JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

FINANCIAL RESULTS FOR THE FISCAL PERIOD ENDED MARCH 2016
(REIT)
May 16, 2016
Japan Real Estate Investment Corporation
Tokyo Stock Exchange8952
http://www.j-re.co.jp/english
Hiroshi Nakajima, Executive Director
Japan Real Estate Asset Management Co., Ltd.
Naoki Umeda, President & CEO
Ryuta Yoshida, Executive Officer, General Manager, Planning Department/ TEL +81-3-3211-7951
Scheduled Date of Filling Securities Report: June 24, 2016
Scheduled date of dividend payment:
June 14, 2016
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 2016 period (October 1, 2015 – March 31, 2016)(Percentages represent increases/decreases compared with results for the previous fiscal period)(1) Operating Results

Operating Revenues
Period ended

Millions of yen

March 31, 2016
September 30, 2015

Operating Income%

30,58929,980Millions of yen

2.0
5.9

12,352
12,054

Profit per Unit
Period ended

March 31, 2016
September 30, 2015

Ordinary Income

Profit%Millions of yen%

Millions of yen

%

2.5
7.2

10,816
10,4873.1
9.0

10,753
10,476

2.6
8.9

ROE

ROA

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

Ordinary Income toOperating Revenues Ratio

Yen

%

%

%

8,212
8,015

2.3
2.2

1.2
1.2

35.4
35.0

Note: The ROE for the March 2016 period is calculated by using the average of unitholders’ equity for the beginning and end of the period. As theCompany issued new investment units, the ROE for the September 2015 period is calculated by using the average of unitholders’ equity thattakes into account the number of days from the beginning of the period to one day prior to the date of new unit issuance and the number of days
from the new unit issuance to the end of the period.

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

Dividend per Unit
Excluding Excess of
Accounting Profits

Period ended

March 31, 2016
September 30, 2015
Notes:

Total Dividends in
Excess of
Accounting Profits

Payout Ratio

Ratio of Dividends
to Net Assets

Yen

Millions of yen

Yen

Millions of yen

%

%

8,121
8,001

10,632
10,475

0
0

0
0

98.8
99.9

2.3
2.3

1.The payout ratio is rounded down to the first decimal place.
2. As the Company issued new investment units, the dividend payout ratio for the September 2015 period is calculated by using thefollowing formula: Dividend payout ratio = Total cash dividends / Profit × 100
3. In the March 2016 period, the cause of differences in dividend per unit and profit per unit is the provision of reserve for reduction entry.
In the September 2015 period, the cause of differences in dividend per unit and profit per unit is the fact that, as the Company issued newinvestment units, profit per unit is calculated based on the average number of units during the period.

(3) Financial Standing
Total Assets
As ofMarch 31, 2016
September 30, 2015

Net Assets

Equity Ratio

Net Assets per Unit

Millions of yen

Millions of yen%

Yen

890,626
899,938

469,044468,76752.7
52.1

358,238
358,026

Reference: Total unitholders’ equity is 469,044 million yen for the March 2016 period and 468,767 million yen for the September 2015 period.

1

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(4) Cash Flows

Period ended

Cash Flows fromOperating Activities

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

21,681
16,975

2,338(49,829)(20,525)
34,01424,904
21,409March 31, 2016
September 30, 2015

2. Performance Forecasts for the September 2016 period (April 1, 2016 to September 30, 2016)
and the March 2017 period (October 1, 2016 to March 31, 2017)(Percentages represent projected increases/decreases compared with the results for the preceding fiscal period)
Operating Revenues

Operating Income

Ordinary Income

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

ProfitMillions of yen% Millions of yen% Millions of yen% Millions of yen
Period ending
September 30, 2016
30,560 (0.1)
12,280 (0.6)
10,810 (0.1)
10,800March 31, 2017
30,560 0.0
12,390 0.9
10,960 1.4
10,950

%

Yen

Yen

0.4
1.4

8,250
8,360

0
0

Reference:Profit per unit forecast = Profit forecast / Number of total investment units forecast for the end of the period(the September 2016 period ): 8,250 yen; (the March 2017 period): 8,360 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, 2016
1,309,310 units
1,309,310 units
As of September 30, 2015
Number of Treasury Units at End of Period
As of March 31, 2016
0 units
As of September 30, 2015
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 2016 period (April 1, 2016 to September 30, 2016)” and the March 2017 period (October
1, 2016 to March 31, 2017) on pages 7 and 8.

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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 June 25, 2015), information concerning it has been omitted.
As announced on December 18, 2015, the transfer agent will be replaced Sumitomo Mitsui Trust Bank, Limited with Mitsubishi UFJ
Trust and Banking Corporation regarding the management of unitholders registry and special accounts on June 14, 2016 and the generaladministrator for institutional administration and accounting will be also replaced as the same as above on October 1, 2016.

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, inthe most recent securities report (released December 24, 2015), information concerning them has been omitted.
b. Business Operations(1) Results for Period
Japan Real Estate Investment Corporation (“the Company”) was established on May 11, 2001, following revisions to the Act
on Investment Trusts and Investment Corporations of Japan, or the ITA. The Company was listed on the real estate investment
trust market of the Tokyo Stock Exchange (“TSE”) on September 10, 2001. (Securities Code: 8952) Since its IPO, the size of
the Company’s assets (total acquisition price) has grown steadily, expanding from 92.8 billion yen to 923.4 billion yen*, as ofMarch 31, 2016. In the same period, the Company continued to grow steadily in the number of properties in its portfolio, from
20 to 68 properties.
During the March 2016 period (October 1, 2015 – March 31, 2016), the Japanese economy continued on a gradual trend
toward improvement due to recovering capital investment and operational profits mainly in the non-manufacturing industries,
as well as continued improvement in employment conditions. However, the latest flux of economy, stirring insecurity about
future prospects, has made some companies to err on the cautions side, while the domestic consumption has lost an impetus toa degree, together rendering the economy to slow down in some aspects.
In the market for leased office, the trend of decreasing vacancies and increasing advertised rents continued mainly in theTokyo metropolitan area. In other major cities, the occupancy also improved.
In the investment market for real estate, continued favorable conditions for the financing environment were reinforced by
the anticipation of further improvement in the office buildings market, and domestic and overseas investors appear to exhibit
sound appetite for property acquisition, as a result of which competition in property acquisition is likely to intensify.
Under such market conditions, the Company made sound investments under the Investment Guideline of providing
stable dividends to unitholders, which was set forth at the time of the Company’s listing on the TSE and remains unchanged tothis date. Accordingly, the Company has been able to provide the dividend at the 8,121 yen, which is an increase by 120 yen
on the previous period during which the dividend was restored to the 8,000-yen mark.
*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 price inthe 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’s occupancy rate was improved to 98.3% as of March 31, 2016 from
97.7% occupancy rate as of September 30, 2015.
As for external growth, the Company transferred the following properties as part of the asset refreshment initiative
to improve the portfolio quality: Hirokoji Sakae Building (Nagoya City, Aichi Prefecture) for 1,850 million yen on
March 30, 2016 and Kyoto Shijo Kawaramachi Building (Kyoto City, Kyoto Prefecture) for 2,516 million yen on March
31, 2016. These transfers are pursued in tandem with the acquisition of a large-scale complex building AER (Sendai
City, Miyagi Prefecture) conducted in the September 2015 period, as part of the asset refreshment, and the selection was
based on the fact that those properties exceeded the average age of building (17.0 years as of March 31, 2016) in the
Company portfolio.
As a result of the above, the Company’s portfolio at the end of the fiscal period under review, March 31, 2016,
consisted of 68 properties, with a total acquisition price of 923,448 million yen. Total leasable floor area stood at
820,381 m2 with 1,420 tenants in total.
Incidentally, on April 1, 2016, the Company acquired shares of Nishiki Park Building (Nagoya City, Aichi
Prefecture) to increase the existing property ownership, by purchasing further 3,1047% for 175 million yen. Thus, the3

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Company’s current share of the said property has increased from 68.63831% to 71.74301%.
*Note: The Nippon Brunswick Building (land with leasehold interest), whose building ownership was transferred on
August 23, 2013, is included in the above number of properties and total acquisition price, but is not included in total
leasable space or total number of tenants.
② Finance Activities
In addition to maintaining an LTV ratio (ratio of interest-bearing debt to total assets) of 30 to 40% under normal
business conditions, the Company strives to maintain a sound and conservative financial profile by staggering maturities,
extension of durations and diversification of stable lenders among other possibilities, taking into consideration the
borrowing cost and existing 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 possibilityof repayment with funds procured from issuing new investment units. Moreover, where a long-term loan is based on avariable interest, the Company reduces a future risk of interest rate fluctuation by making use of interest-rate swap
transactions.
As for the fiscal period under review, the revenue from the transfers of Hirokoji Sakae Building and Kyoto Shijo
Kawaramachi Building was put forward to the repayment of the existing loans with the cash reserve.
As a result of these financing activities, as of March 31, 2016, the Company’s total interest-bearing debt was
363,400 million yen, 10,050 million yen down from the end of previous period. This amount consists of long-term loans
totaling 320,700 million yen (including the current portion of long-term loans totaling 44,400 million yen), short-termloans totaling 22,700 million yen, and investment corporation bonds totaling 20,000 million yen (there is no current
portion of investment corporation bonds). In addition, the LTV ratio stood at 40.8%.
The Company’s credit ratings as of March 31, 2016 were as follows:
Rating Agency

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

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

Moody’s Japan K.K.

Rating: A1; Outlook: Stable

Rating and Investment Information, Inc.

Rating: AA; Outlook: Stable(3) Summary of Financial Results
As a result of the above operations, in the period under review, the Company’s operating revenues increased 2.0%
compared with the previous period, to 30,589 million yen. On the earnings front, operating income increased 2.5%, to12,352 million yen. After deducting expenses for interest payments on loans and other costs, ordinary income
increased 3.1 %, to 10,816 million yen, and profit increased 2.6%, to 10,753 million yen.
Turning to dividends, the Company will make cash distributions using accounting profits based on the dividend
policy outlined in Article 32-2 of the Company’s Articles 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 thispolicy, in order to stabilize and level out the dividend payout, the Company secures the reserve for reduction entry inaccordance with Article 66-2 “Special provisions for Taxation in the case of Advanced Acquisition of Land, etc., in2009 and 2010” of the same Law as well as Article 42 “Inclusion in Gross Expenses of Advanced Depreciation of
Fixed Assets, etc. Acquired with National Subsidy etc.” of the Corporation Tax Act and the Company also partiallyreserves the retained earnings brought forward. As a result, the total amount of dividends that the Company has
determined to pay out is 10,632,906,510 yen for the period under review, which is a multiple of 1,309,310－thenumber of units outstanding as of March 31, 2016. Accordingly, the per-unit cash dividend is 8,121 yen.
c. Outlook(1) Operating Environment
In the Japanese economy, amid a continued trend toward improvement in employment and personal income, it isanticipated that the introduction of various political policies will support further gradual economic recovery. However,depending on such factors as the global impact of monetary policy in the United States, economic current in Europe,and deceleration of economy in China and other emerging nations in Asia as well as natural resource suppliers, the4

