US farm fund buys Elliott's old station

The Australian | 11 December 2012
Cobran Farm on the Murrumbidgee near Hay, NSW. (Photo: Stuart Mcevoy)

THE transfer of some of Australia's largest and most valuable rural properties to foreign investors is continuing apace, with the sale of the once-largest rice farm in the nation to a US global agricultural fund.

Westchester has bought the 17,200 hectare Cobran Station on the Murrumbidgee River just east of Hay, in NSW, from John Kahlbetzer's Twynam group.

It is believed Westchester, which operates its Australian arm from Wagga Wagga, paid between $18 million and $19m for the irrigated cropping and sheep grazing farm.

Cobran had been for sale for more than a year, after being passed in at auction in October last year without attracting a bid, on a reserve price above $22m.

Cobran was once the biggest rice farm in the country, developed by former Elders IXL, Foster's and Carlton Football Club chief John Elliott into a 31,200ha expanse of rice paddies.

In 2002, it was sold by receivers for Mr Elliott's Australian Rice Holdings for $21.7m to Mr Kahlbetzer and his Twynam Group.
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Most of Cobran's 7766 hectares of irrigated cropping paddocks are sown to cotton, making it the largest cotton property in the district.

It was rumoured that Westchester has made arrangements to lease the property to Australian cotton farming company Tandou, which would grow cotton and run sheep on the other 8800ha of Cobran's dryland paddocks away from the river. But The Australian has been told no such arrangement exists.

Westchester is a specialist agricultural asset manager which invests in agricultural land on behalf of some of the world's largest pension or superannuation funds.

It buys mainly cropping country for its land value rather than food production and manages more than $1 billion of farm assets in the US and Australia.

In late 2010, the US Teachers Insurance and Annuity Association of America, which operates one of the largest pension funds in the world with more than $US490bn under management on behalf of American teachers and university academics, acquired a controlling interest in Westchester.

It is not clear if it is Westchester's latest agricultural fund, the $300m International Agricultural Investors Fund, that has bought Cobran directly, or if the purchase was on behalf of TIAA-CREF's subsidiary, Global Ag Properties Australia.

In May, the Westchester Group snapped up six cropping properties on the Darling Downs being offloaded by Australian-listed rural company Prime AG Australia for $37m on behalf of the giant teachers' pension fund.

Westchester's Australian director, Matt Bull, would not discuss the purchase of Cobran yesterday. But it is understood that while one arm of Westchester had bought Cobran, another Westchester-associated fund has failed to seal a deal on the second property being sold by Twynam in the Hay district, Gundaline.

Originally, the 14,900ha Gundaline property near Carrathool, which also grows cotton, rice, corn as well as having grazing paddocks, was going to be sold as a joint package with Cobran.

But Ray White Rural director Bruce Gunning confirmed yesterday that while contracts had been exchanged on Cobran, the sale of Gundaline had not proceeded.

It was also reported yesterday that further east in the Riverina, one of Sweden's biggest pension funds, Forsta AP-fonden, which manages more than $31bn in assets, had snapped up 16,000 ha Merri Meric near Henty for just under $7m.

Forsten AP is already an indirect owner of Australian farmland through its investments, believed to be nearly $250m, in Westchester-managed agricultural funds alongside TIAA-CREF, but this is believed to be its first direct ownership move.

Most Westchester investments in rural land in Australia are made on the basis that the farms are quality land, able to be maintained as viable cropping country in a sustainable production system.

Typically the funds lease the properties back to local farmers or other experienced farming companies, such as Tandou in Cobran's case, with the expectation of at least a 5 to 6 per cent return on cash invested.

The sale of Cobran follows the recent sale of another significant farming property just a little further east along the prime Murrumbidgee River Road, Uardry Station, with its legendary merino sheep stud.

It was bought by the South Australia-based Brinkworth family for $28m in August, with settlement finished last month.

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