Hurricane Sandy repair bill at US$430,000 for Dixon Advisory's US Masters fund

Tropical storm Sandy has inflicted limited damage to the Hudson County and Brooklyn investment property portfolio of the ASX-listed US Masters Residential Property Fund.

Inspections carried out since the storm have found that only 21 out of the 277 freestanding family homes that comprise the majority of the fund’s portfolio sustained some form of water damage, with the repair bill estimated at US$430,000 before allowing for any insurance claim or US government relief typically provided when a major disaster is declared.

Alan Dixon, managing director of the Dixon Advisory-managed fund, says the impact of the repair bill will be half a US cent per share (US$0.005) or 0.3% of the fund’s net tangible assets.

The total portfolio is worth US$67 million (249 settled properties), with conditional acceptances on another 151 properties worth $US46 million.

Dixon alerted investors that the portfolio had suffered some damage as a result of the storm last week, but said he expected to have “no material impact” on the value of the portfolio.

The fund’s share price is currently trading at $1.56, slightly up from $1.55 a week ago.

Dixon says nine of the properties sustained “more extensive water damage with repair bills expected to be in excess of US$10,000 per property”.

Four of the properties are located in downtown Jersey City where the total expected repair bill is expected to be in excess of US$110,000 – the cost of repairing heater and water units and other aspects of the buildings.

Five are located in Bayonne – a relatively new investment location for the fund – which also suffered contamination from a nearby oil refinery spill in addition to “widespread water damage”.

“The fund expects that the cost of the oil clean-up and remediation will be entirely borne by the refinery and/or the federal government.

“These properties will likely require re-construction and the total estimated cost is approximately US$160,000," says Dixon.

The remaining 12 properties that sustained less extensive water damage are located in Hoboken, Jersey City and West Bergen, with a total estimated bill of US$70,000.

Other properties suffered minor wind-damage of around $90,000 in total with no single property exceeding US$10,000.

The ASX-listed fund bills itself as the first Australian fund to invest directly in US residential real estate, with many of the investors being self-managed super funds.