Value of Rural Funds' almond orchards soar to $91m

The valuation uplift, which incorporates a $24 million gain from capital expenditure to plant and grow 1200 hectares of new trees to date, and $11 million unrealised capital gain, extends the value of the RFF portfolio to about $570 million, with almond orchards accounting for almost a third.

The valuations of its other properties were in line with June 30 book values.

The highly diverse portfolio, managed by rural property veteran David Bryant, was the best performing listed property trust in the 2016 financial year, delivering unitholders a 54 per cent total return.

“We like high-value agricultural commodities like almonds and macadamia nuts, which are benefiting from increased demand from the rising middle classes and the lower dollar,” Mr Bryant told The Australian Financial Review in July.

The valuation increase, excluding capital expenditure, will be a net positive to RFF’s balance sheet but as a non-cash item won’t impact on adjusted funds from operations, from which distributions are paid. As a result, distributions remain in line with its previous forecast of 8 per cent growth and a 9.6¢ payout in the 2017 financial year.

With a market cap of about $350 million, Rural Funds Group is the biggest listed agricultural property trust in Australia with investments spanning vineyards, cotton, cattle farms, poultry farms, almonds and macadamia nuts.

In recent months it has acquired significant water rights including a 9549-megalitre water entitlement in one of the biggest water deals in the Murrumbidgee River irrigation area, 4880-hectare cotton property Lynora Downs in northern Queensland and 242,500 hectares of breeding and finishing cattle properties in northern Queensland for $42 million.