SEPTEMBER2007
SEMIANNUAL
R E P O RT
For the period from April 1, 2007 to September 30, 2007

Japan Real Estate Investment Corporation

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

The Strengths of Japan Real Estate Investment Corporation• Steady growth — Total amount of acquisition prices reached ¥446,940 million ($3,872
million) at the end of September 2007.
• Acquisition of 8.3 Square Kita Building in June 2007 for ¥7,100 million ($62 million).
• Sale of Kobe Itomachi Building as part of reviewing the properties in our portfolio,
and reported a gain on sale of property of ¥397 million ($3.4 million).
• Portfolio of 50 high-quality off ice buildings as of September 30, 2007
• Revenues and profits have continuously increased from IPO to the end of September 2007.
Operating revenues for the 12th period achieved ¥17,530 million ($152 million), and operating
income reached ¥8,739 million ($76 million).
• Increase in revenue as a result of the tenant turnover and rent increase revision withexisting tenants• Superior geographic and tenant diversity with a 98.7% occupancy rate (as of September 30, 2007)• LTV (Interest-bearing debt/Total assets) at the end of the 12th period was 32.1%.
The long- term, fixed-interest debt ratio remained at 100.0 %.
• Highest credit ratings in J-REIT: A+ from Standard & Poor’s Ratings Services, A1 from Moody’s
Investors Services, Inc. and AA from Rating and Investment Information, Inc. (R&I)• Collaboration with sponsors of the asset management company, which comprise Mitsubishi EstateCo., Ltd., Tokio Marine & Nichido Fire Insurance Co., Ltd., The Dai-ichi Mutual Life Insurance
Company, and Mitsui & Co., Ltd.

Contents
Financial Highlights
Top 10 Unitholders
Unit Price Performance
Portfolio Highlights
New Portfolio Property
Property Sold
Issuance of Investment Corporation Bonds
Property Acquired after the Period

p. 1
p. 1
p. 1
p. 2
p. 3
p. 3
p. 3
p. 4

History after IPO
To Our Unitholders
The Portfolio of Japan Real Estate
Investment Corporation
Overview of Portfolio Properties
Financial Section
Corporate Data

p. 6
p. 8
p.12
p.15
p.23
p.37

Financial Highlights
For the period from April 1, 2007 to September 30, 2007
Thousands of U.S. dollars(Note 1)Millions of yen
For the period from
April 1, 2007 to
September 30, 2007

For the period from
October 1, 2006 to
March 31, 2007

17,530
8,739
7,586
7,585

16,960
8,304
7,184
7,183

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

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

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

12,073
10,02228.3 times

11,3009,441
33.8 times

10,3398,257
21.0 times

9,578
7,945
22.1 times

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

7,585
410,000
18,5007,183
410,000
17,521

5,976
345,400
17,302

5,585
345,400
16,172

Operating Revenues
Operating Income
Income before Income Taxes
Net Income

For the period from For the period from
April 1, 2006 to
October 1, 2005 to
September 30, 2006
March 31, 2006

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

For the period from
April 1, 2007 to
September 30, 2007

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

151,868
75,70965,72165,712

8,978
104,592
7,526
86,831
21.1 times 28.3 times
5,509
345,400
15,95165,711410,000
160.27

Notes: 1. Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥115.43 = US$1.00, the foreign exchange rate on
September 30, 2007, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen has been or could be readily
converted, realized or settled into U.S. dollars at that rate or any other rate.
2. NOI = (Property-Related Revenues – Property-Related Expenses) + Depreciation
Property-Related Revenues and Expenses exclude Gain or Loss on Transfer of Properties.
3. FFO = Net Income – Gain (Loss) on Transfer of Properties + Depreciation
4. FFO Multiple = Unit Price at End of the Respective Term ÷ FFO per Unit (Annualized)(Annualized portion of the calculation given in note 4 assumes a fiscal period of 183 days for the period ended September 30, 2005, 182 days for the period
ended March 31, 2006, 183 days for the period ended September 30, 2006, 182 days for the period ended March 31, 2007 and 183 days for the period
ended September 30, 2007.)

Top 10 Unitholde r s
As of September 30, 2007
Company

Japan Trustee Services Bank, Ltd. (Shintaku Acc.) ..................................................................................................
NikkoCiti Trust and Banking Corporation (Toshin Acc.) .......................................................................................
The Master Trust Bank of Japan, Ltd. (Shintaku Acc.) ............................................................................................
Trust & Custody Services Bank, Ltd. (Toshin Acc.) .................................................................................................
The Nomura Trust and Banking Co., Ltd. (Toshin Acc.) .........................................................................................
UBS AG London Asia Equities ................................................................................................................................
Mitsubishi Estate Co., Ltd. .....................................................................................................................................
The Chugoku Bank, Ltd. ........................................................................................................................................
The Bank of New York, Treaty JASDEC Account ...................................................................................................
Tokio Marine & Nichido Fire Insurance Co., Ltd. .................................................................................................

Unit Price Performance

TOPIX

Units

% of Total Units
Outstanding

30,166
29,63429,59923,51912,534
10,886
10,160
9,712
9,521
8,120

7.36%
7.23%
7.22%
5.74%
3.06%
2.66%
2.48%
2.37%
2.32%
1.98%

The Company

PO Price

325%
300%
275%
250%
225%
200%
175%
150%
125%
100%
75%
50% Sept Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept Oct.

2001

2002

2003

2004

2005

2006

2007

Japan Real Estate Investment Corporation 1

Portfolio Highlights

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

Number ofbuildings

Total numberof tenants(Note)

Total leasable
space

Occupancy
rate

September 2001

20

213

133,927m 2

94.6%

Total leasable
space

March 2002

24

353

201,884m 2

94.0%

Occupancy rate

September 2002

27

362

215,928m

2

95.3%

March 2003

30

383

236,693m 2

94.4%

September 2003

32

407

246,062m 2

95.1%

March 2004

36

477

273,157m2

94.8%

September 2004

39

504

293,105m 2

93.6%

March 2005

46

669

336,026m 2

97.6%

September 2005

50

814

364,610m 2

98.6%

March 2006

52

866

400,090m2

98.7%

September 2006

49

835

396,173m 2

98.2%

March 2007

50

887

397,928m 2

97.8%

April 2007

50

882

398,114m 2

97.5%

May 2007

50

883

398,137m 2

97.0%

June 2007

51895

410,075m 2

98.3%

July 2007

51897

410,074m 2

98.4%

August 2007

51

897

410,074m 2

98.5%

September 2007

50

879

406,605m 2

98.7%

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

100,000

170,000

240,000

310,000

380,000

450,000

12th period

60.0

65.0

70.0

75.0

80.0

85.0

90.0

95.0

100.0

Occupancy rate (%)

Portfolio breakdown
As of September 30, 2007

Properties bygeographic
region(Percentage based on
acquisition price)

Tenants byindustry
type

Other major
cities17.1%(Percentage basedon leased space)

Transport services and travel 1.0%
Steel and metals 1.6%
Staffing agencies 1.8%
Ceramics 1.9%
Textiles 2.0%

Others11.3%

Communications 2.3%

Financeandinsurance
12.6%

Construction 3.1%
Tokyo metropolitan area,
excluding 23 wards
2.1%

Tokyo 23 wards
80.8%Serviceindustries
16.5%

Machinery 4.5%

Information
services
9.8%

Real estate 7.2%

Pharmaceuticals 7.7%

Electric devices 8.1%

2 Japan Real Estate Investment Corporation

Retail andrestaurants
8.7%

New Port folio Property
For the period from April 1, 2007 to September 30, 2007

8·3 Square Kita Building
Property Summary
Type of asset:
Acquisition price:
Acquisition date:
Location:
Usage:
Site area:
Floor area of building:
Structure:

Completion:

Real property (Note 1)¥7,100 million ($62 million)
June 1, 2007
Sapporo, Hokkaido
Offices, shops (Note 2)
5,541.60m2 (59,649ft2)
16,048.59m2 (172,745ft2) (Office building)
48.38m2 (521ft2)(Multi-level parking structure)
Steel-reinforced concrete structure,flat roof
Above ground: 11 floors
Below ground: 1 floor (Note 2)
December 2006

Notes: 1. Land: Ownership (47.17% in the site rights)
Building: Ownership (all the compartmentalizedbuilding units in the office building and the multi-levelparking structure, and the common area in the project site)
2. Usage and structure refer to the office building.

Leasing Conditions (As of September 30, 2007)
Number of tenants:
Leasable space:
Leased space:Occupancy rate:

7 tenants
12,265m2 (132,019ft2)
12,078m2 (130,006ft2)
98.5%

SapporoTokyo

Property Acquisition Merits
Located in Sapporo, the largest central cityin Hokkaido, the 8·3 Square Kita Building
benefits the Company's portfolio in terms ofregional diversity. The property is a newbuilding within the site that is directly
connected to JR Sapporo Station via an
underground walkway. With its convenient
location and high specifications for meeting avariety of facility needs for tenants,
the property holds a competitive edge in
Sapporo's office building market.

Property Sold
For the period from April 1, 2007 to September 30, 2007

Kobe Itomachi Building
Sale date:
Sale price:
Acquisition date:
Acquisition price:
Location:
Site area:
Floor area of building:Completion:
Buyer:
Sale date

September 14, 2007
¥1,770 million ($15 million)
September 25, 2001
¥1,436 million ($12 million)
Kobe, Hyogo Prefecture
808.55m2 (8,703ft2)
4,894.09m2 (52,679ft2)
September 1989
MID Urban Development Co., Ltd.
Appraisal value

Tokyo
Kobe

Sale priceGain on saleof property¥1,770 million($15 million)¥397 million($3.4 million)(As of September 1, 2007)

September 14, 2007

¥1,240 million($11 million)

Issuance of Investment Corporation Bonds
For the period from April 1, 2007 to September 30, 2007

Name of the Investment Corporation BondJapan Real Estate Investment Corporation
Fifth Unsecured BondJapan Real Estate Investment Corporation
Sixth Unsecured Bond

Total amount of the bond issue¥10,000 million ($87 million)¥15,000 million ($130 million)

Date of the bond issue

June 18, 2007

Term

5 years

7 years

Interest rate

1.67% (annual)

1.91% (annual)

Secured mortgage or guarantee

There is no secured mortgage or guarantee on the bond.

Finance-related special covenants

No finance-related special covenants are attached to the bond.

Use of the fundFor redemption of the 1st Investment Corporation Bond (June 21, 2007)

Japan Real Estate Investment Corporation 3

Property Acquired after the Period
After the period from April 1, 2007 to September 30, 2007

Acquisition of Harumi Center Building through the preferential purchasing right, which was granted at the time of theAcquisition of Harumi Center
Building from TMKTMK (Special Purpose Company)

AssetsTransaction Summary

Property

Harumi Front Special Purpose Company

Seller:Acquisition price: ¥26,800 million ($232 million)
Appraisal value:

Harumi Center Building¥26,300 million ($228 million)

Total project cost : ¥12,663 million($110 million)(as of November 1, 2007)
Acquisition date: December 18, 2007

Outline of Harumi Center Building
Outside view of the building

ido

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CentralWholesaleMarket

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ki

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Oe

idg

Br

iv
aR

d

Lin

Yurakucho Line

e

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Su

Ka

um

ar

H

Tsukishima Sta.

