Farmlands to sell, lease back 8 stores across North Island

Farmlands, the North Island’s largest rural co-operative retailer, is taking eight of its stores to market on a sale and leaseback basis as part of the company’s strategic growth plans.

The stores are in Dargaville, Kaitaia, Taupo, Hautapu Cambridge, Te Kuiti, Marton, Levin and Palmerston North. Five of the stores are brand new.

Colliers International Director Alan McMahon, who is managing the sales process for Farmlands, says that the sales will enable the business to push for more growth. “Farmlands is a good example of the potential that a sale and lease back offers to invest in core business rather owning real estate. The properties are all leased for at least nine years and we expect them to fetch between $1 million and $3 million each.”

McMahon adds that the rent roll for the eight stores in total is $1,082,400. “Farmlands has written rights of renewal totalling a further 42 years into their leases, by way of 14 three year terms.” Property consultants Turley & Co are leading the lease back program for Farmlands.

Farmlands CEO Peter Ellis says that the sales are part of a three year strategy to fund ongoing growth and manage the company’s balance sheet prudently. “Farmlands prefers to purchase land and to develop a store, to control the process and to determine which properties will be sold to investors by lease back. This frees up the capital for us to reinvest into further company development. Farmlands will move from 39 stores to 45 in 2011 and we see an exciting future for the company, staff and shareholders as well as the wider rural community.”

Mr Ellis adds that challenging economic conditions have not stopped Farmlands from delivering positive results to customers and shareholders around the country. “Careful management and efficiencies has meant that despite the challenges faced, we have achieved sales revenue of $531 million in the 2008/09 year, up 20 per cent on last year, which delivered a loyalty rebate of $4.9 million which was only slightly down on last year’s record payout.” Farmlands turnover has grown from $260m in 2003 to $531m in 2009.

“Six new stores in 2009, another annual loyalty rebate, retail refurbishment and more stores planned show that just a year into our three year plan, Farmlands is making significant progress towards its goal of 25 per cent share of the North Island rural merchandise market.”

The auction is set to take place at the War Memorial Centre in Napier on November 11 2009.

ENDS

NOTES TO EDITORS

Farmlands started in 1962 when a group of farmers and growers banded together to get better prices on the rural supplies they needed for their farms and orchards.
The cooperative is now a top 15 retailer in New Zealand, excluding supermarkets, and now has 24,000 shareholders and 39 branches (up from 27 in 2003) spread throughout the North Island.
The Farmlands retail network has widened this year with four new stores already operational in Taupo, Te Kuiti, Marton and New Plymouth, and two more set to open as part of a planned expansion from 39 to 45 stores by 2011. Kaitaia will open its door later this month, followed by Hautapu Cambridge in November.
In 2008, Farmlands was ranked 78th out of all NZ companies by Deloitte in New Zealand Management Magazine (90th in 2007)