SURF.U Starlight US Residential Fund

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES./

TORONTO, May 19, 2023 /CNW/ - Starlight U.S. Residential Fund (TSXV: SURF.A) (TSXV: SURF.U) (the "Fund") announced today that it has entered into a binding agreement to dispose of 56 ("SFR Sale Portfolio") of its 98 single-family homes located in the suburban area of Atlanta, Georgia. Single-family homes represent less than 4% of the Fund's total fair market value and are non-core to the Fund's overall portfolio and strategy. Following the completion of the sale of the SFR Sale Portfolio, the Fund will continue to own and operate 42 single family homes.

Pursuant to a purchase and sale agreement (the "Agreement") dated May 19, 2023, the Fund has agreed to sell the SFR Sale Portfolio to an institutional investor (the "Purchaser") for approximately US$13.77 million. The Agreement contains customary representations and warranties for a transaction of this nature and, subject to the satisfaction of customary closing conditions, is scheduled to close on or about June 1, 2023. The Purchaser has waived its due diligence conditions under the Agreement. Proceeds from the sale will be used to pay down the Fund's single-family credit facility which currently has an outstanding balance of approximately US$14.35 million with an interest rate equal to the secured overnight financing rate (SOFR) + 3.10%.

The SFR Sale Portfolio is located in several high-quality suburban neighbourhoods surrounding Atlanta, Georgia and is comprised of a mix of three and four-bedroom homes featuring stainless steel appliance packages, upgraded cabinets, granite countertops, upgraded kitchen cabinetry, renovated bathrooms, modern ceramic tile and rejuvenated exteriors and landscaping.

The Fund retained Roofstock Realty LLC ("Roofstock") to represent the Fund relating to the sale. Roofstock is a leading single-family home marketplace and broker with transaction experience of ~US$5 billion.

Certain statements contained in this press release constitute forward-looking information within the meaning of Canadian securities laws and which reflect the Fund's current expectations regarding future events, including the overall financial performance of the Fund and its properties ("Properties"), including the completion of the sale of the SFR Sale Portfolio; the impact of inflation; interest rates; any resurgence in the coronavirus (SARS – CoV2) and its variants ("COVID-19"); and the impact of any changes in migration or other population growth patterns that may be caused by the lagging effects of COVID-19 or otherwise including return to work policies at various employers may have on the business and operations of the Fund. Forward-looking information is provided for the purposes of assisting the reader in understanding the Fund's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes.

Forward-looking information may relate to the completion of the sale of the SFR Sale Portfolio, future results, the impact of inflation levels and interest rates on the resumption of future distributions, the impact of COVID-19 on the Properties as well as the impact of any resurgence in COVID-19 on the markets in which the Fund operates, the trading price of the Fund's TSX Venture Exchange listed class A units and class U units and the value of the Fund's unlisted units, acquisitions, financing, performance, achievements, events, prospects or opportunities for the Fund or the real estate industry and may include statements regarding the financial position, business strategy, budgets, litigation, projected costs, capital expenditures, financial results, occupancy levels, average monthly rent¹, taxes, and plans and objectives of or involving the Fund. In some cases, forward-looking information can be identified by terms such as "may", "might", "will", "could", "should", "would", "occur", "expect", "plan", "anticipate", "believe", "intend", "seek", "aim", "estimate", "target", "goal", "project", "predict", "forecast", "potential", "continue", "likely", "schedule", or the negative thereof or other similar expressions concerning matters that are not historical facts. Forward-looking statements involve known and unknown risks and uncertainties, which may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct, and that objectives, strategic goals and priorities may not be achieved. Those risks and uncertainties include: the completion of the sale of the SFR Sale Portfolio; the extent and sustainability of potential higher levels of inflation and the potential impact on the Fund's operating costs; the pace at which and degree of any changes in interest rates that impact the Fund's weighted average interest rate may occur; the resumption of future distributions; the impact of COVID-19 on the Properties as well as the impact of COVID-19 on the markets in which the Fund operates; the trading price of the Listed Units; changes in government legislation or tax laws which would impact any potential income taxes or other taxes rendered or payable with respect to the Properties or the Fund's legal entities; the impact of rising interest costs, high inflation and supply chain issues have on new supply of multi-family apartments; the extent to which favorable operating conditions achieved during historical periods may continue in future periods; the applicability of any government regulation concerning the Fund's residents or rents as a result of COVID-19 or otherwise; and the availability of debt financing as loans payable become due during the Fund's term. A variety of factors, many of which are beyond the Fund's control, affect the operations, performance and results of the Fund and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results.

Information contained in forward-looking information is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including the following: the impact of inflation and interest rates on the Fund's operating costs; the impact of future interest rates on the Fund's financial performance; the availability of debt financing and as loans payable become due during the Fund's term; the impact of any resurgence in COVID-19 on the Properties as well as the impact this may have on the markets in which the Fund operates; the trading price of the Listed Units; the applicability of any government regulation concerning the Fund's residents or rents as a result of COVID-19 or otherwise; the realization of property value appreciation and timing thereof; the inventory of residential real estate properties (including single-family rental homes); the availability of residential properties for potential future acquisition, if any, and the price at which such properties may be acquired; the ability of the Fund to benefit from any value add program the Fund conducts at certain Properties; the price at which the Properties may be disposed and the timing thereof; closing and other transaction costs in connection with the acquisition and disposition of the Properties; the extent of competition for residential properties; the impact of interest costs, high inflation and supply chain issues have on new supply of multi-family apartments; the extent to which favorable operating conditions achieved during historical periods may continue in future periods; the growth in net operating income² generated and from value-add initiatives; the population of residential real estate market participants; assumptions about the markets in which the Fund operates; expenditures and fees in connection with the maintenance, operation and administration of the Properties; the ability of the ability of Starlight Investments US AM Group LP or its affiliates (the "Manager") to manage and operate the Properties or achieve similar returns to previous investment funds managed by the Manager; the global and North American economic environment; foreign currency exchange rates; the ability of the Fund to realize the estimated gap in market versus in-place rents through future rental rate increases; and governmental regulations or tax laws. Given this period of uncertainty, there can be no assurance regarding: (a) the completion of the sale of the SFR Sale Portfolio; (b) the impact of any resurgence in COVID-19 on the Fund's business, operations and performance or the volatility of the Units; (c) the Fund's ability to mitigate such impacts; (d) credit, market, operational, and liquidity risks generally; (e) the Manager or any of its affiliates, will continue its involvement as asset manager of the Fund in accordance with its current asset management agreement; and (f) other risks inherent to the Fund's business and/or factors beyond its control which could have a material adverse effect on the Fund.

The Fund is a trust formed under the laws of Ontario for the primary purpose of indirectly acquiring, owning and operating a portfolio of income producing multi-family and single-family residential rental properties in the U.S. residential real estate market located primarily in Arizona, California, Colorado, Florida, Georgia, Idaho, Nevada, North Carolina, Oregon, South Carolina, Tennessee, Texas, Utah and Washington.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Starlight U.S. Residential Fund