ARENA REIT. — Capital/Financing Update 2019

May 20, 2019

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NOT FOR RELEASE TO US WIRE SERVICES OR FOR DISTRIBUTION IN THE UNITED STATES

21 MAY 2019

ARENA REIT ACQUISITIONS AND EQUITY RAISING

Key highlights

Arena REIT Group (“ Arena ”) today announces:

• it has settled, exchanged contracts or entered heads of agreement during 2H FY19 to acquire and develop additional social infrastructure properties with a total investment of A$62 million (the “ Acquisitions ”), including:

• three specialist disability accommodation properties for a total investment of A$24 million[1]

• three Early Learning Centre (“ ELC ”) properties for a total investment of A$13 million

• five ELC developments with a total anticipated project investment of A$25 million

• it is undertaking a fully underwritten A$50 million institutional placement (“ Institutional Placement” ) at an issue price of A$2.67 per new Stapled Security (“ Security ”) to fund the Acquisitions and maintain balance sheet capacity for future growth opportunities

• it will also offer a non-underwritten Security Purchase Plan (“ SPP ”) to eligible securityholders to raise up to A$5 million[2]

• FY19 distribution of 13.5 cents per security

• FY20 distribution guidance of 14.3 cents per security[3] (+5.9% on FY19) representing a distribution yield of 5.4% at the Institutional Placement Offer Price

Strategic rationale

The Acquisitions exhibit the following attractive investment characteristics:

• Well located assets with strategic importance to the operations of the tenant

• Supported by fundamental demand drivers including population growth and increasing female workforce participation

• Secure defensive income underpinned by long lease terms, triple-net lease structures and contracted rental growth

• High quality tenants with a strong track record in healthcare and childcare operations

Commenting on the acquisition, Arena’s Managing Director, Mr Rob de Vos said “ Improvement in the operating environment for our early learning tenant partners is providing new opportunities for disciplined investment. Today’s equity raising provides capacity for additional investment in appropriate social infrastructure properties, consistent with our investment strategy.”

1. Refer to Arena ASX Announcement dated 18 February 2019.

2. Eligible securityholders are holders of existing Arena securities as at 7:00pm (AEST) on Monday 20 May 2019 with a registered address in Australia or New Zealand. The Arena Board may (in its absolute discretion), where the total applications under the SPP exceed A$5 million, determine to increase the amount raised to reduce or eliminate the need to scale-back.

3 FY20 distribution guidance is estimated on a status quo basis assuming no acquisitions in addition to the Acquisitions, or disposals, all developments in progress are completed in line with forecast assumptions, and tenants comply with their lease obligations. It includes the impact of the Institutional Placement and SPP.

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Portfolio impact of Acquisitions

Metric 31 Dec 18 Acquisition portfolio 31 Dec 18 Pro Forma
Number of properties 218 11 229
Portfolio value (A$m) $743 million $62 million $805 million
Weighted average yield (%) 6.5% 6.5% 6.5%
31 May 19 Pro forma
Weighted Average Lease Expiry (“WALE”) 14.2 years 18.0 years 14.3 years4

Institutional Placement

Arena is undertaking a fully underwritten A$50 million Institutional Placement at an issue price of A$2.67 per Placement Security to fund the Acquisitions and maintain balance sheet capacity to accommodate pipeline growth and speed of execution on opportunities. The Institutional Placement is fully underwritten by Morgan Stanley Australia Securities Limited; Evans Dixon Corporate Advisory Pty Limited is acting as adviser to the Transaction.

The issue price represents a 4.3% discount to the last closing price of A$2.79 on 20 May 2019; and 2.4% discount to the five-day Volume Weighted Average Price of A$2.74 to 20 May 2019.

From the date of issue, securities issued under the Institutional Placement will rank equally with existing securities on issue. Placement Securities will be entitled to the distribution for the 3 months ending 30 June 2019 (3.375 cents per security) to be paid on 8 August 2019.

