M A RC H 2 0 1 2
Semiannual Report
For the period from October 1, 2011 to March 31, 2012

J a p a n R e a l E s tat e I n v e s t m e n t C o r p o r at i o n

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

MA R C H 2 0 1 2 s e m i a n n u a l r e p o r t

Japan Real Estate Investment Corporation

Profile

Corporate Data
As of March 31, 2012

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

Executives

Transfer Agent

Executive Director:

Noritada Terasawa

Sumitomo Mitsui Trust Bank, Limited

Supervisory Directors:

Kenji Kusakabe

1-4-1, Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan		Tomohiro Okanoya		

Auditors

Paid-in Capital

Ernst & Young ShinNihon LLC¥363,371,780,000

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

Contents
Financial Highlights

p. 1

Top 10 Unitholdersp. 1

Unit Price Performancep. 1

Number of Units Outstanding

Incorporation

549,040

May 11, 2001

Number of Unitholders

Executive Office

16,202

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

Stock Listing

The Strengths of Japan Real Estate
Investment Corporation

p. 2

Portfolio Highlights

p. 3

Asset Management Summaryp. 4

Subsequent Events

p. 5

History after IPO

p. 6

To Our Unitholders

p. 8

The Portfolio of Japan Real Estate
Investment Corporation

p.12

Overview of Portfolio Properties

p.15

Financial Section

p.21

Corporate Data

p.39

Tokyo Stock Exchange

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

Securities CodePlanning Department8952

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

Type of Investment Corporation

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

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

Japan Real Estate Investment Corporation 39

Financial Highlights
Thousands of
U.S. dollars (Note 1)

Millions of yen
For the period from
October 1, 2011 toMarch 31, 2012

For the period from
April 1, 2011 to
September 30, 2011

For the period from
October 1, 2010 toMarch 31, 2011

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

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

For the period from
October 1, 2011 toMarch 31, 2012

Operating Revenues¥24,059¥22,829¥22,135¥22,112¥21,665$292,732

Operating Income

10,786

10,380

9,802

9,939

10,538131,234

Ordinary Income

8,863

8,603

7,938

8,135

8,876

107,839Net Income

8,934

8,268

7,652

8,134

8,875

108,707

Net Operating Income (NOI) (Note 2)

16,361

15,121

14,95015,091

14,414

199,073

Funds from Operations (FFO) (Note 3)

13,625

12,154

11,93812,353

11,914

165,779

14.7 times

15.2 times

16.1 times

15.1 times

16.3 times

14.7 times

FFO Multiple (Note 4)
Cash Distribution

8,888

7,753

7,652

8,134

8,826

108,151

Number of Units

549,040489,200

489,200

489,200

489,200

549,040

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

16,19015,85015,642

16,62818,043196.98Notes: 1.	Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥82.19 = US$1.00, the foreign exchange rate on March 31, 2012,
has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen amounts have been or could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.
2. NOI = Property-Related Revenues – Property-Related Expenses (excluding Depreciation)
3. FFO = Net Income + Depreciation – Gain (Loss) on Sale of Properties – Gain on Transfer of Development Rights of Floor Area
		 – Compensation for the Property Transfer
4. FFO Multiple = Unit Price at End of the Respective Term ÷ FFO per Unit (Annualized)		(Annualized portion of the calculation given in note 4 assumes a fiscal period of 182 days for the period ended March 31, 2010, 183 days for the period ended September
30, 2010, 182 days for the period ended March 31, 2011, 183 days for the period ended September 30, 2011 and 183 days for the period ended March 31, 2012.)

Top 10 Unitholders
As of March 31, 2012
Company

Japan Trustee Services Bank, Ltd. (Shintaku Acc.) .................................................................................................
The Nomura Trust and Banking Co., Ltd. (Toshin Acc.) .......................................................................................
Trust & Custody Services Bank, Ltd. (Toshin Acc.) ...............................................................................................
The Master Trust Bank of Japan, Ltd. (Shintaku Acc.) ..........................................................................................
NOMURA BANK (LUXEMBOURG) S.A. .........................................................................................................
Mitsubishi Estate Co., Ltd. ...................................................................................................................................
STATE STREET BANK AND TRUST COMPANY 505223������������������������������������������������������������������������������
THE BANK OF NEW YORK, TREATY JASDEC ACCOUNT .........................................................................
The Chugoku Bank, Ltd. ......................................................................................................................................
The Gibraltar Life Insurance Co., Ltd. (General Account J-REIT)������������������������������������������������������������������������

Units% of total units
outstanding

75,86939,18237,403
18,171
15,668
10,160
8,796
8,652
8,474
7,976

13.82%
7.14%
6.81%
3.31%
2.85%
1.85%
1.60%
1.58%
1.54%
1.45%

Unit Price Performance
TSE REIT Index

TOPIX

The Company

325%
300%
275%
250%
225%
200%
175%
150%
125%
100%
75%
50% Sept.

Mar.

2001

2002

Sept.

Mar.

2003

Sept.

Mar.

2004

Sept.

Mar.

2005

Sept.

Mar.

2006

Sept.

Mar.

2007

Sept.

Mar.

2008

Sept.

Mar.

2009

Sept.

Mar.

2010

Sept.

Mar.

2011

Sept.

Mar.

2012

Japan Real Estate Investment Corporation 1

The Strengths of Japan Real Estate Investment Corporation

Strengths

Stable Dividends

Collaboration withSponsors—Actual dividend per unit for the 21st

—E xpertise of

fiscal period:¥16,190($196.98)*—Forecasted dividend per unit for the 22nd
fiscal period:***¥15,700($191.02)* ,**T he foreign exchange rate of ¥82.19 = US$1.00, as ofMarch 31, 2012, has been used for this translation.
T he forecasted dividend was disclosed with the announcementof the 21st fiscal period earnings results on May 17, 2012.

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

Steady Growth with
Quality Portfolio

Sound Financial Base—Total acquisition price:—Highest credit ratings for a J-REIT:¥718,663 million($8,744 million)—M aintains

57(as of March 31, 2012)

S&P,

A1

from Moody’s,

A+
AA

from

from R&I—LTV (Interest-bearing debt / ­­Total assets):
high-quality office buildings—The first listed J-REIT, showing steady
performance for 21 consecutive periods

40.4%—L ong-term, fixed-interest debt ratio***:95.3%***Long-term, fixed-interest loans + Investment corporation
bonds (including current portions of Long-term, fixedinterest loans and Investment corporation bonds) / Total
interest-bearing debt

2 Japan Real Estate Investment Corporation

Portfolio Highlights

Trends in the state of portfolio management
Total leasable space (m 2)

Number ofbuildings

Total numberof tenants(Note)

Total leasable
space

September 2001

20

213

133,927m2

94.6%

March 2002

24

353

201,884m2

94.0%

September 2002

27

362

215,928m2

95.3%

March 2003

30

383

236,693m2

94.4%

September 2003

32

407

246,062m2

95.1%

March 2004

36

477

273,157m2

94.8%

September 2004

39

504

293,105m

2

93.6%

March 2005

46

669

336,026m2

97.6%

September 2005

50

814

364,610m2

98.6%

March 2006

52

866

400,090m2

98.7%

September 2006

49

835

396,173m

2

98.2%

March 2007

50

887

397,928m2

97.8%

September 2007

50

879

406,605m2

98.7%

March 2008

53

931

479,877m2

95.9%

September 2008

54

970

508,296m

2

96.1%

March 2009

55

993

516,411m2

95.5%

September 2009

55

977

516,421m2

93.3%

March 2010

55

979

566,277m2

93.0%

September 2010

55

992

567,612m

2

92.4%

March 2011

57

1,004

589,002m2

93.2%

September 2011

56

1,009

584,982m2

94.6%

October 2011

56

1,006

584,201m2

94.3%

November 2011

57

1,025

629,741m2

94.2%

December 2011

57

1,028

629,720m2

93.9%

January 2012

57

1,025

629,720m2

93.7%

February 2012

57

1,032

629,710m2

94.1%

March 2012

57

1,058

629,761m

94.7%

Occupancy
rate

2

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

100,000

200,000

300,000

400,000

500,000

600,000

700,000
Total leasable
space

Occupancy rate

21st period

60.0

65.0

70.0

75.0

80.0

85.0

90.0

95.0

100.0
Occupancy rate (%)

Portfolio breakdown
As of March 31, 2012

Properties bygeographic
regionOther major
cities14.2%

Tokyo 23 wards

78.5%

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

OthersSteel and metals 11.0%
1.0%
Ceramics
Transport 1.2%
servicesand travel

Serviceindustries

14.9%

Financeand insurance

14.4%

1.2%

Tokyo metropolitan area
excluding 23 wards

7.4%

Information
services

Staffing agencies

9.4%

1.5%

Textiles2.4%

Real estate

Machinery

8.8%

3.7%

Communications

Pharmaceuticals

4.7%

Construction

5.2%

7.5%

Retail and Electric devices
restaurants 6.8%

6.5%

Japan Real Estate Investment Corporation 3

Asset Management Summary

For the period from October 1, 2011 to March 31, 2012

Acquisition of New Real Estate
Akasaka Park Building
Property Summary
Location:
Site area:
Floor area of building:
Structure:

5-2-20 Akasaka, Minato-ku, Tokyo
14,198.20m2
97,489.16m2
Steel-framed structure, steel-framed
reinforced concrete structure, flat roof
Floors:Above ground:
30 floors
Below ground:
2 floors
Completion:
July 1993
Acquisition date:November 15, 2011
Acquisition price:¥60,800 million
Seller:Mitsubishi Estate Co., Ltd.
Property management company: Mitsubishi Estate Co., Ltd.

Issuance of New Investment Units
1. Issuance of new investment units by public offering
Number of units newly issued: 54,400
Offer price:¥672,750 per unit
Aggregate amount of issue price: ¥35,471,520,000
Offer price determination date: February 21, 2012
Payment date:February 28, 2012

2. Issuance of new investment units by third-party
allocation
Number of units newly issued: 5,440
Offer price:¥652,050 per unit
Aggregate amount of issue price: ¥3,547,152,000
Payment date:
March 27, 2012
Allottee:
SMBC Nikko Securities Inc.

Through the above-mentioned new unit issuances, JRE made repayments of short-term loans prior to their maturity in the amounts of
35,400 million yen and 3,600 million yen on February 29, 2012 and March 29, 2012, respectively.

4 Japan Real Estate Investment Corporation

Subsequent Events

After the period ended March 31, 2012

Acquisition of New Real Estate
TIXTOWER UENO
Property Summary
4-8-1 Higashi-Ueno, Taito-ku, Tokyo
2,412.80m2
23,727.48m2
Steel-framed reinforced concrete,steel-framed structure, flat roof
Floors:Above ground:18 floors
Below ground:
1 floorCompletion:
July 2010
Acquisition date:June 15, 2012
Acquisition price:¥22,000 million
Seller:Tokyo Tatemono Co., Ltd.
ITOCHU Property Development, Ltd.
Tokyo Kaihatsu K Special Purpose
Company (TMK)
Property management company: The Dai-Ichi Building Co., Ltd.

Ueno Hirokoji
Sta.

JR

t ro

pol

i ta

nE

TIXTOWER UENO

Me

Uen
o St
a.
.
o Sta
Uen

Ue
no
Sta
.

eno Sta. Keisei Main Line
Keisei U

Ueno Onshi Park

Li

ne

s

xpr
essw
ay
To
k yo
Sh
Me
ow
t ro
aS
Hi
t.
biy
aL
ine

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

A sakusa St.

Tok yoMetro Ginz a LinInaricheo Sta.

The Company decided on the acquisition of this property based particularly on an evaluation of the following three points.
Ueno Okachimachi Sta.

1. Superior location

Okachimachi
Sta.
2. Highly competitive, newly constructedbuilding• T he area surrounding Ueno Station
has flourished since historic times andis home to a number of railway lines,
including the Shinkansen bullet train,
JR lines, subways and private railways.
This area is popular among companies
as a hub for business in the Joto andJohoku districts, which has solidly
established its position as Tokyo’s
northern gateway.
• This property is highly rated in termsof transportation convenience, ideallylocated along Showa Street and a twominute walk from JR Ueno Station.

ine
Tsuku
• This property was completed in 2010 and featureso Lsuperior
capacityba Expressand
Shin-Oseismickachimachia.
environmental friendliness. With additional features that include a standardStfloorarea of2
approximately 1,087m , a ceiling height of 2,800mm plus a 100mm of OA floor allowanceand individual air conditioning, the property boasts a high scarcity premium mainly interms of size and specifications in the area surrounding Ueno Station. Given theseelements, the property is considered to be extremely competitive.

Toei Oed

3. Quality enhancement of the investment portfolio• Until now, the Company had yet to enter the area surrounding Ueno Station. Thisacquisition adds to the increased diversification of the Company’s property locations
within the Tokyo Metropolitan Area.
• The acquisition of this property is particularly beneficial not only in terms of enhancing
the quality of the Company’s investment portfolio but also because it lowers the averageage of its properties.

