MARCH2006
S EM I A N N UA L
R EP O R T
For the period from October 1, 2005 to March 31, 2006

Japan Real Estate Investment Corporation

PROFILE

Japan Real Estate Investment Corporation (the “Company”) was established as oneof the f irst 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 off ice
buildings, aiming to maintain geographical diversity while seeking stable growth anddividends in the 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 Japan Real Estate Investment Corporation, are special legal entities
incorporated and operated under the Investment Trust Law. Accordingly, the “shares” of such investment
corporations, including the shares of the Company, 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 Commercial Code of Japan and representing the equity interests in Japaneseordinary corporations incorporated and operated under the Commercial Code of Japan. Investors and readers
are specifically reminded to pay attention to such differences when reviewing this semiannual report andmaking any investment decision on or in respect of the “shares” of the Company. “Shareholders” of theCompany may be construed accordingly. See about the J-REIT System (Pages 54-56) for more details. Each of
the investors and readers should consult their own legal, tax and other advisors regarding all Japanese legal,
tax and other consequences of an investment in the shares of the Company, with specific reference to theirown legal, tax and other situation and any recent changes in applicable laws, guidelines or their interpretation.

THE STRENGTHS OF JAPAN REAL ESTATE INVESTMENT CORPORATION• Steady growth — Total amount of acquisition prices reached ¥412.8 billion ($3,513.8
million) at the end of March, 2006.
• Acquisition of “Kitanomaru Square” in February 2006 (The largest single J-REIT-owned
property) for ¥81.6 billion ($694.3 million) and “Lit City Building” in February 2006 for¥4.7 billion ($39.6 million)• Revenues and profits have continuously increased from IPO to the end of March, 2006.
Operating revenues for the ninth period achieved ¥14.0 billion ($118.9 million), andoperating profits reached ¥6.3 billion ($53.8 million).
• Portfolio of 52 high-quality off ice buildings as of March 31, 2006
• Superior geographic and tenant diversity with the highest period-end occupancy rate of
98.7% since IPO• Collaboration with Mitsubishi Estate Co., Ltd., Tokio Marine & Nichido Fire InsuranceCo., Ltd., The Dai-ichi Mutual Life Insurance Company, and Mitsui & Co., Ltd.
• Highest issuer credit ratings of any office REIT in the world: A+ from Standard & Poor’s, A1 from
Moody’s Investors Service and AA from Rating and Investment Information, Inc. (R&I)

CONTENTSFINANCIAL HIGHLIGHTS
TOP 10 SHAREHOLDERSSHARE PRICE PERFORMANCEPORTFOLIO HIGHLIGHTSNEW PORTFOLIO PROPERTIESPROPERTIES SOLDHISTORY AFTER IPO
TO OUR SHAREHOLDERS
THE PORTFOLIO OF
JAPAN REAL ESTATEINVESTMENT CORPORATION

p. 1
p. 1
p. 1
p. 2
p. 3
p. 7
p. 8
p. 10

p.16

OVERVIEW OF PORTFOLIOPROPERTIESTHE COMPANY’S INVESTMENTPOLICIES
FINANCIAL SECTIONABOUT THE J-REIT SYSTEMPROFILE OF J-REA
CORPORATE DATA

p.19
p.26
p.35
p.54
p.57
p.58

FINANCIAL HIGHLIGHTS
For the Period from October 1, 2005 to March 31, 2006

Thousands of U.S. dollars(Note 1)Millions of yen
For the period from
October1,2005 to
March 31,2006

For the period from
April 1,2005 to
September 30, 2005

For the period from For the period from
October 1, 2004 to
April 1, 2004 to
March 31, 2005
September 30, 2004

For the period from
October 1, 2003 to
March 31, 2004

For the period from
October 1, 2005 to
March 31, 2006

Operating Revenues

13,963

13,12010,747

10,151

9,560

118,864

Operating Prof its

6,319

6,226

4,701

4,358

4,341

53,794

Income before Income Taxes

5,587

5,510

4,121

3,831

3,803

47,560Net Income

5,586

5,509

4,120

3,830

3,802

47,551Net Operating Income ( NOI ) ( Note 2)

9,578

8,979

7,131

6,672

6,455

81,536

Funds from Operations (FFO) (Note 3)

7,946

7,527

5,762

5,488

5,301

67,641FFO Multiple ( Note 4)

22.1 times 21.1 times 19.7 times 20.8 times

20.4times 22.1 times

Cash Distribution

5,586

5,509

4,120

3,830

3,802

47,551

Number of Shares

345,400

345,400

260,400

260,400

260,400

345,400

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

16,172

15,951

15,824

14,711

14,602137.67

Notes: 1. Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥117.47 = US$1.00, the foreign exchange rate on
March 31, 2006, 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. NOI = (Property-Related Revenues – Property-Related Expenses) + Depreciation
3. FFO = Net Income – Gains (Losses) from Sales of Specified Assets + Depreciation
4. FFO Multiple = Share Price at End of the Respective Term ÷ FFO per Share (Annualized)(Annualized portion of the calculation given in note 4 assumes a fiscal period of 183 days for the period ended March 31, 2004, 183 days for the period
ended September 30, 2004, 182 days for the period ended March 31, 2005, 183 days for the period ended September 30, 2005, and 182 days for theperiod ended March 31, 2006.)

TOP 10 SHAREHOLDERS
As of March 31, 2006
Company

Japan Trustee Services Bank, Ltd. (Shintaku Acc.) ............................................................................................
NikkoCiti Trust and Banking Corporation (Toshin Acc.) ..................................................................................
The Master Trust Bank of Japan, Ltd. (Shintaku Acc.) ......................................................................................
Trust & Custody Services Bank, Ltd. (Toshin Acc.) ..........................................................................................
Mitsubishi Estate Co., Ltd. .................................................................................................................................
The Chugoku Bank, Ltd. ....................................................................................................................................
Tokio Marine & Nichido Fire Insurance Co., Ltd. .............................................................................................
The Yamanashi Chuo Bank, Ltd. .......................................................................................................................
The Joyo Bank, Ltd. ............................................................................................................................................
Resona Bank, Ltd. ...............................................................................................................................................

SHARE PRICE PERFORMANCETOPIX

Shares% of Total Shares
Outstanding

21,611
20,36814,305
12,172
10,160
9,495
8,120
7,300
7,138
6,929

6.26%
5.90%
4.14%
3.52%
2.94%
2.75%
2.35%
2.11%
2.07%
2.01%

Share Price

PO Price

200%
180%
160%

140%

120%
100%

80%

60%

Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr

2001

2002

2003

2004

2005

2006

Japan Real Estate Investment Corporation 1

PORTFOLIO HIGHLIGHTS
TRENDS IN THE STATE OF PORTFOLIO MANAGEMENT
Number ofbuildings

September 2001
October 2001
November 2001
December 2001
January 2002
February 2002
March 2002
April 2002
May 2002
June 2002
July 2002
August 2002
September 2002
October 2002
November 2002
December 2002
January 2003
February 2003
March 2003
April 2003
May 2003
June 2003
July 2003
August 2003
September 2003
October 2003
November 2003
December 2003
January 2004
February 2004
March 2004
April 2004
May 2004
June 2004
July 2004
August 2004
September 2004
October 2004
November 2004
December 2004
January 2005
February 2005
March 2005
April 2005
May 2005
June 2005
July 2005
August 2005
September 2005
October 2005
November 2005
December 2005
January 2006
February 2006
March 2006

Total numberof tenants(Note 1)

20
20
21
22
23
24
24
24
25
25
26
27
27
28
29
29
29
29
30
30
30
30
30
32
32
33
34
34
34
34
36
37
37
37
37
38
39
39
40
40
42
43
46
47
47
48
49
49
50
50
50
50
50
52
52

Total leasable
floor space

133,927m 2

198
197
248
266
269
325
328
326
329
334
333
340
339
340
347
345
348
351
359
356
356
356
362
386
384
396
400
401
403
407
444
447
448
446
447
457
466
463
471
476
534
557
609
610
611
634
636
639
742
744
743
751
748
780
782

136,381m 2
164,883m 2
171,734m 2
178,698m 2
201,934m 2
201,884m 2
201,580m 2
207,914m 2
207,914m 2
212,194m 2
215,928m 2
215,928m 2
220,720m 2
223,771m 2
223,771m 2
223,771m 2
223,771m 2
236,693m 2
236,702m 2
236,702m 2
237,897m 2
237,897m 2
246,062m 2
246,062m 2
251,631m 2
253,806m 2
260,003m 2
260,032m 2
260,211m 2
273,157m 2
281,171m 2
281,171m 2
281,155m 2
281,155m 2
286,860m 2
293,105m 2
293,116m 2
298,362m 2
298,362m 2
311,530m 2
322,429m 2
336,026m 2
345,333m 2
345,333m 2
350,973m 2
355,468m 2
355,458m 2
364,610m 2
364,610m 2
364,592m 2
364,592m 2
364,587m 2
400,090m 2
400,090m 2

Occupancy
rate

Total leasable f loor space (m 2)130,000

180,000

230,000

280,000

330,000

380,000

94.6%
93.9%
94.7%
93.8%
94.1%
94.0%
94.0%
93.3%
93.6%
94.4%
94.3%
95.2%
95.3%
94.8% (Note 2)
95.5%
95.3%
95.2%
95.6%
94.4%
94.4%
94.9%
94.4%
94.9%
95.3%
95.1%
95.4%
92.5%
93.2%
92.5%
93.2%
94.8%
94.7%
94.7%
91.7%
92.7%
92.8%
93.6%
93.7%
94,1%
94.6%
94.8%
95.5%
97.6%
97.7%
97.9%
97.8%
97.9%
98.2%
98.6%
98.4%
98.3%
98.5%
98.4%
98.1%
98.7%

430,000

Total leasablef loor space
Occupancy rate

Surpassed 400,000m2(4.3 million ft2)
at the end of
February 2006
60.0

65.0

70.0

75.0

80.0

85.0

90.0

95.0

100.0

Occupancy rate (%)
Notes: 1. In the event that the same tenant occupies several buildings, the tenant is calculated as one tenant in the total number of tenants.
2. Occupancy rate of “Genki Medical Plaza” is not considered in the calculation of October 2002, because the property was acquired at the end of that month, andits rent contracts started at the beginning of November 2002.

PORTFOLIO BREAKDOWNAs of March 31, 2006

Proper ties bygeographicr eg ion(Percentage based on
acquisition price)

Tenants byindustr yt ype
Other major
cities
(16.0%)( Percentage basedon leased area)

Steel and metals 1.6%
Textiles 1.8%
Temporary staff agency1.8%
Ceramics 1.9%
Transport services/Travel 1.9%
Communications 2.7%

Others10.3%

Construction 2.9%
Tokyo metropolitan area,
excluding 23 wards(3.0%)

Tokyo 23 wards(81.0%)

Information
services
12.5%

Machinery 4.8%

Real estate 6.7%

Electric devices 6.9%

Pharmaceuticals 7.7%

2 Japan Real Estate Investment Corporation

Serviceindustries
17.9%

Finance,insurance
Retail 10.2%
andrestaurants
8.5%

NEW PORT FOLIO PROPERTIESPROPERTIES ACQUIRED DURING THE PERIOD ENDED MARCH 31, 2006

Notes: 1.In “Property summary,” concerning real estate and other assets of which the Company is partial owner through co-ownership or sectional ownership, the figures for “Sitearea”and“Floor area of building” represent total site area and total floor space for the entire building.
2.In “Leasing Conditions,” the figures represent information of the portion owned by the Company, unless otherwise stated.

Lit City Building
Property Summary
Type of specified asset:
Acquisition price:
Acquisition date:
Location:
Intended use:
Site area:
Floor area of building:
Structure:
Completion:
Note:

Ownership (Note)¥4,650 million ($39.6 million)
February 1, 2006
Okayama, Okayama Prefecture
Office space, retail stores
7,596.44m2 (81,767.32ft2)
52,653.19m2 (566,753.67ft2)
Above ground: 20 floors
Below ground: 2 floors
June 2005

Land: Ownership (Share of co-ownership: 22.1162%)
Building: Compartmentalized building units and co-ownership of compartmentalized building
units (Ownership of building: 27.7488%)

Leasing Conditions (As of March 31, 2006)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:

37 tenants
9,965m2 (107,262.26ft2)
9,090m2 (97,843.85ft2)
91.2%

Property Acquisition Merits

OkayamaTokyo

The property is located in Okayama City,
the second largest city in the Chugoku
region next to Hiroshima. The area has beensteadily developing as a hub in the Chugoku
and Shikoku regions in line withimprovements to the wide area, high-speedtransportation network. In addition tohaving one of the largest leased floor areas in
the city, the Lit City Building offers highquality specifications that are expected tosatisfy the facility needs of various tenants.

Kitanomaru Square
Property Summary
Type of specified asset:
Acquisition price:
Acquisition date:
Location:
Intended use:
Site area:
Floor area of building:
Structure:
Completion:
Note:

Ownership (Note)¥81,555.5 million ($694.3 million)
February 24, 2006
Chiyoda-ku, Tokyo
Office space, retail stores, residences
5,821.03m2 (62,656.98ft2)
57,279.20m2 (616,547.58ft2)
Above ground: 26 floors
Below ground: 2 floors
January 2006

Ownership (after obtaining trust beneficiary right on February 24, 2006,
the trustee agreement was terminated, and then the Company acquired theownership in this property as of the same date.)

Leasing Conditions (As of March 31, 2006)(Note)
Number of tenants:
5 tenants
Leasable floor space:
Office area and retail stores: 25,678m2 (276,395.42ft2)
Leased area:
Office area and retail stores: 25,678m2 (276,395.42ft2)
Occupancy rate:
100.0%
Note: The figures exclude its residential area.

Property Acquisition Merits

Shinjuku

ShibuyaTokyo

Shinagawa

Prestigiously located near the Imperial
Palace, the property boasts access to
three subway lines and a rich naturalenvironment. This new building offers
the utmost in convenience and luxury
to corporate and residential customers.
The conclusion of fixed-term rent
contracts with office and shop tenants
will contribute to stable revenue
streams in the mid term.

Japan Real Estate Investment Corporation 3

Summary of Preferred Capital Contribution Certificates Additionally Acquired
Type of assets acquired: Preferred capital contribution certificates of 920 shares
Acquisition price: ¥46 million ($0.4 million)
Acquisition date: November 24, 2005
The Company plans to underwrite certificates as follows. The acquisition shown above is the second
acquisition.
Issuance date

Number of shares

Amounts per share

Total amount of issuance

19,120¥ 50,000 ($426)¥956 million ($8.1 million)

November 24, 2005

920

¥ 50,000 ($426)¥46 million ($0.4 million)

November 24, 2006

5,360

¥ 50,000 ($426)¥268 million ($2.3 million)

March 29, 2005

Concurrent acquisition of rights granting priority to purchase properties after completion of construction(preferential purchasing rights)

TMK (Special Purpose Company)
Harumi Front TMK

Property

Specified corporate bonds&
Special purpose borrowing

80%

Preferred capital contribution certificatesSpecified capital contribution

JRE’s total contribution:¥1,270 million ($10.8 million)
JRE’ s share of preferred
capital contribution: 49.9%(Approximately 9.9%of total project cost)

20%

Summary of Property to be held by TMK
Property Summary
Name of development
Project:
Location:
Site area:
Total project area:
Leasable floor space:
Intended use:
Total project cost:
Construction scheduleCommencement:
Completion:

Harumi Center Building (tentative)
2-25-2, Harumi, Chuo-ku, Tokyo
4,664.63 m2 (50,209.61ft2)
27,494.17 m2 (295,944.50ft2)
20,778.85 m2 (223,661.46ft2)
Office space, retail stores, parking area
¥12,821 million ($109.1 million) (planned)
May 2005
November 2006 (planned)* Since the Harumi Center Building (tentative name) is currently underconstruction, an image is shown left.
* The above overview is a plan or schedule, and is subject to change in the future.

4 Japan Real Estate Investment Corporation

PROPERTIES ACQUIRED AFTER THE PERIOD ENDED MARCH 31, 2006

Sanno Grand Building
Property Summary
Type of specified asset:
Acquisition price:
Acquisition date:
Location:
Intended use:
Site area:
Floor area of building:
Structure:
Completion:
Note:

Ownership (Note)¥10,700 million ($91.1 million)
April 3, 2006
Chiyoda-ku, Tokyo
Office space
3,663.93m2 (39,438.18ft2)
33,875.95m2 (364,637.34ft2)
Above ground: 10 floors
Below ground: 3 floors
September 1966

Ownership (Share of co-ownership for both land and building: 49.0%)* With this additional share acquisition, the share of co-ownership in this property
for the Company became 99.0%.

Leasing Conditions (As of April 3, 2006) (Note)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:
Note:

51 tenants
20,935m2 (225,342.25ft2)
20,471m2 (220,347.80ft2)
97.8%

Number of tenants shows the figure for the entire building, while the figures for leasable floor
space, leased area and occupancy rate are for the 99% area of the building under JRE's co-ownership.

Property Acquisition Merits

Shinjuku
Tokyo

Shibuya

Shinagawa

Located in front of Akasaka-Mitsuke
Station, this property has very convenient
access to several subway lines. It is also alandmark building in the Akasaka area.
Large-scale renewal work has brought thebuilding up to the latest standards forearthquake-proof construction and interior
specifications. This additional shareacquisition raised JRE’s share of coownership to 99.0%, enabling JRE to
manage the property more effectively.

Sendai Honcho Honma Building
Property Summary
Type of specified asset:
Acquisition price:
Acquisition date:
Location:
Intended use:
Site area:
Floor area of building:
Structure:
Completion:
Note:

Trust beneficiary right in trust of real estate (Note)¥250 million ($2.1 million)
June 28, 2006
Sendai, Miyagi Prefecture
Office space, retail stores
1,437.47m2 (15,472.78ft2)
8,247.50m2 (88,775.27ft2)
Above ground: 11 floors
November 1991

Land: Ownership (Share of co-ownership: 31.864% of 1 out of 3 lots)
Building: Compartmentalized building units and co-ownership of compartmentalizedbuilding units (Ownership of building: 6.61%)* On June 28, 2006, the Company set up an additional trust fund after theacquisition which enabled it to control a 100% trust beneficiary rights thereof.

