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:
- 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;
- Purchase of the entire property portfolio including land and buildings and irrigation shares, with external operational management via a long-term leaseback;
- 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.