Japan Real Estate Investment CorporationJ A P A N R E A L E S TAT E I N V E S T M E N T C O R P O R AT I O N

http://www.j-re.co.jp/english/

M A RC H 2 0 1 4
Semiannual Report
For the period from October 1, 2013 to March 31, 2014

MARCH 2014 SEMIANNUAL REPORTProfile

Corporate Data
As of March 31, 2014

Japan Real Estate Investment Corporation (“the Company”) was established as one of
the first real estate investment corporations in Japan following revisions to the Law
Concerning Investment Trusts and Investment Corporations of Japan, as amended, or
the Investment Trust Law. Its investments focus primarily on office buildings, and it isaiming to maintain geographical diversity while seeking stable growth and dividends inthe medium to long term. The Company was listed on the Tokyo Stock Exchange(“TSE”) on September 10, 2001. (Securities Code: 8952)
Note: Investment corporations, including the Company, are special legal entities incorporated and operated underthe Investment Trust Law. Accordingly, the “units” of such investment corporations, including the units of theCompany, are governed by the Investment Trust Law and represent the equity interests in such investment
corporations, which may differ in certain material respects from the “shares” governed by the Corporation Law ofJapan and representing the equity interests in Japanese ordinary corporations incorporated and operated under
the Corporation Law of Japan. Investors and readers are specifically reminded to pay attention to such differences
when reviewing this semiannual report and making any investment decision on or in respect of the “units” of
the Company. “Unitholders” of the Company may be construed accordingly. Each of the investors and readers
should consult their own legal, tax and other advisors regarding all Japanese legal, tax and other consequencesof an investment in the units of the Company, with specific reference to their own legal, tax and other situation
and any recent changes in applicable laws, guidelines or their interpretation.

Executives

Transfer Agent

Executive Director:

Noritada Terasawa

Sumitomo Mitsui Trust Bank, Limited

Supervisory Directors:

Kenji Kusakabe

1-4-1, Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan

Tomohiro Okanoya

Auditors
Paid-in Capital

Ernst & Young ShinNihon LLC¥396,018,317,000

Hibiya Kokusai Bldg.
2-2-3, Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011, Japan

Contents
Financial Highlights

p. 1

Top 10 Unitholdersp. 1

Unit Price Performancep. 1

Number of Units Outstanding

Incorporation

1,188,280

May 11, 2001

Number of Unitholders

Executive Office

13,986

Japan Real Estate Investment Corporation
3-3-1, Marunouchi, Chiyoda-ku, Tokyo 100-0005, Japan

Stock Listing

The Strengths of Japan Real Estate
Investment Corporation

p. 2

Portfolio Highlights

p. 3

Tokyo Stock Exchange

For further information, please contact:
Japan Real Estate Asset Management Co., Ltd.

Securities CodePlanning Department8952

Tel: 81-3-3211-7921

Asset Management Summaryp. 4

Asset Size, Property Acquisitions, andPerformance Trends

p. 7

Type of Investment Corporation

To Our Unitholders

p.10

Closed-end corporate type fund

The Portfolio of Japan Real Estate
Investment Corporation

p.14

Overview of Portfolio Properties

p.17

Financial Section

p.23

Corporate Data

p.41

Fax: 81-3-3212-8886
E-mail: j-rea-inquiry@j-rea.co.jp

This semiannual report includes translations of documents originally filed under the Financial Instruments and Exchange Law of Japan. This report
was prepared in English solely for the convenience of readers outside Japan and should not be considered as a disclosure statement. The original
Japanese documents shall take precedence in the event of any discrepancies arising from the translations or interpretations contained in this report.
Estimates for the Company’s future operating results contained in this semiannual report are forward-looking statements and are based on
information currently available to the Company and its asset management company and are subject to risks and uncertainties. Consequently, theseprojections should not be relied upon as the sole basis for evaluating the Company. Actual results may differ substantially from the projections
depending on a number of factors.

Japan Real Estate Investment Corporation 41

Financial Highlights
Thousands of
U.S. dollars (Note 1)

Millions of yen
For the period from For the period from
October 1, 2013 toApril 1, 2013 toMarch 31, 2014
September 30, 2013

For the period from
October 1, 2012 toMarch 31, 2013

For the period from
April 1, 2012 to
September 30, 2012

For the period from
October 1, 2011 toMarch 31, 2012

For the period from
October 1, 2013 toMarch 31, 2014

Operating Revenues¥26,582¥26,225¥25,357¥24,222¥24,059$258,288

Operating Income

10,831

10,781

10,631

10,212

10,786105,246

Ordinary Income

9,083

9,143

8,749

8,372

8,863

88,256Net Income

9,070

9,129

8,824

8,448

8,934

88,128Net Operating Income (NOI) (Note 2)

17,481

17,205

16,76815,997

16,361

169,857

Funds from Operations (FFO) (Note 3)
FFO Multiple (Note 4)

14,71914,61914,032

13,356

13,625143,02120.9 times

23.4 times

27.2 times

16.2 times

14.7 times

20.9 times

Cash Distribution
Number of Units (Note 5)

9,070

9,129

8,995

8,619

8,888

88,128

1,188,280

594,140

594,140

549,040

549,040

11,546

7,633

15,36615,14015,70016,19074.16

Dividend per Unit (Yen/U.S.dollars) (Note 5)

Notes: 1. Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥102.92 = US$1.00, the foreign exchange rate on March 31, 2014,
has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen amounts have been or could be readily converted, realized or
settled into U.S. dollars at that rate or any other rate.
2. NOI = Property-Related Revenues – Property-Related Expenses (excluding Depreciation)
3. FFO = Net Income + Depreciation – Gain (Loss) on Sale of Properties – Gain on transfer of development rights of floor area – Dividends earned
4. FFO Multiple = Unit Price at End of the Respective Term ÷ FFO per Unit (Annualized)(Annualized portion of the calculation given in Note 4 assumes a fiscal period of 183 days for the period ended March 31, 2012, 183 days for the period ended
September 30, 2012, 182 days for the period ended March 31, 2013, 183 days for the period ended September 30, 2013 and 182 days for the period ended March 31, 2014.)
5. The Company implemented a 2-for-1 split of each investment unit as of January 1, 2014.

Top 10 Unitholders
As of March 31, 2014
Company

Japan Trustee Services Bank, Ltd. (Shintaku Acc.) .................................................................................................
The Master Trust Bank of Japan, Ltd. (Shintaku Acc.) ..........................................................................................
Trust & Custody Services Bank, Ltd. (Toshin Acc.) ...............................................................................................
The Nomura Trust and Banking Co., Ltd. (Toshin Acc.).......................................................................................
STATE STREET BANK AND TRUST COMPANY 505223 ..............................................................................
THE BANK OF NEW YORK, NON-TREATY JASDEC ACCOUNT ..............................................................
NOMURA BANK (LUXEMBOURG) S.A. .........................................................................................................
Mitsubishi Estate Co., Ltd.....................................................................................................................................
The Chugoku Bank, Ltd. ........................................................................................................................................
STATE STREET BANK-WEST PENSION FUND CLIENTS-EXEMPT.................................................................

Units% of total units
outstanding

204,533
98,93088,89766,72324,52423,74323,183
20,32016,78015,72117.21%
8.33%
7.48%
5.62%
2.06%
2.00%
1.95%
1.71%
1.41%
1.32%

Unit Price Performance
TSE REIT Index

TOPIX

The Company

325%
300%
275%
250%
225%
200%
175%
150%
125%
100%
75%
50% Sept.

Mar.

2001

2002

Sept.

Mar.

2003

Sept.

Mar.

2004

Sept.

Mar.

2005

Sept.

Mar.

2006

Sept.

Mar.

2007

Sept.

Mar.

2008

Sept.

Mar.

2009

Sept.

Mar.

2010

Sept.

Mar.

2011

Sept.

Mar.

2012

Sept.

Mar.

2013

Sept.

Mar.

2014

Japan Real Estate Investment Corporation 1

The Strengths of Japan Real Estate Investment Corporation

Stable Dividends

Collaboration withSponsors—Actual dividend per unit

— Expertise offor the 25th fiscal period:¥7,633

Mitsubishi Estate Co., Ltd.,The Dai-ichi Life($74.16)*1

Insurance Company, Limited—Forecasted dividend per unit
for the 26th fiscal period:¥7,600and Mitsui & Co., Ltd.
is being fully utilized.

($73.84)*1, *2*1 The foreign exchange rate of ¥102.92 = US$1.00, as ofMarch 31, 2014, has been used for this translation.

*2 The forecasted dividend was disclosed with the announcement of the25th fiscal period earnings results on May 19, 2014.

Strengths

Steady Growth with
Quality Portfolio

Sound Financial Base

—Total acquisition price:—Highest credit ratings for a J-REIT:(as of March 31, 2014)

A1¥837,405 million($8,136 million)— Maintains

64

from Moody’s,

AAA+

from S&P,

from R&I— LTV (Interest-bearing debt / Total assets):43.9 %

properties—The first listed J-REIT, showing steady— Long-term, fixed-interest bearing debt ratio*3 :84.2 %

performance for 25 consecutive periods

3 Long-term, fixed-interest loan + Investment corporation bonds (including*

current portion of Long-term, fixed-interest loans and Investment
corporation bonds) / Total interest-bearing debts

2 Japan Real Estate Investment Corporation

Portfolio Highlights
Trends in the state of portfolio management
Total leasable space (m 2)
Number ofbuildings

Total numberof tenants

Total leasable
space

Occupancy
rate
2

94.6%

September 2001

20

213

133,927m

March 2002

24

353

201,884m2

94.0%

September 2002

27

362

215,928m2

95.3%

March 2003

30

383

236,693m2

94.4%

September 2003

32

407

246,062m2

95.1%

March 2004

36

477

273,157m2

94.8%

September 2004

39

504

293,105m2

93.6%

March 2005

46

669

336,026m2

97.6%

September 2005

50

814

364,610m2

98.6%

March 2006

52

866

400,090m2

98.7%

September 2006

49

835

396,173m2

98.2%

March 2007

50

887

397,928m2

97.8%

September 2007

50

879

406,605m2

98.7%

March 2008

53

931

479,877m2

95.9%

September 2008

54

970

508,296m2

96.1%

2

95.5%

March 2009

55

993

516,411m

September 2009

55

977

516,421m2

93.3%

March 2010

55

979

566,277m2

93.0%

September 2010

55

992

567,612m2

92.4%

March 2011

57

1,004

589,002m2

93.2%

September 2011

56

1,009

584,982m2

94.6%

March 2012

57

1,058

629,761m2

94.7%

September 2012

58

1,082

645,787m2

95.5%

March 2013

60

1,131

700,759m2

96.7%

September 2013

61

1,146

713,180m2

96.3%

October 2013

61

1,147

713,164m2

96.2%

November 2013

61

1,147

713,023m2

95.3%

December 2013

61

1,146

713,023m2

95.4%

January 2014

62

1,201

739,622m2

95.1%

February 2014

62

1,205

745,862m2

95.1%

March 2014

63

1,223

750,956m2

96.7%

100,000

200,000

400,000

500,000

600,000

700,000
Total leasable
space

Occupancy rate

25th period

60.0Note 1:
Note 2:300,000

65.0

70.0

75.0

80.0

85.0

90.0

95.0

100.0
Occupancy rate (%)

The total number of tenants is the gross number of tenants by building.
Nippon Brunswick (land with leasehold interest) is not included.

Portfolio breakdown
As of March 31, 2014

Properties by geographic region

Tenants by industry type

(Percentage based on acquisition price)(Percentage based on leased space)

Electricity and Ceramics Others
heat supply service 1.5% 9.8%

1.6%

Other major cities

14.9%
Tokyo metropolitan area
excluding Tokyo 23 wards

8.4%

Tokyo 23 wards

76.7%

Public services
and associations*Nippon Brunswick (land with leasehold

Information
services

9.9%

2.3%

interest) is not included.

Finance

9.4%

Medical*From the 25th Period, “Electricity and heat

supply services” is segregated from “Others” andrepresented separately.

2.5%

Insurance

Electric
devices

3.1%

9.3%

Machinery

3.3%

Serviceindustries

Special services(consulting, etc.)

8.5%

3.6%

Real estateCommunications

8.1%

4.1%

Construction

Pharmaceuticals

5.0%

6.3%

Media andadvertising

5.7%

Retail and restaurants

6.3%

Japan Real Estate Investment Corporation 3

Asset Management Summary
For the period from October 1, 2013 to March 31, 2014

Acquisition of New Real Estate
Acquired Real Estate: Otemachi Financial City North Tower
Property Summary• Location:• Site area:• Floor area of building:• Structure:• Floors:• Completion:• Acquisition date:• Acquisition price:• Seller:• Property management company:

1-9-5 Otemachi, Chiyoda-ku, Tokyo
14,108.16 m2
239,769.07 m2
Steel-framed, steel-framed reinforced concrete structure, flat roof
Above ground: 35 floors
Below ground: 4 floors
October 2012
March 31, 2014
¥15,462 million
Mitsubishi Estate Co., Ltd. and Sankei Building Co., Ltd.
NTT Urban Development Builservice Co.

The Company evaluated the following two points in the determination of
the acquisition.
1. Superior location

Otemachi Financial
City North Tower
resswa.
OLine temachi Stata.
achi S

Otemachi Sta.

Otem

e

Otema

.

Otem

Maru

chi Sta

2. State-of-the-art office with high functionality
The property is a state-of-the-art large-scale building that was completed in 2012. It is equipped with elements toensure a comfortable office environment, including an astylar space of approximately 2,314 m2 on a standard floorarea; a spacious open-plan standard floor office area with commanding views on three sides; a grid ceiling systemwith fewer restrictions from partitions; and an individual air conditioning system that enables detailed setting byzone, among other features. Furthermore, in addition to enhancing CO2 reduction and containing built-in countermeasures against heat islands, the building is highly competitive in terms of BCP preparedness (BusinessContinuity Planning) and contribution to regional disaster prevention efforts.

nouchi

ine

ta.

iL

NTT
Communications
Otemachi
Building

South Tower

achi SToz
aon LinChiyo

MitsuiBussanBuilding
Hanz omyda Lin

e

Mita
Line
Japan
Meteorological
AgencyMet ropolitan Exp

This property, which was built as part of the Otemachi 1-chome, District 2, Type I Urban Redevelopment Project
and which is the second phase of the Chain Urban Renaissance Project in Otemachi, comprises “Otemachi
Financial City,” including the South Tower, which was built along with the property. Connecting directly with
Otemachi subway station and offering convenient access to JR Tokyo station, this large-scale newly-built property
boasts its premium location in Otemachi as an international financial center.
In addition, the lower floors of the South Tower, located next to the property, are equipped with “St. Luke’s
MediLocus,” an annex of St. Luke’s International Hospital that provides English-language-based medical services.
The property boasts a locational advantage with value-added functions.

Acquired Real Estate: Queen’s Tower A
Property Summary• Location:• Site area:• Floor area of building:• Structure:• Floors:• Completion:• Acquisition date:• Acquisition price:• Seller:• Property management company:

2-3-1 Minatomirai, Nishi-ku, Yokohama City, Kanagawa Prefecture
44,406.40 m2
498,282.77 m2
Steel-framed, steel-framed reinforced concrete, reinforced concrete structure, flat roof
Above ground: 37 floors
Below ground: 5 floors
June 1997
January 31, 2014¥17,200 million
Regina Property Godo Kaisha
Mitsubishi Estate Co., Ltd.

The Company evaluated the following two points in the determination of
the acquisition.
Yoko

Yokohama
Media
Tower

ha
ma
M

ina

tom

ail

sai

iR

Od
vd

Queen’s Square
Yokohama

M
in
ato
M

Mitsubishi Juko
Yokohama Building

i ra
iO
do
ri
Bl

The Landmark
Tower Yokohama

1. Superior location
Minatomirai, the area in which the property sits, has experienced a significant rise in its profile and rating as an
office area in recent years. Housing only large buildings, the area also fulfills companies’ BCP requirements to ahigh degree.
The property is directly connected to Minatomirai station on the Minatomirai Line of the Yokohama Minatomirai
Railway. The location has an advantage over other blocks in the Minatomirai area in terms of accessibility.

.

ine

ta .

iL

iS

i ra

i ra

tom

tom

ina

Bl

M

ina

or i

y,

M

wa

Yokohama
Museum of Art

ku

i ra

MARK ISminatomirai

Pacifico
Yokohama
Ko

Minatomirai
Business Square
Keiyu
Hospital
MM Park
Building

Queen’s Tower A

vd.

4 Japan Real Estate Investment Corporation

2. An office complex that caters to tenant needs
With a standard floor area of approximately 1,570 m2, a ceiling height of 2,730 mm (after installation of an OA
floor), individual air conditioning, 24-hour manned control, and an emergency power generator among otherfacility features, the property is at a level that compares with relatively new buildings. Tenants in the property arealso allowed to use the business support facilities of the adjacent Yokohama Landmark Tower. Furthermore, theproperty is highly convenient for tenants since it also houses commercial facilities such as restaurants, merchandise
sales and service outlets on its lower floors.

