Farmers buy back Riverina holding from US fund

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The largest of the properties is Bulgandra at Walbundrie.
Australia Financial Review | 1 November 2020

Farmers buy back Riverina holding from US fund
 
by Larry Schlesinger
 
American pension fund giant TIAA sold its Southern Riverina farming aggregation between Wagga Wagga and Albury in southern NSW to local farmers after more than a decade of ownership.
 
The 4174-hectare portfolio of seven oilseed and cereal cropping properties within the districts of Henty, Culcairn and Walbundrie.
 
They were offered for sale as individual farms or in one line by Westchester Group, manager of the global farmland funds of the Teachers Insurance and Annuity Association (TIAA), which owns more than $1 billion worth of farmland in NSW and WA.
 
Price expectations were not disclosed, but recent sales in the region indicated it could be worth over $40 million.
 
While there was interest from corporate and institutional buyers, both overseas and domestic, all seven were acquired by local family-run farming operators, according to Sam Triggs and Richie Inglis from Inglis Rural Property who marketed the portfolio on behalf of Westchester.
 
It was the second recent major rural holding to be offloaded by an American institutional investor, that was purchased by local farmers as funds continue to pour into blue-chip farmland.
 
Last week, Banongill Station, a historic cropping and grazing estate in Victoria’s Western District owned by US pension fund giant the Washington State Investment Board and other investors, sold to a consortium of seven local farming families for about $80 million.
 
The largest property in Westchester’s Southern Riverina portfolio was the 2160ha Bulgandra, 10km west of Walbundrie and about 60 kilometres north of Albury.
 
Tenants turn buyers
Records show TIAA’s International Agricultural Investors Fund 2 paid $5.6 million for Bulgandra in December 2008.
 
The other substantial farm was 1018-hectare Warrawillah near Culcairn. The remaining five small blocks ranged in size from 193 hectares to 269 hectares.
 
A number of buyers were long-time tenants of the properties.
 
“The outcome of this sale proves that institutional capital and local farmers can successfully work together, and although this land has been foreign-owned for over 10 years, our organisation is delighted to be returning the title deeds to local family farmers,” said Westchester CEO Matt Bull.
 
He said investors had been rewarded with a double-digit return which had exceeded original expectations.
 
“This sale outcome highlights the strength of Australian farmland as an asset class, particularly during the COVID-19 pandemic and in a current volatile economic environment,” Mr Bull said.
 
“Rural property is widely considered a defensive/safe asset class and it is becoming increasingly popular within institutional investment portfolios due to its negative correlation to other traditional asset classes.”
 
Mr Triggs said the sales campaign had generated over 170 enquiries and35 farm inspections
 
“Whilst the opportunity to secure a large portfolio in these regions was attractive to the corporate investment groups, the local farming families were the most competitive.”
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