Japan Real Estate Investment Corporation 5

History after IPO
In September 2001, the Company became the first J-REIT in Japan listed on the Tokyo Stock
Exchange (“TSE”). Since then, the Company has targeted stable management to fulfill its goal of
maintaining and increasing dividends per unit over the medium to long term. The Company’s
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

Occupancy rate
94.6%

95.3%

94.0%

94.4%

95.1%

97.6%

94.8%

98.6%

98.7%

98.2%

93.6%

Total acquisition price(Number of properties)

Keep stable
occupancy rate

Steady growth inasset size
¥412,766 ¥418,693
million(52)

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

¥326,560¥290,510¥144,697¥92,845

million(24)¥164,277
million(27)¥183,542 ¥192,607
million(30)

million(49)

million(32)¥218,437¥239,827

million(46)

million(50)

million(39)

million(36)

million(20)

At IPO

Period ended Period ended Period ended Period ended Period ended Period ended Period ended Period ended Period ended Period ended

Sept. 2001 Mar. 2002 Sept. 2002 Mar. 2003 Sept. 2003 Mar. 2004 Sept. 2004 Mar. 2005 Sept. 2005 Mar. 2006 Sept. 2006

Dividend
per unit¥14,983

Bond issues¥12,853¥14,455

June 2002
First Investment
Corporation
Bond Issue(First fora J-REIT)¥15,117¥14,602¥14,711

Apr. 2003
Second/Third
Investment Corporation
Bond Issue¥15,824¥15,951¥16,172¥17,302

Sept. 2005
Fourth Investment Corporation
Bond Issue (First J-REIT ever toissue investment corporation bonds
without a negative pledge clauseor other financial covenants)

Listing and issuance of units
Sept. 2001
May 2002
Listed on TSE First Follow-On
as first J-REIT (First for a J-REIT)
Sept. 2001
IPO

6 Japan Real Estate Investment Corporation

Oct. 2003
Second Follow-On

Apr. 2005
Third Follow-On

Oct. 2006
Fourth Follow-On

properties already held. The size of the Company’s assets (total acquisition price) has grown from
¥92.8 billion at IPO to ¥718.6 billion as of the 21st fiscal period end due to the steady achievementof external growth strategies. However, in terms of internal growth strategies, ongoing efforts arebeing made in such areas as maintaining stable occupancy rates and reducing building management
costs.
95.9%
97.8%

96.1%

95.5%

98.7%

93.3%

93.0%

92.4%

93.2%

94.6%

94.7%
¥718,663¥641,245 ¥643,891¥518,969¥441,276 ¥446,940
millionmillion(50)

million(53)¥542,969
million(54)¥564,219 ¥564,219
million(55)

million(55)

million(55)¥660,601 ¥657,863
million(57)

million(57)

million(56)

million(55)(50)

JRE’s asset size has
increased sevenfold since
being listed ten years ago.

Period ended Period ended Period ended Period ended Period ended Period ended Period ended Period ended Period ended Period ended Period ended

Mar. 2007 Sept. 2007 Mar. 2008 Sept. 2008 Mar. 2009 Sept. 2009 Mar. 2010 Sept. 2010 Mar. 2011 Sept. 2011 Mar. 2012¥17,521¥18,500¥29,223¥19,072

June 2007
Fifth/Sixth Investment
Corporation Bond Issue¥19,020¥19,198¥18,043¥16,628 ¥15,642¥15,850¥16,190

Apr. 2010
Seventh Investment
Corporation Bond Issue
July 2010
Eighth Investment
Corporation Bond Issue

Mar. 2008
Fifth Follow-On

Dec. 2009
Sixth Follow-On

Feb. 2012
Seventh Follow-On

Japan Real Estate Investment Corporation 7

To Our Unitholders

8 Japan Real Estate Investment Corporation

Amid persistently severe operating conditions, the Company continued to implementa management policy that emphasizes external growth, acquiring the prime largesized property, Akasaka Park Building, in November 2011 and successfully issuing
new investment units in February 2012.
BUSINESS PERFORMANCEFOR THE 21ST FISCAL PERIOD
Summary of Financial Results and Cash Dividend
In the 21st fiscal period (October 1, 2011 to March 31, 2012),
Japan Real Estate Investment Corporation (“the Company”)
recorded operating revenues totaling 24,059 million yen, up
5.4% compared with the previous period. On the earnings
front, operating income increased 3.9% to 10,786 million yen.
After deducting expenses for interest payments on loans andother costs, ordinary income rose 3.0% to 8,863 million yen
and net income improved 8.1% to 8,934 million yen.
Turning to dividends, the Company maintains the total
amounts of reserve for reduction entry and income taxes
deferred related to reserve for reduction entry accumulated in
the previous fiscal period, both of which were recorded inaccordance with stipulations under Article 67-15 of the Special
Taxation Measures Law of Japan, as well as based on the“Special Provisions for Taxation in the case of Advance
Acquisition of Land, etc. in 2009 and 2010” under Article 66-2
of said law (which is intended to ensure that a stable cash dividend level is maintained), and allocates the adjusted amountof deferred tax liabilities to reserve for reduction entry, reflecting changes in corporate tax rates. Therefore, the Company has
determined to pay out cash dividends of 8,888,957,600 yen
from retained earnings for the period under review, which must
be divisible by 549,040—the number of units outstanding asof March 31, 2012. Accordingly, the per-unit cash dividend
totaled 16,190 yen.

Operating Environment and Performance
During the period under review, conditions in the Japanese
economy remained severe due to a delay in full-fledged economic recovery. Despite a faster-than-anticipated restorationof the supply capacity disrupted by the Great East Japan
Earthquake, such economic difficulties were mainly attributable to lackluster demand for disaster-related reconstruction
despite positive expectations due to stalled government measures; flood damage in Thailand; and the extremely strong yen,reflecting sovereign risk in Europe.
In the market for leased office space, occupancy rates
for office buildings in Tokyo stopped falling for the most part.
However, rent levels remained on a downward trend due toongoing high vacancy rates amid an excessive supply of newbuildings. In regional business areas, although there were signs

that occupancy rates in certain urban areas were gradually
beginning to improve, the overall trend of high vacancy rates
coupled with low rent levels prevailed amid stagnant demandfor office space.
In the property market, difficulties remained in establishing common ground regarding prices with buyers acting
more conservatively, in line with actual market conditions forleased office space, and sellers pinning expectations on arebound in economic and property market conditions. In addition, the transaction volume failed to rally due to an accommodative fund raising environment that encouraged potential
sellers to hold on to their properties.
Amid such harsh circumstances, the Company strived
to improve occupancy rates by aggressively promoting leasing
activities that take into account market trends. As a result of
these activities, the Company’s occupancy rate edged up from
94.6% as of September 30, 2011 to 94.7% as of March 31,
2012. In addition, as part of its external growth strategy, theCompany worked to strengthen its portfolio through the acquisition of the Akasaka Park Building, a highly competitive,
large-sized office building located in central Tokyo.
As a result of the above, the Company’s portfolio as ofMarch 31, 2012, consisted of 57 office buildings with a totalacquisition price of 718,663 million yen. Total leasable spacestood at 629,761 m2, with a total of 1,058 tenants.

Financial Activities
To fund the repayment of existing loans (including those to be
repaid prior to maturity), the Company procured loans totaling
7,500 million yen on November 1, 2011; 2,000 million yen on
December 15, 2011; and 7,000 million yen on March 26, 2012.
Moreover, the Company procured 37,000 million yen
in short-term loans and 17,000 million yen in long-term loanson November 15, 2011 to fund the acquisition of the Akasaka
Park Building. At the same time, the Company decided to issue
54,400 new investment units through public offering and
5,440 new investment units through third-party allocation
during the period under review. Through these new unit issuances, the Company procured 35,471 million yen on February 28,
2012 and 3,547 million yen on March 27, 2012, respectively.
The Company made repayments of short-term loans prior totheir maturity in the amounts of 35,400 million yen and 3,600
million yen on February 29, 2012 and March 29, 2012, respectively, with funds procured through the issuance of the above
investment units.
Japan Real Estate Investment Corporation 9

The Company intends to turn such severe conditions into an opportunity, shifting its
focus towards external growth based on overall growth that will compensate for afall in internal growth. Through such actions, the Company will work to increase
revenues and earnings and, in turn, maintain and improve per-unit cash dividends.
As a result of these financing activities, as of March 31,
2012, the Company’s total interest-bearing debt amounted to284,300 million yen. This amount consists of long-term loans
totaling 215,800 million yen (including a current portion totaling 50,100 million yen), short-term loans totaling 13,500 million
yen, and investment corporation bonds totaling 55,000 million
yen (including a current portion totaling 10,000 million yen).
As of March 31, 2012, the Company’s long-term, fixedinterest debt ratio (ratio of long-term, fixed-interest debt, including the current portion of long-term loans and investment corporation bonds, to total interest-bearing debt) stood at 95.3%,
and the LTV ratio (ratio of interest-bearing debt to total assets)was 40.4%. As these figures indicate, the Company has been able
to maintain a sound and conservative financial standing.
The Company’s credit ratings as of the date of thisreport were as follows.
Credit Rating Agency

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

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

Moody’s Japan K.K.

Rating: A1; Outlook: Negative

Rating and Investment Information, Inc.

Rating: AA; Outlook: Stable

OUTLOOK
Trends in the Office Leasing Market
The Japanese economy is anticipated to gradually recover since
numerous negative factors continuing from the previous year—
particularly the impact of the Great East Japan Earthquake—
have become less prominent. However, recessionary risks
remain due to various factors that include ongoing power supply problems, a slowing of overseas economies, an exacerbationof the European financial crisis, the renewed strength of the
yen and higher oil prices.
In the market for leased office space, vacancy rates areprojected to remain at current levels for the foreseeable future,reflecting low expectations that demand will rapidly increase.
However, market rent levels are expected to bottom out in thelatter half of 2012 thanks to efforts to promote adjustments tocurrent rent levels to increase affordability for tenants as well
as a decrease in the supply of new buildings.
Regarding property markets, the Company believes thatan increase in sales property information will continue to beunlikely for the time being due to a fund-raising environmentthat remains accommodative. In order to continue steadily

10 Japan Real Estate Investment Corporationacquiring prime properties, the Company considers it important to maintain agile and accurate decision making. Such decision making is facilitated by the detailed analysis of leasing
markets and the acquisition of sales information through avariety of property information channels.

Growth Strategies
In accordance with the aforementioned, the Company adheresto the following management policies in order to maintain andimprove profitability.
First, the Company works to strengthen the relationship of trust with existing tenants. As of March 31, 2012, theCompany had contracts with 11 property management companies. Most of these companies were already handling themanagement of their buildings before the Company acquired
them and had thus built relationships of trust with their tenants. The Company will work to further strengthen these relationships by anticipating tenants’ needs and providing tailoredservices to increase tenant satisfaction, thereby maintaining
occupancy rates and disincentivizing rent reduction requests.
Second, we endeavor to implement effective initiatives
to fill vacancies in a prompt manner. In cooperation with theproperty management companies mentioned above, theCompany actively seeks the most appropriate tenants for each
property, based on location and features, in order to fill current
and anticipated vacancies as rapidly as possible. Furthermore,
the Company works to uncover additional needs for floor spaceamong existing tenants.
Third, we constantly strive to stabilize our revenues andearnings. With the aim of stabilizing revenues and earnings, theCompany endeavors to secure fixed- and long-term leasing
agreements with its large-scale tenants.
Lastly, we aim to continuously reduce management
costs. The Company has introduced sound competitive principles for its multiple property management companies to follow and is revamping their management systems and cost structures on an ongoing basis.
With regard to the acquisition of properties, theCompany has adopted the following policies.
First, to access important information quickly theCompany continues to enhance its property information channels while working to develop new channels.
Second, in its acquisition activities, the Company continues to meticulously monitor and examine economic, physical and legal factors, including rights-related issues, when

Noritada Terasawa (Left)
Executive Director of Japan Real Estate Investment Corporation

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

selecting properties. In particular, with regard to the structureof buildings, the Company requires buildings to meet or exceed
new earthquake-resistance standards and exclusively targets
properties capable of maintaining a competitive edge in termsof the facilities they offer over the medium to long term.
Third, in accordance with its acquisition policies, theCompany maintains its portfolio so that 70% or more of the portfolio properties are located within the Tokyo metropolitan area,with the remaining 30% or fewer located in other major cities.
Under these policies, the Company will continue toacquire highly competitive properties. At the same time, inorder to further enhance the quality of its portfolio, theCompany will remain open to the replacement of portfolio
properties with due consideration given to timing.

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

24,370 million yen, operating income totaling 10,240 million
yen, ordinary income totaling 8,330 million yen, and net
income totaling 8,310 million yen. The Company plans to
declare a cash dividend totaling 15,140 yen per unit.
Actual operating revenues, operating income, ordinary
income, net income and cash dividends per unit may varydepending on circumstances.
Since the beginning of 2012, there have been indications that an upswing in the economy is finally about to takeplace. In addition, there have been recent discussions in the
media that corporate performance in certain industries is on arecovery track.
Under these circumstances, although the market forleased office space is gradually recovering from the worst of theeconomic downturn, there are no signs that market rent levels
have ceased falling, which is partly attributable to the impactof the excess supply of properties in central Tokyo. Despite
persistently severe operating conditions due to these factors,
the Company successfully issued new investment units in
February 2012.
In addition, the Company acquired the prime largesized property, Akasaka Park Building, in the 21st fiscal period.
Accordingly, the Company will continue implementing a management policy that emphasizes continual external growth inlight of the ongoing downward pressure on current rent levels.
You have placed considerable trust in us. Going forward,
we seek to continue earning that trust through sustainablegrowth and performance. Thank you for your steadfast support.

