JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

FINANCIAL RESULTS FOR THE FISCAL PERIOD ENDED SEPTEMBER 2019
(REIT)
November 15, 2019Japan Real Estate Investment Corporation
Tokyo Stock Exchange8952
https://www.j-re.co.jp/en/
Yutaka Yanagisawa, Executive Director
Japan Real Estate Asset Management Co., Ltd.
Naoki Umeda, President & CEO
Masaru Motooka, Executive Officer & General Manager, Planning Department/ TEL +81-3-3211-7951
Scheduled Date of Filling Securities Report: December 25, 2019
Scheduled date of dividend payment:
December 13, 2019
Supplementary materials for financial results: Yes
Holding of a briefing on financial results:
Yes (primarily for institutional investors and analysts)
Name of Issuer:
Stock Exchange Listing:
Securities Code:
URL:
Representative:
Asset Management Company:
Representative:
Contact:(Amounts are rounded down to the nearest million yen)

1. Financial Results for the September 2019 period (April 1, 2019 –September 30, 2019)(Percentages represent increases/decreases compared with results for the previous fiscal period)(1) Operating Results

Operating Revenues
Period ended

September 30, 2019
March 31, 2019

Operating Profit
Millions of yen%

Millions of yen%

Millions of yen%

35,16433,0226.5(0.1)

16,494
14,54813.4(0.2)

15,39013,44114.5
0.7

14,945
13,431

11.3
1.2

Period ended

Notes 1:
2:

Profit%Profit per Unit
September 30, 2019
March 31, 2019

Ordinary Profit

Millions of yen

ROE

ROA

(Profit to Unitholders’Equity Ratio)(Ordinary Profit toTotal Assets Ratio)

Ordinary Profit toOperating Revenues Ratio

Yen

%

%

%

10,789
9,696

2.9
2.6

1.6
1.4

43.8
40.7

Profit per unit is calculated as profit divided by the number of the average investment units during the period.
Regarding ROE, the average amount of the unitholders’ equity as of the beginning and the end of the period.

(2) Dividends
Dividend per Unit
Excluding Excess of
Accounting Profits

Period ended

September 30, 2019
March 31, 2019
Notes 1:
2:
3:

Total Cash Dividends Dividend in Excess
Excluding Excess of of Accounting Profits
Accounting Profits
per Unit

Total Dividends in
Excess of
Accounting Profits

Payout Ratio

Ratio of Dividends
to Net Assets

Yen

Millions of yen

Yen

Millions of yen%%

10,197
9,697

14,124
13,432

0
0

0
0

94.5
100.0

2.8
2.6

The payout ratio is rounded off to the first decimal place.
For the period ended September 30, 2019, the total dividends are calculated as profit, adding the reservation for a reduction entry (2million yen) and deducting the reserve for reduction entry (822 million yen).
For the period ended March 31, 2019, the total dividends are calculated as profit, adding reservation for a reduction entry (2 million
yen).

(3) Financial Standing
Total Assets
As of

September 30, 2019
March 31, 2019

Net Assets

Equity Ratio

Net Assets per Unit

Millions of yen

Millions of yen%

Yen

966,390963,676

512,770
511,25653.1
53.1

370,174
369,082

Reference: Total unitholders’ equity is 512,770 million yen for the September 2019 period and 511,256 million yen for the March 2019 period.

1

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(4) Cash Flows
Cash Flows fromOperating Activities
Period ended

Cash Flows from
Investing Activities

Cash Flows from
Financing Activities

Cash and Cash Equivalents
at End of Period

Millions of yen

Millions of yen

Millions of yen

Millions of yen

23,864
19,665(1,213)(12,148)(13,429)(7,701)33,604
24,382September 30, 2019
March 31, 2019

2. Performance Forecasts for the March 2020 period (October 1, 2019 to March 31, 2020)
and the September 2020 period (April 1, 2020 to September 30, 2020)(Percentages represent projected increases/decreases compared with the results for the preceding fiscal period)
Operating Revenues
Period ending
March 31, 2020
September 30, 2020

Millions of yen

35,24034,130Operating Profit% Millions of yen

0.2
(3.1)

16,58015,410Ordinary Profit% Millions of yen

0.5
(7.1)

Dividend per Unit Dividend in Excess
Excluding Excess ofof Accounting
Accounting Profits
Profits per Unit

Profit% Millions of yen

15,5401.0
14,420 (7.2)

15,09014,410

%

Yen

Yen

1.0
(4.5)

10,30010,40000Reference:

Profit per unit forecast = Profit forecast / Number of total investment units forecast for the end of the period(the March 2020 period): 10,890 yen; (the September 2020 period): 10,400 yen.
Note: For the period ending March 2020, expected dividends per unit are calculated as unappropriated retained earnings, deducting the reserve for
reduction entry (822 million yen).

*Other(1) Changes in Accounting Policy/Changes in Accounting Estimates/Restatements
Changes in accounting policy following revisions to accounting standards, etc.:
Other changes in accounting policy:
Changes in accounting estimates:
Restatements:

None
None
None
None

(2) Number of Units Outstanding
Number of Units Outstanding at End of Period (Including Treasury Units)
As of September 30, 2019
1,385,210 units
As of March 31, 2019
1,385,210 units
Number of Treasury Units at End of Period
As of September 30, 2019
0 units
As of March 31, 2019
0 units
Note: Please refer to the notes regarding per unit information on page 25 for the number of investment units on which the calculations ofprofit per unit are based.

* The Implementation Status of Statutory Audit
At the time of disclosure of these financial results, the audit procedures for the financial statements pursuant to the Financial
Instruments and Exchange Act have not yet finished.

* Explanation regarding the appropriate use of business operations forecasts, and other special remarks
1. Estimates for the Company’s future operating results contained in the financial results are forward-looking statements and are basedon information currently available to the Company and certain assumptions deemed reasonable. Actual results may differ substantiallyfrom the projections depending on a number of factors. In addition, these forecasts do not guarantee the stated dividends. As forassumptions underlying performance forecasts, please refer to the table entitled “Assumptions Underlying Performance Forecasts for
the March 2020 period (October 1, 2019 to March 31, 2020) and the September 2020 period (April 1, 2020 to September 30, 2020)”
on pages 7 and 8.

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JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

1. Business Policy and Operations(1)
Business Operations① Results for the Period
Japan Real Estate Investment Corporation (the “Company”) was established on May 11, 2001, following the Act on Investment
Trusts and Investment Corporations of Japan (“ITA”). The Company was listed on the real estate investment trust market of
the Tokyo Stock Exchange (“TSE”) on September 10, 2001 (Securities Code: 8952). Since its IPO, the size of the Company’s
assets (total acquisition price) has grown steadily, expanding from 92.8 billion yen to 1.023 trillion yen*, as of September 30,
2019. In the same period, the Company continued to grow steadily in the number of properties in its portfolio, from 20 to 73
properties.
During the September 2019 period (April 1, 2019 to September 30, 2019), the Japanese economy implied the weakness of theexport, due to the influence of the overseas commerce issues, however, the recovery of employment and income environment
was continued, and corporate revenue showed a steady change.
In the market for leased office space, the tendency of lowering vacancy rates was continued, and the attraction of tenants for
newly built buildings was favorably developed due to the high demand for office space. In addition, the gentle increase of therent level was continued not only in the Tokyo metropolitan areas but also nation-wide. The Company steadily accumulated
the increasing income and earnings, as a result of the more proactive rent revisions and the realization of the higher rents upontenant replacements due to the favorable rent market
In the investment market for real estate, favorable conditions for the financing environment continued, and transaction yields
were still at a low level against the backdrop of domestic and overseas investors’ desire to actively invest with the challenging
acquisition environment.
Under such market conditions, the Company made sound investments under the Investment Guideline of providing stabledividends to unitholders, which was set forth at the time of the Company’s listing on the TSE and remains unchanged to thisdate. Accordingly, the Company was able to provide a dividend at 10,197 yen, which is an increase by 500 yen compared withthe previous period.
* The acquisition price includes the selling price (614 million yen) of the part of Jingumae Media Square Building disposed on
October 30, 2009. The total acquisition price in the subsequent sections follows the same convention.
②

Results of Operations
a. Property Management and Acquisition and Disposition
In the market for leased office space in the fiscal period under review, as a result of our efforts to improve occupancy rates
through meticulous property leasing, the Company successfully maintained and achieved an occupancy rate of 99.3% as of
September 30, 2019.
As for property acquisitions and dispositions, on September 30, 2019, the Company disposed of a 50.0% quasi-co-ownershipinterest of the trust beneficiary right of Kawasaki Isago Building (Kawasaki-shi, Kanagawa) for 3.078 billion yen. The
disposition of the interest will take place in two steps, and an additional 50.0% quasi-co-ownership interest of the trust
beneficiary right of Kawasaki Isago Building will be disposed of for 3.078 billion yen on December 20, 2019.
As a result of the above, the Company’s portfolio at the end of the fiscal period under review, September 30, 2019, consistedof 73 properties, with a total acquisition price of 1.023 trillion yen. Net rentable floor area stood at 852,509 m2 with 1,500
tenants in total.
Note: LINK SQUARE SHINJUKU (land with leasehold interest), whose building ownership was disposed of on August 23,
2013, and Shibuya Cross Tower (land with leasehold interest), whose building ownership was disposed of on January
18, 2018, are included in the above number of properties and total acquisition price, but are not included in net rentablefloor area or total number of tenants.
The name of LINK SQUARE SHINJUKU (land with leasehold interest) was changed from Shinjuku South Gate Project(tentative name) (land with leasehold interest) on August 26, 2019.
b. Finance Activities
According to its financial policy, the Company aims to maintain the LTV ratio (ratio of interest-bearing debt to total assets)
at 30% to 40%, and strives to maintain a sound and conservative financial profile by staggering maturities, extension ofdurations and diversification of stable lenders among other possibilities, taking into consideration the borrowing costs andexisting relationships with lenders.
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JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Concerning new loans related to property acquisition and the refinancing of existing loans, the Company carries out loans
strategically and flexibly after giving close consideration to the above-mentioned means, as well as the possibility of
repayment with funds procured from issuing new investment units.
As a result of the above financing activities, as of September 30, 2019, the Company’s total interest-bearing debt was 389.9
billion yen at the same level as that of the end of the previous period. This amount consists of long-term loans totaling 343.5
billion yen (including the current portion of long-term loans totaling 46.5 billion yen), short-term loans totaling 13.5 billion
yen, and investment corporation bonds totaling 32.9 billion yen. The current LTV ratio stands at 40.4%.
The Company’s credit ratings as of September 30, 2019 were as follows:
Rating Agency

Credit Rating

S&P Global Ratings Japan Inc.

Long-term: A+; Short-term: A-1; Outlook: Stable

Moody’s Japan K.K.

Rating: A1; Outlook: Stable

Rating and Investment Information, Inc.

Rating: AA; Outlook: Stable③ Summary of Financial Results and Dividends
As a result of the above operations, in the period under review, the Company’s operating revenues increased 6.5% comparedwith the previous period, to 35.1 billion yen. On the earnings front, operating profit increased 13.4%, to 16.4 billion yen. After
deducting expenses for interest payments on loans and other costs, ordinary profit increased 14.5%, to 15.3 billion yen, andprofit increased 11.3%, to 14.9 billion yen.
Turning to dividends, the Company will make cash distributions using accounting profits based on the dividend policy
outlined in Article 32-1(2) of the Company’s Articles of Incorporation, in an amount that exceeds 90% of earnings available
for dividends as required by Article 67-15 of the Special Taxation Measures Act. Based on this policy, the Company decided
that the total amount of dividends, under the application of Article 65-7 “Exceptions of the Taxation in case of the Replacement
by Purchase of Specific Assets” of the Special Taxation Measures Act, making reduction entries, and also to secure retained
earnings brought forward, is 14,124,986,370 yen for the period under review, which is a multiple of 1,385,210－the numberof units outstanding as of September 30, 2019. Accordingly, the dividend per investment unit is 10,197 yen.
(2) Outlook① Operating Environment
The Japanese economy in the future is expected to follow a course of moderate recovery as a result of further improving
conditions for employment and income, as well as various financial policies in force. However, due to the influence of thetrend of trade issues on the world economy, the uncertainty of overseas economies, and the influence of changes in thefinancial capital market, the Company considers that it is necessary to give close attention to these downward risks.
In the market for leased office space, especially regarding the increase in office space supply in the Tokyo metropolitan areas,
the demand of the new supply properties is still high, and business performance is expected to maintain a high level in the
future. The Company expects that occupancy rates will maintain a high level for the time being, and the gentle upward trend
in rents will continue.
Regarding the investment market for real estate, low interest rates and positive investor confidence have still been prevailingand transactions carried out at stronger valuation are anticipated to continue. Therefore, it is important to continue to beproactive in searching for new properties while paying close attention to market trends.
a Property Management
Based on the conditions stated above, the Company will adhere to the following management policies in order to maintainand improve profitability.
(i) Strengthen relationships of trust with existing tenants
The Company has contracts with numerous property management companies. Each property management company has
developed relationships of trust with their tenants through their daily diligence in managing their respective properties
over the years. The Company will work to further solidify these relationships by anticipating tenants’ needs and providing
tailored services to bolster tenant satisfaction, thereby maintaining and improving occupancy rates and raising the rent
levels.
(ii) Fill vacancies promptly
4

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

In cooperation with the property management companies mentioned above and their leasing brokers, the Company will
actively seek the most appropriate tenants for each property, based on location and features, in order to fill current andanticipated vacancies without delay. Furthermore, the Company will work to identify additional needs for floor area
among the existing tenants.
(iii) Stabilize revenues and earnings
With the aim of stabilizing revenues and earnings, the Company will endeavor to promote fixed lease agreements andsecure long-term leasing with its large-scale tenants.
(iv) Reduce management costs
The Company has introduced sound competitive principles to a number of property management companies so that they
perpetually review and improve their management systems and cost structures. Along with this, the Company endeavors
to ensure and enhance tenant satisfaction.
b Property Acquisitions and Dispositions
The Company has adopted the following policies for acquiring properties.
(i) To access property information quickly, the Company continues to enhance its property information channels whileworking to develop new channels.
(ii) In its acquisition activities, the Company continues to meticulously monitor and examine economic, physical, and legal
factors, including rights-related issues, when selecting properties. In particular, with regard to the structure of buildings,
the Company requires buildings to meet or exceed new earthquake-resistant standards, verifies the need for renovations
by capturing current conditions accurately based on engineering reports, and exclusively targets properties capable ofmaintaining a competitive edge in terms of the facilities they offer over the medium to long term.
(iii) In accordance with its acquisition policies, the Company shall maintain its portfolio so that 70% or more of the portfolio
properties are located within the Tokyo metropolitan area, with the remaining 30% or fewer located in other major cities.
Under these policies, the Company will continue to acquire highly competitive properties. At the same time, in order tofurther improve the quality of its portfolio, the Company will remain open to the replacement of portfolio properties withdue consideration at the right time.
c Financial Policies
The Company has adopted the following financial policies.
(i) In principle, the Company shall maintain an LTV ratio (including investment corporation bonds) below 65%. To ensure
an even lower interest-bearing debt ratio, the Company adopts the conservative target level of 30% to 40%.
(ii) The Company shall set the ceiling for the combined total of loans and investment corporation bonds at 1 trillion yen.
(iii) When obtaining a loan, the Company shall only negotiate with qualified institutional investors (limited to those defined
under Article 67-15 of the Special Taxation Measures Act) before executing a loan agreement.
(iv) With the purpose of maintaining liquidity at an appropriate level, the Company may establish preliminary borrowing
frameworks such as overdraft agreements and commitment line agreements, or may conclude preliminary contracts forloans, as needed.
(v) The Company aims for the best possible execution of financial transactions by negotiating with numerous financial
institutions.
② Performance Forecasts
The Company’s forecasts for the March 2020 period (October 1, 2019 to March 31, 2020) are as follows: operating revenues
totaling 35.2 billion yen, operating profit totaling 16.5 billion yen, ordinary profit totaling 15.5 billion yen, and profit totaling
15.0 billion yen. The Company plans to declare a per-unit cash dividend of 10,300 yen.
The Company’s forecasts for the September 2020 period (April 1, 2020 to September 30, 2020) are as follows: operating
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JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

revenues totaling 34.1 billion yen, operating profit totaling 15.4 billion yen, ordinary profit totaling 14.4 billion yen, andprofit totaling 14.4 billion yen. The Company plans to declare a per-unit cash dividend of 10,400 yen.
Regarding the assumptions underlying these forecasts, please see pages 7 and 8 entitled “Assumptions Underlying
Performance Forecasts for the March 2020 period (October 1, 2019 to March 31, 2020) and the September 2020 period (April
1, 2020 to September 30, 2020).” Operating revenues, operating profit, ordinary profit, profit, and cash dividend per unit
might vary depending on changes that could occur in the market situation.

