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Evans Dixon US fund profit down 769%

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Evans Dixon’s troubled US Masters Residential Property Fund (URF) posted a net operating loss of $47.5 million for the first half of 2019, after tax, plummeting by 769 per cent from the year before.

The fund made a total revenue of $24 million, increasing by 29 per cent from the prior corresponding period, which URF said reflected both sales growth and cost reductions.

Earnings before interest, tax and unrealised fair value and currency movements for URF came to $3.4 million.

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Its net loss for the period attributable to unitholders fell by 218 per cent to $44.1 million. This came to a loss per unit of 14.4 cents, further down from 3.3 cents the year before.

There was a 1.5 per cent drop in value of URF’s total portfolio.

“The US macroeconomic environment remains supportive of the group’s strategy,” URF noted in its directors’ report.

“The ordinary unit price, however, has continued to trade at a significant discount to net asset value (NAV) during the period. The responsible entity is aware of the impact this has on unitholders and is undertaking a number of initiatives to improve performance and returns for investors.”

Net tangible asset value per ordinary unit post-tax was $1.25, down from $1.42 the year before.

Rental revenue however was boosted by 30 per cent for the half year to $23.1 million and group level cost savings of $1.2 million were achieved by reducing the portfolio management costs. 

URF reported it will be looking to further optimise its cash flow by introducing cost-cutting initiatives at both the property and administrative level.

Former group chief Alan Dixon stepped down from his role in June to salvage the fund. At the time, URF told shareholders it would be cutting its dividends from 5 cent to 1, as well as selling the property portfolio to pay off its debts.

Since then, Mr Dixon has taken an extended leave of absence for personal reasons. In his place as co-heads of the investment manager of the fund are Kevin McAvey, co-chief financial officer and Brian Disler, general counsel.

Mr Dixon however has continued as a director of Evans Dixon, as well as its New Energy Solar fund.

The group recently posted its full-year results, with its NPATA falling by 33 per cent from financial year 2018 to $21.8 million.

URF provides investors with exposure to a portfolio of residential property in the New York City metropolitan area. 

As at 30 June, the group was said to own 600 single family houses and 17 multifamily apartment buildings holding 1,626 housing units, together having a total asset value of $1.4 billion.

The fund claimed to be the largest institutional owner of townhouses and brownstones in the region.

URF noted it had increased its initial early repayment of its debt, Notes Series II – reducing the cost of financing for the fund, by cutting the ongoing interest expense.

Additionally, its investment manager is also evaluating options around its current office space, “looking for a more cost-effective space that is properly sized for the operating platform” it needs to run a portfolio moving forward.

URF’s share price on Wednesday was 77 cents, a little more than half of where it was a year prior at $1.35.

Earlier this year, Shine Lawyers indicated it had intentions to launch a class action against Evans Dixon’s subsidiary Dixon Advisory.

 

Evans Dixon US fund profit down 769%
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Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

You can contact her on [email protected].

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