goFARM raises A$120m to redevelop Riverina assets

The developer’s latest acquisition in the Murray-Darling Basin includes a vineyard it wants to replace with almonds, and significant water entitlements.

Australian agricultural investor and developer goFARM has raised A$120 million ($81 million; €74 million) to buy 1,758ha of New South Wales properties and redevelop them for horticulture.

goFARM raised the funds in less than a month, largely from Australian family offices including Costa Asset Management, which jointly owns the company alongside its managing director Liam Lenaghan.

Lenaghan told Agri Investor that most of the capital came from repeat investors, with “a couple of new names” in the mix.

“We’re very fortunate that we have built some great investor loyalty over the last decade by doing what we say we are going to do and delivering compelling investment returns,” he said.

Alongside the family offices, Lenaghan said one institutional investor came on board for the project. He would not disclose further details on the other investors.

Lenaghan also confirmed that goFARM has withdrawn its massive Sandmount Farms horticulture asset from sale, after listing it in 2022 with an asking price north of A$250 million. goFARM has owned Sandmount for five years and now plans to stick with it for another four to five years, doubling down on its commitment to developing the 6,300ha asset in the Murray-Darling Basin, which is used to grow almonds and seedless mandarins.

Shift from wine

The firm’s latest investment vehicle, currently known as the goFARM Riverina Trust, targets returns in the mid-teens.

The Riverina acquisition comprises three properties near Griffith in NSW, in an area known for its wineries.

However, Lenaghan said although Griffith’s Stephendale Vineyard was one of the properties acquired, grapes were not on the agenda for the Riverina Trust. Instead, goFARM would rip out the vines to make way for the development of orchards including almond trees.

“Stephendale represents terrific land, terrific infrastructure and significant high-security water entitlements, and we’re able to buy all that significantly below the cost of replacement.

“Of course, we’ve got the time and cost of removing the vineyard and redeveloping it, but our math says we’re a mile in front by doing that rather than taking on a greenfield project.”

Lenaghan said goFARM’s strategy revolved around transforming assets to their “highest and best use,” and that the Riverina Trust’s best use was not wine.

A consumer shift toward premium wine meant that cool-temperate regions like South Australia’s Barossa Valley contributed more value than warm-climate regions like the Riverina.

“It’s well-documented, the stress that exists in the warm-climate wine industry,” Lenaghan said.

Wine Australia’s 2023 Vintage Report supported this, showing that cool-temperate regions yield grapes at a higher price per tonne compared with their commercial warm inland counterparts.

Lenaghan said goFARM was following the premiumization trend by investing in the cooler climate of Tasmania.

He said while there were limited sites of suitable nature on the island state, goFARM was looking to ramp up its involvement and had already begun planting a vineyard in the Tamar Valley.

The other properties in the Riverina acquisition, previously used for irrigated and dryland cropping, will also undergo a transformation into horticulture, with existing infrastructure repurposed to support development.

Water win

The Riverina properties boast significant water entitlements, including 5,000ML of high and general security entitlements.

Last month, the Australian government passed legislation allowing changes to the Murray-Darling Basin Plan, meaning the government could begin to buy back large volumes of water entitlements.

With the Riverina acquisition sitting within the Murray-Darling Basin, Lenaghan said goFARM was pleased to have secured its entitlements ahead of the government agreement which could see the pool of consumptive water for agriculture diminish.

“Supply and demand would suggest that with less supply it becomes more valuable,” he said. “At the same time, it doesn’t mean that the farming operations are any more profitable just because you have a large, motivated purchaser in the market.

“There’s a bit of a disconnect between what the government might be willing to pay to meet an environmental objective versus what the industry may be willing to pay to generate an acceptable return on capital.”

goFARM’s portfolio currently stands at A$1.1 billion in assets under management, including 88,000ha of crops including grains, oilseeds, pulses, citrus and tree nut crops across Southern Australia.