Centuria Agriculture Fund acquires A$21.5m South Australian horticulture facility

Real estate fund manager Centuria expects at least A$1 billion from its agricultural investment arm.

The P'Petual facility in South Australia produces tomatoes, cucumbers, eggplants and capsicums in greenhouses and glasshouses.

ASX-listed real estate investment manager Centuria Capital Group has acquired a A$21.5 million ($14.4 million; €13.2 million) protected cropping facility in South Australia, boosting its unlisted Centuria Agriculture Fund to A$351 million in assets under management.

The facility’s vendor, hydroponic vegetable producer P’Petual Holdings, will continue to operate it with the backing of Centuria.

This fourth acquisition for CAF – which launched at the start of the 2023 financial year – is made up of 6ha of greenhouses and 6ha of double-skinned plastic glasshouses within a 59ha property in the Adelaide Plains region, 38km north of Adelaide.

The facilities could produce 1,488 tonnes of tomatoes, 136 tonnes of cucumbers, 517 tonnes of eggplants and 43 tonnes of capsicums each year.

Centuria head of agriculture Andrew Tout said the open-end CAF had no set fundraising target, but that the firm expects it to grow to more than A$1 billion.

“We’ve got no set timeframes; we’ll do it as the right opportunities present themselves, and we’ll get there by making more acquisitions like this where we’ve got high-quality properties with a big focus on having the right operators investing in the right industries,” he told Agri Investor.

Tout said CAF aims to find “best-in-class facilities” that are unaffected by negative weather events and can produce all year round.

“Your typical outdoor production system is exposed to the elements and it’s also very seasonal, so your production periods are very limited.

“The main attraction to these [CAF] assets is continuity of supply and the ability for producers to produce a high-quality product with much lower inputs, therefore the efficiencies of these are significant.”

A win-win

Tout said the Adelaide Plains acquisition reflected CAF’s strategy of acquiring high-quality assets after rigorous assessment.

“All the assets have different attributes. They might be very similar to look at, but each of them requires full and proper due diligence in their own right.”

Typically, the fund’s assets continue to operate under the management of their vendor, who leases the facility from Centuria.

Tout said this model was a win-win for both Centuria and P’Petual.

“The reality is that glasshouses are very capital-intensive; they’re quite expensive to build.

“That’s one of the real benefits for our tenants – it allows them to operate under a capital-light model and have the capacity to expand when market demand is available.”

The deal has already produced one such result, with Centuria having submitted an application for an additional 4ha glasshouse, boosting P’Petual’s production space to 16ha.

Tout expected the completion of this development within the next two years.

This expansion aside, Tout said it will be “business as usual” for Centuria’s tenant.

“They’ll continue to do what they’ve always done, and we’ll work alongside them in whichever way is required to help them succeed.”

Agricultural expansion

Centuria Capital Group currently has A$21 billion in assets under management.

Tout said Centuria viewed its agricultural investments as an extension of its primary focus on real estate.

“The learnings of Centuria over the last 30 years are all being applied to the acquisitions that we make in the agriculture fund, so it’s a broader extension of the existing business.”

The Adelaide Plains acquisition is the fourth asset in Centuria’s CAF.

CAF’s first acquisition was the A$177 million Flavorite Warragul Glasshouse in Victoria from Flavorite, a business formerly owned by Roc Partners-managed funds. The asset has a 33.4ha glasshouse with 5ha of blueberries and a significant packing facility.

The second acquisition was the A$70 million Sundrop Farms in Port Augusta, about 270km north of Adelaide Plains, an energy-efficient 20ha tomato greenhouse that exclusively supplies Coles supermarkets, acquired from infrastructure asset manager Morrison.

The third asset was another 20ha tomato glasshouse in Guyra, New South Wales, operated by the Costa Group.

With 12ha of protected cropping, the Adelaide Plains asset is CAF’s smallest acquisition to date.