Aspen Group Limited · ASX:APZ
Aspen — Investor Presentation (September 2012)
47 slides from Aspen's investor presentation, Sep 24, 2012
Slide 1: Aspen Group $101.4 million equity raising
Not for release or distribution in the United States or to, or for the account or benefit of, US Persons For personal use only Aspen Group $101.4 million equity raising Investor presentation 24 September 2012 1
Slide 2: Important notices
For personal use only Important notices This Presentation has been prepared by Aspen Group Limited and Aspen Funds Management Limited as responsible entity for the Aspen Property Trust (together, Aspen Group) in connection with a non-renounceable entitlement offer (Entitlement Offer) of stapled secu
Slide 3: Outline
For personal use only Outline 1.0 Overview 2.0 Strategic review 3.0 Overview of the Entitlement Offer 4.0 Overview of Aspen 5.0 Pro forma financial information 6.0 Key risks 7.0 Appendix 3
Slide 4: Overview
For personal use only Overview 4
Slide 5: Entitlement Offer – summary
For personal use only Entitlement Offer – summary > Aspen is offering approximately 597 million new securities ("New Securities") at $0.17 per New Security (“Offer Price”) to raise approximately $101.4 million ("Entitlement Offer") – 1 for 1 accelerated pro-rata non-renounceable entitlement offer of
Slide 6: Entitlement Offer – rationale
For personal use only Entitlement Offer – rationale Step one in > The Entitlement Offer is crucial to provide Aspen with an improved position to finalise its strategic review strategic review > Debt reduction strategy agreed with Aspen’s main lender National Australia Bank ("NAB")1 Financial > Creat
Slide 7: Entitlement Offer – impact
For personal use only Entitlement Offer – impact Use of proceeds Core Operating Earnings and distribution guidance > Proceeds from the $101.4 million raised > Core Operating Earnings2 generated from on under the Entitlement Offer will be used as balance sheet investment property assets and follows:
Slide 8: Strategic review – initial conclusions
For personal use only Strategic review – initial conclusions > De-risk the balance sheet – Entitlement Offer and associated debt reduction – full impairment of loans to associates – provide liquidity to facilitate funding the likely exercise of the Investor Put in Aspen Development Fund No.1 and pro
Slide 9: Aspen Group – investment highlights
For personal use only Aspen Group – investment highlights Diversified investment property portfolio – office, industrial and accommodation properties – geographically diversified across four Australian states Core income generating assets – net rental income growth of 30% in FY13 under executed
Slide 10: Aspen Group – investment highlights (cont'd)
For personal use only Aspen Group – investment highlights (cont'd) Simplified business strategy – strategic focus on recurring income (rent and management fees) – Aspen Diversified Property Fund currently undertaking an orderly sale of its assets – development activities (Aspen Development Fund No
Slide 11: Summary of key risks
For personal use only Summary of key risks > The performance of Aspen could be negatively affected by a number of general risk factors which might be unrelated to Aspen’s operating performance, these include: – economic conditions in Australia and internationally – investor sentiment and stock marke
Slide 12: Strategic review
For personal use only Strategic review 12
Slide 13: Strategic review – impairment of loans to associates
Strategic review – impairment of loans For personal use only to associates > As part of the initial stages of the strategic review, Aspen has undertaken a further comprehensive review of its development syndicates and non-core inventory – all development syndicates have been identified as non-core a
Slide 14: Strategic review – core and non-core business divisions
Strategic review – core and non-core For personal use only business divisions > As part of the initial stages of the strategic review, Aspen has classified its assets into two separate divisions: – Core assets comprising: – on balance sheet investment property assets; and – Aspen Parks Property Fund
Slide 15: Strategic review – update on debt facilities
For personal use only Strategic review – update on debt facilities > $35 million of the Entitlement Offer proceeds will be immediately applied by Aspen to permanently reduce debt facilities with its main debt provider, National Australia Bank ("NAB") – $15 million of the proceeds will be applied to
Slide 16: Strategic review – Investor Put
