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1、2024 ANNUALREPORTARENA REITBetter Communities.Together.2CONTENTSFY2024 HIGHLIGHTS 4PORTFOLIO SUMMARY 6CHAIR AND MANAGING DIRECTORS REPORT 8SUSTAINABILITY 12FINANCIAL REPORT 15Contents 16Directors report 17Auditors independence declaration 41Consolidated financial statements 42Notes to the consolidat
2、ed financial statements 47Directors declaration 82Independent auditors report 83ASX ADDITIONAL INFORMATION 88INVESTOR INFORMATION 90CORPORATE DIRECTORY 92Further information can be found online at:.auABOUT THIS REPORTThe financial statements in this report cover Arena REIT(the Group)comprising Arena
3、 REIT Limited,Arena REIT No.1,Arena REIT No.2,and their controlled entities for the period 1 July 2023 to 30 June 2024.The financial statements are presented in Australian currency.The Responsible Entity of Arena REIT No.1 and Arena REIT No.2(the Trusts)is Arena REIT Management Limited(ACN 600 069 7
4、61,AFSL 465754).3IMPORTANT NOTICEThis report has been prepared by Arena REIT(Arena)comprising Arena REIT Limited(ACN 602 365 186),Arena REIT Management Limited(ACN 600 069 761 AFSL No.465754)as responsible entity of Arena REIT No.1(ARSN 106 891 641)and Arena REIT No.2(ARSN 101 067 878).The informati
5、on contained in this report is current only as at the date of this report or as otherwise stated herein.This report may not be reproduced or distributed without Arenas prior written consent.The information contained in this report is not investment or financial product advice and is not intended to
6、be used as the basis for making an investment decision.Arena has not considered the investment objectives,financial circumstances or particular needs of any particular recipient.You should consider your own financial situation,objectives and needs,conduct an independent investigation of,and if neces
7、sary obtain professional advice in relation to,this report.Past performance is not an indicator or guarantee of future performance.Except as required by law,no representation or warranty,express or implied,is made as to the fairness,accuracy,completeness or correctness of the information,opinions an
8、d conclusions,or as to the reasonableness of any assumption,contained in this report.By receiving this report and to the extent permitted by law,you release Arena and its directors,officers,employees,agents,advisers and associates from any liability(including,without limitation,in respect of direct,
9、indirect or consequential loss or damage or any loss or damage arising from negligence)arising as a result of the reliance by you or any other person on anything contained in or omitted from this report.This report is for information purposes only and should not be considered as a solicitation,offer
10、 or invitation for subscription,purchase or sale of securities in any jurisdiction,or to any person to whom it would not be lawful to make such an offer or invitation.This report contains forward-looking statements including certain forecast financial information.The words“anticipate”,“believe”,“exp
11、ect”,“project”,“forecast”,“estimate”,“outlook”,“upside”,“likely”,“intend”,“should”,“could”,“may”,“target”,“plan”,and other similar expressions are intended to identify forward-looking statements.The forward-looking statements are made only as at the date of this report and involve known and unknown
12、risks,uncertainties,assumptions and other factors,many of which are beyond the control of Arena and its directors.Such statements are not guarantees of future performance and actual results may differ materially from anticipated result,performance or achievements expressed or implied by the forward-
13、looking statements.Other than as required by law,although they believe there is a reasonable basis for the forward-looking statements,neither Arena nor any other person(including any director,officer,or employee of Arena or any related body corporate)gives any representation,assurance or guarantee(e
14、xpress or implied)as to the accuracy or completeness of each forward-looking statement or that the occurrence of any event,result,performance or achievement will actually occur.You should not place undue reliance on any of the forward-looking statements.Arena REIT acknowledges the Traditional Custod
15、ians of the lands on which our business and assets operate,and recognises their ongoing connection to land,waters and community.ARENA REIT ANNUAL REPORT 20244FY2024 HIGHLIGHTS1.UBS,UBS Australian REIT month in review,June 2024;ASX total return includes security price growth and reinvestment of distr
16、ibutions.TOTAL ASSETS$1.62 billionup 3.5%on 30 June 2023STATUTORY NET PROFIT$57.5 milliondown 22.5%on FY2023DISTRIBUTIONS PER SECURITY(DPS)17.4 centsup 3.6%on FY2023MARKET CAPITALISATION$1.38 billionas at 30 June 2024NET OPERATING PROFIT$62 millionup 4.7%on FY2023PER ANNUM FIVE YEAR TOTAL ASX RETURN
17、 PERFORMANCE1 12.2%EARNINGS PER SECURITY(EPS)17.65 centsup 3.2%on FY2023NET ASSET VALUE(NAV)PER SECURITY$3.41down 0.3%on FY2023Arena REIT is an ASX200 listed group that develops,owns and manages social infrastructure property across Australia.Our objective is to deliver an attractive and predictable
18、 distribution to investors with earnings growth prospects over the medium to long term.ARENA REIT ANNUAL REPORT 202452.Includes the incremental value attributed by forward start interest rate swaps entered into as at 30 June 2024.GEARING 22.6%4.1 years weighted average facility termHEDGE COVER281%4.
19、1 years weighted average hedge termAVERAGE LIKE-FOR-LIKE RENTAL GROWTH+4.9%WEIGHTED AVERAGE LEASE EXPIRY(WALE)18.5 yearsas at 30 June 2024REVALUATION UPLIFT$4 millionin line with 30 June 2023 investment property valueCAPITAL DEPLOYED$63 millionin FY2024 6PORTFOLIO SUMMARYAS AT 30 JUNE 2024Arenas por
20、tfolio of social infrastructure properties is leased to a diversified tenant base in the early learning and healthcare sectors.TOTAL PROPERTIES 276 255 Early Learning Centres 9 Healthcare 12 ELC developmentsTOTAL PORTFOLIO VALUE$1.58 billion$1.44 billion Early Learning Centres 135 million Healthcare
21、WALE 18.5 years 19.4 years Early Learning Centres 9.6 years Healthcare1 12NT Metro201WA MetroWA Regional5SA Regional3Early Learning Centres(255 properties)163SA Metro532VIC Metro54NSW Metro271NSW Regional34QLD Regional56QLD Metro7TAS MetroTAS Regional1Healthcare(9 properties)ELC development sites(12
22、 properties)5217ARENA REIT ANNUAL REPORT 2024QLD 34%VIC 28%NSW 16%SA 11%WA 8%TAS&NT 3%Early Learning 91%Healthcare 9%Goodstart 24%Green Leaves 18%Edge 11%Affinity 9%Aspire 7%ForHealth 6%G8 Education 5%Mayfield 2%Other 18%Sector Diversification By value(%)Geographic Diversification By value(%)Tenant
23、Diversification By income(%)1 12NT Metro201WA MetroWA Regional5SA Regional3VIC Regional26Early Learning Centres(255 properties)163SA Metro532VIC Metro54NSW Metro271NSW Regional34QLD Regional56QLD Metro7TAS MetroTAS Regional1Healthcare(9 properties)ELC development sites(12 properties)52118Arena has p
24、roduced earnings and distribution growth,successfully delivered development completions,replenished the development pipeline and maintained the portfolios long WALE.These positive outcomes are a result of the quality of Arenas property portfolio,the proactive approach of Arenas management team and t
25、he strong macroeconomic themes that support investment in social infrastructure property.It is also an endorsement of Arenas disciplined strategy and ability to deliver on our investment objective.Arena has delivered an ASX total compound return per annum of 6.9%over the three year,12.2%over the fiv
26、e year and 18.4%over the 10 year period to 30 June 2024.1FINANCIAL RESULTSIncome growth underpinned by ongoing disciplined capital management Arenas net operating profit increased by 4.7%to$62 million in financial year 2024(FY2024).Key contributors to higher operating income included the acquisition
27、 of operating early learning centre(ELC)properties and development projects completed during financial year 2023(FY2023)and FY2024 and growth in contracted annual and market rent reviews.The result represents EPS of 17.65 cents,an increase of 3.2%over the prior year.Arena has paid a full-year distri
28、bution of 17.4 cents per security,an increase of 3.6%on the prior year.Statutory net profit for the year was$57.5 million,a decrease of 22.5%on the prior year primarily due to a lower revaluation gain on investment properties and derivatives.Arenas total assets increased by 3%to$1.62 billion primari
29、ly as a result of acquisition and development capital expenditure.Arenas net asset value was$3.41 per security as at 30 June 2024,in line with$3.42 as at 30 June 2023 as an increase in Arenas portfolio capitalisation rates has been offset by passing and market rent increases.CHAIR AND MANAGING DIREC
30、TORS REPORTLeft to Right:David Ross,Rob de Vos.ASX total return performance per annum to 30 June 202411 YEAR24.6%7.8%Arena REITASX200 AREIT Accum Index3 YEARS5.7%6.9%5 YEARS4.4%12.2%10 YEARS8.9%18.4%Arena has again delivered positive outcomes for our stakeholders during financial year 2024.Despite b
31、roader challenges in real estate investment markets arising from persistently high inflation and higher interest rates,Arena has performed well against its investment objective.This has been achieved through our ongoing disciplined capital,leasing and portfolio management and the careful management
32、of operating costs,while at the same time embedding sustainability across our business strategies.As a result,Arena is well positioned to explore and capitalise on new opportunities that are consistent with our purpose and investment objective.1.UBS,UBS Australian REIT month in review,June 2024;ASX
33、total return includes security price growth and reinvestment of distributions,Index is S&P ASX200(GICS)AREIT Accumulation Index.9ARENA REIT ANNUAL REPORT 2024FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024DPS EPS 10.010.210.911.112.012.312.813.113.513.814.014.5514.815.216.817.1
34、16.016.317.417.65 Earnings&distributions per security(cents)3 year CAGR EPS 5.1%DPS 5.5%5 year CAGR EPS 5.0%DPS 5.2%Arena completed a post balance date$120 million Institutional Placement that was strongly supported by new and existing securityholders.Eligible existing securityholders were also offe
35、red the opportunity to participate in a post balance date Security Purchase Plan which was oversubscribed,raising an additional$24 million on the same terms as the Institutional Placement.PORTFOLIO OVERVIEWInvestment proposition and partnership approach drives sustainable and commercial outcomesSust
36、ainability has been embedded across Arenas business strategies which best positions us to achieve positive long term commercial and community outcomes.Sustainability outcomes delivered during FY2024 include:Zero organisational scope 1 and 2 emissions.6-star rating for organisational NABERS energy co
37、-assessment.Certified Carbon Neutral by Climate Active for business operations in 2022-2023.Certified Carbon Neutral by Climate Active for business services in 2022-2023.Registered to develop Arenas Reflect Reconciliation Action Plan.FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2
38、0241.331.541.841.972.102.222.563.373.423.41NAV per security($)3 year CAGR 10.0%5 year CAGR 10.2%FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY20248.99.712.812.914.114.020.119.819.318.5 Portfolio WALE(years)2.FinancedEmissionsareScope3Category15emissionsbyindoorfloorareameasuredink
39、gCO2e/m2inlinewithsupplementalguidanceforthefinancialsectorbytheTCFDascomparedwithequivalentrestatedFY2021baseline.“Arena has maintained capital management discipline through the cycle with consistent hedging programs,extension of facility term and the successful completion of the post balance date
40、Institutional Placement;increasing capacity to deploy capital into growth opportunities consistent with strategy.”Solar renewable energy systems installed on 90%of Arenas property portfolio.Adopted an Emission Reduction Plan targeting net zero Financed Emissions by 2050,with an interim 2030 target o
41、f a 60-70%reduction in the intensity of Arenas Financed Emissions.2 A 36%absolute reduction and 42%reduction in the intensity of Arenas Financed Emissions to end FY2023.2Please refer to Arenas FY2024 Sustainability Report for more detailed information.10CHAIR AND MANAGING DIRECTORS REPORT CONTINUEDA
42、verage like-for-like rent review increase of 4.9%Annual rent reviews completed during FY2024 resulted in an average like-for-like rent increase of 4.9%.Approximately 95%of financial year 2025,2026,2027 and 2028 rent reviews are contracted at CPI,the higher of CPI or an agreed fixed amount,or market
43、rent reviews.Development project completions in FY2024Arena completed seven ELC projects for a total investment of$54.5 million,on a net yield on total cost of 5.1%with an initial weighted average lease term of 20 years.Long portfolio WALE of 18.5 yearsThe portfolio WALE is 18.5 years following the
44、ELC developments completed during FY2024.Portfolio compositionAt 30 June 2024,Arenas property portfolio comprised 267 ELC properties and development sites(91%of portfolio value)and 9 healthcare properties(9%of portfolio value).Portfolio valuation uplift of$4 million127 properties were independently
45、valued throughout FY2024 with the balance of the portfolio subject to directors valuations.A valuation uplift of$4 million was recorded,representing an increase of 0.25%from FY2023.The portfolios weighted average passing yield widened by 23 basis points to 5.39%.The weighted average passing yield on
46、 the ELC portfolio widened by 23 basis points and healthcare portfolio widened by 31 basis points.Development pipeline of$139 million3The development pipeline comprises 21 ELC projects with a forecast total cost of$139 million;$95 million of forecast capital expenditure remains outstanding.The weigh
47、ted average net initial yield on forecast total cost on completion of the development pipeline is 6.0%.CAPITAL MANAGEMENTDebt maturity extended and ongoing consistency in hedging programDuring FY2024 Arena extended the maturity dates on each tranche of its$500 million syndicated borrowing facility.A
48、s at 30 June 2024,the weighted average remaining facility term was 4.1 years with no expiry before 31 May 2027.Following the post balance date Institutional Placement,proforma undrawn debt facility capacity of$182 million was available to fund the development program and future growth opportunities.
