ARENA REIT. — AGM Information 2020

Nov 18, 2020

A R E N A R E I T

Annual General Meeting 19 November 2020

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ARENA DIRECTORS

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From left: Gareth Winter, David Ross, Rob de Vos, Rosemary Hartnett, Dennis Wildenburg, Simon Parsons.

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AGENDA

Instructions for Virtual Meeting 3 Chair’s address 5 Managing Director’s report 8 Questions 14 Formal Business 15 Meeting Close 25 Important Notice 26

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• ASKING QUESTIONS VIRTUALLY VIA LUMI • When the Question function is available, the Q&A icon will appear at the top of the app.

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• To send in a question, simply click in the ‘Ask a question’ box, type your question and the press the send arrow.

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• Your question will be sent immediately for review.

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• VOTING VIRTUALLY VIA LUMI

• When the poll is open, the vote will be accessible by selecting the voting icon at the top of the screen.

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• To vote simply select the direction in which you would like to cast your vote, the selected option will change colour.

• There is no submit or send button, your selection is automatically recorded.

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CHAIR’S ADDRESS David Ross Chair

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FY20 HIGHLIGHTS Result demonstrates portfolio resilience in a challenging environment

• 5% growth in EPS[1] driven by contracted rental growth, acquisitions and development completions.

• Decisive response to the impacts of COVID-19, including working with tenant partners to finalise all rent relief agreements where justified.

• Long WALE maintained at 14 years.

• Acquisition of three ELC properties and one healthcare property, divestment of five ELC properties.

• Three development projects delivered, acquisition of 17 new projects[2] taking development pipeline to 20 projects[2] with forecast total cost of $112 million with $57 million capital expenditure outstanding.

• 6% growth in NAV highlights resilience of ELC portfolio valuations.

• Debt maturity extended and capacity increased.

• Completed $60 million institutional placement and post balance date $25 million Security Purchase Plan (SPP).

• Commenced renewable energy program.

• EPS is calculated as net operating profit over weighted average number of securities on issue.

• Includes four projects that have not yet settled; including one subject to an unconditional contract and three which are awaiting satisfaction of subdivision or planning approval.

• Includes SPP securities which were issued on 1 July 2020 while settlement proceeds were received on 30 June 2020. 4. Includes ten FY19 uncapped market rent reviews which were resolved during FY20, excludes 26 unresolved FY20 market rent reviews which are all subject to a 0% collar and 7.5% cap.

• Gearing calculated as ratio of net borrowing over total assets less cash.

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14.55 cents
Earnings per security
(EPS) [1 ]
+5% on FY19
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$76.6 million
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Statutory net
profit
+29% on FY19
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$2.22

14.0 cents

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Distributions per
security (DPS)
+4% on FY19
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Distributions per Net Asset Value
security (DPS) (NAV) [3 ]
+4% on FY19 +6% on FY19
+3.4% 14.8%
Average like-for-like
Gearing ratio [5 ]
rent increase [4 ]
-730bps on FY19
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• DELIVERING ON INVESTMENT OBJECTIVE Earnings and distributions per security (cents)

To generate attractive and predictable distributions to investors with earnings growth prospects over the medium to long term.

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14.4-14.6 [1 ]
14.6
15
14.0
13.8
13.5
13.1
12.8
12.3
12.0
11.1
10.9
10.2
10.0
10
8.8 8.9
5
0
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
- - -
DPS (cents) EPS (cents) DPS Guidance (cents)
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• FY21 DPS guidance of 14.4-14.6 CPS +3-4% on FY20[1. ]

• Earnings and distribution growth underpinned by core earnings drivers.

• FY21 distribution guidance is estimated on a status quo basis assuming no new acquisitions or disposals, all developments in progress are completed in line with forecast assumptions, tenants comply with their existing or adjusted lease obligations and is based on Arena’s current assessment of the future impact of COVID-19 pandemic (which is subject to a wide range of uncertainties) and assumes ongoing government support of the early learning sector.

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MANAGING DIRECTOR’S REPORT

Rob de Vos Managing Director

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COVID-19 UPDATE

Decisive response, uncertainties remain

Impact

• All of Arena’s properties remain open and in operation.

• Lockdowns in response to COVID-19 significantly impacted ELC attendances however there has been a strong rebound post easing of lockdown restrictions.

• Strong Government response to COVID-19 via the Early Childhood Education and Care Relief Package, JobKeeper package, ELC transition payment and top-ups .

• for lockdown affected areas, Recovery Package, relaxation of the activity test, waiver of gap fees and additional absence days for COVID-19 related reasons[1]

• Medical centre visitation, imaging and pathology services reduced up to May 2020 but have improved in-line with the broader economy opening up.

