This article is from the Australian Property Journal archive
Aspen Group has upgraded its full-year earnings guidance on the back of higher rental income, and says it has a “massive opportunity” to profitably scale up amid a severe housing undersupply as it added a Peel development site in Western Australia to its portfolio.
The lifestyle communities and affordable accommodation provider posted an 18% increase in underlying operating earnings in the first half on a per security basis to 8.07c, as net rental income lifted 13% on the prior corresponding period (pcp) to $17.2 million.
Underlying operating earnings overall was 31% higher at $16.1 million.
EBITDA jumped 33% to $20.4 million.
Aspen announced an upgrade to FY25 guidance, of underlying operating EBITDA of $41.5 million – up 29% on FY24, underlying earnings per security of 16.7c, up 21%, and distributions of 10.0c, up 18%.
“Aspen has a massive opportunity to profitably increase in scale given the structural shortages of quality accommodation for the majority of Australian households,” it said.
During the half that average number of dwellings and sites in the rental pool increased by 7%, and average weekly gross rent increased 4% to $328 per dwelling and site.
“Aspen’s rents remain highly competitive and attractive to customers,” it said.
It said it continued recycling capital from properties with relatively high rents at a circa 3% yield into properties with lower rents more suited to Aspen’s customer base and with higher expected returns.
Total development profit increased 68% to $5.5 million with a margin of 33% and ROIC of 20%.
Aspen posted record production, sales and average prices. Its lifestyle development profit more than doubled with sales volume increasing 50% and profit per sale increasing 38% to $142,000. The average sale price increased 10% to $470,000, “still well below local median house prices and some competing villages”, it noted.
Developed residential land lots almost sold out with average sale price increasing 5% to $218,000, allowing for new homes to be developed cheaper than local existing house prices.
It has a low-cost approved pipeline of circa 1,100 sites equating to around 10x current sales rate. Aspen is aiming to double the approved pipeline and create value by securing new development approvals at Adelaide Caravan Park, Normanville, Highway 1, and its newly acquired land parcel at Ravenswood in Western Australia.
The 33-hectare site, 78 kilometres south of Perth, was acquired for $12 million. Zoned for residential use, it is expected to yield 360 residential lots and there are four riverfront houses on the property leased for around $90,000 per year each.
Aspen noted that the Peel region population is approximately 162,000 and is forecast to grow by around 80% over the next 20 years, roughly double the rate of Australia. Ravenswood itself will soon see a new Coles anchored retail and commercial hub, a primary school and various developments associated with the Transform Peel project delivered.
During the half it Aspen also added a one-hectare lot at Coorong Quays adjacent to its Alexandrina Cove Retirement Village in South Australia.
Aspen said it has mitigated risks with development assets represent only approximately 9% of total assets, spread across nine active projects diversified by geography, regulation, customers, and builders.
Aspen Group divested a majority of its stake in lifestyle communities rival Eureka Group following an unsuccessful takeover attempt.