49、Arenas weighted average cost of debt as at 30 June 2024 was 4.0%compared with 3.95%as at 30 June 2023.Following the repayment of debt using part proceeds from the post balance date Institutional Placement,86%of borrowings were hedged for a weighted average term of 4.5 years.Sustainable financeArena
50、has a Sustainability-Linked Loan(SLL)overlaid across its existing$500 million debt facility.Arenas Sustainable Finance Framework and SLL are aligned to the Sustainability-Linked Loan Principles.Arena achieved 100%of the SLL margin discount for the FY2023 sustainability performance targets during the
51、 period.Substantial capacity to fund new investment opportunitiesGearing4 was 22.6%as at 30 June 2024,with proforma gearing of 19.9%following the post balance date Institutional Placement,reduced from 21%as at 30 June 2023,with undrawn debt capacity of$182 million to fund the balance of the developm
52、ent pipeline of$95 million,and future growth opportunities.Arena raised$17 million during FY2024 via the DRP,which remains open.3.Includes four ELC development projects which were conditionally contracted as at 30 June 2024 and four ELC development projects which are in exclusive due diligence.4.Gea
53、ring calculated as ratio of net borrowings over total assets less cash.FY25 FY26FY28FY27FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 FY37 FY38 FY39 FY40 FY41 FY42 FY43 FY44FY46FY45FY47+Early Learning Healthcare0.7%0.4%1.5%4.4%3.9%2.2%5.1%4.7%2.3%10.1%10.0%6.9%5.0%7.2%6.2%1.4%1.1%26.8%Lease expiry profile
54、 by income(%)ARENA REIT ANNUAL REPORT 202411OUTLOOKELC sector updateStrong macroeconomic drivers continue to support the Australian ELC sector.Rising female workforce participation continues to drive demand for ELC services and long day care participation over the medium to long term.5,6From July 20
55、23 Australian families have benefitted from improved affordability measures,7 including an increase in the maximum Childcare Subsidy(CCS)rate to 90%for the first child in care,retention of the increased CCS rate at a maximum of 95%for subsequent children in care;and increasing the CCS for every fami
56、ly(with one child in care)earning less than$530,000 in annual household income.These measures have been designed to improve lifelong learning prospects of Australian children;increase workforce participation;improve gender equality,including womens financial security;and stimulate economic activity
57、over the medium to long term.8The Federal Government recently announced additional funding to support a 15%wage increase for early childcare education and care workers in services that agree to limit daily fee increases to 4.4%over the next 12 months.The increased funding is expected to result in im
58、proved staff availability and better outcomes for families.Healthcare sector and Arena portfolio updateArenas community-based healthcare and specialist disability accommodation portfolios continue to perform in-line with expectation.The broader Australian healthcare sector is facing short term chall
59、enges arising from inflation and higher interest rates as well as sector specific funding issues.Accordingly,we anticipate short term downward pressure on some Australian healthcare real estate values as a result of more challenging operating conditions.Over the longer-term,demand for Australian hea
60、lthcare services is expected to increase due to supportive macroeconomic themes.The Arena teamArena continues to differentiate its brand in the marketplace through a partnership approach,working collaboratively with our tenant partners and other stakeholders.Arenas management team has specialist ass
61、et management and development expertise and a strong track record that includes the successful delivery of 77 development projects over the past 12 years at a total cost of$421 million.“Strong macroeconomic drivers continue to support growth in the demand for essential community services across Aust
62、ralia.These themes,combined with Arenas disciplined origination,capital management and asset management expertise have positioned the business well to sustainably deliver on its purpose and investment objective of delivering predictable distributions to securityholders with the prospect for growth.”
63、5.ABS Labour Force status by Relationship in household,Sex,State and Territory.6.Australian Government Early Childhood and Child Care in Summary Reports 2012-2023.7.Labors Plan for Cheaper Child Care|Policies|Australian Labor Party(alp.org.au)8.Cheaperchildcare:Apracticalplantoboostfemaleworkforcepa
64、rticipation(grattan.edu.au)Better Communities.Together.Arena remains well positioned to navigate ongoing and emerging economic challenges and has an expanded and experienced management team ready to capitalise on new growth opportunities.Our outlook is positive,and we look forward to continuing to e
65、xecute on our well-defined strategy and investment objective of delivering an attractive and predictable distribution to investors with earnings growth prospects over the medium to long term,while delivering on our purpose of Better Communities.Together.On behalf of the Board,we would like to thank
66、our investors,tenant and business partners for their ongoing support,and the Arena team for their ongoing commitment and contribution to Arenas performance.We encourage you to join us and look forward to welcoming you to our Annual General Meeting being held on 22 November 2024.Yours sincerely,David
67、 Ross ChairRob de Vos Managing Director12SUSTAINABILITYMATERIAL ISSUESAn independent external assessment of Arenas material issues guided the development of Arenas Sustainability Framework,which outlines our approach to key sustainability issues,including:The sustainability risks and opportunities t
68、hat are most critical to Arena;Topics large investors and ESG rating agencies consider material to Arena;The Global Reporting Initiative Standards topic standards considered most material to Arena by peers and investors;The issues identified by the Sustainability Accounting Standards Board(SASB)fram
69、ework most relevant to the Real Estate industry sub-sector;How Arena contributes to the United Nations Sustainable Development Goals(UN SDGs);The recommendations of the Task Force for Climate-related Financial Disclosures(TCFD);and The Modern Slavery Act 2018(Cth).Sustainability has been embedded ac
70、ross Arenas business strategies which best positions us to achieve positive long term commercial and community outcomes.13ARENA REIT ANNUAL REPORT 2024View Arenas key policies and the Corporate Governance Statement for the 2024 Financial Year at:.au/about-us/governanceIn compliance with ASX Listing
71、Rule 4.10.3,Arena has separately issued and published on its website,its 2024 Corporate Governance Statement which discloses the extent to which Arena has followed the recommendations for good corporate governance set by the ASX Corporate Governance Council(Corporate Governance Principles and Recomm
72、endations 4th Edition)during the reporting period.APPROACHWe are committed to identifying and managing climate change risks and opportunities and maximising our resilience in the transition to a low carbon economy.We are committed to investing in renewable energy and improving the efficiency of our
73、use of natural resources.We are committed to creating a working environment where our team members can work efficiently,feel valued and appreciated and engage and collaborate to deliver beneficial and sustainable outcomes.We work with our tenant partners to invest the capital necessary to provide ef
74、ficient,flexible and well-located accommodation at sustainable rents,allowing them to focus on their core purpose to deliver essential services to communities throughout Australia.Our social infrastructure properties facilitate access to services which provide material benefits,both social and finan
75、cial,to local communities and society more generally.We are committed to the highest level of integrity and ethical standards,complying with all applicable laws and regulations and effective,accountable and transparent risk management practices,policies and procedures.We are committed to strengtheni
76、ng the management of our modern slavery risks.ARENAS SUSTAINABILITY FRAMEWORKPARTNERSHIPS FOR CHANGEDue to the nature of Arenas triple net leases,tenant partners maintain operational control of our properties,accordingly our overarching approach to sustainability is Partnerships for change.Arena is
77、committed to collaborative business partnerships and strives to be an accommodation partner of choice.ENVIRONMENTSOCIALGOVERNANCEKEY ISSUESClimate resilienceResource efficiencyOur teamOur tenant partnersOur communitiesResponsible governanceSupply chain sustainabilityARENAS SUSTAINABILITY FRAMEWORKAr
78、ena has separately issued its 2024 Sustainability Report which can be downloaded from Arenas website at .au/sustainability.This report provides detail on our commitment to strategies that address sustainability challenges faced by Arena and Arenas stakeholders and identifies opportunities to progres
79、s positive change.14SUSTAINABILITY CONTINUEDOUR PERFORMANCE HIGHLIGHTS We have continued to make material progress on our goals during the reporting period as detailed below.1.FinancedEmissionsareScope3Category15emissionsbyindoorfloorareameasuredinkgCO2e/m2inlinewithsupplementalguidanceforthefinanci
80、alsectorbytheTCFDascomparedwithequivalentrestatedFY2021baseline.OUR FY2024 PERFORMANCEKEY ISSUETARGETTRACKINGRECENT ACHIEVEMENTSEnvironmentClimate resilience Develop a detailed transition plan including an emissions reduction roadmap for our operations and asset portfolio by FY2025 Align reporting w
81、ith recommendations of the TCFD by FY2025DELIVERED DELIVERED Adopted an Emission Reduction Plan targeting net zero Financed Emissions by 2050,with an interim 2030 target of a 60-70%reduction in the intensity of Arenas Financed Emissions1 A 36%absolute reduction and 42%reduction in the intensity of A
82、renas Financed Emissions to end FY2023 1 Completed quantitative scenario analysis of climate risks and opportunities and their potential financial impacts FY2024 Sustainability Report disclosures aligned with the TCFDResource efficiency Maintain organisational carbon neutrality Climate Active certif
83、ication Install solar renewable energy systems on 90%of Arenas property portfolio by FY2027DELIVERED DELIVERED Zero organisational scope 1 and 2 emissions 6-star rating for organisational NABERS energy co-assessment Certified Carbon Neutral by Climate Active for business operations in 2022-2023 Cert
84、ified Carbon Neutral by Climate Active for business services in 2022-2023 Solar renewable energy systems installed on 90%of Arenas property portfolio SocialOur team Create a working environment where our team members can work efficiently,feel valued and appreciated and engage and collaborate to deli
85、ver beneficial and sustainable outcomesDELIVERED Maintained gender balance for the ARL Board and senior executives using the 40:40:20 model Independent team alignment and engagement survey benchmarked with top decile ranking in both employee engagement and alignmentOur tenant partners Continue to co
86、llaborate with tenant partners on appropriately identified ESG/Sustainability initiatives and report progressDELIVERED We continued to work collaboratively with our tenant partners during the period completing a review of the performance of current solar installations,identification of opportunities
87、 to optimise existing solar installations and further opportunities to move towards net zero scope 1 and 2 emissionsOur communities Our social infrastructure properties facilitate access to services which provide material benefits,both social and financial,to local communities and society more gener
