Arena REIT shows 7% increase in Vals in 6 months

17 June 2021

Arena REIT’s portfolio valuation program is expected to result in a net revaluation uplift of $72 million for the six month period ending 30 June 2021 as capital continues to support values in the sector.

Strong macroeconomic drivers for the Australian ELC sector are leading to increased values with the weighted average cap rate for Arena’s ELC dropping 22bps to 5.84% and the their healthcare assets by 44bps to 5.55%.

Demand for services and record female workforce participation rate have been driving increased long day care participation rates over the medium to long term. The essential nature of the services provided by the ELC sector was reinforced through the various COVID-19 related funding commitments3 over the last 12 months. The Federal Government recently committed a further investment of $1.7 billion to the sector to support ongoing economic recovery in the short term; and improve workforce participation, gender equality, women’s financial security and economic activity over the medium to long term.

In report issued in June 2021, CBRE’s Australian Healthcare and Social Infrastructure team noted that “the priority government funding for child care during the pandemic underscored the importance of the asset class and the domino effect their access has on the economy. CBRE’s Sandro Peluso adds, “Pre-COVID-19 there was a perception by some in the market that there was an oversupply of child care centres, yet demand continues to rise. Interest from new and existing ASX investors and privates alike also indicate that child care is a highly favourable asset class moving into the future.”

In preparing for the June year end accounts, Arena independently revalued a total of 47 ELC assets and four healthcare assets, with the remaining ELC and healthcare assets and ELC development projects subject to Directors’ valuation. The increase in valuations represents a 7% uplift from HY21 results and an increase of $0.21 in Net Asset Value (NAV) per security.

Adding to the groups total portfolio in FY21 are seven new assets and 14 development projects. A further 9 new projects have been added to the development pipeline which now comprises 13 projects, with an expected total capital investment of $79 million.

The portfolio is also being well support as a future hedge against inflation with the rent review profile of the ELC’s skewed towards annual lease rent reviews that are subject to increases of the higher of an agreed fixed increase or CPI.

Further Information

See CBRE Report on the Sector

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