Top REIT, Inc.
Business Report
The 19th Fiscal Period
From May 1, 2015 to October 31, 2015

Financial Highlights
19TH FISCALPERIODPERFORMANCE

20TH FISCALPERIODFORECAST

21ST FISCALPERIODFORECAST

184 days

182 days

184 days

OPERATING REVENUE

5,368 million

5,419 million

5,390 million

OPERATING INCOME

2,210 million

2,264 million

2,230 million

ORDINARY INCOME

1,654 million

1,743 million

1,743 million

NET INCOME

1,674 million

1,742 million

1,742 million¥9,761¥9,900¥9,900NUMBER OF INVESTMENT UNITS

176,000 units

176,000 units

176,000 units

PORTFOLIO SIZE

20 properties

20 properties

20 properties

PERIOD OF ASSET MANAGEMENTDIVIDEND PER UNIT

The forward-looking statements above contain assumptions and actual results may differ due to change
in events, conditions or circumstances. These statements should not be considered to guarantee any
dividend amounts to be paid. Assumptions of forecasts for the 20th and 21st fiscal periods are as follows:(1) Portfolio Assets
The forward-looking statements are based on the assumption that portfolio assets will be the 20
properties Top REIT Inc. (“Top REIT”) owns as of the date of this document (December 16, 2015).
(2)Number of Investment Units Outstanding
The forward-looking statements are based on the assumption that the number of investment units
issued and outstanding will be 176,000 units, which is the number as of the date of this document,
and that no issuance of new investment units will be made through October 31, 2016.
(3)Interest-Bearing Liabilities
The forward-looking statements are based on the assumption that the balance of interest-bearing
liabilities is ¥90,279 million, which is the amount as of October 31, 2015.
For the 20th fiscal period, it is assumed that regarding the ¥19,527 million in loans due for repayment
on February 29, 2016, ¥27 million will be repaid using cash on hand and the remaining ¥19,500
million will be refinanced. It is also assumed that, of long-term loans, ¥67 million will be repaid on
December 30, 2015 as agreed upon.
For the 21st fiscal period, it is assumed that the ¥3,000 million in loans due for repayment on October
31, 2016 will be fully refinanced. It is also assumed that, of long-term loans, ¥67 million will be
repaid on June 30, 2016 as agreed upon.

－ 1 －(4)Operating Revenue
For rental revenue from existing properties, Top REIT takes into account the execution of new leaseagreements and cancellation of lease agreements that have been finalized and scheduled as of the dateof this document, as well as such factors that may cause fluctuations as risks associated with rent
revision with tenants due for rent revision or contract renewal, in light of recent real estate leasing
market conditions.
For Harumi Island Triton Square Office Tower Y, the second phase of the construction work toconvert one floor that had been used as a cafeteria for the employees of tenants into office leasing
space is scheduled to be completed during the 20th fiscal period. It is assumed that the occupancy rateof the section converted into office leasing space after the work has been completed will stand at
100% after the end of April 2016 onward.
(5)Dividend per Unit
Dividends (dividend per unit) are calculated based on the dividend policy stipulated in Top REIT’s
Articles of Incorporation.
For the 20th and the 21st fiscal periods, it is assumed that net income will be fully distributed as
dividends (excluding fractions).
For the 20th and the 21st fiscal periods, it is assumed that ¥201 million of internal reserve will not bereversed.

－ 2 －GreetingThank you for your continued loyal patronage to Top REIT, Inc. (Top REIT).
The Japanese economy was impacted in terms of exports and production by the deceleration of emerging
countries during the fiscal period under review (19th fiscal period), but ongoing government economic
policies and Bank of Japan monetary easing measures led to strong corporate performance andcorresponding improvement in the employment and income environment to continue. The Japanese
economy thus maintained a moderate recovery trend. While there are worrisome elements in the global
economy that still require close monitoring such as trends in the Chinese economy, the impact of low
crude oil prices and geopolitical risks, the moderate recovery is thought to continue going forward. The
domestic stock market also experienced continued unstable status with rough movements in prices suchas with the simultaneous global decline in stock prices given the plunge of the Chinese stock market. In
addition, the Tokyo Stock Exchange REIT Index, which had risen from the end of last year (2014) andwas stable at the 1,800 points level, softened in and after July with the impact of the situations in China
and Greece as well as other factors, and fell to the 1,500 points level in September. It then turned to an
upward trend again in October and is recently regaining calmness.
In recent times when both the domestic economy and stock markets, including J-REITs, are being
significantly swayed by the global economy and world affairs, the real estate transaction market is also
being impacted by foreign forces. Real estate cap rates are decreasing (real estate prices are surging)with the synergism of the inflow of capital from active investors abroad and the domestic appetite forinvestment. Under such circumstances, Top REIT firmly maintained its selective investment approach interms of cap rate, location, size, occupancy rate and other conditions without lowering its perception of
acquisitions while continuing its strategy of Implementation of Growth Strategy Focusing on “Internal
Growth” and focusing on the management of its properties under ownership. As a result, lease contracts
with new tenants were concluded at Faret East Building (located in Tachikawa-shi, Tokyo) and MEL
Building (located in Sendai-shi, Miyagi), and the properties reached full occupancy. Efforts to attract
new tenants are steadily progressing for the new office floor of Harumi Island Triton Square OfficeTower Y where conversion from cafeteria to tenant office space began. However, leasing up of
evacuated spaces has already progressed to 94%, Top REIT recorded a period-on-period decrease in thefinancial results for the 19th fiscal period (fiscal period ended October 31, 2015) due to such factors as
the decrease in revenue at Kanda Nishiki-cho 3-chome Building where the contribution to profit islimited and the disappearance of the previous fiscal period’s gains on sale of two properties, with
operating revenue of 5,368 million yen (down 4.4%), ordinary income of 1,654 million yen (down
12.6%) and net income of 1,674 million yen (down 8.6%). For dividends, 365 yen per unit of internal
reserves (reserve for reduction entry, etc.) were reversed, resulting in dividend per unit of 9,761 yen,
0.8% more than the previous fiscal period.
Top REIT has realized the accumulation of profit through steadily advancing the current strategies,
making it possible to raise the dividend level. We intend to continue our endeavors to maximize theinvestment value of our unitholders through collaboration with the Asset Manager and the sponsors. We
appreciate your continued support and understanding.
December 16,2015

Junichi Sahara

Tatsuya Chiba

Executive Officer
Top REIT, Inc.

President and Representative Director
Top REIT Asset Management Co., Ltd.

－ 3 －Initiatives of Top REIT and Dividends for the 19th Fiscal Period
Top REIT announced its measures as Implementation of Growth Strategy Focusing on “Internal Growth”
at the time of the release of our financial results for the 17th fiscal period in December 2014. During thepast year we focused on implementing measures for the early recovery of the dividend level which dipped
below 10,000 yen in the 18th fiscal period.

Current Strategies

There is a more detailed explanation on the following pages with regard to the progress of the various
measures, but as a result of the fruits of these endeavors appearing in revenues, dividend per unit for the
19th fiscal period, which was forecasted to be ¥9,700, was actually ¥9,761. Regarding the reversal ofinternal reserves, the amount was reduced from the initial forecast of ¥82 million to ¥64 million, equivalent
to a loss on retirement of kitchen instruments associated with the conversion from a cafeteria to officespace at Harumi Island Triton Square Office Tower Y.

Continue growth strategy focusing on “Internal Growth,” aiming to raise dividends level

Steadily implement measures for value enhancement of existing portfolio
Pursue leasing activities to achieve full occupancy of office building and conduct
appropriate rent revision
Firmly maintain policy of selective investment that contribute to the improvementof portfolio quality as well as investors’ value
Manage ratio of fixed rate loans with careful monitoring of interest rate trend, spread
maturities and equalize refinance amountAchieverment
in 19th FP

Management of
Existing Portfolio
 Harumi Triton Y: Begun
conversion work of cafeteria“Completed 1st phase work”
and “Executed lease contract”

 Akasaka Oji, Faret East, MEL Bldg.
Attracted successor tenants
 Rent revision  Up 1.7% on
average (with 8 tenants)

Financial
Management

External
Growth Refinanced on Jun. and  No acquisition during
Sep. 2015 Total 12.5bn
19th FP・Fixed rate (Full amount) : 0.68%  Continued sourcing
on average
activities to secure
・7 years: ¥8.5bn , 5years: ¥4.0bn
investment opportunities
in cooperation withsponsors－ 4 －<Internal Reserve>
Balance at beginning of 19th FP： ¥266 million： ¥64 million (*)

Reversal in 19th FP(Equivalent to loss on retirement of kitchen instruments of Harumi Y)(*) Deferred tax liability: ¥20mn + Reserve for reduction entry: ¥43mn： ¥201 million

Balance after reversal

Reduced amount of reversal of internal reserve due to the increased profit

Reversal of internal reserve(Yen/unit)
10,000

9,761

9,700

365
9,500

Reduced amountof reversal ofinternal reserve

(28)

467
320

163

(130)
9,000

9,233
8,500

8,000
19th
FP Forecast
19th
FP

19th
FP Actual
19th
FP

Forecast

Actual(Note) Figures for impact on dividend per unit are rounded down to the nearest yen.

－ 5 －Achieved higher
than expected
profitManagement of Properties
Regarding rent revisions (including contract renewal) during the 19th fiscal period for office buildings andretail properties, we undertook rent revisions with eight tenants (seven at office buildings and one at a retailproperty) who accounted for approximately 4% of the total monthly rent of our portfolio. Backed by theoffice leasing market, for which the rent level is on a recovering trend, and as a result of continued
negotiations to increase rent upon sufficient consideration of competitiveness of target properties in thesurrounding markets and the disparity between current rent and the market standard, rents were increased
for three tenants and the revenue from all target tenants increased by 2.2% on average, including theincrease of rent through tenant replacement. We will continue to conduct negotiations for appropriate rent
revisions in light of the market standard while grasping movements of respective tenants.

Revised monthly
rentMonthly rent before
revision

Increase in monthly rent

Results of rent revision ＝(%)

Monthly rent before revision（Million

yen）

200

(6.1%)
+0.3%

150
100

+1.7%

50
0
18th FP
Apr.2015

18th FP
Apr.2015

19th FP
Oct.2015

14 tenants

Excl.
IY Higashi-Narashino

20th FP
Apr.2016(Forecast)

21st FP
Oct.2016(Forecast)

22nd FP
Apr.2017(Forecast)
（㎡）

4,000

2,000
1,000
0

431

‐1,000（Million yen）

* Figures in () indicate number of tenants subject to rent revision.
(2)

60

Termination in 19th FP(excl. residence)

20
th FP

50
40

Akasaka Oji Bldg. (3)Shiba-Koen Bldg. (1)Shinjuku EAST Bldg. (2)Shinkawa Chuo Bldg. (3)Ginza Oji Bldg. (1)Faret East Bldg. (3)13tenants
7.3％ oftotal rents(Note)

Akasaka Oji Bldg. (2)Shiba-Koen Bldg. (2)Shinkawa Chuo Bldg. (3)Ginza Oji Bldg. (6)Faret East Bldg. (3)Sagamihara SC (IY)
MEL Bldg. (1)18
tenants
12.2％ oftotal rents(Note)

(3)

30

(5)

20

(2)

(1)

(2)

(7)
(3)

(1)

(4)

FP

(1)

0
Nov

Dec

Jan

Feb

20th FP

Mar

Apr

May

21
st

10

New contract in 19th FP(excl. residence)

3,159

3,000

Rent revision (Average)+1.7 %+
Tenant replacement (1 tenant, 363㎡/431㎡)＝
Increase in rent in 19th FP+2.2 %(Average)

23rd FP
Oct.2017(Forecast)

Jun

Jul

Aug

Sep

Oct

21st FP(Note) Ratio indicates the total monthly rent to be revised in 20th or 21st FP against the total monthly rent (including common
service fees) of all properties owned at Oct. 2015.

－ 6 －Regarding the conversion from a cafeteria to tenant office space at Harumi Island Triton Square OfficeTower Y which we are engaged in as part of the enhancement of asset value for our properties, the cafeteria
was closed in May 2015 and the conversion work has commenced. The first phase construction wascompleted in October 2015. In the northern half of the floor, leasing with tenants has already begun and therental revenue for this section is expected to be recorded starting from the 20th fiscal period. The second
phase construction began in November 2015, converting the southern half of the floor. The construction issteadily making progress and the section is scheduled to be converted to offices by March 2016. Regarding
attracting tenants, a contract for lease starting in April 2016 has already been concluded and, as with thenorthern half of the floor, revenue is expected to be recorded as soon as the section is converted into offices.
This conversion expands the property’s total rentable office space by approximately 8.5% and so an
increase in profitability is anticipated.
19th FP(May 2015 – Oct. 2015)<1st phase (Completed)>(North)Conversion to office

21st FP onward(May 2016 -)<2nd phase (started)>
Under leasing(Occupaid)(North)（North）
Leasetoto exisiting
exisiting tenant
Lease(Core)（Core）(Core)
Temporaryleasing

20th FP(Nov. 2015 – Apr. 2016)(South)（South）
Conversion
to officeofficeConversion to(South)demolition

Leased half of south side space
to existing tenant temporarily
From May 2015 to Oct. 2015

(Core)
After conversion
work (Plan)(South)Lease to exisiting tenant

Leased half of north side
space to existing tenant
Started from Sep. 2015

Leased half of south side
space to existing tenant
Starting from Apr. 2016(*) “Core”: Common area and storage

Revenue/ Expenses and
CAPEX in 19th FP (Actual)
CAPEX for 1st phase
construction
Loss on retirement ofkitchen instruments(Expenses)
Temporary payment
from tenants(Revenue)¥352mn

Revenue/ Expenses and
CAPEX in 20th FP (Plan)CAPEX for 2nd phase
construction¥195mnEffect of Conversion
Estimated NOI yieldUp approx. 0.3%(*) Assume full contribution of rent

¥64mn

¥117mnLoss on retirement ofassets (Expenses)－

Temporary payment
from tenants(Revenue)¥94mn

Increase in Rentable Office space(1st phase) ①

Increase in Rentable Office space(1st phase) ②+979㎡(up 4.2% before conversion)+979㎡(up 4.2% before conversion)－ 7 －Effect of conversion
Increase in Rentable Officespace ①+②

+1,959㎡(up 8.5% before
conversion)

Top REIT has positioned its basic asset management strategy as sustaining and increasing revenue over the
medium- to long-term through the “Tenants First” policy and “keeping operational management costs at an
appropriate level.” We will endeavor to communicate with our tenants while steadily implementing
initiatives to strengthen the competitiveness of properties and increase profitability in the medium to longterm through the improvement of tenant satisfaction.

Sustain stable revenue over medium to long term by maintaining
good relationship with tenants

Kanda Nishiki-cho 3-chome Bldg.

Wide selection of lunch bags
and office supplies in the store

Directly connected to the store
from inside of the building

Set up “Eat-In” space

Ecology Toyosu
Procentury

Kanda Nishiki-cho 3-chome Bldg.

Akasaka Oji Bldg.

