JRIC.L Regulatory News (JRIC)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION

IF YOU ARE IN ANY DOUBT ABOUT THE CONTENTS OF THIS ANNOUNCEMENT OR THE ACTION YOU SHOULD TAKE, YOU ARE RECOMMENDED TO SEEK YOUR OWN INDEPENDENT PERSONAL FINANCIAL ADVICE IMMEDIATELY FROM YOUR STOCKBROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT, FUND MANAGER OR OTHER APPROPRIATE INDEPENDENT FINANCIAL ADVISER DULY AUTHORISED UNDER THE UK FINANCIAL SERVICES AND MARKETS ACT 2000 (AS AMENDED) IF YOU ARE RESIDENT IN THE UK OR, IF NOT, FROM ANOTHER APPROPRIATELY AUTHORISED INDEPENDENT FINANCIAL ADVISER

27 November 2015

Recommended Cash Offer for

JAPAN RESIDENTIAL INVESTMENT COMPANY LIMITED ("JRIC")

by Nikko III Pte. Ltd. ("Bidco")

an investment vehicle indirectly wholly-owned by the Blackstone Funds

to be effected by way of a scheme of arrangement

under Part VIII of the Companies (Guernsey) Law, 2008 (as amended)

Offer Update

Posting of the Scheme Document

On 13 November 2015, Bidco and JRIC announced that they had reached agreement on the terms of a recommended cash offer by Bidco for the entire issued and to be issued ordinary share capital of JRIC (the "Offer") at 72 pence in cash for each JRIC Share. The Offer is being implemented by way of a court-sanctioned scheme of arrangement under Part VIII of the Guernsey Companies Law.

The board of JRIC announces that JRIC is today posting to JRIC Shareholders a scheme document in relation to the Offer, setting out amongst other things the full terms and conditions of the Scheme, an explanatory statement, an expected timetable of principal events, an updated valuation of the Wider JRIC Group's investment property portfolio, and details of the actions to be taken by JRIC Shareholders (the "Scheme Document").

Capitalised terms in this announcement (the "Announcement"), unless otherwise defined, have the same meanings as set out in the Scheme Document. A copy of the Scheme Document is available on JRIC's website at www.jricl.com under the Shareholder Information sub-section of the Investors tab.

Updated valuation of the JRIC investment property portfolio

The JRIC Board has commissioned an updated valuation of the Wider JRIC Group's investment property portfolio from the Wider JRIC Group's external valuers, Savills and Cushman & Wakefield, under Rule 29 of the City Code.

The Wider JRIC Group's investment portfolio was valued by Savills and Cushman & Wakefield at an aggregate of ¥49,774 million as at 31 October 2015 (£267 million at the exchange rate of ¥186.093/£1 as at 30 October 2015, the closest working day to 31 October 2015) and this is reproduced in full in the Scheme Document.

As at 31 May 2015, the date of JRIC's half year end, the Wider JRIC Group's investment property portfolio was valued by Savills and Cushman & Wakefield (then known as DTZ) at an aggregate of ¥46,833 million (£247 million at the exchange rate of ¥189.84/£1 as at 31 May 2015). The Wider JRIC Group's investment property portfolio as at 31 October 2015 includes Minamisuna 7 Chome Building (acquired on 7 July 2015 at a purchase price of ¥488 million and externally valued as at 31 October 2015 at ¥511 million) and excludes Modulor Gakuenmae (sold on 1 October 2015 for ¥462 million and externally valued as at 31 May 2015 at ¥349 million).

The unaudited NAV per JRIC Share as at 31 May 2015 was 56.3 pence. For illustrative purposes, adjusting this NAV for the impact of the updated valuations of the Wider JRIC Group's investment property portfolio and the ¥/£ exchange rate, both as at 31 October 2015, would result in an unaudited NAV per JRIC Share of approximately 64.9 pence (see 'Basis of calculation' below).

