May 18, 2004
JAPAN REAL ESTATE INVESTMENT CORPORATIONANNOUNCEMENT OF FIFTH FISCAL PERIOD RESULTS
1. Summary of Financial Results
In the fifth fiscal period (six months ended March 31, 2004), Japan Real Estate
Investment Corporation (“JRE”) recorded gross revenues of 9,560 million yen, up 6.6
percent from the previous period. Operating profits rose 11.4 percent, to 4,341 million
yen, and income before income taxes increased 11.6 percent, to 3,803 million yen. Net
income was up 11.6 percent, to 3,802 million yen.
JRE’s policy with regard to profit appropriation is to distribute dividends ofapproximately 100 percent of taxable income, in accordance with Article 67-15 of theSpecial Taxation Measures Law of Japan applicable to J-REITs. For the period underreview, we declared a cash dividend of 14,602 yen per unit.
As of March 31, 2004, JRE’s total asset balance was 244,523 million yen andits net worth was 137,250 million yen, or 527,077 yen per unit. On its balance sheet, JRE
had interest-bearing debt of 87,000 million yen.

2. Results of Operations(1) Property Management and Acquisition
During the period under review, signs of an export-led economic recovery appeared
against a backdrop of improved business confidence in the United States and around theworld. As for Japanese domestic demand, a rally in corporate capital investment led to ameasured improvement in business confidence, despite an ongoing harsh employment
climate.
In the market for leased office space, the so-called “Period 2003 Problem,”
typified by a sudden increase in the supply of newly constructed office buildings incentral Tokyo, reached its peak, and signs of a recovery in Tokyo have appeared.
Meanwhile, demand for office floor space in regional urban centers remains weak as aresult of the integration and downsizing of offices. In general, therefore, the operating
environment remains difficult.

1Facing these conditions, JRE maintained a high occupancy rate of 94.8 percent(as of March 31, 2004) by (1) acquiring top-level properties and upgrading building
facilities through optimal refurbishment in order to maintain and improve functions; (2)developing finely tuned building management policies from the perspective of tenants
while undertaking vigorous sales activities; and (3) raising its emphasis on fixed-term andlong-term lease contracts. In the period under review, our occupancy rate surpassed the
94 percent mark, and the success of our vigorous sales activities was translated into
tangible financial gains. This was despite a temporary fall in occupancy to 92.5 percent,due to the cancellation of contract with Nippon Ericsson K.K., JRE’s third largest tenant,as announced in an earlier press release.
JRE is working to reduce costs with a view to further enhancing profit stability.
Our basic policy is to lower property management fees and utility expenses by 5 percent
within the first three years of new property acquisitions. Twenty-seven properties
acquired before our fourth fiscal period are subject to this cost reduction program.
Despite being midway through the program period, we have already reduced costs of
those properties by 10.0 percent per year, based on the results of our fourth and fifthbusiness periods.
Regarding the property market, bad-debt write-offs by financial institutions andthe adoption of asset-impairment accounting have helped sustain active property sales. At
the same time, in the face of difficult fund-management conditions stemming from low
interest rates, such entities as private funds, pension funds, and qualified institutional
investors, are beginning to turn their attention to the acquisition of real estate, besides
JRE and other listed Real Estate Investment Trusts (REITs).
In an increasingly competitive market, JRE uses its own information network tocollect data on the sales of numerous properties. We have made acquisitions based on
meticulous examination of these data, and after determining optimal prices from many
perspectives, including profit stability of the entire company and expected rate of return.
On October 9, 2003, we acquired the Jingumae Media Square Building (12,200 million
yen investment). On November 14, we took an 11.11 percent ownership share in Ebisu
Neonato (3,740 million yen). On December 26, we acquired an additional 53.83 percent
ownership share in the Fukusuke Sakaisuji-honmachi Building (1,900 million yen),2

bringing our ownership to 100 percent. On March 24, 2004, we purchased the Nippon
Brunswick Building (6,670 million yen), and on March 25 we took a 27.085 percent
ownership share with a joint leasehold interest of 25.18 percent in the NHK Hiroshima
Broadcasting Center Building (1,320 million yen). As of March 31, 2004, JRE’s assets
consisted of 36 office buildings, with a total value of 218,437 million yen, net rentablefloor area of 273,157 m2 (approximately 83,000 tsubo), and a total of 444 tenants.

