Melbourne fund manager secures enormous dairy farm
Prime Dairy, an agricultural fund manager held by Prime Value Asset Management, is paying $15 million for a north west Tasmanian dairy farm.
The 700 hectare piece of a much larger historic Woolnorth estate was offered by Van Dairy Limited following the recent loss of a 25-million-litre milk contract with Fonterra.
PD intends to run it as a conventional operation accommodating some 1000 cows.
VDL, owned by billionaire Xianfeng Lu and formerly known as Moon Lake Investments, utilised it as an organic dairy, licensed for a herd of c600.
Woolnorth is about 137 kilometres west of Devonport and 209 north west of Launceston.
Herd mentality
PAM is backed by Melbourne’s Yak Yong Quek who also directs a sister company, Shakespeare Property Group, which has been an active commercial real estate investor since COVID.
Amongst that business’ highest profile recent acquisitions is Gold Coast’s ex-Palazzo Versace, a $213.7m East Melbourne office, acquired from Dexus, and Sydney CBD’s Domain House (which cost $132.95m).
In late 2020, it paid Stockland $89m for four retirement villages.
The agricultural arm will slot the Woolnorth asset into the unlisted Prime Value Dairy Trust announced four years ago with a $230m mandate; it will be the last property to go there.
The acquisition comes three years since PD paid VDL $62.5m for 11 more Tasmanian dairy farms (story continues below).
It now controls some 5000ha, predominantly in the state and Victoria, where rainfall is high, on which it hopes to milk more than 10,000 cows.
“We’re now seeing the rewards from significant investment in the region, which we first commenced in 2020 and ramped up in 2021,” Prime Dairy general manager, Dairy Investments, Kirsti Keightley, said.
“Our dairy production was up 35 per cent over the last year, which will improve profits, and we expect significant further growth to come,” she added.
“We now have the assets to grow more grass and to achieve more high quality dairy production,” according to the executive.
“There is enough support land to winter all our cows and to grow young stock.
“We have built huge new effluent dams and pivot irrigations and have significantly reduced the need for chemical fertilisers”.
The Prime Value Dairy Trust is targeting a minimum 12pc medium and long term return.
Distributions of between 5-7pc are being paid quarterly, it added, earned from a mix of milk sale income and land value appreciation.
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