Rural Funds Group bolsters FY26 earnings

Rural Funds Group, the ASX-listed agricultural REIT (RFF), posted a significant jump in full-year earnings to $124.1 million, bolstered by the divestment of several assets.

RFF substantially improved its earnings from FY25's $20.3 million thanks to asset revaluations following the sale of several assets at a premium to book value.

Also contributing to earnings was net property income, which increased by 5.7% to $100.5 million.

This increase was primarily from additional rental income on capital expenditure, mainly macadamia orchards, and indexation.

Net farming income also improved by $1 million compared to the prior year, driven by favourable cropping results on two cotton properties.

Some of the completed sales included 2254ML of high-security Murrumbidgee River water entitlements, the Maryborough cropping properties and the Cerberus cattle property.

RFF managing director David Bryant said the group completed the sale of two sugarcane properties for $6.3 million and a 6254-megalitre water entitlement for $53.3 million during the period.

"Importantly, the water entitlements sold were not needed to support RFF's existing properties and were therefore surplus to portfolio requirements," Bryant said.

"While these entitlements have delivered strong capital growth since their acquisition, the income from annual allocation sales has been modest in recent years and below RFF's cost of debt, making their sale accretive to adjusted funds from operations (AFFO)."

During the 12 months, RFF commenced planting an additional 694 hectares of macadamias on the unleased portion of Rookwood Farms. The project is designed to improve utilisation of existing land, water and infrastructure assets and support future earnings growth.

"Developing agricultural assets is a core part of RFF's strategy, generating both income and capital growth by bringing underutilised land and water into higher-value production, which lifts potential income generation and value," he said.

RFF develops and leases agricultural properties, such as almond and macadamia orchards, vineyards, cattle properties, cropping properties, agricultural plant and equipment, cattle and water rights. It manages a $1.8 billion property portfolio.

Rural Funds Management is the responsible entity and manager of RFF. It manages over $2.5 billion of agricultural assets on behalf of retail and institutional investors.