STARLIGHT U.S. RESIDENTIAL FUND ANNOUNCES Q2-2025 OPERATING RESULTS
/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES./
TORONTO, Aug. 28, 2025 /CNW/ - Starlight U.S. Residential Fund (TSXV:SURF) and (TSXV:SURF) (the "Fund") announced today its results of operations and financial condition for the three months ended June 30, 2025 ("Q2-2025") and six months ended June 30, 2025 ("YTD-2025"). Certain comparative figures are included for the Fund's financial and operational performance as at December 31, 2024, for the three months ended June 30, 2024 ("Q2-2024") and for the six months ended June 30, 2024 ("YTD-2024").
All amounts in this press release are in thousands of United States ("U.S.") dollars except for average monthly rent ("AMR")1, or unless otherwise stated. All references to "C$" are to Canadian dollars.
"The Fund continues to own a high-quality, well diversified portfolio of multi-family communities and was able to extend certain of the Fund's loans to provide more time to capitalize on any potential improvement in the real estate investment market," commented Evan Kirsh, the Fund's President. "The Fund continues to focus on maximizing the net operating income at the Fund's remaining properties whilst navigating the current challenging capital markets environment and focusing on managing the Fund's liquidity."
Q2-2025 HIGHLIGHTS
Revenue from property operations for Q2-2025 was $8,311 (Q2-2024 - $10,097) representing a decrease of 17.7% in revenue due to the Fund completing the disposition of Lyric Apartments ("Lyric") in Q2-2025 and the remaining single-family properties ("SF Properties") during 2024 ("Primary Variance Driver") as well as a decrease in same property revenue of 3.3% primarily due to decreases in AMR in Austin and Phoenix.
Net operating income ("NOI")1 for Q2-2025 was $4,865 (Q2-2024 - $6,306), representing a decrease of 22.9% in NOI primarily due to the Primary Variance Driver and reduction in same property NOI as a result of decreases in AMR due to the Fund competing with new supply at the Fund's Austin and Phoenix properties.
Same property NOI1 for Q2-2025 was $4,456 (Q2-2024 - $4,833), representing a decrease of $377 or 7.8% relative to Q2-2024. Excluding the Fund's Austin and Phoenix properties which faced heavy competition from new supply and aggressive pricing to lease new properties as well as the impact of the anticipated property tax assessment increase in Raleigh which is based on a four year reassessment cycle, Q2-2025 normalized same property NOI would have been consistent with Q2-2024.
The Fund reported a net loss and comprehensive loss attributable to unitholders for Q2-2025 of $13,177 (Q2-2024 - $3,840). The Fund reported a fair value loss on investment properties during Q2-2025 primarily due to the expansion of capitalization rates used to value the Fund's investment properties (see "Future Outlook").
The Fund completed 41 in-suite light value-add upgrades at the multi-family properties ("MF Properties") during Q2-2025, which generated an average rental premium of $102 and an average return on cost of approximately 24.0%.
The Fund achieved economic occupancy1 of 93.9% during Q2-2025 and as at August 27, 2025, had collected approximately 99.6% of rents for Q2-2025, with further amounts expected to be collected in future periods, demonstrating the Fund's high quality resident base and operating performance.
The Fund completed the disposition of Lyric on April 29, 2025 and used the proceeds to fully repay the outstanding loan payable secured by the property of $86,697 and to fully repay Fund's credit facility outstanding balance of $13,605, which reduced the remaining availability on such credit facility to $2,395. The remaining net proceeds from the sale were utilized for working capital and liquidity requirements of the Fund.
The Eight at East loan payable matured May 7, 2025 whereby the Fund did not meet certain extension requirements. The Fund was able to obtain a short-term extension of the loan and subsequently completed the sale of the property on August 12, 2025 for proceeds of $64,700 and fully repaid the applicable first mortgage of $64,225 (see "Subsequent Events").
On July 17, 2025, the Bainbridge Sunlake ("Sunlake") loan payable was extended by one-year to June 1, 2026. As per the terms of the extension, the loan is subject to certain conditions during the remaining loan term and bears interest-only payments at a fixed rate of 8.56% per annum with any debt service shortfall, as defined therein, being accrued and deferred until maturity (see "Subsequent Events").
