Fox's Peak sells for $6.3m

Rural Equities Ltd has sold Fox's Peak Station in South Canterbury for $6.3 million, in a move toward dairy at the expense of sheep and beef.

An undisclosed New Zealand buyer signed an unconditional agreement to buy the 4799hectare high country sheep and beef farm, which has been owned by REL for more than 20 years.

The sale, including livestock, farm plant and machinery, is scheduled to settle on January 22.

REL owns a $200m portfolio of 30 farms throughout the country and a pine forest near Ngaruawahia. Most of these assets came from a merger of REL with related company New Zealand Rural Property Trust last month.

Hastings-based REL chairman Sir Selwyn Cushing said selling Fox's Peak was about rebalancing the company's assets to take advantage of a resurgent dairy industry.

"This was a sheep and beef farm and a very good one but we have quite a few good sheep and beef farms," he said.

The sale comes less than two months after Fonterra raised its dairy payout forecast 95 cents to $6.05 per kilogram of milk solids.

Sir Selwyn said the sale had been in pipeline for several years but was shelved when rural property prices slumped this year.

The $6.3m price was in line with the farm's last valuation in June.

Money from selling Fox's Peak Station would be invested in dairy, either by upgrading one of REL's dairy support units to a fully operating dairy farm or by buying new property.

Sir Selwyn would not rule out selling off more sheep and beef farms to fund a dairy expansion.

Most of REL's assets are in sheep and beef. It has only six dairy farms and two dairy support units.

REL's fortunes fell during the recession when it went from a $32.39m profit in the June 2008 year to a $19.84m loss June 2009 year. This included an overall $33m reduction in its asset value, largely attributable to investment properties.

Despite a tough year, Sir Selwyn remained positive about the REL's prospects.

"New Zealand's resurgence will be led by agriculture, horticulture and viticulture," he said.

Sir Selwyn's family trust, H&G Ltd, is REL's biggest shareholder with 32 per cent, followed by RotoruaTrust Perpetual Capital Fund Ltd with 11 per cent.

- © Fairfax NZ News