• SDA portfolio unaffected outside the introduction of increased sanitation, resident security and well-being programs.

• Progress on ELC development program largely unaffected to date.

Arena’s response

• Implemented measures to support the safety and wellbeing of the Arena team.

• Increased engagement with tenant partners and Arena’s stakeholders.

• Capital management initiatives undertaken to provide capacity to pursue future social infrastructure property investments consistent with strategy while also improving liquidity and reducing gearing.

• .

• All rent relief agreements with our tenant partners reached where justified[2]

• Impact of COVID-19 on property income for the period 1 July 2019 to 30 June 2020

• 96% of contracted rent receipted;

• 3.5% of contracted rent deferred, of which 71% is scheduled to be received in FY21, all tenants partners are currently compliant with rent relief agreements; and

• • 0.5% of contracted rent has been abated.

• 1. https://www.dese.gov.au/covid 19/childcare/; https://ministers.dese.gov.au/

• Including under the National Cabinet Mandatory Code of Conduct whereby landlords are obliged to provide eligible tenants rental relief in proportion to the reduction in trade resulting from COVID-19. A R E N A R E I T 2 0 2 0 A N N U A L G E N E R A L M E E T I N G

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• DELIVERING ON STRATEGY

• Consistent approach delivering positive portfolio and capital management outcomes

Lease management:

• 100% occupancy.

• Average FY20 like-for-like rent increase of +3.4%[1] .

• Investment and developments: • Four operating properties acquired at SOCIAL

• a net initial yield of 6.3% with initial weighted average lease expiry of 16 INFRASTRUCTURE years. PROPERTY

• Three ELC developments completed at a net initial yield on cost of 6.7% with initial weighted average lease expiry of 22 years.

• • 17 new ELC development projects acquired with forecast total cost of $83 million[2] .

• Working in partnership: • Commenced renewable energy program.

• Completed rejuvenation of existing ELCs in partnership with four tenant groups.

• All rent relief agreements reached to . date where justified[3]

Portfolio management:

• Portfolio weighted average lease expiry (by income) maintained at 14 years.

• • Five ELC properties sold at average premium of 11.6% to book value.

• • Net valuation uplift of $36.9 million.

• • Portfolio weighted average passing yield 6.22%.

• Includes ten FY19 uncapped market rent reviews which were resolved during FY20, excludes 26 unresolved FY20 market rent reviews which are all subject to a 0% collar and 7.5% cap.

• Includes four projects that have not yet settled; including one subject to an unconditional contract and three which are awaiting satisfaction of subdivision or planning approval.

• Under the National Cabinet Mandatory Code of Conduct landlords are obliged to provide eligible tenants rental relief in proportion to the reduction in trade resulting from COVID-19.

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• CONTRIBUTORS TO EPS GROWTH Rental growth and development completions supporting EPS growth

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16
0.65 - 0.15 - 0.20
-0.10 14.55
0.55
13.8
14
12
10
8
6
FY19 EPS Contracted like-for-like Completed Net operating expenses Funding mix - equity Rent abatement FY20 EPS
rental income growth developments, and other income
acquisitions and
disposals
cents per share
1
EPS
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1. EPS is calculated as net operating profit over weighted average number of securities on issue.

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||||||||
|---|---|---|---|---|---|---|
|PORTFOLIO OVERVIEW|
|Number of|30 June 2020|Net valuation movement|30 June 2020|Change versus|
|assets|[1 ]|valuation|versus 30 June 2019|assin|ield|30 June 2019|
|p|g|y|
|$m|$m|%|%|bps|
|ELC portfolio|228|777.4|+34.7|+5.1%|6.24%|(21)|
|Healthcare portfolio|11|136.6|+2.2|+1.8%|6.12%|4|
|Total portfolio|239|914.0|+36.9|+4.6%|6.22%|(16)|
|Sector diversity (by value)|Geographic diversity (descending by value)|Tenant diversity (descending by income)|
|1%|
|15%|QLD|6%|[3% ]|Goodstart|16%|
|Green Leaves|
|9%|
|VIC|
|33%|Healius|
|3%|
|NSW|Affinity|
|3%|
|ELC|
|G8 Education|
|Healthcare|WA|4%|
|Petit|
|5%|
|SA|
|22%|Oxanda|
|Edge|
|TAS|
|6%|
|SACare|
|NT|
|Other|
|8%|
|85%|
|27%|

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Goodstart
16%
Green Leaves
30%
Healius
3%
Affinity
3%
G8 Education
4%
Petit
5%
Oxanda
Edge
6%
SACare
14%
Other
8%
11%
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1. Includes one project which is subject to an unconditional contract and excludes three projects which are awaiting satisfaction of subdivision or planning approval. 2. Totals may not add due to rounding.