(2) Issue of Additional Units and Other Fund-Raising Activities
During the period under review, JRE became the first Japanese Real Estate Investment
Trust (J-REIT) to make a second additional public offering. This offer of 35,000 units,
made on October 24, 2003, generated approximately 21,295 million yen, increasing thenumber of issued units to 260,400, with a total value of 133,448 million yen.
Flexible capital procurement is necessary when acquiring property. By
increasing capital and establishing a sound financial base, we can ensure ample
borrowing reserves to further expand our operating asset base. While issuing additional
units is vital for the further growth of JRE, we must be aware of the appropriate timing
and scale of such issues, taking into account financial market conditions and our own
plans for property acquisitions.
To secure flexibility in capital procurement, JRE took out a short-term loan of
12 billion yen to finance its purchase of the Jingumae Media Square Building on October
9, 2003. This temporarily raised the Corporation’s short-term borrowings to 19 billion
yen. Following the additional unit issue on October 25, 2003, however, we repaid 14
billion yen of such borrowings as of October 31 and November 28. In March 2004, wethen borrowed 13 billion yen to acquire the Nippon Brunswick Building and the Yoyogi
1-chome Building. This figure included a 4 billion yen floating-rate short-term loan,
taken out to ensure flexibility, and a 9 billion yen fixed-rate long-term loan, to prepare forthe risk of future interest rate hikes and the potential need for refinancing. When
procuring capital, we place high priority on spreading repayment dates and long-term
fixation of interest-bearing debt. On March 31, 2004, JRE had total borrowings of 42billion yen (including 33 billion yen in long-term loans) and outstanding corporate bonds
valued at 45 billion yen.

3

JRE has received the following credit ratings.
Rating Agency

Issuer Credit RatingStandard & Poor’s

Long-term: A+; Short-term: A-1; Outlook:
StableMoody’s Investors Service

Rating: A2; Outlook: Positive** On January 26, 2004, Moody’s Investors Service amended its outlook for JRE’s issuer
credit rating and rating for unsecured long-term debt (A2) to positive from stable.

3. Outlook(1) Operating Environment
Although modest recovery in the Japanese economy is expected to continue, the risk offurther destabilization of the economy cannot be disregarded, due to the grip of prolonged
deflation on financial markets.
Despite signs of improvement in occupancy rates in central Tokyo, rent levelsin the office building market remain in an adjustment phase, and so it is difficult to say
whether or not they have hit bottom. As for regional urban centers, we expect the decline
in demand for office floor space to continue in the immediate future, and so genuine
recovery in the office building rental market will take some time.
Meanwhile, tenants have stringent demands not only with respect to location,building quality, and facilities, but also for high-quality building management andvalue-added services. For these reasons, tenants have become more and more
discriminating when selecting buildings. To meet these needs, suppliers must provide
services that correctly and promptly reflect the needs of tenants and deliver added valuethat differentiates their buildings from the competition.
In the real estate market, properties will continue being sold to settle
non-performing loans and for asset impairment accounting purposes, due to the ongoingdeflationary climate. In light of recent increases in demand, JRE believes that now is thetime when its true operational capabilities will be called to account.

(2) Property Management

4

Although we expect the office building rental market to soften, JRE is adopting thefollowing management policies in order to maintain and improve earnings.

(i) Strengthen relationships of trust with existing tenants
As of March 31, 2004, JRE had contracts with nine property management companies.
Most of these companies were already managing their respective buildings before they
were acquired by JRE, and so have built relationships of trust with their tenants.
Strengthening these relationships by anticipating tenants’ needs and providing tailoredservices helps increase tenant satisfaction, prevent cancellation of contracts, reduceturnover, and curb demands for reduced rents.

(ii) Fill vacancies promptly
In cooperation with the property management companies mentioned above, JRE actively
seeks the best tenants for each property, based on location and features, in order to fillcurrent and anticipated vacancies as rapidly as possible. We are also working to uncoveradditional demand for office floor space among our existing tenants.

(iii) Promote fixed-term and long-term lease contracts
As a means of assuring future revenues, JRE is gradually shifting to fixed-term andlong-term contracts.

(iv) Reduce management costs
JRE has introduced sound competitive principles for its nine property managementcompanies to follow. Those companies are also revamping their management systems andcost structures. Our target for properties owned as of March 31, 2004, is to reduce thesum of property management fees and utility expenses by 5 percent within three years ofacquisition.

(3) Property Acquisition
JRE has adopted the following policies for acquiring properties in order to improveearnings through steady asset expansion increase and growth.

5(i) To access important information quickly, JRE is enhancing its property information
channels, including strengthening its relationship with building owners, with whom it has
previously conducted business. We are also working to develop new channels.

(ii) In its acquisition activities, JRE will continue to meticulously monitor and examine
economic, physical, and legal factors, including rights-related issues. We will also takebusiness conditions into account when selecting properties. With regard to the structureof buildings, we require buildings to meet or exceed new earthquake-resistant standards,
and we are targeting properties capable of maintaining a competitive edge over the
medium and long terms.

