Japan Real Estate Investment Corporation

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

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

Contents
The Strengths of Japan Real Estate Investment Corporation

p. 1

To Our Unitholders

p. 2

Financial Highlights

p. 6

Top 10 Unitholdersp. 6

Unit Price Performance

p. 6

Portfolio Highlights

p. 7

Asset Management Summaryp. 8

Asset Size, Property Acquisitions, and Performance Trends

p.10

The Portfolio of Japan Real Estate Investment Corporation

p.12

Overview of Portfolio Properties

p.17

Financial Section

p.23

Other Information

p.49

Corporate Data

p.51

The Strengths of Japan Real Estate Investment Corporation
STRENGTHS

Stable Dividends

Collaboration withSponsors— Actual dividend per unit— ‌Expertise offor the September 2016 period:¥8,3 6 1

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

— Forecasted dividend per unit
for the March 2017 period:¥8,460

Steady Growth with
Quality Portfolio

Sound Financial Base
As of September 30, 2016

As of September 30, 2016

— Total acquisition price:¥923,623 million—
68
Maintainsproperties— ‌The first listed J-REIT, showing steady
performance for 30 consecutive periods—	‌Highest level of credit ratings for a J-REIT:

A+
AA

from S&P,

A1

from Moody’s,

from R&I—	‌LTV (Interest-bearing debt / Total assets):40.3%—	‌Long-term, fixed interest-bearing debt ratio:*

87.2%* ‌Long-term, fixed interest loans + Investment corporation bonds (including
current portion of Long-term, fixed interest loans and Investment­corporation bonds) / Total interest-bearing debt

Japan Real Estate Investment Corporation1

To Our Unitholders
In the fiscal period ended September 2016, both incomes and revenues increased due to asteady rise in rental revenues from the existing buildings, as well as a decrease in interest
expenses, which resulted from the benefits of low interest rates. Dividends were up 240 yen, to
8,361 yen, compared to the previous period. The occupancy rate of our portfolio at the end of
the period reached an extremely high level of 98.7%. We will continue our efforts to focus on
improving the profitability of our existing buildings through upward rent revisions, as well as
to aim for stable dividend growth.

Business Performance for the September 2016 Period
Summary of Financial Results and Cash Dividends

Operating Environment and Performance

In the September 2016 period (April 1, 2016 to September 30, 2016),

The September 2016 period has seen moderate yet constant recovery

Japan Real Estate Investment Corporation (“the Company”) recordedof the Japanese economy in general, with a steady growth of business

operating revenues increased by 0.6% on the previous period, to 30,773

profitability and employment. Meanwhile, some companies remain

million yen. On the earnings front, operating income increased 0.1%,

cautious in making judgments due to international factors such as

to 12,368 million yen. After deducting expenses for interest payments

the UK’s decision to leave the EU, which triggered fluctuations inon loans and other costs, ordinary income increased 1.3%, to 10,958

the financial and capital markets, and a downturn in the emerging

million yen, and profit had an increase of 1.8%, to 10,947 million yen.

economies in Asia. The concerns for the trend towards a strong yen

Turning to dividends, the Company will make cash distributions

and uncertainties in the prospects of the domestic economy are alsousing accounting profits based on the dividend policy outlined incontributory factors.

Article 32-1(2) of the Company’s Articles of Incorporation, in an

In the market for leased offices, the decline in vacancy rates inamount that exceeds 90% of earnings available for dividends as

the Tokyo metropolitan area has lost momentum, but the demand forrequired by Article 67-15 of the Special Taxation Measures Law oflarge, recently built buildings remains strong, maintaining an upward

Japan. Based on this policy, keeping below the level of end-of-term

trend, if marginal, in advertised rents.

unappropriated retained earnings and reserving the retained earnings

In the investment market for real estate, healthy conditions forbrought forward, the total amount of dividends that the Company has

the financing environment continue, backed by the global trend ofdetermined to pay out is 10,947,140,910 yen for the period underfinancial deregulation, whereas desirable properties with high com­review, which is a multiple of 1,309,310–the number of units outstand-petitiveness are few, and thus the competition for property acquisition

ing as of September 30, 2016. Accordingly, the per-unit cash dividend

has intensified.

is 8,361 yen.

Under such market conditions, the Company made sound investments under the Investment Guideline of providing stable dividends
to unitholders, which was set forth at the time of the Company’s listing on the TSE and remains unchanged to this date. Accordingly, theCompany has been able to provide dividends at 8,361 yen, which is anincrease of 240 yen over the previous period.
In the market for leased office space in the period under review,as a result of our efforts to improve and maintain occupancy rates
through meticulous property leasing, the Company’s occupancy rate
was 98.7% as of September 30, 2016, which marks a further improvement on the last period’s 98.3% as of March 31, 2016.

2

Japan Real Estate Investment Corporation

As for external growth, we acquired additional shares of the Nishiki Park Building in the
September 2016 period, and newly acquired the Kanazawa Kamitsutsumicho Building in the
March 2017 period. We will continue to adhere to a strict and consistent evaluation criteriaamid competition in property acquisitions as we select properties with a medium- to longterm competitive edge. Furthermore, in 2016, we received a high evaluation in the Global Real
Estate Sustainability Benchmark (GRESB), acquiring the highest Green Star rating. We willcontinue to implement ESG initiatives going forward.

As for external growth, the Company acquired shares of Nishiki

Concerning new loans related to property acquisition and the refi-

Park Building (Nagoya, Aichi Prefecture) on April 1, 2016 to boost thenancing of existing loans, the Company carries out loans strategicallyexisting property ownership by purchasing a further 3.1047% for 175

and flexibly after giving close consideration to the above-mentioned

million yen. Thus, the Company’s current share of the said propertymeans, as well as the possibility of repayment with funds procured

has increased from 68.63831% to 71.74301%.

from issuing new investment units.

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

In the period under review, the Company successfully reduced

the fiscal period under review, September 30, 2016, consisted ofborrowings by means of cash reserves, and extended the contractual

68 properties, with a total acquisition price of 923,623 million yen.

term of the commitment line agreement (a total of 50 billion yen)

Total leasable floor area stood at 820,917 m2 with 1,426 tenants in total.

for another year.

Incidentally, on October 3, 2016, the Company acquired the

As a result of these financing activities, as of September 30, 2016,

Kanazawa Kamitsutsumicho Building (Kanazawa, Ishikawa Prefecture)

the Company’s total interest-bearing debt was 356,350 million yen,for 2,780 million yen. This is a recently built property with a com­

7,050 million yen down from the end of the previous period. This

petitive edge, situated in Kanazawa, the administrative and economic

amount consists of long-term loans totaling 290,650 million yen

center of the Hokuriku region.

(including the current portion of long-term loans totaling 42,850

Notes: 1. The part of the Jingumae Media Square Building site (acquisition price:
614 million yen) that was expropriated by the Tokyo Metropolitan
Government on October 30, 2009, is included in the total acquisition
price. The total acquisition price in the subsequent sections follows thesame convention.
2. The Nippon Brunswick Building (land with leasehold interest), whosebuilding ownership was transferred on August 23, 2013, is included in thenumber of properties and total acquisition price above, but is not included
in total leasable space or total number of tenants.

Finance Activities
According to financial policy, the Company aims to operate the LTV
ratio (ratio of interest-bearing debt to total assets) at 30 to 40%, andstrives to maintain a sound and conservative financial profile by the
staggering of maturities, extension of durations, and diversification

million yen), short-term loans totaling 45,700 million yen, andinvestment corporation bonds totaling 20,000 million yen (there isno current portion of investment corporation bonds). The current
LTV ratio stands at 40.3%.
The Company’s credit ratings as of September 30, 2016 were as follows:
Rating Agency

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

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

Moody’s Japan K.K.

Rating: A1; Outlook: Stable

Rating and Investment
Information, Inc.

Rating: AA; Outlook: Stableof stable lenders, among other possibilities, taking into consideration
the borrowing cost and existing relationships with lenders.

