Upscale Funds Management, a Fund Manager specialising in Natural Capital and agriculture, has its seventh fund, the Koala Farmland Fund 2 (KFF2).

Koala Farmland Fund 2 (Fund) intends to create a more investable, climate resilient agricultural property fund that is positive for investors and the environment.

The capital raise target is $6.6 million from Wholesale Clients.

The Fund’s investment strategy is to add incremental environmental income via biodiversity offsets, such as Koala or Greater Glider, to traditional agriculture revenue on land purchased in
Southern Queensland (SQ).

Biodiversity offsets in SQ are in continual demand because of strong population growth and consequent expansion in housing and infrastructure. Habitat destroyed in the development process must be avoided or replaced (offset) elsewhere. Developers pay offset providers to re zone, preserve, and maintain replacement land. Conversely, there is a lower supply of suitable land available, very few offset providers, and particularly complex regulation.

Other income streams to add to traditional agriculture may include carbon farming and leasing the properties to renewable energy projects. The grazing activities, usually cattle, will be integrated into the offset management plan. KFF2 believe that cattle and koala can co-exist profitably and do not believe in locking up land to the exclusion of either species.

The Fund manager, Upscale Funds Management (UFM), and its associates have unique intellectual property and a strong track record over 8 years. UFM is a pioneer in Natural Capital development, combining the 4 growth markets of biodiversity offsets, carbon farming, hosting renewable energy projects and agriculture. UFM currently has $55m funds under management.

The investment strategy of KFF2 has already been successfully implemented in Koala Farmland Fund 1 (KFF1). KFF1 raised $6.5m capital in 2021 and purchased 3 properties in South East Queensland. KFF1 has offset contracts with some of Australia’s largest resident property developers and created Southern Queensland’s first Greater Glider offset under the Federal Government’s EPBC regulations.

The Fund is targeting 22% return on invested capital (after fees) with 10-25% p.a. distributions from year 3. KFF2 is a diversified alternate investment in real property, uncorrelated to financial markets, with farmland purchased at agricultural prices offering excellent downside risk protection.

KFF2 is an unlisted managed investment scheme available only to Wholesale Clients. UFM Directors will be foundation investors in the KFF2.

For more information, contact Rob Hart, Managing Director, Upscale Funds Management on 0439 536 875 or rob.hart@upscalefunds.com.au