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

risk of economic downturn in Japan must be closely watched.
In the market for leased office space, vacancy rates in the Tokyo metropolitan areas continue to decline due to theslowing supply of new properties, and the gradual rise in rent levels will continue, especially for buildings with astrong competitive edge. In other major cities, also further decline in the vacancy rate is expected. Meanwhile, bearing
in mind the risk of economic downturn, the recovery of the market for leased office space may not be as rigorous as
hoped through the growth in the demand for offices, but a trend of moderate recovery is anticipated for a period in the
future.
In the investment market for real estate, while the financing environment is expected to remain favorable, general
shortage of desirable properties for sales and the decline of expected yield suggest that transactions carried out at
higher valuation is likely to continue, with a possibility of intensifying competition.
① Property Management
Based on the conditions stated above, the Company will adhere to the following management policies in order tomaintain and improve profitability.
(i) Strengthen relationships of trust with existing tenants
The Company has contracts with numerous property management companies. Each property management company
has developed relationships of trust with their tenants through their daily diligence in managing their respective
properties over the years. The Company will work to further solidify these relationships by anticipating tenants’needs and providing tailored services to increase tenant satisfaction, thereby maintaining and improving occupancy
rates and raising 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 fillcurrent and anticipated vacancies as rapidly as possible. Furthermore, the Company will work to uncover additional
needs for floor space 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 agreement andsecure long-term leasing with its large-scale tenants.
(iv) Reduce management costs
The Company has introduced sound competitive principles for its multiple property management companies tofollow and is revamping their management systems and cost structures on an ongoing basis while ensuring andimproving the tenant satisfaction levels.
② Property Acquisitions and Sales
The Company has adopted the following policies for acquiring properties.
(i) To access information quickly, the Company continues to enhance its property information channels while working todevelop 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 appropriately grasping current conditions 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.
(iii) In accordance with its acquisition policies, the Company shall maintain its portfolio so that 70% or more of theportfolio properties are located within the Tokyo metropolitan area, with the remaining 30% or fewer located in othermajor cities.
Under these policies, the Company will continue to acquire highly competitive properties. At the same time, in orderto further improve the quality of its portfolio, the Company will remain open to the replacement of portfolio properties
5

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

with due consideration given to timing.
③ Financial Policy(i) In principle, the Company shall maintain an LTV ratio that does not exceed 65%. To ensure an even lower
interest-bearing debt ratio, the Company adopts the conservative target level of 30% to 40%.
(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
For the September 2016 period (April 1, 2016 to September 30, 2016), the Company forecasts operating revenues
totaling 30,560 million yen, operating income totaling 12,280 million yen, ordinary income totaling 10,810 million
yen, and profit totaling 10,800 million yen. The Company plans to declare a cash dividend is 8,250 yen per unit.
For the March 2017 period (October 1, 2016 to March 31, 2017), the Company forecasts operating revenues
totaling 30,560 million yen, operating income totaling 12,390 million yen, ordinary income totaling 10,960 million
yen, and profit totaling 10,950 million yen. The Company plans to declare a cash dividend is 8,360 yen per unit.
Regarding the assumptions set for these forecasts, please see pages 7 and 8 entitled “Assumptions Underlying
Performance Forecasts for the September 2016 period (April 1, 2016 to September 30, 2016) and the March 2017
period (October 1, 2016 to March 31, 2017).” Operating revenues, operating income, ordinary income, profit, andcash dividend per unit may vary depending on changes in the market situation.

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JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Assumptions Underlying Performance Forecasts for the September 2016 period (April 1, 2016 to September 30, 2016)
and the March 2017 period (October 1, 2016 to March 31, 2017)
Item
Accounting period

Assumption
・The September 2016 period: April 1, 2016 to September 30, 2016 (183 days)
・The March 2017 period: October 1, 2016 to March 31, 2017 (182 days)
・The Company assumes its property portfolio consists of 68 properties at the end of the March 2016 period. The

Number ofproperties held byactual portfolio may differ from this assumption due to additional property acquisitions and dispositions.
・As of May 16, 2016, 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 Company assumes that the total number of units outstanding as of May 16, 2016, is 1,309,310.
・The Company assumes an LTV ratio in the 30% to 40% range as an operational guideline under normal
business conditions.
・The Company carried out short-term loans of 9 billion yen on April 1, 2016, to serve as funds for repayment ofInterest-bearing
debt

existing short-term loans and also carried out a short-term loan of 3 billion yen on April 4, 2016 for part of
repayment of existing long-term loan. In addition, the Company made a repayment of 1 billion yen of existing
long-term loan on due date which fell on April 25, 2016 with cash reserves. As a result, the balance forinterest-bearing debt is 360, 400 million yen as of May 16, 2016.
・In the September 2016 period, as of May 16, 2016, the Company presumes it will refinance the long-term loans
due for repayment during the period totaling 24 billion yen (repayment date: June 23, 2016) and the short-termloans due for repayment during the period totaling 4 billion yen (repayment dates: September 1, 2016). There are
no investment corporation bonds to mature in the September 2016 period.
・In the March 2017 period, as of May 16, 2016, the Company presumes it will refinance the long-term loans due
for repayment during the period totaling 14.4 billion yen (repayment dates: November 15, 2016, December 21,
2016, March 1, 2017, March 24, 2017 and March 30, 2017) and the short-term loans due for repayment during
the period totaling 9.7 billion yen (repayment dates: January 10, 2017, March 2, 2017, March 27, 2017 andMarch 31, 2017). There are no investment corporation bonds to mature in the March 2017 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, 2016, and by factoring in potential
variables that reflect recent market conditions for leased office space, such as a rent levels and occupancy rates.

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JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Item

OperatingexpensesNon-operating
expensesAssumption
・Of the taxes the Company is subject to, 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 2017 property taxes, city planning taxes, and depreciable property taxes for properties
acquired in 2016 to be 2 million yen for the additional interest acquired for the Nishiki Park Building.
・The Company assumes that property and other taxes will be 2,960 million yen in the September 2016 period and2,950 million yen in the March 2017 period.
・The Company assumes that depreciation will be 6,490 million yen in the September 2016 period and 6,430 million
yen in the March 2017 period.
・Property management expenses are assumed to take past operational results into consideration.
・Repair expenses may vastly differ from the projected amounts as there may be large differences in costs incurredfrom one fiscal period to another and because such costs are not recurring.
・The Company assumes that non-operating expenses, such as interest expenses on loans and investment corporation
bonds, will be 1,470 million yen in the September 2016 period and 1,430 million yen in the March 2017 period.
・The Company presumes that dividends in excess of accounting profits will not be distributed. Reflecting this, under
the Company’s Articles of Incorporation, the Company assumes that it will make cash distributions using accounting
profits, distributing said profit in an amount in excess of 90% of earnings available for dividends.
・The Company assumes that dividend amounts in the September 2016 and the March 2017 periods will not be

Dividend
amounts

Other

appropriated from internal reserves.**Internal reserves (projected for the March 2016 period) shall comprise the gain on sale of the Takanawadai Building
as of April 1, 2011 (878 million yen), reserves for reduction entry to be made on the sales of Hirokoji Sakae
Building (transferred on March 30, 2016) and Kyoto Shijo Kawaramachi Building (transferred on March 31, 2016)
both under the application of the Special Provisions for Taxation in the case of Advanced Acquisition of Land, etc.,
in 2009 and 2010 (amounting to 161 million yen), 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.
・The Company presumes that revisions that could impact the abovementioned forecasts will not be made in suchareas as laws, tax systems, accounting standards, and listing rules as well as regulations of the Investment Trusts
Association, Japan.
・The Company assumes that there will be no unprecedented or significant changes in general market trends or realestate market conditions or other factors.
・In addition to the abovementioned income taxes deferred, the Company calculates the amount of its corporate andother taxes related to reserves for reduction entry, taking into consideration asset retirement obligations as well as theamortization of term leasehold interest for buildings.

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JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

3. Financial Statements(1) Balance Sheets
Thousands of yen
As of September 30, 2015
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Deferred tax assets
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
Total intangible assets

9

As of March 31, 2016

20,564,934
5,844,989
209,386
393,532
953
23,84827,037,645

19,362,431
5,542,352
201,642
324,887972
25,64025,457,927

266,361,565(74,720,230)
191,641,335
3,193,164(643,744)
2,549,420
2,944,813(1,721,977)
1,222,835
376,537(187,315)
189,222452,965,989
1,310
76,541,120(16,201,956)
60,339,163
645,610(139,759)
505,851
939,320(615,178)
324,141
35,772(14,470)
21,302
151,935,120
1,278
861,696,973

266,097,000(78,601,472)
187,495,528
3,185,674(696,966)
2,488,707
2,962,534(1,795,372)
1,167,161
384,059(209,733)
174,325450,267,151
2,250
77,281,405(17,595,584)
59,685,820
648,264(153,961)
494,302945,736(641,407)
304,328
38,850(16,610)
22,240151,935,120
2,299
854,039,237

6,064,832
444,160
828,095
7,337,088

6,049,002
444,160
828,095
7,321,258

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Thousands of yen
As of September 30, 2015
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, 2016

577,168
1,573,641
814,254869,447
3,834,511
872,868,573

577,168
1,573,641
706,082
924,282
3,781,174
865,141,670

32,23932,239899,938,458

26,70026,700890,626,297

1,478,287
36,700,000
32,100,000
1,346,666
664,500
9,466
610,379
3,478,134
101,701
76,489,136

2,230,597
22,700,000
44,400,000
1,337,902
669,098
10,835
1,128,609
3,088,163
9,618
75,574,825

20,000,000
284,650,000
49,573,768
116,161
322,080
20,074354,682,084
431,171,221

20,000,000
276,300,000
49,197,812
167,220
325,325
16,366
346,006,725
421,581,550

458,016,096

458,016,096

243,360
243,360
10,507,781
10,751,141
468,767,237
468,767,237
899,938,458

243,360
243,360
10,785,290
11,028,651
469,044,747
469,044,747
890,626,297

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(2) Statements of Income
Thousands of yen
For the period
from April 1, 2015
to September 30, 2015
Operating revenues
Rent revenues
Other lease business revenues
Gain on sales 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 income
Non-operating income
Interest income
Dividend income
Reversal of distribution payable
Refund of property taxes
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
Investment unit issuance expenses
Other
Total non-operating expenses
Ordinary income
Income 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, 2015
to March 31, 2016

29,886,578
94,31429,980,892

30,290,297
138,195
161,378
30,589,871

16,642,681
926,559
60,569143,924
7,800
78,433
66,897
17,926,866
12,054,026

16,941,905
933,354
61,279145,512
7,800
69,19978,22018,237,271
12,352,600

4,611
6,494
3,520

4,490

－

1,492

37,037－

5,448
57,11131
9,356

1,329,408
191,891

1,347,628
153,314

9,633

5,539

56,541
36,074
1,623,550
10,487,587
10,487,587
11,44925
11,475
10,476,112
31,66910,507,781

39,314
1,545,797
10,816,159
10,816,159
11,82051,04062,86010,753,298
31,991
10,785,290

－

11

－

3,341

－

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(3) Statements of Changes in Unitholders’ Equity
For the period from April 1, 2015 to September 30, 2015
Thousands of yen

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

426,783,117

Voluntary retained
earnings
Reserve for
reduction
entry
236,745

Unappropriated retained
earnings

Total
voluntary
retainedearnings
236,745

9,651,286

31,232,979

Total
surplusTotal
unitholders'equityTotal
net assets

9,888,031

436,671,148

436,671,148－

31,232,979

31,232,979

－

－

－

Dividends of surplus(6,615)(9,613,001)(9,613,001)(9,613,001)(9,613,001)

Profit10,476,112

10,476,112

10,476,112

10,476,112

Total changes of items
during period
Balance at end ofcurrent period

6,615

6,615

31,232,979

6,615

6,615

856,494

863,110

32,096,089

32,096,089

458,016,096

243,360

243,360

10,507,781

10,751,141

468,767,237

468,767,237

For the period from October 1, 2015 to March 31, 2016
Thousands of yen

Unitholders' equity
Surplus
Voluntary retained
earnings

Total
surplusTotal
unitholders'equityTotal
net assets

10,507,781

10,751,141

468,767,237

468,767,237

Dividends of surplus(10,475,789)(10,475,789)(10,475,789)(10,475,789)

