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RAM Group’s $650 essential services trust head for the ASX

This article originally appeared in The Australian.

Lockdowns could prove a boon for a near $650m listed property float that is billed as an essential services play by the expanding Real Asset Management, which is taking it to major investors this week.

The offer is the first out of the blocks, with rival HomeCo launching a medical trust after already spinning off a daily needs fund, and Newmark Capital testing interest in the float of a trust that owns Bunnings properties.

RAM is hoping its unique blend of neighbourhood retail centres and healthcare properties entices investors to commit after the prospect of it raising $250m to $300m to join the ASX was flagged last year.
The Australian revealed that RAM tapped Credit Suisse and UBS to advise on the float and it has since added Ord Minnett and E&P Corporate Advisory.

RAM earlier this month picked up more medical real estate assets as it moves closer to listing the RAM Essential Services Property Fund.

The portfolio is being pitched for its resilience through the Covid-19 pandemic and potential upside from its development pipeline and ability to buy more centres.

The fund would list with a portfolio of 28 assets, including eight medical properties currently under contract, all occupied by essential services and medical tenants.

The properties kept up a healthy 92 per cent rent collection through the 2020 pandemic period and this bounced back to about 98 per cent in the following quarter. The fund has a weighted average lease term of 7.4 years. Major tenants include Woolworths, Coles, Wesfarmers and IGA.

The fund has more than $100m of development plays across its portfolio and on the medical side it has a growing exposure to private hospitals.

Sports property heavyweight Greg Miles, the former chief operating officer of Scentre, is non-executive chairman. Former Arena REIT chief executive Bryce Mitchelson is also on the board.
The portfolio is valued at $645m and is 99.7 per cent occupied. It has weightings to Queensland (41 per cent) and NSW (38 per cent) with a lower presence in Victoria and WA.

The fund will list with low gearing and a target range of 25-40 per cent gearing.

RAM in July bought four medical assets worth $42.5m.