ASPEN GROUP — Capital/Financing Update 2021

Nov 4, 2021

Aspen Group Limited ABN 50 004 160 927 Aspen Property Trust ARSN 104 807 767

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Suite 21, 285A Crown Street Surry Hills NSW 2010 Telephone: 02 9151 7500

Email: homemail@aspengroup.com.au

ASX ANNOUNCEMENT 5 November 2021

Acquisition – Meadowbrooke Lifestyle Estate

Aspen Group (ASX: APZ) (‘‘Aspen’’) is pleased to announce that it has entered into a conditional contract to acquire the Meadowbrooke Lifestyle Estate (‘‘Meadowbrooke ’’ ) in Boyanup, Western Australia under a receivership sale. Settlement is expected to occur in December 2021.

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Meadowbrooke Lifestyle Estate

Meadowbrooke is a retirement community being developed and operated under a land lease financial model. The property spans 9.1 hectares and approvals are in place for 181 houses of which 17 have been built and sold to date. It has a large, good quality club house, a craft room/activity centre, bowling green and gymnasium, workshop/shed, caravan and boat parking, and 3 self-contained villas that are currently offered for lease on a short stay basis. Full site infrastructure is in place for the next 78 houses.

The existing houses are occupied under a land lease agreement with current contracted land rents of about $172 per week on average and exit fees of 15%.

The project fell into receivership in 2019 and during this period the sales price of houses declined. The average price of new houses sold to date is around $312,000 and the last two sold during the receivership at $250,000. We believe sales volumes and prices will increase again when the community moves out of receivership, helped by a general rebound in WA’s housing markets. Initially, we aim to regain momentum in the project by fixing up some legacy issues, improving services and offering our first stage of new houses at very competitive prices starting from as low as $225,000. At our entry price, we expect total returns will still be attractive due to an uplift in the site values above cost once leased.

Location & Socio-demographics

Boyanup is located about 20kms southeast of Bunbury, 180kms south of Perth CBD (about 2 hours by car) and about 100kms north of Margaret River.

Bunbury is a major port town and is regarded as Western Australia’s “second city” after Perth. Its main industries by employment are health care & social services, retail trade and construction.

Bunbury’s urban area has a population of over 72,000 and it services a region with over 176,000 people. They are slightly older on average and have lower median household income compared to the whole of Western Australia (2016 census).

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Bunbury
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Perth Apartment Portfolio
Perth House Portfolio
Mandurah Gardens
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Meadowbrooke
Lifestyle Estate
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	Western	Bunbury	Bunbury Urban
Census 2016	Australia	Region (SA4)	Area (SUA)
Population	2.47m	176,330	72,402
Median age – years	36	41	38
Population >50 years	32%	38%	34%
Population growth 2011-2016	10.5%	11.5%	10.4%
Average number of people per household	2.6	2.5	2.5
Median household income – weekly	$1,595	$1,319	$1,436
Unemployed	7.8%	7.0%	8.2%

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Pricing

The purchase price is $3.258 million (excluding transaction costs), equating to about $358,000 per hectare and $18,000 per approved site. We believe the price is less than 50% of replacement cost.

The property currently makes a small operating loss including the costs of holding the development land (eg. land tax, council rates). We expect to create value for shareholders by generating cash profits from the sale of houses and from a valuation uplift on the serviced land sites once they are leased.

Continued Growth in Aspen’s Development Pipeline

Upon settlement, Aspen’s land development pipeline will increase by 44% to 534 approved sites at an average book value of only $32,000 per site. Over 100 of these sites are fully serviced.

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Evolution of Aspen's Land Development Pipeline
Total Approved Sites and Current Book Value per Site
600
500
Meadowbrooke
($18k^)
400
Wodonga
Gardens ($27k)
300 Lewis Fields
($24k)
Mount Barker
200
($46k)
Sweetwater
100 Grove ($44k)
Four Lanterns
($95k)
0
2H FY19 1H FY20 2H FY20 1H FY21 2H FY21 1H FY22
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^ Meadowbrooke $18k is Aspen’s purchase price per approved site – property has not yet been externally valued

Announcement authorised by the Board of Aspen Group Limited.

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For further information, please contact: David Dixon John Carter Joint Chief Executive Officer Joint Chief Executive Officer Phone: (+61) 2 9151 7584 Phone: (+61) 2 9151 7586 Email: davidd@aspengroup.com.au Email: johnc@aspengroup.com.au

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Disclaimer

This announcement has been prepared by Aspen Group Limited on behalf of Aspen Group Limited and Aspen Property Trust (“Aspen”) and should not be considered in any way to be an offer, invitation, solicitation or recommendation with respect to the subscription for, purchase or sale of any security, and neither this document nor anything in it shall form the basis of any contract or commitment. Prospective investors should make their own independent evaluation of an investment in Aspen. Nothing in this announcement constitutes investment, legal, tax or other advice. The information in this announcement does not take into account your investment objectives, financial situation or particular needs. The information does not purport to constitute all of the information that a potential investor may require in making an investment decision.

Aspen has prepared this announcement based on information available to it. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this announcement. To the maximum extent permitted by law, none of Aspen, its directors, employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising from fault or negligence on the part of any of them or any other person, for any loss arising from the use of this announcement or its contents or otherwise arising in connection with it.

This announcement contains forward looking information. Indications of, and guidance on, future earnings, distributions and financial position and performance are forward looking statements. Forward looking statements are based on Aspen’s current intentions, plans, expectations, assumptions, and beliefs about future events and are subject to risks, uncertainties and other factors which could cause actual results to differ materially. Aspen and its related bodies corporate and their respective directors, officers, employees, agents, and advisers do not give any assurance or guarantee that the occurrence of any forward-looking information, view or intention referred to in this announcement will actually occur as contemplated. All references to dollar amounts are in Australian currency.

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