SEP TEMBER2006
S E M I A N N UA L
R EP O R T
For the period from April 1 to September 30, 2006

Japan Real Estate Investment Corporation

PROFILE

Japan Real Estate Investment Corporation (the “Company”) was established as oneof the f irst real estate investment corporations in Japan, following revisions to the
Law Concerning Investment Trusts and Investment Corporations of Japan, as
amended, or the Investment Trust Law. Its investments focus primarily on off ice
buildings, aiming to maintain geographical diversity while seeking stable growth anddividends in the medium to long term. The Company was listed on the Tokyo Stock
Exchange (“TSE”) on September 10, 2001. (Securities Code: 8952)
Note: Investment corporations, including Japan Real Estate Investment Corporation, are special legal entities
incorporated and operated under the Investment Trust Law. Accordingly, the “units” of such investment
corporations, including the units of the Company, are governed by the Investment Trust Law and represent
the equity interests in such investment corporations, which may differ in certain material respects from the“shares” governed by the Company law of Japan and representing the equity interests in Japaneseordinary corporations incorporated and operated under the Company law of Japan. Investors and readers
are specifically reminded to pay attention to such differences when reviewing this semiannual report andmaking any investment decision on or in respect of the “units” of the Company. “Unitholders” of theCompany 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 consequences of an investment in the unitsof the Company, with specific reference to their own legal, tax and other situation and any recent changes inapplicable laws, guidelines or their interpretation.

THE STRENGTHS OF JAPAN REAL ESTATE INVESTMENT CORPORATION• Steady growth — Total amount of acquisition prices reached ¥418,693 million ($3,551
million) at the end of September 2006.
• Acquisition of Sanno Grand Building (additional share) in April 2006 for ¥10,700 million($91 million), Sendai Honcho Honma Building (additional share) in June 2006 for¥250 million ($2 million) and Hirokoji Tokio Marine Nichido Building in September
2006 for ¥1,680 million ($14 million)• Strengthening of portfolio by the Company’s first sale of properties (JAL Sales Building, ShinYokohama First Building, Niigata Ishizuecho Nishi-Bandaibashi Building and Kanazawa
Minamicho Building)• Revenues and profits have continuously increased from IPO to the end of September 2006.
Operating revenues for the 10th period achieved ¥15,570 million ($132 million), and operating
profits reached ¥7,041 million ($60 million).
• Portfolio of 49 high-quality off ice buildings as of September 30, 2006
• Superior geographic and tenant diversity with a 98.2% occupancy rate
(as of September 30, 2006)• Collaboration with Mitsubishi Estate Co., Ltd., Tokio Marine & Nichido Fire Insurance Co.,
Ltd., The Dai-ichi Mutual Life Insurance Company, and Mitsui & Co., Ltd.
• Highest issuer credit ratings for a J-REIT: A+ from Standard & Poor’s, A1 from Moody’s InvestorsService and AA from Rating and Investment Information, Inc. (R&I)

CONTENTSFINANCIAL HIGHLIGHTS
TOP 10 UNITHOLDERSUNIT PRICE PERFORMANCEPORTFOLIO HIGHLIGHTSNEW PORTFOLIO PROPERTIESPROPERTIES SOLDSUBSEQUENT EVENTSHISTORY AFTER IPO

p. 1
p. 1
p. 1
p. 2
p. 3
p. 5
p. 6
p. 8

TO OUR UNITHOLDERS
THE PORTFOLIO OF
JAPAN REAL ESTATEINVESTMENT CORPORATIONOVERVIEW OF PORTFOLIOPROPERTIESFINANCIAL SECTION
CORPORATE DATA

p. 10

p. 14
p. 17
p. 25
p. 40

FINANCIAL HIGHLIGHTS
For the Period from April 1, 2006 to September 30, 2006

Thousands of U.S. dollars(Note 1)Millions of yen
For the period from
April 1, 2006 to
September 30, 2006

Operating Revenues
Operating Prof its
Income before Income Taxes
Net Income

15,570
7,041
5,977
5,976

Net Operating Income (NOI) (Note 2)
Funds from Operations (FFO) (Note 3)
FFO Multiple (Note 4)

For the period from
October 1, 2005 to
March 31, 2006

13,962
6,319
5,586
5,585

For the period from For the period from
April 1, 2005 to
October 1, 2004 to
September 30, 2005
March 31, 2005

13,119
6,226
5,510
5,509

10,747
4,701
4,121
4,120

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

For the period from
April 1, 2006 to
September 30, 2006

10,151
4,358
3,831
3,830

132,063
59,726
50,69750,688

10,740
9,578
8,978
7,131
6,672
91,098
8,257
7,945
7,526
5,762
5,488
70,03821.0 times 22.1 times 21.1 times 19.7 times 20.8 times 21.0 times

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

5,976
345,400
17,302

5,585
345,400
16,172

5,509
345,400
15,951

4,120
260,400
15,824

3,830
260,400
14,711

50,688345,400
146.75

Notes: 1. Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥117.90 = US$1.00, the foreign exchange rate on
September 30, 2006, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen has been or could bereadily converted, realized or settled into U.S. dollars at that rate or any other rate.
2. NOI = (Property-Related Revenues – Property-Related Expenses) + Depreciation
3. FFO = Net Income – Gains (Losses) from Sales of Specified Assets + Depreciation
4. FFO Multiple = Unit Price at End of the Respective Term ÷ FFO per Unit (Annualized)(Annualized portion of the calculation given in note 4 assumes a fiscal period of 183 days for the period ended September 30, 2004, 182 days for theperiod ended March 31, 2005, 183 days for the period ended September 30, 2005, 182 days for the period ended March 31, 2006, and 183 days for theperiod ended September 30, 2006.)

TOP 10 UNITHOLD ERS
As of September 30, 2006
Company

NikkoCiti Trust and Banking Corporation (Toshin Acc.) .................................................................................
Japan Trustee Services Bank, Ltd. (Shintaku Acc.) ............................................................................................
Trust & Custody Services Bank, Ltd. (Toshin Acc.) ..........................................................................................
The Master Trust Bank of Japan, Ltd. (Shintaku Acc.) ......................................................................................
Mitsubishi Estate Co., Ltd. ................................................................................................................................
The Chugoku Bank, Ltd. ...................................................................................................................................
Tokio Marine & Nichido Fire Insurance Co., Ltd. ............................................................................................
The Bank of Ikeda, Ltd. .....................................................................................................................................
The Yamanashi Chuo Bank, Ltd. .......................................................................................................................
The Joyo Bank, Ltd. ...........................................................................................................................................

Units% of Total Units
Outstanding

26,33021,015
14,656
13,358
10,160
9,495
8,120
7,900
7,300
5,438

7.62%
6.08%
4.24%
3.87%
2.94%
2.75%
2.35%
2.29%
2.11%
1.57%

UNIT PRICE PERFORMANCETOPIX

Unit Price

PO Price

200%

175%

150%

125%

100%

75%

60%

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

2001

2002

2003

2004

2005

2006

Japan Real Estate Investment Corporation 1

PORTFOLIO HIGHLIGHTS
TRENDS IN THE STATE OF PORTFOLIO MANAGEMENT

Number ofbuildings

Total numberof tenants(Note)

Total leasable
floor space

Occupancy
rate

September 2001

20

198

133,927m 2

94.6%

March 2002

24

328

201,884m 2

94.0%

September 2002

27

339

215,928m 2

95.3%

March 2003

30

359

236,693m 2

94.4%

September 2003

32

384

246,062m 2

95.1%

March 2004

36

444

273,157m 2

94.8%

September 2004

39

466

293,105m 2

93.6%

March 2005

46

609

336,026m 2

97.6%

September 2005

50

742

364,610m 2

98.6%

March 2006

52

782

400,090m 2

98.7%

April 2006

52

784

410,452m 2

98.9%

May 2006

52

781

410,459m 2

98.6%

June 2006

48

752

392,352m 2

98.6%

July 2006

48

748

392,352m 2

98.2%

August 2006

48

743

392,352m 2

98.4%

September 2006

49

754

396,173m 2

98.2%

Total leasable f loor space (m 2)100,000

170,000

240,000

310,000

380,000

450,000

Total leasablef loor space
Occupancy rate

10th period

60.0

65.0

70.0

75.0

80.0

85.0

90.0

95.0

100.0

Occupancy rate (%)

Note: In the event that the same tenant occupies several buildings, the tenant is calculated as one tenant in the total number of tenants.

PORTFOLIO BREAKDOWNAs of September 30, 2006

Proper ties bygeographicr eg ion(Percentage based on
acquisition price)

Tenants byindustr yt ype

Other major
cities(15.7%)( Percentage basedon leased area)

Transport services and travel 1.2%
Steel and metals 1.6%
Temporary staff agency 1.9%
Ceramics 1.9%
Textiles 2.0%

Others11.4%

Communications 2.6%
Construction 2.6%

Tokyo metropolitan area,
excluding 23 wards(2.2%)

Tokyo 23 wards(82.1%)

Information
services
11.8%

Machinery 4.6%

Real estate 6.5%

Electric devices 7.1%

Pharmaceuticals 7.7%

2 Japan Real Estate Investment Corporation

Serviceindustries
18.3%

FinanceandRetail insurance
9.8%
andrestaurants
8.8%

NEW PORT FOLIO PROPERTIESPROPERTIES ACQUIRED DURING THE PERIOD ENDED SEPTEMBER 30, 2006

Notes: 1. In “Property Summary,” concerning real estate and other assets of which the Company is a partial owner through co-ownership or sectional ownership, the figures for “Sitearea”and“Floor area of building” represent total site area and total floor space for the entire building.
2. In “Leasing Conditions,” the figures represent information of the portion owned by the Company, unless otherwise stated.

Sanno Grand Building (Additional share acquisition)
Property Summary
Type of specified asset:
Acquisition price:
Acquisition date:
Location:
Intended use:
Site area:
Floor area of building:
Structure:

Ownership (Note)¥10,700 million ($91 million)
April 3, 2006
Chiyoda-ku, Tokyo
Office space, retail stores
3,663m2 (39,438ft2)
33,875m2 (364,637ft2)
Above ground: 10 floors
Below ground: 3 floors
September 1966

Completion:
Note:

Ownership (Share of co-ownership for both land and building: 49.0%)* With this additional share acquisition, the share of co-ownership in this property
for the Company became 99.0%.

Leasing Conditions (As of September 30, 2006) (Note)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:
Note:

52 tenants
20,926m2 (225,251ft2)
20,652m2 (222,302ft2)
98.7%

Number of tenants shows the figure for the entire building, while the figures for leasable floor
space, leased area and occupancy rate are for the 99% area of the building under JRE's coownership.

Property Acquisition Merits

Shinjuku
Tokyo

Shibuya

Shinagawa

Located in front of Akasaka-Mitsuke
Station, this property has very convenient
access to several subway lines. It is also alandmark building in the Akasaka area.
Large-scale renewal work has brought thebuilding up to the latest standards forearthquake-proof construction andinterior specifications. This additional
share acquisition raised JRE’s share of coownership to 99.0%, enabling JRE to
manage the property more effectively.

Sendai Honcho Honma Building(Additional share acquisition)
Property Summary
Type of specified asset:
Acquisition price:
Acquisition date:
Location:
Intended use:
Site area:
Floor area of building:
Structure:
Completion:
Note:

Trust beneficiary right in trust of real estate¥250 million ($2 million)
June 28, 2006
Sendai, Miyagi Prefecture
Office space, retail stores
1,437m2 (15,473ft2)
8,247m2 (88,775ft2)
Above ground: 11 floors
November 1991

Land: Ownership (Share of co-ownership: 31.864% of 1 out of 3 lots)
Building: Compartmentalized building units and co-ownership of compartmentalizedbuilding units (Ownership of building: 6.61%)* On June 28, 2006, the Company set up an additional trust fund after theacquisition which enabled it to control a 100% trust beneficiary rights thereof.

