This article is from the Australian Property Journal archive
EARLY learning centre assets remained relatively resilient against a challenging backdrop, with Arena REIT (ASX: ARF) posting a statutory net profit of $74 million for FY23, though this represented a downgrade of 78% on the previous year.
ARF posted a net operating profit of $59.65 million, a 6% increase from $56.32 million in the year prior.
Arena REIT attributed this to income growth from contracted annual and market rent reviews, acquisitions and development projects completed in both FY22 and FY23.
With earnings per security at 17.1 cents, up 5% on FY22 and distributions per security at 16.8 cents, up 5% on FY22.
The 78% or $260 million downgrade in statutory profit over the financial year was largely attributed to a lower revaluation gain on investment properties and derivatives.
Total assets were at $1.57 billion, up 3% from the 30 June 2022, as a result of acquisitions, development capital expenditure and positive portfolio revaluation.
Arena’s portfolio of 263 ELC properties and development sites and nine healthcare properties had a valuation uplift of $17 million, with a weighted average passing yield of 5.16%.
99 of these properties were independently valued throughout FY23 with the balance of the portfolio subject to directors’ valuations.
With total portfolio occupancy at 99.7%, with a WALE of 19.3-year and a like-for-like rent review increase of 6.8%.
ARF has a development pipeline of 16 early learning centre projects with a total forecast cost of $112 million, with $66 million in forecast capital expenditure remaining outstanding.
While the weighted average net initial yield on forecast total cost on completion of the development pipeline is 5.4%.
“Arena has maintained its capital management discipline through the period and continues to operate well within its banking covenant requirements,” said Gareth Winter, CFO at Arena REIT.
“Our balance sheet gearing and expanded debt facilities fully fund the development pipeline with capacity to deploy capital into further growth opportunities.”
NAV was up 1% to $3.42 per security for the same period, gearing was at 21% from 20.2% from 30 June 2022.
ARF had a weighted average facility term of 3.7 years with no expiry until March 2026, with a weighted average cost of debt of 3.95% as at 30 June 2023 and 88% of borrowings hedged for weighted average term of 3.5 years at 2.03%
Arena’s investment proposition and partnership approach are integral to building better communities, together,” said Rob de Vos, managing director at Arena REIT.
“We remain well positioned to patiently deploy capital into quality assets that support Arena’s investment objective – to generate an attractive and predictable distribution to investors with earnings growth prospects over the medium to long term.”
Arena REIT posted a DPS guidance for FY24 of 17.4 cents per security, reflecting growth of 3.6% on FY2023
