MARCH2007
S E M I A N N UA L
REPORT
For the period from October 1, 2006 to March 31, 2007

Japan Real Estate Investment Corporation

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

The Strengths of Japan Real Estate Investment Corporation• Steady growth — Total amount of acquisition prices reached ¥441,276 million ($3,738
million) at the end of March 2007.
• Acquisition of Nishiki Park Building in October 2006 for ¥3,850 million ($33 million), its
additional shares in November 2006 for ¥1,300 million ($11 million) and preferred capital
contribution certificates issued by Harumi Front Special Purpose Company in November 2006
for ¥268 million ($2 million)• Portfolio of 50 high-quality off ice buildings as of March 31, 2007
• Recording a capital gain on the exchange of ¥459 million by the property exchange of
Mitsubishi Soken Building for Mitsubishi UFJ Trust and Banking Building• Revenues and profits have continuously increased from IPO to the end of March 2007.
Operating revenues for the 11th period achieved ¥16,960 million ($144 million), and operating
profits reached ¥8,304 million ($70 million).
• Superior geographic and tenant diversity with a 97.8% occupancy rate (as of March 31, 2007)• New investment unit issue in October 2006 (64,600 units; Total issue value: approximately¥63 billion)• LTV (Interest-bearing debt/Total assets) at the end of the 11th period was 31.5%.
The long- term, fixed-interest debt ratio achieved 100.0 %.
• Highest issuer credit ratings in J-REIT: A+ from Standard & Poor’s, A1 from Moody’s InvestorsService and AA from Rating and Investment Information, Inc. (R&I)• Collaboration with sponsors of the asset management company, which comprise Mitsubishi
Estate Co., Ltd., Tokio Marine & Nichido Fire Insurance Co., Ltd., The Dai-ichi Mutual Life
Insurance Company, and Mitsui & Co., Ltd.

Contents
Financial Highlights
p. 1
Top 10 Unitholdersp. 1
Unit Price Performancep. 1
New Investment Unit Issue
p. 1
Portfolio Highlights
p. 2
New Portfolio Property
p. 3
Summary of Preferred Capital Contribution
Certificates Additionally Acquiredp. 3
Exchange of Properties
p. 4

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

p. 7
p. 8
p.10
p.14
p.17
p.25
p.40

Financial Highlights
For the period from October 1, 2006 to March 31, 2007
Thousands of U.S. dollars(Note 1)Millions of yen
For the period from
October 1, 2006 to
March 31, 2007

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

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

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

143,668
70,34760,86160,852

11,75910,740
9,578
8,978
7,131
9,441
8,257
7,945
7,526
5,762
33.8 times 21.0 times 22.1 times 21.1 times 19.7 times

99,616
79,98333.8times

Operating Revenues
Operating Prof its
Income before Income Taxes
Net Income

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

Net Operating Income ( NOI ) ( Note 2)
Funds from Operations (FFO) (Note 3)
FFO Multiple ( Note 4)
Cash Distribution
Number of Units
Dividend per Unit ( Yen / U.S. dollars)

7,183
410,000
17,521For the period from
April 1, 2006 to
September 30, 2006

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

5,976
345,400
17,302For the period from For the period from
October 1, 2005 toApril 1, 2005 to
March 31, 2006
September 30, 2005

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

5,585
345,400
16,172

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

5,509
345,400
15,951

4,120
260,400
15,82460,852410,000
148.42

Notes: 1. Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥118.05 = US$1.00, the foreign exchange rate on
March 31, 2007, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen has been or could be readily
converted, realized or settled into U.S. dollars at that rate or any other rate.
2. NOI = (Property-Related Revenues – Property-Related Expenses) + Depreciation
3. FFO = Net Income – Gains (Losses) from Sales of Specified Assets + Depreciation
4. FFO Multiple = Unit Price at End of the Respective Term ÷ FFO per Unit (Annualized)(Annualized portion of the calculation given in note 4 assumes a fiscal period of 182 days for the period ended March 31, 2005, 183 days for the period
ended September 30, 2005, 182 days for the period ended March 31, 2006, 183 days for the period ended September 30, 2006 and 182 days for theperiod ended March 31, 2007.)

Top 10 Unitholde r s
As of March 31, 2007

% of Total Units

Company

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

Unit P rice Per formance

TOPIX

Units

Outstanding

26,415
26,132
26,027
19,498
12,682
10,877
10,160
9,491
9,016
8,120

6.44%
6.37%
6.35%
4.76%
3.09%
2.65%
2.48%
2.31%
2.20%
1.98%

The Company

PO Price

325%
300%
275%
250%
225%
200%
175%
150%
125%
100%
75%
50%

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

2001

2002

2003

2004

2005

2006

2007

New Investment Unit Issue
Issuance date: ................................................. October 24, 2006
Issue price: ............................................. ¥1,009,400 ($8,550.61)
Number of units issued: .......................................... 64,600 units

Aggregate amount of issue price: ...... ¥65,207million ($552 million)
Commencement date
for the calculation of cash dividends: ....................... October 1, 2006
Japan Real Estate Investment Corporation 1

Portfolio Highlights

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

Number ofbuildings

Total numberof tenants(Note)

Total leasable
space

Occupancy
rate

September 2001

20

213

133,927m 2

94.6%

March 2002

24

353

201,884m 2

94.0%

September 2002

27

362

215,928m 2

95.3%

March 2003

30

383

236,693m 2

94.4%

September 2003

32

407

246,062m 2

95.1%

March 2004

36

477

273,157m2

94.8%

September 2004

39

504

293,105m 2

93.6%

March 2005

46

669

336,026m 2

97.6%

September 2005

50

814

364,610m 2

98.6%

March 2006

52

866

400,090m2

98.7%

September 2006

49

835

396,173m 2

98.2%

October 2006

50

878

402,159m 2

97.8%

November 2006

50

878

404,232m 2

97.8%

December 2006

50

876

404,148m 2

98.0%

January 2007

50

880

404,148m 2

97.3%

February 2007

50

877

404,157m 2

97.6%

March 2007

50

887

397,928m 2

97.8%

100,000

170,000

240,000

310,000

380,000

450,000

Total leasable
space
Occupancy rate

11th period

60.0

65.0

70.0

75.0

80.0

85.0

90.0

95.0

100.0

Occupancy rate (%)

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

Portfolio breakdown
As of March 31, 2007

Properties bygeographic
region(Percentage based on
acquisition price)

Tenants byindustry
type

Other major
cities
(16.0%)(Percentage basedon leased space)

Transport services and travel 1.3%
Steel and metals 1.7%
Ceramics 1.9%
Staffing agencies 1.9%
Textiles 2.1%

Others11.0%

Construction 2.5%
Communications 2.5%

Tokyo metropolitan area,
excluding 23 wards(2.1%)

Tokyo 23 wards(81.9%)

Machinery 4.5%

Real estate 5.8%

Serviceindustries
18.8%
Financeandinsurance
12.7%
Retailandrestaurants
8.9%

Pharmaceuticals 7.7%

Electric devices 8.0%

2 Japan Real Estate Investment Corporation

Information services 8.7%

New Port folio P roperty
For the period from October 1, 2006 to March 31, 2007
Notes: 1. In “Property Summary,” concerning real estate of which the Company is a partial owner through co-ownership or sectional ownership, the figures for “Sitearea”and “Floor area of building” represent total site area and total floor space for the entire building.
2. In “Leasing Conditions,” the figures represent information of the portion owned by the Company, unless otherwise stated.

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

Completion:

Real property (Note)¥3,850 million ($33 million)/¥1,300 million ($11 million)
October 2, 2006 / November 1, 2006
Nagoya, Aichi Prefecture
Office, shop, residence
2,170.45m2 (23,363ft2)
25,091.91m2 (270,087ft2)
Steel-framed, steel-framed reinforced
concrete, and steel-reinforced concrete
structure, flat roof
Above ground: 22 floors
Below ground: 4 floors
August 1995

Tokyo
NagoyaProperty Acquisition Merits

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

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

Leasing Conditions (As of March 31, 2007) (Note)
Number of tenants:
Leasable space:
Leased space:Occupancy rate:

49 tenants
8,059m2 (86,747ft2)
7,953m2 (85,609ft2)
98.7 %

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

Summary of Preferred Capital Contribution Certificates Additionally Acquired
For the period from October 1, 2006 to March 31, 2007

Type of assets acquired: Preferred capital contribution certificates of 5,360 units
Acquisition price: ¥268 million ($2.3 million)
Acquisition date: November 24, 2006
The Company underwrote certificates as follows. The acquisition
shown above is the third acquisition.

Summary of Property held by TMK

Property Summary
Name of property:
Location:
Site area:
Floor area of building:Leasable space:Occupancy rate:
Structure:
Usage:
Total project cost:Completion:

Harumi Center Building
Harumi, Chuo-ku, Tokyo
4,664.63m2 (50,210ft2)
26,447.27m2 (284,676ft2)
20,812m2 (224,022ft2)
98.1% (as of March 31, 2007)
Steel framed structure, flat roof
Above ground: 10 floors
Office, shop, parking area
¥12,821 million ($109 million)(forecast value at the time of
the first contribution)
November 2006

Issuance date

Number of units

Amounts per unit

Total amount of issuance

March 29, 2005

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

November 24, 2005

920

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

November 24, 2006

5,360

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

Concurrent acquisition of rights granting priority to purchase properties after completion of
construction (preferential purchasing rights)
TMK (Special Purpose Company)
Harumi Front TMK

80%
Specified corporate bonds &Special purpose borrowing

Real property
Preferred capital contribution
certificatesSpecified capital
contribution

20%

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

Japan Real Estate Investment Corporation 3

Exchange of P roperties
For the period from October 1, 2006 to March 31, 2007

Shin Marunouchi
Building

Mitsubishi Soken
Building

Mitsubishi UFJ Trust andBanking Building

Marunouchi Building

Tokyo Station

Outline of Transfer
Transferred property

Mitsubishi Soken Building(Trust beneficiary right in trust of real estate: 100.0% of ownership)
Acquisition date:
Acquisition price:Transfer date:
Transfer price:
Location:
Site area:¥27,267 million
September 25, 2001
March 28, 2007
¥41,900 million
Otemachi,Chiyoda-ku, Tokyo
3,441.35m2 (37,072ft2)

Floor area of building:
Structure:

Completion:
Transferee:26,372.92m2 (283,875ft2) (Note)
Steel-framed reinforced
concrete structure, flat roof
Above ground: 15 floors
Below ground: 2 floors
July 1970
Mitsubishi Estate Co., Ltd.

