Aspen Group, which has more than 1,000 affordable retirement community dwellings, is benefitting from the shortage of low-cost housing in Australia.
The group’s total operating earnings increased 34% to $11.8 million for the year to 30 June 2022. Net operating income rose 17% to $14.8 million and net profit after tax almost doubled to $75.4 million.
Retirement communities make up 17% of Aspen’s portfolio value. The majority are land lease developments for over 50s that sell for less than $400,000.
Revenue from Aspen’s retirement operations increased by 26% to $4.7 million in the 2021-22 financial year. Profits increased 25% to $5.3 million. The number of retirement community dwellings nearly doubled over the course of the financial year, increasing 88% to 1,101.
Aspen’s land lease community rents are rising at about 3-5% per annum. Aspen said it won’t increase rents to keep pace with higher inflation.
The average land rent is only $179 per week, below the Commonwealth Rent Assistance cap, which helps the group maintain rental growth and sustainability.
Aspen’s growth has been held back by “turmoil” in the building industry, the company said.
“The operating environment was challenging in FY2022 due to the ongoing COVID-19 pandemic, turmoil in the building industry (supply bottlenecks, labour shortages, cost increases), higher inflation and interest rates, declining household income in real terms, some extreme weather events, and patchy economic activity,” the group’s annual report noted.
“Despite this, we continued to materially increase earnings and net asset value per security because there is massive and growing demand for Aspen’s more affordable accommodation.”
Looking ahead, the company said it expects most of the difficulties it faced last financial year to be resolved this year. “Aspen’s business is expected to continue to perform well due to the severe shortage of quality accommodation at affordable prices. Aspen will continue to seek opportunities to grow its portfolio of residential, retirement and park communities through acquisition and development.”
The dividend was 3.50 cents per share, steady with the dividend at the same time last year.
Aspen provides housing for the approximately 40% of Australian households that can afford to pay no more than $400 per week on rent. According to National Housing Finance and Investment Corporation research, less than 10% of Australia’s rental stock is affordable for the bottom 40% of renters by income.
