Milltrust Agricultural Investments, the agri division of UK- and Singapore-based Milltrust International, has acquired a pair of neighboring dairy farms in the first foray of its Australia Buy & Lease Fund in the sector.
With this transaction, the open-ended vehicle has now bought three Australian farms in as many months, and seven assets in total. As of end November, MAI had raised $80 million for its Buy & Lease strategy, which also covers New Zealand.
Invergelly and Taminga, as the firm’s latest purchases are named, are located near Finley in the Southern Riverina district of New South Wales, “a region recognized for its superior soil types, access to reliable irrigation water and history of consistent productivity,” MAI said.
Geared to expand
Invergelly hosts a broadacre irrigated dairy farm, while Taminga provides additional irrigated support land to expand the milking platform. Together they account for 550 hectares of laser-levelled pastures.
The dairy herd, which will be retained under the ongoing lessee relationship, was the highest-producing jersey herd in Australia in 2013, according to MAI. The firm intends to develop the assets by building a calf rearing shed and feedpad as well as integrating the two farms through crossings and laneways.
Griff Williams, MAI’s chief investment officer, described the investment as a “a carefully structured entry for the Fund into the Australian dairy sector.”
The properties will also be able to rely on additional water rights, purchased to allow for an increase in cow headcount and production. Taken together, MAI forecasts, development initiatives will enable total output to reach 6.5 million liters in the coming season.
MAI launched its Buy & Lease strategy in June 2016. As of November, its largest LP was the Royal Borough of Windsor. Its investor base counts a number of UK local authority pensions, including the Berkshire Pension Fund, which committed £30 million ($42 million; €34 million) last year.
The firm is also in talks with sovereign wealth funds and family offices, Williams told Agri Investor last fall, adding that the investment process and portfolio construction implemented within the funds can also be delivered as segregated accounts.
The Buy & Lease Fund is open-ended and managed in local currency. LPs are required to commit for a minimum of 10 years, according to MAI documents. It does not involve a management fee; instead a 15 percent fee is levied on lease income, and a carry of 15 percent – subject to a 5 percent hurdle – paid when assets are sold.
Last November, the vehicle bought Lurline North, a 1,965-hectare mixed-cropping farm in Queensland. The same month, it also emerged that MAI was considering expanding its Buy & Lease strategy to Latin America and “very closely” looking at a portfolio of assets to seed a dedicated fund.