(TSE Code: 8982)

Top REIT, Inc.

Presentation on
Business Results forthe 11ｔｈ Fiscal Period
May 1, 2011－
October 31, 2011

December 15, 2011

IndexTopics:V. Financial Strategies

・ Overview since ListingV-1. Financial Strategies: Stable Financial management
V-2. Financial Strategies: Financial Status / Extend Borrowing Periods

I. Performance of the Eleventh Fiscal Period(Ended October 31, 2011)

V-3. Financial Strategies: Issuer Rating and Loans at End of Eleventh Fiscal Period

I-1. Progress of Strategy for Recovery of Dividend Level

VI. Eleventh Fiscal Period Results (Ended October 31, 2011)

I-2. Leasing Situation of Akasaka Oji Building

VI-1. Statements of Income (Summary) / Statements of Cash Distributions

I-3. Results from Rent Revisions (excluding residential)

VI-2. Balance Sheets (Summary)I-4. Property Newly Acquired in 11th Fiscal Period

VI-3. Major Financial Indicators

I-5. Property Replacement

VI-4. Unitholders

I-6. Anticipated Newly Acquisition Property

VI-5. Unit Price Performance and Volume (March 1, 2006 – November 30, 2011)

II. Results of Past Periods and Forecasts

VII. Appendix: Portfolio Overview

II-1. Summary of the Eleventh Fiscal Period

VII-1. Portfolio Map (as at end of 11th FP)

II-2. Results of Past Periods and Forecasts

VII-2. Portfolio Summary (as at end of 11th FP)

II-3. Results of Past Periods and Forecasts (Detail)VII-3. Portfolio Overview (as at end of 11th FP)
VII-4. Appraisal Values as at End of Period

III. Growth Strategy: Leaping for the Next Stage

VII-5. Appraisal Cap Rate

III-1. Market Prospects

VII-6. Operating Income by Property (Eleventh Fiscal Period)

III-2. Strategy for Recovery of the Dividend Level

VII-7~9. Property Details

III-3. Growth Strategy for the Next Stage

VIIl. Appendix: Structure of Related Parties
IV. Eleventh Fiscal Period Operating Results and Future Initiatives

Vlll-1. Characteristics of Top REIT and Operational Strategies

IV-1. Operating Results: History of Asset GrowthVlll-2. Overview of Asset Manager

IV-2. Operating Results: History of Occupancy Rate
IV-3. Operating Strategies: Management Policy and Schedule of Future Rent Revisions

1

TOPICS . Overview since Listing
4th ・ 5th ・ 6th FP

1ｓｔ ・ 2nd ・ 3ｒｄ FP

Nov 1, 2007～Apr 30,2009

Mar 1, 2006 – Oct 31, 2008

7th ・ 8th ・ 9th FP

10th FP

11th FP

12ｔｈ FPMay 1, 2009～Oct 31, 2010

Nov 1, 2010～
Apr 30, 2011

May 1, 2011～
Oct 31, 2011

Nov1.2011～
Apr 30,2012

Jun. 2010
26 bn
IPO
bn
IPO 82.
82.26
Offering Price ¥550,000 per unit

Investment Corporation
Bonds Ｉｓｓｕｅｄ

Financial

StatusDividend

1st

2nd

3rd

4th

5th

6th・7th

8th

9th

10th

11th

End of FP
Debt¥35.9 bn
ＬＴＶ
28.0%

End of FP
Debt¥54.3bn
ＬＴＶ
37.1%

End of FP
Debt¥54.4 bn
ＬＴＶ
37.3%

End of FP
Debt¥83.0 bn
ＬＴＶ
47.4%

End of FP
Debt¥82.0 bn
ＬＴＶ
47.3%

End of FP
Debt¥81.74 bn
ＬＴＶ
47.3%

End of FP
Debt¥94.24bn
ＬＴＶ
50.6%

End of FP
Debt¥94.17bn
ＬＴＶ
50.5%

End of FP
Debt¥94.10bn
ＬＴＶ
50.5%

End of FP
Debt¥94.03bn
ＬＴＶ
50.7%

1st
1st

2nd
2nd

3rd
3rd

4th
4th

5th
5th

6th
6th

7th
7th

8th
8th

9th
9th

10th
10th

11th
11th

¥17,609¥17,609¥14,992¥14,992¥11,921¥11,921¥11,884¥11,884¥12,863¥12,863¥13,206¥13,206¥12,654¥12,654¥13,484¥13,484¥14,220¥14,220¥13,922¥13,922¥12,809¥12,809

OfficeRetailResidental

Other

200
180

External

Growth

120

435bn
¥177.
bn
¥177.435

17
17properties
properties
735bn
¥178.
¥178.735bn

11
11 properties
properties

160
140

14
14 properties
properties
347bn
¥162.
¥162.347bn

13
13
properties
properties
187bn
¥157.
¥157.187bn

17
17
properties
properties

15
15 properties
properties
047bn
¥175.
¥175.047bn(billion yen)77
properties
properties
386bn
¥104.
¥104.386bn

88properties
properties
286bn
¥113.
¥113.286
bn

846bn
¥130.
bn
¥130.846

100
80
60
40
20
0
IPO

1st FP

2nd FP

3rd FP

4th FP

5th FP

6th FP

7th FP

8th FP

9th FP

10th FP

11th FPAs of Feb.1,2012（Schedule）

2

I.

Performance of the Eleventh Fiscal Period (Ended October 31, 2011)3

I - 1. Progress of Strategy for Recovery of Dividend Level
Forecast of Dividend per Unit at announcement of
earnings results for 10th FP(yen)
15,00015 Properties

15 Properties

15 Properties● Strategy for Recovery of the Dividend Level ‐ Measures in 11th FP ◆ Secure foothold for revenues through flawless management ofexisting properties
・ Completion of early leasing of Akasaka Oji Building

12,000・ Minimize range of decrease in rent revision◆ Accumulate greater revenues with acquisition of new properties

13,922・ Utilize the sponsor’s strengths as well as various information
channels

12,6009,000

11,100

6,000

10th FP(Ended Apr 30, 2011)(Results)

11th FP(Ended Oct 31, 2011)(Schedule)

12th FP(Ending Apr 30, 2012)(Schedule)

Actual and Forecast of Dividend per unit
at announcement of earnings results for 11th FP(yen)
15,00015 Properties

17 Properties
12,809209

17 Properties

12,40012,0001,300

13,922
12,600

9,000

6,000

11,10010th FP(Ended Apr 30, 2011)(Results)

11th FP(Ended Oct 31, 2011)(Schedule)

12th FP(Ending Apr 30, 2012)(Schedule)・ Target office buildings in central Tokyo and residential
properties in the central Tokyo or Tokyo Metropolitan Area

● Performance of Recovery Strategy ‐ Actual Measures in 11th FP ◆ Secure foothold for revenues through flawless management ofexisting properties
・ Status of contracted lease agreement on Akasaka Oji Building
Approx, 1,600m2 (2.5 floors)/Approx, 6,500m2 (8.5 floors)
・ Minimize range of decrease in rent revision
Decrease averaged 1.7%
(Large improvement due to agreement unchanged in rent
revision of Sagamihara Shopping Center)◆ Accumulate greater revenues with acquisition of new properties
・ Acquisition of new properties and replacement of properties
11th FP Acquisition of two residential properties
12th FP Disposition of one office building
Acquisition of one residential property (anticipated)4

I - 2. Leasing Situation of Akasaka Oji Building
Current
Current Leasing
Leasing Condition
Condition
Occupancy Rate

11.9%

(End of Nov, 2011)

May 2011~
November 2011
Agreement conclusion(including reservationagreement) (※)

TOTAL

Aim to contribute to increasing profit
in 14th fiscal period taking into
consideration Free Rent (not receiving
rents for a certain term)

Approx.1,300m2/Approx.6,500m2 Approx. 1,600m2/Approx.6,500m2(2.0F floors / 8.5 floors)(2.5 floors / 8.5 floors)

Number of inquiries

47

80

Number of previews

27

36

Number of
considerations

Leasing
Leasing Policy
Policy・ Promote the superiority of Akasaka Oji Building andapproach IT companies, apparel companies and others
regardless of their business

5 (floor space: Approx. 800m2~Approx. 2,300m2)（※）Indicated lease agreements concluded before December 14, 2011

・ While maintaining the level of rents, aim for aminimization of downtime⇒ Leasing activity which brings together thecollective strengths of TOP REIT

Opaque economic climate
Delay in recovery of corporate
earnings
Stopping and revision ofplans for relocation andexpansion of floor space

Further rise in consciousness to
reduce costs among companies

Prioritize economic terms
more than areas

Prolonged decision-making due to considering several candidate properties
Reduced offering rent levels bysurrounding competitive properties

Severe Leasing Activities

Future Strategy◆ Conduct activities more broadly with comprehensive
criterion based on existing leasing policy ◆・Proactively demonstrate relocation advantages to would-be
tenants through persistent door-to-door campaigns
・Conduct activities that allow possibility of leasing floors bysection・Flexibly respond to economic conditions by closely monitoring
the lease status of surrounding competing properties5

I - 2. Leasing Situation of Akasaka Oji Building
Improvement
Improvement inin Competitive
Competitive PowerPower && AssetAsset Value
Value
The view from Akasaka Oji~ Implementation of Renewal Construction● Entrance hall ●● Elevator hall ●● The rest room for women ●● The rest room for men ●6

I - 3. Results from Rent Revisions (excluding residential)
Office:Office: Rent
Rent Revision
Revision Results
Results (As(As atat endend ofof 11th
11th FP)FP)
Monthly rent before
revision

Revised monthly
rent

Rent revision results ＝Increase in monthly rent(%)

Monthly rent before revision(million yen)
300

10th
10th FPFP revision:
revision:
13.8%
13.8% decrease
decrease250
6th
6th FPFP revision:
revision:
0.5%
0.5% increase
increase

2nd
2nd FPFP revision:
revision:
0.1%
0.1% increase
increase

200

150
4th
4th FPFP revision:
revision:
14.9%
14.9% increase
increase100
1st
1st FPFP revision:
revision:
0.2%
0.2% increase
increase

50

0

5th
5th FPFP revision:
revision:
7.8%
7.8% increase
increase

3rd
3rd FPFP revision:
revision:
9.1%
9.1% increase
increase

1st FP

8th
8th FPFP revision:
revision:
5.8%
5.8% decrease
decrease

2nd FP

3rd FP

4th FP

5th FP

9th
9th FPFP revision:
revision:
6.5%
6.5% decrease
decrease

7th
7th FPFP revision:
revision:
1.4%
1.4% decrease
decrease

6th FP

7th FP

8th FP

9th FP

11th
11th FPFP revision:
revision:
9.0%
9.0% decrease
decrease

10th FP

11th FP◆
Results ofof 11th
11th FPFP Rent
Rent Revision
Revision ◆◆ Results◆
In spite of estimated deduction within certain level with regard to therent revision of Sagamihara Shopping Center, earnings improved
largely due to concluding unchanged rent agreement
・Office Buildings

5 cases:・Retail Properties 1 case:(Sagamihara Shopping Center)

Unchanged１ ・ Decreased４
9.0% decrease on average
Unchanged■ Total (excluding residential): 1.7% decrease on average7I – 4. Property Newly Acquired in 11th Fiscal Period[Reason for Acquisition]

Impress
Musashi-Koganei① High transport convenience: About a 2 minute walk from Yoga Station on the Tokyu Den-en-toshi Line, havingtransportation to Shibuya Station and Otemachi Station without transfer② High convenience for daily life with concentrated retail facilities in surrounding area
③ Boasts a good living environment due to the easy access to Kinuta Park from Yoga Station through a promenade
which has fountains and avenues
Address

1-14-12 Tamagawadai, Setagaya Ward, Tokyo

Acquisition Price 1,165 million yen (Acquired on October.14, 2011)
Area of Land/
Total Floor
Space

777.85m2/1,894.35m2 (RC structure with a flat roof; 1basement floor, 5 floors above ground)

Completion

February 2008

Appraisal Value

1.17 billion yen (dated September 1, 2011)
Japan Real Estate Institute

Cap Rate

Assumed NOI yield 5.5 % (*)
Cap rate 5.0% (Direct Capitalization Method)

Address

4-14-18, Nakamachi, Koganei-shi, Tokyo

Acquisition Price 1,223.4 million yen (Acquired on August.12, 2011)
Area of Land/ 760.85m2/2,471.30m2 (RC structure with a flat roof;
Total Floor Space 10 floors above ground)
Completion
Appraisal Value
Cap Rate

June 2008
1.27 billion yen (dated July 1, 2011)
Japan Real Estate Institute
Assumed NOI yield 5.9 % (※)
Cap Rate 5.5% (Direct Capitalization Method)【Reason for Acquisition】① Transport convenience: it is about a 4 minute walk from Musashi-Koganei Station on the JR Chuo Line, from which
it takes only approximately 20 minutes to Shinjuku Station② Plenitude of convenience facilities for daily life due to concentrated retail facilities and established public facilities
around the area
③ Fairly young, high quality and equipped facilities as independent washstands, toilets and bathroom dryers for allunits

TOP Residence
Yoga（*）The indicated yield is calculated by dividing assumed
NOI, the difference between the operating revenues andthe operating expenses of the property for the initial year
calculated by the DCF method described in the real estateappraisal report prepared upon acquisition, by theacquisition price.

