Macquarie’s Paraway Pastoral Company lists three assets for sale

Paraway Pastoral Company, the manager of a portfolio of pastoral and cropping assets owned by Macquarie Asset Management’s open-end Macquarie Pastoral Fund, has placed three of its properties up for sale.

The three assets together comprise a total land area of 40,942 ha and are all located in New South Wales.

Agri Investor understands MAM received several unsolicited offers for the assets over the past 12 months, so Paraway Pastoral Co has decided to sell in order to realize gains for investors and reinvest the proceeds into both existing and new assets. The Macquarie Pastoral Fund was established in 2007 as a closed-end vehicle and closed on A$700 million ($468.2 million; €429.7 million) in 2011, before restructuring in 2015 to become open-end.

The assets for sale are the 14,326-ha Borambil Station, located 8km southeast of Condobolin in the Central West region, expected to fetch between A$75 million and A$80 million; Pier Pier Station, comprising the two non-contiguous properties of Pier Pier (covering 20,388 ha) and Dynong (3,567 ha), located in the Western Plains near Coonamble and expected to sell in the mid-A$40 million range; and the Burmah Aggregation, which covers 5,456 ha near Graman in the North West Slopes region, which is expected to receive offers in the A$75-80 million range.

If sold together, the portfolio could be worth around A$180 million at the top end of this price guidance.

Col Medway, senior director at LAWD, the real estate agent appointed to conduct the sale process, said the assets could appeal to someone wanting to acquire anchor assets for a wider portfolio, but that they might also appeal as standalone assets for separate buyers due to their different locations and uses.

“They are geographically removed from one another and are in different climatic zones, but it depends on what investment strategies [a buyer would have],” he said, with it possible that a buyer would want to try and run them together as one enterprise.

Mixed farming assets

Borambil Station, which Medway described as a “really significant development opportunity,” is home to both dryland and irrigated production systems and comes with significant water entitlements totalling 8,569ML, comprising 3,550ML of groundwater licences and 5,109ML of river water licences. It is currently carrying a 13,000-head Merino ewe flock and operates cattle agistment with a capacity of 40,000 dry sheep equivalents.

Pier Pier is a mixed farming enterprise that has been extensively developed by Paraway Pastoral Co, including the addition of a new shearing shed and associated yards. It currently carries a Merino ewe flock of 10,000 alongside 1,200 trade cattle, and has a capacity to carry 35,000 DSE. It also has 5,100 ha of dryland cropping area.

The Burmah Aggregation is also a mixed farming enterprise, with a mixture of grazing pasture, dryland cropping and timbered grazing land. It is made up of four separate properties acquired by Paraway Pastoral Co over the past eight years and developed into a single holding, and is being primarily used for summer and winter cropping, and as a cattle finishing platform.

On the broader Australian farmland market, Medway said that activity has “moved back to normal settings” after several years of abnormally high interest in assets.

“I don’t think there will be any retreat in values. Buyers who hang around waiting for things to get cheaper will be very disappointed,” he said.

“With the balance sheets of vendors today, which are immensely better than they were [during the last major downturn] in 2008, I just don’t see values declining,” he said, because there will be very few distressed sales.

Rising interest rates will have some impact on debt serviceability, but there are still “strong, high-quality parties with an ability to transact,” Medway said, arguing that interest rates are still not high by historical standards.

Medway added that the first impact in levels of enquiry will be in the farmer-to-farmer market, as relatively smaller family enterprises drop out of the market or slow down acquisition plans due to higher interest rates.

In its 2023 full-year results announcement, published earlier this month, Macquarie Asset Management revealed that it had increased its agricultural assets under management by 19 percent in the year to March 31, 2023, reaching A$4.3 billion.