LISTED Western Australian property player Aspen Group has entered into an agreement with WA caravan manufacturer Fleetwood Corporation to acquire its caravan park division.
LISTED Western Australian property player Aspen Group has entered into an agreement with WA caravan manufacturer Fleetwood Corporation to acquire its caravan park division.
Called Fleewood Parks, the wholly owned Fleetwood subsidiary operates six caravan parks in the State.
The sale price is about $28 million, which will give Fleetwood about a $9 million before tax profit on the deal.
Aspen has launched Aspen Parks, an unlisted property-based investment trust specifically targeting property assets in the tourist-caravan park market.
The two companies have also entered into an alliance under which Aspen has first option to buy future tourist parks that Fleetwood may develop or identify and will buy new caravans and cabins from Fleetwood at wholesale prices.
Fleetwood group financial controller Brad Denison said the company’s caravan park strategy had been to operate parks while they provided value added potential through the ability to supply accommodation buildings from Fleetwood’s Manufactured Accommodation division.
"As each park ‘matures’ – that is there is limited value add potential – and the ongoing revenue becomes a rental annuity stream then those parks will be sold and the proceeds used to acquire other parks that have development potential," he said.
"Although the parks to be sold are not fully mature, the agreement to sell to Aspen allows Fleetwood to realise its current investment in the parks and, through the Strategic Alliance Agreement, still retain the right to provide all the accommodation units required by Aspen to fully develop the parks.
"The ongoing returns generated by mature caravan park operations are expected to be less than the returns traditionally generated by Fleetwood and are more aligned to property returns."
Aspen estimates the initial yield on the acquired properties will be 14 per cent with a 10 per cent distribution paid monthly to investors.
The ability to pay monthly distributions is underpinned by regular cashflow with more than 50 per cent provided by permanent tenants and a regular pattern of visitors.
Aspen group managing director Angelo Del Borrello said the new trust was a response to growth in the leisure property sector, especially outside the traditional city hotel-resort sector.
"Australia has seen some dramatic shifts in demographics and behaviours in recent years but close to the top of the pile must sit the phenomenon of people spending their money travelling Australia, many of them retired," he said.
Mr Del Borrello said tourist parks had "boomed in popularity and patronage".
