Creating a strategic advantage in today's Rural Property market.

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

In the agribusiness world, Spring is far more than just a change of season - it marks a period of opportunity in New Zealand’s Rural Property market. Decisions are made to expand operations, purchase new land or restructure business assets. Yet the difference between seizing an opportunity and missing out, often comes down to preparation.

Chatter around the traps suggests this Spring is set to be one of the hottest in recent times, with strong commodity prices, interest rates trending down, and a strong flow of capital into New Zealand agriculture.

‘Bank Ready’ = Market Ready

The ‘Bank Ready’ concept isn’t just about ticking boxes with your bank. It’s about positioning yourself to act with confidence and feel in control of the finance and property purchase process. Lenders are looking for a clear and a well thought out approach to finance application that aligns with your strategy.

We hear and talk about the concept of ‘Bank Ready’, but what does that mean?

I’ve broken this down into three key principles.

1. Knowing your business position gives you confidence to execute

'Bank Ready' farmers and growers who understand not only their financial position but also their risk profile, cashflow position and how it fits within their long-term strategy have the best chance of success in getting competitive debt capital the first time.

It’s not just about today’s balance sheet - it’s about knowing what could go wrong, what contingencies you have, and how you’d respond. Banks stress-test deals. The more context you give around “what if” scenarios, the more confidence they’ll have in your resilience.

Borrowing capacity is another critical factor. Don’t leave this in your bank’s hands; know exactly how they view your position and how much you can borrow. That knowledge gives you leverage, pre-approvals, and the confidence to execute quickly.

This is also the time to ensure you’ve got funding headroom. Expansion is exciting, but it’s vital to raise additional capital while you’re strong - not when the cycle turns. Going in “skinny” leaves no buffer for volatility.

2. Bank Alignment

A great banker of ‘Bank Ready’ farmers and growers deeply understands their customer’s strategy and what success means to them. Together with their customers, they understand the risks and mitigants the business may face and how their customers are likely to react.

Alignment means you both see the same opportunities and the same challenges.

If you’re unsure about your alignment, ask direct questions: What barriers do they see? Is it operational performance, balance sheet strength, information flow, or something else?

It’s never too late to build bank alignment, but what we always suggest is start early. Don’t underestimate the power of having strategic conversations with your debt provider to ensure that when the perfect opportunity pops up, everyone begins the process on the same page.

3. Structuring for long-term success

When time pressure hits, it’s tempting to just “get the deal done.” Bank debt is usually the cheapest form of capital within a business, but it needs to be structured in a way that sets the business up to have a sustainable future, positioned for equity growth.

• Long-term assets → long-term capital.

Ask yourself:

• How does this fit with existing repayments?
• What’s the impact on cashflow and bank perception?
• What’s the short- and long-term balance sheet impact?

As outlined in a recent article by Chris, we increasingly need to look for alternate capital solutions. The market has moved on from bank debt and farmer equity as the only two components that make up a Balance Sheet. This is particularly important for first time farmers.

Preparing early gives you the best chance at securing the right structure, terms, and pricing.

Lastly, readiness isn’t just financial. With consents and regulations shaping deals, compliance is part of the package. True bank readiness also means regulatory compliance, strong on-farm management and the right business team behind you.

Communication is key. Talk early and openly with your advisory team, banker and real estate agents about your strategy and timelines.

Being prepared with finance isn’t just about stress reduction - it’s your competitive edge in a fast-moving market.

If you’re ready to position yourself ahead of the curve this Spring, talk to the NZAB team today, drop us a line for a no obligation chat.  Feel free to call one of our local team members in Southland, Canterbury, Manawatu, Taranaki or Waikato  (or flick us a quick email here)

 

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NZAB, 335 Lincoln Road, Addington, Christchurch, New Zealand 8024, 0800 NZAB 12

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