8

I – 5. Property Replacement
Nittetsu Honmachi Building(Disposition)
Disposition Date:
November 25, 2011
Disposition Price:
1.3 billion yen
Investment Breakdown: 0.6% (as of end of October 2011)<Recovered to 100% occupancy in 10th FP; high NOI yield >Premier Stage Nihonbashi Kayabacho( Acquisition )Replacement

Futures risk

・ Concern of worsening supply-demand balance due tolarge supply of offices in line with redevelopment of areas
around Osaka Station
・ Tenants’ moving out risk is expanding; vacancy rate isincreasing in Honmachi area as well・ Concentration of rent revisions from 13th FP to 15th FP,
increasing risks of rent reduction《Utilize Sponsors’ Strengths》
Realized effective disposition gaining best
opportunity by brokerage of Sumitomo
Trust and Banking[Expected to secure steady profit due to being highly competitive]・ High transport convenience: About a 3 minute walk from Kayabacho
Station on the Tokyo Metro Hibiya Line and about a 4 minute walkfrom the same station on Tozai Line, further it has good access to
Nihonbashi Station that is within walking distance・ Expected steady demand from business persons due to proximity to
the central business districts of Otemachi and marunouchi Areas
・ Steady rent level・ Construction plans with increased scarcity value due to construction ofstudio apartments (less than 40m2) limited due to being district planningarea of Chuo Ward

Pursuit to further stabilityof portfolio● Effect of Disposition● Effect of Replacement (Acquisition of property above) Capital gains from disposition (approximately 250millon yen)

 Secure profit due to acquiring residential property inexcellent location with expected steady occupancy

 Plans to internally reserve (approximately 80 million yen) by
utilizing the exceptional taxation to reinforce financial
standing
 Accumulate the cash dividend for 12th FP(accumulate approx,1,100 yen) High liquidity in terms of area, scale and scarcity
 Expected profit increase due to improving
occupancy(occupancy rate : 92.7% as of September 30, 2011)

Plan to internally reserve portions of capital gains from disposition of land by utilizing “Special Provisions for Taxation in
the Event of Advance Acquisition of Land, etc. in 2009 and 2010”9

I - 6. Anticipated Newly Acquisition Property
Address

Premier Stage Nihonbashi Kayabacho

Acquisition Price(Scheduled)

3-4-1 Nihonbashi Kayabacho, Chuo Ward, Tokyo
2,400 million yen (February.1,2012)

Book Value

2,550 million yen (As of October.1,2011)

Completion

February,2004

Area of Land/
Floor Space

479.93m2/4,540.70m2 (SRC structure with a flat roof 14 floors above ground)

Cap Rate

Estimated NOI yield: 5.7% (*) / Cap rate: 5.1% (Capitalization Method)（*）The indicated yield is calculated by
dividing assumed NOI, the difference
between the operating revenues and theoperating expenses of the property for the
initial year calculated by the DCF method
described in the real estate appraisal
report prepared upon acquisition, by theacquisition price.

10II. Results of Past Periods and Forecasts

11

II - 1. Summary of the Eleventh Fiscal Period
11th FP Results
May 1, 2011 October 31, 2011

11th FP Forecast(Announced onJune 14, 2011)

Period of asset
management (days)

184

184

-

-

181

-

-

Operating revenue¥5,812mn¥5,806mn

¥6mn

0.1%

¥5,967mn(¥154mn)(2.6%)

Operating income¥2,779mn¥2,752mn

¥27mn

1.0%

¥2,971mn(¥192mn)(6.5%)

Ordinary income¥1,986mn¥1,954mn

¥32mn

1.7%

¥2,194mn(¥208mn)(9.5%)

Extraordinary loss

-

-

-

-

¥37mn

(¥37mn)(100.0%)¥1,985mn¥1,953mn

¥32mn

1.7%

¥2,157mn(¥172mn)(8.0%)

Number of units issued
and outstanding (unit)

155,000

155,000--

155,000--

Dividend per unit (yen)¥12,809¥12,600

¥209

1.7%

¥13,922(¥1,113)(8.0%)

Number of properties

17

15

2

-

15

2

-

Appraisal value total¥172,440mn

-

-

-

¥170,670mn¥1,770mn

1.0%

Items

Net income

10th FP Results
November 1, 2010 April 30, 2011

Net Change(Results vs. Forecast)■ Differences between Forecasts and Actual Results
Operating Revenue: +¥6mn■ Other References
Items

11th FP Results

10th FP Results

48

46

295,215.03m2

291,627.72m2

Occupancy rate

97.3%

99.7%

Depreciation andamortization¥1,060mn¥1,086mn

Capital expenditures¥234mn¥464mnTerm-end unit price (yen)¥403,000¥491,500¥62,465mn¥76,182.5mn

 Increase in revenue due to acquisition of new properties (2 residential properties)

Number of tenants Increase in revenue due to agreed unchanged rents for rent revisions at Sagamihara
Shopping Center

Total rentable floor space Decrease in revenue from utilities expenses borne by tenants due to saved electrical
power by tenants Decrease in revenue equivalent to expenses for restoring to original condition by
reducing costs of Akasaka Oji Building

Operating Income: +¥27mn
 Decrease in utilities expenses due to saved electric power by tenants Decrease in expenses equivalent for restoring to original condition of Akasaka Oji
Building

Ordinary Income: +¥32mn
 Increase in revenue by reversing the provision for loss on disasters and receipt of
insurance

Net Change(11th FP Results vs.
10th FP Results)

Term-end market
capitalization

12

II - 2. Results of Past Periods and Forecasts
Preconditions for Forecastof Earnings Results

12th FP (End of April, 2012)

13th FP (End of October, 2012)

Portfolio Assets

It is assumed that Premier Stage Nihonbashi Kayabacho will be acquired as of February 1, 2012 in addition to 16 properties owned as ofDecember 14, 2011

Number of Units Issued andOutstanding

155,000 Units
As of end of FP: ¥93,970 million (Anticipated repayment of ¥67
million as agreed upon)
Assumed capital gain (approx. ¥250 million) due to disposition
Nittesu Honmachi Building

Interest-Bearing Liabilities
Operating Revenue
Tenants for Akasaka Oji
Building
Rent Revisions
Operating Expenses
Non-Operating Expenses
Dividend

14% of total rents (as of the end of 11th FP) are planned for rent
revision
Almost agreed on revisions with some tenants in Harumi Toriton Y
It is assumed that property tax, etc. will be ¥609 million anddepreciation and amortization will be ¥1,061 million¥741 million (interest on loans, interest expenses on investment
corporation bonds and related expenses: ¥737 million)

2.1% of total rents (as of the end of 11th FP) are planned for rent
revision
Assumed a few decreases, but minimal impact
It is assumed that property tax, etc. will be ¥598 million anddepreciation and amortization will be ¥1,087 million¥694 million (interest on loans, interest expenses on investment
corporation bonds and related expenses: ¥689 million)

It is assumed to distribute almost total amounts by deducting theinternal reserve (approx. ¥80 million) as reduction entry of part ofthe capital gains due to disposing Nittetsu Honmachi Building

It is assumed that there is no reversal of internal reserves(approximately ¥80 million).

OperatingOperating Expenses
Expenses

Posted revenue equivalent to expenses
for restoring to original condition (¥133mn) due to a major tenant moving out of
Akasaka Oji Building(million yen)
7,000

6,060
5,584

―

It is assumed that revenues come only from lease agreements that have been concluded (including reserved agreements) as of December
14, 2011, covering approximately 2,100 ㎡ (3 floors) and approximately 7,300 ㎡ (9 floors and underground repository).

OperatingOperating Revenue
Revenue

6,000

As of end of FP: ¥93,902 million (Anticipated repayment of ¥67
million as agreed upon)

5,606

5,608

5,814

5,967

5,812

4,000

5,641

4,715

2,933

2,905

2,978

2,964

3,041

2,995

3,033

5th FP

6th FP

7th FP

8th FP

9th FP

10th FP

11th FP

3,000
5,379

5,000

Posted expenses for restoring to original
condition (¥133 mn) due to a major tenant
moving out of Akasaka Oji Building(million yen)

4,817

2,464

3rd FP

4th FP

2,903

2,903

1,878

2,000

4,526

2,465

1,610

4,037
4,000

1,000

3,000

0
1st FP

2nd FP

3rd FP

4th FP

5th FP

6th FP

7th FP

8th FP

9th FP

10th FP

11th FP

12th FP 13th FP(Forecast) (Forecast)

1st FP

2nd FP

12th FP 13th FP(Forecast) (Forecast)*The actual number of days in the First Fiscal Period was 245. The above numbers are calculated by the following calculation method: (First Fiscal Period Results / 245 Days) x 365 Days / 2.
In addition, the above forecast figures are calculated under certain preconditions as of the date of this material and are subject to change. Moreover, the dividend is not guaranteed.

13

II – 2. Results of Past Periods and Forecasts
OperatingOperating Income
Income
4,000

2,500

3,000

2,647
2,427

2,700

2,651
2,250

Net
Net Income
Income(million yen)(million yen)

2,849

3,019

2,971

2,630

2,000
2,779

2,323
2,033

2,738

1,993

1,847

1,841

3rd FP

4th FP

2,046

1,961

2,090

2,204

2,157
1,985

1,967
1,782

2,476

2,353

1,500

2,000
1,000
1,000
500

0

0
1st FP

2nd FP

3rd FP

4th FP

5th FP

6th FP

7th FP

8th FP

9th FP

10th FP 11th FP 12th FP 13th FP(Forecast) (Forecast)

1st FP

2nd FP

5th FP

6th FP

7th FP

8th FP

9th FP

10th FP 11th FP 12th FP 13th FP(Forecast) (Forecast)

Dividend
Dividend(yen)
16,00014,992

14,22014,00013,116

12,863
11,921

12,00013,922

13,484

13,206

12,80912,654

12,40011,884
11,50010,0008,000
1st FP

2nd FP

3rd FP

4th FP

5th FP

6th FP

7th FP

8th FP

9th FP

10th FP

11th FP

12th FP
13th FP(Forecast) (Forecast)*The actual number of days in the First Fiscal Period was 245. The above numbers are calculated by the following calculation method: (First Fiscal Period Results / 245 Days) x 365 Days / 2.
In addition, the above forecast figures are calculated under certain preconditions as of the date of this material and are subject to change. Moreover, the dividend is not guaranteed.