The Scheme and the Meetings

As further detailed in the Scheme Document, to become effective, the Scheme will require the approval of JRIC Shareholders at the Court Meeting and the passing of a special resolution at the JRIC EGM. In addition, at the JRIC EGM, a separate ordinary resolution will be proposed to approve the Asset Management Transition Agreement that will be voted on by Independent JRIC Shareholders by way of a poll. The Scheme is also conditional upon this resolution being passed. Notices convening the Court Meeting and the JRIC EGM, respectively for 10.00 a.m. on 21 December 2015 and 10.15 a.m. on 21 December 2015 (or as soon thereafter as the Court Meeting is concluded or adjourned) to be held at Sarnia House, Le Truchot, St Peter Port, Guernsey GY1 1GR, are set out in the Scheme Document. If the Scheme is approved by the JRIC Shareholders then the JRIC Shares will be cancelled from trading on AIM at 7.00 a.m. on 31 December 2015.

Timetable

The expected timetable of principal events is set out below. If any of the key dates set out in the expected timetable change, an announcement will be made through a Regulatory Information Service.

Notes:

(1) It is requested that white Forms of Proxy for the Court Meeting be lodged not later than 24 hours prior to the time appointed for the Court Meeting (excluding any part of such 24 hour period falling on a weekend or a public holiday in Guernsey). White Forms of Proxy not so lodged may be handed to Capita Asset Services on behalf of the Chairman of the Court Meeting before the start of the Court Meeting.

(2) Yellow Forms of Proxy for the JRIC EGM must be lodged not later than 24 hours prior to the time appointed for the JRIC EGM (excluding any part of such 24 hour period falling on a weekend or a public holiday in Guernsey). Yellow Forms of Proxy not returned so as to be received by the time mentioned above and in accordance with the instructions on the Form of Proxy will be invalid unless the Board of JRIC directs otherwise.

(3) If either the Court Meeting or the JRIC EGM is adjourned, the Scheme Voting Record Time for the relevant adjourned meeting will be 6:00 p.m. on the day which is two days prior to the date of the adjourned Meeting.

(4) Or as soon thereafter as the Court Meeting shall have concluded or been adjourned.

(5) These dates are indicative only and will depend, among other things, on the date upon which the Court sanctions the Scheme. JRIC will announce any changes to these dates through a Regulatory Information Service.

(6) This is the latest date by which the Scheme may become effective unless JRIC and Bidco agree, and the Panel and, if required, the Court, permits, a later date.

(7) On the Effective Date, JRIC will become a wholly-owned subsidiary of Bidco. Share certificates in respect of the JRIC Shares will cease to be valid and entitlements traded within the CREST system to JRIC Shares will be cancelled. Following the AIM Cancellation, JRIC Shares will not be quoted on any publicly traded market in the United Kingdom or elsewhere.

All references in this announcement to times are to London time unless otherwise stated.

Enquiries:

Basis of calculation

The illustrative unaudited NAV per JRIC Share of approximately 64.9 pence referred to above is based on: (i) the Group balance sheet as at 31 May 2015 which shows net assets of ¥22,645 million comprised of the investment portfolio of ¥46,833 million; net debt of ¥26,706 million; and other net assets of ¥2,518 million; (ii) the updated valuation of the investment portfolio as at 31 October 2015 of ¥49,774 million; and (iii) a ¥/£ exchange rate of 186.093/1.

It does not take into account: (i) any net profit and losses earned during the period between 1 June 2015 and 31 October 2015; or (ii) the impact of the purchase of Minamisuna 7 Chome Building (acquired on 7 July 2015 for a purchase price of ¥488 million and externally valued as at 31 October at ¥511 million) and the sale of Modulor Gakuenmae (sold on 1 October 2015 for ¥462 million and externally valued as at 31 May 2015 at ¥349 million).

Important notices relating to financial advisers

PwC, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Bidco and for no-one else in connection with the Offer and will not be responsible to any person other than Bidco for providing the protections afforded to clients of PwC, nor for providing advice in relation to the Offer or any other matters referred to herein. Neither PwC nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of PwC in connection with the Offer, any statement contained herein or otherwise.

Liberum, which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively as financial adviser to JRIC and no one else in connection with the Offer, and will not be responsible to anyone other than JRIC for providing the protections afforded to clients of Liberum or for providing advice in relation to the Offer or other matters referred to in this announcement. Neither Liberum nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Liberum in connection with the Offer, any statement contained herein or otherwise.

Smith & Williamson, which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively as the nominated adviser to JRIC and no one else in connection with the Offer, and will not be responsible to anyone other than JRIC for providing the protections afforded to clients of Smith & Williamson or for providing advice in relation to the Offer or other matters referred to in this announcement. Neither Smith & Williamson nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Smith & Williamson in connection with the Offer, any statement contained herein or otherwise.

