The public joint stock company INVL Baltic Farmland manages shares of businesses that invest in agricultural land. Invalda INVL began investing in agricultural land in Lithuania in 2004. Currently INVL Baltic Farmland owns 100 per cent of 18 companies with combined holdings of more than 3 thousand hectares of agricultural land in Lithuania. More than 98 per cent of the land is rented out to farmers and agricultural companies.
The land-owner companies and INVL Baltic Farmland on 30 June 2015 signed a basic property administration agreement with INVL Farmland Management, which administrates the companies’ agricultural land with an eye to ensuring steady growth of income for shareholders and to increasing the value of the land.
Management fees paid to INVL Farmland Management comprise 7 per cent of the land-owner companies’ annual rental income and 0.5 per cent of INVL Baltic Farmland’s market capitalization. There is also a success fee that’s payable when annual growth of the land-owner companies’ consolidated equity is at least 5 per cent more than inflation in Lithuania. The success fee is 20 per cent of the amount by which consolidated equity exceeds the benchmark (on a high-watermark basis).
Investments in agricultural land are long-term. They are recommended for investors who are satisfied with return from rent and possible gains from growth of agricultural land prices. Since the prices of agricultural products are determined in world markets, this investment enables participation in the world food supply chain.