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Wodonga Gardens Retirement Estate. Source: Villages
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  • The Aspen Group (APZ) has paid $6.1 million for the Wodonga Gardens Retirement Estate in West Wodonga, Victoria
  • The existing 51 dwellings have a current re-leasing value of around $15.3 million, according to Aspen, with the community approved for 172 houses
  • Aspen believes the market value of the spare land is at least $4.25 million or $35,000 per approved site, which APZ says is an attractive entry price
  • Homes are covered by a conventional loan/lease arrangement for retirement villages with a total exit charge of up to 36 per cent
  • APZ shares are trading in the grey at $1.35 at 12:48 pm AEST

Aspen Group (APZ) has purchased the Wodonga Gardens Retirement Estate in West Wodonga, Victoria, for $6.1 million.

The company entered conditional contracts with Wodonga Gardens Estate Pty Ltd and settlement is expected to occur in August.

Aspen’s retirement assets will increase to seven across four states and its land development pipeline will expand by 49 per cent to 370 approved sites on the back of this acquisition.

The Wodonga land encompasses 8.8 hectares on which 172 homes have been built and leased to date.

Homes are covered by a conventional loan/lease arrangement for retirement villages with a total exit charge of up to 36 per cent. Recent sales of the houses have been priced around $300,000 on average, equating to average total exit fees of $108,000 per house.

Aspen said it aimed to provide accommodation on more competitive terms while still generating returns.

“We are considering developing and selling future houses under a land lease community model (LLC) as we believe the product is more appealing to customers,” the company said.

“For the existing village residents, we could reduce total exit fees to around 25% which, upon re-leasing, should make the houses more appealing to incoming residents and result in outgoing residents receiving higher proceeds.”

Aspen expects to develop and sell at least 10 houses per year, with holding deposits for eight new homes currently on the books.

“The existing dwellings have a current re-leasing value of around $15.3 million (average of $300,000 per dwelling) in our opinion, which equates to maximum exit fees payable under the existing contracts of about $5 million,” the company said.

“These fees would reduce to about $3.8 million if we reduced total exit fees to 25%.”

Aspen believes the current market value of the spare land is at least $4.25 million or $35,000 per approved site, which it said was an attractive entry price.

The transaction will be initially funded with debt, with Aspen saying it expected the acquisitions to be accretive to both net asset value and earnings per share over the medium term

Aspen said its residential portfolio in Perth continued to be strategically re-deployed as it was more beneficial to sell these assets rather than re-lease once residents vacated and restructuring work was done.

So far the sales of five properties have been settled, and four more contracts have been entered into at an average price of $440,000 and an average profit margin per property of $104,000

APZ shares were trading in the grey at $1.35 at 12:48 pm AEST.

APZ by the numbers
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