URF Faces Market Risks While Targeting Full Portfolio Sale by Year-End

Significant Asset Sales Propel URF’s Wind-Down Strategy

US Masters Residential Property Group (ASX:URF) pressed ahead with its liquidation plan in the first quarter of 2026, closing sales on 40 assets for a combined US$48.59 million. This transaction reduced the Group’s holdings to 121 properties with a net realisable value of US$123.21 million as of 31 March. The Group remains committed to divesting the entire portfolio by the end of 2026, a strategic initiative first announced in early 2023.

Despite external headwinds including the Iran war and fluctuating interest rates, as well as local political shifts under New York’s new Mayor Zohran Mamdani, URF’s core markets have remained relatively stable. The New Jersey listings, particularly in the Workforce and Premium segments, continue to attract strong buyer interest, while New York Premium assets have experienced uneven but ongoing activity. This resilience supports the Group’s confidence in meeting its sales timeline.

Sales Pipeline Now Covers Entire Portfolio

At quarter-end, the entire portfolio was actively in the sales pipeline, including 15 properties previously held as income-generating ‘same home’ assets now slated for sale while tenanted. This shift simplifies reporting and reflects the Group’s focus on asset liquidation over ongoing rental income. Properties under attorney review or contract are expected to close in the near term, although timing remains subject to market and property-specific factors.

The Group’s sales pipeline breaks down into US$57.95 million in New York Premium, US$13.51 million in New Jersey Premium, and US$51.75 million in New Jersey Workforce assets. This comprehensive pipeline underpins the Group’s ambition to exit the market fully by year-end, continuing the momentum seen in previous quarters where sales targets were exceeded, as documented in the surpassed 2025 sales target announcement.

Distributions and Debt Reduction Maintain Investor Confidence

URF distributed 10 cents per stapled security during Q1 2026 and declared a further 4 cents per security payable in late May, funded through repatriated net sales proceeds that qualify as liquidating distributions for US tax purposes, avoiding withholding tax. This approach aligns with the Group’s plan of liquidation implemented in 2025.

Capital management remains a priority, with proceeds from asset sales used to repay US$24.41 million of the Global Atlantic loan facility during the quarter, lowering the outstanding balance to US$52.09 million. This continues a trend of debt reduction that has supported the Group’s financial flexibility, building on prior debt cuts reported in late 2025.

While no securities were bought back in Q1, the responsible entity has expressed ongoing interest in on-market buybacks as a capital return mechanism, contingent on market conditions and security prices. This is consistent with the buy-back program initiated earlier in 2026, designed to return value to security holders efficiently and opportunistically, as detailed in the on-market buy-back program announcement.

Operational Costs and Cash Flow Reflect Portfolio Wind-Down

General and Administrative expenses declined to A$2.2 million in Q1 2026, down from prior periods, reflecting cost discipline amid the winding down of operations. Funds From Operations (FFO), excluding disposal costs, posted a loss of A$2.7 million, a result consistent with ongoing portfolio sell-down where rental income diminishes and holding costs persist for properties marketed for sale.

The Group’s net asset value per stapled security stood at A$0.232 as of 31 March 2026, with 688.5 million securities on issue. This valuation encapsulates the progress made in asset sales and debt reduction, but also underscores the challenges ahead as the Group seeks to exit the US residential property market entirely within the year.