Property developer and fund manager Aspen Group has revealed around $95 million in writedowns in its upcoming full-year results, but has reassured investors that its operating profit will only take a small hit as a result.
Aspen released today results of its end-of-year portfolio valuation, which resulted in likely impairments to the carrying value of loans to development syndicates of $82 million, and a further $33 million in writedowns related to equity interests in those syndicates.
It has also foreshadowed a $10 million write-down in the carrying value of non-core land inventory.
The group said the writedowns were non-cash impairments that would have no impact on its debt facilities.
Aspen said it statutory result - which last year was a profit of $17.4 million - will reflect the inclusion of the non-cash impairments.
Its operating eartnings will be less affected. Interest income accrued from certain syndicates in the last quarter of FY12 will not be recognised in the full-year result.
As a result, operating earnings are expected to now be in the range of $33 million to $34 million, compared to Aspen's previous guidance of $35.75 million.
Aspen stock was marked down sharply, sliding 14 per cent on the ASX today, with the securities closing trade today at 36.5 cents.
In positive news for the company, Aspen said the review revealed a bump in value in the company’s investment property portfolio.
Aspen said its portfolio had been independently valued at $258.2 million at June 30, an increase of $30.1 million over the past six months.
The company also said it expected its portfolio to generate a 30 per cent increase in rental income in FY13, on the back of successful leasing initiatives at the Spearwood Industrial estate and market rates returning to its Karratha Village and Septimus Roe Square properties.
