Rural Funds Group Limited (ASX:RFF) Managing Director David Bryant presents the company's half year FY18 results.
Highlights:• Property revenue 23% higher due to rent on development capital expenditure, rent from new acquisitions and lease indexation
• TCI and EPU lower mainly due to non-cash changes in the fair value of derivatives
• AFFO per unit lower in HY18 following the issue of new units as part of a $78.6m Entitlement Offer.Funds raised reduced debt, creating balance sheet capacity to fund the Natal acquisition2
• AFFO per unit is forecast to be higher in the second half of FY18 due to revenue from Natal acquisition2 (commenced 8 Dec 2017) and Murrumbidgee HS water allocation sales (predominantly Jan/Feb 2018)
• FY18 AFFO and DPU forecasts reaffirmed
• Forecast FY19 DPU of 10.43 cents, consistent with 4% annual DPU growth target
• Increase in total assets predominantly due to Natal acquisition, almond capital expenditure and revaluations
• Gearing of 37% remains within target range of 35% plus/minus 5%, with sufficient capacity for committed capital expenditure
• WALE of 12.5 yrs provides stability of income and long term structured rental growth via a mix of indexation mechanisms
• Cattle acquisition includes Natal transaction ($63m) settled 8 Dec 2017 and Cattle JV breeder acquisitions ($3m)
• Rewan valuation 17% higher than acquisition price plus deployed capital expenditure, primarily due to increased carrying capacity
• Lynora Downs valuation reflects increased irrigation area and infrastructure. Expansion of irrigation area ongoing
• Murrumbidgee water valuation a result of increased price of entitlements traded on market