Note: Including the building registered as a separate building

Outline of Acquisition
Acquired property

Mitsubishi UFJ Trust and Banking Corporation(Real property: 19.38402% of ownership)
Acquisition date:
Acquisition price:
Location:
Site area:
Floor area of building:
Structure:

Completion:
February 2003
March 28, 2007
Type of ownership:
Land: Ownership (Note 1)¥44,700 million
Building: Compartmentalized
Marunouchi,building units (Note 2)
Chiyoda-ku, Tokyo
8,100.39m 2 (87,192ft 2 )Transferor:
Mitsubishi Estate Co., Ltd.
108,171.67m 2 (1,164,349ft 2 )Notes:1.Co-ownership at the ratio of 226/1,000 in two lots
Steel-framed, steel-framed(700.81m 2 ( 7,543ft 2 )) and co-ownership at the ratio of
reinforced concrete structure,
2,795/10,000 in one lot (5,085.53m 2 (54,740 ft 2 )).
2.Co-ownership of its compartmentalized building units
flat roofof a part of the 4th stories below ground through the 7th
Above ground: 29 floors
stories above ground and the 8th through 29th stories
Below ground: 4 floors
above ground with a ratio of 226/1,000 of the total
75,824.97m 2 (816,172 ft 2 ). Share in the building: 19.38402%

Overall Comparison between the Properties(As of the date of exchange)

Mitsubishi Soken Building
Age of building
Location
Total number of tenants
PML value
NOI ( per year )Specifications

Mitsubishi UFJ Trust and Banking Building

36.7 years

4.1 years

The north end of the Otemachi area

The center of the Marunouchi area

4

10

8.98%

2.24%

¥1,574 million¥1,620 million(Actual results for the period from Oct. 2005 to Sept. 2006)(Notional NOI relating to the acquired shares)

2,575mm2,800mmStandard floor area

Higher level 700m2
Lower level 1,460m2

1,776m2

Air conditioning system

Central air conditioning

Individual air conditioning

Ceiling height

4 Japan Real Estate Investment Corporation

Reason for the Exchange

Challenges of Mitsubishi Soken Building—The competitiveness of the building is likely to decrease in the case that morebuildings in the neighborhood are reconstructed in the future.
—It is necessary to study what action to be taken after the lease contract for a specificleasing period with a principal tenant, which accounts for more than 80% of theleasable space, expires at the end of March 2011.
—Progress of reconstruction business in Development of Land Replanning/Rezoning
in the Otemachi Area.**As for details, please refer to the next page.

Is this building to be retained,
to be rebuilt or to be sold?
Study of Possible Options

1. Maintaining ownership with a proposal ofan exchange of lands at the current location— Concerns regarding the decreasing competitiveness inthe future cannot be eliminated.

2. Reconstruction with a proposal of an exchangeof lands at the current location— There is negative impact on profitability during thereconstructing period.
— It is difficult to construct a new building with squareshaped lease spaces that is highly competitive.

3. Sole development or joint development with aproposal of an exchange of lands within the areascheduled for the second phase of development— There is negative impact on profitability during thereconstructing period.
— Various risks associated with large-scale development
may not be avoided, such as a project completion risk.

4. Outright sale

— Although the profit for the current fiscal period of
the sale will substantially increase by capital gain
upon sale, the profit will decline constantly insubsequent years.

5. Exchange— This alternative will (A) allow avoiding (i) adverse
effect on profitability and (ii) various risks associatedwith large-scale development, and (B) maintainstable profitability.

The best scheme is to exchange this building with newly constructed buildings in the same area, which is the best location for office buildings in Japan,
in order to maintain stable profitability.
Japan Real Estate Investment Corporation 5

Outline of Development of Land Replanning/Rezoning in the Otemachi Area ( Maps)
Otemachi area with development of land
replanning/rezoning

Chiyoda Line

Marunouchi Line
JR LineArea with second phase ofdevelopment building

Tozai Line

Sites of Government
Buildings No.1 and No.2

t io nOtemachi Building

chi Stachi Sta

Mitsubishi Soken
Building

Otema

Otema

Otem

achi StationArea with first phase ofdevelopment building

t io nNTT Otemachi
Building

Hanzomon Line
Nippon Building
Palace Hotel Tokyo

tation

Otem

achi

Stati

on

S t a t io

Tokyo

Shin-Marunouchi
BuildingnOtemachi S

Marunouchi Kitaguchi
Building
Nihon Seimei
Marunouchi
Building

Mita Line

Mitsubishi UFJ
Trust and Banking Building
JR Tokyo Station

Marunouchi
Building

Outline of Development of Land Replanning/Rezoning in the Otemachi Area
Name of business : Tokyo Metropolitan Urban Land Development Business Plan,
Development of Land Replanning/Rezoning in the Otemachi Area
Business entity :Urban Renaissance Agency (UR)Area:
Approximately 13.1 ha
Period :From April 2006 to the end of March 2015

Outline of Urban Development Project Involving Sequential Reconstruction(1) UR acquires the sites of Government Buildings.
(2) Lands of the relevant parties holding certain rights and interests in properties who wish to rebuild are collected to exchange thelands to the sites of Government Buildings.
(3) Rebuilding is performed at the sites of government buildings. (First phase redevelopment)(4) Lands of the relevant parties holding certain rights and interests in properties who wish to rebuild next are collected to exchange
the lands to the building site of the relevant parties holding certain rights and interests in properties who participated in the firstphase redevelopment.
(5) Rebuilding is performed at the building site of the relevant parties holding certain rights and interests in properties who
participated in the first phase redevelopment. (Second phase redevelopment)(6) The building sites of the relevant parties holding certain rights and interests in properties who participated in the second phaseredevelopment are used for the next sequential reconstructing, etc.

6 Japan Real Estate Investment Corporation

Subsequent Events
After the period from October 1, 2006 to March 31, 2007

Acquired Property

8·3 Square Kita Building
Property Summary
Type of specified asset:
Acquisition price:
Acquisition date:
Location:
Usage:
Site area:
Floor area of building:Real property (Note 1)¥7,100 million ($60 million)
June 1, 2007
Sapporo, Hokkaido
Office, shop (Note 2)
5,541.60m2 (59,649ft2)
16,048.59m2 (172,745ft2) (Office building)
48.38m2 (521ft2)(Multi-level parking structure)

Structure:

Steel-reinforced concrete structure,flat roof

Completion:

Above ground: 11 floors
Below ground: 1 floor (Note 2)
December 2006

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

Leasing Conditions (As of June 1, 2007) (Note)
Number of tenants:
Leasable space:
Leased space:Occupancy rate:

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

SapporoTokyo

Property Acquisition Merits
Located in Sapporo, the largest central cityin Hokkaido, the 8·3 Square Kita Building
benefits JRE's portfolio in terms of regional
diversity. The property is a new building
within the site that is directly connected to
JR Sapporo Station via an undergroundwalkway. With its convenient location andhigh specifications for meeting a variety offacility needs for tenants, the property holds
a competitive edge in Sapporo's officebuilding market.

Note: The number of tenants, leasable space, leased space andoccupancy rate refer to the office building as of the acquisition date.

Issuance of Investment Corporation Bonds
Based on the approval by the Board of Directors' meeting held on June 1, 2007, the Company issued investment corporation bonds.
(1) Name(i) Japan Real Estate Investment Corporation Fifth Unsecured Bond (hereinafter, “the Fifth Bond”)(ii) Japan Real Estate Investment Corporation Sixth Unsecured Bond (hereinafter, “the Sixth Bond”)(2) Total amount of the bond issue
The Fifth Bond:
10 billion yen
The Sixth Bond:
15 billion yen(3) Payment amount
100 yen per face value of 100 yen(4) Redemption price
100 yen per face value of 100 yen(5) Yield on the bonds
The Fifth Bond: 1.67%
The Sixth Bond: 1.91%(6) Secured mortgage or guarantee
There is no secured mortgage or guarantee on the bonds.
There are no assets reserved as security for the bonds.
(7) Redemption method and dates(i) Final redemption date
The Fifth Bond: June 18, 2012
The Sixth Bond: June 18, 2014(ii) Redemption by purchase may be accomplished anytime from the date following the payment date.
(8) Interest payment dates
June 18 and December 18 of every year
(9) Finance-related special covenants
No finance-related special covenants are attached to the bonds.
(10) Use of the fund
Scheduled future redemptions of the existing investment corporation bonds

Japan Real Estate Investment Corporation 7

Histor y after IPO
Since listing on the Tokyo Stock Exchange (“TSE”) as the first J-REIT in Japan, the Company has
established a firm track record over the past 10 fiscal periods. As the Company concluded its 11th fiscal
period ended March 31, 2007, the total acquisition price for properties reached ¥441,276 million.
Throughout its history, the Company has sustained stable management while realizing steady growth
and taking the initiative as a J-REIT pioneer. During the fiscal period under review, the Company
accelerated efforts to streamline and strengthen its portfolio. In addition to acquiring quality property,
the Company conducted a property exchange (detailed on p. 4-6) for the first time.
Sep. 2001
Listed on TSE as first J-REIT
Sep. 2001
IPO
May 2002
First Follow-On(First for a J-REIT)
2
133,927m
2