Improve tenant satisfaction by discerning
tenant needs

Convenience for tenants－ 8 －Shinjuku EAST Bldg.
Shinkawa Chuo Bldg.

Kanda Nishiki-cho 3-chome Bldg.
Akasaka Oji Bldg.
Shiba-koen Bldg.
Shinjuku EAST Bldg.
Shinkawa Chuo Bldg.

Shiba-koen Bldg.

Ginza Oji Bldg.
Faret EAST Bldg.

Office Bldgs. 7 of 10 Properties (*)(*) excl. NEC Head Office, and Harumi Triton Y and Z◆ Benefits for Owner ◆Maintain and improve
profitability andfunctionalityof properties◆ Benefits for Tenants ◆◆ Eco-Friendly ◆Enhance convenience

Water-saving

Cost reduction

Saving electricity－ 9 －External Growth
The appetite of overseas and other investors to purchase properties continues to be strong in the real estatetransaction market. Competition for acquisitions is further intensifying as information on excellent
properties is limited and in some parts there is even a sense of overheating in transaction prices.
Backed by the favorable fund procurement environment, investors’ appetite for purchases is expected tocontinue on a strong note and the environment for Top REIT’s external growth is expected to continue tobe severe.
In such an environment, Top REIT will continue to have office buildings as its main target and will
endeavor to improve its existing portfolio as well as unitholder value by firmly maintaining its selective
investment in excellent properties in light of the situation of the real estate transaction market.

Selective
Investment
Portfolio
Share
Now

72.9%

3 Major
Asset
Types

Current
Investment Policy

TargetTargetAround75%

OfficeRetail

27.1%

Other

Asset
Type

Around25%
Residence

Other

•

Tokyo Met. area and other major cities,
mainly on central Tokyo•

Put importance on high level traffic
convenience•

Put importance on stability and growthpotential of trade zone

Main target

Verify characteristics
of individual assets •Maintain cautious
stance•Tokyo, Tokyo Met. area and other major
cities, located close to train station•

Put importance on cap rate and age of
bldg.at the time of acquisition•

Verify substitutability of assets sufficiently

Verify characteristics
of individual assets •－ 10 －

Located in areas where ample demand isanticipated

Put importance on cap rate at the time ofacquisition

Financial Management
During the 19th fiscal period, to finance ¥8.5 billion Investment Corporation Bonds due on June 2015, Top
REIT took out long-term loans in the same amount. Furthermore, regarding the long-term loans of ¥4.2
billion that was due on September 2015, ¥4 billion was refinanced as of the same date with a long-termloan and the remaining ¥0.2 billion was repaid using cash on hand. All refinancing was with 5 or 7 year
long-term loans and interest rates were fixed through interest-rate swap agreements. Going forward, whileclosely watching market interest rates, we will proceed with refinancing at fixed interest rates, and byincreasing the fixed interest rate on interest-bearing liabilities, we will prepare for potential future interest
rate hikes.

June, 2015

September, 2015
Beforerefinancing

Afterrefinancing

Bank loans

Bank loans

Beforerefinancing

After refinancing

Type

Investment
corp. bondBank loans

Amount¥8.500bn¥4.500bn¥4.000bn

Amount¥2.954bn¥1.297bn¥4.000bn

Term

5Y

7Y

5Y

Term

2Y 10M

2Y 6M

7Y

0.825%(fixed)0.430%(fixed)Interest
rate

1.000%(fixed)Type0.610%(floating)Interest
rate(weighted average)
0.639% (*)

0.763%(fixed)(*)(Interest rate as of Sep. 30, 2015)(*) Figures are rounded tothree decimal places.

“Reduce interest expenses” “Raise ratio of loans with fixed interest rates”“Spread maturities” “Equalize refinance amounts”

100%（Million yen）

25,000

53.5

53.5

48.6

44.0

41.0

37.7

56.0

46.5

46.5

51.4

56.0

59.0

62.3

44.0

80%
20,0002,827

60%

15,000
9,000
8,500

1,230

5,000

8,500

16,700
4,251
0

40%

19,04010,000

3,000

1,822

4,670
2,355

4,000
4,500

4,000
4,000

4,500

19th FP 20th FP 21st FP 22nd FP 23rd FP 24th FP 25th FP 26th FP 27th FP 28th FP 29th FP 30th FP 31st FP 32nd FP 33rd FP
Oct.2015 Apr.2016 Oct.2016 Apr.2017 Oct.2017 Apr.2018 Oct.2018 Apr.2019 Oct.2019 Apr.2020 Oct.2020 Apr.2021 Oct.2021 Apr.2022 Oct.2022－ 11 －

20%
0%

15thFP
16thFP
17thFP
18thFP
19thFP
20thFP
21stFP
Oct.2013 Apr.2014 Oct.2014 Apr.2015 Oct.2015 Apr.2016 Oct.2016(Plan)(Plan)

(Billion yen)
150.0
Short-Term
Long-Term

120.0

6.7

90.0

9.3

13.2

60.0

72.7

2.5
30.0

87.4

94.0

96.9

95.9

100.3

90.2

68.4

54.4
33.4

33.4

0.0
IPO
1st FP
3rd FP
5th FP
7th FP
9th FP
11th FP 13th FP 15th FP 17th FP 19th FP
Mar.2006 Oct.2006 Oct.2007 Oct.2008 Oct.2009 Oct.2010 Oct.2011 Oct.2012 Oct.2013 Oct.2014 Oct.2015

1.5%

Average interest rate
1.3%

1.1%

0.9%

0.7%
11th FP 12th FP 13th FP 14th FP 15th FP 16th FP 17th FP 18th FP 19th FP
Oct. 2011 Apr. 2012 Oct. 2012 Apr. 2013 Oct. 2013 Apr. 2014 Oct. 2014 Apr. 2015 Oct. 2015

Reserve for reduction entry

LTV

(%)

(Million yen)

50.5
50

50.7

51.5

51.4

51.4

51.6

50.0

50.0
47.7

47.3

47.6

40

300

200

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

30

100

27.8
20

0
IPO
5th FP 10th FP 11th FP 12th FP 13th FP 14th FP 15th FP 16th FP 17th FP 18th FP 19th FP
Mar.2006 Oct.2008 Apr.2011 Oct.2011 Apr.2012 Oct.2012 Apr.2013 Oct.2013 Apr.2014 Oct.2014 Apr.2015 Oct.2015－ 12 －

Outlook of Performance
As a result of implementing measures based on the Implementation of Growth Strategy Focusing on“Internal Growth,” Top REIT is realizing effects such as the elimination vacancies and enhancement ofasset value to its properties, increase of revenues through appropriate rent revisions and reduction ofborrowing costs.
In the 20th fiscal period, we will also make the early recovery of the dividend level more certain bycontinuing the Implementation of Growth Strategy Focusing on “Internal Growth” in light of current trends
in the real estate transaction market and status of the portfolio.
As such, we forecast a dividend per unit of ¥9,900 for the 20th fiscal period, an increase of ¥200 from theprevious forecast, and a dividend per unit of ¥9,900 for the 21st fiscal period.
Going forward, we will endeavor to stabilize and improve the dividend level through the steady
implementation of various measures.

Future Initiatives

Continue growth strategy focusing on “Internal Growth”
Management of
Existing Portfolio

Financial
Management

 Harumi Triton Y: Finalize conversion
work Persistent negotiation with tenants toincrease rent level
 Maintain good relation with tenants Reduce costs related tofinancial activities Raise ratio of loans with
fixed interest rate andspread maturities

Trend of dividend

Dividend Forecast (per unit)
20th FP

21st FP

¥9,900¥9,900

Announcemnet of 17th FP results

External Growth Seek investment
opportunities
considering trend ofreal estate market
 Rebuild sponsor
structure

Raised lowest dividend level steadily
through
implementation of various measures

Announcemnet of 18th FP results

Announcemnet of 19th FP results(Yen)
10,000

9,700

9,680

9,761

ＵＰ10％
10%UP

9,300
9,000

9,000

Revised
Forecast

Actual
8,000

9,900

9,900
9,700

Revised
Forecast

Revised
Forecast

ActualInitialforecast

Initialforecast

Initialforecast

7,000

18th FP

19th FP－ 13 －

20th FP

21th FP

【1】Overview of Asset Management Operation
1. Operating Results and Financial Position(In millions of yen, except per unit data or where otherwise indicated)
15th fiscal period 16th fiscal period 17th fiscal period 18th fiscal period 19th fiscal period
From
From
From
From
From
May 1, 2015
Nov. 1, 2014
May 1,2014
Nov. 1, 2013
May 1, 2013
to
to
to
to
to
Oct. 31, 2015
Apr. 30, 2015
Oct. 31, 2014
Apr. 30, 2014
Oct. 31, 2013
(1) Operating results
Operating revenue¥ 5,154¥ 5,637¥ 5,792¥ 5,612¥5,368(Revenue related to rental business)

5,154

5,637

5,792

5,315

5,368

Operating expenses

2,981

3,108

3,229

3,140

3,157

(Expenses related to rental business)

2,438

2,622

2,721

2,630

2,673

Operating income

2,172

2,528

2,563

2,472

2,210

Ordinary income

1,580

1,913

1,955

1,891

1,654

Net income

1,579

1,913

1,954

1,831

1,674

186,169(0.4)%

200,8027.9%

200,551(0.1)%

189,737(5.4)%

189,568(0.1)%

Interest-bearing liabilities

95,997

100,430

100,362

90,59890,279Net assets(Period-on-period variation)

83,871(0.3) %

93,081
11.0%

93,1200.0%

92,998(0.1) %

92,976(0.0)%

Unitholders’ capital

82,26091,143

91,143

91,143

91,143

Total cash distributions

1,579

1,912

1,954

1,703

1,717

Payout ratio (Note 2)

100.0%

99.9%

100.0%

93.0%

102.6%(2) Assets, etc. (as of the end of the period)
Total assets(Period-on-period variation)(3) Cash distributions(4) Per unit information
Number of units outstanding

155,000

176,000

176,000

176,000

176,000

Net assets per unit (Note 3)

541,105

528,873

529,095

528,400

528,278

Dividend per unit

10,191

10,864

11,107

9,680

9,761

(Distribution of earnings per unit)

10,191

10,864

11,107

9,680

9,761

－

－

－

－

－

ROA (Note 4)

0.8% <1.7%>

1.0% <2.0%>

1.0% <1.9%>

1.0% <2.0%>

0.9% <1.7%>

ROE (Note 4)

1.9% <3.7>%

2.2% <4.4>%

2.1% <4.2>%

2.0% <4.0>%

1.8%<3.6%>

Ratio of unitholders’ equity to total assets(Period-on-period variation)

45.1%
0.1%

46.4%
1.3%

46.4%
0.0%

49.0%
2.6%

49.0%
0.0%

LTV (Note 4)

51.6%

50.0%

50.0%

47.7%

47.6%

Rental NOI (Note 5)

3,831

4,207

4,274

3,871

3,879

19

22

22

20

20

40

49

50

45

47

301,825.87 m2

331,677.14 m2

331,709.64 m2

321,207.26 m2

322,185.64

Occupancy rate at the end of the period(Note 7)

96.7%

98.1%

98.9%

98.9%

99.4%

Depreciation and amortization

1,115

1,193

1,202

1,186

1,185

176

511

143

442

578

(Distribution in excess of earnings perunit)(5) Financial indices(6) Supplemental information
Number of properties at the end of theperiodNumber of tenants at the end of the period(Note 6)
Total rentable area at the end of the period

Capital expenditures
Notes:
1. Accounting data does not include consumption taxes.

－ 14 －

2. Since fund procurement through public offering was conducted during the 16th fiscal period and the number of investment units had changed
accordingly, the payout ratio for the 16th fiscal period is calculated as follows:
Payout ratio= Total cash distribution (excluding distribution in excess of earnings) / Net income ×100
3. Net assets per unit for the 15th fiscal period has been rounded to the nearest yen and net assets per unit for the 16th fiscal period and onward
have been rounded down to the nearest yen.
4. The indices above are calculated using the following formulas. Annualized figures indicated in angle brackets are based on the number ofdays in the relevant period.
ROA = Ordinary income / ((Total assets at beginning of period + Total assets at end of period)/2) × 100
ROE = Net income / ((Net assets at beginning of period + Net assets at end of period)/2) × 100
LTV= Interest bearing liabilities / Total assets
5. Rental NOI (Net operating income) = Rental revenue - Expenses related to rental business + Depreciation and amortization
6. Number of tenants at the end of the period indicates total number of tenants of each property as of the end of the period. In case a master leaseagreement is concluded, it is counted as one tenant. In case one tenant rents multiple units, it is counted as one tenant if the units are in thesame property and as multiple tenants if the units are in different properties.
7. Occupancy rate at the end of the period = Total leased areas at the end of the period / Total rentable areas at the end of the period
When a pass-through type master lease agreement has been concluded, the area subleased to the end tenants is considered to be the leasedarea.
8. Unless otherwise mentioned, fractions are rounded off for monetary amounts and rounded for ratios throughout the report.

－ 15 －

2. Overview of Asset Management Operation for the 19th Fiscal Period
A. Overview of Top REIT
Top REIT was founded on November 2, 2005 based on the Act on Investment Trusts and Investment Corporations (Act No. 198of 1951, as amended) with Top REIT Asset Management Co., Ltd. (the “Asset Manager”) as the incorporator. On March 1, 2006,
Top REIT was listed on the Real Estate Investment Trust Section of the Tokyo Stock Exchange (TSE) (Securities Code: 8982)
with the number of investment units issued and outstanding totaling 145,500 units. As of the end of the 19th fiscal period(October 31, 2015), the total number of investment units issued and outstanding stood at 176,000 units as a result of the issuanceof additional investment units through the third-party allotment (9,500 units) on March 23, 2006, the public offering (20,000
units) on November 25, 2013, and the third-party allotment (1,000 units) on December 13, 2013.
Top REIT manages its portfolio with the aim of maximizing the investment value for its unitholders by securing stable revenues
over the medium- to long-term and achieving steady growth of its portfolio. To do so, Top REIT focuses on the two strategies,“Skilled management of a diversified portfolio” and “Optimal application of the sponsors’ strengths.” As of the end of the 19th
fiscal period, its portfolio consisted of 20 properties with a total acquisition value of ¥190,484 million.

