Key details of the leases and lessees are outlined below:
|Lessee||Lease type||Payment frequency||Indexation Mechanism||Rent review||Capital commitments|
|Cattle JV Pty Ltd||Property||Quarterly in advance||Annual CPI & cattle price adjustment (Eastern Young Cattle Index), with 150bps ceiling||Five year market review||
|Cattle JV Pty Ltd||Herd lease||Quarterly in advance||Annual cattle price adjustment mechanism||n/a||
|DA and JF Camm Pty Ltd||Property||Quarterly in advance||2.5% per annum||Five year market review||
|JBS Australia Pty Ltd||Property||Monthly in advance||CPI||No||
|Stone Axe Pastoral Company||Property||Quarterly in advance||2.5% per annum||Five year market review||
Cattle JV Pty Ltd
CJV is a wholly owned subsidiary of Rural Funds Management and is structured to accept investment with suitable joint venture partners (e.g. processors seeking to secure supply).
CJV has employed property managers for each of the three properties with 80 years’ combined experience in livestock operations and management. The personnel have worked on the properties being purchased or within the immediate region.
CJV aims to increase the carrying capacity, weight gain and calving rates on the three properties. The herd lease rental indexation includes an Eastern Young Cattle Index (EYCI) adjustment mechanism (up to an additional 150 basis points above a base rate) providing RFF with some exposure to the benefits of higher cattle prices.
DA and JF Camm Pty Ltd (Camm)
DA & JF Camm Pty Ltd (Camm) operate an integrated cattle business, the Camm Agricultural Group (CAG). Operating since 1978, CAG is a cattle breeding, backgrounding and finishing business. The business operates nine properties, including a 9,100 Standard Cattle Unit1 capacity feedlot.
The business runs approximately 35,000 breeding, backgrounding and feedlot cattle, with Natal, the property leased from RFF, the primary breeding location for CAG.
JBS Australia Pty Ltd
JBS Australia is Australia’s largest cattle processor domestically and has a daily processing capacity of 8,000 cattle and 21,000 smallstock. It is a subsidiary of JBS S.A., the largest protein processor globally. Listed on the Sao Paulo Stock Exchange, JBS S.A has a market capitalisation of approximately AUD$9b and revenue of AUD$62b. It is the world’s largest beef producer, leather processor, chicken producer and second largest pork and lamb producer. The company has more than 400 production facilities and 235,000 employees.
Stone Axe Pastoral Company
Stone Axe Pastoral is a Wagyu cattle breeding enterprise which operates four properties in the New England region of New South Wales, as well as a property in the Kojonup region of Western Australia.
The company has operated since 2014, and is majority owned by ROC Partners, a private equity firm formed in 2014.
Katena Pty Ltd
Katena Pty Ltd operates a Queensland-based cattle business.
Elrose Enterprises Pty Ltd
Elrose Enterprises Pty Ltd is a Brahman cattle stud business seeking to expand operations.
Australian Agricultural Company (ASX:AAC)
Established in 1824, Australian Agricultural Company (ASX:AAC) is Australia’s largest integrated cattle and beef producer, and the oldest continuously operating company in Australia. AAC operates a balance of properties, feedlots and farms comprising approximately 6.5 million hectares of land in Queensland and the Northern Territory, or 1% of Australia’s landmass.
The lease of Rewan Station to AAC is expected to commence 1 October 2019.
1A Standard Cattle Unit is equivalent to an animal with a liveweight of 600kg. Source: National Beef Cattle Feedlot Environmental Code of Practice, Meat and Livestock Australia, 2012.