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Sta

ei

im

Re

ki

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ch
Ka

e

idg

Br

Harumi Island
Triton Square

Harumi Center BuildinglnaToyomi
Athletic Park

io

h
sas

Ca

A

Property Summary

Property Acquisition Merits

Name of property:

Harumi Center Building

Location:
Site area:
Floor area of building:Leasable space:Occupancy rate:
Structure:

Harumi, Chuo-ku, Tokyo
4,664.63m2 (50,210ft2)
26,447.27m2 (284,676ft2)
20,812m2 (224,018ft2)
98.1% (as of December 18, 2007)
Steel-framed structure, flat roof
Above ground: 10 floors
Office, shop
November 2006

Usage:
Completion:

4 Japan Real Estate Investment Corporation

The property is located in the Harumi area of Tokyo's
Chuo-ku, a new business district that features Harumi
Triton Square among other office buildings. It is a relatively large-scale and new building that was constructed in November 2006. The property is conveniently situated an 8-minute walking distance fromthe nearest subway station, and with the planned
extension of Harumi St., it will also be quickly accessible by car from the Ginza area, Odaiba and Haneda
Airport. With high specifications that meet various
tenants' facility needs, this property holds a competitive edge in Tokyo's office building market.

preferred capital contribution into the Harumi Front Special Purpose Company ( TMK ) in March 2005.

Harumi Front
Special Purpose Company

Preferred capital contribution made to TMK(Approximately 49.9% of the total preferred capital
contribution)

Liabilities and net assets

Dividends on the preferred capital contribution

80%
Specified corporate bonds &Special purpose loans

Preferred capital contribution
Specified capital contribution

Schedule

TMK

The Company

December 2007

Sale of the property

Acquisition of
the property

March 2008

Resolution by the general
meeting of members

Record of dividends
as revenue

April 2008

Dividend payment(decision on dividend payment)

20%

Receipt of dividends*TMK's ratio of liabilities to net assets does not takedeposits received from tenants into account.

Outline of Preferred Capital Contribution
Acquired property:
Type of securities:
Issuer:Acquisition dates:
Acquisition price :Real estate-backed securities
Preferred capital contribution certificatesHarumi Front Special Purpose Company (TMK)
March 29, 2005 / November 24, 2005 / November 24, 2006
¥1,270 million ($11 million)(number of units)(25,400 units)(about 49.9% of the total of 50,900 units of preferred capital contribution units)

Limit on preferential purchasing rights: May 31, 2008

Projection on Dividend Payment from TMK
Dividend payment to the Company from TMK: Approximately ¥7.8 billion($68 million)(projection)(For the approximately 49.9% of preferred capital
contribution by the Company)*The above dividend payment from TMK is the projection as of November 14, 2007.
The actual amount of dividend payment from TMK will be determined upon resolution to be made by the general
meeting of members of TMK (scheduled to be held in late March 2008).
*The Company will record the dividend payment as revenue in the period when the resolution on the dividend payment ismade by TMK.

Japan Real Estate Investment Corporation 5

Histor y after IPO
Since listing on the Tokyo Stock Exchange (“TSE”) as the first J-REIT in Japan, the Company has establisheda firm track record over the past 11 fiscal periods. As the Company concluded its 12th fiscal period ended
September 30, 2007, the total acquisition price for properties reached ¥446,940 million ($ 3,872 million).
Throughout its history, the Company has sustained stable management while realizing steady growth and taking the initiative as a J-REIT pioneer. During the fiscal period under review, the Company accelerated efforts
to streamline and strengthen its portfolio.
Sep. 2001
Listed on TSE as first J-REIT
Sep. 2001
IPO
May 2002
First Follow-On(First for a J-REIT)

133,927m2

Oct. 2003
Second Follow-On(126,748m2)
213Tenants

201,884m2

Apr. 2005
Third Follow-On(189,815m2)
353 Tenants

Oct. 2006
Fourth Follow-On
Feb. and Mar. 2002
Acquired Credit Rating (First for a J-REIT)
Standard & Poor’s A+ (Outlook: Stable)
Moody’s A2 (Outlook: Stable)(205,796m2)
362 Tenants

Period Ended
Sep. 2001
Period Ended
Mar. 2002

Jun. 2002
First Investment Corporation Bond Issue (First credit
rated issue for an investment corporation bond)
Apr. 2003
Second/Third Investment Corporation Bond Issue
Nov. 2004
Moody’s upgraded its credit rating from A2 to A1 with outlook of stable.
Dec. 2004
R&I issued an AA credit rating.
Mar. 2005
Acquisition of preferred capital contribution certificates(First for a J-REIT)
Sep. 2005
Fourth Investment Corporation Bond Issue (First J-REIT ever to issue investment
corporation bonds without a negative pledge clause or other financial covenants)
Jun. 2007
Fifth Investment Corporation Bond Issue
Sixth Investment Corporation Bond Issue
Note: The total number of tenants is the gross number of tenants by building.

6 Japan Real Estate Investment Corporation

215,928m2

Period Ended
Sep. 2002
Period Ended
Mar. 2003
Period Ended
Sep. 2003
Period Ended
Mar. 2004

94.6%
94.0%

Stable management(Trend in operating conditions)

95.3%

OCCUPANCY RATE

94.4%
95.1%
94.8%

97.6%
93.6%

98.6%

98.7%
98.2%

Listed on ¥144,697
97.8%¥412,766
Million¥192,607
TSE
98.7%¥326,560¥164,277
MillionMillion¥239,827¥92,845 (24)MillionMillion ¥183,542
(52)
(32)
¥418,693
Million(27)¥218,437 Million
Million¥290,510 (50)(39)
Million(20)
Million¥441,276 ¥446,940(30)
Million(49)(36)
MillionMillion
(46)
(50)
(50)

TOTAL ACQUISITION PRICE (TOTAL PROPERTIES ACQUIRED)

Steady growth(Acquisitions)

236,693m2(223,410m2)
383 Tenants

TOTAL LEASABLE SPACE ( LEASED SPACE )

246,062m2(233,925m2)
2
407 Tenants 273,157m(258,885m2)
477 Tenants

293,105m2(274,411m2)
504 Tenants

336,026m2(327,962m2)
364,610m2
669 Tenants(359,620m2)
814 Tenants

400,090m2(394,764m2)
396,173m2
866 Tenants

Period Ended
Sep. 2004(389,012m2)
835 Tenants

397,928m2(389,112m2)
887 Tenants

406,605m2

Period Ended
Mar. 2005(401,329m2)
879 Tenants

Period Ended
Sep. 2005

Forward-looking initiatives(J-REIT management)

Period Ended
Mar. 2006

Listing and issuanceof units

Period Ended
Sep. 2006

Credit ratings,
diversificationof investment methods,etc.

Period Ended
Mar. 2007
Period Ended
Sep. 2007

Japan Real Estate Investment Corporation 7

To Our Unitholders

8 Japan Real Estate Investment Corporation

In the 12th fiscal period, the Company recorded
operating revenues of ¥17,530 million ($152 million),up 3.4% from the previous period. Net income rose 5.6%
to ¥7,585 million ($66 million).
Kazuhiko Arahata
CEO & President of Japan Real Estate
Asset Management Co., Ltd.

FINANCIAL RESULTS AND OUTLOOK

profits, and I am pleased to report another satisfactory fiscal

During the 12th fiscal period (the six months ended September

period for our unitholders.

30, 2007), despite concerns regarding the impact of the subprime

In the 12th fiscal period, the Company recorded operating

loan crisis in the United States on global financial and capitalrevenues of ¥17,530 million* ($152 million), up 3.4% from themarkets toward the end of the period, the Japanese economy

previous period. Operating income rose 5.2% to ¥8,739 million

continued to show a favorable trend. Factors that contributed to($76 million). After deducting expenses for interest payments

the economy's soundness included strong capital expenditure

on loans and other costs, income before income taxes increased

attributable to continued improvements in corporate sector

5.6% to ¥7,586 million ($66 million), and net income climbed

performance and increased demand. Furthermore, improvements

5.6% to ¥7,585 million ($66 million). As a result, we declared ain the employment environment have sustained the corporate

cash dividend of ¥18,500 ($160.27) per unit.

sector's healthy conditions. As a result of favorable corporate* Includes gain on the sale of a property of ¥397 million ($3.4 million).

performance, the market for leased office space saw an increasein demand, which led to improved vacancy rates throughout the

For the 13th fiscal period (October 1, 2007 to March 31,

country. Demand was especially robust in central Tokyo,

2008), the Company expects to record a revenue of aroundreflected in noticeably falling vacancy rates and climbing rents¥7,800 million ($68 million) to be received from Harumi Front

for new tenants. Regarding the property market, property values

Special Purpose Company ("Harumi Front TMK")**, asremained on an upward trend as a result of expanding demand

dividends. Accordingly, the Company forecasts operating

for office properties amid the continuing economic recovery, as

revenues of ¥25,430 million ($220 million), income before

well as increased investments in office buildings by a variety ofincome taxes of ¥12,190 million ($106 million) and net income

investors.

of ¥12,190 million ($106 million). We plan to declare a dividend

In such an operating environment, the Companyof ¥29,730 ($257.56) per unit. Our forecasts for the 14th fiscal

implemented various initiatives to achieve greater internal

period (April 1, 2008 to September 30, 2008) are operating

growth. These initiatives, including building renovations andrevenues of ¥18,050 million ($156 million), income before

other measures to improve tenant satisfaction, activities to attract

income taxes of ¥7,460 million ($65 million) and net income of

new tenants and aggressive upward rent revisions for existing¥7,460 million ($65 million). We plan to declare a dividend oftenants, were implemented to raise rent levels for the entire¥18,210 ($157.76) per unit.

portfolio. As part of efforts to achieve further external growth,
the Company acquired a property and sold a property during the
fiscal period under review to optimize its portfolio and further** Harumi Front TMK is a special purpose company defined under the Act on
Securitization of Assets and has developed the Harumi Center Building in Harumi,
Chuo-ku, Tokyo (commencement of construction: May 2005; Completion: November

strengthen the portfolio quality. As a result of these activities in2006). The Company has underwritten approximately 49.9% of the preferred capitalline with portfolio optimization that the Company has

contribution certificates, which Harumi Front TMK has issued through three separate

undertaken since the 10th fiscal period, its properties as ofissuances from March 2005, at a price of ¥1,270 million ($11 million). In conjunction

