Aspen Group (ASX:APZ) executives highlighted accelerating earnings growth, a stronger development sales run-rate, and upgraded guidance during a results briefing covering the six months ended 31 December 2025. Management emphasized the company’s focus on affordable rental accommodation for households earning under AUD 100,000, and said current housing supply dynamics continue to support demand at the lower price and rent points.
Management frames strategy around affordability and supply constraints
Joint CEO David Dixon said Aspen targets the roughly 40% of households with incomes below AUD 100,000, which typically can afford rents under about AUD 400–AUD 500 per week and purchase prices below AUD 500,000–AUD 600,000. Dixon argued Aspen operates “at a very different part of the market than average,” stating there is “no shortage” of rentals above AUD 1,000 per week or housing above AUD 1 million, while affordable stock is scarce.
He attributed broader affordability pressures to high costs of production in metropolitan markets and said Aspen is gravitating toward “house-friendly states” such as South Australia and Western Australia, where taxes and regulation are lower. Dixon also said price and rental growth is strongest at the “lowest price and rent points,” adding that policies that stimulate demand without increasing supply can accelerate prices.
Half-year metrics: EPS, NAV, and rental margin expansion
Management reported total value creation of AUD 0.22 per share on a comprehensive income basis for the half. Underlying EPS increased 33% to AUD 0.107 per share, with Dixon noting underlying EPS is cash-based and includes realized development profits, while unrealized value creation is reflected in NAV. NAV increased 6% during the period, and management cited compound NAV growth of 17% per annum since FY 2020.
EBITDA rose 29%, while underlying operating earnings increased 51% and were described as running at “almost AUD 50 million per annum.” The average number of dwellings or sites in the rental pool increased 5% to 4,154, driven primarily by lifestyle development settlements and the purchase of the Adelaide Villas portfolio.
Key rental operating metrics included:
- Average gross rents increased 8% to AUD 353 per week.
- Net rent increased 16% to AUD 194 per week.
- Net rental income increased 22% to AUD 20.9 million.
- Margins expanded 4 percentage points to 55%.
Management emphasized that net rents grew faster than gross rents during the half, with Dixon stating that for every dollar of gross rent increase, more than 100% of the increase flowed through to the bottom line due to margin expansion.
Portfolio detail: residential, parks, and lifestyle
In the residential portfolio, Aspen said gross rents averaged AUD 390 per week. The number of residential dwellings was unchanged due to capital recycling into lower rent properties, contributing to 5% gross rental growth. Margins expanded to 67%, lifting net rental income for the residential portfolio by 8%.
In the parks portfolio, park dwellings increased 1% due to settlements of new lifestyle houses at Highway 1. Management said the focus was on a “more profitable mix of rate and occupancy” following refurbishments, with average gross rent increasing 13% to AUD 386 per week. Margin expanded 5 percentage points to 47%, and net rental income for parks increased 29%.
In lifestyle, the average number of sites increased 24% due to development settlements and the Adelaide Villas acquisition, roughly split evenly. Typical land rent was described as about AUD 200 per week (excluding ancillary income), with 3.5% contracted annual increases. Margin expanded 4 percentage points to 62%, contributing to 38% growth in net rental income for lifestyle.
Management also discussed capital recycling in residential, comparing current results to a hypothetical “static” portfolio from three years prior. Aspen said the current approach resulted in 134 more dwellings (14% increase), AUD 900,000 more net rental income per annum (6% increase), AUD 34 lower average weekly rent per property (7% reduction), and AUD 13 million less capital invested (8% reduction). The company said this improved the residential portfolio’s return on invested capital by 15% to 10.2%.
Development ramp lifts sales and profit; acquisitions add capacity
Head of Asset Management Patrick Maddern said Aspen materially increased development activity to drive sales and was “now seeing the fruits” of that effort. Total development sales were up 60% versus the prior corresponding period, while land lease home sales were up almost 2.5x. Management said realized development profit increased 87% due to higher volumes and improved margins, supported by a higher proportion of land lease homes in the sales mix. Maddern also noted that more land lease home settlements increase NAV through newly leased sites.
On acquisitions, Aspen detailed several transactions during the half and one announced on the call:
- Adelaide Villas: settled in August for AUD 16.2 million; 113 villas/units in premium Adelaide suburbs (about AUD 143,000 per dwelling). At acquisition, the portfolio included 84 retirement village leases and 29 residential leases. Management said it plans to convert retirement village leases to residential leases and converted 7% (8 leases) in the first half.
- Aspen Wallaroo: settled in October; a 13.5-hectare coastal site about two hours north of Adelaide. Management said it negotiated an in-principle master plan with council for 300+ lots including a lifestyle village, residential allotments, build-to-rent, and complementary commercial, and is progressing development approvals.
- Surry Hills office: settled in November for AUD 8 million (about AUD 4,000 per square meter). Management said it will occupy about half the space and has begun leasing the remainder.
- Coorong Quays expansion: announced as a new acquisition; 40 hectares north of the existing Coorong Quays community, purchased for AUD 7.5 million (AUD 188,000 per hectare). Management said current zoning supports rural living allotments and Aspen may seek higher density to improve profitability.
Balance sheet position and upgraded guidance
Management said the balance sheet remains positioned to support growth. Interest cover strengthened to 5.7x and loan-to-value remained at 22%. Rental asset book value increased 12% to AUD 660 million (AUD 151,000 per dwelling or site), with a weighted average cap rate unchanged at 6.9%.
Capital deployed in development increased 19% to AUD 110 million, partially due to the Wallaroo acquisition. Working capital in manufactured house inventory declined by AUD 2 million, which management attributed to earlier investment ahead of higher sales and settlements. The development business delivered a 20% return on invested capital, in line with internal targets.
On outlook, joint CEO John Carter said the rental business is expected to remain essentially fully occupied. He guided to gross rent increases of 4%–5% per annum and said Aspen believes its residential portfolio is around 10% “under-rented.” Carter also said lifestyle leases have fixed 3.5% annual increases, and lifestyle leases are expected to grow 15%–20% per annum due to development activity. He noted refurbishment of common facilities at The Cove at Upper Mount Gravatt is impacting FY 2026 income, with an increase expected in FY 2027.
In development, Carter described build-to-rent as a “very big opportunity,” citing Australind as Aspen’s first build-to-rent program, with the first batch of houses expected to be ready to lease in April. On sales guidance, Aspen upgraded FY 2026 settlements guidance to 160 from 150 (including 130 lifestyle houses and 30 residential) and raised its FY 2027 settlement target to 220 from 200, targeting at least 150 lifestyle houses.
Aspen also upgraded FY 2026 EPS guidance by 7% to AUD 0.215 and issued initial FY 2027 EPS guidance of AUD 0.25.
During Q&A, management discussed expected tax-rate changes as historical tax losses have been utilized, indicating FY 2027 may be less efficient but that the medium-to-long-term group tax rate is expected to return to a 5%–10% range, consistent with other stapled real estate groups. Executives also provided preliminary build-to-rent unit economics assumptions for a one-bedroom product and discussed timing uncertainties around future development approvals and settlements.
About Aspen Group (ASX:APZ)
Aspen is a leading provider of quality accommodation on competitive terms in residential, retirement and park communities. Our core target customer base is the 40% of Australian households that can pay no more than $400 per week in rent or $400,000 purchase price for their housing needs.
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