Arena Reit · ASX:ARF
Arena Reit — HY2025 Earnings Presentation
32 slides from Arena Reit's earnings presentation, Feb 12, 2025
Slide 1: Half Year 2025 Results Presentation
Arena REIT HALF YEAR 2025 RESULTS PRESENTATION 12 February 2025 Better Communities. Together. r Title
Slide 2: Agenda
Agenda 03 Highlights 05 Sustainability 06 Financial Results 11 Portfolio Update 19 Outlook 20 Questions Arena REIT acknowledges the traditional custodians of 21 Directory the lands on which our business and assets operate, and recognises 22 Appendices their ongoing connection to land, waters and com
Slide 3: Highlights for Half Year 2025
Highlights for Half Year 2025 Capitalising on opportunities consistent with strategy & investment objective • 11 operating properties acquired, six ELC development projects completed, ELC development pipeline comprises 19 Statutory net profit Net operating profit projects1. • Growth in net operating
Slide 4: Delivering on Strategy
Delivering on Strategy Developing, owning & managing social infrastructure property Working in partnership Portfolio management Continue to progress solar renewable energy program; currently installed on 93% Portfolio increased to 289 properties of Arena’s property portfolio. delivering essential co
Slide 5: Sustainability
Sustainability Investment proposition and approach drives sustainable and commercial outcomes • Sustainability is integral to Arena’s investment approach and best positions Arena to achieve positive long term commercial and community outcomes. • Key sustainability outcomes delivered to date include:
Slide 6: Financial Results
Financial Results Gareth Winter CHIEF FINANCIAL OFFICER Better Communities. Together. r Title
Slide 7: Financial Performance
Financial Performance New investment and annual rent increases underpinning distribution growth HY2025 HY2024 Change Change $’000 $’000 $’000 % • Property income continues to increase due to: – Acquisitions and ELC developments Property income 44,153 39,060 5,093 +13% completed during the period; Ot
Slide 8: Contributors to EPS Growth
Contributors to EPS Growth Acquisitions, development completions & annual rent escalation supporting EPS growth 12 -0.05 -0.08 -0.36 0.56 10 0.41 9.20 8.72 8 6 4 2 0 HY2024 EPS Contracted like-for- Developments and Asset disposals Net operating Funding mix and costs HY2025 EPS like rental income acq
Slide 9: Financial Position
Financial Position Strong balance sheet with substantial capacity • Growth in total assets continues from the As at 31 Dec 2024 30 June 2024 Change acquisition of operating properties and ELC development completions. • Undrawn debt capacity of $118 million to fund ELC development commitments and new
Slide 10: Capital Management
Capital Management Ongoing discipline in uncertain interest rate environment • Institutional Placement and SPP completed in period raising $144 million to support new As at 31 Dec 2024 30 June 2024 Change investment. • $500 million debt facility comprised as follows as at 31 December 2024: Borrowing
Slide 11: Portfolio Update
Portfolio Update Justin Bailey CHIEF INVESTMENT OFFICER Better Communities. Together. r Title
Slide 12: Portfolio Overview
Portfolio Overview Number of assets1 31 December 2024 Net valuation movement versus 31 December 2024 Change versus valuation 30 June 2024 passing yield 30 June 2024 $m $m % % bps Early learning portfolio 279 1,567 +12 +0.8 5.36 - Healthcare portfolio 10 167 -5 -4.0 6.00 +32 Total portfolio 289 1,734
Slide 13: Lease Expiry Profile
Lease Expiry Profile Weighted average lease expiry of 18 years 30% • Less than 2% of portfolio income subject to expiry ELC (%) Healthcare (%) prior to FY33. 24.4% • Over 55% of portfolio lease income expires after 25% FY40. • Nine1 operating properties were added to the portfolio with weighted aver
Slide 14: Annual Rent Reviews
Annual Rent Reviews HY2025 average like-for-like rent increase of +3.2% 100% 7.5% 10.1% 7.1% 12.2% • Attractive rent review structure with 4.6% 4.6% embedded income growth and inflation 4.6% 4.6% 6.7% 7.8% protection. 6.0% 80% 8.0% • ~95% of FY2025, FY2026, FY2027 and % of income FY2028 rent reviews
Slide 15: Acquisitions and Developments
Acquisitions and Developments Working with our tenants as property partners • High-quality, purpose-built properties facilitating essential community services. • 111 operating properties acquired and six ELC development projects were completed during the period. • ELC development pipeline comprises
Slide 16: ELC Operating Environment
ELC Operating Environment Strong social and macroeconomic drivers continue to support early learning sector Workforce Participation Rate1 • Strong macroeconomic drivers continue to support the Australian early childhood education 100% and care (ECEC) sector. Rising female workforce participation con
