Japan Real Estate Investment Corporation
Performance Review of the Second Period(Ended September 30, 2002)

November 2002
Japan Real Estate Asset Management Co., Ltd.
CEO & President: Ryoichi Kakehashi

Table of Contents
2. Acquired Properties in the 2nd Term andProperties to be Acquired in the 3rd Term

1. Japan Real Estate Investment Corporation
Performance Review of the Second Periodu One Year History after Listing4

u ＭＤ Kanda Building

21

u Financial Summary for the 2nd Term

5

u Burex Kyobashi Building22

u 2nd Fiscal Period Income Statement

6u Kandabashi Park Building23

u 2nd Fiscal Period Balance Sheet

7u Kokusai Iidabashi Building

24

u Statement for 2nd Fiscal Period Cash Flows8u da Vinci Harajuku

25

u Statement for 2nd Fiscal Period Dividend

9u Financial Ratios

10

u Summary of Loans

11u Property Price Comparison

12

u Property Acquisition after Listing13

u Geographical Diversification and Earthquake Risk

Diversification

14

u Analysis of Tenants (1): Diversification and Major

Tenants
u Analysis of Tenants (2): Improved Stability

15
16

u Analysis of Tenants (3): Tenant Moves in the 2nd

Fiscal Period17

u Analysis of Investors (1): JRE’s Unitholder

Compositionu Analysis of Investors (2): Major Unitholders

18

3. Management Policy for the Future
u Current Japanese Real Estate Market and Business

Environment27

u Management Policy for the Future28

u Internal Growth Plan29

u Appropriate Tenant Operations According to TenantFeatures30

u Maintenance Works: Implementation and Plans (1)31u Maintenance Works: Implementation and Plans (2)32

u Cost Reduction Effects

33

u External Growth Plan

34

u Deal Source Summary

35

19

1

Table of Contents
4. Business Forecasts
u Forecasted Income Statementu 3rdFiscal Period Balance Sheet Forecastu Property Occupancy Rates

37
38
39

5. Other Informationu JRE Unit Price Performance41

u Unit Price Performances to Indices42

u JRE Historical Volatility

43

u Performances of 24 Properties Compared withthe 1st Term44

u Comparison of Unitholders Composition45

u Disclaimer on Forecasts

46

2

1. Japan Real Estate Investment Corporation
Performance Review of the Second Period3One Year History after Listing~ The sole J­REIT which has completed the whole cycle of REIT
The Top REIT: Creating the J­REIT World
1. Listing：

Listed on September 10, 2001 issuing 160,000 units at an IPO price of¥525,000 per unit, acquiring properties to begin management.
(Awarded the 3rd “Deal of the Year,” prize in Equity Finance by the Nikkei
Bonds and Financial Weekly.)

2. Purchase of properties：

Asset values nearly doubled for the year from 20 properties valued at¥92.8 billion, to 29 properties worth ¥174.1 billion (November estimate).
Occupancy held steady at the level of 94% for the year.

3. Credit ratings：

The first J­REIT; the world’s highest rating for REIT
February 2002

S&P

A+

March 2002

Moody’s

A2

4. Additional issue of units：An additional 65,000 units were issued in May 2002 at ¥490,980 per unit.

5. Bond issue：

Bonds valued at ¥25 billion were issued by professional private placement.

6. IR activities：

Presentations held for individual investors and sales departments of
securities firms.

7. Unit price:

Largely remained above the IPO price during the term.
4

Financial Summary for the 2nd Term
Assets (Expanded portfolio)：

Liabilities (Diversified and stable)：Three newly acquired properties

Bond issue

MD Kanda Building： ¥9.52 billion

Professional private placement, Closing date: June 21

Burex Kyobashi： ¥5.25 billion

Total issue amount: ¥25 billion

Kandabashi Park Building： ¥4.81 billion

Redemption date: June 21, 2007

Portfolio

Total fixed liabilities (excluding deposits from tenants):

Recurring profit：¥2,898 million

Breakdown:Long­term debt ¥24 billion
Bond

Number of tenants： 339

Ratings: A+（S&P）, A2（Moody’s）

Occupancy rate： 95.3%

The portfolio has been further stabilized.
(Type*)(Name of Property)

Anchor：MD Kanda, Burex Kyobashi,
Kandabashi

Rarity：Burex Kyobashi

Yield

：None

*Anchor： Property with prospect of significant mid­ to long­term
cash flows and stable revenue

Net income：¥2,897 million¥49 billion

Total rentable area： 215,928 ㎡
Operation as of September 30, 2002

Gross profit: ¥7,910 million
Operating profit: ¥3,386 million

Office property： 27 buildings
Total purchase amount： ¥164.277 billion

Summary of income：

Dividend per unit： ¥12,853.

¥25 billion

We issued the first investment corporation bonds toqualified institutional investors, diversifying our sources ofcapital. Funds raised were mainly used to retire all short­term debt (¥40 billion).

Unitholders’equity
equity(increased(increasedcapital
capitalinin
Unitholders’preparationfor
fornew
newproperty
propertyacquisition）：
acquisition）：
preparation
Issue of additional units
Issue of additional units(Public offering, Closing date: May 7)(Public offering, Closing date: May 7)
Number of additional units: 65,000
Number of additional units: 65,000
Aggregate issue price: Approximately ¥30.8 billion
Aggregate issue price: Approximately ¥30.8 billion
Total number of units: 225,400
Total number of units: 225,400
Total equity contribution： ¥112 billion
Total equity contribution： ¥112 billion

Rarity： Property with favorable features and limited liquidity risk
Yield：

High­yield property

We made the first J­REIT public offering of additional
units to further strengthen our capital base inpreparation for new property acquisition and to reach
growth targets for assets under management.

5

2nd Fiscal Period Income Statement(in millions of yen)
st

Item

1 Period(203 days)

Operating Revenues
Rental revenues
Other rental revenues
Operating Expenses
Property management fees
Utility charges
Property and other taxes
Insurance expenses
Maintenance expenses
Other operating expenses
NOI
Depreciation
Operating Profits
Administrative expenses
Asset management fees
Other administrative expenses
Net Operating Profits
Non­Operating Revenues
Interest received
Other non­operating revenues
Non­Operating Expenses
Interest expenses
Bond interest expenses
Deferred start­up costs
Deferred bond­issuance costs
New unit­issuance costs
Unit­listing expenses
Other non­operating expenses
Recurring Profits
Gross Income
Taxes
Net Income
Retained Earnings

6,492
6,427
65
1,759
915
493
4
15
321
10
4,732
1,100
3,632
671
389
281
2,961
2
2
0
559
241
－
90
－
121
74
31
2,405
2,405
1
2,403
2,403

FFO (Net Income＋Depreciation）
Dividend per unit

2ndExisting 24
properties

7,553
7,532
21
2,672
1,105
759
628
20
152
7
4,881
1,126
3,755

Period (183 days)
Additional 3
properties

357
357
－
27
16
10
－
0
0
0
330
68
262

Total

Change% Change

7,910
7,889
21
2,699
1,121
769
628
20
152
7
5,211
1,194
4,017
630
382
247
3,386
2
0
2
491
224
91
－
70
70
－
33
2,898
2,898
1
2,897
2,897

1,417

21.8%

940

53.4%

3,503

4,091

¥14,983¥12,853･ Revenues and income increased due tofull­term operation of the properties
acquired in the 1st fiscal period and thestart of operation of the MD Kanda
Building, Burex Kyobashi, andKandabashi Park Building.
・ Operating expenses rose by ¥628 million
due to recognition to cost of property tax
and local tax.

