Aspen Group - Proposed Acquisition
Marina Hindmarsh Island Fund - Coorong Quays SA
onlyuse ersonal24 February 2022
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Marina Hindmarsh Island Fund (MHIF) | 1 | |||
▪ | Aspen Group (Aspen) and Mill Hill Capital (MHC) (owned by John Carter and David Dixon) are proposing a merger of Marina Hindmarsh Island Fund (MHIF or Fund) and Aspen for the | |||
benefit of both groups of shareholders | ||||
only | ▪ | MHIF was established in 2017 by MHC - management of the Fund was delegated to Aspen in early 2019 when the MHC executives joined Aspen | ||
▪ | MHIF is unlisted and has 30 shareholders - sophisticated / wholesale investors | |||
▪ | The sole purpose of the Fund was to acquire, operate and develop Coorong Quays, Hindmarsh Island SA (CQ) - essentially a "Buy-Fix-Sell" strategy | |||
▪ | CQ has Residential, Retirement and Park components - like Aspen | |||
▪ | MHIF acquired CQ through a receivership sale - the property was distressed and had several major legacy issues that have been resolved over the past several years | |||
use | ▪ | CQ has been stabilised, positioned for growth, and materially de-risked - profits are now derived predominantly from collecting rent and developing residential lots and a retirement land | ||
lease community | ||||
▪ | Consideration and Pricing: | |||
• 162,442 new APZ securities for each MHIF share (total of 16.2 million new APZ securities - 11.6% of existing APZ securities): | ||||
ersonal | - MHIF shareholders can elect to receive up to 20% of their consideration in cash (priced at $1.507 per APZ security) | |||
- Aspen executives David Dixon, John Carter and Patrick Maddern will accept all APZ scrip for their 25% interest in MHIF
• Implied value of Coorong Quays: $25 million (assuming APZ securities valued at NAV of $1.507) - Operating component: 8.5% yield (after allowing for expected average annual SIBC)
- Residential and Land Lease Development components: c.$41k per approved site
• Expected first year total Net Operating Income and Development Profits of $2.4 million, equating to 8.8% ROI (including transaction costs and after adjusting for foregone Project Management Fees that Aspen currently earns from the Fund)
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Marina Hindmarsh Island Fund (MHIF) | 1 | ||||||
▪ | Aspen Group Limited has formed an Independent Board Committee (IBC) comprising Clive Appleton and Guy Farrands to oversee the transaction | ||||||
only | ▪ | Transaction is conditional on Aspen securityholder approval, MHIF shareholders accepting the offer and entering into agreements, and other conditions (refer page 14) | |||||
▪ | IBC has appointed m3 Property to independently value CQ - this firm recently valued Lewis Fields and Wodonga Gardens for Aspen | ||||||
▪ | IBC intends to appoint Hall Chadwick as Independent Expert - the Independent Expert's report will be included in an Explanatory Memorandum and Notice of Meeting expected to be | ||||||
sent to Aspen securityholders by late March | |||||||
▪ | APZ securityholder meeting expected late April 2022 | ||||||
▪ | Proposal has been put to MHIF shareholders and a large majority have indicated they are supportive | ||||||
use | |||||||
ersonal | |||||||
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Acquisition Outcomes for Aspen - Calendar 2021 Pro Forma Basis3 | 2 |
only | Total Approved | |||
Total Assets | Dwellings / | |||
+7% to $384m | Sites1 | |||
+18% to 4,264 | ||||
use | Portfolio Value by State | |||
NT | ||||
7% | ||||
NSW | ||||
28% | ||||
ersonal | ||||
WA | ||||
33% | ||||
VIC | ||||
2% | QLD | |||
8% | SA | |||
22% | ||||
1. Excludes CQ's Residential Encumbrances, CQ's Cabin-Van Park (approved for 200 sites - not yet under development)
Equity +11% | Gearing | |
reduced from | EPS +9% | |
NAV Neutral | ||
31.5% to 29.9% | ||
Total Dwellings/Sites - Operating v. Development
Leased Land
Sites1
23%
Leased Dwellings
41%
Land Site
Development
Pipeline2
21%
Dwellings Under Refurbishment | Leased Water Sites |
10% | 5% |
and all storage land sites owned by Aspen and CQ. 2. Excludes CQ's Cabin-Van Park and storage sites. 3. Assumes MHIF shareholders elect all APZ scrip
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Coorong Quays (CQ)
Coorong Quays is a fully approved master planned community with about 3,000 dwellings / sites:
only | ▪ Residential, retirement and park accommodation at affordable | |
prices/rents | ||
▪ Lifestyle location at the mouth of the Murray River adjoining the | Highway 1 | |
Coorong National Park | ||
▪ 80 minutes to Adelaide CBD and 50 minutes to Mount Barker | Adelaide Caravan Park | |
▪ 1,842 sites developed to date - over 90% are occupied and | ||
income producing | ||
use | ▪ 1,098 sites in development pipeline including: | |
- 254 residential land sites (versus 130 sold last 12 months) | The Ridge | |
- 132 retirement sites under a land lease model (versus 8 sold | Mount Barker | |
first 18 months) | ||
- 200 cabin / caravan sites (not commenced) | ||
- Additional marina and storage sites | Lewis Fields | |
ersonal | Major Improvements Since MHIF's Acquisition from Receivership: | |
▪ New main entrance & road / removal of land bridge to open | ||
residential canal | ||
▪ Connecting to mains sewer and removing under-sized | ||
wastewater treatment plant which has enabled further land | ||
development, and reduced environmental risks | ||
▪ Changed from operating to leasing most commercial | ||
components (tavern, marine services) | ||
▪ | Properties owned by Aspen |
Significant refurbishment / redevelopment to improve the community (including creating the CQ Club for all residents)
Approved sites are a combination of actual and estimated capacity and subject to change. Encumbrance fees are payable by the owners of all Residential lots from when they acquire the land.
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Approved Sites - #
Commercial,
13
Marina, 600
Residential
Community,
1,465
Storage, 500
Park Community, | |
200 | Retirement Community, 160 |
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