Japan Real Estate Investment Corporation

SEMIANNUAL REPORTMarch 2017
For the period from October 1, 2016 to March 31, 2017

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

Contents
The Strengths of Japan Real Estate Investment Corporation

p. 1

To Our Unitholders

p. 2

Financial Highlights

p. 6

Top 10 Unitholdersp. 6

Unit Price Performance

p. 6

Portfolio Highlights

p. 7

Asset Management Summaryp. 8

Asset Size, Property Acquisitions, and Performance Trends

p.12

The Portfolio of Japan Real Estate Investment Corporation

p.14

Overview of Portfolio Properties

p.19

Financial Section

p.25

Other Information

p.50

Corporate Data

p.53

The Strengths of Japan Real Estate Investment Corporation
STRENGTHS

Stable Dividends

Collaboration withSponsors— Actual dividend per unit— ‌Expertise offor the March 2017 period:¥8,544

Mitsubishi Estate Co., Ltd.
and Mitsui & Co., Ltd.
is being fully utilized.

— Forecasted dividend per unit
for the September 2017 period:¥8,810

Steady Growth with
Quality Portfolio

Sound Financial Base
As of March 31, 2017

As of March 31, 2017

— Total acquisition price:¥944,723 million—
69
Maintainsproperties— ‌The first listed J-REIT, showing steady
performance for 31 consecutive periods—	‌Highest level of credit ratings for a J-REIT:

A+
AA

from S&P,

A1

from Moody’s,

from R&I—	‌LTV (Interest-bearing debt / Total assets):

41.1%—	‌Long-term, fixed interest-bearing debt ratio*:

90.2%* ‌Long-term, fixed interest loans + Investment corporation bonds (including
current portion of Long-term, fixed interest loans and Investment­corporation bonds) / Total interest-bearing debt

Japan Real Estate Investment Corporation1

To Our Unitholders
In the fiscal period ended March 2017, both incomes and revenues increased due to a steadyrise in rental revenues from the existing buildings, as well as a decrease in interest expenses,
which resulted from the benefits of low interest rates. Dividends were up 183 yen, to 8,544
yen, compared to the previous period. The occupancy rate of our portfolio at the end of theperiod reached the highest level of 98.8%. We will continue our efforts to focus on improving
the profitability of our existing buildings through upward rent revisions, as well as to aim forstable dividend growth.

Business Performance for the March 2017 Period
Summary of Financial Results and Cash Dividends

In the investment market for real estate, the continuing favorable

In the March 2017 period (October 1, 2016 to March 31, 2017), Japan

conditions for the financing environment prompted growth in market

Real Estate Investment Corporation (“the Company”) recorded operating

players, such as those who took the advantages of J-REITs. The vigorous

revenues of 30, 818 million yen, increasing 0.1% on the previous period.

appetite for property acquisition keeps the capitalization rate at lower

On the earnings front, operating profit increased 1.6%, to 12,567 million

levels; thus, acquisitions are not straightforward in the current

yen. After deducting expenses for interest payments on loans and otherenvironment.

costs, ordinary profit increased 2.2%, to 11,197 million yen, and profit
had an increase of 2.2%, to 11,186 million yen.
Turning to dividends, the Company will make cash distributions

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

using accounting profits based on the dividend policy outlined ining on the TSE and remains unchanged to this date. Accordingly, theArticle 32-1(2) of the Company’s Articles of Incorporation, in an

Company has been able to provide dividends at 8,544 yen, an increaseamount that exceeds 90% of earnings available for dividends as requiredof 183 yen from the previous period.

by Article 67-15 of the Special Taxation Measures Law of Japan. BasedIn the market for leased office space in the period under review, as

on this policy, keeping below the level of end-of-term unappropriateda result of our efforts to improve occupancy rates through meticulous

retained earnings and reserving the retained earnings brought forward,

property leasing, the Company successfully maintained its record-

the total amount of dividends that the Company has determined to pay

breaking level of occupancy rate, from 98.7% as of September 30,

out is 11,186,744,640 yen for the period under review, which is a multi-

2016 to 98.8% as of March 31, 2017.

ple of 1,309,310—the number of units outstanding as of March 31,
2017. Accordingly, the per-unit cash dividend is 8,544 yen.

As for external growth, on October 3, 2016, the Company
acquired the Kanazawa Kamitsutsumicho Building (Kanazawa,
Ishikawa Prefecture) for 2,780 million yen. This is a recently built

Operating Environment and Performance

property with a competitive edge, situated in Kanazawa, the adminis-

During the March 2017 period (October 1, 2016 to March 31, 2017),

trative and economic center of the Hokuriku region. Elsewhere, thethe Japanese economy continued to follow a moderate yet steady

31-year-old Genki Medical Plaza (Chiyoda-ku, Tokyo) was transferred

recovery, backed by improvement in the exchange rate after the US

on January 25, 2017 at 6,890 million yen, while the Company

presidential election, as well as the sustained financial deregulationacquired shares of Shinjuku Eastside Square (Shinjuku-ku, Tokyo),policies, prompting preferable business performance in the country.

a recently built competitive property, to boost the existing property

In the market for leased office space, the demand for large, recently

ownership by purchasing an additional 3.6% for 6,660 million yen

built properties remains strong mainly in central Tokyo, resulting, if

through an exchange transaction. This property reorganization has

moderately, in the trends of declining vacancies and increasingenhanced the quality of the Company’s portfolio. As a result of theadvertised rents.

above, the Company’s current share of Shinjuku Eastside Square has
increased from 14.0% to 17.6%.

2

Japan Real Estate Investment Corporation

As for external growth, we acquired the Kanazawa Kamitsutsumicho Building and theTamachi Front Building in the March 2017 period, in addition to acquiring additional sharesof the Shiodome Building. Furthermore, we acquired additional shares of Shinjuku Eastside
Square in exchange for Genki Medical Plaza through a swap transaction with Mitsubishi
Estate Co., Ltd., the Company’s sponsor. We will continue to adhere to a consistent evaluation
criteria amid severe competition in property acquisitions as we select properties witha medium- to long-term competitive edge.

The Company also acquired the Tamachi Front Building

Concerning new loans related to property acquisition and the(Minato-ku, Tokyo), which is a recently built, medium-sized property

refinancing of existing loans, the Company carries out loans strategicallysituated in the upcoming business district of Tamachi, for 6,210 million

and flexibly after giving close consideration to the above-mentioned

yen. The existing ownership of the Shiodome Building (Minato-ku,

means, as well as the possibility of repayment with funds procured

Tokyo) was increased by purchasing an additional 5.0% quasi-co-own-from issuing new investment units.

ership interest of the trust beneficiary right for 10,450 million yen. As

During the March 2017 period, the Company issued privatea result, the Company’s current share of said property increased fromplacement investment corporation bonds with DBJ Green Building

45.0% to 50.0%.

Certification as a foray into the J-REIT scheme. This certification

As a result of the above, the Company’s portfolio at the end of the

program is operated by the Development Bank of Japan Inc. (“DBJ”),

fiscal period under review, March 31, 2017, consisted of 69 properties,

with the aim to assess and certify properties for their environmen-

with a total acquisition price of 944,723 million yen. Leasable floor

tal and social awareness. The proceeds partially contributed to fund thearea stood at 835,069 m with 1,482 tenants in total.

additional acquisition of interest on the trust beneficiary right of the2

Shiodome Building.
Notes: 1. The part of the Jingumae Media Square Building site (acquisition price:
614 million yen) that was expropriated by the Tokyo Metropolitan
Government on October 30, 2009, is included in the total acquisition
price. The total acquisition price in the subsequent sections follows thesame convention.
2. Shinjuku South Gate Project (tentative name) (land with leasehold ­interest),
whose building ownership was transferred on August 23, 2013, is includedin the above number of properties and total acquisition price, but is notincluded in leasable floor area or number of tenants. Please note that
Nippon Brunswick Building (land with leasehold interest) was renamed
Shinjuku South Gate Project (tentative name) (land with leasehold i­nterest)
on May 15, 2017.

As a result of these financing activities, as of March 31, 2017,
the Company’s total interest-bearing debt was 369,000 million yen,a 12,650 million yen increase from the end of the previous period.
This amount consists of long-term loans totaling 303,000 million
yen (including the current portion of long-term loans totaling
46,500 million yen), short-term loans totaling 36,000 million yen,
and investment corporation bonds totaling 30,000 million yen (there
is no current portion of investment corporation bonds). The current
LTV ratio stands at 41.1%.

Finance Activities
According to its financial policy, the Company aims to operate theLTV ratio (ratio of interest-bearing debt to total assets) at 30 to 40%,and strives to maintain a sound and conservative financial profile bystaggering maturities, extension of durations and diversification of
stable lenders among other possibilities, taking into consideration the
borrowing cost and existing relationships with lenders.

The Company’s credit ratings as of March 31, 2017 were as follows:
Rating Agency

Credit Rating

S&P Global Ratings Japan Inc.

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

Moody’s Japan K.K.

Rating: A1; Outlook: Stable

Rating and Investment
Information, Inc.

Rating: AA; Outlook: Stable

Japan Real Estate Investment Corporation3

Outlook
Operating Environment(iii) Stabilize revenues and earnings

The Japanese economy is expected to follow a course of moderate	With the aim of stabilizing revenues and earnings, the Company

recovery as a result of improving conditions for employment andwill endeavor to promote fixed lease agreements and secure long-income, as well as various financial policies in force. However, interna-

term leasing with its large-scale tenants.

tional factors such as policies under the new administration in the US,
the Brexit negotiations and instability in Europe, as well as the resulting(iv) Reduce management costs

fluctuations in the financial and capital markets, may lead to an economic

	The Company has introduced sound competitive principles todownturn in Japan, and thus it is necessary to remain vigilant.

a number of property management companies so that theyIn the market for leased office space, the demand is anticipated toperpetually review and improve their management systems andendure without a sharp fall, backed by business activities continuing tocost structures. Along with this, the Company endeavors to ensure

thrive. While it seems unlikely that the future increase of office spaceand enhance tenant satisfaction.

supply expected to materialize in central Tokyo will bring a dramaticturn in the market, it merits close attention to discern changes, includ-

Property Acquisitions and Sales

ing indirect effects in surrounding areas.

The Company has adopted the following policies for acquiring

Regarding the investment market for real estate, fierce competition

properties.

in property acquisition and transactions carried out at higher valuation
are anticipated to continue. Therefore, it is important to be highly(i)	To access property information quickly, the Company continues

selective in making investments while remaining proactive in search

to enhance its property information channels while working toof new properties.

develop new channels.

Property Management(ii)	In its acquisition activities, the Company continues to meticu-

Based on the conditions stated above, the Company will adhere to

lously monitor and examine economic, physical, and legal factors,

the following management policies in order to maintain and improve

including rights-related issues, when selecting properties. In particular,

profitability.

with regard to the structure of buildings, the Company requires
buildings to meet or exceed new earthquake-resistance standards,(i) Strengthen relationships of trust with existing tenantsverifies the need for renovations by ascertaining current conditions

	The Company has contracts with numerous property manage-

accurately based on engineering reports, and exclusively targets

ment companies. Each property management company has

properties capable of maintaining a competitive edge in terms ofdeveloped relationships of trust with its tenants through its daily

the facilities they offer over the medium to long term.

diligence in managing its respective properties over the years.
The Company will work to further solidify these relationships bymaintain its portfolio so that 70% or more of the portfolio proper-

bolster tenant satisfaction, thereby maintaining and improving

ties are located within the Tokyo metropolitan area, with theoccupancy rates and raising rent levels.

remaining 30% or fewer located in other major cities.

(ii) Fill vacancies promptly

Under these policies, the Company will continue to acquire highly	In cooperation with the property management companies men-competitive properties. At the same time, in order to further improvetioned above and their leasing brokers, the Company will actively

the quality of its portfolio, the Company will remain open to theseek the most appropriate tenants for each property, based on

replacement of portfolio properties with due consideration given

location and features, in order to fill current and anticipatedto timing.

vacancies without delay. Furthermore, the Company will work to
identify additional needs for floor area among the existing tenants.

4(iii)	In accordance with its acquisition policies, the Company shallanticipating tenants’ needs and providing tailored services toJapan Real Estate Investment Corporation

Hiroshi Nakajima (Left)
Executive Director of Japan Real Estate Investment Corporation

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

Financial Policy
The Company has adopted the following financial policies.

Performance Forecasts for the September 2017 andMarch 2018 Fiscal Periods
The Company’s forecasts for the September 2017 period (April 1, 2017 to(i)	In principle, the Company shall maintain an LTV ratio below

September 30, 2017) are as follows: operating revenues totaling 31,590

65%. To ensure an even lower interest-bearing debt ratio, themillion yen, operating profit totaling 12,840 million yen, ordinaryCompany adopts the conservative target level of 30% to 40%.

profit totaling 11,550 million yen, and profit totaling 11,540 million yen.
The Company plans to declare a cash dividend of 8,810 yen per unit.

(ii)	The Company shall set the ceiling for the combined total of loans
and investment corporation bonds at 1 trillion yen.

The Company’s forecasts for the March 2018 period (October 1,
2017 to March 31, 2018) are as follows: operating revenues totaling
31,490 million yen, operating profit totaling 12,880 million yen, ordinary(iii)	When obtaining a loan, the Company shall only negotiate withqualified institutional investors (limited to those defined under
Article 67-15 of the Special Taxation Measures Act) before executing a loan agreement.

profit totaling 11,610 million yen, and profit totaling 11,600 m­ illion yen.
The Company plans to declare a cash dividend of 8,860 yen per unit.
Operating revenues, operating profit, ordinary profit, profit, andcash dividend per unit may vary depending on changes that may occur
in the market situation.

(iv)	With the purpose of maintaining liquidity at an appropriate level,
the Company may establish preliminary borrowing frameworks
such as overdraft agreements and commitment line agreements,
or may conclude preliminary contracts for loans, as needed.
(v)	The Company aims for the best possible execution of financialtransactions by negotiating with numerous financial institutions.

Hiroshi Nakajima
Executive Director of Japan Real Estate Investment Corporation

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

Japan Real Estate Investment Corporation

5

Financial Highlights
Millions of yen
For the period from
October 1, 2016 to
March 31, 2017

For the period from
April 1, 2016 to
September 30, 2016

For the period from
October 1, 2015 toMarch 31, 2016

For the period from
April 1, 2015 to
September 30, 2015

For the period from
October 1, 2014 toMarch 31, 2015

Operating revenues¥30,818¥30,773¥30,589¥29,980¥28,314

Operating profit

12,567

12,36812,352

12,054

11,243

Ordinary profit

11,197

10,958

10,816

10,487

9,625

Profit11,186

10,947

10,753

10,476

9,619

Net operating income (NOI) (Note 1)

20,372

20,182

19,973

19,67018,412

Funds from operations (FFO) (Note 2)

17,67917,447

17,07916,80815,629

21.8

22.8

25.0

21.5

22.6

Cash distribution

11,186

10,947

10,632

10,475

9,613

Number of units

1,309,310

1,309,310

1,309,310

1,309,310

1,251,530

8,544

8,361

8,121

8,001

7,681

FFO multiple (Times) (Note 3)

Dividend per unit (Yen)

Notes: 1. NOI = Property-related revenues – Property-related expenses (excluding Depreciation)
2. FFO = Profit + Depreciation – Gain (Loss) on sales of properties
3. FFO multiple = Unit price at end of the respective term / FFO per unit (Annualized)(Annualized portion of the calculation given in Note 3 assumes a fiscal period of 182 days for the period ended March 31, 2015, 183 days for the period ended September
30, 2015, 183 days for the period ended March 31, 2016, 183 days for the period ended September 30, 2016 and 182 days for the period ended March 31, 2017.)

Top 10 Unitholders As of March 31, 2017
Units

% of total units
outstanding

Japan Trustee Services Bank, Ltd. (Shintaku Acc.) ......................................................................................................................................

251,457

19.21%The Master Trust Bank of Japan, Ltd. (Shintaku Acc.) ................................................................................................................................
Trust & Custody Services Bank, Ltd. (Toshin Acc.) ....................................................................................................................................

129,9109.92%

106,502

8.13%

The Nomura Trust and Banking Co., Ltd. (Toshin Acc.) ............................................................................................................................
STATE STREET BANK WEST CLIENT-TREATY 505234 ....................................................................................................................

54,572

4.17%

28,253

2.16%

STATE STREET BANK AND TRUST COMPANY 505012 ...................................................................................................................
STATE STREET BANK-WEST PENSION FUND CLIENTS-EXEMPT 505233 ..................................................................................

25,552

1.95%

24,029

1.84%

NOMURA BANK (LUXEMBOURG) S.A. ..............................................................................................................................................
STATE STREET BANK AND TRUST COMPANY 505223 ...................................................................................................................

