This article appears courtesy of Institutional Investor
Source: Real Estate Finance & Investment
St. Helena’s Global Wine Partners has raised $250 million to fund two new ventures– vinREIT , a new real estate investment trust focused on vineyards, and a separate private equity fund that will invest in wineries and vineyards. Separately, Vintage Wine Trust is gearing up for an initial public offering, expected later this year.
vinREIT, through a partnership with Entertainment Properties Trust , will invest in both vineyards and land fit for improvement or where vineyards will be planted, said Vic Motto , chairman and ceo of the joint venture. The company has acquired one property and while immediately concentrated on California, it is discussing possible acquisitions in Washington and Canada. All of these areas produce the higher priced, premium wines on which the REIT will focus. Individual investors are just learning about this industry, creating plenty of “missionary” work for the REIT, Motto said. Entertainment Properties Trust officials did not return calls.
The wine industry has grown at a rate that is two to three times that of the rest of the economy over the past 10 years, Motto said, noting that it is a capital-intensive, vertically integrated industry. The industry has traditionally been financed through vineyard owners, private investors and bank debt. But over the past decade, the industry has been attracting other forms of capital and is no longer underserved by the capital markets.
Only one other REIT, Vintage Wine Trust , is dedicated to the sector. The company raised $145.9 million through a private stock offering in March and quickly spent $89.9 million to assemble a portfolio of five vineyards. Vintage has now registered to sell about 16 million shares in an effort to raise more than $160 million to fund additional property acquisitions, according to a Nov. 10 Securities and Exchange Commission filing. Vintage will likely make its initial public offering at $10 a share early next year. Vintage officials did not return calls.
Vintage Wines has additional acquisitions in its sights. The company has entered non-binding letters of intent to buy two more properties for about $15 million. Another 15 properties under preliminary consideration could cost $310 million more, according to SEC filings. The REIT has focused on California, where about 90% of American wine is produced, but plans to eventually target properties nationwide and abroad. Friedman Billings Ramsey is underwriting their IPO.
By leasing rather than owning the land, tenants can take capital that would be locked up in real estate and spend it on vineyard operations, maintenance, marketing, distribution, brand acquisition, and investments in facilities and technology. Tenants pay their own taxes, insurance, maintenance and other costs.
