James Powell, General Manager – Investor Relations, Corporate Affairs and Sustainability for Rural Funds Management presents on the FY23 results of the Rural Funds Group (ASX:RFF).
James Powell: In August, Rural Funds Management reported the financial results for the Rural Funds Group for the full year ended 30 June 2023. One of the key highlights throughout the year was entering into a lease for up to 3,000 hectares of macadamia orchards, which are under development in Queensland. As a result of entering that lease and the subsequent income that has been received on those assets, RFF saw property revenue increase approximately 10 per cent during FY23, primarily as a result of those macadamia developments.
The fund has a policy to have all of the assets revalued at least once every two years. During FY23, RFM arranged independent valuations for two thirds of the assets within the portfolio. As a consequence of asset reevaluations, the portfolio's adjusted net asset value increased 9 per cent to $2.93 per unit. Positive reevaluations were observed across all of the major agricultural sectors within the portfolio, and the highest gains were seen in macadamia and almond orchards, which were revalued.
From a capital management perspective, the fund has sufficient debt headroom to fund the capital expenditure which is forecast to be deployed on the macadamia developments over the next year. The fund also has an increased level of interest rate hedges as well as fixed debt, which provides future protection for further interest rate rises.
From an earnings perspective, FY23 results were in line with prior forecasts. Rural Funds Management is forecasting AFFO growth over approximately 5 per cent in FY24, equating to 11.2 cents per unit. The fund also forecasts to pay out distributions of 11.73 cents per unit, which is in line with the distribution received in FY23. Over the coming year, Rural Funds Management will continue to focus on rolling out the developments of various assets within the portfolio. This includes the higher and better use development strategy within the macadamia segment, as well as productivity improvements for cattle and cropping properties.
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