Arena REIT releases 2018 Annual Report

Arena REIT, the ASX 300 listed group that owns, manages and develops social infrastructure property with a particular emphasis on early learning centres, has published it’s 2018 Annual Report.

 

The group has also released its Annual General Meeting (AGM) notice and the accompanied Explanatory Memorandum for investors. The AGM is scheduled for Tuesday 20 November 2018.

 

ARENA Chairman David Ross and Managing Director Bryce Mitchelson highlighted the following key points in their letter to shareholders:

 

• Net operating profit increased 21 per cent to $34.7 million from the previous year
• Average annual rent increased by 2.6 per cent from the previous year
• Total assets increased 17% to $726.1 million from the previous year
• Investment properties saw revaluations of $26.5 million equivalent to a 7 per cent increase in value
• The portfolio comprised of 207 early learning centres and seven healthcare properties
• The portfolio is 100 per cent occupied
• Earnings per share increased by 6.5 per cent to 13.1 cents
• Dividend per share increased by 6.7 per cent to 12.8 cents

 

Mr Ross also noted that Statutory Net Profit had fallen by 33 per cent year on year to $64.4 million. This was due to revaluation gains in the year ending 2018 of $26.5m being materially lower than the $66.1 million recorded in the previous year.

 

Arena’s early learning centres had a carrying value of $596 million as at 30 June 2018. This is an increase of 27 per cent from the prior year and was largely driven by acquisitions and revaluations.

 

The key assumptions used to value their early learning centres saw small changes with the range applied to market rent per license place widen from $1,500 to $5,000 from $1,500 to $3,900 a year earlier, capitalisation rates widen to 5.0 per cent to 9.0 per cent from 4.5 per cent to 10.25 per cent a year earlier and passing yields narrow to 4.0 per cent to 9.0 per cent from 4.5 per cent to 10.25 per cent a year earlier.

 

The following tenants make up ARENA’s investment portfolio:

• Goodstart Early Education at 34 per cent of the group’s investment portfolio;
• Affinity Education at 12 per cent;
• Greenleaves at 12 per cent;
• G8 Education at 8 per cent;
• Petite Early Learning at 6 per cent;
• Oxanda at 3 per cent;
• With the balance relating to health service tenants.

 

With regards the outlook for Arena Mr Ross noted “We remain positive about the outlook for FY19” and went on to say that despite strong fundamentals they are expecting to see “some further short term pressure on child care operators from increased supply.”

 

The Annual General Meeting will be held on 20 November 2018 at 10:00am. The venue is Hall & Wilcox, Level 11 Rialto South Tower, 525 Collins Street, Melbourne VIC, 3000.