This article is from the Australian Property Journal archive
HAVING largely benefitted from shifts in Australia’s housing market such as a growing preference for lifestyle locations and an incentives to downsize over FY21, Aspen Group (ASX: APZ) has snapped up a new apartment portfolio.
Aspen saw an 18% increase in total revenue to $36.0 million in FY21, driven largely by portfolio diversification and a healthier performance in development and trading.
The group also posted an operating profit of $9.0 million, an increase of 36% on FY20.
“The demand for our properties has generally increased during the COVID-19 pandemic as they are typically in “lifestyle” locations close to jobs and facilities. Our relatively low rents have become even more attractive in the weaker economic environment, and they are well supported by government subsidies,” Aspen said.
Aspen posted a 14% improvement on its FY20 EPS of 6.80 cents, at 7.73 cents for FY21, with a DPS of 6.60 cents, up 10% on FY20’s 6.00 cents.
NAV was reported at $1.31, a 14% increase on the previous corresponding year’s $1.15. While the group’s portfolio was valued on a WACR of 7.7%, with $83,000 per approved site including land and dwellings.
Aspen’s property portfolio also increased by 37% over FY21 to $229 million, largely due to revaluation gains and acquisitions.
Major acquisitions over the period included the Cooks Hill Co-Living Community, with a value of $68k per unit, Burleigh Heads Residential Community at $175k per dwelling, Mount Barker land at $46k per approved site, Upper Mount Gravatt Co-Living Community at $60k per room, and Lewis Fields Retirement Community at $30k per approved site.
Aspen has also just completed the $52 million acquisition of a portfolio of apartments in Perth from the Buckridge Group of Companies, totalling 17 properties and 514 apartments.
The acquisition price, which is pre transaction costs, represents a cost of $101,000 per apartment and $61,000 per bedroom, with land value a large contributor to total value.
Occupancy in the portfolio is currently at 41%, with average weekly rent at $215 due to the current condition of the apartments.
Aspen plans to inject approximately $25 million in the portfolio over the next 18 to 24 months in order to refurbish the apartments, some of which are uninhabitable.
The group expects the new portfolio will generate a 10% growth in profits, with aspirations for a total valuation uplift of at least 30% on total cost following the refurbishment and leasing of the apartments.
“We believe Aspen is well positioned to continue to grow profits and the book value of equity over the medium term and we are aiming for growth of at least 10% per annum,” Aspen said.
