TIDMJARA TIDMJARU TIDMJARE
RNS Number : 8263U
JPMorgan Global Core Real Assets Ld
28 November 2023
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN GLOBAL CORE REAL ASSETS LIMITED
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHSED 31ST AUGUST
2023
RESILIENT POSITIVE ASSET PERFORMANCE +0.7% IN CHALLENGING
MARKETS
5% DIVID INCREASE DURING THE PERIOD
SHARE BUYBACKS INITIATED
Legal Entity Identifier: 549300D8JHZTH6GI8F97
Information disclosed in accordance with the DTR 4.2.2
JPMorgan Global Core Real Assets Limited (the 'Company' or
'JARA'), the diversified global infrastructure, transportation and
real estate investment company, is pleased to announce its half
year results for the six-months ended 31st August 2023, in which
its carefully calibrated portfolio performed robustly in the
current challenging macroeconomic conditions.
Highlights for the six months ended 31st August 2023
Performance
-- The net asset value ('NAV') total return was -4.6%, whilst
total returns to shareholders was -7.8%.
-- Underlying asset performance in local currency was +0.7%.
Currency was the key negative contributor to Company performance
during the period (-5.1%) as Sterling generally strengthened. To
help reduce this volatility the Company initiated a partial hedge
in July.
-- The share price discount to NAV widened during the period, to
18.1%, from 14.9%, against a background of volatile equity
markets.
-- At the asset level, transportation (+0.9%), infrastructure
(+0.6%) and real estate debt (+0.3%) contributed positively to
performance, while US private real estate equity was the principal
detractor (-0.9%).
-- Dividends during the period were increased 5% year on year,
with two distributions of 1.05p compared with 1 penny per share in
the prior year.
Portfolio
-- The portfolio remains highly diversified across geographies,
asset classes and importantly macro and political environments,
with 344 investments, providing investors a remarkably diverse
portfolio of 1,409 core real assets worldwide.
-- During the period, the Company invested a further GBP2.4m in
the infrastructure strategy, increasing investor exposure to a
platform of 20 global infrastructure operating businesses which the
manager views as attractively positioned.
-- Meanwhile, the Company reduced its private real estate
exposure from 40% to 37% in response to the prevailing market
conditions.
-- Occupancy across the real estate and transportation segments
stands at 96%, in line with expectations.
-- Contracted income received stands at 96%, which is within normal operational levels.
-- Average lease length across the real estate and
transportation segments is 4.7 years, with c.10% due to expire in
2023.
-- The blended average discount rate across the portfolio is
7.9%, with 6.5% being applied to property, and infrastructure and
transport using a rate of 9.3%.
Valuation
-- Four out of the seven exits at the portfolio level occurred
at valuations which were up to 10% higher than their carrying NAV,
a reflection of prudent valuations. On average, these seven deals
achieved an approximate +2% increase on their appraisal value,
which affirms the quality and resilience of JARA's NAV.
-- In contrast to the widening discount, the portfolio
management team has reviewed historical sales data in relation to
the appraisal (carrying) NAVs for JARA's investments in private
real assets.
-- In analysing recently closed transactions across the US real
estate, APAC real estate, and global infrastructure strategies,
exit valuations were largely in line with the appraisal values at
that time. This is an indication of the rigor of the valuation
process which is undertaken for each of these portfolios and
underlying assets.
-- The stability of underlying valuations reflects the quality
of the portfolio and strategy even in a period of considerable
market uncertainty, most notably in the real estate sector.
Gearing
-- JARA is debt free at the company level and the underlying
portfolio takes a conservative approach to debt given its core
nature.
-- The portfolio's look through cost of debt is 4.3%, with a
loan to value of 38.2%. Of this leverage, almost 80% is fixed rate
and less than 10% is maturing by the end of 2024.
Discount Management
-- The Board and Investment Manager are focused on using the
tools available to them to close the discount to NAV at which the
Company's shares trade, which has grown during the recent period of
macro-economic uncertainty.
-- During the period, the Company initiated a share buyback
programme and, to date, 3.2% of the Company's share capital has
been bought back at an average discount of 26.2%, providing an
uplift in the Company's NAV.
ESG
-- On 30th June 2023, in line with regulatory requirements, the
Manager published its first UK Task Force on Climate-related
Financial Disclosures ('TCFD') Report for the Company in respect of
the year ended 31st December 2022. This is available to view on the
Company's website.
