Rural Funds Group Sells Five Farm Assets for $255.6M at 22.7% Above Book Value
Rural Funds Group secures $255.6m from five asset sales at 22.7% premium to book value
Rural Funds Group (ASX: RFF) has exchanged contracts for the sale of five assets for a combined value of $255.6m, according to Rural Funds Management Limited (RFM), the responsible entity of the trust.
The sales represent an average premium of 22.7% to the assets’ 31 December 2025 book values. Settlements are expected to occur predominantly in 1H27.
For investors, the significance is immediate. Proceeds will be directed toward reducing gearing, moving the trust closer to its stated target range and strengthening the balance sheet.
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Breaking down the five asset sales
The disposals comprise four cattle properties and one water entitlement. Each asset was sold at a value assessed against its prior book value, with the portfolio delivering a combined uplift over carrying values recorded at the end of December 2025.
| Asset | Type | Prior Book Value (Dec 2025) | Est. Net Sale Proceeds |
|---|---|---|---|
| Rewan | Cattle property | $72.8m | $106.9m |
| Cobungra | Cattle property | $52.9m | $50.3m |
| Wyseby | Cattle property | $35.1m | $43.2m |
| Cerberus | Cattle property | $26.2m | $34.1m |
| 2,500 ML NSW river water | Water entitlement | $21.3m | $21.1m |
| Total | $208.3m | $255.6m |
Sale values are net of estimated transaction costs, with figures subject to rounding.
The conditions attaching to the sales are as follows:
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All asset sales are unconditional, except for Cobungra, which requires Foreign Investment Review Board (FIRB) approval for the purchase.
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Settlements are expected to occur predominantly in 1H27.
What the sales mean for RFF’s balance sheet
Proceeds will be initially applied to RFF’s core debt facility. This debt reduction has a direct impact on gearing, one of the key measures investors watch when assessing the financial stability of a property trust.
On a pro forma basis, adjusting for estimated net sales proceeds, gearing is calculated at 31.6%, down from 39.1% at 31 December 2025. That movement brings the trust within its stated target gearing range of 30–35%.
The pro forma gearing figure is calculated as external borrowings divided by adjusted total assets, adjusted for estimated sales proceeds and 2H26 forecast capital expenditure of $49.1m.
Stated strategy
“The asset sales are in-line with RFM’s stated strategy to dispose of assets to reduce gearing to within RFF’s target range of 30-35%.”
The J&F / JBS guarantee condition
The asset sales also satisfy the condition precedent (Condition) to increase the Guarantee to J&F Australia Pty Ltd from $160.0m to $200.0m (the Second Tranche Additional Guarantee) when required by JBS.
The Guarantee currently remains at $160.0m. Further detail is available in the Explanatory Memorandum and Notice of Meetings dated 2 March 2026.
Understanding agricultural REITs and gearing
An agricultural Real Estate Investment Trust (REIT) is a listed vehicle that owns and manages farming assets. RFF owns a diversified portfolio of Australian agricultural assets, and its strategy is to generate capital growth and income from developing and leasing those assets.
Gearing refers to the ratio of borrowings to assets. Keeping this ratio within a defined target band matters because it supports financial stability and the reliability of distributions paid to investors. Selling assets above book value and applying the proceeds to debt reduces gearing, which strengthens the balance sheet and can de-risk the investment case.
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Distribution outlook and what comes next
RFF has reaffirmed its FY26 forecast AFFO of 11.7 cpu. Following settlement, the transactions are expected to provide a net benefit to AFFO, according to the announcement.
The trust targets distribution growth of 4% per annum, with distributions paid quarterly. Settlements are expected predominantly in 1H27, with FIRB approval remaining the only outstanding condition, applicable to Cobungra alone.
Key takeaways for investors include:
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$255.6m in combined sale proceeds at a 22.7% premium to book value.
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Pro forma gearing cut to 31.6%, within the 30–35% target range.
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FY26 AFFO guidance of 11.7 cpu reaffirmed.
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The guarantee condition to J&F Australia satisfied.
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