The Placement Securities issued under the Institutional Placement are expected to be allotted and commence trading on 27 May 2019.

SPP

Following the completion of the Institutional Placement, Arena will offer eligible securityholders resident in Australia and New Zealand on Arena’s register as at 7:00pm (AEST) on Monday 20 May 2019, the opportunity to participate in a non-underwritten SPP to raise up to A$5 million[5] . Eligible securityholders in Australia and New Zealand will be invited to subscribe for up to A$15,000 of additional new securities per securityholder, free of transaction and brokerage costs.

The Issue date of the SPP Securities will be 1 July 2019 and they will not participate in the June 2019 quarter distribution. Accordingly the offer price under the SPP will be the issue price of the Institutional Placement adjusted for distribution entitlements in respect of the June 2019 quarter.

Further information in relation to the SPP will be dispatched to eligible securityholders on or around 3 June 2019.

4 Pro forma WALE of Arena’s portfolio including Acquisitions (on completion) as at 31 May 2019.

5 The Arena Board may (in its absolute discretion), where the total applications under the SPP exceed A$5 million, determine to increase the amount raised to reduce or eliminate the need to scale-back applications.

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Financial Impact

The FY20 financial impact of the Acquisitions and Institutional Placement is:

• Accretive to Earnings Per Security[6]

• Accretive to Net Asset Value per Security

• Provides for pro forma gearing at 31 December 2018 of 25%[7]

Outlook and FY20 Guidance

Arena confirms the FY19 distribution of 13.5 cents per security and provides FY20 distribution guidance of 14.3 cents per security[8] (+5.9% on FY19) representing a distribution yield of 5.4% at the Institutional Placement price.

Indicative Transaction Timetable

Event Date
Trading halt and announcement of Equity Raising 21 May 2019
Institutional Placement
Institutional Placement bookbuild 21 May 2019
Announcement of outcome of Institutional Placement 22 May 2019
Trading halt lifted 22 May 2019
Settlement of Placement Securities under the Institutional Placement 24 May 2019
Allotment and trading of Placement Securities issued under the Institutional Placement 27 May 2019
SPP
Record date for SPP 7pm 20 May 2019
SPP offer period 3-25 June 2019
Allotment of Securities issued under the SPP 1 July 2019
Securities issued under the SPP commence trading on ASX 2 July 2019
Holding statement dispatch date 2 July 2019

6 Earnings per security is calculated as net operating profit over weighted average number of securities on issue.

7 Gearing calculated as ratio of drawn borrowings over total assets; includes the impact of the Institutional Placement but does not include any impact attributable to the SPP.

8 FY20 distribution guidance is estimated on a status quo basis assuming no acquisitions in addition to the Acquisitions, or disposals, all developments in progress are completed in line with forecast assumptions, and tenants comply with their lease obligations. It includes the impact of the Institutional Placement and SPP.

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Important Information

Additional information about the Acquisitions and the Equity Raising (including “ Key Risk Factors ”) are contained in the presentation released to the ASX today.

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For further information, please contact:

Rob de Vos Sam Rist Managing Director Head of Investor Relations +61 3 9093 9000 +61 3 9093 9000 rob.devos@arena.com.au samantha.rist@arena.com.au

About Arena REIT

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

DISCLAIMER

This announcement has been prepared for publication in Australia and may not be released to US wire services or distributed 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 announcement 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 requirements under the US Securities Act and applicable US state securities laws.

This document has been prepared by Arena REIT (“Arena”) comprising Arena REIT Limited (ACN 602 365 186), Arena REIT Management Limited (ACN 600 069 761 AFSL No. 465754) as responsible entity of Arena REIT No.1 (ARSN 106 891 641) and Arena REIT No.2 (ARSN 101 067 878). The 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’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. 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 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 and its directors. Such statements are not

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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 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) as to the accuracy or completeness of each forward-looking statement or that the occurrence of any event, result, performance or achievement will actually occur. You should not place undue reliance on any of the forward-looking statement.