Performance Forecasts for the 22nd and 23rd Fiscal
Periods
For the 22nd fiscal period (April 1, 2012 to September 30,2012), the Company forecasts operating revenues totaling
24,050 million yen, operating income totaling 10,220 million
yen, ordinary income totaling 8,350 million yen, and net
income totaling 8,430 million yen. The Company plans to
declare a cash dividend totaling 15,700 yen per unit.
For the 23rd fiscal period (October 1, 2012 to March 31,2013), the Company forecasts operating revenues totaling

Noritada Terasawa
Executive Director of Japan Real Estate Investment Corporation

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

Japan Real Estate Investment Corporation 11

The Portfolio of Japan Real Estate Investment Corporation As of March 31, 2012
Properties Roster
Location

Type ofspecified asset

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

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

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

 I- 9I- 10I- 11
I- 12
I- 13
I- 14

Yurakucho Denki Building
Kodenmacho Shin-Nihonbashi Building
Kyodo Building (Kayabacho 2Chome)
Burex Kyobashi Building
Ginza Sanwa Building
Ryoshin Ginza East Mirror Building

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

Real property
Trust
Trust
Real property
Real property
Real property

 I- 15
I- 16
I- 17
I- 18Harumi Center Building
Akasaka Park Building
Aoyama Crystal Building
Shiodome Building

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

Real property
Real property
Real property
Trust I- 19
I- 20I- 21
I- 22

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

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

Trust
Trust
Real property
Real property

 I- 23
I- 24
I- 25
I- 26
I- 27
I- 28
I- 29I- 30I- 31

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

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

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

Harmony Tower
I- 32
Otsuka Higashi-Ikebukuro BuildingI- 33
Ikebukuro 2Chome BuildingI- 34
Ikebukuro YS BuildingI- 35
Tokyo metropolitan area, excluding 23 wards
Hachioji First SquareII- 1

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

Real property
Trust
Trust
Real property

10/31/2002
02/24/2006
05/31/2002
08/15/2002
04/01/2005
03/28/2007
07/29/2005
01/31/2005
04/03/2006
total
08/01/2003
09/25/2001
03/01/2011
07/22/2002
03/10/2005
03/15/2005
05/24/2010
total
12/18/2007
11/15/2011
03/14/2003
12/19/2008
01/15/2010
total
09/10/2001
09/25/2001
09/01/2004
09/13/2005
03/24/2010
total
11/01/2004
02/01/2011
09/10/2001
03/24/2004
04/01/2004
11/22/2002
10/09/2003
11/30/2001
11/14/2003
04/01/2004
total
02/28/2005
09/25/2001
09/25/2001
08/02/2004

5,000
81,555
9,520
4,810
14,70044,7007,000
10,20010,70020,900
7,200
3,173
4,410
5,250
16,830
5,353
2,645
7,999
26,80060,8007,680
21,25054,60075,850
4,859
2,808
7,830
9,350
22,426
31,7765,500
12,300
5,123
6,670
8,700
4,885
12,20034,600
3,740
360
4,100
8,500
3,541
1,728
4,500

Hachioji, Tokyo

Real property II- 2

Saitama, Saitama Prefecture

Real property

MM Park Building II- 3
Kawasaki Isago BuildingII- 4
Musashi Kosugi STM BuildingII- 5
Other major cities
8.3 Square Kita BuildingIII- 1
Jozenji Park BuildingIII- 2
Sendai Honcho Honma BuildingIII- 3

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

Real property
Trust
Real property

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

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

Sapporo, Hokkaido
Sendai, Miyagi Prefecture
Sendai, Miyagi Prefecture

Real property
Real property
Trust

Kanazawa Park Building

Kanazawa, Ishikawa Prefecture

Real property

 III- 5

Nishiki Park Building

Nagoya, Aichi Prefecture

Real property

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

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

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

Real property
Real property
Real property
Real property
Trust
Real property

 III- 12

Midosuji Daiwa Building

Osaka, Osaka Prefecture

Trust III- 13
III- 14

Lit City Building
NHK Hiroshima Broadcasting Center Building

Okayama, Okayama Prefecture
Hiroshima, Hiroshima Prefecture

Real property
Real property

 III- 15
III- 16
III- 17

Tosei Tenjin Building
Tenjin Crystal Building
Hinode Tenjin Building

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

Real property
Real property
Trust

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

(1.0%)(0.1%)

III- 406/01/2007
01/31/2005
09/25/2001
06/28/2006
total
02/28/2002
03/03/2003
total
10/02/2006
11/01/2006
total
09/22/2006
09/10/2001
08/08/2003
12/20/2001
09/01/2008
09/25/2001
12/26/2003
total
09/25/2001
02/28/2002
total
02/01/2006
03/25/2004
03/03/2008
total
09/25/2001
06/01/2005
09/10/2001

718,663(100.0%)

NumberName of building

Saitama Urawa Building

Total

12 Japan Real Estate Investment Corporation

Acquisition price(¥ mil)(0.7%)(11.3%)(1.3%)(0.7%)(2.0%)(6.2%)(1.0%)(2.9%)(1.0%)(0.4%)(0.6%)(0.7%)(2.3%)(1.1%)(3.7%)(8.5%)(1.1%)(10.6%)(0.7%)(0.4%)(1.1%)(4.4%)(0.8%)(1.7%)(0.7%)(0.9%)(1.2%)(0.7%)(1.7%)(4.8%)(0.6%)(1.2%)(0.5%)(0.2%)(0.6%)(0.8%)(0.4%)(5.2%)(0.5%)(0.6%)(0.4%)(0.6%)(0.7%)(0.2%)(2.0%)(0.3%)(0.4%)(3.3%)(0.6%)(2.0%)(0.6%)(0.4%)(0.2%)(0.7%)(0.5%)

Percentage ofownership of thebuilding

Completion

Appraisal value atthe end of
period (¥ mil)Leasable space

Leased space

Occupancy
rate

Numberof tenants

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

1985
2006
1998
1993
2004
2003
2005
1966

6,160
68,7007,810
4,290
16,30045,8006,390
29,6004,791m2
25,678m2
6,269m2
3,687m2
9,316m2
11,855m2
4,495m2
20,871m2

4,791m2
25,678m2
5,613m2
3,561m2
9,316m2
11,855m2
4,495m2
19,540m2

100.0%
100.0%
89.5%
96.6%
100.0%
100.0%
100.0%
93.6%

1
4
7
10
1
10
1
38

223
1,671
181
121
479
1,026
162
993

(0.9%)(6.9%)(0.8%)(0.5%)(2.0%)(4.3%)(0.7%)(4.1%)

10.78%
100.0%
100.0%
100.0%
70.95%
100.0%

1975
1991
1991
2002
1982
1998

7,430
2,980
4,780
6,330
14,6005,040

4,694m2
3,897m2
4,538m2
4,279m2
4,329m2
4,255m2

3,727m2
3,686m2
4,336m2
4,279m2
4,290m2
4,255m2

79.4%
94.6%
95.5%
100.0%
99.1%
100.0%

12
9
9
1
10
12

240
114
161
150
369
135

(1.0%)(0.5%)(0.7%)(0.6%)(1.5%)(0.6%)

100.0%
100.0%
100.0%
40.0%

2006
1993
1982
2007

20,00062,5007,240
78,00020,812m2
45,009m2
4,898m2
32,155m2

18,470m2
41,187m2
4,898m2
31,650m2

88.7%
91.5%
100.0%
98.4%

6
23
6
32

639
1,996
218
2,203

(2.7%)(8.3%)(0.9%)(9.2%)

100.0%
100.0%
100.0%
31.325%

1984
1992
1989
1996

5,910
2,610
5,740
30,4009,606m2
4,062m2
6,134m2
35,043m2

9,401m2
4,062m2
6,134m2
31,493m2

97.9%
100.0%
100.0%
89.9%

20
8
10
93

296
117
169
1,604

(1.2%)(0.5%)(0.7%)(6.7%)

100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
12.29939%

2004
2005
1989
1974
2003
1987
1998
1976
1994

5,600
15,170
5,330
6,730
9,870
6,120
10,20042,0002,740

5,205m2
16,856m2
7,754m2
7,356m2
7,745m2
3,147m2
5,558m2
29,660m2
2,462m2

5,205m2
16,856m2
7,306m2
6,264m2
7,745m2
3,147m2
5,558m2
26,236m2
2,462m2

100.0%
100.0%
94.2%
85.2%
100.0%
100.0%
100.0%
88.5%
100.0%

4
1
16
19
9
4
7
56
5

192
669
248
282
293
192
342
1,239
75

(0.8%)(2.8%)(1.0%)(1.2%)(1.2%)(0.8%)(1.4%)(5.2%)(0.3%)

29.253305%
100.0%
100.0%
100.0%

1997
1987
1990
1989

9,630
3,820
1,610
4,120

10,929m2
7,215m2
2,186m2
5,932m2

10,334m2
7,215m2
2,186m2
5,537m2

94.6%
100.0%
100.0%
93.4%

14
7
9
11

347
174
71
186

(1.4%)(0.7%)(0.3%)(0.8%)

80.4%

1996

4,170

10,068m2

9,433m2

93.7%

39

235

(1.0%)

100.0%

1990

2,030

4,510m2

4,492m2

99.6%

14

109

(0.5%)

100.0%
100.0%
34.32%

2007
1990
1990

35,6002,730
3,560

38,496m2
6,831m2
5,378m2

37,550m2
6,325m2
5,378m2

97.5%
92.6%
100.0%

26
13
23

1,365
140
145

(5.7%)(0.6%)(0.6%)

100.0%
50.0%
100.0%

2006
1993
1991

6,630
880
2,470

12,265m2
2,518m2
6,241m2

12,265m2
2,518m2
5,286m2

100.0%
100.0%
84.7%

8
18
18

322
66
118

(1.3%)(0.3%)(0.5%)

89.0%

1991

5,330

20,820m2

18,419m2

88.5%

73

435

(1.8%)

57.04651%

1995

3,620

8,056m2

7,468m2

92.7%

56

225

(0.9%)

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

1987
1987
1991
1982
1995
1992

1,310
12,6001,040
1,770
16,3003,580

3,911m2
21,624m2
3,448m2
6,802m2
28,414m2
11,556m2

3,121m2
20,963m2
2,992m2
5,514m2
26,178m2
11,350m2

79.8%
96.9%
86.8%
81.1%
92.1%
98.2%

12
29
13
30
41
20

87
592
64
103
730
224

(0.4%)(2.5%)(0.3%)(0.4%)(3.0%)(0.9%)

100.0%

1991

14,10020,450m2

19,054m2

93.2%

33

573

(2.4%)

27.7488%
48.753%

2005
1994

4,200
2,280

9,965m2
9,860m2

9,591m2
9,860m2

96.2%
100.0%

41
12

255
254

(1.1%)(1.1%)

100.0%
100.0%
74.4844%

1992
1993
1987

1,290
2,470
3,720

4,000m2
5,973m2
5,868m2

4,000m2
5,773m2
5,868m2

100.0%
96.6%
100.0%

19
29
6

86
148
176

(0.4%)(0.6%)(0.7%)

693,230

629,761m2

596,194m2

94.7%

1,058

24,059(100.0%)

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

Major Tenants Roster
Rank

1
2
3
4
5
6
7
8
9
10

Name of tenant

Name of building

MSD K.K.
Kitanomaru Square (also includes 1 other building)General Electric Company
Akasaka Park Building
Mitsubishi Estate Co., Ltd.
Osaki Front Tower (also includes 1 other building)
NTT Communications Corporation
Shiodome Building
HAKUHODO DY HOLDINGS INCORPORATED Akasaka Park Building
Mitsubishi UFJ Trust and Banking Corporation
Mitsubishi UFJ Trust and Banking Building
Seven & i Holdings Co., Ltd.
Nibancho Garden
Space Design, Inc.
Burex Kojimachi Building (also includes 1 other building)
JSOL Corporation
Harumi Center Building(Note)MM Park Building (also includes 2 other buildings)

Leased space% of totalleased space

25,491m2
18,842m2
17,213m2
11,813m2
11,059m2
10,598m2
9,316m2
8,774m2
8,567m2
7,150m2

4.3%
3.2%
2.9%
2.0%
1.9%
1.8%
1.6%
1.5%
1.4%
1.2%

Note: Not disclosed as per tenant request

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

III-1 to III-17: Other major cities

III-1

II-2
II-1
III-2

III-3

II-5
II-3

III-4

II-4

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

I-1 to I-35: Tokyo
23 wards

I-34
I-35 I-33
I-32

I-2

I-1

I-3
I-5
I-21
I-4
I-26
I-10
I-7
I-22
I-27 I-28 I-8 I-6 I-13 I-12
I-29 I-16 I-9 I-14 I-11
I-30
I-18 I-15
I-17
I-19
I-31
I-20
I-23
I-24

I-25

Tokyo Station

14 Japan Real Estate Investment Corporation

Overview of Portfolio Properties As of March 31, 2012
Note: C oncerning real estate or trust beneficiary rights in trust of real estate of which the Company is a partial owner through co-ownership or compartmentalized building units or
quasi-co-ownership, the figures for “Site area” and “Floor area of building” represent total site area and total floor space for the entire building.