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OUTLOOK Well positioned despite ongoing uncertainty

INCOME GROWTH

• FY21 distribution guidance of 14.4-14.6 cents per security, an increase of 3-4%[1] on FY20.

• Annual rent increases, including market rent reviews:

• Approximately 8% of FY20 income unresolved; and

• Approximately 9% of FY21 income.

• Full impact of FY20 acquisitions and development completions.

• $112 million development pipeline comprising 20 ELC projects[2]

OUTLOOK

• Early learning and healthcare are integral to economic recovery.

• Gearing[3] reduced to 14.8%, no debt expiry falling due until March 2023.

• Proven ability to secure and execute on high quality opportunities while maintaining a disciplined investment process for opportunities that meet Arena’s preferred property characteristics.

• FY21 distribution guidance is estimated on a status quo basis assuming no new acquisitions or disposals, all developments in progress are completed in line with forecast assumptions, tenants comply with their existing or adjusted lease obligations and is based on Arena’s current assessment of the future impact of COVID-19 pandemic (which is subject to a wide range of uncertainties) and assumes ongoing government support of the early learning sector.

Investment objective: To deliver an attractive and predictable distribution to investors with earnings growth prospects over the medium to long term.

1. Includes four projects that have not yet settled; including one subject to an unconditional contract and three which are awaiting satisfaction of subdivision or planning approval.

2. Gearing calculated as ratio of net borrowing over total assets less cash.

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QUESTIONS

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FORMAL BUSINESS

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ORDINARY BUSINESS

Financial Reports

To receive and consider, the Financial report, the Directors’ Report and the Auditor’s Report, each for the financial year ended 30 June 2020.

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ORDINARY BUSINESS Resolution 1: Non-binding advisory vote on the Remuneration Report To consider and, if thought fit, to pass the following as an advisory resolution of the Company: ‘That the Remuneration Report for the financial year ended 30 June 2020 be adopted.’

Proxyvotingresults	For	Open	Against	Abstain
Proxyvotes for Resolution 1(%)	83.05%	0.52%	16.43%
Proxyvotes for Resolution 1(quantity)	173,399,713	1,077,071	34,305,207	1,848,729

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OTHER BUSINESS Resolution 2: Election of Mr David Ross as a director of the Company

To consider and, if thought fit, to pass the following as an ordinary resolution of the Company:

• ‘That Mr David Ross who retires by rotation in accordance with ASX Listing Rules 14.4 and 14.5 and, being

• eligible, offers himself for re-election, be re-elected as a director of the Company.’

Proxyvotingresults	For	Open	Against	Abstain
Proxyvotes for Resolution 2(%)	97.26%	0.64%	2.10%
Proxyvotes for Resolution 2(quantity)	204,831,111	1,356,488	4,426,034	1,923,774

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OTHER BUSINESS

Resolution 3: Ratification of Placement

To consider and, if thought fit, to pass the following as separate ordinary resolutions of the Company and each of the Trusts:

• ‘That for the purposes of ASX Listing Rule 7.4 and for all other purposes, the previous issue of 26,315,790

• Securities at an issue price of $2.28 per Security, under a placement to institutional investors as detailed in the Explanatory Memorandum (Placement) be ratified.’

Proxyvotingresults	For	Open	Against	Abstain
Proxyvotes for Resolution 3(%)	99.21%	0.66%	0.13%
Proxyvotes for Resolution 3(quantity)	164,415,562	1,101,389	214,610	44,034,206

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OTHER BUSINESS Resolution 4: Grant of deferred STI rights to Mr Rob de Vos

To consider and, if thought fit, to pass the following as separate ordinary resolutions of the Company and each of the Trusts:

• ‘That for the purposes of ASX Listing Rule 10.14 and for all other purposes, the grant to the Managing

• Director, Mr Rob de Vos, of rights as his deferred short term incentive under the Arena REIT Deferred Short Term and Long Term Incentive Plan on the terms set out in the Explanatory Memorandum to this Notice of Meeting, is approved.’

Proxyvotingresults	For	Open	Against	Abstain
Proxyvotes for Resolution 4(%)	99.03%	0.66%	0.31%
Proxyvotes for Resolution 4(quantity)	205,455,514	1,374,593	651,406	4,479,352

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OTHER BUSINESS Resolution 5: Grant of LTI performance rights to Mr Rob de Vos

To consider and, if thought fit, to pass the following as separate ordinary resolutions of the Company and each of the Trusts:

• ‘That for the purposes of ASX Listing Rule 10.14 and for all other purposes, the grant to the Managing

• Director, Mr Rob de Vos, of performance rights as his long term incentive under the Arena REIT Deferred Short Term and Long Term Incentive Plan on the terms set out in the Explanatory Memorandum to this Notice of Meeting, is approved.’

