Full Year 2026 RAM Essential Services Property Fund Earnings Call Transcript
Key Points
- Unconditional sale of five retail assets for $218.6 million, reducing gearing to 16.8% and providing significant capital for strategic initiatives.
- Portfolio transition to healthcare-focused REIT with healthcare income increasing to 74% and tertiary healthcare to 43%, enhancing income stability.
- WALE extended to 8.1 years post-transaction, providing longer-term cash flow security.
- Strong leasing performance with 21 deals achieving average spreads of 4%, and 84% of leases having fixed or CPI-linked rent reviews.
- No arrears on private hospital exposure and high occupancy at 97%, with 98% of tenants in essential services.
- FFO declined to $14.7 million, down $9.8 million from FY25, due to asset sales and one-off items.
- Gearing increased to 43.5% pre-transaction, reflecting softer valuations and asset sales.
- Distribution guidance for FY27 is lower at $0.036-$0.038 per unit, down from $0.0455 in FY26.
- Trading at a significant discount to NTA, limiting ability to deploy capital for accretive acquisitions.
- Uncertainty around capital strategy, with management considering options like buybacks or sell-downs, but facing liquidity challenges.
Thank you very much, Ryan, and good morning, everybody. My name is Scott Wehl. I'm the Group CEO of Real Asset Management. I'm joined this morning by George Websdale, our Head of Real Estate; Doug Rapson, Head of Listed Real Estate; and Chang Liu, Fund Manager on REP.
The plan is that we'll take the next 20 minutes to run through the presentation we posted this morning and then have some time to round out with some Q&A.
On page 2, you can see the agenda. So I'll run through the highlights, hand over to Doug, who will walk you through the key components of the transaction. Chang will run you through the portfolio as at June 30, and George will take you through the financial numbers and the future strategy.
Turning to page 4, the big news is on the top right in that we have moved to an unconditional sale of the five retail assets, netting over $200 million for the fund and representing a bit more than a third of its assets. The transaction is due to settle Q2 FY27. So accordingly, a
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