Rural Funds Group

For the half year ended 31 December 2025, net property income increased by $3 million to $49 million, up 7%. AFFO was $21.5 million, or $0.55 per unit, and reported earnings were $44 million, or $0.113 per unit, compared with $13 million in the prior period. RFF paid two distributions totaling $0.0587 per unit, in line with forecast. Adjusted NAV per unit was $3.10, up $0.02, and pro forma gearing was 39.1%. Management said AFFO and distributions are on track to meet full-year guidance, and that FY27 committed CapEx will be significantly lower than in prior years. They also said they are targeting approximately $260 million of asset sales over the next 12 months, which should help move gearing toward the 30% to 35% target range.

David Bryant framed the strategy as using asset development to lift returns while keeping most revenue from long-dated leases on a diversified agricultural portfolio. He highlighted Kaiuroo as an example of the model, saying Stage 1 is complete and more development will follow, making the asset more profitable and more attractive to lessees. He also said the business will now lean more on asset sales and livestock-related growth rather than more balance-sheet-heavy development, given the higher interest-rate environment.

Daniel Yap said the refinancing completed in November and December produced a tenor extension and a 5 to 10 basis point reduction in margins versus the previous tranches. He also noted the core debt facility remains within covenants and has enough headroom to fund committed CapEx for FY26 and FY27 if needed. On capital structure, management said the facility is about 60% hedged, with hedging potentially increasing as asset sales reduce debt.

Analysts focused on the asset-sale plan, refinancing margins, yields, and the proposed increase to the J&F guarantee. Management said the sales pipeline includes more water entitlements and some low-yielding cattle properties, and that the target has been lifted from $200 million to $260 million to help return gearing toward 30% to 35%. On the J&F guarantee, management said the structure has shown no variability in returns and is accretive, potentially adding up to $0.01 per unit of AFFO on a full-year basis if fully utilized. They also said cattle-price volatility has not changed RFF’s returns from the guarantee, since fees are based on the guaranteed amount rather than cattle prices.