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Hancock buys Rural Funds’ Mooral almond orchard for A$98m

Rural Funds Management will use some of the proceeds of the sale to further its macadamia orchard development strategy.

Hancock Agricultural Investment Group has purchased Mooral almond orchard from Rural Funds Group for A$98 million ($70.4 million; €59.6 million), Agri Investor understands.

Rural Funds Management, the responsible entity for Australian Securities Exchange-listed Rural Funds Group, announced to shareholders yesterday that it had exchanged contracts for the sale of the Mooral almond orchard in western New South Wales.

RFM said contracts had been exchanged “with a global agriculture and timberland investment manager, as nominee for a special purpose vehicle that will be owned by pension funds and institutional investors.”

Agri Investor understands that the investment manager is US-based Hancock Agricultural Investment Group, a subsidiary of Hancock Natural Resource Group, according to sources familiar with the matter.

Rural Funds Management and selling agent CBRE Agribusiness declined to comment.

The deal is expected to close by the end of December 2020, according to Rural Funds Group’s FY20 results presentation, announced today (August 25). The sale is subject to due diligence and Foreign Investment Review Board approval.

Hancock earlier this year purchased a portfolio of almond orchards from the endowment fund of Harvard University for approximately A$120 million, according to a report in the Australian Financial Review.

Just under a third of the capital realized from the sale of Mooral will be used to support Rural Funds’ macadamia orchard development strategy, the firm said, alongside capital raised by the sale of its poultry operations to First State Super-owned ProTen.

It recently acquired 5,409 hectares of sugar cane farms in Queensland for A$81.1 million with the intention of redeveloping them into macadamia orchards. Planting of macadamia trees on the properties is expected to commence in late FY21 and lessee discussions are ongoing. The properties will be leased as cattle and cropping operations in the interim while development takes place.

On June 30, 2020, Rural Funds Group owned 61 properties across almonds, cattle, cropping, vineyards and macadamias. The firm said 78 percent of its lessees were corporate or listed entities and the properties had a long weighted average lease expiry profile of 10.9 years.

Property revenue for the year ended June 30, 2020 increased by 8 percent to A$72.0 million and the firm’s total earnings per unit increased by 82 percent to 18.4 cents.

“The positive FY20 results are largely due to the ongoing expansion of the portfolio, primarily in the cattle sector, and independent valuations of various asset,” RFM said in a statement.

“The investment into macadamias is consistent with RFM’s strategy of investing in sectors in which Australia participates globally, improving portfolio diversification, and utilising RFM’s development and operating knowledge. RFM has macadamia orchard development and operating experience, currently farming three orchards in Bundaberg, and is able to draw on its extensive almond orchard development experience.”