Japan Real Estate Investment Corporation

SEMIANNUAL REPORT
September 2022
For the period from April 1, 2022 to September 30, 2022

Contents

P. 2	The Strengths of Japan Real Estate Investment Corporation
P. 3

To Our Unitholders

P. 6

Asset Management SummaryP. 7

Financial Highlights

P. 7

Top 10 Unitholders

P. 7

Unit Price Performance

P. 8

Portfolio Highlights

P. 9

Approach to ESG

P. 13	Asset Size, Property Acquisitions, and Performance Trends
P. 16	Overview of Portfolio Properties
P. 22 Financial Section
P. 53 Other Information
P. 64 Corporate Data

ProfileJapan Real Estate Investment Corporation (the “Company”) was established as oneof the first real estate investment corporations in Japan following revisions to the
Act on Investment Trusts and Investment Corporations of Japan, as amended, or
the ITA. Its investments focus primarily on office buildings, and it is aiming tomaintain g­ eographic diversity while seeking stable growth and dividends in themedium- 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 under the ITA. Accordingly, the “units” of such investment corporations, including the units of
the Company, are governed by the ITA and represent the equity interests in such investment corporations, which may differ in certain material respects from the “shares” governed by the Corporation
Law of Japan 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 beconstrued accordingly. Each investor and reader should consult their own legal, tax, and other advisors regarding all Japanese legal, tax, and other consequences of an investment in the units of theCompany, with specific reference to their own legal, tax, and other situations, and any recentchanges in applicable laws and guidelines or their interpretation.

1

Japan Real Estate Investment Corporation

The Strengths ofJapan Real Estate Investment Corporation
01

Steady Growth of Dividends
Actual dividend per unit for the September 2022 period:

JPY 11,500
Forecast dividend per unit for the March 2023 period:

JPY 11,400
02

Collaboration with Sponsor
Expertise of Mitsubishi Estate Co., Ltd.

03

Steady Growth of Quality Portfolio (As of September 30, 2022)
Total acquisition price: JPY 1.09 trillion 73 properties

The first listed J-REIT in 200104

Sound Financial Base (As of September 30, 2022)
Highest credit ratings for a J-REIT: A+ from S&P, A2 from Moody’s, AA from R&I
Long-term interest-bearing debt ratio*: 94.9%
LTV (Interest-bearing debt / Total assets): 42.0%* ‌(Long-term loans [including current portion of long-term loans] + Investment corporation bonds) / Total interest-bearing debt

Japan Real Estate Investment Corporation

2

To Our Unitholders
In the fiscal period ended September 30, 2022, Japan Real Estate Investment Corporation (JRE) increased
dividends per unit (DPU) by JPY 100, to JPY 11,500, marking the 17th consecutive period of DPU growth.
In terms of internal growth, while the recent weakness in demand in the office leasing market is persisting,
we are making good progress in filling vacancies thanks to our diligent efforts to pursue a flexible leasing
strategy. As for external growth, although the market for property transactions remains overheated, we
will continue strategic asset replacement with the aim of creating a highly competitive portfolio over the
medium- to long-term, including by making the best use of the sponsor pipelines.

Business Performance for the September 2022 Period 
Summary of Financial Results and Cash Dividends

constraints, and fluctuations in financial and capital markets must

In the September 2022 period (April 1, 2022 to September 30, 2022),

continue to be closely monitored.

Japan Real Estate Investment Corporation recorded operating revenues

In the office leasing market, the vacancy rate, which had been ris-increased 3.3% compared with the previous period, to JPY 37.6 bil-ing against the background of the spread of telework associated withlion. On the income front, operating profit increased 5.5%, to JPYchanges in work styles, has now generally leveled off and settled down,

18.0 billion. After deducting expenses for interest payments on loans

but the future remains uncertain, as a large supply of new office floors

and other costs, ordinary profit increased 6.6%, to JPY 17.2 billion,

is expected to come on stream in 2023. Rent levels continue to trend

and profit increased 4.6%, to JPY 16.7 billion.

slightly downward. Against the background of such leasing market

Turning to dividends, the Company will make cash distributions

trends, the Company is striving to attract new tenants through strate-using earnings based on the dividend policy outlined in Article 32-1(2)gic leasing activities and to further enhance the satisfaction level ofof the Company’s Articles of Incorporation, in an amount that exceeds

existing tenants by adding value to the properties, with the aim of

90% of profit available for dividends as required by Article 67-15 of the

securing stable income and occupancy rates for the entire portfolio.

Special Taxation Measures Act. Based on this policy, the Company madeIn the real estate trading market, the environment for acquiringa reduction entry under the application of Article 65-7 “Exceptions

properties remained challenging due to the continued favorable financ-of the Taxation in case of the Replacement by Purchase of Specificing environment backed by the continuation of accommodative mone-

Assets” of the Special Taxation Measures Act, and secured retained

tary policies, interest rate differentials with overseas markets, and theearnings brought forward. From this, the Company decided that the

progression of the appreciation of the U.S. dollar against the Japanese

total amount of dividends is JPY 15,929,915,000 for the period under

Yen in the foreign exchange market, as well as the fierce competition

review, which is a multiple of 1,385,210—the number of units out-

for quality office buildings, which are in short supply.

standing as of September 30, 2022. Accordingly, the dividend perinvestment unit is JPY 11,500.

Under such market conditions, the Company made sound investments under the Investment Guideline of providing stable dividends
to unitholders, which was set forth at the time of the Company’s

3

Operating Environment and Performancelisting on the TSE and remains unchanged to date. Accordingly, theDuring the September 2022 period (April 1, 2022 to September 30,

Company provided a dividend per investment unit at JPY 11,500,

2022), the Japanese economy has continued to recover, particularly inwhich is an increase by JPY 100 compared with the previous period.

personal consumption, as socioeconomic activities began to normalize

In the office leasing market in the fiscal period under review, thedue to the easing of activity restrictions on the spread of COVID-19

occupancy rate at the end of the period was 93.9%, a decrease of 3.1%

and other factors. On the other hand, the outlook remains uncertainfrom the end of the previous period, due to the exit of some large-lot

due to the protracted situation in Ukraine, global monetary tighten-

tenants and the prolonged leasing period, while positive demanding, and other factors. The effects of rising prices, supply-side

was acquired, including new contracts for improvement of location

Japan Real Estate Investment Corporation

On the environmental front, JRE is promoting initiatives aimed at achieving its goals for FY2030 andaddressing its materiality. Earning high regard for its various environmental, social, and governance (ESG)
initiatives, JRE was selected as a constituent of the MSCI Japan ESG Select Leaders Index in June 2022.
Going forward, JRE will continue pioneering an approach to asset management that takes sustainability
into consideration.

and office environments as well as floor space expansion due tomeans, as well as the possibility of repayment with funds procured

business expansion.

from issuing new investment units.

As for property acquisitions and dispositions, the Company dis-In the fiscal period under review, the short-term loans of JPY

posed of Harumi Center Building (Chuo-ku, Tokyo) for JPY 24,330

25,000 million borrowed to partially fund the acquisition of Toyosu

million on May 31, 2022.

Front were repaid with the proceeds from the disposition of Harumi

As a result of the above, the Company’s portfolio at the end of theCenter Building and some cash on hand. Furthermore, in addition

fiscal period under review, September 30, 2022, consisted of 73 prop-

to borrowing to partially fund the repayment of existing loans, theerties, with a total acquisition price of JPY 1.09 trillion. Net rentable

Company also repaid the equivalent of JPY 1,500 million worth offloor area stood at 875,648 m2 with 1,499 tenants in total. (Note 1)loans with cash on hand.

In addition, the Company disposed of its 25% co-ownershipAs a result of the above financing activities, as of September 30,

interest in Harumi Front (Chuo-ku, Tokyo) for JPY 9,777 million

2022, the Company’s total interest-bearing debt was JPY 423.3 billion,

as of December 1, 2022. The property is planned to be disposed of ina decrease of JPY 26.5 billion compared with the end of the previous

three phases, with 30% of the co-ownership interest to be disposed

fiscal period. This amount consists of long-term loans totaling JPY

of for JPY 11,733 million on April 3, 2023, and another 45% of the358.7 billion (including the current portion of long-term loans total-

co-ownership interest for JPY 17,599 million on January 12, 2024.

ing JPY 48.5 billion), short-term loans totaling JPY 21.7 billion, andNote 1: Shibuya Cross Tower (land with leasehold interest), whose building ownership was disposed of on January 18, 2018, is included in the above numberof properties and total acquisition price, but is not included in net rentablefloor area or total number of tenants.

investment corporation bonds totaling JPY 42.9 billion. The current
LTV ratio stands at 42.0%.
The Company’s credit ratings as of September 30, 2022 were as follows:

Finance Activities

Rating Agency

Credit Rating

S&P Global Ratings Japan Inc.

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

Moody’s Japan K.K.

Rating: A2; Outlook: Stable

Rating andInvestment Information, Inc.

Rating: AA; Outlook: Stable

According to its financial policy, the Company aims to maintain the
LTV ratio (ratio of interest-bearing debt to total assets) at 30% to
40%, and strives to maintain a sound and conservative financial profile
by staggering maturities, extension of durations and diversification of
stable lenders among other possibilities, taking into consideration the
borrowing costs and existing relationships with lenders.
Concerning new loans related to property acquisition and the refinancing of existing loans, the Company carries out loans strategicallyand flexibly after giving close consideration to the above-mentioned

Japan Real Estate Investment Corporation

4

Outlook 
Operating Environment(iv) Reduce management costs

The Japanese economy is expected to recover in the future as domestic

The Company has introduced sound competitive principles to ademand is expected to improve with the normalization of socioeco-

number of property management companies so that these compa-

nomic activities, although the impact of COVID-19 will remain. On

nies perpetually review and improve their management systems

the other hand, the Company believes that it is necessary to pay atten-

and cost structures. Along with this, the Company endeavors totion to downside risks such as global price and interest rate increases

ensure and enhance tenant satisfaction.

against the background of the protracted situation in Ukraine, andto watch the effects of fluctuations in financial and capital markets

Property Acquisitions and Dispositions

very closely.

The Company has adopted the following policies for acquiring properties.

In the office leasing market, the Company will promote flexible(i) To access property information quickly, the Company continues toleasing in response to market conditions, secure stable earnings overenhance its existing property information channels while working

the medium- to long-term, and maintain and improve asset value,

to develop new channels.

while keeping a close eye on trends in office demand and the officespace of choice in line with the review of work styles.

(ii) In its acquisition activities, the Company continues to meticulously monitor and examine economic, physical, and legal factors,

Regarding the real estate investment market, it is important toincluding rights-related issues, when selecting properties. In par-continue to be proactive in searching for new properties, keeping col-ticular, with regard to the structure of buildings, the Company

laboration with sponsors as our main focus, in order to promote more

requires buildings to meet or exceed new earthquake-resistant stan-

strategic replacement of our portfolio while paying close attention todards, verifies the need for renovations by capturing current condi-

future market trends due to changes in social conditions.

tions accurately based on engineering reports, and exclusively
targets properties capable of maintaining a competitive edge in

Property Management
Based on the conditions stated above, the Company will adhere toterms of the facilities they offer over the medium- to long-term.
(iii) In accordance with its acquisition policies, the Company shallthe following management policies in order to maintain and improve

maintain its portfolio so that 70% or more of the portfolio prop-

profitability.

erties are located within the Tokyo metropolitan area, with the(i) S trengthen relationships of trust with existing tenantsremaining 30% or fewer located in other major cities. Under these

The Company has contracts with numerous property management

policies, the Company will continue to acquire highly competitive

companies. Each property management company has developed

properties. At the same time, in order to further improve the quality

relationships of trust with their tenants through their daily diligenceof its portfolio, the Company will remain open to the replacement

in managing their respective properties over the years. The Company

of portfolio properties with due consideration at the right time.

will work to further solidify these relationships by anticipating tenants’ needs and providing tailored services to bolster tenant satisfac-

Financial Policies

tion, thereby maintaining and improving occupancy rates and

The Company has adopted the following financial policies.

raising the rent levels.

(i) In principle, the Company shall maintain an LTV ratio (including(ii) F ill vacancies promptly
In cooperation with the property management companies men-interest-bearing debt ratio, the Company adopts the conservative

tioned above and their leasing brokers, the Company will actively

target level of 30% to 40%.

seek the most appropriate tenants for each property, based on location and features, in order to fill current and anticipated vacancies
without delay. Furthermore, the Company will work to identify
additional needs for floor area among the existing tenants.
(iii) S tabilize revenues and income
With the aim of stabilizing revenues and income, the Company
will endeavor to promote fixed lease agreements and secure longterm leasing with its large-scale tenants.

5

investment corporation bonds) below 65%. To ensure an even lower

Japan Real Estate Investment Corporation(ii) The Company shall set the ceiling for the combined total of loans
and investment corporation bonds at JPY 1 trillion.
(iii) When obtaining a loan, the Company shall only negotiate withqualified institutional investors (limited to those defined under
Article 67-15 of the Special Taxation Measures Act) before executing a loan agreement.

(iv) With the purpose of maintaining liquidity at an appropriate level,
the Company may establish preliminary borrowing frameworks suchas overdraft agreements and commitment line agreements as needed.
(v) In financial transactions, in order to realize low financing costs, theCompany aims to achieve the best execution by making comprehensive judgments on borrowing terms and conditions, such as
interest rate levels and borrowing periods.

Yutaka Yanagisawa

Performance Forecasts for the March 2023 andSeptember 2023 Periods

Executive Director of Japan Real Estate
Investment Corporation

The Company’s forecasts for the March 2023 period (October 1, 2022
to March 31, 2023) are as follows: operating revenues totaling JPY
36.9 billion, operating profit totaling JPY 16.6 billion, ordinary profit
totaling JPY 15.8 billion, and profit totaling JPY 15.7 billion. The
Company plans to declare a per-unit cash dividend of JPY 11,400.
The Company’s forecasts for the September 2023 period (April 1,
2023 to September 30, 2023) are as follows: operating revenues totaling
JPY 37.1 billion, operating profit totaling JPY 16.5 billion, ordinary
profit totaling JPY 15.6 billion, and profit totaling JPY 15.6 billion.
The Company plans to declare a per-unit cash dividend of JPY 11,300.

Shojiro Kojima

Note: Operating revenues, operating profit, ordinary profit, profit, and cash dividend perunit might vary depending on changes that could occur in the market situation.

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

Asset Management Summary
For the period from April 1, 2022 to September 30, 2022

Disposed Property

Property to be Disposed

Harumi Center Building

Harumi Front

Location

2-5-24 Harumi, Chuo-ku, Tokyo

Location

2-1-40 Harumi, Chuo-ku, Tokyo

Site area

4,664.63m2

Site area

7,250.15m2

Floor area of building

26,447.27m

Floor area of building

45,458.90m2

Structure

Steel-framed structure, flat roof

Structure

Steel-framed structure, flat roof

FloorsAbove ground: 17 floors
Below ground: 1 floor

2

FloorsAbove ground: 10 floors

Completion

November 2006

Completion

February 2012

Acquisition date / Acquisition priceDecember 18, 2007 / JPY 26,800 million

Acquisition date / Acquisition price

January 7, 2013 / JPY 31,300 million

Disposition date / Disposition priceMay 31, 2022 / JPY 24,330 million

Disposition date / Disposition priceType of ownership

Land: Ownership
Building: Ownership

December 1, 2022 / JPY 9,777 million
April 3, 2023 / JPY 11,733 million
January 12, 2024 / JPY 17,599 million

Buyer

Undisclosed

Type of ownership

Land: Ownership
Building: Ownership

Buyer

Undisclosed

Japan Real Estate Investment Corporation

6

Financial Highlights
In millions of JPY
For the period from
October 1, 2021 toMarch 31, 2022

For the period from
April 1, 2022 toSeptember 30, 2022

For the period from
April 1, 2021 toSeptember 30, 2021

For the period from
October 1, 2020 toMarch 31, 2021

For the period from
April 1, 2020 to
September 30, 2020

Operating revenues

37,65436,45336,901

34,94434,966

Operating profit

18,042

17,107

18,394

16,47916,498

Ordinary profit

17,256

16,191

17,477

15,50815,608

Profit16,79016,045

16,865

15,56015,598Net operating income (NOI) (Note 1)

23,08424,07024,204

24,82524,943Funds from operations (FFO) (Note 2)

19,70021,053

20,58322,08922,225

21.0

21.0

22.5

20.4

16.8

Cash distribution

15,92915,791

15,73015,68015,600

Number of units

1,385,210

1,385,210

1,385,210

1,385,210

1,385,210

11,50011,40011,356

11,32011,262

FFO multiple (Times) (Note 3)

Dividend per unit (JPY)

Notes: 1. NOI = Property-related revenues – Property-related expenses (excluding Depreciation)
2. FFO = Profit + Depreciation – Gain (Loss) on sales of real estate properties
3. FFO multiple = Unit price at end of the respective term / FFO per unit (Annualized)(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, 2020, 182 days for theperiod ended March 31, 2021, 183 days for the period ended September 30, 2021, 182 days for the period ended March 31, 2022 and 183 days for the period ended
September 30, 2022.)

Top 10 Unitholders As of September 30, 2022
Units

% of total units
outstanding

Custody Bank of Japan, Ltd. (Shintaku Acc.) ��������������������������������������������������������������������������������������������������������������������������������������������

355,51625.67%The Master Trust Bank of Japan, Ltd. (Shintaku Acc.) �������������������������������������������������������������������������������������������������������������������������������

222,292

16.05%The Nomura Trust and Banking Co., Ltd. (Toshin Acc.) ���������������������������������������������������������������������������������������������������������������������������

60,754

4.39%

STATE STREET BANK WEST CLIENT - TREATY 505234 �����������������������������������������������������������������������������������������������������������������

26,614

1.92%

SSBTC CLIENT OMNIBUS ACCOUNT ����������������������������������������������������������������������������������������������������������������������������������������������

18,967

1.37%

JP MORGAN CHASE BANK 385781 �����������������������������������������������������������������������������������������������������������������������������������������������������

17,4481.26%

Mitsubishi Estate Co., Ltd. �����������������������������������������������������������������������������������������������������������������������������������������������������������������������

17,120

1.24%

STATE STREET BANK AND TRUST COMPANY 505103 ������������������������������������������������������������������������������������������������������������������

15,666

1.13%

DFA INTERNATIONAL REAL ESTATE SECURITIES PORTFOLIO ������������������������������������������������������������������������������������������������

14,931

1.08%

The Chugoku Bank, Limited ���������������������������������������������������������������������������������������������������������������������������������������������������������������������

14,325

1.03%

Company

Unit Price Performance
350%

TSE REIT Index   

TOPIX   The Company

300%

250%

200%

150%

100%

50%
Sep.
2001

7

Sep.
2002

Sep.
2003

Sep.
2004

Japan Real Estate Investment Corporation

Sep.
2005

Sep.
2006

Sep.
2007

Sep.
2008

Sep.
2009

Sep.
2010

Sep.
2011

Sep.
2012

Sep.
2013

Sep.
2014

Sep.
2015

Sep.
2016

Sep.
2017

Sep.
2018

Sep.
2019

Sep.
2020

Sep.
2021

Sep.
2022

Portfolio Highlights
Trends in the State of Portfolio Management

Rentable office area (m2)

Number ofproperties

Number oftenants

Leasable officespace (m2)Occupancy
rate (%)

September 2001

20

213

133,927

94.6

March 2002

24

353

201,884

94.0

March 2003

30

383

236,693

94.4

March 2004

36

477

273,157

94.8

March 2005

46

669

336,026

97.6

March 2006

52

866

400,090

98.7

March 2007

50

887

397,928

97.8

March 2008

53

931

479,877

95.9

March 2009

55

993

516,411

95.5

March 2010

55

979

566,277

93.0

March 2011

57

1,004

588,984

93.2

March 2012

57

1,058

629,761

94.7

March 2013

60

1,131

700,759

96.7

March 2014

64

1,223

750,956

96.7

March 2015

68

1,350

793,976

97.8

March 2016

68

1,420

820,38198.3

March 2017

69

1,482

835,069

98.8

March 2018

70

1,449

833,335

99.2

March 2019

73

1,506

855,902

99.5

March 2020

73

1,515

864,014

99.7

March 2021

73

1,497

873,873

97.9

March 2022

74

1,498

896,530

97.0

April 2022

74

1,493

896,52995.9

May 2022

73

1,485

875,716

95.8

June 2022

73

1,481

875,708

95.3

July 2022

73

1,486

875,708

93.4

August 2022

73

1,484

875,708

93.1

September 2022

73

1,499

875,64893.9

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

0200,000

400,000

600,000

800,000

1,000,000

Sep.
2022
period

50.0

60.0

70.0

80.0

90.0

100.0
Occupancy rate (%)

Portfolio Breakdown As of September 30, 2022
Properties by geographic region

Tenants by industry type

(Percentage based on acquisition price)(Percentage based on leased office area)

Other areas 6.9%

Electricity andheat supply services

Nagoya city 2.7%

1.6%

Osaka city and
Kyoto city 7.6%
Tokyo metropolitan area
(excluding
Tokyo 23 wards) 6.1%

Tokyo 23 wards

76.7%

Tokyo 5 central wards*

68.6%
Tokyo 23 wards(excluding Tokyo 5 central wards)

8.0%

Others 11.5%
Ceramics 1.4%

13.3%

Public services andassociations 1.7%
Communications

Service industries

11.9%

2.0%
Medical 2.1%

Finance

Construction 2.4%

9.0%

Insurance 3.8%

Real estate

9.0%

Pharmaceuticals

3.8%

Retail and restaurants

Machinery 3.8%

Electric devices 5.8%

Specialist services (Consulting, etc.)

