Rating Action: Moody's changes Japan Real Estate's rating outlook to stable;
affirms A1 rating
Global Credit Research - 25 Jan 2016
Tokyo, January 25, 2016 -- Moody's Japan K.K. has changed to stable from negative the outlook for Japan Real
Estate Investment Corporation (JRE).
At the same time, Moody's has affirmed JRE's A1 long-term senior unsecured rating and issuer rating.
RATINGS RATIONALE
The stable rating outlook reflects JRE's stable growth in cash flow, because of its steadily expanding portfolio, as
well as its strengthened level of financial management, a result in turn of the company's equity financing andimproved liquidity.
The stable rating outlook also reflects Moody's expectation that JRE will continue with its conservative approach
towards fiscal management and for maintaining financial stability, through collaboration with its sponsor, Mitsubishi
Estate Co., Ltd. (A2 stable).
JRE's net debt/EBITDA was approximately 9.8x in September 2015. Moody's will assess, on an ongoing basis,
JRE's fiscal management as well as the effects on JRE's debt and leverage of any new property purchases.
JRE's portfolio expanded to JPY 927.8 billion in September 2015 from JPY 660.6 billion in March 2011. As a result,the numbers of its office properties and tenants increased to 70 and 1,461 respectively in September 2015, from
57 and 1,004 in March 2011.
JRE's high average occupancy rate was 97.7% as of end-September 2015, keeping above 95% since September
2012. Moody's expects it to continue generating stable cash flow.
JRE has maintained its conservative leverage control through active equity financing, with good access to thecapital market. JRE's debt/gross assets was 37.6% in September 2015, keeping below the 40% level.
JRE's liquidity coverage ratio has been above 100% since 2013, and the company has continued to level thetenors of its debt maturities, thus increasing its financial flexibility.
JRE's rating incorporates the likelihood that JRE's refinancing risk would be mitigated through the close
relationships -- as supported by its sponsors -- it has with its lenders even in times when the financing
environment deteriorates.
An improvement in portfolio profitability or decrease in leverage could lead to upward rating pressure. For example,
if net debt/EBITDA decreases below 7.0x with good prospects for remaining at these lower levels, and debt/grossassets stays around 35%, then JRE's rating could be upgraded.
On the other hand, factors that could lead to a downgrade include: (1) a deterioration in portfolio cash flows, and(2) a higher level of financial leverage. For example, JRE's rating would be downgraded if net debt/EBITDA anddebt/gross assets increase above 9.0x and 40%, respectively.
The principal methodology used in these ratings was Global Rating Methodology for REITs and Other Commercial
Property Firms (Japanese) published in October 2010. Please see the Credit Policy page on www.moodys.com
for a copy of this methodology.
Japan Real Estate Investment Corporation, headquartered in Tokyo, is a J-REIT which listed in September 2001.
At end-September 2015, its investment portfolio consisted of 70 offices with the cumulative acquisition price ofapproximately JPY927.8 billion. Its operating revenue for the fiscal half-year ended September 2015 totaled
JPY29.98 billion.
REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory
disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/classof debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordancewith Moody's rating practices. For ratings issued on a support provider, this announcement provides certain
regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating
action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in
relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where
the transaction structure and terms have not changed prior to the assignment of the definitive rating in a mannerthat would have affected the rating. For further information please see the ratings tab on the issuer/entity page forthe respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating
action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures willbe those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable tojurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating
outlook or rating review.
Moody's Japan K.K. is a credit rating agency registered with the Japan Financial Services Agency and its
registration number is FSA Commissioner (Ratings) No. 2. The Financial Services Agency has not imposed any
supervisory measures on Moody's Japan K.K. in the past year.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal
entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures foreach credit rating.
Akifumi Fukushi
Vice President - Senior Analyst
Structured Finance Group
Moody's Japan K.K.
Atago Green Hills Mori Tower 20fl
2-5-1 Atago, Minato-ku
Tokyo 105-6220
Japan
JOURNALISTS: 813-5408-4110
SUBSCRIBERS: 813-5408-4100
Kei Kitayama
MD - Asia-Pac Structured Fin
Structured Finance GroupJOURNALISTS: 813-5408-4110
SUBSCRIBERS: 813-5408-4100
Releasing Office:
Moody's Japan K.K.
Atago Green Hills Mori Tower 20fl
2-5-1 Atago, Minato-ku
Tokyo 105-6220
Japan
JOURNALISTS: 813-5408-4110
SUBSCRIBERS: 813-5408-4100© 2016 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors andaffiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES(“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES,CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCHPUBLICATIONS PUBLISHED BY MOODY’S (“MOODY’S PUBLICATIONS”) MAY INCLUDE MOODY’S
CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS,
OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY
MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY
ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANYOTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICEVOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARENOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDEQUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS ORCOMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S
PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDITRATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO
PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S
PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULARINVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH
THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITSOWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR
PURCHASE, HOLDING, OR SALE. MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOTINTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FORRETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKINGAN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHERPROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO,
COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE
REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED,REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN
WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSONWITHOUT MOODY’S PRIOR WRITTEN CONSENT.
All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable.
Because of the possibility of human or mechanical error as well as other factors, however, all information contained
herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the
information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to bereliable including, when appropriate, independent third- party sources. However, MOODY’S is not an auditor andcannot in every instance independently verify or validate information received in the rating process or in preparing
the Moody’s Publications.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors
and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses ordamages whatsoever arising from or in connection with the information contained herein or the use of or inability to
use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives,
licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limitedto: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial
instrument is not the subject of a particular credit rating assigned by MOODY’S.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors
and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity,
including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability
that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond thecontrol of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers,
arising from or in connection with the information contained herein or the use of or inability to use any suchinformation.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS,
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER
OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER

OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER
WHATSOEVER.
Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”),
hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes
and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of
any rating, agreed to pay to Moody’s Investors Service, Inc. for appraisal and rating services rendered by it fees
ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address
the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist
between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also
publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at
www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder
Affiliation Policy.”
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the AustralianFinancial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399
657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable).
This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the
Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’Sthat you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor theentity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within themeaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to thecreditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security
that is available to retail investors. It would be reckless and inappropriate for retail investors to use MOODY’S
credit ratings or publications when making an investment decision. If in doubt you should contact your financial orother professional adviser.
Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of
Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned
subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK.
MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned
by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a
NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws.
MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and theirregistration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate andmunicipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (asapplicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal
and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000. MJKK and
MSFJ also maintain policies and procedures to address Japanese regulatory requirements.