childcare-sunshine-yellow-feature
Image – Canva.
  • Renegotiated lease terms include the installation of solar
  • Lease terms increased by 25 years
  • Market rent reviews for FY20-FY22 increased by 6.5% on average

Arena REIT (ASX: ARF) today announced it has agreed terms for the renegotiation of leases on a portfolio of 87 properties across Australia.

The key terms include the installation of solar power across all ARF properties tenanted by Goodstart Early Learning, renegotiated portfolio lease term increased by 25 years, and resolution of all FY20, FY21 and FY22 market rent reviews.

Arena’s portfolio consists of 86% early learning centres and 14% healthcare properties, with Goodstart Early Learning the largest tenant partner.

Tenant diversification by income for HY21

arena-reit-arf-tenant-diversification-by-income-pie-chart
Source – Arena REIT.

The company said the installation of solar is expected to reduce carbon emissions by approximately 1,000 tonnes per annum, as calculated by Infinite Energy.

Pro-forma weighted average lease expiry as of 30 June 2021 is 20.1 years, it was previously 14.7 years at HY21. This rise follows the 25-year lease term increase as mentioned in the key terms of renegotiation.

Lease expiry profile by income for HY21

Lease-profile-HY21-arena-reit
Source – Arena REIT.

The resolution of market rent reviews has resulted in an average increase of 6.5% for FY20, FY21 and FY22.

In Arena’s June market update, the company saw promise in the early learning centre sector, with “Demand for services and record female workforce participation rate… driving increased long day care participation rates over the medium to long term.”

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