Rural Funds Group (RFF) H2 2025 earnings summary

Executive summary

• FY 2025 saw a 9% increase in net property income and a return to profit in farming operations, with AFFO up 4.5% year-over-year and slightly above guidance.

• Results aligned with forecasts, delivering 11.5 cents per unit AFFO and 11.73 cents per unit distributions, both in line with guidance.

• Gearing increased marginally due to CapEx on development assets, but asset divestments of $89 million helped manage leverage.

• 84% of assets are leased, with a WALE of 13.9 years, supporting stable income.

• Independent valuations on 68% of the portfolio resulted in a 1.2% uplift in book values.

Financial highlights

• Net property income rose 9.2% year-over-year to $95.1 million, driven by new macadamia orchard leases and annual indexation.

• AFFO per unit grew 4.5% to 11.5 cents, exceeding half-year forecasts.

• Four distributions paid, totaling $0.1173 per unit, with a payout ratio of 102%.

• Adjusted NAV per unit decreased from $3.14 to $3.08, mainly due to mark-to-market of interest rate swaps.

• Earnings per unit dropped to 5.22 cents from 30.28 cents year-over-year, mainly due to mark-to-market revaluations on interest rate swaps and lower property revaluations.

Outlook and guidance

• FY 2026 AFFO forecast at 11.7 cents per unit, with distributions expected to remain constant and a payout ratio of 100%.

• Revenue growth for FY 2026 projected in the low to mid-teens, but AFFO growth guided at 2% due to lower rent on an almond orchard and limited interest rate cuts.

• Major priorities include continued development of Rookwood Farms and Kaiuroo, and non-core asset sales.

• Distribution yield forecast at 6.0% based on recent unit price.