ARENA REIT. — Capital/Financing Update 2017

Jul 27, 2017

28 JULY 2017

ELC PORTFOLIO ACQUISITION, EQUITY RAISING AND FY18 DPS GUIDANCE

Arena REIT Group (Arena) announces the acquisition of a portfolio of nine Early Learning Centre (ELC) properties under development for a total cost of $65 million.[1]

The acquisition will be partially funded via a fully underwritten institutional placement of $55 million. Arena will also offer a non-underwritten security purchase plan to raise up to a further $5 million, with the capacity to accept a further $5 million in oversubscriptions. The balance of the acquisition will be funded with cash and existing debt facilities.

Arena has also announced FY18 distribution guidance of 12.8 cents per security[2] , an increase of 6.7% over the prior year. Based on the institutional placement issue price of $2.03 per security and the FY18 distribution guidance, the forecast FY18 distribution yield is 6.3%.

PORTFOLIO ACQUISITION

Arena has entered into contracts[3] to acquire a portfolio of nine ELC properties under development for a fixed total cost of $65 million. The properties are expected to be completed on a progressive basis over the next 12 months and are being acquired on a fund through basis[4] , with Arena earning a net yield on total cost of 6.25%.

At settlement, Arena will pay an initial $27.6 million, followed by further payments as projects progress to completion. Four of the projects are expected to complete in 1HFY18, with the remaining five projects due for completion in 2HFY18.

The new portfolio has been independently valued (on completion) at $66.8 million, reflecting a weighted average passing yield of 6.0%.The property purchase price represents a 5.2% discount to independent valuation (on completion), improves Arena’s WALE to 13.5 years[5] , further diversifies the tenant mix and enhances the rent review profile.

Commenting on the acquisition, Arena’s Managing Director, Mr Bryce Mitchelson said “The acquisition improves the quality of Arena’s portfolio, is accretive to earnings and is at a discount to independent valuation. The fund through acquisition structure also provides an attractive return profile from commencement, and the fixed development cost reduces Arena’s risk profile through the development process.”

1 Total cost includes property purchase price and project costs of $63.3 million plus stamp duty and associated transaction costs.

2 FY18 DPS guidance includes the acquisition and institutional placement and assumes development projects are completed in line with forecast assumptions and tenants comply with their lease obligations.

3 The acquisition is conditional upon completion of the equity raising.

4 A fund through acquisition involves the acquisition of land and progressive payment of development costs. 5 As at 30 June 2017 plus acquisition portfolio on completion.

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) Level 5, 41 Exhibition Street Locked Bag 32002 Collins Street East Melbourne VIC 3000 Melbourne VIC 8003 www.arena.com.au info@arena.com.au

Locked Bag 32002 Collins Street East T +61 3 9093 9000 Melbourne VIC 8003 Freecall 1800 008 494 info@arena.com.au F +61 3 9093 9093

Arena REIT (ASX:ARF) ASX Announcement 28 July 2017

On completion, each property will be leased to Green Leaves Early Learning Centres (Green Leaves), an existing tenant in the Arena portfolio. Each lease is for a 20 year initial term, has a triple net structure, and includes annual rent reviews at a minimum of 3% per annum, with a market rent review at each 10 year anniversary.

Arena’s Head of Property, Mr Rob de Vos added “We are very pleased to be expanding our relationship with Green Leaves and at the same time enhancing the quality of our ELC portfolio. The properties are well located in catchments with favourable demographic profiles and forecast population growth, and have been designed to maximise tenant operational efficiency.”

EQUITY RAISING[6]

Arena will undertake an equity raising to fund the acquisition and provide further balance sheet capacity to fund future opportunities. The equity raising will comprise:

• a fully underwritten $55 million institutional placement; and

• a non-underwritten Security Purchase Plan to eligible Australian and New Zealand investors to raise up to $5 million, with the capacity to accept a further $5 million in oversubscriptions.

Institutional placement

The institutional placement will be conducted at an issue price of $2.03 per security. The issue price reflects a 2.9% discount to the closing price of $2.09 per security on 27 July 2017, and a 3.6% discount to the 5-day Volume Weighted Average Price (VWAP) to 27 July 2017 of $2.105 per security.

Securities issued via the institutional placement will rank equally with existing securities from the date of issue.

Security Purchase Plan (SPP)

The SPP will offer eligible Australian and New Zealand securityholders the opportunity to participate via the acquisition of up to $15,000 in new securities. The SPP will not be underwritten and will raise up to $5 million, with the capacity to accept a further $5 million in oversubscriptions. The issue price for securities issued under the SPP will be the same as the issue price of new securities under the institutional placement of $2.03 per security. No brokerage or transaction costs are payable for securities issued under the SPP, and securities issued via the SPP will rank equally with existing securities from the date of issue.

Full details of the SPP are contained in the SPP Booklet which is expected to be lodged with the ASX on Monday 7 August 2017.

6 The maximum number of fully paid ordinary stapled securities to be issued under the institutional placement and SPP is 32 million. Arena is not required to obtain securityholder approval for the equity raising.

Page 2

Arena REIT (ASX:ARF) ASX Announcement 28 July 2017

UNAUDITED FY17 FINANCIAL RESULTS

Arena has today announced unaudited FY17 financial results to provide investors with information to assist in evaluating the offer. Key metrics are as follows:

For the year ended 30 June 2017:

• Statutory net profit of $96.8 million (+33% on FY16)

• Net operating profit of $28.7 million (+12% on FY16)

• Distributable income (Earnings) per security (EPS) of 12.3 cents (+11% on FY16)

• Distribution per security (DPS) of 12.0 cents (+10% on FY16)

As at 30 June 2017:

• Total assets of $621.3 million (+21% on 30 June 2016)

• Gearing of 27.5% (+70bps on 30 June 2016)

• Net Asset Value (NAV) of $1.84 per security (+19% on 30 June 2016)

Further details in relation to the 2017 financial results are appended to the presentation attached to this announcement. Arena is scheduled to release its audited FY2017 annual financial report to the ASX on Thursday 24 August 2017.

FORECAST FINANCIAL IMPACT OF THE ACQUISITION AND EQUITY RAISING

• FY18 EPS impact – the transaction is expected to be neutral to EPS in FY18 (due to the timing of the equity raising and development cashflows throughout FY18), and accretive to EPS in FY19[7]

• Pro forma gearing – post the initial acquisition payment and institutional placement, pro forma gearing will decrease to 23.5%. Post completion of all developments, pro forma gearing is 26.4%

• Net Asset Value (NAV) per security – an increase in pro-forma Net Asset Value (NAV) per security from $1.84 at 30 June 2017 to $1.86.

Commenting on the financial impact of the transaction, Mr Mitchelson said “Funding the portfolio acquisition via an equity raising strengthens Arena’s balance sheet and provides additional capacity to fund new growth opportunities.”

FY18 DPS GUIDANCE

Arena has announced FY18 distribution guidance of 12.8 cents per security, an increase of 6.7% over the prior year.[8] Following this announcement, the five year compound average growth in distributions per security to June 2018 is forecast at 9.3% per annum.

7 EPS forecast impact includes the acquisition and institutional placement and assumes development projects are completed in line with forecast assumptions and tenants comply with their lease obligations. Any securities issued under the non-underwritten SPP have not been included in the calculation.

