January 2006 - Aspen Group

ASPIRE
ASPEN GROUP QUARTERLY INVESTOR UPDATE JANUARY 2006
Aspen acquires
prime land
sub-division estate
Aerial view over Dunsborough
Lakes, in the burgeoning south-west
cape region of Western Australia.
will be $138 million, comfortably ahead of where the Fund size was
expected to be at this stage.
Acquisitions lead to 2006
earnings upgrade
Since our last investor update in October 2005, Aspen has acquired
over $200 million in assets, lifting the Group assets under
management to in excess of $500 million. This is a significant
increase, leading Aspen to announce a revised earnings forecast for
the 2006 financial year and an increase in the distribution rate from
the March 2006 quarter.
The most prominent acquisition has been the Dunsborough Lakes
golf course estate located in the south west coastal town of
Dunsborough,Western Australia. This substantial land development
project is to be acquired for $93.68 million. Aspen has created a new
funds management entity,Aspen Dunsborough Lakes Limited, which
will own the property and continue the development that has been in
progress for several years.
During the past quarter we have actively sought to increase the size
and diversity of the Aspen Diversified Property Fund, making three
significant acquisitions. Two properties in New South Wales and one
in Victoria with a combined value of $86 million have been acquired
to complement the existing six properties all based in Western
Australia. Total Fund assets following completion of the acquisitions
The growth in Funds Management assets and continued strong
performance from our property portfolio have contributed to an
upward revision of forecast earnings for the 2006 financial year to
11.5 cents per security, a 31% increase over 2005 earnings.
From March next year the quarterly distribution will increase to
2.625 cents per security (10.5 cents annualised), providing an
attractive income yield on Aspen Group stapled securities at the
current security price.
In between acquisitions the Group produced the 2005 annual
report which I hope you found informative. The Group also held
its annual general meeting and I thank all securityholders, both
those who were able to attend the meeting in person and those
who forwarded their proxy forms, for your support of the
resolutions tabled.
The first half of 2005/2006 financial year has been a very
exciting period for Aspen Group, providing a sound platform on
which the Group can deliver a strong full year result, and reward
all securityholders.
Angelo Del Borrello
Managing Director
Aspen hits a winner with
Dunsborough Lakes golf
course estate
Dunsborough Lakes golf course estate
is a substantial land sub-division project
covering a total area of approximately
230 hectares, including an established
18 hole championship golf course.
While primarily a residential estate,
there are designated areas for tourism,
retail and industrial land usage, giving
the project increased scope and
flexibility for final lot design and use.
The property adjoins the townsite of Dunsborough and is
some 254 kms south of Perth in Western Australia.
Dunsborough fronts the calm waters of Geographe Bay, in a
uniquely north facing position for a Western Australian town.
Of further significance, the property is at the northern
boundary of the world renowned Margaret River wine region
one of the area’s key industries and a major tourism drawcard.
Originally established in 1994, the project was substantially
enhanced in 2002 when acquired by WR Carpenter Properties.
Their commitment to progress the construction of lots and
enhanced marketing effort, along with the region’s growing
population resulted in solid lot sales from the beginning of
2003 through until mid 2005. As at 30 September 2005
approximately 520 residential lots in the estate have been sold.
There have also been some 26 serviced industrial lots which
have been sold in an area known as Enterprise Park.
Following acquisition of the project by ADLL 187 lots will be
available for immediate sale with an estimated value of
approximately $50 million, representing a significant early
income for ADLL with no associated construction costs.
Over the course of the project life (approximately 13 years)
an estimated additional 1261 lots (subject to approval) will be
constructed, predominately residential but also including retail,
industrial and tourism. In total, the project will produce an
estimated profit of $114.1 million, and in the process create
a vibrant community in what has become a thriving
regional town.
An unlisted limited company, Aspen Dunsborough Lakes Ltd
(ADLL), has been established to hold the project assets.
An equity raising targeting institutional investors has commenced
with Aspen Group to hold a 20% cornerstone investment. Aspen
Group subsidiary Aspen Property Developments Pty Ltd will be
appointed as Company Manager under a management agreement
with ADLL, to provide the necessary corporate services, project
management and sales and marketing services. Aspen Group will
derive significant long term fee income from the project, both
through the acquisition of the estate and ongoing project
management.
We look forward to advising Aspen Group securityholders of
further progress in future editions of Aspire.
“...the annual market compound
growth for residential land within
Dunsborough has been 16.5% over
the past 15 years...
”
FURTHER GROWTH
FOR
The unlisted diversified property fund,
Aspen Diversified has grown rapidly
since acquiring its first properties in
June 2005. Commencing with an initial
five properties valued at $36.1 million,
the Fund will have nine properties and
total assets of $142 million following
settlement of the new acquisitions.
An office building at 80 Mount Street, North Sydney was
acquired for $31 million excluding costs on 1 December
2005. The building is a substantial freestanding office tower
strategically positioned on a highly visible corner in the heart
of the North Sydney central business district. The property
provides a total net lettable area of 6,269 square metres
comprising 14 levels of office accommodation and ground
floor retail areas. The multi-tenanted office tower with
31 tenants will show an 8.5% yield on a fully leased basis, an
attractive return for a prominent CBD location. In addition
there are three levels of basement parking.