September 30, 2007 consisted of 50 office buildings with a total

with Harumi Front TMK's December 18, 2007 sale of the Harumi Center Building toacquisition amount of ¥446,940 million ($3,872 million). Total

the Company at a price of ¥26,800 million ($232 million), the Company expects toleasable space was 406,605 m (approximately 4,376,659 ft ),receive a dividend in return for its preferred capital contributions in April 2008. The

with a total of 879 tenants. The additional internal and external

amount of the dividend, however, will be determined at a general meeting of members

growth that we realized during the fiscal period under review hasof Harumi Front TMK scheduled to be held in March 2008. Accordingly, the Company

enabled us to continue to achieve increases in revenues andplans to record the said dividend in its revenues for the 13th fiscal period following

2

2

determination of the dividend amount.
Japan Real Estate Investment Corporation 9

In addition to expanding our portfolio by acquiring competitive properties,
we will continue to focus on improving the quality of the portfolio.
Although it will be necessary to pay close attention to thefrom rating agencies, it is able to obtain low-interest loans at

impact of the U.S. economy on the Japanese market, as well as

favorable terms. It is extremely important for a REIT to be able

the impact of increasing crude oil and raw material prices on

to expeditiously raise funds in order not to miss opportunities tocorporate earnings performance and consumer confidence andacquire prime properties that become available. The Company

spending, the stable, favorable turnabout in the Japanese

has been able to keep interest rates down and obtain unsecured

economy centered on the corporate sector is expected to continuebank loans, primarily as a result of its adherence to a conservative

for the foreseeable future. In the market for leased office space,financial strategy. Moreover, property sellers have a great deal ofboth vacancy rates and rent levels are demonstrating favorable

confidence in our ability to pay a contract price, as the Company

trends, supported by the active demand for office space spurredalready has a recognized name in the real estate market. As ofby the robust corporate performance. On the other hand, when

November 14, 2007, the Company had obtained the following

selecting buildings, tenants in this market are making increasingly

credit ratings.

stringent demands, ranging from location, building quality, andRating Agency

Credit RatingStandard & Poor's Ratings Services

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

to provide services that correctly and promptly reflect the needs

Moody's Investors Services, Inc.

Issuer rating: A1; Outlook: Positiveof tenants and to deliver added value that differentiates theirRating and Investment
Information, Inc.

Issuer rating: AA; Outlook Stablefeatures, to building management and value-added services. We
anticipate that it will become even more important for suppliersbuildings from the competition. In the real estate market, theCompany expects that c o m p e t i t i o n t o a c q u i r e p r i m eproperties will become more intense.

External Growth

Therefore, to produce steady results that extend into theAggressive investing continues in Japan's real estate market, andfuture under these operating conditions, the Company adheres

competition for the acquisition of prime real estate is intensifying,

to the following management policies with respect to financial

making it more difficult to achieve external growth. Still, ourstrategy and internal and external growth. Six years have passed

policy is to expand our portfolio by acquiring prime properties

since our public listing, and our goal is to achieve continued

through one-on-one transactions. In more specific terms, we will

stable operations.

avoid direct and excessive competition, such as bidding, to theextent possible and continue to make sufficient use of the pipeline

MANAGEMENT POLICIES

provided by sponsor companies of the Asset Management

Financial Strategy

Company, as well as working to negotiate with co-owners

The greatest challenge facing us in terms of financial strategy isand compartmentalized owners of jointly owned properties

maintaining the sound financial position that we have built up(properties owned in the form of co-ownership or compart-over the years. More specifically, it is essential to limit the scalementalized ownership), which comprise approximately 30% ofof impact that higher interest rates will have on earnings, while

our portfolio in terms of the number of buildings, for additional

also delaying their impact. To achieve these objectives, theacquisition of shares in these properties. Furthermore, as we

Company has set a conservative target range of the loan-to-value

acquired the Harumi Center Building through a one-on-one

ratio ("LTV ratio": Interest-bearing debt/Total assets) between

transaction enabled by the exercise of the preferential purchase

30% and 40%, and at the same time, we will increasingly

rights that we obtained through preferred capital contributions

undertake fixed-interest debt financing with longer terms.

to Harumi Front TMK, we will proactively examine new methods

Adhering to these policies, the Company achieved an LTV ratio

for acquiring properties.

and long-term, fixed-interest debt ratio (ratio of long-term, fixed-

In addition to expanding our portfolio by acquiring

interest debt including current portion of investment corporationcompetitive properties, we will continue to focus on improving

bonds to total interest-bearing debt) of 32.1% and 100%,

the quality of the portfolio. The Company will work to optimize

respectively, at the end of the 12th fiscal period.

its portfolio by, in a timely manner, selling properties that are

Because of the excellent ratings the Company has obtained

10 Japan Real Estate Investment Corporation

expected to lose their competitiveness as rental buildings due toTaketo Yamazaki (Left)
Executive Director ofJapan Real Estate Investment Corporation

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

their deterioration through age and changes in the real estate

in corporate earnings. In addition, rent levels for new tenants inleasing market. By the end of the 11th fiscal period, we had

the 23 wards of Tokyo began to increase two and one-half years

transferred five properties from our portfolio, one of which wasago, making it possible to raise rents on contracts with existinga 37-year-old property transferred through an exchange with atenants beginning in 2006.

four-year-old property. During the 12th fiscal period, we also

Turning to our own portfolio, rents on contracts increased

sold one property. These activities have enabled the further

by 4.6% over the past two fiscal periods. The increase can be

optimization of our portfolio in terms of scale and quality. The

broken down into 1.4% attributable to external growth (increasetable below compares our portfolios upon public listing on

or decrease of properties) and 3.2% due to internal growth. We

September 30, 2001 and at the end of the 12th fiscal period. The

expect to see a further increase of market rent levels, which means

comparison clearly shows that we have succeeded in creating athat the difference between market rent levels and rents onlarge-scale and yet highly liquid portfolio consisting of relatively

contracts relating to our portfolio properties will most likely

new properties located primarily in the 23 wards of Tokyo.

become more apparent. Based on this difference, and throughWith the aim of further strengthening our business foundations,an expected turnover of around 6% to 8% in tenants andwe will do our utmost to implement greater growth.

negotiations aimed at revising rents on existing contracts, we¥92,845 million($804 million)¥446,940 million($3,872 million)

Total Acquisition
At IPOPrice
for properties At 12th Period-End

Since the launch of the J-REIT market over six years ago,
44 investment corporations have sprung up, and the market

56.7%

Other Areas

43.3%

Tokyo 23 Wards

80.8%

enjoyed over the past years. Meanwhile, as the market grows andOther Areas

19.2%

competition intensifies, the J-REIT market is facing its next stage

At 12th Period-End

Average Building
Ageopportunity to see increased revenue from rents.

Tokyo 23 Wards
At IPO
Geographical
Diversification

believe that circumstances now present us with an excellent

At IPO

17.9 years

At 12th Period-End

13.9 years

continues to mature. Considering this, the Company — a J-REIT
pioneer — is proud of the great impact and huge success it hasof development. The Company will become the market leader
in the next stage as well, mobilizing all of its know-how andenthusiasm to fulfill its mandate from unitholders to increase
unitholder value. We thank all of our unitholders for theirInternal Growth

unwavering support and understanding.

Our third policy pertains to internal growth. At present, internal
growth is our primary management focus.
The Company has achieved its 11th consecutive period ofrevenue and profit growth. However, during the first three tofour years after public listing, the rental market was unfavorable.
In the midst of slack corporate earnings, an increasing cost
consciousness led corporations to close their sales locations as

Taketo Yamazaki
Executive Director of Japan Real Estate Investment Corporation

they continued to cut back. Unfortunately, our existing properties
did not generate increased earnings. Instead, the ability to increase
revenue and profit came through the acquisition of new
properties, or in other words, through external growth.
The market, however, began to change about three years
ago, and occupancy rates increased following an overall reboundKazuhiko Arahata
CEO & President of Japan Real Estate Asset Management Co., Ltd.
Japan Real Estate Investment Corporation 11

The Portfolio of Japan Real Estate Investment Corporation
As of September 30, 2007

Location

Type ofspecified asset

Acquisitiondate

Acquisition
price(¥ millions)

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

5,000 (1.1%)
81,555 (18.2%)
9,520 (2.1%)
4,810 (1.1%)
14,700 (3.3%)
44,700 (10.0%)
7,000 (1.6%)
10,20010,70020,900 (4.7%)
7,200 (1.6%)
3,173 (0.7%)
5,250 (1.2%)
16,830 (3.8%)
5,353 (1.2%)
7,680 (1.7%)
4,859 (1.1%)
2,808 (0.6%)
7,830 (1.8%)
9,350 (2.1%)
2,738 (0.6%)
5,500 (1.2%)
5,123 (1.1%)
6,670 (1.5%)
8,700 (1.9%)
4,885 (1.1%)
12,200 (2.7%)
34,600 (7.7%)
3,740
360
4,100 (0.9%)8,500 (1.9%)
3,541 (0.8%)
1,728 (0.4%)4,500 (1.0%)

03/31/2005
09/25/2001
10/11/2001
total
09/25/2001

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

Properties Roster
NumberName of building

Tokyo 23 wards

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

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

Ownership
Ownership
Ownership
Ownership
Ownership
Ownership
Ownership
Ownership

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

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

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

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

I- 28
I- 29
● I- 30● I- 31

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

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

Ownership
Trust
Trust
Ownership
Ownership
Ownership

●
●

●
●

●
●

Tokyo metropolitan area excluding 23 wards
●

II-1
II-2

Hachioji First Square
Saitama Urawa Building

Hachioji, Tokyo
Saitama, Saitama Prefecture

●

II-3

Kawasaki Isago Building

Kawasaki, Kanagawa Prefecture

●

Trust

(0.7%)(0.6%)(0.8%)

Other major cities

III- 1
III- 2● III- 3

8.3 Square Kita Building
Jozenji Park Building
Sendai Honcho Honma Building

Sapporo, Hokkaido
Sendai, Miyagi Prefecture
Sendai, Miyagi Prefecture

Ownership
Ownership
Trust●

III- 4

Kanazawa Park Building

Kanazawa, Ishikawa Prefecture

Ownership●

III- 5

Nishiki Park Building

Nagoya, Aichi Prefecture

Ownership

III- 6
III- 7● III- 8● III- 9● III- 10

Hirokoji Sakae Building*Nagoya Hirokoji Building
Nagoya Misono Building
Kyoto Shijo Kawaramachi Building
Sakaisujihonmachi Building

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

Ownership
Ownership
Ownership
Ownership
Ownership

III- 11 Midosuji Daiwa Building

Osaka, Osaka Prefecture

Trust

III- 12
III- 13● III- 14● III- 15● III- 16

Okayama, Okayama Prefecture
Hiroshima, Hiroshima Prefecture
Fukuoka, Fukuoka Prefecture
Fukuoka, Fukuoka Prefecture
Fukuoka, Fukuoka Prefecture

●
●

●
●

●

●
●

Lit City Building
NHK Hiroshima Broadcasting Center Building
Tosei Tenjin Building
Tenjin Crystal Building
Hinode Tenjin Building*Hirokoji Tokio Marine Nichido Building changed its name to Hirokoji Sakae Building on October 1, 2007.

