GoFARM is looking for a buyer willing to pay "north of $250 million" and prepared to invest another $200m upgrading its 6298-hectare Sandmount Farms Portfolio in Victoria's Murray Valley.
The property is largely made up of former dairy farms, which goFARM aggregated through more than 70 individual land and water rights transactions since 2018, when the northern Victorian industry was in distress.
Located 45 kilometres north of Shepparton at Katunga, the Sandmount Farms offering includes more than 50,000 megalitres of water entitlements, of which about 28,000ML of are high security.
Marketing agents, Land, Agribusiness, Water and Development (LAWD), said that made it the largest water portfolio in the Goulburn Murray Irrigation District, and one of the most sizeable in the southern Murray-Darling Basin.
The decision to sell seems something of an about-face for goFARM, whose managing director Liam Lenaghan told ACM last August that his business was investing for the long term.
"Philosophically, we're looking at building assets that we're happy to hold forever," he said at the time.
"Because if that's the mindset then, at some point, someone else will want to own it, so that creates the exit path in itself.
"If you're trying to be a cheeky property flipper, at some point you're going to get caught."
Six months on, Mr Lenaghan says a much greater investment than his high-net-worth investors can spare is required and the property must be sold.
"I think the scale of the opportunity in reality, as a whole has been much greater than what we first anticipated," he said this week.
"We've gone further down the path in terms of deploying our own capital than we had initially anticipated.
"Our pockets are only so deep. GoFARM shareholders are supported by high-net-worth individuals and family offices, so to double down, which is what the investment requires now, is a big ask from any one individual."
Already invested $200m
As it stands, goFARM itself has poured about $200m into the aggregation, establishing more than 200ha of almonds and 70ha of seedless mandarins as proof of concept.
The balance of the land is currently a mix of irrigated and rainfed row cropping of corn, barley, wheat, canola and faba bean production.
"We've done the groundwork, bringing the portfolio together, completing all the land capability studies, designing orchards, headworks infrastructure, demonstrating capability," Mr Lenaghan said.
"It now needs capital added, infrastructure and trees planted."
Another $200m needed
The next $200m to be invested, he said, would likely be spent planting about 1.5 million almond or walnut trees, although Mr Lenaghan said the aggregation would offer the buyer the versatility to pursue a wide variety of crops.
LAWD said about 4000ha was suited to horticultural production and the balance, approximately 1500ha, to row crops.
Mr Lenaghan would not disclose the operational returns the aggregation had been making in the four and a half years since it had been formed.
"It's not a going concern to the extent that it is a mature asset generating full operating earnings," he said.
"We've got portions of this portfolio that are generating very nice cash yields.
"We've got other areas that are now one year-old orchards that have a 25-year life, so that's money in, no money out, and then we've got areas going through amelioration and investment activities, so crop yield is not yet at full capacity."
Even so, Mr Lenaghan said, it had proven its productivity with corn yields of 20 tonnes a hectare, dryland barley at 8t/ha, canola 3.7t/ha, beans 1t/ha and wheat at 5t/ha.
International search for corporates
Sandmount Farms is for sale by international expressions of interest and LAWD senior director, Danny Thomas, said it would attract institutions and large corporate investors in search of a venture with an accelerated timeline.
"The portfolio's sophisticated water delivery system, positioned in a high-security water zone, above the Murray River bottleneck, the Barmah Choke, leverages a number of channels that have undergone a $2 billion Federal Government upgrade," he said.
"In addition to surface water, the site has access to a regulated and well-managed groundwater resource, courtesy of the Katunga Deep Lead Aquifer.
"goFARM has done an outstanding job in bringing together the right land, water entitlements, technology and people to prepare the Sandmount Farms Portfolio for the step change in production, earnings and capital that will be achieved with an injection of new investment."
Resilience baked in
Mr Lenaghan said Sandmount Farms was designed for long-term resilience.
"Incumbent horticultural growing regions are increasingly facing water access and delivery issues, increasing climate-induced stress, such as heat stress and declining chill units, and labour shortages," he said.
"Through our research we identified this region, and the properties that now sit within the Sandmount Farms Portfolio, as the best in Australia for addressing these issues and sustainably growing high-value crops now, and into the future."
While the aggregation was certainly for sale, Mr Lenaghan said goFARM would be interested in remaining involved.
"We think it's prudent to invite the next pool of capital to come in and unlock the potential, whether that be with us or instead of us, that will be determined by market response," he said.
"We'd ideally love to stay and to continue to deliver against our vision for the portfolio but if there's an investor that believes they have the capability and capacity to do it themselves, then so be it."
The information memorandum will be released on March 7, with expression of interest closing on April 29. For more information contact Danny Thomas, +61 439 349 977.
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