8 FY18 DPS guidance includes the acquisition and institutional placement and assumes development projects are completed in line with forecast assumptions and tenants comply with their lease obligations.

Page 3

Arena REIT (ASX:ARF) ASX Announcement 28 July 2017

INDICATIVE TRANSACTION TIMETABLE

The outcome of the institutional placement is expected to be announced to the market before commencement of normal trading on Monday 31 July 2017. Pending this announcement, Arena securities have been placed in a trading halt. Trading in Arena securities is expected to resume on Monday 31 July 2017.

on Monday 31 July 2017.
Institutional Placement
Tradinghalt	Friday28 July2017
Institutionalplacement opens	Friday28 July2017
Institutionalplacement closes	Friday28 July2017
Tradingin Arena REIT securities resumes	Monday31 July2017
Settlement of institutionalplacement securities	Wednesday2 August 2017
Allotment and tradingof institutionalplacement securities	Thursday3 August 2017
Propertyacquisition
Proposedpropertysettlement	Friday4 August 2017
SecurityPurchase Plan
Record date for SPP	Thursday27 July2017
SPP offer period	Monday 7 August – Monday 28 August 2017
Allotment and tradingof SPP securities	Tuesday5 September 2017

IMPORTANT INFORMATION

For further information, see attached the investor presentation which includes further details about the portfolio acquisition and equity raising, including an overview of the key risks.

– ENDS –

For further information, please contact: Bryce Mitchelson Susie McPherson Managing Director Head of Investor Relations and Marketing +61 3 9093 9000 +61 3 9093 9000 bryce.mitchelson@arena.com.au susie.mcpherson@arena.com.au

About Arena REIT

Arena REIT is an ASX300 listed property group that owns, manages and develops specialised real estate assets across Australia. Our current portfolio of social infrastructure assets is leased to a diversified tenant base in the growing early learning and healthcare sectors. To find out more, visit www.arena.com.au

Page 4

Arena REIT (ASX:ARF) ASX Announcement 28 July 2017

DISCLAIMER

This document has been prepared by Arena REIT (“Arena REIT”) 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 information contained in this document is current only as at the date of this document or as otherwise stated herein. This document may not be reproduced or distributed without Arena REIT’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 REIT 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. 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 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 REIT 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 is for information purposes only and should not be considered as a solicitation, offer 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 document contains forward-looking statements including certain forecast financial information. The words “anticipate”, “believe”, “expect”, “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 announcement and involve known and unknown risks, uncertainties, assumptions and other factors, many of which are beyond the control of Arena REIT 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-looking statements. Other than as required by law, although they believe there is a reasonable basis for the forward-looking statements, neither Arena REIT nor any other person (including any director, officer, or employee of Arena REIT or any related body corporate) gives any representation, assurance or guarantee (express 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 forwardlooking statement.

Page 5

==> picture [87 x 109] intentionally omitted <==

Acquisition and equity raising Acquisition of ELC portfolio for a total cost of $65 million 28 July 2017

==> picture [53 x 66] intentionally omitted <==

Arena REIT / Acquisition and equity raising / www.arena.com.au

Important notice and disclaimer

This investor presentation (“Presentation”) has been prepared by Arena REIT (“Arena REIT”) 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 dated 28 July 2017.

Arena REIT has stapled securities on issue, each stapled security comprising one unit in Arena REIT No. 1 (ARSN 106 891 641), one unit in Arena REIT No. 2 (ARSN 101 067 878) and one share in Arena REIT Limited (ACN 602 365 186) ("Stapled Securities"). The Stapled Securities are quoted on the ASX (ASX:ARF). This Presentation has been prepared in relation to an institutional placement ("Offer") of new Stapled Securities ("New Stapled Securities"). The Offer is fully underwritten by Morgan Stanley Australia Securities Limited (ABN 55 078 652 276) ("Lead Manager").

The Offer is only available in Australia to certain persons who are professional investors under section 708 of the Corporations Act 2001 (Cth) ("Corporations Act") or wholesale clients under section 761G of the Corporations Act to whom a disclosure document is not required to be given under Chapter 6D of the Corporations Act. Determination of eligibility of investors for the purposes of the offer is determined by reference to a number of matters, including legal requirements and the discretion of Arena REIT and the Lead Manager. Arena REIT and the Lead Manager disclaim any liability in respect of the exercise or otherwise of that discretion to the maximum extent permitted by law.

This Presentation is not a prospectus, product disclosure statement or other offering document under Australian law, including the Corporations Act 2001 (Cwlth) (“Corporations Act”) or any other law. The Presentation has not been, nor will it be, lodged with the Australian Securities and Investments Commission.

By accepting, assessing or reviewing this Presentation, or attending any associated presentation or briefing, you agree to be bound by the following conditions.

Summary information

This Presentation contains summary information about the current activities of Arena REIT and the entities within the Arena REIT stapled group as at the date of this Presentation. The information in this Presentation is of a general nature and is not intended to be used as the basis for making an investment decision. This Presentation does not purport to be complete nor does it contain all the information which a prospective investor may require in evaluating a possible investment in Arena REIT or that would be required in a prospectus or product disclosure statement prepared in accordance with the requirements of the Corporations Act.

Summary information (continued)

The historical information in this Presentation is, or is based upon, information that has been released to the Australian Securities Exchange (“ASX”). This Presentation should be read in conjunction with Arena REIT’s other periodic and continuous disclosure announcements lodged with the ASX, which are available at www.asx.com.au.

No member of Arena REIT or any of its related bodies corporate and their respective directors, employees, officers and advisers offer any warranties in relation to the statements and information in this Presentation.

Statements made in this Presentation are made only as of the date of this Presentation. The information in this Presentation remains subject to change without notice and Arena REIT reserves the right to withdraw or vary the timetable without notice.

The distribution of this Presentation outside Australia and New Zealand may be restricted by law. Persons who come into possession of information in this Presentation who are not in Australia or New Zealand should seek independent advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

Not an offer

This Presentation is for information purposes only and should not be considered as a solicitation, offer or invitation for subscription, purchase or sale of New Stapled Securities in any jurisdiction, or to any person to whom it would not be lawful to make such an offer or invitation. No action has been taken to register the New Stapled Securities or otherwise permit a public offering of the New Stapled Securities .

In particular, this Presentation has been prepared for publication in Australia and may not be released in the United States. This announcement does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or any other jurisdiction. Any securities described in this Presentation have not been, and will not be, registered under the US Securities Act of 1933 and may not be offered or sold in the United States except in transactions exempt from, or not subject to, registration under the US Securities Act and applicable US state securities laws.

This document may not be distributed to any person, and the Securities may not be offered or sold, in any other country outside Australia except to the extent permitted under the section captioned “International Offer restrictions”.

==> picture [53 x 66] intentionally omitted <==

Arena REIT / Acquisition and equity raising / www.arena.com.au

Important notice and disclaimer (continued)

Not advice

Nothing in this Presentation constitutes financial product, investment, legal, tax or other advice. This Presentation has been prepared without taking account of any person’s individual investment objectives, financial situation or particular needs. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own investment objectives, financial situation and needs and seek legal, accounting, taxation and any other advice appropriate to their jurisdiction. Cooling off rights do not apply to the acquisition of New Stapled Securities.

