Arena REIT FY24 releases solid FY24 results as tenant rental growth drifts lower

ASX listed early childhood education and care (ECEC) landlord Arena REIT, has released its full year 2024 results in which it reported a 4.7 per cent increase in net operating profit and confirmed that rental growth across its ECEC network pared back to 5.0 per cent over the period. 

 

Statutory net profit, impacted by lower than prior period revaluation gains, fell by 23 per cent to $57,508 million, with Group earnings per security of 17.65 cents, up 3.2 per cent, and distribution per share of 17.4 cents, up 3.6 per cent. 

 

“Strong macroeconomic drivers continue to support growth in the demand for essential

community services across Australia,” Managing Director Mr Rob de Vos said.

 

“These themes, combined with Arena’s disciplined origination, capital management and asset management expertise have positioned the business well to sustainably deliver on its purpose and investment objective of delivering predictable distributions to securityholders with the prospect for growth.”

 

ECEC tenant rental increases fall back to 5.0 per cent year on year

 

Average rental increases across Arena’s portfolio of 255 ECEC centres were 5.0 per cent over the twelve months to June 2024, down from 5.50 per cent in December 2023 and down from just over 7.0 per cent recorded at its peak this time last year. 

Rent now (on average) accounts for 10.3 per cent of the gross revenue of Arena’s ECEC tenants, slightly lower than last year which reflects the substantial 9 per cent fee increases passed from the period March 2023 to March 2024 which more than outweighed rent rises. 

 

Network growth underpinned by development pipeline completions and growth

 

Arena has consistently maintained healthy levels of development centres within its pipeline which, on completion, continue to support both network and revenue growth. Seven development sites were completed in FY 2024 at a total cost of $54.5 million and a yield of 5.1 per cent. 

 

As at year end Arena had 21 projects within its development pipeline, which is high relative to history, and includes four sites that were conditionally contracted as at 30 June 2024 and four which were in exclusive due diligence.

 

From an operating centre perspective Arena acquired six ccentres, grouped under one brand and owned by existing tenant partner Affinity Education Group located in New South Wales, as part of a larger transaction and corresponding capital raise announced on 24 July 2024. 

 

To learn more about Arena’s FY2024 results please click here for the press release and here for the presentation.