A medical and essential retail real estate fund that leases its properties to essential service tenants sold nine assets worth almost $250m in the first half of the 2025 financial year as part of a capital recycling program and a strategic move to reweight its portfolio.
Sales by the ASX-listed RAM Essential Services Property Fund include Yeppoon Village, Tumut Bay Shopping Centre, Southlakes Medical Centre, and Box Hill Day Surgery. Parkwood Medical Centre and Highland Medical Centre are under contract and set to settle this month, contributing to the nine divested assets worth $189m or close to book value.
RAM also sold three non-core assets weighted for a mid-5 per cent yield with sale proceeds deployed to recalibrate the portfolio. It has another four assets, valued at $79m, on the market, which are under due diligence.
The proceeds from the sales will be used to reduce leverage to sub-30 per cent range and support the remaining security buyback program.
The divestment also supports strategic transitioning of its portfolio from a 50:50 retail-healthcare mix to an 80:20 healthcare-led portfolio.
RAM’s Head of Real Estate, Matthew Strotton, said the assets they sold had “run their strategic course.”
“We wanted to manage leverage and free up capital for a share buyback but importantly we wanted to make sure we were divesting assets that were still attractive to buyers,” Mr. Strotton said.
Reweight to assets in medical
“The assets we’ve divested, we sold them in a rate or income yield in the mid-5 per cent range and the type of assets we are looking to buy are above 7 per cent, so it’s a good yield exchange.”
As part of this reweighting, the company has paid $23m for the Cairns Day Surgery – anchored by Ramsay Health Care. The surgical centre transaction realised a 7 per cent plus yield.
RAM currently holds 22 healthcare assets and seven neighborhood retail assets.
Mr. Strotton said they were pleased with the progress made on their strategic objectives in the first half.
“Market conditions are stabilizing, and we continue to pursue opportunities in various healthcare sub-sectors, with a focus on day surgeries,” he said. “Our plan is to build on our pedigree and evolve into a top-tier solution provider for healthcare.”
For FY25 first half, the portfolio achieved comparable net operating income growth of 3.1 per cent. The Fund delivered an annualized distribution of 5c per security, equating to an 8 per cent yield.
