NZL - NZ Rural Land Co IPO

[Snoopy]

I know a number of dairy farmers well. They have all made tens of millions in profits and capital gains over the past 30 years and expect to continue that wealth accumulation. They all have a problem of getting market value for their enterprises when wanting to retire.

<snip>

NZ has a growing population. Land is a scarce commodity.
I believe this is a very clever structure which will give a good dividend return and excellent capital gains in the long run for those wanting a smaller slice of the rural money pot.

I wonder if there is an expectation issue here?

Could the reason that farmers are not getting the prices that they think their land is worth be because their land is not worth what they think it is?

I know that farmers have done well with capital gains over the last 30 or so years. In fact those capital gains are really the reward for many farmers whose cumulative incomes over that period have been less than stellar.

The banks are not prepared to lend on farm land acquisitions, because they cannot see the continuity of income that will support the current market price for farm land. So why should new equity investors in farm land today have a realistically different measuring stick on farm values?

And why should farm values go up long term from here if the farm cannot generate the income to support those farm values?

SNOOPY