16 December 2022
Centuria secures $70m Sundrop farms asset
Agricultural real estate portfolio grows to $421 million
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- Off market acquisition of a 20ha1 tomato glasshouse asset on 246ha site
- 20 year sale and leaseback triple-net lease to leading sustainable horticultural operator, Sundrop
- Strong ESG credentials backed by leading solar and water technology
- Secured for unlisted, open ended Centuria Agriculture Fund (CAF), 19.4 year WALE2, 100% occupancy
Centuria Agriculture Fund, managed by the Australasian real estate funds manager, Centuria Capital Group (ASX:CNI or Centuria), has secured one of South Australia’s largest glasshouse assets for $70 million in an off market transaction. The vendor is the Morrison & Co Growth Infrastructure Fund.
CAF will enter a 20 year sale and leaseback arrangement in respect of the property with sustainable horticultural operator, Sundrop Farms. Sundrop Farms will be the second agriculture asset for the recently launched, open ended, Centuria Agriculture Fund (CAF). In June 2022, Centuria secured CAF’s seed asset – the $177 million glasshouse facility in Warragul, Victoria.
The acquisition is supported by strong leasing covenants including a triple-net lease and CPI linked annual rental reviews and following the acquisition, CAF’s portfolio will be valued at $247 million with a 19.4 year WALE2 and 100% occupancy3. Centuria’s entire agriculture AUM is worth $421 million3.
The Port Augusta property encompasses a 20 hectare1 glasshouse facility, which produces truss loose, truss prepack and baby plum tomatoes and accounts for approximately 14% of Australia’s truss tomato market4. Sundrop produces c.17,000 tonnes of tomatoes per annum in a year round production from the facility.
The 246 hectare1 Port Augusta, SA site provides four five hectare glasshouses, a 1.4 megalitre (ML) reverse osmosis plant, a 1ML desalination plant that processes up to 600ML of seawater annually, a 25ML storage dam, a packaging warehouse and a 12.5 hectare Concentrated Solar Energy System (CSP), which creates sustainable onsite renewable energy. The CSP generates 30,000 megawatts of heating, 45,700 kwh of electricity and facilitates seawater desalination. The South Australia location provides unlimited access to seawater and is within a region of relatively low humidity, which is ideally suited to tomato production. The property receives up to 30% more winter sunlight than other greenhouses around Australia4, providing a natural competitive advantage on high value periods of truss production.
Andrew Tout, Centuria’s Head of Agriculture, said, “This high quality glasshouse facility was constructed in 2016, incorporating modern renewable energy, heating and irrigation sources, which creates highly sustainable, premium fresh produce. 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.”
Jason Huljich, Centuria Joint CEO, said, “Agricultural real estate throughout Australia continues to experience strong tailwinds resulting from strong global demand for Australian agricultural products and technological innovations. We are pleased to partner with Sundrop who has developed world first, integrated sustainable farming technology, resulting in more predictable volumes of produce in a protected farming environment.
“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.
“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.”
David McKinnon, Investment Director at Morrison & Co, said “We acquired the business in 2019 recognising its potential to deliver a step change in the way food is produced. 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.”
Centuria expects to make further announcements in the near future as it builds out its agriculture portfolio.
1. Gross Production Area
2. Weighted Average Lease Expiry (WALE) by asset value as at December 2022.
3. As at December 2022
4. Source: Independent Knight Frank Valuation Report, November 2022
