RAM Essential Services Property Fund outlined plans to divest five retail assets for a total of $218.6 million, marking a strategic shift toward healthcare-focused essential services. The unconditional sale of Coomera Square, Springfield Fair, Coles Rutherford, Keppel Bay Plaza and Mowbray Marketplace is expected to close in the second quarter of fiscal 2027.
The transaction will reduce the fund’s gearing from 43.5% to 16.8%, with total borrowings falling from $289.3 million to $74.6 million. The cost of debt is forecast to decline to 4.57% from 5.19%, supported by $175 million in hedges expiring between September 2026 and June 2027 at rates of 3.50% to 3.60%.
Following the sale, healthcare assets will account for approximately 80% of the portfolio by value, up from 28.6%. Medical and wellness income will represent 28.6% of total revenue, while tertiary healthcare will contribute 26.1%. The fund’s net lease structures are expected to rise to roughly 60%, with 99% of income derived from essential services tenants. Like-for-like property income grew 4.4% to $37.9 million in the latest period.
Funds from operations fell to $14.7 million from $24.5 million in FY25, though underlying FFO increased 4.1% to $17.6 million. Distribution per security declined to 4.55 cents from 5.00 cents, with FY27 guidance set between 3.6 and 3.8 cents, implying a yield of 8.5% to 9.0% based on the August 21 closing price of $0.42. The fund’s NTA dropped to $0.71 per unit from $0.81, trading at a 40% discount.
Management noted it is evaluating all pathways to optimize outcomes for unit holders. The portfolio comprises 26 properties across 112,338 square meters, with 97% occupancy and a weighted average lease expiry of 6.8 years, extending to 8.1 years post-transaction. Cap rates for healthcare assets rose 17 basis points to 6.24%, while essential retail rates increased 4 basis points to 6.15%.
