(TSE Code: 8982)

Top REIT, Inc.
Presentation on
Business Results for theThird Fiscal Period（May 1, 2007 – October 31, 2007)

December 18, 2007

IndexOverview Since IPO(Highlights of the First, Second and Third Period Activities)
I. Third Fiscal Period Results (Ended October 31, 2007)
I-1
I-2
I-3
I-4
I-5

Results of the Third Fiscal Period (Summary)
Results of the Past Periods and Forecasts
Unitholders
Unit Price Performance & Volume(March 1, 2006 – November 30, 2007）
Portfolio Overview – Portfolio Summary

II. External Growth Strategies
II-1
II-2
II-3

External Growth: Past Achievements
External Growth: Fully Applying Sponsors’ Strengths
External Growth: Strategies

III．Internal Growth Strategies
III-1
III-2
III-3

Internal Growth: Maintaining High Occupancy Rate
Internal Growth: Results from Office Rents Revision /Room for Internal Growth by Revising Rents Upward
Internal Growth: Results from Residential Rents Revision/ Room for Internal Growth by Revising Retail Rents
UpwardIV. Financial Strategies
IV-1
IV-2

IV-3

Credit Rating and Debt Composition as of October 31,
2007
Financial Strategies: Preparation for the Risk ofFluctuating Interest Rates and Spreading Out Repayment
Dates
Financial Strategies: Sound Financial Policy

V. Third Fiscal Period Results (Ended October 31, 2007)
V-1

Income Statement (Summary) / Dividend Statement

V-2

Balance Sheets (Summary)V-3

Major Financial Indicators

V-4

Forecast for Fourth and Fifth Fiscal Periods

VI. Portfolio Overview
VI-1

Portfolio Map

VI-2

Portfolio Overview

VI-3

Appraisal Values as of End of Third Fiscal Period

VI-4

Appraisal CapsVII. Appendix (1) Portfolio Details
VII-1

Performance on Property Basis

VII-2

Property Details

VII-3

Withdrawal of Early Termination Notice andAgreement on the Rent Revision with Ito-Yokado

VIII. Appendix (2) Structure of Asset Manager
VIII-1

Decision Making Process for Acquisition and
Disposition of Properties

VIII-2

Overview of Asset Manager

IX. Appendix (3) Other Reference
IX-1

Summary of Real Estate Market Indicators

IX-2

Characteristics of Top REIT

IX-3
IX-4

Investment Principles
Internal Growth Principles

1

Overview Since IPO
Y2006

Y2005
Nov. Dec. Jan. Feb. Mar.

Apr

May

Jun.

Jul.

Y2007
Aug.

Sep

Oct.

Established(Nov 2, 2005)

Obtained

New Property
Rating A2
Acquired (Jun 30, 2006) (Oct 3, 2006)

Listed (Mar 1, 2006)
77 Properties
Properties¥104,386mn¥104,386mn

Dec.

Jan.

Feb.

Mar.

Apr

May Jun, Jul, Aug Sep Oct

Second Fiscal Period Nov 1, 2006 – Apr 30, 2007

First Fiscal Period : Nov 2, 2005 – Oct 31, 2006 364Days
Actual Asset management Period: Mar 1, 2006 – Oct 31,
2006 245Days

TopicsNov.

88 Properties
Properties¥113,286mn¥113,286mn

Third Fiscal Period May 1,
2007 – October 31, 2007

New Property
Acquired (Dec 8, 2006)

New Properties
Acquired (Mar 19,20, 2007)

99 Properties
Properties¥123,921mn¥123,921mn

11
11 Properties
Properties¥130,846mn¥130,846mn

Mar 1 Harumi Triton Square Office Tower Y ¥33,000mn, Akasaka Oji Building ¥9,660mn, Kanda Park Plaza ¥5,156mn,|
Faret East Building ¥1,520mn and Nittetsu Honmachi Building ¥1,100mn
Mar 3 NEC Head Office Building ¥41,950mn

External
GrowthMar 1 Sagamihara Shopping Center ¥12,000mn
Jun 30 Ito-Yokado Higashi-Narashino ¥8,900mn
Mar 19 Musashiurawa Shopping
Square¥4,335mn
Dec 8 Fukasawa-House tower H & I ¥10,635mn
Mar 20 OAK PLAZA ¥2,590 mn¥33,400mn¥33,400mn¥37,400mn¥37,400mn¥35,900mn¥35,900mn¥47,100mn¥47,100mn¥54,300mn¥54,300mn(Mar 20Fixed by IRS ¥11,000mn)(May 31 Interest rate Fixed by Interest Rate Swap Total: ¥23,000mn)

Financial
Strategy(Debt)¥54,400mn¥54,400mn
June 29
Refinance（3.20 固定化
11,000百万円）

7Yr Fixed Debt ¥2bn

Mar 3 Long-Term Debt ¥33,400mn
Jun 30 ¥4,000mnAug 31 ¥2,500mn
Short-Term Debt

Dec 8 ¥13,700mn

Mar 19, 20¥20,900mn

Aug 6
Fixed by

L-T Debt IRS Total¥54.4bn ¥42bn
Floater ¥10.4bn

Financial
Strategy(Equity)Net
Net Assets
Assets¥100mn¥100mnInitial
Initial Public
Public Offering
Offering¥82,260mn¥82,260mn
Offering at ¥550,000 per unit

Term-end Unit Price(closing)¥689,000

Term-end Unit Price(closing)¥843,000

Term-end Unit Price(closing)¥524,0002

I. Third Fiscal Period Results (Ended October31, 2007)3

I-1． Results of the Third Fiscal Period (Summary)(in millions yen, except as otherwise noted)

Items

Third Fiscal
Period Results

Third Fiscal
Period Forecast

May 1, 2007 – Oct31, 2007(Announced onJune 18, 2007)

Second Fiscal
Period Results

Net Change(Results vs. Forecast)

Net Change(Third Fiscal Period
Results vs. Second Fiscal
Period Results)

Nov 1, 2006 – Apr30, 2007

184

184

－

－

181

－

－

Operating Revenue

4,715

4,698

17

+ 0.4%

4,526

189

+4.2%

Ordinary Income

1,848

1,644

204

+12.4%

2,324

-475

-20.5%Net Income

1,847

1,643

204

+12.4%

2,323

-475

-20.5%

Number of Units Issued (Unit)

155,000

155,0000－

155,000

0－

Dividend per Unit (Yen)¥11,921¥10,600¥1,321+12.4%¥14,992-¥3,071-20.5%

11

11

0

－

11

3

－

155,923－－－

152,468

3,455

+2.2%

Period of Asset Management (Days)

Number of Properties Assumed
Appraisal Value Total■ Difference Between Forecast and Actual Results
Operating Revenue：¥17mn¾ Operating income exceeded the forecast mainly due toincremental rental revenue such as contract renewal fee income
from Fukasawa House .

Ordinary Income: ¥204mn¾ Actual maintenance cost was less than the previous forecast
due to reviewing efficiency of maintenance work and achieving
maintenance cost reduction through diligent negotiations.
¾ Non-operating expenses (mostly “interest paid”) was less thanthe previous forecast and non-operating income (mostly“interest received”) was more than the previous forecast.
¾ General administrative expenses such as cost of general unit
holder meeting could be minimized due to reviewing efficiencyof expenses and negotiations.

■Other References
Items

Third Fiscal Period

Second Fiscal
PeriodNumber of Tenants

40

39

Total Rentable Area

261,671.67㎡

261,671.68㎡

Occupancy Rate

99.7％

99.5％

Current Depreciation¥927mn¥873mnCurrent Capital
Expenditures

¥49mn

¥80mn

Term-End Unit Price¥524,000¥843,000

Term-End Market
Capitalization¥81,220mn¥130,665mn

4I-2. Results of the Past Periods and Forecasts
OperatingOperating Revenue
Revenue
5,500

OperatingOperating Expenses
Expenses

5,000

4,715

4,526

（in million Yen）
City Planning Tax and
Fixed Assets Tax imposed

5,000

4,712

4,661

4,037

4,500

Net
Net Income
Income（in millions Yen）

（in millions Yen）

5,000

4,000

4,000

4,000

3,000

2,465

3,500

2,000
3,000

1,610

1,878

(490)

2,450
(454)

3,000

2,500
(506)

2,323

2,000
第1期実績
1st FP

第2期実績
2nd FP

第3期実績
3rd FP

第4期予想
4th FP 第5期予想
5th FP(Forecast) (Forecast)

2,033

2,000

1,000

2,500

City Planning Tax and
Fixed Assets Tax imposed

City Planning Tax and
Fixed Assets Tax imposed

18,00014,992

16,00011,921

11,10011,000

1,720
(454)

1,705
(506)

1,000

0

0
st FP
th FP
1第1期実績
2nd第2期実績
FP
3rd FP
4th 第4期予想
FP
5第5期予想第3期実績(Forecast) (Forecast)

st FP
nd FP
1
2第2期実績
3rd第3期実績
FP
4th第4期予想
FP
5th FP
第1期実績
第5期予想(Forecast) (Forecast)

Dividend
Dividend per
per Unit
Unit
(Yen)

1,847
(490)

Items

Days of Fiscal Period

1st Fiscal Period*(Reference only)

3rd Fiscal
Period

2nd Fiscal
Period

4th Fiscal
Period(Forecasts)

5th Fiscal
Period(Forecasts)

182.5

181

184

182

184

Operating Revenue¥4,037mn¥4,526mn¥4,715mn¥4,661mn¥4,712mn

Operating Expenses¥1,610mn¥1,878mn¥2,465mn¥2,450mn¥2,500mn

8,000

Tax & Public Due00¥490mn¥454mn¥506mn6,000

Depreciation¥730mn¥873mn¥927mn¥931mn¥931mn¥2,033mn¥2,323mn¥1,847mn¥1,720mn¥1,705mn

Dividend per Unit

¥13,116¥14,992¥11,921¥11,100¥11,000

FFO per Unit

¥17,827¥20,625¥17,903¥17,100¥17,000

14,00013,116

12,00010,0004,000

Net Income

2,000
0
第1期実績
1st FP

第2期実績
第5期予想
rd FP
th FP
2nd FP
3第3期実績
4第4期予想5th FP(Forecast) (Forecast)*1. Actual days of the 1st fiscal period was 245 Days. The above numbers are calculated by a following calculation method ( (First Fiscal Period Results) / 245 Days x 365 Days / 2)5

