JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

FINANCIAL RESULTS FOR THE FISCAL PERIOD ENDED MARCH 2017
(REIT)
May 16, 2017
Japan Real Estate Investment Corporation
Tokyo Stock Exchange8952
http://www.j-re.co.jp/en/
Hiroshi Nakajima, Executive Director
Japan Real Estate Asset Management Co., Ltd.
Naoki Umeda, President & CEO
Ryuta Yoshida, Director, Senior Executive Officer & General Manager, Planning
Department/ TEL +81-3-3211-7951
Scheduled Date of Filling Securities Report: June 26, 2017
Scheduled date of dividend payment:
June 14, 2017
Supplementary materials for financial results: Yes
Holding of a briefing on financial results:
Yes (primarily for institutional investors and analysts)
Name of Issuer:
Stock Exchange Listing:
Securities Code:
URL:
Representative:
Asset Management Company:
Representative:
Contact:(Amounts are rounded down to the nearest million yen)

1. Financial Results for the March 2017 period (October 1, 2016 –March 31, 2017)(Percentages represent increases/decreases compared with results for the previous fiscal period)(1) Operating Results

Operating Revenues
Period ended

March 31, 2017
September 30, 2016

Operating Profit

Ordinary Profit

ProfitMillions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

30,81830,7730.1
0.6

12,567
12,3681.6
0.1

11,197
10,958

2.2
1.3

11,186
10,947

2.2
1.8

Profit per Unit
Period ended

March 31, 2017
September 30, 2016

ROE

ROA

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

Ordinary Profit toOperating Revenues Ratio

Yen

%

%

%

8,543
8,361

2.4
2.3

1.3
1.2

36.3
35.6

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

Period ended

March 31, 2017
September 30, 2016
Note:

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

Total Dividends in
Excess of
Accounting Profits

Payout Ratio

Ratio of Dividends
to Net Assets

Yen

Millions of yen

Yen

Millions of yen

%

%

8,544
8,361

11,186
10,947

0
0

0
0

100.0
99.9

2.4
2.3

The payout ratio is rounded down to the first decimal place.

(3) Financial Standing
Total Assets
As ofMarch 31, 2017
September 30, 2016

Net Assets

Equity Ratio

Net Assets per Unit

Millions of yen

Millions of yen%

Yen

898,306
883,633

469,598
469,35952.3
53.1

358,661
358,478

Reference: Total unitholders’ equity is 469,598 million yen for the March 2017 period and 469,359 million yen for the September 2016 period.

(4) Cash Flows
Cash Flows fromOperating Activities
Period ended

March 31, 2017
September 30, 2016

Cash Flows from
Investing Activities

Cash Flows from
Financing Activities

Cash and Cash Equivalents
at End of Period

Millions of yen

Millions of yen

Millions of yen

Millions of yen

17,19017,280(20,115)(1,964)

1,693(17,673)

21,31522,546

1

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

2. Performance Forecasts for the September 2017 period (April 1, 2017 to September 30, 2017)
and the March 2018 period (October 1, 2017 to March 31, 2018)(Percentages represent projected increases/decreases compared with the results for the preceding fiscal period)
Operating Revenues

Operating Profit

Millions of yen
Period ending% Millions of yen
September 30, 2017
31,590 2.5
12,840March 31, 2018
31,490 (0.3)
12,880

Reference:

Ordinary Profit% Millions of yen

2.2
0.3

11,55011,610

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

Profit% Millions of yen

3.1
0.5

11,54011,600

%

Yen

Yen

3.2
0.5

8,810
8,860

0
0

Profit per unit forecast = Profit forecast / Number of total investment units forecast for the end of the period(the September 2017 period ): 8,810 yen; (the March 2018 period): 8,860 yen.

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

None
None
None
None

(2) Number of Units Outstanding
Number of Units Outstanding at End of Period (Including Treasury Units)
As of March 31, 2017
1,309,310 units
1,309,310 units
As of September 30, 2016
Number of Treasury Units at End of Period
As of March 31, 2017
0 units
As of September 30, 2016
0 units
Note: Please refer to the notes regarding per unit information on page 24 for the number of investment units on which the calculations ofprofit per unit are based.

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

* Explanation regarding the appropriate use of business operations forecasts, and other special remarks
Estimates for the Company’s future operating results contained in the financial results are forward-looking statements and are basedon information currently available to the Company and certain assumptions deemed reasonable. Actual results may differ
substantially from the projections depending on a number of factors. In addition, these forecasts do not guarantee the stateddividends. As for assumptions underlying performance forecasts, please refer to the table entitled “Assumptions Underlying
Performance Forecasts for the September 2017 period (April 1, 2017 to September 30, 2017) and the March 2018 period (October 1,
2017 to March 31, 2018) ” on pages 7 and 8.

2

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

1. Related Corporations
Due to the fact that there have been no important changes to the “Structure and Formation” section in the most recent securities report(released December 26, 2016), information concerning it has been omitted.

2. Business Policy and Operations
a. Business Policy
Due to the fact that there have been no important changes to investment policies, investment targets, or dividend polices in themost recent securities report (released December 26, 2016), information concerning them has been omitted.
b. Business Operations(1) Results for the Period
Japan Real Estate Investment Corporation (“the Company”) was established on May 11, 2001, following the Act on
Investment Trusts and Investment Corporations of Japan (“ITA”). The Company was listed on the real estate investment
trust market of the Tokyo Stock Exchange (“TSE”) on September 10, 2001 (Securities Code: 8952). Since its IPO, the sizeof Company’s assets (total acquisition price) has grown steadily, expanding from 92.8 billion yen to 944.7 billion yen*, as ofMarch 31, 2017. In the same period, the Company continued to grow steadily in the number of properties in its portfolio,
from 20 to 69 properties.
During the March 2017 period (October 1, 2016 to March 31, 2017), the Japanese economy continued to follow a moderate
yet steady recovery, backed by the improvement in the exchange rate after the US presidential election, as well as thesustained financial deregulation policies, prompting preferable business performance in the country.
In the market for leased office space, the demand for large, recently-built properties remains strong mainly in the Tokyo
central areas, resulting, if moderate, in the trends of declining vacancies and increasing advertised rents.
In the investment market for real estate, the continuing favorable conditions for the financing environment prompted a
growth in market players, such as those who took the advantages of J-REIT. The vigorous appetite for property acquisition
keeps the capitalization rate at lower levels, thus acquisitions are not straightforward in the current environment.
Under such market conditions, the Company made sound investments under the Investment Guideline of providing stabledividends to unitholders, which was set forth at the time of the Company's listing on the TSE and remains unchanged to thisdate. Accordingly, the Company has been able to provide a dividend at 8,544 yen, which is an increase by 183 yen from theprevious period.
*Note: The part of the Jingumae Media Square Building site (acquisition price: 614 million yen) that was expropriated by the
Tokyo Metropolitan Government on October 30, 2009, is included in the total acquisition price. The total acquisition pricein the subsequent sections follows the same convention.
(2) Results of Operations① Property Management and Acquisition
In the market for leased office space in the period under review, as a result of our efforts to improve occupancy rates
through meticulous property leasing, the Company successfully maintained its record-breaking level of occupancy rate,from 98.7% as of September 30, 2016 to 98.8% as of March 31, 2017.
As for external growth, on October 3, 2016, the Company acquired the Kanazawa Kamitsutsumicho Building (Kanazawa,
Ishikawa Prefecture) for 2,780 million yen. This is a recently-built property with a competitive edge, situated in
Kanazawa, an administrative and economic center of the Hokuriku region. Elsewhere, the 31-year-old Genki Medical
Plaza (Chiyoda-ku, Tokyo) was transferred on January 25, 2017 at 6,890 million yen, while the Company acquired sharesof Shinjuku Eastside Square (Shinjuku-ku, Tokyo), a recently-built competitive property, to boost the existing property
ownership by purchasing further 3.6% for 6,660 million yen through an exchange transaction. This property
reorganization has enhanced the quality of the Company’s portfolio. As a result of the above, the Company’s current shareof Shinjuku Eastside Square has increased from 14.0% to 17.6%.
The Company also acquired the Tamachi Front Building (Minato-ku, Tokyo), which is a recently-built, medium-sizedproperty situated in the upcoming business district of Tamachi area, for 6,210 million yen. The existing ownership of the
Shiodome Building (Minato-ku, Tokyo) was increased by purchasing an additional 5.0% quasi-co-ownership interest of
the trust beneficiary right for 10,450 million yen. As a result, the Company’s current share of the said property has
increased from 45.0% to 50.0%.
3

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

As a result of the above, the Company’s portfolio at the end of the fiscal period under review, March 31, 2017, consistedof 69 properties, with a total acquisition price of 944,723 million yen. Total leasable floor area stood at 835,069 m2 with
1,482 tenants in total.
*Note: Shinjuku South Gate Project (tentative name) (land with leasehold interest), whose building ownership wastransferred on August 23, 2013, is included in the above number of properties and total acquisition price, but is notincluded in total leasable floor area or total number of tenants. Please note that Nippon Brunswick Building (land withleasehold interest) was renamed to Shinjuku South Gate Project (tentative name) (land with leasehold interest) on May
15, 2017.
② Finance Activities
According to its financial policy, the Company aims to operate the LTV ratio (ratio of interest-bearing debt to total assets)
at 30 to 40%, and strives to maintain a sound and conservative financial profile by staggering maturities, extension ofdurations and diversification of stable lenders among other possibilities, taking into consideration the borrowing cost andexisting relationships with lenders.
Concerning new loans related to property acquisition and the refinance of existing loans, the Company carries out loans
strategically and flexibly after giving close consideration to the above-mentioned means, as well as the possibility of
repayment with funds procured from issuing new investment units.
During the March 2017 period, the Company issued private placement investment corporation bonds with DBJ Green
Building Certification as a foray in the J-REIT scheme. This certification program is operated by the Development Bankof Japan Inc. (“DBJ”), with the aim to assess and certify properties for their environmental and social awareness. The
proceeds partially contributed to fund the additional acquisition of interest on the trust beneficiary right of the Shiodome
Building.
As a result of these financing activities, as of March 31, 2017, the Company’s total interest-bearing debt was 369,000
million yen, 12,650 million yen increase from the end of previous period. This amount consists of long-term loans totaling
303,000 million yen (including the current portion of long-term loans totaling 46,500 million yen), short-term loans
totaling 36,000 million yen, and investment corporation bonds totaling 30,000 million yen (there is no current portion of
investment corporation bonds). The current LTV ratio stands at 41.1%.
The Company’s credit ratings as of March 31, 2017 were as follows:
Rating Agency

Credit Rating

S&P Global Ratings Japan Inc.

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

Moody’s Japan K.K.

Rating: A1; Outlook: Stable

Rating and Investment Information, Inc.

Rating: AA; Outlook: Stable③ General Meeting of Unitholders
The Company held the 10th General Meeting of Unitholders on March 28, 2017. The meeting deliberated agenda items
concerning partial amendments to the Articles of Incorporation, appointment of one executive director, appointment of
two substitute executive directors, appointment of two supervisory directors, and appointment of one substitutesupervisory director. All agenda items were approved and resolved in accordance with the original proposals.
Following the meeting resolutions, Mr. Hiroshi Nakajima was reappointed as the Executive Director, while Mr. Tomohiro
Okanoya (reappointment) and Mr. Hiroaki Takano (new appointment) assumed the office of the Supervisory Director, asof May 11, 2017. Meanwhile, Mr. Naoki Umeda and Mr. Kazuo Nezu have been designated to be Substitute Executive
Directors. Likewise, Mr. Yoshinori Kiya has been designated as Substitute Supervisory Director.
(3) Summary of Financial Results
As a result of the above operations, in the period under review, the Company’s operating revenues increased by 0.1% on theprevious period, to 30,818 million yen. On the earnings front, operating profit increased 1.6%, to 12,567 million yen. After
deducting expenses for interest payments on loans and other costs, ordinary profit increased 2.2%, to 11,197 million yen,and profit had an increase of 2.2%, to 11,186 million yen.
Turning to dividends, the Company will make cash distributions using accounting profits based on the dividend policy
outlined in Article 32-1(2) of the Company’s Articles of Incorporation, in an amount that exceeds 90% of earnings available
for dividends as required by Article 67-15 of the Special Taxation Measures Law of Japan. Based on this policy, keeping
below the level of end-of-term unappropriated retained earnings and reserving the retained earnings brought forward, thetotal amount of dividends that the Company has determined to pay out is 11,186,744,640 yen for the period under review,
4

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

which is a multiple of 1,309,310－the number of units outstanding as of March 31, 2017. Accordingly, the per-unit cash
dividend is 8,544 yen.
c. Outlook(1) Operating Environment
The Japanese economy is expected to follow a course of moderate recovery as a result of improving conditions for
employment and income, as well as various financial policies in force. However, international factors such as policies
under the new administration in the US, the Brexit negotiations and instability in Europe, as well as the resulting
fluctuations in the financial and capital markets, may lead to an economic downturn in Japan, and thus it is necessary toremain vigilant.
In the market for leased office space, the demand is anticipated to endure without a sharp fall, backed by business activities
continuing to thrive. While it seems unlikely that the future increase of office space supply expected to materialize in theTokyo central areas will bring a dramatic turn in the market, it merits close attention to discern changes, including indirect
effects in surrounding areas.
Regarding the investment market for real estate, fierce competition in property acquisition and transactions carried out at
higher valuation are anticipated to continue. Therefore, it is important to be highly selective in making investments whileremaining proactive in search of new properties.
① Property Management
Based on the conditions stated above, the Company will adhere to the following management policies in order to maintainand improve profitability.
(i) Strengthen relationships of trust with existing tenants
The Company has contracts with numerous property management companies. Each property management company has
developed relationships of trust with their tenants through their daily diligence in managing their respective properties
over the years. The Company will work to further solidify these relationships by anticipating tenants’ needs andproviding tailored services to bolster tenant satisfaction, thereby maintaining and improving occupancy rates and raising
the rent levels.
(ii) Fill vacancies promptly
In cooperation with the property management companies mentioned above and their leasing brokers, the Company will
actively seek the most appropriate tenants for each property, based on location and features, in order to fill current andanticipated vacancies without delay. Furthermore, the Company will work to identify additional needs for floor area
among the existing tenants.
(iii) Stabilize revenues and earnings
With the aim of stabilizing revenues and earnings, the Company will endeavor to promote fixed lease agreements andsecure long-term leasing with its large-scale tenants.
(iv) Reduce management costs
The Company has introduced sound competitive principles to a number of property management companies so thatthey perpetually review and improve their management systems and cost structures. Along with this, the Company
endeavors to ensure and enhance tenant satisfaction.
② Property Acquisitions and Sales
The Company has adopted the following policies for acquiring properties.
(i) To access property information quickly, the Company continues to enhance its property information channels whileworking to develop new channels.
(ii) In its acquisition activities, the Company continues to meticulously monitor and examine economic, physical, and legal
factors, including rights-related issues, when selecting properties. In particular, with regard to the structure of buildings,
the Company requires buildings to meet or exceed new earthquake-resistance standards, verifies the need forrenovations by capturing current conditions accurately based on engineering reports, and exclusively targets properties
capable of maintaining a competitive edge in terms of the facilities they offer over the medium to long term.
5