Japan Real Estate Investment Corporation3

Outlook
Operating Environment
The Japanese economy is expected to follow a course of moderate
recovery as a result of new monetary policy by the Bank of Japan as wellas the government policies to end deflation. However, depending onsuch factors as the normalization of the US monetary policy and the
UK decision to leave the EU, as well as the deceleration of Asian economies, the risk of economic downturn in Japan must be closely watched.
Helped with the limited supply of new properties, the market forleased office space is expected to recover gradually in the Tokyo metropolitan area and other areas. However, it is necessary to remain vigilant
to identify the impact of the increase in office space supply that is
anticipated in 2018 and beyond. In other major cities, with some areas
holding fewer vacancies and improving standard rents, the overall status of the market veers toward moderate recovery.
In the investment market for real estate, the favorable financing
environment and shortage of desirable properties remains unchanged,
and the expected yield is forecast to stay at the current low level.
Therefore, competition in property acquisition is likely to further
intensify, and transactions carried out at higher valuation are likely
to continue.

Property Management
Based on the conditions stated above, the Company will adhere to thefollowing management policies in order to maintain and improve
profitability.
(i) Strengthen relationships of trust with existing tenants
	The Company has contracts with numerous property managementcompanies. Each property management company has developed
relationships of trust with their tenants through daily diligence inmanaging their respective properties over the years. The Company
will work to further solidify these relationships by anticipating
tenants’ needs and providing tailored services to bolster tenant­satisfaction, thereby maintaining and improving occupancy rates
and raising rent levels.

(ii) Fill vacancies promptly	In cooperation with the previously mentioned property management companies and their leasing brokers, the Company will
actively seek the most appropriate tenants for each property,
based on location and features, in order to fill current and anticipated vacancies without delay. Furthermore, the Company will
work to identify additional needs for floor space among the­existing tenants.
(iii) Stabilize revenues and earnings	With the aim of stabilizing revenues and earnings, the Company
will endeavor to promote fixed lease agreements and secure longterm leasing with its large-scale tenants.
(iv) Reduce management costs
	The Company has introduced sound competitive principles to anumber of property management companies so that they perpetually review and improve their management systems and cost structures. Along with this, the Company endeavors to ensure andenhance tenant satisfaction.

Property Acquisitions and Sales
The Company has adopted the following policies for acquiringproperties.
(i)	To access information quickly, the Company continues toenhance its property information channels while working todevelop new channels.
(ii)	In its acquisition activities, the Company continues to meticulously monitor and examine economic, physical, and legal factors,
including rights-related issues, when selecting properties. In particular, with regard to the structure of buildings, the Company
requires buildings to meet or exceed new earthquake-resistancestandards, verifies the need for renovations by ascertaining current
conditions accurately based on engineering reports, and exclusively
targets properties capable of maintaining a competitive edge interms of the facilities they offer over the medium to long term.

4Japan Real Estate Investment Corporation

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

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

(iii)	In accordance with its acquisition policies, the Company shallmaintain its portfolio so that 70% or more of the portfolio proper-(v)	The Company aims for the best possible execution of financialtransactions by negotiating with numerous financial institutions.

ties are located within the Tokyo metropolitan area, with theremaining 30% or fewer located in other major cities.

Performance Forecasts for the March 2017 and
September 2017 Fiscal Periods

Under these policies, the Company will continue to acquire highly

For the March 2017 period (October 1, 2016 to March 31, 2017), thecompetitive properties. At the same time, in order to further improve

Company forecasts operating revenues totaling 30,720 million yen,

the quality of its portfolio, the Company will remain open to theoperating income totaling 12,490 million yen, ordinary income total-

replacement of portfolio properties with due consideration given

ing 11,080 million yen, and profit totaling 11,070 million yen. The

to timing.

Company plans to declare a cash dividend of 8,460 yen per unit.

Financial Policy2017), the Company forecasts operating revenues totaling 31,170 mil-

The Company has adopted the following financial policies.

lion yen, operating income totaling 12,730 million yen, ordinary income

For the September 2017 period (April 1, 2017 to September 30,

totaling 11,350 million yen, and profit totaling 11,340 million yen.
(i)	In principle, the Company shall maintain an LTV ratio below

The Company plans to declare a cash dividend of 8,660 yen per unit.

65%. To ensure an even lower interest-bearing debt ratio, theOperating revenues, operating income, ordinary income, profit,

Company adopts the conservative target level of 30 to 40%.

and cash dividend per unit may vary depending on potential changes
to the market situation.

(ii)	The Company shall set the ceiling for the combined total of loans
and investment corporation bonds at 1 trillion yen.
(iii)	When obtaining a loan, the Company shall only negotiate withqualified institutional investors (limited to those defined under
Article 67-15 of the Special Taxation Measures Act) before execut-

Hiroshi Nakajima

ing a loan agreement.

Executive Director of Japan Real Estate Investment Corporation(iv)	With the purpose of maintaining liquidity at an appropriate level,
the Company may establish preliminary borrowing frameworks,
such as overdraft agreements and commitment line agreements, orNaoki Umeda

may conclude preliminary contracts for loans, as needed.

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

Japan Real Estate Investment Corporation

5

Financial Highlights
Millions of yen
For the period from
April 1, 2016 to
September 30, 2016

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

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

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

For the period from
April 1, 2014 toSeptember 30, 2014

Operating revenues¥30,773¥30,589¥29,980¥28,314¥27,760

Operating income

12,36812,352

12,054

11,243

11,255

Ordinary income

10,958

10,816

10,487

9,625

9,582

Profit10,947

10,753

10,476

9,619

9,572

Net operating income (NOI) (Note 1)

20,182

19,973

19,67018,412

18,105

Funds from operations (FFO) (Note 2)

17,447

17,07916,80815,62915,455

22.8

25.0

21.5

22.6

22.9

Cash distribution

10,947

10,632

10,475

9,613

9,571

Number of units

1,309,310

1,309,310

1,309,310

1,251,530

1,251,530

8,361

8,121

8,001

7,681

7,648

FFO multiple (Times) (Note 3)

Dividend per unit (Yen)

Notes: 1. NOI = Property-related revenues – Property-related expenses (excluding Depreciation)
2. FFO = Profit + Depreciation – Gain (Loss) on sales of properties
3. FFO multiple = Unit price at end of the respective term / FFO per unit (Annualized)(Annualized portion of the calculation given in Note 3 assumes a fiscal period of 183 days for the period ended September 30, 2014, 182 days for the period ended
March 31, 2015, 183 days for the period ended September 30, 2015, 183 days for the period ended March 31, 2016 and 183 days for the period ended September 30, 2016.)

Top 10 Unitholders As of September 30, 2016
Unitholders

Units% of total units
outstanding

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

237,365

18.13%The Master Trust Bank of Japan, Ltd. (Shintaku Acc.) ................................................................................................................................................................................................................................................

129,151

9.86%

Trust & Custody Services Bank, Ltd. (Toshin Acc.) .......................................................................................................................................................................................................................................................

97,820

7.47%

The Nomura Trust and Banking Co., Ltd. (Toshin Acc.) .........................................................................................................................................................................................................................................

52,705

4.03%

STATE STREET BANK WEST CLIENT-TREATY 505234 .........................................................................................................................................................................................................................

26,487

2.02%

STATE STREET BANK-WEST PENSION FUND CLIENTS-EXEMPT 505233 ..........................................................................................................................................................

22,544

1.72%

STATE STREET BANK AND TRUST COMPANY 505223 .......................................................................................................................................................................................................................

21,279

1.63%

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

17,9701.37%

NOMURA BANK (LUXEMBOURG) S.A. ..........................................................................................................................................................................................................................................................................

17,226

1.32%

Mitsubishi Estate Co., Ltd. ............................................................................................................................................................................................................................................................................................................................