479

10.1%

385
△ 41

10.6%
▲ 6.1%

425

14.4%

△ 68

▲ 12.2%

493
493

20.5%
20.5%

493

20.5%

588

16.8%

・ Dividend for the 2nd fiscal period(¥12,853) was higher than the estimateddividend (¥12,400), mainly reflecting the
opening of the Burex Kyobashi andKandabashi Park Building during thisperiod.

6

2nd Fiscal Period Balance Sheet(in millions of yen)
Item

As of March
31, 2002

Change over
As of Sept.
30, 2002 Previous Period

As of March As of Sept. Change over31, 2002
30, 2002 Previous Period

Reasons for Change

Liabilities

Current Assets
Cash and entrusted cash

Item

Reasons for Change

15,32319,990838

175

16,162

20,165Decreased by the delay inproperty acquisition
4,667

Current Liabilities
Decreased by issuance of new

40,0005,000△ 35,000 investment units and investment

Rent received in advance

998

1,219

221 acquisition of Kandabashi Park

Fixed Assets

Other current liabilities

730

873

143

Property and equipment (Including entrusted property and equipment)

Total Current Liabilities

41,728

7,092△ 34,636

24,00024,0000

Other current assets
Total Current Assets△ 663 Decreased by returning consumption tax

Short­term borrowing

4,003

Buildings

45,41351,8926,479

Structures

262

279

17

Machinery and equipment

944

1,036

92

Land

99,614

113,727

14,113

Deposits from tenants

Accumulated depreciation△ 1,100△ 2,294△ 1,194

Total Property and Equipment

145,135

164,644

19,509Entrusted lease hold rights

444

444

0

Unitholders' Equity

Total Intangible Assets

444

444

0

corporation bonds, and increased by
BuildingLong­term Liabilities
Long­term borrowings
Increased due to property acquisition

Investment Corporation Bond

25,00025,000 Increased by bond issuance

12,41814,255

1,837

Total Long­term Liabilities

36,41863,255

26,837

Total Liabilities

78,14670,347△ 7,799

Unitholders' capital

81,260112,152

30,892 Increased by new unit issuance

Retained earnings

2,403

2,897

494

Total Unitholders' Equity

83,663

115,049

31,386

Total Liabilities and Unitholders' Equity

161,809

185,397

23,587

Intangible Assets

Investments and OthersLong­term prepaid expenses, etc.
Total Investments and Others
Total Fixed Assets

67

71

4

67

71

4

145,647

165,160

19,513

0

70

70

0

70

70

161,809

185,397

23,587

Deferred Assets
Bond issuance expenses
Total Deferred Assets
Total Assets

Expensed by issuance ofinvestment corporation bond7

Statement for 2nd Fiscal Period Cash Flows(in millions of yen)

Item
Cash flow from operating activities

1st Period （203 days）

2nd Period （183 days）

4,340

5,255

Net income before tax

2,405

2,898

Depreciation and adjustments

1,935

2,357

Cash flow from investment activities△ 134,276△ 18,866

Cash flow from financing activities

145,260

18,27664,000

Short­ and long­term loans

5,000△ 40,000

Repayment of short­term loans
Proceeds from issuance of investment corporation bonds
Proceeds from issuance of equity units­

25,00081,26030,892△ 2,615

Payment of dividend and others
Net increase in Cash and Cash Equivalents
Balance of Cash and Cash Equivalents at beginning of period
Balance of Cash and Cash Equivalents at end of period

15,323

4,666­

15,323

15,32319,9908

Statement for 2nd Fiscal Period Dividend(in yen)

1st Period （ 2 0 3 days）

2nd Period （ 1 8 3 days）

Net income before distribution

2,403,333,973

2,897,172,211

Total amount of dividends

2,403,273,200

2,897,066,200

60,773106,011Retained earnings*Dividend per share is: 12,853 yen （1st Period: 14,983 yen）

9

Financial Ratios
Financial Indices

1st Period （203 Days）

Return on assets (ROA)

2.0％（3.6％ annualized）

1.6％（3.2％ annualized）

Return on equity (ROE)

2.9％（5.2％ annualized）

2.7％（5.4％ annualized）

EOP equity ratio

51.7%

62.1%

EOP interest­bearing debt ratio on total assets （LTV#1）

39.6%

29.1%

EOP interest­bearing debt ratio on total property acquisition value （LTV#2）

44.2%

32.9%

EOP Long­term debt to capitalization ratio

123.8%

94.2%

x15.5

x13.9

Net operating Income (NOI)

4,732 million yen

5,211 million yen

Funds from operations (FFO)

3,503 million yen

4,091 million yen

FFO multiple

13.5

14.1

Payout Ratio to CAD

0.79

0.76

Debt service coverage ratio (DSCR)

2nd Period （183 Days）*ROA = Recurring profits / Average of total assets during the period（1st period:203 actual working days, 2nd period:183 actual working days）*ROE = Net income / Average of net worth during the period（1st period:203 actual working days, 2nd period:183 actual working days）*EOP equity ratio = EOP networth / EOP total assets*LTV#1 = EOP interest­bearing debt / EOP total assets*LTV#2 = EOP interest­bearing debt / EOP total property acquisition value*EOP Long­term debt to capitalization ratio = EOP fixed assets / (EOP Long­term borrowing and others+EOP unitholders' equity)*DSCR = Net income before interest, taxes, depreciation and amortization / Interest expenses*NOI = （Operating revenues ­ Operating expenses） + Depreciation*FFO = Net income + Depreciation*FFO multiple = Unit price at the end of the period / FFO per unit （annualized）*Payout Ratio to CAD = Total amount of dividend / FFO*CAD (Cash Available Distribution) = FFO ­ capital expenditure10Summary of Loans
Name

Short­term
borrowing

Borrowing Date

The Bank of Tokyo­Mitsubishi, Ltd.

2002/8/15

1,250

Mizuho Corporate Bank, Ltd.

2002/8/15

1,250

The Sumitomo Trust ＆ Banking Co., Ltd.

2002/8/15

1,250

The Misubishi Trust & Banking Corporation

2002/8/15

1,250

Total

Long­term
borrowing

Interest（％）

Repayment Date

0.89417
2003/6/23

5,000

The Bank of Tokyo­Mitsubishi, Ltd.

2001/9/25

6,000

Expected Principal

Mizuho Corporate Bank, Ltd.

2001/9/25

6,000

Repayment Date

The Sumitomo Trust ＆ Banking Co., Ltd.

2001/9/25

5,200

The Misubishi Trust & Banking Corporation

2001/9/25

5,200

Final Principal

Sompo Japan Insurance Inc.

