An institutional grade portfolio spanning close to 43,000 hectares across two states has hit the market with expectations of $400m.
Project Jaal is large scale livestock and broadacre cropping opportunity comprising 26,834 hectares in Western Australia and 16,097 hectares in Victoria.
It is being offered as a sale and leaseback opportunity by a significant unnamed Western Australian business, believed to be headed by a private high net worth individual living in Switzerland who owns other livestock and enterprises.
Selling agents from LAWD and accounting firm PwC, appointed to handle the sale of the geographically and climatically diversified mixed farm, were unable to disclose the vendor, but Grain Central understands it is Paul and Deidre Cowan who own Arkle Farms.
The Western Australian holding runs a 900 head Angus stud, a 2000 head commercial cattle herd and a 10,000 sheep, lamb and wool enterprise. It is currently growing wheat, barley and canola and is capable of producing more than 85,000 tonnes annually.
The Victorian country, reputed to be the largest contiguous holding in the state, is planted to cereals (wheat, oats and barley), legumes (lentils, lupins, vetch and chickpeas) and oilseeds (canola). It is capable of producing more than 60,000 tonnes annually.
The operation has an environmental and sustainable focus, with the management implementing sustainable and regenerative farming techniques across the two hubs.
LAWD director Danny Thomas said the sale and leaseback opportunity is a capital management decision.
“The vendor has aggregated the land and now wants to grow the portfolio by reinvesting the funds into more property purchases and developments.”
Mr Thomas said Project Jaal is being offered with a strong lease covenant.
“There is an attractive commencing rent of $16 million per annum (triple net) across the 43,000 hectares.”
According to Investopedia, “a triple net lease helps landlords reduce the risk of a commercial lease … where a tenant pays one or more additional expenses … including property taxes, property insurance premiums or maintenance costs.”
Mr Thomas said a four percent yield equates to around $400m.
“Over a 20-year period, a sale and leaseback deal is effectively 100 percent finance. A locked in four percent commencing yield would give an incoming purchaser more certainty than borrowing money from a bank.”
“The vendor is proposing a long weighted average lease expiry (WALE) with an initial 20-year term lease and two 10-year options, annual CPI-based rent reviews and market rent reviews every five years,” Mr Thomas explained.
Mr Thomas is confident inquiry will come from North American investment pension funds and family offices in Europe.
“Given the scale and quality of the holding, it would be great to see Australian super funds or Australian high net worth families involved in the sale. The attraction would be investing in a significant amount of agricultural land without the operating risk.”
Project Jaal is being offered for sale by expressions of interest closing July 6.