4.4%* Chiyoda-ku, Chuo-ku, Minato-ku, Shinjuku-ku, Shibuya-ku

Information services

6.6%Media and advertisement 5.8%

* GRAND FRONT OSAKA is excluded

Japan Real Estate Investment Corporation

8

Approach to ESG

Sustainability Policy

Sustainability Policy

Japan Real Estate Asset Management Co., Ltd. (JRE-AM), which manages the Company’s assets,
believes that asset management focused on ESG is essential to the sustainable improvement ofasset value.
Sustainability Management Department is driving the Company’s ESG initiatives in accordancewith its Sustainability Policy.
Such initiatives include the enhancement of the disclosure of the Company’s ESG-related information, the acquisition of environmental certifications and evaluations from external organizations,participation in international initiatives, and other efforts.
We disclose ESG-related information on our company website in a timely manner.

WEB We refer to GRI (Global Reporting Initiative) standards andthe SASB (Sustainability Accounting Standards Board) Real Estate Standard
for the disclosure of a wide range of ESG information on our website.
Please refer to our ESG website
for further information.
https://jre-esg.com/en/esg/information.html

GRI STANDARDS Content Index
https://jre-esg.com/en/pdf/
en-esg_gri.pdf

SASB Framework
https://jre-esg.com/en/pdf/sustainability_report2022.pdf#page=25

1

Climate change initiative (promoting decarbonization and strengthening resilience)2

Contribution to resource conservation
including water and resource recycling

3

Contribution to conserving
biodiversity and ecosystem

4

Enhancement of tenants’ health andwell-being, and safety

5Creating a workplace where a diverse
workforce can thrive

6

Enhancement of governance systems

7

Stakeholder engagement through information disclosure and ESG evaluations

Materiality
Based on the Sustainability Policy, JRE and JRE-AM have determined materiality in order to achieve a sustainable society under our corporate social
responsibility, recognizing the importance of consideration for ESG. We will annually disclose the progress of KPIs linked to the each objective andwork towards contributing to the Sustainable Development Goals (SDGs) as well as achieving medium- to long-term growth of JRE through our
responses to materiality.

Social trends and stakeholder expectations

Very Strong

Environment

Governance

Climate Change Initiative

Environmental Considerationof Portfolio

Human Resources
Development and Diversity
Promotion

Tenant Engagement

Enhancing Governance
Systems at Both JRE and JRE-AM

Employee Health andWell-being at JRE-AM

Information Disclosure andStakeholder Engagement
Protecting Biodiversity

Regional Redevelopment

Contributing toLocal Communities

StrongWeak

WEB For more information, please visit “Materiality” on our ESG website.
https://jre-esg.com/en/esg/policy.html#anchor02

9Society

Japan Real Estate Investment Corporation

Conservation of
Water Resources
Recycling and Conservationof Resources

Impact of JRE’s business
Very Strong

International Initiatives
In 2018, JRE-AM became a signatory to the following international initiatives:
Became Signatory in April 2018

United Nations Global Compact (UNGC) 
Mitsubishi Estate Co., Ltd., JRE-AM’s parent company, became a signatory to the UNGC. Accordingly, JRE-AM has
participated in this i­nitiative as a member of the Mitsubishi Estate Group.
Became Signatory in August 2018

Principles for Responsible Investment (PRI) Assessment Result  bout the PRI Assessment Result
A
PRI signatories are required to report annually on the status of their ESG integration practices for evaluation.
JRE-AM has received the following evaluation results for which we made the report in 2021.
ModuleStar Score

Investment & Stewardship Policy
Real Estate(Highest rating)External Evaluation and Certification
Commitment to GRESB 
Received the highest evaluations in both GRESB Real Estate
Assessment and GRESB Public Disclosure in the 2022 GRESB
results as shown on the right●●GRESB Real Estate Assessment 5 StarsGRESB Public Disclosure
A

MSCI Japan ESG Select Leaders Index 
Selected as a constituent of the MSCI Japan ESG Select Leaders Index (the “Index”) provided by MSCI Inc. in June 2022
Disclaimer THE INCLUSION OF JRE IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEXNAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF JRE BY MSCI OR ANY OF
ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND
LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

Participation in the CDP Climate Change Program 
Received the highest score of “A” securing a place on its annual “A List” for the first time in the 2022 Carbon Disclosure Project(CDP) Climate Change ProgramAwarded “Prime” Status in the ISS ESG Corporate Rating Awarded “Prime” status in the ISS’s sustainability rating in March 2020

Green Building-Certified Properties in Our Portfolio 
We are focusing on improving the sustainability of the Company’s entire portfolio. As of the end of September 2022, 74.5%*of the Company’s portfolio is green certified. Going forward, the Company will continue to acquire environmental certifications and evaluations, such as the DBJ Green Building Certification.
* On a gross floor area of owned building basis

WEB Please refer to our ESG website for further information.
https://jre-esg.com/en/external/

Japan Real Estate Investment Corporation

10

Environment
New Targets for CO2 Emissions Reduction

Acquisition of ZEB Ready Certification

JRE revised its targets for CO2 emissions reduction in March 2022.
JRE’s revised targets were approved by the Science Based Targets initiative(SBTi) in 2022 and we joined the international initiative RE100 as thefirst J-REIT in the same year. We aim to make 90% of electricity used atour buildings renewable electricity by FY2030, and 100% by FY2050.
As of the end of September 2022, JRE completed the switch to renewable electricity at its properties of 100% operational control. JRE proactively
introduces renewable electricity into the buildings other than 100% operational control and further accelerate the reduction of CO2 emissions.

JRE aims to own 5-10 ZEBs by FY2030. In collaboration with Mitsubishi
Jisho Design Inc., we have started to verify the future possibility to makethe existing properties to ZEBs through renovations since 2019. JRE
Higashi-Gotanda 1Chome Building and Daido Seimei Niigata Building
have received ZEB Ready Certifications as well as 5 Stars Certifications by
Building‐Housing Energy‐efficiency Labeling System (“BELS”) based on
the design and renovation plan for the building, assuming that the renovation will be carried out in the future. We will further pursue the future possibility to realize ZEBs through renovations of the existing properties with
51 ％削減an aim to achieve the KPIs for FY2030.
この建物のエネルギー消費量

CO2 emissions reduction target (total emission)

建築物省エネルギー性能表⽰制度
国⼟交通省告⽰に基づく第三者認証
2022年1⽉21⽇交付

80%

reduction

Net zero
この建物のエネルギー消費量51％削減

2022年1⽉21⽇交付 国⼟交通省告⽰に基づく第三者認証

FY2019FY2030FY2050Introduction status of renewable electricity• Introduction status of 100%
owned properties

39 /39 are completed

JRE Higashi-Gotanda 1Chome Building(Shinagawa-ku, Tokyo)

Daido Seimei Niigata Building(Niigata City, Niigata)• I ntroduction status

Source Ministry of the Environment ZEB PORTAL Site
http://www.env.go.jp/earth/zeb/detail/01.html

58 /72 are completed

Supporting TCFD Recommendationsof overall properties

To enhance the sustainability of its future business, JRE evaluates the risks
and opportunities that climate change presents, and reflects them in its
operational policies and asset management accordingly.

WEB For more information, please visit “Environmental Performance”
and “International Initiatives” on our ESG website.
https://jre-esg.com/en/environment/environment.html
https://jre-esg.com/en/initiative/

WEB For more information, please visit “Climate Change Initiatives”
on our ESG website.
https://jre-esg.com/en/environment/climate.html

Society
For Tenants and Partners
Sustainability Guide to Promote Owner and Tenant Collaboration 
JRE has created a Sustainability Guide and distributed it to its tenants, aiming to promote close
collaboration with them.
This Sustainability Guide introduces the activities that we can do in the office, mainly fromthe viewpoints of the “environment” and “tenant well-being.”
We will team up with our tenants and endeavor to co-create a sustainable society with them.

Raising ESG Awareness of Our Stakeholders 
JRE offers ESG seminars for our business partners, master lessees, and property managers, among
others, for the purpose of raising stakeholder awareness. We invite ESG experts from outside theCompany to cover global ESG trends and discuss specialized fields such as GRESB and ZEB.
We believe that raising sustainability awareness not only within JRE, but among all our
stakeholders, will benefit sustainability efforts at each asset level.

Sustainability Guide VOL. 1
Theme

Work Style Reform

Sustainability Guide VOL. 2
Theme 1
Theme 2

Offices in the “New Normal” Era
Waste Recycling

SUSTAINABILITY
GUIDE
VOL. 2

MITSUBISHI ESTATE CO., LTD.

Japan Real Estate Investment Corporation

Society

Tenants/
Customers

Co-creation
EconomyBuilding
OwnersEnvironment

Our Thoughts
In 2020, the COVID-19 pandemic completelychanged the way we live.

The pandemic has prompted us to evolve into

a “non-contact” society where contact is avoided
to prevent infection from airborne droplets.

This transformation has resulted in a steep increasein the use of delivery and take-out services,which in turn has led to more plastic bottle andlunch box waste in homes and offices. Consequently,
the pandemic has had a significant impact
on the problem of waste.

WEB Please refer to the following link for the Sustainability Guide.
https://jre-esg.com/en/society/society.html

11Japan Real Estate Investment Corporation

What can we do to help create a sustainable society?

This Sustainability Guide mainly focuses on steps that,
as office workers, all of us can take to enhanceenvironmental and employee friendliness.
In partnership with our tenants,

we will co-create a sustainable society.

2

Sustainability Guide VOL. 2

For Communities
Urban Revitalization / Urban Redevelopment Project 
GRAND FRONT OSAKA which JRE acquired in October 2021 has built a“Knowledge Capital” where knowledge is created. “Knowledge Office Space,”consisting of knowledge work space (for researchers, creators, business owner)and educational functions and “Future Life Showroom” exhibiting new lifestyle delivered by the fusion of advanced technologies and sensibilities are­represented. The “Knowledge Plaza” located at the center of the North Wing
is a symbol of the “town.” Events and presentations linked to the Knowledge
Capital are held here, bringing even more life and vitality to exchanges
between people in the city.
Furthermore, as a general incorporated association “Grand Front Osaka
TMO” was established to operate the Grand Front Osaka integrated town,
a participatory type of “town” development is promoted to grow the “town”
along with its residents, workers and visitors, to bring bustle and vitality
back to a place people will want to come to every day.

Supporting Cultural and Artistic Activities Tokyo Opera City has two museums, six theatres/halls, and an art gallery.
It includes a concert hall with a wooden interior and one of the world’s best
acoustic systems as well as the New National
Theatre, where operas, plays, modern dances,
dramas, and other contemporary performing
arts are performed for ­the public.
We support the Tokyo Opera City
Cultural Foundation, which plans and organizes
the musical performances and art exhibitions
that take place at the Concert Hall, the RecitalHall, and the Art Gallery of Tokyo Opera City.

WEB Please refer to our website for further information.
https://jre-esg.com/en/society/society.html

For Employees
Learning and Development for All Employees Based on the idea that all employees should be professionals with a highdegree of specialization, JRE-AM encourages all our employees, i.e., permanent employees, contract employees, and seconded employees, to participate
in a variety of training programs.

Examples of training programs by external lecturers in FY2021(22 programs were conducted in total):Compliance training for those engaged in CASE 1 	

investment management business (June 2021
and February 2022)

 CASE 2

Internal Audit Training (June 2021)

Anti-Money Laundering Training (July 2021)
 CASE 3 	

 CASE 4 	Sustainability Training (January 2022)
Diversity Training CASE 5 	(December 2021 and February 2022)

For more details on personnel development system, please refer to thefollowing website.
WEB https://www.j-rea.co.jp/en/employee/index.html
Mitsubishi Estate:https://mec.disclosure.site/e/sustainability/activities/social/human-resource/Support and Incentives for Career Enrichment,
Qualiﬁcations, and Licenses 
For all of its employees, JRE-AM subsidizes the expenses of various training programs or sessions such as fund management, logical thinking skills,
financial accounting, organizational management, coaching, compliance,and more. In addition, JRE-AM also subsidizes the expenses of obtaining
qualifications and licenses such as ARES Certified Master, Certified
Building Administrator, Real Estate Transaction Agent, among others.

Creating a Productive and Employee-friendly Workplace 
We have our new office at Otemachi Park
Building since December 2017.
We promoted workplace reform by relocating our office. As a result, we accelerated
work efficiency and improved productivity.

Free-address work environment

GovernanceOur basic policy as an investment corporation and asset management company is not only to comply with laws and regulations, but to meet social
demands as well. Taking care to have each employee perform his or her duties with high ethical standards and strict self-discipline raises our reputation
among investors and garners the trust of the greater society.
Basic Principle of Compliance for the Investment Corporation (JRE)
JRE’s basic principle of compliance is to thoroughly observe legal and other relevant norms in regard to the business operation as well as to respondto the requirements from society. This means that the investment corporation administers and oversees the outsourcing companies from the same
standpoint, while complying with legal and other relevant norms in its decision-making.
Basic Principle of Compliance for the Asset Management Company (JRE-AM)
Basic Principle
 nsuring thorough compliance is one of its top priority issues, since JRE-AM understands that any insufficiency in compliance would affect even
1 E
its management base.
2 As an asset management company, JRE-AM recognizes that it bears the responsibility for realizing the values that are required by society in its
business operation, and makes proactive and continuous efforts for full compliance to enhance the value of its business operation both qualitatively
and quantitatively.
3 JRE-AM is determined to achieve a reputation for quality among its investors by promoting compliance activities, and thereby gains the trust ofa wide spectrum of society.
WEB For more information on our environmental, social, and governance initiatives,
please visit our ESG website or see our Sustainability Report 2022.

ESG website
https://jre-esg.com/en/

Sustainability Report 2022
https://jre-esg.com/en/pdf/sustainability_report2022.pdf
Japan Real Estate Investment Corporation

12

Asset Size, Property Acquisitions, and Performance Trends
Occupancy rate (%)

94.6

93.3

93.0

92.4

93.2

94.6

94.7

95.5

96.7

96.3

96.7

97.8

97.8 97.7

In September 2001, the Company became the first J-REIT in Japan listed on the Tokyo Stock Exchange. Since then,the Company has targeted stable management to fulfill its goal of maintaining or increasing dividend per unit overthe medium- to long-term. The Company’s growth is 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 already held. The size of the Company’s assets (total acquisition price) has grown from JPY 92.8 billion
at IPO to JPY 1.09 trillion as of the period ended September 30, 2022 due to the steady achievement of external growthstrategies. However, in terms of internal growth strategies, ongoing efforts are being made in such areas as
maintaining stable occupancy rates and reducing building management costs.

Total acquisition price (JPY billion)(Number of properties)

718
641

643

660

657

740

782

794

837

838

883

927

564

First J-REIT listed
on TSE, beganwith JPY 92.8
billion in assets

92
(20)

(55)

(55)

(55)

(57)

(56)

(57)

(58)

(60)

(62)

(64)

(64)

(68)

(70)

Sep.
2001

Sep.
2009

Mar.
2010

Sep.
2010

Mar.
2011

Sep.
2011

Mar.
2012

Sep.
2012

Mar.
2013

Sep.
2013

Mar.
2014

Sep.
2014

Mar.
2015

Sep.
2015

8,314

7,821

7,925

8,095

7,850

7,570

7,683

7,633

7,648

7,681

8,001

At IPO

Dividend per unit* (JPY )

9,599

9,021

Listing and issuance of units
Sep. 2001
Listed on TSE
as first J-REIT
Sep. 2001
IPO

Dec. 2009
Sixth
Follow-On

Feb. 2012
SeventhFollow-On

Oct. 2012
EighthFollow-On

Apr. 2014
Ninth
Follow-On

Apr. 2015
TenthFollow-On* As the Company implemented a 2-for-1 split of each investment unit as of January 1, 2014, the figures for March 2002 through September 2013 periods have taken the split into account.

13

Japan Real Estate Investment Corporation

98.3

98.7

98.8

99.1

99.2

99.2

99.5

99.3

99.7

99.0

97.9

96.5

97.0

93.9

As of Sep. 30, 2022:
73 properties;
JPY 1,091 billion

944

955

990

1,014 1,025 1,023

1,053 1,070 1,070 1,067

1,118

1,091

923

923

(68)

(68)

(69)

(69)

(70)

(71)

(73)

(73)

(73)

(73)

(73)

(72)

(74)

(73)

Mar.
2016

Sep.
2016

Mar.
2017

Sep.
2017

Mar.
2018

Sep.
2018

Mar.
2019

Sep.
2019

Mar.
2020

Sep.
2020

Mar.
2021

Sep.
2021

Mar.
2022

Sep.
2022

(End of fiscal period)

8,121

8,361

8,544

9,096

9,336

9,495

9,697

10,197

10,61011,262

11,32011,356

11,40011,500

Apr. 2018
Eleventh
Follow-On

Japan Real Estate Investment Corporation14

Major Tenant Roster
Name of tenant

Leased officearea (m2)Name of property% of total leased
office area

MUFG Bank, Ltd.

Harumi Front (and 4 other properties)

35,129

4.3%

Undisclosed

Osaki Front Tower (and 3 other properties)

21,904

2.7%

Undisclosed

Kitanomaru Square (and 3 other properties)

17,853

2.2%

SQUARE ENIX HOLDINGS CO., LTD.

Shinjuku Eastside Square

15,172

1.9%

HAKUHODO DY HOLDINGS INCORPORATED

Akasaka Park Building (and another property)

12,817

1.6%

Mitsubishi UFJ Trust and Banking Corporation

Mitsubishi UFJ Trust and Banking Building

10,598

1.3%

TOTO LTD.

Shiodome Building (and another property)

9,923

1.2%

SCSK Corporation

Toyosu Front

9,907

1.2%

Minato Mirai 21 District Heating and Cooling Co., Ltd.

Queen’s Tower A

9,536

1.2%

Seven & i Holdings Co., Ltd.

