Rural Funds Group in WA farm buying spree

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Jenne BrammerThe West Australian
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The properties will be leased to WA-based Stone Axe Pastoral Company, one of Australia’s biggest wagyu beef operations.
Camera IconThe properties will be leased to WA-based Stone Axe Pastoral Company, one of Australia’s biggest wagyu beef operations. Credit: supplied

ASX-listed Rural Funds Group will acquire three cattle properties north of Perth for $22.6 million from Pilbara pastoralist and businessman Brent Smoothy, marking the real estate investment trusts’ first exposure to WA land.

The cattle properties are Petro, High Hill and Willara, comprising about 6000ha between Jurien Bay and Eneabba, and will be leased to WA-based Stone Axe Pastoral Company, one of Australia’s biggest wagyu beef operations.

A statement by Rural Funds Group, an agricultural-focussed REIT with assets under management of $1.2 billion, said the WA property leases would be on similar terms to its existing cattle arrangements, including a 10-year term with a rent review in year five. Settlement is expected in April 2020.

RFG said additional investment would occur on these properties to increase productivity through grazing area and development, and additional irrigation.

The company’s shares took a hit in August following two unfavourable reports from short-sellers, but today were up by 2.5 per cent to $1.82.

WA transactions will bring RFG’s cattle properties across Australia to 19, across 665,241ha of land.

Additional opportunities in this sector would continue to be investigated RFG said.

The purchases follow RFG’s offloading of loss making poultry farms at NSW and Victoria to ProTen Investment Management, which is a specialist developer and operator of broiler chicken farms.

RFG’s poultry assets include 17 broiler chicken farmers, 11 of which have an average of 30 years with grower agreements and leases expiring in FY24. RFM said it had determined continued investment in this sector was better suited to businesses with greater economies of scale.

The company said proceeds would be used to pay down debt and shift to the more lucrative beef cattle market. Other sectors within the portfolio include vineyards, cotton, macadamias, and almonds.

In February, Stone Axe Pastoral acquired a controlling interest in Margaret River Premium Meat Exports, marking a four fold increase in pure bred wagyu numbers.

Stone Axe, in March, entered into a 10 year lease agreement with RFG to lease its 4220ha Cobungra property in Victoria.

Mr Smoothy, who owns the Pilbara pastoral property Hillside, is also the founder of the ASX listed fertiliser mining company Kalium Lakes.

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