Ag investor Rural Funds digs in after US short seller ambush

Rural Funds Group shares crash after nasty US report claims

News
Aa

Rural Funds Group vows to fight US investment report claims the company's property assets are highly over valued

Aa

Shares in diverse agribusiness property investor, Rural Funds Group, are in a trading halt after copping a stock market caning early this week when it was ambushed by a scathing US investment report.

Rural Funds Group manages more than $1 billion in assets ranging from feedlots to almond orchards, vineyards and Central Queensland cotton country.

More than $335 million was cut from the parent company's market capitalisation in 30 minutes on Tuesday as the group's shares tumbled from $2.35 to $1.36 when the report by American-based short-seller, Bonitas Research, claimed Rural Funds had overstated its assets as much as 100 per cent.

It claimed Rural Funds' true net asset figure was only about $268m at the end of last year.

We are determined to remain transparent and give our shareholders as much information as possible - David Bryant, Rural Funds Group

The 22-year-old company, which was publicly listed five years ago, operates as an agricultural real estate investment trust leasing its investment properties to experienced farm sector operators such as beef giant JBS, Treasury Wine Estates, Select Harvests, Olam International, the Charters Towers-based Camm family, and Stone Axe Pastoral in northern NSW.

Bonitas accused RFM of fabricating rental income since 2017, a claim hotly denied by managing director and company co-founder, David Bryant.

He has engaged independent experts to verify RFM's financial statements and promised a speedy and detailed response to the US research.

The Australian Securities and Investment Commission had also been invited to study Rural Funds records, which were audited by PwC.

"Our accounts are accurate and our business is completely above board," Mr Bryant said.

"We are determined to remain transparent and give our shareholders as much information as possible, which was not the opportunity they were given when this report was dropped to selected market players," he said.

David Bryant

David Bryant

"We had never heard of Bonitas. We have no knowledge of why we were singled out for these accusations.

"I'm only too pleased to communicate our position publicly and prove we are very sound."

The company intended to release information to the stock market and resume trading on Thursday.

Bonitas is a California-based short selling operation founded by Matt Wiechert, who was also co-founder of Glaucus Research which was behind last year's intensive scrutiny of another agribusiness investor, Blue Sky Alternative Investments.

Rural Funds Management employs about 140 staff and manages about $1.2b in agricultural assets, including $939m of assets in six investment funds for which it is the responsible entity.

The parent group's assets include 154 poultry sheds at Griffith in NSW and Lethbridge, Victoria; about 660,000 hectares of cattle country in Queensland and NSW worth about $270m; 660ha of vineyards in South Australia and Victoria worth $18m; 260ha of macadamia plantings at Bundaberg worth $14m, and 7800ha of cotton farmland worth about $50m.

  • Start the day with all the big news in agriculture! Click here to sign up to receive our daily Farmonline newsletter.
Aa

From the front page

Sponsored by