REG - JPMorgan Global Core JPM Glbl Core - JARU JPM Glbl Core - JARE - Quarterly NAV and Portfolio Update

JPMorgan Global Core Real AssetsAnnouncement

25/06/2024 07:00

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RNS Number : 6768T  JPMorgan Global Core Real Assets Ld  25 June 2024

LONDON STOCK EXCHANGE ANNOUNCEMENT

 

JPMORGAN GLOBAL CORE REAL ASSETS LIMITED

 

QUARTERLY NET ASSET VALUE AND PORTFOLIO UPDATE

 

 

Legal Entity Identifier: 549300D8JHZTH6GI8F97

 

JPMorgan Global Core Real Assets Limited ("JARA" or the "Company") announces
its unaudited Net Asset Value ("NAV") as at 31st May 2024 of 91.96 pence per
share (29th February 2024: NAV 93.92 pence per share). During the quarter, the
Company paid a dividend of 1.05 pence per share on 31st May 2024, bringing the
NAV total return for the quarter to -1.0% and to -2.4% for the preceding 12
months, while the total share price return for the 12 months to 31st May 2024
was -12.2%.

 

The Company repurchased 1,655,000 shares in the quarter to 31st May 2024. The
shares were repurchased at a weighted average discount of c. 17% and these
repurchases added approximately 0.1 pence per share to NAV performance. The
programme is ongoing.

 

A snapshot of the components to this NAV and the relevant date for their
valuation is provided below. The Company currently has outstanding redemption
requests in respect of the US Real Estate Equity and Asia Pacific Real Estate
Equity strategies. As more redemptions are received, this would further reduce
the allocation towards the strategic target of 15.0% for each Real Estate
Equity fund.

 

Strategies

 Name                             Date of price for Strategy  % of JARA's NAV as at 31st May 2024
 Infrastructure                   31st March 2024             20.9%
 Transportation                   31st December 2023          20.7%
 US Real Estate Equity            31st March 2024             18.2%
 Asia-Pacific Real Estate Equity  31st March 2024             15.8%
 US Real Estate Debt              31st March 2024             7.5%
 Liquid Strategy                  31st May 2024               16.9%

 

Private infrastructure and transportation were significant contributors during
the period, adding +1.4% in local currency terms, with private real estate
debt flat. The private real estate equity sleeve was the most significant
detractor, contributing -1.1% to performance, while liquid strategies
contributed +0.4% in local currency. Sterling(1) strengthened against the
underlying currencies in the portfolio, including USD, resulting in a net
negative currency impact over the Company's quarter to 31st May 2024.

 

1 The GBP/USD exchange rate was 1.27320 as at 31st May 2024, versus 1.26495 as
at 29th February 2024

 

Dividends

The most recent quarterly dividend of 1.05 pence per share was paid to
shareholders on 31st May 2024. The Board continues to expect the yield to be
within the target range of 4 to 6% on issue price, as set out in the Company's
IPO prospectus. The current year's expected total dividends for the financial
year ending 28th February 2025 of 4.20 pence per share represents a yield of
5.5% on the current market price(2).

 

2 Based on JARA's closing share price as at 31st May 2024.

 

 

Issued Share Capital

As at 31st May 2024, there were 208,790,138 shares in issue, excluding
10,617,814 shares held in Treasury.

 

Valuations

The Board notes that across the investment companies sector the accuracy of
private market valuations is a key investor concern. To this end, the
portfolio management team has reviewed historical transactional data in
relation to the appraisal (carrying) NAVs for JARA's indirect investments in
private real assets. This review was conducted on 20 transactions since the
second quarter of 2022 across US real estate, APAC real estate, and global
infrastructure. It showed that exit valuations were largely aligned with the
appraisal values at the time of disposal, with an average difference of
approximately 2%.

 

Both the Board and the Investment Manager believe this affirms the quality and
resilience of JARA's NAV. This is an indication of the rigour of the valuation
process which is undertaken for each of JARA's strategies and their underlying
assets. It is important to highlight that this has occurred during a period of
significant market uncertainty, most notably in the real estate sector. The
Board receives regular reporting on realised gains/losses of any underlying
asset disposal against its carrying value as part of its work to oversee and
validate the Company's reported NAV.

 

Portfolio Construction

As at 31st May 2024, the Company's portfolio was valued at £188.6 million.

 

Sector exposure percentage of NAV(3)

 

                     Total Exposure  Private Asset Exposure  Public Asset Exposure
 Real Estate Equity  38%             33%                     5%
 Transportation      26%             22%                     4%
 Infrastructure      24%             20%                     4%
 Real Estate Debt    25%             22%                     4%
 Total               100%            83%                     17%

 

3 As at 31st May 2024. Numbers may not sum due to rounding. Cash level at
quarter end was ~2%.

 

Geographical exposure percentage of NAV(4)

 

                30.11.23  29.02.24  31.05.24
 North America  56%       55%       55%
 Asia Pacific   26%       26%       26%
 Europe         16%       16%       17%
 UK             2%        2%        2%
 Other          ~0%       ~0%       ~0%
 Total          100%      100%      100%

 

4 As at 31st May 2024. Numbers may not sum due to rounding.

 

 

Private Asset Portfolio Metrics

Please see below for the metrics of JARA's private investments. As at 31st May
2024, private asset exposure represented 83% of JARA's NAV, stable compared to
the previous quarter.

