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Evans Dixon's (ASX ED1) US Masters Residential Property Fund (ASX: URF) has been on rocky ground of late, and its woes have continued to worsen into the new year.
The company has been forced to reduce its net asset value (NAV) by up to 30 per cent as a result of a struggling New York City housing market, an unfavourable exchange rate, and write-downs associated with large scale developments.
Based on a preliminary assessment of its portfolio, the company expects assets above US$3 million to be the hardest hit by the adjustment to the NAV.
Despite these results, the company is encouraged by values for pending transactions to be made by URF, particularly in Downtown Jersey City.
"The Fund's management team acknowledges that the current market conditions and preliminary valuation results are disappointing," says URF.
"However, the property valuations have no operational impact on the Fund, including on its borrowing facilities or forecast Net Operating Income."
The fund's strategy to overcome the ongoing problems are to reduce leverage, maximise operational income, complete the renovation pipeline, and rebalance the portfolio away from premium assets and towards higher-yielding "workforce" assets.
"Notwithstanding these market movements, the Fund's sales program is still considered achievable, and its execution will assist in the realisation of the above goals, which in turn will maximise financial returns for unitholders."
Evans Dixon announced in November that it had shed 100 of its staff since April and officially closed its Dixon Projects business in Australia.
The company blamed poor results for URF, pressures from the Royal Commission, and weaker financial performance for ED1 shares losing half their value in the 12 months to November.
Peter Anderson took on the role of CEO in July to fill the shoes of Alan Dixon, who had shifted his focus to turning around the US fund's fortunes. But Dixon then took an extended leave of absence and recently stepped aside from his eponymous business altogether.
An operational review led by Anderson found a need for improved financial discipline at the company as well as better integration of its business divisions.
Shares in URF are down 2.22 per cent to $0.66 per share at 1.25pm AEDT.
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