DomaCom thumbs up to reopening of Kidman sale

From
Arthur Naoumidis

Arthur Naoumidis

The property fund manager DomaCom, has welcomed the decision by S. Kidman & Co to reopen the company’s sale process for Australian parties.

DomaCom Chief Executive Officer Arthur Naoumidis said this announcement, which has been endorsed by Treasurer Scott Morrison, simply reflects the reality that there is genuine public interest in keeping the iconic Kidman pastoral station in Australian hands.

“When DomaCom entered the bidding for Kidman just before Christmas via the process of its ASIC-registered fund, there was no shortage of sceptics in the market who believed it was little more than a publicity stunt.

But what DomaCom realised was that there was enormous interest among ‘mum and dad’ investors to invest in part of this country’s agricultural heritage.

Opinion polls show ordinary Australians are deeply concerned about retaining our agricultural land, as well as the businesses that flow from them, and what DomaCom’s crowd-funding proposal did was give them the opportunity to give expression to that concern.

The end result has been that about 4,000 retail investors have pledged about $60 million over the past two months to keep Kidman Station in Australian hands.”

The Kidman Station is an aggregation of 16 pastoral properties including outstations and supporting properties in breeding, feedlot and cropping. It is spread across Queensland, the Northern Territory, South Australia and Western Australia and is home to 185,000 cattle. At 101,000 square kilometres, it is larger than Ireland and almost half the size of Victoria.

Morrison blocked the proposed sale to Chinese interests in November on the basis that it would be contrary to the national interest.

Naoumidis says the decision by Kidman to open up the sale process again to give Australian interests the opportunity to acquire this pastoral empire is a shot in the arm for the DomaCom offer.

“We are hopeful that the announcement by Kidman will encourage more retail investors to come forward to invest in Kidman. Aside from the issue of keeping it in Australian hands, the investment reality is that under our proposal the land will be separated from the operating business, with the land expected to return about 8%-9% to our investors.”

Seventh generation pastoralist and ASIC-licensed financial adviser Stephen Burgin, who has joined forces with DomaCom to promote its bid, says there are sound commercial reasons for retail investors to invest in Kidman Station.

“Burgeoning agricultural direct property investment, underwritten by strong domestic and export demand, should continue in the medium to long term, especially in light of sustained foreign currency exchange rates.
Investors, who can participate for as little as $2000, will, in fact, be the landlord and thus fractionally participate in the lease back income stream from the station operators, involving large institutional ASX-listed entities.

They will receive stable income, several times that of current cash rates. In addition, part of the income will be tax free and tax deferred due to the nature of agricultural investment.

DomaCom also has a secondary market to provide a liquidity facility provided buyers and sellers are in the market. It operates in a similar way to online trading in ASX listed shares.”

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