88、allyON TRACK Ongoing community partnership with RizeUp a grass roots community organisation facilitating a pathway to safety and independence for women and children impacted by domestic and family violence Registered to develop Arenas Reflect Reconciliation Action Plan GovernanceResponsible governan
89、ce Continue to review and refine company policies and procedures for managing ESG risksDELIVERED To fully embed sustainability across Arenas business strategies,Arenas internal investment process methodology was updated to include Preferred Sustainability Investment Criteria which align with Arenas
90、Sustainability Framework ISS QualityScore Governance maintained at 1/10,the highest possible rating FTSE Russell ESG Governance Score maintained at 5/5,the highest possible ratingSupply chain sustainability Continue to build on our Modern Slavery response in line with our roadmapON TRACK Delivered t
91、hird voluntary Modern Slavery Statement Delivered Year 2 targets of our Modern Slavery Roadmap2024 FINANCIAL REPORT&DIRECTORS REPORTARENA REITBetter Communities.Together.FOR THE YEAR ENDED 30 JUNE 202416CONTENTSABOUT THIS REPORTThese financial statements cover Arena REIT(the Group)comprising Arena R
92、EIT No.1,Arena REIT No.2,Arena REIT Limited,and their controlled entities.The financial statements are presented in Australian currency.The Responsible Entity of Arena REIT No.1 and Arena REIT No.2(the Trusts)is Arena REIT Management Limited(ACN 600069761,AFSL 465754).The Responsible Entitys registe
93、red office is:Level 32,8 Exhibition Street Melbourne VIC 3000DIRECTORS REPORT 17AUDITORS INDEPENDENCE DECLARATION 41FINANCIAL STATEMENTS 42Consolidated statement of comprehensive income 42Consolidated balance sheet 43Consolidated statement of changes in equity 44Consolidated statement of cash flows
94、45NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 47DIRECTORS DECLARATION 82INDEPENDENT AUDITORS REPORT 83CORPORATE DIRECTORY 9217ARENA REIT ANNUAL REPORT 2024DIRECTORS REPORTDIRECTORS REPORTThe directors of Arena REIT Limited(ARL)and Arena REIT Management Limited(ARML),the Responsible Entity of Aren
95、a REIT No.1 and Arena REIT No.2(the Trusts),present their report together with the financial statements of Arena REIT for the year ended 30 June 2024.The financial report covers ARL,Arena REIT No.1(ARF1),Arena REIT No.2(ARF2),and their controlled entities(Arena REIT or Group).ARF1,ARF2 and ARL are s
96、eparate entities for which the units and shares have been stapled together to enable trading as one security.The units of ARF1,ARF2 and shares of ARL cannot be traded separately.None of the stapled entities controls any of the other stapled entities,however for the purposes of statutory financial re
97、porting the entities form a consolidated group.DIRECTORSThe following persons held office as directors of ARL during the financial year and up to the date of this report:David Ross(Chair)(Independent,non-executive)Rosemary Hartnett(Independent,non-executive)Helen Thornton(Independent,non-executive)D
98、ennis Wildenburg(Independent,non-executive)Rob de Vos(Executive)The following persons held office as directors of ARML during the financial year and up to the date of this report:David Ross(Chair)(Independent,non-executive)Rosemary Hartnett(Independent,non-executive)Helen Thornton(Independent,non-ex
99、ecutive)Dennis Wildenburg(Independent,non-executive)Rob de Vos(Executive)Gareth Winter(Executive)PRINCIPAL ACTIVITIESArena REIT invests in a portfolio of investment properties and is listed on the Australian Securities Exchange under the code ARF.There were no changes in the principal activities of
100、the Group during the year.DISTRIBUTIONS TO SECURITYHOLDERSThe following table details the distributions to securityholders declared during the financial year:2024202320242023$000$000cpscpsSeptember quarter15,33614,6074.354.20December quarter15,39414,6464.354.20March quarter15,44814,6854.354.20June q
101、uarter15,49814,7304.354.20Total distributions to securityholders61,67658,66817.4016.8018DIRECTORS REPORT CONTINUEDOPERATING AND FINANCIAL REVIEWThe Group operates with the aim of generating attractive and predictable distributions for securityholders with earnings growth prospects over the medium to
102、 long term.The Groups strategy is to invest in property underpinned by relatively long leases and in sectors with supportive macro-economic trends.The Group will consider investment in sectors with the required characteristics,which may include:Early learning/childcare services;Healthcare-including
103、medical centres,diagnostic facilities,hospitals,disability accommodation,aged care and associated facilities;Education-including schools,colleges and universities and associated facilities.KEY FINANCIAL METRICS30 June 202430 June 2023ChangeNet profit(statutory)$58 million$74 million-23%Net operating
104、 profit(distributable income)$62 million$60 million+5%Distributable income per security17.65 cents 17.10 cents+3.2%Distributions per security17.40 cents 16.80 cents+3.6%Total assets$1,623 million$1,568 million+3%Investment properties$1,579 million$1,516 million+4%Borrowings$377 million$342 million+1
105、0%Net assets$1,214 million$1,199 million+1%Net Asset Value(NAV)per security$3.41$3.42-%Gearing*22.6%21.0%+160 bps*GearingcalculatedasNetBorrowings/TotalassetslessCash.ARENA REIT ANNUAL REPORT 202419FY2024 HIGHLIGHTS Net statutory profit was$58 million,down 23%on the prior year.This is primarily due
106、to the lower investment property revaluation gain compared to the prior year,and the revaluation loss on derivatives;Net operating profit was$62 million,up 5%on the previous year,primarily driven by the increase in rental income arising from periodic rent reviews,lease commencements on completion of
107、 ELC developments,partially offset by an increase in finance costs;Distributions for the year were 17.4 cents per security,up 3.6%on the prior year;NAV per security at 30 June 2024 was$3.41,down from$3.42 on 30 June 2023;Gearing was 22.6%at 30 June 2024,up from 21.0%at 30 June 2023 primarily due to
108、a$35 million increase in the drawn balance of the syndicated debt facility during the year used to fund acquisitions and development capital expenditure;The property portfolio increased with the addition of five Early Learning Centre(ELC)development sites.During the year,seven ELC developments reach
109、ed practical completion;and One operating ELC was sold during the year with sale proceeds of$4 million.FINANCIAL RESULTS30 June 202430 June 2023$000$000Property income80,22274,147Other income678594Total operating income80,90074,741Property expenses(573)(507)Operating expenses(5,419)(4,720)Finance co
110、sts(12,464)(9,862)Net operating profit(distributable income)*62,44459,652Non-distributable items:Investment property revaluation and straight-lining of rent3,78016,997Change in fair value of derivatives(4,910)527Profit/(loss)on sale of investment properties(153)(47)Transaction costs(1,653)(745)Amort
111、isation of equity-based remuneration(non-cash)(1,481)(1,557)Other(519)(588)Statutory net profit57,50874,239*Netoperatingprofit(distributableincome)isnotastatutorymeasureofprofit.20DIRECTORS REPORT CONTINUEDFINANCIAL RESULTS SUMMARY30 June 202430 June 2023Net operating profit(distributable income)($0
112、00)62,44459,652Weighted average number of ordinary securities(000)353,845348,771Distributable income per security(cents)17.6517.10 Net operating profit is the measure used to determine securityholder distributions and represents the underlying cash-based profit of the Group for the relevant period.N
113、et operating profit excludes fair value changes from asset and derivative revaluations and items of income or expense not representative of the Groups underlying operating earnings or cashflow.The increase in net operating profit during the year is primarily due to:Ongoing annual rent increases and
114、market rent reviews on the Groups property portfolio;Commencement of rental income from ELC developments completed during the year;The full year effect of acquisitions and developments completed during FY2023;Partially offset by the increase in financing costs.Non-distributable items decreased durin
115、g the year primarily due to a lower revaluation gain on investment properties compared to the prior year,and a revaluation loss on derivatives.INVESTMENT PROPERTY PORTFOLIOKey Property Metrics30 June 202430 June 2023Total value of investment properties$1,579 million$1,516 millionNumber of properties
116、 under lease264258Development sites1214Properties available for lease or sale-Total properties in portfolio276272Portfolio occupancy99.7%100%Weighted average lease expiry(WALE)18.5 years19.3 years The increase in the value of investment properties is primarily due to the addition of:Property acquisi
117、tion,development and capital expenditure of$63 million;and A net revaluation increment to the portfolio of$4 million for the year,inclusive of straight-lining of rent accrual.Offset by the following investment property disposal during the year:One operating ELC was sold during the year with sale pro
118、ceeds of$4 million.ARENA REIT ANNUAL REPORT 202421CAPITAL MANAGEMENT Equity During the year,5.0 million securities were issued at an average price of$3.52 to raise$17.4 million of equity pursuant to the Distribution Re-investment Plan(DRP).Bank facilities&gearing The Group refinanced its syndicated
119、debt facility in June 2024,keeping the facility limit unchanged at$500 million but extending the maturity dates.The Group has a$100 million facility expiring 31 May 2027,a$200 million facility expiring 31 May 2028 and a$200 million facility expiring 31 May 2029,providing a remaining weighted average
120、 term of 4.1 years as at 30 June 2024;The balance drawn increased by$35 million to fund acquisitions and development capital expenditure,offset by proceeds from asset disposals;Gearing was 22.6%at 30 June 2024(30 June 2023:21.0%);The Group was fully compliant with all bank facility covenants through
121、out FY2024 and as at 30 June 2024.At 30 June 2024 the Loan to Valuation Ratio was 24.9%(Covenant:50%)and the Interest Cover Ratio was 4.9 times(Covenant:2.0 times).Interest rate management Active swaps in place as at 30 June 2024 have a notional value of$285 million and cover 76%of borrowings(2023:8
122、8%).The weighted average fixed rate for active swaps is 2.03%(2023:2.03%)and the weighted average term is 2.6 years(2023:3.5 years).During the year,the Group entered into forward start interest rate swaps with a notional value of$120 million.These swaps have a weighted average fixed interest swap ra
123、te of 3.82%and weighted average term of 4.0 years,with commencement dates throughout FY2025 and FY2026.FY2025 OUTLOOK The Group has provided FY2025 distribution guidance of 18.25 cents per security,which represents an increase of 4.9%on FY2024.FY2025 distribution guidance is estimated on a status qu
124、o basis,assuming no new acquisitions or disposals and no material change in current market or operating conditions after the date of this report.SIGNIFICANT CHANGES IN STATE OF AFFAIRS In the opinion of the directors,other than the matters identified in this report,there were no significant changes
125、in the state of affairs of the Group that occurred during the financial year.MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR On 23 July 2024,the Group announced that it had exchanged contracts,entered into heads of agreement or was in exclusive due diligence to acquire and develop additional soc
126、ial infrastructure properties with a total investment of$92 million.In conjunction with these acquisitions,the Group undertook a fully underwritten Institutional Placement of$120 million.On 1 August 2024,the Group issued a Security Purchase Plan for eligible Australian and New Zealand investors to r
127、aise up to$20 million.The offer remains open as at the date of this report.Other than those matters identified above,no matter or circumstance has arisen since 30 June 2024 that has significantly affected,or may significantly affect:(i)the operations of the Group in future financial years;or(ii)the