Sector Exposure
Sector Allocation (%)
Industrial / Logistics 17%
Office 9%
Residential 10%
Retail 5%
Other Real Estate 2%
Total Real Estate (private % /
public %) 43% (37% / 6%)
Utilities 12%
Renewable Energy 5%
Liquid Bulk Storage 2%
Conventional Energy 2%
Fixed Transportation Assets 1%
Total Infrastructure (private
% / public %) 23% (19% / 4%)
Maritime 9%
Energy Logistics 6%
Aviation 2%
Rolling Stocks 3%
Other Transportation 1%
Total Transportation (private
% / public %) 22% (20% / 3%)
Real Estate Mezzanine Debt 7%
Other Real Asset Debt 2%
Other Real Assets (private % /
public %) 10% (7% / 2%)
Total Invested Portfolio 98%
Geographical and Currency Exposure
Region
North America 56%
Europe (Including
3% U.K.) 18%
Asia-Pacific 26%
Currency
USD 58%
CAD <1%
GBP 20%
EUR 2%
Other(1) <1%
JPY 6%
AUD 4%
Other(2) 9%
Source: J P. Morgan Asset Management. Data as of 31st August
2023. Totals may not add up to 100% due to rounding. FX exposure
differs from regional exposure due to currency hedged
investments.
(1) Includes DKK (<1%), CHF (<1%), and SEK (<1%).
(2) Includes SGD (3%), RMB (2%), NZD (2%), HKD (<1%), and KRW
(<1%).
John Scott, Chairman, commented:
"Despite the macro-economic challenges that have caused
significant share price volatility across the investment companies
sector, from which the Company was unfortunately not immune, the
Company's underlying portfolio has continued to perform
respectably, achieving a +0.7% return at asset level.
"The Company remains focused on addressing the discount to NAV
at which the shares currently trade and during the period has
initiated four proactive measures. These are: increasing dividend
payments by 5%; reducing private real estate exposure which has
been the principal asset detractor; introducing a degree of
currency hedging into the strategy; and initiating a share buyback
programme to preserve and improve shareholder value, as well as
attract new demand for the shares.
"Whilst headwinds are still steering the direction of
macro-economic travel, there are reasons to be optimistic.
Inflation appears to be coming under control and we can expect with
a reasonable degree of confidence that central banks will begin to
start cutting interest rates, a move that should have a positive
impact on the Company's share price.
"Further, we have every confidence in the Company's portfolio
positioning with numerous drivers of shareholder value creation
across our global asset base now in place. An example of this is
the strong outlook for APAC real estate where growth opportunities
are less affected by interest rate-driven headwinds. Our real
estate mezzanine debt will continue to benefit from the higher rate
environment. There is every sign that the valuation declines we
have seen in US private real estate are flattening and may be near
the bottom. The US government has passed some of the most important
public infrastructure legislation in the country's history,
presenting a major growth investment opportunity. Finally, the
global search for increased energy security has seen demand for
traditional and alternative energy sources, as well as for assets
in the transportation sector to support this demand.
"Ultimately, the Company's carefully curated and diverse
portfolio of 344 investments in 1,409 assets around the world
places it in a compelling position to generate an attractive level
of risk-adjusted returns for our shareholders and we look to the
future with confidence."
Enquiries :
JPMorgan Global Core Real Assets
Limited
Press enquiries through Buchanan
JPMorgan Funds Limited Tel: 0800 20 40 20 or +44 1268
44 44 70
E-mail: invtrusts.cosec@jpmorgan.com
Buchanan Communications Tel: +44 (0) 20 7466 5000
Financial PR Email: JARA@buchanancomms.co.uk
Henry Wilson, Helen Tarbet, George
Beale
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the interim report for the Company for
the six months ended 31st August 2023.
This has been a difficult period for many investment trusts -
and JARA is no exception. The Company recorded a 4.6% decrease in
total return on net assets over the six months, reflecting a period
of respectable performance in our underlying holdings, offset by
adverse currency movements which contributed -5.1% to returns. Our
main problem, however, has been the significant widening of the
discount to our net asset value ('NAV') and the result is a total
return for shareholders of -7.8%, the discount having moved out
from 14.9% to 18.1% over the same period. Our view is that this
widened discount reflects the current weak demand across our sector
of the equity markets, and is not a reflection of the underlying
quality of our diversified portfolio.
Features of the period
Activity in most developed economies continued its halting
recovery from the disruption caused by COVID-19, but many years of
loose monetary policy, combined with supply chain difficulties,
have provoked widespread inflation. While there are signs that in
most economies the worst is past, inflation has worked its way into
the system and is proving very difficult to cast aside. On top of
this, Russia's war in Ukraine, already by far the most serious
conflict in Europe since 1945, shows every sign of descending into
a bloody stalemate. Although energy and other commodity markets
have to an extent adapted to the new realities of eastern Europe,
gas, oil and fertiliser prices remain stubbornly higher than in
pre-invasion days, contributing to a cost-of-living crisis in many
countries. Your Company, which invests in a diversified portfolio
of core real assets, was designed to perform resiliently in
difficult environments such as the one we face today and in the
main this is proving to be the case; our underlying asset value has
borne up well when measured in local currency.
Share Price and Discount
JARA's discount to NAV averaged 15.4% over the six-month period,
ending at 18.1% at the end of August. At the time of writing the
discount has widened still further and currently stands at 26.2%*.
