On 3 December 2018, Rural Funds Group (ASX: RFF) declared a dividend of 2.6 cents per share for the December quarter of 2018 which is having an ex-date of 28 December 2018, the record date of 31 December 2018 and payment date of 31 January 2019.
Rural Funds Group, an agricultural real estate investment trust (REIT), is having a portfolio of 47 properties across 6 agricultural sectors in multiple climatic zones. The company is currently following a strategy to generate a stable income plus capital growth by owning and improving farms.
In FY 2018, the total assets (Proforma basis) of the company increased by 42.4 percent to $836.7 million which was mainly due to the acquisitions in the cattle and cotton sectors, almond orchard development capital expenditure and valuation increases of cattle, almond and macadamia assets. The earning per unit (EPU) of the company increased by 3.6 percent to 17.3 cents mainly due to the additional lease income from acquisitions and capital expenditure and non-cash changes in the fair value of investment properties. Adjusted funds from operations (AFFO) per unit increased by 1.6% to 12.7 cents in FY 2018. The growth of AFFO was impacted by the delayed settlement of Natal cattle property aggregation. The company has reported that since the July 2018 the equity raise liquidity of the company has improved and three properties in cattle and cotton sectors have been contracted to be acquired. The company reported a Proforma gearing of 29% which was below the lower than the target range of 30-35%.
On 12 July 2018, Rural fund management (RFM) announced a $149.5 million Entitlement Offer to fund the acquisition of five feedlots from JBS Australia and the provision of a guarantee to support the working capital requirements of the feedlots. The company has received an approval from the Foreign Investment Review Board to acquire the five feedlots from JBS. RFM will continue to undertake due diligence on properties, particularly in the cattle and cotton sectors, where there are acquisition and development opportunities that can grow the Fund’s scale and distributions into the future.
In the month of May 2018, the company contracted to acquire Comanche, a 7,600-ha cattle property which is located in central Queensland, for $16.6mn. The property is suitable for both breeding and backgrounding cattle and it also offers productivity development opportunities for the company.
For FY 2019, the company is expecting AFFO per unit to be around 13.2 cents and Distribution per unit to be around 10.43 cents. The Forecast AFFO payout ratio for FY 2019 is 79% which will provide capacity for continuing DPU growth and can be deployed to income-generating investments.
In the last six months, the share price of the company increased by 8.08 percent and traded at a PE ratio of 15.920x. RFF’s share traded at $2.25 with a market capitalization of circa $749.56 million as on 4 December 2018 (AEST 4:00 PM).
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