Leasing Conditions (As of September 30, 2006)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:

17 tenants
6,241m2 (67,185ft2)
6,162m2 (66,335ft2)
98.7 %

Property Acquisition Merits

SendaiTokyo

Located in a traditional and concentrated
office area in Sendai City, the property has
exceptionally convenient access, situatedwithin a one-minute walk from the Hirosedori
Subway Station, and a seven-minute walkfrom JR Sendai Station. With its high-quality
specifications, the Sendai Honcho Honma
Building responds to a variety of tenant needs.
This additional share acquisition raised JRE’sshare of co-ownership to 100.0%, enabling
JRE to manage the property more effectively.

Japan Real Estate Investment Corporation 3

Hirokoji Tokio Marine Nichido Building
Property Summary
Type of specified asset:
Acquisition price:
Acquisition date:
Location:
Intended use:
Site area:
Floor area of building:
Structure:
Completion:

Ownership¥1,680 million ($14 million)
September 22, 2006
Nagoya, Aichi Prefecture
Office space, retail stores
786m2 (8,469ft2)
6,445m2 (69,374ft2)
Above ground: 9 floors
Below ground: 2 floors
September 1987

Leasing Conditions (As of September 30, 2006)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:

11 tenants
3,849m2 (41,433ft2)
3,121m2 (33,600ft2)
81.1%

Property Acquisition Merits

Tokyo
Nagoya4 Japan Real Estate Investment Corporation

Located in Fushimi, one of Nagoya's main
business districts, and facing Hirokoji
Street, the main avenue running east-towest in central Nagoya, this property
offers convenient access to Fushimi
Station (a five-minute walk) on the
Higashiyama and Tsurumai subway lines.
Robust export industries, rising capital
investment and employment growthunderpin a strong office building market.

PROPERTIES SOLD
As of June 28, 2006

Niigata Ishizuecho
Nishi-Bandaibashi
Building

Location :Site area :Floor area of building :Structure :Completion :JAL Sales Building

Niigata, Niigata Prefecture
957m2 (10,311ft2)
6,410m2 (69,000ft2)
Above ground: 8 floors
Below ground: 1 floor
November 1984

Location :Site area :Floor area of building :Structure :Completion :Meguro-ku, Tokyo
1,401m2 (15,086ft2)
5,269m2 (56,721ft2)
Above ground: 6 floors
Below ground: 1 floor
September 1991

Kanazawa Minamicho
Building

Location :Site area :Floor area of building :Structure :Completion :Kanazawa, Ishikawa Prefecture
887m2 (9,549ft2)
5,163m2 (55,576ft2)
Above ground: 9 floors
March 1987

Shin-Yokohama First
Building

Location :Site area :Floor area of building :Structure :Completion :Yokohama, Kanagawa Prefecture
1,528m2 (16,447ft2)
10,403m2 (111,981ft2)
Above ground: 10 floors
Below ground: 2 floors
April 1992

(Millions of yen)

Name

Date of sales

Appraisal value(End of March 2006)

Sales priceProfits or losses
from sales

JAL Sales Building

June 28 , 2006

1,490

2,593

1,272

Shin-Yokohama First Building

June 28 , 2006

1,640

1,755

-1,178

Niigata Ishizuecho Nishi-Bandaibashi Building

June 28 , 2006

729

1,490

454

Kanazawa Minamicho Building

June 28 , 2006

985

1,165

-147

4,844

7,003

400

Total

Japan Real Estate Investment Corporation 5

SUBSEQUENT EVENTSADDITIONAL ISSUE OF UNITS

Issuance date: ............................................................October 24, 2006
Issue price: ...........................................................¥1,009,400 ($8,561)
Number of units issued: .....................................................64,600 units

Aggregate amount of issue price : ..............¥65,207 million ($553 million)
Commencement date
for the calculation of cash dividends: ...........................October 1, 2006

Note: With the procurement of funds from the issue of units, the Company repaid short-term loans of ¥ 4,500 million ($38 million) on October 31, 2006and ¥ 58,000 million ($492 million) on November 24, 2006.

PROPERTIES ACQUIRED AFTER THE PERIOD ENDED SEPTEMBER 30, 2006

Notes: 1. In “Property Summary,” concerning real estate and other assets of which the Company is a partial owner through co-ownership or sectional ownership, the figures for “Sitearea”and“Floor area of building” represent total site area and total floor space for the entire building.
2. In “Leasing Conditions,” the figures represent information of the portion owned by the Company, unless otherwise stated.

Nishiki Park Building
Property Summary
Type of specified asset:
Acquisition price:
Acquisition date:
Location:
Intended use:
Site area:
Floor area of building:
Structure:
Completion:

Ownership (Note)¥3,850 million ($33 million)/¥1,300 million ($11 million)
October 2, 2006 / November 1, 2006
Nagoya, Aichi Prefecture
Office space, retail stores, residence
2,170m2 (23,363ft2)
25,091m2 (270,087ft2)
Above ground: 22 floors
Below ground: 4 floors
August 1995

Note: Land: Ownership (Share of co-ownership: 54.3489% of 1,786.45m 2 [1lot]) andterm leasehold interest (share of quasi-co-ownership: 272,736 / 384,380
of 384m 2 [1lot])
Building: Share of co-ownership of compartmentalized building units(60.93025% share of co-ownership of 13,296.06m 2 of the office/shop
spaces from the first floor to the twentieth floor and 90% share of coownership of 999.50m 2 of the residential space from the twenty-first floor
to the twenty-second floor)*Ownership of building : 57.04651%

Leasing Conditions (As of November 1, 2006) (Note)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:

48 tenants
8,059m2 (86,747ft2)
7,959m2 (85,671ft2)
98.8 %

Note: The figures do not include the residential space of the building.

Property Acquisition Merits

Tokyo
Nagoya6 Japan Real Estate Investment Corporation

Located in Fushimi, one of Nagoya's
main business districts, and facing
Sakura Street, a main thoroughfare,this property offers convenient access to
Marunouchi Station (a one-minute walk)on the Sakuradori and Tsurumai
subway lines. Burgeoning economic
environment underpins growing
office demand.

SUMMARY OF PREFERRED CAPITAL CONTRIBUTION CERTIFICATES ADDITIONALLY ACQUIREDType of assets acquired: Preferred capital contribution certificates of 5,360 units
Acquisition price: ¥268 million ($2.3 million)
Acquisition date: November 24, 2006

The Company underwrote certificates as follows. The acquisition shown above is the third acquisition.
Issuance date

Number of units

Amounts per unit

Total amount of issuance

19,120¥ 50,000 ($424)¥956 million ($8.1 million)

November 24, 2005

920

¥ 50,000 ($424)¥46 million ($0.4 million)

November 24, 2006

5,360

¥ 50,000 ($424)¥268 million ($2.3 million)

March 29, 2005

Concurrent acquisition of rights granting priority to purchase properties after completion of construction(preferential purchasing rights)

TMK (Special Purpose Company)
Harumi Front TMK

Property

Specified corporate bonds&
Special purpose borrowing

80%

Preferred capital contribution certificatesSpecified capital contribution

JRE’s total contribution:¥1,270 million ($11 million)
JRE’s share of preferred
capital contribution: 49.9%(Approximately 9.9%of total project cost)

20%

Summary of Property held by TMK

Property Summary
Name of development
Project:
Location:
Site area:
Total project area:
Leasable floor space:
Intended use:
Total project cost:
Construction
Commencement:
Completion:

Harumi Center Building
2-5-24, Harumi, Chuo-ku, Tokyo
4,664m2 (50,210ft2)
27,365m2 (294,563ft2)
20,812m2 (224,022ft2)
Office space, retail stores, parking area
¥12,821 million ($109 million)
May 2005
November 2006

Japan Real Estate Investment Corporation 7

HISTORY AF TER IPO
Since listing on the Tokyo Stock Exchange (“TSE”) as the first J-REIT in Japan, the Company has
established a firm track record over the past 10 fiscal periods. As the Company concluded its 10th fiscal
period ended September 30, 2006, the total acquisition price for properties reached ¥418,693 million.
Throughout its history, the Company has sustained stable management while realizing steady growth
and taking the initiative as a J-REIT pioneer. During the fiscal period under review, the Company
accelerated efforts to streamline and strengthen its portfolio. In addition to acquiring quality
properties, the Company sold properties for the first time ever in its history, disposing of four during
the 10th fiscal period.
Sep. 2001
Listed on TSE as first J-REIT
Sep. 2001
IPO
May 2002
First Follow-On(First for a J-REIT)

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

2
201,884m
2

Oct. 2003
Second Follow-On(189,815m )328 Tenants

Apr. 2005
Third Follow-On
Period Ended
Largest additional issue (until then) of
Sep. 2001
units since listing of J-REIT
Period Ended(total subscription of ¥70,210 million ($596 million))Mar. 2002
Feb. and Mar. 2002
Acquired Issuer Credit Rating (First for a J-REIT)
Standard & Poor’s A+ (Outlook: Stable)
Moody’s A2 (Outlook: Stable)(205,796m )339 Tenants

Period Ended
Sep. 2002

Jun. 2002
First Investment Corporation Bond Issue (First credit
rated issue for an investment corporation bond)
Apr. 2003
Second/Third Investment Corporation Bond Issue
Nov. 2004
Moody’s upgraded its credit rating from A2 to A1 with outlook of stable.
Dec. 2004
R& I issued an AA issuer credit rating.
Mar. 2005
Acquisition of preferred capital contribution certificates(First for a J-REIT)
Sep. 2005
Fourth Investment Corporation Bond Issue (First J-REIT ever to issue investment
corporation bonds without a negative pledge clause or other financial covenants)

8 Japan Real Estate Investment Corporation

2
215,928m
2

Period Ended
Mar. 2003
Period Ended
Sep. 2003
Period Ended
Mar. 2004
Period Ended
Sep. 2004

94.6%
94.0%

95.3%
OCCUPANCY RATE

94.4%

Stable management

95.1%

Listed on
TSE¥ 92,845(Trend in operating conditions)

94.8%
97.6%

93.6%
¥ 144,697 ¥164,277
Million(24)

Million(20)

Million(27)¥ 183,542
Million(30)¥192,607 ¥218,437
Million(32)

Million(36)¥239,827 ¥290,510
MillionMillion
(39)

(46)

98.6%

¥326,560
Million
(50)

98.7%

¥412,766
Million(52)

98.2%¥418,693
Million(49)

TOTAL ACQUISITION PRICE (TOTAL PROPERTIES ACQUIRED)

Steady growth(Acquisitions)

2236,693m
2(223,410m )359 Tenants2
246,062m
2

TOTAL LEASABLE FLOOR SPACE ( LEASED AREA )(233,925m )384 Tenants

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

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

2336,026m
2(327,962m )609 Tenants

2364,610m
2(359,620m )742 Tenants

2400,090m
2(394,764m )782 Tenants

2396,173m
2(389,012m )754 Tenants

Period Ended
Mar. 2005

Forward-looking initiatives

Period Ended
Sep. 2005(J-REIT management)

Listing and issuanceof units

Period Ended
Mar. 2006
Period Ended
Sep. 2006

Credit ratings,
diversificationof investment methods,etc.

Japan Real Estate Investment Corporation 9

TO OUR UNITHOLDERS

10 Japan Real Estate Investment Corporation

In this fifth year since public listing ,our goal is to achieve continued
stable operations.

