Anything around the $2 is a pretty good risk-reward. I would be...

Anything around the $2 is a pretty good risk-reward. I would be a bit surprised if we got back to $1.80's again @pete11, but if there is a market sell-off in general then of course anything is possible.

It is unlikely RFF will be closing the discount to NAV completely in the short-term. This is not just about global rates or Aussie bonds, there are fundamental risks inherent in RFF. Specifically, there are continuing operating risks with relation to macadamias (it has required more CAPEX and time than initially planned, and they have had to scale back the hectares of development in Phase 1); there are valuation risks particularly for horticultural lands (I expect Select Harvest to negotiate lower rents which reduces valuations for ~10% of the portfolio); risks for dividend growth and stability (Dividends > AFFO); and capital allocation risks (particularly related to debt, leverage, and potential for future investments).

However, in saying all that, I feel very comfortable with the current risk-reward. I do believe macadamias are weighing heavily on the discount, and reckon this should reduce in 2024/25 as they increasingly lease out the Phase 1's 3000ha of developed land. I also expect that with the remaining 1800ha macadamia land remaining undeveloped, hopefully, they have learned how to develop future leases better in 2026+. This will close the gap of Dividends < AFFO in FY25.


And while the valuation risks are real, a lot of re-leasing happens in 2026+. In FY26 the lease expiry is more for vineyards / Treasury Wine Estates (I think those rents are relatively stable) and cattle (which currently is depressed due to low cattle prices, but that could change by 2026). The biggest risk of revaluations is almonds as Select Harvest has been performing very poorly and the industry is suffering, which will flow into rents and valuation, but not until FY30. Worthwhile to note that my base case is the gains in agricultural land values (80% of NTA) will be much lower going forward than what we saw in the past couple of years, though water (20% of NTA) could be higher actually.



Happy to buy on weakness and hold. GLTAH.