Continuation, Notice of AGM and Notice of EGM

2 July 2013

Japan Residential Investment Company Limited

(the "Company")

Proposed Continuation of the Company,

Notice of Annual General Meeting and Notice of Extraordinary General Meeting

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 Company advises that it has posted to shareholders a notice of the Annual General Meeting of the Company ("AGM") to be held at the registered office of the Company, Sarnia House, Le Truchot, St Peter Port, Guernsey, GY1 4NA on 19 July 2013 at 10:00am.

In addition, the Company advises that it has posted to shareholders a circular convening an Extraordinary General Meeting of the Company ("EGM") for the purposes of proposing the continuation of the Company (the "Circular"). The EGM will be held at the registered office of the Company, Sarnia House, Le Truchot, St Peter Port, Guernsey, GY1 4NA on 19 July 2013 at 10:15am.

The Circular sets out the recommendations of the Board with regard to the continuation of the Company together with the factors which support the continuation of the Company.

Copies of the Notice of AGM, Notice of EGM and the Circular are available on the Company's website at www.jricl.com.

The following information has been extracted from the Circular and sets out the benefits for Shareholders in the Company continuing and the Board's unanimous recommendation that Shareholders vote in favour of the Resolution.

1. Introduction

The Company was admitted to trading on AIM on 13 October 2006 with a fixed life of seven years from admission. With the approach of the seventh anniversary of the Company's admission to AIM later this year, the Board, having considered various options and having discussed these with Shareholders and with the Company's advisers, has decided to recommend to Shareholders that they approve the continuation of the Company subject to further opportunities for Shareholders to review the life of the Company at meetings to be held at periodic intervals.

2. Background to the Proposal

The constitution of the Company, on its launch in 2006, provided that by no later than 13 September 2013 an extraordinary general meeting of the Company should be convened at which a resolution to wind-up the Company should be proposed unless a resolution shall have been passed before that time, by way of simple majority, releasing the Directors from the obligation to convene such a meeting. Subsequently, at the time of the Company's fund raising in June 2010, the threshold for the release of this obligation was increased to 60 per cent. of those voting at the relevant extraordinary general meeting. If the Directors are not released from the obligation to hold an extraordinary general meeting no later than 13 September 2013, the voting rights are weighted in such a way that the resolution to wind-up the Company will be passed at such meeting. Accordingly, the Company currently has a fixed life that is coming towards its end.

In light of the above, your Board has been considering, in conjunction with Shareholders and its advisers, various options available to the Company.

3. Rationale for Continuation

As a result of the process referred to above, the Board has concluded that there are the following benefits for Shareholders in the Company continuing:

Current position

·; Since its launch in 2006, the Fund has assembled a modern, high quality Japanese residential property portfolio with the following features:

- well diversified portfolio of 50 properties (2,206 rental units) in and around the major population centres;

- newer properties (average age approximately 7 years);

- convenient access to train or subway stations;

- highly affordable units concentrated in the mid-level rental markets;

- high tenant quality with one quarter corporate leases and non-collection of rents less than 0.1 per cent.; and

- consistently high occupancy rate averaging over 95 per cent. for the past 24 months.

·; The Fund's portfolio is well-managed, with total return outperforming the IPD benchmark by 1.2 per cent per annum over the five years ending October 2012, and with an investment strategy of asset rotation to further enhance performance.

·; The Fund generates resilient cash flows resulting in a current dividend yield of 5.8 per cent.

·; The Company is unique in offering investors Japanese property exposure via a quoted vehicle subject to a UK governance, reporting and regulatory framework.

Future outlook

·; The operating environment for residential property in Japan remains encouraging with steady tenant demand and limited new supply.

·; The Japanese residential property sector reflects compelling value by a wide range of metrics including historical prices, affordability and yield spread over financing costs.

·; Property values have been rising and the Fund portfolio value increased by 2.6 per cent. on a like-for-like basis during the financial year ending November 2012.

·; Liquidity is improving, especially for smaller properties in central Tokyo as demonstrated by the Fund's recent disposals of two such properties at significant premiums to the most recent independent valuations.

·; Recent macro economic developments in Japan are providing a new impetus for economic growth.

·; The Japanese debt markets currently offer abundant low cost financing for the type of assets invested in by the Company.

·; There are opportunities to purchase high quality assets that are income and NAV enhancing.

In view of the above, the Board has decided unanimously to recommend that Shareholders vote in favour of the Resolution. If the Resolution is passed, an ordinary resolution (requiring a simple majority of those voting) seeking Shareholder approval for the further continuation of the Company will be proposed by the Company at a future meeting to be held in 2018 and subsequently in every fifth calendar year thereafter.