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

FINANCIAL RESULTS AND OUTLOOKI

With respect to our financial strategy, on October 2,n the wake of improved corporate earnings and2006, the Company decided to issue 64,600 new investment

employment conditions in the 10th fiscal period

units through public offering with the goal of raising funds(six months ended September 30, 2006), theto cover repayment of loans and for the acquisition ofJapanese economy showed a moderate but steadyproperties and for other purposes. As a result, the Company

business recovery. Under these circumstances, the Company

raised ¥63,211 million ($536 million) on October 24, 2006.

continued to achieve increases in revenues and profits, andConsequently, the loan to value ratio* declined to the low

we are pleased to report another satisfactory fiscal period

30% range, and we continue to maintain a solid financial

for our unitholders. In the 10th fiscal period, the Company

position.

recorded operating revenues of ¥15,570 million ($132* Loan to value ratio: Interest-bearing debt/Total assets

million)*, up 11.5% from the previous period. Operating

For the 11th fiscal period (October 1, 2006 to Marchprofits rose 11.4% to ¥7,041 million ($60 million). After31, 2007), the Company forecasts operating revenues ofdeducting expenses for interest payments on loans and other¥16,430 million ($139 million), income before income taxes

non-operating expenses, income before income taxesof ¥6,780 million ($58 million) and net income of ¥6,780

increased 7.0% to ¥5,977 million ($51 million), and net

million ($58 million). The Company plans to declare a cash

income climbed 7.0% to ¥5,976 million ($51 million). As

dividend of ¥16,530 ($140.20) per unit.

a result, the Company declared a cash dividend of ¥17,302($146.75) per unit for the half year.

Our forecasts for the 12th fiscal period (April 1, 2007
to September 30, 2007) are operating revenues of ¥16,540

In the fiscal period under review, the Company

million ($140 million), income before income taxes ofacquired three properties for a total acquisition amount of¥6,820 million ($58 million), net income of ¥6,820 million¥12,630 million ($107 million), including additional($58 million), and a cash dividend of ¥16,600 ($140.80)

acquisitions of shares in existing properties, and also soldper unit.

four properties for a total sale price of ¥7,003 million ($59

Despite expectations for moderate expansion of themillion). As a result, the Company's properties as ofJapanese economy, uncertainties remain overall concerning

September 30, 2006 consisted of 49 office buildings with athe impact of the U.S. economy on Japanese markets,

total acquisition amount of ¥418,693 million ($3,551

increases in interest rates, and the impact of rising crude oil

million) and total leasable floor area of 396,173 m 2

and raw material prices on corporate earnings.

(approximately 4,264,370 ft2), with a total of 754 tenants.

In the market for leased office space, vacancy rates in

Since September 30, 2006, the Company has been

central Tokyo and certain other regional urban centers arecontinually focused on the advancement of REIT

demonstrating marked improvement, and rent levels areoperations. With respect to external growth, we acquired

expected to rise for some office buildings. On the othercompartmentalized building units of the Nishiki Park

hand, selection of property by tenants is becoming more

Building, a new property, on two separate occasions, andcompetitive in terms of location, building quality andalso acquired additional preferred capital contribution

features, and trends toward a bipolarization of the market

certificates issued by the Harumi Front Special Purpose

are likely to grow stronger.

Company for the third time.

At the same time, tenants in the office market haveJapan Real Estate Investment Corporation 11

The Company shall become the market leader in the next stage as well,mobilizing all of its know-how and enthusiasm to fulfill its mandate
from unitholders to increase unitholder value.
increasingly stringent demands with respect to high-quality

in order not to miss opportunities to acquire prime

building

services.

properties that become available. In February 2006, we

Consequently, tenants have become increasingly selective

acquired Kitanomaru Square for ¥81,555 million ($692

when leasing office space. We anticipate that it will become

million), with ¥80,000 million ($679 million) of theeven more important for suppliers to provide services that

financing procured from bank loans. At that time, we were

accurately and promptly reflect the needs of tenants, andable to keep the interest rate down to a very low 0.2745%

to deliver added value that differentiates their buildings

and obtain the bank loans unsecured. This is primarily thefrom the competition.

result of our conservative financial strategy and its

management

andvalue-added

In the real estate market, the Company expects that

implementation. Moreover, property sellers have a great

entities such as private funds, pension funds, anddeal of confidence in the Company's ability to pay theinstitutional investors, in addition to J-REITs, will continue

contract price, as JRE is already a recognized name in theto actively invest in real estate. Accordingly, we anticipate

real estate market.

that competition to acquire prime properties in urban
centers will intensify. Therefore, to produce steady results

External Growththat extend into the future, the Company adheres to theTfollowing management policies with respect to financial
strategy and internal and external growth. In this fifth year
since public listing, our goal is to achieve continued stable
operations.

he following is an explanation of our policies
concerning external growth. Diversificationof investment is vital to sound asset
management. Five years ago we began to

manage assets valued at approximately ¥90,000 million* Gain on sale of properties accounted for ¥400 million ($3.4 million) of total
operating revenues.

($763 million). To create greater diversification against
risk, we considered that at least ¥300,000 million ($2,545

MANAGEMENT POLICIES

million) in aggregate property acquisitions would be

Financial Strategy

necessary, and therefore, placed a premium on increasingT

he greatest challenge facing us in terms ofasset volume until that amount was reached. To achievefinancial strategy is maintaining our sound

this, we focused primarily on leveraging our information

financial position built up over the years. As

network, including sponsor companies. As a result, we were

the Japanese economy recovers, interest rates

able to steadily accumulate assets at relatively reasonable

are eventually expected to rise. As rising interest rates leadprices and have now expanded our asset base to ¥420,000

to ballooning interest payments, it is imperative that wemillion ($3,562 million), far exceeding our initial target.

work to prevent resulting major economic damage. In other

Fortunately, competition for the acquisition of property

words, it is essential to limit the range of impact that higher

was not as fierce then as it is today, and this was a supportinginterest rates will have on earnings, while also delaying theirfactor.

impact. To that end, our policy is to retain a low percentage

However, aggressive investing continues in today'sof interest-bearing debt at the longest term fixed interest

real estate market, and competition for the acquisition ofrate possible.

prime real estate is intensifying. Therefore, when we do

In addition, because of the excellent ratings theparticipate in bids, we are almost never the first bidder, andCompany has obtained from rating agencies, it is able tothis makes it extremely difficult to promote external growth.

obtain low-interest loans at favorable terms. It is extremelyConsequently, having achieved the necessary mini-

important for a REIT to be able to expeditiously raise funds

mum diversification of real estate risk, the Company no

12 Japan Real Estate Investment Corporation

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

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

longer goes out of its way to acquire new properties. Thatand occupancy rates increased following an overall reboundis not to say that we are putting a stop to growth in scale;in corporate earnings. In addition, rent levels for new

our policy, to the extent possible, is to carefully select prime

tenants began to increase one and a half years ago, thus

properties mainly through one-on-one transactions rather

making it possible for the Company to raise rents withthan through direct competition such as bidding.

existing tenants beginning from this year. As a result of

In addition, we will take steps to enhance the quality

these changes, from the 8th period, the Company has beenof our portfolio by selling off properties as necessary. As aable to increase revenue through existing properties alone,

start, in the 10th period, we sold properties for the first time.

without new property acquisitions. Given these conditions,

The gain on the sale amounted to ¥400 million ($3.4

the Company plans to promote internal growth through amillion), or a dividend increase of about ¥1,160 ($9.84) per

two-pronged approach of renting vacant office space at asunit. However, because our dividend policy is based onhigh a price as possible, and negotiating rent increases withrental income, the gain on the sale was simply the end result

existing tenants.

of the sale. Due to unforeseeable changes in the rental
market and other factors, acquisitions do not always produce

Since the launch of the J-REIT market over five years

the expected return. After having acquired properties,

ago, 40 investment corporations have sprung up and theshould a better understanding of the market lead us tomarket continues to mature. Considering this, thedetermine that continuously holding them is not in the

Company, a J-REIT pioneer, is proud of the great impact

future best interest of our unitholders, we will sell them inand huge success it has enjoyed over the past five years.

order to further raise the quality of our portfolio.

Meanwhile, as the market grows and competition
intensifies, the J-REIT market is facing its next stage ofInternal Growthdevelopment. The Company shall become the market leaderOur third policy pertains to internal growth.

in the next stage as well, mobilizing all of its know-how andAt present, internal growth is our primaryenthusiasm to fulfill its mandate from unitholders tomanagement focus.

increase unitholder value. I thank all of our unitholders for

The Company has achieved its 10th

their unwavering support and understanding.

consecutive period of revenue and profit growth; however,during the first three to four years after public listing, therental market was unfavorable. In the midst of slack
corporate earnings, an increasing cost consciousness led
corporations to close their sales locations and they continued
to cut back. Unfortunately, our existing properties did not

Taketo Yamazaki
Executive Director of Japan Real Estate Investment Corporation

generate increased earnings; but rather the ability to increase
revenue and profit came through the acquisition of new
properties, or in other words, through external growth.
The market, however, began to change two years ago,

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

Japan Real Estate Investment Corporation 13

THE PORTFOLIO OF JAPAN REAL ESTATE INVEST MENT CORPORATIONAs of September 30, 2006

PROPERTIES ROSTER
NumberName of building

Location

Type ofspecified asset

Acquisitiondate

Acquisition
price(¥ millions)

10/31/2002
2/24/2006
5/31/2002
8/15/2002
9/25/2001
4/1/2005
7/29/2005
1/31/2005
4/3/2006
total
8/1/2003
9/25/2001
7/22/2002
3/10/2005
3/15/2005
3/14/2003
9/10/2001
9/25/2001
9/1/2004
9/13/2005
9/25/2001
11/1/2004
9/10/2001
3/24/2004
4/1/2004
11/22/2002
10/9/2003
11/30/2001
11/14/2003
4/1/2004
total
2/28/2005
9/25/2001
9/25/2001
8/2/2004

5,000 (1.2%)
81,555 (19.5%)
9,520 (2.3%)
4,810 (1.1%)
27,267 (6.5%)
14,700 (3.5%)
7,000 (1.7%)
10,20010,70020,900 (5.0%)
7,200 (1.7%)
3,173 (0.8%)
5,250 (1.3%)
16,830 (4.0%)
5,353 (1.3%)
7,680 (1.8%)
4,859 (1.2%)
2,808 (0.7%)
7,830 (1.9%)9,350 (2.2%)
2,738 (0.7%)5,500 (1.3%)
5,123 (1.2%)
6,670 (1.6%)
8,700 (2.1%)
4,885 (1.2%)
12,200 (2.9%)
34,600 (8.3%)
3,740
360
4,100 (1.0%)
8,500 (2.0%)
3,541 (0.8%)
1,728 (0.4%)4,500 (1.1%)

3/31/2005
9/25/2001
10/11/2001
total
9/25/2001

3,300
1,232
1,342
2,574
3,375

Tokyo 23 wards

I- 1
I- 2
● I- 3● I- 4● I- 5● I- 6● I- 7● I- 8Genki Medical Plaza
Kitanomaru Square
MD Kanda Building
Kandabashi Park Building
Mitsubishi Soken Building
Nibancho Garden
Burex Kojimachi Building
Sanno Grand Building

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

Ownership
Ownership
Ownership
Ownership
Trust
Ownership
Ownership
Ownership

I- 9
I-10
● I-11● I-12● I-13● I-14● I-15● I-16● I-17● I-18● I-19● I-20● I-21● I-22● I-23● I-24● I-25● I-26● I-27

Yurakucho Denki Building
Kodenmacho Shin-Nihonbashi Building
Burex Kyobashi Building
Ginza Sanwa Building
Ryoshin Ginza East Mirror Building
Aoyama Crystal Building
Shiba 2Chome Daimon Building
Cosmo Kanasugibashi Building
Shinwa Building
Tokyo Opera City Building
Takanawadai Building
Higashi-Gotanda 1Chome Building
Omori-Eki Higashiguchi Building
Nippon Brunswick Building
Yoyogi 1Chome Buildingda Vinci Harajuku
Jingumae Media Square Building
Shibuya Cross Tower
Ebisu Neonato

