17th Jul 2014 11:48
17 July 2014
Japan Residential Investment Company Limited
("the Company")
Investment Property Valuation
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 portfolio was externally valued at ¥45,852 million (£269 million) as at 31 May 2014. This represents an increase of ¥11,732 million (£69 million) or 34.4% over the portfolio valuation six months prior. In addition to valuation gains on properties held, Portfolio value reflects the acquisition of nine additional properties between December 2013 and March 2014 with a combined total purchase price of ¥10,932 million (£64 million) excluding tax and other acquisition costs.
On a like-for-like basis, the investment property value growth rate was 3.5% for assets held during the year ended May 2014, compared with a 3.9% increase over the prior twelve month period. The scarcity of assets and lower yields in Tokyo continue to support investment demand in regional markets. While the portfolio registered valuation gains in each of the major regional categories, the largest gains in percentage terms were in Nagoya (+4.0%) followed by Tokyo (+3.8%), Osaka (+3.3%), and Other (+2.3%). During the six months ended May 2014, the growth rate increased to 1.8% on a like-for-like basis, compared with 1.6% over the prior six month period.
The unleveraged net yield of the portfolio (appraised net operating income over value) ended at 5.4% as at 31 May 2014, down from 5.6% six months prior. With 10-year Japanese government bonds currently yielding 0.53%, investment property value growth expectations are supported by the substantial yield premium they offer over the risk free rate. The regional allocation of the property portfolio by value as at May end was Tokyo: 59%, Osaka: 19%, Nagoya: 10%, and Other: 12%.
Portfolio valuation trend by region for year ending May (like-for-like basis):
Change in Value YoY (%) | Property Yield (%) | ||||
2012 | 2013 | 2014 | May-2014 | ||
Tokyo | 0.5 | 4.9 | 3.8 | 4.9 | |
Osaka | 0.4 | 2.9 | 3.3 | 5.6 | |
Nagoya | -1.5 | 2.9 | 4.0 | 5.9 | |
Other | 0.0 | 3.5 | 2.3 | 6.4 | |
Total | 0.1 | 3.9 | 3.5 | 5.4 | |
Note: Sterling values shown above are based on the exchange rate of ¥170.509/£1 as at 31 May 2014.
Enquiries:
KK Halifax Management Limited Manager
| Edward Barrow | +65 6593 8904 |
KK Halifax Asset Management Investment Adviser
| Alec Menikoff | +81 (0)3 5563 8771 |
Smith & Williamson Corporate Finance Limited Nominated Adviser
| Azhic Basirov David Jones | +44 (0)20 7131 4000 |
Jefferies Hoare Govett Joint Broker
| Sara Hale Simon Hampton | +44 (0)20 7029 8000 |
Liberum Capital Limited Joint Broker
| Richard Bootle | +44 (0)20 3100 2222 |
Related Shares:
JRIC.L