Aspen Group Limited · ASX:APZ
Aspen — Merger or Acquisition (September 2015)
40 slides from Aspen's merger presentation, Sep 14, 2015
Slide 1: Merger of Aspen Group and Aspen Parks Property Fund
For personal use only Merger of Aspen Group and Aspen Parks Property Fund Creating a leader in value for money accommodation 14 September 2015 1
Slide 2: Contents
Contents For personal use only The Merger proposal The Merged Group profile Appendices 2
Slide 3: The Merger proposal
1 The Merger proposal For personal use only 3
Slide 4: Executing on strategy: becoming a leader in value for money accommodation
EXECUTING ON STRATEGY For personal use only Becoming a leader in "value for money" accommodation 1 Aspen Group and Aspen Parks Property Fund ("APPF") have entered into an agreement to merge APPF is an unlisted property fund, with 21 properties valued at $189 million(1) and approximately 3,000 invest
Slide 5: Key Merger terms
MERGER TERMS For personal use only Key Merger terms Consideration for Aspen Group Securityholders Aspen Group securityholders will receive one Merged Group security for each Aspen Group security Consideration for APPF Securityholders Consideration represents a value of $0.50 per APPF security(1) 8.2
Slide 6: The Merged Group: simplified and integrated platform
THE MERGED GROUP 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) $84m Equity stake in APPF (2) (3) Aspen Group APPF Merged Group
Slide 7: A simple business owning, managing and developing accommodation properties
THE MERGED GROUP For personal use only A simple business owning, managing and developing value for money accommodation properties 1 Permanent Largely retiree customers residents Land lease model (customer owns cabin) Stable, high quality, annuity residential rental cashfows Development margin on cab
Slide 8: Accommodation portfolio of over 5,000 sites with national footprint
THE MERGED GROUP For personal use only Accommodation portfolio(1) of over 5,000 sites with a national footprint Queensland Western Australia Carrying Cap Property value ($m) rate (%) Carrying Cap Property value ($m) rate (%) 1 Australiana 6.0 11.3 16 Balmoral 1.2 10.8 New South Wales 17 Cooke Point
Slide 9: Immediate significant accretion to distributions
DISTRIBUTIONS For personal use only Immediate significant accretion to distributions(1) Distribution accretion reflects: Merged Group balance sheet gearing consistent with target range Merger synergies Aspen Group APPF(2) +28% +16% FY16 DPS FY16 DPS 12.0 4.6 9.4 4.0 Current FY16 Merged Group Current
Slide 10: Appropriate capital structure
CAPITAL STRUCTURE For personal use only Appropriate capital structure Merged Group pro forma 30 June 2015 gearing(1) subject to the level of take up under the Cash Option Range of 25% to 37% (based on zero to full take-up of the Cash Option) Post a sale of Spearwood South industrial property, pro fo
Slide 11: Benefits for Aspen Group securityholders
BENEFITS FOR ASPEN GROUP SECURITYHOLDERS For personal use only Increased Opportunity for Aspen Group to achieve scale efficiently 1 exposure to a Valued at a weighted average capitalisation rate of 13.1% quality portfolio of assets Properties independently valued during FY15 (most for 30 June 2015 a
Slide 12: Benefits for APPF securityholders
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 accommodati
Slide 13: The Merged Group profile
2 The Merged Group profile For personal use only 13
Slide 14: Business focus shifting 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 composition
Slide 15: Properties across a diversified customer base to reduce risk
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-sell to
Slide 16: A market leading fully integrated internalised 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, with operations commencing in 2004 25 properties, located in every mainland state – 42% in NSW Over 400 employees Strong customer Over
Slide 17: Progressing expanded development pipeline
THE MERGED GROUP PROFILE: DEVELOPMENT For personal use only Progressing expanded development pipeline 1 In-house team Located in both Sydney and Perth Combine traditional residential, caravan park and manufactured housing experience Development Creating high quality annuity rental streams 2 approach
Slide 18: Strong acquisitions track record
THE MERGED GROUP PROFILE: ACQUISITIONS For personal use only Strong acquisitions track record 1 Clear criteria Locational focus on: metropolitan, existing asset clusters, or major regional population centres (especially east coast) Attractive income yields and development potential Adding to Focus o
Slide 19: 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 Inadequate savings drives requirement for capital release from residential down-sizing More active, self-reliant lifesty
Slide 20: Summary and conclusion
SUMMARY AND CONCLUSION For personal use only The Merged Group will be a leading owner, manager and developer of value for money accommodation, with a geographically diverse portfolio across Australia The Merger will create an enlarged and simplified entity with an improved platform to drive sharehol
Slide 21: Appendices
Appendices For personal use only A Financial information B Implementation of the Merger C Aspen Group strategy evolution D Accommodation portfolio E Summary of Merger Implementation Deed 21