17,1201.31%

Unit Price Performance
TSE REIT Index   

325%

TOPIX   The Company

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

6

Japan Real Estate Investment Corporation

Portfolio Highlights
Trends in the state of portfolio management
September 2001
March 2002
September 2002
March 2003
September 2003
March 2004
September 2004
March 2005
September 2005
March 2006
September 2006
March 2007
September 2007
March 2008
September 2008
March 2009
September 2009
March 2010
September 2010
March 2011
September 2011
March 2012
September 2012
March 2013
September 2013
March 2014
September 2014
March 2015
September 2015
March 2016
April 2016
May 2016
June 2016
July 2016
August 2016
September 2016

Total leasable space (m2)

Number ofbuildings

Total number oftenants

Total leasable
space (m2)Occupancy
rate (%)

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

213
353
362
383
407
477
504
669
814
866
835
887
879
931
970
993
977
979
992
1,004
1,009
1,058
1,082
1,131
1,146
1,223
1,239
1,350
1,461
1,420
1,421
1,416
1,415
1,412
1,419
1,426

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

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

820,381820,866
820,900
820,900
820,900
820,902820,917

98.3
98.4
98.2
98.0
98.0
98.3
98.7

0

200,000

400,000

600,000

800,000

1,000,000

Sep. ’16
periodNotes: 1. The total number of tenants is the gross number of tenants by building.
2. Nippon Brunswick Building (land with leasehold interest) is not included.

50.0

60.0

70.0

80.0

90.0

100.0
Occupancy rate (%)

Portfolio breakdown As of September 30, 2016
Properties by geographic region

Tenants by industry type

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

Nagoya city

3.3%

Osaka city and
Kyoto city

6.8%

Tokyo metropolitan
area excluding
Tokyo 23 wards

7.6%

Ceramics 1.2%
Electricity andheat supply services 1.5%

Other areas 7.7%

Other 9.7%

Public services andassociations 2.4%

74.6%

Service industries 10.0%

Machinery 3.1%

Finance

8.6%

Insurance 3.2%
Communications

3.9%

Real estateSpecialist services(consulting, etc.) 4.2%
Construction* ‌Nippon Brunswick Building(land with leasehold interest)
is not included.

Electronic devices 8.7%

Medical 2.8%

Tokyo 23 wards

Information services 10.5%

8.5%

4.5%

Media and advertisement

5.2%

Retail and restaurants
Pharmaceuticals

5.6%

6.5%

Japan Real Estate Investment Corporation

7

Asset Management Summary
For the period from April 1, 2016 to September 30, 2016

Acquired Asset (Subsequent Event)

e

Lin

ine

oy
a

uN
ag

iL
am

Hyakumangoku-dori
Nippon Life Insurance
Company Building

ku-dori

Meiji St.

Isetan

ine

in L

ets

uni S
t.

tosh

Ao
n

Kamitsutsumicho
Building

Kanazawa New Grand Hoteluku LineKanazawa Castle Park

Toei Shinj

Shinjuku 3-Chome Sta.

Sta.

Property Summarya.

ntShinjuku
Ward Office

Kanazawa Kamitsutsumicho Building
injuku St

Line

e

in
oya L

u Nag

Ki

Kanazawa
Finance-history

museumShinjuku Culture
CenterKanazawa

Shinjuku

Sh
Odakyui
Subway Tsuruma

ts
Meite

Shirakawa Park

Location:
2-4-3 Nishiki, Naka-ku, Nagoya City, Aichi Prefecture● Site area: 	‌2,170.45 m2 (Total land area for the building site including
leased land (term leasehold interest) of 384 m2)● Floor area of building:
25,091.91 m2 (Total floor space for the entire building)● Structure: 	‌Steel-framed, steel-flamed reinforced concrete, reinforced
concrete s­ tructure, flat roof
● Floors: 	‌Above ground: 22 floors
Below ground: 4 floors● Completion: 	‌August 1995
● Acquisition date:
April 1, 2016
● Acquisition price:¥175 million● Type of ownership: 	‌Land:
Ownership(36,729/1,000,000 co-ownership of 1 lot: 1,786.45 m2)
	Building:Share of co-ownership of compartmentalized building units	(37,003/1,000,000 co-ownership of office and shop units
from the 1st floor to the 20th floor: 13,296.06 m2)
Share of ownership of the building: 3.1047%
	Changes in JRE’s share of ownership of the building after
the additional acquisition: 68.63831% → 71.74301%● Seller:Three individuals*●

Shinjuku Sta.

Fushimi Sta.

Nishiki Park Building (Additional Acquisition)
Property Summary

Alta

RifareFukuSubway Higashiyama Line
Nagoya Sta.

JR Kanazawa sta.

Yasukiguchi

Kokusai
Center Sta.
Meitetsu Nagoya Sta.

Nagoya Sta.

Nomura Securities
Kanazawa Building

Hyakumango

Sakuradori Line
Marunouchi Sta.

Hokuriku
Shinkansen Line →Kanazawa
Shinjuku Eastside SquarePark Building

Nish
Shinjuku
Sta.

Subwayine

Higashiyama Line
Nagoya Sta.

Line
Sakuradori

Seibu Shinjuku Sta.

L
Oedo
Toei

Nishiki Park Building
Tsurumai Line
Marunouchi Sta.

Higashi Shinjuku
Sta.
Nukebenten St.

Shokuan St.

ine

Aichi Prefectural Library

Meiji Yasuda Life Insurance
Company Building

Seibu Shinjuku
Line

Legal Affairs Bureau
Government Building

Ho
kur
iku
Ma
in L

Acquired Asset

Shin

Ko
sh

uK

aid

o

juk
uS
t.
Mar
uno
uc

hi L

ine

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

Mitsubishi Estate Co., Ltd.

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

(1) Superior location
This property is located in the Fushimi zone, which has one of the highest concentrations of offices in the Nagoya district. Being a one-minute walk from the nearest
Marunouchi station on the Sakuradori and Tsurumai subway lines, the property
boasts superior traffic convenience as well as high visibility from Sakuradori Avenue,
which faces the building.

(2) Improvement of property operation and management­efficiency, along with asset value
A detailed understanding of the property and increased percentage of ownership by
the Company will enhance operation and management efficiency, which will raise theasset value.

8

Japan Real Estate Investment Corporation

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

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

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

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

Acquired a “Green Star”
In the 2016 GRESB Real Estate Assessment, the Company was evaluatedhighly and acquired the best status, a “Green Star”.

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

Properties certified with DBJ Green Building Certification

Properties withthe best classenvironmental &social awarenessFive Stars

Harumi Front(Chuo-ku, Tokyo)

Shinjuku Eastside Square(Shinjuku-ku, Tokyo)

Harumi Center Building(Chuo-ku, Tokyo)

Osaki Front Tower(Shinagawa-ku, Tokyo)

Properties withexceptionally highenvironmental &social awareness

Four Stars

MM Park Building(Yokohama,Kanagawa Prefecture)

Japan Real Estate Investment Corporation

9

Asset Size, Property Acquisitions, and Performance Trends
Occupancy rate

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

In September 2001, the Company became the first J-REIT in Japan listed on the Tokyo Stock
Exchange. Since then, the Company has targeted stable management to fulfill its goal of maintaining or increasing dividend per unit over the medium to long term. The Company’s growth is basedon external growth strategies that aim to increase earnings through the acquisition and transfer ofproperties, as well as internal growth strategies that seek to optimize earnings from properties alreadyheld. The size of the Company’s assets (total acquisition price) has grown from ¥92.8 billion at IPO
to ¥923.6 billion as of the period ended September 30, 2016 due to the steady achievement of external growth strategies. However, in terms of internal growth strategies, ongoing efforts are being
made in such areas as maintaining stable occupancy rates and reducing building management costs.

