Ram Essential Services Property Fund · ASX:REP
Ram Essential Services Property Fund — HY23 Earnings Presentation
28 slides from Ram Essential Services Property Fund's earnings presentation, Feb 27, 2023
Slide 1: Ram Essential Services Property Fund HY23 Financial & Operating Results
RAM ESSENTIAL SERVICES PROPERTY FUND HY23 Financial & Operating Results 27 February 2023 REAL ASSET MANAGEMENT I PAGE 0
Slide 2: Agenda
KEPPEL BAY PLAZA AGENDA 1. Overview 2. Financial Performance 3. Portfolio Update 4. Value-add Pipeline 5. Outlook 6. Other Information In the spirit of reconciliation, the Real Asset Management Group acknowledges the traditional custodians of country throughout Australia and their connections to lan
Slide 3: Overview
GOLD COAST SURGERY 1. OVERVIEW REAL ASSET MANAGEMENT I PAGE 2
Slide 4: HY23 Highlights
HY23 HIGHLIGHTS Well positioned for a higher inflation environment with strong underlying growth Portfolio Strong Leasing Outcomes Resilient Tenancy Mix $200m+ Value-Add pipeline +10% spreads across Occupancy stable at 98%1 +$15m commenced 22 renewals and planned projects Financial Stable Valuations
Slide 5: REP Investment Case
REP INVESTMENT CASE Unique exposure to attractive sectors High quality, geographically diverse portfolio of Essential Retail and Healthcare assets Defensive income profile through low vacancy and long WALE Organic growth through value add pipeline that continues to expand Unique exposure to high qua
Slide 6: Sustainability and Reporting
SUSTAINABILITY AND REPORTING Developing sustainability frameworks to be implemented and documented across all assets Longer term Short term Net Zero goal pathway aligned to best practice Minimum performance standards Expand scope to other initiatives Industry ESG reporting framework Sustainability c
Slide 7: Financial Performance
WINDAROO VILLAGE 2. FINANCIAL PERFORMANCE REAL ASSET MANAGEMENT I PAGE 6
Slide 8: Funds From Operations (FFO)
FUNDS FROM OPERATIONS (FFO) Operational growth absorbing higher interest costs Funds from Operations HY231 HY222 (FFO net of adjustments) Strong leasing spreads Rent from completed value-add projects $'000 $'000 Organic growth through WARR 3.4% and CPI linked leases Property NOI 22,276 7,611 68% net
Slide 9: Balance Sheet & Capital Management
BALANCE SHEET & CAPITAL MANAGEMENT Strengthened balance sheet and improved visibility Gearing of 32.8% at low end of policy range 31 Dec 30 Jun Key Debt Metrics and comfortably within facility covenant 2022 2022 Gearing 1 32.8% 29.9% Agreed new syndicated debt facility increasing limit and extending
Slide 10: Portfolio Update
CAMBRIDGE DAY SURGERY 3. PORTFOLIO UPDATE REAL ASSET MANAGEMENT I PAGE 9
Slide 11: Portfolio Overview
PORTFOLIO OVERVIEW Diversified portfolio uniquely exposed to attractive sectors 30 June 22 31 Dec 22 Number of Properties 35 35 98% Occupancy2 Total Property Value $798.2m $807.1m Weighted Average Capitalisation Rate (WACR) 5.45% 5.49% 7 Year WALE Occupancy2 99% 98% Tenants 301 297 % income subject
Slide 12: Portfolio Resilience Shining Through
PORTFOLIO RESILIENCE SHINING THROUGH Strong leasing outcomes driving underlying income growth Good capital discipline +3.4% WARR Acquired assets at attractive cap rates Expanded and specialist leasing team driving positive outcomes +8.1% Total Leasing Spread Tenants well positioned and deliverin
Slide 13: Tenants Are Well Positioned
TENANTS ARE WELL POSITIONED Resilient tenants exposed to sector tailwinds underpinning cash flow growth Essential Retail % of Rank Tenant Category Income Strong demand for Essential Retail: food retailing one of only two categories to experience positive retail trade in 1 Medical 10.9% Dec QTR. Unde
Slide 14: Resilient Asset Valuations
RESILIENT ASSET VALUATIONS Strong income growth offsetting cap rate expansion 45% of the portfolio externally revalued as at 45% Portfolio Revalued 31 December 20221 1.1% total portfolio valuation increase 1% Increase on Prior Book Value Income growth offsetting capitalisation rate expansion +4 bps
