Japan Real Estate Investment Corporation

SEPTEMBER
2010

Semiannual
Report
For the period from April 1, 2010 to September 30, 2010

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

Contents
Financial Highlights

p. 1

Top 10 Unitholdersp. 1

Unit Price Performance

p. 1

The Strength of Japan Real Estate
Investment Corporation

p. 2

Portfolio Highlights

p. 3

Asset Management Summaryp. 4

Diversified Property Acquisition Methods

p. 5

History after IPO

p. 6

To Our Unitholders

p. 8

The Portfolio of Japan Real Estate
Investment Corporation

p.12

Overview of Portfolio Properties

p.15

Financial Section

p.23

Corporate Datap.43

Financial Highlights
Thousands of U.S.dollars(Note 1)Millions of yen
For the period from
April 1, 2010 to
September 30, 2010

Operating Revenues
Operating Income
Income before Income Taxes
Net Income

For the period from
October 1, 2009 to
March 31, 2010

For the period from
April 1, 2009 to
September 30, 2009

For the period from
October 1, 2008 to
March 31, 2009

For the period from
April 1, 2008 to
September 30, 2008

For the period from
April 1, 2010 to
September 30, 2010

22,112
9,939
8,135
8,134

21,665
10,5388,876
8,875

21,524
10,054
8,505
8,504

20,716
9,955
8,426
8,425

19,805
9,807
8,449
8,448

263,813
118,576
97,06097,046Net Operating Income (NOI) (Note 2)
Funds from Operations (FFO) (Note 3)
FFO Multiple (Note 4)

15,091
12,35315.1 times

14,414
11,91416.3 times

13,95011,57714.1 times

14,575
12,21313.7 times

14,173
12,00915.5 times

180,050
147,378
15.1 times

Cash Distribution
Number of Units
Dividend per Unit (Yen/U.S.dollars)

8,134
489,200
16,6288,826
489,200
18,0438,504
443,000
19,1988,425
443,000
19,0208,448
443,000
19,072

97,046489,200
198.38Notes: 1. Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥83.82 = US$1.00, the foreign exchange rate on
September 30, 2010, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen amounts have been or could bereadily converted, realized or settled into U.S. dollars at that rate or any other rate.
2. NOI = Property-Related Revenues – Property-Related Expenses (excluding Depreciation)
3. FFO = Net Income + Depreciation – Gain (Loss) on Transfer of Properties – Gain on Transfer of Development Rights of Floor Area
– Compensation for the Property Transfer
4. FFO Multiple = Unit Price at End of the Respective Term ÷ FFO per Unit (Annualized)(Annualized portion of the calculation given in note 4 assumes a fiscal period of 183 days for the period ended September 30, 2008, 182 days forthe period ended March 31, 2009, 183 days for the period ended September 30, 2009, 182 days for the period ended March 31, 2010 and 183 days forthe period ended September 30, 2010.)

Top 10 Unitholders
As of September 30, 2010
Company

The Nomura Trust and Banking Co., Ltd. (Toshin Acc.) .......................................................................................
Japan Trustee Services Bank, Ltd. (Shintaku Acc.) ..................................................................................................
Trust & Custody Services Bank, Ltd. (Toshin Acc.) ................................................................................................
The Master Trust Bank of Japan, Ltd. (Shintaku Acc.) ...........................................................................................
THE BANK OF NEW YORK, TREATY JASDEC ACCOUNT ..........................................................................
Mitsubishi Estate Co., Ltd. .....................................................................................................................................
The Chugoku Bank, Ltd. ........................................................................................................................................
North Pacific Bank, Ltd. .........................................................................................................................................
AIG Edison Life Insurance Company GA NON DIMA .........................................................................................
BBH FOR MATTHEWS ASIAN GROWTH AND INCOME FUND ...............................................................

Units% of total units
outstanding

52,48051,02442,797
19,108
12,682
10,160
7,697
7,493
6,520
6,209

10.73%
10.43%
8.75%
3.91%
2.59%
2.08%
1.57%
1.53%
1.33%
1.27%

TOPIX

The Company

Unit Price Performance
TSE REIT Index
325%
300%
275%
250%
225%
200%
175%
150%
125%
100%
75%
50% Sept.

Mar.

2001

2002

Sept.

Mar.

2003

Sept.

Mar.

2004

Sept.

Mar.

2005

Sept.

Mar.

2006

Sept.

Mar.

2007

Sept.

Mar.

2008

Sept.

Mar.

2009

Sept.

Mar.

Sept.

2010

Japan Real Estate Investment Corporation 1

The Strength of Japan Real Estate Investment Corporation

Strength

Stable Dividends

Collaboration withSponsors— Actual dividend per unit for the 18th
fiscal period:¥16,628($198.38)*— Forecasted dividend per unit for the 19th
fiscal period:***¥15,430($184.08)*, **The foreign exchange rate of ¥83.82 = US$1.00, as of September 30,
2010, has been used for this translation.
The forecasted dividend was disclosed with the announcement of the
18th fiscal period earnings results on November 16, 2010.

— Expertise of

Mitsubishi Estate Co., Ltd.,The Dai-ichi Life
Insurance Company, Limited
and Mitsui & Co., Ltd.
is being fully utilized

Steady Growth with Quality
Portfolio

Sound Financial Base

— Total acquisition price:— Highest credit ratings for a J-REIT:(as of September 30, 2010)

A1

AAAA

¥643,891million
55— LTV (Interest-bearing debt / Total assets):— The first listed J-REIT, showing steady
performance for 18 consecutive periods— Long-term, fixed-interest debt ratio****:($7,682 million)***— Maintains

high-quality office buildings*** Included in the acquisition prices of properties held as of September 30,
2010 is a portion of the Jingumae Media Square Building site (with a bookvalue of ¥614 million), which was transferred on October 30, 2009. This is
the same as on the following pages.

2 Japan Real Estate Investment Corporationfrom S&P,

from Moody’s,

from R&I

41.3%
89.0%
**** Long-term, fixed-interest loans + Investment corporation bonds(including current portions of Long-term, fixed-interest loans andInvestment corporation bonds) / Total Interest-bearing debt

Portfolio Highlights

Trends in the state of portfolio management
Number ofbuildings

Total numberof tenants(Note)

Total leasable
space

Occupancy
rate
2

September 2001

20

213

133,927m

March 2002

24

353

201,884m 2

94.6%
94.0%

September 2002

27

362

215,928m 2

95.3%

March 2003

30

383

236,693m2

94.4%

September 2003

32

407

246,062m 2

95.1%

March 2004

36

477

273,157m 2

94.8%

September 2004

39

504

293,105m 2

93.6%

March 2005

46

669

336,026m

2

97.6%

September 2005

50

814

364,610m 2

98.6%

March 2006

52

866

400,090m 2

98.7%

September 2006

49

835

396,173m 2

98.2%

March 2007

50

887

397,928m2

97.8%

September 2007

50

879

406,605m 2

98.7%

March 2008

53

931

479,877m 2

95.9%

September 2008

54

970

508,296m 2

96.1%

March 2009

55

993

516,411m 2

95.5%

September 2009

55

977

516,421m

93.3%

March 2010

55

979

566,277m2

93.0%

April 2010

55

980

566,216m 2

92.4%

May 2010

55

981

567,593m 2

91.6%

June 2010

55981

567,617m

2

91.6%

July 2010

55983

567,624m 2

91.7%

2

August 2010

55

983

567,612m 2

91.6%

September 2010

55

992

567,612m 2

92.4%

Note: The total number of tenants is the gross number of tenants
by building.

Total leasable space (m 2)100,000

200,000

300,000

400,000

500,000

600,000

700,000

Total leasable
space

Occupancy rate

18th period

60.0

65.0

70.0

75.0

80.0

85.0

90.0

95.0

100.0
Occupancy rate (%)

Portfolio breakdown
As of September 30, 2010

Properties bygeographic
regionOther major
cities15.8%

Tokyo 23 wards

75.9%

Tenants byindustrytype(Percentage basedon leased space)(Percentage based on
acquisition price)

Tokyo metropolitan area
excluding 23 wards

8.2%

OthersTransport services 12.5%
and travel
Steel and metals

Serviceindustries

15.7%

1.1%

Financeand insurance

1.2%

10.7%

Ceramics

1.4%

Information
services

Staffing agencies

9.3%

1.7%
Textiles

2.7%

Pharmaceuticals

8.1%

Machinery

4.0%
Electric devices

Communications

7.2%

4.9%
Construction

6.1%

Real estate

Retail and

6.2% restaurants
7.1%

Japan Real Estate Investment Corporation 3

Asset Management Summary
For the period from April 1, 2010 to September 30, 2010

Issue of Investment Corporation Bonds
Issue of the Seventh Investment Corporation Bond

Issue of the Eighth Investment Corporation Bond

Total amount:
Issue date:
Final redemption date:
Yield:
Collateral:
Financial covenant:Total amount:
Issue date:
Final redemption date:
Yield:
Collateral:
Financial covenant:¥10,000 million ($119 million)
April 23, 2010
April 23, 2015
1.26% per annum
No secured mortgage/guarantee
None¥10,000 million ($119 million)
July 23, 2010
July 23, 2015
1.05% per annum
No secured mortgage/guarantee
None

Completion of Construction to Extend the Ryoshin Ginza East Mirror Building
In accordance with the extension plan for the Ryoshin Ginza East Mirror Building, construction was completed on May 24, 2010,
and the extension was handed over to the Company on the same date.
There is a more pronounced scarcity in the Ginza area, which is dominated by small-sized buildings, because of
construction to increase buildings' sizes. The Company is taking steps to improve revenues and earnings by increasing property
appeal for new tenants and by flexibly responding to the office-related needs of existing tenants.

in
aL

in
e

Sh
ow
aS
t.

nz
Gi

ch
oL

MatsuyaShintomChuo City icho
Office

ji

u
ar
H
t.
iS
m

Ryoshin Ginza East Mirror BuildingkiExtension

Kabukiza

T
su

H

ig
as

hi

gi

nz

a

Gi

nz

Note: The acquisition price after the extension's construction was calculated by adding:the total amount of ¥2,645,922 thousand (excluding brokerage commissions and otheracquisition-related expenses), which comprised the adjacent property's land andbuilding acquisition costs incurred on July 4, 2008; the adjacent building's demolition
expenses; the extension construction costs; and ¥5,353,500 thousand, the acquisition
price of Ryoshin Ginza East Mirror Building as of March 15, 2005.

ne

573m2
4,250m2¥7,999,422 thousand

Li

377m2
2,875m2¥5,353,500 thousand

Yu
ra
ku

T
A s oeiak
usa864.91m2
5,751.68m2

M
E x e t ro p
p re o l is s w ta nay

615.25m2
4,104.71m2

-it
cho
me

e

(After extension)aSite area:
Floor area of building:Standard floor area(for rental floor space):
Leasable space:
Acquisition price:(Before extension)

Ch
uo
St
.

Gi
nz
a

OutlineTsukiji
Hongwanji

BeforeStandard
floor area
377m2

After

377m2

196m2

Standard floor area 573m2

4 Japan Real Estate Investment Corporation

Diversified Property Acquisition Methods
The Company employs a diverse array of property acquisition models, which are listed below, in order to avoid as much as possible
excessive market competition when acquiring properties.

Additional Share Acquisitions
When a co-owner or compartmentalized owner is selling his or her co-ownership or compartmentalized ownership, other co-owners orcompartmentalized owners of the property are likely to purchase through negotiation such co-ownership or compartmentalized ownershipon preferential terms. This means that the other co-owners or compartmentalized owners who intend to acquire additional shares of theproperty enjoy increased buying opportunities.
Because the acquirer, as an existing co-owner or compartmentalized owner, is knowledgeable about the overview and historyof as well as other information regarding the property, the acquirer is able to reduce risks relating to the property.

Number of the Company
properties that were co-owned
or compartmentalized building
units at the time of initialacquisition

Major properties that the Company increased22

its portion of through additional acquisition

55(properties)

Number of properties that theCompany acquired an additional share of or building units
in after original acquisition

12

Number of properties wholly
owned by the Company due toadditional acquisitions withinsuch properties

4

Shiodome Building

Tokyo Opera City Building

Midosuji Daiwa
Building

22(properties)

12(properties)

Exchange Transaction
The Company acquired a portionof the Mitsubishi UFJ Trust andBanking Building on March 28,
2007 by way of an exchangetransaction involving the transferof the Mitsubishi Soken Building
owned by the Company to
Mitsubishi Estate Co., Ltd.,
which is one of the Company's
sponsor companies.

Sanno Grand Building

Exercise of Preferential
Purchasing Right
through Preferred
Capital Contribution

Mitsubishi UFJ Trust andBanking Building

Exercising its preferential
purchasing right for the Harumi
Center Building—which was
acquired upon making a preferred
capital contribution to Harumi
Front Special Purpose Company(TMK) in March 2005—theCompany acquired said property
on December 18, 2007.

Harumi Center Building

Extension of Existing Building
The Company acquired land and an existing building adjacent to the Ryoshin Ginza East Mirror Building, which it already owned.
Upon the dismantling of said building, the Company undertook the construction of an extension to the Ryoshin Ginza East Mirror
Building on this property. (Please refer to the facing page.)
Japan Real Estate Investment Corporation 5

Histor y after IPO
In September 2001, the Company became the first J-REIT in Japan listed on the Tokyo Stock
Exchange (“TSE”). Since then, the Company has targeted stable management to fulfill its goal of
maintaining and increasing dividends per unit over the medium to long term. The Company’s growthis based on external growth strategies that aim to increase earnings through the acquisition and transfer of properties as well as internal growth strategies that seek to optimize earnings from properties

Occupancy rate
94.6%

95.3%

94.0%

95.1%

94.4%

94.8%

97.6%

98.6%

93.6%

Total acquisition price(Number of properties)

Keep stable
occupancy rate

Steady growth inasset size

First J-REIT in Japan listed on
TSE began with ¥92.8 billion in assets.

