What are the key drivers of returns in FarmCap’s portfolio?

The key drivers of returns in the FarmCap investment are:

• Interest income from agricultural loans – the primary source of investor returns. Loans are generally priced at a floating base rate, such as BBSW, plus a credit margin reflecting the specialist nature of agricultural private credit.
• Structural funding gap – many capable, asset-rich farmers fall outside traditional bank lending criteria. FarmCap’s ability to provide flexible and timely funding allows it to earn an attractive premium.
• Specialist origination – FarmCap’s national agricultural network provides access to privately negotiated lending opportunities that are generally unavailable through public markets.
• Disciplined loan selection – detailed credit analysis, independent valuations and on-farm meetings help FarmCap select borrowers and transactions offering an appropriate balance between yield and risk.
• Short-duration lending – loans are typically structured over shorter periods, allowing capital to be regularly repriced and redeployed into new opportunities at prevailing market rates.
• High portfolio deployment – returns are enhanced when investor capital remains efficiently invested in income-producing loans, with limited cash drag between transactions.
• Credit performance – timely payment of interest and repayment of principal are critical. Avoiding impairments, defaults and enforcement costs helps convert the portfolio’s headline yield into consistent investor distributions.

Returns are supported and protected by registered mortgages over agricultural property, conservative loan-to-value ratios and diversification across borrowers, regions and agricultural sectors. These features do not directly generate returns, but they provide an important buffer against capital loss.