Slide 15: A Long-Term Commitment to Healthcare
A LONG-TERM COMMITMENT TO HEALTHCARE Attractive risk adjusted returns for investors Structural Leverage RAM’s tailwinds eco-system Structural De-risked Advantages Valuation Low site support utilisation Returns Develop to Revenue Core generation REAL ASSET MANAGEMENT I PAGE 14
Slide 16: Value-Add Pipeline
NORTH WEST PRIVATE HOSPITAL 4. VALUE-ADD PIPELINE REAL ASSET MANAGEMENT I PAGE 15
Slide 17: Value-Add Pipeline Overview
VALUE-ADD PIPELINE OVERVIEW CHARACTERISTICS UPDATE Organically evolved from existing asset Progressing through master planning and base across medical and essential retail approvals for key projects asset classes Increased scope of works in healthcare Largely a collection of smaller value-add driven
Slide 18: Value-Add Pipeline – Program Update
VALUE-ADD PIPELINE – PROGRAM UPDATE Project Overview Development Update Phase 2 – Phase 1 – Phase 3 – Property Name Sector Income Pre- Development Approval Construction^ commitment Delivered Projects Six Projects Essential Retail Forecast Commencements1 North Lakes Essential Retail Mayo Private Hosp
Slide 19: Completed Projects Adding Value to Under-Utilised Sites
COMPLETED PROJECTS ADDING VALUE TO UNDER-UTILISED SITES Coomera Square Springfield Fair Increased WALE via new leases agreed with major tenants Utilisation of low site coverage through development of low-risk pre-committed pad sites Accretive earnings through delivery of value-add pipeline REAL ASSE
Slide 20: Outlook
COOMERA SQUARE 5. OUTLOOK REAL ASSET MANAGEMENT I PAGE 19
Slide 21: FY23 Guidance
FY23 GUIDANCE 5.7 – 5.8 cents1 Distribution Per Security 7.0%2 Forecast Annualised Distribution Yield 90% – 100% Target FFO Payout Ratio Distribution Paid in Quarterly Instalments 1. Guidance assumes average 3-month BBSW of 3.20%, target gearing range of 25% - 40% and assumes no unexpected delays in
Slide 22: Executing Strategy and Delivering Growth
EXECUTING STRATEGY AND DELIVERING GROWTH Unique exposure to attractive sectors Strong leasing outcomes with 10% spreads on renewals Actively managed New developments and increased scope identified Stable and secure rental income with 94% of fund income from essential service tenants with 98% occupan
Slide 23: Important Information
IMPORTANT INFORMATION GENERAL ADVICE WARNING: The information contained herein does not have any regard to the specific investment objectives, financial situation or the particular needs of any person. The information in this presentation is not intended to be personal financial advice. This materia
Slide 24: Other Information
HIGHLANDS HEALTH CENTRE 6. OTHER INFORMATION REAL ASSET MANAGEMENT I PAGE 23
Slide 25: Strategy
STRATEGY OBJECTIVE Deliver stable and secure income with potential for both income and capital growth underpinned by high quality, defensive assets exposed to favourable sector trends. ACTIVE ASSET DELIVER ORGANIC PARTNERSHIP ACQUISITION MANAGEMENT GROWTH MODEL PIPELINE Extensive experience Providin
Slide 26: Income Statement
INCOME STATEMENT REVENUE HY22 HY23 (Oct–Dec 21) Rent from investment properties $m 28,965 9,793 Net unrealised gains on revaluation of properties $m - 33,105 Net unrealised gains on derivative financial instruments $m - 435 Interest revenue $m 2 - Total revenue $m 28,967 43,333 EXPENSES Direct prope
Slide 27: FFO Reconciliation
FFO RECONCILIATION HY22 HY23 (Oct–Dec 21) Net profit after tax for the period $m 3,325 27,218 Adjusted for: $m (599) (194) Reversal of straight-line lease revenue recognition Reversal of unrealised fair value (gain) on investment properties $m 6,378 (33,105) Reversal of unrealised fair value (gain)
Slide 28: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET 31 Dec 2022 30 Jun 2022 Cash and equivalents $m 10.0 15.8 Investment properties $m 807.0 798.2 Other assets $m 17.7 18.3 Total assets $m 834.7 832.3 Borrowings $m (278.4) (257.0) Trade and other payables $m (17.5) (24.7) Total liabilities $m (295.8) (281.7) Net assets $m 5
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