12 Japan Real Estate Investment Corporation

Ownership
Ownership
Ownership
OwnershipTrust

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

7,100 (1.6%)
1,000 (0.2%)
2,924
250
3,174 (0.7%)
2,880
1,700
4,580 (1.0%)
3,850
1,300
5,150 (1.2%)
1,680 (0.4%)
14,533 (3.3%)
1,865 (0.4%)
2,650 (0.6%)
2,264
1,900
4,164 (0.9%)
6,934
7,380
14,314 (3.2%)
4,650 (1.0%)
1,320 (0.3%)
1,550 (0.3%)
5,000 (1.1%)
3,657 (0.8%)
446,940 (100.0%)

Percentage ofownership of thebuilding (%)

Completion

Appraisal value
at the end of period(¥ millions)

100.0
100.0
100.0
56.76
31.34519.38402
100.0
99.0

1985
2006
1998
1993
2004
2003
2005
1966

6,300
85,60011,4006,310
17,60046,5007,040
28,8004,791m2
25,678m2
6,269m2
3,687m2
9,316m2
11,923m2
4,495m2
20,865m2(51,577ft2)(276,402ft2)(67,480ft2)(39,695ft2)(100,282ft2)(128,341ft2)(48,384ft2)(224,594ft2)

4,791m2
25,678m2
6,269m2
3,687m2
9,316m2
11,902m2
4,495m2
20,727m2(51,577ft2)(276,402ft2)(67,480ft2)(39,695ft2)(100,282ft2)(128,121ft2)(48,384ft2)(223,105ft2)

1
5
2
8
1
9
1
47

222
1,931
363
183
488
979
162
1,006

(1.3%)(11.3%)(2.1%)(1.1%)(2.9%)(5.7%)(0.9%)(5.9%)

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

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

8,240
3,890
7,050
17,800
4,980
9,150
7,510
3,590
9,060
11,900
2,840
7,050
5,720
9,030
13,0006,420
15,60051,1005,620

4,694m2
3,897m2
4,279m2
4,329m2
2,875m2
4,898m2
9,643m2
4,062m2
6,197m2
9,246m2
4,067m2
5,205m2
7,708m2
7,356m2
7,772m2
3,147m2
5,558m2
29,819m2
2,462m2(50,531ft2)(41,950ft2)(46,068ft2)(46,604ft2)(30,949ft2)(52,724ft2)(103,799ft2)(43,726ft2)(66,707ft2)(99,528ft2)(43,783ft2)(56,035ft2)(82,972ft2)(79,180ft2)(83,660ft2)(33,876ft2)(59,832ft2)(320,978ft2)(26,511ft2)

4,694m2
3,897m2
4,279m2
4,329m2
2,875m2
4,898m2
9,643m2
4,062m2
6,197m2
8,951m2
4,067m2
5,205m2
7,708m2
7,310m2
7,772m2
3,147m2
5,558m2
29,315m2
2,462m2(50,531ft2)(41,950ft2)(46,068ft2)(46,604ft2)(30,949ft2)(52,724ft2)(103,799ft2)(43,726ft2)(66,707ft2)(96,356ft2)(43,783ft2)(56,035ft2)(82,972ft2)(78,685ft2)(83,660ft2)(33,876ft2)(59,832ft2)(315,552ft2)(26,511ft2)

15
6
1
12
8
7
21
8
7
105
1
4
19
18
7
5
8
53
3

293
155
150
389
137
259
321
135
274
500
117
220
255
335
344
202
381
1,552
153

(1.7%)(0.9%)(0.9%)(2.3%)(0.8%)(1.5%)(1.9%)(0.8%)(1.6%)(2.9%)(0.7%)(1.3%)(1.5%)(2.0%)(2.0%)(1.2%)(2.2%)(9.1%)(0.9%)

29.253305
100.0
100.0
100.0

1997
1987
1990
1989

13,600
3,920
1,630
5,630

10,929m2
7,143m2
2,186m2
5,797m2(117,646ft2)(76,892ft2)(23,532ft2)(62,401ft2)

10,929m2
7,143m2
2,186m2
5,797m2(117,646ft2)(76,892ft2)(23,532ft2)(62,401ft2)

18
9
9
8

441
180
73
205

(2.6%)(1.1%)(0.4%)(1.2%)

50.6611
100.0

1996
1990

3,690
2,720

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

6,308m2
4,510m2(67,906ft2)(48,550ft2)

42
16

170
136

(1.0%)(0.8%)

100.0

1990

3,360

6,831m2(73,537ft2)

6,541m2(70,411ft2)

12

158

(0.9%)

100.0
50.0
100.0

2006
1993
1991

7,210
1,130
3,690

12,265m2
2,518m2
6,241m2(132,030ft2)(27,106ft2)(67,185ft2)

12,078m2
2,518m2
6,241m2(130,014ft2)(27,106ft2)(67,185ft2)

7
17
17

195
67
172

(1.1%)(0.4%)(1.0%)

89.0

1991

6,590

20,889m2(224,855ft2)

19,495m2(209,848ft2)

70

531

(3.1%)

57.04651

1995

5,390

8,059m2(86,747ft2)

8,019m2(86,321ft2)

49

292

(1.7%)

100.0
100.0
100.0
100.0
100.0

1987
1987
1991
1982
1992

1,730
16,000
1,940
2,350
4,800

3,849m2
21,635m2
3,470m2
6,799m2
11,574m2(41,433ft2)(232,878ft2)(37,354ft2)(73,186ft2)(124,587ft2)

3,495m2
21,440m2
3,470m2
6,390m2
11,574m2(37,627ft2)(230,787ft2)(37,354ft2)(68,788ft2)(124,587ft2)

12
26
9
30
17

100
712
97
136
263

(0.6%)(4.2%)(0.6%)(0.8%)(1.5%)

100.0

1991

18,90020,450m2(220,127ft2)

20,230m2(217,756ft2)

24

674

(3.9%)

27.748827.085100.0
100.0
74.4844

2005
1994
1992
1993
1987

5,550
1,790
1,530
4,980
3,870
531,100

9,965m2
5,477m2
4,000m2
5,577m2
5,837m2
406,605m2(107,269ft2)(58,964ft2)(43,057ft2)(60,032ft2)(62,832ft2)(4,376,659ft2)

9,793m2
5,051m2
4,000m2
5,099m2
5,765m2
401,329m2(105,412ft2)(54,376ft2)(43,057ft2)(54,886ft2)(62,062ft2)(4,319,871ft2)

39
11
20
23
12
879

Total leasable
space

Leased space

Total
number oftenants

Revenues fromleasing operations(¥ millions)305(1.8%)
141(0.8%)
97(0.6%)
215(1.3%)
178(1.0%)
17,132** (100.0%)** Total revenues from leasing operations include revenue of ¥63 million (0.4%) for Kobe Itomachi Building sold on September 14, 2007.

Japan Real Estate Investment Corporation 13

Major Tenants Roster
Rank

1
2
3
4
5
6
7
8
9
10

Name of tenant

Leased space

Percent of totalleased space

17,014m2 (183,144ft2)
10,665m2 (114,802ft2)
9,316m2 (100,282ft2)
8,774m2 (94,453ft2)
8,476m2 (91,245ft2)
7,131m2 (76,759ft2)
6,906m2 (74,341ft2)
5,331m2 (57,393ft2)
5,144m2 (55,371ft2)
4,791m2 (51,577ft2)

4.2%
2.7%
2.3%
2.2%
2.1%
1.8%
1.7%
1.3%
1.3%
1.2%

Name of building

Banyu Pharmaceutical Co., Ltd.
Mitsubishi UFJ Trust and Banking Corporation
Seven & i Holdings Co., Ltd.
Space Design, Inc.
FAST RETAILING CO., LTD.
The Dai-ichi Mutual Life Insurance Company
TOTO Ltd.
Toshiba Solutions Corporation
Asahi Kasei Pharma Corporation
Center for Health Care & Public Concern

Kitanomaru Square (also includes 1 other building)
Mitsubishi UFJ Trust and Banking Building
Nibancho Garden
Burex Kojimachi Building (also includes 1 other building)
Kitanomaru Square
Midosuji Daiwa Building (also includes 6 other buildings)
Midosuji Daiwa Building (also includes 1 other building)
Takanawadai Building (also includes 2 other buildings)
MD Kanda Building
Genki Medical Plaza

Locations of Portfolio Properties
II-1–II-3: Tokyo metropolitan area
excluding 23 wards

III-1–III-16: Other major cities

III-1

II-2
III-2

II-1

III-3

II-3

III-4

III-13
III-14
III-16

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

III-15

I-1–I-31: Tokyo
23 wards

I-30
I-31 I-29
I-28

I-2

I-1

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

I-20

I-21

Tokyo Station

14 Japan Real Estate Investment Corporation

Over view of Portfolio Properties As of September 30, 2007
Note: Concerning real estate of which the Company is a partial owner through co-ownership or compartmentalized building units, the figures for “Site area” and “Floor area of building”
represent total site area and total floor space for the entire building.

