Arena REIT FY2026 Results: Net Operating Profit Rises 8% as Property Portfolio Expands

Source: Kapitales Research

Highlights

Net operating profit increased 8.3% to AU$79.1 million in FY2026.
The portfolio maintained full occupancy at 100%, with an average remaining lease term of 17.5 years.
The trust continued to expand its early learning portfolio while addressing rental issues involving a major tenant.

Arena REIT (ASX: ARF) reported higher operating earnings for FY2026, supported by rental increases, property acquisitions and development completions. In its full-year results presentation dated 21 August 2026, the Australian property trust outlined growth in earnings and asset value, alongside its plans to strengthen portfolio quality and manage challenges within its early learning centre business.

Financial Performance Improves

For the financial year ended 30 June 2026, Arena REIT recorded net operating profit of AU$79.1 million, up 8.3% from AU$73.1 million in FY2025. Total operating income increased 10.5% to AU$103.1 million, while property income rose 10.3% to AU$101.6 million.

Earnings per security climbed 5.7% to 19.60 cents, while the distribution paid to investors increased 5.5% to 19.25 cents per security. Statutory net profit reached AU$131.8 million, up 61.7% year-on-year, mainly reflecting higher valuation gains on investment properties and derivatives compared with the previous year. The trust’s total assets increased 8% to approximately AU$2.0 billion. Net asset value rose 4% to AU$3.60 per security, while gearing stood at 24.5% at 30 June 2026. Its weighted average cost of debt was 4.2%, with 100% hedging cover reported at the reporting date.

Portfolio Growth and Development Pipeline

Arena REIT reported 100% portfolio occupancy and a weighted average lease expiry of 17.5 years. Like-for-like rental growth reached 4.0%, while market rent reviews delivered an average increase of 7.6%. The trust completed 11 early learning centre developments in FY2026, achieving an average net initial yield of 6.0% on the total project cost.. Its development pipeline contained 29 projects, with a forecast total cost of AU$228 million and AU$121 million in remaining capital expenditure commitments.

The trust also acquired three early learning properties for AU$19.6 million and divested 11 assets for AU$53.5 million, receiving sale proceeds at an 8% premium to book value.

Edge Early Learning Remains a Key Challenge

Arena REIT continued to address issues involving Edge Early Learning, whose leases account for 14% of the trust’s annual rental income. Following unpaid August rent and the issuance of default notices, Arena said it was engaging with Edge regarding its lease obligations and possible outcomes for the portfolio. The trust took over two completed centres and reached preliminary agreements with a new national operator for 20-year leases at rents matching the existing rates during the initial lease period. It stated that replacing the existing tenant with suitable operators remained an option if required.

Outlook

Arena REIT’s FY2026 results showed stronger operating earnings, stable occupancy and continued development activity. Its priorities for FY2027 include resolving the Edge situation, improving portfolio quality and pursuing disciplined investment opportunities.

Note- All data presented is based on information available at the time of writing.

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