Acquisition of New Real Estate
Acquired Real Estate: Ebisu Neonato (Additional Share)
Property Summary• Location:• Site area:• Floor area of building:• Structure:

za

wa

St

.

atré
Ebisu

isu

St

a.

K

a
om

Meij

i St.

Hibiya Line

Shibuya River

Ebisu NeonatoEb

4-1-18 Ebisu, Shibuya-ku, Tokyo
5,005.70 m2
36,598.38 m2
Steel-framed, steel-framed reinforced concrete
structure, flat roof
• Floors:
Above ground: 18 floors
Below ground: 2 floors• Completion:
October 1994
• Acquisition date:February 18, 2014
• Acquisition price:¥10,512 million• Seller:
INPEX CORPORATION• Property management company: Tokio Marine & Nichido Facilities, Inc.

Ebisu Sta.

The Company evaluated the following two points in the determination of the acquisition.
1. Superior location
Like its neighbor Shibuya, the Ebisu area is one of Tokyo’s main office areas and incorporates a broad range of business tenants, including overseas companies and IT firms. Withina one-minute walk to the station, and with direct access to JR Ebisu station via a pedestrian deck, this property possesses some key advantages over other properties in the area.

2. Increase in share of co-ownership of this asset
Further improvement in operational efficiency can be expected with this recent additional acquisition of the property, reducing the number of co-owners of the property tothree and making the Company the largest shareholder among them.

2-for-1 Split of Investment Units
1. Purpose of the Split

2. Overview of the Split

The Company, which has long promoted the holding of investment
units by a wide range of investor classes through its IR activities, has
resolved to split its investment units in order to establish anenvironment that facilitates further investment by investors and istimed to coincide with the start of “NISA” (Nippon Individual
Savings Account) in January 2014.
Through this split of investment units, the Company hopes tobroaden its investor base by providing a wide range of private investors the opportunity to invest from their NISA accounts as well as toincrease their long-term holdings.

(1) Method of the Split
On the effective date of January 1, 2014, the Company implemented a 2-for-1 split of theinvestment units held by unitholders stated or recorded on the final unitholders registry as ofDecember 31, 2013.** Since December 31 is a holiday for the unitholder registry administrator, the date was December 30, 2013 inpractice(2) Increase in Number of Investment Units through the Split, etc.
• Number of JRE investment units outstanding before the split:• Increase in number of investment units through the split:• Number of JRE investment units outstanding after the split:• Total number of investment units issuable after the split:

594,140 units
594,140 units
1,188,280 units
4,000,000 units

Subsequent Events
Acquired Real Estate: Nishiki Park Building(Additional Share)
Property Summary• Location:

2-4-3 Nishiki, Naka-ku,
Nagoya City, Aichi Prefecture• Site area:
2,170.45 m2 (Total land area
for the building site including
leased land (term leaseholdinterest) of 384 m2)• Floor area of building: 25,091.91 m2 (Total floor
space for the entire building)• Structure:
Steel-framed, steel-framed concrete, and steel-reinforced concrete structure, flat roof
• Floors:
Above ground: 22 floors
Below ground: 4 floors• Completion:
August 1995
• Acquisition date:June 9, 2014
• Acquisition price:¥650 million• Seller:
DYNAS, Ltd., 1 corporationand 5 individuals*• Property managementcompany:
Mitsubishi Estate Co., Ltd.

Issuance of New Investment Units
Public offering of new investment units• Number of units newly issued:
57,500 units• Offer price (subscription price):
501,760 yen per unit
• Aggregate amount of offer price (subscription price): 28,851,200,000 yen• Issue price (paid-in price):
486,400 per unit
• Aggregate amount of issue price (paid-in price):
27,968,000,000 yen• Payment date:
April 15, 2014

Issuance of new investment units through third-party allocation• Number of units newly issued:• Issue price (paid-in price):• Aggregate amount of issue price (paid-in price):• Payment date:• Allottee:

5,750 units
486,400 yen per unit
2,796,800,000 yen
May 14, 2014
SMBC Nikko Securities Inc.

The Company used the funds procured by issuing new investment units through theabovementioned public offering and cash reserves to make repayments of 28,900 million
yen in short-term loans prior to maturity and scheduled repayments of 3,000 million yen
in short-term loans by May 7, 2014. As for the funds procured by issuing new investment units through the abovementioned third-party allocation, a portion was used tosupplement cash reserves allocated to the repayment of short-term loans.

* The details concerning one corporation and five individuals among the sellers are undisclosed due totheir non-approval of disclosure.

Japan Real Estate Investment Corporation 5

Japan Real Estate Investment Corporation 6

Asset Size, Property Acquisitions and Performance Trends
In September 2001, the Company became the first J-REIT in Japan listed on the Tokyo Stock Exchange(“TSE”). Since then, the Company has targeted stable management to fulfill its goal of maintaining andincreasing dividends per unit over the medium to long term. The Company’s growth is based on
external growth strategies that aim to increase earnings through the acquisition and transfer ofOccupancy rate
94.6%

95.3%

94.0%

95.1%

94.4%

97.6%
94.8%

98.6%

93.6%

Major Portfolio Properties

Kitanomaru Square
The 9th fiscal period

Shiodome Building
The 15th and 17th fiscal
periods

Akasaka Park Building
The 21st fiscal period

Mitsubishi UFJ Trust andBanking Building
The 11th fiscal period

Total acquisition price (Number of properties)
First J-REIT
listed on TSE began with
¥92.8 billion in assets.

¥144
¥92

billion

¥326
¥290

¥164
billion

¥183

¥192

billionbillion

(30)

(32)

¥218
billion¥239

billionbillionbillionbillion
(20)

(24)

(27)

(36)

(39)

(46)

(50)

At IPO

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Sept. 2001

Mar. 2002

Sept. 2002

Mar. 2003

Sept. 2003

Mar. 2004

Sept. 2004

Mar. 2005

Sept. 2005

Dividend per unit*¥7,491¥6,426¥7,227¥7,558¥7,301¥7,355¥7,912¥7,975

Listing and issuance of units
Sept. 2001
Listed on TSE
as first J-REIT

May 2002
First Follow-On(First for a J-REIT)

Sept. 2001
IPO
*JRE implemented a 2-for-1 split of each investment unit as of January 1, 2014.
The figures for the 1st through the 24th periods are taken the split into account.

7 Japan Real Estate Investment Corporation

Oct. 2003
Second Follow-On

Apr. 2005
Third
Follow-On

properties as well as internal growth strategies that seek to optimize earnings from properties already held. The sizeof the Company’s assets (total acquisition price) has grown from ¥92.8 billion at IPO to ¥837.4 billion as of the25th fiscal period end due to the steady achievement of external growth strategies. However, in terms of internal
growth strategies, ongoing efforts are being made in such areas as maintaining stable occupancy rates and reducing
building management costs.
95.9%
98.7%

98.2%

97.8%

96.1%

95.5%

93.3%

93.0%

98.7%
Keep stable occupancy rate

Major Portfolio Properties

MM Park Building
The 13th fiscal period

Shibuya Cross Tower
The 1st fiscal periodTokyo Opera City Building
The 8th and 17th fiscal
periods

Harumi Front
The 23rd fiscal period¥641

Steady growth in asset size

billion

¥542

¥518

billionbillion

¥412

¥441

¥418

billionbillion

(52)

(49)

billion

(50)

¥564

¥564

billionbillion

(55)

(55)

¥446
billion

(50)

(53)

(54)

(55)

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Mar. 2006

Sept. 2006

Mar. 2007

Sept. 2007

Mar. 2008

Sept. 2008

Mar. 2009

Sept. 2009

Mar. 2010¥8,086¥8,651¥8,760¥9,250¥14,611¥9,536¥9,510¥9,599¥9,021

Oct. 2006
FourthFollow-On

8 Japan Real Estate Investment Corporation

Mar. 2008
Fifth Follow-On

Dec. 2009
Sixth
Follow-On

92.4%

93.2%

94.6%

94.7%

95.5%

96.7%

96.7%

96.3%

Properties That Have Been Recently Acquired

Nagoya Hirokoji Place
The 24th fiscal period

Shijo Karasuma Center
Buiding
The 24th fiscal period

Queen’s Tower A
The 25th fiscal period

Ebisu Neonato
The 25th fiscal period

¥782
¥718
¥643
billion¥660
billion¥657

billion¥740

Otemachi Financial City
North Tower
The 25th fiscal period¥794

billionbillion

(60)

(62)

¥837
billionbillionbillion

JRE’s asset size has
increased sevenfold since
being listed ten years ago.

(55)

(57)

(56)

(57)

(58)

(64)

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Sept. 2010

Mar. 2011

Sept. 2011

Mar. 2012

Sept. 2012

Mar. 2013

Sept. 2013

Mar. 2014¥8,314¥7,821¥7,925¥8,095¥7,850¥7,570¥7,683¥7,633Feb. 2012
SeventhFollow-On

Oct. 2012
EighthFollow-On

Apr. 2014
Ninth
Follow-On

Japan Real Estate Investment Corporation 9

To Our Unitholders

Continuing to pursue external growth-oriented operations in the 25th fiscal
period, Queen’s Tower A in Yokohama City was acquired in January 2014 andan additional share of Ebisu Neonato was acquired in February. In March 2014,
the Company acquired Otemachi Financial City North Tower, a sophisticatedbuilding completed in 2012 and located in a premium office area.

BUSINESS PERFORMANCEFOR THE 25TH FISCAL PERIOD
Summary of Financial Results and Cash Dividend
In the 25th fiscal period (October 1, 2013 to March 31, 2014),
Japan Real Estate Investment Corporation (“the Company”)
recorded operating revenues totaling 26,582 million yen, up 1.4%
compared with the previous period. On the earnings front, operating
income increased 0.5% to 10,831 million yen. After deducting
expenses for interest payments on loans and other costs, ordinary
income decreased 0.7% to 9,083 million yen and net income fell
0.7% to 9,070 million yen.
Turning to dividends, the Company will make cash
distributions using accounting profits based on the dividend
policy outlined in Article 32-2 of the Company’s Articles ofIncorporation, in an amount that exceeds 90% of earnings
available for dividends as required by Article 67-15 of the Special
Taxation Measures Law of Japan. Based on this policy, theCompany was able to maintain retained earnings as the amount
did not exceed earnings available for distribution at the end of
the period. Therefore, the total amount of dividends that theCompany has determined to pay out is 9,070,141,240 yen forthe period under review, which must be divisible by 1,188,280—
the number of units outstanding as of March 31, 2014.
Accordingly, the per-unit cash dividend totaled 7,633 yen.

Operating Environment and Performance
During the period under review, the Japanese economy saw solid
gains in household income and investments coupled withimprovement in corporate earnings due to the peak in demand
before the consumption tax increase in April 2014 and the
support of government policies geared toward the upswing in theeconomy, although there remain concerns about the impact fromthe economic slowdown in overseas markets.
In the market for leased office space during the period
under review, while the downward pressure on rent levels
continued to weaken, it did not disappear, and property-related

10 Japan Real Estate Investment Corporation

revenues, excluding those from properties that have newly begun
operations, declined further compared with the previous period.
Vacancy rates in the Tokyo metropolitan were on a downward
trend as tenant numbers picked up in conjunction with therecovering economic conditions. Highly competitive buildings
also experienced improving occupancy rates and the rental
market showed recovery. However, many companies looking tochange premises remained very cautious about office costs andrent level, which for the market as a whole, were not risingstrongly enough for a rebound. And while there is still someregional variation in areas outside of the Tokyo metropolitanarea, overall rent levels remained persistently low, even thoughsome regions started to see a bottoming out.
In the property market, an opportune fund-raising
environment sparked a flurry of buying and selling. Prices began
to rise, with some sellers seeing prices beginning to approach
hoped-for levels.
Thus, the Company has actively conducted investments
under an investment policy of providing stable dividends to all
unitholders that has not changed since it first listed on the TSE.
For the 25th fiscal period, the period under review, the Company
was able to continue to provide stable cash dividends.
Reflecting these circumstances, the Company pursued anaggressive yet flexible leasing approach that takes into accountmarket trends. Due to these efforts, the Company’s occupancy
rate edged up from 96.3% as of September 30, 2013 to 96.7%
as of March 31, 2014.
At the same time, the Company strives to bolster its
portfolio through external growth and to raise revenues andearnings through acquisitions of highly convenient properties
that are built to high specifications in prime locations and that
also boast both stability and competitiveness. The Company
acquired part of Queen’s Tower A (Yokohama City) on
January 31, 2014 for 17,200 million yen, an additional portionof Ebisu Neonato (Shibuya-ku, Tokyo) on February 18, 2014 for
10,512 million yen, and part of Otemachi Financial City North
Tower (Chiyoda-ku, Tokyo) on March 31, 2014 for 15,462
million yen.

The Company is endeavoring to bolster its portfolio’s competitive edge bycontinuing to acquire prime properties.

As a result of the above, the Company’s portfolio at theend of the fiscal period under review, March 31, 2014, consistedof 64 properties (office buildings) with a total acquisition priceof 837,405 million yen. Total leasable space stood at 750,956 m2,
with a total of 1,223 tenants.
Note 1: The part of the Jingumae Media Square Building site that wastransferred (acquisition price: 614 million yen) on October 30, 2009, is
included in the total acquisition price. This inclusion applies to the figuresin the following section as well.
Note 2: The Nippon Brunswick Building (Land with leasehold interest),
whose building ownership was transferred on August 23, 2013, is includedin the above number of properties and total acquisition price, but is notincluded in total leasable space or total number of tenants.

Financial Activities
To fund the repayment of existing loans, the Company procured
short-term loans totaling 1,000 million yen on October 7, 2013;
8,000 million yen on January 7, 2014; 5,000 million yen on
January 15, 2014; and 10,000 million yen on March 24, 2014;
as well as long-term loans amounting to 3,000 million yen on
March 24, 2014.
Moreover, the Company procured 17,000 million yen in
long-term loans on January 31, 2014 to partially fund theacquisition of Queen’s Tower A, 7,000 million yen in short-termloans on February 18, 2014 to partially fund the acquisition of
Ebisu Neonato, and 14,800 million yen in short-term loans on
March 31, 2014 to partially fund the acquisition of Otemachi
Financial City North Tower.
The Company concluded interest-rate swap contracts tohedge against interest-rate fluctuation risk for the 12,000 million
yen portion of the 17,000 million yen procured in long-termloans on January 31, 2014, and the 3,000 million yen procured
in long-term loans on March 24, 2014.
As a result of these financing activities, as of March 31,
2014, the Company’s total interest-bearing debt amounted to358,900 million yen. This amount consists of long-term loans
totaling 247,100 million yen (including the current portion of
long-term loans totaling 5,100 million yen), short-term loans

totaling 56,800 million yen, and investment corporation bonds
totaling 55,000 million yen (including the current portion of
investment corporation bonds totaling 15,000 million yen).
As of March 31, 2014, the Company’s long-term, fixedinterest bearing debt ratio (ratio of long-term, fixed-interest
bearing debt (including the current portion of long-term loans
and investment corporation bonds) to total interest-bearingdebt) stood at 84.2%, and the LTV ratio (ratio of interest-bearing
debt to total assets) was 43.9%.
In addition, at the Board of Directors meetings held on
March 27, 2014, and April 8, 2014, the Company decided toissue new investment units (57,500 units through public
offering, 5,750 units through third-party allocation). As a result,
the Company procured 27,968 million yen on April 15, 2014,
from the public offering and 2,796 million yen on May 14,
2014, from the third-party allocation portion.
The Company has been able to maintain a sound andconservative financial standing through such measures as using
the funds procured by issuing new investment units throughpublic offering and cash reserves to make repayments of 31,900
million yen in short-term loans by May 7, 2014 and lowering the
LTV ratio. As for the funds procured by issuing new investment
units through third-party allocation, a portion was used tosupplement cash reserves allocated to the repayment of shortterm loans.
The Company’s credit ratings as of March 31, 2014 wereas follows:
Rating Agency

Credit RatingStandard & Poor’s Ratings Japan K.K.

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

Moody’s Japan K.K.

Rating: A1; Outlook: Negative

Rating and Investment Information,
Inc.

Rating: AA; Outlook: Stable

Japan Real Estate Investment Corporation 11

The market for leased office space is improving, but as it will take a bit longer
for a real recovery to take hold, in the 26th fiscal period the Company intends
to continue pursuing external growth-oriented operations. Going forward, theCompany will leverage its sound financial standing to achieve further external
growth as well as secure stable cash dividends.

OUTLOOK
Trends in the Office Leasing Market
In the Japanese economy, although there is a worry that thereactionary drop in household sector spending due to theconsumption tax hike will impact economic conditions, a
gradual, self-sustaining recovery is expected thanks mainly tovarious economic measures and policies supporting corporate
activities, improving export conditions owing to firm economic
trends in the United States and other overseas markets, and an
improving household sector bolstered by better hiring conditions.
In the market for leased office space, there is not expected
to be large-scale supply that could greatly impact markets,
especially in central Tokyo, and with the recovering economy andsolid office demand, some competitive areas are expected to see
a rebound in rent levels. However, it is anticipated that it willtake some more time before the market as a whole picks up
steam.
Regarding property markets, while there is currently hopefor real recovery in the market for leased office space and an
opportune fund raising environment is expected to spur
aggressive trading, looking solely at large-scale prime properties,
there are very few competitors in a position to consider making
acquisitions. So, before the market begins to heat up, we aregathering data and working hard to ensure the further acquisitionof prime properties.

