Wednesday, August 15, 2012

Soros-backed Adecoagro sells farm at 14 times cost (AGRO)

The stock is trading below Soros' average cost at $10.72.
From Agrimoney:
Brazil-based farm operator Adecoagro, in which billionaire George Soros's investment group is the top shareholder, showed the gains to be made from South American farmland by selling a site for 14 times what it paid for it a decade before.
Adecoagro, which owns nearly 300,000 hectares of land in Argentina, Brazil and Uruguay, said it had sold its San Jose site for $1,212 per hectare, compared with a purchase price of $85 per hectare in 2002.
The gain reflected, besides the buoyant South American land market highlighted by peer SLC Agricola last week, the development of the site, in Sante Fe, Argentina, from a solely ranching operation to a mixed farm.
"Agecoagro implemented a sustainable production model that allowed it to grow row crops over 6% of the farm and to increase the productivity of the pastures used for cattle grazing," the group said.
Look through to rest of portfolio?
While failing to reveal the cost of development, it said that the sale price of $9.25m for the farm represented an internal rate of return of 31.8%, and booked an operating profit of $7.96m from the deal.
The price was also 31% higher than the valuation of the farm by Cushman & Wakefield in an appraisal last September, raising questions over the potential uplift to the rest of Agecoagro portfolio.
"This farm sale reflects Adecoagro's ability to monetise gains generated by land transformation and commodity appreciation, as well as its focus on maximising return on invested capital," the group said.
The deal took to $111.5m its gains from the sale of 10 farms, totalling 37,000 hectares, since 2006....MORE