6

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Assumptions Underlying Performance Forecasts for the March 2020 period (October 1, 2019 to March 31, 2020)and theSeptember 2020 period (April 1, 2020 to September 30, 2020)
Item
Accounting
periodAssumption
・The March 2020 period: October 1, 2019 to March 31, 2020 (183 days)
・The September 2020 period: April 1, 2020 to September 30, 2020 (183 days)
・The Company’s property portfolio consists of 73 properties at the end of the September 2019 period, and will

Number ofproperties heldby theCompany

dispose of a 50.0% quasi-co-ownership interest of the trust beneficiary right of Kawasaki Isago Building on
December 20, 2019.
・The Company’s property portfolio consists of 72 properties at the end of the March 2020 and the September

Number of units
outstanding

・The Company assumes that the total number of units outstanding is 1,385,210 at the end of September 30, 2019.

2020, assuming the property is disposed of as noted above.
・The actual portfolio might differ from this assumption due to additional property acquisitions and dispositions.

・The Company maintains an LTV ratio within a range between 30% and 40% as an operational guideline.
・The Company repaid the long-term loan of 3.0 billion yen with cash reserves on October 1, 2019. And, theInterest-bearing
debt

Company executed a loan of 6.0 billion yen due for repayment of the existing long-term loan of 6.0 billion yen on
November 1, 2019, and also the Company executed a loan of 8.5 billion yen on November 15, 2019 due forrepayments of the existing long-term loan of 3.0 billion yen and of the existing short-term loan of 5.5 billion yen.
In addition, the Company executed a long-term loan of 11.0 billion yen on November 15, 2019 to procure funds
for repayments of the existing long-term loan of 3.0 billion yen, the existing long-term loan of 3.0 billion yen, andthe existing short-term loan of 5.0 billion yen. As a result, the balance of interest-bearing debt is 386.9 billion yen
as of November 15, 2019.
・In the March 2020 period, as of November 15, 2019, the Company will execute a long-term loan of 1.0 billion
yen due for repayment of the existing long-term loan of 1.0 billion yen. After the execution of this loan, theCompany will refinance the long-term loans due for repayments during the period totaling 14.5 billion yen(repayment dates: December 16, 2019, January 7, 2020, and January 15, 2020) and the short-term loans due forrepayments during the period totaling 14.0 billion yen (repayment dates: December 26, 2019, February17, 2020,
and March 30, 2020).There are no investment corporation bonds set to mature in the March 2020 period.
・In the September 2020 period, as of November 15, 2019, the Company will refinance the long-term loans due
for repayments during the period totaling 13.0 billion yen (repayment dates: June 15, 2020, and July 3, 2020).
There are no investment corporation bonds set to mature in the September 2020 period.

Operatingrevenues

・Revenues from portfolio properties held by the Company are calculated by taking into consideration new contractconclusions and existing contract cancellations fixed as of November 15, 2019, and by factoring in potential
variables that reflect recent market conditions for leased office space, such as rent levels and occupancy rates.
・In the March 2020 period, the company expects a gain on the disposition of 50% quasi-co-ownership interest of
the trust beneficiary right of Kawasaki Isago building, 1,596 million yen.

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JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Item

Operatingexpenses

Nonoperating
expensesAssumption
・ Of the taxes applicable to the Company, property taxes, city planning taxes and depreciable property taxes
corresponding to the relevant fiscal period have been recorded as property-related expenses. However, when a property
is acquired at a point during the period used for the calculation of property tax, a property tax adjustment is levied thattakes into account the date of the transfer of the new acquisition. The amount of the adjustment is factored into theacquisition price and therefore not recorded as an expense in the relevant fiscal period. In addition, the Company
assumes the 2020 property taxes, city planning taxes, and depreciable property taxes for properties acquired in 2019
to be as follows:
50 million yen for Front Place Minami-Shinjuku, and 12 million yen for Daido Seimei Niigata Building
・The property and other taxes will 3,240 million yen in the March 2020 period and 3,300 million yen in the September
2020 period.
・The depreciation will be 6,370 million yen in the March 2020 period and 6,320 million yen in the September 2020
period.
・Property management expenses are assumed by taking past operational results into consideration.
・Repair expenses may vastly differ from the projected amounts as such costs fluctuate significantly from one fiscal
period to another, and because these costs are not recurring.
・The non-operating expenses, such as interest expenses on loans and investment corporation bonds, will be 1,030
million yen in the March 2020 period and 1,000 million yen in the September 2020 period.
・The Company applies “Exceptions of the Taxation in case of the Replacement by Purchase of Specific Assets” under

Dividend
amounts

Article 65-7 of the Special Taxation Measures Act, and made a reduction entry amounting 1,256 million yen out of thegain of 1,583 million yen on the disposition of a 50.0% quasi-co-ownership interest of the trust beneficiary right of
Kawasaki Isago Building for the September 2019 period. The balance of the internal reserves after making the reduction
entry as above was 2,127 million yen. In addition, the Company will make a reduction entry amounting 1,266 million
yen for the disposition of a 50.0% quasi-co-ownership interest on December 20, 2019.
・In the March 2020 and the September 2020 periods, the gains on the reversal of the reduction entry, corresponding
to the depreciation of the replaced property, will be subject to cash distributions.
・ The Company shall not distribute dividends in excess of accounting profits. Thus, based on its Articles ofIncorporation, the Company shall make cash distributions of the amount that is higher than 90% of earnings available
for dividends up to the accounting profits.

Other

・No revisions will be made in such areas as laws, tax systems, accounting standards, and listing rules as well as
regulations of the Investment Trusts Association, Japan to the extent that impact the above-mentioned forecasts.
・No unprecedented or significant changes will occur to the general market trends or real estate market conditions orother factors.
・In addition to the income taxes deferred on the reserves for reduction entry, the corporate and other taxes arecalculated by taking into consideration the taxes in relation to the amortization of term leasehold interest for buildings
and asset retirement obligations.

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JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

3. Financial Statements(1) Balance Sheets
Thousands of yen
As of March 31, 2019
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
LandConstruction in progress
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Total property, plant and equipment
Intangible assets
Land leasehold interests
Land leasehold interests in trust
Easement
Other
Total intangible assets

9

As of September 30, 201918,333,626
6,049,324
403,661
303,936
27,34925,117,897

26,723,523
6,881,014
324,798
310,203
42,66434,282,203

254,165,807(94,674,805)
159,491,001
2,986,067(925,182)
2,060,884
3,353,312(2,342,903)
1,010,408
457,745(313,936)
143,808
458,625,391
3,317
103,203,658(27,987,992)
75,215,666
998,400(297,385)
701,015
1,071,048(787,277)
283,770
72,883(38,496)
34,386
230,532,021
7,979
928,109,652

254,826,921(98,967,794)
155,859,126
2,987,203(973,424)
2,013,779
3,358,886(2,437,315)
921,570
468,865(326,598)
142,266
458,682,518
6,527
102,939,399(29,445,798)
73,493,601
991,213(319,524)
671,688
1,041,321(772,373)
268,947
72,594(41,559)
31,035
229,768,734
28,540921,888,337

5,675,045
444,160
828,095
7,938
6,955,239

5,659,215
444,160
828,095
6,221
6,937,692

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Thousands of yen
As of March 31, 2019
Investments and other assets
Investment securities
Leasehold and guarantee deposits
Long-term prepaid expenses
Other
Total investments and other assets
Total non-current assets
Deferred assets
Investment corporation bond issuance costs
Total deferred assets
Total assets
Liabilities
Current liabilities
Operating accounts payable
Short-term borrowings
Current portion of long-term borrowings
Accounts payable - otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Other
Total current liabilities
Non-current liabilities
Investment corporation bonds
Long-term borrowings
Deposits received from tenants
Deferred tax liabilities
Asset retirement obligations
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus
Voluntary retained earnings
Reserve for tax purpose reduction entry
Total voluntary retained earnings
Unappropriated retained earnings
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets

10

As of September 30, 2019577,168
1,573,847
118,528
1,138,615
3,408,160
938,473,052

577,168
1,573,847
61,263
991,6033,203,883
932,029,913

85,56885,568
963,676,518

78,18878,188966,390,305

1,834,640
8,500,000
49,000,000
1,705,853
429,796
11,401
598,810
3,338,764
8,920
65,428,189

1,600,860
13,500,000
46,500,000
1,801,587
429,676
8,895
991,141
3,295,905
7,924
68,135,991

32,993,175
299,500,000
53,863,645
289,105
345,493386,991,419
452,419,608

32,993,175
297,000,000
54,419,220
722,903
348,974
385,484,272
453,620,264

497,241,216

497,241,216

550,359
550,359
13,465,334
14,015,693
511,256,909
511,256,909
963,676,518

548,259548,259
14,980,566
15,528,825
512,770,041
512,770,041
966,390,305

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(2) Statements of Income
Thousands of yen
For the period
from October 1, 2018
to March 31, 2019
Operating revenues
Rent revenues
Other lease business revenues
Gain on sales of real estate properties
Total operating revenues
Operating expenses
Expenses related to lease business
Asset management fee
Asset custody fee
Administrative service fees
Directors’ compensations
Commission expenses
Other operating expenses
Total operating expenses
Operating profit
Non-operating income
Interest income
Dividend income
Reversal of distributions payable
Other
Total non-operating income
Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds
Amortization of investment corporation bondissuance costs
Other
Total non-operating expenses
Ordinary profit
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitRetained earnings brought forward
Unappropriated retained earnings

11

For the period
from April 1, 2019
to September 30, 2019

32,783,783
238,662－
33,022,445

33,522,024
58,1891,583,993
35,164,207

16,819,683
1,296,545
62,191
132,759
7,800
90,96264,004
18,473,946
14,548,499

16,909,983
1,409,620
63,120132,329
7,800
83,212
63,90018,669,967
16,494,240

152
－
2,581
2,676
5,410

134
11,6811,347
013,163906,390
161,833

907,457
163,799

6,457

7,379

37,875
1,112,557
13,441,352
13,441,352
11,423(1,128)
10,294
13,431,058
34,276
13,465,334

38,147
1,116,783
15,390,620
15,390,620
11,309433,798
445,107
14,945,513
35,053
14,980,566

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(3) Statements of Changes in Unitholders’ Equity
For the period from October 1, 2018 to March 31, 2019
Thousands of yen

Unitholders’ equity
Surplus
Voluntary retained earnings
Total
surplusTotal
unitholders’equity13,307,368

13,737,204

510,978,420

138,488(138,488)－－(1,657)

1,657

－

－

(16,307)

16,307－－

Dividends of surplus(13,152,568)(13,152,568)(13,152,568)

Profit13,431,058

13,431,058

13,431,058

Unitholders’capitalBalance at beginning of
the period
Changes in items during
the period
Provision of reserve for tax
purpose reduction entry
Reversal of reserve for tax
purpose reduction entry
Reversal of reserve for
special account for tax
purpose reduction entry

497,241,216

Reserve fortax purpose
reduction
entry

Reserve for
specialaccount for
tax purpose
reduction
entry

Total
voluntary
retainedearnings

413,528

16,307429,835

138,488(1,657)(16,307)

Unappropriated retained
earnings

Total changes in items during
the period－

136,831(16,307)

120,523

157,965

278,489

278,489

Balance at end of the period

497,241,216

550,359－

550,359

13,465,334

14,015,693

511,256,909

Total
net assets

Balance at beginning of
the period
Changes in items during
the period
Provision of reserve for tax
purpose reduction entry
Reversal of reserve for tax
purpose reduction entry
Reversal of reserve for
special account for tax
purpose reduction entry

510,978,420－－－

Dividends of surplus(13,152,568)

Profit13,431,058

Total changes in items during
the period

278,489

Balance at end of the period

511,256,909

12

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

For the period from April 1, 2019 to September 30, 2019
Thousands of yen

Unitholders’ equity
Surplus
Unitholders’capitalBalance at beginning of
the period
Changes in items during
the period
Reversal of reserve for tax
purpose reduction entry

497,241,216

Voluntary retained
earnings
Reserve fortax purpose
reduction
entry

Total
voluntary
retainedearnings

Unappropriated retained
earnings

Total
surplusTotal
unitholders’equityTotal
net assets

550,359

550,359

13,465,334

14,015,693

511,256,909

511,256,909(2,100)(2,100)

2,100

－

－

－

Dividends of surplus(13,432,381)(13,432,381)(13,432,381)(13,432,381)

Profit14,945,513

14,945,513

14,945,513

14,945,513

Total changes in items during
the period－(2,100)(2,100)1,515,232

1,513,131

1,513,131

1,513,131

Balance at end of the period

497,241,216

548,259548,259

14,980,566

15,528,825

512,770,041

512,770,041

13

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(4) Statements of Cash Distributions
For the period
from October 1, 2018
to March 31, 2019