19,7271.51%

18,347

1.40%

The Chugoku Bank Ltd. .............................................................................................................................................................................

17,9701.37%

Unitholders

Unit Price Performance
TSE REIT Index   

325%

TOPIX   The Company

300%
275%
250%
225%
200%
175%
150%
125%
100%
75%
50%
Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar.
2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 20176

Japan Real Estate Investment Corporation

Portfolio Highlights
Trends in the state of portfolio management
September 2001
March 2002
September 2002
March 2003
September 2003
March 2004
September 2004
March 2005
September 2005
March 2006
September 2006
March 2007
September 2007
March 2008
September 2008
March 2009
September 2009
March 2010
September 2010
March 2011
September 2011
March 2012
September 2012
March 2013
September 2013
March 2014
September 2014
March 2015
September 2015
March 2016
September 2016
October 2016
November 2016
December 2016
January 2017
February 2017
March 2017

Leasable office space (m2)

Number ofbuildings

Number oftenants

Leasable officespace (m2)Occupancy
rate (%)

20
24
27
30
32
36
39
46
50
52
49
50
50
53
54
55
55
55
55
57
56
57
58
60
61
63
63
67
69
67
67
68
68
68
67
67
68

213
353
362
383
407
477
504
669
814
866
835
887
879
931
970
993
977
979
992
1,004
1,009
1,058
1,082
1,131
1,146
1,223
1,239
1,350
1,461
1,420
1,426
1,454
1,461
1,461
1,460
1,465
1,482

133,927
201,884
215,928
236,693
246,062
273,157
293,105
336,026
364,610400,090
396,173
397,928
406,605
479,877
508,296
516,411516,421566,277
567,612589,002584,982629,761
645,787
700,759
713,180
750,956
752,723
793,976
832,030

94.6
94.0
95.3
94.4
95.1
94.8
93.6
97.6
98.6
98.7
98.2
97.8
98.7
95.9
96.1
95.5
93.3
93.0
92.4
93.2
94.6
94.7
95.5
96.7
96.3
96.7
97.8
97.8
97.7

820,381820,917
827,855
827,855
827,855
827,234
827,234
835,069

98.3
98.7
98.7
99.0
98.6
98.6
98.6
98.8

0

200,000

400,000

600,000

800,000

1,000,000

Mar. ’17
periodNotes: 1. The number of tenants is the gross number of tenants by building.
2.	Shinjuku South Gate Project (tentative name) (land with leasehold interest)
is not included.

50.0

60.0

70.0

80.0

90.0

100.0
Occupancy rate (%)

Portfolio breakdown As of March 31, 2017
Properties by geographic region

Tenants by industry type

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

Nagoya city

Ceramics 1.3%
Electricity andheat supply services 1.4%

Other areas 7.8%

6.6%

Tokyo metropolitan
area excluding
Tokyo 23 wards

7.4%

Note:‌ Shinjuku South Gate
Project (tentative name)(land with leasehold
Service industries 10.1%
interest) is not included.

Information services 11.0%

Medical 2.2%

3.3%

Osaka city and
Kyoto city

Others 10.0%

Tokyo 23 wards

74.8%

Public services andassociations 2.4%

Finance 9.5%

Machinery 3.2%
Insurance 3.3%

Real estate

8.6%

Specialist services(Consulting, etc.) 4.0%

Electric devices

7.6%

Communications 4.2%
Construction 4.3%
Media and advertisement

5.0%

Retail and restaurants
Pharmaceuticals

5.7%

6.2%

Japan Real Estate Investment Corporation

7

Asset Management Summary
For the period from October 1, 2016 to March 31, 2017

Acquired Asset

Meiji Yasuda Life Insurance
Company Building

Nomura Securities
Kanazawa Building

Ho
kur
iku
Ma
in L

ine

Kanazawa
Park Building
JR Kanazawa sta.
RifareShiba 31

Shiba Tax Office

Kanazawa
Finance-history
museumToei Mita Line

Kanazawa
Kamitsutsumicho
Building

15

Shiba 5

do

kai

, To

e

Lin

ine

aL

suk

o
Yok

ku-dorio Monorail
Toky

Hyakumango

Shiba 4

Tamachi Front
Building

e
ta.
Lin
aS
ku
Mit Line
oho
ihin
n-t
Ke
usa
ihi
hisak
e
c
A
ii
,K
Da15 Toei
ine
a.
i St
te L
ach
ano
Tam
Yam
n
se
an
ink
Sh
do
kai
To

Kanazawa New Grand Hotel

Kanazawa Castle Park

Kanazawa Kamitsutsumicho Building

Tamachi Front Building

Property and Transaction Summary

Property and Transaction Summary

Location:
1-15 Kamitsutsumicho, Kanazawa City, Ishikawa Prefecture● Site area: 	‌1,561.80 m2● Floor area of building: 	9,619.96 m2 (Including tower type parking adjacent to thebuilding (118.28 m2))
● Structure: 	‌Steel structure, flat roof
● Floors: 	‌Above ground: 11 floors● Completion: 	‌August 2009
● Acquisition date:
October 3, 2016
● Acquisition price:¥2,780 million● Type of ownership: 	‌Land: Ownership	Building: Ownership● Seller:
Shimizu Corporation● ‌Property management
Mitsubishi Jisho Property Management Co., Ltd.
company:

Location:
13-2, 4 Chome, Shiba, Minato-ku, Tokyo
Site area: 	‌747.31 m2● Floor area of building:
5,747.80 m2● Structure: 	‌Steel-framed, steel-framed reinforced concrete structure,flat roof● Floors: 	‌Above ground: 9 floors
Below ground: 1 floor● Completion: 	‌July 2014
● Acquisition date:
March 30, 2017
● Acquisition price:¥6,210 million● Type of ownership: 	‌Land: Ownership	Building: Ownership● Seller:
Shiba Yon Development Specific Purpose Company (TMK)● ‌Property management
Mitsubishi Estate Co., Ltd.
company:

The Company evaluated the following two points in the determinationof acquisition.

The Company evaluated the following two points in the determinationof acquisition.

(1) Superior location(1) Superior location

This property is located in a business center, where offices of local government
and private companies in the Hokuriku district are clustered and situated along
Hyakumangoku-dori, the main road of the city. In addition, a convenient bus routeproviding smooth access both locally as well as outside of Hokuriku has been secured
from JR Kanazawa Station, the terminal station for the Hokuriku Shinkansen, the bullet
train running to and from Tokyo which opened last year.

The property to be acquired is a medium-sized, recently built property located in the
Tamachi area, which attracts attention as a business base. The property offers superior
traffic convenience as it is close to Tamachi Station of the JR Line and Mita Station of
the Mita and Asakusa subway Lines.

●(2) Strong competitivenessThe property was built in 2009 and its building age is less than the average building
age in our portfolio. The property is not only appointed with the latest facilities andequipment to meet the environmental requirements of an office, but it also possesses
tower type parking that can accommodate 88 vehicles. This coincides with local
business needs and will strengthen the competitiveness of the property.

8

NEC Corporation
Head Office

Mita Sta.

Hokuriku
Shinkansen Line →Hyakumangoku-dori
Nippon Life Insurance
Company Building

Acquired AssetJapan Real Estate Investment Corporation●●(2) Brand new office building with sophisticated features

Completed in July 2014, the property is a multi-tenant office building with excellent
visibility due to the curtain wall and exceptionally designed appearance. In addition, it
has a standard floor with an open-plan which can be divided into two (leasable floor space
is approximately 140 tsubo), and the ceiling height is 2,800 mm (OA floor: 100 mm).
The property mainly uses LED lighting for both the leased and common space in
response to environmental concerns. Therefore, competitiveness of the property is very
high for this area.

Inner C

ircular

Route

Hamarikyu
Onshi Garden

JR Line

World
Trade
CenterBuilding

Hamam

Toei Oedo
Lin
Daimon Do eri
Daimon Sta.

atsucho Sta.

Shiodome
Building

Yuri
ka
m

om
e

Kyu-Shibarikyu
Onshi Garden

Shiba-koen Sta.

MinatoCity OfficeToei AsakusaDaiichi Ke Lineihin

Toei MitaLine
Hibiya Do
ri
Ona
rimo
n Sta
.

Acquired Asset

Shiodome Building (Additional acquisition)
Property and Transaction Summary

Location:
2-20, 1 Chome, Kaigan, Minato-ku, Tokyo
Site area: 	‌12,054.22 m2 (Total land area of the building site)● Floor area of building: 	115,930.83 m2 (Total floor space of the entire building)● Structure: 	‌Steel-framed, steel-framed reinforced concrete structure,flat roof● Floors: 	‌Above ground: 24 floors
Below ground: 2 floors● Completion: 	‌December 2007
● Acquisition date:
March 30, 2017
● Acquisition price:¥10,450 million● Type of ownership: 	‌Land: Ownership	Building: Ownership
Share of the quasi-co-ownership: 5.0%	Changes in the Company’s share of quasi-co-ownership ofthe building after the additional acquisition: 45.0% 50.0%● Seller:
Mitsui & Co. Real Estate Ltd.
● ‌Property management
Mitsubishi Jisho Property Management Co., Ltd.
company:●●

The Company evaluated the following two points in the determinationof acquisition.

(1) High competitivenessThis property is located in front of Hamamatsucho Station of the JR Line and is thesouth gateway of the Shiodome area. It is also within three minutes’ walk from
Hamamatsucho Station of the JR Line and Daimon Station of the Asakusa and Oedo
Lines. In addition, it is accessible to Tokyo Station and Shinagawa Station, which is a hub
station for “Shinkansen,” and also to Haneda Airport (Tokyo International Airport),
providing great traffic convenience.
As for other features, it is a comparatively new building completed in December 2007,
and the standard floor area constitutes a large space without pillars, comprising an area ofover 1,000 tsubo and a ceiling height of 2,900 mm (additional 100 mm of OA floor).

(2) Increase in share of co-ownership of the building

Since the Company’s share of quasi-co-ownership of trust beneficially right in trustof this property will go up to 50.0% from the current share of 45.0% after the above
acquisition, further improvement in operational efficiency and the value of the asset
can be expected.

Japan Real Estate Investment Corporation

9

Exchange of Properties with the Sponsor
Acquired Asset

Transferred Asset
Genki Medical Plaza
Transaction Summary

Transferee:
Mitsubishi Estate Co., Ltd.
Transfer price: 	‌¥6,890 million● Book value: 	‌¥4,776 million● Appraisal value 	‌¥6,890 million (as of November 1, 2016)● Acquisition price: 	‌¥5,000 million
●

uo
Ch
e
Lin

Yamanote Line
Seibu Shinjuku
Line●

Higashi Sh
Toei Oedo Line
injuku Sta.
Shokuan St.

Shinjuku
SquareShinjuku
Culture Center

Yasukuni St.

Shinjuku 3-Chome Sta.
Ma
Shinjuku Sta.
ine
ru
ku L
Shin nouch
Shinju ojuk i Lin
Toei
d
uS
e
u Kai
sh
o
t.
K
Shinjuku Sta.

Shinjukugyoenmae
Sta.

IsetanM
Fuk eiji St.
uto
shin
Lin
e

Shinjukuchi Sta.
Nishigu

Shinjuku Ward Office
Alta

Property Summary (as of January 25, 2017)

Location:
6-5, 3chome Iidabashi, Chiyoda-ku, Tokyo
Site area: 	‌1,052.80 m2● Floor area of building: 	6,722.02 m2● Structure: 	‌Steel-framed, reinforced concrete structure, flat roof
● Floors: 	‌Above ground: 8 floors
Below ground: 1 floor● Completion date: 	‌September 1985
● Occupancy rate:
100.0%●

Seibu Shinjuku Eastside
Sta.

●

Shinjuku Eastside Square (Additional acquisition)
Property and Transaction Summary

Location:
27-30, 6 Chome, Shinjuku, Shinjuku-ku, Tokyo
Site area: 	‌25,320.28 m2 (Total land area for the building site)● F loor area of building: 167,245.46 m2 (Total area for the building)●●* Including retail outlets in the attached building (214.27 m2)

Structure: 	‌Steel-framed, reinforced concrete structure, flat roof
Floors: 	‌Above ground: 20 floors
Below ground: 2 floors● Completion: 	‌March 2012
● Acquisition date:
January 25, 2017
● Acquisition price:¥6,660 million● Type of ownership: 	‌Land: Ownership (share of co-ownership: 3.6%)
	Building: Ownership (share of co-ownership: 3.6%)
	Changes in the Company’s share of co-ownership of thebuilding after the additional acquisition: 14.0% 17.6%● ‌Seller:
Mitsubishi Estate Co., Ltd.
● ‌Property management
Mitsubishi Estate Co., Ltd.
company:●●

The Company evaluated the following three points in the determinationof acquisition.

(1) Superior location
This property is a large, recently built office building and a rare property located in
Shinjuku, a world-class business district with a high concentration of commercial facilities.
The property offers superior traffic convenience as it is directly connected to
Higashi-Shinjuku Station of the Toei Oedo Line and the Tokyo Metro’s FukutoshinLine. Shinjuku Sanchome Station is also within walking distance. It is possible to takeadvantage of the well-developed traffic network from Shinjuku Station, a rail hub
which boasts one of the world’s highest transit riderships.

(2) Brand new office building with sophisticated features
Completed in March 2012, the property has an office building equipped with the latest
specifications and its office space is approximately 1,800 tsubo per floor, one of thelargest in central Tokyo. It accommodates convenient facilities for office workers suchas restaurants and a fitness gym.
With the use of a double-skin façade and air barrier system, the building enhances
energy efficiency and reduces environmental burdens. In addition, it has highfunctionality in terms of earthquake-resistance and disaster prevention since it
is equipped with an emergency generator and a damping device.

(3) Increase share of co-ownership in the property
The Company owns 14% of co-ownership in the property and as it understands thecharacteristics and details of property management of the property, efficient property
management and improvement in asset value can be expected through increasing its
co-ownership ratio to 17.6% with this additional acquisition.

10

Japan Real Estate Investment Corporation

Purpose of exchange of assets
Mitsubishi Estate Co., Ltd. is the transferee and transferorof both the asset to be transferred and the asset to beacquired (additional acquisition) from the exchange.
By exchanging a previously built asset for a recently built
asset with a competitive edge, the Company aims for the
replacement of properties that will lead to the improvementof its portfolio along with maintaining and expanding its
revenue base.

Acquired the Best Status, a “Green Star”, in GRESB
What is GRESB?
GRESB (Global Real Estate Sustainability Benchmark) was established in 2009 bya group of European pension funds. It is an annual benchmark evaluation to assess
the environmental, social, and governance (ESG) performance of the real estate sector.
Major European, American, and Asian institutional investors utilize this benchmark
in their investment decision-making processes. GRESB Real Estate Assessment is
unique in evaluating not the individual property itself, but the environmentfriendliness and sustainability approach of each real estate company and REIT.

Acquired a “Green Star”
In the 2016 GRESB Real Estate Assessment, the Company was evaluated highlyboth in Management & Policy and Implementation & Measurement aspects andacquired the status of “Green Star”.

Obtaining DBJ Green Building Certification
The DBJ Green Building certification was established by
the Development Bank of Japan with the aim of encouraging real estate project activities that pursue environmental
and social contributions instead of focusing solely on economic performance. Green Building-certified properties are
selected based on a comprehensive evaluation scheme formultiple criteria, including tenant amenities, involvementin the local community, and risk management, in addition
to the environmental performance of the building. Under
this program, a number of properties held by the Company
have been highly rated, including Harumi Front, which
received the highest rank of Five Stars, representing thefirst J-REIT property that has ever been honored withthis evaluation.

Properties certified with DBJ Green Building Certification

Properties withthe best classenvironmental &social awarenessFive Stars

Shiodome Building(Minato-ku, Tokyo)

Harumi Front(Chuo-ku, Tokyo)

Shinjuku Eastside Square(Shinjuku-ku, Tokyo)

Harumi Center Building(Chuo-ku, Tokyo)

Osaki Front Tower(Shinagawa-ku, Tokyo)

MM Park Building(Yokohama, Kanagawa Prefecture)

Properties withexceptionally highenvironmental &social awareness

Four Stars

Japan Real Estate Investment Corporation

11

Asset Size, Property Acquisitions, and Performance Trends
Occupancy rate

94.6% 94.0% 95.3% 94.4% 95.1% 94.8% 93.6% 97.6% 98.6% 98.7% 98.2% 97.8% 98.7% 95.9% 96.1%

In September 2001, the Company became the first J-REIT in Japan listed on the Tokyo Stock
Exchange. Since then, the Company has targeted stable management to fulfill its goal of maintaining or increasing dividend per unit over the medium to long term. The Company’s growth is basedon external growth strategies that aim to increase earnings through the acquisition and transfer ofproperties, as well as internal growth strategies that seek to optimize earnings from properties alreadyheld. The size of the Company’s assets (total acquisition price) has grown from ¥92.8 billion at IPO
to ¥944.7 billion as of the period ended March 31, 2017 due to the steady achievement of external
growth strategies. However, in terms of internal growth strategies, ongoing efforts are being made insuch areas as maintaining stable occupancy rates and reducing building management costs.