¥326,560¥290,510¥144,697
million(24)¥92,845¥164,277¥183,542 ¥192,607
million(30)

million(27)

million(32)¥218,437 ¥239,827
million(36)

million(39)

million(50)

million(46)

million(20)

At IPO

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Sept. 2001

Mar. 2002

Sept. 2002

Mar. 2003

Sept. 2003

Mar. 2004

Sept. 2004

Mar. 2005

Sept. 2005

¥14,983¥12,853¥14,455¥15,117¥14,602¥14,711¥15,824¥15,951

Dividend
per unit

June 2002
First Investment
Corporation
Bond Issue(First for a J-REIT)

Bond issues

Sept. 2001
Listing and
Listedon TSEissuance of units

as first J-REIT
Sept. 2001
IPO

6 Japan Real Estate Investment Corporation

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

Apr. 2003
Second/Third
Investment Corporation
Bond Issue

Oct. 2003
Second Follow-On

Sept. 2005
Fourth Investment Corporation
Bond Issue (First J-REIT ever toissue investment corporation bonds
without a negative pledge clauseor other financial covenants)
Apr. 2005
Third Follow-Onalready held. The size of the Company’s assets (total acquisition price) has grown from ¥92.8 billion at
IPO to ¥643.8 billion as of the 18th fiscal period end due to the steady achievement of external
growth strategies. However, in terms of internal growth strategies, ongoing efforts are being made insuch areas as maintaining stable occupancy rates and reducing building management costs.

95.9%
98.7%

98.2%

96.1%

95.5%

98.7%

97.8%

93.3%

93.0%

Built a portfolio that is worth
over ¥640 billion¥518,969¥412,766 ¥418,693¥441,276 ¥446,940
millionmillion
(53)

92.4%

¥641,245 ¥643,891
million(55)

million(55)¥564,219¥542,969 ¥564,219
millionmillionmillion
(54)

(55)

(55)

million(50)(50)

Period ended

Period ended

Period ended

Period ended Period ended

Period ended

Period ended

Period ended

Period ended

Sept. 2006

Mar. 2007

Sept. 2007

Mar. 2008

Sept. 2008

Mar. 2009

Sept. 2009

Mar. 2010

Sept. 2010

¥17,302¥17,521¥18,500¥29,223¥19,072¥19,020¥19,198¥18,043¥16,628

million(52)

million(49)

Period ended

Mar. 2006¥16,172

June 2007
Fifth/Sixth Investment
Corporation Bond Issue

Oct. 2006
Fourth Follow-On

Mar. 2008
Fifth Follow-On

Apr. 2010
Seventh Investment
Corporation Bond Issue
July 2010
Eighth Investment
Corporation Bond Issue
Dec. 2009
Sixth Follow-On

Japan Real Estate Investment Corporation 7

To Our Unitholders

8 Japan Real Estate Investment Corporation

Amid severe market conditions, the Company acquired additional property fora building extension to the Ryoshin Ginza East Mirror Building with the aimof maintaining and improving the competitiveness of the properties it holds.
BUSINESS PERFORMANCEFOR THE 18TH FISCAL PERIOD
Summary of Financial Results and Cash Dividend
In the 18th fiscal period (April 1, 2010 to September 30, 2010),
Japan Real Estate Investment Corporation (“the Company”)
recorded operating revenues totaling 22,112 million yen, up
2.1% compared with the previous period. On the earnings front,
operating income decreased 5.7% to 9,939 million yen. After
deducting expenses for interest payments on loans and other costs,
income before income taxes fell 8.3% to 8,135 million yen, andnet income dropped 8.4% to 8,134 million yen.
Accordingly, the amount of cash dividends for the period
under review totaled 8,134,417,600 yen, for a per-unit cash
dividend of 16,628 yen.

Operating Environment and Performance
During the period under review, the Japanese economy showedsigns of recovery primarily due to improvements in corporate
earnings owing to increased exports and a rebound in
production. However, given the slow pace of recovery, as wellas the strength of the yen and ineffectiveness of government
policies through to September 30, 2010, the economy
weakened further and continued to face severe conditions,
including high unemployment throughout the period.
In the market for leased office space, there were signs thatthe decline in occupancy rates in large and new buildings incentral Tokyo has ceased. Nevertheless, overall vacancy rates
continued to increase, reflecting such factors as ongoing highvacancy rates in regional business areas and in less competitivemid- and small-sized buildings. Consequently, overall rent levels
continued to fall amid these high vacancy rates.
In the property market, there was a recovery in thewillingness of purchasers to invest due to improvement in thefund raising environment and progress made regarding
adjustments in property prices. As a result, the transaction volume
is on an upward trend.
Amid this environment, the Company endeavored tomaintain the upward trajectory in occupancy rates by promoting
aggressive leasing activities based on market trends. In addition,
the Company worked to further bolster the quality of its portfolio
properties by maintaining and improving the competitiveness ofthe properties it holds. Particular initiatives included an expansionin leasable floor space through the completion of a building

extension of the Ryoshin Ginza East Mirror Building, and theupgrading of building and facility specifications throughappropriate renovations.
As a result of these activities, the Company's portfolio asof September 30, 2010 consisted of 55 office buildings with a
total acquisition price of 643,891 million yen. Total leasable
space stood at 567,612 m2, with a total of 992 tenants.

Finance Activities
In conjunction with the redemption of the Third Investment
Corporation Bond worth 10.0 billion yen on April 30, 2010, theCompany issued the Seventh Investment Corporation Bond on
April 23, 2010, totaling 10.0 billion yen.
Overview of the Seventh Investment Corporation Bond
Name of investment
Japan Real Estate Investment
corporation bondCorporation Seventh Unsecured Bond
(No finance-related special covenants,
such as negative pledge)
Total amount issued
10.0 billion yen
Issue date
April 23, 2010
Maturity date
April 23, 2015
Interest rate
1.26% per year

In order to improve the ratio of long-term debt andinvestment corporation bonds, both of which are accounted forby interest-bearing debt, the Company issued the Eighth
Investment Corporation Bond totaling 10.0 billion yen on July23, 2010.
Overview of the Eighth Investment Corporation Bond
Name of investment
Japan Real Estate Investment
corporation bondCorporation Eighth Unsecured Bond
(No finance-related special covenants,
such as negative pledge)
Total amount issued
10.0 billion yen
July 23, 2010
Issue date
Maturity dateJuly 23, 2015
Interest rate
1.05% per year

In conjunction with the securing of cash on hand throughthe issue of the Eighth Investment Corporation Bond, theCompany repaid short-term loans totaling 10,000 million yen
prior to their maturity dates on July 26, 2010.
In addition to the above actions, the Company undertookloans totaling 2,000 million yen on June 1, 2010, 3,000 million
yen on June 14, 2010, 3,000 million yen on June 15, 2010 and
3,500 million yen on September 1, 2010 in order to repay existingloans. Furthermore, the Company redeemed long-term loans

Japan Real Estate Investment Corporation 9

By implementing initiatives with absolute confidence and professionalpassion, and with the aim of maximizing value for our unitholders,we will work to guide the Company through successes to come.
totaling 50 million yen, establishing a schedule for the repayment
installments on September 24, 2010.
As a result of these financing activities, as of September
30, 2010, the Company's total interest-bearing debt amounted
to 262,450 million yen. This amount consisted of long-termloans totaling 178,450 million yen, which includes a current
portion totaling 64,100 million yen, in addition to short-termloans totaling 29,000 million yen and investment corporation
bonds totaling 55,000 million yen.
As of September 30, 2010, the Company's long-term,
fixed-interest debt ratio (ratio of long-term, fixed-interest debt,
including the current portion of long-term loans and investment
corporation bonds, to total interest-bearing debt) stood at 89.0%,
and the LTV ratio (ratio of interest-bearing debt to total assets)was 41.3%. As these figures indicate, the Company has been able
to maintain a sound and conservative financial standing.
The Company’s credit ratings as of the date of this reportwere as follows.
Rating agency

Credit ratingStandard & Poor's Ratings Japan K.K.

Long-term: AA-;
Short-term: A-1+;
Outlook: Negative

Moody's Japan K.K.

Rating: A1; Outlook: Stable

Rating and Investment Information, Inc.

Rating: AA; Outlook: Stable

OUTLOOK
Trends in the Rental Office Market
Although economic trends are expected to weaken temporarily,
the Japanese economy is anticipated to gradually recover amid
an improvement in overseas economies, the impact of various
government policies now being implemented and other factors.
Nevertheless, there is a risk of various factors placing downward
pressure on the domestic economy, including a possible slowdownin overseas economies as well as fluctuations in currency exchange
rates and share prices. At the same time, due to the risks posedby persistent deflation and the potential of further deteriorationin employment conditions, great care and attention are required
when making forecasts.
In the market for leased office space, the increase in thevacancy rate is showing signs of stopping and a reversal in rent
levels is expected with regard to some prime properties in central
Tokyo. However, reflecting the still weak business sentimentpervading the corporate sector, it is difficult to be optimistic that

10 Japan Real Estate Investment Corporation

demand for office space, which is relatively sensitive to economic
conditions, will rapidly increase. In addition, there are concernsthat the balance of supply and demand will worsen due to anincrease in the supply of office buildings from 2011 onward.
In the property market, the volume of real estatetransactions is anticipated to gradually expand, buoyed by an
improvement in the fund raising environment. As it moves to takefull advantage of opportunities for acquiring prime properties
amid an uncertain leasing market, the Company believes that thesoundness of its financial standing, its ability to collect property
information and its superior analytical capabilities will be of criticalimportance.

Growth Strategies
In accordance with the aforementioned, the Company adheresto the following management policies in order to maintain andimprove profitability.
First, the Company works to strengthen the relationshipof trust with existing tenants and strategically raise rent levels. As
of September 30, 2010, the Company had contracts with 11
property management companies. Most of these companies werealready managing their respective buildings before the Company
acquired them and have thus built relationships of trust with theirtenants. The Company works to further strengthen these
relationships by anticipating tenants' needs and providing tailoredservices to increase tenant satisfaction and subsequently maintainoccupancy rates and restrain rent reduction requests.
Second, we endeavor to implement effective initiatives
to fill vacancies in a prompt manner. In cooperation with theproperty management companies mentioned above, theCompany actively seeks the most appropriate tenants for each
property, based on location and features, in order to fill current
and anticipated vacancies as rapidly as possible. Furthermore,
the Company works to uncover additional needs for floor spaceamong existing tenants.
Third, we constantly strive to stabilize our revenues andearnings. With the aim of stabilizing revenues and earnings, theCompany endeavors to apply fixed- and long-term leasing
agreements with its large-scale tenants.
Lastly, we aim to continuously reduce management costs.
The Company has introduced sound competitive principles for
its multiple property management companies to follow. These
companies are revamping their management systems and cost
structures on an ongoing basis.

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

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

With regard to the acquisition of properties, the Company
has adopted the following policies.
First, the Company continually enhances its property
information channels and develops new channels in order toaccess important information quickly.
Second, in its acquisition activities, the Company
continues to meticulously monitor and examine economic,
physical and legal factors, including rights-related issues, whenselecting properties. In particular, with regard to the structure ofbuildings, the Company requires buildings to meet or exceed newearthquake-resistance standards and exclusively targets properties
capable of maintaining a competitive edge in terms of the facilities
they offer over the medium to long term.
Third, in accordance with its acquisition policies, theCompany maintains its portfolio so that 70% or more of theportfolio properties are located within the Tokyo metropolitanarea, with the remaining 30% or fewer located in other major
cities.
Under these policies, the Company will continue toacquire highly competitive properties. At the same time, in orderto further enhance the quality of its portfolio, the Company willremain open to the replacement of portfolio properties with due
consideration given to timing.

Financial Strategy
In principle, the Company maintains an LTV ratio that does notexceed 65%. To ensure an even lower interest-bearing debt ratio,
the Company adopts the conservative target level of 30% to 40%.
Concerning the financing of property acquisitions,the Company uses, in a flexible manner, a variety of funding
schemes—including the issue of investment corporation
bonds—while maintaining a sound and conservative financial
standing and closely monitoring trends in financial markets.
When obtaining a loan, the Company strictly adheres to its
financial policies. More specifically, with the aim ofminimizing funding costs, the Company negotiates withseveral qualified institutional investors (limited to thosedefined under the Special Taxation Measures Law of Japan)
before executing a loan agreement.

Performance Forecasts for the 19th and 20th Periods
For the 19th fiscal period, (October 1, 2010 to March 31,2011), the Company forecasts operating revenues totaling
21,690 million yen, operating income totaling 9,430 million
yen, income before income taxes totaling 7,540 million yen
and net income totaling 7,540 million yen. The Company
plans to declare a cash dividend totaling 15,430 yen per unit.
For the 20th fiscal period (April 1, 2011 to September
30, 2011), the Company forecasts operating revenues totaling
21,530 million yen, operating income totaling 9,530 million
yen, income before income taxes totaling 7,670 million yen
and net income totaling 7,670 million yen. The Company
plans to declare a cash dividend totaling 15,690 yen per unit.
As discussed above, the Japanese economy is expected
to weaken during the foreseeable future. With due
consideration given to such possibility, we believe that wemust take a careful, somewhat defensive approach inforecasting the future environment surrounding the J-REIT
market. Even under these conditions, the Company willcontinue to take actions consistent with being a J-REIT leader
boasting unparalleled investment management capabilities
and superior financial soundness. By taking on bear markets
and turning crisis into opportunity as we implement the said
initiatives with absolute confidence and professional passion
with the aim of maximizing value for our unitholders, we will
work to guide the Company through successes to come.
As a going concern bearing significant responsibility
to manage your invaluable investment, we appreciate you foryour steadfast trust in us and ask for your resolute support.

