Australia & New Zealand Business Report 2017

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Discovery Reports

Arena REIT delivers attractive and consistent returns to international investors

Specialist property group’s mandate extends across the social infrastructure real estate spectrum, and includes education and government sector assets

PUBLISHED : Friday, 22 September, 2017, 5:15pm
UPDATED : Friday, 22 September, 2017, 5:15pm

Since launching its initial public offering on the Australian Securities Exchange (ASX) in 2013, specialist property group Arena REIT (Arena) has delivered on its objective of providing an attractive and growing income stream to investors. Using a disciplined investment strategy in a real estate segment enjoying favourable demographic trends and strong government support, the ASX 300-listed real estate investment trust (reit) recorded a three-year compound average total investor return of 31 per cent per annum as of June 30 this year, supported by earnings growth averaging 10 per cent per annum. Arena ranked as the top performing Australian reit over that period, making it a compelling option for international investors seeking a relatively high income yield with growth over time.

“Our focus on developing purpose-built centres in the right locations has propelled our solid performance. Also, we are internally managed, which closely aligns management with our investors,” says founding CEO Bryce Mitchelson.

Relying on its in-depth knowledge of micromarkets, Arena has strategically grown its childcare portfolio, focusing on areas that are relatively under supplied and with high population growth. In the first half of its fiscal year 2017, Arena completed seven early learning centres, five of which are adjacent to new primary schools in Victoria and have been leased to non-profit operator YMCA for 26 years.

Apart from childcare centres, Arena also invests in medical centres, seeing unmet health care needs arising from an ageing population and rising chronic disease prevalence. Arena’s mandate extends across the social infrastructure real estate spectrum, and includes education and government sector assets.

Arena’s current portfolio, comprising more than 200 high-quality and well located early learning and health care properties, is 100 per cent leased to a diversified tenant base with an average remaining lease term of 12.8 years. Its key tenants are Goodstart Early Learning, Primary Health Care and Affinity Education Group. “We generate value through strong tenant relationships,” Mitchelson says. “We employ a collaborative approach to deliver customised facilities that render competitive advantage and long-term profitability to our tenants.”