¥518

Total acquisition price (Number of properties)

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

¥144
¥92

billion

(20)

(24)

¥164
billion¥290¥183 ¥192
billionbillion

(30)

(32)

¥218
billion¥239

billion

(39)

(46)

billionbillion

(52)

(49)

¥542
billion¥441 ¥446
billionbillion

(50)

(50)

¥326
billionbillionbillionAt IPO

(27)

(36)

(50)

(53)

(54)

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

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

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

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

Oct. 2003
Second Follow-On

Apr. 2005
Third Follow-On

Oct. 2006
Fourth Follow-On

Mar. 2008
Fifth
Follow-On

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

10

Japan Real Estate Investment Corporation

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

¥718
¥660
¥641 ¥643 billion ¥657
billionbillionbillion

(55)

(55)

¥740

billion¥782 ¥794
billion¥837 ¥838
billionbillion

(64)

(64)

¥883

¥927 ¥923 ¥923
billionbillionbillion

(70)

(68)

(68)

billionbillionbillion¥564 ¥564
billionbillion

(55)

(55)

(57)

(56)

(57)

(58)

(60)

(62)

(68)

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

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

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

Feb. 2012
Seventh Follow-On

Oct. 2012
Eighth Follow-On

Apr. 2014
Ninth Follow-On¥8,121¥8,361

Apr. 2015
Tenth Follow-On

Japan Real Estate Investment Corporation

11

The Portfolio of Japan Real Estate Investment Corporation
As of September 30, 2016

Properties roster
NumberName of building

Location

Type ofspecified asset

Acquisition date

Acquisition price(¥ millions)Tokyo 23 wards●

I- 1

Genki Medical Plaza

Iidabashi, Chiyoda-ku

Real property

10/31/2002

5,000(0.5%)●

I- 2

Kitanomaru Square

Kudan-Kita, Chiyoda-ku

Real property

02/24/2006

81,555(8.8%)●I- 3

MD Kanda Building

Kanda-Mitoshirocho, Chiyoda-ku

Real property

05/31/2002

9,520(1.0%)●

I- 4

Kandabashi Park Building

Kanda-Nishikicho, Chiyoda-ku

Real property

08/15/2002

4,810(0.5%)●

I- 5

Otemachi Financial City North Tower

Otemachi, Chiyoda-ku

Real property

03/31/2014

15,462(1.7%)●

I- 6

Nibancho Garden

Nibancho, Chiyoda-ku

Real property

04/01/2005

14,700(1.6%)●

I- 7

Mitsubishi UFJ Trust and Banking Building

Marunouchi, Chiyoda-ku

Real property

03/28/2007

44,700(4.8%)●

I- 8

Burex Kojimachi Building

Kojimachi, Chiyoda-ku

Real property

07/29/2005

7,000(0.8%)●

I- 9

Sanno Grand Building

Nagatacho, Chiyoda-ku

Real property

01/31/2005

10,20004/03/2006

10,700Total

20,900(2.3%)●

I- 10

Yurakucho Denki Building

Yurakucho, Chiyoda-ku

Real property

08/01/2003

7,200(0.8%)●

I- 11

Kodenmacho Shin-Nihonbashi Building

Nihonbashi-Kodenmacho, Chuo-ku

Trust

09/25/2001

3,173(0.3%)●

I- 12

Kyodo Building (Kayabacho 2Chome)

Nihonbashi-Kayabacho, Chuo-ku

Trust

03/01/2011

4,410(0.5%)●

I- 13

Burex Kyobashi Building

Kyobashi, Chuo-ku

Real property

07/22/2002

5,250(0.6%)●

I- 14

Ginza 1Chome East Building

Ginza, Chuo-ku

Trust

03/02/2015

6,459(0.7%)●

I- 15

Ginza Sanwa Building

Ginza, Chuo-ku

Real property

03/10/2005

16,830(1.8%)●I- 16

Ryoshin Ginza East Mirror Building

Ginza, Chuo-ku

Real property

03/15/2005

5,353

05/24/2010

2,645
7,999

(0.9%)●

I- 17

Harumi Front

Harumi, Chuo-ku

Real property

01/07/2013

31,300(3.4%)●

I- 18

Harumi Center Building

Harumi, Chuo-ku

Real property

12/18/2007

26,800(2.9%)●

I- 19

Akasaka Park Building

Akasaka, Minato-ku

Real property

11/15/2011

60,800(6.6%)●

I- 20

Aoyama Crystal Building

Kita-Aoyama, Minato-ku

Real property

03/14/2003

7,680(0.8%)●

I- 21

Clover Shiba-koen

Shiba-koen, Minato-ku

Trust

01/20/2015

4,500(0.5%)●

I- 22

Shiodome Building

Kaigan, Minato-ku

Trust

12/19/2008

21,25001/15/2010

54,60005/01/2015

10,100Total

85,950(9.3%)●

I- 23

Shiba 2Chome Daimon Building

Shiba, Minato-ku

Trust

09/10/2001

4,859(0.5%)●

I- 24

Cosmo Kanasugibashi Building

Shiba, Minato-ku

Trust

09/25/2001

2,808(0.3%)●

I- 25

Shinjuku Eastside Square

Shinjuku, Shinjuku-ku

Real property

10/01/2014

23,100(2.5%)●

I- 26

Shinwa Building

Nishi-Shinjuku, Shinjuku-ku

Real property

09/01/2004

7,830(0.8%)●

I- 27

Tokyo Opera City Building

Nishi-Shinjuku, Shinjuku-ku

Real property

09/13/2005

9,350

03/24/2010

22,426

Total

31,776(3.4%)●I- 28

TIXTOWER UENO

Higashi-Ueno, Taito-ku

Real property

06/15/2012

22,000(2.4%)●

I- 29

Higashi-Gotanda 1Chome Building

Higashi-Gotanda, Shinagawa-ku

Real property

11/01/2004

5,500(0.6%)●

I- 30

Osaki Front Tower

Osaki, Shinagawa-ku

Real property

02/01/2011

12,300(1.3%)●I- 31

Omori-Eki Higashiguchi Building

Omori-Kita, Ota-ku

Trust

09/10/2001

5,123(0.6%)●

I- 32

Nippon Brunswick Building (Land with leasehold interest)

Sendagaya, Shibuya-ku

Real property

03/24/2004

6,670

08/23/2013(1,170)

Total

5,500

(0.6%)●

I- 33

Yoyogi 1Chome Building

Yoyogi, Shibuya-ku

Real property

04/01/2004

8,700(0.9%)●

I- 34

da Vinci Harajuku

Jingumae, Shibuya-ku

Real property

11/22/2002

4,885(0.5%)●

I- 35

Jingumae Media Square Building

Jingumae, Shibuya-ku

Real property

10/09/2003

12,200(1.3%)●

I- 36

Shibuya Cross Tower

Shibuya, Shibuya-ku

Real property

11/30/2001

34,600(3.7%)●

I- 37

Ebisu Neonato

Ebisu, Shibuya-ku

Real property

11/14/2003

3,740

●

12

Total

I- 38

Harmony Tower

Honcho, Nakano-ku

Real property

04/01/2004

360

02/18/2014

10,512

Total

14,612

02/28/2005

8,500

12/19/2012

520

03/27/2015

2,100(1.6%)

Total

11,120(1.2%)●I- 39

Otsuka Higashi-Ikebukuro Building

Higashi-Ikebukuro, Toshima-ku

Trust

09/25/2001

3,541(0.4%)●

I- 40

Ikebukuro 2Chome Building

Ikebukuro, Toshima-ku

Trust

09/25/2001

1,728(0.2%)●

I- 41

Ikebukuro YS Building

Minami-Ikebukuro, Toshima-ku

Real property

08/02/2004

4,500(0.5%)

Japan Real Estate Investment Corporation

Leased space

Occupancy rate

Total number oftenants

4,791m2

4,791m2

100.0%

1

222(0.7%)

25,678m2

25,678m2

100.0%

5

1,719(5.6%)

6,269m2

6,269m2

100.0%

9223(0.7%)

4,580

3,687m2

3,687m2

100.0%

10

115(0.4%)

2012

18,8005,121m2

5,121m2

100.0%

2344(1.1%)

31.345%

2004

17,9009,316m2

9,316m2

100.0%

1476(1.5%)

19.38402%

2003

51,60011,904m2

11,904m2

100.0%

10998(3.2%)

100.0%

2005

6,610

4,495m2

4,495m2

100.0%

1

150(0.5%)

99.0%

1966

33,30020,665m2

19,918m2

96.4%

38

924

(3.0%)

10.78%

1975

8,060

4,697m2

4,697m2

100.0%

13267(0.9%)

100.0%

1991

2,880

3,897m2

3,897m2

100.0%

11

113(0.4%)

