November 18, 2003
JAPAN REAL ESTATE INVESTMENT CORPORATIONANNOUNCEMENT OF FOURTH FISCAL PERIOD RESULTS
1. Summary of Financial Results
On November 18, 2003, Japan Real Estate Investment Corporation (“JRE,” TSE: 8952)
announced the financial results of its fourth fiscal period, ended September 30, 2003.
For the fourth fiscal period, JRE reported gross revenues of 8,965 million yen(up 5.5 percent from the preceding period) and operating profits of 3,898 million yen(up 5.7 percent). Net income before income taxes was 3,408 million yen (up 4.6
percent) and net income was 3,407 million yen (up 4.6 percent), which produced adividend of 15,117 yen per unit for the period.
As of September 30, 2003, JRE’s total asset balance was 209,581 million yen
and its net worth was 115,559 million yen, or 512,688 yen per unit. On its balance sheet,
JRE bore interest-bearing debt of 76,000 million yen.

2. Results of Operations for the Period(1) Property Management and Acquisition
Improving performances for Japanese companies and signs of brighter prospects forbusiness investment and the stock market indicate that the Japanese economy has
emerged from the worst period of the downturn. Reasons for concern, including U.S.
economic trends and foreign exchange rates, persist, however, and the issue of whether
the economy is headed for a genuine recovery remains unclear.
In the market for leased office space, a large amount of new office floor space
was added in the Tokyo central business district during 2003, and apprehensions wereraised concerning the softening of the office market due to the impact of the so-called
Year 2003 Problem.
Although JRE experienced almost no adverse impact from the Year 2003
Problem, tenant requests for rent reductions increased and demands to reduce officefloor space were unabated while office rents decreased as a result of persistent deflationin the Japanese economy.
Nonetheless JRE secured an occupancy rate of 95.1 percent at the end of theperiod by 1) maintaining property-related competitive strength through cost-effective
remodeling as well as the high grade of its acquired properties, 2) developing finely
tuned and tenant-centric building management policies and undertaking vigorous sales
1activities, and 3) shifting a certain portion of its leasing contracts toward fixed and/or
long-term leases.
In addition, JRE is working on cost reduction with a view to further enhancing
profit stability. In line with its basic policy of reducing property management fees andutilities expenses by 5 percent within the first three years of new property acquisitions,based on the third and fourth periods, JRE has already reduced these costs by 6.7
percent per year on 26 of the 30 properties acquired by the third period which are
subject to cost reductions.
Regarding property acquisitions, the introduction of bad loan write-offs,
corporate restructuring and impairment accounting sustained active property sales
because low occupancy rates make certain properties liabilities for companies andindividuals, particularly those that do not specialize in building management. After
careful examination of many sales offers, JRE determined prices from a comprehensive
viewpoint, including profit stability and expected return on investments for the entire
company, and acquired the Yurakucho Denki Building (7,200 million yen for a 10.78
percent ownership share) and the Nagoya Misono Building (1,865 million yen). As aresult of these transactions, JRE’s assets as of September 30, 2003, consisted of 32
office buildings, representing acquisitions with a total value of 192,607 million yen,
total leasable floor space of 246,062 sq. meters (approximately 74,000 tsubo), and a
total occupancy of 384 tenants.
In addition to these 32 properties, in September 2003, JRE announced
decisions to acquire two buildings: Jingumae Media Square Building (12,200 million
yen; acquisition completed on October 9, 2003) and Yoyogi 1-chome Building[tentative name] (8,700 million yen; acquisition to be completed on April 1, 2004).
(2) Capital Procurement
On April 30, 2003, JRE issued its second and third series of ¥10,000 million corporate
bonds (five- year and seven-year bonds respectively). This capital procurement wasundertaken to convert short-term floating-rate loans to long-term, fixed-interest bonds toaddress the risk of interest rates rising in the future and the risk of future re-financing
through the issuing of bonds of different maturities. JRE’s issuer credit ratings and thecredit ratings held by these corporate bonds are as follows.

