Japan Real Estate Investment Corporation

SEPTEMBER 2004 SEMIANNUAL REPORTFor the period from April 1, 2004 to September 30, 2004

Profile
Japan Real Estate Investment Corporation (the “Company”) wasestablished as one of the first real estate investment corporations inJapan, following revisions to the Law Concerning Investment Trusts
and Investment Corporations of Japan, as amended, or theInvestment Trust Law. Its investments focus primarily on officebuildings, aiming to maintain geographical diversity while seeking
stable growth and dividends in the medium to long term. The
Company was listed on the Tokyo Stock Exchange (“TSE”) on
September 10, 2001. (Securities Code: 8952)
Note: Investment corporations, including Japan Real Estate Investment Corporation, are special legal entities
incorporated and operated under the Investment Trust Law. Accordingly, the “shares” of suchinvestment corporations, including the shares of the Company, are governed by the Investment Trust
Law and represent the equity interests in such investment corporations, which may differ in certain
material respects from the “shares” governed by the Commercial Code of Japan and representing theequity interests in Japanese ordinary corporations incorporated and operated under the Commercial
Code of Japan. Investors and readers are specifically reminded to pay attention to such differences whenreviewing this semiannual report and making any investment decision on or in respect of the “shares” of
the Company. “Shareholders” of the Company may be construed accordingly. Each of the investors andreaders should consult their own legal, tax and other advisors regarding all Japanese legal, tax and otherconsequences of an investment in the shares 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.

The Strengths of Japan Real Estate Investment Corporation

Contents
Financial Highlights
Top 10 Shareholders
Share Price Performance
Portfolio Highlights
New Portfolio Properties
History after IPO
To Our Shareholders
The Portfolio of Japan Real Estate
Investment Corporation
Overview of Portfolio Properties
Financial Section
Corporate Data

p. 1
p. 1
p. 1
p. 2
p. 3
p. 6
p. 8
p.12
p.15
p.21
p.34

• Portfolio of 39 high-quality office buildings as of September 30, 2004 (Onenew property and additional ownership in one existing property wereacquired on November 1, 2004.)• Revenues and profits have increased for six consecutive periods. Grossrevenues for the sixth period topped ¥10 billion, and operating profits
reached ¥4.4 billion.
• Steady growth — Total amount of acquistion prices surpassed ¥239 billion,
aiming to achieve the goal of 300 billion yen by March 31, 2006.
• Superior geographic and tenant diversity with a 93.6% occupancy rate (as of
September 30, 2004)• Collaboration with Mitsubishi Estate Co., Ltd., The Tokio Marine and Fire
Insurance Co., Ltd., The Dai-ichi Mutual Life Insurance Company, andMitsui & Co., Ltd.
• Highest issuer credit ratings of any office REIT in the world: A+ fromStandard & Poor’s and A1 from Moody’s Investors Service. Moody’s
Investors Service changed their rating from A2 to A1 on November 11, 2004,
and R&I issued an AA senior long-term credit rating on December 20, 2004.
• Praise from investors — Awarded “Deal of the Year” 4th prize in Equity
Finance by the “Nikkei Bonds & Financial Weekly” during 2002, following
3rd place in 2001
• Healthy financial strategy that supports strong growth through additional
issues of shares and bonds

Financial Highlights
For the Period from April 1, 2004 to September 30, 2004

Thousands of U.S. dollars(Note 1)Millions of yen

Operating Revenues
Operating Profits
Income before Income Taxes
Net Income
Net Operating Income (NOI) (Note 2)
Funds from Operations (FFO) (Note 3)
FFO Multiple (Note 4)
Cash Distribution
Number of Shares
Dividend per Share (Yen/U.S. dollars)

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

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

For the period from
April 1, 2003 to
September 30, 2003

For the period from
October 1, 2002 to
March 31, 2003

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

10,151
4,358
3,831
3,830
6,672
5,488
20.8 times
3,830
260,400
14,711

9,560
4,341
3,803
3,802
6,455
5,301
20.4 times
3,802
260,400
14,602

8,965
3,898
3,408
3,407
5,950
4,801
15.2 times
3,407
225,400
15,117

8,500
3,687
3,259
3,258
5,702
4,568
14.6 times
3,258
225,400
14,45591,41039,251
34,50334,49560,08649,41920.8 times
34,495
260,400
132.47

Notes: 1. Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥111.05 = US$1.00, the foreignexchange rate on September 30, 2004, has been used for translation. The inclusion of such amounts is not intended to imply thatJapanese yen has been or could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.
2. NOI = (Property-Related Revenues – Property-Related Expenses) + Depreciation
3. FFO = Net Income – Gains (Losses) from Sales of Specified Assets + Depreciation
4. FFO Multiple = Share Price at End of the Respective Term ÷ FFO per Share (Annualized)(Annualized portion of the calculation given in note 4 assumes a fiscal period of 182 days for the period ended March 31, 2003, 183 days forthe period ended September 30, 2003, 183 days for the period ended March 31, 2004 and 183 days for the period ended September 30, 2004.)

Top 10 Shareholders
Company

Japan Trustee Services Bank, Ltd. (Shintaku Acc.) ..............................
Mitsubishi Estate Co., Ltd. .................................................................
The Chugoku Bank, Ltd. ....................................................................
State Street Bank and Trust Company ................................................
The Tokio Marine and Fire Insurance Co., Ltd. ..................................
The Yamanashi Chuo Bank, Ltd. ........................................................
The Master Trust Bank of Japan, Ltd. (Shintaku Acc.) .......................
North Pacific Bank, Ltd. .....................................................................
Trust & Custody Services Bank, Ltd. (Toshin Acc.) ............................
The Bank of Ikeda, Ltd. ......................................................................

Shares% of Total Shares
Outstanding

11,531
10,160
8,995
8,646
8,120
7,300
7,085
7,067
6,996
5,566

4.43%
3.90%
3.45%
3.32%
3.12%
2.80%
2.72%
2.71%
2.69%
2.14%

Share Price Performance
165%
155%
145%
135%
125%
115%
105%
95%
85%
75%
65%
55%
45%

Sept

Oct

Nov Dec

2001
TOPIX

Jan Feb Mar

2002
Share Price

Apr May June July

Aug Sept Oct

Nov Dec

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

2003

Mar Apr May June July Aug Sept Oct Nov

2004

PO Price

Japan Real Estate Investment Corporation

1

Portfolio Highlights
TRENDS IN THE STATE OF PORTFOLIO MANAGEMENT
Number ofbuildings

Total numberof tenants Total leasable Occupancy(Note 1)
floor space
rate

September 2001

20

198

133,927m2

94.6%

October 2001

20

197

136,381m2

93.9%

November 2001

21

248

164,883m2

94.7%

December 2001

22

266

171,734m2

93.8%

January 2002

23

269

178,698m2

94.1%

February 2002

24

325

201,934m2

94.0%

March 2002

24

328

201,884m2

94.0%

April 2002

24

326

201,580m2

93.3%

May 2002

25

329

207,914m2

93.6%

June 2002

25

334

207,914m2

94.4%

July 2002

26

333

212,194m2

94.3%

August 2002

27

340

215,928m2

95.2%

September 2002

27

339

215,928m2

95.3%

October 2002

28

340

220,720m2

94.8% (Note 2)

November 2002

29

347

223,771m2

95.5%

December 2002

29

345

223,771m2

95.3%

January 2003

29

348

223,771m2

95.2%

February 2003

29

351

223,771m2

95.6%

March 2003

30

359

236,693m2

94.4%

April 2003

30

356

236,702m2

94.4%

May 2003

30

356

236,702m2

94.9%

June 2003

30

356

237,897m2

94.4%

July 2003

30

362

237,897m2

94.9%

August 2003

32

386

246,062m2

95.3%

September 2003

32

384

246,062m2

95.1%

October 2003

33

396

251,631m2

95.4%

November 2003

34

400

253,806m2

92.5%

December 2003

34

401

260,003m2

93.2%

January 2004

34

403

260,032m2

92.5%

February 2004

34

407

260,211m2

93.2%

March 2004

36

444

273,157m2

94.8%

April 2004

37

447

281,171m2

94.7%

May 2004

37

448

281,171m2

94.7%

June 2004

37446

281,155m2

91.7%

July 2004

37

447

281,155m2

92.7%

August 2004

38

457

286,860m2

92.8%

September 2004

39

466

293,105m2

93.6%

130,000

164,000

198,000

266,000

232,000

65.0

70.0

75.0

80.0

85.0

90.0

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

PORTFOLIO BREAKDOWN
Properties by geographic region

Tenants by industry type

(Percentage based on acquisition price)(Percentage based on leased area)
Nonferrous metals
and metal products 2.1%
Temporary staff agency
2.1%
Transport services / Travel 2.3%
Textiles 2.6%

Tokyo metropolitan area,
excluding 23 wards(3.7%)

Others
9.1%

Ceramics 2.6%
Communications 3.0%
Tokyo 23 wards(73.2%)