Yurakucho, Chiyoda-ku
Nihonbashi-Kodenmacho, Chuo-ku
Kyobashi, Chuo-ku
Ginza, Chuo-ku
Ginza, Chuo-ku
Kita-Aoyama, Minato-ku
Shiba, Minato-ku
Shiba, Minato-ku
Nishi-Shinjuku, Shinjuku-ku
Nishi-Shinjuku, Shinjuku-ku
Higashi-Gotanda, Shinagawa-ku
Higashi-Gotanda, Shinagawa-ku
Omori-Kita, Ota-ku
Sendagaya, Shibuya-ku
Yoyogi, Shibuya-ku
Jingumae, Shibuya-ku
Jingumae, Shibuya-ku
Shibuya, Shibuya-ku
Ebisu, Shibuya-ku

Ownership
Trust
Ownership
Ownership
Ownership
Ownership
Trust
Trust
Ownership
Ownership
Trust
Ownership
Trust
Ownership
Ownership
Ownership
Ownership
Ownership
Ownership

I-28
I-29
● I-30● I-31

Harmony Tower
Otsuka Higashi-Ikebukuro Building
Ikebukuro 2Chome Building
Ikebukuro YS Building

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

Ownership
Trust
Trust
Ownership
Ownership
Ownership

●
●

●
●

●
●

Tokyo metropolitan area excluding 23 wards
●

II-1
II-2

Hachioji First Square
Saitama Urawa Building

Hachioji, Tokyo
Saitama, Saitama Prefecture

●

II-3

Kawasaki Isago Building

Kawasaki, Kanagawa Prefecture

●

Trust

(0.8%)(0.6%)(0.8%)

Other major cities●

III- 1
III- 2

Jozenji Park Building
Sendai Honcho Honma Building

Sendai, Miyagi Prefecture
Sendai, Miyagi Prefecture

Ownership
Trust●

III- 3Kanazawa Park Building

Kanazawa, Ishikawa Prefecture

Ownership

III- 4
III- 5● III- 6● III- 7● III- 8

Hirokoji Tokio Marine Nichido Building
Nagoya Hirokoji Building
Nagoya Misono Building
Kyoto Shijo Kawaramachi Building
Sakaisujihonmachi Building

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

Ownership
Ownership
Ownership
Ownership
Ownership

III- 9

Midosuji Daiwa Building

Osaka, Osaka Prefecture

Trust

III-10
III-11● III-12● III-13● III-14● III-15

Kobe Itomachi Building
Lit City Building
NHK Hiroshima Broadcasting Center Building
Tosei Tenjin Building
Tenjin Crystal Building
Hinode Tenjin Building

Kobe, Hyogo Prefecture
Okayama, Okayama Prefecture
Hiroshima, Hiroshima Prefecture
Fukuoka, Fukuoka Prefecture
Fukuoka, Fukuoka Prefecture
Fukuoka, Fukuoka Prefecture

●

●
●

●

●
●

14 Japan Real Estate Investment Corporation

Trust
Ownership
Ownership
Ownership
OwnershipTrust

1/31/2005
9/25/2001
6/28/2006
total
2/28/2002
3/3/2003
total
9/22/2006
9/10/2001
8/8/2003
12/20/2001
9/25/2001
12/26/2003
total
9/25/2001
2/28/2002
total
9/25/2001
2/01/2006
3/25/2004
9/25/2001
6/1/2005
9/10/2001
total

1,000 (0.2%)
2,924
250
3,174 (0.8%)
2,880
1,700
4,580 (1.1%)
1,680 (0.4%)
14,533 (3.5%)
1,865 (0.4%)
2,650 (0.6%)
2,264
1,900
4,164 (1.0%)
6,934
7,380
14,314 (3.4%)
1,436 (0.3%)
4,650 (1.1%)
1,320 (0.3%)
1,550 (0.4%)5,000 (1.2%)
3,657 (0.9%)
418,693 (100.0%)

Percentage ofownership of thebuilding (%)

Completion

Appraisal value
at the end of period(¥ millions)

100.0
100.0
100.0
56.76
100.0
31.345
100.0
99.0

1985
2006
1998
1993
1970
2004
2005
1966

6,210
82,7009,680
5,210
33,000
16,1006,930
25,1004,791m2
25,678m2
6,269m2
3,687m2
18,006m2
9,316m2
4,495m2
20,926m2(51,577ft2)(276,402ft2)(67,480ft2)(39,695ft2)(193,819ft2)(100,282ft2)(48,384ft2)(225,251ft2)

4,791m2
25,678m2
6,269m2
3,687m2
18,006m2
9,316m2
4,495m2
20,652m2(51,577ft2)(276,402ft2)(67,480ft2)(39,695ft2)(193,819ft2)(100,282ft2)(48,384ft2)(222,302ft2)

1
5
2
7
4
1
1
52

221
643
293
172
1,062
490
162
969

(1.5%)(4.2%)(1.9%)(1.1%)(7.0%)(3.2%)(1.1%)(6.4%)

10.78
100.0
100.0
70.95
100.0
100.0
100.0
100.0
100.0
8.368
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
12.29939

1975
1991
2002
1982
1998
1982
1984
1992
1989
1996
1991
2004
1989
1974
2003
1987
1998
1976
1994

7,610
3,420
6,240
17,300
4,650
8,770
6,930
3,470
8,270
11,300
2,730
6,700
5,460
8,090
10,1006,080
15,10043,3005,370

4,694m2
3,897m2
4,279m2
4,329m2
2,875m2
4,898m2
9,643m2
4,062m2
6,197m2
9,242m2
4,067m2
5,205m2
7,708m2
7,347m2
7,772m2
3,109m2
5,558m2
29,819m2
2,462m2(50,531ft2)(41,950ft2)(46,068ft2)(46,604ft2)(30,949ft2)(52,724ft2)(103,799ft2)(43,726ft2)(66,707ft2)(99,489ft2)(43,783ft2)(56,035ft2)(82,972ft2)(79,085ft2)(83,660ft2)(33,470ft2)(59,832ft2)(320,978ft2)(26,511ft2)

4,694m2
3,897m2
4,279m2
4,329m2
2,875m2
4,898m2
9,539m2
4,062m2
6,197m2
9,024m2
4,067m2
4,540m2
7,708m2
7,298m2
7,772m2
3,109m2
4,606m2
29,726m2
2,462m2(50,531ft2)(41,950ft2)(46,068ft2)(46,604ft2)(30,949ft2)(52,724ft2)(102,678ft2)(43,726ft2)(66,707ft2)(97,137ft2)(43,783ft2)(48,878ft2)(82,972ft2)(78,556ft2)(83,660ft2)(33,470ft2)(49,586ft2)(319,969ft2)(26,511ft2)

15
5
1
13
8
7
24
8
9
108
1
3
19
18
1
4
8
51
3

283
154
150
371
134
293
311
133
267
471
114
217
252
332
283
199
361
1,485
151

(1.9%)(1.0%)(1.0%)(2.4%)(0.9%)(1.9%)(2.1%)(0.9%)(1.8%)(3.1%)(0.8%)(1.4%)(1.7%)(2.2%)(1.9%)(1.3%)(2.4%)(9.8%)(1.0%)

29.253305
100.0
100.0
100.0

1997
1987
1990
1989

11,800
3,480
1,540
5,150

10,929m2
7,114m2
2,186m2
5,797m2(117,646ft2)(76,580ft2)(23,532ft2)(62,401ft2)

10,929m2
7,114m2
2,186m2
5,797m2(117,646ft2)(76,580ft2)(23,532ft2)(62,401ft2)

17
9
9
8

419
186
71
202

(2.8%)(1.2%)(0.5%)(1.3%)

50.6611
100.0

1996
1990

3,300
2,550

6,344m2
4,510m2(68,290ft2)(48,550ft2)

6,260m2
4,510m2(67,387ft2)(48,550ft2)

39
16

166
135

(1.1%)(0.9%)

100.0

1990

3,360

6,831m2(73,537ft2)

6,379m2(68,671ft2)

12

162

(1.1%)

50.0
100.0

1993
1991

1,070
3,450

2,518m2
6,241m2(27,106ft2)(67,185ft2)

2,400m2
6,162m2(25,842ft2)(66,335ft2)

17
17

68
151

(0.5%)(1.0%)

89.0

1991

5,610

21,202m2(228,223ft2)

20,076m2(216,096ft2)

68

541

(3.6%)

100.0
100.0
100.0
100.0
100.0

1987
1987
1991
1982
1992

1,680
15,900
1,890
2,140
4,610

3,849m2
21,624m2
3,470m2
6,800m2
11,574m2(41,433ft2)(232,765ft2)(37,354ft2)(73,197ft2)(124,587ft2)

3,121m2
20,890m2
3,470m2
6,800m2
11,574m2(33,600ft2)(224,864ft2)(37,354ft2)(73,197ft2)(124,587ft2)

11
28
9
33
17

4
731
96
143
254

(0.0%)(4.8%)(0.6%)(0.9%)(1.7%)

100.0

1991

15,90020,450m2(220,127ft2)

20,450m2(220,127ft2)

25

670

(4.4%)

100.0
27.748827.085100.0
100.0
74.4844

1989
2005
1994
1992
1993
1987

951
5,220
1,550
1,480
4,970
3,580
467,001

3,478m2
9,965m2
5,477m2
4,000m2
5,600m2
5,860m2
396,173m2(37,443ft2)(107,269ft2)(58,964ft2)(43,057ft2)(60,283ft2)(63,078ft2)(4,264,370ft2)

3,279m2
9,965m2
5,335m2
3,688m2
5,122m2
5,507m2
389,012m2(35,299ft2)(107,269ft2)(57,436ft2)(39,697ft2)(55,137ft2)(59,279ft2)(4,187,289ft2)

17
40
12
17
23
12
754

68
288
148
97
219
175
15,169(0.4%)(1.9%)(1.0%)(0.6%)(1.4%)(1.2%)(100.0%)Total leasable
floor space

Leased area

Note : Total revenues from leasing operations include revenues for the period from four properties sold on June 28, 2006.

Total
number oftenants

Revenues fromleasing operations(¥ millions)Japan Real Estate Investment Corporation 15

MAJOR TENANTS ROSTER
Rank

1
2
3
4
5
6
7
8
9
10

Name of tenant

Name of building

Banyu Pharmaceutical Co., Ltd.
Mitsubishi Research Institute Inc.
Seven & i Holdings Co., Ltd.
Space Design, Inc.
FAST RETAILING CO., LTD.
Yamano Gakuen (Note)
The Dai-ichi Mutual Life Insurance Company
TOTO Ltd.
Toshiba Solutions Corporation
Asahi Kasei Pharma Corporation

Leased area

Kitanomaru Square (also includes 1 other building)
17,014m2 (183,144ft2)
Mitsubishi Soken Building
14,529m2 (156,399ft2)
Nibancho Garden
9,316m2 (100,282ft2)
Burex Kojimachi Building (also includes 1 other building) 8,774m2 (94,453ft2)
Kitanomaru Square
8,476m2 (91,245ft2)
Yoyogi 1Chome Building
7,772m2 (83,660ft2)
Midosuji Daiwa Building (also includes 7 other buildings) 7,660m2 (82,455ft2)
Midosuji Daiwa Building (also includes 1 other building)
6,906m2 (74,341ft2)
Takanawadai Building (also includes 2 other buildings)
5,331m2 (57,393ft2)
MD Kanda Building
5,144m2 (55,371ft2)

Percent of totalleased area

4.4%
3.7%
2.4%
2.3%
2.2%
2.0%
2.0%
1.8%
1.4%
1.3%

Note: The lease agreement concluded with the tenant shall be terminated on April 30, 2007.

