The S&P/ASX 300 Index (ASX: XKO) share Rural Funds Group (ASX: RFF) could be a top idea to look at right now.

The farmland real estate investment trust (REIT) has seen its fair share of pain in the last few years amid high interest rates, just like most of the REIT sector.

With US tariffs creating a lot of uncertainty for a number of industries across the world. A dependable business could be appealing, particularly one that's exposed to some useful tailwinds.

There are a few reasons why I like it in the current environment.

Interest rate cut(s) on the cards

The Reserve Bank of Australia (RBA) has already cut the official cash rate once in 2025 and it seems there's a fair chance it could do so again this month.

As reported by various media, Australian trimmed mean inflation, which excludes large price changes in consumer goods and services, rose 0.7% quarter-over-quarter and 2.9% on an annual reading. This is within the RBA's inflation target of between 2% to 3%. The headline inflation was 2.4%.

CNBC reported on comments from expert Sean Langcake, head of macroeconomic forecasting at Oxford Economics, who said:

…underlying inflation measures paint a better picture, with trimmed-mean inflation falling back to within the RBA's target range.

With underlying inflation within the RBA's target range, the Bank has greater scope to help support the economy through this coming shock.

I think REITs could be some of the biggest beneficiaries from interest rates going lower because of both the boost for property valuations it could provide and the reduction in debt costs.

This ASX 300 share looks like a compelling option with the current interest rate outlook.

Ongoing rental improvements

Rural Funds is not a term deposit – it is exposed to risks, but it is also capable of producing growth of its earnings and underlying value.

The business is benefiting from contracted rental growth for its farms, with some having fixed annual rental increases and others having rises linked to inflation, plus market reviews.

The ASX share is expecting to grow its rental profit – adjusted funds from operations (AFFO) – by 3.6% in FY25 to 11.4 cents per unit.

I think AFFO growth helps grow the underlying value of the business. Combine that with the distribution, which is expected to be a 6.6% yield in FY26, and I think that's a solid level of underlying return for an investor.

Large asset discount

One of the main reasons why I think the business is cheap, aside from the decline of more than 40% since January 2022, is that it's trading at a large discount to its net asset value (NAV).

At the end of December 2024, it had an adjusted NAV of $3.10 per unit. That figure tells investors what the underlying portfolio, debt and everything else are worth when added together.

Rural Funds units are currently trading at a 43% discount to that NAV. I think that discount could close if interest rates reduce.