Outlook For Rural Funds Management (RFF)
Hello Market Matters Wondering what your thoughts are in relation to the RFF report out? I was unclear as to the EPS outlook. Thanks for your great commentary. Regards Rob
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Answer
Hi Rob,
RFF are pounding the pavement with an investor roadshow following their results released in August. We view RFF as a very steady real-estate investment trust holding agricultural assets – basically farmland, which they lease to high-quality operators across a range of agricultural sectors with a portfolio worth ~$1.6bn spread across Cattle properties (northern Australia feedlots & breeding), Almond orchards (Riverina, SA), Vineyards (SA & VIC), Tree nut and cropping assets & Macadamia developments (emerging growth area).
- RFF earns rent; tenants handle operations and commodity risk. Leases are typically escalated by CPI or fixed increases (2–3%) and the trust distributes most of its income as quarterly distributions.
Based on consensus numbers, earnings are expected to grow at ~4% per year ongoing driving a similar sort of annual uplift in the dividend, with a projected yield of 6.08% over the coming 12 months, unfranked given it’s trust structure.
