US MASTERS RESIDENTIAL PROPERTY FUND onlyuse
personalQUARTERLY UPDATE
October - December 2021
For
28 February 2022
Executive Summary
onlyWe welcome investors to the US Masters Residential Property Fund's (URF or Fund) Quarterly Report for the period 1 October 2021 to 31 December 2021.
At the end of the Quarter the Fund completed its regular six-monthly valuation process, and this process saw the Fund's 1-4 Family portfolio increase in value by 1.6%. This follows an increase of 2.7% for the first six months of 2021. Growth in the second half of 2021 was achieved across all investment regions, with the Fund's New York Premium segment experiencing the strongest relative uplift.
Q4 2021 was a successful quarter for the Fund's 1-4 Family operational results;
• | Rent payments equal to 99% of the quarter's rent roll were collected; |
use | |
• The Fund's occupancy rate increased to 96.2%, which is the highest level that has been achieved since the Fund began | |
publishing quarterly statistics; | |
• | Same-home Net Operating Income (NOI) for Q4 2021 was up 5.5% compared to Q4 2020; |
• | General & Administrative (G&A) costs continued their downward trend, with the second half of 2021 representing an 11% |
cost reduction compared to the first half of the year. |
Excluding disposal costs and non-recurring items, the Funds From Operations (FFO) loss for the second half of 2021 was A$3
million. This represents a 58% improvement over the first half of the year, and illustrates the ongoing benefits from the Fund's personalstrategic initiatives. Pleasingly, the Fund is expected to achieve a positive FFO run rate within the second half of the 2022 calendar
ye r.
With the Fund's sales program in its final stages, only one asset sale closed during the quarter. Selective sales will continue to occur into the future, and at the end of the quarter there were six properties earmarked for sale. Proceeds from future sales will be available for capital management strategies such as security buybacks and further debt reduction (noting that there are annual limits on early loan repayments against the Global Atlantic Term Loan, above which the Fund is charged a Yield Maintenance Premium).
The local US Management team and the Responsible Entity Board of Directors continue to work closely with Ackman Ziff on potential capital market opportunities for the Fund. Such opportunities may include a full or partial portfolio sale, and we note that additional information on this process is included within the Chair's Letter and CEO Report accompanying the Full Year 2021 Financial Results which have been released alongside this Quarterly Report.
We welcome investor feedback on these reporting metrics, and encourage direct communication with the Fund via our Investor R lations team at URFInvestorRelations@usmrpf.com.
For | Brian Disler | Kevin McAvey |
Co-Head of the US REIT | Co-Head of the US REIT | |
US Masters Residential Property Fund | QUARTERLY UPDATE October - December 2021 | 2 |
For personal use only
US Masters Residential Property Fund QUARTERLY UPDATE October - December 2021
Contents
2
Executive Summary
4
Portfolio Valuation
5
Portfolio Composition
6
Asset Sales
7
Capital Management
8
Rental Income Collections
9
Portfolio Occupancy
10
Net Operating Income
11
General & Administrative Expenses
12
Net Asset Value
14
Fund Cash Flow Profile
3
Portfolio Valuation
onlyAt the end of the quarter the Fund conducted its regular six-monthly asset valuation process. Consistent with prior periods, this was conducted by obtaining asset-specific appraisals using the comparable sales methodology from a panel of independent brokers and real estate valuers. Specific appraisals were obtained on 48% of the portfolio by number, and 53% of the portfolio by value. These results were then used to calculate neighbourhood-specific adjustment figures, which were subsequently applied to the remainder of the portfolio on a neighbourhood-by-neighbourhood basis. The results of this process for the 1-4 family portfolio are summarised below:
usepersonalThe Fund's Workforce properties continued to perform strongly, increasing in value by 1.2% for the six months to 31 December 2021. This followed a positive movement of 8.6% for the six months to 30 June 2021. These investment areas
continue to benefit from strong interest from both investors and homeowners.
