Royalty Units

Royalty Units are a somewhat novel form of investment. Simply put, the investor receive a sales commission, usually a fixed tender of total sales.
A recent study by the University of Vermont classifies it as a well-suited investment form for agricultural business.

WALNUTS.GE offers Royalty Contracts for the first development they undertook in 2017/18

Legal Structure

  • For every Royalty Unit WALNUTS.GE agrees to pay 0.1% of gross sales of in-shell FOB walnut prices to the investor. Each contract is valid for 30 years starting January 1st, 2019.

  • The Investor enters into the contract with WALNUTS.GE USA LLC, a wholly owned subsidiary of WALNUTS.GE. This protects investors under Texas law.

  • The investment is only available for US non-residents.

Orchard

  • The orchard comprise of WALNUTS.GE’s main developments, a total of 15400 Chandler walnut trees (~70ha).

  • They are split into two developments: 8400 Chandler trees planted in the winter 2017/18 on a 6x6m sizing and 7000 Chandler trees planted in the winter 2018/19 on a 7x5m sizing.

  • The type of walnut is Chandler on Regia rootstock.

Cost Breakdown

  • The current price of 1 Royalty Unit is 10750 USD.

  • The price for a unit increases as the orchard matures and nears its production cycle.

  • There are no additional management fees any other service fees for this type of investment.

  • No VAT is added on the purchase, nor is there a withholding tax in the US for distributing royalties (The investment may, however, be subject to withholding tax in the country of tax residence).

Royalty Unit
Land Size 71ha
Tree Number 15400 Chandler Walnut
Title Revenue Sharing Agreement
Planting Year 2017/18 8400 trees, 2018/19 7000 trees
Taxation 0% witholding
No extra cost until production start
Replant dead trees
Installment Plan
Price 10 750 USD

Yield Forecast

Agricultural yields vary strongly depending on weather conditions. Generally speaking, walnut trees take about 4 years to enter into production and have a minimum life cycle of 30 years, which can go up to 70 years if conditions are good. We are using UC Davis for our average yield forecasts. They forecast an annual production of 6.5t/ha when fully grown in the 7th year. A well-managed modern day orchard can outpace these, especially when using highly productive varieties like Chandler. Our Turkish producers achieve yields of 8t/ha or more, which we use as our optimistic scenario. The pessimistic scenario assesses a freeze in the first year resulting in a complete replanting of the orchard and a disease that forces to prune 30% of the orchard to its minimum during the second year.

Price forecasts

  • Walnut prices are fluctuating from year to year according to global supply and demand.

  • Since weather and world production are outside our control, a grower must focus on producing high-yielding trees and quality nuts. Chandler Walnuts are some of the most desired walnuts on the market. In-shell Chandler FOB prices have ranged in recent years from 2000 USD/t to 4500 USD/t. We us a price of 3500 USD/t in our models.

  • You can follow live price updates for walnuts on Tridge.com

  • A well-managed modern day orchard can outpace these, especially when using highly productive varieties like Chandler. Our Turkish producers achieve yields of 8t/ha or more, which we use as our optimistic scenario.

ROI

  • With respect to price and yield forecast we’ve created several ROI scenarios All return data is after expenses and management fees.

Managed Walnut Farmland Royalty Units
Land Size 1 ha 71 ha
Tree Number 285 Chandler or Howard Walnut 15400 Chandler Walnut
Title 95-years registered Lease + Option Right Revenue Sharing Agreement
Planting Year 2019/20 2017/18 8400 trees, 2018/19 7000 trees
Taxation 1% on Revenue 0% witholding
No extra cost until production start
Replant dead trees Free during first 4 years
Installment Plan 40% upfront, 60% within next 12 months
Price 85 000 USD 10 750 USD

We offer sophisticated individual to own productive farmland and gain direct exposure to a continous stream of passive income.

Invest now