This article is from the Australian Property Journal archive
ROBUST property revaluations thanks to strong cattle market conditions boosted diversified agricultural trust Rural Funds Group (RFF)’s full-year earnings by 52%.
The group posted earnings of 55.6c per unit over FY22, which it largely attributed to revaluations in the cattle sector, which were up $105 million, as well as the almond sector (up $18 million) and water entitlements (up $12 million).
Revaluations also contributed to the 24% increase in adjusted net asset value to $2.69 per unit, combined with acquisitions of $179 million and development capex of $46 million.
Adjusted funds from operations increased 9%, while they were slightly lower on a per unit basis to 11.7c primarily due to the acquisition of three development assets that are currently vacant.
It is forecasting FY23 distributions of 11.73 cpu cash distribution plus 0.47 cpu franking credits, and the forecast AFFO is 10.1 cpu.
“Beyond FY23 inflation will increase RFF’s rental income, interest expenses are well hedged, agricultural land values are likely to be stable and additional rents from development assets are likely,” RFF said.
Rural Funds Group has 68 properties across the almond, cattle, cropping, vineyards and macadamias sectors. About 68% of its forecast FY23 revenue is from corporate tenants and the portfolio has a weighted average lease expiry of 9.1 years.
Four cattle property leases ranging from 10 to 25 years were entered into during the period with ASX-listed Australian Agricultural Company, Mort & Co and Clarke Creek Energy Pty Ltd, which will install wind turbines on an existing cattle property while Mort & Co have leased properties with the intention to develop a cattle feedlot.
RFF said lease negotiations subject to an exclusivity agreement are currently occurring for macadamia developments. RFF has been growing its focus on macadamias, and has ambitions of developing 5,000 hectares of orchards and launched a $100 million raising a year ago that would be used to develop 1,000 hectares.
Gearing ended lower. Additional forward-dated hedges were entered into, increasing the average hedge duration to 8.6 years.
The one-year rolling total return of Australian farmland to the end of March was 14.68%, according to the latest ANREV data, driven by near-equal contributions from income return and capital growth. ANREV’s index measures returns across 65 properties worth $1.86 billion owned or managed by major funds including RFF’s responsible entity, Rural Funds Management.
