Arena REIT Reports $73M Net Operating Profit, Distributions Up 4.9%
Arena REIT reported a robust 17% increase in net operating profit for FY2025, underpinned by strong portfolio management and development activity, while raising its distribution guidance by 5.5% for FY2026.
- Net operating profit up 17% to $73 million
- Statutory net profit surged 42% to $81 million
- Distributions per security increased 4.9% to 18.25 cents
- Portfolio occupancy steady at 100% with 18.4 years WALE
- Development pipeline expanded with 29 early learning centre projects
Strong Financial Performance
Arena REIT has delivered a solid financial performance for the year ended 30 June 2025, reporting a 17% rise in net operating profit to $73 million and a 42% jump in statutory net profit to $81 million. Earnings per security grew by 5.1% to 18.55 cents, reflecting the REIT’s disciplined investment approach and active portfolio management.
Distributions per security increased by 4.9% to 18.25 cents, with FY2026 guidance set at 19.25 cents, signaling a further 5.5% growth. This steady income growth is supported by contracted rental escalations, market rent reviews, and the completion of development projects.
Portfolio Quality and Growth
The REIT’s portfolio remains fully occupied at 100%, with a weighted average lease expiry (WALE) of 18.4 years, underscoring long-term income security. Arena achieved an average like-for-like rent increase of 3.5%, with market rent reviews averaging 6.8% during the year. The portfolio’s weighted average passing yield rose slightly to 5.47%, reflecting ongoing value enhancement.
During FY2025, Arena acquired 11 properties, including healthcare and early learning centres (ELCs), while divesting five lower-quality ELC assets at an 18% premium to book value. The REIT also completed 12 ELC development projects, reinforcing its focus on high-quality, purpose-built social infrastructure.
Development Pipeline and Sector Outlook
Arena’s development pipeline now includes 29 ELC projects with a forecast cost of $227 million and an initial yield of 6.0%. These projects, expected to complete over the next two years, are secured with existing tenant partners, highlighting strong collaboration within the sector.
The early learning sector benefits from supportive government reforms aimed at improving access and quality, which are expected to drive increased participation and demand. Meanwhile, the healthcare portfolio continues to perform steadily amid a growing and ageing population, with Arena actively seeking further investment opportunities in social infrastructure.
Capital and Sustainability Highlights
Arena increased its debt facility to $600 million, extending maturities and maintaining a conservative gearing ratio of 22.8%. The weighted average cost of debt stands at 4.1%, with a strong hedge cover ratio of 69%, positioning the REIT well to manage interest rate risks.
Sustainability remains a core focus, with Arena achieving zero scope 1 and 2 emissions and installing solar systems on 92% of its portfolio. The REIT has also delivered significant reductions in financed emissions intensity, aligning with its 2030 targets and securing sustainability-linked loan benefits.
Looking Ahead
With a robust balance sheet, a high-quality portfolio, and a strong development pipeline, Arena REIT is well positioned to continue delivering predictable and growing distributions. The company’s emphasis on essential community services and sustainability initiatives aligns with long-term demographic and policy trends, providing a solid foundation for future growth.
Bottom Line?
Arena REIT’s FY2025 results and strategic initiatives set the stage for sustained growth amid evolving social infrastructure demands.
Questions in the middle?
- How will upcoming market rent reviews impact income growth over the next four years?
- What risks could arise from regulatory changes in the early learning sector?
- How might interest rate fluctuations affect Arena’s cost of debt and distribution guidance?
