TORONTO, Nov. 25, 2025 /CNW/ - Starlight U.S. Residential Fund (TSXV:SURF) (TSXV:SURF) (the "Fund") announced today its results of operations and financial condition for the three months ended September 30, 2025 ("Q3-2025") and nine months ended September 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 September 30, 2024 ("Q3-2024") and for the nine months ended September 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 while navigating the current challenging capital markets environment and focusing on managing the Fund's liquidity."
FUND REORGANIZATION
Subsequent to September 30, 2025, the Fund entered into a reorganization agreement with Starlight Group Property Holdings Inc. ("Starlight Group"). Under the proposed reorganization all unitholders of the Fund (the "Unitholders") will exchange their current units of the Fund for limited partnership units of Starlight U.S. Residential (Multi-Family) Investment L.P. ("MF Investment LP"). As part of the transaction, the Fund will be dissolved and MF Investment LP will become the successor entity with its limited partnership units listed on the TSX Venture Exchange. The reorganization is expected to be completed before the end of 2025 pending Unitholder approval, lender consents and regulatory acceptance (see "Subsequent Events").
Q3-2025 HIGHLIGHTS
Revenue from property operations for Q3-2025 was $6,866 (Q3-2024 - $9,849) representing a decrease of 30.3% in revenue due to the Fund completing the disposition of Lyric Apartments ("Lyric") and Eight at East in Q2-2025 and Q3-2025, respectively and the remaining single-family properties ("SF Properties") during 2024 ("Primary Variance Driver") as well as a decrease in same property revenue of 3.4% primarily as a result of decreases in AMR due to the Fund competing with new supply in Austin and Phoenix.
Net operating income ("NOI")1 for Q3-2025 was $3,964 (Q3-2024 - $6,228), representing a decrease of 36.4% 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 Q3-2025 was $3,507 (Q3-2024 - $3,877), representing a decrease of $370 or 9.5% relative to Q3-2024. 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, Q3-2025 normalized same property NOI would have been consistent with Q3-2024.
The Fund reported a net loss and comprehensive loss attributable to Unitholders for Q3-2025 of $317 (Q3-2024 - $4,727), primarily due to higher fair value loss on investment properties during Q3-2024 due to the expansion of capitalization rates used to value the Fund's investment properties, partially offset by lower NOI during Q3-2025 due to Primary Variance Driver.
The Fund completed 18 in-suite light value-add upgrades at the multi-family properties ("MF Properties") during Q3-2025, which generated an average rental premium of $147 and an average return on cost of approximately 23.9%.
The Fund achieved economic occupancy1 of 92.7% during Q3-2025 and as at November 24, 2025, had collected approximately 99.4% of rents for Q3-2025, with further amounts expected to be collected in future periods, demonstrating the Fund's high quality resident base and operating performance.
On August 12, 2025, the Fund completed the disposition of Eight at East for proceeds of $64,700 and fully repaid the applicable first mortgage of $64,225.
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.
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 owned the property. However, during Q3-2025, the Fund 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. As a result, subsequent to September 30, 2025, the foreclosure proceedings were finalized through a public auction which resulted in the transfer of ownership of Emerson to a third party (see "Subsequent Events").
Subsequent to September 30, 2025, the Fund entered into a reorganization agreement with Starlight Group. Under the proposed reorganization all Unitholders will exchange their current units of the Fund for limited partnership units of MF Investment LP. As part of the transaction, the Fund will be dissolved and MF Investment LP will become the successor entity with its limited partnership units listed on the TSX Venture Exchange. The reorganization is expected to be completed before the end of 2025 pending Unitholder approval, lender consents and regulatory acceptance (see "Subsequent Events")
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 $24,975 (YTD-2024 - $29,878), representing a decrease of 16.4% relative to YTD-2024, primarily due to the Primary Variance Driver and a decrease of 3.4% in same property revenue 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 $14,882 (YTD-2024 - $18,802), representing a decrease of 20.8% 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 $37,900 (YTD-2024 - $19,007), primarily resulting from YTD-2025 reporting a higher fair value loss on investment properties than YTD-2024.
The Fund completed 114 in-suite light value-add upgrades at the MF Properties during YTD-2025, which generated an average rental premium of $105 and an average return on cost of approximately 24.6%.
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 the 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.
FINANCIAL CONDITION AND OPERATING RESULTS
Highlights of the financial and operating performance of the Fund as at September 30, 2025, for Q3-2025 and YTD-2025, including a comparison to December 31, 2024, Q3-2024 and YTD-2024, as applicable, are provided below:
September 30,2025
December 31, 2024
Key multi-family operational information
Number of multi-family properties owned(1)
4
6
Total multi-family suites
1,333
1,973
Economic occupancy(2)
92.7 %
93.3 %
Physical occupancy(2)(3)
92.5 %
93.8 %
AMR (in actual dollars)(2)
$ 1,505
$ 1,591
AMR per square foot (in actual dollars)(2)
$ 1.70
$ 1.67
Estimated gap to market versus in-place rents(3)
4.0 %
1.2 %
Selected financial information
Gross book value(3)
$ 321,216
$ 514,416
Indebtedness(3)
$ 311,214
$ 470,979
Indebtedness to gross book value(3)(4)
96.9 %
91.6 %
Weighted average interest rate - as at period end(5)
7.73 %
6.10 %
Weighted average loan term to maturity(6)
1.14 years
1.57 years
Q3-2025
Q3-2024
YTD-2025
YTD-2024
Summarized income statement (excluding non-controlling interest)(6)
Revenue from property operations
$ 6,866
$ 9,849
$ 24,975
$ 29,878
Property operating costs
(1,954)
(2,717)
(6,864)
(7,870)
Property taxes(7)
(948)
(904)
(3,229)
(3,206)
Adjusted Income from Operations / NOI
3,964
6,228
14,882
18,802
Fund and trust expenses
(1,093)
(856)
(3,126)
(2,463)
Finance costs(8)
(6,671)
(10,036)
(22,986)
(28,436)
Other income and expense(9)
3,483
(63)
(26,670)
(6,910)
Net loss and comprehensive loss - attributable to unitholders(6)
$ (317)
$ (4,727)
$ (37,900)
$ (19,007)
Other selected financial information
Funds from operations ("FFO")(3)
$ (3,218)
$ (2,507)
$ (8,346)
$ (5,938)
FFO per unit - basic and diluted
(0.10)
(0.08)
(0.26)
(0.19)
Adjusted funds from operations ("AFFO")(3)
(1,157)
(1,013)
(3,384)
(2,987)
AFFO per unit - basic and diluted
(0.04)
(0.03)
(0.11)
(0.09)
Weighted average interest rate - average during period(5)
7.54 %
5.85 %
7.26 %