2001/9/25

1,600

Repayment Date

24,0002008/6/23

Total

Name
Investment
Corporation
Bond

EOB（million yen）

1st Investment Corporation Bond

Issuance Date
2002/6/21

EOB（million yen）
25,0001.12

2006/6/23

Interest（％）

Maturity Date

1.32

2007/6/21

uWeighted average interest rate is 1.19% based on the amount of loans at the end of the period.

u

Average time remaining to repayment (as of 2nd fiscal end) is 0.73 year (approximately 9 months) for
short­term borrowing and 3.73 years (approximately 3 years, 9 months) for long­term borrowing.
11

Property Price Comparison
Area

Tokyo
Metro­
politanArea

23 Wards

Excluding 23
Wards

Appraisal Valueat End of Period

Name

Properties Acquired in the
2nd Period

Net
Rentable
Areas（㎡）Occupancy
Rate

28,100 million

27,267 million

1970

18,006

96.3%

Kodenmacho Shin­Nihonbashi Building

3,170 million

3,173 million

1991

3,897

100.0%

Shiba 2­chome Daimon Building

4,890 million

4,859 million

1984

9,622

89.9%

Cosmo Kanasugibashi Building

2,760 million

2,808 million

1992

4,062

83.2%

Takanawadai Building

2,970 million

2,738 million

1991

4,091

100.0%JTS Building

1,330 million

1,362 million

1991

3,383

100.0%

Omori­Eki Higashiguchi Building

4,980 million

5,123 million

1989

7,708

95.7%

Otsuka Higashi­Ikebukuro Building

3,480 million

3,541 million

1987

7,114

98.6%

Ikebukuro 2­chome Building

1,570 million

1,728 million

1990

2,186

88.9%

Shibuya Cross Tower

34,500 million

34,600 million

1976

28,547100.0%Urawa Dai­Ichi­Seimei Life Dowa Kasai Building

2,690 million

2,574 million

1990

4,510

91.1%

Kawasaki Isago Building

3,370 million

3,375 million

1990

6,831

93.1%

Ericsson Shin­Yokohama Building

3,100 million

3,000 million

1992

6,964

100.0%

Sendai Honcho Honma Building

2,900 million

2,924 million

1991

5,829

100.0%

911 million

1,010 million

1984

4,383

82.9%

Kanazawa Minamicho Building

1,310 million

1,331 million

1987

3,773

88.4%

Kanazawa Park Building

3,090 million

2,880 million

1991

13,03093.3%

Nagoya Hirokoji Building

14,900 million

14,533 million

1987

21,59099.7%

Kyoto Shijo Kawaramachi Building

2,470 million

2,650 million

1982

6,800

70.9%

Midosuji Daiwa Building

14,400 million

14,314 million

1991

20,449100.0%

Fukusuke Sakaisujihonmachi Building

2,330 million

2,264 million

1992

5,337

91.6%

Kobe Itomachi Building

1,310 million

1,436 million

1989

3,478

73.8%

Hinode Tenjin Building

3,640 million

3,657 million

1987

5,944

100.0%

Tosei Tenjin Building

1,530 million

1,550 million

1992

4,080

80.4%

MD Kanda Building

9,590 million

9,520 million

1998

6,334

100.0%

Burex Kyobashi Building

5,040 million

5,250 million

2002

4,279

100.0%

Kandabashi Park Building

4,920 million
165,251 million

4,810 million
164,277 million

1993

3,687
215,928100.0%
95.3%

Kokusai Iidabashi Building

5,450million

5,000million

1985

4,791

100.0%da Vinci Harajuku

4,950million

4,885million

1987

3,051

100.0%

Total
Properties to be Acquired inthe 3rd Period

Year
Built

Mitsubishi Soken Building

Niigata Ishizuecho Nishi­Bandaibashi Building

Other Major Cities

Acquisition
Price*Appraisal values of properties acquired in the 3rd period are those that applied at the time of acquisition.

12

Property Acquisition after Listing
95.2%

94.7%

94.4%

94.1%

180,000

94.0%
94.6%
93.9%

160,000

93.3%

94.8%

94.3%

174,16295.0%

169,277

93.6%

164,277 164,277
159,467

94.0%

93.8%

95.4%

95.3%

154,217 154,217

144,697 144,697 144,697
140,000
128,787

131,437

134,43790.0%

120,000

100,000

92,845

94,18785.0%

80,000

21

20

22

23

24

26

25

2７

28

29

60,00080.0%
40,00020,000075.0%
2001Sep

Oct

Nov

Dec

2002 Jan

Fe b

Mar

Apr

May

Acquisition Price (in millions of yen)

Jun

Jul

Aug

Sep

Oct

Nov

Occupancy Rate

* Occupancy rate for October 2002 does not include figures for the Kokusai Iidabashi Building and occupancy rate for November 2002 is
estimated.

13

Geographical Diversificationand andEarthquake Risk Diversification
Others8.2%

Nagoya8.8%

Tokyo 23 Wards
65.0%
Osaka/Kobe/Kyoto
12.6%

Tokyo Metropolitan Area
(excluding 23 wards)
5.4%

Notwithstanding that all properties
acquired in the 2nd period are locatedin metropolitan Tokyo, the PML value
has risen by only 0.11%.
*27 properties as of end­September 2002

Well balanced portfolio: Highly liquid
properties with stable rent income in Tokyo
Metropolitan area account for approximately
70% of the total. Properties with attractive
yields in other major cities account for 30%.
Because all the properties acquired in the 2nd
period are located in the Metropolitan Tokyo
area, the share of Tokyo properties has risen
from 66.5% to 70.4%.
*As to 29 buildings, including two buildings to be acquiredin the 3rd period, the percentage located in the Tokyo
Metropolitan area is 72.1%.

5.40%
5.20%

5.36%

5.00%

5.08%

4.97%

4.80%
4.60%
4.40%
4.20%
4.00%

A s o f I PO

En d o f 1 s t P e r io d
（ 2 4 pr o pe r t ie s ）En d o f 2 n d Pe r io d
（ 2 7 pr o pe r t ie s）* Ratios are based on purchase prices.
* The Tokyo metropolitan area encompasses Tokyo and the three neighboring prefectures of Saitama, Chiba and Kanagawa.

14

Analysis of Tenants (1):Diversification and Major TenantsuBusiness DiversificationuTop 5 Tenants(types of business as share of total rented area)
Others8.7%
Employment agency
2.1%
Machinery
2.5%
Glass & Ceramics
2.6%

Top ５ Ten ants
Financial/Insurance
16.0%

1 Mitsubishi Research Institute2 Dai-ichi Mutual Life
3 Ericsson Japan

Construction
3.2%

4 TOTO

Steel & Metals
3.3%
Information Services
15.1%

ansport Services/Travel
3.7%

5 Janssen Pharmaceutical

Pr oper t y
Mitsubishi Soken Building
Midosuji Daiwa Building
Other 8 buildings
Ericsson Shin-Yokohama Building
Nagoya Hirokoji Building
Midosuji Daiwa Building
Takanawadai Building
Tosei Tenjin Building

Re nted Area

% o f T o ta l
R en te d A re a

14,529㎡

7.06%

13,292㎡

6.46%

5,794㎡

2.82%

4,840㎡

2.35%

4,318㎡

2.10%

Retail/Food Service
4.0%
Communications
3.9%
Services
10.5%

Real Estate
5.0%
Textile & Apparel
5.0%
Pharmaceutical
5.3%

Electrical Machinery
9.0%

The number of tenants rose sharply
from 198 at IPO to 339 (End 1st
Period: 328). Rented­area ratios
show diversification in tenants’ linesof business.
15

