Aspen Group Limited · ASX:APZ
Aspen — Linwar Property Conference 2008
48 slides from Aspen's conference presentation, May 20, 2008
Slide 1: Linwar Property Conference
For personal use only Linwar Property Conference 19th May 2008 “Creating wealth through intelligent property investment” 1 “Creating wealth through intelligent property investment” Linwar Property Conference May 08
Slide 2: Contents
Contents For personal use only 1. Overview 2. Half Year in Review 3. Capital Management 4. Business Strategy 5. Property Portfolio 6. Funds Management 7. Summary 8. Outlook Appendix 1 – Financial Summary Appendix 2 – Property Portfolio 2 “Creating wealth through intelligent property investment” Linw
Slide 3: Corporate Structure
1. Overview Corporate Structure For personal use only Investment Funds Equity Property Management Investments Underlying 53% 47% Included in funds management Revenue ¾ Portfolio of diversified ¾ Driving DPU and EPU Growth ¾ Co-invests in funds property assets ¾ Efficient use of capital – Strategic s
Slide 4: Management Structure
1. Overview Management Structure For personal use only BOARD OF DIRECTORS Reg Gillard Non-executive Chairman Terry Budge Non-executive Director Angelo Del Borrello Managing Director Seng Fai Chan Non-executive Director Gavin Hawkins Executive Director Finance Matthew McCann Non-executive Director AS
Slide 5: Half Year Highlights
2. Half Year in Review Highlights For personal use only ¾ Underlying Net Profit increased 63% to $19.02 million ¾ Underlying EPS increased 26% to 7.57 cents ¾ 13% growth in property portfolio largely a result of $36.6 million in revaluations ¾ 12% increase in property revenues to $16.1 million ¾ Fun
Slide 6: Financial Performance
2. Half Year in Review Financial Performance For personal use only “Strong growth in underlying earnings” HY HY % 2008 2007 Change Underlying Net Profit* ($’m) 19.02 11.65 Å 63% Underlying EPS (cents) 7.57 6.02 Å 26% * Underlying net profit after tax represents net profit after tax excluding non cas
Slide 7: Operating Revenue
2. Half Year in Review Operating Revenue For personal use only Operating Revenue by Nature Operating Revenue by Type 7 “Creating wealth through intelligent property investment” Linwar Property Conference May 08
Slide 8: Financial Position
2. Half Year in Review Financial Position For personal use only “Strong balance sheet position” % 31 Dec 07 30 Jun 07 Change Gross Assets Under Management ($’m) 1,429 1,224 Å 17% Investment Property ($’m) 380 336 Å 13% Gearing 34% 31% Å 10% 8 “Creating wealth through intelligent property investment”
Slide 9: Capital Structure
3. Capital Management Capital Structure For personal use only Capital Structure Current Stapled Securities on Issue 264.6 million Market Cap (at $1.54 closing price, 15 May 2008) $407 million Total Securityholders Circa 3,500 Institutional 63% Retail 37% 9 “Creating wealth through intelligent proper
Slide 10: Debt Structure
3. Capital Management Debt Structure For personal use only Debt Profile (30 April 2008) Total Fixed Floating Borrowings $228.6 m $129.6 m $99.0 m Average Hedge Maturity Profile 2.5 yrs 30 days Gearing 35%* Look-through gearing 43% Unused Facility Limit $40.2m** * Gearing falls to 22% with repayment
Slide 11: Business Strategy Overview
4. Business Strategy Overview For personal use only Transparent business model remains unchanged 1. Development of Sound Property Portfolio (Section 5): ¾ Produce strong recurring rental streams ¾ Capital growth through active management and optimal asset utilisation ¾ Opportunistic growth – Karrath
Slide 12: Property Portfolio Summary
5. Property Portfolio Summary For personal use only Latest Book Value Property Location Sector Occupancy Valuation A$ millions Septimus Roe Square Perth, WA Office December 2007 93.9 100% Alcoa Office Complex Booragoon, WA Office October 2006 28.9 100% 564 St. Kilda Road Melbourne, VIC Office Decemb