Serviceindustries
19.1%
Information
service
14.2%

Construction 3.2%

Finance,insurance
12.9%

Machinery 4.2%
Retail and restaurants 4.2%
Real estate 5.1%
Pharmaceuticals
6.4%

2 Japan Real Estate Investment Corporation

Total leasable
floor space (m2)
Total leasable
floor space
Occupancy rate

60.0

Other major cities(23.1%)

300,000

Electric devices
7.0%

95.0

Occupancy
rate (%)

New Portfolio Properties
Properties acquired during the period ended September 30, 2004 and on November 1, 2004

Yoyogi 1chome Building
Property Summary
Type of specified asset: Ownership
Acquisition price:¥8,700 million ($78.3 million)
Acquisition date:
April 1, 2004
Location:
Shibuya-ku, Tokyo
Intended use:
Office space
Site area:
1,755.75m2 (18,898.72ft2)
Floor area of building: 10,778.10m2 (116,014.39ft2)
Structure:
Above ground: 14 floors
Below ground: 1 floor
Completion:
October 2003

Leasing Conditions (As of September 30, 2004)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:

1 tenant
7,772m2 (83,657.03ft2)
7,772m2 (83,657.03ft2)
100.0%

Ikebukuro

Shinjuku
Tokyo
Shibuya

Shinagawa

Property Acquisition Merits
The Yoyogi 1chome Building islocated in Yoyogi, a stable
market with expected demand
from the preparatory school
industry. It is also a link to
Shinjuku, a core business area. It
is a brand-new building
completed in October 2003 andas such offers superior
specifications.

Ebisu Neonato
Property Summary
Type of specified asset: Ownership (Note)
Acquisition price:¥3,740 million ($33.7 million) /¥360 million ($3.2 million)
Acquisition date:November 14, 2003 / April 1, 2004
Location:
Shibuya-ku, Tokyo
Intended use:
Office space
Site area:
5,005.70m2 (53,880.85ft2)
Floor area of building: 36,598.38m2 (393,941.30ft2)
Structure:
Above ground: 18 floors
Below ground: 2 floors
Completion:
October 1994
Note: 12.3% co-ownership in land and ownership of the 3rd and 4th floors of thebuilding in two transactions

Leasing Conditions (As of September 30, 2004)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:

3 tenants
2,462m2 (26,500.72ft2)
2,462m2 (26,500.72ft2)
100.0%

Ikebukuro

Shinjuku
Tokyo
ShibuyaProperty Acquisition Merits
Ebisu is a commercial, retail andentertainment area inmetropolitan Tokyo. Located in
Ebisu, with direct access to JR
Ebisu Station by pedestrian deck,
this building offers strong
competitiveness with its highquality construction and firstclass facilities.

ShinagawaJapan Real Estate Investment Corporation3

Ikebukuro YS Building
Property Summary
Type of specified asset: Ownership
Acquisition price:¥4,500 million ($40.5 million)
Acquisition date:August 2, 2004
Location:
Toshima-ku, Tokyo
Intended use:
Office space, parking area
Site area:
1,384.56m2 (14,903.27ft2)
Floor area of building: 7,464.64m2 (80,348.64ft2)
Structure:
Above ground: 8 floors
Below ground: 1 floor
Completion:
December 1989

Leasing Conditions (As of September 30, 2004)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:

8 tenants
5,715m2 (61,515.69ft2)
5,171m2 (55,660.13ft2)
90.5%

Ikebukuro

Shinjuku
Tokyo
Shibuya

Shinagawa

Property Acquisition Merits
This building faces Meiji-dori, one
of Tokyo’s major streets, witheasy access to several subways
and private railway stations. It is
located in Ikebukuro, a majorcommercial, retail and entertainment area in metropolitan Tokyo,
rivaling Shibuya and Shinjuku.
This building is characterized for
its high-quality construction andfirst-class facilities.

Shinwa Building
Property Summary
Type of specified asset: Ownership
Acquisition price:¥7,830 million ($70.5 million)
Acquisition date:
September 1, 2004
Location:
Shinjuku-ku, Tokyo
Intended use:
Office space
Site area:
822.00m2 (8,847.93ft2)
Floor area of building: 8,291.69m2 (89,250.92ft2)
Structure:
Above ground: 10 floors
Below ground: 1 floor
Completion:
November 1989

Leasing Conditions (As of September 30, 2004)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:

7 tenants
6,265m2 (67,435.83ft2)
5,513m2 (59,341.38ft2)
88.0%

Ikebukuro

Shinjuku
Tokyo
Shibuya

Shinagawa4 Japan Real Estate Investment Corporation

Property Acquisition Merits
The Shinwa Building is located in
Nishi-Shinjuku, a core businessarea, and in close proximity to theTokyo Metropolitan Government
Building and Shinjuku Station. It
boasts high-integrity specification
to meet all sorts of tenant needs,
including OA floor, separate airconditioning system and ample
power supply. The entrance andcommon areas have been renovatedto create an appealing atmosphere.

Higashi Gotanda 1chome Building
Property Summary
Type of specified asset: Ownership
Acquisition price:¥5,500 million ($49.5 million)
Acquisition date:November 1, 2004
Location:
Shinagawa-ku, Tokyo
Intended use:
Office space, retail stores
Site area:
1,539.95m2 (16,575.87ft2)
Floor area of building: 6,460.39m2 (69,538.99ft2)
Structure:
Above ground: 8 floors
Completion:
July 2004

Leasing Conditions (As of November 1, 2004)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:

3 tenants
5,205m2 (56,026.10ft2)
1,790m2 (19,267.38ft2)
34.4% (Note)

Note: As of November 20, 2004, number of tenants stood at 4, leasable floor space
was 5,205 m2 (56,026ft2), and occupancy rate reached 100.0%.

Ikebukuro

Shinjuku
Tokyo
Shibuya

Shinagawa

Property Acquisition Merits
This building is located a convenientfour-minute walk from JR Gotanda
Station, next to the developing
business areas of Shinagawa andOsaki. It is a brand-new building
offering OA floor, separate airconditioning system and ample
power supply. Characterized by its
high-quality specifications, theHigashi Gotanda 1chome Building
appeal to a variety of tenant needs.

Japan Real Estate Investment Corporation

5

History after IPO
Since listing on the Tokyo Stock Exchange (“TSE”) as the first J-REIT in Japan, JRE hasestablished a firm track record over the past six fiscal periods.
JRE has taken the initiative as a J-REIT pioneer, while aiming for stable management
and solid growth.

Sep. 2001
Listed on TSE as first J-REIT

Sep. 2001
IPO

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

Oct. 2003
Second Follow-On

Feb. and Mar. 2002

Period Ending
Sep. 2001

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

Period Ending
Mar. 2002

June 2002
First Investment Corporation Bond Issue(First credit rated issue for an investment corporation)

Apr. 2003

Period Ending
Sep. 2002
Period Ending
Mar. 2003
PeriodEndingSep. 2003

Second/Third Investment Corporation Bond Issue

Jan. 2004
Moody’s amended its outlook for JRE’s credit rating (A2) from stable to positive.

Sep. 2004
Moody’s amended its outlook for JRE’s credit rating (A2) from positive to under review for possible upgrade.

Nov. 2004
Moody’s changed its credit rating from A2 to A1 with outlook of stable.

Dec. 2004
R&I issued an AA senior long-term credit rating.

6 Japan Real Estate Investment Corporation

Occupancy rate

Stable management

94.6%
94.0%

(Trend in operating conditions)

95.3%
94.4%
95.1%

Listed on
TSE¥92.8
Billion(20)¥144.6
Billion(24)

94.8%¥164.2
Billion
(27)

93.6%

¥183.5
Billion(30)¥192.6
Billion(32)¥218.4
Billion(36)

Steady growth¥239.8Billion(39)(Acquisitions)

Total acquisition price (Total properties acquired)2

133,927m
2(126,748m )198 Tenants

201,884m2
2(189,815m )Total leasable floor space (Leased area)

328 Tenants

215,928m2
2) the seveOur(205,796m
forecasts for

339 Tenants

236,693m2
2(223,410m )359 Tenants

246,062m2
2(233,925m )384 Tenants

273,157m2
2(258,885m )444 Tenants

293,105m2
2(274,411m )466 Tenants

Listing and issuanceof Investment shares

PeriodEndingMar. 2004
Period Ending
Sep. 2004

Credit rating,capital issue, etc.

Forward-looking initiatives(J-REIT management)

Japan Real Estate Investment Corporation

7

To Our Shareholders“Slow Ahead”

8 Japan Real Estate Investment Corporation

B

ased on the Company’s core 4S growth strategyemphasizing Sincerity, Stability, Soundness, and Strengthof Will, JRE has enjoyed six consecutive periods of steady
growth, with operating profits and net income rising eachperiod.