128、results of those operations in future financial years;or(iii)the state of affairs of the Group in future financial years.LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS The Group will continue to be managed in accordance with its existing investment objectives and guidelines.The results of th
129、e Groups operations will be affected by a number of factors,including the performance of investment markets in which the Group invests.Investment performance is not guaranteed and future returns may differ from past returns.As investment conditions change over time,past returns should not be used to
130、 predict future returns.22DIRECTORS REPORT CONTINUEDMATERIAL BUSINESS RISKS The material business risks that could adversely affect the achievement of the Groups financial prospects are as follows.The Group has in place a Risk Management Policy and Framework under which it identifies,assesses,monito
131、rs and manages these risks.Macroeconomic risk The operations and performance of the Group is influenced by the macroeconomic condition of the Australian and the wider global economy.A prolonged economic downturn and its related effects,including increasing rates of unemployment,in addition to other
132、factors such as inflation and rising interest rates,could have a material adverse impact on the Groups business or financial performance including asset valuations,income,expenses and cashflows.The Groups development activity may be impacted by supply chain disruption and the impact of cost-escalati
133、on and labour shortages in the construction industry.Concentration risk The Groups property portfolio is presently 91%invested in ELCs and ELC development sites and 9%in healthcare assets.Adverse events to the early learning and/or healthcare property sectors may result in general deterioration of t
134、enants ability to meet their lease obligations and the future growth prospects of the portfolio.As at 30 June 2024,61%of the portfolio by income(excluding developments)is leased to the largest four tenants(Goodstart Early Learning 23%,Green Leaves Early Learning 18%,Edge Early Learning 11%,and Affin
135、ity Education 9%).Any material deterioration in the operating performance of the Groups tenants may result in them not meeting their lease obligations which could reduce the Groups income and portfolio value if a suitable replacement cannot be found.Tenant risk The Group relies on tenants to generat
136、e its revenue.Tenants may be not-for-profit companies,private entities or listed public companies.If a tenant is affected by financial difficulties they may default on their rental or other contractual obligations which may result in loss of rental income and loss in value of the Groups properties.T
137、ypically,tenants are required to provide an unconditional and irrevocable bank guarantee,which must not expire until at least six months after the ultimate expiry date of the lease,as security for their performance under the lease.Refer to note 8(d)for further details on tenancy risk for the portfol
138、io.Climate change risk Extreme weather and other climate change related events have the potential to damage the Groups investment properties and disrupt tenant operations.Such events may increase tenant costs for maintenance,the cost,deductibles or availability of insurance,the ability to re-lease i
139、nvestment properties in the future and the rent levels for which they can be leased,thereby affecting future investment property valuations and rental cash flows.The precise nature of these risks is uncertain as it depends on complex factors such as policy change,technology development,market forces
140、,and the links between these factors and climatic conditions.To help mitigate the risk of localised valuation impacts on the Group,the investment property portfolio is geographically diversified.Active asset management of the portfolio can also assist with mitigating this risk.Changes to existing re
141、gulatory regimes or the introduction of new regulatory regimes(including environmental or climate change related regulation)may also increase the cost of compliance,reporting and maintenance of assets.Government policy risk and change in lawChildcare and healthcare operators rely heavily on governme
142、nt funding which,if reduced or otherwise modified,may adversely impact the underlying demand for these services and therefore tenants ability to meet lease obligations and/or their demand for these properties.There is a risk that there may be material adverse changes in legislation,government polici
143、es or legal or judicial interpretation relating to the childcare and/or healthcare sectors.Property valuations Changes in the property market,especially changes in the valuation of properties and in market rents,may adversely affect the Groups financial performance and the price of ARF securities.Cy
144、ber securityThe Group leverages IT systems,networks and data to operate efficiently.Managing potential IT system failures and cybersecurity breaches is an area of focus for the Group to ensure it manages the risk of loss of sensitive information,operational disruption,reputational damage,fines and p
145、enalties.ARENA REIT ANNUAL REPORT 202423MATERIAL BUSINESS RISKS CONTINUEDCyber security continuedThe following measures are in place to help protect the business and employees from cybersecurity related threats:providing a digitally safe working environment,both in the office and for remote working;
146、protecting systems,networks and end-point devices;mandatory training for all employees to identify and manage potential threats;vulnerability testing and security event monitoring to identify and respond to threats;embedding policies to safely control,access and manage data and privacy,for both empl
147、oyees and third parties;and simulated cyber attacks and recovery exercises to enhance resilience and identify potential improvement opportunities.Capital ManagementCapital market volatility may impact our ability to transact and access suitable capital.The Group manages this risk by:acquiring and de
148、veloping new assets on capital efficient terms;retaining a strong balance sheet and relatively low gearing;actively managing debt expiries;maintaining a disciplined and prudent approach to capital management and hedging;maintaining liquidity in excess of funding requirements;and engaging with debt a
149、nd equity investors to regularly update them about the business.AFSL financial compliance riskThe Group is exposed to the risk of having inadequate capital and liquidity.Arena REIT Management Limited,a subsidiary of ARL,holds an Australian Financial Services License(AFSL)and acts as a responsible en
150、tity for the Groups managed investment schemes.The AFSL requires minimum levels of net tangible assets,liquid assets,cash reserves and liquidity,which may restrict the Group in paying dividends that would breach these requirements.The directors regularly review and monitor the Groups balance sheet t
151、o ensure ARMLs compliance with its AFSL requirements.INFORMATION ON DIRECTORSThe directors during the financial year were:David Ross,Independent Non-Executive ChairDavid has over 35 years ASX listed company and corporate experience in the property and property funds management industries in Australi
152、a and overseas,including Global and US Chief Executive Officer Real Estate Investments and Chief Executive Officer Asia Pacific for Lend Lease,Chief Executive Officer for General Property Trust and Chief Operating Officer for Babcock and Brown.He is currently an independent non-executive Director at
153、 Charter Hall Group and was formerly a non-executive Director of Sydney Swans Foundation Limited.David holds a Bachelor of Commerce,an Associate Diploma in Valuation and is a fellow of the Australian Institute of Company Directors(FAICD).Other current directorships:Charter Hall Group.Former director
154、ships in last 3 years:None.Rosemary Hartnett,Independent Non-Executive Director,Chair of Culture and Remuneration CommitteeRosemary has over 30 years experience in the Australian property sector and extensive senior management experience in property finance.Her former executive roles include senior
155、property finance executive and fund manager roles for trading and investment banks,including Macquarie Bank,ANZ and NAB.Rosemary was also Chief Executive Officer of Housing Choices Australia,one of the countrys leading registered housing associations.Rosemary holds a Bachelor of Business in Property
156、(Valuations)and is a member of the Australian Institute of Company Directors(MAICD).She was previously Chair and an independent director of ISPT Pty Ltd(ISPT)and an independent director of Fanplayr Inc.,Aconex,and Wallara Australia,and director of International Property Funds Management Pty Ltd(IPFM
157、).Other current directorships:None.Former directorships in last 3 years:ISPT Pty Ltd;Fanplayr Inc.;International Property Funds Management Pty Ltd(IPFM).24DIRECTORS REPORT CONTINUEDINFORMATION ON DIRECTORS CONTINUED Helen Thornton,Independent Non-Executive DirectorHelen was appointed to the ARL and
158、ARML Boards on 15 December 2022.She has over 30 years experience across a wide range of industries including healthcare,insurance,financial services,manufacturing,mining,property and utilities,in both public and private corporations,and government statutory authorities.Helen has extensive financial,
159、risk management,audit and governance expertise holding executive senior leadership roles at Deloitte,KPMG,BHP and BlueScope Steel.Helen holds a Bachelor of Economics from Monash University and is a member of Chartered Accountants Australia and New Zealand(CA ANZ)and the Australian Institute of Compa
160、ny Directors(GAICD).Other current directorships:Ansvar Insurance;ISPT Pty Ltd;McPhersons Limited;Treasury Corporation of Victoria.Former directorships in last 3 years:Yarra Valley Water.Dennis Wildenburg,Independent Non-Executive Director,Chair of Audit CommitteeDennis has over 35 years experience i
161、n the financial services,funds management and property industries.His former roles include Director of MLC Funds Management Limited,member of the Lend Lease Group board that managed GPT and an Associate Director of Hill Samuel Australia Limited(now Macquarie Group Limited).Dennis is a member of Char
162、tered Accountants Australia and New Zealand(CA ANZ),a Fellow of the Australian Institute of Company Directors(FAICD)and has served on the Boards of Property Funds Australia Limited,Investa Wholesale Funds Management Limited and ICPF Holdings Limited.Other current directorships:None.Former directorsh
163、ips in last 3 years:None.Rob de Vos,Executive DirectorRob is Managing Director of Arena and has over 25 years experience in the real estate and property funds management industry including acquisitions,developments,funds management,portfolio management and strategy,with expertise across both traditi
164、onal and specialised property assets.Robs experience in social infrastructure property investment spans over 20 years,and he is recognised as a market leader in the development and management of high performing specialised property investment funds.Prior to joining Arena,Rob held senior roles with J
165、ones Lang LaSalle,Becton Property Group and Ceramic Funds Management.Rob is a licensed real estate agent(VIC)and holds a Diploma of Financial Markets and a Diploma of Property Operations.Other current directorships:None.Former directorships in last 3 years:None.Gareth Winter,Executive Director and C
166、ompany SecretaryGareth is Chief Financial Officer of Arena and Executive Director of Arena REIT Management Limited.He was formerly a partner at PricewaterhouseCoopers and has over 30 years professional experience.Throughout his career Gareth specialised in advising the listed and unlisted property a