LOCATIONS OF PORTFOLIO PROPERTIES
II-1–II-3: Tokyo metropolitan area
excluding 23 wards

III-1–III-15: Other major cities

II-2
III-1
III-2

II-1

III-3

II-3

III-8 III-5
III-12 III-10
III-4
III-11III-9 III-7III-6
III-13
III-14
III-15

I-1–I-31: Tokyo
23 wards

I-30
I-31

I-29

I-1
I-2
I-3
I-17
I-6
I-4
I-10
I-18
I-22
I-7 I-5
I-11
I-23 I-24
I-12
I-8
I-25
I-9 I-13
I-26
I-14
I-15
I-27
I-16
I-19

I-28

I-20

I-21

Tokyo Station

16 Japan Real Estate Investment Corporation

OVERVIEW OF PORTFOLIO PROPERTIES As of September 30, 2006
Note: Concerning real estate and other assets of which the Company is a partial owner through co-ownership or compartmentalized building units, the figures for “Site area” and “Floor
area of building” represent total site area and total floor space for the entire building.

Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building:
Structure :Completion :Genki Medical Plaza

Kitanomaru Square

● I-1

● I-2

Chiyoda-ku, Tokyo
1,052m2 (11,332ft2)
6,722m2 (72,355ft2)
Above ground: 8 floors
Below ground: 1 floor
September 1985

Location :Site area :Floor area of building:
Structure :Completion :MD Kanda Building

Kandabashi Park
Building

● I-3

● I-4

Chiyoda-ku, Tokyo
1,085m2 (11,688ft2)
8,185m2 (88,104ft2)
Above ground: 10 floors
February 1998

Location :Site area :Floor area of building :Structure :Completion :Mitsubishi Soken
Building

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

Chiyoda-ku, Tokyo
3,441m2 (37,042ft2)
26,372m2 (283,875ft2)
Above ground: 15 floors
Below ground: 2 floors
July 1970

Chiyoda-ku, Tokyo
1,218m2 (13,116ft2)
9,370m2 (100,860ft2)
Above ground: 10 floors
Below ground: 1 floor
July 1993

Nibancho Garden● I-5

Location :Site area :Floor area of building :Structure :Chiyoda-ku, Tokyo
5,821m2 (62,657ft2)
57,279m2 (616,548ft2)
Above ground: 26 floors
Below ground: 2 floors
January 2006

● I-6

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

Chiyoda-ku, Tokyo
11,003m2 (118,445ft2)
57,031m2 (613,877ft2)
Above ground: 14 floors
Below ground: 2 floors
April 2004

Burex Kojimachi
Building

Sanno Grand
Building

● I-7

● I-8

Chiyoda-ku, Tokyo
967m2 (10,416ft2)
6,526m2 (70,252ft2)
Above ground: 11 floors
Below ground: 1 floor
January 2005

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

Chiyoda-ku, Tokyo
3,663m2 (39,438ft2)
33,875m2 (364,637ft2)
Above ground: 10 floors
Below ground: 3 floors
September 1966
Japan Real Estate Investment Corporation 17

Yurakucho Denki
Building

Kodenmacho ShinNihonbashi Building● I-10● I-9

Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Chiyoda-ku, Tokyo
5,749m2 (61,891ft2)
70,287m2 (756,569ft2)
Above ground: 20 floors
Below ground: 4 floors
September 1975

Location :Site area :Floor area of building :Structure :Completion :Burex Kyobashi
Building

Ginza Sanwa Building● I-11● I-12Chuo-ku, Tokyo
756m2 (8,138ft2)
5,470m2 (58,884ft2)
Above ground: 8 floors
Below ground: 1 floor
February 2002

Location:
Site area:
Floor area of building:
Structure:
Completion:● I-14● I-13Completion:

Location :Site area :Floor area of building :Structure :Completion :Chuo-ku, Tokyo615m2 (6,622ft2)
4,104m2 (44,183ft2)
Above ground: 8 floors
Below ground: 1 floor
October 1998

Chuo-ku, Tokyo
1,119m2 (12,048ft2)
8,851m2 (95,271ft2)
Above ground: 9 floors
Below ground: 2 floors
October 1982

Aoyama Crystal
Building

Ryoshin Ginza East
Mirror Building

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

Chuo-ku, Tokyo773m2 (8,324ft2)
5,822m2 (62,677ft2)
Above ground: 9 floors
Below ground: 1 floor
November 1991

Location :Site area :Floor area of building :Structure :Completion :Minato-ku, Tokyo
989m2 (10,649ft2)
8,094m2 (87,127ft2)
Above ground: 10 floors
Below ground: 4 floors
December 1982

Shiba 2Chome
Daimon Building

Cosmo Kanasugibashi
Building● I-15● I-16

Minato-ku, Tokyo
2,820m2 (30,364ft2)
16,235m2 (174,753ft2)
Above ground: 8 floors
Below ground: 2 floors
March 1984

18 Japan Real Estate Investment Corporation

Location :Site area :Floor area of building :Structure :Completion :Minato-ku, Tokyo
758m2 (8,165ft2)
5,420m2 (58,350ft2)
Above ground: 9 floors
Below ground: 1 floor
March 1992

Shinwa Building

Tokyo Opera City
Building● I-17

Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Shinjuku-ku, Tokyo822m2 (8,848ft2)
8,291m2 (89,251ft2)
Above ground: 10 floors
Below ground: 1 floor
November 1989

● I-18Location :Site area :Floor area of building :Structure :Completion :Shinjuku-ku, Tokyo
18,236m2 (196,301ft2)
232,996m2 (2,507,954ft2)
Above ground: 54 floors
Below ground: 4 floors
July 1996

Takanawadai
Building

Higashi-Gotanda
1Chome Building● I-19● I-20Shinagawa-ku, Tokyo
1,416m2 (15,244ft2)
5,762m2 (62,029ft2)
Above ground: 13 floors
January 1991

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

Shinagawa-ku, Tokyo
1,539m2 (16,576ft2)
6,460m2 (69,539ft2)
Above ground: 8 floors
July 2004

Omori-Eki
Higashiguchi Building

Nippon Brunswick
Building● I-21● I-22

Ota-ku, Tokyo
2,199m2 (23,673ft2)
14,095m2 (151,721ft2)
Above ground: 11 floors
Below ground: 2 floors
July 1989

Location :Site area :Floor area of building :Structure :Completion :Shibuya-ku, Tokyo
1,497m2 (16,119ft2)
11,957m2 (128,708ft2)
Above ground: 9 floors
Below ground: 2 floors
March 1974

Yoyogi 1Chome
Buildingda Vinci Harajuku● I-23● I-24

Shibuya-ku, Tokyo
1,755m2 (18,899ft2)
10,778m2 (116,014ft2)
Above ground: 14 floors
Below ground: 1 floor
October 2003

Location :Site area :Floor area of building :Structure :Completion :Shibuya-ku, Tokyo
839m2 (9,038ft2)
4,359m2 (46,922ft2)
Above ground: 7 floors
Below ground: 2 floors
December 1987

Japan Real Estate Investment Corporation 19

Jingumae Media
Square Building

Shibuya Cross Tower● I-26● I-25

Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Shibuya-ku, Tokyo
2,261m2 (24,344ft2)
9,420m2 (101,400ft2)
Above ground: 9 floors
Below ground: 2 floors
March 1998

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

Harmony Tower● I-27● I-28

Shibuya-ku, Tokyo
5,005m2 (53,881ft2)
36,598m2 (393,941ft2)
Above ground: 18 floors
Below ground: 2 floors
October 1994

Location:
Site area:
Floor area of building:
Structure:
Completion:● I-30● I-29Completion :Location :Site area :Floor area of building :Structure :Completion :Toshima-ku, Tokyo
2,121m2 (22,834ft2)
9,531m2 (102,594ft2)
Above ground: 8 floors
Below ground: 1 floor
November 1987

Nakano-ku, Tokyo
10,020m2 (107,860ft2)
72,729m2 (782,851ft2)
Above ground: 29 floors
Below ground: 2 floors
March 1997

Ikebukuro 2Chome
Building

Otsuka HigashiIkebukuro Building

Location :Site area :Floor area of building :Structure :Shibuya-ku, Tokyo
5,153m2 (55,471ft2)
61,862m2 (665,880ft2)
Above ground: 32 floors
Below ground: 3 floors
April 1976

Location :Site area :Floor area of building :Structure :Completion :Toshima-ku, Tokyo
397m2 (4,276ft2)
3,157m2 (33,987ft2)
Above ground: 9 floors
Below ground: 1 floor
May 1990

Ikebukuro YS
Building

Hachioji First
Square● I-31● II-1

Toshima-ku, Tokyo
1,384m2 (14,903ft2)
7,464m2 (80,349ft2)
Above ground: 8 floors
Below ground: 1 floor
December 1989

20 Japan Real Estate Investment Corporation

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

Hachioji, Tokyo
2,989m2 (32,177ft2)
18,329m2 (197,302ft2)
Above ground: 12 floors
Below ground: 1 floor
July 1996

Kawasaki Isago
Building

Saitama Urawa
Building● II-3● II-2

Location :Site area :Floor area of building :Structure :Completion :Saitama, Saitama Prefecture
1,533m2 (16,502ft2)
6,258m2 (67,367ft2)
Above ground: 8 floors
March 1990

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

Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Kawasaki, Kanagawa Prefecture
1,594m2 (17,163ft2)
9,623m2 (103,590ft2)
Above ground: 12 floors
Below ground: 1 floor
December 1990

Jozenji Park Building

Sendai Honcho
Honma Building● III-1● III-2

Sendai, Miyagi Prefecture
1,566m2 (16,864ft2)
7,648m2 (82,326ft2)
Above ground: 8 floors
Below ground: 1 floor
January 1993

Location :Site area :Floor area of building :Structure :Completion :Sendai, Miyagi Prefecture
1,437m2 (15,473ft2)
8,247m2 (88,775ft2)
Above ground: 11 floors
November 1991

Kanazawa Park
Building

Hirokoji Tokio
Marine Nichido
Building● III-3● III-4

Kanazawa, Ishikawa Prefecture
6,642m2 (71,501ft2)
43,481m2 (468,027ft2)
Above ground: 12 floors
Below ground: 2 floors
October 1991

Location :Site area :Floor area of building :Structure :Completion :Nagoya, Aichi Prefecture
786m2 (8,469ft2)
6,445m2 (69,374ft2)
Above ground: 9 floors
Below ground: 2 floors
September 1987

Nagoya Hirokoji
Building

Nagoya Misono
Building● III-5● III-6

Nagoya, Aichi Prefecture
4,095m2 (44,087ft2)
33,377m2 (359,275ft2)
Above ground: 18 floors
Below ground: 2 floors
May 1987

Location :Site area :Floor area of building :Structure :Completion :Nagoya, Aichi Prefecture
805m2 (8,665ft2)
5,348m2 (57,565ft2)
Above ground: 7 floors
Below ground: 1 floor
September 1991
Japan Real Estate Investment Corporation 21

Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Kyoto Shijo
Kawaramachi Building

Sakaisujihonmachi
Building● III-7● III-8

Kyoto, Kyoto Prefecture
1,471m2 (15,840ft2)
9,701m2 (104,421ft2)
Above ground: 9 floors
Below ground: 1 floor
November 1982

Location :Site area :Floor area of building :Structure :Completion :Osaka, Osaka Prefecture
2,036m2 (21,918ft2)
17,145m2 (184,553ft2)
Above ground: 13 floors
Below ground: 2 floors
October 1992

Midosuji Daiwa
Building

Kobe Itomachi
Building● III-9● III-10

Osaka, Osaka Prefecture
3,044m2 (32,772ft2)
31,213m2 (335,977ft2)
Above ground: 15 floors
Below ground: 2 floors
September 1991

