Aspen Group Boosts FY25 Outlook Amid Housing Demand and Development Growth

November 15, 2024 02:16 PM AEDT | By Team Kalkine Media

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Aspen Group Boosts FY25 Outlook Amid Housing Demand and Development Growth — Image source: shutterstock

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Highlights

Aspen Group anticipates FY25 earnings to rise 5% over previous estimates.

Expansion planned for lifestyle and residential sectors with doubled home production.

Focus on debt reduction to strengthen financial position.

Aspen Group (ASX:APZ), a leader in affordable housing and lifestyle community management, has raised its earnings forecast for FY25, driven by growing demand in its development segments. This upgraded outlook for ASX real estate stocks, which sees underlying earnings per security (EPS) rising to 16.0 cents, represents a 5% boost over prior guidance and a notable 16% improvement from FY24’s 13.8 cents. This positive adjustment reflects Aspen’s strong market position in affordable housing, with improved returns from its lifestyle and residential development sectors.

The group reported robust performance within its long-stay rental market, emphasizing minimal vacancies that signal stable demand in this sector. However, the short-stay rental market showed variability, with results described as “patchy.” Despite this, Aspen’s focus remains firmly on the lifestyle and residential segments, where it plans a significant production boost. The company aims to double its output to over 200 new homes and land sites by FY25, a move supported by steady building costs and an average 12% increase in sale prices for lifestyle houses.

The company also outlined steps to reinforce its financial structure, with plans to reduce net debt to approximately $130 million. This target will be supported by proceeds from planned asset sales, a move that aligns with Aspen's strategic focus on strengthening its balance sheet while capitalizing on market momentum.

Aspen’s CEO, David Dixon, emphasized the group’s commitment to meeting growing demand and expanding its land rental offerings. Dixon highlighted the importance of capturing the current momentum in the development sector and catering to the increasing preference for lifestyle-oriented housing. The production expansion underscores Aspen's broader strategy to enhance its role in the affordable housing market, ensuring it remains well-positioned to benefit from sustained demand.

Shares of Aspen Group were recently up by 7.17%, trading at $2.39 on ASX, reflecting positive investor response to the updated outlook and growth plans. With this trajectory, Aspen continues to solidify its reputation as a key player in the property investment sector, particularly in affordable and lifestyle housing.

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