Analysis of Tenants (2): Improved Stability
uExample ③ ～Changes in leasinguExamples ① ～Changes in total rented area
1 st Period
Ranking

2nd Period
Ranking

Name

1st Period
Total NRA （㎡）contracts to longer­term instruments *2nd Period
Total NRA （㎡）Change（㎡）1

1 Mitsubishi Research Institute14,53014,530022 Dai­ichi Life

13,591

13,292△ 299

3

3 Ericsson Japan

5,794

5,794

0

4

4 TOTO

4,840

4,840

0

5

5 Janssen Pharmaceutical

4,318

4,318

0

­

6

6

7 B

­

8 C （a tenant of a property acquired in the 2

3,919

­

7

9 D

3,593

3,593

0

8

10 E

3,575

3,575

0

9

11 F

3,384

3,384

0

10

12 G

3,103

3,103

0

nd

A （a tenant of a property acquired in the 2

period）
4,137

nd

period）

4,280

­

4,137

0

The “Year 2003 Problem” has not resulted intermination of leasing contracts with major tenants
to date.

*Includes a non­cancellation clauseContracts to longer­term instruments *・Tokyo metropolitan area (% of revenue fromfixed rent contracts):
24.4% (end of 1st period)→28.1% (end of 2nd period)
・3 wards area of Tokyo (% of revenue fromfixed rent contracts):
52.3% (end of 1st period)→53.3% (end of 2nd period)
Rental revenue has further stabilized

uExample ② ～Change in occupancy rates and rented area
・Occupancy rate of 24 properties held at the end of the 1st period (excluding new properties) rose from
94.0% to 95.0% by the end of the 2nd period.
・While termination of contracts resulted in a decrease of 8,400 square­meters in the 2nd period, newcontracts of 10,000 square­meters more than offset the decrease.
16

Analysis of Tenants (3): Tenant Moves in the 2nd Fiscal Period

MD Kanda
Kandabashi Park
Mitsubishi Soken
Kodenm acho Shin­Nihonbashi
Burex Kyobashi
Shiba 2­chom e Daim on
Cosm o Kanas ugibashi
Takanawadai
JTS
Om ori­Eki Higas higuchi
Shibuya Cross Tower
Ots uka Higas hi­Ikebukuro
Ikebukuro 2­chom e
Urawa Dai­Ichi­Seim ei Life Dowa Kasai
Erics son Shin­Yokoham a
Kawasaki Isago
Sendai Honcho Honm a
Niigata Ishizuecho Nis hi­Bandaibashi
Kanazawa Park
Kanazawa Minam icho
Nagoya Hirokoji
Kyoto Shijo Kawaram achi
Fukusuke Sakais ujihonm achi
Midosuji Daiwa

LeasedCanceled

Kobe Itom achi
Tosei Tenjin
Hinode Tenjin
0㎡

200㎡

400㎡

600㎡

800㎡

1,000㎡

1,200㎡

1,400㎡

1,600㎡

1,800㎡

2,000㎡

17

Analysis of Investors (1):
JRE’s Unitholder Composition
1st Fiscal End

2nd Fiscal End

その他

Number of Units

Individual /Others３１,５８３（１９.７%）

Number ofUnitholders

Financial
６６,５６１（４１.５%）

Corporation Foreign Corp.
/ Individuals
２２,３１０３９,９４６（１３．９%）（２４.９%）

１２,０４５（９５.８％）

１０８
３１５（０.９％） （２.５％）

外国法人・

Individual/
Financialの法人
個人 Corporation Foreign Corp.
Others/ Individuals
２２,３１０３９,９４６
２６,１５６
９２,８３０
４５,９０５（１１.６%）
６０,５０９（２０.４%）（１３.９%） （４１.２%）（２４.９%）（２６.８%）

１７,４０９（９６.３％）

１０６（０.８％）

１２７
４１７（０.７％） （２.３％）

１３０（０.７％）

18

Analysis of Investors (2): Major Unitholders

Company

Units% of Total Shares
Outstanding

The Chase Manhattan Bank, N.A. London

14,965

6.64%

Mitsubishi Estate Co., Ltd.

10,160

4.51%

The Tokio Marine and Fire Insurance Co., Ltd.

8,120

3.60%

The Yamanashi Chuo Bank, Ltd.

7,300

3.24%

The Chugoku Bank, Ltd.

5,540

2.46%

The Nomura Trust & Banking Co., Ltd. (Toshin Acc.)

5,226

2.32%

The Hachijuni Bank, Ltd.

5,023

2.23%

The Dai-ichi Mutual Life Insurance Company

4,920

2.18%

The Master Trust Bank of Japan, Ltd. (Shintaku Acc.)
Banca Nationale del Lavoro

4,761
4,490

2.11%
1.99%

19

2. Acquired Properties in the 2nd Termand Properties to be Acquired in the 3rd Term

20

MD Kanda Building （Acquired in the 2nd period）【Property Summary】
u Address：

9­1, Mitoshiro­cho,
Kanda, Chiyoda­ku, Tokyo

u Area：＜Land＞1,085.83 ㎡＜Building＞8,185.11㎡

u Structure：

Steel Framed Reinforced
Concrete Structure / 10
Storiesu Built in：

February 1998
(Age: 4 years)

u Type of Ownership： Fee Simple
u Net Rentable Area： 6,334㎡
u Occupancy Ratio：

100%【Transaction Summary】
u Seller：

Mitsui & Co.

u Acquisition Price：

9,520 million yen

u Appraised Value：

9,530 million yen(As of March 31, 2002)

u Acquisition Date：

May 31, 2002

Excellent location: 1­ to 9­ minute
walk from major JR stations Kanda
and Ochanomizu; subway stations,Ogawa­cho, Awaji­cho, Shin­
Ochanomizu, Kanda, and Otemachi.

21

Burex Kyobashi Building （Acquired in the 2nd period）【Property Summary】
u Address：2­7­14, Kyobashi,Chuo­ku, Tokyo

u Area：＜Land＞756.03 ㎡＜Building＞5,649.21 ㎡

u Structure：

Steel Framed Reinforced
Concrete Structure / 8
Stories with basementu Built in：

February 2002
(Age: 1 year)

u Type of Ownership： Fee Simple
u Net Rentable Area： 4,279 ㎡
u Occupancy Ratio：

100%【Transaction Summary】
u Seller：

Space Design, Inc.

u Acquisition Price：

5,250 million yen

u Appraised Value：

5,040 million yen(As of June 1, 2002)

u Acquisition Date：

July 22, 2002

Excellent location: 2­ to 8­minute
walk from major JR station Tokyo;
subway stations Kyobashi and
Takara­cho.