(iii) JRE’s general target for regional diversity of property ownership, in accordance with
its acquisition policies, is for 60 percent to 80 percent of properties to be located within
the Tokyo metropolitan area, with the remaining 20 percent to 40 percent located inregional urban centers. It is possible, however, that future trends in office demand may
prompt JRE to temporarily depart from these ratios and increase the proportion of its
holdings in the greater Tokyo area.

The appropriate timing for property acquisition cannot be ascertained in advance. Whenfunding property acquisition, therefore, JRE's policy is to take out short-term loans at thetime of purchase and later select various options for capital procurement, including
corporate unit issues, according to trends in financial markets. When effecting a loan, ourpolicy is to minimize funding costs by negotiating with several qualified institutional
investors before settling on a lender.

4. Performance Forecasts
In the six-month period from April 1 to September 30, 2004, we forecast operating
revenues of 9,900 million yen, recurring profits of 3,800 million yen, and net income of
3,800 million yen. We plan to declare an interim dividend of 14,600 yen per unit. Actual
figures for operating revenues, recurring profits, net income, and cash dividends may

6vary due to changes in business conditions.
Our forecasts for the seventh fiscal period (October 1, 2004, to March 31,2005) are operating revenues of 9,700 million yen, recurring profits of 3,700 million yen,
net income of 3,700 million yen, and cash dividends of 14,300 yen per unit.
These estimates are based on conservative assumptions of the portfolio of 36
properties as of March 31, 2004, Yoyogi 1-chome Building newly acquired as of April 1,
2004, and the additional co-ownership in Ebisu Neonato as of March 12, 2004, (described
below) and excludes any other additional acquisitions.

After March 31, 2004, JRE acquired the following two office buildings.

(1) Yoyogi 1-chome Building

Transaction Summary
Acquired asset: Real estate (ownership rights for land and building)Acquisition price: 8,700 million yen
Acquisition date: April 1, 2004

Property Summary
Location: 22-1, Yoyogi 1-chome, Shibuya-ku, Tokyo
Use: Offices
Land area: 1,755.75 m2
Floor area: 10,778.10 m2
Structure: Steel-framed reinforced concrete structure with flat roof, one floor below
ground, and 14 above
Construction completed: October 2003
Tenants: 1
Net rentable area: 7,772 m2
Net rented area: 7,772 m2
Occupancy rate: 100 percent

7Note: The above figures for the number of tenants, net rentable area, net rented area, andoccupancy rate are current as of the date of acquisition. The figures are based on data
provided by the vendor.

(2) Ebisu Neonato

Transaction Summary
Acquired asset: Real estate
Land: Co-ownership of 1,069,450/90,000,000 of total site
Building: Co-ownership of space (4th floor: 1,069,450/5,534,725)
Acquisition price: 360 million yen
Acquisition date: April 1, 2004

Property Summary
Location: 1-18, Ebisu 4-chome, Shibuya-ku, Tokyo
Use: Offices
Land area: 5,005.70 m2 (total land area)
Floor area: 36,598.38 m2 (total floor area)
Structure: Steel-framed reinforced concrete structure with flat roof, two floors below
ground, and 18 above
Construction completed: October 1994
Tenants: 1
Net rentable area: 237 m2
Net rented area: 237 m2
Occupancy rate: 100 percent

Note: The above figures for the number of tenants, net rentable area, net rented area, andoccupancy rate are current as of the date of acquisition. The figures are based on data
provided by the vendor.

This notice is translation in English of the announcement of Fifth Fiscal Period Results in

8

Japanese on May 18, 2004 in our website. However, no assurance or warranties are given
for the completeness or accuracy of English translations.

Contact Information:
Japan Real Estate Asset Management Co., Ltd.
Planning Department
Takuro Yamanaka+81-3-3211-7921

9

Income Statement for the 5th Period(In millions of yen）
5th Period （ 183 days）
Item
Operating Revenue

32 existing
properties
9,059

Newly acquired
properties*
501

Rental revenue

8,960
98

4th Period

9,560

8,965

501

9,461

8,951

−

98

14

3,007

98

3,105

3,015

1,076

51

1,127

1,095

Utility charges

751

28

779

777

Property and other taxes

783

8

791

797

Other rental revenues
Operating Expenses
Property management fees

Change% Change

595

6.6%

90

3.0%

505

8.5%

（ 182 days）

Total

Insurance expenses

23

1

24

22

Maintenance expenses

358

7

365

289

Other operating expenses

15

1

16

32

6,052

403

6,455

5,950

1,385

113

1,498

1,393

4,666

290

4,956

4,556

400

8.8%

615

658

△ 43

△ 6.5%

11.4%

NOI
Depreciation and amortization
Operating Profit
Administrative expenses
Asset management fees

