New Zealand Rural Land Company Limited (NS) Analysis

Overview

NZRLC is a newly incorporated company that has been formed for the purpose of acquiring rural land across the New Zealand agricultural sector. NZRLC intends to be a landlord only and will lease the rural land that it acquires to experienced tenants under long term leases. Tenants will undertake the on-land agricultural operations and pay rental to NZRLC.

In the long term NZRLC may acquire land in the dairy, sheep and beef, horticulture, viticulture and forestry sectors. However, the initial focus for NZRLC is to acquire rural land in the dairy sector.

Performance

The following information was extracted from New Zealand Rural Land Company Limited's (NS) Half Year results, released 29 August 2024:

NZL’s HY24 Result Delivers Income Growth and Dividend Resumption

New Zealand Rural Land Co (NZL.NZX) announces its financial result for the six months ending 30 June 2024 (HY24 end). NZL recorded a net profit after tax of $12.4m and Adjusted Funds From Operations (AFFO) of $3.6m, excluding earnings from properties with put/call arrangements in place.

HY24 Highlights

• Roc Partners purchased 25% of NZL’s portfolio, validating strategy and partnering for future growth;
• AFFO grew from 1.53 cps in HY23 to 1.94 cps (+26.8%) in HY24. NZL forecasts FY24 AFFO of between 5.01 cps and 5.36cps (FY24 includes the rental adjustments and first half year of higher yielding acquisitions);
• Portfolio diversification and yield materially increased by forestry and horticultural acquisitions in HY24;
• WALT increased from 11.6 years (31 December 2023) to 12.7 years at HY24 end;
• 17,457 hectares of rural land now owned, an increase of +18.3% on FY23;
• Gearing lowered to 30.5% with 64.0% of debt hedged;
• HY24 forestry transactions reaffirm NZL’s partnership with New Zealand Forestry Leasing (NZFL) and continue NZL’s contribution to the New Zealand Governments international and domestic greenhouse gas emissions targets and biodiversity enhancements;
• Dividend reinstated at 75% of AFFO, equivalent to 1.46 cps. Dividend will be paid in mid-October 2024;
• Dividend reinvestment plan will be reinstated; and
• On-market share buyback programme continued, with 10,000 shares repurchased at an average price of $0.88 per share, bringing the total shares repurchased to 621,327 since buyback was initiated in June 2023.