Farmland asset manager New Zealand Rural Land Company has reported a record net profit after tax of NZ$39.7 million ($24.2 million; €24.1 million) for the year ending June 30, 2022, a period in which its total assets increased by 75 percent to reach NZ$289 million.
The firm, which listed on the New Zealand Stock Exchange in December 2020, buys and leases out farmland in New Zealand. It is currently focused on the dairy sector but has ambitions to expand into other sectors including horticulture, viticulture, forestry, sheep and beef. It raised money from its initial public offering but has since raised additional third-party private capital.
NZRLC owns 11,710ha of rural land that it leases to seven tenants with a weighted average lease term of 9.8 years, spread across Canterbury, Otago and Southland on New Zealand’s South Island. The assets are managed by New Zealand Rural Land Management, which is led by founder and executive director Richard Milsom.
The firm said its net asset value per share had increased by 19 percent to reach NZ$1.656 (up from NZ$1.397 in 2021, a shortened 292-day reporting period due to the IPO date), with adjusted funds from operation rising to NZ$4.3 million from NZ$-0.8 million in 2021. It announced it would pay a final divided of 1.60 cents per share, with total dividends for FY22 at 3.61 cents per share.
In a statement, the firm said: “The outlook remains positive for future earnings growth. [NZRLC’s] land portfolio has performed well over the last 18 months. This demonstrates both the attractiveness of rural land and [NZRLC’s] advantages for acquisitions and the ability to structure sound leases with high-quality tenant partners.
“Importantly, rural land remains an increasingly scarce and critical primary sector infrastructure asset. [NZRLC’s] portfolio serves as a long-term inflation hedge and benefits from predictable income from long-term leases.”
The firm completed four acquisitions in FY22 comprising approximately 4,200 ha of land in Otago and Southland, all pastoral dairy farms with a number of potential alternative uses. Those acquisitions have already shown an increase in value of 26.2 percent (NZ$23.6 million on the purchase price), the firm said.
NZRLC said that continuing high levels of inflation in New Zealand would “have a limited but net positive impact” on the company, thanks to its leases incorporating regular, uncapped, CPI reviews that could see higher inflation results in higher-than-anticipated rental growth.
It added that higher levels of rural land sales in New Zealand are expected to continue, reflective of the asset class’ positive characteristics and growing appetite for NZ-based produce.