If the Resolution is not passed, the current constitution of the Company is expected to result in the Company being placed into liquidation on or before 13 September 2013. The Board is concerned that it would not be in the best interests of Shareholders if the markets believed that, in any sense, the Company were undertaking a 'fire sale' of its investment portfolio. In the event that the Resolution is not passed, the Board would propose the continuation of the Company for a limited period to enable the implementation of a managed realisation of the Company's portfolio of properties in a timely and orderly process with the net proceeds generated being returned to Shareholders as soon as practicable.

Further information about the Fund's market and strategy, the Proposal and the Extraordinary General Meeting is set out below. Summary details of the Fund's property portfolio and further information about the Fund and its portfolio properties, financial information and constitutional documents can be found on the Company's website at: www.jricl.com.

4. Market outlook

Set out below is the Manager and the Investment Adviser's summary view of the outlook for the Japanese residential property market:

"Japanese property markets continue to recover, supported by an improved credit market and an encouraging economic environment. Competition among lenders with surplus capital is reducing debt financing costs. Lenders jockeying to deploy surplus funds are offering more debt at lower spreads. Banks are currently lending up to 70 per cent. of property value for five years at interest rates in the range of 1 per cent. to 2 per cent.

Equity capital market gains have further reduced the cost of capital for property companies. Land scarcity and low levels of residential construction in recent years have constrained new supply. These trends are allowing investors to pay higher prices for properties, leading to increased liquidity and placing downward pressure on yields.

Japanese residential property market fundamentals remain positive as the sector's stable cash flow continues to draw investors and supply remains tight. The trend of declining Fund asset values began in 2008, accelerated in 2009, and narrowed in 2010. Fund asset values began to reflate in 2011 and this trend accelerated in 2012. The Japanese residential property market appears to be in the early stage of a recovery cycle. Japanese residential property values remain low by historical standards, compared to peer cities around the world, and relative to average household income or to achievable rent.

The operating environment for residential property in Japan is encouraging with steady tenant demand and limited new supply heightening competition for quality assets in major urban areas. Improved lease market conditions have helped boost occupancy and resulted in greater rental pricing power.

Occupancy is increasing, a reflection of improving lease market conditions. Occupancy in respect of the Fund's portfolio for the 12 months ending 31 May 2013 increased to 95.5 per cent, from 94.7 per cent. during the same period one year prior. The number of the Fund's rental units experiencing price increases is increasing year-on-year. The rate of decline in rents is falling with annual declines in rents moderating to 0.7 per cent. in 2012, down from 1.1 per cent. in the prior year.

We expect falling yields in the Japanese residential property sector to continue to exert upward pricing pressure driven by improving fundamentals investor asset diversification requirements and generous spreads between property income and financing costs. Residential yields currently range from 4.8 per cent. to 5.5 per cent. in Tokyo and from 6.0 per cent. to 7.0 per cent. in Osaka and Nagoya.

Both the political leadership and the Bank of Japan have voiced a commitment to ending deflation in Japan. The outlook for Japanese property has improved as expectations of more aggressive monetary easing increase investor interest in equities and hard assets. We believe the Fund is at an inflection point in terms of both capital values and income growth. Based on the macroeconomic and sector fundamentals, we are optimistic for the prospects of income growth and continued reflation in asset values."

KK Halifax Management Limited

KK Halifax Asset Management

28 June 2013"

5. Strategy

Investment policy

The Fund's current investment policy is to provide Shareholders with stable income together with capital growth by investing in Japanese residential properties predominantly situated in major conurbations which offer attractive yields and the potential for capital growth. Up to 15 per cent. of the Gross Asset Value (calculated at the time of investment) may be invested in commercial property measured at the time of investment. Although the Fund does not seek actively to invest in commercial property, it may acquire properties which include elements of commercial property (for example shops situated on the ground floor of an apartment block) and it may acquire a portfolio of properties comprising a mixture of residential and commercial properties. In this event the Fund, subject to prevailing market conditions, will seek to sell any freestanding commercial properties. The Company expects to maintain this investment policy if the Resolution is passed.

Capital rotation

Within this overall policy, as part of a capital rotation strategy, the Fund seeks to sell selected non-core assets, using the proceeds and moderate amounts of additional gearing to make new opportunistic purchases of high quality, attractively priced properties. This capital rotation strategy commenced in June 2012 with the purchase of a Tokyo Central 5 Ward asset for ¥955m (£6.4m) at a 5.6 per cent. prospective yield. This was followed by the sale in April 2013 of two Tokyo 23 Ward assets for a combined sale price of ¥930m (£6.2m), offering a 4.3 per cent. yield to purchasers and representing a 20.2 per cent. premium over November 2012 appraised value.