Proxyvotingresults	For	Open	Against	Abstain
Proxyvotes for Resolution 5(%)	97.51%	0.66%	1.83%
Proxyvotes for Resolution 5(quantity)	204,281,195	1,373,733	3,830,944	2,474,993

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OTHER BUSINESS Resolution 6: Grant of deferred STI rights to Mr Gareth Winter

To consider and, if thought fit, to pass the following as separate ordinary resolutions of the Company and each of the Trusts:

• ‘That for the purposes of ASX Listing Rule 10.14 and for all other purposes, the grant to the chief financial

• officer and an executive director of the Responsible Entity, Mr Gareth Winter, of rights as his deferred short term incentive under the Arena REIT Deferred Short Term and Long Term Incentive Plan on the terms set out in the Explanatory Memorandum to this Notice of Meeting, is approved.’

Proxyvotingresults	For	Open	Against	Abstain
Proxyvotes for Resolution 6(%)	99.03%	0.66%	0.31%
Proxyvotes for Resolution 6(quantity)	205,456,374	1,373,733	651,406	4,479,352

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OTHER BUSINESS Resolution 7: Grant of LTI performance rights to Mr Gareth Winter

To consider and, if thought fit, to pass the following as separate ordinary resolutions of the Company and each of the Trusts:

• ‘That for the purposes of ASX Listing Rule 10.14 and for all other purposes, the grant to the chief financial

• officer and an executive director of the Responsible Entity, Mr Gareth Winter, of performance rights as his long term incentive under the Arena REIT Deferred Short Term and Long Term Incentive Plan on the terms set out in the Explanatory Memorandum to this Notice of Meeting, is approved.’

Proxyvotingresults	For	Open	Against	Abstain
Proxyvotes for Resolution 7(%)	97.51%	0.66%	1.83%
Proxyvotes for Resolution 7(quantity)	204,280,335	1,373,733	3,831,804	2,474,993

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OTHER BUSINESS

Resolution 8: Amendment of Constitutions

To consider and, if thought fit, to pass the following as separate special resolutions of the Company and each of the Trusts:

• ‘That, in accordance with sections 136 and 601GC of the Corporations Act 2001 (Cth), each

• Constitution be amended, in the manner set out in the Explanatory Memorandum, with effect from the time that such amendments are lodged with the Australian Investments and Securities Commission.’

Proxyvotingresults	For	Open	Against	Abstain
Proxyvotes for Resolution 8(%)	69.73%	0.67%	29.60%
Proxyvotes for Resolution 8(quantity)	147,482,151	1,410,796	62,590,145	1,054,315

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MEETING CLOSE

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IMPORTANT NOTICE

This presentation 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 ) and is authorised to be given to the ASX by Gareth Winter, Company Secretary. The information contained in this document is current only as at 30 June 2020 or as otherwise stated herein. This document is for information purposes only and only intended for the audience to whom it is presented. This document contains selected information and should be read in conjunction with the Annual Report for the full-year ended 30 June 2020 lodged with the ASX on 29 September 2020 and other ASX announcements released from time to time. This document may not be reproduced or distributed without Arena’s prior written consent. The information contained in this document is not investment or financial product advice and is not intended to 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 necessary obtain professional advice in relation to, this document.

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 and conclusions, or as to the reasonableness of any assumption, contained in this document. By receiving this document 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, 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 document.

This document contains certain forward-looking statements along with certain forecast financial information. The words “anticipate”, “believe”, “expect”, “project”, “forecast”, “guidance”, “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 document and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of Arena and its directors. Such statements reflect the current expectations of Arena concerning future results and events, and are not guarantees of future performance. Actual results or outcomes for Arena may differ materially from the anticipated results, performance or achievements expressed, projected or implied by these forward-looking statements or forecasts. Other than as required by law, although they believe that 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 (express or implied) that the occurrence of these events, or the results, performance or achievements expressed in or implied by any forward-looking statements in this announcement will actually occur and you are cautioned not to place undue reliance on such forward-looking statements. Risk factors (which could be unknown or unpredictable or result from a variation in the assumptions underlying the forecasts) could cause actual results to differ materially from those expressed, implied or projected in any forward-looking statements or forecast. Past performance is not an indicator or guarantee of future performance or results.

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