Japan Real Estate Investment Corporation

J-REITSEPTEMBER 2011 SEMIANNUAL REPORT

10 th
ANNIVERSARYJ A P A N R E A L E S TAT E I N V E S T M E N T C O R P O R AT I O N

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

SEPTEMBER
2011

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

Profile

Corporate Data
As of September 30, 2011

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

Executives

Transfer Agent

Executive Director:

Noritada Terasawa

The Sumitomo Trust & Banking Co., Ltd.

Supervisory Directors:

Kenji Kusakabe

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

Tomohiro Okanoya

Auditors
Paid-in Capital

Ernst & Young ShinNihon LLC¥324,353,108,000

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

Contents
Financial Highlights

p. 1

Top 10 Unitholdersp. 1

Unit Price Performancep. 1

Number of Units Outstanding

Incorporation

489,200

May 11, 2001

Number of Unitholders

Executive Office

13,504

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

Stock Listing

The Strengths of Japan Real Estate
Investment Corporation

p. 2

Portfolio Highlights

p. 3

Property Transfer and Internal Reserves

p. 4

Subsequent Events

p. 5

History after IPO

p. 6

To Our Unitholders

p. 8

The Portfolio of Japan Real Estate
Investment Corporation

p.12

Overview of Portfolio Properties

p.15

Financial Section

p.21

Corporate Data

p39

Tokyo Stock Exchange

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

Securities CodePlanning Department8952

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

Type of Investment Corporation

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

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

Japan Real Estate Investment Corporation 39

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

Millions of yen
For the period from
April 1, 2011 to
September 30, 2011

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

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

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

For the period from
April 1, 2009 to
September 30, 2009

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

Operating Revenues¥22,829¥22,135¥22,112¥21,665¥21,524$297,847

Operating Income

10,380

9,802

9,939

10,53810,054135,426

Ordinary Income

8,603

7,938

8,135

8,876

8,505

112,249

Net Income

8,268

7,652

8,134

8,875

8,504

107,870

Net Operating Income (NOI) (Note 2)

15,121

14,95015,091

14,414

13,950197,276

Funds from Operations (FFO) (Note 3)

12,154

11,93812,353

11,914

11,577

158,57615.2 times

16.1 times

15.1 times

16.3 times

14.1 times

15.2 times

FFO Multiple (Note 4)
Cash Distribution

7,753

7,652

8,134

8,826

8,504

101,159

Number of Units

489,200

489,200

489,200

489,200

443,000

489,200

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

15,85015,642

16,62818,04319,198206.78Notes: 1. Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥76.65 = US$1.00, the foreign exchange rate on September 30,
2011, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen amounts have been or could be readily converted, realized
or settled into U.S. dollars at that rate or any other rate.
2. NOI = Property-Related Revenues – Property-Related Expenses (excluding Depreciation)
3. FFO = Net Income + Depreciation – Gain (Loss) on Transfer of Properties – Gain on Transfer of Development Rights of Floor Area
– Compensation for the Property Transfer
4. FFO Multiple = Unit Price at End of the Respective Term ÷ FFO per Unit (Annualized)(Annualized portion of the calculation given in note 4 assumes a fiscal period of 183 days for the period ended September 30, 2009, 182 days for the period ended March
31, 2010, 183 days for the period ended September 30, 2010, 182 days for the period ended March 31, 2011 and 183 days for the period ended September 30, 2011.)

Top 10 Unitholders
As of September 30, 2011
Units

% of total units
outstanding

72,842
39,10636,508
16,96011,471
10,160
9,430
8,534
8,039
7,493

14.89%
7.99%
7.46%
3.47%
2.34%
2.08%
1.93%
1.74%
1.64%
1.53%

TOPIX

The Company

Company

Japan Trustee Services Bank, Ltd. (Shintaku Acc.) ................................................................................................
The Nomura Trust and Banking Co., Ltd. (Toshin Acc.) ......................................................................................
Trust & Custody Services Bank, Ltd. (Toshin Acc.) ..............................................................................................
The Master Trust Bank of Japan, Ltd. (Shintaku Acc.) .........................................................................................
NOMURA BANK (LUXEMBOURG) S.A. ........................................................................................................
Mitsubishi Estate Co., Ltd. ...................................................................................................................................
THE BANK OF NEW YORK, TREATY JASDEC ACCOUNT ........................................................................
The Chugoku Bank, Ltd. .....................................................................................................................................
BBH FOR MATTHEWS ASIAN GROWTH AND INCOME FUND .............................................................
North Pacific Bank, Ltd. ......................................................................................................................................

Unit Price Performance
TSE REIT Index
325%
300%
275%
250%
225%
200%
175%
150%
125%
100%
75%
50% Sept.

Mar.

2001

2002

Sept.

Mar.

2003

Sept.

Mar.

2004

Sept.

Mar.

2005

Sept.

Mar.

2006

Sept.

Mar.

2007

Sept.

Mar.

2008

Sept.

Mar.

2009

Sept.

Mar.

2010

Sept.

Mar.

Sept.

2011

Japan Real Estate Investment Corporation 1

The Strengths of Japan Real Estate Investment Corporation

Strengths

Stable Dividends

Collaboration withSponsors— Actual dividend per unit for the 20th

— Expertise of

fiscal period:¥15,850($206.78)*— Forecasted dividend per unit for the 21stfiscal period:***¥15,700($204.83)* ,**The foreign exchange rate of ¥76.65 = US$1.00, as of September 30, 2011,
has been used for this translation.
The forecasted dividend was disclosed with the announcement of the20th fiscal period earnings results on November 21, 2011.

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

Steady Growth with
Quality Portfolio

Sound Financial Base

— Total acquisition price:— Highest credit ratings for a J-REIT:(as of September 30, 2011)

A1

AAAA

¥657,863 million
56— LTV (Interest-bearing debt / Total assets):— The first listed J-REIT, showing steady
performance for 20 consecutive periods— Long-term, fixed-interest debt ratio***:($8,583 million)— Maintains

high-quality office buildings

from S&P,

from Moody’s,

from R&I

41.8%
93.9%
*** Long-term, fixed-interest loans + Investment corporation bonds (including
current portions of Long-term, fixed-interest loans and Investment
corporation bonds) / Total Interest-bearing debt

2 Japan Real Estate Investment Corporation

Portfolio Highlights

Trends in the state of portfolio management

September 2001

Total leasable space (m 2)

Number ofbuildings

Total numberof tenants(Note)

Total leasable
space

20

213

133,927m2

94.6%

2

94.0%

Occupancy
rate

March 2002

24

353

201,884m

September 2002

27

362

215,928m2

95.3%

March 2003

30

383

236,693m2

94.4%

September 2003

32

407

246,062m2

95.1%

March 2004

36

477

273,157m2

94.8%

2

93.6%

September 2004

39

504

293,105m

March 2005

46

669

336,026m2

97.6%

September 2005

50

814

364,610m2

98.6%

March 2006

52

866

400,090m2

98.7%

2

98.2%

September 2006

49

835

396,173m

March 2007

50

887

397,928m2

97.8%

September 2007

50

879

406,605m2

98.7%

March 2008

53

931

479,877m2

95.9%

2

96.1%

September 2008

54

970

508,296m

March 2009

55

993

516,411m2

95.5%

September 2009

55

977

516,421m2

93.3%

March 2010

55

979

566,277m2

93.0%

2

92.4%

September 2010

55

992

567,612m

March 2011

57

1,004

589,002m2

93.2%

April 2011

56

998

584,868m2

93.6%

May 2011

56

998

584,918m2

93.8%

2

93.6%

June 2011

56997

584,938m

July 2011

56

998

584,940m2

93.8%

August 2011

56

1,001

584,970m2

93.8%

September 2011

56

1,009

584,982m2

94.6%

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

100,000

200,000

300,000

400,000

500,000

600,000

700,000
Total leasable
space

Occupancy rate

20th 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, 2011

Properties bygeographic
regionOther major
cities

15.5%

Tokyo 23 wards

76.5%

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

OthersTransport services 12.2%
and travel
Steel and metals

1.0%

Serviceindustries

14.7%
Financeand insurance

1.1%

10.6%

Ceramics

1.2%
Tokyo metropolitan area
excluding 23 wards

8.1%

Information
services

Staffing agencies

9.3%

1.5%
Textiles

2.6%

Real estate

Machinery

9.1%

4.0%

Pharmaceuticals

Communications

7.6%

4.9%
Construction

5.8%

Retail and Electric devices
restaurants 7.3%

6.9%

Japan Real Estate Investment Corporation 3

Property Transfer and Internal Reserves
Transfer of Asset
The Company transferred the following property in order to further enhance the quality of its portfolio.

Takanawadai Building
Transferred asset:
Transfer date:
Transfer price:
Acquisition date:
Acquisition price:
Gain on the sale:Transferee:

Trust beneficiary right in trust of domestic real estate (Takanawadai Building)April 1, 2011
¥3,160 million (excluding any balance due or payment for fixed property and city planning taxes, etc.)
September 25, 2001
¥2,738 million¥546 million
Nomura Real Estate Development Co., Ltd.

Undertaking Stable Dividends by Utilizing Internal Reserves
Excluding the monetary amount of dividends scheduled to be paid for 20th fiscal period, the Company maintains overall
internal reserves totaling 909 million yen as of September 30, 2011.
These internal reserves are derived from gains from the sale of part of the Jingumae Media Square Buildingsite to the Tokyo Metropolitan Government on October 30, 2009 and the Takanawadai Building property on April 1, 2011.
The Company will use the internal reserves obtained from these temporary gains to undertake the stable payment of
future dividends.

Stable dividends<Internal reserves>
derived from temporary
gains from property transfers

Reversal of
Appropriations forreserve fordividends fromreduction entry the 23rd fiscal
period onward
Deferred tax
liability reduction

Reserve for reduction entry¥533 million
Deferred tax liability¥345 million
Retained earnings
brought forward¥30 million
September 30, 2011
internal reserve balance

March 31, 2012
forecasted dividend

September 30, 2012
forecasted dividend

September 30, 2012
internal reserve balance¥909 million¥15,700¥15,700¥740 million

Note: Forecasted dividends for the 21st and 22nd fiscal periods were disclosed in the 20th fiscal period results announced on November 21, 2011.
These forecasted dividends are based on the premise that the Company will issue new investment units during the 21st fiscal period.
However, the issue of such investment units is not guaranteed and, in the event of such issue, the number of units may vary.
Accordingly, actual dividends may differ from forecasted amounts. For more details, please refer to the JAPAN REAL ESTATE INVESTMENTCORPORATION ANNOUNCEMENT OF TWENTIETH FISCAL PERIOD RESULTS announced on November 21, 2011.