For the period
from April 1, 2019
to September 30, 2019

Amount (Yen)Amount (Yen)I Retained earnings

13,465,334,195

14,980,566,219

2,100,289

2,099,020

13,432,381,370

14,124,986,370(9,697)(10,197)－822,033,757

35,053,114

35,645,112

II Reversal of voluntary retained earnings
Reversal of reserve for tax purpose
reduction entry
III Cash distribution(Dividend per investment unit)
IV Voluntary retained earnings
Provision of reserve for tax purpose
reduction entry
V Retained earnings brought forward

Computation Method for Determining

The Company will make cash

The Company will make cash

Dividends

distributions using accounting profits
based on the cash distribution policy
outlined in Article 32-1(2) of theCompany’s Articles of Incorporation, in
an amount that exceeds 90% of the“amount of distributable profit” as set
forth in Article 67-15 of the Special
Taxation Measures Act. Based on thispolicy, the Company has decided that the
total amount of dividends, which is set not
to exceed the unappropriated retained
earnings and also to secure retained
earnings brought forward, is¥13,432,381,370 for the period underreview, which is a multiple of 1,385,210— the number of units outstanding as ofMarch 31, 2019. Furthermore, theCompany does not pay out dividends thatexceed accounting profits as outlined in
Article 32-1(3) of the Company’s Articles
of Incorporation.

distributions using accounting profits
based on the cash distribution policy
outlined in Article 32-1(2) of theCompany’s Articles of Incorporation, in
an amount that exceeds 90% of the“amount of distributable profit” as set
forth in Article 67-15 of the Special
Taxation Measures Act. Based on thispolicy, the Company has decided that the
total amount of dividends, under theapplication of Article 65-7 “Exceptions of
the Taxation in case of the Replacement
by Purchase of Specific Assets” of theSpecial Taxation Measures Act, making
reduction entries, and also which is set not
to exceed the unappropriated retained
earnings and to secure retained earnings
brought forward, is ¥14,124,986,370 for
the period under review, which is amultiple of 1,385,210 — the number ofunits outstanding as of September 30,
2019. Furthermore, the Company does not
pay out dividends that exceed accounting
profits as outlined in Article 32-1(3) of theCompany’s Articles of Incorporation.

14

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(5) Statements of Cash Flows
Thousands of yen
For the period
from October 1, 2018
to March 31, 2019
Cash flows from operating activities
Profit before income taxes
Depreciation
Amortization of investment corporation bond issuancecosts
Dividend income
Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in supplies
Decrease (increase) in prepaid expenses
Decrease in property, plant and equipment in trust due tosaleIncrease (decrease) in operating accounts payable
Increase (decrease) in accounts payable - other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in accrued expenses
Increase (decrease) in advances received
Decrease (increase) in long-term prepaid expenses
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Proceeds from refund of leasehold and guarantee deposits
Refund of leasehold and guarantee deposits received
Proceeds from leasehold and guarantee deposits received
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from short-term borrowings
Repayments of short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of investment corporation bonds
Payments of investment corporation bond issuance costs
Distributions paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period

15

For the period
from April 1, 2019
to September 30, 201913,441,352
6,402,235

15,390,620
6,435,380

6,457

7,379

－
(152)
1,068,224(34,563)－
32,071(11,681)(134)
1,071,256
78,863(663)(6,267)－

1,423,739(662,311)(1,778)459,018
131
138,635
106,250(202,162)
20,753,408
116(1,079,304)(9,181)
19,665,038

75,370
153,831392,331(131)(42,859)
57,265(86,664)
24,937,637
11,871(1,071,245)(13,815)
23,864,447(12,197,475)(961,265)－(997,779)
2,007,931(12,148,589)(757,328)(1,020,222)
2,680(995,148)
1,556,781(1,213,237)

3,000,000(16,000,000)
18,000,000(9,500,000)
10,000,000(50,315)(13,150,767)(7,701,082)(184,632)
24,567,583
24,382,950

10,500,000(5,500,000)
10,500,000(15,500,000)－－(13,429,623)(13,429,623)
9,221,586
24,382,950
33,604,537

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(6) Notes Concerning Going Concerns Assumption“Not applicable”(7) Summary of Significant Accounting Policies
Investment securities
Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving averagemethod.
Property and equipment, depreciation and impairment (except for leased assets)
Property and equipment is stated at cost, less accumulated depreciation. The cost of land, buildings and building improvements includes
the purchase price of property and acquisition costs. Depreciation is calculated on a straight-line basis over the estimated useful lives of
the assets ranging as stated below:
Buildings....................................................................... 2-61 years
Structures...................................................................... 2-60 years
Machinery and equipment............................................ 2-18 years
Tools, furniture and fixtures......................................... 2-29 years
Expenditures for repairing expenses are charged to income as incurred. Significant renewals and betterments are capitalized.
The Company reviews fixed assets for impairment whenever events or changes in circumstances indicate that the carrying amount of
its fixed assets may not be recoverable. According to the standard set by the Accounting Standards Board of Japan, companies are required
to recognize an impairment loss in their statement of income if certain indicators of asset impairment exist and the book value of an asset
exceeds the undiscounted sum of future cash flows of the asset. The standard states that impairment losses should be measured as theexcess of the book value over the higher of (i) the fair market value of the asset, net of disposition costs, and (ii) the present value of
future cash flows arising from ongoing utilization of the asset and from disposal after asset use. The standard covers land, factories,
buildings and other forms of property, plant and equipment as well as intangible assets. Fixed assets are grouped at the lowest level forwhich there is identifiable cash flows that are independent of cash flows of other groups of assets.
Intangible assets
Intangible assets primarily consist of leasehold rights and easement, which are stated at cost. Amortization of a term leasehold interest forbusiness use is calculated by the straight-line method based on the period of agreement.
Leased assets
Leased assets under finance lease transactions that do not transfer ownership of the leased assets to the lessees are capitalized anddepreciated by the straight-line method over the lease term with no residual value.
Deferred charges
Investment corporation bond issuance costs are amortized using the straight-line method over the redemption periods.
Investment unit issuance expenses are charged to income as incurred. The underwriters’ economic remunerations for underwriting theoffering are not recognized as investment unit issuance expenses in the financial statements since such costs are not paid by the Company
as commission under the so-called “spread-method”.
Under the spread-method, the difference between the offer price (the price paid by the unitholder) and the issue price (the price received
by the Company) is retained by the underwriters as remuneration.
Revenue recognition
Revenues from leasing of office space are recognized as rent accrued over the lease period.
Taxes on property and equipment
Property and equipment is subject to property taxes and city planning taxes on a calendar year basis. These taxes are generally charged
to income during the period. The sellers of the properties are liable for property taxes for the calendar year including the period from thedate of purchase by the Company through the end of the year since the taxes are imposed on the owner registered on the record as ofJanuary 1 based on the assessment made by the local government. The Company pays the amount equivalent to the property taxes to thesellers applicable to the period since acquisition and includes the amount equivalent to the taxes in the purchase price of each property
and capitalizes it as a cost of the property.
Consumption taxes
Consumption taxes withheld and consumption taxes paid are not included in the statements of income. The consumption taxes paid are
generally offset against the balance of consumption taxes withheld. As such, the excess of payments over amounts withheld are includedin current assets and the excess of amounts withheld over payments are included in current liabilities.
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks, and short-term investments, which are highly liquid, readily
convertible to cash and with insignificant risk of price fluctuation, with original maturity of three months or less.
Hedge accounting
The Company enters into derivative transactions to hedge against interest-rate risk and other forms of risk based on the risk management
policies outlined in the Company’s Articles of Incorporation. The Company uses interest-rate swap transactions for hedging fluctuationsin interest rates on floating-rate loans. The Company has also executed currency swap transactions as a method of hedging against
16

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

currency exchange fluctuation risks. Deferred hedge accounting is generally used for such interest-rate swaps and currency swap
transactions, and the effectiveness of hedging is measured by comparing the total cash flow fluctuation of the hedged item and that of thehedging instrument since the inception of the hedge.
For interest-rate swaps and currency swaps that qualify for hedge accounting and meet certain criteria provided under Japanese GAAP,
however, the Company applies special accounting treatment. Under such special accounting treatment, the differentials paid or received
under the swap agreements are recognized and included in interest expense of the hedged loans, and the interest-rate swaps and currency
swaps are not required to be separately valued. For interest-rate swaps and currency swaps that meet the specific criteria for such special
accounting treatment, ongoing assessments of hedge effectiveness are not required and hence not performed.

17

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(8) Notes to Financial Statements(Notes to Balance Sheets)a.
Commitment line agreement
The Company has signed commitment line agreements with three banks.
Thousands of yen
As of March 31, 2019b.

As of September 30, 2019

Total amount of commitment line agreement
Debt financing balance

60,000,000－

60,000,000－

Balance

60,000,000

60,000,000

Minimum net assets required by Article 67, Paragraph 4 of the ITA
Thousands of yen
As of March 31, 2019

As of September 30, 201950,00050,000(Notes to Statements of Income)a.
Breakdown of property-related revenues and expenses
Thousands of yen
For the period from October 1, 2018
to March 31, 2019b.

For the period from April 1, 2019
to September 30, 2019

Property-Related Revenues
Rent revenues
Rental revenues
Common service charges
Parking revenues
Other rental revenues
Other lease business revenues
Cancellation charges
Other miscellaneous revenues

33,022,445
32,783,783
26,261,656
2,965,802
768,9452,787,379
238,662
159,038
79,62333,580,214
33,522,024
27,114,478
2,845,225
774,730
2,787,590
58,18935,524
22,665

Property-Related Expenses
Expenses related to lease business
Property management expenses
Utilities expenses
Property and other taxes
Casualty insurance
Repairing expenses
Depreciation
Other rental expenses
Property-Related Profits

16,819,683
16,819,683
3,691,389
2,493,875
3,021,982
50,421
979,805
6,400,633
181,576
16,202,762

16,909,983
16,909,983
3,637,328
2,570,022
3,256,368
50,398
767,963
6,433,778
194,123
16,670,230

Breakdown of gain on sales of real estate properties
For the period from October 1, 2018 to March 31, 2019
“Not applicable”
For the period from April 1, 2019 to September 30, 2019
Thousands of yen

Kawasaki Isago Building (50% quasi-co-ownership interest)
Revenue from sale of real estate property
Cost of real estate property sold
Other sales expenses
Gain on sales of real estate properties

18

3,078,234
1,423,739
70,5001,583,993

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(Changes in Unitholders’ Equity)
Total number of investment units issuable
and number of units outstanding

As of March 31, 2019

As of September 30, 2019

Total number of investment units issuable

4,000,000 units

4,000,000 units

Number of units outstanding

1,385,210 units

1,385,210 units(Supplemental Cash Flow Information)
Cash and cash equivalents
The following table represents a reconciliation of cash and cash equivalents at March 31, 2019 and September 30, 2019:
Thousands of yen
As of March 31, 2019
As of September 30, 2019

Cash and deposits
Cash and deposits in trust
Time deposits with maturities of more than three months
Cash and cash equivalents

18,333,626
6,049,324－
24,382,950

26,723,523
6,881,014－
33,604,537(Financial Instruments)
a. Status of financial instruments(i) Policies for dealing financial instruments
Concerning the financing of property acquisitions, the Company shall use several funding sources including bank loans, the issuanceof investment corporation bonds and the issuance of investment units. When executing such financing activities, the Company
endeavors to retain the ability to secure stable and low-cost financing by maintaining high credit ratings and thereby limiting thefinancial covenants that may restrict the financial flexibility of the Company. To achieve these goals, the Company intends to further
develop and reinforce the confidence of debt holders and rating agencies in the Company by bolstering the capital base and controlling
the loan-to-value ratio (“LTV”) at an adequate level.
In order to hedge against future interest-rate fluctuations, the Company may enter into derivative transactions, which shall be
executed solely for the purpose of hedging against interest-rate fluctuation and other risks, and not for speculative purposes.
With respect to management of excess funds, as a matter of policy the Company uses time deposits as its main vehicle, while
securities and monetary claims are also eligible for such investment.
(ii) Characteristics and risk profile of each financial instrument and risk management system
The Company regularly re-evaluates the appropriateness and effectiveness of its risk management system in order to improve on it.
The characteristics and risk profile of financial instruments and the system in place to manage such risks are as follows:
The deposits, which are typically large time deposits used to manage excess funds, are exposed to the credit risk of the deposit-taking
financial institutions. The Company manages credit risk by restricting the tenor of the deposit to relatively short periods and setting aminimum credit rating requirement for the deposit-taking financial institutions.
The funding proceeds from borrowings and issues of investment corporation bonds are applied mainly to acquire real estate
properties and repay outstanding loans and bonds. While floating-rate short-term and long-term loans are exposed to the risk ofinterest-rate hikes, such risk is mitigated by the Company’s low LTV and relatively high percentage of long-term fixed-rate debts
within the total borrowing. The Company may also exercise hedging by means of derivative transactions (interest-rate swap
transactions) in order to mitigate the risk of fluctuation concerning the floating-rate long-term loans, thereby effectively stabilizing
the overall interest rates on the loans. Foreign currency-denominated loans are also exposed to currency exchange and interest-ratefluctuation risk. However, the Company uses derivative transactions as a method of hedging against these risks (interest-rate andcurrency swap transactions). Foreign currency investment corporation bonds are also exposed to currency exchange risk. However,
the Company uses derivative transactions as a method of hedging against the risks (currency swap transactions). For more detailed
information on the hedge accounting method, please refer to the previous section “(7) Summary of Significant Accounting Policies:
Hedge accounting”.
Loans and investment corporation bonds involve liquidity risk at the time of maturity. To manage such liquidity risk, the Company
implements measures such as ① maintaining and strengthening its ability to access equity markets to secure funds, ② maintaining
commitment lines with major financial institutions (There is no amount outstanding under the facility as of March 31, 2019 and
September 30, 2019) and ③ preparing monthly financial plans.
(iii) Supplementary note regarding fair value of financial instruments
The fair values of financial instruments presented in this report are based on their market value, and in cases where market values are
not available, reasonably calculated values are presented. Since calculation of fair value is based on certain assumptions, the fair value
could differ depending on the assumptions used. In addition, the contract value of derivative transactions, which is presented in thefollowing section entitled “Derivative Transactions”, is not an exact representation of market risk attributable to derivative transactions.

