September 27, 2018

Real estate investment trust (REIT) Rural Funds Group (RFG) announced its latest acquisition – Dyamberin – a 1,728-hectare cattle station in New South Wales, for $13.4 million.

The deal, which is expected to close by the end of October of this year, is the most recent in a string of cattle property acquisitions by RFG, after the group’s announcement in July that it was in the middle of raising $150 million to expand its cattle operations holdings.

Structured as a diversified property trust, RFG has a portfolio of 47 properties including cattle, nuts, vineyards, poultry, and cattle holdings, and a market cap exceeding $700 million.

Prior to the group’s deal for Dyamberin, in May of this year, RFG acquired Comanche – the 7,600-hectare cattle breeding and backgrounding station where cattle gain weight between weaning and being shipped to a feedlot –  in central Queensland from Geoff and Delrae Shaw for $15.7 million at auction.

Two months later, in August of this year, the trust acquired the 8,280-hectares Cerberus station in Queensland – another cattle breeding and backgrounding property. As part of the $10 million deal, RFG will provide its lessee with $1.6 million in financing, and will undertake a $2.5 million upgrading designed to raise capacity at the site by 28 percent, according to AFR.  

Concurrently, RFG announced its acquisition of Mayneland, 2,942-hectare cotton farm in central Queensland for $18 million. The property consists of 531 hectares of irrigated land, and 1,757 hectare of dryland acreage, and includes water entitlements totaling 11,234 megaliters.

Dyamberin

Under the terms of the deal, and aligning with RFG’s leasing model, Dyamberin will be leased out under a 10-year lease to Stone Axe Pastoral Company, a Wagyu beef company that already operates two other properties in the area.

Wagyu beef is sourced from any of four Japanese breeds of beef cattle, and is known for its intense marbling and high price. Significant markets for Wagyu beef include Hong Kong, the U.S., Singapore, Cambodia, and Thailand (Meat and Livestock Australia report, 2015). Recent years have seen declining slaughter of Wagyu steer in Japan, trending with overall pressure on beef from competition from other protein sources (USDA, 2016).

In May 2017, Roc Partners acquired a majority stake in Stone Axe, which was founded in Kojonup in 2014 by Cicero Group founders Matthew Walker and James Robinson. At the time, Stone Axe was stockpiling frozen embryos sourced from its own herd of 1,000 donor cattle being kept at a center in New South Wales, with plans for the first embryo transplant to happen later this spring, according to The West Australian. Up to 2,000 full blood Wagyu embryos were expected to be transferred into Angus recipients under Stone Axe’s proof-of-concept program that the company stated would be under trial for a year before being scaled up.

More recently, in February of this year, the GO NSW Equity Fund – an investment fund started as a partnership between the New South Wales government, the Australian superannuation fund First State Super, which allocated an initial A$100 million, and private equity investment firm ROC Partners – acquired a A$3.3 million stake in Stone Axe Pastoral.

-Lynda Kiernan