Land fund reverse lease receives broad approval

Farmers are responding positively to the Opportunity to Sell Property to the Land Fund with Lease and Repurchase Rights, which was introduced a year ago. This service is intended for farm development or financial stabilization if the farm needs additional financial resources that cannot be obtained from commercial banks at that time.

During the year, a number of farms have used the service, selling a total of 1,000 farms to the fund under reverse lease. 105 properties covering an area of 2150 ha. The Land Fund has invested 6.6 million EUR in financing these transactions. The greatest demand for reverse lease is in Zemgale (including Sēlija), where half of the transactions have been financed – 57 properties covering an area of 1030 ha. Kurzeme is next with 30 properties covering an area of 700 ha. In other regions, activity has been lower so far, but the number of transactions is also growing there.

The most popular purposes of using reverse lease: urgent purchase of leased land (or at auction), for the purchase of machinery, current assets (including seeds, mineral fertilizers), as well as settlements with suppliers.

Reverse lease allows a farm not only to obtain the financial resources necessary for further development, but also provides clear and transparent contract terms - by concluding a reverse lease transaction with Land fund, the land buyback price and term are immediately determined, as well as a land lease agreement is concluded. The lease with buyback term is five years, and the farm can buy back the property for a price that is the market value of the property at the time the property is sold. For the Land Fund.

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