167、nd infrastructure funds management sector on corporate finance,capital management,risk management,transaction structuring and financial systems and reporting.Gareth holds a Bachelor of Commerce and is a member of Chartered Accountants Australia and New Zealand(CA ANZ).Other current directorships:Non
168、e.Former directorships in last 3 years:None.ARENA REIT ANNUAL REPORT 202425INFORMATION ON DIRECTORS CONTINUED LefttoRight:GarethWinter,DennisWildenburg,HelenThornton,RobdeVos,RosemaryHartnett,DavidRoss.MEETINGS OF DIRECTORSThe number of meetings of the Responsible Entitys board of directors and of e
169、ach board committee held during the year ended 30 June 2024,and the number of meetings attended by each director were:ARL BoardARML BoardAudit CommitteeNomination CommitteeCulture&Remuneration CommitteeABABABABABDavid Ross1313131310105566Rosemary Hartnett1313131310105566Helen Thornton131313131010556
170、6Dennis Wildenburg1313131310105566Rob de Vos13131313*Gareth Winter*1313*A-Numberofmeetingsheldduringthetimethedirectorheldofficeorwasamemberofthecommitteeduringtheyear.B-Number of meetings attended.*=Notamemberoftherelevantboard/committee.REMUNERATION REPORT Introduction from the Chair of the Cultur
171、e and Remuneration CommitteeOn behalf of the Culture and Remuneration Committee(Committee)and the Board,I am pleased to present the Remuneration Report for the financial year ended 30 June 2024(FY2024).The Report sets out our remuneration strategy and outcomes for Key Management Personnel(KMP)compri
172、sing the Executive KMP and the independent non-executive directors(NED).Remuneration FrameworkArenas remuneration framework is designed to attract,incentivise and retain talent by providing market competitive rewards with incentive opportunity aligned to strategy and performance thereby guiding the
173、behaviour and actions of Executive KMP.There were no changes to the remuneration framework in FY2024.26DIRECTORS REPORT CONTINUEDREMUNERATION REPORT CONTINUED Performance and Remuneration OutcomesThe Board considers a range of quantitative and qualitative factors when reviewing performance against A
174、renas key strategy and performance drivers(KPDs)which are set out on page 28 of this report.The remuneration outcomes in respect of FY2024 are consistent with the intended operation of Arenas remuneration framework and align with strong performance across a range of financial and non-financial objec
175、tives.The FY2024 economic and investment environment has been characterised by relatively high inflation and interest rates creating uncertainty and cost of living pressures.Notwithstanding the challenging environment,Arenas financial performance in FY2024 was underpinned by discipline across invest
176、ment,capital and portfolio management programs which have supported positive financial outcomes and the continued delivery of Arenas investment objective:Distributable Income of$62.4 million represents 5%growth on FY2023;Distributable Income per Security(DIS)of 17.65 cents represents 3.2%growth on F
177、Y2023;Distributions per Security(DPS)of 17.4 cents represents 3.6%growth on FY2023;Above target DPS growth in FY2025 guidance of 18.25 cents representing growth of 4.9%;and Portfolio occupancy of 99.7%and weighted average lease expiry of 18.5 years.Substantial progress was also made in key non-finan
178、cial objectives.Sustainability has been embedded across Arenas business strategy which best positioned us to achieve positive long term commercial and community outcomes in FY2024 including:Zero organisational scope 1 and 2 emissions;Certified Carbon Neutral by Climate Active for business operations
179、 and business services in 2022-2023;Renewable energy systems installed on 90%of Arenas property portfolio;Adopted an Emission Reduction Plan targeting net zero by 2050 with an interim 2030 target of a 60-70%reduction in the intensity of Arenas Financed Emissions;and Material reductions in the intens
180、ity of Arenas financed emissions.The Committee recognises the importance of our culture and the Arena team contributing to the achievement of our purpose and objectives.We remain focused on the development and engagement of our people.In FY2024 we have:Maintained our record of a high level of team r
181、etention with alignment and engagement measured in the top decile;Continued to invest in our team and individual development programs;Invested in new resources to contribute to business development and growth opportunities;Supported flexible working and invested in staff wellness and leadership prog
182、rams;and Enhanced our code of conduct and workplace policies to support our team experience.Executive KMP were awarded 95%of their target Short Term Incentive(STI)opportunity based on the assessment of performance as set out in the FY2024 STI scorecard on pages 32-33.The FY2022 Long Term Incentive(L
183、TI)was tested as at 30 June 2024 and 100%vested as:Arenas FY2024 DIS exceeded the high hurdle of the target range;and Arenas Total Securityholder Return(TSR)of 25%(equivalent to an 8%CAGR)for the three-year period ended 30 June 2024 ranked at the 83rd percentile amongst the comparator group comprise
184、d of Arenas peers.FY2025 Remuneration Framework Changes to the Remuneration Framework in FY2025 is expected to be limited to amending the STI to provide Executive KMP with the opportunity to achieve a maximum STI of 120%of target STI to reflect contemporary practice amongst Arenas peers.Arenas remun
185、eration framework will continue to clearly link and equitably reward and incentivise the achievement of performance-based outcomes and behaviours that reflect our purpose,values and stakeholder expectations.We welcome your feedback in respect of this Report.Rosemary Hartnett Chair,Culture and Remune
186、ration CommitteeARENA REIT ANNUAL REPORT 202427REMUNERATION REPORT CONTINUED GovernanceWho are the members of the Committee?The Committee is comprised of the independent directors and is chaired by Ms Rosemary Hartnett.What does the Committee do?Advises the Board on remuneration policy and practices
187、,sets and monitors standards of business behaviour and culture and has oversight of team development and wellness,succession planning and conflict management.The Committee also appoints remuneration advisers to review and advise on aspects of a remuneration policy and associated frameworks.Who is in
188、cluded in the remuneration report?The independent non-executive directors(NED):Mr David Ross(Chair);Ms Rosemary Hartnett;Ms Helen Thornton;and Mr Dennis Wildenburg.The Executive KMP:Mr Rob de Vos Managing Director and Chief Executive Officer(CEO);and Mr Gareth Winter Executive Director and Chief Fin
189、ancial Officer(CFO).Key Committee Decisions and remuneration outcomes in FY2024 Executive KMP Executive KMP received a 3.5%increase in fixed remuneration in FY2024.FY2024 total target remuneration for Executive KMP including at risk incentives increased by 6.8%(CEO)and 6.7%(CFO).FY2024 at risk remun
190、eration subject to short term and long term performance hurdles was set at 60%(FY2023:59%)of CEO and 57%(FY2023:56%)of CFO total target remuneration.Short Term Incentive(STI)There were no changes to the structure of the STI in FY2024.Executive KMP were awarded 95%of their FY2024 STI opportunity base
191、d on the assessment of financial and non-financial objectives as set out on page 32-33 of this report.50%of an STI award to Executive KMP is deferred for 12 months with payment delivered in equity.The FY2023 Deferred STI has fully vested.Long Term Incentive(LTI)There were no changes to the structure
192、 of the LTI in FY2024.The testing of hurdles and other conditions in relation to the FY2022 LTI Grant occurred as at 30 June 2024.The FY2022 LTI Grant fully vested:Arenas FY2024 DIS of 17.65 cents per security(representing CAGR of 5.1%)exceeded the upper performance hurdle of 17.6 cents per security
193、(target 5%CAGR);and Arenas three year Total Securityholder Return(TSR)of 25%(equivalent to an 8%CAGR)ranked at the 83rd percentile of the comparator group comprising the members of the ASX300 A-REIT Index over the performance period.Non-Executive Director(NED)Board FeesBoard fees are set at a level
194、to attract and retain suitably qualified and experienced Directors having regard to appropriate benchmarks for comparable listed entities,the size and complexity of operations,responsibilities and time commitments.Board fees increased by an average of 5.0%in FY2024.Minimum Security Holding Requireme
195、nt All KMP are compliant with Arenas MSHR policy.Key Decisions in respect to FY2025 Remuneration FrameworkShort Term Incentive(STI)Contemporary practice amongst Arenas peers is to provide opportunity for a maximum STI above target STI.From FY2025,Arenas STI program will provide for a maximum STI of
196、120%of target STI.Long Term Incentive(LTI)There are no changes to the structure of the LTI in FY2025.28DIRECTORS REPORT CONTINUEDOUR INVESTMENT OBJECTIVETo generate an attractive and predictable distribution to investors with earnings growth prospects over the medium to long term.OUR KEY PERFORMANCE
197、 DRIVERS Culture Discipline Relationships Capital deploymentOUTCOMESDelivering positive outcomes for our investors,communities,team and other stakeholders.OUR STRATEGIESSustainability has been embedded across Arenas business strategies which best positions us to achieve positive long term commercial
198、 and community outcomes.Be a respected owner of social infrastructure properties.Be an active manager of a diverse property portfolio.Maintain a responsible approach to growth and diversification.ARENAS PROPOSITIONOUR PURPOSEBetter Communities.Together.Culture Discipline Relationships Capital deploy
199、mentFinancial objectivesLINKING ARENAS STRATEGY&OBJECTIVES TO REMUNERATIONBetter Communities.Together.Sustainability Respected owner Active manager Responsible growthNon-financial objectivesSTI 50%LTI 100%STI 50%PURPOSESTRATEGIESKEY PERFORMANCE DRIVERSOUTCOMESPAY FOR PERFORMANCEExecutive KMP Pay for
200、 Performance OutcomesREMUNERATION REPORT CONTINUED ARENA REIT ANNUAL REPORT 202429Our Purpose:Better Communities.Together.Our Investment Objective Executive KMP Remuneration Framework Objectives Remuneration Principles Remuneration Components Fixed Remuneration STI(variable at risk)LTI(variable at r
201、isk)Generate an attractive and predictable distribution for securityholders with earnings growth prospects over the medium to long term through developing,owning and managing social infrastructure property that meet Arenas preferred property characteristicsAttract,retain and incentivise Executive KM
202、P Market competitive rewards to attract and retain high calibre talent capable of executing strategy.Total remuneration opportunity to include a significant proportion of at risk performance based pay.Guide the behaviour and actions of Executive KMP in-line with our purpose,values and stakeholder ex
203、pectations.Base level of annual remuneration.Generally set around the median of comparable organisations with reference to complexity of the role and the skills and experience necessary for success in the role.Reviewed annually.Independently benchmarked on a periodic basis against comparable organis
204、ations.Performance based remuneration focused on achieving predetermined strategic business objectives outlined in Arenas business plan including delivery of distributions to securityholders.Target opportunity based on a percentage of total remuneration.From FY2025,a maximum STI will be set at 120%o
205、f target STI.Payable 50%in cash and 50%in equity with vesting of equity component deferred for 12 months.Performance based remuneration aligned directly with securityholder returns.Opportunity based on a percentage of total remuneration.Three year performance period.Payable in equity to align Execut