Taketo Yamazaki
Executive Director of Japan Real Estate Investment Corporation

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

Japan Real Estate Investment Corporation 11

The Portfolio of Japan Real Estate Investment Corporation As of September 30, 2010
Properties Roster
Location

Type ofspecified asset

Acquisition
dateTokyo 23 wards
P I- 1Genki Medical PlazaP I- 2
Kitanomaru Square
P I- 3
MD Kanda Building
P I- 4
Kandabashi Park Building
P I- 5
Nibancho Garden
P I- 6
Mitsubishi UFJ Trust and Banking Building
P I- 7
Burex Kojimachi Building
P I- 8
Sanno Grand Building

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

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

P
P
P
P
P

I- 9
I- 10
I- 11
I- 12
I- 13

Yurakucho Denki Building
Kodenmacho Shin-Nihonbashi Building
Burex Kyobashi Building
Ginza Sanwa Building
Ryoshin Ginza East Mirror Building

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

Real property
Trust
Real property
Real property
Real property

P
P
P

I- 14
I- 15
I- 16

Harumi Center Building
Aoyama Crystal Building
Shiodome Building

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

Real property
Real property
Trust

P
P
P
P

I- 17
I- 18
I- 19
I- 20

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

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

Trust
Trust
Real property
Real property

P
P
P
P
P
P
P
P
P

I- 21
I- 22
I- 23
I- 24
I- 25
I- 26
I- 27
I- 28
I- 29

Takanawadai Building
Higashi-Gotanda 1Chome Building
Omori-Eki Higashiguchi Building
Nippon Brunswick Building
Yoyogi 1Chome Buildingda Vinci Harajuku
Jingumae Media Square Building
Shibuya Cross Tower
Ebisu Neonato

Higashi-Gotanda, Shinagawa-ku
Higashi-Gotanda, Shinagawa-ku
Omori-Kita, Ota-ku
Sendagaya, Shibuya-ku
Yoyogi, Shibuya-ku
Jingumae, Shibuya-ku
Jingumae, Shibuya-ku
Shibuya, Shibuya-ku
Ebisu, Shibuya-ku

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

P
P
P
P

I- 30
I- 31
I- 32
I- 33

Harmony Tower
Otsuka Higashi-Ikebukuro Building
Ikebukuro 2Chome Building
Ikebukuro YS Building
Tokyo metropolitan area, excluding 23 wards
P II- 1
Hachioji First Square

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

Real property
Trust
Trust
Real property

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

5,000
81,555
9,520
4,810
14,70044,7007,000
10,20010,70020,900
7,200
3,173
5,250
16,830
5,353
2,645
7,999
26,8007,680
21,25054,60075,850
4,859
2,808
7,830
9,350
22,426
31,776
2,738
5,500
5,123
6,670
8,700
4,885
12,20034,600
3,740
360
4,100
8,500
3,541
1,728
4,500

Hachioji, Tokyo

Real property

P

II- 2

Saitama, Saitama Prefecture

Real property

P
P
P

II- 3
II- 4
II- 5

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

3,300
2,379
5,679
1,232
1,342
2,574
37,4003,375
4,000

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

7,100
1,000
2,924
250
3,174
2,880
1,700
4,580
3,850
1,300
5,150
1,680
14,5331,865
2,650
24,000
2,264
1,900
4,164
6,934
7,380
14,314
4,650
1,320
1,450
2,770
1,550
5,000
3,657
643,891

NumberName of building

Saitama Urawa Building

MM Park Building
Kawasaki Isago Building
Musashi Kosugi STM Building
Other major cities
P III- 1
8.3 Square Kita Building
P III- 2
Jozenji Park Building
P III- 3
Sendai Honcho Honma Building

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

Real property
Trust
Real property

Sapporo, Hokkaido
Sendai, Miyagi Prefecture
Sendai, Miyagi Prefecture

Real property
Real property
Trust

P

III- 4

Kanazawa Park Building

Kanazawa, Ishikawa Prefecture

Real property

P

III- 5

Nishiki Park Building

Nagoya, Aichi Prefecture

Real property

P
P
P
P
P
P

III- 6
III- 7
III- 8
III- 9III- 10
III- 11

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

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

Real property
Real property
Real property
Real property
Trust
Real property

P

III- 12

Midosuji Daiwa Building

Osaka, Osaka Prefecture

Trust

P
P

III- 13
III- 14

Lit City Building
NHK Hiroshima Broadcasting Center Building

Okayama, Okayama Prefecture
Hiroshima, Hiroshima Prefecture

Real property
Real property

P
PP

III- 15
III- 16
III- 17

Tosei Tenjin Building
Tenjin Crystal Building
Hinode Tenjin Building
Total

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

Real property
Real property
Trust

12 Japan Real Estate Investment Corporation

Acquisition price(¥ mil)(0.8%)(12.7%)(1.5%)(0.7%)(2.3%)(6.9%)(1.1%)(3.2%)(1.1%)(0.5%)(0.8%)(2.6%)(1.2%)(4.2%)(1.2%)(11.8%)(0.8%)(0.4%)(1.2%)(4.9%)(0.4%)(0.9%)(0.8%)(1.0%)(1.4%)(0.8%)(1.9%)(5.4%)(0.6%)(1.3%)(0.5%)(0.3%)(0.7%)(0.9%)(0.4%)(5.8%)(0.5%)(0.6%)(1.1%)(0.2%)(0.5%)(0.7%)(0.8%)(0.3%)(2.3%)(0.3%)(0.4%)(3.7%)(0.6%)(2.2%)(0.7%)(0.4%)(0.2%)(0.8%)(0.6%)(100.0%)Percentage ofownership of thebuilding

Completion

Appraisal value atthe end of
period (¥ mil)

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

1985
2006
1998
1993
2004
2003
2005
1966

6,050
70,3009,170
4,790
16,10046,5006,220
28,4004,791m2
25,678m2
6,269m2
3,687m2
9,316m2
11,922m2
4,495m2
20,865m2(51,577ft2)(276,402ft2)(67,480ft2)(39,695ft2)(100,282ft2)(128,332ft2)(48,384ft2)(224,594ft2)

4,791m2
23,502m2
6,019m2
3,218m2
9,316m2
11,922m2
4,495m2
20,349m2

10.78%
100.0%
100.0%
70.95%
100.0%

1975
1991
2002
1982
1998

7,810
3,600
6,170
14,9005,830

4,694m2
3,897m2
4,279m2
4,329m2
4,250m2(50,531ft2)(41,950ft2)(46,068ft2)(46,604ft2)(45,756ft2)

100.0%
100.0%
40.0%

2006
1982
2007

21,4007,970
79,60020,812m2
4,898m2
32,151m2

100.0%
100.0%
100.0%
31.325%

1984
1992
1989
1996

6,310
2,930
6,890
33,100100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
12.29939%

1991
2004
1989
1974
2003
1987
1998
1976
1994

29.253305%
100.0%
100.0%
100.0%

Occupancy
rate

Numberof tenants(51,577ft2)(252,980ft2)(64,796ft2)(34,641ft2)(100,282ft2)(128,332ft2)(48,384ft2)(219,041ft2)

100.0%
91.5%
96.0%
87.3%
100.0%
100.0%
100.0%
97.5%

1
5
7
9
1
10
1
43

222
1,355
281
121
482
982
162
1,025

(1.0%)(6.1%)(1.3%)(0.5%)(2.2%)(4.4%)(0.7%)(4.6%)

3,631m2
3,198m2
4,279m2
4,329m2
3,072m2(39,087ft2)(34,430ft2)(46,068ft2)(46,604ft2)(33,075ft2)

77.4%
82.1%
100.0%
100.0%
72.3%

12
9
1
11
8

277
126
150
380
135

(1.3%)(0.6%)(0.7%)(1.7%)(0.6%)(224,022ft2)(52,724ft2)(346,080ft2)

19,492m2
4,511m2
32,048m2(209,812ft2)(48,556ft2)(344,971ft2)

93.7%
92.1%
99.7%

6
6
29

772
211
2,378

(3.5%)(1.0%)(10.8%)

9,631m2
4,062m2
6,198m2
35,043m2(103,671ft2)(43,726ft2)(66,717ft2)(377,203ft2)

9,534m2
3,368m2
4,698m2
32,078m2(102,626ft2)(36,257ft2)(50,574ft2)(345,292ft2)

99.0%
82.9%
75.8%
91.5%

18
7
8
96

304
97
184
1,712

(1.4%)(0.4%)(0.8%)(7.7%)

2,050
5,650
5,410
7,520
10,3006,090
10,70040,8002,880

4,067m2
5,205m2
7,708m2
7,356m2
7,745m2
3,147m2
5,558m2
29,795m2
2,462m2(43,783ft2)(56,035ft2)(82,972ft2)(79,180ft2)(83,373ft2)(33,876ft2)(59,832ft2)(320,718ft2)(26,511ft2)

0m2
5,205m2
7,204m2
7,356m2
7,745m2
3,147m2
5,558m2
28,137m2
1,231m2(0ft2)(56,035ft2)(77,554ft2)(79,180ft2)(83,373ft2)(33,876ft2)(59,832ft2)(302,865ft2)(13,255ft2)

0.0%
100.0%
93.5%
100.0%
100.0%
100.0%
100.0%
94.4%
50.0%

0
4
17
21
7
5
7
60
2

6
203
263
315
338
204
352
1,428
62

(0.0%)(0.9%)(1.2%)(1.4%)(1.5%)(0.9%)(1.6%)(6.5%)(0.3%)

1997
1987
1990
1989

9,990
3,820
1,600
4,430

10,929m2
7,183m2
2,186m2
5,823m2(117,646ft2)(77,319ft2)(23,532ft2)(62,687ft2)

9,952m2
7,183m2
2,186m2
5,823m2(107,123ft2)(77,319ft2)(23,532ft2)(62,687ft2)

91.1%
100.0%
100.0%
100.0%

14
6
9
9

399
196
76
195

(1.8%)(0.9%)(0.3%)(0.9%)

80.4%

1996

4,460

10,068m2(108,378ft2)

9,216m2(99,206ft2)

91.5%

37

247

(1.1%)

100.0%

1990

2,080

4,510m2(48,550ft2)

4,421m2(47,588ft2)

98.0%

14

114

(0.5%)

100.0%
100.0%
34.32%

2007
1990
1990

36,0002,870
3,540

38,496m2
6,831m2
5,394m2(414,374ft2)(73,537ft2)(58,071ft2)

36,555m2
6,831m2
5,394m2(393,476ft2)(73,537ft2)(58,071ft2)

95.0%
100.0%
100.0%

27
12
21

1,388
162
161

(6.3%)(0.7%)(0.7%)

100.0%
50.0%
100.0%

2006
1993
1991

6,630
922
2,660

12,265m2
2,518m2
6,241m2(132,030ft2)(27,106ft2)(67,185ft2)

12,265m2
2,414m2
5,365m2(132,030ft2)(25,985ft2)(57,753ft2)

100.0%
95.9%
86.0%

8
17
16

334
69
128

(1.5%)(0.3%)(0.6%)

89.0%

1991

5,330

20,848m2(224,408ft2)

17,057m2(183,601ft2)

81.8%

70

456

(2.1%)

57.04651%

1995

3,990

8,056m2(86,715ft2)

7,736m2(83,272ft2)

96.0%

51

268

(1.2%)

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

1987
1987
1991
1982
1995
1992

1,510
13,4001,130
1,720
17,0003,850

3,911m2
21,624m2
3,470m2
6,801m2
28,414m2
11,574m2(42,103ft2)(232,763ft2)(37,354ft2)(73,215ft2)(305,852ft2)(124,587ft2)

3,274m2
19,211m2
3,194m2
4,449m2
25,582m2
9,786m2(35,246ft2)(206,795ft2)(34,387ft2)(47,899ft2)(275,365ft2)(105,338ft2)

83.7%
88.8%
92.1%
65.4%
90.0%
84.6%

12
25
10
26
44
15

97
648
70
93
700
236

(0.4%)(2.9%)(0.3%)(0.4%)(3.2%)(1.1%)

100.0%

1991

14,50020,450m2(220,127ft2)

19,041m2(204,965ft2)

93.1%

32

601

(2.7%)

27.7488%
48.753%

2005
1994

4,720
2,980

9,965m2
9,860m2(107,269ft2)(106,134ft2)

9,210m2
9,628m2(99,140ft2)(103,642ft2)

92.4%
97.7%

37
11

241
262

(1.1%)(1.2%)

100.0%
100.0%
74.4844%

1992
1993
1987

1,320
2,500
3,720
632,1123,924m2(42,243ft2)
5,674m2(61,085ft2)
2
5,852m(62,995ft2)
2
524,683m (5,647,636ft2)

98.1%
94.5%
100.0%
92.4%

19
31
8
992

89
146
181
22,112(0.4%)(0.7%)(0.8%)(100.0%)

Leasable space

4,000m2(43,057ft2)
6,006m2(64,648ft2)
25,852m(62,995ft2)
2567,612m (6,109,722ft2)

Leased space

Revenues from leasing
operations (¥ mil)Japan Real Estate Investment Corporation 13

Major Tenants Roster
Rank

Name of tenant

Name of building

Leased space% of totalleased space

1
2
3
4
5
6
7
8
9
10

Banyu Pharmaceutical Co., Ltd. (Note 1)
NTT Communications Corporation
Mitsubishi UFJ Trust and Banking Corporation
Seven & i Holdings Co., Ltd.
Space Design, Inc.
JSOL Corporation(Note 2)
TOTO LTD.
SANYO SHOKAI LTD.
Sanofi-aventis K.K.

