This article is from the Australian Property Journal archive
ARMED with a “significant” balance sheet capacity, social infrastructure investor Arena REIT expects to continue actively seeking emerging opportunities after a fruitful first half to FY25 which saw a 16% increase in operating profit.
The childcare centre and healthcare asset owner posted a $36 million net operating profit, which it owed to income growth from contracted annual rent reviews, acquisitions and development projects completed in the period, and the full period effect from development projects completed over FY24.
Earnings per security of 9.2c was 5.5% higher than the prior corresponding period, and Arena has paid distributions of 9.125c pe security for the period, an increase of 4.9%.
Arena reaffirmed financial year 2025 distribution guidance of 18.25c per security, an uplift of 4.9%.
Statutory net profit for HY2025 was $36 million, an increase of 87% primarily due investment property and derivative valuation gains compared to the pcp.
“Arena’s investment activity accelerated during half year 2025 as the trajectory of debt costs became clearer and we utilised our competitive cost of capital and deal sourcing expertise to execute on emerging opportunities,” said managing director Rob de Vos.
“With an expanded and experienced management team, Arena remains well positioned to capitalise on further growth opportunities that are consistent with our well-defined strategy and investment objective”.
During the half it picked a purpose-built residential healthcare complex for essential workers at Bendigo Hospital in a $35 million-plus deal, on a 6.2% yield. It also acquired 11 operating properties at an average net initial yield of 6.1% with weighted average initial lease term of 16 years. Six childcare centre development projects were completed for a total cost of $43 million at an average net initial yield on total cost of 5.7%, with an initial weighted average lease expiry of 20 years.
Arena completed a $120 million institutional placement and $24 million security purchase plan in the half, and raised $10 million via the DRP, which remains open.
Its gearing was 20.8%, down from 22.6% over six months, with undrawn debt capacity of $118 million to fund the balance of the development pipeline of $93 million.
“Arena retains significant balance sheet capacity to fund future growth opportunities,” it said.
It reaffirmed FY25 distribution guidance of 18.25c per security, reflecting growth of 4.9% over FY24.
Arena has a $1.567 billion portfolio of childcare centres across 279 assets, which saw a slight valuation uplift in the half, and it has 10 assets in its healthcare portfolio totalling $167 million.
The portfolio weighted average lease expiry is 18 years following the completion of acquisitions and childcare centre development projects in the half.
Its development pipeline comprises 19 early learning centre projects with a forecast total cost of $131 million, with $93 million of forecast capital expenditure outstanding. The weighted average initial yield on forecast total cost on completion of the development pipeline is 6.1%.