Insights: Why buying Aussie land in a syndicate is proving a wise investment

With Aussie rural property in high demand, see the ins and outs of buying a farm as part of a syndicate - and why it’s becoming increasingly popular.

It has been an incredible year for the Australian rural property market, and with farm aggregations up for grabs, a new buying trend has emerged.

During the past several years local farmers have pooled their resources to beat the market and get their hands on some of the hottest property.

And with corporate investment groups looking to cash in on land price rises, syndicate buyers become more common, according to experts.

WHAT IS THE TREND?

Put simply; more and more local farmers are joining forces to create syndicates to buy Australian rural property that is on the market.

Banongill Station at Skipton sold last year to a syndicate of buyers for $80m.

Mulcahy and Co Accounting and Financial Services Ballarat director Chris Mulcahy has been involved in multiple syndicate purchases in western Victoria over the past several years.

Mr Mulcahy helped form a syndicate of buyers to purchase parts of the Corinella Group’s Western District aggregation this year and in 2020 he helped buyers with their $80m purchase of Banongill Station at Skipton.

He said he expects to see more syndicate buyer groups as local farmers vie for a share of large aggregations on the market.

“In the last five years we have helped local farmers get their hands on 48,000 acres (19,424ha), that was once corporate land and is now with the local people thanks to syndicates,” Mr Mulcahy said.

“Often it has been a corporate group selling a large parcel of land and local farmers have wanted to get their hands on some, but they can’t afford the whole thing.

“One individual can’t go and buy it all, it is the nature of the circumstances.”

TDC Livestock and Property rural property specialist Tom Pearce, in partnership with TDC founders Ron Thomas, Peter De Garis and David Clarkson, helped put together a syndicate that purchased the Corinella Group’s Glenroy Plains aggregation in December this year.

Mr Pearce shared the same sentiment as Mr Mulcahy and said he expected to see more syndicate buyers in the future.

“We are seeing a trend of some of these properties going to private hands,” Mr Pearce said.

“Once they get in, the corporate group, they can be hard to get out because it is hard for farmers to purchase that much land.

“But people are opening up to the idea of forming a syndicate and the bulk of the expressions are family-based.

Corinella Group agricultural portfolio sold for $370m.

“They have been farming and have had some great years. Now they are looking for expansion and willing to take on anything to expand.”

Another example of an Australian syndicate securing a large-scale property was further north, where the 4155ha Euglo Station at Condobolin, NSW, sold for $16.2m in July 2021.

Wagga Wagga livestock agents James Tierney and Tim Drum in conjunction with Junee farmers Robert and Alison Hart joined forces to purchase the aggregation.

WHY ARE FARMERS CHOOSING TO BUY IN A SYNDICATE?

This year has been exceptional for property sales, with a perfect storm of conditions creating a seller’s market.

According to Mr Mulcahy, these conditions have encouraged corporate investment groups to sell their aggregations, opening the doors for local buyers.

“I assume these corporates have a lifespan and are looking at their balance sheets and they have achieved what they wanted to earlier than they anticipated and so they want to cash in,” he said.

“One of the drivers of the syndicates are the clients who are looking for farmland.

“They contact us or we contact them and make sure there is enough motivation to push through with the deal.

“I think the farming is going quite well at the moment, and with low interest rates, farmers are looking to find that appropriate level of scale.

“If these opportunities come along then farmers want to capitalise and grow their operation.”

Mr Mulcahy also said the details of a syndicate were negotiated before the offer was given to the vendor, meaning who will own what parts of the properties and how much each party will pay was already settled.

Mr Pearce said syndicate buying helped farmers break their drought of trying to secure more property near the Glenroy Plains aggregation in South Australia.

“Going in on something together satisfies the growth farmers are after,” he said.

“The Glenroy Plains aggregation was on our radar and the interest started early with neighbouring property holders.

Euglo in central NSW was sold for more than $16 million.

“There was a couple of guys trying to buy land for three years and they couldn’t get anything to stick, but they were able to join this syndicate and it worked.

“This is important when land is becoming harder and harder to come across.”

ARE SYNDICATE BUYERS A GOOD THING?

In the eyes of the experts, the answer is yes.

Mr Pearce said syndicate buyers had the potential to benefit regional communities, not just local farmers.

“Agriculture is a good illustration of trickle down and everyone benefits in the area,” he said.

“So to see these properties go back into local hands is exciting.

“At the end of the day these guys know the value of the land and pay what it is worth

“And if that benefits the vendor and they get a better return on investment then I think it is the way to go.”

Mr Mulcahy also said syndicate buyers benefited the market, making grand sales much simpler for vendors.

“Often in the selling process the vendor would like to sell in chunks,” he said.

“But with our syndicate, for example with the Corinella Group, they grouped the lots up together and sold them as a whole.

“The question is with all these parcels of land, how can we make it one transaction for multiple pieces of land?”

“Syndicates can make it as straightforward for the vendor as possible.”