Nibancho Garden

9,316

1.2%

Notes: 1 . Undisclosed due to tenant’s request
2. GRAND FRONT OSAKA is excluded

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

III-1

II-2

II-1

III-1 to III-24:
Other major cities

III-7
III-8

III-2
III-3
III-4
III-5
III-6

II-5
II-3
II-4

III-12
III-19

III-22
III-23
III-24

III-21

III-20
III-13
III-14
III-15
III-16
III-17
III-18

III-9
III-10
III-11
I-43
I-44
I-37
I-42

I-1

I-27 I-26
I-28
I-30
I-31
I-32

I-29

I-33
I-34
I-35

I-6

I-19
I-36

I-9

I-2, I-3

I-4
I-5
I-8 I-7
I-10

I-18
I-20
I-25

Tokyo Station
I-14

I-11
I-12
I-13

I-15 I-16

I-38

I-21
I-22, I-23
I-24

I-17

I-39
I-40

I-41

I-1 to I-44:
Tokyo 23 wards

15

Japan Real Estate Investment Corporation

Overview of Portfolio Properties
As of September 30, 2022

Tokyo 23 wards

Kitanomaru
Square●

JRE KandaOgawamachi
Building

I-1●

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

Chiyoda-ku, Tokyo
5,821.03m2
57,279.20m2
100.0%
January 2006

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

OtemachiFinancial City
North Tower●

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

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

Location:
Site area:
Floor area of building:
Ownership:Completion:●

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

I-6

Chiyoda-ku, Tokyo
10,992.13m2
57,031.06m2
31.35%
April 2004

Sanno Grand
Building

I-8●

Chiyoda-ku, Tokyo
967.67m2
6,526.64m2
100.0%
January 2005●

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

I-9

I-11

Chuo-ku, Tokyo
1,381.52m2
11,672.55m2
100.0%
February 2014●

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

Chiyoda-ku, Tokyo
3,663.93m2
33,875.95m2
99.0%
September 1966

JRE Kayabacho
2Chome Building●

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

JRE Ginza
1Chome East
Building

I-13

Chuo-ku, Tokyo
756.03m2
5,470.54m2
100.0%
February 2002

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

Front Place
Nihonbashi

Burex Kyobashi
Building

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

I-5

Chiyoda-ku, Tokyo
9,338.74m2
146,611.42m2
2.91%
January 2017

●

I-10

Chiyoda-ku, Tokyo
5,749.91m2
70,287.65m2
10.78%
September 1975●

Chiyoda-ku, Tokyo
1,218.56m2
9,370.25m2
56.76%
July 1993

Nibancho
GardenBurex Kojimachi
Building

Yurakucho Denki
Building

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

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

I-7

Chiyoda-ku, Tokyo
8,100.39m2
108,171.67m2
19.38%
February 2003●

Chiyoda-ku, Tokyo
1,085.83m2
8,185.11m2
100.0%
February 1998

●

I-3

I-2

OtemachiPark Building

Mitsubishi UFJ
Trust and Banking
Building

Location:
Site area:
Floor area of building:
Ownership:Completion:●

I-4

Chiyoda-ku, Tokyo
14,108.16m2
239,769.07m2
4.80%
October 2012●

Kandabashi Park
Building

I-12

Chuo-ku, Tokyo
754.26m2
5,505.80m2
100.0%
April 1991

Ginza Sanwa
Building
●

I-15

I-14

Chuo-ku, Tokyo
702.41m2
4,976.85m2
100.0%
May 2008

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

Chuo-ku, Tokyo
1,119.27m2
8,851.00m2
70.95%
October 1982

Japan Real Estate Investment Corporation

16

Harumi Front

JRE Ginza
3Chome Building●

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

●

I-16

Chuo-ku, Tokyo
864.91m2
5,751.68m2
100.0%
October 1998●

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

JRE Aoyama
Crystal Building●

Location:
Site area:
Floor area of building:
Ownership:Completion:●

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

JRE Shiba
2Chome Daimon
Building

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

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

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

Minato-ku, Tokyo
747.31m2
5,747.80m2
100.0%
July 2014

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

JRE Nishi‐
Shinjuku Terrace●

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

17

Japan Real Estate Investment Corporation●

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

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

I-24

●

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

I-27

Shinjuku-ku, Tokyo
9,628.17m2
92,092.30m2
37.16%
August 2011

Front PlaceMinami-Shinjuku

I-29

Shinjuku-ku, Tokyo
18,236.94m2
232,996.81m2
31.33%
July 1996

Minato-ku, Tokyo
26,468.48m2
166,405.36m2
13.45%
January 1991

Shinjuku Front
Tower

I-26

Shinjuku-ku, Tokyo
25,320.28m2
167,245.46m2
35.0%
March 2012●

Minato-ku, Tokyo
12,054.22m2
115,930.83m2
55.0%
December 2007

Seavans S Building

Tokyo Opera City
Building

I-28

Shinjuku-ku, Tokyo
822.00m2
8,291.69m2
100.0%
November 1989

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

I-21

I-23

Minato-ku, Tokyo
758.54m2
5,420.93m2
100.0%March 1992●

Minato-ku, Tokyo
14,198.20m2
97,489.16m2
100.0%
July 1993●

Shinjuku Eastside
Square

I-25

I-18

Shiodome
Building

I-20

Minato-ku, Tokyo
528.58m2
3,496.01m2
100.0%
February 2006●

Tamachi Front
Building●

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

JRE Cosmo
Kanasugibashi
Building

I-22

Minato-ku, Tokyo
2,820.90m2
16,235.10m2
100.0%March 1984

Chuo-ku, Tokyo
7,250.15m2
45,458.90m2
100.0%
February 2012

CloverShiba-koen

I-19

Minato-ku, Tokyo
989.30m2
8,094.36m2
100.0%
December 1982●

Akasaka Park
Building

I-17●

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

I-30

Shibuya-ku, Tokyo
1,040.80m2
5,982.36m2
100.0%
September 2015

Link Square
Shinjuku●

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

I-31

Shibuya-ku, Tokyo
3,852.34m2
42,049.96m2
37.34%
August 2019

JRE Jingumae
Media Square
Building●

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

JRE Yoyogi
1Chome Building●

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

I-32

Shibuya-ku, Tokyo
1,755.75m2
10,778.10m2
100.0%
October 2003●

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

Shibuya Cross Tower(Land with leasehold interest)●

Shibuya-ku, Tokyo
839.66m2
4,359.20m2
100.0%
December 1987

Ebisu Neonato●

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

Shibuya-ku, Tokyo
5,153.45m2———

Location:
Site area:
Floor area of building:
Ownership:Completion:Toyosu Front●

Shibuya-ku, Tokyo
5,005.70m2
36,598.38m2
44.72%
October 1994

JRE HigashiGotanda 1Chome
Building

I-38

I-37

●

Taito-ku, Tokyo
2,412.80m2
23,727.48m2
94.04%
July 2010

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

Osaki Front
Tower●

Koto-ku, Tokyo
13,700.00m2
104,683.98m2
24.0%
August 2010

I-40

Shinagawa-ku, Tokyo
3,684.38m2
23,673.92m2
100.0%
June 2005

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

JRE Ikebukuro
2Chome Building●

Shinagawa-ku, Tokyo
1,539.95m2
6,460.39m2
100.0%
July 2004

Harmony Tower●

I-42

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

Nakano-ku, Tokyo
10,020.52m2
72,729.31m2
38.38%March 1997

JRE Minami‐
Ikebukuro
Building

I-43

Toshima-ku, Tokyo
397.26m2
3,157.51m2
100.0%
May 1990

I-39

I-41

Ota-ku, Tokyo
2,199.30m2
14,095.34m2
100.0%
July 1989●

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

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

JRE Omori-Eki
Higashiguchi
Building●

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

I-36

I-35

TIXTOWER
UENO

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

I-33

I-34

Shibuya-ku, Tokyo
2,124.12m2
9,420.42m2
100.0%March 1998●

JRE Jingumae
Terrace

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

I-44

Toshima-ku, Tokyo
1,384.56m2
7,464.64m2
100.0%
December 1989

Japan Real Estate Investment Corporation18

Tokyo metropolitan area, excluding Tokyo 23 wards

Hachioji First
Square●Location:
Site area:
Floor area of building:
Ownership:Completion:

JRE Saitama
Urawa Building

II-1

Hachioji, Tokyo
2,989.33m2
18,329.98m2
80.40%
July 1996●

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

Queen’s Tower A●●

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

II-3

Yokohama, Kanagawa Prefecture
6,825.77m2
49,037.51m2
100.0%
December 2007

Musashi Kosugi
STM Building

II-4

Yokohama, Kanagawa Prefecture
44,406.40m2
498,282.77m2
11.11%
June 1997

II-2

Saitama, Saitama Prefecture
1,533.06m2
6,258.59m2
100.0%March 1990●

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

MM Park
Building

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

II-5

Kawasaki, Kanagawa Prefecture
3,552.15m2
22,839.61m2
34.32%
October 1990

Other major cities

8∙3 Square Kita
Building●

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

Jozenji Park
Building

III-1

Sapporo, Hokkaido
5,541.60m2
16,096.97m2
100.0%
December 2006●

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

JRE Sendai
Honcho Honma
Building●

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

19

JRE Higashi
Nibancho Square

III-2

Sendai, Miyagi Prefecture
1,566.68m2
7,648.33m2
50.0%
January 1993●

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

AER
●

III-3

Sendai, Miyagi Prefecture
3,191.27m2
27,680.45m2
100.0%
July 2008

Daido Seimei
Niigata Building

III-5

●

III-6

III-4

Sendai, Miyagi Prefecture
1,437.47m2
8,247.50m2
100.0%
November 1991

Japan Real Estate Investment Corporation

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

Sendai, Miyagi Prefecture
6,591.05m2
73,186.57m2
55.35%March 1998

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

Niigata, Niigata Prefecture875.05m2
5,327.23m2
100.0%
October 1998

Kanazawa Park
Building●

JRE Kanazawa
Kamitsutsumicho
Building

III-7●

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

Kanazawa, Ishikawa Prefecture
6,642.71m2
43,481.20m2
89.0%
October 1991

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

JRE Nagoya
Hirokoji Place●

Nishiki Park
Building●

Kanazawa, Ishikawa Prefecture
1,561.80m2
9,619.96m2
100.0%
August 2009

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

Nagoya Hirokoji
Building

III-10●

Nagoya, Aichi Prefecture
2,170.45m2
25,091.91m2
71.74%
August 1995

JRE Shijo
Karasuma Center
Building

III-11●

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

Nagoya, Aichi Prefecture
2,401.43m2
15,947.29m2
100.0%
December 2004

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

GRAND FRONTOSAKA (North
Building)●

Nagoya, Aichi Prefecture
4,095.81m2
33,377.73m2
100.0%
May 1987●

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

Osaka, Osaka Prefecture
22,680.03m2
290,030.59m2
4.9%
February 2013

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

JRE Dojima Tower●

Osaka, Osaka Prefecture
6,159.61m2
45,411.31m2
100.0%
April 1995

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

JRE Amagasaki
Front Building●●

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

Osaka, Osaka Prefecture
1,652.88m2
18,673.28m2
100.0%
July 1995

JRE Midosuji
Daiwa Building●

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

Lit City Building

NHK Hiroshima
Broadcasting
Center Building

III-20

III-19Amagasaki, Hyogo Prefecture
3,975.20m2
24,055.58m2
100.0%
October 2008

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

III-18Osaka, Osaka Prefecture
3,044.65m2
31,213.27m2
100.0%
September 1991●

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

III-15

III-17

Osaka, Osaka Prefecture
2,036.22m2
17,145.59m2
100.0%
October 1992●

Kyoto, Kyoto Prefecture
1,371.16m2
9,185.98m2
100.0%
January 2010

JRE Umeda Square
Building

JRE
Sakaisujihonmachi
Building

III-16

III-12

III-14

Osaka, Osaka Prefecture
20,488.08m2
10,226.10m2 (Umekita Plaza)/181,371.39m2(South)
4.9%
February 2013 (Umekita Plaza)/March 2013 (South)●

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

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

GRAND FRONTOSAKA (Umekita
Plaza and South
Building)

III-13

III-9

III-8

Okayama, Okayama Prefecture
7,596.44m2
52,653.19m2
24.60%
June 2005

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

III-21Hiroshima, Hiroshima Prefecture
3,296.46m2
35,217.28m2
48.75%
August 1994

Japan Real Estate Investment Corporation

20

JRE Tenjin
3Chome Building●

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

JRE Tenjin Crystal
Building

III-22

Fukuoka, Fukuoka Prefecture
1,221.31m2
5,588.57m2
100.0%March 1992●

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

Hinode Tenjin
Building

III-23

Fukuoka, Fukuoka Prefecture
1,835.17m2
10,432.04m2
100.0%
August 1993●

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

III-24

Fukuoka, Fukuoka Prefecture
1,452.15m2
12,527.07m2
74.48%
August 1987

Note:	Concerning real estate or trust beneficiary rights 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 area for the entire building.

21

Japan Real Estate Investment Corporation

Financial Section
Selected Financial Data ........................................................................................................................ p.22
Balance Sheets ................................................................................................................................................ p.23
Statements of Income and Retained Earnings ........................................................... p.25
Statements of Changes in Unitholders’ Equity ......................................................... p.26
Statements of Cash Distributions ............................................................................................ p.27
Statements of Cash Flows ................................................................................................................. p.28
Notes to Financial Statements ...................................................................................................... p.29
Independent Auditor’s Report ..................................................................................................... p.50

Selected Financial Data
Millions of yen

Operating revenues
Operating expenses
Operating profit
Ordinary profit
Profit before income taxes
ProfitTotal assets
Interest-bearing debt
Net assets
Unitholders’ capital
Number of units (Units)
Net assets per unit (Yen)
Cash distribution
Dividend payout ratio (Note 1)
Dividend per unit (Yen)Net operating income (NOI)
Funds from operations (FFO)
Return on assets (ROA) (Note 2)
Return on equity (ROE) (Note 3)
EOP equity ratio (Note 4)
EOP interest-bearing debt ratio
on total assets (Note 5)
FFO multiple (Times)
Debt service coverage ratio (Times) (Note 6)

For the period
from April 1, 2022
to September 30, 2022

For the period
from October 1, 2021
to March 31, 2022

For the period
from April 1, 2021
to September 30, 2021

For the period
from October 1, 2020
to March 31, 2021

For the period
from April 1, 2020
to September 30, 2020

37,654
19,612
18,042
17,256
17,256
16,7901,008,970
423,393
517,761
497,241
1,385,210
373,778
15,92994.9%
11,50023,084
19,7001.7%(3.4% annualized)
3.2%(6.5% annualized)
51.3%

36,453
19,346
17,107
16,191
16,191
16,045
1,035,072
449,893516,762497,241
1,385,210
373,057
15,791
98.4%
11,40024,07021,053
1.6%(3.2% annualized)
3.1%(6.2% annualized)
49.9%

36,901
18,507
18,394
17,477
17,477
16,865
1,003,583
419,493
516,447
497,241
1,385,210
372,829
15,73093.3%
11,35624,204
20,583
1.7%(3.5% annualized)
3.3%(6.5% annualized)
51.5%

34,944
18,464
16,47915,50815,50815,5601,001,734
419,493515,262497,241
1,385,210
371,974
15,680100.8%
11,32024,82522,0891.5%(3.1% annualized)
3.0%(6.1% annualized)
51.4%

34,966
18,46816,49815,60815,60815,5981,000,254
418,993515,302497,241
1,385,210
372,002
15,600100.0%
11,262
24,94322,2251.6%(3.1% annualized)
3.0%(6.0% annualized)
51.5%

42.0%
21.0
29.2

43.5%
21.0
26.9

41.8%
22.5
27.7

41.9%
20.4
24.8

41.9%
16.8
24.2

Notes: 1. Dividend payout ratio = Dividend per unit / Profit per unit × 100
2. ROA = Ordinary profit / Average of Total assets during the period × 100
3.	ROE = Profit / Average of Net assets during the period × 100		(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, 2020, 182 days for theperiod ended March 31, 2021, 183 days for the period ended September 30, 2021, 182 days for the period ended March 31, 2022 and 183 days for the period ended
September 30, 2022.)
4. EOP equity ratio = (Net assets at the end of period / Total assets at the end of period) × 100
5. EOP interest-bearing debt ratio on total assets = (Interest-bearing debt at the end of period / Total assets at the end of period) × 100
6. Debt service coverage ratio = Profit before Interest, Taxes, Depreciation and Amortization / Interest expenses

Japan Real Estate Investment Corporation

22

Balance Sheets
As of March 31, 2022 and September 30, 2022

Thousands of yen

ASSETS
Current assets   Cash and deposits   Cash and deposits in trust   Operating accounts receivable  Prepaid expenses   Consumption taxes refund receivable  Other   Total current assets
Non-current assets   Property, plant and equipment   Buildings    Accumulated depreciation    Buildings, net   Structures    Accumulated depreciation    Structures, net   Machinery and equipment    Accumulated depreciation    Machinery and equipment, net    Tools, furniture and fixtures    Accumulated depreciation     Tools, furniture and fixtures, net   Land   Construction in progress   Buildings in trust    Accumulated depreciation    Buildings in trust, net   Structures in trust    Accumulated depreciation    Structures in trust, net    Machinery and equipment in trust    Accumulated depreciation     Machinery and equipment in trust, net    Tools, furniture and fixtures in trust    Accumulated depreciation     Tools, furniture and fixtures in trust, net   Land in trust    Construction in progress in trust    Total property, plant and equipment  Intangible assets   Land leasehold interests   Easement   Other    Total intangible assets   Investments and other assets   Investment securities    Leasehold and guarantee deposits   Long-term prepaid expenses   Other    Total investments and other assets   Total non-current assets
Deferred assets   Investment corporation bond issuance costs   Total deferred assets
Total Assets

23Japan Real Estate Investment Corporation

As of March 31, 2022

As of September 30, 2022

21,150,064
6,023,858
608,869
96,270617,709
208,981
28,705,752

20,473,628
6,319,372
466,371503,071—
307,853
28,070,298

266,395,817(119,112,797)
147,283,020
3,237,811(1,228,447)
2,009,363
3,437,918(2,723,473)
714,444508,728(344,652)
164,075
473,737,244
32,712
116,270,016(37,173,354)
79,096,662
1,135,217(444,958)
690,258
893,580(617,387)
276,192
76,983(52,189)
24,794
292,084,985
71,215996,184,970

255,140,683(116,706,330)
138,434,352
3,112,295(1,233,432)
1,878,863
3,266,422(2,592,318)
674,103524,266(356,945)
167,321458,991,518
54,256
116,752,139(39,425,825)
77,326,313
1,139,925(477,306)
662,619904,598(638,594)
266,003
79,252(54,975)
24,277292,105,411
87,072
970,672,114

5,580,065
828,095
27,782
6,435,942

5,564,235
826,648
24,371
6,415,255

660,468
1,580,934
26,4631,400,696
3,668,562
1,006,289,476

660,468
1,580,934
48,744
1,457,579
3,747,726
980,835,096

77,31377,313
1,035,072,541

64,88564,885
1,008,970,280

Thousands of yen

As of March 31, 2022

As of September 30, 2022

LIABILITIESCurrent liabilities   Operating accounts payable

1,936,919

1,540,850  Short-term borrowings

41,200,000

21,700,000   Current portion of long-term borrowings

48,500,000

48,500,000   Accounts payable - other

2,164,967

2,138,389  Accrued expenses

327,656

289,834   Income taxes payable

11,1589,208—

2,324,024

3,092,429

2,821,313   Accrued consumption taxes  Advances received  Other   Total current liabilities

