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Affordable housing developer Aspen Group (ASX: APZ) says it is "well on track" to achieve its full-year earnings guidance with its nine-month pre-tax earnings already representing 82 per cent of its upgraded FY26 target.
In a third-quarter update for the period ending 31 March 2026, the Sydney-based Aspen Group posted pre-tax profit of 17.6c per security, putting the group on a strong run-rate to hit the 21.5c guidance it set at its half-year results in February - itself a 7 per cent upgrade on the 19c originally forecast in August 2025.
Net rental income for the nine months hit $31.4 million, up 20 per cent on the prior corresponding period and on track for the $41 million full-year guidance.
Realised development profit reached $19.0 million, a 153 per cent jump on the same period last year, as the number of property settlements surged 105 per cent to 142 during the period.
The strength of the current year has led Aspen to issue FY27 pre-tax earnings guidance of 25c per security, representing a further 16 per cent uplift on the FY26 target and signalling confidence in a multi-year growth trajectory the group has attributed to structural housing undersupply across Australia.
“We currently hold 42 lifestyle contracts and two residential land contracts, totalling 20 per cent of FY27 settlement guidance of 220,” says the company.
“We have just launched the next stage of Mount Barker and will soon launch the first stage of Ravenswood which have 90 residential land lots combined.
“Our sale prices are highly competitive, and our development profit margins have been expanding over the past 12 months, providing some protection against a potential slowdown in residential markets and potential disruption and cost increases in the building industry due to the Iran war and higher oil prices.”
Aspen notes that there is “minimal cost risk” for current production stages as these are already largely complete and the company has fixed-price contracts.
“If there is significant disruption in the building industry, the acute undersupply of affordable housing will worsen, and Aspen’s rents and prices will increase further in our opinion,” says the company.
“We expect households to continue to need or prefer accommodation with lower price points that offer better value for money.”
The company says demand for affordable accommodation continues to benefit from a national housing shortage, with its rental village portfolio maintaining high occupancy and delivering consistent rental growth across its east and west coast operations.
Aspen reveals that its long-term accommodation portfolio is largely full and that the company continues to increase its residential rents by about 5 per cent a year on average.
“We estimate that our Perth residential rents are now about 10 to 15 per cent below current market and our CoVE Upper Mount Gravatt residential rents have been discounted by 20 per cent during the current refurbishment works,” says Aspen.
Aspen Group provides accommodation in the living, lifestyle and holidays sectors and the company’s mission is to provide affordable accommodation options to about 40 per cent of Australian households with an annual income of less than $90,000. CoVE is the company’s co-living brand in the residential market.
The latest earnings update builds on a strong FY25, in which the group delivered underlying pre-tax EPS of 16.8 cents, up 22 per cent year-on-year, net rental income of $35 million, up 14 per cent, and development profit of $12.7 million, a 47 per cent increase.
Aspen has been active on the acquisition front to fuel the pipeline. In September 2025, the group acquired the Wallaroo Shores site on South Australia's Yorke Peninsula for $14.1 million, adding a 217-home development site to its portfolio.
That deal followed the $32.5 million purchase of a site at Australind in Western Australia in May 2025 and a $12 million acquisition at Ravenswood.
The news comes after Aspen raised $74 million at $2.90 per security in May 2025 to fund its acquisition-led growth strategy, alongside a $50 million increase to its debt facility, taking total capacity to $260 million. Gearing remains conservative at 18 per cent, with the interest cover ratio approaching 6.0 times.
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