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(iii) In accordance with its acquisition policies, the Company shall maintain its portfolio so that 70% or more of the portfolio
properties are located within the Tokyo metropolitan area, with the remaining 30% or fewer located in other major
cities.
Under these policies, the Company will continue to acquire highly competitive properties. At the same time, in order tofurther improve the quality of its portfolio, the Company will remain open to the replacement of portfolio properties
with due consideration given on timing.
③ Financial Policies
The Company has adopted the following financial policies.
(i) In principle, the Company shall maintain an LTV ratio below 65%. To ensure an even lower interest-bearing debt ratio,
the Company adopts the conservative target level of 30% to 40%.
(ii) The Company shall set the ceiling for the combined total of loans and investment corporation bonds at 1 trillion yen.
(iii) When obtaining a loan, the Company shall only negotiate with qualified institutional investors (limited to those defined
under Article 67-15 of the Special Taxation Measures Act) before executing a loan agreement.
(iv) With the purpose of maintaining liquidity at an appropriate level, the Company may establish preliminary borrowing
frameworks such as overdraft agreements and commitment line agreements, or may conclude preliminary contracts forloans, as needed.
(v) The Company aims for the best possible execution of financial transactions by negotiating with numerous financial
institutions.
(2) Performance Forecasts
The Company’s forecasts for the September 2017 period (April 1, 2017 to September 30, 2017) are as follows: operating
revenues totaling 31,590 million yen, operating profit totaling 12,840 million yen, ordinary profit totaling 11,550 million yen,and profit totaling 11,540 million yen. The Company plans to declare a per-unit cash dividend to be 8,810 yen.
The Company’s forecasts for the March 2018 period (October 1, 2017 to March 31, 2018) are as follows: operating revenues
totaling 31,490 million yen, operating profit totaling 12,880 million yen, ordinary profit totaling 11,610 million yen, andprofit totaling 11,600 million yen. The Company plans to declare a per-unit cash dividend to be 8,860 yen.
Regarding the assumptions underlying these forecasts, please see pages 7 and 8 entitled “Assumptions Underlying
Performance Forecasts for the September 2017 period (April 1, 2017 to September 30, 2017) and the March 2018 period(October 1, 2017 to March 31, 2018).” Operating revenues, operating profit, ordinary profit, profit, and cash dividend per unit
may vary depending on changes that may occur to the market situation.

6

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Assumptions Underlying Performance Forecasts for the September 2017 period (April 1, 2017 to September 30, 2017)
and the March 2018 period (October 1, 2017 to March 31, 2018)
Item
Accounting period

Assumption
・The September 2017 period: April 1, 2017 to September 30, 2017 (183 days)
・The March 2018 period: October 1, 2017 to March 31, 2018 (182 days)
・The Company’s property portfolio consists of 69 properties at the end of the March 2017 period. The actual

Number ofproperties held byportfolio may differ from this assumption due to additional property acquisitions and dispositions.
・As of May 16, 2017, the Company does not have any forward or other commitments as set forth in the Financial

the Company

Services Agency’s Guidelines for Supervision.

Number of units
outstanding

・The total number of units outstanding as of May 16, 2017, is 1,309,310.
・The Company operates an LTV ratio within a range between 30% and 40% as an operational guideline.
・The Company executed a short-term loan of 9 billion yen on April 3, 2017 to procure funds for the repayment ofexisting short-term loan, in addition to the execution of a long-term loan of 5 billion yen on April 4, 2017 for the
repayment of existing long-term loan.
As a result, the balance for interest-bearing debt is 369,000 million yen as of May 16, 2017.
・In the September 2017 period, as of May 16, 2017, the Company prepares to refinance the long-term loans due

Interest-bearing
debt

for repayment during the period totaling 23.5 billion yen (repayment dates: June 1, 2017, June 15, 2017 andAugust 31, 2017) and the short-term loans due for repayment during the period totaling 4.0 billion yen(repayment dates: September 1, 2017). There are no investment corporation bonds to mature in the September
2017 period.
・In the March 2018 period, as of May 16, 2017, the Company prepares to refinance the long-term loans due forrepayment during the period totaling 18.0 billion yen (repayment dates: December 20, 2017, January 9, 2018,
January 17, 2018, March 1, 2018, March 26, 2018 and March 30, 2018) and the short-term loans due forrepayment during the period totaling 23.0 billion yen (repayment dates: December 26, 2017, January 10, 2018,
March 1, 2018, March 2, 2018, March 27, 2018 and March 30, 2018). There are no investment corporation bonds
to mature in the March 2018 period.

Operating revenues

・Revenues from portfolio properties held by the Company are calculated by taking into consideration newcontract conclusions and existing contract cancellations fixed as of May 16, 2017, and by factoring in potential
variables that reflect recent market conditions for leased office space, such as rent levels and occupancy rates.

7

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Item

Assumption
・Of the taxes applicable to the Company, property taxes, city planning taxes and depreciable property taxes
corresponding to the relevant fiscal period have been recorded as property-related expenses. However, when aproperty is acquired at a point during the period used for the calculation of property tax, a property tax adjustment islevied that takes into account the date of the transfer of the new acquisition. The amount of the adjustment isfactored into the acquisition price and therefore not recorded as an expense in the relevant fiscal period. In addition,
the Company assumes the 2018 property taxes, city planning taxes, and depreciable property taxes for properties
acquired in 2017 to be as follows:

Operatingexpenses

25 million yen for the additional shares acquired for Shinjuku Eastside Square, 28 million yen for the acquisitionof Tamachi Front Building, and 31 million yen for the additional shares acquired for Shiodome Building.
・The property and other taxes will be 2,910 million yen in the September 2017 period and 2,910 million yen in the
March 2018 period.
・The depreciation will be 6,540 million yen in the September 2017 period and 6,530 million yen in the March 2018
period.
・Property management expenses are assumed by taking past operational results into consideration.
・Repair expenses may vastly differ from the projected amounts as such costs fluctuate significantly from one fiscal
period to another, and because these costs are not recurring.

Non-operating
expenses

・The non-operating expenses, such as interest expenses on loans and investment corporation bonds, will be 1,300
million yen in the September 2017 period and 1,270 million yen in the March 2018 period.
・The Company shall not distribute dividends in excess of accounting profits. Thus, based on its Articles ofIncorporation, the Company shall make cash distributions of the amount that is higher than 90% of earnings available
for dividends up to the accounting profits.
・The Company assumes that dividend amounts in the September 2017 and the March 2018 periods will not be

Dividend
amounts

Other

appropriated from internal reserves*.
*Internal reserves (projected for the March 2017 period) shall comprise the gain on sale of the Takanawadai Building
as of April 1, 2011 (878 million yen), reserves for reduction entry made on the sales of Hirokoji Sakae Building(transferred on March 30, 2016) and Kyoto Shijo Kawaramachi Building (transferred on March 31, 2016, together
amounting to 161 million yen) both under the application of the Special Provisions for Taxation in the case of
Advanced Acquisition of Land, etc., in 2009 and 2010, and the residual amount of 530 million yen, which is anapportioned revenue of the subsidies for work under Article 42 “Inclusion in Gross Expense of Advanced
Depreciation of Fixed Assets, etc. Acquired with National Subsidy, etc.” of the Corporation Tax Act, after the
deduction of 519 million yen to compensate the dividend paid out for the September 2012 and March 2013 periods
consisting of reserve for reduction entry and associated deferred tax liabilities, together with the retained earnings
brought forward.
・No revisions will be made in such areas as laws, tax systems, accounting standards, and listing rules as well as
regulations of the Investment Trusts Association, Japan to the extent that impact the above-mentioned forecasts.
・No unprecedented or significant changes will occur to the general market trends or real estate market conditions orother factors.
・In addition to the income taxes deferred on the reserves for reduction entry, the corporate and other taxes arecalculated by taking into consideration the taxes in relation to the amortization of term leasehold interest forbuildings and asset retirement obligations.

8

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

3. Financial Statements(1) Balance Sheets
Thousands of yen
As of September 30, 2016
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Deferred tax assets
Consumption taxes receivable
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
LandConstruction in progress
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Total property, plant and equipment
Intangible assets
Leasehold rights
Leasehold rights in trust
Easement
Other
Total intangible assets

9

As of March 31 , 201716,231,988
6,314,725
279,659
397,720943－
38,50823,263,545

15,709,586
5,605,731
248,403
367,001914
30,94625,71621,988,301

267,181,629(83,477,470)
183,704,158
3,247,865(754,986)
2,492,879
2,992,615(1,880,589)
1,112,026
396,617(232,002)
164,615450,384,924
2,250
77,750,199(18,994,417)
58,755,782
651,869(168,192)
483,677
948,336(665,333)
283,00248,182(19,071)
29,110151,935,120
2,299
849,349,846

265,124,117(87,142,205)
177,981,912
3,129,120(786,272)
2,342,847
3,074,681(1,960,979)
1,113,701
426,995(252,624)
174,371434,837,910
6,087
87,708,942(21,031,700)
66,677,241
836,762(206,985)
629,777993,657(691,097)
302,560
54,191(22,677)
31,513
181,425,424
1,020
865,524,368

6,035,634
444,160
828,095
14,2807,322,170

5,738,365
444,160
828,095
12,7507,023,371

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Thousands of yen
As of September 30, 2016
Investments and other assets
Investment securities
Lease and guarantee deposits
Long-term prepaid expenses
Other
Total investments and other assets
Total non-current assets
Deferred assets
Investment corporation bond issuance costs
Total deferred assets
Total assets
Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Current portion of long-term loans payable
Accounts payable - otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Other
Total current liabilities
Non-current liabilities
Investment corporation bonds
Long-term loans payable
Deposits received from tenants
Deferred tax liabilities
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Unitholders' equity
Unitholders' capital
Surplus
Voluntary retained earnings
Reserve for reduction entry
Total voluntary retained earnings
Unappropriated retained earnings
Total surplus
Total unitholders' equity
Total net assets
Total liabilities and net assets

10

As of March 31, 2017577,168
1,573,421
600,787925,004
3,676,381
860,348,399

577,168
1,573,634
613,924
979,840
3,744,567
876,292,308

21,16021,160883,633,105

26,15026,150898,306,760

1,748,290
45,700,000
42,850,000
1,290,343
578,332
9,740
528,6393,500,462
32,091
96,237,899

2,853,804
36,000,000
46,500,000
1,481,266
564,649
10,997－3,329,302
8,908
90,748,928

20,000,000
247,800,000
49,727,428
167,188328,60212,659318,035,880
414,273,779

30,000,000
256,500,000
50,950,892
167,156
331,913
8,952
337,958,915
428,707,843

458,016,096

458,016,096

363,469
363,469
10,979,760
11,343,229
469,359,325
469,359,325
883,633,105

363,400
363,400
11,219,420
11,582,820
469,598,916
469,598,916
898,306,760

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(2) Statements of Income
Thousands of yen
For the period
from April 1, 2016
to September 30, 2016
Operating revenues
Rent revenues
Other lease business revenues
Gain on exchange of real estate properties
Total operating revenues
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Directors' compensations
Commission fee
Other operating expenses
Total operating expenses
Operating profit
Non-operating income
Interest income
Dividend income
Reversal of distribution payable
Income on settlement of management associationaccounts
Other
Total non-operating income
Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds
Amortization of investment corporation bondissuance costs
Other
Total non-operating expenses
Ordinary profit
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitRetained earnings brought forward
Unappropriated retained earnings

For the period
from October 1, 2016
to March 31, 2017

30,565,884
208,084
30,773,968

30,726,244
58,75333,62030,818,618

17,091,090
964,81559,880154,0317,800
64,87562,63918,405,132
12,368,836

16,939,531
960,233
60,214
126,883
7,800
70,35686,353
18,251,373
12,567,245

480
7,401
2,855

189
4,210

19,444－030,181

4,399

1,243,269
152,189

1,175,845
153,619

5,539

5,512

39,212
1,440,211
10,958,806
10,958,806
11,323(2)
11,321
10,947,485
32,275
10,979,760

38,927
1,373,904
11,197,739
11,197,739
11,011(3)
11,008
11,186,731
32,688
11,219,420

－

11

－

－

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(3) Statements of Changes in Unitholders’ Equity
For the period from April 1, 2016 to September 30, 2016
Thousands of yen

Unitholders' equity
Surplus
Unitholders'
capitalBalance at beginning ofcurrent period
Changes of items
during period
Provision of reserve
for reduction entry

Reserve for
reduction
entry

Unappropriated retained
earnings

Total
voluntary
retainedearnings

Total
surplusTotal
unitholders'equityTotal
net assets

243,360

243,360

10,785,290

11,028,651

469,044,747

469,044,747

120,108

120,108(120,108)－－－

Dividends of surplus(10,632,906)(10,632,906)(10,632,906)(10,632,906)

Profit10,947,485

10,947,485

10,947,485

10,947,485

Total changes of items
during period
Balance at end ofcurrent period

458,016,096

Voluntary retained
earnings－

120,108

120,108

194,469

314,578

314,578

314,578

458,016,096

363,469

363,469

10,979,760

11,343,229

469,359,325

469,359,325

For the period from October 1, 2016 to March 31, 2017
Thousands of yen

Unitholders' equity
Surplus
Unitholders'
capitalBalance at beginning ofcurrent period
Changes of items
during period
Reversal of reserve
for reduction entry

Reserve for
reduction
entry

Total
voluntary
retainedearnings

Unappropriated retained
earnings

Total
surplusTotal
unitholders'equityTotal
net assets

363,469

363,469

10,979,760

11,343,229

469,359,325

469,359,325

(69)

(69)

69

－

－

－

Dividends of surplus(10,947,140)(10,947,140)(10,947,140)(10,947,140)

Profit11,186,731

11,186,731

11,186,731

11,186,731

Total changes of items
during period
Balance at end ofcurrent period

458,016,096

Voluntary retained
earnings

－

(69)

(69)

239,660

239,590

239,590

239,590458,016,096

363,400

363,400

11,219,420

11,582,820

469,598,916

469,598,916

12

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(4) Statements of Cash Distributions

Item

For the period
from April 1, 2016
to September 30, 2016

For the period
from October 1, 2016
to March 31, 2017

Amount (Yen)Amount (Yen)I Retained earnings

10,979,760,350

11,219,420,612

69,53069,182

10,947,140,910

11,186,744,640(8,361)(8,544)32,688,970

32,745,154

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

Computation Method for Determining
Dividends

The Company will make cash
distributions using accounting profits

The Company will make cash
distributions using accounting profits

based on the cash distribution policy
outlined in Article 32-1(2) of theCompany’s Articles of Incorporation, in
an amount that exceeds 90% of the“amount of distributable profit” as set
forth in Article 67-15 of the Special
Taxation Measures Act. Based on thispolicy, the Company has decided that thebased on the cash distribution policy
outlined in Article 32-1(2) of theCompany’s Articles of Incorporation, in
an amount that exceeds 90% of thetotal amount of dividends, which is set not
to exceed the unappropriated retained
earnings and also to secure retained
earnings brought forward, is
10,947,140,910 yen for the period underreview, which is a multiple of 1,309,310— the number of units outstanding as of
September 30, 2016. Furthermore, theCompany does not pay out dividends thatexceed accounting profits as outlined in
Article 32-1(3) of the Company’s Articles
of Incorporation.