Growth Strategies
As stated above, conditions in the market for leased office space
include the fall in overall market rent levels having almost, but
not yet completely, bottomed out with some building owners
looking to raise rent levels and others needing to maintaincurrent levels. In line with these expectations, the Company will
adhere to the following management policies in order to keep
improving profitability.
First, the Company works to strengthen relationships oftrust with existing tenants. As of March 31, 2014, the Company

12 Japan Real Estate Investment Corporation

had contracts with 12 property management companies. Mostof these companies were already handling the management of
their buildings before the Company acquired them and had thus
built relationships of trust with their tenants. The Company will
work to further strengthen these relationships by anticipating
tenants’ needs and providing tailored services to increase tenantsatisfaction, thereby maintaining occupancy rates,
disincentivizing rent reduction requests and pursuing
opportunities to raise rent levels.
Second, we endeavor to fill vacancies promptly. In
cooperation with the property management companies
mentioned above, the Company will actively seek the mostappropriate tenants for each property, based on location andfeatures, in order to fill current and anticipated vacancies as
rapidly as possible. Furthermore, the Company will work to
uncover additional needs for floor space among existing tenants.
Third, with the aim of stabilizing revenues and earnings,
the Company will endeavor to secure fixed- and long-term
leasing agreements with its large-scale tenants.
Lastly, we aim to continuously reduce management costs.
The Company has introduced sound competitive principles for
its multiple property management companies to follow and isrevamping their management systems and cost structures on an
ongoing basis.
With regard to the acquisition of properties, theCompany has adopted the following policies for acquiringproperties.
First, to access information quickly, the Company
continues to enhance its property information channels whileworking to develop new channels.
Second, in its acquisition activities, the Company
continues to meticulously monitor and examine economic,
physical and legal factors, including rights-related issues, whenselecting properties. In particular, with regard to the structure ofbuildings, the Company requires buildings to meet or exceed
new earthquake-resistance standards, making appropriate
renovations based on engineering reports, and exclusively targets
properties capable of maintaining a competitive edge in terms of

Noritada Terasawa (Left)
Executive Director of Japan Real Estate Investment Corporation

Hiroshi Katayama (Right)
CEO & President of Japan Real Estate Asset Management Co., Ltd.

the facilities they offer over the medium to long term.
Third, in accordance with its acquisition policies, theCompany shall maintain its portfolio so that 70% or more of theportfolio properties are located within the Tokyo metropolitanarea, with the remaining 30% or fewer located in other major
cities.
Under these policies, the Company will continue toacquire highly competitive properties. At the same time, in orderto further enhance the quality of its portfolio, the Company willremain open to the replacement of portfolio properties with due
consideration given to timing.

Financial Strategies
In principle, the Company shall maintain an LTV ratio that does
not exceed 65%. To ensure an even lower interest-bearing debt
ratio, the Company adopts the conservative target level of 30%
to 40%. As for the financing of property acquisitions, theCompany shall use, in a flexible manner, a variety of funding
schemes—including the issue of investment corporation
bonds—while maintaining a sound and conservative financial
standing and closely monitoring trends in financial markets.
When obtaining a loan, the Company shall strictly adhere to its
financial policies. More specifically, with the aim of minimizing
funding costs, the Company shall negotiate with several qualified
institutional investors (limited to those defined under the Special
Taxation Measures Law of Japan) before executing a loan
agreement.

27,600 million yen, operating income totaling 11,240 million
yen, ordinary income totaling 9,580 million yen, and net income
totaling 9,570 million yen. The Company plans to declare a cash
dividend totaling 7,650 yen per unit.
Actual operating revenues, operating income, ordinary
income, net income, and cash dividend per unit may varydepending on changes in the situation.
As previously stated in the Trends in the Office Leasing
Market section, rent levels are rebounding in an increasing
number of areas, but it is expected that the recovery of theexisting portfolio will lag slightly behind this recovery.
Looking ahead, the Company will continue to strive forfurther external growth while maintaining stable cash dividends,
leveraging its sound financial standing.
You have placed considerable trust in us. Going forward,
we seek to continue earning that trust through sustainablegrowth and performance. Thank you for your steadfast support.

Noritada Terasawa
Executive Director of Japan Real Estate Investment Corporation

Performance Forecasts for the 26th and 27th Fiscal Periods
For the 26th fiscal period (April 1, 2014 to September 30, 2014),
the Company forecasts operating revenues totaling 27,610
million yen, operating income totaling 11,200 million yen,ordinary income totaling 9,530 million yen, and net income
totaling 9,520 million yen. The Company plans to declare a cash
dividend totaling 7,600 yen per unit.
For the 27th fiscal period (October 1, 2014 to March 31,2015), the Company forecasts operating revenues totaling

Hiroshi Katayama
CEO & President of Japan Real Estate Asset Management Co., Ltd.

Japan Real Estate Investment Corporation 13

The Portfolio of Japan Real Estate Investment Corporation As of March 31, 2014
Properties Roster

Location

Type ofspecified asset

Acquisition
dateTokyo 23 wards
쎲I- 1
Genki Medical Plaza
쎲I- 2
Kitanomaru Square
쎲I- 3
MD Kanda Building
쎲I- 4
Kandabashi Park Building
쎲I- 5
Otemachi Financial City North Tower
쎲I- 6
Nibancho Garden
쎲I- 7
Mitsubishi UFJ Trust and Banking Building쎲I- 8
Burex Kojimachi Building
쎲I- 9
Sanno Grand Building

Iidabashi, Chiyoda-ku
Kudan-Kita, Chiyoda-ku
Kanda-Mitoshirocho, Chiyoda-ku
Kanda-Nishikicho, Chiyoda-ku
Otemachi, Chiyoda-ku
Nibancho, Chiyoda-ku
Marunouchi, Chiyoda-ku
Kojimachi, Chiyoda-ku
Nagatacho, Chiyoda-ku

Real property
Real property
Real property
Real property
Real property
Real property
Real property
Real property
Real property

쎲I- 10쎲I- 11
쎲I- 12
쎲I- 13
쎲I- 14
쎲I- 15

Yurakucho Denki Building
Kodenmacho Shin-Nihonbashi Building
Kyodo Building (Kayabacho 2Chome)
Burex Kyobashi Building
Ginza Sanwa Building
Ryoshin Ginza East Mirror Building

Yurakucho, Chiyoda-ku
Nihonbashi-Kodenmacho, Chuo-ku
Nihonbashi-Kayabacho, Chuo-ku
Kyobashi, Chuo-ku
Ginza, Chuo-ku
Ginza, Chuo-ku

Real property
Trust
Trust
Real property
Real property
Real property

쎲I- 16
쎲I- 17
쎲I- 18
쎲I- 19쎲I- 20

Harumi Front
Harumi Center Building
Akasaka Park Building
Aoyama Crystal Building
Shiodome Building

Harumi, Chuo-ku
Harumi, Chuo-ku
Akasaka, Minato-ku
Kita-Aoyama, Minato-ku
Kaigan, Minato-ku

Real property
Real property
Real property
Real property
Trust쎲I- 21
쎲I- 22
쎲I- 23
쎲I- 24

Shiba 2Chome Daimon Building
Cosmo Kanasugibashi Building
Shinwa Building
Tokyo Opera City Building

Shiba, Minato-ku
Shiba, Minato-ku
Nishi-Shinjuku, Shinjuku-ku
Nishi-Shinjuku, Shinjuku-ku

Trust
Trust
Real property
Real property

쎲I- 25
쎲I- 26
쎲I- 27
쎲I- 28
쎲I- 29TIXTOWER UENO
Higashi-Ueno, Taito-ku
Higashi-Gotanda 1Chome Building
Higashi-Gotanda, Shinagawa-ku
Osaki Front Tower
Osaki, Shinagawa-ku
Omori-Eki Higashiguchi Building
Omori-Kita, Ota-ku
Nippon Brunswick Building (Land with leasehold interest) Sendagaya, Shibuya-ku

Real property
Real property
Real property
Trust
Real property

쎲I- 30쎲I- 31
쎲I- 32
쎲I- 33
쎲I- 34

Yoyogi 1Chome Buildingda Vinci Harajuku
Jingumae Media Square Building
Shibuya Cross Tower
Ebisu Neonato

Yoyogi, Shibuya-ku
Jingumae, Shibuya-ku
Jingumae, Shibuya-ku
Shibuya, Shibuya-ku
Ebisu, Shibuya-ku

Real property
Real property
Real property
Real property
Real property

쎲I- 35Harmony Tower

Honcho, Nakano-ku

Real property

쎲I- 36
Otsuka Higashi-Ikebukuro Building쎲I- 37
Ikebukuro 2Chome Building쎲I- 38
Ikebukuro YS Building
Tokyo metropolitan area, excluding Tokyo 23 wards
쎲 II- 1
Hachioji First Square

Higashi-Ikebukuro, Toshima-ku
Ikebukuro, Toshima-ku
Minami-Ikebukuro, Toshima-ku

Trust
Trust
Real property

10/31/2002
02/24/2006
05/31/2002
08/15/2002
03/31/2014
04/01/2005
03/28/2007
07/29/2005
01/31/2005
04/03/2006
total
08/01/2003
09/25/2001
03/01/2011
07/22/2002
03/10/2005
03/15/2005
05/24/2010
total
01/07/2013
12/18/2007
11/15/2011
03/14/2003
12/19/2008
01/15/2010
total
09/10/2001
09/25/2001
09/01/2004
09/13/2005
03/24/2010
total
06/15/2012
11/01/2004
02/01/2011
09/10/2001
03/24/2004
08/23/2013
total
04/01/2004
11/22/2002
10/09/2003
11/30/2001
11/14/2003
04/01/2004
02/18/2014
total
02/28/2005
12/19/2012
total
09/25/2001
09/25/2001
08/02/2004

5,000
81,555
9,520
4,810
15,462
14,70044,7007,000
10,20010,70020,900
7,200
3,173
4,410
5,250
16,830
5,353
2,645
7,999
31,30026,80060,8007,680
21,25054,60075,850
4,859
2,808
7,830
9,350
22,426
31,77622,0005,500
12,3005,123
6,670(1,170)
5,500
8,700
4,885
12,20034,6003,740
36010,512
14,612
8,500
520
9,020
3,541
1,728
4,500

Hachioji, Tokyo

Real property

쎲II- 2

Saitama Urawa Building

Saitama, Saitama Prefecture

Real property

쎲II- 3쎲II- 4
쎲II- 5
쎲II- 6

MM Park Building
Queen’s Tower A
Kawasaki Isago Building
Musashi Kosugi STM Building

Yokohama, Kanagawa Prefecture
Yokohama, Kanagawa Prefecture
Kawasaki, Kanagawa Prefecture
Kawasaki, Kanagawa Prefecture

Real property
Trust
Trust
Real property

03/31/2005
03/19/2008
total
09/25/2001
10/11/2001
total
03/24/2008
01/31/2014
09/25/2001
03/25/2008

3,300
2,379
5,679
1,232
1,342
2,574
37,40017,2003,375
4,000

Other major cities
쎲III- 1
8.3 Square Kita Building쎲III- 2
Jozenji Park Building쎲III- 3
Higashi Nibancho Square쎲III- 4
Sendai Honcho Honma Building

Sapporo, Hokkaido
Sendai, Miyagi Prefecture
Sendai, Miyagi Prefecture
Sendai, Miyagi Prefecture

Real property
Real property
Real property
Trust쎲III- 5

Kanazawa Park Building

Kanazawa, Ishikawa Prefecture

Real property

쎲III- 6

Nishiki Park Building

Nagoya, Aichi Prefecture

Real property

쎲III- 7
쎲III- 8
쎲III- 9
쎲III- 10
쎲III- 11
쎲III- 12
쎲III- 13
쎲III- 14

Nagoya Hirokoji Place
Hirokoji Sakae Building
Nagoya Hirokoji Building
Nagoya Misono Building
Shijo Karasuma Center Building
Kyoto Shijo Kawaramachi Building
Shin-Fujita Building
Sakaisujihonmachi Building

Nagoya, Aichi Prefecture
Nagoya, Aichi Prefecture
Nagoya, Aichi Prefecture
Nagoya, Aichi Prefecture
Kyoto, Kyoto Prefecture
Kyoto, Kyoto Prefecture
Osaka, Osaka Prefecture
Osaka, Osaka Prefecture

Trust
Real property
Real property
Real property
Real property
Real property
Trust
Real property

쎲III- 15

Midosuji Daiwa Building

Osaka, Osaka Prefecture

Trust쎲III- 16
쎲III- 17

Lit City Building
NHK Hiroshima Broadcasting Center Building

Okayama, Okayama Prefecture
Hiroshima, Hiroshima Prefecture

Real property
Real property

쎲III- 18
쎲III- 19
쎲III- 20

Tosei Tenjin Building
Tenjin Crystal Building
Hinode Tenjin Building
Total

Fukuoka, Fukuoka Prefecture
Fukuoka, Fukuoka Prefecture
Fukuoka, Fukuoka Prefecture

Real property
Real property
Trust

06/01/2007
01/31/2005
01/07/2013
09/25/2001
06/28/2006
total
02/28/2002
03/03/2003
total
10/02/2006
11/01/2006
total
07/31/2013
09/22/2006
09/10/2001
08/08/2003
09/03/2013
12/20/2001
09/01/2008
09/25/2001
12/26/2003
total
09/25/2001
02/28/2002
total
02/01/2006
03/25/2004
03/03/2008
total
09/25/2001
06/01/2005
09/10/2001

7,100
1,000
9,950
2,924
250
3,174
2,880
1,700
4,580
3,850
1,300
5,150
8,567
1,680
14,533
1,865
4,400
2,650
24,000
2,264
1,900
4,164
6,934
7,380
14,314
4,650
1,320
1,450
2,770
1,550
5,000
3,657
837,405

NumberName of building

14 Japan Real Estate Investment Corporation

Acquisition price(¥ mil)(0.6%)(9.7%)(1.1%)(0.6%)(1.8%)(1.8%)(5.3%)(0.8%)(2.5%)(0.9%)(0.4%)(0.5%)(0.6%)(2.0%)(1.0%)(3.7%)(3.2%)(7.3%)(0.9%)(9.1%)(0.6%)(0.3%)(0.9%)(3.8%)(2.6%)(0.7%)(1.5%)(0.6%)(0.7%)(1.0%)(0.6%)(1.5%)(4.1%)(1.7%)(1.1%)(0.4%)(0.2%)(0.5%)(0.7%)(0.3%)(4.5%)(2.1%)(0.4%)(0.5%)(0.8%)(0.1%)(1.2%)(0.4%)(0.5%)(0.6%)(1.0%)(0.2%)(1.7%)(0.2%)(0.5%)(0.3%)(2.9%)(0.5%)(1.7%)(0.6%)(0.3%)(0.2%)(0.6%)(0.4%)(100.0%)Percentage ofownership of thebuilding

Completion

Appraisal value atthe end of
period (¥ mil)Leasable space

Leased space

Occupancy
rate

Numberof tenants

100.0%
100.0%
100.0%
56.76%
3.3852192%
31.345%19.38402%
100.0%
99.0%

1985
2006
1998
1993
2012
2004
2003
2005
1966

6,510
74,2007,480
4,100
16,60017,30044,6006,220
29,6004,791m2
25,678m2
6,269m2
3,687m2
5,112m2
9,316m2
11,904m2
4,495m2
20,855m2

4,791m2
25,678m2
6,269m2
3,687m2
5,112m2
9,316m2
11,904m2
4,495m2
20,294m2

100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
97.3%

1
4
8
10
2
1
10
1
34

226
1,686
221
116
1
480
993
150
914

(0.9%)(6.3%)(0.8%)(0.4%)(0.0%)(1.8%)(3.7%)(0.6%)(3.4%)

10.78%
100.0%
100.0%
100.0%
70.95%
100.0%

1975
1991
1991
2002
1982
1998

7,220
2,910
5,030
6,400
15,4005,390

4,697m2
3,897m2
4,513m2
4,279m2
4,329m2
4,255m2

4,185m2
3,897m2
4,513m2
4,279m2
4,329m2
3,878m2

89.1%
100.0%
100.0%
100.0%
100.0%
91.1%

12
11
8
1
10
11

241
118
145
151
375
159

(0.9%)(0.4%)(0.5%)(0.6%)(1.4%)(0.6%)

100.0%
100.0%
100.0%
100.0%
40.0%

2012
2006
1993
1982
2007

36,60020,50062,9006,980
78,80033,369m2
20,812m2
45,013m2
4,898m2
32,155m2

33,183m2
20,812m2
41,894m2
4,898m2
31,590m2

99.4%
100.0%
93.1%
100.0%
98.2%

5
9
26
8
35

1,235
645
2,265
201
1,740

(4.6%)(2.4%)(8.5%)(0.8%)(6.5%)