The Fund was pursuing good faith negotiations with the lenders of Emerson at Buda ("Emerson") loan payable to obtain a modification and extension of the loans secured respectively by the property and a pledge of the ownership interests ("Pledged Interests") in the entity that owns the property. However, subsequent to June 30, 2025, the Fund has received a formal notice of an event of default (the "Notice") from one of the lenders (the "Lender") secured by the Pledged Interests, demanding the repayment of the loan (see " Subsequent Events"). The Fund does not expect a material impact on its net asset value as a result of any remedies the lender may exercise.
1 The metric is a non-IFRS measure. Non-IFRS financial measures do not have standardized meanings prescribed by IFRS (see "Non-IFRS Financial Measures and Reconciliations").
YTD-2025 HIGHLIGHTS
Revenue from property operations for YTD-2025 was $18,109 (YTD-2024 - $20,029), representing a decrease of 9.6% relative to YTD-2024, primarily due to the Primary Variance Driver and a decrease of 2.2% primarily as a result of decreases in AMR due to the Fund competing with new supply at the Fund's Austin and Phoenix properties.
NOI for YTD-2025 was $10,917 (YTD-2024 - $12,574), representing a decrease of 13.2% relative to YTD-2024. Excluding the Fund's Austin and Phoenix properties which faced heavy competition from new supply and aggressive pricing to lease new properties as well as the impact of the anticipated property tax assessment increase in Raleigh which is based on a four year reassessment cycle, YTD-2025 normalized same property NOI would have been consistent with YTD-2024.
The Fund reported a net loss and comprehensive loss attributable to unitholders for YTD-2025 of $37,583 (YTD-2024 - $14,280), primarily resulting from YTD-2025 reporting a higher fair value loss on investment properties than YTD-2024.
The Fund completed 96 in-suite light value-add upgrades at the MF Properties during YTD-2025, which generated an average rental premium of $97 and an average return on cost of approximately 24.8%.
FINANCIAL CONDITION AND OPERATING RESULTS
Highlights of the financial and operating performance of the Fund as at June 30, 2025, for Q2-2025 and YTD-2025, including a comparison to December 31, 2024, Q2-2024 and YTD-2024, as applicable, are provided below:
June 30,2025
December 31, 2024
Key multi-family operational information
Number of multi-family properties owned(1)
5
6
Total multi-family suites
1,597
1,973
Economic occupancy(2)
93.9 %
93.3 %
Physical occupancy(2)(3)
93.4 %
93.8 %
AMR (in actual dollars)(2)
$ 1,565
$ 1,591
AMR per square foot (in actual dollars)(2)
$ 1.70
$ 1.67
Estimated gap to market versus in-place rents(3)
2.8 %
1.2 %
Selected financial information
Gross book value(3)
$ 381,816
$ 514,416
Indebtedness(3)
$ 373,655
$ 470,979
Indebtedness to gross book value(3)(4)
97.9 %
91.6 %
Weighted average interest rate - as at period end(5)
7.45 %
6.10 %
Weighted average loan term to maturity(6)
1.13 years
1.57 years
Q2-2025
Q2-2024
YTD-2025
YTD-2024
Summarized income statement (excluding non-controlling interest)(6)
Revenue from property operations
$ 8,311
$ 10,097
$ 18,109
$ 20,029
Property operating costs
(2,350)
(2,645)
(4,911)
(5,153)
Property taxes(7)
(1,096)
(1,146)
(2,281)
(2,302)
Adjusted Income from Operations / NOI
4,865
6,306
10,917
12,574
Fund and trust expenses
(1,288)
(797)
(2,033)
(1,607)
Finance costs(8)
(7,783)
(9,341)
(16,314)
(18,400)
Other income and expense(9)
(8,971)
(8)
(30,153)
(6,847)
Net loss and comprehensive loss - attributable to unitholders(6)
$ (13,177)
$ (3,840)
$ (37,583)
$ (14,280)
Other selected financial information
Funds from operations ("FFO")(3)
$ (2,917)
$ (1,693)
$ (5,128)
$ (3,431)
FFO per unit - basic and diluted
(0.09)
(0.05)
(0.16)
(0.11)
Adjusted funds from operations ("AFFO")(3)
(1,262)
(763)
(2,227)
(1,974)
AFFO per unit - basic and diluted
(0.04)
(0.02)
(0.07)
(0.06)
Weighted average interest rate - average during period(5)
7.31 %
6.06 %
