RAM Essential Services Property Fund Posts 3.2% NOI Growth and 5.0 cps Distribution
RAM Essential Services Property Fund (REP) reported solid FY25 results, maintaining stable occupancy and delivering steady income while progressing its shift to a healthcare-focused REIT. The fund also announced a key board appointment as it looks ahead to further growth.
- 3.2% growth in net operating income for FY25
- Stable portfolio occupancy at 98% with strong leasing spreads of 3.8%
- Completed $119 million in non-core asset disposals to fund healthcare acquisitions
- Acquisition of Cairns Surgical Centre strengthens healthcare portfolio
- Appointment of Steven Pritchard as new independent director
Solid Financial Performance Amid Strategic Transition
RAM Essential Services Property Fund (ASX – REP) has delivered on its FY25 guidance, reporting a 3.2% increase in net operating income (NOI) and a full-year distribution of 5.0 cents per security. This translates to an attractive yield of approximately 8% based on recent trading prices, underscoring the fund’s ability to generate steady income for investors despite broader economic headwinds.
The fund’s portfolio occupancy remained resilient at 98%, supported by strong tenant demand and a high-quality tenant mix including Ramsay Health Care, Healthe Care, and St John of God. Leasing activity was robust, with 34 deals completed and positive rental spreads averaging 3.8%, comfortably outpacing inflation and reinforcing the defensive nature of the portfolio.
Strategic Capital Recycling and Healthcare Focus
FY25 saw REP continue its strategic pivot from retail to healthcare assets, completing $119 million in non-core disposals at an average yield of around 5.7%. These divestments included assets such as Yeronga Village and Tanilba Bay Shopping Centre, enabling the fund to recycle capital into higher-growth healthcare properties.
A highlight of this transition was the acquisition of the Cairns Surgical Centre for $23 million, anchored by Ramsay Health Care. This deal advances REP’s goal of achieving an 80 – 20 healthcare-to-retail asset composition, positioning the fund as a leading pure-play healthcare REIT on the ASX.
Strengthening Portfolio Resilience and Governance
Weighted average lease expiry (WALE) extended to 7.1 years, up 9.2% from the previous year, enhancing portfolio stability and income predictability. Meanwhile, gearing remains moderate at 38.8%, with expectations of reduction through ongoing capital recycling and positive valuation trends.
On the governance front, REP appointed Steven Pritchard as an independent director, bringing extensive experience in finance and stockbroking. He replaces Greg Miles, who stepped down after more than four years contributing to the fund’s early development and strategic evolution.
Looking Ahead
Management has provided FY26 distribution guidance of 5.00 to 5.20 cents per security, reflecting confidence in the fund’s income sustainability and growth prospects. With over $300 million in healthcare acquisition opportunities in the pipeline, REP is well positioned to continue its transformation and deliver long-term value to investors.
Bottom Line?
REP’s steady income and strategic healthcare pivot set the stage for a compelling growth trajectory in FY26 and beyond.
Questions in the middle?
- How will REP’s capital recycling strategy evolve amid changing market conditions?
- What impact will the new independent director have on REP’s strategic direction?
- Can REP sustain its leasing momentum and occupancy levels as it expands healthcare assets?