211,31268,65797,444,443

79,392,278

Non-current liabilities   Investment corporation bonds

42,993,175

42,993,175  Long-term borrowings

317,200,000

310,200,000   Deposits received from tenants

58,334,907

55,831,455   Deferred tax liabilities

1,952,196

2,407,179   Asset retirement obligations

366,911

370,608  Other

17,912

13,695

420,865,102

411,816,113

518,309,545

491,208,392

497,241,216

497,241,216

3,439,070

3,693,378   Total non-current liabilities
Total Liabilities
NET ASSETS
Unitholders’ equity  Unitholders’ capital  Surplus    Voluntary retained earnings     Reserve for tax purpose reduction entry     Total voluntary retained earnings

3,439,070

3,693,378   Unappropriated retained earnings

16,082,709

16,827,292   Total surplus

19,521,779

20,520,671   Total unitholders’ equity

516,762,995

517,761,887

516,762,995

517,761,887

1,035,072,541

1,008,970,280

Total Net Assets
Total Liabilities and Net Assets

Japan Real Estate Investment Corporation24

Statements of Income and Retained Earnings
For the six months ended March 31, 2022 and September 30, 2022

Thousands of yen

For the period
from October 1, 2021
to March 31, 2022

For the period
from April 1, 2022
to September 30, 2022

34,739,020

34,095,465

Operating revenues
Rent revenues

396,245

193,855

Gain on sales of real estate properties

1,318,376

3,365,229

Total operating revenues

36,453,643

37,654,549

Expenses related to lease business

17,391,031

17,480,747

Asset management fees

1,541,945

1,718,962

Other lease business revenues

Operating expenses

Asset custody fees

64,77464,634

Administrative service fees

134,403

136,484

Directors’ compensations

7,800

7,800

Commission expenses

122,766

83,339Other operating expenses

83,716120,248

Total operating expenses

19,346,437

19,612,216

17,107,205

18,042,332

Operating profit
Non-operating income
Interest income

134

122

Dividend income

—

9,378

Reversal of distributions payable
Refund of property taxes

1,583

1,129

781

80,376

8

5,102

2,507

96,109Interest expenses

695,591

661,923

Interest expenses on investment corporation bonds

174,500

172,615

Amortization of investment corporation bond issuance costs

12,36012,427

Other

35,90435,064

Total non-operating expenses

918,356

882,031

Ordinary profit

16,191,356

17,256,411

Profit before income taxes

16,191,356

17,256,411

OtherTotal non-operating income
Non-operating expenses

Income taxes – current

11,178

11,142

Income taxes – deferred

134,475

454,983

Total income taxes

145,653

466,125

16,045,702

16,790,285

Retained earnings brought forward

37,00737,007

Unappropriated retained earnings

16,082,709

16,827,292

Profit25

Japan Real Estate Investment Corporation

Statements of Changes in Unitholders’ Equity
For the six months ended March 31, 2022 and September 30, 2022

For the period from October 1, 2021 to March 31, 2022
Thousands of yen

Unitholders’ equity
Surplus
Voluntary retained earnings

Total
net assets

Total surplus

Totalunitholders’equity16,902,746

19,206,522

516,447,738

516,447,738(1,135,294)

—

—

—

Dividends of surplus(15,730,444)(15,730,444)(15,730,444)(15,730,444)

Profit16,045,702

16,045,702

16,045,702

16,045,702

Unitholders’capitalBalance at beginning of the period

497,241,216

Reserve fortax purpose
reduction entry

Totalvoluntary
retainedearnings

Unappropriatedretainedearnings

2,303,775

2,303,775

1,135,294

1,135,294

Changes during the period Provision of reserve for tax
purpose reduction entry

Total changes during the period
Balance at end of the period—

1,135,294

1,135,294(820,037)

315,257

315,257

315,257

497,241,216

3,439,070

3,439,070

16,082,709

19,521,779

516,762,995

516,762,995

For the period from April 1, 2022 to September 30, 2022
Thousands of yen

Unitholders’ equity
Surplus
Voluntary retained earnings

Total
net assets

Total surplus

Totalunitholders’equity16,082,709

19,521,779

516,762,995

516,762,995(254,308)———

Dividends of surplus(15,791,394)(15,791,394)(15,791,394)(15,791,394)

Profit16,790,285

16,790,285

16,790,285

16,790,285

Unitholders’capitalBalance at beginning of the period

497,241,216

Reserve fortax purpose
reduction entry

Totalvoluntary
retainedearnings

Unappropriatedretainedearnings

3,439,070

3,439,070

254,308

254,308

Changes during the period Provision of reserve for tax
purpose reduction entry

Total changes during the period
Balance at end of the period—

254,308

254,308

744,583

998,891

998,891

998,891

497,241,216

3,693,378

3,693,378

16,827,292

20,520,671

517,761,887

517,761,887

Japan Real Estate Investment Corporation

26

Statements of Cash Distributions
For the six months ended March 31, 2022 and September 30, 2022

	 
	 For the period
from October 1, 2021 to March 31, 2022

For the period
from April 1, 2022 to September 30, 2022

Amount (Yen)Amount (Yen)I Retained earnings

16,082,709,191

16,827,292,959

II Cash distribution

15,791,394,000

15,929,915,000(11,400)(11,500)	 Provision of reserve for tax purpose reduction entry

254,308,146

860,370,914

IV Retained earnings brought forward

37,007,045

37,007,045

The Company will make cash distributions using earnings based on the cash
distribution policy outlined in Article
32-1(2) of the Company’s Articles ofIncorporation, in an amount that exceeds
90% of the “amount of distributableprofit” as set forth in Article 67-15 of theSpecial Taxation Measures Act. Based on
this policy, the Company has decided thatthe total amount of dividends, under theapplication of Article 65-7 “Exceptions of
the Taxation in case of the Replacement
by Purchase of Specific Assets” of theSpecial Taxation Measures Act, making
reduction entries, and securing retained
earnings brought forward, is¥15,791,394,000 for the period, which isa multiple of 1,385,210 — the number ofunits outstanding as of March 31, 2022.
Furthermore, the Company does not pay
out dividends that exceed earnings as
outlined in Article 32-1(3) of the Company’s Articles of Incorporation.

The Company will make cash distributions using earnings based on the cash
distribution policy outlined in Article
32-1(2) of the Company’s Articles ofIncorporation, in an amount that exceeds
90% of the “amount of distributableprofit” as set forth in Article 67-15 of theSpecial Taxation Measures Act. Based on
this policy, the Company has decided thatthe total amount of dividends, under theapplication of Article 65-7 “Exceptions of
the Taxation in case of the Replacement
by Purchase of Specific Assets” of theSpecial Taxation Measures Act, making
reduction entries, and securing retained
earnings brought forward, is¥15,929,915,000 for the period, which isa multiple of 1,385,210 — the number ofunits outstanding as of September 30,
2022. Furthermore, the Company does
not pay out dividends that exceed earnings as outlined in Article 32-1(3) of theCompany’s Articles of Incorporation.

(Dividend per investment unit)
III Voluntary retained earnings

Computation Method for Determining Dividends

27Japan Real Estate Investment Corporation

Statements of Cash Flows
For the six months ended March 31, 2022 and September 30, 2022

Thousands of yen

For the period
from October 1, 2021
to March 31, 2022

For the period
from April 1, 2022
to September 30, 2022

Profit before income taxes

16,191,356

17,256,411

Depreciation

6,326,332

6,275,709

12,36012,427

Dividend income—(9,378)Interest income

(134)

(122)

Interest expenses

870,092

834,539

Decrease (increase) in operating accounts receivable(269,758)

142,497

Decrease (increase) in consumption taxes refund receivable(617,709)

617,709

Cash flows from operating activities

Amortization of investment corporation bond issuance costs

1,697

3,338

148,985(406,801)

1,293,228

20,813,797

Increase (decrease) in operating accounts payable

84,010

119,543

Increase (decrease) in accounts payable - other(213,925)

110,645

Increase (decrease) in accrued consumption taxes(1,133,236)

2,324,024

Increase (decrease) in accrued expenses

131

(131)

Increase (decrease) in advances received

27,096(271,115)

Decrease (increase) in supplies
Decrease (increase) in prepaid expenses
Decrease in property, plant and equipment due to sale

Decrease (increase) in long-term prepaid expenses
Other, net
SubtotalInterest and dividends received
Interest paid

(878)

(22,280)(26,418)(139,181)

22,693,229

47,661,633

134

9,500

(883,413)(872,229)(8,611)(13,091)

21,801,339

46,785,812

Purchase of property, plant and equipment(1,071,951)(1,469,824)

Purchase of property, plant and equipment in trust(53,601,404)(715,579)

Purchase of intangible assets(2,179)(1,698)Purchase of investment securities(83,300)—

Payments of leasehold and guarantee deposits(7,086)—

Refund of leasehold and guarantee deposits received(2,257,627)(4,302,561)

Proceeds from leasehold and guarantee deposits received

3,289,597

1,611,838(53,733,952)(4,877,825)

Proceeds from short-term borrowings

50,200,000

41,500,000

Repayments of short-term borrowings(27,000,000)(61,000,000)

Proceeds from long-term borrowings

34,700,000

16,500,000

Repayments of long-term borrowings(27,500,000)(23,500,000)

Distributions paid

(15,730,505)(15,788,907)(42,288,907)

Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities

Net cash provided by (used in) investing activities
Cash flows from financing activities

Net cash provided by (used in) financing activities

14,669,494

Net increase (decrease) in cash and cash equivalents(17,263,118)(380,920)

Cash and cash equivalents at beginning of the period

44,437,040

27,173,922

Cash and cash equivalents at end of the period

27,173,922

26,793,001

Japan Real Estate Investment Corporation

28

Notes to Financial Statements
March 31, 2022 and September 30, 2022

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 AssetManagement Co., Ltd. (“JRE-AM”). JRE-AM is a wholly-owned subsidiary of Mitsubishi Estate Co., Ltd. (“MEC”).
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, Tokio Marine &­Nichido Fire Insurance Co., Ltd. and The Dai-ichi Life Insurance Company, Limited under the ITA.
On September 10, 2001, the Company commenced operations when the Company was listed on the Tokyo Stock Exchange as oneof the first real estate investment corporations in Japan (“J-REITs”). The Company issued 160,000 units at a price of ¥506,625 per unit,
generating gross proceeds of ¥81,060 million.
As of September 30, 2022, the Company owned a portfolio of 73 office properties with an aggregate of approximately 875,648 m2 ofleasable space.
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 ITA, the Japanese Financial Instruments and Exchange Law
and related regulations, which are different in certain respects as to the application and disclosure requirements of International Financial
Reporting Standards (“IFRS”).
The accompanying financial statements are a translation of the audited financial statements of the Company, which were prepared inaccordance 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 is presented herein as additional information.
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.

2. Summary of Significant Accounting Policies
Investment securities

Non-marketable securities, which have no market prices, classified as other securities are carried at cost. Cost of securities sold is determinedby the moving average method.
Property and equipment, depreciation and impairment (except for leased assets)

Property and equipment is stated at cost, less accumulated depreciation. The cost of land, buildings and building improvements includes
the purchase price of property and acquisition costs. Depreciation is calculated on a straight-line basis over the estimated useful lives of theassets ranging as stated below:
Buildings ................................................................................................................................... 2 – 61 years
Structures ................................................................................................................................. 2 – 75 years
Machinery and equipment ................................................................................ 2 – 18 years
Tools, furniture and fixtures ............................................................................. 2 – 29 years

29Japan Real Estate Investment Corporation

Expenditures for repairing expenses are charged to income as incurred. Significant renewals and betterments are capitalized.
The Company reviews fixed assets for impairment whenever events or changes in circumstances indicate that the carrying amount of its
fixed assets may not be recoverable. According to the standard set by the Accounting Standards Board of Japan (“ASBJ”), companies are
required to recognize an impairment loss in their statements of income if certain indicators of asset impairment exist and the book valueof an asset exceeds the undiscounted sum of future cash flows of the asset. The standard states that impairment losses should be measured
as the excess of the book value over the higher of (i) the fair market value of the asset, net of disposition costs, and (ii) the present valueof future cash flows arising from ongoing utilization of the asset and from disposal after asset use. The standard covers land, factories,
buildings and other forms of property, plant and equipment as well as intangible assets. Fixed assets are grouped at the lowest level forwhich there is identifiable cash flows that are independent of cash flows of other groups of assets.
Intangible assets

Intangible assets primarily consist of leasehold rights and easement, which are stated at cost. Amortization of a term leasehold interest forbusiness use is calculated by the straight-line method based on the period of agreement.
Leased assets

Leased assets under finance lease transactions that do not transfer ownership of the leased assets to the lessees are capitalized and depreciated by the straight-line method over the lease term with no residual value.
Deferred charges

Investment corporation bond issuance costs are amortized using the straight-line method over the redemption periods.
Investment unit issuance expenses are charged to income as incurred. The underwriters’ economic remunerations for underwriting theoffering are not recognized as investment unit issuance expenses in the financial statements since such costs are not paid by the Company
as commission under the so-called “spread-method.”
Under the spread-method, the difference between the offer price (the price paid by the unitholder) and the issue price (the price received
by the Company) is retained by the underwriters as remuneration.
Revenue recognition

The content of main performance obligations related to revenue arising from contracts with customers of the Company and the normal
timing for satisfying such performance obligations (the normal timing for recognizing revenue) are as follows:(i) Sales of real estate properties
The Company recognizes revenue from the sale of real estate properties when the purchaser, as the customer, obtains control of the realestate property by fulfilling the delivery obligations stipulated in the contract for the sale of real estate property.
(ii) Utilities income
The Company recognizes utilities income based on the supply of electricity, water, etc. to the lessee as the customer, in accordance with theterms of the real estate lease contract and related agreements. Of utilities income, in the case that the Company determines it is an agent
for utilities income, the utilities income is recognized as income at the net amount received as charges for electricity, gas, etc. supplied byother parties, less the amount paid to such other parties.
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 toincome during the period. The sellers of the properties are liable for property taxes for the calendar year including the period from the dateof purchase by the Company through the end of the year since the taxes are imposed on the owner registered on the record as of January 1
based on the assessment made by the local government. The Company pays the amount equivalent to the property taxes to the sellers
applicable to the period since acquisition and includes the amount equivalent to the taxes in the purchase price of each property and­capitalizes it as a cost of the property.

Japan Real Estate Investment Corporation

30

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 includedin current assets and the excess of amounts withheld over payments are included in current liabilities.
Cash and cash equivalents

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

The Company enters into derivative transactions to hedge against interest-rate risk and other forms of risk based on the risk management
policies outlined in the Company’s Articles of Incorporation. The Company uses interest-rate swap transactions for hedging fluctuationsin interest rates on floating-rate loans. The Company has also executed currency swap transactions as a method of hedging against currency
exchange fluctuation risks. Deferred hedge accounting is generally used for such interest-rate swaps and currency swap transactions, andthe effectiveness of hedging is measured by comparing the total cash flow fluctuation of the hedged item and that of the hedging instrument since the inception of the hedge.
For interest-rate swaps and currency swaps that qualify for hedge accounting and meet certain criteria provided under Japanese GAAP,
however, the Company applies special accounting treatment. Under such special accounting treatment, the differentials paid or received
under the swap agreements are recognized and included in interest expense of the hedged loans, and the interest-rate swaps and currency
swaps are not required to be separately valued. For interest-rate swaps and currency swaps that meet the specific criteria for such special
accounting treatment, ongoing assessments of hedge effectiveness are not required and hence not performed.

3. Commitment Line Agreement
As of March 31, 2022 and September 30, 2022
The Company has signed commitment line agreements with three banks.
Total amount of commitment line agreements
Debt financing balance
BalanceThousands of yen

As of March 31, 2022

As of September 30, 2022

60,000,000

60,000,000——

60,000,000

60,000,000

4. Reserve for Tax Purpose Reduction Entry
As of March 31, 2022 and September 30, 2022
Thousands of yen

Reserve for tax purpose reduction entry

As of March 31, 2022

As of September 30, 2022

3,439,070

3,693,378

Deferred tax liability for the reserve for tax purpose reduction entry

1,953,125

2,408,105

Total

5,392,196

6,101,484

Note: R eduction entry is made based on the reserve method, where the requirements of the tax law are met, and deferred tax liability is recorded in the liabilities section
for the future taxable temporary difference related to the amount of the reserve for reduction entry, and the net amount after deducting the deferred tax liability isrecorded in the net assets section as the reserve for tax purpose reduction entry. This deferred tax liability is recorded (or reversed) as a counterpart account of income
taxes-deferred in the statements of income.

31

Japan Real Estate Investment Corporation

5. Financial Instruments
1. Status of financial instruments(1) Policies for dealing with financial instruments
		Concerning the financing of property acquisitions, the Company shall use several funding sources including bank loans, the issuance ofinvestment corporation bonds and the issuance of investment units. When executing such financing activities, the Company endeavors
to retain the ability to secure stable and low-cost financing by maintaining high credit ratings and thereby limiting the financial covenants that may restrict the financial flexibility of the Company. To achieve these goals, the Company intends to further develop andreinforce the confidence of debt holders and rating agencies in the Company by bolstering the capital base and controlling the loan-tovalue ratio (“LTV”) at an adequate level.
		  In order to hedge against future interest-rate fluctuations, the Company may enter into derivative transactions, which shall be
executed solely for the purpose of hedging against interest-rate fluctuation and other risks, and not for speculative purposes.
		  With respect to management of excess funds, as a matter of policy the Company uses time deposits as its main vehicle, while securities
and monetary claims are also eligible for such investment.
(2) Characteristics and risk profile of each financial instrument and risk management system		The Company regularly re-evaluates the appropriateness and effectiveness of its risk management system in order to improve on it.
		 The characteristics and risk profile of financial instruments and the system in place to manage such risks are as follows:		  The deposits, which are typically large time deposits used to manage excess funds, are exposed to the credit risk of the deposit-taking
financial institutions. The Company manages credit risk by restricting the tenor of the deposit to relatively short periods and setting aminimum credit rating requirement for the deposit-taking financial institutions.
		  The funding proceeds from borrowings and issues of investment corporation bonds are applied mainly to acquire real estate properties and repay outstanding loans and bonds. While floating-rate short-term and long-term loans are exposed to the risk of interest-rate
hikes, such risk is mitigated by the Company’s low LTV and relatively high percentage of long-term fixed-rate debts within the totalborrowing. The Company may also exercise hedging by means of derivative transactions (interest-rate swap transactions) in order tomitigate the risk of fluctuation concerning the floating-rate long-term loans, thereby effectively stabilizing the overall interest rates on
the loans. Foreign currency-denominated loans are also exposed to currency exchange and interest-rate fluctuation risk. However, theCompany uses derivative transactions as a method of hedging against these risks (interest-rate and currency swap transactions). Foreign
currency investment corporation bonds are also exposed to currency exchange risk. However, the Company uses derivative transactions
as a method of hedging against the risks (currency swap transactions). For more detailed information on the hedge accounting method,
please refer to Section 2. “Summary of Significant Accounting Policies: Hedge accounting.”		  Loans and investment corporation bonds involve liquidity risk at the time of maturity. To manage such liquidity risk, the Company
implements measures such as (i) maintaining and strengthening its ability to access equity markets to secure funds, (ii) maintaining
commitment lines with major financial institutions (There is no amount outstanding under the facility as of March 31, 2022 andSeptember 30, 2022) and (iii) preparing monthly financial plans.
(3) Supplementary note regarding fair value of financial instruments
		Since the fair value of financial instruments is calculated based on certain assumptions, the fair value could differ depending on theassumptions used. In addition, the contract value of derivative transactions, which is presented in Section 6. “Derivative Transactions,”
is not an exact representation of market risk attributable to derivative transactions.

