Aspen Group Limited · ASX:APZ
Aspen — H1 FY2024 Earnings Presentation
37 slides from Aspen's earnings presentation, Feb 22, 2024
Slide 1: Aspen Group 1H FY24 Results Presentation
Aspen Group 1H FY24 Results Presentation 22 February 2024
Slide 2: Contents
Contents 1. Aspen’s Business Model 2. Summary of 1H FY24 Results 3. FY24 Outlook and Guidance Upgrade Appendix A: Property Portfolio Appendix B: Earnings and Balance Sheet 2
Slide 3: Aspen's Business Model
1 Aspen’s Business Model 3 3
Slide 4: Aspen's Business Model and Integrated Platform
Aspen’s Business Model and Integrated Platform Owner Provider of Quality Accommodation Proprietary approach - 100% focused on optimising returns for Aspen securityholders on Competitive Terms Operator Boosting profitability through intensive Core Customer Base operational management and provision of
Slide 5: Superior Investment Returns on Australian Residential Assets
Australian Residential Superior Investment Property Returns – Superior on Australian Returns Residential Assets Australian residential property typically trades at net yields below 3% and delivers attractive total returns over the long run due to the following positive traits... üHousing is essentia
Slide 6: Aspen Strives for Above-Market Returns
Aspen Strives Superior for Above-Market Investment Returns Returns on Australian Residential Assets üAffordable housing is the most essential (least discretionary), and most acutely undersupplied with limited solutions in sight üCreating quality housing at less than new replacement cost through disc
Slide 7: Summary of 1H FY24 Results
2 Summary of 1H FY24 Results 7 7
Slide 8: Highlights
Highlights Guidance Upgrade NAV1 up 5% to $2.10 FY24 EPS2 WACR3 up 28bps / deferred tax expense -5cps 13.00-13.50 cents Up 8-13% on FY23 Aspen Even More Appealing shortages of affordable housing becoming more acute Property NOI up 25% margin expansion Increasing Scale 2x > 5,000 dwellings/sites Port
Slide 9: Statutory Results – Peer Comparison
Statutory Results – Peer Comparison1 Total Return on Equity Distribution Yield Current Stock Price2 / NAV3 (Statutory EPS / Starting NAV) (DPS / Starting NAV) 4.0x 45% 6% 40% average 3.5x 5% 35% 3.0x 30% 4% 2.5x 25% 3% 2.0x 20% 1.5x 15% 2% 1.0x 10% 1% 5% 0.5x 0% 0% 0.0x Aspen Eureka Ingenia LIC Aspe
Slide 10: Segment WACR – Peer Comparison
Segment WACR1 – Peer Comparison Aspen Ingenia Eureka Lifestyle Communities 11.00% 10.00% 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 19 20 21 22 1H 3 19 20 21 22 23 19 20 21 22 23 19 20 21 22 23 24 24 24 24 2 FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY 1H 1H 1H Residential
Slide 11: Balance Sheet – December 2023
Balance Sheet – 31 December 2023 Aspen Group Operations Development Net Asset Value per Security $2.20 3,844 Dwellings/Sites 1,188 Sites Operating Property Value6 Development Property Value6 $2.00 5,032 Dwellings/Sites $479m $35m $1.80 $125k per dwelling/site $30k per site 15% per annum $1.60 compou
Slide 12: Underlying Operating Earnings – 1H FY24
Underlying Operating Earnings – 1H FY24 Aspen Group Operations Development Operating EPS 14c Rental Income2 Sales Revenue Total Revenue $30.0m +22% $12.0m -1% $42.4m +15% $314pw per dwelling/site3 $285k per dwelling/site3 12c Property NOI Development Profit 2H Guidance 20% per annum Underlying EBITD
Slide 13: Operations – Higher Rents and Margins Across the Group
Operations – Higher Rents and Margins Across the Group Weekly Revenue per Operational Property NOI Margin Total Property NOI ($m) & Margin (%) Dwelling/Site 80% $30 60% $400 75% $25 50% $350 70% 65% $20 40% $300 60% $250 55% $15 30% 50% $200 $10 20% 45% 40% $150 $5 10% 35% $100 30% $0 0% FY19 FY20 F
Slide 14: Refurbishment & Development Activity and Pipeline