206、ive KMP and securityholders.LTI participation is offered to all Executive KMP(and Arena staff)to align their interests with securityholders.Allocated using a face value method.Align remuneration to performance and the successful execution of strategy Generate market competitive returns for securityh
207、olders.Assess incentives against financial and non-financial measures aligned with strategy and values.Deliver a meaningful component of Executive KMP remuneration in the form of equity subject to performance hurdles to align Executive KMP with outcomes in the best interests of securityholders over
208、the medium to long term.REMUNERATION REPORT CONTINUED Executive KMP Remuneration Framework30DIRECTORS REPORT CONTINUEDWhat are the STI and LTI performance hurdles?Why are these performance hurdles used and the link to Performance?Can the Board cancel or vary incentives?Financial performance measures
209、(50%weighting)based on Distribution and DIS targets.Non-financial objectives(50%weighting)based on achieving predetermined strategic business objectives related to Arenas KPDs including culture,discipline,relationships and capital deployment.Aligns Executive KMP with immediate strategic objectives a
210、nd the sound management of financial and non-financial business priorities required to deliver the annual business plan.Aligns with securityholder expectations of earnings growth targets and directly linked to core elements of Arenas investment objectives.The Board has full discretion to reduce,canc
211、el or increase STI and LTI incentives,including if information in respect of past awards arises that would otherwise have meant an award would not have been made.Vesting determined by performance against a DIS target range(50%weighting)and Relative TSR ranking(50%weighting)against the members of the
212、 ASX200 AREIT Index.DIS targets are set at 3-5%CAGR as representing through-the-cycle growth expectations and competitive stretch targets.DIS is a key driver of securityholder returns with sustained growth in earnings over the medium to long term a key value driver for securityholder wealth.The DIS
213、target range of 3-5%CAGR is consistent with core elements of Arenas investment objective to deliver securityholders with attractive and predictable distributions with earnings growth prospects over the medium to long term.A DIS CAGR within the target range of 3-5%is expected to be competitive throug
214、h the cycle compared to Arenas peers in the ASX200 A-REIT index.Historical analysis has demonstrated that average and median DIS CAGR for the ASX200 A-REITs is below a 3%CAGR and a 5%CAGR represents top quartile performance.Consistency of the target range over time provides predictability in DIS and
215、 an appropriate balance between sustainable securityholder returns and risk.Achieving the target,in conjunction with disciplined capital,lease and portfolio management,requires the ongoing efficient and effective deployment of capital including the delivery of Arenas development opportunities.Relati
216、ve TSR aligns Executive KMP with overall securityholder returns and reduces the effect of economic cycles by measuring performance relative to peers.Remuneration Components REMUNERATION REPORT CONTINUED Executive KMP Remuneration Framework continuedFixed Remuneration STI(variable at risk)LTI(variabl
217、e at risk)ARENA REIT ANNUAL REPORT 202431REMUNERATION REPORT CONTINUEDExecutive KMP FY2024 Target Remuneration and Remuneration Mix Executive KMP fixed remuneration was increased by 3.5%in FY2024.FY2024 total target remuneration for Executive KMP including at risk incentives increased by 6.8%(CEO)an
218、d 6.7%(CFO).Executive KMPFY2024 Target Remuneration Proportion of at Risk Performance Based Remuneration Cash EquityFixed1 STI2 LTI Total Fixed STI Deferred STI LTI Rob de Vos$750,000$560,000$570,000$1,880,00040%15%15%30%Gareth Winter$473,500$280,000$360,000$1,113,50043%13%13%32%1.Fixed remuneration
219、 is set by the Board as inclusive of the prescribed Superannuation Guarantee contribution.2.50%of an STI award is deferred for 12 months and payable in Arena stapled securities.3.Percentages may not add due to rounding.Executive KMP Employment Agreements Contract duration Ongoing.Termination by the
220、Executive KMP CEO:9 month notice period.CFO:6 month notice period.Unvested STI or LTI entitlements lapse unless the Board determines otherwise.Termination by Arena REIT without cause,mutually agreed resignation,retirement or other circumstanceNotice period(as above)applies or equivalent payment in l
221、ieu of notice based on TFR.The Board has discretion to determine awards which may remain on foot and may also pro rata awards for time and performance.The Board may lapse an award in full or allow accelerated vesting in special circumstances subject to termination benefit rules.Termination by Arena
222、REIT for causeNo notice period or termination payment unless the board determines otherwise.Unvested STI or LTI entitlements lapse unless the Board determines otherwise.Post-employment restraintsRestrained from soliciting suppliers,customers and staff for the term of the relevant notice period post-
223、employment.Performance&Variable Remuneration Outcomes The table below summarises Arenas performance in key areas over the past 5 years.5 Year Financial Performance IndicatorsMetricFY2024FY2023FY2022FY2021FY2020Net Profit(Statutory)$million 57.574.2 334.3 165.4 76.6 Distributable Income$million62.459
224、.7 56.3 51.9 43.8 Distributable Income per Securitycents 17.6517.1 16.3 15.2 14.55 Distributions per Security cents17.416.8 16.0 14.8 14.0 Net Asset Value per Security$3.41$3.42$3.37$2.56$2.22 Security Price at 30 June$3.87$3.76$4.27$3.60$2.19 Gearing22.6%21.0%20.2%19.9%14.8%Annual Total Shareholder
225、 Return(TSR)7.8%(7.8%)22.8%72.4%(15.6%)Annual TSR of ASX-300 A-REIT Index 23.8%7.5%(11.2%)33.9%(20.7%)32DIRECTORS REPORT CONTINUEDREMUNERATION REPORT CONTINUEDFY2024 STI Scorecard Performance and Outcomes The Board set the Executive KMP target financial performance hurdles and non-financial objectiv
226、es required to deliver strategic priorities that create long term value for securityholders.The Committees assessment of the Executive KMPs FY2024 performance is set out in the scorecard below.Financial Objectives(50%)Category MeasurementWeightingRatingCommentsDistributions&Earnings FY2024 distribut
227、ion target of at least 17.4 cents per security25%TActual FY2024 distribution of 17.4 cents per security(3.6%growth).FY2024 DIS in a target range of 17.6 to 17.8 cents(3-4%growth)12.5%PActual FY2024 DIS of 17.65 cents(3.2%growth).Expected FY2025 DIS supporting FY2025 distribution guidance of at least
228、 17.9 to 18.1 cents per security(3-4%growth on FY2024 distribution target)12.5%EActual FY2025 distribution guidance of 18.25 cents(4.9%growth on FY2024 distribution target).Key:E=ExceededTargetT=On-TargetP=PartialB=BelowTargetARENA REIT ANNUAL REPORT 202433REMUNERATION REPORT CONTINUEDFY2024 STI Sco
229、recard Performance and Outcomes continuedNon-Financial Objectives(50%)Key Performance Driver Strategic Business Objectives Weighting Rating CommentsCulture Culture&Values Governance Sustainability Team performance Development&Succession 12.5%T No safety or injury incidents.Independent team alignment
230、 and engagement survey benchmarked with top decile ranking in employee engagement and alignment.Maintained highest possible ISS QualityScore Governance rating and FTSE Russell ESG Governance Score.Sustainability has been embedded across Arenas business strategy with our Investment assessment methodo
231、logy updated to include Preferred Sustainability Investment Criteria to align with Arenas Sustainability Framework.Zero organisational scope 1 and 2 emissions.6-star rating for organisational NABERS energy co-assessment.Certified Carbon Neutral by Climate Active for business operations in 2022-2023.
232、Certified Carbon Neutral by Climate Active for business services in 2022-2023.Registered to develop Arenas Reflect Reconciliation Action Plan.Solar renewable energy systems installed on 90%of property portfolio.Adopted an Emission Reduction Plan targeting net zero Financed Emissions by 2050,with an
233、interim 2030 target of a 60-70%reduction in the intensity of Arenas Financed Emissions.A 36%absolute reduction and 42%reduction in the intensity of Arenas Financed Emissions to end FY2023.On-track to deliver Year 2 targets of our Modern Slavery Roadmap.Development and succession program in place and
234、 set as a KPI for Executive KMP.Discipline Capital Providers Insurances Lease Management Portfolio Management Technology12.5%T Business funding,hedging,liquidity and gearing maintained within approved parameters and development pipeline fully funded.Extended all debt maturities and weighted average
235、hedge term and improved pricing.Achieved the full Sustainability Linked Loan margin discount for the FY2023 performance targets.Improved flood insurance cover for tenants.Stability of 18.5 year WALE maintained.99.7%tenant occupancy.Implemented a program of cyber risk mitigation projects.Relationship
236、s Capital Markets Stakeholder Management Tenant Partners 12.5%T Extended research coverage with new analyst initiating coverage in the period.Positive and improved tenant engagement survey rating.Continued working collaboratively with our tenant partners completing a review of current solar installa
237、tions to identify opportunities to optimise solar installations and further opportunities to move towards net zero scope 1 and 2 emissions.New website launched,winning silver award in Melbourne Design Awards(Digital-Corporate)category.Capital Deployment Developments and Origination 12.5%T 7 ELC deve
238、lopment projects reached practical completion with a value of$55 million.10 ELC projects added to the development pipeline.Key:E=ExceededTargetT=On-TargetP=PartialB=BelowTarget34DIRECTORS REPORT CONTINUEDREMUNERATION REPORT CONTINUEDFY2024 STI Scorecard Performance and Outcomes continuedThe Committe
239、e reviewed the scorecard of Arenas performance throughout FY2024 and determined that the outcome is consistent with the objectives of the STI plan.Reduced transaction volumes and general uncertainty in the property markets in which Arena operates reflected a market in transition with respect to infl
240、ation and rapid increases in interest rates.Arenas ongoing discipline in capital deployment and capital management was expected to contribute to financial outcomes in FY2024 and FY2025 that would deliver 3-4%growth in distributions per security notwithstanding the annualisation effect on earnings fr
241、om the rapid interest rate increases in FY2023 which adversely affected the earnings of the broader REIT sector.Financial objectives were largely achieved and reflected ongoing discipline in capital deployment into appropriate investment opportunities and the material mitigation of rising interest r
242、ates from Arenas capital management and consistent interest rate hedging program.Based on their assessment of the STI scorecard,the Committee awarded the Executive KMP 90%of the financial objectives component and 100%of the non-financial objectives component resulting in an overall award of 95%of th
243、eir STI opportunity.The Committee also consulted with Arenas Audit Committee and confirmed that there were no adverse risk management,behavioural or financial matters relevant to the assessment of Executive KMP performance.The STI awards for Executive KMP based on FY2024 performance outcomes is set
244、out below.Executive KMP FY2024 STI AwardsExecutive KMPSTI AwardAward as a%of STI Opportunity1Cash ComponentDeferred STI Component2Deferred STI Rights Granted3,4,5$%$No.Rob de Vos$532,000 95%$266,000$266,000 69,134Gareth Winter$266,000 95%$133,000$133,000 34,5671.AnySTIOpportunitynotawardedisforfeite
245、d.2.50%of an STI Award is deferred for 12 months and vesting is subject to service over the deferral period.3.DeferredSTIRightsconvertintoArenaStapledSecurities.TheallocationofrightsusesafacevaluemethodbydividingthevalueoftheDeferredSTIawardbythe15dayVWAP(ex-distribution)ofArenaStapledSecuritiesimme
