Arena REIT Continues Reporting Strong Business Results but Remains Overvalued

We raise our fair value estimate for no-moat-rated Arena REIT to AUD 3.40 per share from AUD 3.20 per share following its fiscal 2022 results, reflecting the time-value-of-money impact on our financial model. We have largely maintained our earnings forecasts, a AUD 17 cent DPS estimate for fiscal 2023. Arena announced AUD 4.06 cents in distributions per share, or DPS, for the June quarter, correspondingly closely to guidance, which is to be expected given Arena’s highly predictable near-term earnings. Arena’s full-year DPS of AUD 16 cents implies a 3% distribution yield per security at current share prices.