This article originally appeared in The Market Herald.
- RAM Essential Property REIT (REP) posts its FY23 results, highlighting strong performance despite a challenging macroeconomic environment that resulted in losses
- The company reported Funds From Operations (FFO) of $30.6 million, an increase from $21.7 million in June 2022
- The FFO metric equals 5.9 cents per security, with 5.7 cents declared for distributions per unit
- RAM Essential retains a “buy” rating from 6 brokers, and zero brokers rate the stock a sell
- RAM Essential shares were up 0.7 per cent, trading at 71.5 cents at 3:55 pm AEST
RAM Essential Services Property Fund (REP) has posted its FY23 results, highlighting strong performance despite a challenging macroeconomic environment that resulted in losses.
The company reported Funds From Operations (FFO) of $30.6 million, an increase from $21.7 million in June 2022. The FFO metric equals 5.9 cents per security, with 5.7 cents declared for distributions per unit – an FFO payout ratio of 97.1 per cent, up from the June 2022 payout ratio of 95.92 per cent.
Net Tangible Assets (NTAs) slightly declined to 97 cents, compared to $1.04 cents in June 2022. This downward revision was driven by the troubled investment property market, which continues to struggle with COVID-era devaluation.
It’s worth noting that some investment bank analysts expect property prices to continue increasing in Australia, and the sector anticipates a return to ‘normal’ across FY24 and FY25.
The ongoing challenges faced by the REIT sector are evident in RAM’s statutory profit for FY23, which showed a loss of $16.6 million.
Despite this, RAM Essential retains a “buy” rating from six brokers, with zero brokers rating the stock as a sell.
Looking at the net unrealised gain on the revaluation of investment properties, investors can observe a healing sector.
Investment property revaluation gains for FY23 came in at $35.9 million – compared to a negative read of minus $52.4 million for FY22. This context helps explain the company’s FY23 loss of $16 million in profits.
As of the end of June 2023, the company’s investment portfolio consists of 12 retail shopping centres and 23 medical properties valued at a total of $786.5 million.
The portfolio was 97.62 per cent occupied with a weighted average lease expiry time of 6.44 years, slightly down from June 2022 at 6.96 years.
The company has debt facilities of $324.5 million with an average expiry of 2.79 years, and FY23 drawn borrowings totalled $302 million.
RAM Essential (REP) shares were up 0.7 per cent, trading at 71.5 cents at 3:55 pm AEST.