By Editor, Global AgInvesting Media
In a milestone for its agricultural investment strategy, Rural Funds Group (RFF) has announced the sale of four developed cattle properties and a significant water entitlement package for a combined $255.6 million. The transaction represents a 22.7% premium over the assets’ combined book values, marking a successful execution of the fund’s long-term “acquire and develop” mandate.
In a press release by Rural Funds Management (RFM)—the responsible entity for the ASX-listed agricultural Real Estate Investment Trust (REIT)—the announcement details the exchange of contracts for three central Queensland properties (Rewan, Wyseby, and Cerberus), the Cobungra property in Victoria, and the divestment of 2,500 ML of New South Wales river water entitlements.
A Proven Strategy of Development and Realization
Since 2016, when Rural Funds Group first ventured into the cattle sector with the purchase of Rewan, the fund has continuously built up its cattle portfolio. Excluding feedlots, RFF’s cattle property acquisitions were valued at $567.9 million as of December 31, 2025.
The core of RFM’s strategy has been to identify agricultural properties with substantial capacity for productivity growth. Once acquired, the fund implements targeted capital improvements—such as upgrading water infrastructure, enhancing pastures, and expanding cultivation areas—to boost the land’s overall cattle carrying capacity.
“It is pleasing to see the acquisition and development strategy we set out to unitholders when first entering the cattle sector has been delivered in full,” said Tim Sheridan, Chief Operating Officer of Rural Funds Management, in the press release.
“The result is substantial gains for unitholders,” he added.
Breakdowns of the Asset Sales
The individual property divestments highlight the massive valuation gains achieved through active asset management:
- Rewan (Central Queensland): Spanning 17,479 hectares near Rolleston, Rewan was RFF’s inaugural cattle acquisition in August 2016 for $31.2 million. Over ten years, RFM overhauled its water systems and pastures to increase its adult equivalent (AE) carrying capacity. It sold for an estimated net proceeds of $106.9 million—representing a staggering 47% premium over its December 2025 book value of $72.8 million. This marks the largest single asset sale in RFF’s history.
- Cobungra (Victoria): This 6,497-hectare breeding property located at the foot of Mount Hotham was acquired in March 2019 for $36.8 million. Under RFF’s ownership, pasture, fencing, and roads were heavily upgraded before leasing it to premium Wagyu producer Stone Axe Pastoral Company. Cobungra has been sold for an estimated net proceeds of $50.3 million, subject to Foreign Investment Review Board (FIRB) approval.
- Wyseby (Central Queensland): Acquired in June 2023 for approximately $37.0 million due to its proximity to Rewan, the 14,071-hectare property was sold for $43.2 million—a 23% premium to its book value of $35.1 million. The property was purchased by a party related to the existing lessee in conjunction with the neighboring Rewan property.
- Cerberus (Central Queensland): Purchased in September 2018 for $10.8 million, the 8,280-hectare Rockhampton property underwent extensive infrastructure upgrades, leading to improved cattle weight gains and weaning rates. It sold to a party related to the existing lessee for $34.1 million, registering a 30% premium to its book value of $26.2 million.
Strengthening the Balance Sheet
Beyond generating robust returns, these divestments serve a key structural purpose for RFF: debt reduction.
The net proceeds of $255.6 million will initially be used to pay down RFF’s core debt facility. This move aligns with RFM’s stated goal to keep the REIT’s gearing levels within a target range of 30% to 35%. On a pro forma basis, factoring in the net proceeds and projected capital expenditure for the second half of 2026, RFF’s gearing is expected to drop significantly to 31.6%, down from 39.1% at the end of December 2025.
“The sale of these assets provides substantial gains to reduce debt or provide reinvestment opportunities within the portfolio, therefore, on a standalone basis are expected to be accretive to the Rural Funds Group,” said Sheridan in the release.
Settlements are expected to take place predominantly in the first half of FY27. Moving forward, the transactions are projected to deliver a net benefit to the fund’s Adjusted Funds From Operations (AFFO), with the FY26 forecast AFFO of 11.7 cents per unit fully reaffirmed.
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