Rural Funds Group (ASX: RFF) announced that it is spending $52.7 million to acquire five cattle farms from JBS Australia
in Queensland and New South Wales.
Rural Funds Group is a real estate investment trust (REIT) that owns farms and leases them to tenants. JBS Australia is the largest meat and food processing company in Australia, it operates beef, lamb and pork processing facilities in five states and beef feedlots in Queensland and NSW. It is also Australia’s largest meat exporter.
The facilities that Rural Funds Group is acquiring has a combined capacity of 150,000 Standard Cattle Units, which is around 15% of Australia’s lot-fed cattle capability.
Rural Funds Group is also entering into a finance lease with JBS for a 10-year term, with CPI inflation indexation.
The REIT will also give a limited guarantee of $75 million to a business that acquires cattle for JBS feedlots.
Obligations have been guaranteed by JBS’ parent company, Baybrick Pty Ltd, which has net assets of $2.3 billion and owns other food businesses like Primo SmallGoods. Baybrick Pty Ltd’s parent, JBS S.A, is a Brazilian business with a market capitalisation of almost $9 billion and is the largest protein processor in the world.
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