Rural Funds Group Contracts to Acquire Farms from MSF Sugar Pty Ltd
August 02, 2020 at 11:11 pm EDT
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Rural Funds Management Limited (RFM), as responsible entity and manager for the Rural Funds Group has contracted to acquire 5,409 ha of sugar cane farms (with associated plant and equipment) and 8,060 ML of water entitlements from MSF Sugar Pty Ltd. (MSF) for $81.1 million (excluding transaction costs). RFM intends to progressively convert the farms to approximately 2,200 ha of macadamia orchards, with a substantial portion of the remaining area able to be used for cropping. RFM is in discussions with several potential lessees and will provide further details of the agreed development program in due course. Approximately 25% of the MSF farms are leased at rates consistent with RFF's other natural resource predominant assets. RFM will seek to lease the balance of the cane farms which are currently operated. The transaction will include a two-year off-take agreement in respect to the cane produced on the farms, or a reduction in the purchase price. The transaction includes an opportunity to purchase additional water rights. Settlement is expected to occur in October 2020 and will be funded from an approved increase to RFF's debt facility.
Rural Funds Group is an Australia-based real estate investment trust (REIT). The Company owns a diversified portfolio of agricultural assets that are leased predominantly to corporate agricultural operators. It is primarily engaged in the development and leasing of agricultural properties and equipment. The Company leases almond orchards, macadamia orchards, vineyards, cattle properties, cropping properties, agricultural plants and equipment, cattle, and water rights. The Company holds three almond orchards approximately 4,068 planted hectares; six vineyards approximately 636 planted hectares; 13 macadamia orchards approximately 1,906 planted hectares; seven properties with areas to be developed into macadamia orchards with 2,520 hectares; 23 cattle properties made up of 18 breeding, backgrounding, and finishing properties and five cattle feedlots with a combined capacity of 150,000 head, and 15 cropping properties approximately 14,573 hectares.