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

2
201,884m
2

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

2
215,928m
2

Oct. 2006
Fourth Follow-On(205,796m )362 Tenants
Period Ended
Sep. 2001
Period Ended
Mar. 2002

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

8 Japan Real Estate Investment Corporation

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

94.6%
94.0%

95.3%
OCCUPANCY RATE

94.4%

Stable management

95.1%(Trend in operating conditions)

94.8%
97.6% 98.6%

93.6%

98.7%

98.2%
Listed on¥144,697¥164,277
97.8%
TSE
MillionMillion ¥183,542¥326,560¥92,845 (24)¥290,510 Million(27)
Million ¥192,607 ¥218,437
Million¥412,766
Million¥239,827 Million
(30)
(50)
(20)
Million¥418,693 ¥441,276
Million(46)(32)
Million(36)
Million(52)
Million
(39)
(49)
(50)

TOTAL ACQUISITION PRICE (TOTAL PROPERTIES ACQUIRED)

Steady growth(Acquisitions)

2236,693m
2(223,410m )383 Tenants

TOTAL LEASABLE SPACE ( LEASED SPACE )2
246,062m
2(233,925m )407 Tenants

2
273,157m
2(258,885m )477 Tenants

2
293,105m
2(274,411m )504 Tenants

2336,026m
2(327,962m )669 Tenants

2364,610m
2(359,620m )814 Tenants

2400,090m
2(394,764m )866 Tenants

2396,173m
2(389,012m )835 Tenants

Period Ended
Sep. 2004

2
397,928m
2(389,112m )887 Tenants

Period Ended
Mar. 2005

Forward-looking initiatives

Period Ended
Sep. 2005( J-REIT management)

Listing and issuanceof units

Period Ended
Mar. 2006
Period Ended
Sep. 2006
Period Ended
Mar. 2007

Credit ratings,
diversificationof investment methods,etc.

Japan Real Estate Investment Corporation 9

To Our Unitholders

10 Japan Real Estate Investment Corporation

The market for leased office space is seeing an increase indemand, leading to improved vacancy rates in major
cities around Japan.
Kazuhiko Arahata
CEO & President of Japan Real Estate
Asset Management Co., Ltd.

FINANCIAL RESULTS AND OUTLOOK

space of 397,928 m2 (approximately 4,283,261 ft2) and a

In the 11th fiscal period (the six months ended March 31,

total of 887 tenants, marking steady growth of the portfolio.

2007), the Japanese economy continued to show favorable

For the 12th fiscal period (April 1, 2007 to September

trends, although the household sector displayed signs of

30, 2007), the Company forecasts operating revenues of

weakness attributable to such factors as a general flattening¥17,000 million ($144 million), income before income taxes

out in consumer spending caused by sluggish incomeof ¥7,000 million ($59 million) and net income of ¥7,000

growth. Capital spending increased in an environment

million ($59 million). The Company plans to declare a cash

where profits in the corporate sector rose in response todividend of ¥17,090 ($144.77) per unit.
Our forecasts for the 13th fiscal period (October 1,

growth in demand and an improvement in staffing
conditions.

2007 to March 31, 2008) are operating revenues of ¥17,140

As a result of favorable corporate performance, themillion ($145 million), income before income taxes ofmarket for leased office space is seeing an increase in¥7,070 million ($60 million), net income of ¥7,070 million

demand, which is leading to improved vacancy rates in($60 million), and a cash dividend of ¥17,200 ($145.70) per

major cities around Japan. Demand is especially robust in

unit.

central Tokyo, reflected in noticeably falling vacancy rates

Although it will be necessary to pay close attention toand climbing rents for new tenants. Under these

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

circumstances, the Company continued to achieve increases

well as the impact of rising interest rates and increasing

in revenues and profits, and it is pleased to report anothercrude oil and raw material prices on corporate earnings

satisfactory fiscal period for our unitholders.

performance, the stable, favorable turnabout in the JapaneseIn the 11th fiscal period, the Company recorded
operating revenues of ¥16,960 million ($144 million), up

economy centered on the corporate sector is expected tocontinue for the foreseeable future.

8.9% from the previous period. Operating profits rose 17.9%

In the market for leased office space, both vacancy

to ¥8,304 million ($70 million). After deducting expenses

rates and rent levels are demonstrating favorable trends,

for interest payments on loans and other costs, income

supported by the active demand for office space spurred bybefore income taxes increased 20.2% to ¥7,184 million ($61

the robust corporate performance.

million) and net income climbed 20.2% to ¥7,183 million

On the other hand, when selecting buildings, tenants($61 million). As a result, we declared a cash dividend of

in this market are making increasingly stringent demands¥17,521 ($148.42) per unit.

ranging from location, building quality and features to

In addition to acquiring competitive property duringbuilding management and value-added services. We

the fiscal period under review, as a means of constantly

anticipate that it will become even more important forreviewing the portfolio, the Company conducted an

suppliers to provide services that correctly and promptly

exchange of properties in order to enhance portfolio quality.

reflect the needs of tenants and to deliver added value thatAs a result, the Company ’s properties as of March 31, 2007

differentiates their buildings from the competition.

consisted of 50 office buildings with a total acquisition

In the real estate market, the Company expects active

amount of ¥441,276 million ($3,738 million), total leasable

real estate investment to be continued by J-REITs, inJapan Real Estate Investment Corporation 11

The Company shall become the market leader
in the next stage as well, mobilizing all of its know-how and enthusiasm
to fulfill its mandate from unitholders to increase unitholder value.
addition to such entities as private funds, pension funds andlatitude to acquire more properties for further growth.

institutional investors. Accordingly, we expect that

As of May 16, 2007, the Company had obtained thecompetition to acquire prime properties in urban centers

following credit ratings.

will become more intense.
Therefore, to produce steady results that extend into
the future, the Company adheres to the following
management policies with respect to financial strategy andinternal and external growth. Five and a half years havepassed since our public listing, and our goal is to achieve

Rating Agency

Issuer Credit RatingStandard & Poor’s

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

Moody’s Investors Service

Rating: A1; Outlook: Positive

Rating and Investment
Information, Inc.

Rating: AA; Outlook: Stable

continued stable operations.
Because of the excellent ratings the Company has obtained
MANAGEMENT POLICIESfrom rating agencies, it is able to obtain low-interest loans

Financial Strategy

at favorable terms. It is extremely important for a REIT to

The greatest challenge facing us in terms of financial

be able to expeditiously raise funds in order not to missstrategy is maintaining our sound financial position built

opportunities to acquire prime properties that becomeup over the years. As the Japanese economy recovers,

available. The Company has been able to keep interest rates

interest rates are eventually expected to rise. In response, it

down and obtain bank loans unsecured primarily as a result

is essential to limit the scale of impact that higher interestof its adherence to a conservative financial strategy.

rates will have on earnings, while also delaying their impact.

Moreover, property sellers have a great deal of confidence

To that end, in the 11th fiscal period, the Company issued

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

64,600 investment units by public offering, raising ¥63,211

has a recognized name in the real estate market.

million ($535 million) on October 24, 2006, in order tofund the repayment of loans and acquisition of new specified

External Growth

assets. This amount was used to repay ahead of schedule

In the current feverish metropolitan Tokyo real estate

short-term loans of ¥4,500 million ($38 million) on Octobermarket, we believe it is difficult to continue our portfolio

31, 2006, and ¥58,000 million ($491 million) on November

expansion strategy along only the same lines we have taken

24, 2006, respectively. Consequently, as of March 31, 2007,

thus far. Aggressive investing continues in Japan's real estate

the loan to value ratio (Interest-bearing debt/Total assets)market, and competition for the acquisition of prime realstood at 31.5%, in line with our target of the 30% range.

estate is intensifying, making it more difficult to achieve

In addition to the above, as a result of converting

external growth. For these reasons, we have been focused

short-term loans to long-term loans, on March 31, 2007,

on improving portfolio quality from the 10th fiscal period

the Company had total interest-bearing debt of ¥140,000

by a reshuffling of properties in the portfolio. The Company

million ($1,186 million), consisting of ¥85,000 million

sold properties from its portfolio for the first time during($720 million) in long-term loans, including a ¥6,000

the 10th fiscal period, selling a total of four properties, andmillion ($51 million) current portion of long-term loans;in the 11th fiscal period, it conducted the property exchange

and outstanding investment corporation bonds with a par

detailed in the chart below as part of efforts to further

value of ¥55,000 million ($466 million), including a ¥25,000

strengthen portfolio quality. The property acquired throughmillion ($212 million) current portion of investment

the exchange, the Mitsubishi UFJ Trust and Banking

corporation bonds. (Short-term loans have been repaid in

Building, is a large-scale office building directly in front offull.) This sound financial strategy has given us sufficientTokyo Station, giving it a location in the heart of the

12 Japan Real Estate Investment Corporation

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

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

Marunouchi area, which is the most prominent location foror in other words, through external growth.

office buildings in Japan. This makes the property of

The market, however, began to change two and a half

exceptional competitiveness, and the acquisition has beenyears ago, and occupancy rates increased following an overall

highly rated by the real estate market in Japan.

rebound in corporate earnings. In addition, rent levels forTransferred Property

Acquired Property

Name of Property

Mitsubishi Soken
Building

Mitsubishi UFJ Trust andBanking Building

Age of Building

36.7 years

4.1 years

new tenants in the 23 wards of Tokyo began to increase twoyears ago, making it possible to raise rents on contracts withexisting tenants beginning in 2006. As a result of these rent

Otemachi, Chiyoda-ku,

Marunouchi, Chiyoda-ku,

increases in the overall market, approximately 40% of our

Tokyo

Tokyo

leasing agreements in the 23 wards of Tokyo are for rents

Type of specified

Trust beneficiary rightReal property

asset

in trust of real estateTransfer/acquisition¥41,900 million¥44,700 million

expected turnover of around 7% in tenants and negotiationsPrice($355 million)($379 million)

aimed at revising rents on existing contracts, we believe

Location

Specifications
Ceiling height

2,575mmStandard floor area Higher level

700m

2

2,800mmthat circumstances now present us with an excellent

1,776mopportunity to see increased revenue from rents.