I-3．Unitholders
Ownership
Ownership Share
Share byby Investor
Investor Criteria
Criteria as
as ofof October
October 31,
31, 2007
2007
Investor Criteria

Number of Units Held

Number of Unitholders

Retail Investors/Others

15,491

10.0%

5,425

93.7%

Financial Institutions（Incl. Security Firms)

101,512

65.5%

156

2.7%

Non-Financial
Institutions (Corporate)

11,304

7.3%

123

2.1%

Overseas Investors

26,693

17.2%

85

1.5%

155,000

100.0%

5,789

100.0%Total

Top
Top 1515 Unitholders
Unitholders as
as ofof October
October 31,
31, 2007
2007
Rank

Name

1st Fiscal
Period End
Total
Number ofInvestors:
6131

11,638

7.51

2 NikkoCiti Trust and Banking Corporation, trust account

11,130

7.18

3 The Bank of Ikeda
4 The Master Trust Bank of Japan, trust account

6,850

4.42

6,764

4.36

5 Trust and Custody Services Bank, trust account
6 North Pacific Bank

6,344

4.09

4,469

2.88

7 American Life Insurance Company GAL
8 Nomura Trust and Banking, trust account

3,847

2.48

3,422

2.21

9 Goldman Sachs International

3,383

2.18

10 The Sumitomo Trust & Banking
11 Nippon Steel City Produce

3,176

2.05

3,162

2.04

11 Oji Real Estate

3,162

2.04

13 The Hiroshima Bank
14 The Fuji Fire and Marine Insurance

3,060

1.97

2,416

1.56

15 Sumitomo Mitsui Banking Corporation

2,256

1.46

75,07948.44

Financial Institutions : 171 （2.8%）
Non-Financial Institutions (Corporate):146 （2.4%）
Overseas Investors: 45 （0.7%）

Retail Investors/Others 5,769 (94.1%)
Financial Institutions: 165 （3.0%）
Non-Financial Institutions (Corporate): 127 （2.3%）
Overseas Investors: 80 （1.4%）

2nd Fiscal
PeriodEnd Total
Number ofInvestors:
5521

Retail Investors/Others 5,149（93.3%）
Financial Institutions: 156 （2.7%）
Non-Financial Institutions (Corporate): 123 （2.1%）
Overseas Investors: 85 （1.5%）

3rd Fiscal
PeriodEnd Total
Number ofInvestors:
5,789

Number of Units Share (%)
held

1 Japan Trustee Service Bank, trust account

Total

NumberNumber ofof Unitholders
Unitholders

Retail Investors/Others 5,425（93.7%）

0%

20%

40%

60%

80%

100%

NumberNumber ofof Units
Units Held
Held

Non-Financial Institutions(Corporate)
Retail13,105 （8.5%）
Investors/Others
16,470 （10.6%）
Overseas
Financial Institutions （Incl. Security Firms) :Investors
110,045 （71.0%）
15,380 （9.9%）

1st Fiscal
Period End
Total numberof Units
Outstanding
155,000

Non-Financial Institutions
Retail Investors(Corporate)/Others 13,320 （8.6%）
12,393 （8.0%）

2nd Fiscal
Period End
Total
numberof Units
Outstanding155,000rd
3 FiscalPeriod End
Total numberof Units
Outstanding
155,000

Overseas
Investors
27,524 （17.8%）

Financial Institutions （Incl. Security Firms) :101,763 (65.7%）
Retail Investors/Others 15,491（10.0%）

Non-Financial Institutions(Corporate)
11,304 （7.3%）

Overseas
Investors
26,693 （17.2%）

Financial Institutions （Incl. Security Firms) :101,512 (65.5%）

0%

20%

40%

60%

80%

100%

6

I-4. Unit Price Performance & Volume (March 1, 2006- November 30, 2007）
TOP

東証REIT指数（指数化後）
TSE REIT Index

TOPIX（指数化後）

31,893Units （March 1）（JPY）
950,000

Historical Closing High:¥998,000(Feb 16, 2007)

TOP

TOP出来高TOP Trading Volume

TOPIX

1st Fiscal
第1期
Period(Unit)
10,000

3rd Fiscal
第3期
Period

2nd Fiscal
第2期
Period

第4期

8,000

850,000

750,000

6,000

650,000
4,000
550,000

Historical
Closing Low¥397,000(Nov 22, 2007)

450,000

350,000

Mar 2006 Apr

May
H18.3

June H18.5
July H18.6
Aug H18.7SepH18.8Oct
Dec Jan2007 H19.1
Feb H19.2
Mar H19.3
AprH19.4May
H18.4
H18.9 Nov
H18.10 H18.11
H18.12
H19.5June
H19.6 July
H19.7

3rd Fiscal Period End Unit
Price
(Closing)

JPY 524,000（October 31,
2007）

2,000

Aug
H19.8

0

H19.9
Sep H19.10
Oct H19.11
Nov H19.12
Dec

IPO Price

JPY 550,000

Mar 1, 2006

Historical High since
IPO (Closing Price)

JPY 998,000

Feb 16, 2007

Historical low since
IPO (Closing Price)

JPY 397,000

Nov 22, 20077

I-5. Portfolio Overview – Portfolio Summary

Total Acquisition Price:

Rentable Area: 261,671.67㎡¥130.846 billion

PML:

Number of Properties: 11
Asset Class (property type)
100%

11.5%

2.0%
8.1%
19.3%

18.4%

80%
60%

88.5%

81.6%

70.6%

40%
20%
0%

(40.2%)
IPO
上場時(37.0%)(32.1%)End of
第1期末
1st FP

End of 2nd
第2,3期末and 3rd FP

Scale (on a total floor area basis)
Othersその他
Residential
住宅

Retail
商業施設

100%

6.0%

5.5%

80%

10.7%
11.5%

17.7%

1.1%

1.0%

13.0%

19.8%

80%

40%

Officeオフィスビル

20%）：日本電気本社
Share of NEC（（ ）：Head Office
ビルの比率

0%

Building

0.8%

71.8%

IPO
IPO
上場時

9.2%

10,000m2 –
1万㎡以上5万㎡未満
49,999m2
50,000m2 –
5万㎡以上10万㎡未満
99,999m2

66.2%

End
Endofof
1st第1期末
periodFP

Less than
1万㎡未満
10,000m2

57.3%

Kansai
関西圏

ndnd

4.9%

5.9%

49.4%

46.5%

40.3%

40%

14.0%

19.8%

20%

31.6%

29.1%

IPO
上場時

End ofst1st
1第1期末
period
FP

80%
60%

86.0%

79.2%

70.6%

Metropolitan
東京周辺都市部
Tokyo
Central
東京都心部
Tokyo

IPO
上場時

End of
第1期末
1st FP

100,000m2
or more10万㎡以上End
Endofof2 2
第2,3期末
第2期末andand
33rdrd Period
FP

4.6%

100%

28.6%

20%
0%

10.6%

26.8%

Age of Buildings

60%
40%

6.8%

60%

Area
100%

2.2%

End of 2nd
第2期末
第2,3期末and3rd FP

0%

17.1%
25.2%
11.4%
End of 2nd
第2,3期末第2期末andand
3rd3rdPeriodFP

20 years
20年以上
or more15 years –15年以上20年未満
19 years
10 years –10年以上15年未満
14 years
5 years –5年以上10年未満
9 years
Less than
5年未満
5 years

Average：：13.3 Years
Average
Average：13.3
Years※Weighted Average based on
Acquisition Price※Numbers on above graphs are calculated based on Acquisition Price

8

II. External Growth Strategies9II-1. External Growth: Past Achievements
History
History ofof Asset
Asset Growth
GrowthAppreciation
Appreciation ofof Asset
Asset Values
ValuesAccomplishment of“Pursuing both Steady Growth and Quality”( in millions yen )OAK PLAZA
2,590
Musashiurawa Shopping Square 4,335
Fukasawa House Tower H&I 10,635

 Portfolio overall

Ito-Yokado
Higashi-Narashino
8,900

IPO

End of
1st Period

11Properties 11 Properties
130,846
130,846

Asset
Class

From
Sponsors

As of Endof 期実績
1st Fiscal Period
第13rd Fiscal Period
May 1, 2007 –October 31, 2007

55,000As第3of Endof 3rd Fiscal Period
期実績

From
Sponsors

From NonSponsors

45,000

14

25

30

38

35,000Retail

12

14

5

14

15

55

30,000Residence

24

69

8

23

14

3

Other

8

9

2

3

7

9

15,000

68

143

29

65

66

105

10,00030 % of Property Information are from sponsors.
To focus on collecting office property information leads

9,550

10,55040,000

51

171

5,100

Appraisal Price - Acquisition Price
期末算定価格-取得価格

Harumi Island
Triton Square
Office Tower Y

NEC Head Office50,000From NonSponsors

94

As of第2End of
2nd Fiscal Period
期実績

Acquisition
取得価格Price(in millions of yen)
60,00024

211

25 ,077

 Appraisal Gain of Three Major Properties in Central Tokyo

OfficeTotal

130 ,846

21,6 22

14 ,156

20 ,000
0

End of
3rd Period

2nd Fiscal Period
Nov. 1, 2006 –Apr. 30, 2007

15 5,92 3

15 2,46 8
130 ,846

12 7,44 2
1 13,2 86

60 ,000
40 ,000

End of
2nd Period

Appraisal Gain
含み益100 ,000
80 ,000

NumberNumber ofof Property
Property Information
Information
1st Fiscal Period(last 6 months)
May 1, 2006 –Oct. 31, 2006
From
From NonSponsors Sponsors

Appraisal Value
期末算定価格180 ,000
160 ,000
140 ,000
120 ,000

7 Properties 8 Properties
113,286
104,386

Acquisition Price
取得価格(in millions of yen)

