Property

Property: CPC buying VRD’s Bunda Station for $15m

Beef Central, 01/12/2014

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Consolidated Pastoral Company has confirmed it is in the process of buying Victoria River District grazing property, Bunda Station for about $15 million.

The 180,000ha Northern Territory cattle property owned by the Reg Underwood family sits adjacent to CPC’s Kirkimbie Station on the Western Australian/NT border.

CPC chief executive Troy Setter confirmed the move to buy the property to the Financial Review, which published an item this morning. CPC has leased Bunda at different times in the past.

“We are in the final stages of due diligence and it is under contract,” Mr Setter told the Financial Review. “This purchase will give us a property with major scale in the Victoria River District.”

The purchase of Bunda Station reflects the strategy of the company to beef up its property holdings and quality of cattle. Indonesian government selectors from Sembawa Breeding farm, Sumatra, Indonesia, selected 200 heifers from Bunda Station this year to be exported to Indonesia. The heifers were flown to Indonesia in a deal between the Indonesian government and Brisbane-based exporter Lembiru Livestock.

Bunda Station is currently owned by the Reg Underwood family, brother of John Underwood, whose family sold adjoining Inverway and Riveren Stations to Indonesian group Japfa, also known as Santori, last year for about $35 million.

Bunda Station was passed in at auction in 2012 after bidding closed at $10 million, in the depths of the live export crisis. This week’s announcement is another sign of improving property conditions in the northern cattle industry.

CPC is the nation’s second largest beef producer after AA Co, controlling 19 properties across Australia’s top end covering more than 5.6 million hectares. The company delivered a $26 million loss for the full year to March 2014, down from a $14 million profit the year before. The result was principally due to the drought of 2013 and higher operating costs.

The company’s leasehold properties slipped in value from $311 million to $295 million, according to accounts filed with the corporate regulator. Freehold land value was unchanged at $93 million.

Mr Setter told the Financial Review that the company’s private equity owner – London based Terra Firma – was committed to the beef industry and that further value could be developed out of the company.

Herron Todd White valuer Frank Peacocke told the Financial Review that the recent sales activity in the north and the fundamentals in the cattle business had increased competition for stations.

“At this stage there are at least five and possibly as many as nine stations throughout the NT and Kimberley that are reportedly either done deals or in the final stages of negotiation.

“We won’t know what impact their ultimate sale prices will have on the market’s perception of where values sit until these deals are consummated and the sales thoroughly analysed,” he said.

“However, there is clearly some competitive tension starting to come back again and maybe influencing prospective purchasers in their bidding.”

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