Regarding the property market, bad-debt writeoffs by financial institutions and the adoption ofasset-impairment accounting have helped sustain
active property sales. At the same time, in the face ofdifficult fund-management conditions stemmingfrom a climate of low interest rates, not only
Japanese Real Estate Investment Trusts (J-REITs)
but also such entities as private funds, pension
funds, and qualified institutional investors are
stepping up their acquisition of real estate.
I would like to highlight some of the Company’s
major achievements during the sixth period, anddiscuss our strategies and forecasts for the seventh
period and beyond.

OVERVIEW OF THE SIXTH PERIOD
CEO & President of Japan Real Estate Asset Management Co., Ltd.

RYOICHI KAKEHASHI

In its sixth period, the six months ended September
30, 2004, Japan Real Estate Investment Corporation(“JRE”) maintained the momentum in revenues andprofits it has continuously displayed since IPO.
During the period under review, the Japanese
economy remained on track for a recovery, fueled byrobust capital investment on the back of strong
corporate earnings, resilience in consumer spending
and a decline in the unemployment rate.
In the market for leased office space, the supply of
new office buildings in central Tokyo decreased fromthe previous period, leading to a gradual correctionin the oversupply of office buildings toward
equilibrium in supply and demand. In addition,
vacancy rates began to improve in competitive officebuildings. Demand for office floor space in regional
urban centers, however, remains weak overall
despite renewed vitality in some major cities such as
Nagoya. In general, therefore, the operating
environment remains difficult.

Key Performance Indicators
Based on the Company’s core 4S growth strategyemphasizing Sincerity, Stability, Soundness, andStrength of Will, JRE has enjoyed six consecutive
periods of steady growth, with operating profits andnet income rising each period.
Gross revenues reached ¥10.2 billion ($91.4
million) for the first time, representing a 6.2 percent
increase compared with the previous period.
Operating profits rose 0.4 percent, to ¥4.4 billion($39.3 million), and income before income taxes
increased 0.7 percent, to ¥3.8 billion ($34.5 million).
Net income was up 0.7 percent, to ¥3.8 billion($34.5 million).
JRE’s policy with regard to profit appropriation is
to distribute dividends of approximately 100 percent
of taxable income, in order to enjoy the tax benefit
available under Article 67-15 of the Special Taxation
Measures Law of Japan applicable to J-REITs. On
this basis, for the period under review, we declared acash dividend of ¥14,711 ($132.47) per share.
As of September 30, 2004, JRE’s total asset
balance was ¥257.4 billion ($2,317.6 million) and its
Japan Real Estate Investment Corporation

9

net worth was ¥137.3 billion ($1,236.2 million), or¥527,185 ($4,747.3) per share. On its balance sheet,
JRE had interest-bearing debt of ¥99.0 billion($891.5 million).

11.4 percent per year, based on the results of our
fifth and sixth periods (October 2003 to September2004).

Fund-Raising Activities
Acquisitions and Management
In an increasingly competitive market, JRE uses its
own information network to collect data on the salesof numerous properties. We have made acquisitions
based on meticulous examination of these data, andafter determining optimal prices from many
perspectives, including profit stability of the entire
company and expected rate of return.
On April 1, 2004, we acquired additional
ownership in the Yoyogi 1chome Building (¥8.7
billion/$78.3 million investment) and the Ebisu
Neonato (¥0.4 billion/$3.2 million investment for an
additional 1.2% ownership, bringing JRE’s total
ownership to 12.3%). In addition, we acquired the
Ikebukuro YS Building (¥4.5 billion/$40.5 million
investment) on August 2, and the Shinwa Building(¥7.8 billion/$70.5 million) on September 1. As of
September 30, 2004, JRE’s property portfolio
consisted of 39 office buildings, with a total value of¥239.8 billion ($2,159.6 million), net rentable floorarea of 293,105m2 (3,154,953ft2), and a total of 466
tenants.
JRE maintained a high occupancy rate of 93.6
percent (as of September 30, 2004) by:• Acquiring top-level properties and upgradingbuilding facilities through optimal refurbishment inorder to maintain and improve functions• Developing finely tuned building management
policies from the perspective of tenants while
undertaking vigorous sales activities• Raising its emphasis on fixed-term and long-termlease contracts
JRE is working to reduce costs with a view tofurther enhancing profit stability. Our basic policy is
to lower property management fees and utility
expenses by 5 percent within the first three years of
new property acquisitions.
Of the total number of properties acquired up to
the end of the fourth period and including properties
acquired during the six-month period from April 1,
2003 through September 30, 2003, twenty-eightproperties are subject to this cost reduction program.
Despite being midway through the program period,
we have already reduced costs of those properties by

10 Japan Real Estate Investment Corporation

During the period under review, JRE raised funds
through borrowings to acquire properties. To
mitigate the risks of higher interest rates andrefinancing in the future, JRE focused on stabilizing
its financing over the medium and long term byincreasing funds through fixed-interest long-termloans. In an effort to further stabilize its financial
position, JRE established a new commitment line
totaling ¥20 billion ($180.1 million) on July 21,
2004, with a view to ensuring a flexible and securemeans of procuring funds.
On September 30, 2004, JRE had totalborrowings of ¥54 billion ($486.3 million),including ¥10 billion ($90.0 million) in short-termloans (up ¥1 billion/$9.0 million from the previous
period), ¥44 billion ($396.2 million) in long-termloans (up ¥11 billion/$99.1 million from theprevious period), and outstanding corporate bonds
valued at ¥45 billion ($405.2 million, unchanged
from the previous period).

OUTLOOK FOR SEVENTH PERIOD
AND BEYOND
Operating Environment
Despite expectations for a full-scale recovery in theJapanese economy, some points of concern haveemerged relating to the external demand that has
driven the Japanese economy so far, such as
projections for a slowdown in the U.S. Accordingly,
the pace of economic recovery in Japan may weaken.
In the office building leasing market, despite signsof improvement in some occupancy rates and aslowing decline in rental fees, a broad-based
recovery remains distant, and in the context of thetrend towards polarization, high-quality officebuildings will see a rise in occupancy rates, while therate in other buildings will fall.
Meanwhile, tenants have stringent demands not
only with respect to location, building quality, andfacilities, but also for high-quality building
management and value-added services. For thesereasons, tenants have become more and more
discriminating when selecting buildings. To meet

these needs, suppliers must provide services that
correctly and promptly reflect the needs of tenants
and deliver added value that differentiates theirbuildings from the competition.
In the real estate market, properties will continue
being sold to settle non-performing loans and for
asset-impairment accounting purposes. In light ofrecent increases in demand, JRE believes thatcompetition will further intensify for the acquisitionof prime properties.

New Property Acquisition
Higashi-Gotanda 1chome Building was acquired for¥5.5 billion ($49.5 million) on November 1, 2004.
Only completed in July 2004, the property, which
offers a mixture of offices and stores in a highly
desirable location, had an occupancy rate of 34.4%
at the time of acquisition, and had 100% occupancy
rate as of November 20, 2004.

Executive Director of Japan Real Estate Investment Corporation

YONEICHIRO BABA (Left)
CEO & President of Japan Real Estate Asset Management Co., Ltd.

RYOICHI KAKEHASHI (Right)

Credit Ratings
In recognition of the Company’s overall performanceand potential, Moody’s Investors Service on
November 11, 2004, raised its rating on JRE’s issuer
credit rating and rating for unsecured corporate
bonds from A2 to A1. In addition, on December 20,
2004, Tokyo-based Rating and Investment
Information, Inc. (R&I) assigned JRE a new ratingof AA in connection with its senior long-term credit
rating.

JRE has received the following credit ratings:
Ratings Agency

Issuer Credit Rating

R&I

Long-term: AA

Standard & Poor’s

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

Moody’s InvestorsService

Rating: A1; Outlook: Stable

Performance Forecasts
For both the seventh period (from October 1, 2004
to March 31, 2005) and the eighth period (from
April 1, 2005, to September 30, 2005) we forecast
gross revenues of ¥10.4 billion ($936.5 million),income before income taxes of ¥4.0 billion ($36.0
million), and net income of ¥4.0 billion ($36.0

million) and plan to declare a dividend of ¥15,400($138.68) per share. Actual figures for grossrevenues, income before income taxes, net income,and cash dividends may vary due to changes inbusiness conditions.
The estimates for the aforementioned seventh andeighth periods are based on conservative
assumptions of the portfolio of 39 properties as of
September 30, 2004, and the newly acquired Higashi
Gotanda 1chome Building, and excludes any otheradditional acquisitions.

On behalf of JRE’s management and professionals,
we hope this business report provides readers with abetter understanding of the company. We would liketo take this opportunity to also thank you for yourcontinued support.