25,00041,95041,95041,950

6,100

8,300

10,80033,00033,00033,000Akasaka Oji
Building

41,95020,00033,000

9,660

5,000

取得価格

Acquisition
Price

1st
FP

2
3
第2期実績
FP
FP
nd

nd

Acquisition
取得価格
Price

1st
FP

2
第2期実績
FP
nd

3nd
FP

取得価格

Acquisition
Price

2,040
9,660
1st
FP

4,540
9,660

4,640
9,660

2
第2期実績
FP

3nd
FP

nd

10

II-2. External Growth: Fully Applying Sponsors’ Strengths
Top REIT, Inc.
.
Top REIT AssetManagement

Utilizing Sponsors’ Strengths“Sponsors’ Strengths”
have been applied to
all acquisitions of Properties■Number of group companies
Sumitomo Trust Group42
Nippon Steel Group326
Oji Paper Group305

Properties previously owned or developed by sponsor group companies

Faret East
Building

Nittetsu
Honmachi
Building

Structuring

Akasaka Oji
Building

Providing
EquityAs of March 31, 2007

Properties brokered by sponsors

Musashiurawa
Shopping Square

NEC Head Office

Harumi Island
Triton Square
Office Tower Y

Sagamihara
Shopping Center
OAK PLAZA

Ito-Yokado
HigashiNarashino

FukasawaHouse Tower
H&I

The Sumitomo Trust& BankingKanda Park
Plaza

Nippon SteelCity Produce

Pipeline (Agreement on Provision of Information & Brokerage Information)

Oji Real Estate

Warehousing
Agreement on
Warehousing11II-3. External Growth: Strategies
MediumMedium Term
Term External
External Growth
Growth Target
TargetTo reduce investment share to 20% in NEC Head Office Building
Additional acquisition: about 80 billion yen

250

Future Acq uisitions

210

Others200

Harumi Island Triton Sq uare Office Tower Y

150

NEC Head Office

130.8
42.7%

26.6%
15.7%

100

104.3
28.2%

50

31.6%

25.2%

40.2%

32.1%

IPO

End of 3rd
FiscalPeriod0(in billions of yen)

約65億円

20.0%

Image after
achievingtargetImage
Image ofof Portfolio
Portfolio Breakdown
Breakdown by
by Asset
Asset ClassClass After
After
Achieving
Achieving Medium
Medium Term
Term External
External Growth
Growth Target
Target ¥210
¥210
BillionBillion
Office:75%, Aggregation of Retail, Residential,
Others: 25%
Non-Office: 25%
Non
Non-Office:

Future Acquisitions

OthersResidintial

Current Portfolio
Approx¥15Billion

RetailNEC Head Office:
20.0%

Office:¥92 Billion

Non-Office:¥38 Billion

Harumi Island Triton
Square Office Tower Y:
15.7%

Approx¥65 Billion

Striving to achieve the growth target by April 2010
Current
Current Investment
Investment Strategies
Strategies byby Asset
Asset Class
Class
Asset
Class

PolicyOfficeFocusing on offices located in central Tokyo

Retail

Focusing on urban retail facilities

Residential

Office:75%

Focusing on location of each property (Considering
mainly on sponsor development properties)

Target LTV range 40-50%

Aiming to achieve dividend growth target：12,000-13,000 yen/unit

12III．Internal Growth Strategies

13III-1. Internal Growth: Maintaining High Occupancy Rate
“Tenants First” = Maintaining and Improving Tenant Satisfaction

Reflecting demand from tenants in facility management plan, thus improving assets quality and value

Building up good relationship with major tenants will support long-term stable cash flows

Five
Five Major
Major Tenants
Tenants
Type ofIndustry

Name of Tenants
Ito-Yokado Co., Ltd.
NEC
Sumitomo Metal
Industries
Nippon Steel City
Produce
R.A. AssetManagement

As of October 31, 2007 (3rd Fiscal Period End)

Wholesale/
RetailManufacturing

Name of Properties

RentedArea (㎡）

Share
(%)

Sagamihara Shopping Center/
Ito-Yokado Higashi-Narashino

112,089.54

43.0

NEC Head Office Building

72,238.03

27.7

11,905.47

4.6

Real Estate

Harumi Island Triton Square OfficeTower Y
Faret East /OAK PLAZA

10,785.18

4.1

Real Estate

Fukasawa-House Tower H&I

10633.16

4.1

Manufacturing

Occupancy
Occupancy rate
rate (Transitions)(Transitions)
99.8%

99.9%

300,000
280,000
260,000
240,000
220,000
200,000
180,000
160,000
140,000
120,000
100,000■Leasing Agreement with Major Tenants¾ Leasing agreement with Ito-YokadoLong-term leasing agreement for Sagamihara is valid until
Aug 10, 2013, and for Higashi-Narashino is valid until Nov
30, 2014.
¾ Leasing agreement with NEC
20-years fixed term leasing agreement that runs until Dec
2025 has been signed. A rent will be revised in Dec 2013,
Dec 2017 and Dec 2021. (Cancellation option by NEC
thereafter under certain conditions)

Gross Rentable Area (㎡)Occupancy Rate

Maintaining Stable and High
Occupancy

99.5%

99.5%

99.4%

99.5%

99.6%

99.6%

99.7%

261,671.68

261,671.67

261,671.67

261,671.67

261,671.67

261,671.67

261,671.67

229,231.70

178,104.46

March 2006(IPO)

100.0%
98.0%
96.0%
94.0%
92.0%
90.0%
88.0%
86.0%
84.0%

Oct-06

Apr-07

End of 1st FP

End of 2nd FP

May-07

Third Fiscal Period

Jun-07

Jul-07Aug-07

Sep-07

Oct-07

82.0%
80.0%

End of 3rd FP

14

III-2. Internal Growth: Results from Office Rents Revision /Room for Internal Growth by Revising Rents Upward
Office:Office: Rent
Rent Renewal
Renewal Results/Schedule
Results/Schedule ofof Future
Future Rent
Rent Renewal
Renewal

Office:Office: Room
Room forfor upward
upward rent
rent revision
revision

Equivalent to Market Rents or no change
マ ー ケ ット 並 み 賃 料 達 成 済 / 据 置 改 定
RevisedUp or地Roomto /revisedupward
改
定余
有
増額
改定済

11stst FP:
FP: revised
revised up：4.6%
up：4.6% growth
growth (Avg.)(Avg.)

st FP
1第
1期

2期
nd FP
2第
rd FP
3第
3期

33rdrd FP:
FP: revised
revised up：9.1%
up：9.1% growth
growth (Avg.)(Avg.)

th FP
4期
4第
th FP
5第
5期

6

Past Result

nd FP:
22nd
FP: revised
revised up:up:
3.8%
3.8% growth
growth (Avg.)(Avg.)

Future Schedule

Room to grow
¥140M/FP

Prospective
Growth(Approx.
60M/FP)(Excluding Rent Revision from NEC)FP

th 6 期
第

7期
th FP
7第
第8期

8th FPNEC
NEC Head
Head Office
Office Building
Building
th
16
第 1FP
6期

0

Area to be
対象面積(㎡)

5 ,0 0 0

1 0 ,0 0 0

1 5 ,0 0 0

2 0 ,0 0 0

2 5 ,0 0 0

現状賃料

renewed: ㎡

Market Rents
マーケット賃料

Current Rents

Ratio
Ratio ofof Potential
Potential Upward
Upward Revision
Revision ofof Rents
Rents (by(by area)area)
Expected more than 20%
g rowth:3%

5% or higher thanmarket-rate rents: 1%

Equivalent to market-rate
rents
10%

Expected more than 10%
g rowh: 12%

Ratio
Ratio ofof Potential
Potential Upward
Upward Revision
Revision ofof Rents
Rents (by(by rents
rents amount)amount)5% or higher than market-rate rents:

Expected more than 20% growth: 3%

2%
Equivalent to market-rate rents

Expected more than 10% growth

19%

:11%

Expected more than 5%
g rowth:15%

Expected more than
5% growth:
23%

35% of total
office floorarea may berevisedupwardNEC Head Office
NEC Head Office
61%

42%

※ Area is considered office rentable area only (excluding space such as storage attached to offices)15

III-3. Internal Growth: Results from Residential Rents Revision/ Room for Internal Growth by Revising Retail Rents Upward
Residential:
Residential: Maintaining
Maintaining HighHigh Occupancy
Occupancy

Residential:
Residential: Renewal
Renewal Rents
Rents andand Newly
Newly Contracted
Contracted Rents
Rents

Rented(㎡)
面積(㎡)

12,000
Newly
Newly
contracted
contracted
Rents
Rents

Achieved
Achieved 3.1%
3.1% growth
growth (Avg.)(Avg.)

第2期
2nd FP

第3期

No-change
前賃料と同額Increased
増額
Decreased
減額

10,747.81
94.6%

10,00010,273.86

10,292.47

90.5%

90.6%

Achieved
Achieved 1.2%
1.2% growth
growth (Avg.)(Avg.)

