BrasilAgro highlighted the gains to be made from Brazilian
farmland by selling a second farm from its 170,000-hectare portfolio for a
The Brazilian farm operator, which counts Argentine
agriculture giant Cresud as its major shareholder, said it had sold its Horizontina
farm in eastern Brazil for R$75.0m ($36.7m).
The sum is nearly twice what BrasilAgro paid for the farm in
April 2010, and 40% above the value that Deloitte placed on the site at the end
of that year.
The gain is not all profit, with the group having spent a
considerable sum developing the 14,359-hectare site, which is valued in the
company's books at R$46.0m, representing the acquisition price plus follow-on
investment, with an allowance for depreciation.
Nonetheless, BrasilAgro claimed an internal rate of return
of 27% from the farm, if profits from crop production, as well as capital
gains, are included.
"The sale is part of the company's business strategy, which
aims at capital gains from property sales, in addition to gains in agricultural
production," the company said.
The deal follows the disposal of a smaller farm, in the
state of Goias, a year ago, for more than twice total investment cost,
including its acquisition in 2006.
Horizontina was part of BrasilAgro's portfolio of grain and
oilseed producing farms, with the company also owning cattle and forestry
assets further south, and sugar cane-focused operations in Brazil's centre
The farm had been developed from 2,000 hectares of arable
land at acquisition to 7,500 hectares planned for the coming 2012-13 season.
BrasilAgro revealed last month it obtained environmental
licenses to transform more of Horizontina into crop land.
It will continue to operate the farm until July.
BrasilAgro shares closed up 2.6% at R$9.95 in Sao Paulo.