Demand for prime farmland is building up heading into spring – along with private debt to fund acquisitions – as new trophy properties and portfolios come onto the market driven by soaring land and commodity prices, low interest rates and excellent seasonal conditions.
Agricultural debt specialist Merricks Capital said its discussions with rural sales agents revealed “strong demand for properties valued at more than $10 million” as the non-bank lender lined up half a billion dollars of funding opportunities.
“Strong commodity prices and good seasonal conditions have tightened the hold producers have on their current land assets while prompting an expansion phase in their operations. Low supply of farms on the market has improved transaction expectations of vendors,” Merricks said in its August update to investors.
“Additional demand has originated from investors and international buyers who are seeing value in Australian rural property. Urbanites chasing a regional lifestyle are pushing up rural land values on urban fringes while investors looking for environmental-driven outcomes, for example in the carbon farming space, are also increasing competition in the market.”
In May, Merricks, backed the wealthy Liberman family, launched a multibillion-dollar agricultural credit fund to provide loans of between $10 million and $150 million for farm acquisitions and related investments in infrastructure and supply chains.
In August, Merricks provided a $57 million loan to recapitalise a dairy farm in north-west Tasmania running 30,000 dairy cows, and this month it will close a $24 million, two-year facility secured by more than 800 hectares of farmland in the Bundaberg region in Queensland.
The fund manager said it was in due diligence on a further $500 million of agricultural real estate lending opportunities.
“On average, new loans in the pipeline continue to promise approximately 10 per cent effective interest rates net to the fund,” Merricks said.
Strong market conditions
While an undersupply of premium rural listings has been a feature of the market for some time, a number of corporate and private owners are taking advantage of the strong market conditions to sell this spring.
Leading the charge, American alternative asset manager Proterra Investment Partners has listed its Corinella portfolio of 50 grain-growing properties spread across Victoria and South Australia, valued at about $350 million.
LAWD agents Danny Thomas and Elizabeth Doyle have been appointed to sell the portfolio, which can be purchased whole or as individual farms.
In other blue-chip offerings, the North family has listed its beef breeding and backgrounding aggregation, Bowness and neighbouring property Willowmere, in the Murringo region north-east of Young in the NSW south-west slopes.
Price expectations are between $16.5 million and $18 million for the 1392-hectare offering, which runs about 650 breeding cows alongside a winter cropping program.
The property is being marketed by Richie and Jamie Inglis from Inglis Rural Property.
“It’s one of Murringo’s premier landholdings,” Richie Inglis said.
Joining these offerings, Mortgage Choice co-founder Peter Higgins is having a second go at selling the Sydney Polo Club on the banks of the Hawkesbury River at Richmond.
The 115-hectare property, about an hour from Sydney, was last up for sale in 2019 with an expectation of about $75 million. Ray White Rural agent Chris Malone has the listing this time.
Included in the offering are three polo fields, 38 brick horse stables, two undercover riding arenas, a grand clubhouse, a renovated homestead and three workers’ cottages.