Australian agricultural real estate: A stable cash-yielding investment through volatile times
Stafford Capital Partners is pleased to share a recording of our recent webinar (recorded on 14 May 2020), “Australian agricultural real estate: A stable cash-yielding investment through volatile times”, in which we explore why investing in Australian agricultural real estate (farmland) through our latest product, SAAF II, is attractive in the current volatile environment and over the longer-term.
Australia, where Stafford Capital Partners was founded, is one of the world’s leading agricultural producers and a top 5 exporter of wheat, cotton, beef and lamb. The country’s reputation as a consistent, reliable supplier of high-quality and safe agricultural produce has allowed it to gain significant global market share, with well-established export routes to the rapidly growing populations across neighbouring deficit markets in Asia, which are reliant on agricultural imports for their food security.
There is strong demand for farm leases from farmers seeking to increase both their production and asset utilization rates. Today, and over the long-term, we observe virtually nil farmland vacancy rates, stable rental incomes and consistent yearly growth in land values (an average of over 6.5% p.a. during the past 20 years). The decorrelated nature of the industry is revealed in the strong performance of Australian farmers throughout the coronavirus situation, thanks to continued demand for agri-food staples in both domestic and export markets.
Stafford is an experienced farmland investor in Australia. Our first fund, SAAF I - backed by an Australian superannuation fund and a Swiss pension fund - launched in December 2018 and has already acquired 11 farmland assets, which are generating a 4.6% cash yield and projected 9.1% IRR (net of fees), with lease payments secured through 6-month bank guarantees. Given its success, the model will be repeated in our second fund, SAAF II, that is capital raising with AUD 20m of initial commitments towards a target size of AUD 150 million and a Q4 close this year.