14

II - 3. Results of Past Periods and Forecasts (Detail)Item

6th Fiscal
Period

7th Fiscal
Period

8th Fiscal
Period

9th Fiscal
Period10th Fiscal
Period11th Fiscal
Period12th Fiscal
Period(Forecast)

13th Fiscal
Period(Forecast)

Period of asset
management (days)

181

184

181

184

181

184

182

184

Operating revenue¥5,606mn¥5,608mn¥5,814mn¥6,060mn¥5,967mn¥5,812mn¥5,641mn¥5,379mn

Operating expenses¥2,905mn¥2,978mn¥2,964mn¥3,041mn¥2,995mn¥3,033mn¥2,903mn¥2,903mn¥718mn¥762mn¥711mn¥783mn¥741mn¥809mn¥701mn¥678mn¥476mn¥561mn¥567mn¥586mn¥586mn¥609mn¥609mn¥598mn¥1,151mn¥1,105mn¥1,127mn¥1,081mn¥1,086mn¥1,060mn¥1,061mn¥1,087mn

Operating income¥2,700mn¥2,630mn¥2,849mn¥3,019mn¥2,971mn¥2,779mn¥2,738mn¥2,476mn

Ordinary income¥2,047mn¥1,960mn¥2,091mn¥2,204mn¥2,194mn¥1,986mn¥1,998mn¥1,783mn

Net income¥2,046mn¥1,961mn¥2,090mn¥2,204mn¥2,157mn¥1,985mn¥1,967mn¥1,782mn

Net operating income
from property leasing¥4,412mn¥4,284mn¥4,535mn¥4,691mn¥4,639mn¥4,393mn¥4,329mn¥4,103mn

ＦＦＯ¥3,198mn¥3,066mn¥3,217mn¥3,286mn¥3,243mn¥3,046mn¥3,028mn¥2,869mn

Number of units issued
and outstanding (units)

155,000

155,000

155,000

155,000

155,000

155,000

155,000

155,000

Dividend per unit

¥13,206¥12,654¥13,484¥14,220¥13,922¥12,809¥12,400¥11,500

FFO per unit

¥20,635¥19,785¥20,755¥21,200¥20,929¥19,654¥19,537¥18,513

Of which, expenses
related to rent business(excluding taxes and dues, anddepreciation and amortization)

Of which, taxes anddues
Of which, depreciation
and amortization

Note: The forecasts should not be construed as a guarantee of the actual dividends

15

III. Growth Strategy: Leaping for the Next Stage

16

III - 1. Market Prospects[Present state]

Real
Real Estate
Estate Leasing
Leasing Market
Market[Future prospects]◆Signs of recovery in vacancy rates appearing for large-scale officebuildings built recently in 3 central wards of Tokyo◆Concerns for worsening vacancy rate due to large supply of officebuildings in 2012 and after◆Polarization expanding between large-scale office buildings newly
built and other buildings even in central Tokyo◆Concerns that recovery of corporate performance will be prolonged
due to anxiety over global economic turmoil and prolonged trend of
yen’s appreciation may further postpone recovery in rent

◆Office rent levels remain generally weak◆Studio and family residences with high convenience continue toshow steady performance⇒ TOP REIT’s strategy
Continue efforts to strengthen leasing activities and prevent tenant’s
moving out

RealReal Estate
Estate Transaction
Transaction Market
Market[Future prospects][Present state]◆Number of high-grade office properties available for sale oractually sold remains small due to continued gap in priceperspectives of seller and buyer◆Buyers compete over office buildings in central Tokyo as
properties available for sale are scarce(Buyers are primarily REITs and private placement funds,)◆The market for rental residential property transactions remains
steady◆The price perspective gap between seller and buyer will remain for
high-grade office properties◆Number of office buildings available for sale expected to increase as
end of fiscal year nears◆Price level of high-grade office buildings will be in the bottom range.
◆Market for rental residential property transactions will remain steadybut tend to overheat⇒ TOP REIT’s strategy
Focus acquisitions by gathering information on high-grade officebuildings in central Tokyo available for saleFinancial
Financial // Capital
Capital Market
Market[Present state]◆De facto zero interest rate monetary policy maintained andcontinued by the Bank of Japan◆No particular change in the attitude of banks (lenders) since theearthquake◆The J-REIT market remains weak despite doubling in purchasing
amount of J-REIT units and intermittent implementation of thepurchase by the Bank of Japan[Future prospects]◆Market interest rates will remain stable at low levels for some time
◆The J-REIT market and the attitude of banks will remain uncertain due
to the impact of financial turmoil in Europe and other factors⇒TOP REIT’s strategy
While closely monitoring the market environment, select fundprocurement means from among bank loans, investment corporation
bonds, public offerings, etc.

17III - 2. Strategy for Recovery of the Dividend Level

Current Management Policy◆ Secure foothold for revenues through flawless management of existing properties
・ Recognizing the top priority issues to solicit for tenants of Akasaka Oji Building,intend to lease up immediately
・ Maintain and improve occupancy rate by leasing vacant spaces along with implementing measures to prevent
tenants from moving out in addition to continuing to strengthen tenant relations
・ Minimize range of decrease in rent revision (as for rent revision negotiations with some tenants in Harumi Island
Triton Square Office Tower Y, which rents are to be revised during the 12th FP, agreements are almost achieved)◆ Accumulate greater revenues with acquisition of new properties
・Acquire high-grade office properties located in central Tokyo(acquisition of high-grade properties by utilizing cash on hand and procuring funds from lenders)・ Utilize the sponsor’s strengths (properties owned or brokered by sponsors) as well as various information channels『 Early recovery of the dividend level ¥13,000 ~ ¥14,000 』
Asset Class

Property acquisition target

Portfolio
share

StanceOffices◆ Excellent location in Central Tokyo◆ High-quality specifications◆ Properties with strong competitiveness(ability to attract tenants, stable operations over long term)

Approx.
75%◎

Approx.
25%△

Other thanoffices◆ Focus on residential properties
・Located in Central Tokyo and surrounding areas, close to railway stations and with excellent transit access・Stable occupancy rates and rent levels

18III - 3. Growth Strategy for the Next Stage◆ While securing a foothold for revenues, acquire competitive and highly profitable properties◆ Fully utilize the Top REIT Edge

Growth Strategy
Strategy
GrowthGrowth Methods
Methods
GrowthContinued Implementation of Growth Strategy for the Next Stage
Sponsor Strength
Superior Portfolio◆ Implement growth strategy with anextreme focus on the dividend level(¥13,000~14,000)◆ Flexibly select fund procurement means according to the market environment
・Bank loans: Flexibly utilize strong bank formation
・Investment corporation bonds: Consider in view of market environment, etc.
・Capital increases through public offerings: Consider investment unit price levels andproperty returns, as well as amount of net assets and dividend◆ Consider M&A and joining of new sponsors

Further Leap
Forward

Next Stage
Asset
Asset Size
Size
(No. of
Properties)

Achieve ¥210.0bn

Next stageg

Dividend
Dividend Level
Level Maintain ¥13,000~14,000

Asset size: ¥210bn
No. of properties: around 20 – 23
LTV: 40 – 50%

20

Acquisitions ofadditional ¥33bn
Appropriately
control LTV

15

End of 11th FP
10

Asset size: ¥177.435bn
No. of properties: 17
LTV: 50.7%¥160bnTargetingTargeting asset
asset size
size ofof ¥210bn,¥210bn,reducing
reducingNEC
NECHeadHead Office
OfficeBuilding’s
Building’s
share
share ofofthe
the portfolio
portfolio toto 20%
20%¥170bn¥180bn¥190bn¥200bn¥210bn(Asset Size)

19

IV. Eleventh Fiscal Period Operating Results and Future Initiatives

20

IV - 1. Operating Results: History of Asset Growth
History
History ofof Asset
Asset Growth
GrowthAcquisition price(billion yen)

Latent profit = (Appraisal value – Book value)

Appraisal value(billion yen)

200

30
25

180
20
160

15
10

140

5
120
0
-5

100
1st FP

Acquisition priceBook value

2nd FP

3rd FP

4th FP

5th FP

6th FP

7th FP

8th FP

9th FP

10th FP

11th FPEnd of 1st FP
Oct. 2006

End of 2nd
FP
April. 2007

End of 3rd FP
Oct. 2007

End of 4th FP
April. 2008

End of 5th FP
Oct. 2008

End of 6th FP
April. 2009

End of 7th FP
Oct. 2009

End of 8th FP
April. 2010

End of 9th FP
Oct. 2010

End of 10thFP
April. 2011

End of 11th
FP
Oct. 2011¥113.286bn¥130.846bn¥130.846bn¥157.187bn¥162.347bn¥162.347bn¥162.347bn¥175.047bn¥175.047bn¥175.047bn¥177.435bn

¥116.

187

bn

¥133.

576

bn

698

¥132.

bn

¥159.

585

bn

¥163.

985

bn

¥163.

245

bn

237

¥162.

bn

618

¥174.

bn

618

¥173.

bn

¥172.

994

bn

¥174.742bn

Appraisal value¥127.442bn¥152.468bn¥155.923bn¥188.035bn¥189.441bn¥170.870bn¥164.948bn¥177.146bn¥175.351bn¥170.670bn¥172.440bn

Unrealized
profits and loses¥11.254bn¥18.891bn¥23.224bn¥28.449bn¥25.455bn¥7.624bn¥2.710bn¥2.527bn¥1.732bn(¥2.324bn)(¥2.302bn)*Acquisition price and appraisal value details are provided on P39 to P41.
*Figures less than one million yen have been rounded down for the above-mentioned values. As for latent profits and loses, figures less than one million yen have been rounded down
after deducting book value (total) from appraisal value (total).

21

IV - 2. Operating Results: History of Occupancy Rate
Occupancy
Occupancy Rate
Rate (Portfolio)(Portfolio)(gross rentablefloor space: ㎡)

The occupancy rate at the end of the fiscal period fell below 99%
99% for the first timesince listing, focus efforts on leasing activities to recover occupancy
occupancy rate.
Gross rentable floor space

99.9%

99.8%

99.5%

99.7%

99.5%

99.5%

Occupancy rate

99.2%

99.2%

99.2%

99.7%

99.5%

99.6%

99.5%

99.6%

(Ｏｃｃｕｐａｎｃｙ ｒａｔｅ)

99.5%

325,000

97.4%

300,000
291,627.72

291,647.88

275,000

291,627.72
283,622.23

250,000

293,684.13

291,627.72

293,702.65

97.3%

97.2%

95%

295,215.03
290,805.51

291,627.72

291,627.72

283,622.23

90%
85%

283,622.23
276,833.20

225,000

100%

80%

261,671.68
229,231.70

200,000

261,671.67

75%

178,104.46
175,00070%

150,00065%

125,000
March 2006
(IPO)

Apr.2008
Oct.2006
Apr.2007
Oct.2007
Oct.2010
Apr. 2011
Apr.2010
Apr.2009
Oct.2008
Oct.2009
End of 1st FP End of 2nd FP End of 3rd FP End of 4th FP End of 5th FP End of 6th FP End of 7th FP End of 8th FP End of 9th FP End of 10th FP

May. 2011

Jun.2011

Jul. 2011

Aug. 2011

Sep. 2011

Oct. 2011
End of 11th FP

60%
Nov. 2011《 Major Long-Term Rent Agreement (3 years or more) 》
Property

Main tenant

Based on rented Remaining
Based on rent
period ofper Share of floor space pershare ofcontract
portfolio
portfolio(years)Tenancy
period(years)Expiration date

Notes

NEC Head Office Building

NEC Corporation

27.2%

24.5%

14.2

Previous
ownerDec. 28, 2025

Fixed-rate rent by Dec. 2013 (16th FP)
Cancellation banned until Dec. 2013 (16th FP)

Ito-Yokado HigashinarashinoStore

Ito-Yokado Co., Ltd.

