Economics
Property
Arena REIT says occupancy across ECEC tenant portfolio at highest level in five years
Jason Roberts
Dec 19, 2021
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Arena REIT has released a pre close trading update in which it confirms that underlying operator occupancy across its early childhood education and care (ECEC) portfolio of around 226 centres is higher than any corresponding period over the past five years. The performance metrics, which are submitted by the Arena’s tenant partners that include organisations such as Goodstart Early Learning, Green Leaves Early Learning, Affinity Education Group, G8 Education, Edge Early Learning and Petit Early Learning journey, sends a strong signal that demand for ECEC services continues to be strong post COVID-19 disruptions in 2021. The Trust noted in its statement that “strong macroeconomic drivers continue to support the Australian early learning sector and the essential nature of these community services was reinforced through the various COVID-19 related federal and government funding commitments over the last 12 months.” Like for like rental increases were 3.6 per cent over the six month period to 31 December 2021. Stronger operating conditions and optimism push development pipeline to new high The bullish operating environment has catalysed Arena to increase its development pipeline by seven new sites over the six months to December 2021 taking the total number of sites in its pipeline to nineteen, the highest since at least June 2014. That being said two ECEC centres were divested during the period at an average premium to book value of 15 per cent with all proceeds reinvested back into the development pipeline. Elsewhere the Trust confirmed that the ECEC portfolio valuation program for the period ending 31 December 2021 is expected to result in a new revaluation uplift of $141 million, representing an increase of 14.7 per cent from 30 June 2021. The passing yield of the portfolio contracted 69 basis points to 5.15 per cent, a substantial reduction over the six month reporting period. Arena confirmed it will publish its Half Year 2022 results on 11 February, 2022. To review the statement in full please see here.
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