ASPEN GROUP — Capital/Financing Update 2012

Sep 23, 2012

Aspen Group Limited ABN 50 004 160 927

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Aspen Property Trust ARSN 104 807 767

Level 3, Newspaper House 129 St Georges Terrace, Perth Western Australia, 6000 Telephone: 08 9220 8400 Facsimile: 08 9220 8401

ASX Email: ANNOUNCEMENT homemail@aspengroup.com.au

MEDIA RELEASE ASX ANNOUNCEMENT 24 September 2012

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES

Aspen Group Announces a Fully Underwritten Accelerated Pro-Rata Non-Renounceable Entitlement Offer of approximately A$101.4 million

Aspen Group (“Aspen”: ASX: APZ) today announces a fully underwritten equity raising of approximately A$101.4 million at A$0.17 per security (“Offer Price”) from the issue of approximately 597 million new securities. The equity raising will be undertaken via a 1 for 1 accelerated pro-rata non-renounceable entitlement offer (“Entitlement Offer”) of new securities (“New Securities”).

The Offer Price represents a:

• 27.7% discount to the closing price of Aspen's securities on the Australian Securities Exchange (“ASX”) on 21 September 2012 of A$0.235;

• 16.0% discount to the theoretical ex-rights price[1] of A$0.20;

• 40.5% discount to Aspen’s pro-forma net tangible assets per security (“NTA”) of A$0.29;

• 10.8% earnings yield based on forecast FY13 Core Operating Earnings[2] ; and

• 8.9% distribution yield based on forecast FY13 distributions.

The Entitlement Offer is fully underwritten by UBS AG, Australia Branch.

Use of proceeds

The Entitlement Offer is being undertaken to repay debt and create headroom under Aspen's core debt facility to fund the likely exercise of the Investor Put in Aspen Development Fund No.1 and provide further working capital. This debt reduction strategy has been agreed with Aspen’s main lender, the National Australia Bank (“NAB”). Following the Entitlement Offer, Aspen will have enhanced financial flexibility via increased liquidity and headroom under its debt covenants[3] . Balance sheet gearing will be reduced from 46.4% to 39.3% and look through gearing will be reduced from 49.4% to 41.3%.[4]

1 The theoretical ex-rights price or TERP is the theoretical price at which Aspen securities should trade immediately after the ex-date for the Entitlement Offer. The TERP is a theoretical calculation only. The actual price at which Aspen securities trade immediately after the ex-date for the Entitlement Offer will depend on many factors and may not be equal to the TERP.

2 Core Operating Earnings defined as rental income from Aspen’s on balance sheet investment property assets and recurring funds management income from Aspen Parks Property Fund. Core Operating Earnings excludes all income and direct expenses associated with the non-core assets. Aspen is forecasting the non-core assets to be neutral to operating profit in FY13.

3 Debt covenants under NAB Core Facility include 1.5x Interest Cover Ratio, 60% Loan to Value ratio and 1.25 year Weighted Lease Duration until 30 June 2013 on NAB security pool assets.

4 Balance sheet gearing: interest bearing debt less cash divided by total assets less cash. Look through gearing: look through debt less cash divided by look through total assets less cash.

Aspen Group ASX Announcement 24 September 2012

The Entitlement Offer will provide Aspen with liquidity to fund the likely exercise of a put option commitment to an Aspen Development Fund No. 1 shareholder (“Investor Put”) and provide further working capital. The cost to Aspen to fulfil its obligations under the Investor Put will be $25.3 million.[5] The Investor Put is exercisable at the shareholder’s discretion between 27 September 2012 and 15 October 2012 (settlement to occur within 60 days post exercise).[6] Following exercise of the Investor Put Aspen will own 75.1% of the Aspen Development Fund No. 1, and as a result Aspen will consolidate that entity.

$35 million of proceeds from the Entitlement Offer will be immediately applied to permanently reduce Aspen's debt facilities with its main debt provider, NAB:

• $15 million of the proceeds will be applied to Aspen’s core debt facility;

• • $20 million of the proceeds will be applied to the Aspen Development Fund No. 1 debt facility.