Slide 13: Property Portfolio Overview
5. Property Portfolio Overview For personal use only Key Indicators ¾ Weighted Average Lease Expiry 4.45 years ¾ Weighted Average Occupancy 97% ¾ Weighted Average Cap rate 7.62% Highlights ¾ Capitalised on Perth CBD office strength with 22% lift in Septimus Roe Square valuation in 12 months ¾ Entry
Slide 14: Booragoon Development
5. Property Portfolio Booragoon Development For personal use only ¾ 9300sqm office tower ¾ 300 car bays ¾ 10 year IRR circa 15% ¾ Construction Costs currently out to tender ¾ Sub division approval already granted for a 2000sqm apartment site 14 “Creating wealth through intelligent property investmen
Slide 15: Karratha Village
5. Property Portfolio Karratha Village For personal use only ¾ Construction of a 180 room modular home village ¾ Woodside committed to a 5 year lease (+ 5 year option) over 160 rooms ¾ Initial annual revenue $10.2 million ¾ Total project costs circa $28 million including land ¾ Construction underway
Slide 16: Funds Management Overview
6. Funds Management Overview For personal use only ¾ Leverages Aspen’s core property management expertise ¾ Growing recurring income base (Increase of 105% 1HY08) ¾ In-house skill sets across all property sectors ¾ 6 established funds management business sectors ¾ “Aspen Select” property securities
Slide 17: Divisions
6. Funds Management Divisions For personal use only Aspen Aspen Aspen Aspen Aspen Aspen Branding Parks Diversified Living Developments Villages Communities Development Affordable Retirement Sector Resort Park Core Income Syndicated Land Fund Series Living/Retirement Aged Care Asset value $238 millio
Slide 18: Contribution to Income and Asset Growth
6. Funds Management Contribution to Income and Asset Growth For personal use only Income Split Assets Under Management 16 1250 Transactional Recurring 14 1009 1000 12 883 6.7 10 750 $m $m 8 500 6 3.3 333 4 5.1 7.8 250 2 3.8 82 1.2 1.3 0 0.3 0 HY05 HY06 HY07 HY08 Jun-05 Jun-06 Jun-07 Dec-07 18 “Creat
Slide 19: Distribution
6. Funds Management Distribution For personal use only ¾ Increased national business development team to 6 covering all key centres of Australia ¾ Direct/Inhouse Sales Managers increased to 2 ¾ Proven distribution capacity at retail and wholesale levels ¾ 96% increase in retail inflows over the corr
Slide 20: New Initiatives - Retail
6. Funds Management New Initiatives - Retail For personal use only Aspen Parks ¾ Introduced wholesale version designed to be platform friendly ¾ Independent research rating increased to recommended (upper end) by Lonsec ¾ Growing popularity of Aspen Parks with financial planners as a portfolio diver
Slide 21: New Initiatives - Wholesale
6. Funds Management New Initiatives - Wholesale For personal use only Aspen Villages Fund ¾ Launched May 2008 – Target average return 18% p.a. over life of fund ¾ Affordable living sector – early retirees and tourism ¾ Six properties secured to seed for initial portfolio ¾ Targeting wholesale invest
Slide 22: Aspen Parks Property Fund
6. Funds Management Aspen Parks Property Fund For personal use only Strategy ¾ To acquire, manage and expand a portfolio of park properties providing regular income and capital growth to investors Highlights ¾ Target GAUM ($150 million) achieved in only 3 years ¾ Provided original investors with tot
Slide 23: Aspen Parks Property Fund
6. Funds Management Aspen Parks Property Fund For personal use only Kununurra Island Gateway Cooke Point Balmoral Pilbara Exmouth Ningaloo Reef Monkey Mia BRISBANE Roxby Downs Perth Port Augusta Wallamba River Coogee Beach Woodman Point Horseshoe SYDNEY ADELAIDE Wymah Valley Yarraby Twofold Bay Ashl
Slide 24: Aspen Parks New Acquisitions FY08
6. Funds Management Aspen Parks Property Fund For personal use only New Acquisitions FY08 Monkey Mia Myall Grove, Roxby Downs, SA $11.5 million Seven Park Portfolio Victoria and New South Wales $43.1 million Monkey Mia Remaining 50% share $9.5 million Cabin Developments Pilbara, Exmouth, Wymah Valle
