On Wednesday, small-cap property investment and fund management group, Aspen Group, announced that it has settled its acquisition of the Lewis Fields Retirement Village in Strathalbyn, South Australia.
The property spans 3.7 hectares and is approved for a Retirement Village with 80 houses of which 26 have been built to date, including a community building and landscaped gardens. Strathalbyn is experiencing population growth due to its attractive amenity, affordability and close proximity to Mount Barker and Adelaide. Lewis Fields is currently the only retirement village under development and offering new houses in Strathalbyn.
The property is Aspen’s fifth acquisition in FY21 and adds to the group’s substantial cluster in South Australia, increasing Aspen’s total approved sites to 2,745 representing growth of more than 25% in FY21.
Aspen is proposing to develop and sell the remaining 54 houses under a land lease community model subject to the relevant approvals being obtained, as the company believes it is a more compelling product for customers. While also providing the opportunity to reduce exit fees for existing residents.
The property has been independently valued at $2.40 million which is slightly above the purchase price of $2.36 million. The valuer applied a 17% discount rate on the contracted deferred management fee stream and a rate of $600k per hectare on the spare land which equates to approximately $25k per approved site.
Aspen continues to selectively redeploy capital from its Perth residential portfolio where it is more beneficial to sell than to re-lease once tenants vacate and refurbishment works are completed. Aspen has so far settled the sale of 2 houses and entered into conditional contracts on another 3 for an average price of $418k and average profit margin per house of $94k after all costs.
The company expects the acquisition to be accretive to both NAV and EPS over the medium term.