Rural values keep climbing, page-13

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Rural Funds Group defies drought as profits grow
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Rural Funds grew the value of its portfolio, which includes cattle stations. Supplied
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by Larry Schlesinger

A strategy of diversifying its portfolio to mitigate against drought and climate change, plus investment in cattle stations, helped Rural Funds Group deliver a 29 per cent rise in earnings to $44 million and a 15 per cent boost in its share price in the past financial year.
Rural Funds managing director David Bryant said the impact of the drought on its lessees had been "minimal".
"With our well-annunciated climatic diversification approach of spreading the portfolio [geographically and by rural sector], we have diminished the impact from events like this, which are natural and inevitable," Mr Bryant told The Australian Financial Review.
He said the trust had secured sufficient water rights to not only provide enough irrigation for its lessees – which include almond producers Select Harvest and Singapore's Olam – but also to sell excess water in a market where the spot price has surged to $340 a megalitre from $100 because of the drought.

Over FY18 Rural Funds grew the value of its portfolio of almond orchards, cattle stations, vineyards, poultry farms and water rights to almost $800 million, with acquisitions such as the Natal cattle aggregation in Central Queensland and the JBS feedlots.


Its most valuable portfolio remains almond orchards, worth $375 million and forecast to generate almost $30 million in rent next year.
Mr Bryant said, due to intense competition, there would be no further expansion in that sector "for now", but it would look to grow in sectors where it already has investments, including cattle and cotton.
The trust forecast 4 per cent increases in both its adjusted funds from operations (AFFO) and distributions in FY19 – 13.2¢ and 10.43¢ respectively. AFFO for FY18 was 12.7¢, in line with guidance.























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