Selling my holding in URFPA. This fund is trading at a long way from NTA. The original thesis was this is either going broke or you will make a decent return when the fund improves it's position. I purchased URFPA as it provided an effective yield of 12.5% while holding compared to 0% for URF. The yield was the reward for sitting on the risks.

The current LTV is around 58% (52% when including cash on hand) so it is very heavily geared. The problem is the cash flows. Over my journey to educate myself over the past year I have discovered how important this is. I think the new management has had a positive influence over the fund (Dixon advisory previously just milked fees from the fund), however, there is still a way to go. URF has to dispose of properties to fund the large cash flow gap. While I don't consider the selling of properties a bad thing to bring down gearing the fact it is required for cash flow is a bigger issue than I first realised. The selling has been around or just under book value, however, there is normally additional expense costs of around 4-6%. Gearing is not far from bank converants so any hit to the property values could mean the bank covernants are breached. If breached the loans become imediately payable.

I will definitely continue to monitor URF/URFPA in case the cash flow turnaround occurs, to take advantage of a potential for the share price to move towards NTA. I just don't believe this will happen within at least the next year so why would I have my money sitting there doing nothing and at risk of default?