Genki Medical Plaza

Kitanomaru Square● I-1

Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Chiyoda-ku, Tokyo
1,052.80m2 (11,332ft2)
6,722.02m2 (72,355ft2)
Above ground: 8 floors
Below ground: 1 floor
September 1985

● I-2

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

Kandabashi Park
Building

● I-3

● I-4

Chiyoda-ku, Tokyo
1,085.83m2 (11,688ft2)
8,185.11m2 (88,104ft2)
Above ground: 10 floors
February 1998

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

Completion :Location :Site area :Floor area of building :Structure :Completion :Chiyoda-ku, Tokyo
11,003.87m2 (118,445ft2)
57,031.06m2 (613,877ft2)
Above ground: 14 floors
Below ground: 2 floors
April 2004

Chiyoda-ku, Tokyo
1,218.56m2 (13,116ft2)
9,370.25m2 (100,860ft2)
Above ground: 10 floors
Below ground: 1 floor
July 1993

Mitsubishi UFJ Trust andBanking Building● I-5

Location :Site area :Floor area of building :Structure :Chiyoda-ku, Tokyo
5,821.03m2 (62,657ft2)
57,279.20m2 (616,548ft2)
Above ground: 26 floors
Below ground: 2 floors
January 2006

● I-6

Location :Site area :Floor area of building :Structure :Completion :Chiyoda-ku, Tokyo
8,100.39m2 (87,192ft2)
108,171.67m2 (1,164,349ft2)
Above ground: 29 floors
Below ground: 4 floors
February 2003

Burex Kojimachi
Building

Sanno Grand Building

● I-7

● I-8

Chiyoda-ku, Tokyo
967.67m2 (10,416ft2)
6,526.64m2 (70,252ft2)
Above ground: 11 floors
Below ground: 1 floor
January 2005

Location :Site area :Floor area of building :Structure :Completion :Chiyoda-ku, Tokyo
3,663.93m2 (39,438ft2)
33,875.95m2 (364,637ft2)
Above ground: 10 floors
Below ground: 3 floors
September 1966
Japan Real Estate Investment Corporation 15

Yurakucho Denki
Building

Kodenmacho ShinNihonbashi Building● I-10● I-9

Location :Site area :Floor area of building :Structure :Completion :Chiyoda-ku, Tokyo
5,749.91m2 (61,891ft2)
70,287.65m2 (756,569ft2)
Above ground: 20 floors
Below ground: 4 floors
September 1975

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

Ginza Sanwa Building● I-11

Location :Site area :Floor area of building :Structure :Completion :Chuo-ku, Tokyo
756.03m2 (8,138ft2)
5,470.54m2 (58,884ft2)
Above ground: 8 floors
Below ground: 1 floor
February 2002

● I-12

Location :Site area :Floor area of building :Structure :Completion :● I-14● I-13Completion :Chuo-ku, Tokyo
615.25m2 (6,622ft2)
4,104.71m2 (44,183ft2)
Above ground: 8 floors
Below ground: 1 floor
October 1998

Location :Site area :Floor area of building :Structure :Completion :Shiba 2Chome
Daimon Building

Completion :Minato-ku, Tokyo
2,820.90m2 (30,364ft2)
16,235.10m2 (174,753ft2)
Above ground: 8 floors
Below ground: 2 floors
March 1984

16 Japan Real Estate Investment Corporation

Minato-ku, Tokyo
989.30m2 (10,649ft2)
8,094.36m2 (87,127ft2)
Above ground: 10 floors
Below ground: 4 floors
December 1982

Cosmo Kanasugibashi
Building● I-15

Location :Site area :Floor area of building :Structure :Chuo-ku, Tokyo
1,119.27m2 (12,048ft2)
8,851.00m2 (95,271ft2)
Above ground: 9 floors
Below ground: 2 floors
October 1982

Aoyama Crystal
Building

Ryoshin Ginza East
Mirror Building

Location :Site area :Floor area of building :Structure :Chuo-ku, Tokyo
773.28m2 (8,324ft2)
5,822.88m2 (62,677ft2)
Above ground: 9 floors
Below ground: 1 floor
November 1991

● I-16

Location :Site area :Floor area of building :Structure :Completion :Minato-ku, Tokyo
758.54m2 (8,165ft2)
5,420.93m2 (58,350ft2)
Above ground: 9 floors
Below ground: 1 floor
March 1992

Shinwa Building

Tokyo Opera City
Building● I-17

Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Shinjuku-ku, Tokyo
822.00m2 (8,848ft2)
8,291.69m2 (89,251ft2)
Above ground: 10 floors
Below ground: 1 floor
November 1989

● I-18Location :Site area :Floor area of building :Structure :Completion :Shinjuku-ku, Tokyo
18,236.94m2 (196,301ft2)
232,996.81m2 (2,507,954ft2)
Above ground: 54 floors
Below ground: 4 floors
July 1996

Takanawadai Building

Higashi-Gotanda
1Chome Building● I-19● I-20Shinagawa-ku, Tokyo
1,416.17m2 (15,244ft2)
5,762.70m2 (62,029ft2)
Above ground: 13 floors
January 1991

Location :Site area :Floor area of building :Structure :Completion :Shinagawa-ku, Tokyo
1,539.95m2 (16,576ft2)
6,460.39m2 (69,539ft2)
Above ground: 8 floors
July 2004

Omori-Eki Higashiguchi
Building

Nippon Brunswick
Building● I-21● I-22

Ota-ku, Tokyo
2,199.30m2 (23,673ft2)
14,095.34m2 (151,721ft2)
Above ground: 11 floors
Below ground: 2 floors
July 1989

Location :Site area :Floor area of building :Structure :Completion :Shibuya-ku, Tokyo
1,497.52m2 (16,119ft2)
11,957.38m2 (128,708ft2)
Above ground: 9 floors
Below ground: 2 floors
March 1974

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

Shibuya-ku, Tokyo
1,755.75m2 (18,899ft2)
10,778.10m2 (116,014ft2)
Above ground: 14 floors
Below ground: 1 floor
October 2003

Location :Site area :Floor area of building :Structure :Completion :Shibuya-ku, Tokyo
839.66m2 (9,038ft2)
4,359.20m2 (46,922ft2)
Above ground: 7 floors
Below ground: 2 floors
December 1987

Japan Real Estate Investment Corporation 17

Jingumae Media
Square Building

Shibuya Cross Tower● I-26● I-25

Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Shibuya-ku, Tokyo
2,261.68m2 (24,344ft2)
9,420.42m2 (101,400ft2)
Above ground: 9 floors
Below ground: 2 floors
March 1998

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

Harmony Tower● I-27● I-28

Shibuya-ku, Tokyo
5,005.70m2 (53,881ft2)
36,598.38m2 (393,941ft2)
Above ground: 18 floors
Below ground: 2 floors
October 1994

Location :Site area :Floor area of building :Structure :Completion :● I-30● I-29Completion :Toshima-ku, Tokyo
2,121.39m2 (22,834ft2)
9,531.28m2 (102,594ft2)
Above ground: 8 floors
Below ground: 1 floor
November 1987

Location :Site area :Floor area of building :Structure :Completion :Ikebukuro YS
Building

Completion :Toshima-ku, Tokyo
1,384.56m2 (14,903ft2)
7,464.64m2 (80,349ft2)
Above ground: 8 floors
Below ground: 1 floor
December 1989

18 Japan Real Estate Investment Corporation

Toshima-ku, Tokyo
397.26m2 (4,276ft2)
3,157.51m2 (33,987ft2)
Above ground: 9 floors
Below ground: 1 floor
May 1990

Hachioji First
Square● I-31

Location :Site area :Floor area of building :Structure :Nakano-ku, Tokyo
10,020.52m2 (107,860ft2)
72,729.31m2 (782,851ft2)
Above ground: 29 floors
Below ground: 2 floors
March 1997

Ikebukuro 2Chome
Building

Otsuka HigashiIkebukuro Building

Location :Site area :Floor area of building :Structure :Shibuya-ku, Tokyo
5,153.45m2 (55,471ft2)
61,862.33m2 (665,880ft2)
Above ground: 32 floors
Below ground: 3 floors
April 1976

● II-1

Location :Site area :Floor area of building :Structure :Completion :Hachioji, Tokyo
2,989.33m2 (32,177ft2)
18,329.98m2 (197,302ft2)
Above ground: 12 floors
Below ground: 1 floor
July 1996

Kawasaki Isago
Building

Saitama Urawa
Building● II-3● II-2

Location :Site area :Floor area of building :Structure :Completion :Saitama, Saitama Prefecture
1,533.06m2 (16,502ft2)
6,258.59m2 (67,367ft2)
Above ground: 8 floors
March 1990

Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :8 . 3 Square Kita
Building

Jozenji Park Building● III-1● III-2

Sapporo, Hokkaido
5,541.60m2 (59,649ft2)
16,096.97m2 (173,266ft2)
Above ground: 11 floors
Below ground: 1 floor
December 2006

Location :Site area :Floor area of building :Structure :Completion :● III-4● III-3

Sendai, Miyagi Prefecture
1,437.47m2 (15,473ft2)
8,247.50m2 (88,775ft2)
Above ground: 11 floors
November 1991

Location :Site area :Floor area of building :Structure :Completion :Nishiki Park Building

Completion :Nagoya, Aichi Prefecture
2,170.45m2 (23,363ft2)
25,091.91m2 (270,087ft2)
Above ground: 22 floors
Below ground: 4 floors
August 1995

Kanazawa, Ishikawa Prefecture
6,642.71m2 (71,501ft2)
43,481.20m2 (468,027ft2)
Above ground: 12 floors
Below ground: 2 floors
October 1991

Hirokoji Sakae
Building● III-5

Location :Site area :Floor area of building :Structure :Sendai, Miyagi Prefecture
1,566.68m2 (16,864ft2)
7,648.33m2 (82,326ft2)
Above ground: 8 floors
Below ground: 1 floor
January 1993

Kanazawa Park
Building

Sendai Honcho
Honma Building

Location :Site area :Floor area of building :Structure :Completion :Kawasaki, Kanagawa Prefecture
1,594.50m2 (17,163ft2)
9,623.83m2 (103,590ft2)
Above ground: 12 floors
Below ground: 1 floor
December 1990

● III-6

Location :Site area :Floor area of building :Structure :Completion :Nagoya, Aichi Prefecture
786.79m2 (8,469ft2)
6,445.08m2 (69,374ft2)
Above ground: 9 floors
Below ground: 2 floors
September 1987
Japan Real Estate Investment Corporation 19

Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Location :Site area :Floor area of building :Structure :Completion :Nagoya Hirokoji
Building

Nagoya Misono
Building● III-7● III-8

Nagoya, Aichi Prefecture
4,095.81m2 (44,087ft2)
33,377.73m2 (359,275ft2)
Above ground: 18 floors
Below ground: 2 floors
May 1987

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

Sakaisujihonmachi
Building● III-9● III-10

Kyoto, Kyoto Prefecture
1,471.57m2 (15,840ft2)
9,701.04m2 (104,421ft2)
Above ground: 9 floors
Below ground: 1 floor
November 1982

Location :Site area :Floor area of building :Structure :Completion :Lit City Building● III-11● III-12

Osaka, Osaka Prefecture
3,044.65m2 (32,772ft2)
31,213.27m2 (335,977ft2)
Above ground: 15 floors
Below ground: 2 floors
September 1991

Location :Site area :Floor area of building :Structure :Completion :Hiroshima, Hiroshima Prefecture
3,296.46m2 (35,483ft2)
35,217.28m2 (379,075ft2)
Above ground: 23 floors
Below ground: 2 floors
August 1994

20 Japan Real Estate Investment Corporation

Okayama, Okayama Prefecture
7,596.44m2 (81,767ft2)
52,653.19m2 (566,754ft2)
Above ground: 20 floors
Below ground: 2 floors
June 2005

Tosei Tenjin Building● III-13

Completion :Osaka, Osaka Prefecture
2,036.22m2 (21,918ft2)
17,145.59m2 (184,553ft2)
Above ground: 13 floors
Below ground: 2 floors
October 1992

Midosuji Daiwa
Building

NHK Hiroshima
Broadcasting Center
Building

Location :Site area :Floor area of building :Structure :Nagoya, Aichi Prefecture
805.04m2 (8,665ft2)
5,348.00m2 (57,565ft2)
Above ground: 7 floors
Below ground: 1 floor
September 1991