B. Investment Environment and Management Performance<Investment Environment>(a)Economy in GeneralIn the 19th fiscal period, the Japanese economy was impacted in terms of exports and production by the deceleration of theeconomies in emerging countries, but ongoing government economic policies and Bank of Japan’s monetary easing measures
led to strong corporate performance and corresponding improvement in the employment and income environment to continue.
The Japanese economy thus maintained a moderate recovery trend.
While U.S. interest rate trends, resurgence of the European debt problem, China’s growth stagnation, resource-rich countries’
economic trends and other risk factors that may impact the Japanese economy require close monitoring, such factors as
anticipated improvement in consumer sentiment associated with the increase in companies’ capital investment and households’
income against the backdrop of depreciation of the yen and high stock prices suggest that the moderate recovery will continue.
(b)Real Estate Leasing Market[Office Buildings]
The office leasing market remained steady, as evident by such factors as the vacancy rate continuing to improve in not only
Tokyo but also Osaka, Fukuoka and other major office districts, as well as the ongoing increase trend in rent, centering on
excellent office buildings in central Tokyo. Based on the continued assumption of robust office demand buoyed by such factors
as improvement in the employment environment and corporate performance, the market as a whole is expected to continue tobe on a moderate recovery trend.
[Retail Properties]
Personal consumption is gradually recovering and is thought to remain steady going forward, backed by improvement in theemployment and income environment. On an analysis by business category, strong showings are expected to continue fordepartment stores in Tokyo, which are expected to benefit from growth in consumption driven by inbound tourism, and forfood supermarkets and other business categories that target a small trade area, which are showing consecutive year-on-yearincreases in business performance. Among large-scale general supermarkets, on the other hand, there are stores struggling with
continuing year-on-year decreases in business performance. In this manner, the state of disparities arising in businessperformance depending on the characteristics of individual retail properties is thought to continue.
[Residential Properties]
Rental residential property construction starts in the Tokyo metropolitan area are forecast to remain at a low level due in part tosoaring land acquisition costs and construction costs. With improvement in the employment and income environment and otherfactors, the trend of population in-migration exceeding out-migration continues in the Tokyo metropolitan area and majorurban areas of Japan. As such, the favorable supply-demand environment is expected to continue for highly-competitive rental
residential properties that are excellent in terms of location and quality. The rental residential property market is thus thought tosee strong showings in both occupancy rate and rent.
(c) Real Estate Transaction Market
In the current real estate transaction market, a positive investment stance is maintained overall, centering on not only J-REITs
but also private placement funds, business corporations, overseas investors who anticipate a full-fledged recovery of theJapanese economy and other investors. This has led to ongoing capital inflow into the market continuing. On the other hand,with information on the sale of excellent properties being limited, competition over property acquisition is increasingly
intensifying and transaction prices are on an upward trend. While the expected cap rate of excellent office buildings in the“Marunouchi/Otemachi District” have ceased falling in the 3.5% to 4.0% range, there are also survey results that have shownthat in other districts the expected cap rates have decreased slightly as before. With investors’ appetite for real estate
investment remaining strong against the backdrop of a favorable financing environment, the downward trend of investment
returns is seen to continue for the time being.

－ 16 －

(d) Financial Market
The financial market in the 19th fiscal period saw both short-term and long-term interest rates remain at a low level against the
backdrop of ongoing monetary easing measures by the Bank of Japan. The purchase of Japanese government bonds by the
Bank of Japan in an aim to achieve an inflation rate of 2% based on “quantitative and qualitative monetary easing” is expected
to continue. Therefore, the view is that interest rate levels will remain low in a stable manner for the time being and a financing
environment that is also favorable for J-REITs will continue.
<Asset Management Performance>(a)Acquisition and Sale of Assets
Top REIT began the 19th fiscal period with 20 properties (total acquisition value: ¥190,484 million). With an aim to newly
acquire highly-competitive and highly-profitable properties, Top REIT considered the acquisition of properties through not
only the “optimal application of the sponsors’ strengths” but also by utilizing established information channels and its
characteristics as a diversified REIT to collect and carefully select from property sale information, with a focus on excellent
office buildings located in central Tokyo at the core. There were no acquisitions or dispositions during the 19th fiscal period,
thus Top REIT’s portfolio remains unchanged from the end of the previous fiscal year.
(b)Management and Maintenance of Portfolio Assets
The basic asset management strategy of Top REIT is sustaining and increasing revenue over the medium to long term by
maintaining and improving tenant satisfaction (the “Tenants First” policy) and keeping operational management costs at an
appropriate level. Top REIT strived to improve tenant satisfaction and maintain and improve occupancy rates while sustaining
trusted relationships with tenants and discerning tenant needs via property management companies. During the 19th fiscal
period, Top REIT continued to focus on tenant solicitation activities for successor tenants of Kanda Nishiki-cho 3-chome
Building, which has been a pending issue. As a result, the occupancy rate improved to 94.3% at the end of the 19th fiscal
period.
Regarding maintenance, Top REIT followed up on ensuring that it had an appropriate grasp of the operational management
conditions and steady implementation of asset management plans for each property. Based on asset management plans, Top
REIT also carried out renovation and repairs that contributed to enhancing the competitiveness of properties and maintaining
and improving the functionality of properties, and construction that contributed to improving tenant satisfaction. Top REIT also
took steps to keep relevant costs at an appropriate level and conducted efficient management. Furthermore, during the 19th
fiscal period, with regard to one floor of Harumi Island Triton Square Office Tower Y that had been used as a cafeteria for theemployees of tenants, Top REIT commenced construction to convert the floor into office leasing space and the first phase
construction was completed. As of the date of this document the second phase construction has also begun. The concerned
construction is scheduled to be completed during the fiscal period ending April 2016. In addition, the lease agreement has
already been concluded for the leasing space after the completion of the concerned construction.

C. Funding
Top REIT procures funds under a financial policy based on stable financial management. During the 19th fiscal period, tofinance ¥8,500 million for the redemption No. 1 Unsecured Investment Corporation Bonds due on June 4, 2015, Top REIT
took out long-term loans in the same amount. Top REIT worked on spreading out the repayment dates by splitting theconcerned long-term loans into ¥4,000 million (repayment date: May 29, 2020) and ¥4,500 million (repayment date: May 31,2022). Furthermore, regarding the long-term loans of ¥4,251 million that was due on September 30, 2015, ¥4,000 million was
refinanced as of the same date with a long-term loan (repayment date: September 30, 2022) and the remaining ¥251 million
was repaid using cash on hand. Regarding all of the long-term loans borrowed during the 19th fiscal period, Top REIT fixedinterest rates to be paid for the entire amount of the respective loans through interest-rate swap transactions, thereby hedging
against the risk of interest rate fluctuations. Using cash on hand, Top REIT also repaid ¥67.5 million in long-term loans on June30, 2015 as agreed upon.
As a result, at the end of the 19th fiscal period, the balance of interest-bearing liabilities amounted to ¥90,279.5 million and theratio of interest-bearing liabilities to total assets was 47.6%. Moreover, the ratio of long-term interest-bearing liabilities(including the current portion) was 100.0%, while interest-bearing liabilities with fixed interest rates accounted for 56.0%.
Top REIT conducted shelf registration for investment corporation bonds, as indicated below, in order to secure flexible
procurement of long-term funds.
[Overview of Shelf Registration]
Object of Shelf Registration
Investment corporation bonds(excluding short-term corporation bonds)

Amount to be Issued

Scheduled Period of Issue¥100,000 million

From May 20, 2014 to May 19, 2016

The credit rating of Top REIT as of October 31, 2015 is as follows:
Credit Rating Agency

Rating [Outlook]

Issuer rating: A+
Rating outlook: [Negative]

Rating and Investment Information, Inc. (R&I)－ 17 －

D. Earnings Results and Dividends
As a result of the asset management and operations described above, Top REIT recorded asset management performance during
the 19th fiscal period of ¥5,368 million in operating revenue, ¥2,210 million in operating income and ¥1,654 million in ordinary
income after deducting expenses concerning borrowings, etc., and net income was ¥1,674 million.
As for dividends, investment corporations may deduct the dividend distributions for the tax purpose under the conditions set forthin Article 67-15 of the “Special Taxation Measures Act of Japan” (Act No.26 of 1957, as amended). Based on this treatment, Top
REIT declared a dividend per investment unit of ¥9,761. This is the maximum value arrived at when the number of units issued
and outstanding (176,000 units) is multiplied by an integer, which does not exceed the unappropriated retained earnings for the
19th fiscal period after adding ¥43 million, the reversed amount of internal reserve. The reversed amount of internal reserve wasa portion of the reserve for reduction entry by applying the “Special Provisions for Taxation in the Event of Advance Acquisitionof Land, etc. in 2009 and 2010” (Article 66-2 of the Special Taxation Measures Act).

3. Balance of Paid-in Capital
Change in paid-in capital of Top REIT during the past five years is as follows:
Units issued andoutstanding (units)
Issue date
Remarks
Increase
BalanceNovember 25, 2013
Public offering
20,000175,000

Paid-in capital(In millions of yen)
Increase
Balance¥ 8,460¥ 90,720

Note
Note 1

December 13, 2013
Third party allotment
1,000
176,000
423
91,143Note 2
Notes:
1. New investment units were issued at a price of ¥ 438,750 per unit (issue value of ¥423,000 per unit) through a public
offering in order to raise funds for the acquisition of assets.
2. New investment units were issued at a value of ¥ 423,000 per unit through a third party allocation to raise funds forthe acquisition of assets, etc.
[Market Price of Investment Units]
The market price of the investment units on the Tokyo Stock Exchange REIT Section during respective fiscal periods is asfollows:
15th fiscal period
16th fiscal period
17th fiscal period
18th fiscal period
19th fiscal period
From May 1, 2013
From Nov. 1, 2013
From May 1, 2014
From Nov. 1, 2014
From May 1, 2015
to Oct. 31, 2013
to Apr. 30, 2014
to Oct. 31, 2014
to Apr. 30, 2015
to Oct. 31, 2015
High

¥ 519,000¥ 494,000¥ 483,000¥ 539,000¥ 531,000

Low

411,000

437,500

444,000

439,000

445,000－ 18 －

4. Cash Distribution
The dividend per unit for the 19th fiscal period is ¥9,761. Top REIT expects to distribute almost all the amount of unappropriatedretained earnings after the amount of reversal of reserve for reduction entry combined to be eligible for special tax treatments(Article 67-15 of the Act on Special Measures Concerning Taxation) that allows Top REIT to deduct an amount equivalent to
distributions of retained earnings as expenses from taxable income.
(In thousands of yen except per unit data)
15th fiscal period

16th fiscal period

17th fiscal period

18th fiscal period

19th fiscal period

From May 1, 2013
to Oct. 31, 2013

From Nov. 1, 2013
to Apr. 30, 2014

From May 1, 2014
to Oct. 31, 2014

From Nov. 1, 2014
to Apr. 30, 2015

From May 1, 2015
to Oct. 31, 2015

¥1,579,617¥1,913,997¥1,954,943¥1,832,069¥1,674,520

12

1,933

111

128,389

101

Total cash distributions

1,579,605

1,912,064

1,954,832

1,703,680

1,717,936<Per unit>(10,191)(10,864)(11,107)(9,680)(9,761)

Distribution of earnings

1,579,605

1,912,064

1,954,832

1,703,680

1,717,936<Per unit>(yen)(10,191)(10,864)(11,107)(9,680)(9,761)

Repayment
capital

of

－

－

－

－

－

<Per unit>

(yen)

<－>

<－>

<－>

<－>

<－>

Unappropriated retained
earnings
Retained earnings brought
forward(yen)

paid-in

5. Management Policy and Issues to be Addressed(a) Management Strategy for Existing Properties
Top REIT will continue to follow its basic asset management strategy that centers on sustaining and increasing revenue overthe medium- to long-term by maintaining and improving tenant satisfaction (the “Tenants First” policy) and keeping
operational management costs at an appropriate level. Under this strategy, Top REIT will focus on sustaining relationships oftrust with tenants, leasing vacant spaces and such, as well as striving to maintain stable occupancy rates over the medium- tolong-term.
Furthermore, Top REIT will also work to ensure an appropriate perception of the operational management conditions for each
property while steadily implementing such measures as to sustain and improve revenues and keep operational management
costs at an appropriate level. In addition, Top REIT will carry out systematic repair work and such to enhance thecompetitiveness of properties and to maintain and improve the functionality of properties, in an aim to secure stable revenues
over the medium- to long-term.
(b) Investment Strategy for New Properties
Top REIT aims to maintain or increase its dividends over the medium- to long-term by realizing external growth through theacquisition of new properties. Top REIT will continue to not only further utilize the pipeline support functions from sponsor
companies, but also utilize various information channels it established to collect information on new properties based on
detailed analysis of the market conditions of each asset class, while primarily placing emphasis on highly-competitive officebuildings. By doing so, Top REIT aims to expand the portfolio size while improving its quality.
Furthermore, Top REIT makes it a management policy to keep the ratio of the investment amount per property at less than 20%of the entire portfolio as a target over the medium- to long-term. Going forward, Top REIT will continuously work to reduce
the risk of concentration of investments on specific properties by steadily advancing further external growth.
(c) Financial Strategy
Top REIT will continue to implement diversified and flexible fund procurement operations in preparation for the acquisition of
new properties and refinancing of existing loans, etc. While securing mobility and flexibility in fund procurement, Top REIT
will work to reduce the risk of fund procurement by extending borrowing periods and dispersing the repayment dates. At thesame time, Top REIT will manage the risk of interest rate fluctuations by taking into account the balance of borrowings at
floating and fixed interest rates, as it discerns the interest rate trends. Moreover, financial soundness will be maintained bykeeping the leverage at an appropriate level.
(d) Compliance and Risk Management, etc.
In addition to the supervision of the Executive Officer by Supervisory Directors at the Board of Directors meetings and otheroccasions, Top REIT will continue its direction and supervision on the Asset Manager so that it can conduct management
operations with full care given to market risks, including rent decreases, and credit risks as well as with a focus on theprotection of unitholders’ interests in conducting transactions with interested parties and on other compliance issues.

6. Significant Subsequent Events
There are none applicable.

－ 19 －

【2】Outline of Top REIT
1. Status of Unitholders Capital

Number of units authorized (units)
Number of units issued and outstanding(units)Unitholders’ capital (In millions of yen)
Number of unitholders

15th fiscal period

16th fiscal period

17th fiscal period

18th fiscal period

19th fiscal period

As of Oct. 31, 2013

As of Apr. 30, 2014

As of Oct. 31, 2014

As of Apr. 30, 2015

As of Oct. 31, 2015

2,000,000

2,000,000

2,000,000

2,000,000

2,000,000

155,000

176,000

176,000

176,000

176,000¥ 82,260
7,590¥ 91,143
9,163¥ 91,143
9,846¥ 91,143
8,770¥ 91,143
8,423

2. Major Unitholders
Major unitholders as of October 31, 2015 are as follows:
Number of units
Share of units held
held (units)(%) (Note)
Japan Trustee Services Bank, Ltd. (trust account)
44,89825.51
The Master Trust Bank of Japan, Ltd. (trust account)
19,505
11.08
Trust & Custody Services Bank, Ltd. (securities investment trust account)
9,660
5.49
The Nomura Trust and Banking Co., Ltd. (investment trust account)
5,658
3.21
Sumitomo Mitsui Trust Bank, Limited
3,176
1.80
NIPPON STEEL KOWA REAL ESTATE CO., LTD.
3,162
1.80
OJI REAL ESTATE CO., LTD.
3,162
1.80
STATE STREET BANK AND TRUST COMPANY 505223
2,609
1.48
The Asahi Fire & Marine Insurance Company, Limited
2,010
1.14
Mizuho Securities Co., Ltd.
1,972
1.12
STATE STREET BANK-WEST PENSION FUND CLIENTS-EXEMPT 505233
1,962
1.11
CBNY DFA INTERNATIONAL REAL ESTATE SECURITIES PORTFOLIO
1,738
0.99
Japan Trustee Services Bank, Ltd. (trust account 9)
1,699
0.97
The Minami-Nippon Bank, Ltd.
1,270
0.72
UBS AG LONDON A/C IPB SEGREGATED CLIENT ACCOUNT
1,222
0.69
Total
103,703
58.92
Note: The share of units held is the ratio to the total number of units issued and outstanding. They are each rounded to thesecond decimal place.
Name－ 20 －

3. Information on Officers and Auditor
A: Names of officers and an auditor as of October 31, 2015 are as follows:
Post
Executive Officer
Supervisory Director

Name
Junichi Sahara(Note1)
Yasuyuki Kuribayashi(Note1)Supervisory Director

Kunio Tsuneyama(Note1)

Accounting Auditor

KPMG AZSA LLC

Total amount of fee paid
during the current period(In thousands of yen)

Major additional post

¥ 2,700－
Partner Attorney,
City-Yuwa Partners (Note2)
Managing Partner, Tsuneyama
Certified Public Accountants Office
Managing Partner, Tsuneyama Sogo
Accountants OfficeDirector in Kuroda Electric Co., Ltd.
(Note2)

1,800

1,800

12,600(Note 3)－

Notes:
1. There are no investment units of Top REIT held by the Executive Officer or Supervisory Directors in their own nameor others' names.
2. Although Supervisory Directors may have additional posts in entities other than those listed above, there is no interest
between those companies including those listed above and Top REIT.
3. The fee paid for the English financial statement audit is included in the total amount of audit fee paid to the
Accounting Auditor.
4. There was no resignation or dismissal of the Officer, Director or Auditor during the current period.
B: Policy on determination of dismissal and denial of reappointment of Accounting Auditor
The Board of Directors shall decide after taking various factors into consideration.