For personal use only Strategic review – Investor Put > Aspen has a put option commitment to an Aspen Development Fund No.1 shareholder (“Investor Put”) – exercisable at the shareholder’s discretion between 27 September 2012 and 15 October 2012 (settlement to occur within 60 days post exercise) – un
Slide 17: Overview of the Entitlement Offer
For personal use only Overview of the Entitlement Offer 17
Slide 18: Entitlement Offer – summary
For personal use only Entitlement Offer – summary Entitlement > Fully underwritten, 1 for 1 accelerated pro-rata non-renounceable Entitlement Offer to eligible securityholders1 to raise Offer Structure approximately $101.4 million and Size > Issue of approximately 597 million New Securities > Offer
Slide 19: Entitlement Offer – indicative timetable
For personal use only Entitlement Offer – indicative timetable1 Event Date Trading halt and ASX announcement to launch Entitlement Offer 24 September 2012 Institutional Entitlement Offer period (bookbuild) 24 September 2012 Trading in Aspen securities resumes 25 September 2012 Record Date for the En
Slide 20: Aspen Group – outlook
For personal use only Aspen Group – outlook > Entitlement Offer significantly improves Aspen's balance sheet and liquidity position – balance sheet gearing reduced to 39.3%1,2 – financial flexibility to facilitate funding future capital commitments and further reduce debt levels across the Group > C
Slide 21: Overview of Aspen
For personal use only Overview of Aspen 21
Slide 22: Overview of Aspen
For personal use only Overview of Aspen1 > Aspen is an Australian property investment and funds management group with core assets under management of approximately $700 million Corporate structure Aspen Group (APZ) Stapled Securities Rental income Funds management fees, equity profits, interest reve
Slide 23: Investment property portfolio
For personal use only Investment property portfolio Overview Key Metrics June 2012 June 2011 > FY12 rental growth of 9.6% (like-for-like) Portfolio Total ($m) 379 327 > 14.6% rental growth at Septimus Roe Wtd. Ave Cap Rate (%) 9.34% 9.47% > Market review (April 12) at Aspen Karratha Occupancy (%) 97
Slide 24: Investment property portfolio (cont'd)
For personal use only Investment property portfolio (cont'd) Summary of Investment Properties Book Value Property Sector Indep. Valuation Date June-12 ($m) June-11 ($m) Cap Rate (%) WALE (yrs) Occup. (%) Septimus Roe, WA Office Jun 12 105.5 87.0 8.75 2.54 91 Spearwood Industrial Estate, WA Industria
Slide 25: Funds management
For personal use only Funds management Overview Gross Retail Inflows: FY07-FY12 (Aspen Parks) > Gross equity inflows in Aspen Parks in FY12 up $M 50 45 82% on prior period (net inflows: +51%) 40 > Continued strong performance of Aspen Parks 35 and investor demand for income 30 25 > Leverage existing
Slide 26: Funds management (cont'd)
For personal use only Funds management (cont'd) Aspen Parks Overview Aspen Parks income segment analysis > Strong trading performance driven by mining $M 40 and tourist properties 35 > Gearing1 reduced from 44.4% (June 2011) to 30 25 30.8% (June 2012) FY2011 20 > Annualised distribution rate increas
Slide 27: Non-core activities – Aspen Diversified Property Fund
For personal use only Non-core activities – Aspen Diversified Property Fund > Unitholders approved orderly sale of assets Key Metrics June 2012 June 2011 and wind-up Equity interest held by Aspen 43.6% 35.9% > Settlement of Nunawading, VIC (Sep 12) for Book value – equity $11.5m1 $11.5m $18.4m (c.1%
Slide 28: Non-core activities – Aspen Living and Aspen Development Fund No.1
Non-core activities – Aspen Living and Aspen For personal use only Development Fund No.1 > Further deterioration in residential market Aspen Living Key Metrics FY2012 FY2011 despite falling interest rate environment Lot settlements (Number) 177 269 > Development and planning cost pressures, Lot sett
Slide 29: Overview of debt facilities – Aspen
Overview of debt facilities – Aspen1 For personal use only Debt summary Group Facility Drawn Purpose Maturity ICR2 LVR Lease Covenants Facilities Limit Debt1 Duration ICR 1.5x NAB Core Facility $108.2m $107.9m Long Term Core Facility Feb-14 LVR 60% Lease 1.25yrs3 2.0x 47% 1.92yrs NAB Karratha2 $13.5
Slide 30: Overview of debt facilities – funds and syndicates
Overview of debt facilities – funds and For personal use only syndicates1 Aspen Fund Lender Debt facility Maturity LVR covenant LVR actual Aspen Parks St George $136m July-14 55% 51% Aspen Living: • Aspen Dunsborough Lakes NAB $26m Dec-13 62.5%2 62.5% • Fern Bay Seaside Village Bankwest $20m Feb-14
Slide 31: Pro forma financial information
For personal use only Pro forma financial information 31
Slide 32: Pro forma balance sheet
