This article is from the Australian Property Journal archive
NEW investments and rental growth have helped social infrastructure investor Arena REIT (ASX: ARF) to deliver a FY19 profit of $37.7 million, an increase of 9% over FY18.
The statutory profit was $59.3 million, 8% down on the prior year, primarily due to the revaluation of interest rate hedges ($8.6 million) in FY19 compared with ($0.6 million) in FY18. Earnings per security was 13.8 cents, up 5.3% and distributions was 13.5 cents, up 5.5%. Total assets increased by 14% to $825.7 million, resulting in a 7% increase in NAV per security to $2.10 at 30 June 2019.
Managing director Rob de Vos said the trust remains focused on new investments that deliver predictable earnings and earnings growth prospects while maintaining investment discipline.
Rent reviews during the year resulted in an average like-for-like rent increase of 3.6% with 39 market rent reviews recording an average increase of 9.4%. the portfolio occupancy was maintained at 100% and the weighted average lease expiry (WALE) increased to 14.1 years from 12.9 years at 30 June 2018.
Eight operating early learning centres and healthcare properties, including a $24 million portfolio of specialist disability accommodation properties were acquired at a net initial yield on cost of 6.4% with a weighted average lease term of 17.1 years. Four ELC development projects were completed at a net initial yield on cost of 6.4% on new 20-year leases and eight new ELC development sites were acquired.
de Vos said the underlying demographics for ELC demand remain supportive including record female workplace participation rate and improved affordability from the child care subsidy (CCS). New ELC supply is showing signs of moderation with growth of 3.9% in the 12-month period to 30 June 2019, down from 4.0%.
“Our tenant partners continue to report a positive impact from the introduction of the CCS with higher occupancy and fee growth. Combined with a more measured approach to new ELC supply across the sector, we view the market as conducive to opportunities.” de Vos said.
Arena has reaffirmed FY20 DPS guidance of 14.3 cents reflecting growth of 5.9% over FY19.