Aspen Group Limited · ASX:APZ
Aspen — Merger or Acquisition (September 2015)
34 slides from Aspen's merger presentation, Sep 14, 2015
Slide 1: Aspen Parks Property Fund Merger with Aspen Group
For personal use only Aspen Parks Property Fund Merger with Aspen Group 14 September p 2015
Slide 2: Merger overview: a compelling proposition for APPF
Merger overview: a compelling proposition for APPF For personal use only 1 Aspen Parks Property Fund (“APPF”) and Aspen Group have entered an agreement to merge APPF established an Independent p Board Committee ((“APPF IBC”)) to assess the merits of the Merger g for APPF securityholders 2 The APPF
Slide 3: Merger consideration: significant premium to NAV
Merger consideration: significant premium to NAV For personal use only Merger consideration $0.50 per APPF security held(1), an 8.2% premium to APPF NAV ($0.4622 at 30 June 2015) Form of consideration will be at each APPF securityholder's election Scrip Option: 0.386 Merged Group securities for
Slide 4: Election of Merger consideration: Cash v Scrip
Election of Merger consideration: Cash v Scrip For personal use only Cash Option of $0.52 is equivalent value to Scrip Option at $1.347 per Merged Group security ¾ Value of Scrip Option will change in line with Aspen Group security price up to the date of Merger implementation implementation, expe
Slide 5: Scrip Merger consideration: increase in distributions
Scrip Merger consideration: increase in distributions For personal use only For those APPF securityholders who retain Merged Group securities, distributions are forecast to be 16% higher than current APPF distributions Change in APPF distributions F example For l +16% FY16 DPS If you currently o
Slide 6: Merger benefits for APPF securityholders
Merger benefits for APPF securityholders For personal use only Improved liquidity Option of receiving up to 100% consideration in cash (subject to the aggregate $35 million Cash 1 Option cap), or remaining invested in the Merged Group which will be a leading owner and manager of value for money ac
Slide 7: The Merged Group: creating an integrated platform for future returns
The Merged Group: creating an integrated platform for future returns in an attractive market sector For personal use only Securityholders who retain Merged Group securities have the opportunity to benefit from: A clear strategic focus as a leader in the value for money accommodation sector Attra
Slide 8: Merger timetable and distribution guidance
Merger timetable and distribution guidance For personal use only Timing Announcement of Merger 14 September 2015 First court hearing Scheme Booklet released to Aspen Group and APPF October 2015 securityholders Aspen Group and APPF securityholder meetings November 2015 Second court hearing December 2
Slide 9: Merger background
For personal use only Merger background
Slide 10: Background to the Merger
Background to the Merger For personal use only Current APPF structure limits investor liquidity and access to equity funding APPF background g Established in 2004 as an open ended, unlisted property fund ¾ Approximately 3,000 securityholders - many since inception Portfolio growth since inceptio
Slide 11: APPF IBC unanimously recommends the Merger
APPF IBC unanimously recommends the Merger For personal use only In May 2015, Aspen Group submitted a confidential, incomplete and non-binding expression of interest to APPF to combine the two groups by way of Merger Governance protocols have been adopted, including the establishment of an APPF
Slide 12: Strategic alternatives considered by the IBC
Strategic alternatives considered by the IBC For personal use only Options considered Board assessment 1 1. I di id l assett sales Individual l N t consistent Not i t t with ith b broader d growth th strategy t t and d maintenance i t off portfolio tf li Impacts operational efficiencies for asse
Slide 13: Strategy if the Merger proposal does not proceed
Strategy if the Merger proposal does not proceed For personal use only Continue intensive operational and revenue management to optimise returns from existing assets The Fund's open-ended, unlisted structure, dating from 2004, does not meet current market conditions ¾ Does not satisfy current se
Slide 14: Profile of the Merged Group
For personal use only Profile of the Merged Group
Slide 15: The Merged Group profile
The Merged Group profile For personal use only Creating a simplified and integrated platform for further growth Portfolio size and asset type as at 30 June 2015 $189m $273m Accommodation properties Resource properties $163m $ Non-core property(1) $84m Equity stake in APPF (2) (3) Aspen Group APPF Me
Slide 16: The Merged Group profile: a simple business
The Merged Group profile For personal use only A simple business owning, managing and developing value for money accommodation properties 1 Permanent Largely retiree customers residents Land lease model (customer owns cabin) Stable, high quality, annuity residential rental cashfows Developme
Slide 17: Business focus shift toward residential / permanents
The Merged Group profile For personal use only Business focus has been to shift toward residential / permanents Acquisitions since 1 July 2014 have been 56% residential / permanents Sale of three short stay resort-style assets in north-west WA (expected to close September 2015) Portfolio composi
Slide 18: Properties across a diversified customer base
