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Commercial lets and livery stables put farm assets to maximum use

Published: 23 October 2015

With land prices near their Hampshire based farm recently reaching in excess of £15,000 per acre, Tom and Alison Coleman have been reluctant to invest in the expansion of their existing arable farming interests through the purchase of more land. Instead they have focused on improving the asset value and earning potential of the land and buildings they already own by building a new grain store and expanding an existing complex of commercial lets.

Lower Norton Farm at Sutton Scotney near Winchester consists of 530 acres of arable land, with an additional 1,820 acres farmed on a contract basis. The main rotation is oilseed rape and winter beans, followed by winter wheat and spring malting barley which is grown for the continental lager export market.

“Targeting the barley export market and Group 2 wheat market gives us the potential to earn a small premium over standard domestic contracts,” Tom Coleman explains. “Even so, with arable farming currently going through a particularly tricky period, we have looked for other ways to make the farm more profitable and to diversify the farm’s income potential by adding value to our existing asset base.”

Lower Norton was purchased by the Colemans in the late 1980s. Since then, the farm’s ex-dairy buildings, which included cubicle sheds and a Dutch barn, have been re-developed into a variety of commercial storage units, offices and a livery yard.

It is the first time we have worked with AMC and in our experience that reputation has certainly proven to be true.

Tom Coleman Lower Norton Farm, Hampshire

“The buildings have provided a valuable revenue stream to the farming business, but we recognised that there was more we could do to increase their rental potential,” Tom adds.

“We are therefore in the process of building an American Barn-style stable block which will ring-fence the livery yard away from the other commercial lets to comply with a number of health and safety requirements.”

The American Barn-style stables have been part-funded by the farm’s AMC loan.

The new stable block will enable the existing livery facilities to be demolished, making way for a purpose-built office and storage facility which has already been leased on a five year basis to one of the Coleman’s existing tenants.

“Our view is that it is easier to work with existing tenants than it is to find new occupants,” Tom continues. “For that reason we have worked with the tenant concerned to ensure that the new building meets their specific needs. The theory is that they will remain on site much longer if the infrastructure we provide is tailor made to their needs. It is a win-win situation."

Planning permission for the new structure was granted in September 2015, with the building works scheduled to be completed by July 2016.

In addition to the commercial properties and livery facilities, the Colemans have also built a new grain store to replace the ex-dairy unit’s Dutch barn.

The 450m2 grain-tipping facility, which has the capacity to hold 1,000 tonnes, was completed in January 2015 and has already proved its worth by making the logistics of grain-handling during the summer’s busy harvest season much easier to manage.

“We used our agricultural permitted development rights to build the new store on a Greenfield site which is central to the farm’s arable operations,” Tom continues. “It provides a safer store for crops at harvest time and, in the winter, is used as secure storage for the farm’s arable machinery. It has made harvesting crops more efficient and also means we can start to consider alternative ways to make the Dutch barn more profitable.”

The construction of the new grain store has been funded using a 15-year variable rate loan from AMC. “We first approached AMC on the basis that they had a reputation for understanding farming businesses such as ours,” Tom describes.

The new stable block will free up additional commercial letting space.

“It is the first time we have worked with AMC and in our experience that reputation has certainly proven to be true; it has been a very straightforward relationship, with no interference from them since the loan was approved.”

“We drew down the first part of the loan to build the grain store, and made a subsequent withdrawal to part-fund the stable block. We will use the remainder of the loan to demolish the old stables and construct the replacement commercial property. All along AMC has been happy to let us get on with running the business as we see fit. They have been exceptionally easy and helpful to deal with.”

Tom is confident that the improvements he’s made to the farm’s infrastructure will make the business better equipped to deal with the arable sector’s unpredictable nature.

“We have tried to be as forward-thinking as possible and hope to use any surplus that the contract farming arm of the business might make for early repayments against the AMC loan.

“We have extended that same philosophy to the way we have developed the commercial properties by designing the new stables in such a way that if the livery yard struggles at any point in the future we can quite easily convert the building into offices or commercial storage. Similarly, we built the new grain store to a standard that allows it to be upgraded to a full-time grain facility should the need ever arise. It is all part of our master plan of future-proofing the farm for any eventuality.”

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