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    RFF   AU000000RFF5


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Rural Funds Group (ASX:RFF) provides an update on its recent entitlement offering

08/08/2016 | 12:50am EDT

Rural Funds Group (ASX:RFF) Executive Manager, Funds Management, Andrea Lemmon discusses the recent entitlement offering, where the funds are going and what the new assets will mean for the group.

Rural Funds Group (ASX:RFF) Executive Manager, Funds Management, Andrea Lemmon discusses the recent entitlement offering, where the funds are going and what the new assets will mean for the group.

Rural Funds Management (RFM) as manager and responsible entity of the Rural Funds Group recently completed a $61 million equity raising. The equity raising comprised a non-renounceable entitlement offer for our unit holders, allowing them to acquire one new unit for every four units they held, at the record date of 8th of July. The RFM Board elected not to include a placement component in this equity raising, meaning that those investors who took up their entitlement, retained their proportionate ownership in the Fund. The units commenced trading on the 29th of July 2016.

The entitlement offer saw 41.3 million new units issued. Of these units 24.3 million units went to our existing unitholders, with the balance going through to the underwriters. This reflects a participation rate of around 60 per cent, a similar participation rate to our capital raising in September 2015. Our register comprises 70 per cent of retail investors and this component of our register, had a slightly higher participation right at 65 per cent. Rural Funds Management would like to acknowledge our retail investors and their advisors, and thank them for their continued support and ongoing interest in the Rural Funds Group.

The funds together with debt and retained earnings will be deployed into three separate sectors. Firstly, the Rural Funds Group will acquire three cattle properties. Two in the Gulf of Carpentaria that are used to breed cattle and one in central Queensland, used for fattening cattle. Capital will also be deployed to extend the Kerabury almond orchard by 1,000 hectares, taking total plantings there to 2,500 hectares and making it one of the largest almond orchards in New South Wales. And finally, funds will also be deployed towards our macadamia orchards acquired in March 2016.

The cattle assets are a natural resource predominant asset. This is important to the Fund because this type of asset has higher potential capital growth, than infrastructure assets such as poultry farms. The cattle and macadamia assets both fit RFF’s climate diversification strategy. This strategy is designed to lessen the likelihood that multiple lessees will experience wetter or drier conditions, at the same time. Importantly, the transaction is adjusted funds from operation accretive, which supports growing distributions. It also grows the Rural Fund Group’s WALE, or weighted average lease expiry to 15.2 years.

RFF will announce its annual results on or around the 24th of August. An ASX announcement will advise you of the exact date and time. You’ll be invited to join a webinar hosted by our Managing Director, David Bryant. Other than that, investors can look forward to an increase in distributions with RFF forecasting a distribution for FY17 of 9.64 cents a unit, an eight per cent increase over FY16. First record date for FY17 distributions is the 30th of September 2016.


ę Financenewsnetwork 2016
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Net income 2021 54,0 M 39,6 M 39,6 M
Net Debt 2021 334 M 245 M 245 M
P/E ratio 2021 16,0x
Yield 2021 4,44%
Capitalization 863 M 637 M 633 M
EV / Sales 2021 17,4x
EV / Sales 2022 16,5x
Nbr of Employees -
Free-Float 93,0%
Duration : Period :
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Mean consensus OUTPERFORM
Number of Analysts 4
Last Close Price 2,54 AUD
Average target price 2,68 AUD
Spread / Average Target 5,48%
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Managers and Directors
David Anthony Bryant Managing Director & Director
Daniel Yap Chief Financial Officer
Leslie Guy Julian Paynter Non-Executive Chairman
Tim Sheridan Chief Operating Officer
Michael Geoffrey Carroll Independent Non-Executive Director
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