This article is from the Australian Property Journal archive
US Masters Residential Property Fund posted an interim net operating loss of nearly $47.6 million, as it endured a difficult period in which it cut dividends and started selling off assets to repay debt.
The group cited federal tax changes capping the deductibility of state and local taxes, higher tax assessments on certain properties, and changes in legislation relating to rent regulated properties, as well as “neighbourhood specific dynamics and macroeconomic factors including increased uncertainty due to rising US-China trade tensions,” for the weak result.
Distributions were cut from 5c to 1c.
URF’s non-core asset divestment program has seen nine properties sold for $9.7 million, and contracts have been entered into for a further eight, for a combined $11.5 million.
There are 24 properties currently on the market for sale with an aggregate fair value of $42.5 million. Golden Peak II LLC, in which URF has a 67.5% interest, entered into a contract to dispose of a build to rent portfolio for US$65 million, representing a US$27.4 million gain on acquisition cost in 2012.
The fund has been under particular scrutiny since a Nine Media report earlier this highlighted concerns about the sustainability of its dividends, as its interest costs were outpacing rental income.
URF was listed in 2012 as a way for investors to gain New York City residential property market exposure, and take advantage of higher yields and strong Australian dollar. The fund is mostly owned by wealth management firm Evans Dixon. The firm’s chief executive officer, Alan Dixon, stepped down in June to focus on URF.
