Evans Dixons’ American real estate arm posts $44 million loss

Former Essendon chairman David Evans’ controversial wealth management company Evans Dixon has been dealt a million dollar blow just weeks after it emerged disgruntled investors were considering legal action against the company.

Alan Dixon and David Evans. Picture: Stuart McEvoy.

The American real estate arm of Evans Dixon, the wealth management company controlled by former Essendon chairman David Evans and his business partner Alan Dixon, has posted a $44 million loss.

The US Masters Residential Property Fund, which trades on the ASX as URF, reported total comprehensive losses blowing out in the half-year to June 30.

The $44.2 million plunge into the red compares to the $37.5 million profit the fund and its group of controlled entities recorded for the same period last year.

The company, which pools investors’ money to buy run-down real estate across New York City, renovate it and rent it out, blamed a range of issues for the poor performance, including an oversupply of housing in the Bedford-Stuyvesant area of Brooklyn, and “increased uncertainty due to rising US-China trade tensions.’’

Former Essendon chairman David Evans.

Tax changes and new rental laws also hit the company’s bottom line.

The Herald Sun revealed last week that up to 100 investors have expressed interest in a class action against the Evans Dixon companies, after financial advisers in Australia encouraged them to invest in the URF and other Dixon companies in the US.

The companies are subsidiaries of the Australian parent company Evans Dixon, and returned high fees to Australia, while the share price of URF nosedived, dropping from $1.50 in August last year to 76 cents at 3.15pm today.

Greg Norman and David Evans at the opening of the Cathedral Lodge golf course in 2017. Picture: David Crosling

Mr Dixon, 45, an American-based Australian businessman, resigned as the CEO of Evans Dixon in Australia in June to focus on turning around the fortunes of the struggling URF.

However, on August 1 it was announced he was taking leave from the URF for “personal reasons,’’ and Kevin McAvey and Brian Disler were announced as the new co-heads of the URF.

According to the statement lodged with the ASX, a new strategy to cut costs and improve the company’s performance has been underway for two months under the new company heads.

That includes selling off non-core properties, and reducing costs such as merchant fees, downsizing the head office, and working directly with tradesmen such as painters and handymen.

RELATED:

EVANS DIXONS’ HIGH-END GOLF COSTS DETAILED

MUMS AND DADS CONSIDER CLASS ACTION AGAINST EVANS DIXON

The company report also confirmed it was meeting “a number of parties to explore a range of strategic alternatives.’’

American company Oaktree Capital and Australian firm 360 Capital are circling, with a view to potentially taking over from Walsh & Company, the Sydney-based funds manager which is the responsible entity for the US Masters Residential Property Fund.

Walsh & Company is owned by Evans Dixon, the $20 billion wealth management company floated on the Australian Stock Exchange in May last year by Mr Evans and Mr Dixon.

Evans Dixon’s share value has fallen by 75 per cent since its float, and its business model of “integrated vertical selling’’ — encouraging its clients to invest in its own businesses — is under increased pressure, particularly following the royal commission which sharply criticised the banking industry for encouraging clients to invest in-house.

Evans Dixon re-iterated tonight that it believed there was no basis for a class action.