Gunn Agri Cattle Fund nears full deployment with cattle breeding property purchase

Gunn Agri Partners’ flagship fund reaches $141.4m in AUM with acquisition of Abingdon Downs.

Gunn Agri Cattle Fund has purchased the 484,000-hectare Abingdon Downs cattle breeding property in Queensland as it nears full deployment of its capital.

The Gunn Agri Partners-managed fund, which held a final close in April 2018, has reached A$200 million ($141.4 million; €123.3 million) in assets under management with the acquisition of the Abingdon Downs property, the manager said in a statement.

The purchase price for Abingdon Downs was in the region of A$40 million to A$50 million, Agri Investor understands. Gunn Agri Partners declined to disclose the price.

The price tag included 27,400 head of cattle and the property’s plant and equipment, taking the total herd managed by the fund’s operating company, Cunningham Cattle Company, to 71,500.

Abingdon Downs, located 130 kilometres north of Georgetown, was sold by Keough Cattle Company through Frawley Rural Services Australia. Keough’s remaining portfolio of cattle properties, including several adjoining holdings, is still up for sale.

Speaking to Agri Investor, Gunn Agri Partners managing partner Bradley Wheaton said that Abingdon Downs and another Cattle Fund-owned property, the 400,000-hectare Esmerelda station in north Queensland, had not been affected by recent drought conditions that have hit hard in New South Wales and southern Queensland.

“That’s one of the key reasons for diversifying the geographic spread of our portfolio the way we have,” he said.

“What we do see, though, is that the breeding herd on the east coast of Australia is still structurally short, as we don’t believe it’s fully recovered from the last major sell-off that we saw in 2014-15. With some rain and some pasture growth in southern areas [in recent weeks], there’s been a very strong market signal demanding female breeders, and we believe that being long on breeding cattle is a very good position to be in going into the end of a drought like this.”

Abingdon Downs would complement the Gunn Agri Cattle Fund’s existing portfolio, Wheaton said, and proved an attractive investment due to dependable water access that provides scope for further investment to improve productivity.

Wheaton confirmed that Gunn Agri Partners is also pursuing investment opportunities in the almonds and cropping sectors and is actively progressing one “quite sizeable” almond investment.

The Gunn Agri Cattle Fund is a closed-end vehicle targeting an IRR of 10-13 percent. The net asset value for the fund stood at A$1.12 as at 30 June 2018, up from the inception value of $1.00 at the beginning of 2016.

The Cattle Fund’s land portfolio has increased in value by 7.9 percent above the FY2017 valuation plus capex spend for FY2018 (excluding stamp duty and acquisition costs), taking the total portfolio uplift to 34.5 percent for the period from inception to 30 June 2018.

The portfolio includes five aggregations ranging from north Queensland, where Esmerelda station is located, to properties on the NSW border.

Cunningham Cattle Company grows out young cattle at properties including the Katandra Aggregation near Hughenden, which covers 51,598 hectares, as well as using long-term agistment arrangements with large-scale operators.

The Cattle Fund’s southern operations include the Maranoa Aggregation near Roma in southwestern Queensland, which is operated as a breeding and grow-out operation covering 36,095 hectares, and Goodar Station in southern Queensland which provides additional breeding capacity, fodder production for fattening and cash cropping capability.