- US Masters Residential Property Fund (URF) is selling “substantially all” of its US residential property assets to real estate firms Brookside and Rockpoint in a US$507 million (A$675 million) deal
- Holders of URF preference shares will receive the full $100 face value of the securities as part of their deal, while holders of ordinary shares will receive 22 cents per unit
- This marks a discount on URF ordinary shares of around 38 per cent to the company’s last closing price
- Should URF investors vote in favour of the deal and all other sale conditions be met, the property fund will be liquidated and de-listed from the ASX
- Shares in URF are tumbling 42 per cent lower at 1:10 pm AEDT to 20 cents each
Shares US Masters Residential Property Fund (URF) have nosedived after the fund announced it was selling “substantially all” of its US residential property assets to real estate firms Brookside and Rockpoint in a US$507 million (A$675 million) deal.
While the price tag represents a 3 per cent premium to the combined market cap of URF’s preference shares, which trade under the ticker URFPA, and its ordinary shares, holders of preference shares or hybrid holders will be getting a far better deal.
The company said URFPA holders will be repaid the full $100 face value of their securities, plus any accrued interest outstanding for the last half-year.
Meanwhile, holders of ordinary URF shares will receive roughly 22 cents per unit — a discount of some 38 per cent to URF’s last closing price and 35 per cent to its three-month volume-weighted average price.
The deal is still subject to a 60-day examination period and an independent expert review.
The sales deal comes as part of the troubled property fund’s 2019 plan to stabilise cash flows, reduce debt levels, and explore capital market opportunities.
While today’s deal does not include URF’s investments in large-scale apartment complexes in urban America, it all but marks the end of the property trust, which is owned by E&P Financial.
URF today said after considering its options alongside capital advisor Ackman-Ziff, the company decided the portfolio sale was a better deal for shareholders than continuing to manage its portfolio directly or selling assets one at a time.
The deal with the Brookside-Rockpoint joint venture came after over 80 potential investors were contacted and 21 confidentiality agreements were drawn up to facilitate due diligence work and sales discussions, according to URF.
Should URF investors vote in favour of the deal and all other conditions be met, the property fund will be liquidated and de-listed from the ASX.
URF said it was expecting transaction settlement for around July this year, with final shareholder distributions slated for early 2023.
Shares in URF were tumbling 42 per cent lower at 1:10 pm AEDT to 20 cents each. The company has a $79 million market cap.