100.0%
100.0%
100.0%
31.325%

1984
1992
1989
1996

6,060
2,780
5,500
29,5009,606m2
4,062m2
5,997m2
35,050m2

9,462m2
4,062m2
5,522m2
33,392m2

98.5%
100.0%
92.1%
95.3%

22
6
13
97

281
108
160
1,315

(1.1%)(0.4%)(0.6%)(4.9%)

94.040229%
100.0%
100.0%
100.0%
—

2010
2004
2005
1989
—

23,7005,570
15,5005,170
5,360

15,020m2
5,205m2
16,856m2
7,756m2—

14,853m2
5,205m2
16,856m2
7,756m2—

98.9%
100.0%
100.0%
100.0%
—

18
4
1
23
—

699
155
665
216
60

(2.6%)(0.6%)(2.5%)(0.8%)(0.2%)

100.0%
100.0%
100.0%
100.0%
44.718394%

2003
1987
1998
1976
1994

9,940
6,280
9,560
42,50014,1007,745m2
3,147m2
5,558m2
30,532m2
8,700m2

7,745m2
3,147m2
5,558m2
28,789m2
8,700m2

100.0%
100.0%
100.0%
94.3%
100.0%

9
4
5
64
5

286
191
309
1,291
178

(1.1%)(0.7%)(1.2%)(4.9%)(0.7%)

32.113115%

1997

10,80011,998m2

11,998m2

100.0%

18373(1.4%)

100.0%
100.0%
100.0%

1987
1990
1989

3,960
1,610
4,310

7,224m2
2,186m2
5,932m2

7,224m2
2,186m2
5,932m2

100.0%
100.0%
100.0%

6
9
11

196
70
177

(0.7%)(0.3%)(0.7%)

80.4%

1996

4,440

10,068m2

10,068m2

100.0%

47

236(0.9%)

100.0%

1990

2,090

4,510m2

4,199m2

93.1%

19

104

(0.4%)

100.0%
11.11481%
100.0%
34.32%

2007
1997
1990
1990

35,50017,5002,390
3,840

38,426m2
26,667m2
6,831m2
5,378m2

35,484m2
26,354m2
6,831m2
5,378m2

92.3%
98.8%
100.0%
100.0%

25
52
13
25

1,242
403
136
158

(4.7%)(1.5%)(0.5%)(0.6%)

100.0%
50.0%
100.0%
100.0%

2006
1993
2008
1991

6,770
892
11,7002,240

12,265m2
2,518m2
20,526m2
6,234m2

12,078m2
2,467m2
16,362m2
5,981m2

98.5%
98.0%
79.7%
96.0%

6
17
17
22

309
71
531
127

(1.2%)(0.3%)(2.0%)(0.5%)

89.0%

1991

4,350

20,889m2

20,147m2

96.4%

72

464

(1.7%)

57.04651%

1995

3,690

8,033m2

7,738m2

96.3%

58

205

(0.8%)

100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%

2004
1987
1987
1991
2010
1982
1995
1992

9,250
1,550
11,800
1,110
4,550
1,760
16,7003,150

13,200m2
3,911m2
21,624m2
3,448m2
6,634m2
6,805m2
28,414m2
11,556m2

12,053m2
3,121m2
21,302m2
3,448m2
6,634m2
5,810m2
26,248m2
11,180m2

91.3%
79.8%
98.5%
100.0%
100.0%
85.4%
92.4%
96.7%

22
12
31
16
6
32
41
20

352
85
584
66
195
115
696
230

(1.3%)(0.3%)(2.2%)(0.2%)(0.7%)(0.4%)(2.6%)(0.9%)

100.0%

1991

12,80020,450m2

20,200m2

98.8%

42

527

(2.0%)

27.7488%
48.753%

2005
1994

4,230
2,470

9,965m2
9,860m2

9,965m2
9,860m2

100.0%
100.0%

41
12

259
262

(1.0%)(1.0%)

100.0%
100.0%
74.4844%

1992
1993
1987

1,300
2,490
3,650
829,152

4,000m2
5,973m2
5,841m2
750,956m2

4,000m2
5,973m2
5,841m2
726,148m2

100.0%
100.0%
100.0%
96.7%

19
30
4
1,223

85
146
170
26,582(0.3%)(0.6%)(0.6%)(100.0%)

Revenues from leasing
operations (¥ mil)Japan Real Estate Investment Corporation 15

Major Tenants Roster
Rank

1
2
3
4
5
6
7
8
9
10

Name of tenant

Name of building

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
(Note)
Mitsubishi Estate Co., Ltd.
General Electric Company
HAKUHODO DY HOLDINGS INCORPORATEDNTT Communications CorporationJGC Corporation
Mitsubishi UFJ Trust and Banking Corporation
TOTO LTD.
Minato Mirai 21 District Heating and Cooling Co., Ltd

Harumi Front (also includes 3 other buildings)
Kitanomaru Square (also includes 2 other buildings)
Osaki Front Tower (also includes 1 other building)Akasaka Park Building
Akasaka Park Building (also includes 1 other building)
Shiodome Building
MM Park Building (also includes 1 other building)
Mitsubishi UFJ Trust and Banking Building
Shiodome Building (also includes 2 other buildings)
Queen's Tower A

Leased space% of totalleased space

33,901m2
26,061m2
17,213m2
13,683m2
12,831m2
11,813m2
10,649m2
10,598m2
10,570m2
9,536m2

4.7%
3.6%
2.4%
1.9%
1.8%
1.6%
1.5%
1.5%
1.5%
1.3%

Note: Not disclosed as per tenant request

Locations of Portfolio Properties
II-1 to II-6: Tokyo metropolitan area,
excluding Tokyo 23 wards

III-1 to III-20: Other major cities

III-1

II-2
II-1
III-2 III-4
III-3

II-6
II-3

III-5

II-5
II-4

III-9 III-6
III-13III-11 III-7
III-16 III-14
III-8
III-12 III-10
III-15
III-17
III-18
III-20 III-19

I-1 to I-38:
Tokyo 23 wards

I-37
I-38 I-36
I-25
I-1

I-35

I-2
I-3
I-4
I-23
I-6 I-8 I-5
I-29
I-11
I-24
I-30 I-31 I-9 I-7 I-14 I-13
I-32 I-18 I-10 I-15 I-12
I-33 I-19
I-16
I-20
I-17
I-21
I-34
I-22
I-26
I-27

I-28

Tokyo Station

16 Japan Real Estate Investment Corporation

Overview of Portfolio Properties As of March 31, 2014
Note: Concerning real estate or trust beneficiary rights in trust of real estate of which the Company is a partial owner through co-ownership or compartmentalized building units or
quasi-co-ownership, the figures for “Site area” and “Floor area of building” represent total site area and total floor space for the entire building.

Genki Medical
Plaza

Kitanomaru
SquareMD Kanda
Building

쎲 I-1

쎲 I-2

쎲 I-3

Location:
Chiyoda-ku, Tokyo
Site area:
1,052.80m2
Floor area of building: 6,722.02m2
Structure:
Above ground: 8 floors
Below ground: 1 floor
Completion:
September 1985

Location:
Chiyoda-ku, Tokyo
Site area:
5,821.03m2
Floor area of building: 57,279.20m2
Structure:
Above ground: 26 floors
Below ground: 2 floors
Completion:
January 2006

Location:
Chiyoda-ku, Tokyo
Site area:
1,085.83m2
Floor area of building: 8,185.11m2
Structure:
Above ground: 10 floors
Completion:
February 1998

Kandabashi Park
Building

OtemachiFinancial City
North Tower

Nibancho Garden

쎲 I-4

쎲 I-5

쎲 I-6

Location:
Chiyoda-ku, Tokyo
Site area:
1,218.56m2
Floor area of building: 9,370.25m2
Structure:
Above ground: 10 floors
Below ground: 1 floor
Completion:
July 1993

Location:
Chiyoda-ku, Tokyo
Site area:
14,108.16m2
Floor area of building: 239,769.07m2
Structure:
Above ground: 35 floors
Below ground: 4 floors
Completion:
October 2012

Location:
Chiyoda-ku, Tokyo
Site area:
11,003.87m2
Floor area of building: 57,031.06m2
Structure:
Above ground: 14 floors
Below ground: 2 floors
Completion:
April 2004

Mitsubishi UFJ
Trust andBanking Building

Burex Kojimachi
Building

Sanno Grand
Building

쎲 I-7

쎲 I-8

쎲 I-9

Location:
Chiyoda-ku, Tokyo
Site area:
8,100.39m2
Floor area of building: 108,171.67m2
Structure:
Above ground: 29 floors
Below ground: 4 floors
Completion:
February 2003

Location:
Chiyoda-ku, Tokyo
Site area:
967.67m2
Floor area of building: 6,526.64m2
Structure:
Above ground: 11 floors
Below ground: 1 floor
Completion:
January 2005

Location:
Chiyoda-ku, Tokyo
Site area:
3,663.93m2
Floor area of building: 33,875.95m2
Structure:
Above ground: 10 floors
Below ground: 3 floors
Completion:
September 1966

Yurakucho Denki
Building

Kodenmacho
Shin-Nihonbashi
Building

Kyodo Building(Kayabacho
2Chome)쎲 I-10쎲 I-11

쎲 I-12

Location:
Chiyoda-ku, Tokyo
Site area:
5,749.91m2
Floor area of building: 70,287.65m2
Structure:
Above ground: 20 floors
Below ground: 4 floors
Completion:
September 1975

Location:
Chuo-ku, Tokyo
Site area:
773.28m2
Floor area of building: 5,822.88m2
Structure:
Above ground: 9 floors
Below ground: 1 floor
Completion:
November 1991

Location:
Chuo-ku, Tokyo
Site area:
754.26m2
Floor area of building: 5,505.80m2
Structure:
Above ground: 9 floors
Below ground: 1 floor
Completion:
April 1991

Japan Real Estate Investment Corporation 17

Burex Kyobashi
Building

Ginza Sanwa
Building

Ryoshin Ginza
East Mirror
Building

쎲 I-13

쎲 I-14

쎲 I-15

Location:
Chuo-ku, Tokyo
Site area:
756.03m2
Floor area of building: 5,470.54m2
Structure:
Above ground: 8 floors
Below ground: 1 floor
Completion:
February 2002

Location:
Chuo-ku, Tokyo
Site area:
1,119.27m2
Floor area of building: 8,851.00m2
Structure:
Above ground: 9 floors
Below ground: 2 floors
Completion:
October 1982

Location:
Chuo-ku, Tokyo
Site area:
864.91m2
Floor area of building: 5,751.68m2
Structure:
Above ground: 8 floors
Below ground: 1 floor
Completion:
October 1998

Harumi Front

Harumi Center
Building

Akasaka Park
Building

쎲 I-16

쎲 I-17

쎲 I-18Location:
Chuo-ku, Tokyo
Site area:
7,250.15m2
Floor area of building: 45,458.90m2
Structure:
Above ground: 17 floors
Below ground: 1 floor
Completion:
February 2012

Location:
Chuo-ku, Tokyo
Site area:
4,664.63m2
Floor area of building: 26,447.27m2
Structure:
Above ground: 10 floors
Completion:
November 2006

Location:
Minato-ku, Tokyo
Site area:
14,198.20m2
Floor area of building: 97,489.16m2
Structure:
Above ground: 30 floors
Below ground: 2 floors
Completion:
July 1993

Aoyama Crystal
Building

Shiodome
Building

Shiba 2Chome
Daimon Building쎲 I-19

쎲 I-20쎲 I-21

Location:
Minato-ku, Tokyo
Site area:
989.30m2
Floor area of building: 8,094.36m2
Structure:
Above ground: 10 floors
Below ground: 4 floors
Completion:
December 1982

Location:
Minato-ku, Tokyo
Site area:
12,046.00m2
Floor area of building: 115,930.83m2
Structure:
Above ground: 24 floors
Below ground: 2 floors
Completion:
December 2007

Location:
Minato-ku, Tokyo
Site area:
2,820.90m2
Floor area of building: 16,235.10m2
Structure:
Above ground: 8 floors
Below ground: 2 floors
Completion:
March 1984

Cosmo
Kanasugibashi
Building

Shinwa Building

Tokyo Opera
City Building쎲 I-22

쎲 I-23

쎲 I-24

Location:
Minato-ku, Tokyo
Site area:
758.54m2
Floor area of building: 5,420.93m2
Structure:
Above ground: 9 floors
Below ground: 1 floor
Completion:
March 1992

18 Japan Real Estate Investment Corporation

Location:
Shinjuku-ku, Tokyo
Site area:
822.00m2
Floor area of building: 8,291.69m2
Structure:
Above ground: 10 floors
Below ground: 1 floor
Completion:
November 1989

Location:
Shinjuku-ku, Tokyo
Site area:
18,236.94m2
Floor area of building: 232,996.81m2
Structure:
Above ground: 54 floors
Below ground: 4 floors
Completion:
July 1996

TIXTOWER
UENO

Higashi-Gotanda
1Chome Building

Osaki Front
Tower

쎲 I-25

쎲 I-26

쎲 I-27

Location:
Taito-ku, Tokyo
Site area:
2,412.80m2
Floor area of building: 23,727.48m2
Structure:
Above ground: 18 floors
Below ground: 1 floor
Completion:
July 2010

Location:
Shinagawa-ku, Tokyo
Site area:
1,539.95m2
Floor area of building: 6,460.39m2
Structure:
Above ground: 8 floors
Completion:
July 2004

Omori-Eki
Higashiguchi
Building

NipponBrunswick
Building

Location:
Shinagawa-ku, Tokyo
Site area:
3,684.38m2
Floor area of building: 23,673.92m2
Structure:
Above ground: 15 floors
Completion:
June 2005

Yoyogi 1Chome
Building(Land with leaseholdinterest)
쎲 I-28Location:
Ota-ku, Tokyo
Site area:
2,199.30m2
Floor area of building: 14,095.34m2
Structure:
Above ground: 11 floors
Below ground: 2 floors
Completion:
July 1989

쎲 I-29Location:
Shibuya-ku, Tokyo
Site area:
1,497.52m2
Floor area of building: —Structure:—
Completion:—

쎲 I-30Location:
Shibuya-ku, Tokyo
Site area:
1,755.75m2
Floor area of building: 10,778.10m2
Structure:
Above ground: 14 floors
Below ground: 1 floor
Completion:
October 2003

da Vinci
Harajuku

Jingumae Media
Square Building

Shibuya CrossTower

쎲 I-31

쎲 I-32

쎲 I-33

Location:
Shibuya-ku, Tokyo
Site area:
839.66m2
Floor area of building: 4,359.20m2
Structure:
Above ground: 7 floors
Below ground: 2 floors
Completion:
December 1987

Location:
Shibuya-ku, Tokyo
Site area:
2,124.59m2
Floor area of building: 9,420.42m2
Structure:
Above ground: 9 floors
Below ground: 2 floors
Completion:
March 1998

Location:
Shibuya-ku, Tokyo
Site area:
5,153.45m2
Floor area of building: 61,862.33m2
Structure:
Above ground: 32 floors
Below ground: 3 floors
Completion:
April 1976

Ebisu Neonato

Harmony Tower

Otsuka HigashiIkebukuro
Building

쎲 I-34

쎲 I-35

쎲 I-36

Location:
Shibuya-ku, Tokyo
Site area:
5,005.70m2
Floor area of building: 36,598.38m2
Structure:
Above ground: 18 floors
Below ground: 2 floors
Completion:
October 1994

Location:
Nakano-ku, Tokyo
Site area:
10,020.52m2
Floor area of building: 72,729.31m2
Structure:
Above ground: 29 floors
Below ground: 2 floors
Completion:
March 1997

Location:
Toshima-ku, Tokyo
Site area:
2,121.39m2
Floor area of building: 9,531.28m2
Structure:
Above ground: 8 floors
Below ground: 1 floor
Completion:
November 1987

Japan Real Estate Investment Corporation 19

Ikebukuro
2Chome Building

Ikebukuro YS
Building

Hachioji First
Square쎲 I-37

쎲 I-38

쎲 II-1

Location:
Toshima-ku, Tokyo
Site area:
397.26m2
Floor area of building: 3,157.51m2
Structure:
Above ground: 9 floors
Below ground: 1 floor
Completion:
May 1990

Location:
Toshima-ku, Tokyo
Site area:
1,384.56m2
Floor area of building: 7,464.64m2
Structure:
Above ground: 8 floors
Below ground: 1 floor
Completion:
December 1989

Location:
Hachioji, Tokyo
Site area:
2,989.33m2
Floor area of building: 18,329.98m2
Structure:
Above ground: 12 floors
Below ground: 1 floor
Completion:
July 1996

Saitama Urawa
Building

MM Park
Building

Queen’s Tower A쎲 II-2

쎲 II-3쎲 II-4

Location:
Saitama, Saitama Prefecture
Site area:
1,533.06m2
Floor area of building: 6,258.59m2
Structure:
Above ground: 8 floors
Completion:
March 1990

Location:
Yokohama, Kanagawa Prefecture
Site area:
6,825.77m2
Floor area of building: 49,037.51m2
Structure:
Above ground: 15 floors
Below ground: 1 floor
Completion:
December 2007

