US Masters Residential Property Fund (URF) has finalised its joint venture agreement and management agreements with Brooksville Company LLC (Brooksville) and Pinnacle City Living, LLC (Pinnacle). Under the terms of the agreements, URF will externalise the Fund's US REIT operating platform, with Brooksville and Pinnacle operating and managing the Fund's portfolio of 1-4 Family properties (Portfolio). As part of the joint venture, and as previously anticipated, Brooksville has made an investment of US$1.5 million of their founders' capital into entities that own the Portfolio via a joint venture Delaware company (JV Company). URF intends to dedicate these proceeds to its ongoing buyback program. Vehicles owned by URF and Brooksville have entered into a joint venture agreement to govern the JV Company. The JV Company has appointed: Brooksville as asset manager of the Portfolio under an asset management agreement ("AMA"); Pinnacle as property manager of the Portfolio under a property management agreement ("PMA"); and Brooksville Advisors LLC, a New York limited liability company, as turnover manager of the Portfolio under a turnover management agreement ("TMA"). US Masters Residential (USA) Fund has appointed Brooksville as Australian services manager under an Australian services agreement ("ASA", together with the AMA, PMA and TMA, "Management Agreements"). The terms of the partnership were structured to create maximum alignment between Brooksville and URF unitholders, with the structure incentivising Brooksville to expeditiously return the maximum amount
of capital to unitholders. Under the terms of the agreement, Brooksville will be required to deliver an 8% compound annual return above their entry valuation to URF unitholders before receiving any promotional interest incentive payment. As of the date of this announcement, this structure will require Brooksville to return approximately 0.40 cents per unit on a fully diluted basis (plus 8% compound annual returns over and above this level) to URF unitholders before receiving any incentive payment. In an effort to generate returns for URF unitholders, Brooksville intend to undertake a number of initiatives designed to improve portfolio operating performance, including leveraging the use of technology to improve operating efficiency and better serve residents. More importantly, Brooksville's strategy to return capital to unitholders will predominately be driven by a continuation and acceleration of asset sales from URF's 1-4 Family portfolio. To this end, Brooksville will identify sub-markets with the strongest fundamentals and seek to accelerate the sales program in those locations. Furthermore, Brooksville will work with and carefully manage local brokers to minimise selling costs and ensure the properties are aggressively marketed. Further updates on these initiatives will be released alongside the upcoming full year accounts.