Rural Funds Group (ASX:RFF)

Investment strategybearing fruit in 1H FY18 

Rural Funds Group (ASX:RFF) – Australia’s only diversified agricultural REIT –

announced a 23% YoY increase in interim revenue to A$24.1m. This increase was

due to rent on development capital expenditure, lease indexation (CPI), and rent

from new acquisitions (the December 2016 purchase of the $34.4m

Murrumbidgee River water entitlement and $26.5m Lynora Downs cotton

property).

The key cash profit metric -adjusted funds from operations (AFFO) - increased by

22% to A$15.4m from the pcp’s A$12.6m. However, as a result of share dilution

following a $78.6m capital raise (at $1.70ps) in mid-2017, unit AFFO at 6c was

some 5% down on last year’s 6.3c.

Management guides that AFFO per unit should be higher in 2H FY18E due to rental

income from the Natal cattle property acquisition (effective 8 December 2017),

and from high security water allocation sales ex Murrumbidgee (predominantly in

Jan/Feb 2018).