Acquisition of Property

28 June 2012

Japan Residential Investment Company Limited (the "Company")

Acquisition of Property

Japan Residential Investment Company Limited (AIM: JRIC) is a closed-ended Guernsey registered company established to make and hold investments in residential property in Japan. The Company, its subsidiaries and entities in which it has a beneficial interest are referred to collectively as "the Fund".

The Fund is pleased to announce the acquisition of Lilienberg Mejiro Ichiban Kan (the "Property"), a residential property located in Shinjuku Ward, Tokyo (the "Acquisition"). Built in February 2005, the 44 unit property has 1,374 square metres of leasable area. It is located in a popular residential area with excellent mass transit access and close proximity to a wide variety of shops and restaurants. The Property is 10 minutes walking distance from Mejiro Station on the JR Yamanote Line, the rapid transit loop line that circles central Tokyo.

The recapitalisation of the Fund in June 2010 was followed by successful deleveraging initiatives and the refinancing of debt with extended maturities. This, combined with improved conditions in Japanese credit and property markets, enables the Investment Adviser to enhance portfolio quality and income through new acquisitions.

The price paid for the Property, excluding tax and other acquisition costs was ¥954.7 million (£7.7 million). The Property - externally valued at ¥1,030 million (£8.3 million) as at 31 May 2012 - represents approximately 3.2% of the total Fund portfolio. The purchase price discount to appraisal value of 7.3% is sufficient to offset acquisition costs (including, inter alia, taxes, broker commission and trust fees) with no dilution of net asset value ("NAV") per share.

The Property has an estimated prospective net operating yield of 5.6%.

The Acquisition was financed primarily with debt from Resona Bank, Ltd. in the amount of ¥1,205m (£9.7 million). The 5-year term loan is collateralised against the Property as well as three previously unlevered assets. It has a loan-to-value ("LTV") of 59.7% and carries a floating interest rate of 1.04%.

Post acquisition, the Fund has a weighted average interest cost of 1.85%. The Fund holds debt totaling ¥17,657 million (£142.3 million) and has a loan-to-value ratio of 55.0% based on the most recently reported appraised values. Gearing is 45.1%, calculated as total debt less cash and restricted reserves as a proportion of total assets. The Fund weighted average debt maturity is 3.1 years.

Alec Menikoff, Managing Director, Halifax Asset Management said, "This is a high quality asset acquired through an off market transaction at a very attractive price point. In addition to increasing earnings per share, the Acquisition improves portfolio quality by increasing the allocation to the Tokyo Central 5 Wards."

Note: Sterling denominated values are based on an exchange rate of ¥124.06/£1.

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