Slide 25: Aspen Diversified Property Fund
6. Funds Management Aspen Diversified Property Fund For personal use only Strategy ¾ To acquire a commercial property portfolio in the $5 – $30 million range (too large for individual investors but too small for LPTs, institutional investors) Highlights ¾ Total return since inception 12.30% pa ¾ 3 a
Slide 26: Aspen Diversified Property Fund Properties
6. Funds Management Aspen Diversified Property Fund For personal use only Property Location Use Acquisition Date Book Value 5 Memorial Drive Shellharbour, NSW Office/ Retail Dec 2007 $8.5m 2 Apollo Place Lane Cove, NSW Office Dec 2007 $9.2m 3 Apollo Place Lane Cove, NSW Office Dec 2007 $7.8 m 60 Gri
Slide 27: Aspen Diversified Property Fund
6. Funds Management Aspen Diversified Property Fund For personal use only Lane Wacol Cove Shellharbour 27 “Creating wealth through intelligent property investment” Linwar Property Conference May 08
Slide 28: Aspen Living
6. Funds Management Aspen Living For personal use only Aspen Aspen Fern Bay St Leonards Seaside Dunsborough Whitsunday Total Estate Lakes Shores Village Number of Lots 1,135 800 1,108 776 3,819 Remaining Projected Gross Realisable Value 432 255 354 244 1,285 ($’m) Location Dunsborough Bowen Perth St
Slide 29: Aspen Living Strategy
6. Funds Management Aspen Living For personal use only Strategy ¾ Leverages Aspen’s expertise in residential subdivision to provide attractive returns to investors and long term recurring funds management income for Aspen. ¾ In-house expertise used to reposition underperforming developments and incr
Slide 30: Aspen Developments
6. Funds Management Aspen Developments For personal use only Aspen Development Fund No1 Strategy ¾ Multi-project development fund diversified across construction, residential development, health/ retirement sectors to mitigate development risk. ¾ Opportunity to joint venture with institutional and s
Slide 31: Aspen Developments Adelaide City Central
6. Funds Management Aspen Developments For personal use only Adelaide City Central e i a h g b d c Key f a. Office Tower b. Office Tower c. Bar/restaurant d. Office Tower e. Office Tower f. Adelaide GPO/Retail g. Hotel/ Residential h. Office Tower i. Residential apartments 31 “Creating wealth throug
Slide 32: Norwest Private Hospital
6. Funds Management Aspen Developments For personal use only Norwest Private Hospital (artists impression) 32 “Creating wealth through intelligent property investment” Linwar Property Conference May 08
Slide 33: Aspen Select Property Fund
6. Funds Management Aspen Select Property Fund For personal use only Strategy ¾ Open ended hybrid product targeted at: ¾ Retail investors via platforms ¾ Wholesale investors via direct investment ¾ Leverage Aspen’s broad property sector expertise and funds management framework to offer investor a un
Slide 34: Aspen Villages
6. Funds Management Aspen Villages For personal use only Strategy ¾ Wholesale fund to acquire, develop and manage residential accommodation villages ¾ Target sectors requiring affordable and/or flexible accommodation solutions with supporting services Highlights ¾ Portfolio of properties has recentl
Slide 35: Aspen Communities
6. Funds Management Aspen Communities For personal use only Strategy ¾ To develop built form retirement villages and aged care facilities in a sustainable community environment ¾ Typical sites will comprise 200-300 living units on 7-12ha land ¾ Utilise in-house development expertise of Aspen Develop
Slide 36: EPS/DPS Growth Profile
7. Summary For personal use only EPS/ DPS Growth Profile Underlying EPS and DPS growth has 16 15.6 15.5 4 Year EPS been driven by: CAGR 20.5% ¾ Strong performance of property portfolio 14 12.8 12.8 through astute acquisitions and active asset management 12 4 Year DPS C e n t s P e r S e c u rit y CA