2

Lower level 1,460m2
Air conditioning system Central air conditioningthat are below current market rent levels. Through an

Individual air conditioning

Since the launch of the J-REIT market over five anda half years ago, 41 investment corporations have sprung

Although competition for the acquisition of prime realup and the market continues to mature. Considering this,estate is intensifying, our policy is to expand our portfolio

the Company — a J-REIT pioneer — is proud of the greatby carefully selecting and acquiring prime properties

impact and huge success it has enjoyed over the past years.

through one-on-one transactions rather than through direct

Meanwhile, as the market grows and competitioncompetition such as bidding, to the extent possible. Toward

intensifies, the J-REIT market is facing its next stage ofthis end, we will continue to make sufficient use of thedevelopment. The Company shall become the market leader

pipeline provided by sponsor companies of the Assetin the next stage as well, mobilizing all of its know-how andManagement Company.

enthusiasm to fulfill its mandate from unitholders toincrease unitholder value. I thank all of our unitholders forInternal Growth

their unwavering support and understanding.

Our third policy pertains to internal growth. At present,internal growth is our primary management focus.
The Company has achieved its 10th consecutive
period of revenue and profit growth; however, during thefirst three to four years after public listing, the rental market
was unfavorable. In the midst of slack corporate earnings,

Taketo Yamazaki
Executive Director of Japan Real Estate Investment Corporation

an increasing cost consciousness led corporations to close
their sales locations as they continued to cut back.
Unfortunately, our existing properties did not generateincreased earnings; but rather the ability to increase revenue

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

and profit came through the acquisition of new properties,
Japan Real Estate Investment Corporation 13

The Portfolio of Japan Real Estate Investment Cor poration
As of March 31, 2007

Location

Type ofspecified asset

Acquisitiondate

Acquisition
price(¥ millions)

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

5,000 (1.1%)
81,555 (18.5%)
9,520 (2.2%)
4,810 (1.1%)
14,700 (3.3%)
44,700 (10.1%)
7,000 (1.6%)
10,20010,70020,900 (4.7%)
7,200 (1.6%)
3,173 (0.7%)
5,250 (1.2%)
16,830 (3.8%)
5,353 (1.2%)
7,680 (1.7%)
4,859 (1.1%)
2,808 (0.6%)
7,830 (1.8%)
9,350 (2.1%)
2,738 (0.6%)
5,500 (1.2%)
5,123 (1.2%)
6,670 (1.5%)
8,700 (2.0%)
4,885 (1.1%)
12,200 (2.8%)
34,600 (7.8%)
3,740
360
4,100 (0.9%)8,500 (1.9%)
3,541 (0.8%)
1,728 (0.4%)4,500 (1.0%)

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

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

Properties Roster
NumberName of building

Tokyo 23 wards

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

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

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

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

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

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

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

I- 28
I- 29
● I- 30● I- 31

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

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

Real property
Trust
Trust
Real property
Real property
Real property

●
●

●
●

●
●

Tokyo metropolitan area excluding 23 wards
●

II-1
II-2

Hachioji First Square
Saitama Urawa Building

Hachioji, Tokyo
Saitama, Saitama Prefecture

●

II-3

Kawasaki Isago Building

Kawasaki, Kanagawa Prefecture

●

Trust

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

Other major cities●

III- 1
III- 2

Jozenji Park Building
Sendai Honcho Honma Building

Sendai, Miyagi Prefecture
Sendai, Miyagi Prefecture

Real property
Trust

●

III- 3Kanazawa Park Building

Kanazawa, Ishikawa Prefecture

Real property●

III- 4

Nishiki Park Building

Nagoya, Aichi Prefecture

Real property

III- 5
III- 6● III- 7● III- 8● III- 9

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

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

Real property
Real property
Real property
Real property
Real property

III- 10 Midosuji Daiwa Building

Osaka, Osaka Prefecture

Trust

III- 11 Kobe Itomachi Building
III- 12 Lit City Building● III- 13 NHK Hiroshima Broadcasting Center Building● III- 14 Tosei Tenjin Building● III- 15 Tenjin Crystal Building● III- 16 Hinode Tenjin Building

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

●

●
●

●

●
●

14 Japan Real Estate Investment Corporation

Trust
Real property
Real property
Real property
Real property
Trust

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

1,000 (0.2%)
2,924
250
3,174 (0.7%)
2,880
1,700
4,580 (1.0%)
3,850
1,300
5,150 (1.2%)
1,680 (0.4%)
14,533 (3.3%)
1,865 (0.4%)
2,650 (0.6%)
2,264
1,900
4,164 (0.9%)
6,934
7,380
14,314 (3.2%)
1,436 (0.3%)
4,650 (1.1%)
1,320 (0.3%)
1,550 (0.4%)5,000 (1.1%)
3,657 (0.8%)
441,276 (100.0%)

Percentage ofownership of thebuilding (%)

Completion

Appraisal value
at the end of period(¥ millions)

100.0
100.0
100.0
56.76
31.34519.38402
100.0
99.0

1985
2006
1998
1993
2004
2003
2005
1966

6,220
83,900
10,2005,600
16,40044,7006,930
26,8004,791m2
25,678m2
6,269m2
3,687m2
9,316m2
11,737m2
4,495m2
20,865m2(51,577ft2)(276,402ft2)(67,480ft2)(39,695ft2)(100,282ft2)(126,340ft2)(48,384ft2)(224,594ft2)

4,791m2
25,678m2
6,269m2
3,687m2
9,316m2
11,737m2
4,495m2
20,750m2(51,577ft2)(276,402ft2)(67,480ft2)(39,695ft2)(100,282ft2)(126,340ft2)(48,384ft2)(223,360ft2)

1
5
2
8
1
10
1
49

222
1,843
292
165
493
20
162
982

(1.4%)(11.2%)(1.8%)(1.0%)(3.0%)(0.1%)(1.0%)(6.0%)

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

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

7,980
3,430
6,610
17,500
4,790
8,900
6,990
3,560
8,450
11,600
2,780
6,720
5,520
8,480
11,8006,090
15,30045,8005,520

4,694m2
3,897m2
4,279m2
4,329m2
2,875m2
4,898m2
9,643m2
4,062m2
6,197m2
9,242m2
4,067m2
5,205m2
7,708m2
7,347m2
7,772m2
3,147m2
5,558m2
29,819m2
2,462m2(50,531ft2)(41,950ft2)(46,068ft2)(46,604ft2)(30,949ft2)(52,724ft2)(103,799ft2)(43,726ft2)(66,707ft2)(99,489ft2)(43,783ft2)(56,035ft2)(82,972ft2)(79,085ft2)(83,660ft2)(33,876ft2)(59,832ft2)(320,978ft2)(26,511ft2)

4,694m2
3,897m2
4,279m2
4,329m2
2,875m2
4,898m2
9,643m2
4,062m2
6,197m2
8,942m2
4,067m2
5,205m2
7,708m2
7,322m2
7,772m2
3,147m2
5,558m2
29,819m2
2,462m2(50,531ft2)(41,950ft2)(46,068ft2)(46,604ft2)(30,949ft2)(52,724ft2)(103,799ft2)(43,726ft2)(66,707ft2)(96,259ft2)(43,783ft2)(56,035ft2)(82,972ft2)(78,814ft2)(83,660ft2)(33,876ft2)(59,832ft2)(320,978ft2)(26,511ft2)

15
5
1
12
8
7
22
8
8
108
1
4
19
19
1
5
9
55
3

294
153
150
374
134
253
312
133
265
484
116
208
252
331
283
197
327
1,479
151

(1.8%)(0.9%)(0.9%)(2.3%)(0.8%)(1.5%)(1.9%)(0.8%)(1.6%)(2.9%)(0.7%)(1.3%)(1.5%)(2.0%)(1.7%)(1.2%)(2.0%)(9.0%)(0.9%)

29.253305
100.0
100.0
100.0

1997
1987
1990
1989

12,700
3,500
1,560
5,570

10,929m2
7,123m2
2,186m2
5,797m2(117,646ft2)(76,679ft2)(23,532ft2)(62,401ft2)

10,929m2
7,123m2
2,186m2
5,797m2(117,646ft2)(76,679ft2)(23,532ft2)(62,401ft2)

18
9
9
8

445
182
73
201

(2.7%)(1.1%)(0.4%)(1.2%)

50.6611
100.0

1996
1990

3,390
2,550

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

6,307m2
4,421m2(67,894ft2)(47,588ft2)

40
15

170
136

(1.0%)(0.8%)

100.0

1990

3,360

6,831m2(73,537ft2)

5,982m2(64,392ft2)

11

158

(1.0%)

50.0
100.0

1993
1991

1,070
3,600

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

2,400m2
5,804m2(25,842t2)(62,475ft2)

16
16

67
158

(0.4%)(1.0%)

89.0

1991

6,300

21,202m2(228,223ft2)

18,574m2(199,933ft2)