Kitanomaru Square (also includes 1 other building)
Shiodome Building
Mitsubishi UFJ Trust and Banking Building
Nibancho Garden
Burex Kojimachi Building (also includes 1 other building)Harumi Center Building
MM Park Building (also includes 1 other building)Midosuji Daiwa Building (also includes 1 other building)
Shiodome Building
Tokyo Opera City Building (also includes 1 other building)

23,126m2 (248,935ft2)
11,813m2 (127,157ft2)
10,665m2 (114,802ft2)
9,316m2 (100,282ft2)
8,774m2 (94,453ft2)
7,634m2 (82,178ft2)
7,027m2 (75,643ft2)
6,906m2 (74,341ft2)
5,935m2 (63,889ft2)
5,820m2 (62,654ft2)

4.4%
2.3%
2.0%
1.8%
1.7%
1.5%
1.3%
1.3%
1.1%
1.1%

Notes: 1. Banyu Pharmaceutical Co., Ltd. changed its contract name to MSD K.K. on October 1, 2010.
2. Not disclosed as per tenant request

Locations of Portfolio Properties
II-1 to II-5: Tokyo metropolitan area,
excluding 23 wards

III-1 to III-17: Other major cities

III-1

II-2
II-1
III-2

III-3

II-5
II-3

III-4

II-4

III-7III-5
III-10
III-6
III-13 III-11
III-9 III-8
III-12
III-14
III-15
III-17 III-16

I-1 to I-33: Tokyo
23 wards

I-32
I-33 I-31
I-30

I-2

I-1

I-3
I-5
I-19
I-4
I-24
I-10
I-7
I-20
I-6
I-11
I-25 I-26
I-8
I-12
I-9
I-27
I-13
I-28
I-15
I-17 I-16 I-14
I-29
I-18
I-21
I-22

I-23

Tokyo Station

14 Japan Real Estate Investment Corporation

Over view of Portfolio Properties As of September 30, 2010
Note: Concerning real estate or trust beneficiary rights in trust of real estate of which the Company is a partial owner through co-ownership or compartmentalized building units or
quasi-co-ownership, the figures for “Site area” and “Floor area of building” represent total site area and total floor space for the entire building.

Genki Medical PlazaP

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

Kitanomaru SquareI-1

Chiyoda-ku, Tokyo
1,052.80m2 (11,332ft2)
6,722.02m2 (72,355ft2)
Above ground: 8 floors
Below ground: 1 floor
September 1985

P

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

MD Kanda BuildingP

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

P

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

Nibancho Garden

P

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

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

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

Completion:

I-6

Chiyoda-ku, Tokyo
8,100.39m2 (87,192ft2)
108,171.67m2 (1,164,349ft2)
Above ground: 29 floors
Below ground: 4 floors
February 2003

Sanno Grand Building

I-7

Chiyoda-ku, Tokyo
967.67m2 (10,416ft2)
6,526.64m2 (70,252ft2)
Above ground: 11 floors
Below ground: 1 floor
January 2005

Chiyoda-ku, Tokyo
1,218.56m2 (13,116ft2)
9,370.25m2 (100,860ft2)
Above ground: 10 floors
Below ground: 1 floor
July 1993

P

Burex Kojimachi
Building
P

I-4

Mitsubishi UFJ Trust andBanking Building

I-5

Chiyoda-ku, Tokyo
11,003.87m2 (118,445ft2)
57,031.06m2 (613,877ft2)
Above ground: 14 floors
Below ground: 2 floors
April 2004

Chiyoda-ku, Tokyo
5,821.03m2 (62,657ft2)
57,279.20m2 (616,548ft2)
Above ground: 26 floors
Below ground: 2 floors
January 2006

Kandabashi Park
Building

I-3

Chiyoda-ku, Tokyo
1,085.83m2 (11,688ft2)
8,185.11m2 (88,104ft2)
Above ground: 10 floors
February 1998

I-2

P

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

I-8

Chiyoda-ku, Tokyo
3,663.93m2 (39,438ft2)
33,875.95m2 (364,637ft2)
Above ground: 10 floors
Below ground: 3 floors
September 1966

Japan Real Estate Investment Corporation 15

Yurakucho Denki
Building
P

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

Kodenmacho Shin-Nihonbashi
Building

I-9

Chiyoda-ku, Tokyo
5,749.91m2 (61,891ft2)
70,287.65m2 (756,569ft2)
Above ground: 20 floors
Below ground: 4 floors
September 1975

P

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

Burex Kyobashi
Building
P

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

P

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

Ryoshin Ginza East
Mirror BuildingP

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

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

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

Completion:

16 Japan Real Estate Investment Corporation

I-14

Chuo-ku, Tokyo
4,664.63m2 (50,210ft2)
26,447.27m2 (284,676ft2)
Above ground: 10 floors
November 2006

Shiodome Building

I-15

Minato-ku, Tokyo
989.30m2 (10,649ft2)
8,094.36m2 (87,127ft2)
Above ground: 10 floors
Below ground: 4 floors
December 1982

Chuo-ku, Tokyo
1,119.27m2 (12,048ft2)
8,851.00m2 (95,271ft2)
Above ground: 9 floors
Below ground: 2 floors
October 1982

P

Aoyama Crystal
Building
P

I-12

Harumi Center Building

I-13

Chuo-ku, Tokyo
864.91m2 (9,310ft2)
5,751.68m2 (61,911ft2)
Above ground: 8 floors
Below ground: 1 floor
October 1998

Chuo-ku, Tokyo
773.28m2 (8,324ft2)
5,822.88m2 (62,677ft2)
Above ground: 9 floors
Below ground: 1 floor
November 1991

Ginza Sanwa Building

I-11

Chuo-ku, Tokyo
756.03m2 (8,138ft2)
5,470.54m2 (58,884ft2)
Above ground: 8 floors
Below ground: 1 floor
February 2002

I-10

P

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

I-16

Minato-ku, Tokyo
12,046.00m2 (129,662ft2)
115,930.83m2 (1,247,868ft2)
Above ground: 24 floors
Below ground: 2 floors
December 2007

Shiba 2Chome
Daimon BuildingP

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

Cosmo Kanasugibashi
Building

I-17

Minato-ku, Tokyo
2,820.90m2 (30,364ft2)
16,235.10m2 (174,753ft2)
Above ground: 8 floors
Below ground: 2 floors
March 1984P

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

Shinwa BuildingP

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

P

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

Takanawadai BuildingP

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

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

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

Completion:

I-22

Shinagawa-ku, Tokyo
1,539.95m2 (16,576ft2)
6,460.39m2 (69,539ft2)
Above ground: 8 floors
July 2004

Nippon Brunswick
Building

I-23

Ota-ku, Tokyo
2,199.30m2 (23,673ft2)
14,095.34m2 (151,721ft2)
Above ground: 11 floors
Below ground: 2 floors
July 1989

Shinjuku-ku, Tokyo
18,236.94m2 (196,301ft2)
232,996.81m2 (2,507,954ft2)
Above ground: 54 floors
Below ground: 4 floors
July 1996

P

Omori-Eki Higashiguchi
Building
P

I-20

Higashi-Gotanda
1Chome Building

I-21

Shinagawa-ku, Tokyo
1,416.17m2 (15,244ft2)
5,762.70m2 (62,029ft2)
Above ground: 13 floors
January 1991

Minato-ku, Tokyo
758.54m2 (8,165ft2)
5,420.93m2 (58,350ft2)
Above ground: 9 floors
Below ground: 1 floor
March 1992

Tokyo Opera City
Building

I-19

Shinjuku-ku, Tokyo
822.00m2 (8,848ft2)
8,291.69m2 (89,251ft2)
Above ground: 10 floors
Below ground: 1 floor
November 1989

I-18

P

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

I-24

Shibuya-ku, Tokyo
1,497.52m2 (16,119ft2)
11,957.38m2 (128,708ft2)
Above ground: 9 floors
Below ground: 2 floors
March 1974

Japan Real Estate Investment Corporation 17

Yoyogi 1Chome
Building
P

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

I-25

Shibuya-ku, Tokyo
1,755.75m2 (18,899ft2)
10,778.10m2 (116,014ft2)
Above ground: 14 floors
Below ground: 1 floor
October 2003

P

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

Jingumae Media
Square BuildingP

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

P

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

Ebisu Neonato

P

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

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

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

Completion:

18 Japan Real Estate Investment Corporation

I-30

Nakano-ku, Tokyo
10,020.52m2 (107,860ft2)
72,729.31m2 (782,851ft2)
Above ground: 29 floors
Below ground: 2 floors
March 1997

Ikebukuro 2Chome
Building

I-31

Toshima-ku, Tokyo
2,121.39m2 (22,834ft2)
9,531.28m2 (102,594ft2)
Above ground: 8 floors
Below ground: 1 floor
November 1987

Shibuya-ku, Tokyo
5,153.45m2 (55,471ft2)
61,862.33m2 (665,880ft2)
Above ground: 32 floors
Below ground: 3 floors
April 1976

P

Otsuka Higashi-Ikebukuro
Building
P

I-28

Harmony Tower

I-29

Shibuya-ku, Tokyo
5,005.70m2 (53,881ft2)
36,598.38m2 (393,941ft2)
Above ground: 18 floors
Below ground: 2 floors
October 1994

Shibuya-ku, Tokyo
839.66m2 (9,038ft2)
4,359.20m2 (46,922ft2)
Above ground: 7 floors
Below ground: 2 floors
December 1987

Shibuya Cross Tower

I-27

Shibuya-ku, Tokyo
2,124.59m2 (22,869ft2)
9,420.42m2 (101,400ft2)
Above ground: 9 floors
Below ground: 2 floors
March 1998

I-26

P

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

I-32

Toshima-ku, Tokyo
397.26m2 (4,276ft2)
3,157.51m2 (33,987ft2)
Above ground: 9 floors
Below ground: 1 floor
May 1990

Ikebukuro YS
Building
P

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

Hachioji First
SquareI-33

Toshima-ku, Tokyo
1,384.56m2 (14,903ft2)
7,464.64m2 (80,349ft2)
Above ground: 8 floors
Below ground: 1 floor
December 1989

P

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

Saitama Urawa
Building
P

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

P

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

Kawasaki Isago
Building
P

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

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

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

Completion:

II-5

Kawasaki, Kanagawa Prefecture
3,552.15m2 (38,235ft2)
22,839.61m2 (245,843ft2)
Above ground: 8 floors
Below ground: 2 floors
October 1990

Jozenji Park Building

III-1

Sapporo, Hokkaido
5,541.60m2 (59,649ft2)
16,096.97m2 (173,266ft2)
Above ground: 11 floors
Below ground: 1 floor
December 2006

Yokohama, Kanagawa Prefecture
6,825.77m2 (73,472ft2)
49,037.51m2 (527,835ft2)
Above ground: 15 floors
Below ground: 1 floor
December 2007

P

8 . 3 Square Kita
Building
P

II-3

Musashi Kosugi
STM Building

II-4

Kawasaki, Kanagawa Prefecture
1,594.50m2 (17,163ft2)
9,623.83m2 (103,590ft2)
Above ground: 12 floors
Below ground: 1 floor
December 1990

Hachioji, Tokyo
2,989.33m2 (32,177ft2)
18,329.98m2 (197,302ft2)
Above ground: 12 floors
Below ground: 1 floor
July 1996

MM Park Building

II-2

Saitama, Saitama Prefecture
1,533.06m2 (16,502ft2)
6,258.59m2 (67,367ft2)
Above ground: 8 floors
March 1990

II-1

P

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

III-2

Sendai, Miyagi Prefecture
1,566.68m2 (16,864ft2)
7,648.33m2 (82,326ft2)
Above ground: 8 floors
Below ground: 1 floor
January 1993

Japan Real Estate Investment Corporation 19

Sendai Honcho
Honma BuildingP

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

Kanazawa Park
Building

III-3

Sendai, Miyagi Prefecture
1,437.47m2 (15,473ft2)
8,247.50m2 (88,775ft2)
Above ground: 11 floors
November 1991

P

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

Nishiki Park BuildingP

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

P

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

Nagoya Hirokoji
Building
P

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

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

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

Completion:

20 Japan Real Estate Investment Corporation

III-8

Nagoya, Aichi Prefecture
805.04m2 (8,665ft2)
5,348.00m2 (57,565ft2)
Above ground: 7 floors
Below ground: 1 floor
September 1991

Shin-Fujita Building

III-9

Kyoto, Kyoto Prefecture
1,471.57m2 (15,840ft2)
9,701.04m2 (104,421ft2)
Above ground: 9 floors
Below ground: 1 floor
November 1982

Nagoya, Aichi Prefecture
786.79m2 (8,469ft2)
6,445.08m2 (69,374ft2)
Above ground: 9 floors
Below ground: 2 floors
September 1987

P

Kyoto Shijo
Kawaramachi Building
P

III-6

Nagoya Misono
Building

III-7

Nagoya, Aichi Prefecture
4,095.81m2 (44,087ft2)
33,377.73m2 (359,275ft2)
Above ground: 18 floors
Below ground: 2 floors
May 1987