4. Information on Asset Manager, Asset Custodian and Administrative AgentsThe asset manager, asset custodian and administrative agents of Top REIT as of October 31, 2015 are as follows:Business

Company name

Asset manager

Top REIT Asset Management Co., Ltd.

Assets custodian

Sumitomo Mitsui Trust Bank, Limited

Administrative agent(running of the organization, accounting matters, etc.)
Administrative agent(unitholders’ register, special accounts)

Sumitomo Mitsui Trust Bank, Limited
Sumitomo Mitsui Trust Bank, Limited－ 21 －

【3】 Portfolio Overview
1. Portfolio Summary

Type of asset

Asset class

Real estate

Office building

Office building

Real estatein trust

Retail property

Residential
property

Area

18th fiscal period
As of April 30, 2015
AmountPercentage of(In millions of
total assetsyen)(%)(Note 1)
(Note 2)19th fiscal period
As of October 31, 2015
AmountPercentage of(In millions of
total assetsyen)(%)(Note 1)
(Note 2)Central Tokyo¥ 6,186

3.3－－

Subtotal

6,186

3.3

－

－

Central Tokyo

127,26667.1

133,000

70.2

Tokyo
Metropolitan Area

1,596

0.8

1,575

0.8

Subtotal

128,86367.9

134,576

71.0

27,16714.3

27,131

14.3

1,203

0.6

1,198

0.6

Subtotal

28,37015.0

28,330

14.9

Central Tokyo

2,322

1.2

2,296

1.2

Tokyo
Metropolitan Area

17,1159.0

16,9879.0

Subtotal

19,438

10.2

19,28410.2

182,859

96.4

182,190

96.1

6,877

3.6

7,377

3.9

¥ 189,737

100.0¥ 189,568

100.0<182,859><96.4><182,190><96.1>

Tokyo
Metropolitan Area
Other
Major Cities

Subtotal of real estate and real estate in trust
Cash, deposits and other assets
Total assets (Note 3)
Notes:

1. Amounts are the book value as of each period end. Real estate and real estate in trust represent the book values after
deducting accumulated depreciation. Amounts are rounded down to the nearest million yen.
2. Percentage of total assets shows the ratio of respective assets to total assets and is rounded to the first decimal place.
3. Figures in angle brackets represent the portions of actually owned properties in the object assets.
< Geographical Classification >Area

RegionSupplementary note

Central Tokyo

Chiyoda-ku, Chuo-ku, Minato-ku, Shibuya-ku,
Shinjuku-ku and Shinagawa-ku

―

Tokyo
Metropolitan Area

Tokyo (excluding Central Tokyo),
Kanagawa, Saitama and Chiba Prefectures―

KansaiRegional economic zone centering
on Osaka

Osaka, Kyoto, Hyogo, Shiga, Nara andWakayama Prefectures

ChukyoRegional economic zone centeringon Nagoya

Aichi, Gifu and Mie Prefectures

Other Major cities

Cities designated by government ordinance andother major cities (excluding cities belonging to
the above classifications)－ 22 －―

2. Major Properties Owned
The major properties (top ten properties by book value) that Top REIT owns as of October 31, 2015 are as follows:Book value
Property name
(In millions ofyen)

Rentable area
(Note 1)

Leased area
(Note 2)

Occupancy
rate(Note 3)

Share inrentalrevenue(Note 4)

(m2)

(m2)

(%)

(%)

Primary use

NEC Head Office
Building

Trust
beneficiaryinterest¥ 42,380

72,238.03

72,238.03

100.0

26.8

Officebuilding

Harumi Island
Triton Square
Office Tower Y

Trust
beneficiaryinterest

29,74724,150.01

24,150.01

100.0

17.0

Officebuilding

Harumi Island
Triton Square
Office Tower Z

Trust
beneficiaryinterest

18,994

10,914.20

10,914.20

100.0

Kanda Nishiki-cho
3-chome Building

Trustbeneficiaryinterest

12,615

7,719.04

7,278.15

94.3

3.6

Officebuilding

Sagamihara Shopping
CenterTrust
beneficiaryinterest

11,247

61,763.28

61,763.28

100.0

6.2

Retailproperty

Fukasawa House
Towers H&I

Trust
beneficiaryinterest

9,878

11,357.44

10,456.00

92.1

4.3

Residential
property

Akasaka Oji
Building

Trust
beneficiaryinterest

9,682

7,301.15

7,233.62

99.1

5.1

Officebuilding

Ito-Yokado
Higashi-Narashino Store

Trust
beneficiaryinterest

7,598

51,098.42

51,098.42

100.0

3.1

Retailproperty

Shiba-Koen Building

Trustbeneficiaryinterest

6,173

3,524.17

3,524.17

100.0

2.1

Officebuilding

Trust
Shinkawa Chuo Building beneficiaryinterest

5,674

6,032.24

6,032.24

100.0

3.9

Officebuilding¥ 153,993

256,097.98

254,688.12

99.4

78.4

Total
Notes:
1.

Officebuilding

Rentable area is total rentable area for each asset as of the end of the 19th fiscal period. Furthermore, in the case ofco-ownership (including quasi-co-ownership), the stated figure is given by multiplying the rentable area of the wholebuilding by the ratio of co-ownership, and rounded to the second decimal place.
2. Leased area is the area based on lease agreements effective as of the end of the 19th fiscal period. Furthermore, in thecase of co-ownership (including quasi-co-ownership), the stated figure is given by multiplying the leased area of thewhole building by the ratio of co-ownership, and rounded to the second decimal place. In the case of pass-through typemaster-lease agreements, the area subleased to end-tenants is calculated as the leased area.
3. Occupancy rate is the figure given by dividing the leased area as of the end of the 19th fiscal period by rentable area, androunded to the first decimal place.
4. Share in rental revenue is rounded to first decimal place. Share in rental revenue for Harumi Island Triton Square OfficeTower Z is not disclosed as the consent of the tenants has not been obtained.

－ 23 －

3. Details of Assets(a) Details of Properties
A. The details of properties owned by Top REIT as of October 31, 2015 are as follows
Asset class(In millions of yen)

Area

Property name

NEC Head Office
Building
Harumi Island
Triton Square
Office Tower Y
Akasaka Oji
Building

Office building

Shiba-Koen Building
Central Tokyo

Harumi Island
Triton Square
Office Tower Z
Kanda Nishiki-cho
3-chome Building
Shinkawa Chuo
Building
Shinjuku EAST Building

Retail property

Ginza Oji Building
Tokyo
Metropolitan
Faret East Building
Area
Subtotal (10 properties)
Sagamihara Shopping
Center
Ito-Yokado
Higashi-Narashino StoreTokyo
Musashiurawa Shopping
Metropolitan
SquareArea
Kojima × Bic Camera
Kashiwa StoreOther
MEL Building
Major Cities
Subtotal (5 properties)

Residential property

Central Tokyo

Tokyo
Metropolitan
Area

Top Residence
Nihonbashi Kayabacho
Fukasawa House
Towers H&I
Ecology Toyosu
Procentury
Impress
Musashi-Koganei
Top Residence Yoga

Address

Type of title

Appraisal value(Note)

Book value

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

Trust beneficiaryinterest¥ 54,500¥ 42,380

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

Trust beneficiaryinterest

27,20029,747

8-1-22 Akasaka,
Minato-ku, Tokyo
3-5-5 Shiba, Minato-ku,
Tokyo

Trust beneficiaryinterest
Trust beneficiaryinterest

9,610

9,682

4,260

6,173

1-8-12 Harumi, Chuo-ku,
Tokyo

Trust beneficiaryinterest

12,30018,994

3-11-1 Kanda Nishiki-cho,
Chiyoda-ku, Tokyo
1-17-24, Shinkawa,Chuo-ku, Tokyo
10-5, Tomihisa-cho,Shinjuku-ku, Tokyo

Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest

8,430

12,615

6,310

5,674

6,690

5,664

2,160

2,067

2,720

1,575

134,180

134,576

4-9-8, Ginza, Chuo-ku, Tokyo
2-34-7 Akebonocho,
Tachikawa-shi, Tokyo

Trust beneficiaryinterest

3-13-33 Kobuchi, Minami-ku,
Sagamihara-shi, Kanagawa
7-3-1 Higashi Narashino,
Narashino-shi, Chiba
7-3-1 Bessho, Minami-ku,
Saitama-shi, Saitama
Building A:1-10, Oyamadai,
Kashiwa-shi, Chiba
Building B: 1-29, Oyamadai,
Kashiwa-shi, Chiba
2-7-28 Chuo, Aoba-ku,
Sendai-shi, Miyagi

Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest

9,070

11,247

3,990

7,598

4,140

3,691

Trust beneficiaryInterest

4,930

4,594

Trust beneficiaryinterest

1,340

1,198

23,47028,330

2,860

2,296

7,810

9,878

5,500

4,765

1,370

1,184

3-4-1 Nihonbashi
Kayabacho, Chuo-ku,
Tokyo
2-1-2 Fukasawa,
Setagaya-ku, Tokyo
4-8-8 Toyosu, Koto-ku,
Tokyo
4-14-18 Nakamachi,
Koganei-shi, Tokyo
1-14-12 Tamagawadai,
Setagaya-ku, Tokyo

Subtotal (5 properties)
Total(20 properties)

Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest

1,300

1,158

18,84019,284¥ 176,490¥ 182,190

Note: Appraisal values are the assessed values based on appraisal reports by real estate appraisers in accordance with the asset
evaluation method and standards stipulated in Top REIT’s Articles of Incorporation and rules set forth by The Investment
Trusts Association, Japan (real estate appraisal reports were prepared by The Tanizawa Sogo Appraisal Co., Ltd.; Japan Real
Estate Institute and Daiwa Real Estate Appraisal Co., Ltd.) with October 31, 2015 as the points of evaluation.

－ 24 －

18th fiscal period
From November 1, 2014
to April 30, 2015
Area

Asset class

B. Operating results by property are as follows:

Property name

Number oftenants

Occupancy
RentalShare in
Number ofrate
revenue
total rental
tenants(at end of (In millions revenues
period)of yen)(%)(Note 3) (Note1)(%)(Note 2)

1

100.0

¥ 1,439

27.1

1

100.0

¥ 1,439

26.8

Harumi Island Triton
Square Office Tower Y

9

99.8

830

15.6

9

100.0

911

17.0

6

100.0

270

5.1

5

99.1

273

5.1

2

100.0

10
88

0.2
1.7

2

100.0

111

2.1

Harumi Island Triton
Square Office Tower Z

1

100.0

1

100.0

Kanda Nishiki-cho
3-chome Building

5

76.1

8

94.3

191

3.6

Shinkawa Chuo Building

1

100.0

204

3.8

1

100.0

207

3.9

Shinjuku EAST Building

4

99.4

240

4.5

4

99.4

240

4.5

Ginza Oji Building

2

100.0

92

1.7

2

100.0

92

1.7

Faret East
Building

1

96.2

147

2.8

1

100.0

147

2.8

32

98.5

3,880

73.0

34

99.6

3,960

73.8

2

100.0

332

6.3

2

100.0

332

6.2

1

100.0

177

3.3

1

100.0

165

3.1

3

100.0

126

2.4

3

100.0

126

2.4

1

100.0

1

100.0

1

90.9

56

1.1

1

100.0

52

1.0

8

99.9

851

16.0

8

100.0

835

15.6

Top Residence
Nihonbashi Kayabacho

1

97.2

89

1.7

1

96.9

90

1.7

Fukasawa House Towers
H&I

1

92.8

238

4.5

1

92.1

231

4.3

Ecology Toyosu
Procentury

1

96.0

166

3.1

1

98.4

170

3.2

Impress Musashi-Koganei

1

95.3

44

0.8

1

95.8

42

0.8

Top Residence Yoga

1

95.4

38

0.7

1

98.3

37

0.7

5

94.7

577

10.9

5

95.1

572

10.7

OAK PLAZA(Note 4)

-

-

6

0.1

-

-

-

-

Subtotal (1 property)
Total (22 properties)

45

98.9

6

0.1
100.0

47

99.4

-

¥ 5,315¥ 5,368

100.0

Central Tokyo

Akasaka Oji Building

Tokyo Metropolitan
Area

Subtotal (11 properties)
Sagamihara Shopping
Center
Ito-Yokado
Higashi-Narashino Store
Musashiurawa Shopping
SquareKojima × Bic Camera
Kashiwa Store

Other
Major
CitiesRetail property

NEC Head Office Building

MEL
Building

Tokyo Metropolitan
Area

CentralTokyo

Subtotal (5 properties)

Residential property

Share in total
Occupancy
Rentalrentalrate
revenuerevenues(at end of (In millions (%)(Note 3)
period)of yen)(%)(Note 2)

Kanda Park Plaza (Note 4)
Shiba-Koen Building

Tokyo
Metropolitan
Area

Office building(Note1)

CentralTokyo

Subtotal (5 properties)
Other

19th fiscal period
From May 1, 2015
to October 31, 2015

Notes:
1. Number of tenants indicates total number of tenants of each property as of the end of the period. In the case a master
lease agreement is concluded, it is counted as one tenant. In the case one tenant rents multiple units, it is counted as one
tenant if the units are in the same property and as multiple tenants if the units are in different properties.