¥518

Total acquisition price (Number of properties)

billion¥412 ¥418
First J-REIT listed on
TSE began with
¥92.8 billion in assets

¥144
¥92

billion

(20)

(24)

¥164
billion¥290¥183 ¥192
billionbillion

(30)

(32)

¥218
billion¥239

billion

(39)

(46)

billionbillion

(52)

(49)

¥542
billion¥441 ¥446
billionbillion

(50)

(50)

¥326
billionbillionbillionAt IPO

(27)

(36)

(50)

(53)

(54)

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

Sep. 2001 Mar. 2002 Sep. 2002 Mar. 2003 Sep. 2003 Mar. 2004 Sep. 2004 Mar. 2005 Sep. 2005 Mar. 2006 Sep. 2006 Mar. 2007 Sep. 2007 Mar. 2008 Sep. 2008

Dividend per unit*¥7,491 ¥6,426 ¥7,227 ¥7,558 ¥7,301 ¥7,355 ¥7,912 ¥7,975 ¥8,086 ¥8,651 ¥8,760 ¥9,250 ¥14,611 ¥9,536
Listing and issuance of units
Sep. 2001
Listed on TSE
as first J-REIT

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

Oct. 2003
Second Follow-On

Apr. 2005
Third Follow-On

Oct. 2006
Fourth Follow-On

Mar. 2008
Fifth
Follow-On

Sep. 2001
IPO* The Company implemented a 2-for-1 split of each investment unit as of January 1, 2014. The figures for the March 2002 through September 2013 periods have taken the split into account.

12

Japan Real Estate Investment Corporation

95.5% 93.3% 93.0% 92.4% 93.2% 94.6% 94.7% 95.5% 96.7% 96.3% 96.7% 97.8% 97.8% 97.7% 98.3% 98.7% 98.8%

¥883

¥718
¥641 ¥643
billionbillion

(55)

(55)

¥660 ¥657
billionbillion

(57)

(56)

billion¥740¥782 ¥794
billion¥837 ¥838
billionbillion

(64)

(64)

¥927 ¥923 ¥923
billionbillionbillion

(70)

(68)

(68)

¥944
billionbillionbillionbillion¥564 ¥564
billionbillion

(55)

(55)

(57)

(58)

(60)

(62)

(68)

(69)

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

Mar. 2009 Sep. 2009 Mar. 2010 Sep. 2010 Mar. 2011 Sep. 2011 Mar. 2012 Sep. 2012 Mar. 2013 Sep. 2013 Mar. 2014 Sep. 2014 Mar. 2015 Sep. 2015 Mar. 2016 Sep. 2016 Mar. 2017

¥9,510 ¥9,599 ¥9,021 ¥8,314 ¥7,821 ¥7,925 ¥8,095 ¥7,850 ¥7,570 ¥7,683 ¥7,633 ¥7,648 ¥7,681 ¥8,001 ¥8,121 ¥8,361 ¥8,544
Dec. 2009
Sixth Follow-On

Feb. 2012
Seventh Follow-On

Oct. 2012
Eighth Follow-On

Apr. 2014
Ninth Follow-On

Apr. 2015
Tenth Follow-On

Japan Real Estate Investment Corporation

13

The Portfolio of Japan Real Estate Investment Corporation
As of March 31, 2017

Properties roster
NumberName of building

Location

Type ofspecified asset

Acquisition date

Acquisition price(¥ millions)Tokyo 23 wards
I-1
I-2
● I-3
● I-4
● I-5
● I-6
● I-7
● I-8

Kitanomaru Square
MD Kanda Building
Kandabashi Park Building
Otemachi Financial City North Tower
Nibancho Garden
Mitsubishi UFJ Trust and Banking Building
Burex Kojimachi Building
Sanno Grand Building

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

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

I-9● I-10● I-11● I-12● I-13● I-14● I-15

Yurakucho Denki Building
Kodenmacho Shin-Nihonbashi Building
Kyodo Building (Kayabacho 2Chome)
Burex Kyobashi Building
Ginza 1Chome East Building
Ginza Sanwa Building
Ryoshin Ginza East Mirror Building

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

Real property
Trust
Trust
Real property
Trust
Real property
Real property

I-16● I-17● I-18● I-19● I-20● I-21

Harumi Front
Harumi Center Building
Akasaka Park Building
Aoyama Crystal Building
Clover Shiba-koen
Shiodome Building

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

Real property
Real property
Real property
Real property
Trust
Trust

I-22
● I-23● I-24● I-25

Shiba 2Chome Daimon Building
Cosmo Kanasugibashi Building
Tamachi Front Building
Shinjuku Eastside Square

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

Trust
Trust
Real property
Trust

I-26
● I-27

Shinwa Building
Tokyo Opera City Building

Nishi-Shinjuku, Shinjuku-ku
Nishi-Shinjuku, Shinjuku-ku

Real property
Real property

I-28● I-29● I-30● I-31● I-32TIXTOWER UENO
Higashi-Gotanda 1Chome Building
Osaki Front Tower
Omori-Eki Higashiguchi Building
Shinjuku South Gate Project (tentative name)(land with leasehold interest)

Higashi-Ueno, Taito-ku
Higashi-Gotanda, Shinagawa-ku
Osaki, Shinagawa-ku
Omori-Kita, Ota-ku
Sendagaya, Shibuya-ku

Real property
Real property
Real property
Trust
Real property

I-33● I-34● I-35● I-36● I-37

Yoyogi 1Chome Buildingda Vinci Harajuku
Jingumae Media Square Building
Shibuya Cross Tower
Ebisu Neonato

Yoyogi, Shibuya-ku
Jingumae, Shibuya-ku
Jingumae, Shibuya-ku
Shibuya, Shibuya-ku
Ebisu, Shibuya-ku

Real property
Real property
Real property
Real property
Real property

Harmony Tower

Honcho, Nakano-ku

Real property

●
●

●

●

●

●

●

●

●

I-38

I-39
● I-40● I-41●

14

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

Japan Real Estate Investment Corporation

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

Trust
Trust
Real property

02/24/2006
05/31/2002
08/15/2002
03/31/2014
04/01/2005
03/28/2007
07/29/2005
01/31/2005
04/03/2006
Total
08/01/2003
09/25/2001
03/01/2011
07/22/2002
03/02/2015
03/10/2005
03/15/2005
05/24/2010
Total
01/07/2013
12/18/2007
11/15/2011
03/14/2003
01/20/2015
12/19/2008
01/15/2010
05/01/2015
03/30/2017
Total
09/10/2001
09/25/2001
03/30/2017
10/01/2014
01/25/2017
Total
09/01/2004
09/13/2005
03/24/2010

81,555
9,520
4,810
15,462
14,70044,7007,000
10,20010,70020,900
7,200
3,173
4,410
5,250
6,459
16,830
5,353
2,645
7,999
31,30026,80060,8007,680
4,500
21,25054,60010,10010,45096,400
4,859
2,808
6,210
23,1006,660
29,7607,830
9,350
22,426Total
06/15/2012
11/01/2004
02/01/2011
09/10/2001
03/24/2004
08/23/2013

31,77622,0005,500
12,3005,123
6,670(1,170)(3.4%)(2.3%)(0.6%)(1.3%)(0.5%)

Total
04/01/2004
11/22/2002
10/09/2003
11/30/2001
11/14/2003
04/01/2004
02/18/2014
Total
02/28/2005
12/19/2012

5,500
8,700
4,885
12,20034,6003,740
36010,512
14,6128,500
520(0.6%)(0.9%)(0.5%)(1.3%)(3.7%)

03/27/2015

2,100

Total
09/25/2001
09/25/2001
08/02/2004

11,120
3,541
1,728
4,500

(8.6%)(1.0%)(0.5%)(1.6%)(1.6%)(4.7%)(0.7%)(2.2%)(0.8%)(0.3%)(0.5%)(0.6%)(0.7%)(1.8%)(0.8%)(3.3%)(2.8%)(6.4%)(0.8%)(0.5%)(10.2%)(0.5%)(0.3%)(0.7%)(3.2%)(0.8%)(1.5%)(1.2%)(0.4%)(0.2%)(0.5%)

Revenues fromleasing operations (¥ millions)

Completion

Appraisal value atthe end of period (¥ millions)Leasable
office space

Leased office space

Occupancy rate

Number of tenants

100.0%
100.0%
56.76%
3.3852192%
31.345%19.38402%
100.0%
99.0%

2006
1998
1993
2012
2004
2003
2005
1966

80,1008,460
4,610
18,90017,90051,8006,880
33,30025,678m2
6,269m2
3,687m2
5,121m2
9,316m2
11,904m2
4,495m2
20,665m2

25,678m2
6,269m2
3,687m2
5,121m2
9,316m2
11,904m2
4,495m2
20,571m2

100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
99.5%

5
9
10
2
1
10
1
40

1,714
225
114
344
477
989
152
911

(5.6%)(0.7%)(0.4%)(1.1%)(1.6%)(3.2%)(0.5%)(3.0%)

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

1975
1991
1991
2002
2008
1982
1998

8,080
2,920
4,990
7,660
7,360
18,4006,260

4,697m2
3,897m2
4,464m2
4,279m2
4,513m2
4,326m2
4,255m2

4,697m2
3,897m2
4,464m2
4,279m2
4,513m2
4,326m2
4,255m2

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

13
11
10
1
8
11
12

267
114
142
157
175
375
162

(0.9%)(0.4%)(0.5%)(0.5%)(0.6%)(1.2%)(0.5%)

100.0%
100.0%
100.0%
100.0%
100.0%
50.0%

2012
2006
1993
1982
2006
2007

40,90019,60071,3008,120
4,610
108,000

33,369m2
20,812m2
45,013m2
4,898m2
2,550m2
40,194m2

33,369m2
16,528m2
45,013m2
4,898m2
2,550m2
40,194m2

100.0%
79.4%
100.0%
100.0%
100.0%
100.0%

8
9
29
7
8
38

1,220
505
2,211
217
93
1,899

(4.0%)(1.6%)(7.2%)(0.7%)(0.3%)(6.2%)

100.0%
100.0%
100.0%
17.6%

1984
1992
2014
2012

6,670
3,170
6,330
32,8009,606m2
4,062m2
3,792m2
20,573m2

9,606m2
4,062m2
3,792m2
20,573m2

100.0%
100.0%
100.0%
100.0%

24
8
8
42

276
108
1
743

(0.9%)(0.4%)(0.0%)(2.4%)

100.0%
31.325%

1989
1996

7,040
33,7005,997m2
35,025m2

5,997m2
34,817m2

100.0%
99.4%

13
101

217
1,505

(0.7%)(4.9%)

94.040229%
100.0%
100.0%
100.0%
—

2010
2004
2005
1989
—

25,0006,140
16,6005,700
5,490

15,020m2
5,205m2
16,856m2
7,706m2—

14,593m2
5,205m2
16,856m2
7,481m2—

97.2%
100.0%
100.0%
97.1%
—

17
4
1
24
—

627
183
702
234
60

(2.0%)(0.6%)(2.3%)(0.8%)(0.2%)

100.0%
100.0%
100.0%
100.0%
44.718394%

2003
1987
1998
1976
1994

11,600
7,100
10,10052,70016,9007,745m2
3,147m2
5,558m2
29,797m2
8,700m2

7,745m2
3,147m2
5,558m2
29,797m2
8,679m2

100.0%
100.0%
100.0%
100.0%
99.8%

8
4
5
54
6

302
198
220
1,440
465

(1.0%)(0.6%)(0.7%)(4.7%)(1.5%)

38.382307%

1997

14,00014,340m2

14,340m2

100.0%

22454(1.5%)

100.0%
100.0%
100.0%

1987
1990
1989

4,530
1,700
5,100

7,224m2
2,186m2
5,932m2

7,224m2
2,186m2
5,932m2

100.0%
100.0%
100.0%

7
8
10

189
70
190

(0.6%)(0.2%)(0.6%)

Percentage of ownershipof the building

Japan Real Estate Investment Corporation

15

NumberName of building

Location

Type ofspecified asset

Acquisition date

Acquisition price(¥ millions)Tokyo metropolitan area, excluding Tokyo 23 wards●

II-1

Hachioji First Square

Hachioji, Tokyo

Real property

●

II-2

Saitama Urawa Building

Saitama, Saitama Prefecture

Real property

MM Park Building
Queen’s Tower A
Kawasaki Isago Building
Musashi Kosugi STM Building

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

II-3● II-4● II-5● II-6●

Real property
Trust
Trust
Real property

03/31/2005
03/19/2008
Total
09/25/2001
10/11/2001
Total
03/24/2008
01/31/2014
09/25/2001
03/25/2008

3,300
2,379
5,679
1,232
1,342
2,574
37,40017,2003,375
4,000(0.6%)(0.3%)(4.0%)(1.8%)(0.4%)(0.4%)

Other major cities
●
●
●
●

III-1

8.3 Square Kita Building

Sapporo, Hokkaido

Real property

06/01/2007

7,100(0.8%)

III-2

Jozenji Park Building

Sendai, Miyagi Prefecture

Real property

01/31/2005

1,000(0.1%)

III-3

Higashi Nibancho Square

Sendai, Miyagi Prefecture

Real property

01/07/2013

9,950(1.1%)

III-4

Sendai Honcho Honma Building

Sendai, Miyagi Prefecture

Trust

09/25/2001

2,924

06/28/2006

250

Total

3,174

(0.3%)

●

III-5

AER

Sendai, Miyagi Prefecture

Real property

09/01/2015

18,640(2.0%)●

III-6

Kanazawa Park Building

Kanazawa, Ishikawa Prefecture

Real property

02/28/2002

2,880

03/03/2003

1,700

Total

4,580

(0.5%)●

III-7

Kanazawa Kamitsutsumicho Building

Kanazawa, Ishikawa Prefecture

Real property

10/03/2016

2,780(0.3%)●

III-8

Nishiki Park Building

Nagoya, Aichi Prefecture

Real property

10/02/2006

3,850

11/01/2006

1,300

06/09/2014

650
175

Total

5,975

(0.6%)●

III-9

Nagoya Hirokoji Place

Nagoya, Aichi Prefecture

Trust

07/31/2013

8,567(0.9%)●

III-10

Nagoya Hirokoji Building

Nagoya, Aichi Prefecture

Real property

09/10/2001

14,533(1.5%)●

III-11

Nagoya Misono Building

Nagoya, Aichi Prefecture

Real property

08/08/2003

1,865(0.2%)●

III-12

Shijo Karasuma Center Building

Kyoto, Kyoto Prefecture

Real property

09/03/2013

4,400(0.5%)●

III-13

Umeda Square Building

Osaka, Osaka Prefecture

Trust

04/01/2015

15,523(1.6%)●

III-14Shin-Fujita Building

Osaka, Osaka Prefecture

Trust

09/01/2008

24,000(2.5%)●

III-15

Sakaisujihonmachi Building

Osaka, Osaka Prefecture

Real property

09/25/2001

2,264

12/26/2003

1,900

Total

4,164

09/25/2001

6,934

●

III-16

Midosuji Daiwa Building

Osaka, Osaka Prefecture

Trust(0.4%)

02/28/2002

7,380

Total

14,314(1.5%)●

III-17

Amagasaki Front Building

Amagasaki, Hyogo Prefecture

Trust

03/25/2015

9,300(1.0%)●

III-18

Lit City Building

Okayama, Okayama Prefecture

Real property

02/01/2006

4,650(0.5%)●

III-19NHK Hiroshima Broadcasting Center Building

Hiroshima, Hiroshima Prefecture

Real property

03/25/2004

1,320

03/03/2008

1,450

Total

2,770

(0.3%)●

III-20Tosei Tenjin Building

Fukuoka, Fukuoka Prefecture

Real property

09/25/2001

1,550(0.2%)●

III-21

Tenjin Crystal Building

Fukuoka, Fukuoka Prefecture

Real property

06/01/2005

5,000(0.5%)●

III-22

Hinode Tenjin Building

Fukuoka, Fukuoka Prefecture

Trust

09/10/2001

3,657(0.4%)

944,723(100.0%)Total

Transferred property
Genki Medical Plaza
Total

16

04/01/2016

Japan Real Estate Investment Corporation

Revenues fromleasing operations (¥ millions)

