Real estate investment trust (REIT) Aspen Group (ASX: APZ) has doubled in the last 12 months.
The company owns, develops, and operates residential, retirement and holiday park communities across Australia.
It is a leading provider of quality affordable accommodation to the 40% of Australians who are unable to afford more than $400/week rent or $400,000 house prices.
A year ago, this REIT was trading for approximately $2.50 each. Last week, it closed at $5.22.
The team at Bell Potter has just released fresh analysis on Aspen Group, indicating there is more upside potential.
The broker has maintained its buy recommendation and bumped up its target price to $5.95 (previously $4.85).
Let's see what was behind the upgrade.
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Aspen Group in good shape and under-owned
The team at Bell Potter said Aspen Group is in "good shape."
It noted the company's Parks division is travelling ahead of FY25 as well.
APZ remains well capitalised with c.$113m of undrawn debt capacity on hand to fund further acquisitions and planned development capex, and remains under-owned despite recent ASX300 inclusion with recent register holding increases from already substantial shareholders.
The broker also highlighted FY26 YTD settlements and contracts on hand have increased to 137, representing 91% of recently upgraded FY26 guidance for 150 settlements.
New FY27 settlement target of 200 is pointing towards >2x delivered in FY24 (97), with APZ seeing an acceleration in sales at 91 over the last 4 months.
Aspen Group currently has 10 projects contributing to earnings, growing shortly to 15 in total.
Buy recommendation
Bell Potter listed key reasons for its buy recommendation on this ASX REIT.
The broker said Aspen's target tenant/owner sits within a very defensive segment of the market – affordable living.
The national undersupply equation means that this will remain a crucial pillar of the housing market, and will be upheld by strong demand and government subsidy for the foreseeable future.
Bell Potter also said the ASX REIT has delivered compelling risk-adjusted returns over time, yet plays in what is otherwise a low-yielding category of residential and derivatives for rent (and sell).
Focus on total return we believe puts APZ in good stead ahead.
Based on the updated target price of $5.95, there is approximately 14% upside from Friday's closing price of $5.22.