4.7%

17.3%

3.1

16.8

Nov. 30, 2014

Expiration date of rent agreement :18th FP(some rent is to be calculated on sales of store)

Musashiurawa Shopping Square

Olympic Corporation
Nitori Co., Ltd. etc

2.6%

5.1%

14.0

5.9

Oct. 31,2025

Cancellation banned until Oct. 2015(19th FP)

OAK PLAZA

Nippon Steel City
Produce, Ltd.

1.9%

2.1%

15.4

Previous
ownerMar. 31,2027

Fixed-rate rent until Mar. 2017(22nd FP)
Cancellation banned until Mar. 2017(22nd FP)

36.3%

48.9%

Total

IV - 2. Operating Results: History of Occupancy Rate
Occupancy
Occupancy Rate
Rate (Office)(Office)

The occupancy rate fell
due to the major tenant
moving out of Akasaka
Oji Building

Rentable office space(gross rentablefloor space: ㎡)

99.7%

99.8%

100.0%

100.0%

100.0%

99.6%

180,000

99.0%

99.1%

Occupancy rate

99.4%

99.6%

99.8%

99.8%

99.8%

99.8%

99.8%

(Ｏｃｃｕｐａｎｃｙ ｒａｔｅ)

100%
95.2%

95.0%

94.9%

150,000
130,968.26
116,369.99 131,531.52

116,089.69

120,000

130,408.56

139,312.77

139,312.77

138,673.71
138,929.87

139,312.77

90%

139,312.77
139,312.77

132,896.49

130,249.39

132,601.13
128,191.61

116,015.47

80%

116,370.00

90,00070%
60,00060%

30,0000March 2006
(IPO)

Apr.2008
Oct.2006
Apr.2007
Oct.2007
Oct.2008
End of 1st FP End of 2nd FP End of 3rd FP End of 4th FP End of 5th FP

Oct.2010
Apr. 2011
Apr.2010
Apr.2009
Oct.2009
End of 6th FP End of 7th FP End of 8th FP End of 9th FP End of 10th FP

May. 2011

Jun.2011

Jul. 2011

Aug. 2011

Sep. 2011

Oct. 2011
End of 11th FP

Nov. 201150%※ vacant floors ：Akasaka Oji Building（approx.6,430㎡）・Faret East Building（approx.290㎡）・ Shiba-Koen building（approx.220㎡）

IV - 2. Operating Results: History of Occupancy Rate
Occupancy
Occupancy Rate
Rate (Total(Total ofof Residence)
Residence)
Rentable office space(gross rentablefloor space: ㎡)
25,000Occupancy rate (Total)(Ｏｃｃｕｐａｎｃｙ ｒａｔｅ)
100%

94.6%

93.6%

95.7%

95.1%

93.9%
93.3%

89.5%
20,000

94.5%

94.4%
93.5%

92.7%

19 ,08 9 .8 6
1 7,1 74 .91

17 ,03 3.8 8

1 6,9 83 .1 1

15,000

10 ,63 3 .1 6
1 0,1 64 .11

17 ,26 2.0 3

17 ,37 4.2 8
1 7,1 43 .2 3

1 6 ,8 21 .94

94.3%

2 0 ,6 2 0.34

88.7%

10,000

94.5%

95.0%

94.6%

2 0,4 78 .87

1 9,1 11 .43

90%

17 ,13 0 .8 0
1 6 ,9 7 0.59

80%

70%

1 0,0 69 .11

5,000

60%

0
Apr.2007End of 2nd FP

Oct.2007End of 3rd FP

Apr.2008
End of 4th FP

Oct.2008
End of 5th FP

Apr.2009
End of 6th FP

Oct.2009
End of 7th FP

Apr.2010
End of 8th FP

Oct. 2010
End of 9th FP

Apr. 2011
End of 10th FP

May. 2011

Jun. 2011

Jul. 2011

Aug. 2011

Sep. 2011

Oct. 2011
End of 11th FP

Nov. 2011

Occupancy
Occupancy Rate
Rate (Each(Each ofof Residence)
Residence)(Ｏｃｃｕｐａｎｃｙ ｒａｔｅ)
100.0%

Occupancy rate (Fukasawa)Occupancy rate (Toyosu)

Occupancy rate (Musashi-Koganei)

Occupancy rate (Yoga)

97.7%

97.5%

97.4%

98.0%

97.7%

97.6%
96.9%

96.6%

96.3%

95.9%

95.6%

96.3%
95.4%
95.1%

95.0%
93.6%

93.0%

94.9%

94.8%

94.6%

93.6%

94.3%
93.1%

93.6%

93.2%

92.2%

92.1%

92.0%
90.7%

91.8%

91.0%
90.8%

90.0%
89.5%

88.5%

88.7%

87.7%

85.0%
Apr.2007End of 2nd FP

Oct.2007End of 3rd FP

Apr.2008
End of 4th FP

Oct.2008
End of 5th FP

Apr.2009
End of 6th FP

Oct.2009
End of 7th FP

Apr.2010
End of 8th FP

Oct. 2010
End of 9th FP

Apr. 2011
End of 10th FP

May. 2011

Jun. 2011

Jul. 2011

Aug. 2011

Sep. 2011

Oct. 2011
End of 11th FP

Nov. 201150%

IV - 3. Operating Strategies:
Management Policy and Schedule of Future Rent Revisions「Tenants First」 Policy = 「Maintaining and Improving tenants satisfaction」
Maintain and enhance asset value by discerning and appropriately incorporating tenant needs
Secure stable revenue for the long term by creating a favorable relationship with superior tenants

Schedule
Schedule ofof Rent
Rent Revisions
Revisions inin thethe 12th
12th FPFP && 13th13th FPFP (excluding(excluding residential)
residential)(thousand yen)
100,000

Harumi Island Triton Y(parts of tenants)
Akasaka Oji Building(parts of tenants)

80,00012th FP
60,00040,00020,00013th FP*Based on monthly rent0

Nov.2011

Dec.2011

Jan.2012

Feb.2012

Mar.2012

Apr.2012

12th FPMay 2012

Jun.2012

Jul.2012

Aug.2012

Sep.2012

Shiba-Koen Building(parts of tenants)
Kanda Park Plaza(parts of tenants)
Faret East Building(parts of tenants)
Kanda Park Plaza(parts of tenants)
Faret East Building(parts of tenants)

10
tenants

5
tenants

Oct.2012

13th FP

Rent
Rent Revision
Revision Policy
PolicyConduct persistent negotiations and preventive measures of tenant’s moving out using thegood relations with tenants.
25

V. Financial Strategies

26

V - 1. Financial Strategies: Stable Financial Management
Financial Policies (Stable Financial Management)
Maintain stable bank formationand secure financial flexibility

Changes in Fund Procurement Status (Debt)

Short-Term

LTVLong-Term(billion yen)

100

Extend Borrowing Periods and Spread
Out Repayment Dates

60%
6.7
47.4%

47.3%

47.3%

47.3%

80

Manage Risk of Fluctuating Interest
Rates

10.3
37.1%

9.3

6.7
50%

50.6%
13.3

50.5%

50.5%

13.3

50.7%

37.3%

40%

60
27.8%

The market interest rate is currently low and stable. In viewof the risk of future interest rate fluctuations, TOP REIT willin the meantime operate with a ratio of fixed-rate interest
borrowings of 50% while enjoying the present benefits. TOP
REIT will watch for interest rate trends and deliberate on
raising the ratio of fixed-rate interest borrowings.

28.0%
20.9

40

87.5

2.5

72.7

72.7

68.5

94.1

87.5

94.0

68.5

20%

54.4
20

Conduct operation with a target ratio of loans to total assets(LTV) of around 50% in contrast to the 60% ceiling

33.4

33.4

33.4

IPO

1st FP

2nd FP

0Manage Risk of Fluctuating Interest Rates

11.3%

16.2%

16.2%

7.1%

3rd FP

4th FP

5th FP

6th FP

7th FP

8th FP

9th FP

10th FP 11th FP

Ratio
Ratio ofof Loans
Loans with
with Fixed
Fixed Interest
Interest Rates
Rates
100%

7.1%

24.0%

80%

37.9%

80%

60%

40%

10%
0%

Ratio
Ratio ofof Long-Term
Long-Term Loans
Loans
100%

30%

37.9%
52.8%

52.8%

47.2%

47.2%

47.3%

47.4%

47.4%

52.7%

52.6%

52.6%

60%

88.7%

83.8%

83.8%

92.9%

92.9%

100.0%

100.0%

100.0%
40%
ShortTerm

20%

LongTerm0%
5th FP

6th FP

7th FP

8th FP

9th FP

10th FP

11th FP

As of
Nov.30,2011

76.0%
62.1%

62.1%

20%

Floating
Fixed

0%
5th FP

6th FP

7th FP

8th FP

9th FP

10th FP

11th FP

As of
Nov.30,2011•Regarding all graphs on this page, figures for the end of the 9th FP and after include ¥8.5 bn of investment corporation bonds.

27

V - 2. Financial Strategies: Financial Status / Extend Borrowing Periods
Refinancing
Refinancing andand Extend
Extend Borrowing
Borrowing Periods
Periods
Refinance for 12th Fiscal Period has been completed.
● Nov. 2011 Total ¥19.04bn in long-term loans ⇒ Refinanced with long-term loans (floating rate)
・ Rolled over into a five-year syndicated loan by 6 major banks with which Top REIT has conductedbusiness since listing・ Will continue to maintain stable bank formation and work to extend remaining periods of loans(million yen)

*Scheduled repayment of 67.5 million yen each period between 11th FP and 21st FP

25,00020,000

6,700
1,670

15,0004,908

No. 1 Unsecured
Investment
Corporation Bonds

9,800
9,000

1,273

19,04010,00016,7003,000
11,189

5,000

8,500

8,500
6,300
4,000
1,823

-

11th
FP

12th
FP

13th
FP

14th
FP

15th
FP

16th
FP

17th
FP

18th
FP

19th
FP

20th
FP

21st
FP

22nd
FP

Outstanding Balance ofLoans by Lender

The Sumitomo Trust and Banking Co., Ltd.

¥22,689mn

26.5%

Development Bank of Japan, Inc.

¥6,497mn

7.6%Mizuho Corporate Bank, Ltd.

¥15,946mn

18.6%

Dai-Ichi Life Insurance Company Ltd.

¥1,000mn

1.2%

Sumitomo Mitsui Banking Corporation¥12,570mn

14.7%

Resona Bank, Limited¥1,000mn

1.2%

The Bank of Tokyo Mitsubishi UFJ, Ltd.

¥12,570mn

14.7%

The Bank of Fukuoka, Ltd.

¥3,000mn

3.5%

The Chuo Mitsui Trust and Banking, Co., Ltd¥4,190mn

4.9%

The Hiroshima Bank, Ltd.

¥1,000mn

1.2%

Mitsubishi UFJ Trust and Banking Corporation¥4,075mn

4.8%

The Yamaguchi Bank, Ltd.

¥1,000mn

1.2%¥85,537mn

100.0%¥8,500mn－¥94,037mn－

SUB TOTAL

No. 1 Unsecured Investment Corporation Bonds
TOTAL

Long-termLong-Term(as of Nov.30, 2011)28

V - 3. Financial Strategies: Issuer Rating and Loans at End of
Eleventh Fiscal Period
Issuer Rating

LenderCategory

Development Bank of Japan, IncA3(Negative) Assigned by Moody’s Japan K.K.