Genki Medical
Plaza

Kitanomaru
SquareMD Kanda
Building

 I-1

 I-2

 I-3

Location:
Chiyoda-ku, Tokyo
Site area:
1,052.80m2
Floor area of building: 6,722.02m2
Structure:
Above ground: 8 floors
Below ground: 1 floor
Completion:
September 1985

Location:
Chiyoda-ku, Tokyo
Site area:
5,821.03m2
Floor area of building: 57,279.20m2
Structure:
Above ground: 26 floors
Below ground: 2 floors
Completion:
January 2006

Location:
Chiyoda-ku, Tokyo
Site area:
1,085.83m2
Floor area of building: 8,185.11m2
Structure:
Above ground: 10 floors
Completion:
February 1998

Kandabashi Park
Building

Nibancho Garden

Mitsubishi UFJ
Trust andBanking Building

 I-4

 I-5

 I-6

Location:
Chiyoda-ku, Tokyo
Site area:
1,218.56m2
Floor area of building: 9,370.25m2
Structure:
Above ground: 10 floors
Below ground: 1 floor
Completion:
July 1993

Location:
Chiyoda-ku, Tokyo
Site area:
11,003.87m2
Floor area of building: 57,031.06m2
Structure:
Above ground: 14 floors
Below ground: 2 floors
Completion:
April 2004

Location:
Chiyoda-ku, Tokyo
Site area:
8,100.39m2
Floor area of building: 108,171.67m2
Structure:
Above ground: 29 floors
Below ground: 4 floors
Completion:
February 2003

Burex Kojimachi
Building

Sanno Grand
Building

Yurakucho Denki
Building

 I-7

 I-8

 I-9

Location:
Chiyoda-ku, Tokyo
Site area:
967.67m2
Floor area of building: 6,526.64m2
Structure:
Above ground: 11 floors
Below ground: 1 floor
Completion:
January 2005

Location:
Chiyoda-ku, Tokyo
Site area:
3,663.93m2
Floor area of building: 33,875.95m2
Structure:
Above ground: 10 floors
Below ground: 3 floors
Completion:
September 1966

Location:
Chiyoda-ku, Tokyo
Site area:
5,749.91m2
Floor area of building: 70,287.65m2
Structure:
Above ground: 20 floors
Below ground: 4 floors
Completion:
September 1975

Kodenmacho
Shin-Nihonbashi
Building

Kyodo Building(Kayabacho
2Chome)Burex Kyobashi
Building

 I-10 I-11

 I-12

Location:
Chuo-ku, Tokyo
Site area:
773.28m2
Floor area of building: 5,822.88m2
Structure:
Above ground: 9 floors
Below ground: 1 floor
Completion:
November 1991

Location:
Chuo-ku, Tokyo
Site area:
754.26m2
Floor area of building: 5,505.80m2
Structure:
Above ground: 9 floors
Below ground: 1 floor
Completion:
April 1991

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

Japan Real Estate Investment Corporation 15

Ginza Sanwa
Building

Ryoshin Ginza
East Mirror
Building

Harumi Center
Building

 I-13

 I-14

 I-15

Location:
Chuo-ku, Tokyo
Site area:
1,119.27m2
Floor area of building: 8,851.00m2
Structure:
Above ground: 9 floors
Below ground: 2 floors
Completion:
October 1982

Location:
Chuo-ku, Tokyo
Site area:
864.91m2
Floor area of building: 5,751.68m2
Structure:
Above ground: 8 floors
Below ground: 1 floor
Completion:
October 1998

Location:
Chuo-ku, Tokyo
Site area:
4,664.63m2
Floor area of building: 26,447.27m2
Structure:
Above ground: 10 floors
Completion:
November 2006

Akasaka Park
Building

Aoyama Crystal
Building

Shiodome
Building

 I-16

 I-17

 I-18Location:
Minato-ku, Tokyo
Site area:
14,198.20m2
Floor area of building: 97,489.16m2
Structure:
Above ground: 30 floors
Below ground: 2 floors
Completion:
July 1993

Location:
Minato-ku, Tokyo
Site area:
989.30m2
Floor area of building: 8,094.36m2
Structure:
Above ground: 10 floors
Below ground: 4 floors
Completion:
December 1982

Location:
Minato-ku, Tokyo
Site area:
12,046.00m2
Floor area of building: 115,930.83m2
Structure:
Above ground: 24 floors
Below ground: 2 floors
Completion:
December 2007

Shiba 2Chome
Daimon Building

Cosmo
Kanasugibashi
Building

Shinwa Building I-19

 I-20 I-21

Location:
Minato-ku, Tokyo
Site area:
2,820.90m2
Floor area of building: 16,235.10m2
Structure:
Above ground: 8 floors
Below ground: 2 floors
Completion:
March 1984

Location:
Minato-ku, Tokyo
Site area:
758.54m2
Floor area of building: 5,420.93m2
Structure:
Above ground: 9 floors
Below ground: 1 floor
Completion:
March 1992

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

Tokyo Opera
City Building

Higashi-Gotanda
1Chome Building

Osaki Front
Tower

 I-22

 I-23

 I-24

Location:
Shinjuku-ku, Tokyo
Site area:
18,236.94m2
Floor area of building: 232,996.81m2
Structure:
Above ground: 54 floors
Below ground: 4 floors
Completion:
July 1996

16 Japan Real Estate Investment Corporation

Location:
Shinagawa-ku, Tokyo
Site area:
1,539.95m2
Floor area of building: 6,460.39m2
Structure:
Above ground: 8 floors
Completion:
July 2004

Location:
Shinagawa-ku, Tokyo
Site area:
3,684.38m2
Floor area of building: 23,673.92m2
Structure:
Above ground: 15 floors
Completion:
June 2005

Omori-Eki
Higashiguchi
Building

NipponBrunswick
Building

Yoyogi 1Chome
Building

 I-25

 I-26

 I-27

Location:
Ota-ku, Tokyo
Site area:
2,199.30m2
Floor area of building: 14,095.34m2
Structure:
Above ground: 11 floors
Below ground: 2 floors
Completion:
July 1989

Location:
Shibuya-ku, Tokyo
Site area:
1,497.52m2
Floor area of building: 11,957.38m2
Structure:
Above ground: 9 floors
Below ground: 2 floors
Completion:
March 1974

Location:
Shibuya-ku, Tokyo
Site area:
1,755.75m2
Floor area of building: 10,778.10m2
Structure:
Above ground: 14 floors
Below ground: 1 floor
Completion:
October 2003

da Vinci
Harajuku

Jingumae Media
Square Building

Shibuya CrossTower

 I-28

 I-29

 I-30Location:
Shibuya-ku, Tokyo
Site area:
839.66m2
Floor area of building: 4,359.20m2
Structure:
Above ground: 7 floors
Below ground: 2 floors
Completion:
December 1987

Location:
Shibuya-ku, Tokyo
Site area:
2,124.59m2
Floor area of building: 9,420.42m2
Structure:
Above ground: 9 floors
Below ground: 2 floors
Completion:
March 1998

Location:
Shibuya-ku, Tokyo
Site area:
5,153.45m2
Floor area of building: 61,862.33m2
Structure:
Above ground: 32 floors
Below ground: 3 floors
Completion:
April 1976

Ebisu Neonato

Harmony Tower

Otsuka HigashiIkebukuro
Building

 I-31

 I-32

 I-33

Location:
Shibuya-ku, Tokyo
Site area:
5,005.70m2
Floor area of building: 36,598.38m2
Structure:
Above ground: 18 floors
Below ground: 2 floors
Completion:
October 1994

Location:
Nakano-ku, Tokyo
Site area:
10,020.52m2
Floor area of building: 72,729.31m2
Structure:
Above ground: 29 floors
Below ground: 2 floors
Completion:
March 1997

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

Ikebukuro
2Chome Building

Ikebukuro YS
Building

Hachioji First
Square I-34

 I-35

 II-1

Location:
Toshima-ku, Tokyo
Site area:
397.26m2
Floor area of building: 3,157.51m2
Structure:
Above ground: 9 floors
Below ground: 1 floor
Completion:
May 1990

Location:
Toshima-ku, Tokyo
Site area:
1,384.56m2
Floor area of building: 7,464.64m2
Structure:
Above ground: 8 floors
Below ground: 1 floor
Completion:
December 1989

Location:
Hachioji, Tokyo
Site area:
2,989.33m2
Floor area of building: 18,329.98m2
Structure:
Above ground: 12 floors
Below ground: 1 floor
Completion:
July 1996

Japan Real Estate Investment Corporation 17

Saitama Urawa
Building

MM Park
Building

Kawasaki Isago
Building II-2

 II-3 II-4

Location:
Saitama, Saitama Prefecture
Site area:
1,533.06m2
Floor area of building: 6,258.59m2
Structure:
Above ground: 8 floors
Completion:
March 1990

Location:
Yokohama, Kanagawa Prefecture
Site area:
6,825.77m2
Floor area of building: 49,037.51m2
Structure:
Above ground: 15 floors
Below ground: 1 floor
Completion:
December 2007

Location:
Kawasaki, Kanagawa Prefecture
Site area:
1,594.50m2
Floor area of building: 9,623.83m2
Structure:
Above ground: 12 floors
Below ground: 1 floor
Completion:
December 1990

Musashi Kosugi
STM Building

8.3 Square Kita
Building

Jozenji Park
Building II-5

 III-1

 III-2

Location:
Kawasaki, Kanagawa Prefecture
Site area:
3,552.15m2
Floor area of building: 22,839.61m2
Structure:
Above ground: 8 floors
Below ground: 2 floors
Completion:
October 1990

Location:
Sapporo, Hokkaido
Site area:
5,541.60m2
Floor area of building: 16,096.97m2
Structure:
Above ground: 11 floors
Below ground: 1 floor
Completion:
December 2006

Location:
Sendai, Miyagi Prefecture
Site area:
1,566.68m2
Floor area of building: 7,648.33m2
Structure:
Above ground: 8 floors
Below ground: 1 floor
Completion:
January 1993

Sendai Honcho
Honma Building

Kanazawa Park
Building

Nishiki Park
Building

 III-3

 III-4

 III-5

Location:
Sendai, Miyagi Prefecture
Site area:
1,437.47m2
Floor area of building: 8,247.50m2
Structure:
Above ground: 11 floors
Completion:
November 1991

Location:
Kanazawa, Ishikawa Prefecture
Site area:
6,642.71m2
Floor area of building: 43,481.20m2
Structure:
Above ground: 12 floors
Below ground: 2 floors
Completion:
October 1991

Location:
Nagoya, Aichi Prefecture
Site area:
2,170.45m2
Floor area of building: 25,091.91m2
Structure:
Above ground: 22 floors
Below ground: 4 floors
Completion:
August 1995

Hirokoji Sakae
Building

Nagoya Hirokoji
Building

Nagoya Misono
Building

 III-6

 III-7

 III-8

Location:
Nagoya, Aichi Prefecture
Site area:
786.79m2
Floor area of building: 6,445.08m2
Structure:
Above ground: 9 floors
Below ground: 2 floors
Completion:
September 1987

18 Japan Real Estate Investment Corporation

Location:
Nagoya, Aichi Prefecture
Site area:
4,095.81m2
Floor area of building: 33,377.73m2
Structure:
Above ground: 18 floors
Below ground: 2 floors
Completion:
May 1987

Location:
Nagoya, Aichi Prefecture
Site area:
805.04m2
Floor area of building: 5,348.00m2
Structure:
Above ground: 7 floors
Below ground: 1 floor
Completion:
September 1991

Kyoto Shijo
Kawaramachi
Building

Shin-Fujita
Building

Sakaisujihonmachi
Building

 III-9

 III-10

 III-11

Location:
Kyoto, Kyoto Prefecture
Site area:
1,471.57m2
Floor area of building: 9,701.04m2
Structure:
Above ground: 9 floors
Below ground: 1 floor
Completion:
November 1982

Location:
Osaka, Osaka Prefecture
Site area:
6,159.61m2
Floor area of building: 45,411.31m2
Structure:
Above ground: 21 floors
Below ground: 2 floors
Completion:
April 1995

Location:
Osaka, Osaka Prefecture
Site area:
2,036.22m2
Floor area of building: 17,145.59m2
Structure:
Above ground: 13 floors
Below ground: 2 floors
Completion:
October 1992

Midosuji Daiwa
Building

Lit City Building

NHK Hiroshima
Broadcasting
Center Building

 III-12

 III-13

 III-14

Location:
Osaka, Osaka Prefecture
Site area:
3,044.65m2
Floor area of building: 31,213.27m2
Structure:
Above ground: 15 floors
Below ground: 2 floors
Completion:
September 1991

Location:
Okayama, Okayama Prefecture
Site area:
7,596.44m2
Floor area of building: 52,653.19m2
Structure:
Above ground: 20 floors
Below ground: 2 floors
Completion:
June 2005