100.0%

1991

4,920

4,464m2

4,265m2

95.5%

9

145

(0.5%)

100.0%

2002

7,520

4,279m2

4,279m2

100.0%

1

157(0.5%)

100.0%

2008

7,220

4,513m2

4,513m2

100.0%

8145(0.5%)

70.95%

1982

18,4004,326m2

4,201m2

97.1%

9

378

(1.2%)

100.0%

1998

6,180

4,255m2

4,255m2

100.0%

12

162(0.5%)

100.0%

2012

40,00033,369m2

33,369m2

100.0%

8

1,248(4.1%)

100.0%

2006

19,60020,812m2

20,812m2

100.0%

9608(2.0%)

100.0%

1993

70,10045,013m2

45,013m2

100.0%

29

2,235(7.3%)

100.0%

1982

8,120

4,898m2

4,898m2

100.0%

7217(0.7%)

100.0%

2006

4,600

2,550m2

2,227m2

87.3%

7

100

(0.3%)

45.0%

2007

96,80036,174m2

35,867m2

99.1%

35

1,885

(6.1%)

100.0%

1984

6,470

9,606m2

9,606m2

100.0%

25277(0.9%)

100.0%

1992

3,090

4,062m2

3,870m2

95.3%

7

99

(0.3%)

14.0%

2012

25,90016,365m2

16,365m2

100.0%

43658(2.1%)

100.0%

1989

6,970

5,997m2

5,997m2

100.0%

13

214(0.7%)

31.325%

1996

32,50035,099m2

34,469m2

98.2%

101

1,469

(4.8%)

94.040229%

2010

24,80015,020m2

13,930m2

92.7%

16

651

(2.1%)

100.0%

2004

6,070

5,205m2

5,205m2

100.0%

4

182(0.6%)

100.0%

2005

16,50016,856m2

16,856m2

100.0%

1711(2.3%)

100.0%

1989

5,600

7,756m2

7,756m2

100.0%

23

234(0.8%)

—

—

5,490

—

—

—

—

60

(0.2%)

100.0%

2003

11,6007,745m2

7,745m2

100.0%

9304(1.0%)

100.0%

1987

7,100

3,147m2

3,147m2

100.0%

4191(0.6%)

100.0%

1998

10,5005,558m2

4,698m2

84.5%

5

166

(0.5%)

100.0%

1976

52,30029,762m2

29,288m2

98.4%

55

1,398

(4.5%)

44.718394%

1994

16,5008,700m2

8,679m2

99.8%

6

451

(1.5%)

38.382307%

1997

13,90014,340m2

14,340m2

100.0%

20444(1.4%)

100.0%

1987

4,480

7,224m2

7,224m2

100.0%

7

189(0.6%)

100.0%

1990

1,700

2,186m2

2,186m2

100.0%

967(0.2%)

100.0%

1989

4,800

5,932m2

5,932m2

100.0%

10190(0.6%)

Appraisal value atthe end of period (¥ millions)

Percentage of ownershipof the building

Completion

100.0%

1985

6,890

100.0%

2006

78,600100.0%

1998

8,360

56.76%

1993

3.3852192%

Total leasable space

Revenues fromleasing operations (¥ millions)Japan Real Estate Investment Corporation

13

NumberName of building

Location

Type ofspecified asset

Acquisition date

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

●

II- 1

II- 2

Hachioji First Square

Saitama Urawa Building

Hachioji, Tokyo

Saitama, Saitama Prefecture

Real property

Real property

03/31/2005

3,300

03/19/2008

2,379

Total

5,679

09/25/2001

1,232

10/11/2001

1,342

Total

(0.6%)

2,574(0.3%)●II- 3

MM Park Building

Yokohama, Kanagawa Prefecture

Real property

03/24/2008

37,400(4.0%)●

II- 4

Queen’s Tower A

Yokohama, Kanagawa Prefecture

Trust

01/31/2014

17,200(1.9%)●II- 5

Kawasaki Isago Building

Kawasaki, Kanagawa Prefecture

Trust

09/25/2001

3,375(0.4%)●

II- 6

Musashi Kosugi STM Building

Kawasaki, Kanagawa Prefecture

Real property

03/25/2008

4,000(0.4%)

Other major cities●

III- 1

8.3 Square Kita Building

Sapporo, Hokkaido

Real property

06/01/2007

7,100(0.8%)●

III- 2

Jozenji Park Building

Sendai, Miyagi Prefecture

Real property

01/31/2005

1,000(0.1%)●

III- 3

Higashi Nibancho Square

Sendai, Miyagi Prefecture

Real property

01/07/2013

9,950(1.1%)●

III- 4

Sendai Honcho Honma Building

Sendai, Miyagi Prefecture

Trust

09/25/2001

2,924

●
●

●

250

Total

3,174

(0.3%)(2.0%)

III- 5

AER

Sendai, Miyagi Prefecture

Real property

09/01/2015

18,640III- 6

Kanazawa Park Building

Kanazawa, Ishikawa Prefecture

Real property

02/28/2002

2,880

03/03/2003

1,700

Total

4,580

10/02/2006

3,850

11/01/2006

1,300

06/09/2014

650

III- 7

Nishiki Park Building

Nagoya, Aichi Prefecture

Real property(0.5%)

04/01/2016

175

Total

5,975

(0.6%)●

III- 8

Nagoya Hirokoji Place

Nagoya, Aichi Prefecture

Trust

07/31/2013

8,567(0.9%)●

III- 9

Nagoya Hirokoji Building

Nagoya, Aichi Prefecture

Real property

09/10/2001

14,533(1.6%)●

III- 10 Nagoya Misono Building

Nagoya, Aichi Prefecture

Real property

08/08/2003

1,865(0.2%)●

III- 11 Shijo Karasuma Center Building

Kyoto, Kyoto Prefecture

Real property

09/03/2013

4,400(0.5%)●

III- 12 Umeda Square Building

Osaka, Osaka Prefecture

Trust

04/01/2015

15,523(1.7%)●

III- 13 Shin-Fujita Building

Osaka, Osaka Prefecture

Trust

09/01/2008

24,000(2.6%)●

III- 14 Sakaisujihonmachi Building

Osaka, Osaka Prefecture

Real property

09/25/2001

2,264

12/26/2003

1,900

Total

4,164

09/25/2001

6,934

●

III- 15 Midosuji Daiwa Building

Osaka, Osaka Prefecture

Trust(0.5%)

02/28/2002

7,380

Total

14,314(1.5%)●

III- 16 Amagasaki Front Building

Amagasaki, Hyogo Prefecture

Trust

03/25/2015

9,300(1.0%)●

III- 17 Lit City Building

Okayama, Okayama Prefecture

Real property

02/01/2006

4,650(0.5%)●

III- 18 NHK Hiroshima Broadcasting Center Building

Hiroshima, Hiroshima Prefecture

Real property

03/25/2004

1,320

03/03/2008

1,450

Total

2,770

(0.3%)●

III- 19 Tosei Tenjin Building

Fukuoka, Fukuoka Prefecture

Real property

09/25/2001

1,550(0.2%)●

III- 20 Tenjin Crystal Building

Fukuoka, Fukuoka Prefecture

Real property

06/01/2005

5,000(0.5%)

III- 21 Hinode Tenjin Building
Total

Fukuoka, Fukuoka Prefecture

Trust

09/10/2001

3,657(0.4%)

923,623(100.0%)●Transferred properties
Hirokoji Sakae Building
Kyoto Shijo Kawaramachi Building
Total

14

06/28/2006

Japan Real Estate Investment Corporation

Percentage of ownershipof the building

Completion

Appraisal value atthe end of period (¥ millions)

Total leasable space

Leased space

Occupancy rate

Total number oftenants

Revenues fromleasing operations (¥ millions)

80.4%

1996

4,810

10,068m2

10,068m2

100.0%

51

240(0.8%)

100.0%

1990

2,420

4,510m2

4,510m2

100.0%

18

109(0.4%)

100.0%

2007

39,80038,426m2

37,953m2

98.8%

30

1,320

(4.3%)

