AVOCADOS don't just appeal to millennials but also investors as WA land asset developer, manager and investor, Alterra Limited, has made its first venture into the fruit.
The company has secured a 300 hectare avocado project, known as Carpenters Project, based at Pemberton.
"With approximately 2500 hectares of current avocado production in Western Australia, this single development has the potential to represent about 10 per cent of WA's planted hectares, with pre-feasibility results providing Alterra with a basis to pursue development," Alterra managing director Oliver Barnes said.
A special purpose vehicle, Carpenters Beedelup Pty Ltd (SPV), has been established to develop the project and will seek to raise capital from a capital syndicate.
From there Alterra will remain a direct equity interest, but at present the SPV is entirely Alterra owned.
The land and water resources for the Carpenters Project have been leased from Red Moon Property Holdings Pty Ltd, an entity related to the Casotti Group, WA's largest privately-owned fruit grower, packer and wholesaler, for a 30-year term with two 10-year options.
Alterra has already secured exclusive rights to local avocado genetics and production data from Pemberton avocado grower, packer and exporter French's Group.
Based on current industry production benchmarks for the Pemberton region, Alterra estimated an avocado orchard in Pemberton has the potential to produce between 20 to 30 tonnes of avocados per hectare per annum.
It said avocado demand in Australia has continued to rise with wholesale prices paid to farmers in Pemberton from the most recent harvest (September 2019 to March 2020) ranging from $5.45 -$9.00 per kilogram.
Based on these figures (averaging: 25t/ha sold at $7.22/kg), the 300ha project has the potential to generate about $54 million a year.
"The Carpenters Project site is exceptional with the region highly regarded for its favourable climate, reliable rainfall, excellent soil types and quality water, which makes this site a high-value asset for Alterra," Mr Barnes said.
"The Carpenters Project is a significant opportunity to launch Alterra's new business model with an outstanding asset supported by quality management."
He said this was the first of several planned projects for the company.
"The Australian market for developed assets of this quality is currently dominated by international funds but we believe that they will see a strong increase in competition from Australian funds, including industry super funds."
