JRIC.L Regulatory News (JRIC)

17 Dec 2007 07:01

Japan Residential Inv. Co. Ltd17 December 2007 Japan Residential Investment Company Limited ("the Company") Notice of Investment Activity Japan Residential Investment Company (AIM: JRIC) is a closed-ended Guernseyregistered company established to make and hold investments in residentialproperty in Japan. In October 2006 the Company raised £100 million (beforeexpenses) in conjunction with an application to have its entire issued sharecapital admitted to trading on AIM ("Admission"). The purpose of thisannouncement is to update investors on the progress made in terms of investingthe money 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 36 properties inYokohama, Nagoya, Sapporo, Kobe and Sendai as well as central and suburban areasof Tokyo and Osaka with a value of approximately £118.2 million. The Fund hasentered into contracts to acquire a further 5 properties with a value ofapproximately £26.0 million. In addition, agreement has been reached with sellers on the commercial terms,subject to completion of due diligence, in respect of 16 further properties,with a value of approximately £47.8 million. This portfolio totals £192.0 million, or approximately 65% of the Fund's targetinvestment amount. Portfolio Summary No. of Residential Net Rentable Total acquisition properties Units Area (sq m) price Completed 36 1,542 48,138.81 JPY 26.86 billionContracted 5 377 12,909.62 JPY 5.90 billionLetters ofAgreement 16 575 18,111.12 JPY 10.87 billionTotal 57 2,494 79,159.55 JPY 43.62 billionGBP approximate GBP 192.0 millionequivalent The portfolio is diversified across major markets including Tokyo (46%), Osaka(26%), Nagoya (14%), and Other (14%) markets. The estimated stabilised net yieldof the portfolio is 5.0%. The occupancy rate on completed transactions, currently 87%, has continued toincrease as properties purchased on completion of construction approach fulloccupancy and larger numbers of stabilised properties are added to theportfolio. In addition to quality assets with stabilised income, the Fund willcontinue to acquire properties upon completion of construction provided that theassociated leasing risk or deferment of income is sufficiently accounted for inthe purchase price. The Fund is pleased to announce that it has arranged a three year term loanfacility in the amount of JPY 6.121 billion. The loan-to-purchase price of thecollateral assets is 73%. The interest rate is floating at 1.72%. Loan proceedswill be used to fund additional property purchases. There are signs that the global credit crisis is impacting some lenders in Japancausing them to adopt lower loan-to-value ratios, shorter loan tenors and higherinterest rate spreads. Nevertheless, based on discussions with several lenders,the Investment Advisor, KK Halifax Asset Management, believes that debtfinancing terms for the unlevered properties in this portfolio will be achievedin-line with original pro forma economic estimates on Admission. The Fundcontinues its core strategy of rapid deployment of investment capital to qualityresidential properties throughout Japan while carefully monitoring underlyingmarket fundamentals including the availability of debt financing at attractiveterms. Exchange rate applied: JPY 227.1940 = GBP 1 as at 13 December 2007. EnquiriesK.K. Halifax Asset Management Alec Menikoff +81 (0)3 5408 8784Fairfax I.S. PLC John Korwin-Szymanowski +44 (0)20 7460 4376Smith & Williamson CorporateFinance Limited Azhic Basirov +44 (0)20 7131 4000 This information is provided by RNS The company news service from the London Stock Exchange