Rental growth rates now 50% lower than post COVID peaks H1 Arena REIT results confirm

The growth in like-for-like rental increases at early childhood education and care (ECEC) focused real estate investment trust Arena REIT fell to on average 3.23 per cent in the six months ended December 2024 its latest half year results show. 

The increase was more than 50 per cent lower than the high level of 7.1 per cent recorded in June 2023 and around 1.8 per cent lower than the 5.00 per cent growth reported at its Full Year 2024 results in August 2024. 

The shift lower reflects broader moderations in inflation across the Australian economy and will undoubtedly be well received by Arena’s ECEC tenants across its portfolio who will welcome a return pre-COVID rental increase patterns. 

Arena steps up growth via acquisition and completions, restocks development pipeline

During the period Arena leant into its growth strategy acquiring eleven brownfield centres at a total cost of $127 million and a yield of 6.1 per cent with the new additions to the portfolio complemented by the completion of 6 development sites at a cost of $43 million and yield of 5.8 per cent. 

Notably, the REIT elected to replenish its development pipeline with the acquisition of eight new development sites that were conditionally contracted as at 31 December 2024. The acquisitions boost the Trust’s pipeline back to 18 sites, towards the top of the last five years range. 

Arena’s ECEC portfolio, excluding development sites, now stands at a record 268 centres which collectively now have a valuation of $1.56 billion, or around $5.46 million per centre both of which are new highs in terms of dollars. 

Revaluations and acquisitions support strong profit performance 

Arena reported a net operating profit, which includes contributions from its healthcare portfolio, for the half-year ended 31 December 2024 of $36 million, an increase of 16 per cent on last year driven by rental increases and the contribution from new acquisitions and development site completions over the period more than making up for a 20 per cent increase in operating costs. 

Statutory net profit also came in at $36 million with the benefits of a $6.7 million portfolio revaluation exercise somewhat set off against mark downs in the value of derivative instruments on the balance sheet used to hedge the interest rate risk implicit in the portfolio. 

The Trust reported earnings per share of 9.2 cents, an increase of 5.5 per cent and has paid a dividend per share of 9.125 cents for the period, an increase of 4.9 per cent on last year. 

“Arena’s investment activity accelerated during half year 2025 as the trajectory of debt

costs became clearer and we utilised our competitive cost of capital and deal sourcing expertise to execute on emerging opportunities,” Rob de Vos, Managing Director said.  

“With an expanded and experienced management team, Arena remains well positioned to capitalise on further growth opportunities that are consistent with our well defined strategy and investment objective.”

To access the results in full please see here.