Profit10,753,298

10,753,298

10,753,298

10,753,298

Unitholders'
capitalBalance at beginning ofcurrent period
Changes of items
during period

Total changes of items
during period
Balance at end ofcurrent period

458,016,096

Reserve for
reduction
entry
243,360

Total
voluntary
retainedearnings
243,360

Unappropriated retained
earnings－－－

277,509277,509277,509277,509458,016,096

243,360

243,360

10,785,290

11,028,651

469,044,747

469,044,747

12

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(4) Basis of Calculations Used to Determine Cash Distributions

Item

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

For the period
from October 1, 2015
to March 31, 2016

Amount (Yen)Amount (Yen)I Retained earnings

10,507,781,132

10,785,290,543

II Cash distribution

10,475,789,310

10,632,906,510(8,001)(8,121)

Provision of reserve for reduction
entry

－

120,108,982

IV Retained earnings brought forward

31,991,822

32,275,051(Dividend per investment unit)
III Voluntary retained earnings

Computation Method for Determining
Dividends

The Company will make cash distributions
using accounting profits based on the cash
distribution policy outlined in Article 32-2of the Company’s Articles of Incorporation,in an amount that exceeds 90% of the“amount of distributable profit” as set forthin Article 67-15 of the Special Taxation
Measures Act. After maintaining retained
earnings brought forward in an amount notexceeding unappropriated retained earnings,
the total amount of dividends that theCompany has determined to pay out is
10,475,789,310 yen for the period underreview, which is a multiple of 1,309,310 —the number of units outstanding as of
September 30, 2015. Furthermore, theCompany does not pay out dividends thatexceed accounting profits as outlined in
Article 32-3 of the Company’s Articles ofIncorporation.

The Company will make cash distributions
using accounting profits based on the cash
distribution policy outlined in Article 32-2of the Company’s Articles of Incorporation,in an amount that exceeds 90% of the“amount of distributable profit” as set forthin Article 67-15 of the Special Taxation
Measures Act. Based on this policy, theCompany secures the reserve for reduction
entry in accordance with Article 66-2
“Special provisions for Taxation in the caseof Advanced Acquisition of Land, etc., in2009 and 2010” of the same Law as well as
Article 42 “Inclusion in Gross Expense of
Advanced Depreciation of Fixed Assets, etc.
Acquired with National Subsidy, etc.” of the
Corporation Tax Act. The Company also
reserves the retained earnings brought
forward. As a result, the total amount ofdividends that the Company has determined
to pay out is 10,632,906,510 yen for theperiod under review, which is a multiple of
1,309,310 — the number of units
outstanding as of March 31, 2016.
Furthermore, the Company does not pay out
dividends that exceed accounting profits asoutlined in Article 32-3 of the Company’s
Articles of Incorporation.

13

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(5) Statements of Cash Flows
Thousands of yen
For the period
from April 1, 2015
to September 30, 2015
Cash flows from operating activities
Income before income taxes
Depreciation
Amortization of investment corporation bondissuance costs
Investment unit issuance expenses
Dividend income
Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes refund
receivable
Decrease (increase) in supplies
Decrease (increase) in prepaid expenses
Decrease due to sale of property, plant and equipment
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
Payments for 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
Redemption of investment corporation bonds
Proceeds from issuance of investment units
Payments for investment unit issuance expenses
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, 2015
to March 31, 2016

10,487,587
6,332,545

10,816,159
6,487,255

9,633

5,539

56,541(6,494)(4,611)
1,521,300(81,885)－

833,719－－249
68,6444,168,218(42,710)
94,892518,230(136)(389,971)
108,172(156,038)
23,182,702
5,700(1,496,209)(10,451)
21,681,741(238,026)－

315,567
135,172
610,379367
131,859(669,193)(829,188)
18,605,274
9,716(1,626,001)(13,133)
16,975,856

14－(4,490)1,500,943
7,744(7,519,000)
2,519,000(19,705,392)(26,558,326)(501,810)(833,198)
2,768,976(49,829,752)(2,817,000)
7,817,000(1,863,127)(422,278)

33,000,000(28,800,000)
42,800,000(14,550,000)(20,000,000)
31,232,979(56,541)(9,611,537)
34,014,899
1,161,003
20,248,921
21,409,924

9,700,000(23,700,000)
6,000,000(2,050,000)－(1,391,023)
1,015,067
2,338,638－－－(10,475,520)(20,525,520)
3,494,859
21,409,924
24,904,784

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.
Compressed amount of tangible assets with government grants
Thousands of yen
As of September 30, 2015

Buildingsb.

As of March 31, 2016

50,08650,086

Commitment line agreement
The Company has signed commitment line agreements with four banks.
Thousands of yen
As of September 30, 2015c.

As of March 31, 2016

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, 2015

As of March 31, 2016

50,00050,000(Notes to Statements of Income)a.
Breakdown of property-related revenues and expenses
Thousands of yen
For the period from April 1, 2015
to September 30, 2015

For the period from October 1, 2015
to March 31, 2016

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

29,980,892
29,886,578
23,246,606
3,647,677
790,0632,202,231
94,31481,455
12,85830,428,493
30,290,297
23,683,413
3,712,032
799,252
2,095,599
138,195
38,001
100,194

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

16,642,681
3,549,250
2,869,139
2,766,013
58,020881,171
6,332,545
186,539
13,338,211

16,941,905
3,767,790
2,543,078
2,789,628
58,655
1,101,189
6,487,255
194,306
13,486,587

17

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）b.

Breakdown of gain on sales of real estate properties
For the period from April 1, 2015 to September 30, 2015
“Not applicable”
For the period from October 1, 2015 to March 31, 2016
Thousands of yen

Hirokoji Sakae Building
Revenue from sale of real estate property
Cost of real estate property sold
Other sales expenses
Gain on sale of real estate property

1,867,031
1,681,178
35,495150,357

Revenue from sale of real estate property
Cost of real estate property sold
Other sales expenses
Gain on sale of real estate property

2,516,000
2,487,040
17,93811,020

Kyoto Shijo Kawaramachi Building(Changes in Unitholders’ Equity)
Total number of investment units issuable
and number of units outstanding

As of September 30, 2015

As of March 31, 2016

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, 2015 and March 31, 2016:
Thousands of yen
As of September 30, 2015
As of March 31, 2016

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

20,564,934
5,844,989(5,000,000)
21,409,924

19,362,431
5,542,352－
24,904,784(Financial Instruments)
For the six months ended September 30, 2015 and March 31, 2016
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, issuance ofinvestment corporation bonds and issuance of investment units. When executing such financing activities, the Company endeavors
to retain the ability to secure stable and low-cost financing by maintaining high credit ratings and thereby limiting 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 capital base and controlling theloan-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.

18

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

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 also utilizes derivative transactions (interest-rate swap transactions) as a hedge againstinterest-rate risk derived from floating-rate long-term loans, thereby maintaining the overall interest rates on the loans at aneffectively fixed level. Foreign currency-denominated loans are also exposed to currency exchange and interest-rate fluctuation risk.
However, the Company uses derivative transactions as a method of hedging against these risks (interest-rate and currency 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, 2015 and March 31, 2016) 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, 2015
and March 31, 2016 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, 2015

(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
20,564,934
5,844,989
36,700,000
32,100,000
20,000,000
284,650,000－

Fair value
20,564,934
5,844,989
36,700,000
32,260,394
21,692,400
289,975,910－

Difference－－－
160,394
1,692,400
5,325,910－

Thousands of yen
As of March 31, 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
19,362,431
5,542,352
22,700,000
44,400,000
20,000,000
276,300,000－

Fair value
19,362,431
5,542,352
22,700,000
44,605,234
21,988,600
283,574,360－

Difference－－－
205,234
1,988,600
7,274,360－

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 the 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, 2015 and March 31, 2016. 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, 2015 and March 31, 2016.
(5) Investment corporation bonds
Their fair values are based on the values published by a financial data provider.
(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
Thousands of yen
As of September 30, 2015
As of March 31, 2016
577,168
577,168
49,573,768
49,197,812(1) Non-listed stock (*1)
(2) Deposits received from tenants (*2)(*1) With regard to non-listed stock, which does not have a quoted market price in an active market and whose cash flows are 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, 2015
1 year or less

Cash and deposits
Cash and deposits in trust
Total

1 to 2 years

20,564,934
5,844,989
26,409,924———

2 to 3 years

3 to 4 years———

4 to 5 years———

Over 5 years

—
—
—

—
—
—

Thousands of yen
As of March 31, 2016
1 year or less

Cash and deposits
Cash and deposits in trust
Total

1 to 2 years

19,362,431
5,542,352
24,904,784———

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, 2015
1 year or less

Short-term loans
Investment corporation bonds
Long-term loans
Total

36,700,000—
32,100,000
68,800,000

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years——
42,850,000
42,850,000—
10,000,000
36,000,000
46,000,000——
25,000,000
25,000,000——
44,500,000
44,500,000—
10,000,000
136,300,000
146,300,000

Thousands of yen
As of March 31, 2016
1 year or less

Short-term loans
Investment corporation bonds
Long-term loans
Total

22,700,000—
44,400,000
67,100,000

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years——
46,500,000
46,500,000—
10,000,000
27,500,000
37,500,000——
49,000,000
49,000,000——
39,000,000
39,000,000—
10,000,000
114,300,000
124,300,000

20

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(Derivative Transactions)a. Derivatives not designated as hedging instruments
For the period from April 1, 2015 to September 30, 2015
“Not applicable”
For the period from October 1, 2015 to March 31, 2016
“Not applicable”
b. Derivatives designated as hedging instruments
For the period from April 1, 2015 to September 30, 2015
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

60,800,000

60,800,000*―

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

Receive floating USD,
pay fixed JPY, interest-rate
and currency swap
transaction (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, 2015 to March 31, 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
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
transaction (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, 2015 and March 31, 2016. 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, 2015 and March 31, 2016 were as follows:

Thousands of yen
For the period from April 1, 2015
For the period from October 1, 2015
to March 31, 2016
to September 30, 2015

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

953
47,736
104,064
152,754(57,032)
95,722972
51,542
102,509
155,025(61,631)
93,394

94,768116,161
210,929
115,207

92,421
167,220259,642
166,247

The reconciliation of tax rate difference between the adjusted statutory tax rate and the effective tax rate for the six months ended
September 30, 2015 and March 31, 2016 was as follows:
For the period from April 1, 2015
to September 30, 2015

For the period from October 1, 2015
to March 31, 201635.36%(35.32%)
0.06%
－
0.01%
0.11%

35.36%(34.76%)0.06%(0.03%)(0.05%)
0.58%

Statutory tax rate
Deductible dividend distribution
Change in valuation allowance
Effect of changes in tax rates
Others
Effective tax rate

As for the adjustments to deferred tax assets and liabilities due to changes in income tax rates, “the Act for Partial Amendment of the
Income Tax Act, etc.”(Act No.15 of 2016) and “the Act for Partial Amendment, etc. of the Local Tax Act, etc.”(Act No.13 of 2016)
were enacted in the Diet session on March 29, 2016 and, as a result, corporate income tax rates, etc. will change for periods beginningon or after April 1, 2016 and again on or after April 1, 2018.
Accordingly, the effective statutory tax rates used to measure the Company’s deferred tax assets and liabilities were changed to34.81% for temporary differences expected to be recovered or settled from the September 2016 period to the March 2018 period, and to34.60% for temporary differences expected to be recovered or settled for the September 2018 period and thereafter. The effects of thesechanges are immaterial.