Japan Real Estate Investment Corporation

32

2. Fair value of financial instruments

Fair value of financial instruments, their values carried on the balance sheets and the differences between them as of March 31, 2022
and September 30, 2022 are as follows. Since “Cash and deposits,” “Cash and deposits in trust,” and “Short-term borrowings” are cash
and due to be settled in a short period, and their fair values approximate their book values, the notes are omitted.
Thousands of yen

As of March 31, 2022
Book value

Fair value(1) Current portion of long-term borrowings

48,500,000

48,606,802(2) Investment corporation bonds

42,993,175

43,624,512

631,337(3) Long-term borrowings

317,200,000

315,353,094(1,846,905)(4) Deposits received from tenants

58,334,907

57,105,428(1,229,478)

—

—

—

(5) Derivative transactions

Difference

106,802

Thousands of yen

As of September 30, 2022
Book value

Fair value(1) Current portion of long-term borrowings

48,500,000

48,556,944

56,944(2) Investment corporation bonds

42,993,175

43,561,203

568,028(3) Long-term borrowings

310,200,000

307,817,490(2,382,509)(4) Deposits received from tenants

55,831,455

54,654,518(1,176,936)

—

—

—

(5) Derivative transactions

Difference

Notes: 1. Measurement of fair value of financial instruments and matters concerning derivative transactions
		 (1) Current portion of long-term borrowings and (3) Long-term borrowings			For loans with floating interest rates, since the interest rates on such loans reflect market rates reasonably well over the short term and their book values are good
approximations of their fair values, the book values are presented as their fair values. (However, the fair values of floating-rate long-term loans (please refer to
Section 6. “Derivative Transactions, (2) Derivatives designated as hedging instruments”) hedged by an interest-rate and currency swap subject to integrated treatment
or by an interest-rate swap subject to special accounting treatment are calculated by discounting the aggregated principal and interest on such loans using reasonableestimates of the rates that would be applicable if the Company were to refinance the existing loans for the remaining period to maturity under the prevailing market
condition.) The fair values of long-term loans with fixed interest rates are calculated by discounting the aggregated amounts of the principal and the interest of theloans by the rates that are reasonably estimated to be applicable if the Company were to refinance the existing loans for the remaining period to maturity.
		 (2) Investment corporation bonds
			Their fair values are based on reference prices published by a financial data provider where available. When reference prices are not available, their fair values arecalculated by discounting the aggregate of the principal and interest by nominal rates assumed applicable if the loans were refinanced for the duration of the current
maturity. (However, the fair values of investment corporation bonds (please refer to Section 6. “Derivative Transactions, (2) Derivatives designated as hedging­instruments”) hedged by a currency swap subject to allocation treatment are calculated by discounting the aggregate of the principal and interest integrated withthe currency swap by nominal rates assumed applicable if the loans were refinanced for the duration of the current maturity.)		 (4) Deposits received from tenants			These fair values of these deposits are the discounted present values by estimated periods until the deposits are returned and discount rates reflected credit risksof the Company.
		 (5) Derivative transactions
			 Please refer to Section 6. “Derivative Transactions.”
2. Repayment schedule for investment corporation bonds, long-term borrowings and other interest-bearing debt after the closing dateThousands of yen

As of March 31, 2022

Investment corporation bonds
Long-term borrowings
Total

1 year or less—
48,500,000
48,500,000

1 to 2 years
10,000,000
39,500,000
49,500,000

2 to 3 years—
54,800,000
54,800,000

3 to 4 years
20,000,000
52,500,000
72,500,000

4 to 5 years
10,000,000
25,700,000
35,700,000

Over 5 years
2,993,175
144,700,000
147,693,175

4 to 5 years
10,000,000
21,000,000
31,000,000

Over 5 years
2,993,175
153,200,000
156,193,175

Thousands of yen

As of September 30, 2022

Investment corporation bonds
Long-term borrowings
Total

33

Japan Real Estate Investment Corporation

1 year or less—
48,500,000
48,500,000

1 to 2 years
10,000,000
42,300,000
52,300,000

2 to 3 years
10,000,000
57,000,000
67,000,000

3 to 4 years
10,000,000
36,700,000
46,700,000

6. Derivative Transactions(1) Derivatives not designated as hedging instruments
		 As of March 31, 2022
		  “Not applicable”
		As of September 30, 2022
		  “Not applicable”(2) Derivatives designated as hedging instruments
		 As of March 31, 2022
			The contract amount or the equivalent principal amount set out in the contract as of the closing date for each derivative designated asa hedging instrument is as follows:
Thousands of yen

Contract value

Fair value

Measurementof fair value

9,800,000*1—

10,000,000

10,000,000*1—2,993,175

2,993,175*2—

Derivative accounting method

Type of derivative transaction

Hedged item

Special Treatment for interest-rate swap

Receive floating, pay fixed interest-rate
swap transactions

Long-term
borrowings

26,300,000

Integrated Treatment (Special Treatment
and Allocation Treatment) for interestrate and currency swap

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

Long-term
borrowings

Allocation Treatment for currency swap

Receive fixed USD, pay fixed JPY,
­currency swap transactions (with initialand final exchange)

Investment
corporation bonds

Over one year

		 As of September 30, 2022
			The contract amount or the equivalent principal amount set out in the contract as of the closing date for each derivative designated asa hedging instrument is as follows:
Thousands of yen

Contract value

Fair value

Measurementof fair value

6,800,000*1—

10,000,000

10,000,000*1—2,993,175

2,993,175*2—

Derivative accounting method

Type of derivative transaction

Hedged item

Special Treatment for interest-rate swap

Receive floating, pay fixed interest-rate
swap transactions

Long-term
borrowings

16,800,000

Integrated Treatment (Special Treatment
and Allocation Treatment) for interestrate and currency swap

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

Long-term
borrowings

Allocation Treatment for currency swap

Receive fixed USD, pay fixed JPY,
Investment
currency swap transactions (with initialcorporation bonds
and final exchange)

Over one year

*1. The derivative transactions eligible for Special Treatment for interest-rate swap and Integrated Treatment (Special Treatment for interest-rate swap and Allocation Treatment
for currency swap) are accounted for as integral parts of the hedged loans, and the fair value of those derivative transactions is included in that of the underlying long-termborrowings as of March 31, 2022 and September 30, 2022. Please refer to Note 1 of “2. Fair value of financial instruments” under Section 5. “Financial Instruments,” aswell as subheadings (1) and (3) concerning derivative transactions.
*2. Currency swap transactions eligible for allocation treatment are accounted for as integrated parts of the hedged investment corporation bonds, and the fair value of the­currency swap transactions is included in that of the underlying investment bonds as of March 31, 2022 and September 30, 2022. Please refer to Note 1 of “2. Fair valueof financial instruments” under Section 5. “Financial Instruments,” as well as subheading (2) concerning derivative transactions.

Japan Real Estate Investment Corporation

34

7. Property, Plant and Equipment and Intangible Assets
Changes in property, plant and equipment and intangible assets for the six months ended September 30, 2022 are as follows:
Thousands of yen
Type of Asset

Balance at
beginning of
the period

Increase during
the period

Decrease during
the period

Balance at endof the period

Depreciation andamortization

Net balanceat end ofthe period

Remarks

Property, plant and equipment

Buildings

266,395,817

969,173

12,224,307

255,140,683

116,706,330

3,847,820

138,434,352*1Structures

3,237,811

3,416

128,932

3,112,295

1,233,432

52,031

1,878,863—

Machinery and equipment

3,437,918

6,952

178,448

3,266,422

2,592,318

28,431

674,103—

Tools, furniture and fixtures

508,728

19,174

3,636

524,266

356,945

14,679167,321—473,737,244—

14,745,725

458,991,518——

458,991,518*1

32,71233,144

11,60054,256——54,256—

Buildings in trust

116,270,016

482,122—

116,752,139

39,425,825

2,252,471

77,326,313—

Structures in trust

1,135,217

4,708

—

1,139,925

477,306

32,347

662,619—

Machinery and equipment in trust

893,580

11,017—

904,598

638,594

21,206

266,003—

Tools, furniture and fixtures in trust

76,983

2,268—

79,252

54,975

2,785

24,277—

292,084,985

20,425—292,105,411——

292,105,411—

71,21515,857—87,072——

87,072—

Subtotal

1,157,882,232

1,568,261

27,292,651

1,132,157,842

161,485,728

6,251,773

970,672,114

Land leasehold interests

5,933,601——

5,933,601

369,366

15,8295,564,235—

Easement

828,095—

1,446

826,648——826,648—

Other

59,106998—

60,10535,733

4,408

24,371—6,820,803

998

1,446

6,820,355

405,099

20,2386,415,255

1,164,703,036

1,569,260

27,294,098

1,138,978,198

161,890,827

6,272,012

977,087,370

Land
Construction in progress

Land in trust
Construction in progress in trust

Intangible assets

Subtotal
Total*1. The decrease of the buildings and the land was mainly due to the disposal of Harumi Center Building.

35

Accumulated depreciation
Accumulated amortization

Japan Real Estate Investment Corporation

8. Borrowings
The condition of loans by financial institutions as of September 30, 2022 is as follows:

Drawdown date

Balance at
beginning ofcurrent period(¥ thousand)

Balance at
end ofcurrent period(¥ thousand)Averageinterest
rate*1(%)

Repayment date

Sumitomo Mitsui Trust Bank, Limited

April 20, 2021

2,000,000—

0.1254

April 20, 2022

MUFG Bank, Ltd. *3

February 18, 2022

11,000,000—

0.10727

May 18, 2022

MUFG Bank, Ltd. *4

May 18, 2022——

0.10727

August 18, 2022

MUFG Bank, Ltd. *5

August 18, 2022—

11,000,000

0.10364

November 18, 2022

MUFG Bank, Ltd.

November 30, 2021

3,200,000

3,200,000

0.11739

November 30, 2022

MUFG Bank, Ltd.

March 29, 2022

15,000,000—

0.11995

March 29, 2023
*6

Mizuho Bank, Ltd.

March 29, 2022

10,000,000—

0.1199March 29, 2023
*7

Sumitomo Mitsui Trust Bank, Limited

April 20, 2022—

2,000,000

0.11987

April 20, 2023

Mizuho Bank, Ltd.

April 25, 2022——

0.11758

April 25, 2023
*8

MUFG Bank, Ltd.

June 15, 2022——

0.12182

June 15, 2023
*9

Shinsei Bank, Limited

June 15, 2022—

2,500,000

0.12205

June 15, 2023

MUFG Bank, Ltd.

July 15, 2022——

0.12383

July 10, 2023
*10

Mizuho Bank, Ltd.

July 25, 2022

0.12127

July 10, 2023

Classification
LenderShort-term borrowings

Subtotal—

3,000,000

41,200,000

21,700,000

Mizuho Bank, Ltd.

April 24, 2013

3,000,000—

0.87375

April 25, 2022

MUFG Bank, Ltd.

June 15, 2012

4,000,000—

1.1975June 15, 2022

MUFG Bank, Ltd.

June 15, 2012

2,500,000—

1.2725June 15, 2022

Shinsei Bank, Limited

June 15, 2012

2,500,000—

1.2725June 15, 2022

The Norinchukin Bank

June 17, 2014

0.6785June 17, 2022

0.3925

August 10, 2022

3,000,000—

The Gunma Bank, Ltd.

1,000,000—

The Shinkumi Federation Bank

1,000,000—

Daishi Hokuetsu Bank, Ltd.

1,000,000—

The Chugoku Bank, Limited
Long-term borrowings

1,000,000—

The Toho Bank, Ltd.

1,000,000—

The Fukui Bank, Ltd.

1,000,000—

The Tochigi Bank, Ltd.

500,000—

2,000,000—

MUFG Bank, Ltd.

August 10, 2015

September 1, 2015

0.47125

September 1, 2022

The Hachijuni Bank, Ltd.

December 20, 2017

1,000,000

1,000,000

0.1863

December 20, 2022
*11

Development Bank of Japan Inc.

January 7, 2013

3,000,000

3,000,000

1.115

January 6, 2023
*11

Daishi Hokuetsu Bank, Ltd.

January 7, 2016

1,500,000

1,500,000

0.2802January 10, 2023
*11

The 77 Bank, Ltd.

January 10, 2018

1,000,000

1,000,000

0.205

January 10, 2023
*11

The Hachijuni Bank, Ltd.

January 15, 2016

1,000,000

1,000,000

0.265

January 16, 2023
*11

The Iyo Bank, Ltd.

January 15, 2016

1,000,000

1,000,000

0.265

January 16, 2023
*11

Repayment
methodUse ofproceeds

Notes

Bullet*2

Unsecured
Unguaranteed
UnsubordinatedBullet*2

Unsecured
Unguaranteed
UnsubordinatedJapan Real Estate Investment Corporation

36

Drawdown date

Balance at
beginning ofcurrent period(¥ thousand)

Balance at
end ofcurrent period(¥ thousand)Averageinterest
rate*1(%)

Repayment date

Sumitomo Mitsui Trust Bank, Limited

January 17, 2018

3,000,000

3,000,000

0.210January 17, 2023
*11

Development Bank of Japan Inc.

January 31, 2014

5,000,000

5,000,000

0.9325January 31, 2023
*11

The Yamaguchi Bank, Ltd.

March 25, 2013

1,000,000

1,000,000

0.945

March 24, 2023
*11

The Bank of Fukuoka, Ltd.

March 24, 2015

2,000,000

2,000,000

0.5125

March 24, 2023
*11

The Norinchukin Bank

March 25, 2015

3,500,000

3,500,000

0.46825

March 27, 2023
*11

The Chugoku Bank, Limited

March 26, 2018

2,000,000

2,000,000

0.1988March 27, 2023
*11

Sumitomo Mitsui Banking Corporation

November 29, 2018

3,000,000

3,000,000

0.1694

May 29, 2023
*11

Sumitomo Mitsui Trust Bank, Limited

November 29, 2018

3,000,000

3,000,000

0.1694

May 29, 2023
*11

MUFG Bank, Ltd.

June 1, 2017

12,000,000

12,000,000

0.0415*12 *13

June 1, 2023
*11

The Chugoku Bank, Limited

June 15, 2015

3,000,000

3,000,000

0.61175

June 15, 2023
*11

The Bank of Fukuoka, Ltd.

June 15, 2017

2,500,000

2,500,000

0.2388June 15, 2023
*11

MUFG Bank, Ltd.

December 19, 2014

10,000,000

10,000,000

0.42375*14

December 19, 2023

MUFG Bank, Ltd.

March 26, 2018

5,000,000

5,000,000

0.07985*12 *15

March 26, 2024

Classification
LenderLong-term borrowings

37

The Hachijuni Bank, Ltd.

March 26, 2018

1,000,000

1,000,000

0.2338March 26, 2024

Sumitomo Mitsui Trust Bank, Limited

May 29, 2019

5,000,000

5,000,000

0.075

May 29, 2024
June 17, 2024

The Iyo Bank, Ltd.

June 15, 2017

2,500,000

2,500,000

0.275

The Hachijuni Bank, Ltd.

June 15, 2017

1,000,000

1,000,000

0.275

June 17, 2024

MUFG Bank, Ltd.

September 1, 2015

3,500,000

3,500,000

0.630

September 2, 2024

Sumitomo Mitsui Trust Bank, Limited

September 2, 2015

3,800,000

3,800,000

0.536

September 2, 2024

The Norinchukin Bank

September 1, 2017

5,000,000

5,000,000

0.240

September 2, 2024

Sumitomo Mitsui Trust Bank, Limited

September 26, 20195,500,000

5,500,000

0.105

September 26, 2024

Taiyo Life Insurance Company

October 1, 2014

2,000,000

2,000,000

0.7825October 1, 2024

Mizuho Bank, Ltd.

October 1, 2015

2,500,000

2,500,000

0.5575October 1, 2024

The Gunma Bank, Ltd.

November 18, 2019

1,000,000

1,000,000

0.11642*12

November 18, 2024

MUFG Bank, Ltd.

June 1, 2018

10,000,000

10,000,000

0.2544

December 2, 2024

Shinkin Central Bank

January 7, 2020

2,000,000

2,000,000

0.2075January 7, 2025

The Ashikaga Bank, Ltd.

January 9, 2018

1,000,000

1,000,000

0.285January 9, 2025

Mizuho Trust & Banking Co., Ltd.

March 2, 2015

3,000,000

3,000,000

0.5585

March 3, 2025

MUFG Bank, Ltd.

March 26, 2018

2,000,000

2,000,000

0.2725

March 26, 2025

Development Bank of Japan Inc.

March 30, 2017

5,000,000

5,000,000

0.315

March 31, 2025

Taiyo Life Insurance Company

May 29, 2015

1,500,000

1,500,000

0.7375

May 29, 2025
June 16, 2025

Sumitomo Mitsui Trust Bank, Limited

June 15, 2020

7,000,000

7,000,000

0.2075

Sumitomo Mitsui Banking Corporation

July 20, 2021

5,000,000

5,000,000

0.15375

July 22, 2025

Sumitomo Mitsui Trust Bank, Limited

August 31, 2018

3,000,000

3,000,000

0.320

August 29, 2025

Development Bank of Japan Inc.

September 1, 2015

7,000,000

7,000,000

0.7175September 1, 2025

Sumitomo Mitsui Trust Bank, Limited

September 23, 2020

5,000,000

5,000,000

0.1475September 24, 2025

Mizuho Bank, Ltd.

December 26, 2016

5,000,000

5,000,000

0.3625

December 26, 2025

Japan Real Estate Investment Corporation

Repayment
methodUse ofproceeds

Notes

Bullet*2

Unsecured
Unguaranteed
UnsubordinatedDrawdown date

Balance at
beginning ofcurrent period(¥ thousand)

Balance at
end ofcurrent period(¥ thousand)Averageinterest
rate*1(%)

Repayment date

Sumitomo Mitsui Trust Bank, Limited

January 29, 2021

2,000,000

2,000,000

0.1625January 29, 2026

Classification
Lender

MUFG Bank, Ltd.

February 26, 2018

6,500,000

6,500,000

0.3413February 26, 2026

Mizuho Bank, Ltd.

March 27, 2018

5,500,000

5,500,000

0.300

March 27, 2026

Shinkin Central Bank

March 30, 2017

5,000,000

5,000,000

0.360

March 30, 2026

Sumitomo Mitsui Trust Bank, Limited

June 28, 2021

3,700,000

3,700,000

0.17875

June 29, 2026

The Norinchukin Bank

January 23, 2019

4,000,000

4,000,000

0.1988July 23, 2026

Shinkin Central Bank

September 1, 2017

5,000,000

5,000,000

0.3188September 1, 2026

Long-term borrowings

MUFG Bank, Ltd.

October 31, 2016

3,000,000

3,000,000

0.240

October 30, 2026

Mizuho Bank, Ltd.

December 21, 2016

5,000,000

5,000,000

0.415

December 21, 2026

Shinkin Central Bank

January 23, 2019

5,000,000

5,000,000

0.2213January 25, 2027

Shinkin Central Bank

April 24, 2018

6,000,000

6,000,000

0.3675

April 26, 2027

The Norinchukin Bank

July 3, 2020

2,000,000

2,000,000

0.24375

July 5, 2027

The Joyo Bank, Ltd.

January 9, 2018

1,000,000

1,000,000

0.4188January 11, 2028

Sumitomo Mitsui Banking Corporation

January 19, 2018

3,000,000

3,000,000

0.4338January 19, 2028

The Bank of Fukuoka, Ltd.

January 29, 2021

2,500,000

2,500,000

0.21875

January 31, 2028

Mizuho Bank, Ltd.

March 30, 2018

4,000,000

4,000,000

0.3963

March 30, 2028

MUFG Bank, Ltd.

March 30, 2018

4,000,000

4,000,000

0.3963

March 30, 2028

Taiyo Life Insurance Company

March 30, 2018

1,000,000

1,000,000

0.3963

March 30, 2028

The Bank of Fukuoka, Ltd.

August 31, 2021

1,500,000

1,500,000

0.20625

August 31, 2028

Mizuho Bank, Ltd.

