AN INSTITUTIONAL-grade portfolio spanning close to 43,000 hectares across two states has hit the market with price expectations of $400 million.
Project Jaal is large-scale broadacre cropping and livestock opportunity comprising 26,834ha in Western Australia and 16,097ha in Victoria.
It is being offered as a sale-and-leaseback opportunity by a significant unnamed WA business, believed to be headed by a private high net worth individual living in Switzerland who owns other grain and livestock
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 WA holding is currently growing wheat, barley and canola and is capable of producing more than 85,000 tonnes of grain annually.
It also runs a 900-head Angus stud, a 2000-head commercial cattle herd and a 10,000 sheep, lamb and wool enterprise.
The Victorian country, reputed to be the largest contiguous holding in the state, is planted to wheat, oats, barley, lentils, lupins, vetch, chickpeas and canola, and is capable of producing more than 60,000t 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 was 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 43,000ha.”
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 equated to around $400M.
“Over a 20-year period, a sale-and-leaseback deal is effectively 100pc finance.
“A locked-in 4pc 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.