Refurbishment & Development Activity and Pipeline Build to Rent Build to Sell Annuity Land Rents + NAV uplift Developing and selling the Higher Occupancy, Rents and Value component of land in communities + Development Profit 1,200 through Refurbishment of Dwellings that is most valuable as premium (
Slide 15: Development – Skewing to More Profitable Lifestyle Houses
Development – Skewing to More Profitable Lifestyle Houses Development Sales - # Average Sales Price per Dwelling/Site Development Profit ($m) & Margin (%) 100 $500k $25 60% 90 $450k 50% Contracts on Hand1 80 $400k $20 70 $350k 40% 60 $300k $15 50 $250k 30% 40 $200k $10 20% 30 $150k 20 $100k $5 10% 1
Slide 16: Offer for Eureka Group Holdings
Offer for Eureka Group Holdings The Offer § Aspen is making an off-market takeover offer for all the ordinary shares in Eureka Group Holdings Limited (EGH) – Aspen’s Bidders Statement will be despatched on or before 24 March 2024 § All-scrip consideration: 0.26 APZ Securities for every 1 EGH Share §
Slide 17: Comparison of Average Weekly Rents and NOI per Dwelling
Comparison of Average Weekly Rents and NOI per Dwelling Eureka's Portfolio (owned component) Aspen's Residential Portfolio $450 $450 Metro Locations Much Broader Target Market $400 $400 Less Operationally Intensive Same Rent - 6% Higher NOI $72 $350 $350 $15 -$188 $300 $300 -$118 $250 $250 $200 $200
Slide 18: Offer for Eureka Group Holdings
Offer for Eureka Group Holdings Other Benefits of the Proposed Merger for Aspen Securityholders (assuming 100% ownership) ü Most of Eureka’s properties are well suited to Aspen’s business of providing rentals at <$400pw while generating attractive investment returns ü Eureka’s SE Qld management team
Slide 19: FY24 Outlook and Guidance
3 FY24 Outlook and Guidance 19 19
Slide 20: Outlook and Upgrade to Guidance
Outlook and Upgrade to Guidance Property NOI FY24 Guidance Upgrade1 Residential ü Passing rents are 8% above 1H result - market rents are even higher ü Occupancy to remain high over the medium term - competitive rents and constrained supply Underlying Operating ü Leasing commenced at CoVE Maylands i
Slide 21: Outlook and Upgrade to Guidance
Outlook and Upgrade to Guidance FY24 Guidance Upgrade1 Development ü Production is skewed to 2H and more profitable Lifestyle dwellings ü Demand has picked up post availability of display houses for the first time at projects – currently Underlying Operating holding record number of contracts3, spre
Slide 22: Appendix A Property Portfolio
Appendix A Property Portfolio 22
Slide 23: Aspen is Helping Solve Australia's Affordable Housing Problem
Aspen is Helping Solve Australia’s Affordable Housing Problem Creating affordable housing through disciplined acquisition and development processes § upcycling older buildings which are often unlivable Indigenous Programs § building new homes at relatively low cost § working with local indigenous gr
Slide 24: Portfolio Summary – December 2023
Portfolio Summary – 31 December 2023 Total Dwellings/Sites: Operating v. Development2 Location1 Portfolio Aggregates Total Operational Operational Regional Dwellings Sites 29% Dwellings that Aspen Leases 1,696 34% 40% Land Sites that Aspen Leases 2,024 Metropolitan Land Total Operational Dwellings/S
Slide 25: Residential Overview
Residential Overview $m unless stated Residential Changes in Values and Rents 1HFY24 1HFY23 Change 12 months to December 20231 # Dwellings (close) 992 999 (1%) 15.0% # Operational 872 820 6% # Refurbishment Pipeline 120 179 (33%) Total Book Value $240 $192 25% Average value $242k $193k 25% 10.0% WAC
Slide 26: Residential Properties