Leasing Conditions (As of June 28, 2006) (Note)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:

1 tenant
412 m2 (4,434.73ft2)
412 m2 (4,434.73ft2)
100.0%

Note: The figures above represent the additional acquisition.

Property Acquisition Merits

SendaiTokyo

Located in a traditional and concentrated
office area in Sendai City, the property has
exceptionally convenient access, situatedwithin a one-minute walk from the Hirosedori
Subway Station, and a seven-minute walkfrom JR Sendai Station. With its high-quality
specifications, the Sendai Honcho Honma
Building responds to a variety of tenant needs.
This additional share acquisition raised JRE’sshare of co-ownership to 100.0%, enabling
JRE to manage the property more effectively.

Japan Real Estate Investment Corporation 5

6 Japan Real Estate Investment Corporation

PROPERTIES SOLD
As of June 28, 2006

Location :Site area :Floor area of building :Structure :Completion :Niigata Ishizuecho
Nishi-Bandaibashi
Building

JAL Sales Building

 III-3

 I-21

Niigata, Niigata Prefecture
957.90m2 (10,310.74ft2)
6,410.33m2 (69,000.15ft2)
Above ground: 8 floors
Below ground: 1 floor
November 1984

Location :Site area :Floor area of building :Structure :Completion :Meguro-ku, Tokyo
1,401.52m2 (15,085.82ft2)
5,269.58m2 (56,721.23ft2)
Above ground: 6 floors
Below ground: 1 floor
September 1991

Kanazawa Minamicho
Building

 III-5

Location :Site area :Floor area of building :Structure :Completion :Kanazawa, Ishikawa Prefecture
887.17m2 (9,549.41ft2)
5,163.19m2 (55,576.06ft2)
Above ground: 9 floors
March 1987

III-3
III-5
Shin-Yokohama First
Building

I-21

II-3

 II-3

Location :Site area :Floor area of building :Structure :Completion :Yokohama, Kanagawa Prefecture
1,528.00m2 (16,447.24ft2)
10,403.41m2 (111,981.26ft2)
Above ground: 10 floors
Below ground: 2 floors
April 1992

Property numbers are from the properties roster on pages 16-17.
(Millions of yen)

Name

Disposal Value

9th Period
Book Value(Mar 31, 06)

Disposal Value-9th Period
Book Value

9th Period
Appraisal Value

Disposal Value-9th Period
Appraisal Value

JAL Sales Building

2,593

1,261

1,332

1,490

1,103

Shin-Yokohama First Building

1,755

2,918

-1,162

1,640

115

Niigata Ishizuecho Nishi-Bandaibashi Building

1,490

1,000

490

729

761

Kanazawa Minamicho Building

1,165

1,291

-126

985

180

Total

7,003

6,469

534

4,844

2,159

*Appraisal value means the price at the end of each period, evaluated by an institutional appraiser.

Japan Real Estate Investment Corporation 7

HISTORY AF TER IPO
Since listing on the Tokyo Stock Exchange (“TSE”) as the first J-REIT in Japan, JRE hasestablished a firm track record over the past nine fiscal periods. While sustaining stable
management, JRE has realized steady growth and taken the initiative as a J-REIT pioneer.
JRE maintained a property acquisition target of ¥300 billion ($2.6 billion) to be achieved byMarch 31, 2006. On April 1, 2005, JRE had achieved its initial target one year in advance.
Furthermore, the size of our portfolio as of March 31, 2006 was ¥412.8 billion ($3.5 billion),a measure of JRE’s significant growth.
Sep. 2001
Listed on TSE as first J-REIT
Sep. 2001
IPO
May 2002
First Follow-On(First for a J-REIT)
2
133,927m
2

Oct. 2003
Second Follow-On(126,748m )198 Tenants

2
201,884m
2

Apr. 2005
Third Follow-On
Largest additional issue (until then) of shares since listing of J-REIT(total subscription of ¥70.2 billion ($597.7 million))(189,815m )328 Tenants

Period Ended
Sep. 2001

Feb. and Mar. 2002
Acquired Issuer Credit Rating (First for a J-REIT)
Standard & Poor’s A+ (Outlook: Stable)
Moody’s A2 (Outlook: Stable)

Period Ended
Mar. 2002

Jun. 2002
First Investment Corporation Bond Issue (First credit
rated issue for an investment corporation bond)
Apr. 2003
Second/Third Investment Corporation Bond Issue
Nov. 2004
Moody’s upgraded its credit rating from A2 to A1 with outlook of stable.
Dec. 2004
R& I issued an AA issuer credit rating.
Mar. 2005
Acquisition of preferred capital contribution certificates(First for a J-REIT)
Sep. 2005
Fourth Investment Corporation Bond Issue (First J-REIT ever to issue investment
corporation bonds without a negative pledge clause or other financial covenants)
8 Japan Real Estate Investment Corporation

Period Ended
Sep. 2002
Period Ended
Mar. 2003
Period Ended
Sep. 2003
Period Ended
Mar. 2004

94.6%
94.0%

95.3%
OCCUPANCY RATE

94.4%

Stable management

95.1%(Trend in operating conditions)

94.8%
97.6%

93.6%

Listed on
TSE¥ 144.7¥ 92.8Billion(24)

Billion(20)¥ 164.3¥ 183.5

Billion(27)¥ 192.6

Billion(30)¥218.4

Billion(32)

Billion(36)¥239.8Billion(39)¥290.5
Billion
(46)

98.6%

¥326.6
Billion(50)

98.7%¥412.8Billion(52)

TOTAL ACQUISITION PRICE (TOTAL PROPERTIES ACQUIRED)

Steady growth(Acquisitions)2

215,928m
2(205,796m )339 Tenants

2
236,693m
2(223,410m )359 Tenants

TOTAL LEASABLE FLOOR SPACE ( LEASED AREA )2
246,062m
2(233,925m )384 Tenants

2
273,157m
2(258,885m )444 Tenants

2
293,105m
2(274,411m )466 Tenants

2336,026m
2(327,962m )609 Tenants

2364,610m
2(359,620m )742 Tenants

2400,090m
2(394,764m )782 Tenants

Period Ended
Sep. 2004

Forward-looking initiatives

Period Ended
Mar. 2005( J-REIT management)

Listing and issuanceof shares

Period Ended
Sep. 2005
Period Ended
Mar. 2006

Credit ratings,
diversificationof investment methods,etc.

Japan Real Estate Investment Corporation 9

TO OUR SHAREHOLDERS

10 Japan Real Estate Investment Corporation

Wise investments, a firm grasp of market trends
and skillful management have enabled us tobuild a strong portfolio.
n its ninth fiscal period, the six months
ended March 31, 2006, Japan Real
Estate Investment Corporation (“theCompany”) recorded sound growth inrevenues and profits, continuing thestring of consecutive increases inbusiness results it has maintained for all
periods since its IPO. Wise investments,
a firm grasp of market trends and skillful management
have enabled us to build a strong portfolio. The
Company is set apart by expertise firmly rooted inexperience.
During the period under review, the Japanese
economy continued on the road to a moderate but
steady recovery, supported by increases in capital
investment on the back of stronger corporate
earnings and by a more favorable consumer mindset
spurred by improvements in employment conditions
and household incomes.
The market for leased office space received
support from the recovery in corporate earnings
performance, leading to marked improvement invacancy rates particularly in central Tokyo. Rents
have also been rising for large, newly constructedbuildings and other prime properties in central
Tokyo. Rents continued to decline slightly in otherregional urban centers, with the exception of somemajor cities such as Osaka, in spite of signs ofimprovements in the balance of supply and demand.
Regarding the property market, the view that land
prices have bottomed out and signs of rising land prices
in central Tokyo, as well as the sound market for leased
office space, have supported increased investment inIreal estate not only by Japanese Real Estate Investment
Trusts ( J-REITs), but also by newcomers into themarket from other areas. Accordingly, competition toacquire prime properties in urban centers has
intensified.
I would like to highlight some of the Company’s
major achievements during the ninth period, anddiscuss our strategies and forecasts for the tenth period
and beyond.
OVERVIEW OF THE NINTH PERIOD

Performance
he Company recorded operating revenues of ¥14.0
billion ($118.9 million), an
increase of 6.4 percent fromthe previous period. Operating profits gained 1.5
percent to ¥6.3 billion ($53.8
million). After deducting
expenses for interest payments on borrowings and otheradministrative costs, income before income taxes rose
1.4 percent to ¥5.6 billion ($47.6 million) and net income
increased 1.4 percent to ¥5.6 billion ($47.6 million).
The Company’s policy with regard to profit
appropriation is to distribute dividends of approximately
100 percent of taxable income, in order to enjoy the tax
benefit available under Article 67-15 of the Special
Taxation Measures Law of Japan applicable to J-REITs.
For the period under review, we declared a cash dividendof ¥16,172 ($137.67) per share.
As of March 31, 2006, the Company’s total asset
balance was ¥433.6 billion ($3,690.7 million). The

TJapan Real Estate Investment Corporation 11

The Company acquired ownership of the Kitanomaru Square for ¥81.6 billion($694.3 million) on February 24, 2006. As a result, the Company’s properties
as of March 31, 2006 consisted of 52 office buildings with a total acquisition
amount of ¥412.8 billion ($3,513.8 million).

Company recorded interest-bearing debt of ¥196.5
billion ($1,672.8 million) on its balance sheets.
Acquisitions and Managementn an increasingly competitive market
environment, the Company uses its own
information network to collect data on
the sale of numerous properties. We makeacquisitions based upon meticulous
examination of these data, and after
determining optimal prices fromnumerous perspectives, including that ofprofit stability of the entire Company and expected rates
of return.
During the period under review, the Company not
only participated in fierce bidding competitions, butalso focused on leveraging its own information network
to engage in one-on-one transactions. JRE acquired ashare of the Lit City Building for ¥4.7 billion ($39.6
million) on February 1, 2006. In addition, the Company
acquired ownership of the Kitanomaru Square for ¥81.6
billion ($694.3 million) on February 24, 2006. As aresult, the Company’s assets as of March 31, 2006
consisted of 52 office buildings with a total acquisition
amount of ¥412.8 billion ($3,513.8 million), net leasable
floor area of 400,090 m2 (4,306,529 ft2), and a total of
782 tenants.
T he Company maintained a record-highoccupancy rate of 98.7% (as of March 31, 2006) by (1)acquiring top-level properties and upgrading building
facilities through optimal refurbishment in order tomaintain and improve functions; and (2) developing
finely tuned building management policies from theI

12 Japan Real Estate Investment Corporation

perspective of tenants while undertaking vigorous sales
activities. We are working to reduce costs with a view
to further enhance profit stability. In light of therecovery in the market for leased office space in central
Tokyo, we have also undertaken concrete initiatives
aimed at raising the level of rents.
Concerning cost reductions, the Company’s basic
policy is to lower maintenance cost by five percent ofmaintenance cost plus utility cost in the first three yearsof new property acquisition. Of the 39 properties
acquired up to the end of the sixth fiscal period (sixmonths ended September 30, 2004), 31 properties are
subject to this cost reduction program. We have already
reduced costs of those properties by 13.3 percent per
year, based on the results of our eighth and ninth fiscal
periods (April 1, 2005 to March 31, 2006).
Fund-Raising Activities
f the total acquisition
price of ¥86.2 billion($733.9 million) for two
properties acquired during the period underreview, ¥84.5 billion($719.3 million) wascovered by short-termloans. Meanwhile, cash on hand raised through theSeptember 29, 2005 issue of ¥10.0 billion ($85.1
million) worth of investment corporation bonds wasused to repay ¥10.0 billion ($85.1 million) in shortterm loans on October 3, 2005. As a result of theabove factors, on March 31, 2006, the Company had
total interest-bearing liabilities of ¥196.5 billionO($1,672.8 million), including ¥90.5 billion ($770.4 million)in short-term loans (up ¥74.5 billion ($634.2 million) fromthe previous fiscal period), ¥24.0 billion ($204.3 million)in the current portion of long-term borrowings(unchanged from the previous fiscal period), ¥27.0
billion ($229.8 million) in long-term loans (unchanged
from the previous fiscal period), and outstanding
investment corporation bonds with a par value of¥55.0 billion ($468.2 million) (unchanged from theprevious fiscal period).
The Company has received the credit ratings
listed below in recognition of its overall performanceand potential.

Kazuhiko Arahata
CEO & President of Japan Real Estate AssetManagement Co., Ltd.

Rating Agency

Issuer Credit RatingStandard & Poor’s

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

Moody’s Investors Service

Rating: A1; Outlook: Stable

Rating and Investment Information, Inc.

Rating: AA

Japan Real Estate Investment Corporation 13

Taketo Yamazaki (Left)
Executive Director ofJapan Real Estate Investment Corporation

Kazuhiko Arahata (Right)
CEO & President of Japan Real Estate AssetManagement Co., Ltd.

OUTLOOK FOR THE TENTH PERIOD AND
BEYOND

Operating Environment
espite expectations for asustained recovery in theJapanese economy, uncertainties remain concerning increases ininterest rates and theimpact of rising crude
oil and raw material
prices upon corporate earnings performance.
In the office building leasing market, vacancy rates
in central Tokyo and certain other regional urban centers
are demonstrating marked improvement. In addition,
rent levels are expected to rise for a portion of officebuildings. At the same time, property selection is
evolving in terms of location, building quality andfacilities, as well as for high-quality building
management and value-added services and trends
toward a bipolarization of the market are likely to growstronger.
For these reasons, tenants have become
increasingly discriminating when selecting buildings.
We anticipate that it will become even more importantfor suppliers to provide services that promptly andaccurately reflect the needs of tenants, and to deliverD

14 Japan Real Estate Investment Corporation

added value that differentiates their buildings from thecompetition.
In the real estate market, the Company expects
active real estate investment to continue by J-REITs,
in addition to such entities as private funds, pension
funds and institutional investors. Accordingly, we expectthat competition to acquire prime properties in urban
centers will further increase.
New Property Acquisitions
he Company purchased
additional share of coownership in the Sanno
Grand Building for ¥10.7
billion ($91.1 million) on
April 3, 2006, raising its
share of the co-ownershipin this property from 50.0%
to 99.0%. Boasting superior location in a popular area
branded as a business town, the area has a stable rental
office market and is bordered by government and otherpublic offices, supporting a strong demand for offices
especially from extra-governmental organizations. This
property has sufficient facilities to meet tenants’ needs,
and is identified as having earthquake-proof construction
to meet the new mandated standards to withstandtemblors. On the date of acquisition (April 3, 2006), theoccupancy rate of the entire building stood at 97.8%.

TWith our team of dedicated and trustworthy professionals,
I am confident that we are prepared for the challenges that lay ahead.
In addition, the Company set up an additional trust
fund after purchasing a further share of the Sendai
Honcho Honma Building for ¥250 million ($2.1
million) on June 28, 2006. The acquisition allowed theCompany to control 100% of the trust beneficiary rightsof the entire building, enabling improved efficiency inthe operational management of the building andincreased asset value. The building is located in thehighly competitive “Aoba Street and Hirose Street” area,
a concentrated office area in the city of Sendai.
Occupancy rates for this acquisition were 100% as ofJune 28, 2006.
Properties Sold after March 31, 2006
In order to improve the quality of its property portfolio,
the Company sold the trust beneficiary rights in trustof real estate for the JAL Sales Building for ¥2,593.0
million ($22.1 million), the Niigata Ishizuecho NishiBandaibashi Building for ¥1,490.0 million ($12.7
million) and the Kanazawa Minamicho Building for¥1,165.0 million ($9.9 million), and a real estate property,
the Shin-Yokohama First Building for ¥1,755.3 million($14.9 million). The total sales value of the four
properties amounted to ¥7,003.3 million ($59.6 million),while the total book value was ¥6,469.1 million ($55.1
million), as of March 31, 2006. The difference between
the total sales value and the total book value was ¥534.2
million ($4.5 million). The handover for all four
properties was executed on June 28, 2006.
Performance Forecasts
For the six-month period from April 1, 2006 to September
30, 2006 (the tenth fiscal period), we forecast operating
revenues of ¥15.2 billion ($129.7 million), income before
income taxes of ¥5.5 billion ($46.7 million) and net
income of ¥5.5 billion ($46.7 million). We plan to declare
a dividend of ¥15,890 ($135.27) per share.
Our forecasts for the six-month period from

October 1, 2006 to March 31, 2007 (the eleventh fiscal
period) are operating revenues of ¥16.2 billion ($137.9
million), income before income taxes of ¥6.0 billion($51.0 million), net income of ¥6.0 billion ($51.0
million) and cash dividends of ¥17,300 ($147.27) per
share.
The above estimates for the tenth and eleventh
periods are based on conservative assumptions of theportfolio consisting of 52 properties as of March 31,
2006, and the acquisition of additional shares in boththe Sanno Grand Building on April 3, 2006 and the
Sendai Honcho Honma Building on June 28, 2006, but
do not include the disposal of four properties: the JAL
Sales Building, the Niigata Ishizuecho NishiBandaibashi Building, and Kanazawa Minamicho
Building and the Shin-Yokohama First Building on
June 28,2006. Estimates are subject to change inaccordance with the acquisition or sale of otherproperties. These estimates are also based on 345,400
investment shares outstanding as of March 31, 2006.
With our team of dedicated and trustworthy
professionals, our portfolio of prime properties and ourrefined property management policies, I am confident
that we are prepared for the challenges that lay ahead.
The Company will move forward with boldness anddetermination to search out and obtain the finest
properties available in order to enhance its portfolio andincrease shareholder value. I thank all of our shareholders
for your unwavering support and understanding.

Taketo Yamazaki
Executive Director of Japan Real Estate Investment Corporation

Kazuhiko Arahata
CEO & President of Japan Real Estate Asset Management Co., Ltd.