Kanazawa, Ishikawa Prefecture
6,642.71m2 (71,501ft2)
43,481.20m2 (468,027ft2)
Above ground: 12 floors
Below ground: 2 floors
October 1991

Hirokoji Sakae
Building

III-5

Nagoya, Aichi Prefecture
2,170.45m2 (23,363ft2)
25,091.91m2 (270,087ft2)
Above ground: 22 floors
Below ground: 4 floors
August 1995

III-4

P

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

III-10

Osaka, Osaka Prefecture
6,159.61m2 (66,301ft2)
45,411.31m2 (488,803ft2)
Above ground: 21 floors
Below ground: 2 floors
April 1995

Sakaisujihonmachi
Building
P

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

Midosuji Daiwa
Building

III-11

Osaka, Osaka Prefecture
2,036.22m2 (21,918ft2)
17,145.59m2 (184,553ft2)
Above ground: 13 floors
Below ground: 2 floors
October 1992

P

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

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

III-13

Okayama, Okayama Prefecture
7,596.44m2 (81,767ft2)
52,653.19m2 (566,754ft2)
Above ground: 20 floors
Below ground: 2 floors
June 2005

P

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

Tosei Tenjin BuildingP

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

III-14Hiroshima, Hiroshima Prefecture
3,296.46m2 (35,483ft2)
35,217.28m2 (379,075ft2)
Above ground: 23 floors
Below ground: 2 floors
August 1994

Tenjin Crystal
Building

III-15

Fukuoka, Fukuoka Prefecture
1,221.31m2 (13,146ft2)
5,588.57m2 (60,155ft2)
Above ground: 8 floors
March 1992

Osaka, Osaka Prefecture
3,044.65m2 (32,772ft2)
31,213.27m2 (335,977ft2)
Above ground: 15 floors
Below ground: 2 floors
September 1991

NHK Hiroshima
Broadcasting Center
Building

Lit City BuildingP

III-12P

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

III-16

Fukuoka, Fukuoka Prefecture
1,835.17m2 (19,754ft2)
10,432.04m2 (112,289ft2)
Above ground: 14 floors
Below ground: 1 floor
August 1993

Hinode Tenjin
Building
P

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

III-17

Fukuoka, Fukuoka Prefecture
1,452.15m2 (15,631ft2)
12,527.07m2 (134,840ft2)
Above ground: 10 floors
Below ground: 2 floors
August 1987

Japan Real Estate Investment Corporation 21

22 Japan Real Estate Investment Corporation

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

p.23
p.24
p.26
p.26
p.27
p.28
p.42

Selected Financial Data
Thousands of U.S. dollars

Millions of yen
For the period from

For the period from

(Note 1)For the period from

For the period from

For the period from

For the period from

April 1, 2010 to

October 1, 2009 to

April 1, 2009 to

October 1, 2008 to

April 1, 2008 to

April 1, 2010 to

September 30, 2010

March 31, 2010

September 30, 2009

March 31, 2009

September 30, 2008

September 30, 2010

Operating Revenues¥ 22,112¥ 21,665¥ 21,524¥ 20,716¥ 19,805$5,263,813

Operating Expenses

12,173

11,127

11,46910,761

9,998

145,236

Operating Income

9,939

10,53810,054

9,955

9,807

118,576

Income before Income Taxes

8,135

8,876

8,505

8,426

8,449

97,060Net Income

8,134

8,875

8,504

8,425

8,448

97,046

Total Assets

634,974

637,326

564,528565,022542,920

7,575,448

Interest-Bearing Debts

262,450

262,500

220,500

220,500

199,500

3,131,114

Net Assets

332,536

333,228

306,106

306,027

306,050

3,967,270

Unitholders’ Capital

324,353

324,353

297,601

297,601

297,601

3,869,639

Number of Units

489,200

489,200

443,000

443,000

443,000

489,200

Net Assets per Unit (Yen/U.S. dollars)

679,755

681,170

690,984

690,806

690,858

8,110

Cash Distribution

8,134

8,826

8,504

8,425

8,448

97,046

Dividend Payout Ratio

99.9%

99.4%

100.0%

99.9%

100.0%

99.9%

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

16,62818,04319,19819,02019,072

198.38Net Operating Income (NOI)

15,091

14,414

13,95014,575

14,173

180,050

Funds from Operations (FFO)

12,353

11,914

11,577

12,213

12,009147,378

Return on Assets (ROA) (Note 2)

1.3%

1.5%

1.5%

1.5%

1.6%

1.3%

(2.6% annualized)

Return on Equity (ROE) (Note 3)

2.4
(4.9% annualized)

EOP Equity Ratio (Note 4)(3.0% annualized)

2.7％(5.5% annualized)(3.0% annualized)

2.8％(5.5% annualized)(3.1% annualized)

2.8％(5.5% annualized)(3.1% annualized)

2.7％(5.5% annualized)(2.6% annualized)

2.4%(4.9% annualized)

52.4%

52.3%

54.2%

54.2%

56.4%

52.4%

41.3%

41.2%

39.1%

39.0%

36.7%

41.3%

FFO Multiple

15.1 times

16.3 times

14.1 times

13.7 times

15.5 times

15.1 times

Debt Service Coverage Ratio (Note 6)

7.8 times

9.0 times

9.0 times

8.9 times

9.7 times

7.8 times

EOP Interest-Bearing Debt Ratioon Total Assets (Note 5)

Notes 1:

2:
3:

4:
5:
6:

Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥83.82 = US$1.00, the foreign exchange rate on September 30,
2010, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen has been or could be readily converted, realized or
settled into U.S. dollars at that rate or any other rate.
ROA = Income before Income Taxes ÷ Average of Total Assets during the period
ROE = Net Income ÷ Average of Net Assets during the period(Annualized portion of the calculation given in note 2 and note 3 assumes a fiscal period of 183 days for the period ended September 30, 2008, 182 days for theperiod ended March 31, 2009, 183 days for the period ended September 30, 2009, 182 days for the period ended March 31, 2010 and 183 days for the period ended
September 30, 2010.)
EOP Equity Ratio = (Net Assets at end of period ÷ Total Assets at end of period) × 100
EOP Interest-Bearing Debt Ratio on Total Assets = (Interest-Bearing Debt at end of period ÷ Total Assets at end of period) × 100
Debt Service Coverage Ratio = Net Income before Interest, Taxes, Depreciation and Amortization ÷ Interest Expenses

Japan Real Estate Investment Corporation

23

Balance Sheets
As of September 30, 2010 and March 31, 2010

Thousands of yen
As of
As of
September 30, 2010
March 31, 2010

U.S. dollars (Note 1)
As of
September 30, 2010ASSETS
Current Assets:
Cash and bank deposits
Rental receivables
Refundable income taxes¥ 19,312,117)¥ 18,753,604)$ 230,399,873)

138,113)

154,218)

1,647,743)

2,546)

3,790)

30,385)―)

819,013)―)

139,939)

176,709)

1,669,522)

19,592,717)

19,907,336)

233,747,523)

Land

423,146,654)

423,030,382)

5,048,277,905)

Buildings and structures

224,862,344)

222,885,082)

2,682,681,270)

Machinery and equipment

3,016,602)

3,016,602)

35,989,055)

Refundable consumption taxes
Other current assets
Total current assets

Property and Equipment, at Cost:

Tools, furniture and fixtures

119,144)

116,069)

1,421,429)

Construction in progress

226,224)

228,711)2,698,928)

651,370,969)

649,276,848)

Subtotal

7,771,068,588) )Accumulated depreciation(42,912,152)(38,693,393)(511,956,013))

Total property and equipment

608,458,816)

610,583,455)

7,259,112,575)

577,168

577,168

6,885,804)

Investments and Other Assets:
Investment securities
Deposits

29,33029,330349,921)Long-term prepaid expenses

19,17823,769228,801)

5,306,643

5,306,643

63,309,995)

Easement

Leasehold rights

828,095

828,095

9,879,448)

Deferred investment corporation bond issuance costs

162,077

70,574

1,933,640)¥634,974,026¥637,326,373$7,575,447,707

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

24 Japan Real Estate Investment Corporation

Thousands of yen
As of
As of
September 30, 2010
March 31, 2010

U.S. dollars (Note 1)
As of
September 30, 2010

LIABILITIESCurrent Liabilities:
Trade accounts payable¥

373,669¥,990,412$

4,458,004

Other payables

855,510

866,972

10,206,519

Short-term loans

29,000,000

39,000,000

345,979,480

Current portion of long-term loans

64,100,000

9,100,000

764,733,954―

10,000,000―

846,510

816,801

10,099,141

Current portion of investment corporation bonds
Accrued expenses
Accrued consumption taxes

686,855―

8,194,407

Rent received in advance

2,324,448

2,393,764

27,731,431

Other current liabilities

5,832

11,64369,58898,192,826

63,179,594

1,171,472,524

Investment corporation bonds

55,000,000

35,000,000

656,167,979

Long-term loans

114,350,000

169,400,000

1,364,232,880

Deposits received from tenants

34,894,592

36,517,967

416,303,898

Total long-term liabilities

204,244,592

240,917,967

2,436,704,757

Total Liabilities

302,437,419

304,097,561

3,608,177,281

324,353,108

324,353,108

3,869,638,607

8,183,499

8,875,704

97,631,819

Total current liabilities

Long-Term Liabilities:

NET ASSETS
Unitholders’ capital
Authorized:
Issued:2,000,000 units
489,200 units as of September 30, 2010 and
489,200 units as of March 31, 2010

Retained earnings
Total net assets

332,536,607

333,228,812

3,967,270,426

Total Liabilities and Net Assets¥634,974,026¥637,326,373$7,575,447,707

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

Japan Real Estate Investment Corporation25

Statements of Income and Retained Earnings
For the six months ended September 30, 2010 and March 31, 2010
Thousands of yen
For the period
from April 1, 2010
to September 30, 2010

U.S. dollars (Note 1)

For the period
from October 1, 2009
to March 31, 2010

For the period
from April 1, 2010
to September 30, 2010

Operating Revenues and Expenses
Operating Revenues:
Rental revenues
Non-rental revenues
Gain on sale of properties
Compensation for the property transfer
Total operating revenues¥21,946,264
166,508――
22,112,773¥20,635,057
123,901
885,059
21,795
21,665,813$261,826,114
1,986,499―)―)
263,812,614

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

11,239,716
542,435
186,420
155,086
50,057
12,173,716
9,939,057

10,290,164
529,379
180,909―
127,080
11,127,533
10,538,280

134,093,496
6,471,427
2,224,059
1,850,229
597,201
145,236,412
118,576,201

11,255
19,724
8,110
7,607
0

19,716―――
10

134,278
235,31496,75590,7651)

1,373,981
438,677
17,742―)
19,7888,135,564

1,196,686
403,852
10,82850,59019,7538,876,295

16,392,047
5,233,562
211,671―)
236,087
97,059,947

1,208
(73)
8,134,430
49,068¥ 8,183,499

605
17
8,875,672
31¥ 8,875,704

14,412(881)
97,046,416
585,403$ 97,631,819

Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Dividends income
Refund of property taxes
Interest on tax refund
Other non-operating revenues
Non-Operating Expenses:
Interest expense
Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance costs
New unit issuance costs
Other non-operating expenses
Income before Income Taxes
Income Taxes:
Current
Deferred
Net Income
Retained Earnings Brought Forward
Retained Earnings at End of Period

Statements of Changes in Unitholders’ Equity
For the six months ended September 30, 2010 and March 31, 2010
Thousands of yen

Balance as of September 30, 2009
New unit issuanceCash dividends paid
Net income
Balance as of March 31, 2010
Cash dividends paid
Net income
Balance as of September 30, 2010

Units

Unitholders’ capital

Retained earnings

Total

443,000
46,200――489,200――
489,200¥297,601,460
26,751,648――¥324,353,108――¥324,353,108¥8,504,745)―(8,504,714)
8,875,672)¥8,875,704)(8,826,635)
8,134,430)¥8,183,499)¥306,106,205)
26,751,648)(8,504,714)
8,875,672)¥333,228,812)(8,826,635)
8,134,430)¥332,536,607)

U.S. dollars (Note 1)

Balance as of March 31, 2010
Cash dividends paid
Net income
Balance as of September 30, 2010
The accompanying notes form an integral part of these financial statements.