Location:
Yokohama, Kanagawa Prefecture
Site area:
44,406.40m2
Floor area of building: 498,282.77m2
Structure:
Above ground: 37 floors
Below ground: 5 floors
Completion:
June 1997

Kawasaki Isago
Building

Musashi Kosugi
STM Building

8•3 Square Kita
Building쎲 II-5

쎲 II-6

쎲 III-1

Location:
Kawasaki, Kanagawa Prefecture
Site area:
1,594.50m2
Floor area of building: 9,623.83m2
Structure:
Above ground: 12 floors
Below ground: 1 floor
Completion:
December 1990

Location:
Kawasaki, Kanagawa Prefecture
Site area:
3,552.15m2
Floor area of building: 22,839.61m2
Structure:
Above ground: 8 floors
Below ground: 2 floors
Completion:
October 1990

Location:
Sapporo, Hokkaido
Site area:
5,541.60m2
Floor area of building: 16,096.97m2
Structure:
Above ground: 11 floors
Below ground: 1 floor
Completion:
December 2006

Jozenji Park
Building

HigashiNibancho Square

Sendai Honcho
Honma Building

쎲 III-2

쎲 III-3

쎲 III-4

Location:
Sendai, Miyagi Prefecture
Site area:
1,566.68m2
Floor area of building: 7,648.33m2
Structure:
Above ground: 8 floors
Below ground: 1 floor
Completion:
January 1993

20 Japan Real Estate Investment Corporation

Location:
Sendai, Miyagi Prefecture
Site area:
3,191.27m2
Floor area of building: 27,680.45m2
Structure:
Above ground: 14 floors
Below ground: 1 floor
Completion:
July 2008

Location:
Sendai, Miyagi Prefecture
Site area:
1,437.47m2
Floor area of building: 8,247.50m2
Structure:
Above ground: 11 floors
Completion:
November 1991

Kanazawa Park
Building

Nishiki Park
Building

Nagoya Hirokoji
Place쎲 III-5

쎲 III-6

쎲 III-7

Location:
Kanazawa, Ishikawa Prefecture
Site area:
6,642.71m2
Floor area of building: 43,481.20m2
Structure:
Above ground: 12 floors
Below ground: 2 floors
Completion:
October 1991

Location:
Nagoya, Aichi Prefecture
Site area:
2,170.45m2
Floor area of building: 25,091.91m2
Structure:
Above ground: 22 floors
Below ground: 4 floors
Completion:
August 1995

Location:
Nagoya, Aichi Prefecture
Site area:
2,401.43m2
Floor area of building: 15,947.29m2
Structure:
Above ground: 10 floors
Completion:
December 2004

Hirokoji Sakae
Building

Nagoya Hirokoji
Building

Nagoya Misono
Building

쎲 III-8

쎲 III-9

쎲 III-10

Location:
Nagoya, Aichi Prefecture
Site area:
786.79m2
Floor area of building: 6,445.08m2
Structure:
Above ground: 9 floors
Below ground: 2 floors
Completion:
September 1987

Location:
Nagoya, Aichi Prefecture
Site area:
4,095.81m2
Floor area of building: 33,377.73m2
Structure:
Above ground: 18 floors
Below ground: 2 floors
Completion:
May 1987

Location:
Nagoya, Aichi Prefecture
Site area:
805.04m2
Floor area of building: 5,348.00m2
Structure:
Above ground: 7 floors
Below ground: 1 floor
Completion:
September 1991

Shijo Karasuma
Center Building

Kyoto Shijo
Kawaramachi
Building

Shin-Fujita
Building

쎲 III-11

쎲 III-12

쎲 III-13

Location:
Kyoto, Kyoto Prefecture
Site area:
1,371.16m2
Floor area of building: 9,185.98m2
Structure:
Above ground: 8 floors
Below ground: 1 floor
Completion:
January 2010

Location:
Kyoto, Kyoto Prefecture
Site area:
1,471.57m2
Floor area of building: 9,701.04m2
Structure:
Above ground: 9 floors
Below ground: 1 floor
Completion:
November 1982

Location:
Osaka, Osaka Prefecture
Site area:
6,159.61m2
Floor area of building: 45,411.31m2
Structure:
Above ground: 21 floors
Below ground: 2 floors
Completion:
April 1995

Sakaisujihonmachi
Building

Midosuji Daiwa
Building

Lit City Building

쎲 III-14

쎲 III-15

쎲 III-16

Location:
Osaka, Osaka Prefecture
Site area:
2,036.22m2
Floor area of building: 17,145.59m2
Structure:
Above ground: 13 floors
Below ground: 2 floors
Completion:
October 1992

Location:
Osaka, Osaka Prefecture
Site area:
3,044.65m2
Floor area of building: 31,213.27m2
Structure:
Above ground: 15 floors
Below ground: 2 floors
Completion:
September 1991

Location:
Okayama, Okayama Prefecture
Site area:
7,596.44m2
Floor area of building: 52,653.19m2
Structure:
Above ground: 20 floors
Below ground: 2 floors
Completion:
June 2005

Japan Real Estate Investment Corporation 21

NHK Hiroshima
Broadcasting
Center Building

Tosei Tenjin
Building

Tenjin Crystal
Building

쎲 III-17

쎲 III-18

쎲 III-19

Location:
Hiroshima, Hiroshima Prefecture
Site area:
3,296.46m2
Floor area of building: 35,217.28m2
Structure:
Above ground: 23 floors
Below ground: 2 floors
Completion:
August 1994

Hinode Tenjin
Building

쎲 III-20

Location:
Fukuoka, Fukuoka Prefecture
Site area:
1,452.15m2
Floor area of building: 12,527.07m2
Structure:
Above ground: 10 floors
Below ground: 2 floors
Completion:
August 1987

22 Japan Real Estate Investment Corporation

Location:
Fukuoka, Fukuoka Prefecture
Site area:
1,221.31m2
Floor area of building: 5,588.57m2
Structure:
Above ground: 8 floors
Completion:
March 1992

Location:
Fukuoka, Fukuoka Prefecture
Site area:
1,835.17m2
Floor area of building: 10,432.04m2
Structure:
Above ground: 14 floors
Below ground: 1 floor
Completion:
August 1993

Financial Section
Selected Financial Data
Balance Sheets
Statements of Income and Retained Earnings
Statements of Changes in Unitholders’ Equity
Statements of Cash Flows
Notes to Financial Statements
Independent Auditor’s Report

p.23
p.24
p.26
p.26
p.27
p.28
p.40

Selected Financial Data
Thousands of
U.S. dollars (Note 1)

Millions of yen

For the period from For the period from For the period from For the period from For the period from For the period from
October 1, 2013 toApril 1, 2013 to
October 1, 2012 toApril 1, 2012 to
October 1, 2011 to October 1, 2013 toMarch 31, 2014 September 30, 2013 March 31, 2013 September 30, 2012 March 31, 2012
March 31, 2014

Operating Revenues

26,582¥ 26,225¥ 25,357¥ 24,222

Operating Expenses¥

15,751

15,444

14,72514,009$ 258,288
For ¥the24,059
period from October
1, 2010 to March 31,
2011153,042
13,273Operating Income

10,831

10,781

10,631

10,212

10,786

Ordinary Income

9,083

9,143

8,749

8,372

8,863

105,246
88,256

Income before Income Taxes

9,083

9,143

8,749

8,372

8,904

88,256Net Income

9,070

9,129

8,824

8,448

8,934

88,128

Total Assets

817,130

775,066

765,628

724,851

703,0857,939,471

Interest-Bearing Debts

358,900

320,150

311,200

305,750

284,300

3,487,175

Net Assets

405,355

405,415405,280

372,429

372,869

3,938,554

Unitholders’ Capital

396,018

396,018

396,018

363,371363,371

3,847,827

Number of Units

1,188,280

594,140

594,140

549,040

549,040

1,188,280

341,128

341,178

682,130

678,328

679,130

3,314

Net Assets per Unit (Yen/U.S. dollars)(Note 2)
Cash Distribution

9,070

9,129

8,995

8,619

8,888

88,128Dividend Payout Ratio

99.9%

99.9%

101.9%

102.0%

99.4%

99.9%

Dividend per Unit (Yen/U.S. dollars)

7,633

15,36615,14015,70016,19074.16

Net Operating Income (NOI)

17,481

17,205

16,76815,997

16,361

169,857

Funds from Operations (FFO)

14,71914,61914,032

13,356

13,625143,021Return on Assets (ROA) (Note 3)

1.1%

1.2%

1.2%

1.2%

1.3%

(2.3% annualized)

Return on Equity (ROE) (Note 4)

2.2%(4.5% annualized)(2.4% annualized)

2.3%(4.5% annualized)(2.4% annualized)

2.2%(4.4% annualized)(2.3% annualized)

2.3%(4.5% annualized)(2.6% annualized)

2.6%(5.3% annualized)

1.1%(2.3% annualized)

2.2%(4.5% annualized)

EOP Equity Ratio (Note 5)

49.6%

52.3%

52.9%

51.4%

53.0%

49.6%

EOP Interest-Bearing Debt Ratio on
Total Assets (Note 6)

43.9%

41.3%

40.6%

42.2%

40.4%

43.9%

FFO Multiple

20.9 times

23.4 times

27.2 times

16.2 times

14.7 times

20.9 times

Debt Service Coverage Ratio (Note 7)

9.6 times

9.5 times

8.7 times

8.3 times

8.5 times

9.6 times

Notes 1: Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥102.92 = US$1.00, the foreign exchange rate on March 31, 2014,
has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen has been or could be readily converted, realized or settled into
U.S. dollars at that rate or any other rate.
2: The Company implemented a 2-for-1 split of each investment unit with an effective date of January 1, 2014. Net assets per unit is calculated as if the split had occurredat the start of the fiscal period ended September 30, 2013.
3: ROA = Ordinary Income ÷ Average of Total Assets during the period
4: ROE = Net Income ÷ Average of Net Assets during the period(Annualized portion of the calculation given in Note 3 and Note 4 assumes a fiscal period of 183 days for the period ended March 31, 2012, 183 days for the period
ended September 30, 2012, 182 days for the period ended March 31, 2013, 183 days for the period ended September 30, 2013 and 182 days for the period ended
March 31, 2014.)
5: EOP Equity Ratio = (Net Assets at the end of period ÷ Total Assets at the end of period) × 100
6: EOP Interest-Bearing Debt Ratio on Total Assets = (Interest-Bearing Debt at the end of period ÷ Total Assets at the end of period) × 100
7: Debt Service Coverage Ratio = Net Income before Interest, Taxes, Depreciation and Amortization ÷ Interest Expenses

Japan Real Estate Investment Corporation 23

Balance Sheets
As of March 31, 2014 and September 30, 2013

Thousands of yen

U.S. dollars (Note 1)

As ofMarch 31, 2014

As of
September 30, 2013

As ofMarch 31, 2014

¥25,043,677¥ 24,598,188$243,331,500

Rental receivables

134,048

188,185

1,302,454

Refundable consumption taxes

398,464—

3,871,592

Other current assets

165,359

251,745

1,606,678

25,741,550

25,038,118

250,112,223

Land

538,445,756

510,355,333

5,231,692,157

Buildings and structures

315,363,650

296,764,545

3,064,162,945

Machinery and equipment

3,736,768

3,699,678

36,307,503

Tools, furniture and fixtures

334,350

308,280

3,248,644

Construction in progress

361,593

181,638

3,513,341

ASSETS
Current Assets:
Cash and bank deposits

Total current assets

Property and Equipment, at Cost:

Subtotal

858,242,118

811,309,476

8,338,924,589

Accumulated depreciation(76,076,179)(70,445,570)(739,177,803)

Total property and equipment

782,165,939

740,863,906

7,599,746,786

577,168

577,168

5,607,929

1,071,830

1,071,830

10,414,209

119,267

23,206

1,158,833

6,549,297

6,565,127

63,634,838

828,095

828,095

8,046,010

Investments and Other Assets:
Investment securities
Deposits
Long-term prepaid expenses
Leasehold rights
Easement
Deferred investment corporation bond issuance costs
Total Assets
The accompanying notes form an integral part of these financial statements.

24 Japan Real Estate Investment Corporation

77,182

99,161

749,926¥817,130,330¥775,066,613$7,939,470,754

Thousands of yen

U.S. dollars (Note 1)

As ofMarch 31, 2014

As of
September 30, 2013

¥

¥

As of
March 31, 2014

LIABILITIESCurrent Liabilities:
Trade accounts payable

1,396,469

1,128,949$

13,568,495

Other payables

1,234,453

1,026,389

11,994,303

Short-term loans

56,800,000

25,000,000

551,884,959

Current portion of investment corporation bonds

15,000,000

15,000,000

145,744,267

Current portion of long-term loans

5,100,000

13,100,000

49,553,051

Accrued expenses

800,158

786,011

7,774,565

Income taxes payable

11,551

7,951

112,237—

601,862—

Rent received in advance

3,288,284

2,840,696

31,949,910

Other current liabilities

259,8139,986

2,524,426

83,890,731

59,501,848

815,106,213

Investment corporation bonds

40,000,000

40,000,000

388,651,380

Long-term loans

242,000,000

227,050,000

2,351,340,847

Deposits received from tenants

45,418,762

42,634,207

441,301,613

Deferred tax liabilities

122,812

122,8121,193,284

Asset retirement obligations

312,538

309,420

3,036,711

Other long-term liabilities

29,53232,969286,942

Total long-term liabilities

327,883,645

310,149,410

3,185,810,777

Total Liabilities

411,774,376

369,651,258

4,000,916,991

396,018,317

396,018,317

3,847,826,632

Accrued consumption taxes

Total current liabilities

Long-Term Liabilities:

NET ASSETS
Unitholders’ Equity:
Unitholders’ capital
Authorized: 4,000,000 units as of March 31, 2014 and2,000,000 units as of September 30, 2013
Issued:1,188,280 units as of March 31, 2014 and594,140 units as of September 30, 2013
Surplus
Voluntary reserve
Reserve for reduction entry
Retained earnings
Total surplus
Total unitholders’ equity

236,709236,7092,299,937

9,100,926

9,160,328

88,427,194

9,337,636

9,397,037

90,727,131

405,355,953

405,415,354

3,938,553,763

Total net assets

405,355,953

405,415,354

3,938,553,763

Total Liabilities and Net Assets¥817,130,330¥775,066,613$7,939,470,754

The accompanying notes form an integral part of these financial statements.

Japan Real Estate Investment Corporation 25

Statements of Income and Retained Earnings
For the six months ended March 31, 2014 and September 30, 2013

Thousands of yen

U.S. dollars (Note 1)

For the period
from October 1, 2013
to March 31, 2014

For the period
from April 1, 2013
to September 30, 2013

For the period
from October 1, 2013
to March 31, 2014

OPERATING REVENUES AND EXPENSES
Operating Revenues:
Rental revenues
Non-rental revenues
Gain on sale of properties
Total operating revenues¥26,357,478
225,489—
26,582,967¥26,116,177
90,73918,603
26,225,520$256,096,755
2,190,919—
258,287,674

Operating Expenses:
Property-related expenses
Asset management fees
Administrative service fees
Professional fee
Other operating expenses
Total operating expenses
Operating Income

14,750,867
675,187
194,645
58,222
72,17315,751,096
10,831,870

14,509,238
621,540
191,496
64,69557,046
15,444,016
10,781,503

143,323,623
6,560,316
1,891,227
565,706
701,262
153,042,134
105,245,540

NON-OPERATING REVENUES AND EXPENSES
Non-Operating Revenues:
Interest income
Dividends income
Return of unclaimed distributions
Income on settlement of management association accounts
Other non-operating revenues

6,658
—
2,261
—
—

5,824
19,724
3,220
104,761
2,080

64,697—
21,976——

Non-Operating Expenses:
Interest expense
Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance costs
Other non-operating expenses
Ordinary Income

1,297,612
410,928
21,97826,951
9,083,320

1,337,230
392,323
17,49827,0099,143,053

12,607,971
3,992,700
213,552
261,865
88,256,124

Income before Income Taxes

9,083,320

9,143,053

88,256,124

13,169(2)
9,070,153
30,773¥ 9,100,926

13,308(11)
9,129,757
30,571¥ 9,160,328

127,958(27)
88,128,194
299,001$ 88,427,194

Income Taxes:
Current
Deferred
Net Income
Retained Earnings Brought Forward
Retained Earnings at End of Period

Statements of Changes in Unitholders’ Equity
For the six months ended March 31, 2014 and September 30, 2013

Units

Balance as of April 1, 2013
594,140
Provision of reserve for reduction entry—
Cash dividends paid—
Net income—
Balance as of September 30, 2013
594,140
Unit split
594,140
Cash dividends paid—
Net income—
Balance as of March 31, 2014
1,188,280

Balance as of October 1, 2013
Unit split
Cash dividends paid
Net income
Balance as of March 31, 2014

Unitholders’capital¥396,018,317———¥396,018,317———¥396,018,317¥407,278(170,569)——¥236,709———¥236,709

Units

Unitholders’capitalReserve for reduction entry

594,140
594,140——
1,188,280$3,847,826,632———$3,847,826,632$2,299,937———$2,299,937

The accompanying notes form an integral part of these financial statements.

