In a significant development for the Australian property sector, Arena REIT Group has revealed plans for substantial acquisitions and a strategic capital raise. The company has outlined its intentions to invest AUD 92 million in new social infrastructure properties, including a mix of Early Learning Centre (ELC) acquisitions and developments. This move is part of Arena REIT’s broader strategy to expand its portfolio and enhance its market position.

Major Acquisitions and Development Plans

Arena REIT is set to acquire six Early Learning Centre properties for a total of AUD 58 million and undertake the development of four additional ELC sites with a projected investment of AUD 34 million. These investments are designed to strengthen Arena’s portfolio in the growing early childhood education sector. The new acquisitions are expected to contribute positively to Arena’s financial performance, bolstered by attractive net lease structures and predictable income supported by strong social and macroeconomic drivers.

Institutional Placement and Capital Raise

To fund these acquisitions, Arena REIT is conducting a fully underwritten institutional placement to raise AUD 120 million. This placement, managed by Macquarie Capital (Australia) Limited and Jefferies (Australia) Pty Ltd, will be issued at an attractive price of AUD 3.78 per new Stapled Security. This issue price reflects a 4.5% discount to the closing price of AUD 3.96 as of July 22, 2024, and a 5.1% discount to the five-day Volume Weighted Average Price.

The capital raised will not only support the acquisitions but also maintain balance sheet flexibility for future growth opportunities. The new securities are expected to be allotted and commence trading on July 29, 2024. Eligible institutional securityholders will have the opportunity to secure their pro rata share of the new securities, ensuring fair allocation based on demand.

Following the institutional placement, Arena REIT will also offer a non-underwritten Security Purchase Plan (SPP) to eligible securityholders in Australia and New Zealand. This plan aims to raise up to AUD 20 million and allows securityholders to purchase up to AUD 30,000 of additional securities without transaction or brokerage fees. The SPP securities will be issued on August 27, 2024, at the same price as the institutional placement.

Financial Guidance and Strategic Outlook

Arena REIT has provided its distribution guidance for FY2025, forecasting a distribution of 18.25 cents per security. This represents a 4.9% increase over FY2024, reflecting the company’s robust performance and strategic growth initiatives.

Chief Financial Officer Gareth Winter highlighted Arena’s commitment to capital management discipline, noting the company’s successful implementation of consistent hedging programs and facility term extensions. Managing Director Rob de Vos emphasized that the company’s disciplined approach to capital management and asset origination has positioned Arena REIT well to meet its investment objectives and deliver sustainable growth.

Arena REIT, an ASX200-listed property group, focuses on developing, owning, and managing social infrastructure properties across Australia. Its portfolio is predominantly leased to tenants in the early learning and healthcare sectors, supporting its mission to provide essential community services.

Arena REIT’s focus on social infrastructure and early learning centers aligns well with current market trends and demographic needs. The acquisitions are set to enhance the company’s portfolio and provide stable, long-term returns.

  Arena REIT, ASX200, Australian property sector, Early Learning Centre, Gareth Winter, Jefferies, Macquarie Capital, Rob de Vos, Security Purchase Plan