Ann: Acquisition and equity raising presentation, page-3

Ballsy.

The capital raise at $2.47 will probably pull the stock price back to that level. Though I think this is a good idea for the company, because even at this price it's well above it's intrinsic value ($2.20?) so they're kind of getting a 10% return in book value just via capital allocation. Current shareholders may not agree (look at what happened to SHV when they did their cap raise, price plummetted, but has since rebounded).

The problem I have with the capital raise is that 85% of the $100m is going to macadamia developments. There was a lot written up at the time about macadamia developments being higher CAPEX at the start, higher returns in the long run, but also higher risk as it seems quite a challenge to set them up. And I reckon, this is their 'mea culpa' in terms of taking more money/time than they expected. And I quote: "As these assets (macadamia orchards) currently achieve low rates of return, RFM has reduced it's FY22 management fee to zero for this portion of the portfolio".

There is some money left over for some new cattle acquisitions and water entitlements - but these aren't going to be massive or instantly accretive to the AFFO, and I think the water is for servicing the existing properties anyway. Anyone know?

I've said before that I thought the macadamias would scare some investors, as it's going to drive down the AFFO while no doubt RFF will continue their 4% increases on dividends. They should be reducing dividends to reduce the capital raise, so as not to dilute shareholders - essentially paying ourselves and copping the management fee in the process. If you look at their graph below, you'll see the impact of macadamias on FY21 which they have confirmed their outlook (well that's great, the equity raise is in the FY22 financial year - again, disingenuous). In this cap raise they have now also confirmed AFFO of 11.6 for FY22 (lower), but will pay out 11.73cpu dividends (over 100% payout). Hmm, that's warning signs for me.



Watching from the sidelines.