4 Japan Real Estate Investment Corporation

Subsequent Events
After the period ended September 30, 2011

Acquisition of New, Prime Real Estate
Akasaka Park Building
Location:
Site area:
Floor area of building:
Structure:

5-2-20 Akasaka, Minato-ku, Tokyo
14,198.20m2
97,489.16m2
Steel-framed, steel-framed reinforced concrete structure,flat roof
Above ground:
30 floors
Below ground:
2 floors
July 1993
Mitsubishi Estate Co., Ltd.
November 15, 2011
Mitsubishi Estate Co., Ltd.
100.0% (As of the acquisition date;does not include the residential portion)

Floors:Completion:
Property management company:
Acquisition date:Seller:Occupancy rate:

o
om

nL

in

e

ine
hi L
ouc ket.
r un itsuri S
Ma ka-m Sotoboasa
Ak

Akasaka
Goyouchi

nz
Ha
e
in
aL
z
n

Gi
Yamawaki
GakuenHibiyaHigh
SchoolHie Jinja

Akasaka Park Building

Ak
as
ak
a

akasakaSacas
TBS

Ch

i

d
yo

aL

in

e

The Company decided on the acquisition of this property based particularly on an evaluation of the following two points.

1. Superior location

2. Large property with high competitiveness• Located in the Akasaka area where many foreign companies havehistorically established their business bases. The image of this area has
been further improved in recent years by the development of “akasaka
Sacas,” and diversified demand from tenants is expected into the future.
• In addition, the building commands good access to public transportation
being only five minutes’ walk from Akasaka Station on the Tokyo Metro
Chiyoda subway line and within walking distance of Akasaka-mitsuke
Station on the Tokyo Metro Ginza and Marunouchi subway lines.
Therefore, it enjoys easy access to the other main areas of central Tokyo.

• The property, with a total floor space of 97,489.16m2 forthe entire building and a standard floor area of approx.
2,036.36m2, has the advantage of large scale, which may
well be considered to give it scarcity value among largesized buildings in Chiyoda, Chuo and Minato cities.
• The property has competitive specifications as an
office building, including a ceiling height of 2,700mm, an electric capacity of 40 VA/m2 and a 24-houra-day building entry system.

The Submission of Shelf Registration Statement to Issue Investment Units
The Company submitted the following shelf registration statement for the issuance of investment units to the commissioner of the Kanto
Local Finance Bureau on November 21, 2011.
<Overview of shelf registration of new investment units>
Type of domestic investment security:
Scheduled period of issuance:
Scheduled amount of issuance:
Use of proceeds:

Japan Real Estate Investment Corporation investment unit
Within one year commencing from the effective date of the Shelf Registration Statement(from November 29, 2011 to November 28, 2012)
Up to ¥40,700 million
Loan repayment

Japan Real Estate Investment Corporation 5

History after IPO
In September 2001, the Company became the first J-REIT in Japan listed on the Tokyo Stock
Exchange (“TSE”). Since then, the Company has targeted stable management to fulfill its goal of
maintaining and increasing dividends per unit over the medium to long term. The Company’s
growth is based on external growth strategies that aim to increase earnings through the acquisition
and transfer of properties as well as internal growth strategies that seek to optimize earnings from

Occupancy rate
94.6%

94.0%

95.3%

94.4%

95.1%

97.6%

94.8%

98.6%

98.7%

93.6%

Total acquisition price(Number of properties)

Keep stable
occupancy rate

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

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

¥326,560¥290,510¥144,697¥92,845

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

million(32)¥218,437¥239,827

million(46)

million(50)

million(39)

million(36)

million(20)

At IPO

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

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

Dividend
per unit¥14,983¥12,853¥14,455

June 2002
First Investment
Corporation
Bond Issue(First fora J-REIT)

Bond issues¥15,117¥14,602¥14,711

Apr. 2003
Second/Third
Investment Corporation
Bond Issue¥15,824¥15,951

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

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

6 Japan Real Estate Investment Corporation

Oct. 2003
Second Follow-On¥16,172

Apr. 2005
Third Follow-On

properties already held. The size of the Company’s assets (total acquisition price) has grown from
¥92.8 billion at IPO to ¥657.8 billion as of the 20th fiscal period end due to the steady achievementof external growth strategies. However, in terms of internal growth strategies, ongoing efforts arebeing made in such areas as maintaining stable occupancy rates and reducing building management
costs.
95.9%
98.2%

97.8%

96.1%

95.5%

98.7%

93.3%

93.0%

92.4%

¥641,245 ¥643,891
million(55)

million(55)¥518,969¥418,693
million(49)¥441,276 ¥446,940
millionmillion(50)

million(53)¥542,969
million
(54)

93.2%

94.6%

¥660,601 ¥657,863
million(57)

million(56)¥564,219 ¥564,219
million(55)

million(55)(50)

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

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

Sept. 2006 Mar. 2007 Sept. 2007 Mar. 2008 Sept. 2008 Mar. 2009 Sept. 2009 Mar. 2010 Sept. 2010 Mar. 2011 Sept. 2011¥17,302¥17,521¥18,500¥29,223¥19,072

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

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

Oct. 2006
Fourth Follow-On

Mar. 2008
Fifth Follow-On

Dec. 2009
Sixth Follow-On

Japan Real Estate Investment Corporation 7

To Our Unitholders

8 Japan Real Estate Investment Corporation

Amid these severe operating conditions, the Company strived to improve occupancy
rates by aggressively promoting leasing activities that take into account market
trends. In addition, the Company transferred ownership of the Takanawadai
Building with the aim of further increasing the quality of its portfolio throughongoing asset reorganization.
BUSINESS PERFORMANCEFOR THE 20TH FISCAL PERIOD
Summary of Financial Results and Cash Dividend
In the 20th fiscal period (April 1, 2011 to September 30, 2011),
Japan Real Estate Investment Corporation (“the Company”)
recorded operating revenues totaling 22,829 million yen, up
3.1% compared with the previous period. On the earnings
front, operating income increased 5.9% to 10,380 million yen.
After deducting expenses for interest payments on loans andother costs, ordinary income rose 8.4% to 8,603 million yen
and net income improved 8.1% to 8,268 million yen.
Turning to dividends, through the utilization of the“Special Provisions for Taxation in the case of Advance
Acquisition of land, etc. in 2009 and 2010” under Article 66-2of the Special Taxation Measures Law of Japan (which is intended to ensure that a stable cash dividend level is maintained), theCompany has decided to set a reserve for reduction entry within retained earnings to avoid generating taxable income. The
Company has determined to pay out cash dividends in an
amount that does not exceed the amount of unappropriatedretained earnings at period-end after corporate tax deductions
related to the aforementioned reserve for reduction entry. This
amount must be divisible by 489,200—the number of units
outstanding as of September 30, 2011. Accordingly, the amountof cash dividends for the period under review totaled
7,753,820,000 yen, for a per-unit cash dividend of 15,850 yen.

Operating Environment and Performance
During the period under review, conditions in the Japanese
economy during the first half were severe, reflecting a drop in
consumer spending and decreased industrial production due tosevered supply chains resulting from the Great East Japan
Earthquake. Despite signs of a recovery in consumer spending
and industrial production from the summer onward, a fullscale recovery did not materialize. This was attributable to aheightened awareness of the risk of further economic stagnation caused by the impact of power supply restrictions and thenuclear disaster in Japan as well as concerns over a general slowdown in overseas economies that, along with credit instability
in North America and Europe, is driving up yen rates.

In the market for leased office space, occupancy rates
for office buildings in Tokyo stopped falling for the most partwhile those for prime properties in central Tokyo experienced
a rise. Despite these factors, overall rent levels remained on a
downward trend due to an expanding wait-and-see attitude
that reflected the delayed economic recovery. In regional business areas, there was a gradual improvement in occupancy rates.
However, the overall trend of high vacancy rates coupled withlow rent levels prevailed amid stagnant demand for office space.
In the property market, although the number of transactions was initially stagnant due to the effect of the Great East
Japan Earthquake, for the period as a whole REIT-related realestate transactions remained steady as the disaster had no specific impact on property values themselves. Nevertheless, transaction volume failed to rally due to the difficulty in establishingcommon ground over prices between sellers and buyers in lightof uncertain economic and office rental market trends as wellas an accommodative fund raising environment that encouraged potential sellers to hold on to their properties.
Amid such harsh circumstances, the Company strived
to improve occupancy rates by aggressively promoting leasing
activities that take into account market trends. As a result of
these activities, the Company’s occupancy rate rose from 93.2%
as of March 31, 2011 to 94.6% as of September 30, 2011. In
addition, as part of an effort to reorganize its assets, theCompany transferred ownership of the Takanawadai Building.
As a result of the above, the Company’s portfolio as of
September 30, 2011, consisted of 56 office buildings with a
total acquisition price of 657,863 million yen. Total leasable
space stood at 584,982 m2, with a total of 1,009 tenants.