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

Tosei Tenjin
Building

Tenjin Crystal
Building

Hinode Tenjin
Building

 III-15

 III-16

 III-17

Location:
Fukuoka, Fukuoka Prefecture
Site area:
1,221.31m2
Floor area of building: 5,588.57m2
Structure:
Above ground: 8 floors
Completion:
March 1992

Location:
Fukuoka, Fukuoka Prefecture
Site area:
1,835.17m2
Floor area of building: 10,432.04m2
Structure:
Above ground: 14 floors
Below ground: 1 floor
Completion:
August 1993

Location:
Fukuoka, Fukuoka Prefecture
Site area:
1,452.15m2
Floor area of building: 12,527.07m2
Structure:
Above ground: 10 floors
Below ground: 2 floors
Completion:
August 1987

Japan Real Estate Investment Corporation 19

20 Japan Real Estate Investment Corporation

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

p.21
p.22
p.24
p.24
p.25
p.26
p.38

Selected Financial Data
Thousands of
U.S. dollars (Note 1)

Millions of yen

For the period from For the period from For the period from For the period from For the period from For the period from
October 1, 2011 toApril 1, 2011 to
October 1, 2010 toApril 1, 2010 to
October 1, 2009 to October 1, 2011 toMarch 31, 2012 September 30, 2011 March 31, 2011 September 30, 2010 March 31, 2010
March 31, 2012

Operating Revenues¥ 24,059¥ 22,829¥ 22,135¥ 22,112

Operating Expenses

13,273

12,44912,333

12,173Operating Income

10,786

10,380

9,802

9,939

10,538131,234

Ordinary Income

8,863

8,603

7,938

8,135

8,876

107,839

Income before Income Taxes

8,904

8,614

7,657

8,135

8,876

108,337Net Income

8,934

8,268

7,652

8,134

8,875

108,707

Total Assets

703,085

643,949

646,847

634,974

637,326

8,554,392

Interest-Bearing Debts

284,300

269,350

272,400

262,450

262,500

3,459,058

Net Assets

372,869

332,670332,054332,536

333,228

4,536,682

Unitholders’ Capital

363,371324,353

324,353

324,353

324,353

4,421,119

Number of Units

549,040489,200

489,200

489,200

489,200

549,040

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

679,130

680,029

678,770

679,755

681,170

8,263

8,888

7,753

7,652

8,134

8,826

108,151

Cash Distribution$  292,732
For ¥the21,665
period from October
1, 2010 to March 31,
2011161,497
11,127

Dividend Payout Ratio

99.4%

93.7%

99.9%

99.9%

99.4%

99.4%

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

16,19015,85015,642

16,62818,043196.98Net Operating Income (NOI)

16,361

15,121

14,95015,091

14,414

199,073

Funds from Operations (FFO)

13,625

12,154

11,93812,353

11,914

165,779

Return on Assets (ROA) (Note 2)

1.3%

1.3%

1.2%

1.3%

1.5%

1.3%

(2.6% annualized) (2.7% annualized)
Return on Equity (ROE) (Note 3)

2.6%

2.5%

(5.3% annualized) (5.0% annualized)(2.5% annualized)

2.3 %(4.6% annualized)(2.6% annualized)

2.4 %(4.9% annualized)(3.0% annualized) (2.6% annualized)

2.7 %

2.6%

(5.5% annualized) (5.3% annualized)

EOP Equity Ratio (Note 4)

53.0%

51.7%

51.3%

52.4%

52.3%

53.0%

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

40.4%

41.8%

42.1%

41.3%

41.2%

40.4%

FFO Multiple

14.7 times

15.2 times

16.1 times

15.1 times

16.3 times

14.7 times

Debt Service Coverage Ratio (Note 6)

8.5 times

8.4 times

7.5 times

7.8 times

9.0 times

8.5 times

Notes 1: Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥82.19 = US$1.00, the foreign exchange rate on March 31, 2012,
has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen has been or could be readily converted, realized or settled into
U.S. dollars at that rate or any other rate.
2: ROA = Ordinary Income ÷ Average of Total Assets during the period
3: ROE = Net Income ÷ Average of Net Assets during the period(Annualized portion of the calculation given in note 2 and note 3 assumes a fiscal period of 182 days for the period ended March 31, 2010, 183 days for the period ended
September 30, 2010, 182 days for the period ended March 31, 2011, 183 days for the period ended September 30, 2011 and 183 days for the period ended March 31, 2012.)
4: EOP Equity Ratio = (Net Assets at end of period ÷ Total Assets at end of period) × 100
5: EOP Interest-Bearing Debt Ratio on Total Assets = (Interest-Bearing Debt at end of period ÷ Total Assets at end of period) × 100
6: Debt Service Coverage Ratio = Net Income before Interest, Taxes, Depreciation and Amortization ÷ Interest Expenses

Japan Real Estate Investment Corporation 21

Balance Sheets

As of March 31, 2012 and September 30, 2011

Thousands of yen

U.S. dollars (Note 1)

As ofMarch 31, 2012

As of
September 30, 2011

As ofMarch 31, 2012

¥ 18,661,450¥ 19,366,180$  227,052,567

102,822

105,708

1,251,031

—

4,983

—

448,257—

5,453,915

ASSETS
Current Assets:
Cash and bank deposits
Rental receivables
Refundable income taxes
Refundable consumption taxes

148,390

146,268

1,805,453

19,360,920

19,623,140

235,562,965

Land

472,709,596

424,833,012

5,751,424,707

Other current assets
Total current assets

Property and Equipment, at Cost:
Buildings and structures

254,100,997

237,880,857

3,091,629,118

Machinery and equipment

3,095,111

3,087,670

37,658,001

Tools, furniture and fixtures

182,888

125,6032,225,193

986

46,026

12,006

Construction in progress

730,089,580

665,973,170

8,882,949,025

Accumulated depreciation(55,559,353)(50,887,381)(675,986,786)

Total property and equipment

674,530,226

615,085,789

8,206,962,239

Subtotal

Investments and Other Assets:
Investment securities
Deposits
Long-term prepaid expenses
Leasehold rights

577,168

577,168

7,022,364

1,069,330

1,069,330

13,010,468

10,40819,025

126,640

6,612,617

6,628,447

80,455,255

Easement

828,095

828,095

10,075,379

Deferred investment corporation bond issuance costs

96,689118,525

1,176,408¥703,085,455¥643,949,522$8,554,391,718

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

22 Japan Real Estate Investment Corporation

Thousands of yen

U.S. dollars (Note 1)

As ofMarch 31, 2012

As of
September 30, 2011

As ofMarch 31, 2012¥    864,742¥    639,477$   10,521,259

830,283

798,233

10,102,007

LIABILITIESCurrent Liabilities:
Trade accounts payable
Other payables
Short-term loans

13,500,000

16,500,000

164,253,559

Current portion of investment corporation bonds

10,000,000

10,000,000

121,669,303

Current portion of long-term loans

50,100,000

8,100,000

609,563,207

Accrued expenses

823,544759,305

10,020,014

Income taxes payable

15,095605

183,666

Accrued consumption taxes
Rent received in advance—

704,254—

3,156,794

2,477,592

38,408,494—

115,571

—

2,162

2,477

26,316

79,292,623

40,097,518

964,747,824

Investment corporation bonds

45,000,000

45,000,000

547,511,863

Long-term loans

165,700,000

189,750,000

2,016,060,348

Deposits received from tenants

39,622,449

35,788,642

482,083,582

300,204

345,639

3,652,569

Provision for loss on disaster
Other current liabilities
Total current liabilities
Long-Term Liabilities:

Deferred tax liabilities

300,253

297,259

3,653,169

Total long-term liabilities

250,922,908

271,181,541

3,052,961,531

Total Liabilities

330,215,531

311,279,059

4,017,709,354

363,371,780

324,353,108

4,421,119,114

Asset retirement obligations

NET ASSETS
Unitholders’ equity:
Unitholders’ capital   Authorized: 2,000,000 units   Issued:
549,040 units as of March 31, 2012 and489,200 units as of September 30, 2011
Surplus   Voluntary reserve    Reserve for reduction entry  Retained earnings
Total surplus
Total unitholders’ equity

533,179—

6,487,160

8,964,963

8,317,354

109,076,090

9,498,143

8,317,354

115,563,250

372,869,923

332,670,462

4,536,682,364

Total net assets

372,869,923

332,670,462

4,536,682,364

Total Liabilities and Net Assets¥703,085,455¥643,949,522$8,554,391,718

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

Japan Real Estate Investment Corporation 23

Statements of Income and Retained Earnings
For the six months ended March 31, 2012 and September 30, 2011

Thousands of yen

U.S. dollars (Note 1)

For the period
from October 1, 2011
to March 31, 2012

For the period
from April 1, 2011
to September 30, 2011

For the period
from October 1, 2011
to March 31, 2012

Operating Revenues and Expenses
Operating Revenues:
Rental revenues
Non-rental revenues
Gain on sale of properties
Total operating revenues¥23,775,373
284,260—
24,059,633¥22,187,539
95,818546,615
22,829,973$289,273,311
3,458,575—
292,731,886

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

12,388,608
579,666
192,149
66,89946,15013,273,475
10,786,157

11,595,387
546,883
186,397
63,39857,47012,449,537
10,380,435

150,731,332
7,052,768
2,337,875
813,966
561,515
161,497,455
131,234,431

5,842
—
8
0

6,013
19,724
4,900—

71,082—
107
1

Non-Operating Expenses:
Interest expense
Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance costs
New unit issuance costs
Other non-operating expenses
Ordinary Income

1,343,797
469,237
21,836
53,79240,0808,863,265

1,295,442
471,115
21,836—
18,784
8,603,896

16,349,890
5,709,177
265,677
654,486
487,663
107,838,728

Extraordinary Income:Reversal of provision for loss on disaster
Income before Income Taxes

40,9298,904,194

10,9658,614,861

497,982
108,336,710

16,221(46,636)
8,934,609
30,354¥ 8,964,963

605
346,043
8,268,213
49,141¥ 8,317,354

197,362(567,419)
108,706,766
369,324$109,076,090

Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Dividends income
Interest on tax refund
Other non-operating revenues

Income Taxes:
Current
Deferred
Net Income
Retained Earnings Brought Forward
Retained Earnings at End of Period

Statements of Changes in Unitholders’ Equity
For the six months ended March 31, 2012 and September 30, 2011

Balance as of March 31, 2011
Cash dividends paid
Net income
Balance as of September 30, 2011
Provision of reserve for reduction entry
New unit issuanceCash dividends paid
Net income
Balance as of March 31, 2012

Balance as of September 30, 2011
Provision of reserve for reduction entry
New unit issuanceCash dividends paid
Net income
Balance as of March 31, 2012

Units

489,200——
489,200—
59,840——549,040¥324,353,108——¥324,353,108—
39,018,672——¥363,371,780

Units

Unitholders’capitalReserve for reduction entry

489,200—
59,840——549,040$3,946,381,652—
474,737,462——$4,421,119,114—$6,487,160———$6,487,160

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

24 Japan Real Estate Investment Corporation

Thousands of yen
SurplusReserve for reduction entry Retained earnings

Unitholders’capital————¥533,179———¥533,179¥7,701,207(7,652,066)
8,268,213¥8,317,354(533,179)—(7,753,820)
8,934,609¥8,964,963

Total surplus

Total unitholders’equity¥7,701,207(7,652,066)
8,268,213¥8,317,354——(7,753,820)
8,934,609¥9,498,143¥332,054,315(7,652,066)
8,268,213¥332,670,462—
39,018,672(7,753,820)
8,934,609¥372,869,923

U.S. dollars (Note 1)
SurplusRetained earnings
Total surplus

Total unitholders’equity$101,196,671(6,487,160)—(94,340,187)
108,706,766$109,076,090$4,047,578,323—
474,737,462(94,340,187)
108,706,766$4,536,682,364$101,196,671——(94,340,187)
108,706,766$115,563,250

Statements of Cash Flows

For the six months ended March 31, 2012 and September 30, 2011

Thousands of yen

U.S. dollars (Note 1)

For the period
from October 1, 2011
to March 31, 2012

For the period
from April 1, 2011
to September 30, 2011

For the period
from October 1, 2011
to March 31, 2012

Income before income taxes¥ 8,904,194¥ 8,614,861$108,336,710

Depreciation and amortization

Cash Flows from Operating Activities:
4,690,797

4,433,226

57,072,608

Amortization of investment corporation bond issuance costs

21,836

21,836

265,677

New unit issuance costs

53,792—

654,486

Dividends income—(19,724)—

Interest income(5,842)(6,013)(71,082)

Interest expense

1,813,034

1,766,557

22,059,067(40,929)(10,965)(497,982)

Rental receivables

2,885

3,057

35,112

Refundable income taxes

4,983(4,983)60,634(448,257)

362,232(5,453,915)

Reversal of provision for loss on disaster

Refundable consumption taxes
Prepaid expenses
Trade accounts payable(707)(13,339)(8,611)(208,116)(10,011)(2,532,145)

Other payables

43,918

11,231

534,353

Accrued expenses(704,136)

700,619(8,567,184)

Rent received in advance679,201(502,356)

8,263,797—

2,586,877

—

8,616

12,944

104,842

Decrease due to sale of tangible fixed asset
Long-term prepaid expenses
Other(235,463)(5,684)(2,864,866)  Sub-total

