While Japan Residential’s net asset value rose 6.3% in yen terms over the six months ended 31 May 2015, in sterling terms the rise was just 0.4% as the yen weakened. The yen uplift in the NAV was driven by a 3.1% uplift in the value of their investment properties. The distribution was held steady at 1.8p on revenue that was also fairly flat at 1.7p. gearing fell modestly from 52% to 50%. the weighted average interest cost is 0.88%
The portfolio of 57 properties (2,697 rentable units) was externally valued at Yen46.8 billion (£246.7m) at 31 May 2015. This represents an increase of Yen981 million (£5.2m) or 2.1% over the portfolio valuation one year prior, despite the previously announced disposal of Branche Kanamecho IV in Toshima Ward, Tokyo in September 2014. This property was sold at a 34.1% premium over its 31 May 2014 valuation of Yen410 million (£2.2m).
The regional allocation of the property portfolio by value at 31 May 2015 was: Tokyo 59%; Osaka 19%; Nagoya 10%; and Other 12%. The unleveraged net yield of the portfolio (appraised net operating income over value) was 5.2% at 31 May 2015, down from 5.3% six months prior. With ten-year Japanese government bonds currently yielding 0.42%, property value growth expectations are supported by the substantial yield premium they offer over the risk-free rate.
On a like-for-like basis, investment property value increased 3.1% during the twelve months ended 31 May 2015. The largest gains in percentage terms were in Tokyo (+3.5%), where the majority of the Fund’s assets are located. This was followed by gains in Other (+2.6%), Osaka (+2.5%) and Nagoya (+2.4%).
Occupancy averaged 94.8% for the six months ending 31 May 2015. This is down from 95.1% during the period one year prior. The portfolio occupancy rate was 95.1% at 30 June 2015. Average occupancy for the 3 years ended 31 May 2015 was 95.1%.
JRIC : Japan Residential gains despite yen weakness