BEN WILMOT, COMMERCIAL PROPERTY EDITOR, THE AUSTRALIAN
7:00PM SEPTEMBER 8, 2021
Australian cattle property investment firm Packhorse Pastoral Company has opened its second round of funding, seeking to raise $50m as it builds up a network of properties on which it is undertaking mass-scale regeneration of the landscape.
The company is looking to tap investors for the next round of funding after a successful first raising, which backed its purchase of Stuart’s Creek.
Picking up that 8360ha property in Queensland, was the first move in the company’s five-year plan to acquire $1bn worth of cattle property.
The company is looking to bring cattle station assets to private investors rather than them being the province of established farming families or tycoons.
Packhorse brings a record of generating seven years of recurring positive financial and environmental outcomes in its privately managed cattle property portfolios, including at Lighthouse in Queensland.
Packhorse already manages about 66,000ha of cattle properties from its base around Roma and is keen to also grow its holdings in the area. “It’s the right type of soil and it’s the right type of rainfall,” Packhorse Pastoral Company chairman Tim Samway said.
The company has an active pipeline of properties and targets both stations where owners are facing succession issues and that may offer an opportunity for amalgamations with neighbouring properties.
The annual total returns generated by the manager have soared to 22.65 per cent, from a combination of land appreciation and stable income streams from long-term agistment agreements negotiated with major cattle companies and beef processors.
The company is ramping up its expansion plans with the imminent settlement of another two properties, both set to deliver solid growth opportunities and returns for investors.
Mr Samway said the company was being propelled by its expertise in funds management, land regeneration and cattle management.
It had also developed a way of creating wealth through optimising cattle station assets and deploying widespread rejuvenation of pastoral land.
“Rural agricultural land is fast emerging as a valuable stand-alone investment, providing competitive risk-adjusted returns and low correlation compared to traditional asset classes,” Mr Samway said.
Packhorse is pitched as delivering investors an opportunity to own a piece of Australian country. It has a long history of strong capital gains, due to its finite nature and provision of sought-after quality grass fed beef.
“We know that food production will need to almost double in the next 30 years to feed the population and the global demand for sustainably sourced Australian grass-fed beef is increasing,” Mr Samway said.
“These are critical drivers that underpin Packhorse’s mission to accumulate and regenerate agricultural land on a significant scale across Australia,” he said.
Packhorse is also undertaking programs to improve soil and grassland quality to enable carbon to be more successfully sequestered in the rejuvenated land.
In August, Packhorse engaged market leader Carbon Link to provide a carbon baseline for Stuart’s Creek which could sequester up to 2800 tonnes of carbon per annum across an estimated 4000ha of land.
The additional revenue generated by on selling carbon credits, as organisations globally pledge net zero targets, is helping with raising funds as investors are keen to be part of a fund deploying sizeable carbon capture programs across an expanding portfolio of suitable land.
“The carbon credit market grew 20 per cent in 2020 to $272bn so to play a part in this emerging market may well present investors with a significant financial upside,” Mr Samway said.
Packhorse Pastoral chief executive Geoff Murrell said “we’re seeing an increase in land price because the opportunity in the sector is being noticed”.
“There is considerable pressure in the market, but our focused and disciplined off-market acquisition strategy gets us access to quality properties at good prices. Coupled with the added security that comes with our agistment revenue model that smooths the peaks and troughs, we deliver even in times of volatility,” Mr Murrell said.