Rural Funds Group and Olam ink new almond deal

Rural Funds Group (RFF), the listed Australian real estate investment trust (REIT), has struck a deal to develop and lease a 1,500 hectare almond orchard to Olam, the operations arm of the Singaporean agribusiness and the biggest almond grower in Australia.

The deal, which will see RFF pay A$19.25 million ($13.6 million; €12.25 million) for two plots covering 1,500 hectares near Darlington Point in New South Wales, comes six months after the REIT and Olam teamed up on a similar deal for 600 hectares of almond orchards in New South Wales.

In a statement the firm said the total cost of the latest development, which will see the orchards leased to Olam for 22 years and 9 months, will be around A$109 million.

The firm said the almonds will be planted during 2016 and that there “will be a further area of up to 1,000 hectares suitable for development, taking total plantings to 2,500 hectares.”

The deal reflects Australia’s booming almond industry, which saw export figures hit a record-breaking A$118m in June this year, 75 percent higher than the same time last year according to the Australian Bureau of Statistics. In 2014 Australia recorded export sales of A$422m, and the Almond Board of Australia is forecasting exports this year of around $A600m and domestic sales of A$200m.

Investors hungry for a long-term cash generative crop have been drawn to Australia as California, the world’s biggest almond-growing region, continues to struggle against drought. According to a recent Colliers International report, almond orchard prices in Australia have surged in recent years, up from A$25,000 a hectare in 2011 to more than A$47,000 a hectare in 2015.

Last month First State Super, the A$53 billion Australian superannuation fund, bought more than 4,000 hectares of almond orchards and land across New South Wales from listed Australian company Select Harvests. Earlier in August Ontario Teachers’ Pension Plan bought a 1,000 hectare almond farm in north-west Victoria in Australia for A$115 million. And in 2013 the Swiss fund of funds Adveq, alongside four institutional investors, bought 11 almond orchards in Australia for A$211 million.

RFF is listed on the Australian Securities Exchange and has more than A$250 million invested in 27 properties across Australia including poultry farms, almond orchards, vineyards and livestock operators.