● III-14

Location :Site area :Floor area of building :Structure :Completion :Fukuoka, Fukuoka Prefecture
1,221.31m2 (13,146ft2)
5,588.57m2 (60,155ft2)
Above ground: 8 floors
March 1992

Location :Site area :Floor area of building :Structure :Completion :Ten j in Cr ystal
Building

Hinode Tenjin
Building● III-15● III-16

Fukuoka, Fukuoka Prefecture
1,835.17m2 (19,754ft2)
10,432.04m2 (112,289ft2)
Above ground: 14 floors
Below ground: 1 floor
August 1993

Location :Site area :Floor area of building :Structure :Completion :Fukuoka, Fukuoka Prefecture
1,452.15m2 (15,631ft2)
12,527.07m2 (134,840ft2)
Above ground: 10 floors
Below ground: 2 floors
August 1987

Japan Real Estate Investment Corporation 21

22 Japan Real Estate Investment Corporation

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

p.23
p.24
p.26
p.26
p.27
p.28
p.36

Selected Financial Data
Thousands of U.S. dollars(Note 1)Millions of yen
For the period from
April 1, 2007 to
September 30, 2007

For the period from
October 1, 2006 to
March 31, 2007

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

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

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

For the period from
April 1, 2007 to
September 30, 2007

Operating Revenues
Operating Expenses
Operating Income
Income before Income Taxes
Net Income¥ 17,530
8,791
8,739
7,586
7,585

¥ 16,960
8,655
8,304
7,184
7,183

¥ 15,570
8,528
7,041
5,977
5,976

¥ 13,962
7,643
6,319
5,586
5,585

¥ 13,119
6,893
6,226
5,510
5,509

$ 151,868
76,15975,70965,72165,712

Total Assets
Interest-Bearing Debts
Total Net Assets
Unitholders’ Capital

449,643
144,500
272,269
264,683

443,973
140,000
271,867
264,683

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

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

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

3,895,378
1,251,841
2,358,739
2,293,026

Number of Units
Net Assets per Unit (Yen/U.S. dollars)
Cash Distribution
Dividend Payout Ratio
Dividend Per Unit (Yen/U.S. dollars)

410,000
664,071
7,585
99.9%
18,500410,000
663,091
7,183
100.0%
17,521

345,400
600,605
5,976
99.9%
17,302

345,400
599,475
5,585
99.9%
16,172

345,400
599,2545,509
100.0%
15,951410,000
5,753.02
65,71199.9%
160.27

12,073
11,30010,3399,578
8,978
10,022
9,441
8,257
7,945
7,526
1.7%
1.6%
1.4%
1.4%
1.6%
(3.4% annualized) (3.2% annualized) (2.7% annualized) (2.8% annualized) (3.2% annualized)
2.8%
2.7%
2.9%
2.7%
2.8%
(5.6% annualized) (5.5% annualized) (5.8% annualized) (5.4% annualized) (5.6% annualized)
60.6%
61.2%
47.0%
47.8%
58.1%

104,592
86,831
1.7%(3.4% annualized)
2.8%(5.6% annualized)
60.6%

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

32.1%
28.3 times
10.4 times

31.5%
33.8 times
10.5 times

45.9%
21.0 times
9.5 times

45.3%
22.1 times
12.3 times

34.3%
21.1 times
14.0 times

32.1%
28.3 times
10.4 times

Notes 1: Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥115.43 = US$1.00, the foreign exchange rate on
September 30, 2007, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen has been or could be readily converted,
realized or settled into U.S. dollars at that rate or any other rate.
2: ROA = Income before Income Taxes ÷ Average of Total Assets during the period
3: ROE = Net Income ÷ Average of Net Assets during the period(Annualized portion of the calculation given in note 2 and note 3 assumes a fiscal period of 183 days for the period ended September 30, 2005, 182 days forthe period ended March 31, 2006, 183 days for the period ended September 30, 2006, 182 days for the period ended March 31, 2007 and 183 days for theperiod ended September 30, 2007.)
4: EOP Equity Ratio = (Net Assets at end of period ÷ Total Assets at end of period) x 100
5: EOP Interest-Bearing Debt Ratio on Total Assets = (Interest-Bearing Debt at end of period ÷ Total Assets at end of period) x 100
6: Debt Service Coverage Ratio = Net Income before Interest, Taxes, Depreciation and Amortization ÷ Interest Expenses

Japan Real Estate Investment Corporation 23

Balance Sheets
As of September 30, 2007 and March 31, 2007

Thousands of yen

U.S. dollars (Note 1)

As of September
30, 2007

As of March
31, 2007

As of September
30, 2007¥ 16,419,825¥ 13,877,640$ 142,249,199

104,093

143,310

901,785—

165,977—

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

146,549

870,936

1,269,600

Other current assets

76,347584,592

661,417

16,746,815

15,642,456

145,082,002

Land

296,188,439

293,773,646

2,565,957,198

Buildings and structures

149,740,602

145,028,118

1,297,241,640

Machinery and equipment

2,196,639

2,125,142

19,030,053

Tools, furniture and fixtures

94,56591,060819,244

Construction in progress

974,677

1,052,672

8,443,880

449,194,923

442,070,640

3,891,492,014

Total current assets

Property and Equipment, at Cost:

SubtotalLess accumulated depreciation
Net property and equipment(20,763,580)(18,089,037)(179,880,275)

428,431,343

423,981,603

3,711,611,739

Investments and Other Assets:
Investment securities

1,272,797

1,272,797

11,026,575

Deposits

23,575

21,974204,240

Long-term prepaid expenses

1,866

2,365

16,1732,204,134

2,204,134

19,094,991

Easement

828,095

828,095

7,174,005

Deferred investment corporation bond issuance costs

134,865

19,944

1,168,374¥449,643,494¥443,973,371$3,895,378,100

Leasehold rights

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

24 Japan Real Estate Investment Corporation

Thousands of yen

As of September
30, 2007

U.S. dollars (Note 1)

As of March
31, 2007

As of September
30, 2007

LIABILITIESCurrent Liabilities:
Trade accounts payable
Other payables¥

1,150,816¥

1,430,707$

9,969,825

1,064,279

951,396

9,220,129—

6,000,000—

10,000,000

25,000,000

86,632,591

629,266

542,238

5,451,495

61

48

529

Accrued consumption taxes

260,679—

2,258,336

Rent received in advance

2,195,163

2,102,606

19,017,272

Other current liabilities

2,432

2,814

21,07515,302,699

36,029,812

132,571,252

Investment corporation bonds

45,000,000

30,000,000

389,846,660

Long-term loans

89,500,000

79,000,000

775,361,691

Deposits received from tenants

27,571,602

27,075,888

238,859,937

Current portion of long-term loan
Current portion of investment corporation bondAccrued expenses
Accrued income taxes

Total current liabilities
Long-Term Liabilities:

Total long-term liabilities

162,071,602

136,075,888

1,404,068,288

Total Liabilities

177,374,302

172,105,700

1,536,639,540

264,683,960

264,683,960

2,293,025,730

NET ASSETS
Unitholders’ capital
Authorized: 2,000,000 units
Issued:410,000 units as of September 30, 2007 and
410,000 units as of March 31, 2007
7,585,231

7,183,711

65,712,830

Total net assets

Retained earnings

272,269,191

271,867,671

2,358,738,560

Total Liabilities and Net Assets¥449,643,494¥443,973,371$3,895,378,100

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

Japan Real Estate Investment Corporation 25

Statements of Income and Retained Earnings
For the six months ended September 30, 2007 and March 31, 2007

Thousands of yen

U.S. dollars (Note 1)

For the period
from April 1, 2007
to September 30, 2007

For the period
from October 1, 2006
to March 31, 2007

For the period
from April 1, 2007
to September 30, 2007

¥17,079,232
53,172397,770—
17,530,174¥16,397,656
103,116—459,256
16,960,029$147,961,815
460,648
3,445,985—
151,868,448

7,894,956
661,347
150,965
83,797
8,791,065
8,739,108

7,918,008
452,640
162,210
122,726
8,655,585
8,304,444

68,396,051
5,729,421
1,307,851
725,958
76,159,282
75,709,166

29,9602,678

36,064
1,363

259,554
23,200695,398
413,838
16,159—60,136
7,586,213

666,198
376,539
9,972
79,62024,951
7,184,588

6,024,419
3,585,194
139,994—
520,980
65,721,333

1,087
(4)
7,585,130
101¥ 7,585,231

989
0
7,183,598
112¥ 7,183,711

9,422
(43)
65,711,954
876$ 65,712,830

Units

Unitholders’ capital

Retained earnings

345,400
64,600——410,000———
410,000¥201,472,860
63,211,100——¥264,683,960———¥264,683,960¥ 5,976,223—(5,976,110)
7,183,598¥ 7,183,711—(7,183,610)
7,585,130¥ 7,585,231

Units

Unitholders’ capital

Retained earnings

Total

410,000———
410,000$2,293,025,730———$2,293,025,730$ 62,234,351—(62,233,475)
65,711,954$ 65,712,830$2,355,260,081—(62,233,475)
65,711,954$2,358,738,560

Operating Revenues and Expenses
Operating Revenues:
Rental revenues
Non-rental revenues
Gain on sale of properties
Gain on exchange of properties
Total operating revenues
Operating Expenses:
Property-related expenses
Asset management fees
Administrative service fees
Other operating expenses
Total operating expenses
Operating income
Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Other non-operating revenues
Non-Operating Expenses:
Interest expense
Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance costs
Unit issuance costs
Other non-operating expenses
Income before Income Taxes
Income Taxes:
Current
Deferred
Net Income
Retained Earnings brought forward
Retained Earnings at end of period

Statements of Changes in Unitholders’ equity
For the six months ended September 30, 2007 and March 31, 2007

Thousands of yen

Balance as of September 30, 2006
Public offering
Cash dividends paid
Net income
Balance as of March 31, 2007
Public offering
Cash dividends paid
Net income
Balance as of September 30, 2007

Total

¥207,449,083
63,211,100(5,976,110)
7,183,598¥271,867,671—(7,183,610)
7,585,130¥272,269,191

U.S. dollars (Note 1)

Balance as of March 31, 2007
Public offering
Cash dividends paid
Net income
Balance as of September 30, 2007

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

26 Japan Real Estate Investment Corporation

Statements of Cash Flows
For the six months ended September 30, 2007 and March 31, 2007

Thousands of yen

U.S. dollars (Note 1)

