Primewest eyes float of $350m farmland trust

Primewest had originally targeted an asset size of $100 million for the agricultural fund but “given the opportunities available in the market” has increased that mandate to $350 million.

“Primewest will also explore the potential to list this fund on the ASX in due course,” the fund manager said.

The proposed REIT would fill a void left by the pending sale of the already-listed Vitalharvest Freehold Trust, owner of berry farms leased to Costa Group, which Primewest took charge of last year as its manager and biggest shareholder.

Primewest intended to use Vitalharvest as the platform to establish a Long WALE-style diversified farmland REIT with a focus on horticultural investments.

However, those plans were scuppered when Macquaire’s property arm lobbed a $300 million cash bid for Vitalharvest, which with the support of Primewest, is expected to be finalised in the coming months.

“We’ve identified quite a few properties that would have gone into Vitalharvest that will now go into the unlisted fund,” said Primewest managing director David Schwartz, who has spearheaded the $4.9 billion fund manager’s push into the farmland sector.

Mr Schwartz said the focus was on acquiring mainly intensive farming properties in the horticultural and cropping sectors on long-term sale-and-lease backs.

Around $65 million of farmland assets are under contract with the timing of the IPO dependent on the trust achieving sufficient scale.

The trust already owns $47 million of assets, including the Lamattina family’s Mornington Peninsula vegetable farms, which it acquired for $42 million in a sale and leaseback deal in June last year.

A future float of the Primewest agricultural trust would give equity investors an alternative entry point into the farmland sector.

Australia’s only listed rural property fund of scale is Rural Funds Group, which owns about a $1 billion of assets spread across almonds, cattle, macadamia, wine grapes and water.

Alongside its investment in rural assets, Primewest is also aiming to acquire $150 million of assets over the next 12 months for its open-ended property income fund, which mostly invests in direct property. The fund has been seeded with three childcare centres under contract for $30 million.

The fully-underwritten $55 million equity raising comprises 43 million new Primewest shares offered at $1.27 each – a 5.9 per cent discount to Wednesday’s closing price of $1.35.

Primewest also announced full-year distribution guidance of 5¢ per security.

The fund manager added $400 million of assets over the six months to December, growing its total book to $4.9 billion.