Loan
Balance

Interest Rate(end of Oct,
2011)

Loan Execution
Date

Repayment
Date¥135mn2.42%(fixed)January 13,
2010

November 30,
2016

Remaining
PeriodNote

Scheduled
repayment

Unsecured
and without
guarantee¥11,189mn

1.24%(floating)March 3, 2009

November 30,
2011

1 months

Loan
Balance

Interest Rate(end of Oct,
2011)

The Sumitomo Trust and Banking Co., Ltd.
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust and Banking Corporation¥6,300mn

1.48%(fixed)Development Bank of Japan, Inc.

¥3,000mn

LenderCategory¥135mnThe Sumitomo Trust and Banking, Co., Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust and Banking Corporation

AA－ (Stable) Assigned by Rating and Investment Information, Inc. (R&I)

Unsecured
and without
guarantee

Mitsubishi UFJ Trust and Banking Corporation¥1,273mn

Repayment
Date

March 27,
2008

January 13,
2010

Note

March 27,2013

1 year&5 months

Unsecured
and without
guarantee

November 30,
2012

1 year&1 months

1.53%(fixed)1. 24%(floating)March 27, 2009 November 30,
2011

1 months

The Sumitomo Trust and Banking, Co., Ltd.
Mizuho Corporate Bank, Ltd.

Unsecured
and without
guarantee

Sumitomo Mitsui Banking Corporation
The Bank of Tokyo Mitsubishi UFJ, Ltd.

¥9,800mn

1.24%(floating)Unsecured
and without
guarantee

Mitsubishi UFJ Trust and Banking Corporation¥1,273mn
Mizuho Corporate Bank, Ltd.
The Bank of Tokyo Mitsubishi UFJ, Ltd.

¥4,908mn

1. 24%(floating)

November 30,
2009

November 30,
2011

1 months

Unsecured
and without
guarantee¥4,908mn

The Chuo Mitsui Trust and Banking, Co., Ltd.

¥1,670mn

1. 24%(floating)February 26,
2010

November 30,
2011

1 months

1.95%(fixed)June 29, 2007

June 29, 2012

8 months

Unsecured
and without
guarantee¥1,670mn
The Sumitomo Trust and Banking Co., Ltd.
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo Mitsubishi UFJ, Ltd.
The Chuo Mitsui Trust and Banking, Co., Ltd.
Mitsubishi UFJ Trust and Banking Corporation

Resona Bank, Limited

Development Bank of Japan, Inc.

¥2,362mn

2.42%(fixed)January 13,
2010

November 30,
2016

4 years&
7 months

1.39%(fixed)March 3, 2011

February 29,
2016

4 years&
4 months

Unsecured
and without
guarantee

0.84%(floating)March 31, 2011

February 29,
2016

4 years&
4 months

Unsecured
and without
guarantee¥12,162mn
The Sumitomo Trust and Banking Co., Ltd.
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo Mitsubishi UFJ, Ltd.
The Chuo Mitsui Trust and Banking, Co., Ltd.
Mitsubishi UFJ Trust and Banking Corporation¥16,700mn¥16,700mn¥8,500mn

Unsecured
and without
guarantee¥8,500mn
The Sumitomo Trust and Banking, Co., Ltd.
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust and Banking Corporation

Long-Term Loans

Current Portion of Long-Term Loans

Remaining
Period¥9,300mn¥11,189mn
The Sumitomo Trust and Banking, Co., Ltd.
Sumitomo Mitsui Banking Corporation

Loan Execution
Date

The Sumitomo Trust and Banking Co., Ltd.
The Bank of Fukuoka, Ltd.
The Hiroshima Bank, Ltd.
The Yamaguchi Bank, Ltd.

¥6,700mn¥6,700mn¥9,000mn

1. 24%(floating)March 26, 2010 June 29, 2012

8 months

Unsecured
and without
guarantee¥48,862mn

1.43%(avg.)

No. 1 Unsecured Investment Corporation Bonds¥8,500mn

1.00%(fixed)Total¥94,037mn

1.38%(avg. )

Subtotal

3 years(avg.)¥9,000mn

Long-Term Loans

Subtotal¥36,675mn

1.41%(avg.)The Sumitomo Trust and Banking, Co., Ltd.

¥2,000mn

2.27%(fixed)Development Bank of Japan, Inc.

¥1,000mn

2.40%(fixed)Dai-Ichi Life Insurance Company Ltd.

¥1,000mn

2.40%(fixed)¥4,000mn

4 months(avg.)

June 29, 2007

June 30, 2014

2 years&
8 months

Unsecured
and without
guarantee

June 4, 2010

June 4, 2015

3 years &7 monthUnsecured
and without
guarantee

2 years(avg.)

Note: Interest rates are rounded to the second decimal place, and the remaining periods are rounded to a whole number.
The averages for interest rates and remaining periods are weighted averages based on the balance at the end of fiscal period.

29

VI. Eleventh Fiscal Period Results (Ended October 31, 2011)30

VI - 1. Statements of Income (Summary) /Statements of Cash Distributions■ Statements of Income
Account■ Statements of Cash Distributions
10th FP
November 1, 2010 April 30, 2011
(181 days)

11th FPMay 1, 2011 October 31, 2011(184 days)

AmountAmountAccount

I. Operating revenue andexpenses
1.Operating revenue¥5,967mn¥5,812mn

2.Operating expenses¥2,995mn¥3,033mn

Expenses related torent business¥2,414mn¥2,479mn¥450mn¥424mnAsset management fees
Other01¥131mn¥129mnOperating income¥2,971mn¥2,779mn

II. Non-operating income
and expenses
1.Non-operating income¥6mn¥6,060mn¥8mn

Interest income

¥3mn

¥3mn

Other02

¥3mn

¥4mn

2.Non-operating expenses¥783mn¥801mnInterest expenses¥615mn¥613mnInterest expenses oninvestment corporation bonds

¥42mn

¥42mn

-

-

Other03¥125mn¥145mnOrdinary income¥2,194mn¥1,986mn

Extraordinary loss

¥37mn

-

¥2,158mn¥1,986mn

Amortization of deferredorganization expenses

Income before income taxes
Income taxes-current

¥0mn

¥1mn

Income taxes-deferred（¥0mn）（¥0mn）Net income¥2,157mn¥1,985mn

Unappropriatedretained earnings¥2,157mn¥1,985mn

10th FP
November 1, 2010 April 30, 2011
(181 days)

11th FPMay 1, 2011 October 31, 2011(184 days)

AmountAmountUnappropriatedretained earnings¥2,157mn¥1,985mn

Total dividend amount¥2,157mn¥1,985mn<Dividend per unit><¥13,922><¥12,809>

Retained earnings
carried forward

00【Expenses related to rent business】
 Depreciation and amortization:¥ 1,060mn

 Property management expenses:¥ 389mn

 Utilities expenses:¥ 208mnand others31VI - 2. Balance Sheets (Summary)
Account

10th FP(as of April 30, 2011)

11th FP(as of October 31, 2011)

AmountAmountAssets
I. Total current assets¥12,738mn¥10,183mn¥8,244mn¥5,405mn

Cash and deposits in trust¥4,204mn¥4,512mn¥289mn¥265mn¥173,551mn¥175,235mn

II. Total noncurrent assets
1. Total property, plant andequipment
Buildings, etc.

11th FP(as of October 31, 2011)

AmountAmountLiabilities

Cash and deposits

Other

Account

10th FP(as of April 30, 2011)

I. Total current liabilities¥20,850mn¥38,364mn

Operating accounts payable¥210mn¥163mnShort-term loans payable
Current portion of long-termloans payable
Accounts payable － other--¥19,175mn¥36,675mn¥262mn¥254mnAccrued expenses¥254mn¥261mnAccrued consumption taxes

¥49mn

¥63mn

Advances received¥868mn¥941mn¥172,994mn¥174,742mn¥992mn¥1,002mn

Derivative liabilities
Other

-

-

¥29mn

¥4mn

¥81,068mn¥62,849mn

Investment Corporation Bond

¥8,500mn¥8,500mn

Long-term loans payable¥66,430mn¥48,862mn¥144mn¥144mn¥5,993mn¥5,342mn¥101,918mn¥101,214mn

Land¥4,888mn¥4,888mn

Buildings, etc. in trust¥48,879mn¥49,410mn

Land in trust¥118,234mn¥119,440mn

2. Total intangible assets

¥0mn

¥2mn

Intangible assets

¥0mn

¥2mn

3. Total investment andother assets¥557mn¥490mnLease and guarantee deposits

¥10mn

¥10mn

Long-term prepaid expenses¥389mn¥304mnI. Total unitholders’ equity¥84,418mn¥84,245mn

Other¥157mn¥176mn1.Unitholders’ capital¥82,260mn¥82,260mn¥2,157mn¥1,985mn¥2,157mn¥1,985mn

-

-

-

-

Total net assets¥84,418mn¥84,245mn

Total liabilities and net assets¥186,336mn¥185,459mn

III. Total deferred assets
Investment corporation bondissuance costs
Total assets

¥45mn

¥40mn

¥45mn

¥40mn

¥186,336mn¥185,459mn

II. Total noncurrent liabilities

Tenant leasehold and security
deposits
Tenant leasehold and security
deposits in trust
Total liabilities
Net assets

2.Surplus
Unappropriatedretained earnings
Total surplus
II. Total valuation and translation
adjustments
Deferred gains or losses on hedge

32

VI - 3. Major Financial Indicators
Item
Period of asset management

9th Fiscal Period
May 1, 2010 –October 31, 2010

10th Fiscal Period
November 1, 2010 –April 30, 2011

11th Fiscal Period
May 1, 2011 –October 31, 2011

Remark184days181days184days

50.5%

50.5%

50.7%

Interest-bearing liabilities at end of period / Total assets at endof period¥4,691mn¥4,639mn¥4,393mn

Rent revenue – Expenses related to rent business + Depreciation
and amortization

5.4%

5.3%

5.0%

¥3,286mn¥3,243mn¥21,200¥20,929

Ratio of ordinary income to total
assets (return on assets (ROA))

1.2%

1.2%

1.1%

[Annualized][2.4%][2.4%][2.1%]

Ratio of net income to unitholders'equity (return on equity (ROE))

2.6%

2.6%

2.4%

[Annualized][5.2%][5.1%][4.7%]

Implied Cap Rate

5.8%

5.6%

NOI / ( Market capitalization at end of period +Net Debt at end of
5.7% period (Total liabilities at end of period – Total current assets at
end of period))

NAV multiple

0.82

0.93

Market capitalization at end of period / (Net assets at end of
0.76 period + (Appraisal value at end of period – Book value at end of
period))Ratio of unitholders' equity to total
assets at the end of period

45.3%

45.3%

45.4% Net assets at end of period / Total assets at end of period

Ratio of interest-bearing liabilities tototal assets at end of period(LTV)
Rental NOI(Net operating income)Rental NOI yield
Funds from Operation (FFO)
FFO per unit

Rental NOI x 2 / Sum total of the acquisition price of allproperties in the portfolio at end of period¥3,046mn Net income + Depreciation and amortization¥19,654 FFO / Number of units issued and outstanding at end of period

Ordinary income / ((Total assets at beginning of period + Total
assets at end of period) / 2)

Net income / ((Net assets at beginning of period + Net assets at
end of period) / 2)33

VI - 4 . Unitholders
Unitholdings
Unitholdings (as(as atat endend of11th
of11th FP)
FP)
Category

Number of Units Held

Individuals / other
Financial institutions(incl. securities firms)
Other domestic
corporations
Overseas corporations /individuals
Total

