Industry players are confident of a new farmland record price being achieved in Western Australia from the sale of the aggregation of Project Jaal near Esperance and Munglinup.
Price expectations for the 26,834-hectare broadacre cropping and livestock opportunity in WA and 16,097ha in Victoria's Mallee region are about $400 million.
This would outstrip the record WA amount achieved for farmland when the Cherylton farm at Kojonup fetched $100 million in January this year.
The Cherylton sale smashed the previous record of $97.62m, set when Melbourne-based Daybreak Cropping purchased Erregulla Plains - a 22,192ha broadacre enterprise near Mingenew in WA's Wheatbelt - in February 2020.
WA's median farmland price per hectare was $5121 last year, as sales increased 27.5 per cent to $895m.
Figures released recently by Rural Bank revealed the median price of farmland in this State has increased 157 per cent during the past five years.
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Expressions of interest for Project Jaal, being offered through LAWD and accounting firm PwC, close on July 6.
Project Jaal is currently producing wheat, barley and canola in WA and is capable of an output of more than 85,000 tonnes of grain annually.
There is a 900-head Angus stud and 2000-head commercial cattle herd on the WA properties.
Project Jaal also supports 10,000 head of sheep, prime lambs and a wool enterprise.
The Victorian aggregation is cropping only and is believed to be the biggest continuous farm land holding in that State.
It is planted to wheat, oats, barley, lentils, lupins, vetch, chickpeas and canola and is capable of producing more than 60,000 tonnes of grain per year.
The total package of Project Jaal in WA and Victoria is being offered as a sale and lease-back opportunity by a significant, unnamed WA business.
LAWD director Danny Thomas said the sale and leaseback opportunity was a capital management decision.
He said the vendor wanted to grow the portfolio by reinvesting the funds into more property purchases and developments.
Mr Thomas said through the lease, there would be an attractive commencing rent of $16 million per annum triple net across the total 43,000ha in both States.
He said a 4 per cent yield equated to about $400m.
"Over a 20-year period, a sale-and-leaseback deal is effectively 100pc finance," Mr Thomas said.
He said the vendor was proposing a long weighted average lease expiry (WALE) with an initial 20-year term lease and two 10-year options, annual CPI-based rent reviews and market rent reviews every five years.
He said it was likely enquiry will come from North American investment pension funds and family offices in Europe.
"Given the scale and quality of the holding, it would be great to see Australian super funds or Australian high net-worth families involved in the sale," he said.
"The attraction would be investing in a significant amount of agricultural land without the operating risk."
Mr Thomas said high quality, large scale portfolios of this nature are highly sought after at present - especially in WA.
"The market remains strong for this class of agricultural property," he said.
