goFARM buys Aware Super portfolio for A$30m

Strong commodity prices and relatively cheap water make it a ‘good time’ to be an irrigated producer in Australia, goFARM’s Liam Lenaghan says.

Australian asset manager goFARM has purchased a portfolio of farms from Aware Super for approximately A$30 million ($20.8 million; €20.4 million).

The assets, collectively known as the Lake Boga portfolio, were managed by Kilter Rural on behalf of VicSuper, prior to the latter’s merger with First State Super to form Aware Super in 2020.

The portfolio comprises 38 farms in Victoria that cover 9,014 hectares of land across four aggregations, including 3,721ha of irrigated land.

It also includes one of Australia’s largest field tomato enterprises, a 50ha commercial Queen Garnet plum orchard, irrigated and certified organic land for producing cereals and tomatoes, a sheep grazing enterprise and 3,945ha of conservation and support land, much of which was marketed as presenting future carbon offset opportunities.

As part of the deal, goFARM purchased 8,167ML of low-reliability water entitlement mainly in the form of storage rights, which the asset manager said it believes “will only become more valuable to irrigated agriculture and horticulture under future climate scenarios.”

Aware Super has retained high-security entitlements that were originally acquired by VicSuper, thought to be worth more than A$100 million.

goFARM will retain the operation’s existing management team and on-farm staff.

Speaking to Agri Investor, goFARM managing director Liam Lenaghan said: “Having built portfolios ourselves, we recognize the time, energy and expense involved in pulling 38 properties together, and there’s been significant investment in infrastructure to convey and distribute water efficiently.

“To our mind, we’ve been able to buy that water infrastructure at below replacement cost, which is significant, particularly in an environment where cost escalation is rampant when you look at building new infrastructure. We also feel the large bundle of water storage rights are undervalued, and that under future climate scenarios, with headroom constraints in the Lower Murray, that they’re going to become a more prized asset. So, it made sense to back our view and also negotiate a significant bundle of allocation water too in addition to that.”

Lenaghan said strong commodity prices and relatively cheap water made it a “good time to be an irrigated producer” in Australia.

“It’s a complicated portfolio and production system as acquired, so our focus will be on simplifying that and the timeliness of execution. We will do less things, but more of those,” he said.

goFARM is also the process of selling an asset of its own, the Sandmount Farms aggregation, which is expected to fetch more than A$250 million. The firm built that aggregation through more than 70 separate land and water rights purchases since 2018.

Lenaghan said discussions over that sale were progressing, with a resolution expected before the end of 2022.