3rd FP

10,581.76
93.2%

Revised
Revised
Rents
Rents

0

10

20

30

No-change
据置改定

第2期
2nd FP

Increased
増額改定

稼働率 Rate

3rd FP
10,164.11
89.5%

8,000
Number of Units

Occupancy

賃貸面積(㎡)
Area
10,060.64

9,930.61

10,053.05

100.0%
10,409.49
91.7%

10,409.11
91.7%

10,633.16
93.6%

88.5%

88.3%

90.0%

87.4%

40

Decreased
減額改定

6,000

85.0%

4,000

80.0%

2,000

75.0%

3rd FP
第3期

70.0%

0
Number of Units

0

10

20

30

40

平成18年12月末
Dec
（取得時）
2006

平成19年1月末
Jan

平成19年2月末
Feb

平成19年3月末
Mar

平成19年4月末
Apr
At end of（第2期末）
2nd FP

2007

RetailRetail ：Scheduleof Future
Future Rent
Rent Revisions
Revisions：Schedule of
4th FP
第4期

Residential

5th FP

第5期

Sagamihara
Sagamihara Shopping
Shopping Center
Center

6th FP
第6期

IY
IY Higashi-Narashino
Higashi-Narashino(Sales-Based(Sales-Based Rent)
Rent)

7th FP
第7期
8th FP

第8期
9th FP
第9期

RetailMusashiurawa
Musashiurawa Shopping
Shopping Square
Square10th FP
第10期
Area subject torent revisions: ㎡ 0

95.0%

10,00020,00030,00040,00050,00060,000平成19年5月末
May

平成19年6月末
June 平成19年7月末
July

平成19年8月末
Aug

平成19年9月末
Sep

平成19年10月末
Oct
At
end
（第3期末）
of 3rdFP

Newly Contracted Rents:
Continuing to achieve
increased rents mainly fromnew tenants
Sagamihara Shopping
Center:Commencing negotiation
to pursue higher rent
based on rising local land
value

16

IV. Financial Strategies

17IV-1. Credit Rating and Debt Composition as of October 31, 2007
Issuer Rating
Assigned by Moody’s Investors Services

A2 (Stable)
Lender

Term
Loan
1

Sumitomo Trust
Mizuho CB
SMBCBank of Tokyo Mitsubishi
UFJ
Chuo Mitsui Trust
Mitsubishi UFJ Trust

Sub Total
Term
Loan
2
Long
Term
Debt

Term
Loan
3
Term
Loan
4
Term
Loan
5

Term-end
Balance(in million Yen)

Interest Rate

5,200

1.19%(Floater)

Date ofMaturity

Remaining
Period(Duration)

Repayment
MethodNote

March 3,
2006

Mar 3,
2009

1 year &4 Months

BulletUnsecured

March 3,
2006

Mar 3,
2011

3 Years &4 Months

BulletUnsecured

1.60%（Fixed）

June 29,
2007

June 30,
2010

2 Years &8 Months

BulletUnsecured

1.95%（Fixed）

June 29,
2007

June 29,2012

4 Years &8 Months

BulletUnsecured

June 29,
2007

June 30,
2014

6 Years &8 Months

BulletUnsecured

5,500
1.39%(Fixed)
6,000
16,700
5,200

Ditto

Date of
Borrowings

5,500

1.29% (Floater)
1.92%(Fixed)

6,000

Sub Total

16,700

Ditto

8,500

Sub Total

8,500

Ditto

8,500

Sub Total

8,500

Sumitomo Trust
Development Bank ofJapan
Dai-Ichi Life

2,000

2.27%(Fixed)

1,000

2.40%(Fixed)

1,000

2.40%(Fixed)

Sub Total

4,000

3 Years &1 Months(Avg.)
Note: Interest rates are rounded to the second decimal point, and the remaining periods are rounded to a whole number. The averages for interest rates andremaining periods are weighted average figures using month-end balance.
Total

54,400

1.66%（Avg.）

18

IV-2. Financial Strategies: Preparation for the Risk of Fluctuating
Interest Rates and Spreading Out Maturity Dates
Total borrowings: 54.4 billion yen

Loan to value (LTV): 37.3%

Ratio of long-term borrowings: 100%

Ratio of fixed interest borrowings: 80.9%

Ratio
Ratio ofof Long-Term
Long-Term Debt
Debt

Ratio
Ratio ofof Fixed
Fixed Debt
Debt
100%

7.0%

100%

60%

60%

100.0%

40%

100.0%

93.0%
61.5%

20%

57.6%

100.0%

40%

Short Term

19.1%

35.9%

80%

38.5%

80%

80.9%

64.1%

20%

Long Term

Floater

42.4%

Fixed

0%

0%
IPO

IPO

End of 1st FP End of 2nd FP End of 3rd FP

End of 1st FP End of 2nd FP End of 3rd FP

All short-term debt has been refinanced tolong-term debt on July 29, 2007

Actions
Actions toto SpreadSpread Out
Out Debt
Debt Maturity
Maturity Schedule
Schedule(in billion yen)(in billion yen)

20

20

BeforeBefore Refinancing
Refinancing

15

15

10

10

5

5

After
After Refinancing
Refinancing

0

0
2007

2008

2009

2010

Periodending 10/07

Periods
ending 4/08
and 10/08

Periods
ending 4/09
and 10/09

Periods
ending 4/10
and 10/10

3/3/09
2.5

18.4

16.7

2011
Periods ending
4/11 and 10/11

2012

2007

2013

2008

2009

3/3/11
0.0

16.7

0.0

0.0

0.0

2010

2011

2012

2013

2014

Periods
Periods
Periods
Periods
Periods
Periods
Periods
Periodending 4/08 ending 4/09 ending 4/10 ending 4/11 ending 4/12 ending 4/13 ending 4/14
ending 10/07
and 10/14
and 10/13
and 10/12
and 10/11
and 10/10
and 10/09
and 10/08

Periods
Periods
Periods
ending 4/12 ending 4/13 and ending 4/14
and 10/12
10/13
and 10/14

54.3

0

0

03/03/09

06/30/10

03/03/11

06/29/12

16.7

8.5

16.7

8.5

06/30/14
0.0

4.0

54.4

19

IV-3. Financial Strategies: Sound Financial Policy
Sound Financial Policy
Conservative Financial Policy

Maintaining Multiple Financing Channels

Spreading Out Debt Maturities

Maintaining Good Relationships with Prominent
Lenders to Secure Stable Debt and Additional
Borrowing Capability

Preparing for Future Interest Rate Fluctuation

Diversification of borrowing
period and repayment dates

Maintaining a Conservative Leverage Ratio Consistently
Consistently maintain
maintain LTV
LTV atat aa conservative
conservative 40-50%
40-50% toto ensureensure

financingfinancing capabilities
capabilities forfor forthcoming
forthcoming acquisitionsacquisitions
Capacity
Capacity ofof Additional
Additional Borrowings
Borrowings
andand Acquisitions
Acquisitions
Approx. ¥37 bn
Capacity for additional borrowings（Unit: Billion Yen）

Ceiling
Ceiling LTV
LTV == ①①

3年
Capacity for
Additional Borrowings
Approx. 37.0②②

Current Assets
13.0

①①

Capacity for
Additional Acquisitions
Approx. 37.0

Borrowings
54.
54.4

Operational goal 50%(Scope for operations:40-50%)

Hedging against the risk ofrising interest ratesPeriod-end
Period-end LTV
LTV == ②②
Period-End 37.3%

The refinancing was executed on June 29, 2007
extending the borrowing periods and spreading out
repayment dates. This policy will continue to befollowed as a means to improve the stability offinancial operations.

The current ratio of fixed interest borrowings is
80.9%.
Top REIT will closely monitor conditions of shortterm and long-term interest rate market and takeappropriate action if necessary.

Building of a stable bank formation
Maintaining financial flexibility & capability

5年

Security Deposit (with interest)1.2

Other 6.2

Fixed Assets
132.8
132.8

Ratio of interest-bearing debt
to total assets
38.1%

Net assets 84.0

All borrowings have been obtained unsecured andan issuer rating has been obtained.
Top REIT continues to maintain stable transactions
with six banks. Top REIT has been dealt with since
time of the IPO. Development Bank of Japan and
DaiDai-Ichi Mutual Life Insurance has joined as new
lenders of a 7-years term loan since June 2007.

20

V. Third Fiscal Period Results (Ended October 31, 2007)21

V-1. Income Statement (Summary) / Dividend Statement■Income Statement
Accounting Item

■Dividend Statement
3rd FPMay 1, 2007 – October 31,
2007 (184days)

2nd FP
Nov 1, 2006 – April 30,
2007 (181days)

Value(in millions yen)Value
(In million yen)(%)

1. Operating Revenue

4,715

100.0

4,526

100.0

2. Operating Expenses

2,465

52.3

1,878

41.5

Rental expenses

1,970

1,388

Asset management fees

367

367

Other operating expenses

126

122

2,250

47.7

2,647

58.5

1. Non-Operating Income

43

0.9

10

0.2

Interest received

16

7

Other non-operating income

27

2

II Non-Operating Income and Expenses

2. Non-Operating Expenses
Interest paid

444

9.4

332

414

307

Amortization of funding costs

55

New investment unit issue costsーーOther non-operating expenses

24
1,848

Net income before income taxes

1,848

2,324

Corporate residents and business taxes

1

1

Corporate tax adjustment

00

Net Income

1,847

Retained Earnings at the End of
Period

1,847

7.3

19

Ordinary Income

39.2

39.2

2,324

2,323

2nd FP
Nov 1, 2006 – April 30, 2007
(181days)Value(in millions yen)Value
(in millions yen)Accounting Item(%)

I. Operating Revenue and Expenses

Operating Income

3rd FPMay 1, 2007 – October 31,
2007 (184days)

51.4

Retained earnings
at end of period

1,847

2,323

Total Dividend
Amount

1,847

2,323

(Dividend per Unit)(yen)（11,921）（14,992）

Retained earnings
carried forward

00¾ Contribution of properties acquired in 2nd FP
Fukasawa House H&I, Musashiurawa Shopping
Square and OAK PLAZA for full period¾ Reduced rents of Ito-Yokado Higashi-Narashino Store
since August 1, 2007

【Rental expenses】
Depreciation: ¥927mn
Management expenses: ¥305mn
Utility Cost: ¥166mn and others

51.3

2,323

22

V-2. Balance Sheets (Summary)
3rd FP Ended
October 31, 2007

2nd FP Ended
April 30, 2007

3rd FP Ended
October 31, 2007

Accounting Item

Accounting Item
Value
(in millions yen)

(%)

Value
( in millions yen)

(%)

Value
(in millions yen)

(%)

Value
(in millions yen)

1,325

0.9

22,103(%)

Liabilities

Assets
I Total Current Assets

13,062

Cash and deposits

4,745Cash and deposits held in trust
account
Tenants receivables
Consumption tax
refund receivable

9.0

8.6

593

8,243

9,840

32

30

-

Other current assets

12,571

2,055

40

50

132,875

91.0

133,706

91.4

1. Total Investment Properties, net

132,698

90.9

133,576

91.3

Buildings, etc. in trust

43,524

Land in trust

89,174

I Total Current Liabilities
Accounts payable

57

95

Short-term debt-

20,900

Other account payable

240

283

Expenses payable

143

Consumption tax payable

171

Rents received in advance

710

731

2

3

Other current liabilities

II Total Fixed Assets

44,402
89,174

II Total Fixed Liabilities
Tenant Lease and security
deposits in trust
Derivative debt

