Ann: Presentation - FY23 Financial Results, page-10

I hear where you are coming from, but all these sectors are cyclical, so hence their push geographical, sector diversification.

Something hits home to me was a question I put to a Cattle farmer in NSW some years back now, commenting about the price of beef coming off at the time & how that was going to affect the viability of him as a farmer, given that we were looking to lend him some money for expanding the herd numbers (with more food to allow more carrying capacity - similar comments from RFF on developing the properties for the farmers now); This farmers response was that he would simply go to auction & be able to buy a calf at a lower price, just like he would sell at a finished cattle price at a lower price (by weight); Additionally as he would fatten this calf up to adult cattle he had the opportunity retain his margin throughout the growing period of approx. 2 years (or max ideally thereabouts but longer if wanted to), so could time when he sold to try & maximise the return; He added that while he was waiting the cattle simply got heavier, adding to the price he eventually got.

Not a perfect science, but kind of win win I think, or at least a fall back position. A bit like a tree planted for timber does not "go off" so to speak & simply becomes more valuable by size the longer the delay in harvesting, so could time the harvest based on the price it will command.

Another parallel is that the trees RFF has is as they become more mature they become not only more robust, but also get closer to production & higher yields. So not only does the farmland generally grow with inflation long term, but the underlying asset does as well by value add & literally growing as well as the tenant (or RFF if they had to step in as a fallback position) has the ability to earn more then better RFF develops it. This is totally the opposite to Office/Warehouse/Retail, where you can't simply step in to run the business until a new tenant is found, plus the longer you go the more the property will depreciate (vs only much less plant/building infrastructure needed for farmland).

I really like this as a core holding.

I expect that the earnings per share to support the dividend we will get updated in the coming months as the new tenant leases are squared away, as well as potential sale of the non-core assets to reduce debt, both reducing it a bit more in the mean time.

Even if AREITs pull back further which I think they have the potential to do, I think RFF will follow the index in the short term but recover in the medium term as the stock pickers realise it is not just another AREIT, but with different characteristics not really linked as much to the economy as other AREITs.

Price today very promising though.