Location :Site area :Floor area of building :Structure :Completion :Kobe, Hyogo Prefecture
808m2 (8,703ft2)
4,894m2 (52,679ft2)
Above ground: 10 floors
September 1989

Lit City Building

NHK Hiroshima
Broadcasting Center
Building● III-11● III-12

Okayama, Okayama Prefecture
7,596m2 (81,767ft2)
52,653m2 (566,754ft2)
Above ground: 20 floors
Below ground: 2 floors
June 2005

Location :Site area :Floor area of building :Structure :Completion :Hiroshima, Hiroshima Prefecture
3,296m2 (35,483ft2)
35,217m2 (379,075ft2)
Above ground: 23 floors
Below ground: 2 floors
August 1994

Tosei Tenjin Building

Ten j in Cr ystal
Building● III-13● III-14

Fukuoka, Fukuoka Prefecture
1,221m2 (13,146ft2)
5,588m2 (60,155ft2)
Above ground: 8 floors
March 1992

Location :Site area :Floor area of building :Structure :Completion :22 Japan Real Estate Investment Corporation

Fukuoka, Fukuoka Prefecture
1,835m2 (19,754ft2)
10,432m2 (112,289ft2)
Above ground: 14 floors
Below ground: 1 floor
August 1993

Hinode Tenjin
Building● III-15

Location :Site area :Floor area of building :Structure :Completion :Fukuoka, Fukuoka Prefecture
1,452m2 (15,631ft2)
12,527m2 (134,840ft2)
Above ground: 10 floors
Below ground: 2 floors
August 1987

Japan Real Estate Investment Corporation 23

24 Japan Real Estate Investment Corporation

2QX.JRE-zaimu=0125 07.2.7 11:32 AM ページ 25

FINANCIAL SECTION
SELECTED FINANCIAL DATABALANCE SHEETSSTATEMENTS OF INCOME
STATEMENTS OF CHANGES IN
UNITHOLDERS’ EQUITYSTATEMENTS OF CASH FLOWSNOTES TO FINANCIAL STATEMENTSREPORT OF INDEPENDENT AUDITORS

p. 25
p. 26
p. 28
p. 28
p. 29
p. 30
p. 39

SELECTED FINANCIAL DATA
Thousands of U.S. dollars(Note 1)Millions of yen
For the period from
April 1, 2006 to
September 30, 2006

For the period from
October 1, 2005 to
March 31, 2006

For the period from
April 1, 2005 to
September 30, 2005

For the period from
October 1, 2004 to
March 31, 2005

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

For the period from
April 1, 2006 to
September 30, 2006

Operating Revenues
Operating Expenses
Operating Profits
Income before Income Taxes
Net Income¥15,570
8,528
7,041
5,977
5,976

¥ 13,962
7,643
6,319
5,586
5,585

¥ 13,119
6,893
6,226
5,510
5,509

¥ 10,747
6,046
4,701
4,121
4,120

¥ 10,151
5,792
4,358
3,831
3,830

132,063
72,33659,726
50,69750,688

Total Assets
Interest-Bearing Liabilities
Total Unitholders’ Equity
Unitholders’ Capital

441,163
202,500
207,449
201,472

433,552
196,500
207,058
201,472

355,968
122,000
206,982
201,472

322,358
159,000
137,569
133,448257,372
99,000137,279
133,448

3,741,842
1,717,557
1,759,534
1,708,845

Number of Units
Total Unitholders’ Equity per Unit
(Yen/U.S. dollars)
Cash Distribution
Dividend Payout Ratio
Dividend Per Unit (Yen/U.S. dollars)

345,400

345,400

345,400

260,400

260,400

345,400

600,605
5,976
99.9%
17,302599,475
5,585
99.9%
16,172599,2545,509
100.0%
15,951

528,2994,120
99.9%
15,824

527,1853,830
100.0%
14,711

5,094.19
50,68899.9%
146.75Net Operating Income (NOI)
Funds from Operations (FFO)
Return on Assets (ROA) (Note 2)
Return on Equity (ROE) (Note 3)
EOP Equity Ratio (Note 4)
EOP Interest-Bearing Debt Ratioon Total Assets (Note 5)
FFO Multiple
Debt Service Coverage Ratio (Note 6)

10,740
9,578
8,978
7,131
6,672
91,098
8,257
7,945
7,526
5,762
5,488
70,038
1.4%
1.4%
1.6%
1.4%
1.5%
1.4%
(2.7% annualized) (2.8% annualized) (3.2% annualized) (2.9% annualized) (3.0% annualized) (2.7% annualized)
2.9%
2.7%
2.8%
3.0%
2.8%
2.9%
(5.8% annualized) (5.4% annualized) (5.6% annualized) (6.0% annualized) (5.6% annualized) (5.8% annualized)
47.0%
47.8%
58.1%
42.7%
53.3%
47.0%
45.9%
21.0 times
9.5 times

45.3%
22.1 times
12.3 times

34.3%
21.1 times
14.0 times

49.3%
19.7 times
11.2 times

38.5%
20.8 times
12.7 times

45.9%
21.0 times
9.5 times

Notes 1: Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥117.90 = US$1.00, the foreign exchange rate on
September 30 , 2006, 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 = Income before Income Taxes ÷ Average of Total Assets during the period
3: ROE = Net Income ÷ Average of Net Worth during the period(Annualized portions of the calculations given in notes 2 and 3 above assume a fiscal period of 183 days for the period ended September 30, 2004, 182
days for the period ended March 31, 2005, 183 days for the period ended September 30, 2005 , 182 days for the period ended March 31, 2006 and 183
days for the period ended September 30 , 2006.)
4: EOP Equity Ratio = (Net Worth at end of period ÷ Total Assets at end of period) x 100
5: EOP Interest-Bearing Debt Ratio on Total Assets = (Interest-Bearing Debt at end of period ÷ Total Assets at end of period) x 100
6: Debt Service Coverage Ratio = Net Income before Interest, Taxes, Depreciation and Amortization ÷ Interest Expenses
Japan Real Estate Investment Corporation 25

2QX.JRE-zaimu=0125 07.2.7 11:32 AM ページ 26

BALANCE SHEETSAs of September 30, 2006 and March 31, 2006

Thousands of yen

U.S. dollars (Note 1)

As of September
30, 2006

As of March
31, 2006

As of September
30, 2006¥ 21,102,952¥ 17,485,196$ 178,990,269

105,628

74,566895,914—1,001,998—

295,905

220,423

2,509,798

21,504,486

18,782,184

182,395,981

Land

291,407,261

283,232,146

2,471,647,681

Buildings and structures

137,049,167

138,304,737

1,162,418,726

Machinery and equipment

2,070,922

2,178,032

17,565,076

Tools, furniture and fixtures

90,75250,736

769,741ASSETS
Current Assets:
Cash and bank deposits
Rental receivables
Consumption tax refundable
Other current assets
Total current assets

Property and Equipment, at Cost:

Construction in progress

1,071,673

1,149,831

9,089,686

431,689,778

424,915,484

3,661,490,910(16,023,048)(14,148,305)(135,903,717)

415,666,730

410,767,178

3,525,587,194

1,004,797

1,004,797

8,522,456

Deposits

12,974

12,974110,048

Long-term prepaid expenses

3,307

4,196

28,0562,112,906

2,112,906

17,921,179

828,095

828,095

7,023,710

SubtotalLess accumulated depreciation
Net property and equipment

Investments and Other Assets:
Investment securities

Leasehold rights
Easement
Deferred investment corporation bond issuance costs
Total Assets
The accompanying notes form an integral part of these financial statements

26 Japan Real Estate Investment Corporation

29,91639,888

253,740¥441,163,214¥433,552,222$3,741,842,364

2QX.JRE-zaimu=0125 07.2.7 11:32 AM ページ 27

Thousands of yen

As of September
30, 2006

U.S. dollars (Note 1)

As of March
31, 2006

As of September
30, 2006

LIABILITIESCurrent Liabilities:
Trade accounts payable¥

749,064¥

684,600$

6,353,386

Other payables

981,513846,5638,324,965

Short-term loans

64,500,000

90,500,000

547,073,791

Current portion of long-term loan

6,000,000

24,000,000

50,890,585

Current portion of investment corporation bond

25,000,000—

212,044,105

645,360

319,537

5,473,792

655

1,010

5,562

Accrued consumption taxes

522,577—

4,432,377

Rent received in advance2,425,067

2,608,745

20,568,851

Other current liabilities

3,531

295,916

29,957

100,827,770

119,256,373

855,197,373

Investment corporation bonds

30,000,000

55,000,000

254,452,926

Long-term loans

77,000,000

27,000,000

653,095,844

Deposits received from tenants

25,886,360

25,237,080

219,562,009

Total long-term liabilities

132,886,360

107,237,080

1,127,110,779

Total Liabilities

233,714,131

226,493,454

1,982,308,152

201,472,860

201,472,860

1,708,845,293

5,976,223

5,585,907

50,688,920

Accrued expenses
Accrued income taxes

Total current liabilities
Long-Term Liabilities:

UNITHOLDERS’ EQUITY
Unitholders’ capital
Authorized:
Issued:2,000,000 units
345,400 units

Retained earnings
Total unitholders’ equity

207,449,083

207,058,767

1,759,534,212

Total Liabilities and Unitholders’ Equity¥441,163,214¥433,552,222$3,741,842,364

The accompanying notes form an integral part of these financial statements

Japan Real Estate Investment Corporation 27

2QX.JRE-zaimu=0125 07.2.7 11:32 AM ページ 28

STATEMENTS OF INCOME
For the six months ended September 30, 2006 and March 31, 2006

Thousands of yen

Operating Revenues and Expenses
Operating Revenues:
Rental revenues
Non-rental revenues
Gain on sale of properties
Total operating revenues
Operating Expenses:
Property-related expenses
Asset management fees
Administrative service fees
Other operating expenses
Total operating expenses
Operating profits

U.S. dollars (Note 1)

For the period
from April 1, 2006
to September 30, 2006

For the period
from October 1, 2005
to March 31, 2006

For the period
from April 1, 2006
to September 30, 2006

¥15,066,744
102,638
400,799
15,570,182¥13,899,176
63,749—13,962,925$127,792,574
870,553
3,399,489
132,062,615

7,511,891
653,512
249,067
113,984
8,528,456
7,041,725

6,744,815
571,457
230,858
96,623
7,643,754
6,319,170

63,714,091
5,542,941
2,112,534
966,790
72,336,356
59,726,259

Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Other non-operating revenues
Non-Operating Expenses:
Interest expense
Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance costs
Other non-operating expenses
Income before Income Taxes

4,730
3,059

44
2,795

40,12625,953646,283
376,500
9,972
39,6295,977,131

327,838
376,500
9,972
20,8455,586,853

5,481,623
3,193,384
84,580336,13150,696,620

Income Taxes:
Current
Deferred
Net Income

1,006
0
5,976,124

1,018
(2)
5,585,837

8,535
5
50,688,080

The accompanying notes form an integral part of these financial statements

STATEMENTS OF CHANGES IN UNITHOLDERS’ EQUITY
For the six months ended September 30, 2006 and March 31, 2006
Thousands of yen

Balance as of September 30, 2005
Cash dividends paid
Net income
Balance as of March 31, 2006
Cash dividends paid
Net income
Balance as of September 30, 2006

Units

Unitholders’ capital

Retained earnings

Total

345,400——
345,400——
345,400¥201,472,860——¥201,472,860——¥201,472,860¥ 5,509,545(5,509,475)
5,585,837¥ 5,585,907(5,585,808)
5,976,124¥ 5,976,223¥ 206,982,405(5,509,475)
5,585,837¥ 207,058,767(5,585,808)
5,976,124¥ 207,449,083

U.S. dollars( Note 1)

Balance as of March 31, 2006
Cash dividends paid
Net income
Balance as of September 30, 2006

