AAM Investment Group lists institutional-grade Sunshine Farms Aggregation for sale

AAM Investment Group has put its Sunshine Farms Aggregation on the market as it repositions its portfolio geographically.

Sunshine Farms is an aggregation of five farms near Forbes in western New South Wales, comprising 14,074 hectares of irrigated and dryland cropping and grazing land. The holdings also come with a combined 14,766 mega-liters of water entitlements. All the individual farms are located within a 25km radius.

Agri Investor understands that the aggregation is expected to fetch upwards of A$90 million ($58 million; €53 million).

The assets were the first strategic land and development acquisition made by AAM’s Diversified Agriculture Fund in January 2020, and the firm subsequently undertook extensive development to improve the value and productivity of the assets, particularly through the development of irrigation.

The aggregation draws on 11,556ML of general security water entitlements from the Jemalong Irrigation Scheme; 2,050ML of Lachlan River general security water entitlements; and 1,160ML of Upper Lachlan Alluvial groundwater, supplemented by 300ML of on-farm storage.

AAM has grown a range of crops across the aggregation, including cotton, wheat, barley and faba beans, as well as growing fodder to support livestock and wool production.

Speaking to Agri Investor, AAM managing director Garry Edwards said the firm was selling the assets as it repositioned its “lamb supply chain” to focus more on northern New South Wales and areas further north.

“With the acquisition of an asset near Tamworth, Sunshine Farms is now less integral to our lamb supply chain. Given that, and the water entitlements that come with it, we think it is a good time to test the market,” he said.

Edwards said the addition of water entitlements would be “significant” in attracting interest, as the development of irrigation infrastructure by AAM ensured the assets were highly productive.

On land values and whether they will hold up in a world of rising interest rates, Edwards said: “In my experience, quality land assets are still appreciating in value. The productive assets, particularly those with water entitlements, will perform well.”

Edwards said no decisions had been made about what would happen with the capital raised by the sale, with the prospect of a return to investors on the cards, but added: “We expect to still be in expansion mode over the next couple of years.”

The sale is being overseen by LAWD, whose senior director Danny Thomas said: “By aggregating those assets and making them more efficient, AAM has created institutional appeal.”

Thomas added that, while the aggregation has been listed as one asset for sale, AAM will listen to offers for the farms on an individual basis, with interest already coming from local players in the market.

Expressions of interest for the aggregation close on October 5, 2023.

Other assets in the AAM Diversified Agriculture Fund portfolio include its beef cattle and sheep operating company, Australian Livestock Company, which runs livestock on the which runs livestock on the approximately 135,260 ha Terrick Terrick Aggregation; three softwood timber businesses in New South Wales, South Australia and Queensland; and a minority stake in AAM’s own Southern Cross Poultry Fund.

AAM held a first close for ADAF in December 2019 on an initial A$60 million, topping it up in mid-2020 to reach A$100 million before a further raise later in the year. The firm was back in the market raising further capital in 2022.