Japan Real Estate Investment Corporation 15

THE PORTFOLIO OF JAPAN REAL ESTATE INVEST MENT CORPORATIONAs of March 31, 2006

PROPERTIES ROSTER
NumberName of building

Location

Type ofspecified asset

Acquisitiondate

Acquisition
price(¥ millions)

10/31/2002
2/24/2006
5/31/2002
8/15/2002
9/25/2001
4/1/2005
7/29/2005
1/31/2005
8/1/2003
9/25/2001
7/22/2002
3/10/2005
3/15/2005
3/14/2003
9/10/2001
9/25/2001
9/1/2004
9/13/2005
9/25/2001
11/1/2004
9/10/2001
9/10/2001
3/24/2004
4/1/2004
11/22/2002
10/9/2003
11/30/2001
11/14/2003
4/1/2004
total
2/28/2005
9/25/2001
9/25/2001
8/2/2004

5,000 (1.2%)
81,555 (19.8%)
9,520 (2.3%)
4,810 (1.2%)
27,267 (6.6%)
14,700 (3.6%)
7,000 (1.7%)
10,200 (2.5%)
7,200 (1.7%)
3,173 (0.8%)
5,250 (1.3%)
16,830 (4.1%)
5,353 (1.3%)
7,680 (1.9%)
4,859 (1.2%)
2,808 (0.7%)
7,830 (1.9%)9,350 (2.3%)
2,738 (0.7%)5,500 (1.3%)
1,362 (0.3%)
5,123 (1.2%)
6,670 (1.6%)
8,700 (2.1%)
4,885 (1.2%)
12,200 (3.0%)
34,600 (8.4%)
3,740
360
4,100 (1.0%)
8,500 (2.1%)
3,541 (0.9%)
1,728 (0.4%)4,500 (1.1%)

3/31/2005
9/25/2001
10/11/2001
total
1/28/2002
9/25/2001

3,300
1,232
1,342
2,574
3,000
3,375

(0.8%)

1/31/2005
9/25/2001
9/25/2001
2/28/2002
3/3/2003
total
9/25/2001
9/10/2001
8/8/2003
12/20/2001
9/25/2001
12/26/2003
total
9/25/2001
2/28/2002
total
9/25/2001
2/1/2006
3/25/2004
9/25/2001
6/1/2005
9/10/2001
total

1,000
2,924
1,010
2,880
1,700
4,580
1,331
14,533
1,865
2,650
2,264
1,900
4,164
6,934
7,380
14,314
1,436
4,650
1,320
1,550
5,000
3,657
412,766(0.2%)(0.7%)(0.2%)

Tokyo 23 wards

I- 1
I- 2
 I- 3
 I- 4
 I- 5
 I- 6
 I- 7
 I- 8
 I- 9 I- 10
 I- 11
 I- 12 I- 13
 I- 14
 I- 15
 I- 16
 I- 17
 I- 18
 I- 19
 I- 20
 I- 21
 I- 22
 I- 23
 I- 24
 I- 25
 I- 26
 I- 27
 I- 28

Genki Medical Plaza
Kitanomaru Square
MD Kanda Building
Kandabashi Park Building
Mitsubishi Soken Building
Nibancho Garden
Burex Kojimachi Building
Sanno Grand Building
Yurakucho Denki Building
Kodenmacho Shin-Nihonbashi Building
Burex Kyobashi Building
Ginza Sanwa Building
Ryoshin Ginza East Mirror Building
Aoyama Crystal Building
Shiba 2Chome Daimon Building
Cosmo Kanasugibashi Building
Shinwa Building
Tokyo Opera City Building
Takanawadai Building
Higashi-Gotanda 1Chome Building
JAL Sales Building
Omori-Eki Higashiguchi Building
Nippon Brunswick Building
Yoyogi 1Chome Buildingda Vinci Harajuku
Jingumae Media Square Building
Shibuya Cross Tower
Ebisu Neonato

Iidabashi, Chiyoda-ku
Kudankita, Chiyoda-ku
Kandamitoshirocho, Chiyoda-ku
Kandanishikicho, Chiyoda-ku
Otemachi, Chiyoda-ku
Nibancho, Chiyoda-ku
Kojimachi, Chiyoda-ku
Nagatacho, Chiyoda-ku
Yurakucho, Chiyoda-ku
Nihonbashikodenmacho, Chuo-ku
Kyobashi, Chuo-ku
Ginza, Chuo-ku
Ginza, Chuo-ku
Kita-Aoyama, Minato-ku
Shiba, Minato-ku
Shiba, Minato-ku
Nishi-Shinjuku, Shinjuku-ku
Nishi-Shinjuku, Shinjuku-ku
Higashi-Gotanda, Shinagawa-ku
Higashi-Gotanda, Shinagawa-ku
Shimomeguro, Meguro-ku
Omori Kita, Ota-ku
Sendagaya, Shibuya-ku
Yoyogi, Shibuya-ku
Jingumae, Shibuya-ku
Jingumae, Shibuya-ku
Shibuya, Shibuya-ku
Ebisu, Shibuya-ku

Ownership
Ownership
Ownership
Ownership
Trust
Ownership
Ownership
Ownership
Ownership
Trust
Ownership
Ownership
Ownership
Ownership
Trust
Trust
Ownership
Ownership
Trust
Ownership
Trust
Trust
Ownership
Ownership
Ownership
Ownership
Ownership
Ownership

I- 29
I- 30
 I- 31
 I- 32

Harmony Tower
Otsuka Higashi-Ikebukuro Building
Ikebukuro 2Chome Building
Ikebukuro YS Building

Honcho, Nakano-ku
Higashi-Ikebukuro, Toshima-ku
Ikebukuro, Toshima-ku
Minami-Ikebukuro, Toshima-ku

Ownership
Trust
Trust
Ownership







Tokyo metropolitan area excluding 23 wards

II-1
II-2

Hachioji First Square
Saitama Urawa Building

Hachioji, Tokyo
Saitama, Saitama Prefecture

Ownership
OwnershipII-3
 II-4Shin-Yokohama First Building
Kawasaki Isago Building

Yokohama, Kanagawa Prefecture
Kawasaki, Kanagawa Prefecture

Ownership
Trust






(0.6%)(0.7%)(0.8%)

Other major cities

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

Jozenji Park Building
Sendai Honcho Honma Building
Niigata Ishizuecho Nishi-Bandaibashi Building
Kanazawa Park Building

Sendai, Miyagi Prefecture
Sendai, Miyagi Prefecture
Niigata, Niigata Prefecture
Kanazawa, Ishikawa Prefecture

Ownership
Trust
Trust
OwnershipIII-5
 III-6
 III-7
 III-8
 III-9Kanazawa Minamicho Building
Nagoya Hirokoji Building
Nagoya Misono Building
Kyoto Shijo Kawaramachi Building
Sakaisujihonmachi Building

Kanazawa, Ishikawa Prefecture
Nagoya, Aichi Prefecture
Nagoya, Aichi Prefecture
Kyoto, Kyoto Prefecture
Osaka, Osaka Prefecture

Trust
Ownership
Ownership
Ownership
Ownership

III-10 Midosuji Daiwa Building

Osaka, Osaka Prefecture

III-11
 III-12
 III-13
 III-14
 III-15
 III-16

Kobe, Hyogo Prefecture
Okayama, Okayama Prefecture
Hiroshima, Hiroshima Prefecture
Fukuoka, Fukuoka Prefecture
Fukuoka, Fukuoka Prefecture
Fukuoka, Fukuoka Prefecture

Kobe Itomachi Building
Lit City Building
NHK Hiroshima Broadcasting Center Building
Tosei Tenjin Building
Tenjin Crystal Building
Hinode Tenjin Building

16 Japan Real Estate Investment Corporation

Trust
Trust
Ownership
Ownership
Ownership
Ownership
Trust(1.1%)(0.3%)(3.5%)(0.5%)(0.6%)(1.0%)(3.5%)(0.3%)(1.1%)(0.3%)(0.4%)(1.2%)(0.9%)(100%)

Percentage ofownership of thebuilding (%)

Completion

Appraisal value
at the end of period(¥ millions)

100
100
100
56.76
100
31.345
100
50
10.78
100
100
70.95
100
100
100
100
100
8.368
100
100
100
100
100
100
100
100
100

1985
2006
1998
1993
1970
2004
2005
1966
1975
1991
2002
1982
1998
1982
1984
1992
1989
1996
1991
2004
1991
1989
1974
2003
1987
1998
1976

6,210
80,2009,080
5,010
31,00015,8006,880
11,400
7,350
3,400
6,060
17,300
4,650
8,290
6,650
3,360
8,180
10,400
2,650
6,520
1,490
5,390
7,910
9,620
5,900
14,09041,6004,791m2
25,678m2
6,269m2
3,687m2
18,006m2
9,316m2
4,495m2
10,573m2
4,694m2
3,897m2
4,279m2
4,329m2
2,875m2
4,916m2
9,643m2
4,062m2
6,197m2
9,244m2
4,067m2
5,205m2
3,383m2
7,708m2
7,347m2
7,772m2
3,109m2
5,558m2
29,819m2(51,570ft2)(276,395ft2)(67,479ft2)(39,686ft2)(193,815ft2)(100,276ft2)(48,384ft2)(113,807ft2)(50,526ft2)(41,947ft2)(46,059ft2)(46,597ft2)(30,946ft2)(52,915ft2)(103,796ft2)(43,723ft2)(66,704ft2)(99,501ft2)(43,777ft2)(56,026ft2)(36,414ft2)(82,968ft2)(79,082ft2)(83,657ft2)(33,465ft2)(59,826ft2)(320,969ft2)

4,791m2
25,678m2
6,269m2
3,687m2
18,006m2
9,316m2
4,495m2
10,339m2
4,694m2
3,897m2
4,279m2
4,329m2
2,875m2
4,916m2
9,643m2
4,062m2
6,197m2
9,137m2
4,067m2
5,205m2
3,383m2
7,548m2
7,298m2
7,772m2
3,109m2
5,558m2
29,726m2(51,570ft2)(276,395ft2)(67,479ft2)(39,686ft2)(193,815ft2)(100,276ft2)(48,384ft2)(111,288ft2)(50,526ft2)(41,947ft2)(46,059ft2)(46,597ft2)(30,946ft2)(52,915ft2)(103,796ft2)(43,723ft2)(66,704ft2)(98,350ft2)(43,777ft2)(56,026ft2)(36,414ft2)(81,246ft2)(78,555ft2)(83,657ft2)(33,465ft2)(59,826ft2)(319,968ft2)

1
5
2
7
4
1
1
51
15
5
1
13
8
8
26
9
9
109
1
4
1
18
18
1
4
9
52

223
71
293
172
1,062
496
162
486
282
154
150
372
133
245
301
129
239
453
114
216
86
253
330
283
199
343
1,496

(1.6%)(0.5%)(2.1%)(1.2%)(7.6%)(3.6%)(1.2%)(3.5%)(2.0%)(1.1%)(1.1%)(2.7%)(1.0%)(1.8%)(2.2%)(0.9%)(1.7%)(3.2%)(0.8%)(1.5%)(0.6%)(1.8%)(2.4%)(2.0%)(1.4%)(2.5%)(10.7%)

12.29939
29.253305
100
100
100

1994
1997
1987
1990
1989

5,000
10,400
3,410
1,510
5,010

2,462m2
10,929m2
7,114m2
2,186m2
5,797m2(26,501ft2)(117,639ft2)(76,574ft2)(23,530ft2)(62,398ft2)

2,462m2
10,929m2
6,831m2
2,186m2
5,797m2(26,501ft2)(117,639ft2)(73,528ft2)(23,530ft2)(62,398ft2)

3
17
9
9
8

144
420
178
71
206

(1.0%)(3.0%)(1.3%)(0.5%)(1.5%)

50.6611

1996

3,300

6,336m2(68,200ft2)

6,056m2(65,186ft2)

37

166

(1.2%)

100
100
100

1990
1992
1990

2,420
1,640
3,290

4,510m2
6,925m2
6,831m2(48,545ft2)(74,540ft2)(73,528ft2)

4,510m2
6,925m2
6,379m2(48,545ft2)(74,540ft2)(68,663ft2)

16
9
12

138
110
166

(1.0%)(0.8%)(1.2%)

50
93.39
100

1993
1991
1984

1,060
3,150
729

2,518m2
5,829m2
4,383m2(27,104ft2)(62,743ft2)(47,178ft2)

2,400m2
5,829m2
4,234m2(25,833ft2)(62,743ft2)(45,574ft2)

17
16
10

68
149
82

(0.5%)(1.1%)(0.6%)

89
100
100
100
100

1991
1987
1987
1991
1982

5,480
985
15,9001,890
2,090

21,202m2
3,777m2
21,635m2
3,470m2
6,800m2(228,216ft2)(40,655ft2)(232,877ft2)(37,351ft2)(73,195ft2)

20,624m2
3,568m2
21,084m2
3,470m2
6,800m2(221,995ft2)(38,406ft2)(226,946ft2)(37,351ft2)(73,195ft2)

68
16
29
9
33

546
82
739
95
139

(3.9%)(0.6%)(5.3%)(0.7%)(1.0%)

100

1992

4,400

11,574m2(124,581ft2)

11,574m2(124,581ft2)

18

225

(1.6%)

100
100
27.748827.085100
100
74.4844
—

1991
1989
2005
1994
1992
1993
1987
—

14,600
945
4,890
1,490
1,360
4,970
3,490
439,799

20,450m2
3,478m2
9,965m2
5,477m2
4,000m2
5,640m2
5,860m2
400,090m2(220,122ft2)(37,437ft2)(107,262ft2)(58,954ft2)(43,056ft2)(60,708ft2)(63,076ft2)(4,306,529ft2)

20,450m2
3,345m2
9,090m2
5,335m2
3,848m2
5,080m2
5,657m2
394,764m2(220,122ft2)(36,005ft2)(97,844ft2)(57,425ft2)(41,419ft2)(54,681ft2)(60,891ft2)(4,249,200ft2)

25
18
37
12
19
24
12
782

679
62
82
151
95
225
177
13,962(4.9%)(0.4%)(0.6%)(1.1%)(0.7%)(1.6%)(1.3%)(100%)

Total leasable
floor space

Leased area

Total
number oftenants

Revenue fromleasing operations(¥ millions)Japan Real Estate Investment Corporation 17

MAJOR TENANTS ROSTER
Rank

1
2
3
4
5
6
7
8
9
10

Name of tenant

Name of building

Banyu Pharmaceutical Company, Ltd.
Mitsubishi Research Institute, Inc.
The Dai-ichi Mutual Life Insurance Company
Seven & i Holdings Co.,Ltd. (Note 1)
Space Design, Inc.
FAST RETAILING CO., LTD.
Yamano Gakuen (Note 2)
TOTO Ltd.
Toshiba Solutions Corporation
Asahi Kasei Pharma Corporation

Leased area

Kitanomaru Square (also includes 2 other buildings)
17,077m2 (183,815ft2)
Mitsubishi Soken Building
14,529m2 (156,389ft2)
Midosuji Daiwa Building (also includes 8 other buildings) 10,302m2 (110,890ft2)
Nibancho Garden Building
9,316m2 (100,276ft2)
Burex Kojimachi Building (also includes 1 other building) 8,774m2 (94,442ft2)
Kitanomaru Square
8,476m2 (91,235ft2)
Yoyogi 1Chome Building
7,772m2 (83,657ft2)
Midosuji Daiwa Building (also includes 1 other building)
6,906m2 (74,335ft2)
Takanawadai Building (also includes 2 other buildings)
5,331m2 (57,382ft2)
MD Kanda Building
5,144m2 (55,370ft2)

Percent of totalleased area

4.3%
3.7%
2.6%
2.4%
2.2%
2.1%
2.0%
1.7%
1.4%
1.3%

Notes: 1. The tenantship in the lease agreement of this property was transferred from Ito-Yokado Co., Ltd. to its holding company, Seven & i Holdings Co., Ltd., on
December 1, 2005.
2. The lease agreement concluded with the tenant shall be terminated on April 30, 2007.

LOCATIONS OF PORTFOLIO PROPERTIES
II-1–II-4: Tokyo metropolitan area
excluding 23 wards

III-1–III-16:Other major cities

II-2
II-1

III-1 III-2
III-4 III-5
III-8 III-7
III-12III-11
III-6
III-13
III-9
III-14 III-15 III-10
III-16

III-3
II-3

I-1–I-32: Tokyo
23 words

I-30

I-31
I-32

I-1
I-3
I-2
I-17
I-6
I-4
I-23
I-7 I-5
I-10
I-18
I-8
I-11
I-24 I-25
I-26
I-9 I-12
I-13
I-14
I-27

I-29

I-28
I-21

I-19

I-15
I-16

I-20

I-22

Tokyo Station

18 Japan Real Estate Investment Corporation

II-4

OVERVIEW OF PORTFOLIO PROPERTIES AS OF MARCH 31, 2006
Note: Concerning real estate and other assets of which the Company is partial owner through co-ownership or compartmentalized building units, the figures for “Site area” and “Floor
area of building” represent total site area and total floor space for the entire building.

