Rural land sales and
lease-back is part of FEA's prudent land bank
management
Some people may have seen the advertisement which
appeared in The Australian Financial Review on
Monday 20 April 2009 (click here).
It seeks offers from investors interested in
purchasing high-quality rural properties in
Tasmania, northern New South Wales and South East
Queensland.
Sale and lease-back of FEA plantation forestry land
is an ongoing part of our business strategy and one
that we have followed for a number of years.
Please be advised that the current advertising is
NOT a 'fire sale'.
Quite the contrary - we see this as a good time to
potentially sell some of our properties at
attractive prices - this intention was disclosed
earlier in the year as part of our continual strong
focus on cost and capital management.
Over a number of years FEA has developed
high-quality rural properties for forestry. Over the
same period we have sold a proportion of these
properties at book value or slightly higher and
leased them back. Many investors have gained
long-term benefits from these arrangements - and FEA
has reduced its debt.
FEA is financially strong and prudently reducing
debt
FEA has finance facilities that don't mature until
2011. These equate to a relatively conservative net
debt to equity ratio of approximately 40% as at 31
December 2008.
After the recent $13 million sale - at 100 cents in
the dollar - of a portion of our high-quality loan
book, we have received interest in the sale of a
further portion.
We are in the process of reducing our net debt - and
the sale of some rural land on attractive terms for
both FEA and the purchasers is just one strategy we
intend to pursue in the interests of the responsible
management of a strong company.
Investing in rural property with FEA Plantations
Please use the contact details on the attached
advertisement if you're interested in a direct rural
property investment on attractive terms with FEA.
Alternatively, you may wish to consider the FEA
Timberlands Fund.
The unit price for this simple, sound and reliable
rural property investment has increased by
approximately 19% since its inception some 6 months
ago.
The FEA Timberlands Fund offers:
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Regular income stream through
quarterly distributions hedged against inflation with rents
adjusted annually; |
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Capital growth potential from
quality rural land highly suitable for forestry; |
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Investments in rural property
have a low volatility of returns due to the fixed nature of
rental income which is hedged against inflation; |
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Portfolio diversification into
a sector with a low or negative correlation with shares,
listed property and fixed interest; |
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• |
Low fund expenses due to
Triple Net leases requiring tenants to pay all property
maintenance, taxes and operating expenses; |
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• |
Independently rated 4¼ stars
by AAG Research and
Recommended (Lower End) by Lonsec Research1; |
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Access to a highly experienced
and successful rural property manager with 23 years
experience; and |
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Simple and transparent fund
structure and concept. |
To quote 'Investing in Rural Property', September
2008 by Atchison Consultants rural property can
offer significant benefits as part of a diversified
investment portfolio in these volatile times:
"This analysis indicates that, by introducing
Australian rural property into a diversified
investment portfolio, a decrease in volatility of
returns would have been achieved without a reduction
in return. The low correlation of returns with major
asset classes and property sectors and the low
volatility of returns contribute to this outcome."
1
Investment ratings: This publication features the
investment ratings of independent research entities,
Australian Agribusiness Group (AAG) and Lonsec
Limited (Lonsec). The investment ratings provided by
AAG and Lonsec are based on a number of factors
including, but not limited to, a consideration of
the industry/market sector, the experience and style
of the management group, financial returns and
risks, fees and expenses and the structure of the
investment. The investment rating provided by AAG is
based on a star-rating system with five stars being
the highest. The investment rating provided by
Lonsec is based on a recommendation system with the
following five rating classifications — Highly
Recommended, Recommended (Upper End), Recommended
(Lower End), Investment Grade, and Not Approved.
Investment ratings are only one factor to be taken
into account when deciding whether to invest. A
decision by a prospective investor to invest in the
Fund should not be based solely on the investment
ratings featured in this publication. The investment
ratings the Fund has received are contained in
investment ratings reports. A copy of these reports
can be obtained from
here.
NOTICE: The information contained in this
publication is general in nature and does not take
into account any particular individual’s financial
situation, objectives or needs. Prior to acquiring
an interest in the FEA Timberlands Fund ARSN 126 971
462 (Fund), prospective investors should seek
independent financial and legal advice and obtain a
copy of the product disclosure statement (PDS), read
it in its entirety and determine whether an
investment in the Fund is appropriate for their
needs. Applications must be made on an application
form attached to the current PDS for the Fund.
Investment ratings: This publication features the
investment ratings of independent research entities,
Australian Agribusiness Group (AAG) and Lonsec
Limited (Lonsec).
The Lonsec Limited ("Lonsec") ABN 56 061 751 102
rating (assigned September 2008) presented in this
document is limited to "General Advice" and based
solely on consideration of the investment merits of
the financial product. It is not a recommendation to
purchase, sell or hold the relevant product, and you
should seek independent financial advice before
investing in this product. The rating is subject to
change without notice and Lonsec assumes no
obligation to update this document following
publication. Lonsec receives a fee from the fund
manager for rating the product using comprehensive
and objective criteria.
FEA Limited 22 Apr 2009
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