US Masters Residential Property Group reports a half-year profit and advances its ambitious asset sales program, while navigating a significant US tax structure change and mixed market conditions.
- Half-year post-tax profit of $4.8 million reversing prior losses
- Asset sales pipeline surpasses US$155 million with potential to exceed US$216 million in 2025
- US operations reclassified from REIT to taxable C-Corp, reducing deferred tax liabilities drastically
- Portfolio fair value declined by US$9.2 million, mainly due to New York segment softness
- Distribution of 10 cents per stapled security declared and paid post balance date
Strong Financial Turnaround
US Masters Residential Property Group has reported a notable turnaround in its financial performance for the half-year ended 30 June 2025. The Group posted a post-tax profit of $4.8 million, a significant improvement from the $17.9 million loss recorded in the same period last year. This positive result was driven by a 127% increase in total revenue to $13.55 million and effective management of operating costs.
Accelerated Asset Sales Program
Central to US Masters’ strategy is an aggressive asset sales program aimed at unlocking value and returning capital to security holders. The Group set a challenging sales target of US$200-225 million for the 2025 financial year, a substantial increase from US$151 million in 2024. By early August, US Masters had already closed sales worth US$155.3 million and held contracts or offers on an additional US$61.5 million of assets. With further listings and properties soon to enter the sales pipeline, the Group is well positioned to meet or exceed its sales guidance.
Market Conditions and Portfolio Valuation
Despite strong sales momentum, the Group’s portfolio experienced a fair value decrement of US$9.2 million (2.84%) during the half-year, primarily due to a 4.38% decline in the New York Premium segment. Market activity in New York has softened, partly attributed to political uncertainty following the nomination of a democratic socialist candidate for NYC mayor, which has tempered buyer sentiment. In contrast, New Jersey segments remained relatively stable with firm pricing and buyer interest. The Group continues to adapt its sales approach, including off-market and package sales, to maintain velocity.
US Tax Structure Reclassification
A significant development during the period was the reclassification of the Group’s US operations from a Real Estate Investment Trust (REIT) to a taxable corporate (C-Corp) structure effective 1 January 2025. This change, accompanied by a formal plan of liquidation expected to conclude by the end of 2028, has materially reduced the Group’s net deferred tax liability from $40.2 million to $0.5 million. While the new tax regime subjects the US operations to approximately 30% corporate tax, historical losses can offset taxable income, mitigating immediate tax impacts. The reclassification also removes withholding tax on repatriated funds within the liquidation period, enhancing capital return flexibility.
Capital Management and Debt Facility
US Masters declared and paid a distribution of 10 cents per stapled security in August 2025, reflecting the success of its sales program. The Group’s debt facility with Global Atlantic, totaling US$150.8 million at balance date, matures in May 2026. Management is actively considering refinancing options, including extension, repayment from sales proceeds, or new financing arrangements. The facility covenants remain satisfied, but mandatory prepayment requirements impose a disciplined repayment schedule. The Group’s capital management strategy balances distribution payments, security buybacks, and debt obligations to maximise security holder value.
Outlook
US Masters is executing its business plan with clear progress on asset sales and capital returns, despite a challenging and evolving market environment. The Group’s ability to navigate tax restructuring, maintain sales momentum, and manage debt will be critical as it approaches the debt maturity and liquidation timeline. Investors will be watching closely for updates on sales settlements, refinancing outcomes, and market conditions, particularly in New York.
Bottom Line?
US Masters’ next moves on debt refinancing and sales execution will be pivotal for sustaining its recovery and delivering value.
Questions in the middle?
- Will US Masters complete its targeted US$200-225 million in asset sales by year-end?
- How will the C-Corp tax structure impact long-term returns and liquidation timing?
- What refinancing strategy will the Group adopt ahead of the May 2026 debt maturity?