Location :Site area :Floor area of building :Structure :Completion :Genki Medical Plaza

Kitanomaru Square

 I-1

 I-2

Chiyoda-ku, Tokyo
1,052.80m2 (11,332.23ft2)
6,722.02m2 (72,355.15ft2)
Above ground: 8 floors
Below ground: 1 floor
September 1985

Location :Site area :Floor area of building:
Structure :Completion :Kandabashi Park
Building

MD Kanda Building

 I-4

 I-3

Location :Site area :Floor area of building:
Structure :Completion :Chiyoda-ku, Tokyo
1,085.83m2 (11,687.77ft2)
8,185.11m2 (88,103.71ft2)
Above ground: 10 floors
February 1998

Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Nibancho Garden

 I-5

 I-6

Chiyoda-ku, Tokyo
3,441.35m2 (37,042.35ft2)
26,372.92m2 (283,875.47ft2)
Above ground: 15 floors
Below ground: 2 floors
July 1970

Location:
Site Area:
Floor area of building:
Structure:
Completion:

Chiyoda-ku, Tokyo
967.67m2 (10,415.90ft2)
6,526.64m2 (70,252.10ft2)
Above ground: 11 floors
Below ground: 1 floor
January 2005

Chiyoda-ku, Tokyo
11,003.87m2 (118,444.56ft2)
57,031.06m2 (613,876.63ft2)
Above ground: 14 floors
Below ground: 2 floors
April 2004

Sanno Grand
Building

 I-7

Completion:

Chiyoda-ku, Tokyo
1,218.56m2 (13,116.46ft2)
9,370.25m2 (100,860.43ft2)
Above ground: 10 floors
Below ground: 1 floor
July 1993

Mitsubishi Soken
Building

Burex Kojimachi
Building

Location:
Site Area:
Floor area of building:
Structure:

Chiyoda-ku, Tokyo
5,821.03m2 (62,656.98ft2)
57,279.20m2 (616,547.58ft2)
Above ground: 26 floors
Below ground: 2 floors
January 2006

 I-8

Location:
Site Area:
Floor area of building:
Structure:
Completion:

Chiyoda-ku, Tokyo
3,663.93m2 (39,438.18 ft2)
33,875.95m2 (364,637.34 ft2)
Above ground: 10 floors
Below ground: 3 floors
September 1966
Japan Real Estate Investment Corporation 19

Location :Site area :Floor area of building :Structure :Completion :Yurakucho Denki
Building

Kodenmacho ShinNihonbashi Building

 I-9

 I-10Chiyoda-ku, Tokyo
5,749.91m2 (61,891.46ft2)
70,287.65m2 (756,569.24ft2)
Above ground: 20 floors
Below ground: 4 floors
September 1975

Location :Site area :Floor area of building :Structure :Completion :Burex Kyobashi
Building

Ginza Sanwa Building I-11

Location :Site area :Floor area of building :Structure :Completion :Location:
Site area:
Floor area of building:
Structure:
Completion:

Chuo-ku, Tokyo
756.03m2 (8,137.83ft2)
5,470.54m2 (58,884.35ft2)
Above ground: 8 floors
Below ground: 1 floor
February 2002

 I-12

Location:
Site area:
Floor area of building:
Structure:
Completion:

Aoyama Crystal
Building

 I-13

 I-14Chuo-ku, Tokyo
615.25m2 (6,622.49ft2)
4,104.71m2 (44,182.69ft2)
Above ground: 8 floors
Below ground: 1 floor
October 1998

Location :Site area :Floor area of building :Structure :Completion :Minato-ku, Tokyo
2,820.90m2 (30,363.89ft2)
16,235.10m2 (174,752.99ft2)
Above ground: 8 floors
Below ground: 2 floors
March 1984

20 Japan Real Estate Investment Corporation

Minato-ku, Tokyo
989.30m2 (10,648.73ft2)
8,094.36m2 (87,126.88ft2)
Above ground: 10 floors
Below ground: 4 floors
December 1982

Cosmo Kanasugibashi
Building

 I-15Completion :Chuo-ku, Tokyo
1,119.27m2 (12,047.71ft2)
8,851.00m2 (95,271.28 ft2)
Above ground: 9 floors
Below ground: 2 floors
October 1982

Ryoshin Ginza East
Mirror Building

Shiba 2Chome
Daimon Building

Location :Site area :Floor area of building :Structure :Chuo-ku, Tokyo
773.28m2 (8,323.51ft2)
5,822.88m2 (62,676.90ft2)
Above ground: 9 floors
Below ground: 1 floor
November 1991

 I-16

Location :Site area :Floor area of building :Structure :Completion :Minato-ku, Tokyo
758.54m2 (8,164.85ft2)
5,420.93m2 (58,350.35ft2)
Above ground: 9 floors
Below ground: 1 floor
March 1992

Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Shinwa Building

Tokyo Opera City
Building

 I-17

 I-18

Shinjuku-ku, Tokyo
822.00m2 (8,847.93ft2)
8,291.69m2 (89,250.92ft2)
Above ground: 10 floors
Below ground: 1 floor
November 1989

Location :Site area :Floor area of building :Structure :Completion :Takanawadai
Building

Higashi-Gotanda
1Chome Building I-19

 I-20Shinagawa-ku, Tokyo
1,416.17m2 (15,243.51ft2)
5,762.70m2 (62,029.13ft2)
Above ground: 13 floors
January 1991

Location:
Site area:
Floor area of building:
Structure:
Completion:

Omori-Eki
Higashiguchi Building I-21

 I-22Meguro-ku, Tokyo
1,401.52m2 (15,085.82ft2)
5,269.58m2 (56,721.23ft2)
Above ground: 6 floors
Below ground: 1 floor
September 1991

Location :Site area :Floor area of building :Structure :Completion :Shibuya-ku, Tokyo
1,497.52m2 (16,119.16ft2)
11,957.38m2 (128,708.04ft2)
Above ground: 9 floors
Below ground: 2 floors
March 1974

Ota-ku, Tokyo
2,199.30m2 (23,673.05ft2)
14,095.34m2 (151,720.83ft2)
Above ground: 11 floors
Below ground: 2 floors
July 1989

Yoyogi 1Chome
Building

 I-23Completion :Shinagawa-ku, Tokyo
1,539.95m2 (16,575.87ft2)
6,460.39m2 (69,538.99ft2)
Above ground: 8 floors
July 2004

JAL Sales Building

Nippon Brunswick
Building

Location :Site area :Floor area of building :Structure :Shinjuku-ku, Tokyo
18,236.94m2 (196,300.60ft2)
232,996.81m2 (2,507,954.36ft2)
Above ground: 54 floors
Below ground: 4 floors
July 1996

 I-24

Location :Site area :Floor area of building :Structure :Completion :Shibuya-ku, Tokyo
1,755.75m2 (18,898.72ft2)
10,778.10m2 (116,014.39ft2)
Above ground: 14 floors
Below ground: 1 floor
October 2003

Japan Real Estate Investment Corporation 21

Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Location:
Site area:
Floor area of building:
Structure:
Completion:da Vinci Harajuku

Jingumae Media
Square Building I-25

 I-26

Shibuya-ku, Tokyo
839.66m2 (9,038.02ft2)
4,359.20m2 (46,921.99ft2)
Above ground: 7 floors
Below ground: 2 floors
December 1987

Location :Site area :Floor area of building :Structure :Completion :Shibuya Cross Tower

Ebisu Neonato

 I-27

 I-28

Shibuya-ku, Tokyo
5,153.45m2 (55,471.22ft2)
61,862.33m2 (665,879.93ft2)
Above ground: 32 floors
Below ground: 3 floors
April 1976

Location :Site area :Floor area of building :Structure :Completion :Otsuka HigashiIkebukuro Building I-29

 I-30Nakano-ku, Tokyo
10,020.52m2 (107,859.88 ft2)
72,729.31m2 (782,851.02ft2)
Above ground: 29 floors
Below ground: 2 floors
March 1997

Location :Site area :Floor area of building :Structure :Completion :Toshima-ku, Tokyo
397.26m2 (4,276.07ft2)
3,157.51m2 (33,987.12ft2)
Above ground: 9 floors
Below ground: 1 floor
May 1990

22 Japan Real Estate Investment Corporation

Toshima-ku, Tokyo
2,121.39m2 (22,834.43ft2)
9,531.28m2 (102,593.74ft2)
Above ground: 8 floors
Below ground: 1 floor
November 1987

Ikebukuro YS
Building

 I-31

Completion :Shibuya-ku, Tokyo
5,005.70m2 (53,880.85ft2)
36,598.38m2 (393,941.30ft2)
Above ground: 18 floors
Below ground: 2 floors
October 1994

Harmony Tower

Ikebukuro 2Chome
Building

Location :Site area :Floor area of building :Structure :Shibuya-ku, Tokyo
2,261.68m2 (24,344.50ft2)
9,420.42m2 (101,400.46ft2)
Above ground: 9 floors
Below ground: 2 floors
March 1998

 I-32

Location :Site area :Floor area of building :Structure :Completion :Toshima-ku, Tokyo
1,384.56m2 (14,903.27ft2)
7,464.64m2 (80,348.64ft2)
Above ground: 8 floors
Below ground: 1 floor
December 1989

Location:
Site area:
Floor area of building:
Structure:
Completion:

Location :Site area :Floor area of building :Structure :Completion :Location:
Site area:
Floor area of building:
Structure:
Completion:

Hachioji First
SquareSaitama Urawa
Building II-1

 II-2

Hachioji, Tokyo
2,989.33m2 (32,176.85ft2)
18,329.98m2 (197,302.07ft2)
Above ground: 12 floors
Below ground: 1 floor
July 1996

Location :Site area :Floor area of building :Structure :Completion :Shin-Yokohama First
Building

Kawasaki Isago
Building II-3 II-4

Yokohama, Kanagawa Prefecture
1,528.00m2 (16,447.24ft2)
10,403.41m2 (111,981.26ft2)
Above ground: 10 floors
Below ground: 2 floors
April 1992

Location :Site area :Floor area of building :Structure :Completion :Sendai Honcho
Honma Building

 III-1

 III-2

Sendai, Miyagi Prefecture
1,566.68m2 (16,863.59 ft2)
7,648.33m2 (82,325.86ft2)
Above ground: 8 floors
Below ground: 1 floor
January 1993

Location :Site area :Floor area of building :Structure :Completion :Niigata, Niigata Prefecture
957.90m2 (10,310.74ft2)
6,410.33m2 (69,000.15ft2)
Above ground: 8 floors
Below ground: 1 floor
November 1984

Sendai, Miyagi Prefecture
1,437.47m2 (15,472.78ft2)
8,247.50m2 (88,775.27ft2)
Above ground: 11 floors
November 1991

Kanazawa Park
Building

 III-3

Completion :Kawasaki, Kanagawa Prefecture
1,594.50m2 (17,163.04ft2)
9,623.83m2 (103,589.94ft2)
Above ground: 12 floors
Below ground: 1 floor
December 1990

Jozenji Park Building

Niigata Ishizuecho
Nishi-Bandaibashi
Building

Location :Site area :Floor area of building :Structure :Saitama, Saitama Prefecture
1,533.06m2 (16,501.70ft2)
6,258.59m2 (67,366.84ft2)
Above ground: 8 floors
March 1990

 III-4

Location :Site area :Floor area of building :Structure :Completion :Kanazawa, Ishikawa Prefecture
6,642.71m2 (71,501.47ft2)
43,481.20m2 (468,027.29ft2)
Above ground: 12 floors
Below ground: 2 floors
October 1991
Japan Real Estate Investment Corporation 23

Location :Site area :Floor area of building :Structure :Completion :Kanazawa Minamicho
Building

Nagoya Hirokoji
Building

 III-5

 III-6

Kanazawa, Ishikawa Prefecture
887.17m2 (9,549.41ft2)
5,163.19m2 (55,576.06ft2)
Above ground: 9 floors
March 1987

Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Nagoya Misono
Building

Kyoto Shijo
Kawaramachi Building

 III-7

 III-8

Nagoya, Aichi Prefecture
805.04m2 (8,665.37ft2)
5,348.00m2 (57,565.34ft2)
Above ground: 7 floors
Below ground: 1 floor
September 1991

Location :Site area :Floor area of building :Structure :Completion :Kyoto, Kyoto Prefecture
1,471.57m2 (15,839.83ft2)
9,701.04m2 (104,421.02ft2)
Above ground: 9 floors
Below ground: 1 floor
November 1982

Sakaisujihonmachi
Building

Midosuji Daiwa
Building

 III-9

 III-10

Osaka, Osaka Prefecture
2,036.22m2 (21,917.67ft2)
17,145.59m2 (184,553.42ft2)
Above ground: 13 floors
Below ground: 2 floors
October 1992

Location :Site area :Floor area of building :Structure :Completion :Kobe Itomachi
Building

Kobe, Hyogo Prefecture
808.55m2 (8,703.15ft2)
4,894.09m2 (52,679.50ft2)
Above ground: 10 floors
September 1989

 III-12

Location :Site area :Floor area of building :Structure :Completion :24 Japan Real Estate Investment Corporation

Osaka, Osaka Prefecture
3,044.65m2 (32,772.31ft2)
31,213.27m2 (335,976.52ft2)
Above ground: 15 floors
Below ground: 2 floors
September 1991

Lit City Building

 III-11

Location :Site area :Floor area of building :Structure :Completion :Nagoya, Aichi Prefecture
4,095.81m2 (44,086.89ft2)
33,377.73m2 (359,274.55ft2)
Above ground: 18 floors
Below ground: 2 floors
May 1987

Okayama, Okayama Prefecture
7,596.44m2 (81,767.32ft2)
52,653.19m2 (566,753.67ft2)
Above ground: 20 floors
Below ground: 2 floors
June 2005

NHK Hiroshima
Broadcasting Center
Building

Tosei Tenjin Building

 III-13

Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Hiroshima, Hiroshima Prefecture
3,296.46m2 (35,482.77ft2)
35,217.28m2 (379,075.28ft2)
Above ground: 23 floors
Below ground: 2 floors
August 1994

 III-14

Location :Site area :Floor area of building :Structure :Completion :Fukuoka, Fukuoka Prefecture
1,221.31m2 (13,146.06ft2)
5,588.57m2 (60,154.81ft2)
Above ground: 8 floors
March 1992

Ten j in Cr ystal
Building

Hinode Tenjin
Building

 III-15

 III-16

Fukuoka, Fukuoka Prefecture
1,835.17m2 (19,753.59ft2)
10,432.04m2 (112,289.44ft2)
Above ground: 14 floors
Below ground: 1 floor
August 1993

Location :Site area :Floor area of building :Structure :Completion :Fukuoka, Fukuoka Prefecture
1,452.15m2 (15,630.80ft2)
12,527.07m2 (134,840.13ft2)
Above ground: 10 floors
Below ground: 2 floors
August 1987

Japan Real Estate Investment Corporation 25

THE COMPANY ’S INVEST MENT POLICIES(1) I NVES TM E NT POLICIES(i) Basic investment policies
The basic investment policies of the Company shall be as follows:
q Basic policies (Article 23 of the Articles of Incorporation)
The Company shall invest primarily in specif ied assets (the “portfolio real estate assets”), consisting of certain real estate assets andreal estate related securities (as defined below) with the goals of achieving stable growth in value over a medium- to long-term period.
The terms “real estate assets” and “real estate related securities” shall mean the items listed below.
I.

Real estate assets:

1. Real estate
2. Leaseholds of real estate
3. Surface rights
4. Trust beneficiary rights in trust of real estate, leaseholds of land, and surface rights. These assets referred to herein include
benef iciary certificates of comprehensive trusts over real estate and moneys incidental thereto, but do not include marketablesecurities as defined in Article 3, Item 1 of the Cabinet Order of Law on Investment Trusts and Investment Corporations as
amended (the “Cabinet Order”) .
5. Trust beneficiary rights in monetary trusts that are invested in real estate, leaseholds of real estate, and surface rights (except formarketable securities)
6. Equity interests in anonymous partnership relating to a contract that (i) either party makes a contribution to the other party for
purposes of management of the assets described in any of the items listed in 1. through 5. above, (ii) the other party manages thecontribution as investments principally in any of such assets, and (iii) its profits are distributed (hereinafter referred to as “anonymous
partnership equity interest”)
II. Marketable securities, value of which derives principally from real estate assets (the “real estate related securities”) are as follows:
1. Preferred Securities (as defined in Article 2, Paragraph 9 of Asset Liquidation Law, as amended, the “Asset Liquidation Law”)
issued by a special purpose company under such Law whose objective is to invest more than half of its assets in real estate assets
2. Beneficiary certificates (as defined in Article 2, Paragraph 12 of the Investment Trust Law) issued by an investment trust whose
objective is to invest more than half of its assets in real estate assets
3. Certificates for shares (as defined in Article 2, Paragraph 22 of the Investment Trust Law) issued by an investment corporation
under such Law whose objective is to invest more than half of its assets in real estate assets
4. Beneficiary certificates of a special purpose trust (as defined in Article 2, Paragraph 13 under the Asset Liquidation Law), whose
objective is to invest more than half of its assets in real estate assets (except for the trust beneficiary rights referred to in 4. and 5.
of I. above)
w Investment attitude (Article 24 of the Articles of Incorporation)
The following is the basic policy of investment attitude of the Company, especially its policy concerning the acquisition and holdingof the Portfolio Real Estate as set forth in the Articles of Incorporation.
A. In accordance with the Ministerial Ordinance of the Ministry of Finance, the Company shall make an investment so that at least
75% of its total assets are invested in real estate, leaseholds of real estate, surface rights, trust beneficiary rights (limited to trusts
in real estate, surface rights or leaseholds of land), and anonymous partner equity interests (limited to anonymous partner contracts,
the assets of which are entrusted in real estate, surface rights, or leaseholds of real estate).
B. It is the Company’s asset investment policy to make an investment, so that the ratio (the “specified real estate ratio”) of the aggregate
value of the specified real estate to the aggregate value of the specified assets is at least 75%. The specified real estate shall mean,
among the specified assets, the real estate, leaseholds of real estate, surface rights or the trust beneficiary rights of real estate,leaseholds of land and surface rights.
C. The Company shall principally invest in office buildings which are located in Tokyo and other major metropolitan areas of Japan,
including those as such designated by the relevant Cabinet Order.