The Holeproof Building is a distribution centre comprising
19,580 sqm of industrial and 2,507 sqm of office area, located
in Nunawading, a well established industrial precinct
approximately 20kms north of the Melbourne CBD.
The property, acquired on 22 December 2005 for
$28 million exclusive of costs, is fully tenanted by Holeproof,
a division of blue chip company Pacific Brands Limited, with a
lease expiry in 2010. Aspen Diversified will obtain an initial
yield of 9.7% from the property with fixed annual rental
increases agreed until expiry.
ASPEN DIVERSIFIED
Homemaker City situated in Castle Hill, New South Wales is
the latest acquisition for Aspen Diversified and comprises a
bulky goods centre of 16 retail units over 10,090 sqm and
office space of 1,288 sqm. Major tenants include Bing Lee
Electronics, Fitness First Health Clubs and AB Furniture.
The acquisition of Homemaker City for $27 million exclusive
of acquisition costs is due for settlement on 1 February 2006,
and will provide the Fund with a rental yield of 9.1%.
Aspen Group has assisted the Fund to grow through increasing
its equity holding, and underwriting the acquisition of these
new properties while the Fund continues to raise capital from
retail investors.
The Fund offers investors an attractive
yield of 8.75% per annum, payable
monthly, providing an attractive property
investment. Contact Aspen now to obtain a
copy of the Product Disclosure Statement.
Freecall 1800 220 840
Holeproof Complex
Trailcraft Industrial Complex
Riseley Corporate Centre
76-79 Station Road, Nunawadding,Victoria
99 Quill Way, Henderson,Western Australia
135 Riseley Street, Booragoon,Western Australia
Midland Cinema Complex
Abernethy Park
Champion Drive Shopping Centre
181 Morrison Road, Midland,Western Australia
511 Abernethy Road, Kewdale,Western Australia
Cnr Champion Drive & Seville Drive,
Armadale,Western Australia
Cardno BSD Centre
Mount Street Building
Homemaker City
2 Bagot Road, Subiaco,Western Australia
80 Mount Street, North Sydney, New South Wales
Castle Hill, Melbourne, New South Wales
Settlements Completed
on Four New Parks
Aspen Parks Property Fund is pleased to confirm settlement of the
four new properties mentioned in the last edition of Aspire, with
settlement completed over the last three months.
The properties are:
•
•
•
•
A 50% interest in Monkey Mia Dolphin Resort, Shark Bay,WA
Wallamba Caravan Park, Forster, NSW
Shalimar Ski and Caravan Park, Forster, NSW
Capital Consolidation
One of the more significant resolutions tabled at the AGM was the
proposal to consolidate the Group’s capital base on a one for five
basis. Following strong support in favour of the proposal, the
Group’s capital base was reduced to one fifth of the number of
securities on issue.Therefore all securityholders will have received a
new holding statement showing one fifth of the number of securities
previously held. In line with the consolidation has been the increase
in Aspen’s security price, which immediately increased five times, and
is now trading above $1.00.The Directors believe the new security
price better reflects the nature of Aspen’s business, and is more in
line with the listed property sector.
Yarraby Holiday and Tourist Park, Echuca,Victoria
Following settlement of these acquisitions,Aspen Parks owns
13 properties with total assets having increased to approximately
$85 million. The Fund is well on track to meet its objective of
reaching $150 million in assets within five years from the initial
launch in July 2004.
The assets of the fund are now well diversified both in terms of
geographic location and the quality of accommodation offered,
from budget backpackers’ accommodation and low cost permanent
park accommodation all the way up to resort style
accommodation. This ensures Aspen Parks is able to attract a
variety of tenants leading to a more consistent and reliable income
stream for the benefit of the Fund.
Aspen Group Managing Director Angelo Del Borrello said:
“Following the establishment of the Fund with a portfolio of
six parks in Western Australia, we have now complemented
and diversified the Fund through acquisitions in Victoria, New
South Wales and Queensland during 2005.”
Annual General
Meeting
Aspen Group held its annual general meeting on Monday 28
November 2005. It was pleasing to see a number of security
holders attend the meeting and provide their support for the
resolutions tabled, all of which were passed by a strong majority.
Managing Director Mr Angelo Del Borrello presented an overview
of the Group’s activities, financial position and outlook, while also
addressing a number of questions from those present. A copy of
the presentation is available through Aspen’s website (ASX
announcements).
New Research values
Aspen at $1.43
Stockbroker Patersons has recently revised their recommendations
on Aspen Group, following the completion of the equity placement,
and acquisition of Dunsborough Lakes and properties for Aspen
Diversified. Patersons have revised their valuation per security to
$1.43 and accordingly have placed a BUY recommendation for
Aspen Group securities on both a short and long term basis.
The revised valuation arises from the higher than forecast growth in
Aspen’s funds management activities. We encourage securityholders
to read the report which can be accessed through Aspen’s website.
Quarterly
Outlook
settlement of Dunsborough
• Complete
Lakes acquisition
settlement of Aspen
• Complete
Diversified acquisitions and issue new
offer document
• Half yearly reporting
Further information on Aspen Group and its activities can
be obtained by contacting us using the following details:
Address
E-mail
Phone
Fax
Level 8, 256 Adelaide Terrace
Perth WA 6000
PO Box Y3442
East St George’s Terrace, Perth WA 6832
[email protected]
08 9220 8400
08 9220 8401
Freecall
1800 220 840
Postal
www.aspengroup.com.au