It is forming Tasmanian Farming Trust with $36m of farmland assets, partly funded through debt and by capital from eligible new and existing investors.
The minimum thresholds are A$500,000 for approved Australian wholesale investors and NZ$750,000 for NZ investors.
Three irrigated farms are already part-owned and under management by Compass and a fourth neighbouring farm in the Derwent Valley will be purchased by the trust so its present owner can become an investor.
In total the farms are running 2400 cows and producing about one million kilograms of milksolids annually, contracted to Fonterra Tasmania at a forecast milk price around $7/kg MS.
In the information memorandum, Compass is projecting annual trust income of A$7m, expenditure of $5.36m and earnings after interest, tax, depreciation and amortisation of $1.53m.
Projected returns on equity are 8-11% annually, plus anticipated capital growth of 5%.
Compass NZ managing director and founder Guy Blundell, of Arrowtown, says the company had $200m of assets under management in NZ and Australia.
It is now restructuring the ownership of the Tasmanian farms, in which Compass has an existing 5% stake and making an investment offer to attract approximately A$9m of new capital.
The balance of $11m capital in the trust will come from existing investors.
Compass also intends borrowing $17.5m, using the four farms as security.
Blundell says Tasmanian dairy farming asset values are about 70-80% those of similar irrigated farms in NZ.
Dairy farmland is around $28,000-$29,000/ha and there is no requirement to buy dairy company shares.
The trust would own 1023ha of land in total across the four farms, containing 685ha of milking platform.
Land and water, including developments, will cost $29.5m to purchase, livestock $5.3m and plant and machinery $957,000.
Stamp duty will be $1.3m, legal and professional fees $150,000 and the establishment fee for Compass of $359,000, or 1%.
Compass also stands to earn a management fee of 1.5% and a performance fee of 20% of total returns over 8% annualised pre-tax return on equity at the end of the planned seven years life of the trust.
The offer will close at the end of the month.
