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Uruguayan farmland asset managed by TLG goes on sale

Portugal-based LatAm farmland manager TLG is keen to co-invest 5% to 10% with the new buyer and wants to stay on as manager.

A large cattle and farming aggregation comprising eight properties has been put up for sale in western Uruguay.

The 20,000ha asset has been managed by Portugal-based TLG Management Partners since around 2009, when it was acquired by a group of investors that included institutional LPs, family offices and high-net-worth individuals.

The property has a cattle carrying capacity of approximately 14,000 head, with almost 2,000ha dedicated to rice and row crops and a further 2,000ha for forestry.

JLL is the listing agent for the asset. Its LatAm director for international capital markets Joshua O’Malley told Agri Investor that the firm expects a range of investors to be attracted to the property.

“GPs that are already active in the space and that have funds that are investing in agriculture on a global basis – that’s one group we’re expecting to hear from,” said O’Malley.

“The second group is large LP investors that are known to do joint ventures so they’re less passive – the Canadian model, for example, is to partner up with strong local operators and enter into joint ventures with a safe portfolio, but with the idea of growing the portfolio over time. Then there’s investor groups, and a lot of that is private capital family offices that are known land aggregators around the world.”

The ideal buyer for the assets, said O’Malley, would be an investor keen to take on the portfolio as a whole and able to recapitalize it so it can continue to grow and unlock additional value.

O’Malley added that TLG would continue as manager of the assets and is ready to co-invest 5 percent to 10 percent with the new owner.

TLG manages farmland assets invested into by institutional investors in Argentina, Brazil, Paraguay and Uruguay, across 20 properties representing more than 90,000ha.

O’Malley said the potential returns delivered by the asset vary depending on the management style chosen by the owner, but could average cash-on-cash gross income yield of 5 percent and a total unlevered return of 10 percent to 12 percent.

He acknowledged that while some investors may be turned off by the fact the asset is largely a cattle operation, much of “the pullback from livestock is focused on commodity beef – that’s the beef sold in hamburgers; that’s the same beef where a percentage will be replaced alternative proteins.”

“Uruguay as a country has 2025 target to position itself as a premium provider of sustainable beef. And much of the beef in Uruguay is grass-fed even though some of it is still finished on feedlot, you still don’t see these same meat factories that happen in the US, for example.

“TLG’s strategy is focused on creating full-cycle integrated grass-fed and grass-finished beef and positioning it in the market as a sustainable choice for consumers.”