Update on current market conditions

RNS Number : 6565F
Prospect Epicure J-REIT Val Fd PLC
13 October 2008

13 October 2008

Prospect Epicure J-REIT Value Fund PLC

The Board of Prospect Epicure J-REIT Value Fund PLC (the "Company") notes the extremely poor performance and high levels of volatility
of the Japanese stockmarket over the week of 6-10 October 2008. The TSE REIT index was down 22 per cent. and the Nikkei 225 index was down
21 per cent. In particular, the J-REIT sector continues to be adversely affected by the global negative market sentiment, the lack of
financing facilities available in the Japanese real estate market and negative sentiment following the announcement of the bankruptcy of the
first J-REIT, 8965 New City Residence Investment Corporation ("NCRI").

On 6 October, the Board and the Investment Manager learned that NikkoCitigroup, prime broker and debt provider to the subsidiaries of
the Company, had significantly reduced the maximum permitted gearing levels available to these subsidiaries, and immediate steps were taken
to sell down holdings in order to stay within the new limits.

On 9 October, one of the Company's smaller holdings, NCRI, declared bankruptcy by announcing a notice of petition to commence civil
rehabilitation proceedings as it was unable to refinance its short term debt. Whilst NCRI only represented 2% of the Company's gross assets,
this was the first J-REIT to announce bankruptcy since J-REITs were established in 2001 and this news added to the negative sentiment across
the J-REIT sector.

The Investment Adviser believes that there should be proceeds payable to the shareholders of NCRI following the sale of its assets and
settlement of its liabilities as the properties are of generally high quality. However the timing and quantum of any payment cannot be
determined at this stage, and there can be no guarantees that any monies will be payable to shareholders of NCRI.

The Company's unconfirmed net asset value per share ("NAV") of 16.21 pence (which equates to a net asset value of �21.236m / Yen
3.726bn) as of close of business on Thursday 9 October 2008 is significantly down on the previous NAV of Thursday 2 October of 25.67 pence
(which equated to a net asset value of �33.633m / Yen 6.347bn). The confirmed NAV announcement for 9 October is expected to be made either
later today or on 14 October. The TSE REIT index was down 22 per cent. for the week of 6-10 October, but as the Company employs a high level
of gearing in its investment strategy and invests in some of the less liquid J-REITs, the NAV is down by a significantly larger percentage
than that of the TSE REIT index. As at 10 October, the gearing level of the Company's subsidiaries was 208 per cent. (which excludes cash
balances of �5.5m held in the Isle of Man).

During the course of the week of 6-10 October, in light of the very difficult market conditions, subsidiaries of the Company have
actively liquidated certain positions in order to manage gearing levels and also to meet margin calls from its prime broker and debt
provider NikkoCitigroup.

As of close of trading on 10 October, subsidiaries of the Company have unsettled margin calls totalling Yen 873mn (c.�5.2m). The
Company's Investment Adviser is in regular dialogue with NikkoCitigroup as the current level of gearing is in excess of the revised gearing
levels set by NikkoCitigroup.

In addition to the investment portfolio of J-REITs in its subsidiaries, cash balances of �5.5m are held with the Company's custodian
Anglo Irish Bank in the Isle of Man. The Board had previously announced that a decision on the interim dividend had been deferred in the
light of turbulent credit and equity market conditions. Whilst no decisions had been taken on the quantum of any interim dividend, the �5.5m
was being retained in part, to satisfy the dividend obligation once decided. The Board feels it is now highly unlikely to pay an interim
dividend given the current difficult market conditions.

The Board wishes to advise that if stock market conditions in the J-REIT sector continue to perform poorly then this will place
significant pressure on the Company's portfolio and its ability to manage its gearing levels, and therefore its net asset value.

A further update will be provided in due course.

This information is provided by RNS
The company news service from the London Stock Exchange

END

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