The Directors believe that much of this is driven by investor
response to the dramatically changed interest rate environment, and
indeed is reflected across the entire listed investment companies
sub-sector. As yields on government debt have risen, so in tandem
has the yield demanded by the market on other investments which,
absent a significant rise in dividends, drives a reduction in share
prices. The weakening of our share price pays little heed to the
quality of the underlying asset portfolio, nor the prospect of
growing dividends. That this is a feature being experienced by a
wide range of funds is, we are aware, of little comfort to our
shareholders, and that is why your Board is taking a number of
concerted actions to address the discount.
* As at 24th November 2023.
Board Actions
Your Board is responding to this challenging environment with
the aim of preserving and restoring shareholder value.
First: we have increased dividend payments in order to return
greater value to shareholders. Further detail is set out in the
'Dividend' section below.
Secondly: responding to shareholder feedback regarding the
proportion of the Company's investments in private real estate
strategies, total exposure has been reduced from 40% to 37% over
the past year and further adjustments will be made, as needed. Part
of the proceeds were used to make a further GBP2.4 million
investment into the Infrastructure strategy, demonstrating the
Board's confidence in building greater exposure for shareholders in
what is essentially a platform of 20 global infrastructure
operating businesses. Furthermore, we have asked the Investment
Manager to continue to evaluate the allocations across our entire
portfolio to ensure a balance of risk and return best suited to
today's environment and opportunities.
Thirdly: the Board has explored cost effective options available
to the Company to dampen the effects of currency fluctuations which
continue to provide some distraction to shareholders from the
resilient constant currency performance of our various real asset
strategies. To this end, the Company switched its investment
allocation within Infrastructure strategy to a hedged unit class.
This reallocation of the existing unhedged investment in
Infrastructure to the hedged vehicle is intended to reduce the
currency-related volatility in returns. This is discussed in more
detail in the Investment Managers' Report below.
Fourthly: we have initiated a series of share buybacks and, to
date, 3.2% of our share capital has been bought back, at an average
discount of 26.2%; the programme continues and, by buying in our
own shares at a significant discount, provides a worthwhile uplift
in NAV for continuing shareholders.
Dividends
The Company declared two interim dividends of 1.05 pence each
per ordinary share each, which were paid to shareholders on 31st
May 2023 and 30th August 2023. A third dividend of 1.05 pence per
Ordinary Share was declared after the period end and will be paid
to shareholders on 29th November 2023. This is a 5% increase on the
comparable quarterly dividends for May and August 2022, which were
1 penny per ordinary share.
Task Force on Climate-related Financial Disclosures
On 30th June 2023, in line with regulatory requirements, the
Investment Manager published its first UK Task Force on
Climate-related Financial Disclosures ('TCFD') Report for the
Company in respect of the year ended 31st December 2022. The report
provides estimates of the portfolio's climate-related risks and
opportunities, disclosed in accordance with the Financial Conduct
Authority's Environmental, Social and Governance ('ESG') sourcebook
and TCFD recommendations.
This is the first report under the new disclosure requirements,
and it is available on the Company's website:
www.jpmrealassets.co.uk. The Board is aware that best practice
reporting under the TCFD regime is still evolving both with regard
to metrics and input data quality, as well as the interpretation
and implications of the outputs produced. We continue to monitor
and respond to developments.
Outlook
Despite the acute geopolitical tensions arising from Russia's
war in Ukraine and Israel's military operation in Gaza, the global
economy and financial markets have to date been relatively muted in
their response to these threats. Whilst we all fervently hope that
both conflicts will be resolved as rapidly as possible, it is now
apparent that in both theatres of war we may be facing the prospect
of engagements which endure much longer than was initially thought
possible, with the consequent effects on macro-economic conditions
of inflation, higher interest rates, and equity market
uncertainty.
As I have noted in the past, the Company invests in many
different classes of real assets, on a basis that is highly
diversified both by sector and by geography. We pursue a
progressive dividend policy while also seeking capital growth in
real terms. This should appeal to investors wanting a running
return combined with the delivery of steady long-term growth in
asset values across the cycle. It is deeply frustrating for your
Directors to observe that, on the one hand, JARA is achieving what
it set out to do, while on the other seeing little of the Company's
success reflected in our current share price.
Nonetheless, I see grounds for optimism: inflation's dragon
appears to have been tamed, if not yet slain, and there are
indications that central banks may start to cut interest rates, a
move that would be expected to result in a positive re-rating of
your Company's shares, albeit rates will remain at higher levels
than have prevailed in recent times. Your Board is aware that there
will be a continuation vote in August 2024, at which shareholders
will have the opportunity to decide whether the Company continues
in business for a further five years. In recommending a course of
action, your Board will consider all options before determining
what it considers to be the best outcome for investors. Until then,
we value the support of our shareholders, whom I ask to reflect on
the underlying investment proposition of JARA, which I believe to
be sound and carefully calibrated to offer resilience in the times
in which we live.