Financial Activities
To fund the repayment of existing loans (including those to be
repaid prior to maturity), the Company procured loans totaling
10,000 million yen on April 4, 2011; 23,000 million yen on
June 1, 2011; 24,000 million yen on June 23, 2011; 4,500
million yen on August 1, 2011; 5,000 million yen on August
31, 2011; 1,500 million yen on September 1, 2011; and 5,500
million yen on September 26, 2011.
At the same time, the Company repaid 3,000 million
yen in short-term loans prior to their maturity through proceeds
Japan Real Estate Investment Corporation 9

The Company intends to turn such severe conditions into an opportunity, shiftingits focus towards external growth based on overall growth that will compensate
for a fall in internal growth. Through such actions, the Company will work toincrease revenues and earnings and, in turn, maintain and improve per-unit
cash dividends.
obtained from the sale of the Takanawadai Building on April
1, 2011. In addition, the Company completed the scheduledinstallment repayment of long-term loans totaling 50 million
yen on September 26, 2011.
As a result of these financing activities, as of September
30, 2011, the Company’s total interest-bearing debt amounted
to 269,350 million yen. This amount consists of long-term loans
totaling 197,850 million yen (including a current portion totaling 8,100 million yen), short-term loans totaling 16,500 million
yen, and investment corporation bonds totaling 55,000 million
yen (including a current portion totaling 10,000 million yen).
As of September 30, 2011, the Company’s long-term,
fixed-interest debt ratio (ratio of long-term, fixed-interest debt,
including the current portion of long-term loans and investment
corporation bonds, to total interest-bearing debt) stood at 93.9%,
and the LTV ratio (ratio of interest-bearing debt to total assets)was 41.8%. As these figures indicate, the Company has been able
to maintain a sound and conservative financial standing.
The Company’s credit ratings as of the date of thisreport were as follows.
Credit Rating Agency

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

Long-term: AA-;
Short-term: A-1+;
Outlook: Negative

Moody’s Japan K.K.

Rating: A1; Outlook: Negative

Rating and Investment Information, Inc.

Rating: AA; Outlook: Stable

OUTLOOK
Trends in the Office Leasing Market
The Japanese economy is expected to remain uncertain due tonumerous domestic and overseas risk factors even though arecovery in industrial production (which slumped following
the Great East Japan Earthquake) is anticipated amid a rise indemand for disaster-related reconstruction.
In the market for leased office space, vacancy rates areprojected to remain at current levels for the foreseeable future
due to the fixed supply of new buildings, reflecting low expectations that demand will rapidly recover. Following this, it ispresumed that it will be some time before rent levels rebound.
We expect property market transactions to stabilize
thanks to an ongoing accommodative fund-raising environ-

10 Japan Real Estate Investment Corporation

ment. However, the Company considers it important to analyze more detailed property information obtained through avariety of channels in order to acquire prime properties amid
an increasingly uncertain economic environment and an ongoing slump in leasing markets.

Growth Strategies
In accordance with the aforementioned, the Company adheresto the following management policies in order to maintain andimprove profitability.
First, the Company works to strengthen the relationship of trust with existing tenants and strategically raise rent
levels. As of September 30, 2011, the Company had contracts
with 11 property management companies. Most of these companies were already managing their respective buildings before
the Company acquired them and have thus built relationshipsof trust with their tenants. The Company works to further
strengthen these relationships by anticipating tenants’ needs
and providing tailored services to increase tenant satisfaction
and subsequently maintain occupancy rates and restrain rent
reduction requests.
Second, we endeavor to implement effective initiatives
to fill vacancies in a prompt manner. In cooperation with theproperty management companies mentioned above, theCompany actively seeks the most appropriate tenants for each
property, based on location and features, in order to fill current
and anticipated vacancies as rapidly as possible. Furthermore,
the Company works to uncover additional needs for floor spaceamong existing tenants.
Third, we constantly strive to stabilize our revenues andearnings. With the aim of stabilizing revenues and earnings, theCompany endeavors to apply fixed- and long-term leasing
agreements with its large-scale tenants.
Lastly, we aim to continuously reduce management
costs. The Company has introduced sound competitive principles for its multiple property management companies to follow. These companies are revamping their management systems
and cost structures on an ongoing basis.
With regard to the acquisition of properties, theCompany has adopted the following policies.

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

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

First, the Company continually enhances its property
information channels and develops new channels in order toaccess important information quickly.
Second, in its acquisition activities, the Company continues to meticulously monitor and examine economic, physical and legal factors, including rights-related issues, whenselecting properties. In particular, with regard to the structureof buildings, the Company requires buildings to meet or exceed
new earthquake-resistance standards and exclusively targets
properties capable of maintaining a competitive edge in termsof the facilities they offer over the medium to long term.
Third, in accordance with its acquisition policies, theCompany maintains its portfolio so that 70% or more of the portfolio properties are located within the Tokyo metropolitan area,with the remaining 30% or fewer located in other major cities.
Under these policies, the Company will continue toacquire highly competitive properties. At the same time, inorder to further enhance the quality of its portfolio, theCompany will remain open to the replacement of portfolio
properties with due consideration given to timing.

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

Performance Forecasts for the 21st and 22nd Fiscal Periods

million yen, operating income totaling 10,590 million yen,ordinary income totaling 8,630 million yen, and net income
totaling 8,620 million yen. The Company plans to declare acash dividend totaling 15,700 yen per unit.
For the 22nd fiscal period (April 1, 2012, to September
30, 2012), the Company forecasts operating revenues totaling
24,080 million yen, operating income totaling 10,270 million
yen, ordinary income totaling 8,470 million yen, and net
income totaling 8,520 million yen. The Company plans to
declare a cash dividend totaling 15,700 yen per unit.
Actual operating revenues, operating income, ordinary
income, net income and cash dividends per unit may varydepending on circumstances.
The circumstances primarily surrounding the nuclear
disaster in Japan gradually stabilized during the six months
following the Great East Japan Earthquake. In the market forleased office space, the prevailing wait-and-see attitude following the disaster is finally subsiding, with movement emerging
among tenants. In light of rapid yen appreciation caused by the
global financial crisis, however, the attitude among companies
remains guarded. As a result, the downward trend in rent levels
has not completely halted. Amid such severe internal growth
conditions, the Company plans to continue using its healthyfinancial standing to facilitate steady external growth.
You have placed considerable trust in us. Going forward,
we seek to continue earning that trust through sustainable growthand performance. Thank you for your steadfast support.

Noritada Terasawa
Executive Director of Japan Real Estate Investment Corporation

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

For the 21st fiscal period (October 1, 2011, to March 31, 2012),
the Company forecasts operating revenues totaling 24,140
Japan Real Estate Investment Corporation 11

The Portfolio of Japan Real Estate Investment Corporation As of September 30, 2011
Properties Roster
Location

Type ofspecified asset

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

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

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

쎲 I- 9쎲I- 10쎲I- 11
쎲I- 12
쎲 I- 13
쎲 I- 14

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

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

Real property
Trust
Trust
Real property
Real property
Real property

쎲 I- 15
쎲I- 16
쎲I- 17

Harumi Center Building
Aoyama Crystal Building
Shiodome Building

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

Real property
Real property
Trust쎲I- 18
쎲I- 19쎲I- 20쎲I- 21

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

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

Trust
Trust
Real property
Real property

쎲I- 22
쎲I- 23
쎲I- 24
쎲I- 25
쎲I- 26
쎲 I- 27
쎲 I- 28
쎲 I- 29
쎲 I- 30

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

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

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

Harmony Tower쎲 I- 31
Otsuka Higashi-Ikebukuro Building쎲I- 32
Ikebukuro 2Chome Building쎲I- 33
Ikebukuro YS Building쎲I- 34
Tokyo metropolitan area, excluding 23 wards
Hachioji First Square쎲 II- 1

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

Real property
Trust
Trust
Real property

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

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

Hachioji, Tokyo

Real property쎲 II- 2

Saitama, Saitama Prefecture

Real property

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

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

Real property
Trust
Real property

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

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

Sapporo, Hokkaido
Sendai, Miyagi Prefecture
Sendai, Miyagi Prefecture

Real property
Real property
Trust

Kanazawa Park Building

Kanazawa, Ishikawa Prefecture

Real property

쎲 III- 5

Nishiki Park Building

Nagoya, Aichi Prefecture

Real property

쎲III- 6
쎲III- 7
쎲III- 8
쎲III- 9
쎲III- 10
쎲 III- 11

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

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

Real property
Real property
Real property
Real property
Trust
Real property

쎲III- 12

Midosuji Daiwa Building

Osaka, Osaka Prefecture

Trust쎲 III- 13
쎲III- 14

Lit City Building
NHK Hiroshima Broadcasting Center Building

Okayama, Okayama Prefecture
Hiroshima, Hiroshima Prefecture

Real property
Real property

쎲III- 15
쎲III- 16
쎲III- 17

Tosei Tenjin Building
Tenjin Crystal Building
Hinode Tenjin Building

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

Real property
Real property
Trust

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

(1.1%)(0.2%)

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

657,863(100.0%)

NumberName of building

Saitama Urawa Building

Total

12 Japan Real Estate Investment Corporation

Acquisition price(¥ mil)(0.8%)(12.4%)(1.4%)(0.7%)(2.2%)(6.8%)(1.1%)(3.2%)(1.1%)(0.5%)(0.7%)(0.8%)(2.6%)(1.2%)(4.1%)(1.2%)(11.5%)(0.7%)(0.4%)(1.2%)(4.8%)(0.8%)(1.9%)(0.8%)(1.0%)(1.3%)(0.7%)(1.9%)(5.3%)(0.6%)(1.3%)(0.5%)(0.3%)(0.7%)(0.9%)(0.4%)(5.7%)(0.5%)(0.6%)(0.5%)(0.7%)(0.8%)(0.3%)(2.2%)(0.3%)(0.4%)(3.6%)(0.6%)(2.2%)(0.7%)(0.4%)(0.2%)(0.8%)(0.6%)

Percentage ofownership of thebuilding

Completion

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

Leased space

Occupancy
rate

Numberof tenants

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

1985
2006
1998
1993
2004
2003
2005
1966

6,100
68,7008,750
4,560
16,30046,5006,220
29,0004,791m2
25,678m2
6,269m2
3,687m2
9,316m2
11,855m2
4,495m2
20,871m2

4,791m2
25,678m2
4,794m2
3,218m2
9,316m2
11,855m2
4,495m2
20,275m2

100.0%
100.0%
76.5%
87.3%
100.0%
100.0%
100.0%
97.1%

1
5
6
9
1
10
1
38

221
1,562
259
121
474
984
162
1,027

(1.0%)(7.0%)(1.2%)(0.5%)(2.1%)(4.4%)(0.7%)(4.6%)

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

1975
1991
1991
2002
1982
1998

7,430
3,110
4,710
6,170
14,6005,300

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

4,095m2
3,686m2
4,336m2
4,279m2
4,290m2
4,059m2

87.2%
94.6%
95.5%
100.0%
99.1%
95.4%

13
9
9
1
10
11

249
117
143
150
371
115

(1.1%)(0.5%)(0.6%)(0.7%)(1.7%)(0.5%)