2Issuer credit rating
Rating Agency
Standard & Poor’s
Moody’s Investors Service

Issuer Credit Rating
Long-term: A+; Short-term: A-1; Outlook: Stable
Rating: A2; Outlook: Stable

Credit Ratings of Corporate Bonds Issued on April 30, 2003
Rating Agency
Credit RatingStandard & Poor’s
A+
Moody’s Investors Service A2
The issue of these two corporate bonds (¥20 billion) was used to repay short-term loansof ¥15.8 billion with a due date of June 23, 2003. In addition, JRE undertook short-termborrowings of ¥5 billion to be allotted as new capital for the Yurakucho Denki Building.
As of September 30, 2003, JRE had total borrowings of ¥31 billion, of which¥24 billion was in long-term loans, and outstanding issues of corporate bonds which
totaled ¥45 billion.
3. Outlook for the Next Period(1) General Operational Outlook① Property Management for the Next Period
Although the office building rental market will remain soft, JRE will maintain andimprove revenues by following the management policies set forth below. As averagerents continue to spiral downward and tenant needs grow more sophisticated anddiverse, the trend toward higher-grade office specifications at low rents will intensify.
In this climate, tenants will become more rigorous in selecting office buildings.
Providing added value through service attuned to tenant needs as well as throughdifferentiation from competitor buildings will become even more critical.
i. Ensure tenant satisfaction
As of September 30, 2003, JRE had contracts with eight property managementcompanies. Most of these firms were already managing their respective buildings before
acquisition, and have long-established relationships with tenants. Further strengtheningof these relationships will allow JRE to anticipate tenant needs, heightening tenantsatisfaction and reducing turnover.
ii. Fill vacancies promptly
To fill any vacancies in buildings (including the Ericsson Shin- Yokohama Building,3which was cancelled by Japan Ericsson as of October 31, 2003), in cooperation withthese property management companies, JRE is seeking the best candidates for its
properties in consideration of their location and other characteristics and is working tofill vacancies as fast as possible. JRE is also working to uncover latent demand for
expansion of floor space among JRE’s existing tenants.
iii. Shift to fixed and long-term leased contracts
To ensure future revenues, JRE is shifting to fixed lease contracts and long-term lease
contracts.
iv. Management cost reductions
Regarding management costs, JRE promotes healthy competition among the eightproperty management companies it employs, encouraging them to improve their
management structures and review costs. JRE’s target is to achieve a 5 percent reductionin property management fees and utility expenses for all properties within three years of
their acquisition. In 26 of JRE’s total of 30 office buildings that come under this cost
reduction program, results from the third and fourth fiscal periods show that JRE has
achieved reductions of 6.7 percent.
② Property Acquisition for the Next Period
JRE has adopted the following policies to guide its acquisition of properties to imp roveboth profitability and stability of revenues. In the real estate market, property
liquidations made in light of bad loan write-offs and the introduction of impairment
accounting are expected to increase in the current deflationary environment because
many properties will become liabilities for owners who are do not specialize in property
management. Thus, this environment will continue to present JRE with opportunities forthe selection of superior properties.
i. Development of information channels
Because the early acquisition of information is vital, JRE is strengthening its existing
real estate information channels, and is developing new channels through which toobtain information on available properties.
ii. Due diligence of properties for acquisition
JRE will conduct its acquisitions with due diligence, meticulously examining the
economic factors, physical condition, and legal status of potential acquisitions. Through4this heightened attentio n to the utility of potential acquisitions, JRE will ensure
selectivity in its investments. JRE targets the acquisition of buildings that meet or
exceed new earthquake-resistance standards and buildings with high- grade facilities thatwill remain competitive over the medium to long term.
iii. Consideration of geographic distribution
The general target for regional diversity of property ownership, in accordance with
JRE’s property-acquisition policies, is for 60 to 80 percent to be located in the Tokyo
metropolitan area, with the remainder located in other regional urban centers. Future
trends in office demand may cause JRE to diverge from the above ratio and increase theproportion of its holdings in the Tokyo metropolitan area.
(Note) On September 12, 2003, the target regional share for the Tokyo metropolitan area was changed
from 60 to 70 percent to 60 to 80 percent, and the target share for other regional urban centers waschanged from 30 to 40 percent to 20 to 40 percent.

