5th Nov 2008 07:30
Japan Residential Investment Company Limited ("the Company")
Notice of Investment Activity
Japan Residential Investment Company (AIM: JRIC) is a closed-ended Guernsey registered company established to make and hold investments in residential property in Japan. In October 2006 the Company raised £100 million (before expenses) in conjunction with an application to have its entire issued share capital admitted to trading on AIM ("Admission"). The purpose of this announcement is to update investors on the progress made in terms of investing the money raised at the time of Admission.
The Company, through firms in which it has beneficial ownership (referred to collectively as the 'Fund') had completed the purchase of 54 properties (the "Portfolio") with a value of approximately £205.9 million (¥40.8 billion) as at 31 August 2008 (£255.7 million as at 4 November 2008). The Fund currently has no pending contracts or letters of agreement to acquire additional properties. NAV per share was 97.6p (¥193) at period end (121.2p at the exchange rate as at 4 November 2008).
The estimated stabilised net yield of the portfolio is 5.1%. The Portfolio occupancy rate was 94.1% as at 31 August 2008. The Portfolio is diversified across major markets including Tokyo (43%), Osaka (28%), Nagoya (14%), and Other (15%) markets.
Portfolio Value by Region 1
Tokyo Central 5 Wards 24%
Tokyo 23 Wards 15%
Greater Tokyo 4%
Osaka 28%
Nagoya 14%
Other 15%
The Portfolio has a total of 2,294 residential units and 74,505.19 sq m of net rentable area. Leases with corporate counterparties represent 29.1% of Fund leases currently in place.
The Fund has existing debt financing totaling £164.5 million (£132.4 million at 31 August 2008) (¥26.5 billion), with a blended interest rate of 2.34% and an average loan-to-value ratio of 71.1%. The average remaining tenor of outstanding debt is 2.9 years. The earliest debt maturity is a ¥2.57 billion facility due in Q1 2010. Of the total outstanding long term debt, 34% is fixed rate, 43% is floating rate with a cap, and 23% is floating rate without a cap.
Capital constraints on the debt and equity markets resulting from the global credit crisis has led to an increasing number of forced sellers and is expected to place downward pricing pressure on assets in the short term. In light of this, the Fund is primarily focused on asset, cash and financial risk management and is not prioritising new acquisitions. The Investment Advisor, KK Halifax Asset Management, believes the long term outlook is favourable for residential property investment in Japan.
The Directors intend to make an interim distribution of 1.5p per share from distributable reserves on 31 December 2008.
Notes:
1. Tokyo Central 5 Wards are the Minato, Shibuya, Shinjuku, Meguro, and Chiyoda wards. Tokyo 23 Wards are the remaining wards excluding the Tokyo Central 5 wards. Greater Tokyo is comprised of Tokyo (excluding the Tokyo 23 Wards), Kanagawa, Saitama, and Chiba prefectures. Osaka refers to Osaka Prefecture; Nagoya refers to Nagoya Prefecture.
2. Exchange rate applied: £ denominated values based on the exchange rate of ¥198.26/£ at 31 August 2008 and ¥159.56/£ at 4 November 2008.
Enquiries
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K.K. Halifax Asset Management
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Alec Menikoff
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+81 (0)3 5408 8784
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Fairfax I.S. PLC
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John Korwin-Szymanowski
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+44 (0)20 7460 4376
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Smith & Williamson Corporate Finance Limited
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Azhic Basirov
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+44 (0)20 7131 4000
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Related Shares:
JRIC.L