NumberNumber ofof Unitholders
Unitholders
Number of Unitholders

20,516

13.2%

6,675

94.9%

100,937

65.1%

111

1.6%

13,120

8.5%

140

2.0%

20,427

13.2%

105

1.5%

155,000

100.0%

7,031

100.0%

Top
Top 1515 Unitholders
Unitholders (as(as atat endend ofof 11th
11th FP)
FP)
Rank

Name

Number of
Share of Total
Units Held

1 Japan Trustee Service Bank (trust account)

27,53617.77

2 Nomura Trust and Banking (investment trust account)

11,907

7.68

Trust and Custody Services Bank (securities investment
3 trust account)

7,038

4.54

4 North Pacific Bank, LTD.

6,139

3.96

5 The Master Trust Bank of Japan (trust account)

5,916

3.82

6 The Senshu Ikeda Bank, Ltd

4,540

2.93

7 American Life Insurance Company GA Company JPY

4,000

2.58

8 The Fuji Fire and Marine Insurance Company, Limited

3,465

2.24

9 The Sumitomo Trust and Banking Co., Ltd.

3,176

2.05

10 Nippon Steel City Produce, Inc

3,162

2.04

10 Oji Real Estate Co., Ltd.

3,162

2.04

Trust and Custody Services Bank (money trust tax
12account)

2,850

1.84

13 NOMURA BANK (LUXEMBOURG) S.A.

2,701

1.74

14 Mizuho Trust & Banking co, Ltd

2,062

1.33

15 The Minami Nippon Bank, Ltd.
Total

1,550

1.00

89,204

57.55

Financial institutions (incl. securities firms):
Other domestic corporations:
Overseas corporations / individuals:
9th Fiscal Period
Total number ofunitholders at endof period: 6,830

10th Fiscal Period
Total number ofunitholders at endof period: 7,090

11th Fiscal Period
Total number ofunitholders at endof period: 7,031

105 [1.5%]
139 [2.0%]
113 [1.7%]

Individuals / other 6,473 [94.8%]
Financial institutions (incl. securities firms):
Other domestic corporations:
Overseas corporations / individuals:

113 [1.6%]
145 [2.0%]
114 [1.6%]

Individuals / other 6,718 [94.8%]
Financial institutions (incl. securities firms):
Other domestic corporations:
Overseas corporations / individuals:

111 [1.6%]
140 [2.0%]
105 [1.5%]

Individuals / other 6,675 [94.9%]

0%

20%

40%

60%

80%

100%

NumberNumber ofof Units
Units Held
Held

9th Fiscal Period
Total number of units
issued andoutstanding at end of
period: 155,000

10th Fiscal Period
Total number of units
issued andoutstanding at end of
period: 155,000
11th Fiscal Period
Total number of units
issued andoutstanding at end of
period: 155,0000%Individuals / other:
19,556 [12.6%]

Other domestic corporations:
13,870 [9.0%]

Overseas
corporations /individuals:
20,601 [13.3%]

Financial institutions (incl. securities firms):
100,973 [65.1%]
Individuals / other:
20,592 [13.3%]

Other domestic corporations:
13,475 [8.7%]

Overseas
corporations /individuals:
23,674 [15.3%]

Financial institutions (incl. securities firms):
97,259 [62.7%]
Individuals / other:
20,516 [13.2%]

Other domestic corporations:
13,120 [8.5%]

Overseas
corporations /individuals:
20,427 [13.2%]

Financial institutions (incl. securities firms):
100,937 [65.1%]

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

34

VI - 5. Unit Price Performance and Volume (Mar 1, 2006 – Nov 30, 2011)
第10期
Top REIT Trading Volume

第10期
（yen）

Top REITTES REIT Index

TOPIX

第10期
（Unit）

1,000,000

10,00011th FP

12th FP

900,000
8,000
800,000

700,000

6,000

600,000
4,000

500,000

400,000
2,000
300,000

200,000

Apr
2006

Oct
2006

Apr
2007

Oct
2007

11th
11th Fiscal
Fiscal Period
Period End
End
Unit
Unit PricePrice(based(based on
on closing
closing price)
price)

Apr
2008

Oct
2008

Apr
2009

Oct
2009

IPO
IPO PricePrice¥403,000(Oct. 31, 2011)

Historical
Historical HighHigh since
since IPO
IPO
(based(based on
on closing
closing price)
price)
Historical
Historical Low
Low since
since IPO
IPO
(based(based on
on closing
closing price)
price)

Apr
2010¥550,000

Oct
2010

Apr
2011

Oct
2011

0

Mar. 1, 2006

¥998,000 Feb. 16, 2007
¥208,000 Oct. 28, 200835

VIl. Appendix: Portfolio Overview

36VII - 1. Portfolio Map (as at end of 11th FP)
Tokyo Metropolitan Area

Musashiurawa
Shopping
SquareImpress
MusashiMusashi-Koganei Fukasawa House
Towers H&I
Faret East Building
ItoIto-Yokado
HigashiHigashi-Narashino
TOP Residence
Store
Yoga

Fukasawa House Towers H&I

Musashiurawa
Shopping
SquareHarumi Island Triton Square
Office Tower Y&Z

Kansai (Osaka Metropolitan Area)

Amagasaki Sta.

Shin-Osaka Sta.

Osaka Sta.

Kyobashi Sta.
日鉄本町ビルNittetsu Honmachi
Building
Tennoji Sta.

NEC Head Office Building（※）Disposition of Nittetsu Honmachi
Building has been completed on November 25,
2011

Iidabashi Sta.OAK PLAZA
Kanda Nishiki-cho
3-chome Building

Central Tokyo

Shinjuku Sta.
Yotsuya Sta.

ShibuyaWard

Shibuya Sta.

Kanda Park Plaza
Kanda Sta.

ChiyodaWard

Akasaka Oji
Building
MinatoWard

Akihabara Sta.

Sagamihara
Shopping CenterTokyo Sta.

Chuo Ward
Shinbashi Sta.

ShibaShiba-Koen
Building
NEC Head
Office Building

Ecology Toyosu
Procentury
Harumi Island
Triton Square
Office Tower Y & Z
Kanda Nishiki-cho 3-chome Building

Shinagawa
Ward
Shinagawa Sta.

37

VII - 2. Portfolio Summary (as at end of 11th FP)
Total Acquisition Price: ¥177.435bn.

Gross Rentable Floor Area : 295,215.03m2

Number of Properties

:

PML

17

:

2.4%

Asset Class (property type)
100%

11.5%

18.4%

80%

Area

2.0%
8.1%

1.6%
9.7%

1.6%
9.7%

1.5%
9.0%

1.5%
10.2%

19.3%

15.5%

15.5%

14.4%

14.2%

1.4%

Other

11.5%

Residential

1.1%
13.0%

Retail

1.0%

14.1%

0.7%

0.7%

0.6%

0.6%

28.6%

26.6%

26.6%

24.6%

25.6%

25.5%

70.6%

72.8%

72.8%

74.7%

73.7%

74.5%

End of
3rd FP

End of
5th FP

End of
7th FP

End of
9th FP

80%

88.5%

81.6%
70.6%

73.1%

73.1%

75.1%

74.1%

72.9%

(23.5%)

40%

20%

86.0%

79.2%

20%

(40.2%)(37.0%)(32.1%)(25.8%)(25.8%)(24.0%)(23.6%)IPO

End of
1st FP

End of
3rd FP

End of
5th FP

End of
7th FP

End of
9th FP

End of
As of Feb 1,
11th FP 2012 (Schedule)( ) Share of
NEC Head Office
Building

0%

IPO

End of
1st FP

6.0%
10.7%

5.5%

6.8%

100%
12.2%

12.2%

11.3%

12.5%

13.1%

17.7%
26.8%

11.5%

10,000㎡49,999㎡

21.9%

21.9%

10.6%
9.2%

60%

Less than
10,000㎡

7.4%

27.6%

27.2%

27.0%

6.9%

6.8%

4.6%

5.9%

46.5%

40.3%

58.5%

58.5%

54.2%

53.5%

14.0%

6.8%

32.6%
31.6%

11.4%

End of
3rd FP

End of
5th FP

End of
7th FP

End of
9th FP

End of
As of Feb 1,
11th FP 2012 (Schedule)

IPO

13.0%

12.9%

39.2%

29.9%

29.7%

11.3%

12.6%

1.3%

1.3%

41.8%

29.1%
12.4%

0%

End of
1st FP

17.1%
1.3%

19.8%

25.2%
20%

IPO

5 years-9
years
Less than
5 years

60%

53.1%

20%

0%

43.5%

43.4%

6.7%

40%
57.3%

44.5%

15 years19 years
10 years14 years

42.9%

17.1%
66.2%

20 years or
more

10.7%

41.2%
49.4%

40%
71.8%

4.8%

80%

50,000㎡99,999㎡
100,000㎡
or more

7.4%

4.9%

End of
As of Feb 1,
11th FP 2012 (Schedule)thEnd
End ofof 11
11th FPFP
17.7
Ａｖｅｒａｇｅ::
Ａｖｅｒａｇｅ
Ａｖｅｒａｇｅ: 17.7 years
years

Age of Buildings

Scale
Scale (based(based on
on total
total floor
floor space)
space)

80%

Tokyo
Metropolitan
Area
Central Tokyo

60%

40%

100%

Kansai

0.8%

19.8%

Office

60%

0%

100%

End of
1st FP

End of
3rd FP

End of
5th FP

5.8%

End of
7th FP

End of
9th FP

End of
As of Feb 1,
11th FP 2012 (Schedule)※In the above graphs, percentage figures are calculated based on acquisition price and the average is a weighted average based on acquisition price.

38

VII - 3. Portfolio Overview (as at end of 11th FP)
Asset
Class

Area

Property

Acquisition
Date

Total Floor
Space (m2)

Mar 3, 2006

144,476.05

Mar 1, 2006

AcquisitionPrice(mm yen)Portfolio Occupancy
Number of
Share
Rate
Tenants(%)(%)

72,238.03

Jan. 1990

41,950

23.6

100.0

1

1.4

PML
(%)

267,132.67

23,219.46

Oct. 2001

33,000

18.6

100.0

7

1.2

Mar 27, 2008 267,132.67

10,914.20

Oct. 2001

20,000

11.3

100.0

1

1.5

Kanda Nishiki-cho 3-chome
Building

Chiyoda Ward,Tokyo

Jan 13,2010

12,169.78

8,025.65

Mar.1973

12,700

7.2

100.0

1

7.0

Minato Ward,Tokyo
Minato Ward,Tokyo
Chiyoda Ward,Tokyo

Mar 1, 2006

10,063.05

7,300.35

Apr. 1989

9,660

5.4

11.9

2

6.4

Mar 19, 2008

4,958.29

3,060.43

May 1991

5,770

3.3

92.7

2

9.6

Mar 1, 2006

5,511.83

4,537.66

Nov. 1959

5,156

2.9

100.0

10

14.1

Tokyo
Metropolitan Faret East Building
Area

Tachikawa City,Tokyo

Mar 1, 2006

16,206.34

5,850.23

Dec. 1994

2,091

1.2

95.0

1

2.8

Kansai

Osaka City, Osaka Mar 1, 2006

6,714.09

4,409.52

June 1991

1,100

0.6

100.0

12

8.5

－

139,555.53－

131,427

74.1

95.0

37

－

Mar 1, 2006

56,351.42

61,763.28

Aug. 1993
etc.

