Aspen is set to surpass its $1 billion of total assets under management milestone with the $234 million acquisition of Futuris Corporation?s property development division.
The purchase includes all current work in progress and undeveloped land currently undertaken by Futuris’ subsidiary, Caversham Property Developments Pty Ltd and Caversham Properties Pty Ltd. Futuris’ interests in Westralia and its associated management entities are not included in the sale.
Caversham owns or has development rights over some 18 development projects which are at various stages of completion.
The portfolio is being acquired for the newly created Aspen Development Fund No1 and the assets includes the Adelaide City Central Project – a twin tower $74 million commercial development; two Western Australia residential subdivisions in Byford on the scrap and Chittering Valley valued at $65 million; and two hospital and retirement projects in Cambelltown, New South Wales and a third in Currambine, WA valued at $100 million.
ADF No1 will be a closed end fund with an expected term of eight years and a target internal rate of return of 18% per annum over this period.
Wholesale and sophisticated investors will be invited to participate in the fund with both Aspen and Futuris to take a cornerstone shareholding of 25% respectively.
Aspen’s managing director Angelo Del Borrello said the acquisition of the Caversham business including assets and employees enables Aspen to create a diversified property development fund with some projects well advanced and which we believe will have appeal to wholesale investors.
Futuris’ chief executive Les Wozniczka said that the sale agreements represented a rewarding outcome for shareholders from the company’s efforts to add value to its land interests.
“The growth of our rural and regional assets in Elders and ITC meant that our Property Development Division held greater value for investors with a greater commitment to property development as a core business. I am confident our property staff will benefit from the new ownership,”
Wozniczka said that the funds would be redeployed into Futuris’ rural and regional assets and growth strategies.
Meanwhile, Aspen in undertaking a capital raising to raise $54.4 million to fund the acquisition and develop the residential Seaside Village located in Newcastle, NSW, with a value of $76.6 million. Development of the land has already commenced with some 66 lots already sold, while a further 83 titled lots worth an estimated $21.9 million are currently available for sale. In total 881 lots are expected to be produced over the estimated project life of nine years.
As a result of the proposed acquisitions and Entitlement Issue, Aspen has revised upward its earnings and distribution guidence for the FY07 period as follows:
• Underlying Earnings Per Security increase 19.23% for FY07 from 13.0 cents to 15.5 cents
• Quarterly Distribution Per Security increase 21.7% from 2.875 cents to 3.5 cents
• Net tangible assets increase 21% from $1.09 to $1.32 cents per stapled security
Following these transactions, Aspen’s funds management assets will increase to $767 million, with total assets under management for the group now at $1.1 billion.
“The acquisitions are very much in line with the group’s investment strategy of increasing property assets under management through the creation and seed funding of innovative funds management vehicles, whilst maintaining a strong overall balance sheet position,” Del Borello said.
Australian Property Journal