26 Japan Real Estate Investment Corporation

Units

Unitholders’ capital

Retained earnings

489,200――
489,200$3,869,638,607――$3,869,638,607$105,890,051)(105,304,648)
97,046,416)$ 97,631,819)

Total$3,975,528,658)(105,304,648)
97,046,416)$3,967,270,426)

Statements of Cash Flows
For the six months ended September 30, 2010 and March 31, 2010
Thousands of yen

U.S. dollars (Note 1)

For the period
from April 1, 2010
to September 30, 2010

For the period
from October 1, 2009
to March 31, 2010

For the period
from April 1, 2010
to September 30, 2010

Income before income taxes¥ 8,135,564)¥ 8,876,295)$ 97,059,947)

Depreciation and amortization

4,218,759)

3,945,587)

50,331,180)

17,742)

10,828)211,671)―)(19,724)(11,255)
1,812,658)

50,590)―)(19,716)
1,600,538)―)(235,314)(134,278)
21,625,609)

Rental receivables

16,104)

26,918)

192,137)

Refundable income taxes

1,243)(85)

14,834)

Refundable consumption taxes
Prepaid expenses
Trade accounts payable

819,013)
44,105)(230,525)(819,013)(50,453)
163,659

9,771,093)
526,197)(2,750,243)

Other payables

100,887)(8,828)1,203,620

Accrued expenses

686,992)(343,474)

8,196,041

Rent received in advance(69,316)

131,872)（(826,964)

Decrease due to sale of tangible fixed asset
Long-term prepaid expenses
Other

―)
4,591)(10,730)

614,142)(6,677)(12,600)―)
54,781)(128,014)

15,516,112)

14,159,584)

185,112,297)

Cash Flows from Operating Activities

Amortization of investment corporation bond issuance costs
New unit issuance costs
Dividends income
Interest income
Interest expense

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

28,637)―)―)

21,977)―)(1,783,087)(1,514,269)(21,272,814)

341,656)(1,208)(650)(14,412)

13,760,454)

12,666,642)

164,166,726)(159,723,216)

Cash Flows from Investing Activities
Payments of time deposits(13,388,000)(6,143,000)

Proceeds from time deposits

4,388,000)

12,643,000)

52,350,274)

Purchases of property and equipment(2,584,262)(75,747,620)(30,831,093)

Purchases of intangible assets
Purchases of investment securities
Payments for lease and guarantee deposits
Repayments of lease and guarantee deposits received(13,658)―)―)(2,282,590)(2,601,260)(574,370)(7,428)(2,362,163)(162,945)―)―)(27,232,046)

Proceeds from lease and guarantee deposits received
Net cash used in investing activities

659,215)

5,759,060)

7,864,654)(13,221,295)(69,033,782)(157,734,373)

Cash Flows from Financing Activities
Proceeds from short-term loans

5,500,000)

29,500,000)

65,616,798)

Repayments of short-term loans(15,500,000)(38,500,000)(184,920,067)

Proceeds from long-term loans

6,000,000)

63,000,000)

71,581,961)

Repayments of long-term loans
Proceeds from issuance of investment corporation bonds
Redemption of investment corporation bonds
Payments of investment corporation bond issuance costs
Proceeds from issuance of units
Payments of new unit issuance costs
Dividends to unitholders(6,050,000)
20,000,000)(10,000,000)(109,085)―)―)(8,821,561)(12,000,000)―)―)―)
26,751,648)(50,590)(8,500,907)(72,178,478)
238,606,538)� � � (119,303,269)(1,301,424)―)―)(105,244,116)

Net cash (used in) provided by financing activities(8,980,647)

60,200,149)(107,142,057)

Net (Decrease) Increase in Cash and Cash Equivalents(8,441,487)

3,833,009)(100,709,703)

Cash and Cash Equivalents at Beginning of Period

18,753,604)

14,920,595)

223,736,635)

Cash and Cash Equivalents at End of Period¥10,312,117)¥18,753,604)$123,026,931)

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

Japan Real Estate Investment Corporation

27

Notes to Financial Statements
September 30, 2010 and March 31, 2010

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Japan Real Estate Investment Corporation (the “Company”) is a real estate investment corporation formed to own and invest primarily in a portfolio of
office properties. The Company is externally managed by a licensed asset management company, Japan Real Estate Asset Management Co., Ltd. (“J-Rea”).
J-Rea is currently owned 63% by Mitsubishi Estate Co., Ltd. (“MEC”), 27% by The Dai-ichi Mutual Life Insurance Company (currently renamed The
Dai-ichi Life Insurance Company, Limited, “DL”) and 10% by Mitsui & Co., Ltd.
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, Tokio Marine & Nichido Fire Insurance Co.,
Ltd. (“TMN”) and DL under the Law Concerning Investment Trusts and Investment Corporations of Japan, or the Investment Trust Law.
On September 10, 2001, the Company commenced operations when the Company was listed on the Tokyo Stock Exchange as one of the first real estate
investment corporations in Japan (so-called “J-REITs”). The Company issued 160,000 units at a price of ¥506,625 ($6,044), generating gross proceeds of¥81,060 million ($967,072 thousand) (Note 1).
The Company completed a seventh public offering of 42,000 units at a price of ¥579,040 ($6,908) on December 8, 2009 and third party allocation of 4,200
units at a price of ¥579,040 ($6,908) on December 22, 2009, generating gross proceeds of ¥24,319 million ($290,142 thousand) and ¥2,431million($29,014 thousand). As of September 30, 2010, the Company had total unitholders’ capital of ¥324,353 million ($3,869,639 thousand) with 489,200
outstanding units (Note 1).

At September 30, 2010, the Company owned a portfolio of 55 office properties concerning an aggregate of approximately 567,612 square meters ofleasable space.

Note1: The foreign exchange rate of ¥83.82=US$1.00, as of September 30, 2010, has been used for translation.
Basis of presenting financial statements
The Company maintains its accounting records and prepares its financial statements in accordance with accounting principles generally accepted in Japan(“Japanese GAAP”), including provisions set forth in the Investment Trust Law, the Corporation Law of Japan, the Financial Instruments and Exchange
Law of Japan and the related regulations, which are different in certain respects as to the application and disclosure requirements of International Financial
Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which were prepared in accordance withJapanese GAAP and were presented in the Securities Report of the Company filed with the Kanto Local Finance Bureau. In preparing the accompanying
financial statements, certain reclassifications and modifications have been made to the financial statements issued domestically in order to present them ina format that is more familiar to readers outside Japan. In addition, the notes to financial statements include information that might not be required underJapanese GAAP but is presented herein as additional information.
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥83.82=US$1.00, the foreign exchange rate on
September 30, 2010, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen has been or could be readily
converted, realized or settled into U.S. dollars at that rate or any other rate.
As permitted under the Japanese Financial Instruments and Exchange Law, amounts of less than one million yen have been omitted. As a result, the totals
shown in the accompanying financial statements do not necessarily agree with the sum of the individual amounts.

28 Japan Real Estate Investment Corporation

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESInvestment securities
Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving average method.
Property and equipment
Property and equipment is stated at cost, less accumulated depreciation. The costs of land, buildings and building improvements include the purchase priceof property, legal fees and acquisition costs. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets ranging as statedbelow:
Buildings………………………………………………………………………………………

2-61 years

Structures………………………………………………………………………………………

5-50 years

Machinery and equipment………………………………………………………………….….

3-18 years

Tools, furniture and fixtures…………………………………………..………………..……...

3-15 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. Companies are required to recognize an impairment loss in their statement of income if certain indicators of asset impairment exist andthe book value of an asset exceeds the undiscounted sum of future cash flows of the asset. The standard states that impairment losses should be measured
as the excess of the book value over the higher of (1) the fair market value of the asset, net of disposition costs and (2) the present value of future cash
flows arising ongoing utilization of the asset and from disposal after asset use. The standard covers land, factories, buildings and other forms of property,
plant and equipment as well as intangible assets. Fixed assets are grouped at the lowest level for which there is identifiable cash flows that are independentof cash flows of other groups of assets.

Deferred charges
Deferred charges include investment corporation bond issuance costs and new unit issuance costs.
Investment corporation bond issuance costs are amortized using the straight-line method over the amortization periods.

Revenue recognition
Revenues from leasing of office space are recognized as rent accrued over the lease period.

Taxes on property and equipment
Property and equipment is subject to property taxes and city planning taxes on a calendar year basis. These taxes are generally charged to income during
the period. The sellers of the properties were liable for property taxes for the calendar year including the period from the date of purchase by the Company
through the end of the year since the taxes are imposed on the owner registered in the record as of January 1 based on the assessment made by the local
government. The Company paid the amount equivalent to the property taxes to the sellers applicable to the period since acquisition and included theamount equivalent to the taxes in the purchase price of each property and capitalized as cost of the property.

Consumption taxes
Consumption taxes withheld and consumption taxes paid are not included in the statements of income. The consumption taxes paid are generally offset
against the balance of consumption taxes withheld. As such, the excess of payments over amounts withheld are included in the current assets and the excess
of amounts withheld over payments are included in the current liabilities.

Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks and short-term investments which are highly liquid, readily convertible to cash andwith insignificant risk of price fluctuation, with original maturity of three months or less.

Japan Real Estate Investment Corporation29

3. CHANGES IN ACCOUNTING POLICIESThe New Accounting Standard for Asset Retirement Obligations
Effective April 1, 2010, the Company adopted the Accounting Standard for Asset Retirement Obligations (The Accounting Standards Board of Japan(hereinafter referred to ASBJ) Statement No.18, March 31, 2008) and the Guidance on Accounting Standard for Asset Retirement Obligations (ASBJ
Guidance No.21, March 31, 2008). This change had no effect on the Company’s revenues and expenses.

4. CHANGES IN PRESENTATIONStatements of income and retained earnings“Professional fee” and “Interest on tax refund” , which used to be included in “Other operating expenses” and “Other non-operating revenues” until the
period ended March 31, 2010, have been presented as separate accounts for the fiscal period ended September 30, 2010, due to their materiality.
“Professional fee” in the amount of ¥57,561 thousand ($687 thousand) and “Interest on tax refund” in the amount of ¥10 thousand ($0 thousand) are
included in “Other operating expenses” and “Other non-operating revenues” for the six months period from October 1, 2009 to March 31, 2010,
respectively.

Statements of Cash Flows
Beginning with the period ended September 30, 2010, the Company has combined “Interest received” and “Dividends income received” and has presented
them as “Interest and dividends income received”. “Interest and dividends income received” for the six months period ended September 30, 2010 includes“Interest received” in the amount of ¥8,913 thousand ($106 thousand) and “Dividends income received” in the amount of ¥19,724 thousand ($235
thousand).

5. FINANCIAL INSTRUMENTS
For the six months ended September 30, 2010 and March 31, 2010
1. Status of financial instruments(1) Policies for dealing financial instruments
Concerning the financing of property acquisitions, the Company shall use several funding sources including bank loans, issuance of investment
corporation bonds and issuance of investment units. When executing such financing activities, the Company endeavors to retain the ability to securestable and low-cost financing by maintaining high credit rating and thereby limiting the financial covenants which may restrict the financial flexibility of
the Company.

To achieve these goals, the Company intends to further develop and reinforce the confidence of debt holders and rating agencies in the

Company by bolstering capital base and controlling loan-to-value ratio (“LTV”) at adequate level.
In order to hedge against future interest-rate fluctuations, the Company may enter in derivative transactions, which shall be executed solely for the
purpose of controlling risks, and not for speculative purposes.
At the time of this report, the Company holds no position in derivative transactions.
With respect to management of excess fund, as a matter of policy the Company uses time deposit as its main vehicle, while securities and monetaryclaims are also eligible for such investment.

30 Japan Real Estate Investment Corporation

(2) Characteristics, and risk profile of each financial instrument and risk management system
J-Rea regularly re-evaluates appropriateness and effectiveness of risk management system in order to improve on it.
Characteristics, and risk profile of financial instruments and risk management system are as follows:
Deposits which are typically large time deposit used to manage the excess funds, are exposed to credit risk of the deposit-taking financial institutions.
The Company manages credit risk by restricting the tenor of the deposit relatively short and setting a minimum credit rating requirement for thedeposit-taking financial institutions.
The fund proceeds from borrowings and issues of investment corporate bonds are applied mainly to acquire real estate properties and repayment ofoutstanding loans and bonds. While floating-rate short-term loans are exposed to the risk of interest-rate hike, such risk is mitigated by the Company’s
low LTV and relatively high percentage of long-term fixed-rate debts within the total borrowing. Loans and investment corporate bonds involve liquidity
risk at the time of maturity. To manage such liquidity risk, the Company implements the measures such as (i) maintaining and strengthening its ability toaccess equity markets to secure funds, (ii) maintaining a commitment lines with major financial institutions (There is no outstanding under the facility as
of September 30, 2010 and as of March 31, 2010), and (iii) preparing monthly financial plan.

(3) Supplementary Note regarding fair value of financial instruments
The fair values of financial instruments presented in this report are based on their market value, and in case where market values are not available,reasonably calculated values are presented. Since calculation of fair value is based on certain assumptions, the fair value could differ depending on
assumptions used.

2. Fair value of financial instruments
Fair value of financial instruments, their values carried on the balance sheet and the difference between them as of September 30, 2010 and as of March
31, 2010 are as follows.
The financial instruments whose fair values have extreme difficulty estimating are excluded from the following schedule (Note2).
Thousands of yen

U.S. dollars

As of September 30, 2010

(1) Cash and bank deposits

Book value

Fair value

As of September 30, 2010
Difference¥－Book value$

Fair value$¥ 19,312,117

29,000,000

29,000,000

－

－

－

－

－

－

(4) Current portion of long-term loans

64,100,000

64,483,149

383,149764,733,954

769,305,053

4,571,099

345,979,480

230,399,873
345,979,480$－¥ 19,312,117(2) Short-term loans(3) Current portion of
investment corporation bonds－

230,399,873

Difference－(5) Investment corporation bonds

55,000,000

56,122,950

1,122,950

656,167,979

669,565,140

13,397,161(6) Long-term loans

114,350,000

115,794,652

1,444,652

1,364,232,880

1,381,468,051

17,235,171

Thousands of yen
As of March 31, 2010
Book value

Fair value¥ 18,753,604¥ 18,753,604(2) Short-term loans(3) Current portion of
investment corporation bonds

39,000,000

39,000,000

10,000,000

10,001,900

1,900(4) Current portion of long-term loans

9,100,000

9,123,831

23,831(5) Investment corporation bonds

35,000,000

34,427,850(572,150)(6) Long-term loans

169,400,000

170,352,153

952,153(1) Cash and bank deposits

Difference¥－－

Japan Real Estate Investment Corporation31

Note1: Measurement of fair value of financial instruments(1) Cash and bank deposits
Due to short tenor, the book value of these assets are reasonable approximation of the present value of these assets and hence used as their fair value.
(2) Short-term loans
Since these loans’ tenor is short and rates are reset at short interval, the book values of these liabilities are reasonable approximation of their present value andhence used as their fair values.
(3) Current portion of investment corporation bonds and (5) Investment corporation bonds
Their fair values are based on the values published by a financial data provider.
(4) Current portion of long-term loans and (6) long-term loans
The fair values of these liabilities are calculated by discounting the aggregated amounts of the principals and the interests of the loan by the rates that arereasonably estimated to be applicable if the Company refinances the existing loans for the remaining period to maturity under the prevailing market conditions at
September 30, 2010 and March 31, 2010.