Executive Director of Japan Real Estate Investment Corporation

YONEICHIRO BABA

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

RYOICHI KAKEHASHIJapan Real Estate Investment Corporation

11

The Portfolio of Japan Real Estate Investment Corporation
As of September 30, 2004

PROPERTIES ROSTER
Location

Type ofspecified asset

Acquisitiondate

Acquisition
price(¥ millions)● I- 1 Genki Medical Plaza● I- 2 MD Kanda Building● I- 3 Kandabashi Park Building● I- 4 Mitsubishi Soken Building● I- 5 Yurakucho Denki Building● I- 6 Kodenmacho Shin-Nihonbashi Building● I- 7 Burex Kyobashi Building● I- 8 Aoyama Crystal Building● I- 9 Shiba 2chome Daimon Building● I- 10 Cosmo Kanasugibashi Building● I- 11 Shinwa Building● I- 12 Takanawadai Building● I- 13 JAL Travel Building● I- 14 Omori-Eki Higashiguchi Building● I- 15 Nippon Brunswick Building● I- 16 Yoyogi 1chome Building● I- 17 da Vinci Harajuku● I- 18 Jingumae Media Square Building● I- 19 Shibuya Cross Tower● I- 20 Ebisu Neonato

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

Ownership
Ownership
Ownership
Trust
Ownership
Trust
Ownership
Ownership
Trust
Trust
Ownership
Trust
Trust
Trust
Ownership
Ownership
Ownership
Ownership
Ownership
Ownership● I- 21 Otsuka Higashi-Ikebukuro Building● I- 22 Ikebukuro 2chome Building● I- 23 Ikebukuro YS Building

Higashi-Ikebukuro, Toshima-ku
Ikebukuro, Toshima-ku
Minami-Ikebukuro, Toshima-ku

Trust
Trust
Ownership

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

5,000 (2.1%)
9,520 (4.0%)
4,810 (2.0%)
27,267 (11.4%)
7,200 (3.0%)
3,173 (1.3%)
5,250 (2.2%)
7,680 (3.2%)
4,859 (2.0%)
2,808 (1.2%)
7,830 (3.3%)
2,738 (1.1%)
1,362 (0.6%)
5,123 (2.1%)
6,670 (2.8%)8,700 (3.6%)
4,885 (2.0%)
12,200 (5.1%)
34,600 (14.4%)
3,740
360
4,100 (1.7%)
3,541 (1.5%)
1,728 (0.7%)4,500 (1.9%)

9/25/2001
10/11/2001
total
1/28/2002
9/25/2001

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

NumberName of building

Tokyo 23 wards

Tokyo metropolitan area excluding 23 wards● II- 1

Saitama Urawa Building

Saitama, Saitama Prefecture

Ownership● II- 2● II- 3Shin-Yokohama First Building
Kawasaki Isago Building

Yokohama, Kanagawa Prefecture
Kawasaki, Kanagawa Prefecture

Ownership
Trust(1.1%)(1.3%)(1.4%)

Other major cities● III-1● III-2● III-3

Sendai Honcho Honma Building
Sendai, Miyagi Prefecture
Niigata Ishizuecho Nishi-Bandaibashi Building Niigata, Niigata Prefecture
Kanazawa Park Building
Kanazawa, Ishikawa Prefecture

Trust
Trust
Ownership● III-4● III-5● III-6● III-7● III-8

Kanazawa Minamicho Building
Nagoya Hirokoji Building
Nagoya Misono Building
Kyoto Shijo Kawaramachi Building
Sakaisujihonmachi Building (Note)

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

Trust
Ownership
Ownership
Ownership
Ownership● III-9

Midosuji Daiwa Building

Osaka, Osaka Prefecture

Kobe, Hyogo Prefecture● III-10 Kobe Itomachi Building● III-11 NHK Hiroshima Broadcasting Center Building Hiroshima, Hiroshima Prefecture
Fukuoka, Fukuoka Prefecture● III-12 Tosei Tenjin Building
Fukuoka, Fukuoka Prefecture● III-13 Hinode Tenjin Building

Trust
Trust
Ownership
OwnershipTrust

9/25/2001
9/25/2001
2/28/2002
3/3/2003
total
9/25/2001
9/10/2001
8/8/2003
12/20/2001
9/25/2001
12/26/2003
total
9/25/2001
2/28/2002
total
9/25/2001
3/25/2004
9/25/2001
9/10/2001
total

2,924 (1.2%)
1,010 (0.4%)
2,880
1,700
4,580 (1.9%)
1,331 (0.6%)
14,533 (6.1%)
1,865 (0.8%)2,650 (1.1%)
2,264
1,900
4,164 (1.7%)
6,934
7,380
14,314 (6.0%)
1,436 (0.6%)
1,320 (0.6%)
1,550 (0.6%)
3,657 (1.5%)
239,827 (100.0%)

MAJOR TENANTS ROSTER
Rank

1
2
3
4
5

Name of tenant

Mitsubishi Research Institute, Inc. (Note)
The Dai-ichi Mutual Life Insurance Company
Yamano Gakuen
TOTO Ltd.
Asahi Kasei Pharma Corporation

Name of building

Mitsubishi Soken Building
Midosuji Daiwa Building (also includes 7 other buildings)
Yoyogi 1chome Building
Midosuji Daiwa Building (also includes 1 other building)
MD Kanda Building

Note: Lease with this tenant is a fixed-term lease for the period from February 1, 2001 to March 31, 2011.
This tenant has agreed not to terminate the contract during the lease period.

12 Japan Real Estate Investment Corporation

Leased area

14,529m2 (156,389ft2)
9,984m2 (107,467ft2)
7,772m2 ( 83,657ft2)
6,669m2 ( 7,184ft2)
5,144m2 ( 55,370ft2)

Percentage ofownership of thebuilding (%)

Completion

Appraisal value
at the end of period(¥ millions)

100
100
56.76
100
10.78
100
100
100
100
100
100
100
100
100
100
100
100
100
100

1985
1998
1993
1970
1975
1991
2002
1982
1984
1992
1989
1991
1991
1989
1974
2003
1987
1998
1976

5,700
8,130
4,840
30,400
6,820
3,240
5,290
7,330
5,250
2,920
7,800
2,530
1,420
5,180
7,170
8,710
5,140
12,67034,4004,791m2
6,269m2
3,687m2
18,006m2
4,694m2
3,897m2
4,279m2
4,916m2
9,643m2
4,062m2
6,265m2
4,091m2
3,383m2
7,708m2
7,347m2
7,772m2
3,051m2
5,558m2
29,775m2(51,570ft2)(67,479ft2)(39,686ft2)(193,815ft2)(50,526ft2)(41,947ft2)(46,059ft2)(52,915ft2)(103,796ft2)(43,723ft2)(67,436ft2)(44,035ft2)(36,414ft2)(82,968ft2)(79,082ft2)(83,657ft2)(32,841ft2)(59,826ft2)(320,495ft2)

4,791m2
6,269m2
3,687m2
18,006m2
4,694m2
3,897m2
4,279m2
4,916m2
9,643m2
4,062m2
5,513m2
4,091m2
3,383m2
7,708m2
7,296m2
7,772m2
3,051m2
5,074m2
29,739m2(51,570ft2)(67,479ft2)(39,686ft2)(193,815ft2)(50,526ft2)(41,947ft2)(46,059ft2)(52,915ft2)(103,796ft2)(43,723ft2)(59,341ft2)(44,035ft2)(36,414ft2)(82,968ft2)(78,533ft2)(83,657ft2)(32,841ft2)(54,616ft2)(320,108ft2)

1
2
7
4
15
5
1
9
30
7
7
1
1
19
17
1
6
7
52

222
324
181
1,063
267
162
150
259
305
136
36
140
89
251
308
281
193
316
1,497

(2.2%)(3.2%)(1.8%)(10.5%)(2.6%)(1.6%)(1.5%)(2.6%)(3.0%)(1.3%)(0.4%)(1.4%)(0.9%)(2.5%)(3.0%)(2.8%)(1.9%)(3.1%)(14.8%)

12.30
100
100
100

1994
1987
1990
1989

4,220
3,410
1,420
4,450

2,462m2
7,114m2
2,186m2
5,715m2(26,501ft2)(76,574ft2)(23,530ft2)(61,516ft2)

2,462m2
6,477m2
2,186m2
5,171m2(26,501ft2)(69,718ft2)(23,530ft2)(55,660ft2)

3
10
7
8

143
174
72
49

(1.4%)(1.7%)(0.7%)(0.5%)

100
100
100

1990
1992
1990

2,360
1,620
3,140

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

4,154m2
5,222m2
6,831m2(44,713ft2)(56,209ft2)(73,528ft2)

14
5
11

144
56
189

(1.4%)(0.6%)(1.9%)

93.39
100

1991
1984

2,930
755

5,829m2
4,383m2(62,743ft2)(47,178ft2)

5,829m2
4,198m2(62,743ft2)(45,187ft2)

14
10

158
85

(1.6%)(0.8%)

89.00
100
100
100
100

1991
1987
1987
1991
1982

5,390
1,010
14,6001,840
2,050

21,343m2
3,782m2
21,590m2
3,470m2
6,800m2(229,734ft2)(40,709ft2)(232,393ft2)(37,351ft2)(73,195ft2)