6,065

6,160

0

0.0

Total Liabilities

Other intangible assets

0

0.0

0

0.0

Net Assets

176

0.1

129

0.1

10

10

Long-term prepaid expenses

60

37

Deferred tax assets

57

46

Other investments

48

34

III Total Deferred Assets

34

Organization expenses(initial expense)

34
145,972

Tenant leasehold and security
deposits, etc

0.0

39

0.0

39
100.0

146,317100.0

39,701
33,400

0.0

Leasehold and security deposits

41.5

-

54,4000

3. Total Investment and Other Assets

60,627

15.1

88
Refinancing

Long-term debt

2. Total Intangible Assets

Total Assets

2nd FP Ended
April 30, 2007

162

27.1

141

61,95242.4

61,80542.2

I Total Unitholders’ Equity

84,107

57.6

84,58357.8

1. Unitholders’ equity

82,26056.3

82,26056.2

2. Reserves
Retained earnings at
period end
Total reserves

1,847

2,323

1,847

1.3

2,323

1.6

II Adjustments for valuation,
conversion, etc.
Deferred hedge losses

△88

△0.0

△71

△0.0

Total Net Assets
Total Liabilities and Net
Assets84,01957.6

84,51157.8

145,972

100.0

146,317100.0

Total debts: : ¥54,400mn (1)

△88

△71

Of which, interest-bearing debt: ¥１,275mn (2)(1) + (2) Total interest-bearing debt: ¥55,675mn

23V-3. Major Financial Indicators
3rd FP
Nov 1, 2006 –April 30, 2007

2nd FP
Nov 1, 2006 –April 30, 2007

Normalized 1st FP
Nov 2, 2005 – Oct31, 2006

Remarks

Indicators of First Fiscal Period have been calculated asfollows(First Fiscal Period Results) / 245 Days x 365 Days / 2

184 days

181 days

182.5 days

Ratio of interest-bearing debt tototal assets at period end

38.1%

38.0%

29.1%

Interest-bearing debt at period end / total assets atperiod end

Ratio of debt to total assets atperiod end (“LTV”)

37.3%

37.1%

28.0%

Total debt at period end / total assets at period end¥3,671mn¥4,010mn¥3,551mn

Rental revenue – rental expenses + depreciation for theperiod

5.6%

6.1%

6.3%

Rental NOI (semi-annualized) x 2 / total acquisition priceof portfolio at period end¥2,775mn¥3,197mn¥2,763mn¥17,903¥20,625¥17,827

FFO/number of outstanding units issued at period end

1.3%

1.7％

1.9％

Ordinary income / (total assets at beginning period (forfirst fiscal period, total assets as of March 1, 2006) +average total assets at period end) / 2

-2.5%

-3.4%

-3.9%

2.2%

2.7%

2.5%

-4.3%

-5.5%

-5.0%

57.6%

57.8%

66.2%

Days of Fiscal Period

Rental NOI (Net Operating Income)Rental NOI yield
Funds from Operation (FFO)
FFO per unit

Return on Assets (ROA)
Annualized
Return on Equity (ROE)
Annualized
Unitholders’ Equity to Total Asset
Ratio at period end

Net income + depreciation for the period

Net income/(net assets at beginning period (for first fiscal
period, net assets as of March 1, 2006) + average net
assets at period end) / 2

Unitholders’ equity at period end/total assets at periodend24V-4. Forecast for Fourth and Fifth Fiscal Periods
Items

4th FP
Nov 1, 2007 – April 30, 2008
(Forecast)

5th FPMay 1, 2008 – October 31, 2008
(Forecast)

3rd FPMay 1, 2007 – Oct 31, 2007

Days of Fiscal Period

182 days

184 days

184 days

Operating Revenue¥4,661mn¥4,712mn¥4,715mn

Operating Expenses¥2,450mn¥2,500mn¥2,465mn

Property expenses¥1,016mn¥1,064mn¥1,043mn(Tax & Public Due :¥454mn)(Tax & Public Due: ¥506mn)(Tax & Public Due: ¥490mn)¥931mn¥931mn¥927mnOperating Income¥2,211mn¥2,211mn¥2,250mn

Ordinary Income¥1,721mn¥1,706mn¥1,848mn

Net Income¥1,720mn¥1,705mn¥1,847mn

155,000 Units

155,000 Units

155,000 Units¥11,100¥11,000¥11,921

NOI (Rental)¥3,645mn¥3,648mn¥3,671mn

FFO¥2,651mn¥2,636mn¥2,775mn

Depreciation

Number of Units Issued
Dividend per Unit

Assumptions

Number of Properties: 11, Number of Units Issued: 155,000 Units
Total Debts：¥54.4Billion
Non-Operating Expenses
4th Fiscal Period ¥504mn (of which interest to be paid ¥473mn)
5th Fiscal Period ¥520mn (of which interest to be paid ¥491mn)

Number of Properties：1125

VI. Portfolio Overview

26

VI-1. Portfolio Map
Tokyo
metropolitan area

Osaka metropolitan
area in Kansai

Musashiurawa
Shopping Square

Amagasaki

Faret East Building
Fukasawa-House
深沢ハウスＨＩ棟
tower H & I

Ito-Yokado
Higashi-Narashino

Fukasawa-House
tower H & I
Sagamihara
Shopping Center

Shin-Osaka

Osaka

Kyobashi

日鉄本町ビルNittetsu Honmachi
Building
TennojiHarumiIsland Triton Square オフィスタワーＹ
Office Tower Y
晴海アイランドトリトンスクエア

Central Tokyo

Akihabara

Iidabashi
OAK PLAZA
Kanda

Kanda Park Plaza

Shinjuku
YotsuyaShibuyaWard

ChiyodaWard

Akasaka Oji
Building

Shibuya

Shinagawa
Ward

Tokyo

Chuo Ward
Shinbashi

MinatoWard

武蔵浦和ショッピングスクエア
Musashiurawa
Shopping Square

Harumi Island Triton
Square Office Tower Y

NEC Head
Office Building

Shinagawa

NEC
Head Office
日本電気本社ビル
Building

27

VI-2. Portfolio Overview as of End of Third Fiscal Period
Asset
Class

Address

Acquisition Date

Floor Area(m2)

Rentable
Area (m2)Completion
Date

Acquisition
Price

Share
(%)

NEC Head Office
Building

Minato Ward,Tokyo

March 3, 2006

144,476.05

72,238.03

Jan 1990¥41,950mn

32.1

100.0

1

1.6

Harumi Island Triton
Square Office Tower Y

Chuo Ward,Tokyo

March 1, 2006

267,132.67

23,239.62

Oct 2001¥33,000mn

25.2

100.0

7

1.4

Akasaka Oji Building

Minato Ward,Tokyo

March 1, 2006

10,063.05

7,281.83

Apr 1989¥9,660mn

7.4

100.0

3

6.3

Chiyoda Ward,Tokyo

March 1, 2006

5,511.83

4,537.66

Nov 1959¥5,156mn

3.9

100.0

10

14.1

Tokyo
Faret East Building
Metropolitan

Tachikawa,
Tokyo

March 1, 2006

16,206.34

4,663.33

Dec 1994¥1,520mn

1.2

100.0

1

2.9

Nittetsu Honmachi
Building

Osaka City,
Osaka

March 1, 2006

6,714.09

4,409.52

Jun 1991¥1,100mn

0.8

100.0

10

8.0

－

116,369.99－¥92,386mn

70.6

－

32

－

Area

CentralTokyo
OfficeProperty

Kanda Park Plaza

Kansai

Sub-Total (6 Properties)
March 1, 2006

56,351.42

61,763.28

Aug 1993¥12,000mn

9.2

100.0

2

3.8

Narashino, Chiba

June 30, 2006

45,338.37

51,098.42

Oct 1994¥8,900mn

6.8

100.0

1

7.7

Saitama City,
SaitamaMarch 19, 2007

28,930.36

14,960.69

Oct 2005¥4,335mn

3.3

100.0

3

8.5

－

127,822.39－¥25,235mn

19.3

100.0

6

－

12,135.36

11,357.44

June 2004¥10,635mn

8.1

93.65

1

1.6

－

11,357.44－¥10,635mn

8.1

93.65

1

－

6,121.85

6,121,85

April 1985

¥2,590mn

2.0

100.0

1

7.7

Sub-Total (1 Property)－

6,121,85－¥2,590mn

2.0

100.0

1

－

Total (11 Properties)－

261,671.67－¥130,846mn

100.0

99.7

40

2.2

Tokyo
Metropolitan Ito-Yokado HigashiNarashinoMusashiurawa
Shopping Square
Sub-Total (3Properties)

Fukasawa-House

Tokyo
Metropolitan tower H & I
Residential

Setagaya Ward, December 8, 2006
Tokyo

Sub-Total (1 Property)
Central
Tokyo

PML
（％）

Sagamihara,
Kanagawa

Sagamihara
Shopping Center

RetailOccupancy No. of
Tenants(%)

OAK PLAZA

Chiyoda Ward,Tokyo

March 20 2007

Others28

VI-3. Appraisal Values as of End of Third Fiscal Period(In millions yen)

Asset Class

Area

Appraisal
Price (B)

Appraisal Price as ofApr 30, 2007

Appraisal
Price (C)

(B)-(A)

Appraisal Price as of
October 31, 2007

Appraisal
Price (D)(Ｃ)-(A)(D)-(A)

43,04041,95047,0505,100

51,5009,550

52,50010,550

Harumi Island Triton
Square Office Tower Y

33,13933,00039,1006,100

41,3008,300

43,80010,800Akasaka Oji Building

9,916

9,660

11,7002,040

14,2004,540

14,3004,640

Kanda Park Plaza

5,178

5,156

5,202

46

5,260

104

5,513

357

Tokyo
Metropolitan

Faret East Building

1,452

1,520

2,140

620

2,450

930

2,550

1,030

KansaiNittetsu Honmachi
Building

1,125

1,100

1,140

40

1,330

230

1,670

570

Sub-Total (6 Properties)