Percentage of ownershipof the building

Completion

Appraisal value atthe end of period (¥ millions)Leasable
office space

Leased office space

Occupancy rate

Number of tenants

80.4%

1996

4,900

10,068m2

10,068m2

100.0%

50

239(0.8%)

100.0%

1990

2,480

4,510m2

4,510m2

100.0%

18

110(0.4%)

100.0%
11.11481%
100.0%
34.32%

2007
1997
1990
1990

39,80020,6002,680
4,260

38,426m2
26,669m2
6,831m2
5,378m2

36,987m2
25,939m2
6,831m2
5,378m2

96.3%
97.3%
100.0%
100.0%

30
50
13
26

1,291
981
146
161

(4.2%)(3.2%)(0.5%)(0.5%)

100.0%

2006

7,940

12,265m2

12,265m2

100.0%

9322(1.0%)

50.0%

1993

999

2,518m2

2,418m2

96.0%

16

63

(0.2%)

100.0%

2008

13,50020,526m2

20,526m2

100.0%

23564(1.8%)

100.0%

1991

2,430

6,234m2

5,894m2

94.6%

24

128

(0.4%)

55.35443%

1998

19,40023,612m2

23,522m2

99.6%

65

628

(2.0%)

89.0%

1991

4,880

20,942m

2

20,942m2

100.0%

81495(1.6%)

100.0%

2009

3,000

7,206m2

7,044m2

97.7%

25

124

(0.4%)

71.74301%

1995

5,040

10,338m

2

10,188m2

98.6%

60

267

(0.9%)

100.0%

2004

10,70013,200m2

13,200m2

100.0%

27387(1.3%)

100.0%

1987

12,70021,427m2

20,448m2

95.4%

36

539

(1.8%)

100.0%

1991

1,280

3,448m2

3,448m2

100.0%

16

71(0.2%)

100.0%

2010

5,080

6,634m2

6,634m2

100.0%

11

189(0.6%)

100.0%

1995

16,40010,370m2

10,370m2

100.0%

42457(1.5%)

100.0%

1995

18,90028,403m2

28,256m2

99.5%

51

699

(2.3%)

100.0%

1992

3,390

11,520m2

11,520m2

100.0%

22

220(0.7%)

100.0%

1991

14,30020,450m2

20,450m2

100.0%

42530(1.7%)

100.0%

2008

9,890

15,500m2

15,500m2

100.0%

31437(1.4%)

27.7488%

2005

4,430

9,965m2

9,965m2

100.0%

39

250(0.8%)

48.753%

1994

2,870

9,860m2

9,860m2

100.0%

12261(0.9%)

100.0%

1992

1,360

3,995m2

3,834m2

96.0%

22

76

(0.2%)

100.0%

1993

2,700

5,964m2

5,964m2

100.0%

30

156(0.5%)

74.4844%

1987

3,890

5,903m2

5,828m2

98.7%

2

170

(0.6%)

1,042,319

835,069m2

825,437m2

98.8%

1,482
145

(0.5%)

30,784(100.0%)Japan Real Estate Investment Corporation17

Major tenants roster
Name of tenant

Leased officespace (m2)Name of building% of total leased
office space

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Harumi Front (also includes 3 other buildings)

33,912

4.1%(Note)

Kitanomaru Square (also includes 2 other buildings)

22,305

2.7%(Note)

Osaki Front Tower (also includes 2 other buildings)

21,849

2.6%

NTT Communications Corporation

Shiodome Building

14,766

1.8%

HAKUHODO DY HOLDINGS INCORPORATED

Akasaka Park Building (also includes 1 other building)

12,831

1.6%

Mitsubishi UFJ Trust and Banking Corporation

Mitsubishi UFJ Trust and Banking Building

10,5981.3%

JGC Corporation

MM Park Building (also includes 1 other building)

10,483

1.3%

Minato Mirai 21 District Heating and Cooling Co., Ltd

Queen's Tower A

9,536

1.2%

Seven & i Holdings Co., Ltd.

Nibancho Garden

9,316

1.1%

TOTO LTD.

Shiodome Building (also includes 1 other building)

9,138

1.1%

(Note) Not disclosed due to tenant’s request

Location of portfolio properties
II-1 to II-6:
Tokyo metropolitan area, excluding Tokyo 23 wards

III-1

II-2

II-1

III-1 to III-22:
Other major cities

III-6
III-7

II-6
II-5
II-3
II-4

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

III-12
III-17

III-20
III-21
III-22

III-19

III-18
III-13
III-14
III-15
III-16

III-8
III-9
III-10
III-11
I-40

I-39

I-41
I-28
I-2, I-3

I-7 I-6
I-38

I-26

I-25

I-1
I-5

I-4

I-34

I-8

I-9 I-13

I-35
I-36

I-19 I-18

I-27
I-33

I-32

I-37

I-20

I-21

I-14

I-10
I-11
I-12
I-15

Tokyo Station

I-16, I-17

I-22, I-23, I-24

I-29
I-30

I-31

I-1 to I-41:
Tokyo 23 wards

18

Japan Real Estate Investment Corporation

Overview of Portfolio Properties
As of March 31, 2017

Kitanomaru
Square●MD Kanda
Building

I-1●

Kandabashi Park
Building

I-2

●

I-3

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Site area:

5,821.03m2

Site area:

1,085.83m2

Site area:

1,218.56m2

Floor area of building:

57,279.20m2

Floor area of building:

8,185.11m2

Floor area of building:

9,370.25m2

Structure:		Above ground: 26 floors
Below ground: 2 floors

Structure:

Above ground: 10 floors

Completion:

February 1998

Structure:		Above ground: 10 floors
Below ground: 1 floor

Completion:

January 2006

Completion:

July 1993

OtemachiFinancial City
North Tower●

Nibancho
Garden●Mitsubishi UFJ
Trust andBanking Building

I-5

I-4

●

I-6

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Site area:

14,108.16m2

Site area:

10,992.13m2

Site area:

8,100.39m2

Floor area of building:239,769.07m2

Floor area of building:

57,031.06m2

Floor area of building:

108,171.67m2

Structure:		Above ground: 35 floors
Below ground: 4 floors

Structure:		Above ground: 14 floors
Below ground: 2 floors

Structure:		Above ground: 29 floors
Below ground: 4 floors

Completion:

October 2012

Completion:

April 2004

Completion:

February 2003

Burex Kojimachi
Building●

Sanno Grand
Building

I-7●

Yurakucho Denki
Building

I-8

●

I-9

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Site area:

967.67m2

Site area:

3,663.93m2

Site area:

5,749.91m2

Floor area of building:

6,526.64m2

Floor area of building:

33,875.95m2

Floor area of building:

70,287.65m2

Structure:		Above ground: 11 floors
Below ground: 1 floor

Structure:		Above ground: 10 floors
Below ground: 3 floors

Structure:		Above ground: 20 floors
Below ground: 4 floors

Completion:

January 2005

Completion:

September 1966

Completion:

September 1975

Kodenmacho
Shin-Nihonbashi
Building●

Kyodo Building(Kayabacho
2Chome)I-10●

Burex Kyobashi
Building
●

I-12

I-11

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Site area:

773.28m2

Site area:

754.26m2

Site area:

756.03m2

Floor area of building:

5,822.88m2

Floor area of building:

5,505.80m2

Floor area of building:

5,470.54m2

Structure:		Above ground: 9 floors
Below ground: 1 floor

Structure:		Above ground: 9 floors
Below ground: 1 floor

Structure:		Above ground: 8 floors
Below ground: 1 floor

Completion:

November 1991

Completion:

April 1991

Completion:

February 2002

Japan Real Estate Investment Corporation19

Ginza 1Chome
East Building●

Ginza Sanwa
Building

I-13●

Ryoshin Ginza
East Mirror
Building

I-14●

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Site area:

702.41m2

Site area:

1,119.27m2

Site area:

864.91m2

Floor area of building:

4,976.85m2

Floor area of building:

8,851.00m2

Floor area of building:

5,751.68m2

Structure:		Above ground: 9 floors
Below ground: 1 floor

Structure:		Above ground: 9 floors
Below ground: 2 floors

Structure:		Above ground: 8 floors
Below ground: 1 floor

Completion:

May 2008

Completion:

October 1982

Completion:

October 1998

Harumi Front●

Harumi Center
Building

I-16●

Akasaka Park
Building

I-17

●

I-18

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Location:

Minato-ku, Tokyo

Site area:

7,250.15m2

Site area:

4,664.63m2

Site area:

14,198.20m2

Floor area of building:

45,458.90m2

Floor area of building:

26,447.27m2

Floor area of building:

97,489.16m2

Structure:		Above ground: 17 floors
Below ground: 1 floor

Structure:

Above ground: 10 floors

Completion:

November 2006

Structure:		Above ground: 30 floors
Below ground: 2 floors

Completion:

February 2012

Completion:

July 1993

Aoyama Crystal
Building●

CloverShiba-koen

I-19

●

Shiodome
Building

I-20

●

I-21

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Site area:

989.30m2

Site area:

528.58m2

Site area:

12,054.22m2

Floor area of building:

8,094.36m2

Floor area of building:

3,496.01m2

Floor area of building:

115,930.83m2

Structure:		Above ground: 10 floors
Below ground: 4 floors

Structure:		Above ground: 9 floors
Below ground: 1 floor

Structure:		Above ground: 24 floors
Below ground: 2 floors

Completion:

December 1982

Completion:

February 2006

Completion:

December 2007

Shiba 2Chome
Daimon Building●

Cosmo
Kanasugibashi
Building

I-22

●

20

I-15

Tamachi Front
Building
●

I-24

I-23

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Site area:

2,820.90m2

Site area:

758.54m2

Site area:

747.31m2

Floor area of building:

16,235.10m2

Floor area of building:

5,420.93m2

Floor area of building:

5,747.80m2

Structure:		Above ground: 8 floors
Below ground: 2 floors

Structure:		Above ground: 9 floors
Below ground: 1 floor

Structure:

Above ground: 9 floors

		

Below ground: 1 floor

Completion:

March 1984

Completion:

March 1992

Completion:

July 2014

Japan Real Estate Investment Corporation

Shinjuku Eastside
Square●Shinwa Building●

Tokyo Opera
City Building

I-26

I-25

●

I-27

Location:

Shinjuku-ku, Tokyo

Location:

Shinjuku-ku, Tokyo

Location:

Shinjuku-ku, Tokyo

Site area:

25,320.28m2

Site area:

822.00m2

Site area:

18,236.94m2

Floor area of building:

167,245.46m2

Floor area of building:

8,291.69m2

Floor area of building:

232,996.81m2

Structure:		Above ground: 20 floors
Below ground: 2 floors

Structure:		Above ground: 10 floors
Below ground: 1 floor

Structure:		Above ground: 54 floors
Below ground: 4 floors

Completion:

March 2012

Completion:

November 1989

Completion:

July 1996

TIXTOWER
UENO●

Higashi-Gotanda
1Chome Building

I-28

●

Osaki Front
Tower

I-29

●

I-30

Location:

Taito-ku, Tokyo

Location:

Shinagawa-ku, Tokyo

Location:

Shinagawa-ku, Tokyo

Site area:

2,412.80m2

Site area:

1,539.95m2

Site area:

3,684.38m2

Floor area of building:

23,727.48m2

Floor area of building:

6,460.39m2

Floor area of building:

23,673.92m2

Structure:		Above ground: 18 floors
Below ground: 1 floor

Structure:

Above ground: 8 floors

Structure:

Above ground: 15 floors

Completion:

July 2004

Completion:

June 2005

Completion:

July 2010

Omori-Eki
Higashiguchi
Building●

I-31

Shinjuku South Gate Project(Tentative name)(Land with leasehold interest)●

Yoyogi 1Chome
Building
●

I-33

I-32

Location:

Ota-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Site area:

2,199.30m2

Site area:

1,497.52m2

Site area:

1,755.75m2

Floor area of building:

14,095.34m2

Floor area of building:—Floor area of building:

10,778.10m2

Structure:		Above ground: 11 floors
Below ground: 2 floors

Structure:—

Completion:—

Structure:		Above ground: 14 floors
Below ground: 1 floor

Completion:

July 1989

Completion:

October 2003

da Vinci
Harajuku●

Jingumae Media
Square Building

I-34

●

Shibuya Cross
Tower

I-35

●

I-36

Location:

Shibuya-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Site area:

839.66m2

Site area:

2,124.59m2

Site area:

5,153.45m2

Floor area of building:

4,359.20m2

Floor area of building:

9,420.42m2

Floor area of building:

61,862.33m2

Structure:		Above ground: 7 floors
Below ground: 2 floors

Structure:		Above ground: 9 floors
Below ground: 2 floors

Structure:		Above ground: 32 floors
Below ground: 3 floors

Completion:

December 1987

Completion:

March 1998

Completion:

April 1976

Japan Real Estate Investment Corporation

21

Ebisu Neonato●

Harmony Tower

I-37

●

Otsuka HigashiIkebukuro
Building

I-38●

Location:

Shibuya-ku, Tokyo

Location:

Nakano-ku, Tokyo

Location:

Toshima-ku, Tokyo

Site area:

5,005.70m2

Site area:

10,020.52m2

Site area:

2,121.39m2

Floor area of building:

36,598.38m2

Floor area of building:

72,729.31m2

Floor area of building:

9,531.28m2

Structure:		Above ground: 18 floors
Below ground: 2 floors

Structure:		Above ground: 29 floors
Below ground: 2 floors

Structure:		Above ground: 8 floors
Below ground: 1 floor

Completion:

October 1994

Completion:

March 1997

Completion:

November 1987

Ikebukuro
2Chome Building●

Ikebukuro YS
Building

I-40●

Hachioji First
Square

I-41

●

II-1

Location:

Toshima-ku, Tokyo

Location:

Toshima-ku, Tokyo

Location:

Hachioji, Tokyo

Site area:

397.26m2

Site area:

1,384.56m2

Site area:

2,989.33m2

Floor area of building:

3,157.51m2

Floor area of building:

7,464.64m2

Floor area of building:

18,329.98m2

Structure:		Above ground: 9 floors
Below ground: 1 floor

Structure:		Above ground: 8 floors
Below ground: 1 floor

Structure:		Above ground: 12 floors
Below ground: 1 floor

Completion:

May 1990

Completion:

December 1989

Completion:

July 1996

Saitama Urawa
Building●

MM Park
Building

II-2●

Queen’s Tower A
●

II-4

II-3

Location:

Saitama, Saitama Prefecture

Location:

Yokohama, Kanagawa Prefecture

Location:

Yokohama, Kanagawa Prefecture

Site area:

1,533.06m2

Site area:

6,825.77m2

Site area:

44,406.40m2

Floor area of building:

6,258.59m2

Floor area of building:

49,037.51m2

Floor area of building:

498,282.77m2

Structure:

Above ground: 8 floors

Completion:

March 1990

Structure:		Above ground: 15 floors
Below ground: 1 floor

Structure:		Above ground: 37 floors
Below ground: 5 floors

Completion:

December 2007

Completion:

June 1997

Kawasaki Isago
Building
●

22

I-39

Musashi Kosugi
STM Building

II-5

●

8∙3 Square Kita
Building

II-6

●

III-1

Location:

Kawasaki, Kanagawa Prefecture

Location:

Kawasaki, Kanagawa Prefecture

Location:

Sapporo, Hokkaido

Site area:

1,594.50m2

Site area:

3,552.15m2

Site area:

5,541.60m2

Floor area of building:

9,623.83m2

Floor area of building:

22,839.61m2

Floor area of building:

16,096.97m2

Structure:		Above ground: 12 floors
Below ground: 1 floor

Structure:		Above ground: 8 floors
Below ground: 2 floors

Structure:		Above ground: 11 floors
Below ground: 1 floor

Completion:

December 1990

Completion:

October 1990

Completion:

December 2006

Japan Real Estate Investment Corporation

Jozenji Park
Building●

HigashiNibancho Square

III-2

●

Sendai Honcho
Honma Building

III-3

●

III-4

Location:

Sendai, Miyagi Prefecture

Location:

Sendai, Miyagi Prefecture

Location:

Sendai, Miyagi Prefecture

Site area:

1,566.68m2

Site area:

3,191.27m2

Site area:

1,437.47m2

Floor area of building:

7,648.33m2

Floor area of building:

27,680.45m2

Floor area of building:

8,247.50m2

Structure:		Above ground: 8 floors
Below ground: 1 floor

Structure:		Above ground: 14 floors
Below ground: 1 floor

Structure:

Above ground: 11 floors

Completion:

November 1991

Completion:

January 1993

Completion:

July 2008

AER●

Kanazawa Park
Building

III-5●

Kanazawa
Kamitsutsumicho
Building

III-6

●

III-7

Location:

Sendai, Miyagi Prefecture

Location:

Kanazawa, Ishikawa Prefecture

Location:

Kanazawa, Ishikawa Prefecture

Site area:

6,591.05m2

Site area:

6,642.71m2

Site area:

1,561.80m2

Floor area of building:

73,186.57m2

Floor area of building:

43,481.20m2

Floor area of building:

9,619.96m2

Structure:		Above ground: 31 floors
Below ground: 3 floors

Structure:		Above ground: 12 floors
Below ground: 2 floors

Structure:

Above ground: 11 floors

Completion:

August 2009

Completion:

March 1998

Completion:

October 1991

Nishiki Park
Building●

Nagoya Hirokoji
Place

III-8

●

Nagoya Hirokoji
Building

III-9●

III-10Location:

Nagoya, Aichi Prefecture

Location:

Nagoya, Aichi Prefecture

Location:

Nagoya, Aichi Prefecture

Site area:

2,170.45m2

Site area:

2,401.43m2

Site area:

4,095.81m2

Floor area of building:

25,091.91m2

Floor area of building:

15,947.29m2

Floor area of building:

33,377.73m2

Structure:		Above ground: 22 floors
Below ground: 4 floors

Structure:

Above ground: 10 floors

Completion:

December 2004

Structure:		Above ground: 18 floors
Below ground: 2 floors

Completion:

August 1995

Completion:

May 1987

Nagoya Misono
Building●

Shijo Karasuma
Center Building

III-11●

Umeda Square
Building

III-12●

III-13

Location:

Nagoya, Aichi Prefecture

Location:

Kyoto, Kyoto Prefecture

Location:

Osaka, Osaka Prefecture

Site area:

805.04m2

Site area:

1,371.16m2

Site area:

1,652.88m2

Floor area of building:

5,348.00m2

Floor area of building:

9,185.98m2

Floor area of building:

18,673.28m2

Structure:		Above ground: 7 floors
Below ground: 1 floor

Structure:		Above ground: 8 floors
Below ground: 1 floor

Structure:		Above ground: 17 floors
Below ground: 3 floors

Completion:

September 1991

Completion:

January 2010

Completion:

July 1995

Japan Real Estate Investment Corporation

23

Shin-Fujita
Building●

Sakaisujihonmachi
Building

III-14●

Midosuji Daiwa
Building

III-15●

III-16

Location:

Osaka, Osaka Prefecture

Location:

Osaka, Osaka Prefecture

Location:

Osaka, Osaka Prefecture

Site area:

6,159.61m2

Site area:

2,036.22m2

Site area:

3,044.65m2

Floor area of building:

45,411.31m2

Floor area of building:

17,145.59m2

Floor area of building:

31,213.27m2

Structure:		Above ground: 21 floors
Below ground: 2 floors

Structure:		Above ground: 13 floors
Below ground: 2 floors

Structure:		Above ground: 15 floors
Below ground: 2 floors

Completion:

April 1995

Completion:

October 1992

Completion:

September 1991

Amagasaki Front
Building●

Lit City Building●

NHK Hiroshima
Broadcasting
Center Building

III-18

III-17●

III-19Location:

Amagasaki, Hyogo Prefecture

Location:

Okayama, Okayama Prefecture

Location:

Hiroshima, Hiroshima Prefecture

Site area:

3,975.20m2

Site area:

7,596.44m2

Site area:

3,296.46m2

Floor area of building:

24,055.58m2

Floor area of building:

52,653.19m2

Floor area of building:

35,217.28m2

Structure:

Above ground: 10 floors

Completion:

October 2008

Structure:		Above ground: 20 floors
Below ground: 2 floors

Structure:		Above ground: 23 floors
Below ground: 2 floors

Completion:

June 2005

Completion:

August 1994

Tosei Tenjin
Building●

Tenjin Crystal
Building

III-20●Hinode Tenjin
Building

III-21●

III-22

Location:

Fukuoka, Fukuoka Prefecture

Location:

Fukuoka, Fukuoka Prefecture

Location:

Fukuoka, Fukuoka Prefecture

Site area:

1,221.31m2

Site area:

1,835.17m2

Site area:

1,452.15m2

Floor area of building:

5,588.57m2

Floor area of building:

10,432.04m2

Floor area of building:

12,527.07m2

Structure:

Above ground: 8 floors
March 1992

Above ground: 14 floors
Below ground: 1 floor

Structure:

Completion:

Structure:		Above ground: 10 floors
Below ground: 2 floors

Completion:

August 1993

Completion:

August 1987

Note:	Concerning real estate or trust beneficiary rights in trust ofreal estate of which the Company is a partial owner throughco-ownership, or compartmentalized building units, or quasi-coownership, the figures for “Site area” and “Floor area of building”
represent total site area and total floor area for the entire building.

24

Japan Real Estate Investment Corporation

Financial Section
Selected Financial Data ........................................................................................................................ p.25
Balance Sheets ................................................................................................................................................ p.26
Statements of Income and Retained Earnings ........................................................... p.28
Statements of Changes in Unitholders’ Equity ......................................................... p.29
Statements of Cash Distributions ............................................................................................ p.30
Statements of Cash Flows ................................................................................................................. p.31
Notes to Financial Statements ...................................................................................................... p.32
Independent Auditor’s Report ..................................................................................................... p.49

Selected Financial Data
Millions of yen

For the period from
October 1, 2016 to
March 31, 2017

For the period from
April 1, 2016 to
September 30, 2016

Operating revenues

30,81830,773Operating expenses

18,251

Operating profit

12,567

Ordinary profit

For the period from
October 1, 2015 toMarch 31, 2016

For the period from
April 1, 2015 to
September 30, 2015

For the period from
October 1, 2014 toMarch 31, 2015

30,58929,98028,314

18,405

18,237

17,926

17,071

12,36812,352

12,054

11,243

11,197

10,958

10,816

10,487

9,625

Profit before income taxes

11,197

10,958

10,816

10,487

9,625

Profit11,186

10,947

10,753

10,476

9,619

Total assets

898,306

883,633

890,626

899,938

852,679

Interest-bearing debt

369,000

356,350

363,400

373,450

361,000

Net assets

469,598

469,359

469,044468,767

436,671

Unitholders’ capital

458,016

458,016

458,016

458,016

426,783

Number of units

1,309,310

1,309,310

1,309,310

1,309,310

1,251,530

Net assets per unit (Yen)358,661

358,478

358,238

358,026

348,909

Cash distribution

11,186

10,947

10,632

10,475

9,613

Dividend payout ratio

100.0%

99.9%

98.8%

99.9%

99.9%

Dividend per unit (Yen)

8,544

8,361

8,121

8,001

7,681

Net operating income (NOI)

20,372

20,182

19,973

19,67018,412

Funds from operations (FFO)

17,67917,447

17,07916,80815,629Return on assets (ROA) (Note 1)

1.3%(2.5% annualized)

1.2%
1.2%
1.2%
1.2%
(2.5% annualized) (2.4% annualized) (2.4% annualized) (2.3% annualized)

Return on equity (ROE) (Note 2)

2.4%(4.8% annualized)

2.3%
2.3%
2.2%
2.2%
(4.7% annualized) (4.6% annualized) (4.5% annualized) (4.4% annualized)

EOP equity ratio (Note 3)

52.3%

53.1%

52.7%

52.1%

51.2%

EOP interest-bearing debt ratio
on total assets (Note 4)

41.1%

40.3%

40.8%

41.5%

42.3%

FFO multiple (Times)

21.8

22.8

25.0

21.5

22.6

Debt service coverage ratio (Times) (Note 5)

14.3

13.5

12.5

12.1

10.8

Notes: 1. ROA = Ordinary profit ÷ Average of Total assets during the period
2. ROE = Profit ÷ Average of Net assets during the period		(Annualized portion of the calculation given in Note 1 and Note 2 assumes a fiscal period of 182 days for the period ended March 31, 2015, 183 days for the period
ended September 30, 2015, 183 days for the period ended March 31, 2016, 183 days for the period ended September 30, 2016 and 182 days for the period ended
March 31, 2017.)
3. EOP equity ratio = (Net assets at the end of period ÷ Total assets at the end of period) × 100
4. EOP interest-bearing debt ratio on total assets = (Interest-bearing debt at the end of period ÷ Total assets at the end of period) × 100
5. Debt service coverage ratio = Profit before Interest, Taxes, Depreciation and Amortization ÷ Interest expenses

Japan Real Estate Investment Corporation

25

Balance Sheets
As of September 30, 2016 and March 31, 2017

Thousands of yen

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

26

Japan Real Estate Investment Corporation

As of September 30, 2016

As of March 31, 201716,231,988
6,314,725
279,659
397,720943—
38,50823,263,545

15,709,586
5,605,731
248,403
367,001914
30,94625,71621,988,301

267,181,629(83,477,470)
183,704,158
3,247,865(754,986)
2,492,879
2,992,615(1,880,589)
1,112,026
396,617(232,002)
164,615450,384,924
2,250
77,750,199(18,994,417)
58,755,782
651,869(168,192)
483,677
948,336(665,333)
283,00248,182(19,071)
29,110151,935,120
2,299
849,349,846

265,124,117(87,142,205)
177,981,912
3,129,120(786,272)
2,342,847
3,074,681(1,960,979)
1,113,701
426,995(252,624)
174,371434,837,910
6,087
87,708,942(21,031,700)
66,677,241
836,762(206,985)
629,777993,657(691,097)
302,560
54,191(22,677)
31,513
181,425,424
1,020
865,524,368

6,035,634
444,160
828,095
14,2807,322,170

5,738,365
444,160
828,095
12,7507,023,371

577,168
1,573,421
600,787925,004
3,676,381
860,348,399

577,168
1,573,634
613,924
979,840
3,744,567
876,292,308

21,16021,160883,633,105

26,15026,150898,306,760

Thousands of yen

As of September 30, 2016

As of March 31, 2017

LIABILITIESCurrent liabilities   Operating accounts payable

1,748,290

2,853,804   Short-term loans payable

45,700,000

36,000,000   Current portion of long-term loans payable

42,850,000

46,500,000   Accounts payable - other

1,290,343

1,481,266

578,332

564,649

9,740

10,997  Accrued expenses   Income taxes payable   Accrued consumption taxes  Advances received  Other   Total current liabilities

528,639—3,500,462

3,329,302

32,091

8,908

96,237,899

90,748,928

Non-current liabilities   Investment corporation bonds

20,000,000

30,000,000   Long-term loans payable

247,800,000

256,500,000   Deposits received from tenants

49,727,428

50,950,892   Deferred tax liabilities

167,188

167,156   Asset retirement obligations

328,602331,913  Other

12,6598,952

318,035,880

337,958,915

414,273,779

428,707,843

458,016,096

458,016,096

363,469

363,400   Total non-current liabilities
Total Liabilities
NET ASSETS
Unitholders’ equity  Unitholders’ capital  Surplus    Voluntary retained earnings    Reserve for reduction entry     Total voluntary retained earnings

363,469

363,400   Unappropriated retained earnings

10,979,760

11,219,420   Total surplus

11,343,229

11,582,820   Total unitholders’ equity

469,359,325

469,598,916

469,359,325

469,598,916

883,633,105

898,306,760

Total Net Assets
Total Liabilities and Net Assets

Japan Real Estate Investment Corporation27

Statements of Income and Retained Earnings
For the six months ended September 30, 2016 and March 31, 2017

Thousands of yen

For the period
from April 1, 2016
to September 30, 2016

For the period
from October 1, 2016
to March 31, 2017

30,565,884

30,726,244

208,084

58,753Operating revenues
Rent revenues
Other lease business revenues
Gain on exchange of real estate properties
Total operating revenues—

33,62030,773,968

30,818,618

17,091,090

16,939,531

964,815

960,233

Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee

59,88060,214

Administrative service fees

154,031

126,883

Directors’ compensations

7,800

7,800

Commission fee

64,87570,356

Other operating expenses

62,63986,353

18,405,132

18,251,373

12,368,836

12,567,245

Interest income

480

189

Dividend income

7,401

—

Reversal of distribution payable

2,855

4,210

Income on settlement of management association accounts

19,444—

Total operating expenses
Operating profit
Non-operating income

Other
Total non-operating income

0—30,181

4,399

1,243,269

1,175,845

152,189

153,619

Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds
Amortization of investment corporation bond issuance costs

5,539

5,512

Other

39,212

38,9271,440,211

1,373,904

Total non-operating expenses
Ordinary profit

10,958,806

11,197,739

Profit before income taxes

10,958,806

11,197,739

Income taxes – current

11,323

11,011

Income taxes – deferred

(2)

(3)

11,321

11,008

Total income taxes

10,947,485

11,186,731

Retained earnings brought forward

32,27532,688Unappropriated retained earnings

10,979,760

11,219,420

Profit28

Japan Real Estate Investment Corporation

Statements of Changes in Unitholders’ Equity
For the six months ended September 30, 2016 and March 31, 2017

For the period from April 1, 2016 to September 30, 2016
Thousands of yen

Unitholders’ equity
Surplus
Unitholders’capitalVoluntary retained earnings

Unappropriatedretainedearnings

Total
net assets

Total surplus

Totalunitholders’equityReservefor reduction
entry

Total voluntary
retainedearnings

243,360

243,360

10,785,290

11,028,651

469,044,747

469,044,747

120,108

120,108(120,108)———

Dividends of surplus(10,632,906) (10,632,906)(10,632,906)(10,632,906)

Profit10,947,485

10,947,485

10,947,485

Balance at beginning of current period

458,016,096

Changes of items during period
Provision of reserve for reduction entry—

120,108

120,108

194,469

314,578

314,578

314,578

458,016,096

363,469

363,469

10,979,760

11,343,229

469,359,325

469,359,325

Total changes of items during period
Balance at end of current period

10,947,485

For the period from October 1, 2016 to March 31, 2017
Thousands of yen

Unitholders’ equity
Surplus
Unitholders’capitalVoluntary retained earnings

Unappropriatedretainedearnings

Total
net assets

Total surplus

Totalunitholders’equityReservefor reduction
entry

Total voluntary
retainedearnings

363,469

363,469

10,979,760

11,343,229

469,359,325

469,359,325

(69)

(69)

69

—

—

—

Dividends of surplus(10,947,140) (10,947,140)(10,947,140)(10,947,140)

Profit11,186,731

11,186,731

11,186,731

11,186,731

Balance at beginning of current period

458,016,096

Changes of items during period
Reversal of reserve for reduction entry

Total changes of items during period
Balance at end of current period

—

(69)

(69)

239,660

239,590

239,590

239,590458,016,096

363,400

363,400

11,219,420

11,582,820

469,598,916

469,598,916

Japan Real Estate Investment Corporation

29

Statements of Cash Distributions
For the six months ended September 30, 2016 and March 31, 2017

	 
Item

I	  Retained earnings

For the period
from April 1, 2016 to September 30, 2016

For the period
from October 1, 2016 to March 31, 2017

Amount (Yen)Amount (Yen)

10,979,760,350

11,219,420,612

II	  Voluntary retained earnings
	  Reversal of reserve for reduction entry
III	  Cash distribution
	  (Dividend per investment unit)
IV	  Retained earnings brought forward

Computation Method for Determining Dividends

30Japan Real Estate Investment Corporation

69,53069,182

10,947,140,910

11,186,744,640(8,361)(8,544)32,688,970

32,745,154

The Company will make cash distributions
using accounting profits based on the cash
distribution policy outlined in Article
32-1(2) of the Company’s Articles ofIncorporation, in an amount that exceeds
90% of the “amount of distributableprofit” as set forth in Article 67-15 of theSpecial Taxation Measures Act. Based on
this policy, the Company has decided thatthe total amount of dividends, which is set
not to exceed the unappropriatedretained earnings and also to secureretained earnings brought forward, is
10,947,140,910 yen for the period underreview, which is a multiple of 1,309,310 —the number of units outstanding as of
September 30, 2016. Furthermore, theCompany does not pay out dividends
that exceed accounting profits asoutlined in Article 32-1(3) of theCompany’s Articles of Incorporation.

The Company will make cash distributions using accounting profits based on
the cash distribution policy outlined in
Article 32-1(2) of the Company’s Articles
of Incorporation, in an amount thatexceeds 90% of the “amount of distributable profit” as set forth in Article 67-15
of the Special Taxation Measures Act.
Based on this policy, the Company has
decided that the total amount of dividends, which is set not to exceed theunappropriated retained earnings andalso to secure retained earnings brought
forward, is 11,186,744,640 yen for theperiod under review, which is a multipleof 1,309,310 — the number of units
outstanding as of March 31, 2017.
Furthermore, the Company does not pay
out dividends that exceed accounting
profits as outlined in Article 32-1(3) ofthe Company’s Articles of Incorporation.