For the period
from April 1, 2007
to September 30, 2007

For the period
from October 1, 2006
to March 31, 2007

For the period
from April 1, 2007
to September 30, 2007

Cash Flows from Operating Activities
Income before income taxes
Depreciation and amortization
Amortization of investment corporation bond issuance costs
New unit issuance costs
Interest income
Interest expense
Gain on exchange of properties
Rental receivables
Other receivables
Refundable corporate taxes
Refundable consumption taxes
Prepaid expenses
Trade accounts payable
Other payables
Accrued expenses
Rent received in advance
Decrease due to sale of property and equipment
Long-term prepaid expenses
Other
Sub-totalInterest received
Interest paid
Income taxes paid
Net cash provided by operating activities¥ 7,586,213
2,835,589
16,159—(29,960)
1,109,237—
39,217724,386
2,312
165,977
11,818(279,891)
76,072
260,816
92,556
1,334,569
498(1,210)13,944,365
23,872(1,022,347)(1,075)
12,944,814¥ 7,184,588
2,717,648
9,972
79,620(36,064)
1,042,738(459,256)(37,681)(870,936)(5,796)(165,977)(23,632)
681,643(148,384)(522,714)(322,460)—
942(179,789)
8,944,460
35,054(1,145,723)(1,596)
7,832,195$ 65,721,333
24,565,447
139,994—(259,554)
9,609,613—
339,749
6,275,549
20,0381,437,904
102,388(2,424,769)
659,0392,259,523
801,845
11,561,719
4,318(10,485)
120,803,648
206,810(8,856,860)(9,313)112,144,285

Cash Flows from Investing Activities
Payments of time deposits
Proceeds from time deposits
Purchases of property and equipment
Purchases of intangible assets
Purchases of investment securities
Payments of deposits
Proceeds from lease deposits received
Repayment of lease deposits received
Net cash used in investing activities(7,538,222)
3,339,222(8,083,745)——(1,380)1,616,667(1,120,953)(11,788,411)(4,573,000)
4,000,000(10,534,991)(91,227)(268,000)(9,000)4,119,969(2,930,441)(10,286,691)(65,305,570)
28,928,545(70,031,579)——(11,962)
14,005,607(9,711,109)(102,126,067)

Cash Flows from Financing Activities
Proceeds from short-term loans
Repayment of short-term loans
Proceeds from long-term loans
Repayment of long-term loans
Proceeds from investment corporation bonds
Payments of investment corporation bond redemption
Proceeds from issuance of units
Payments of investment corporation bond issuance costs
Payment of new unit issuance costs
Dividends to unitholders
Net cash used in financing activities
Net Decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period
Cash and Cash Equivalents at End of Period

2,000,000(2,000,000)
10,500,000(6,000,000)
25,000,000(25,000,000)—(129,608)—(7,183,610)(2,813,218)(1,656,815)
11,304,640¥ 9,647,825—(64,500,000)
2,000,000———
63,211,100—(78,805)(5,976,110)(5,343,816)(7,798,312)
19,102,952¥ 11,304,640

17,326,518(17,326,518)
90,964,221(51,979,555)
216,581,478(216,581,478)—(1,122,829)—(62,233,475)(24,371,638)(14,353,420)
97,935,029$ 83,581,608

The accompanying notes form an integral part of these financial statements
Japan Real Estate Investment Corporation 27

Notes to Financial Statements
September 30, 2007 and March 31, 2007

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Japan Real Estate Investment Corporation (the “Company”) is a real estate investment corporation formed to own and invest primarily in a
portfolio of office properties. The Company is externally managed by a licensed asset management company, Japan Real Estate AssetManagement Co., Ltd. (“J-Rea”). J-Rea is currently owned 36% by Mitsubishi Estate Co., Ltd. (“MEC”), 27% by The Tokio Marine &Nichido Fire Insurance Co., Ltd. (“TMN”), 27% by The Dai-ichi Mutual Life Insurance Company (“DL”) and 10% by Mitsui & Co., Ltd.
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, TMN and DL under the Law
Concerning Investment Trusts and Investment Corporations of Japan, or the Investment Trust Law.
On September 10, 2001, the Company commenced operations when the Company was listed on the Tokyo Stock Exchange as one of the firstreal estate investment corporations in Japan (so-called “J-REITs”). The Company issued 160,000 units at a price of ¥525,000, generating grossproceeds of ¥84,000 million.
As of September 30, 2007, the Company had total unitholders’ capital of ¥264,683 million ($2,293, 025 thousand) with 410,000 outstanding units.
At September 30, 2007, the Company owned a portfolio of 50 office properties concerning an aggregate of approximately 406,605 square
meters of leasable space.
Basis of presenting financial statements
The Company maintains its accounting records and prepares its financial statements in accordance with accounting principles generally acceptedin Japan (“Japanese GAAP”), including provisions set forth in the Investment Trust Law, the Corporation Law of Japan, the Financial
Instruments and Exchange Law of Japan and the related regulations, which are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which 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.
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥115.43=US$1.00, the foreign exchange
rate on September 30, 2007, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen has beenor could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.
As permitted under the Japanese Securities and Exchange Law, amounts of less than one million yen have been omitted. As a result, the totals
shown in the accompanying financial statements do not necessarily agree with the sum of the individual amounts.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESInvestment Securities
Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving average method.
Property and equipment
Property and equipment is stated at cost, less accumulated depreciation. The costs of land, buildings and building improvements include thepurchase price of property, legal fees and acquisition costs. Depreciation is calculated on a straight-line basis over the estimated useful lives of
the assets ranging as stated below:
Buildings ...............................................................................................................2–61 years
Structures ..............................................................................................................5–50 years
Machinery and equipment .....................................................................................3–18 years
Tools, furniture and fixtures...................................................................................3–15 years

28 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. 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 excess of the book value over the higher of (1) the fair market value of the asset, net of disposition
costs and (2) the present value of future cash flows arising ongoing utilization of the asset and from disposal after asset use. The standard covers
land, factories, buildings and other forms of property, plant and equipment as well as intangible assets. Fixed assets are grouped at the lowest
level for which there is identifiable cash flows that are independent of cash flows of other groups of assets.
Deferred charges
Deferred charges include investment corporation bond issuance costs and new unit issuance costs.
Investment corporation bond issuance costs are amortized using the straight-line method over the redemption periods. Investment corporationbond issuance costs recorded on the balance sheets for the 11th fiscal period and before are amortized using the straight-line method over three
years, with an equal amount amortized in each fiscal period.
This change has resulted in increasing investment corporation bond issuance costs by ¥15,659 thousand ($135 thousand), decreasing amortizationof investment corporation bond issuance costs by the same amount, and increasing income before income taxes by the same amount, comparedto the previous method.
Revenue recognition
Revenues from leasing of office space are recognized as rent accrued over the lease period.
Taxes on property and equipment
Property and equipment is subject to property taxes and city planning taxes on a calendar year basis. These taxes are generally charged to income
during the period. The sellers of the properties were liable for property taxes for the calendar year including the period from the date of purchaseby the Company through the end of the year since the taxes are imposed on the owner registered in the record as of January 1 based on theassessment made by the local government. The Company paid the amount equivalent to the property taxes to the sellers applicable to the period
since acquisition and included the amount equivalent to the taxes in the purchase price of each property and capitalized as cost of the property.
Consumption taxes
Consumption taxes withheld and consumption taxes paid are not included in the statements of income. The consumption taxes paid are generally
offset against the balance of consumption taxes withheld. As such, the excess of payments over amounts withheld are included in the current
assets and the excess of amounts withheld over payments are included in the current liabilities.
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.

3. INVESTMENT SECURITIESInvestment securities recorded at cost at September 30, 2007 and March 31, 2007 are summarized as follows:
Thousands of yen

U.S. dollars

As of September
30, 2007

As of March
31, 2007

As of September
30, 2007¥1,272,797¥1,272,797$ 11,026,575

Other securities
Non-listed stock

Japan Real Estate Investment Corporation 29

4. PROPERTY AND EQUIPMENT
Property and equipment at September 30, 2007 and March 31, 2007 consisted of the following:Thousands of yen

As of September 30, 2007
Acquisition Costs

Book Value

U.S. dollars

As of March 31, 2007
Acquisition Costs

As of September 30, 2007

Book Value

Acquisition Costs

Book ValueLand¥267,192,199 ¥267,192,199 ¥264,010,556 ¥264,010,556 $2,314,755,255 $2,314,755,255

Buildings and structures

129,501,363

124,338,793

1,121,903,866(15,550,114) 113,951,248(13,112,423) 111,226,369(134,714,670)

Accumulated depreciation
Machinery and equipment

1,643,944

Accumulated depreciation(540,639)

Tools, furniture and fixtures

85,840

Accumulated depreciation(22,419)

Construction in progress

1,545,124
1,103,305(475,115)

14,241,919
1,070,009(4,683,698)

81,34963,421(14,916)

987,189,196
9,558,220

743,661
66,432(194,225)

549,436

974,677974,677

1,052,672

1,052,672

8,443,880

8,443,880

Land in trust

28,996,240

28,996,240

29,763,090

29,763,090

251,201,943

251,201,943

Buildings and structures in trust

20,239,239

Accumulated depreciation(4,319,008)

Machinery and equipment in trust

552,694

Accumulated depreciation(328,486)

Tools, furniture and fixtures in trust

8,724

Accumulated depreciation(2,912)

Total

20,689,324
15,920,231(4,157,577)

224,207(326,314)

175,337,773
16,531,747(37,416,686)

253,703(2,845,763)

580,018

4,788,134

9,711
5,811

1,942,371

75,582(2,688)¥428,431,343

137,921,087

7,022¥423,981,603(25,232)

50,351$3,711,611,739

The compressed amount of tangible assets with government grants under the Corporation Tax Law of Japan was ¥50 million ($433 thousand)at September 30, 2007 and ¥50 million ($433 thousand) at March 31, 2007.

5. SHORT-TERM LOANS
Short-term loans at September 30, 2007 and March 31, 2007 consisted of the following:Thousands of yen

As of September
30, 2007

U.S. dollars

As of March
31, 2007

As of September
30, 2007

Unsecured loan from a bank with variable interest,
originally due on August 29, 2008

— (*)

—

—

Total

—

—

—

(*) Since the Company made early extinguishments of the short-term loan of ¥2,000 million ($17,326 thousand) in the fiscal period under review, there
were no outstanding loan balances as of September 30, 2007. The loan was borrowed on August 31, 2007 and extinguished on September 28, 2007.

The Company has commitment lines of ¥25,000 million ($216,581 thousand) with four financial institutions to reduce refinancing risk.
The unused amount of such commitment lines was ¥25,000 million ($216,581 thousand) at September 30, 2007.