Risk

An investment in Arena REIT is subject to investment and other known and unknown risks, some of which are beyond the control of Arena REIT. Arena REIT does not guarantee any particular rate of return or the performance of Arena REIT or the Stapled Securities (including the New Stapled Securities), nor does it guarantee the repayment of capital from Arena REIT or any particular tax treatment. Some of these risks are set out in the section captioned “Key Risks”.

Financial data

All references to dollars and cents are in reference to Australian dollars unless otherwise stated and all financial data is presented as at the date of this Presentation unless otherwise stated.

Future performance

This Presentation contains certain “forward looking statements”. Forward looking statements can generally be identified by the use of forward looking words such as “expect”, “anticipate”, “likely”, “intend”, “should”, “could”, “may”, “predict”, “plan”, “propose”, “will”, “believe”, “forecast”, “estimate”, “target”, “outlook”, “guidance”, “project”, “opinion” and other similar expressions within the meaning of securities laws of applicable jurisdictions and include, but are not limited to, the outcome and effects of the Offer and the use of proceeds. Indications of, and guidance on, future earnings and financial position and performance are also forward looking statements, and include statements in this Presentation regarding the conduct and outcome of the Offer, the use of proceeds, and Arena REIT’s outstanding debt. The forward looking statements contained in this Presentation are not guarantees or predictions of future performance and involve known and unknown risks (including the risks set out in the “Key Risks” section of this Presentation) and uncertainties and other factors, many of which are beyond the control of Arena REIT, and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct.

Future performance (continued)

You are cautioned not to place undue reliance on forward looking statements, opinions and estimates provided in this Presentation as there can be no assurance that actual outcomes will not differ materially from these express and implied forward-looking statements and the assumptions on which those statements are based.

Forward looking statements, opinions and estimates provided in this Presentation necessarily involve uncertainties, assumptions, contingencies and other factors, and unknown risks may arise.

Similarly, statements about market and industry trends, which are based on interpretations of current market conditions, should be treated with caution. Such statements may cause the actual results or performance of Arena REIT to be materially different from any future results or performance expressed or implied by such forward looking statements. Forward looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Such forward looking statements are based on information available to Arena REIT as at the date of this Presentation.

Except as required by law or regulation (including the ASX Listing Rules), Arena REIT undertakes no obligation to provide any additional, updated or supplementary information whether as a result of new information, future events or results, or otherwise.

Past performance

Investors should note that past performance, including past security price performance, of Arena REIT cannot be relied upon as an indicator of (and provides no guidance as to) future Arena REIT performance including future security price performance and is given for illustrative purposes only.

Stapled securities

Investors should note that ASX reserves the right (without limiting its absolute discretion) to remove Arena REIT Limited, Arena REIT No.1 and/or Arena REIT No.2 from the official list of ASX if any of the securities comprising the Stapled Securities cease to be stapled together, or any equity securities are issued by Arena REIT Limited, Arena REIT No.1 and/or Arena REIT No.2 which are not stapled to corresponding securities in the other entity.

==> picture [53 x 66] intentionally omitted <==

Arena REIT / Acquisition and equity raising / www.arena.com.au

Important notice and disclaimer (continued)

Disclaimer

No person other than Arena REIT has authorised, permitted or caused the issue, submission, dispatch or provision of this Presentation. To the maximum extent permitted by law, Arena REIT on its own behalf and on behalf of its advisers, affiliates, related bodies corporate, directors, officers, partners, employees and agents:

(i) excludes and disclaims all liability, for any expenses, losses, damages or costs incurred by you as a result of your participation in the offer and the information in this Presentation being inaccurate or incomplete in any way for any reason, whether by negligence or otherwise; and

Disclaimer (continued)

Arena REIT and its advisers, affiliates, related bodies corporate, directors, officers, partners, employees and agents do not make any recommendations as to whether you or your related parties should participate in the Offer nor do they make any representations or warranties to you concerning the Offer, and by receiving this Presentation you represent, warrant and agree that you have not relied on any statements made by any person in relation to the Offer.

(ii) makes no representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of information in this Presentation.

The Lead Manager, together with its related bodies corporate, shareholders or affiliates and each of their respective officers, directors, employees, affiliates, partners, associates, agents or advisers (together, the "Limited Parties") do not make or purport to make any representation or warranty, expressed or implied, as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this Presentation and there is no statement in this Presentation which is based on any statement by a Limited Party. None of the Limited Parties accepts any fiduciary obligations to or relationship with any investor or potential investor in connection with the Offer or otherwise. By accepting this Presentation each recipient expressly disclaims any fiduciary relationship and agrees that it is responsible for making its own independent judgements with respect to the Offer, and any other transaction or other matter arising in connection with this Presentation.

None of the Limited Parties accepts liability for any loss arising from the use of this Presentation or its contents or otherwise arising in connection with it, including, without limitation, any liability from fault or negligence, or liability for any direct, indirect, consequential or contingent loss or damage arising from the use of information contained in this Presentation or in relation to the accuracy or completeness of the information, statements, opinions or matters, express or implied, contained in, arising out of or derived from, or for omissions from, this Presentation including, without limitation, any financial information, any estimates or projections and any other financial information derived therefrom.

==> picture [53 x 66] intentionally omitted <==

Arena REIT / Acquisition and equity raising / www.arena.com.au

Agenda

Transaction overview	6
Property details and portfolio impact	10
Transaction funding	17
Financial impact	20
Summary and indicative timetable	22
Contact details	25
Appendices:	27
- Financial information	28
- Key risks	31
- International offer restrictions	34

==> picture [53 x 66] intentionally omitted <==

Arena REIT / Acquisition and equity raising / www.arena.com.au

==> picture [87 x 109] intentionally omitted <==

Transaction overview

==> picture [53 x 66] intentionally omitted <==

==> picture [319 x 11] intentionally omitted <==

----- Start of picture text -----

Arena REIT / Acquisition and equity raising / www.arena.com.au
----- End of picture text -----

Acquisition, equity raising and financial impact

• Arena has entered into contracts to acquire a portfolio of nine Early Learning Centre (ELC) properties under development for a total cost of $65.0 million[1 ]

Acquisition

• The properties have planning permits in place, are in various stages of development and are being acquired on a fund through basis[2 ] for an initial yield on total cost of 6.25%

• All properties will be leased to Green Leaves Early Learning Centres, an existing Arena tenant

• The acquisition is consistent with Arena’s preferred investment characteristics

• The portfolio comprises nine high quality, purpose built properties in well located catchments

Strategic rationale

• The properties will be 100% leased on completion on 20-year triple net leases with minimum 3% pa rental increases to a high performing operator

• The properties are being acquired at a 5.2% pricing discount to independent valuation (on completion)

• Improved Arena portfolio metrics – WALE increased to 13.5 years[3 ] and tenant diversification enhanced

• Equity raising to fund the acquisition and provide further balance sheet capacity: − A fully underwritten $55 million institutional placement

Equity raising

  - A non-underwritten Security Purchase Plan to eligible investors to raise up to $5 million, with the capacity to accept a further $5 million in oversubscriptions

• The balance of the acquisition will be funded with cash and existing debt facilities

• Transaction is expected to be neutral to EPS in FY18 (due to timing difference of the equity raising and development cashflows throughout FY18) and accretive to EPS in FY19

• Financial impact[[4 ]]

• Pro-forma 30 June 2017 gearing of 26.4% post completion[[4 ]] (vs 27.5% at 30 June 2017)

• An increase in pro-forma Net Asset Value (NAV) per security from $1.84 at 30 June 2017 to $1.86

1 Total cost includes property purchase price and project costs of $63.3 million plus stamp duty and associated transaction costs.

