Rural Funds Group is a real estate investment trust (REIT) that owns farms and leases them to tenants. Started in 1997, Rural Funds Management (the manager) now manages $1.2 billion in agricultural assets across New South Wales, Queensland, South Australia and Victoria.
Rural Funds’ Response To Bonitas Research
After the market had shut Rural Funds issued a rebuttal.
First, Rural Funds said that the short report was issued without any inquiry of Rural Funds Group or Rural Funds Management (RFM). Rural Funds also pointed out that Bonitas has a short interest and stands to significantly profit if its shares fall.
Rural Funds said: “RFM rejects entirely the unfounded allegations of financial impropriety and irregularity contained in the Document and is obtaining legal advice in respect of those matters. Notwithstanding, given the seriousness of the matters raised and the resultant adverse effect on the price of RFF securities, RFM has engaged Ernst & Young to independently investigate matters raised and assess RFM’s refection of each of the claims made in the Document as set out below.”
As you may be able to guess, Rural Funds then went on to say for most of Bonitas’ points, “This statement is incorrect” with further denials.
However, Rural Funds did explain that there was one error in the notes:
“The RFF 31 December 2018 accounts contained a table formatting error in Note E2, p31. The table incorrectly lists a loan to the 2007 Macgrove Project of $14.463 million. The correct figure is $0.008 million. This error is confined to this table only and does not flow through to, or alter, the accuracy of RFF’s 31 December 2018 Financial Statements.”
Rural Funds will also be holding a webinar at 9AM in response to the document, with a recording to be made available on the RFM website.
It’s hard to say who is right until at least Ernst & Young has finished with its audit. It will be interesting to see if the Rural Funds report is released according to the scheduled date in this reporting season.
It might be better to think about the reliable shares in the free report below instead until this is resolved one way or another.
Disclosure: Jaz owns shares of Rural Funds at the time of writing, but this could change at any time.