12,000

6.8

100.0

2

3.6

Jun 30, 2006

45,338.37

51,098.42

Oct. 1994

8,900

5.0

100.0

1

7.7

Mar 19, 2007

28,930.36

14,960.69

Oct. 2005

4,335

2.4

100.0

3

8.5

－

127,822.39－

25,235

14.2

100.0

6

－

Dec 8, 2006

12,135.36

11,357.44

Jun. 2004

10,635

6.0

94.3

1

1.6

May 30, 2008

9,630.96

6,789.03

Jan. 2005

5,160

2.9

97.6

1

10.6

Aug 12, 2011

2,471.30

2,056.41

Jun. 2008

1,223

0.7

91.8

1

6.4

Oct 14, 2011

1,894.35

1,512.38

Feb. 2008

1,165

0.7

92.0

1

8.6

21,715.26－

18,183

10.2

95.0

4

－

6,121.85

6,121.85

Apr. 1985

2,590

1.5

100.0

1

7.7

－

6,121.85

－

2,590

1.5

100.0

1

－

－

295,215.03－

177,435

100.

97.

48

2.4

Akasaka Oji Building
Shiba-Koen Building
Kanda Park Plaza

Nittetsu Honmachi Building (*)
Subtotal

Sagamihara City,
Kanagawa Pref.
Tokyo
Ito-Yokado Higashi-Narashino
Narashino City,
Metropolitan Store
Chiba Pref.
Area
Saitama City,
Musashiurawa Shopping Square
Saitama Pref.
Sagamihara Shopping Center

Subtotal
Fukasawa House Towers H&I
Ecology Toyosu Procentury
Tokyo
Metropolitan
Residential Area
Impress Musashi-Koganei
TOP Residence Yoga

Setagaya Ward,Tokyo
Koto Ward,Tokyo
Koganei City,Tokyo
Setagaya Ward,
Tokyo

－

Subtotal
Other

Completion
Date

Harumi Island Triton Square
Office Tower Y
Harumi Island Triton Square
Office Tower Z

OfficeRetailRentable
Floor Space(m2)

Minato Ward,Tokyo
Chuo Ward,Tokyo
Chuo Ward,Tokyo

NEC Head Office Building

CentralTokyo

Address

CentralTokyo

Chiyoda Ward,Tokyo

OAK PLAZA
Subtotal
Total

Mar 20, 2007

0

3（※）Disposition of Nittetsu Honmachi Building has been completed on November 25, 201139

VII - 4. Appraisal Value as at End of Period(million yen)
Asset
Class

OfficeRetail

47,75047,95047,500

4,642

(450)

39,30039,00038,70038,500

7,266

(200)

19,92015,50015,10014,30014,200(5,720)(100)

12,70012,82014,10014,10014,00014,000

1,179-

Akasaka Oji Building

9,660

9,867

13,30013,300

9,570

9,560

(307)

(10)

Shiba-Koen Building

5,770

5,890

3,710

3,410

3,410

3,410

(2,480)-

NEC Head Office Building

41,95042,85747,750

Harumi Island Triton Square OfficeTower Y

33,00031,233

Harumi Island Triton Square OfficeTower Z

20,000Sumitomo Corporation Nishiki-cho
Building

Property

Appraisal Value Appraisal Valueat End of 8th FP at End of 9th FP

Kanda Park Plaza

5,156

5,105

5,047

4,959

4,970

4,930

(175)

(40)

Tokyo
Metropolitan
Area

Faret East Building

2,091

1,746

2,500

2,500

2,430

2,390

643

(40)

KansaiNittetsu Honmachi Building (*)

Tokyo
Metropolitan
Area

Tokyo
Residential Metropolitan
Area

Other

Appraisal Valueat End of 11th
FP (Ｃ)

Book Value at
End of 11th FP
(A)

Area

CentralTokyo

Difference
Difference in
BetweenAppraisal Value
Appraisal Value from End of 10thFP
and Book Value(C) – (B)(C)－(A)

Appraisal Valueat End of 10thFP
(B)

Acquisition
Price

Central
Tokyo

1,100

1,003

1,390

1,380

1,430

1,430

426

-

Subtotal

131,427

130,445

142,597

141,499

136,760

135,920

5,474

(840)

Sagamihara Shopping Center

12,00011,435

10,70010,30010,30010,300(1,135)-

Ito-Yokado Higashi-Narashino
Store

8,900

8,055

5,613

5,568

5,560

5,560

(2,495)-

Musashiurawa Shopping Center

4,335

4,047

3,800

3,810

3,810

3,810

(237)

-

Subtotal

25,23523,538

20,113

19,67819,67019,670(3,868)-

Fukasawa House Towers H&I

10,635

10,372

7,180

6,980

6,990

6,960

(3,412)(30)

Ecology Toyosu Procentury

5,160

5,120

4,560

4,520

4,590

4,780

(340)

190

Impress Musashi-Koganei

1,223

1,315

-

-

-

1,270

(45)

-

TOP Residence Yoga

1,165

1,249

-

-

-

1,170

(79)

-

Subtotal

18,18318,057

11,74011,500

11,58014,180(3,877)160

OAK PLAZA

2,590

2,701

2,696

2,674

2,660

2,670

(31)

10

Subtotal

2,590

2,701

2,696

2,674

2,660

2,670

(31)

10

Total

177,435

174,742

177,146

175,351

170,670

172,440(2,302)(670)（※）Disposition of Nittetsu Honmachi Building has been completed on November 25, 201140

VII - 5. Appraisal Cap Rate
Property

7th Fiscal Period

8th Fiscal Period

Discounted Cash Flow
DirectCapitaliz Method
ation
Discount
Terminal
Method:Rate
Cap Rate
Cap Rate

Discounted Cash Flow
DirectCapitaliz Method
ation
Discount
Terminal
Method:Rate
Cap Rate
Cap Rate

9th Fiscal Period

4.3%

3.8%
(Next 4
years)
4.3%(afterward)

4.6%

4.3%

3.8%
(Next 3
years)
4.3%(afterward)

4.6%

4.6%

4.3%

4.8%

4.6%

4.3%

4.6%

4.3%

4.8%

4.6%

-

-

-

4.5%
4.8%
5.3%
5.8%
6.2%

4.4%
4.6%
4.8%
5.5%
6.4%

6.0%

10th Fiscal Period

Discounted Cash Flow
MethodDirectCapitalization
Method:Cap Rate

Discount
Rate

Terminal
Cap Rate

4.3%

3.8%
(Next 3
years)
4.3%(afterward)

4.6%

4.8%

4.6%

4.3%

4.3%

4.8%

4.6%

5.2%

4.9%

5.4%

4.8%
4.9%
5.9%
6.0%
6.5%

4.5%
4.8%
5.3%
5.8%
6.2%

4.4%
4.6%
4.8%
5.5%
6.4%

5.8%

6.2%

6.0%

6.4%

5.5%

6.9%

5.8%

5.5%

5.2%

Ecology Toyosu Procentury

DirectCapitalization
Method:Cap Rate

11th Fiscal Period

Discounted Cash Flow
MethodDiscount
Rate

Terminal
Cap Rate

4.3%

3.8%
(Next 2
years)
4.3%(afterward)

4.6%

4.8%

4.6%

4.3%

4.3%

4.8%

4.6%

5.2%

4.9%

5.4%

4.8%
4.9%
5.9%
6.0%
6.5%

4.5%
5.0%
5.3%
5.8%
6.2%

4.5%
4.8%
4.8%
5.5%
6.3%

5.8%

6.2%

6.0%

6.4%

5.5%

6.9%

6.1%

5.8%

5.5%

4.9%

5.4%

5.2%

5.4%

5.2%

5.6%

Impress Musashi-Koganei--

TOP Residence Yoga

-

-

4.8%

4.3%

NEC Head Office Building

Harumi Island Triton Square
Office Tower Y
Harumi Island Triton Square
Office Tower Z
Kanda Nishiki-cho 3-chome
Building
Akasaka Oji Building
Shiba-Koen Building
Kanda Park Plaza
Faret East Building
Nittetsu Honmachi Building (*)
Sagamihara Shopping
Center
Ito-Yokado HigashiNarashino Store
Musashiurawa Shopping
SquareFukasawa House Towers
H&I

OAK PLAZA

DirectCapitalization
Method:Cap Rate

Discounted Cash Flow
MethodDiscount
Rate

Terminal
Cap Rate

4.3%

3.8%
(Next 2
years)
4.3%(afterward)

4.6%

4.8%

4.6%

4.3%

4.8%

4.3%

4.8%

4.6%

4.3%

4.8%

4.9%

4.6%

5.1%

4.9%

4.6%

5.1%

4.8%
5.1%
5.9%
6.0%
6.5%

4.5%
4.9%
5.3%
5.8%
6.2%

4.5%
4.7%
4.8%
5.5%
6.3%

4.8%
5.0%
5.6%
6.0%
6.5%

4.5%
4.9%
5.2%
5.7%
6.2%

4.5%
4.7%
4.7%
5.4%
6.3%

4.8%
5.0%
5.5%
5.9%
6.5%

5.8%

6.1%

6.0%

5.8%

6.1%

6.0%

5.8%

6.1%

6.4%

5.5%

6.9%

6.3%

6.1%

6.6%

6.3%

6.1%

6.6%

6.1%

5.8%

5.5%

6.1%

5.8%

5.5%

6.1%

5.8%

5.5%

6.1%

4.9%

5.4%

5.2%

4.9%

5.4%

5.1%

4.8%

5.3%

5.0%

4.7%

5.2%

5.5%

5.3%

5.7%

5.5%

5.3%

5.7%

5.4%

5.2%

5.6%

5.2%

5.0%

5.4%

-

-

-

-

-

-

-

-

-

-

5.5%

5.3%

5.7%

-

-

-

-

-

-

-

-

-

-

5.0%

4.8%

5.2%

5.4%

4.8%

4.3%

5.4%

4.8%

4.3%

5.4%

5.2%

5.0%

5.5%

5.2%

5.0%

5.5%

（※）Disposition of Nittetsu Honmachi Building has been completed on November 25, 2011

Appraisers

Properties

Tanizawa Sogo Appraisal Co., Ltd.

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

Japan Real Estate institute

Harumi Island Triton Square Office Towers Y & Z, Kanda Nishiki-cho 3-chome Building, Kanda Park Plaza, Faret East Building, ItoYokado Higashi-Narashino Store, Fukasawa House Towers H&I, Ecology Toyosu Procentury, Impress Musashi-Koganei,
TOP Residence Yoga ,OAK PLAZADAIWA REAL ESTATE APPRAISAL Corporation

Shiba-Koen Building, Sagamihara Shopping Center, Musashiurawa Shopping Square* The appraisals were conducted by the above real estate appraisers based on the asset assessment methods and standards specified in TOP REIT’s articles of incorporation as well as the regulations set forth by The
Investment Trust Association, Japan.