Residential Properties Residential1 WA NSW QLD SA Perth Apartment Perth House Lindfield Burleigh Cooks Hill Uniresort Normanville Total Residential Portfolio6 Portfolio Apartments Heads Region Perth Metro Perth Metro Sydney Metro Newcastle Metro Brisbane Metro Gold Coast Metro Fleurieu Peninsula Lan
Slide 27: Recent Acquisition – Burwood VIC Apartments
Recent Acquisition – Burwood VIC Apartments § Exchanged conditional contracts in 1H – expect to settle around 1 March 2024 § Burwood is 17kms east of Melbourne CBD and is home to Deakin University’s Melbourne Campus which has about 28,000 staff and students § Modern 4 level apartment complex opened
Slide 28: Lifestyle Overview
Lifestyle Overview $m unless stated Lifestyle Communities Lifestyle Houses – Sales and Contracts1 (#) 1HFY24 1HFY23 Change 60 # Sites (close) 1,295 1,101 18% 50 # Operational 636 568 12% 40 # Development Pipeline 659 533 24% 30 Total Book Value $86 $70 23% 20 Average value $66k $64k 3% WACR 6.5% 6.6
Slide 29: Lifestyle Properties
Lifestyle Properties Lifestyle NSW WA VIC SA Four Sweetwater Mandurah Wodonga Alexandrina Meadowbrooke Sierra Lewis Fields Total Lifestyle Lanterns Grove Gardens Gardens Cove Region Sydney Metro Newcastle Region South Coast South Coast Darling Range Albury-Wodonga Fleurieu Fleurieu Land Ownership Fr
Slide 30: Parks Overview
Parks Overview $m unless stated Park Portfolio Performance ($m) Park Communities $50 NSW 1HFY24 1HFY23 Change $45 summer Woodside exited AKV $40 bushfires # Dwellings / Sites (close) 2,450 2,395 2% +COVID +COVID $35 # Operational 2,210 2,149 3% $30 # Development Pipeline 240 246 -2% $25 Total Book V
Slide 31: Park Properties
Park Properties Parks NSW SA NT WA Barlings Koala Tween Highway Adelaide Coorong Darwin Aspen Total Investment Total Parks Beach Shores Waters One CP Quays FSR Karratha Properties4 Adelaide Adelaide Region South Coast Central Coast South Coast Fleurieu Darwin Metro Pilbara Metro Metro Land Ownership
Slide 32: Land Development
Land Development Land Development Inventory SA SA Investment Total Land Total Property Mount Barker CQ Residential Property Development Portfolio Region Adelaide Hills Fleurieu Land Ownership Freehold Freehold Resident Tenure N/A N/A Total Land Area (HA) 200 7.8 25.4 33.2 233 Operational Sites 3,720
Slide 33: Appendix B Earnings and Balance Sheet
Appendix B Earnings and Balance Sheet
Slide 34: Comprehensive Income and Underlying Operating Earnings
Comprehensive Income and Underlying Operating Earnings 1HFY24 1HFY23 1HFY24 1HFY23 Summary Change Operations & Development Contributions Change $m $m $m $m Comprehensive income before tax 33.58 29.77 13% Operations Revaluation of PP&E – Darwin FSR (2.21) (4.27) Rental & ancillary services revenue 30
Slide 35: Reconciliation of Statutory Profit to Underlying Operating Earnings
Reconciliation of Statutory Profit to Underlying Operating Earnings 1HFY24 1HFY23 $m $m Statutory Net Profit before Tax 31.37 25.50 Deferred tax expense/(benefit) recognised (9.09) 0.37 Underlying Operating Earnings excludes value creation through development / refurbishment of properties to Statuto
Slide 36: Summary Balance Sheet and Capital Management
Summary Balance Sheet and Capital Management 31 December 23 30 June 23 Key Metrics Change $m $m Total Assets 594.6 553.2 7% - Investment Properties 537.3 490.4 10% - House and Land Development Inventories 24.9 21.7 15% Net Debt 150.8 129.6 16% Gearing below Aspen’s long-term target 30-40% - Cash 5.0
Slide 37: Disclaimer
Disclaimer This presentation has been prepared by Aspen Group Limited on behalf of Aspen Group Limited and Aspen Property Trust (“Aspen”) and should not be considered in any way to be an offer, invitation, solicitation or recommendation with respect to the subscription for, purchase or sale of any s