13“amount of distributable profit” as set
forth in Article 67-15 of the Special
Taxation Measures Act. Based on thispolicy, the Company has decided that the
total amount of dividends, which is set not
to exceed the unappropriated retained
earnings and also to secure retained
earnings brought forward, is
11,186,744,640 yen for the period underreview, which is a multiple of 1,309,310— the number of units outstanding as ofMarch 31, 2017. Furthermore, theCompany does not pay out dividends thatexceed accounting profits as outlined in
Article 32-1(3) of the Company’s Articles
of Incorporation.

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(5) Statements of Cash Flows
Thousands of yen
For the period
from April 1, 2016
to September 30, 2016
Cash flows from operating activities
Profit before income taxes
Depreciation
Difference resulting from exchange of real estate
properties
Amortization of investment corporation bond issuancecosts
Dividend income
Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes refund
receivable
Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable - other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in accrued expenses
Increase (decrease) in advances received
Decrease (increase) in long-term prepaid expenses
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Purchase of intangible assets
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee
deposits
Repayments of tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from short-term loans payable
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of investment corporation
bonds
Payments of investment corporation bond issuancecosts
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

For the period
from October 1, 2016
to March 31, 2017

10,958,806
6,501,082

11,197,739
6,528,096－

127,789

5,539

5,512

(7,401)(480)
1,395,458(78,017)－(189)
1,329,464
31,256－(30,946)(72,832)
228,507(55,105)(599,970)(136)
412,299
105,294(22,326)
18,770,716
7,867(1,486,087)(12,418)
17,280,078

30,71890,746
31,138(528,471)
136(171,159)(13,137)(85,145)
18,543,549
93(1,343,284)(9,754)
17,190,603(3,347,000)
3,347,000(1,803,437)(673,099)(17,762)－－－(10,375,364)(10,975,199)
－
(213)

220

－

(828,495)
1,358,111(1,964,462)(1,110,899)
2,346,460(20,115,215)

36,000,000(13,000,000)(30,050,000)

23,000,000(32,700,000)
26,700,000(14,350,000)－

10,000,000－(10,503)(10,623,685)(17,673,685)(2,358,069)
24,904,784
22,546,714(10,946,280)
1,693,216(1,231,395)
22,546,714
21,315,318－

14

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(6) Notes Concerning Going Concerns Assumption“Not applicable”(7) Summary of Significant Accounting Policies
Investment securities
Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving averagemethod.
Property and equipment, depreciation and impairment (except for leased assets)
Property and equipment is stated at cost, less accumulated depreciation. The cost of land, buildings and building improvements includes
the purchase price of property and acquisition costs. Depreciation is calculated on a straight-line basis over the estimated useful lives of
the assets ranging as stated below:
Buildings....................................................................... 2-61 years
Structures...................................................................... 2-60 years
Machinery and equipment............................................ 2-18 years
Tools, furniture and fixtures......................................... 2-29 years
Expenditures for repairing expenses are charged to income as incurred. Significant renewals and betterments are capitalized.
The Company reviews fixed assets for impairment whenever events or changes in circumstances indicate that the carrying amount of
its fixed assets may not be recoverable. According to the standard set by the Accounting Standards Board of Japan, companies are
required to recognize an impairment loss in their statement of income if certain indicators of asset impairment exist and the book valueof an asset exceeds the undiscounted sum of future cash flows of the asset. The standard states that impairment losses should bemeasured as the excess of the book value over the higher of (i) the fair market value of the asset, net of disposition costs, and (ii) the
present value of future cash flows arising from ongoing utilization of the asset and from disposal after asset use. The standard covers
land, factories, buildings and other forms of property, plant and equipment as well as intangible assets. Fixed assets are grouped at thelowest level for which there is identifiable cash flows that are independent of cash flows of other groups of assets.
Intangible assets
Intangible assets primarily consist of leasehold rights and easement, which are stated at cost. Amortization of a term leasehold interestfor business use is calculated by the straight-line method based on the period of agreement.
Leased assets
Leased assets under finance lease transactions that do not transfer ownership of the leased assets to the lessees are capitalized anddepreciated by the straight-line method over the lease term with no residual value.
Deferred charges
Investment corporation bond issuance costs are amortized using the straight-line method over the redemption periods.
New unit issuance costs are charged to income as incurred. The underwriters’ economic remunerations for underwriting the offering
are not recognized as new unit issuance costs in the financial statements since such costs are not paid by the Company as commission
under the so-called “spread-method”.
Under the spread-method, the difference between the offer price (the price paid by the unitholder) and the issue price (the pricereceived by the Company) is retained by the underwriters as remuneration.
Revenue recognition
Revenues from leasing of office space are recognized as rent accrues over the lease period.
Taxes on property and equipment
Property and equipment is subject to property taxes and city planning taxes on a calendar year basis. These taxes are generally charged
to income during the period. The sellers of the properties are liable for property taxes for the calendar year including the period from thedate of purchase by the Company through the end of the year since the taxes are imposed on the owner registered on the record as ofJanuary 1 based on the assessment made by the local government. The Company pays the amount equivalent to the property taxes to thesellers applicable to the period since acquisition and includes the amount equivalent to the taxes in the purchase price of each property
and capitalizes it as a cost of the property.
Consumption taxes
Consumption taxes withheld and consumption taxes paid are not included in the statements of income. The consumption taxes paid are
generally offset against the balance of consumption taxes withheld. As such, the excess of payments over amounts withheld areincluded in Current assets and the excess of amounts withheld over payments are included in Current liabilities.
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks and short-term investments, which are highly liquid, readily
convertible to cash and with insignificant risk of price fluctuation, with original maturity of three months or less.
Hedge accounting
The Company enters into derivative transactions to hedge against interest-rate risk and other forms of risk based on the risk
management policies outlined in the Company’s Articles of Incorporation. The Company uses interest-rate swap transactions forhedging fluctuations in interest rates on floating-rate loans. The Company has also executed interest-rate and currency swap
15

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

transactions as a method of hedging against currency exchange and interest-rate fluctuation risks. Deferred hedge accounting is
generally used for such interest-rate swaps and interest-rate and currency swap transactions, and the effectiveness of hedging ismeasured by comparing the total cash flow fluctuation of the hedged item and that of the hedging instrument since the inception of thehedge.
For interest-rate swaps that qualify for hedge accounting and meet certain criteria provided under Japanese GAAP, however, theCompany applies special accounting treatment. Under such special accounting treatment, the differentials paid or received under theswap agreements are recognized and included in interest expense of the hedged loans, and the interest-rate swaps are not required to be
separately valued. For interest-rate swaps that meet the specific criteria for such special accounting treatment, ongoing assessments ofhedge effectiveness are not required and hence not performed.
In addition, for interest-rate and currency swap transactions that meet certain criteria provided under Japanese GAAP, the Integrated
Treatment is applied. Under such Integrated Treatment, the interest-rate and currency swaps that hedge foreign currency-denominatedfloating rate payments into yen-denominated fixed rate payments are treated as an integral part of the hedged foreign currency
borrowing, and the loan is accounted for as a yen-denominated fixed-rate borrowing.

16

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(8) Notes to Financial Statements(Notes to Balance Sheets)
a. Reduction amount of tangible assets with government grants
Thousands of yen
As of September 30, 2016

Buildingsb.

As of March 31, 2017

50,08650,086

Reduction amount of fixed assets acquired through exchange
Thousands of yen
As of September 30, 2016—

Land in trustc.

As of March 31, 2017―

Commitment line agreement
The Company has signed commitment line agreements with four banks.
Thousands of yen
As of September 30, 2016d.

2,008,155

As of March 31, 2017

Total amount of commitment line agreement
Debt financing balance

50,000,000—

50,000,000—

Balance

50,000,000

50,000,000

Minimum net assets required by Article 67, Paragraph 4 of the ITA
Thousands of yen
As of September 30, 2016

50,000

As of March 31, 2017

50,000(Notes to Statements of Income)a. Breakdown of property-related revenues and expenses
Thousands of yen
For the period from April 1, 2016
to September 30, 2016

For the period from October 1, 2016
to March 31, 2017

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

30,773,968
30,565,884
23,994,977
3,598,719
786,817
2,185,369
208,084
10,883
197,200

30,784,997
30,726,244
24,352,065
3,545,126
802,247
2,026,805
58,753
11,43847,315

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

17,091,090
3,519,734
2,708,649
2,936,241
57,814
1,181,022
6,500,062
187,565
13,682,878

16,939,531
3,737,491
2,383,645
2,925,627
58,945
1,113,418
6,526,566
193,836
13,845,466

17

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）b.

Breakdown of gain on exchange of real estate properties
For the period from April 1, 2016 to September 30, 2016
“Not applicable”
For the period from October 1, 2016 to March 31, 2017
Thousands of yen

Genki Medical Plaza
Revenue from transfer of real estate property
Cost of real estate property transferred
Other transfer expenses incurred
Compressed amount of fixed assets
Gain on exchange of real estate property

6,890,000
4,776,921
71,3022,008,155
33,620(Changes in Unitholders’ Equity)
Total number of investment units issuable
and number of units outstanding

As of September 30, 2016

As of March 31, 2017

Total number of investment units issuable

4,000,000 units

4,000,000 units

Number of units outstanding

1,309,310 units

1,309,310 units(Supplemental Cash Flow Information)
Cash and cash equivalents
The following table represents a reconciliation of cash and cash equivalents at September 30, 2016 and March 31, 2017:
Thousands of yen
As of September 30, 2016
As of March 31, 2017

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

16,231,988
6,314,725－
22,546,714

15,709,586
5,605,731－
21,315,318(Financial Instruments)
For the six months ended September 30, 2016 and March 31, 2017
a. Status of financial instruments(i) Policies for dealing financial instruments
Concerning the financing of property acquisitions, the Company shall use several funding sources including bank loans, theissuance of investment corporation bonds and the issuance of investment units. When executing such financing activities, theCompany endeavors to retain the ability to secure stable and low-cost financing by maintaining high credit ratings and thereby
limiting the financial covenants that may restrict the financial flexibility of the Company. To achieve these goals, the Company
intends to further develop and reinforce the confidence of debt holders and rating agencies in the Company by bolstering the capitalbase and controlling the loan-to-value ratio (“LTV”) at an adequate level.
In order to hedge against future interest-rate fluctuations, the Company may enter into derivative transactions, which shall be
executed solely for the purpose of hedging against interest-rate fluctuation and other risks, and not for speculative purposes.
With respect to management of excess funds, as a matter of policy the Company uses time deposits as its main vehicle, while
securities and monetary claims are also eligible for such investment.
(ii) Characteristics and risk profile of each financial instrument and risk management system
The Company regularly re-evaluates the appropriateness and effectiveness of its risk management system in order to improve on it.
The characteristics and risk profile of financial instruments and the system in place to manage such risks are as follows:
The deposits, which are typically large time deposits used to manage excess funds, are exposed to the credit risk of thedeposit-taking financial institutions. The Company manages credit risk by restricting the tenor of the deposit to relatively shortperiods and setting a minimum credit rating requirement for the deposit-taking financial institutions.
The funding proceeds from borrowings and issues of investment corporation bonds are applied mainly to acquire real estate
properties and repay outstanding loans and bonds. While floating-rate short-term and long-term loans are exposed to the risk ofinterest-rate hikes, such risk is mitigated by the Company’s low LTV and relatively high percentage of long-term fixed-rate debts
within the total borrowing. The Company may also exercise hedging by means of derivative transactions (interest-rate swap
transactions) in order to mitigate the risk of fluctuation concerning the floating-rate long-term loans, thereby effectively stabilizing
18

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

the overall interest rates on the loans. Foreign currency-denominated loans are also exposed to currency exchange and interest-ratefluctuation risk. However, the Company uses derivative transactions as a method of hedging against these risks (interest-rate andcurrency swap transactions). For more detailed information on the hedge accounting method, hedging instruments, hedged items,
hedge policies and the evaluation method of hedge effectiveness, please refer to the previous section (7) Summary of Significant
Accounting Policies: Hedge accounting.
Loans and investment corporation bonds involve liquidity risk at the time of maturity. To manage such liquidity risk, theCompany implements measures such as ① maintaining and strengthening its ability to access equity markets to secure funds, ②maintaining commitment lines with major financial institutions (There is no amount outstanding under the facility as of September
30, 2016 and March 31, 2017) and ③ preparing monthly financial plans.
(iii) Supplementary note regarding fair value of financial instruments
The fair values of financial instruments presented in this report are based on their market value, and in cases where market values
are not available, reasonably calculated values are presented. Since calculation of fair value is based on certain assumptions, the fairvalue could differ depending on the assumptions used. In addition, the contract value of derivative transactions, which is presented
in the following section entitled Derivative Transactions, is not an exact representation of market risk attributable to derivativetransactions.
b. Fair value of financial instruments
Fair value of financial instruments, their values carried on the balance sheet and the differences between them as of September 30, 2016
and March 31, 2017 are as follows.
The financial instruments whose fair values are extremely difficult to estimate are excluded from the following schedule (Note 2):
Thousands of yen
As of September 30, 2016

(1) Cash and deposits(2) Cash and deposits in trust(3) Short-term loans(4) Current portion of long-term loans(5) Investment corporation bonds(6) Long-term loans(7) Derivative transactions

Book value (*)
16,231,988
6,314,725(45,700,000)(42,850,000)(20,000,000)(247,800,000)－

Fair value (*)
16,231,988
6,314,725(45,700,000)(43,090,739)(21,946,300)(254,805,571)－

Difference (*)－－－(240,739)(1,946,300)(7,005,571)－(*) Liabilities are shown in parentheses.
Thousands of yen
As of March 31, 2017

(1) Cash and deposits(2) Cash and deposits in trust(3) Short-term loans(4) Current portion of long-term loans(5) Investment corporation bonds(6) Long-term loans(7) Derivative transactions

Book value (*)
15,709,586
5,605,731(36,000,000)(46,500,000)(30,000,000)(256,500,000)－

Fair value (*)
15,709,586
5,605,731(36,000,000)(46,684,630)(31,654,880)(261,031,032)－

Difference (*)－－－(184,630)(1,654,880)(4,531,032)－(*)Liabilities are shown in parentheses.
Notes: 1. Measurement of fair value of financial instruments and matters concerning derivative transactions(1) Cash and deposits and (2) Cash and deposits in trust
Due to short tenor, the book values of these assets are reasonable approximations of the present value of these assets and hence
used as their fair value.
(3) Short-term loans
Since these loans’ tenor is short and rates are reset at a short interval, the book values of these liabilities are reasonableapproximations of their present value and hence used as their fair values.
(4) Current portion of long-term loans and (6) Long-term loans
For loans with floating interest rates, since the interest rates on such loans reflect market rates reasonably well over the short term
and their book values are good approximations of their fair values, the book values are presented as their fair values. (However, thefair values of floating-rate long-term loans hedged by an interest-rate and currency swap subject to integrated treatment or by aninterest-rate swap subject to special accounting treatment are calculated by discounting the aggregated principal and interest on
such loans, after taking into account the effect of said interest-rate and currency swaps or interest-rate swaps, using reasonableestimates of the rates that would be applicable if the Company were to refinance the existing loans for the remaining period tomaturity under the prevailing market conditions as of September 30, 2016 and March 31, 2017. Such floating-rate long-term loans
are presented in the following section entitled Derivative Transactions.) The fair values of the liabilities with fixed interest rates arecalculated by discounting the aggregated amounts of the principal and the interest of the loans by the rates that are reasonably
estimated to be applicable if the Company were to refinance the existing loans for the remaining period to maturity under theprevailing market conditions as of September 30, 2016 and March 31, 2017.
(5) Investment corporation bonds
Their fair values are based on reference prices published by a financial data provider where available. When reference prices are
not available, their fair values are calculated by discounting the aggregate of the principal and interest by nominal rates assumed
applicable if the loans were refinanced for the duration of the current maturity.
(7) Derivative transactions
Please refer to the following section entitled Derivative Transactions.

