This article is from the Australian Property Journal archive
AMID a storm of allegations over fraud and asset inflation from firms in the US and Hong Kong, agricultural assets owner Rural Funds has sold a portfolio 17 poultry farms for $72 million, just under book value.
Funds from the sale will be used to pay down the ASX-listed company’s debt, and then for natural resource predominant assets, the first of these to be three Western Australian cattle properties, located between 200 and 280 kilometres north of Perth, for $22.6 million from Brent Smoothy.
The properties will be leased to Stone Axe Pastoral Company Pty Ltd and allow SAP to expand and further diversify its Wagyu beef operations.
“Consistent with other cattle properties acquired by RFF, the WA properties have the potential to improve carrying capacity through grazing area development and additional irrigation,” managing director, David Bryant said.
Leases are for 10 years and settlement is expected by April.
The poultry sheds have been sold to ProTen, a specialist developer and operator of broiler chicken farms and which has an existing presence in the Griffith region of New South Wales, where the majority of RFP’s operations are based.
“RFM has determined that continued investment in this sector is better suited to businesses with greater economies of scale,” Bryant said.
Eleven of the farms have an average age of 30 years, and the portfolio sold below the book value of $75 million.
In August, US-based short seller Bonitas Research took aim at Rural Funds, declaring its stock “worthless” in a report that subsequently wiped out $355 million from the RFF’s value in 30 minutes during morning trade.
Only a month later, HK advisory firm Bucephalus Research said it had conducted its own research into RFF following the report and said it was “very concerned” and that “RFF’s unitholders … are inadvertently being drawn into a Ponzi scheme”.
“Criminal fraud is hard to prove, but we see a clear cut case of financial engineering and creative accounting being used to inflate asset values and line the pockets of the management company,”
Rural Funds has sinced launched legal action against Bonitas, alleging it suffered loss and damage as a result of the making of the allegations.
Rural Funds said the Bucephalus criticisms were substantially similar to those made Bonitas, and referred investors to its previous ASX announcements and the Ernst & Young report.
“RFF rejects the allegations made by Bucephalus. Short sellers like Bonitas, and those associated with them, make substantial profit from a declining RFF securities price,” RFF said.
“Bucephalus and Bonitas have each released documents that are false, misleading and speculative without any inquiry being made of RFM before their release. Their documents are entirely without substantiation and are made out of the jurisdiction in their false view that they are beyond regulatory scrutiny in Australia.”
RFF’s current FY20 forecast distributions totalling 10.85 cents per unit remain unchanged. FY20 forecast AFFO will be 13.4 cpu, reflecting a payout ratio of 81%.