Further information

This announcement is for information purposes only. It is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of any offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Offer or otherwise, nor shall there by any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. JRIC Shareholders are advised to read carefully the formal documentation in relation to the Offer once it has been published. The Offer will be made solely by means of the Scheme Document, to be published by JRIC, which will contain the full terms and conditions of the Offer, including details for JRIC Shareholders of how to vote at the Meetings in respect of the Offer. Any acceptance or other response to the Offer should be made only on the basis of the information in the Scheme Document.

Bidco reserves the right to elect (with the consent of the Panel) to implement the Offer by way of a Takeover Offer. In such event, the Takeover Offer will be implemented on substantially the same terms, subject to appropriate amendments, as those which would apply to the Scheme.

This announcement does not constitute a prospectus or a prospectus equivalent document.

This announcement has been prepared for the purposes of complying with Guernsey law, the AIM Rules and the City Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside the United Kingdom and Guernsey.

The JRIC Directors accept responsibility for the information contained in this announcement. To the best of the JRIC Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.

Overseas jurisdictions

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom or Guernsey may be restricted by law. Therefore, any persons who are subject to the laws of any jurisdiction other than the United Kingdom or Guernsey, or JRIC Shareholders who are not resident in the United Kingdom or Guernsey, should inform themselves about, and observe, any applicable requirements. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, the ability of persons who are not resident in the United Kingdom or Guernsey to vote their JRIC Shares with respect to the Scheme and the Court Meeting, or to execute and deliver forms of proxy appointing another to vote at the Court Meeting on their behalf, may be affected by the laws of the relevant jurisdiction in which they are located.

Unless otherwise determined by Bidco or required by the City Code, and permitted by applicable law and regulation, the Offer shall not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Offer by any such use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction.

Copies of this announcement and all documents relating to the Offer (in whole or in part) are not being, and must not be, directly or indirectly, mailed, transmitted or otherwise forwarded, distributed or sent in, into or from any Restricted Jurisdiction and persons receiving this announcement and such documents (including, without limitation, agents, custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in, into or from any Restricted Jurisdiction. Any person (including, without limitation, any agents, custodian, nominee and trustee) who would, or otherwise intends to, or who may have a contractual or legal obligation to, forward this announcement and/or any other documents relating to the Offer to any jurisdiction outside the United Kingdom and Guernsey should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction. If the Offer is implemented by way of a Takeover Offer, (unless otherwise permitted by applicable law and regulation) such Takeover Offer may not be made, directly or indirectly, in or into any Restricted Jurisdiction, by the use of mail or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone), or by any facility of a national, state or other securities exchange of any Restricted Jurisdiction and such Takeover Offer may not be capable of acceptance by any such use, means, instrumentality or facility. Further details in relation to overseas shareholders will be contained in the Scheme Document.

Notices to US JRIC Shareholders

This announcement does not constitute, or form part of, any offer for, or any solicitation of any offer for, securities, nor is it a solicitation of any vote or approval in any jurisdiction, nor will there be any purchase or transfer of the securities referred to in this announcement in any jurisdiction in contravention of applicable law or regulation.

None of the securities referred to in this announcement have been approved or disapproved by the SEC, any state securities commission in the United States or any other US regulatory authority, nor have such authorities passed upon or determined the adequacy or accuracy of the information contained in this announcement. Any representation to the contrary is a criminal offence in the United States.

The Offer relates to the shares of a Guernsey-registered company traded on AIM and is proposed to be effected by means of a scheme of arrangement under the Companies Law. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules or the proxy solicitation rules under the US Securities Exchange Act of 1934 or other US securities laws. Accordingly, the Offer is subject to disclosure requirements, rules and practices which are different from certain United States disclosure and other requirements. If, in the future, Bidco exercises the right to implement the Offer by way of a Takeover Offer and determines to extend the Takeover Offer into the US, it will be made in accordance with the procedural and filing requirements of US securities laws, to the extent applicable. Financial information included in the relevant documentation will have been prepared in accordance with accounting standards applicable (where relevant) in the United Kingdom and Guernsey that may not be comparable to the financial statements of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the US or the auditing of the Public Accounting Oversights Board (U.S.).

