REG - JPMorgan Global Core JPM Glbl Core - JARU JPM Glbl Core - JARE - Quarterly Net Asset Value and Portfolio Update

JPMorgan Global Core Real AssetsAnnouncement

21/03/2024 07:00

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RNS Number : 6650H  JPMorgan Global Core Real Assets Ld  21 March 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
an unaudited Net Asset Value ("NAV") as at 29th February 2024 of 93.92 pence
per share (30th November 2023: NAV 94.06 pence per share). During the quarter,
the Company paid a dividend of 1.05 pence per share on 23rd February 2024,
bringing the NAV total return for the quarter to +1.0% and to -3.9% for the
preceding 12 months, while the total share price return for the 12 months to
29th February 2024 was -20.9%.

 

The Company repurchased 1,850,000 shares in the quarter to 29th February 2024.
The shares were repurchased at a weighted average discount of c. 28% and these
repurchases added approximately 0.2 pence per share to NAV performance. The
programme is ongoing.

 

An analysis of the components to this NAV and the relevant dates for their
valuation is provided below. The Company currently has redemption requests in
US Real Estate which, if exercised, would reduce the allocation from the
current 19.1% to a target of 15%.

 

Strategies

 Name                             Date of price for Strategy  % of JARA's NAV as at 29th February 2024
 Infrastructure                   31st December 2023          20.3%
 Transportation                   30th September 2023         20.0%
 US Real Estate                   31st December 2023          19.1%
 Asia-Pacific Real Estate Equity  31st December 2023          16.3%
 US Real Estate Debt              31st December 2023          7.4%
 Liquid Strategy                  29th February 2024          16.9%

 

Private infrastructure and transportation were significant contributors during
the period, adding 0.8%, with private real estate debt contributing -0.2% in
local currency. The private real estate equity sleeve was the most significant
detractor, contributing -1.6% to performance, while liquid strategies
contributed +0.5% in local currency. The underlying currencies in the
portfolio weakened against the USD, resulting in a net positive currency
impact. In addition, a slightly stronger US dollar versus sterling* marginally
helped performance over the Company's quarter to 29th February 2024.

 

*The GBP/USD exchange rate was 1.26495 as at 29th February 2024, versus
1.26595 as at 30th November 2023

 

Dividends

The most recent quarterly dividend of 1.05 pence per share was paid to
shareholders on 23rd February 2024. The Board continues to expect the yield to
be within the target range of 4 - 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 29th February 2024 of 4.20 pence per share represents a
yield of 6.5% on the current market price*.

 

* Based on JARA's closing share price as at 29th February 2024.

 

Issued Share Capital

As at 29th February 2024, there were 210,445,138 shares in issue, excluding
8,962,814 shares held in treasury.

 

Valuations

The Board notes that one of the broader market concerns is in relation to the
accuracy of private market NAVs. 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 15 transactions since the second quarter of 2022
across U.S. real estate, APAC real estate, and global infrastructure. It
showed that exit valuations were largely in line with the appraisal values at
the time of disposal - with the deals observed on average transacting at a 1%
premium over appraisal value.

 

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 29th February 2024, the Company's portfolio was valued at
£194.5million.

 

Sector exposure Percentage of NAV

 

                     Total Exposure  Private Asset Exposure  Public Asset Exposure
 Real Estate Equity  42%             35%                     7%
 Transportation      23%             21%                     3%
 Infrastructure      24%             20%                     4%
 Real Estate Debt    10%             7%                      2%
 Total               100%            83%                     17%

As at 29th February 2024. Numbers may not sum due to rounding. Cash level at
quarter end was <2%

 

Geographical exposure percentage of NAV

 

                31.08.23  30.11.23  29.02.24
 North America  56%       56%              55%
 Asia Pacific   28%       26%              26%
 Europe         15%       16%              16%
 UK             3%        2%               2%
 Other          ~0%       ~0%              ~0%
 Total          100%      100%             100%

As at 29th February 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 29th
February 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 1,414 individual assets (30th November 2023:
348 private investments and 1,402 individual assets).

 

              31.08.23  30.11.23  29.02.24
 Investments  344       348       352
 Assets       1,409     1,402     1,414

 

 

Private Portfolio Operating Metrics

 

Discount Rates

The blended average discount rate is 8.1%. The asset level discount rate will
vary by strategy as detailed below. The average discount rate has risen
marginally from 8.0% for the previous quarter. This was primarily driven by an
increase in the real estate discount rate.

 

                                 31.08.23  30.11.23  29.02.24
 Portfolio discount rate         7.9%      8.0%      8.1%
 Property                        6.5%      6.6%      6.8%
 Infrastructure & Transport      9.3%      9.4%      9.5%

 

 

Lease Duration

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

 

                                  31.08.23  30.11.23  29.02.24
 Weighted Lease Duration (years)  4.7       5.4       5.0

 

 

Occupancy

·    96% occupancy of leased assets in real estate and transportation,
with Q4 2023 collections being in line with expectations. At an overall
portfolio level, occupancy and income receipts are in line with what the
Manager expects.

 

            31.08.23  30.11.23  29.02.24
 Occupancy  96%       96%       96%

 

 

Loan To Value (LTV)

·    39% portfolio weighted average loan to value 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.

 

      31.08.23  30.11.23  29.02.24
 LTV  38%       38%       39%

 

 

Debt

·    4.4% blended average cost of debt across the strategies, with 65.6%
being fixed and 34.4% floating and a weighted average maturity of 5.2 years.

 

                           31.08.23  30.11.23  29.02.24
 Debt Cost                 4.3%      4.5%(1)   4.4%
 Fixed                     78.6%     65.7%     65.6%
 Floating                  21.4%     34.3%     34.4%
 Average Maturity (years)  5.6       5.3       5.2

 

(1) The cost of debt for mezzanine debt as at 30th Nov 2023 has been restated
from 4.6% to 4.5%.

 

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 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 of the portfolio (including liquidity funds) are
as follows:

 

 Currency          31.08.23  30.11.23  29.02.24
 USD               58%       60%       58%
 GBP               20%       20%       21%
 JPY               6%        6%        6%
 AUD               4%        4%        4%
 SGD               3%        3%        3%
 RMB               2%        2%        2%
 EUR               2%        2%        2%

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

The above reflects the changes in currency exposure following the allocation
to the hedged vehicle of the Infrastructure strategy on 3rd July 2023.

 

21st March 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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