Stafford Capital Partners is raising a A$150 million ($107.1 million; €94.4 million) fund focused on the Australian farmland market and has made its first farm acquisitions in the country, according to its head of agriculture and food.
Jos Boeren said Stafford Australian Agricultural Real Estate Fund II will acquire and lease medium-sized row crop and grazing properties in Australia, as well as associated water rights. The fund will target an annual return of 3.5-4 percent from rental income, in addition to annual appreciation returns that have historically averaged 5-6 percent.
Stafford will focus its fundraising for SAAF II on public and private pensions in North America, Europe and select Asian countries, Boeren added. He declined to discuss fund life or average commitment size, saying only that both were “in line with what the market is normally offering.”
Boeren – who joined the traditionally secondaries and timber-focused private investment and advisory firm in September after a stint with ag-focused executive search firm Kincannon & Reed – told Agri Investor that in December, Stafford also closed its first farm acquisitions in Australia.
The two properties were bought through a separate account called SAAF and managed on behalf of an unnamed Australian superannuation fund and a Swiss pension. Boeren said the A$33 million vehicle follows the same buy-and-lease model Stafford plans to use for SAAF II.
He added that SAAF has also created a partnership with two established agricultural investment groups in Australia.
In May 2017, Stafford secured a $100 million mandate from the $16.2 billion Swiss pension ASGA Pensionskasse that included an allocation to what was described as the first ag-focused separate account the firm had established for an LP.
A market source told Agri Investor that one of Stafford’s partners in Australia is Growth Farms, which recently purchased most of the Cygnet Park Farms portfolio on behalf on an unnamed private buyer investing through a separately managed account.
Boeren said Stafford will focus largely on grain and oilseed-focused properties in order to capitalize on Australia’s reputation among investors as a key agricultural production market with strong rule of law. While drought is a factor in the country, Boeren said, related risks can be managed through diversification among regions.
“Output in Australia is perceived as high-quality, consistent and safe. There is a lot of value in what Australia is producing and how they produce,” said Boeren. “There is a good opportunity for value if we start to compare on a productivity basis, what Australia represents as opposed to other regions that are producing the same commodity.”
Australia’s geographic proximity to key grain and oilseed importing markets of Japan, South Korea, Indonesia and China was key in motivating Stafford’s desire to enter the market, Boeren added.
“In the end, it’s about the offtake,” he said. “You can grow something and be super-efficient, but if you have no access to the market; then what?”
– additional reporting by Daniel Kemp