BrasilAgro turns from farmland buyer to seller

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Agrimoney.com | 5 October 2011
Eduardo Elsztain, Chairman of the Board and Chief Executive Officer of IRSA Investments and Representations (IRSA). Cresud is the farmland subsidiary of IRSA, one of Argentina's largest farmland owners. Cresud operates in Brazil through its subsidiary BrasilAgro (Photo: Reuters/Enrique Marcarian).

BrasilAgro, which amassed some 170,000 hectares of land in less than four years, has turned seller, disposing of the first property which it bought for a price 10% higher than the start of the year.

The Brazilian cotton-to-cattle group, which is controlled by Argentine agriculture giant Cresud, sold for 580,000 bags of soybeans, equivalent to R$26.1m at current prices, Sao Pedro farm, whose acquisition five years ago kicked off the group's expansion drive.

The Sao Paulo-based company said the disposal fulfilled a company business strategy "which seeks, in addition to gains in agricultural production, the profiting of capital gains from properties sales".

While BrasilAgro did not detail the capital gain, it revealed that it had invested R$10.1m in the farm beyond the purchase price, which was struck at 488,000 sacks of soybeans, equivalent to R$11.2m at the time of the deal.

The group has developed cane stands at the 2,450-hectare farm, besides growing corn and rice.

'Very good price'

Brazil land purchases are typically priced in bags of soybeans per hectare, a hangover from days of soaring inflation.

The sale value equates to 45 soybean bags per hectare, which a BrasilAgro spokesperson told Agrimoney.com was a "very good price".

Auditors valued the property at R$23.7m at the end of December.

However, the pace of appreciation appears to lag the annual rate of 21% that BrasilAgro a month ago cited for central Brazil, where Goias is situated.

BrasilAgro is undertaking a debt reduction programme expected by analysts to reduce net borrowings to R$4.2m by the end of June 2012, according to a Reuters poll of analysts.

The figure was R$58.4m at the close of June this year, and R$158.1m a year before.
Original source: Agrimoney
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