JPMorgan Global Core JPM Glbl Core - JARU JPM Glbl Core - JARE - NET ASSET VALUE AND PORTFOLIO UPDATE - QUARTERLY

JPMorgan Global Core Real Assets

14/12/2021 06:59

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RNS Number : 5061V  JPMorgan Global Core Real Assets Ld  14 December 2021

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") per share as at 30th November 2021 of
95.08 pence. During the quarter to 30th November 2021 the Company paid a
dividend of 1 penny per share on 29th November 2021, bringing the total return
for the quarter to 5.03%. This has resulted in a total NAV return of 10.31%
over the last two quarters. The 12 month return, inclusive of the two most
recent quarters, comes to 8.44%. This is representative of JARA's portfolio
performing strongly since the Company has been near fully invested. JARA has
now paid out 7 pence per share of dividends since IPO and the Manager notes
that income from the underlying portfolio has increased markedly in recent
quarters.

 

Across both public and private allocations, and measured in local currency,
JARA's real estate, infrastructure and transportation allocations returned
2.3%, 1.9% and 1.5%, respectively, over the three month period. This local
currency return is in line with JARA's long term return targets. The
3.9% appreciation of the US dollar versus sterling over the quarter 1 
(#_ftn1) benefitted JARA's NAV, given its 60% US dollar exposure.

 

The reopening of the global economy continues to benefit JARA's portfolio and
specifically real estate sectors. This has more recently been led by private
markets and in particular U.S. real estate, which experienced one of its best
quarters on record. As a result, real estate was again the largest driver of
returns for the Company over the period.

 

The transportation and infrastructure allocations continue to perform well,
offering a higher income level to the portfolio than real estate. Both these
sectors are also benefiting from the increase in economic activity but to a
lesser extent than real estate. As a core investor, the Company is focused on
access to these markets through assets with longer term contracts and sectors
which are less economically sensitive. The pipelines of the private strategies
are currently focused on renewables, regulated utilities, contracted power and
energy logistic assets. The Company's listed allocation was impacted by the
volatility leading into the Company's quarter end resulting in a marginally
negative return over the period for this allocation.

 

We note the emergence of new variants of COVID and while this puts some degree
of uncertainty on the horizon, JARA's portfolio performed well during the
acute phase of the COVID disruption in 2020. The core nature and relatively
low leverage of the overall portfolio, along with the expertise honed in
operating portfolio assets through difficult market conditions means, given
current information, the Manager is comfortable with its ability to deliver
target returns going forward.

 

 

 

 

Dividends

The most recent quarterly dividend of 1 penny per share was paid to
investors on 29th November 2021, representing an annualised yield of 4.7% 2 
(#_ftn2) . In the absence of unforeseen circumstances, the Board expects
distributions to be within the target range of 4 - 6% yield on issue price, as
set out in the Company's IPO prospectus.

 

Issued share capital

 

No new shares were issued during the quarter. As at 30th November 2021, there
were 217,407,952 shares in issue. Since its IPO in September 2019 JARA has
seen its share capital expand by 45.9%; healthy evidence of the interest and
support for the diversified real assets investment proposition which
differentiates JARA in the market.

 

Portfolio Construction

 

As at 30th November 2021, the Company's portfolio was valued at £203.9
million and was 96% invested.

 

Over the period there were no new commitments and the manager is awaiting the
drawdown of the allocation to JPM's US Real Estate Mezzanine Debt Strategy,
which aims to capture the attractive returns currently available in that
sector and will serve to boost contracted income. As at 30th November 2021,
the Company had uncalled commitments of £14 million. We would highlight that
JARA's Private Asia property exposure is primarily logistics, with a smaller
allocation to office and a small residential exposure to Japanese multi family
dwellings. There is no residential or office exposure in China. The Asia
property portfolio is performing well with solid income returns across all
sectors and appreciation in the industrial/logistics sector.

 

Sector exposure Percentage of NAV

 

                        Total Exposure  Private Asset Exposure  Public Asset Exposure
 Real Estate Equity     52%             38%                     14%
 Real Estate Mezzanine  0%              0%                      0%
 Infrastructure         23%             17%                     6%
 Transportation         21%             18%                     3%
 Total                  96%             74%                     22%

As at 30th November 2021. Numbers may not sum due to rounding.

