6th Aug 2007 07:01
Japan Residential Inv. Co. Ltd06 August 2007 Japan Residential Investment Company Limited ("the Company") Notice of Investment Activity Japan Residential Investment Company Limited (AIM: JRIC) is a closed-endedGuernsey registered company established to make and hold investments inresidential property in Japan. In October 2006 the Company raised £100 million(before expenses) in conjunction with an application to have its entire issuedshare capital admitted to trading on AIM ("Admission"). The purpose of thisannouncement is to update investors on the progress made in terms of investingthe funds raised at the time of Admission. The Company, through firms in which it has beneficial ownership (referred tocollectively as the 'Fund') has completed the purchase of 23 properties inYokohama, Nagoya, Sapporo, Kobe, and Sendai as well as central and suburbanareas of Tokyo and Osaka with a value of approximately £77.0 million. The Fundhas entered into contracts to acquire a further 5 properties with a value ofapproximately £26.9 million. In addition, agreement has been reached with sellers on the commercial terms,subject to completion of due diligence, in respect of 5 further properties, witha value of approximately £14.0 million. Due to issues of seasonality, the Investment Advisor, KK Halifax AssetManagement, expects the pace of acquisitions to increase in the coming monthsand the directors of the Company expect it to be fully invested within 18 monthsof Admission. Portfolio Summary No. of Residential Net Rentable Area Total acquisition properties Units (sq m) price Completed 23 1,009 31,215.48 JPY 18.68 billion Contracted 5 319 11,241.09 JPY 6.50 billion Letters ofAgreement 5 255 7,288.70 JPY 3.39 billion Total 33 1,583 49,745.27 JPY 28.58 billion GBP approximate GBP 117.8 millionequivalent The properties have been purchased on expected stabilised net yields of between4.0% and 6.5%. The estimated stabilised net yield of the portfolio is 5.2%.While this estimate is 0.3% lower that the target yield stated in the Admissiondocument, it reflects the concentration of the portfolio in major metropolitanareas, the general quality of the assets, as well as the overall downward trendin property yields in Japan. The portfolio consists of a combination of properties purchased with currentsteady cash flow and those purchased on completion or in later stages oflease-up. In addition to quality assets with stabilised income, the Fund willcontinue to purchase properties upon completion of construction provided theassociated leasing risk or deferment of income are sufficiently accounted for inthe purchase price. Due to the large portion of new buildings acquired, the average portfolioproperty is less than three years old. As a young portfolio, it is expected tohave relatively low maintenance and repair costs and to compete well for tenantsdue to newer amenities and modern design. The portfolio properties are well located in major metropolitan areas or thesuburbs thereof. 80% of the portfolio, by value, is located in the top four mostpopulous cities (Tokyo, Yokohama, Osaka and Nagoya). As such, the InvestmentAdvisor believes the portfolio is well positioned to enjoy stable to increasingrents and long-term capital growth. Financing The Fund is pleased to announce that it has obtained five year term debtfinancing in the amount of JPY 11.5 billion. The interest rate, currentlyfloating at 2.16%, is capped at 4.0%. The loan-to-purchase price of the leveredassets is 76.7%. Subsequent to obtaining this financing, the Fund repaid its JPY5.0 billion (£20.6 million) bridge loan facility. Exchange rate applied: JPY 242.580 = GBP 1 as at 3 August 2007. Enquiries K.K. Halifax Asset Management Alec Menikoff +81 (0)3 5408 8784 Fairfax I.S. PLC John Korwin-Szymanowski +44 (0)20 7460 4376 Smith & Williamson CorporateFinance Limited Azhic Basirov +44 (0)20 7131 4000 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
JRIC.L