Ann: Release of Bucephalus document, page-148

for all those opining management fee should be based on income not asset value, you haven’t thought it through. RFF holds lots of different types of assets. Some are high yielding but depreciate in value over time, most notably the poultry. Others are low yielding but give capital gain over time, like the cattle country. Both are important for diversity. We don’t want management incentivised to buy extra poultry - that’s the worst performing most risky part of the business currently.

My only concern with RFF going forward is that this episode will significantly slow momentum for further growth through acquisitions. They have been regularly raising capital at a significant premium to NTA, which naturally has an averaging effect to increase NTA immediately. This has been very earnings accretive for long term holders and has a lot to do with the reason a rural REIT has been returning 20% year on year. I don’t doubt that they would have been negotiating and planning for the next round, but will have to wait until this all blows over as holders will not take kindly to a big raising at a steep discount to the last one, let alone discounted to NTA.