19,305m2
3,177m2
21,214m2
3,470m2
6,040m2(207,797ft2)(34,197ft2)(228,345ft2)(37,351ft2)(65,014ft2)

64
13
31
7
29

530
73
757
108
126

(5.2%)(0.7%)(7.5%)(1.1%)(1.2%)

100

1992

4,170

11,574m2(124,581ft2)

4,641m2(49,955ft2)

8190(1.9%)

100
100
27.085
100
76.18
—

1991
1989
1994
1992
1987
—

13,500
966
1,350
1,370
3,470
238,961

19,658m2 (211,597ft2)
3,344m2(35,994ft2)
4,408m2(47,447ft2)
3,755m2(40,418ft2)
4,977m2(53,572ft2)
274,411m2 (2,953,733ft2)

23
15
13
19
8
466

Total leasable
floor space

20,449m2(220,111ft2)
3,478m2(37,437ft2)
5,470m2(58,879ft2)
4,080m2(43,917ft2)
5,902m2(63,529ft2)
293,105m2 (3,154,953ft2)

Leased area

Total
number oftenants

Revenue fromleasing operations(¥ millions)

650(6.4%)
73(0.7%)
100(1.0%)
103(1.0%)
171(1.7%)
10,151 (100.0%)

Note: On July 1, 2004, “Fukusuke Sakaisujihonmachi Building” was renamed to “Sakaisujihonmachi Building.”

Percent of totalleased area

5.3%
3.6%
2.8%
2.4%
1.9%

Japan Real Estate Investment Corporation

13

LOCATIONS OF PORTFOLIO PROPERTIES
III-1 – III-13 : Other major cities

II-1 – II-3 : Tokyo metropolitan area
excluding 23 wards

II-1
III-1
III-4

III-2

II-3

III-3
III-9 III-6
III-5
III-11 III-10
III-7
III-8
III-13
III-12

II-2

I-22
I-21
I-23
I-1

I-11

I-15
I-17
I-18
I-19
I-8

I-16

I-20

I-3
I-4
I-5

I-2
I-6
I-7

I-9
I-10

I-13
I-12

I-14

I-1 – I-23 : Tokyo 23 wards

14 Japan Real Estate Investment Corporation

Overview of Portfolio Properties As of September 30, 2004
Genki Medical Plaza● I-1

Location :Chiyoda-ku, Tokyo
Site area :1,052.80m2 (11,332.23ft2)
Floor area of building : 6,722.02m2 (72,355.15ft2)
Structure :Above ground: 8 floors
Below ground: 1 floor
Completion :September 1985

MD Kanda Building● I-2

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

Kandabashi Park
Building

Mitsubishi Soken
Building

● I-3

● I-4

Location :Chiyoda-ku, Tokyo
Site area :1,218.56m2 (13,116.46ft2)
Floor area of building : 9,370.25m2 (100,860.43ft2)
Structure :Above ground: 10 floors
Below ground: 1 floor
Completion :July 1993

Location :Chiyoda-ku, Tokyo
Site area :3,441.35m2 (37,042.35ft2)
Floor area of building : 26,372.92m2 (283,875.47ft2)
Structure :Above ground: 15 floors
Below ground: 2 floors
Completion :July 1970

Yurakucho Denki
Building

Kodenmacho ShinNihonbashi Building

● I-5

● I-6

Location :Chiyoda-ku, Tokyo
Site area :5,749.91m2 (61,891.46ft2)
Floor area of building : 70,287.65m2 (756,569.24ft2)
Structure :Above ground: 20 floors
Below ground: 4 floors
Completion :September 1975

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

Burex Kyobashi
Building

Aoyama Crystal
Building

● I-7

● I-8

Location :Chuo-ku, Tokyo
Site area :756.03m2 (8,137.83ft2)
Floor area of building : 5,470.54m2 (58,884.35ft2)
Structure :Above ground: 8 floors
Below ground: 1 floor
Completion :February 2002

Location :Minato-ku, Tokyo
Site area :989.30m2 (10,648.73ft2)
Floor area of building : 8,094.36m2 (87,126.88ft2)
Structure :Above ground: 10 floors
Below ground: 4 floors
Completion :December 1982
Japan Real Estate Investment Corporation

15

Shiba 2chome Daimon
Building

Cosmo Kanasugibashi
Building● I-9● I-10Location :Minato-ku, Tokyo
Site area :2,820.90m2 (30,363.89ft2)
Floor area of building : 16,235.10m2 (174,752.99ft2)
Structure :Above ground: 8 floors
Below ground: 2 floors
Completion :March 1984

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

Shinwa Building

Takanawadai Building● I-11● I-12

Location :Shinjuku-ku, Tokyo
Site area :822.00m2 (8,847.93ft2)
Floor area of building : 8,291.69m2 (89,250.92ft2)
Structure :Above ground: 10 floors
Below ground: 1 floor
Completion :November 1989

Location :Shinagawa-ku, Tokyo
Site area :1,416.17m2 (15,243.51ft2)
Floor area of building : 5,762.70m2 (62,029.13ft2)
Structure :Above ground: 13 floors
Completion :January 1991

JAL Travel Building

Omori-Eki Higashiguchi
Building● I-13● I-14

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

Location :Ota-ku, Tokyo
Site area :2,199.30m2 (23,673.05ft2)
Floor area of building : 14,095.34m2 (151,720.83ft2)
Structure :Above ground: 11 floors
Below ground: 2 floors
Completion :July 1989

Nippon Brunswick
Building

Yoyogi 1chome Building● I-15● I-16

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

16 Japan Real Estate Investment Corporation

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

da Vinci Harajuku

Jingumae Media Square
Building● I-17● I-18Location :Shibuya-ku, Tokyo
Site area :839.66m2 (9,038.02ft2)
Floor area of building : 4,359.20m2 (46,921.99ft2)
Structure :Above ground: 7 floors
Below ground: 2 floors
Completion :December 1987

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

Shibuya Cross Tower

Ebisu Neonato● I-19● I-20Location :Shibuya-ku, Tokyo
Site area :5,153.45m2 (55,471.22ft2)
Floor area of building : 61,862.33m2 (665,879.93ft2)
Structure :Above ground: 32 floors
Below ground: 3 floors
Completion :April 1976

Location :Shibuya-ku, Tokyo
Site area :5,005.70m2 (53,880.85ft2)
Floor area of building : 36,598.38m2 (393,941.30ft2)
Structure :Above ground: 18 floors
Below ground: 2 floors
Completion :October 1994

Otsuka Higashi-Ikebukuro
Building

Ikebukuro 2chome
Building● I-21● I-22

Location :Toshima-ku, Tokyo
Site area :2,121.39m2 (22,834.43ft2)
Floor area of building : 9,531.28m2 (102,593.74ft2)
Structure :Above ground: 8 floors
Below ground: 1 floor
Completion :November 1987

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

Ikebukuro YS Building

Saitama Urawa Building● I-23● II - 1

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

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

Japan Real Estate Investment Corporation

17

Shin-Yokohama First
Building

Kawasaki Isago Building● II - 2● II - 3

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

Location :Kawasaki, Kanagawa Prefecture
Site area :1,594.50m2 (17,163.04ft2)
Floor area of building : 9,623.83m2 (103,589.94ft2)
Structure :Above ground: 12 floors
Below ground: 1 floor
Completion :December 1990

Sendai Honcho Honma
Building

Niigata Ishizuecho
Nishi-Bandaibashi
Building● III- 1● III- 2

Location :Sendai, Miyagi Prefecture
Site area :1,437.47m2 (15,472.78ft2)
Floor area of building : 8,247.50m2 (88,775.27ft2)
Structure :Above ground: 11 floors
Completion :November 1991

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

Kanazawa Park Building

Kanazawa Minamicho
Building● III- 3● III- 4

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

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

Nagoya Hirokoji
Building

Nagoya Misono
Building● III- 5● III- 6

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

18 Japan Real Estate Investment Corporation

Location :Nagoya, Aichi Prefecture
Site area :805.04m2 (8,665.37ft2)
Floor area of building : 5,348.00m2 (57,565.34ft2)
Structure :Above ground: 7 floors
Below ground: 1 floor
Completion :September 1991

Kyoto Shijo
Kawaramachi Building

Sakaisujihonmachi
Building (Note)
Note: On July 1, 2004, “Fukusuke
Sakaisujihonmachi Building” wasrenamed to “Sakaisujihonmachi
Building.”● III- 7

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

● III- 8

Location :Osaka, Osaka Prefecture
Site area :2,036.22m2 (21,917.67ft2)
Floor area of building : 17,145.59m2 (184,553.42ft2)
Structure :Above ground: 13 floors
Below ground: 2 floors
Completion :October 1992