Statements of Cash Flows
For the six months ended September 30, 2016 and March 31, 2017

Thousands of yen

For the period
from April 1, 2016
to September 30, 2016

For the period
from October 1, 2016
to March 31, 2017

Profit before income taxes

10,958,806

11,197,739

Depreciation

6,501,082

6,528,096—

127,789

Amortization of investment corporation bond issuance costs

5,539

5,512

Dividend income(7,401)—

Interest income

(480)

(189)

Interest expenses

1,395,458

1,329,464

Cash flows from operating activities

Difference resulting from exchange of real estate properties(78,017)

31,256—(30,946)

Decrease (increase) in prepaid expenses(72,832)

30,718

Increase (decrease) in operating accounts payable

228,507

90,746

Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes refund receivable

Increase (decrease) in accounts payable – other(55,105)

31,138

Increase (decrease) in accrued consumption taxes(599,970)(528,471)

Increase (decrease) in accrued expenses

(136)

136

Increase (decrease) in advances received

412,299(171,159)

Decrease (increase) in long-term prepaid expenses

105,294(13,137)

Other, net(22,326)(85,145)

18,770,716

18,543,549

7,867

93

(1,486,087)(1,343,284)

SubtotalInterest and dividend income received
Interest expenses paid

(12,418)(9,754)

17,280,078

17,190,603

Payments into time deposits(3,347,000)—

Proceeds from withdrawal of time deposits

3,347,000—

Purchase of property, plant and equipment(1,803,437)(10,375,364)

Purchase of property, plant and equipment in trust(673,099)(10,975,199)

Purchase of intangible assets(17,762)

—

—

(213)

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

Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
Repayments of tenant leasehold and security deposits

220—(828,495)(1,110,899)

Proceeds from tenant leasehold and security deposits

1,358,111

2,346,460

Net cash provided by (used in) investing activities(1,964,462)(20,115,215)

Proceeds from short-term loans payable

36,000,000

23,000,000

Repayments of short-term loans payable(13,000,000)(32,700,000)

Proceeds from long-term loans payable—

26,700,000

Repayments of long-term loans payable(30,050,000)(14,350,000)

Proceeds from issuance of investment corporation bonds—

10,000,000

Payments of investment corporation bond issuance costs—(10,503)

Dividends paid

(10,623,685)(10,946,280)

Net cash provided by (used in) financing activities(17,673,685)

1,693,216

Net increase (decrease) in cash and cash equivalents(2,358,069)(1,231,395)

Cash and cash equivalents at beginning of period

24,904,784

22,546,714

Cash and cash equivalents at end of period

22,546,714

21,315,318

Cash flows from financing activities

Japan Real Estate Investment Corporation31

Notes to Financial Statements
September 30, 2016 and March 31, 2017

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 90% by Mitsubishi Estate Co., Ltd. (“MEC”) and 10% by Mitsui & Co., Ltd.
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, Tokio Marine &Nichido Fire Insurance Co., Ltd. and The Dai-ichi Life Insurance Company, Limited under the ITA.
On September 10, 2001, the Company commenced operations when the Company was listed on the Tokyo Stock Exchange as oneof the first real estate investment corporations in Japan (“J-REITs”). The Company issued 160,000 units at a price of ¥506,625 per unit,
generating gross proceeds of ¥81,060 million.
As of March 31, 2017, the Company owned a portfolio of 69 office properties with an aggregate of approximately 835,069 m2 of­leasable space.
Basis of presenting financial statements

The Company maintains its accounting records and prepares its financial statements in accordance with accounting principles generally
accepted in Japan (“Japanese GAAP”), including provisions set forth in the ITA, the Japanese Financial Instruments and Exchange Law
and related regulations, which are different in certain respects as to the application and disclosure requirements of International Financial
Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which were prepared inaccordance with Japanese GAAP and were presented in the Securities Report of the Company filed with the Kanto Local Finance Bureau.
In preparing the accompanying financial statements, certain reclassifications and modifications have been made to the financial statements
issued domestically in order to present them in a format that is more familiar to readers outside Japan. In addition, the notes to financial
statements include information that might not be required under Japanese GAAP but is presented herein as additional information.
As permitted under the Japanese Financial Instruments and Exchange Law, amounts of less than one million yen have been omitted.
As a result, the totals shown in the accompanying financial statements do not necessarily agree with the sum of the individual amounts.

2. Summary of Significant Accounting Policies
Investment securities

Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving average method.
Property and equipment, depreciation and impairment (except for leased assets)

Property and equipment is stated at cost, less accumulated depreciation. The cost of land, buildings and building improvements includes
the purchase price of property and acquisition costs. Depreciation is calculated on a straight-line basis over the estimated useful lives of theassets ranging as stated below:
Buildings ................................................................................................................................... 2 – 61 years
Structures ................................................................................................................................. 2 – 60 years
Machinery and equipment ................................................................................ 2 – 18 years
Tools, furniture and fixtures ............................................................................. 2 – 29 years

32

Japan Real Estate Investment Corporation

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

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

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

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

Revenues from leasing of office space are recognized as rent accrues over the lease period.
Taxes on property and equipment

Property and equipment is subject to property taxes and city planning taxes on a calendar year basis. These taxes are generally charged toincome during the period. The sellers of the properties are liable for property taxes for the calendar year including the period from the dateof purchase by the Company through the end of the year since the taxes are imposed on the owner registered on the record as of January
1 based on the assessment made by the local government. The Company pays the amount equivalent to the property taxes to the sellers
applicable to the period since acquisition and includes the amount equivalent to the taxes in the purchase price of each property and­capitalizes it as a cost of the property.
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
Current assets and the excess of amounts withheld over payments are included in Current liabilities.
Cash and cash equivalents

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

Japan Real Estate Investment Corporation

33

Hedge accounting

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

3. Financial Instruments
For the six months ended September 30, 2016 and March 31, 2017
1. Status of financial instruments(1) Policies for dealing financial instruments
		Concerning the financing of property acquisitions, the Company shall use several funding sources including bank loans, the issuance ofinvestment corporation bonds and the issuance of investment units. When executing such financing activities, the Company endeavors
to retain the ability to secure stable and low-cost financing by maintaining high credit ratings and thereby limiting the financial covenants that may restrict the financial flexibility of the Company. To achieve these goals, the Company intends to further develop andreinforce the confidence of debt holders and rating agencies in the Company by bolstering the capital base and controlling the loan-tovalue ratio (“LTV”) at an adequate level.
		  In order to hedge against future interest-rate fluctuations, the Company may enter into derivative transactions, which shall be
executed solely for the purpose of hedging against interest-rate fluctuation and other risks, and not for speculative purposes.
		  With respect to management of excess funds, as a matter of policy the Company uses time deposits as its main vehicle, while securities
and monetary claims are also eligible for such investment.
(2) Characteristics and risk profile of each financial instrument and risk management system		The Company regularly re-evaluates the appropriateness and effectiveness of its risk management system in order to improve on it.
		The characteristics and risk profile of financial instruments and the system in place to manage such risks are as follows:		The deposits, which are typically large time deposits used to manage excess funds, are exposed to the credit risk of the deposit-taking
financial institutions. The Company manages credit risk by restricting the tenor of the deposit to relatively short periods and setting
a minimum credit rating requirement for the deposit-taking financial institutions.
		  The funding proceeds from borrowings and issues of investment corporation bonds are applied mainly to acquire real estate properties
and repay outstanding loans and bonds. While floating-rate short-term and long-term loans are exposed to the risk of interest-rate hikes,
such risk is mitigated by the Company’s low LTV and relatively high percentage of long-term fixed-rate debts within the total borrowing.
The Company may also exercise hedging by means of derivative transactions (interest-rate swap transactions) in order to mitigate the riskof fluctuation concerning the floating-rate long-term loans, thereby effectively stabilizing the overall interest rates on the loans. Foreign
currency-denominated loans are also exposed to currency exchange and interest-rate fluctuation risk. However, the Company uses derivative transactions as a method of hedging against these risks (interest-rate and currency swap transactions). For more detailed informationon the hedge accounting method, hedging instruments, hedged items, hedge policies and the evaluation method of hedge effectiveness,please refer to the previous Section 2. Summary of Significant Accounting Policies: Hedge accounting.

34

Japan Real Estate Investment Corporation		  Loans and investment corporation bonds involve liquidity risk at the time of maturity. To manage such liquidity risk, the Company
implements measures such as (i) maintaining and strengthening its ability to access equity markets to secure funds, (ii) maintaining
commitment lines with major financial institutions (There is no amount outstanding under the facility as of September 30, 2016 andMarch 31, 2017) and (iii) preparing monthly financial plans.
(3) Supplementary note regarding fair value of financial instruments		The fair values of financial instruments presented in this report are based on their market value, and in cases where market values
are not available, reasonably calculated values are presented. Since calculation of fair value is based on certain assumptions, the fairvalue could differ depending on the assumptions used. In addition, the contract value of derivative transactions, which is presented
in Section 4. Derivative Transactions, is not an exact representation of market risk attributable to derivative transactions.
2. Fair value of financial instruments

Fair value of financial instruments, their values carried on the balance sheets and the differences between them as of September 30, 2016
and March 31, 2017 are as follows.
The financial instruments whose fair values are extremely difficult to estimate are excluded from the following schedule (Note 2):
Thousands of yen

As of September 30, 2016
Book value*

Fair value*(1) Cash and deposits

16,231,988

16,231,988

Difference*—(2) Cash and deposits in trust

6,314,725

6,314,725—(3) Short-term loans(45,700,000)(45,700,000)—(4) Current portion of long-term loans(42,850,000)(43,090,739)(240,739)(5) Investment corporation bonds(20,000,000)(21,946,300)(1,946,300)(6) Long-term loans(247,800,000)(254,805,571)(7,005,571)

—

—

—

(7) Derivative transactions* Liabilities are shown in parentheses.
Thousands of yen

As of March 31, 2017
Book value*

Fair value*

Difference*(1) Cash and deposits

15,709,586

15,709,586—(2) Cash and deposits in trust

5,605,731

5,605,731—(3) Short-term loans(36,000,000)(36,000,000)—(4) Current portion of long-term loans(46,500,000)(46,684,630)(184,630)(5) Investment corporation bonds(30,000,000)(31,654,880)(1,654,880)(6) Long-term loans(256,500,000)(261,031,032)(4,531,032)

—

—

—

(7) Derivative transactions* Liabilities are shown in parentheses.
Notes: 1. Measurement of fair value of financial instruments and matters concerning derivative transactions
		 (1) Cash and deposits and (2) Cash and deposits in trust			 Due to short tenor, the book values of these assets are reasonable approximations of the present value of these assets and hence used as their fair value.
		 (3) Short-term loans
			Since these loans’ tenor is short and rates are reset at a short interval, the book values of these liabilities are reasonable approximations of their present value andhence used as their fair values.
		 (4) Current portion of long-term loans and (6) Long-term loans
			For loans with floating interest rates, since the interest rates on such loans reflect market rates reasonably well over the short term and their book values are good approximations of their fair values, the book values are presented as their fair values. (However, the fair values of floating-rate long-term loans hedged by an interest-rate andcurrency swap subject to integrated treatment or by an interest-rate swap subject to special accounting treatment are calculated by discounting the aggregated principal
and interest on such loans, after taking into account the effect of said interest-rate and currency swaps or interest-rate swaps, using reasonable estimates of the rates thatwould be applicable if the Company were to refinance the existing loans for the remaining period to maturity under the prevailing market conditions as of September 30,
2016 and March 31, 2017. Such floating-rate long-term loans are presented in Section 4. Derivative Transactions.) The fair values of the liabilities with fixed interest rates
are calculated by discounting the aggregated amounts of the principal and the interest of the loans by the rates that are reasonably estimated to be applicable if the Company were to refinance the existing loans for the remaining period to maturity under the prevailing market conditions as of September 30, 2016 and March 31, 2017.
		 (5) Investment corporation bonds
			Their fair values are based on reference prices published by a financial data provider where available. When reference prices are not available, their fair values are calculated by discounting the aggregate of the principal and interest by nominal rates assumed applicable if the loans were refinanced for the duration of the current maturity.
		 (7) Derivative transactions
			 Please refer to Section 4. Derivative Transactions.
Japan Real Estate Investment Corporation

35

2. Financial instruments whose fair values cannot be reliably measured
Thousands of yen(1) Non-listed stock *1(2) Deposits received from tenants *2

As of September 30, 2016

As of March 31, 2017577,168
49,727,428

577,168
50,950,892*1 With regard to non-listed stock, which does not have a quoted market price in an active market and whose cash flows are not reasonably estimated, fair value cannot
be reliably measured and it is therefore presented at book value.
*2 With regard to deposits received from tenants, which do not have a quoted market price in an active market and reasonably estimated tenor, their cash flows cannot
be reliably measured and they are therefore presented at their book value.
3. Redemption schedule for monetary claims after the closing dateThousands of yen

As of September 30, 2016

Cash and deposits
Cash and deposits in trust
Total

1 year or less
16,231,988
6,314,725
22,546,714

1 to 2 years———

2 to 3 years———

3 to 4 years———

4 to 5 years———

Over 5 years———

Thousands of yen

As of March 31, 2017

Cash and deposits
Cash and deposits in trust
Total

1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years

15,709,586
5,605,731
21,315,318

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

4 to 5 years——
37,000,000
37,000,000

Over 5 years—
10,000,000
105,300,000
115,300,000

4. Repayment schedule for investment corporation bonds, long-term loans and other interest-bearing debt after the closing dateThousands of yen

As of September 30, 2016

Short-term loans
Investment corporation bonds
Long-term loans
Total

1 year or less
45,700,000—
42,850,000
88,550,000

1 to 2 years—
10,000,000
36,000,000
46,000,000

2 to 3 years——
25,000,000
25,000,000

3 to 4 years——
44,500,000
44,500,000

Thousands of yen

As of March 31, 2017

Short-term loans
Investment corporation bonds
Long-term loans
Total

1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years

36,000,000—
46,500,000
82,500,000—
10,000,000
27,500,000
37,500,000——
49,000,000
49,000,000——
39,000,000
39,000,000——
40,200,000
40,200,000—
20,000,000
100,800,000
120,800,000

4. Derivative Transactions(1) Derivatives not designated as hedging instruments
		 For the period from April 1, 2016 to September 30, 2016
		  “Not applicable”
		For the period from October 1, 2016 to March 31, 2017		  “Not applicable”(2) Derivatives designated as hedging instruments
		 For the period from April 1, 2016 to September 30, 2016			The contract amount or the equivalent principal amount set out in the contract as of the closing date for each derivative designated asa hedging instrument is as follows.

36

Japan Real Estate Investment Corporation



Derivative accounting method

Type of derivative transaction

Receive floating, pay fixedinterest-rate swap transactions
Integrated Treatment (Special Treatment
Receive floating USD, pay fixed JPY,
and Allocation Treatment) for interest-rate interest-rate and currency swap trans­
and currency swap transactions
actions (with initial and final exchange)

Hedge accounting

Hedged item

Contract valueOver one year

Thousands of yen

Fair value

Measurementof fair value

Long-term loans

64,300,000

64,300,000*—

Long-term loans

10,000,000

10,000,000*—

		 For the period from October 1, 2016 to March 31, 2017			The contract amount or the equivalent principal amount set out in the contract as of the closing date for each derivative designated asa hedging instrument is as follows.


Derivative accounting method
Hedge accounting
Integrated Treatment (Special Treatment
and Allocation Treatment) for interestrate and currency swap transactions

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

Hedged item

Contract valueOver one year

Thousands of yen

Fair value

Measurementof fair value

Long-term loans

64,300,000

64,300,000*—

Long-term loans

10,000,000

10,000,000*—* Because the derivative transactions eligible for the Special Treatment of interest-rate swaps and Integrated Treatment (Special Treatment for interest-rate swaps and Allocation
Treatment for currency swaps) are accounted for as integral parts of the hedged loans, the fair value of those derivative transactions is included in that of the underlying­long-term loans as of September 30, 2016 and March 31, 2017. Please refer to the measurement of fair value of financial instruments in Note 1 of “2. Fair value of financial
instruments” under Section 3. Financial Instruments as well as subheadings (4) and (6) of Note 1 concerning derivative transactions.