The timing of property acquisition cannot be ascertained in advance. Therefore, JRE’s
policy is to fund property acquisitions with short-term loans, then to refinance utilizing
various funding methods, including corporate bonds, taking into account trends infinancial markets at the time. When effecting such loans, JRE’s policy is to minimize
funding costs by negotiating with several qualified institutional investors before settling
on a lender.
(2) Performance Forecasts①Future Estimates
In JRE’s fifth six- month period (ending March 31, 2004), operating revenue is forecast
on conservative assumptions at 9,400 million yen, income before income taxes at 3,700
million yen, and net income at 3,700 million yen. JRE also expects to pay dividends of
14,200 yen per unit. Actual figures for operating revenue, income before income taxes,
net income and dividends may vary due to changes in these operating conditions. Thisestimate is based on the 34 properties, the 32 owned as of the end of the period and the
Jingumae and Ebisu acquisitions described below.
The forecasts for the six- month period ending September 30, 2004, are for
operating revenue of 9,300 million yen, income before income taxes of 3,600 million
yen, and net income of 3,600 million yen. Dividends for the same period are forecast at5

14,000 yen per unit. This estimate is based on the 34 properties noted above and the
Yoyogi acquisition described below.
②Property Acquisitions
JRE has acquired or agreed to acquire three additional properties. Details on theseproperties are as follows.
i. Jingumae Media Square Building[Transaction Summary]Type of Ownership:
Land: Fee Simple, Building: Fee Simple
Acquisition price:
12,200 million yen
Acquisition date:
October 9, 2003
[Property Summary]
Location:
6-25-14 Jingu- mae, Shibuya-ku, Tokyo
Application:
Offices and shops
Area:<Land>: 2,261.88m2 , and <Building>: 9,420.42m2
Structure:
Two floors below ground, nine above
Building completed:
March 1998
Tenants:
7
Net rentable area:
5,558m2
Net rented area:
5,074 m2
Occupancy rate:
91.3%(Note) The figures for tenants, net rentable area, net rented area, and occupancy rate arefor the date of acquisition and are based on data provided by the seller.
ii. Ebisu Neonato Building[Transaction Summary]Type of Ownership:
Acquisition price:
Acquisition date:[Property Summary]
Location:
Application:
Area:
Structure:
Built in:

Land: Co-ownership, Building: Unit-ownership
3,740 million yen
November 14, 2003
4-1-18 Ebisu, Shibuya-ku, Tokyo
Offices<Land>: 5,005.70m2 , and <Building>: 36,598.38m2
Two floors below ground, eighteen above
October 1994
6

Tenants:2
Net rentable area:
2,225m2
Net rented area:
1,599 m2
Occupancy rate:
71.9%(Note) The figures for tenants, net rentable area, net rented area, and occupancy rate arefor the date of acquisition and are based on data provided by the seller. Rental
contracts for all floor space were completed on the day of the acquisition, andthe occupancy rate as of December 1, 2003 was anticipated to be 100 percent.
iii. Yoyogi 1-chome Building (tentative name)[Transaction Summary]Type of Ownership:
Land: Fee Simple, Building: Fee Simple
Acquisition price:
8,700 million yen
Acquisition date:
April 1, 2004 (tenant interior work completed athandover)[Property Summary]
Location:
1-22-1 Yoyogi, Shibuya-ku, Tokyo
Application:
OfficesArea:<Land>: 1,793.03m2 , and <Building>: 11,234.29m2
Structure:
One floor below ground, fourteen above
Built in:
October 2003
Tenants:
1
Net rentable area:
To be determined by date of acquisition.
Net rented area:
To be determined by date of acquisition.
Occupancy rate:
100.0%(Note) The figures for tenants and occupancy rate are for the date of acquisition (April 1,
2004) and are based on data provided by the seller. Net rentable area and net
rented area will be determined by the date acquisition.
To finance the acquisition of the Jingumae Media Square Building on October 9, 2003,
JRE undertook short-term borrowings of 12,000 million yen (to be repaid by November
28, 2003) on the same date.

