Cattle on Tanbar Station in Queensland’s channel country after flooding. Accountants Bentleys sold the property last year on behalf of Western Grazing as part of a deal worth +$130 million to Paraway Pastoral Co.

IN A space traditionally occupied by pastoral houses and specialist property marketers, a new trend is emerging for investment advisors, accountants and legal companies to move into marketing of rural property.

Gabriel Passmore is an agribusiness consultant with Sydney-based advisory firm Chapman Eastway – a long established advisor to the Australian agricultural sector – with a particular focus on farming and livestock grazing businesses.

Mr Passmore said he had seen an increasing number of advisors, lawyers and accountants selling, or attempting to sell, more complex agricultural property assets. The trend was particularly evident in the cattle property segment of the market.

Recent examples include:

Bentleys – an international network of business advisors and professionals that provides accounting services, audit and assurance, business advisory, cloud solutions, corporate recovery, financial planning, superannuation advice, trusts and estates planning, and taxation consulting.

• In May this year, Bentleys sold the 678,000ha breeding property Rocklands near Camooweal on the Barkly Tablelands and 1.02m ha Tanbar in the Cooper Creek Channel country of south-western Queensland for vendor, Pam Deamer of Western Grazing to Paraway Pastoral for between $130-$140m.
• Bentleys is currently selling some of the best developed breeding properties on the Barkly Tablelands of the Northern Territory, the 1.05m ha Mungabroom and Beetaloo aggregation.
• Bentleys acted in the Australian Country Choice/Acton Land & Cattle Co joint venture property and cattle deal negotiated in July last year
• The company also provided the marketing connections that led to last year’s sale agreement between Canadian-backed Hewitt Cattle Co and Central Queensland’s Pegunny Pastoral Co. The deal was rumoured at the time to be worth at least $50 million

Ernst & Young – a multinational professional services firm headquartered in London, with offices in every capital city of Australia except Darwin.

• Ernst & Young is the marketing agent for S. Kidman and Co – the largest private landholding in the world comprising 10 working cattle stations spanning 11 million hectares.

Several large legal firms have also got in on the action, negotiating a number of large grazing property transactions for clients in the past two years.

Mr Passmore believes there are a number of reasons why the trend is occurring:

• Advisors, accountants and lawyers often already have an intimate knowledge of an existing client’s business and assets. As a result, a vendor may be more comfortable selling through them, rather than a specialist real estate agent.
• With more complex assets, there is a degree of financial literacy and business acumen that advisors, accountants and lawyers are able to offer investors, which they would argue is beyond a traditional property agency. For example, a sophisticated investor without in-depth agricultural knowledge can look at the financial metrics they are accustomed to, based on the numbers the vendor’s agents have devised, and have a good level of confidence around potential returns for the asset.
• Advisors and accountants often have an operational insight of asset both practically and financially. They can therefore put together exceptionally comprehensive information memorandum packages.
• Tax optimisation – Advisors can structure the transaction by understanding the affairs of both parties to achieve a better after tax outcome. For instance, where the vendor has tax losses the purchaser may want to dissect part of the purchase price towards depreciable plant.

The move into the marketing of properties appears to be blurring the lines between the functions of advisors, accountants and legal companies.

Mr Passmore believes conflict of interest is a distinct risk, in separating advisory and property marketing functions, for example.

“Real estate agencies are trying to push up into the advisor’s space, and the advisors are trying to push down into the agent’s space, so the functions are becoming blurred. But it is beneficial for a vendor to have so many options to market their property. Everyone has their different strengths and weaknesses,” he said.

He said in the end, it will come down to what a vendor thinks is the best option.

“Which is why, in some cases, they will go with a firm they’ve already dealt with, because they have a more intimate knowledge of what the end goal is for the vendor.”

Mr Passmore believes investment advisors, accountants and legal companies are attracted to large property transactions for two reasons:

• These companies argue that they have the vendor’s best interests at heart. They believe their confident and comprehensive approach secures their clients the best result.
• A commercial outcome, in what are often very substantial monetary transactions. The three aggregations listed above, for example, represent an asset value of well over $600 million.

Such moves are making the rural property marketing space even more crowded than what it currently is.

Mr Passmore said the number of real estate agents selling agricultural assets has also increased dramatically.

“A decade or so ago, there were really only two main players – Landmark and Elders. Today, there are many more niche marketers selling agricultural assets trying to secure market share. For instance, seven years ago CBRE and Colliers didn’t sell agricultural assets in Australia. Now they are, and are taking significant market share from conventional property agency.”

Mr Passmore believes the real estate marketing industry is becoming more competitive, as a result.

“Agents are becoming more competitive with their fee structures and value proposition. However, agents have fixed costs – in terms of their office space and staff – that need to be met. So they can’t drop their price too low to the point where they are just breaking even.”

He said there may be a number of attractions for the vendor in choosing to market through a lawyer, accountant or advisor.

• Someone who already knows their asset intimately, particularly in terms of the financials, can add a degree of comfort to their selling.
• A better price because an accountant, lawyer or advisor may know their asset so intimately, that they are able to structure an information memorandum or a package that gives buyers the comfort to extract their highest willingness to pay.

Mr Passmore believes the trend will continue, but whether these new players in the property space will capture more market share remains to be seen.