41

VII - 6. Operating Income by Property (Eleventh Fiscal Period)(million yen)
NEC
Head
OfficeBuilding

HarumiIslandTritonSquareOfficeTower Y

HarumiIslandTritonSquareOfficeTower Z
(Note1)

Kanda
Nishikicho 3chome
Building(Note1)

Akasaka ShibaOji
Koen
Building Building

Kanda
Park
Plaza

Operatingperiod (days)

184days184days184days184days184days184days184days 184days

Total revenue
from property
leasing

1,370

1,296

460

108

179

159

98

Rent revenue－ real estate

1,370

1,296

326

108

179

159

229

351

221

26

40

1

165

25

8

Taxes and
dues

224

95

40

Utilities
expenses-

84

Repairexpenses-Non-life
insurance
expenses
Other

Total expenses
from property
leasing
Property
management
expenses

Nittetsu
ItoFukasawa Ecology Impress
TOP
Faret Honmachi Sagamihara Yokado Musashi
urawa
House
OAK
East
Shopping Higashi- Shopping
Toyosu Musashi- Residence PLAZA
Building
TowersBuilding
Center
Procentury
KoganeiNarashino Square
Yoga
H&I(Note2)Store
184days184days184days184days184days184days

81days18days184days

407

236

129

236

161

17

3

94

98

407

236

129

225

155

17

3

94

68

33

61

46

18

69

41

3

0

17

8

31

10

2

1

1

40

24

1

0

0

9

13

12

9

55

29

15

16

8

0

-

14

14

7

12

23

10

-

-

-

0

1

0

-

-

1

136

0

2

0

0

1

13

0

9

5

0

-

1

1

2

0

0

0

0

0

0

0

0

0

0

0

0

0

2

2

2

-

2

1

2

1

0

1

2

1

0

-

1

1,141

944

283

380

239

82

139

90

65

346

189

110

166

119

14

2

77

[5.4%][5.7%][2.8%][6.0%][5.0%][2.9%][5.4%][8.6%][11.8%][5.8%][4.3%][5.1%][3.1%][4.6%][5.4%][5.2%][5.9%]

213

244

120

34

30

16

13

37

15

53

96

49

65

45

8

2

11

Operatingincome

927

699

163

345

208

65

125

53

49

292

92

61

101

74

5

0

65

Capitalexpenditures

4

5

0

0

135

26

0

36

4

8

1

-

1

1

-

0

6

NOI
(NOI yield)
Depreciation
andamortization

・ Renewal of the rental spaces
・ Renewal of the common areas

・Renewal of central monitor board(Note1) Some figures for Harumi Island Triton Square Office Tower Z and Kanda Nishiki-cho
3-chome Building are not disclosed due to request by the tenant.
(Note2) Disposition of Nittetsu Honmachi Building has been completed on November 25, 201142

VII - 7. Property Details: Office Buildings

Property

NEC Head Office Building

Property

Harumi Island Triton Square Office Tower Y

Property

Harumi Island Triton Square Office Tower Z

Address

Shiba, Minato Ward, Tokyo

Address

Harumi, Chuo Ward, Tokyo

Address

Harumi, Chuo Ward, Tokyo

Floor Area

144,476.05m2

Floor Area

267,132.67m2

Floor Area

267,132.67m2

Completion

January 1990

Completion

October 2001

Completion

October 2001

Title

Co-ownership (50%)

Title

Co-ownership (3rd – 15th floors)

Title

Co-ownership (a part of the 17th floor and18th – 22nd floors)

Acquisition Price

41.95 billion yen

Acquisition Price

33 billion yen

Acquisition Price

20 billion yen

43VII - 7. Property Details: Office Buildings

Property

Kanda Nishiki-cho 3-chome Building(formerly called “Sumitomo Corporation
Nishiki-cho Building”)

Address

Kanda Nishiki-cho, Chiyoda Ward, Tokyo

Floor Area

Property

Akasaka Oji Building

Property

Shiba-Koen Building

12,169.78m2

Address

Akasaka, Minato Ward, Tokyo

Address

Shiba, Minato Ward, Tokyo

Floor Area

10,063.05m2

Floor Area

4,958.29m2

Completion

March 1973 (large-scale renovation
undertaken in November 2001 andearthquake-resistant reinforcement
construction implemented in October 2009)

Completion

April 1989

Completion

May 1991

Ownership

Co-ownership (1st – 7th floors)

Ownership

Title

Title

Title

12.7 billion yen

Acquisition Price

9.66 billion yen

Acquisition Price

Acquisition Price

5.77 billion yen

44VII - 7. Property Details: Office Buildings

Property

Kanda Park Plaza

Address

Kajicho, Chiyoda Ward, Tokyo

Floor Area

5,511.83m2

Completion

Property

Property

Nittetsu Honmachi Building

Address

Utsubohonmachi, Nishi Ward, Osaka

Floor Area

6,714.09m2

Address

Akebonocho, Tachikawa City, Tokyo

Floor Area

16,206.34m2

Completion

June 1991

Completion

December 1994

Title

Ownership

Acquisition Price

1.1 billion yen

November 1959
Repair work to enhance earthquake resistance in2003

Faret East Building

Title

OwnershipTitle

Co-ownership (2nd – 5th and a part of the
6th and 8th floors)

Acquisition Price

5.156 billion yen

Acquisition Price

2.091 billion yen（※） Disposition of Nittetsu Honmachi Building has been completed
on November 25, 201145

VII - 8. Property Details: Residential

Property

Fukasawa Towers H&I

Impress Musashi-koganei

Property

TOP Residence Yoga

Address

Tamagawadai, Setagaya Ward,Tokyo

Toyosu, Koto Ward, Tokyo

Address

Floor Area

9,630.96m2

Floor Area

2,471.30 m2

Floor Area

1,894.35㎡

Completion

January 2005

Completion

June.2008

Completion

February. 2008

Co-ownership (H&I)

Title

Ownership

Title

Ownership

Title

Ownership

10.635 billion yen

AcquisitionPrice

5.16 billion yen

AcquisitionPrice

1.2234 billion yen

AcquisitionPrice

1.165 billion yen

Floor Area

12,135.36m2

Acquisition
Price

Property

Address

Fukasawa, Setagaya Ward,
Tokyo

Title

Ecology Toyosu Procentury

Nakamachi, Koganei-shi,Tokyo

Address

Completion

Property

June 2004

VII - 9. Property Details: Retail Properties and Other Properties

Property

Sagamihara Shopping Center

Property

Ito-Yokado Higashi-Narashino Store

PropertyMusashiurawa Shopping Square

PropertyOAK PLAZA

Address

Kobuchi, Sagamihara City,
Kanagawa Pref.

Address

Higashinarashino, Narashino City,
Chiba Pref.

Address

Bessho, Minami Ward, Saitama
City, Saitama Pref.

Address

Kanda Awajicho, Chiyoda Ward,Tokyo

Floor Area

56,351.42m2

Floor Area

45,338.37m2

Floor Area

28,930.36m2

Floor Area

6,121.85m2

Completion

August 1993

Completion

October 1994

Completion

October 2005

Completion April 1985
Completion of the conversion in 2007

Title

Ownership

Title

OwnershipTitle

Co-ownership (50%)

Title

Ownership

AcquisitionPrice

8.9 billion yen

AcquisitionPrice

4.335 billion yen

AcquisitionPrice

2.59 billion yen

AcquisitionPrice

12 billion yen

VIIl. Appendix: Structure of Related Parties

48

VIII - 1. Characteristics of Top REIT and Operational Strategies
Top
Top REITREIT Asset
Asset
Management
Management (TRAM)(TRAM)

Asset
Management

Top
Top REIT
REIT

1. Skilled Management of a Diversified Portfolio(1) Pursuit of both external growth and quality of assets managed

Diversified Portfolio(2) Pursuit of stability and growth potential of profitability through uniqueasset class

Development
Development
Brokerage
Brokerage
Property
Property
Management
Management

Capital+Human
Resources

OfficeDNA
DNA(3) Strategic application of commissioned reports from a think tank

RetailThree
Three Major
Major
Asset
Asset Types
Types

Residential

Other Asset
Types

2. Optimal Application of Sponsor Strengths

Asset
Asset
Management
Management

Sponsors
Sponsors
The Sumitomo
Trust and Banking(2) Agile acquisition of properties through warehousing function

31%

Oji Real Estate
A wholly-owned subsidiary of
Oji Paper(3) Achieving internal growth through “management-added benefits”

38%

Nippon Steel City Produce
A wholly-owned subsidiary of
Nippon Steel(1) Steady external growth through pipeline function

i.e., hotels andwarehouses

31%

Ensuring SteadyRevenue

SupportSteady Growth ofPortfolio

Maximizing Unitholders’ ValueSponsors’Sponsors’Strengths
Strengths

Utilizing Sponsor Strengths
Inheriting Sponsors’ DNATRAM was established in collaboration with three firms – The Sumitomo Trust andBanking, Nippon Steel City Produce and Oji Real Estate.

Excellent personnel have been dispatched to TRAM from the three sponsors toensure real estate investment expertise as well as inheritance of their corporategroups’ assets, that is, a long-term strategic view and diversified know-how acquired
through each of the sponsor’s businesses.

Sponsor skills shall be utilized to achieve steady growth by applying their real estatedevelopment abilities, brokerage networks and management skills, including leasing
activities that utilize the leasing demand from sponsors’ groups/clients.
Number of group companies (as of March 31, 2011)
Sumitomo Trust Group62

Nippon Steel Group344

Oji Paper Group

333

49

VIII - 2. Overview of Asset Manager
Name

Top REIT Asset Management Co., Ltd.

Address

Nittetsu Nihonbashi Building
1-13-1 Nihonbashi, Chuo Ward, Tokyo

GeneralGeneral Meeting
Meeting ofof Stockholders
Stockholders
AuditorBoard of Directors

EstablishedOct. 22, 2004

Paid-in Capital
Shareholders

Investment and Management Committee
Risk and Compliance Committee¥300mnRepresentative
The Sumitomo Trust and Banking Co., Ltd. 38%
Director and President
Nippon Steel City Produce, Inc. 31%
Compliance Officer
Oji Real Estate Co., Ltd. 31%

Business
Description

Investment
Investment management business
Department(Registered Financial Instruments
Business Operator No. 365 (Kinsho), issued by the
Director-General of the Kanto Local Finance Bureau)

Asset
Management
Department

Finance
Department

Planning and
Administrative
Department

Compliance
OfficeFinance and Accounting GroupIR Group※The head of the Compliance Officeconcurrently serves as the Compliance
Officer

Directors

President and Representative
Director:

Nobuhito Endo

Milestones

Dec. 10, 2004:

Top REIT Asset Management (TRAM) obtained a license as a real estate agent (The Governorof Tokyo No. (1) 83904)
TRAM obtained approval for a discretionary agent license for real estate transactions(The Minister of Land, Infrastructure and Transport No. 35)
TRAM obtained approval as an asset manager for an investment corporation(The Prime Minister No. 47)
TRAM entered into an Asset Management Agreement with Top REIT, Inc.
TRAM was deemed a Registered Financial Instruments Business Operator (Investment
Management Business), No. 365 (Kinsho), issued by the Director-General of the Kanto Local
Finance Bureau
TRAM formally submitted applications to register as Financial Instruments Business Operator(Investment Management Business)
TRAM renewed a license as a real estate agent (The Governorof Tokyo No. (2) 83904)

May 10, 2005:
June 28, 2005:
Nov. 2, 2005:
Sept. 30, 2007:

Nov. 27, 2007:
Dec. 10, 2009:

Portfolio Management Group

50

VIII - 2. Overview of Asset Manager【 Decision-Making Process 】

Report of minority opinions(Note 1)

(Note 2)

Risk and Compliance
Committee
Department in chargeof preparing proposal

Compliance Office

Examination

Examination
anddecision(Rejection)
ReturnBoard of Directors
Final
Decision

Investment andManagement Committee

Examination
anddecision(Rejection and/or Suspension)(Note 3)

Examination
anddecision(Rejection)(Note 1) Proposals will be passed to the Risk and Compliance Committee if they fall under eitherof the following:• Material transactions with interested parties defined in the rules on transactions with interested parties(a unanimous vote is required in this case.)• The head of the Compliance Office recognizes the discussion of the issues in the Risk and Compliance Committee to be necessary.
(Note 2) Proposals will be passed to the Board of Directors if they fall under any of the following:• The price of the proposed acquisition or sale is over 10 billion yen and over 10% of Top REIT’s total assets.
• Material transactions with interested parties defined in the rules on transactions with interested parties• Forward commitment transactions• Capital raising plans (final decisions on raising capital shall be made by the Board of Directors of Top REIT.)(Note 3) The head of the Compliance Office can suspend discussions and decisions and return the item to the Department in charge of the proposal 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.

51

Contact
IR Contact
Koji Murata,
Tomio Kurokawa,
Junko Yoshii
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 viewed 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 the prior consent of Top REIT.

52