There was interest this week in two new investments trusts coming to market, each promising an inflation linkage aimed at offsetting potentially higher costs and interest rates.

First up is The Sustainable Farmland Trust  which aims to raise £200 million to invest in US agricultural assets.

The US company behind the trust, Intl Farming Investment Management LLC (IFC), has more than $2.2 billion of group assets under management and a track record dating back to 2009.

The trust will invest at least half the money raised in ‘a performing and diverse portfolio of US farmland assets’ held in an existing private fund run by IFC as well as investing directly in farming, agricultural supply and infrastructure assets in the US.

The company claims farmland assets are historically negatively correlated with equity markets but positively correlated with higher inflation.

It is targeting a net initial yield of 4.5% with an NAV (net asset value) target return of between 7% and 9% based on the 100p issue price and a management fee of 1% per year.

Shares readers may recall a similar trust – Global Sustainable Farmland Income – was slated to launch in early 2020 but failed to generate enough interest, so it will be interesting to see if the market is more receptive this time.

The second new trust on the launchpad is Independent Living REIT, which is aiming to raise £150 million to invest in ‘supported housing assets which are let to compliant tenants’.

The company is targeting three areas for investment: specialized supported housing for adults with learning difficulties, mental health issues or physical disabilities; extra care for adults aged 55 and over who need specialist care; and homeless accommodation.

Rents are expected to be funded by the Department for Work and Pensions with annual uncapped inflation-linked uplifts, while at the same time generating ‘material savings’ for UK taxpayers compared with the cost to the NHS of keeping patients in hospital.

Atrato Partners, the firm behind Atrato Onsite Energy (ROOF) and Supermarket Income REIT (SUPR), is acting as investment adviser to the trust, which is targeting an initial annual dividend of 5p per share and an NAV total return of between 7% and 10% per year.

Helpfully for investors there are already a couple of trusts against which to compare this new arrival in the form of Home REIT (HOME) and Impact Healthcare REIT (IHR), which cater respectively for homeless people and those with long-term physical and mental care issues.

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