For personal use only Pro forma balance sheet > Aspen Group pro forma balance sheet > Adjustments 1 – Includes full impairment of Aspen’s remaining loans to associates, 1 2 impairments to other assets and trade and other receivables and the $m 30 Jun 12 Adjustments Pro forma provision for stamp duty
Slide 33: June 2012 NTA reconciliation (per security)
For personal use only 30 June 2012 NTA reconciliation (per security) > As a result of implementing the initial findings of the strategic review, the Board notes that the audited FY12 financial statements differ from the 4E and Preliminary Financial Statements announced on 31 August 2012 (see below f
Slide 34: Key risks
For personal use only Key risks 34
Slide 35: Key risks
For personal use only Key risks Business activities undertaken by Aspen are subject to a number of risks and other factors which may impact its future performance. Some of these risks, particularly Company specific risks, can be mitigated by the use of safeguards and appropriate controls, however, m
Slide 36: Key risks (cont'd)
For personal use only Key risks (cont’d) Specific risks Tenant Defaults Rental income can be adversely affected by tenants not making rental payments in a timely fashion and defaulting under their lease agreement. While Aspen uses its best endeavours to satisfy itself as to the financial strength of
Slide 37: Key risks (cont'd)
For personal use only Key risks (cont’d) Specific risks (cont’d) Physical Works In the event that any property requires structural repairs or major works which are not of a capital nature, additional charges may have to be made against the rental income from the respective properties. While allowanc
Slide 38: Key risks (cont'd)
For personal use only Key risks (cont’d) Specific risks (cont’d) Property Performance and Investment (cont'd) Factors affecting investment property values include capitalisation and discount rates, growth outlooks, supply and demand, economic factors, environmental issues, native title claims, land
Slide 39: Key risks (cont'd)
For personal use only Key risks (cont’d) Specific risks (cont’d) Contractual Risk Aspen has provided debt funding to the Aspen Diversified Property Fund, the Aspen Parks Property Fund, Aspen Communities Property Fund, Aspen Villages Property Fund, other associated entities, and to property developme
Slide 40: Key risks (cont'd)
For personal use only Key risks (cont’d) Specific risks (cont’d) Gearing and Financial Covenants By using debt to part finance the purchase of properties, the potential for capital gains and capital losses increases. As a condition to entering loan arrangements, Aspen must not breach certain covenan
Slide 41: Key risks (cont'd)
For personal use only Key risks (cont’d) Specific risks (cont’d) Aspen Parks Property Fund There are risks relating to the ongoing liquidity of the Aspen Parks Wholesale Property Fund. Aspen Group provides a liquidity facility to the Fund which has a six month cancellation clause. Given the withdraw
Slide 42: Key risks (cont'd)
For personal use only Key risks (cont’d) Specific risks (cont’d) Exposure to resources sector A reduction in the level of activity associated with mining and resources projects (particularly in the North West of WA) may have an effect upon occupancy levels and asset valuations of Aspen and the Aspen
Slide 43: Appendix
For personal use only Appendix 43 7.0
Slide 44: International Offer Restrictions
For personal use only International Offer Restrictions This document does not constitute an offer of new stapled securities ("New Securities") of Aspen in any jurisdiction in which it would be unlawful. New Securities may not be offered or sold in any country outside Australia except to the extent p
Slide 45: International Offer Restrictions (cont'd)
For personal use only International Offer Restrictions (cont’d) Hong Kong WARNING: This document has not been, and will not be, authorized by the Securities and Futures Commission in Hong Kong pursuant to the Securities and Futures Ordinance (Cap. 571) of the Laws of Hong Kong (the "SFO"). No action
Slide 46: International Offer Restrictions (cont'd)
For personal use only International Offer Restrictions (cont’d) Singapore This document has not been registered as a prospectus with the Monetary Authority of Singapore. This document and any other document or material in connection with the offer or sale, or invitation for subscription or purchase
Slide 47: International Offer Restrictions (cont'd)
For personal use only International Offer Restrictions (cont’d) United Kingdom Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial Services Authority in the United Kingdom and no prospectus (within the meaning of sect