This article is from the Australian Property Journal archive
RURAL Funds Group has gone on a buying spree, snapping up three contiguous cattle properties in Northern Queensland for $53.0 million as part of a $72.5 million transaction.
The properties, Natal Downs, Longton and Narellan, known as Natal, encompass 390,600ha and are situated south west of Charters Towers.
The properties will be acquired from members of the Camm Agricultural Group (CAG) a family business that has been operating for more than 20 years and leased to, DA & JF Camm Pty Ltd (Camm) also a member of CAG.
The lease will be for a period of 10 years, indexed annually at 2.5% and with a market review at the end of year five.
The security arrangements associated require that Camm provide first mortgages over two properties independently valued at more than $20 million as security for its lease, loan and livestock facility.
To enable RFF to receive first mortgage security, RFF will provide a loan to Camm of $10 million. The net security position represents greater than two years of lease payments.
Managing director David Bryant said RFM has identified development opportunities to increase the carrying capacity of the properties and has budgeted to provide $2.5 million for the lessee to undertake productivity capital expenditure. The lessee will receive a performance fee of $2 million subject to an agreement.
To fully utilise the increased carrying capacity of the properties, RFF will provide a livestock lease facility of $5 million to the lessee. The facility allows the lessee to acquire trade cattle, with RFF retaining ownership of the cattle, and the lessee contributing 20% of the value of the cattle at the time of purchase.
Bryant said the Natal aggregation builds on RFF’s cattle assets acquired in 2016 and is part of the strategy that identifies natural resource predominant assets with the potential for capital growth through property improvements.
The acquisition will be funded by balance sheet capacity, gearing will increase from 28.5% to 36.4% on a pro forma 30 June 2017 basis.
Upon completion, cattle assets will represent 16% of the RFF portfolio. The Natal acquisition is expected to increase FY18 AFFO from 12.5 cents per unit (cpu) to 12.7 cpu. FY18 total forecast distributions remain unchanged at 10.03 cpu, an increase of 4% on FY17.
Australian Property Journal