100.0%
100.0%
40.0%

2006
1982
2007

20,3007,460
78,00020,812m2
4,898m2
32,155m2

20,612m2
4,898m2
32,084m2

99.0%
100.0%
99.8%

7
6
30

684
205
2,277

(3.1%)(0.9%)(10.2%)

100.0%
100.0%
100.0%
31.325%

1984
1992
1989
1996

6,060
2,730
5,980
30,9009,606m2
4,062m2
6,134m2
35,043m2

9,401m2
4,062m2
5,659m2
31,536m2

97.9%
100.0%
92.3%
90.0%

20
8
10
91

306
111
201
1,572

(1.4%)(0.5%)(0.9%)(7.1%)

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

2004
2005
1989
1974
2003
1987
1998
1976
1994

5,650
15,180
5,250
7,040
9,990
6,090
10,40040,8002,800

5,205m2
16,856m2
7,754m2
7,356m2
7,745m2
3,147m2
5,558m2
29,846m2
2,462m2

5,205m2
16,856m2
7,754m2
7,356m2
7,745m2
3,147m2
5,558m2
28,931m2
2,014m2

100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
96.9%
81.8%

4
1
18
21
8
4
7
58
4

190
667
252
300
312
190
341
1,358
68

(0.9%)(3.0%)(1.1%)(1.3%)(1.4%)(0.9%)(1.5%)(6.1%)(0.3%)

29.253305%
100.0%
100.0%
100.0%

1997
1987
1990
1989

9,450
3,820
1,580
4,230

10,929m2
7,193m2
2,186m2
5,932m2

9,317m2
6,303m2
2,186m2
5,932m2

85.2%
87.6%
100.0%
100.0%

12
5
9
11

344
169
73
180

(1.5%)(0.8%)(0.3%)(0.8%)

80.4%

1996

4,450

10,068m2

9,215m2

91.5%

38

239

(1.1%)

100.0%

1990

2,070

4,510m2

4,510m2

100.0%

14

111(0.5%)

100.0%
100.0%
34.32%

2007
1990
1990

35,9002,720
3,510

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

36,097m2
6,741m2
4,720m2

93.8%
98.7%
87.8%

26
11
20

1,335
160
143

(6.0%)(0.7%)(0.6%)

100.0%
50.0%
100.0%

2006
1993
1991

6,630
887
2,480

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

12,265m2
2,518m2
5,448m2

100.0%
100.0%
87.3%

8
18
17

327
67
128

(1.5%)(0.3%)(0.6%)

89.0%

1991

5,330

20,848m2

17,046m2

81.8%

71

452

(2.0%)

57.04651%

1995

3,660

8,056m2

7,739m2

96.1%

52

244

(1.1%)

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

1987
1987
1991
1982
1995
1992

1,330
12,6001,080
1,720
16,4003,620

3,911m2
21,624m2
3,470m2
6,801m2
28,414m2
11,574m2

3,121m2
20,034m2
2,562m2
5,159m2
26,008m2
10,693m2

79.8%
92.6%
73.8%
75.9%
91.5%
92.4%

12
27
9
30
41
18

87
575
63
101
736
229

(0.4%)(2.6%)(0.3%)(0.5%)(3.3%)(1.0%)

100.0%

1991

14,10020,450m2

19,164m2

93.7%

34

590

(2.6%)

27.7488%
48.753%

2005
1994

4,220
2,980

9,965m2
9,860m2

9,315m2
9,469m2

93.5%
96.0%

38
12

257
249

(1.2%)(1.1%)

100.0%
100.0%
74.4844%

1992
1993
1987

1,320
2,470
3,720
634,357

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

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

100.0%
96.6%
100.0%

19
30
6

85
153
173

(0.4%)(0.7%)(0.8%)

584,982m2

553,212m2

94.6%

1,009

22,283(100.0%)

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

Major Tenants Roster
Rank

1
2
3
4
5
6
7
8
9
10

Name of tenant

Name of building

MSD K.K.
Mitsubishi Estate Co., Ltd.
NTT Communications Corporation
Mitsubishi UFJ Trust and Banking Corporation
Seven & i Holdings Co., Ltd.
Space Design, Inc.
JSOL Corporation(Note)TOTO LTD.
(Note)

Kitanomaru Square (also includes 1 other building)
Osaki Front Tower
Shiodome Building
Mitsubishi UFJ Trust and Banking Building
Nibancho Garden
Burex Kojimachi Building (also includes 1 other building)Harumi Center Building
MM Park Building (also includes 1 other building)Midosuji Daiwa Building (also includes 1 other building)
Shibuya Cross Tower

Leased space% of totalleased space

23,695m2
16,856m2
11,813m2
10,598m2
9,316m2
8,774m2
8,567m2
7,027m2
6,118m2
6,045m2

4.3%
3.0%
2.1%
1.9%
1.7%
1.6%
1.5%
1.3%
1.1%
1.1%

Note: Not disclosed as per tenant request

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

III-1 to III-17: Other major cities

III-1

II-2
II-1
III-2

III-3

II-5
II-3

III-4

II-4

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

I-1 to I-34: Tokyo
23 wards

I-33
I-34 I-32
I-31

I-2

I-1

I-3
I-20
I-4
I-25
I-10
I-7
I-21
I-6
I-12
I-26 I-27
I-13
I-8
I-9
I-11
I-28
I-14
I-29
I-16
I-17
I-15
I-18
I-30
I-19
I-5

I-22
I-23

I-24

Tokyo Station

14 Japan Real Estate Investment Corporation

Overview of Portfolio Properties As of September 30, 2011
Note: Concerning real estate or trust beneficiary rights in trust of real estate of which the Company is a partial owner through co-ownership or compartmentalized building units or
quasi-co-ownership, the figures for “Site area” and “Floor area of building” represent total site area and total floor space for the entire building.

Genki Medical
Plaza

Kitanomaru
SquareMD Kanda
Building

쎲 I-1

쎲 I-2

쎲 I-3

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

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

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

Kandabashi Park
Building

Nibancho Garden

Mitsubishi UFJ
Trust andBanking Building

쎲 I-4

쎲 I-5

쎲 I-6

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

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

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

Burex Kojimachi
Building

Sanno Grand
Building

Yurakucho Denki
Building

쎲 I-7

쎲 I-8

쎲 I-9

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

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

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

Kodenmacho
Shin-Nihonbashi
Building

Kyodo Building(Kayabacho
2Chome)Burex Kyobashi
Building

쎲 I-10쎲 I-11

쎲 I-12

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

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

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

Japan Real Estate Investment Corporation 15

Ginza Sanwa
Building

Ryoshin Ginza
East Mirror
Building

Harumi Center
Building

쎲 I-13

쎲 I-14

쎲 I-15

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

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

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

Aoyama Crystal
Building

Shiodome
Building

Shiba 2Chome
Daimon Building쎲 I-16

쎲 I-17

쎲 I-18Location:
Minato-ku, Tokyo
Site area:
989.30m2
Floor area of building: 8,094.36m2
Structure:
Above ground: 10 floors
Below ground: 4 floors
Completion:
December 1982

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

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

Cosmo
Kanasugibashi
Building

Shinwa Building

Tokyo Opera
City Building쎲 I-19

쎲 I-20쎲 I-21

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

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

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

Higashi-Gotanda
1Chome Building

Osaki Front
Tower

Omori-Eki
Higashiguchi
Building

쎲 I-22

쎲 I-23

쎲 I-24

Location:
Shinagawa-ku, Tokyo
Site area:
1,539.95m2
Floor area of building: 6,460.39m2
Structure:
Above ground: 8 floors
Completion:
July 200416 Japan Real Estate Investment Corporation

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

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

NipponBrunswick
Building

Yoyogi 1Chome
Buildingda Vinci
Harajuku

쎲 I-25

쎲 I-26

쎲 I-27

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

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

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

Jingumae Media
Square Building

Shibuya Cross
Tower

Ebisu Neonato

쎲 I-28

쎲 I-29

쎲 I-30Location:
Shibuya-ku, Tokyo
Site area:
2,124.59m2
Floor area of building: 9,420.42m2
Structure:
Above ground: 9 floors
Below ground: 2 floors
Completion:
March 1998

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

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

Harmony Tower

Otsuka HigashiIkebukuro
Building

Ikebukuro
2Chome Building쎲 I-31

쎲 I-32

쎲 I-33

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

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

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

Ikebukuro YS
Building

Hachioji First
SquareSaitama Urawa
Building

쎲 I-34

쎲 II-1

쎲 II-2

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

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

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

Japan Real Estate Investment Corporation 17

MM Park
Building

Kawasaki Isago
Building

Musashi Kosugi
STM Building쎲 II-3쎲 II-4

쎲 II-5

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

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

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

8.3 Square Kita
Building

Jozenji Park
Building

Sendai Honcho
Honma Building

쎲 III-1

쎲 III-2

쎲 III-3

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

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

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

Kanazawa Park
Building

Nishiki Park
Building

Hirokoji Sakae
Building

쎲 III-4

쎲 III-5

쎲 III-6

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

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

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

Nagoya Hirokoji
Building

Nagoya Misono
Building

Kyoto Shijo
Kawaramachi
Building

쎲 III-7

쎲 III-8

쎲 III-9Location:
Nagoya, Aichi Prefecture
Site area:
4,095.81m2
Floor area of building: 33,377.73m2
Structure:
Above ground: 18 floors
Below ground: 2 floors
Completion:
May 1987

