Rural Funds Group (ASX: RFF) released their half-year results for the period ended 31st December 2018 this morning.
Rural Funds Group is a real estate investment trust (REIT) that owns farms and leases them to tenants. Started in 1997, Rural Funds Group now manages $1.2 billion in agricultural assets across New South Wales, Queensland, South Australia and Victoria.
Here Are The 4 Key Points
- Property revenue increased 27% to $30.7 million
- Total comprehensive income increased by 47% to $24.62 million
- Earnings per unit increased 17.4% to 7.73 cents per unit
- Distributions/dividends per unit increased by 4% to 5.22 cents per unit
Acquisitions
During the half, Rural Funds Group made multiple acquisitions. These included five cattle properties ranging from a 1,062 ha property in New England to an 8,280 ha property in central Queensland. They also acquired a cotton property in central Queensland for $17.8 million. The acquisitions for the period totalled $87.1 million.
Management Commentary
Included in the results release was this statement: “Between August 2018 and February 2019 RFM announced the acquisition of four additional cattle properties and one cotton property, to be funded from balance sheet capacity. All cattle properties have productivity development potential and accompanying leases with ten-year terms with a market rent review in the fifth year.”
On the increase in earnings: “An independent revaluation for the Kerarbury almond orchard resulted in an increase of $15.6 million, or 10% to the prior value. Earnings were higher for the period mainly due to the independent valuation for Kerarbury, higher income resulting from acquisitions and the sale of unleased annual water allocations.”
Outlook
Rural Funds Group has confirmed the FY19 forecast for adjusted funds from operations (AFFO) of 13.2 cents per unit and distributions of 10.43 cents per unit. This would represent an increase of 4% from FY18. Looking further ahead, guidance was also given for distributions in FY20, which was 10.85 cents per unit. This would continue the growth trend of 4%.
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Disclaimer: At the time of writing, Max does not own shares in any of the companies mentioned.
