Aspen Group has purchased another site as a build-to-rent investment following a liquidator sale, this time in Newcastle.
The residential building in exclusive Cooks Hill currently operates as a co-living community with 55 rooms called Elizabeth House.
It is 60 per cent occupied and was being refurbished before the last owner fell into receivership.
Purpose-built for YWCA, a not-for-profit, it rises three floors and sits on a 1948 square metre site at 82 Parkway Avenue.
It previously sold for $1.97m in November, 2012.
Aspen said it plans to complete the renovation of the community areas including a large communal lounge and dining room.
It will also combine some of the units – already designed for single person living – add ensuites and enhance the communal facilities, it said, in order to diversify the tenant base.
“There is also the potential to add more affordable rental housing floorspace to the site under current planning guidelines and develop the entire site for higher and better use in future,” a company spokeswoman said.
Aspen said about 1000 sqm of internal floorspace could be added to the 1500 sqm complex.
The ASX-listed group is paying $3.75 million for the property, which is about 650 metres from Susan Gilmore Beach in the neighbouring suburb of Bar Beach.
Total all-in cost after refurbishment, it said, is estimated at $4.75m, or $116,000 per flat, assuming a 41-unit scheme and $3167 per sqm of dwelling area.
“Net rental yield on cost is expected to be about 4.5-5 per cent upon completion at gross rents of $175-200 per week, which is about half the rent of one bedroom units in Cooks Hill,” the company said.
Two days ago the investor announced it spent $3.5m on a block of 18 units in Burleigh Heads, also following a mortgagee in possession campaign.
After renovated the dwellings and subdividing the near-hectare parcel, it is anticipating a $7.2m outlay on its Gold Coast asset.
“We expect to be able to continue to grow Aspen’s business and portfolio profitability in future and we believe the opportunities will increase during this economic downturn”, it said.
Newcastle is New South Wales’ second largest metropolitan area accommodating a population of about 450,000, forecast to be rising at three per cent annually.
Nobbys and Mereweather beaches are amongst its most popular tourist attractions.
Also at the Hunter River mouth, the town is 160 kilometres north of Sydney.