Arena REIT Reports $109.7M Net Profit, Distributions Up 5%

Robust Half-Year Performance

Arena REIT has delivered a standout half-year financial result for the period ended 31 December 2025, with net profit after tax attributable to stapled group investors soaring 202% to $109.7 million. This surge was primarily driven by substantial revaluation gains on its investment properties, reflecting the strength of its portfolio in the early learning and healthcare sectors.

Underlying operating profit, measured as net operating profit or distributable income, also rose a solid 9% to $39 million. This growth was supported by rental income increases from periodic rent reviews, new lease commencements following the completion of early learning centre developments, and recent acquisitions.

Distribution Growth and Portfolio Expansion

Distributions to securityholders increased by 5% to 9.625 cents per security for the half-year, maintaining Arena REIT’s commitment to providing attractive and predictable income streams. The net asset value per security climbed 5% to $3.64, underscoring the enhanced value of the portfolio.

The property portfolio expanded during the period with the addition of one operating early learning centre and twelve development sites. Eight new early learning centres were completed, while six were divested, with three settlements expected post-reporting date. The portfolio remains fully leased with a weighted average lease expiry of 17.9 years, highlighting long-term income security.

Capital Management and Debt Facilities

Arena REIT strengthened its capital position by expanding its debt facilities by $100 million and extending maturity dates by 12 months in February 2026. The Group now holds three syndicated facilities totaling $700 million, with maturities staggered through to May 2031, providing a weighted average debt term of 4.5 years. Gearing edged up slightly to 23.2%, remaining well within covenant limits.

Interest rate risk is actively managed, with 93% of borrowings hedged through interest rate swaps at a weighted average fixed rate of 2.73%. Forward start swaps covering $270 million at a fixed rate of 3.4% are set to commence over the next two years, providing further interest cost certainty.

Outlook and Risks

Looking ahead, Arena REIT expects to pay a full-year distribution of 19.25 cents per security for FY26, assuming stable market conditions and no significant acquisitions or disposals. The Group’s focus remains on sectors underpinned by long leases and supportive macroeconomic trends, particularly early learning and healthcare.

However, the Group acknowledges several risks including concentration in early learning and healthcare tenants, tenant credit risk, macroeconomic pressures such as inflation and interest rates, climate change impacts, and potential regulatory changes affecting government funding for childcare and healthcare services.

Overall, Arena REIT’s half-year results reflect a well-executed strategy of portfolio growth, income stability, and prudent capital management, positioning it strongly for the medium to long term.