John Scott
Chairman 27th November 2023
INVESTMENT MANAGERS' REPORT
Review of Markets
The six months to 31st August 2023 brought about some optimism
across markets, with inflation cooling off and a reasonable
assumption that developed economies are approaching the end of
monetary tightening. However, inflationary forces may be stickier
than expected as energy prices present upward pressure. In the
U.S., equities have rallied on the back of larger tech stocks
bolstered by the potential opportunity stemming from Artificial
Intelligence (AI), while in the U.K. other fiscal and monetary
policy concerns continue to weigh heavily on the public indices. In
fixed income, rates remain volatile, with shifting central bank
policy expectations driving market pricing.
Monetary policy has continued to tighten over the past six
months, with the Federal Reserve and the Bank of England increasing
policy rates to above 5% (up +75-100bps over the period). The
impact of these hikes has begun to pass through the economy, but
this takes time, and hence interest rates are likely to remain
higher for longer than initially expected.
During the reporting period, uncertainty remained a prominent
theme across markets. The setbacks of interest rates, quantitative
tightening, and geopolitical factors were more pronounced.
Inflation seems to be cooling across the U.S. and U.K., led by
supply-chain related factors and a fall in energy prices. The U.K.
is showing slower progress as wage growth is trending higher,
whereas in the U.S. this inflationary aspect appears to have
peaked. With crude oil prices re-approaching high levels, the
ongoing war in Ukraine, the Gaza conflict and other geopolitical
tensions in the Middle East there might be upward pressure on
overall prices, and this could keep inflation at the forefront of
the minds of consumers and central banks alike. Given real assets
have historically been able to provide some level of inflation
linkage in returns they are a useful asset class for investors
looking to protect against this risk.
We continue to believe that the case for core real assets is as
attractive as ever. APAC real estate has a strong outlook, with
growth opportunities and fewer interest rate-driven headwinds. Real
estate mezzanine debt also benefits from higher base rates,
resilient spreads, and exposure to floating rate loans. Although
U.S. private real estate has continued to face near term
difficulties, market pricing has started to flatten out, showing
signs that it may be nearing a bottom. In addition, the valuation
of listed real assets looks attractive given the recent sell-off.
As the U.S. government passed two of the most significant pieces of
public infrastructure legislation in the nation's history, fiscal
policy has shifted from a short-term pandemic response to a
longer-term public investment model. This represents a significant
opportunity for infrastructure. Finally, the search for energy
security given the distribution in the global energy supply from
geopolitics conflicts, has driven demand for both traditional and
alternatives energy sources, creating a dynamic, multi-year
opportunity for global core transport.
Near term global real assets outlook
See graphs in the half year report, available on the Company's
website; www.jpmrealassets.co.uk.
Performance Review
In the first six months of this financial year, the Company's
NAV return, in GBP, was -4.6%. This return is inclusive of two 1.05
pence per share dividends. The annualised yield based on the NAV at
31st August 2023 is 4.4% and 4.2% based on initial issue price.
During the same six-month period, the underlying asset
performance in local currency was +0.7%. Infrastructure,
transportation and real estate debt provided a positive
contribution, while U.S. private real estate equity was the primary
detractor. A significant driver of the negative return in GBP terms
was the impact of currency movements on the portfolio as Sterling
generally strengthened. This was most noticeable against the US
Dollar (the key currency pair), as Sterling strengthened from 1.21
to 1.27 over the six-month period. To help reduce some of this
currency related volatility, the Company initiated a partial
currency hedge in July, which is discussed further below.
Return attribution (1st March 2023 to 31st August 2023)
U.S. Real Estate -0.9%
Asia Pacific Real Estate -0.2%
Global Infrastructure 0.6%
Global Transportation 0.9%
U.S. Real Estate Mezzanine
Debt 0.3%
Listed Real Assets -0.1%
Total Local Return 0.7%
Currency Impact -5.1%
Company Level Costs -0.2%
Total -4.6%
Source: J.P. Morgan Asset Management. Data as of 31st August
2023. Numbers may not sum due to rounding. Currency impact also
includes return earned from cash holdings over the year. Table
shows the components of return contribution made up of income and
capital. Capital contribution may be negative for reasons including
asset depreciation, asset write downs or public mark-to-market.
U.S. private real estate contributed -0.9% to the portfolio in
local currency returns. This was primarily driven by the higher
interest rate environment which impacted borrowing costs causing
buyers to increase underwriting requirements significantly and
reduce transaction activity. Further friction was created in the
office market, which continued to be challenged as work from home
headwinds weigh on the sector resulting in reduced demand.
JARA's global exposure and diversification across both equity
and debt in real estate offered some buffer to this U.S. volatility
as Asia-Pacific real estate produced a -0.2% local currency
performance contribution and U.S. real estate debt was positive in
local currency terms, contributing +0.3%. Looking forward,
sustained economic growth and a peaking of interest rates will be
important for real estate markets. Most fundamentals continue be
resilient - an example of this was that at mid-year, the U.S.
private real estate strategy is on track to deliver 11% net
operating income growth, which is currently over 100 basis points
ahead of budget for the year and higher than the growth generated
in 2022.