－ 25 －

2. Rental revenue is rounded down to the nearest million yen. Rental revenue for Harumi Island Triton Square Office Tower
Z, Kanda Nishiki-cho 3-chome Building and Kojima × Bic Camera Kashiwa Store in the 18th fiscal period and forHarumi Island Triton Square Office Tower Z and Kojima × Bic Camera Kashiwa Store in the 19th fiscal period is notdisclosed as the consent of the tenants has not been obtained.
3. Share in total rental revenues is rounded to the first decimal place. Share in total rental revenues for Harumi Island Triton
Square Office Tower Z, Kanda Nishiki-cho 3-chome Building and Kojima × Bic Camera Kashiwa Store in the 18th fiscal
period and for Harumi Island Triton Square Office Tower Z and Kojima × Bic Camera Kashiwa Store in the 19th fiscal
period is not disclosed as the consent of the tenants has not been obtained.
4. Kanda Park Plaza and OAK PLAZA were sold to third parties on November 13, 2014.
② Details of Renewable Energy Power Generation Facility
There are none applicable.
③ Details of Right to Operate Public Facility, etc.
There are none applicable.
④ Details of Investment Securities
There are none applicable.

4. Contracted Amount and Fair Value of Specified Transactions
The contracted amount and fair value of the specified transactions of Top REIT as of October 31, 2015 are as follows:

Segment

Contract amount (Notes 1, 2)
Exceeding one year

Type of transaction

Interest-rate swap
Transaction other than(Fixed-rate payable
market transaction
receivable)

andfloating-rate

Total(In millions of yen)
Fair value(Notes 1, 3)¥ 42,200¥25,500¥ (160)¥ 42,200¥25,500¥ (160)Notes:
1. The above figures are rounded down to the nearest million yen.
2. Contract amounts of interest-rate swap transactions represent figures based on the notional principal.
3. Fair value is evaluated at the price calculated by the counterparty of the concerned transaction, based on the prevailingmarket rate.

5. Other Assets
All real estate and trust beneficiary interests in real estate are listed in the table under “3-(a) Details of Properties”. There wereno significant specified assets that are main investment targets of Top REIT other than those listed in the table mentioned above
as of October 31, 2015.

6. Assets by Country and Region
There are none applicable.

－ 26 －

【4】Capital Expenditures
1. Scheduled Capital Expenditures
The table below shows the estimated amounts of significant capital expenditures for repair and maintenance of its properties,
planned as of October 31, 2015. The estimated amounts shown in the table below include costs that may be recognized as
expenses.

Property name

NEC Head Office
Building

Harumi Island Triton
Square Office Tower Y

Location

Minato-ku,Tokyo

Chuo-ku, Tokyo

PurposeScheduled term forconstruction
or maintenance

Estimated amounts(In millions of yen)
Payment
Total ofduring theTotaladvancecurrent
payment
periodRenewal of parts forfire shutter

From May 2015
to Nov. 2015

¥32

¥－

¥－

Renewal of gondola

From May 2015
to Jan. 2016

27

－

－

Renewal of parts forelectrical substationequipment

From May 2015
to Jan. 2016

20

－

－

Renewal of
emergency
broadcasting
equipment

From May 2015
to Mar. 2016

17

－

－

Renewal of parts for
smoke ventilation
window

From May 2015
to Mar. 2016

17

－

－

Renewal of lightequipment

From May 2015
to Mar. 2016

23

－

－

Renewal ofventilating duct

From May 2015
to Mar. 2016

24

－

－

Renewal of cooling
tower

From May 2015
to Mar. 2016

33

－

－

Renewal of drainpipe
for air conditioning
facility

From May 2015
to Mar. 2016

25

－

－

Renewal ofmonitoring
equipment

From May 2015
to Mar. 2016

47

－

－

Renewal of control
panel for lighting

From Feb. 2016
to Feb. 2016

21

－

－

Renewal ofinteraction control
systemFrom Mar. 2015
to Apr. 2016

12

0

0

14F restoration work
(2nd construction
period)From Nov. 2015
to Mar. 2016

198

－

－

Shiba-Koen Building

Minato-ku,
Tokyo

Renewal of watertank, etc.

From Nov. 2015
to Dec. 2015

13

－

－

Kanda Nishiki-cho
3-chome Building

Chiyoda-ku,
Tokyo

Renewal of control
panel for lighting

From Jan. 2016
to Feb. 2016

15

－

－

Sagamihara Shopping
CenterSagamihara-shi,
Kanagawa

Replacement ofelectric lock

From Jan. 2016
to Mar. 2016

15

－

－

－ 27 －

Property name

Kojima×Bic Camera
Kashiwa Store

Location

Kashiwa-shi,
Chiba

PurposeScheduled term forconstruction
or maintenance

Renovation of
exterior walls

From Nov. 2015
to Feb. 2016

Estimated amounts(In millions of yen)
Payment
Total ofduring theTotaladvancecurrent
payment
period27－－

2. Capital Expenditures Made During the 19th Fiscal Period
The following table is an overview of capital expenditures made during the 19th fiscal period. Capital expenditures during the
19th fiscal period amounted to ¥578 million and combined with ¥102 million in repairs and maintenance costs that arerecognized as expenses for the 19th fiscal period, a total of ¥681 million of construction work was implemented.

Property nameLocation

Harumi Island Triton
Square Office Tower Y

Chuo-ku, Tokyo

Kanda Nishiki-cho
3-chome Building

Chiyoda-ku,
Tokyo

Sagamihara Shopping
CenterSagamihara-shi,
Kanagawa

Purpose
14F restoration work
(1st construction
period)Joinery work ofentrance
Partition installation(B1F, 6F)
Exterior wall coating

Other

Renewal of function

Term forconstruction or
maintenanceCapital expenditures(In millions of yen)

From Apr. 2015
to Oct. 2015

¥357

From Jul. 2015
to Aug. 201515

From Aug. 2015
to Oct. 201517

From Dec. 2014
to Aug. 2015
From May 2015
to Oct. 2015

130
58

Total

578

3. Funds Reserved for Long-term Repair and Maintenance Plan
(In millions of yen)
15th fiscal period

16th fiscal period

17th fiscal period

18th fiscal period

19th fiscal period

From May 1, 2013
to October 31, 2013

From November 1, 2013
to April 30, 2014

From May 1, 2014
to October 31, 2014

From November 1, 2014
to April 30, 2015

From May 1, 2015
to October 31, 2015

Balance of reserved funds at
beginning of the period

¥ 375

¥ 414

¥ 385

¥ 486

¥ 395

Amount reserved during theperiod

197

197

282

111

197

Amount withdrawn fromreserved funds during the period

158

225

181

202

171

Amount carried forward

¥ 414

¥ 385

¥ 486

¥ 395

¥ 421

－ 28 －

【5】Expenses and Liabilities
1. Details of Expenses Related to Asset Management(In millions of yen)
19th fiscal period
From May 1, 2015
to October 31, 2015

18th fiscal period
From November 1, 2014
to April 30, 2015(a) Asset management fee (Note)

¥ 341

¥ 341

Asset custody fee andadministrative service fees7675(c) Directors’ compensations

66(d) Audit fee1012(e) Other expenses

75

48

¥ 509

¥ 484

(b)

Total

Note: With regard to the asset management fee in the 18th fiscal period, there were ¥41 million of fees related to the sale ofproperties (included in the costs of sale) and ¥1 million of fees related to the acquisition of a new property (included in thebook value) in addition to the amounts described above.

－ 29 －

2. Borrowings
Borrowings from financial institutions as of October 31, 2015 are as follows:(In millions of yen, unless otherwise stated)

LenderTerm Loan Development Bank of
No. 11
Japan Inc.

January 13,
2010

¥ 135
6,012

Mizuho Bank, Ltd.

3,841
March 3,
2011

3,006

Term Loan
Sumitomo MitsuiNo. 17
Banking Corporation

422

422

－

－

422

－

633
422
759

Subtotal
Term Loan Development Bank of
No.11
Japan Inc.

633

Sumitomo Mitsui Trust
Bank, Limited
Mizuho Bank, Ltd.
Sumitomo Mitsui
Term Loan Banking Corporation
November
No. 1630, 2011
The Bank ofTokyo-Mitsubishi UFJ,Ltd.
Mitsubishi UFJ Trust andBanking Corporation

－

644

－

504

－

504

－

340

－

1,266

－

633

－

633

－
－

422
759

－

Remarks

2.42

November30, 2016(Note 2)

(Note 3)

Unsecured
andunguaranteed

1.39

February29, 2016

Bulletrepaymentonrepayment
date(Note 5)

Unsecured
andunguaranteed(Note 6)

Unsecured
andunguaranteed(Note 3)

Unsecured
andunguaranteed(Note 5)

Unsecured
andunguaranteed(Note 7)

Unsecured
andunguaranteed

835
717
0.67

February29, 2016

0.61

October
31, 2016

644
504
504

－
－
0.61

－
－
－

22,662

67

1,822

0.61

－

6,687

－

－

6,687

4,440

－
－

－
－

4,440

3,474
3,474
965

－

－

－

－

－ 30 －

Bulletrepaymentonrepayment
date

340

4,318

1,890

Bulletrepaymentonrepayment
date

1,008

538
3,067

Use of
funds

3,006

－

538
23,913January 13,
2010－

Repayment
method(Note 4)－

1,266

March 27,
2013

3,006

－

1,008

Due on

3,841

422

－

Term Loan
Mitsubishi UFJ Trust andNo. 20Banking Corporation

－
－

1,266

Mitsubishi UFJ Trust andBanking Corporation

Mizuho Bank, Ltd.

－－

Average interest
rate (%)(Note 1)

6,012

1,266

－

Tokyo-Mitsubishi UFJ,
Ltd.
Resona Bank, Ltd.

－

－

－

November
30,
2012

－

－

The Bank ofTokyo-Mitsubishi UFJ,
Ltd.

Sumitomo Mitsui
Term Loan Banking Corporation
No.19-① The Bank of

¥ 135

－

－

March
30, 2012

¥ 67

－

717

Mizuho Bank, Ltd.

¥ 67

－

Sumitomo Mitsui Trust
Bank, Limited

Sumitomo Mitsui Trust
Bank, Limited

Balance at the endof the period－

835

The Yamaguchi Bank,Ltd.

Decrease－

Mitsubishi UFJ Trust andBanking Corporation

The Bank of Fukuoka,
March 31,
Term Loan Ltd.
2011
No. 15
The Hiroshima Bank, Ltd.

Increase－

3,006

Sumitomo Mitsui Trust
Bank, Limited

Long-term Loans

Balance at the
beginning of theperiodSumitomo Mitsui Trust
Bank, Limited

Sumitomo Mitsui
Term Loan Banking Corporation
No. 14The Bank ofTokyo-Mitsubishi UFJ,Ltd.

Current Portion of Long-term LoansDateborrowed

3,474
3,474
965

Bulletrepaymenton
September
30. 2015 repayment
date

Bulletrepaymenton
September
30, 2015 repayment
date

2.42

November30, 2016(Note 2)

(Note 3)

Unsecured
andunguaranteed

0.51

November30, 2016

Bulletrepaymentonrepayment
date(Note 5)

Unsecured
andunguaranteed

LenderDateborrowed

Sumitomo Mitsui Trust
Bank, Limited
Mizuho Bank, Ltd.

Long-term Loans

Sumitomo Mitsui
Term Loan Banking Corporation
No. 17The Bank ofTokyo-Mitsubishi UFJ,Ltd.
Mitsubishi UFJ Trust andBanking Corporation.
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Bank, Ltd.
Sumitomo Mitsui
Term Loan Banking Corporation
No. 18The Bank ofTokyo-Mitsubishi UFJ,Ltd.
Mitsubishi UFJ Trust andBanking Corporation
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Bank, Ltd.
Sumitomo Mitsui
Term Loan Banking Corporation
No. 20
The Bank ofTokyo-Mitsubishi UFJ,Ltd.
Development Bank ofJapan Inc.
Sumitomo Mitsui Trust
Bank, Limited
Term Loan
No. 21
Resona Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Sumitomo Mitsui
Banking Corporation

Term Loan
Mizuho Bank, Ltd.
No.23-①

March 30,
2012

June 29,2012

March 27,2013

April 30,
2013

March 31,2014

June 30,
2014

Mizuho Bank, Ltd.

June 3,
2015

Resona Bank, Ltd.

Resona Bank, Ltd.

Balance at the endof the period

1,008

－

1,008

－

644

－

644

－

504

－

504

－

504
340

－

5,660

－

－

5,660

4,255

－
－

－
－

4,255

3,330

3,330

－

925

－

－

925

1,428

－

－

1,428

1,264

－
－

－
－

1,264
989

－

2,355

－

－

2,355

730

－

－

730

－

1,400

－

－

1,400

1,400

－

－

1,400

－

－

1,000

500

－

－

500

200

－

－

200

1,000

－

－

1,000

1,000

－

－

1,000

－

－

1,000

－

－

400

300

－

－

300

300

－

－

300

－

1,500

－

1,500

－

1,000

－

1,000

－

1,000

－

1,000

－

500

－

500

1,000

－

1,000

1,000

－

1,000

－
－

1,000

－

1,000

－

1,000

－

1,000

－

500

－

500

－ 31 －(Note 3)

Unsecured
andunguaranteed

Bulletrepaymentonrepayment
date(Note 5)

Unsecured
andunguaranteed

March
27, 2018

Bulletrepaymentonrepayment
date(Note 7)

Unsecured
andunguaranteed

0.73

April
30, 2018

Bulletrepaymentonrepayment
date(Note 3)

Unsecured
andunguaranteed

0.82

March 29,2019

Bulletrepaymentonrepayment
date(Note 6)

Unsecured
andunguaranteed

0.90

March 29,2019

Bulletrepaymentonrepayment
date(Note 5)

Unsecured
andunguaranteed

0.43

May 29,2020

Bulletrepaymentonrepayment
date(Note 9)Unsecured
andunguaranteed

Bulletrepaymentonrepayment
date(Note 9)Unsecured
andunguaranteed

0.73

1.08

(Note 4)

1,000

400

Remarks

June 30,
2017

500

1,000

Bulletrepaymentonrepayment
date

Use of
funds

0.70

989

－

Repayment
methodOctober
31, 2016

3,330

－

500

Due on0.61(Note 8)－989

Average interest
rate (%)(Note 1)－－－
June 3,
2015

－

340

989

Aozora Bank, Ltd.

Sumitomo Mitsui Trust
Bank, Limited
Sumitomo Mitsui
Banking Corporation
Term Loan The Bank ofTokyo-Mitsubishi UFJ,
No.24-②Ltd.
The Bank of Fukuoka,
Ltd.

Decrease

3,330

The Bank of Fukuoka,
Ltd.
Sumitomo Mitsui Trust
Bank, Limited

The Bank of Fukuoka,
Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Mitsubishi UFJ Trust andTerm Loan Banking Corporation
No.24-①
The Bank of Fukuoka,
Ltd.

Increase

504

Aozora Bank, Ltd.

The Dai-ichi Life
Insurance Company,
Term Loan
LimitedNo.23-②
Sumitomo Mitsui
Banking Corporation

Balance at the
beginning of theperiod(Note 4)0.82
(Note 4)

May 312022

Dateborrowed

Long-term Loans

LenderBalance at the
beginning of theperiodIncrease

Decrease

Balance at the endof the period

Sumitomo Mitsui Trust
Bank, Limited

－

1,180

－

1,180

Mizuho Bank, Ltd.

