Rural Funds (ASX:RFF) share price jumps on first-half financials

Shares in the Aussie agriculture REIT are pushing higher. We have the details.

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Key points

  • The Rural Funds share price is climbing by 4% today
  • The company made substantial additions to its property portfolio over the period 
  • Distributions are expected to increase by 4% in FY23

The Rural Funds Group (ASX: RFF) share price is rising today after the agricultural real estate investment trust (REIT) released its latest half-yearly results.

Within the results, the REIT announced additions to its property portfolio.

At the time of writing, the Rural Funds share price is 3.94% higher at $2.90.

Let's take a look at what the company announced.

What did Rural Funds report?

Highlights of Rural Funds' HY22 financial results (ending 31 December 2021) included:

  • Total net profit after tax of $38.2 million (against its prior corresponding period of $58.4 million)
  • Property revenue up 12%, or $3.8m, to $34.8 million
  • Balance sheet capacity "within target range", with gearing at 33%
  • Distributions "in line" with forecast at 5.87 cents

During the half-year period, the company made some substantial additions to its property portfolio. As of December 2021, the group's total assets were at $1.25 billion, up from $1.04 billion in June 2021.

Among these additions was a $100 million entitlement offer achieved back in August, used "to fund the developments of 1,000 hectares of macadamia orchards, the purchase of an 8.3 GL water entitlement and for additional asset acquisitions".

In November, the company acquired "three cattle and cropping properties" that totalled 33,926 hectares and three mature macadamia orchards.

What else did Rural Funds report?

The company also confirmed a forecasted adjusted funds from operations (AFFO) of 11.9 cents per unit (cpu) and distributions of 11.73 cpu for the second half of FY22. This increase is expected with funds from the J&F Guarantee and acquisitions.

Looking forward to its FY23 distributions, it estimates a 4% increase on FY22 at 12.20 cpu, including franking credits.

Looking forward to the next half, Rural Funds aims to focus on two main strategies to increase investor earnings:

Firstly, the conversion of assets to higher and better use, specifically within the macadamia sector.

The second strategy, improving the productivity of natural resource assets, is being deployed on existing cattle and cropping assets within the portfolio.

Rural Funds share price snapshot

Since the beginning of the year, the Rural Funds share price has dropped 8%. In comparison, the S&P/ASX 200 Real Estate Index (ASX: XRE) has fallen nearly 9%.

Over the last 12 months, Rural Funds shares have increased by 22%.

The company has a market capitalisation of $1.13 billion.

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