Image source: © 2025 Krish Capital Pty. Ltd.

Highlights:

  • In FY25, ARF's net operating profit rose 17% year-on-year to AUD 73 million, with statutory net profit up 42% to AUD 81 million.

  • Portfolio value increased to AUD 1.86 billion in FY26, supported by acquisitions, divestments, and development completions.

  • FY2026 distribution per security is forecast at 19.25 cents, up 5.5% from FY2025.

Arena REIT (ASX:ARF) has reported its financial results for the year ended 30 June 2025, posting growth in profit, earnings per security, and portfolio value. The company also issued guidance for higher distributions in FY2026.

Financial Performance

For FY2025, Arena REIT recorded a net operating profit (distributable income) of AUD 73 million, an increase of 17% compared to FY2024. Statutory net profit rose 42% year-on-year to AUD 81 million. Operating earnings per security were 18.55 cents, up 5.1% from the prior year, while distributions per security increased 4.9% to 18.25 cents.

Total assets at 30 June 2025 stood at AUD 1.86 billion, 15% higher than a year earlier. Net asset value per security was AUD 3.46, a rise of 1.5%. Gearing was reported at 22.8%, compared with 22.6% at 30 June 2024. The company provided FY2026 distribution guidance of 19.25 cents per security, which represents a 5.5% increase on FY2025.

Earnings growth was supported by contracted rental increases, acquisitions, and development completions.

Portfolio Highlights

As at 30 June 2025, Arena’s portfolio had a weighted average lease expiry of 18.4 years and 100% occupancy (excluding certain properties conditionally contracted for sale or with new leases agreed). The average like-for-like rent increase for the year was 3.5%.

During the period, Arena acquired one healthcare property and ten early learning centre (ELC) properties for a combined AUD 129 million, with an initial yield of 6.1%. Five ELC properties were divested for AUD 37.5 million, achieving an 18% premium to book value. Twelve ELC development projects were completed at a total cost of AUD 83.1 million, with an initial yield of 5.8%.

The development pipeline was replenished with 29 ELC projects valued at AUD 227 million, all with existing tenant partners and expected to complete over FY2026 and FY2027.

Valuations for 58 properties were independently assessed at year-end, with the total portfolio value increasing by AUD 24 million, or 1.4%, to AUD 1.737 billion. The weighted average passing yield for the portfolio was 5.47%.

Sector Updates

In the ELC sector, the company noted ongoing federal reforms aimed at improving access to affordable childcare and enhancing safety measures. Average daily fees across Arena’s ELC tenants rose 3.53% from 30 September 2024 and 9.75% from 31 March 2024, with stable occupancy levels and net rent to gross revenue ratios holding at 9.9%.

In the healthcare sector, demand continues to be supported by demographic trends. Arena’s healthcare assets performed in line with expectations, and the company is seeking further investment opportunities in healthcare and social infrastructure.

Capital Management and Sustainability

Arena increased its debt facility by AUD 100 million to AUD 600 million, extending maturities across tranches to between May 2028 and May 2030. The weighted average cost of debt was 4.1%.

Sustainability outcomes in FY2025 included achieving zero organisational scope 1 and 2 emissions, installing solar systems on 92% of properties, and reducing financed emissions intensity by 47% compared to FY2024 levels.