Rural Funds Group · ASX:RFF
Rural Funds — Merger or Acquisition (July 2021)
28 slides from Rural Funds's merger presentation, Jul 8, 2021
Slide 1: Acquisition and equity raising
Managed by: Acquisition and equity raising 8 July 2021
Slide 2: Disclaimer and glossary of terms
Disclaimer and glossary of terms Disclaimer This presentation has been prepared by Rural Funds Management Limited (ACN 077 492 838, AFSL 226 701) (RFM) as the responsible entity of Rural Funds Group (RFF) and has been authorised for release by the Board of RFM. RFF is a stapled security, incorporati
Slide 3: Contents
Contents 1. Purpose of the Equity Raising Presenters 2. Equity raising details and conclusion 3. Appendices David Bryant Tim Sheridan Daniel Yap James Powell Managing Director Chief Operating Chief Financial General Manager – Officer Officer Investor Relations & Marketing 3
Slide 4: Purpose of the Equity Raising
1 Purpose of the Equity Raising Macadamia planting material Glendorf, central Queensland, May 2021. 4
Slide 5: Overview
Overview Equity Raising for macadamia developments, cattle acquisitions and an accretive water transaction. • The purpose of the Equity Raising is to provide capital for: 1. The development of 1,000 ha of macadamia orchards; Purpose 2. To acquire cattle properties to be leased by corporate lessees;
Slide 6: Macadamia development update
Macadamia development update Macadamia developments once leased will provide material long term AFFO accretion. Maryborough orchard development • In FY20 and FY21 RFF acquired $104m land and water in Rockhampton, Bundaberg and Maryborough for the development of 5,000 ha of macadamia orchards. • As t
Slide 7: Cattle and cropping acquisitions
Cattle and cropping acquisitions The Equity Raising provides $100m of capital for cattle and cropping acquisitions. Macadamia development locations2 • The capital requirements of the development of 1,000 ha macadamia orchards (including Rookwood Weir water settlement)1 equals $85m. The Equity Raisin
Slide 8: Replicating proven strategies
Replicating proven strategies RFM has a successful track record of executing productivity and higher and better use development strategies. Case study: Productivity improvements Case study: Higher and better use development Name and location ▪ Comanche - Glenroy, central Queensland Name and location
Slide 9: Water Entitlements acquisition
Water Entitlements acquisition RFM believes demand for secure water in this region will increase over the long term, as permanent plantings such as almond orchards, continue. Water Entitlements Lower Murrumbidgee Groundwater area • 8,338ML Lower Murrumbidgee Groundwater Asset water entitlements1 • L
Slide 10: Financial impact
Financial impact FY22 AFFO 11.6 cpu. Accretion from additional acquisitions and finalisation of macadamia lessee. Forecasts and gearing Sources of funds • FY22 forecast AFFO 11.6 cpu. Sources of funds $m • AFFO accretion to be driven by finalisation of macadamia lessee arrangement and Equity raising
Slide 11: Equity raising details and conclusion
Equity raising 2 details and conclusion Cattle grazing at Comanche, pivot in background, central Queensland, May 2021. 11
Slide 12: Equity raising details
Equity raising details Fully underwritten 1 for 8.4 accelerated non-renounceable entitlement offer to raise $100m. Equity raising details • Fully underwritten 1 for 8.4 accelerated non-renounceable entitlement offer to raise $100m. Structure • Record date for Entitlement Offer is 12 July 2021 at 7.0
Slide 13: Timetable
Timetable Retail Entitlement Offer closes 28 July 2021. Participating investors are encouraged to use the BPAY details on their Entitlement Offer and Acceptance Form, or by contacting RFM Investor Services. Timetable Event Date Trading halt and announcement of the Entitlement Offer Thursday, 8 July
Slide 14: Conclusion
Conclusion The Equity Raising provides capital for acquisitions and developments. ✓ AFFO accretion: RURAL FUNDS GROUP (ASX: RFF) • Capital will be applied to acquire assets that will increase AFFO. • AFFO will increase further when macadamia orchards are leased. o ASX-listed agricultural Real Estate
Slide 15: Appendices
3 Appendices Water storage at Lynora Downs, central Queensland, March 2021. 15
Slide 16: Pro forma December 2020 summarised balance sheet
