This article is from the Australian Property Journal archive
RURAL Funds Group (ASX:RFF) is furthering its push into the macadamia industry, embarking on its orchard developments as it expects to be able to maintain its distributions growth target.
The trust has 67 properties across the almonds, cattle, cropping, vineyards and macadamias sectors, with 78% of its lessees being corporate and/or listed entities.
Its portfolio has a long weighted average lease expiry profile is 11.1 years.
Earnings per unit increased 94% during the first half to 17.3 cents per security, largely due to the sale of the Mooral almond orchard at a 21% premium to book value.
Adjusted funds from operations per unit was 6.6 cents and distributions per unit was 5.64 cents, both in line with the full-year forecast.
The trust’s manager, Rural Funds Management (ASX:RFM) said horticultural staff have relocated to central Queensland to oversee the macadamia developments, with 500 hectares planned for the 2021 calendar year.
It said RFF has existing earnings and balance sheet capacity to enable the commencement of the developments while continuing to fund distributions, and its FY22 forecast distributions of 11.73 cents per unit are in line with the 4% growth target.
“The developments are expected to provide ongoing earnings growth in future years.
“The investment into macadamias is consistent with RFM’s strategy of investing in sectors in which Australia participates globally, improving portfolio diversification, and utilising RFM’s development and operating knowledge.”
RFM’s experience in the sector includes three orchards in Bundaberg that it is currently farming.
During the period it secured additional land and water for its macadamia orchard development program. This includes a 21,600 megalitre allocation that will be sourced from Rookwood Weir, south west of Rockhampton, following a $32.4 million deal. It also intends to convert large portions of Rockhampton cattle stations to macadamia orchards, and has a similar plan for 2,200 hectares of sugar cane farmland in near Maryborough.
Increased revenue came from an increase of guarantee associated with JBS-operated feedlots, from $82.5 million to $99.9 million.
Adjusted net asset value per unit increased 4% to $2.01 per unit.