The Merged Group profile For personal use only Properties across a diversified customer base to reduce risk 1 Mix of Mixed exposure is a frequent regulatory requirement permanent Greater flexibility to maximise the highest and best use of sites residents and short-stay (59%) Ability to cross-s
Slide 19: Accommodation portfolio
The Merged Group profile For personal use only Accommodation portfolio(1) Number of properties Value ($m) % overall # of sites Mixed residential/short stay 15 143 59% 3,459 100% short stay 3 37 16% 447 100% residential 2 19 8% 260 Resource – AKV worker facility 1 22 9% 180 Resource – other parks 4 2
Slide 20: Operations: market leading integrated operating platform
The Merged Group profile: Operations For personal use only A market leading fully integrated internalised operating platform 1 Scale operations 11 year track record record, with operations commencing in 2004 25 properties, located in every mainland state – 42% in NSW Over 5,000 sites and more
Slide 21: Development: progressing expanded development pipeline
The Merged Group profile: Development For personal use only Progressing expanded development pipeline 1 In house team In-house Located in both Sydney and Perth Combine traditional residential, caravan park and manufactured housing experience Development Creating high quality annuity rental str
Slide 22: Acquisitions: strong acquisitions track record
The Merged Group profile: Acquisitions For personal use only Strong acquisitions track record 1 Clear criteria Locational focus on: metropolitan, metropolitan existing asset clusters, clusters or major regional population centres (especially east coast) Attractive income yields and development p
Slide 23: Supportive social trends and positive industry fundamentals
The Merged Group profile For personal use only Supportive social trends and positive industry fundamentals 1 Demographics Increasing retiree population Lengthening life expectancy ¾ Inadequate savings drives requirement for capital release from residential down-sizing ¾ More active, self-reliant
Slide 24: Summary and conclusion
Summary and conclusion For personal use only Merger is an important strategic initiative for APPF ¾ Resolves limitations of APPF’s unlisted fund structure ¾ Provides securityholders y with a choice of outcomes Merged Group will be a more significant integrated owner, manager and developer of acc
Slide 25: Appendix: Additional Information
For personal use only Appendix Additional Information
Slide 26: A Financial information: Pro forma June 2015 Balance Sheet
A Financial information For personal use only Pro forma 30 June 2015 Balance Sheet Aspen Distribution guidance Pro forma 30 June 2015 ($m) APPF Adj. Pro forma Group(1) The Merged Group is forecasting an FY16 annualised Cash 2 7 (1) 6 distribution of 12.0 cents per Merged Group security(5), based o
Slide 27: B Implementation of the Merger
B Implementation of the Merger For personal use only Merger considerations APPF securityholders will receive 100% Merged Group securities unless they elect the Cash Option After giving careful consideration to the varying objectives of APPF and Aspen Group securityholders, a Cash Option subject
Slide 28: Current Aspen Group and APPF structure
B Implementation of the Merger For personal use only Current Aspen Group and APPF structure APZ APPF securityholders APZ securityholder (other than APZ entities) Aspen Group 58% APT Aspen Property Trust AGL APPML AGL APT APPT Aspen Group Limited 42% 42% AFML AFML Aspen Funds Management RE RE Limited
Slide 29: C Accommodation portfolio: national footprint
C Accommodation portfolio(1) For personal use only Accommodation portfolio(1) of over 5,000 sites with a national footprint Queensland Western Australia Carrying Cap Property value ($m) rate (%) Carrying Cap Property value ($m) rate (%) 1 Australiana 6.0 11.3 16 Balmoral 1.2 10.8 New South Wales 17
Slide 30: C Accommodation portfolio
C ACCOMMODATION PORTFOLIO(1) For personal use only Property Location State Tenure Sites Carrying value ($m) Cap rate (%) Ballina Ballina NSW Both (F&L) 223 17.2 9.0% D bb P Dubbo Parklands kl d D bb Dubbo NSW F h ld Freehold 127 11 3 11.3 10 2% 10.2% A Shady River Echuca-Moama NSW Freehold 146 5.8 1
Slide 31: D Summary of Merger Implementation Deed
D Summary of Merger Implementation Deed For personal use only Process and conditions Aspen Group and APPF have entered into a Merger Implementation Deed to give effect to the Merger Conditions precedent include: ¾ Customary regulatory approvals (including ASIC and ASX approvals) and court approv
Slide 32: D Summary of Merger Implementation Deed (continued)
D Summary of Merger Implementation Deed For personal use only Process and conditions (continued) Customary termination rights including: ¾ If any of the resolutions required to implement the Merger are not approved by the requisite majority ¾ If an independent expert opines that the Merger is not
Slide 33: Disclaimer
Disclaimer For personal use only This presentation and the information in it is not investment or financial product advice and is not a recommendation or advice in relation to Aspen Group (“Aspen Group”), Aspen Parks Property Fund (“APPF”) or their subsidiaries, or the merger proposal described in t
Slide 34: For further information on the Merger Proposal please contact
For personal use only For further information on the Merger Proposal please contact Aspen Investor Services website: www.aspenfunds.com.au Email: funds@aspengroup.com.au @ p g p Telephone: Freecall 1800 220 840 (8:00am to 4:00pm AWST)