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

JPMorgan Global Core Real Assets

18/03/2022 07:00

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RNS Number : 2072F  JPMorgan Global Core Real Assets Ld  18 March 2022

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 28th February 2022 of 94.99 pence
per share. During the quarter to 28th February 2022 the Company paid a
dividend of 1 penny per share on 25th February 2022, bringing the total return
for the quarter to +0.96%.

 

JARA's portfolio is continuing to perform well since the Company has been near
fully invested. Across both public and private allocations, and measured in
local currency, JARA's real estate, infrastructure and transportation
allocations returned 2.9%, 2.1% and 2.1%, respectively, over the three month
period. The 0.7% depreciation of the US dollar versus sterling over the
quarter* offset some of this strong asset level return. We are again pleased
to see JARA's portfolio deliver positive returns over what has been a very
volatile period for most asset classes.

 

As per the announcement made on 4th March 2022, the portfolio has no exposure
to Russia or Ukraine at a net asset value or income level. JARA's core
approach to investing should, as it did during the worst of the COVID related
volatility, result in a relatively stable asset level performance. The
portfolio has large exposures to logistics, long dated infrastructure cash
flows and, via the transport allocation, to backbone transport assets such as
liquid natural gas tankers, as well as some smaller allocations to offshore
renewable energy maintenance vessels; all areas of interest given the current
macro background.

 

JARA has now paid out 8 pence per share of dividends since IPO and the current
dividend yield is 4.7% as at the closing price on 16th March.

 

* The GBP/USD exchange rate was 1.34175 as at 28th February 2022 .

 

Dividends

The most recent quarterly dividend of 1 penny per share was paid to
investors on 25th February 2022, representing an annualized yield of 4.7%*. In
the absence of unforeseen circumstances, the Board expects the ongoing yield
to be within the target range of 4 - 6% yield on issue price as set out in the
Company's IPO prospectus.

 

* Based on JARA's closing share price as at 16th March 2022.

 

Issued Share Capital

 

No new shares were issued over the quarter, As at 28th February 2022, there
were 217,407,952 shares in issue. Since its IPO in Sept 2019 JARA has seen its
share capital expand by 45.9%.

 

Portfolio Construction

 

As at 28th February 2022, the Company's portfolio was valued at £204.7
million and was 99% invested. As announced on 4th March 2022, the Company made
its initial commitment into US Real Estate Mezzanine Debt. This investment
will take JARA to being effectively 100% invested and was funded from its cash
balance and by reducing the liquid real asset allocation portion of JARA's
portfolio.

 

This investment will provide JARA with exposure to a portfolio of 15 existing
loans, with a bias towards multifamily and office loans. The weighted average
duration of the portfolio of loans is 2.7 years. At full investment, and with
the addition of the Mezzanine Debt strategy, the Company will have increased
its sensitivity to rising interest rates, given the Mezzanine strategy's 64%
exposure to floating rate loans.

 

In 2021 commercial real estate markets were on a very positive path.
Investment sales volumes were strong, debt flows remained high, and core real
estate equity returns climbed to approximately 20% for the full year. Core
real estate mezzanine debt benefits from these strong underlying fundamentals
and continues to offer an attractive relative value to other fixed income
investment products seeking similar current income return.

 

Sector exposure Percentage of NAV

 

                        Total Exposure  Private Asset Exposure  Public Asset Exposure
 Real Estate Equity     47%             39%                     8%
 Real Estate Mezzanine  8%              4%                      4%
 Infrastructure         23%             17%                     5%
 Transportation         21%             18%                     3%
 Total                  100%            78%                     21%

As at 28th February 2022 . Numbers may not sum due to rounding.

 

Geographical exposure Percentage of NAV

 

                  31.8.21   30.11.21  28.02.22
 North America  48%         49%              54%
 Asia Pacific   29%         29%              29%
 Europe         15%         16%              16%
 UK             3%          1%               2%
 Other          ~1%         ~1%              ~0%
 Total          95%         96%              100%

 

Geographical exposures only include invested capital.

 

Private Asset Portfolio Metrics

The private assets have the most complete data set compared to the listed
portion of JARA's portfolio given their less consistent and non standardised
reporting; therefore below we have included the aggregated detail from the
private portion of JARA's portfolio to allow further analysis and comparison
on a time series basis. Private asset exposure currently represents 78% of
JARA's NAV.

 

Investments

 

·    268 investments and, at a more granular individual asset level, look
through exposure to 1,023 individual assets (30th November 2021: 957)

 

              31.8.21  30.11.21  28.02.22
 Investments  236      251       268
 Assets       922      957       1,023

 

Private Portfolio Operating Metrics

 

Discount Rates

 

·    The blended average discount rate is 7.3%. Asset level discount rate
will vary by strategy, with real estate currently having a blended rate of
6.1% and Infrastructure and Transport being 8.6%. The discount rate will
change to some degree as new assets are acquired. The discount rates have
remained relatively stable over the last couple of quarters and changes are
primarily driven by portfolio acquisitions and disposals rather than a
changing of assumptions.

 

                                 31.8.21  30.11.21  28.2.22
 Portfolio discount rate         7.5%     7.4%      7.3%
 Property                        6.3%     6.2%      6.1%
 Infrastructure & Transport      8.7%     8.8%      8.6%

 

Lease Duration

 

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

 

                                  31.8.21  30.11.21  28.02.22
 Weighted Lease Duration (years)  4.7      4.7       4.4

 

Occupancy

 

·    98% occupancy of leased assets in real estate and transportation, of
which 98% paid income as expected in Q4 2021, in line with Q3 2021. At an
overall portfolio level, occupancy and income receipts are in line with what
the manager expects as optimal portfolio performance.

 

            31.8.21  30.11.21  28.02.22
 Occupancy  97%      98%       98%

 

Loan To Value

 

·    39% portfolio weighted average loan to value across private assets.
Asset level LTVs will vary by strategy with the real estate blended LTV of 31%
and Infrastructure and Transport blended LTV of 48%. The underlying strategies
generally take a conservative view on overall leverage use and this approach
has benefitted them over the last year of COVID related volatility.

 

      31.8.21  30.11.21  28.02.22
 LTV  40%      39%       39%

 

Debt

 

·    3.0% blended average cost of debt across the strategies, with 78%
being fixed and 22% floating and a weighted average maturity of 5.7 years.

 

                   31.8.21  30.11.21  28.02.22
 Debt Cost         3.2%     3.2%      3.0%
 Fixed             82%      82%       78%
 Floating          18%      19%       22%
 Maturity (years)  5.6      5.9       5.7

 

Development Profile

 

·    The private asset portfolio had less than 3% exposure to development
assets. This allocation allows the Manager, where appropriate, to capitalize
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; Logistics assets, US single family residential
(collectively representing $2.2bn of value) 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.

 

                            31.8.21  30.11.21  28.02.22
 Development Risk Exposure  <3%      <3%       <3%

 

Currency

 

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

 

 Currency          31.8.21  30.11.21  28.02.22
 USD               59%      60%       64%
 EUR               10%      10%       9%
 AUD               8%       8%        7%
 JPY               6%       6%        6%
 GBP               5%       5%        1%
 RMB               3%       3%        3%
 SGD               2%       2%        3%
 CAD               2%       2%        2%
 NZD               2%       2%        2%

 As at 28th February 2022 - may not sum to 100% due to rounding.

 

 

18th March 2022

 

 

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.

 

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