Slide 17: Arena's ELC Portfolio
Arena’s ELC Portfolio 15% Arena ELC portfolio – net rent to gross operator revenue1 14% Asset quality supporting portfolio strength 13% 12% 11% 10% • 99.2% portfolio occupancy as at 31 December 2024. 9% • Arena’s ELC portfolio operating data1 to 30 September 2024: 8% 7% o Average daily fee of $150.1
Slide 18: Healthcare Sector & Portfolio
Healthcare Sector & Portfolio Acquisition of purpose-built key health worker accommodation • Arena’s community-based healthcare and specialist disability accommodation portfolios continue to perform in-line with management’s expectation. • The underlying community demand for Australian healthcare se
Slide 19: Outlook
Outlook Investment objective To deliver an attractive and predictable distribution to investors with earnings Well positioned for growth opportunities growth prospects over the medium to long term. INCOME GROWTH • Reaffirm FY2025 distribution guidance of 18.25 cents per security, an increase of 4.9%
Slide 20: Questions
Questions Better Communities. Together. r Title
Slide 21: Our Investor Facing Team
Our Investor Facing Team ROB DE VOS GARETH WINTER JUSTIN BAILEY SAM RIST Managing Director Chief Financial Officer Chief Investment Chief of Investor Relations Officer & Sustainability Rob has over 25 years’ experience Gareth has over 30 years’ Justin has 25 years’ investment and Sam has over 25 yea
Slide 22: Appendices
Appendices Better Communities. Together. r Title
Slide 23: Financial Performance
Financial Performance HY2025 HY2024 Change Change $’000 $’000 $’000 % Property income 44,153 39,060 5,093 +13% Other income 638 329 309 +94% Total operating income 44,791 39,389 5,402 +14% Property expenses (335) (227) (108) +48% Operating expenses (3,005) (2,509) (496) +20% Finance costs (5,660) (5
Slide 24: Balance Sheet
Balance Sheet 31 Dec 2024 30 June 2024 Change Change Covenant Facility Ratio $’000 $’000 $’000 % requirement Cash 15,107 12,434 2,673 +21% Loan to value ratio (LVR) Maximum 50% 23.2% Receivables and other assets 10,284 6,161 4,123 +67% Interest cover ratio (ICR) Minimum 2x 5.8x Investment properties
Slide 25: Portfolio Composition and Movement
Portfolio Composition and Movement Portfolio movements (30 June 2024 to 31 December 2024)1 300 -1 11 280 5 9 12 Number of properties 6 260 240 278 220 264 200 180 30-Jun-24 Development projects Development projects Operating properties Operating properties 31-Dec-24 acquired completed acquired dives
Slide 26: ELC Portfolio Valuations
ELC Portfolio Valuations As at 31 December 2024 Number of Value Passing yield properties1 $m % Independent ELC freehold valuations Queensland 19 111.1 5.25% Victoria 18 94.8 5.27% New South Wales 5 25.0 5.04% Western Australia 6 28.9 5.42% South Australia 5 33.2 5.76% Tasmania 3 15.5 5.50% Total ind
Slide 27: ELC Portfolio Metrics
ELC Portfolio Metrics 31 Dec 20241 30 June 20242 Change Leased ELCs 268 255 +13 Development sites 11 12 -1 Total ELCs 279 267 +12 WALE (by income) (years) 18.8 19.4 -0.6 year Tenanted occupancy (%) 99.2 99.7 -50bps Average passing yield (%) 5.36 5.36 - Portfolio value ($m) 1,567 1,444 +9% Average re
Slide 28: Healthcare Portfolio Metrics
Healthcare Portfolio Metrics 31 Dec 2024 30 June 2024 Change Total healthcare properties 10 9 +1 WALE (by income) (years) 11.3 9.6 +1.7 year Tenanted occupancy (%) 100 100 - Average passing yield (%) 6.00 5.68 +32bps Property portfolio ($m) 167 135 +24% Average rental increase (%) 3.31 4.20 -89bps P
Slide 29: Portfolio Location Map
Portfolio Location Map 1. Excludes eight ELC development projects and two operating acquisitions which were conditionally contracted as at 31 December 2024. HY2025 Results Better Communities. Together. 12 February 2025 | 29 r Title
Slide 30: ELC Market Transactions
ELC Market Transactions NSW passing yields VIC passing yields QLD passing yields 10% 10% 10% 9% 9% 9% 8% 8% 8% 7% 7% 7% 6% 6% 6% 5% 5% 5% 4% 4% 4% 3% 3% 3% 2% 2% 2% 1% 1% 1% 0% 0% 0% Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-24 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-2
Slide 31: ELC Sales Yields versus 10 Year Bond
ELC Sales Yields versus 10 Year Bond Average Rolling ELC Sales Yield vs 10 Year Australian Government Bond Yield 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Apr-19 Aug-18 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-20 Apr-21 Apr-22 Apr-23 Apr-24 Dec-11 Dec-12 Dec-13 Dec-1
Slide 32: Important Notice
Important Notice This presentation has been prepared by Arena REIT (Arena) comprising Arena REIT Limited (ACN 602 365 186), Arena REIT Management Limited (ACN 600 069 761 AFSL No. 465754) as responsible entity of Arena REIT No.1 (ARSN 106 891 641) and Arena REIT No.2 (ARSN 101 067 878) and is author