ASPEN has settled on its $52 million acquisition of a portfolio of inner Perth apartment complexes that it will begin refurbishing the assets with a targeted value uplift of at least 30%.
The portfolio consists of 514 mostly one and two-bedroom apartments across 17 complexes, and is being acquired at approximately $101,000 per apartment. It also gives Aspen control over 4.7 hectares of land in total.
Most of the properties were built and in 1970s and Aspen plans to spend $25 million across the portfolio over the next 18 to 24 months. Net rental yield is expected to be minimal for the first year depending on how many apartments are offline for refurbishment – the portfolio was also acquired with 41% occupancy – before stabilising at over 5% post the refurbishment and leasing program, based on an average weekly rent of $275.
Works will commence this month on the first 80 apartments and refurbished units will progressively become available for lease from late December.
“WA is currently enjoying economic and population growth, and record employment levels. Perth offers an attractive lifestyle, its residential vacancy rate is about 1%, and residential prices and rents are increasing, yet prices are generally less than they were 10 years ago and have lagged the eastern states,” Aspen said.
It noted that the portfolio offers optionality to expand or rebuild on higher density zoned sites, and to recycle capital from apartments that may be less suited to Aspen’s business given their relatively high rent and price points.
The acquisition is expected to be accretive to both net asset value and earnings per security over the medium term.