The balance of proceeds (net of costs) will be applied to working capital ($34.0 million).[7]

In return for this permanent reduction of debt, NAB has agreed to:

• waive the weighted lease duration covenant breach and immediately reduce the covenant from 2.0 years to 1.25 years until 30 June 2013,[8] resulting in Aspen’s core debt facility with NAB being reclassified as non-current with a maturity of February 2014;

• waive the LVR covenant breach in respect of Aspen Development Fund No. 1 facility;

• grant a five month extension of the maturity date of the Aspen Development Fund No. 1 facility to February 2014.

In addition to utilising $35 million of the offer proceeds to immediately repay debt, Aspen has committed to reduce total NAB facilities across the Group[9] by a further $71 million by 31 December 2013.[10] This reduction is to be achieved via an orderly divestment of non-core assets. Aspen Diversified Property Fund is already undertaking an orderly sale of its assets (c.$120 million of assets available to be sold) and executing on its divestment strategy with the sale of the Nunawading, Victoria property which settled on 20 September 2012, at a premium to book value.[11]

Aspen Group Chairman Mr Frank Zipfinger said: “The Entitlement Offer allows Aspen to derisk its balance sheet. It will provide the financial flexibility for the Group to operate from an improved position and undertake its strategic review to simplify the business and focus on core strengths to improve securityholder returns.”

Strategic review

As part of Aspen’s strategic review announced on 31 August 2012, several initial conclusions have been identified. These include to:

• de-risk the balance sheet via the Entitlement Offer, associated debt reduction, full impairment of loans to associates and to facilitate funding future capital commitments (including the potential Investor Put obligation and to provide working capital);

• de-risk earnings via focusing on recurring income from rent and management fees and reducing reliance on income from interest and equity investments;

• focus on Core Operating Earnings[12] ;

5 Excludes any stamp duty payable (estimated $1.8 million).

6 For full details on the Investor Put see slide 16 of the Aspen Entitlement Offer Presentation. 7 For full details on use of proceeds see slide 7 of the Aspen Entitlement Offer Presentation.

8 After which the covenant level will revert to 2.0 years.

9 Including all funds and syndicates.

10 Comprising $38 million by June 2013 and $33 million by December 2013.

11 $18.4 million sale price reflects a c.1% premium to book value.

12 Core Operating Earnings defined in footnote 2 above.

Aspen Group ASX Announcement 24 September 2012

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• increase operational efficiency and reduce overheads;

• focus on the Group’s core assets (on balance sheet investment property assets and Aspen Parks Property Fund); and

• realisation of non-core businesses (management of funds and development syndicates including Aspen Diversified Property Fund, Aspen Development Fund and Aspen Living residential land syndicates) to provide scope to streamline the business.

As part of the initial stages of the strategic review, Aspen has undertaken a further comprehensive review of its development syndicates and non-core inventory. As a result of implementing the initial findings of the strategic review, the Board has determined to fully impair Aspen’s loans to associates, reflecting a $36.6 million impairment. This process was carried out on the basis that the syndicates are now non-core and an orderly divestment of the underlying assets or of the Group’s interests in the syndicates will take place. Any value achieved from the disposal of these assets, in excess of senior secured liabilities, represents potential upside to Aspen securityholders.

As Aspen’s FY12 audit process had not been completed at the time the Board determined to undertake the impairment, it was considered necessary that the impairment form part of the Group’s audited FY12 financial statements.

As a result of implementing the initial findings of the strategic review, the Board notes that the audited FY12 financial statements differ from the 4E and Preliminary Financial Statements announced on 31 August 2012.[13]

Mr Zipfinger said: “As the Group continues to progress the strategic review, we have identified the core strengths of the business, being the investment property portfolio and Aspen Parks Property Fund. Aspen’s non-core businesses have also been identified, being the residential and commercial development divisions, which the Group plans to exit. The Entitlement Offer is a crucial first step to provide Aspen with an improved capital position from which to finalise its strategic review.”

Entitlement Offer details

The Entitlement Offer is a fully underwritten accelerated non-renounceable entitlement offer under which eligible securityholders in Aspen will be entitled to acquire 1 New Security for every 1 existing Security held as at 5.00 pm (WST) on 27 September 2012 (“Record Date”) at the Offer Price of A$0.17 per New Security.

New Securities issued under the Entitlement Offer will rank equally with existing Aspen securities on issue and will be eligible for the forecast 1H13 distribution of 0.75 cents per security.[14] As the Entitlement Offer is non-renounceable, securityholders will not receive any value for entitlements not taken up.