93,85392,386

106,332

13,946116,040

23,654

120,333

27,947

Sagamihara Shopping
Center

11,93912,00012,100100

12,100100

12,100100

Ito-Yokado HigashiNarashino

8,927

8,900

9,010

110

6,888

-2,012

5,873-3,027

Musashiurawa Shopping
Square

4,449

4,335

－

－

4,350

15

4,350

15

Sub-Total (2 Properties)

25,31525,235

21,110210

23,338-1,89722,323-2,912

Fukasawa-House tower
H&I

10,902

10,635－－

10,500-135

10,500△135

Sub-total (1 property)

10,902

10,635－－

10,500-135

10,500-135

OAK PLAZA

2,627

2,590

－

－

2,590

0

2,767

177

Sub-total (1 property)

2,627

2,590

－

－

2,590

0

2,767

177

Total(11Properties)

132,698

130,846

127,442

14,156

152,468

21,632

155,923

25,077

OfficeTokyo
Metropolitan

Tokyo
Metropolitan
Residential

OthersBook Value

Appraisal Price as of
Oct 31,2006

NEC Head Office Building
CentralTokyo

RetailProperty

Acquisition
Price

CentralTokyo

29

VI-4. Appraisal Cap
IPO

Properties

DirectCapitalization
Method:Cap Rate

First Fiscal Period

Discounted Cash Flow Method

DirectCapitalization
Method:Cap Rate

Discount Rate

Terminal
CapitalizationRate

4.2%(Next 7yrs)
4.7% (afterwards)

4.8%

4.1%

Second Fiscal Period

Discounted Cash Flow Method

DirectCapitalization
Method:Cap Rate

Third Fiscal Period

Discounted Cash Flow Method

Discounted Cash Flow Method

Discount Rate

Terminal
CapitalizationRate

3.8%(Next 7yrs)
4.3% (afterwards)

4.4%

4.1%

3.7% (Next 6yrs)
4.2% (afterwards)

4.2%

4.0%

3.5% (next 6yrs)
4.2% (afterwards)

4.2%

Discount Rate

Terminal
Capitalization
Rate

DirectCapitalization
Method:Cap Rate

Discount Rate

Terminal
Capitalization
Rate

NEC Head Office Building

4.5%

Harumi Island Triton Square
Office Tower Y

5.3%

5.0%

5.6%

4.6%

4.3%

4.8%

4.4%

4.1%

4.6%

4.3%

4.0%

4.5%

Akasaka Oji Building

4.8%

5.0%

5.1%

4.4%

4.6%

4.7%

4.2%

4.4%

4.5%

4.2%

4.3%

4.5%

Kanda Park Plaza

5.2%

4.8%

5.8%

5.2%

4.8%

5.8%

5.2%

4.8%

5.8%

5.1%

4.7%

5.7%

Faret East Building

6.3%

6.4%

6.6%

5.9%

6.0%

6.2%

5.7%

5.8%

6.0%

5.5%

5.6%

5.8%

Nittetsu Honmachi Building

6.5%

6.5%

6.8%

6.3%

6.3%

6.6%

6.2%

6.2%

6.5%

6.0%

6.2%

6.3%

Sagamihara Shopping
Center

5.3%

5.2%

5.5%

5.3%

5.2%

5.5%

5.3%

5.2%

5.5%

5.3%

5.1%

5.5%

Ito-Yokado HigashiNarashino

－

－

－

6.3%

5.4%

6.8%

6.1%

5.8%

6.6%

6.1%

5.2%

6.6%

Musashiurawa Shopping
Square

－

－

－

－

－

－

5.1%

5.0%

5.3%

5.1%

4.8%

5.3%

Fukasawa-House tower H&I

－

－

－

－

－

－

4.3%

4.0%

4.5%

4.3%

4.0%

4.5%

OAK PLAZA

－

－

－

－

－

－

4.8%

4.3%

5.4%

4.7%

4.2%

5.3%

Appraisers in Charge

Properties

Tanizawa Sogo Appraisal Co., Ltd.

NEC Head Office Building, Akasaka Oji Building, Faret East Building, Nittetsu Honmachi Building

Japan Real Estate Institute

Harumi Island Triton Square Office Tower Y, Fukasawa-House tower H&I

Chuo Real Estate Appraisal Co., Ltd

Kanda Park Plaza, Ito-Yokado Higashi-Narashino, OAK PLAZADAIWA REAL ESTATE APPRAISAL Corporation.

Sagamihara Shopping Center, Musashiurawa Shopping Square30

VII. Appendix (1) Portfolio Details

31VII-1. Operating Income by Property Basis(in millions yen)
NEC Head
OfficeBuilding

Harumi Island
Triton Square
Office Tower Y

Akasaka Oji
Building

Kanda Park
Plaza

Faret East
Building

Nittetsu
Honmachi
Building

Sagamihara
Shopping
Center

Ito-Yokado
HigashiNarashinoMusashiurawa Fukasawa- OAK PLAZA
Shopping
House Tower
SquareH&I

184 Days

184 Days

184 Days

184 Days

184 Days

184 Days

184 Days

184 Days

184 Days

184 Days

184 Days

Total Revenue

1,370

1,316

407

186

124

107

408

299

129

270

94

Rental Revenue

1,370

1,316

407

186

124

107

408

299

129

250

94

Property RelatedExpenses Total

217

361

109

42

60

41

113

39

3

51

2

Property
Management Fee

1

167

37

11

26

15

2

1

1

40

0

Taxes and Public
Charges

212

90

35

13

9

9

84

31

-

3

-

Utility Costs

-

96

24

12

22

10

-

-

-

0

-

Insurance Fees

1

2

0

0

0

0

1

1

0

0

0

Repair Expenses

-

1

9

2

0

3

23

2

-

4

0

Others

1

2

2

2

1

2

1

2

1

2

1

ＮＯＩ

1,152

955

297

143

64

65

294

260

125

219

91

Depreciation &Amortization

233

266

31

12

29

25

78

123

50

66

9

Operating Income

919

689

266

131

34

40

216

136

75

152

81

Capital Expenditures

-

-

-

11

0

28

9

-

-

-

-

Days of Fiscal Period

Property Tax are charged from 3rd Fiscal Period except
Musashiurawa and OAK Plaza. Property Tax for theseproperties will be charged from 5th fiscal period.

Replacing airconditioning
equipments andothersReplacing airconditioning
equipments andothersReplacingdisasterprevention
equipment32

VII-2-1. NEC Head Office Building
Address

5-7-1 Shiba, Minato-ku,
TokyoAcquisitionPrice

41.95 billion yen

Site Area

21,190.14m2

Floor Space

144,476.05m2

Floors3 Basement Floors
39 Floors Above Ground

Completion

January 1990

Title

Land, Building:
Co-Ownership (50%)■ The building enjoys great transportation convenience with four railway lines usable (JR Yamanote Line, Keihin-Tohoku Line, Toei
Subway Mita Line and Toei Asakusa Line) providing good access to Haneda Airport and various places in central Tokyo.
■ This property is widely referred to as the NEC Super Tower and is a landmark in Tokyo.
■ NEC Corporation has its head office in this building. The area forms a conglomeration of the NEC group affiliates.

33

VII-2-2. Harumi Island Triton Square Office Tower Y
Address

1-8-11 Harumi, Chuo-ku,
TokyoAcquisitionPrice

33 billion yen

Site Area

39,569.53m2

Floor
Space

267,132.67m2

Floors4 Basement Floors , 40 Floors
Above Ground

Completion

October 2001

Title

Land: Co-ownership(16,884,921/100,000,000)
Building: Compartmentalized
ownership (3rd – 15th Floor )■ Harumi Island Triton Square is a large multi-use complex completed in 2001 through coordinated redevelopment of the Harumi district of Tokyo,
a bayside area. The Square has three skyscraper office buildings as its landmark, retail facilities and a high-rise condominium.
■ The property is a 40-story skyscraper that is an intelligent office building built in 2001 and equipped with state-of-the-art specifications/facilities.
■ The Tokyo head office of Sumitomo Metal Industries and the head office of Japan Trustee Services Bank are the main tenants.

34

VII-2-3. Akasaka Oji Building
Address

8-1-22 Akasaka, Minato-ku, Tokyo

Acquisition Price

9.66 billion yen

Site Area and Floor
Space

2,023.72m2／10,063.05m2

Floors

1 Basement floor, 9 Floors Above
GroundCompletion

April 1989

Title

Ownership■ This building is in an area extending from the Akasaka district of Tokyo, an area home to many hotels and embassies that is also popular among
foreign firms, to the Aoyama district, home to fashion, culture and music with many luxury brand shops.
■ The building faces Aoyama Dori (avenue) and enjoys great transit convenience as the closest station (Aoyama-itchome Station) has tracks for
the Tokyo Metro Subway Ginza and Hanzomon Lines, and for the Toei Subway Oedo Line. Although located in the center of Tokyo, the area isrich in greenery with the Akasaka Imperial Grounds extending along the opposing side of Aoyama Dori.
■ The anchor tenant is Sony Computer Entertainment.

35

VII-2-4. Office Properties
Kanda
Park Plaza

Faret East Building

Nittetsu
Honmachi
Building

Address

2-2-2 Kajimachi, Chiyoda-ku, Tokyo

Acquisition Price

5.156 billion yen

Site Area and Floor Space

632.98m2／5,511.83m2

Floors

1 Basement floor, 9 Floors Above
GroundCompletion

November 1959

Title

Ownership

Address

2-34-7 Akebonocho, Tachikawa, Tokyo

Acquisition Price

1.52 billion yen

Site Area and Floor Space

2,350.84m2／16,206.34m2

Floors

1 Basement Floor, 12 Floors Above Ground

Completion

December 1994

Title

Land: Co-ownership (44,544,000/100,000,000)
Building: Compartmentalized Ownership(2rd – 5th and a part of 6th Floor )Address

1-10-24 Utsubohonmachi, Nishi-ku,
Osaka

Acquisition Price

1.1 billion yen

Site Area and Floor Space

852.55m2／6,714.09m2

Floors2 Basement Floor, 12 Floors Above
GroundCompletion

June 1991

Title

Ownership36

VII-2-5. Sagamihara Shopping Center

Address

3-13-33 Kobuchi, Sagamihara, Kanagawa

Acquisition Price

12 billion yen

Site Area and Floor
Space

30,949.80m2／56,351.42m2

Floors

1 Basement Floor, 4 Floors Above Ground

Completion

August 1993

Title

Ownership■ Located along national highway 16, a lengthy central thoroughfare in the Tokyo metropolitan area, the large shopping center is also near Kobuchi Station on the
JR Yokohama Line, enjoying excellent access by road or rail. This commercial area has a population of some 620,000 within a 5km radius and about 1.86
million within a 10km radius. Many shopping centers, home centers and specialty stores are found along national highway 16, including the neighboring Jusco
Sagamihara Shopping Center.
■ This property has approximately 19,000m2 in sales space comprised of the directly operated Ito-Yokado and specialty shops, and provides parking for over
1,300 vehicles. The site also features a family restaurant and gardening specialty store.

