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Just a week after settling the $32.5 million acquisition of a Western Australian development opportunity, Sydney-based developer Aspen Group is looking to raise $74 million to pursue new projects in the affordable housing sector.
Aspen Group is raising $70 million through an institutional placement and $4 million via a securityholder purchase plan with the price set at $2.90 per security.
The capital raising follows a renegotiated syndicated debt facility which has seen Aspen lift its limit by $50 million to $260 million.
Aspen says the additional funds will be used to strengthen its balance sheet and provide flexibility to pursue organic growth and new acquisition opportunities that the company notes are increasing in the affordable housing space.
The company last week settled on the $32.5 million acquisition of a vacant workers’ camp at Australind, near Bunbury south of Perth, that the company plans to further develop for general residential and lifestyle uses. The property currently comprises 97 transportable dwellings and a community clubhouse on 16ha of land.
The WA property was developed by Albemarle Corporation for the planned expansion of its Kemerton Lithium Plant which has since been abandoned.
The approved structure plan for the site allows up to 450 homes. Aspen funded the acquisition through existing debt facilities.
Last month, Aspen also acquired a 33.4ha site at Ravenswood, further north near Mandurah, for $12 million and it is pursuing a new development at Coorong Quays in South Australia, on a 1ha site adjacent to the Alexandrina Cove Retirement Village.
The latest acquisitions follow a failed $166 million takeover bid for listed affordable housing company Eureka Group Holdings (ASX: EGH).
The Gold Coast-based Eureka Group, which provides low-cost accommodation for seniors and people with disabilities, rejected the Aspen offer for undervaluing the business.
Aspen Group, which managed to secure about 109 million shares in Eureka Group during the takeover process, sold half of them in October last year, using the $33.6 million proceeds to retire debt.
The company says it has the potential to further strengthen balance sheet through the sale of the remaining stake in Eureka Group “at an acceptable price”.
Aspen points out that it is becoming economic for the company to build new dwellings on some of its spare land to achieve a marginal 6 per cent net rental yield with “competitive rents in the strongest markets, particularly WA and SA”.
Aspen sees potential to further boost development with plans to lift sales from 110 in FY25 to more than 200 over the next to three years.
The company currently has an established rental pool of more than 4,000 dwellings and sites with average weekly rent of $328 and average book value of only $133,000. It also has an established development pipeline of more than 2,300 approved and planned sites at average book value of $30,000.
Aspen Group posted a net profit after tax of $8 million in the first half of FY25, down from $8.2 million a year earlier, as revenue lifted 25 per cent to $3.68 million.
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