ECEC landlord Arena REIT issues bullish trading statement ahead of FY22 close

Arena REIT, the ASX listed real estate investment trust which has significant early childhood education and care (ECEC) holdings, has confirmed in a pre EOFY trading update a portfolio revaluation increase of 8.2 per cent is anticipated for the first half of 2022 amidst strong trading across its tenant portfolio.  

 

The portfolio revaluation program saw 48 ECEC centres independently valued as at 30 June 2022, with the balance of centres subject to a Director’s valuation. The ECEC portfolio valuation uplift was $93 million, equating to an 8.2 per cent increase above that recorded on 31 December 2021. 

 

The weighted average passing yield has now fallen to 4.90 per cent, a record low for the Group which is of note given the RBA’s recent commentary on the direction of interest and most recent surprise 50 basis points rise. 

 

Arena’s healthcare portfolio also saw a revaluation lift but the amounts passed were smaller in both absolute and relative terms than the ECEC portfolio. 

 

Portfolio growth evident in last six months as tenant report strong trading

 

Over the course of the last six months Arena has continued to grow its portfolio having added seven centres via acquisition and six via completed development projects taking the total ownership to around 241 centre across its network. 

 

Arena’s partners reported solid underlying business performances as at 31 March 2022: 

 

• Average daily fee of $120.27, +5.35% from March 20216
• March like-for-like occupancy in line with the same period last year
• Net rent to revenue ratio of 10.6%

 

The tenant partners also noted that last year’s occupancy levels in March were higher than any corresponding period over the last five years, suggesting that this year’s performance remains historically high. 

 

Rent reviews during FY22 resulted in an average annual like-for-like rent increase of 4.1% which is just above the four year range of between 2.60 per cent and 3.90 per cent. 

 

Arena will release its full year results on 11 August 2022.