Deals

Duxton Broadacre Farms buys A$15m South Australia mixed property

The listed vehicle has purchased the farm to give its portfolio greater geographical diversification.

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ASX-listed Duxton Broadacre Farms has completed the purchase of a mixed-farming property in South Australia.

The firm acquired the 1,980-hectare Boorala property for A$15 million ($10.8 million; €9.6 million), funded by A$10 million of bank debt and A$5 million of cash on deposit.

Boorala is located close to South Austraila’s border, near Naracoorte, and represents Duxton BF’s first move into the region. It already owns an aggregation of three properties in New South Wales covering 19,4645 hecatres and this latest acquisition will help mitigate risk through geographic diversification, portfolio manager Will Brennan told Agri Investor.

“It makes sense for us, as developing geographical diversity is a key risk-mitigation strategy,” Brennan said.

Duxton considers land in this region to be mispriced relative to both global and domestic land values, Brennan said, and, while it is not Australia’s cheapest farmland in absolute terms, higher productivity and increased reliability underpin the value proposition.

The property currently runs approximately 3,000 ewes as well as growing crops, with Brennan saying that Boorala will likely be increasingly weighted towards cropping over time.

Brennan said Duxton BF was on the lookout for further opportunities in the region around Boorala, as well as close to its existing aggregation in New South Wales.

“We’re looking to continue to scale and geographically diversify, provided we are confident opportunities are appropriately valued,” he said.

The firm would also look at developing the property’s irrigation capability, he said, to generate higher and more reliable crop yields.

Duxton Broadacre Farms bills itself as the only listed vehicle in Australia providing investors with direct access to grain production.

Its net asset value as of 30 June 2018 was $74.263 million, or A$1.71 per share. Its investment portfolio was valued in June 2018 at A$68.2 million, an increase of 16.91 percent from valuations in 2017.