Alterra to develop 300ha WA avocado project

Alterra to develop 300ha WA avocado project

Shares in Perth-based agri-investor Alterra (ASX:1AG) rose by almost 17 per cent today after announcing plans to develop what could become one of the largest avocado farms in the country.

Alterra came out of a trading suspension yesterday after releasing news it had secured a 30-year lease to develop and operate a 300-hectare avocado orchard in the southwestern horticultural hotspot of Pemberton.

The lease includes another 10-year option and once developed the orchard could represent around 10 per cent of the state's planted hectares of the green gold.

The project will be administered by a special purpose vehicle (SPV) subsidiary set up by Alterra called Carpenters Beedelup, which is leasing land and water resources from Red Moon Property Holdings, an entity related to WA's largest privately-owned fruit grower, packer and wholesaler the Casotti Group.

Carpenters Beedelup will seek to raise capital in FY21 from a development capital syndicate, following which Alterra intends to maintain a direct equity interest.

"With approximately 2,500 hectares of current avocado production in Western Australia, this single development has the potential to represent about 10 per cent of WA's planted hectares, with positive pre-feasibility results providing Alterra with a basis to pursue development," says Alterra managing director Oliver Barnes (pictured left with Alterra executive director Andrew McBain).

"The Carpenters Project site is exceptional with the region highly regarded for its favourable climate, reliable rainfall, excellent soil types and quality water, which makes this site a high-value asset for Alterra.

"The Carpenters Project is a significant opportunity to launch Alterra's new business model with an outstanding asset supported by quality management."

He claims Alterra operates in an asset class that is known to hedge inflation with limited correlation to economic cycles.

"There has been strong demand at an institutional level, with billions of dollars invested into Australian agricultural assets over the past 12 months," he says.

"This is the first of several planned projects for Alterra and I am pleased to say the Company's opportunity pipeline is strong.

"Over the coming months, we will conduct detailed engineering studies, soil testing and financial due diligence, in combination with arranging the development capital required to bring the full project to fruition."

Casotti Group director and general manager Mario Casotti says Carpenters adjoins the family's renowned "Casuarina" property in a premium growing region, with access to significant high quality water and nutrient-rich Karri soils perfect for avocado production.

"We are pleased to work with Alterra to realise our dream of developing Carpenters and are confident in Alterra's capacity as project developer and manager to successfully deliver this unique opportunity," he says.

As part of the lease, Red Moon will be responsible for the works associated with land clearance and construction of the dam sites.

Casotti Group has guaranteed to provide the Carpenters Project with 500 megalitres of water per annum from their adjoining property "Casuarina", which will be used to support avocado plantings while a dam is constructed which - subject to feasibility - is expected to hold approximately 3.0 gigalitres of water.

Alterra has already secured exclusive rights to local avocado genetics and production data from Pemberton avocado company French's Group.

"French's Group has seen increased international demand for premium Pemberton avocados with an excellent shelf life which supports a significant export opportunity for the industry and Alterra," says French's Group founder William French.

"The region is recognised within Australia for high-quality product, and we believe the Carpenters Project will help drive global demand for avocados from the region."

While Alterra has not provided a parent company guarantee for the SPV's obligations under the lease, Alterra is committing an initial $350,000 to the SPV for working capital purposes including; first two years lease payments and ongoing feasibility costs.

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