Aspen Group Limited · ASX:APZ
Aspen — H1 2023 Earnings Presentation
51 slides from Aspen's earnings presentation, Feb 20, 2023
Slide 1: Financial Results Presentation - 1H FY23
Aspen Group Financial Results Presentation - 1H FY23 February 2023 UniResort, Upper Mount Gravatt, QLD Maylands, WA 1
Slide 2: Contents
Residents at Four Lanterns Estate, NSW Contents 1 Results Summary - 1H FY23 Page 3 2 Outlook and FY23 Guidance Page 17 Appendix A Business and Portfolio Page 20 Appendix B Statutory Accounts Page 41 Appendix C Distribution and Tax History Page 49 Sweet Water Grove – marketing campaign, NSW
Slide 3: Results Summary 1H FY23
1 Results Summary 1H FY23 New homes at Wodonga Gardens Retirement Village, VIC 3
Slide 4: 1H FY23 – Operating Earnings Summary
1H FY23 – Operating Earnings Summary Extreme shortages of affordable accommodation driving rents and profits up materially across all parts of the business... Operating EPS (cents) Rent & Ancillary Revenue Development Revenue +33-39% $24.8m +55% $12.1m +204% Corporate Overheads 12.00 Property NOI De
Slide 5: Key Earnings Growth Drivers for 1H FY23
Key Earnings Growth Drivers for 1H FY23 Contributions Drags (mainly positioning for future growth) ✓ Extreme shortage of accommodation nationwide, especially at the more ▪ Retirement land rents grew less than CPI and remain below the affordable end of the spectrum – residential vacancy rate c.1% nat
Slide 6: Earnings
Earnings 1H FY23 1H FY22 FY22 1H FY23 1H FY22 FY22 Summary Change Operations & Development Change $m $m $m $m $m $m Statutory Profit 25.87 29.27 (12%) 75.38 Operations Statutory Profit per Security (cents) 15.29 22.20 (31%) 55.05 Rental & ancillary services revenue 24.81 15.95 55% 35.33 Direct prope
Slide 7: Maintaining Balance of Operating and Development Income – Margins Normalising
Maintaining Balance of Operating and Development Income – Margins Normalising Property NOI ($m) Development Profits ($m) Operating and Development Mix ($m) $50 55% $14 35% $20 $45 $18 $12 34% $40 50% $16 $35 $10 33% $14 $30 45% $12 $8 32% $25 $10 $6 31% $20 40% $8 $15 $4 30% $6 $10 35% $4 $2 29% $5
Slide 8: Capital
Capital Balance sheet strengthened to reduce risk and take advantage of new opportunities while interest rates are normalising... Approved Dwellings/Sites Portfolio WACR1 Net Debt Net Asset Value per Total Asset Value 4,809 +4% 6.51% $113m Security $508m $1.88 Average Value per Development ROIC2 Gea
Slide 9: Residential Portfolio (48% of portfolio value)
Residential Portfolio (48% of portfolio value) $m unless stated Residential Portfolio Residential Net Operating Income (NOI) in 1H was 3x pcp: 1H FY23 1H FY22 Change FY22 - Increasing rents across the portfolio # Dwellings/Sites (closing) 1,313 1,103 19% 1,353 - Only frictional vacancy and very low
Slide 10: Aspen’s Portfolio Well Positioned for Continued Rent and Value Growth
Aspen’s Portfolio Well Positioned for Continued Rent and Value Growth ▪ Residential market dynamics influence all our property types – CoreLogic Home Value Index - % change to January 2023 Residential, Retirement and Parks 20% ▪ Residential vacancy rate is only c.1% nationally, a 20 year low1 - Capi
Slide 11: Retirement Communities (16% of portfolio value)
Retirement Communities (16% of portfolio value) $m unless stated Retirement Communities 1H FY23 1H FY22 Change FY22 # Dwellings / Sites (closing) 1,101 940 17% 1,101 # Operational (closing) 568 522 9% 553 Retirement Community Net Operating Income (NOI) up 27% to pcp: - Land Lease Community land rent
Slide 12: Park Communities (36% of portfolio value)
Park Communities (36% of portfolio value) $m unless stated Park Communities Revenue, NOI and margins have increased at the Park Communities - main growth drivers: 1H FY23 1H FY22 Change FY22 - Broad based rebound in short stay demand post-Covid – tourists and workers - Significant upgrades / additio