Note2: Financial instruments whose fair values cannot be reliably measured.
Thousands of yen(1)

Non-listed stock (*1）

¥ ,577,168(2)

Deposits received from tenants (*2)

34,894,592

U.S. dollars
As ofSeptember 30, 2010

As ofMarch 31, 2010

As of
September 30, 2010¥

577,168$

36,517,967

6,885,804
416,303,898(*1) With regard to non-listed stocks which do not have quoted market price in active market and whose cash flows are not reasonably estimated, their fair value cannot
be reliably measured andtherefore presented at their book value.

(*2) With regard to deposits received from tenants, which do not have quoted market price in active market, and their tenor cannot be reasonably estimated, their cash
flows cannot be reliably measured and therefore presented at their book value.

Note3: Redemption schedule for monetary claim after the closing dateCash andbank deposits

1year or lessThousands of yen
As of September 30, 2010
1 to
2 to
3 to
2years
3years
4years4 to
5yearsover
5years

1year or less

¥19,312,117

¥－

¥－

¥－

$230,399,873¥－¥－

U.S. dollars
As of September 30, 2010
1 to
2 to
3 to
2years
3years
4years
$－

$－

$－

4 to
5yearsover
5years$－$－Thousands of yen
As of March 31, 2010

Cash andbank deposits

1year or less

1 to
2years2 to
3years3 to
4years4 to
5yearsover
5years¥18,753,604

¥－

¥－

¥－

¥－

¥－

Note4: Repayment schedule for investment corporation bonds, long-term loans and other interest-bearing debt after the closing dateThousands of yen
As of September 30, 2010
1year or less

1 to 2 years

Short-term loans¥29,000,000
Investment
corporation bonds¥－

2 to 3 years¥

3 to 4 years

－

¥

－

4 to 5 years¥－

over 5 years¥－－

10,000,000－

15,000,000

20,000,000

10,000,000

64,100,000
93,100,000

8,100,000
18,100,000

69,100,000
69,100,000

13,100,000
28,100,000

16,600,000
36,600,000

7,450,000
17,450,000

Long-term loans
Total

32 Japan Real Estate Investment Corporation

U.S. dollars
As of September 30, 2010
1year or less

1 to 2 years

2 to 3 years$ 345,979,480$ � � � � －$－119,303,269－

178,954,903

238,606,538

119,303,269

764,733,954
1,110,713,434

96,635,648
215,938,917

824,385,588
824,385,588

156,287,282
335,242,186

198,043,426
436,649,964

88,880,935
208,184,204

3 to 4 years

4 to 5 years

over 5 years

Short-term loans
Investment
corporation bonds－

3 to 4 years－$

4 to 5 years

over 5 years

－

$

－

$

Long-term loans
Total

Thousands of yen
As of March 31, 2010
1year or less

1 to 2 years－¥

10,000,000－

10,000,000－

15,000,000

10,000,000

9,100,000
58,100,000

68,100,000
68,100,000

49,100,000
59,100,000

34,100,000
34,100,000

2,100,000
17,100,000

16,000,000
26,000,000

Short-term loans¥39,000,000
Investment
corporation bonds
Long-term loans
Total

2 to 3 years

¥

－

－

¥

¥

－

－

¥

6. PROPERTY AND EQUIPMENT
Property and equipment at September 30, 2010 and March 31, 2010 consisted of the following:Thousands of yen

U.S. dollars
As of March 31, 2010

As of September 30, 2010

As of September 30, 2010

Acquisition Costs

Book Value

Acquisition Costs

Book Value

Acquisition Costs

Book ValueLand¥319,465,931)¥319,465,931¥319,406,060)¥319,406,060$3,811,332,988)$3,811,332,988

Buildings and structures

177,237,753)

Accumulated depreciation
Machinery and equipment
Accumulated depreciation
Tools, furniture and fixtures
Accumulated depreciation

175,443,969)(33,750,967)

143,486,785(30,459,585)

2,114,504,331)
144,984,383(402,660,072)

1,296,956(11,760,943)

2,209,482)

2,209,482)(985,802)

1,223,679(912,526)

26,359,845)

107,344)

109,873)

1,711,844,259

14,598,902

1,310,821)(61,727)

48,145(55,808)

51,535(736,434)

574,387

226,224)

226,224

228,711)

228,7112,698,928)

2,698,928

Land in trust

103,680,723)

103,680,723

103,624,322)

103,624,322

1,236,944,918)

1,236,944,918

Buildings and structures in trust

47,624,591)

Accumulated depreciation(7,635,019)

Construction in progress(6,816,581)

332,915(444,688)(4,431)

4,839(4,202)

4,522(52,866)

57,742¥608,458,816)¥608,458,816¥610,583,455)¥610,583,455$7,259,112,575)$7,259,112,575

807,120)

Accumulated depreciation(474,204)

Accumulated depreciation
Total

568,176,939)

39,989,571

Machinery and equipment in trust

Tools, furniture and fixtures in trust

47,441,113)
40,624,531(91,088,280)

362,431(5,657,417)

807,120)

9,629,209)

8,724)

9,271)

477,088,659

3,971,793

110,608)

The compressed amount of tangible assets with government grants under the Corporation Tax Law of Japan was ¥50 million ($598 thousand) at September
30, 2010 and ¥50 million ($598 thousand) at March 31, 2010.

Japan Real Estate Investment Corporation

33

7. SHORT-TERM LOANS
Short-term loans at September 30, 2010 and March 31, 2010 consisted of the following:Thousands of yen
As ofSeptember 30, 2010

As ofMarch 31, 2010―

2,000,000―

5,000,000

5,000,000

59,651,634

2,000,000

4,500,000

23,860,654

2011

2,000,000

2,000,000

23,860,654

0.51528% unsecured loan from a bank, due on June 1, 2011

2,000,000―

23,860,654―

2,000,000――

2,500,000―

2,000,000

2,000,000

23,860,654

2,000,000―

23,860,654―

2,000,000――

2,000,000―

1,500,000―

17,895,490―

1,000,000―

5,000,000

5,000,000

59,651,634

3,000,000

3,000,000

35,790,981

500,000

2,000,000

5,965,163

1,000,000

1,000,000

11,930,327

1,000,000

1,000,000

11,930,327

0.54430% unsecured loan from a bank, due on June 1, 2010

U.S. dollars
  As of  September 30, 2010

0.52244% unsecured loan from a bank, due on December
21, 2010
0.52786% unsecured loan from a bank, due on March 24,
2011
0.52342% unsecured loan from a bank, due on March 24,

0.52955% unsecured loan from a bank, due on September 1,
2010
0.53346% unsecured loan from a bank, due on September
24, 2010
0.52342% unsecured loan from a bank, due on March 24,
2011
0.5015% unsecured loan from a bank, due on September 1,
2011
0.53057% unsecured loan from a trust bank, due on
September 1, 2010
0.53346% unsecured loan from a trust bank, due on March24, 2011
0.5015% unsecured loan from a trust bank, due on
September 1, 2011
0.53346% unsecured loan from a trust bank, due on
September 24, 2010
0.52244% unsecured loan from a trust bank, due on
December 21, 2010
0.52146% unsecured loan from a trust bank, due on January
17, 2011
0.53000% unsecured loan from a trust bank, due on March24, 2011
0.52342% unsecured loan from a bank, due on March 24,
2011
0.52342% unsecured loan from a bank, due on March 24,
2011
0.71428% unsecured loan from a bank, due on March 24,
2011

2,000,000

2,000,000

23,860,654

Total¥29,000,000¥39,000,000$345,979,480

The Company has commitment lines of ¥25,000 million ($298,258 thousand) with four financial institutions to reduce a refinancing risk.
The unused amount of such commitment lines was ¥25,000 million ($298,258 thousand) at September 30, 2010.

34 Japan Real Estate Investment Corporation

8. INVESTMENT CORPORATION BONDS INCLUDING CURRENT PORTION OF INVESTMENT CORPORATION
BONDS
Details of total investment corporation bonds outstanding are summarized as follows:
As ofMarch 31, 2010

As of
September 30, 2010

As of
September 30, 2010

Amount(thousands of yen)Interest rate(%)

Amount(thousands of yen)Interest rate(%)

Amount(U.S. dollars)

―�

0.98%

¥10,000,000

0.98%

Unsecured bond due on September 29, 2025

10,000,000

2.56%

10,000,000

2.56%

Unsecured bond due on June 18, 2012

10,000,000

1.67%

10,000,000

1.67%

119,303,269

Unsecured bond due on June 18, 2014

15,000,000

1.91%

15,000,000

1.91%

178,954,903

Unsecured bond due on April 23, 2015

10,000,000

1.26%

―

―

119,303,269

Unsecured bond due on July 23, 2015

10,000,000

1.05%

Total

¥55,000,000―¥45,000,000―$656,167,979

Unsecured bond due on April 30, 2010

¥

―

―

―

$

119,303,269

119,303,269

9. LONG-TERM LOANS INCLUDING CURRENT PORTION OF LONG-TERM LOANS
Long-term loans at September 30, 2010 and March 31, 2010 consisted of the following:Thousands of yen
As ofSeptember 30, 2010

U.S. dollars
As ofMarch 31, 2010

As of
September 30, 2010

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

2,000,000¥

2,000,000$23,860,654

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

5,000,000

5,000,000

59,651,634

1.63% unsecured loan from a trust bank, due on April 4, 2011

10,000,000

10,000,000

119,303,269

1.73% unsecured loan from a trust bank, due on June 1, 2011

22,000,000

22,000,000

262,467,192

1.65925% unsecured loan from banks, trust banks, and an insurancecompany, due on June 23, 2011

24,000,000

24,000,000

286,327,845

1.6225% unsecured loan from a bank, due on June 15, 2010―

3,000,000―

1.5725% unsecured loan from a bank, due on June 14, 2010―

3,000,000―

1.10625% unsecured loan from a bank, due on December 20, 2010

1,000,000

1,000,000

11,930,327

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

100,000

100,000

1,193,033

2,000,000

2,000,000

23,860,654

5,000,000

5,000,000

59,651,634

2012

5,000,000

5,000,000

59,651,634

1.135% unsecured loan from a trust bank, due on January 15, 2013

5,000,000

5,000,000

59,651,634

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

2,000,000

2,000,000

23,860,654

5,000,000

5,000,000

59,651,634

5,000,000

5,000,000

59,651,634

1,500,000

1,500,000

17,895,490

1.55% unsecured loan from an insurance company,
due on October 29, 2012
1.33125% unsecured loan from another financial institution,
due on November 1, 2011
1.0925% unsecured loan from a trust bank, due on December 21,

1.86875% unsecured loan from an insurance company,
due on May 29, 2015
1.54375% unsecured loan from an insurance company,
due on March 30, 2017
1.86875% unsecured loan from an insurance company,
due on May 29, 2015
1.595% unsecured loan from an insurance company,
due on April 25, 2016

1,000,000

1,000,000

11,930,327

1.4925% unsecured loan from a bank, due on August 31, 2012

1,000,000

1,000,000

11,930,327

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

2,000,000

2,000,000

23,860,654

Japan Real Estate Investment Corporation35

1.42375% unsecured loan from a bank, due on April 24, 2013

5,000,000

5,000,000

59,651,634

1.4875% unsecured loan from a bank, due on September 2, 2013

3,000,000

3,000,000

35,790,981
59,651,634

1.135% unsecured loan from a bank, due on January 15, 2013

5,000,000

5,000,000

1.42375% unsecured loan from a bank, due on April 24, 2013

3,000,000

3,000,000

35,790,981

1.135% unsecured loan from a bank, due on January 15, 2013

5,000,000

5,000,000

59,651,634

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

2,000,000

2,000,000

23,860,654

1.42375% unsecured loan from a bank, due on April 24, 2013

5,000,000

5,000,000

59,651,634

1.0925% unsecured loan from a bank, due on December 21, 2012

5,000,000

5,000,000

59,651,634

1.085% unsecured loan from a bank, due on January 15, 2013

11,000,000

11,000,000

131,233,596

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

2,000,000

2,000,000

23,860,654

2013

5,000,000

5,000,000

59,651,634

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

2,000,000

2,000,000

23,860,654

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

2,000,000

2,000,000

23,860,654

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

1,850,000

1,900,000

22,071,105

1.31% unsecured loan from a bank, due on March 24, 2014

2,000,000

2,000,000

23,860,654

1.06% unsecured loan from a bank, due on January 15, 2013

1,000,000

1,000,000

11,930,327

0.8925% unsecured loan from a bank, due on December 15, 2011

2,000,000

2,000,000

23,860,654

1.06% unsecured loan from a bank, due on January 15, 2013

1,000,000

1,000,000

11,930,327

1.0475% unsecured loan from a bank, due on March 25, 2013

1,000,000

1,000,000

11,930,327

1.2375% unsecured loan from a bank, due on March 24, 2014

1,000,000

1,000,000

11,930,327

1.0475% unsecured loan from a bank, due on March 25, 2013

2,000,000

2,000,000

23,860,654

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

3,000,000―

35,790,981

1.0475% unsecured loan from a bank, due on March 25, 2013

2,000,000

2,000,000

23,860,654

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

3,000,000―

35,790,981

1.0475% unsecured loan from a bank, due on March 25, 2013

3,000,000

3,000,000

35,790,981

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

2,000,000

2,000,000

23,860,654¥178,450,000¥178,500,000$2,128,966,834

64,100,000

9,100,000

764,733,954¥114,350,000¥169,400,000$1,364,232,880

1.4875% unsecured loan from a trust bank, due on September 2,

Subtotal
Less: current portion of long-term loans
Total
(*)

Repayments of principal shall be made by installments of ¥50 million for each 6 month period and ¥1,350 million on the final principal repayment date.

