September 1, 2017

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.

Behind the move to sell is the strategic decision by Hassad to restructure its Australian portfolio away from pure-play agricultural production to one that will include more value-added investments along the sheepmeat and grain supply chains, and the creation of an export business, according to AFR.

“The sale of the Cummins/Ungarra and Glendale aggregation will allow us to rebalance our portfolio by further diversifying and strengthening our Australian operations, and providing an opportunity for the production, processing and marketing of premium agricultural products,” Hassad Managing Director McKillop told the Weekly Times.

However, despite how it appears, the decision does not indicate that Hassad is limiting or reducing its commitment to Australian agriculture, but instead reflects a rebalancing of focus.

“In no way does this change in strategy represent any sort of withdrawal or downscale of Hassad’s investment in, or commitment to, the Australian agricultural sector which, as we know is one of the strongest and most sought after in the world,” McKillop told AFR.

Large Scale Interest

Both South Australian aggregations are being sold through expression of interest campaigns, with Elders managing the sale of Cummins/Ungara and CBRE managing the sale of Glendale. And with the scarcity of large-scale farming properties coming to market in South Australia due to the fragmented nature of the market, widespread interest is being expected from both Australian and overseas bidders.

The Cummins/Ungarra aggregation is expected to receive significant interest from domestic and foreign corporate buyers seeking large scale farmland investment opportunities, together with significant local operators looking to expand their operations and achieve further economies of scale,” Tom Russo, real estate general manager with Elders, told the Weekly Times.

Additionally, the sale creates the ability for a buyer to enter a highly-sought after agricultural region where properties often remain in family ownership for generations.

“The mid-north is one of the state’s most tightly held cropping regions, with the majority of operations held by third, fourth and fifth generation farming families and it is anticipated this opportunity to acquire a substantial presence in the region will attract strong interest,” Phil Schell with CBRE said.

The sale of Raby Station, which has extensive frontage on the Macquarie River and includes 385 hectares of developed irrigated land and 2,560 hectares of cultivated dryland, will be managed by Trevor Wilson and Phil Rourke with Landmark Harcourts.

“The successful purchaser will acquire one of the Central Western NSW region’s premier rural agribusiness enterprises which has been a significant part of Australian agricultural history and offers the opportunity to undertake a variety of agricultural pursuits,” Wilson told AFR.

Sale Upon Sale

The announcement of Hassad’s exit from its South Australian farming portfolio and the sale of Raby Station in New South Wales are the next steps resulting from a review of Hassad Australia’s $469 million farming company.

Amid the restructuring, Hassad announced only last month that it had agreed to sell its Clover Downs Station located in Queensland, Australia to farmer Bill Zell for $27 million.

Originally acquired by Hassad Australia from Clyde Agriculture in 2010 for $18.5 million, the 125,000-hectare Clover Downs is operated as a large-scale sheep breeding hub, and is one of 13 Australian properties in Hassad Australia’s portfolio, that spans the states of New South Wales, Queensland, Victoria, Western Australia, and South Australia.

This is the second asset sale for Hassad Australia, following the sale of the first property the company bought in Australia – the 2,632-hectare Kaladbro Station – to Tom and Pat Brinkworth in a deal reported to be valued at more than $20 million.

Dry weather has been a challenge for Clover Downs since its addition to Hassad’s portfolio in 2010, and the company has stopped exporting sheep out of Portland Kaladbro, prompting the company to divest.

“We believe the property is no longer strategic to the company,” John McKillop, managing director at Hassad Australia, told AFR last month. “And going forward we will focus our attention on downstream operations such as marketing and processing.”

-Lynda Kiernan