－

710

－

710

－

600

－

600

Sumitomo Mitsui
Banking Corporation
September
Term Loan
The Bank of
30, 2015
No.25
Tokyo-Mitsubishi UFJ,Ltd.
Mitsubishi UFJ Trust andBanking Corporation
Resona Bank, Ltd.

－

－

600

Average interest
rate (%)(Note 1)0.76
(Note 4)

600

－

510

－

510

－

400

－

400

Subtotal

58,185

12,5003,067

67,617

Total¥82,098¥ 15,567¥7,386¥ 90,279

Due onRepayment
methodUse offunds

Remarks

September
30, 2022

Bulletrepaymentonrepayment
date(Note 5)

Unsecured
andunguaranteed

Notes:
1.
2.
3.
4.
5.
6.
7.
8.
9.

Average interest rate is the interest rate of borrowings for the respective loan contracts (weighted by the balance during the period) and rounded
to the second decimal place.
Repayment of ¥67.5 million has been and will be made at the end of June and December each year starting on June 30, 2010, with the remaining
payment of ¥1,822.5 million to be made on November 30, 2016, the final repayment date.
The borrowings have been used for the acquisition of trust beneficiary interest in real estate.
To avoid interest rate volatility risk, the interest rates are hedged by interest rate swap transactions and the average interest rates show theweighted-average interest rates reflecting the effect of the relevant interest rate swap transactions.
The borrowings have been used for the repayment of long-term loans.
The borrowings have been used for the repayment of short-term loans.
The borrowings have been used for the repayment of short-term and long-term loans.
To avoid interest rate volatility risk, a portion of the borrowing amounting to ¥8,500 million is hedged by an interest rate swap transaction andthe average interest rate shows the weighted-average interest rate reflecting the effect of the relevant interest rate swap transaction.
The borrowings have been used for the redemption of No. 1 Unsecured Investment Corporation Bonds.

3. Investment Corporation Bonds
There are none applicable.

4. Short-Term Investment Corporation Bonds
There are none applicable.

5. Subscription Rights
There are none applicable.

－ 32 －

Balance Sheets(In thousands of yen)
As of April 30, 2015
AssetsCurrent assets
Cash and deposits (Notes 3 and 11)
Cash and deposits in trust (Notes 3 and 11)
Operating accounts receivable
Prepaid expenses
Deferred tax assets (Note 9)
Other
Total current assets
Non-current assets
Property and equipment (Note 12)
Buildings
Structures
Machinery and equipment
Tools, furniture and fixtures
Land
Buildings in trust (Note 4)
Structures in trust (Note 4)
Machinery and equipment in trust
Tools, furniture and fixtures in trust
Land in trust (Note 4)
Construction in progress in trust
Less: accumulated depreciation
Total property and equipment
Intangible assets
Leasehold right in trust
Other intangible assets in trust
Other
Total intangible assets
Investments and other assets
Lease and guarantee deposits
Long-term prepaid expenses
Other
Total investments and other assets
Total non-current assets
Deferred assets
Investment corporation bond issuance costs
Investment unit issuance expenses
Total deferred assets
Total assets¥¥

The accompanying notes to financial statements are an integral part of these statements.

－ 33 －

2,046,803
3,796,885
218,025
298,13715
13
6,359,881

As of October 31, 2015¥

2,638,085
3,582,056
301,141
296,248
12－
6,817,545

1,222,605
5,559
20,3096,609
5,209,643
66,198,127
801,461
310,592
303,189
127,651,793－(18,879,396)
182,850,494

－
－
－
－
－
67,891,811
807,020
316,304
280,255
132,862,108
101(19,975,370)
182,182,231

7,348
1,650
21
9,019

7,348
1,376

10,000244,946
241,210496,157
183,355,671

10,000282,502254,532
547,034
182,737,990

1,837
20,03521,873
189,737,426

13,357
13,357
189,568,893

－

8,724

－

¥

Balance Sheets, continued(In thousands of yen)
As of April 30, 2015

As of October 31, 2015

Liabilities
Current liabilities
Operating accounts payable
Current portion of investment corporation bonds (Note 11)
Current portion of long-term loans (Notes 8 and 11)
Accounts payable
Accrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Other
Total current liabilities
Non-current liabilities
Long-term loans (Notes 8 and 11)
Tenant leasehold and security deposits (Note 11)
Tenant leasehold and security deposits in trust (Notes 4 and 11)
Deferred tax liabilities (Note 9)
Derivative liabilities (Note 11)
Total non-current liabilities
Total liabilities
Net Assets (Notes 7 and 14)
Unitholders’ equity
Unitholders’ capital
Units authorized: 2,000,000 units
Units issued and outstanding: 176,000 units
Retained earnings
Total unitholders’ equity
Deferred gains or losses on hedges
Total net assets
Total liabilities and net assets¥¥

The accompanying notes to financial statements are an integral part of these statements.

－ 34 －

352,904
8,500,000
23,913,000
231,359
103,139764
85,700704,242
3,711
33,894,820¥

530,455－

22,662,000
236,463
69,315716
26,918729,644
1,591
24,257,106

58,185,000
170,568
4,373,971
72,34542,216
62,844,102
96,738,923

67,617,500－
4,631,266
55,28730,76672,334,820
96,591,926

91,143,100

91,143,100

1,883,949
93,027,049(28,546)
92,998,503
189,737,426

1,854,633
92,997,733(20,767)
92,976,966
189,568,893¥

Statements of Income(In thousands of yen)
For the six-month period
ended April 30, 2015
Operating revenue
Rental revenue (Note 5)
Other rental business revenue (Note 5)
Gain on sales of real estate properties (Note 6)
Total operating revenue
Operating expenses
Expenses related to rental business (Note 5)
Asset management fee
Asset custody fee
Administrative service fees
Directors’ compensations
Audit fee
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Gains on forfeiture of unclaimed dividends
Insurance income
Total non-operating income
Non-operating expenses
Interest expenses
Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance costs
Borrowing related expenses
Amortization of investment unit issuance expenses
Other
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes – current (Note 9)
Income taxes – deferred (Note 9)
Total income taxes
Net income
The accompanying notes to financial statements are an integral part of these statements.

－ 35 －¥¥

5,283,814
31,369297,259
5,612,443

For the six-month period
ended October 31, 2015¥

5,220,477
147,738－

5,368,215

2,630,481
341,711
8,622
67,4476,300
10,00075,8283,140,392
2,472,051

2,673,458
341,201
8,515
66,7646,300
12,60048,665
3,157,505
2,210,709

1,025
611
424
2,061

844
452
－
1,297

355,378
42,034
5,511
170,0896,678
2,440
582,133
1,891,979
1,891,979
944
59,06860,013
1,831,965

377,898
8,267
1,837
151,582
6,678
11,283
557,548
1,654,459
1,654,459
864(20,768)(19,904)
1,674,363¥

Statements of Changes in Net Assets(In thousands of yen)
Deferred
gains or
Total netlosses on
assetshedge

Number ofunits

Unitholders’capitalRetainedearnings

Total
unitholders’equity176,000¥ 91,143,100¥ 2,006,816¥ 93,149,916

Dividends from surplus(1,954,832)(1,954,832)(1,954,832)

Net income

1,831,965

1,831,965

1,831,965

Balance as of October 31, 2014

Net changes of items otherthan unitholders’ equity (net)¥ 91,143,100¥ 93,120,720

649

649

¥ (28,546)¥ 92,998,503¥ 1,883,949¥ 93,027,049

Dividends from surplus(1,703,680)(1,703,680)(1,703,680)

Net income

1,674,363

1,674,363

1,674,363

Balance as of April 30, 2015

176,000¥ (29,195)

Net changes of items otherthan unitholders’ equity (net)
Balance as of October 31, 2015

176,000¥ 91,143,100¥1,854,633

The accompanying notes to financial statements are an integral part of these statements.

－ 36 －¥ 92,997,733

7,778

7,778

¥ (20,767)¥92,976,966

Statements of Cash Distributions

Classification

For the six-month period
ended April 30, 2015

For the six-month period
ended October 31, 2015

Amount(yen) (Note 1)

Amount(yen) (Note 2)¥1,832,069,089¥1,674,520,004－
1,703,680,000

43,517,328
1,717,936,000(Dividend per unit)
IV. Voluntary retained earnings[9,680][9,761]

Reserve for reduction entry

128,233,041－

V. Retained earnings brought forward¥156,048¥101,332

I. Unappropriated retained earnings
II. Voluntary retained earnings
Reversal of reserve for reduction entry
III. Total Amount of Dividends

The accompanying notes to financial statements are an integral part of these statements.

Notes:
1.
In accordance with the “cash distribution policy” stipulated in Article 34 of the Articles of Incorporation, the total
amount of dividends is limited to the amount of income. The article also stipulates the policy that “Top REIT shall
distribute an amount in excess of 90% of its distributable profits as stipulated in Article 67-15 of the Act on Special
Measures Concerning Taxation.” Based on these policies, Top REIT decided on a total distribution of ¥1,703,680,000 as
distribution of income for the period. This is the maximum value arrived at when the number of units issued andoutstanding (176,000 units) is multiplied by an integer, which does not exceed the unappropriated retained earnings ofthe 18th fiscal period after deducting both (1) the amount of deferred tax liabilities adjusted to reflect the change in tax
rate, and (2) the amount of retained earnings brought forward pursuant to Article 66-2 of the “Special Taxation Measures
Act of Japan ” which would be transferred to the reserve for reduction entry.
Furthermore, Top REIT does not make cash distributions in excess of the profit as stipulated in Article 34-2 of the
Articles of Incorporation.
2.

In accordance with the “cash distribution policy” stipulated in Article 34 of the Articles of Incorporation, the policy of“Top REIT shall distribute an amount in excess of 90% of its distributable profits as stipulated in Article 67-15 of the
Act on Special Measures Concerning Taxation” shall be pursued. Accordingly, Top REIT decided on a total distributionof ¥1,717,936,000 as distribution of income for the period. This is the maximum value arrived at when the number ofunits issued and outstanding (176,000 units) is multiplied by an integer, which does not exceed the sum of
unappropriated retained earnings of the 19th fiscal period after adding the amount of reversal of reserve for reduction
entry. Furthermore, Top REIT does not make cash distributions in excess of the profit as stipulated in Article 34-2 of the
Articles of Incorporation.

－ 37 －

Statements of Cash Flows(In thousands of yen)
For the six-month period
ended April 30, 2015

For the six-month period
ended October 31, 2015¥¥

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Amortization of trademark
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance expenses
Interest income and interest on securities
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in prepaid expenses
Decrease in property and equipment in trust due to sale
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable
Increase (decrease) in accrued consumption taxes
Increase (decrease) in advances received
Decrease (increase) in long-term prepaid expenses
Other, net
Subtotal

1,891,979
1,186,513
21
5,511
6,678
(1,025)
397,412
1,382
62,617
7,734,728(5,696)(25,453)(138,262)(97,646)
127,083(16,236)
11,129,607

1,654,459
1,185,199
21
1,837
6,678
(844)
386,165(83,116)
1,888－
12,3495,104(58,781)
25,402(37,556)
37,045
3,135,853

1,025(404,780)(851)
10,725,000

844(419,945)(911)
2,715,840

Cash flows from investing activities
Purchase of property and equipment
Purchase of property and equipment in trust
Proceeds from tenant leasehold and security deposits
Repayments of tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits in trust
Repayments of tenant leasehold and security deposits in trust
Net cash used in investing activities(388,632)(245,384)
43,239(100)
285,796(1,210,483)(1,515,565)(4,739)(399,193)
965－
125,720(39,959)(317,207)

Cash flows from financing activities
Proceeds from long-term loans
Repayment of long-term loans
Redemption of investment corporation bonds
Payment of dividends
Net cash used in financing activities－(9,764,500)－(1,954,832)(11,719,332)

12,500,000(4,318,500)(8,500,000)(1,703,680)(2,022,180)

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period (Note 3)(2,509,897)
8,353,586
5,843,689

376,452
5,843,689
6,220,142

Interest income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities¥

The accompanying notes to financial statements are an integral part of these statements.

－ 38 －¥

Notes to Financial Statements
For the six-month periods ended April 30, 2015 and October 31, 2015

Note 1. Organization and Basis of Presentationa)Organization
Top REIT, Inc. (“Top REIT”) was founded on November 2, 2005 based on the Act on Investment Trusts and Investment
Corporations (Act No. 198 of 1951, as amended) with Top REIT Asset Management Co., Ltd. (the “Asset Manager”) as theincorporator. On March 1, 2006, Top REIT was listed on the Real Estate Investment Trust Section of the Tokyo Stock
Exchange (TSE) (Securities Code: 8982) with the number of investment units issued and outstanding totaling 145,500 units. Asof the end of the 19th fiscal period (October 31, 2015), the total number of investment units issued and outstanding stood at
176,000 units as a result of the issuance of additional investment units through the third-party allotment (9,500 units) on March
23, 2006, the public offering (20,000 units) on November 25, 2013, and the third-party allotment (1,000 units) on December 13,
2013.
Top REIT manages its portfolio with the aim of maximizing the investment value for its unitholders by securing stable revenues
over the medium- to long-term and achieving steady growth of its portfolio. To do so, Top REIT focuses on the two strategies,“Skilled management of a diversified portfolio” and “Optimal application of the sponsors’ strengths.” As of the end of the 19th
fiscal period, its portfolio consisted of 20 properties with a total acquisition value of ¥190,484 million.

b)

Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in the Investment Trust
Law and the Japanese Financial Instruments and Exchange Act and their related accounting regulations, and in conformity withaccounting principles generally accepted in Japan (hereinafter the “Japanese GAAP”), which are different in certain respects as
to application and disclosure requirements from International Financial Reporting Standards. The accompanying financial
statements have been reformatted and translated into English from the financial statements of Top REIT prepared in accordancewith Japanese GAAP, and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the
Financial Instruments and Exchange Act. In preparing these financial statements, certain reclassifications and modifications
have been made to the financial statements issued domestically in order to present them in a format which is more familiar toreaders outside Japan. As permitted by the regulations under the Financial Instruments and Exchange Act of Japan, amounts ofless than one thousand yen have been omitted. As a result, the totals shown in the accompanying financial statements do notnecessarily agree with the sums of the individual amounts. The fiscal period of Top REIT represents two six-month accounting
periods: each period is from May 1 to October 31 or, from November 1 to April 30 of the following year.