18 Japan Real Estate Investment Corporation

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

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

Shin-Fujita
Building

Sakaisujihonmachi
Building

Midosuji Daiwa
Building

쎲 III-10

쎲 III-11

쎲 III-12

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

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

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

Lit City Building

NHK Hiroshima
Broadcasting
Center Building

Tosei Tenjin
Building

쎲 III-13

쎲 III-14

쎲 III-15

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

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

Tenjin Crystal
Building

Hinode Tenjin
Building

쎲 III-16

쎲 III-17

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

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

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

Japan Real Estate Investment Corporation 19

20 Japan Real Estate Investment Corporation

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

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

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

Millions of yen

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

Operating Revenues¥ 22,829¥ 22,135¥ 22,112¥ 21,665¥ 21,524$  297,847

Operating Expenses

12,44912,333

12,173

11,127

11,469162,421

Operating Income

10,380

9,802

9,939

10,53810,054135,426

Ordinary Income

8,603

7,938

8,135

8,876

8,505

112,249

Income before Income Taxes

8,614

7,657

8,135

8,876

8,505

112,392

Net Income

8,268

7,652

8,134

8,875

8,504

107,870

Total Assets

643,949

646,847

634,974

637,326

564,5288,401,168

Interest-Bearing Debts

269,350

272,400

262,450

262,500

220,500

3,514,025

Net Assets

332,670332,054332,536

333,228

306,106

4,340,123

Unitholders’ Capital

324,353

324,353

324,353

324,353

297,601

4,231,613

Number of Units

489,200

489,200

489,200

489,200

443,000

489,200

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

680,029

678,770

679,755

681,170

690,984

8,872

7,753

7,652

8,134

8,826

8,504

101,159

Cash Distribution
Dividend Payout Ratio

93.7%

99.9%

99.9%

99.4%

100.0%

93.7%

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

15,85015,642

16,62818,04319,198206.78Net Operating Income (NOI)

15,121

14,95015,091

14,414

13,950197,276

Funds from Operations (FFO)

12,154

11,93812,353

11,914

11,577

158,576Return on Assets (ROA) (Note 2)

1.3%

1.2%

1.3%

1.5%

1.5%

(2.7% annualized)

Return on Equity (ROE) (Note 3)

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

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

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

2.7 %(5.5% annualized)(3.0% annualized)

2.8 %(5.5% annualized)

1.3%(2.7% annualized)

2.5%(5.0% annualized)

EOP Equity Ratio (Note 4)

51.7%

51.3%

52.4%

52.3%

54.2%

51.7%

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

41.8%

42.1%

41.3%

41.2%

39.1%

41.8%

FFO Multiple

15.2 times

16.1 times

15.1 times

16.3 times

14.1 times

15.2 times

Debt Service Coverage Ratio (Note 6)

8.4 times

7.5 times

7.8 times

9.0 times

9.0 times

8.4 times

Notes 1: Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥76.65 = US$1.00, the foreign exchange rate on September 30,
2011, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen has been or could be readily converted, realized or settled
into U.S. dollars at that rate or any other rate.
2: ROA = Ordinary Income ÷ Average of Total Assets during the period
3: ROE = Net Income ÷ Average of Net Assets during the period(Annualized portion of the calculation given in note 2 and note 3 assumes a fiscal period of 183 days for the period ended September 30, 2009, 182 days for the period
ended March 31, 2010, 183 days for the period ended September 30, 2010, 182 days for the period ended March 31, 2011 and 183 days for the period ended September
30, 2011.)
4: EOP Equity Ratio = (Net Assets at end of period ÷ Total Assets at end of period) × 100
5: EOP Interest-Bearing Debt Ratio on Total Assets = (Interest-Bearing Debt at end of period ÷ Total Assets at end of period) × 100
6: Debt Service Coverage Ratio = Net Income before Interest, Taxes, Depreciation and Amortization ÷ Interest Expenses

Japan Real Estate Investment Corporation 21

Balance Sheets
As of September 30, 2011 and March 31, 2011

Thousands of yen

U.S. dollars (Note 1)

As of
September 30, 2011

As ofMarch 31, 2011

As of
September 30, 2011

¥ 19,366,180¥ 15,734,155$  252,657,282

105,708

108,765

1,379,101

4,983

—

65,016—362,232—ASSETS
Current Assets:
Cash and bank deposits
Rental receivables
Refundable income taxes
Refundable consumption taxes

146,268

133,948

1,908,263

19,623,140

16,339,102

256,009,663

Land

424,833,012

426,447,459

5,542,505,060

Other current assets
Total current assets

Property and Equipment, at Cost:

Buildings and structures

237,880,857

238,722,465

3,103,468,465

Machinery and equipment

3,087,670

3,118,364

40,282,723

Tools, furniture and fixtures

125,603

121,685

1,638,663

Construction in progress

46,026—600,470

665,973,170

668,409,975

8,688,495,381

Accumulated depreciation(50,887,381)(47,192,408)(663,892,774)

Total property and equipment

615,085,789

621,217,566

8,024,602,607

Subtotal

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

577,168

577,168

7,529,916

1,069,330

1,069,330

13,950,820

19,02531,970248,2126,628,447

6,644,277

86,476,809

Easement

828,095

828,095

10,803,592

Deferred investment corporation bond issuance costs

118,525

140,361

1,546,315¥643,949,522¥646,847,871$8,401,167,935

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

22 Japan Real Estate Investment Corporation

Thousands of yen

U.S. dollars (Note 1)

As of
September 30, 2011

As ofMarch 31, 2011

As of
September 30, 2011¥    639,477¥    968,355$    8,342,829

798,233

853,497

10,414,010

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

16,500,000

25,000,000

215,264,188

Current portion of investment corporation bonds

10,000,000—

130,463,144

Current portion of long-term loans

8,100,000

68,100,000

105,675,147

759,305

872,457

9,906,144

605

4,005

7,893

Accrued expenses
Income taxes payable
Accrued consumption taxes

704,254—

9,187,928

Rent received in advance2,477,592

2,979,949

32,323,453

Provision for loss on disaster

115,571

281,195

1,507,780

2,477

9,597

32,32140,097,518

99,069,057

523,124,836

Investment corporation bonds

45,000,000

55,000,000

587,084,149

Long-term loans

189,750,000

124,300,000

2,475,538,160

Deposits received from tenants

35,788,642

36,130,203

466,909,881

345,639—

4,509,323

Other current liabilities
Total current liabilities
Long-Term Liabilities:

Deferred tax liabilities

297,259

294,294

3,878,135

Total long-term liabilities

271,181,541

215,724,497

3,537,919,649

Total Liabilities

311,279,059

314,793,555

4,061,044,486

324,353,108

324,353,108

4,231,612,629

Asset retirement obligations

NET ASSETS
Unitholders’ capital   Authorized: 2,000,000 units   Issued:
489,200 units as of September 30, 2011 and489,200 units as of March 31, 2011  Retained earnings

8,317,354

7,701,207

108,510,820

Total net assets

332,670,462

332,054,315

4,340,123,449

Total Liabilities and Net Assets¥643,949,522¥646,847,871$8,401,167,935

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

Japan Real Estate Investment Corporation 23

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

Thousands of yen

U.S. dollars (Note 1)

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

For the period
from October 1, 2010
to March 31, 2011

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

Operating Revenues and Expenses
Operating Revenues:
Rental revenues
Non-rental revenues
Gain on sale of properties
Total operating revenues¥22,187,539
95,818546,615
22,829,973¥21,972,096
163,849—
22,135,946$289,465,622
1,250,077
7,131,315
297,847,014

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

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

11,471,604
538,569
187,915
60,95074,201
12,333,241
9,802,704

151,277,073
7,134,819
2,431,802
827,114
749,778
162,420,586
135,426,428

6,013
19,724
4,900
—

7,215
—
8
2

78,458257,326
63,928—1,295,442
471,115
21,836
18,784
8,603,896

1,360,723
470,934
21,716
17,714
7,938,842

16,900,745
6,146,315
284,880
245,069
112,249,133

10,965—143,054—8,614,861

281,195
7,657,647—
112,392,186

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

5,850
(329)
7,652,126
49,081¥ 7,701,207

7,893
4,514,587
107,869,707
641,114$108,510,820

Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Dividends income
Interest on tax refund
Other non-operating revenues
Non-Operating Expenses:
Interest expense
Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance costs
Other non-operating expenses
Ordinary Income
Extraordinary Income:Reversal of provision for loss on disaster
Extraordinary Losses:
Provision for loss on disaster
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, 2011 and March 31, 2011

Thousands of yen

Balance as of September 30, 2010
Cash dividends paid
Net income
Balance as of March 31, 2011
Cash dividends paid
Net income
Balance as of September 30, 2011

Units

Unitholders’ capital

Retained earnings

Total

489,200——
489,200——
489,200¥324,353,108——¥324,353,108——¥324,353,108¥8,183,499(8,134,417)
7,652,126¥7,701,207(7,652,066)
8,268,213¥8,317,354¥332,536,607(8,134,417)
7,652,126¥332,054,315(7,652,066)
8,268,213¥332,670,462

Units

Unitholders’ capital

Retained earnings

Total

489,200——
489,200$4,231,612,629——$4,231,612,629$100,472,378(99,831,264)
107,869,707$108,510,820$4,332,085,007(99,831,264)
107,869,707$4,340,123,449

U.S. dollars (Note 1)

Balance as of March 31, 2011
Cash dividends paid
Net income
Balance as of September 30, 2011

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

24 Japan Real Estate Investment Corporation

Statements of Cash Flows
For the six months ended September 30, 2011 and March 31, 2011

Thousands of yen

U.S. dollars (Note 1)

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

For the period
from October 1, 2010
to March 31, 2011

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

Income before income taxes¥ 8,614,861¥ 7,657,647$112,392,186

Depreciation and amortization

57,837,269

Cash Flows from Operating Activities:
4,433,226

4,286,516

Amortization of investment corporation bond issuance costs

21,836

21,716284,880

Dividends income(19,724)—(257,326)

Interest income(6,013)(7,215)(78,458)

Interest expense

1,766,557

1,831,658

23,047,060(10,965)—(143,054)—

281,195—

3,057

29,34839,888

Reversal of provision for loss on disaster
Provision for loss on disaster
Rental receivables(4,983)2,546(65,016)

Refundable consumption taxes

362,232(362,232)

4,725,804

Prepaid expenses(13,339)(20,134)(174,036)

Trade accounts payable(10,011)

186,316(130,611)

Refundable income taxes

Other payables

11,231(88,081)

146,534

Accrued expenses

700,619(686,992)

9,140,497

Rent received in advance(502,356)

655,500(6,553,904)

Decrease due to sale of tangible fixed asset

2,586,877—

33,749,212

Long-term prepaid expenses

12,944(12,792)

168,881

Other(5,684)28,206(74,167)

17,940,364

13,803,204

234,055,639  Sub-total
Interest and dividend income received
Interest paid

24,9189,229

325,093(1,876,072)(1,805,573)(24,475,838)(1,204,462)

Payments for loss on disaster(92,321)—

Income taxes paid

(4,005)(1,845)(52,253)

