NEWS RELEASE
Jan 30, 2012

R&I Affirms AA, Stable: Japan Real Estate Investment Corp.
Rating and Investment Information, Inc. (R&I) has announced the following:
ISSUER:

Japan Real Estate Investment Corp.
Issuer Rating: AA, Affirmed
Rating Outlook: Stable

RATIONALE:
Japan Real Estate Investment Corp. (JRE) is a real estate investment trust (J-REIT) that was listed in
September 2001, specializing in investments in office buildings. Its sponsors are Mitsubishi Estate Co.,
Ltd., The Dai-ichi Life Insurance Co., Ltd. and Mitsui & Co., Ltd. Mitsubishi Estate is the largest sponsor
among them.
JRE has created a quality portfolio through investments in competitive large office buildings mainly
located in central Tokyo. The ratio of properties located in the central three wards of Tokyo is as high as
57.3% of the total on an acquisition value basis. Capitalizing on strong ties with sponsors and its own
network established through the past transactions, the REIT is making steady external growth. With its
asset size expanding to over 710 billion yen as of end-December 2011, JRE maintains one of thestrongest business bases in the J-REIT industry. In November 2011, JRE acquired Akasaka Park Building
for 60.8 billion yen from its sponsor Mitsubishi Estate. This building is one of the most premium properties
in the Akasaka area. Its rarity value is high, and as a result, the REIT's portfolio has been furtherbolstered.
The occupancy rate of properties held by the REIT was 94.2% at end-November 2011, up 2.2
percentage points from a year earlier, showing a recovery trend. Since contract rents are still higher thanmarket rents to some extent, downward adjustments to unit rent prices as a result of rent revisions orchanges in tenants are expected to continue. The NOI yield has declined to the mid 4-5 range. R&I willcontinue to pay close attention to trends in earnings recovery.
It seems that the current LTV (Interest-bearing debts/Total assets) has risen to the mid 40-50% range.
This is because the acquisition of Akasaka Park Building was financed through loans, instead of raising
capital through a public offering, which JRE initially considered but gave up in view of market conditions.
Nevertheless, the REIT maintains a conservative leverage management policy with the target set at the30% level. It has clarified its intention to lower the LTV to around 40% as early as possible through shelfregistration for investment units issuance (upper limit: 40.7 billion yen), among others. Given that JRE has
so far worked to manage its debt ratio by means of capital increases through six public offerings, thepossibility of its debt-equity structure deteriorating seriously is limited. Although the term-end appraisal
value is falling, the pace of decline is moderating. It still exceeds the book value by 1.9% as of endSeptember 2011.
JRE's loans are mostly long-term fixed-rate loans with an average remaining term to maturity of 3.63
years as of end-September 2011. The loans are all unsecured and unguaranteed with repayment dates
staggered appropriately. JRE maintains good relationships with domestic financial institutions, mainly
mega banks and trust banks, as evidenced by the fact that it borrows on relatively favorable terms fromthem. It also ensures sufficient liquidity with a committed line of credit totaling 43 billion yen (all unused asof January 2012).
The Rating Outlook is Stable. Although the weak office market is a cause of concern, its impact on
cash flows is expected to be alleviated by, for example, the strong competitiveness of the REIT's
properties, well-diversified portfolio and its asset manager and sponsors' high investment capabilities.
Moreover, its conservative leverage management policy and strong financing ability will likely underpin thecurrent high rating.

■Contact: Investors Service Division
TEL.+81-(0)3-3276-3511■Media Contact : Corporate Planning Division (Public Relations) TEL.+81-(0)3-3276-3438

Rating and Investment Information, Inc.

E-mail. infodept@r-i.co.jp

Nihonbashi 1-chome Bldg., 1-4-1, Nihonbashi, Chuo-ku, Tokyo 103-0027, Japan

http://www.r-i.co.jp

Credit ratings are R&I's opinions on an issuer's general capacity to fulfill its financial obligations and the certainty of the fulfillment of its individual obligations as promised (creditworthiness) and are notstatements of fact. Further, R&I does not state its opinions about any risks other than credit risk, give advice regarding investment decisions or financial matters, or endorse the merits of any investment.
R&I does not undertake any independent verification of the accuracy or other aspects of the related information when issuing a credit rating and makes no related representations or warranties. R&I is notliable in any way for any damage arising in relation to credit ratings (including amendment or withdrawal thereof). As a general rule, R&I issues a credit rating for a fee paid by the issuer. For details,
please refer to http://www.r-i.co.jp/eng/policy/policy.html.
© Rating and Investment Information, Inc.

NEWS RELEASE
The primary rating methodologies applied to this rating are provided at "Basic Methodologies for R&I's
Credit Rating" and "Rating Methodology for J-REIT". The methodologies are available at the web site
listed below, together with other rating methodologies that are taken into consideration when assigning
the rating.
http://www.r-i.co.jp/eng/cfp/about/methodology/index.html
R&I RATINGS:ISSUER:RATING:RATING OUTLOOK:

Japan Real Estate Investment Corp. (Sec. Code: 8952)
Issuer RatingAA, Affirmed
StableUnsec. Str. Bonds No.4

Issue Date

Maturity Date

Issue Amount (mn)Sep 29, 2025

JPY 10,000

RATING:

Sep 29, 2005
AA, Affirmed

Unsec. Str. Bonds No.5

Issue Date

Maturity Date

Issue Amount (mn)

Jun 18, 2012

JPY 10,000

RATING:Jun 18, 2007
AA, Affirmed

Unsec. Str. Bonds No.6

Issue Date

Maturity Date

Issue Amount (mn)

Jun 18, 2014

JPY 15,000

RATING:Jun 18, 2007
AA, Affirmed

Unsec. Str. Bonds No.7

Issue Date

Maturity Date

Issue Amount (mn)

Apr 23, 2015

JPY 10,000

RATING:Apr 23, 2010AA, Affirmed

Unsec. Str. Bonds No.8

Issue Date

Maturity Date

Issue Amount (mn)

Jul 23, 2015

JPY 10,000

RATING:Jul 23, 2010
AA, Affirmed■Contact: Investors Service Division
TEL.+81-(0)3-3276-3511■Media Contact : Corporate Planning Division (Public Relations) TEL.+81-(0)3-3276-3438

E-mail. infodept@r-i.co.jp

Rating and Investment Information, Inc.

Nihonbashi 1-chome Bldg., 1-4-1, Nihonbashi, Chuo-ku, Tokyo 103-0027, Japan

http://www.r-i.co.jp

Credit ratings are R&I's opinions on an issuer's general capacity to fulfill its financial obligations and the certainty of the fulfillment of its individual obligations as promised (creditworthiness) and are notstatements of fact. Further, R&I does not state its opinions about any risks other than credit risk, give advice regarding investment decisions or financial matters, or endorse the merits of any investment.
R&I does not undertake any independent verification of the accuracy or other aspects of the related information when issuing a credit rating and makes no related representations or warranties. R&I is notliable in any way for any damage arising in relation to credit ratings (including amendment or withdrawal thereof). As a general rule, R&I issues a credit rating for a fee paid by the issuer. For details,
please refer to http://www.r-i.co.jp/eng/policy/policy.html.
© Rating and Investment Information, Inc.