Goodstart Early Learning has conditionally agreed to acquire 31 centres operated by Edge Early Learning, including 20 of Arena REIT’s 27 properties occupied by the childcare group. The proposed transaction remains subject to due diligence, final documentation and Arena’s consent to lease assignments.
- Conditional acquisition of 31 Edge-operated centres by Goodstart
- 20 of Arena’s 27 Edge-occupied properties included
- Rent continues to be received across Arena’s 27 properties
- Separate sale process covers 33 remaining Edge centres, including seven Arena properties
- Approximately $4 million held in bank guarantees and security deposits
Goodstart Agreement Covers Most Arena Edge Properties
Goodstart Early Learning has entered into conditional Heads of Agreement to acquire 31 early learning centre businesses operated by Edge Early Learning, a transaction that includes 20 of the 27 properties Arena REIT (ASX:ARF) owns and leases to Edge.
The proposed deal gives Arena a potential pathway for 20 of its affected properties after
Lease Assignments and Due Diligence Remain Outstanding
Arena said the transaction remains subject to ongoing due diligence and a final agreement between Goodstart and the Administrator. Arena is conducting its own due diligence as it considers whether to consent to the assignment of the leases attached to the proposed acquisition.
Rent is currently being received on all 27 Arena-owned centres occupied by Edge. That provides some near-term continuity, although the announcement does not disclose the transaction value, timing, proposed lease terms or whether the existing rental arrangements would change if the deal proceeds.
Seven Arena Properties Remain Outside the Proposed Deal
The Administrator is separately pursuing a sale of the remaining 33 centres operated by Edge. That group includes seven additional Arena-owned properties, leaving their future occupancy and lease arrangements unresolved by the proposed Goodstart transaction.
Arena said it would continue engaging with the Administrator to seek a solution that maximises long-term outcomes for securityholders. It also continues to reserve its legal rights in relation to the Edge portfolio and holds approximately $4 million in bank guarantees and security deposits as security over the leases.
Bottom Line?
The proposed sale reduces uncertainty for 20 Arena properties, but completion, lease assignment consent and the fate of seven remaining centres are still open questions.
Questions in the middle?
- Will Goodstart’s final agreement preserve the existing rent and lease economics for Arena’s 20 properties?
- What outcome will emerge for the seven Arena-owned centres outside the proposed transaction?
- Will Arena need to draw on its approximately $4 million of security, or will rent continue uninterrupted across the Edge portfolio?