Market Herald logo

Subscribe

Be the first with the news that moves the market
  • Aspen Group (APZ) has purchased a partially completed build-to-rent development at Burleigh Heads in Queensland for $3.15 million
  • This residential community includes 18 substantial townhouses that are suitable for families and co-living
  • Aspen says this area attracts more interstate migrants than any other place in Australia due to its diverse economy, attractive lifestyle and lower housing costs
  • During COVID-19 Aspen has managed to maintain profitability
  • Positively, underlying earnings for the 10 months, ending April 30, are in line with the previously provided guidance
  • On market close, Aspen is down 1.90 per cent on the market and is selling shares for $1.03 each

Aspen Group (APZ) has purchased a partially completed build-to-rent development at Burleigh Heads in Queensland for $3.15 million.

This residential community includes 18 substantial townhouses that are suitable for families and co-living. Aspen says this area attracts more interstate migrants than any other place in Australia due to its diverse economy, attractive lifestyle and lower housing costs.

The purchase price is $3.15 million-plus GST and settlement is expected to occur in a few months after a subdivision is completed. The total all-in development cost is expected to be around $7.2 million, meaning $400,000 per dwelling.

“We expect to be able to continue to grow Aspen’s business and portfolio profitability in future and we believe the opportunities will increase during this economic downturn,” the company said.

Business update

Currently, Aspen has maintained profitability during the COVID-19 outbreak and underlying earnings for 10 months, ending April 30, are in line with the previously provided guidance.

“This has been enabled by the essential role and versatility of our properties, and proactive management and government initiatives,” the company said.

Rents from the company’s longer-term accommodation are typically at the lower end of their local markets and this level is supported bu household incomes and government subsidies.

Aspen is estimating its rents represent 30 per cent or less of household income for the vast majority of its customers even those dependent on welfare.

“Of course, higher-income households are also attracted by lower rents, particularly when economic conditions deteriorate, as it frees up income for other uses,” the company told the market.

“To date, we have not experienced an increase in arrears due to COVID-19 and very few customers have requested rent relief,” it added.

Aspens short stay revenue represents about half of the total of revenue and has reduced to almost nil since COVID-19 restrictions. However, this has been largely offset by an increase in longer stay business and a material reduction in operating costs.

Over 50 per cent of the company’s tourist cabins are now occupied at an average rent of $243 per week by longer stay customers, which includes essential workers and others looking to isolate.

“We have retained the flexibility to move back to shorter stay business and
increase rates and profitability when conditions improve, which will hopefully occur by the peak July-October period in the Northern Territory and by summer in NSW,” the company said.

Aspen has been able to satisfy Woodsdie’s requirement for the exclusive use of Aspen Karratha Village so that the added complexities of housing FIFO workers during COVID-19 can be managed appropriately.

On market close, Aspen is down 1.90 per cent on the market and is selling shares for $1.03 each.

APZ by the numbers
More From The Market Herald
Openn Negotiation (ASX:OPN) - Managing Director, Peter Gibbons

" Openn Negotiation (ASX:OPN) eyes $3m for North America expansion

Property technology company Openn Negotiation (ASX:OPN) has received firm commitments to raise $3 million via a…

" Waypoint REIT (ASX:WPR) sells 31 fuel and convenience store assets

Waypoint REIT (ASX:WPR) has agreed to sell 31 non-core fuel and convenience assets for a total…

" Sunland to bank $20M for Gold Coast property

Property developers Sunland Group have entered an unconditional contract to sell a Gold Coast property for…
Sunland Group (ASX:SDG)- CEO, Soheil Abedian

" Sunland Group (ASX:SDG) sells Carrum Downs for $17M

Sunland Group (ASX:SDG) has announced it is selling the Carrum Downs property in Melbourne for $17…