JRIC.L Regulatory News (JRIC)

4 Oct 2007 11:47

Japan Residential Inv. Co. Ltd04 October 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 28 properties inYokohama, Nagoya, Sapporo, Kobe and Sendai as well as central and suburban areasof Tokyo and Osaka with a value of approximately £91.6 million. The Fund hasentered into contracts to acquire a further 6 properties with a value ofapproximately £30.7 million. In addition, agreement has been reached with sellers on the commercial terms,subject to completion of due diligence, in respect of 12 further properties,with a value of approximately £23.1 million. As expected in the run-up to the calendar year-end, the pace of acquisitions isincreasing and the Investment Advisor, KK Halifax Asset Management, expects thatthe Company will be fully invested within 18 months of Admission. Portfolio Summary No. of Residential Net Rentable Total acquisition properties Units Area (sq m) priceCompleted 28 1,192 37,363.04 JPY 21.63 billionContracted 6 410 12,918.93 JPY 7.24 billionLetters ofAgreement 12 290 8,807.79 JPY 5.46 billion Total 46 1,892 59,089.76 JPY 34.33 billion GBP approximate GBP 145.4 millionequivalent The expected stabilised net yields for the above-cited properties are between4.0% and 6.5%. The estimated stabilised net yield of the portfolio is 5.2%. The occupancy rate, currently 80%, continues to increase as properties purchasedon completion of construction approach full occupancy and larger numbers ofstabilised properties are added to the portfolio. In addition to quality assetswith stabilised income, the Fund will continue to acquire properties uponcompletion of construction provided that the associated leasing risk ordeferment of income is sufficiently accounted for in the purchase price. Investment Focus The Fund's core strategy remains the rapid deployment of investment capital witha focus on the following: •Well-located properties in central areas of major cities. Presently, 85% of the portfolio by value is located in the top four most populous cities (Tokyo, Yokohama, Osaka, and Nagoya). •Single-oriented units, primarily studio and one-bedroom, in central areas where the demographic for young, singles continues to expand. •New product with modern design and amenities to attract tenants and with minimal capital expenditure requirements. The average age of Fund properties acquired to date is less than three years old. The portfolio consists of both long-term core holdings as well as investmentswhich the Investment Advisor believes will be optimised through a mid-term saleover the next 12 to 36 months. A portfolio with newer, centrally locatedproperties is expected to provide a high degree of liquidity. This shouldprovide the Fund with flexibility in terms of trading out of propertiesindividually or in bulk. Following full investment of the initial capital, the Fund will continue to beactively managed with a view to further improving the quality of holdingsthrough selective reconstitution of the portfolio. The Investment Advisoranticipates that this strategy will provide a means for the Fund to achievecapital gains while taking advantage of investment opportunities thatmaterialise during the life of the Fund. Exchange rate applied: JPY 236.15 = GBP 1 as at 3 October 2007. EnquiriesK.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 Exchange