5. Property and Equipment
Property and equipment as of September 30, 2016 and March 31, 2017 consisted of the following:Thousands of yen

As of September 30, 2016

As of March 31, 2017

Acquisition costs

Book value

Acquisition costs

Book valueLand

450,384,924

450,384,924

434,837,910

434,837,910

Buildings and structures

270,429,495  Accumulated depreciation(84,232,457)

Machinery and equipment

2,992,615  Accumulated depreciation(1,880,589)

268,253,237
186,197,038(87,928,478)

180,324,759

3,074,681
1,112,026(1,960,979)

1,113,701

Tools, furniture and fixtures

396,617  Accumulated depreciation(232,002)

164,615(252,624)

174,371

2,250

2,250

6,087

6,087

Land in trust

151,935,120

151,935,120

181,425,424

181,425,424

Buildings and structures in trust

78,402,068  Accumulated depreciation(19,162,609)

Construction in progress

Machinery and equipment in trust

948,336  Accumulated depreciation(665,333)

Tools, furniture and fixtures in trust

48,182  Accumulated depreciation(19,071)

Construction in progress in trust
Total

426,995

88,545,705
59,239,459(21,238,686)

283,002(691,097)

29,110(22,677)

67,307,019

993,657
302,560

54,191
31,513

2,299

2,299

1,020

1,020

849,349,846

849,349,846

865,524,368

865,524,368

The reduction amount of tangible assets with government grants under the Corporation Tax Law of Japan was ¥50 million as of
September 30, 2016 and ¥50 million as of March 31, 2017.
Japan Real Estate Investment Corporation37

6. Loans
The condition of loans by financial institutions as of March 31, 2017 is as follows.
Segment
Drawdown Date
LenderBalance at
End ofCurrent Period(¥ thousand )Average
Interest
Rate *1(%)

Repayment
Date

Mizuho Bank, Ltd.

June 23, 2016

5,000,000—

0.07048

December 26, 2016

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

June 23, 2016

5,000,000—

0.07048

December 26, 2016

Sumitomo Mitsui Trust Bank, Limited

June 23, 2016

5,000,000—

0.07048

December 26, 2016

Mitsubishi UFJ
Trust and Banking Corporation

June 23, 2016

5,000,000—

0.07048

December 26, 2016

The 77 Bank, Ltd.

January 7, 2016

1,000,000—

0.07011January 10, 2017

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

March 2, 2016

1,500,000—

0.07002

March 2, 2017

Mizuho Bank, Ltd.

March 25, 2016

5,500,000—

0.07024

March 27, 2017

Sumitomo Mitsui Trust Bank, Limited

March 31, 2016

1,700,000—

0.07

March 31, 2017

Short-term loans

Mizuho Bank, Ltd.

April 1, 2016

5,500,000

5,500,000

0.07002

April 3, 2017

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

April 1, 2016

3,500,000

3,500,000

0.07002

April 3, 2017

Mitsubishi UFJ
Trust and Banking Corporation

April 4, 2016

3,000,000—

0.07018

April 4, 2017*3

Shinsei Bank, Limited

September 1, 2016

2,000,000

2,000,000

0.07002

September 1, 2017

Shinkin Central Bank

September 1, 2016

1,000,000

1,000,000

0.07002

September 1, 2017

Resona Bank, Limited

September 1, 2016

1,000,000

1,000,000

0.07002

September 1, 2017

Mitsubishi UFJ
Trust and Banking Corporation

December 26, 2016—

5,000,000

0.07

December 26, 2017

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

December 26, 2016—

5,000,000

0.07

December 26, 2017

Sumitomo Mitsui Trust Bank, Limited

December 26, 2016—

1,300,000

0.07

December 26, 2017

The 77 Bank, Ltd.

January 10, 2017—

1,000,000

0.07

January 10, 2018

Resona Bank, Limited

March 1, 2017—

2,000,000

0.07

March 1, 2018

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

March 2, 2017—

1,500,000

0.07

March 2, 2018

Mizuho Bank, Ltd.

March 27, 2017—

5,500,000

0.07

March 27, 2018

Sumitomo Mitsui Trust Bank, Limited

March 31, 2017

0.07

March 30, 2018

SubtotalLong-term loans

38

Balance at
Beginning ofCurrent Period(¥ thousand)

Shinkin Central Bank

November 15, 2011—

1,700,000

45,700,000

36,000,000

1,000,000—

0.7525

November 15, 2016
December 21, 2016

Mizuho Bank, Ltd.

December 21, 2010

5,000,000—

1.30625

Resona Bank, Limited

March 1, 2011

2,000,000

—

1.255

March 1, 2017

Development Bank of Japan Inc.

March 24, 2010

1,350,000

—

1.665

March 24, 2017

The Dai-ichi Life Insurance Company,
LimitedMarch 30, 2009

5,000,000—

1.54375

March 30, 2017

Mitsubishi UFJ
Trust and Banking Corporation

April 4, 2011

5,000,000

5,000,000

1.205

April 4, 2017*4

Mitsubishi UFJ
Trust and Banking Corporation

June 1, 2011

12,000,000

12,000,000

1.12625

June 1, 2017
*4

The Iyo Bank, Ltd.

June 15, 2012

2,500,000

2,500,000

0.66

June 15, 2017
*4

Shinsei Bank, Limited

June 15, 2012

2,500,000

2,500,000

0.66

June 15, 2017
*4

The Bank of Fukuoka, Ltd.

June 15, 2012

2,500,000

2,500,000

0.66

June 15, 2017*4

Japan Real Estate Investment Corporation

Repayment
MethodUse ofProceeds

Notes

Bullet*2

Unsecured
Unguaranteed
UnsubordinatedBullet*2

Unsecured
Unguaranteed
UnsubordinatedDrawdown Date

Balance at
Beginning ofCurrent Period(¥ thousand)

Balance at
End ofCurrent Period(¥ thousand )Average
Interest
Rate *1(%)

Repayment
Date

The Hachijuni Bank, Ltd.

June 15, 2012

1,000,000

1,000,000

0.66

June 15, 2017
*4

The Bank of Fukuoka, Ltd.

August 31, 2011

2,000,000

2,000,000

0.9025

August 31, 2017
*4

The Bank of Fukuoka, Ltd.

August 31, 2012

1,000,000

1,000,000

0.57125

August 31, 2017*4

The Hachijuni Bank, Ltd.

December 20, 2012

1,000,000

1,000,000

0.45625

December 20, 2017
*4

The Joyo Bank, Ltd.

January 7, 2013

1,000,000

1,000,000

0.49125

January 9, 2018
*4

The Ashikaga Bank, Ltd.

January 7, 2013

1,000,000

1,000,000

0.49125

January 9, 2018
*4

Sumitomo Mitsui Trust Bank, Limited

January 17, 2011

3,000,000

3,000,000

1.43375

January 17, 2018
*4

Nippon Life Insurance Company

March 1, 2011

2,000,000

2,000,000

1.465

March 1, 2018
*4

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

March 24, 2011

2,000,000

2,000,000

1.3975

March 26, 2018
*4

Resona Bank, Limited

March 25, 2013

3,000,000

3,000,000

0.45

March 26, 2018*4

The Chugoku Bank, Limited

March 25, 2013

2,000,000

2,000,000

0.45

March 26, 2018
*4

The Hachijuni Bank, Ltd.

March 25, 2013

1,000,000

1,000,000

0.45

March 26, 2018
*4

Taiyo Life Insurance Company

March 30, 2011

2,000,000

2,000,000

1.39625

March 30, 2018*4

Shinkin Central Bank

April 24, 2013

5,000,000

5,000,000

0.52775

April 24, 2018

Mitsubishi UFJ
Trust and Banking Corporation

June 1, 2011

10,000,000

10,000,000

1.31125

June 1, 2018

Shinsei Bank, Limited

August 31, 2011

3,000,000

3,000,000

1.0475

August 31, 2018

Segment
LenderLong-term loans

Sumitomo Mitsui Trust Bank, Limited

November 15, 2011

3,000,000

3,000,000

0.98375

November 15, 2018

Sumitomo Mitsui Banking Corporation

November 15, 2011

3,000,000

3,000,000

0.98375

November 15, 2018

Mizuho Bank, Ltd.

September 1, 2015

2,500,000

2,500,000

0.17

March 1, 2019
March 25, 2019

The Gunma Bank, Ltd.

March 24, 2014

1,000,000

1,000,000

0.4105

Sumitomo Mitsui Trust Bank, Limited

May 29, 2015

5,000,000

5,000,000

0.2075

May 29, 2019

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

September 1, 2015

5,000,000

5,000,000

0.2

September 2, 2019

Sumitomo Mitsui Trust Bank, Limited

September 26, 2011

5,500,000

5,500,000

1.16

September 26, 2019

The Hiroshima Bank, Ltd.

October 1, 2014

3,000,000

3,000,000

0.31575

October 1, 2019

Mizuho Bank, Ltd.

November 1, 2011

6,000,000

6,000,000

1.2075

November 1, 2019

Mizuho Bank, Ltd.

November 15, 2011

3,000,000

3,000,000

1.13875

November 15, 2019

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

November 15, 2011

3,000,000

3,000,000

1.13875

November 15, 2019

Mitsubishi UFJ
Trust and Banking Corporation

November 15, 2011

3,000,000

3,000,000

1.13875

November 15, 2019

The Gunma Bank, Ltd.

November 17, 2014

1,000,000

1,000,000

0.316

November 18, 2019

The Yamanashi Chuo Bank, Ltd.

December 15, 2014

2,000,000

2,000,000

0.266

December 16, 2019

Shinkin Central Bank

January 7, 2013

2,000,000

2,000,000

0.71375

January 7, 2020

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

January 15, 2013

5,500,000

5,500,000

0.71

January 15, 2020

Shinkin Central Bank

January 15, 2013

5,000,000

5,000,000

0.71

January 15, 2020

Repayment
MethodUse ofProceeds

Notes

Bullet*2

Unsecured
Unguaranteed
UnsubordinatedJapan Real Estate Investment Corporation

39

Drawdown Date

Balance at
Beginning ofCurrent Period(¥ thousand)

Balance at
End ofCurrent Period(¥ thousand )Average
Interest
Rate *1(%)

Repayment
Date

Mitsubishi UFJ
Trust and Banking Corporation

June 15, 2012

4,000,000

4,000,000

0.9525June 15, 2020

Sumitomo Mitsui Trust Bank, Limited

June 15, 2012

4,000,000

4,000,000

0.9525June 15, 2020

Sumitomo Mitsui Trust Bank, Limited

June 15, 2015

3,000,000

3,000,000

0.3425June 15, 2020

The Yamaguchi Bank, Ltd.

October 29, 2012

2,000,000

2,000,000

0.8

October 29, 2020

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

December 21, 2012

5,000,000

5,000,000

0.80125

December 21, 2020

Mitsubishi UFJ
Trust and Banking Corporation

December 21, 2012

5,000,000

5,000,000

0.80125

December 21, 2020

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

January 15, 2013

5,500,000

5,500,000

0.83625

January 15, 2021

Mitsubishi UFJ
Trust and Banking Corporation

January 31, 2014

4,000,000

4,000,000

0.64225

January 29, 2021

Segment
LenderThe Bank of Fukuoka, Ltd.

January 31, 2014

2,500,000

2,500,000

0.63849

January 29, 2021

Sumitomo Mitsui Trust Bank, Limited

January 31, 2014

2,000,000

2,000,000

0.62575

January 29, 2021

The Iyo Bank, Ltd.

March 24, 2014

2,000,000

2,000,000

0.6035

March 24, 2021

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

April 24, 2013

5,000,000

5,000,000

0.775

April 26, 2021

Mizuho Bank, Ltd.

June 15, 2012

4,000,000

4,000,000

1.07375

June 15, 2021

Sumitomo Mitsui Trust Bank, Limited

December 26, 2016—

3,700,000

0.1913June 28, 2021

The Iyo Bank, Ltd.

October 1, 2014

1,000,000

1,000,000

0.46525

October 1, 2021

The Chugoku Bank, Limited

October 1, 2014

1,000,000

1,000,000

0.4725October 1, 2021

Long-term loans

The Daishi Bank, Ltd.

1,800,000

1,800,000

Sony Bank Incorporated

1,400,000

1,400,000

The Toho Bank, Ltd.

1,400,000

1,400,000

The Hokuetsu Bank, Ltd.

1,400,000

1,400,000

The Shinkumi Federation Bank

1,000,000

1,000,000

The Akita Bank, Ltd.

900,000

900,000

The Gunma Bank, Ltd.

November 14, 2014

900,000

900,000

The 77 Bank, Ltd.

900,000

900,000

The Tochigi Bank, Ltd.

900,000

900,000

The Fukui Bank, Ltd.

900,000

900,000

The Bank of Iwate, Ltd.

500,000

500,000

The Higo Bank, Ltd.

500,000

500,000

The Yamagata Bank, Ltd.

40

0.463

November 15, 2021

500,000

500,000

The Nishi-Nippon City Bank, Ltd.

June 17, 2014

2,000,000

2,000,000

0.621

December 17, 2021

Sumitomo Mitsui Banking Corporation

January 7, 2013

2,000,000

2,000,000

0.98

January 7, 2022

Mizuho Bank, Ltd.

January 15, 2013

5,000,000

5,000,000

0.96625

January 17, 2022

The Norinchukin Bank

January 31, 2014

3,500,000

3,500,000

0.757

January 31, 2022

Mizuho Bank, Ltd.

April 24, 2013

3,000,000

3,000,000

0.87375

April 25, 2022

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

June 15, 2012

4,000,000

4,000,000

1.1975June 15, 2022

Mitsubishi UFJ
Trust and Banking Corporation

June 15, 2012

2,500,000

2,500,000

1.2725June 15, 2022

Shinsei Bank, Limited

June 15, 2012

2,500,000

2,500,000

1.2725June 15, 2022

The Norinchukin Bank

June 17, 2014

3,000,000

3,000,000

0.6785June 17, 2022

Japan Real Estate Investment Corporation

Repayment
MethodUse ofProceeds

Notes

Bullet*2

Unsecured
Unguaranteed
UnsubordinatedSegment
Drawdown Date
LenderBalance at
Beginning ofCurrent Period(¥ thousand)

Balance at
End ofCurrent Period(¥ thousand )The Gunma Bank, Ltd.

1,000,000

1,000,000

The Shinkumi Federation Bank

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

The Toho Bank, Ltd.

1,000,000

1,000,000

The Fukui Bank, Ltd.

1,000,000

1,000,000

The Tochigi Bank, Ltd.

500,000

500,000

2,000,000

2,000,000

The Daishi Bank, Ltd.
The Chugoku Bank, Limited

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

August 10, 2015

September 1, 2015

Average
Interest
Rate *1(%)

Repayment
Date

0.3925

August 10, 2022

0.47125

September 1, 2022

Development Bank of Japan Inc.

January 7, 2013

3,000,000

3,000,000

1.115

January 6, 2023

The Daishi Bank, Ltd.

January 7, 2016

1,500,000

1,500,000

0.2802January 10, 2023

The Hachijuni Bank, Ltd.

January 15, 2016

1,000,000

1,000,000

0.265

January 16, 2023

The Iyo Bank, Ltd.

January 15, 2016

1,000,000

1,000,000

0.265

January 16, 2023

Development Bank of Japan Inc.

January 31, 2014

5,000,000

5,000,000

0.9325January 31, 2023

The Yamaguchi Bank, Ltd.

March 25, 2013

1,000,000

1,000,000

0.945

March 24, 2023

Long-term loans

The Bank of Fukuoka, Ltd.

March 24, 2015

2,000,000

2,000,000

0.5125

March 24, 2023

The Norinchukin Bank

March 25, 2015

3,500,000

3,500,000

0.46825

March 27, 2023

The Chugoku Bank, Limited

June 15, 2015

3,000,000

3,000,000

0.61175

June 15, 2023
December 19, 2023

Mitsubishi UFJ
Trust and Banking Corporation

December 19, 2014

10,000,000

10,000,000

0.42375*5Mitsubishi UFJ
Trust and Banking Corporation

September 1, 2015

3,500,000

3,500,000

0.63

September 2, 2024

Sumitomo Mitsui Trust Bank, Limited

September 2, 2015

3,800,000

3,800,000

0.536

September 2, 2024

Taiyo Life Insurance Company

October 1, 2014

2,000,000

2,000,000

0.7825October 1, 2024

Mizuho Bank, Ltd.

October 1, 2015

2,500,000

2,500,000

0.5575October 1, 2024

Mizuho Trust & Banking Co., Ltd.

March 2, 2015

3,000,000

3,000,000

0.5585

March 3, 2025

Development Bank of Japan Inc.

March 30, 2017—

5,000,000

0.315

March 31, 2025

Taiyo Life Insurance Company

May 29, 2015

1,500,000

1,500,000

0.7375

May 29, 2025

Development Bank of Japan Inc.

September 1, 2015

7,000,000

7,000,000

0.7175September 1, 2025

Mizuho Bank, Ltd.

December 26, 2016—

5,000,000

0.3625

December 26, 2025

Shinkin Central Bank

March 30, 2017—

5,000,000

0.36

March 30, 2026

Mitsubishi UFJ
Trust and Banking Corporation

October 31, 2016—

3,000,000

0.24

October 30, 2026

Mizuho Bank, Ltd.