26 Japan Real Estate Investment Corporation

Thousands of yen
SurplusReserve for reduction entry Retained earnings¥8,855,281
170,569(8,995,279)
9,129,757¥9,160,328—(9,129,555)
9,070,153¥9,100,926

Total surplus

Total unitholders’equity¥9,262,560—(8,995,279)
9,129,757¥9,397,037—(9,129,555)
9,070,153¥9,337,636¥405,280,877—(8,995,279)
9,129,757¥405,415,354—(9,129,555)
9,070,153¥405,355,953

U.S. dollars (Note 1)
SurplusRetained earnings
Total surplus

Total unitholders’equity$89,004,357—(88,705,356)
88,128,194$88,427,194$3,939,130,926—(88,705,356)
88,128,194$3,938,553,763$91,304,293—(88,705,356)
88,128,194$90,727,131

Statements of Cash Flows
For the six months ended March 31, 2014 and September 30, 2013

Thousands of yen

U.S. dollars (Note 1)

For the period
from October 1, 2013
to March 31, 2014

For the period
from April 1, 2013
to September 30, 2013

For the period
from October 1, 2013
to March 31, 2014

Income before income taxes¥9,083,320¥ 9,143,053$88,256,124

Depreciation and amortization

5,649,556

5,507,945

54,892,700

21,97817,498

213,552—(19,724)—

Cash Flows from Operating Activities:

Amortization of investment corporation bond issuance costs
Dividends income
Interest income(6,658)(5,824)(64,697)

Interest expense

1,708,541

1,729,553

16,600,671

Rental receivables
Refundable consumption taxes
Supplies
Prepaid expenses
Decrease due to sale of tangible fixed asset
Trade accounts payable

54,136(83,319)

526,006(398,464)

472,497(3,871,592)

3

—

33

(23,195)

5,692(225,377)—

1,200,748—(107,934)

307,202(1,048,722)

Other payables

185,815

108,948

1,805,438

Accrued expenses(601,744)

601,744(5,846,723)

Rent received in advance

447,588(405,075)

4,348,896

Long-term prepaid expenses(96,060)(8,661)(933,349)

Other
Sub-totalInterest and dividends income received
Interest paid
Income taxes paid
Net cash provided by operating activities

143,373(158,618)

1,393,060

16,060,256

18,413,663

156,046,022

7,965

26,26977,396(1,694,512)(1,769,481)(16,464,366)(9,569)(16,460)(92,981)

14,364,139

16,653,990

139,566,070

Cash Flows from Investing Activities:
Payments of time deposits(9,486,000)(12,237,000)(92,168,675)

Proceeds from time deposits

15,486,000

11,237,000

150,466,382

Purchases of property and equipment(46,326,374)(14,904,173)(450,120,234)

Repayments of lease and guarantee deposits received(1,207,724)(2,048,695)(11,734,597)

Proceeds from lease and guarantee deposits received

3,992,279

1,724,542

38,790,120(37,541,820)(16,228,325)(364,767,004)

Proceeds from short-term loans

45,800,000

11,000,000

445,005,830

Repayments of short-term loans(14,000,000)(4,000,000)(136,027,983)

Net cash used in investing activities
Cash Flows from Financing Activities:

Proceeds from long-term loans

20,000,000

13,000,000

194,325,690

Repayments of long-term loans(13,050,000)(21,050,000)(126,797,513)

Proceeds from issuance of investment corporation bonds—

10,000,000—

Payments of investment corporation bond issuance costs—(55,277)—(9,126,830)(8,998,782)(88,678,880)

Net cash provided by (used in) financing activities

29,623,169(104,059)

287,827,144

Net Increase in Cash and Cash Equivalents

6,445,489

321,605

62,626,210

Dividends to unitholders

Cash and Cash Equivalents at Beginning of Period

14,598,188

14,276,582

141,840,151

Cash and Cash Equivalents at End of Period¥21,043,677¥14,598,188$204,466,362

The accompanying notes form an integral part of these financial statements.

Japan Real Estate Investment Corporation 27

Notes to Financial Statements
March 31, 2014 and September 30, 2013

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Japan Real Estate Investment Corporation (the “Company”) is a real estate investment corporation formed to own and invest primarily in a
portfolio of office properties. The Company is externally managed by a licensed asset management company, Japan Real Estate AssetManagement Co., Ltd. (“J-Rea”). J-Rea is currently owned 63% by Mitsubishi Estate Co., Ltd. (“MEC”), 27% by The Dai-ichi MutualLife Insurance Company (currently renamed The Dai-ichi Life Insurance Company, Limited, “DL”) and 10% by Mitsui & Co., Ltd.
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, Tokio Marine &Nichido Fire Insurance Co., Ltd. (“TMN”) and DL under the Law Concerning Investment Trusts and Investment Corporations of Japan,
or the Investment Trust Law.
On September 10, 2001, the Company commenced operations when the Company was listed on the Tokyo Stock Exchange as oneof the first real estate investment corporations in Japan (so-called “J-REITs”). The Company issued 160,000 units at a price of ¥506,625($4,923), generating gross proceeds of ¥81,060 million ($787,602 thousand) (Note).
At March 31, 2014, the Company owned a portfolio of 64 office properties with an aggregate of approximately 750,956 square meters ofleasable space.
Note: The foreign exchange rate of ¥102.92=US$1.00, as of March 31, 2014, has been used for translation.

Basis of presenting financial statements
The Company maintains its accounting records and prepares its financial statements in accordance with accounting principles generally
accepted in Japan (“Japanese GAAP”), including provisions set forth in the Investment Trust Law, the Corporation Law of Japan, theFinancial Instruments and Exchange Law of Japan and the related regulations, which are different in certain respects as to the applicationand disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which were preparedin accordance with Japanese GAAP and were presented in the Securities Report of the Company filed with the Kanto Local Finance Bureau.
In preparing the accompanying financial statements, certain reclassifications and modifications have been made to the financial statements
issued domestically in order to present them in a format that is more familiar to readers outside Japan. In addition, the notes to financial
statements include information that might not be required under Japanese GAAP but is presented herein as additional information.
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥102.92=US$1.00, theforeign exchange rate on March 31, 2014, has been used for translation. The inclusion of such amounts is not intended to imply thatJapanese yen has been or could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.
As permitted under the Japanese Financial Instruments and Exchange Law, amounts of less than one million yen have been
omitted. As a result, the totals shown in the accompanying financial statements do not necessarily agree with the sum of the individual
amounts.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESInvestment securities
Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving average method.
Property and equipment, depreciation and impairment (except for leased assets)
Property and equipment is stated at cost, less accumulated depreciation. The costs of land, buildings and building improvements include
the purchase price of property, legal fees 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 .............................................................................................................. 3-60 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 amountof 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 ofan asset exceeds the undiscounted sum of future cash flows of the asset. The standard states that impairment losses should be measured as
the excess of the book value over the higher of (1) the fair market value of the asset, net of disposition costs and (2) 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 for which there is
identifiable cash flows that are independent of cash flows of other groups of assets.

28 Japan Real Estate Investment Corporation

Intangible assets
Intangible assets primarily consist of leasehold rights and easement, which are started 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 and depreciatedby 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.
New unit issuance costs are charged to income as incurred. The underwriters’ economic remunerations for underwriting theoffering are not recognized as new unit issuance costs in the financial statements since such costs are not paid by the Company ascommission 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 pricereceived by the Company) is retained by the underwriters as remuneration.
Revenue recognition
Revenues from leasing of office space are recognized as rent accrues 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 toincome during the period. The sellers of the properties were 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 in the record as ofJanuary 1 based on the assessment made by the local government. The Company paid the amount equivalent to the property taxes to thesellers applicable to the period since acquisition and included the amount equivalent to the taxes in the purchase price of each property andcapitalized as 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 included in
the current assets and the excess of amounts withheld over payments are included in the 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 based on the risk management policies outlined in the
Company’s Articles of Incorporation. The Company uses interest-rate swap transactions for hedging fluctuations in interest rates on
floating-rate loans. Deferred hedge accounting is generally used for such interest-rate swaps and the effectiveness of hedging is measured bycomparing the total cash flow fluctuation of the hedged item and that of the hedging instrument since the inception of the hedge.
For interest-rate swaps that qualify for hedge accounting and meet certain criteria provided under Japanese GAAP, however, theCompany 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 are not required to be measured
at fair value separately. For interest-rate swaps that meet the specific criteria for such special accounting treatment, assessments of hedge
effectiveness are not performed.

3. FINANCIAL INSTRUMENTS
For the six months ended March 31, 2014 and September 30, 2013
1. Status of financial instruments(1) Policies for dealing financial instruments
Concerning the financing of property acquisitions, the Company shall use several funding sources including bank loans, issuance ofinvestment corporation bonds and issuance of investment units. When executing such financing activities, the Company endeavors toretain the ability to secure stable and low-cost financing by maintaining high credit ratings and thereby limiting the financial covenants
which may restrict the financial flexibility of the Company. To achieve these goals, the Company intends to further develop andreinforce the confidence of debt holders and rating agencies in the Company by bolstering the capital base and controlling the loan-tovalue 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
Japan Real Estate Investment Corporation 29

executed solely for the purpose of controlling 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.
(2) 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.
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 deposittaking financial institutions. The Company manages credit risk by restricting the tenor of the deposit to relatively short periods andsetting a minimum 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 of interest
rate hike, such risk is mitigated by the Company’s low LTV and relatively high percentage of long-term fixed-rate debts within the totalborrowing. Loans and investment corporation bonds involve liquidity risk at the time of maturity. To manage such liquidity risk, theCompany implements measures such as (i) maintaining and strengthening its ability to access equity markets to secure funds, (ii)maintaining commitment lines with major financial institutions (There is no outstanding under the facility as of March 31, 2014 and asof September 30, 2013), and (iii) preparing monthly financial plans. The Company also utilizes derivative transactions (interest-rate
swap transactions) as a hedge against interest-rate risk derived from floating-rate long-term loans, thereby maintaining the overall
interest rates on the loans at an effectively fixed level. For more detailed information on the hedge accounting method, hedging
instruments, hedged items, hedge policies and the evaluation method of hedge effectiveness, please refer to the previous section 2.
Summary of significant accounting policies: Hedge accounting.
(3) 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.
2. Fair value of financial instruments
Fair value of financial instruments, their values carried on the balance sheet and the difference between them as of March 31, 2014 and asof September 30, 2013 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

U.S. dollars
As of March 31, 2014

Book value

Fair value(1) Cash and bank deposits¥25,043,677¥25,043,677

DifferenceBook value

Fair value—$243,331,500$243,331,500(2) Short-term loans

56,800,000

56,800,000—

551,884,959

551,884,959

Current portion of investment(3)
corporation bonds—

15,000,000

15,056,550

56,550145,744,267

146,293,723

549,456(4) Current portion of long-term loans

5,100,000

5,129,403

29,40349,553,051

49,838,746

285,695¥

Difference$—(5) Investment corporation bonds

40,000,000

41,632,000

1,632,000

388,651,380

404,508,356

15,856,976(6) Long-term loans

242,000,000

246,544,239

4,544,239

2,351,340,847

2,395,493,970

44,153,123

—

—

—

—

—

(7) Derivative transactions—

Thousands of yen
As of September 30, 2013
Book value

Fair value¥ 24,598,188¥ 24,598,188(2) Short-term loans

25,000,000

25,000,000—

Current portion of investment(3)
corporation bonds

15,000,000

15,173,400

173,400(1) Cash and bank deposits

Difference¥—(4) Current portion of long-term loans

13,100,000

13,158,190

58,190(5) Investment corporation bonds

40,000,000

41,508,300

1,508,300(6) Long-term loans

227,050,000

230,703,880

3,653,880———(7) Derivative transactions

Note 1: Measurement of fair value of financial instruments and matters concerning derivative transactions(1) Cash and bank deposits
Due to short tenor, the book values of these assets are reasonable approximations of the present value of these assets and hence used as their fair value.
(2) Short-term loans
Since these loans’ tenor is short and rates are reset at a short interval, the book values of these liabilities are reasonable approximations of their present value and hence
used as their fair values.
(3) Current portion of investment corporation bonds and (5) Investment corporation bonds
Their fair values are based on the values published by a financial data provider.

30 Japan Real Estate Investment Corporation

(4) Current portion of long-term loans and (6) long-term loans
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, the fair values of floating-rate long-term loans hedged by interest-rate
swaps subject to the special treatment are calculated by discounting the aggregated principal and the interest on such loans, after taking into account the effect of saidinterest-rate swaps, using reasonable estimates of the rates that would be applicable if the Company were to refinance the existing loans for the remaining period tomaturity under the prevailing market conditions as of March 31, 2014. Such floating-rate long-term loans are presented in the following section entitled Derivative
Transactions.) The fair values of the liabilities with fixed interest rates are calculated by discounting the aggregated amounts of the principals and the interests of the loansby the rates that are reasonably estimated to be applicable if the Company refinances the existing loans for the remaining periods to maturity under the prevailing market
conditions as of March 31, 2014 and September 30, 2013.
(7) Derivative Transactions
Please refer to the following section entitled Derivative Transactions.
Note 2: Financial instruments whose fair values cannot be reliably measured.
Thousands of yen
As of March 31, 2014

(1) Non-listed stock (*1)¥

(2) Deposits received from tenants (*2)¥45,418,762

U.S. dollars

As of September 30, 2013

577,168¥

As of March 31, 2014

577,168$¥42,634,207

5,607,929$441,301,613(*1) With regard to non-listed stocks which do not have a quoted market price in an active market and whose cash flows are not reasonably estimated, their fair value cannot
be reliably measured and they are therefore presented at their book value.
(*2) With regard to deposits received from tenants, which do not have a quoted market price in an active market, and their tenor cannot be reasonably estimated, their cash
flows cannot be reliably measured and they are therefore presented at their book value.
Note 3: Redemption schedule for monetary claims after the closing dateThousands of yen

U.S. dollars
As of March 31, 2014

1 yearor less

Cash andbank deposits ¥25,043,677

1 to
2 years

2 to
3 years

3 to
4 years

4 to
5 yearsOver
5 years

1 yearor less

1 to
2 years

2 to
3 years

3 to
4 years

4 to
5 yearsOver
5 years

¥—

¥—

¥—

¥—

¥—

$243,331,500

$—

$—

$—

$—

$—

Thousands of yen
As of September 30, 2013

Cash andbank deposits

1 yearor less

1 to
2 years

2 to
3 years

3 to
4 years

4 to
5 yearsOver
5 years¥24,598,188

¥—

¥—

¥—

¥—

¥—

Note 4: Repayment schedule for investment corporation bonds, long-term loans and other interest-bearing debt after the closing dateThousands of yen
As of March 31, 2014
1 year or less

1 to 2 years

Short-term loans¥56,800,000¥

Investment corporation bonds

15,000,000

20,000,000

Long-term loans
Total

2 to 3 years—¥

3 to 4 years

—

¥

—

4 to 5 years

—

¥

—

10,000,000

Over 5 years—¥—
10,000,000

5,100,000

16,600,000

44,400,000

46,500,000

25,000,000

109,500,000¥76,900,000¥36,600,000¥44,400,000¥46,500,000¥35,000,000¥119,500,000

U.S. dollars
As of March 31, 2014
1 year or less

1 to 2 years

2 to 3 years

Short-term loans$551,884,959$

Investment corporation bonds

145,744,267

194,325,690

Long-term loans
Total

—

$

3 to 4 years—$

4 to 5 years

—

—

—

$

Over 5 years

—

$

—

97,162,845

97,162,845

49,553,051

161,290,323

431,403,031

451,807,229

242,907,112

1,063,933,152$747,182,277$355,616,012$431,403,031$451,807,229$340,069,957$1,161,095,997

Thousands of yen
As of September 30, 2013
1 year or less

1 to 2 years

Short-term loans¥25,000,000¥—

Investment corporation bonds

15,000,000

20,000,000

2 to 3 years¥——

3 to 4 years¥——

4 to 5 years¥—
10,000,000

Over 5 years¥—
10,000,000

Long-term loans

13,100,000

19,600,000

32,100,000

42,850,000

36,000,000

96,500,000

Total¥53,100,000¥39,600,000¥32,100,000¥42,850,000¥46,000,000¥106,500,000

Japan Real Estate Investment Corporation 31

4. DERIVATIVE TRANSACTIONS(1) Derivatives not designated as hedging instruments
For the period from October 1, 2013 to March 31, 2014
“Not applicable”
For the period from April 1, 2013 to September 30, 2013
The Company did not conduct any derivative transactions.
(2) Derivatives designated as hedging instruments
For the period from October 1, 2013 to March 31, 2014
The contract amount or the equivalent principal amount set out in the contract as of the closing date for each derivative designatedas a hedging instrument is as follows.
Thousands of yen
Contract value
Derivative accounting method

Hedge accounting

Type of derivative transaction

Hedged item

Receive-floating, pay-fixedLong-term loansinterest-rate swap transactions

15,000,000

Over one year

Fair value

Measurement of fairvalue

15,000,000*—*Because the transactions based on the special treatment of interest-rate swaps and the hedged long-term loans are treated as one item, the fair value is included under the fair valueof the long term loans at the end of the fiscal period ended March 31, 2014. Please refer to the measurement of fair value of financial instruments in Note 1, section “2. Fair valueof financial instruments” under “Financial Instruments” as well as subheadings (4) and (6) of Note 1, which are related to derivative transactions.

