Jinushi was listed in Japan in 2007 as a real estate manager with a different take on property development in the country. Jinushi pursues an opportunistic investment strategy, targeting prime real estate, especially projects that can be converted in the future.
Jinushi is a company that stresses high quality land opportunities that can support long-term business tenants, which in turn can generate longer term, stable income. It has a cumulative total of around 250 projects in Japan, which it estimates are worth over JPY 3bn, based on December 2021 prices.
Diversified range of high quality business tenants
Jinushi is paying attention to the diversification of its tenants base – e.g. supermarkets, drugstores, logistics, factories and warehouses. It is adding tenants in areas like nurseries and educational corporations. This should help to protect the portfolio against any sectoral downturns.
The projects on its books are pretty hefty, blue chip ones. They are spread across the major urban areas – e.g. four supermarkets in the Tokyo area, none under 1500 square metres, and indeed it has a 7300 square metre tenancy from the Espot Fuchinobe supermarket in Sagamihara.
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There are also some very significant sites in the home improvement space – e.g. the Super Viva Home Higashimatsuyama mall, also in the Tokyo area, which is over 41,000 square metres. Projects range across everything from golf driving ranges to sports clubs to car dealerships.
Jinushi will sell land projects to a separate REIT structure it has established – Landlord Private REIT – which is operated as an investment vehicle. This has reached over JPY 5bn in assets under management in five years of operations (it was set up in 2016).
Jinushi focuses on land ownership
Jinushi focuses on land ownership, rather than buildings. The construction and maintenance of the actual buildings lies with the tenant businesses. This means Jinushi does not need to worry about repairs or renovation. Investors are getting the raw land lease yield.
Tenant contracts are very long term, out to 20-30 years. The risk of a company moving out is very low, especially in this area of Japanese retail and logistics. At the end of the contract the property is returned to Jinushi. It is highly unlikely that the asset is going to decrease.
Given this business model it is not surprising that Jinushi has some very solid-looking financials, although it is not well known outside of Japan. The company was only established in 2000 and was originally listed on the Nagoya Stock Exchange in 2007. It moved to the Prime Market of the Tokyo Stock Exchange in April 2022 which is starting to bring it onto the radar of some international property investors.
A quick note on the financials. Jinushi posted some great results on 14 February. It continues to impress in terms of value, growth and income. The PE ratio is a mere 9.5x with a 13.15% EBITA margin. As a Japanese real estate play it is top notch and looks in much healthier shape than larger competitors like Mitsubishi Estate or AEON Mall.
The company is obviously rich in prime assets as well as reporting a +9% gain in cash and cash equivalents. Liabilities were reported down 25%. You also have some very impressive revenue efficiency here. Bridgewise ranks Jinushi a Strong Buy and rates it 92/100 for total assets.
