LZF property portfolio reaches 5,000 hectares; share of leaseback transactions increases

The Latvian Land Fund, managed by the development finance institution ALTUM, has acquired 290 land properties covering an area of 5,000 hectares since its inception, investing a total of 13.2 million euros in transactions. This year, it is planned to invest approximately 10 million euros in transactions.

Over the past six months, the proportion of properties purchased in reverse lease transactions has increased significantly in the Land Fund's property portfolio. In April of this year, it already accounted for 121.3% of the fund's properties.

Overall, the demand for the Land Fund's services remains steadily high with an increasing trend. In the 1st quarter of this year, the Land Fund has made new transactions worth 2 million euros, purchasing 640 hectares. This is 28% more than in the 1st quarter of last year in terms of area and 66% more in terms of invested resources.

Ina Alksne, Head of ALTUM Latvian Land Fund: “Currently, 99% of the properties we purchased have already been leased for agricultural purposes, in fact, all purchased properties are quickly returning to operation. Since the introduction of the reverse lease service last fall, landowners have sold 600 hectares of agricultural land to the fund with lease and repurchase rights. We have invested 1.9 million euros in these transactions. We see that farmers appreciate and use the opportunity to not only obtain the financial resources necessary for further development of the farm with the help of reverse lease, but also provide clear and transparent contract terms – when concluding a reverse lease transaction, the land repurchase price and term are immediately determined, as well as a land lease agreement is concluded. It is also important that private individuals, when selling land to the fund, are exempt from the 20% capital gains tax in accordance with the law.”

The most active region in terms of transactions in general and also in reverse lease transactions is Zemgale - by mid-April, 24 properties in Zemgale had been sold to the fund with lease and repurchase rights, their total area is 300 hectares. Overall, the lowest activity is still in Latgale, and a large part of the properties offered there are unsuitable for purchase, as they have not been maintained and overgrown for a long time and their purchase would be economically unprofitable for the fund, or they are not suitable for active agricultural activity due to the composition of the property.

Land fund acquired areas by region: Zemgale – 2071 hectares, Kurzeme – 942 hectares, Vidzeme – 825 hectares, Riga region – 725 hectares, Latgale – 437 hectares.

The Land Fund has been operating since July 2015. It purchases real estate throughout Latvia that meets certain criteria. The Fund purchases properties at prices that do not exceed the average market price for equivalent agricultural land in the respective region and parish. In November last year, the Fund began offering a reverse lease service.

Information about the Latvian Land Fund HERE!