• 2 A fund through acquisition involves the acquisition of land and progressive payment of development costs.

==> picture [53 x 66] intentionally omitted <==

• 3 As at 30 June 2017 plus acquisition portfolio on completion.

• 4 EPS forecast impact includes the acquisition and institutional placement and assumes development projects are completed in line with forecast assumptions and tenants comply with their lease obligations. Any securities issued under the non-underwritten SPP have not been included in the calculation.

Arena REIT / Acquisition and equity raising / www.arena.com.au

FY17 financial results and FY18 DPS guidance

• For the year ended 30 June 2017: • Statutory net profit $96.8 million (+33% on FY16)

• • Net operating profit of $28.7 million (+12% on FY16)

• • Distributable income (Earnings) per security (EPS) of 12.30 cents (+11% on FY16)

• • Distribution per security (DPS) of 12.0 cents (+10% on FY16)

• Unaudited FY17 As at 30 June 2017: financial results • Total assets of $621.3 million (+21% on 30 June 2016) •

• summary Gearing of 27.5% (+70bps on 30 June 2016) • Net Asset Value (NAV) of $1.84 per security (+19% on 30 June 2016)

• Audited FY17 Financial Report:

• Arena is scheduled to release its audited FY2017 annual financial report to the ASX on Thursday 24 August 2017

• FY18 DPS guidance • FY18 DPS guidance of 12.8 cents[1] – an increase of 6.7% over FY17 DPS of 12.0 cents

==> picture [53 x 66] intentionally omitted <==

1 FY18 DPS guidance includes the acquisition and institutional placement and assumes development projects are completed in line with forecast assumptions and tenants comply with their lease obligations.

Arena REIT / Acquisition and equity raising / www.arena.com.au

Transaction details

Structure

• Acquisition of a portfolio of nine properties to be developed into ELCs, each subject to an interdependent Contract of Sale, and a Development Agreement and Agreement for Lease

Timing

• All of the properties will be settled simultaneously (estimated to be early August 2017), and are in different stages of development

• Four of the centres are expected to be completed in 1HFY18, whilst the remaining five are estimated to be completed in 2HFY18

• The development of each of the properties will be completed on a fund through basis[1 ] with Arena to earn the project yield on each dollar invested

Total cost 2

• Arena’s total cost has been fixed at $65.0 million[2 ] – comprising an initial payment of $27.6 million, followed by capex drawdowns as projects progress to completion

• The acquisition portfolio initial yield on total cost is 6.25%

Tenant

• Each property is subject to an agreement for lease with Green Leaves (an existing tenant of Arena) that provides, subject to completion of the development, the grant of a 20 year initial term on Arena’s standard triple net lease

Risk mitigation

• Development cost over-run or project delay – fixed cost development contract with any cost overrun or project delay to be borne by the developer

• Developer default – under development contract Arena has step-in rights on the building contract

• Builder default – the developer is obligated to appoint a new builder and complete the project

==> picture [53 x 66] intentionally omitted <==

• 1 A fund through acquisition involves the acquisition of land and progressive payment of development costs. 2 Total cost includes property purchase price and project costs of $63.3 million plus stamp duty and associated transaction costs.

Arena REIT / Acquisition and equity raising / www.arena.com.au

Property details and portfolio impact

==> picture [87 x 109] intentionally omitted <==

==> picture [53 x 66] intentionally omitted <==

==> picture [319 x 11] intentionally omitted <==

----- Start of picture text -----

Arena REIT / Acquisition and equity raising / www.arena.com.au
----- End of picture text -----

Portfolio consistent with Arena’s preferred investment characteristics

• Long lease terms – leased on completion on 20 year initial terms (plus 10 year option)

• Triple net lease structure – tenant pays all outgoings, including structural capex

• Attractive review profile – minimum 3% pa rental increase, market rent review every 10 years (0% collar; no cap)

==> picture [307 x 157] intentionally omitted <==

==> picture [279 x 156] intentionally omitted <==

Murrumba Downs, QLD – Artist’s impression

Bellerive, TAS – Artist’s impression

==> picture [53 x 66] intentionally omitted <==

Arena REIT / Acquisition and equity raising / www.arena.com.au

Portfolio acquired on attractive pricing

• Properties are being acquired at a 5.2% pricing discount to independent valuation (on completion) of $66.8 million, reflecting a weighted average passing yield of 6.0%

Property	No. of ELC places	Purchase cost **(excl. transaction costs1) **	Total cost **(incl. transaction costs1) **	Initial yield on total cost
Murrumba Downs, QLD	186	$9.5m	$9.8m	6.20%
Craigieburn, VIC	124	$6.8m	$7.1m	6.17%
Port Macquarie, NSW	140	$7.4m	$7.7m	6.18%
Bellerive, TAS	116	$6.2m	$6.4m	6.19%
Pelican Waters, QLD	128	$6.7m	$6.8m	6.32%
Cairnlea, VIC	116	$7.3m	$7.5m	6.27%
Mawson Lakes, SA	112	$6.4m	$6.5m	6.32%
Warner Lakes, QLD	128	$6.6m	$6.7m	6.33%
Cannon Hill, QLD	100	$6.4m	$6.5m	6.30%
Total	1,150	$63.3m	$65.0m	6.25%

==> picture [53 x 66] intentionally omitted <==

1 Transaction costs include stamp duty and associated transaction costs.

Arena REIT / Acquisition and equity raising / www.arena.com.au

Growing partnership with high performing tenant

Green Leaves Early Learning Centres (Green Leaves)

• Principals have over 30 years’ experience in early learning sector

• Five existing ELCs in Arena portfolio, and two under construction

• Arena and Green Leaves have successfully partnered on four ELC developments over the last three years:

• All operating profitably within first six months of operation[1 ]

==> picture [183 x 103] intentionally omitted <==

Green Leaves ELC, Seaford Meadows, SA – completed 2015

• Significant value created for Arena investors

Property	Completed	Total cost	30 June 2017 valuation
Griffin, QLD (Stage 1 and 2)	Nov 2014/June 2017	$4.7m	$6.3m
Seaford Meadows, SA	Apr 2015	$2.5m	$3.6m
Kawana, QLD	Nov 2015	$3.2m	$4.4m
Horsham, VIC	Dec 2016	$2.9m	$3.7m

==> picture [53 x 66] intentionally omitted <==

1 Excluding Horsham, VIC which opened in 2017.

==> picture [182 x 204] intentionally omitted <==

Green Leaves ELC, Griffin, QLD – stage 1 completed 2014

Arena REIT / Acquisition and equity raising / www.arena.com.au

Properties located in preferred markets with sound fundamentals

• Properties all located in catchments with growing 0-4 year old populations

• The portfolio’s average catchment child per place ratio[1 ] is favourable at 4.1

==> picture [53 x 66] intentionally omitted <==

• 1 The child per place ratio is calculated as the number of children aged 0-4 years over the number of long day care places available within the defined catchment.

