Farming families in the box seats as funds sell down portfolios
Cashed-up local farming families enjoying the benefits of a bumper harvest and record high commodity prices are reclaiming possession of some of Australia’s best rural properties, as institutional investors sell down their prized portfolios.
Highlighting his trend, according to agribusiness specialist LAWD, was US-based Proterra Investment Partners’ divestment of its Corinella portfolio of 49 grain farms in Victoria and South Australia in December for $370 million to 27 local buyers.
Other examples include fund manager Laguna Bay Pastoral Company selling its Woorndoo Aggregation in Victoria’s Western Districts in January for $70 million to two local farming families and the $70 million Gippsland dairy portfolio being offered by Duxton Asset Management’s Ace Dairy. Mr Medway said three out of the seven properties in the portfolio have so far been sold to local farming families.
Also highlighting the spending power of local farmers was the $120 million sale in January of the 16,500ha Gunnedah aggregation offloaded by the China Shenhua Energy Company. Twelve local farmers acquired the bulk of the property alongside one offshore corporate investor.
“What we have seen is a number of transactions where funds have done their jobs and aggregated properties to grow efficiencies and, when those funds have come to the end of their life, some of these aggregations have been broken up and sold back to multiple local producers,” said Col Medway, senior director at LAWD which handled the sales campaign for Proterra, Duxton and Laguna Bay Pastoral.
Mr Medway said while there was less transactional risk and complexity for fund managers to sell to one buyer, they were happy to take on multiple buyers because it was delivering the highest sale price and return to their investors.
On the buyer side, Mr Medway said local farmers were buying properties where significant capital had been spent on things like soil amelioration, water infrastructure and fencing “meaning the properties were in better order and far more productive than when they were first aggregated”.
Highlighting the current appetite of local buyers, CBRE Agribusiness managing director David Goodfellow said farming families (alongside corporate groups) were among those expressing interest in beef powerhouse Jimarndy Station at Clarke Creek north of Rockhampton in Central Queensland, which has just hit the market and is expected to sell for more than $55 million.
CBRE and Nutrien Harcourts are marketing the 17,368ha grazing property, which includes 16 km of Isaac River frontage, on behalf of the Simon family.
The latest forecasts from the Department of Agriculture (ABARES) is for the gross value of Australian Agriculture to hit $81 billion this financial, up from $64 billion in the prior year, which was also a record.
Alongside this bumper crop, farm cash income is projected to increase by around 34 per cent to average $278,000 per farm this financial year, putting local farmers, who have also seen the equity in their existing portfolios soar, in the financial position to expand their holdings.
However, despite local interest being strong, some large aggregations were still best suited to being sold as a single portfolio, Mr Medway said, highlighting the $580 million sale last year of Macquarie’s Lawson Grains to Alberta Investment Management Corporation (AIMCo).
“This is an example where we had an immense amount of local enquiry on individual properties in both NSW and Western Australia, however the most efficient transaction for the vendor in this case was to go with another institution,” he said.
