Aspen Group Expands Adelaide Footprint with $19M Retirement Village Buy

Strategic Acquisition in Adelaide’s Retirement Living Sector

Aspen Group (ASX, APZ) has announced a significant expansion of its retirement living portfolio with the acquisition of 19 small retirement village properties from ACH Group, a respected not-for-profit organisation based in Adelaide. The portfolio, valued at $19 million before transaction costs, comprises 129 villas predominantly situated in inner-metropolitan Adelaide suburbs known for their strong property values, with median house prices exceeding $1 million.

The properties include a mix of residential leases and retirement village licenses, with the latter governed by the Retirement Villages Act. The villas, mostly built in the 1990s, feature two bedrooms and carports, catering primarily to residents over 80 years old who have typically lived in their units for around a decade.

Lease Conversion Strategy to Unlock Value

A key element of Aspen’s strategy is the gradual conversion of retirement village licenses into standard residential leases as tenants vacate. This approach addresses the sub-scale nature of the properties for retirement village use and aims to increase the capital employed in the residential segment of the portfolio. By doing so, Aspen anticipates enhancing rental income streams and aligning rent levels with broader market targets.

The portfolio’s initial yield is expected to be approximately 6%, derived from a combination of residential rental income and deferred management fee accruals associated with retirement village licenses. The pricing per dwelling varies significantly, reflecting the lease type, with unencumbered residential villas valued around $395,000 and retirement village licensed villas at approximately $65,000, factoring in a 25% deferred management fee.

Funding and Settlement Outlook

Settlement of the acquisition is anticipated in August 2025, with Aspen intending to fund the purchase through debt. This move underscores the company’s confidence in the portfolio’s income-generating potential and its broader growth strategy within the retirement living sector. The inclusion of 16 strata-titled units in Adelaide’s CBD further diversifies the portfolio’s asset base.

While the acquisition presents a promising opportunity, the timing and scale of lease conversions will be critical to watch, as they will directly impact future earnings and capital deployment. Aspen’s management, led by Joint CEOs David Dixon and John Carter, has signaled a clear intent to optimize the portfolio’s performance over time.