Eco Investor February 2016

Core Securities

Aspen Sells Aspen Parks

Aspen Group sold its 42 per cent stake in holiday parks fund Aspen Parks Property Fund to Discovery Parks, which now owns just over 90 per cent of Aspen Parks. Discovery Parks is wrapping up the takeover offer before it moves to compulsorily acquire the securities it does not have.

For Aspen Parks security holders, the successful takeover means they have sold out of an illiquid unlisted fund at a 39 per cent premium to net asset value and have cash in hand.

For Aspen Group security holders, the situation is a little different as the holding in Aspen Parks was their major asset and that has been replaced with cash.

Aspen Group sold its stake for a net $60.8 million and receives another $5 million for the termination of its management agreement with Aspen Parks. Its other assets are seven wholly owned manufactured home and holiday parks worth $39.1 million, Aspen Karratha Village worth $22 million and an industrial property for sale at Spearwood in Perth worth $28.7 million.

If the takeover is wrapped up as looks likely, Aspen's net asset value per security will rise from $1.25 to $1.42, it will have no debt, and it will have cash of over $60 million. That looks to be a good position to be in, so the takeover offer by Discovery has created value for Aspen.

What now for Aspen? Chief executive Clem Salwin said if the transaction conditions are met and the takeover proceeds as planned, Aspen will be a smaller and more focused entity with an attractive portfolio of wholly owned assets. The portfolio will be less geographically spread, and so easier and less expensive to manage.

Importantly, there is no change of strategy. He said Aspen maintains its "very positive strategic outlook on the value for money accommodation sector and the opportunities we see in it. Cash on hand post the transaction, together with existing debt facilities, provides very significant acquisition capacity."

Aspen has acquired seven properties over the last 12 months and it continues to see a good pipeline of attractive opportunities, he said.

The rollup in Australia's holiday parks sector and its partial conversion to manufactured homes estates continues with Aspen Group remaining as one of at least four players.

The stronger balance sheet means it can also look at capital management initiatives such as a possible on-market buyback of up to 10 per cent of the securities after the December results are released in late February. With its security price not much above its year low of $1.16, a buyback makes sense. (ASX: APZ)

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