nottheaverageactuary

Actuarial news and views from Cape Town and beyond

For Sale: The biggest property on Earth

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The collected landownings amassed by Sir Sidney Kidman in the late 19th century are for sale, news.com.au reported a month ago. This collection of Australian cattle stations is the largest non-sovereign piece of property in the world. It has an area of 101 000 square km, which is more than three-quarters the size of England, and has been owned by the same family for more than a hundred years.

The price, you ask? – A meagre US$325 million.

It’s difficult to say whether this is a good valuation for a gigantic piece of desert, given the obvious lack of comparable properties. However, it is a reportedly well-run business with 187 000 head of cattle (as of March 31, source: beefcentral.com) distributed over the ten distinct stations. At that time, the herd itself was valued at US$117 million and the land at US$197 million. The company is reported to be debt-free. While fluctuations in both the markets and stock levels could make asset values highly variable, it appears that the price of US$325 million is actually asking a premium on NAV. This is very interesting for such a large and unmarketable property, and may be due to its proven track record as a going concern.

The sale seems to have been timed with a rising demand for Australian beef in China, which makes cattle farming an increasingly lucrative business. Recently signed free trade agreements with Asian nations will remove certain tariffs involved in the supply chain. There are clearly economies of scale to be taken advantage of, and the land is relatively well-diversified geographically to mitigate the risk of losses from drought.

Greg Campbell, managing director of the holding company, S Kidman and Co, is optimistic about the returns promised by the land. “Don’t be fooled by desert,” he says. “Desert can be an attractive place to do business.”

Anna Creek in South Australia is the largest cattle station in the world. Source: news.com.au

Source: beefcentral.com

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