Economics
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Arena REIT confirms boost of ECEC centre development pipeline
Jason Roberts
Feb 14, 2020
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Arena REIT has more than doubled their early childhood education and care (ECEC) development pipeline with the settlement of nine new sites in the period and the contracting of two more sites (that have not yet settled) taking the pipeline to 16 sites in total, a level not seen for a number of years at their half year results.
The move to boost the pipeline corresponds with a $50 million increase in their debt facility as they position the organisation to capitalise on their positive outlook for the sector.Commenting on the Group’s current financial position Chief Financial Officer Mr Gareth Winter said “We continue to operate well within our debt covenant requirements and have increased our debt capacity and term to find the balance of the development pipeline and additional opportunities for growth.”
Elsewhere the company confirmed that they had acquired three operating centres and sold five underperforming centres - a move that takes their total portfolio to 223 centres consistent with their active portfolio management strategy. Strong results underpinned by rental growth, acquisitions and site completionsOperating profits were up 17 per cent on last year at $21.4 million and statutory profit rose 24 per cent to $42.2 million, largely due to the inclusion of portfolio revaluation gains (of $20.3 million) which are not included in operating profits.
The key profit drivers were a 3.3 per cent increase in like for like rental increases, which compares favourably against peer Charter Hall who reported a 2.0 per cent increase, and contributions from the three operating centre acquisitions and one completed development site.
Notably during the period three uncapped rent reviews were resolved resulting in a net 15.2 per cent average increase but as yet a further seven uncapped and 15 capped (at 15 per cent) are not resolved.
Management continues to diversify with purchase of Perth based health care centreIn line with the Group’s strategy to continue to diversify and grow its healthcare portfolio, management confirmed the acquisition of an $11 million multi-disciplinary healthcare centre co located with Kalamunda Hospital in Perth.
The property is a modern purpose built facility leased to Mead Medical, a local community healthcare provider with complementary pathology and pharmacy tenancies and its inclusion in the portfolio lifts the number of healthcare related assets to 11.
The property has a triple net lease and was acquired at a 6.5 per cent yield with a 10 year lease.
Commenting on the half year results Rob de Vos, Managing Director said “We remain focused on proactive portfolio management, continuing to strengthen our tenant relationships and securing attractive investment opportunities to grow earnings and build long term value for investors.”
To read the results presentation please click here.
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