This closed-ended investment company came to AIM in January with the mission of building a portfolio of investments in a peculiarly Japanese property and leisure asset – the ‘love hotel’.

In overcrowded and decorous Japan, where parents routinely live with their adult children, the only opportunity for many couples to fully express their feelings is in love hotels, where rooms can be rented by the hour. This industry of between 20,000 and 30,000 hotels now makes £17bn of revenues a year and, poignantly, has remained impervious to the fluctuations of the wider Japanese economy over the past decade.

With the £20m it raised at float, JPLH has acquired six hotels, which are being refurbishing and brought under its Bonita brand. ‘We want to make them somewhere where people want to come,’ says director Steve Mansfield.

Mansfield adds that now is an ‘excellent time to invest’ as many highly indebted owners are feeling financial pressures from their lenders, including two recent bankruptcies of mid-sized property companies with 24 love hotels on their books. Distressed sales and others like these present opportunities for debt-free JPLH, were it not for its own current lack of spare funds.

‘We didn’t raise as much as we’d hoped at IPO,’ concedes Mansfield, who counted ¥609m in the bank at the half-year end and is in ‘active discussions’ with two balance sheet lenders and one securitisation arranger. ‘We’re looking at our options, and when the market’s calmed down we expect we’ll be able to do something.’

The shares are down just slightly from their 50p issue price and, although the concept undoubtedly has its appeal, we recommend steering clear for now.

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Japan Leisure Hotels	AIM	£20.73m	47.00p	0.00p
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Other company articles:
Japan Leisure Hotels			01/10/2008
New Issues Examined by Oliver Haill			07/02/2008
Newcomer - Japan Leisure Hotels			16/01/2008