Merricks Capital Agriculture Credit Fund Portfolio and Market Update – July 2024

The Merricks Capital Agriculture Credit Fund (the Fund) returned 0.9%* in July and 10.3%* on an annualised basis since inception. The Fund declared a 4.0% distribution at 31 July, which will be paid mid-August. 

The Australian and New Zealand agricultural outlook remains robust. Land values appear to be holding, with strong demand for high-quality, productive assets. Rising interest rates and mixed commodity prices have refocused the buyer market on cash returns and productivity. 

One new loan settled during the month, a 2.8% allocation to the Fund ($10.5m) to facilitate a property acquisition for an irrigated cropping business in the Riverina, NSW. The loan is secured against five contiguous farms totalling 3,068ha growing rice, soybeans and popcorn during summer and wheat and barley during winter. The facility has a peak LVR of 57% and is forecast to generate an investor return of 11.8% IRR (net of fees and costs). 

We are currently prioritising increasing our asset subsector weighting to horticulture, dairy and downstream supply chain assets, which offer favourable risk-adjusted returns and are well-positioned to navigate any seasonal variances. Due diligence is ongoing for $110m in senior secured loans with a 57% weighted average LVR and an 11.2% forecast net investor IRR across the horticulture and dairy sectors.