Van Leeuwen Group to sell nine dairy farms as it focuses on barn operations

Van Leeuwen farm with cows  Hero image

An extensive portfolio of South Canterbury dairy farms is for sale as the Van Leeuwen Group ramps up investment in its high-tech barn farming operations.

The portfolio represents an exceptional opportunity to acquire nine highly productive pasture and support farms including 3,509ha of freehold land, extensive infrastructure, irrigation shares and a supply contract to Oceania Dairy.

The Van Leeuwen Group has exclusively appointed Colliers International to market the portfolio for sale by way of an international expressions of interest campaign.

Prospective purchasers have the option to either own and operate the farms outright, or buy the farms as a passive investment, with external operational management via a long-term leaseback.

“This is an incredibly rare opportunity to secure a profitable dairy farming operation at scale,” says Ruth Hodges, National Director of Rural and Agribusiness at Colliers.

“The portfolio offers strong projected returns that are expected to be particularly appealing to institutional and corporate investors.

“The net yield on investment has been independently forecast at up to 7.30 per cent on an owner-operator basis and 4.24 per cent on a passive leaseback basis.

“The strength of these returns, and the sheer scale of the portfolio, add up to a truly unique offering for the New Zealand market.”

Owners Aad and Wilma van Leeuwen say it is the right time to sell.

“We have grown our business substantially over the years, and are now looking to pass this legacy on to the next generation.

“Along with a capital re-structure, we recently finalised a new vision for the business which is primarily focused on optimising and growing our robotic barn farming operations.

“Our aim is to be a market leader in farming systems that are sustainable with new environmental regulations, ensuring the business is well positioned to capitalise on future dairy profitability due to growing scarcity of supply.”

The Van Leeuwen Group’s vision is to optimise its existing robotic barn farming operations as well as invest in future growth.

The nine farms being offered for sale are traditional, pasture-based dairy farms and non-core support farms that do not fit strategically with this vision.

The portfolio comprises six pastoral dairy farms and three dairy support blocks with a total farm area of 3,298ha.

This is comprised of 1,973ha of dairy farm land, including 1,708ha of milking platform; 159ha of leased land; and 1,536ha of dairy support land.

The Van Leeuwen Group has invested heavily in eradicating Mycoplasma bovis from all its farms since the initial outbreak in July 2017. All nine farms for sale have been cleared of M bovis for more than a year and a half.

  Ruth Hodges of Colliers says New Zealand’s dairy industry has shown its resilience with less impact than other sectors at present.

“Historically, during times of crisis, food production remains absolutely core and investment flows to these types of assets.

“The long-term outlook for dairy proteins is still very strong. New Zealand’s production is not increasing, meaning supply in the future will remain tight and prices firm.”

Hodges adds that prices of farmland at present represent some of the best buying opportunities in a very long time.

Richard O’Sullivan, Rural and Agribusiness Director at Colliers, says the farms are superbly located in the Morven, Ikawai and Waihaorunga districts in South Canterbury.

“This region is renowned for its low-cost and reliable irrigation scheme and strong seasonal grass production.

“All farms in the portfolio are highly accessible, being no more than 30 minutes from each other, with support blocks well located to the dairy farming hub.

“The farms currently produce some 1.84 million kilograms of milk solids and further gains in production are available to an incoming purchaser via improvements to irrigation infrastructure.”

The farms for sale have been operated under a traditional, pasture-focused seasonal supply dairy farming system, predominately using a grass-based Level 3 system.

Temperate climatic conditions with the addition of irrigation mean a steady pasture growth curve can be relied on season to season, without the risk of prolonged summer drought conditions restricting pasture growth rates.

There has been a mix of management across the dairy farms including sharemilker contracts, contract milkers and direct farm management.

Most dairy platforms start on twice a day milking and then move to 16 hourly milking later in the season.

The farms have a supply contract with Oceania Dairy Limited, which is a state-of-the-art manufacturing plant based in Glenavy, South Canterbury.

Established by world-leading dairy manufacturer Yili, the plant produces and exports high-quality milk products.

Oceania Dairy offers a competitive milk price, which for the past two seasons has been the Fonterra milk price, plus 15 cents.

The dairy support farms are utilised for the grazing of bulls, heifers and wintering cows. Support farms close to milking platforms also assist with supplementary feed.

Each farm has a different level of infrastructure ranging from older sheds and irrigation systems to modern sheds and irrigation.

The houses on the farms are mostly well-appointed and are all in good to reasonable condition.

Interested parties have three options to consider:

  1. Purchase of the entire property portfolio including land, buildings, associated lease land, irrigation shares and water supply, stock, items of plant and equipment and supply contract to Oceania Dairy;
  2. Purchase of the entire property portfolio including land and buildings and irrigation shares, with external operational management via a long-term leaseback;
  3. Purchase of one or more individual properties and their associated leases.

Further information on the portfolio or individual farms is available from Ruth Hodges and Richard O’Sullivan of Colliers International.

Expressions of interest are to be submitted by 4pm on 25 June. Shortlisted parties will then be invited to participate in a second stage including due diligence and submission of a binding sale and purchase agreement.


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Ruth Hodges

National Co-Director

Queenstown

Ruth commenced her career in rural real estate in August 2009 before establishing the first Colliers International Rural and Agribusiness franchise in New Zealand with Shane O’Brien in September 2014. Ruth has been integral in setting up the new Rural and Agribusiness systems for Colliers International and has recently stepped in to lead the growth of this business in Otago and Southland. The Otago Southland Rural and Agribusiness team also partners with companies that have strongly established regional connections - Compass Agribusiness and Colliers Queenstown (Otago Realty Limited).

Growing up on a large scale high country farm in Central Otago set the foundation for Ruth’s desire to be involved in the rural industry throughout her working life. After achieving a first class honours degree from Otago University, Ruth commenced her career in rural finance that spanned nine years with the National Bank. Not content to sit still for long, she joined the progressive new dairy company Synlait as their Business Development Manager focusing on growing their farming assets via key acquisitions around the Canterbury region. Ruth has also been involved in the rural building industry with her husband Nigel, and the experience of the incredible highs and lows that this industry encountered over the past 12 years has honed her management and problem solving skills to the highest level.

As a rural real estate professional, Ruth's business is about people and their farming businesses - and focussing on this instead of just the physical assets is key to how she achieves positive outcomes regardless of market conditions. Her underlying principles of trust and integrity ensures she continue to form long lasting, genuine relationships and apply an open, honest approach to all situations. Furthermore, Ruth's comprehensive understanding of an often complex and evolving rural market together with her ever-present proactive attitude allows her to provide solutions that go beyond the traditional real estate model.

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Richard O'Sullivan

Director

Christchurch (Rural)

Richard brings to the Colliers Rural and Agribusiness team a strong agribusiness background and a quality network of relationships in the sector and as a director of the business works alongside an accomplished real estate team to offer clients local expertise, backed by the extensive national and global reach of the Colliers brand.


After graduating from Lincoln University with a Bachelor of Agriculture, Richard has spent the past 20 years in technical, agribusiness and banking based rural roles gaining diverse experience across finance, operations, farm development and sales/syndications. His background has given him an extensive skill set in the fields of real estate, business planning, rural finance, governance, due diligence and project management. 

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