(Asset Retirement Obligations)
For the six months ended September 30, 2015 and March 31, 2016a. 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, 2015 and March 31, 2016 consisted of the following:Thousands of yen
For the period from April 1, 2015
to September 30, 2015

For the period from October 1, 2015
to March 31, 2016

318,867—
3,212
322,080

322,080—
3,244
325,325

Balance at the beginning of the period
Increase in tangible fixed assets
Adjustment required over the period
Balance at the end of the period

22

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

b. 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 instead notedherein.

(Investment and Rental Property)
For the six months ended September 30, 2015 and March 31, 2016
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, 2015 and March 31, 2016 and the fair values as of September 30, 2015 andMarch 31, 2016 are as follows:
Thousands of yen

As of March 31, 2015
829,449,219

Book value
Change during period(*1)
39,584,842

As of September 30, 2015
869,034,061

Book value
Change during period(*2)(7,673,565)

As of September 30, 2015
869,034,061

Fair value
As of September 30, 2015
977,666,000

Thousands of yen

As of March 31, 2016
861,360,496

Fair value
As of March 31, 2016
996,828,000

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 reasons for the increase were the acquisitions of the Umeda Square Building (¥15,677,942
thousand) and the AER (¥18,889,617 thousand), as well as an additional 5.0% co-ownership interest of trust beneficiary right of real estate
pertaining to the Shiodome Building (¥10,173,888 thousand). The major reason for decrease was depreciation.
(*2) As for increases/decreases for the period, the major reasons for the decrease were the sale of the Hirokoji Sakae Building (¥1,681,178 thousand)and the Kyoto Shijo Kawaramachi Building (¥2,487,040 thousand), as well as depreciation.
3. Fair values as of September 30, 2015 and March 31, 2016 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, 2015 and March 31, 2016
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, 2015 and March 31, 2016 andfor the periods then ended, respectively:
Yen

Net assets at period end per unit
Profit per unit

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

For the period from October 1, 2015
to March 31, 2016

358,026
8,015

358,238
8,212

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

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

10,476,112―(Subsequent Events)“Not applicable”

24

For the period from October 1, 2015
to March 31, 2016

10,753,298―

10,476,112

10,753,298

1,307,008 units

1,309,310 units

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.
Total Unitholders’ Capital
Number of Units Outstanding(Million Yen)
Notes
Date
Remarks
Increase/Decrease Balance Increase/Decrease Balance
February 28, 2012

Issuance of new investment
units (public offering)

54,400543,600

35,471

359,824*1

March 27, 2012

Issuance of new investment
units (third-party allocation)

5,440

549,040

3,547

363,371*2

October 29, 2012

Issuance of new investment
units (public offering)

41,000590,040

29,678393,050*3

4,100

594,140

2,967

396,018*4

594,140 1,188,280－

396,018＊

5

57,500 1,245,780

27,968423,986＊

6

November 28, 2012
January 1, 2014
April 15, 2014

Issuance of new investment
units (third-party allocation)
Split of investment units
Issuance of new investment
units (public offering)May 14, 2014

Issuance of new investment
units (third-party allocation)

5,750 1,251,530

2,796

426,783＊

7

April 6, 2015

Issuance of new investment
units (public offering)

54,000 1,305,530

29,189455,972＊8Issuance of new investment
3,780 1,309,310
2,043 458,016*9units (third-party allocation)
New investment units were issued at 672,750 yen per unit (underwriting price of 652,050 yen) with the purpose of funding therepayment of short-term loans used to acquire new specified assets and, in the event there is any remaining, the repayment ofother loans.
New investment units were issued at 652,050 yen per unit with the purpose of funding the repayment of short-term loans used toacquire new specified assets and, in the event there is any remaining, the repayment of other loans.
New investment units were issued at 746,850 yen per unit (underwriting price of 723,870 yen) with the purpose of funding therepayment of loans and the acquisition of new specified assets.
New investment units were issued at 723,870 yen per unit with the purpose of 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 debt.
New investment units were issued at 486,400 yen per unit, for the purpose of compensating decreases in cash reserves assigned to
repayment debt.
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.
*8.

*9.

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, 2015

Asset type

Real property

Region, etc.

Total ofnet book value*1(¥ million)

Ratio tototal assets(%)

Tokyo 23 wards

525,18958.4

522,763

58.7

Tokyo metropolitan area
(excluding Tokyo 23 wards)*2

44,5495.0

44,2925.0

Regional cities

85,724

9.5

81,4159.1

655,46372.8

648,472

72.8

Tokyo 23 wards

118,62713.2

118,260

13.3

Tokyo metropolitan area
(excluding Tokyo 23 wards)*2

19,781

2.2

19,6392.2

Regional cities

75,161

8.4

74,9898.4

213,57123.7

212,888

23.9

30,9043.4

29,265

3.3

(－)

(－)

(－)

(－)

899,938

100.0

890,626100.0(869,034)(96.6)(861,360)(96.7)

Total

Trust

As of March 31, 2016

Total

Savings and other assets

Total ofnet book value*1(¥ million)

Ratio tototal assets(%)

Total amount of assets*1. Total of net book value as of September 30, 2015 is based on total amounts from the balance sheets as of September 30, 2015, andtotal of net book value as of March 31, 2016 is based on total amounts from the balance sheets as of March 31, 2016. 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, 2016.
Book value atthe end of period(¥ mil)

6,890

4,810

5,000,000

0.5%

Kitanomaru
SquareRealproperty

5*5

25,678*5100.0%*578,30073,59481,555,500

8.8%

MD Kanda
Building

Realproperty

9

6,269

100.0%

8,170

8,807

9,520,000

1.0%

Kandabashi
Park Building

Realproperty

10

3,687

100.0%

4,460

4,510

4,810,000

0.5%

OtemachiFinancial City
North Tower

Realproperty2

5,121

100.0%

18,20015,37015,462,900

1.7%Nibancho
GardenRealproperty

1*5

9,316
*5

100.0%*5

17,80012,742

14,700,000

1.6%Mitsubishi
UFJ Trust andBanking
Building

Realproperty

10

11,904100.0%

49,30029,12444,700,000

4.8%

Burex
Kojimachi
Building

Realproperty

1

4,495

100.0%

6,600

5,810

7,000,000

0.8%

2.3%

(¥ thousand)

Ratio
*2

74.6%

Sanno Grand
Building

Realproperty

37

20,66598.4%

32,30021,20910,200,000
10,700,000
Total:
20,900,000

Yurakucho
Denki
Building

Realproperty

13

4,697

100.0%

7,980

7,738

7,200,000

0.8%

Trust

11

3,897

100.0%

2,800

2,796

3,173,000

0.3%

Trust

10

4,464

100.0%

4,800

4,244

4,410,000

0.5%

Real
property

1

4,279

100.0%

7,520

4,558

5,250,000

0.6%

Trust

8

4,513

100.0%

7,010

6,591

6,459,000

0.7%

Kodenmacho
Shin-Nihonba
shi Building
Kyodo
Building(Kayabacho
2Chome)Burex
Kyobashi
Building
Ginza
1 Chome East
Building

Ratio by 2*regionAppraisal value
at the end of
period (¥ mil)*3

Tokyo
23
wards

Occupancy rate*2
100.0%

Leasable space
(m2)
4,791

Number oftenants*1
1

Type ofspecified asset
Realproperty

Name ofbuilding

RegionTokyo metropolitan area

Genki
Medical Plaza

Acquisition price*427

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Shiodome
Building
Tokyo metropolitan area

Tokyo
23
wards

Shiba 2Chome
DaimonBuilding
Cosmo
Kanasugibashi
Building
Shinjuku
Eastside
SquareShinwaBuilding

100.0%

17,80017,133(¥ thousand)

Ratio
*2

16,830,000

1.8%

0.9%

12

4,255

100.0%

5,910

7,563

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

8

33,369100.0%

39,500*7

29,50731,300,000

3.4%

9

20,812100.0%

20,60023,02426,800,000

2.9%

29
*5

45,013*5100.0%*5

71,40060,83760,800,000

6.6%

Real
property

7

4,898

100.0%

7,890

7,148

7,680,000

0.8%

Trust

8

2,550

100.0%

4,600
*14

4,621

4,500,000

0.5%

9.3%

Real
propertyRealpropertyRealpropertyRealproperty

Trust

34

36,17493.2%

96, 800

82,666

21,250,000
54,600,000
10,100,000
Total:
85,950,000

Trust

25

9,606

100.0%

6,250

5,064

4,859,000

0.5%

Trust

6

4,062

100.0%

3,000

2,552

2,808,000

0.3%

Real
property

43

16,365100.0%

25,900*14

23,006

23,100,000

2.5%

Real
property

13

5,997

100.0%

6,560

7,483

7,830,000

0.8%

3.4%

Real
property

98

35,083

95.4%

31,20028,6719,350,000
22,426,831
Total:
31,776,831

TIXTOWER
UENO
Higashi-Gotan
da 1Chome
Building

Realproperty

17

15,020100.0%

25,30020,47722,000,000

2.4%

Real
property

4

5,205

100.0%

5,910

4,564

5,500,000

0.6%

Osaki Front
Tower*9Realproperty

1

16,856100.0%

16,300*7

10,114

12,300,000

1.3%

Omori-Eki
Higashiguchi
Building

Trust

23

7,756

100.0%

5,480

4,637

5,123,000

0.6%

5,572

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

0.6%Tokyo OperaCity
Building*8

NipponBrunswick
Building(Land)

Real
property

*10

*10

28

*10

5,490

Ratio by 2*regionCloverShiba-koenBook value at theend of period(¥ mil)Harumi Center
Building
Akasaka Park
Building
AoyamaCrystal
Building

4,329

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

Harumi Front

10

Occupancy rate*2

Ryoshin Ginza
East Mirror
Building

Leasable space(m2)

Type ofspecified asset
Realproperty

Number oftenants*1

Name ofbuilding

RegionGinza Sanwa
Building

Acquisition price*4

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Book value atthe end of period(¥ mil)7,136

8,700,000

0.9%

Real
property

4

3,147

100.0%

6,920

4,857

4,885,000

0.5%

JingumaeMedia Square
Building

Realproperty

4

5,558

59.8%

10,50010,726

12,200,000
*12

1.3%

Shibuya Cross
Tower

Real
property

58

29,76299.8%

51,30038,00334,600,000

3.7%

14,3143,740,000
360,000
10,512,000
Total:
14,612,000

1.6%

1.2%

Ebisu Neonato

Realproperty

Harmony
Tower

Realproperty

19

14,340100.0%

13,900

10,1548,500,000
520,000
2,100,000
Total:
11,120,000

OtsukaHigashi-Ikebu
kuro Building

Trust

7

7,224

100.0%

4,430

3,494

3,541,000

0.4%

Ikebukuro
2ChomeBuilding

Trust

9

2,186

100.0%

1,690

1,589

1,728,000

0.2%

Ikebukuro YS
Building

Realproperty

10

5,932

100.0%

4,640

4,187

4,500,000

0.5%

Hachioji First
SquareRealproperty

4,989

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

0.6%

Saitama
Urawa
Building

Realproperty

18

4,510

100.0%

2,310

2,533

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

0.3%

MM Park
Building

Realproperty

29

38,426

98.5%

38,70032,85937,400,000

4.1%

Queen’sTower A

Trust

51

26,66798.0%

19,400*14

16,647

17,200,000

1.9%

Kawasaki
Isago Building

Trust

13

6,831

100.0%

2,560

2,991

3,375,000

0.4%

Musashi
Kosugi STM
Building

Realproperty

26

5,378

100.0%

4,100

3,910

4,000,000

0.4%

Tokyo
23
wards

Tokyo metropolitan areaTokyo
metropo
litan

area,
excludi
ng
Tokyo
23
wards

6

50

8,700

100.0%

10,068100.0%

29

15,6004,800*2Appraisal value
at the end of
period (¥ mil)*3
10,900Ratio*2Ratio byregionOccupancy rate*2
100.0%