19

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

b. Fair value of financial instruments
Fair value of financial instruments, their values carried on the balance sheets and the differences between them as of March 31, 2019 and
September 30, 2019 are as follows.
The financial instruments whose fair values are extremely difficult to estimate are excluded from the following schedule (Note 2):
Thousands of yen
As of March 31, 2019

Book value *18,333,626
6,049,324(8,500,000)(49,000,000)(32,993,175)(299,500,000)－(1) Cash and deposits(2) Cash and deposits in trust(3) Short-term borrowings(4) Current portion of long-term borrowings(5) Investment corporation bonds(6) Long-term borrowings(7) Derivative transactions

Fair value *18,333,626
6,049,324(8,500,000)(49,196,138)(34,636,903)(303,623,135)－

Difference *－－－(196,138)(1,643,728)(4,123,135)－* Liabilities are shown in parentheses.
Thousands of yen
As of September 30, 2019

Book value *26,723,523
6,881,014(13,500,000)(46,500,000)(32,993,175)(297,000,000)－(1) Cash and deposits(2) Cash and deposits in trust(3) Short-term borrowings(4) Current portion of long-term borrowings(5) Investment corporation bonds(6) Long-term borrowings(7) Derivative transactions

Fair value *26,723,523
6,881,014(13,500,000)(46,590,431)(34,481,445)(300,056,730)－

Difference *－－－(90,431)(1,488,270)(3,056,730)－* Liabilities are shown in parentheses.
Notes: 1. Measurement of fair value of financial instruments and matters concerning derivative transactions(1) Cash and deposits and (2) Cash and deposits in trust
Due to short tenor, the book values of these assets are reasonable approximations of the present value of these assets and hence usedas their fair value.
(3) Short-term borrowings
Since these loans’ tenor is short and rates are reset at a short interval, the book values of these liabilities are reasonable approximationsof their present value and hence used as their fair values.
(4) Current portion of long-term borrowings and (6) Long-term borrowings
For loans with floating interest rates, since the interest rates on such loans reflect market rates reasonably well over the short term
and their book values are good approximations of their fair values, the book values are presented as their fair values. (However, thefair values of floating-rate long-term loans (please refer to the following “Derivative Transactions, b. Derivatives designated as
hedging instruments”) hedged by an interest-rate and currency swap subject to integrated treatment or by an interest-rate swap subject
to special accounting treatment are calculated by discounting the aggregated principal and interest on such loans using reasonableestimates of the rates that would be applicable if the Company were to refinance the existing loans for the remaining period to maturity
under the prevailing market condition.) The fair values of long-term loans with fixed interest rates are calculated by discounting theaggregated amounts of the principal and the interest of the loans by the rates that are reasonably estimated to be applicable if theCompany were to refinance the existing loans for the remaining period to maturity.
(5) Investment corporation bonds
Their fair values are based on reference prices published by a financial data provider where available. When reference prices are notavailable, their fair values are calculated by discounting the aggregate of the principal and interest by nominal rates assumed
applicable if the loans were refinanced for the duration of the current maturity. (However, the fair values of investment corporation
bonds (please refer to the following “Derivative Transactions, b. Derivatives designated as hedging instruments”) hedged by acurrency swap subject to allocation treatment are calculated by discounting the aggregate of the principal and interest integrated withthe currency swap by nominal rates assumed applicable if the loans were refinanced for the duration of the current maturity.)(7) Derivative transactions
Please refer to the following section entitled “Derivative Transactions”.
2. Financial instruments whose fair values cannot be reliably measured
Thousands of yen
As of September 30, 2019577,168
577,168
53,863,645
54,419,220

As of March 31, 2019(1) Non-listed stock *1(2) Deposits received from tenants *2*1. With regard to non-listed stock, which does not have a quoted market price in an active market and whose cash flows are not reasonably
estimated, fair value cannot be reliably measured and it is therefore presented at book value.
*2. With regard to deposits received from tenants, which do not have a quoted market price in an active market and reasonably estimatedtenor, their cash flows cannot be reliably measured and they are therefore presented at their book value.

20

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）
3. Redemption schedule for monetary claims after the closing dateThousands of yen
As of March 31, 2019
Cash and deposits
Cash and deposits in trust
Total

1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

18,333,626
6,049,324
24,382,950

—
—
—

—
—
—

—
—
—

4 to 5 years

Over 5 years

—
—
—

—
—
—

Thousands of yen
As of September 30, 2019
Cash and deposits
Cash and deposits in trust
Total

1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

26,723,523
6,881,014
33,604,537

—
—
—

—
—
—

—
—
—

4 to 5 years

Over 5 years

—
—
—

—
—
—

4. Repayment schedule for investment corporation bonds, long-term borrowings and other interest-bearing debt after the closing dateThousands of yen
As of March 31, 2019
Short-term borrowings
Investment corporation bonds
Long-term borrowings
Total

1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years

8,500,000—
49,000,000
57,500,000——
41,000,000
41,000,000——
51,700,000
51,700,000——
48,500,000
48,500,000—
10,000,000
39,500,000
49,500,000—
22,993,175
118,800,000
141,793,175

Thousands of yen
As of September 30, 2019
Short-term borrowings
Investment corporation bonds
Long-term borrowings
Total

1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years

13,500,000—
46,500,000
60,000,000——
52,200,000
52,200,000——
51,000,000
51,000,000——
48,500,000
48,500,000—
10,000,000
42,300,000
52,300,000—
22,993,175
103,000,000
125,993,175

21

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(Derivative Transactions)a. Derivatives not designated as hedging instruments
As of March 31, 2019
“Not applicable”
As of September 30, 2019
“Not applicable”
b. Derivatives designated as hedging instruments
As of March 31, 2019
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:(Thousands of yen)

Derivative
accounting method
Special Treatment forinterest-rate swap
Integrated Treatment (Special
Treatment and Allocation
Treatment) for interest-rate andcurrency swap

Allocation Treatment for
currency swap

Type ofderivative transaction
Receive floating,pay fixed interest-rate
swap transactions
Receive floating USD,
pay fixed JPY,
interest-rate and currency
swap transactions (withinitial and final exchange)
Receive fixed USD,
pay fixed JPY, currency
swap transactions (withinitial and final exchange)

Hedged item

Contract valueOver one year

Fair value

Measurementof fair value

Long-term
borrowings

63,300,000

57,300,000*1―Long-term
borrowings

10,000,000

10,000,000*1―Investment
corporation bonds

2,993,175

2,993,175*2―

As of September 30, 2019
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:(Thousands of yen)

Derivative
accounting method
Special Treatment forinterest-rate swap
Integrated Treatment (Special
Treatment and Allocation
Treatment) for interest-rate andcurrency swap

Allocation Treatment for
currency swap

Type ofderivative transaction
Receive floating,pay fixed interest-rate
swap transactions
Receive floating USD,
pay fixed JPY,
interest-rate and currency
swap transactions (withinitial and final exchange)
Receive fixed USD,
pay fixed JPY, currency
swap transactions (withinitial and final exchange)

Hedged item

Contract valueOver one year

Fair value

Measurementof fair value

Long-term
borrowings

63,300,000

57,300,000*1―Long-term
borrowings

10,000,000

10,000,000*1―Investment
corporation bonds

2,993,175

2,993,175*2―*1. The derivative transactions eligible for Special Treatment for interest-rate swap and Integrated Treatment (Special Treatment for interest-rate swap
and Allocation Treatment for currency swap) are accounted for as integral parts of the hedged loans, and the fair value of those derivativetransactions is included in that of the underlying long-term borrowings as of March 31, 2019 and September 30, 2019. Please refer to page 20,
Note 1 of the section entitled “b. Fair value of financial instruments” under “Financial Instruments”, as well as subheadings (4) and (6)concerning derivative transactions.
*2. Currency swap transactions eligible for allocation treatment are accounted for as integrated parts of the hedged investment corporation bonds, andthe fair value of the currency swap transactions is included in that of the underlying investment bonds as of March 31, 2019 and September 30,
2019. Please refer to page 20, Note 1 of the section entitled “b. Fair value of financial instruments” under “Financial Instruments”, as well as
subheading (5) concerning derivative transactions.

22

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(Income Taxes)
The Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation Measures
Act, an investment corporation is allowed to deduct dividends of accounting profits, or dividend distributions, paid to unitholders fromits taxable income if certain tax requirements are satisfied. Such tax requirements include dividend distributions in excess of 90% of its
earnings available for dividends for the fiscal period as stipulated by Article 67-15 of the Special Taxation Measures Act. The significant
components of deferred tax assets and liabilities as of March 31, 2019 and September 30, 2019 were as follows:

As of March 31, 2019

Deferred tax assets:
Accrued enterprise tax
Amortization of a term leasehold interest
Asset retirement obligations
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Asset retirement obligations
Reserve for advanced depreciation of non-current assets
Total deferred tax liabilities
Net deferred tax liabilities

Thousands of yen
As of September 30, 2019

952
89,460
119,540
209,953(107,516)
102,437

942
94,937
120,745
216,624(114,197)
102,427

101,484
290,057
391,542
289,105

101,484
723,845825,330
722,903

The reconciliation of tax rate difference between the adjusted statutory tax rate and the effective tax rate as of March 31, 2019 and
September 30, 2019 was as follows:
As of March 31, 2019

As of September 30, 201934.59%(34.57%)
0.05%
0.01%
0.08%

34.59%(31.75%)
0.04%
0.00%
2.89%

Statutory tax rate
Deductible dividend distribution
Change in valuation allowance
Others
Effective tax rate

(Asset Retirement Obligations)
For the six months ended March 31, 2019 and September 30, 2019
Asset retirement obligations reported on balance sheets
The Company acquired Osaki Front Tower on February 1, 2011 under the term leasehold for business use agreement which, at the expiryof the leasehold, obligates the Company to restore the leased land to its original state. At the inception of a lease with such an obligation,
the Company recognized an asset retirement obligation and a corresponding capital asset in an amount equal to the present value of theestimated demolition cost required for the removal of the properties located on the leased land. The present value is calculated using
2.015% as the discount rate over 42 years, which is the term of the leasehold.
Change in the asset retirement obligations for the six months ended March 31, 2019 and September 30, 2019 consisted of the following:Thousands of yen
For the period from October 1, 2018
For the period from April 1, 2019
to March 31, 2019
to September 30, 2019

Balance at the beginning of the period
Increase in tangible fixed assets
Accretion expense
Balance at the end of the period

342,047－
3,446
345,49323

345,493－
3,480
348,974JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(Investment and Rental Property)
For the six months ended March 31, 2019 and September 30, 2019
The Company owns primarily a portfolio of office properties in Tokyo and other prefectures in order to gain rental revenue from them.
The book values on balance sheets as of March 31, 2019 and September 30, 2019 and the fair values as of March 31, 2019 and
September 30, 2019 are as follows:
Thousands of yen

Book value

Fair value

As of September 30, 2018

Change during the period *1

As of March 31, 2019

As of March 31, 2019927,908,805

7,148,915

935,057,721

1,178,420,000

Thousands of yen

Book value

Fair value

As of March 31, 2019

Change during the period *2

As of September 30, 2019

As of September 30, 2019935,057,721(6,237,260)

928,820,461

1,204,238,234

Notes: 1. Book value on balance sheets means the acquisition cost less accumulated depreciation.
2. Significant changes*1. As for the increases/decreases for the period, the major reason for the increases was the acquisition of Front Place Minami-Shinjuku (¥9,358,058
thousand), and Daido Seimei Niigata Building (¥1,856,065 thousand). The major reason for decreases was by depreciation.
*2. As for the increases/decreases for the period, the major reasons for the decreases were the disposition of a 50% quasi-co-ownership interest of
Kawasaki Isago Building (¥1,423,739 thousand) and by depreciation.
3. Fair values as of March 31, 2019 and September 30, 2019 are defined as the appraised values provided by an external qualified professional
appraiser. As of September 30, 2019, Kawasaki Isogo Building (50% quasi-co-ownership interest), for which the disposition agreement was madedated September 19, 2019, was valued at the disposition price.

Profits and losses related to investment and rental property are listed in the “a. Breakdown of property-related revenues and expenses”
under “Notes to Statements of Income”.
(Segment Information)
For the six months ended March 31, 2019 and September 30, 2019
Since the Company has been engaged in the real estate leasing business using a single segment, segment information has been omitted.
Information on products and services
Since revenues from external customers for a single segment accounted for more than 90% of total operating revenues, segment
information on products and services has been omitted.
Information on geographic area
a. Revenue
Since 100% of total operating revenues was generated from external customers within Japan, a geographical breakdown of revenues
has been omitted.
b. Property and equipment
Since 100% of total property and equipment on the balance sheets was located within Japan, a geographical breakdown of suchproperty and equipment has been omitted.
Information on major clients
Since no single external client represents 10% or more of the Company’s total operating revenues, information on major clients has been
omitted.

24

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(Per Unit Information)
The following table summarizes information about net assets per unit and profit per unit at March 31, 2019 and September 30, 2019 andfor the periods then ended, respectively:
Yen

Net assets per unit
Profit per unit

For the period from October 1, 2018
to March 31, 2019

For the period from April 1, 2019
to September 30, 2019

369,082
9,696

370,174
10,789Notes: 1. Profit per unit is computed by dividing profit by the weighted average number of units outstanding during each period.
Diluted profit per unit has not been presented since no warrants or convertible bonds were outstanding during the period.
2. The basis for the computation of profit per unit is as follows:

Thousands of yen
For the period from October 1, 2018
For the period from April 1, 2019
to March 31, 2019
to September 30, 2019

ProfitAmount not attributable tonormal unitholders
Profit applicable tonormal investment units
Average number of units

13,431,058

14,945,513－－

13,431,058

14,945,513

1,385,210 units

1,385,210 units(Subsequent Events)“Not applicable”

25

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(9) Increase/Decrease in Total Number of Units Outstanding
The Company procured the funds of approximately 39.2 billion yen by issuing the new investment units of public offering (69,000
units) and third-party allocation (6,900 units) in April and May 2018. Changes in the past five years are as follows.

Date

Number of Units Outstanding

Total Unitholders’ Capital(Millions of yen)

Increase/Decrease Balance

Increase/Decrease Balance

Remarks

Notes

April 6, 2015

Issuance of new investment
units (public offering)

54,000 1,305,530

29,189455,972＊

May 11, 2015

Issuance of new investment
units (third-party allocation)

3,780 1,309,310

2,043

458,016＊

April 16, 2018

Issuance of new investment
units (public offering)

69,000 1,378,310

35,659493,675

＊

*2.
*3.

*4.

2
3

Issuance of new investment＊
46,900 1,385,210
3,565
497,241
units (third-party allocation)
New investment units were issued at 557,620 yen per unit (underwriting price of 540,550 yen) for the purpose of funding the partial
repayment of short-term loans, the redemption of investment corporation bonds, the acquisition of specified assets, and, in the event
there are any funds remaining, cash reserves.
New investment units were issued at 540,550 yen per unit for the purpose of funding the partial repayment of short-term loans and,in the event there are any funds remaining, cash reserves.
New investment units were issued at 533,120 yen per unit (underwriting price of 516,800 yen) for the purpose of funding theacquisition of specified assets and the partial repayment of short-term loans, and in the event there are any funds remaining, cash
reserves.
New investment units were issued at 516,800 yen per unit for the purpose of funding the partial repayment of short-term loans and,in the event there are any funds remaining, cash reserves.