19

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）
2. Financial instruments whose fair values cannot be reliably measured(1) Non-listed stock (*1)
(2) Deposits received from tenants (*2)

Thousands of yen
As of September 30, 2016
As of March 31, 2017577,168
577,168
49,727,428
50,950,892(*1) With regard to non-listed stock, which does not have a quoted market price in an active market and whose cash flows are notreasonably estimated, fair value cannot be reliably measured and it is therefore presented at book value.
(*2) With regard to deposits received from tenants, which do not have a quoted market price in an active market and reasonably
estimated tenor, their cash flows cannot be reliably measured and they are therefore presented at their book value.

3. Redemption schedule for monetary claims after the closing dateThousands of yen
As of September 30, 2016
1 year or less

Cash and deposits
Cash and deposits in trust
Total

16,231,988
6,314,725
22,546,714

1 to 2 years———

2 to 3 years

3 to 4 years———

4 to 5 years———

Over 5 years

—
—
—

—
—
—

Thousands of yen
As of March 31, 2017
1 year or less

Cash and deposits
Cash and deposits in trust
Total

15,709,586
5,605,731
21,315,318

1 to 2 years———

2 to 3 years

3 to 4 years

—
—
—

—
—
—

4 to 5 years

Over 5 years

—
—
—

—
—
—

4. Repayment schedule for investment corporation bonds, long-term loans and other interest-bearing debt after the closing dateThousands of yen
As of September 30, 2016
Short-term loans
Investment corporation bonds
Long-term loans
Total

1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years

45,700,000—
42,850,000
88,550,000—
10,000,000
36,000,000
46,000,000——
25,000,000
25,000,000——
44,500,000
44,500,000——
37,000,000
37,000,000—
10,000,000
105,300,000
115,300,000

Thousands of yen
As of March 31, 2017
Short-term loans
Investment corporation bonds
Long-term loans
Total

1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years

36,000,000—
46,500,000
82,500,000—
10,000,000
27,500,000
37,500,000——
49,000,000
49,000,000——
39,000,000
39,000,000——
40,200,000
40,200,000—
20,000,000
100,800,000
120,800,000

20

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(Derivative Transactions)a. Derivatives not designated as hedging instruments
For the period from April 1, 2016 to September 30, 2016
“Not applicable”
For the period from October 1, 2016 to March 31, 2017
“Not applicable”
b. Derivatives designated as hedging instruments
For the period from April 1, 2016 to September 30, 2016
The contract amount or the equivalent principal amount set out in the contract as of the closing date for each derivative
designated as a hedging instrument is as follows.
(Thousands of yen)

Derivative accounting
methodContract value

Type ofderivative transaction

Hedged item

Hedge accounting

Receive floating,pay fixed interest-rate swap
transactions

Long-term loans

64,300,000

64,300,000*―

Integrated Treatment(Special Treatment andAllocation Treatment) forinterest-rate and currency
swap transactions

Receive floating USD,
pay fixed JPY, interest-rate
and currency swap
transactions (with initial andfinal exchange)

Long-term loans

10,000,000

10,000,000*―

Over one year

Measurement

Fair value of fair value

For the period from October 1, 2016 to March 31, 2017
The contract amount or the equivalent principal amount set out in the contract as of the closing date for each derivative
designated as a hedging instrument is as follows.
(Thousands of yen)

Derivative accounting
methodHedge accounting
Integrated Treatment(Special Treatment andAllocation Treatment) forinterest-rate and currency
swap transactions

Contract value

Type ofderivative transaction

Hedged item

Receive floating,pay fixed interest-rate swap
transactions

Long-term loans

64,300,000

Receive floating USD,
pay fixed JPY, interest-rate
and currency swap
transactions (with initial andfinal exchange)

Long-term loans

10,000,000

Fair value

Measurementof fair value

64,300,000*―

10,000,000*―

Over one year

*Because the derivative transactions eligible for the Special Treatment of interest-rate swaps and Integrated Treatment (Special Treatment forinterest-rate swaps and Allocation Treatment for currency swaps) are accounted for as integral parts of the hedged loans, the fair value of thosederivative transactions is included in that of the underlying long-term loans as of September 30, 2016 and March 31, 2017. Please refer to themeasurement of fair value of financial instruments in Note 1 of the section entitled “b. Fair value of financial instruments” under “Financial
Instruments” as well as subheadings (4) and (6) of Note 1 concerning derivative transactions.

21

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(Income Taxes)
The Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation Measures
Act, an investment corporation is allowed to deduct dividends of accounting profits, or dividend distributions, paid to unitholders fromits taxable income if certain tax requirements are satisfied. Such tax requirements include dividend distributions in excess of 90% of its
earnings available for dividends for the fiscal period as stipulated by Article 67-15 of the Special Taxation Measures Act. The
significant components of deferred tax assets and liabilities as of September 30, 2016 and March 31, 2017 were as follows:

Thousands of yen
For the period from April 1, 2016
For the period from October 1, 2016
to March 31, 2017
to September 30, 2016

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

943
56,530103,542
161,016(67,652)
93,364914
61,519104,585
167,019(73,683)
93,33692,421
167,188259,610
166,245

92,421
167,156
259,578
166,242

The reconciliation of tax rate difference between the adjusted statutory tax rate and the effective tax rate for the six months ended
September 30, 2016 and March 31, 2017 was as follows:
For the period from April 1, 2016
to September 30, 2016

For the period from October 1, 2016
to March 31, 201734.81%(34.77%)
0.06%
0.01%
0.10%

34.81%(34.78%)
0.06%
0.01%
0.10%

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

(Asset Retirement Obligations)
For the six months ended September 30, 2016 and March 31, 2017a. Asset retirement obligations reported on balance sheets
The Company acquired Osaki Front Tower on February 1, 2011 under the term leasehold for business use agreement which, at the
expiry of the leasehold, obligates the Company to restore the leased land to its original state. At the inception of a lease with such an
obligation, the Company recognized an asset retirement obligation and a corresponding capital asset in an amount equal to the present
value of the estimated demolition cost required for the removal of the properties located on the leased land. The present value iscalculated using 2.015% as the discount rate over 42 years, which is the term of the leasehold.
Change in the amount of the asset retirement obligations as of September 30, 2016 and March 31, 2017 consisted of the following:Thousands of yen
For the period from April 1, 2016
to September 30, 2016

For the period from October 1, 2016
to March 31, 2017

325,325—
3,277
328,602328,602—
3,310
331,913

Balance at the beginning of the period
Increase in tangible fixed assets
Adjustment required over the period
Balance at the end of the periodb. Asset retirement obligations other than those reported on balance sheets
Under the Road Act of Japan, the Company is obligated to remove the cable lines and the accompanying equipment originally installed
for preventing analog TV interference under the public roads close to Shibuya Cross Tower and to restore the public roads to their
original states because analog TV broadcasting was discontinued.
Since the removal involves public roads currently in service and some of the locations of the underground structures are potentiallyaffected by the ongoing redevelopment projects near Shibuya Station, it is difficult to initiate such removal unilaterally without
involving other interested parties. Therefore, a reasonable estimate of the present value of asset retirement obligations cannot be madebecause the method, the cost and the timing of the removal remains uncertain.
In consideration of such uncertainty, the asset retirement obligation is not reported in the financial statements, and is instead notedherein.

22

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(Investment and Rental Property)
For the six months ended September 30, 2016 and March 31, 2017
The Company owns primarily a portfolio of office properties in Tokyo and other prefectures in order to gain rental revenue from them.
The book values on balance sheets as of September 30, 2016 and March 31, 2017 and the fair values as of September 30, 2016 andMarch 31, 2017 are as follows:
Thousands of yen

Book value

Fair value

As of March 31, 2016

Change during period(*1)

As of September 30, 2016

As of September 30, 2016

861,360,496(4,702,758)

856,657,737

1,011,368,000

Thousands of yen

Book value

Fair value

As of September 30, 2016

Change during period(*2)

As of March 31, 2017

As of March 31, 2017856,657,737

15,877,252

872,534,990

1,042,319,000

Notes: 1. Book value on balance sheets means the acquisition cost less accumulated depreciation.
2. Significant changes(*1) As for increases/decreases for the period, the major reason for the increase was the additional acquisition of the Nishiki Park Building (¥180,157
thousand), while the decrease was accounted for by depreciation.
(*2) As for increases/decreases for the period, the major reason for the increase was the acquisition of the Kanazawa Kamitsutsumicho Building(¥2,834,879 thousand) and the Tamachi Front Building (¥6,269,916 thousand), as well as the additional acquisition of the Shinjuku Eastside
Square (¥4,719,469 thousand) and the Shiodome Building (¥10,505,287 thousand). The decrease was accounted for by the transfer of the Genki
Medical Plaza (¥4,776,921 thousand) and by depreciation.
3. Fair values as of September 30, 2016 and March 31, 2017 are defined as the appraised values provided by an external qualified professional
appraiser.

Profits and losses related to investment and rental property are listed in the "a. Breakdown of property-related revenues and expenses”
under “Notes to Statements of Income”.

(Segment Information)
For the six months ended September 30, 2016 and March 31, 2017
Since the Company has been engaged in real estate leasing business using a single segment, segment information has been omitted.
Information on products and services
Since revenues from external customers for a single segment of similar products and services accounted for more than 90% of total
operating revenues, information on products and services has been omitted.

Information on geographic area
a. Revenue
Since 100% of total operating revenues was generated from external customers within Japan, a geographical breakdown ofrevenues has been omitted.
b. Property and equipment
Since 100% of total property and equipment on the balance sheets was located within Japan, a geographical breakdown of suchproperty and equipment has been omitted.
Information on major clients
Since no single external client represents 10% or more of the Company’s total operating revenues, information on major clients has
been omitted.

23

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(Per Unit Information)
The following table summarizes information about net assets per unit and profit per unit at September 30, 2016 and March 31, 2017 andfor the periods then ended, respectively:
Yen

Net assets at period end per unit
Profit per unit

For the period from April 1, 2016
to September 30, 2016

For the period from October 1, 2016
to March 31, 2017

358,478
8,361

358,661
8,543

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

Thousands of yen

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

For the period from April 1, 2016
to September 30, 2016

For the period from October 1, 2016
to March 31, 2017

10,947,485

11,186,731――

10,947,485

11,186,731

1,309,310 units

1,309,310 units(Subsequent Events)“Not applicable”

24

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(9) Increase/Decrease in Total Number of Units Outstanding
There have been no changes made during the period under review regarding the number of units outstanding and total unitholders’capital. Changes in the past five years are as follows.

Date

Number of Units Outstanding

Total Unitholders’ Capital(Millions of yen)

Increase/Decrease Balance

Increase/Decrease Balance

Remarks

Notes

October 29, 2012

Issuance of new investment
units (public offering)

41,000590,040

29,678393,050*1November 28, 2012

Issuance of new investment
units (third-party allocation)

4,100

594,140

2,967

396,018*2

January 1, 2014

Split of investment units

594,140 1,188,280－

396,018*3

April 15, 2014

Issuance of new investment
units (public offering)

57,500 1,245,780

27,968423,986*4

May 14, 2014

Issuance of new investment
units (third-party allocation)

5,750 1,251,530

2,796

426,783＊

5April 6, 2015

Issuance of new investment
units (public offering)

54,000 1,305,530

29,189455,972＊

6Issuance of new investment＊
7
3,780 1,309,310
2,043 458,016
units (third-party allocation)
New investment units were issued at 746,850 yen per unit (underwriting price of 723,870 yen) with the purpose of partiallyfunding the repayment of loans and the acquisition of new specified assets.
New investment units were issued at 723,870 yen per unit with the purpose of partially funding the acquisition of new specified
assets.
With December 31, 2013 as the date of record, and January 1, 2014 as the effective date, the Company implemented a 2-for-1
split of the investment units held by unitholders stated or recorded on the final unitholders registry for December 31, 2013.
New investment units were issued at 501,760 yen per unit (underwriting price of 486,400 yen), for the purpose of assigning funds
to repayment of loans.
New investment units were issued at 486,400 yen per unit, for the purpose of compensating decreases in cash reserves assigned to
repayment of loans.
New investment units were issued at 557,620 yen per unit (underwriting price of 540,550 yen) for the purpose of funding thepartial repayment of short-term loans, the redemption of investment corporation bonds, the acquisition of specified assets, and, inthe event there are any funds remaining, cash reserves.
New investment units were issued at 540,550 yen per unit for the purpose of funding the partial repayment of short-term loans and,in the event there are any funds remaining, cash reserves.

May 11, 2015
*1.
*2.
*3.
*4.
*5.
*6.

*7.

25

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

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

5. Reference Dataa.

Composition of the Company’s Assets
As of September 30, 2016

Asset type

Real property

Region, etc.

Total ofnet book value*1(¥ million)

Ratio tototal assets(%)

Tokyo 23 wards

519,59058.8

495,911

55.2

Tokyo metropolitan area
(excluding Tokyo 23 wards)*2

43,9575.0

43,628

4.9

Regional cities

81,176

9.2

83,482

9.3

644,72473.0

623,023

69.4

Tokyo 23 wards

117,840

13.3

155,363

17.3

Tokyo metropolitan area
(excluding Tokyo 23 wards)*2

19,542

2.2

19,468

2.2

Regional cities

74,5498.4

74,6788.3

211,933

24.0

249,51127.8

26,975

3.1

25,771

2.9

(－)

(－)

(－)

(－)

883,633

100.0

898,306

100.0(856,657)(96.9)(872,534)(97.1)

Total

Trust

As of March 31, 2017

Total

Total ofnet book value*1(¥ million)

Ratio tototal assets(%)

Savings and other assets

Total amount of assets*1. Total of net book value as of September 30, 2016 is based on total amounts from the balance sheets as of September 30, 2016, andtotal of net book value as of March 31, 2017 is based on total amounts from the balance sheets as of March 31, 2017. Real property
and real property held in trust are the book values after depreciation and amortization.
*2. Here, and throughout this document, Tokyo metropolitan area encompasses the prefectures of Tokyo, Kanagawa, Chiba andSaitama.
*3. The figures in parentheses indicate the value of real property held. Ratios are rounded to the first decimal place.

26

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）b.