Approximately one third of the Fund's portfolio properties are valued under ¥500m (£3.3m). The Investment Adviser believes that smaller assets such as these are in high demand from private investors seeking to allocate money to alternative investments for stable income, diversification, and tax planning purposes. By divesting smaller assets and reinvesting into larger assets for improved efficiency and yield, this strategy is expected to be accretive from an earnings standpoint while helping to grow NAV and improve prospects for capital gains.

Regional allocation

The current regional allocation of the Fund's portfolio is Tokyo 45 per cent., Osaka 27 per cent., Nagoya 13 per cent., and elsewhere 14 per cent. The allocation is expected to change over time depending on market and economic conditions. The Investment Adviser will monitor a variety of factors including tenant demand and product supply in the target submarkets as well as income and capital growth trends to manage the risk return profile of the portfolio. The Investment Adviser believes that the Tokyo market in particular as well as central locations in Osaka and Nagoya currently represent attractive investment opportunities.

Fund size

The Board believes that there are advantages to increasing the size of the Fund through an equity capital raise followed by property acquisitions to increase assets under management and market capitalisation. Advantages of a larger fund include greater economies of scale, greater liquidity in the shares of the Company, and the potential ability to access alternative capital markets such as the Main Market of the London Stock Exchange or overseas listings. The Investment Adviser has identified a pipeline of quality properties that together with conservative levels of gearing would represent an attractive opportunity for accretive acquisitions. The Company intends, subject to the passing of the Resolution, to pursue opportunities for the issue of new equity capital. However, the Company will not, without the prior approval of Shareholders, allot new Shares at an allotment price which is less than the prevailing Net Asset Value per Share.

Borrowing

The Fund uses leverage in order to seek to enhance the returns to Shareholders. It is anticipated that in respect of each investment the Fund will typically borrow in the region of 60 per cent. of the purchase price of a property, excluding acquisition costs. The proportion of borrowings undertaken will depend upon the characteristics of each property and market conditions at that time.

At 31 May 2013, bonds and loans payable totalled ¥17.2bn (£114.7m) against investment property totalling ¥32.6bn (£217.4m). The loan-to-value (LTV) ratio was 52.7 per cent., calculated as total outstanding debt as a proportion of appraised portfolio value. The weighted average annual interest cost was 1.82 per cent.. The Fund weighted average debt maturity was 2.2 years.

The Fund has three loans totalling ¥9.0bn (£60.0m) - approximately half of total outstanding debt - maturing on or before 29 September 2014. This debt has a total LTV ratio of 48.3 per cent., a weighted average outstanding maturity of 10 months, and an average annual interest rate of 2.1%. The Fund's two most recent loans were raised in February and June 2012 for 5 years with 60 per cent. LTV and have annual interest rates of approximately 1.6 per cent. fixed and 1.0 per cent. floating respectively. The Investment Adviser believes that a reduction in interest expense and additional improvements in the debt profile of the Fund could be achieved by the early refinancing of this debt. Such a refinancing is expected to free up additional equity capital to make earnings accretive investments in new residential properties.

Dividends

The Board intends, subject to the passing of the Resolution, to maintain a prudent and sustainable distribution policy. The total dividend paid by the Company in respect of the year ended 30 November 2012 amounted to 3.6p per Share, an amount which was fully covered by underlying profit of 4.0p per Share and which represents a dividend yield of 5.8 per cent. based on the Company's share price of 62.12p (the closing market price on 28 July 2013 being the last practicable date prior to the date of this announcement).

Foreign exchange

Predominantly all revenues earned and most expenses incurred by the Company are denominated in Yen. The Company reports its results in Sterling and the price of Ordinary Shares are quoted in Sterling. Furthermore, any dividends declared are paid in Sterling. The Directors do not currently intend to implement a currency hedging policy and, accordingly, the reported Net Asset Value and the amount of income available for distribution will be affected by movements in Yen against Sterling.

Risk factors

The Company's business and the value of its Shares remain subject to the risk factors set out in Part 3 of the Company's shareholder circular dated 28 May 2010 (which is available on the Company's website at: www.jricl.com) including fluctuations in property values and exchange rates and the availability and terms of future refinancing arrangements.

6. Recommendation

For the reasons set out above, the Board considers that the Proposal is in the best interests of Shareholders as a whole and unanimously recommends that Shareholders vote in favour of the Resolution.

Enquiries:

DEFINITIONS

The following definitions apply throughout this announcement unless the context requires otherwise: