Refinancing of Debt

24 January 2012

Japan Residential Investment Company Limited ("the Company")

Refinancing of Debt

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".

On 24 January 2012, the Fund entered into agreements with Resona Bank, Ltd. ("Resona"), for two loans totalling ¥7,000 million (£58 million) (the "Loans"). Resona is Japan's fourth largest bank by market capitalisation. The drawdown of these Loans is scheduled for 16 February 2012, subject to the provision of all lender required documentation and execution of related third party agreements. The Loans will be used to repay all debt outstanding to ORIX Corporation and DB Trust Bank in the amount of ¥7,000 million (£58 million) that matures on 20 May 2012.

The new 5-year term loans will carry a fixed interest rate calculated as the base rate plus 90bps. The base rate will be the 5-year fixed rate provided by Resona two days prior to the loan draw down date and established with reference to prevailing market rates for interest rate swaps. The 5-year fixed rate is currently 68bps as confirmed in Tokyo on 24 January 2012. Therefore, it is anticipated that, barring any sharp changes in market rates, the 5-year fixed interest rate cost will be set at approximately 158bps per annum. Debt currently outstanding with ORIX Corporation and DB Trust Bank carries a blended average interest rate cost of 1.55% and is floating with an interest rate cap.

The new loans will be secured by 16 properties externally valued at ¥11,421 million (£95 million) as at 30 November 2011, for a loan-to-value ("LTV") of 61%.  The Loans have no amortisation requirements or prepayment penalties. Early repayment of the Loans would be subject to standard break funding cost covenants. By allowing the Fund to fix interest rates for 5 years at a cost in line with its current floating rate debt, the new loan terms represent a significant improvement over the current in place financing.

Following this refinancing, the Fund will have an LTV of approximately 53% at the asset level based on property values as at 30 November 2011. The Fund will have no further debt maturing until December 2013 and the weighted average debt maturity will be 3.3 years. The Investment Adviser has noted significant improvements in the Japanese credit markets for real estate financing. The loan terms achieved represent strong lender confidence in the residential property market as well as in the quality of the Fund's underlying portfolio assets.

Note: Sterling denominated values are based on an exchange rate of ¥120.3229/£1.

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