For the period from April 1, 2013 to September 30, 2013
The Company did not conduct any derivative transactions.

5. PROPERTY AND EQUIPMENT
Property and equipment at March 31, 2014 and September 30, 2013 consisted of the following:Thousands of yen
As of March 31, 2014

U.S. dollars
As of September 30, 2013

As of March 31, 2014

Acquisition costs

Book value

Acquisition costs

Book value

Acquisition costs

Book valueLand¥420,000,107¥420,000,107¥399,537,150¥399,537,150$4,080,840,532$4,080,840,532

Buildings and structures

252,544,865

Accumulated depreciation
Machinery and equipment
Accumulated depreciation(61,160,927)

244,555,959
191,383,937(56,583,875)

2,896,723

2,453,797,761
187,972,083(594,256,974)

2,868,276(1,479,416)

1,417,307(1,393,733)

1,859,540,787

28,145,389
1,474,542(14,374,427)

Tools, furniture and fixtures

304,053

Accumulated depreciation(122,610)

181,442(105,932)

176,514(1,191,320)

1,762,946

361,593361,593

181,638

181,638

3,513,341

3,513,341

118,445,649

110,818,182

110,818,182

1,150,851,625

1,150,851,625

Construction in progress
Land in trust

118,445,649

Buildings and structures in trust

62,818,784

Accumulated depreciation(12,728,848)

Machinery and equipment in trust

840,044

Accumulated depreciation(575,077)

Tools, furniture and fixtures in trust
Accumulated depreciation
Total

282,447

13,770,962

2,954,266

52,208,586
50,089,935(11,793,444)

610,365,184
40,415,141(123,677,118)

831,402
264,966(560,510)

30,297

486,688,067

8,162,114
270,891(5,587,621)

25,833

2,574,493

294,378(9,298)20,999(8,072)

17,760(90,344)

204,034¥782,165,939¥782,165,939¥740,863,906¥740,863,906$7,599,746,786$7,599,746,786

The compressed amount of tangible assets with government grants under the Corporation Tax Law of Japan was ¥50 million ($487
thousand) at March 31, 2014 and ¥50 million ($487 thousand) at September 30, 2013.

6. SHORT-TERM LOANS
Short-term loans at March 31, 2014 and September 30, 2013 consisted of the following:Thousands of yen
As of March 31, 2014

0.24882% unsecured loan from a bank, due on January 7, 2014
0.22756% unsecured loan from a bank, due on January 7, 2015
0.24882% unsecured loan from a bank, due on January 7, 2014
0.22756% unsecured loan from a bank, due on January 7, 2015
0.24882% unsecured loan from a bank, due on January 7, 2014
0.2281% unsecured loan from a bank, due on April 30, 2014
0.22756% unsecured loan from a bank, due on January 7, 2015
0.2275% unsecured loan from a bank, due on February 18, 2015
0.2263% unsecured loan from a bank, due on March 24, 2015
0.2163% unsecured loan from a bank, due on March 31, 201532 Japan Real Estate Investment Corporation¥—
1,000,000—
1,500,000—
3,000,000
4,000,000
3,500,000
2,500,000
3,700,000

U.S. dollars

As of September 30, 2013

¥1,000,000—
1,500,000—
4,000,000
3,000,000————

As of March 31, 2014$—
9,716,284—
14,574,427—
29,148,853
38,865,138
34,006,996
24,290,711
35,950,253

Thousands of yen

U.S. dollars

As of March 31, 2014

As of September 30, 2013

As of March 31, 2014—
5,000,000
1,000,000
2,500,000
3,700,000——
1,500,000
5,000,000
2,500,000
3,700,000
3,000,000
3,500,000
2,500,000
3,700,000¥56,800,000

1,000,000
5,000,000———
1,500,000
5,000,000————
3,000,000———¥25,000,000—
48,581,422
9,716,284
24,290,711
35,950,253——
14,574,427
48,581,422
24,290,711
35,950,253
29,148,853
34,006,996
24,290,711
35,950,253$551,884,959

0.25% unsecured loan from a trust bank, due on October 7, 2013
0.22818% unsecured loan from a trust bank, due on September 2, 2014
0.22818% unsecured loan from a trust bank, due on October 7, 2014
0.2263% unsecured loan from a trust bank, due on September 24, 2014
0.2163% unsecured loan from a trust bank, due on March 31, 2015
0.24882% unsecured loan from a trust bank, due on January 7, 2014
0.24835% unsecured loan from a trust bank, due on January 15, 2014
0.22756% unsecured loan from a trust bank, due on January 7, 2015
0.22774% unsecured loan from a trust bank, due on January 15, 2015
0.2263% unsecured loan from a trust bank, due on March 24, 2015
0.2163% unsecured loan from a trust bank, due on March 31, 2015
0.2281% unsecured loan from a bank, due on July 31, 2014
0.2275% unsecured loan from a bank, due on February 18, 2015
0.2263% unsecured loan from a bank, due on March 24, 2015
0.2163% unsecured loan from a bank, due on March 31, 2015
Total

Note 1: The interest rates indicate a weighted average of interest rates, rounded to the fifth decimal place.
Note 2: The Company has commitment lines totaling ¥43,000 million ($417,800 thousand) with five financial institutions to reduce refinancing risk.
The unused amount of such commitment lines was ¥43,000 million ($417,800 thousand) at March 31, 2014.

7. INVESTMENT CORPORATION BONDS INCLUDING CURRENT PORTION OF INVESTMENT CORPORATION BONDS
Details of total investment corporation bonds outstanding are summarized as follows:
As of March 31, 2014

Unsecured bond due on September 29, 2025
Unsecured bond due on June 18, 2014
Unsecured bond due on April 23, 2015
Unsecured bond due on July 23, 2015
Unsecured bond due on August 30, 2018
Total

As of September 30, 2013

As of March 31, 2014

Amount(thousands of yen)Interest rate(%)

Amount(thousands of yen)Interest rate(%)

Amount(U.S. dollars)¥10,000,000
15,000,000
10,000,000
10,000,000
10,000,000¥55,000,000

2.56%
1.91%
1.26%
1.05%
0.497%—¥10,000,000
15,000,000
10,000,000
10,000,000
10,000,000¥55,000,000

2.56%
1.91%
1.26%
1.05%
0.497%—$ 97,162,845
145,744,267
97,162,845
97,162,845
97,162,845$534,395,647

8. LONG-TERM LOANS INCLUDING CURRENT PORTION OF LONG-TERM LOANS
Long-term loans at March 31, 2014 and September 30, 2013 consisted of the following:Thousands of yen
As of March 31, 2014

U.S. dollars

As of September 30, 2013

As of March 31, 2014

CURRENT PORTION OF LONG-TERM LOANS
1.31% unsecured loan from a bank, due on March 24, 2014
1.2375% unsecured loan from a bank, due on March 24, 2014
0.615% unsecured loan from a bank, due on November 17, 2014
1.665% unsecured loan from a bank, due on March 24, 2017 (Note 2)
1.39875% unsecured loan from a bank, due on March 24, 2015

¥

—
—

¥

2,000,000$—

1,000,000—

1,000,000—

9,716,284

100,000

100,000

971,628

2,000,000—

19,432,569

1.2625% unsecured loan from a bank, due on March 24, 2014—

2,000,000—

1.2625% unsecured loan from a trust bank, due on March 24, 2014—

2,000,000—

1.2625% unsecured loan from a bank, due on March 24, 2014—

2,000,000—

1.2625% unsecured loan from a trust bank, due on March 24, 2014—

2,000,000—

1.2625% unsecured loan from a bank, due on March 24, 2014—

2,000,000—

2,000,000—

19,432,569

5,100,000

13,100,000

49,553,051

0.645% unsecured loan from a bank, due on December 15, 2014
Subtotal
LONG-TERM LOANS
1.86875% unsecured loan from an insurance company, due on May 29, 2015

5,000,000

5,000,000

48,581,422

1.54375% unsecured loan from an insurance company, due on March 30, 2017

5,000,000

5,000,000

48,581,422

1.86875% unsecured loan from an insurance company, due on May 29, 2015

1,500,000

1,500,000

14,574,427

1.595% unsecured loan from an insurance company, due on April 25, 2016

1,000,000

1,000,000

9,716,284

1.39625% unsecured loan from an insurance company, due on March 30, 2018

2,000,000

2,000,000

19,432,569

Japan Real Estate Investment Corporation 33

Thousands of yen
As of March 31, 2014

U.S. dollars

As of September 30, 2013

As of March 31, 2014

1.65% unsecured loan from a bank, due on September 1, 2015

2,000,000

2,000,000

19,432,569

1.665% unsecured loan from a bank, due on March 24, 2017 (Note 2)

1,500,000

1,550,000

14,574,427

1.115% unsecured loan from a bank, due on January 6, 2023

3,000,000

3,000,000

29,148,853

0.9325% unsecured loan from a bank, due on January 31, 2023

5,000,000—

48,581,422

1.39875% unsecured loan from a bank, due on March 24, 2015—

2,000,000—

0.9025% unsecured loan from a bank, due on August 31, 2017

2,000,000

2,000,000

19,432,569

0.66% unsecured loan from a bank, due on June 15, 2017

2,500,000

2,500,000

24,290,711

0.57125% unsecured loan from a bank, due on August 31, 2017

1,000,000

1,000,000

9,716,284

0.63849% unsecured loan from a bank, due on January 29, 2021 (Note 3)

2,500,000—

24,290,711

1.1875% unsecured loan from a bank, due on June 15, 2015

3,000,000

3,000,000

29,148,853

1.20875% unsecured loan from a bank, due on June 15, 2015

3,000,000

3,000,000

29,148,853

0.45% unsecured loan from a bank, due on March 26, 2018

2,000,000

2,000,000

19,432,569

1.30625% unsecured loan from a bank, due on December 21, 2016

5,000,000

5,000,000

48,581,422

1.2075% unsecured loan from a bank, due on November 1, 2019

6,000,000

6,000,000

58,297,707

1.13875% unsecured loan from a bank, due on November 15, 2019

3,000,000

3,000,000

29,148,853

1.07375% unsecured loan from a bank, due on June 15, 2021

4,000,000

4,000,000

38,865,138

0.96625% unsecured loan from a bank, due on January 17, 2022

5,000,000

5,000,000

48,581,422

0.87375% unsecured loan from a bank, due on April 25, 2022

3,000,000

3,000,000

29,148,853

1.43375% unsecured loan from a trust bank, due on January 17, 2018

3,000,000

3,000,000

29,148,853

1.16% unsecured loan from a trust bank, due on September 26, 20195,500,000

5,500,000

53,439,565

0.98375% unsecured loan from a trust bank, due on November 15, 2018

3,000,000

3,000,000

29,148,853

0.9525% unsecured loan from a trust bank, due on June 15, 2020

4,000,000

4,000,000

38,865,138

0.62575% unsecured loan from a trust bank, due on January 29, 2021 (Note 3)

2,000,000—

19,432,569

1.465% unsecured loan from an insurance company, due on March 1, 2018

2,000,000

2,000,000

19,432,569

1.255% unsecured loan from a bank, due on March 1, 2017

2,000,000

2,000,000

19,432,569

0.45% unsecured loan from a bank, due on March 26, 2018

3,000,000

3,000,000

29,148,853

1.3975% unsecured loan from a bank, due on March 26, 2018

2,000,000

2,000,000

19,432,569

1.13875% unsecured loan from a bank, due on November 15, 2019

3,000,000

3,000,000

29,148,853

1.1975% unsecured loan from a bank, due on June 15, 2022

4,000,000

4,000,000

38,865,138

0.80125% unsecured loan from a bank, due on December 21, 2020

5,000,000

5,000,000

48,581,422

0.71% unsecured loan from a bank, due on January 15, 2020

5,500,000

5,500,000

53,439,565

0.83625% unsecured loan from a bank, due on January 15, 2021

5,500,000

5,500,000

53,439,565

0.775% unsecured loan from a bank, due on April 26, 2021

5,000,000

5,000,000

48,581,422

1.0325% unsecured loan from a trust bank, due on April 4, 2016

5,000,000

5,000,000

48,581,422

1.205% unsecured loan from a trust bank, due on April 4, 2017

5,000,000

5,000,000

48,581,422

1.12625% unsecured loan from a trust bank, due on June 1, 2017

12,000,000

12,000,000

116,595,414

1.31125% unsecured loan from a trust bank, due on June 1, 2018

10,000,000

10,000,000

97,162,845

1.13875% unsecured loan from a trust bank, due on November 15, 2019

3,000,000

3,000,000

29,148,853

0.9525% unsecured loan from a trust bank, due on June 15, 2020

4,000,000

4,000,000

38,865,138

1.2725% unsecured loan from a trust bank, due on June 15, 2022

2,500,000

2,500,000

24,290,711
48,581,422

0.80125% unsecured loan from a trust bank, due on December 21, 2020

5,000,000

5,000,000

0.64225% unsecured loan from a trust bank, due on January 29, 2021 (Note 3)

4,000,000—

38,865,138

0.90875% unsecured loan from banks and trust banks, due on June 23, 2016

24,000,000

24,000,000

233,190,828

1.0475% unsecured loan from a bank, due on August 31, 2018

3,000,000

3,000,000

29,148,853

0.66% unsecured loan from a bank, due on June 15, 2017

2,500,000

2,500,000

24,290,711

1.2725% unsecured loan from a bank, due on June 15, 2022

2,500,000

2,500,000

24,290,711—

1,000,000—

0.4105% unsecured loan from a bank, due on March 25, 2019 (Note 3)

0.615% unsecured loan from a bank, due on November 17, 2014

1,000,000—

9,716,284

0.7525% unsecured loan from a bank, due on November 15, 2016

1,000,000

1,000,000

9,716,284

0.71375% unsecured loan from a bank, due on January 7, 2020

2,000,000

2,000,000

19,432,569

0.71% unsecured loan from a bank, due on January 15, 2020

5,000,000

5,000,000

48,581,422

0.52775% unsecured loan from a bank, due on April 24, 2018

5,000,000

5,000,000

48,581,422

0.98375% unsecured loan from a bank, due on November 15, 2018

3,000,000

3,000,000

29,148,853

0.98% unsecured loan from a bank, due on January 7, 2022

2,000,000

2,000,000

19,432,569

34 Japan Real Estate Investment Corporation

Thousands of yen
As of March 31, 2014

0.645% unsecured loan from a bank, due on December 15, 2014

U.S. dollars

As of September 30, 2013

As of March 31, 2014—

2,000,000—

0.66% unsecured loan from a bank, due on June 15, 2017

2,500,000

2,500,000

24,290,711

0.3825% unsecured loan from a bank, due on January 15, 2016

1,000,000

1,000,000

9,716,284

0.6035% unsecured loan from a bank, due on March 24, 2021 (Note 3)

2,000,000—

19,432,569

0.66% unsecured loan from a bank, due on June 15, 2017

1,000,000

1,000,000

9,716,284

0.45625% unsecured loan from a bank, due on December 20, 2017

1,000,000

1,000,000

9,716,284

0.3825% unsecured loan from a bank, due on January 15, 2016

1,000,000

1,000,000

9,716,284

0.45% unsecured loan from a bank, due on March 26, 2018

1,000,000

1,000,000

9,716,284

0.8% unsecured loan from a bank, due on October 29, 2020

2,000,000

2,000,000

19,432,569

0.945% unsecured loan from a bank, due on March 24, 2023

1,000,000

1,000,000

9,716,284

0.49125% unsecured loan from a bank, due on January 9, 2018

1,000,000

1,000,000

9,716,284

0.49125% unsecured loan from a bank, due on January 9, 2018

1,000,000

1,000,000

9,716,284

0.757% unsecured loan from a bank, due on January 31, 2022 (Note 3)

3,500,000—

34,006,996

Subtotal

242,000,000

227,050,000

2,351,340,847

Total¥247,100,000¥240,150,000$2,400,893,898

Note 1: The interest rates of floating rate loans indicate a weighted average of interest rates, rounded to the fifth decimal place.
Note 2: Repayments of principal shall be made by installments of ¥50 million for each 6 month period and ¥1,350 million on the final principal repayment date.
Note 3: The borrowings are hedged by interest rate swaps and the average interest rates of the borrowings are calculated adjusting the effect of the interest rate swaps.

9. NET ASSETSThe Company is required to maintain net assets of at least ¥50 million ($486 thousand), as required pursuant to the Investment Trust Law.

