December 20, 2022

photo credit: Centuria Capital

By Lynda Kiernan-Stone, Global AgInvesting Media

Centuria Capital Group has acquired Sundrop Farms, one of the largest glasshouse operations in South Australia, through its Centuria Agriculture Fund (CAF) for A$70 million. The acquisition was made through an off-market agreement with the vendor, Morrison & Co. Growth Infrastructure Fund.

This acquisition marks the second for the CAF portfolio, following the maiden acquisition of its seed asset – a glasshouse facility in Warragul, Victoria, purchased in June 2022 for A$177 million. 

Commenting on the deal, Jason Huljich, joint CEO at Centuria, said, “This acquisition is another example of Centuria executing on its strategy of providing our unlisted investors with access to high quality investment opportunities in the fragmented, agriculture sector and provides a new highly sought after funds management vertical for the Centuria platform.”

Located in Port Augusta, South Australia, with unlimited access to seawater, the Sundrop Farms assets encompass a 246-hectare site including four five-hectare glasshouses,  a 1.4 megaliter reverse osmosis plant, a 1 megaliter desalination plant that processes up to 600 megaliters of seawater annually; a 25 megaliter storage dam, a packaging warehouse, and a 12.5 hectare Concentrated Solar Energy System (CSP), which generates 30,000 megawatts for heating, and 45,700 megawatts for electricity and facilities seawater desalination. 

This location is ideally suited for tomato production as it is relatively low-humidity and receives up to 30 percent more winter sunlight compared to other greenhouses in the country – giving the business a natural competitive advantage and ability for year-round production.

Taken together, its location and business structure have been the foundation for Sundrop Farms to sustainably grow 17,000 tons of truss loose, truss pre-pack, and baby plum tomatoes per year, or approximately 14 percent of Australia’s total truss tomato market.

“This high quality glasshouse facility was constructed in 2016, incorporating modern renewable energy, heating and irrigation sources, which creates highly sustainable, premium fresh produce,” said Andrew Tout, head of agriculture, Centuria. “These are strong fundamentals that underpin a well performing agriculture real estate investment and also present ESG credentials which resonate well with CAF’s sustainability overlay.”

Morrison & Co acquired the business in 2019, and has held it as part of its Morrison & Co. Growth Infrastructure Fund (MGIF), which the company stated targets gross returns of 13-15 percent per annum through investments in “ideas that matter” and that are backed by long-term secular trends such as water conservation and decarbonization.

“We acquired the business in 2019 recognizing its potential to deliver a step-change in the way food is produced,” said David McKinnon, investment director, Morrison & Co. “We’re proud to have worked with management over the years to turn the business into a mature and profitable one, being a key regional employer, and leader in sustainable food production.”

CAF noted that it will enter a 20-year sale and leaseback agreement with Sundrop Farms including a triple-net lease and CPI-linked annual rental reviews.

Huljich commented, “Centuria continues to partner with experienced operators with a strong track record in agricultural innovation and this is one of a series of agricultural acquisitions we intend to deliver throughout FY23 and beyond, with the aim of growing CAF into one of Australia’s largest unlisted, sector specific agriculture funds.”

With this acquisition, CAF’s portfolio will be valued at $247 million, and Centuria’s total agricultural AUM will be worth $421 million. However, in the near future, Centuria expressed that it will make further announcements as it continues to build up its ag portfolio.

~ Lynda Kiernan-Stone is editor in chief 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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