Poultry competition (RFF // RFP)

Southern Cross seeks $50m for Queensland and South Australian poultry farms

A new agricultural fund is looking to raise about $50 million in equity for the purchase of nine poultry farms in Queensland and South Australia worth more than $70 million.
The Southern Cross Poultry Fund, advised by NAB, will acquire the farms with an annual production of about 13 million birds making it one of the largest poultry production businesses in Australia after companies Pro Ten and the listed Rural Funds Management.
According to confidential marketing documents viewed by The Australian Financial Review, the assets to be acquired include two farms near Coominya about 60 kilometres northwest of Brisbane, Queensland, which produce about 3 million birds a year with contracts secured to Baiada until 2020.
An additional nine farms will be purchased on the banks of the Murray River, north of the Barossa Valley near Blanchetown. They produce about 9.9 million birds a year with contracts secured to Inghams until May 2024.

Overall, 55 sheds will be purchased with a forecast revenue of $13.2 million in fiscal 2018.

An initial gearing level of between 25 and 45 per cent has been disclosed with investors told they can expect to enjoy a pre-tax distribution yield of 10 per cent a year.
The fund's indicative modelling suggests a five-year internal rate of return of about 12 per cent.
Brisbane-based agriculture, commercial property and infrastructure manager AAM Investment Group will act as fund and asset manager. Garry Edwards, the founder and chairman of AAMIG, and former Australian Agricultural Company executive Tim Gallagher will head the management of the Southern Cross Poultry Fund. AAMIG manages several agricultural-related assets including a majority stake in CRF, one of Australia's largest lamb-processing facilities.
The fund mentions that a 14-shed expansion at the South Australian farms during fiscal 2019 will help drive earnings growth. The fund will have an initial term of five years and is expected to be launched early next month.

Poultry sector tempting investors

The poultry sector has been a serious focus for investors since the private equity group TPG listed the once family-owned Inghams Group. TPG still owns 47 per cent of Inghams and has sold a large portfolio of poultry related assets to groups such as CorVal and Charter Hall Group.

Private syndicators have also been buying into the sector. Brisbane's Sentinel Property Group, established by real estate investor Warren Ebert, snapped up the Purga Breeder Farms south of Ipswich from the Sanday and Trevanion families for $22.8 million.
That deal included three farms covering 63 hectares and 17 poultry breeding facilities with a capacity for 200,000 birds.
Chicken consumption has grown faster than any other form of animal protein in Australia over the past 25 years.

www.copyright link/real-estate/southern-cross-seeks-50m-for-queensland-and-south-australian-poultry-farms-20170811-gxu9xt