Warakirri makes first acquisitions for Diversified Agriculture Fund – exclusive

The Diversified Agriculture Fund will deploy approximately A$25m across three foundation assets and will move to an open-end structure to continue raising capital.

Warakirri Asset Management has acquired three foundation assets for its Diversified Agriculture Fund as fundraising continues.

The purchases include a soft-leaf vegetable operation in the Australian states of Victoria and Queensland that is leased to Dicky Bill Australia; a citrus asset in Western Australia leased to Moora Citrus Group; and a berry asset in WA leased to Australian Securities Exchange-listed giant Costa Group. All three deals are scheduled to be settled in October or November this year.

Steve Jarrott, portfolio manager for the Diversified Agriculture Fund, told Agri Investor the acquisitions fit with the fund’s strategy of building a diversified portfolio of assets leased to high-quality tenants.

Warakirri said in a statement that the assets will provide a secure long-term income return of 8-9 percent per year, with a weighted average lease expiry of 12 years.

The firm did not disclose the value of each transaction but said around A$25 million ($18 million; €15 million) of capital has been raised to date to deploy across the three assets.

A fourth deal to acquire an agricultural supply chain infrastructure asset is in the pipeline and should be announced before the end of the year, Jarrott said.

Warakirri launched the Diversified Agriculture Fund in May 2019, targeting an initial raise of A$100 million before expanding to around A$300 million over time. Jarrott joined the firm in October 2019 from Westchester, the agricultural investment arm of TIAA-Nuveen Group, to oversee the fund.

Jarrott said that fundraising had not reached A$100 million yet. Warakirri anticipates that it will have close to A$50 million deployed by the end of 2020 in the foundation assets and other deals in the pipeline.

In a statement, the firm said: “Warakirri will move to a new stage and continue to raise capital from new and existing clients in line with the strong pipeline of investment opportunities we have.”

The fund has been designed as a property trust-style vehicle, in a similar vein to vehicles that were highlighted as strong performers during covid-19 in recent analysis by Colliers International.

Most of the fund’s investors to date are Australian, comprising family offices, small superannuation funds and others.

“This model works well for them because they can get exposure to agriculture while managing the volatility and taking advantage of the diversification that comes from working with different operators in different sectors,” Jarrott told Agri Investor.

On the impact of the coronavirus, Jarrott said: “Ag has been really resilient to covid-19 – there have definitely been some challenges in different parts of the sector but overall supply chains and producers have adapted what they do to deal with the disruption.

“The counterparties that we’re working with on these transactions are all sophisticated, best-in-class operators who’ve managed really well through this time, and investment performance generally through this period has been really resilient.”