The Entitlement Offer is expected to raise approximately A$101.4 million, with the institutional component (“Institutional Entitlement Offer”) comprising approximately A$60.9 million and the retail component (“Retail Entitlement Offer”) comprising approximately A$40.6 million.

The Institutional Entitlement Offer will take place on Monday, 24 September 2012. New Securities in respect of institutional entitlements not subscribed for and the right to subscribe for New Securities which would otherwise have been offered to ineligible securityholders will be placed into the institutional bookbuild. The institutional bookbuild will close at 5.00pm (EST) / 3.00 pm (WST) on Monday, 24 September 2012.

13 A reconciliation of adjustments to net tangible assets is provided on slide 33 of the Aspen Entitlement Offer Presentation.

14 Distribution payout of 80% of cash Core Operating Earnings. Full year forecast FY13 distribution of 1.5 cents per security.

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The Retail Entitlement Offer is expected to open on Wednesday, 3 October 2012 and close at 5.00 pm (WST) on Wednesday, 17 October 2012. Under the Retail Entitlement Offer, if the Retail Offer is not fully subscribed to, eligible retail securityholders will have an opportunity to apply for New Securities in excess of their entitlement at the Offer Price (“Additional Securities”). While the number of Additional Securities that may be applied for is uncapped, Aspen may apply any scale-back to applications for Additional Securities in its absolute discretion.

Core Operating Earnings[15] and distribution guidance

The Board’s guidance for forecast FY13 Core Operating Earnings per security is 1.8 cents and for forecast FY13 distribution per security is 1.5 cents.[16] As a result of undertaking the Entitlement Offer the Board has determined to suspend the Distribution Reinvestment Plan for FY13.

Further information

Further information, including investment considerations and risks associated with the Entitlement Offer, is included in the presentation released with this announcement.

Eligible retail securityholders are encouraged to carefully read the Retail Offer Booklet for further details relating to the Retail Entitlement Offer. Aspen expects to lodge the Retail Offer Booklet with the ASX and dispatch to retail securityholders on or about Wednesday, 3 October 2012.

If securityholders wish to obtain more information in the interim, please telephone our investor services centre on 1800 220 840 or visit our website at www.aspengroup.com.au.

Securityholders who are in any doubt as to how they should respond should consult their financial advisor.

End

For further information please contact:

Hugh Martin Brett Fullarton Interim Chief Executive Officer Chief Financial Officer Phone: (+61) 8 9220 8400 Phone: (+61) 8 9220 8400 Email : hughm@aspengroup.com.au Email: brettf@aspengroup.com.au

For media enquiries:

David Tasker Professional Public Relations Phone: (+61) 8 9388 0944 Mobile: (+61) 433 112 936 Email: david.tasker@ppr.com.au

Annexure

1. Entitlement Offer Timetable

15 Core Operating Earnings defined in footnote 2 above.

16 Distribution payout of 80% of cash Core Operating Earnings.

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Annexure 1: Entitlement Offer Timetable[17]

Institutional Entitlement Offer period (bookbuild)	24 September 2012
Trading in Aspen securities resumes	25 September 2012
Record Date for the Entitlement Offer	5pm (AWST17), 27 September 2012
Mailing of entitlement and acceptance form to eligible retail securityholders	3 October 2012
Retail Entitlement Offer opens	3 October 2012
Retail Entitlement Offer closes for early applications	8 October 2012
Settlement under the Institutional Entitlement Offer (and early Retail Entitlement Offer)	9 October 2012
Allotment and trading of New Securities issued under the Institutional Entitlement Offer (and early Retail Entitlement Offer)	10 October 2012
Retail Entitlement Offer closes	5pm (AWST17), 17 October 2012
Announcement of shortfall under Retail Entitlement Offer	22 October 2012
Settlement of New Securities issued under the Retail Entitlement Offer	24 October 2012
Allotment of New Securities issued under the Retail Entitlement Offer	25 October 2012
Trading of New Securities issued under the Retail Entitlement Offer on a normal basis	26 October 2012
Despatch of holding statements	26 October 2012

Note: The above timetable is indicative only and subject to change.

17 All dates and times are indicative only and subject to change at the discretion of Aspen, in conjunction with the underwriter. All dates and times are references to Australian Western Standard Time.

Aspen Group ASX Announcement 24 September 2012

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