26 Japan Real Estate Investment Corporation

D. The Company shall make investment decisions only after it conducts thorough and sufficient due diligence investigations of therelevant real estate assets and becomes fully aware of the investment value in light of the investment climate.
E. The Company shall invest principally in real estate and trust beneficiary rights in trust of real estate, but may invest in other realestate assets (meaning any asset listed in “I. Real estate assets” above, but excluding the real estate and the trust beneficiary rights
in trust of the real estate) and real estate related securities in addition to those described above in light of investment climate atthat time and/or the size of the assets.
e Leasing of corporate assets (Article 27 of the Articles of Incorporation)
The Company may enter into leasing contracts with third parties with regard to real estate assets being specified assets, for the purposeof generating earnings, and may cause the trustees to enter into leasing contracts with third parties with regard to the underlying realestate of the trust beneficiary rights.
r Loans and corporate bonds (Article 30 of the Articles of Incorporation)
A. In order to manage the portfolio of the Company in an efficient and stable manner, the Company may make borrowings or issue
corporate bonds with a view to utilizing the proceeds thereof toward acquisitions of specified assets, capital improvements of thereal estate for lease and the underlying real estate of the trust beneficiary rights and working capital.
B. The Company shall not make total borrowings, including loans and issuance of corporate bonds, in excess of an aggregate of ¥1
trillion.
C. The Company may borrow only from qualified institutional investors (the “qualif ied institutional investors”) referred to in Article
2, Paragraph 3, Item 1 of the Securities and Exchange Law of Japan.
(ii) Guidelines for investment and management of portfolio real estate assets based on basic investment policies
The asset management company, J-Rea, has internally established, for the purpose of properly carrying out the asset managementbusiness of the Company, the Japan Real Estate Asset Management Plan (the “Asset Management Plan”) as its internal rule, basedon the basic investment policies outlined in section (i), q through r above and in accordance with the asset management agreement(the “Asset Management Agreement”) concluded between the Company and the asset management company dated May 18, 2001, as
amended on August 3, 2001 and April 1, 2003. Accordingly, the asset management company manages the portfolio real estate assets
in compliance with the Asset Management Plan, with the aim of managing the assets of the Company in an appropriate manner.
The Asset Management Plan has been formed, based on the current Japanese economic environment, real estate market conditions,financial environment, statistics of economy, property conditions and performance of the Company, all at the time of listing on theTokyo Stock Exchange, or TSE, the medium- and long-term outlook for the real estate market, and experience and know-how
accumulated by the asset management company and other various complex factors then available to the investment managementcompany. As such, the asset management company intends to review the Asset Management Plan periodically to determine whether
or not they appropriately fit with the external and internal environmental factors. If the asset management company determines that
it is in the best interests of the Company and its investors to revise the Asset Management Plan to manage the portfolio, the AssetManagement Plan may be revised periodically in line with the Articles of Incorporation and the asset management agreement.
The asset management company will pursue the achievement of internal growth as well as external growth in order to enhance its
earnings and stability. Internal growth means that the Company will maximize the profitability of its own existing real estate andother assets. External growth means that the Company will acquire new portfolio real estate assets within such an appropriate pricerange as may be considered in the best interests of the Company. The asset management company shall conduct the management by
taking into account the stability of the cash flow and the expected return from a comprehensive perspective. The asset managementcompany will, in managing the assets, consider various factors, including portfolio composition in terms of geographical diversification,use, size and age as well as the capitalization rate (meaning the return obtained by dividing the cash flow, excluding capital expenditures
but after deduction of cost of repairs, by the property acquisition costs). The Company is continuously engaged in market research
activities, for the purpose of the external growth, to seek an opportunity to acquire new portfolio real estate assets. Once the Company
makes an acquisition decision, the Company shall promptly make a public announcement thereof.

Japan Real Estate Investment Corporation 27

q Guidelines for acquisition of portfolio real estate assets
To achieve the external growth, the guidelines concerning the acquisition of portfolio real estate assets are as follows:
A. Geographic portfolio composition
1. The basic geographical diversification is to make investment of 70% or more of the funds in real estate located in the greater Tokyo
metropolitan area and the approximately remaining 30% or less of the funds in cities in other parts of Japan.
2. During the course of expansion of the asset base of the Company, the portfolio composition may tentatively deviate from theinvestment allocation percentages as outlined above.
B. Property type portfolio composition
In principle, the asset management company will recommend the Company to invest in portfolio real estate assets used for officebuildings.
While these assets may mainly be used for office buildings, they may also partially be used for commercial use or, depending on
the relevant local municipal regulations, may be used for residential use. Accordingly, the Company may acquire the office buildings
with certain portion thereof used for commercial facilities or residential areas.
C. Building size and age in portfolio composition
1. In principle, the asset management company will recommend the Company to invest in land and buildings thereon that have total
floor space or size of 3,000 square meters or more per building.
2. In principle, the asset management company will recommend the Company to invest in buildings with the latest earthquake
resistance capabilities in compliance with the earthquake resistance standards (meaning the earthquake resistance standards underthe “Building Standards Law” which came into effect in 1981, and hereinafter the “earthquake resistance standards”) or buildings
with the equivalent capabilities as stated above.
3. In addition to the criteria referred to in 1. and 2. above, the asset management company will recommend the Company to make an
investment decision by taking into account such factors as location, building structures (including earthquake resistance standards),
facilities (including ceiling height, floor wiring, space per floor, electrical supply, and so forth), and the complexity of ownershipand other rights.
D. Due diligence conducted at the time of acquisition
1. Acquisition of the real property
To thoroughly and accurately assess the quality of properties, the asset management company will conduct a comprehensive due
diligence of the property from an economic, physical, and legal standpoint.
The asset management company will make use of analytical assessment based on real estate appraisal reports, engineering reports,and seismic reports and real estate market reports issued by independent third party professionals who possess analytical capability
and relevant experience.
The asset management company will also make an on-site inspection of the property and hold interviews with persons in chargeof property management of the building.

28 Japan Real Estate Investment Corporation

2. The following table shows the due diligence items based on the above.
Type of Research

Details of Research

Economic Analysis

Source Materials— Supply and demand conditions for office buildings in the location underreal estate appraisal reports,

consideration including a future outlook; analysis of market rental rates

market reports,— Frontage condition, access to major roads and public transportation

on-site inspection— Level of discount rate and capitalization rate
— Analysis of the current operating costs of the building and room forreduction— Reflection of inspection of the physical conditions of building, legal due
diligence, economic analysis of the current building operation— Evaluation of dispositions
Physical Inspection— Searching the boundary with neighboring properties and status of the overdocuments from the seller,

boundaryengineering reports,— The level of maintenance for the building and facilities and its state ofseismic report,

deterioration

on-site inspection— Medium- and long-term estimated repairs and capital expenditure— Building and facility specifications (room layout, ceiling height, heat,ventilation and air-conditioning (HVAC) systems, electrical supply, etc.)— Earthquake resistance capability of the building— Investigation for existence of toxic substances within the building or within
the property site
— Whether or not there has been any actual damage to the building as aresult of natural disasters, such as typhoons, earthquakes, etc.
Legal Research— Research into ownership and other rights and mortgages

documents from the seller,— Research into lease contracts

engineering reports,— Certification of the property boundary line, agreement regarding theon-site inspection

boundary— Research into the level of compliance with legal requirements forconstruction and management of the building— Research into management rules, agreements among the owners, andleasehold agreements in cases where the building and land are not owned by asingle owner— Research into existence and substance of any agreements with the owners
in the neighborhood regarding the countermeasures against defective
television radiation acceptance, etc.
— Investigation into the operations of the property management company

documents from the seller, on-State of Property

and compliance with building management manualsite inspection

Management— Research into whether or not there have been any suggestions and/or

Researchonthecomplaints made by tenants against the building management— Tenant composition— Research into the existence of any rules or stipulations governing building
management in cases where the property is not owned by a single owner

Japan Real Estate Investment Corporation 29

E. Targeted capitalization rate
1. The asset management company will set a certain target for its capitalization rate and make acquisition of portfolio real estate assets by
taking into account the capitalization rate set for the total portfolio.
2. The capitalization rate referred to above may be adjusted from time to time in accordance with changes in the Company’s financing
policy and/or changes in interest rates.
* The capitalization rate addressed in this section is based on the return calculated by dividing the cash flow (excluding capital expenditure and after
deduction of the cost of repairs) by the property acquisition costs.

F. Investment in real estate related securities
The asset management company primarily invests assets in real estate and trust beneficiary rights in trust of real estate. However, in theevent that investment is made in real estate related securities, the following are the primary criteria for investments:
a. The Company intends to make an investment in real estate related securities if the investment opportunity is ensured for the Company
to acquire the underling real estate of such securities upon maturity of the investment period;b. The aggregate amount of our investment of the real estate related securities is up to 10% of the total assets of the Company;c. The Company makes an investment after it conducts the due diligence on the investment scheme within the real estate related
securities and evaluate the profitability and investment grade of the underlining real estate by reference to paragraphs A through E
above; andd. In case of the investment in real estate related securities involving development of the underlining real estate, the Company will makean investment if the development project is sufficiently reliable, after conducting the due diligence of the development plans from thepoint of view of risks relating to scheduled completion and delivery as well as risks relating to retaining sufficient tenants uponcompletion.

w Guidelines for management of portfolio real estate assets
To achieve internal growth, the policy for maintenance and management of portfolio real estate assets is as follows:
A. Policy for maintenance and management
The Company shall, for the purpose of internal growth, make an effort through continuous and strategic capital investments in andmanagement of properties, to increase the tenant satisfaction and competitiveness, maintain and expand the income, such as raising therent and improving the occupancy ratios, and decrease of costs, such as outsourced maintenance costs and utility charges.
In order to achieve the above, the Company shall consign the management of properties to a suitable property management company
after taking into account the nature and conditions of the relevant property. The Company will ensure to achieve these objectives
through sound competition among several property management companies having business relation with the Company.
1. Selection of property management companies
When appointing the property management company for the relevant property, the Company shall analyze and select the property
management companies, based not only on their general capability and track record as property management company, but also on theirunderstanding of and familiarity with the Company’s own operational procedures of management of properties, given that the property
management business requires them to coordinate with the asset management company, asset holding company and otheradministration outsourcing companies, and their involvement in planning of acquisition of property.
2. Evaluation of property management companies
For the purposes of understanding the capability and nature of, and then improving the level of operation of, the property managementcompanies, from the point of view of stable management of the properties of the Company and adequate supervision over the property
management companies, the Company generally conducts the evaluation of each property management company at each fiscal period end.
The Company and the asset management company shall jointly conduct such evaluation, upon retaining the third party specialists, i.e.,evaluation consultant having special expertise, over the following items:
Leasing capability
Capability to maintain the buildings, including management control over the costs
Capability of repair and construction
Reporting capability
External evaluation, including evaluation on customer satisfaction

30 Japan Real Estate Investment Corporation

The Company shall consider the replacement of the property management company if the Company finds out some of them areinadequate as consignee of the property management of the properties after the relevant property management company fails to abideby the instruction to correct certain conducts.
B. Insurance policy
In principle, the Company will carry comprehensive casualty and liability insurance covering all of the properties owned by theCompany to protect the properties either from damages to or reduction in revenue arising from natural causes or accidents or any
possible financial losses arising from liability claims of third parties. In connection with procuring earthquake insurance, the Company
will make a determination based on the amount of the probable maximum loss, or PML, on its properties.
*1. The Company will carry comprehensive casualty insurance to compensate for financial losses due to damages and accidents except for earthquakes,
floods, tidal waves and wars. This type of insurance can also include a special provision that compensates for corporate profits.
*2. Liability insurance covers the Company from possible financial losses arising from legal claims with regard to physical harm or financial damage tothird parties that results from possession, use, occupancy or management of the building.

e Guidelines for disposal of portfolio real estate assets
In principle, the Company seeks to hold investments over a reasonably long-time and has no particular intention to engage in short-termbuying and selling of the properties. In determining the sale of a property, the Company makes a comprehensive analysis anddetermination by taking into consideration such factors as the outlook for future profitability of that property, the amount that theproperty has changed in value and the outlook for future additional change in value, the economic outlook and stability for the region inwhich the portfolio real estate assets are located, the deterioration of the real estate and other assets and the estimate of future expenses
associated with its maintenance, and how well the particular property fits with the Company’s total portfolio of properties.
(iii) Financing guidelines
The Company has stipulated the following financial guidelines.
q In order to manage the assets of the Company in an efficient and stable manner, the Company may make borrowings or issue
corporate bonds for purposes of making acquisitions of specified assets, capital improvements for the existing portfolio realestate assets and working capital.
w The Company shall not make total borrowings, including loans and issuance of corporate bonds, in excess of an aggregate of¥1 trillion.
e The Company shall borrow only from qualified institutional investors.
r In principle, the Company shall not borrow funds (including investment corporation bonds) in excess of 65% of the total valueof its total assets (the “debt ratio”), and will seek to maintain an even lower debt ratio.
t The Company shall seek to borrow funds at the most favorable possible terms in consideration of the economic climate at the time ofborrowing, with a view to reducing the future effects of refinancing and achieving the lowest possible financing costs . The Company
will compare terms presented from several qualified institutional investors, such as ratio of fixed interest loan, borrowing periods,
requirement of collateral for borrowing and so forth, to achieve the best possible terms. However, the financing costs may fluctuate due
to changes in unforeseeable economic conditions in instances where penalties, which may arise from prepayment of borrowings, will be
determined by the interest rate environment at that time.
y The Company may establish lines of credit facility in advance, including a maximum line of credit facilities and a commitment line or
future loan agreements to finance timely in need of capital whenever it becomes necessary to acquire additional specified assets.
u The Company may use its properties as collateral for borrowing funds.
Borrowing and repayment of funds in the near term will be based on the following policies:
q As a flexible response is required when borrowing funds for the further acquisition of relevant assets, short-term borrowing will be themain means for procuring the necessary funds.
w Short-term borrowing procured for the acquisition of the assets shall be converted to long-term fixed-interest borrowing or corporate
bonds as appropriate, with reference to the finance environment, to achieve low and stable fund procurement costs.

Japan Real Estate Investment Corporation 31

(2) INVESTMENT ASSETS(i) Assets in which the Company may invest are as follows:q Real estate assets and real estate related securities
w Other specified assets
1. The Company may invest in the following marketable securities:
a. Government bonds
b. Municipal government bondsc. Bonds issued by special legal entities under special law
d. Corporate bonds (except for convertible bonds, bonds with warrants and bonds with stock acquisition rights)
e. Specified corporate bonds issued by special purpose companies, as set forth in Article 2, Paragraph 1, Item 3-2 of the Securities andExchange Law
f. Commercial paper, as set forth in Article 2, Paragraph 1, Item 8 of the Securities and Exchange Law
g. Securities or certificates which fall within any of the types described in a. through f. above and which are issued by foreign
governments or foreign legal entities
h. Beneficiary certificates except for those described in section (i), q, II. 2. of (1) of the Investment Policies above
i. Certificates for shares of investment corporations except for those described in section (i), q, II. 3. of (1) of the Investment policies
above
j. Corporate bonds issued by investment corporations, as set forth in Article 2, Paragraph 25 of the Investment Trust Law
k. Shares issued by foreign investment corporations, as set forth in Article 220, Paragraph 1 of the Investment Trust Law
l. Trust beneficiary certificates of foreign loan receivables, as set forth in Article 2, Paragraph 1, Item 10 of the Securities andExchange Law
m. Securities or certificates representing options, as set forth in Article 2, Paragraph 1, Item 10-2 of the Securities and Exchange Law
n. Depository receipts denominated in Japanese yen of the same nature as for those in a. through d. above, as described in Article 2,
Paragraph 1, Item 10-3 of the Securities and Exchange Law
o. Negotiable certificates of deposit issued by foreign entities denominated in Japanese yen
p. Trust beneficiary certificates of loan receivables, as set forth in Article 2, Paragraph 2, Item 1 of the Securities and Exchange Law
q. Rights against a foreign entity which are of the same nature as the rights in item p. above
2. The Company may invest in monetary claims, with the exception of those described in Article 3, Items 1, 12 and 14 of the Cabinet
Order.
3. The Company may invest in financial derivatives, as described in Article 3, Item 14 of the Cabinet Order.
4. The Company may invest in stocks (provided, however, that investments may be made when deemed necessary or useful for the basic
policies outlined in section (i), q of (1) of the Investment Policies above.)e The Company may invest in trademark rights under the Trademark Law, the right to utilize the trademark exclusively or nonexclusively, and the right to use sources of hot springs as set forth in the Hot Springs Law and facilities related to such hot springs. Thisis provided, however, that investments may be made when deemed necessary or useful for the basic policies outlined in section (i), q of(1) of the Investment Policies above.
(ii) Investment criteria and future investment plan in terms of property type, geographical location, and business sector and so forth
Please refer to (i) Basic investment policies and (ii) Guidelines for investment and management of portfolio real estate assets based on
Basic investment policies under (1) Investment Policies above.

32 Japan Real Estate Investment Corporation

(3) DISTRIBUTION POLICYThe Company will make cash distributions subsequent to each fiscal period in accordance with the following guidelines.
(i) In connection with the total cash amount to be distributed to shareholders, accounting profits will be calculated in accordance withthe generally accepted accounting principles in Japan (Japanese GAAP).
(ii) In making cash distributions to the extent of accounting profits, the Company will distribute profits as cash distributions in excess of
90% of the taxable income as defined in Article 67-15 of the Special Taxation Measures Law of Japan.
(iii) At the appropriate discretion of the board of directors, the Company may, in accordance with Article 137, Paragraph 1 of theInvestment Trust Law, make distributions in excess of accounting profits based on the Cash Distribution Statement approved
pursuant to Article 131, Paragraph 2 of the Investment Trust Law.
(iv) The Company is allowed to make distributions in excess of accounting profits to the extent of the amount equivalent to theaggregate of the amount of depreciation for the current period and the amount of accounting profits. However, in cases where cash
distributions for the relevant period do not exceed 90% of the “distributable amount” stipulated by Article 39-32-3 of the Cabinet
Order of Enforcement of the Special Taxation Measures Law of Japan, the Company may make distributions in excess ofaccounting profits to the extent of 91% of such distributable amount.
(v) Distributions need to be made in cash in proportion to the number of shares registered on the final records of shareholders(including the records of beneficial shareholders) as of the close of each fiscal period.
(vi) In the event that the Company issues additional shares during a business period, the value of the dividends in connection with thoseshares may be calculated on a daily pro-rated basis, as determined by the board of directors.
(vii) Besides the above provisions, the Company shall comply with the rules on investment trusts and investment corporations(established on March 16, 2001, as amended) stipulated by the Investment Trusts Association of Japan.
(viii) If investors need to calculate a profit or loss upon distribution in excess of accounting profits, the Company will not make
distributions in excess of accounting profits to the shareholders. However, the Company will be able to make distributions in excessof accounting profits pursuant to clauses (i) through (vii) above if any of the following three conditions is met.
1. Due to changes of the tax codes or other reasons, it becomes no longer necessary for an individual investor to calculate a gain or loss
upon distribution in excess of accounting profits for the period.
2. Due to changes of the tax codes or other reasons, the board of directors determines that it is appropriate to make distributions inexcess of accounting profits such as that individual investors are no longer required under tax codes to calculate in each case his/her
profit and loss on sale with regard to the distributions in excess of accounting profits in general.
3. The board of directors determines that it is necessary to make distributions in excess of accounting profits to meet the distribution
requirements.