325

393

Other administrative expenses

290

264

4,341

3,898

443

Non-Operating Revenue

0

4

△4

Interest received

00Other non-operating revenues

04

Non-Operating Expenses

538

494

Interest expenses

163

177

Bond interest expenses

248

236

Deferred bond-issuance cost

61

61

Net Operating Profit

Other non-operating expenses

44

8.9%

64

18

Recurring Profit

3,803

3,408

395

11.6%

Gross Income

3,803

3,408

395

11.6%

Taxes

1

1

Net Income

3,802

3,407

395

11.6%

Retained Earnings

3,802

3,407

FFO (Net Income＋Depreciation）

5,301

4,801

500

10.4%

Dividends per Unit

14,602

15,117*Newly acquired properties are the Jingumae Media Square Building, Ebisu Neonato, Nippon Brunswick Building,
NHK Hiroshima Broadcasting Center Building, and Fukusuke Sakaisuji-honmachi Building (additional acquisition).

Balance Sheet for the 5th Period

Item

5th Fiscal Year-end

4th Fiscal Year-end（Mar 31, 04）（Sep 30, 03）

ChangeReason for Change

Current Assets

24,77915,377

9,402

666

1,031

△ 365

25,445

16,4099,036

Property and equipment
Buildings
Structures
Machinery and equipment
Land

68,700394
1,270
153,254

60,112326
1,204
135,687

8,588
68
66
17,567

Accumulated depreciation△ 6,496△ 4,998△ 1,498

217,122

192,332

24,790

1,912
1,912

726
726

1,186
1,186

46

52

△6

46

52

△6

219,078

193,11125,967

-

61

△ 61

-

61

△ 61

244,523

209,581

34,942

Cash and entrusted cash
Other current assets
Total Current Assets
Fixed Assets

Total Property and Equipment
Intangible Assets
Lease hold rights
Total Intangible Assets

Increased due to the
Jingumae Media Square
Building and Ebisu Neonato
acquisition

Investments and Others
Long-term prepaid expenses, etc.
Total Investments and Others
Total Fixed Assets
Deferred Assets
Bond issuance cost
Total Deferred Assets
Total Assets

Decreased due to amortization ofbond issuance cost（In millions of yen）
Item

5th Fiscal Year-end

4th Fisical Year-end（Mar 31, 03）（Sep 30, 03）

ChangeReasons for Change

Liabilities
Current Liabilities
Short-term borrowing
Rent received in advance
Other current liabilities
Total Current Liabilities
Long-term Liabilities
Investment Corporation Bonds
Long-term borrowing
Deposits from tenants
Total Long-term Liabilities
Total Liabilities

Unitholder's Equity
Unitholder's capital
Retained earnings
Total Unitholder's Equity

Total Liabilities and Unitholder's Equity

Increased due to borrowings from the Chugoku Bank,

9,000

7,000

2,000 Ltd., and the Hachijuni Bank, Ltd.

1,582

1,444

138

1,777

1,207

570

12,359

9,652

2,707

45,00045,000−33,00024,0009,000

Increased due to borrowing from the Dai-ichi
Mutual Life Insurance Company

16,914

15,369

1,545

Increased due to deposits from tenants byproperty acquisitions

94,91484,36910,545

107,273

94,021

13,252

133,448

112,152

21,296 Increased by new unit issuance

3,802

3,407

395

137,250

115,559

21,691

244,523

209,581

34,942

Portfolio Summary(in millions of yen)

Area

Name

23 WardsTokyo
Metropolitan
Area

5th Period
4th Period
Appraisal
Appraisal
Value
Value
(Mar 31, 04) (Sep 30, 03)

Acquisition
Year Built
Price(Mar 31, 04)

Net Rentable
Area (㎡)Occupancy
Rate(Mar 31, 04)(Mar 31, 04)

