arena-reit-arf-feature
Image: Canva, ARF.
  • Early learning centre sector continues strong
  • Some projects delayed due to extreme weather in NSW and Qld
  • ELC comprised $93 million of the overall uplift

Arena REIT (ASX: ARF) has announced the company expects a net revaluation uplift of some $102 million for the six month period ending 30 June 2022. The company said this will represent an increase of 7.8% from HY22 and is equivalent to an increase of $0.29 in net asset value per security.

Independent valuations were carried out on 48 early learning centre (ELC) assets and three healthcare assets, the remainder ar subject to Directors’ valuation.

The majority of uplift comes from ARF’s early learning centre portfolio, with the company noting the property portfolio remains 100% occupied and has a WALE of 20 years.

Valuation movement (since 31 December 2021) Weighted average passing yield (30 June 2022)
Early learning centre portfolio $93 million 8.2% 4.90%
Healthcare portfolio $9 million 5.2% 5.02%
Total portfolio $102 million 7.8% 4.91%

Strong macroeconomic drivers continue to support the Australian ELC sector. Demand for services and record female workforce participation rate have been driving increased long day care participation rates over the medium to long term, said Arena.

Across FY22, the company has acquired a total of seven ELC properties and six ELC development projects.

Recent extreme weather events in New South Wales and Queensland have caused minor delays in the progress of four ELC development projects which were expected to be completed in 2HFY22. The average expected delay is two months and these projects are now anticipated to be completed in 1HFY23. Due to the fund through nature of these development projects the delays do not impact on Arena’s contracted returns or investment cost.

Arena’s development pipeline currently comprises 16 projects, with an initial yield on total cost of 5.78% and expected total capital investment of $103 million; approximately $50 million of forecast capital expenditure remains outstanding.

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