Arena REIT has reported a robust HY2026 financial performance, with net operating profit rising 9% and statutory net profit surging 202%. The REIT’s active portfolio management and development pipeline underpin its confidence in sustained growth.
- Net operating profit up 9% to $39 million
- Statutory net profit increased 202% to $110 million
- 100% portfolio occupancy with WALE of 17.9 years
- Reaffirmed FY2026 distribution guidance of 19.25 cents per security
- Expanded borrowing facility to $700 million with low cost of debt
Strong Financial Performance
Arena REIT has announced a solid half-year result for the six months ending 31 December 2025, with net operating profit (distributable income) climbing 9% to $39 million compared to the prior corresponding period. Statutory net profit saw an even more dramatic increase, soaring 202% to $110 million, reflecting both operational strength and valuation gains. Earnings per security rose 5.4% to 9.70 cents, while distributions per security increased 5.5% to 9.625 cents, signalling steady income growth for investors.
Portfolio Quality and Growth Drivers
The REIT’s portfolio remains fully occupied at 100%, with a weighted average lease expiry (WALE) of 17.9 years, underscoring the long-term stability of its income streams. Arena’s portfolio valuation increased by 3.3%, supported by a firming weighted average passing yield to 5.39%. The early learning centre (ELC) segment continues to be a key focus, with six properties divested at a premium and three new operating ELC acquisitions completed. Additionally, eight development projects were finished during the period, and the pipeline now includes 29 ELC developments slated for completion over the next two years, reflecting a strong commitment to growth through development.
Capital Management and Funding
Capital discipline remains a cornerstone of Arena’s strategy. The REIT increased its borrowing facility by $100 million to $700 million, extending the duration and reducing margins. The weighted average cost of debt stands at a competitive 4.20%, with 93% of borrowings hedged at an average rate of 2.73%. Gearing remains conservative at 23.2%, providing ample capacity to fund ongoing development projects and potential acquisitions. This prudent approach positions Arena well to capitalise on future opportunities while managing risk.
Sector Outlook and Sustainability
Demographic trends and supportive government policies continue to underpin demand for Arena’s social infrastructure assets, particularly in early learning and healthcare. Recent regulatory changes, such as the Federal Government’s removal of the Child Care Subsidy activity test, are expected to boost utilisation and revenue potential for ELC tenants. On sustainability, Arena has achieved zero scope 1 and 2 emissions and significant reductions in scope 3 emissions, with solar installations on 93% of its properties. These initiatives align with its commitment to responsible investment and community outcomes.
Looking Ahead
Arena has reaffirmed its FY2026 distribution guidance of 19.25 cents per security, reflecting confidence in continued income growth. The REIT’s active portfolio management, development pipeline, and strong balance sheet provide a solid foundation for navigating market conditions and delivering value to securityholders. Investors will be watching closely how Arena executes on its development projects and capitalises on sector tailwinds in the coming months.
Bottom Line?
Arena REIT’s disciplined strategy and robust pipeline set the stage for sustained growth amid evolving sector dynamics.
Questions in the middle?
- How will upcoming market rent reviews impact income growth in HY2027?
- What risks could affect the delivery timelines and yields of the 29 ELC development projects?
- How might further government policy changes influence demand in the early learning sector?