10. INCOME TAXESThe Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation Measures
Law of Japan (hereinafter the STML), an investment corporation is allowed to deduct dividends of accounting profits, or dividend
distributions, paid to investors from its 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 STML. Basedon the distribution policy provided by Article 32-2 of the Articles of Incorporation, the Company made a dividend distribution in theamount of ¥9,070 million ($88,128 thousand) subsequent to March 31, 2014, which is the multiple number of units up to 100% of theunappropriated retained earnings after deducting therefrom ¥30 million ($299 thousand) of retained earnings to be carried forward. The
Company will not distribute dividends in excess of retained earnings under Article 32-3 of the Articles of Incorporation.
The significant components of deferred tax assets and liabilities as of March 31, 2014 and September 30, 2013 were as follows:
Thousands of yen
As of March 31, 2014

U.S. dollars

As of September 30, 2013

As of March 31, 2014

Deferred tax assets:
Accrued enterprise tax
Amortization of a term leasehold interest
Asset retirement obligations

¥

1,039

¥

34,247

1,037
28,840$10,104
332,760

6,568

5,503

63,82341,85635,381

406,687

Valuation allowance(40,816)(34,343)(396,583)

Total deferred tax assets

1,039

1,037

10,104

Reserve for advanced depreciation of non-current assets¥122,812¥122,812$1,193,284

Total deferred tax liabilities

122,812

122,8121,193,284¥121,772¥121,775$1,183,180

Deferred tax liabilities:

Net deferred tax liabilities

The reconciliation of tax rate difference between the adjusted statutory tax rate and the effective tax rate for the six months ended March 31,
2014 and September 30, 2013 were as follows:
For the period from October 1, 2013
to March 31, 2014

For the period from April 1, 2013
to September 30, 2013

Statutory tax rate

39.43%

39.43%

Deductible dividend distribution(39.37%)(39.37%)

Change in valuation allowance

0.08%

0.08%

Others

0.01%

0.01%

Effective tax rate

0.14%

0.15%
Japan Real Estate Investment Corporation 35

Adjustment in deferred tax assets and deferred tax liabilities due to tax rate change
The “Act for Partial Revision of Income Tax Act, etc.” (Act No. 10 of 2014) promulgated on March 31, 2014 partially revised the “Special
Measures to Secure the Funds to Realize the Restoration of the Damages following the Great East Japan Earthquake” (Act No. 117 of 2011)
to limit the taxation period of the special corporate tax for restoration to March 31, 2014, resulting in a change of the statutory tax rateapplicable to the deferred tax assets and deferred tax liabilities arising from the temporary differences that are expected to reverse in the
period ending September 31, 2014 (the 26th fiscal period) through the period ending March 31, 2015 (the 27th fiscal period), which shallbe 37.11% on a nominal tax rate basis. The impact of this change is minimal.

11. RELATED PARTY TRANSACTIONS
For the six months ended March 31, 2014 and September 30, 2013
(1) Parent Company and Major Corporation Unitholders
For the period from October 1, 2013 to March 31, 2014
“Not applicable”
For the period from April 1, 2013 to September 30, 2013
“Not applicable”(2) Subsidiaries
For the period from October 1, 2013 to March 31, 2014
“Not applicable”
For the period from April 1, 2013 to September 30, 2013
“Not applicable”(3) Sister Companies
For the period from October 1, 2013 to March 31, 2014
“Not applicable”
For the period from April 1, 2013 to September 30, 2013
“Not applicable”(4) Directors and Major Individual Unitholders
For the period from October 1, 2013 to March 31, 2014
“Not applicable”
For the period from April 1, 2013 to September 30, 2013
“Not applicable”

12. SEGMENT INFORMATION
For the six months ended March 31, 2014 and September 30, 2013
Since the Company has been engaged in real-estate leasing business using a single segment, segment information has been omitted.
Information about products and services
Since revenues from external customers for single segment of similar products and services accounted for more than 90% of total operating
revenues, information about products and services has been omitted.
Information about geographic area
(1) Revenues
Since 100% of the total operating revenues were generated from external customers within Japan, geographical breakdown ofrevenues has been omitted.
(2) Property and equipment
Since 100% of total property and equipment on the balance sheet are located within Japan, geographical breakdown of such property
and equipment has been omitted.
Information about major clients
Since no single external client represents 10% or more of the Company’s total operating revenues, information about major clients has been
omitted.

36 Japan Real Estate Investment Corporation

13. ASSET RETIREMENT OBLIGATIONS
For the six months ended March 31, 2014 and September 30, 2013
Asset retirement obligations reported on balance sheet
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 obligation, theCompany 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 amount of the asset retirement obligations as of March 31, 2014 and September 30, 2013 consisted of following:Thousands of yen

U.S. dollars

For the period from October 1, 2013
to March 31, 2014

For the period from April 1, 2013
to September 30, 2013

For the period from October 1, 2013
to March 31, 2014

$3,006,421

Balance at the beginning of the period¥309,420¥306,334

Increase in the tangible fixed assets

—

—

—

Adjustment required over the period

3,117

3,086

30,290¥312,538¥309,420$3,036,711

Balance at the end of the period

Asset retirement obligations other than those reported on balance sheet
Under the Road Act of Japan, the Company is obligated to remove the cable lines and the accompanying equipment originally installed forpreventing analog TV interference under the public roads close to Shibuya Cross Tower and to restore the public roads to their originalstates because analog TV broadcasting was discontinued.
Since the removal involves public roads currently in service and some of the location of the underground structures is potentiallyaffected by the ongoing redevelopment projects near Shibuya station, it is difficult to initiate such removal unilaterally without involving
other interested parties. Therefore, a reasonable estimate of the present value of asset retirement obligations cannot be made because themethod, the cost and the timing of the removal remains uncertain.
In consideration of such uncertainty, the asset retirement obligation is not reported in the financial statements, and instead notedherein.

14. INVESTMENT AND RENTAL PROPERTY
For the six months ended March 31, 2014 and September 30, 2013
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, 2014 and as of September 30, 2013 and the fair values as of March 31, 2014
and as of September 30, 2013 are as follows:
Thousands of yen
Book value

Fair value

As of September 30, 2013

Change during period(*1)

As of March 31, 2014

As of March 31, 2014

¥748,257,128¥41,286,203¥789,543,332¥829,152,000

U.S. dollars
Book value

Fair value

As of September 30, 2013

Change during period(*1)

As of March 31, 2014

As of March 31, 2014

$7,270,279,138$401,148,497$7,671,427,634$8,056,276,720

Thousands of yen
Book value

Fair value

As of March 31, 2013

Change during period(*2)

As of September 30, 2013

¥739,901,194¥8,355,934¥748,257,128

As of September 30, 2013

¥775,147,000

Note 1: Book value on balance sheet means the acquisition cost less accumulated depreciation.
Note 2: Significant changes(*1) For the period ended March 31, 2014, the major reasons for the increase are the acquisition of Queen’s Tower A (¥17,520,660 thousand or $170,235,726) andOtemachi Financial City North Tower (¥15,623,199 thousand or $151,799,449) as well as the additional acquisition of Ebisu Neonato (¥10,978,467 thousand or$106,669,913). The major reason for the decrease is depreciation.
(*2) For the period ended September 30, 2013, the major reasons for the increase are the acquisition of Nagoya Hirokoji Place (¥8,729,181 thousand) and Shijo Karasuma
Center Building (¥4,451,165 thousand). The major reasons for the decrease are the sale of Nippon Brunswick Building (building) (¥1,200,748 thousand) anddepreciation.
Note 3: Fair values as of March 31, 2014 and as of September 30, 2013 are defined as the appraised values provided by an external qualified professional appraiser.

Japan Real Estate Investment Corporation 37

15. PER UNIT INFORMATION
The following table summarizes information about net assets per unit and net income per unit at March 31, 2014 and September 30, 2013
and for the periods then ended, respectively:
Yen

Net assets at period end per unit
Net income per unit

U.S. dollars

For the period from October 1, 2013
to March 31, 2014

For the period from April 1, 2013
to September 30, 2013

For the period from October 1, 2013
to March 31, 2014

¥341,128¥341,178$3,314

7,633

7,683

74

Note 1: Net income per unit is computed by dividing net income by the weighted average number of units outstanding during each period. Diluted net income per unit has notbeen presented since no warrants or convertible bonds were outstanding during the period.
Note 2: The Company implemented a 2-for-1 split of each investment unit with an effective date of January 1, 2014. Net income per unit is calculated as if the split had occurredat the start of the period ended September 30, 2013.

16. BREAKDOWN OF PROPERTY-RELATED REVENUES AND EXPENSES
For the six months ended March 31, 2014 and September 30, 2013
Thousands of yen

Property-Related Revenues

U.S. dollars

For the period from October 1, 2013
to March 31, 2014

For the period from April 1, 2013
to September 30, 2013

For the period from October 1, 2013
to March 31, 2014

$258,287,674¥26,582,967¥26,206,916

Rental Revenues

26,357,478

26,116,177

256,096,755

Rental revenues

20,301,286

20,088,252

197,253,074

Common service charges

3,445,407

3,554,993

33,476,564

627,183

600,511

6,093,890

1,983,600

1,872,419

19,273,227

Non-Rental Revenues

225,489

90,7392,190,919

Cancellation charges

86,664

6,929

842,052

Gain on donation of non current assets

91,572

44,967889,748

Other miscellaneous revenues

47,252

38,842

459,118$143,323,623

Parking revenues
Other rental revenues

Property-Related Expenses¥14,750,867¥14,509,238

Property management expenses

3,247,634

3,080,614

31,554,937

Utilities expenses

2,414,132

2,433,257

23,456,397

Property and other taxes

22,693,287

2,335,593

2,356,725

Casualty insurance

53,79257,095

522,664

Repairing expenses

887,210866,369

8,620,394

5,649,556

5,507,945

54,892,700

162,947

207,229

1,583,245¥11,832,100¥11,697,678$114,964,051

For the period from April 1, 2013
to September 30, 2013

For the period from October 1, 2013
to March 31, 2014

Depreciation
Other rental expenses
Property-Related Profits

17. BREAKDOWN OF GAIN ON SALE OF PROPERTIESFor the six months ended March 31, 2014 and September 30, 2013
Thousands of yen
For the period from October 1, 2013
to March 31, 2014

U.S. dollars

Nippon Brunswick Building (building)
Revenue from sale of property¥—¥1,220,000$—

Cost of property—

1,200,748—

Other sales expenses

—

647

—

18,603$—Gain on sale of property

38 Japan Real Estate Investment Corporation¥—¥

18. SUPPLEMENTAL CASH FLOW INFORMATIONCash and cash equivalents
The following table represents a reconciliation of cash and cash equivalents at March 31, 2014 and September 30, 2013:
Thousands of yen

Cash and deposits with banks
Cash and deposits with banks held in trust
Time deposits with maturities ofmore than three months
Cash and cash equivalents

U.S. dollars

As of March 31, 2014

As of September 30, 2013

As of March 31, 2014

¥20,633,688¥20,404,340$200,482,785

4,409,989

4,193,848

42,848,715(4,000,000)(10,000,000)(38,865,138)¥21,043,677¥14,598,188$204,466,362

19. LEASES
1. 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. Such capitalized leased assets primarily consist of tools,
furniture and fixtures.
2. The Company, as a lessor, owns office buildings under leases and earns rent income. As of March 31, 2014 and September 30, 2013, thefuture lease revenues under the non-cancelable operating leases are as follows:
Thousands of yen

U.S. dollars

As of March 31, 2014

As of September 30, 2013

As of March 31, 2014

$212,511,580

Due within one year

¥21,871,691¥20,619,216

Due after one year

51,661,072

45,615,611

501,953,681

Total¥73,532,764¥66,234,828$714,465,261

20. SUBSEQUENT EVENTSFor the six months ended March 31, 2014
Issuance of new investment units
As approved by the Board of Director’s meetings on March 27, 2014 and April 8, 2014, the Company decided to issue new investment
units, completing the public offering on April 15, 2014 and the third-party allocation on May 14, 2014. As a result of the issuance ofadditional units, the unitholders’ capital increased to ¥426,783,117 thousand ($4,146,746 thousand), and the units issued and outstanding
increased to 1,251,530 units as of May 14, 2014.
Summary of the issuance of units
A. Public offering of new investment units
1. Subscription method:
2. Number of units newly issued:
3. Offer price (subscription price):
4. Aggregate amount of offer price (subscription price):
5. Issue price (paid-in price):
6. Aggregate amount of issue price (paid-in price):
7. Payment date:
8. Initial date subject to distribution:

Public offering (subscription by book-building and spread method*)
57,500 units¥501,760 ($4,875) per unit
¥28,851,200 thousand ($280,326 thousand)¥486,400 ($4,726) per unit
¥27,968,000 thousand ($271,745 thousand)April 15, 2014
April 1, 2014

*Under the so-called “spread method”, the price difference between the aggregate amount of the offer price and the aggregate amount of the issue price shall be the proceeds foreach underwriter, and the Company will not pay an underwriting fee to the underwriters. The underwriting fee is not recognized as new unit issuance cost in the financial
statements.

B. Issuance of new investment units by third-party allocation
1. Subscription method:
2. Number of units newly issued:
3. Issue price (paid-in price):
4. Aggregate amount of issue price (paid-in price):
5. Payment date:
6. Initial date subject to distribution:
7. Allottee:

Third-party allocation
5,750 units¥486,400 ($4,726) per unit
¥2,796,800 thousand ($27,175 thousand)May 14, 2014
April 1, 2014
SMBC Nikko Securities Inc.

C. Use of proceeds
The net proceeds raised through the public offering were partially appropriated for repayment of short-term loans. The net proceeds
raised through the third-party allocation were appropriated for supplementing cash reserves used for the repayment of short-term loans.
Japan Real Estate Investment Corporation 39

40 Japan Real Estate Investment Corporation

Profile

Corporate Data
As of March 31, 2014

Japan Real Estate Investment Corporation (“the Company”) was established as one of
the first real estate investment corporations in Japan following revisions to the Law
Concerning Investment Trusts and Investment Corporations of Japan, as amended, or
the Investment Trust Law. Its investments focus primarily on office buildings, and it isaiming to maintain geographical diversity while seeking stable growth and dividends inthe medium to long term. The Company was listed on the Tokyo Stock Exchange(“TSE”) on September 10, 2001. (Securities Code: 8952)
Note: Investment corporations, including the Company, are special legal entities incorporated and operated underthe Investment Trust Law. Accordingly, the “units” of such investment corporations, including the units of theCompany, are governed by the Investment Trust Law and represent the equity interests in such investment
corporations, which may differ in certain material respects from the “shares” governed by the Corporation Law ofJapan and representing the equity interests in Japanese ordinary corporations incorporated and operated under
the Corporation Law of Japan. Investors and readers are specifically reminded to pay attention to such differences
when reviewing this semiannual report and making any investment decision on or in respect of the “units” of
the Company. “Unitholders” of the Company may be construed accordingly. Each of the investors and readers
should consult their own legal, tax and other advisors regarding all Japanese legal, tax and other consequencesof an investment in the units of the Company, with specific reference to their own legal, tax and other situation
and any recent changes in applicable laws, guidelines or their interpretation.

Executives

Transfer Agent

Executive Director:

Noritada Terasawa

Sumitomo Mitsui Trust Bank, Limited

Supervisory Directors:

Kenji Kusakabe

1-4-1, Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan

Tomohiro Okanoya

Auditors
Paid-in Capital

Ernst & Young ShinNihon LLC¥396,018,317,000

Hibiya Kokusai Bldg.
2-2-3, Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011, Japan

Contents
Financial Highlights

p. 1

Top 10 Unitholdersp. 1

Unit Price Performancep. 1

Number of Units Outstanding

Incorporation

1,188,280

May 11, 2001

Number of Unitholders

Executive Office

13,986

Japan Real Estate Investment Corporation
3-3-1, Marunouchi, Chiyoda-ku, Tokyo 100-0005, Japan

Stock Listing

The Strengths of Japan Real Estate
Investment Corporation

p. 2

Portfolio Highlights

p. 3

Tokyo Stock Exchange

For further information, please contact:
Japan Real Estate Asset Management Co., Ltd.

Securities CodePlanning Department8952

Tel: 81-3-3211-7921

Asset Management Summaryp. 4

Asset Size, Property Acquisitions, andPerformance Trends

p. 7

Type of Investment Corporation

To Our Unitholders

p.10

Closed-end corporate type fund

The Portfolio of Japan Real Estate
Investment Corporation

p.14

Overview of Portfolio Properties

p.17

Financial Section

p.23

Corporate Data

p.41

Fax: 81-3-3212-8886
E-mail: j-rea-inquiry@j-rea.co.jp

This semiannual report includes translations of documents originally filed under the Financial Instruments and Exchange Law of Japan. This report
was prepared in English solely for the convenience of readers outside Japan and should not be considered as a disclosure statement. The original
Japanese documents shall take precedence in the event of any discrepancies arising from the translations or interpretations contained in this report.
Estimates for the Company’s future operating results contained in this semiannual report are forward-looking statements and are based on
information currently available to the Company and its asset management company and are subject to risks and uncertainties. Consequently, theseprojections should not be relied upon as the sole basis for evaluating the Company. Actual results may differ substantially from the projections
depending on a number of factors.

Japan Real Estate Investment Corporation 41

Japan Real Estate Investment CorporationJ A P A N R E A L E S TAT E I N V E S T M E N T C O R P O R AT I O N

http://www.j-re.co.jp/english/

M A RC H 2 0 1 4
Semiannual Report
For the period from October 1, 2013 to March 31, 2014

MARCH 2014 SEMIANNUAL REPORT