Arena Reit · ASX:ARF
Arena Reit — FY2024 Earnings Presentation
32 slides from Arena Reit's earnings presentation, Aug 15, 2024
Slide 1: Full Year 2024 Results Presentation
Arena REIT FULL YEAR 2024 RESULTS PRESENTATION 15 August 2024 Better Communities. Together. r Title
Slide 2: Agenda
Arena REIT acknowledges Agenda the traditional custodians of the lands on which our business and assets operate, and recognises their ongoing connection to land, waters and 03 Highlights community. 05 Sustainability 06 Financial Results 11 Portfolio Update 19 Outlook 20 Questions 21 Our Investor Fac
Slide 3: Highlights for Full Year 2024
Highlights for Full Year 2024 Delivering on our stated investment objectives • Growth in net operating profit driven by like-for-like contracted Statutory net profit Net operating profit rental increases, acquisitions and development completions. • NAV per security stable, as an increase in portfoli
Slide 4: Delivering on Strategy
Delivering on Strategy Inflation protected, predictable income Portfolio management Working in partnership • Long term WALE (by income) of 18.5 • Continue to progress solar renewable years energy program; currently installed on 90% of Arena’s property portfolio • Portfolio weighted average passing y
Slide 5: Sustainability
Sustainability Investment proposition and approach drives sustainable and commercial outcomes • Sustainability has been embedded across Arena’s business strategies which best positions us to achieve positive long term commercial and community outcomes. • Sustainability outcomes delivered during FY20
Slide 6: Financial Results
Financial Results Gareth Winter CHIEF FINANCIAL OFFICER Better Communities. Together. r Title
Slide 7: Financial Performance
Financial Performance Income growth underpinned by ongoing disciplined capital management FY2024 FY2023 Change Change • Property income continues to increase due $’000 $’000 $’000 % to: – Contracted rental growth from annual rent increases and market rent reviews; Property income 80,222 74,147 6,075
Slide 8: Contributors to EPS Growth
Contributors to EPS Growth Ongoing disciplined capital management supporting bottom line earnings growth 20 1.04 0.24 -0.19 - 0.24 -0.3 17.65 18 17.1 - 16 14 12 10 8 6 4 2 0 FY23 EPS Contracted like-for-like Completed developments Net operating expenses Asset disposals Funding mix and costs FY24 EPS
Slide 9: Financial Position
Financial Position Strong balance sheet with substantial capacity As at • Growth in total assets continues from the 30 June 2024 30 June 2023 Change acquisition of operating and development ELCs $m $m % and the completion of ELC development projects. • Post balance date Institutional Placement incre
Slide 10: Capital Management
Capital Management Debt maturity extended and ongoing consistency in hedging program • $500 million debt facility comprised as follows as at 30 As at 30 June 2024 30 June 2023 Change June 2024: – $100 million expiring 31 May 2027; – $200 million expiring 31 May 2028; and – $200 million expiring 31 M
Slide 11: Portfolio Update
Portfolio Update Justin Bailey CHIEF INVESTMENT OFFICER Better Communities. Together. r Title
Slide 12: Portfolio Overview
Portfolio Overview Number of 30 June 2024 Net valuation movement versus 30 30 June 2024 Change versus assets1 valuation June 2023 passing yield 30 June 2023 $m $m % % bps Early learning portfolio 267 1,444 7.3 +0.5 5.36 +23 Healthcare portfolio 9 135 -3.5 -2.5 5.68 +31 Total portfolio 276 1,579 3.8
Slide 13: Lease Expiry Profile
Lease Expiry Profile Weighted average lease expiry of 18.5 years 30% • Less than 3% of portfolio income subject to expiry Early Learning (%) Healthcare (%) 26.8% prior to FY2031. 25% • Over 56% of portfolio lease income expires from FY2040. 20% • Seven ELC development completions added to % of incom
Slide 14: Annual Rent Reviews
Annual Rent Reviews FY2024 average like-for-like rent increase of +4.9% 100% 8.3% 7.6% • Attractive rent review structure with embedded 12.9% 13.2% 5.0% income growth and inflation protection. 5.0% 7.5% 5.0% 8.6% 5.0% 80% 6.7% • ~95% of FY2025, FY2026, FY2027 and FY2028 rent 8.9% reviews contracted
Slide 15: Acquisitions and Developments
Acquisitions and Developments Working with our tenants as property partners • High-quality, purpose-built properties with existing tenant partners. • Seven ELC development projects were completed in FY2024. • Post balance date acquisition of six operating ELCs and four ELC development projects with
Slide 16: ELC Operating Environment
ELC Operating Environment Strong social and macroeconomic drivers continue to support early learning sector • Rising female workforce participation continues to drive demand for childcare services and long day Australian Parent Workforce Participation Rate1 care (LDC) participation rates over the me
Slide 17: ELC Portfolio
ELC Portfolio 15% Arena ELC portfolio – net rent to gross operator revenue1 14% Asset quality supporting portfolio strength 13% 12% 11% 10% • 99.7% portfolio occupancy as at 30 June 2024. 9% • Arena’s ELC portfolio operating data1 to 31 March 2024: 8% 7% o Average daily fee of $141.38: 6% 5% ▪ +0.6%
Slide 18: Healthcare Sector & Portfolio
Healthcare Sector & Portfolio Short term operating challenges, longer term support from positive macroeconomic themes • Arena’s community-based healthcare and specialist disability accommodation portfolios continue to perform in-line with expectation. • Broader Australian healthcare services are cur
Slide 19: Outlook
Investment objective Outlook To deliver an attractive and predictable distribution to investors with earnings Inflation protected predictable income growth prospects over the medium to long term. INCOME GROWTH • Reaffirming FY2025 distribution guidance of 18.25 cents per security, an increase of +4.