May 9, 2018
*1.

1

26

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

4. Changes in Officers
Change in officers shall be disclosed in a timely manner once the decision is made.

5. Reference Dataa.

Composition of the Company’s Assets
As of March 31, 2019

Asset type

Real property

RegionTotal ofnet book value*1(¥ million)

Ratio tototal assets(%)

Tokyo 23 wards

502,91552.2

500,211

51.8

Tokyo metropolitan area
(excluding Tokyo 23 wards)*2

42,230

4.4

41,916

4.3

Other major cities

82,691

8.6

81,984

8.5

627,83765.2

624,113

64.6

Tokyo 23 wards

214,11722.2

213,40922.1

Tokyo metropolitan area
(excluding Tokyo 23 wards)*2

19,211

2.0

17,677

1.8

Other major cities

73,8907.7

73,6207.6

307,21931.9

304,70731.5

28,6183.0

37,569

3.9

(－)

(－)

(－)

(－)

963,676

100.0

966,390100.0(935,057)(97.0)(928,820)(96.1)

Total

Real property
in trust

As of September 30, 2019

Total

Total ofnet book value*1(¥ million)

Ratio tototal assets(%)

Savings and other assets

Total amount of assets*1. Totals of net book value as of March 31, 2019 and September 30, 2019 are based on the total amounts from the balance sheets as ofMarch 31, 2019 and September 30, 2019, respectively. Real property and real property in trust present the net book values after
depreciation and amortization.
*2. Tokyo metropolitan area encompasses the prefectures of Tokyo, Kanagawa, Chiba and Saitama throughout this document.
*3. The figures in parentheses indicate the value of real property held. Ratios are rounded to the first decimal place.

27

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）b.

Real Estate Investment Property and Trust Beneficiary Rights in Trust of Real Estatei) Outline of real estate and other assets included in the Company's holdings (quick reference guide)
The table below is a quick reference guide outlining the real estate and other assets included in the Company’s holdings as of
September 30, 2019.

87,40070,87381,555,500

8.0%

MD Kanda
Building

Realproperty

9

6,269

100.0%

8,900

8,631

9,520,000

0.9%

Kandabashi
Park Building

Realproperty

10

3,687

100.0%

4,820

4,431

4,810,000

0.5%

OtemachiFinancial City
North Tower

Realproperty2

5,121

100.0%

20,80014,764

15,462,900

1.5%Nibancho
GardenRealproperty

1
*5

9,316
*5

100.0%*5

19,10012,17814,700,000

1.4%Mitsubishi
UFJ Trust andBanking
Building

Realproperty

10

11,904100.0%

57,60028,63844,700,000

4.4%

Burex
Kojimachi
Building

Realproperty

1

4,495

100.0%

7,530

5,415

7,000,000

0.7%

Sanno Grand
Building

Realproperty48

20,535100.0%

33,10021,172

10,200,000
10,700,000
Total:
20,900,000

2.0%

Yurakucho
Denki
Building

Realproperty

10

4,697

100.0%

8,980

7,659

7,200,000

0.7%

Kodenmacho
Shin
Nihonbashi
Building

Trust

10

3,897

100.0%

2,960

2,723

3,173,000

0.3%

Front Place
Nihonbashi

Realproperty

2

8,468

100.0%

19,700*6

17,641

17,560,000

1.7%

Kyodo
Building(Kayabacho
2Chome)

Trust

10

4,464

100.0%

5,080

4,129

4,410,000

0.4%

Burex
Kyobashi
Building

Realproperty

1

4,279

100.0%

7,740

4,363

5,250,000

0.5%

Ginza
1Chome East
Building

Trust

8

4,513

100.0%

7,920

6,196

6,459,000

0.6%

28

(¥ thousand
)

Ratio
*2

Ratio byregion*2

Occupancy rate*2
100.0%*5

Book value at the

Leasable floorarea (m2)
25,678*5

end of period (¥ mil)Number oftenants*1
5*5of period (¥ mil)*3

Type ofspecified asset
Realproperty

Appraisal value at the end

Name ofproperty

RegionTokyo metropolitan area

Tokyo
23
wards

Kitanomaru
SquareAcquisition price*4

76.8%

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Realproperty
Harumi Center
Real
Building
property
Akasaka Park
Real
Building
property
Aoyama Crystal
Real
Building
property
Harumi Front

CloverShiba-koen

Shiodome
Building
Tokyo metropolitan area

Tokyo 23
wards

Shiba 2Chome
DaimonBuilding
Cosmo
Kanasugibashi
Building
Tamachi Front
Building
Shinjuku
Eastside Square
Shinjuku Front
Tower
ShinwaBuilding

Trust

19,40017,150Ratio*2

16,830,000

1.6%

0.8%

11

4,255

100.0%

6,560

7,319

5,353,500
2,645,922*7
Total:
7,999,422

8

33,369100.0%

40,700*8

27,03231,300,000

3.1%

13

20,812100.0%

21,00021,61526,800,000

2.6%

30
*5

44,999*5100.0%*5

80,20058,84960,800,000

5.9%

8

4,898

100.0%

9,610

7,015

7,680,000

0.8%

9

2,550

100.0%

4,740
*6

4,468

4,500,000

0.4%

21,250,000
54,600,000
10,100,000
10,450,000 10.4%
10,530,000
Total:
106,930,000

Trust

36

44,21399.9%

125,000

101,323

Trust

22

9,606

98.9%

7,490

5,458

4,859,000

0.5%

Trust

8

4,062

100.0%

3,530

2,503

2,808,000

0.3%

Real
property

8

3,792

100.0%

7,080
*6

6,147

6,210,000

0.6%

5.4%

Trust

40

36,262

94.9%

63,700*6

52,03923,100,000
6,660,000
25,460,000
Total:
55,220,000

Trust

45

15,705100.0%

26,600*6

24,85025,025,000

2.4%

Real
property

13

5,997

100.0%

9,100

7,782

7,830,000

0.8%

3.1%

0.9%

Tokyo Opera
Real
City Building*9 property
Front PlaceMinamiShinjuku

100.0%(¥ thousand)Realproperty

98

34,971

99.8%

36,50027,7669,350,000
22,426,831
Total:
31,776,831

2

4,095

100.0%

9,500
*6

9,395

9,250,000

LINK
SQUARESHINJUKU(Land)

Real
property

*10

*10

*10

5,500

5,572

6,670,000(1,170,000)*11 0.5%
Total:
5,500,000

Yoyogi1 Chome
Building

Real
Property

8

7,745

100.0%

12,9006,778

8,700,000

29

Ratio byregion*2

Realproperty

Book value atthe end of period(¥ mil)Ryoshin Ginza
East Mirror
Building

4,326

Appraisal value
at the end of
period (¥ mil)*3

Number oftenants*1
11

Occupancy rate*2

Type ofspecified asset
Realproperty

Leasable floorarea (m2)Name ofproperty

RegionGinza Sanwa
Building

Acquisition price*4

0.8%

76.8%

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(¥ thousand)

Rati
o by
Ratio
*2

6

3,147

100.0%

7,480

4,852

4,885,000

0.5%

5

5,558

100.0%

11,10010,602

12,200,000
*12

1.2%

27,186

34,600,000(8,076,000)*14
Total:
26,524,000

2.6%

1.4%

*13

*13

*13

39,500Ebisu Neonato

Realproperty

5

8,659

100.0%

19,60013,8923,740,000
360,000
10,512,000
Total:
14,612,000

TIXTOWER
UENO

Real
property

16

15,016100.0%

25,90018,95322,000,000

2.1%

5

5,205

100.0%

6,910

4,316

5,500,000

0.5%

1

16,856100.0%

17,300*8

8,363

12,300,000

1.2%

27

7,706

100.0%

6,160

4,758

5,123,000

0.5%

1.1%

Real
Tokyo Higashi Gotanda
1Chome Building property
23
wards
Real
Osaki Front
property
Tower*15
Omori-Eki
Higashiguchi
Trust
Building
Tokyo metropolitan area

Harmony Tower

Realproperty

22

14,340100.0%

14,9009,789

8,500,000
520,000
2,100,000
Total:
11,120,000

Otsuka Higashi
Ikebukuro
Building

Trust

5

7,253

100.0%

4,820

3,408

3,541,000

0.3%

Ikebukuro
2Chome Building

Trust

8

2,186

88.8%

1,870

1,547

1,728,000

0.2%

Ikebukuro YS
Building

Realproperty

10

5,932

86.0%

5,840

4,058

4,500,000

0.4%

Hachioji First
SquareRealproperty

4,833

3,300,000
2,379,112
Total:
5,679,112

0.6%

Saitama Urawa
Building

Realproperty

0.3%

3.7%

Tokyo
metropolitan
MM Park
Real
area,
Building
property
excludingQueen’s Tower A Trust
Tokyo
23
wards
Kawasaki Isago
Trust
Building
Musashi Kosugi
STM Building

Realproperty

48

10,068100.0%

5,070

18

4,510

100.0%

2,840

2,443

1,232,000
1,342,000
Total:
2,574,000

35

38,41599.5%

41,50030,89837,400,000

98.2%

22,300*6

Ratio byregion*2Book value at theend of period (¥ mil)Appraisal value at theend of period(¥ mil)*3

Occupancy rate*2

area

Real
property

Leasable floor
(m2)

Real
propertyRealproperty

Number of tenants*1

Shibuya Cross
Tower(Land)

Type ofspecified asset

Name ofproperty

RegionJingumae
Terrace
Jingumae Media
Square Building

Acquisition price*4

76.8%

6.7%
49

26,66916,253

17,200,000

1.7%

0.2%

0.4%

14

3,415

100.0%

1,590

1,423

3,375,000(1,687,500)*16
Total:
1,687,500

26

5,378

100.0%

4,740

3,741

4,000,000

30

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Type ofspecified asset

Number oftenants*1

Leasable floorarea (m2)Occupancy rate*2

Appraisal value
at the end of
period (¥ mil)*3

Book value atthe end of period(¥ mil)Real
property

8

12,265100.0%

9,560

5,689

7,100,000

0.7%

Jozenji Park Building

Realproperty

17

2,518

93.4%

1,050

971

1,000,000

0.1%

Higashi Nibancho
SquareRealproperty

22

20,52698.1%

14,100*88,662

9,950,000

1.0%

0.3%

(¥ thousand)

Ratio
*2

Other major cities

Sendai Honcho Honma
Building

Trust

28

6,234

100.0%

2,700

2,822

2,924,000
250,000
Total:
3,174,000

AER

Real
property

65

23,61298.9%

20,80018,291

18,640,000

1.8%Daido Seimei
Niigata Building

Realproperty

9

3,928

94.7%

1,860

1,822

1,770,000

0.2%

Kanazawa Park
Building

Realproperty

82

20,946

98.8%

6,840

4,366

2,880,000
1,700,000
Total:
4,580,000

0.4%

Kanazawa
Kamitsutsumicho
Building

Realproperty

27

7,213

98.1%

3,210

2,544

2,780,000

0.3%

0.6%

Nishiki Park
Building*17

Realproperty64*5

10,338*5100.0%
*5

5,380

5,016

3,850,000
1,300,000
650,000
175,000
Total:
5,975,000

Nagoya Hirokoji Place

Trust

34

13,200100.0%

12,700*6

7,849

8,567,000

0.8%

Nagoya Hirokoji
Building

Realproperty

42

21,404100.0%

13,50015,252

14,533,000

1.4%

Nagoya Misono
Building

Realproperty

17

3,448

100.0%

1,500

1,424

1,865,000

0.2%

Shijo Karasuma Center
Building

Realproperty

13

6,634

100.0%

6,180
*6

3,794

4,400,000

0.4%

Umeda Square
Building*18

Trust

42

10,374100.0%

17,00015,74815,523,520

1.5%

Shin Fujita Building

Trust

48

28,40399.3%

19,90021,56424,000,000

2.3%

Sakaisujihonmachi
Building

Realproperty

3,604

2,264,000
1,900,000
Total:
4,164,000

0.4%

24

11,520100.0%

31

3,730

Ratio byregion*2

Name ofproperty

Region8･3 Square Kita
Building

Acquisition price*4

16.5%

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Number oftenants*1

Leasable floorarea (m2)Occupancy rate*2

Appraisal value
at the end of
period (¥ mil)*3

Book value atthe end of period(¥ mil)Trust

41

20,450100.0%

15,30013,8006,934,000
7,380,000
Total:
14,314,000

1.4%

Amagasaki Front
Building

Trust

29

15,500100.0%

10,1008,441

9,300,000

0.9%

2,533

4,650,000(555,131)*19
Total:
4,094,868

0.4%

0.3%

Lit City Building

Realproperty

25

8,906

98.1%

4,450

(¥ thousand)

Ratio
*2

16.5%

NHK Hiroshima
Broadcasting Center
Building

Realproperty

12

9,860

100.0%

3,450

2,887

1,320,000
1,450,000
Total:
2,770,000

Tosei Tenjin
Building

Realproperty

22

3,995

100.0%

1,610

1,342

1,550,000

0.2%

Tenjin Crystal
Building

Realproperty

30

5,964

98.6%

3,110

3,781

5,000,000

0.5%

Hinode Tenjin
Building

Trust

2

5,944

100.0%

4,560

3,394

3,657,000

0.4%

Total

1,500

852,50999.3%

1,202,750

928,820

1,023,999,654*1.

