This article is from the Australian Property Journal archive
THE RAM Essential Services Property Fund (ASX:REP) saw a healthy period of growth over HY24, after completing several strategic disposals.
Funds from operations were at $12.1 million, down from $14.4 million in HY23. With FFO per security at 2.32 cents, down from 2.76 cents per security.
Distributions per security were at 2.80 cents, down from 2.90 cents in HY23. NTA per security was at $0.92, down from $1.03 at 31 December 2022.
REP’s portfolio of 32 properties, for a total value of $744.9 million across 120,161sqm GLA, remained resilient with 98% occupancy, 5.81% WACR and a WALE of 6.19-years.
“Following our strong full-year results last financial year, REP has continued to deliver in the first half of FY24. We have seen a healthy increase in NOI compared to the same period last year, mitigating some of the effects of rising interest rates,” said Matthew Strotton, executive director and head of real estate at RAM.
“The fact that REP is seeing growth in operating income at the peak of the rate cycle suggests that it is well-positioned for growth when interest rates adjust.”
Portfolio NOI growth was at 3.4% or 7.1% growth on a like-for-like basis. With supermarket MAT growth at 6.0%. This was after an 8% increase in leasing spreads.
“RAM has continued to manage the balance sheet in a sensible manner as the market moves into the next phase of the interest rate cycle,” added Strotton.
“This approach has safeguarded the REP portfolio and ensured the delivery of stable income to securityholders in line with guidance and, importantly, positioned the fund to recycle capital and target areas for robust growth and outperformance.”
Over the period, REP carried out a strategic divestment of assets, freeing up capital for recycling into high-growth assets. Sales include The Hub, Westlake, North Lakes Convenience Centre and Windaroo Village.
Additional net proceeds from these divestments will be used to reduce leverage, in line with the goal of reducing gearing.
Gearing at the close of the period was within the target range of 30% to 40%, at 35.7%.
As at 31 December 2023, REP had debt headroom of $35 million with 2.3 years debt maturity, with 57% hedged and 1.5 years hedge duration.
With cost of debt at 4.87%, up from 3.37% at 31 December 2022.
While earlier this month, RAM offloaded a 4,454sqm site leased to radiology provider Qscan in Redcliffe to Allamanni Development for $10.4 million.
