ASX REITs are often overlooked during earnings season, but their place in many investors' portfolios is unquestionable.
Two names that reported today are Centuria Office REIT (ASX: COF) and Arena REIT (ASX: ARF), and based on the share price movement today – the market has spoken.
Centuria trades more than 3% lower on the day, fetching $1.20 per share at the time of writing.
Meanwhile, Arena is 3% in the green, swapping hands at $4.03 apiece.
Let's take a look.
One ASX REIT down…
First of the ASX REITs is Centuria, the office REIT. It reported mixed results for FY24. Centuria delivered funds from operations (FFO) of $82.2 million, equating to 13.8 cents per unit.
This was in line with its guidance. Distributions also met expectations at 12 cents per security.
Despite these steady numbers, the REIT's net tangible assets (NTA) stood at $1.80 per unit, down from $2.20 per unit last year.
Meanwhile, its weighted average debt expiry (WADE) expanded to 4.1 years, providing it with some financial breathing room. It now has no debt expiring until FY28.
COF Fund Manager Belinda Cheung highlighted the efforts to strengthen the balance sheet through asset divestments and refinancing but acknowledged the tough macroeconomic environment.
During the period, COF continued to execute significant leasing activity and capital management, against a backdrop of challenging macroeconomic headwinds including a high inflationary and interest rate environment coupled with slow GDP growth.
Centuria's inhouse management team remained focused on addressing vacancies and near-term expiries to provide reliable income streams for the benefit of unitholders.
Looking ahead, the ASX REIT has set its FY25 FFO guidance at 11.8 cents per unit. This equates to a distribution yield of around 7% at the time of writing.
…One ASX REIT up
In contrast, Arena REIT, which focuses on healthcare and education properties, reported a stronger set of results. This likely explains why its share price is drifting higher post-announcement.
Arena's net operating profit rose by 4.7% to $62 million, driven by income growth from rent reviews and completed development projects.
This translated to earnings per security (EPS) of 17.65 cents, up 3.2% on FY23.
The ASX REIT also announced a distribution per security (DPS) of 17.4 cents for the full year, a 3.6% increase from the previous year.
Meanwhile, management reaffirmed its FY25 distribution guidance of 18.25 cents per security, targeting year on year growth of 4.9%.
Despite a statutory net profit decline of 22.5% due to lower revaluation gains on some of its properties, Arena's total assets grew by 3% to $1.62 billion.
CEO Rob de Vos highlighted these points in his comments:
Strong macroeconomic drivers continue to support growth in the demand for essential community services across Australia.
These themes, combined with Arena's 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.
Takeout
While Centuria Office REIT faced headwinds in a challenging environment, Arena REIT managed to post steady growth. This shows how ASX REITs can post differing opportunities despite being in the same sector of real estate.
Arena is up 9% this past year, while Centuria is down more than 15%.