15,992,882

12,005,014

208,648,180

Net cash provided by operating activities
Cash Flows from Investing Activities:
Payments of time deposits(13,103,693)(10,936,000)(170,954,908)

Proceeds from time deposits

9,603,693

15,436,000

125,292,808

Purchases of property and equipment(1,313,045)(16,256,769)(17,130,403)(7,012)(1,335,897)(91,493)—(1,040,000)—(1,187,152)(1,087,293)(15,487,961)

Purchases of intangible assets
Payments for lease and guarantee deposits
Repayments of lease and guarantee deposits received

845,590

2,322,904

11,031,845(5,161,619)(12,897,056)(67,340,112)

Proceeds from short-term loans

7,000,000

19,500,000

91,324,201(202,217,873)

Proceeds from lease and guarantee deposits received
Net cash used in investing activities
Cash Flows from Financing Activities:
Repayments of short-term loans(15,500,000)(23,500,000)

Proceeds from long-term loans

66,500,000

17,000,000

867,579,909

Repayments of long-term loans(61,050,000)(3,050,000)(796,477,495)

—

(159)

—

(7,649,238)(8,135,759)(99,794,367)(10,699,238)

1,814,080(139,585,626)

132,025922,038

1,722,441

Cash and Cash Equivalents at Beginning of Period

11,234,155

10,312,117

146,564,326

Cash and Cash Equivalents at End of Period¥11,366,180¥11,234,155$148,286,767

Payments of investment corporation bond issuance costs
Dividends to unitholders
Net cash (used in) provided by financing activities
Net Increase in Cash and Cash Equivalents

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

Japan Real Estate Investment Corporation 25

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

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Japan Real Estate Investment Corporation (the “Company”) is a real estate investment corporation formed to own and invest primarily in a
portfolio of office properties. The Company is externally managed by a licensed asset management company, Japan Real Estate AssetManagement Co., Ltd. (“J-Rea”). J-Rea is currently owned 63% by Mitsubishi Estate Co., Ltd. (“MEC”), 27% by The Dai-ichi MutualLife Insurance Company (currently renamed The Dai-ichi Life Insurance Company, Limited, “DL”) and 10% by Mitsui & Co., Ltd.
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, Tokio Marine &Nichido Fire Insurance Co., Ltd. (“TMN”) and DL under the Law Concerning Investment Trusts and Investment Corporations of Japan,
or the Investment Trust Law.
On September 10, 2001, the Company commenced operations when the Company was listed on the Tokyo Stock Exchange as oneof the first real estate investment corporations in Japan (so-called “J-REITs”). The Company issued 160,000 units at a price of ¥506,625($6,610), generating gross proceeds of ¥81,060 million ($1,057,534 thousand) (Note). Since then, up until September 30, 2011, theCompany had issued 489,200 units as a total resulting in total unitholders’ capital of ¥324,353 million ($4,231,613 thousand) (Note).
As of March 31, 2011, the Company owned a portfolio of 56 office properties concerning an aggregate of approximately 584,982 square
meters of leasable space.
Note: The foreign exchange rate of ¥76.65=US$1.00, as of March 31, 2011, has been used for translation.
Basis of presenting financial statements
The Company maintains its accounting records and prepares its financial statements in accordance with accounting principles generally
accepted in Japan (“Japanese GAAP”), including provisions set forth in the Investment Trust Law, the Corporation Law of Japan, theFinancial Instruments and Exchange Law of Japan and the related regulations, which are different in certain respects as to the applicationand disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which were preparedin accordance with Japanese GAAP and were presented in the Securities Report of the Company filed with the Kanto Local Finance Bureau.
In preparing the accompanying financial statements, certain reclassifications and modifications have been made to the financial statements
issued domestically in order to present them in a format that is more familiar to readers outside Japan. In addition, the notes to financial
statements include information that might not be required under Japanese GAAP but is presented herein as additional information.
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥76.65=US$1.00, the foreignexchange rate on September 30, 2011, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese
yen has been or could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.
As permitted under the Japanese Financial Instruments and Exchange Law, amounts of less than one million yen have been omitted. As a result, the totals shown in the accompanying financial statements do not necessarily agree with the sum of the individual amounts.

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

26 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 amountof its fixed assets may not be recoverable. According to the standard set by the Accounting Standards Board of Japan, companies are
required to recognize an impairment loss in their statement of income if certain indicators of asset impairment exist and the book value ofan asset exceeds the undiscounted sum of future cash flows of the asset. The standard states that impairment losses should be measured as
the excess of the book value over the higher of (1) the fair market value of the asset, net of disposition costs and (2) the present value of
future cash flows arising ongoing utilization of the asset and from disposal after asset use. The standard covers land, factories, buildings andother forms of property, plant and equipment as well as intangible assets. Fixed assets are grouped at the lowest level for which there is identifiable cash flows that are independent of cash flows of other groups of assets.
Intangible assets
Intangible assets primarily consist of leasehold rights and easement, which are started at cost. Amortization of a term leasehold interest forbusiness use is calculated by the straight-line method based on the period of agreement.
Provision for loss on disaster
The Company recorded “Provision for loss on disaster” incurred as a result of the Great East Japan Earthquake, which occurred on March 11, 2011.
That includes the reasonably estimated sum to restore the damaged properties (interiors, etc.) to their original state.
Deferred charges
Deferred charges include investment corporation bond issuance costs and new unit issuance costs.
Investment corporation bond issuance costs are amortized using the straight-line method over the amortization periods.
Revenue recognition
Revenues from leasing of office space are recognized as rent accrued over the lease period.
Taxes on property and equipment
Property and equipment is subject to property taxes and city planning taxes on a calendar year basis. These taxes are generally charged toincome during the period. The sellers of the properties were liable for property taxes for the calendar year including the period from thedate of purchase by the Company through the end of the year since the taxes are imposed on the owner registered in the record as ofJanuary 1 based on the assessment made by the local government. The Company paid the amount equivalent to the property taxes to thesellers applicable to the period since acquisition and included the amount equivalent to the taxes in the purchase price of each property andcapitalized as cost of the property.
Consumption taxes
Consumption taxes withheld and consumption taxes paid are not included in the statements of income. The consumption taxes paid are
generally offset against the balance of consumption taxes withheld. As such, the excess of payments over amounts withheld are included in
the current assets and the excess of amounts withheld over payments are included in the current liabilities.
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks and short-term investments which are highly liquid, readily convertible to cash and with insignificant risk of price fluctuation, with original maturity of three months or less.
(Additional information)
Effective April 1, 2011, the Company adopted the Accounting Standard for Accounting Changes and Error Corrections (The AccountingStandards Board of Japan (hereinafter referred to ASBJ) Statement No. 24, December 4, 2009) and the Guidance on Accounting Standard
for Accounting Changes and Error Corrections (ASBJ Guidance No. 24, December 4, 2009).

Japan Real Estate Investment Corporation 27

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

U.S. dollars
As of September 30, 2011

Book value

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

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

10,000,000(1) Cash and bank deposits

DifferenceBook value

Fair value—$  252,657,282$  252,657,282

16,500,000—

215,264,188

215,264,188—

10,076,100

76,100130,463,144

131,455,969

992,825¥­

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

8,100,000

8,113,355

13,355

105,675,147

105,849,389

174,242(5) Investment corporation bonds

45,000,000

45,804,000

804,000

587,084,149

597,573,386

10,489,237(6) Long-term loans

189,750,000

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

2,475,538,160

2,458,815,792(16,722,368)

28 Japan Real Estate Investment Corporation

Thousands of yen
As of March 31, 2011

(1) Cash and bank deposits

Book value

Fair value

Difference¥ 15,734,155¥ 15,734,155¥      —

(2) Short-term loans

25,000,000

25,000,000—(3) Current portion of long-term loans

68,100,000

68,241,360

141,360(4) Investment corporation bonds

55,000,000

55,387,950

387,950(5) Long-term loans

124,300,000

125,886,120

1,586,120Note 1: Measurement of fair value of financial instruments(1) Cash and bank deposits
		 Due to short tenor, the book value of these assets are reasonable approximation of the present value of these assets and hence used as their fair value.
(2) Short-term loans		Since these loans’ tenor is short and rates are reset at short interval, the book values of these liabilities are reasonable approximation of their present value and hence
used as their fair values.
(3) Current portion of investment corporation bonds and (5) investment corporation bonds		Their fair values are based on the values published by a financial data provider.
(4) Current portion of long-term loans and (6) long-term loans		The fair values of these liabilities are calculated by discounting the aggregated amounts of the principals and the interests of the loan by the rates that are reasonably
estimated to be applicable if the Company refinances the existing loans for the remaining period to maturity under the prevailing market conditions at September 30,
2011 and March 31, 2011.
Note 2: Financial instruments whose fair values cannot be reliably measured.
Thousands of yen

U.S. dollars

As of September 30, 2011

As of March 31, 2011

As of September 30, 2011

(1) Non-listed stock (*1)¥   577,168¥   577,168$  7,529,916(2) Deposits received from tenants (*2)

35,788,642

36,130,203

466,909,881(*1) With regard to non-listed stocks which do not have quoted market price in active market and whose cash flows are not reasonably estimated, their fair value cannot be
reliably measured and therefore presented at their book value.
(*2) With regard to deposits received from tenants, which do not have quoted market price in active market, and their tenor cannot be reasonably estimated, their cash flows
cannot be reliably measured and therefore presented at their book value.
Note 3: Redemption schedule for monetary claim after the closing dateThousands of yen

U.S. dollars
As of September 30, 2011

Cash andbank deposits

1 yearor less

1 to
2 years

2 to
3 years

3 to
4 years

4 to
5 yearsOver
5 years

1 yearor less

1 to
2 years

2 to
3 years

3 to
4 years

4 to
5 yearsOver
5 years¥19,366,180

¥­—

¥­—

¥­—

¥­—

¥­—

$252,657,282

$­—

$­—

$­—

$­—

$­—

Thousands of yen
As of March 31, 2011

Cash andbank deposits

1 yearor less

1 to
2 years

2 to
3 years

3 to
4 years

4 to
5 yearsOver
5 years¥15,734,155

¥—

¥—

¥—

¥—

¥—

Japan Real Estate Investment Corporation 29

Note 4: Repayment schedule for investment corporation bonds, long-term loans and other interest-bearing debt after the closing dateThousands of yen
As of September 30, 2011
1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years