Units

Unitholders’ capital

Retained earnings

Total

345,400——
345,400$1,708,845,293——$1,708,845,293$ 47,378,353(47,377,513)
50,688,080$ 50,688,920$1,756,223,646(47,377,513)
50,688,080$1,759,534,212

The accompanying notes form an integral part of these financial statements

28 Japan Real Estate Investment Corporation

2QX.JRE-zaimu=0125 07.2.7 11:32 AM ページ 29

STATEMENTS OF CASH FLOWSFor the six months ended September 30, 2006 and March 31, 2006

Thousands of yen

U.S. dollars (Note 1)

For the period
from April 1, 2006
to September 30, 2006

For the period
from October 1, 2005
to March 31, 2006

For the period
from April 1, 2006
to September 30, 2006

¥ 5,977,131
2,682,161
13,497
9,972(4,730)1,022,783¥ 5,586,853
2,359,942
—
9,972
(44)
704,338$ 50,696,620
22,749,464
114,485
84,580(40,126)
8,675,007(31,062)
1,001,998(318)
32,954
2,896,040
3,537,856
64,463
134,949
523,755(183,677)
888—(378,812)
17,299,851
3,347(698,139)(1,360)16,603,699

10,806(747,914)—(21,561)——
302,131(81,800)(109)
185,777
6,712(294,000)
371,976
8,393,082
44(687,120)(972)
7,705,033(263,462)
8,498,714(2,703)
279,51124,563,529
30,007,267
546,767
1,144,609
4,442,369(1,557,910)
7,538—(3,212,997)
146,733,263
28,396(5,921,452)(11,539)
140,828,668

Cash Flows from Investing Activities
Purchases of property and equipment
Purchases of investment securities
Proceeds from deposits
Proceeds from lease deposits received
Repayment of lease deposits
Repayment of bank deposits
Net cash used in investing activities(14,049,415)——
1,839,514(1,190,234)(2,000,000)(15,400,134)(88,698,937)(46,000)
2,134
3,256,479(663,616)—(86,149,940)(119,163,826)——
15,602,330(10,095,289)(16,963,528)(130,620,313)

Cash Flows from Financing Activities
Proceeds from short-term loans
Repayment of short-term loans
Proceeds from long-term loans
Dividends to unitholders
Net cash provided by financing activities
Net increase (decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at beginning of Period
Cash and Cash Equivalents at end of Period

2,000,000(52,000,000)
56,000,000(5,585,808)
414,191
1,617,756
17,485,196¥ 19,102,952

86,500,000(12,000,000)—(5,509,475)
68,990,524(9,454,382)
26,939,578¥ 17,485,196

16,963,528(441,051,739)
474,978,796(47,377,513)
3,513,072
13,721,427
148,305,313$ 162,026,741

Cash Flows from Operating Activities
Income before income taxes
Depreciation and amortization
Loss on retirement of property and equipment
Amortization of investment corporation bond issuance costs
Interest income
Interest expense
Changes in assets and liabilities
Rental receivables and other receivables
Consumption tax refundable
Corporate tax refundable
Prepaid expenses
Proceeds from sale of tangible fixed asset
Proceeds from sales of tangible fixed assets in trust
Trade accounts payable
Other payables
Accured expenses
Rent received in advanceLong-term prepaid expenses
Other long-term liabilities
Other
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by operating activities

The accompanying notes form an integral part of these financial statements

Japan Real Estate Investment Corporation 29

2QX.JRE-zaimu=0125 07.2.7 11:32 AM ページ 30

NOTES TO FINANCIAL STATEMENTS
September 30, 2006 and March 31, 2006

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 36% by Mitsubishi Estate Co., Ltd. (“MEC”), 27% by The Tokio Marine &Nichido Fire Insurance Co., Ltd. (“TMN”), 27% by The Dai-ichi Mutual Life Insurance Company (“DL”) and 10% by Mitsui & Co.,Ltd.
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, TMN and DL under the
Law Concerning Investment Trusts and Investment Corporations of Japan, or the Investment Trust Law.
On September 10, 2001, the Company commenced operations when the Company was listed on the Tokyo Stock Exchange as one of thefirst real estate investment corporations in Japan (so-called “J-REITs”). The Company issued 160,000 units at a price of ¥525,000,
generating gross proceeds of ¥84,000 million. The proceeds from the offering of the units, net of underwriters’ discount, were ¥81,060
million.
On May 8, 2002, the Company completed a second public offering of 65,000 units at a price of ¥490,980, generating gross proceeds of¥31,913 million. The proceeds from the offering of the units, net of underwriters’ discount, were ¥30,892 million.
On October 25, 2003, the Company completed a third public offering of 35,000 units at a price of ¥629,000, generating gross proceeds of¥22,015 million. The proceeds from the offering of the units, net of underwriters’ discount, were ¥21,295 million.
On April 26, 2005, the Company completed a fourth public offering of 85,000 units at a price of ¥826,000, generating gross proceeds of¥70,210 million. The proceeds from the offering of the units, net of underwriters’ discount, were ¥68,024 million. As of September 30,
2006, the Company had total unitholders’ equity of ¥201,472 million with 345,400 outstanding units.
At September 30, 2006, the Company owned a portfolio of 49 office properties concerning an aggregate of approximately 396,173 square
meters of leasable area.
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 Japanese Commercial Code, theSecurities and Exchange Law of Japan and the related regulations, which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are basically a translation of the audited financial statements of the Company, which wereprepared in accordance with Japanese GAAP and were presented in the Securities Report of the Company filed with the Kanto Local
Finance Bureau. In preparing the accompanying financial statements, certain reclassifications and modifications have been made to thefinancial statements issued domestically in order to present them in a format that is more familiar to readers outside Japan. In addition, thenotes 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 ¥117.90=US$1.00, the foreignexchange rate on September 30, 2006, 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 Securities and Exchange Law, amounts of less than one thousand/million yen have been omitted. As aresult, the totals shown in the accompanying financial statements do not necessarily agree with the sum of the individual amounts.
Certain amounts previously reported have been reclassified to conform to the current period’s presentation.

30 Japan Real Estate Investment Corporation

2QX.JRE-zaimu=0125 07.2.7 11:32 AM ページ 31

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESInvestment Security
Non-marketable security classified as other security is carried at cost. Cost of security sold is determined by the moving average method.
Property and equipment
Property and equipment is stated at cost, less accumulated depreciation. The costs of land, buildings and building improvements include
the purchase 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 ............................................................................................................5–50 years
Machinery and equipment...................................................................................3–18 years
Tools, furniture and fixtures ................................................................................3–15 years
Expenditures for repairs and maintenance are charged to income as incurred. Significant renewals and betterments are capitalized.
On August 9, 2002, the Business Accounting Deliberation Council in Japan issued “Accounting Standard for Impairment of Fixed
Assets”. The standard requires the recognition of an impairment loss on certain assets, such as fixed assets, intangible assets andinvestments, individually or as a group, as the difference between the carrying amount and the fair value of the asset or present value using
a discounted cash flow model. The standard requires that an assessment for the impairment be carried out on an asset whenever events orchanges in circumstances indicate that the carried amount may not be recoverable.

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 three years.
New unit issuance costs are charged to income as incurred. The underwriters’ commissions of the public offering are not recognized as newunit issuance costs in the financial statements since such costs are not payable by the Company under the so-called “spread method”. Under
the spread method, the difference between the offering price (the price paid by the unitholder) and the purchase price (the price received
by the Company) is directly paid to the underwriters. The difference incurred at the fourth offering on April 26, 2005 was ¥2,185 million($18,537 thousand).
Revenue recognition
Revenues from leasing of office space are recognized as rental revenues over the lease contract 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 are liable for property taxes for the calendar year including the period from the dateof purchase by the Company through the end of the year since the taxes are imposed on the owner registered in the record as of January 1
based on the assessment made by the local government. The Company pays the amount equivalent to the property taxes to the sellers
applicable to the period since acquisition and includes the amount equivalent to the taxes in the purchase price of each property andcapitalized as cost of the property.

Japan Real Estate Investment Corporation 31

2QX.JRE-zaimu=0125 07.2.7 11:32 AM ページ 32

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 consists 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.

3. INVESTMENT SECURITIESInvestment securities recorded at cost at September 30, 2006 and March 31, 2006 are summarized as follows:
Thousands of yen

Other securities
Non-listed stock

U.S. dollars

As of September
30, 2006

As of March
31, 2006

As of September
30, 2006¥1,004,797¥1,004,797$8,522,456

4. PROPERTY AND EQUIPMENT
Property and equipment at September 30, 2006 and March 31, 2006 consisted of the following:Thousands of yen

As of September 30, 2006
Acquisition Costs

Book Value

U.S. dollars

As of March 31, 2006
Acquisition Costs

As of September 30, 2006

Book Value

Acquisition Costs

Book ValueLand¥236,459,083 ¥236,459,083¥226,564,681 ¥226,564,681 $2,005,590,187 $2,005,590,187

Buildings and structures

114,263,592

113,767,762(10,841,440) 103,422,152(9,082,161)

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

1,487,554(412,445)

969,156,850
104,685,600

1,533,824
1,075,108

81,041(379,413)(91,954,543)

877,202,308

12,617,087
1,154,411

41,110(3,498,268)

9,118,819

687,373(7,575)73,466(3,531)

37,578(64,250)

623,123

Construction in progress

1,071,673

1,071,673

1,149,831

1,149,831

9,089,686

9,089,686

Land in trust

54,948,178

54,948,178

56,667,464

56,667,464

466,057,494

466,057,494

Buildings and structures in trust

22,785,575

Accumulated depreciation(4,450,618)

Machinery and equipment in trust

583,367

Accumulated depreciation(308,567)

Tools, furniture and fixtures in trust

9,711

Accumulated depreciation(2,401)Total

32 Japan Real Estate Investment Corporation

24,536,975
18,334,957(4,355,725)

193,261,876
20,181,249

644,207274,800(325,218)

7,309(2,254)

155,512,783

4,947,989
318,9899,626¥415,666,730(37,749,093)(2,617,194)

2,330,795

82,3687,371¥410,767,178(20,368)

61,999$3,525,587,194

2QX.JRE-zaimu=0125 07.2.7 11:32 AM ページ 33

5. SHORT-TERM LOANS
Short-term loans at September 30, 2006 and March 31, 2006 consisted of the following:Thousands of yen

As of September
30, 2006

Unsecured loan from a bank with variable interest,
due on June 15, 2006¥

U.S. dollars

As of March
31, 2006

As of September
30, 2006—¥ 2,000,000$—

Unsecured loan from a trust bank with variable interest,
due on September 13, 2006—

2,000,000—

Unsecured loan from a bank with variable interest,
due on October 31, 2006—

2,000,000—

Unsecured loan from a trust bank with variable interest,
due on February 1, 2007

4,500,000

4,500,000

38,167,939

Unsecured loan from a bank with variable interest,
due on June 15, 2007

2,000,000—

16,963,528

Unsecured loans from banks and trust bankswith variable interest, due on February 23, 2007

58,000,000

80,000,000

491,942,324

Total¥64,500,000¥90,500,000$547,073,791

The weighted average interest rates applicable to the short-term loans at September 30, 2006 and March 31, 2006 were 0.31042% and0.27255%, respectively, per annum.
Since the period ended September 30, 2006, the Company has committed credit lines of ¥25,000 million ($212,044 thousand) with certain
financial institutions to reduce a refinancing risk. The unused amount of such committed credit lines was ¥25,000 million ($212,044
thousand) at September 30, 2006.