68

521

(3.2%)

57.04651

1995

5,210

8,059m2(86,747ft2)

7,953m2(85,609ft2)

49

273

(1.7%)

100.0
100.0
100.0
100.0
100.0

1987
1987
1991
1982
1992

1,680
15,900
1,890
2,140
4,700

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

3,121m2
19,994m2
3,470m2
6,598m2
11,574m2(33,600ft2)(215,219ft2)(37,354ft2)(71,020ft2)(124,587ft2)

11
26
9
30
17

95
721
100
146
259

(0.6%)(4.4%)(0.6%)(0.9%)(1.6%)

100.0

1991

16,80020,450m2(220,127ft2)

20,450m2(220,127ft2)

25

673

(4.1%)

100.0
27.748827.085100.0
100.0
74.4844

1989
2005
1994
1992
1993
1987

951
5,400
1,780
1,510
4,970
3,640
498,7413,478m2
9,965m2
5,477m2
4,000m2
5,602m2
5,837m2
397,928m2(37,443ft2)(107,269ft2)(58,964ft2)(43,057ft2)(60,304ft2)(62,832ft2)(4,283,261ft2)

3,279m2
9,965m2
5,335m2
3,848m2
5,124m2
5,256m2
389,112m2(35,299ft2)(107,269ft2)(57,436ft2)(41,429ft2)(55,158ft2)(56,584ft2)(4,188,373ft2)

17
40
12
19
24
11
887

68
297
148
95
199
165
16,500(0.4%)(1.8%)(0.9%)(0.6%)(1.2%)(1.0%)(100.0%)Total leasable
space

Leased space

Total
number oftenants

Revenues fromleasing operations(¥ millions)

Note: Total revenues from leasing operations include revenues of ¥ 1,051 million (6.4%) for Mitsubishi Soken Building transferred on March 28, 2007.

Japan Real Estate Investment Corporation 15

Major Tenants Roster
Rank

1
2
3
4
5
6
7
8
9
10

Name of tenant

Name of building

Banyu Pharmaceutical Co., Ltd.
Mitsubishi UFJ Trust and Banking Corporation
Seven & i Holdings Co., Ltd.
Space Design, Inc.
FAST RETAILING CO., LTD.
Yamano Gakuen (Note 1)
The Dai-ichi Mutual Life Insurance Company
TOTO Ltd. (Note 2)
Toshiba Solutions Corporation
Asahi Kasei Pharma Corporation

Leased space

Kitanomaru Square (also includes 1 other building)
17,014m2 (183,144ft2)
Mitsubishi UFJ Trust and Banking Building
10,665m2 (114,802ft2)
Nibancho Garden
9,316m2 (100,282ft2)
Burex Kojimachi Building (also includes 1 other building) 8,774m2 (94,453ft2)
Kitanomaru Square
8,476m2 (91,245ft2)
Yoyogi 1Chome Building
7,772m2 (83,660ft2)
Midosuji Daiwa Building (also includes 7 other buildings) 7,660m2 (82,455ft2)
Midosuji Daiwa Building (also includes 1 other building)
6,906m2 (74,341ft2)
Takanawadai Building (also includes 2 other buildings)
5,331m2 (57,393ft2)
MD Kanda Building
5,144m2 (55,371ft2)

Percent of totalleased space

4.4%
2.7%
2.4%
2.3%
2.2%
2.0%
2.0%
1.8%
1.4%
1.3%

Notes: 1. The lease agreement concluded with the tenant was terminated on April 30, 2007.
2. TOTO LTD. changed its Japanese name from Toto Kiki Kabushiki Gaisha to TOTO Kabushiki Gaisha (English name unchanged) on May 15, 2007.

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

III-1–III-16: Other major cities

II-2
III-1
III-2

II-1

III-3
III-5
III-9 III-6
III-13 III-11
III-4
III-12 III-10III-8 III-7
III-14
III-15
III-16

II-3

I-1–I-31: Tokyo
23 wards

I-30
I-31

I-29

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

I-28

I-17

I-20

I-21

Tokyo Station

16 Japan Real Estate Investment Corporation

O ver view of Portfolio P roperties As of March 31, 2007
Note: Concerning real estate of which the Company is a partial owner through co-ownership or compartmentalized building units, the figures for “Site area” and “Floor area of building”
represent total site area and total floor space for the entire building.

Genki Medical Plaza

Kitanomaru Square● I-1

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

● I-2

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

Kandabashi Park
Building

● I-3

● I-4

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

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

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

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

Mitsubishi UFJ Trust andBanking Building● I-5

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

● I-6

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

Burex Kojimachi
Building

Sanno Grand
Building

● I-7

● I-8

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

Location :Site area :Floor area of building :Structure :Completion :Chiyoda-ku, Tokyo
3,663.93m2 (39,438ft2)
33,875.95m2 (364,637ft2)
Above ground: 10 floors
Below ground: 3 floors
September 1966
Japan Real Estate Investment Corporation 17

Yurakucho Denki
Building

Kodenmacho ShinNihonbashi Building● I-10● I-9

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

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

Ginza Sanwa Building● I-11

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

● I-12

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

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

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

18 Japan Real Estate Investment Corporation

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

Cosmo Kanasugibashi
Building● I-15

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

Aoyama Crystal
Building

Ryoshin Ginza East
Mirror Building

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

● I-16

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

Shinwa Building

Tokyo Opera City
Building● I-17

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

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

Takanawadai
Building

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

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

Omori-Eki
Higashiguchi Building

Nippon Brunswick
Building● I-21● I-22

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

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

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

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

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

Japan Real Estate Investment Corporation 19

Jingumae Media
Square Building

Shibuya Cross Tower● I-26● I-25

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

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

Harmony Tower● I-27● I-28

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

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

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

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

20 Japan Real Estate Investment Corporation

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

Hachioji First
Square● I-31

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

Ikebukuro 2Chome
Building

Otsuka HigashiIkebukuro Building

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

● II-1

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

Kawasaki Isago
Building

Saitama Urawa
Building● II-3● II-2

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

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

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

Sendai, Miyagi Prefecture
1,566.68m2 (16,864ft2)
7,648.33m2 (82,326ft2)
Above ground: 8 floors
Below ground: 1 floor
January 1993

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

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

● III-4

Location :Site area :Floor area of building :Structure :Completion :Hirokoji Tokio
Marine Nichido
Building

Completion :Nagoya, Aichi Prefecture
786.79m2 (8,469ft2)
6,445.08m2 (69,374ft2)
Above ground: 9 floors
Below ground: 2 floors
September 1987

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

Nagoya Hirokoji
Building● III-6● III-5

Location :Site area :Floor area of building :Structure :Sendai, Miyagi Prefecture
1,437.47m2 (15,473ft2)
8,247.50m2 (88,775ft2)
Above ground: 11 floors
November 1991

Nishiki Park
Building● III-3

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

Location :Site area :Floor area of building :Structure :Completion :Nagoya, Aichi Prefecture
4,095.81m2 (44,087ft2)
33,377.73m2 (359,275ft2)
Above ground: 18 floors
Below ground: 2 floors
May 1987
Japan Real Estate Investment Corporation 21

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

Kyoto Shijo
Kawaramachi Building● III-7● III-8

Nagoya, Aichi Prefecture
805.04m2 (8,665ft2)
5,348.00m2 (57,565ft2)
Above ground: 7 floors
Below ground: 1 floor
September 1991

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

Midosuji Daiwa
Building● III-9● III-10

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

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

Kobe, Hyogo Prefecture
808.55m2 (8,703ft2)
4,894.09m2 (52,679ft2)
Above ground: 10 floors
September 1989

Location :Site area :Floor area of building :Structure :NHK Hiroshima
Broadcasting Center
Building

Hiroshima, Hiroshima Prefecture
3,296.46m2 (35,483ft2)
35,217.28m2 (379,075ft2)
Above ground: 23 floors
Below ground: 2 floors
August 1994

22 Japan Real Estate Investment Corporation

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

Tosei Tenjin Building● III-13

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

Kobe Itomachi
Building

Completion :Location :Site area :Floor area of building :Structure :Kyoto, Kyoto Prefecture
1,471.57m2 (15,840ft2)
9,701.04m2 (104,421ft2)
Above ground: 9 floors
Below ground: 1 floor
November 1982

● III-14

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

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

Hinode Tenjin
Building● III-15● III-16

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

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

Japan Real Estate Investment Corporation 23

24 Japan Real Estate Investment Corporation

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

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

Selected Financial Data
Thousands of U.S. dollars(Note 1)Millions of yen
For the period from
October 1, 2006 to
March 31, 2007

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

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

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

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

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

Operating Revenues
Operating Expenses
Operating Profits
Income before Income Taxes
Net Income¥ 16,960
8,655
8,304
7,184
7,183

¥ 15,570
8,528
7,041
5,977
5,976

¥ 13,962
7,643
6,319
5,586
5,585

¥ 13,119
6,893
6,226
5,510
5,509

¥ 10,747
6,046
4,701
4,121
4,120

$ 143,668
73,321
70,34760,86160,852

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

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

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

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

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

322,358
159,000
137,569
133,448

3,760,893
1,185,938
2,302,987
2,242,134

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

410,000

345,400

345,400

345,400

260,400

410,000

663,091
7,183
100.0%
17,521600,605
5,976
99.9%
17,302599,475
5,585
99.9%
16,172599,2545,509
100.0%
15,951

528,2994,120
99.9%
15,824

5,617.04
60,852100.0%
148.42Net Operating Income (NOI)
Funds from Operations (FFO)
Return on Assets (ROA) (Note 2)
Return on Equity (ROE) (Note 3)
EOP Equity Ratio (Note 4)
EOP Interest-Bearing Debt Ratioon Total Assets (Note 5)
FFO Multiple
Debt Service Coverage Ratio (Note 6)