Arena REIT / Acquisition and equity raising / www.arena.com.au

Enhanced portfolio metrics – WALE extended to 13.5 years[1 ]

Lease expiry profile (by income)

==> picture [382 x 138] intentionally omitted <==

----- Start of picture text -----

90%
78.1%
80% 75.9%
70%
60%
50%
40%
30%
20%
10% 2.9% 2.6% 0.3% 0.3% 11.9% 10.8% 8.5% 7.7% 0.5% 0.5%
0%
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 and
beyond
30-Jun-17 Post transaction
----- End of picture text -----

Sector diversification (by value) (post transaction)

==> picture [165 x 104] intentionally omitted <==

----- Start of picture text -----

13%
Early Learning
Healthcare
87%
----- End of picture text -----

Geographic diversification (by value) (post transaction)

Tenant diversification (by income)

==> picture [167 x 122] intentionally omitted <==

----- Start of picture text -----

2.9% 0.3%
NSW
7.7%
VIC
3.2%
QLD
22.3%
SA
WA
34.8%
28.9% TAS
NT
----- End of picture text -----

==> picture [649 x 199] intentionally omitted <==

----- Start of picture text -----

45% 40.0%
7.7%
40% 36.2%
VIC
35% 3.2%
30% QLD
22.3%
25%
SA
20% 15.2% 13.8% 14.9% 13.5% 13.4%
15% 10.7% 9.6% WA
10% 4.3% 5.2% 4.7% 5.1% 4.6% 4.6% 4.2% 34.8% 28.9% TAS
5%
0% NT
Goodstart Primary Affinity Green G8 Petit Early Oxanda Other
Early Health Care Education Leaves Learning
Learning
30-Jun-17 Post transaction
1 As at 30 June 2017 plus acquisition portfolio on completion.
Arena REIT / Acquisition and equity raising / www.arena.com.au / Acquisition and equity raising / www.arena.com.au www.arena.com.au
----- End of picture text -----

Arena REIT / Acquisition and equity raising / www.arena.com.au / Acquisition and equity raising / www.arena.com.au www.arena.com.au

Extended ELC development pipeline

==> picture [128 x 11] intentionally omitted <==

----- Start of picture text -----

FY18 completion schedule
----- End of picture text -----

0 1 2 Durack, NT Bundoora, VIC Cannon Hill, QLD Warner Lakes, QLD Mawson Lakes, SA Cairnlea, VIC Pelican Waters, QLD Killara, NSW Mount Pleasant, QLD Torquay, VIC Auburn, NSW Bellerive, TAS Port Macquarie, NSW Craigieburn, VIC Murrumba Downs, QLD Richmond, VIC Chadstone, VIC Dec-17 Jun-18 Jun-17 Existing projects Acquired projects 1			Arena pipeline Total
			Number of projects 18
			Forecast total cost $113.2 million
			Weighted average initial yield on cost 6.7%
			Amount outstanding (post initial acquisition payment) $49 million
			- Acquisition portfolio $35.7 million
			- Existing projects $13.3 million
			• A total of seventeen projects due for completion in FY18 • One existing project in planning and due for completion in FY19 • All projects will be fully funded by the equity raising and existing debt facilities

==> picture [53 x 66] intentionally omitted <==

1 Chadstone, VIC was completed subsequent to 30 June 2017.

Arena REIT / Acquisition and equity raising / www.arena.com.au

==> picture [87 x 109] intentionally omitted <==

Transaction funding

==> picture [53 x 66] intentionally omitted <==

==> picture [319 x 11] intentionally omitted <==

----- Start of picture text -----

Arena REIT / Acquisition and equity raising / www.arena.com.au
----- End of picture text -----

Source and use of funds

**Sources1 **	$m
Institutional placement	55.0
Debt facility	10.0
Cash	1.0
Total sources	66.0

• The properties are being acquired on a fund through basis[2 ]

• Arena to earn project yield on each dollar invested – portfolio initial yield on cost 6.25%

	Uses	$m
	Property acquisitions	27.6
	Development payments	35.7
	Transaction and fundraising costs	2.7
	Total uses	66.0
	Investment timing	$m
	Initial purchase cost	27.6
	1HFY18 forecast payments	21.1
	2HFY18 forecast payments	16.3
	**Total3 **	65.0

==> picture [53 x 66] intentionally omitted <==

• 1 Any securities issued under the non-underwritten SPP have not been included in the calculation.

• 2 A fund through acquisition involves the acquisition of land and progressive payment of development costs.

• 3 Total cost includes property purchase price and project costs of $63.3 million plus stamp duty and associated transaction costs.

Arena REIT / Acquisition and equity raising / www.arena.com.au

Institutional placement and SPP overview

• Fully underwritten institutional placement to raise $55 million via the issue of 27.1 million new

• Structure and size securities

• Issue price of $2.03 per security −

• Pricing 2.9% discount to closing price of $2.09 per security on 27 July 2017 − 3.6% discount to 5-day Volume Weighted Average Price (VWAP) of $2.105 per security

• • Securities issued via the institutional placement will rank equally with existing securities from

• Ranking the date of issue

• Arena will offer eligible Australian and New Zealand securityholders the opportunity to acquire up to $15,000 in new securities via a Security Purchase Plan

• The SPP will not be underwritten and will raise up to $5 million, with the capacity to accept a further $5 million in oversubscriptions

• Security Purchase Plan (SPP) • The issue price for securities issued under the SPP will be the same as the issue price of new securities under the institutional placement of $2.03 per security

• No brokerage or transaction costs are payable for securities issued under the SPP

• Securities issued via the SPP will rank equally with existing securities from the date of issue

==> picture [53 x 66] intentionally omitted <==

Arena REIT / Acquisition and equity raising / www.arena.com.au

==> picture [87 x 109] intentionally omitted <==

Financial impact

==> picture [53 x 66] intentionally omitted <==

==> picture [319 x 11] intentionally omitted <==

----- Start of picture text -----

Arena REIT / Acquisition and equity raising / www.arena.com.au
----- End of picture text -----

Positive financial impact

		FY17	**FY18 forecast1 **	•
Distribution per security		12.0 cents 12.8 cents
Annual distribution growth		10.0%	6.7%	•
Distribution yield2		5.9%	6.3%
	Unaudited		Pro forma
	30-Jun-17		30-Jun-17 forecast at completion
Total assets Borrowings	$621.3m $170.6m		$685.3m $180.6m
Net assets	$432.5m		$486.5m
NAV per security	$1.84		$1.86
Gearing	27.5%		26.4%

Transaction is expected to be neutral to EPS in FY18 (due to timing of equity raising and development cashflows throughout FY18) and EPS accretive in FY19[3 ]

Further potential earnings upside from investment of expanded balance sheet capacity

Earnings and Distributions per security (cents)

==> picture [290 x 194] intentionally omitted <==

----- Start of picture text -----

14
12.8
12.3
12.0
12
11.1
10.9
10.0 10.2
10
8.8 8.9
8.2
8.0
8
6
4
FY13 FY14 FY15 FY16 FY17 FY18
1
Guidance
DPS (cents) EPS (cents)
----- End of picture text -----

1 FY18 distribution guidance includes the acquisition and institutional placement and assumes development projects are completed in line with forecast assumptions and tenants comply with their lease obligations.

==> picture [53 x 66] intentionally omitted <==

2 Based on issue price of $2.03 per security.

3 EPS forecast impact includes the acquisition and institutional placement and assumes development projects are completed in line with forecast assumptions and tenants comply with their lease obligations. Any securities issued under the non-underwritten SPP have not been included in the calculation.

