Rural Funds Group (ASX: RFF) shares won’t be going anywhere on Thursday after being placed in a trading halt prior to market open this morning. The Rural Funds share price closed yesterday’s session flat for the day at $2.60.
Today’s trading halt was accompanied by a slew of announcements from the company. Let’s take a look at what Rural Funds reported.
Capital raising and acquisition
The Rural Funds share price will remain frozen today after the company updated the market with details of a proposed capital raising and acquisition.
In a statement to the ASX, Rural Funds Group announced it proposes to undertake a $100 million equity raising via a fully underwritten entitlement offer.
The company noted the equity raising will be used for the development of 1,000 hectares of macadamia orchards. In addition, Rural Funds intends to use the capital raised to acquire cattle properties and water entitlements.
The equity raising will be undertaken at $2.47 per unit, a 5% discount from the last closing price of Rural Funds shares. The company noted that brokers Bell Potter, Wilsons and UBS will be underwriting the capital raising.
The Rural Funds share price will remain halted until the earlier of the open of trading on Friday 9 July 2021, or when the company announces the outcome of the proposed capital raising.
Rural Funds share price snapshot
Rural Funds is a real estate investment trust (REIT) that owns a diversified portfolio of Australian agricultural assets. These include almond and macadamia plantations, cattle, and vineyards. Overall, Rural Funds targets distribution growth of 4% per annum by owning and improving farms that are leased.
Rural Funds shares have remained relatively subdued in 2021. After an initial sell-off earlier this year, the Rural Funds share price has recovered to trade 0.78% higher for the year so far.
In February, Rural Funds flagged the company’s intentions to plant 500 hectares of new macadamia orchards this calendar year.
Provided a successful capital raising, Rural Funds forecasts FY22 adjusted funds from operations (AFFO) of 11.6 cents per unit (CPU).
Throughout FY20 and FY21, the group has acquired $104 million of land and water for the development of macadamia orchards. It expects 500 hectares to be planted by November 2021 with an additional 500 hectares planted by June 2022.
Based on the current share price, the group has a market capitalisation of around $884 million.