Core infrastructure and transportation markets performed
resiliently, providing positive contributions of +0.6% and +0.9%
respectively on a local currency basis. As economies have slowed,
the demand-insensitive nature of many of these assets and the
inflation-linked nature of some cashflows have been supportive to
performance. This collective allocation across both private
infrastructure and transportation has now reached 38.4% (45.0%
including public markets). This increased over the reporting period
- both as a result of relative outperformance but also as a result
of asset allocation decisions discussed in the next section.
During the period, capital deployment within infrastructure and
transportation was primarily focused on incremental or smaller
'bolt-on' investments to existing assets. We typically call these
'platform' investments as they allow for a diversified platform to
be created over time. A key benefit of this is that building large,
diversified platforms allows for efficient capital deployment and
growth which will deliver increasing shareholder value over time.
Investments over the period included additional allocations across
areas such as railcar leasing, utilities, renewable energy, and dry
bulk carriers.
Finally, the Company's listed real asset allocation was a small
negative contributor of -0.1% on a local currency basis. This was
driven by volatility at the end of the period, as a particularly
negative performance in the REIT sector offset gains made earlier
in the period. As a reminder, our listed real asset allocation is
made up of two distinct strategies: U.S. all-tranche REITs and a
broader allocation across a variety of other listed real assets.
The benefit of having an allocation to listed real assets within
the portfolio is both as a source of liquidity - giving more
flexibility around asset allocation - and as a further diversifier
in returns and sectoral exposure.
Portfolio Valuations
The portfolio management team has reviewed historical
transactional data in relation to the appraisal (carrying) NAVs for
JARA's investments in private real assets. In analysing recently
closed transactions across US real estate, APAC real estate, and
global infrastructure, exit valuations were largely in line with
the appraisal values at that time. This is an indication of the
rigor of the valuation process which is undertaken for each of
these portfolios and underlying assets. It's important to highlight
that this has occurred during a period of market uncertainty, most
notably in the real estate sector. Four out of the seven exits
occurred at valuations which were up to 10% higher than their
carrying NAV which is a reflection of prudent valuations. On
average, these seven deals observed an approximate +2% increase on
their appraisal value, which affirms the quality and resilience of
JARA's NAV.
JARA's NAV has shown resilience
Each of JARA's underlying private sub-funds produces a valuation
on a quarterly basis which is independently validated by a
third-party appraisal firm on a regular basis and no less than once
a year.
See data chart in the half year report, available on the
Company's website; www.jpmrealassets.co.uk.
Portfolio Rebalancing
At the beginning of the period, the portfolio management team
viewed that JARA's overweight exposure to private real estate
equity, in comparison to its strategic allocation, coupled with its
negative outlook relative to other alternatives, warranted
rebalancing.
Consequently, we initiated a rebalancing process in the first
and second quarters of 2023 and received partial payouts from both
the U.S. Core real estate and APAC Core real estate strategies,
amounting to US$5.2 million as of 31st August 2023. This meant JARA
ended the period with real estate equity exposure of 43%, reduced
from 46% at the start of the financial year. The portfolio
management team will continue to monitor the market and make
further adjustments as needed.
Hedging Update
The Company announced at the end of June an update to its
hedging strategy. As of 3rd July 2023, JARA has been invested in
the hedged vehicle of its private Infrastructure allocation. The
reallocation of the existing unhedged investment in private
infrastructure to the hedged vehicle is intended to reduce the
currency-related volatility in returns from the private
infrastructure allocation. As a result of the change, based on
portfolio weightings as of 31st August 2023, the Company has 20% of
its NAV exposed to GBP, with reduced exposure to EUR of 2% and to
USD of 58%. The Company will continue to consider additional
actions to reduce currency-related NAV volatility as
appropriate.
See charts in the half year report, available on the Company's
website; www.jpmrealassets.co.uk.
Please find below JARA's detailed breakdown of sector,
geographic, and currency exposure as of 31st August 2023.
Sector Exposure
Sector Allocation (%)
Industrial / Logistics 17%
Office 9%
Residential 10%
Retail 5%
Other Real Estate 2%
Total Real Estate (private % /
public %) 43% (37% / 6%)
Utilities 12%
Renewable Energy 5%
Liquid Bulk Storage 2%
Conventional Energy 2%
Fixed Transportation Assets 1%
Total Infrastructure (private
% / public %) 23% (19% / 4%)
Maritime 9%
Energy Logistics 6%
Aviation 2%
Rolling Stocks 3%
Other Transportation 1%
Total Transportation (private
% / public %) 22% (20% / 3%)
Real Estate Mezzanine Debt 7%
Other Real Asset Debt 2%
Other Real Assets (private % /
public %) 10% (7% / 2%)
Total Invested Portfolio 98%
Source: J P. Morgan Asset Management. Data as of 31st August
2023. Holdings, sector weights, allocations and leverage, as
applicable, are subject to change at the discretion of the
investment manager without notice. Numbers may not sum to total
invested portfolio due to rounding. Cash represents 2% of the total
portfolio.
