Advance Terrafund REIT expects rents and land prices to decline in the midterm on agricultural products oversupply and decline in cereal prices.
The Company held a regular meeting with investors on Nov 15th 2016. It already announced 8% y/y decline in rents for the 2016/2017 farm year, starting Oct 1st 2016. Arable land prices have also shown volatility aka 5% average decline expected in 2016.
Advance Terrafund REIT dividend plans 2017 confirmed
Yet, Advance Terrafund’s management reiterated dividend guidance of at least BGN 0.10 dividend per share from 2016 profits or 4.9% dividend yield at current market quotes. The Company has already sold 6 500 dca of land by Sept.30th 2016 for a total of BGN 8.5m and expects to realize another 6 000 – 6 500 dca by the end of 2016. In its 3Q16 financial report, the Company reported that it has preliminary agreements for the sale of another 12k dca. Management expects to realize half by the end of 2016.
Who is Advance Terrafund REIT
Advance Terrafund is the largest REIT owner of agricultural land in Bulgaria. It is also one of the largest owners of land in the country after the Bulgarian state. It owns 23K ha of arable land which it rents or leases to farmers. The Fund’s holdings are mainly concentrated in the most fertile regions of the country: 40% of the land is in North-East Bulgaria.
The Company was established in 2005 to take advantage of the consolidation wave in the agricultural sector as arable land was highly fragmented at time point in time. In addition, it took advantage of the lower land prices which almost tripled from the EU accession of Bulgaria (2007) until nowadays.