Real Estate Investment Property and Trust Beneficiary Rights in Trust of Real Estatei) Outline of real estate and other assets included in the Company's holdings (quick reference guide)
The table below is a quick reference guide outlining the real estate and other assets included in the Company’s holdings as ofMarch 31, 2017.
Occupancy rate*2

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

Book value atthe end of period(¥ mil)100.0%*5

80,10072,80381,555,500

8.6%

MD Kanda
Building

Realproperty

9

6,269

100.0%

8,460

8,756

9,520,000

1.0%

Kandabashi
Park Building

Realproperty

10

3,687

100.0%

4,610

4,491

4,810,000

0.5%

OtemachiFinancial City
North Tower

Realproperty2

5,121

100.0%

18,90015,195

15,462,900

1.6%

Nibancho
GardenRealproperty

1
*5

9,316
*5

100.0%*5

17,90012,57014,700,000

1.6%Mitsubishi
UFJ Trust andBanking
Building

Realproperty

10

11,904100.0%

51,80029,01444,700,000

4.7%

Burex
Kojimachi
Building

Realproperty

1

4,495

100.0%

6,880

5,700

7,000,000

0.7%

Tokyo
23
wards

Sanno Grand
Building

Realproperty

2.2%

Yurakucho
Denki
Building

Realproperty(¥ thousand)

Ratio
*2

40

20,66599.5%

33,30021,307

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

13

4,697

100.0%

8,080

7,715

7,200,000

0.8%

74.8%

Kodenmacho
Shin
Nihonbashi
Building

Trust

11

3,897

100.0%

2,920

2,775

3,173,000

0.3%

Kyodo
Building(Kayabacho
2Chome)

Trust

10

4,464

100.0%

4,990

4,207

4,410,000

0.5%

1

4,279

100.0%

7,660

4,489

5,250,000

0.6%

8

4,513

100.0%

7,360

6,471

6,459,000

0.7%

Burex
Kyobashi
Building
Ginza
1 Chome East
Building

Realproperty

Trust

27

Ratio by 2*regionLeasable floorarea (m2)
25,678*5

Number oftenants*1
5*5Type ofspecified asset
Realproperty

Name ofproperty

RegionTokyo metropolitan area

Kitanomaru
SquareAcquisition price*4

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Tokyo metropolitan area

Shiodome
Building

Tokyo 23
wards

Shiba 2Chome
DaimonBuilding
Cosmo
Kanasugibashi
Building
Tamachi Front
Building

Trust

100.0%

18,40017,190(¥ thousand)Ratio by 2*regionCloverShiba-koenBook value atthe end of period(¥ mil)Real
property
Harumi Center
Real
Building
property
Akasaka Park
Real
Building
property
Aoyama Crystal
Real
Building
property
Harumi Front

4,326

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

Real
property

11

Occupancy rate*2

Ryoshin Ginza
East Mirror
Building

Leasable floorarea (m2)Type ofspecified asset
Realproperty

Number oftenants*1

Name ofproperty

RegionGinza Sanwa
Building

Acquisition price*4
Ratio
*2

16,830,000 1.8%

0.8%

12

4,255

100.0%

6,260

7,492

5,353,500
2,645,922*6
Total:
7,999,422

8

33,369100.0%

40,900*7

28,78831,300,000

3.3%

9

20,812

79.4%

19,60022,60326,800,000

2.8%

29
*5

45,013*5100.0%*5

71,30060,33260,800,000

6.4%

7

4,898

100.0%

8,120

7,112

7,680,000

0.8%

8

2,550

100.0%

4,610
*14

4,576

4,500,000

0.5%

Trust

38

40,194100.0%

108,000

92,543

21,250,000
54,600,000
10,100,000
10.2%
10,450,000
Total:
96,400,000

Trust

24

9,606

100.0%

6,670

5,021

4,859,000

0.5% 74.8%

Trust

8

4,062

100.0%

3,170

2,527

2,808,000

0.3%

Real
property

8

3,792

100.0%

6,330
*14

6,264

6,210,000

0.7%

27,444

23,100,000
6,660,000
Total:
29,760,000

3.2%

7,592

7,830,000

0.8%

3.4%

Shinjuku
Eastside Square

Trust

42

20,573100.0%

32,800*14

ShinwaBuilding

Realproperty

13

5,997

100.0%

7,040

Tokyo Opera
City Building*8

Realproperty

101

35,02599.4%

33,70028,2819,350,000
22,426,831
Total:
31,776,831

TIXTOWER
UENO
Higashi
Gotanda1ChomeBuilding

Realproperty

17

15,02097.2%

25,00020,01422,000,000

2.3%

Real
property

4

5,205

100.0%

6,140

4,489

5,500,000

0.6%

Osaki Front
Tower*9Realproperty

1

16,856100.0%

16,600*7

9,612

12,300,000

1.3%

Omori-Eki
Higashiguchi
Building

Trust

24

7,706

97.1%

5,700

4,779

5,123,000

0.5%

28

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Ratio byregion

Ratio
*2

*2

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

Occupancy rate*2

Leasable floorarea (m2)

Number oftenants*1

Type ofspecified asset

Name ofproperty

Region(¥ thousand)

0.6%

Real
property

*10

*10

*10

5,490

5,572

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

Real
Property

8

7,745

100.0%

11,6007,006

8,700,000

0.9%

Real
property

4

3,147

100.0%

7,100

4,896

4,885,000

0.5%

Jingumae Media
Square Building

Realproperty

5

5,558

100.0%

10,10010,71912,200,000
*12

1.3%

Shibuya Cross
Tower

Real
property

54

29,797100.0%

52,70037,50834,600,000

3.7%

14,2053,740,000
360,000
10,512,000
Total:
14,612,000

1.5% 74.8%

1.2%

Shinjuku South
Gate Project(tentative name)(Land) *10
Yoyogi1 Chome
Buildingda Vinci
Harajuku

Tokyo
23
wards

Acquisition price*4

Ebisu Neonato

Realproperty

6

8,700

99.8%

16,900Tokyo metropolitan area

Harmony Tower

Realproperty

22

14,340100.0%

14,00010,0468,500,000
520,000
2,100,000
Total:
11,120,000

Otsuka Higashi
Ikebukuro
Building

Trust

7

7,224

100.0%

4,530

3,441

3,541,000

0.4%

Ikebukuro
2Chome Building

Trust

8

2,186

100.0%

1,700

1,574

1,728,000

0.2%

Ikebukuro YS
Building

Realproperty

10

5,932

100.0%

5,100

4,134

4,500,000

0.5%

Hachioji First
SquareRealproperty

4,953

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

0.6%

0.3%

Real
Tokyo Saitama Urawa
Building
property
metropolitan
area,
MM ParkReal
excludBuilding
propertying
Tokyo
Queen’s Tower A Trust
23
wards

50

10,068100.0%

4,900

18

4,510

100.0%

2,480

2,526

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

30

38,42696.3%

39,80032,28737,400,000

4.0%

50

26,66997.3%

20,600*14

16,51917,200,000

1.8%

Kawasaki Isago
Building

Trust

13

6,831

100.0%

2,680

2,949

3,375,000

0.4%

Musashi Kosugi
STM Building

Realproperty

26

5,378

100.0%

4,260

3,861

4,000,000

0.4%

29

7.4%

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Leasable floorarea (m2)Occupancy rate*2

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

Book value atthe end of period(¥ mil)912,265100.0%

7,940

6,024

7,100,000

0.8%

Jozenji Park Building

Realproperty

16

2,518

96.0%

999

1,009

1,000,000

0.1%

Higashi Nibancho
SquareRealproperty

23

20,526100.0%

13,500*79,155

9,950,000

1.1%

0.3%

(¥ thousand)

Ratio
*2

Other major cities

Sendai Honcho Honma
Building

Trust

24

6,234

94.6%

2,430

2,888

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

AER

Real
property

65

23,612

99.6%

19,40018,504

18,640,000

2.0%

Kanazawa Park Building

Realproperty

81

20,942100.0%

4,880

4,336

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

0.5%

Kanazawa
Kamitsutsumicho
Building

Realproperty

25

7,206

97.7%

3,000

2,783

2,780,000

0.3%

5,218

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

0.6%

Real
property60*5

10,338
*5

98.6%
*5

5,040

Nagoya Hirokoji Place

Trust

27

13,200100.0%

10,700*148,159

8,567,000

0.9%

Nagoya Hirokoji
Building

Realproperty

36

21,42795.4%

12,70015,49014,533,000

1.5%

Nagoya Misono
Building

Realproperty

16

3,448

100.0%

1,280

1,529

1,865,000

0.2%

Shijo Karasuma Center
Building

Realproperty

11

6,634

100.0%

5,080
*14

4,053

4,400,000

0.5%

Umeda Square
Building*16

Trust

42

10,370100.0%

16,40015,512

15,523,520

1.6%

Shin Fujita Building

Trust

51

28,403

99.5%

18,90022,20624,000,000

2.5%

Sakaisujihonmachi
Building

Realproperty

3,724

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

0.4%Nishiki Park Building*13

22

11,520100.0%

30

3,390

Ratio by 2*regionType ofspecified asset
Realproperty

Number oftenants*1

Name ofproperty

Region8･3 Square Kita
Building

Acquisition price*4

17.7%

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Occupancy rate*2

20,450100.0%

14,30013,594

6,934,000
7,380,000
Total:
14,314,000

1.5%

Amagasaki Front
Building

Trust

31

15,500100.0%

9,890

8,900

9,300,000

1.0%

Lit City Building

Realproperty

39

9,965

100.0%

4,430

3,215

4,650,000

0.5%

NHK Hiroshima
Broadcasting Center
Building

Realproperty

12

9,860

100.0%

2,870

2,999

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

0.3%

Tosei Tenjin Building

Realproperty

22

3,995

96.0%

1,360

1,381

1,550,000

0.2%

Tenjin Crystal Building

Realproperty

30

5,964

100.0%

2,700

4,055

5,000,000

0.5%

Hinode Tenjin Building

Trust

2

5,903

98.7%

3,890

3,417

3,657,000

0.4%

Total

1,482

835,06998.8%

1,042,319

872,534

944,723,286*1.

(¥ thousand)

Ratio
*2

Ratio by 2*regionLeasable floorarea (m2)42Book value atthe end of period(¥ mil)Number oftenants*1

Trust

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

Type ofspecified asset

Other major cities

Name ofproperty

RegionMidosuji Daiwa
Building

Acquisition price*4

17.7%

100.0%The total number of tenants is based on the gross number of tenants in each building. Each instance of occupancy of a single
tenant leasing space is considered separately on a per property basis even if said tenant leases floor area in multiple properties.
*2. Occupancy rate, ratio of acquisition price and ratio by region are rounded to the nearest first decimal place.
*3. Appraisal value at the end of period is, as a rule, the value assessed by real estate appraisers based on the Company's Articles ofIncorporation and the Cabinet Office Ordinance on Accountings of Investment Corporations. The book closing date is used as theappraisal date and the appraisal value is calculated by Daiwa Real Estate Appraisal Co., Ltd.
*4. Incidental expenses arising from acquisitions are not included in the acquisition price.
*5. Residential portions are not included in the total number of tenants, the occupancy rate or the leasable floor area for Kitanomaru
Square, Nibancho Garden, Akasaka Park Building or Nishiki Park Building. The residential portions for these properties are as
follows: Kitanomaru Square, leasable floor area: 11,694m2, occupancy rate: 99.4%; Nibancho Garden, leasable floor area:
1,686m2, occupancy rate: 100.0%; Akasaka Park Building, leasable floor area: 10,780m2, occupancy rate: 93.1%; Nishiki Park
Building, leasable floor area: 954m2, occupancy rate: 74.0%.
*6. This includes the acquisition price of the land and building adjacent to Ryoshin Ginza East Mirror Building dated July 4, 2008,
the cost of the adjacent building’s demolition and the total expense of the construction and expansion of the Ryoshin Ginza East
Mirror Building (excluding brokerage fees and other acquisition-related expenses) after its completion on May 24, 2010.
*7. Appraisal values by Chuo Real Estate Appraisal Co., Ltd.
*8. Accompanying the acquisition of Tokyo Opera City Building on September 13, 2005, the Company acquired 33 shares of Tokyo
Opera City Building Co., Ltd. (the business that maintains, services and operates the building) at a total acquisition price of 2,797
thousand yen and inherited the 874 thousand yen deposit made to Tokyo Opera City Building Co., Ltd. by the seller. In an
additional acquisition, on March 24, 2010, the Company acquired 91 shares of Tokyo Opera City Building Co., Ltd. at a totalacquisition price of 7,539 thousand yen. Concurrently, the Company acquired 4,931 shares of Tokyo Opera City Heat Supply Co.,
Ltd. (the supplier of heat to the building) at a total acquisition price of 566,831 thousand yen, inheriting the 2,360 thousand yen
deposit made to Tokyo Opera City Building Co., Ltd. by the seller.
Regarding the appraisal value at the end of the fiscal period of the above-mentioned shares, the 124 shares of Tokyo Opera City
Building Co., Ltd. are valued at 10,336 thousand yen and the 4,931 shares of Tokyo Opera City Heat Supply Co., Ltd. are valued
at 566,831 thousand yen.
*9. On acquiring Osaki Front Tower, the Company inherited the land renter’s lease deposit of 1,040,000 thousand yen held by theseller of the building. The value of the lease deposit was appraised at the end of the fiscal period and remained unchanged.
*10. Because the building portion of Shinjuku South Gate Project (tentative name) (land with leasehold interest) was transferred on
August 23, 2013, no total number of tenants, leasable floor area or occupancy rate are provided. Furthermore, the 1,497m2 portionof land still held is being rented to the transferee of the building, Mitsubishi Estate Co., Ltd. Please note that Nippon Brunswick
Building (land with leasehold interest) was renamed to Shinjuku South Gate Project (tentative name) (land with leaseholdinterest) on May 15, 2017.
*11. Because the building was transferred on August 23, 2013, the acquisition price of the building at the time of the land and building
purchase dated March 24, 2004, has been deducted.
31

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）*12. This is the acquisition price dated October 9, 2003, and includes a portion of the site transferred on October 30, 2009 (cost ofinvestment sold, 614 million yen).
*13. On acquiring Nishiki Park Building on October 2, 2006, the Company inherited the 9,000 thousand yen lease deposit made by theland renters held by the seller of the building.
*14. Appraisal values by Japan Real Estate Institute.
*15. In the above quick reference guide, if the real estate or other assets are classified as shared ownership or compartmental
ownership, only the real estate or other assets owned by the Company are presented and the portions owned by the other sharedowners or compartmental owners are excluded.
*16. Trust assets of the trust beneficiary right acquired by the Company include a claim for 500,000 thousand yen of deposit for
construction to connect to underground shopping centers given to Osaka Shigaichi Kaihatsu Co., Ltd., which was held by theprevious owner.