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

10,000,000—

15,000,000

20,000,000—

10,000,000

Long-term loans

8,100,000

70,100,000

13,100,000

16,600,000

30,100,000

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

Total

U.S. dollars
As of September 30, 2011
1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years

Short-term loans$215,264,188$         —$         —$         —$         —$         —Investment corporation bonds

130,463,144—

195,694,716

260,926,288—

130,463,144

Long-term loans

105,675,147

914,546,641

170,906,719

216,568,819

392,694,064

780,821,918

Total$451,402,479$914,546,641$366,601,435$477,495,108$392,694,064$911,285,062

Thousands of yen
As of March 31, 2011
1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years¥25,000,000¥       —

¥       —

¥       —

¥       —

¥       —

—10,000,000—

15,000,000

20,000,000

10,000,000

Long-term loans

68,100,000

50,100,000

34,100,000

2,100,000

14,600,000

23,400,000

Total¥93,100,000¥60,100,000¥34,100,000¥17,100,000¥34,600,000¥33,400,000

Short-term loans
Investment corporation bonds

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

U.S. dollars
As of September 30, 2011

As of March 31, 2011

Acquisition Costs

Book Value

Acquisition Costs

Book Value

Acquisition Costs

Book ValueLand¥319,465,931¥319,465,931¥319,465,931¥319,465,931$4,167,852,984$4,167,852,984

Buildings and structures

190,174,858

Accumulated depreciation
Machinery and equipment(40,321,390)

2,481,081,003

189,818,577
149,853,468

2,302,347(37,122,350)

152,696,226

1,955,035,468

Accumulated depreciation(1,119,828)

Tools, furniture and fixtures

113,324

Accumulated depreciation(73,028)

40,296(67,776)

42,562(952,750)

46,02646,026——600,470

600,470

Land in trust

105,367,081

105,367,081

106,981,528

106,981,528

1,374,652,077

1,374,652,077

Buildings and structures in trust

47,705,998

Accumulated depreciation(8,864,594)

40,468,589(115,650,289)

Machinery and equipment in trust

785,323

Accumulated depreciation(503,515)

Construction in progress

Tools, furniture and fixtures in trust
Accumulated depreciation
Total

1,182,518(526,045,536)
30,037,144

2,305,014(1,059,108)

1,245,905(8,435,299)

281,807(503,157)

525,718

506,737,173

10,245,578

813,349

12,27815,427,513

622,387,461

48,903,888
38,841,404(14,609,631)
1,478,468

110,338

310,192(6,569,023)

3,676,555

160,195

11,346(5,024)

7,254(4,715)

6,630(65,546)

94,649¥615,085,789¥615,085,789¥621,217,566¥621,217,566$8,024,602,607$8,024,602,607

The compressed amount of tangible assets with government grants under the Corporation Tax Law of Japan was ¥50 million ($653 thousand) at September 30, 2011 and ¥50 million ($653 thousand) at March 31, 2011.

30 Japan Real Estate Investment Corporation

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

U.S. dollars

As of September 30, 2011

As of March 31, 2011

As of September 30, 2011$        —¥       —

¥ 2,000,000

0.38% unsecured loan from a bank, due on August 1, 2011—

1,500,000—

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

4,000,000

4,000,000

52,185,258

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

1,000,000—

13,046,314

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

1,500,000—

19,569,472—

2,000,000—

0.38% unsecured loan from a bank, due on August 1, 2011—

1,500,000—

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

1,500,000—

19,569,472

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

0.48% unsecured loan from a bank, due on June 1, 2011

0.48% unsecured loan from a bank, due on September 1, 2011

1,000,000—

13,046,314

0.48% unsecured loan from a trust bank, due on September 1, 2011—

1,500,000—

0.38% unsecured loan from a trust bank, due on August 1, 2011—

1,500,000—

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

1,500,000—

19,569,472

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

500,000—

6,523,157

0.38% unsecured loan from a trust bank, due on December 21, 2011—

5,000,000—

0.38% unsecured loan from a trust bank, due on November 1, 2011

1,500,000

1,500,000

19,569,472—

500,000—

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

1,000,000

1,000,000

13,046,314

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

1,000,000

1,000,000

13,046,314

0.38% unsecured loan from a trust bank, due on September 26, 2011

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

2,000,000

2,000,000

26,092,629¥16,500,000¥25,000,000$215,264,188

The Company has commitment lines of ¥43,000 million ($560,992 thousand) with four financial institutions to reduce a refinancing risk.
The unused amount of such commitment lines was ¥43,000 million ($560,992 thousand) at September 30, 2011.

6. INVESTMENT CORPORATION BONDS Including current portion of
Investment corporation Bonds
Details of total investment corporation bonds outstanding are summarized as follows:
As of September 30, 2011

As of September 30, 2011

As of March 31, 2011

Amount(thousands of yen)Interest rate(%)

Amount(thousands of yen)Interest rate(%)

Amount(U.S. dollars)

Unsecured bond due on September 29, 2025

¥10,000,000

2.56%¥10,000,000

2.56%$130,463,144

Unsecured bond due on June 18, 2012

10,000,000

1.67%

10,000,000

1.67%

130,463,144

Unsecured bond due on June 18, 2014

15,000,000

1.91%

15,000,000

1.91%

195,694,716

Unsecured bond due on April 23, 2015

10,000,000

1.26%

10,000,000

1.26%

130,463,144

Unsecured bond due on July 23, 2015

10,000,000

1.05%

10,000,000

1.05%

130,463,144

Total¥55,000,000—¥55,000,000—$717,547,293

Japan Real Estate Investment Corporation 31

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

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

U.S. dollars

As of September 30, 2011

As of March 31, 2011

As of September 30, 2011¥        ­—

¥  5,000,000$         ­
—1.33125% unsecured loan from another financial institution,
due on November 1, 2011

5,000,000

5,000,000

65,231,572

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

10,000,000—

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

22,000,000—

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

24,000,000—

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

1,000,000—

13,046,314

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

2,000,000

2,000,000

26,092,629

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

100,000

100,000

1,304,631

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

2,000,000

2,000,000

26,092,629

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

5,000,000

5,000,000

65,231,572

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

5,000,000

5,000,000

65,231,572

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

1,500,000

1,500,000

19,569,472

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

1,000,000

1,000,000

13,046,314

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

2,000,000

2,000,000

26,092,629

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

1,000,000—

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

2,000,000

2,000,000

26,092,629

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

2,000,000—

26,092,629

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

5,000,000

5,000,000

65,231,572

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

3,000,000

3,000,000

39,138,943

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

5,000,000

5,000,000

65,231,572

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

3,000,000

3,000,000

39,138,943

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

5,000,000

5,000,000

65,231,572

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

2,000,000

2,000,000

26,092,629

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

5,000,000

5,000,000

65,231,572

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

5,000,000

5,000,000

65,231,572

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

5,000,000

5,000,000

65,231,572

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

11,000,000

11,000,000

143,509,459

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

2,000,000

2,000,000

26,092,629

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

2,000,000

2,000,000

26,092,629

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

5,000,000

5,000,000

65,231,572

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

2,000,000

2,000,000

26,092,629

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

3,000,000

3,000,000

39,138,943

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

71,754,729

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

2,000,000

2,000,000

26,092,629

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

1,750,000

1,800,000

22,831,050

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

2,000,000

2,000,000

26,092,629

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

1,000,000

1,000,000

13,046,314

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

5,000,000

5,000,000

65,231,572

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

5,000,000

5,000,000

65,231,572

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

2,000,000

2,000,000

26,092,629

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

5,000,000—

65,231,572

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

5,000,000—

65,231,572

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

12,000,000—

156,555,773

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

10,000,000—

130,463,144

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

1,000,000

1,000,000

13,046,314

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

1,000,000

1,000,000

13,046,314

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

1,000,000

1,000,000

13,046,314

32 Japan Real Estate Investment Corporation

Thousands of yen
As of September 30, 2011

U.S. dollars

As of March 31, 2011

As of September 30, 2011

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

1,000,000

1,000,000

13,046,314

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

2,000,000

2,000,000

26,092,629

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

3,000,000

3,000,000

39,138,943

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

2,000,000

2,000,000

26,092,629

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

3,000,000

3,000,000

39,138,943

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

3,000,000

3,000,000

39,138,943

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

2,000,000

2,000,000

26,092,629

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

2,000,000

2,000,000

26,092,629

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

2,000,000

2,000,000

26,092,629

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

24,000,000—

313,111,546

3,000,000—

39,138,943

197,850,000

192,400,000

2,581,213,307

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

8,100,000

68,100,000

105,675,147¥189,750,000¥124,300,000$2,475,538,160

Less: current portion of long-term loans
Total(*) Repayments of principal shall be made by installments of ¥50 million for each 6 month period and ¥1,350 million on the final principal repayment date.

8. NET ASSETSThe Company is required to maintain net assets of at least ¥50 million ($652 thousand), as required pursuant to the Investment Trust Law.