Note 2. Summary of Significant Accounting Policiesa)Property and Equipment (including assets in trust)
Property and Equipment are stated at cost. Depreciation of property and equipment is calculated on a straight-line basis overthe estimated useful lives of the assets ranging as stated below:
Buildings
Structures
Machinery and equipment
Tools, furniture and fixtures

2~59 years
2~54 years
2~15 years
2~12 yearsb)

Investment Corporation Bond Issuance Costs
Investment corporation bond issuance costs are amortized using the straight-line method over the maturity period of the bonds.

c)

Investment Unit Issuance Expenses
Investment unit issuance expenses are amortized using the straight-line method over three years.

d)Taxes on Property and Equipment
With respect to property taxes, city planning taxes and depreciable asset taxes, of the taxation amount assessed and determined,
the amount corresponding to the relevant period is accounted for as expenses related to rental business.
Of the amounts paid for the acquisitions of real estate or trust beneficiary interests in real estate, the amounts equivalent toproperty taxes is capitalized as part of the acquisition costs of the relevant property instead of being charged as expenses.
Capitalized property taxes amounted to ¥1,733 thousand for the six-month period ended April 30, 2015, and there were noproperty tax capitalized for the six-month period ended October 31, 2015.

e)

Hedge Accounting Approach(1) Hedge Accounting Approach
Deferred hedge accounting is applied for interest rate swap transactions. However, special treatment is applied for interest
rate swaps when the requirements for special treatment are fulfilled.
(2) Hedging Instruments and Hedged Items
Hedging instruments:
Interest rate swap transactions
Hedged items:
Borrowing interest rates(3) Hedging Policy
Top REIT enters into derivative transactions to hedge against risks stipulated in the Articles of Incorporation in accordancewith the financial policy.
－ 39 －

(4) Hedge Effectiveness Assessment
Hedge effectiveness is assessed by comparing the cumulative change in hedged items and the cumulative change in hedging
instruments and then examining the ratio of the amount of change in both.
f)Trust Beneficiary Interests in Real Estate
For trust beneficiary interests in real estate, all accounts of assets and liabilities held in trust as well as all income generated andexpenses incurred from the trust are recorded in the concerned items accounts on the balance sheet and statement of income.

g)Consumption Taxes
Consumption taxes are excluded from transaction amounts. Furthermore, non-deductible consumption taxes related toacquisition of properties are included in the acquisition costs of the respective properties.

h)Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and cash in trust, deposits placed with banks and deposits in trust that can bewithdrawn at any time, and short-term investments that are easily convertible to cash, have a low risk of price fluctuation andmature within three months from the date of purchase.

i)

Reclassification
Certain prior period amounts have been reclassified to conform to the current period’s presentation.

－ 40 －

Note 3. Cash and Cash Equivalents
The relationship between cash and cash equivalents in the accompanying statements of cash flows and accounts and amounts in theaccompanying balance sheets is as follows:(In thousands of yen)
As of April 30, 2015

As of October 31, 2015

Cash and deposits
Cash and deposits in trust¥ 2,046,803
3,796,885¥ 2,638,085
3,582,056

Cash and cash equivalents¥ 5,843,689¥ 6,220,142

Note 4. Asset Pledged as Collateral and Secured Liabilities
The Assets pledged as collateral are as follows:(In thousands of yen)
As of April 30, 2015
Buildings in trust
Structures in trust
Land in trust
Total

As of October 31, 2015

¥ 2,203,777
67,771
8,892,092¥ 2,289,630
65,4038,892,092¥ 11,163,640¥ 11,247,126

The secured liabilities are as follows:(In thousands of yen)
As of April 30, 2015
Tenant leasehold and security deposits in trust
Total－ 41 －

As of October 31, 2015

¥ 326,648¥ 326,648¥ 326,648¥ 326,648

Note 5. Breakdown of Property-Related Revenue and Expenses
Property-related revenue and expenses for the six month periods ended April 30, 2015 and October 31, 2015 were as follows:(In thousands of yen)
For the six-month period
ended April 30, 2015

For the six-month period
ended October 31, 2015

A. Revenue related to rental business
Rental and parking lots revenue¥ 4,975,223¥ 4,972,503

Other rental revenue

308,591

247,973

Other rental business revenue

21,349143,790

Cancellation penalty received

10,0203,948

5,315,184

5,368,215

Property management fees

432,436

405,783

Utilities expenses

247,539

255,263

Property and other taxes

630,540

612,070

Non-life insurance expenses

10,546

10,634

Repair and maintenance

84,300102,144

1,186,513

1,185,199

38,604102,3632,630,481

2,673,458¥ 2,684,702¥ 2,694,757

Total revenue related to rental business
B. Expenses related to rental business

Depreciation and amortization
Other
Total expenses related to rental business
C. Operating income from real estate rental business(A − B)

Note 6. Gain on sales of real estate properties
There were no sales of real estate properties during the period ended October 31, 2015.
Gain on sales of real estate properties during the period ended April 30, 2015 was as follows:(In thousands of yen)
For the six-month period ended April 30, 2015
Kanda Park Plaza
Proceeds from sales of real estate
properties
Cost of sale of real estate properties
Other sales related expenses
Gain on sales of real estate propertiesOAK PLAZA¥ 5,350,000
5,050,382
192,487¥
107,129

Proceeds from sales of real estate
properties
Cost of sale of real estate properties
Other sales related expenses
Gain on sales of real estate properties¥ 2,900,000
2,684,345
25,524¥ 190,129

Note 7. Net Assets
Top REIT issues only non-per value units in accordance with the Act on Investment Trusts and Investment Corporations of Japan,
and all issue amounts of new units are designated as stated capital. Top REIT maintains at least 50millon yen as the minimum net
assets required by Article 67, Paragraph 4 of the Act on Investment Trust and Investment Corporation.

－ 42 －

Note 8. Long-term Loans
Long-term loans consisted of bank borrowings under loan agreements. The following table summarizes the long-term loans
outstanding as of April 30, 2015 and October 31, 2015.
(In thousands of yen)
As of April 30, 2015

As of October 31, 2015

0.61% unsecured long-term loans due in 2015

¥ 2,954,000

0.61% unsecured long-term loans due in 2015

1,297,000－

2.42% unsecured long-term loans due in 2016

135,000¥ 135,000－

2.42% unsecured long-term loans due in 2016

1,890,000

1,822,500

1.39% unsecured long-term loans due in 2016

16,700,000

16,700,000

0.67% unsecured long-term loans due in 2016－

2,827,000

0.69% unsecured long-term loans due in 2016

2,827,000－

0.51% unsecured long-term loans due in 2016

19,040,000

19,040,000

0.61% unsecured long-term loans due in 2016

3,000,000

3,000,000

0.70% unsecured long-term loans due in 2017

17,500,000

17,500,000

0.73% unsecured long-term loans due in 2018

4,670,000

4,670,000

1.08% unsecured long-term loans due in 2018

2,355,000

2,355,000

0.73% unsecured long-term loans due in 2018

1,230,000

1,230,000

0.82% unsecured long-term loans due in 2019

4,500,000

4,500,000

0.90% unsecured long-term loans due in 2019

4,000,000

4,000,000

0.43% unsecured long-term loans due in 2020－

4,000,000

0.82% unsecured long-term loans due in 2022－

4,500,000

0.76% unsecured long-term loans due in 2022－

4,000,000(23,913,000)(22,662,000)¥ 58,185,000¥ 67,617,500

Less: Current Portion
Total long-term loans, less current portion

The stated interest rate is the weighted average interest rate during the period ended October 31, 2015.
The redemption schedules for long-term loans subsequent to April 30, 2015 and October 31, 2015 are disclosed in “Note 11,
Financial Instruments”.

－ 43 －

Note 9. Income Taxes
Top REIT is subject to Japanese corporate income taxes. The tax effect of temporary differences that give rise to a significant
portion of the deferred tax assets and liabilities as of April 30, 2015 and October 31, 2015 were as follows:(In thousands of yen)
As of April 30, 2015

As of October 31, 2015

Current assets
Enterprise tax payable

¥ 15

¥ 12

13,627

9,913¥ 13,642¥ 9,926

Reserve for reduction entry¥ 85,972¥ 65,200

Total deferred tax liabilities

85,972

65,200(Net deferred tax liabilities)¥ 72,329¥ 55,274

Non-current assets
Deferred gains or losses on hedges
Total deferred tax assets
Non-current liabilities

Reconciliation of major items for differences between the statutory tax rate and effective tax rate with respect to pre-tax income
reflected in the accompanying statements of income for the six-month periods ended April 30, 2015 and October 31, 2015 are as
follows:
As of April 30, 2015
Effective statutory tax rate

As of October 31, 201534.15%

32.31%

Deductible cash distributions(30.75%)(33.55%)

Other(0.23%)

0.04%

3.17%

(1.20%)(Adjustment)

Effective tax rate after applying tax effect accounting

Top REIT has a policy of making cash distributions of earnings in excess of 90% of distributable income for the fiscal period toqualify for conditions, as set forth in the Special Taxation Measures Act, to achieve a deduction of cash distributions for income
tax purposes. Based on this policy, Top REIT treated the cash distributions of earnings as a tax deductible distribution as definedin the Special Taxation Measures Act.
The Act on Partial Amendment of the Income Tax Act, etc. (Act No. 9 of 2015) was promulgated on March 31, 2015, and thecorporate tax rate was changed from fiscal periods starting on or after April 1, 2015. Accordingly, the effective statutory tax rateused to calculate the deferred tax assets and liabilities for temporary differences expected to be settled or realized during fiscal
periods which start on or after May 1, 2015 has been changed to 32.31% from 34.15%. This change had little impact on thedeferred tax assets and the income taxes-deferred.

Note 10. Leases
1. Finance lease transactions
There are none applicable.
2. Operating lease transactions (as lessor)
Future minimum rental revenues under existing non-cancelable lease agreements are as follows:(In thousands of yen)
As of April 30, 2015

As of October 31, 2015

Due within one year

¥ 4,046,703¥ 3,925,537

Due after one year

9,173,902

7,256,547¥ 13,220,605¥ 11,182,085

Total－ 44 －

Note 11. Financial Instruments
1. Status of Financial Instruments(1) Policies for financial instruments
Top REIT procures necessary funds through bank loans, issuance of investment corporation bonds and issuance ofinvestment units with the aim of contributing to steady growth of assets and stable and efficient performance in accordancewith the financial policy stated by the Asset Manager.
For management of surplus funds through financial instruments, investment targets include securities and monetary claimsin accordance with the investment limitations stipulated in the Articles of Incorporation. However, as a general rule, thesurplus funds are held as bank deposits.
Furthermore, derivative transactions shall be limited to those for the purpose of hedging interest rate fluctuation risk andother risks in accordance with the investment limitations.
(2) Financial Instruments, their Risks and Risk Management System
Top REIT and Top REIT Asset Management, Co., Ltd. (“TRAM”), the asset management company of Top REIT, strive toimprove risk management through regular monitoring of the adequacy and effectiveness of risk management systems. Top
REIT and TRAM have a structure that monitors various risks regularly and reflects the results of monitoring on the risk
management plan and the asset management plans. In addition, Top REIT and TRAM monitor risks through varioustransactions and reflect the results of monitoring in the decision-making in a timely manner.
For individual financial instruments, their risks and risk management system, Top REIT and TRAM strive for risk
management based on the Articles of Incorporation set by the Asset Manager.
①

Credit risk concerning deposits and derivative transactions
Deposits, especially time deposits of large amounts used for investment of Top REIT’s surplus funds are exposed tocredit risks such as bankruptcy of the depository financial institutions. Top REIT minimizes the risk through suchmeasures as limiting them to short term deposits, setting a standard of credit rating for depository financial
institutions to be used and establishing rules for the ceiling amounts of deposit. For derivative transactions, Top
REIT limits credit risks by setting a standard of credit rating for financial institutions used in the transaction andputting in place a structure to monitor deals, the fair value of each transaction and credit status of counter parties.

②

Market risks concerning loans
Proceeds from loans and investment corporation bonds are used mainly to acquire real estate properties and torefinance existing loans and bonds.
Floating-rate loans are exposed to market risks. Top REIT manages interest-raising risks by fixing interest rates
through interest swap transactions and setting a target for fixed-rate interest ratios. In addition, when procuring newloans or refinancing existing loans, Top REIT considers interest-raising risks and the following ways such as
diversifying the financial methods and lenders, and dispersing repayment dates to minimize risks. For hedging
instruments and hedged items, hedging policy, and hedge effectiveness assessment in hedge accounting, please referto “e) Hedge Accounting Approach” under “Note 2. Summary of Significant Accounting Policies.”③

Liquidity risks concerning loans and tenant leasehold and security deposits
Loans, investment corporation bonds and tenant leasehold and security deposits are exposed to liquidity risk at thetime of repayment of loans, redemption of investment corporation bonds and return of tenant leaseholds andsecurity deposits. Top REIT manages these risks by preparing monthly fund management plans. In addition, Top
REIT monitors liquidity risks regularly and at the time of various transactions by preparing cash flow schedules
which include projections of repayment of loans and tenant leaseholds and security deposits, distribution ofdividends, taking into account a comparative monitoring with liquidity on hand that factors in the liquidity of
portfolio properties.

(3) Supplemental Explanation regarding the Fair Value of Financial Instruments
The fair value of financial instruments is based on the observed market price, if available. When there is no observed
market price available, fair value is reasonably estimated. Certain assumptions are used for the estimation of fair value.
Since various factors are reflected in estimating the fair value, different assumptions and factors could result in a different
value. Furthermore, the contractual amounts of derivative transactions stated in “2. Fair Values of Financial Instruments”
below do not represent the market risk involved in these derivative transactions.

－ 45 －

2. Fair Values of Financial Instruments
Book value, fair value and differences between the values as of April 30, 2015 are shown in the table below. Financial
instruments for which fair value is difficult to estimate are not included in the table (Please refer to Note 2).
(In thousands of yen)
As of April 30, 2015
Book value(1)

Cash and deposits(2)

Cash and deposits in trust
Total assets

Fair value

Difference¥ 2,046,803¥ 2,046,803¥ －3,796,885

3,796,885－¥ 5,843,689¥ 5,843,689

¥ －

(3)

Current portion of investment
corporation bonds¥ 8,500,000¥ 8,504,675¥ 4,675(4)

Current portion of long-term loans

23,913,000

23,991,626

78,626(5)Long-term loans

58,185,000

58,306,844

121,844(6)

Tenant leasehold and security deposits
in trust

23,44323,443－¥ 90,621,443¥ 90,826,589¥ 205,145¥ (42,216)¥ (42,216)¥ －¥ (42,216)¥ (42,216)¥ －Total liabilities
Derivative transactions (*1)
Derivatives designatedas hedging instruments
Total derivative transactions(*1) The value of derivative transactions is the net of derivative assets and derivative liabilities, with amounts inparentheses representing the net liability position.
(Note 1) Methods to estimate fair value of financial instruments and matters related to derivative transactions
Assets(1) Cash and deposits, and(2) Cash and deposits in trust
Due to the short maturities, the book value of these assets is deemed a reasonable approximation of the fairvalue. Therefore, the book value is used as the fair value.
Liabilities(3) Current portion of investment corporation bonds
The fair value is a referential figure based on the values published by the financial data provider.
(4) Current portion of long-term loans, and(5) Long-term loans
Since floating rate long-term loans reflect market interest rates within a short period of time, the book value isdetermined to be a reasonable estimate of the fair value. In the case of fixed interest rate loans, the fair value isestimated by discounting the principal and the interest cash flows of the debt at the current rate that isreasonably estimated to be applicable if Top REIT enters into new similar loans.
Furthermore, the fair value of long-term loans that qualify for the special treatment of interest-rate swaps iscalculated by discounting the sum of the interest after reflecting the effect of the relevant interest rate swap,
and the principal, using reasonable estimates of the rate that would be applicable to similar fixed-rate long-termloans (Please refer to “Derivative Transactions” below).
(6) Tenant leasehold and security deposits in trust
Due to the short maturities, the book value of these liabilities is deemed a reasonable approximation of the fairvalue. Therefore, the book value is used as the fair value.