10. NET ASSETSThe Company is required to maintain net assets of at least ¥50 million ($597 thousand), as required pursuant to the Investment Trust Law.

36 Japan Real Estate Investment Corporation

11.
11.INCOME
INCOMETAXESTAXESAtAt September
September 30,
30, 2010
2010 andand March
March 31,
31, 2010,
2010, thethe Company’s
Company’s deferreddeferred tax
tax assets
assets consisted
consisted mainly
mainly ofof thethe enterpriseenterprise tax,
tax, which
which isis not
not deductible
deductible forfor taxtax
purposes.
purposes.The
Thereconciliation
reconciliationof
oftax
taxrateratedifference
differencebetween
betweenthe
theadjusted
adjustedstatutory
statutorytax
taxraterateandandthetheeffective
effectivetax
taxraterateforforthethesixsixmonths
monthsended
endedSeptember
September30,
30,
2010
2010andandMarch
March31,
31,20102010were
wereasasfollows:
follows:
For
Forthetheperiod
periodfrom
fromApril
April1,1,2010
2010

For
Forthetheperiod
periodfrom
fromOctober
October1,1,2009
2009

totoSeptember
September30,
30,20102010

totoMarch
March31,
31,20102010

Statutory
Statutorytax
taxrate…………………………………………………..……………39.33%………………………..
rate…………………………………………………..……………39.33%………………………..39.33%
39.33%
Deductible
Deductibledividend
dividenddistribution……………...……………………………….
distribution……………...……………………………….(39.32%)(39.32%)……………………..
……………………..(39.11%)(39.11%)
SpecialSpecialdeductions
deductionsresulting
resultingfrom
fromexpropriation…………………………………－
expropriation…………………………………－ ……………………………
……………………………(0.22%)(0.22%)
Others……….……………………………………
Others……….…………………………………………..….……………………0.01%………………………….
……..….……………………0.01%………………………….0.01%
0.01%
Effective
Effectivetax
taxrate…………………………………
rate………………………………………………………………...0.01%………………………….
……………………………...0.01%………………………….0.01%
0.01%

The
TheCompany
Companyisissubject
subjecttotoJapaneseJapanesecorporate
corporateincome
incometaxes
taxeson
onall
allof
ofits
itstaxable
taxableincome.
income.However,
However,under
underthetheSpecial
SpecialTaxation
TaxationMeasures
MeasuresLaw
Lawof
ofJapan,Japan,ororthethe STML,
STML, anan investment
investment corporation
corporation isis allowed
allowed toto deduct
deduct dividends
dividends ofof accounting
accounting profits,
profits, oror dividend
dividend distributions,distributions, paid
paid toto investors
investors fromfrom its
its taxable
taxableincomeincome ifif certain
certain tax
tax requirements
requirements areare satisfied.
satisfied. Such
Such tax
tax requirements
requirements include
include dividend
dividend distributions
distributions inin excess
excess ofof 90%
90% ofof itsits earnings
earnings available
available forfor
dividend
dividend forfor thethe fiscal
fiscal period
period as
as stipulated
stipulated by
by Article
Article 67-15
67-15 ofof thethe STML.
STML. Based
Based onon thethe distribution
distribution policy
policy provided
provided by
by Article
Article 32-2
32-2 ofof thethe Articles
Articles ofofincorporation,
incorporation,thetheCompany
Companymade
madeaadividend
dividenddistribution
distributionof
ofmultiple
multipleof
ofnumbernumberofofunits
unitsup
uptoto100%
100%ofofretained
retainedearnings,
earnings,within
withinaacertain
certainrange
rangewhere
wherenonoadditional
additionalincome
incometaxes
taxesororfurtherfurthertax
taxburden
burdenisisincurred
incurredby
bythe
theunitholders,unitholders,ininthe
theamountamountofof¥8,134¥8,134million
million($97,046($97,046thousand)thousand)subsequent
subsequenttotoSeptember
September30,
30,20102010andandtreatedtreatedititas
astax
taxdeductible
deductibledividend.
dividend.The
TheCompany
Companywill
willnot
notdistributedistributethe
thedividends
dividendsininexcess
excessof
ofretained
retainedearnings
earningsunder
underArticle
Article32-3
32-3ofofthe
theArticlesArticlesof
ofincorporation.
incorporation.

12.
12.RELATEDRELATEDPARTY
PARTYTRANSACTIONSTRANSACTIONSFor
Forthethesixsixmonths
monthsended
endedSeptember
September30,
30,20102010andandMarch
March31,
31,20102010

For
Forthetheperiod
periodfrom
fromOctober
October1,1,2009
2009totoMarch
March31,
31,20102010(1)(1) Parent
ParentCompany
Companyand
andMajor
MajorCorporation
CorporationUnitholders
Unitholders“Not“Notapplicable”
applicable”(2)(2) Subsidiaries
Subsidiaries“Not“Notapplicable”
applicable”(3)(3) Sister
SisterCompanies
Companies“Not“Notapplicable”
applicable”(4)(4) Directors
Directorsand
andMajor
MajorIndividual
IndividualUnitholders
Unitholders“Not“Notapplicable”
applicable”

For
Forthetheperiod
periodfrom
fromApril
April1,1,2010
2010totoSeptember
September30,
30,20102010(1)(1) Parent
ParentCompany
Companyand
andMajor
MajorCorporation
CorporationUnitholders
Unitholders“Not“Notapplicable”
applicable”(2)(2) Subsidiaries
Subsidiaries“Not“Notapplicable”
applicable”(3)(3) Sister
SisterCompanies
Companies“Not“Notapplicable”
applicable”(4)(4) Directors
Directorsand
andMajor
MajorIndividual
IndividualUnitholders
Unitholders“Not“Notapplicable”
applicable”

Japan Real Estate Investment Corporation

37

13.

SEGMENT INFORMATION

For the period from April 1, 2010 to September 30, 2010

Since the Company has been engaged in real-estate leasing business using a single segment, segment information has been omitted.

Information about products and services
Since revenues from external customers for single segment of similar products and services accounted for more than 90 percent of total operating revenues,
information about products and services has been omitted.

Information about geographic area
(1)

Revenues
Since 100% of the total operating revenues were generated from external customers within Japan, geographical breakdown of revenues has been
omitted.

(2)

Property and equipment
Since 100 percent of total property and equipment on the balance sheet are located within Japan, geographical breakdown of such property andequipment has been omitted.

Information about major clients
Since no single external client represents 10 percent or more of the Company’s total operating revenues, information about major clients has been omitted.

(Additional information)
Effective April 1, 2010, the Company adopted the Accounting Standard for Disclosures about Segments of an Enterprise and Related Information (ASBJ
Statement No.17, March 27, 2009) and Guidance on Accounting Standard for Disclosures about Segments of an Enterprise and Related Information (ASBJ
Guidance No.20, March 21, 2008).

14. ASSET RETIREMENT OBLIGATIONS
For the period from April 1, 2010 to September 30, 2010

“Not applicable”

38 Japan Real Estate Investment Corporation

15. INVESTMENT AND RENTAL PROPERTY
For the six months ended September 30, 2010 and March 31, 2010
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, 2010, as of March 31, 2010 and the fair value as of September 30, 2010 are as follows:

Thousands of yen
Book value
As ofFair value

Change

As of

As of

March 31, 2010

during period(*1)

September 30, 2010

September 30, 2010

¥616,718,194¥(2,124,639)¥614,593,555¥632,112,000

U.S. dollars
Book
As of

value

Fair value

Change

As of

As of

March 31, 2010

during period(*1)

September 30, 2010

September 30, 2010

$7,357,649,657$(25,347,639)$7,332,302,018$7,541,302,792

Thousands of yen
Book value

Fair value

ChangeAs ofduringMarch 31, 2010

As of

As of

September30, 2009

March 31, 2010
period(*2)¥542,690,979¥74,027,214)¥616,718,194¥646,174,000

Note1: Book value on balance sheet means the acquisition cost less accumulated depreciation.
Note2: Significant changes(*1) For the period ended September 30, 2010, the major reason of increase is acquisition of the extension to Ryoshin Ginza East Mirror Building (¥752,185
thousand or $8,974 thousand). The major reason of decrease is the depreciation.
(*2) For the period ended March 31, 2010, the major reason of increase is acquisition of additional interest in Shiodome Building (¥54,867,413 thousand) andTokyo Opera City Building (¥22,680,527 thousand). The major reason of decrease is the sale of a part of Jingumae Media Square Building site (¥614,142
thousand).
Note3: Fair values as of September 30, 2010 and as of March 31, 2010 are defined as the appraised values provided by external qualified professional appraiser.

16. PER UNIT INFORMATION
The following table summarizes information about net assets per unit and net income per unit at September 30, 2010 and March 31, 2010, and for theperiods then ended respectively:
U.S. dollars

Yen
For the period
from April 1, 2010
to September 30, 2010

For the period
from October 1, 2009
to March 31, 2010

For the period
from April 1, 2010
to September 30, 2010

Net assets at period end per unit

¥679,755¥681,170$8,110Net income per unit

¥616,628¥618,819$8,198Net income per unit is computed by dividing net income by the weighted average number of units outstanding during each period. Diluted net income perunit has not been presented since no warrants or convertible bonds were outstanding during the period.

Japan Real Estate Investment Corporation

39

17. BREAKDOWN OF PROPERTY-RELATED REVENUES AND EXPENSES
For the six months ended September 30, 2010 and March 31, 2010
Thousands of yen

U.S. dollars

For the period
from April 1, 2010
to September 30, 2010

For the period
from October 1, 2009
to March 31, 2010

For the period
from April 1, 2010
to September 30, 2010

Property-Related Revenues¥22,112,773¥20,758,959$263,812,614

Rental Revenues

21,946,264

20,635,057

261,826,114

Rental revenues

16,675,451

15,894,747

198,943,589

Common service charges

3,313,297

2,999,979

39,528,722

Parking revenues

565,990543,9146,752,448

1,391,525

1,196,415

16,601,355

166,508

123,901

1,986,499

Cancellation charges

39,57596,498472,149

Other miscellaneous revenues

126,932

27,403

1,514,350

11,239,716

10,290,164

134,093,496

Property management expenses

2,551,011

2,364,505

30,434,400

Utilities expenses

1,736,977

1,358,151

20,722,710

Property and other taxes

1,844,277

1,770,849

22,002,829

49,60145,343591,763

Other rental revenues
Non-Rental Revenues

Property-Related Expenses

Casualty insurance
Repairing expenses
Depreciation
Other rental expenses
Property-Related Profits

790,390

756,162

9,429,617

4,218,759

3,945,587

50,331,180

48,69949,564580,997¥10,873,056¥10,468,794$129,719,117

18. SUPPLEMENTAL CASH FLOW INFORMATION
The following table represents a reconciliation of cash and cash equivalents at September 30, 2010 and March 31, 2010:
Thousands of yen

Cash and deposits with banks
Cash and deposits with banks held in trust

U.S. dollars

As ofSeptember 30, 2010

As ofMarch 31, 2010

As of
September 30, 2010

¥15,383,805)¥14,811,840$183,533,827)

3,928,312)

3,941,763

46,866,046)

Time deposits with maturities of more than three months(9,000,000)－(107,372,942)

Cash and cash equivalents¥10,312,117)¥18,753,604$123,026,931)

40 Japan Real Estate Investment Corporation

19. LEASESThe Company owns office buildings under leases and earns rent income. As of September 30, 2010 and March 31, 2010, the future lease revenues under
the non-cancelable operating leases are as follows:
Thousands of yen

Due within one year

U.S. dollars

As ofSeptember 30, 2010

As ofMarch 31, 2010

As of
September 30, 2010

¥16,699,184¥16,231,346$199,226,730

Due after one year

29,581,496

35,000,862

352,916,926

Total¥46,280,681¥51,232,208$552,143,655

20. SUBSEQUENT EVENTSFor the six months ended September 30, 2010 and March 31, 2010

“Not applicable”

Japan Real Estate Investment Corporation

41

42 Japan Real Estate Investment Corporation

Corporate Data
As of September 30, 2010

Executives

Transfer Agent

Executive Director:

Taketo Yamazaki

The Sumitomo Trust & Banking Co., Ltd.

Supervisory Directors:

Kenji Kusakabe

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

Tomohiro Okanoya

Auditors
Paid-in Capital

Ernst & Young ShinNihon LLC¥324,353,108,000

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

Number of Units Outstanding

Incorporation

489,200

May 11, 2001

Number of Unitholders

Executive Office

14,177

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

Stock Listing
Tokyo Stock Exchange

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

Securities CodePlanning Department8952

Tel: 81-3-3211-7921
Fax: 81-3-3212-8886

Type of Investment Corporation

E-mail: j-rea-inquiry@j-rea.co.jp

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

Japan Real Estate Investment Corporation 43

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