At Royalty Farms, our main objective is to attain properties that will produce both income and equity growth. We are thrilled with the farm properties we are currently involved with and have several more similar farms on our radar. We target properties in a distress sale or below market property value with strong upside growth potential. A strong operator in place with a track record of success renting the facility for competitive annual percentage rate of return on a 20 year triple net lease. They pay the taxes and upkeep and we collect the rent. Next we will liquidate the property and return the principal plus profit, if any; rinse and repeat.
With interest rates going up, so are the rental returns on the future farm properties we are considering. This is the business model we plan to follow for our next several property investments. When something works, don’t fix it. It’s a sector that we can acquire distressed properties below market value with strong renters and returns in place. This is the mainstay and business model for the next several years.
Vegetables are known to lose most of their valuable nutrients in just a few days. Royalty Farms outlets will be able to grow and sell vegetables all onsite. This will provide ultimate freshness with a large percentage of nutrients still intact for better and healthier food. The vegetables are grown in a high control, high tech indoor environment providing high quality food to supply metropolitan neighborhoods with a healthier choice.
Another area of interest is in the hospitality business. One target property is located oceanfront on the Caribbean ocean in Tulum, Mexico. Tulum is one of the top vacation getaway spots in the world today located at the bottom of the Yucatán peninsula. A triple net lease with the establishment can produce a solid annual income with strong upside equity growth potential when sold. A 20 year triple net lease is extremely valuable as is ocean front property on the crystal clear Caribbean ocean.
Seafood is becoming more and more expensive and difficult to find. One billion snow crabs went missing in Alaska this year canceling their entire snow crab season. Salmon is also in short supply. The salmon fishing season was canceled on the entire west coast for the 2023 season. In the next several decades the scarcity is expected to increase and seafood will only be available to a small portion of the population.
We have a relationship that will allow us to build a property to farm crab and salmon and have a NASDAQ company run and operate the facility. In a reasonable amount of time we would sell the property to the operator. In addition, there are good tax benefits for farming food products.
