Rural Funds Group

RFF Details
Acquisition and expansion of water resources:Recently, Rural Funds Group (ASX: RFF) reported that RFF Kerarbury asset value has increased by $35 million, and this is expected to positively impact HY17 total comprehensive income and net assets (although a non-cash item). Late last year, RFF through Rural Funds Management Ltd (RFM) has contracted to purchase Lynora Downs, a 4,800-hectare cotton property located in central Queensland at a purchase price of $26.5 million. RFM and Queensland Cotton Corporation Pty Ltd have established a joint venture, CotJV which would lease and operate Lynora Downs for a period of five years with an option to extend for a further five years. The property has 780 hectares of developed irrigation fields and substantial water entitlement. The group is developing further water storage and irrigation area at an expected cost of $5.7 million. In October 2016, the Group acquired high security Murrumbidgee water resources. These two developments would add over 25,000 ML to RFF’s water portfolio. Recently RFM Director, Mr Julian Widdup has been appointed to RFM Audit Committee. For FY17, the group has guided adjusted funds from operations of 12.42 cents per unit and distributions of 9.64 cents. The half year financial result is expected on February 21, 2017. Meanwhile, the stock is currently trading at a good dividend yield. We recommend a “Hold” on the stock at the current market price of $ 1.76
 

RFF Daily Chart (Source: Thomson Reuters) 

National Storage REIT

NSR Details
Acquisitions to add value:National Storage REIT (ASX: NSR) has agreed to acquire a facility in Wellington, New Zealand from Storage Solution 2002 Ltd and Paremata Business Park Ltd for NZ$9.75 million. The asset comprises 4,300 net rentable square meters in 500 units. NSR has increased its available capital with Westpac Banking Corp by NZ$50 million to help fund the acquisition.
 

Freehold Storage Centre in Wellington (Source: Company Reports)
 
Further, the company has entered into arrangements to acquire the freehold interests of two existing Perth assets at Guildford and Rockingham. The transaction would enable the group to acquire two freehold land parcels adjacent to the Rockingham center in Cort Way. NSR has also negotiated improved lease terms for the Subiaco centre, which would secure the underlying business and long term leasehold interest. Further, NSR also reported of acquiring a second freehold storage center in Artarmon, Sydney. The asset is a multi-storage centre with 550 units over 3,300 sqm of net lettable area. Management said the acquisition enables the company to expand its inner Sydney presence and provides good coverage across Artarmon. The group continues to actively pursue acquisition opportunities in line with its acquisition and asset management strategy which would expand and enrich its asset portfolio. Meanwhile, NSR stock has a handsome dividend yield and we rate the stock a “Speculative Buy” at the current market price of $ 1.45
 

NSR Daily Chart (Source: Thomson Reuters)

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