November 15, 20198,500,000

8,500,000

0.34875

November 15, 2028

The Nishi-Nippon City Bank, Ltd.

December 17, 2021

1,000,000

1,000,000

0.27875

December 18, 2028

Shinkin Central Bank

January 15, 2020

5,000,000

5,000,000

0.325

January 15, 2029

Mizuho Bank, Ltd.

November 1, 2019

6,000,000

6,000,000

0.35125

November 1, 2029

MUFG Bank, Ltd.

January 15, 2020

5,500,000

5,500,000

0.3625January 15, 2030

MUFG Bank, Ltd.

April 27, 2020

5,000,000

5,000,000

0.35875

April 26, 2030

Mizuho Bank, Ltd.

April 27, 2020

5,000,000

5,000,000

0.35875

April 26, 2030

MUFG Bank, Ltd.

June 15, 2020

4,000,000

4,000,000

0.36125

June 14, 2030

MUFG Bank, Ltd.

October 20, 2020

5,000,000

5,000,000

0.2925October 18, 2030

MUFG Bank, Ltd.

December 21, 2020

10,000,000

10,000,000

0.2825

December 20, 2030

0.16719*12

March 24, 2031

The Iyo Bank, Ltd.

March 24, 2021

2,000,000

2,000,000

The Yamanashi Chuo Bank, Ltd.

March 26, 2019

2,000,000

2,000,000

0.3688March 26, 2031

MUFG Bank, Ltd.

April 5, 2021

5,000,000

5,000,000

0.41875

April 4, 2031

MUFG Bank, Ltd.

April 26, 2021

5,000,000

5,000,000

0.35625

April 25, 2031

Mizuho Bank, Ltd.

June 15, 2021

4,000,000

4,000,000

0.28875

June 16, 2031

The Norinchukin Bank *16

January 29, 2021

5,000,000

5,000,000

0.34625

July 31, 2031

The Chugoku Bank, Limited

October 1, 2021

1,000,000

1,000,000

0.345

October 1, 2031

The Norinchukin Bank *17

November 15, 2021

5,000,000

5,000,000

0.395

November 17, 2031

Shinkin Central Bank

November 15, 2021

5,000,000

5,000,000

0.405

November 17, 2031

Daishi Hokuetsu Bank, Ltd.

November 15, 2021

3,200,000

3,200,000

0.395

November 17, 2031

The Chugoku Bank, Limited

November 15, 2021

1,000,000

1,000,000

0.405

November 17, 2031

The 77 Bank, Ltd.

November 15, 2021

1,000,000

1,000,000

0.395

November 17, 2031
November 17, 2031

The Hachijuni Bank, Ltd.

November 15, 2021

1,000,000

1,000,000

0.16636*12

The Nishi-Nippon City Bank, Ltd.

December 17, 2021

1,000,000

1,000,000

0.37375

December 17, 2031

Sumitomo Mitsui Banking Corporation

January 7, 2022

2,000,000

2,000,000

0.415January 7, 2032

Repayment
methodUse ofproceeds

Notes

Bullet*2

Unsecured
Unguaranteed
UnsubordinatedJapan Real Estate Investment Corporation

38

Drawdown date

Balance at
beginning ofcurrent period(¥ thousand)

Balance at
end ofcurrent period(¥ thousand)Averageinterest
rate*1(%)

Repayment date

January 17, 2022

5,000,000

5,000,000

0.4475January 19, 2032

The Norinchukin Bank *18

January 29, 2021

5,000,000

5,000,000

0.3675January 30, 2032

The Norinchukin Bank

January 31, 2022

3,500,000

3,500,000

0.4725January 30, 2032

The Shiga Bank, Ltd.

February 21, 2022

3,000,000

3,000,000

0.440

February 24, 2032

The Chugoku Bank, Limited

February 21, 2022

1,000,000

1,000,000

0.440

February 24, 2032

Classification
LenderMizuho Bank, Ltd.

Long-term borrowings

The Gunma Bank, Ltd.

February 21, 2022

1,000,000

1,000,000

0.440

February 24, 2032

The Chugoku Bank, Limited

June 15, 2022—

1,000,000

0.57375

June 15, 2032

The 77 Bank, Ltd.

June 15, 2022—

1,000,000

0.57375

June 15, 2032

The Norinchukin Bank *19

June 17, 2022—

3,000,000

0.61625

June 17, 2032—

3,000,000—

1,000,000—

1,000,000—

500,000

The Shinkumi Federation BankThe Toho Bank, Ltd.
The Keiyo Bank, Ltd.

August 10, 2022

The Tochigi Bank, Ltd.

0.37875

August 10, 2032

August 10, 2032

Daishi Hokuetsu Bank, Ltd.

August 10, 2022—

2,000,000

0.39875

The Chugoku Bank, Limited

August 10, 2022—

1,000,000

0.39875

August 10, 2032

MUFG Bank, Ltd.

September 9, 2022—

2,000,000

0.555

September 9, 2032

The Nishi-Nippon City Bank, Ltd.

September 12, 2022—

1,000,000

0.5475September 13, 2032

Sumitomo Life Insurance Company

March 26, 2019

1,000,000

1,000,000

0.505

March 27, 2034

Sumitomo Life Insurance Company

December 16, 2019

2,000,000

2,000,000

0.490

December 18, 2034

Subtotal

365,700,000

358,700,000

Total

406,900,000

380,400,000

Repayment
methodUse ofproceeds

Notes

Bullet*2

Unsecured
Unguaranteed
Unsubordinated*1.	The average for floating interest rates is recorded as the weighted average during the period. The average is rounded off to the fifth decimal place. The weighted average forinterest rates of loans for which floating interest rates were swapped to fixed rates in order to hedge the risk of interest rate fluctuations is calculated taking the effect of thisswap into consideration.
*2.	The purposes of executing these loans are to purchase real properties or beneficiary right of real estate in trust, to repay existing loans, and to fund the redemption of investment corporation bonds.
*3. As of February 18, 2022, MUFG Bank, Ltd. transferred its loan receivable of ¥10,600 million to Mitsubishi UFJ Trust and Banking Corporation.
*4. As of May 18, 2022, MUFG Bank, Ltd. transferred its loan receivable of ¥10,800 million to Mitsubishi UFJ Trust and Banking Corporation.
*5. As of August 18, 2022, MUFG Bank, Ltd. transferred its loan receivable of ¥6,800 million to Mitsubishi UFJ Trust and Banking Corporation.
*6. The Company made a full repayment (¥15,000 million) before maturity on May 31, 2022.
*7. The Company made a full repayment (¥10,000 million) before maturity on May 31, 2022.
*8. The Company made a full repayment (¥3,000 million) before maturity on July 25, 2022.
*9. The Company made a full repayment (¥4,500 million) before maturity on July 15, 2022.
*10.	The Company made a repayment (¥3,000 million) before maturity on August 10, 2022, and made a repayment for the remaining (¥1,500 million) before maturity on
September 12, 2022.
*11.	At the end of the period, these loans are accounted for under current liabilities on the balance sheets as the current portion of long-term borrowings.
*12.	These are floating rate borrowings which are not swapped into fixed rates.
*13.	The loan was based on floating rate (Base rate (Risk free rate (TONA) compounded in arrears over rate observation period (1 month) according to the lookback method +spread adjustment (-0.02923%)) + 0.09%).
*14.	In order to hedge the risk of exchange rate and interest rate fluctuations related to foreign currency-denominated loans, the Company conducted an interest-rate and currency swap transaction, which substantially secured exchange and interest rates. Accordingly, the balance and the weighted average for interest rates during the period are
calculated taking the effect of this interest-rate and currency swap into consideration.
*15.	The loan was based on floating rate (Base rate (Risk free rate (TONA) compounded in arrears over rate observation period (3 months) according to the lookback method +spread adjustment (0.00835%)) + 0.09%).
*16.	The applicable interest rate will be lowered by 0.01% from the original rate of 0.35625% for a corresponding period pursuant to the loan agreement on the condition thateither one of the targets set for CO2 emissions reduction or the number of ZEB-certified buildings the Company owns, respectively, is achieved. Since the target wasachieved at the time of confirmation at the end of July 2021, the interest rate for the period until the next confirmation was 0.34625%.
*17.	The applicable interest rate will be lowered by 0.01% from the original rate of 0.405% for a corresponding period pursuant to the loan agreement on the condition thateither one of the targets set for CO2 emissions reduction or the number of ZEB-certified buildings the Company owns, respectively, is achieved. Since the target wasachieved at the time of confirmation on May 16, 2022, the interest rate for the period until the next confirmation was 0.395%.
*18.	The applicable interest rate will be lowered by 0.01% from the original rate of 0.3775% for a corresponding period pursuant to the loan agreement on the condition thateither one of the targets set for CO2 emissions reduction or the number of ZEB-certified buildings the Company owns, respectively, is achieved. Since the target wasachieved at the time of confirmation at the end of July 2021, the interest rate for the period until the next confirmation was 0.3675%.
*19.	The applicable interest rate will be lowered by 0.01% from the original rate of 0.61625% for a corresponding period pursuant to the loan agreement on the condition thateither one of the targets set for CO2 emissions reduction or the number of ZEB-certified buildings the Company owns, respectively, is achieved.

39

Japan Real Estate Investment Corporation

9. Investment Corporation Bonds including Current Portion of Investment Corporation Bonds
Outstanding investment corporation bonds as of September 30, 2022 are as follows:

Securities

4th unsecured investment
corporation bond10th unsecured investment
corporation bond11th unsecured investment
corporation bond12th unsecured investment
corporation bond (Japan Real
Estate Investment Green Bonds)
13th unsecured investment
corporation bond
Total

Date of issue

Balance at
beginning ofcurrent period(¥ thousand)

Balance at
end ofcurrent period(¥ thousand)Interest rate(%)

Repayment period

Repayment
methodUse ofproceeds

Notes

September 29, 2005

10,000,000

10,000,0002.56

September 29, 2025

Bullet*1*2

March 30, 2017

10,000,000

10,000,000

0.3975

March 30, 2027

Bullet*1*2 *3

October 26, 2017

2,993,175

2,993,175

0.2788October 26, 2027

Bullet*1*2 *3 *4

November 1, 2018

10,000,000

10,000,000

0.23

November 1, 2023

Bullet*1*2

October 26, 2020

10,000,000

10,000,000

0.2

October 24, 2025

Bullet*1*2

42,993,175

42,993,175*1. The investment corporation bonds are primarily used to fund the acquisition of real properties or beneficiary right of real estate in trust, and to repay existing loans.
*2. Financial covenants, such as a negative pledge, are not included in these bonds.
*3. Bond issuance was limited to qualified institutional investors by a private placement.
*4.	For the purpose of avoiding foreign currency risk with respect to foreign currency investment corporation bonds, the Company engages in currency swap transactions to fix
the exchange rates. Considering the effects of the currency swap transactions, the balances and interest rates are reflected in the schedule.

10. Net Assets
The Company is required to maintain net assets of at least ¥50 million, as required pursuant to the ITA.

Japan Real Estate Investment Corporation40

11. Income Taxes
The Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation Measures
Act, an investment corporation is allowed to deduct dividends of earnings or dividend distributions, paid to unitholders from its taxable
income if certain tax requirements are satisfied. Such tax requirements include dividend distributions in excess of 90% of its profit available
for dividends for the fiscal period as stipulated by Article 67-15 of the Special Taxation Measures Act. The significant components ofdeferred tax assets and liabilities as of March 31, 2022 and September 30, 2022 were as follows:
Thousands of yen

As of March 31, 2022

As of September 30, 2022

Deferred tax assets:
Accrued enterprise tax

929

926

Amortization of a term leasehold interest

122,288

127,763

Asset retirement obligations

126,914

128,193

250,132

256,883

Valuation allowance(147,747)(154,501)

Total deferred tax assets

102,385

102,381Deferred tax liabilities:
Asset retirement obligations

101,455

101,455

Reserve for advanced depreciation of non-current assets

1,953,125

2,408,105

Total deferred tax liabilities

2,054,581

2,509,561

1,952,196

2,407,179

Net deferred tax liabilities

The reconciliation of tax rate difference between the adjusted statutory tax rate and the effective tax rate as of March 31, 2022 andSeptember 30, 2022 was as follows:
As of March 31, 2022

41

As of September 30, 2022

Statutory tax rate

34.59%

34.59%

Deductible dividend distribution(33.74%)(31.93%)

Change in valuation allowance

0.04%

0.04%

Others

0.00%

0.00%

Effective tax rate

0.90%

2.70%

Japan Real Estate Investment Corporation

12. Related Party Transactions
For the six months ended March 31, 2022 and September 30, 2022
Transactions with related parties defined under the Financial Instruments and Exchange Act are listed below.
(1) Parent Company and Major Corporation Unitholders
		 For the period from October 1, 2021 to March 31, 2022
			“Not applicable”
		For the period from April 1, 2022 to September 30, 2022
			“Not applicable”(2) Affiliated Companies
		 For the period from October 1, 2021 to March 31, 2022
			“Not applicable”
		For the period from April 1, 2022 to September 30, 2022
			“Not applicable”(3) Sister Companies
		 For the period from October 1, 2021 to March 31, 2022
			“Not applicable”
		For the period from April 1, 2022 to September 30, 2022
			“Not applicable”(4) Directors and Major Individual Unitholders
		 For the period from October 1, 2021 to March 31, 2022
			“Not applicable”
		For the period from April 1, 2022 to September 30, 2022
			“Not applicable”

Japan Real Estate Investment Corporation42

Transactions with related parties defined under the ITA are listed below.
In addition to controlling unitholders, major unitholders, subsidiary corporations, subsidiary companies of controlling unitholders, andofficers and their close relatives, the definition of a “related party” under the ITA also includes the asset management company and its
interested parties (parent and subsidiary corporations, specified individual shareholders, and major shareholders of the asset managementcompany defined as interested parties under Article 201 of the ITA and Article 123 of the enforcement order of the ITA), as well as theasset custody company.
For the period from October 1, 2021 to March 31, 2022 (Unaudited)Type of relationship

Interested party

Name oftransaction partner

Mitsubishi EstateCo., Ltd.

Type of business

Real estate

Percentage ofunits held

1.24%

Transaction details

Mitsubishi Jisho
Property Management
Co., Ltd.

Asset custodycompany

Sumitomo Mitsui
Trust Bank, Limited

Bank

—

—

Balance at
end of the period(¥ thousand)Rent revenue

15,728,787——

46,500,000——

Security deposit increase

Real estate
management

Accounting item

Real estate beneficiary rights
in trust purchase
Security deposit return

Interested party

Transaction amount(¥ thousand)

365,980 Deposits received
from tenants
319,117

Property management
expenses

2,526,476

Proceeds fromlong-term borrowings—

Repayments oflong-term borrowings——

Long-term
borrowings

20,192,826—

41,000,000

Notes: 1. Consumption tax is not included in the above amounts.
2. Transaction terms were decided based on market conditions at the time the transaction was made.

For the period from April 1, 2022 to September 30, 2022 (Unaudited)Type of relationship

Name oftransaction partner

Type of business

Percentage ofunits held

Transaction details

Interested party

Mitsubishi EstateCo., Ltd.

Real estate

1.24%

Security deposit increase

Interested party

Mitsubishi Jisho
Property Management
Co., Ltd.

Real estate
management

Asset custodycompany

Sumitomo Mitsui
Trust Bank, Limited

Rent revenue
Security deposit return

Bank

—

—

Transaction amount(¥ thousand)

15,395,388

Accounting item—

205,945 Deposits received
from tenants
1,404,349

Property management
expenses

2,487,663

Proceeds fromlong-term borrowings—

Repayments oflong-term borrowings——

Long-term
borrowings

Notes: 1. Consumption tax is not included in the above amounts.
2. Transaction terms were decided based on market conditions at the time the transaction was made.
3.	Due to the change of asset custody company, Sumitomo Mitsui Trust Bank, Limited is no longer within the scope of related parties.
		Therefore, the transaction amount represents the transaction amount during the period when the company was a related party.
		The balance at the end of the period is the balance at the time when the company ceased to be a related party.
		In addition, the type of relationship and the percentage of units held are the status during the period when the company was a related party.

43

Japan Real Estate Investment Corporation

Balance at
end of the period(¥ thousand)—
18,994,422—

41,000,000

13. Segment Information
For the six months ended March 31, 2022 and September 30, 2022
Since the Company has been engaged in the real estate leasing business using a single segment, segment information has been omitted.
Information on products and services

Since revenues from external customers for a single segment accounted for more than 90% of total operating revenues, segment information on products and services has been omitted.
Information on geographic area

(1) Revenue		Since 100% of total operating revenues was generated from external customers within Japan, a geographical breakdown of revenues has
been omitted.
(2) Property and equipment
		Since 100% of total property and equipment on the balance sheets was located within Japan, a geographical breakdown of such property and equipment has been omitted.
Information on major clients

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

Japan Real Estate Investment Corporation

44

14. Asset Retirement Obligations
For the six months ended March 31, 2022 and September 30, 2022
Asset retirement obligations reported on balance sheets

The Company acquired Osaki Front Tower on February 1, 2011 under the term leasehold for business use agreement which, at the expiryof the leasehold, obligates the Company to restore the leased land to its original state. At the inception of a lease with such an obligation,
the Company recognized an asset retirement obligation and a corresponding capital asset in an amount equal to the present value of theestimated demolition cost required for the removal of the properties located on the leased land. The present value is calculated using
2.015% as the discount rate over 42 years, which is the term of the leasehold.
Change in the asset retirement obligations for the six months ended March 31, 2022 and September 30, 2022 consisted of the following:Thousands of yen

For the period from October 1, 2021
to March 30, 2022

For the period from April 1, 2022
to September 30, 2022

363,251

366,911

Balance at the beginning of the period
Increase in tangible fixed assets

—

—

3,659

3,696

366,911

370,608

Accretion expense
Balance at the end of the period

15. Investment and Rental Property
For the six months ended March 31, 2022 and September 30, 2022
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 March 31, 2022 and September 30, 2022 and the fair values as of March 31, 2022 and September 30, 2022 are as follows:
Thousands of yen

Book value

Fair value

As of September 30, 2021

Change during the period *1

As of March 31, 2022

As of March 31, 2022

954,902,065

47,718,397

1,002,620,463

1,322,980,000

Thousands of yen

Book value

Fair value

As of March 31, 2022

Change during the period *2

As of September 30, 2022

As of September 30, 2022

1,002,620,463(25,534,367)

977,086,095

1,303,560,000

Notes: 1. Book value on balance sheets means the acquisition cost less accumulated depreciation.
2. Significant changes
		 *1. A s for the increases/decreases for the period, the major reasons for the increases were the acquisitions of GRAND FRONT OSAKA (North Building) (¥9,869,891
thousand), GRAND FRONT OSAKA (Umekita Plaza and South Building) (¥11,347,537 thousand), Toyosu Front (¥25,643,143 thousand) and the additional
acquisition of Otemachi Financial City North Tower (¥6,429,989 thousand), and the major reasons for the decreases were the disposition of Nagoya Misono
Building (¥1,293,228 thousand) and by depreciation.
		 *2. A s for the increases/decreases for the period, the major reasons for the decreases were the disposition of Harumi Center Building (¥20,813,797 thousand) andby depreciation.
3. Fair values as of March 31, 2022 and September 30, 2022 are defined as the appraised values provided by an external qualified professional appraiser. As of March 31,
2022, Harumi Center Building, for which the disposition agreement was made dated May 16, 2022, was valued at the disposition price, and as of September 30,
2022, Harumi Front, for which the disposition agreement was made dated November 15, 2022, was valued at the disposition price.

Profits and losses related to investment and rental property are listed in Section 18. “Breakdown of Property-Related Revenues and Expenses.”