Geographical and Currency Exposure
Region
North America 56%
Europe (Including 3% U.K.) 18%
Asia-Pacific 26%
Currency
USD 58%
CAD <1%
GBP 20%
EUR 2%
Other(1) <1%
JPY 6%
AUD 4%
Other(2) 9%
Source: J P. Morgan Asset Management. Data as of 31st August
2023. Totals may not add up to 100% due to rounding. FX exposure
differs from regional exposure due to currency hedged
investments.
(1) Includes DKK (<1%), CHF (<1%), and SEK (<1%).
(2) Includes SGD (3%), RMB (2%), NZD (2%), HKD (<1%), and KRW
(<1%).
Buyback Update
Further to the announcement made on 10th August 2023 regarding
the Board's decision to make use of the share repurchase authority
granted by shareholders at the Company's annual general meeting,
the programme's first repurchase was on 11th August 2023 and the
Company repurchased 1,400,000 shares in the quarter to 31st August
2023. The shares were repurchased at a weighted average discount of
c. 18.4%. The programme is ongoing.
JARA is unlevered at the Company level and the exposure to
listed real assets, along with the rebalancing redemption proceeds
from private strategies, provides a certain level of flexibility
for the buyback without compromising portfolio integrity. The
portfolio management team will continue to work with the Board to
ensure any future buybacks are balanced against the overall
portfolio positioning and liquidity.
Balance Sheet
JARA's private asset balance sheet remains robust. JARA
continues to have no Company level leverage whilst look through
loan-to-values at the underlying strategies have a weighted average
of 38.2%. Of this leverage, almost 80% is fixed rate and less than
10% is maturing by the end of 2024.
Further details on the balance sheet are provided in the half
year report, which is available on the Company's website;
www.jpmrealassets.co.uk.
Investment Managers
Alternatives Solutions Group Investment Committee
Security Capital Research & Management Inc. and J.P. Morgan
Alternative Asset Management Inc.
27th November 2023
INTERIM MANAGEMENT REPORT
The Company is required to make the following disclosures in its
half year report.
Principal and Emerging Risks and Uncertainties
The principal and emerging risks and uncertainties faced by the
Company fall into the following broad categories: investment
management and performance, operational, regulatory, environmental,
and global. Information on each of these areas is given in the
Company's Strategic Report within the Annual Report and Financial
Statements for the year ended 28th February 2023.
Related Parties Transactions
During the first six months of the current financial year, no
transactions with related parties have taken place which have
materially affected the financial position or the performance of
the Company during the period.
Going Concern
The Directors believe that having considered the Company's
objective, risk management policies, capital management policies
and procedures, the nature of the portfolio and expenditure
projections, the Company has adequate resources, an appropriate
financial structure and suitable management arrangements in place
to continue in operational existence for a period of at least 12
months from the date of approval of this Half Year Report. The
Directors have noted that the Company has a relatively large
portion of the portfolio (liquid real estate allocation) that is
capable of being realised fairly quickly.
The Board is aware that the Company has a continuation vote at
its 2024 Annual General Meeting. At this time, the Board considers
that the basic investment proposition of the Company is sound.
Directors' Responsibilities
The Board of Directors confirms that, to the best of its
knowledge:
(i) the condensed set of financial statements contained within
the Half Year Report has been prepared in accordance with FRS104
'Interim Financial Reporting' and gives a true and fair view of the
assets, liabilities, financial position and net return of the
Company as required by the Disclosure Guidance and Transparency
Rules ('DTR') 4.2.4R; and
(ii) the interim management report includes a fair review of the
information required by DTR 4.2.7R and 4.2.8R.
In order to provide these confirmations, and in preparing these
financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business;
and the Directors confirm that they have done so.
