Rural Funds Group Sells Five Assets for $255.6m at 22.7% Premium
3 min read
10:11am on Friday 10th of July, 2026 AEST ~10am, 10th July, 26
Rural Funds Group has exchanged contracts to sell five agricultural assets for $255.6 million, trimming gearing to a pro forma 31.6% and reaffirming its FY26 income forecast.
- Five assets sold for $255.6 million, 22.7% above book value
- Pro forma gearing reduced to 31.6%, within target range
- Cobungra sale subject to Foreign Investment Review Board approval
- Guarantee facility increase linked to asset sales
- FY26 AFFO forecast maintained at 11.7 cents per unit
Asset Sales Deliver Premium and Debt Reduction
Rural Funds Group (ASX:RFF) has locked in contracts to sell five agricultural assets for a combined net value of $255.6 million, representing a substantial 22.7% premium over their December 2025 book values. The standout transaction is the Rewan cattle property, which commanded $106.9 million versus its $72.8 million book value, highlighting strong market demand for quality agricultural real estate.
Other properties include Wyseby and Cerberus cattle holdings, which also sold above book value, while the 2,500 ML NSW river water asset and Cobungra property fetched prices close to their prior valuations. The Cobungra sale remains conditional on Foreign Investment Review Board approval, injecting some uncertainty into its timing.
Gearing Target Achieved Through Strategic Disposals
These disposals align with Rural Funds Group’s strategic aim to reduce gearing to within its 30-35% target range. Proceeds from the sales will be applied to the group’s core debt facility, bringing pro forma gearing down to 31.6% from 39.1% at the end of 2025. This marks a significant deleveraging step, likely to ease balance sheet pressure amid ongoing capital expenditure commitments.
Guarantee Facility Increase Conditioned on Sales
The asset sales also unlock a condition precedent to increase the guarantee facility extended to J&F Australia Pty Ltd from $160 million to $200 million. This second tranche additional guarantee, which remains unused for now, can be drawn upon when required by JBS, a major tenant or stakeholder. The linkage between asset sales and guarantee capacity underscores the financial engineering Rural Funds Group is employing to balance growth and risk.
Earnings Forecasts Unchanged Despite Portfolio Shifts
Despite the portfolio changes, Rural Funds Group has reaffirmed its FY26 adjusted funds from operations (AFFO) forecast of 11.7 cents per unit. The sales are expected to be accretive to AFFO following settlement, which is anticipated predominantly in the first half of 2027. This steadiness in income guidance suggests management’s confidence in the underlying operational cash flows and the group's ability to deploy capital efficiently.
With capital expenditure forecast at $49.1 million for the second half of 2026, the group’s ability to reduce gearing while maintaining distribution targets will be a key metric to watch. The conditional nature of the Cobungra sale means investors should monitor regulatory developments closely to gauge the full impact of the disposals.
Bottom Line?
RFF’s asset sales mark a decisive step toward deleveraging, but regulatory approval for Cobungra remains a near-term variable to watch.
Questions in the middle?
- Will Foreign Investment Review Board approval for Cobungra proceed smoothly and on what timeline?
- How will the increased guarantee facility be utilised by JBS, and what does this imply for future capital requirements?
- Can Rural Funds Group sustain AFFO growth amid ongoing capital expenditure and portfolio reshaping?
