Occasionally a few older orchard plots are available from existing investors who need to sell their investment. It is important to highlight that these plots are much more mature. The investor is not buying a plot with saplings. The trees are already producing at harvest and, depending on the plot being sold, the harvest may already be at the breakeven point or with a small profit.
We have not yet had any plots become available for resale from acres that are fully mature and producing at peak capacity. We do not expect them to be available in the future either. Once an orchard has become fully productive, it is very rare for it to be put on the market. Nevertheless, an investor looking to shave a few years off their waiting time can purchase a plot that has already been planted to see quicker returns.
Masterplan — Phase I
Chandler Orchards has fully planted 5 individual campaigns totaling 75,315 Chandler Walnut Trees. Campaigns 1-4 will reach profitability next season, while only campaign 5 has yet to reach profitability.
For investors purchasing a resale plot, we guarantee the production of campaigns 1-4 immediately. We will guarantee production of campaign 5 beginning in the 2021/22 season.
We guarantee a minimum annual ROI of 4% with respect to the investor’s purchase price, each and every season. Should prices or production fall below this level, Chandler Orchards will make up the difference to investors.
What happens if I buy in the middle of a season? At harvest, how are the profits divided between both owners?
Investors always participate in complete seasons beginning in June and ending with the sale of the harvest in May. Profits are never split.
For example, an investor who sells his or her plot in March (two months before the sale of the harvest) will still be paid the year’s harvest and is still responsable for the payment of orchard expenses through May.
New buyers only begin to pay orchard expenses in June, with the start of a new season, no matter the date the sale of the land is closed with the seller.
Why is this the case?
We do not want to encourage speculative short-term trading activity in our orchard plots (i.e. investors purchasing resale plots immediately before the harvest and then selling them immediately after).
This is an investment that is only appropriate investors with a long-term time horizon.
We can guarantee the performance of resale plots because Chandler Orchards is responsable for the management and success of the orchard, not the seller. There is no difference in management between newly planted plots or resale plots.
In fact, as each campaign matures, the level of uncertainty diminishes and it becomes much easier for our agronomist to project yields with confidence. This is why we can only guarantee campaigns that have matured to a certain degree.
30-Year US Treasury Bills are yielding 3% annually. We want buyers to invest with us and have the confidence that this is a long-term investment that will never yield less than a Treasury Bill, no matter what happens. It is appropriate for investors looking for low-risk assets for retirement.
While we are confident that investors will be realizing returns of 10%, 20% and more, by setting a 4% floor we are able to guarantee the performance of our campaigns much sooner. If we offered a 20% floor, we’d only be able to offer a guarantee performance once a plot had reached maturity and at that point the guarantee is of little use.
Investors buying into guaranteed campaigns today can acquire plots with confidence knowing that these campaigns will immediately outperform US Treasury Bills, no matter what happens to yields or prices in future seasons. Campaigns 1-4 are already at a point that even extreme weather events cannot impact production to a level that would cause them to produce less than a 4% ROI.
The plots we have published on our resale page are plots where the asking price has been set in consultation with Chandler Orchards. These plots have prices that have been set at a level that allows us to offer our 4% guarantee.
Each investor is free to sell his or her plot in the future whenever and at whatever price they feel appropriate. However, we will not publish resales on our website nor will we offer our 4% performance guarantee if we consider the asking price to be excessive. Investors looking to sell at prices we feel are excessive will need to complete the sale without our assistance.
Our 4% guarantee is a tool we offer to our investors to assist them exit their investment and realize a capital gain, but we only offer the guarantee when we are allowed to participate in the transaction.
We want all our resales to take place with fair prices for both the buyer and the seller.