37

VII-2-6. Retail Properties
Musashiurawa Shopping
SquareAddress

7-3-1, Bessho, Minamiward, Saitama-city,
SaitamaAcquisition Price

4.3 billion yen

Area of Land/Floor Space

8,317.99.㎡／28,930.36㎡

Structure/Floors

Steel structure with flat
roof / 1 basement floor,
4 floors above ground

Completion

October 2005

Type of Title

Co-ownership ("kyoyu")
of trust beneficiaryinterests in real estate(Ratio of ownership is 50%)

ItoIto-Yokado HigashiHigashi-Narashino Store

Address

7-3-1 Higashi Narashino,
Narashino, Chiba

Acquisition Price

8.9 billion yen

Site Area and Floor
Space

29,854.57m2／
45,338.37m2

Floors

1 Basement Floor, 4Floors Above Ground

Completion

October 1994

Title

Ownership38

VII-2-7. Fukasawa-House tower H & I

Address

2-1-2 Fukasawa, Setagaya Ward, Tokyo

Acquisition Price

10.6 billion yen

Site Area andFloor Space

39,840.90m2／12,135.36m2

Floors14 Floors Above Ground

Completion

June 2004

Title

Land: Co-ownership (1,584,269/10,000,000)
Building: Compartmentalized ownership■ The surrounding area has a luxurious and spacious streetscape and is one of the most prestigious housing areas in Tokyo. The property is
adjacent to Komazawa Park and the site itself has rich greenery providing an excellent residential environment.
■ Fukasawa-House is a large housing project that consists of 13 residential tower with 772 units and a retail building within an expansive site. All
residences house underground parking. The subject property is the rental housing buildings in the project and has 124 units ranging in size from
2-4 bedroom units with areas of some 75m2 to 120m2. It comes with excellent anti-disaster facilities including an anti-earthquake structure andpotable water generation system for emergencies.

39VII-2-8. OAK PLAZA

Address

2-10-6 Kanda Awajicho, Chiyoda-ward,Tokyo

Acquisition Price

2.59billion yen

Area of Land/Floor
Space

1,013.49㎡／6,121.85㎡

Structure/Floors

SRC structure with a flat roofFloors / 1
basement floor, 10 floors above ground

Completion

CompletionApril 1985
(Completion Date of the conversion
March 2007)

Type of Title

Ownership■ This property is highly accessible as it is only a 3 to 6 minute walk from six stations including the JR Ochanomizu Station, JR Akihabara Station,
Tokyo Metro Marunouchi Line Awajicho Station. It boasts a sound location near the prime office areas of Marunouchi and Otemachi aroundTokyo Station and the Akihabara area and its IT base. etc.
■Since its completion in 1985, this property was used as a hotel named as Hotel New Kanda and now has been converted to a multi-use buildingthat has, in addition to hotels, offices (service offices and meeting rooms for rent), restaurant and retail shop.

40

VII-3. Contents of Memorandum of Understanding
Withdrawal of Early Termination Notice from ItoIto-Yokado¾ ItoIto-Yokado withdraws the notice of early termination dated February 22, 2007.
¾ Top REIT agrees to such withdrawal.
Agreement on the Rent Revision

Rent = Fixed Rent (minimum rent) + Sales-Based Rent

Adopt SalesSales-based Rent Scheme (Change in method of rent
calculation)
Confirm minimum rent until the maturity of the leaseagreement

Fixed Annual Rent

Sales-Based Rent

Agree on Reduction in the fixed rent (Revised on August 1, 2007)
Share the plan and information to maximize property value（Business plan for the site, the annual results of sales andthe number of customers who visited the site)

Before Revision

After Revision

JPY725mn

JPY471mn (revised on August 31, 2007)

N/A

The sales-based rent is the amount obtained from multiplying the excess over a specificamount of annual sales generated during a period from March to February of the following year
from the lots directly operated by Ito-Yokado by a specific rate.
The sales-based rent will not accrue before February 2008 and can accrue from March 2008.

Leased Area

51,098.42㎡

Deposit and Guarantee

Deposit:JPY1,135mn, Guarantee: JPY1,275mn (as of Oct 31, 2007)

Maturity of the Lease

November 30, 2014
Terms and conditions of the rent system including method of calculation of the fixed rent andthe sales-based rent shall not change until November 30, 2014, the maturity of the leaseagreement.

Rent Renewal

3-year regular review

Prohibition of Early
Termination

a. Termination is prohibited for the first thirteen years (until November 30, 2007) regardless of reasons therefore
b. Even after the period set forth in a., early termination is prohibited unless continuation of the agreement is impracticable forunavoidable reasons.

Other Issues

Ito-Yokado should bear utilities costs and routine management expenses.

N/A

Top REIT is entitled to request Ito-Yokado to give a reasonable explanation of its business planfor the site rented by it.
Ito-Yokado shall submit to Top REIT the annual results of the sales and the number ofcustomers.

41

VIII. Appendix (2) Structure of Asset Manager

42

VIII-1. Decision Making Process for Acquisition and Disposition of Properties

少数意見の報告
Report of minority opinions
（注2）

（注1）

ﾘｽｸ･
ｺﾝﾌﾟﾗｲｱﾝｽ
Risk and
委員会
Compliance(Note 1)

Department
立案部
in charge ofpreparing a
Proposals

ｺﾝﾌﾟﾗｲｱﾝｽ
室Compliance

Committee

審議・決議
Examination

Examination

and（否決） decision
差戻し

投資運用
Investment
委員会
and

取締役会
Board ofDirectors(Rejection)

審議・
決議
Examination
anddecision（否決・中止（注3））(Rejection and/or

決定FinalDecisionManagement
Committee

Office審査(Note 2)

審議・決議
Examination
and（否決） decision(Rejection)（注1）以下いずれかに該当する場合にはリスク・コンプライアンス委員会に付議します。
Suspension) (Note 3)
Return• 利益相反取引規程に定める利害関係者との重要な取引（この場合、全会一致の議決が必要）(Note 1)will be passed to the Risk and Compliance Committee if they fall on either of the followings:• Proposals
コンプライアンス室長がリスク・コンプライアンス委員会での審議を必要と認める場合• Material transactions with interested parties defined in the rules on transactions with interested parties（注2）以下いずれかに該当する場合には取締役会に付議します。
(unanimous vote is required in this case)• 取得又は売却予定額が100億円超かつ本投資法人の総資産額の10%を超える場合• The head of the Compliance Office recognizes the discussion of the issues in the Risk and Compliance Committee to be necessary.
• Proposals
資金調達計画（資金調達に関する最終意思決定は本投資法人の役員会にて行われます。）(Note 2)will be passed to the Board of Directors if they fall under any of the followings:• The price of proposed acquisition or sale is over 10 billion yen and over 10% of Top REIT’s total assets.
• 利益相反取引規程に定める利害関係者との重要な取引• Capital raising plans (Final decisions on raising capital shall be made by the Board of Directors of Top REIT.)（注3）コンプライアンス室長は、投資運用委員会における審議、決議の過程で法令等に照らして問題点がある• Material transactions with interested parties defined in the rules on transactions with interested parties(Noteと判断する場合には、審議及び決議を中止し、立案部に差し戻すことができます。
3) The head of the Compliance Office can suspend discussions and decisions and return the item to the Department in charge of if he or
she judges that the item has legal problems in the process of discussions or decision making at the Investment and Management Committee.

43

VIII-2. Overview of Asset Manager
Name

Top REIT Asset Management Co., Ltd.

名

称

Address

Nittetsu Nihonbashi Building
1-13-1
Nihonbashi, Chuo Ward, Tokyo地
東京都中央区日本橋一丁目13番1号日鐵日本橋ビル

所

在Established

トップリート・アセットマネジメント株式会社（Top REIT Asset Management Co., Ltd.）Oct 22, 2004

設
平成16年10月22日¥300mnPaid-in
Capital 立
Shareholders The Sumitomo Trust & Banking Co., Ltd. 38%
資本金と株主構成 3億円
Nippon Steel City Produce, Inc. 31%
住友信託銀行株式会社
38%
Oji Real
Estate Co., Ltd. 31%
株式会社新日鉄都市開発

Business
Description

事業

Directors
代表Milestone

沿

内

31%

株主総会
株主総会
監査役
取締役会
投資運用委員会

Investment
trust manager and王子不動産株式会社31%
asset manager of J-REIT
Registered Financial Instruments Firm (Asset Management),
容投資法人資産運用業
No. 365(Kinsho), issued by the Director, Kanto Local Finance Bureau
and者President
代表取締役社長
Representative
Director
平成19年7月1日より代表取締役社長
Oct 22, 2004
Dec 10, 2004
革 平成16年12月10日
May 10, 2005

平成17年5月10日

Jun 28, 2005

平成17年6月28日
Nov 2,
2005
平成17年11月2日※全て平成19年6月20日現在
Sep 30, 2007

Nov 27, 2007

:土田Nobuhito
ENDO
京一

投資運用部

ﾘｽｸ･ｺﾝﾌﾟﾗｲｱﾝｽ委員会
代表取締役社長

財務部

企画・管理部

ｺﾝﾌﾟﾗｲｱﾝｽ室

遠藤 晋民: Top REIT Asset Management (“TRAM”) established: TRAM obtained a license for real estate agent (The Governor’s of Tokyo No. (1) 83904)
宅地建物取引業の免許取得 東京都知事（1）第83904号: TRAM obtained an approval for discretionary agent license for real estate transaction
宅地建物取引業法上の取引一任代理等の認可取得(The Minister of Land, Infrastructure and Transport No. 35)
国土交通大臣認可第35号: TRAM obtained an approval for asset manager for investment corporation(The Prime Minister No. 47)
投資信託委託業者の認可取得
内閣総理大臣第47号:トップリート投資法人と資産運用委託契約の締結
TRAM entered into the Asset Management Agreement with Top REIT, Inc.
: Deemed Registered Financial Instruments Firm (Asset Management), No. 365 (Kinsho),issued by the Director, Kanto Local Finance Bureau.
: Formally submitted applications to register as Financial Instruments Firm