Slide 37: Outlook
8. Outlook For personal use only ¾ 10% distribution yield at current security price of $1.54 (Distribution expected to be comfortably met by full year underlying earnings) ¾ Sound rental income stream from property portfolio (not reliant on asset disposals) ¾ Property revenue upside through Booragoo
Slide 38: Disclaimer
Disclaimer For personal use only This presentation has been prepared by Aspen Group (“Aspen”) and should not be considered in any way to be an offer, invitation, solicitation or recommendation with respect to the subscription for, purchase or sale of any security, and neither this document nor anyth
Slide 39: Income Statement
Appendix 1 Financial Summary Income Statement For personal use only HY08 ($M) HY07 ($M) Income Rental income 16.14 14.44 Funds management 14.46 7.20 Property revaluations & Other 36.94 48.52 Financial Income 4.87 2.28 Share of profit of associates 2.24 2.89 Total Income 74.65 75.33 Expenses Direct p
Slide 40: Financial Performance
Appendix 1 Financial Summary Financial Performance For personal use only HY08 HY07 % ($M) ($M) Change Underlying NPAT before significant items 19.0 11.7 Å 63% Significant Items: Revaluation Gains on Investment Property (Net of tax) 30.5 42.9 Gains on Interest Hedge instruments 1.3 0.9 Security based
Slide 41: Financial Position
Appendix 1 Financial Summary Financial Position 31 Dec 07 30 Jun 07 Change For personal use only Assets $M $M % Current Trade 59.9 75.2 Inventories 49.4 - Cash and other 18.2 12.0 Non Current Investment Properties 380.2 335.8 Equity Investments 93.8 93.3 Inventories 15.1 12.8 Other non-current asset
Slide 42: Property Portfolio - Office
Appendix 2 Property Portfolio Office For personal use only St. Kilda Rd, Melbourne Septimus Roe Square, Perth Building Area 8,470 sqm plus 173 car parking bays Building Area 16,883 sqm plus 126 car bays Tenants 38 tenants including BankWest, Tenants L’Oreal Subway, Dome Cafe, Sun, State Police Conne
Slide 43: Office Update
Appendix 2 Property Portfolio Office Update For personal use only Currie Street ¾ Re-valued to $93.5m as a result of yield compression in the Adelaide commercial market and increased leasing activity in the building ¾ Take up of vacant area by existing tenants ¾ Occupancy increased from 88% to 99% S
Slide 44: Property Portfolio - Industrial
Appendix 2 Property Portfolio Industrial For personal use only Elders Woolstores, Fremantle Noble Park. Melbourne Rocklea, Brisbane Building Area 100,800 sqm Building Area 42,747 sqm plus 400 parking bays Building Area 14,555 sqm plus 150 car bays Tenant Elders Limited (subsidiary of Futuris Limited
Slide 45: Industrial Update
Appendix 2 Property Portfolio Industrial Update For personal use only Elders Woolstores ¾ Substantial increase in surrounding land values and redevelopment activity of both light industrial and residential enhances appeal as a redevelopment site Noble Park ¾ Noble Park/Melbourne industrial market re
Slide 46: Property Portfolio - Retail
Appendix 2 Property Portfolio Retail For personal use only Garden Town, Toowoomba Building Area Tenants 12.434sqm plus 750 car bays Super IGA Supermarket, two sub-major ¾ Tenant re-mix opportunities to be pursued and multiple speciality tenancies Occupancy 90% ¾ Food court redevelopment planned Book
Slide 47: Leasing Profile
Appendix 2 Property Portfolio Leasing Profile For personal use only Lease expiry profile by financial year 30% 25% 20% Lease % of Key Tenants Expiry Income 15% Elders 2012 16% 10% Centrelink 2011 9% 5% DIMIA 2015 8% 0% Alcoa 2014 6% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 L’
Slide 48: Diversification
Appendix 2 Property Portfolio Diversification For personal use only 48 “Creating wealth through intelligent property investment” Linwar Property Conference May 08