Midosuji Daiwa
Building

Kobe Itomachi Building● III- 9● III- 1 0

Location :Osaka, Osaka Prefecture
Site area :3,044.65m2 (32,772.31ft2)
Floor area of building : 31,213.27m2 (335,976.52ft2)
Structure :Above ground: 15 floors
Below ground: 2 floors
Completion :September 1991

Location :Kobe, Hyogo Prefecture
Site area :808.55m2 (8,703.15ft2)
Floor area of building : 4,894.09m2 (52,679.50ft2)
Structure :Above ground: 10 floors
Completion :September 1989

NHK Hiroshima
Broadcasting Center
Building

Tosei Tenjin Building● III- 1 1● III- 1 2

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

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

Hinode Tenjin Building● III- 1 3

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

19

20 Japan Real Estate Investment Corporation

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

p.22
p.24
p.25
p.26
p.26
p.33

SELECTED FINANCIAL DATA
Thousands of U.S. dollars(Note 1)Millions of yen
For the period from
April 1, 2004 to
September 30, 2004

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

¥

9,560

For the period from
April 1, 2003 to
September 30, 2003

¥

8,965

For the period from
October 1, 2002 to
March 31, 2003

¥

8,500

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

Operating Revenues¥ 10,151

Operating Expenses

5,792

5,219

5,067

4,812

$91,410
52,159Operating Profits

4,358

4,341

3,898

3,687

39,251

Income before Income Taxes

3,831

3,803

3,408

3,259

34,503Net Income

3,830

3,802

3,407

3,258

34,495

Total Assets

257,372

244,523

209,581200,0222,317,629

Interest-Bearing Liabilities

99,00087,00076,00066,800891,490

Total Shareholders’ Equity

137,279

137,250

115,559

115,410

1,236,192

Shareholders’ Capital

133,448

133,448

112,152

112,152

1,201,696

Number of Shares

260,400

260,400

225,400

225,400

260,400

Total Shareholders’ Equity per Share (Yen/U.S. dollars)

527,185

527,077

512,688

512,026

4,747

3,830

3,802

3,407

3,258

34,495

Cash Distribution
Dividend Payout Ratio

99.9%

99.9%

99.9%

99.9%

99.9%

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

14,711

14,602

15,117

14,455132.47

Net Operating Income (NOI)

6,672

6,455

5,950

5,702

60,086

Funds from Operations (FFO)

5,488

5,301

4,801

4,568

49,419Return on Assets (ROA) (Note 2)

1.5%(3.0% annualized)

1.6%(3.2% annualized)

1.7%(3.3% annualized)

1.7%(3.4% annualized)

1.5%(3.0% annualized)

Return on Equity (ROE) (Note 3)

2.8%(5.6% annualized)

2.8%(5.7% annualized)

3.0%(5.9% annualized)

2.8%(5.7% annualized)

2.8%(5.6% annualized)

53.3%

56.1%

55.1%

57.7%

53.3%

EOP Equity Ratio (Note 4)

38.5%

35.6%

36.3%

33.4%

38.5%

FFO Multiple

EOP Interest-Bearing Debt Ratio on Total Assets (Note 5)

20.8 times

20.4 times

15.2 times

14.6 times

20.8 times

Debt Service Coverage Ratio (Note 6)

12.7 times

13.9 times

12.6 times

14.5 times

12.7 times

Note 1: Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥111.05 = US$1.00, the foreign exchange rateon September 30, 2004, 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.
Note 2: ROA = Income before Income Taxes ÷ Average of Total Assets during the period
Note 3: ROE = Net Income ÷ Average of Net Worth during the period(Annualized portions of the calculations given in notes 2 and 3 above assume a fiscal period of 182 days for the period ended March 31, 2003, 183
days for the period ended September 30, 2003, 183 days for the period ended March 31, 2004 and 183 days for the period ended September 30,
2004.)
Note 4: EOP Equity Ratio = (Net Worth at end of period ÷ Total Assets at end of period) x 100
Note 5: EOP Interest-Bearing Debt Ratio on Total Assets = (Interest-Bearing Debt at end of period ÷ Total Assets at end of period) x 100
Note 6: Debt Service Coverage Ratio = Net Income before Interest, Taxes, Depreciation and Amortization ÷ Interest Expenses

Japan Real Estate Investment Corporation

21

Balance Sheets
As of September 30, 2004 and March 31, 2004

Thousands of yen

U.S. dollars

As of September
30, 2004

As of March
31, 2004

As of September
30, 2004¥ 16,847,448¥ 24,779,461$ 151,710,475

62,552

72,787563,279

Consumption tax refundable

38,222

109,734

344,183

Other current assets

251,197

482,937

2,262,018

17,199,419

25,444,919

154,879,955

Land

167,381,398

153,254,024

1,507,261,576

Buildings and structures

77,567,710

69,093,823

698,493,559

Machinery and equipment

1,400,385

1,250,776

12,610,399

17,114

13,887

154,114ASSETS
Current Assets:
Cash and bank deposits
Rental receivables

Total current assets

Property and Equipment, at Cost:

Tools, furniture and fixtures
Construction in progress

Less accumulated depreciation
Net property and equipment

5,500

5,500

49,527

246,372,107

223,618,010

2,218,569,175(8,149,448)(6,496,834)(73,385,391)

238,222,659

217,121,176

2,145,183,784

Investments and Other Assets:
Deposits

14,234

14,234

128,177

Long-term prepaid expenses

24,336

31,453

219,139

1,083,390

1,083,336

9,755,878

828,095

828,095

7,456,960

599

599

5,389

¥257,372,732¥244,523,812$2,317,629,282

Leasehold rights
Easement
Other
Total Assets
The accompanying notes form an integral part of these financial statements

22 Japan Real Estate Investment Corporation

Thousands of yen

As of September
30, 2004

U.S. dollars

As of March
31, 2004

As of September
30, 2004

LIABILITIESCurrent Liabilities:
Trade accounts payable¥

251,066¥

958,026$

2,260,841

Other payables

718,385

565,076

6,469,024

Short-term loans

10,000,000

9,000,000

90,049,527

Accrued expenses

257,710

243,398

2,320,667

941

997

8,473

Rent received in advance

2,195,608

1,582,154

19,771,347

Other current liabilities

4,836

9,403

43,546

13,428,546

12,359,054

120,923,425

Accrued income taxes

Total current liabilities

Long-Term Liabilities:
Corporate bonds

45,000,000

45,000,000

405,222,873

Long-term loans

44,000,000

33,000,000

396,217,920

Deposits from tenants

16,782,973

16,913,871

151,129,871

882,000—

7,942,368

Total long-term liabilities

Other

106,664,973

94,913,871

960,513,032

Total Liabilities

120,093,519

107,272,925

1,081,436,457

Shareholders’ capital

133,448,380

133,448,380

1,201,696,353

Retained earnings

3,830,833

3,802,507

34,496,472

Total shareholders’ equity

137,279,213

137,250,887

1,236,192,825

Total Liabilities and Shareholders’ Equity¥257,372,732¥244,523,812$2,317,629,282

SHAREHOLDERS’ EQUITY

The accompanying notes form an integral part of these financial statements

Japan Real Estate Investment Corporation

23

Statements of Income and Retained Earnings
For the six months ended September 30, 2004 and March 31, 2004

Thousands of yen

U.S. dollars

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

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

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

¥10,104,095¥9,461,852$90,986,895

Operating Revenues and Expenses
Operating Revenues:
Rental revenues
Non-rental revenues

47,033

98,920423,534

10,151,128

9,560,772

91,410,429

Property-related expenses

5,135,869

4,603,885

46,248,265

Asset management fees

362,571

325,666

3,264,935

Administrative service fees

194,627

186,469

1,752,604

Other operating expenses

99,199103,561

893,274

5,792,266

5,219,581

52,159,078

4,358,862

4,341,191

39,251,351

84

99

758

2,334

128

21,016

Interest expense

221,578

163,980

1,995,304

Interest expense on corporate bonds

248,500

248,500

2,237,730

Amortization of corporate bond issuance costs—

61,125—

New share issuance costs—

49,183—

Other non-operating expenses

59,554

15,225536,282

Income before Income Taxes

3,831,648

3,803,405

34,503,809

Current

958

1,017

8,624

Deferred3

6

27

3,830,687

3,802,382

34,495,158

Operating Expenses:

Operating profits

Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Other non-operating revenues
Non-Operating Expenses:

Income Taxes:

Net Income
Retained Earnings at begining of period
Retained Earnings at end of period
The accompanying notes form an integral part of these financial statements

24 Japan Real Estate Investment Corporation

146

125

1,314

¥ 3,830,833¥3,802,507$34,496,472

Statements of Cash Flows
For the six months ended September 30, 2004 and March 31, 2004

Thousands of yen

U.S. dollars

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

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

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

Income before income taxes¥ 3,831,648¥ 3,803,405$ 34,503,809

Depreciation and amortization

1,657,320

1,498,676

14,924,092

2,321

—

20,905

Cash Flows from Operating Activities

Loss on retirement of property and equipment
Amortization of corporate bond issuance costs—

