July 1, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

Australian listed property fund manager Primewest has recently completed a sale and leaseback deal for Piscioneri Farms – a citrus and table grape operation in Sunraysia, Victoria, confirms Smith Agri International, which managed the transaction. 

Consisting of approximately 93 total acres, of which 84 are planted, the sale of Piscioneri Farms, which brings with it “extensive water rights and modern infrastructure”, was conducted on an “off market” basis.

The terms of the deal result in ongoing management services for Piscioneri, and a long-term lease arranged with Montague Bros., which will serve to create a dedicated supply of citrus and table grapes to Montague’s new $66 million Narre Warren processing facility.

Off Market Deals

It was just in April of this year that Centuria Capital entered into a bid implementation deed (BID) with Primewest for an off-market takeover offer for Primewest for A$600 million (US$462.5 million). 

If all conditions are met, once the transaction is complete the merger of the two complementary investment platforms will result in a single entity with AUM exceeding A$15 billion (about US$11.7 billion), and will position the new merged group for index inclusion on the S&P/ASX200 with a market cap of A$2.2 billion (US$1.7 billion). 

It has also been recently reported that as the two parties move closer to completion of the merger deal, Centuria Capital is gathering 12,000 investors for the business. 

“In the past if you look at either Primewest or Augusta or Centuria, if we bought a $100 million or a $120 million property that has pretty well tapped out most unlisted retail players,” John McBain, co-CEO, Centuria Capital told AFR. “Well, we’ve doubled that [scale of acquisition] just as an opening salvo. We’ll be doing much more of that.”

Only months earlier, in February of this year, Primewest more than tripled its funding target for its newly launched Primewest Agricultural Trust No 1 to A$350 million (US$268 million), and stated it may list the fund, but did not specify a timeframe for such action. 

The move followed the launch of an A$55 million (US$41.75 million) equity raising, which was also surpassed, earning A$60 million (US$45.5 million) to be used by Primewest to fund key investments made by its unlisted agricultural trust, which was to possibly act as the starting point for Primewest’s proposed REIT, and another of its property income funds.

Primewest entered the Australian agricultural space in April of last year with the launch of its inaugural ag investment fund with an initial funding target of A$100 million (US$76 million) and its first ag acquisition. 

Already with a presence in commercial, industrial, retail, residential, and tourism, Primewest launched the Primewest Agricultural Trust No 1 to “provide Investors with an opportunity to acquire high quality agricultural investments leased to strong tenant covenants well positioned to benefit from the anticipated improvement in the Australian agricultural Industry,” according to the firm’s website. 

This newly established trust deployed its first capital, paying A$4.8 million (US$3.13 million) for “Pinegatta” in New South Wales. Located in the Riverina region, the 425-hectare (1050-acre) Pinegatta has been growing carrots and potatoes, supplying PepsiCo subsidiary Smith Snack Food Company. With the acquisition, Primewest has entered into a lease agreement with Kagome, the largest tomato producer in Australia.

Only two months later in June 2020, Primewest agreed to acquire GoFARM Asset Management Pty Ltd – the manager of Vitalharvest Freehold Trust in a A$10 million (US$7.47 million) deal.

 Through this deal, Primewest also acquired an 11.8 percent stake in Vitalharvest Freehold Trust (VFT), and a further first right of refusal over another 6.2 percent in the externally managed real estate investment trust (REIT) that holds a portfolio of properties valued at about $275 million with a market capitalization of approximately $143 million. It is also, notably, the owner of the largest berry and citrus farm aggregation in Australia, which is 100 percent leased to Costa Group, one of the country’s largest horticultural companies.

However… by November of last year, global alternative asset manager Macquarie Infrastructure and Real Assets (MIRA) announced that one of its managed agricultural funds had made a cash offer of A$300 million for Australian REIT Vitalharvest Freehold Trust (VTF). 

Since MIRA’s original bid, a new player entered the ring. ROC Private Equity stepped up, making a rival bid of A$314.8 million (US$245 million) for Vitalharvest, placing MIRA in the position of having to raise their bid. 

This certainly put pressure on MIRA. However, its position isn’t completely threatened. Costa and MIRA are no strangers. Costa has existing relationships with MIRA via its leasing of multiple avocado farms from the manager, structured as fixed rental agreements over a 20-year time period.

After a period rife with tension, MIRA succeeded, beating out ROC only days ago with an offer of A$1.33 per share (A$357 million / US$267 million) for VitalHarvest.

– Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Oilseed & Grain News. She can be reached at lkiernan@globalaginvesting.com.