Leasable space
(m2)
7,745

Number oftenants*1
9

Yoyogi1 Chome
Buildingda Vinci
HarajukuType ofspecified asset
Real
Property

Name ofbuilding

Region(¥ thousand)Acquisition price*4

7.6%

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Leasable space(m2)

Occupancy rate*2

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

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

7,510

6,160

7,100,000

0.8%

Jozenji Park Building

Realproperty

16

2,518

96.0%

958

1,011

1,000,000

0.1%

Higashi Nibancho
SuqareRealproperty

21

20,52695.2%

13,500*79,394

9,950,000

1.1%

0.3%

(¥ thousand)

Ratio
*2

Other major cities

Sendai Honcho Honma
Building

Trust

24

6,234

98.9%

2,350

2,917

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

AER

Real
property

61

23,61298.0%

19,00018,801

18,640,000

2.0%

Kanazawa Park Building

Realproperty

4,329

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

0.5%

5,082

3,850,000
1,300,000
650,000
Total:
5,800,000

0.6%Nishiki Park Building*13

Realproperty

78

62
*5

20,942

97.5%

9,850
*5

99.4%
*5

4,590

4,700

17.8%

Nagoya Hirokoji Place

Trust

26

13,20098.4%

10,400*14

8,302

8,567,000

0.9%

Nagoya Hirokoji
Building

Realproperty

31

21,61096.0%

12,40015,332

14,533,000

1.6%

Nagoya Misono
Building

Realproperty

16

3,448

100.0%

1,240

1,561

1,865,000

0.2%

Shijo Karasuma Center
Building

Realproperty

9

6,634

95.0%

4,920
*14

4,168

4,400,000

0.5%

Umeda Square
Building*16

Trust

42

10,370100.0%

16,30015,526

15,523,520

1.7%

Shin-Fujita Building

Trust

46

28,41494.4%

17,80022,351

24,000,000

2.6%

Sakaisujihonmachi
Building

Realproperty

3,665

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

0.5%

21

11,520

98.5%

30

3,240

Ratio by 2*regionType ofspecified asset
Realproperty

Number oftenants*1

Name ofbuilding

Region8･3 Square Kita
Building

Acquisition price*4

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Type ofspecified asset

Number oftenants*1

Leasable space(m2)

Occupancy rate*2

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

Book value atthe end of period(¥ mil)Trust

42

20,45099.7%

13,80013,337

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

1.6%

Amagasaki Front
Building

Trust

31

15,500

99.0%

9,690

9,137

9,300,000

1.0%

Lit City Building

Realproperty

39

9,965

100.0%

4,370

3,346

4,650,000

0.5%

NHK Hiroshima
Broadcasting Center
Building

Realproperty

12

9,860

100.0%

2,660

2,991

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

0.3%

Tosei Tenjin Building

Realproperty

22

3,995

96.2%

1,320

1,397

1,550,000

0.2%

Tenjin Crystal Building

Realproperty

30

5,964

99.1%

2,590

4,173

5,000,000

0.5%

Hinode Tenjin Building

Trust

3

5,869

100.0%

3,720

3,415

3,657,000

0.4%

Total

1,420

820,38198.3%

996,828

861,360

923,448,286*1.

(¥ thousand)

Ratio
*2

Ratio by 2*regionName ofbuilding

RegionMidosuji Daiwa
Building

Acquisition price*4

100.0%The total number of tenants is based on the gross number of tenants in each building. Each instance of occupancy of a single
tenant leasing space is considered separately on a per property basis even if said tenant leases space 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 space for Kitanomaru
Square, Nibancho Garden, Akasaka Park Building or Nishiki Park Building. The residential portions for these properties are as
follows: Kitanomaru Square, leasable space: 11,694m2, occupancy rate: 96.1%; Nibancho Garden, leasable space: 1,686m2,
occupancy rate: 100.0%; Akasaka Park Building, leasable space: 10,780m2, occupancy rate: 92.1%; Nishiki Park Building,leasable space: 954m2, occupancy rate: 86.9%.
*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 4,931 shares of Tokyo Opera City
Heating Co., Ltd. are valued at 566,831 thousand yen and the 124 shares of Tokyo Opera City Building Co., Ltd. are valued at
10,336 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 the Nippon Brunswick Building was transferred on August 23, 2013, no total number of tenants,
leasable space or occupancy rate are provided. Furthermore, the 1,497m2 portion of land still held is being rented to the transfereeof the building, Mitsubishi Estate Co., Ltd.
*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, the Company inherited the 9,000 thousand yen lease deposit made by the land 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. On acquiring the Umeda Square Building, the Company inherited 500,000 thousand yen of deposit for construction to connect tounderground shopping centers given to Osaka Shigaichi Kaihatsu Co., Ltd., which was held by the seller of the building.
*17. The properties presented in the above quick reference guide do not include properties that have falsified structural calculation
reports as reported by the local government authorities and the Ministry of Land, Infrastructure, Transport and Tourism.

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 2016 period (October 1, 2015 – March 31, 2016). Furthermore, the income summary is presented based on thepreviously mentioned “Summary of Significant Accounting Policies.”(Millions of Yen)
Revenues / Expenses (October 1, 2015 – March 31, 2016)
Property- Propertyrelated related
revenues expenses
PropertyCapital
relatedNOI
expendit NCF
profits③－④③(①+②) ures②④*2

Other expenses

Depreciation①

Repairing expenses

Casualty insurance

Property and other
taxes

Genki Medical
Plaza

Utilities expenses

Property management
expensesName of building

223

70

12

15

17

0

2

20

2

152

173

-

173

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

1,716

750

142

69

94

2

30

410

-

965

1,376

11

1,364

219

90

15

17

20

0

8

28

-

128

156

4

152

105

45

4

-

16

0

6

16

-

60

77

1

75

336

181

28

18

45

0

0

88

-

154

243

3

239

479

246

60

25

53

0

15

91

-

233

324

9

315

997

377

54

59

136

1

16

109

0

620

729

33

696

150

81

-

-

13

0

5

62

-

68

131

14

116

917

406

100

56

105

1

66

77

-

510

587

171

415

256

137

35

20

41

0

9

30

-

119

149

28

121

107

54

15

8

11

0

2

13

3

53

66

5

61

143

67

10

10

11

0

13

21

-

76

97

3

94

155

53

-

-

11

0

3

38

-

101

139

63

76

126

86

15

6

0

0

2

61

-

40

101

11

89

382

136

27

18

64

0

5

20

0

245

266

38

227

159

96

16

12

14

0

13

38

0

62

101

79

21

Harumi Front
Harumi Center
Building
Akasaka Park
Building
Aoyama Crystal
Building

1,229

667

113

107

74

1

9

360

-

562

922

-

922

604

384

75

42

47

1

5

212

-

220

432

1

430

2,207

1,247

225

249

273

3

120

373

0

959

1,333

490

842

222

93

13

13

29

0

5

30

-

129

160

5

155

Clover Shiba-koen

110

39

8

6

0

0

1

23

-

70

93

5

88

Shiodome Building

1,748

763

149

111

127

2

30

336

6

985

1,321

11

1,310

Shiba 2Chome
Daimon Building

274

139

36

25

38

0

2

35

0

134

170

-

170

33

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Revenues / Expenses (October 1, 2015 – March 31, 2016)
Property- Propertyrelated related
revenues expenses
PropertyCapital
NOI
relatedexpendit NCF
profits ③(①+②) ures④*2③－④②

Other expenses

Depreciation①

Repairing expenses

Casualty insurance

Property and other
taxes

Cosmo
Kanasugibashi
Building
Shinjuku Eastside
SquareUtilities expenses

Property management
expensesName of building

107

46

10

7

13

0

2

13

-

61

74

6

68

574

277

50

44

49

0

0

132

-

297

429

-

429

208

82

16

18

19

0

1

25

-

125

151

0

150

1,451

1,131

681

379

57

42

38

1

0

237

-

302

540

2

538

182

90

13

18

14

0

0

43

-

92

135

-

135

710

497

68

44

27

0

6

256

92

212

469

-

469

232

120

27

21

25

0

17

28

-

112

140

104

35

60

20

-

-

20

-

-

-

-

39

39

-

39

294

139

25

20

23

0

1

67

-

155

222

-

222

191

54

10

10

16

0

1

14

-

136

151

0

150

188

169

25

20

41

0

44

36

0

19

56

54

1

1,410

929

175

118

123

2

76

430

1

481

912

157

755

Ebisu Neonato

449

219

54

22

42

2

2

94

0

229

324

78

246

Harmony Tower

440

266

147

-

47

1

13

56

-

174

230

-

230

188

98

20

19

12

0

6

39

-

89

129

54

74

63

31

8

5

5

0

3

7

-

32

40

9

30

186

109

19

16

14

0

28

30

-

77

107

-

107

241

126

49

4

25

0

12

32

-

115

147

1

146

106

60

14

8

9

0

12

16

-

45

61

75

(13)

MM Park Building

1,277

748

139

172

78

1

62

293

0

528

822

33

788

Queen’s Tower A

1,000

733

213

105

111

3

58

234

6

267

501

114

387

143

79

24

14

13

0

3

23

-

63

87

-

159

64

21

4

10

0

0

27

-

94

122

2

87

119

319

183

28

54

22

0

7

69

0

136

206

4

201

63

43

10

7

6

0

7

10

-

19

30

9

20

Shinwa Building
Tokyo Opera City
Building*1
TIXTOWER
UENO
Higashi-Gotanda
1Chome Building
Osaki Front Tower
Omori-Eki
Higashiguchi
Building
Nippon Brunswick
Building (land)
Yoyogi 1Chome
Buildingda Vinci Harajuku
Jingumae Media
Square Building
Shibuya Cross
Tower

OtsukaHigashi-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
Jozenji Park
Building

320

34

47

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Revenues / Expenses (October 1, 2015 – March 31, 2016)
Property- Propertyrelated related
revenues expenses

45

40

0

15

127

-

240

368

0

367

132

63

16

13

15

0

0

16

0

68

85

15

69

605

306

85

55

-

0

3

161

0

299

460

0

460

465

319

100

47

64

1

37

64

2

146

210

55

155

263

160

52

22

23

0

5

49

6

102

151

80

71

375

189

39

32

33

0

6

76

-

186

262

2

260

94

66

12

12

28

0

2

10

0

27

37

-

37

577

419

90

50

60

1

73

142

0

157

300

107

192

71

74

10

6

6

0

29

22

-

(3)

19

237

(218)

183

115

23

15

11

0

4

59

-

68

128

-

128

126

82

21

15

11

0

6

28

0

44

72

0

71

438

185

49

37

0

0

16

80

0

252

333

10

323

639

523

90

85

75

1

48

219

1

116

335

160

175

227

136

42

27

35

0

7

22

-

91

113

-

113

529

279

61

40

73

1

39

63

-

249

313

213

99

435

221

64

29

1

0

4

121

0

214

335

7

327

Lit City Building

253

146

31

20

19

1

7

65

-

107

173

3

170

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

261

192

50

23

23

0

26

42

25

69

111

188

(76)

80

43

12

7

7

0

5

10

-

36

47

13

34

150

125

23

17

18

0

3

61

0

25

87

7

79

169

72

21

14

14

0

3

19

-

96

115

16

99

Total

58 1,101 6,487

194

13,486

19,973

2,876

17,09730,428

Utilities expenses

AER
Kanazawa Park
Building
Nishiki Park
Building
Nagoya Hirokoji
Place
Hirokoji Sakae
Building*3
Nagoya Hirokoji
Building
Nagoya Misono
Building
Shijo Karasuma
Center Building
Kyoto Shijo
Kawaramachi
Building*3
Umeda Square
Building
Shin-Fujita
Building
Sakaisujihonmachi
Building
Midosuji Daiwa
Building
Amagasaki Front
Building

16,941 3,767 2,543 2,789

Other expenses

Depreciation①

66

Casualty insurance

296

Property and other
taxes

Repairing expenses

Property management
expenses

Higashi Nibancho
SuqareSendai Honcho
Honma Building

PropertyCapital
relatedNOI
expendit NCF
profits③－④③(①+②) ures
②
④*2

537

Name of building*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 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. Hirokoji Sakae Building and Kyoto Shijo Kawaramachi Building were transferred on March 30 and 31, 2016, respectively.