61,125—

New share issuance costs—

49,183—

Interest income

(84)

(99)

(758)

Interest expense

470,078

412,480

4,233,034

Rental receivables and other receivables

10,235(3,084)

92,164

Consumption tax refundable

71,513(109,734)

643,968

Prepaid expenses

1,737(23,367)

15,638

—

2,364

—

Other current assets
Trade accounts payable(706,960)

733,274(6,366,144)

Other payables

153,309(131,409)

1,380,545

Accrued expenses—(24,089)—

Consumption tax payable—(13,024)—

Rent received in advance613,454

137,4595,524,122

Other current liabilities

877,433

5,465

7,901,240

7,118

6,629

64,093

6,989,122

6,405,254

62,936,708

84

99

758

(455,767)(413,245)(4,104,156)(1,014)(1,142)(9,130)6,532,425

5,990,966

58,824,180(22,531,125)(25,787,014)(202,891,712)(54)(1,185,904)(486)

Proceeds from lease deposits received

1,613,366

2,529,171

14,528,286

Repayment of lease deposits(1,744,264)(984,870)(15,707,019)(22,662,077)(25,428,617)(204,070,931)

Long-term prepaid expenses
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash Flows from Investing Activities
Purchases of property and equipment
Purchases of intangible assets

Net cash used in investing activities
Cash Flows from Financing Activities
Proceeds from short-term borrowings

6,000,000

16,000,000

54,029,716

Repayment of short-term borrowings(5,000,000)(14,000,000)(45,024,764)

Proceeds from long-term borrowings

99,054,480

11,000,000

9,000,000

Proceeds from issuance of shares—

21,295,960—

Payment of new share issuance costs—(49,183)—(3,802,361)(3,407,418)(34,240,079)

8,197,639

28,839,359

73,819,353

Dividends to shareholders
Net cash provided by financing activities
Net Increase in Cash and Cash Equivalents(7,932,013)

9,401,708(71,427,398)

Cash and Cash Equivalents at beginning of Period

24,779,461

15,377,753

223,137,873¥ 16,847,448¥ 24,779,461$ 151,710,475

Cash and Cash Equivalents at end of Period
The accompanying notes form an integral part of these financial statements

Japan Real Estate Investment Corporation25

Statements of Changes in Shareholders’ Equity
For the six months ended September 30, 2004 and March 31, 2004

SharesThousands of yen

Balance as of September 30, 2003

225,400¥115,559,916

Public offering

35,00021,295,960

Cash dividends paid—

(3,407,371)

Net income—

3,802,382

260,400

137,250,887$1,235,937,746

Cash dividends paid—

(3,802,360)(34,240,079)

Net income—

3,830,687

34,495,158

260,400¥137,279,213$1,236,192,825

Balance as of March 31, 2004

Balance as of September 30, 2004

U.S. dollars

The accompanying notes form an integral part of these financial statements

Notes to Financial Statements
September 30, 2004 and March 31, 2004

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 36% by Mitsubishi Estate Co., Ltd.
(“MEC”), 27% by The Tokio Marine & Nichido Fire Insurance Co., Ltd. (“TMN”), 27% by The Dai-ichi Mutual Life
Insurance Company (“DL”) and 10% by Mitsui & Co., Ltd.
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, TMN and DL
under the Law Concerning Investment Trusts and Investment Corporations of Japan, or the Investment Trust Law.
On September 10, 2001, the Company commenced operations when the Company was listed on the Tokyo Stock Exchange as
one of the first real estate investment corporations in Japan (so-called “J-REITs”). The Company issued 160,000 shares at a
price of ¥525,000, generating gross proceeds of ¥84,000 million. The proceeds from the offering of the shares, net ofunderwriters’ discount, were ¥81,060 million.
On May 8, 2002, the Company completed a second offering of 65,000 shares at a price of ¥490,980, generating gross proceedsof ¥31,914 million. The proceeds from the offering of the shares, net of underwriters’ discount, were ¥30,892 million.
On June 21, 2002, the Company issued ¥25,000 million of unsecured corporate bond due June 2007 with an interest rate of
1.32% to the qualified investors.
On April 30, 2003, the Company issued ¥10,000 million of unsecured corporate bond due April 2008 with an interest rate of
0.69% to the qualified investors and ¥10,000 million of unsecured corporate bond due April 2010 with an interest rate of
0.98% to the qualified investors.
On October 25, 2003, the Company completed a third public offering of 35,000 shares at a price of ¥629,000, generating grossproceeds of ¥22,015 million. The proceeds from the offering of the shares, net of underwriters’ discount, were ¥21,296 million.
As of March 31, and September 30, 2004, the Company had total shareholders’ equity of ¥133,448 million with 260,400 shares.
At September 30, 2004, the Company owned a portfolio of 39 office properties concerning an aggregate of approximately
293,000 square meters of rentable area.

26 Japan Real Estate Investment Corporation

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 JapaneseCommercial Code, the Securities 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 wereprepared in accordance with Japanese GAAP and were presented in the Securities Report of the Company filed with the Kanto
Local Finance Bureau. In preparing the accompanying financial statements, certain reclassifications and modifications have been
made to the financial statements issued domestically in order to present them in a format that is more familiar to readers outside
Japan. In addition, the notes to financial statements include information that might not be required under Japanese GAAP but ispresented herein as additional information.
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥111.05=US$1.00, theforeign exchange rate on September 30, 2004, has been used for translation. The inclusion of such amounts is not intended to
imply that Japanese yen has been or could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESProperty and equipment
Property and equipment is stated at cost, less accumulated depreciation. The costs of land, buildings and building improvements
include the purchase price of property, legal fees and acquisition costs. Depreciation is calculated on a straight-line basis over theestimated useful lives of the assets ranging as stated below:
Buildings ...................................................................................................2–61 years
Structures..................................................................................................5–49 years
Machinery and equipment.........................................................................3–18 years
Tools, furniture and fixtures .....................................................................3–15 years
Expenditures for repairs and maintenance are charged to operations as incurred. Significant renewals and betterments arecapitalized.
Revenue recognition
Revenues from leasing of office space are recognized as rent accrued over the lease period.
Taxes on property and equipment
Property and equipment is subject to property taxes and city planning taxes on a calendar year basis. These taxes are generally
charged to expense during the period. The sellers of the properties were liable for property taxes for the calendar year including
the period from the date of purchase by the Company through the end of the year since the taxes are imposed on the ownerregistered in the record as of January 1 based on the assessment made by the local government. The Company paid the amountequivalent to the property taxes to the sellers applicable to the period since acquisition and included the amount 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.

Japan Real Estate Investment Corporation27

Cash and cash equivalents
The statements of cash flows are provided for information purposes only since they are not required to be prepared by theInvestment Trust Law, the Japanese Commercial Code, the Securities and Exchange Law of Japan or the related regulations.
Cash and cash equivalents consists of cash on hand, deposits placed with bank and short-term investments which are highly
liquid, readily convertible to cash and with insignificant risk of price fluctuation, with original maturity of three months or less.

3. PROPERTY AND EQUIPMENT
Property and equipment at September 30, 2004 and March 31, 2004 consisted of the following:Thousands of yen

As of September 30, 2004
Acquisition Costs

Land

Book Value¥110,713,933 ¥110,713,933

U.S. dollars

As of March 31, 2004

As of September 30, 2004

Acquisition Costs

Book Value

Acquisition Costs

Book Value¥96,586,560¥96,586,560$996,973,737$996,937,737

Buildings and structures

53,247,662

Accumulated depreciation

4,644,484

Machinery and equipment

756,177

Accumulated depreciation

207,184

Tools, furniture and fixtures

7,488

Accumulated depreciation

1,391

6,097

1,000

5,431

12,52854,900Construction in progress

5,500

5,500

5,500

5,500

49,52749,527

Land in trust

56,667,465

56,667,465

56,667,464

56,667,464

510,287,839

510,287,839

Buildings and structures in trust

24,320,048

Accumulated depreciation

3,071,981

Machinery and equipment in trust

644,208

Accumulated depreciation

223,370

Tools, furniture and fixtures in trust

9,626

Accumulated depreciation

1,038

Total

44,861,830
48,603,178

3,560,614

479,492,674
41,301,216

41,823,353

606,568
548,993

160,635

6,809,338
445,933

1,865,685

6,431

2,586,742

219,000,885
21,645,251

27,663,042

644,208
420,838

187,174

457,034

2,011,438

3,789,623

86,686669¥238,222,659

191,337,843

5,801,061

7,456
8,588

4,943,653

67,42824,231,993
21,248,067

437,669,321

6,787

9,345

¥217,121,176

77,341$2,145,183,784

4. SHORT-TERM LOANS
Short-term loans at September 30, 2004 and March 31, 2004 consisted of the following:Thousands of yen

U.S. dollars

As of September
30, 2004

As of March
31, 2004

As of September
30, 2004¥—¥5,000,000$

Unsecured loans from banks with variable interest,
due on March 24, 2005

4,000,000

4,000,000

36,019,811

Unsecured loan from a bank with variable interest,
due on June 15, 2005

2,000,000—

18,009,905

Unsecured loans from banks with variable interest,
due on June 15, 2004

Unsecured loans from banks and trust bankswith variable interest, due on October 29, 2004—

4,000,000—

36,019,811¥10,000,000¥9,000,000$90,049,527

The weighted average interest rates applicable to the bank loans at September 30, 2004 and March 31, 2004 were 0.45014%
and 0.48961%, respectively, per annum.

