RFM Gulf aggregation with carbon potential likely to make circa $50m

Beef Central, 20/05/2024

Brahman cattle on Mutton Hole

A large Queensland Gulf Country grazing aggregation has been put to market by its institutional investor owner, with a strong emphasis placed on carbon opportunities.

ASX-listed farmland trust Rural Funds Group is offering its Mutton Hole and Oakland Park aggregation, a 225,000ha breeding holding with conditionally registered Carbon Sequestration Projects, in the heart of the Gulf of Carpentaria near Normanton.

Price expectations are around $50 million on a walk-in, walk-out basis.

The component holdings include Mutton Hole (140,300ha) and adjoining Oakland Park (85,500ha), 15km from Normanton and extending to within 45km of Croydon, to the southeast of Oakland Park.

In 2016 the properties, alongside the 17,500ha central Queensland showcase cattle finishing property Rewan, were purchased by Rural Funds Management as part of a $50 million three-property investment (including stock) representing its first foray into the Australian cattle industry.

A wholly owned RFM subsidiary, Cattle JV Pty Ltd, bred cattle at Oakland Park and Mutton Hole, before transporting them to buffel grass backgrounding property Rewan, near Rolleston for finishing.

The subsequent lease of Rewan to the Australian Agricultural Co for its Wagyu cattle operations has removed the need for RFM to retain the breeding properties.

“The Gulf breeding properties were initially acquired as part of an integrated operation to supply weaners to a finishing property which has since been leased to another company,” RFM chief operating officer Tim Sheridan said.

“This, coupled with the completion of our originally identified productivity improvements, has led to an ideal opportunity for a walk-in walk-out transaction.”

Last June, RFM bought the Caldwell family’s 18,500ha Wyseby station, neighbouring Rewan, as a tenant-in-common arrangement (57.25pc ownership) for $37 million.

LAWD and Queensland Rural are handing the expressions of interest process in the Mutton Hole aggregation.

Enjoying an excellent season, the holdings have breeding and backgrounding capacity of 17,600 Adult Equivalents.

Conditional approval to generate carbon credits under the Mutton Hole and Oakland Park Regeneration Projects, has been gained, utilising the Human Induced Regeneration (HIR) methodology. Initial desktop assessments indicated that the projects may yield up to 1.25 million ACCUs over a 25-year crediting period. Future crediting opportunities may also exist for these properties under the newly legislated Federal Nature Repair Market.

The assets are watered by 140 dams, sub-artesian groundwater bores and further natural water resources, capable of supporting a large-scale livestock operation, and Benefits from an efficient network of paddocks and laneways, as well as numerous smaller holding paddocks.

Capital expenditure projects in recent years have focused on livestock handling facilities, water infrastructure, fencing, pasture improvement and accommodation.

Mutton Hole fronts the Norman and Carron Rivers and the Wills and Walker Creeks, while Oakland Park fronts the Carron River and Footes and Green Creeks, with more than 140 earth dams and numerous tanks and troughs across the properties.

Handling the sale of the Mutton Hole aggregation for LAWD are Grant Veivers and Simon Cudmore, and for QLD Rural, Troy Trevor and Peter MacPherson. Expressions of interest close Monday 1 July.


About RFM

RFM currently owns 23 cattle property and feedlot assets across Queensland, New South Wales, Victoria & Western Australia, encompassing 717,434ha of breeding and backgrounding land, and 150,000 head feedlot capacity. The assets were valued in December at $696.2m. Lessees of properties and feedlots include Mort & Co, Stone Axe Pastoral, JBS Australia, Camm Agriculture and the Australian Agricultural Co.

In its half-year result announced in February, Rural Funds Group announced:

  • Property revenue increased 12.4pc, or $4.6 million, to $42m.
  • Earnings increased 19.5pc, or $11.6m, to $71m driven by property revenue and asset revaluations
  • Adjusted net asset value increased 4.8pc, or 14c per unit, to $3.07 per unit benefiting from independently revalued assets, primarily in the cattle and macadamia sectors.
  • Asset revaluations contributed $72.2m to adjusted NAV.
  • Adjusted funds from operations (AFFO) 4.0 cpu, and forecast to be higher in the second half.

The RFG stock was trading at $2.03 on the ASX on Friday, down from a recent high of $2.22 in early February.

The company told the market at its half-year in February it was in the documentation phase of a proposed transaction for two cropping properties – Mayneland and Baamba Plains – with a combined value of $73.6m. The proposed transaction involved a 50pc sale of the properties to an operator and the operator will lease 100pc of the properties. If a binding agreement is reached, the transaction is expected to settle during the second half.





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