ASX-listed Aspen Group, which has 20% of its assets in SA, has revealed the difference between the income from a retirement village and a land lease community.
Aspen, which owns and operates affordable land lease communities, residential communities, and holiday parks, has presented to shareholders a property tour of its assets Coorang Quays, Alexandrina Cove Lifestyle Village, Lewis Fields, The Ridge Mount Barker, Aspen-managed Crest Woodside, Adelaide Caravan Park and Highway 1.
“We expect rents and values to continue to increase across Aspen’s portfolio over the medium term despite the increase in interest rates,” said Aspen Group in its presentation.
“Historically low vacancy rates, population growth, and significant building supply bottlenecks and cost spikes are overwhelming the impacts of higher interest rates to date.
“Aspen’s portfolio has been accumulated at well below replacement cost – our rents are at the lower end of the spectrum and local competition.”
Alexandrina Cove Lifestyle Village, it said, was a traditional high quality retirement village with a Deferred Management Fee (DMF) of 35%. It had just 17 DMF houses completed when it went into receivership. The RV house re-leasing values fell to $249,000, which was below production cost.
“Spare land at the village was converted into a land lease community (pictured) with agreement from the existing RV residents – both resident types share all the community facilities. RV exit fees were reduced from 35% to 20% for existing residents and to 10% for future residents – RV re-leasing values have recovered to around $350,000.
“Production of new houses under the Land Lease model has commenced – 11 houses sold to date at average price of $342,000. For each new house developed and sold, we expect to generate $115,000 of value add (profit on house sale plus uplift in land value), and have nil permanent capital employed.”