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 ISABELLA WALKER Managing Director Chief Financial Officer Chief Investment Chief of Investor Relations Investor Relations & Officer & Sustainability Sustainability Analyst Rob has over 25 years’ experience Gareth has over 30 ye
Slide 22: Appendices
Appendices Better Communities. Together. r Title
Slide 23: Financial Performance
Financial Performance FY2024 FY2023 Change Change $’000 $’000 $’000 % Property income 80,222 74,147 6,075 +8% Other income 678 594 84 +14% Total operating income 80,900 74,741 6,159 +8% Property expenses (573) (507) (66) +13% Operating expenses (5,419) (4,720) (699) +15% Finance costs (12,464) (9,86
Slide 24: Balance Sheet
Balance Sheet 30 June 2024 30 June 2023 Change Change Covenant Facility Ratio $’000 $’000 $’000 % requirement Cash 12,434 16,113 (3,679) -23% Loan to value ratio (LVR) Maximum 50% 24.9% Receivables and other assets 6,161 5,958 203 +3% Interest cover ratio (ICR) Minimum 2x 4.9x Investment properties
Slide 25: Portfolio Composition and Movement
Portfolio Composition and Movement Portfolio movements (30 June 2023 to 30 June 2024)1 280 5 7 -1 12 14 260 Number of properties 240 220 258 264 200 180 160 30-Jun-23 Development sites Development projects Operating properties Operating properties 30-Jun-24 acquired completed acquired divested 1. Ex
Slide 26: ELC Portfolio Valuations
ELC Portfolio Valuations As at 30 June 2024 Number of Value Passing yield properties1 $m % Independent ELC freehold valuations Queensland 19 124 5.44% Victoria 18 126 5.30% New South Wales 9 38.4 5.24% Western Australia 5 26 4.74% South Australia 7 43.6 5.45% Total independent ELC valuations 58 358
Slide 27: ELC Portfolio Metrics
ELC Portfolio Metrics 30 June 20241 30 June 2023 Change Leased ELCs 255 249 +6 Development sites 12 142 -2 Total ELCs 267 263 +4 WALE (by income) (years) 19.4 20.2 -0.8 year Tenanted occupancy (%) 99.7 99.6 +10bps Average passing yield (%) 5.36 5.13 +23bps Portfolio value ($m) 1,444 1,377 +5% Averag
Slide 28: Healthcare Portfolio Metrics
Healthcare Portfolio Metrics 30 June 2024 30 June 2023 Change Total healthcare properties 9 9 - WALE (by income) (years) 9.6 10.3 - 0.7 year Tenanted occupancy (%) 100 100 - Average passing yield (%) 5.68 5.37 +31bps Property portfolio ($m) 135 139 -2.9% Average rental increase (%) 4.2 4.9 -70bps Po
Slide 29: Portfolio Location Map
Portfolio Location Map 1. Excludes four ELC development projects which were conditionally contracted as at 30 June 2024 and all post balance date Acquisitions. FY2024 Results Better Communities. Together. 15 August 2024 | 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% Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-15 De
Slide 31: ELC Sales Yields versus 10 Year Bond
0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% FY2024 Results Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 r Title Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Better Communities. Together. Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-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