- US Masters Residential Property Fund (URF) is selling “substantially all” of its US residential real estate assets to real estate companies Brookside and Rockpoint in a US$507 million (A$675 million) transaction
- URF preferred stockholders will receive the full $100 par value of the securities as part of their transaction, while common stockholders will receive 22 cents per unit
- This represents a discount on URF common stock of approximately 38% to the company’s last closing price.
- If URF investors vote in favor of the deal and all other conditions of sale are met, the property fund will be liquidated and delisted from the ASX
- URF shares fall 42% at 1:10 p.m. AEDT to 20 cents each
Shares of US Masters Residential Property Fund (URF) fell after the fund announced it was selling “substantially all” of its US residential real estate assets to real estate companies Brookside and Rockpoint in a 507 deal. million (A$675 million).
While the price represents a 3% premium to the combined market capitalization of URF’s preferred stock, which trades under the symbol URFPA, and its common stock, holders of preferred or hybrid stock will benefit from a much better offer.
The company said URFPA holders will be refunded the full $100 face value of their securities, plus any unpaid accrued interest over the past six months.
Meanwhile, holders of URF common stock will receive approximately 22 cents per unit, a discount of approximately 38% to URF’s last closing price and 35% to its weighted average price. volume over three months.
The agreement is still subject to a 60-day review period and review by an independent expert.
The sale agreement is part of the struggling real estate fund’s 2019 plan to stabilize cash flow, reduce debt levels and explore capital market opportunities.
Although today’s deal does not include URF’s investments in large-scale apartment complexes in urban America, it virtually marks the end of the real estate trust, which is owned by E&P Financial.
URF said today that after reviewing its options with capital adviser Ackman-Ziff, the company has decided that selling the portfolio is a better deal for shareholders than continuing to manage its portfolio directly or selling assets one by one.
The agreement with the Brookside-Rockpoint joint venture came after more than 80 potential investors were contacted and 21 confidentiality agreements were drafted to facilitate due diligence work and sales discussions, according to the URF.
If URF investors vote in favor of the deal and all other conditions are met, the real estate fund will be liquidated and delisted from the ASX.
The URF said it expects settlement of the transaction around July this year, with final distributions to shareholders expected in early 2023.
Shares of URF fell 42% at 1:10 p.m. AEDT to 20 cents apiece. The company has a market capitalization of $79 million.