9. INCOME TAXESThe Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation Measures
Law of Japan, 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 excessof 90% of its earnings available for dividend for the fiscal period as stipulated by Article 67-15 of the STML. Based on the distribution policy provided by Article 32-2 of the Articles of Incorporation, the Company made a dividend distribution in the amount of ¥7,753 million($101,159 thousand) subsequent to September 30, 2011, which is the multiple number of units up to 100% of retained earnings remaining
after deducting ¥533 million ($6,956 thousand) of reserve for advanced depreciation of non-current asset associated with the gain on salesof land, as stipulated under the Special Provisions for Taxation in the case of Advanced Acquisition of Land, etc. in 2009 and 2010 (Article
66-2, Paragraph 1 of the STML), and ¥30 million ($396 thousand) out of retained earnings at the beginning of this period. The Company
will not distribute the dividends in excess of retained earnings under Article 32-3 of the Articles of Incorporation.
The significant components of deferred tax assets and liabilities as of September 30, 2011 and March 31, 2011 were as follows:
Thousands of yen

U.S. dollars

As of September 30, 2011

As of March 31, 2011

As of September 30, 2011

Deferred tax assets:¥     —¥  403$      —

Amortization of a term leasehold interest

8,301

2,075

108,301

Asset retirement obligations

1,553

387

20,268

9,854

2,866

128,568

Valuation allowance(9,854)(2,462)(128,568)

Total deferred tax assets

—

403

—

¥     —¥  403$      —

Reserve for advanced depreciation of non-current assets¥345,639¥   ­—$4,509,323

Total deferred tax liabilities

345,639­—

4,509,323¥345,639¥   ­—$4,509,323

Accrued enterprise tax

Net deferred tax assets
Deferred tax liabilities:

Net deferred tax liabilities

Japan Real Estate Investment Corporation 33

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

Statutory tax rate
Deductible dividend distribution

For the period from October 1, 2010
to March 31, 201139.33%

39.33%(35.40%)(39.30%)Change in valuation allowance

0.09%

0.03%

Others

0.01%

0.01%

4.02%

0.07%

Effective tax rate

Tax rate change after the closing dateOn December 2, 2011, two tax bills were promulgated in the official gazette: the “Reform Bill for Partial Revision of Income Tax Law, etc.
in Response to the Changing Economic Structure”, which includes approximately 5% reduction of the effective corporate tax rate, and the“Special Measures to Secure the Funds to Realize the Restoration of the Damages following the Great East Japan Earthquake”, which
includes the introduction of 10% surtax on the corporate national tax for 3 years. This results in a change of the statutory tax rate applicable to the deferred tax assets and deferred tax liabilities arising from the temporary differences that are expected to reverse from the period
ending September 30, 2012 (the 22nd fiscal period) through the period ending March 31, 2015 (the 27th fiscal period) from 39.33% as of
September 30, 2011 to 36.59%, and with respect to the temporary differences that are expected to reverse on or after the period ending
September 30, 2015 (the 28th fiscal period) from 39.33% to 34.16%. These changes in applicable tax rates will result in the reduction ofdeferred tax liabilities by ¥45,434 thousand ($593 thousand) and corresponding amount of income taxes deferred in the next fiscal period.

10. RELATED PARTY TRANSACTIONS
For the six months ended September 30, 2011 and March 31, 2011
For the period from April 1, 2011 to September 30, 2011
(1) Parent Company and Major Corporation Unitholders“Not applicable”(2) Subsidiaries“Not applicable”(3) Sister Companies“Not applicable”(4) Directors and Major Individual Unitholders“Not applicable”
For the period from October 1, 2010 to March 31, 2011
(1) Parent Company and Major Corporation Unitholders“Not applicable”(2) Subsidiaries“Not applicable”(3) Sister Companies“Not applicable”(4) Directors and Major Individual Unitholders“Not applicable”

11. SEGMENT INFORMATION
For the six months ended September 30, 2011 and March 31, 2011
Since the Company has been engaged in real-estate leasing business using a single segment, segment information has been omitted.

34 Japan Real Estate Investment Corporation

Information about products and services
Since revenues from external customers for single segment of similar products and services accounted for more than 90% of total operating
revenues, information about products and services has been omitted.
Information about geographic area
(1) Revenues	Since 100% of the total operating revenues were generated from external customers within Japan, geographical breakdown of revenues
has been omitted.
(2) Property and equipment
	Since 100% of total property and equipment on the balance sheet are located within Japan, geographical breakdown of such property
and equipment has been omitted.
Information about major clients
Since no single external client represents 10% or more of the Company’s total operating revenues, information about major clients has been
omitted.

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

U.S. dollars

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

For the period from October 1, 2010
to March 31, 2011

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

$3,839,453¥294,294¥     —

Increase in the tangible fixed assets—

293,309—

Adjustment required over the period

2,965

984

38,682¥297,259¥294,294$3,878,135

Balance at the beginning of the period

Balance at the end of the period

13. INVESTMENT AND RENTAL PROPERTY
For the six months ended September 30, 2011 and March 31, 2011
The Company owns primarily a portfolio of office properties in Tokyo and other prefectures in order to gain rental revenue from them.
The book values on balance sheets as of September 30, 2011 and as of March 31, 2011 and the fair value as of September 30, 2011
are as follows:
Thousands of yen
Book value

Fair value

As of March 31, 2011

Change during period(*1)

As of September 30, 2011

As of September 30, 2011

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

U.S. dollars
Book value

Fair value

As of March 31, 2011

Change during period(*1)

As of September 30, 2011

As of September 30, 2011

$8,202,086,623$(80,203,615)$8,121,883,008$8,276,020,874

Japan Real Estate Investment Corporation 35

Thousands of yen
Book value

Fair value

As of September 30, 2010

Change during period(*2)

As of March 31, 2011

As of March 31, 2011

¥614,593,555¥14,096,384¥628,689,939¥642,220,000

Note 1: Book value on balance sheet means the acquisition cost less accumulated depreciation.
Note 2: Significant changes(*1) For the period ended September 30, 2011, the major reasons of decrease are sale of Takanawadai building (¥2,586,877 thousand or $33,749 thousand) and the depreciation.
(*2) For the period ended March 31, 2011, the major reason of increase is acquisition of Osaki Front Tower (¥12,685,891 thousand) and Kyodo Building (Kayabacho
2Chome) (¥4,436,622 thousand). The major reason of decrease is the depreciation.
Note 3: 	Fair values as of September 30, 2011 and as of March 31, 2011 are defined as the appraised values provided by external qualified professional appraiser.
Regarding Takanawadai Building, the amount of the sales price as of April 1, 2011 is composed as substitute for fair value as of March 31, 2011.

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

Net assets at period end per unit
Net income per unit

U.S. dollars

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

For the period from October 1, 2010
to March 31, 2011

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

¥680,029¥678,770$8,872

16,901

15,642220

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.

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

U.S. dollars

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

For the period from October 1, 2010
to March 31, 2011

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

$290,715,699

Property-Related Revenues¥22,283,358¥22,135,946 Rental Revenues

22,187,539

21,972,096

289,465,622  Rental revenues

16,950,216

16,668,011

221,137,852   Common service charges

3,340,801

3,303,526

43,585,150

554,352

562,495

7,232,256

1,342,169

1,438,063

17,510,363
1,250,077  Parking revenues   Other rental revenues
Non-Rental Revenues

95,818

163,849  Cancellation charges

43,684

122,261

569,916   Other miscellaneous revenues

52,134

41,587680,161¥11,595,387¥11,471,604$151,277,073

2,573,006

2,626,467

33,568,251

Property-Related Expenses   Property management expenses  Utilities expenses

1,686,108

1,664,458

21,997,508   Property and other taxes

2,081,803

1,878,397

27,159,863  Casualty insurance

47,96348,052625,752  Repairing expenses

585,288

833,405

7,635,858

4,433,226

4,286,516

57,837,269

187,989

134,306

2,452,572¥10,687,970¥10,664,342$139,438,627  Depreciation   Other rental expenses
Property-Related Profits

36 Japan Real Estate Investment Corporation

16. BREAKDOWN OF GAIN ON SALE OF PROPERTIESFor the six months ended September 30, 2011 and March 31, 2011
Thousands of yen
For the period from April 1, 2011
to September 30, 2011

U.S. dollars

For the period from October 1, 2010
to March 31, 2011

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

Takanawadai Building Revenue from sale of property¥3,160,000¥—$41,226,354

2,586,877—

33,749,212

26,507—345,826¥  546,615¥—$ 7,131,315

Cost of property
Other sales expenses Gain on sale of property

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

U.S. dollars

As of September 30, 2011

As of March 31, 2011

As of September 30, 2011¥15,363,085¥11,670,451$200,431,642

Cash and deposits with banks held in trust

4,003,095

4,063,704

52,225,640

Time deposits with maturities ofmore than three months(8,000,000)(4,500,000)(104,370,515)¥11,366,180¥11,234,155$148,286,767

Cash and deposits with banks

Cash and cash equivalents

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

U.S. dollars

As of September 30, 2011

As of March 31, 2011

As of September 30, 2011

$221,313,048

Due within one year

¥16,963,645¥17,395,104

Due after one year

26,244,552

31,115,669

342,394,686

Total¥43,208,197¥48,510,774$563,707,734

19. SUBSEQUENT EVENTSFor the six months ended September 30, 2011
Shelf registration for the issuance of investment units
On November 21, 2011, the Company submitted shelf registration statements for the issuance of investment units to the commissioner ofthe Kanto Local Finance Bureau. Brief details are follows.
1. Type of securities to be offered: Investment units of the Company
2. Planned issuance period: 	One year commencing from the effective date of the shelf registration statement(From November 29, 2011 to November 28, 2012)
3. Planned amount of issuance:
Up to ¥40,700 million ($530,985 thousand)
4. Specific use of proceeds of issue: Repayment of existing loans

Japan Real Estate Investment Corporation 37

38 Japan Real Estate Investment Corporation

Profile

Corporate Data
As of September 30, 2011

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

Executives

Transfer Agent

Executive Director:

Noritada Terasawa

The Sumitomo Trust & Banking Co., Ltd.

Supervisory Directors:

Kenji Kusakabe

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

Tomohiro Okanoya

Auditors
Paid-in Capital

Ernst & Young ShinNihon LLC¥324,353,108,000

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

Contents
Financial Highlights

p. 1

Top 10 Unitholdersp. 1

Unit Price Performancep. 1

Number of Units Outstanding

Incorporation

489,200

May 11, 2001

Number of Unitholders

Executive Office

13,504

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

Stock Listing

The Strengths of Japan Real Estate
Investment Corporation

p. 2

Portfolio Highlights

p. 3

Property Transfer and Internal Reserves

p. 4

Subsequent Events

p. 5

History after IPO

p. 6

To Our Unitholders

p. 8

The Portfolio of Japan Real Estate
Investment Corporation

p.12

Overview of Portfolio Properties

p.15

Financial Section

p.21

Corporate Data

p39

Tokyo Stock Exchange

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

Securities CodePlanning Department8952

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

Type of Investment Corporation

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

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

Japan Real Estate Investment Corporation 39

Japan Real Estate Investment Corporation

J-REITSEPTEMBER 2011 SEMIANNUAL REPORT

10 th
ANNIVERSARYJ A P A N R E A L E S TAT E I N V E S T M E N T C O R P O R AT I O N

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

SEPTEMBER
2011

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