22

Kandabashi Park Building （Acquired in the 2nd period）【Property Summary】
u Address：1­19­1, Nishiki­cho, Kanda
Chiyoda­ku, Tokyo

u Area：＜Land＞1,218.56 ㎡＜Building＞9,370.25 ㎡

u Structure：

Steel Framed Reinforced
Concrete Structure / 10
Stories with basementu Built in：July 1993 (Age: 9 years)

u Type of Ownership： Co­ownershipu Net Rentable Area： 3,687 ㎡
u Occupancy Ratio： 100%

【Transaction Summary】
u Seller：

Mitsubishi Estate, Jyoni Shojiu Acquisition Price：

4,810 million yen

u Appraised Value：

4,920 million yen(As of July 1, 2002)

u Acquisition Date：

August 15, 2002

Excellent location: 5­minute
walk from major subway
stations Otemachi and Ogawa­
cho.

23

Kokusai Iidabashi Building （To be acquired in the 3rd period）【Property Summary】
u Address：3­6­5, Iidabashi,
Chiyoda­ku, Tokyo

u Area：＜Land＞1,052.80 ㎡＜Building＞6,722.02 ㎡

u Structure：

Steel Framed Reinforced
Concrete Structure / 8
Stories with basementu Built in：

September 1985
(Age: 17 years)

u Type of Ownership： Land: Fee Simple /Leasehold, Building: Fee
Simpleu Net Rentable Area： 4,791 ㎡
u Occupancy Ratio：

100%【Transaction Summary】
u Seller：

Kokusai Motorcars Co.

u Acquisition Price：

5,000 million yen

u Appraised Value：5,450 million yen

Excellent location: 1­minute
walk from major JR and subway
station Iidabashi.

(As of September 1, 2002)
u Acquisition Date：

October 31, 200224

da Vinci Harajuku （To be acquired in the 3rd period）【Property Summary】
u Address：

3­25­15, Jingu­mae,
Shibuya­ku, Tokyo

u Area：＜Land＞839.66 ㎡＜Building＞4,359.20 ㎡

u Structure：

Steel Framed Reinforced
Concrete Structure / ７
Stories with 2­story
basementu Built in：

December 1987
(Age: 15 years)

u Type of Ownership： Fee Simple
u Net Rentable Area： 3,051 ㎡
u Occupancy Ratio：

100%【Transaction Summary】
u Seller：

Leonardu Acquisition Price：

4,885 million yen

u Appraised Value：

4,950 million yen(As of July 1, 2002)

u Acquisition Date：

November 22, 2002

Excellent location: 6­ to 7­
minute walk from major JR
station Harajuku, and subway
station Meiji Jingu­mae.

25

3. Management Policy for the Future26

Current Japanese Real Estate Market
and Business Environment
u The office building leasing market likely to suffer a decrease in demand in the Tokyo

Metropolitan area as a result of Japanese companies’ efforts to reduce rented spaces andintegrate their offices in the face of uncertain economic prospects. In other major cities,
demand is weak due to the continuing concentration of business in Tokyo.
u The market is expected to be sluggish due to the “Year 2003 Problem” ­ a massive

increase in the supply of new large­scale buildings in the Tokyo metropolitan area.
u At the same time, a growing split in the market between high­ and low­occupancy

properties is seen due to the weak office building leasing market, with high­quality
properties enjoying a distinct advantage.
u Thus, we expect the trend toward asset reduction among Japanese companies to continue

in anticipation of the introduction of impairment accounting. As a result, an increase in thenumber of office buildings for sale will be seen.

27

Management Policy for the FutureuProperty management (Internal growth)üStrengthen relations with existing tenants through quality services

ü Take timely steps to reduce vacancy rates
ü Revise lease contracts to fixed rent contracts and extend contract termüuReduce property management fees and utility charges by 5% within three years after
acquisition

Acquisition of properties (External growth)üFurther expand sources of information on properties

ü

Acquire earthquake­resistant buildings meeting new standards or buildings of equalquality according to structural evaluationü

Reach total assets of ¥300 billion by the end of March 2006u

Capital and financial policyuDifferentiation strategyüWe have completed a business cycle of REIT, maintaining core portfolio of excellent
quality properties and financial soundness.
28

Internal Growth Planu

Strengthen relations with the existing tenantsüIn order to further strengthen our relationship of trust with tenants, efforts should
focus on retention by providing services to meet client needs and increasing
satisfaction.

u

Take timely steps to reduce vacancy ratesü

In cooperation with property management companies, vacancy rates should be
reduced by encouraging potential tenants to choose our properties. With respect toexisting tenants, we should look for ways to meet their needs for increased space.

u

Revise lease contracts to fixed rent contracts or extend contract termü

In order to fix future revenues, revision of lease contracts to fixed rent contracts or
extended term contracts should be strongly promoted.

uReduce property management fees and utility charges
üProperty management system and fees and utility charges should be reviewed byintroducing competition among property management companies. Management fees
and utility charges should be cut by 5% within three years after acquisition ofproperty.

29

Appropriate Tenant Operations According to Tenant Features◆In◆In orderorder toto enhanceenhance tenanttenant strategies
strategies including
including thethe “Year“Year 2003
2003 Problem,”
Problem,” implement
implement optimal
optimal operations
operations
accordingtotenantcategory
according to tenant category
üü To
To examine
examine thethe effectivenesseffectiveness ofof plannedplanned operations,operations, implement
implement trials
trials on
on somesome ofof thethe existing
existing properties.
properties. Confirm
Confirmtheeffectivenessandpromotereviewandsystematization
operations
toenableimplementationonallproperties.
the effectiveness and promote review and systematization operations to enable implementation on all properties.
◆Tenant◆Tenant categories
categories defined
defined so
so as
as to
to improve
improve efficiency
efficiency andand profitability
profitability byby optimizing
optimizing thethe operations,operations, not
not totodiscriminate
betweenclients.
Its
aims
are:
discriminate between clients. Its aims are:(1)
(1) ToTo enable
enable effective
effective andand immediate
immediate response
response toto tenants’tenants’ demands
demands forfor rent
rent reduction
reduction andand prevent
prevent their
theirvacating;
vacating;(2)(2) ToTo increase
increase efficiency
efficiency ofof thethe property
property management
management company
company andand minimize
minimize operating
operating costs.
costs.
《Implementation of optimal operations according to tenant characteristics》

Tenantstrategy
Reducecosts

Prevent rise invacancy rate・Gather information on tenant needs
・Information on vacating tenants

Reduce・Reduce costs by introducing new
operating costs systems in cooperation with
PM company

Control capital
expenditure・Minimize unnecessary large­scale
remodeling and repair by gathering
information on tenant needs

Optimal operation according
to tenant characteristics

Strengthen
profit base

Implement effective and immediate responseto the tenant demands for rent reduction andprevent their vacating.

Prevent decline ・Gather information on tenant needs
・Improve CS
in rent

Maximize time for dealing with tenant
demands for rent reduction; forestallsuch demands by anticipating theirsource.
Minimize vacancy period by selecting
potential tenants based on information
gathered at an early stage.
Improve operational efficiency of PM
companies and minimize operating costs.
Depending on importance of client,coordinate number of operations andmake them more efficient.