 

Investments

·    352 private investments and, at a more granular individual asset
level, look through exposure to 1,437 individual assets (29th February
2024(5): 348 private investments and 1,410 individual assets).

 

              30.11.23  29.02.24  31.05.24
 Investments  348       348       352
 Assets       1,402     1,410     1,437

 

5 The count of investments and assets as at 29th February 2024 has been
restated from 352 and 1,414, respectively, to reflect updated data that has
since become available.

 

Private Portfolio Operating Metrics

 

Discount Rates

The blended average discount rate is 8.2%(6). The asset level discount rate
will vary by strategy as detailed below. The average discount rate remained
roughly unchanged from the previous quarter(7). This was driven by an increase
in the real estate discount rate and a decrease in the infrastructure and
transport discount rate combined with a marginally higher allocation.

 

                                 30.11.23  29.02.24  31.05.24
 Portfolio discount rate         8.0%      8.2%      8.2%
 Real Estate Equity              6.6%      6.8%      6.9%
 Infrastructure & Transport      9.4%      9.6%      9.3%

 

6 Includes U.S. real estate mezzanine debt, which is not broken out separately
given its minor contribution to the portfolio discount rate.

7 The infrastructure and transport discount rate as at 29th February 2024 has
been restated from 9.5% to reflect updated data that has since become
available. This in turn impacted the portfolio discount rate.

 

Lease Duration

·    average lease duration of 5.1 years in real estate and transportation,
with approximately 15% expected to expire in 2024.

 

                                  30.11.23  29.02.24  31.05.24
 Weighted Lease Duration (years)  5.4       5.0       5.1

 

Occupancy

·    96% occupancy of leased assets in real estate and transportation, with
Q1 2024 collections being in line with expectations. At an overall portfolio
level, occupancy and income receipts are in line with the Investment Manager's
expectations.

 

            30.11.23  29.02.24  31.05.24
 Occupancy  96%       96%       96%

Loan To Value (LTV)

·    40% portfolio weighted average LTV across private assets. Asset level
LTVs will vary by strategy, with the real estate average LTV of 35% and
infrastructure and transport blended LTV of 49%. The underlying strategies
continue to take a conservative view on overall leverage use.

 

      30.11.23  29.02.24  31.05.24
 LTV  38%       39%       40%

 

Debt

·    4.6% blended average cost of debt across the strategies, with 70.5%
being fixed and 29.5% floating and a weighted average maturity of 5.1 years.

 

                30.11.23              29.02.24         31.05.24
 Debt Cost                     4.5%        4.4%   4.6%
 Fixed                         65.7%       65.6%  70.5%
 Floating                      34.3%       34.4%  29.5%
 Average Maturity (years)      5.3         5.2    5.1

 

Development Profile

A number of the underlying private strategies have the capacity to engage in a
small degree of development, with the private asset portfolio having a
relatively minimal exposure to development assets. This small allocation
allows the Investment Manager, where appropriate, to capitalise on areas where
construction is a more effective way to gain access to assets or sectors less
accessible in the secondary market. The development pipeline has moderated
more recently, especially in real estate. We would expect construction
exposure across JARA's portfolio to remain relatively low on an aggregate
basis.

 

Currency

 

The main currency exposures(8) of the portfolio (including liquidity funds)
are as follows:

 

 Currency          30.11.23  29.02.24  31.05.24
 USD               60%       58%       59%
 GBP               20%       21%       22%
 JPY               6%        6%        6%
 AUD               4%        4%        4%
 SGD               3%        3%        3%
 RMB               2%        2%        2%
 NZD               2%        2%        1%

 

(8) Other currencies represent approximately 4% in aggregate. Numbers may not
sum to 100% due to rounding.

 

25th June 2024

For Further Information

 

JPMorgan Funds Limited - Company Secretary

Emma Lamb

Telephone 0800 20 40 20 or +44 1268 44 44 70

 

Buchanan Communications - Financial PR

JARA@buchanancomms.co.uk (mailto:JARA@buchanancomms.co.uk)

0207 466 5000

 

Notes

The Company aims to provide holders of the Ordinary Shares with a stable
income and capital appreciation, measured on a constant currency basis,
through exposure to a globally diversified portfolio of Core Real Assets in
accordance with the Company's investment policy. The Company obtains exposure
to Core Real Assets through various real asset strategies, namely: Global
Infrastructure, Global Real Estate, Global Transport and Global Liquid Real
Assets. J.P. Morgan's Alternative Solutions Group has the primary
responsibility for managing the Company's portfolio.

 

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