Ratio byregion*2Type ofspecified asset

Other major cities

Name ofproperty

RegionMidosuji Daiwa
Building

Acquisition price*4

100.0%The total number of tenants is based on the gross number of tenants in each building. Each instance of occupancy of a single tenantleasing space is considered separately on a per property basis even if said tenant leases floor area in multiple properties.
*2. Occupancy rate, ratio of acquisition price and ratio by region are rounded to the nearest first decimal place.
*3. Appraisal value at the end of period is, as a rule, the value assessed by real estate appraisers based on the Company's Articles ofIncorporation and the Cabinet Office Ordinance on Accountings of Investment Corporations. The book closing date is used as theappraisal date and the appraisal value is calculated by Daiwa Real Estate Appraisal Co., Ltd.
*4. Incidental expenses arising from acquisitions are not included in the acquisition price.
*5. Residential portions are not included in the total number of tenants, the occupancy rate or the leasable floor area for Kitanomaru
Square, Nibancho Garden, Akasaka Park Building or Nishiki Park Building. The residential portions for these properties are as
follows: Kitanomaru Square, leasable floor area: 11,694m2, occupancy rate: 96.6%; Nibancho Garden, leasable floor area: 1,686m2,
occupancy rate: 100.0%; Akasaka Park Building, leasable floor area: 10,780m2, occupancy rate: 94.2%; Nishiki Park Building,leasable floor area: 954m2, occupancy rate: 85.8%.
*6. Appraisal values by Japan Real Estate Institute.
*7. This includes the acquisition price of the land and building adjacent to Ryoshin Ginza East Mirror Building dated July 4, 2008, thecost of the adjacent building’s demolition and the total expense of the construction and expansion of the Ryoshin Ginza East Mirror
Building (excluding brokerage fees and other acquisition-related expenses) after its completion on May 24, 2010.
*8. Appraisal values by Chuo Real Estate Appraisal Co., Ltd.
*9. Accompanying the acquisition of Tokyo Opera City Building on September 13, 2005, the Company acquired 33 shares of Tokyo
Opera City Building Co., Ltd. (the business that maintains, services and operates the building) at a total acquisition price of 2,797
thousand yen and inherited the 874 thousand yen deposit made to Tokyo Opera City Building Co., Ltd. by the seller. In an additional
acquisition, on March 24, 2010, the Company acquired 91 shares of Tokyo Opera City Building Co., Ltd. at a total acquisition priceof 7,539 thousand yen. Concurrently, the Company acquired 4,931 shares of Tokyo Opera City Heat Supply Co., Ltd. (the supplierof heat to the building) at a total acquisition price of 566,831 thousand yen, inheriting the 2,360 thousand yen deposit made toTokyo Opera City Building Co., Ltd. by the seller.
Regarding the appraisal value at the end of the fiscal period of the above-mentioned shares, the 124 shares of Tokyo Opera City
Building Co., Ltd. are valued at 10,336 thousand yen and the 4,931 shares of Tokyo Opera City Heat Supply Co., Ltd. are valued
at 566,831 thousand yen.
*10. Because the building portion of LINK SQUARE SHINJUKU (land with leasehold interest) was disposed on August 23, 2013, nototal number of tenants, leasable floor area or occupancy rate are provided. Furthermore, the 1,497m2 portion of land still held isbeing rented to the transferee of the building, Mitsubishi Estate Co., Ltd.
*11. Because the building was disposed on August 23, 2013, the acquisition price of the building at the time of the land and building
purchase dated March 24, 2004, has been deducted.
*12. This is the acquisition price dated October 9, 2003, and includes a portion of the site disposed on October 30, 2009 (cost of32

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

investment sold, 614 million yen).
*13. Because the building portion of Shibuya Cross Tower (land with leasehold interest) was disposed on January 18, 2018, no total
number of tenants, leasable floor area or occupancy rate are provided. Furthermore, the 5,153 m2 portion of land still held is being
rented to the transferee of the building, Mitsubishi Estate Co., Ltd.
*14. Because the building was disposed on January 18, 2018, the acquisition price of the building at the time of the land and building
purchase dated November 30, 2001, has been deducted.
*15. On acquiring Osaki Front Tower, the Company inherited the land renter’s lease deposit of 1,040,000 thousand yen held by the sellerof the building. The value of the lease deposit was appraised at the end of the fiscal period and remained unchanged.
*16. Because a 50% quasi-co-ownership interest of the trust beneficiary right was disposed on September 30, 2019, the 50% of theacquisition price of the trust beneficiary right purchase dated September 25, 2001, has been deducted.
*17. On acquiring Nishiki Park Building on October 2, 2006, the Company inherited the 9,000 thousand yen lease deposit made by theland renters held by the seller of the building.
*18. Trust assets of the trust beneficiary right acquired by the Company include a claim for 500,000 thousand yen of deposit for
construction to connect to underground shopping centers given to Osaka Shigaichi Kaihatsu Co., Ltd., which was held by theprevious owner.
*19. Because the retail units were disposed on September 28, 2018, the acquisition price of the retail units at the time of the land andbuilding purchase dated February 1, 2006, has been deducted.
*20. In the above quick reference guide, if the real estate or other assets are classified as shared ownership or compartmental ownership,
only the real estate or other assets owned by the Company are presented and the portions owned by the other shared owners orcompartmental owners are excluded.

33

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

ii) Breakdown of property-related revenues and expenses for real estate and other assets included in the Company's holdings
The table below is a quick reference guide outlining the revenues and expenses on each real estate and other asset for the
September 2019 period (April 1, 2019 – September 30, 2019). Furthermore, the income summary is presented based on thepreviously mentioned “Summary of Significant Accounting Policies.”(Millions of Yen)
Revenues / Expenses (April 1, 2019 – September 30, 2019)
Property- Propertyrelated related
revenues expenses
Property and other
taxes

Repairing expenses

Depreciation
①

743

133

70

97

1

24

416

0

1,000

1,417

18

1,398

228

86

16

14

22

0

4

28

-

142

170

3

166

120

40

1

-

18

0

3

18

-

79

97

4

92

363

185

28

19

50

0

0

85

0

178

264

-

264

Nibancho Garden
Mitsubishi UFJ
Trust and Banking
Building
Burex Kojimachi
Building
Sanno Grand
Building
Yurakucho Denki
Building
Kodenmacho
Shin Nihonbashi
Building
Front Place
Nihonbashi
Kyodo Building(Kayabacho
2Chome)Burex Kyobashi
Building
Ginza 1Chome East
Building
Ginza Sanwa
Building
Ryoshin Ginza East
Mirror Building

480

208

59

27

56

0

4

60

-

271

331

0

331

995

372

58

57

158

0

6

88

2

623

711

6

705

162

60

-

-

14

0

3

42

-

101

144

0

143

942

373

106

56

123

1

4

82

-

569

651

4

646

270

129

33

20

48

0

0

25

-

141

167

6

160

120

56

15

9

12

0

2

13

3

64

78

2

75

401

151

23

21

40

0

0

64

0

249

313

-

313

151

59

11

11

12

0

1

22

-

92

114

-

114

158

38

-

-

12

0

2

23

-

119

143

-

143

186

81

13

9

11

0

0

46

-

104

151

0

150

402

155

27

16

77

0

8

24

0

246

271

13

257

164

84

13

12

16

0

1

40

-

79

119

-

119

Harumi Front

1,228

700

130

115

79

1

14

358

0

528

887

12

874

Other expenses

Utilities expenses

MD Kanda
Building
Kandabashi Park
Building
Otemachi Financial
City North Tower

Casualty insurance

Property management
expenses

Kitanomaru Square

PropertyNOI
Capitalrelated③(①+②) expend- NCF
profits
itures ③－④
②
④*2

1,744

Name of property

Harumi Center
Building
Akasaka Park
Building
Aoyama Crystal
Building

588

389

66

44

49

0

16

210

0

199

410

8

401

2,239

1,272

257

231

278

3

87

410

3

967

1,378

105

1,272

247

90

13

13

33

0

9

20

0

157

177

0

177

Clover Shiba-koen

115

47

10

6

6

0

0

22

-

68

90

-

90

Shiodome Building

2,525

946

184

132

190

1

22

406

7

1,579

1,986

52

1,934

Shiba 2Chome
Daimon Building

277

223

36

25

40

0

76

44

0

53

97

170

(73)

34

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(Millions of Yen)
Revenues / Expenses ( April 1, 2019 – September 30, 2019)
Property- Propertyrelated related
revenues expenses
Other expenses

Depreciation①

Repairing expenses

Casualty insurance

Property and other
taxes

Cosmo
Kanasugibashi
Building
Tamachi Front
Building
Shinjuku Eastside
SquareShinjuku Front
Tower

Utilities expenses

Property management
expensesName of property

CapitalPropertyexpendNOI
related
NCF
ituresprofits ③(①+②)④*2 ③－④
②

118

52

14

9

13

0

0

14

-

66

80

-

80

157

69

10

9

14

0

2

31

0

87

119

-

119

1,397

620

110

106

108

2

5

285

2

776

1,062

43

1,018

668

306

61

37

58

0

2

144

0

362

506

3

503

236

100

23

15

20

0

2

37

-

136

173

20

152

1,602

1,046

*1

*1

*1

*1

*1

556

*1

38

*1

198

59

15

12

0

0

-

30

0

139

170

-

170

111

23

-

-

23

-

-

-

-

87

87

-

87

319

117

23

18

25

0

6

43

-

201

244

-

244

185

59

10

10

19

0

1

16

-

126

143

0

142

298

152

25

25

54

0

6

40

-

145

186

0

185

540

85

-

-

85

-

-

-

-

454

454

-

454

486

209

49

23

38

1

3

92

-

277

369

12

337

678

380

61

37

37

1

39

201

-

298

500

11

488

191

77

12

18

14

0

3

27

0

114

141

1

140

Osaki Front Tower

708

497

67

46

26

0

7

255

94

211

466

1

464

Omori-Eki
Higashiguchi
Building

229

123

32

18

25

0

6

39

-

105

145

24

120

Harmony Tower

488

169

49

-

56

0

12

50

-

319

369

-

369

202

109

19

25

12

0

9

42

-

92

135

62

72

72

34

8

5

5

0

5

8

0

38

46

0

45

176

88

19

14

15

0

6

31

0

87

119

46

72

240

114

50

2

26

0

(0)

34

0

125

159

13

146

119

52

16

8

8

0

1

17

-

66

83

-

83

MM Park Building

1,280

745

137

178

80

1

51

294

-

534

829

41

788

Queen’s Tower A

1,016

666

201

100

115

3

13

226

6

349

576

138

437

Kawasaki Isago
Building

160

83

26

16

13

0

3

23

-

76

100

1

98

Shinwa Building
Tokyo Opera City
Building*1
Front PlaceMinami- Shinjuku
LINK SQUARESHINJUKU(land)
Yoyogi 1Chome
Building
Jingumae Terrace
Jingumae Media
Square Building
Shibuya Cross
Tower(land)
Ebisu Neonato
TIXTOWER
UENO
Higashi Gotanda
1Chome Building

Otsuka Higashi
Ikebukuro Building
Ikebukuro 2Chome
Building
Ikebukuro YS
Building
Hachioji First
SquareSaitama Urawa
Building

*1

*1

35

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(Millions of Yen)
Revenues / Expenses (April 1, 2019 – September 30, 2019)
Property- Propertyrelated related
revenues expenses
PropertyNOI
Capitalrelated③(①+②) expend- NCF
profits
itures ③－④②④*2

Other expenses

NHK Hiroshima
Broadcasting
Center Building
Tosei Tenjin
Building
Tenjin Crystal
Building
Hinode Tenjin
Building

Depreciation①

Lit City Building

Repairing expenses

Daido Seimei
Niigata Building
Kanazawa Park
Building
Kanazawa
Kamitsutsumicho
Building
Nishiki Park
Building
Nagoya Hirokoji
Place
Nagoya Hirokoji
Building
Nagoya Misono
Building
Shijo Karasuma
Center Building
Umeda Square
Building
Shin Fujita
Building
Sakaisujihonmachi
Building
Midosuji Daiwa
Building
Amagasaki Front
Building

Casualty insurance

AER

Property and othertaxes

Musashi Kosugi
STM Building
8･3 Square Kita
Building
Jozenji Park
Building
Higashi Nibancho
SquareSendai Honcho
Honma Building

Utilities expenses

Property management
expensesName of property

166

67

22

2

12

0

1

27

-

99

126

5

121

333

210

30

55

23

0

30

70

-

122

192

3

189

60

38

9

7

7

0

2

11

-

22

34

-

34

565

272

81

43

41

0

5

100

-

293

393

0

393

140

66

17

12

16

0

1

18

-

74

92

0

91

683

359

84

56

65

0

38

113

0

323

437

207

229

76

60

12

5

0

0

4

37

-

16

54

-

54

524

315

102

60

66

1

5

79

0

208

288

8

280

132

95

18

14

10

0

6

45

-

36

82

5

77

290

179

55

23

25

0

11

56

6

111

168

1

166

403

190

41

35

35

0

3

73

-

213

286

32

254

565

380

92

45

65

1

9

166

0

184

351

12

338

72

55

10

5

6

0

2

30

0

17

47

-

47

213

111

28

15

11

0

4

50

-

102

153

5

147

444

218

53

28

51

0

13

71

-

225

296

36

259

731

506

90

72

77

1

20

243

-

225

469

128

341

237

149

42

32

36

0

10

26

0

88

115

9

105

551

291

61

46

77

1

10

94

0

259

354

105

248

446

234

67

27

26

0

9

103

0

212

315

17

298

233

125

27

17

16

1

4

58

-

108

166

-

166

266

179

49

26

24

0

1

51

25

87

138

0

138

86

41

12

8

7

0

1

11

0

45

56

-

56

164

127

22

18

19

0

3

63

0

36

99

2

97

185

89

20

19

14

0

13

21

0

95

117

35

82

Total
33,580 16,909 3,637 2,570 3,25650
767 6,433
194 16,670
23,104
1,495 21,608*1. Disclosure of NOI and NCF in the breakdown of the expenses of the property leasing business for Tokyo Opera City Building has
been withheld at the request of the joint owners of the relevant real estate.
*2. Construction expenses that correspond to capital expenditures incurred during the period under review are listed under capital
36

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

expenditures. This does not include expenses capitalized as construction in progress, expenses capitalized as furniture, etc., or such
expenses included in the book value as brokerage fees for acquiring real estate or other assets, real estate acquisition taxes or otheracquisition-related expenses.

c. Condition of Other Assets(i) Shares/Investment Securities
Securities
Tokyo Opera City
Building Co., Ltd.
Tokyo Opera City Heat
Supply Co., Ltd.
Total

Acquisition price(¥ thousand)Appraisal value(¥ thousand)Unit priceAmountUnit priceAmountValuation
gain/loss(¥ thousand)

124

83

10,336

83

10,336

－

*

4,931

114

566,831114

566,831

－

*

－

－

577,168－

577,168

－

－

Notes

Number ofsharesNotes* Appraisal value for relevant non-listed stock are defined as acquisition costs.

(ii) Marketable Securities Other Than Shares
Asset type

Appraisal value(¥ thousand)Unit priceAmountUnit priceAmountValuation
gain/loss(¥ thousand)Book value (¥ thousand)
Quantity

Trust beneficiaryrights in deposits

1

137,451

137,451

137,451

137,451

－

－

Total

－

－

137,451－

137,451

－

－

Notes

(iii) Other Specified Assets
Asset type

Appraisal value(¥ thousand)Unit priceAmountUnit priceAmountValuation
gain/loss(¥ thousand)Book value (¥ thousand)
Quantity

Monetary claim

1

1,040,000

1,040,000

1,040,000

1,040,000

－

－

Total

－

－

1,040,000－

1,040,000－－* Trust beneficiary rights, mainly consisted of the trust asset of real estate, are included in the previous section b. “Real Estate Investment
Property and Trust Beneficiary Rights in Trust of Real Estate”.

