Rural Funds Group (RFF) H1 2026 earnings summary

Executive summary

• Net property income rose 6.8% year-over-year to $48.6 million, driven by higher rents from macadamia orchard developments and annual lease indexation.

• Adjusted funds from operations (AFFO) were $21.5 million (5.53 cents per unit), with distributions of 5.87 cents per unit, both on track for full-year guidance.

• Asset sales and independent valuations confirmed asset values, with $60.7 million in divestments at or above book value supporting balance sheet strength and capital expenditure.

• Gearing remains stable at 39.1%, with a target to reduce to 30%-35% through further asset sales.

• Portfolio value reached $1.99 billion across 61 properties, with 83% leased and a WALE of 13.2 years.

Financial highlights

• Revenue for the half year was $70.2 million, up from $62.2 million year-over-year.

• Net farming income was $1.1 million, with a stronger second half expected due to upcoming harvests.

• Earnings for the half were $44.1 million, up from $13 million in the prior period, aided by gains on interest rate swaps and water entitlement sales.

• Interest expense rose by $4 million due to reduced capitalized interest as development programs concluded.

• Distributions of 8.80 cents per unit were declared and paid during the half year, totaling $34.3 million.

Outlook and guidance

• Full-year AFFO and distribution guidance reaffirmed at 11.7 and 11.73 cents per unit, respectively.

• Second half farming income expected to be significantly higher, supporting full-year AFFO targets.

• Additional asset sales planned to further reduce gearing and fund CapEx.

• Distribution increases are expected once the payout ratio falls below 95%, likely in 12-24 months.

• Portfolio strategy focuses on income and capital growth from developing and leasing agricultural assets, with a preference for low-cost production and diversified sectors.