Arena REIT Boosts EPS 5.4% and Reaffirms FY2026 Distribution Guidance
Arena REIT reported a robust half-year performance for HY2026, with net profit rising to $110 million and earnings per security up 5.4%. The company reaffirmed its FY2026 distribution guidance, underpinned by strong rental growth and disciplined capital management.
- Statutory net profit of $110 million, up 9% year-on-year
- Operating EPS increased 5.4% to 9.70 cents
- Net asset value per security rose 5.2% to $3.64
- Borrowing facility expanded to $700 million, extended to 2031
- Portfolio fully occupied with 17.9 years WALE and 3.6% rental growth
Strong Financial Performance
Arena REIT has posted a solid half-year result for the six months ending December 2025, with statutory net profit reaching $110 million, marking a 9% increase compared to the prior corresponding period. Operating earnings per security (EPS) rose by 5.4% to 9.70 cents, driven by a combination of rental income growth, strategic acquisitions, and development completions. The net asset value (NAV) per security also improved by 5.2% to $3.64, largely reflecting positive revaluation gains across the portfolio.
Capital Management and Balance Sheet Strength
The REIT has expanded its borrowing facility to $700 million, up from $600 million, with an extended maturity profile now reaching 2031. This extension provides a weighted average facility term of 4.5 years and maintains a relatively low gearing ratio of 23.2%, slightly up from 22.8% at the previous financial year-end. The weighted average cost of debt remains competitive at 4.20%, with hedging in place over 93% of borrowings, underscoring a disciplined approach to capital management and funding stability.
Portfolio Quality and Operational Highlights
Arena’s portfolio remains fully occupied at 100%, supported by a weighted average lease expiry (WALE) of 17.9 years, which provides a secure and long-term income stream. The portfolio saw a 3.6% like-for-like rental increase, including market rent reviews averaging 7.6% in the first half. The company actively managed its portfolio through $53.5 million in transactions, divesting six early learning centre (ELC) properties and acquiring three operating properties, while completing eight development projects costing $65 million. The development pipeline remains robust with 29 projects slated for completion over the next two years.
Sector Dynamics and Sustainability Focus
Strong social and macroeconomic drivers continue to underpin demand in the early learning and healthcare sectors, which form the core of Arena’s portfolio. Government reforms aimed at expanding access to affordable, quality early education are expected to support ongoing growth. Sustainability initiatives are also progressing well, with a 41% absolute reduction in Scope 3 emissions and solar renewable energy installed on 93% of properties. Arena achieved 100% of its FY2025 Sustainability Linked Loan margin discount, reflecting its commitment to environmental responsibility.
Outlook and Distribution Guidance
Looking ahead, Arena reaffirmed its FY2026 distribution per security guidance of 19.25 cents, reflecting confidence in stable income growth and disciplined portfolio management. The company remains focused on maintaining portfolio quality, leveraging proprietary data for investment decisions, and pursuing a develop-to-own strategy for ELCs. With an experienced management team and increased borrowing capacity, Arena is well-positioned to capitalise on future investment opportunities in its specialised social infrastructure sectors.
Bottom Line?
Arena REIT’s strong half-year results and reaffirmed distribution guidance signal steady growth ahead, but investors will watch how development projects and market conditions evolve.
Questions in the middle?
- How will Arena manage risks associated with its development pipeline and conditional contracts?
- What impact will upcoming market rent reviews have on future earnings growth?
- How might changes in government policy on early learning and healthcare affect Arena’s portfolio demand?