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

1

778,893

778,893

778,893

778,893

－

－

Total

－

－

778,893－

778,893

－

－

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 Properties
Total
AmountPayment Amountfor the fiscal underreview period

Total Amount
Already Paid

From July 2016
To March 2017

372

－

－

Upgrade of
air conditioning
facilities

From October 2016
To March 2017

234

－

－

Upgrade of
air conditioning
facilities

From October 2016
To March 2017

148

－

－

Upgrade of
air conditioning
facilities

From April 2016
To September 2016

143

－

－

Upgrade of disasterprevention facilities

From October 2016
To March 2017

84

－

－

Upgrade of
air conditioners

From May 2016
To February 2017

84

－

－

Upgrade of
air conditioning
facilities

From October 2016
To March 2017

62

－

－

Upgrade of
air conditioners

From July 2016
To December 2016

11

－

－

PurposeScheduled Period

Upgrade of
air conditioners(Location)

Midosuji Daiwa Building(Osaka, Osaka Prefecture)

Umeda Square Building(Osaka, Osaka Prefecture)

Shinwa Building(Shinjuku-ku,Tokyo)

Omori-Eki
Higashiguchi Building(Ota-ku,Tokyo)

Sakaisujihonmachi Building(Osaka, Osaka Prefecture)

Kanazawa Park Building(Kanazawa, Ishikawa Prefecture)

Omori-Eki
Higashiguchi Building(Ota-ku,Tokyo)

Jozenji Park Building(Sendai, Miyagi Prefecture)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 ¥2,876 million and repair,maintenance and renovation expenses classified as expenses in the period under review totaled ¥1,101 million, for a total of ¥3,977
million worth of construction that has been carried out.
One of the significant capital expenditures for the period under review was the upgrade of air conditioners of the Nagoya Misono
Building.
Name of Building(Location)

Expenditures forConstruction (¥ million)

Purpose

PeriodUpgrade of air conditioners

From April 2015
To March 2016

226

Upgrade of air conditioners

From August 2015
To March 2016

213

(Ota-ku, Tokyo)

Upgrade of
air conditioning facilities

From October 2015
To March 2016

101

NHK Hiroshima
Broadcasting Center Building

Upgrade of air conditioners

From September 2015
To January 2016

83

Upgrade ofdisaster prevention facilities

From August 2015
To February 201673

Construction work

From November 2015
To March 2016

72

Upgrade ofdisaster prevention facilities

From June 2015
To February 2016

61

Upgrade of electrical equipment

From August 2015
To March 2016

59

Upgrade of air conditioners

From October 2015
To November 2015

54

Nagoya Misono Building(Nagoya, Aichi Prefecture)

Midosuji Daiwa Building(Osaka, Osaka Prefecture)

Omori-Eki Higashiguchi Building(Hiroshima, Hiroshima Prefecture)

Nishiki Park Building(Nagoya, Aichi Prefecture)

Saitama Urawa Building(Saitama, Saitama Prefecture)
NHK Hiroshima
Broadcasting Center Building(Hiroshima, Hiroshima Prefecture)

Burex Kyobashi Building(Chuo-ku, Tokyo)

Otsuka Higashi-Ikebukuro Building(Toshima-ku, Tokyo)

Other real estate

1,929

Total

2,876

(iii) Money Saved for Long-term Repair Plans
Based on mid-to-long term repair plans, the Company has reserved funds for every property to prepare for expenditures such as
maintaining future property value and upgrading equipment.
(Millions of yen)

Balance of reserved funds
at the start of period
Reserved funds
for the period
Reversal of reserved
funds for the period
Balance carried overto next period

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

For the period from
April 1, 2014 toSeptember 30, 2014

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

2,486

2,431

2,463

2,519

2,762

2,469

2,470

2,531

2,804

3,304

2,524

2,438

2,475

2,561

2,762

2,431

2,463

2,519

2,762

3,304

38

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

e. Expenses and Liabilities(i) Details on Operation-related Expenses

Item(a) Asset management fee*(breakdown) Fees for the period
Incentive fees(b) Asset custody fee(c) Administrative service fees(d) Directors' compensations(e) Commission fee(f) Other operating expenses
Total

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

For the period
from October 1, 2015
to March 31, 2016

¥926,559¥687,741¥238,818¥60,569¥143,924¥7,800¥78,433¥66,897¥1,284,184¥933,354¥697,679¥235,675¥61,279¥145,512¥7,800¥69,199¥78,220¥1,295,365

thousandthousandthousandthousandthousandthousandthousandthousandthousandthousandthousandthousandthousandthousandthousandthousandthousandthousand*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, 2015, acquisition fees amounted to ¥221,317 thousand, and in the period ended March 31, 2016,
disposition fees amounted to ¥21,830 thousand.

39

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(ii) Loans
The condition of loans by financial institutions as of March 31, 2016, is as follows.
Segment

Drawdown
Date

Balance at
Beginning ofCurrent
Period(¥ thousand)

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

Repayment
Date

Repayment
MethodUse ofProceeds

Notes

October 1,
2014

2,500,000―

0.18

October 1,
2015

BulletPurchasereal estate

Floating
interest rate

March 25,2015

5,500,000

―

0.171

March 25,
2016

BulletPurchasereal estate trust
beneficiaryrightsFloating
interest rate

March 31,2015

2,000,000―

0.1707

March 31,2016

BulletRepay
existing shortterm loans

Floating
interest rate

BulletPurchasereal estate trust
beneficiaryrightsFloating
interest rate

Repay
existing shortterm loans

Floating
interest rate

LenderMizuhoBank, Ltd.

The Bank ofTokyoMitsubishi
UFJ, Ltd.

Short-term loans

April 1,2015

5,500,000

5,500,000

0.1706

April 1,
2016

March 25,2016―

5,500,000

0.1136

March 27,2017

BulletMarch 2,2015

3,500,000―

0.18

March 2,
2016

BulletApril 1,2015

3,500,000

3,500,000

0.1706

April 1,
2016

BulletMarch 2,2016―

1,500,000

0.1136

March 22017

BulletRepay
existing shortterm loans

Floating
interest rate

August 24,
2015

1,500,000―*20.1611

August 24,
2016

BulletRepay
existing shortterm loans

Floating
interest rate

September 1,
2015

2,000,000

2,000,000

0.1606

September 1,
2016

BulletPurchasereal estate

Floating
interest rate

March 31,2015

3,700,000―

0.1707

March 31,2016

BulletRepay
existing shortterm loans

Floating
interest rate

March 31,2016―

1,700,000

0.1136

March 31,2017

BulletRepay
existing shortterm loans

Floating
interest rate

BulletPurchasereal estate andRepay
existing shortterm loans

Floating
interest rate

Shinsei Bank,
LimitedSumitomo
Mitsui Trust
Bank, Limited

Purchasereal estate trust
beneficiaryrightsPurchasereal estate trust
beneficiaryrightsFloating
interest rate

Floating
interest rate

September 1,
2015

2,000,000

1,000,000*30.16486

September 1,
2016

January 7,
2015

1,000,000―

0.18

January 7,
2016

BulletRepay
existing shortterm loans

Floating
interest rate

January 7,
2016―

1,000,000

0.14531January 10,
2017

BulletRepay
existing shortterm loans

Floating
interest rate

ShinkinCentral Bank

September 1,
2015

2,000,000

1,000,000*30.16486

September 1,
2016

BulletRepay
existing shortterm loans

Floating
interest rate

The Daishi
Bank, Ltd.

January 7,
2015

1,500,000―

0.18

January 7,
2016

BulletRepay
existing shortterm loans

Floating
interest rate

October 1,
2014

500,000―

0.18

October 1,
2015

BulletPurchasereal estate

Floating
interest rate

36,700,000

22,700,000

Resona Bank,
LimitedThe 77
Bank, Ltd.

Mitsubishi
UFJ Trust andBanking
Corporation
Subtotal

40

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Segment

Drawdown
Date

LenderMitsubishi
UFJ Trust andBanking
Corporation
MizuhoBank, Ltd.

Long-term loans to be repaid within 1 year

Sumitomo
Mitsui Trust
Bank, Limited
The Bank ofTokyoMitsubishi
UFJ, Ltd.
The Dai-ichi
Life Insurance
Company,
LimitedMitsubishi
UFJ Trust andBanking
Corporation

June 23,2011

Balance at
Beginning ofCurrent
Period(¥ thousand)

Balance at
End ofCurrent
Period(¥ thousand)

6,000,000

6,000,000

6,000,000

6,000,000

Average
Interest
Rate *1(%)

Repayment
Date

Repayment
MethodUse ofProceeds

Notes

0.90875

June 23,2016

BulletRepay
existing loans

Fixed interest rate

6,000,000

6,000,000

6,000,000

6,000,000

March 30,2009―

5,000,000

1.54375

March 30,
2017

BulletRepay
existing loans

Fixed interest rate

April 4,2011

5,000,000

5,000,000

1.0325

April 4,2016

BulletRepay
existing loans

Fixed interest rate

MizuhoBank, Ltd.

December 21,
2010―

5,000,000

1.30625

December 21,
2016

BulletRepay
existing shortterm loans

Fixed interest rate

Resona Bank,
LimitedMarch 1,2011―

2,000,000

1.255

March 1,
2017

BulletPurchasereal estate trust
beneficiaryrightsFixed interest rate

Development
Bank ofJapan Inc.

March 24,2010

100,000

1,400,000
*4

1.665

March 24,
2017

Repaymentininstallments*4

Purchasereal estate

Fixed interest rate

ShinkinCentral Bank

November 15,
2011―

1,000,000

0.7525

November 15,
2016

BulletPurchasereal estate

Fixed interest rate

Taiyo Life
Insurance
Company

April 24,2008

1,000,000

1,000,000

1.595

April 25,
2016

BulletRedeeminvestment
corporation
bonds

Fixed interest rate

The Hachijuni
Bank, Ltd.

January 15,
2013

1,000,000―

0.3825January 15,
2016

BulletRepay
existing loans

Fixed interest rate

The IyoBank, Ltd.

