"Rural Funds Group(ASX: RFF)
One of my favourite dividend shares on the local market is this agriculture-focused property group. I’m a big fan of Rural Funds due to its high quality assets and long term leases. In respect to the latter, the company recently reported a weighted average lease expiry of ~11 years. Combined with periodic rental increases, I think this has positioned it well to grow its income and distribution at a solid and predictable rate for many years to come. Its shares currently offer a trailing 4.4% distribution yield."
MF's author James Mickleboro also previously ramped RFF on 4 August 2019:
"Rural Funds Group (ASX: RFF)
Rural Funds is an agriculture-focused property group which I think is amongst the best dividend options on the local market. I’m a big fan of the company due to its high quality assets and its positive long-term distribution growth potential. The latter is thanks to its long-term tenancy agreements and periodic rent increases which I believe will allow Rural Funds to grow its distribution at a solid rate long into the future. The company’s units currently offer investors a 4.4% forward distribution yield."
And yet again another ramp of RFF today 6 Aug 2019 by Motley Fool by author Sebastian Bowen:
Although Rural Funds is a smaller REIT, it makes the cut today after posting a 2.17% weekly gain to close Monday at $2.35. Rural Funds is a REIT specialising in agricultural land and currently offers a 4.11% yield at a P/E ratio of 16.86. It appears as though investors are loving the defensive nature of agricultural land and are taking a shine to RFF shares as a result."
Since Trading Halt, MF have released recent revelations about RFF today (1 hour ago) by author Tom Richardson:
"Rural Funds share price craters on short seller’s explosive allegations
The Rural Funds Group Limited(ASX: RFF) share price tanked 42% to $1.36 this morning on the back of a string of outrageous allegations made publicly against the agricultural real estate investment trust by activist short seller Bonitas Research.
Please note these are only allegations made by a ‘short seller’ for now and should not be relied upon as fact or to draw an investment conclusion.
By way of background Rural Funds Management (RFM) as a privately held business is responsible for managing the ASX-listed RFF investment trust, but Bonitas Research is alleging that privately held RFM has been used to siphon off funds via different transactions from the trust to the private management company.
Bonitas alleged: “In total, we calculate that through these two transactions plus various ongoing cash expenses and fees since FY’14, RFF Management had siphoned A$ 86+ million into RFM at the ultimate expense of RFF minority shareholders,” .
These are some serious allegations, but only the tip of the iceberg according to Bonitas.
It also alleges, among other things, that RFF fabricated rental income by around $28 million and overstated net assets (the aggregate value of all its agricultural businesses, farms, cattle herds, etc) by more than 100%.
This is notable as if the allegation is correct or if RFF has even been inflating assets to a lesser extent, it could be in breach of debt covenants relating to the minimum value of net assets. Debt can be a killer for any business.
In conclusion, according to Bonitas, RFF has raised a total of $475 million via equity raisings and borrowings since FY 2014 on the back of its allegedly misleading reporting and activities.
“We believe nearly 100% of RFF’s reported profits since FY’17 are attributable to either fabricated rental income or non-cash gains from dubious fair value changes applied to RFF’s assets,” Bonitas concluded.
Bonitas rates the equity as worthless and of course is financially incentivised to paint as worse a picture of RFF as possible.
The stock has been suspended while RFF’s management team prepares its response to the shock allegations. As such it’s important to note that management should be given the chance to explain themselves or rebut the allegations."
For your info.
RFF Price at posting:
$1.36 Sentiment: Hold Disclosure: Held
(20min delay)