Australia’s Norman Farming Selling $100M Aggregations
September 12, 2017
Australia’s Norman Farming is selling its Kalanga and Mobandilla aggregations in southern Queensland with expectations that sale proceeds will exceed $100 million.
Located in the Border Rivers region, the two aggregations total a combined 18,028 hectares and have a production history of 40,000 bales of cotton per year, or more than 12 bales per hectare – output that surpasses the industry average, and earned Norman Farming the title of Australian Cotton Grower of the Year in 2010.
Kalanga was originally acquired by the Norman family in 1981, and since that time has been expanded through acquisitions bringing the property to 5,000 hectares of “highly developed flood irrigated” land, according to Australian Financial Review.
“No expense has been spared in the development of the Aggregations, which has significantly increased their productivity through expansion of land area and redevelopment of irrigation fields as well as the introduction of bankless channel irrigation and efficient water management,” Danny Thomas, CBRE Agribusiness regional director, and appointee to oversee the sale via international expressions of interest, told AFR.
The properties which are being sold include land, water licenses with a maximum volumetric limit of 71,170 megaliters, on-farm water storage, plant, equipment, and crops.
“The vendors have strategically acquired and developed a first-class asset of international significance,” said Thomas.
All in the Timing
The Norman family state that although they are decidedly not exiting the farming industry, now presents itself as a good time to sell its Kalanga and Mobandilla holdings.
The median value of Australian farmland increased by 9.3 percent last year, after a 5.3 percent increase in 2015 and a 6.8 percent increase in 2014, reflecting a consistent strength in value, according to Rural Bank and Rural Finance’s Australian Farmland Values report.
“Despite variable seasonal conditions and ever-changing commodities prices, the sustained growth in land prices not only reflects the resilience of the sector, but investor confidence in Australian agriculture’s growth prospects for the future, said Andrew Smith, Rural Bank general manager, agribusiness. “It’s clear from the report that you are likely to come out on top if you buy right and take a long term view when investing in agricultural farmland.”
Concurrent high-value activity in the sector is also signaling to the Normans that now is the time to move. In March of this year the Sustainable Agriculture Fund (SAF) portfolio was listed for sale by AgCAP, the fund’s manager with expectations of fetching A$180 million.
The SAF portfolio is comprised of 17 farms across Australia that are active in beef, dairy, cropping, and irrigated production which are organized into five aggregations:
~ The North Star Cropping aggregation in New South Wales that includes the Calrossie, Kirewa, Gil Gil, Marlow, and Glenesk properties which were acquired by SAF for $30 million in 2009.
~ The Cradle Coast aggregation in Tasmania that includes the Blythe, Vale, Ashburton, Midlothian, and Springvale properties.
~ The Victoria cropping aggregation which includes the cornerstone Fintry property acquired by SAF in 2011 for $13 million.
~The King Island beef aggregation, which includes the Boongara, Dinibili, Longford, and Reekara Park properties, which was acquired in 2010 for $27 million.
~ The Darlington Point irrigated cropping aggregation located in New South Wales that consists of the Tubbo Station and Huddersfield property.
Additionally, within the first week of this month, Hassad Food, a vehicle owned by Qatar Investment Authority, the Qatari sovereign wealth fund, announced its decision to sell its entire South Australia farming operations and another property in New South Wales that collectively total more than 10,000 hectares of prime cropping farmland.
Being sold is the Glendale aggregation in Clare, South Australia – a property totaling 2,236 hectares encompassing 12 semi-contiguous parcels, and Cummins/Ungara – a 7,106-hectare property including 11 dryland cropping parcels. A third property – the 8,560-hectare sheep holding station- Raby in New South Wales is also being sold.
Only days later, Australian beef processor Bindaree Beef announced it has sold a 51 percent controlling stake in the family-owned company to Hong Kong-Australian billionaire, Hui Wing Mau, and Beijing-based equity fund Archstone Investment for approximately $120 million.
Behind these big-ticket deals is the increasing interest from Chinese buyers. NPR reported in June that over the past three years, Chinese investment in Australia’s agriculture sector jumped three-fold from $300 million to $1 billion.
“We’re very excited about this agricultural boom that is starting to happen now, not only in the wine sector, but in so many agricultural industries,” said Mitchell Taylor, managing director of Taylors Wines. “And I really believe it’s due to having that access of being on the same time zone as China, and being able to provide that clean, green, positive image that Australia presents.”
The general uptick being seen for the country’s ag sector is also being recognized by investors looking for a home for patient capital.
“This will come as no surprise to those on the land,” noted Smith,”…but perhaps we’re getting to a point where the investment community is recognising what we’ve always known – there is a bright future in Australian agriculture.”
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