This article is from the Australian Property Journal archive
SOCIAL infrastructure investor Arena REIT (ASX: ARF) was supported by strong drivers in the Australian ELC sector in FY24, while lower valuation gains ate at profits.
The REIT posted a statutory net profit of $57.5 million, down 22.5% on the previous corresponding period. This was largely attributed to a lower revaluation gain on investment properties and derivatives for the year.
Arena’s net operating profit was up 4.7% to $62 million in the year ending 30 June 2024.
Earnings per security were at 17.65 cents, up 3.2% on the pcp. With distributions per security at 17.4 cents, up 3.6% on the pcp.
Arena’s total assets were at $1.62 billion, up 3% from the previous year, largely due to acquisition and development capital expenditure.
“Strong macroeconomic drivers continue to support growth in the demand for essential community services across Australia,” said Rob de Vos, managing director at Arena REIT.
“These themes, combined with Arena’s disciplined origination, capital management and asset management expertise have positioned the business well to sustainably deliver on its purpose and investment objective of delivering predictable distributions to securityholders with the prospect for growth.”
The REIT’s portfolio comprises 267 ELC properties and development sites, which represent 91% of portfolio value, with the remainder made up of nine healthcare properties.
127 properties were independently valued in FY24, resulting in a valuation uplift of $4 million, representing a minor increase of 0.25% from FY23.
Arena’s NAV was $3.41 as at 30 June 2024 in line with $3.42 at 30 June 2023, after portfolio capitalisation rates were offset by passing and market rent increases.
Arena’s portfolio boasts a WALE of 18.5 years, with 99.7% occupancy, portfolio weighted average passing yield of 5.4%. Average like-for-like rent increases within the portfolio were at 4.9%.
Arena completed seven ELC projects for a total investment of $54.5 million, on a net yield on total cost of 5.1% with an initial weighted average lease term of 20 years.
The REIT also acquired 14 ELC development projects and boasts a development pipeline of 21 ELC projects at a forecasted cost of $139 million with $95 million of forecast capital expenditure outstanding.
Arena’s weighted average cost of debt as at 4.0% compared with 3.95% in FY23, with the weighted average remaining facility term at 4.1 years with no expiry before 31 May 2027
The REIT’s proforma undrawn debt facility has a capacity of $182 million.
Arena reaffirmed its FY25 distribution guidance of 18.25 cents per security, an increase of 4.9% on FY24.
