US Masters Posts US$48M Q1 Sales, Cuts Debt Amid Market Uncertainty

Market Context and Sales Performance

The first quarter of 2025 presented a challenging backdrop for US Masters Residential Property Group (URF), with inflation concerns and potential US tariffs unsettling markets. Despite these headwinds and persistently high mortgage rates, the Group saw encouraging buyer demand for its residential property listings. URF closed sales on 39 properties, generating US$48.07 million in proceeds, reflecting resilience in its core markets of New Jersey and New York.

At quarter-end, the Group's sales pipeline stood at a robust US$150.50 million, including US$71.86 million under contract or in attorney review. While recent equity market volatility injects some uncertainty into deal closures, URF remains optimistic about achieving its 2025 sales target of US$200 to US$225 million, bolstered by additional properties expected to enter the pipeline throughout the year.

Operational Highlights and Income Growth

Operationally, the Group reported a 5% increase in net operating income (NOI) on a same-home basis to US$8.1 million for the twelve months ending March 2025. This growth was driven by strategic rental increases, particularly in jurisdictions where lease renewals are mandated, which both encouraged tenant turnover and enhanced income from tenants accepting higher rents. The portfolio maintained a 79% occupancy rate, with a deliberate push to increase vacancy in preparation for sales, optimizing asset marketability.

General and administrative expenses rose slightly to A$2.8 million, influenced by currency fluctuations and costs related to the internalised responsible entity structure implemented in mid-2024. Despite these costs, the Group continues to manage its portfolio efficiently amid the ongoing sell-down strategy.

Capital Management and Debt Reduction

Capital management remains a key focus, with the Group reducing its senior debt facility with Global Atlantic by US$31.08 million during the quarter, contributing to a total debt reduction of US$104.73 million over the past year. Proceeds from property sales were also used to repurchase 0.75 million URF Stapled Securities and to declare a 1 cent special distribution, signaling a commitment to returning value to investors.

Looking ahead, the Group is mindful of the May 2026 maturity of its senior loan facility and is actively evaluating refinancing options or further prepayment strategies. The Directors emphasize maintaining prudent cash reserves while balancing capital returns through buybacks and distributions.

Financial Performance and Outlook

URF recorded a Funds From Operations (FFO) loss of A$8.8 million for Q1 2025, which adjusts to a loss of A$2.3 million when excluding one-off disposal and restructuring costs. This loss is expected as the portfolio is actively sold down, with holding costs and vacancy impacting cash flow. However, the Group’s strategic approach to sales and capital management positions it well to navigate the current market environment.

With a post-tax net asset value of A$0.611 per stapled security as of March 31, 2025, and a strong sales pipeline, US Masters is poised to continue its transition while managing risks associated with market volatility and financing maturity.