Primewest backs Macquarie bid for Vitalharvest Freehold Trust

The listed real estate specialist, which is making a push into agriculture, will realize a significant capital gain on Vitalharvest, for which it acquired the management rights in June 2020.

Primewest will back a bid from an agriculture fund managed by Macquarie Infrastructure and Real Assets to acquire 100 percent of the Australian Securities Exchange-listed Vitalharvest Freehold Trust.

Primewest, a listed fund manager that specializes in real estate, announced to shareholders it had entered into a facilitation deed with Macquarie that would see the latter either purchase Vitalharvest for A$1.00 ($0.73; €0.61) per unit by way of a trust scheme or purchase all Vitalharvest’s assets for a cash consideration of A$300 million, should the trust scheme fail to gain the support of enough shareholders.

The agreement is conditional on the MIRA proposal completing and at least 50 percent of shareholders not associated with Primewest voting in favour of the trust scheme. Primewest said it will receive a consideration of A$8 million for novating the management agreement of Vitalharvest to MIRA.

MIRA will make the acquisition through subsidiary Macquarie Agricultural Funds Management and its Macquarie Agriculture Fund – Crop Australia 2 vehicle.

Vitalharvest’s portfolio, a collection of berry and citrus farms, is 100 percent leased to Costa Group, one of Australia’s largest listed agribusinesses and food producers, on an initial 15-year term that started in 2011. Costa holds an option to extend the leases for another 10 years from July 2026.

Costa said last week it “would be comfortable” if the takeover bid was successful, and noted that it “has an existing productive relationship with MIRA through our leasing of several avocado farms from MIRA, which are all based on fixed rental agreements operating under 20-year leases.”

Primewest acquired the management rights for Vitalharvest in June 2020 as part of a wider push into Australian agriculture.

Alongside its acquisition of Vitalharvest’s previous manager goFARM Asset Management for A$10 million, Primewest also acquired an 11.8 percent interest in the trust, with an option over a further 6.2 percent stake. Its stake now stands at 19.87 percent, making it the largest unitholder in the trust.

In a statement, Primewest chief executive David Schwartz said: “Having considered the feedback from Vitalharvest investors and the merits of the MIRA proposal, Primewest’s intention is to support the proposed transaction.

“Upon acquiring the manager of Vitalharvest Freehold Trust (VTH), Primewest sought to reduce the variability in earnings associated with the current VTH leases. However, there was no certainty that this strategy was achievable in a suitable timeframe whilst the MIRA proposal provides cash certainty to all investors at a material premium to the price of VTH units. As such, in the absence of a superior proposal, Primewest intends to vote in favour of the MIRA proposal.”

Schwartz added that Primewest continues to “actively seek” opportunities in agriculture and believes there is “significant demand” from investors to invest in the space following the launch of its unlisted agricultural fund in April 2020.