18/10/23

My thesis is still in tact, the problem has been underestimating how long it would take to sell everything. Previous management pursuing the takeover offer also did not help things at all.

$0.45c capital return, 2 year time period (even though I said this over years ago).

1/3/23

Nothing unexpected in the latest quarterly, although the prospects of this vehicle being cashflow neutral appear to have diminished somewhat.

I've been patient for this long so I'm happy to keep holding in the hope of the some big sales coming through in the next few months.

24/12/22

If nothing else, URF is extremely entertaining.

After an unsuccessful attempt to delay the conversion of the CPUs by the tire kickers down at Keybridge Capital, it seems that things will be forging ahead as I initially envisaged. From here it's simple:

1) Sell Properties (provided it's within 5% of book value)

2) Pay down debt (where possible)

3) Buy back shares

There might be a few vultures circling as well. Time will tell.

Maintaining $0.33 val.

31/08/22

The quarterly results are pretty positive and the below analysis still looks pretty good, although I hope the sales program isn't too reckless.

The whole block sale fiasco (whilst it thankfully didn't proceed) really cost investors in terms of fees spent pursuing the transaction and time wasted not focusing on an orderly asset sale program coupled with the on market buyback program.

The outsourcing of the property management function looks positive although I do hope the costs of the transition are minimised.

Increasing my val slightly to account for the time value of money.

15/6/22

Now we're pretty much back to where I started with this one after the portfolio sale was withdrawn by the purchaser (thank god) and a progressive sell down of the portfolio and a buyback of securities has been announced.

This investment still has a heap of moving parts but is slowly becoming more simple.

the main points of consideration:

1) How close to book value can assets be sold for after transaction costs

2) How quickly can we get to FCF breakeven

3) What will happen to AUD/USD

4) How quickly will capital be returned to shareholders

URF's cost of debt is fixed at 4% until around 2025 which will work in its favour however it's only allowed to pay down 5% of the balance each year until 2025.

I think a $0.45 cashflow to investors (NAV currently somewhere around $0.55) within 3 years (instead of 2) is now realistic. When and how the cashflow arrives is unclear. Even if it was all at the end of year 3 you would get a 12% p.a. return at a price of $0.32.

30/3/22

URF's latest announcement is yet another twist in this bizarre story.

The market reaction has been very interesting with the CPU's now trading at around 18% under their face value + distributions until maturity and URF units are now trading at/above the $0.22 per unit pay-out that management outlined in the sale announcement.

It seems that the market believes this deal will not be approved by URF holders (URFPA holders don't get a vote apparently).

What happens from here is anyone's guess. If the transaction doesn't proceed there will be a $600,000 USD break fee payable to the buyers - a crap outcome for unitholders.

A gradual sale of the portfolio combined with an on market buyback of both the CPUs and URF units is probably going to produce the best all round outcome and I still think that'll end up giving URF holders a coupon somewhere around $0.40 (assuming CPUs are converted in Jan 23). The hard part is figuring out timelines.

04/03/22

A capital transaction looks increasingly likely (see latest report) and my price of $0.45 per unit (theorised below) looks likely to be slightly conservative as does my timeline of April 2023.

Nothing is certain and the poor capital structure and unusual nature of the assets in the the fund seems to be causing some difficulties in finding a buyer but it seems to me like some sort of return of capital is inevitable.

19/11

The recent update was pleasing, with most things heading in the right direction (albeit slowly). Cashflow breakeven target is around this time next year.

A buyback and possible portfolio sale have also been stated by management to be on the cards.

The result of a partial or total portfolio sale at somewhere around book value would be an eye watering proposition for unitholders (both URF and URFPA) considering current SP. A return of capital or off market buyback would be a good outcome

My conviction remains and patience is the key.

14/8 This has had a rocket under it for the last few weeks. Market sentiment has changed and this may yet turn from a frog into a prince....well at least for me. My hope is that wind up/takeover is in the works. This would result in a large return on investment, even from current share prices. After listening to NAOS speak at their webinar I got the impression that they believe that some of the carrying values for the assets are conservative. I haven't had the time to comb through the carrying values and research how they compare to current market values however I'm of the understanding that things have started to come good. Will use the same concept as my last valuation but predicting a price of around 53cps (current Post Tax NTA) which is certainly achievable if someone with a lower cost of debt and more economy of scale started sniffing around. Other things that are keeping me interested: Material lift in book values Cheaper cost of debt due to lower LVR Early redemption of URFPA Potential for cashflow URFPA are a no brainer as well. 17/6/21 It looks like sale prices are starting to pick up as well as getting closer to book values even after transaction costs. I imagine there is also a lag in the sale process meaning that asset sales announced this month actually reflect prices as at a number of months ago. There may be some salvation for dumpster divers like myself after all. Maintain the below valuation. Prefer URFPA over URF. 16/4/21 Based on the last few days it looks like someone knows something about this dumpster fire of a fund.... either that or someone has realised URF's assets aren't looking so bad anymore. Bit arbitrary but valuation is based on a wind up/takeover offer coming in two years time at a price of $0.45 per unit and a 12% discount rate.