For and on behalf of the Board
John Scott
Chairman 27th November 2023
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
31st August 31st August 28th February
2023 2022 2023
GBP'000 GBP'000 GBP'000
---------------------------------------- ------------ ------------ --------------
(Losses)/gains on investments held
at fair value through
profit or loss (13,920) 28,896 16,763
Foreign currency (losses)/gains (105) 203 183
Investment income 5,517 5,443 10,853
Interest receivable and similar income 39 2 44
---------------------------------------- ------------ ------------ --------------
Total (loss)/return (8,469) 34,544 27,843
Management fee (981) (934) (2,231)
Other administrative expenses (344) (426) (687)
---------------------------------------- ------------ ------------ --------------
(Loss)/return before finance costs
and taxation (9,794) 33,184 24,925
Finance costs - (1) (1)
---------------------------------------- ------------ ------------ --------------
(Loss)/return before taxation (9,794) 33,183 24,924
Taxation (749) (535) (1,094)
---------------------------------------- ------------ ------------ --------------
Net (loss)/return (10,543) 32,648 23,830
---------------------------------------- ------------ ------------ --------------
(Loss)/return per share (note 3) (4.81)p 15.01p 10.91p
---------------------------------------- ------------ ------------ --------------
CONDENSED STATEMENT OF CHANGES IN EQUITY
Share Retained
premium earnings Total
GBP'000 GBP'000 GBP'000
----------------------------------------- --------- ---------- ----------
Six months ended 31st August 2023
(Unaudited)
At 28th February 2023 219,278 4,450 223,728
Repurchase of shares into Treasury - (1,096) (1,096)
Net loss for the period - (10,543) (10,543)
Dividends paid in the period (note
4) - (4,608) (4,608)
----------------------------------------- --------- ---------- ----------
At 31st August 2023 219,278 (11,797) 207,481
----------------------------------------- --------- ---------- ----------
Six months ended 31st August 2022
(Unaudited)
At 28th February 2022 217,123 (10,534) 206,589
Issue of ordinary shares 2,155 - 2,155
Net return for the period - 32,648 32,648
Dividends paid in the period (note
4) - (4,348) (4,348)
----------------------------------------- --------- ---------- ----------
At 31st August 2022 219,278 17,766 237,044
----------------------------------------- --------- ---------- ----------
Year ended 28th February 2023 (Audited)
At 28th February 2022 217,123 (10,534) 206,589
Issue of ordinary shares 2,155 - 2,155
Net return for the year - 23,830 23,830
Dividends paid in the year (note 4) - (8,846) (8,846)
----------------------------------------- --------- ---------- ----------
At 28th February 2023 219,278 4,450 223,728
----------------------------------------- --------- ---------- ----------
CONDENSED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
At 31st August At 31st August At 28th February
2023 2022 2023
GBP'000 GBP'000 GBP'000
---------------------------------------- --------------- --------------- -----------------
Assets
Non current assets
Investments held at fair value through
profit or loss 202,997 232,492 219,960
---------------------------------------- --------------- --------------- -----------------
Current assets
Other receivables 1,060 459 990
Cash and cash equivalents 4,056 4,573 3,541
---------------------------------------- --------------- --------------- -----------------
5,116 5,032 4,531
Liabilities
Current liabilities
Other payables (632) (480) (763)
---------------------------------------- --------------- --------------- -----------------
Net current assets 4,484 4,552 3,768
---------------------------------------- --------------- --------------- -----------------
Total assets less current liabilities 207,481 237,044 223,728
---------------------------------------- --------------- --------------- -----------------
Net assets 207,481 237,044 223,728
---------------------------------------- --------------- --------------- -----------------
Amounts attributable to shareholders
Share premium 219,278 219,278 219,278
Retained earnings (11,797) 17,766 4,450
---------------------------------------- --------------- --------------- -----------------
Total shareholders' funds 207,481 237,044 223,728
---------------------------------------- --------------- --------------- -----------------
Net asset value per share (note 5) 95.2p 108.0p 102.0p
---------------------------------------- --------------- --------------- -----------------
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
31st August 31st August 28th February
2023 2022 2023
GBP'000 GBP'000 GBP'000
-------------------------------------------- ------------ ------------ --------------
Operating activities
Loss/(return) before taxation (9,794) 33,183 24,924
Deduct dividends received (5,465) (5,407) (10,770)
Deduct investment income - interest (52) (36) (83)
Deduct deposit and liquidity fund interest
received (39) (2) (44)
Less interest expense - (1) (1)
Add indirect management fee 603 497 1,265
Add performance fee 7 - 128
Add losses/(deduct gains) on investments
held at fair value
through profit or loss 13,920 (28,896) (16,763)
Decrease in prepayments and accrued
income 16 25 6
Increase in other payables 8 90 255
Add exchange losses/(deduct exchange
gains) on cash and
cash equivalents 13 (71) (6)
Taxation (755) (541) (1,101)
-------------------------------------------- ------------ ------------ --------------
Net cash outflow from operating activities
before interest
and taxation (1,538) (1,159) (2,190)
Dividends received 5,410 6,004 10,856
Investment income - interest 54 38 80
Deposit and liquidity fund interest
received 39 2 44
Interest expense - 1 1
Purchases of investments held at fair
value through profit or loss (7,622) (31,021) (21,148)
Sales of investments held at fair value
through profit or loss 9,811 31,655 21,408
-------------------------------------------- ------------ ------------ --------------
Net cash inflow from operating activities 6,154 5,520 9,051
-------------------------------------------- ------------ ------------ --------------
Financing activities
Issue of ordinary shares - 2,155 2,155
Repurchase of shares into treasury (1,018) - -
Dividends paid (4,608) (4,348) (8,846)
-------------------------------------------- ------------ ------------ --------------
Net cash outflow from financing activities (5,626) (2,193) (6,691)
-------------------------------------------- ------------ ------------ --------------
Increase in cash and cash equivalents 528 3,327 2,360
Cash and cash equivalents at the start
of the period/year 3,541 1,175 1,175
Exchange movements (13) 71 6
-------------------------------------------- ------------ ------------ --------------
Cash and cash equivalents at the end
of the period/year(1) 4,056 4,573 3,541
-------------------------------------------- ------------ ------------ --------------
1 Cash and cash equivalents includes liquidity funds.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 31st August 2023.