45

Japan Real Estate Investment Corporation

16. Revenue Recognition
For the six months ended March 31, 2022 and September 30, 2022
Breakdown information on revenue from contracts with customers
For the period from October 1, 2021 to March 31, 2022
Thousands of yen

Revenue from contracts with customers *1

Sales of real estate properties
Utilities income
OthersTotal

Revenue from external customers—

1,318,376 *2

1,567,099 *3

1,567,099—

33,568,167

1,567,099

36,453,643*1.	Rent revenues subject to “Accounting Standard for Lease Transactions” (ASBJ Statement No. 13) and revenue from sales of real estate properties subject to “Practical Guidelines on Accounting by Transferors for Derecognition of Real Estate Securitized by means of Special Purpose Companies” (the Accounting System Committee Statement
No. 15 of the Japanese Institute of Certified Public Accountants (JICPA)) are excluded from “Revenue from contracts with customers” as they are not subject to AccountingStandard for Revenue Recognition. The revenue from contracts with customers is mainly revenues from utilities income.
*2.	Sales of real estate properties are recorded as gains or losses on sales of real estate properties in the statements of income in accordance with Article 48-2 of the Regulations
on Accounting of Investment Corporation (Cabinet Office Ordinance No. 47 of 2006), and therefore the amount is the proceeds from sales of real estate properties, less thecost of real estate properties sold and other sales expenses.
*3.	Utilities income is the amount of income recognized in proportion to the supply of electricity, water, etc. to the lessee as the customer, in accordance with the terms of thereal estate lease contract and related agreements.

For the period from April 1, 2022 to September 30, 2022
Thousands of yen

Revenue from contracts with customers *1

Sales of real estate properties
Utilities income
OthersTotal—
1,699,920 *3

Revenue from external customers

3,365,229 *2
1,699,920—

32,589,399

1,699,920

37,654,549*1.	Rent revenues subject to “Accounting Standard for Lease Transactions” (ASBJ Statement No. 13) and revenue from sales of real estate properties subject to “Practical Guidelines on Accounting by Transferors for Derecognition of Real Estate Securitized by means of Special Purpose Companies” (the Accounting System Committee Statement
No. 15 of the Japanese Institute of Certified Public Accountants (JICPA)) are excluded from “Revenue from contracts with customers” as they are not subject to AccountingStandard for Revenue Recognition. The revenue from contracts with customers is mainly revenues from utilities income.
*2.	Sales of real estate properties are recorded as gains or losses on sales of real estate properties in the statements of income in accordance with Article 48-2 of the Regulations
on Accounting of Investment Corporation (Cabinet Office Ordinance No. 47 of 2006), and therefore the amount is the proceeds from sales of real estate properties, less thecost of real estate properties sold and other sales expenses.
*3.	Utilities income is the amount of income recognized in proportion to the supply of electricity, water, etc. to the lessee as the customer, in accordance with the terms of thereal estate lease contract and related agreements.

Japan Real Estate Investment Corporation46

17. Per Unit Information
The following table summarizes information about net assets per unit and profit per unit as of March 31, 2022 and September 30, 2022
and for the periods then ended, respectively:
Yen

For the period from October 1, 2021
to March 31, 2022

For the period from April 1, 2022
to September 30, 2022

Net assets per unit

373,057

373,778

Profit per unit

11,58312,121

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

ProfitAmount not attributable to normal unitholders
Profit applicable to normal investment units
Average number of units

For the period from October 1, 2021
to March 31, 2022

For the period from April 1, 2022
to September 30, 2022

16,045,702—
16,045,702
1,385,210 units

16,790,285—
16,790,285
1,385,210 units

18. Breakdown of Property-Related Revenues and Expenses
For the six months ended March 31, 2022 and September 30, 2022
Thousands of yen

47

For the period from October 1, 2021
to March 31, 2022

For the period from April 1, 2022
to September 30, 2022

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

35,135,266

34,289,320

34,739,020

34,095,465

29,251,345

28,564,156

2,364,432

2,290,265

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

Japan Real Estate Investment Corporation

713,093

694,1102,410,148

2,546,932

396,245

193,855

271,572

82,652

124,673

111,202

17,391,031

17,480,747

17,391,031

17,480,747

3,986,885

3,836,799

2,249,197

2,760,966

3,371,900

3,521,321

46,686

48,5831,217,236

849,752

6,326,242

6,275,535

192,881

187,788

17,744,235

16,808,573

19. Breakdown of Gain on Sales of Real Estate Properties
For the six months ended March 31, 2022 and September 30, 2022
For the period from October 1, 2021 to March 31, 2022
Thousands of yen

Nagoya Misono Building
Revenue from sale of real estate property
Cost of real estate property sold
Other sales expenses
Gain on sales of real estate properties

2,629,000
1,293,228
17,394
1,318,376

For the period from April 1, 2022 to September 30, 2022
Thousands of yen

Harumi Center Building
Revenue from sale of real estate property
Cost of real estate property sold
Other sales expenses
Gain on sales of real estate properties

24,330,000
20,813,797
150,973
3,365,229

20. Changes in Unitholders’ Equity
For the six months ended March 31, 2022 and September 30, 2022
Total number of investment units issuable
and number of units outstanding

Total number of investment units issuable
Number of units outstanding

As of March 31, 2022

As of September 30, 2022

4,000,000 units

4,000,000 units

1,385,210 units

1,385,210 units

Japan Real Estate Investment Corporation

48

21. Supplemental Cash Flow Information
Cash and cash equivalents

The following table represents a reconciliation of cash and cash equivalents as of March 31, 2022 and September 30, 2022:
Thousands of yen

As of March 31, 2022

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

As of September 30, 2022

21,150,064

20,473,628

6,023,858

6,319,372——

27,173,922

26,793,001

22. Leases
1. L eased assets under finance lease transactions that do not transfer ownership of the leased assets to the lessees are capitalized and depreciated by thestraight-line method over the lease term with no residual value. Such capitalized leased assets primarily consist of tools, furniture and fixtures.
2. The Company, as a lessor, owns office buildings under leases and earns rent income. As of March 31, 2022 and September 30, 2022, thefuture lease revenues under the non-cancelable operating leases are as follows:
Thousands of yen

As of March 31, 2022

Due within one year
Due after one year
Total

23. Subsequent Events
For the six months ended September 30, 2022
“Not applicable”

49

Japan Real Estate Investment Corporation

As of September 30, 2022

26,186,403

26,368,954

47,369,578

47,318,343

73,555,981

73,687,297

Japan Real Estate Investment Corporation

50

51

Japan Real Estate Investment Corporation

Japan Real Estate Investment Corporation

52

Other Information
1. Risk Factors
The principal risks with respect to investment in JRE are as follows:• any adverse conditions in the Japanese economy could adversely affect JRE;
• JRE may not be able to acquire properties to execute the growth and investment strategy in a manner that is accretive to earnings;• illiquidity in the real estate market may limit the ability to grow or adjust the portfolio;• the past experience of the asset manager (the “AIFM”) in the Japanese real estate market is not an indicator or guarantee of future results;• JRE’s reliance on its sponsor company, the AIFM, and other third-party service providers could have a material adverse effecton business;• there are potential conflicts of interest between JRE and its sponsor company as well as the AIFM;• JRE’s revenues largely comprise leasing revenues from the portfolio properties, which may be negatively affected by vacancies, decreases
in rent and late or missed payments by tenants;• JRE faces significant competition in seeking tenants and it may be difficult to find replacement tenants;• increases in interest rates may increase the interest expense and may result in a decline in the market price of the units;• JRE may suffer large losses if any of the properties incurs direct or indirect damage from a natural or man-made disaster;• most of the properties in the portfolio are concentrated in Tokyo and the Tokyo metropolitan area;• any inability to obtain financing for future acquisitions could adversely affect the growth of the portfolio;• JRE’s failure to satisfy a complex series of requirements pursuant to Japanese tax regulations would disqualify JRE from certain taxation
benefits and significantly reduce the cash distributions to the unitholders; and• ownership rights in some of JRE’s properties may be declared invalid or limited.
In addition, JRE is subject to the following risks:• risks related to increasing operating costs;• risks related to JRE’s dependence on the efforts of the AIFM’s key personnel;• risks related to the restrictive covenants under debt financing arrangements;• risks related to entering into forward commitment contracts;• risks related to third-party leasehold interests in the land underlying JRE properties;• risks related to holding the property in the form of stratified ownership (kubun shoyū) interests or co-ownership interests(kyōyū-mochibun);• risks related to holding the property through trust beneficiary interests;• risks related to properties not in operation (including properties under development);• risks related to the defective title, design and construction, other defects, non-conformity to the agreement or problems in
the properties;• risks related to impairment losses related to the properties;• risks related to tenant leasehold deposits and/or security deposits;• risks related to tenant’s default as a result of financial difficulty or insolvency;• risks related to the insolvency of master lessee;• risks related to the insolvency of a property seller following the purchase of a property by AIF;
• risks related to relying on expert appraisals and engineering, environmental and seismic reports as well as industry and market data;• risks related to the presence of hazardous or toxic substances in the properties, or the failure to properly remediate such substances;• risks related to strict environmental liabilities for the properties;• risks related to the amendment of applicable administrative laws and local ordinances;• risks related to infringing third party’s intellectual property rights;• risks related to holding interests in properties through preferred shares of special purpose companies (tokutei mokuteki kaisha);• risks related to holding Japanese anonymous association (tokumei kumiai) interests;• risks related to investments in trust beneficiary interests;• risks related to the tight supervision by regulatory authorities and compliance with applicable rules and regulations;

53

Japan Real Estate Investment Corporation• risks related to tax authority disagreement with the AIFM’s interpretations of the Japanese tax laws and regulations;• risks related to being unable to benefit from reductions in certain real estate taxes enjoyed by qualified J-REITs;• risks related to changes in Japanese tax laws;• risk of dilution as a result of further issuances of units;• risks related to unexpected repair costs; and• risks related to pandemics, including the COVID-19 pandemic, natural disasters and wars, including the Russian invasion of Ukraine.

2. Information Required under Article 22(2)(d) of the EU Alternative Investment Fund Managers
Directive (AIFMD)(1) ‌Material Changes in Information Listed in Article 23 of AIFMD during the Financial Period Covered by the Report (six-month fiscal
period ended September 30, 2022)
With respect to the information listed under the heading “Techniques it may employ and all associated risks” under Article 23(1)(a),the description of the risk that our properties may be damaged due to natural or man-made disasters was revised to include indirect
damages as well.
In addition, with respect to the information listed under the heading “The identity of the AIFM, AIF’s depository, auditor and anyother service providers and a description of their duties and the investors’ rights thereto” under Article 23(1)(d), since the custodian for
JRE has been changed from Sumitomo Mitsui Trust Bank, Ltd. to Mitsubishi UFJ Trust and Banking Corporation, the name of thecustodian has been revised. Also, with respect to the information listed under the heading “Description of all fees, charges and expenses
and a maximum amount which is directly / indirectly borne by the investors” under Article 23(1)(i), the description of the custodian
fees was updated due to such change of the custodian.

3. Remuneration Policy for Asset Manager Directors, Corporate Auditors and Employees
Beginning April 1, 2021 and ending March 31, 2022
1. Remuneration for Asset Manager Directors

	The total amount of remuneration, bonuses and other property benefits received by Asset Management Directors from the Asset Management Company as compensation for their duties, as well as the individual amounts each Asset Management Director receives, is decided
by a resolution of a general meeting of unitholders. The policy for Asset Manager Director remuneration and bonuses is as follows:(1) The remuneration table is determined by the Director’s position.
(2) Remuneration will be paid to full-time Directors but will not be paid to part-time Directors.
(3) Bonuses will not be paid to Directors, regardless of whether they occupy a full-time or part-time position.
2. Remuneration for Asset Manager Corporate Auditors

	The total amount of remuneration, bonuses and other property benefits received by Corporate Auditors from the Asset Management
Company as compensation for their duties, as well as the individual amounts each Corporate Auditor receives, is decided by a resolutionof a general meeting of unitholders. The policy for Corporate Auditor remuneration and bonuses is as follows:(1) Remuneration will not be paid to part-time Corporate Auditors.
(2) Bonuses will not be paid to Corporate Auditors, regardless of whether they occupy a full-time or part-time position.
Directors

Remuneration based on resolutions of
the General Meeting of Shareholders ofAsset Manager

Number of
person(s)remunerated

3

Corporate Auditors

Remuneration(in millions of JPY)

Number of
person(s)remunerated

52

0

Total

Remuneration(in millions of JPY)

Number of
person(s)remunerated

Remuneration(in millions of JPY)

0

3

52

Japan Real Estate Investment Corporation

54

3. Remuneration for Asset Manager Employees(1)	Remuneration for employees of the Asset Management Company (payment period, payment method, pay raises, promotions, etc.)
is stipulated by pay regulations and personnel evaluation regulations, and decided by objective evaluation of the process as well as
achievements that take into account the overall corporate performance.
(2) Monthly pay consists of base pay, work allowance, executive allowance and overtime pay. Pay raises are based on the results of performance evaluations that take into account management results from the previous fiscal year, and are carried out in April every year.
Promotions are dealt with in the same way.
(3) As for bonuses, the base number of multiples of monthly pay as bonuses is determined in advance by qualifications of the employee.
Increases (or decreases) in the amount paid are based on the results of performance evaluations, which take into account corporate
performance in the previous fiscal year.
All employees
Number of employees

Remuneration based on compensation rules

40

Remuneration (in millions of JPY)
Total

Fixed

Variable

351

229

122

4. Conflicts of Interest

There are potential conflicts of interest between the Company and the Asset Management Company with respect to remuneration for the
Directors, Corporate Auditors and employees of the Asset Management Company. The Company believes that the above remuneration
policy mitigates such potential conflicts. In addition, the Asset Management Company has adopted an internal set of rules that apply to
all related-party transactions, such as transactions between the Company and the Asset Management Company. These rules require strict
compliance by the Asset Management Company with laws and regulations regarding related-party transactions. They also contain specificprocedures to be followed in the event of a transaction that involves a related party, in order to implement arm’s length terms.

55Japan Real Estate Investment Corporation

4.Periodic disclosure for financial products referred to in Article 8, paragraph 1, 2 and 2a, of Regulation(EU) 2019/2088 and Article 6, first paragraph, of Regulation (EU) 2020/852
Product name: Japan Real Estate Investment Corporation
Legal entity identifier: 3538003YAIR3CBGJJ928

Japan Real Estate Investment Corporation (“JRE”) has no employees in accordance with the prohibition on having employees under the Act on
Investment Trusts and Investment Corporations of Japan, and relies on Japan Real Estate Asset Management Co., Ltd. (the “Asset Manager”) to
manage and operate the properties in the portfolio. The Asset Manager and JRE are hereinafter referred to collectively as “we,” “us” or “our” unless
noted otherwise. References to “fiscal year” or “FY” are to the 12 months began or beginning April 1 of the year specified in line with the fiscal yearof the Asset Manager, unless noted otherwise.

Environmental and/or social characteristics
Did this financial product have a sustainable investment objective?

Yes

No

It made sustainable investments with an­environmental objective: ___%

It promoted Environmental/Social (E/S) characteristics andwhile it did not have as its objective a sustainable investment,
it had a proportion of ____% of sustainable investmentsin economic activities that qualify as environmentally sustainable under the EU Taxonomyin economic activities that do not qualify as environmentally sustainable under the EU Taxonomy

with an environmental objective in economic activities that qualify
as environmentally sustainable under the EU Taxonomy
with an environmental objective in economic activities that do not
qualify as environmentally sustainable under the EU Taxonomy
with a social objectiveIt made sustainable investments with a social ­objective: ____%

I t promoted E/S characteristics, but did not make any sustainable
investments

To what extent were the environmental and/or social characteristics promoted by this financial product met?
We are committed to pursuing social sustainability, making socially responsible investments, and maximizing unitholder value by
being mindful of the environment, contributing to society, and enhancing governance. We view environmental, social, and governance(“ESG”)-related initiatives as essential for a business to be both sustainable and stable, and are committed to implementing these initiatives
in cooperation with its stakeholders. More specifically, we are committed to improving the environmental performance of our real estate
portfolio while generating greater returns on our office investments, achieving sustainable development alongside all of our stakeholders,
including unitholders, tenants, employees, suppliers and local communities, to contribute to sustainable society, and maximizing unitholder value. Our basic policy is to strictly observe legal requirements and relevant social norms, and under this basic policy, we haveestablished a Sustainability Policy to implement the initiatives described below.
• Environmental certification. To track the environmental performance of our properties, we rely on certifications issued by thirdparty organizations, such as the Development Bank of Japan’s (“DBJ”) Green Building Certification, Comprehensive Assessment
System for Built Environment Efficiency (“CASBEE”) certification, Building Energy-efficiency Labeling System (“BELS”) certification, Net Zero Energy Building (“ZEB”) certification and other equivalent certifications. As of March 31, 2022, 75.0% of ourproperties had been green-certified based on gross floor area of owned buildings. As of September 30, 2022, 74.5% of our properties were green-certified based on gross floor area of owned buildings.

