No existing income
Modelling
required
Maximum returns sought
Highest LTV
possible
Low yielding asset
Maximised IRR
achieved
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Hedge fund making first agricultural acquisition in the UK
No established business, so analysis and modelling to demonstrate serviceability was vital
The deal
Assets
- Two farms in mid-England
- 975 acres of land
- Property but no operating business
Security
- First charge over both assets
Income
- No existing income
- Detailed modelling around both farming and rental incomes projected
Requirements
- Proven maximisation of IRR versus different pricing metrics
- Maximum LTV sought to maximise returns
Challenges
- Yields in agriculture are low
- Value in potential businesses had to be proven
- Senior debt only
Facility Secured
- 60% LTV
- Amortisation sculpted in line with business projections according to asset sales
Summary
Our client was a hedge fund acquiring two farms in mid-England. Neither had an established business or existing income. The planned businesses had to be modelled, including sensitisation, demonstrating how the loan would be serviced and then amortised over time.
Despite recent growth in the agricultural market, yields remain notoriously low. In seeking maximum LTV, but at an efficient cost, our client settled on 60% LTV option sourced.