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) Full Year results, released 28 February 2025:

NZL’s FY24 Result Delivers AFFO Growth, Diversification and Dividend Growth

New Zealand Rural Land Co (NZL.NZX) is pleased to announce its financial result for the year ended 31 December 2024. NZL recorded a consolidated net profit after tax of $23.1m and Adjusted Funds From Operations (AFFO) of $7.1m, excluding earnings from properties with put/call arrangements in place ( see footnote 1).

FY24 Highlights

• Roc Partners purchased 25% of NZL’s portfolio, validating strategy and partnering for future growth;
• CPI linked rental increases of +18.6% on 37.3% of NZL’s portfolio took effect in mid-2024. A further 26.5% of NZL’s portfolio was subject to a +4.0% increase on 15 April 2024;
• AFFO grew from 4.35 cps in FY23 to 4.94 cps (+13.6%) in FY24. NZL forecasts FY25 AFFO of between 5.25 cps and 5.60cps (FY25 includes further CPI linked rental adjustments and the first full year of higher yielding horticultural acquisitions);
• Portfolio diversification and yield materially increased by forestry and horticultural acquisitions in FY24;
• WALT increased from 11.6 years (31 December 2023) to 12.5 (+8.2%) years at FY24 end;
• 17,503 hectares of rural land now owned, an increase of +9.0% on FY23 16,063;
• Restructured NZL’s borrowing arrangements on 20 December 2024 by entering into a syndicated facility agreement with Rabobank and Bank of China. The new syndicated facility reduces NZL’s weighted average cost of debt and increases total available debt capital from $133.5m to $140.0m;
• Gearing lowered to 29.6% from 36.2% (-6.6%) with 65.0% of borrowing hedged;
• Dividend reinstated at ~80% of AFFO, equivalent to a full year dividend of 4.00 cps. The final dividend will be paid in April 2025. NZL will continue to offer a dividend reinvestment programme.
• Net asset value per share has grown from $1.25 at IPO to $1.603 (at 31 December 2024); and
• On-market share buyback programme continued, with 88,804 shares repurchased at an average price of $0.89 per share, bringing the total shares repurchased to 710,131 since buyback was initiated in June 2023.