14,579,807

17,940,364

177,391,500

5,629

24,91868,492(1,748,913)(1,876,072)(21,278,909)

Payments for loss on disaster(89,992)(92,321)(1,094,937)

Income taxes paid

(1,730)(4,005)(21,057)

12,744,799

15,992,882

155,065,089

Payments of time deposits(7,517,000)(13,103,693)(91,458,815)

Proceeds from time deposits

9,517,000

9,603,693

115,792,676(63,450,933)(1,313,045)(772,003,087)—(7,012)—(1,816,042)(1,187,152)(22,095,666)

Interest and dividend income received
Interest paid

Net cash provided by operating activities
Cash Flows from Investing Activities:

Purchases of property and equipment
Purchases of intangible assets
Repayments of lease and guarantee deposits received
Proceeds from lease and guarantee deposits received
Net cash used in investing activities

5,649,849

845,590

68,741,331(57,617,126)(5,161,619)(701,023,562)

Cash Flows from Financing Activities:
Proceeds from short-term loans

45,500,000

7,000,000

553,595,328

Repayments of short-term loans(48,500,000)(15,500,000)(590,096,119)

Proceeds from long-term loans

25,000,000

66,500,000

304,173,257

Repayments of long-term loans(7,050,000)(61,050,000)(85,776,858)

Proceeds from issuance of units

39,018,672—

474,737,462(49,993)—(608,270)(7,751,081)(7,649,238)(94,306,870)

Net cash provided by (used in) financing activities

46,167,596(10,699,238)

561,717,930

Net Increase in Cash and Cash Equivalents

1,295,269

132,025

15,759,457

Cash and Cash Equivalents at Beginning of Period

11,366,180

11,234,155

138,291,528

Cash and Cash Equivalents at End of Period¥12,661,450¥11,366,180$154,050,985

Payments of new unit issuance costs
Dividends to unitholders

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

Japan Real Estate Investment Corporation 25

Notes to Financial Statements
March 31, 2012 and September 30, 2011

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. (“J-Rea”). J-Rea is currently owned 63% by Mitsubishi Estate Co., Ltd. (“MEC”), 27% by The Dai-ichi MutualLife Insurance Company (currently renamed The Dai-ichi Life Insurance Company, Limited, “DL”) and 10% by Mitsui & Co., Ltd.
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, Tokio Marine &Nichido Fire Insurance Co., Ltd. (“TMN”) and DL under the Law Concerning Investment Trusts and Investment Corporations of Japan,
or the Investment Trust Law.
On September 10, 2001, the Company commenced operations when the Company was listed on the Tokyo Stock Exchange as oneof the first real estate investment corporations in Japan (so-called “J-REITs”). The Company issued 160,000 units at a price of ¥506,625($6,164), generating gross proceeds of ¥81,060 million ($986,251 thousand) (Note).
The Company completed the eighth public offering of 54,400 units at a price of ¥652,050 ($7,933) on February 28, 2012 andthird party allocation of 5,440 units at a price of ¥652,050 ($7,933) on March 27, 2012, generating gross proceeds of ¥35,471 million($431,580 thousand) and ¥3,547 million ($43,158 thousand). As of March 31, 2012, the Company had total unitholders’ capital of¥363,371 million ($4,421,119 thousand) with 549,040 units outstanding (Note).
At March 31, 2012, the Company owned a portfolio of 57 office properties concerning an aggregate of approximately 629,761 square
meters of leasable space.
Note: The foreign exchange rate of ¥82.19=US$1.00, as of March 31, 2012, has been used for translation.
Basis of presenting financial statements
The Company maintains its accounting records and prepares its financial statements in accordance with accounting principles generally
accepted in Japan (“Japanese GAAP”), including provisions set forth in the Investment Trust Law, the Corporation Law of Japan, theFinancial Instruments and Exchange Law of Japan and the related regulations, which are different in certain respects as to the applicationand disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which were preparedin accordance with Japanese GAAP and were presented in the Securities Report of the Company filed with the Kanto Local Finance Bureau.
In preparing the accompanying financial statements, certain reclassifications and modifications have been made to the financial statements
issued domestically in order to present them in a format that is more familiar to readers outside Japan. In addition, the notes to financial
statements include information that might not be required under Japanese GAAP but is presented herein as additional information.
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥82.19=US$1.00, the foreignexchange rate on March 31, 2012, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen
has been or could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.
As permitted under the Japanese Financial Instruments and Exchange Law, amounts of less than one million yen have been omitted. As a result, the totals shown in the accompanying financial statements do not necessarily agree with the sum of the individual amounts.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESInvestment securities
Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving average method.
Property and equipment, depreciation and impairment
Property and equipment is stated at cost, less accumulated depreciation. The costs of land, buildings and building improvements include
the purchase price of property, legal fees and acquisition costs. Depreciation is calculated on a straight-line basis over the estimated useful
lives of the assets ranging as stated below:
Buildings............................................................................................................... 2–61 years
Structures.............................................................................................................. 5–60 years

26 Japan Real Estate Investment Corporation

Machinery and equipment.................................................................................... 3–18 years
Tools, furniture and fixtures.................................................................................. 2–29 years
Expenditures for repairing expenses are charged to income as incurred. Significant renewals and betterments are capitalized.
The Company reviews fixed assets for impairment whenever events or changes in circumstances indicate that the carrying amountof its fixed assets may not be recoverable. According to the standard set by the Accounting Standards Board of Japan, companies are
required to recognize an impairment loss in their statement of income if certain indicators of asset impairment exist and the book value ofan asset exceeds the undiscounted sum of future cash flows of the asset. The standard states that impairment losses should be measured as
the excess of the book value over the higher of (1) the fair market value of the asset, net of disposition costs and (2) the present value of
future cash flows arising ongoing utilization of the asset and from disposal after asset use. The standard covers land, factories, buildings andother forms of property, plant and equipment as well as intangible assets. Fixed assets are grouped at the lowest level for which there is identifiable cash flows that are independent of cash flows of other groups of assets.
Intangible assets
Intangible assets primarily consist of leasehold rights and easement, which are started at cost. Amortization of a term leasehold interest forbusiness use is calculated by the straight-line method based on the period of agreement.
Provision for loss on disaster
The Company recorded “Provision for loss on disaster” incurred as a result of the Great East Japan Earthquake, which occurred on March 11, 2011.
That includes the reasonably estimated sum to restore the damaged properties (interiors, etc.) to their original state.
Deferred charges
Deferred charges include investment corporation bond issuance costs and new unit issuance costs.
Investment corporation bond issuance costs are amortized using the straight-line method over the amortization periods.
New unit issuance costs are charged to income as incurred. The underwriter’s economic remunerations for underwriting the offering are not recognized as new unit issuance costs in the financial statements since such costs are not paid by the Company as commission
under the so-called “spread-method’.
Under the spread-method, the difference between the offer price (the price paid by the unitholder) and the issue price (the pricereceived by the Company) is retained by the underwriters as remunerations. The spread so incurred at the eighth offering on February 28,
2012 was ¥1,126 million ($13,701 thousand).
Revenue recognition
Revenues from leasing of office space are recognized as rent accrued over the lease period.
Taxes on property and equipment
Property and equipment is subject to property taxes and city planning taxes on a calendar year basis. These taxes are generally charged toincome during the period. The sellers of the properties were liable for property taxes for the calendar year including the period from thedate of purchase by the Company through the end of the year since the taxes are imposed on the owner registered in the record as ofJanuary 1 based on the assessment made by the local government. The Company paid the amount equivalent to the property taxes to thesellers applicable to the period since acquisition and included the amount equivalent to the taxes in the purchase price of each property andcapitalized as cost of the property.
Consumption taxes
Consumption taxes withheld and consumption taxes paid are not included in the statements of income. The consumption taxes paid are
generally offset against the balance of consumption taxes withheld. As such, the excess of payments over amounts withheld are included in
the current assets and the excess of amounts withheld over payments are included in the current liabilities.
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks and short-term investments which are highly liquid, readily convertible to cash and with insignificant risk of price fluctuation, with original maturity of three months or less.
Japan Real Estate Investment Corporation 27

3. FINANCIAL INSTRUMENTS
For the six months ended March 31, 2012 and September 30, 2011
1. Status of financial instruments(1) Policies for dealing financial instruments
Concerning the financing of property acquisitions, the Company shall use several funding sources including bank loans, issuance ofinvestment corporation bonds and issuance of investment units. When executing such financing activities, the Company endeavors toretain the ability to secure stable and low-cost financing by maintaining high credit rating and thereby limiting the financial covenants
which may restrict the financial flexibility of the Company. To achieve these goals, the Company intends to further develop and reinforce the confidence of debt holders and rating agencies in the Company by bolstering capital base and controlling loan-to-value ratio(“LTV”) at adequate level.
In order to hedge against future interest-rate fluctuations, the Company may enter in derivative transactions, which shall be executed solely for the purpose of controlling risks, and not for speculative purposes.
At the time of this report, the Company holds no position in derivative transactions.
With respect to management of excess fund, as a matter of policy the Company uses time deposit as its main vehicle, while
securities and monetary claims are also eligible for such investment.
(2) Characteristics, and risk profile of each financial instrument and risk management system
J-Rea regularly re-evaluates appropriateness and effectiveness of risk management system in order to improve on it.
Characteristics, and risk profile of financial instruments and risk management system are as follows:
Deposits which are typically large time deposit used to manage the excess funds, are exposed to credit risk of the deposit-taking financial
institutions. The Company manages credit risk by restricting the tenor of the deposit relatively short and setting a minimum credit rating requirement for the deposit-taking financial institutions.
The fund proceeds from borrowings and issues of investment corporate bonds are applied mainly to acquire real estate properties and repayment of outstanding loans and bonds. While floating-rate short-term loans are exposed to the risk of interest-rate hike,such risk is mitigated by the Company’s low LTV and relatively high percentage of long-term fixed-rate debts within the total borrowing. Loans and investment corporate bonds involve liquidity risk at the time of maturity. To manage such liquidity risk, the Company
implements the measures such as (i) maintaining and strengthening its ability to access equity markets to secure funds, (ii) maintaining acommitment lines with major financial institutions (There is no outstanding under the facility as of March 31, 2012 and as of
September 30, 2011), and (iii) preparing monthly financial plan.
(3) Supplementary note regarding fair value of financial instruments
The fair values of financial instruments presented in this report are based on their market value, and in case where market values are notavailable, reasonably calculated values are presented. Since calculation of fair value is based on certain assumptions, the fair value could
differ depending on assumptions used.
2. Fair value of financial instruments
Fair value of financial instruments, their values carried on the balance sheet and the difference between them as of March 31, 2012 and asof September 30, 2011 are as follows.
The financial instruments whose fair values have extreme difficulty estimating are excluded from the following schedule (Note 2).
Thousands of yen

U.S. dollars
As of March 31, 2012

Book value

Fair value

DifferenceBook value

Fair value

Difference¥ 18,661,450¥ 18,661,450¥       —

$  227,052,567$  227,052,567$        —(2) Short-term loans

13,500,000

13,500,000—

164,253,559

164,253,559—(3) Current portion of investment
corporation bonds

10,000,000

10,026,000

26,000121,669,303

121,985,643

316,340(1) Cash and bank deposits(4) Current portion of long-term loans

50,100,000

50,306,801

206,801

609,563,207

612,079,348

2,516,141(5) Investment corporation bonds

45,000,000

45,813,250

813,250

547,511,863

557,406,619

9,894,756(6) Long-term loans

165,700,000

168,017,031

2,317,031

2,016,060,348

2,044,251,505

28,191,157

28 Japan Real Estate Investment Corporation

Thousands of yen
As of September 30, 2011
Book value

Fair value¥ 19,366,180¥ 19,366,180(2) Short-term loans

16,500,000

16,500,000—(3) Current portion of investment
corporation bonds

10,000,000

10,076,100

76,100(1) Cash and bank deposits

Difference¥­—(4) Current portion of long-term loans

8,100,000

8,113,355

13,355(5) Investment corporation bonds

45,000,000

45,804,000

804,000(6) Long-term loans

189,750,000

188,468,230(1,281,769)

Note 1: Measurement of fair value of financial instruments(1) Cash and bank deposits
		 Due to short tenor, the book value of these assets are reasonable approximation of the present value of these assets and hence used as their fair value.
(2) Short-term loans		Since these loans’ tenor is short and rates are reset at short interval, the book values of these liabilities are reasonable approximation of their present value and hence
used as their fair values.
(3) Current portion of investment corporation bonds and (5) investment corporation bonds		Their fair values are based on the values published by a financial data provider.
(4) Current portion of long-term loans and (6) long-term loans		The fair values of these liabilities are calculated by discounting the aggregated amounts of the principals and the interests of the loan by the rates that are reasonably
estimated to be applicable if the Company refinances the existing loans for the remaining period to maturity under the prevailing market conditions at March 31, 2012
and September 30, 2011.
Note 2: Financial instruments whose fair values cannot be reliably measured.
Thousands of yen

U.S. dollars

As of March 31, 2012

As of September 30, 2011

As of March 31, 2012

(1) Non-listed stock (*1)¥   577,168¥   577,168$  7,022,364(2) Deposits received from tenants (*2)

