Soros-backed Adecoagro takes land gains to $132m

Adecoagro realised more of the substantial gains within its 283,000-hectare landbank by selling one of its Argentine farms in a deal valuing it at 11 times the purchase price a decade ago.

The South America farm operator, in which billionaire George Soros's investment group is the top shareholder, said it had sold 51% of the company controlling its Santa Regina farm, in Buenos Aires province, for $13.0m, equivalent to $7,058 per hectare.

The, unnamed, buyer has an option, expiring in June 2014, to buy the rest of the farm at $7,370 per hectare, taking the total bill to $26.1m.

That is some $3m above an independent valuation of the farm by consultancy Cushman & Wakefield in September, and compared with a purchase price of $2.3m in 2002, equivalent to $625 per hectare.

Capital gains

Adecoagro said that the sale "evidences our ability to continue generating shareholder value through its land transformation activities".

The group, which has realised gains of more than $132m from farm sales over the last seven years, said that measured disposals allowed it "to redeploy its capital efficiently, and continue expanding its operations by acquiring land with high transformation potential".

The proceeds from the San Regina deal "will be reinvested in projects with higher risk-adjusted returns, which will allow the company to continue growing and enhancing shareholder value".

The group, which has now sold more than 40,000 hectares since 2006, claimed an internal rate of return of 34.2% from Santa Regina, even higher than the 31.8% achieved on the San Jose farm, also in Argentina, which the company sold in August.

'Fertile, loamy soils'

Adecoagro sold Santa Regina under a sale and leaseback deal, meaning that it will keep farming the 3,600-hectare site, located some 330 kilometres from the major grain port of Rosario.

The group describes the farm as having "deep, fertile, loamy soils", enabling "high yields, mainly in the production of wheat, soybeans and corn".

Adecoagro shares, which are listed in New York, finished 3.5% higher at $8.99.

Separately on Friday, ValuEngine analysts issued a "strong buy" rating on the stock, which they said "should be trading at $9.24".

ValuEngine recommendations are made largely on technical factors, such as "short-term price reversals, Intermediate-term momentum continuation, and long-term price reversals".

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