37

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

d. Capital Expenditures(i) Schedule for Capital Expenditures
The significant scheduled capital expenditures, such as current plans for repair, maintenance and renovation work on existing
properties, are listed below.
The following scheduled capital expenditures include those accounted for as expenses.
Estimated cost (¥ million)
Name of property(Location)

Shiba 2Chome Daimon Building(Minato-ku, Tokyo)

TotalamountPayment amountfor the fiscal underreview period

Total amountalready paid

From October 2019
To March 2020

367

－

－

Upgrade of
air conditioning
facilities

From October 2019
To March 2020

213

－

－

Sanitary facility renewal
construction

From April 2020
To June 2020

188

－

－

Upgrade of
air conditioning
facilities

From June 2019
To June 2020

80

－

－

Elevator renewal
construction

From December 2019
To February 2020

17

－

－

PurposeScheduled period

Sanitary facility renewal
construction

Shiba 2Chome Daimon Building(Minato-ku, Tokyo)

Shiba 2Chome Daimon Building(Minato-ku, Tokyo)

NHK Hiroshima
Broadcasting Center Building(Hiroshima, Hiroshima Prefecture)

Ikebukuro 2Chome Building(Toshima-ku, Tokyo)(ii) Capital expenditures during the period under review
For acquired real estate and other assets, capital expenditures incurred in the period under review totaled ¥1,495 million and repair,maintenance and renovation expenses classified as expenses in the period under review totaled ¥767 million, for a total of ¥2,263
million worth of construction that has been carried out.
The major item in the capital expenditure was the upgrade of air conditioning facilities of Shiba 2Chome Daimon Building.
Name of property(Location)
Shiba 2Chome Daimon Building(Minato-ku, Tokyo)

Otsuka Higashi Ikebukuro Building(Toshima-ku, Tokyo)

Expenditures forconstruction (¥ million)

Purpose

PeriodUpgrade of
air conditioning facilities

From April 2019
To September 2019137

Sanitary facility renewal
construction

From April 2019
To August 201961

Other real estate

1,296

Total

1,495

(iii) Money Saved for Long-term Repair Plans“Not applicable”

38

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

e.

Expenses and Liabilities(i) Details on Operation-related Expenses
For the period
from October 1, 2018
to March 31, 2019

For the period
from April 1, 2019
to September 30, 2019¥1,296,545 thousand¥904,135 thousand¥392,409 thousand¥1,409,620 thousand¥924,160 thousand¥485,460 thousand(b) Asset custody fee¥62,191 thousand¥63,120 thousand(c) Administrative service fees

¥132,759 thousand¥132,329 thousand(d) Directors’ compensations¥7,800 thousand¥7,800 thousand(e) Commission expenses¥90,962 thousand¥83,212 thousand(f) Other operating expenses¥64,004 thousand¥63,900 thousand¥1,654,263 thousand¥1,759,984 thousand

Item(a) Asset management fee *(breakdown) NOI-linked fee
Distribution-linked fee

Total* In addition to the asset management fee listed above, in the case that a property is acquired, an “acquisition fee” is included in theacquisition cost of the property and paid to the asset management company.
In the case that a property is sold, a “disposition fee” is included in the loss on sale and paid to the asset management company. These
fees are calculated by multiplying the buying/selling price of the property by a fee rate.
In the period ended March 31, 2019, the acquisition fee amounted to ¥55,100 thousand, and in the period ended September 30, 2019,
the disposition fee amounted to ¥15,391 thousand.

39

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(ii) Borrowings
The condition of loans by financial institutions as of September 30, 2019, is as follows.

Drawdown
date

Balance at
beginning ofcurrent period(¥thousand )Balance at
end ofcurrent period(¥thousand )Averageinterest
rate *1(%)

Repayment
date

Mizuho Bank, Ltd.

April 3,2018

5,500,000―

0.1027

April 3,2019

Sumitomo Mitsui
Trust Bank, Limited

December 26,
2018

1,300,000

1,300,000

0.10568

December 26,
2019

Sumitomo Mitsui
Trust Bank, Limited

March 29,2019

1,700,000

1,700,000

0.10545

March 30,
2020

Mizuho Bank, Ltd.

April 3,2019―

5,500,000

0.10631

April 3,2020

MUFG Bank, Ltd.

September 2,
2019―

5,000,000

0.1154September 2,
2020

8,500,000

13,500,000

Classification
LenderShort-term borrowings

SubtotalLong-term borrowings

Sumitomo Mitsui
Trust Bank, Limited

May 29,2015

5,000,000―

0.2075

May 29,2019

MUFG Bank, Ltd.

September 1,
2015

5,000,000

―

0.200

September 2,
2019

Sumitomo Mitsui
Trust Bank, Limited

September 26,
2011

5,500,000

―

1.160

September 26,
2019

The Hiroshima
Bank, Ltd.

October 1,
2014

3,000,000

3,000,000

0.31575

October 1,
2019*3

Mizuho Bank, Ltd.

November 1,
2011

6,000,000

6,000,000

1.2075

November 1,
2019*3

Mizuho Bank, Ltd.

November 15,
2011

3,000,000

3,000,000

1.13875

November 15,
2019*3

MUFG Bank, Ltd.

November 15,
2011

3,000,000

3,000,000

1.13875

November 15,
2019*3

MUFG Bank, Ltd.

November 15,
2011

3,000,000

3,000,000

1.13875

November 15,
2019*3

The Gunma
Bank, Ltd.

November 17,
2014

1,000,000

1,000,000

0.316

November 18,
2019*3

The Yamanashi Chuo
Bank, Ltd.

December 15,
2014

2,000,000

2,000,000

0.266

December 16,
2019*3

Shinkin Central Bank

January 7,
2013

2,000,000

2,000,000

0.71375

January 7,
2020*3

MUFG Bank, Ltd.

January 15,
2013

5,500,000

5,500,000

0.710

January 15,
2020*3

Shinkin Central Bank

January 15,
2013

5,000,000

5,000,000

0.710

January 15,
2020*3

MUFG Bank, Ltd.

June 15,2012

4,000,000

4,000,000

0.9525June 15,2020*3

Sumitomo Mitsui
Trust Bank, Limited

June 15,2012

4,000,000

4,000,000

0.9525June 15,2020*3

Sumitomo Mitsui
Trust Bank, Limited

June 15,2015

3,000,000

3,000,000

0.3425June 15,2020*3

Tokio Marine &Nichido Fire
Insurance Co., Ltd.

July 3,2017

2,000,000

2,000,000

0.100

July 3,
2020
*3

40

Repayment
methodUse ofproceeds

Notes

Bullet*2

Unsecured
Unguaranteed
UnsubordinatedBullet*2

Unsecured
Unguaranteed
UnsubordinatedJAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Drawdown
date

Balance at
beginning ofcurrent period(¥thousand )Balance at
end ofcurrent period(¥thousand )Averageinterest
rate *1(%)

Repayment
date

The Yamaguchi
Bank, Ltd.

October 29,
2012

2,000,000

2,000,000

0.800

October 29,
2020

MUFG Bank, Ltd.

December 21,
2012

5,000,000

5,000,000

0.80125

December 21,
2020

MUFG Bank, Ltd.

December 21,
2012

5,000,000

5,000,000

0.80125

December 21,
2020

MUFG Bank, Ltd.

January 15,
2013

5,500,000

5,500,000

0.83625

January 15,
2021

MUFG Bank, Ltd.

January 31,
2014

4,000,000

4,000,000

0.64225

January 29,
2021

The Bank ofFukuoka, Ltd.

January 31,
2014

2,500,000

2,500,000

0.63849

January 29,
2021

Sumitomo Mitsui
Trust Bank, Limited

January 31,
2014

2,000,000

2,000,000

0.62575

January 29,
2021

The Iyo Bank, Ltd.

March 24,2014

2,000,000

2,000,000

0.6035

March 24,2021

MUFG Bank, Ltd.

April 4,2017

5,000,000

5,000,000

0.00646*4

April 5,2021

MUFG Bank, Ltd.

April 24,2013

5,000,000

5,000,000

0.775

April 26,
2021

Mizuho Bank, Ltd.

June 15,2012

4,000,000

4,000,000

1.07375

June 15,2021

Classification
LenderLong-term borrowings

Sumitomo Mitsui
Trust Bank, Limited

December 26,
2016

3,700,000

3,700,000

0.1913June 28,2021

Sumitomo Mitsui
Banking Corporation

January 19,
2018

5,000,000

5,000,000

0.16255

July 20,
2021

The Bank ofFukuoka, Ltd.

August 31,
2017

1,500,000

1,500,000

0.1325

August 31,
2021

The Iyo Bank, Ltd.

October 1,
2014

1,000,000

1,000,000

0.46525

October 1,
2021

The Chugoku
Bank, Limited

October 1,
2014

1,000,000

1,000,000

0.4725October 1,
2021

The Daishi
Bank, Ltd.

1,800,000

1,800,000

Sony Bank
Incorporated

1,400,000

1,400,000

The Toho Bank, Ltd.

1,400,000

1,400,000

1,400,000

1,400,000

0.463

November 15,
2021

The Shinkumi
Federation Bank

1,000,000

1,000,000

The Akita Bank, Ltd.

900,000

900,000

The Gunma
Bank, Ltd.

900,000

900,000

The Hokuetsu
Bank, Ltd.

November 14,
2014

41

Repayment
methodUse ofproceeds

Notes

Bullet*2

Unsecured
Unguaranteed
UnsubordinatedJAPAN REAL ESTATE INVESTMENT CORPORATION（8952）
Balance at
beginning ofcurrent period(¥thousand )Balance at
end ofcurrent period(¥thousand )The 77 Bank, Ltd.

900,000

900,000

The Tochigi
Bank, Ltd.

900,000

900,000

900,000

900,000

Classification
LenderDrawdown
date

The Fukui Bank, Ltd.
The Bank of
Iwate, Ltd.

November 14,
2014
500,000

500,000

The Higo Bank, Ltd.

500,000

500,000

The Yamagata
Bank, Ltd.

500,000

500,000

Averageinterest
rate *1(%)

Repayment
date

0.463

November 15,
2021

Long-term borrowings

The Nishi-Nippon
City Bank, Ltd.

June 17,2014

2,000,000

2,000,000

0.621

December 17,
2021

Sumitomo Mitsui
Banking Corporation

January 7,
2013

2,000,000

2,000,000

0.980

January 7,
2022

Mizuho Bank, Ltd.

January 15,
2013

5,000,000

5,000,000

0.96625

January 17,
2022

The
Norinchukin Bank

January 31,
2014

3,500,000

3,500,000

0.757

January 31,
2022

Mizuho Bank, Ltd.

April 24,2013

3,000,000

3,000,000

0.87375

April 25,2022

MUFG Bank, Ltd.

June 15,2012

4,000,000

4,000,000

1.1975June 15,2022

MUFG Bank, Ltd.

June 15,2012

2,500,000

2,500,000

1.2725June 15,2022

Shinsei Bank,
LimitedJune 15,2012

2,500,000

2,500,000

1.2725June 15,
2022

The
Norinchukin Bank

June 17,2014

3,000,000

3,000,000

0.6785June 17,
2022

The Gunma
Bank, Ltd.

1,000,000

1,000,000

The Shinkumi
Federation Bank

1,000,000

1,000,000

The Daishi Bank,
Ltd.

1,000,000

1,000,000

1,000,000

1,000,000

0.3925

August 10,
2022

The Toho Bank, Ltd.

1,000,000

1,000,000

The Fukui Bank, Ltd.

1,000,000

1,000,000

The Tochigi
Bank, Ltd.

500,000

500,000

The Chugoku
Bank, Limited

August 10,
2015

42

Repayment
methodUse ofproceeds

Notes

Bullet*2

Unsecured
Unguaranteed
UnsubordinatedJAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Drawdown
date

Balance at
beginning ofcurrent period(¥thousand )Balance at
end ofcurrent period(¥thousand )Averageinterest
rate *1(%)

Repayment
date

MUFG Bank, Ltd.

September 1,
2015

2,000,000

2,000,000

0.47125

September 1,
2022

The Hachijuni
Bank, Ltd.

December 20,
2017

1,000,000

1,000,000

0.1863

December 20,
2022

Development Bankof Japan Inc.

January 7,
2013

3,000,000

3,000,000

1.115

January 6,
2023

The Daishi Bank, Ltd.

January 7,
2016

1,500,000

1,500,000

0.2802January 10,
2023

The 77 Bank, Ltd.

January 10,
2018

1,000,000

1,000,000

0.205

January 10,2023

The Hachijuni
Bank, Ltd.

January 15,
2016

1,000,000

1,000,000

0.265

January 16,
2023

The Iyo Bank, Ltd.

January 15,
2016

1,000,000

1,000,000

0.265

January 16,
2023

Sumitomo Mitsui
Trust Bank, Limited

January 17,
2018

3,000,000

3,000,000

0.210January 17,
2023

Development Bankof Japan Inc.

January 31,
2014

5,000,000

5,000,000

0.9325January 31,
2023

The Yamaguchi
Bank, Ltd.

March 25,2013

1,000,000

1,000,000

0.945

March 24,
2023

The Bank ofFukuoka, Ltd.

March 24,2015

2,000,000

2,000,000

0.5125

March 24,2023

Classification
LenderLong-term borrowings

The
Norinchukin Bank

March 25,2015

3,500,000

3,500,000

0.46825

March 27,
2023

The Chugoku
Bank, Limited

March 26,2018

2,000,000

2,000,000

0.1988March 27,2023

Sumitomo Mitsui
Banking Corporation

November 29,
2018

3,000,000

3,000,000

0.1694

May 29,2023

Sumitomo Mitsui
Trust Bank, Limited

November 29,
2018

3,000,000

3,000,000

0.1694

May 29,2023

MUFG Bank, Ltd.

June 1,
2017

12,000,000

12,000,000

0.000
*4

June 1,
2023

The Chugoku
Bank, Limited

June 15,2015

3,000,000

3,000,000

0.61175

June 15,2023

The Bank ofFukuoka, Ltd.

June 15,2017

2,500,000

2,500,000

0.2388June 15,2023

MUFG Bank, Ltd.

December 19,
2014

10,000,000

10,000,000

0.42375*5December 19,
2023

MUFG Bank, Ltd.

March 26,2018

5,000,000

5,000,000

0.02152*4

March 26,
2024

The Hachijuni
Bank, Ltd.

March 26,2018

1,000,000

1,000,000

0.2338March 26,2024

Sumitomo Mitsui
Trust Bank, Limited

May 29,2019―

5,000,000

0.075

May 29,2024

43

Repayment
methodUse ofproceeds

Notes

Bullet*2

Unsecured
Unguaranteed
UnsubordinatedJAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Drawdown
date

Balance at
beginning ofcurrent period(¥thousand )Balance at
end ofcurrent period(¥thousand )Averageinterest
rate *1(%)

Repayment
date

The Iyo Bank, Ltd.