30

Maintenance Works: Implementation and Plans (1)1．J­Rea’s renovation works
l
l
l
l
l

Prepare mid­ to long­term maintenance plans for each building
Conduct renovation work to increase asset profitability
Implement maintenance work to ensure appropriate asset management
Conduct maintenance to stabilize cash flows
Conduct strict review of estimates on work done by third parties to improve management of work procedures

2．Implementation and planslPlans for 2nd Period
a. Renovation to attract tenantslPlans for 3rd and 4th Periodsc. Renovation to attract tenants(In thousands of yen)
Property Name

PurposeAccounting
Treatment

Cost ofConstruction(in thousands of yen)
Property Name

PurposeAccounting
Treatment

Cost ofConstruction

Kyoto Shijo Kawaramachi

Installation of additional individual air­conditioner

Capitalized cost

95,000

Shibuya Cross

Lobby

Capitalized cost

52,000

Shiba 2­chome Daimon

Interior finishing of common areas

24,000Mitsubishi Soken

Hallway and painting

Capitalized cost

9,000

Nagoya Hirokoji

Interior finishing of rentable areas

Capitalized cost
Capitalized
cost/Expense

16,000Omori­Eki Higashiguchi

Floor in common areas

Capitalized cost

7,000

Ikebukuro 2­chome

Interior finishing of common areas

Capitalized cost

14,000

Shiba 2­chome Daimon

Restrooms (5th & 7th fl.: 2nd period)

Capitalized cost

9,000

b. Renovation for appropriate asset management
Property Name

(In thousands of yen)Accounting
Cost ofTreatment
Construction

Purposed. Renovation for appropriate asset management
Property Name

Purpose(in thousands of yen)Accounting
Cost ofTreatment
Construction

Shibuya Cross

Doors in common areas

Expense18,000

Shibuya Cross

Water supply system

Capitalized cost

85,000

Shibuya Cross

Control rooms on first floor

Capitalized cost

13,000

Shiba 2­chome Daimon

Heat reservoir for air­conditioning

Capitalized cost

99,000Tosei Tenjin

Replacement of lead­in cables

Capitalized cost

6,000

Niigata Ishizuecho Nishi­Bandaibashi

Central control panel

Capitalized cost

26,000Takanawa

Overhaul of air­conditioner

Expense

8,000

Midosuji Daiwa

Water­saving equipment in restrooms

Capitalized cost

48,0003．Cost reduction by strict inspection (during 2nd period)(in millions of yen)
Number of Works

83

Quotation before inspection

578,000

Quotation after inspection
Reduced

511,000
67,000（△ 11.6％）

4. 5 year­plan of renovation works
Renovation Works
AnnualDepreciation
Amount

2002

2003

2004

2005

(in millions of yen)
2006
Total

1,200

1,300

1,500

1,000

1,200

6,200

2,400

2,500

2,200

1,900

1,800

10,900* 29 properties including da Vinci Harajuku* Depreciation does not include the additional depreciation
due to new renovation works.

31

Maintenance Works: Implementation and Plans (2)（Remodeling of the Lobby of Shibuya Cross Tower)
Before remodeling＜Purpose of remodeling＞
・Upgrade the entrance on the third floor to give a better
impression to tenants and visitors. Also replace thesignboard to improve visibility and thus name recognitionof the building and retail shops.
＜Expected construction period＞
・Late November to the end of December 2002

After remodeling (image)＜Main works＞
・Modification of the ceiling louver board and replacementof lighting
・Cleaning of walls and change of design to wood­grain
pattern・Cleaning of floors
・Change of signboards in the building and in the deck on
the third floor

32

Cost Reduction Effects
Initial goal (19 properties)
Expenses

1,295
889
2,184

(in millions of yen)
TargetTarget result
reduction rate
AmountReduction
1,186
109
△8.4%
889
0
2,075
109
△5.0%

1,295
889
2,184

(in millions of yen)
TargetTarget result
reduction rate
AmountReduction△12.9%
1,128
167
889
0
△7.6%
2,017
167

Base amount
2001(1 year)

Property management fees
Utility Charges
Total
Current plan
ExpensesBase amount
2001(1year)

Property management fees
Utility Charges
Total

Initial goal (5 properties)
ExpensesBase amount2nd half of 2001 and 1st half of 2002(1 year)

Property management fees
Utility Charges
Total

923
696
1,619

(in millions of yen)
TargetTarget result
reduction rate
AmountReduction
△8.8%
842
81
696
0
△5.0%
1,538
81

Current Plan
Expenses
Property management fees
Utility Charges
Total

Base amount2nd half of 2001 and 1st half of 2002(1 year)

923
696
1,619

(in millions of yen)
TargetTarget result
reduction rate
AmountReduction△12.0%
812
111
696
0
△6.9%
1,508
111

Estimated management expenses for 2002
Compared with 2001 (amount reduced)
Compared with 2001(reduction rate)
Compared with the base amount (reduction rate)
Achievement ratio to the initial goal of 5% reduction
Achievement ratio to the current plan of 7.6% reduction￥1197 million△￥98 million
△7.6％
△4.5％
89.9%
58.7%

Regarding the 19 properties as of the IPO, a
5% property management fees and utility
charges reduction target was set for the first
three years. This target was later revised
upward to 7.6%. Total cost reduction of ¥98
million is projected by March 2003, against aplanned reduction of ¥167 million over the
next three years. If achieved this will translate
to a 4.5% reduction out of a total cost
reduction target of 7.6%.
For the remaining five properties, we haveslated a 6.9% cost reduction over the next
three years.

33

External Growth Plan
Acquisition of properties：u

Obtain timely information and expand sources of information on properties.

u

To acquire properties, careful investigation should be conducted on theeconomic, physical and legal aspects of those properties. Acquire buildings
meeting new earthquake­resistant standards, or buildings of equal or higher
quality according to structural evaluation.

u

Share of properties held by location: 60% to 70% within Tokyo metropolitan area
(Tokyo, Kanagawa, Chiba, and Saitama Prefectures), with the remainder spreadamong other major cities. The share of properties in the Tokyo metropolitan
area may rise temporarily, depending on future office demand.

u

Reach total assets of ¥300 billion by the end of March 2006.

34

Deal Source Summary
2001
First Half

Second Half

Area

Tokyo Metropolitan
Other Cities
Total

Total

%

Apr

May

Jun

Jul

Aug

Sep

Total

Oct

Nov

Dec

Jan

Feb

Mar

Toal

13

15

11

26

11

22

98

26

22

22

21

20

15

126

224

78.6%

5

1

5

5

14

1

31

6

3

2

4

9

6

30

61

21.4%

18

16

16

31

25

23

129

32

25

24

25

29

21

156

285

100.0%

2002
First Half

Second Half

Area

Tokyo Metropolitan
Other Cities
Total

Total
Nov

Dec

Jan

Feb

Mar

%

Apr

May

Jun

Jul

Aug

Sep

Total

Oct

Toal

11

19

24

18

20

28

120

33

153

76.5%

10

6

7

7

2

13

45

2

47

23.5%

21

25

31

25

22

41

165

35

200

100.0%

Our track record of acquisitions helped us obtain information on 200 properties in
the 2nd fiscal period (up 24% over the previous year). Of these we are currently
researching 15 properties, valued at ¥63 billion, and are negotiating to acquire sixof these, valued at ¥28 billion.

