RAM Essential Services Property Fund will reorient its portfolio toward healthcare following the sale of five retail properties for a total of $218.6 million, according to FY26 presentation materials released Wednesday.
The unconditional divestment of Coomera Square, Springfield Fair, Coles Rutherford, Keppel Bay Plaza and Mowbray Marketplace is expected to settle in the second quarter of FY27, reducing the fund’s gearing from 43.5% to 16.8% and lowering total borrowings from $289.3 million to $74.6 million. Net tangible assets per unit declined to $0.71 from $0.81 at June 30, 2026, while the fund trades at a 40% discount to NTA, near its 52-week low of $0.40.
Post-transaction, healthcare assets will represent approximately 80% of the portfolio’s $662.6 million value, up from 28.6% previously. The shift reflects a broader strategy to align with Australia’s aging population, with the 65+ cohort projected to reach 8 million by 2051. Private hospital spending has grown at a 3.4% compound annual rate over the past decade, reaching $23.04 billion in 2023–24, of which 37% is government-funded. Private health insurance coverage stood at 45.3% of Australians as of 2024.
Funds from operations fell to $14.7 million in FY26 from $24.5 million in FY25, though underlying FFO rose 4.1% to $17.6 million. Like-for-like property income increased 4.4% to $37.9 million, while distributions per security declined to 4.55 cents from 5.00 cents. FY27 guidance projects distributions between 3.6 and 3.8 cents per security, implying a yield of 8.5% to 9.0% based on the August 21 closing price of $0.42. The target FFO payout ratio remains 90% to 100%, with about 90% of distributions expected to be tax-deferred.
The weighted average cap rate for the portfolio stands at 6.20%, with healthcare valuations at 6.24% and essential retail at 6.15%. Occupancy is maintained at 97%, supported by 21 lease deals completed with positive spreads averaging 4%. The weighted average lease expiry extends to 8.1 years post-transaction, with 65% of income weighted to FY2031 and beyond. The cost of debt is forecast to fall to 4.57% from 5.19% at June 30, 2026, with 61% of debt hedged.
Management noted it is evaluating all pathways to enhance unit holder value amid ongoing strategic uncertainty.
