Diversified Dairy/Beef/Restaurant Operation - $5 million
Posted by: James Morin on 1/16/2017 6:17:58 PM
Funding Needed:
Above $1mil
Agriculture & Fishery
Location :
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This is a vertically integrated, diversified agricultural project consisting primarily of a diary cattle operation, beef cattle operation, cash cropping and commercial real estate (with restaurant). There is also a produce (vegetables and fruit) production aspect included to support the restaurant. The total requested amount of financing is $7 million Canadian Dollars (CAD), with the operation providing a net income before interest and taxes of $525,000 (CAD). Using current exchange rates for CAD-USD, this results in a request of $5,320,000 USD, with a net income of $399,000 USD. Amortized over 25 years at 4%, the debt payment would be $336,000 USD per year. The project is located in a well established agricultural region in the northern part of the province of Ontario, Canada, located approximately 350 KM north of Toronto.

The single biggest piece of the operation is the dairy farm. This is a going concern with the current farmer looking to retire. The dairy industry in Canada is managed within a quota system, and this operation comes with all land, buildings, livestock and the quota. Price is $3.3 million CAD. The operation generates approximately $200,000 CAD net (before interest/taxes) as currently structured. Provincial Quota guarantees price and purchase of all milk. An on farm creamery will be added to produce an additional $25,000 CAD per year in net income, and this will be funded through a grant. The price includes 200 acres of land currently used to grow cash crops (various seed plants such as canola, soybean and wheat). This portion currently generates $25,000 CAD net.

The beef cattle operation is also a going concern, but will be ramped up significantly in the next 5 years to produce 40-50 head of cattle per year, with a net income of $100,000 CAD (before interest and taxes). This operation consists of 400 acres of land, barns, silos and this property also contains a greenhouse and gardens for growing the produce portion of the project, which will contribute $50,000 CAD net income. The price for this property is $795,000 CAD, and an additional $250,000 CAD is required for converting a building to a processing facility (for beef cattle). Total price is $1,045,000 CAD.

The cash cropping operation consists of an additional 750 acres of workable land and forest. Cash crops change from season to season, but minimum net income per acre is expected to be $100, or $75000 CAD per year. The price of this operation is $1,500,000 CAD.

The commercial real estate portion is a commercial building located approximately 1 hour from the farming operations. This building currently houses 2 luxury suites for monthly rentals, a hair salon and the aforementioned restaurant. The cost of this building is $600,000 CAD. The luxury suites and hair salon currently provide a net income of $50,000 CAD per year. The key to this building is the restaurant, as it is the outlet for most of the beef and all of the produce production.

An additional $550,000 CAD will be required for the purchase of various machinery and working capital.

Detailed business plans for each operation, and how it all fits together, are being finalized. Ideally the financing we seek can be structured with some flexibility to provide an equity portion to our partners and/or interest only financing for the initial period of 5 years (with the amortization of principal then being 25-30 years).
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