Australia’s most successful rural property trust, Rural Funds Group, has beefed up its cattle portfolio after buying one of Victoria’s largest cattle stations, Cobungra, at the foot of Mount Hotham, for $35 million.
The purchase of the 6486-hectare renowned alpine beef property and more than 24,000 hectares of adjacent grazing licences, lifts the value of RFF’s cattle stations to more than $250 million and the total value of its portfolio including water entitlements to well over $800 million.
The vendor was financier and Wagyu industry figure Mark Suhr, who has owned Cobungra since 2001, with Nick Myer from Elders and Shane McIntyre from CBRE the appointed agents.
Cobungra Station will be leased to Wagyu producer Stone Axe Pastoral Company on a 10-year leasing deal at a rate consistent with other existing cattle property leases.
Stone Axe, co-founded in 2014 by Mathew Walker, the son of Westholme Wagyu pioneer Chris Walker, is one of the country’s leading vertically integrated Wagyu producers. Last February the NSW government and First State Super acquired stakes in Stone Axe, which is majority owned by ROC Partners, a private equity firm.
“The acquisition is consistent with RFF’s strategy to acquire assets that may benefit from productivity improvements, add to the frequency of rent reviews, and in sectors in which RFM has expertise and enhance diversification,” RFF manager, Rural Funds Management (RFM), said.
RFF already has an existing relationship with Stone Axe, which leases two of the fund’s properties – Dyamberin and Woodburn – in the New England region of NSW.
Alongside its investment in cattle stations, Rural Funds Group owns almond, cotton, vineyards and poultry assets, leased to operators like Olam, Select Harvests and Treasury Wine Estates.
The fund, led by David Bryant, has outperformed the major listed office and retail property trusts on a total returns basis in recent years.
In the 2018 financial year, Rural Funds Group delivered a total return of 20 per cent and ranked second on the benchmark BDO 2018 A-REIT Survey behind pub owner ALE Property Group.
Rural Funds acquired its first cattle station investments in 2016 with the purchase of three properties in North and Central Queensland as part of a climatic diversification strategy.
The acquisition of Cobungra will be funded from RFF’s existing debt facility. RFF will present its half-year results on February 21.