35

4. Business Forecasts

36Forecasted Income Statement（in millions of yen, excluding dividend per share）
Term
Property Taxes
Number of Properties
Number of Days

2nd Fiscal Period

1st Fiscal Period
Capitalized
24（203 days）

3rd Fiscal Period(Forecast)

4th Fiscal Period(Forecast)（182 days）（183 days）

27（183 days）

Existing 27 Additional 2
Properties Properties

Total

Operating Revenues

6,492

7,910

8,110

190

8,300

8,300

Operating Expenses

1,760

2,699

2,660

40

2,700

3,000

0

628

630

630

840

NOI

4,732

5,211

5,450

150

5,600

5,300

Depreciation

1,100

1,194

1,170

30

1,200

1,200

Operating Profits

3,632

4,017

4,280

120

4,400

4,100

671

630

700

700

Net Operating Profits

2,961

3,386

3,700

3,400

Non­Operating Profits

△ 557

△488

△ 500

△ 400

（Interest Expenses）

△ 241

△316

△ 360

△ 400

Recurring Profits

2,405

2,898

3,200

3,000

Net Income

2,403

2,897

3,200

3,000

Dividend

2,403

2,897

3,200

3,000

Number of Units

160,400

225,400

Dividend per Unit

¥14,983¥12,853

Dividend per Unit (semi­anualized)¥13,506（Property and Other Taxes）

Administrative Expenses

225,400

225,400¥14,300¥13,60037

3rd Fiscal Period Balance Sheet Forecast(in millions of yen)
Item

As of Sept.

As of March

30, 2002

31, 200３

Change overPrevious
PeriodOther current assets
Total Current Assets

19,99017,000△ 2,990

30, 2002

31, 200３

Change overPrevious
PeriodReasons for Change

175

114

△ 61

20,165

17,114△ 3,051

Current Liabilities

Property and equipment (Including entrusted property and equipment)
Buildings

51,89254,0072,115

Structures

279

288

9

1,036

1,055

19

Land

113,727

121,475

7,748

Accumulated depreciation△ 2,294△ 3,534△ 1,240

Total Property and Equipment

164,644

173,291

8,647

444

722

Short­term borrowing

5,000

9,800

4,800 Increased byRent received in advance

1,219

1,260

41

Other current liabilities

873

900

27

Total Current Liabilities

7,092

11,9604,868Long­term borrowings

24,00024,0000Investment Corporation Bond

25,00025,0000

Deposits from tenants

14,255

14,875620 Increased by Kokusai Iidabashi

Total Fixed Liabilities

63,25563,875620

Total Liabilities

70,34775,835

5,488

Unitholder's capital

112,152

112,1520Retained earnings

2,897

3,200

303

Total Unitholder Equity

115,049

115,352

303

Total Liabilities and Unitholder equity

185,397

191,187

5,790

da Vinci Harajuku acquisition

Fixed Assets

Machinery and equipment

As of March

Liabilities

Current Assets
Cash and entrusted cash

Item

Reasons for Change

As of Sept.

Long­term Liabilities

Increased due to Kokusai
Iidabashi and da Vinci
Harajuku acquisitionand da Vinci Harajuku acquisition

Intangible Assets
Entrusted lease hold rights

278 Increased due toUnitholder Equity

Kokusai Iidabashi acquisition

Total Intangible Assets

444

722

278

Investments and OthersLong­term prepaid expenses, etc.
Total Investments and Others
Total Fixed Assets

71

60

△ 11

71

60

△ 11

165,160

174,073

8,913

70

0

△ 70 Decreased due to deferred

70

0

△ 70

185,397

191,187

5,790

Deferred Assets
Bond issuance costs
Total Deferred Assets
Total Assets

bond issuance costs

38Property Occupancy Rates
Area

Tokyo 23 Wards
Tokyo
Metropolitan
Area

Property Name

1st Fiscal End

Mitsubishi Soken
Kodenmacho Shin­Nihonbashi
Shiba 2­chome Daimon
Cosmo Kanasugibashi
Takanawadai
JTS
Omori­Eki Higashiguchi
Otsuka Higashi­Ikebukuro
Ikebukuro 2­chome
Shibuya Cross Tower
MD Kanda Building

Burex Kyobashi Building
Kandabashi Park Building
Kokusai Iidabashi Buildingda Vinci Harajuku
Average
ExcludingTokyo
23 Wards

Urawa Dai­Ichi­Seimei Life Dowa Kasai
Kawasaki Isago
Ericsson Shin­Yokohama
Average

Other Cities

Sendai Honcho Honma
Niigata Ishizuecho Nishi­Bandaibashi
Kanazawa Minamicho
Kanazawa Park
Nagoya Hirokoji
Kyoto Shijo Kawaramachi
Midosuji Daiwa
Fukusuke Sakaisujihonmachi
Kobe Itomachi
Hinode Tenjin
Tosei Tenjin
Average
Average

97.4%
87.3%
89.3%
87.7%
100.0%
100.0%
95.7%
98.6%
59.2%
95.8%
94.2%
95.0%
86.0%
100.0%
93.5%
100.0%
83.7%
87.0%
91.5%
98.6%
76.3%
100.0%
91.6%
92.3%
100.0%
80.4%
93.9%
94.0%

2nd Fiscal End
96.3%
100.0%
89.9%
83.2%
100.0%
100.0%
95.7%
98.6%
88.9%
100.0%
100.0%
100.0%
100.0%
97.1%
91.1%
93.1%
100.0%
95.2%
100.0%
82.9%
88.4%
93.3%
99.7%
70.9%
100.0%
91.6%
73.8%
100.0%
80.4%
93.4%
95.3%

3rd Fiscal End（Forecast）
96.3%
100.0%
83.3%
95.3%
100.0%
100.0%
95.3%
94.6%
88.8%
98.2%
100.0%
100.0%
100.0%
100.0%
100.0%
96.4%
91.1%
100.0%
100.0%
97.8%
98.8%
82.9%
88.4%
89.3%
93.7%
68.7%
91.4%
91.5%
85.1%
98.7%
76.7%
89.5%
93.6%

39

Other Information

40

JRE Unit Price Performance
Unit Price

As of November 14, 2002

¥559,000unchanged from Nov.
13, 2002

Dividend Yield 4.43%
High¥563,000 Nov. 8, 2002
Low
¥480,000 Jan. 16, 2002
To IPO price
6.48%
(Yen)

(unit）
5,000

570,000

4,500
4,000

550,000

3,500
530,000

3,000
2,500

510,000
2,000
490,000

1,500
1,000

470,000
500

Trading Volume

Unit Price

11
/7

10
/1
6

9/
24

8/
30

8/
9

7/
19

6/
28

6/
7

5/
17

4/
23

4/
2

3/
11

2/
18

1/
25

/2
8
12

12
/6

10
/2
4
11
/1
4

10
/2

9/
10

450,000

Offering Price

41

Unit Price Performances Relative to Indices
As of November 14, 2002
JRE

TOPIX

TPREALTEPCO

JRE公募価格
JRE’s
IPO price

110%

100%

90%

80%

70%

9/
10
9/
2
10 5
/1
10 0
/2
4
11
/7
11
/2
1
12
/6
12
/2
0
1/
10
1/
25
2/
8
2/
25
3/
11
3/
26
4/
9
4/
23
5/
10
5/
24
6/
7
6/
21
7/
5
7/
19
8/
2
8/
16
8/
30
9/
13
10
/
10 1
/1
10 6
/3
11 0
/1
4

60%

＊Share performance is measured based on the offering price of 525,000 yen for JRE (100%) and the Sept. 7, 2001 closing price of 1,080.83 yen
for TOPIX, 770.21 yen for TPREAL, and 3,140 yen for Tokyo Electric Power Company (100%).
＊TPREAL (the TOPIX Real Estate Index) is a weighted index designed to measure the performance of the real estate sector of the TOPIX Index.
＊Share prices used for making graphs are based on closing prices of each day.
＊Stock price performance above is historical and is not an indication of future performance.

