Real Asset Management’s REP fund reported a 40% drop in headline funds from operations (FFO) to AUD 14.7 million for the six months ended June 30, 2026, as the transition to a healthcare-focused portfolio weighed on results. Underlying FFO, which excludes revaluation movements, rose 4.1% year-over-year to AUD 17.6 million, reflecting resilient rental income streams despite portfolio adjustments.
The fund’s like-for-like property income increased 4.4% to AUD 38 million, supported by stable occupancy of 97% and 21 completed lease deals with average spreads of 4%. Weighted average rent reviews stood at 3.5%, while 84% of income is subject to annual escalations, with 58% fixed, 26% CPI-linked, and 15% formula-based. The weighted average lease expiry extended from 6.8 years to 8.1 years post-transaction.
Real Asset Management executed an unconditional sale of five retail assets for a net realized value of AUD 218.6 million, including cash and a 10% equity stake in a newly established five-year fund with a major institutional investor. The transaction, expected to settle in Q2 FY 2027, will reduce gearing from 43.5% to 16.8% and lower borrowings from AUD 267 million to AUD 75 million. The portfolio’s healthcare weighting is projected to reach 80%, with tertiary and private hospital income rising to 43% of total income.
Net tangible assets declined to AUD 662.6 million from AUD 675.5 million, driven by a AUD 12.5 million revaluation decline reflecting an 11-basis-point cap rate expansion. The weighted average cap rate increased to 6.2% from 6.09%. Distributions were cut to 4.55 cents per unit for FY 2026, down from 5 cents in FY 2025, with FY 2027 guidance forecast between 3.6 cents and 3.8 cents per security at a 90% to 100% FFO payout ratio.
The stock last traded at AUD 0.42, down 1.18% on the day, within a 52-week range of AUD 0.40 to AUD 0.64.
