UCASU: Pivoting for portfolio diversity

By Beth Senko, CFA

OTC:UCASU

READ THE FULL UCASU RESEARCH REPORT

2021 was a period of change for UC Asset UCASU. It continues to diversify its real estate investment strategies which now include: investing in land and above-ground-properties for cannabis/hemp growers, revitalizing underinvested properties in Atlanta and converting them to income-generating assets, and developing ‘Airbnb'-like properties targeting business travelers.

The Company shifted its accounting methodology from fair-market value to historical cost, based on SEC feedback that historical cost methodology is more appropriate given UCASU's more diverse investment strategy. This change may create more volatility in reported results, as gains/losses are recognized when a property is sold, instead of over the entire asset holding period. However, the underlying business activities have not changed.

In 2021, UCASU reported $3.5 million in investment income including $2.5 million from the sale of residential portfolio holdings, $0.9 million in interest income and unrealized investment gains, and $0.1 million in rental income. At the end of 2021, UCASU we had two houses and one lot in its residential investment portfolio. The Company expects to divest some or all of the properties in the coming years. After expenses, UCASU posted net operating income of $0.7 million in 2021, compared to $0.2 million in 2020. UC Asset reported $0.12 per share net income in 2021, compared to $0.03 in the previous year. Separately, UC Asset announced a $0.10 per share dividend for shareholders.

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