June 15,2017

2,500,000

2,500,000

0.275

June 17,2024

The Hachijuni
Bank, Ltd.

June 15,2017

1,000,000

1,000,000

0.275

June 17,2024

MUFG Bank, Ltd.

September 1,
2015

3,500,000

3,500,000

0.630

September 2,
2024

Sumitomo Mitsui
Trust Bank, Limited

September 2,
2015

3,800,000

3,800,000

0.536

September 2,
2024

The
Norinchukin Bank

September 1,
2017

5,000,000

5,000,000

0.240

September 2,
2024

Sumitomo Mitsui
Trust Bank, Limited

September 26,
2019―

5,500,000

0.105

September 26,
2024

Taiyo Life Insurance
Company

October 1,
2014

2,000,000

2,000,000

0.7825October 1,
2024

Mizuho Bank, Ltd.

October 1,
2015

2,500,000

2,500,000

0.5575October 1,
2024

MUFG Bank, Ltd.

June 1,
2018

10,000,000

10,000,000

0.2544

December 2,
2024

The Ashikaga
Bank, Ltd.

January 9,
2018

1,000,000

1,000,000

0.285January 9,2025

Mizuho Trust &Banking Co., Ltd.

March 2,2015

3,000,000

3,000,000

0.5585

March 3,2025

MUFG Bank, Ltd.

March 26,2018

2,000,000

2,000,000

0.2725

March 26,2025

Development Bankof Japan Inc.

March 30,2017

5,000,000

5,000,000

0.315

March 31,2025

Taiyo Life Insurance
Company

May 29,2015

1,500,000

1,500,000

0.7375

May 29,2025

Sumitomo Mitsui
Trust Bank, Limited

August 31,
2018

3,000,000

3,000,000

0.320

August 29,
2025

Development Bankof Japan Inc.

September 1,
2015

7,000,000

7,000,000

0.7175September 1,
2025

Mizuho Bank, Ltd.

December 26,
2016

5,000,000

5,000,000

0.3625

December 26,
2025

MUFG Bank, Ltd.

February 26,
2018

6,500,000

6,500,000

0.3413February 26,
2026

Mizuho Bank, Ltd.

March 27,2018

5,500,000

5,500,000

0.300

March 27,2026

Shinkin Central Bank

March 30,2017

5,000,000

5,000,000

0.360

March 30,
2026

The
Norinchukin Bank

January 23,
20194,000,000

4,000,000

0.1988July 23,2026

Shinkin Central Bank

September 1,
2017

5,000,000

5,000,000

0.3188September 1,
2026

MUFG Bank, Ltd.

October 31,
2016

3,000,000

3,000,000

0.240

October 30,
2026

Classification
LenderLong-term borrowings

44

Repayment
methodUse ofproceeds

Notes

Bullet*2

Unsecured
Unguaranteed
UnsubordinatedJAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Drawdown
date

Balance at
beginning ofcurrent period(¥thousand )Balance at
end ofcurrent period(¥thousand )Averageinterest
rate *1(%)

Repayment
date

Mizuho Bank, Ltd.

December 21,
2016

5,000,000

5,000,000

0.415

December 21,
2026

Shinkin Central Bank

January 23,
20195,000,000

5,000,000

0.2213January 25,
2027

Shinkin Central Bank

April 24,2018

6,000,000

6,000,000

0.3675

April 26,
2027

The Joyo Bank, Ltd.

January 9,
2018

1,000,000

1,000,000

0.4188January 11,2028

Sumitomo Mitsui
Banking Corporation

January 19,
2018

3,000,000

3,000,000

0.4338January 19,
2028

Classification
LenderLong-term borrowings

Mizuho Bank, Ltd.

March 30,2018

4,000,000

4,000,000

0.3963

March 30,2028

MUFG Bank, Ltd.

March 30,2018

4,000,000

4,000,000

0.3963

March 30,
2028

Taiyo Life Insurance
Company

March 30,2018

1,000,000

1,000,000

0.3963

March 30,
2028

The Yamanashi Chuo
Bank, Ltd.

March 26,2019

2,000,000

2,000,000

0.3688March 26,
2031

Sumitomo Life
Insurance Company

March 26,2019

1,000,000

1,000,000

0.505

March 27,2034

348,500,000

343,500,000

357,000,000

357,000,000

Subtotal
Total

Repayment
methodUse ofproceeds

Notes

Bullet*2

Unsecured
Unguaranteed
Unsubordinated*1. The average for floating interest rates is recorded as the weighted average during the period. The average is rounded off to the fifth
decimal place. The weighted average for interest rates of loans for which floating interest rates were swapped to fixed rates in orderto hedge the risk of interest rate fluctuations is calculated taking the effect of this swap into consideration.
*2. The purposes of executing these loans are to purchase real properties or beneficiary right of real estate in trust, to repay existingloans, and to fund the redemption of investment corporation bonds.
*3. At the end of the period under review, these loans are accounted for under current liabilities on the balance sheets as the current
portion of long-term borrowings.
*4. These are floating rate borrowings which are not swapped into fixed rates.
*5. In order to hedge the risk of exchange rate and interest rate fluctuations related to foreign currency-denominated loans, theCompany conducted an interest-rate and currency swap transaction, which substantially secured exchange and interest rates.
Accordingly, the balance and the weighted average for interest rates during the period are calculated taking the effect of thisinterest-rate and currency swap into consideration.

45

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(iii) Investment Corporation Bonds
Outstanding investment corporation bonds as of September 30, 2019, are as follows.
Securities

Date of issue

Balance at
beginning ofcurrent period(¥ thousand)

Balance at
end ofcurrent period(¥ thousand)Interest
rate(%)

Repayment
periodRepayment
methodUse ofproceeds

Notes

4th unsecured investment
corporation bondSeptember 29,
2005

10,000,000

10,000,0002.56

September 29,
2025

Bullet*1*2

10th unsecured investment
corporation bondMarch 30,2017

10,000,000

10,000,000

0.3975

March 30,
2027

Bullet*1*2 *3

11th unsecured investment
corporation bondOctober 26,
20172,993,175

2,993,175

0.2788October 26,
2027

Bullet*1*2 *3 *4

November 1,
2018

10,000,000

10,000,000

0.23

November 1,
2023

Bullet*1*2

32,993,175

32,993,175

12th unsecured investment
corporation bond(Japan Real Estate
Investment Green Bonds)

Total*1. The investment corporation bonds are primarily used to fund the acquisition of real properties or beneficiary right of real estate intrust, and to repay existing loans.
*2. Financial covenants, such as a negative pledge, are not included in these bonds.
*3. Bond issuance was limited to qualified institutional investors by a private placement.
*4. For the purpose of avoiding foreign currency risk with respect to foreign currency investment corporation bonds, the Company engages
in currency swap transactions to fix the exchange rates. Considering the effects of the currency swap transactions, the balances andinterest rates are reflected in the schedule.

(iv) New Unit Acquisition Rights“Not applicable”

f. Examination of the Value of Specified Assets(i) Real Estate, etc.
Acquisition
or
Disposition

Property nameAcquisition/
disposition
cost*1(¥ million)

Date oftransaction

Real estateappraisalvalue*3(¥ million)

Appraising
institution

Date ofappraisal

Kawasaki Isago Building
Daiwa Real
September 30,
September 1,
3,078
1,590
Estate Appraisal(50% quasi-co-ownership
2019
2019
Co., Ltd.
interest)*1. The “acquisition/disposition cost” refers to the amount listed in the sale and purchase contract, and does not include various
expenses necessary in the acquisition or disposition of the property such as trading intermediate fees.
*2. The appraisal value listed above is decided in accordance with the 3rd chapter of the Japanese Real Estate Appraisal Act and Real
Estate Appraisal Standards.
*3. The real estate appraisal value of Kawasaki Isago Building (50% quasi-co-ownership interest) is calculated as the real estateappraisal value of the entire property multiplied by a 50% quasi-co-ownership interest of the trust beneficiary right.
Disposition(ii) Other
Value inspections on transactions by the Company that are deemed necessary under Article 201 of the ITA, are entrusted to Yoshihiro
Tanaka CPA Office, excluding ones described in (i) Real Estate, etc. above.
During the period from April 1, 2019 to September 30, 2019, there was no transaction that was subject to such inspections.

46

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

g. Transactions with Interested Parties (from April 1, 2019 to September 30, 2019)(i) Transactions
Buying and selling amounts
Segment
Buying amounts
Total Amount

Selling amounts¥ 3,078,234 thousand¥ － thousand

Breakdown of Transactions with Interested Parties
Total¥ － thousand(－%)¥ － thousand(－%)* The numerical values within the ( ) represent a percentage of the total buying/selling amounts.

(ii) Amount of Commission Fees and Other Expenses
Segment

Property
management
expensesUtilities
expenses

Other
operatingexpenses

Total amount ofcommission fees andother expenses A¥3,637,328 thousand¥2,570,022 thousand¥165,277 thousand

Breakdown of transactions with interested parties
Payment recipient

Amount paid B

Percentage of
total amount
B/A

Mitsubishi Jisho Property
Management Co., Ltd.

¥2,331,533 thousand

64.1 %

Mitsubishi Estate Co., Ltd.

¥174,791 thousand

4.8 %Mitsubishi Real Estate Services
Co., Ltd.

¥41,296 thousand

1.1 %Yuden Building Kanri Co., Ltd.

¥30,041 thousand

0.8 %¥95,104 thousand

3.7 %¥25,990 thousand

15.7 %

Mitsubishi Estate Co., Ltd.

¥330 thousand

0.2 %Mitsubishi Real Estate Services
Co., Ltd.

¥800 thousand

0.5 %Mitsubishi Jisho Sekkei Inc.

¥7,280 thousand

4.4 %Minato Mirai 21 District
Heating and Cooling Co., Ltd.
Mitsubishi Jisho Property
Management Co., Ltd.

*1. Interested parties refers to interested parties of the asset management company who has concluded consignment agreements with theCompany, as stipulated in Article 123 of the enforcement order of the ITA, and Section 26, Paragraph 1, Item 27 of the Regulationsfor Management Reports Concerning Investment Trusts and Investment Corporations of the Investment Trusts Association, Japan.
*2. In addition to the transactions and commission fees listed above, other amounts paid to interested parties, such as orders placed for
repair work, are listed below.
Mitsubishi Jisho Property Management Co., Ltd.
Mitsubishi Estate Co., Ltd.
Yuden Building Kanri Co., Ltd.
Mitsubishi Jisho Sekkei Inc.
Mitsubishi Real Estate Services Co., Ltd.

¥527,493 thousand¥16,281 thousand¥1,486 thousand¥7,344 thousand¥10,876 thousand

47

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

h. Other Announcements
Board of Directors
Below is an overview of the important change and the conclusion of major contracts that were accepted by the Company’s Board of
Directors during the period.
Date of acceptanceAccepted item

May 16, 2019

Consignment of a generaladministrative work
concerning the issuance ofinvestment corporation bonds

Overview
In connection with the comprehensive resolution adopted on the samedate on the issuance of investment corporate bonds, the approval was
given to the candidate agents to whom an administrative work for thesaid bonds was consigned. Other items necessary for its operation are
entrusted to the executive directors to decide.

48

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Selected Financial Data
Millions of yen
For the period from

For the period from

For the period from

For the period from

For the period from

April 1, 2019 to
September 30, 2019

October 1, 2018 toMarch 31, 2019

April 1, 2018 toSeptember 30, 2018

October 1, 2017 toMarch 31, 2018

April 1, 2017 to
September 30, 2017

Operating revenues

35,16433,02233,066

31,95531,718Operating expenses

18,66918,47318,487

18,35818,539Operating profit

16,494

14,548

14,57813,596

13,178

Ordinary profit

15,39013,441

13,34812,362

11,921

Profit before income
taxes
Profit15,39013,441

13,34812,362

11,921

14,945

13,431

13,273

12,291

11,909Total assets

966,390963,676

956,645935,560

906,507

Interest-bearing debt

389,993389,993

384,493403,993375,500

Net assets

512,770

511,256

510,978

470,703

470,321

Unitholders’ capital

497,241

497,241

497,241

458,016

458,016

1,385,210

1,385,210

1,385,210

1,309,310

1,309,310

Net assets per unit (Yen)370,174

369,082

368,881359,505359,213

Cash distribution

14,124

13,432

13,152

12,223

11,909Dividend payout ratio(Note 1)Dividend per unit
(Yen)
Net operating income(NOI)
Funds from operations(FFO)
Return on assets(ROA) (Note 2)

94.5%

100.0%

99.1%

99.5%

100.0%

10,197

9,697

9,495

9,336

9,096

23,10422,60322,401

21,566

21,275

19,795

19,831

19,451

18,652

18,466

1.6%

1.4%

1.4%

1.3%

1.3%

(3.2% annualized)(2.8% annualized)(2.8% annualized)(2.7% annualized)(2.6% annualized)

2.9%

2.6%

2.6%

2.6%

2.5%

(5.8% annualized)(5.3% annualized)(5.2% annualized)(5.2% annualized)(5.1% annualized)

EOP equity ratio(Note 4)
EOP interest-bearing
debt ratio on total
assets (Note 5)
FFO multiple (Times)

53.1%

53.1%

53.4%

50.3%

51.9%

40.4%

40.5%

40.2%

43.2%

41.4%

25.4

22.7

21.3

19.3

19.2

Debt service coverage
ratio (Times) (Note 6)

21.4

19.6

18.5

16.9

16.1

Number of units

Return on equity(ROE) (Note 3)

Notes:1.
2.
3.

4.
5.
6.
7.

Dividend payout ratio = Dividend per unit / Profit per unit × 100
For the period ended September 30, 2018, as new investment units were issued, the ratio was calculated as follows:
Cash distribution / Profit × 100
ROA = Ordinary profit / Average of Total assets during the period × 100
ROE = Profit / Average of Net assets during the period × 100(Annualized portion of the calculation given in Note 2 and Note 3 assumes a fiscal period of 183 days for the period ended
September 30, 2017, 182 days for the period ended March 31, 2018, 183 days for the period ended September 30, 2018, 182 days
for the period ended March 31, 2019 and 183 days for the period ended September 30, 2019.)
EOP equity ratio = (Net assets at the end of period / Total assets at the end of period) × 100
EOP interest-bearing debt ratio on total assets = (Interest-bearing debt at the end of period / Total assets at the end of period) ×100
Debt service coverage ratio = Profit before Interest, Taxes, Depreciation and Amortization / Interest expenses
The Company has applied “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28 on
February 16, 2018) from the period ended September 30, 2018, and the reclassified amount due to the change was reflected to thetotal assets for the period ended March 31, 2018.

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