Arena REIT (ASX:ARF) Reports HY2025 Financial Results
Financial Performance
Arena REIT reported a net operating profit of $36 million for the half-year ended 31 December 2024, marking a 16% increase from the prior corresponding period. Statutory net profit rose by 87% to $36 million. Earnings per security (EPS) reached 9.2 cents, a 5.5% increase, while distributions per security (DPS) were 9.125 cents, up 4.9%. The company’s total assets grew by 10% to $1.8 billion, and the net asset value (NAV) per security increased by 0.9% to $3.44. Arena completed a $120 million Institutional Placement and a $24 million Security Purchase Plan, reaffirming its FY2025 distribution guidance of 18.25 cents per security.
Portfolio Highlights
During HY2025, Arena acquired 11 operating properties with an average net initial yield of 6.1%. Six early learning centre (ELC) development projects were completed at a total cost of $43 million. The development pipeline includes 19 ELC projects with a forecast total cost of $131 million. The portfolio maintained an 18-year weighted average lease expiry (WALE) and achieved a 99.3% occupancy rate. The portfolio’s weighted average passing yield increased to 5.42%, and an average rent review increase of 3.2% was completed.
Capital Management
Arena’s gearing decreased to 20.8% from 22.6% as of 30 June 2024. The weighted average cost of debt stood at 4.25%, with 79% of borrowings hedged at a weighted average rate of 2.45%. The weighted average facility term is 3.6 years, expiring in May 2027. The company achieved a 100% margin discount under its Sustainability-Linked Loan for FY2024.
Sustainability Initiatives
Arena continues to drive sustainability with zero organisational scope 1 and 2 emissions, a 6-star NABERS energy rating, and solar renewable energy systems installed on 93% of its property portfolio. The company is committed to net zero financed emissions by 2050, with significant reductions already achieved.
Executive Comments
Managing Director Rob de Vos stated, “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. 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.”
Chief Financial Officer Gareth Winter commented, “Arena has maintained capital management discipline through the cycle with consistent gearing and hedging programs. We have successfully completed an Institutional Placement and SPP; increasing capacity to deploy capital into growth opportunities consistent with strategy.”
Outlook
Arena REIT reaffirms its FY2025 distribution guidance of 18.25 cents per security, representing a 4.9% increase over FY2024.
Motley Fool contributor Matt Burgess has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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