November 28, 2017

TRT Pastoral Co., headed by Victorian businessman Tim Roberts-Thompson, has agreed to acquire the King Island Aggregation from the Sustainable Agriculture Fund (SAF) for $45 million.

Consisting of 6,785 hectares (16,800 acres), the King Island aggregation includes the Boongara, Dinibili, Longford, and Reekara Park stations running 5,300 lead of Lawsons-blood Angus cows, according to Beef Central.

AgCAP, the manager of Australia’s Sustainable Agriculture Fund (SAF), decided to list the SAF portfolio in March of this year when after seven years as cornerstone investors – a collection of Australian superannuation funds including AustralianSuper – made the decision to exit the fund.

The collective move placed AgCAP in the position of listing the fund’s portfolio of agricultural assets on the market with expectations of fetching A$180 million for the properties.

The decision to sell remained in place even after the SAF posted full-year returns of 18.7 percent in August, as a result of strong cash returns and capital appreciation, with net farm profits (not including capital appreciation) coming in at $9.8 million – compared to $8.8 million for the previous year – reported AFR. These results mark the fourth consecutive year of climbing net cash profits for SAF.

“Growth in profits and farm net profit margins year-on-year is no accident. It is directly related to our pursuit of productivity and efficiency gains in every facet of our portfolio,” Deo de Jesus of AgCAP told AFR.   

When listed in March, the course the sale was to take was being viewed with a flexible eye by AgCAP, which remained open to the possibility of a deal either for the entire portfolio, or various deals for certain assets.

“We understand that there will be some parties that will be interested in individual assets, while there will be others that are interested in the fund as a going concern,” said de Jesus in March.

As it turned out, there were parties that placed bids for the entire portfolio, though these were not able to compete with the combined bids for specific assets.

In September, TIAA Global Agriculture Properties acquired 10 of the 17 properties making up the SAF portfolio, totaling 16,000 hectares across New South Wales, and Victoria. Its asset manager, Westchester Agricultural Asset Management, also maneuvered to establish numerous deals with local farming businesses in regard to the operation of the properties.

Included in the sale were:

North Star Aggregation – Purchased by SAF in December 2009, New South Wales-based North Star encompasses five properties totaling 9,710 hectares (23,994 acres) of rainfed cropland growing winter crops including wheat, barley, chickpeas, sorghum, and cotton.

Darlington Point Aggregation – Purchased in October 2010, and also in New South Wales, Darlington Point totals 4,926 hectares (12,172 acres) of irrigated and rainfed cropland growing wheat, barley, maize, cotton, chickpeas, sunflowers, and vegetables.

Western Victoria Aggregation – Purchased in January 2011, Western Victoria is located in the state of Victoria, comprised of three non-contiguous parcels totaling 5,425 hectares (13,405 acres) of rainfed cropland growing wheat, barley, and canola.

At the time in late September, AgCAP, together with listing agent, CBRE, expected to make a further announcement in the near future regarding the potential sale of the balance of the portfolio which included the King Island Aggregation, and the Cradle Coast Aggregation, which remains on the market.

King Island will be integrated into TRT Pastoral’s existing cattle holdings that include the 33,700 hectare Juanburg property, which TRT bought from Twynam Pastoral in 2007 for $10 million, and Howquadale Station, a Poll Hereford breeding property in Victoria.

The $45 million unconditional cash bid from TRT beat out rival bids from a group of King Island cattlemen who were looking to split the property between them, and two additional bids from overseas parties. In the end TRT beat the field to acquire the aggregation that includes all cattle and plant, and which has proven to be a high-earner for SAF over the course of its ownership, returning 12 percent per year for seven years, with half of those returns allocated to income.

-Lynda Kiernan