Rural Funds Group (ASX:RFF) has reported a 17.3% increase in net property income for the half-year ended 31 December 2024, reaching $45.5 million. The growth was driven primarily by additional rental income from its expanding macadamia developments.
The agricultural real estate investment trust (REIT) delivered adjusted funds from operations (AFFO) of 5.73 cents per unit (cpu), aligning with full-year forecasts. Distributions per unit (DPU) came in at 5.87 cpu, also in line with projections. However, the adjusted net asset value (NAV) declined by 1.2% to $3.10 per unit, largely due to revaluations of interest rate swaps.
Portfolio developments and leasing activity
During the period, Rural Funds Group secured leasing agreements for eight properties valued at $119 million, with a weighted average lease term of 9.7 years. Notable transactions included:
- Cropping properties Mayneland and Baamba Plains leased to TRG JV.
- Lease extensions for five vineyards leased to Treasury Wine Estates (ASX:TWE).
- The cattle property Cerberus leased to a private farming enterprise.
Unleased assets continue to undergo development, with many already generating operating returns. Improved conditions in key commodity markets contributed to positive net farming income for the half-year.
Funding and financial outlook
The group’s syndicated debt facility limit was increased, providing funding for committed capital expenditure, including the completion of its 3,000-hectare macadamia projects leased to TRG JV. The company also identified additional asset sales to lower gearing towards its 30-35% target range.
Looking ahead, full-year FY25 forecasts have been reaffirmed, 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 characteristics of its portfolio, structural rental growth mechanisms, and ongoing productivity improvements in its farmland assets.
