Otway portfolio could fetch $11m: CBRE

The location of the 24 properties in prime agricultural country, along with a yield of around 5 percent and the potential to generate carbon credits is attracting financial investors first and foremost.

CBRE, the real estate firm hired to sell New Forests Asset Management’s Otway Portfolio in Victoria, expects to fetch approximately A$15 million ($11.2 million; €10.3 million) if sold to a single buyer, Agri Investor has learned.

Located in Victoria’s agricultural region of Colac Otway, the portfolio comprises approximately 2,600 hectares of freehold land currently planted to Eucalyptus Globulus.

Peter Ryan, the CBRE agent responsible for steering the sales process, told Agri Investor he is seeing interest from a mix of both foreign and Australian buyers, primarily financial and other institutional investors.

“We’re getting expressions of interest from investor groups and farms,” Ryan said. “People are interested in the yield from the leaseback, which is in the vicinity of five percent. They’re also interested in the potential to generate carbon credits from this transaction and they’re interested in the opportunity to replant or revert.”

Before its use as a timber plantation, the 24 properties, which range in size from 30 to 240 hectares, were also utilized for high-value dairy or grazing, according to Ryan, and can be reverted to these uses. That’s drawn additional interest from timber groups, agricultural funds and private farm investors.

Asked what the advantages and disadvantages are of continuing to use the land for timber, Ryan said: “There’s certainly an advantage to continue with the second rotation of forestry on the land. The high rainfall has improved productivity because the harvest returns that are being generated currently are very good. The properties are well located between two export ports – Geelong and Portland – and they’re well located with access to domestic processing facilities.”

However, reversion is also an attractive option given that the properties are located in what is “recognized as some of the best agricultural land in the country,” Ryan said, adding that the region has high rainfall for Australia – around 2,000mm annually – and a proven production record before it was planted with timber.

Because the portfolio comprises 24 properties, it provides any potential buyer with the option of retaining some parcels for timber and others for beef cattle, sheep grazing and/or dairy. But Ryan said there’s a “high chance” it will be sold to a single buyer.

New Forests is seeking to enter into a sale and leaseback arrangement with the buyer or buyers, retaining management of the properties until the conclusion of each harvest.

The asset manager had listed the portfolio for sale last July but later withdrew it from the market, deciding to harvest the timber first, Ryan explained.