Slide 22: 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, based on 2H
Slide 23: B Implementation of the Merger: background and APPF IBC process
B IMPLEMENTATION OF THE MERGER For personal use only Background to the Merger and APPF IBC process and recommendation 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
Slide 24: B Implementation of the Merger: merger considerations
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 to a
Slide 25: Implementation timetable and distribution guidance
B IMPLEMENTATION OF THE MERGER For personal use only Implementation timetable and distribution guidance 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 Novemb
Slide 26: Aspen Group strategy if the Merger does not proceed
B IMPLEMENTATION OF THE MERGER For personal use only Aspen Group strategy if the Merger does not proceed Continue intensive operational and revenue management to optimise returns from existing assets Development programme – both improving utilisation of existing sites and expansion onto available va
Slide 27: Current and proposed 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 28: Aspen Group strategy evolution
C ASPEN GROUP STRATEGY EVOLUTION For personal use only Aspen Group has been refocused to deliver a clear and consistent business Restructured Refocused Optimise and reinvest 2012 2013 2014 2015 YTD Board restructure and Senior management Sale of majority of non-core Commenced manufactured housing ap
Slide 29: Accommodation portfolio summary
D ACCOMMODATION PORTFOLIO(1) For personal use only Number of properties Value ($m) % overall # of sites Mixed residential/short stay 15 143 59% 3,459 100% short stay 3 37 16% 447 100% residential 2 19 8% 260 Resource – AKV worker facility 1 22 9% 180 Resource – other parks 4 20 8% 923 Total 25 241 1
Slide 30: Accommodation portfolio property table
D ACCOMMODATION PORTFOLIO(1) For personal use only Property Location State Tenure Sites Carrying value ($m) Cap rate (%) Ballina Ballina NSW Both (F&L) 223 17.2 9.0% Dubbo Parklands Dubbo NSW Freehold 127 11.3 10.2% A Shady River Echuca-Moama NSW Freehold 146 5.8 12.7% Horseshoe Lagoon Echuca-Moama
Slide 31: Accommodation portfolio: Ballina, Dubbo, Harrington, Horseshoe Lagoon
D ACCOMMODATION PORTFOLIO For personal use only Ballina Lakeside Dubbo Parklands Harrington Horseshoe Lagoon North Coast, NSW Dubbo, NSW North Coast, NSW Moama, NSW Description Located on the NSW Far-North Located in close proximity to Located on the NSW Mid-North Located in the Echuca / Coast, 30km
Slide 32: Accommodation portfolio: Four Lanterns, Maiden's Inn, Shady River, Tomago
D ACCOMMODATION PORTFOLIO For personal use only Four Lanterns Estate Maiden’s Inn A Shady River Tomago Van Village Leppington, NSW Moama, NSW Moama, NSW Tomago, NSW Description Located within the SW Sydney Located in the Echuca / Located in the Echuca / Located within the greater growth corridor, 51
Slide 33: Accommodation portfolio: Twofold Bay, Wallamba River, Ashley Gardens, Boathaven
D ACCOMMODATION PORTFOLIO For personal use only Twofold Bay Beach Wallamba River Ashley Gardens Boathaven Eden, NSW North Coast, NSW Melbourne, Victoria Ebden, Victoria Description Located in Eden on the NSW Located on the NSW Mid-North Located in Braybrook, 10km Located near Albury/Wodonga Sapphire
Slide 34: Accommodation portfolio: Geelong, Yarraby, Balmoral, Coogee Beach
D ACCOMMODATION PORTFOLIO For personal use only Geelong Riverview Yarraby Balmoral Coogee Beach Geelong, Victoria Echuca Village, Victoria Karratha, WA Fremantle, WA Description Located in Geelong, a short Located in the town of Echuca, Located in the town of Karratha Located approximately 8km drive
Slide 35: Accommodation portfolio: Cooke Point, Mandurah, Pilbara, Perth Vineyards
D ACCOMMODATION PORTFOLIO For personal use only Cooke Point Mandurah Gardens Pilbara Perth Vineyards Port Hedland, WA Mandurah, WA Karratha, WA Perth, WA Description A coastal property overlooking Situated approximately 65km Located in the Pilbara region of Located 14 km from the Perth Pretty Pool I
Slide 36: Accommodation portfolio: Woodman Point, Karratha, Port Augusta, Myall Grove
D ACCOMMODATION PORTFOLIO For personal use only Woodman Point Karratha Village Port Augusta Myall Grove Fremantle, WA Karratha, WA Port Augusta, SA Roxby Downs, SA Description Located 10km from the historic Located in the Pilbara region of Located in Port Augusta, 318km Located in Roxby Downs, port
Slide 37: Accommodation portfolio: Australiana
D ACCOMMODATION PORTFOLIO For personal use only Australiana Top Tourist Park Hervey Bay, QLD Description Located in Hervey Bay, 297km north of Brisbane. Home to permanent residents and offers cabins, caravan, and camping sites for short stay tourists. Facilities include an outdoor barbecue area, pla
Slide 38: Summary of Merger Implementation Deed: process and conditions
E 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: Customary regulatory approvals (including ASIC and ASX approvals) and court approval of
Slide 39: Process and conditions (continued)
E SUMMARY OF MERGER IMPLEMENTATION DEED For personal use only Process and conditions (continued) Customary termination rights including: If any of the resolutions required to implement the Merger are not approved by the requisite majority If an independent expert opines that the Merger is not in the
Slide 40: 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