44

IX. Appendix (3) Other Reference45IX-1. Summary of Real Estate Market Indicators■ Real Estate Leasing Market
Risk
Premium
Marunomuchi

Nihonbashi
Kanda
Toranomon
Shiodome
Akasaka
Roppongi
KohnanNishi Shinjuku
Shibuya
Ikebukuro
Ueno
Ohsaki8
6
4

13,96013,86013,83013,67013,67013,49013,35013,22013,18013,11013,04013,12013,23013,320Jun -0 4

Sep-04

Dec-04Mar-0 5Jun -0 5

Sep-05

Dec-05Mar-0 6

Jun -0 6

Sep-06

Dec-06Mar-0 7

1.8

Mar-0 4

2.3

14,090

2.4

Dec-03

2.7

14,190

2.9

Sep-03

3.6

1.7

1.6

13,9604.0

14,220

4.6

13,5305.1

Jun -0 3

5.7

14,330

5.7

Mar-0 35.1

20

Sep-07

6.0

14,520

4.9

6.0

Dec-02

9,000

4.4

7.0

14,46010,0004.2

14,48011,000

3.6

7.1

6.7

6.0

Sep-02

12,000Source: “The Japanese Real Estate Investor Survey” by Japan Real Estate Institute
Risk Premium: Cap Rate (Marunouchi )-10 Year JGB

Source: CBRE “Office Market Report”

Cap Rate (Residintial Property in Tokyo)

（％）

6.1

Jun -0 2

2007.10

2007.04

2006.10

2006.04

2005.10

2005.04

2004.10

2004.04

2003.10

2003.04

2002.10

2002.04

2001.102.0

1013,00014,7203.0

12

14,000Mar-0 2

4.0

(％）
14

15,00014,520

5.0

Yen/Tsubo
16,000

Sep-01

6.0

Dec-017.0

1.0

Rents per Tsubo
Average Vacancy Rate

Office Leasing Market in Central 5 wards in Tokyo

Cap Rate: Office in Central Tokyo

（％）
8.0

Jun -0 7■ Real Estate Sales Market

Residential (Condominium) Market in Tokyo (Historical rents per Tsubo)

in thousand yen/tsubo

10.8

8.0

Y 2003
Y 2004
Y 2005
Y 2006
Y 2007

7.5
7.0

10.6

6.5
6.0

10.4

5.5
5.0

10.2

Studio ("Jyonan Area" South West)
Family Type (South West Area)
Low Rise Condo for Expats

2007.10

2007.04

2006.10

2006.04

2005.10

2005.04

2004.10

2004.04

2003.104.5

10.0

Studio ("Jyoto Area" (East))
Family Type ("Jyoto Area" (East))
High Rise Condo for Expats

9.8
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Source: “Rental residential property information “FORRENT Monthly Report” by Recruit

Source: “The Japanese Real Estate Investor Survey” by Japan Real Estate Institute■ Retail Property Market

Cap Rate Retail Property in Tokyo
（％）

8.0

Shopping Center Sales (year-on-year comparison)

7.5
7.0
6.5

4.0

6.0
5.5

2.0

3.0
1.0

5.0
4.5
4.0

-1.0

3.5

-2.0
-4.0

Total

Tenants

Y2006 3Q

Y2006 2Q

Y2006 1Q

Y2007 1Q

Y2006 3Q

Y2006 2Q

Y2006 1Q

Y2005 4Q

Y2005 3Q

Y2005 2Q

Y2005 1Q

Y2004 4Q

Y2004 3Q

Y2004 2Q

Y2004 1Q

Y2003 4Q

Y2003 3Q

Y2003 2Q

Y2003 1Q

Y2002 4Q

Y2002 3Q

Y2002 2Q

Y2002 1Q

Y2001 4Q

Y2001 3Q

-5.0
Y2001 2Q

2007.10

2007.04

2006.10

2006.04

Urban Retail Property in Omote-Sando area

-3.0

Y2001 1Q

Urban Retail Property in Ginza area
Suburban SC

2005.10

2005.04

2004.10

2004.04

2003.100.0

Ancor Tenants

Source: “The Japanese Real Estate Investor Survey” by Japan Real Estate InstituteSource: “Annual Sales Statistics of Shopping Centers” by the Japan Council of Shopping Centers

46

IX-2. Characteristics of Top REIT
Top REIT AssetManagement（”TRAM”)

Asset
Management

DNA

Development

Capital+Property
Management Personnel

Top REIT

OfficeRetailBrokerage

Diversified
Portfolio

Three Major
Asset Classes

Residence
Other AssetClassesi.e., hotels andwarehouses

AssetManagement

Pursuing both steady growth and quality through a
blue-chip portfolio of excellent properties and prudent
management measures firmly founded in real estateexpertise
Strategic application of commissioned reports from athink tank

2. Optimal Application of Sponsor Strengths
Ensuring steady growth through the pipeline andwarehousing functions of sponsors

Sponsors
The Sumitomo Trust & Banking

1. Skilled Management of a Diversified Portfolio

Applying unique sponsor strengths to secure growth inasset value

38%

Nippon Steel City Produce
A wholly-owned subsidiaryof Nippon Steel31%

Oji Real Estate
A wholly-owned subsidiaryof Oji Paper

31%

SupportSponsorStrengths

Inheriting Sponsors’ DNA■ Top REIT Asset Management (“TRAM”) was established in collaboration withthree firms – The Sumitomo Trust & Banking, Nippon Steel City Produce andOji Real Estate.
■ Excellent personnel have been dispatched to TRAM from the three sponsors
to ensure real estate investment expertise as well as inheritance of theircorporate groups’ assets, that is, a long-term strategic view and diversified
know-how acquired through each of the sponsor’s businesses.

Ensuring Steady
IncomeSteady Growth ofPortfolio

Maximizing Investor Value
Utilizing Sponsor Strengths■ Sponsor skills shall be utilized to achieve steady growth by applying theirreal estate development abilities, brokerage networks and management
skills, including leasing activities that utilize the leasing demand of oursponsor groups.
■ Number of group companies
Sumitomo Trust Group
Nippon Steel GroupOji Paper Group

42
326
305

47

IX-3. Investment Policy
Diversified Portfolio
Asset Class
OfficeRetailResidence

Investment Focus

Allocation

Mainly in Central Tokyo
Three major metropolitan areasand core regional cities

Less Than
80%

Three major metropolitan areasand core regional cities

Less Than
50%

Mainly in Tokyo Metropolitan
Area Plus three major
metropolitan areas and coreregional cities

Less Than
50%

Investment focus will be determinedbased on characteristics of each asset

OthersLess Than
10%

Estimated Candidate Real Estate Market Nationally：
Approx. JPY 54.5 Trillion(Aggregation of three types of properties)

Residence
20%
28％
RetailAn array of
Choices fromThree Asset Class
Enable to ScreenCompetitive
Properties

Office52％

Source: STB Research Institute“Estimated Investment Market Size by Property Type” dated Oct 31, 2005

Pursuing steady external growth through a
blue-chip portfolio of diverse asset types

Effectively Apply the Characteristics
of Each Asset Class

Avoid a Bias with Certain Asset Classes

EnableSelective
Investment

HighlyCompetitive

TargetPursuing External Growth
Office buildings

Focusing on Blue-Chip
Properties

Pursuing Both Steady Growth and Quality

Retailproperties

Residential
properties

Lowly
Competitive48

IX-4. Internal Growth Policy
Internal Growth Policy
Striving to maintain and improve revenues over the medium to long-term by maintaining and improving tenantsatisfaction (“Tenant First” Policy)A.

Maintaining and improving of tenant relations results in good relationships with tenants and consequently
the maintenance of a high occupancy

B. The examination of detailed measures to improve earnings by sharing themes and issues with the property
manager and developing measures that meet the unique criteria of each property through periodical meetings
C. Maintaining and securing of quality in property management and appropriate revision of maintenance costs

3年

Maintain and Improve Earnings Over the Medium to Long-term

Maintain and improve rent levels

Improve property competitiveness■ Revise rents to appropriate levels based on tradearea and market rents■ Build and maintain good tenant relations

Maintenance of high occupancy■ Maintaining and improving of good tenant relations■ Grasp tenant needs

Rent levels

Utilities, property
taxes, city planningtaxes, etc.

Occupancy

Repair andmaintenance fees
Management
expenses

5年

ＮＯＩ■ Improve the competitiveness of properties(implementation of schedule-based maintenanceand repairs that aim to maintain and improvefunctions, etc.)

Establish appropriate
management costs■ Review management specifications and achieve
appropriate management expenses

49

Contact

IR Contact
Hiroyuki HAYASHI,
Katsuhiko FUJIMOTO
Satoshi YAMAGUCHI
Investor Relations
Top REIT Asset Management Co., Ltd. (Asset Manager)
Phone: +81-3-3243-2181
Fax:+81-3-3243-2182
E-mail： info-top@top-reit-am.co.jp
HP：
http://www.top-reit.co.jp/english/
The contents of this document, including summary notes, quotes, data and other information, are provided solely
for informational purposes and not intended to constitute an offer, solicitation and/or promotion of any specificproducts including investment units of Top REIT, Inc..
Forward looking statements in this document shall not be reviewed as a guaranty of Top REIT’s future
performance.
Although every attention has been paid to the contents of this document, the accuracy and appropriateness of
the information included in this document is not guaranteed and the contents can be revised and/or cancelled
without notice.
All rights regarding use of these materials belong to Top REIT. No copy or use of the content shown in thesematerials shall be permitted without a prior consent of Top REIT.

50