Slide 13: Park Communities – Cabin Upgrades and Short Stay Pivot Lifted Profitability
Park Communities – Cabin Upgrades and Short Stay Pivot Lifted Profitability ▪ Increased profitability of Park Community portfolio in 1HFY23 v. pcp predominantly driven by increased rates (except AKV which was driven by increased occupancy) ▪ During the Covid pandemic and travel restrictions, we were
Slide 14: Aspen’s Development Platform – Growth Engine for all Segments
Aspen’s Development Platform – Growth Engine for all Segments Aspen owns and develops an attractive portfolio of Residential, Retirement and Parks communities that are well suited to our customer base... Development & Refurbishment - Completed and Pipeline (#) Total Development (#) Total Refurbishme
Slide 15: Aspen’s Retirement Land Lease Projects - Illustrative Value Creation
Aspen’s Retirement Land Lease Projects - Illustrative Value Creation Statutory Accounts Split Indicative Example (per house / site) Cashflow Total Value Creation Development Profit Balance Sheet Assumes no value for Deferred Management Fees – they are Development - Sale of New Houses and Creation of
Slide 16: Aspen’s Superior Business Model
Aspen’s Superior Business Model Total value creation is reflected in audited Statutory Profits which includes Operating Earnings and Changes in Asset Values... ASX Listed Accommodation Providers - Statutory Profit per Security1 & Stock Price2 $1.00 $18 ✓ Largest Total Addressable $0.90 $16 Market ✓
Slide 17: Outlook & FY23 Guidance
2 Outlook & FY23 Guidance Tween Waters Holiday Park, Merimbula NSW 17
Slide 18: Outlook
Outlook Residential ✓ Continued shortages of affordable accommodation – occupancy to remain high ✓ Continued growth in market rents - already above in-place rents for most of our properties – income upside captured quickly with <1 year lease duration ✓ More redeveloped high-quality apartments enteri
Slide 19: FY23 Guidance
FY23 Guidance FY23 Guidance Considerations ▪ Guidance is subject to no material changes in market conditions and no other unforeseen circumstances adversely affecting financial performance ▪ Maintaining a measured balance of Development Profit v. Property NOI – Development Profits likely to be lower
Slide 20: Appendix A: Aspen’s Business and Property Portfolio
Appendix A Aspen’s Business and Property Portfolio 20
Slide 21: Aspen’s Business Model
Aspen’s Business Model Aspen Provides Quality Accommodation on Competitive Terms to Australian Households Sustainable Ecological Footprint Customer-centric business model servicing households that can Governance afford no more than $400 weekly rent or $400k purchase price Aspen’s efficient dwellings
Slide 22: Current Portfolio Summary
Current Portfolio Summary Total % Aspen’s portfolio valued at only $430m: Portfolio Aggregates1 ▪ $89k per approved dwelling/site Dwellings that Aspen Leases 1,785 37% ▪ $2.4m per hectare of land (including the value of dwellings) Land Sites that Aspen Leases 1,752 36% ▪ WACR of 6.51% Total Operatio
Slide 23: Portfolio Diversity
Portfolio Diversity Aspen owns, operates and develops residential, retirement and park communities in metropolitan and lifestyle locations where our customers lease dwellings and land sites... Portfolio Value by Property Type Location by Value Total Dwellings/Sites - Operating v. Development Regiona
Slide 24: Geographic Diversity
Geographic Diversity Land Area Land Area WA Dwellings/Sites NT (Hectares) Dwellings/Sites (Hectares) 13 Mandurah 6.8 158 18 Darwin FreeSpirit 10.8 461 14 AKV 2.9 180 15 Perth House Portfolio 2.5 67 18 16 Perth Apartment Portfolio 4.7 514 Land Area Dwellings/ Queensland (Hectares) Sites 17 Meadowbroo
Slide 25: Residential Portfolio