246、diatelypriortotheendoftherelevantfinancialyear(FY2024:$3.8476).4.Rights granted to the Executive KMP are subject to approval by securityholders at Arenas 2024 AGM.5.DeferredSTIRightsdonotreceivecashdistributions.However,additionalrightswillbegrantedequivalenttodistributionsdeclaredonArenaStapledSecu
247、rities during the 12 month deferral period.LTI Performance Measures and AssessmentDistributable Income per Security and Relative TSR were established as performance measures in 2014 at the commencement of Arenas LTI Plan.The Committee considers that these measures remain appropriate and are:aligned
248、with Arenas objective and strategy;metrics that align the Executive KMP with securityholders and drive long term sustainable performance and returns;and consistent with our purpose,values and stakeholder expectations of Executive KMP behaviour.ARENA REIT ANNUAL REPORT 202435REMUNERATION REPORT CONTI
249、NUEDLTI Performance Measures and Assessment continuedLTI YearPerformance Measurement PeriodLTI Performance Measure4Performance HurdleResultVesting Outcome5,6FY2022FY2022-FY2024Relative TSR150%of rights vest at the 50th percentile;with pro rata vesting until 100%vesting at the 75th percentile.Arenas
250、TSR of 25%(equivalent to an 8%CAGR)ranked at the 83rd percentile of the comparator group over the three year performance period.100%FY2024DIS2,3Target range of 16.6 cents to 17.6 cents.Target range exceeded.Actual DIS of 17.65 cents(equivalent to 5.1%CAGR over the three year performance period).100%
251、Overall Vesting4 100%FY2023 FY2023-FY2025Relative TSR150%of rights vest at the 50th percentile;with pro rata vesting until 100%vesting at the 75th percentile.N/A FY2025 DIS2,3Target range of 17.8 cents to 18.85 cents.FY2024FY2024-FY2026Relative TSR150%of rights vest at the 50th percentile;with pro r
252、ata vesting until 100%vesting at the 75th percentile.N/A FY2026 DIS2,3Target range of 18.7 cents to 19.8 cents.1.RelativeTSRrankversusacomparatorgroupcomprisingthemembersoftheASX300A-REITIndex(FY2022Grant)ortheASX200A-REITIndex(FY2023andFY2024Grants)atthecommencementofeachthreeyearperformanceperiod(
253、assumingreinvestmentofdistributions).RelativeTSRperformancerankreducestheeffectofmarketcyclesasitmeasuresArenasperformancerelativetoitspeers.2.DISisakeyperformanceindicatorreferencedbytheBoardinpreparingbusinessplans,measuringArenasperformanceandcreatingvalueforsecurityholders.DISisdeterminedbytheBo
254、ardinaccordancewithArenasDividendandDistributionPolicy.3.TheDIStargetrangeissetatDISgrowthof3%to5%CAGRoverthethreeyearperformanceperiod.Thetargetrangeisconsideredappropriatebythe Board as it is consistent with core elements of Arenas investment objective to deliver securityholders with attractive an
255、d predictable distributions withearningsgrowthprospectsoverthemediumtolongterm.ADISCAGRwithinthetargetrangeof3-5%isexpectedtobecompetitivethroughthecyclecomparedtoArenaspeersintheASX200A-REITindex.RecenthistoricalanalysishasdemonstratedtheaverageandmedianDISCAGRfortheASX200A-REITSforthreeandfiveyear
256、periodsisbelowa3%CAGRwitha5%CAGRrepresentingtopquartileperformanceoverthesamethreeandfiveyearperiods.ConsistencyofthetargetrangeovertimeprovidespredictabilityinDISandanappropriatebalancebetweensustainablesecurityholderreturnsandrisk.TheDISperformancehurdleisassessedinthefinalyearofathreeyearperforma
257、nceperiod.4.A 50%weighting is attributed to each performance measure.5.50%vesting at the threshold of the target range plus progressive pro-rata vesting between 50%and 100%(ie on a straight-line basis)with 100%vesting at or above the upper target.Any LTI opportunity not awarded is forfeited.6.TheBoa
258、rdretainsfulldiscretioninrespectoftheLTIawardincludingadjustingtheconditionsand/orperformanceoutcomestoensurethatexecutiveKMPareneitheradvantagednordisadvantagedbymattersthataffecttheconditions,forexamplethetimingofamaterialequityraisingorexcludingthe effects of one-off items.36DIRECTORS REPORT CONT
259、INUEDREMUNERATION REPORT CONTINUEDExecutive KMP Remuneration Summary-Actual Amounts Received(Non-IFRS Information)1Short Term BenefitsEquity Based Payments3Executive KMPFixed Salary2Non Monetary Benefits Cash STIDeferred STI RightsLTI Performance RightsTotal$Rob de VosFY2024$750,000$17,766$174,657$1
260、61,810$678,363$1,782,596FY2023$724,500$18,127$219,375$160,993$552,398$1,675,393Gareth Winter FY2024$473,500$15,562$85,782$79,473$518,948$1,173,265FY2023$457,500$15,850$107,738$102,634$422,587$1,106,3091.VoluntarydisclosureofactualremunerationreceivedbyExecutiveKMPinaccordancewithcontemporarymarketpr
261、actice.Theinformationdoesnotalign to Australian Accounting Standards.2.SalariesaresetbytheBoardasinclusiveoftheprescribedSuperannuationGuaranteecontributionfortherelevantfinancialyear.3.ThevalueofvestedequitybasedpaymentsisbasedontheASXclosingpriceofanArenaStapledSecurityonthedateofissueofastapledse
262、curityfollowingexerciseofvestedrights.Thismaybehigherorlowerthanthevalueatthetimeofagrantofequitybasedremunerationwhichcontributesto variation between target and actual remuneration.Executive KMP Remuneration measured in accordance with accounting standards(IFRS/statutory)Short Term BenefitsEquity B
263、ased PaymentsOtherExecutive KMPFixed Salary1Non Monetary Benefits Cash STIDeferred STI RightsLTI Performance RightsLeave Entitlements2 Total$Rob de VosFY2024$750,000$17,766$266,000$220,328$426,995$18,341$1,699,430FY2023$724,500$18,127$174,657$197,016$441,624$22,717$1,578,641 Gareth Winter FY2024$473
264、,500$15,562$133,000$109,391$268,523$25,795$1,025,771FY2023$457,500$15,850$85,782$96,760$295,100$12,363$963,355 1.SalaryisfixedremunerationandissetbytheBoardasinclusiveoftheprescribedSuperannuationGuaranteecontributionfortherelevantfinancialyear.2.Change in value of accrued annual and long service le
265、ave entitlements during the period.Executive KMP Statutory Remuneration Mix1The relative proportion of variable and at risk remuneration based on the IFRS/Statutory remuneration set out in the table above.Executive KMPFixed Salary STI LTI%Rob de Vos45%29%26%Gareth Winter48%25%27%1.Variationbetweenta
266、rgetremunerationopportunitymixandactualremunerationmixisaresultoftheforfeitureornon-vestingofopportunitiesandtimingdifferencesbetweengrantingequitybasedremunerationandtheamortisationofequitybasedremunerationovertherelevantperformanceandservice period.ARENA REIT ANNUAL REPORT 202437REMUNERATION REPOR
267、T CONTINUEDExecutive KMP Interests in SecuritiesORDINARY STAPLED SECURITIESExecutive KMPHolding Balance 1 July 2023 FY2022 Deferred STI Award FY2021 LTI Award Bought/(Sold)During Period Other Changes1 Holding Balance 30 June 20242 No.No.No.No.No.No.Rob de Vos993,251 53,492194,932-2,538 1,244,213 Gar
268、eth Winter 955,644 26,271149,123-1,2471,132,2851.SecuritiesgrantedinrespectofdistributionequivalentsonDeferredSTIawards.2.ArenarequiresExecutiveKMPtoaccumulate(overfouryearsfromtheirdateofappointment)andmaintainaminimumholdingofArenasecuritiesequivalentto100%oftheirfixedannualremuneration.Valueisdet
269、erminedbyreferencetothehigherofcostormarketvalueatthecommencementofthefinancialyear.TheExecutiveKMPcomplywiththeminimumsecurityholdingrequirement.DEFERRED STI RIGHTS Executive KMPYear1Grant Date2Vesting Date3 Value per Right4Rights Granted2Rights Vested3Rights LapsedMaximum Value to be recognised in
270、 future years$No.%$Rob de VosFY2024-1 July 25$3.847669,134-$133,000FY202323 Nov 231 July 24$3.756346,497100%-FY202224 Nov 221 July 23$4.101153,492100%-Gareth Winter FY2024-1 July 25$3.847634,567-$66,500FY202323 Nov 231 July 24$3.756322,837100%-FY202224 Nov 221 July 23$4.101126,271100%-1.Representsth
271、eperiodinrespectofwhichtheSTIwasawarded.Vestingissubjecttoserviceatthevestingdate.2.TheFY2024grantofDeferredSTIRightstotheExecutiveKMPhasbeenapprovedbytheBoardwithanallocationdateof1July2024.ThegrantisconditionalonsecurityholderapprovalatArenas2024AGM.TheFY2023grantwasapprovedbysecurityholderson23No
272、vember2023andtheFY2022grantwasapprovedbysecurityholderson24November2022.3.VestedFY2022DeferredSTIRightswereexercisedbyExecutiveKMPon22September2023.FY2023DeferredSTIRightshavevested,areunexercisedbut may be exercised by Executive KMP at any time after the date of this report.4.Thenumberofrightsalloc
273、atedisdeterminedonafacevaluebasisbydividingthevalueoftheDeferredSTIawardbythe15dayVWAP(ex-distribution)ofArenaStapledSecuritiesimmediatelypriortotheendoftherelevantfinancialyear.Thisalsoreflectsareasonableestimationoftheirgrantdatefairvalueasadditionalrightsaresubsequentlygrantedforthevalueofdistrib
274、utionsequivalenttothatdeclaredtoordinarysecurityholdersduring the deferral period.38DIRECTORS REPORT CONTINUEDREMUNERATION REPORT CONTINUEDLTI PERFORMANCE RIGHTS6,7,8 Executive KMPGrant YearGrant Date1Vesting Date4 Fair Value per Right3Rights Granted1,2Portion Vested4Rights LapsedMaximum Value to be
275、 recognised in future years5$No.%$Rob de VosFY202423 Nov 231 July 26$2.28151,745-$230,652FY202324 Nov 221 July 25$2.50138,804-$115,670FY202225 Nov 211 July 24$3.68159,782100%-Gareth Winter FY202423 Nov 23 1 July 26$2.2895,839-$145,676FY202324 Nov 221 July 25$2.5087,153-$72,628FY202225 Nov 211 July 2
276、4$3.68100,318100%-1.Rights are approved by the Board at the commencement of the three year performance period.Each LTI grant to Executive KMP is conditional on approval by securityholders at Arenas AGM.2.TheallocationofrightsisdeterminedonafacevaluebasisbydividingtheLTIopportunitybythe15dayVWAP(ex-d
277、istribution)ofArenaStapledSecuritiesto30Juneatthebeginningofeachgrantyear(FY2024:$3.7563).3.ReflectsfairvalueforaccountingpurposesnotingthatactualLTIallocationsaredeterminedonafacevaluebasis.4.LTIRightsvestedinaccordancewiththeFY2022LTIassessmentassetoutonpage35.Vestedrightsareunexercisedbutmaybeexe
278、rcisedbyExecutive KMP at any time after the date of this report.5.The fair value of rights is amortised over the 3 year performance period for accounting purposes.This represents the maximum value of rights to be recognised in future years in the Statement of Comprehensive Income.The value will be n
279、il if rights do not vest.6.NopaymentisrequiredonissueofRightsorstapledsecuritiesinrespectofavestedRight.Vestingissubjecttoperformancemeasuresandserviceatthe vesting date.LTI Rights have no entitlement to distributions.7.In the event of an actual or proposed change of control event that the Board in
280、its discretion determines should be treated as a change of control,a pro-rata number of unvested grants will vest at the time of the relevant event,based on the performance period elapsed and the extent to which performance hurdles have been achieved at the time(unless the Board determines another t
281、reatment in its discretion).8.ExecutiveKMParerestrictedfromtransactions(usingderivativesorotherwise)thatwouldhavetheeffectoflimitingtheeconomicriskfromparticipating in the LTI.Non-Executive Director Remuneration Framework How are Non-Executive Director(NED)fees set?Fees are set to ensure NEDs are re
282、munerated fairly for their services,recognising the level of skill,expertise and experience required to perform the role.The fees are periodically benchmarked against a comparable group of listed entities.Who approves the fees?Each NED is paid an amount determined by the Board.NEDs do not receive an
283、y equity based payments,retirement benefits or incentive payments.Is there a maximum fee?NED fees are subject to a maximum aggregate amount approved by securityholders of$1 million per annum.Are NEDs required to have a minimum securityholding?Arenas minimum securityholding policy requires NEDs to ac
284、quire(over three years from the later of the date the policy was adopted or their date of appointment)and maintain a minimum holding of Arena securities equivalent to 100%of the annual Board fee.The assessed value is the higher of cost or market value at the beginning of the relevant financial year.