Japan Real Estate Investment Corporation

56• External evaluation on ESG integration. The Asset Manager is a PRI (Principles for Responsible Investment) signatory, whichis required to report annually on the status of its ESG integration practices for evaluation, and received “4 Stars” in the “Investment and Stewardship Policy” module and the highest rating “5 Stars” in the “Real Estate” module in 2021. In addition, in 2021,
JRE received a rating of “A” in the MSCI ESG Ratings assessment where companies are rated on a seven-tier scale ranging from“AAA” (highest) to “CCC” (lowest) according to their exposure to industry—specific ESG risks and their ability to manage those
ESG risks. Moreover, JRE achieved the Institutional Shareholder Services (ISS) ESG Corporate Rating “Prime” status in March
2020 and is regarded as a sustainability leader in its industry. As of June 1, 2022, JRE was selected as a constituent of the MSCIJapan ESG Select Leaders Index.
• Accurate data collection and the PDCA cycle. We measure JRE’s energy consumption, water use, and waste production at eachof its buildings on a monthly basis. We outsource data gathering and analysis to a third party specializing in environmental
management systems (EMS) to help us execute our PDCA (plan, do, check and action) cycle. If there is a significant differencein the data as compared to those from the previous month or year, we investigate the cause by interviewing the relevant property
manager and make efforts to ensure that the data are accurate. We also constantly monitor the effects on carbon emissions ofgreen refurbishments such as LED and air conditioning upgrades. Such data and analyses are reported to the Chief Sustainability
Officer (President & CEO) on a monthly basis.
• Renewable energy. We are making efforts to accelerate the use of electricity from renewable energy recognized by RE100 (where“RE” stands for renewable electricity), which is a global corporate renewable energy initiative bringing together hundreds of large
and ambitious businesses committed to 100% renewable electricity. In May 2022, JRE joined the international initiative RE100
as the first J-REIT. We aim to make 90% of electricity (of Scope 2) used at our buildings renewable energy by FY2030 and 100%by FY2050. While as of the end of FY2020 the renewal energy rate (Scope 2) of our portfolio was 2.0%, the renewal energy rate
(Scope 2) of our portfolio had increased to 16.5% as of the end of FY2021. During the fiscal period ended September 30, 2022,
we actively promoted to switch the source of electricity used at our portfolio to renewable electricity sources. As of September 30,
2022, JRE had completed the introduction of renewable electricity into the properties where JRE owns and controls 100% of
the property.
• Incorporating ESG criteria for property acquisition. Since December 2020, we have added to JRE’s property assessment criteria
environmental factors such as green building certifications and environmental performance including CO2 emissions, when
acquiring properties.
• Sustainability-linked loans. In January 2021, JRE entered into sustainability-linked loans (“SLLs”), the first such arrangement in
the J-REIT industry. SLLs are loans that aim to facilitate and support environmentally and socially sustainable economic activity
and growth. Under this loan scheme, the borrower establishes sustainability performance targets (“SPTs”) based on its business
management strategy, and the lender incentivizes the borrower’s achievement of those targets by providing terms that vary basedon the borrower’s performance against the SPTs. Based on JRE’s target for CO2 emission reduction (the “KPI”) announced in
2020, JRE has agreed with the lender to the following SPTs for the fiscal year ending March 31, 2031: (i) reduction of CO2 emissions (carbon intensity) by 35%, as compared to the fiscal year ended March 31, 2014 and (ii) ownership of five properties withZEB certification. During the fiscal period ended on March 31, 2022, JRE actively pursued measures related to environmentallyfriendly financing and, in November 2021, JRE received another SLL with the same SPTs from the same lender. In addition,
on March 18, 2022, JRE reviewed its KPI (the “New KPI”) and changed the target for CO2 emission reduction to “reductionof CO2 emissions (absolute CO2 emission basis) by 80%, as compared to the fiscal year ended March 31, 2020.” In June 2022,
JRE agreed with the lender to the SPTs which are to be updated reflecting the New KPI and received its fourth SLL.
• Including “Green Lease” provisions in our agreements. JRE has increasingly entered into Green Leases that require tenants
to achieve certain operational improvement and install energy-efficient retrofits. Specifically, Green Leases include provisions­requiring each party to cooperate with the other party on measures to achieve sustainability targets and obtain environmental
certifications, and to share energy-consumption and water usage data. While, as of March 31, 2021, floor area percentage forbuildings leased under a green lease agreement that contains a cost recovery clause was 53.1%, such percentage had increased to 58.4%
as of March 31, 2022. (The figures for Green Leases include properties disposed during each fiscal year based on the SASB standards.)
57

Japan Real Estate Investment Corporation• Green procurement policy. We have established the Green Procurement Policy to implement certain matters set forth in the
Sustainability Policy. The Green Procurement Policy provides guidelines on the selection of products we purchase and selection
and assessment of suppliers. We promote sustainability measures across our supply chain based on this policy.
• Sustainability program for tenants. We have implemented various initiatives to increase tenants’ satisfaction with their property
and enhance the sustainability of tenants’ activities. For instance, we create and distribute a sustainability guide as part of ourefforts to promote collaboration with tenants on sustainability efforts. The sustainability guide introduces activities to improve theoffice environment, such as creating open spaces to promote communications among workers and introducing sustainable daily
efforts to reduce electricity and water consumption. We provide feedback to tenants based on energy, water usage and wasterelated data on how they may be able to reduce their environmental impact. In addition, we conduct periodic satisfaction surveys
to solicit feedback from tenants to maintain a high level of tenant satisfaction and use such feedback to improve our buildings’
sustainability. As of May 2021, our survey on tenant satisfaction covered 26.4% of our properties calculated based on the numberof buildings. By way of update, after the end of the fiscal period ended on March 31, 2022, as of the end of May 2022, such
survey on tenant satisfaction covered 56.2% of our properties calculated based on the number of buildings. We believe that thisimprovement is thanks to advances in the understanding of property managers as a result of our ongoing engagement efforts, suchas ESG seminars for property managers.
• Feedback on sustainability to property managers. We conduct periodic surveys of property managers of all of our properties basedon the questions from GRESB (Global Real Estate Sustainability Benchmark), which is an annual benchmarking assessment tomeasure ESG integration of real estate companies and funds, and we analyze sustainability efforts based on survey results, which
are shared with the property managers. Specifically, the survey includes questions on whether a property manager has introduced
any measures to reduce energy consumption, water usage and waste, whether it has implemented any sustainability measuresand conducted any satisfaction survey for tenants and whether it has engaged in any social activities with local communities.
We believe that raising property managers’ sustainability knowledge and awareness will continue to improve the sustainabilityof our entire portfolio, because they are able to work with tenants and visitors of each building to improve on the sustainability
aspects of our properties.
• Local communities. We engage in effective communication with various stakeholders, including local authorities, local residents
and visitors to our properties, and participate in a range of activities that contribute to local communities. We believe that investments in and operation of office buildings in major cities throughout Japan contribute to community development, including
urban redevelopment and revitalization. We work to improve the long-term value of our portfolio by contributing to the sustainable development of cities through cooperation with local governments, regional councils, tenants and our sponsor. Additionally,
we have established anti-disaster measures that contribute to local communities; for example, there are protocols at Akasaka Park
Building and certain other properties to allow stranded commuters in the event of a disaster to stay at those properties, andwe have an agreement with Chiyoda ward with respect to Otemachi Financial City to allow such stranded commuters to stay.
In addition, we have installed a well on the premises of Kanazawa Park Building and a regional warehouse on the premises ofHarumi Front as a disaster countermeasure. During the fiscal period ended on March 31, 2022, JRE acquired GRAND FRONTOSAKA. Notably, this property includes what is referred to as a “Knowledge Capital,” a space where business people, researchers,
creators and the community come together for the creation and interchange of ideas, and where the synthesis of knowledge leads
to the production of new value. Knowledge Capital is both the name of the facility, and the way the concept is referred to.
Within the “Knowledge Capital,” there is, among other features, work space (for researchers, creators and business owners),
space for educational functions, a showroom for future technologies and a multipurpose theater where can accommodate­wide-ranging events.
• Employee health and well-being. We believe that the physical and mental health of employees and the creation of an accommodating work environment are key to maintaining and improving our business performance. We have implemented various
measures, including creating a productive and employee-friendly workplace and promoting diverse work styles, to promote
the physical and mental health of employees, help them achieve good work-life balance, and increase employees’ motivation.

Japan Real Estate Investment Corporation

58• Communication with employees. We conduct annual anonymous surveys of all employees on a wide range of topics, including thework environment, benefits and educational support. The survey results are reported to the Asset Manager’s President & CEO
and are used for improving our activities. In addition, the HR department interviews employees to gather their opinions on
how to improve operational efficiency. Furthermore, all employees can consult with the General Manager of the Asset Manager’s
Compliance Department, a law firm, or an outside specialist on matters such as risks/problems at work, grievances and improvement requests as well as whistleblowing on illegal or unethical behaviour by officers and employees. Every employee can seek anyof the foregoing consultations anonymously, and whistleblowers are given protection under the Whistleblower Protection Act ofJapan. If deemed necessary, such matters of consultations are reported to the President & CEO, who will conduct an investigation and take measures necessary for resolution of the issue. During the fiscal period ended on March 31, 2022, we conducted
the latest survey and achieved a score of 4.4 (on a 5-point scale) for the employee satisfaction level, with a 100% response rate.

• How did the sustainability indicators perform?
We use the following indicators to measure the attainment of the environmental or social characteristics we promote:• Climate Change Initiatives. We aim to achieve a 80% reduction in total CO2 emissions from our portfolio by FY2030 comparedwith the 2019 level and net zero CO2 emissions from our portfolio by FY2050. We recognize that reduction of greenhouse gas(GHG) emissions is of critical importance to ensure the sustainability of our business. We have been working to reduce energy
consumption and GHG emissions of our portfolio by installing eco-friendly equipment such as LED lighting, which reduces
electronic usage, and energy-saving air conditioning systems. The number of properties where we had installed LED light bulbs
in certain common areas was 20 as of March 31, 2021 and 22 as of March 31, 2022. In addition, we have accelerated the useof electricity 100% from renewable energy sources, and the number of properties in which we had introduced 100% renewableelectricity was 32 as of March 31, 2022 but had grown to 58 as of September 30, 2022. In the fiscal year ended March 31, 2022,
we reduced total CO2 emissions from our portfolio by 30.46% as compared with the 2019 level and reduced total energy
consumption from our portfolio by 8.12% as compared with the 2019 level.
• Water Saving Initiatives. We aim to achieve 20% reduction in water use (intensity) in our portfolio by FY2030 compared withthe 2019 level. Some of the buildings we own are equipped with facilities for reusing rainwater and greywater, as we endeavour toreduce the consumption of tap water. In the fiscal year ended March 31, 2022, we reduced water use (intensity) by our properties
by 29.63% as compared with the 2019 level.
• Waste Management Initiatives. We aim to achieve a more than 90% waste recycling rate in our portfolio by FY2030. We have
reduced waste and promoted efficient use of resources through the promotion of reuse and recycling at our properties. In thefiscal year ended March 31, 2022, we achieved a 55.1% waste recycling rate in our portfolio.
• ESG data coverage. We measure energy consumption, water use and waste produced by each building on a monthly basis. We
outsource data gathering and data analysis to a company specializing in EMS to execute our PDCA cycle. As of September 30,
2022, we monitored and tracked energy consumption data and water withdrawal data covering 100% of the total floor area of
our properties.
• GRESB Real Estate Rating. GRESB was founded in 2009 by a group of major European pension funds who played leading roles
in launching PRI. In the 2022 GRESB Real Estate Assessment, JRE received for the fifth consecutive year “5 Stars,” which is thehighest GRESB rating (out of “5 Stars”), and also received for the seventh consecutive year “Green Star” based on its excellent
ESG management system and performance record.
• PRI assessment result. PRI signatories are required to report annually on the status of their ESG integration practices. In 2021, we
received “4 Stars” in the “Investment and Stewardship Policy” module and the highest rating “5 Stars” in the “Real Estate” module.

59

Japan Real Estate Investment Corporation• CDP score. Carbon Disclosure Project (“CDP”) is an international non-profit organization researching measures taken against
global warming by listed companies with the support of institutional investors around the world. Since 2003, CDP has sent­questionnaires every year to major companies around the world seeking information on business risks and opportunities due togreenhouse gas emissions and climate change, to assess corporate actions on climate change. JRE received the “A-” designation andwas recognized at the highest Leadership Level in the 2021 CDP Climate Change Program. By way of update, after the end of fiscal
year ended September 30, 2022, JRE has received the highest score of “A” securing a place on its annual “A List” for the first time.
• ISS ESG Corporate Rating. Founded in 1985, the Institutional Shareholder Services group of companies (ISS) empowers investors and companies to build for long-term and sustainable growth by providing high-quality data, analytics and insight. JRE
achieved the ISS ESG Corporate Rating “Prime” status in March 2020, for its industry leadership in eco-efficiency, climatechange strategy and environmental management.
• ESG Finance Award. ESG Finance Award is an award program launched in 2019 by the Ministry of the Environment of Japan,
which recognizes investors and financial institutions that have actively promoted green projects and contributed to created positive impact for the environment and society. JRE’s investment corporation bonds won bronze at the inaugural ESG FinanceAwards in February 2020.
• Signatory to international initiatives. The Asset Manager has become a signatory to and participated in the following international initiatives based on its belief that consideration of ESG factors is essential to sustainable asset value growth. The AssetManager has become a signatory to PRI, which encourages the incorporation of ESG issues into companies’ investment decisionmaking processes toward enhanced long-term investment performance and better fulfillment of its fiduciary duty. Since April
2018, our sponsor, Mitsubishi Estate Co., Ltd., became a signatory of the United Nations Global Compact (UNGC), which is avoluntary, global initiative supporting a global framework for sustainable growth through the demonstration of creative, responsible leadership, and Mitsubishi Estate Group, which includes the Asset Manager, was registered as a participant. In May 2022,
JRE has joined the international initiative RE100 as the first J-REIT and JRE’s updated CO2 emissions reduction target has been
approved by the Science Based Targets initiatives (SBTi), which is a global joint initiative by CDP, the United Nations Global
Compact, the World Resources Institute (WRI) and the World Wide Fund for Nature (WWF).
• Sustainable procurement initiatives. The Asset Manager has established the Green Procurement Policy to implement certain
matters set forth in the Sustainability Policy. The key elements of the Green Procurement Policy are as follows:	  ° Criteria for selection of products. The Asset Manager considers the following matters when it selects a product or service inaddition to required quality, function, economic efficiency and reasonability: (i) low-consumption of fossil fuels and energy,(ii) low usage and emission of substances with adverse effects on the environment and human health, (iii) designed toconserve biodiversity and ecology, (iv) designed for long-term usage, (v) designed to be reusable and recyclable, (vi) uses
reclaimed material and has environmental certification, (vii) easily disposable, and (viii) whether waste may be reduced
through reduced procurement.
	  ° Criteria for selection of suppliers. In addition to quality, price, credibility and services offered, the Asset Manager considers
whether any property manager or other supplier (i) has adopted an environmental management system such as ISO14001
and obtained third-party certification, or otherwise fulfills the ESG requirements established by the Asset Manager, (ii)selects any subcontractor by taking into account its sustainability policy and makes it comply with the Asset Manager’s ESG
requirements, (iii) establishes and follows an appropriate and employee-friendly work environment, (iv) promotes diversityof human resources and work-life balance, and prohibits unfair labor, (v) has corporate ethics guidelines including anticorruption policy, and (vi) has a disaster risk management system.
	  ° Additional criteria for selection of property manager. In addition to the criteria for selection of suppliers above, the AssetManager requires any property manager to engage in (i) energy-saving and reduction of greenhouse gas emission, (ii) appropriate water and waste management and recycling promotion, and (iii) control and reduction of hazardous chemical substances.

Japan Real Estate Investment Corporation60• ...and compared to previous periods?
See above.

• What were the objectives of the sustainable investments that the financial product partially made and how did the sustainable investment
contribute to such objectives?

Not applicable.

• How did the sustainable investments that the financial product partially made not cause significant harm to any environmental or social­sustainable investment objective?

Not applicable.
How did this financial product consider principal adverse impacts on sustainability factors?

We collect on an ongoing basis select information on our existing portfolio regarding the principal adverse impact indicators,
including exposure to fossil fuels through investment assets, exposure to energy-inefficient investment assets, GHG emissions and energy
consumption intensity. We monitor these indicators and aim to manage the risk connected to principal adverse impacts from our investment decisions in several ways, including general screening criteria and due diligence. As we actively conduct due diligence review ofproperties before acquisition and promote environmental and social initiatives as described above, we believe that any principal adverse
impacts are substantially mitigated• Exposure to fossil fuels through assets. We do not invest in real estate assets involved in the extraction, storage, transport or manufacture of fossil fuels.
• Exposure to energy-inefficient investment assets. We consider properties other than the properties that have received any of thegreen building certifications and energy-saving certifications (“Green Assets”) to be energy-inefficient. As of September 30, 2022,
74.5% of our properties were Green Assets and 25.5% of our properties were not Green Assets. As described in more detail above,
we implement as appropriate measures to reduce the environmental impact of these properties, including by obtaining environmental certifications.
• Energy consumption intensity. The amounts of energy consumption of our properties per square meter are 0.171 MWh in
FY2020 and 0.165 MWh in FY2021. The amounts of Scope 1 GHG emission of our properties were 3,304 t-CO2 in FY2020
and 3,011 t-CO2 in FY2021. Scope 2 GHG emissions of our properties were 39,748 t-CO2 in FY2020 and 32,049 t-CO2 in
FY2021. Scope 3 GHG emissions of our properties were 50,326 t-CO2 in FY2020 and 36,525 t-CO2 in FY2021.
We believe that investment decisions that negatively affect climate or other environment-related resources, or have negative implications for society, can have a significant impact to risk and value creation for our unitholders. To this end, we consider the principal adverse
impacts of our investment decisions on the above sustainability factors throughout all major steps of the investment decision and management process throughout the lifecycle of the properties in our portfolio.

61

Japan Real Estate Investment Corporation

We believe that climate change is more than an environmental issue, which has a major impact on social and industrial infrastructure, and therefore on our business activities. To maintain sustainable and stable earnings over the long term and overcome the oncomingchanges from climate change, we will need to evaluate the risks and opportunities presented by climate change, and reflect such evaluationin our operational policies and asset management. Based on the foregoing, JRE has examined the magnitude of the financial impact of risks
and opportunities presented by climate change for scenarios involving temperature increases between 4°C and 1.5°C, which are scenarios
published by international organizations and other entities that predict the impact of global warming and climate change and of thechanges that may occur in the business environment as a result of long-term policy trends in relation to climate change. We have examined
the impact of each scenario for 2030 (medium-term) and 2050 (long-term).
What were the top investments of this financial product?

Largest investments

Sector% Assets(based on acquisition price)

Country

Office properties

Real estate

100

Japan

What was the proportion of sustainability-related investments?

As of September 30, 2022, 74.5% of the properties in the portfolio were Green Assets, and 25.5% were nonqualified assets basedon gross floor area of owned buildings.

• What was the asset allocation?
Investments of JRE

74.5% is #1 Alignedwith E/S#1B Other E/S characteristics

25.5% qualifies as #2 Other			• In which economic sectors were the investments made?

JRE invests in office buildings in major cities nationwide in Japan with the goal of stable growth in value over a medium- to­long-term period.
To what extent were the sustainable investments with an environmental objective aligned with the EU Taxonomy?

Not applicable.
 hat was the share of investments made in transitional and enabling activities?
•W	  Not applicable.
			• How did the percentage of investments that were aligned with the EU Taxonomy compare with previous reference periods?

	  Not applicable.
What was the share of sustainable investments with an environmental objective not aligned with the EU Taxonomy?

	  Not applicable.
What was the share of socially sustainable investments?

	  Not applicable.

Japan Real Estate Investment Corporation

62

What investments were included under “other,” what was their purpose and were there any minimum environmental or social safeguards?

As of September 30, 2022, based on gross floor area of owned buildings, 25.5% of our properties were not Green Assets. However,
we implement as appropriate measures to reduce their environmental impact following acquisition, including by obtaining environmental
certifications, installing environmentally-friendly equipment, using renewable energy and undertaking appropriate renovations.
What actions have been taken to meet the environmental and/or social characteristics during the reference period?

As described in greater detail above, we implement various environmental initiatives at our properties including the following:• Environmental certification;• External evaluation on ESG integration;• Accurate data collection and the PDCA cycle;• Renewable energy;• Incorporating ESG criteria for property acquisition;• Sustainability-linked loans;• Including “Green Lease” provisions in our agreements;• Green procurement policy;• Sustainability program for tenants;• Feedback on sustainability to property managers;• Local communities;• Employee health and well-being; and• Communication with employees.
How did this financial product perform compared to the reference benchmark?

Not applicable.
			• How does the reference benchmark differ from a broad market index?
Not applicable.

			• How did this financial product perform with regard to the sustainability indicators to determine the alignment of the reference benchmark with the environmental or social characteristics promoted?

Not applicable.
			• How did this financial product perform compared with the reference benchmark?
Not applicable.

			• How did this financial product perform compared with the broad market index?
Not applicable.

63

Japan Real Estate Investment Corporation

Corporate Data
As of September 30, 2022

Executives
Executive Director: Yutaka Yanagisawa
Supervisory Directors: Tomohiro Okanoya
Hiroaki Takano
Paid-in Capital
JPY 497,241,216,000
Number of Units Outstanding
1,385,210
Number of Unitholders
13,821
Stock Listing
Tokyo Stock Exchange
Securities Code8952
LEI (Legal Entity Identifier)3538003YAIR3CBGJJ928

Type of Investment Corporation
Closed-end corporate type fundTransfer Agent
Mitsubishi UFJ Trust and Banking Corporation
1-4-5, Marunouchi, Chiyoda-ku, Tokyo 100-8212, Japan
AuditorErnst & Young ShinNihon LLC
Hibiya Mitsui Tower
Tokyo Midtown Hibiya
1-1-2 Yurakucho, Chiyoda-ku, Tokyo 100-0006, Japan
Incorporation
May 11, 2001
Executive Office
Japan Real Estate Investment Corporation
1-1-1, Otemachi, Chiyoda-ku, Tokyo 100-0004, JapanFor further information, please contact:
Japan Real Estate Asset Management Co., Ltd.
Planning Department
Tel: 81-3-3211-7951
E-mail: j-rea-inquiry@j-rea.co.jp

This semiannual report includes translations of documents originally filed under the Japanese 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 containedin 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,
these projections 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

64https://www.j-re.co.jp/en/