32

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

ii) Breakdown of property-related revenues and expenses for real estate and other assets included in the Company's holdings
The table below is a quick reference guide outlining the revenues and expenses on each real estate and other asset for the
March 2017 period (October 1, 2016 – March 31, 2017). Furthermore, the income summary is presented based on thepreviously mentioned “Summary of Significant Accounting Policies.”(Millions of Yen)
Revenues / Expenses (October 1, 2016 – March 31, 2017)
Property- Propertyrelated related
revenues expenses
PropertyNOI
Capitalrelated ③(①+②)
expend- NCF
profits
itures ③－④②④*2

Other expenses

Depreciation①

Repairing expenses

Casualty insurance

Property and other
taxes

Genki Medical
Plaza *3
Kitanomaru Square
MD Kanda
Building
Kandabashi Park
Building
Otemachi Financial
City North Tower
Nibancho Garden
Mitsubishi UFJ
Trust and Banking
Building
Burex Kojimachi
Building
Sanno Grand
Building
Yurakucho Denki
Building
Kodenmacho
Shin Nihonbashi
Building
Kyodo Building(Kayabacho
2Chome)Burex Kyobashi
Building
Ginza 1Chome East
Building
Ginza Sanwa
Building
Ryoshin Ginza East
Mirror Building

Utilities expenses

Property management
expensesName of property

145

49

7

9

17

0

0

13

1

95

109

-

109

1,714

772

140

64

94

2

59

411

-

941

1,353

19

1,333

225

86

17

19

20

0

1

28

-

138

166

4

162

114

42

1

-

16

0

6

17

-

71

88

10

78

344

174

26

16

45

0

0

86

-

169

256

-

256

477

244

60

21

53

0

18

90

-

232

322

6

316

989

366

53

45

135

1

17

112

0

623

735

37

698

152

79

-

-

13

0

2

62

-

72

135

15

119

911

427

103

47

105

1

90

76

2

483

560

208

351

267

129

32

17

41

0

7

30

-

137

167

36

131

114

53

14

8

11

0

1

13

3

61

74

4

70

142

54

9

10

11

0

0

21

-

87

109

2

106

157

56

-

-

11

0

4

39

-

101

141

10

131

175

95

12

7

11

0

2

60

-

80

141

0

140

375

135

28

15

65

0

4

22

0

239

261

35

225

162

82

14

11

14

0

1

39

-

79

119

7

111

Harumi Front
Harumi Center
Building
Akasaka Park
Building
Aoyama Crystal
Building

1,220

638

105

96

75

1

0

358

-

581

940

-

940

505

379

75

34

47

1

10

209

-

126

336

-

336

2,211

1,266

231

234

273

4

135

388

-

945

1,333

247

1,086

217

89

13

14

29

0

5

26

-

127

153

9

144

Clover Shiba-koen

93

49

8

5

6

0

5

22

-

43

66

0

65

Shiodome Building

1,899

792

150

118

142

2

37

333

7

1,107

1,440

10

1,430

Shiba 2Chome
Daimon Building

276

204

40

22

38

0

65

35

0

72

107

25

82

33

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(Millions of Yen)
Revenues / Expenses (October 1, 2016 – March 31, 2017)
Property- Propertyrelated related
revenues expenses
Other expenses

Depreciation①

Repairing expenses

Casualty insurance

Property and other
taxes

Cosmo
Kanasugibashi
Building
Tamachi Front
Building

Utilities expenses

Property management
expensesName of property

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

108

46

12

6

13

0

1

13

0

61

74

1

73

1

5

0

-

0

0

-

5

0

(3)

1

-

1

743

296

48

45

49

1

2

148

-

447

596

-

596

217

100

18

19

19

0

15

26

-

117

144

144

0

1,505

1,133

*1

*1

*1

*1

*1

371

*1

113

*1

627

379

62

38

38

1

3

234

-

247

481

1

480

183

87

13

15

14

0

2

42

-

95

138

11

127

702

490

67

41

27

0

4

256

92

212

468

4

464

234

134

27

21

25

0

25

34

0

99

134

83

50

60

20

-

-

20

-

-

-

-

39

39

-

39

302

154

23

18

23

0

20

68

-

148

216

-

216

198

65

10

10

16

0

12

14

-

133

148

68

79

220

145

33

15

45

0

11

38

0

74

113

52

60

1,440

938

161

122

123

2

94

431

1

501

933

169

764

Ebisu Neonato

465

214

55

19

37

1

7

93

-

250

343

69

274

Harmony Tower

454

273

149

-

57

1

12

53

-

180

234

-

234

189

97

20

21

12

0

2

39

-

91

131

26

105

70

29

8

5

5

0

2

8

-

40

48

0

47

190

80

16

17

14

0

0

30

-

110

140

4

135

239

129

50

4

26

1

13

33

-

109

143

10

133

110

63

14

7

9

0

14

17

-

47

64

28

36

MM Park Building

1,291

720

138

159

78

1

48

293

0

570

864

0

863

Queen’s Tower A

981

645

206

81

111

3

23

212

7

335

548

158

390

146

76

23

13

13

0

3

23

-

69

93

5

88

161

64

21

3

11

0

0

27

-

97

124

3

120

322

210

29

51

22

0

37

69

-

111

180

4

176

Shinjuku Eastside
SquareShinwa Building
Tokyo Opera City
Building*1
TIXTOWER
UENO
Higashi Gotanda
1Chome Building
Osaki Front Tower
Omori-Eki
Higashiguchi
Building
Shinjuku South
Gate Project(tentative name)(land) *4
Yoyogi 1Chome
Buildingda Vinci Harajuku
Jingumae Media
Square Building
Shibuya Cross
Tower

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

Kawasaki Isago
Building
Musashi Kosugi
STM Building
8･3 Square Kita
Building

*1

34

*1

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(Millions of Yen)
Revenues / Expenses (October 1, 2016 – March 31, 2017)
Property- Propertyrelated related
revenues expenses
PropertyNOI
Capitalrelated ③(①+②)
expend- NCF
profits
itures ③－④②④*2

Other expenses

Depreciation①

Repairing expenses

Casualty insurance

Property and othertaxes

Utilities expenses

Property management
expensesName of property

Jozenji Park
Building
Higashi Nibancho
SquareSendai Honcho
Honma Building

63

44

10

8

6

0

7

11

-

18

29

19

9

564

273

61

45

39

0

9

116

-

290

407

2

404

128

69

17

12

15

0

6

17

0

58

75

6

69

AER

628

361

88

44

62

0

2

161

0

267

429

0

428

495

310

102

57

64

1

15

67

1

184

251

119

131

124

80

17

9

0

0

1

51

0

44

95

-

95

267

179

56

22

23

0

15

54

6

87

141

61

80

387

178

39

31

33

0

0

72

0

208

280

4

276

539

368

90

42

60

1

20

152

0

170

323

20

302

71

54

10

5

6

0

3

28

0

16

45

19

26

189

113

23

13

11

0

4

59

-

76

135

2

133

457

253

47

35

46

0

40

82

-

203

286

134

151

699

535

90

92

75

1

46

227

0

164

391

168

222

220

164

42

26

35

0

35

23

-

56

79

104

(24)

530

272

62

43

73

1

21

69

-

257

327

395

(67)

437

239

64

27

25

0

1

118

-

198

316

2

314

250

141

29

18

19

1

6

65

-

109

175

0

174

261

178

50

22

23

0

9

47

24

83

130

87

43

76

42

12

6

7

0

4

10

-

33

44

3

41

156

122

22

15

18

0

2

61

0

34

95

4

91

170

75

21

17

14

0

2

20

0

94

115

25

89

Kanazawa Park
Building
Kanazawa
Kamitsutsumicho
Building
Nishiki Park
Building
Nagoya Hirokoji
Place
Nagoya Hirokoji
Building
Nagoya Misono
Building
Shijo Karasuma
Center Building
Umeda Square
Building
Shin Fujita
Building
Sakaisujihonmachi
Building
Midosuji Daiwa
Building
Amagasaki Front
Building
Lit City Building
NHK Hiroshima
Broadcasting
Center Building
Tosei Tenjin
Building
Tenjin Crystal
Building
Hinode Tenjin
Building

Total
30,784 16,939 3,737 2,383 2,925
58 1,113 6,526
193 13,845
20,3722,842 17,529*1. Disclosure of NOI and NCF in the breakdown of the expenses of the property leasing business for Tokyo Opera City Building has
been withheld at the request of the joint owners of the relevant real estate.
*2. Construction expenses that correspond to capital expenditures incurred during the period under review are listed under capital
expenditures. This does not include expenses capitalized as construction in progress, expenses capitalized as furniture, etc., or such
expenses included in the book value as brokerage fees for acquiring real estate or other assets, real estate acquisition taxes or otheracquisition-related expenses.
*3.Genki Medical Plaza was transferred on January 25, 2017.
*4.Please note that Nippon Brunswick Building (land with leasehold interest) was renamed to Shinjuku South Gate Project (tentativename) (land with leasehold interest) on May 15, 2017.
35

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

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

Appraisal Value(¥ thousand)Unit Price

AmountUnit Price

AmountValuation
Gain/Loss(¥ thousand)

124

83

10,336

83

10,336

－

*

4,931

114

566,831114

566,831

－

*

－

－

577,168－

577,168

－

－

Notes

Number of
SharesAcquisition Price (¥ thousand)Notes* Unit prices for relevant non-listed stock are defined as acquisition costs.

(ii) Marketable Securities Other Than Shares
Asset TypeAppraisal Value(¥ thousand)Unit Price

AmountUnit Price

AmountValuation
Gain/Loss(¥ thousand)Book Value (¥ thousand)
Quantity

Trust beneficiaryrights in deposits

1595,624595,624595,624595,624

－

－

Total

－

－

595,624－595,624

－

－

Notes

(iii) Other Specified Assets
Asset TypeAppraisal Value(¥ thousand)Unit Price

AmountUnit Price

AmountValuation
Gain/Loss(¥ thousand)Book Value (¥ thousand)
Quantity

Monetary claim

1

1,040,000

1,040,000

1,040,000

1,040,000

－

－

Total

－

－

1,040,000－

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

36

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

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

Midosuji Daiwa Building(Osaka, Osaka Prefecture)

Umeda Square Building(Osaka, Osaka Prefecture)

Nagoya Hirokoji Building(Nagoya, Aichi Prefecture)

Shinwa Building(Shinjuku-ku,Tokyo)

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

Shinwa Building(Shinjuku-ku,Tokyo)

Kanazawa Park Building(Kanazawa, Ishikawa Prefecture)

Sakaisujihonmachi Building(Osaka, Osaka Prefecture)

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

Kawasaki Isago Building(Kawasaki, Kanagawa Prefecture)

NHK Hiroshima
Broadcasting Center Building(Hiroshima, Hiroshima Prefecture)

Jozenji Park Building(Sendai, Miyagi Prefecture)

Total
AmountPayment Amountfor the fiscal underreview period

Total Amount
Already Paid

From May 2017
To March 2018

361

－

－

Upgrade of
air conditioning
facilities

From October 2017
To March 2018

233

－

－

Elevator renewal
construction

From August 2016
To September 2017

166

－

－

Upgrade of
air conditioning
facilities

From October 2017
To March 2018

158

－

－

Upgrade of
air conditioning
facilities

From September 2017
To March 2018

131

－

－

Upgrade of
air conditioning
facilities

From April 2017
To September 2017

116

－

－

Upgrade of electricalequipment

From May 2017
To February 2018

66

－

－

Construction work

From April 2017
To September 2017

60

－

－

Construction work

From April 2017
To September 2017

60

－

－

Construction work

From January 2017
To March 2018

50

－

－

Elevator renewal
construction

From September 2017
To February 2018

39

－

－

Upgrade of electricalequipment

From August 2017
To January 2018

16

－

－

PurposeScheduled Period

Upgrade of
air conditioning
facilities

37

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(ii) Capital expenditures during the period under review
For acquired real estate and other assets, capital expenditures incurred in the period under review totaled ¥2,842 million and repair,maintenance and renovation expenses classified as expenses in the period under review totaled ¥1,113 million, for a total of ¥3,956
million worth of construction that has been carried out.
The major item in the capital expenditure was the upgrade of air conditioning facilities of the Midosuji Daiwa Building.
Name of Property(Location)

Purpose

PeriodMidosuji Daiwa Building(Osaka, Osaka Prefecture)

Upgrade of
air conditioning facilities

From July 2016
To March 2017353

Shinwa Building(Shinjuku-ku,Tokyo)

Upgrade of
air conditioning facilities

From October 2016
To March 2017139

Kanazawa Park Building(Kanazawa, Ishikawa Prefecture)

Upgrade of
air conditioning facilities

From May 2016
To February 201780

Sakaisujihonmachi Building(Osaka, Osaka Prefecture)

Upgrade ofdisaster prevention facilities

From October 2016
To March 201777

Construction work

From October 2016
To March 201767

Upgrade of electricalequipment

From June 2016
To January 201745

da Vinci Harajuku(Shibuya-ku,Tokyo)

NHK Hiroshima
Broadcasting Center Building(Hiroshima, Hiroshima Prefecture)

Expenditures forConstruction (¥ million)

Other real estate

2,079

Total

2,842

(iii) Money Saved for Long-term Repair Plans
Based on mid-to-long-term repair plans, the Company records a repair/maintenance reserve every term for the expenditures that may
be incurred in preserving the property value in the future and upgrading equipment. The present status of the reserve is as follows:(Millions of yen)
For the period from
October 1, 2014 toMarch 31, 2015

For the period from
April 1, 2015 to
September 30, 2015

For the period from
October 1, 2015 toMarch 31, 2016

For the period from
April 1, 2016 to
September 30, 2016

For the period from
October 1, 2016 to
March 31, 2017

Balance of reserved funds
2,463
2,519
2,762
3,304
―
at the start of period
Reserved funds
2,531
2,804
3,304
―
―
for the period
Reversal of reserved
2,475
2,561
2,762
3,304
―
funds for the period
Balance carried over
2,519
2,762
3,304
―
―
to next period
Note: The Company has decided not to record a reserve for repair expenses, starting from the September 2016 period, if a per-term
average of the estimate of repair, maintenance and renovation expenses for 15 years is lower than the expected depreciation cost for thesubsequent term.

38

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

e. Expenses and Liabilities(i) Details on Operation-related Expenses
For the period
from April 1, 2016
to September 30, 2016

For the period
from October 1, 2016
to March 31, 2017(a) Asset management fee*(breakdown) Term fee
Incentive fee¥964,815 thousand¥707,929 thousand¥256,886 thousand¥960,233 thousand¥715,130 thousand¥245,102 thousand(b) Asset custody fee(c) Administrative service fees(d) Directors' compensations(e) Commission fee(f) Other operating expenses
Total¥59,880 thousand¥154,031 thousand¥7,800 thousand¥64,875 thousand¥62,639 thousand¥1,314,041 thousand¥60,214 thousand¥126,883 thousand¥7,800 thousand¥70,356 thousand¥86,353 thousand¥1,311,842 thousand

Item*In addition to the asset management fee listed above, in the case that a property is acquired, an “acquisition fee” is included in theacquisition cost of the property and paid to the asset management company.
In the case that a property is sold, a “disposition fee” is included in the loss on sale and paid to the asset management company. These
fees are calculated by multiplying the buying/selling price of the property by a fee rate.
In the period ended September 30, 2016, acquisition fee amounted to ¥875 thousand, and in the period ended March 31, 2017,acquisition fee amounted to ¥130,500 thousand and disposition fee amounted to ¥34,450 thousand.

39

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(ii) Loans
The condition of loans by financial institutions as of March 31, 2017, is as follows.

Drawdown
Date

Balance at
Beginningof Current
Period(¥thousand )Balance at
End ofCurrent
Period(¥thousand )Average
Interest
Rate *1(%)

Repayment
Date

MizuhoBank, Ltd.

