Real Asset Managementʼs RAM Essential Services Property Fund (REP) remains confident in the healthcare real estate sector, despite a “challenging” environment for capital markets.
The fund achieved distributions per security (DPS) guidance in FY24, at 5.6c per security, equating to a yield of 8.5%.
It offered DPS guidance of 5.00c to 5.20c per security for FY25, with over 90% tax deferred and a forecast yield of 8%.
Leasing saw 8% spreads to the positive, driving like-for-like net operating income of 4.8%.
Occupancy stable at 98%, with 31 new leasing deals and renewals executed, including major tenant deals with Woolworths and private hospital operators, Healthe Care.
“The local healthcare sector is underpinned by supportive megatrends and fundamentals, including an ageing population, increasing wealth, and a rise in chronic illness and service utilisation,” said RAMʼs executive director and head of real estate, Matthew Strotton.
“These trends have given rise to a growing number of high-quality opportunities in our deal pipeline. REP is well-positioned to capitalise on these opportunities as they arise.”
The portfolioʼs weighted average lease expiry extended by 10.5% in the second half to 6.84 years, “reflecting an enhanced tenant profile and lower volatility”.
Asset disposals worth $84 million show that “REPʼs balance sheet is well-positioned despite challenges facing the REIT sector”.
“Capital markets are still challenging. However, as RAM demonstrated with asset sales, we have successfully generated strong buying interest, proving once again our ability to access liquidity.”
It is using proceeds from the sale to pay down debt and, over time, will pursue “more accretive” acquisitions.
The fund has also finalised an agreement for the expansion of the North West Hospital in Tasmania. The expanded facility is part of the private hospital leased to Healthe Care.