30 Japan Real Estate Investment Corporation

6. INVESTMENT CORPORATION BONDS INCLUDING CURRENT PORTION OF INVESTMENTCORPORATION BOND
Details of total investment corporation bonds outstanding are summarized as follows:
As of September
30, 2007
Amount(thousands of yen)Unsecured bonds due on June 21, 2007¥—

As of March
31, 2007

As of September
30, 2007

Interest rate(%)

Amount(thousands of yen)Interest rate(%)—

¥ 25,000,000

1.32%

Amount(U.S. dollars)$—

Unsecured bonds due on April 30, 2008

10,000,000

0.69%

10,000,000

0.69%

86,632,591

Unsecured bonds due on April 30, 2010

10,000,000

0.98%

10,000,000

0.98%

86,632,591

Unsecured bonds due on September 29, 2025

10,000,000

2.56%

10,000,000

2.56%

86,632,591

Unsecured bonds due on June 18, 2012

10,000,000

1.67%

—

—

86,632,591

Unsecured bonds due on June 18, 2014

15,000,000

1.91%

—

—

129,948,887¥ 55,000,000—¥ 55,000,000—$ 476,479,251

Less: current portion of investment corporation bond

(10,000,000)—(25,000,000)—(86,632,591)

Total¥ 45,000,000—¥ 30,000,000—$ 389,846,660

Subtotal

7. LONG-TERM LOANS INCLUDING CURRENT PORTION OF LONG-TERM LOAN
Long-term loans at September 30, 2007 and March 31, 2007 consisted of the following:Thousands of yen

As of September
30, 2007

0.90875% unsecured loan from a bank, due on June 15, 2007
0.78375% unsecured loan from a bank, due on August 31, 2007
1.0575% unsecured loan from a bank, due on March 24, 2009
1.015% unsecured loan from an insurance company,
due on March 30, 20091.2875% unsecured loan from a bank,due on December 15, 2009
1.47125% unsecured loan from an insurance company,
due on March 30, 2011
1.63% unsecured loan from a trust bank, due on April 4, 2011
1.73% unsecured loan from a trust bank, due on June 1, 2011
1.65925% unsecured loans from banks, trust banks,
and an insurance company, due on June 23, 2011
1.50125% unsecured loan from an insurance company,
due on August 31, 2011
1.33125% unsecured loan from another financial institution,
due on November 1, 2011
1.55% unsecured loan from an insurance company,
due on October 29, 2012
1.6225% unsecured loan from a bank, due on June 15, 2010
1.4925% unsecured loan from a bank, due on August 31, 2012
1.86875% unsecured loan from an insurance company,
due on May 29, 2015
1.86875% unsecured loan from an insurance company,
due on May 29, 2015
Subtotal
Less: current portion of long-term loan
Total

¥

U.S. dollars

As of March
31, 2007

As of September
30, 2007——
2,000,000¥ 3,000,000
3,000,000
2,000,000$——
17,326,518

5,000,000

5,000,000

43,316,296

2,000,000

2,000,000

17,326,518

2,000,000
10,000,000
22,000,000

2,000,000
10,000,000
22,000,000

17,326,518
86,632,591
190,591,701

24,000,000

24,000,000

207,918,219

5,000,000

5,000,000

43,316,296

5,000,000

5,000,000

43,316,296

2,000,000
3,000,000
1,000,000

2,000,000——

17,326,518
25,989,777
8,663,259

5,000,000—

43,316,296

1,500,000¥89,500,000(—)¥89,500,000—¥85,000,000(6,000,000)¥79,000,000

12,994,889$775,361,691(—)$775,361,691
Japan Real Estate Investment Corporation 31

8. NET ASSETSThe Company is required to maintain net assets of at least ¥50 million ($433 thousand), as required pursuant to the Investment Trust Law.

9. INCOME TAXESAt September 30, 2007 and March 31, 2007, the Company’s deferred tax assets consisted mainly of the enterprise tax, which is not deductible
for tax purposes. The reconciliation of tax rate difference between the adjusted statutory tax rate and the effective tax rate for the six months
ended September 30, 2007 and March 31, 2007 were as follows:
For the period from April 1, 2007
to September 30, 2007

For the period from October 1, 2006
to March 31, 2007

Statutory tax rate......................................................................................39.39%.............................................39.39%
Deductible dividend distribution ............................................................(39.38%) ..........................................(39.38%)
Others .......................................................................................................0.00% ..............................................0.00%
Effective tax rate ........................................................................................0.01% ..............................................0.01%
The Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation Measures Law ofJapan, or the STML, an investment corporation is allowed to deduct dividends of accounting profits, or dividend distributions, paid to investors
from its taxable income if certain tax requirements are satisfied. Such tax requirements include dividend distributions in excess of 90% of its
taxable income for the fiscal period as stipulated by Article 67-15 of the STML. Based on the distribution policy provided by Article 32-2 of the
Articles of Incorporation, the Company made a dividend distribution of integral multiple of number of units up to 100% of retained earnings
in the amount of ¥7,585 million ($65,710 thousand) subsequent to September 30, 2007 and treated it as tax deductible dividend. The
Company will not distribute the dividends in excess of retained earnings under Article 32-3 of the Articles of Incorporation.

10. PER UNIT INFORMATION
The following table summarizes information about net assets per unit and net income per unit at September 30, 2007 and March 31, 2007, andfor the periods then ended:
Yen

U.S. dollars

For the period
from April 1, 2007
to September 30, 2007

For the period
from October 1, 2006
to March 31, 2007

For the period
from April 1, 2007
to September 30, 2007

Net assets at period end per unit

¥664,071¥663,091$5,753

Net income per unit

¥ 18,500¥ 17,876$ 160

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

32 Japan Real Estate Investment Corporation

11. RELATED PARTY TRANSACTIONS“Not applicable”

12. BREAKDOWN OF PROPERTY-RELATED REVENUES AND EXPENSES
For the six months ended September 30 2007 and, March 31, 2007.
Thousands of yen

U.S. dollars

For the period
from April 1, 2007
to September 30, 2007

For the period
from October 1, 2006
to March 31, 2007

For the period
from April 1, 2007
to September 30, 2007

Property-Related Revenues¥17,132,404¥16,500,773$148,422,463

Rental Revenues

17,079,232

16,397,656

147,961,815

Rental revenues

13,086,421

12,594,800

113,371,062

Common service charges

2,427,373

2,289,212

21,028,969

504,046

492,917

4,366,689

1,061,389

1,020,726

9,195,094

Parking revenues
Other rental revenues
Non-Rental Revenues

53,172

103,116

460,648

Cancellation charges

33,47840,915290,034

Other miscellaneous revenues

19,69362,200170,614

Property-Related Expenses

7,894,956

7,918,008

68,396,051

Property management expenses

1,875,476

1,815,942

16,247,740

Utilities expenses

1,177,925

1,133,868

10,204,677

Property and other taxes

1,346,026

1,241,021

11,660,973

Casualty insurance

37,391

38,437

323,934

Repairing expenses

580,466

916,973

5,028,732

2,835,589

2,717,648

24,565,447

42,07954,117364,549¥ 9,237,448¥ 8,582,765$ 80,026,411

Depreciation
Other rental expenses
Property-Related Profits

13. BREAKDOWN OF GAIN ON SALE OF PROPERTIESFor the six months ended September 30, 2007 and March 31, 2007.
Thousands of yen

For the period
from April 1, 2007
to September 30, 2007

U.S. dollars

For the period
from October 1, 2006
to March 31, 2007

For the period
from April 1, 2007
to September 30, 2007

Kobe-Itomachi Building
Revenue from sale of property¥1,770,000

Cost of property

1,334,569

Other sale expenses
Gain on sale of property¥

37,660¥ 397,770¥—$ 15,333,969—

11,561,719—

326,265—$ 3,445,985

Japan Real Estate Investment Corporation 33

14. BREAKDOWN OF GAIN ON EXCHANGE OF PROPERTIESFor the six months ended September 30, 2007 and March 31, 2007.
Thousands of yen

For the period
from April 1, 2006
to September 30, 2007

U.S. dollars

For the period
from October 1, 2006
to March 31, 2007

For the period
from April 1, 2006
to September 30, 2007

Mitsubishi Soken Building
Revenue from exchange of property—¥41,900,000

Cost of property—

26,826,706—

Other exchange expenses—

182,100—

Advanced depreciation—

14,431,937—

Gain on exchange of properties

¥

¥

—

¥

459,256

$

—

$

—

15. SUPPLEMENTAL CASH FLOW INFORMATION
The following table represents a reconciliation of cash and cash equivalents at September 30, 2007 and March 31, 2007:
Thousands of yen

Cash and deposits with banks

March 31, 2007

September 30, 2007

¥11,459,974¥ 9,129,721$ 99,280,726

4,959,850

4,747,919

42,968,473

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

U.S. dollars

September 30, 2007

(6,772,000)(2,573,000)(58,667,591)¥ 9,647,825¥11,304,640$ 83,581,608

The Company entered into a contract of exchange of fixed assets with MEC on March 12, 2007 and the transaction was executed on March 28,
2007. The non-cash transaction that occurred from this exchange was as follows:
Thousands of yen

September 30, 2007

The amount of fixed assets acquired¥

The amount of fixed assets rendered
Net cash paid

34 Japan Real Estate Investment Corporation¥

U.S. dollars

March 31, 2007

September 30, 2007—

¥44,700,000$—

41,900,000—¥ 2,800,000

—
—

$

—

16. LEASESThe Company owns office buildings under leases and earns rent income. As of September 30, 2007 and March 31, 2007, the future lease
revenues under the non-cancelable operating leases are as follows:
Thousands of yen

U.S. dollars

As of September
30, 2007

As of March
31, 2007

As of September
30, 2007Due within one year

¥ 8,428,079¥ 8,338,164$ 73,014,636

Due after one year

25,494,616

28,762,327

220,866,465

Total¥33,922,695¥37,100,491$293,881,102

17. SUBSEQUENT EVENTS“Not applicable”

Japan Real Estate Investment Corporation 35

36 Japan Real Estate Investment Corporation

Corporate Data
As of September 30, 2007

Transfer Agent

Executives
Executive Director:

Taketo Yamazaki

The Sumitomo Trust & Banking Co., Ltd.

Supervisory Directors:

Kenji Kusakabe

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

Tomohiro Okanoya
Auditors
Paid-in Capital

Ernst & Young ShinNihon¥264,683,960,000

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

Number of Units Issued

Incorporation

410,000

May 11, 2001

Number of Unitholders

Executive Office

12,787

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

Stock Listing
Tokyo Stock Exchange

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

Securities CodePlanning Department, Manager

8952

Toshiya Kobayashi
Tel: 81-3-3211-7921

Type of Investment Corporation

Fax: 81-3-3212-8886

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

This semiannual report includes translations of documents originally filed under the Securities and Exchange Law of Japan. This report was prepared in English
solely for the convenience of readers outside Japan and should not be considered as a disclosure statement. The original Japanese documents shall take precedence
in the event of any discrepancies arising from the translations or interpretations contained in this report.
Estimates for Japan Real Estate Investment Corporation’s future operating results contained in this semiannual report are forward-looking statements and are 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 Japan Real Estate Investment Corporation. Actual results may differ substantially from the projections
depending on a number of factors.

Japan Real Estate Investment Corporation 37

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

Issued on January 10, 2008