One of the country's richest families is testing the market to sell properties leased to its berry and avocado business Costa Group, which is among the share market's best agribusiness performers in the past year.
Sources said Costa Asset Management – chaired by Robert Costa, who co-founded Costa Group with his brother and former Geelong Football Club chairman Frank Costa – may have appointed Kidder Williams to field offers for 14 properties including those operated and leased by Costa Group.
The move would unwind some of the Costa family's related-party transactions with the listed Costa Group, an arrangement queried by a number of investors and analysts since the group listed in July 2015.
Costa Group floated at $2.25 a share in July 2015 and this week shares have trading around $4.70.
The properties leased to Costa Group include blueberry and raspberry farms on the NSW North Coast’s Corindi district; blueberries in Tumbarumba in southern NSW; blueberries, raspberries and blackberries near Devonport in northern Tasmania; and citrus in the South Australian Riverland.
"If they did look to sell them, we may or may not be interested in buying them," said Costa Group chief executive, Harry Debney, when contacted by The Australian Financial Review.
"They are not a dominant part of our portfolio, we have in excess of 40 farms."
The leases for the Costa Asset Management farms expire in 2026, with options to renew.
The properties also entitle the owner to a fixed rent and a share of earnings from Costa Group's berries and citrus businesses.
Berries are one of the fastest growing produce categories, though the company's move into the avocado segment is credited with firing up investors about the group's growth potential in recent months.
Sources said the properties could be sold for as much as $300 million, citing recent transactions including John Nicoletti's sale of his expansive Western Australian farming operations with a 10-year lease to CK Life Sciences in 2016, representing a yield of 6 per cent.
Costa's Mr Debney declined to comment further on the potential sale but noted that its recent agreement with Macquarie meant the group had access to more than $300 million off balance sheet funding.
However, he noted that Costa Group was primarily looking at deploying the funds to growing its presence in the avocado segment.
Costa's expansion into avocado began last year, when it partnered with Macquarie Agricultural Funds Management to buy Queensland's Avocado Ridge, which has an estimated five per cent share of the market.
For that deal, Macquarie bought the farms and Costa signed a 20-year lease to operate them.
In addition to its berry and citrus farms, Costa Asset Management also invests in residential property developments in Buderim, Queensland and Melbourne's Brunswick. Other investments include Geelong's Idyll Wine Company, cereal and pulse base manufacturer UniGrain and SAAS Automotive.
- This story first appeared in The Australian Financial Review