7

③Issue of New Units
On October 1, 2003, JRE made an additional public offering of 35,000 units to raise
funds for new acquisitions and to repay short-term loans. This generated approximately
21.3 billion yen on October 25, 2003. (Date of unit transfer: October 27, 2003). The
detail information is as follows:
1. New investment units:(1) Number of: 35,000
investment units(2) Subscription Price: ¥629,000 per unit
(3) Gross proceeds: ¥22,015,000,000(4) Lead Underwriter: Nikko Citigroup Limited(5) Due date of payment: Friday, October 24, 2003
(6) Date of unit transfer: Monday, October 27, 2003
(7) Starting date for: Wednesday, October 1, 2003
calculating distribution(8) No public offer was made in any place other than in Japan.
2.

Change in outstanding units (Paid-in capital):
May 11, 2001
Private Placement
September 8, 2001
Additional unit issue (IPO)
May 8, 2002
Additional unit issue
October 25, 2003
Additional unit issue
Total outstanding units after the new issue

400 units
160,000 units
65,000 units
35,000 units
260,400 units

Contact Information:
Japan Real Estate Asset Management Co., Ltd.
Planning Department
Takuro Yamanaka+813-3211-7921

8(¥200 million)(¥81,060 million)(¥30,892 million)(¥21,295 million)(¥133,448 million)

JAPAN REAL ESTATE INVESTMENT CORPORATIONSTATEMENT OF INCOME AND RETAINED EARNINGSFor the Period from April 1, 2003 to September 30, 2003
(In millions of yen)

4th Period （183 days）
Item

Operating Revenues
Rental revenues
Other rental revenues
Operating Expenses
Property management fees
Utility charges
Property and other taxes
Insurance expenses
Maintenance expenses
Other operating expenses
NOI
Depreciation and amortization
Operating Profits
Administrative expenses
Asset management fees
Other administrative expenses
Net Operating Profits
Non-Operating Revenues
Interest received
Other non-operating revenues
Non-Operating Expenses
Interest expenses
Bond interest expenses
Deferred bond-issuance costs
Other non-operating expenses
Recurring Profits
Gross Income
Taxes
Net Income
Retained Earnings

Existing 30
properties

Newly acquired
properties*

8,828
8,814
14
2,983
1,074
769
797
22
287
32
5,846
1,376
4,470

137
137
−

3rd Period
Total（182 days）

8,965
8,951
14
3,015
1,095
777
797
22
289
32
5,950
1,393
4,556
658
393
264
3,898
4
0
4
494
177
236
61
18
3,408
3,408
1
3,407
3,407

8,500
8,449
51
2,798
1,076
711
626
21
323
39
5,702
1,310
4,391
703
432
270
3,687
1
0
1
429
175
164
70
19
3,259
3,259
1
3,258
3,258

FFO (Net Income＋Depreciation ）

4,801

4,568

Dividend per unit

15,117

14,455

32
21
8
0
0
2
0
104
17
86

*Newly acquired properties are “Yurakucho Denki Building”, and “Nagoya Misono Building”.

9

Change% Change

465

5.5%

217

7.8%

248

4.3%

165
△ 45

3.8%
△ 6.4%

211
3

5.7%

65

15.2%

149
149

4.6%
4.6%

149

4.6%

233

5.1%

JAPAN REAL ESTATE INVESTMENT CORPORATIONBALANCE SHEETAs of September 30, 2003
(In millions of yen)

ASSETSItem

4th Fiscal End

3th Fiscal End（Sep 30, 03）（
Mar 31, 03）

ChangeCurrent Assets
Cash and entrusted cash

15,37715,459△ 82

Other current assets

1,031

196

835

16,40915,656753

Property and equipment
Buildings
Structures
Machinery and equipment
Land
Accumulated depreciation

60,112326
1,204
135,687△ 4,998

57,693315
1,161
128,013△ 3,604

2,419
11
43
7,674
△ 1,394

Total Property and Equipment

192,332

183,5788,754

Intangible Assets
Lease hold rights

726

726

0

Total Intangible Assets

726

726

0

52

61

△9

52

61

△9

193,111

184,366

8,745

61

−

61

61

−

61

209,581200,022

9,559

Total Current Assets
Fixed Assets

Investments and Others
Long-term prepaid expenses, etc.
Total Investments and Others
Total Fixed Assets
Deferred Assets
Bond issuance costs
Total Deferred Assets
Total Assets

10

JAPAN REAL ESTATE INVESTMENT CORPORATIONBALANCE SHEETAs of September 30, 2003
(In millions of yen)

