Aspen Reports 31% EPS Growth, Launches $74M Equity Raise
Aspen Group announces a $74 million equity raise alongside robust earnings growth and unchanged FY25 guidance, positioning itself for expansion in Australia’s tight housing market.
- Strong demand for affordable accommodation with rising rents
- FY25 guidance maintained with 21% EPS growth forecast
- Equity raise of $74 million via institutional placement and security purchase plan
- Debt facility increased to $260 million with improved terms
- Development sales and rental income showing significant growth
Robust Market Demand and Operational Strength
Aspen Group has reported sustained strong demand for its accommodation offerings, driven by a nationwide shortage of affordable housing. The company’s long-stay properties are experiencing minimal vacancies, with rents rising in key markets. While short-stay accommodation faces mixed conditions, stronger corporate demand is compensating for weaker tourist activity.
Development sales continue to accelerate, with Aspen on track to deliver over 200 dwellings and settle at least 110 sales in FY25. The group is strategically increasing its completed Lifestyle house inventory to facilitate customer decisions and manage sales velocity across its portfolio of 10 active projects.
Financial Performance and Outlook
Over the five years to FY24, Aspen achieved an impressive 22% annual growth in underlying operating earnings per share (EPS) and a 15% annual increase in net asset value per security. This momentum has carried into FY25, with the first 10 months showing a 31% rise in underlying operating EPS to 13.7 cents, alongside strong growth in net rental income, development profit, and EBITDA.
The company has reaffirmed its FY25 guidance, expecting underlying operating EPS of 16.7 cents, up 21% on FY24, and a distribution per security of 10 cents, an 18% increase. Aspen also anticipates maintaining at least 10% annual EPS growth over the medium term, signaling confidence in its growth trajectory.
Capital Structure Enhancements
To support its growth ambitions and strengthen its balance sheet, Aspen has renegotiated its syndicated debt facility, increasing the limit by $50 million to $260 million, extending the term to September 2028, and reducing the drawn margin by 15 basis points to 185 basis points. This improved facility provides greater financial flexibility amid a competitive acquisition environment.
Complementing this, Aspen is undertaking an equity raising comprising a $70 million institutional placement and a $4 million security purchase plan (SPP), both priced at $2.90 per security. The placement will represent approximately 12% of existing securities on issue, with pro forma gearing expected to reduce to 17%. The equity raise is not expected to materially impact net asset value per security or distributions initially but is intended to enhance medium-term growth prospects and reduce risk.
Looking Ahead
With a strengthened capital base, improved debt terms, and a robust operational outlook, Aspen Group is well-positioned to capitalize on the ongoing demand for affordable housing and development opportunities. The company’s strategic moves suggest a focus on sustainable growth and risk management as it navigates a dynamic property market.
Bottom Line?
Aspen’s capital raise and solid earnings growth set the stage for accelerated expansion, but investors will watch closely for how new funds translate into tangible acquisitions and returns.
Questions in the middle?
- What specific acquisition targets or organic growth projects will Aspen pursue with the new capital?
- How will the increased equity and debt facility impact Aspen’s medium-term return on equity?
- Can Aspen sustain its strong EPS growth amid fluctuating short-stay market conditions?