39,622,449

35,788,642

482,083,582(*1) With regard to non-listed stocks which do not have quoted market price in active market and whose cash flows are not reasonably estimated, their fair value cannot be
reliably measured and therefore presented at their book value.
(*2) With regard to deposits received from tenants, which do not have quoted market price in active market, and their tenor cannot be reasonably estimated, their cash flows
cannot be reliably measured and therefore presented at their book value.
Note 3: Redemption schedule for monetary claim after the closing dateThousands of yen

U.S. dollars
As of March 31, 2012

Cash andbank deposits

1 yearor less

1 to
2 years

2 to
3 years

3 to
4 years

4 to
5 yearsOver
5 years

1 yearor less

1 to
2 years

2 to
3 years

3 to
4 years

4 to
5 yearsOver
5 years¥18,661,450

¥­—

¥­—

¥­—

¥­—

¥­—

$227,052,567

$­—

$­—

$­—

$­—

$­—

Thousands of yen
As of September 30, 2011

Cash andbank deposits

1 yearor less

1 to
2 years

2 to
3 years

3 to
4 years

4 to
5 yearsOver
5 years¥19,366,180

¥­—

¥­—

¥­—

¥­—

¥­—

Japan Real Estate Investment Corporation 29

Note 4: Repayment schedule for investment corporation bonds, long-term loans and other interest-bearing debt after the closing dateThousands of yen
As of March 31, 2012
1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years

Short-term loans¥13,500,000¥        —¥        —¥        —¥        —¥        —Investment corporation bonds

10,000,000—

15,000,000

20,000,000—

10,000,000

Long-term loans

50,100,000

34,100,000

5,100,000

14,600,000

44,400,000

67,500,000

Total¥73,600,000¥34,100,000¥20,100,000¥34,600,000¥44,400,000¥77,500,000

U.S. dollars
As of March 31, 2012
1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years

Short-term loans$164,253,559$         —$         —$         —$         —$         —Investment corporation bonds

121,669,303—

182,503,954

243,338,606—

121,669,303

Long-term loans

609,563,207

414,892,323

62,051,344

177,637,182

540,211,705

821,267,794

Total$895,486,069$414,892,323$244,555,299$420,975,788$540,211,705$942,937,097

Thousands of yen
As of September 30, 2011
1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years

Short-term loans¥16,500,000¥        —¥        —¥        —¥        —¥        —Investment corporation bonds

10,000,000—

15,000,000

20,000,000—

10,000,000

Long-term loans

8,100,000

70,100,000

13,100,000

16,600,000

30,100,000

59,850,000¥34,600,000¥70,100,000¥28,100,000¥36,600,000¥30,100,000¥69,850,000

Total

4. PROPERTY AND EQUIPMENT
Property and equipment at March 31, 2012 and September 30, 2011 consisted of the following:Thousands of yen
As of March 31, 2012

U.S. dollars
As of March 31, 2012

As of September 30, 2011

Acquisition Costs

Book Value

Acquisition Costs

Book Value

Acquisition Costs

Book ValueLand¥367,342,515¥367,342,515¥319,465,931¥319,465,931$4,469,430,771$4,469,430,771

Buildings and structures

206,105,194

Accumulated depreciation
Machinery and equipment(44,189,397)

2,507,667,531

190,174,858
161,915,796

2,309,787(40,321,390)

149,853,468

1,970,018,209

Accumulated depreciation(1,180,434)

Tools, furniture and fixtures

169,661

Accumulated depreciation(78,825)

90,835(73,028)

40,296(959,070)

986

986

46,02646,026

12,006

12,006

Land in trust

105,367,081

105,367,081

105,367,081

105,367,081

1,281,993,937

1,281,993,937

Buildings and structures in trust

47,995,802

Accumulated depreciation(9,577,590)

38,841,404(116,529,878)

Machinery and equipment in trust

785,323

Accumulated depreciation(527,724)

Construction in progress

Tools, furniture and fixtures in trust
Accumulated depreciation
Total

1,129,352(537,649,322)
28,103,024

2,302,347(1,119,828)

1,182,518

257,598(503,515)

467,431,708

9,554,977

785,323

13,227

1,105,184

583,961,586

47,705,998(8,864,594)

13,740,756

2,064,254

113,324

38,418,212(14,362,269)

281,807(6,420,790)

3,134,188

160,938

12,278(5,379)7,847(5,024)

7,254(65,457)

95,481¥674,530,226¥674,530,226¥615,085,789¥615,085,789$8,206,962,239$8,206,962,239

The compressed amount of tangible assets with government grants under the Corporation Tax Law of Japan was ¥50 million ($609 thousand) at March 31, 2012 and ¥50 million ($609 thousand) at September 30, 2011.

30 Japan Real Estate Investment Corporation

5. SHORT-TERM LOANS
Short-term loans at March 31, 2012 and September 30, 2011 consisted of the following
Thousands of yen

U.S. dollars

As of March 31, 2012

As of September 30, 2011

As of March 31, 2012

0.38% unsecured loan from a trust bank, due on November 1, 2011¥        —¥ 1,500,000$         —0.33% unsecured loan from a trust bank, due on November 1, 2012

1,000,000—

12,166,930

0.38% unsecured loan from a bank, due on March 26, 2012—

1,000,000—

0.38% unsecured loan from a bank, due on March 26, 2012—

1,000,000—

0.33% unsecured loan from a bank, due on March 26, 2013

1,000,000—

12,166,930

0.38% unsecured loan from a bank, due on March 26, 2012—

2,000,000—

0.33% unsecured loan from a bank, due on March 26, 2013

2,000,000—

24,333,861

0.38% unsecured loan from a bank, due on March 26, 2012—

4,000,000—

0.38% unsecured loan from a bank, due on June 1, 2012

1,000,000

1,000,000

12,166,930

0.38% unsecured loan from a bank, due on August 1, 2012

1,000,000

1,500,000

12,166,930

0.33% unsecured loan from a bank, due on March 26, 2013

4,000,000—

48,667,721

0.38% unsecured loan from a bank, due on August 1, 2012

1,500,000

1,500,000

18,250,395

0.38% unsecured loan from a bank, due on September 3, 2012

500,000

1,000,000

6,083,465

0.38% unsecured loan from a trust bank, due on August 1, 2012

1,500,000

1,500,000

18,250,395—

500,000—¥13,500,000¥16,500,000$164,253,559

0.38% unsecured loan from a trust bank, due on September 3, 2012
Total

The Company has commitment lines of ¥43,000 million ($523,178 thousand) with five financial institutions to reduce a refinancing risk.
The unused amount of such commitment lines was ¥43,000 million ($523,178 thousand) at March 31, 2012.

6. INVESTMENT CORPORATION BONDS Including current portion of
Investment corporation Bonds
Details of total investment corporation bonds outstanding are summarized as follows:
As of March 31, 2012

As of March 31, 2012

As of September 30, 2011

Amount(thousands of yen)Interest rate(%)

Amount(thousands of yen)Interest rate(%)

Amount(U.S. dollars)

Unsecured bond due on September 29, 2025

¥10,000,000

2.56%¥10,000,000

2.56%$121,669,303

Unsecured bond due on June 18, 2012

10,000,000

1.67%

10,000,000

1.67%

121,669,303

Unsecured bond due on June 18, 2014

15,000,000

1.91%

15,000,000

1.91%

182,503,954

Unsecured bond due on April 23, 2015

10,000,000

1.26%

10,000,000

1.26%

121,669,303

Unsecured bond due on July 23, 2015

10,000,000

1.05%

10,000,000

1.05%

121,669,303

Total¥55,000,000—¥55,000,000—$669,181,166

Japan Real Estate Investment Corporation 31

7. LONG-TERM LOANS INCLUDING CURRENT PORTION OF LONG-TERM LOANS
Long-term loans at March 31, 2012 and September 30, 2011 consisted of the following:Thousands of yen

1.55% unsecured loan from an insurance company, due on October 29, 2012
1.33125% unsecured loan from another financial institution,
due on November 1, 2011

U.S. dollars

As of March 31, 2012

As of September 30, 2011

As of March 31, 2012

¥ 2,000,000¥        —$ 24,333,861—

5,000,000—

1,000,000

1,000,000

12,166,930

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

2,000,000—

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

5,000,000—

60,834,651

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

11,000,000—

133,836,233

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

5,000,000—

60,834,651

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

5,000,000—

60,834,651

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

1,000,000—

12,166,930

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

5,000,000—

60,834,651

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

1,000,000—

12,166,930

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

1,000,000—

12,166,930

0.73625% unsecured loan from a bank, due on December 20, 2012

1,000,000—

12,166,930

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

5,000,000—

60,834,651

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

2,000,000—

24,333,861

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

100,000

100,000

1,216,693

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

2,000,000—

24,333,861

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

36,500,791

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

3,000,000—

1.55% unsecured loan from an insurance company, due on October 29, 2012—

2,000,000—

1.86875% unsecured loan from an insurance company, due on May 29, 2015

5,000,000

5,000,000

60,834,651

1.54375% unsecured loan from an insurance company, due on March 30, 2017

5,000,000

5,000,000

60,834,651

1.86875% unsecured loan from an insurance company, due on May 29, 2015

1,500,000

1,500,000

18,250,395

1.595% unsecured loan from an insurance company, due on April 25, 2016

1,000,000

1,000,000

12,166,930

1.39625% unsecured loan from an insurance company, due on March 30, 2018

2,000,000

2,000,000

24,333,861

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

5,000,000

5,000,000

60,834,651

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

3,000,000

3,000,000

36,500,791—

5,000,000—

0.7525% unsecured loan from a bank, due on November 15, 2016

1,000,000—

12,166,930

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

3,000,000

3,000,000

36,500,791

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

5,000,000—

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

2,000,000

2,000,000

24,333,861

1.30625% unsecured loan from a bank, due on December 21, 2016

5,000,000

5,000,000

60,834,651

1.2075% unsecured loan from a bank, due on November 1, 2019

6,000,000—

73,001,582

1.13875% unsecured loan from a bank, due on November 15, 2019

3,000,000—

36,500,791

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

5,000,000

5,000,000

60,834,651

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

5,000,000—

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

11,000,000—

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

2,000,000

2,000,000

24,333,861

1.3975% unsecured loan from a bank, due on March 26, 2018

2,000,000

2,000,000

24,333,861

1.13875% unsecured loan from a bank, due on November 15, 2019

3,000,000—

36,500,791

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

2,000,000

2,000,000

24,333,861

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

1,700,000

1,750,000

20,683,781

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

5,000,000

5,000,000

60,834,651

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

2,000,000

2,000,000

24,333,861

1.43375% unsecured loan from a trust bank, due on January 17, 2018

3,000,000

3,000,000

36,500,791

1.16% unsecured loan from a trust bank, due on September 26, 20195,500,000

5,500,000

66,918,117

0.98375% unsecured loan from a trust bank, due on November 15, 2018

3,000,000—

36,500,791

1.135% unsecured loan from a bank, due on January 15, 201332 Japan Real Estate Investment Corporation

Thousands of yen
As of March 31, 2012

U.S. dollars

As of September 30, 2011

As of March 31, 2012

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

2,000,000

2,000,000

24,333,861

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

1,000,000—

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

5,000,000—

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

5,000,000—

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

2,000,000

2,000,000

24,333,861

1.0325% unsecured loan from a trust bank, due on April 4, 2016

5,000,000

5,000,000

60,834,651

1.205% unsecured loan from a trust bank, due on April 4, 2017

5,000,000

5,000,000

60,834,651

1.12625% unsecured loan from a trust bank, due on June 1, 2017

12,000,000

12,000,000

146,003,163

1.31125% unsecured loan from a trust bank, due on June 1, 2018

10,000,000

10,000,000

121,669,303

1.13875% unsecured loan from a trust bank, due on November 15, 2019

3,000,000—

36,500,791

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

1,000,000—

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

1,000,000—

0.73625% unsecured loan from a bank, due on December 20, 2012—

1,000,000—

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

1,000,000

1,000,000

12,166,930

0.615% unsecured loan from a bank, due on November 17, 201412,166,930

1,000,000—

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

2,000,000—

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

3,000,000

3,000,000

36,500,791—

2,000,000—

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

3,000,000

3,000,000

36,500,791

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

2,000,000

2,000,000

24,333,861

0.9025% unsecured loan from a bank, due on August 31, 2017

2,000,000

2,000,000

24,333,861

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

3,000,000—

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

2,000,000

2,000,000

24,333,861

1.255% unsecured loan from a bank, due on March 1, 2017

2,000,000

2,000,000

24,333,861

1.465% unsecured loan from an insurance company, due on March 1, 2018

2,000,000

2,000,000

24,333,861

0.90875% unsecured loan from banks and trust banks , due on June 23, 2016

24,000,000

24,000,000

292,006,327

1.0475% unsecured loan from a bank, due on August 31, 2018

3,000,000

3,000,000

36,500,791

0.98375% unsecured loan from a bank, due on November 15, 2018

3,000,000—

36,500,791

0.645% unsecured loan from a bank, due on December 15, 2014

2,000,000—

24,333,861

Subtotal

215,800,000

197,850,000

2,625,623,555

Less: current portion of long-term loans

50,100,000

8,100,000

609,563,207¥165,700,000¥189,750,000$2,016,060,348

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

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

8. NET ASSETSThe Company is required to maintain net assets of at least ¥50 million ($608 thousand), as required pursuant to the Investment Trust Law.