Residential Portfolio Residential1 WA NSW QLD Perth Apartment Perth House Portfolio Lindfield Apartments Cooks Hill Uniresort Burleigh Heads Total Residential Portfolio Region Perth Metro Perth Metro Sydney Metro Newcastle Metro Brisbane Metro Gold Coast Metro Land Ownership Freehold Freehold Freeho
Slide 26: Residential Portfolio - WA
Residential Portfolio - WA Perth Apartment Portfolio (PAP) ▪ 516 apartments (17 buildings) being refurbished-to-rent ▪ Expected total cost including refurbishment of $89m / $172k per apartment ▪ Nearing completion of refurbishment of all apartments except 132 Guildford Road Maylands – this is a 10 s
Slide 27: Residential Portfolio - NSW
Residential Portfolio - NSW Lindfield Apartments ▪ Average rent of only $283pw v. market rent of around $350pw as some tenants are on subsidised leases ▪ Valuation (Directors appraisal) marked down by $1.1m / 8% to $13.0m at 31 December 2022 due to assumed c.40bps increase in cap rate to 3.63% consi
Slide 28: Residential Portfolio - QLD
Residential Portfolio - QLD UMG Co-Living Community (UniResort) UniResort ▪ 64 apartments / 304 ensuited rooms (plus caretakers unit) on 1.2HA of land ▪ Acquired in April 2021 during Covid restrictions for $18.5m / $61k per room ▪ Occupancy has increased from 72% in FY22 to essentially full (except
Slide 29: Residential Portfolio – Land Development Projects
Residential Portfolio – Land Development Projects The Ridge, Mount Barker ▪ Stage 1 of 36 lots developed in FY22 ▪ Only 3 sales settled in 1H (v. 11 in FY22) – buyer enquiry slowed markedly under the weight of a spike in building costs, longer building timeframes and higher interest rates – some pic
Slide 30: Retirement Community Portfolio
Retirement Community Portfolio Retirement NSW WA VIC SA Four Sweetwater Mandurah Gardens Meadowbrooke Wodonga Gardens Lewis Fields Alexandrina Cove Total Retirement Lanterns Grove Region Sydney Metro Newcastle Region South Coast South Coast Albury-Wodonga Fleurieu Fleurieu Land Ownership Freehold Fr
Slide 31: Retirement Communities Portfolio - NSW
Retirement Communities Portfolio - NSW Four Lanterns, Leppington ▪ 3 new houses settled in 1H at an average price of $411k and margin of $117k / 31% ▪ Last new house sale settled in 2H on similar metrics ▪ Future long term growth expected to come from redeveloping the land into higher density reside
Slide 32: Retirement Communities Portfolio - WA
Retirement Communities Portfolio - WA Mandurah Gardens, Mandurah ▪ Mature village ▪ Resale prices recovering over past 24 months – typical resale price of $200-240k which is reasonable compared to new product ▪ Land rent increase was only 3.5% last year – have recently implemented 5.0% increase this
Slide 33: Retirement Communities Portfolio - VIC
Retirement Communities Portfolio - VIC Wodonga Gardens ▪ Residents approved conversion of spare land at Retirement Village to a Land Lease scheme ▪ First 12 house sales settled in 1H at an average price of $391k and margin of $110k / 28% - these were sold under Retirement Village contracts with 25%
Slide 34: Retirement Communities Portfolio - SA
Retirement Communities Portfolio - SA Lewis Fields, Strathalbyn ▪ No new house sales settled in 1H ▪ 10 new houses in production and 5 are under contract1 – expect 4 settlements in 2H at average price of c.$360k and margin of c.$90k ▪ 54 undeveloped land lease sites remaining (including the 10 with
Slide 35: Park Community Portfolio
Park Community Portfolio Park Communities NSW SA NT WA Barlings Koala Tween Highway Adelaide Darwin Coorong Quays AKV Total Parks Portfolio5 Beach Shores Waters One CP FSR Region South Coast Central Coast South Coast Adelaide Metro Adelaide Metro Fleurieu Darwin Metro Pilbara Land Ownership Freehold
Slide 36: Park Communities – WA & NT
Park Communities – WA & NT Aspen Karratha Village ▪ Short stay customer base is being built after expiry of Woodside’s long term lease in January 2021 ▪ Cabins upgraded, facilities improved and new licenced bar opened in late December 2022 – amongst the best accommodation in Karratha in our opinion