11,75910,740
9,578
8,978
7,131
99,616
9,441
8,257
7,945
7,526
5,762
79,983
1.6%
1.4%
1.4%
1.6%
1.4%
1.6%
(3.2% annualized) (2.7% annualized) (2.8% annualized) (3.2% annualized) (2.9% annualized) (3.2% annualized)
2.7%
2.9%
2.7%
2.8%
3.0%
2.7%
(5.5% annualized) (5.8% annualized) (5.4% annualized) (5.6% annualized) (6.0% annualized) (5.5% annualized)
61.2%
47.0%
47.8%
58.1%
42.7%
61.2%
31.5%
33.8 times
10.5 times

45.9%
21.0 times
9.5 times

45.3%
22.1 times
12.3 times

34.3%
21.1 times
14.0 times

49.3%
19.7 times
11.2 times

31.5%
33.8 times
10.5 times

Notes 1: Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥118.05 = US$1.00, the foreign exchange rate on
March 31, 2007, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen has been or could be readily
converted, realized or settled into U.S. dollars at that rate or any other rate.
2: ROA = Income before Income Taxes ÷ Average of Total Assets during the period
3: ROE = Net Income ÷ Average of Net Worth during the period(Annualized portion of the calculation given in note 4 assumes a fiscal period of 182 days for the period ended March 31, 2005, 183 days for the period
ended September 30, 2005, 182 days for the period ended March 31, 2006, 183 days for the period ended September 30, 2006 and 182 days for the period
ended March 31, 2007.)
4: EOP Equity Ratio = (Net Worth at end of period ÷ Total Assets at end of period) x 100
5: EOP Interest-Bearing Debt Ratio on Total Assets = (Interest-Bearing Debt at end of period ÷ Total Assets at end of period) x 100
6: Debt Service Coverage Ratio = Net Income before Interest, Taxes, Depreciation and Amortization ÷ Interest Expenses
Japan Real Estate Investment Corporation 25

Balance Sheets
As of March 31, 2007 and September 30, 2006

Thousands of yen

U.S. dollars (Note 1)

As of March
31, 2007

As of September
30, 2006

As of March
31, 2007¥ 13,877,640¥ 21,102,952$ 117,557,309

Rental receivables

143,310

105,628

1,213,979

Consumption tax refundable

165,977—

1,405,992

Other receivables

870,936—

7,377,692

Other current assets

584,592

295,905

4,952,072

15,642,456

21,504,486

132,507,045

Land

293,773,646

291,407,261

2,488,552,700

ASSETS
Current Assets:
Cash and bank deposits

Total current assets

Property and Equipment, at Cost:
Buildings and structures

145,028,118

137,049,167

1,228,531,284

Machinery and equipment

2,125,142

2,070,922

18,002,058

Tools, furniture and fixtures

91,06090,752

771,376

1,052,672

1,071,673

8,917,175

442,070,640

431,689,778

3,744,774,592(18,089,037)(16,023,048)(153,231,995)

423,981,603

415,666,730

3,591,542,597

1,272,797

1,004,797

10,781,852

21,974

12,974

186,147

Construction in progress
SubtotalLess accumulated depreciation
Net property and equipment

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

2,365

3,307

20,0372,204,134

2,112,906

18,671,197

Easement

828,095

828,095

7,014,785

Deferred investment corporation bond issuance costs

19,94429,916

168,945¥443,973,371¥441,163,214$3,760,892,604

Leasehold rights

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

26 Japan Real Estate Investment Corporation

Thousands of yen

As of March
31, 2007

U.S. dollars (Note 1)

As of September
30, 2006

As of March
31, 2007

LIABILITIESCurrent Liabilities:
Trade accounts payable
Other payables
Short-term loans¥ 1,430,707¥

749,064$

12,119,508

951,396

981,513

8,059,263—

64,500,000—

Current portion of long-term loan

6,000,000

6,000,000

50,825,921

Current portion of investment corporation bond

25,000,000

25,000,000

211,774,672

542,238

645,360

4,593,298

48

655

412

Accrued expenses
Accrued income taxes
Accrued consumption taxes—

522,577—

Rent received in advance

2,102,606

2,425,067

17,811,154

Other current liabilities

2,814

3,531

23,83836,029,812

100,827,770

305,208,066

Investment corporation bonds

30,000,000

30,000,000

254,129,606

Long-term loans

79,000,000

77,000,000

669,207,963

Total current liabilities
Long-Term Liabilities:

27,075,888

25,886,360

229,359,497

Total long-term liabilities

Deposits received from tenants

136,075,888

132,886,360

1,152,697,065

Total Liabilities

172,105,700

233,714,131

1,457,905,132

264,683,960

201,472,860

2,242,134,350

Retained earnings

7,183,711

5,976,223

60,853,123

Total unitholders’ equity

271,867,671

207,449,083

2,302,987,472

Total Liabilities and Unitholders’ Equity¥443,973,371¥441,163,214$3,760,892,604

UNITHOLDERS’ EQUITY
Unitholders’ capital
Authorized: 2,000,000 units
Issued:410,000 units as of March 31, 2007 and345,400 units as of September 30, 2006

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

Japan Real Estate Investment Corporation 27

Statements of Income and Retained Earnings
For the six months ended March 31, 2007 and September 30, 2006

Thousands of yen

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

U.S. dollars (Note 1)

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

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

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

¥16,397,656
103,116—459,256
16,960,029¥15,066,744
102,638
400,799—
15,570,182$138,904,335
873,500—
3,890,354
143,668,188

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

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

67,073,344
3,834,311
1,374,083
1,039,613
73,321,352
70,346,836

36,064
1,363

4,730
3,059

305,501
11,549666,198
376,539
9,972
79,62024,951
7,184,588

646,283
376,500
9,972—
39,6295,977,131

5,643,361
3,189,665
84,473
674,466
211,368
60,860,554

989
07,183,598
112¥ 7,183,711

1,006
0
5,976,124
99¥ 5,976,223

8,380
760,852,167
956$ 60,853,123

Statements of Changes in Unitholders’ equity
For the six months ended March 31, 2007 and September 30, 2006
Thousands of yen

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

Units

Unitholders’ capital

Retained earnings

Total

345,400——
345,400
64,600——410,000¥201,472,860——¥201,472,860
63,211,100——¥264,683,960¥ 5,585,907(5,585,808)
5,976,124¥ 5,976,223—(5,976,110)
7,183,598¥ 7,183,711¥207,058,767(5,585,808)
5,976,124¥207,449,083
63,211,100(5,976,110)
7,183,598¥271,867,671

U.S. dollars( Note 1)

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

Units

Unitholders’ capital

Retained earnings

Total

345,400
64,600——410,000$1,706,673,952
535,460,398——$2,242,134,350$ 50,624,512—(50,623,556)
60,852,167$ 60,853,123$1,757,298,464
535,460,398(50,623,556)
60,852,167$2,302,987,472

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

28 Japan Real Estate Investment Corporation

Statements of Cash Flows
For the six months ended March 31, 2007 and September 30, 2006

Thousands of yen

U.S. dollars (Note 1)

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

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

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

Cash Flows from Operating Activities
Income before income taxes
Depreciation and amortization
Loss on retirement of property and equipment
Amortization of investment corporation bond issuance costs
New unit issuance costs
Interest income
Interest expense
Gain on exchange of properties
Rental receivables
Other receivables
Consumption tax refundable
Corporate tax refundable
Prepaid expenses
Decrease due to sale of tangible fixed asset
Decrease due to sales of tangible fixed assets in trust
Trade accounts payable
Other payables
Accrued expenses
Rent received in advanceLong-term prepaid expenses
Other
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by operating activities¥ 7,184,588
2,717,648—
9,972
79,620(36,064)
1,042,738(459,256)(37,681)(870,936)(165,977)(5,796)(23,632)——
681,643(148,384)(522,714)(322,460)
942(179,789)
8,944,460
35,054(1,145,723)(1,596)
7,832,195¥ 5,977,131
2,682,161
13,497
9,972—(4,730)1,022,783—(31,062)—
1,001,998(318)
32,954
2,896,040
3,537,856
64,463
134,949
523,755(183,677)
888(378,812)
17,299,851
3,347(698,139)(1,360)16,603,699$ 60,860,554
23,021,167—
84,473
674,466(305,501)
8,833,026(3,890,354)(319,204)(7,377,692)(1,405,992)(49,101)(200,192)——
5,774,196(1,256,962)(4,427,906)(2,731,561)
7,984(1,522,995)
75,768,406
296,949(9,705,405)(13,523)
66,346,426

Cash Flows from Investing Activities
Purchases of property and equipment
Purchases of intangible assets
Purchases of investment securities
Payments of deposits
Proceeds from lease deposits received
Repayment of lease deposits
Payments of time deposits
Proceeds from time deposits
Net cash used in investing activities(10,534,991)(91,227)(268,000)(9,000)4,119,969(2,930,441)(4,573,000)
4,000,000(10,286,691)(14,049,415)———
1,839,514(1,190,234)(2,000,000)—(15,400,134)(89,241,776)(772,790)(2,270,224)(76,239)
34,900,204(24,823,730)(38,737,823)
33,883,947(87,138,430)

Cash Flows from Financing Activities
Proceeds from short-term loans
Repayment of short-term loans
Proceeds from long-term loans
Proceeds from issuance of units
Payment of new unit issuance costs
Dividends to unitholders
Net cash (used in) provided by financing activities
Net (decrease) increase in Cash and Cash Equivalents
Cash and Cash Equivalents at beginning of Period
Cash and Cash Equivalents at end of Period—(64,500,000)
2,000,000
63,211,100(78,805)(5,976,110)(5,343,816)(7,798,312)
19,102,952¥ 11,304,640