9. INCOME TAXESThe Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation Measures
Law of Japan (hereinafter the STML), an investment corporation is allowed to deduct dividends of accounting profits, or dividend distributions, paid to investors from its taxable income if certain tax requirements are satisfied. Such tax requirements include dividend distributions in excess of 90% of its earnings available for dividend for the fiscal period as stipulated by Article 67-15 of the STML. Based on the
distribution policy provided by Article 32-2 of the Articles of Incorporation, the Company made a dividend distribution in the amount of¥8,888 million ($108,151 thousand) subsequent to March 31, 2012, which is the multiple number of units up to 100% of retained earnings remaining after deducting ¥45 million ($553 thousand) of additional reserve for advanced depreciation of non-current asset corresponding to the decrease in deferred tax liabilities due to tax rate change described below, and ¥30 million ($372 thousand) out of retained
earnings at the beginning of this period. The Company will not distribute the dividends in excess of retained earnings under Article 32-3 ofthe Articles of Incorporation.

Japan Real Estate Investment Corporation 33

The significant components of deferred tax assets and liabilities as of March 31, 2012 and September 30, 2011 were as follows:
Thousands of yen

U.S. dollars

As of March 31, 2012

As of September 30, 2011

As of March 31, 2012

Deferred tax assets:¥  1,201¥     —$   14,615

Amortization of a term leasehold interest

12,617

8,301

153,517

Asset retirement obligations

2,372

1,553

28,864

16,191

9,854

196,996

Valuation allowance(14,989)(9,854)(182,381)

Total deferred tax assets

1,201

—

14,615Reserve for advanced depreciation of non-current assets¥300,204¥345,639$3,652,569

Total deferred tax liabilities

300,204

345,639

3,652,569¥299,003¥345,639$3,637,955

Accrued enterprise tax

Deferred tax liabilities:

Net deferred tax liabilities

The reconciliation of tax rate difference between the adjusted statutory tax rate and the effective tax rate for the six months ended
March 31, 2012 and September 30, 2011 were as follows:
For the period from October 1, 2011
to March 31, 2012

Statutory tax rate
Deductible dividend distribution

For the period from April 1, 2011
to September 30, 201142.05%

39.33%(41.98%)(35.40%)0.09%

Change in valuation allowance

0.09%

Decrease in deferred tax liability due to tax rate change(0.51%)­—

Others

0.01%

0.01%

(0.34%)

4.02%

Effective tax rate

Adjustment in deferred tax assets and deferred tax liabilities due to tax rate change
On December 2, 2011, two tax bills were promulgated in the official gazette: the “Reform Bill for Partial Revision of Income Tax Law, etc.
in Response to the Changing Economic Structure”, which includes approximately 5% reduction of the effective corporate tax rate, and the“Special Measures to Secure the Funds to Realize the Restoration of the Damages following the Great East Japan Earthquake”, which
includes the introduction of 10% surtax on the corporate national tax for 3 years. This results in a change of the statutory tax rate applicable to the deferred tax assets and deferred tax liabilities arising from the temporary differences that are expected to reverse from the period
ending September 30, 2012 (the 22nd fiscal period) through the period ending March 31, 2015 (the 27th fiscal period) to 36.59%, andwith respect to the temporary differences that are expected to reverse on or after the period ending September 30, 2015 (the 28th fiscal period) to 34.16%. These changes in applicable tax rates resulted in the reduction of deferred tax liabilities by ¥45,434 thousand ($553 thousand) and corresponding amount of income taxes deferred in the period ended March 31, 2012.

10. RELATED PARTY TRANSACTIONS
For the six months ended March 31, 2012 and September 30, 2011
1) Parent Company and Major Corporation Unitholders
For the period from October 1, 2011 to March 31, 2012
“Not applicable”
For the period from April 1, 2011 to September 30, 2011
“Not applicable”(2) Subsidiaries
For the period from October 1, 2011 to March 31, 2012
“Not applicable”
For the period from April 1, 2011 to September 30, 2011
“Not applicable”

34 Japan Real Estate Investment Corporation

(3) Sister Companies
For the period from October 1, 2011 to March 31, 2012
“Not applicable”
For the period from April 1, 2011 to September 30, 2011
“Not applicable”(4) Directors and Major Individual Unitholders
For the period from October 1, 2011 to March 31, 2012
“Not applicable”
For the period from April 1, 2011 to September 30, 2011
“Not applicable”

11. SEGMENT INFORMATION
For the six months ended March 31, 2012 and September 30, 2011
Since the Company has been engaged in real-estate leasing business using a single segment, segment information has been omitted.
Information about products and services
Since revenues from external customers for single segment of similar products and services accounted for more than 90% of total operating
revenues, information about products and services has been omitted.
Information about geographic area
(1) Revenues	Since 100% of the total operating revenues were generated from external customers within Japan, geographical breakdown of revenues
has been omitted.
(2) Property and equipment
	Since 100% of total property and equipment on the balance sheet are located within Japan, geographical breakdown of such property
and equipment has been omitted.
Information about major clients
Since no single external client represents 10% or more of the Company’s total operating revenues, information about major clients has been
omitted.

12. ASSET RETIREMENT OBLIGATIONS
For the six months ended March 31, 2012 and September 30, 2011
Asset retirement obligations reported on balance sheet
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 obligation, theCompany recognized an asset retirement obligations and a corresponding capital asset in an amount equal to the present value of the estimated demolition cost required for the removal of the properties located on the leased land. The present value is calculated using 2.015% as
the discount rate over 42 years which is the term of the leasehold.

Japan Real Estate Investment Corporation 35

Change in the amount of the asset retirement obligations as of March 31, 2012 and September 30, 2011 consisted of following
Thousands of yen

U.S. dollars

For the period from October 1, 2011
to March 31, 2012

For the period from April 1, 2011
to September 30, 2011

For the period from October 1, 2011
to March 31, 2012

$3,616,730¥297,259¥294,294

Increase in the tangible fixed assets

—

—

—

Adjustment required over the period

2,994

2,965

36,439¥300,253¥297,259$3,653,169

Balance at the beginning of the period

Balance at the end of the period

Asset retirement obligations other than those reported on balance sheet
Under the Road Act of Japan, the Company is obligated to remove the cable lines and the accompanying equipment originally installed forpreventing analog TV interference under the public roads close to Shibuya Cross Tower because analog TV broadcasting was discontinued
and to restore the public roads to their original states.
Since the removal involves public roads currently in service and some of the location of the underground structures is potentiallyaffected by the ongoing redevelopment projects near Shibuya station, it is difficult to initiate such removal unilaterally without involving
other interested parties. Therefore, a reasonable estimate of the present value of asset retirement obligations cannot be made because themethod, the cost and the timing of the removal remains uncertain.
In consideration of such uncertainty, the asset retirement obligation is not reported in the financial statements, and instead noted herein.

13. INVESTMENT AND RENTAL PROPERTY
For the six months ended March 31, 2012 and September 30, 2011
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, 2012 and as of September 30, 2011 and the fair value as of March 31, 2012 are
as follows:
Thousands of yen
Book value

Fair value

As of September 30, 2011

Change during period(*1)

As of March 31, 2012

As of March 31, 2012

¥622,542,332¥59,428,606¥681,970,939¥693,230,000

U.S. dollars
Book value

Fair value

As of September 30, 2011

Change during period(*1)

As of March 31, 2012

As of March 31, 2012

$7,574,429,159$723,063,714$8,297,492,873$8,434,481,080

Thousands of yen
Book value

Fair value

As of March 31, 2011

Change during period(*2)

As of September 30, 2011

As of September 30, 2011

¥628,689,939(¥6,147,607)¥622,542,332¥634,357,000

Note 1: Book value on balance sheet means the acquisition cost less accumulated depreciation.
Note 2: Significant changes(*1) For the period ended March 31, 2012, the major reason of increase is acquisition of Akasaka Park Building (¥62,286,404 thousand or $757,834 thousand). The major reason of
decrease is the depreciation.
(*2) For the period ended September 30, 2011, the major reason of decrease are sale of Takanawadai Building (¥2,586,877 thousand) and the depreciation.
Note 3: 	Fair values as of March 31, 2012 and as of September 30, 2011 are defined as the appraised values provided by external qualified professional appraiser.

14. PER UNIT INFORMATION
The following table summarizes information about net assets per unit and net income per unit at March 31, 2012 and September 30, 2011
and for the periods then ended respectively:
Yen

Net assets at period end per unit
Net income per unit

U.S. dollars

For the period from October 1, 2011
to March 31, 2012

For the period from April 1, 2011
to September 30, 2011

For the period from October 1, 2011
to March 31, 2012

¥679,130¥680,029$8,263

17,89916,901

218

Net income per unit is computed by dividing net income by the weighted average number of units outstanding during each period. Diluted
net income per unit has not been presented since no warrants or convertible bonds were outstanding during the period.

36 Japan Real Estate Investment Corporation

15. BREAKDOWN OF PROPERTY-RELATED REVENUES AND EXPENSES
For the six months ended March 31, 2012 and September 30, 2011
Thousands of yen

U.S. dollars

For the period from October 1, 2011
to March 31, 2012

For the period from April 1, 2011
to September 30, 2011

For the period from October 1, 2011
to March 31, 2012

$292,731,886

Property-Related Revenues¥24,059,633¥22,283,358 Rental Revenues

23,775,373

22,187,539

289,273,311  Rental revenues

18,462,260

16,950,216

224,629,042   Common service charges

3,329,294

3,340,801

40,507,300

576,570554,352

7,015,089   Other rental revenues

1,407,247

1,342,169

17,121,881
3,458,575  Parking revenues
Non-Rental Revenues

284,260

95,818  Cancellation charges

10,68943,684130,062   Gain on donation of non current assets

235,148—

2,861,039   Other miscellaneous revenues

38,421

52,134

467,474$150,731,332¥12,388,608¥11,595,387   Property management expenses

Property-Related Expenses

2,864,253

2,573,006

34,849,170  Utilities expenses

1,802,945

1,686,108

21,936,307   Property and other taxes

25,241,795

2,074,623

2,081,803  Casualty insurance

51,33447,963

624,582  Repairing expenses

700,971585,2888,528,671

4,690,797

4,433,226

57,072,608  Depreciation   Other rental expenses
Property-Related Profits

203,683

187,9892,478,198¥11,671,025¥10,687,970$142,000,554

16. SUPPLEMENTAL CASH FLOW INFORMATIONCash and cash equivalents
The following table represents a reconciliation of cash and cash equivalents at March 31, 2012 and September 30, 2011:
Thousands of yen

Cash and deposits with banks
Cash and deposits with banks held in trust
Time deposits with maturities ofmore than three months
Cash and cash equivalents

U.S. dollars

As of March 31, 2012

As of September 30, 2011

As of March 31, 2012

¥14,934,843¥15,363,085$181,711,196

3,726,607

4,003,095

45,341,371(6,000,000)(8,000,000)(73,001,582)¥12,661,450¥11,366,180$154,050,985

17. LEASESThe Company owns office buildings under leases and earns rent income. As of March 31, 2012 and September 30, 2011, the future lease
revenues under the non-cancelable operating leases are as follows:
Thousands of yen

U.S. dollars

As of March 31, 2012

As of September 30, 2011

As of March 31, 2012

$230,936,003

Due within one year

¥18,980,630¥16,963,645

Due after one year

25,640,891

26,244,552

311,970,940

Total¥44,621,521¥43,208,197$542,906,942

18. SUBSEQUENT EVENTSFor the six months ended March 31, 2012
”Not applicable”
Japan Real Estate Investment Corporation 37

38 Japan Real Estate Investment Corporation

Profile

Corporate Data
As of March 31, 2012

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

Executives

Transfer Agent

Executive Director:

Noritada Terasawa

Sumitomo Mitsui Trust Bank, Limited

Supervisory Directors:

Kenji Kusakabe

1-4-1, Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan		Tomohiro Okanoya		

Auditors

Paid-in Capital

Ernst & Young ShinNihon LLC¥363,371,780,000

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

Contents
Financial Highlights

p. 1

Top 10 Unitholdersp. 1

Unit Price Performancep. 1

Number of Units Outstanding

Incorporation

549,040

May 11, 2001

Number of Unitholders

Executive Office

16,202

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

Stock Listing

The Strengths of Japan Real Estate
Investment Corporation

p. 2

Portfolio Highlights

p. 3

Asset Management Summaryp. 4

Subsequent Events

p. 5

History after IPO

p. 6

To Our Unitholders

p. 8

The Portfolio of Japan Real Estate
Investment Corporation

p.12

Overview of Portfolio Properties

p.15

Financial Section

p.21

Corporate Data

p.39

Tokyo Stock Exchange

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

Securities CodePlanning Department8952

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

Type of Investment Corporation

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

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

Japan Real Estate Investment Corporation 39

M A RC H 2 0 1 2
Semiannual Report
For the period from October 1, 2011 to March 31, 2012

J a p a n R e a l E s tat e I n v e s t m e n t C o r p o r at i o n

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

MA R C H 2 0 1 2 s e m i a n n u a l r e p o r t

Japan Real Estate Investment Corporation