January 15,
2013

1,000,000―

0.3825January 15,
2016

BulletRepay
existing loans

Fixed interest rate

Subtotal
Total

32,100,000

44,400,000

68,800,000

67,100,000

41

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Segment

Drawdown
Date

Balance at
Beginning ofCurrent
Period(¥ thousand)

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

Repayment
Date

Repayment
MethodUse ofProceeds

Notes

April 4,2011

5,000,000

5,000,000

1.205

April 4,2017

BulletRepay
existing loans

Fixed interest rate

June 1,
2011

12,000,000

12,000,000

1.12625

June 1,
2017

BulletRepay
existing loans

Fixed interest rate

June 1,
2011

10,000,000

10,000,000

1.31125

June 1,
2018

BulletRepay
existing loans

Fixed interest rate

November 15,
2011

3,000,000

3,000,000

1.13875

November 15,
2019

BulletPurchasereal estate

Fixed interest rate

June 15,2012

4,000,000

4,000,000

0.9525June 15,
2020

BulletPurchasereal estate

Fixed interest rate

June 15,2012

2,500,000

2,500,000

1.2725June 15,
2022

BulletRedeeminvestment
corporation
bonds

Fixed interest rate

December 21,
2012

5,000,000

5,000,000

0.80125

December 21,
2020

BulletRepay
existing loans

Fixed interest rate

January 29,
2021

BulletPurchasereal estate trust
beneficiaryrightsFloating
interest rate
*5

December 19,
2023

BulletRepay
existing shortterm loans

Floating
interest rate
*6

LenderMitsubishi
UFJ Trustand Banking
Corporation

Long-term loans
The Bank ofTokyoMitsubishi

January 31,
2014

4,000,000

4,000,000

0.64225*5

December 19,
2014

10,000,000

10,000,000

0.42375*6September 1,
2015

3,500,000

3,500,000

0.63

September 2,
2024

BulletPurchasereal estate

Fixed interest rate

March 24,2011

2,000,000

2,000,000

1.3975

March 26,2018

BulletRepay
existing shortterm loans

Fixed interest rate

November 15,
2011

3,000,000

3,000,000

1.13875

November 15,
2019

BulletPurchasereal estate

Fixed interest rate

June 15,2012

4,000,000

4,000,000

1.1975June 15,
2022

BulletPurchasereal estate

Fixed interest rate

December 21,
2012

5,000,000

5,000,000

0.80125

December 21,
2020

BulletRepay
existing loans

Fixed interest rate

January 15,
2013

5,500,000

5,500,000

0.71

January 15,
2020

BulletRepay
existing loans

Fixed interest rate

January 15,
2013

5,500,000

5,500,000

0.83625

January 15,
2021

BulletRepay
existing loans

Fixed interest rate

April 24,2013

5,000,000

5,000,000

0.775

April 26,
2021

BulletRepay
existing loans

Fixed interest rate

September 1,
2015

5,000,000

5,000,000

0.2

September 2,
2019

BulletPurchasereal estate

Fixed interest rate

September 1,
2015

2,000,000

2,000,000

0.47125

September 1,
2022

BulletRepay
existing shortterm loans

Fixed interest rate

UFJ, Ltd.

42JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Segment

Drawdown
Date

Balance at
Beginning ofCurrent
Period(¥ thousand)

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

Repayment
Date

Repayment
MethodUse ofProceeds

Notes

January 17,
2011

3,000,000

3,000,000

1.43375

January 17
2018

BulletRepay
existing shortterm loans

Fixed interest rate

September 26,
2011

5,500,000

5,500,000

1.16

September 26,
2019

BulletRepay
existing shortterm loans

Fixed interest rate

November 15,
2011

3,000,000

3,000,000

0.98375

November 15,
2018

BulletPurchasereal estate

Fixed interest rate

June 15,2012

4,000,000

4,000,000

0.9525June 15,
2020

BulletPurchasereal estate

Fixed interest rate

January 31,
2014

2,000,000

2,000,000

0.62575*5January 29,
2021

BulletPurchasereal estate trust
beneficiaryrightsFloating
interest rate*5

May 29,2015

5,000,000

5,000,000

0.2075

May 29,2019

BulletRepay
existing loans

Fixed interest rate

June 15,2015

3,000,000

3,000,000

0.3425June 15,
2020

BulletRepay
existing loans

Fixed interest rate

September 2,
2015

3,800,000

3,800,000

0.536
*5

September 2,
2024

BulletRepay
existing shortterm loans

Floating
interest rate
*5

December 21,
2010

5,000,000―

1.30625

December 21,
2016

BulletRepay
existing shortterm loans

Fixed interest rate

November 1,
2011

6,000,000

6,000,000

1.2075

November 1,
2019

BulletRepay
existing shortterm loans andother loans

Fixed interest rate

November 15,
2011

3,000,000

3,000,000

1.13875

November 15,
2019

BulletPurchasereal estate

Fixed interest rate

June 15,2012

4,000,000

4,000,000

1.07375

June 15,
2021

BulletPurchasereal estate

Fixed interest rate

January 15,
2013

5,000,000

5,000,000

0.96625

January 17,
2022

BulletRepay
existing loans

Fixed interest rate

April 24,2013

3,000,000

3,000,000

0.87375

April 25,
2022

BulletRepay
existing loans

Fixed interest rate

September 1,
2015

2,500,000

2,500,000

0.17

March 1,
2019

BulletPurchasereal estate

Fixed interest rate

October 1,
2015―

2,500,000

0.5575October 1,
2024

BulletRepay
existing shortterm loans

Fixed interest rate

March 24,2010

1,350,000

―

1.665

March 24,2017

Purchasereal estate

Fixed interest rate

Purchasereal estate

Fixed interest rate

LenderSumitomo
Mitsui Trust
Bank, Limited

Long-term loans
MizuhoBank, Ltd.

Repaymentininstallments*4Development
Bank ofJapan Inc.

January 7,
2013

3,000,000

3,000,000

1.115

January 6,
2023

BulletJanuary 31,
2014

5,000,000

5,000,000

0.9325January 31,
2023

BulletSeptember 1,
2015

7,000,000

7,000,000

0.7175September 1,
2025

Bullet43

Purchasereal estate trust
beneficiaryrightsPurchasereal estate andRepay
existing loans

Fixed interest rate

Fixed interest rate

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）
Balance at
Beginning ofCurrent
Period(¥ thousand)

Balance at
End ofCurrent
Period(¥ thousand)

1,800,000

1,800,000

1,400,000

1,400,000

1,400,000

1,400,000

1,400,000

1,400,000

1,000,000

1,000,000

900,000

900,000

900,000

900,000

900,000

900,000

900,000

900,000

900,000

900,000

500,000

500,000

500,000

500,000

500,000

500,000

November 15,
2011

1,000,000

January 7,
2013

Segment
Lender
The Daishi
Bank, Ltd.
The Hokuetsu
Bank, Ltd.
Sony Bank
Incorporated
The Toho
Bank, Ltd.
The Shinkumi
FederationBank
The Akita
Bank, Ltd.
The FukuiBank, Ltd.
The Gunma
Bank, Ltd.
The 77
Bank, Ltd.
The Tochigi
Bank, Ltd.
The Higo
Bank, Ltd.
The Bank of
Iwate, Ltd.
The Yamagata
Bank, Ltd.

Long-term loans

Average
Interest
Rate *1(%)

Repayment
Date

Repayment
MethodUse ofProceeds

Notes

0.463
*5

November 15,
2021

BulletRepay
existing shortterm loans

Floating
interest rate
*5―0.7525

November 15,
2016

BulletPurchasereal estate

Fixed interest rate

2,000,000

2,000,000

0.71375

January 7,
2020

BulletPurchasereal estate

Fixed interest rate

January 15,
2013

5,000,000

5,000,000

0.71

January 15,
2020

BulletRepay
existing loans

Fixed interest rate

April 24,2013

5,000,000

5,000,000

0.52775

April 24,2018

BulletRepay
existing loans

Fixed interest rate

August 31,
2011

2,000,000

2,000,000

0.9025

August 31,
2017

BulletRepay
existing loans

Fixed interest rate

BulletRedeeminvestment
corporation
bonds

Fixed interest rate

Drawdown
Date

November 14,
2014

ShinkinCentral Bank

The Bank ofFukuoka, Ltd.

The Norinchukin Bank

June 15,2012

2,500,000

2,500,000

0.66

June 15,2017

August 31,
2012

1,000,000

1,000,000

0.57125

August 31,
2017

BulletRepay
existing loans

Fixed interest rate

January 31,
2014

2,500,000

2,500,000

0.63849*5

January 29,
2021

BulletPurchasereal estate trust
beneficiaryrightsFloating
interest rate
*5

March 24,2015

2,000,000

2,000,000

0.5125

March 24,
2023

BulletRepay
existing loans

Fixed interest rate

January 31,
2014

3,500,000

3,500,000

0.757
*5

January 31,
2022

BulletJune 17,2014

3,000,000

3,000,000

0.6785*5June 17,
2022

BulletMarch 25,2015

3,500,000

3,500,000

0.46825*5

March 27,
2023

Bullet44

Purchasereal estate trust
beneficiaryrightsRedeeminvestment
corporation
bonds
Purchasereal estate trust
beneficiaryrightsFloating
interest rate
*5
Floating
interest rate
*5
Floating
interest rate
*5

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Drawdown
Date

Balance at
Beginning ofCurrent
Period(¥ thousand)

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

Repayment
Date

Repayment
MethodUse ofProceeds

Notes

August 31,
2011

3,000,000

3,000,000

1.0475

August 31,
2018

BulletRepay
existing loans

Fixed interest rate

June 15,2012

2,500,000

2,500,000

0.66

June 15,2017

BulletPurchasereal estate

Fixed interest rate

1.2725June 15,
2022

BulletRedeeminvestment
corporation
bonds

Fixed interest rate

0.3925*5August 10,
2022

BulletRepay
existing shortterm loans

Floating
interest rate
*5

BulletRedeeminvestment
corporation
bonds

Fixed interest rate

Segment
Lender

Shinsei Bank,
LimitedJune 15,2012
The Chugoku
Bank, Limited
The Daishi
Bank, Ltd.
The FukuiBank,Ltd.
The Gunma
Bank, Ltd.
The Shinkumi
FederationBank
The Toho
Bank, Ltd.
The Tochigi
Bank, Ltd.

Long-term loans

The IyoBank, Ltd.

The Chugoku
Bank, Limited

Taiyo Life
Insurance
Company

Sumitomo
Mitsui
Banking
Corporation

August 10,2015

2,500,000

2,500,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

500,000

500,000

June 15,2012

2,500,000

2,500,000

0.66

June 15,2017

March 24,2014

2,000,000

2,000,000

0.6035*5March 24,
2021

BulletRepay
existing loans

Floating
interest rate
*5

October 1,
2014

1,000,000

1,000,000

0.46525*5October 1,
2021

BulletPurchasereal estate

Floating
interest rate
*5

January 15,
2016―

1,000,000

0.265
*5

January 16,
2023

BulletRepay
existing loans

Floating
interest rate
*5

March 25,2013

2,000,000

2,000,000

0.45

March 26,2018

BulletRepay
existing loans

Fixed interest rate

October 1,
2014

1,000,000

1,000,000

0.4725*5October 1,
2021

BulletPurchasereal estate

Floating
interest rate
*5

June 15,2015

3,000,000

3,000,000

0.61175*5June 15,
2023

BulletRepay
existing loans

Floating
interest rate
*5

March 30,2011

2,000,000

2,000,000

1.39625

March 30,
2018

BulletRepay
existing loans

Fixed interest rate

October 1,
2014

2,000,000

2,000,000

0.7825October 1,
2024

BulletPurchasereal estate

Fixed interest rate

May 29,2015

1,500,000

1,500,000

0.7375

May 29,2025

BulletRepay
existing loans

Fixed interest rate

November 15,
2011

3,000,000

3,000,000

0.98375

November 15,
2018

BulletPurchasereal estate

Fixed interest rate

January 7,
2013

2,000,000

2,000,000

0.98

January 7,
2022

BulletPurchasereal estate

Fixed interest rate

45

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

Drawdown
Date

Balance at
Beginning ofCurrent
Period(¥ thousand)

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

Repayment
Date

Repayment
MethodUse ofProceeds

Notes

June 15,2012

1,000,000

1,000,000

0.66

June 15,2017

BulletPurchasereal estate

Fixed interest rate

December 20,
2012

1,000,000

1,000,000

0.45625

December 20,
2017

BulletRepay
existing loans

Fixed interest rate

March 25,2013

1,000,000

1,000,000

0.45

March 26,2018

BulletRepay
existing loans

Fixed interest rate

January 15,
2016―

1,000,000

0.265
*5

January 16,
2023

BulletRepay
existing loans

The Hiroshima
Bank, Ltd.