December 21, 2016

0.415

December 21, 2026—

5,000,000

Subtotal

290,650,000

303,000,000

Total

336,350,000

339,000,000

Repayment
MethodUse ofProceeds

Notes

Bullet*2

Unsecured
Unguaranteed
Unsubordinated*1	The average for floating interest rates is recorded as the weighted average during the period. The average is rounded off to the fifth decimal place. The weighted average forinterest rates of loans for which floating interest rates were swapped to fixed rates in order to hedge the risk of interest rate fluctuations is calculated taking the effect of thisswap into consideration.
*2	The purposes of executing these loans are to purchase real properties or beneficiary right of real estate in trust, to repay existing loans, and to fund the redemption of investment corporation bonds.
*3 The Company made a full repayment (¥3,000 million) before maturity on October 31, 2016.
*4 At the end of the period under review, these loans are accounted for under current liabilities on the balance sheets as the current portion of long-term loans payable.
*5	In order to hedge the risk of exchange rate and interest rate fluctuations related to foreign currency-denominated loans, the Company conducted an interest-rate and currency swap transaction, which substantially secured exchange and interest rates. Accordingly, the weighted average for interest rates during the period is calculated taking theeffect of this interest-rate and currency swap into consideration.

Japan Real Estate Investment Corporation

41

7. Investment Corporation Bonds including Current Portion of Investment Corporation Bonds
Outstanding investment corporation bonds as of March 31, 2017 are as follows.

Date of Issue

Balance at
Beginning ofCurrent Period(¥ thousand)

Balance at End of
Current Period(¥ thousand)Interest Rate(%)

Repayment Period

Repayment
MethodUse ofProceeds

Notes

September 29, 2005

10,000,000

10,000,0002.56

September 29, 2025

Bullet*1*2

August 30, 2013

10,000,000

10,000,000

0.497

August 30, 2018

Bullet*1*2

March 30, 2017—

10,000,000

0.3975

March 30, 2027

Bullet*1*2 *3

20,000,000

30,000,000

Securities

4th unsecured investment
corporation bond
9th unsecured investment
corporation bond10th unsecured investment
corporation bondTotal

*1 The investment corporation bonds are primarily used to fund the acquisition of real properties or beneficiary right of real estate in trust, and to repay existing loans.
*2 Financial covenants, such as a negative pledge, are not included in these bonds.
*3 Bond issuance was limited to qualified institutional investors by a private placement.

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

9. Income Taxes
The Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation Measures
Act, an investment corporation is allowed to deduct dividends of accounting profits, or dividend distributions, paid to unitholders from its
taxable income if certain tax requirements are satisfied. Such tax requirements include dividend distributions in excess of 90% of its earnings available for dividends for the fiscal period as stipulated by Article 67-15 of the Special Taxation Measures Act. The significant
components of deferred tax assets and liabilities as of September 30, 2016 and March 31, 2017 were as follows:
Thousands of yen

For the period from April 1, 2016
to September 30, 2016

Deferred tax assets:
Accrued enterprise tax
Amortization of a term leasehold interest
Asset retirement obligations
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Asset retirement obligations
Reserve for advanced depreciation of non-current assets
Total deferred tax liabilities
Net deferred tax liabilities

42

Japan Real Estate Investment Corporation

For the period from October 1, 2016
to March 31, 2017

943

914

56,53061,519103,542

104,585

161,016

167,019(67,652)(73,683)

93,364

93,33692,421

92,421

167,188

167,156

259,610259,578

166,245

166,242The reconciliation of tax rate difference between the adjusted statutory tax rate and the effective tax rate for the six months ended
September 30, 2016 and March 31, 2017 was as follows:
For the period from April 1, 2016
to September 30, 2016

Statutory tax rate
Deductible dividend distribution
Change in valuation allowance
Others
Effective tax rate

For the period from October 1, 2016
to March 31, 201734.81%

34.81%(34.77%)(34.78%)

0.06%

0.06%

0.01%

0.01%

0.10%

0.10%

10. Related Party Transactions
For the six months ended September 30, 2016 and March 31, 2017
Transactions with related parties defined under the Financial Instruments and Exchange Act are listed below.
(1) Parent Company and Major Corporation Unitholders
			 For the period from April 1, 2016 to September 30, 2016
				“Not applicable”
			For the period from October 1, 2016 to March 31, 2017
				“Not applicable”(2) Subsidiaries
			 For the period from April 1, 2016 to September 30, 2016
				“Not applicable”
			For the period from October 1, 2016 to March 31, 2017
				“Not applicable”(3) Sister Companies
			 For the period from April 1, 2016 to September 30, 2016
				“Not applicable”
			For the period from October 1, 2016 to March 31, 2017
				“Not applicable”(4) Directors and Major Individual Unitholders
			 For the period from April 1, 2016 to September 30, 2016
				“Not applicable”
			For the period from October 1, 2016 to March 31, 2017
				“Not applicable”

Japan Real Estate Investment Corporation

43

Transactions with related parties defined under the ITA are listed below.
In addition to controlling unitholders, major unitholders, subsidiary corporations, subsidiary companies of controlling unitholders, andofficers and their close relatives, the definition of a “related party” under the ITA also includes the asset management company and its
interested parties (parent and subsidiary corporations, specified individual shareholders, and major shareholders of the asset managementcompany defined as interested parties under Article 201 of the ITA and Article 123 of the enforcement order of the ITA), as well as theasset custody company.
For the period from April 1, 2016 to September 30, 2016 (Unaudited)Type of Relationship

Name ofTransaction Partner

Type of Business

Percentage ofUnits Held

Transaction Details

Interested party

Mitsubishi EstateCo., Ltd.

Real estate

1.307%

Security deposit increase

Interested party

Mitsubishi Jisho
Property Management
Co., Ltd.

Real estate
management—

Property management
expenses

2,101,261—

Asset custodycompany

Sumitomo Mitsui
Trust Bank, Limited

Bank

—

Long-term loans repayment

6,000,000

Long-term loans
payableTransaction Amount(¥ thousand)Accounting Item

Rent revenue
Security deposit return

Transaction Amount(¥ thousand)

11,615,200

Accounting Item

Balance at
End of Period(¥ thousand)—

182,135 Deposits received
from tenants
50,254—18,804,253—
29,300,000

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

For the period from October 1, 2016 to March 31, 2017 (Unaudited)Type of Relationship

Name ofTransaction Partner

Type of Business

Percentage ofUnits Held

Transaction Details

Interested party

Mitsubishi EstateCo., Ltd.

Real estate

1.307%

Security deposit increase

Interested party

Mitsubishi Jisho
Property Management
Co., Ltd.

Real estate
management—

Property management
expenses

2,087,848—

Asset custodycompany

Sumitomo Mitsui
Trust Bank, Limited

Bank

—

Long-term loans
borrowing

3,700,000

Long-term loans
payableRent revenue
Security deposit return

11,388,759

Balance at
End of Period(¥ thousand)—

564,417 Deposits received
from tenants
416,622—
17,914,548—
33,000,000

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

11. Segment Information
For the six months ended September 30, 2016 and March 31, 2017
Since the Company has been engaged in real estate leasing business using a single segment, segment information has been omitted.
Information on products and services

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

44

Japan Real Estate Investment Corporation

Information on geographic area

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

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

12. Asset Retirement Obligations
For the six months ended September 30, 2016 and March 31, 2017
Asset retirement obligations reported on balance sheets

The Company acquired Osaki Front Tower on February 1, 2011 under the term leasehold for business use agreement which, at the expiryof the leasehold, obligates the Company to restore the leased land to its original state. At the inception of a lease with such an obligation,
the Company recognized an asset retirement obligation and a corresponding capital asset in an amount equal to the present value of theestimated demolition cost required for the removal of the properties located on the leased land. The present value is calculated using
2.015% as the discount rate over 42 years, which is the term of the leasehold.
Change in the amount of the asset retirement obligations as of September 30, 2016 and March 31, 2017 consisted of the following:Thousands of yen

Balance at the beginning of the period
Increase in tangible fixed assets
Adjustment required over the period
Balance at the end of the period

For the period from April 1, 2016
to September 30, 2016

For the period from October 1, 2016
to March 31, 2017

325,325

328,602

—

—

3,277

3,310

328,602331,913

Asset retirement obligations other than those reported on balance sheets

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

Japan Real Estate Investment Corporation

45

13. Investment and Rental Property
For the six months ended September 30, 2016 and March 31, 2017
The Company owns primarily a portfolio of office properties in Tokyo and other prefectures in order to gain rental revenue from them.
The book values on balance sheets as of September 30, 2016 and March 31, 2017 and the fair values as of September 30, 2016 andMarch 31, 2017 are as follows:
Thousands of yen

Book value

Fair value

As of March 31, 2016

Change during period*1

As of September 30, 2016

As of September 30, 2016

861,360,496(4,702,758)

856,657,737

1,011,368,000

Thousands of yen

Book value

Fair value

As of September 30, 2016

Change during period*2

As of March 31, 2017

As of March 31, 2017856,657,737

15,877,252

872,534,990

1,042,319,000

Notes: 1. Book value on balance sheets means the acquisition cost less accumulated depreciation.
2. Significant changes*1 As for increases/decreases for the period, the major reason for the increase was the additional acquisition of the Nishiki Park Building (¥180,157 thousand), while
the decrease was accounted for by depreciation.
*2 As for increases/decreases for the period, the major reason for the increase was the acquisition of the Kanazawa Kamitsutsumicho Building (¥2,834,879 thousand)and the Tamachi Front Building (¥6,269,916 thousand), as well as the additional acquisition of the Shinjuku Eastside Square (¥4,719,469 thousand) and the
Shiodome Building (¥10,505,287 thousand). The decrease was accounted for by the transfer of the Genki Medical Plaza (¥4,776,921 thousand) and by depreciation.
3. Fair values as of September 30, 2016 and March 31, 2017 are defined as the appraised values provided by an external qualified professional appraiser.

Profits and losses related to investment and rental property are listed in Section 15. Breakdown of Property-Related Revenues and Expenses.

14. Per Unit Information
The following table summarizes information about net assets per unit and profit per unit at September 30, 2016 and March 31, 2017 andfor the periods then ended, respectively:
Yen

Net assets at period end per unit
Profit per unit

For the period from April 1, 2016
to September 30, 2016

For the period from October 1, 2016
to March 31, 2017

358,478358,661

8,361

8,543

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

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

46

Japan Real Estate Investment Corporation

For the period from April 1, 2016
to September 30, 2016

For the period from October 1, 2016
to March 31, 2017

10,947,485—
10,947,485
1,309,310 units

11,186,731—
11,186,731
1,309,310 units15. Breakdown of Property-Related Revenues and Expenses
For the six months ended September 30, 2016 and March 31, 2017
Thousands of yen

For the period from April 1, 2016
to September 30, 2016

For the period from October 1, 2016
to March 31, 2017

Property-Related Revenues

30,773,968

30,784,997

Rent revenues

30,565,884

30,726,244  Rental revenues

23,994,977

24,352,065   Common service charges

3,598,719

3,545,126  Parking revenues   Other rental revenues

786,817802,247

2,185,369

2,026,805

Other lease business revenues

208,084

58,753  Cancellation charges

10,883

11,438   Other miscellaneous revenues

197,200

47,315

Property-Related Expenses

17,091,090

16,939,531

Property management expenses

3,519,734

3,737,491

Utilities expenses

2,708,649

2,383,645

Property and other taxes

2,936,241

2,925,627

Casualty insurance

57,81458,945

Repairing expenses

1,181,022

1,113,418

Depreciation

6,500,062

6,526,566

Other rental expenses

187,565

193,836

Property-Related Profits

13,682,878

13,845,466

16. Breakdown of Gain on Exchange of Real Estate Properties
For the period from April 1, 2016 to September 30, 2016
“Not applicable”
For the period from October 1, 2016 to March 31, 2017
Thousands of yen

Genki Medical Plaza
Revenue from transfer of real estate property

6,890,000

Cost of real estate property transferred

4,776,921

Other transfer expenses incurred

71,302

Reduction amount of fixed assets

2,008,155

Gain on exchange of real estate property

33,620Japan Real Estate Investment Corporation

47

17. Changes in Unitholders’ Equity
For the six months ended September 30, 2016 and March 31, 2017
Total number of investment units issuable
and number of units outstanding

As of September 30, 2016

As of March 31, 2017

Total number of investment units issuable

4,000,000 units

4,000,000 units

Number of units outstanding

1,309,310 units

1,309,310 units

18. Supplemental Cash Flow Information
Cash and cash equivalents

The following table represents a reconciliation of cash and cash equivalents at September 30, 2016 and March 31, 2017:
Thousands of yen

As of September 30, 2016

As of March 31, 2017

Cash and deposits

16,231,988

15,709,586

Cash and deposits in trust

6,314,725

5,605,731

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

22,546,714

21,315,318

19. Leases
1. Leased assets under finance lease transactions that do not transfer ownership of the leased assets to the lessees are capitalized and depreciated by the straight-line method over the lease term with no residual value. Such capitalized leased assets primarily consist of tools,
furniture and fixtures.
2. The Company, as a lessor, owns office buildings under leases and earns rent income. As of September 30, 2016 and March 31, 2017, thefuture lease revenues under the non-cancelable operating leases are as follows:
Thousands of yen

As of September 30, 2016

Due within one year

19,258,762

19,584,216

Due after one year

29,319,650

31,149,426

Total

48,578,413

50,733,642

20. Subsequent Events
For the six months ended March 31, 2017
“Not applicable”

48

As of March 31, 2017

Japan Real Estate Investment Corporation

Japan Real Estate Investment Corporation

49

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

50

Japan Real Estate Investment Corporation• risks related to tax authority disagreement with the AIFM’s interpretations of the Japanese tax laws and regulations;• risks related to being unable to benefit from reductions in certain real estate taxes enjoyed by qualified J-REITs;• risks related to changes in Japanese tax laws; and• risk of dilution as a result of further issuances of units.

2. Information Required under Article 22(2)(d) of the EU Alternative Investment Fund Managers
Directive (AIFMD)(1) ‌Material Changes in Information Listed in Article 23 of AIFMD during the Financial Period covered by the Report (six-month fiscal
period ended March 31, 2017)
As the general administrator for operation of administrative instruments and accounting, transfer agency and special accounts administrator were changed in June and October 2016, we revised the disclosure of their respective fees under the heading “Description of allfees, charges and expenses and a maximum amount which is directly / indirectly borne by the investors” (Article 23(1) (i)).
		  Therefore, in the section under the heading “The identity of the AIFM, AIF’s depository, auditor and any other service providers,and a description of their duties and the investors’ rights thereto” under Article 23 (1)(d), we added the identity of the new transfer
agent and special accounts administrator (Mitsubishi UFJ Trust and Banking Corporation) and a note stating that the general administrator for operation of administrative instruments and accounting would be replaced by Mitsubishi UFJ Trust and Banking
Corporation, effective October 1, 2016. Please note that such replacement has been made effective as scheduled.

3. Remuneration Policy for the Asset Manager’s Directors, Corporate Auditors and Employees
Beginning April 1, 2016 and ending March 31, 2017
1. Remuneration for Asset Manager Directors

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

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

Remuneration based on resolutionsof the General Meeting of Unitholders
of Asset Manager

Number of
person(s)remunerated

1

Corporate Auditors

Remuneration

Number of
person(s)remunerated¥19.5 million

0

Total

Remuneration

Number of
person(s)remunerated

Remuneration¥0 million

1¥19.5 million

Japan Real Estate Investment Corporation

51

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

Remuneration based on compensation rules

35

Remuneration
Total

Fixed

Variable¥340 million¥217 million¥123 million

4. Conflict of Interest

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

52Japan Real Estate Investment Corporation

Corporate Data
As of March 31, 2017

Executives
Executive Director: 	Hiroshi Nakajima
Supervisory Directors: ‌Tomohiro Okanoya
Hiroaki Takeno(Appointed on May 11, 2017)

Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation
1-4-5, Marunouchi, Chiyoda-ku, Tokyo 100-8212, Japan

Paid-in Capital¥458,016,096,000

Auditors
Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg.
2-2-3, Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011, Japan

Number of Units Outstanding
1,309,310

Incorporation
May 11, 2001

Number of Unitholders
14,623

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

Stock Listing
Tokyo Stock Exchange
Securities Code8952
Type of Investment Corporation
Closed-end corporate type fundFor further information, please contact:
Japan Real Estate Asset Management Co., Ltd.
Planning Department
Tel: 81-3-3211-7951
Fax: 81-3-3212-8886
E-mail: j-rea-inquiry@j-rea.co.jp

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

Japan Real Estate Investment Corporation

53

Japan Real Estate Investment Corporation
SEMIANNUAL REPORTMarch 2017

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

Printed in Japan