Japan Real Estate Investment Corporation 33

(4) INVESTMENT RESTRICTIONSIn accordance with the Articles of Incorporation, the investment restrictions of the Company are as follows:
q The Company shall not seek to invest aggressively in the marketable securities and monetary claims described in (2) Investment Assets
above, but rather make investment to secure stability and liquidity (Article 26 of the Articles of Incorporation).
w The Company shall limit its trading activity in financial derivatives to the extent of hedging the interest rate volatility risks, with regard
to its debts and other risks (Article 26 of the Articles of Incorporation).
e In order to manage the portfolio of the Company in an efficient and stable manner, the Company may make borrowings or issue
corporate bonds (not in excess of ¥1 trillion) with a view to utilizing the proceeds thereof toward acquisitions of specified assets, capital
improvements of the real estate for lease and the underlying real estate of trust beneficiary rights and working capital (Article 30 of the
Articles of Incorporation).
r The Company shall borrow only from qualified institutional investors (Article 30 of the Articles of Incorporation).

34 Japan Real Estate Investment Corporation

FINANCIAL SECTIONFINANCIAL OVERVIEW OF JAPAN REAL ESTATEINVESTMENT CORPORATIONBALANCE SHEETSSTATEMENTS OF INCOME AND
RETAINED EARNINGSSTATEMENTS OF CHANGES IN
SHAREHOLDERS’ EQUITYSTATEMENTS OF CASH FLOWSNOTES TO FINANCIAL STATEMENTSREPORT OF INDEPENDENT AUDITORS

p.36
p.40
p.42
p.42
p.43
p.44
p.53

Japan Real Estate Investment Corporation 35

FINANCIAL OVERVIEW OF JAPAN REAL ESTATE INVESTMENT CORPORATION
1. SELECTED FINANCIAL DATA
Thousands of U.S. dollars(Note 1)Millions of yen
For the period from
October 1, 2005 to
March 31, 2006

For the period from
April 1, 2005 to
September 30, 2005

For the period from
October 1, 2004 to
March 31, 2005

For the period from
April 1, 2004 to
September 30, 2004

Operating Revenues
Operating Expenses
Operating Profits
Income before Income Taxes
Net Income¥ 13,963
7,644
6,319
5,587
5,586

¥ 13,120
6,894
6,226
5,510
5,509

¥ 10,747
6,046
4,701
4,121
4,120

¥ 10,151
5,792
4,358
3,831
3,830

Total Assets
Interest-Bearing Liabilities
Total Shareholders’ Equity
Shareholders’ Capital

433,552
196,500
207,059
201,473355,968
122,000
206,982
201,473322,358
159,000
137,569
133,448

Number of Shares
Total Shareholders’ Equity per Share(Yen/U.S. dollars)
Cash Distribution
Dividend Payout Ratio
Dividend Per Share (Yen/U.S. dollars)

345,400

345,400

599,475
5,586
99.9%
16,172599,254
5,509
100%
15,951Net Operating Income (NOI)
Funds from Operations (FFO)
Return on Assets (ROA) (Note 2)
Return on Equity (ROE) (Note 3)
EOP Equity Ratio (Note 4)
EOP Interest-Bearing Debt Ratioon Total Assets (Note 5)
FFO Multiple
Debt Service Coverage Ratio (Note 6)

For the period from
October 1, 2003 to
March 31, 2004¥

For the period from
October 1, 2005 to
March 31, 2006

9,560
5,219
4,341
3,803
3,802

118,864
65,07053,79447,56047,551

257,372
99,000137,279
133,448244,523
87,000137,250
133,448

3,690,748
1,672,768
1,762,652
1,715,101

260,400

260,400

260,400

345,400

528,2994,120
99.9%
15,824

527,185
3,830
99.9%
14,711

527,077
3,802
99.9%
14,602

5,103.22
47,551
99.9%
137.67

9,578
8,979
7,131
6,672
6,455
81,536
7,946
7,527
5,762
5,488
5,301
67,641
1.4%
1.6%
1.4%
1.5%
1.6%
1.4%
(2.8% annualized) (3.2% annualized) (2.9% annualized) (3.0% annualized) (3.2% annualized) (2.8% annualized)
2.7%
2.8%
3.0%
2.8%
2.8%
2.7%
(5.4% annualized) (5.6% annualized) (6.0% annualized) (5.6% annualized) (5.7% annualized) (5.4% annualized)
47.8%
58.1%
42.7%
53.3%
56.1%
47.8%
45.3%
22.1 times
12.3 times

34.3%
21.1 times
14.0 times

49.3%
19.7 times
11.2 times

38.5%
20.8 times
12.7 times

35.6%
20.4 times
13.9 times

45.3%
22.1 times
12.3 times

Notes 1: Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥117.47 = US$1.00, the foreign exchange rate on
March 31, 2006, 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: ROA = Income before Income Taxes ÷ Average of Total Assets during the period
3: ROE = Net Income ÷ Average of Net Worth during the period(Annualized portions of the calculations given in notes 2 and 3 above assume a fiscal period of 183 days for the period ended March 31, 2004,
183 days for the period ended September 30, 2004, 182 days for the period ended March 31, 2005, 183 days for the period ended September 30, 2005 and182 days for the period ended March 31, 2006.)
4: EOP Equity Ratio = (Net Worth at end of period ÷ Total Assets at end of period) x 100
5: EOP Interest-Bearing Debt Ratio on Total Assets = (Interest-Bearing Debt at end of period ÷ Total Assets at end of period) x 100
6: Debt Service Coverage Ratio = Net Income before Interest, Taxes, Depreciation and Amortization ÷ Interest Expenses

2. CASH DISTRIBUTION
The cash distribution for the period from October 1, 2005 to March 31, 2006 consisted of almost all taxable income for the period,
qualifying the Company for special tax treatment as stipulated in Article 67-15 of the Special Taxation Measures Law of Japan. The
dividend per share was ¥16,172 ($137.67). With 345,400 shares outstanding, the cash distribution totaled ¥5,585,809 thousand($47,550,939). Retained earnings carried forward totaled ¥99,014 ($843).
(From October 1, 2005 to March 31, 2006)(Thousands of yen)

(U.S. dollars)

Net income
Retained earnings brought forward
Distribution(Dividend per share : ¥16,172)
Retained earnings carried forward

5,585,837
71
5,585,809

47,551,184
598
47,550,939

99

843

36 Japan Real Estate Investment Corporation

3. PAID-IN CAPITALThe Company was established with funding from Mitsubishi Estate Co., Ltd. (160 shares), Tokio Marine & Nichido Fire Insurance Co.,
Ltd. (120 shares) and The Dai-ichi Mutual Life Insurance Company (120 shares), each share representing ¥500,000 ($4,256). Additional
160,000 shares were issued in an initial public offering at ¥525,000 ($4,469) each (acceptance price of ¥506,625 ($4,313)). An additional
65,000 shares were issued on May 8, 2002, at ¥490,980 ($4,180) per share (acceptance price of ¥475,268 ($4,046)), an additional 35,000
shares were issued on October 25, 2003, at ¥629,000 ($5,355) per share (acceptance price of ¥608,456 ($5,180)) and an additional 85,000
shares were issued on April 26, 2005, at ¥826,000 ($7,032) per share (acceptance price of ¥800,288 ($6,813)).
Common shares outstanding

Increase
Issue date

Remarks

May 11, 2001
September 8, 2001
May 8, 2002
October 25, 2003
April 26, 2005

Private placement
400
Additional share issue (Initial Public Offering) 160,000
Additional share issue
65,000Additional share issue
35,000Additional share issue
85,000Paid-in capital

Balance

Increase

Balance(Millions of yen) (Thousands of U.S. dollars ) (Millions of yen) (Thousands of U.S. dollars )400
160,400
225,400
260,400
345,400

200
81,06030,892
21,29568,0241,703
690,049
262,978
181,280
579,076

200
1,703
81,260 691,751
112,152 954,729
133,448 1,136,018
201,472 1,715,093

The Company was listed on the Tokyo Stock Exchange on September 10, 2001. Market quotations from that time are as follows:
Month

High

Low

September 2001 ¥550,000 ¥491,000(September 10, 2001 to September 28, 2001)
October 2001
¥551,000 ¥534,000
November 2001 ¥549,000 ¥536,000
December 2001 ¥542,000 ¥485,000
January 2002
¥510,000 ¥480,000
February 2002
¥531,000 ¥499,000
March 2002
¥560,000 ¥527,000
April 2002
¥524,000 ¥495,000
May 2002¥527,000 ¥497,000
June 2002¥525,000 ¥512,000
July 2002¥528,000 ¥518,000
August 2002
¥534,000 ¥520,000
September 2002 ¥540,000 ¥505,000
October 2002
¥543,000 ¥508,000
November 2002 ¥563,000 ¥531,000
December 2002 ¥609,000 ¥552,000
January 2003
¥609,000 ¥560,000
February 2003
¥595,000 ¥569,000
March 2003
¥603,000 ¥573,000MonthApril 2003
May 2003
June 2003
July 2003
August 2003
September 2003
October 2003
November 2003
December 2003
January 2004
February 2004
March 2004
April 2004
May 2004
June 2004
July 2004
August 2004
September 2004
October 2004
November 2004

High

Low

¥641,000¥699,000¥660,000¥657,000¥665,000¥678,000¥655,000¥669,000¥678,000¥707,000¥715,000¥840,000¥830,000¥771,000¥765,000¥795,000¥844,000¥882,000¥874,000¥857,000¥591,000¥631,000¥626,000¥630,000¥640,000¥636,000¥634,000¥639,000¥656,000¥678,000¥692,000¥714,000¥748,000¥702,000¥735,000¥753,000¥785,000¥832,000¥830,000¥820,000

Month

High

Low

December 2004 ¥866,000 ¥805,000
January 2005
¥880,000 ¥840,000
February 2005
¥893,000 ¥852,000
March 2005
¥886,000 ¥856,000
April 2005
¥893,000 ¥842,000
May 2005¥878,000 ¥862,000
June 2005¥945,000 ¥869,000
July 2005¥1,000,000 ¥939,000
August 2005
¥960,000 ¥882,000
September 2005 ¥947,000 ¥856,000
October 2005
¥900,000 ¥867,000
November 2005 ¥944,000 ¥883,000
December 2005 ¥978,000 ¥913,000
January 2005
¥1,000,000 ¥949,000
February 2006 ¥1,070,000 ¥981,000
March 2006
¥1,070,000 ¥985,000
April 2006
¥1,040,000 ¥1,000,000
May 2006¥1,100,000 ¥995,000
June 2006¥1,030,000 ¥904,000

4. OVERVIEW OF BORROWINGSThe following is a list of the Company’s borrowings showing amounts and lending institutions as of March 31, 2006.
Balance
Category

Lender

The Daishi Bank, Ltd.
The Yamanashi Chuo Bank, Ltd.
Mitsubishi UFJ Trust & Banking Corporation
Mitsubishi UFJ Trust & Banking Corporation
Short-term The Daishi Bank, Ltd.
debt

Mitsubishi UFJ Trust & Banking Corporation
Mitsubishi UFJ Trust & Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mizuho Corporate Bank, Ltd.
The Sumitomo Trust & Banking Co., Ltd.
Shinsei Bank, Ltd.
Subtotal(Millions of yen)(Thousands of
Average
U.S. dollars) interest rate (%)

Due

—

—

0.2475October 29, 2005

2,000
—
2,000
2,000

17,026—
17,026
17,0260.25198
0.22
0.25555
0.2475June 15, 2006
July 31, 2006
September 13, 2006
October 31, 2006

4,500
22,00016,00016,00016,00010,00090,50038,308187,282
136,205
136,205
136,205
85,128770,4090.26090.27450.27450.27450.27450.2745February 1, 2007
February 23, 2007
February 23, 2007
February 23, 2007
February 23, 2007
February 23, 2007

Use of funds

Remarks

Repayment of existing
short-term loans
Purchase of real estate
Repayment of existing
Unsecured/Unguaranteed/short-term loans
Senior/Floating rate
Purchase of real estate
Purchase of real estate
trust beneficiary rights

Japan Real Estate Investment Corporation 37

Balance
Category

Lender(Millions of yen)(Thousands of
Average
U.S. dollars) interest rate (%)

Due

Use of funds

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mizuho Corporate Bank, Ltd.
The Sumitomo Trust & Banking Co., Ltd.
Mitsubishi UFJ Trust & Banking Corporation
Sompo Japan Insurance Inc.
Subtotal
The Iyo Bank, Ltd.
The Dai-ichi Mutual Life Insurance Company
The Taiyo Life Insurance Company

6,000
6,000
5,200
5,200
1,600
24,000
2,000
5,000
2,000

51,07751,07744,26744,267
13,620204,307
17,02642,564
17,026

1.05751.015
1.47125

March 24, 2009
March 30, 2009
March 30, 2011

The Chugoku Bank, Ltd.

3,000

25,5380.90875

June 15, 2007

Long-term
The Bank of Fukuoka, Ltd.
debt
Mitsui Life Insurance Co., Ltd.

3,000
5,000

25,53842,5640.78375
1.50125

August 31, 2007
August 31, 2011

Mitsui Life Insurance Co., Ltd.

2,000

17,026

1.55

October 29, 2012

Repayment of existing
short-term loans

National Mutual Insurance Federation ofAgricultural Cooperatives

5,000

42,5641.33125

November 1, 2011

Purchase of real estate

27,000229,846

Current
portion of
long-term
debt

Total

Remarks

Expected principal repayment dateJune 23, 2006
1.12

Final principal repayment dateJune 23, 2008

Purchase of real estate Secured/Unguaranteed/trust beneficiary rights Senior/Fixed rate

Purchase of real estate
Repayment of existing
short-term loans
Secured/Unguaranteed/
Purchase of real estate Senior/Fixed rate

5. BONDS ISSUED BY THE COMPANY
Our past investment corporation bond issues are as follows, as of March 31, 2006.
First issue of investment corporation bonds
Total principal amount of bonds
Issue priceInterest rate
Closing date
Guaranty
Redemption method/date
Second issue of investment corporation bonds
Total principal amount of bonds
Issue priceInterest rate
Closing date
Guaranty
Redemption method/date
Third issue of investment corporation bonds
Total principal amount of bonds
Issue priceInterest rate
Closing date
Guaranty
Redemption method/date
Fourth issue of investment corporation bonds
Total principal amount of bonds
Issue priceInterest rate
Closing date
Guaranty
Redemption method/date

38 Japan Real Estate Investment Corporation¥25 billion ($213 million)¥100 ($0.85) (par value)
1.32% annually
June 21, 2002
Unsecured/unguaranteed
Principal redeemed in full on June 21, 2007
Cancellation upon repurchase may be made at any time.

¥10 billion ($85 million)¥100 ($0.85) (par value)
0.69% annually
April 30, 2003
Unsecured/unguaranteed
Principal redeemed in full on April 30, 2008
Cancellation upon repurchase may be made at any time.

¥10 billion ($85 million)¥100 ($0.85) (par value)
0.98% annually
April 30, 2003
Unsecured/unguaranteed
Principal redeemed in full on April 30, 2010
Cancellation upon repurchase may be made at any time.

¥10 billion ($85 million)¥100 ($0.85) (par value)
2.56% annually
September 29, 2005
Unsecured/unguaranteed
Principal redeemed in full on September 29, 2025
Cancellation upon repurchase may be made at any time.

