Troubled residential property fund moves to sell portfolio

The US Masters Residential Property Fund has instructed its investment manager to sell properties, as the fund struggles with ongoing underperformance.

The fund invested in New York residential property and lost 25 per cent in the year to 30 April 2019, according to its factsheet, and lost 19 per cent over two years.

This led to a divergence between the fund’s market price and its underlying net tangible assets (NTA) per unit. As a result, it was now having to sell the property portfolio in order to pay back the Notes, as well as considering appropriate capital management strategies to maximise returns.

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This process would involve disposal of single assets, disposal of sub-portfolio of assets where there were institutional purchasers and corporate transactions and other capital initiatives.

It said it hoped this would result in a better outcome than having the fund trade at a significant discount to NTA.

A distribution to holders of ordinary units due on 30 June would be reduced to one cent per unit.

In a stock exchange update, the firm said: “Whilst the reduction in the distribution to unitholders is disappointing, it is a necessary step in accelerating the repayment of the Notes and the aim of the program to reduce the fund’s trading discount to NTA.”

Instead, the fund said it would focus on the renovation market in high quality houses where it saw a value opportunity.

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