Arena REIT (ARF) H2 2024 earnings summary

Executive summary

• Statutory profit for FY 2024 was $57.5 million, with underlying net operating profit up 5% to $62.4 million, driven by rental increases, acquisitions, and development completions; statutory net profit fell 22.5% due to lower revaluation gains.

• Earnings per security rose 3.2% to $0.1765, with distribution per security up 3.6% to $0.174.

• Distribution guidance for FY 2025 is reaffirmed at $0.1825 per security, a 4.9% increase over FY 2024.

• Portfolio occupancy at 99.7% with a WALE of 18.5 years, supported by high demand and a diversified tenant base.

• Solar energy installed on 90% of properties, with a 42% reduction in financed emissions since 2021.

Financial highlights

• Property income grew 8% year-over-year to $80.2 million; total operating income up 8% to $80.9 million.

• Net asset value per security stable at $3.41, as higher cap rates were offset by rent increases.

• Like-for-like average rent increased 4.9% year-over-year; 26 market rent reviews averaged a 7.7% increase.

• Portfolio passing yield expanded by 23 basis points to 5.4% at June 2024.

• Gearing increased to 22.6%, with post-placement proforma gearing expected to reduce to 19.9%.

Outlook and guidance

• FY 2025 distribution per security guidance is $0.1825, up 4.9% from FY 2024, assuming no major asset sales or capital deployment beyond announced projects.

• 95% of rent reviews for FY2025–FY2028 are CPI-linked or higher, supporting embedded income growth.

• $139 million development pipeline with $95 million capex outstanding; strong social and macroeconomic drivers for early learning and healthcare sectors.

• Forward BBSY curve assumes a 4.3% average floating rate; CPI assumption averages 3.25% for FY 2025.

• Market rent growth expected to continue at a reasonable rate due to government subsidies and sector demand.