1. General information
The Company is a closed-ended investment company incorporated in
accordance with the Companies (Guernsey) Law, 2008. The address of
its registered office is Level 3, Mill Court, La Charroterie, St
Peter Port, Guernsey GY1 1EJ.
The principal activity of the Company is investing in securities
as set out in the Company's Objective and Investment Policy.
The Company was incorporated on 22nd February 2019. It was
admitted to the premium listing category of the Official List of
the Financial Conduct Authority and to trading on the Main Market
and had its first day of trading on 24th September 2019.
The information contained within the condensed financial
statements in this half year report has not been audited or
reviewed by the Company's auditor.
Investment objective
The Company will seek to provide shareholders with stable income
and capital appreciation from exposure to a globally diversified
portfolio of core real assets.
Investment policy
The Company will pursue its investment objective through
diversified investment in private funds or accounts managed or
advised by entities within J.P. Morgan Asset Management (together
referred to as 'JPMAM'), the asset management business of JPMorgan
Chase & Co. These JPMAM Products will comprise 'Private Funds',
being private collective investment vehicles, and 'Managed
Accounts', which will typically take the form of a custody account
the assets in which are managed by a discretionary manager.
2. Accounting policies
The Company's financial statements have been prepared in
accordance with International Financial Reporting Standards
('IFRS'), which comprise standards and interpretations approved by
the International Accounting Standards Board ('IASB'), the IFRS
Interpretations Committee and interpretations approved by the
International Accounting Standards Committee ('IASC') that remain
in effect and the Companies (Guernsey) Law, 2008.
These financial statements have been prepared on a going concern
basis in accordance with IAS 1, applying the historical cost
convention, except for the measurement of financial assets
including derivative financial instruments designated as held at
fair value through profit or loss ('FVTPL') that have been measured
at fair value.
All of the Company's operations are of a continuing nature.
The accounting policies applied to this condensed set of
financial statements are consistent with those applied in the
financial statements for the year ended 28th February 2023.
3. Loss/(return) per share
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
31st August 31st August 28th February
2023 2022 2023
GBP'000 GBP'000 GBP'000
----------------------------------- ------------ ------------ --------------
Total (loss)/return (10,543) 32,648 23,830
Weighted average number of shares
in issue during
the period/year 219,309,718 217,570,995 218,481,925
----------------------------------- ------------ ------------ --------------
Total (loss)/return per share (4.81)p 15.01p 10.91p
----------------------------------- ------------ ------------ --------------
4. Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
31st August 31st August 28th February
2023 2022 2023
GBP'000 GBP'000 GBP'000
----------------------------------- ------------ ------------ --------------
2023/2024 First interim dividend
of 1.05p
(2022/2023: 1.00p) per share 2,304 2,174 2,174
2023/2024 Second interim dividend
of 1.05p
(2022/2023: 1.00p) per share 2,304 2,174 2,174
2022/2023 Third interim dividend
of 1.00p - - 2,194
2022/2023 Fourth interim dividend
of 1.05p - - 2,304
----------------------------------- ------------ ------------ --------------
Total dividends paid in the
period 4,608 4,348 8,846
----------------------------------- ------------ ------------ --------------
A third interim dividend of 1.05p per share, amounting to
GBP2,242,000 has been declared payable on 29th November 2023 in
respect of the year ending 29th February 2024.
5. Net asset value per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st August 31st August 28th February
2023 2022 2023
Net assets (GBP'000) 207,481 237,044 223,728
Number of shares in issue 218,007,952 219,407,952 219,407,952
--------------------------- ----------------- ----------------- --------------
Net asset value per share 95.2p 108.0p 102.0p
--------------------------- ----------------- ----------------- --------------
JPMORGAN FUNDS LIMITED
28th November 2023
For further information:
Emma Lamb,
JPMorgan Funds Limited
0800 20 40 20 or +44 1268 44 44 70
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the Company's website
(or any other website) is incorporated into, or forms part of, this
announcement.
ENDS
A copy of the Half Year Report will shortly be submitted to the
FCA's National Storage Mechanism and will be available for
inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism . It will
also shortly be available on the Company's website at
www.jpmrealassets.co.uk where up-to-date information on the
Company, including the NAV and share prices, factsheets and
portfolio information can also be found.
aru
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