RURAL Funds Group (RFF), which is the largest fund managed by Rural Funds Management (RFM), has recorded a positive first half to the 2019 financial year, according to its latest report.
Since June 30, 2018, RFF has significantly increased its property and livestock investments in the Eastern States by more than $233 million, effectively becoming Australia’s biggest meat processing company.
For the six months ending on December, 31, 2018, RFF recorded $30.7m in property revenue which was 27 per cent higher than the corresponding period in 2017, due to recent transactions, development capital and lease indexation.
Increased property revenue also saw a rise in total comprehensive income of $24.62m and adjusted funds from operations of 6.4 cents per unit (cpu), up from $16,749m and 6cpu (7pc), respectively, from the same period in 2017.
During this first half of the 2019 financial year, RFF raised $149.5m at $1.95 a unit from shareholders to buy five feedlots from Australia’s largest meat processing company, JBS Australia, worth more than $52.7m.
With a combined capacity of 150,000 standard cattle units, the deal involved JBS leasing back the feedlots for a 10-year term.
The feedlots which RFF acquired were Queensland assets Beef City Feedlot, Toowoomba, and Mungindi Feedlot, Mungindi and in New Sales Wales the Riverina Beef Feedlot, Yanco, Caroona Feedlot, Quirindi and Prime City Feedlot, Griffith.
Some years ago, the ownership of JBS’s cattle assets was transferred to a different entity controlled by the Batista family, J&F Australia, which RFF also took over in the process through its finance facility, worth about $250m.
With the cattle, this five-feedlot deal represented an agreement of more than $300m, which is one of or possibly the largest transaction ever seen in the Australian grain-fed beef industry.
From July 2018 to February 2019, the group also purchased $87.1m of investments through its entitlement offer, totalling about 20,549 hectares.
These properties included Comanche, Rockhampton, Queensland of 7599ha which was bought for $16.7m; 8280ha Cerberus, Rockhampton for $10.8m and leased to Katena Pty Ltd; 2942ha Mayneland, central Queensland, for $17.8m; 1728ha Dyamberin, in the New England region of NSW for $14.1m which was leased to Stone Axe Pastoral Company (Stone Axe); 1065ha Woodburn, in the New England region was bought for $7.5m and leased to Stone Axe and 6486ha Cobungra, Mt Hotham, Victoria for $36.9m and was also leased to Stone Axe.
As at December 31, RFF claimed to own $871.256m worth of total assets across 49 properties (including feedlots Beef City and Riverina Beef and cattle properties Woodburn and Cobungra which hadn’t settled at the time), compared to $637.808m with 38 properties at June 30, 2018.
RFF’s assets are spread over six commodities in Queensland, NSW, Victoria and South Australia.
Almond properties hold the most value out of RFF’s portfolio, with four properties worth $401.4m followed by 16 cattle properties of 656,056ha worth $269.1m, 17 poultry properties worth $79.3m and on a smaller scale are properties for cotton, vineyards and macadamias.
The report stated that RFF’s latest acquisitions have “been consistent with RFF’s strategy and objectives to increase diversification, scale and liquidity and add leases with market rent reviews and productivity improvement opportunities”.
RFM will continue to oversee and manage existing assets and developments while considering new investments and leases.
Having been operating for 22 years, RFM currently manages $1.2 billion worth of assets and employs more than 95 people in Australia.
