This article is from the Australian Property Journal archive
ASX-listed Rural Funds Group (RFF) says international institutional investors are looking to lease its growing portfolio of macadamia orchards as it moves further into sector.
It has ambitions of developing 5,000 hectares of macadamia orchards and launched a $100 million raising in July that would be used to develop 1,000 hectares.
Only a sliver of RFF’s $1.3 billion portfolio is currently accounted for by macadamias. Most is weighted to almond orchards and cattle, with unitholders this month supporting to increase the guarantee for feedlots operated by Brazilian giant JBS.
RFF acquired two mature macadamia orchards totalling 475 hectares in Beerwah and Bauple in November for $58.2 million, with a development capex of $12.7 million. It added to its Fitzroy River Basin holdings, picking up the 27,879-hectare Kaiuroo cattle and cropping aggregation in Central Queensland’s Mackenzie River district for nearly $69 million, while it paid $13.8 million for The Pocket neighbouring its Comanche backgrounding and breeding cattle property to which it has started planting macadamias.
Announcing its interim results, it said development of stage one of the macadamia orchards, being 1,000 hectares in Maryborough, Bundaberg and Rockhampton, is on track to be materially complete in FY22, and it said discussions with several institutional investor lessees are occurring.
“RFM continues to focus on two strategies within the portfolio which seek to increased earnings for investors. Firstly, the conversion of assets to higher and better use, specifically within the macadamia sector. The second strategy, improving the productivity of natural resource assets, is being deployed on existing cattle and cropping assets within the portfolio,” it said.
Property revenue increased to $34.855 million, primarily due to income from the increased J&F guarantee, acquisitions, capital expenditure and lease indexation. Adjusting for income received from the Mooral orchard sale in the prior corresponding period, property revenue increased $3.8 million, or 12%, on the prior corresponding period.
Total comprehensive income fell from $58.4 million to $38.8 million, and earnings per unit from 17.26c to 10.36c. They were driven by positive revaluations primarily on cattle properties, while the gain on sale of $32.5 million, mostly from Mooral, accounted for the falls.
First half adjusted funds from operations was 5.8c per unit (down from 6.6 cpu), and distributions 5.87 cpu (up from 5.64 cpu), both in line with forecasts.
Full-year AFFO is forecast to be 11.9 cpu. FY22 forecast distributions are expected to grow 4% to 11.73 cpu, and FY23 forecast distributions by 4% again to 12.20 cpu.
