June 28, 2022

photo credit: Centuria Capital Group

By Lynda Kiernan-Stone, Global AgInvesting Media

ASX-listed, specialist investment manager Centuria Capital Group, announced the launch of Centuria Agriculture Fund (CAF), an open-ended, unlisted investment fund seeded with a $177 million state-of–the-art glasshouse in Warragul, Victoria. In conjunction with the launch, the group will be seeking approximately $103 million in support of the fund. 

“Centuria branched into the agriculture sector following our merger with Primewest in July 2021 and we intend to expand this vertical to capitalize on the growing demand for premium agricultural products,” said John McBain, joint CEO, Centuria. 

[Background Info]

Centuria Capital announced it had entered into a bid implementation deed (BID) with fund manager Primewest for an off-market takeover offer for Primewest of A$600 million (US$462.5 million) in April 2021.

Just prior to this deal, in February of 2021, Primewest more than tripled its funding target for its newly launched Primewest Agricultural Trust No 1 to A$350 million (US$268 million), and stated it may list the fund, but did not specify a timeframe for such action. 

Primewest entered the Australian agricultural space in April 2020 with the launch of its inaugural ag investment fund with an initial funding target of A$100 million (US$76 million) and its first ag acquisition. 

This newly established trust deployed its first capital, paying A$4.8 million (US$3.13 million) for “Pinegatta” in New South Wales. Located in the Riverina region, the 425-hectare (1050-acre) Pinegatta had been growing carrots and potatoes, supplying PepsiCo subsidiary Smith Snack Food Company. With the acquisition, Primewest entered into a lease agreement with Kagome, the largest tomato producer in Australia.

Only two months later in June 2020, Primewest agreed to acquire GoFARM Asset Management Pty Ltd – the manager of Vitalharvest Freehold Trust in a A$10 million (US$11.27 million) deal. 

Back to the CAF Launch

The launch of CAF is being structured as complementary to Centuria’s existing agriculture trusts, which today manage seven agricultural properties collectively valued at approximately $343 million.

“Strong fundamentals that underpin the sector include population growth forecasts,” noted McBain, “which increase demand for food domestically and internationally, robust free trade agreements supporting exports, and an $80.4 billion1 gross value agricultural production forecast for 2022, contributing approximately 2 percent to Australia’s GDP2.”

As is often the case, funds will either focus on primary agricultural production – farmland and ancillary assets along the supply chain, or, on the flip side, focus more on farming technologies. CAF seems to be taking a more hybrid investment approach. 

“The Fund has a two-prong investment strategy,” explained Jason Huljich, joint CEO, Centuria Capital. “It will primarily focus on precision farming assets, such as glasshouse production, netted crops, vertical farming and properties with access to water, substrate growing and automated harvesting. Secondly, we will target assets aligned to the agricultural supply chain, such as processing, storage/cold storage and distribution to meet the paddock-to-plate demand. This remit includes both existing assets as well as those where farming operations can be expanded or improved through capex funding.”

In order to lessen its operational risk exposure, CAF will primarily invest as a lessor. From this position, the fund will acquire the glasshouse in Warragul, which carries a 19-year sale and leaseback, triple-net lease to leading Australian vegetable producer Flavorite – the largest glasshouse producer of fresh fruits and vegetables in the country, with 25 years of experience in the industry.

The Flavorite facility anchoring the new fund is a climate-controlled, protected cropping facility covering 33.5 hectares (82.7 acres), or about 40 percent of the total site, making it one of the largest glasshouses in the country.

This operation represents the first asset of a larger anticipated portfolio that will include a collection of highly curated Australian agricultural properties. Targeted assets will be leased to experienced agricultural operators, along with additional associated agri-logistics assets with similarly favorable lease terms.

McBain concluded, “CAF intends to carefully partner with select operators who have a strong track-record in producing high-yielding produce and who are well established with extensive experience throughout various weather cycles.”

~ Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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