Rural Funds Management, the responsible entity of Australian Securities Exchange-listed Rural Funds Group, has entered an agreement to lease up to 3,000 hectares of macadamia orchards it owns in Queensland to a company managed by asset manager The Rohatyn Group.
The company taking on the lease is a joint venture between TRG and an unnamed “global institutional investor,” RFM said in a statement to the ASX.
The macadamia orchards are located in Bundaberg, Maryborough and Rockhampton, and were previously used for other types of agriculture before being acquired by RFM and converted into higher-value assets.
The 40-year lease agreement will see the TRG JV take on an initial 1,200ha before an additional 1,800ha in FY24, subject to RFM completing the water supply to orchards in Rockhampton.
RFM and its wholly owned subsidiary RFM Macadamias will continue to provide orchard development and management services. The lease was agreed on triple-net terms with rent to be paid on cumulative capex deployed “at a rate comparable to horticultural asset leases,” RFM said. It is still subject to Foreign Investment Review Board approval.
In August, RFM published annual results for Rural Funds Group for the year ended June 30, 2022.
The firm reported that Rural Funds Group’s earnings had increased by 52 percent to 55.6 cents per unit, while the trust’s adjusted net asset value increased 24 percent to A$2.69 ($1.84; €1.83) per unit. Adjusted funds from operations sat at 11.7 cents per unit, an increase of 9 percent on the year prior.
RFM said the increase in earnings was largely driven by revaluations in the cattle sector (up A$105 million), the almond sector (up A$18 million) and water entitlements (up A$12 million).
In the reporting period to June 30, 2022, the firm leased four cattle properties to the ASX-listed Australian Agricultural Company, Mort & Co and Clarke Creek Energy, respectively. It also acquired three further properties that it intends to develop before seeking lessees.
The trust now owns 68 properties worth a combined A$1.5 billion, with a weighted average lease expiry of 11.8 years. It earns 35 percent of its revenue from cattle, 32 percent of revenue from almonds, and 13 percent from macadamias, with smaller interests in cropping, vineyards and other asset types.