June 23,2016

5,000,000―

0.07048

December 26,
2016

The Bank of TokyoMitsubishi UFJ, Ltd.

June 23,2016

5,000,000―

0.07048

December 26,
2016

Sumitomo Mitsui
Trust Bank, Limited

June 23,2016

5,000,000―

0.07048

December 26,
2016

Mitsubishi UFJ
Trust and Banking
Corporation

June 23,2016

5,000,000―

0.07048

December 26,
2016

The 77
Bank, Ltd.

January 7,
2016

1,000,000―

0.07011January 10,
2017

The Bank of TokyoMitsubishi UFJ, Ltd.

March 2,2016

1,500,000―

0.07002

March 2,2017

MizuhoBank, Ltd.

March 25,2016

5,500,000―

0.07024

March 27,2017

Sumitomo Mitsui
Trust Bank, Limited

March 31,2016

1,700,000―

0.07

March 31,2017

MizuhoBank, Ltd.

April 1,
2016

5,500,000

5,500,000

0.07002

April 3,2017

The Bank of TokyoMitsubishi UFJ, Ltd.

April 1,2016

3,500,000

3,500,000

0.07002

April 3,2017

Mitsubishi UFJ
Trust and Banking
Corporation

April 4,2016

3,000,000―

0.07018

April 4,2017*3

Shinsei Bank,
Limited

September 1,
2016

2,000,000

2,000,000

0.07002

September 1,
2017Shinkin Central Bank

September 1,
2016

1,000,000

1,000,000

0.07002

September 1,
2017

Resona Bank,
Limited

September 1,
2016

1,000,000

1,000,000

0.07002

September 1,
2017

Mitsubishi UFJ
Trust and Banking
Corporation

December 26,
2016―

5,000,000

0.07

December 26,
2017

The Bank of TokyoMitsubishi UFJ, Ltd.

December 26,
2016―

5,000,000

0.07

December 26,
2017

Sumitomo Mitsui
Trust Bank, Limited

December 26,
2016―

1,300,000

0.07

December 26,
2017

The 77
Bank, Ltd.

January 10,
2017―

1,000,000

0.07

January 10,
2018

Resona Bank,
LimitedMarch 1,2017―

2,000,000

0.07

March 1,
2018

The Bank of TokyoMitsubishi UFJ, Ltd.

March 2,2017―

1,500,000

0.07

March 2,2018

MizuhoBank, Ltd.

March 27,2017―

5,500,000

0.07

March 27,2018

Sumitomo Mitsui
Trust Bank, Limited

March 31,2017―

1,700,000

0.07

March 30,
2018

45,700,000

36,000,000

Segment
LenderShort-term loans

Subtotal

40

Repayment
MethodUse ofProceeds

Notes

Bullet*2

Unsecured
Unguaranteed
UnsubordinatedJAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Drawdown
Date

Balance at
Beginningof Current
Period(¥thousand )Balance at
End ofCurrent
Period(¥thousand )Average
Interest
Rate *1(%)

Repayment
Date

Shinkin Central Bank

November 15,
2011

1,000,000―

0.7525

November 15,
2016

MizuhoBank, Ltd.

December 21,
2010

5,000,000―

1.30625

December 21,
2016

Resona Bank,
LimitedMarch 1,2011

2,000,000

―

1.255

March 1,
2017

Development Bankof Japan Inc.

March 24,2010

1,350,000

―

1.665

March 24,2017

The Dai-ichi Life
Insurance Company,
LimitedMarch 30,2009

5,000,000―

1.54375

March 30,2017

Mitsubishi UFJ
Trust and Banking
Corporation

April 4,2011

5,000,000

5,000,000

1.205

April 4,2017
*4

Mitsubishi UFJ
Trust and Banking
Corporation

June 1,
2011

12,000,000

12,000,000

1.12625

June 1,2017*4

The IyoBank, Ltd.

June 15,2012

2,500,000

2,500,000

0.66

June 15,2017*4

Shinsei Bank,
LimitedJune 15,2012

2,500,000

2,500,000

0.66

June 15,2017*4

The Bank ofFukuoka, Ltd.

June 15,2012

2,500,000

2,500,000

0.66

June 15,2017*4

The Hachijuni
Bank, Ltd.

June 15,2012

1,000,000

1,000,000

0.66

June 15,2017*4

The Bank ofFukuoka, Ltd.

August 31,
2011

2,000,000

2,000,000

0.9025

August 31,
2017*4

Segment
LenderLong-term loans

The Bank ofFukuoka, Ltd.

August 31,
2012

1,000,000

1,000,000

0.57125

August 31,
2017*4

The Hachijuni
Bank, Ltd.

December 20,
2012

1,000,000

1,000,000

0.45625

December 20,
2017*4

The JoyoBank, Ltd.

January 7,
2013

1,000,000

1,000,000

0.49125

January 9,
2018*4

The Ashikaga
Bank, Ltd.

January 7,
2013

1,000,000

1,000,000

0.49125

January 9,
2018*4

Sumitomo Mitsui
Trust Bank, Limited

January 17,
2011

3,000,000

3,000,000

1.43375

January 17
2018*4

Nippon Life
Insurance Company

March 1,2011

2,000,000

2,000,000

1.465

March 1,
2018
*4

The Bank of TokyoMitsubishi UFJ, Ltd.

March 24,2011

2,000,000

2,000,000

1.3975

March 26,2018
*4

Resona Bank,
LimitedMarch 25,2013

3,000,000

3,000,000

0.45

March 26,
2018
*4

The Chugoku Bank,
LimitedMarch 25,2013

2,000,000

2,000,000

0.45

March 26,2018
*4

The Hachijuni
Bank, Ltd.

March 25,2013

1,000,000

1,000,000

0.45

March 26,2018*4

Taiyo Life Insurance
Company

March 30,2011

2,000,000

2,000,000

1.39625

March 30,2018*4

Shinkin Central Bank

April 24,2013

5,000,000

5,000,000

0.52775

April 24,
2018

41

Repayment
MethodUse ofProceeds

Notes

Bullet*2

Unsecured
Unguaranteed
UnsubordinatedJAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Drawdown
Date

Balance at
Beginningof Current
Period(¥thousand )Balance at
End ofCurrent
Period(¥thousand )Average
Interest
Rate *1(%)

Repayment
Date

Mitsubishi UFJ
Trust and Banking
Corporation

June 1,
2011

10,000,000

10,000,000

1.31125

June 1,
2018

Shinsei Bank,
LimitedAugust 31,
2011

3,000,000

3,000,000

1.0475

August 31,
2018

Sumitomo Mitsui
Trust Bank, Limited

November 15,
2011

3,000,000

3,000,000

0.98375

November 15,
2018

Sumitomo Mitsui
Banking Corporation

November 15,
2011

3,000,000

3,000,000

0.98375

November 15,
2018

MizuhoBank, Ltd.

September 1,
2015

2,500,000

2,500,000

0.17

March 1,
2019

The Gunma
Bank, Ltd.

March 24,2014

1,000,000

1,000,000

0.4105

March 25,
2019

Sumitomo Mitsui
Trust Bank, Limited

May 29,2015

5,000,000

5,000,000

0.2075

May 29,2019

The Bank of TokyoMitsubishi UFJ, Ltd.

September 1,
2015

5,000,000

5,000,000

0.2

September 2,
2019

Sumitomo Mitsui
Trust Bank, Limited

September 26,
2011

5,500,000

5,500,000

1.16

September 26,
2019

The Hiroshima
Bank, Ltd.

October 1,
2014

3,000,000

3,000,000

0.31575

October 1,
2019

MizuhoBank, Ltd.

November 1,
2011

6,000,000

6,000,000

1.2075

November 1,
2019

MizuhoBank, Ltd.

November 15,
2011

3,000,000

3,000,000

1.13875

November 15,
2019

Segment
LenderLong-term loans

The Bank of TokyoMitsubishi UFJ, Ltd.

November 15,
2011

3,000,000

3,000,000

1.13875

November 15,
2019

Mitsubishi UFJ
Trust and Banking
Corporation

November 15,
2011

3,000,000

3,000,000

1.13875

November 15,
2019

The Gunma
Bank, Ltd.

November 17,
2014

1,000,000

1,000,000

0.316

November 18,
2019

The Yamanashi Chuo
Bank, Ltd.

December 15,
2014

2,000,000

2,000,000

0.266

December 16,
2019

Shinkin Central Bank

January 7,
2013

2,000,000

2,000,000

0.71375

January 7,
2020

The Bank of TokyoMitsubishi UFJ, Ltd.

January 15,
2013

5,500,000

5,500,000

0.71

January 15,
2020

Shinkin Central Bank

January 15,
2013

5,000,000

5,000,000

0.71

January 15,
2020

Mitsubishi UFJ
Trust and Banking
Corporation

June 15,2012

4,000,000

4,000,000

0.9525June 15,
2020

Sumitomo Mitsui
Trust Bank, Limited

June 15,2012

4,000,000

4,000,000

0.9525June 15,
2020

Sumitomo Mitsui
Trust Bank, Limited

June 15,2015

3,000,000

3,000,000

0.3425June 15,
2020

The Yamaguchi
Bank, Ltd.

October 29,
2012

2,000,000

2,000,000

0.8

October 29,
2020

The Bank of TokyoMitsubishi UFJ, Ltd.

December 21,
2012

5,000,000

5,000,000

0.80125

December 21,
2020

42

Repayment
MethodUse ofProceeds

Notes

Bullet*2

Unsecured
Unguaranteed
UnsubordinatedJAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Drawdown
Date

Balance at
Beginningof Current
Period(¥thousand )Balance at
End ofCurrent
Period(¥thousand )Average
Interest
Rate *1(%)

Repayment
Date

Mitsubishi UFJ
Trust and Banking
Corporation

December 21,
2012

5,000,000

5,000,000

0.80125

December 21,
2020

The Bank of TokyoMitsubishi UFJ, Ltd.

January 15,
2013

5,500,000

5,500,000

0.83625

January 15,
2021

Mitsubishi UFJ
Trust and Banking
Corporation

January 31,
2014

4,000,000

4,000,000

0.64225

January 29,
2021

The Bank ofFukuoka, Ltd.

January 31,
2014

2,500,000

2,500,000

0.63849

January 29,
2021

Sumitomo Mitsui
Trust Bank, Limited

January 31,
2014

2,000,000

2,000,000

0.62575

January 29,
2021

The IyoBank, Ltd.

March 24,2014

2,000,000

2,000,000

0.6035

March 24,
2021

The Bank of TokyoMitsubishi UFJ, Ltd.

April 24,2013

5,000,000

5,000,000

0.775

April 26,
2021

MizuhoBank, Ltd.

June 15,2012

4,000,000

4,000,000

1.07375

June 15,2021

Sumitomo Mitsui
Trust Bank, Limited

December 26,
2016―

3,700,000

0.1913June 28,
2021

The IyoBank, Ltd.

October 1,
2014

1,000,000

1,000,000

0.46525

October 1,
2021

The Chugoku
Bank, Limited

October 1,
2014

1,000,000

1,000,000

0.4725October 1,
2021

The Daishi Bank, Ltd.

1,800,000

1,800,000

Sony Bank
Incorporated

1,400,000

1,400,000

The Toho Bank, Ltd.

1,400,000

1,400,000

The Hokuetsu Bank,
Ltd.

1,400,000

1,400,000

The Shinkumi
Federation Bank

1,000,000

1,000,000

The Akita Bank, Ltd.

900,000

900,000

900,000

900,000

The 77
Bank, Ltd.

900,000

900,000

The Tochigi
Bank, Ltd.

900,000

900,000

The Fukui Bank, Ltd.

900,000

900,000

The Bank of
Iwate, Ltd.

500,000

500,000

The Higo Bank, Ltd.

500,000

500,000

The Yamagata
Bank, Ltd.

500,000

500,000

Segment
LenderLong-term loans

The Gunma
Bank, Ltd.

November 14,
2014

0.463

43

November 15,
2021

Repayment
MethodUse ofProceeds

Notes

Bullet*2

Unsecured
Unguaranteed
UnsubordinatedJAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Drawdown
Date

Balance at
Beginningof Current
Period(¥thousand )Balance at
End ofCurrent
Period(¥thousand )Average
Interest
Rate *1(%)

Repayment
Date

The Nishi-Nippon
City Bank, Ltd.

June 17,2014

2,000,000

2,000,000

0.621

December 17,
2021

Sumitomo Mitsui
Banking Corporation

January 7,
2013

2,000,000

2,000,000

0.98

January 7,
2022

MizuhoBank, Ltd.

January 15,
2013

5,000,000

5,000,000

0.96625

January 17,
2022

The
Norinchukin Bank

January 31,
2014

3,500,000

3,500,000

0.757

January 31,
2022

MizuhoBank, Ltd.

April 24,2013

3,000,000

3,000,000

0.87375

April 25,
2022

The Bank of TokyoMitsubishi UFJ, Ltd.

June 15,2012

4,000,000

4,000,000

1.1975June 15,
2022

Mitsubishi UFJ
Trust and Banking
Corporation

June 15,2012

2,500,000

2,500,000

1.2725June 15,2022

Shinsei Bank, Limited

June 15,2012

2,500,000

2,500,000

1.2725June 15,
2022

The
Norinchukin Bank

June 17,2014

3,000,000

3,000,000

0.6785June 17,
2022

The Gunma
Bank, Ltd.

1,000,000

1,000,000

The Shinkumi
Federation Bank

1,000,000

1,000,000

The Daishi Bank, Ltd.

1,000,000

1,000,000

1,000,000

1,000,000

The Toho Bank, Ltd.

1,000,000

1,000,000

The Fukui Bank,Ltd.

1,000,000

1,000,000

The Tochigi
Bank, Ltd.

500,000

500,000

Segment
LenderLong-term loans

The Chugoku Bank,
LimitedAugust 10,2015

0.3925

August 10,
2022

The Bank of TokyoMitsubishi UFJ, Ltd.

September 1,
2015

2,000,000

2,000,000

0.47125

September 1,
2022

Development Bankof Japan Inc.

January 7,
2013

3,000,000

3,000,000

1.115

January 6,
2023

The Daishi Bank, Ltd.

January 7,
2016

1,500,000

1,500,000

0.2802January 10,2023

The Hachijuni
Bank, Ltd.

January 15,
2016

1,000,000

1,000,000

0.265

January 16,
2023

The IyoBank, Ltd.

January 15,
2016

1,000,000

1,000,000

0.265

January 16,
2023

Development Bankof Japan Inc.

January 31,
2014

5,000,000

5,000,000

0.9325January 31,
2023

The Yamaguchi Bank,Ltd.

March 25,2013

1,000,000

1,000,000

0.945

March 24,
2023

44

Repayment
MethodUse ofProceeds

Notes

Bullet*2

Unsecured
Unguaranteed
UnsubordinatedJAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Drawdown
Date

Balance at
Beginningof Current
Period(¥thousand )Balance at
End ofCurrent
Period(¥thousand )Average
Interest
Rate *1(%)

Repayment
Date

The Bank ofFukuoka, Ltd.