The Fund also recorded a positive movement across the New Jersey Premium segment of 1.1% for the six-month period, following a reduction in values of 3.1% for the period ended 30 June 2021. The Fund's primary holding in the New Jersey Premium segment is Downtown Jersey City, and while this valuation movement is modest in size, it is a pleasing return to growth for this area following the slowdown experienced over recent reporting periods.
The Fund's New York premium segment of the portfolio saw an aggregate increase of 2.0% for the six-month period, taking the full-year 2021 result for this segment to 3.8%. The Fund's New York Premium segment of the portfolio is largely comprised of assets in Brooklyn and Upper Manhattan. Within this segment the Fund's Upper Manhattan assets appreciated by 0.5% for the half-year, while the Brooklyn assets increased by 2.5%.
In addition to the Fund's primary 1-4 Family investment portfolio, the Fund's small exposure to large-scale multifamily assets owned with Urban American were also revalued. Large-scale apartment complexes continue to be impacted by the ForCOVID-19 pandemic, and asset values have been affected more significantly than the Fund's primary investments in 1-4 Family housing. These investments were externally valued using a capitalised income methodology, with the value of the assets reducing 4.5% as a result of this process, largely as a result of decreased rent revenues. We remind investors that these assets form only a small part of the Fund's investment portfolio (the Fund's economic interest in these investments is
approximately US$10 million, compared to the US$645 million value of the 1-4 Family portfolio).
Due to the effect of leverage within the Fund, this aggregate valuation change equates to a 4.5% increase to the pre-tax Net Asset Value (NAV).
US Masters Residential Property Fund | QUARTERLY UPDATE October - December 2021 | 4 |
only | Composition | ||||||
The f llowing breakdown represents the Fund's 1-4 family portfolio as at 31 December 2021: | |||||||
use | Portfolio Composition | ||||||
(by value) | |||||||
19% | |||||||
personal | 51% | ||||||
30% | |||||||
NJ Premium | NJ Workforce | NY Premium | |||||
Location | Value (USD) | Property Count | Location | Value (USD) | Property Count | ||
NJ Workforce | $190,166,093 | 300 | NY Premium | $330,930,242 | 113 | ||
Bayonne | $30,842,842 | 54 | Bedford-Stuyvesant | $97,167,226 | 39 | ||
Bergen-Lafayette | $7,845,091 | 11 | Boerum Hill & Brooklyn Heights | $16,740,000 | 3 | ||
Greenville | $36,873,406 | 68 | Bushwick | $20,358,282 | 14 | ||
Jersey City Heights | $51,355,315 | 62 | Clinton Hill | $14,984,672 | 4 | ||
Journal Square | $17,985,306 | 26 | Cobble Hill | $7,197,016 | 2 | ||
North Bergen | $5,260,474 | 9 | Crown Heights & Lefferts Gardens | $33,692,485 | 14 | ||
Secaucus | $515,000 | 1 | Fort Greene | $11,072,777 | 3 | ||
Union City | $2,990,613 | 5 | Park Slope | $33,840,314 | 7 | ||
West Bergen | $34,915,860 | 61 | Prospect Heights | $5,330,000 | 1 | ||
West New York | $1,582,186 | 3 | Williamsburg | $15,937,025 | 6 | ||
For | |||||||
NJ Premium | $124,479,892 | 70 | Hamilton Heights & Harlem | $65,015,443 | 18 | ||
Downtown | $115,502,580 | 64 | Forest Hills | $1,600,000 | 1 | ||
Weehawken | $8,977,312 | 6 | Soho | $7,995,000 | 1 |
Source: US REIT, as at 31 December 2021. Figures may not sum due to rounding.
US Masters Residential Property Fund | QUARTERLY UPDATE October - December 2021 | 5 |
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Us Masters Residential Property Fund published this content on 28 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 February 2022 05:51:02 UTC.