Arena REIT / Acquisition and equity raising / www.arena.com.au

Summary and indicative timetable

==> picture [87 x 109] intentionally omitted <==

==> picture [53 x 66] intentionally omitted <==

==> picture [319 x 11] intentionally omitted <==

----- Start of picture text -----

Arena REIT / Acquisition and equity raising / www.arena.com.au
----- End of picture text -----

Transaction summary

• Acquisition of a portfolio of nine properties to be developed into ELCs

• • Acquired at a 5.2% discount to independent valuation (on completion)

• • Properties well located in markets with favourable demographics

• Consistent with investment strategy • Leased on completion to existing, high performing tenant

• • Long term triple net leases with minimum 3% pa annual rental increases

• • WALE extended to 13.5 years (from 12.8 years at 30 June 2017)

• •

• Enhanced portfolio metrics Improved tenant diversification and rent review profile • Transaction is expected to be neutral to EPS in FY18 (due to timing of equity raising and development cashflows throughout FY18) and accretive

• Attractive financial impact in FY19[1 ] • FY18 distribution guidance 12.8 cents per security[2] (+6.7% on FY17) • Pro forma 30 June 2017 NAV $1.86 per security (+1.1%)

• • Pro forma 30 June 2017 gearing on completion of 26.4%

• • Equity raised provides capacity to fund new opportunities

• Capacity to fund future opportunities • Weighted average cost of debt 3.75%

==> picture [53 x 66] intentionally omitted <==

1 EPS forecast impact includes the acquisition and institutional placement and assumes development projects are completed in line with forecast assumptions and tenants comply with their lease obligations. Any securities issued under the non-underwritten SPP have not been included in the calculation. 2 FY18 distribution guidance includes the acquisition and institutional placement and assumes development projects are completed in line with forecast assumptions and tenants comply with their lease obligations.

Arena REIT / Acquisition and equity raising / www.arena.com.au

Indicative timetable[1 ]

Event	Date
Offer
Trading halt	Friday 28 July 2017
Offer opens	Friday 28 July 2017
Offer closes	Friday 28 July 2017
Trading in Arena REIT Stapled Securities resumes	Monday 31 July 2017
Settlement of New Stapled Securities	Wednesday 2 August 2017
Allotment and trading of New Stapled Securities	Thursday 3 August 2017
Property acquisition
Proposed property settlement	Friday 4 August 2017
Security Purchase Plan (SPP)
Record date for SPP	Thursday 27 July 2017
SPP offer period	Monday 7 August 2017 – Monday 28 August 2017
Allotment and trading of SPP securities	Tuesday 5 September 2017

==> picture [53 x 66] intentionally omitted <==

1 Timetable is indicative only and subject to change.

Arena REIT / Acquisition and equity raising / www.arena.com.au

==> picture [87 x 109] intentionally omitted <==

Contact details

==> picture [53 x 66] intentionally omitted <==

==> picture [319 x 11] intentionally omitted <==

----- Start of picture text -----

Arena REIT / Acquisition and equity raising / www.arena.com.au
----- End of picture text -----

Contact details

For more information visit www.arena.com.au

==> picture [126 x 126] intentionally omitted <==

Bryce Mitchelson Managing Director

+61 3 9093 9000 +61 408 275 375 bryce.mitchelson@arena.com.au

==> picture [126 x 126] intentionally omitted <==

Gareth Winter Chief Financial Officer

+61 3 9093 9000 +61 421 054 758 gareth.winter@arena.com.au

==> picture [126 x 126] intentionally omitted <==

Rob de Vos Head of Property

+61 3 9093 9000 +61 417 520 526 rob.devos@arena.com.au

==> picture [126 x 126] intentionally omitted <==

Susie McPherson

Head of Investor Relations and Marketing

+61 3 9093 9000 +61 434 604 591 susie.mcpherson@arena.com.au

==> picture [53 x 66] intentionally omitted <==

Arena REIT / Acquisition and equity raising / www.arena.com.au

==> picture [87 x 109] intentionally omitted <==

Appendices

==> picture [53 x 66] intentionally omitted <==

==> picture [319 x 11] intentionally omitted <==

----- Start of picture text -----

Arena REIT / Acquisition and equity raising / www.arena.com.au
----- End of picture text -----

Financial information

Pro Forma Balance Sheet

	Unaudited 30-Jun-17 ($m)	Initial acquisition ($m)	Future development ($m)	Pro forma forecast at completion ($m)
Cash and other	29.6		(1.0)	28.6
Investment properties	591.7	29.3	35.7	656.7
Total Assets	621.3	29.3	34.7	685.3
Borrowings	170.6	(24.7)	34.7	180.6
Other liabilities	18.2			18.2
Total Liabilities	188.8	(24.7)	34.7	198.8
Net Assets	432.5	54.0		486.5
Gearing	27.5%	23.5%		26.4%
Securities on Issue	234.8m	27.1m		261.9m
Net Asset Value (NAV) per security	$1.84			$1.86

Pro forma forecast on completion:

• Gearing 26.4% (-110bps)

• NAV per security $1.86 (+1.1%)

==> picture [53 x 66] intentionally omitted <==

* Any securities issued under the non-underwritten SPP have not been included in the above calculations.

Arena REIT / Acquisition and equity raising / www.arena.com.au

Financial information (continued)

Debt information

	**30 Jun 20171 **	30 Jun 2016	Change
Borrowings	$171m	$138m	+24%
Borrowing facility limit	$205m	$175m	+17%
Gearing	27.5%	26.8%	+70bps
Average facility term	2.5yrs	3.5yrs	-1.0yr
Weighted average cost of debt Interest cover ratio Interest rate hedging cover	3.75% 5.6x 79%	3.85% 6.2x 72%	-10bps -0.6x +700bps
Weighted average hedge term	4.3yrs	4.0yrs	+0.3yrs
Weighted average swap rate	2.39%	2.48%	-9bps

Notes

• Gearing forecast to reduce to 26.4% post acquisition completion

• DRP remains in operation – 1.5% discount

• Weighted average cost of debt 3.75% pa

• Hedge cover maintained in preferred range

1 Prior to transaction.

==> picture [53 x 66] intentionally omitted <==

Arena REIT / Acquisition and equity raising / www.arena.com.au

Financial information (continued)

Valuations at 30 June 2017 (unaudited)

	Number of assets	Value ($m)	Passing yield (%)
ELC portfolio
Freehold – Independent Valuations	58	140.3	6.64%
Freehold – Director Valuations	125	315.4	6.69%
Leasehold – Director Valuations	5	12.9	8.51%
Development portfolio	10	39.0	-
Total ELC portfolio	198	507.6	6.73%
Healthcare portfolio
Independent Valuations	3	34.4	6.67%
Director Valuations	4	49.7	7.10%
Total Healthcare portfolio	7	84.1	6.92%
Total portfolio	205	591.7	6.76%

==> picture [53 x 66] intentionally omitted <==

Arena REIT / Acquisition and equity raising / www.arena.com.au

Key risks

Investors should carefully consider the risk factors described below. If you require further information regarding the appropriateness or potential risks of investing in Arena REIT, you should seek appropriate financial, legal, taxation and other necessary advice. All investments involve risk and there are many factors that can impact on the performance of an investment. This summary details some of the major risks that you should be aware of when investing in Arena REIT. Investors should be aware that the list of risks described below may not cover all possibilities and should also consider risks specific to their situation.