－ 46 －

Derivative Transactions
Derivatives designated as hedging instruments
The contract amount or the equivalent principal amount set out in the contract as of the closing date for each
derivative designated as a hedging instrument is as follows:(In thousands of yen)Contract amount
Hedge
Type of derivative
Method of calculating
accounting
Hedged item
More than one Fair valuetransactions
the fair value
methodyear
Interest rate swap
Based on value
Principal
Fixed rate payable Long-term
provided by¥ 8,500,000 ¥ 8,500,000 ¥ (42,216)
treatment
counterparty financial
loans
and
floating
rate
methodinstitution
receivable
SpecialInterest rate swap
treatment of Fixed rate payable Long-term¥ 21,200,000 ¥ 4,500,000
(*2)
―
loans
interest rate
and floating rate
swaps
receivable(*2) Because the transactions based on the special treatment of interest rate swaps and the hedged long-term loans are treatedas one item, the fair value is included under the fair value of long-term loans (refer to Note 1(4), (5)).
(Note 2) Financial instruments of which the fair value is difficult to estimate are as follows:(In thousands of yen)
ItemBook value
Tenant leasehold and security deposits in trust (*3)
¥ 4,350,528
Total¥ 4,350,528(*3) Tenant leasehold and security deposits in trust (excluding (6) above) are not subject to fair value disclosure because
they are not marketable, and the actual deposit period is not estimable as leases may be cancelled, renewed or re-signed
even if a lease term is set in the lease contract, which makes a reasonable estimate of future cash flows difficult.
(Note 3) Redemption schedule for monetary claims after the end of the period(In thousands of yen)
Due within one year
¥ 2,046,803
3,796,885¥ 5,843,689

Cash and deposits
Cash and deposits in trust
Total(Note 4) Repayment schedule for investment corporation bonds and long-term loans after the end of the period(In thousands of yen)
Due within one
year

Due after
one to twoyears

Due after
two to threeyears

Due after
three to fouryears

Due after four
to five years

Due after
five years

Investment
corporationbonds¥ 8,500,000

¥ －

¥ －

¥ －

¥ －

¥ －

Long-term
loans

23,913,000

23,930,000

25,755,000

8,500,000

－

－

Total

¥ 32,413,000¥ 23,930,000¥ 25,755,000¥ 8,500,000

¥ －

¥ －

－ 47 －

Book value, fair value and differences between the values as of October 31, 2015 are shown in the table below. Financial
instruments for which fair value is difficult to estimate are not included in the table (Please refer to Note 2).
(In thousands of yen)
As of October 31, 2015
Book value(1)

Cash and deposits(2)

Cash and deposits in trust

Fair value

Difference¥ 2,638,085¥ 2,638,085¥ －3,582,056

3,582,056－

Total assets¥ 6,220,142¥ 6,220,142

¥ －

(3)

Current portion of long-term loans¥ 22,662,000¥ 22,703,581¥ 41,581(4)

Long-term loans

67,617,500

67,802,834

185,334(5)

Tenant leasehold and security deposits
in trust

8,190

8,190

－

¥ 90, 287,690¥ 90,514,605¥ 226,915¥ (30,766)¥ (30,766)¥ －¥ (30,766)¥ (30,766)¥ －Total liabilities
Derivative transactions (*1)
Derivatives designatedas hedging instruments
Total derivative transactions(*1) The value of derivative transactions is the net of derivative assets and derivative liabilities, with amounts inparentheses representing the net liability position.
(Note 1) Methods to estimate the fair value of financial instruments and matters related to derivative transactions
Assets(1) Cash and deposits, and(2) Cash and deposits in trust
Due to the short maturities, the book value of these assets is deemed a reasonable approximation of the fairvalue. Therefore, the book value is used as the fair value.
Liabilities(3) Current portion of long-term loans, and(4) Long-term loans
Since floating rate long-term loans reflect market interest rates within a short period of time, the book value isdetermined to be a reasonable estimate of the fair value. In the case of fixed interest rate loans, the fair value isestimated by discounting the principal and the interest cash flows of the debt at the current rate that isreasonably estimated to be applicable if Top REIT enters into new similar loans.
Furthermore, the fair value of long-term loans that qualify for the special treatment of interest-rate swaps iscalculated by discounting the sum of the interest after reflecting the effect of the relevant interest rate swap, andthe principal, using reasonable estimates of the rate that would be applicable to similar fixed-rate long-termloans (Please refer to “Derivative Transactions” below).
(5) Tenant leasehold and security deposits in trust
Due to the short maturities, the book value of these assets is deemed a reasonable approximation of the fairvalue. Therefore, the book value is used as the fair value.

－ 48 －

Derivative Transactions
Derivatives designated as hedging instruments
The contract amount or the equivalent principal amount set out in the contract as of the closing date for each
derivative designated as a hedging instrument is as follows:(In thousands of yen)Contract amount
Hedge
Type of derivative
Method of calculating
accounting
Hedged item
Fair value
More thantransactions
the fair value
methodone yearInterest rate swap
Based on value
Principal
Fixed rate payable Long-term
provided by¥ 8,500,000 ¥ 8,500,000 ¥ (30,766)
treatment
counterparty financial
loans
and
floating
rate
methodinstitution
receivable
SpecialInterest rate swap
treatment of Fixed rate payable Long-term¥ 33,700,000 ¥ 17,000,000
(*2)
―
loans
interest-rate
and floating rate
swaps
receivable(*2) Because the transactions based on the special treatment of interest-rate swaps and the hedged long-term loans are treatedas one item, the fair value is included under the fair value of long-term loans (refer to Note 1(3), (4)).
(Note 2) Financial instruments of which the fair value is difficult to estimate are as follows:(In thousands of yen)
ItemBook value
Tenant leasehold and security deposits in trust (*3)
¥ 4,623,076
Total¥ 4,623,076(*3) Tenant leasehold and security deposits in trust (excluding (5) above) are not subject to fair value disclosure because they
are not marketable, and the actual deposit period is not estimable as leases may be cancelled, renewed or re-signed even
if a lease term is set in the lease contract, which makes a reasonable estimate of future cash flows difficult.
(Note 3) Redemption schedule for monetary claims after the end of the period(In thousands of yen)
Due within one year
¥ 2,638,085
3,582,056¥ 6,220,142

Cash and deposits
Cash and deposits in trust
Total(Note 4) Repayment schedule for investment corporation bonds and long-term loans after the end of the period(In thousands of yen)
Due within one
year

Due after
one to twoyears

Long-term loans¥ 22,662,000¥ 38,362,500

Total¥ 22,662,000¥ 38,362,500

Due after
three to fouryears

Due after four
to five years¥ 8,255,000¥ 8,500,000¥ 4,000,000¥ 8,500,000¥ 8,255,000¥ 8,500,000¥ 4,000,000¥ 8,500,000

Due after
two to threeyears－ 49 －

Due after
five years

Note 12. Investment and Rental Properties
Top REIT owns office buildings and other properties for lease in Tokyo and other areas.
The following tables show book values, net change in book values during the period and fair values of these investment andrental properties as of the balance sheet dates and the method of calculation of the fair values.

(For the period from November 1, 2014 to April 30, 2015)(In thousands of yen)Book value
Fair value at the end of the
Balance at the end of
Balance at the beginning of
periodChange during the period
the period
the period¥ 190,955,201¥ (8,095,709)¥ 182,859,492¥ 175,720,000
Notes:
1.
Summary of corresponding investment and rental properties are presented in “【3】Portfolio Overview.”
2.
Book value represents the acquisition cost less accumulated depreciation and amortization.
3.
The increase during the period is primarily attributable to the additional acquisition of Shiba-Koen Building (8thfloor, ¥384,036 thousand) and capital expenditures, and the decrease during the period is mainly due to the sales of
Kanda Park Plaza (¥5,050,382 thousand) and OAK PLAZA (¥2,684,345 thousand), as well as the depreciation andamortization.
4.
Fair value at the end of the period is the appraisal value as appraised by outside real estate appraisers.
Furthermore, profit and loss from investment and rental properties for the fiscal period ended April 30, 2015 is presented in“Note 5. Breakdown of Property-Related Revenue and Expenses”(For the period from May1, 2015 to October 31, 2015)(In thousands of yen)Book value

Fair value at the end of the
Balance at the end of
Balance at the beginning of
periodChange during the period
the period
the period¥ 182,859,492¥ (668,536)¥ 182,190,955¥ 176,490,000
Notes:
1.
Summary of corresponding investment and rental properties are presented in “【3】Portfolio Overview.”
2.
Book value represents the acquisition cost less accumulated depreciation and amortization.
3.
The increase during the period is primarily attributable to capital expenditures, and decrease during the period ismainly due to the depreciation and amortization.
4.
Fair value at the end of the period is the appraisal value as appraised by outside real estate appraisers.
Furthermore, profit and loss from investment and rental properties for the fiscal period ended October 31, 2015 is presented in“Note 5. Breakdown of Property-Related Revenue and Expenses”

Note 13. Related-party Transactions
1.Transactions and Account Balances with the Parent Company and Major Unit Holders(For the six-month periods ended April 30, 2015 and October 31, 2015)
There are none applicable.
2.Transactions and Account Balances with Affiliates(For the six-month periods ended April 30, 2015 and October 31, 2015)
There are none applicable.
3. Transactions and Account Balances with Companies under Common Control(For the six-month periods ended April 30, 2015 and October 31, 2015)
There are none applicable.
4. Transactions and Account Balances with the Board of Directors and Individual Unit Holders(For the six-month periods ended April 30, 2015 and October 31, 2015)
There are none applicable.

－ 50 －

Note 14. Per Unit Information

The following table summarizes per unit information for the six-month periods ended April 30, 2015 and October 31, 2015.
(Yen)
As of April 30, 2015

Net assets per unit

As of October 31, 2015

¥ 528,400¥ 528,278(Yen)

For the six-month period
ended April 30, 2015
Net income per unit

For the six-month period
ended October 31, 2015

¥ 10,408¥ 9,513

Notes:
1. The per unit amounts are rounded down to the nearest yen.
2. Net income per unit is calculated by dividing the net income by the weighted average number of investment units over thenumber of days in the period.
3. Diluted net income per unit has not been presented since there are no outstanding warrants or convertible bonds.
4. The basis for the calculation of net income per unit is as follows:(In thousands of yen unless otherwise stated)
For the six-month period
ended April 30, 2015
Net Income

For the six-month period
ended October 31, 2015

¥ 1,831,965¥ 1,674,363－－

Amounts not attributable to ordinary unitholders
Net income attributable to ordinary investment units¥

1,831,965¥ 1,674,363

Weighted-average number of units during the period

176,000 units

176,000 units－ 51 －

Note 15. Segment Information(For the period from November 1, 2014 to April 30, 2015)
1. Segment Information
Segment information has been omitted as Top REIT has only one segment, which is the real estate leasing business.
2. Related Information(1) Information by Products and Services
Disclosure of this information has been omitted as Top REIT has a single product/service line that accounts for more than
90% of total operating revenues.
(2) Information by Geographic Areas(a) Operating revenues
Disclosure of this information has been omitted as total domestic revenues account for more than 90% of total operating
revenues.
(b) Investment property
Disclosure of this information has been omitted as total domestic investment properties account for more than 90% of thebook value of total investment properties.
(3) Information by Major Tenants(In thousands of yen)
TenantOperating revenues

NEC Corporation¥1,439,441

Related segment
Real estate leasing business(For the period from May 1, 2015 to October 31, 2015)
1. Segment Information
Segment information has been omitted as Top REIT has only one segment, which is the real estate leasing business.
2. Related Information(1) Information by Products and Services
Disclosure of this information has been omitted as Top REIT has a single product/service line that accounts for more than
90% of total operating revenues.
(2) Information by Geographic Areas(a) Operating revenues
Disclosure of this information has been omitted as total domestic revenues account for more than 90% of total operating
revenues.
(b) Investment property
Disclosure of this information has been omitted as total domestic investment properties account for more than 90% of thebook value of total investment properties.
(3) Information by Major Tenants(In thousands of yen)
TenantOperating revenues

Related segment

NEC Corporation¥1,439,441

Real estate leasing businessJapan Trustee Services Bank, Ltd.

¥553,559

Real estate leasing business

Note 16. Significant Subsequent Events
There are none applicable.

－ 52 －

Unit and Unitholders Information
Top REIT Trading Volume

Top REITTSE REIT Index(Indexation)

（yen）

TOPIX
(Indexation)

JGB 10Y(Indexation)（unit）

10,0001,000,000

8,000

800,000

600,000

6,000

400,000

4,000

200,000

2,000

0
Mar.1
2006

Apr.27 Oct.31 Apr.30
2007
2008
2007

Oct.31
2006

Oct.31 Apr.30 Oct.30 Apr.30
2008
2009
2009
2010

Number of Unitholders
17th FP
Total numberof unitholders:9,846

Oct.29 Apr.28 Oct.31 Apr.27
2011 20122010 2011

Oct.31 Apr.30 Oct.31
2012
2013
2013

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

175 [1.8%]
153 [1.6%]

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

162 [1.8%]
167 [1.9%]

Apr.30 Oct.31 Apr.30
2014
2015
2014

110 [1.1%]

Individuals / other 9,408[95.6%]

18th FP
Total numberof unitholders:8,770100 [1.1%]

Individuals / other 8,341[95.1%]
Financial institutions(incl. securities firms)
Other domestic corporations
Overseas corporations / individuals

19th FP
Total numberof unitholders:8,423

97 [1.2%]
160 [1.9%]
176 [2.1%]

Individuals / other 7,990[94.9%]

0%

20%

40%

60%

80%

100%

Number of Units Held
17th FP
Total numberof units issued
andoutstanding:176,000

18th FP
Total numberof units issued
andoutstanding:176,000

19th FP
Total numberof units issued
andoutstanding:176,000

0%

Other domestic corporations
12,490[7.1%]
Overseas
corporations /Financial institutions (incl. securities firms):
individuals:
110,126[62.6%]
20,733[11.8%]

Individuals / other:
32,651[18.6%]

Other domestic corporations
12,544[7.1%]

Individuals / other:
27,290[15.5%]

Financial institutions (incl. securities firms):
102,567[58.3%]

Overseas
corporations /individuals:
33,599[19.1%]

Other domestic corporations
11,738[6.7%]
Overseas
corporations /Financial institutions (incl. securities firms):
individuals:
107,076[60.8%]30,429[17.3%]

Individuals / other:
26,757[15.2%]

20%

40%

60%

(Note) Ratios on this page are rounded to the first decimal place.

－ 53 －

80%

100%

Oct.302015

0