October 1,
2014

3,000,000

3,000,000

0.31575*5October 1,
2019

BulletPurchasereal estateMizuho Trust& BankingCo., Ltd.

March 2,2015

3,000,000

3,000,000

0.5585*5March 3,2025

BulletMarch 1,2011

2,000,000

―

1.255

March 1,
2017

BulletMarch 25,2013

3,000,000

3,000,000

0.45

March 26,2018

BulletRepay
existing loans

Fixed interest rate

October 29,
2012

2,000,000

2,000,000

0.8

October 29,
2020

BulletRepay
existing loans

Fixed interest rate

March 25,2013

1,000,000

1,000,000

0.945

March 24,
2023

BulletRepay
existing loans

Fixed interest rate

March 24,2014

1,000,000

1,000,000

0.4105*5March 25,
2019

BulletRepay
existing loans

November 17,
2014

1,000,000

1,000,000

0.316
*5

November 18,
2019

BulletRepay
existing loans

Nippon Life
Insurance
Company

March 1,2011

2,000,000

2,000,000

1.465

March 1,
2018

BulletThe
Nishi-Nippon
City Bank, Ltd.

June 17,2014

2,000,000

2,000,000

0.621
*5

December 17,
2021

BulletThe Yamanashi
Chuo Bank,Ltd.

December 15,
2014

2,000,000

2,000,000

0.266
*5

December 16,
2019

BulletRepay
existing loans

The Daishi
Bank, Ltd.

January 7,
2016―

1,500,000

0.2802*5

January 10,
2023

BulletRepay
existing shortterm loans

The Ashikaga
Bank, Ltd.

January 7,
2013

1,000,000

1,000,000

0.49125

January 9,
2018

BulletPurchasereal estate

Fixed interest rate

The JoyoBank, Ltd.

January 7,
2013

1,000,000

1,000,000

0.49125

January 9,
2018

BulletPurchasereal estate

Fixed interest rate

March 30,2009

5,000,000―

1.54375

March 30,
2017

BulletRepay
existing loans

Fixed interest rate

284,650,000

276,300,000

Segment
Lender

The Hachijuni
Bank, Ltd.

Resona Bank,
LimitedLong-term loans

The Yamaguchi
Bank, Ltd.

The Gunma
Bank, Ltd.

The Dai-ichi
Life Insurance
Company,
Limited
Total

Purchasereal estate trust
beneficiaryrightsPurchasereal estate trust
beneficiaryrightsPurchasereal estate trust
beneficiaryrightsRedeeminvestment
corporation
bonds

Floating
interest rate
*5
Floating
interest rate
*5
Floating
interest rate
*5

Fixed interest rate

Floating
interest rate
*5
Floating
interest rate
*5
Fixed interest rate

Floating
interest rate
*5
Floating
interest rate
*5
Floating
interest rate*5

*1. The average for floating interest rates is recorded as the weighted average during the period. The average is rounded off to thefifth decimal place.
*2. As of March 24, 2016, the entire amount of ¥1,500,000 thousand has been repaid before the original maturity.
*3. As of March 1, 2016, ¥1,000,000 thousand has been repaid before the original maturity.
*4. ¥50,000 thousand is repaid every six months respectively. ¥1,350,000 thousand is scheduled to be repaid on the final principal
repayment date.
*5. In order to hedge the risk of interest rate fluctuations, floating interest rates were swapped to fixed rates. Accordingly, theweighted average for interest rates during the period is calculated taking the effect of this swap into consideration.
*6. 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.
Note: All floating interest rate loans and fixed interest rate loans procured are unsecured, unguaranteed, and unsubordinated.
46

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(iii) Investment Corporation Bonds
Outstanding investment corporation bonds as of March 31, 2016, are as follows.

Securities

4th unsecured
investment
corporationbond
9th 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

20,000,000

20,000,000

Total

Use ofNotes*1. The 4th unsecured investment corporation bond is used to fund the repayment of existing short-term loans.
The 9th unsecured investment corporation bond is used to fund the repayment of loans and acquire specified assets (“specified
assets” defined in Article 2, Paragraph 1 of the ITA).
*2. Financial covenants, such as a negative pledge, are not included in these bonds.
(iv) New Unit Acquisition Rights“Not applicable”

47

JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

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

Property Name

Acquisition/
Disposition
Cost*1(¥ million)

Date ofTransaction

Real EstateAppraisal
Value(¥ million)

Appraising
Institution

Date of
Appraisal

Daiwa Real
February 1,
Estate Appraisal
2016
Co., Ltd.
Daiwa RealMarch1,
Kyoto Shijo
March 31,
Disposition
2,516
1,960
Estate Appraisal
2016
Kawaramachi Building
2016
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.
Disposition

Hirokoji Sakae
Building

March 30,
2016

1,850

1,640

(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, 2015 to March 31, 2016, there were 3 interest rate swap transactions that were subjected to suchinspections. The Company has received the valuation reports on these transactions from Ernst & Young ShinNihon LLC.
Please note that on the occasion of such investigations, the Company entrusts the investigation of all relevant details of the interest
rate swap transactions, such as names of counter parties, securities, agreed interest rates, types of financial instruments or reference
interest rates and tenor of transactions.
g. Transactions with Interested Parties (from October 1, 2015 to March 31, 2016)(i) Transactions
Buying and Selling Amounts
Segment
Buying Amounts
Total Amount

Selling Amounts¥ ― thousand¥ 4,366,000 thousand

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

48¥ ― thousand( ―%)JAPAN REAL ESTATE INVESTMENT CORPORATION（8952）(ii) Amount of Commission Fees and Other Expenses

Segment

Property
management
expensesUtilities
expenses

Other
operatingexpenses

Total Amount ofCommission Fees andOther Expenses A¥3,767,790¥2,543,078¥147,093

thousandthousandthousandBreakdown 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.
Mitsubishi Jisho
Sekkei Inc.
Minato Mirai 21 District
Heating and CoolingCo., Ltd.
Mitsubishi Jisho
Property Management
Co., Ltd.
Mitsubishi EstateCo., Ltd.
Mitsubishi Real Estate
Services Co., Ltd.

Amount Paid B

B/A¥2,018,599

thousand

53.6%¥248,654

thousand

6.6%¥54,026

thousand

1.4%¥35,369

thousand

0.9%

¥450

thousand

0.0%¥83,945thousand

3.3%¥15,912thousand

10.8%¥2,233thousand

1.5%

¥255

thousand

0.2%*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.

¥862,513¥325,491¥36,049¥12,59949

thousandthousandthousandthousandJAPAN REAL ESTATE INVESTMENT CORPORATION（8952）

h. Other Announcements(i) 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

October 22, 2015

December 18, 2015

February 25, 2016

March 28, 2016

Consignment of generaladministrative work
concerning the issuance ofinvestment corporation
bonds
Signing of an agreement
concerning the terminationof consignment agreement
for Company's businessaffairs/accounting
administrative work
Signing of an agreement
concerning the terminationof consignment agreement
on unitholder registryadministrator
Signing of an agreement
concerning the terminationof consignment agreement
related to management ofspecial accounts
Changes of contract
administrative agent(businessaffairs/accounting),
unitholder registryadministrator and special
account management agent
Signing of a memorandum
concerning amendments tothe 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.
An agreement was signed on December 24, 2015 to declare that theconsignment agreement with Sumitomo Mitsui Trust Bank, Limited, whoprovided services for conducting administrative work of business affairs
and accounting, shall be terminated on September 30, 2016.

An agreement was signed on December 24, 2015 to terminate theconsignment agreement with Sumitomo Mitsui Trust Bank, Limited
concerning the work provided as a unitholder registry administrator,
where the said termination shall be effective at the completion of thenotification of dividend payout for the period ending on March 31, 2016.
An agreement was signed on December 24, 2015 to terminate theagreement with Sumitomo Mitsui Trust Bank, Limited concerning themanagement of special accounts, to be effective at the completion of thenotification of dividend payout for the period ending on March 31, 2016.
A decision is made to appoint Mitsubishi UFJ Trust and Banking
Corporation as the Company's new administrative agent for businessaffairs/accounting, unitholder registry administration and special accountmanagement.

Regarding the consignment agreement for asset management, an
approval has been given to a signing of memorandum to make partial
amendments regarding the scope of cost-bearing responsibilities.
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.

(ii) 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.

50

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, 2015 toMarch 31, 2016

April 1, 2015 to
September 30, 2015

October 1, 2014 toMarch 31, 2015

April 1, 2014 toSeptember 30, 2014

October 1, 2013 toMarch 31, 2014

Operating revenues

30,58929,98028,314

27,76026,582

Operating expenses

18,237

17,926

17,071

16,50515,751

Operating income

12,352

12,054

11,243

11,255

10,831

Ordinary income

10,816

10,487

9,625

9,582

9,083

Income before income
taxes
Profit10,816

10,487

9,625

9,582

9,083

10,753

10,476

9,619

9,572

9,070

Total assets

890,626

899,938

852,679

813,931

817,130

Interest-bearing debt

363,400

373,450

361,000

323,550

358,900

Net assets

469,044468,767

436,671436,622405,355

Unitholders’ capital

458,016

458,016

426,783

426,783

396,018

Number of units

1,309,310

1,309,310

1,251,530

1,251,530

1,188,280

Net assets per unit(Yen)(Note1)
Cash distribution

358,238

358,026

348,909348,871

341,128

10,632

10,475

9,613

9,571

9,070

Dividend payout ratio

98.8%

99.9%

99.9%

99.9%

99.9%

Dividend per unit (Yen)

8,121

8,001

7,681

7,648

7,633

Net operating income(NOI)
Funds from operations(FFO)
Return on assets (ROA)(Note 2)

19,973

19,67018,412

18,105

17,481

17,07916,80815,62915,455

14,719

1.2%

1.2%

1.2%

1.2%

1.1%

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

2.3%

2.2%

2.2%

2.2%

2.2%

(4.6% annualized)(4.5% annualized)(4.4% annualized)(4. 4% annualized)(4.5% annualized)

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

52.7%

52.1%

51.2%

53.6%

49.6%

40.8%

41.5%

42.3%

39.8%

43.9%

25.0

21.5

22.6

22.9

20.9

Debt service coverage
ratio (Times) (Note 6)

12.5

12.1

10.8

10.5

9.6

Return on equity (ROE)(Note 3)

Notes:1.
2.
3.

4.
5.
6.

The Company implemented a 2-for-1 split of each investment unit with an effective date of January 1, 2014. Net assets per unit iscalculated as if the split had occurred at the start of the fiscal period ended March 31, 2014.
ROA = Ordinary income ÷ Average of Total assets during the period
ROE = Profit ÷ Average of Net assets during the period(Annualized portion of the calculation given in Note 2 and Note 3 assumes a fiscal period of 182 days for the period ended March
31, 2014, 183 days for the period ended September 30, 2014, 182 days for the period ended March 31, 2015, 183 days for theperiod ended September 30, 2015 and 183 days for the period ended March 31, 2016.)
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

51