6. CAPITAL EXPENDITURES FOR EXISTING PROPERTIES
a. PLANNED CAPITAL EXPENDITURES
The following table represents the main capital expenditures planned for renovations of existing properties, as of March 31, 2006. The
total expected construction amount includes portions that will be accounted for as ordinary expenses.
Expected construction amounts
Total
Property (Location)

Sanno Grand Building(Chiyoda-ku, Tokyo)
Shibuya Cross Tower(Shibuya-ku, Tokyo)
Ikebukuro YS Building(Toshima-ku, Tokyo)
Ikebukuro YS Building(Toshima-ku, Tokyo)
Jozenji Park Building(Sendai, Miyagi prefecture)
Hinode Tenjin Building(Fukuoka, Fukuoka prefecture)

Objective

Estimated duration(Millionsof yen)(Thousands of
U.S. dollars)

Planned payment
for the period
under review

Previously
paid total

165

1,405

—

—

965

8,215

371

291

105

894

—

—

245

2,086

—

—

11

94

—

—

74

630

—

—

Functional maintenance (air condiFrom June 2006
tioner renewal work [fourth phase])to March 2007
Functional maintenance
From April 2005
(BEMS work*)
to August 2006
Functional maintenance (air condiFrom May 2006
tioner renewal work [first phase])to September 2006
Functional maintenance (air condiFrom October 2006
tioner renewal work [second phase])to March 2007
Improve profitability (renewal of
From July 2006
common areas of standard floors)
to October 2006
Improve profitability (individual air
From May 2006
conditioner renewal work [first phase]) to May 2006

*Building Energy Management Systemb. CAPITAL EXPENDITURES DURING THE PERIOD ENDED MARCH 31, 2006
The following table represents the main capital expenditures for acquired properties during the period under review. Capital expenditures
amounted to ¥1,200 million ($10,215 thousand), with repairs and maintenance adding ¥528 million ($4,495 thousand) throughout theterm for a total of ¥1,728 million ($14,710 thousand).
Capital expenditures during the fiscal period under review were mainly for renewal of common areas for rent in the Nippon Brunswick
Building and functional maintenance in the Shibuya Cross Tower. Other real estate and related work included regular maintenance andrefurbishments of toilets and lighting.
Property (Location)

Nippon Brunswick Building(Shibuya-ku, Tokyo)
Shibuya Cross Tower(Shibuya-ku, Tokyo)

Objective

Construction amounts(Millions of yen)(Thousands of U.S. dollars)

Duration

Improve profitability(renewal of common areas[first phase])
Functional maintenance(first phase work on upgrading
heating equipment)

From March 2005
to October 2005

104

885

From February 2005
to March 2006

414

3,524

681
1,200

5,797
10,215

Other properties
Total

c. CASH RESERVES AT END OF PERIOD (RESERVES FOR CAPITAL IMPROVEMENTS)
In order to prepare for renovation of facilities useful for maintaining the value of properties for the future, the Company accumulates cash
reserves each period for capital improvements that will be conducted based on the medium- to long-term renovation strategy formulated
for each of the properties. Cash reserves over the period under review were as follows:(Thousands of
U.S. dollars)(Millions of yen)

Reserve balance at the beginning of the period
Amount accumulated
Withdrawal from reserves
Amount carried forward

For the period from
October 1, 2005 to
March 31, 2006

For the period from
April 1, 2005 to
September 30, 2005

For the period from
October 1, 2004 to
March 31, 2005

For the period from
April 1, 2004 to
September 30, 2004

For the period from
October 1, 2005 to
March 31, 2006

425
979
864
540

331
923
829
425

225
840
734
331

155
824
754
225

3,618
8,334
7,355
4,597

Japan Real Estate Investment Corporation 39

BALANCE SHEETSAs of March 31, 2006 and September 30, 2005

Thousands of yen

U.S. dollars (Note 1)

As of March
31, 2006

As of September
30, 2005

As of March
31, 2006¥ 17,485,196¥ 26,939,579$ 148,848,186

74,56685,373634,767

1,001,998

254,084

8,529,824

220,424649,529

1,876,423

18,782,184

27,928,565

159,889,200

Land

283,232,146

224,595,204

2,411,101,952

Buildings and structures

138,304,738

109,182,708

1,177,362,199

Machinery and equipment

2,178,032

1,732,022

18,541,178

Tools, furniture and fixtures

50,737

18,142431,913

1,149,831

324,357

9,788,297

424,915,484

335,852,433

3,617,225,539(14,148,307)(11,788,363)(120,441,860)

410,767,177

324,064,070

3,496,783,679

1,004,798

958,798

8,553,653

Deposits

12,975

15,109110,451

Long-term prepaid expenses

4,198

10,90935,725ASSETS
Current Assets:
Cash and bank deposits
Rental receivables
Consumption tax refundable
Other current assets
Total current assets
Property and Equipment, at Cost:

Construction in progress
SubtotalLess accumulated depreciation
Net property and equipment
Investments and Other Assets:
Investment securities

Leasehold rights

2,112,907

2,112,907

17,986,780

Easement

828,095

828,095

7,049,420

Deferred investment corporation bond issuance costs

39,88849,860339,559¥433,552,222¥355,968,313$3,690,748,467

Total Assets
The accompanying notes form an integral part of these financial statements

40 Japan Real Estate Investment Corporation

Thousands of yen

As of March
31, 2006

U.S. dollars (Note 1)

As of September
30, 2005

As of March
31, 2006

LIABILITIESCurrent Liabilities:
Trade accounts payable¥

684,600¥

382,468$

5,827,874

Other payables

846,564

932,365

7,206,639

Short-term loans

90,500,000

16,000,000

770,409,466

Current portion of long-term loan

24,000,000

24,000,000

204,307,483

319,538

298,4292,720,166

1,010

964

8,598

Rent received in advance

2,608,745

2,422,968

22,207,757

Other current liabilities

295,916

10,4952,519,081

119,256,373

44,047,689

1,015,207,064

Investment corporation bonds

55,000,000

55,000,000

468,204,648

Long-term loans

27,000,000

27,000,000

229,845,918

Deposits from tenants

25,237,081

22,644,218

214,838,518—

294,000—

Total long-term liabilities

107,237,081

104,938,218

912,889,084

Total Liabilities

226,493,454

148,985,907

1,928,096,148

Accrued expenses
Accrued income taxes

Total current liabilities
Long-Term Liabilities:

Other

SHAREHOLDERS’ EQUITY
Shareholders’ capital

201,472,860

201,472,860

1,715,100,537

Retained earnings

5,585,908

5,509,546

47,551,782

Total shareholders’ equity

207,058,768

206,982,406

1,762,652,319

Total Liabilities and Shareholders’ Equity¥433,552,222¥355,968,313$3,690,748,467

The accompanying notes form an integral part of these financial statements

Japan Real Estate Investment Corporation 41

STATEMENTS OF INCOME AND RETAINED EARNINGSFor the six months ended March 31, 2006 and September 30, 2005

Thousands of yen

Operating Revenues and Expenses
Operating Revenues:
Rental revenues
Non-rental revenues
Total operating revenues
Operating Expenses:
Property-related expenses
Asset management fees
Administrative service fees
Other operating expenses
Total operating expenses
Operating profits
Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Other non-operating revenues
Non-Operating Expenses:
Interest expense
Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance costs
New share issuance costs
Other non-operating expenses
Income before Income Taxes
Income Taxes:
Current
Deferred
Net Income
Retained Earnings brought forward
Retained Earnings at end of period

U.S. dollars (Note 1)

For the period from
October 1, 2005 to
March 31, 2006

For the period from
April 1, 2005 to
September 30, 2005

For the period from
October 1, 2005 to
March 31, 2006

¥13,899,176
63,74913,962,925¥13,076,552
43,355
13,119,907$118,321,070
542,686
118,863,756

6,744,815
571,458
230,858
96,623
7,643,754
6,319,171

6,158,114
392,914228,974
113,716
6,893,718
6,226,189

57,417,344
4,864,713
1,965,254
822,536
65,069,847
53,793,909

45
2,795

27
11,752382
23,797

327,839
376,500
9,972—
20,846
5,586,854

328,662
249,201
9,972
116,295
23,431
5,510,407

2,790,831
3,205,074
84,890—177,457
47,559,836

1,019
(2)
5,585,837
71¥ 5,585,908

969
2
5,509,436
110¥ 5,509,546

8,673
(21)
47,551,184
598$ 47,551,782

The accompanying notes form an integral part of these financial statements

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the six months ended March 31, 2006 and September 30, 2005

SharesThousands of yen

Balance as of March 31, 2005

260,400¥137,569,060

Public offering

U.S. dollars (Note 1)

85,00068,024,480

Cash dividends paid—

(4,120,570)

Net income—

5,509,436

345,400¥206,982,406$1,762,002,262

Cash dividends paid—

(5,509,475)(46,901,127)

Net income—

5,585,837

47,551,184

345,400¥207,058,768$1,762,652,319

Balance as of September 30, 2005

Balance as of March 31, 2006
The accompanying notes form an integral part of these financial statements

42 Japan Real Estate Investment Corporation

STATEMENTS OF CASH FLOWSFor the six months ended March 31, 2006 and September 30, 2005

Thousands of yen

U.S. dollars (Note 1)

For the period from
October 1, 2005 to
March 31, 2006

For the period from
April 1, 2005 to
September 30, 2005

For the period from
October 1, 2005 to
March 31, 2006

¥ 5,586,854
2,359,942
—
9,972
—
(45)
704,339¥ 5,510,407
2,017,176
1,419
9,972
116,295(27)
577,863$ 47,559,836
20,089,746—
84,890—(382)
5,995,905

10,807(747,914)(21,561)
302,132(81,801)(110)
185,777
6,713(294,000)
371,977
8,393,082
45(687,121)(973)
7,705,033(50,098)
168,118
8,537(325,817)
213,997
4,000(37,959)
6,713(294,000)
3,071
7,929,667
27(586,369)(1,003)
7,342,322

91,994(6,366,853)(183,547)
2,571,991(696,356)(933)
1,581,489
57,146(2,502,767)
3,166,570
71,448,729
382(5,849,329)(8,281)
65,591,501

Cash Flows from Investing Activities
Purchases of property and equipment
Purchases of intangible assets
Purchases of investment securities
Payments of deposits
Proceeds from deposits
Proceeds from lease deposits received
Repayment of lease deposits
Net cash used in investing activities(88,698,937)—(46,000)—
2,134
3,256,479(663,617)(86,149,941)(37,109,136)(1,028,918)(2,798)(875)—
2,253,267(603,991)(36,492,451)(755,077,356)—(391,589)—
18,166
27,721,795(5,649,246)(733,378,230)

Cash Flows from Financing Activities
Proceeds from short-term loans
Repayment of short-term loans
Proceeds from investment corporation bonds
Payments of investment corporation bond issuance costs
Proceeds from issuance of shares
Payment of new share issuance costs
Dividends to shareholders
Net cash provided by financing activities
Net decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at beginning of Period
Cash and Cash Equivalents at end of Period

86,500,000(12,000,000)————(5,509,475)
68,990,525(9,454,383)
26,939,579¥ 17,485,196

14,000,000(61,000,000)
10,000,000(59,832)
68,024,480(116,295)(4,120,570)
26,727,783(2,422,346)
29,361,925¥ 26,939,579

736,358,219(102,153,741)————(46,901,127)
587,303,351(80,483,378)
229,331,564$ 148,848,186

Cash Flows from Operating Activities
Income before income taxes
Depreciation and amortization
Loss on retirement of property and equipment
Amortization of investment corporation bond issuance costs
New share issuance costs
Interest income
Interest expense
Changes in assets and liabilities
Rental receivables and other receivables
Consumption tax refundable
Prepaid expenses
Trade accounts payable
Other payables
Accured expenses
Rent received in advanceLong-term prepaid expenses
Other long-term liabilities
Other
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by operating activities

The accompanying notes form an integral part of these financial statements
Japan Real Estate Investment Corporation 43

NOTES TO FINANCIAL STATEMENTS
March 31, 2006 and September 30, 2005

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 36% by Mitsubishi Estate Co., Ltd. (“MEC”), 27% by The Tokio Marine &Nichido Fire Insurance Co., Ltd. (“TMN”), 27% by The Dai-ichi Mutual Life Insurance Company (“DL”) and 10% by Mitsui & Co.,Ltd.
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, 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 one of thefirst real estate investment corporations in Japan (so-called “J-REITs”). The Company issued 160,000 shares at a price of ¥525,000,
generating gross proceeds of ¥84,000 million. The proceeds from the offering of the shares, net of underwriters’ discount, were ¥81,060
million.
On May 8, 2002, the Company completed a second offering of 65,000 shares at a price of ¥490,980, generating gross proceeds of ¥31,914
million. The proceeds from the offering of the shares, net of underwriters’ discount, were ¥30,892 million.
On October 25, 2003, the Company completed a third public offering of 35,000 shares at a price of ¥629,000, generating gross proceeds of¥22,015 million. The proceeds from the offering of the shares, net of underwriters’ discount, were ¥21,296 million.
On April 26, 2005, the Company completed a fourth public offering of 85,000 shares at a price of ¥826,000, generating gross proceeds of¥70,210 million. The proceeds from the offering of the shares, net of underwriters’ discount, were ¥68,024 million. As of March 31, 2006,
the Company had total shareholders’ equity of ¥201,473 million with 345,400 outstanding shares.
At March 31, 2006, the Company owned a portfolio of 52 office properties concerning an aggregate of approximately 400,090 square
meters of leasable area.
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 Japanese Commercial Code, theSecurities and Exchange Law of Japan and the related regulations, which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which were prepared inaccordance 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 ¥117.47=US$1.00, the foreignexchange rate on March 31, 2006, 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.

44 Japan Real Estate Investment Corporation

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESInvestment Security
Non-marketable security classified as other security is carried at cost. Cost of security sold is determined by the moving average method.
Property and equipment
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 ............................................................................................................5–50 years
Machinery and equipment...................................................................................3–18 years
Tools, furniture and fixtures ................................................................................3–15 years
Expenditures for repairs and maintenance are charged to income as incurred. Significant renewals and betterments are capitalized.
On August 9, 2002, the Business Accounting Deliberation Council in Japan issued “Accounting Standard for Impairment of Fixed
Assets”. The standard requires the recognition of an impairment loss on certain assets, such as fixed assets, intangible assets andinvestments, individually or as a group, as the difference between the carrying amount and the fair value of the asset or present value using
a discounted cash flow model. The standard requires that an assessment for the impairment be carried out on an asset whenever events orchanges in circumstances indicate that the carried amount may not be recoverable. The Company adopted the new standard for an
impairment of long-lived assets in the fiscal period ended September 30, 2005.
The adoption of this new standard had no effect on the statement of income and retained earnings for the fiscal periods ended March 31,
2006 and September 30, 2005.
Deferred charges
Deferred charges include investment corporation bond issuance costs and new share issuance costs.
Investment corporation bond issuance costs are amortized using the straight-line method over three years.
New share issuance costs are charged to income as incurred. The underwriters’ commissions of the public offering are not recognized as
new share issuance costs in the financial statements since such costs are not payable by the Company under the so-called “spread method”.
Under the spread method, the difference between the offering price (the price paid by the shareholder) and the purchase price (the pricereceived by the Company) is directly paid to the underwriters. The difference incurred at the fourth offering on April 26, 2005 was ¥2,186
million ($19,308 thousand).
Revenue recognition
Revenues from leasing of office space are recognized as rent accrued over the lease period.
Taxes on property and equipment
Property and equipment is subject to property taxes and city planning taxes on a calendar year basis. These taxes are generally charged to
expense 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.

Japan Real Estate Investment Corporation 45

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 consists 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.

3. INVESTMENT SECURITIESInvestment securities recorded at cost at March 31, 2006 and September 30, 2005 are summarized as follows:
Thousands of yen

Other securities
Non-listed stock

U.S. dollars

As of March
31, 2006

As of September
30, 2005

As of March
31, 2006¥1,004,798¥958,798$8,553,653

4. PROPERTY AND EQUIPMENT
Property and equipment at March 31, 2006 and September 30, 2005 consisted of the following:Thousands of yen

As of March 31, 2006
Acquisition Costs

U.S. dollars

As of September 30, 2005

Book ValueLand¥226,564,682 ¥226,564,682

Buildings and structures

113,767,762

Accumulated depreciation

9,082,162

Machinery and equipment

1,533,824

Accumulated depreciation

379,413

Tools, furniture and fixtures

41,111

Acquisition Costs

Book ValueBook Value

7,248,141

968,483,545
77,462,430

1,087,814
1,154,411

Acquisition Costs¥167,927,740 ¥167,927,740 $1,928,702,491 $1,928,702,491
84,710,571

104,685,600

As of March 31, 2006

314,601

77,314,731

891,168,814

13,057,159
773,2138,516

3,229,874

9,827,285

349,965

Accumulated depreciation

3,532

37,579

2,470

6,046

30,063319,902

Construction in progress

1,149,831

1,149,831

324,357

324,357

9,788,297

9,788,297

Land in trust

56,667,464

56,667,464

56,667,464

56,667,464

482,399,461

482,399,461

Buildings and structures in trust

24,536,976

Accumulated depreciation

4,355,726

Machinery and equipment in trust

644,208

Accumulated depreciation

325,219

Tools, furniture and fixtures in trust

9,626

Accumulated depreciation

2,255

Total

46 Japan Real Estate Investment Corporation

24,472,137
20,181,250

3,929,924

208,878,654
20,542,213

644,208
318,989

291,345

7,371

1,882

171,799,181

5,484,019
352,8639,626¥410,767,177

37,079,473
2,768,525

2,715,494

81,9487,744¥324,064,070

19,19462,754$3,496,783,679

5. SHORT-TERM LOANS
Short-term loans at March 31, 2006 and September 30, 2005 consisted of the following:Thousands of yen

Unsecured loan from a bank with variable interest,
due on October 29, 2005

As of September
30, 2005—¥ 2,000,000¥

Unsecured loan from a bank with variable interest,
due on June 15, 2006

U.S. dollars

As of March
31, 2006

As of March
31, 2006$—

2,000,000

2,000,000

17,025,624

Unsecured loan from a trust bank with variable interest,
due on July 31, 2006—

3,000,000—

Unsecured loan from a trust bank with variable interest,
due on September 13, 2006

2,000,000

9,000,000

17,025,624

Unsecured loan from a bank with variable interest,
due on October 31, 2006

2,000,000—

17,025,624

Unsecured loan from a trust bank with variable interest,
due on February 1, 2007

4,500,000—

38,307,653

Unsecured loans from banks and trust bankswith variable interest, due on February 23, 2007

80,000,000—

681,024,941

Total¥90,500,000¥16,000,000$770,409,466

The weighted average interest rates applicable to the short-term loans at March 31, 2006 and September 30, 2005 were 0.27255% and0.22553%, respectively, per annum.
Since the period ended September 30, 2005, the Company has been committing credit lines of ¥20,000 million ($17,025,624 thousand)with certain financial institutions to reduce a refinancing risk. The unused amount of such committed credit lines was ¥20,000 million($17,025,624 thousand) at March 31, 2006.

