Page 15 - National Poultry Newspaper

Rural Funds Group sells poultry for $72 million
RURAL Funds Man- agement Limited, as responsible entity for Rural Funds Group (ASX:RFF) has entered into agreements for the sale of RFF’s poultry assets to ProTen Invest- ment Management Pty Ltd as trustee for ProTen Investment Trust for $72 million, subject to cer- tain conditions.
RFF owns 17 broil- er chicken farms, 11 of which have an average age of 30 years with grower agreements and leases ex- piring in FY24.
RFM has determined continued investment in this sector is better suited to businesses with greater economies of scale.
ProTen is a specialist developer and operator of broiler chicken farms with significant indus- try presence, including in the Griffith region of NSW, where the majority of RFP’s operations are based.
The transaction requires agreement from the lessee to the early termination of the leases.
This requires ap- proval by the unithold- ers of RFM Poultry (NSX:RFP), the lessee and operator of the farms.
A notice of meeting is
expected to be sent to RFP unitholders in early November to convene a meeting for late-Novem- ber 2019.
If approved, by ordinary resolution, the transaction is expected to occur by December 31, 2019.
Funds realised from the sale of these infrastructure assets and associated plant and equipment, will be ini- tially used to repay debt.
Subsequently, it is ex- pected this capital will be invested in natural resource predominant as- sets that have potential for higher total returns.
The first of these acqui- sitions is expected to be three Western Australian cattle properties. Acquisition of WA cattle properties
RFM has entered into options to acquire three cattle properties: Petro, High Hill and Willara, for $22.6m inclusive of estimated transaction costs.
The properties are lo- cated between 200km and 280km north of Perth.
The WA cattle prop- erties will be leased to Stone Axe Pastoral Com- pany Pty Ltd.
The properties will al- low SAP to expand and further diversify its
Wagyu beef operations. Consistent with other cattle properties acquired by RFF, the WA proper- ties have the potential to improve carrying capacity through grazing area de- velopment and additional
irrigation.
The leases will be on
largely the same terms as existing cattle property leases, including a 10-year term with a rent review in year five.
Settlement is expected to occur April 2020. Summary and updated forecasts
The intended sale of the poultry assets and rein- vestment of proceeds in natural resource predomi- nant assets is consistent with RFM’s strategy to make acquisitions that:
growth rate of adjusted funds from operations per unit over time, through market rent review mech- anisms;
• Are in industries where Australia possesses a comparative advantage;
• Are in sectors in which RFM has experience and expertise; and
• Enhance climatic di- versification.
Current FY20 forecast distributions totalling 10.85 cents per unit re- main unchanged.
FY20 forecast AFFO, as- suming the completion of the transactions described in this disclosure, will be 13.4 cpu, reflecting a pay- out ratio of 81 percent.
A presentation was al- so lodged with the ASX providing further details regarding the transactions
and updated portfolio RFF’s investment objec-
RFF is a stapled secu- rity, incorporating Rural Funds Trust and RF Ac- tive, trading under the ASX code ‘RFF’.
Rural Funds Manage- ment Ltd is the responsi- ble entity of RFF.
Government’s investment
will fuel agriculture’s
renewable goal

THE National Farm- ers’ Federation has a goal for Australia’s farm energy sources to be 50 percent re- newable by 2030.
NFF CEO Tony Ma- har said the recent pledge by the Federal Government to inject $1 billion in new en- ergy generation, stor- age and transmission would assist in achiev- ing that goal.
“While renewable energy investment continues to develop at pace, the real chal- lenge that needs ad- dressing is support for the transition to ap- propriate transmission and storage assets,” Mr Mahar said.
“Energy is a signifi- cant cost for agricul- ture, especially for the already under-pressure dairy and irrigation in- dustries.
“For intensive sectors like dairy, irrigation or horticulture, with pumping or refrig- eration requirements, costs can be as high as 17 percent, according to the Australian Farm Institute.”
High prices directly subtract from farm profitability.
The input require- ment is constant, so the higher marginal costs of energy cannot be offset.
Equally, a lack of reliability (electricity
being available when it is required) may cause farmers to rely on other options, such as generation powered by diesel or gas.
“The expansion of renewable energy on- farm is a win for farm- ers and the environ- ment,” Mr Mahar said.
The NFF recently collaborated with the CEFC to release the Transforming Austral- ian Agriculture with Clean Energy report, which is a set of initia- tives that may assist in lowering on-farm en- ergy use and carbon emissions.
Mr Mahar said the NFF was committed to reducing the agri- culture value chain’s reliance on fossil fuels in favour of renewable sources.
“To achieve this, we will absolutely require investment in new en- ergy sources and new approaches to genera- tion, storage and trans- mission,” he said.
“Funding that pro- vides a pathway for renewable energies to become part of the farm energy mix is welcomed.”
The announcement progresses NFF’s stat- ed priorities of solving the energy trilemma of lower prices, greater reliability and con- sequent lowering of emissions.

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About Rural Funds Group
RFF owns a diversified portfolio of high-quality Australian agricultural as- sets.
tive is to generate a stable income stream derived from leasing its assets to suitable counterparts and capital growth through any appreciation in the value of those assets.
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