5,510

5,400

110

5,274

5,000

1985

4,791

100.0%MD Kanda Building

8,110

9,670

-1,560

9,472

9,520

1998

6,269

100.0%

Kandabashi Park Building

4,940

4,860

80

4,800

4,810

1993

3,687

100.0%

Mitsubishi Soken Building

30,40028,0002,400

27,11827,2671970

18,006100.0%

Yurakucho Denki Building

6,780

6,830

-50

7,585

7,200

1975

4,694

87.8%

Kodenmacho Shin-Nihonbashi Building

3,240

3,200

40

3,059

3,173

1991

3,897

100.0%

Burex Kyobashi Buidling

5,110

5,010

100

5,364

5,250

2002

4,279

100.0%

Aoyama Crystal Building

7,170

7,430

-260

7,770

7,680

1982

4,916

100.0%

Shiba 2-chome Daimon Building

5,110

4,920

190

5,042

4,859

1984

9,643

95.6%

Cosmo Knasugibashi Building

2,840

2,800

40

2,734

2,808

1992

4,062

100.0%

Takanawadai Building

2,830

2,810

20

2,659

2,738

1991

4,091

100.0%JAL Travel Building

1,390

1,570

-180

1,316

1,362

1991

3,383

100.0%

Omori-Eki Higashiguchi Building

5,180

5,010

170

4,885

5,123

1989

7,708

99.4%

da Vinch Harajuku

5,010

4,970

40

5,034

4,885

1987

3,051

100.0%

Shibuya Cross Tower

34,10033,800300

35,35434,6001976

29,796

99.8%

Otsuka Higashi-Ikebukuro Building

3,370

3,480

-110

3,377

3,541

1987

7,114

100.0%

Ikebukuro 2-chome Building

1,490

1,540

-50

1,693

1,728

1990

2,186

88.8%

Saitama Urawa Building

2,390

2,490

-100

2,534

2,574

1990

4,510

98.0%

1,700

2,230

-530

3,066

3,000

1992

6,925

72.7%

Kawasaki Isago Building

3,110

3,160

-50

3,182

3,375

1990

6,831

100.0%

Sendai Honcho Honma Building

2,970

2,990

-20

2,791

2,924

1991

5,829

95.6%

771

821

-50

1,023

1,010

1984

4,383

95.8%

Kanazawa Park Building

5,460

5,330

130

4,743

4,580

1991

21,343

94.7%

Kanazawa Minamicho Building

1,090

1,120

-30

1,297

1,331

1987

3,782

78.0%

Nagoya Hirokoji Building

14,60014,900-300

14,228

14,533

1987

21,590

97.1%

Nagoya Misono Building

1,840

1,810

30

1,844

1,865

1991

3,470

100.0%

Kyoto Shijyo Kawaramachi Building

2,130

2,250

-120

2,967

2,650

1982

6,800

82.6%

Fukusuke Sakaisuji-honmachi Building

2,570

2,360

210

4,146

2,264

1992

11,574

76.7%

Midosuji Daiwa Building

13,50014,300-800

14,104

14,314

1991

20,44992.4%

Kobe Itomachi Building

999

1,100

-101

1,406

1,436

1989

3,478

94.2%

Tosei Tenjin Building

1,400

1,420

-20

1,514

1,550

1992

4,080

92.0%

Hinode Tenjin Building

3,600

3,690

-90

3,525

3,657

1987

5,924

88.6%

190,710

191,271-561

Niigata Ishizuecho Nishi-Bandaibashi Building

Total

12,410--12,311

12,200

1998

5,558

91.3%

Ebisu Neonato

3,760

-

-

3,760

3,740

1994

2,225

100.0%

Fukusuke Sakaisuji-honmachi Building (additional
acquisition)

1,990

-

-

added to theexisting shares

1,900

1992

Nippon Brunswick Building

6,930

-

-

6,705

6,670

1974

7,347

89.1%

NHK Hiroshima Broadcasting Center Building

1,350

-

-

1,331

1,320

1994

5,470

100.0%

217,150

191,271-

219,032

218,437

273,157

94.8%

Jingumae Media Square Building

Properties acquiredin the 5th Period

ChangeGenki Medical Plaza

Excluding 23
Shin-Yokohama First Building*wards

Other Major Cities

5th Period
Book Value

Total (36 properties)

added to the existing shares

The name of Ericcson Shin-Yokohama Building was changed to Shin-Yokohama First Building on March 1, 2004.

*The average occupancy rates in the 23 wards, the Tokyo metropolitan area excluding the 23 wards and the other major cities are
98.1%, 89.2% and 91.8% respectively.

Area

Properties to be acquiredin the 6th Period

Name

Yoyogi 1-chome Building*Ebisu Neonato Building*

Total

Appraisal
Value(beforeacquisition)
8,400
369
8,769

TheYoyogi 1-chome Building and Ebisu Neonato were acquired on April 1, 2004.

Acquisition
Year Built
Price
-

-

-

8,700
360
9,060

Net Rentable
Area (㎡)Occupancy
Rate(Acquisition (Acquisition
Date)
Date)
2003
100.0%
7,772
1994
237
100.0%-