Economics
Reporting
Arena REIT announces intention to raise $60m as it positions
Jason Roberts
Jun 02, 2020
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Arena REIT Group has confirmed that it is seeking to raise $60 million by way of an institutional placement of $50 million and a security purchase plan (SPP) for retail investors of $10 million at a price of A$2.28 per unit, with the proceeds expected to fund further social infrastructure investments, including in the early education and disability care spaces.
The move comes four weeks after its larger peer Charter Hall Social Infrastructure REIT announced their intention to raise $115 million to fund future growth.Arena, which currently owns 223 early childhood education and care (ECEC) centres and 10 disability care centres, will use the capital raised to continue its growth strategy by investing in opportunities that exhibit the following key characteristics:
- Relatively long lease terms
- Premises that have strategic importance to the operation of the tenant
- High credit quality or government tenants
- Leases where tenants are responsible for substantially all statutory and operating outgoings and costs including land tax, insurance and repairs and maintenance
The institutional component of the raise will be fully underwritten however, the retail component will not be.
Arena centres are all open and 90% of rental payments received in last three monthsFrom an operating perspective, and consistent with commentary in its FY20 distribution guidance announced in May, all Arena properties are open and continue to provide their services to the communities in which they are located.
In addition, the Trust noted that approximately 90 per cent of rental payments due from tenants in the March to May period have been received, although rental relief agreements under the National Cabinet Mandatory Code of Conduct have been reached where justified.
Where rental relief has been provided the rent has largely been deferred. Rental abatements, reductions or cessations of amounts owed have been minimal.
ECEC tenants constrained by increasing attendances, await outcome of funding review Arena went on to note that its tenant base of ECEC operators have reported that operations have become ‘increasingly constrained’ by rising attendances and therefore rising costs at a time when Government subsidy payments are fixed and operators are not able to charge fees.
The consequences of this are that uncertainty levels are elevated as the sector awaits confirmation from the Federal Government on the outcome of the review of the ECEC Relief Package and a roadmap to a post COVID-19 operating environment.
That being said Arena remains confident that structural thematic tailwinds of Government focus on workforce participation will support the ECEC sector as will a growing and ageing population support the disability care sector.
To read Arena’s statement on the capital raise please click here and for their presentation please click here.
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