March 24,2015

2,000,000

2,000,000

0.5125

March 24,
2023

The
Norinchukin Bank

March 25,2015

3,500,000

3,500,000

0.46825

March 27,
2023

The Chugoku Bank,
LimitedJune 15,2015

3,000,000

3,000,000

0.61175

June 15,
2023

Mitsubishi UFJ
Trust and Banking
Corporation

December 19,
2014

10,000,000

10,000,000

0.42375*5December 19,
2023

Mitsubishi UFJ
Trust and Banking
Corporation

September 1,
2015

3,500,000

3,500,000

0.63

September 2,
2024

Sumitomo Mitsui
Trust Bank, Limited

September 2,
2015

3,800,000

3,800,000

0.536

September 2,
2024

Taiyo Life Insurance
Company

October 1,
2014

2,000,000

2,000,000

0.7825October 1,
2024

MizuhoBank, Ltd.

October 1,
2015

2,500,000

2,500,000

0.5575October 1,
2024

Segment
LenderLong-term loans

Mizuho Trust &Banking Co., Ltd.

March 2,2015

3,000,000

3,000,000

0.5585

March 3,2025

Development Bankof Japan Inc.

March 30,2017―

5,000,000

0.315

March 31,2025

Taiyo Life Insurance
Company

May 29,2015

1,500,000

1,500,000

0.7375

May 29,2025

Development Bankof Japan Inc.

September 1,
2015

7,000,000

7,000,000

0.7175September 1,
2025

MizuhoBank, Ltd.

December 26,
2016―

5,000,000

0.3625

December 26,
2025

Shinkin Central Bank

March 30,2017―

5,000,000

0.36

March 30,
2026

Mitsubishi UFJ
Trust and Banking
Corporation

October 31,
2016―

3,000,000

0.24

October 30,
2026

MizuhoBank, Ltd.

December 21,
2016―

5,000,000

0.415

December 21,
2026

290,650,000

303,000,000

336,350,000

339,000,000

Subtotal
Total

Repayment
MethodUse ofProceeds

Notes

Bullet*2

Unsecured
Unguaranteed
Unsubordinated*1. The average for floating interest rates is recorded as the weighted average during the period. The average is rounded off to the fifth
decimal place. The weighted average for interest rates of loans for which floating interest rates were swapped to fixed rates in orderto hedge the risk of interest rate fluctuations is calculated taking the effect of this swap into consideration*2. The purposes of executing these loans are to purchase real properties or beneficiary right of real estate in trust, to repay existingloans, and to fund the redemption of investment corporation bonds.
*3. The Company made a full repayment (¥3,000 million) before maturity on October 31, 2016.
*4. At the end of the period under review, these loans are accounted for under current liabilities on the balance sheets as the current
portion of long-term loans payable.
*5. In order to hedge the risk of exchange rate and interest rate fluctuations related to foreign currency-denominated loans, theCompany conducted an interest-rate and currency swap transaction, which substantially secured exchange and interest rates.
Accordingly, the weighted average for interest rates during the period is calculated taking the effect of this interest-rate andcurrency swap into consideration.

45

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(iii) Investment Corporation Bonds
Outstanding investment corporation bonds as of March 31, 2017, are as follows.

Securities

4th unsecured
investment
corporationbond
9th unsecured
investment
corporationbond
10th unsecured
investment
corporationbond

Date of Issue

Balance at
Beginning ofCurrent Period(¥ thousand)

Balance at
End of Current
Period(¥ thousand)Interest
Rate(％)

Repayment
PeriodRepayment
MethodProceeds

September 29,
2005

10,000,000

10,000,0002.56

September 29,
2025

Bullet*1*2

August 30,
2013

10,000,000

10,000,000

0.497

August 30,
2018

Bullet*1*2

March 30,2017―

10,000,000

0.3975

March 30,
2027

Bullet*1*2 *3

20,000,000

30,000,000

Total

Use ofNotes*1. The investment corporation bonds are primarily used to fund the acquisition of real properties or beneficiary right of real estate intrust, and to repay existing loans.
*2. Financial covenants, such as a negative pledge, are not included in these bonds.
*3. Bond issuance was limited to qualified institutional investors by a private placement.

(iv) New Unit Acquisition Rights“Not applicable”

46

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

f. Examination of the Value of Specified Assets(i) Real Estate, etc.
Property Name

Date ofTransaction

Acquisition/
Disposition
Cost*1(¥ million)

Real EstateAppraisal
Value(¥ million)

Acquisition

Kanazawa
Kamitsutsumicho
Building

October 3,
2016

2,780

2,960

Disposition

Genki Medical Plaza

January 25,
2017

6,890

6,890

Acquisition

Shinjuku
Eastside Square

January 25,
2017

6,660

6,660

Japan Real
Estate InstituteNovember 1,
2016

Acquisition

Tamachi Front Building

March 30,
2017

6,210

6,330

Japan Real
Estate InstituteFebruary 1,
2017Acquisition
or
Disposition

Appraising
Institution
Daiwa Real
Estate Appraisal
Co., Ltd.
Daiwa Real
Estate Appraisal
Co., Ltd

Date of
Appraisal
September 1,
2016
November 1,
2016

Daiwa Real
February 1,
Estate Appraisal
2017
Co., Ltd*1. The “acquisition/disposition cost” refers to the amount listed in the sale and purchase contract, and does not include various
expenses necessary in the acquisition or disposition of the property such as trading intermediate fees.
*2. The appraisal value listed above is decided in accordance with the 3rd chapter of the Japanese Real Estate Appraisal Act and Real
Estate Appraisal Standards.
Acquisition

Shiodome Building

March 30,
2017

10,45010,800(ii) Other
Value inspections on transactions by the Company that are deemed necessary under Article 201 of the ITA, are entrusted to Ernst &Young ShinNihon LLC, excluding ones described in (i) Real Estate, etc. above.
During the period from October 1, 2016 to March 31, 2017, there was no transaction that was subjected to such inspections.
g. Transactions with Interested Parties (from October 1, 2016 to March 31, 2017)(i) Transactions
Buying and Selling Amounts
Segment
Buying Amounts
Total Amount

Selling Amounts¥ 6,890,000 thousand¥26,100,000 thousand

Breakdown of Transactions with Interested Parties
Mitsubishi Estate Co., Ltd.

¥ 6,660,000 thousand( 25.5%)¥ 6,890,000 thousand

Shiba Yon Development
Specific Purpose
Company(TMK)¥ 6,210,000 thousand( 23.8%)¥thousand( ― %)

Total¥ 12,870,000 thousand( 49.3%)¥ 6,890,000 thousand( 100.0%)* The numerical values within the ( ) represent a percentage of the total buying/selling amounts.

47―( 100.0%)

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(ii) Amount of Commission Fees and Other Expenses

Segment

Property
management
expenses

Total Amount ofCommission Fees andOther Expenses A¥3,737,491 thousand

Utilities
expenses¥2,383,645 thousand

Other
operatingexpenses¥153,071 thousand

Breakdown of Transactions with Interested Parties
Percentage of Total AmountPayment Recipient
Mitsubishi Jisho
Property Management
Co., Ltd.
Mitsubishi EstateCo., Ltd.
Mitsubishi Real Estate
Services Co., Ltd.
Yuden Building KanriCo., Ltd.
Minato Mirai 21
District Heating andCooling Co., Ltd.
Mitsubishi Jisho
Property Management
Co., Ltd.
Mitsubishi EstateCo., Ltd.

Amount Paid B

B/A¥2,087,848 thousand

55.9%¥176,562 thousand

4.7%¥43,310 thousand

1.2%¥32,435 thousand

0.9%¥72,148 thousand

3.0%¥16,347 thousand

10.7%¥4,548 thousand

3.0%*1. Interested parties refers to interested parties of the asset management company who has concluded consignment agreements with
the Company, as stipulated in Article 123 of the enforcement order of the ITA, and Section 26, Paragraph 1, Item 27 of theRegulations for Management Reports Concerning Investment Trusts and Investment Corporations of the Investment Trusts
Association, Japan.
*2. In addition to the transactions and commission fees listed above, other amounts paid to interested parties, such as orders placed for
repair work, are listed below.
Mitsubishi Jisho Property Management Co., Ltd.
Mitsubishi Estate Co., Ltd.
Yuden Building Kanri Co., Ltd.
Mitsubishi Real Estate Services Co., Ltd.

¥889,471 thousand¥259,149 thousand¥42,625 thousand¥7,744 thousand

48

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

h. Other Announcements(i) General Meeting of Unitholders
The Company’s 10th General Meeting of Unitholders was held on March 28, 2017. Major items deliberated and results thereof are
as follows:.
AgendasOverview
Item 1: Partial amendment to the Articles ofIncorporation (1)Item 2: Partial amendment to the Articles ofIncorporation (2)Item 3: Appointment of one executive director

Item 4: Appointment of two substitute executive
directors

As per the original proposal, an amendment has been made to the
Articles of Incorporation concerning the following point:- In tandem with the amendment to the asset management fee structure,provisions have been modified and bylaws have been added to align with
the introduction of NOI-linked and distribution-linked fees in place of theterm and incentive fees.
As per the original proposal, amendments have been made to the Articles
of Incorporation concerning the following points:- The Company has adopted electronic publication as the default mode of
publication, and amended the relevant provisions to this effect, as well as
determined the rules for alternative modes of publication when the
primary method is disabled due to unavoidable causes.
- In tandem with the amendments to the Ordinance for Enforcement of
the Act on Special Measures Concerning Taxation, the requirements forthe eligibility to the exceptional treatment for taxation that apply to theCompany have changed. As a result, the provisions in the Articles ofIncorporation that have become obsolete were deleted.
Mr. Hiroshi Nakajima was appointed as Executive Director, as originallyproposed. He assumes the position for the duration of 2 years startingfrom May 11, 2017.
Mr. Naoki Umeda and Mr. Kazuo Nezu were appointed as SubstituteExecutive Directors, as originally proposed.

Item 5: Appointment of two supervisory directors

Mr. Tomohiro Okanoya and Mr. Hiroaki Takano were appointed as
Supervisory Directors, as per the original proposal. They assume theirpositions for the duration of 2 years starting from May 11, 2017.

Item 6: Appointment of one substitute supervisory
directorMr. Yoshinori Kiya was appointed as Substitute Supervisory Director, as
originally proposed.

(ii) Board of Directors
Below is an overview of important changes and conclusions of contracts that were accepted by the Company’s Board of Directors
during the period.
Date of AcceptanceAccepted Item
Overview

March 10, 2017

March 27, 2017

Consignment of generaladministrative work
concerning the issuance ofinvestment corporation
bonds
Amendments to the asset
management consignment
agreement

Consignment of generaladministrative work
concerning the issuance ofinvestment corporationbonds

In tandem with the comprehensive resolution adopted on the same dateregarding the issuance of investment corporation bonds, approval was
given to the candidate agent to whom administrative work for the saidbonds was consigned. Other items necessary for its operation are
entrusted to the board of directors to decide.
Approval was given to the conclusion of amendment agreement dated
March 28, 2017, pursuant to the asset management consignment
agreement, with the conditions precedent that the agenda item 1 of the10th general meeting of unitholders held on March 28, 2017 be
approved, and that it be resolved by the asset management company atits board of directors’ meeting on March 27, 2017.
In tandem with the comprehensive resolution adopted on March 10, 2017
regarding the issuance of investment corporation bonds, some additions
were made to the administrative work to be consigned, and approval was
given to the candidate agent. Other items necessary for its operation are
entrusted to the board of directors to decide.

(iii) Concerning the agent that has been ordered to suspend business operation during the last two-year period
Ernst & Young ShinNihon LLC, who acts as an auditor for Japan Real Estate Investment Corporation, was ordered by the Financial
Services Agency of Japan on December 22, 2015, to suspend all business operations for concluding new contracts for the duration of
three months (January 1 to March 31, 2016). The Company continues to employ the said auditor for its audit practices, provided that theCompany shall verify and ensure the following: the said order does not concern the existing agreement between Ernst & Young
ShinNihon LLC and Japan Real Estate Investment Corporation, all audits provided by the former to the latter have been conducted
appropriately and accurately, and the Company shall continue to closely monitor the said auditor’s diligent efforts in implementing
preventive measures.

49

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Selected Financial Data
Millions of yen
For the period from

For the period from

For the period from

For the period from

For the period from

October 1, 2016 to
March 31, 2017

April 1, 2016 to
September 30, 2016

October 1, 2015 toMarch 31, 2016

April 1, 2015 to
September 30, 2015

October 1, 2014 toMarch 31, 2015

Operating revenues

30,81830,77330,58929,98028,314

Operating expenses

18,251

18,405

18,237

17,926

17,071

Operating profit

12,567

12,36812,352

12,054

11,243

Ordinary profit

11,197

10,958

10,816

10,487

9,625

Profit before income
taxes
Profit11,197

10,958

10,816

10,487

9,625

11,186

10,947

10,753

10,476

9,619

Total assets

898,306

883,633

890,626

899,938

852,679

Interest-bearing debt

369,000

356,350

363,400

373,450

361,000

Net assets

469,598

469,359

469,044468,767

436,671

Unitholders’ capital

458,016

458,016

458,016

458,016

426,783

Number of units

1,309,310

1,309,310

1,309,310

1,309,310

1,251,530

Net assets per unit (Yen)358,661

358,478

358,238

358,026

348,909

Cash distribution

11,186

10,947

10,632

10,475

9,613

Dividend payout ratio

100.0%

99.9%

98.8%

99.9%

99.9%

Dividend per unit (Yen)

8,544

8,361

8,121

8,001

7,681

Net operating income(NOI)
Funds from operations(FFO)
Return on assets (ROA)(Note 1)

20,372

20,182

19,973

19,67018,412

17,67917,447

17,07916,80815,629

1.3%

1.2%

1.2%

1.2%

1.2%

(2.5% annualized)(2.5% annualized)(2.4% annualized)(2.4% annualized)(2.3% annualized)

2.4%

2.3%

2.3%

2.2%

2.2%

(4.8% annualized)(4.7% annualized)(4.6% annualized)(4. 5% annualized)(4.4% annualized)

EOP equity ratio(Note 3)
EOP interest-bearing
debt ratio on total assets(Note 4)
FFO multiple (Times)

52.3%

53.1%

52.7%

52.1%

51.2%

41.1%

40.3%

40.8%

41.5%

42.3%

21.8

22.8

25.0

21.5

22.6

Debt service coverage
ratio (Times) (Note 5)

14.3

13.5

12.5

12.1

10.8

Return on equity (ROE)(Note 2)

Notes:1.
2.

3.
4.
5.

ROA = Ordinary profit ÷ Average of Total assets during the period
ROE = Profit ÷ Average of Net assets during the period(Annualized portion of the calculation given in Note 1 and Note 2 assumes a fiscal period of 182 days for the period ended March
31, 2015, 183 days for the period ended September 30, 2015, 183 days for the period ended March 31, 2016, 183 days for theperiod ended September 30, 2016 and 182 days for the period ended March 31, 2017.)
EOP equity ratio = (Net assets at the end of period ÷ Total assets at the end of period) × 100
EOP interest-bearing debt ratio on total assets = (Interest-bearing debt at the end of period ÷ Total assets at the end of period) × 100
Debt service coverage ratio = Profit before Interest, Taxes, Depreciation and Amortization ÷ Interest expenses

50