Key risks relating to Arena REIT

(a) Concentration risk

The current portfolio of Arena REIT is invested in childcare centres, medical centres and childcare development sites. Adverse events to the childcare and/or healthcare property sectors may result in general deterioration of tenants’ ability to meet their lease obligations across the portfolio or to future growth prospects of the current portfolio. On completion of the acquisition properties, Green Leaves will represent 13.4% of the Arena portfolio (by income). Any material deterioration in the operating performance of Green Leaves may result in them not meeting their lease obligations which could reduce Arena REIT’s income and portfolio value if a suitable replacement cannot be found.

(b) Tenant risk

Arena REIT relies on tenants to generate the majority of its revenue. A substantial proportion of Arena REIT’s tenants are not for profit companies limited by guarantee or private companies. If a tenant is affected by financial difficulties it may default on its rental or other contractual obligations which may result in loss of rental income or losses to the value of Arena REIT’s properties.

(c) Licensing

The provision of childcare and healthcare services are regulated activities. There is therefore a risk that if the relevant tenants’ licence is revoked, no suitably qualified replacement tenant may be found.

(d) Government policy risk and change in law

Childcare and healthcare operators rely heavily on government funding which, if reduced, 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 changes in legislation, government policies or legal or judicial interpretation relating to the childcare and/or healthcare sectors.

(e) Alternative use risk

The risks associated with investing in property assets can be greater for special purpose facilities such as childcare and healthcare properties, which may require extensive

(e) Alternative use risk (continued)

expenditure and rezoning to be suitable for other commercial purposes.

Arena REIT’s performance depends in part on the demand for childcare and healthcare properties in Australia. Most childcare and healthcare properties would require extensive expenditure and rezoning to be suitable for other commercial purposes.

(f) Acquisitions and divestments

Arena REIT intends to make additional acquisitions of assets in accordance with its investment strategy. Future acquisitions may affect Arena REIT’s financial performance. The value of Arena REIT’s properties may vary as a consequence of general market conditions, the property market, or factors specific to an individual property. Arena REIT may be required to sell one or more properties, which may result in a capital loss.

(g) Re-leasing and vacancy

There is a risk that Arena REIT may not be able to negotiate suitable lease extensions with existing tenants or replace outgoing tenants with new tenants on substantially the same terms. Arena REIT could also incur additional costs associated with re-leasing the properties. Re-leasing the properties would depend on numerous market conditions and financial considerations prevalent at that time.

(h) Rental income

Distributions made by Arena REIT are largely dependent upon the rents received from its property portfolio and expenses incurred during operations. Arena REIT has made a number of assumptions in relation to the level of rental income Arena REIT will receive. However, rental income may differ from those assumptions and may be affected by a number of factors, including:

• (i) overall macroeconomic conditions;

• (ii) competition from other childcare centres and healthcare properties;

• (iii) the financial condition of tenants;

• (iv) increase in rental arrears and vacancy periods;

• (v) changes in government policies relating to the childcare and healthcare sectors; and (vi) supply and demand in the property market.

(i) Property valuations

Changes in the property market, especially changes in the valuation of properties and in market rents, may adversely affect Arena REIT’s financial performance and the price of Arena REIT Stapled Securities (including New Stapled Securities). In addition, the valuations of Arena REIT’s properties are the best estimates at the time of undertaking the valuation and may not reflect the actual price a property would realise if sold. The valuations are subject to a number of assumptions which may prove to be inaccurate.

(j) Fund-through development risks

Arena REIT is acquiring the properties on a ‘fund-through’ basis, under which Arena REIT settles the vacant or partially improved land purchase and then makes periodic payments based on quantity surveyor certification.

Arena REIT / Acquisition and equity raising / www.arena.com.au

Key risks (continued)

(j) Fund-through development risks (continued)

There is a risk that delays or issues relating to the development of a site could delay its completion. Any significant delays in completion could have an adverse effect on Arena REIT’s financial performance.

There is also a risk that the developer or its contractors and consultants, encounter financial or other difficulties in developing the site and as a result, the developer could default on its development obligations to Arena REIT. If this occurs, there is a risk that Arena REIT will incur additional costs in attempting to complete the development. Arena REIT has entered into an agreement with the builder allowing Arena REIT the right to step in and take over the construction contract if the developer defaults, but exercising these rights may incur additional construction and/or development costs.

(k) General development risk

In certain circumstances, Arena REIT may be exposed to development risk, resulting from the development of new properties, the refurbishment of existing properties or additions and extensions to existing properties. Property development carries a number of risks, including:

(i) issues surrounding applications for planning approvals from local authorities which can result in delays or require amendments to plans both of which may result in increased costs;

(ii) breach of contract by building contractors; and

(iii) unforeseen circumstances which cause project delays or increases to building costs.

A number of factors affect the earnings, cash flows and valuations of commercial property developments, including construction costs, scheduled completion dates and securing tenants at estimated rental income.

(l) Property liquidity

Property assets are by their nature illiquid investments. Arena REIT may not be able to realise the assets within a short period of time or may not be able to realise assets at valuation. This may affect Arena REIT’s net asset value or the trading price of Arena REIT Stapled Securities.

(m) Environmental issues

As with any property, there is a risk that one or more of Arena REIT’s properties may be contaminated now or in the future. Government environmental authorities may require such contamination be remediated. There is always a residual risk that Arena REIT may be required to undertake any such remediation at its own cost.

==> picture [53 x 66] intentionally omitted <==

In addition, environmental laws impose penalties for environmental damage and contamination which can be material in size. Exposure to hazardous substance at a property within Arena REIT’s portfolio could result in personal injury claims. Such a claim could prove greater than the value of the contaminated property. An environmental issue may also result in interruptions to the operations of a property, including the closure of the property. Any lost income caused by such an interruption to operations may not be recoverable.

(n) Occupational health and safety

There is a risk that liability arising from occupational health and safety matters at one or more of Arena REIT’s properties may be attributable to Arena REIT as the landlord instead of, or as well as, the tenant. To the extent that any liabilities may be borne by the Arena REIT, this may impact upon the financial performance of Arena REIT (to the extent not covered by insurance). In addition, penalties may be imposed upon Arena REIT which may have an adverse impact on Arena REIT.

(o) Capital expenditure

Capital expenditure may exceed Arena REIT’s current forecasts which could adversely impact Arena REIT’s financial performance.

(p) Insurance

Arena REIT maintains a range of insurances relating to its properties with policy specifications and insured limits that it believes to be customary in the industry. However, potential losses of a catastrophic nature such as those arising from earthquakes, terrorism or severe flooding may be uninsurable or not insurable on reasonable financial terms, may not be insured at full replacement costs or may be subject to large excesses. The nature and cost of insurance has been based upon the best estimate of likely circumstances. However, various factors may influence premiums to a greater extent than those forecast, which may in turn have a negative impact on the financial performance of Arena REIT.

(q) Investment characteristics

Arena REIT is exposed to the risks associated with the external management of investment syndicates, including the wind down of such investment syndicates and the associated loss of management fee income and cost recoveries.

(r) Regulatory risks

Arena REIT conducts its business in a highly regulated industry and must comply with the requirements of its Australian Financial Services Licence, the Corporations Act, ASIC, ASX and other regulators. Non-compliance with regulatory requirements may result in financial penalties, additional expense or reputation damage to Arena REIT. In addition, changes to regulation may result in increased costs to Arena REIT in order to comply with regulatory requirements, and an increased risk of non-compliance with new and complex regulation.