The receipt of cash pursuant to the Offer by a US shareholder as consideration pursuant to the terms of the Offer may be a taxable transaction for US federal income tax purposes and under applicable US state and local, as well as foreign and other, tax laws. Each Scheme Shareholder is urged to consult his independent professional adviser immediately regarding the tax consequences of the Offer applicable to him, her or it.

Bidco is incorporated under the laws of Singapore. JRIC is incorporated under the laws of Guernsey. All of the directors of Bidco and JRIC are residents of countries other than the US. All of the assets of Bidco and JRIC are located outside of the US. As a result, it may not be possible for US holders of JRIC Shares to effect service of process within the US upon Bidco, JRIC or any of their respective directors or to enforce against any of them judgments of the US predicated upon the civil liability provisions of the federal securities laws of the US or the laws of any state or territory within the US. It may not be possible to sue Bidco, JRIC or any of their respective directors in a non-US court for violations of US securities laws. It may be difficult to compel Bidco, JRIC and their respective affiliates to subject themselves to the jurisdiction and judgment of a US court.

Forward looking statements

This announcement, including information included or incorporated by reference in this announcement, may contain "forward looking statements" concerning Bidco and JRIC and which are prospective in nature. All statements other than statements of historical fact included in this announcement may be forward looking statements. They are based on current expectation and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward looking statements. Often, but not always, forward looking statements can be identified by the use of forward looking words such as "will", "may", "should", "continue", "believes", "expects", "aims", "targets", "plans", "estimates", "projects", "intends", "anticipates" or words or terms of similar substance or the negative thereof. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, whether express or implied. Forward looking statements may include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Bidco's or JRIC's operations and potential synergies resulting from the Offer; and (iii) the effects of government regulation, or global economic conditions on Bidco's or JRIC's business.

The forward looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results, performance or achievements to differ materially from those projected or implied in any forward looking statements. Due to uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements. Many of these risks and uncertainties relate to factors that are beyond the companies' abilities to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements which speak only as at the date of this announcement. Bidco and JRIC assume no obligation and do not intend to update any forward looking or other statements contained herein, except as required pursuant to applicable law.

No member of the Bidco Group or the JRIC Group, nor any of their respective associates, directors, officers, employees or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward looking statements in this announcement will or may (or will not or may not) actually occur.

Except as expressly provided in this announcement, no forward looking or other statements have been reviewed by the auditors of the Bidco Group or the JRIC Group. All subsequent oral or written forward looking statements attributable to any member of the Bidco Group or JRIC Group, or any of their respective associates, directors, officers, employees or advisers, are expressly qualified in their entirety by the cautionary statement above.

If you are in any doubt about the contents of this announcement or the action you should take, you are recommended to seek your own independent personal financial advice immediately from your stockbroker, bank manager, solicitor, accountant, fund manager or other appropriate independent financial adviser duly authorised under the UK Financial Services and Markets Act 2000 (as amended) if you are resident in the UK or, if not, from another appropriately authorised independent financial adviser.

No profit forecasts or estimates

Nothing in this announcement is intended, or is to be construed, as a profit forecast or estimate for any period and no statement in this announcement should be interpreted to mean that earnings or earnings per JRIC Share for the current or future financial years will necessarily match or exceed the historical published earnings or earnings per JRIC Share.

Dealing disclosure requirements of the City Code

Under Rule 8.3(a) of the City Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m. (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the City Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Rule 2.10 disclosure

In accordance with Rule 2.10 of the City Code, JRIC confirms that as at the date of this announcement it has 211,966,213 shares of £0.10 each in issue and admitted to trading on AIM. There are no treasury shares held. The International Securities Identification Number for the JRIC Shares is GG00B1FB3X85.

Information relating to JRIC Shareholders

Addresses, electronic addresses and certain information provided by JRIC Shareholders, persons with information rights and other relevant persons for the receipt of communications from JRIC may be provided to Bidco during the Offer Period as requested under Section 4 of Appendix 4 of the City Code.

Publication on JRIC's website

A copy of this announcement will be available (subject to certain restrictions relating to persons resident in Restricted Jurisdictions) on JRIC's website at www.jricl.com under the Shareholder Information sub-section of the Investors tab by no later than 12 noon (London time) on the Business Day following the date of this announcement. For the avoidance of doubt, save as expressly referred to in this announcement, the contents of this website are not incorporated in, and do not form part of, this announcement.