Property

Winton’s Baratria listed at circa $28m, after EOI campaign fails to find a buyer

Jon Condon, October 7, 2020

The Baratria aggregation is estimated to have a sustainable carrying capacity of 9000 head.

LARGE-scale northwest Queensland grazing aggregation Baratria has been listed privately for offers around $150/ac – representing a bare value of above $28 million – after an expressions of interest campaign last month.

A number of formal expressions of interest were submitted by the September 17 deadline, mostly from large-scale family-run grazing operations already present in the region, with ongoing discussions being had with these groups.

As evidenced by the yards photo below, dry local conditions created headwinds during the EOI process. A change in the season might be all that is required to deliver a deal, agents believe.

“Interested parties are continuing to ring us, even after the EOI campaign was completed,” marketing agent, JLL’s Geoff Warriner told Beef Central. “We think the level of interest will surge again, once the season breaks,” he said.

Last year’s wet season across the region was short and late, leaving the 78,000ha (190,000ac) downs country holding with a body of short, dry feed, after being only lightly stocked this year.

“While it is dry, condition-wise Baratria is in really good shape, because it has been only conservatively stocked by the Teys Family,” Mr Warriner said. “It means the holding is well-positioned to respond extremely well, when it rains.”

Yards infrastructure on Baratria, showing the current dry season

JLL’s Geoff Warriner and Chris Holgar in conjunction with Wally Cooper of RPL, have listed Baratria for private sale, following the EOI campaign.

As reported earlier, prominent Australian meat processors, the Teys family, decided this year to sell Baratria, after almost 30 years of ownership.

Located between Longreach and Winton, the extensive downs country property is an aggregation of three separate pastoral landholdings – Baratria, Hartree and Clyde.

It was marketed as a turnkey investment and an opportunity to acquire a large-scale pastoral enterprise in the highly-regarded Winton region.

The aggregation is not part of the Teys Australia joint venture processing business with Cargill, but is held under a separate Teys family company. The family bought the original Baratria portion in 1992, following their earlier acquisition of Sedgeford, near Alpha, from Sir William Allan. Adjoining Hartree and Clyde were added to Baratria later, creating one of the larger aggregations in the Winton district.

About 80pc of the country is typical open Mitchell and Flinders grass downs, with the balance mostly broken channels.

Baratria has been used for a variety of purposes over the years, primarily breeding EU-eligible feeder cattle for the Teys feedlot at Condamine, or for oats-finishing at nearby Miamba. It has also played a supply chain role for the Teys Grasslands certified grassfed brand program.

The growing demands of day-to-day management of the Teys Australia processing business across three states has made it harder to focus on the cattle operations at Baratria, leading to the decision to divest, Beef Central was told at the time.

“The diversity and flexibility of Baratria lends itself to being used as a large-scale breeding enterprise for producers with fattening properties further to the east, or alternatively, a large-scale backgrounding enterprise for larger producers to the north and west,” JLL’s Chris Holgar said.

“Due to its scale, location, level of development and favourable pasture and soil types, Baratria is likely to find a buyer among existing industry participants seeking expansion of an existing supply chain, or investors seeking a high-quality, viable standalone enterprise,” he said.

“Having undergone practical development and conservatively stocked over the past 28 years, Baratria is a turnkey opportunity with quality infrastructure, an abundance of water and available pasture.”

Located 50km east of Winton, the property is bisected by the Landsborough Highway, a major thoroughfare for northern beef producers to access eastern markets.

The aggregation is estimated to have a sustainable carrying capacity of 9000 head. It is currently running about 3000 head, which can be negotiated separately.

One option open to a syndicate of buyers would be to divide the holding into several parcels of more serviceable size and value. Well-developed smaller holdings in the immediate area have sold in recent times for $155-$160/ac ($380-$400/ha).

 

 

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  1. Michael Vail, October 9, 2020

    I apologise for my ‘fat-finger’. That WIWO number should have read ‘$AUD24.0-million’ … not $20.2

  2. Michael Vail, October 8, 2020

    “Baratria” Station at Winton, Q’ld:

    It’s good solid pastoral grazing country, for the Winton District; with quality of assets, and scale is very important.

    Let us look to fundamentals …

    1) Sheep sustainable stocking-rate as a median in the Winton District, across a rolling 10-year cycle, might be around 1-DSE to 4-Acres (Blackall is around 1:3). So, multiply by 7-times to arrive at an AE beast. Thus true SSR for cattle might be around 1:28-Acres for the Winton District, in that location.

    2) Sustainable Carry Capacity across time is therefore around # 6,800-head, not # 9,000-head.

    3) If meat and land compound growth is around 3.5% and 2.5% pa respectively (across roughly 50-years), let’s us assume the expected farm-gate value per head sold, at around $1,400 each (at the limit). I’d suggest it’s below $1,200 atm.

    Therefore, the bare value is around $AUD9.5-million … (as improved) to carry around # 6,800-head of cattle … as a median average, year-in, year-out … therefore, a number an Investor may rely upon.

    Thus the implied Premium to Land Value (on a Bare, But Improved basis) being asked, is around 1.95-times, or close to 200% … and at around 3-times above fundamental-value of production.

    In my opinion, the Fair Investment Value (FIV) on a walk-in, walk-out (WIWO) basis, might be around $AUD18.5-million … plus a Premium for scale and quality of assets, at around 30%.

    Making a full value WIWO to pay at around $AUD20.2-million* (with LiveStock and Plant given-in) … at the Limit of ever expecting an economic ROIC over and above the WACC (an implied number I measure for that location, at around 21.2%pa).

    Investors must re-learn how to price Risk …

    And it’s all about the real cash-flows … at the farm-gate … across time.

    IMO 😊

    And then there’s ‘PRICE’ … and the Market is always correct on the day …

    Buyers set the market …

    Sellers merely offer, and ask.

    * Editor’s note: Michael Vail has since corrected an arithmatic error in this comment. See his additional reader’s comment comment above.

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