Slide 37: Park Communities Portfolio - SA
Park Communities Portfolio - SA Highway 1 Highway 1, Bolivar ▪ Occupancy and average daily rate has increased for the short stay cabins – helped by the return of agriculture industry workers ▪ Expect to shortly commence addition of up to 44 new dwellings on spare land – can be rented or sold under a
Slide 38: Park Communities Portfolio - SA
Park Communities Portfolio - SA Coorong Quays, Hindmarsh Island ▪ Occupancy continues to trend higher across all aspects of the park including residential lots, retirement houses, marina berths (wet and dry) and caravan storage ▪ Murray River flooding has not negatively impacted CQ – many boats have
Slide 39: Park Communities Portfolio - NSW
Park Communities Portfolio - NSW Barlings Beach, Tomakin ▪ Occupancy was down in 1H compared to pcp, but REVPAR was up courtesy of higher average rates post pivoting to short stay from long stay – NOI increased 28% ▪ A large proportion of income is derived from leasing land sites on an annual basis
Slide 40: Park Communities Portfolio - NSW
Park Communities Portfolio - NSW Koala Shores, Lemon Tree Passage ▪ Occupancy was down in 1H compared to pcp, but REVPAR was up courtesy of higher average rates post pivoting to short stay from long stay – NOI increased 129% ▪ The park is quite seasonal, but enjoys more consistent weekend trade than
Slide 41: Appendix B: Statutory Accounts
Appendix B Statutory Accounts Adelaide Caravan Park, SA – refurbished cabin interior 41
Slide 42: Reconciliation of Statutory Profit to Operating Profit
Reconciliation of Statutory Profit to Operating Profit 1H FY23 1H FY22 % Change $m $m Statutory Net Profit after Tax 25.87 29.27 (12%) Depreciation / R&M / SIBC Adjustments: ▪ PPE Depreciation in 1H of $0.56m under IFRS does not reflect the actual expense Depreciation of PPE 0.56 0.47 ▪ A total of $
Slide 43: Summary Balance Sheet and Capital Management
Summary Balance Sheet and Capital Management Utilised 31 Dec 22 30 June 22 Expiry Limit Available Key Metrics Change $m 31 Dec 2022 $m $m Debt Facilities (ex. Guarantees) April 2024 $155.00 $121.9 $33.1 Total Assets 508.2 452.5 12% Total Margin (above BBSW) 2.000% - Property Assets 443.1 412.6 7% Sw
Slide 44: Statutory Accounts Extract: Statement of Profit and Loss
Statutory Accounts Extract: Statement of Profit and Loss The above should be read in conjunction with the accompanying notes contained in the financial statements 44
Slide 45: Statutory Accounts Extract: Balance Sheet - Assets
Statutory Accounts Extract: Balance Sheet - Assets The above should be read in conjunction with the accompanying notes contained in the financial statements 45
Slide 46: Statutory Accounts Extract: Balance Sheet – Liabilities and Equity
Statutory Accounts Extract: Balance Sheet – Liabilities and Equity The above should be read in conjunction with the accompanying notes contained in the financial statements 46
Slide 47: Statutory Accounts Extract: Cash Flow Statement
Statutory Accounts Extract: Cash Flow Statement The above should be read in conjunction with the accompanying notes contained in the financial statements 47
Slide 48: Statutory Accounts Extract: Segment Information
Statutory Accounts Extract: Segment Information 48
Slide 49: Appendix C: Distribution & Tax History
Appendix C Distribution & Tax History Alexandrina Cove Lifestyle Village, Hindmarsh Island SA 49
Slide 50: Distribution & Tax History
Distribution & Tax History Aspen Group Ltd Aspen Property Trust1 Period / Quarter Total Amount Paid Payment Date Distribution Type Ended Tax Deferred / Non CPS CPS CPS Assessable Income Dec-17 28/02/2017 Ordinary - 2.10 - 2.10 Jun-17 29/08/2017 Ordinary - 2.50 - 2.50 Oct-17 20/10/2017 Special Capita
Slide 51: 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