Pro forma 31 December 2020 summarised balance sheet Pro forma gearing of 23.9% following the Equity Raising is below RFF’s target range of 30–35% and provides pro forma balance sheet capacity of up to approx. $185m. Summarised balance sheet Acquisition and Equity ($m) 31 December 2020 Pro forma Rais
Slide 17: Portfolio overview
Portfolio overview Diversification by climatic zone, sector and lessee. Assets map, sector information and key lessees1, 2 Note: 1. Shaded areas denote climatic zones differentiated by rainfall seasonality. Source: Bureau of Meteorology; see Climatic Diversification discussion paper, 20 June 2016. N
Slide 18: Revenue by lessees type, sector and indexation
Revenue by lessees type, sector and indexation Assets are leased predominantly to corporate agricultural operators. Revenue by lessees and counterparts1 Revenue by sector 2 Revenue by lease indexation and mechanisms3 Notes: 1. Figures shown are subject to rounding. Lessees shown by FY22f revenue. Ol
Slide 19: Weighted average lease expiry
Weighted average lease expiry Weighted average lease expiry (WALE) of 9.7 years. WALE 18.0 16.0 14.0 12.0 FY21 revenue ($m) 10.0 8.0 6.0 4.0 2.0 0.0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Vineyards Almonds Cattle Macadamias Cropping Note: 1. Excludes ass
Slide 20: Investment strategy
Investment strategy Productivity improvements and higher-and-better-use development strategies aim to increase total returns and AFFO generation. Spectrum of investment opportunities1 Note: 1. The income and growth figures presented in the chart above have been provided to differentiate the profile
Slide 21: Valuations, valuers and lease expiry
Valuations, valuers and lease expiry Policy to conduct independent valuations at least every two years and rotation of valuers. Property valuation details1 Note: 1. Valuations table as shown in the HY21 financial results presentation. Where no independent valuation has been conducted since acquisiti
Slide 22: Development assets and capital expenditure
Development assets and capital expenditure Productivity and higher and better use developments underway across most sectors. Development and capital expenditure summary1 Note: 1. Five-year developments refer to development potential of assets. Pasture improvement includes stylo and leucaena. Cultiva
Slide 23: Environment, social and governance (ESG)
Environment, social and governance (ESG) Policies and procedures addressing ESG issues. Environment Social Governance RFM and Meat & Livestock Australia: reducing emissions on cattle properties Climate change Employment Compliance committee RFM is playing an active role in contributing to improved e
Slide 24: Key risks
Key risks An investment in RFF, like any investment, involves risk. These risks can be broadly divided between specific risks, property market risks, and general risks relevant to RFF. Whilst the assumptions used in generating the forward looking statements within this presentation are considered re
Slide 25: Key risks (cont.)
Key risks (cont.) Specific risks (cont.) Climate risk and climate change risk Inflation RFM monitors the impact of climate change on RFF’s portfolio of assets and has implemented a Climatic Diversification strategy, including Inflation risk is the uncertainty over the future real value of your inves
Slide 26: International offer restrictions
International offer restrictions This document does not constitute an offer of new units ("New Units") of RFF in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Units may not be offered or sold, in any country outside Aus
Slide 27: Underwriting arrangement
Underwriting arrangement UBS AG, Australia Branch, Bell Potter Securities Limited and Wilsons Corporate Finance Limited will be acting as joint lead managers, bookrunners and underwriters of the Entitlement Offer (Underwriters). RFM has entered into an Underwriting Agreement with the Underwriters in
Slide 28: RFM corporate and operations management
Managed by: RFM corporate and operations management (listed alphabetically by surname) Rural Funds Management Limited For further information: ACN 077 492 838 Tim Sheridan David Bryant AFSL 226701 ChiefDirector Managing Operating Officer Level 2, 2 King Street, Deakin, ACT, 2600 T 029700 6203 9700 T
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