2,000,000(52,000,000)
56,000,000——(5,585,808)
414,191
1,617,756
17,485,196¥ 19,102,952—(546,378,653)
16,941,974
535,460,398(667,560)(50,623,556)(45,267,398)(66,059,402)
161,820,862$ 95,761,460

The accompanying notes form an integral part of these financial statements
Japan Real Estate Investment Corporation 29

Notes to Financial Statements
March 31, 2007 and September 30, 2006

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Japan Real Estate Investment Corporation (the “Company”) is a real estate investment corporation formed to own and invest primarily in a
portfolio of office properties. The Company is externally managed by a licensed asset management company, Japan Real Estate AssetManagement Co., Ltd. (“J-Rea”). J-Rea is currently owned 36% by Mitsubishi Estate Co., Ltd. (“MEC”), 27% by The Tokio Marine &Nichido Fire Insurance Co., Ltd. (“TMN”), 27% by The Dai-ichi Mutual Life Insurance Company (“DL”) and 10% by Mitsui & Co., Ltd.
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, TMN and DL under the
Law Concerning Investment Trusts and Investment Corporations of Japan, or the Investment Trust Law.
On September 10, 2001, the Company commenced operations when the Company was listed on the Tokyo Stock Exchange as one of thefirst real estate investment corporations in Japan (so-called “J-REITs”). The Company issued 160,000 units at a price of ¥525,000,
generating gross proceeds of ¥84,000 million.
On October 24, 2006, the Company completed a fifth public offering of 64,600 units at a price of ¥1,009,400 generating gross proceeds of¥65,207 million. As of March 31, 2007, the Company had total unitholders’ capital of ¥264,683 million ($2,242,134 thousand) with
410,000 outstanding units.
At March 31, 2007, the Company owned a portfolio of 50 office properties concerning an aggregate of approximately 397,928 square
meters of leasable space.
Basis of presenting financial statements
The Company maintains its accounting records and prepares its financial statements in accordance with accounting principles generally
accepted in Japan (“Japanese GAAP”), including provisions set forth in the Investment Trust Law, the Corporation Law of Japan, theSecurities and Exchange Law of Japan and the related regulations, which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which were prepared inaccordance with Japanese GAAP and were presented in the Securities Report of the Company filed with the Kanto Local Finance Bureau.
In preparing the accompanying financial statements, certain reclassifications and modifications have been made to the financial statements
issued domestically in order to present them in a format that is more familiar to readers outside Japan. In addition, the notes to financial
statements include information that might not be required under Japanese GAAP but is presented herein as additional information.
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥118.05=US$1.00, the foreignexchange rate on March 31, 2007, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen
has been or could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.
As permitted under the Japanese Securities and Exchange Law, amounts of less than one million yen have been omitted. As a result, thetotals shown in the accompanying financial statements do not necessarily agree with the sum of the individual amounts.

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

30 Japan Real Estate Investment Corporation

Expenditures for repairing expenses are charged to income as incurred. Significant renewals and betterments are capitalized.
The Company has adopted the accounting standard for the impairment of fixed assets which requires that tangible and intangible fixed
assets be carried at cost less depreciation, and be reviewed for impairment whenever events or changes in circumstances indicate that thecarrying amount of an asset may not be recoverable. Companies are required to recognize an impairment loss in their statement of income
if certain indicators of asset impairment exist and the book value of an asset exceeds the undiscounted sum of future cash flows of the asset.
The standard states that impairment losses should be measured as the excess of the book value over the higher of (1) the fair market valueof the asset, net of disposition costs and (2) the present value of future cash flows arising ongoing utilization of the asset and from disposal
after asset use. The standard covers land, factories, buildings and other forms of property, plant and equipment as well as intangible assets.
Fixed assets are grouped at the lowest level for which there is identifiable cash flows that are independent of cash flows of other groups ofassets.
Deferred charges
Deferred charges include investment corporation bond issuance costs and new unit issuance costs.
Investment corporation bond issuance costs are amortized using the straight-line method over three years.
New unit issuance costs are charged to income as incurred. The underwriters' commissions of the public offering are not recognized as newunit issuance costs in the financial statements since such costs are not payable by the Company under the so-called “spread method”. Under
the spread method, the difference between the offering price (the price paid by the unitholder) and the purchase price (the price received
by the Company) is directly paid to the underwriters. The difference incurred at the fifth offering on October 24, 2006 was ¥1,996 million($16,909 thousand).
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 consists of cash on hand, deposits with banks and short-term investments which are highly liquid, readily
convertible to cash and with insignificant risk of price fluctuation, with original maturity of three months or less.

3. INVESTMENT SECURITIESInvestment securities recorded at cost at March 31, 2007 and September 30, 2006 are summarized as follows:
Thousands of yen

Other securities
Non-listed stock

U.S. dollars

As of March
31, 2007

As of September
30, 2006

As of March
31, 2007¥1,272,797¥1,004,797$10,781,852

Japan Real Estate Investment Corporation 31

4. PROPERTY AND EQUIPMENT
Property and equipment at March 31, 2007 and September 30, 2006 consisted of the following:Thousands of yen

As of March 31, 2007
Acquisition Costs

U.S. dollars

As of September 30, 2006

Book Value

Acquisition Costs

As of March 31, 2007

Book Value

Acquisition Costs

Book Value

Land¥264,010,556 ¥264,010,556 ¥236,459,083 ¥236,459,083 $2,236,429,954 $2,236,429,954

Buildings and structures

124,338,793

114,263,592

1,053,272,285(13,112,423) 111,226,369(10,841,440) 103,422,152(111,075,171)

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

1,545,124

1,487,554(475,115)

1,070,009

81,349942,197,114

13,088,727(412,445)

1,075,108(4,024,694)

81,041

9,064,033

689,112(14,916)

66,432(7,575)73,466(126,359)

562,753

Construction in progress

1,052,672

1,052,672

1,071,673

1,071,673

8,917,175

8,917,175

Land in trust

29,763,090

29,763,090

54,948,178

54,948,178

252,122,746

252,122,746

Buildings and structures in trust

20,689,324

Accumulated depreciation(4,157,577)

Machinery and equipment in trust

580,018

Accumulated depreciation(326,314)

Tools, furniture and fixtures in trust

9,711

Accumulated depreciation(2,688)

Total

22,785,575
16,531,747

175,258,999(4,450,618)

18,334,957(35,218,786)

583,367
253,703(308,567)

274,800(2,764,209)

9,711
7,022

2,149,122

82,263(2,401)¥423,981,603

140,040,213

4,913,331

7,309(22,776)¥415,666,730

59,487$3,591,542,597

The compressed amount of tangible assets with governments grants under the Corporation Tax Law of Japan is ¥50 million ($424
thousand) at March 31, 2007 and September 30, 2006.
The compressed amount of land acquired with exchange transaction under the Corporation Tax Law of Japan is ¥14,431 million($122,252 thousand) at March 31, 2007.

5. SHORT-TERM LOANS
Short-term loans at March 31, 2007 and September 30, 2006 consisted of the following:Thousands of yen

As of March
31, 2007

Unsecured loan from a bank with variable interest,
original due on June 15, 2007
Unsecured loan from a trust bank with variable interest,
original due on February 1, 2007
Unsecured loans from banks and trust bankswith variable interest, original due on February 23, 2007
Total

U.S. dollars

As of September
30, 2006

As of March
31, 2007¥ 0 (*)¥ 2,000,000

$ 0

0 (*)

4,500,000

0

0 (*)
¥ 0

58,000,000

0¥64,500,000$ 0(*) Since the Company made early extinguishments of short-term loans in this fiscal period, there was no outstanding loan balances as ofMarch 31, 2007.
The weighted average interest rate applicable to the short-term loans at September 30, 2006 was 0.31042% per annum.
The Company has commitment lines of ¥25,000 million ($211,775 thousand) with four financial institutions to reduce a refinancing risk.
The unused amount of such commitment lines was ¥25,000 million ($211,775 thousand) at March 31, 2007.

32 Japan Real Estate Investment Corporation

6. INVESTMENT CORPORATION BONDS INCLUDING CURRENT PORTION OF INVESTMENTCORPORATION BOND
Details of total investment corporation bonds outstanding are summarized as follows:
As of March
31, 2007

As of September
30, 2006

As of March
31, 2007

Amount(thousands of yen)Interest rate(%)

Amount(thousands of yen)Interest rate(%)

Amount(U.S. dollars)

Unsecured bonds due on June 21, 2007

¥ 25,000,000

1.32%¥ 25,000,000

1.32%$ 211,774,672

Unsecured bonds due on April 30, 2008

10,000,000

0.69%

10,000,000

0.69%

84,709,869

Unsecured bonds due on April 30, 2010

10,000,000

0.98%

10,000,000

0.98%

84,709,869

Unsecured bonds due on September 29, 2025

10,000,000

2.56%

10,000,000

2.56%

84,709,869

Subtotal¥ 55,000,000—¥ 55,000,000—$ 465,904,278

Less: current portion of investment corporation bond

(25,000,000)—(25,000,000)—(211,774,672)

Total¥ 30,000,000—¥ 30,000,000—$ 254,129,606

7. LONG-TERM LOANS INCLUDING CURRENT PORTION OF LONG-TERM LOAN
Long-term loans at March 31, 2007 and September 30, 2006 consisted of the following:Thousands of yen

