JRIC.L Regulatory News (JRIC)

21 May 2009 07:00



21 May 2009

Japan Residential Investment Company Limited ("the Company")

NET ASSET VALUE OF THE COMPANY AND TRADING UPDATE 

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 Directors of the Company wish to announce that the Net Asset Value for the Company as of 28 February 2009 was 114.9 pence per share (¥160 per share) compared to 115.2 pence per share (¥168 per share) as at 30 November 2008. The decline in Net Asset Value is attributable to a 2.3% decline in asset values during the 3 months ended 28 February 2009 which was partially offset by exchange rate movements, income generated by the fund and distributions paid.

The Company, through entities in which it has beneficial ownership (referred to collectively as　the 'Fund'), held 54 properties (the "Portfolio") with an appraised value of approximately ¥37.33 billion (£267.3 million) as at 28 February 2009 representing a decline of 6.9% from initial purchase price excluding acquisition costs. Values on properties held for the 12-month period ending 28 February 2009 fell 9.2% during the period. The unleveraged, net yield of the portfolio (projected 2009 property-level net operating income over value) was 5.6%. 

Cash at bank held by the Fund totalled ¥2.53 billion (£18.1 million) as at 28 February 2009. In addition, cash balances in the form of lender restricted reserves and security deposits from tenants totalled ¥1.16 billion (£8.3 million). In total the Fund had outstanding debt of ¥25.20 billion (£180.5 million) as at 28 February 2009. Fund debt is non-recourse and was secured against 48 properties valued at ¥34.03 billion (£243.7 million) with an LTV ratio of 74.1%. Fund gearing, calculated as net debt (borrowings and deposits from tenants less cash balances and lender restricted reserves) divided by total assets, was 52.4%.

The debt to equity ratio, calculated as net debt divided by total equity, was 1.30x. The blended interest rate of debt was 2.19%. The average remaining tenor of outstanding debt was 2.4 years. The Fund has its first significant refinancing event in February 2010 with the maturity of two loans totalling ¥3.16 billion (£22.6 million). The Investment Advisor is engaged in discussions with the lender regarding terms and conditions of this refinancing.

The occupancy rate for the portfolio was 91.8% as at 30 April 2009 compared with 94.2% as at 30 November 2008. Leases with corporate counterparties represent 29.7% of Fund leases currently in place. Due to the quality of tenants and the fact that the vast majority of leases have third party guarantors, instances of non-collection of rent have been limited to less than 0.1% of annual rental income.

Conditions continue to be clouded by tighter credit and the global economic downturn. The Manager sees no notable difference in market outlook from that described in the Annual Report of 30 November 2008.

Note: Sterling values are determined using the prevailing Yen: Sterling exchange rate at the respective reporting date. Exchange rates used are ¥146.001 as at 30 November 2008 and ¥139.635 as at 28 February 2009.

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