LIABILITIES

Item

4th Fiscal End

3th Fiscal End（Sep 30, 03）（
Mar 31, 03）

ChangeLiabilities
Current Liabilities
Short-term borrowings

7,000

17,800△ 10,800

Rent received in advance

1,444

1,335

109

Other current liabilities

1,207

1,340

△ 133

9,652

20,476△ 10,824

45,00024,00015,36984,36925,00024,00015,13564,13520,0000234
20,234

94,021

84,611

9,410

Unitholders' capital

112,152

112,1520Retained earnings

3,407

3,258

149

Total Unitholders' Equity

115,559

115,410149

Total Liabilities and Unitholders' Equity

209,581200,022

9,559

Total Current Liabilities
Long-term Liabilities
Investment Corporation Bonds
Long-term borrowings
Deposits from tenants
Total Long-term Liabilities
Total Liabilities

Unitholders' Equity

11

JAPAN REAL ESTATE INVESTMENT CORPORATIONPORTFOLIO SUMMARY
As of September 30, 2003

Appraisal
Area

Name

Value*1（Sep 30, 03）

Acquisition
Price *1（*1 in millions of yen）
Net Rentable Occupancy
Rate
Year Built Areas （m2）
（Sep., 2003） （Sep., 2003）

Genki Medical Plaza

5,400

5,000

1985

4,791

100.0%MD Kanda Building

9,670

9,520

1998

6,269

100.0%

Kandabashi Park Building

4,860

4,810

1993

3,687

100.0%

Mitsubishi Soken Building

28,00027,2671970

18,006100.0%

Kodenmacho Shin-Nihonbashi Building

3,200

3,173

1991

3,897

100.0%

Burex Kyobashi Building

5,010

5,250

2002

4,279

100.0%

Aoyama Crystal Building

7,430

7,680

1982

4,916

100.0%

Shiba 2-chome Daimon Building

4,920

4,859

1984

9,622

93.2%

Cosmo Kanasugibashi Building

2,800

2,808

1992

4,062

100.0%

Takanawadai Building

2,810

2,738

1991

4,091

100.0%JAL Travel Building

1,570

1,362

1991

3,383

100.0%

Omori-Eki Higashiguchi Building

5,010

5,123

1989

7,708

99.4%

da Vinci Harajuku

4,970

4,885

1987

3,051

100.0%

Shibuya Cross Tower

33,80034,6001976

29,808

94.9%

Otsuka Higashi-Ikebukuro Building

3,480

3,541

1987

7,114

96.0%

Ikebukuro 2-chome Building

1,540

1,728

1990

2,186

100.0%

23 WardsTokyo
Metropolitan
Area

Saitama Urawa Building

2,490

2,574

1990

4,510

91.1%

Excluding
Ericsson Shin-Yokohama Building
23 Wards

2,230

3,000

1992

6,964

100.0%

Kawasaki Isago Building

3,160

3,375

1990

6,831

100.0%

Sendai Honcho Honma Building

2,990

2,924

1991

5,829

100.0%

821

1,010

1984

4,383

83.5%

5,330

4,580

1991

21,036

89.2%

Kanazawa Minamicho Building

1,120

1,331

1987

3,782

78.0%

Nagoya Hirokoji Building

14,90014,533

1987

21,59097.3%

Kyoto Shijo Kawaramachi Building

2,250

2,650

1982

6,800

89.4%

Fukusuke Sakaisujihonmachi Building

2,360

2,264

1992

5,337

91.6%

Midosuji Daiwa Building

14,30014,314

1991

20,44991.4%

Kobe Itomachi Building

1,100

1,436

1989

3,478

89.9%

Tosei Tenjin Building

1,420

1,550

1992

4,080

78.5%

Hinode Tenjin Building

3,690

3,657

1987

5,944

88.6%

Yurakucho Denki Building

6,830

7,200

1975

4,694

100.0%

Nagoya Misono Building

1,810

1,865

1991

3,470

100.0%

191,271

192,607

246,062

95.1%

Niigata Ishizuecho Nishi-Bandaibashi Building

Kanazawa Park Building

Other Major Cities

Properties Acquiredin the 4th Period

*2

Total
*2

Additional portion was acquired in the 3rd period.

12