Arena REIT / Acquisition and equity raising / www.arena.com.au

Key risks (continued)

(s) Dependency on key staff

The specialised nature of Arena REIT’s asset portfolio requires a manager with extensive experience in the childcare and healthcare sectors. The loss of key staff or inability to attract new qualified staff could adversely affect Arena REIT’s operations and performance.

Key risks relating to investing in Arena REIT Stapled Securities (including New Stapled Securities)

(a) Economic and market conditions

A number of factors affect the performance of the equity market, which could affect the price at which Arena REIT Stapled Securities (including New Stapled Securities) trade on the ASX. Among other things, movements on international and domestic stock markets, interest rates, exchange rates, inflation and inflationary expectations and overall economic conditions, economic cycles, investor sentiment, political events and levels of economic growth, both domestically and internationally as well as government taxation and other policy changes may affect the demand for, and price of Arena REIT Stapled Securities (including New Stapled Securities) . Additionally, equity markets can experience price and volume fluctuations that may be unrelated or disproportionate to the operating performance of Arena REIT.

(b) Distribution guidance

No assurances can be provided in relation to the payment of future distributions. Future determinations as to the payment of distributions by Arena REIT will be at the discretion of Arena REIT and will depend upon the availability of profits, the operating results and financial conditions of Arena REIT, future capital requirements, covenants in relevant debt facilities, general business and financial conditions and other factors considered relevant by Arena REIT. No assurance can be given in relation to the level of tax deferral of future distributions. Tax deferred capacity will depend upon the amount of tax depreciation available and other factors.

(c) Trading liquidity

Liquidity of Arena REIT Stapled Securities (including New Stapled Securities) will be independent on the relative volume of buyers and sellers in the market at any given time, which may be impacted by various factors. Large Stapled Security holders choosing to trade out of their positions may also affect the market by absorbing trading liquidity.

(d) Dilution risk

As Arena REIT issues Stapled Securities (including New Stapled Securities) to new Investors, existing Stapled Security holders proportional beneficial ownership in the underlying assets of Arena REIT and proportional entitlement of any distributions may be reduced.

(e) Funding

Arena REIT’s ability to raise funds from either debt or equity sources in the future depends on a number of factors, including, the state of debt and equity markets, the general economic and political climate and the performance, reputation and financial strength of Arena REIT.

Other risks related to Arena REIT and property fund investments

(a) Interest rates

Unfavourable movements in interest rates relating to Arena REIT’s debt facilities could lead to increased interest expense, to the extent that interest rates are not hedged.

(b) Banking obligation risk

Under Arena REIT’s debt facilities, Arena REIT is subject to a number of undertakings and covenants, including in relation to gearing levels and interest cover ratios. An event of default would occur if Arena REIT fails to maintain these financial covenants. This may be caused by unfavourable movements in interest rates (to the extent interest rates are not hedged) or deterioration in the income or the value of Arena REIT’s investments. In the event that an event of default occurs, the lender may require immediate repayment of Arena REIT’s debt facilities. Arena REIT may need to dispose of assets for less than valuation, raise additional equity or reduce or suspend distributions in order to repay Arena REIT’s debt facilities, if this occurs.

(c) Financing

There is a risk that Arena REIT may not be able to refinance its debt facilities and/or interest rate hedge before expiry or may not be able to refinance them on substantially the same terms as Arena REIT’s existing facility and/or hedge instruments.

(d) Gearing

Arena REIT’s gearing level will magnify the effects of any changes in interest rates or changes in property values or performance measures. If the level of gearing increases over the term of Arena REIT’s debt facilities, this may affect the ability of Arena REIT to refinance its debt facilities

(e) Litigation

Arena REIT may in the ordinary course of business be involved in possible litigation and disputes (for example, tenancy disputes, development disputes, occupational health and safety claims or third party claims). A material or costly dispute or litigation may adversely affect the operational and financial results of Arena REIT.

(f) Tax and stamp duty

Changes in tax or stamp duty law or changes in the way tax or stamp duty law is expected to be interpreted in Australia may adversely impact Arena REIT’s financial performance and the value of Arena REIT securities.

==> picture [53 x 66] intentionally omitted <==

Arena REIT / Acquisition and equity raising / www.arena.com.au

International offer restrictions

This document does not constitute an offer of new stapled securities ("New Stapled Securities") of Arena REIT in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Stapled Securities may not be offered or sold, in any country outside Australia except to the extent permitted below.

Hong Kong

WARNING: This document has not been, and will not be, authorized by the Securities and Futures Commission in Hong Kong pursuant to the Securities and Futures Ordinance (Cap. 571) of the Laws of Hong Kong (the "SFO"). No action has been taken in Hong Kong to authorize this document or to permit the distribution of this document or any documents issued in connection with it. Accordingly, the New Stapled Securities have not been and will not be offered or sold in Hong Kong other than to “professional investors" (as defined in the SFO).

No advertisement, invitation or document relating to the New Stapled Securities has been or will be issued, or has been or will be in the possession of any person for the purpose of issue, in Hong Kong or elsewhere that is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the New Stapled Securities which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors as defined in the SFO and any rules made under that ordinance.

The contents of this document have not been reviewed by any Hong Kong regulatory authority. You are advised to exercise caution in relation to the offer. If you are in doubt about any contents of this document, you should obtain independent professional advice.

Malaysia

This document may not be distributed or made available in Malaysia. The New Stapled Securities are not being offered or made available for purchase in Malaysia. Any offer of New Stapled Securities may not be accepted from any investor in Malaysia.

New Zealand

This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the "FMC Act"). The New Stapled Securities may only be offered or sold in New Zealand (or allotted with a view to being offered for sale in New Zealand) to a person who:

• is an investment business within the meaning of clause 37 of Schedule 1 of the FMC Act;

• meets the investment activity criteria specified in clause 38 of Schedule 1 of the FMC Act;

• is large within the meaning of clause 39 of Schedule 1 of the FMC Act;

• is a government agency within the meaning of clause 40 of Schedule 1 of the FMC Act; or

• is an eligible investor within the meaning of clause 41 of Schedule 1 of the FMC Act.

Singapore

This document has not been registered as a prospectus with the Monetary Authority of Singapore ("MAS") and, accordingly, statutory liability under the Securities and Futures Act, Chapter 289 (the "SFA") in relation to the content of prospectuses does not apply, and you should consider carefully whether the investment is suitable for you. The issuer is not authorised or recognised by the MAS and the New Stapled Securities are not allowed to be offered to the retail public. This document and any other document or material in connection with the offer or sale, or invitation for subscription or purchase of the New Stapled Securities may not be circulated or distributed, nor may the New Stapled Securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore except to "institutional investors" (as defined in the SFA), or otherwise pursuant to, and in accordance with the conditions of, any other applicable provisions of the SFA.

This document has been given to you on the basis that you are an "institutional investor" (as defined under the SFA). In the event that you are not an institutional investor, please return this document immediately. You may not forward or circulate this document to any other person in Singapore.

Any offer is not made to you with a view to the New Stapled Securities being subsequently offered for sale to any other party. You are advised to acquaint yourself with the SFA provisions relating to resale restrictions in Singapore and comply accordingly.

==> picture [53 x 66] intentionally omitted <==

Arena REIT / Acquisition and equity raising / www.arena.com.au