6. INVESTMENT CORPORATION BONDS
Details of total investment corporation bonds outstanding are summarized as follows:
As of March
31, 2006

As of September
30, 2005

As of March
31, 2006

Amount(thousands of yen)Interest rate(%)

Amount(thousands of yen)Interest rate(%)

Amount(U.S. dollars)

Unsecured bonds due on June 21, 2007

¥25,000,000

1.32%¥25,000,000

1.32%$212,820,294

Unsecured bonds due on April 30, 2008

10,000,000

0.69%

10,000,000

0.69%

85,128,118

Unsecured bonds due on April 30, 2010

10,000,000

0.98%

10,000,000

0.98%

85,128,118

Unsecured bonds due on September 29, 2025

10,000,000

2.56%

10,000,000

2.56%

85,128,118

Total¥55,000,000¥55,000,000$468,204,648

Japan Real Estate Investment Corporation 47

7. LONG-TERM LOANS INCLUDING CURRENT PORTION OF LONG-TERM LOAN
Long-term loans at March 31, 2006 and September 30, 2005 consisted of the following:Thousands of yen

U.S. dollars

As of March
31, 2006

As of September
30, 2005

As of March
31, 2006¥ 24,000,000¥ 24,000,000$ 204,307,483

0.90875% unsecured loan from a bank,due on June 15, 2007

3,000,000

3,000,000

25,538,436

0.78375% unsecured loan from a bank,due on August 31, 2007

3,000,000

3,000,000

25,538,436

1.0575% unsecured loan from a bank,due on March 24, 2009

2,000,000

2,000,000

17,025,624

1.015% unsecured loan from an insurance company,
due on March 30, 2009

5,000,000

5,000,000

42,564,058

1.47125% unsecured loan from an insurance company,
due on March 30, 2011

2,000,000

2,000,000

17,025,624

1.50125% unsecured loan from an insurance company,
due on August 31, 2011

5,000,000

5,000,000

42,564,058

1.55% unsecured loan from an insurance company,
due on October 29, 2012

2,000,000

2,000,000

17,025,624

1.33125% unsecured loan from another financial institution,
due on November 1, 2011

5,000,000

5,000,000

42,564,058

Subtotal¥ 51,000,000¥ 51,000,000$ 434,153,401

Less: current portion of long-term loan

(24,000,000)(24,000,000)(204,307,483)

Total¥ 27,000,000¥ 27,000,000$ 229,845,918

1.120% secured loans from banks, trust banks,
and an insurance company, due on June 23, 2006

8. SECURED ASSETSAt March 31, 2006 and September 30, 2005, the following assets were pledged as collateral for the following loans:Thousands of yen

U.S. dollars

Pledged assets:

As of March
31, 2006

As of September
30, 2005

As of March
31, 2006

Bank deposits¥ 8,000,493¥ 7,895,029$ 68,106,687

Land and leasehold rights

47,765,093

47,765,093

406,615,247

Buildings and structures

15,824,731

16,099,186

134,712,957

Machinery and equipment

268,777

297,960

2,288,048

Tools, furniture and fixtures

7,372

7,744

62,755¥71,866,466¥72,065,012$611,785,694

Total

Thousands of yen

U.S. dollars

As of March
31, 2006

As of September
30, 2005

As of March
31, 2006

Current portion of long-term loan

¥24,000,000¥24,000,000$204,307,483

Total¥24,000,000¥24,000,000$204,307,483

Loans secured by the pledged assets:

48 Japan Real Estate Investment Corporation

9. SHAREHOLDERS’ EQUITYThe Company is required to maintain net assets of at least ¥50 million ($426 thousand), as required pursuant to the Investment Trust
Law.

10. INCOME TAXESAt March 31, 2006 and September 30, 2005, the Company’s deferred tax assets consist mainly of the enterprise tax, which is notdeductible for tax purposes. The reconciliation of tax rate difference between the adjusted statutory tax rate and the effective tax rate forthe six months ended March 31, 2006, and September 30, 2005 were as follows:
For the period from October 1, 2005
to March 31, 2006

For the period from April 1, 2005
to September 30, 2005

Statutory tax rate ...................................................................................39.39% ............................................39.39%
Deductible dividend distribution ..........................................................(39.38%)..........................................(39.38%)
Others .....................................................................................................0.01% ..............................................0.01%
Effective tax rate......................................................................................0.02% ..............................................0.02%
The Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation
Measures Law of Japan, or 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 taxable income for the fiscal period as stipulated by Article 67-15 of the STML.
Based on the distribution policy provided by Article 32-2 of the Articles of Incorporation, the Company made a dividend
distribution of 100% of retained earnings in the amount of ¥5,586 million ($47,551 thousand) subsequent to March 31, 2006 andtreated it as tax deductible dividend. The Company will not distribute the dividends in excess of accounting profit under Article
32-3 of the Articles of Incorporation.

Japan Real Estate Investment Corporation 49

11. PER SHARE INFORMATION
The following table summarizes information about net assets per share and net income per share at March 31, 2006 and September 30,
2005, and for the periods then ended:Yen

For the period
from October 1, 2005
to March 31, 2006

U.S. dollars

For the period
from April 1, 2005
to September 30, 2005

For the period
from October 1, 2005
to March 31, 2006

Net assets at period end per share¥599,475¥599,254$5,103

Net income per share¥ 16,172¥ 16,505$ 138

In calculating the net assets per share, the amount of the net assets is adjusted for the cash distribution declared in the subsequent period.
Net income per share is computed by dividing net income by the weighted average number of shares outstanding during each period.
Diluted net income per share has not been presented since no warrants or convertible bonds were outstanding during the period.

12. RELATED PARTY TRANSACTIONSThe Company entered into the following related party transactions with MEC, Mizuho Securities Co., Ltd. and certain affiliates of MEC,TMN and Mitsui & Co., Ltd.
Thousands of yen

For the period
from October 1, 2005
to March 31, 2006

U.S. dollars

For the period
from April 1, 2005
to September 30, 2005

For the period
from October 1, 2005
to March 31, 2006

Purchase of the properties¥—¥14,700,000

Property management fees

889,415

741,990

7,571,424

Utilities

61,531

70,139523,798

Insurance

68,023

2,037

579,064

Other operating expenses

4,043

7,054

34,414

Repair and maintenance395,331

267,945

3,365,381—

45,000—Underwriting commission

50 Japan Real Estate Investment Corporation$—

13. BREAKDOWN OF PROPERTY-RELATED REVENUES AND EXPENSES
For the six months ended March 31, 2006 and September 30, 2005
Thousands of yen

Property-Related Revenues
Rental Revenues

U.S. dollars

For the period
from October 1, 2005
to March 31, 2006

For the period
from April 1, 2005
to September 30, 2005

For the period
from October 1, 2005
to March 31, 2006

¥13,962,925¥13,119,907$118,863,756

13,899,176

13,076,552

118,321,070

Rental revenues

10,216,646

9,664,349

86,972,386

Common area charges

2,286,350

2,100,331

19,463,271

Parking revenues

462,240

451,950

3,934,959

Other rental revenues

933,940

859,9227,950,454

63,74943,355542,686

Cancellation charges

38,35039,566

326,471

Other miscellaneous revenues

25,3993,789

216,215

6,744,815

6,158,114

57,417,344

Property management fees

1,684,380

1,554,810

14,338,809

Utilities expenses

1,068,683

1,012,500

9,097,492

Property and other taxes

Non-Rental Revenues

Property-Related Expenses

1,035,498

1,035,966

8,814,997

Casualty insurance

35,242

33,111300,012

Repairs and maintenance

528,519474,299

4,499,186

2,359,942

2,017,176

20,089,746

Depreciation
Other rental expenses
Profits

32,551

30,252

277,102¥ 7,218,110¥ 6,961,793$ 61,446,412

14. LEASESThe Company owns office buildings under leases and earns rent income. As of March 31, 2006 and September 30, 2005, the future lease
revenues under the non-cancelable operating leases are as follows:
Thousands of yen

U.S. dollars

As of March
31, 2006

As of September
30, 2005

As of March
31, 2006

Due within one year

¥ 8,482,391¥ 7,275,000$ 72,208,995

Due after one year

31,833,988

27,329,530

270,996,752

Total¥40,316,379¥34,604,530$343,205,747

Japan Real Estate Investment Corporation 51

15. SUBSEQUENT EVENTSAppropriation of retained earnings
On May 25, 2006, the Board of Directors resolved to effect the payment of a cash distribution of ¥16,172 per share aggregating ¥5,586
million ($47,551 thousand) to shareholders at the record date of March 31, 2006.
Dispositions of Properties
On June 13, 2006, the Company resolved to dispose four properties as follows in accordance with its asset management policy stipulated by
the Articles of Incorporation.
Consumption taxes and adjustments of property taxes are excluded from the sales prices.
(c) Niigata Ishizuecho Nishi-Bandaibashi Building(a) JAL Sales Building
1. Sales price¥2,593 million

1. Sales price¥1,490 million

2. Type of assets soldTrust

2. Type of assets sold

Trust

3. Contract dateJune 16, 2006

3. Contract dateJune 16, 2006

4. Delivery dateJune 28, 2006

4. Delivery dateJune 28, 2006

5. Buyer

Y.K. Speyside

5. Buyer

Y.K. Speyside

Approximately ¥1,271 million of gain

6. Impact of disposition

6. Impact of disposition
on gain or loss

on sale of real estate will be recorded.

on gain or loss

Approximately ¥453 million of gain onsale of real estate will be recorded.

(b) Shin-Yokohama First Building(d) Kanazawa Minamicho Building

1. Sales price¥1,755 million

1. Sales price¥1,165 million

2. Type of assets soldReal Estate

2. Type of assets sold

Trust

3. Contract dateJune 28, 2006

3. Contract dateJune 16, 2006

4. Delivery dateJune 28, 2006

4. Delivery dateJune 28, 2006

5. Buyer

AIC Inc.

5. Buyer

Y.K. Speyside

6. Impact of disposition

Approximately ¥1,271 million of loss

6. Impact of disposition

Approximately ¥148 million of loss on

on gain or loss

on sale of real estate will be recorded.

52 Japan Real Estate Investment Corporation

on gain or loss

sale of real estate will be recorded.

Japan Real Estate Investment Corporation 53

ABOUT THE J-REIT SYSTEMJ-REIT STRUCTURE AND RELATED ORGANIZATIONS
The organizational structure of the Company is shown in the diagram on the next page, but we feel it would be helpful to add a further
explanation of the role played by each of the related organizations. Understanding this relationship is the key to understanding the overall
J-REIT system. (Numbers in the diagram correspond to the numbers below.)1) Investment Corporation: A special type of entity for the specific purpose of owning and operating real estate properties
The investment corporation is a special type of entity, incorporated and operated under the Investment Trust Law, for the purpose ofowning and operating real estate properties using capital raised from investors. It has a board of directors and shareholders’ meeting justlike an ordinary corporation under the Commercial Code of Japan, but since this structure of the investment corporation is simply a vehicle
for owning and operating real estate properties, it is not permitted under its articles of incorporation to engage in any other businessactivities.
The principal responsibility of the investment corporation is custody and management of its assets, as well as issuance of equity
securities. The corporation does not, however, control its assets directly, as all management functions must be outsourced to a licensed
asset management company.
2) Tokyo Stock Exchange & 3) Investors: Buy and sell the Company’s shares, and receive dividends.
Investors provide capital for the investment corporation and receive equity securities, just as they would receive shares of stock issued by an
ordinary corporation. Dividends are also paid to shareholders of record at the end of the fiscal period. Investors may also buy and sell theequity securities on the Tokyo Stock Exchange just like shares of an ordinary corporation, and the same trading regulations apply.
4) Asset Management Company: Real estate trust fund manager
The investment corporation may not manage its assets by itself, but must outsource the investment decision and administration work to an
asset management company. The asset management company, therefore, performs a vital role for the real estate investment corporation.
The asset management company is normally involved with the investment corporation from the time of its incorporation, andafterwards performs the role of fund manager for the real estate properties on consignment from the investment corporation. The asset
management company must have a good grasp of the properties held by the investment corporation, and manage the assets to achieve
higher earnings. As necessary, it will sell off some of the assets or acquire new ones.
In this way, the asset management company performs a series of duties in accordance with the Investment Trust Law.
5) Asset Holding Company/Administration Outsourcer
The investment corporation consigns the property holding function (physical possession of the property deeds) or trust beneficiary
certificates to trust banks or similar organizations. Administrative functions such as the transfer of share certificates are also outsourced totrust banks or securities companies, just like for shares of ordinary corporations.
6) Property Management Companies
The primary responsibility of the property management companies is to manage the maintenance and leasing of buildings. Building
maintenance involves proper upkeep of the property to ensure long-term profitability for the investment corporation, and leasing services
include monthly invoicing for rents and negotiating contract renewals.

54 Japan Real Estate Investment Corporation

ORGANIZATIONAL STRUCTURE OF JAPAN REAL ESTATE INVESTMENT CORPORATION

2) Tokyo Stock Exchange
4) Asset Management
Company
3) Investors

Shareholders’ Meeting
Japan Real Estate AssetManagement Co., Ltd.

Trade

Investors

Asset managementagreement
Cashdistribution

Trade

Stock
1) Investment Corporation
Investment

Investors

Instruction
Loans
Japan Real Estate Investment
Corporation

Interest
payments

Board
Property management
outsourcing
Rental revenue

Financial Institutions(Qualified institutional
investors)

Investment
Asset custodyoutsourcing
Administration
outsourcing

6) Property Management
Companies

Real estate
management

Office Buildings

5) Asset Holding
Company /Administration
Outsourcer
The Sumitomo Trust &Banking Co., Ltd.

Japan Real Estate Investment Corporation 55

ROLE OF SHAREHOLDERS IN THE J-REIT SYSTEM
Set out below, in further detail, is the role shareholders of the investment corporation play in the J-REIT system. In particular, we would
like to present a description of certain principal rights of the shareholders of an investment corporation under the Investment Trust Law,
which is in effect as of March 31, 2006. This summary does not purport to be a comprehensive description of all of the rights of theshareholders under Japanese law that may be relevant to an investment decision on the shares of the Company.
Voting Rights — A shareholder with one or more shares is entitled to one vote for each share. Except as otherwise provided by law or by
the Articles of Incorporation, a resolution can be adopted at a general meeting of shareholders by a majority vote cast in writing or throughproxies who are also shareholders. Shareholders who do not attend and/or do not exercise their voting rights at the general meeting ofshareholders will be deemed to be in agreement with proposals submitted at the meeting.
Except in certain minor circumstances, the voting rights of shareholders apply to the following resolutions:Appointment and dismissal of executive director, supervisory directors and independent auditors; approval of the execution or
termination of the asset management agreement with an asset management company; consolidation of shares; mergers; dissolution;
amendment to the Articles of Incorporation; and any other matters so required by the Investment Trust Law, any other law or the
Articles of Incorporation.
Other Rights of Shareholders —In addition to the rights set out above, shareholders have the following rights:
Dividends upon resolution of the board of directors;
Derivative action;
Right to sue for annulment of resolutions;
Right to request bar on the executive director to prevent misconduct;
Right to void newly issued shares;
Right to sue for the nullification of merger;
Right to make submissions to shareholders’ meetings;
Right to convene a general meeting of shareholders;
Right to request the appointment of an inspector;
Right to request the removal of directors;
Right to request for the dissolution of an investment corporation; andRight to inspect books.
Consolidation or Split of Shares — An investment corporation may (i) consolidate shares upon resolution of the general meeting ofshareholders, or (ii) split shares into a greater number of shares upon resolution of the board of directors.
No Redemption/Repurchase of Shares — As an investment corporation is a closed-end J-REIT, shareholders are not entitled to request
for redemption/repurchase of their shares from an investment corporation.
Issue of Additional Shares and Subscription Rights — Shareholders have no pre-emptive rights with respect to issuance of additional
shares. Shares may be issued at the times and upon the terms approved by resolution of the board of directors.
Liquidation — In the event of liquidation, the assets remaining after payment of all debts, liquidation expenses and taxes will be
distributed among the shareholders in proportion to the numbers of shares held.

56 Japan Real Estate Investment Corporation

PROFILE OF J-REA (Asset Management Company)
ORGANIZATION
Shareholders’ Meeting
Auditors
Board of Directors

CEO & President

Compliance Department

Risk Management Department

DUTIES PERFORMED FOR JAPAN REALESTATE INVESTMENT CORPORATION*Duties related to compliance
DUTIES PERFORMED FOR J-Rea*Duties related to compliance

DUTIES PERFORMED FOR JAPAN REALESTATE INVESTMENT CORPORATION*Duties related to risk management
DUTIES PERFORMED FOR J-Rea*Duties related to risk management

Planning Department

Finance and Accounting Department

Real Estate Investment Department

Leasing Management Department

DUTIES PERFORMED FOR JAPAN REALESTATE INVESTMENT CORPORATION* Investor relations and disclosure
DUTIES PERFORMED FOR J-Rea* Planning and drafting ofmanagement strategies* General, labor and accounting
administration* In-house legal affairs* Negotiation with government
agencies and related groups* Research and analysis of realestate market

DUTIES PERFORMED FOR JAPAN REALESTATE INVESTMENT CORPORATION* Formulation of financing strategy* Equity financing* Debt financing* Cash management* Accounting and taxation

DUTIES PERFORMED FOR JAPAN REALESTATE INVESTMENT CORPORATION* Acquisition and disposal of realestate assets

DUTIES PERFORMED FOR JAPAN REALESTATE INVESTMENT CORPORATION
Leasing and management of realestate assets

PRINCIPAL SHAREHOLDERS

Shareholder

Address

Numbers of Shares

Percentage

Mitsubishi Estate Co., Ltd.

6-1, Otemachi 1chome, Chiyoda-ku, Tokyo

102,855

36%

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2-1, Marunouchi 1chome, Chiyoda-ku, Tokyo

77,142

27%

The Dai-ichi Mutual Life Insurance Company

13-1, Yurakucho 1chome, Chiyoda-ku, Tokyo

77,14227%

Mitsui & Co., Ltd.

2-1, Otemachi 1chome, Chiyoda-ku, Tokyo

28,571

10%

Total

285,710

100%

Japan Real Estate Investment Corporation 57

CORPORATE DATA
As of March 31, 2006

Transfer Agent

Executives
Executive Director:

Taketo Yamazaki

The Sumitomo Trust & Banking Co., Ltd.

Supervisory Directors:

Kenji Kusakabe

5-33, Kitahama 4chome, Chuo-ku, Osaka 540-8639, Japan

Tomohiro Okanoya
Auditors
Paid-in Capital

Ernst & Young ShinNihon¥201,472,860,000

Hibiya Kokusai Bldg.
2-3, Uchisaiwaicho 2chome, Chiyoda-ku, Tokyo 100-0011, Japan

Number of Shares Issued

Incorporation

345,400

May 11, 2001

Number of Shareholders

Executive Office

15,580Japan Real Estate Investment Corporation
3-1, Marunouchi 3chome, Chiyoda-ku, Tokyo 100-0005, Japan

Stock Listing
Tokyo Stock Exchange

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

Securities CodePlanning Department, Manager

8952

Toshiya Kobayashi
Tel: 81-3-3211-7921

Type of Investment Corporation

Fax: 81-3-3212-8886

Closed-end corporate type fundE-mail: toshiya-kobayashi@j-rea.co.jp

58 Japan Real Estate Investment Corporation

This semiannual report includes translations of documents originally filed under the Securities 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 shalltake precedence in the event of any discrepancies arising from the translations or interpretations contained in this report.
Estimates for Japan Real Estate Investment Corporation’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 Japan Real Estate Investment Corporation. Actual results may differ substantially fromthe projections depending on a number of factors.

Japan Real Estate Investment Corporation 4http://www.j-re.co.jp

Printed in Japan