Rural Funds Group (ASX: RFF), an agricultural real estate investment trust (REIT), has posted a 17.3% rise in net property income for the half-year ending December 31, 2024, reaching $45.5 million. This growth was largely driven by increased rental income from its expanding macadamia developments.
The company reported adjusted funds from operations (AFFO) of 5.73 cents per unit (cpu), in line with full-year forecasts, while distributions per unit (DPU) were 5.87 cpu, meeting projections. However, the group saw a 1.2% decline in its adjusted net asset value (NAV) to $3.10 per unit, primarily due to revaluations of interest rate swaps.
Key Developments and Leasing Activity
During the reporting period, Rural Funds Group secured leasing agreements for eight properties valued at $119 million, with a weighted average lease term (WALT) of 9.7 years. Key transactions included:
- Mayneland and Baamba Plains cropping properties leased to TRG JV.
- Five vineyards leased to Treasury Wine Estates (ASX: TWE) with lease extensions.
- Cerberus cattle property leased to a private farming enterprise.
Unleased assets are undergoing development, with many already generating returns. Positive conditions in key commodity markets also contributed to a strong net farming income for the half-year.
Funding and Financial Outlook
The group increased its syndicated debt facility limit to support ongoing capital expenditure, including the completion of a 3,000-hectare macadamia project leased to TRG JV. Rural Funds Group is also pursuing asset sales to reduce gearing toward its target range of 30-35%.
Looking ahead, the group has reaffirmed its full-year FY25 forecasts, with:
- AFFO expected to reach 11.4 cpu.
- Distributions forecasted at 11.73 cpu, with the same level anticipated for FY26.
Strategic Positioning
Rural Funds Group continues to focus on long-term leases, with a weighted average lease expiry (WALE) of 13.0 years and a predominantly triple-net lease structure. Approximately 79% of forecasted FY25 income will come from corporate and institutional lessees.
The company also highlighted the inflation-hedging benefits of its portfolio, along with structural rental growth mechanisms and ongoing productivity improvements across its farmland assets.
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