6. INVESTMENT CORPORATION BONDS INCLUDING CURRENT PORTION OF INVESTMENTCORPORATION BOND
Details of total investment corporation bonds outstanding are summarized as follows:
As of September
30, 2006

As of March
31, 2006

As of September
30, 2006

Amount(thousands of yen)Interest rate(%)

Amount(thousands of yen)Interest rate(%)

Amount(U.S. dollars)

Unsecured bonds due on June 21, 2007

¥25,000,000

1.32%¥25,000,000

1.32%$212,044,105

Unsecured bonds due on April 30, 2008

10,000,000

0.69%

10,000,000

0.69%

84,817,642

Unsecured bonds due on April 30, 2010

10,000,000

0.98%

10,000,000

0.98%

84,817,642

Unsecured bonds due on September 29, 2025

10,000,000

2.56%

10,000,000

2.56%

84,817,642

Subtotal¥55,000,000—¥55,000,000—$466,497,031

Less: current portion of investment corporation bond

(25,000,000)

—

—

—

(212,044,105)

Total¥30,000,000—¥55,000,000—$254,452,926

Japan Real Estate Investment Corporation 33

2QX.JRE-zaimu=0125 07.2.7 11:32 AM ページ 34

7. LONG-TERM LOANS INCLUDING CURRENT PORTION OF LONG-TERM LOAN
Long-term loans at September 30, 2006 and March 31, 2006 consisted of the following:Thousands of yen

As of September
30, 2006

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

As of September
30, 2006—¥ 24,000,000

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

3,000,000

3,000,000

25,445,293

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

3,000,000

3,000,000

25,445,293

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

2,000,000

2,000,000

16,963,528

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

5,000,000

5,000,000

42,408,821

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

2,000,000

2,000,000

16,963,528

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

5,000,000

5,000,000

42,408,821

1.33125% unsecured loan from another financial institution,
due on November 1, 2011

5,000,000

5,000,000

42,408,821

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

10,000,000—

84,817,642

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

22,000,000—

186,598,813

1.65925% unsecured loans from banks, trust banks,
and an insurance company, due on June 23, 2011

24,000,000—

203,562,341

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

2,000,000

2,000,000

16,963,528¥ 83,000,000¥ 51,000,000$ 703,986,429(6,000,000)(24,000,000)(50,890,585)¥ 77,000,000¥ 27,000,000$ 653,095,844

Subtotal
Less: current portion of long-term loan
Total

¥

U.S. dollars

As of March
31, 2006$—

8. PLEDGED ASSETSAt September 30, 2006 and March 31, 2006, the following assets were pledged as collateral for the following loans:Thousands of yen

U.S. dollars

Pledged assets:

As of September
30, 2006

As of March
31, 2006

As of September
30, 2006

Bank deposits¥ —¥ 8,000,492$ —Land and leasehold rights—

47,765,093—

Buildings and structures—

15,824,731—

Machinery and equipment—

268,777—

Tools, furniture and fixtures

—

7,371

—

¥ —

¥71,866,465

$ —

Total

34 Japan Real Estate Investment Corporation

2QX.JRE-zaimu=0125 07.2.7 11:32 AM ページ 35

Thousands of yen

U.S. dollars

As of September
30, 2006

As of March
31, 2006

As of September
30, 2006

Current portion of long-term loan

¥ —¥24,000,000

$ —

Total

¥ —

¥24,000,000$ —Loans secured by the pledged assets:

9. UNITHOLDERS’ EQUITYThe Company is required to maintain net assets of at least ¥50 million ($424 thousand), as required pursuant to the Investment Trust
Law.

10. INCOME TAXESAt September 30, 2006 and March 31, 2006, the Company’s deferred tax assets consist mainly of the enterprise tax, which is notdeductible for tax purposes. The reconciliation of tax rate difference between the adjusted statutory tax rate and the effective tax rate forthe six months ended September 30, 2006 and March 31, 2006 were as follows:
For the period from April 1, 2006
to September 30, 2006

For the period from October 1, 2005
to March 31, 2006

Statutory tax rate ...................................................................................39.39% ............................................39.39%
Deductible dividend distribution ..........................................................(39.38%)..........................................(39.38%)
Others .....................................................................................................0.01% ..............................................0.01%
Effective tax rate......................................................................................0.02% ..............................................0.02%
The Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation
Measures Law of Japan, or the STML, an investment corporation is allowed to deduct dividends of accounting profits, 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 taxable income 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 of 100% of retained earnings in the amount of ¥5,976 million ($50,688 thousand) subsequent to September 30, 2006
and treated it as tax deductible dividend. The Company will not distribute the dividends in excess of accounting profit under
Article 32-3 of the Articles of Incorporation.

Japan Real Estate Investment Corporation 35

2QX.JRE-zaimu=0125 07.2.7 11:32 AM ページ 36

11. PER UNIT INFORMATION
The following table summarizes information about net assets per unit and net income per unit at September 30, 2006 and March 31, 2006,
and for the periods then ended:Yen

For the period
from April 1, 2006
to September 30, 2006

U.S. dollars

For the period
from October 1, 2005
to March 31, 2006

For the period
from April 1, 2006
to September 30, 2006

Net assets at period end per unit

¥600,605¥599,475$5,094

Net income per unit

¥ 17,302¥ 16,172$ 147

In calculating the net assets per unit, the amount of the net assets is adjusted for the cash distribution declared in the subsequent period.
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.

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

For the period
from April 1, 2006
to September 30, 2006

U.S. dollars

For the period
from October 1, 2005
to March 31, 2006¥

For the period
from April 1, 2006
to September 30, 2006

Purchase of the properties¥12,380,000—$105,004,241

Property management fees

950,817889,415

8,064,610

Utilities

68,26761,530579,029

Insurance

1,200

68,022

10,184

Other operating expenses

4,301

4,042

36,488Interest expense

25,444—

215,814

Repair and maintenance248,712395,3312,109,520

13. BREAKDOWN OF PROPERTY-RELATED REVENUES AND EXPENSES
For the six months ended September 30, 2006 and March 31, 2006
Thousands of yen

U.S. dollars

For the period
from April 1, 2006
to September 30, 2006

For the period
from October 1, 2005
to March 31, 2006

For the period
from April 1, 2006
to September 30, 2006

Property-Related Revenues¥15,169,382¥13,962,925$128,663,127

Rental Revenues

15,066,744

13,899,176

127,792,574

Rental revenues

11,069,700

10,216,646

93,890,592

Common area charges

2,481,982

2,286,350

21,051,591

483,014462,239

4,096,814

1,032,046

933,939

8,753,576

Parking revenues
Other rental revenues
Non-Rental Revenues

102,638

63,749870,553

Cancellation charges

38,73638,350328,558

Other miscellaneous revenues

63,901

25,398541,995

36 Japan Real Estate Investment Corporation

2QX.JRE-zaimu=0125 07.2.7 11:32 AM ページ 37

Property-Related Expenses

7,511,891

6,744,815

63,714,091

Property management fees

1,766,740

1,684,379

14,985,075

Utilities expenses

1,198,307

1,068,682

10,163,759

Property and other taxes

1,271,584

1,035,497

10,785,280

Casualty insurance

38,90935,242330,019

Repairs and maintenance513,335

528,519

4,353,992

2,682,161

2,359,942

22,749,464

40,85232,551

346,501¥ 7,657,491¥ 7,218,110$ 64,949,036

Depreciation
Other rental expenses
Profits

14. BREAKDOWN OF GAIN ON SALE OF PROPERTIESFor the six months ended September 30, 2006 and March 31, 2006
Thousands of yen

For the period
from April 1, 2006
to September 30, 2006

U.S. dollars

For the period
from October 1, 2005
to March 31, 2006

For the period
from April 1, 2006
to September 30, 2006

JAL Sales Building
Revenue from sale of property¥ 2,593,000

Cost of property

1,253,829

Other sales expenses
Gain on sale of property¥

66,725¥ 1,272,445¥¥ 1,755,277¥—$21,993,215—

10,634,689—

565,946—$10,792,580

Shin-Yokohama First Building
Revenue from sale of property
Cost of property
Other sales expenses
Loss on sale of property—$14,887,846

2,896,040—

24,563,529

37,505—318,113¥(1,178,268)¥—$ (9,993,796)¥ 1,490,000¥—$12,637,829—

8,452,349

Niigata Ishizuecho Nishi-Bandaibashi Building
Revenue from sale of property
Cost of property

996,531

Other sales expenses
Gain on sale of property

39,150¥454,318¥¥ 1,165,000¥—

332,061—$ 3,853,419

Kanazawa Minamicho Building
Revenue from sale of property
Cost of property
Other sales expenses
Loss on sale of property—$ 9,881,255

1,287,494—

10,920,229

25,200—213,740—$ (1,252,714)¥ (147,694)¥

Japan Real Estate Investment Corporation 37

2QX.JRE-zaimu=0125 07.2.7 11:32 AM ページ 38

15. LEASESThe Company owns office buildings under leases and earns rent income. As of September 30, 2006 and March 31, 2006, the future lease
revenues under the non-cancelable operating leases are as follows:
Thousands of yen

Due within one year

U.S. dollars

As of September
30, 2006

As of March
31, 2006

As of September
30, 2006¥ 8,387,902¥ 8,482,390$ 71,144,211

Due after one year

27,072,595

31,833,988

229,623,375

Total¥35,460,498¥40,316,379$300,767,587

16. SUBSEQUENT EVENTSIssuance of additional units
Based on the approval by the Board of Directors’ meeting held on October 2, 2006, the Company completed a public offering of 64,600
additional units on October 24, 2006, at an offering price of ¥1,009,400 ($8,561) per unit, or ¥65,207 million ($553,072 thousand) intotal. The proceeds from public offering, net of underwriters’ discount, were ¥63,211 million ($536,142 thousand) at an issue price of¥978,500 ($8,299). As a result of the issuance of additional units, the Company has unitholders’ capital of ¥264,683 million ($2,244,987
thousand) with 410,000 units at October 24, 2006.
Early repayment of loans
On November 13, 2006, the Company resolved to repay the following existing short-term loans on November 24, 2006 before their due
date:(1) Total amount of loans:¥58,000 million ($491,942 thousand)(2) Lenders:

The Bank of Tokyo-Mitsubishi UFJ, Ltd.:¥16,000 million ($135,708 thousand)

Mizuho Corporate Bank, Ltd.:¥16,000 million ($135,708 thousand)

The Sumitomo Trust & Banking Co., Ltd.:¥16,000 million ($135,708 thousand)Shinsei Bank, Limited:¥10,000 million ($84,818 thousand)(3) Interest rate:

0.2745% (from February 23, 2006, through November 23, 2006)(4) Start of the loan period:

February 23, 2006

(5) Planned due:February 23, 2007

Appropriation of retained earnings
On November 17, 2006, the Board of Directors resolved to effect the payment of a cash distribution of ¥17,302 per unit aggregating¥5,976 million ($50,688 thousand) to unitholders at the record date of September 30, 2006.

38 Japan Real Estate Investment Corporation

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Japan Real Estate Investment Corporation 39

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CORPORATE DATA
As of September 30, 2006

Transfer Agent

Executives
Executive Director:
Supervisory Directors:

Taketo Yamazaki

The Sumitomo Trust & Banking Co., Ltd.

Kenji Kusakabe

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

Tomohiro Okanoya
Auditors
Paid-in Capital

Ernst & Young ShinNihon¥201,472,860,000

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

Number of Units Issued

Incorporation

345,400

May 11, 2001

Number of Unitholders

Executive Office

14,248Japan Real Estate Investment Corporation
3-1, Marunouchi 3chome, Chiyoda-ku, Tokyo 100-0005, Japan

Stock Listing
Tokyo Stock Exchange

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

Securities CodePlanning Department, Manager

8952

Toshiya Kobayashi
Tel: 81-3-3211-7921

Type of Investment Corporation

Fax: 81-3-3212-8886

Closed-end corporate type fundE-mail: toshiya-kobayashi@j-rea.co.jp

40 Japan Real Estate Investment Corporation

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

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

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