 

Geographical exposure Percentage of NAV

 

                31.5.21    31.8.21   30.11.21
 North America  49%      48%                49%
 Asia Pacific   29%      29%                29%
 Europe         15%      15%                16%
 UK             3%       3%                 1%
 Other          ~1%      ~1%                ~1%
 Total          96%      95%                96%

Geographical exposures only include invested capital.

 

 

Private asset portfolio metrics

The private assets have the most detailed asset-level data set compared to the
listed portion of JARA's portfolio; therefore below we have included the
aggregated detail from the private portion of the Company's portfolio to allow
further analysis and comparison on a time series basis. Private asset
exposure currently represents 74% of JARA's NAV.

 

Investments

 

·    251 investments and at a more granular individual asset level, look
through exposure to 957 individual assets (31st August 2021: 922)

 

              31.5.21  31.8.21  30.11.21
 Investments  232      236      251
 Assets       880      922      957

 

 

Private Portfolio Operating Metrics

 

Discount Rates

 

·    The blended average discount rate is 7.4%. Asset level discount rate
will vary by strategy, with real estate currently having a blended rate of
6.2% and infrastructure and transport being 8.8%. The discount rate will
change to some degree as new assets are acquired. The discount rates have
remained relatively stable over the last few quarters.

 

                          31.5.21  31.8.21  30.11.21
 Portfolio discount rate  7.6%     7.5%     7.4%

 

 

Lease Duration

 

·    4.7 years average lease duration in real estate and transportation,
with just 7% of JARA's portfolio leases due to expire in 2022.

 

                                  31.5.21  31.8.21  30.11.21
 Weighted Lease Duration (years)  4.9      4.7      4.7

 

Occupancy/Utilisation

 

·    97% occupancy/utilisation of leased assets in real estate and
transportation, of which 98% paid income as expected in Q3 2021, a marginal
improvement on Q2 2021. This was driven by improving economic conditions and a
marginally higher weighting to transportation, where we continue to receive
100% of all expected payments. At an overall portfolio level, occupancy and
income receipts are in line with what the Manager expects as optimal portfolio
performance.

 

                        31.5.21  31.8.21  30.11.21
 Occupancy/Utilisation  97%      97%      98%

 

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 blended LTV of
30% and infrastructure and transport blended LTV of 48%. The underlying
strategies generally take a conservative view on overall leverage.

 

      31.5.21  31.8.21         30.11.21
 LTV  40%            40%       39%

 

Debt

 

·    3.2% blended average cost of debt across the strategies, with 81%
being fixed and 19% floating and a weighted average maturity of 5.9 years.

                   31.5.21  31.8.21  30.11.21
 Debt Cost         3.1%     3.2%     3.2%
 Fixed             81%      82%      81%
 Floating          19%      18%      19%
 Maturity (years)  5.9      5.6      5.9

 

Development Profile

 

·    The private asset portfolio had less than 3% exposure to development
assets. This allocation allows the Manager, where appropriate, to capitalise
on areas where construction is a more effective way to gain access to assets
due to the rich pricing in markets. Currently the development allocation is
mainly focused on three areas; Logistic assets, US single family residential
and Energy Logistic transportation. Each underlying strategy has the capacity
to engage in a small degree of development and this demonstrates the strength
and flexibility of the JPM Alternatives Platform.

 

We would expect construction exposure across JARA's portfolio to remain
relatively low on an aggregate basis.

 

                            31.5.21  31.8.21  30.11.21
 Development Risk Exposure  <3%      <3%      <3%

 

Currency

 

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

 

 Currency          31.5.21  31.8.21  30.11.21
 USD               61%      59%      60%
 EUR               11%      10%      10%
 AUD               8%       8%       8%
 JPY               7%       6%       6%
 GBP               3%       5%       5%
 RMB               4%       3%       3%
 SGD               2%       2%       2%
 CAD               2%       2%       2%
 NZD               2%       2%       2%

 As at 30th November 2021 - may not sum to 100% due to rounding.

 

 

14 December 2021

 

 

Alison Vincent

JPMorgan Funds Limited - Company Secretary

Telephone 0207 742 4000

 

Notes

 

The Company aims to provide holders of the Ordinary Shares with a stable
income and constant currency capital appreciation through exposure to a
globally diversified portfolio of Core Real Assets in accordance with the
Company's investment policy. The Company is seeking 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.

 

 1  (#_ftnref1)  The GBP/USD exchange rate was 1.3323 as at 30th November
2021.

 

 

 2  (#_ftnref2) Based on JARA's closing share price as at 30th November 2021.

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