August 2, 2023

Major New Zealand egg producer's land sale approved for expansion funding

The New Zealand Overseas Investment Office has given the green light to the transfer of 650 hectares of land owned by Mainland Poultry, a leading egg producer in New Zealand, to Australian property investor CorVal Partners, a strategic move by Mainland Poultry to secure funding for its expansion initiatives, Stuff reported.

The egg production operations are conducted under the Zeagold brand and are overseen by parent company Indus Valley.

The land transaction involves nine parcels spread across multiple sites in different regions including Otago, Canterbury, and Waikato. According to details revealed in a Land Information New Zealand (LINZ) decision, CorVal Partners is set to lease the land back to Mainland Poultry through separate triple net leases, each with an initial term of 30 years.

John McKay, chief executive of Zeagold Nutrition, said that the sale and subsequent leaseback arrangement would empower the business to make substantial investments in the domestic egg production sector. This strategic move also aligns Mainland Poultry with a capital partner sharing similar goals.

While the specific value of the deal was not disclosed by McKay, the importance of the sale stems from New Zealand's ongoing egg shortage. In May, Egg Producers Federation director Michael Brooks highlighted the country's egg deficit, indicating that about 3.5 million laying hens were present, falling short of the 3.8 million needed to maintain a consistent egg supply.

The sale and leaseback deal encompasses a total of 11 properties, covering various aspects of egg production, including farms, grading and processing facilities, distribution centres, and feed mills. McKay said that Mainland's strategy is to continue investing in advanced cage-free farms and technology to enhance egg quality and affordability for consumers.

He said that the company will continue to farm and serve their customers, with renewed focus on growing their farm network with the construction of the new Huirimu free-range egg farm in Wharepapa and allocating capital to future farms.

LINZ's decision outlines Mainland's intention to release capital currently tied up in land ownership to facilitate business growth. The sale is aimed at supporting the next developmental phase of the Huirimu site, which is set to become New Zealand's largest free-range egg laying facility, accommodating 240,000 laying hens and 80,000 rearing hens. The investment is expected to involve around NZD 12 million (~US$7.3 million; NZD 1 = US$0.61) in capital expenditure for the Huirimu site's development, creating 40 full-time positions during construction and offering additional environmental safeguards for the respective sites involved.

-      Stuff