285、FY2024 Board and Committee FeesBoard Fee1 Audit CommitteeCulture&Remuneration Committee Nomination Committee$Chair$253,000$22,000$22,000$5,500Member$115,000$11,000$11,000$2,7501.The Board Fee received by the Chair of the Board is inclusive of all Committee fees.2.All Fees are set inclusive of prescr
286、ibed Superannuation Guarantee contributions.ARENA REIT ANNUAL REPORT 202439REMUNERATION REPORT CONTINUEDNon-Executive Director Reported Remuneration(statutory)Fee1$David Ross(Board Chair)FY2024$253,000FY2023$240,000 Rosemary Hartnett2FY2024$150,750FY2023$144,100 Simon Parsons3FY2024-FY2023$133,600 H
287、elen Thornton4FY2024$139,750 FY2023$73,022 Dennis Wildenburg5FY2024$150,750FY2023$144,100 1.Fees are set inclusive of prescribed Superannuation Guarantee contributions.2.Chair of the Culture and Remuneration Committee.3.DrParsonsretiredfromtheBoardon15June2023.4.MsThorntonwasappointedtotheBoardon15D
288、ecember2022.5.Chair of the Audit Committee.Non-Executive Director Securityholdings Ordinary SecuritiesBalance 1 July 2023Acquired Disposed OtherBalance 30 June 2024No.No.No.No.No.David Ross 213,565-213,5651 Rosemary Hartnett 27,9056,996-34,9011 Helen Thornton2-5,540-5,540 Dennis Wildenburg 173,334-1
289、73,3341 1.Complieswithminimumsecurityholdingrequirement(MSHR)asmeasuredatthecommencementofthefinancialyear.2.MsThorntonhasthreeyearsfromappointment(15December2022)tomeettheMSHR.INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORSDuring the year,the Group has paid insurance premiums to insure each
290、of the directors and officers of the Group against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of the Group other than conduct involving a wilful breach of duty in relation to the Group.The contract
291、of insurance prohibits disclosure of the nature of the liability covered and the amount of the premium.The Group has not,during or since the end of the financial year indemnified or agreed to indemnify an auditor of the Group or of any related body corporate against a liability incurred in their cap
292、acity as an auditor.NON-AUDIT SERVICES Details of the non-audit services provided to the Group by the Independent Auditor during the year ended 30 June 2024 are disclosed in note 24 of the financial statements.40DIRECTORS REPORT CONTINUEDFEES PAID TO AND INTERESTS HELD IN THE GROUP BY THE RESPONSIBL
293、E ENTITY OR ITS ASSOCIATESFees paid to the Responsible Entity and its related parties out of Group property during the year are disclosed in note 22 of the financial statements.INTERESTS IN THE GROUPThe movement in securities on issue in the Group during the year is disclosed in note 13 to the finan
294、cial statements.CORPORATE GOVERNANCE STATEMENTThe board of directors for Arena REIT Limited and Arena REIT Management Limited work together and take a co-ordinated approach to the corporate governance of the Group.Each Board has a Board Charter which details the composition,responsibilities,and prot
295、ocols of the Board.In addition,the Boards have a Code of Conduct which sets out the standard of business practices required of the Groups directors and staff.The Group conducts its business in accordance with these policies and code,as well as other key policies which are published on its website.Th
296、ese include:Communications Policy;Continuous Disclosure Policy;Diversity Policy;Environmental,Social and Governance Policy;Privacy Policy;Securities Trading Policy;Conflicts of Interest Policy;Summary of Risk Management Framework;Whistleblower Policy.In compliance with ASX Listing Rule 4.10.3,the Gr
297、oup publishes an annual statement on its website disclosing the extent to which it has followed the recommendations for good corporate governance set by the ASX Corporate Governance Council during the reporting period.ENVIRONMENTAL REGULATION The operations of the Group are not subject to any partic
298、ular or significant environmental regulations under a Commonwealth,State or Territory law.ROUNDING OF AMOUNTS TO THE NEAREST THOUSAND DOLLARSThe Group is an entity of a kind referred to in ASIC Corporations(Rounding in Financial/Directors Reports)Instrument 2016/191,relating to the rounding off of a
299、mounts in the Directors report.Amounts in the Directors report have been rounded to the nearest thousand dollars in accordance with that Instrument,unless otherwise indicated.AUDITORS INDEPENDENCE DECLARATIONThe Auditors independence declaration as required under section 307C of the Corporations Act
300、 2001 is set out on page 41.This report is made in accordance with a resolution of directors.David Ross,ChairMelbourne,15 August 202441ARENA REIT ANNUAL REPORT 2024AUDITORS INDEPENDENCE DECLARATIONPricewaterhouseCoopers,ABN 52 780 433 757 One International Towers Sydney,Watermans Quay,Barangaroo,GPO
301、 BOX 2650,SYDNEY NSW 2001 T:+61 2 8266 0000,F:+61 2 8266 9999,.au Liability limited by a scheme approved under Professional Standards Legislation.Auditors Independence Declaration As lead auditor for the audit of Arena REIT No.1 for the year ended 30 June 2024,I declare that to the best of my knowle
302、dge and belief,there have been:(a)no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit;and(b)no contraventions of any applicable code of professional conduct in relation to the audit.This declaration is in respect of Arena REIT No.1 and the
303、 entities it controlled during the period.JDP WillsSydneyPartnerPricewaterhouseCoopers15 August 202442CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMECONSOLIDATEDFor the year ended 30 June 202430 June 202430 June 2023Notes$000$000Income Property income8(c)97,49892,641Interest678594Net gain on change i
304、n fair value of derivative financial instruments-527Total income98,17693,762ExpensesProperty expenses8(c)(610)(635)Management and administration expenses(7,136)(6,543)Net loss on change in fair value of derivative financial instruments(4,910)-Revaluation loss on investment properties8(13,496)(1,497)
305、Finance costs3(13,686)(10,023)Loss on sale of direct properties(153)(47)Other expenses(677)(778)Total expenses(40,668)(19,523)Net profit for the year57,50874,239Other comprehensive income-Total comprehensive income for the year57,50874,239Total comprehensive income for the year is attributable to Ar
306、ena REIT stapled group investors,comprising:Unitholders of Arena REIT No.156,94072,637Unitholders of Arena REIT No.2(non-controlling interest)2,7003,242Unitholders of Arena REIT Limited(non-controlling interest)(2,132)(1,640)57,50874,239NotesCentsCentsEarnings per security:Basic earnings per securit
307、y in Arena REIT No.1516.0920.83Diluted earnings per security in Arena REIT No.1516.0320.75Basic earnings per security in Arena REIT Group516.2521.29Diluted earnings per security in Arena REIT Group516.1921.20The above consolidated statement of comprehensive income should be read in conjunction with
308、the accompanying notes.43ARENA REIT ANNUAL REPORT 2024CONSOLIDATED BALANCE SHEET CONSOLIDATEDAs at 30 June 202430 June 202430 June 2023Notes$000$000Current assets Cash and cash equivalents612,43416,113Trade and other receivables74,8565,304Derivative financial instruments125,5336,939Total current ass
309、ets22,82328,356Non-current assetsDerivative financial instruments129,05412,558Property,plant and equipment1,305654Investment properties81,579,0661,515,912Intangible assets910,81610,816Total non-current assets1,600,2411,539,940Total assets1,623,0641,568,296Current liabilitiesTrade and other payables1
310、015,22712,579Provisions928766Distributions payable15,49814,730Lease liabilities196229Total current liabilities31,84928,304Non-current liabilitiesProvisions76121Interest bearing liabilities11376,271340,342Lease liabilities856 222 Total non-current liabilities377,203340,685Total liabilities409,052368,
311、989Net assets1,214,0121,199,307EquityContributed equity-ARF113436,640424,361Accumulated profit14634,981632,316Non-controlling interests-ARF2 and ARL15142,391142,630Total equity1,214,0121,199,307The above consolidated balance sheet should be read in conjunction with the accompanying notes.44CONSOLIDA
312、TED STATEMENT OF CHANGES IN EQUITY CONSOLIDATEDFor the year ended 30 June 2024Contributed equityAccumulated profitNon-controlling interests-ARL&ARF2Total equity$000$000$000$000Balance at 1 July 2022415,410 591,012162,5521,168,974Profit for the year-72,6371,60274,239Total comprehensive income for the
313、 year-72,6371,60274,239Transactions with owners in their capacity as owners:Issue of securities under the DRP8,951-4,33413,285Distributions to securityholders-(31,333)(27,335)(58,668)Equity-based remuneration-1,4771,477Balance at 30 June 2023424,361632,316142,6301,199,307Balance at 1 July 2023424,36
314、1632,316142,6301,199,307Profit for the year-56,94056857,508Total comprehensive income for the year-56,94056857,508Transactions with owners in their capacity as owners:Issue of securities under the DRP12,279-5,15917,438Distributions to securityholders-(54,275)(7,401)(61,676)Equity-based remuneration-
315、1,4351,435Balance at 30 June 2024436,640634,981142,3911,214,012Theaboveconsolidatedstatementofchangesinequityshouldbereadinconjunctionwiththeaccompanyingnotes.45ARENA REIT ANNUAL REPORT 2024CONSOLIDATED STATEMENT OF CASH FLOWS CONSOLIDATEDFor the year ended 30 June 202430 June 202430 June 2023Notes$
316、000$000Cash flows from operating activities Receipts in the course of operations88,39581,210Payments in the course of operations(14,341)(13,111)Finance costs paid(12,205)(8,837)Interest received678593Net cash inflow from operating activities1662,52759,855Cash flows from investing activitiesPayments
317、for investment properties and capital expenditure(60,567)(71,326)Proceeds from sale of investment properties3,72733,004Refund of investment property acquisition costs82115Net cash(outflow)from investing activities(56,758)(38,207)Cash flows from financing activitiesNet proceeds from issue of securiti
318、es(73)(60)Distributions paid to securityholders(43,398)(44,633)Loan establishment costs paid(741)(817)Capital receipts from lenders35,00043,000Capital payments to lenders-(25,000)Principal elements of lease payments(236)(225)Net cash(outflow)from financing activities(9,448)(27,735)Net(decrease)/incr
319、ease in cash and cash equivalents(3,679)(6,087)Cash and cash equivalents at the beginning of the financial year16,11322,200Cash and cash equivalents at the end of the financial year612,43416,113Theaboveconsolidatedstatementofcashflowsshouldbereadinconjunctionwiththeaccompanyingnotes.46CONTENTSNOTES
320、TO THE CONSOLIDATED FINANCIAL STATEMENTS 1 General information 47FINANCIAL RESULTS,ASSETS AND LIABILITIES 482 Segment information 483 Finance costs 494 Income taxes 495 Earnings per security(EPS)516 Cash and cash equivalents 527 Trade and other receivables 528 Investment properties 539 Intangible as
321、sets 5810 Trade and other payables 5911 Interest bearing liabilities 5912 Derivative financial instruments 6113 Contributed equity 6214 Accumulated profit 6315 Non-controlling interests 6416 Cashflow information 65RISK 6617 Financial risk management and fair value measurement 6618 Capital management
322、 70GROUP STRUCTURE 7119 Investments in controlled entities 71UNRECOGNISED ITEMS 7120 Contingent assets and liabilities and commitments 7121 Events occurring after the reporting period 71FURTHER DETAILS 7222 Related party disclosures 7223 Equity-based remuneration 7324 Remuneration of auditors 7525 P
323、arent entity financial information 7626 Summary of other material accounting policies 7747ARENA REIT ANNUAL REPORT 2024NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS1.GENERAL INFORMATIONThese financial statements cover Arena REIT(the Group)comprising Arena REIT No.1(ARF1),Arena REIT No.2(ARF2),Arena
324、 REIT Limited(ARL),and their controlled entities.Arena REIT is listed on the ASX and registered and domiciled in Australia.The Responsible Entity of ARF1 and ARF2 is Arena REIT Management Limited(the Responsible Entity).As permitted by Class order 13/1050 issued by ASIC,this financial report is a co
325、mbined financial report that presents the financial statements and accompanying notes of Arena REIT at and for the year ended 30 June 2024.The financial statements were authorised for issue by the directors on 15 August 2024.The directors have the power to amend and reissue the financial statements.
326、(a)Basis of preparationThese general purpose financial statements have been prepared in accordance with Australian Accounting Standards and interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001.Arena REIT is a for-profit entity for the purpose of preparing
327、 the financial statements.The financial report has been prepared on an accruals and historical cost basis except for investment properties,financial assets at fair value through profit or loss,derivative financial instruments which are measured at fair value,and share-based payments which are measur
328、ed at fair value.Cost is based on the fair value of consideration given in exchange for assets.Comparative information is reclassified where appropriate to enhance comparability.The financial statements are presented in Australian Dollars,which is the Groups functional currency.Compliance with Inter
329、national Financial Reporting Standards The financial statements of the Group also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.Going Concern-Net working capital deficiency As at 30 June 2024,the Group is in net current liability po
330、sition of$9.0 million.The deficiency is due to working capital management within the Group,and the difference in the timing of drawdowns from the Groups debt facilities and the timing of expenditure.As at 30 June 2024,the Group has$123 million of unused debt facility which can be drawn to fund cashf
331、low requirements.After taking into account all available information,the directors of the Group have concluded that there are reasonable grounds to believe:The Group will be able to pay its debts as and when they fall due;and The basis of preparation of the financial report on a going concern basis
332、is appropriate.(b)New and amended standards adopted by the GroupThere are no standards,interpretations or amendments to existing standards that are effective for the first time for the financial year beginning 1 July 2023 that have a material impact on the amounts recognised in prior periods or will
333、 affect the current or future periods.(c)New accounting standards and interpretations not yet adoptedThere are no standards that are not yet effective and that are expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions.(d)Critical accounting estimates and judgementsThe Group makes estimates and judgements that affect the re
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