U.S. dollars

As of March
31, 2007

As of September
30, 2006

As of March
31, 2007

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

¥ 3,000,000¥ 3,000,000$ 25,412,961

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

3,000,000

3,000,000

25,412,961

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

2,000,000

2,000,000

16,941,974

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

5,000,000

5,000,000

42,354,934

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

2,000,000

2,000,000

16,941,974

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

5,000,000

5,000,000

42,354,934

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

5,000,000

5,000,000

42,354,934

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

10,000,000

10,000,000

84,709,869

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

22,000,000

22,000,000

186,361,711

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

24,000,000

24,000,000

203,303,685

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

2,000,000

2,000,000

16,941,974

1.2875% unsecured loan from a bank,due on December 15, 2009

2,000,000—

16,941,974¥85,000,000¥83,000,000$720,033,884

Subtotal
Less: current portion of long-term loan

(6,000,000)(6,000,000)(50,825,921)

Total¥79,000,000¥77,000,000$669,207,963

Japan Real Estate Investment Corporation 33

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

9. INCOME TAXESAt March 31, 2007 and September 30, 2006, the Company’s deferred tax assets consist mainly of the enterprise tax, which is notdeductible for tax purposes. The reconciliation of tax rate difference between the adjusted statutory tax rate and the effective tax rate forthe six months ended March 31, 2007 and September 30, 2006 were as follows:
For the period from October 1, 2006
to March 31, 2007

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

Statutory tax rate ...................................................................................39.39% ............................................39.39%
Deductible dividend distribution ..........................................................(39.38%)..........................................(39.38%)
Others .....................................................................................................0.00% ..............................................0.01%
Effective tax rate......................................................................................0.01% ..............................................0.02%
The Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation
Measures Law of Japan, or the STML, an investment corporation is allowed to deduct dividends of accounting profits, or dividend
distributions, paid to investors from its taxable income if certain tax requirements are satisfied. Such tax requirements include
dividend distributions in excess of 90% of its taxable income for the fiscal period as stipulated by Article 67-15 of the STML.
Based on the distribution policy provided by Article 32-2 of the Articles of Incorporation, the Company made a dividend
distribution of 100% of retained earnings in the amount of ¥7,183 million ($60,853thousand) subsequent to March 31, 2007 andtreated it as tax deductible dividend. The Company will not distribute the dividends in excess of accounting profit under Article
32-3 of the Articles of Incorporation.

10. PER UNIT INFORMATION
The following table summarizes information about net assets per unit and net income per unit at March 31, 2007 and September 30, 2006,
and for the periods then ended:Yen

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

U.S. dollars

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

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

Net assets at period end per unit

¥663,091¥600,605$5,617

Net income per unit

¥ 17,876¥ 17,302$ 151

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.

34 Japan Real Estate Investment Corporation

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

U.S. dollars

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

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

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

Purchase of the properties¥48,559,000¥12,380,000$411,342,651

Sale of the properties

41,900,000—

354,934,350

Property management expenses

1,053,304

950,817

8,922,531

Utilities expenses

98,14868,267

831,417

Casualty insurance

34,318

1,200

290,711

Other rental expenses

6,154

4,301

52,137

Interest expense

25,30525,444

214,362

Repairing expenses

742,868

248,712

6,292,827

12. BREAKDOWN OF PROPERTY-RELATED REVENUES AND EXPENSES
For the six months ended March 31, 2007 and September 30, 2006.
Thousands of yen

U.S. dollars

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

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

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

Property-Related Revenues¥16,500,773¥15,169,382$139,777,834

Rental Revenues

16,397,656

15,066,744

138,904,335

Rental revenues

12,594,800

11,069,700

106,690,386

Common service charges

2,289,212

2,481,982

19,391,885

492,917

483,0144,175,499

1,020,726

1,032,046

8,646,564

103,116

102,638

873,500

Cancellation charges

40,91538,736

346,596

Other miscellaneous revenues

62,20063,901

526,903

7,918,008

7,511,891

67,073,344

Property management expenses

1,815,942

1,766,740

15,382,821

Utilities expenses

1,133,868

1,198,307

9,604,981

Property and other taxes

1,241,021

1,271,584

10,512,673

38,43738,909325,601

Parking revenues
Other rental revenues
Non-Rental Revenues

Property-Related Expenses

Casualty insurance
Repairing expenses
Depreciation
Other rental expenses
Profits

916,973

513,335

7,767,671

2,717,648

2,682,161

23,021,167

54,11740,852458,430¥ 8,582,765¥ 7,657,491$ 72,704,490

Japan Real Estate Investment Corporation 35

13. BREAKDOWN OF GAIN ON SALE OF PROPERTIESFor the six months ended March 31, 2007 and September 30, 2006.
Thousands of yen

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

U.S. dollars

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

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

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

Cost of property$—

1,253,829

Other sales expenses—

66,725Gain on sale of property

—

¥

—

¥ 1,272,445

$

—

¥

—

¥ 1,755,277$—

Shin-Yokohama First Building
Revenue from sale of property
Cost of property

2,896,040

Other sales expenses—

37,505

Loss on sale of property

—

¥

—

¥(1,178,268)

$

—

¥

—

¥ 1,490,000$—

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

996,531

Other sales expenses—

39,150Gain on sale of property

—

¥

—

¥

454,318

$

—

¥

—

¥ 1,165,000$—

Kanazawa Minamicho Building
Revenue from sale of property
Cost of property

1,287,494

Other sales expenses—

25,200Loss on sale of property

¥

—

—

¥ (147,694)$—

14. BREAKDOWN OF GAIN ON EXCHAGE OF PROPERTIESFor the six months ended March 31, 2007 and September 30, 2006.
Thousands of yen

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

U.S. dollars

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

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

Mitsubishi Soken Building
Revenue from sale of property¥41,900,000—$354,934,350

Cost of property

26,826,706—

227,248,675

Other sales expenses

182,100—

1,542,568

Advanced depreciation

14,431,937—

122,252,753

Gain on exchange of properties¥

36 Japan Real Estate Investment Corporation

459,256

¥

¥

—

$

3,890,354

15. SUPPLEMENTAL CASH FLOW INFORMATION
The following table represents a reconciliation of cash and cash equivalents at March 31, 2007 and September 30, 2006:
Thousands of yen

Cash and deposits with banks

U.S. dollars

March 31, 2007

September 30, 2006

March 31, 2007

¥ 9,129,721¥13,478,743$ 77,337,750

Cash and deposits with banks held in trust

4,747,919

7,624,208

40,219,560

Time deposits with maturities of more than three months(2,573,000)(2,000,000)(21,795,849)

Cash and cash equivalents¥11,304,640¥19,102,952$ 95,761,460

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

U.S. dollars

March 31, 2007

March 31, 2007

The amount of fixed assets acquired¥44,700,000$378,653,113

The amount of fixed assets rendered

41,900,000

354,934,350

Net cash paid

¥ 2,800,000$ 23,718,763

16. LEASESThe Company owns office buildings under leases and earns rent income. As of March 31, 2007 and September 30, 2006, the future lease
revenues under the non-cancelable operating leases are as follows:
Thousands of yen

Due within one year

U.S. dollars

As of March
31, 2007

As of September
30, 2006

As of March
31, 2007¥ 8,338,164¥ 8,387,902$ 70,632,481

Due after one year

28,762,327

27,072,595

243,645,297

Total¥37,100,491¥35,460,498$314,277,778

Japan Real Estate Investment Corporation 37

17. SUBSEQUENT EVENTSIssuance of Investment Corporation Bonds
Based on the approval by the Board of Directors' meeting held on June 1, 2007, the Company issued investment corporation bonds.
(1) Name(i) Japan Real Estate Investment Corporation Fifth Unsecured Bond
(hereinafter, "the Fifth Bond")(ii) Japan Real Estate Investment Corporation Sixth Unsecured Bond
(hereinafter, "the Sixth Bond")(2) Total amount of the bond issue
The Fifth Bond:
10 billion yen
The Sixth Bond:
15 billion yen(3) Payment amount
100 yen per face value of 100 yen(4) Redemption price
100 yen per face value of 100 yen(5) Yield on the bonds
The Fifth Bond:
1.67%
The Sixth Bond:
1.91%(6) Secured mortgage or guarantee
There is no secured mortgage or guarantee on the bonds. There are no assets reserved as security for the bonds.
(7) Redemption method and dates(i) Final redemption date
The Fifth Bond: June 18, 2012
The Sixth Bond: June 18, 2014(ii) Redemption by purchase may be accomplished anytime from the date following the payment date(8) Interest payment dates
June 18 and December 18 of every year
(9) Finance-related special covenants
No finance-related special covenants are attached to the bonds.
(10) Use of the fund
Scheduled future redemptions of the existing investment corporation bonds
Appropriation of retained earnings
On May 17, 2007, the Board of Directors resolved to effect the payment of a cash distribution of ¥17,521 per unit aggregating ¥7,183 million($60,852 thousand) to unitholders at the record date of March 31, 2007.

38 Japan Real Estate Investment Corporation

Japan Real Estate Investment Corporation 39

Corporate Data
As of March 31, 2007

Transfer Agent

Executives
Executive Director:

Taketo Yamazaki

The Sumitomo Trust & Banking Co., Ltd.

Supervisory Directors:

Kenji Kusakabe

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

Tomohiro Okanoya
Auditors
Paid-in Capital

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

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

Number of Units Issued

Incorporation

410,000

May 11, 2001

Number of Unitholders

Executive Office

14,219Japan Real Estate Investment Corporation
3-1, Marunouchi 3chome, Chiyoda-ku, Tokyo 100-0005, Japan

Stock Listing
Tokyo Stock Exchange

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

Securities CodePlanning Department, Manager

8952

Toshiya Kobayashi
Tel: 81-3-3211-7921

Type of Investment Corporation

Fax: 81-3-3212-8886

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

40 Japan Real Estate Investment Corporation

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

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