RFF 0.50% $2.01 rural funds group

Paying out greater than AFFO is quite common practice in REITs...

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    Paying out greater than AFFO is quite common practice in REITs when they're undertaking a development and going through a lease-up phase. Its something to keep an eye on, but not a red flag. However I am slightly concerned about the changing risk profile of RFF, we're moving further away from a passive landlord to becoming more of a landlord and developer - spending capex to develop uncontracted orchards.

    I haven't don't too much research into the demand / supply dynamics of madamias but if this were to move strongly against us we may find ourselves un-tenanted and unable to monetise this capex leaving us with a hole in our AFFO. David has a wealth of experience in agriculture and i'm sure RFM have done the work to justify this, but something to keep in mind - especially as we're now reaching share prices 20%+ above NTA.

 
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