42

JRE Historical Volatility
As of November 14, 2002

33.89%

32.00 %

27.00 %

23.02%
22.00 %
18.88%

17.00 %
13.94%

12.00 %

JRE

東京電力
TEPCO

TOPIX

TPREAL＊Volatility is a measure of the change in price of a financial instrument over a given period of time. By convention, historical volatility is thestandard deviation of day­to­day logarithmic price changes, expressed as an annualized percentage. We calculated each volatility by analyzing asample of the 200 trading day closing prices.
＊Source: Bloomberg

43Performances of 24 Properties Compared with the 1st Term
Mitsubishi Soken

Item
Metropolitan
Area
Revenues（Tokyo 23 Wards） Operating Expenses(Excluding Depreciation)st

1 Period

Kodenmacho Shin-Nihonbashi
nd

2

st

Period1 Period

2ndPeriodShiba 2-chome Daimonst

1 Period2nd

Cosmo Kanasugibashi
Periodst

1 Periodnd2993,264

1,001,438

153,960

141,237

321,440

311,776

137,706

131,056

240,141

301,724

35,893

63,333

91,774

131,788

32,761

48,873

NOI

753,123

699,714118,068

77,904

229,666

179,988

104,945

82,183

Depreciation

63,21462,917

27,70327,442

29,06828,76922,43722,213

Takanawadai
Item

st

1 Period

JTS
nd

2

PeriodOmori-Eki Higashiguchi
st

1 Period

2ndPeriodst

1 Period2nd（in thousands of yen）

Period24 Properties Total

Otsuka Higashi-Ikebukuro
Periodst

1 Periodnd2

PeriodRevenues

149,816

153,987

95,29099,063

284,432

293,957

198,211

188,325

Operating Expenses(Excluding Depreciation)

31,621

57,79931,11838,901

86,96389,491

44,294

67,384Item

1st Period

Revenues

7,525,739
1,990,923

NOI

118,195

96,18864,17260,162

197,469

204,466

153,917

120,941

Operating Expenses(Excluding Depreciation)

Depreciation

22,86522,78814,71914,64760,05759,55542,082

41,625NOI5,534,816

Depreciation

1,130,730

Operating Profits

4,404,086

Ikebukuro 2-chome
Item

st

1 Period

Shibuya Cross Towernd2

PeriodRevenues

71,43675,429Operating Expenses(Excluding Depreciation)

17,617

NOI

53,819Depreciation

13,486

1st Period

2ndPeriod

1,612,256

1,573,660

31,079475,481641,11044,3501,136,775

932,550

13,613

232,479

242,042

Urawa Dai-Ichi-Seimei Life Dowa Kasai

Item
Metropolitan
Area
Revenues（Excluding Tokyo Operating Expenses(Excluding Depreciation)
23 Wards）

st

1 Period

2nd Period

Kawasaki Isago
1st Period

Item
Ericsson Shin-Yokohama

2nd Period

1st Period

2nd Period

2nd Period

Revenues

7,552,356

Operating Expenses (Excluding Depreciation)

2,671,052

151,133

154,938

181,953

185,368

185,675

190,396

NOI

4,881,304

36,24845,291

57,98173,86441,02253,282

Depreciation

1,125,951

NOI

114,885

109,647

123,972

111,504

144,652

137,114

Operating Profits

3,755,353

Depreciation

22,78822,79044,41844,05944,341

44,179Sendai Honcho Honma
Item

Other Cities

1st Period

Niigata Ishizuecho Nishi-Bandaibashi

2nd Period

1st Period

2nd Period

Kanazawa Minamicho
1st Period

Kanazawa Park

2nd Period

1st Period

2nd Period

Revenues

171,293

165,474

82,222

83,12592,931

95,307

310,225

355,457

Operating Expenses(Excluding Depreciation)

38,51646,48358,52538,85026,81038,18872,066

139,760

NOI

132,777

118,991

23,69844,275

66,121

57,119238,158

215,697

Depreciation

31,04630,791

11,501

11,425

13,561

13,42754,656

53,688

Nagoya Hirokoji
Item

1st Period

Kyoto Shijo Kawaramachi
2nd Period

Revenues

792,728805,697

Operating Expenses(Excluding Depreciation)

247,909

NOI

544,819
145,568

145,312

Depreciation

1st Period

2nd Period

1st Period

Fukusuke Sakaisujihonmachi
2nd Period

1st Period

122,769

833,583

847,826

307,803

32,09856,869145,003

189,11139,757

63,232497,894

121,692

65,900688,580

658,715

120,037

105,902

27,95328,785

110,481

100,246

25,58225,354

Hinode Tenjin
2nd Period

1st Period

Tosei Tenjin
2nd Period

1st Period

159,794

2nd Period

153,790

Kobe Itomachi
Item

1st Period

Midosuji Daiwa

169,134

For reference: Properties Taxes

639,074

Assuming:
For the 1st period, 24 properties
held at the end of the period (March 31, 2002) are assumed tohave begun operation on October
1, 2001.

2nd Period

Revenues

92,68279,702205,016

225,173

94,903102,062

Operating Expenses(Excluding Depreciation)

25,63635,40855,91567,85325,774

43,576

NOI

67,04644,294

149,101

157,320

69,12958,486

Depreciation

14,571

14,42334,34333,993

21,81021,86844

Comparison of Unitholders Composition
100%
11.33
90%
26.8

21.5

21.4

18.9

80%
70%

32.11

15.3
11.6

28.3

24.4

60%
50%
40%

29.4

7.6
29.96

41.2

Foreign Corporations
Other Corporations
Financial Institutions
Individuals

38.0
30%
45.2

20%
33.8
10%

20.4

26.6
16.1

0%
JRE

Company A

Company B

Company C

Company D

As of the end of the fiscal year45

Disclaimer on Forecasts
This presentation contains information regarding forecasts based on the plans andoutlook of Japan Real Estate Investment Corporations (“JRE”). Among thedescriptions in this presentation, all data contained herein are based on suchforecasts, other than those that describe current or historical data. These forecasts
are based upon the assumptions, judgment and data currently available from Japan
Real Estate Asset Management (“J­Rea”) and other investment corporations.
These data may contain known and unknown risks, uncertainty and other factors
not accounted for. Forecasts herein may be affected by known and unknown risks,
uncertainty or other factors, particularly with respect to JRE’s internal and external
growth and profitability­per­share targets. The aforementioned risks, uncertainty orother factors may result in significantly different results regarding JRE’s future
performance, management, and financial data presented implicitly and explicitly
herein. JRE shall assume no obligation to update or further disclose data regardingthese forecasts after the date of this presentation.

46