ARF - ARENA REIT Macquarierates ARF as Upgrade to Outperform...

ARF - ARENA REIT

Macquarierates ARF as Upgrade to Outperform from Neutral (1) - Arena REIT's first halfwas in line with Macquarie and FY guidance is reaffirmed.

The ACCC has launched an inquiry into childcare pricing, whichmay lead to limitations and downside catalysts as the year progresses, but thebroker is comfortable with the REIT's growth outlook and returns fromdevelopments should increase from here.

Given a defensive balance sheet, a solid earnings growth outlookand resilient income, Macquarie upgrades to Outperform from Neutral.

Target rises to $4.05 from $3.94.

Target price is $4.05 Current Price is $3.74 Difference: $0.31If ARF meets the Macquarie target it will return approximately 8% (excludingdividends, fees and charges). Current consensus price target is $4.16,suggesting upside of 11.1%(ex-dividends)The company's fiscal year ends in June.

Forecast for FY23:

Macquarie forecasts a full year FY23 dividend of 16.80 cents andEPS of 17.50 cents . At the last closing share price the estimated dividendyield is 4.49%. At the last closing share price the stock's estimated Price toEarnings Ratio (PER) is 21.37. How do these forecasts compare to marketconsensus projections?

Current consensus EPS estimate is 17.3, implying annual growthof -80.3%. Current consensus DPS estimate is 16.9, implying a prospectivedividend yield of 4.5%. Current consensus EPS estimate suggests the PER is21.6.

Forecast for FY24:

Macquarie forecasts a full year FY24 dividend of 18.10 cents andEPS of 18.50 cents . At the last closing share price the estimated dividendyield is 4.84%. At the last closing share price the stock's estimated Price toEarnings Ratio (PER) is 20.22. How do these forecasts compare to marketconsensus projections?

Current consensus EPS estimate is 18.1, implying annual growthof 4.6%. Current consensus DPS estimate is 17.5, implying a prospectivedividend yield of 4.7%. Current consensus EPS estimate suggests the PER is20.7.