28 Japan Real Estate Investment Corporation

5. LONG-TERM LOANS
Long-term loans at September 30, 2004 and March 31, 2004 consisted of the following:Thousands of yen

U.S. dollars

As of September
30, 2004

As of March
31, 2004

As of September
30, 2004¥24,000,000¥24,000,000$216,118,866

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

2,000,000

2,000,000

18,009,905

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

5,000,000

5,000,000

45,024,764

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

2,000,000

2,000,000

18,009,905

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

3,000,000—

27,014,858

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

3,000,000—

27,014,858

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

5,000,000—

45,024,764¥44,000,000¥33,000,000$396,217,920

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

The weighted average interest rates applicable to the loans at September 30, 2004 and March 31, 2004 were 1.116% and1.122%, respectively, per annum.

6. SECURED ASSETSAt September 30, 2004 and March 31, 2004, the following assets were pledged as collateral for the following loans:Thousands of yen

U.S. dollars

Pledged assets:

As of September
30, 2004

As of March
31, 2004

As of September
30, 2004

Bank deposits¥ 8,054,808¥ 7,863,049$ 72,533,162

Land and leasehold rights

47,765,093

47,765,093

430,122,405

Buildings and structures

16,636,468

16,956,351

149,810,613

356,326

387,604

3,208,695

Machinery and equipment
Tools, furniture and fixtures

8,589

6,787

77,341

Total¥72,821,284¥72,978,884$655,752,216

Loans secured by the pledged assets:

As of September
30, 2004

As of March
31, 2004

As of September
30, 2004

Long-term loans¥24,000,000¥24,000,000$216,118,865

Thousands of yen

U.S. dollars

Japan Real Estate Investment Corporation29

7. SHAREHOLDERS’ EQUITYThe Company is required to maintain net assets of at least ¥50 million ($450 thousand), as required pursuant to the Investment
Trust Law.

8. INCOME TAXESAt September 30 and March 31, 2004, the Company’s deferred tax assets consist mainly of the enterprise tax, which is notdeductible for tax purposes. The reconciliation of tax rate difference between the adjusted statutory tax rate and the effective tax
rate for the six months ended September 30, 2004 and March 31, 2004 were as follows:
For the period from April 1, 2004
to September 30, 2004

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

Statutory tax rate ...............................................................................39.39%..........................................39.39%
Deductible dividend distribution........................................................(39.38%) .......................................(39.38%)
Others ..................................................................................................0.02%............................................0.02%
Effective tax rate ..................................................................................0.03%............................................0.03%

The Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation
Measures Law of Japan, or the STML, an investment corporation is allowed to deduct dividends of accounting profits, ordividend distributions, paid to investors from its taxable income if certain tax requirements are satisfied. Such tax requirements
include dividend distributions in excess of 90% of its taxable income for the fiscal period as stipulated by Article 67-15 of the
STML. Based on the distribution policy provided by Article 33-2 of the Articles of Incorporation, the Company made a dividend
distribution of approximately 100% of retained earnings in the amount of ¥3,830 million ($34,496 thousand) subsequent to
September 30, 2004 and treated it as tax deductible dividend. The Company will not distribute the dividends in excess ofaccounting profit under Article 33-3 of the Articles of Incorporation.

9. PER SHARE INFORMATION
The following table summarizes information about net assets per share and net income per share at September 30, 2004 andMarch 31, 2004, and for the periods then ended:
Yen

U.S. dollars

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

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

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

Net assets at period end per share¥527,185¥527,077$4,747

Net income per share¥ 14,711¥ 14,864$ 132

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

30 Japan Real Estate Investment Corporation

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

U.S. dollars

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

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

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

Property management fees

¥665,649¥595,242$5,994,139

Utilities

74,18865,199668,058

Insurance

1,133

50,637

10,201Other operating expenses

7,385

3,813

66,502

Repair and maintenance¥276,685¥121,775$2,491,536

11. BREAKDOWN OF PROPERTY-RELATED REVENUES AND EXPENSES
For the six months ended September 30, 2004 and March 31, 2004
Thousands of yen

U.S. dollars

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

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

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

Property-Related Revenues¥10,151,128¥9,560,772$91,410,429

Rental Revenues

10,104,095

9,461,852

90,986,895

Rental revenues

7,315,510

6,866,542

65,875,819

Common area charges

1,695,221

1,608,498

15,265,389

Parking revenues

397,299361,680

3,577,657

Other rental revenues

696,065

625,132

6,268,030

47,033

98,920423,534

Non-Rental Revenues
Cancellation charges

15,088

4,829

135,870

Other miscellaneous revenues

31,94594,091

287,664

Property-Related Expenses

5,135,869

4,603,885

46,248,265

1,234,174

1,127,376

11,113,683

Utilities expenses

878,772

779,507

7,913,301

Property and other taxes

936,742

791,908

8,435,318

Casualty insurance

27,13024,540244,302

Repairs and maintenance363,595

365,636

3,274,159

1,657,320

1,498,676

14,924,092

38,136

16,242

343,410¥ 5,015,259¥4,956,887$45,162,164

Property management fees

Depreciation
Other rental expenses
Profits

Japan Real Estate Investment Corporation

31

12. LEASESThe Company leases office buildings and earns rent income. As of September 30, 2004 and March 31, 2004, the future lease
revenues under the non-cancelable operating leases are as follows:
Thousands of yen

U.S. dollars

As of September
30, 2004

As of March
31, 2004

As of September
30, 2004

Due within one year

¥ 5,832,804¥ 5,283,438$ 52,524,122

Due after one year

22,169,112

23,611,592

199,631,810

Total¥28,001,916¥28,895,030$252,155,932

13. SUBSEQUENT EVENTSAppropriation of retained earnings
On November 18, 2004, the Board of Directors resolved to effect the payment of a cash distribution of ¥14,711 per share
aggregating ¥3,830 million ($34,496 thousand) to shareholders at the record date of September 30, 2004.

32 Japan Real Estate Investment Corporation

Independent Auditors’ Report

To the Board of Directors and Shareholders ofJapan Real Estate Investment Corporation

We have audited the accompanying balance sheets of Japan Real Estate Investment Corporation as of September 30, 2004 andMarch 31, 2004, the related statements of income and retained earnings, changes in shareholders’ equity and cash flows for thesix months ended September 30, 2004 and March 31, 2004, all expressed in yen. These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Japan
Real Estate Investment Corporation at September 30, 2004 and March 31, 2004, and the results of its operations and cash flows
for the six months ended September 30, 2004 and March 31, 2004 in conformity with accounting principles generally acceptedin Japan.
The U.S. dollar amounts in the accompanying financial statements with respect to the six-month period ended September 30,
2004 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and,in our opinion, such translation has been made on the basis described in Note 1.

December 21, 2004

Japan Real Estate Investment Corporation

33

Corporate Data
As of September 30, 2004

Transfer Agent

Executives
Executive Director:

Yoneichiro Baba

Supervisory Directors: Tsunaya Kawamura

The Sumitomo Trust & Banking Co., Ltd.
5-33, Kitahama 4chome, Chuo-ku, Osaka 540-8639, Japan

Kenji Kusakabe
Auditors
Paid-in Capital

Ernst & Young ShinNihon¥133,448,380,000

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

Number of Shares Issued
260,400

Incorporation
May 11, 2001

Number of Shareholders
15,343

Executive Office
Japan Real Estate Investment Corporation

Stock Listing

3-1, Marunouchi 3chome, Chiyoda-ku, Tokyo 100-0005, JapanTokyo Stock Exchange
For further information, please contact :Securities CodeJapan Real Estate Asset Management Co., Ltd.

8952

Planning Department, Manager
Toshiya Kobayashi
Tel: 81-3-3211-7921
Fax: 81-3-3212-8886
E-mail: toshiya-kobayashi@j-rea.co.jp

34 Japan Real Estate Investment Corporation

This semiannual report includes translations of documents originally filed under the Securities and Exchange Law of Japan. This report was prepared in English solely for theconvenience 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 Japan Real Estate Investment Corporation’s future operating results contained in this semiannual report are forward-looking statements and are based on information
currently available to the Company and its asset management company and are subject to risks and uncertainties. Consequently, these projections should not be relied upon as thesole basis for evaluating Japan Real Estate Investment Corporation. Actual results may differ substantially from the projections depending on a number of factors.

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

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