ASPEN GROUP — Capital/Financing Update 2021

Mar 30, 2021

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Aspen Group Limited ABN 50 004 160 927 Aspen Property Trust ARSN 104 807 767 UG 285A Crown Street Surry Hills NSW 2010 Telephone: 02 9151 7500

Email: homemail@aspengroup.com.au

ASX ANNOUNCEMENT 31 March 2021

Acquisition – Co-living Community, Upper Mount Gravatt QLD

Aspen Group (ASX: APZ) (“ Aspen ”) is pleased to announce that it has entered into conditional contracts to acquire a co-living community in Upper Mount Gravatt Queensland (“ UMG Co-living Community ”). Settlement is expected to occur in late April 2021. This is Aspen’s fourth acquisition in FY21 and adds to our SE Queensland cluster alongside the Burleigh Heads build to rent project.

UMG Co-living Community

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Upper Mount Gravatt is located in the Brisbane metropolitan area, about 13kms south of the Brisbane CBD. Greater Brisbane is Australia’s 3[rd] largest metropolitan area with a population of about 2.3 million people. The property is located less than 400m from Westfield Garden City, other retail facilities and the transport interchange, and about 3kms from Griffith University’s Nathan Campus.

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Relative to Australia and Brisbane averages Upper Mount Gravatt’s population is young and tertiary educated with a foreign ancestry, household incomes are low, and rents are high (2016 census):

2016	Australia	Greater Brisbane	Upper Mount
			Gravatt
Population	23.4m	2.3m	9,396
Median age – years	38	35	32
Both parents born in Australia	47%	49%	38%
% Population 20-29 years	14%	15%	24%
Population growth 2011-2016	8.8%	9.9%	6.2%
Average number of people per household	2.6	2.7	2.5
Degree/diploma educated	31%	32%	38%
Median household income – weekly	$1,438	$1,562	$1,352
Rent - weekly	$335	$355	$400
Rent / household income	23%	23%	30%
Unemployed	6.9%	7.4%	9.8%

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UMG Co-living Community

UMG Co-living Community is a gated complex comprising 64 apartments across 6 separate 3-storey buildings, over 130 undercroft car parking spaces (2 per apartment), and extensive high quality community facilities including meeting rooms, BBQ/dining areas, swimming pool/spa/sauna, table tennis/tennis/soccer/basketball courts, and landscaped gardens.

There are 40 4-bedroom and 24 6-bedroom apartments, each with their own ensuite with shower, toilet and hand basin. The apartments feature covered balconies off the living area and some of the bedrooms. Two of the bedrooms in the 6-bedroom apartments are loft style, some with their own kitchenettes. The internal area of the 4-bedroom apartments is about 110sqms and the 6-bedroom apartments is about 136sqms (excluding loft storage, balconies and car spaces). There is also a 3- bedroom manager’s apartment and a 1-bedroom caretaker’s apartment. Each apartment has a full kitchen, dining and living area and a cupboard laundry. All apartments are fully furnished and have ducted air-conditioning.

The total internal area of the apartments is approximately 8,500sqms (excluding balconies and car spaces).

Typical Apartment Layout

4 Bedrooms on Single Level (40 units) + Additional 2 Loft Bedrooms (24 units)

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Aspen’s Plan

The property is currently operated as Uniresort, a student accommodation facility with the majority of its customer base attending Griffith University and nearby language schools. Accordingly, COVID-related travel restrictions have reduced demand and net income over the past 12 months.

We intend to broaden the student customer base to include other young, like-minded customers who value the co-living experience and relatively cheaper rents that currently average about $200 per week per room including furniture, electricity, water, internet and a fortnightly clean of common areas. We expect the majority of our tenants will be on standard residential leases or rooming accommodation agreements with a minimum term of 6 months, however there is the opportunity to offer short stay options given the apartments are fully furnished.

We expect the net income yield to recover to over 5% within the next 18 months as occupancy stabilises and from reducing operating costs.

The land is zoned High Density Residential up to 8 stories, and about 24,000sqm of gross floor area can be developed which is over twice the current density. There is also the potential to strata title some or all of the apartments in the future, helped by their fairly standard residential layout and existing separate electricity and hot water meters. In our opinion these attributes will help drive relatively high capital growth over time.

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Pricing

The purchase price is $18.50 million (excluding transaction costs), equating to about $280,000 per apartment, $60,000 per bedroom and $2,166 per sqm of internal area (excluding balconies and car spaces). The median sales price of a 3-bedroom apartment in Upper Mount Gravatt is $418,000 (realestate.com.au).

The current statutory land valuation is $9.70 million, implying a residual purchase price for the improvements of $8.80 million or $1,030psm of internal area (excluding balconies and car spaces). In our opinion the replacement cost of the property is above $30 million including land.

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The acquisition will initially be funded with debt. As foreshadowed at our recent half year financial results, we have started to recycle equity within our portfolio by entering into conditional contracts for the sale of two houses in Perth. The average price achieved was $425,000 equating to a net profit margin above total cost of approximately $90,000 per house.

We expect the acquisition to be accretive to both NAV and EPS over the medium term.

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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