11.11481%

1997

20,00026,669m2

25,922m2

97.2%

49

992

(3.2%)

100.0%

1990

2,610

6,831m2

6,831m2

100.0%

13

145(0.5%)

34.32%

1990

4,210

5,378m2

5,378m2

100.0%

26

161(0.5%)

100.0%

2006

7,700

12,265m2

12,265m2

100.0%

9320(1.0%)

50.0%

1993

998

2,518m2

2,418m2

96.0%

16

61

(0.2%)

100.0%

2008

13,70020,526m2

20,254m2

98.7%

21

554

(1.8%)

100.0%

1991

2,430

6,234m2

6,234m2

100.0%

24

129(0.4%)

55.35443%

1998

19,00023,612m2

23,182m2

98.2%

61

619

(2.0%)

89.0%

1991

4,680

20,942m2

20,803m2

99.3%

79

495

(1.6%)

71.74301%

1995

5,030

10,338m2

9,957m2

96.3%

59

278

(0.9%)

100.0%

2004

10,60013,200m2

13,200m2

100.0%

27383(1.2%)

100.0%

1987

12,60021,610m2

19,814m2

91.7%

33

662

(2.2%)

100.0%

1991

1,270

3,448m2

3,448m2

100.0%

1670(0.2%)

100.0%

2010

5,040

6,634m2

6,634m2

100.0%

11

185(0.6%)

100.0%

1995

16,30010,370m2

10,370m2

100.0%

42449(1.5%)

100.0%

1995

18,30028,414m2

27,540m2

96.9%

49

684

(2.2%)

100.0%

1992

3,330

11,520m2

11,050m2

95.9%

21

220

(0.7%)

100.0%

1991

14,30020,450m2

20,450m2

100.0%

41529(1.7%)

100.0%

2008

9,820

15,500m2

15,500m2

100.0%

31439(1.4%)

27.7488%

2005

4,430

9,965m2

9,965m2

100.0%

39

254(0.8%)

48.753%

1994

2,830

9,860m2

9,860m2

100.0%

12268(0.9%)

100.0%

1992

1,320

3,995m2

3,693m2

92.4%

22

76

(0.2%)

100.0%

1993

2,650

5,964m2

5,964m2

100.0%

30

156(0.5%)

74.4844%

1987

3,880

5,903m2

5,903m2

100.0%

3

159(0.5%)

1,011,368

820,917m2

809,962m2

98.7%

1,426
0

(0.0%)

1(0.0%)

30,773(100.0%)Japan Real Estate Investment Corporation15

Major tenants roster
Name of tenant

Name of building

Leased space (m2)

% of total leased space

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Harumi Front (also includes 3 other buildings)

33,912

4.2%(Note)

Kitanomaru Square (also includes 2 other buildings)

22,3052.8%(Note)

Osaki Front Tower (also includes 2 other buildings)

21,985

2.7%

NTT Communications Corporation

Shiodome Building

13,289

1.6%

HAKUHODO DY HOLDINGS INCORPORATED

Akasaka Park Building (also includes 1 other building)

12,8311.6%

JGC Corporation

MM Park Building (also includes 1 other building)

10,6491.3%

Mitsubishi UFJ Trust and Banking Corporation

Mitsubishi UFJ Trust and Banking Building

10,5981.3%

Minatomirai 21 District Heating and Cooling Co., Ltd.

Queen’s Tower A

9,536

1.2%

Seven & i Holdings Co., Ltd.

Nibancho Garden

9,316

1.2%

Space Design, Inc.

Burex Kojimachi Building (also includes 1 other building)

8,774

1.1%

(Note) Not disclosed due to tenant’s request

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

III- 1

II- 2

II- 1

III- 1 to III- 21:
Other major cities

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

III- 2
III- 3
III- 4
III- 5
III- 6

III- 11
III- 16
III- 17
III- 19
III- 20
III- 21

III- 18
III- 12
III- 13
III- 14
III- 15

III- 7
III- 8
III- 9III- 10
I- 40

I- 39

I- 41
I- 28
I- 3, I- 4

I- 8 I- 7
I- 38

I- 1
I- 2

I- 25

I- 26
I- 27
I- 32 I- 6
I- 33
I- 9
I- 34
I- 35

I- 5
I- 10 I- 14

I- 20 I- 19

I- 36
I- 37

I- 22
I- 21

I- 15

I- 11
I- 12

Tokyo Station
I- 13
I- 16
I- 17, I- 18

I- 23, I- 24

I- 29
I- 30

I- 31

I- 1 to I- 41:
Tokyo 23 wards

16Japan Real Estate Investment Corporation

Overview of Portfolio Properties
As of September 30, 2016

Genki Medical
Plaza●

Kitanomaru
SquareI- 1●

MD Kanda
Building

I- 2

●

I- 3

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Site area:

1,052.80 m2

Site area:

5,821.03 m2

Site area:

1,085.83 m2

Floor area of building:

6,722.02 m2

Floor area of building:

57,279.20 m2

Floor area of building:

8,185.11 m2

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

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

Structure:

Above ground: 10 floors

Completion:

February 1998

Completion:

September 1985

Completion:

January 2006

Kandabashi Park
Building●

OtemachiFinancial City
North Tower

I- 4

●

Nibancho
Garden
●

I- 6

I- 5

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Site area:

1,218.56 m2

Site area:

14,108.16 m2

Site area:

10,992.13 m2

Floor area of building:

9,370.25 m2

Floor area of building:239,769.07 m2

Floor area of building:

57,031.06 m2

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

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

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

Completion:

July 1993

Completion:

October 2012

Completion:

April 2004

Mitsubishi UFJ
Trust andBanking Building●

Burex Kojimachi
Building●

Sanno Grand
Building

I- 8

●

I- 9

I- 7

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Site area:

8,100.39 m2

Site area:

967.67 m2

Site area:

3,663.93 m2

Floor area of building:

108,171.67 m2

Floor area of building:

6,526.64 m2

Floor area of building:

33,875.95 m2

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

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

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

Completion:

February 2003

Completion:

January 2005

Completion:

September 1966

Yurakucho Denki
Building●

Kodenmacho
Shin-Nihonbashi
Building

I- 10●

Kyodo Building(Kayabacho
2Chome)

I- 11

●

I- 12

Location:

Chiyoda-ku, Tokyo

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Site area:

5,749.91 m2

Site area:

773.28 m2

Site area:

754.26 m2

Floor area of building:

70,287.65 m2

Floor area of building:

5,822.88 m2

Floor area of building:

5,505.80 m2

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

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

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

Completion:

September 1975

Completion:

November 1991

Completion:

April 1991

Japan Real Estate Investment Corporation

17

Burex Kyobashi
Building●

Ginza 1Chome
East Building

I- 13

●

Ginza Sanwa
Building

I- 14●

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Site area:

756.03 m2

Site area:

702.41 m2

Site area:

1,119.27 m2

Floor area of building:

5,470.54 m2

Floor area of building:

4,976.85 m2

Floor area of building:

8,851.00 m2

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

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

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

Completion:

February 2002

Completion:

May 2008

Completion:

October 1982

Ryoshin Ginza
East Mirror
Building●

Harumi Front●

Harumi Center
Building

I- 17

●

I- 18

I- 16

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Site area:

864.91 m2

Site area:

7,250.15 m2

Site area:

4,664.63 m2

Floor area of building:

5,751.68 m2

Floor area of building:

45,458.90 m2

Floor area of building:

26,447.27 m2

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

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

Structure:

Above ground: 10 floors

Completion:

November 2006

Completion:

October 1998

Completion:

February 2012

Akasaka Park
Building●

Aoyama Crystal
Building

I- 19●

CloverShiba-koen

I- 20

●

I- 21

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Site area:

14,198.20 m2

Site area:

989.30 m2

Site area:

528.58 m2

Floor area of building:

97,489.16 m2

Floor area of building:

8,094.36 m2

Floor area of building:

3,496.01 m2

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

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

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

Completion:

July 1993

Completion:

December 1982

Completion:

February 2006

Shiodome
Building●

Shiba 2Chome
Daimon Building

I- 22

●

Cosmo
Kanasugibashi
Building

I- 23

●

18

I- 15

I- 24

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Site area:

12,054.22 m2

Site area:

2,820.90 m2

Site area:

758.54 m2

Floor area of building:

115,930.83 m2

Floor area of building:

16,235.10 m2

Floor area of building:

5,420.93 m2

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

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

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

Completion:

December 2007

Completion:

March 1984

Completion:

March 1992

Japan Real Estate Investment Corporation

Shinjuku Eastside
Square●Shinwa Building●

Tokyo Opera
City Building

I- 26

I- 25

●

I- 27

Location:

Shinjuku-ku, Tokyo

Location:

Shinjuku-ku, Tokyo

Location:

Shinjuku-ku, Tokyo

Site area:

25,320.28 m2

Site area:

822.00 m2

Site area:

18,236.94 m2

Floor area of building:

167,245.46 m2

Floor area of building:

8,291.69 m2

Floor area of building:

232,996.81 m2

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

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

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

Completion:

March 2012

Completion:

November 1989

Completion:

July 1996

TIXTOWER
UENO●

Higashi-Gotanda
1Chome Building

I- 28

●

Osaki Front
Tower

I- 29

●

I- 30

Location:

Taito-ku, Tokyo

Location:

Shinagawa-ku, Tokyo

Location:

Shinagawa-ku, Tokyo

Site area:

2,412.80 m2

Site area:

1,539.95 m2

Site area:

3,684.38 m2

Floor area of building:

23,727.48 m2

Floor area of building:

6,460.39 m2

Floor area of building:

23,673.92 m2

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

Structure:

Above ground: 8 floors

Structure:

Above ground: 15 floors

Completion:

July 2004

Completion:

June 2005

Completion:

July 2010

Omori-Eki
Higashiguchi
Building●

Nippon Brunswick Building(Land with leasehold interest)●

Yoyogi 1Chome
Building

I- 32

●

I- 33

I- 31

Location:

Ota-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Site area:

2,199.30 m2

Site area:

1,497.52 m2

Site area:

1,755.75 m2

Floor area of building:

14,095.34 m2

Floor area of building:—Floor area of building:

10,778.10 m2

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

Structure:—

Completion:—

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

Completion:

July 1989

Completion:

October 2003

da Vinci
Harajuku●

Jingumae Media
Square Building

I- 34

●

Shibuya Cross
Tower

I- 35

●

I- 36

Location:

Shibuya-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Site area:

839.66 m2

Site area:

2,124.59 m2

Site area:

5,153.45 m2

Floor area of building:

4,359.20 m2

Floor area of building:

9,420.42 m2

Floor area of building:

61,862.33 m2

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

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

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

Completion:

December 1987

Completion:

March 1998

Completion:

April 1976

Japan Real Estate Investment Corporation

19

Ebisu Neonato●

Harmony Tower

I- 37

●

Otsuka HigashiIkebukuro
Building

I- 38●

Location:

Shibuya-ku, Tokyo

Location:

Nakano-ku, Tokyo

Location:

Toshima-ku, Tokyo

Site area:

5,005.70 m2

Site area:

10,020.52 m2

Site area:

2,121.39 m2

Floor area of building:

36,598.38 m2

Floor area of building:

72,729.31 m2

Floor area of building:

9,531.28 m2

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

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

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

Completion:

October 1994

Completion:

March 1997

Completion:

November 1987

Ikebukuro
2Chome Building●

Ikebukuro YS
Building

I- 40●

Hachioji First
Square

I- 41

●

II- 1

Location:

Toshima-ku, Tokyo

Location:

Toshima-ku, Tokyo

Location:

Hachioji, Tokyo

Site area:

397.26 m2

Site area:

1,384.56 m2

Site area:

2,989.33 m2

Floor area of building:

3,157.51 m2

Floor area of building:

7,464.64 m2

Floor area of building:

18,329.98 m2

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

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

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

Completion:

May 1990

Completion:

December 1989

Completion:

July 1996

Saitama Urawa
Building●

MM Park
Building

II- 2●

Queen’s Tower A
●

II- 4

II- 3

Location:

Saitama, Saitama Prefecture

Location:

Yokohama, Kanagawa Prefecture

Location:

Yokohama, Kanagawa Prefecture

Site area:

1,533.06 m2

Site area:

6,825.77 m2

Site area:

44,406.40 m2

Floor area of building:

6,258.59 m2

Floor area of building:

49,037.51 m2

Floor area of building:

498,282.77 m2

Structure:

Above ground: 8 floors

Completion:

March 1990

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

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

Completion:

December 2007

Completion:

June 1997

Kawasaki Isago
Building
●

20

I- 39

Musashi Kosugi
STM Building

II- 5

●

8∙3 Square Kita
Building

II- 6●

III- 1

Location:

Kawasaki, Kanagawa Prefecture

Location:

Kawasaki, Kanagawa Prefecture

Location:

Sapporo, Hokkaido

Site area:

1,594.50 m2

Site area:

3,552.15 m2

Site area:

5,541.60 m2

Floor area of building:

9,623.83 m2

Floor area of building:

22,839.61 m2

Floor area of building:

16,096.97 m2

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

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

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

Completion:

December 1990

Completion:

October 1990

Completion:

December 2006

Japan Real Estate Investment Corporation

Jozenji Park
Building●

HigashiNibancho Square

III- 2●

Sendai Honcho
Honma Building

III- 3●

III- 4

Location:

Sendai, Miyagi Prefecture

Location:

Sendai, Miyagi Prefecture

Location:

Sendai, Miyagi Prefecture

Site area:

1,566.68 m2

Site area:

3,191.27 m2

Site area:

1,437.47 m2

Floor area of building:

7,648.33 m2

Floor area of building:

27,680.45 m2

Floor area of building:

8,247.50 m2

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

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

Structure:

Above ground: 11 floors

Completion:

November 1991

Completion:

January 1993

Completion:

July 2008

AER●

Kanazawa Park
Building

III- 5●

Nishiki Park
Building

III- 6●

III- 7

Location:

Sendai, Miyagi Prefecture

Location:

Kanazawa, Ishikawa Prefecture

Location:

Nagoya, Aichi Prefecture

Site area:

6,591.05 m2

Site area:

6,642.71 m2

Site area:

2,170.45 m2

Floor area of building:

73,186.57 m2

Floor area of building:

43,481.20 m2

Floor area of building:

25,091.91 m2

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

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

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

Completion:

March 1998

Completion:

October 1991

Completion:

August 1995

Nagoya Hirokoji
Place●

Nagoya Hirokoji
Building

III- 8●

Nagoya Misono
Building

III- 9●III- 10

Location:

Nagoya, Aichi Prefecture

Location:

Nagoya, Aichi Prefecture

Location:

Nagoya, Aichi Prefecture

Site area:

2,401.43 m2

Site area:

4,095.81 m2

Site area:

805.04 m2

Floor area of building:

15,947.29 m2

Floor area of building:

33,377.73 m2

Floor area of building:

5,348.00 m2

Structure:

Above ground: 10 floors

Completion:

December 2004

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

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

Completion:

May 1987

Completion:

September 1991

Shijo Karasuma
Center Building●

Umeda Square
Building

III- 11●Shin-Fujita
Building

III- 12●

III- 13

Location:

Kyoto, Kyoto Prefecture

Location:

Osaka, Osaka Prefecture

Location:

Osaka, Osaka Prefecture

Site area:

1,371.16 m2

Site area:

1,652.88 m2

Site area:

6,159.61 m2

Floor area of building:

9,185.98 m2

Floor area of building:

18,673.28 m2

Floor area of building:

45,411.31 m2

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

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

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

Completion:

January 2010

Completion:

July 1995

Completion:

April 1995

Japan Real Estate Investment Corporation

21

Sakaisujihonmachi
Building●

Midosuji Daiwa
Building

III- 14●

Amagasaki Front
Building

III- 15●

III- 16

Location:

Osaka, Osaka Prefecture

Location:

Osaka, Osaka Prefecture

Location:

Amagasaki, Hyogo Prefecture

Site area:

2,036.22 m2

Site area:

3,044.65 m2

Site area:

3,975.20 m2

Floor area of building:

17,145.59 m2

Floor area of building:

31,213.27 m2

Floor area of building:

24,055.58 m2

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

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

Structure:

Above ground: 10 floors

Completion:

October 2008

Completion:

October 1992

Completion:

September 1991

Lit City Building●

NHK Hiroshima
Broadcasting
Center Building

III- 17●

Tosei Tenjin
Building●

III- 19

III- 18

Location:

Okayama, Okayama Prefecture

Location:

Hiroshima, Hiroshima Prefecture

Location:

Fukuoka, Fukuoka Prefecture

Site area:

7,596.44 m2

Site area:

3,296.46 m2

Site area:

1,221.31 m2

Floor area of building:

52,653.19 m2

Floor area of building:

35,217.28 m2

Floor area of building:

5,588.57 m2

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

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

Structure:

Above ground: 8 floors

Completion:

March 1992

Completion:

June 2005

Completion:

August 1994

Tenjin Crystal
Building●

Hinode Tenjin
Building

III- 20●

III- 21

Location:

Fukuoka, Fukuoka Prefecture

Location:

Fukuoka, Fukuoka Prefecture

Site area:

1,835.17 m2

Site area:

1,452.15 m2

Floor area of building:

10,432.04 m2

Floor area of building:

12,527.07 m2

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

Structure:

Above ground: 10 floors
Below ground: 2 floors

Completion:

August 1993

Completion:

August 1987

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

22

Japan Real Estate Investment Corporation

Financial Section
Selected Financial Data ........................................................................................................................ p.23
Balance Sheets ................................................................................................................................................ p.24
Statements of Income and Retained Earnings ........................................................... p.26
Statements of Changes in Unitholders’ Equity ......................................................... p.27
Statements of Cash Distributions ............................................................................................ p.28
Statements of Cash Flows ................................................................................................................. p.29
Notes to Financial Statements ...................................................................................................... p.30
Independent Auditor’s Report ..................................................................................................... p.48

Selected Financial Data
Millions of yen

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

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

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

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

For the period from
April 1, 2014 toSeptember 30, 2014

Operating revenues

30,77330,58929,98028,314

27,760Operating expenses

18,405

18,237

17,926

17,071

16,505

Operating income

12,36812,352

12,054

11,243

11,255

Ordinary income

10,958

10,816

10,487

9,625

9,582

Income before income taxes

10,958

10,816

10,487

9,625

9,582

Profit10,947

10,753

10,476

9,619

9,572

Total assets

883,633

890,626

899,938

852,679

813,931

Interest-bearing debt

356,350

363,400

373,450

361,000

323,550

Net assets

469,359

469,044468,767

436,671436,622

Unitholders’ capital

458,016

458,016

458,016

426,783

426,783

Number of units

1,309,310

1,309,310

1,309,310

1,251,530

1,251,530

Net assets per unit (Yen)358,478

358,238

358,026

348,909348,871

Cash distribution

10,947

10,632

10,475

9,613

9,571

Dividend payout ratio

99.9%

98.8%

99.9%

99.9%

99.9%

Dividend per unit (Yen)

8,361

8,121

8,001

7,681

7,648

Net operating income (NOI)

20,182

19,973

19,67018,412

18,105

Funds from operations (FFO)

17,44817,07916,80815,62915,455Return on assets (ROA) (Note 1)

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

Return on equity (ROE) (Note 2)

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

EOP equity ratio (Note 3)

53.1%

52.7%

52.1%

51.2%

53.6%

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

40.3%

40.8%

41.5%

42.3%

39.8%

FFO multiple (Times)

22.8

25.0

21.5

22.6

22.9

Debt service coverage ratio (Times) (Note 5)

13.5

12.5

12.1

10.8

10.5

Notes: 1.	ROA = Ordinary income ÷ Average of Total assets during the period
2.	ROE = Profit ÷ Average of Net assets during the period(Annualized portion of the calculation given in Note 1 and Note 2 assumes a fiscal period of 183 days for the period ended September 30, 2014, 182 days for the period
ended March 31, 2015, 183 days for the period ended S­ eptember 30, 2015, 183 days for the period ended March 31, 2016 and 183 days for the period ended September 30, 2016.)
3.	EOP equity ratio = (Net assets at the end of period ÷ Total assets at the end of period) × 100
4.	EOP interest-bearing debt ratio on total assets = (Interest-bearing debt at the end of period ÷ Total assets at the end of period) × 100
5.	Debt service coverage ratio = Profit before Interest, Taxes, Depreciation and Amortization ÷ Interest expenses

Japan Real Estate Investment Corporation

23

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

Thousands of yen

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

24Japan Real Estate Investment Corporation

As of March 31, 2016

As of September 30, 2016

19,362,431
5,542,352
201,642
324,887972
25,64025,457,927

16,231,988
6,314,725
279,659
397,720943
38,50823,263,545

266,097,000(78,601,472)
187,495,528
3,185,674(696,966)
2,488,707
2,962,534(1,795,372)
1,167,161
384,059(209,733)
174,325450,267,151
2,250
77,281,405(17,595,584)
59,685,820
648,264(153,961)
494,302945,736(641,407)
304,328
38,850(16,610)
22,240151,935,120
2,299
854,039,237

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

6,049,002
444,160
828,095—
7,321,258

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

577,168
1,573,641
706,082
924,282
3,781,174
865,141,670

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

26,70026,700890,626,297

21,16021,160883,633,105

Thousands of yen

As of March 31, 2016

As of September 30, 2016

LIABILITIESCurrent liabilities   Operating accounts payable

2,230,597

1,748,290   Short-term loans payable

22,700,000

45,700,000   Current portion of long-term loans payable

44,400,000

42,850,000   Accounts payable - other

1,337,902

1,290,343  Accrued expenses

669,098

578,332   Income taxes payable

10,8359,740   Accrued consumption taxes

1,128,609

528,639  Advances received

3,088,163

3,500,462  Other   Total current liabilities

9,618

32,09175,574,825

96,237,899

Non-current liabilities   Investment corporation bonds

20,000,000

20,000,000   Long-term loans payable276,300,000

247,800,000   Deposits received from tenants

49,197,812

49,727,428   Deferred tax liabilities

167,220

167,188   Asset retirement obligations

325,325

328,602  Other

16,366

12,659346,006,725

318,035,880

421,581,550

414,273,779

458,016,096

458,016,096

243,360

363,469   Total non-current liabilities
Total Liabilities
NET ASSETS
Unitholders’ equity  Unitholders’ capital  Surplus    Voluntary retained earnings    Reserve for reduction entry     Total voluntary retained earnings

243,360

363,469   Unappropriated retained earnings

10,785,290

10,979,760   Total surplus

11,028,651

11,343,229   Total unitholders’ equity

469,044,747

469,359,325

469,044,747

469,359,325

890,626,297

883,633,105

Total Net Assets
Total Liabilities and Net Assets

Japan Real Estate Investment Corporation25

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

Thousands of yen

For the period
from October 1, 2015
to March 31, 2016

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

30,290,297

30,565,884

Other lease business revenues

138,195

208,084

Gain on sales of real estate properties

161,378—

30,589,871

30,773,968

16,941,905

17,091,090

933,354964,815

Operating revenues
Rent revenues

Total operating revenues
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee

61,27959,880Administrative service fees

145,512

154,031

Directors' compensations

7,800

7,800

Commission fee

69,19964,875

Other operating expenses

78,22062,639Total operating expenses
Operating income

18,237,271

18,405,132

12,352,600

12,368,836

Non-operating income
Interest income

4,490

480

Dividend income

—

7,401

Reversal of distribution payable

3,341

2,855

Refund of property taxes

1,492

—

Income on settlement of management association accounts—

19,444

Other

31

0

9,356

30,181

1,347,628

1,243,269

153,314152,189

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

5,539

5,539

Other

39,314

39,212

1,545,797

1,440,211

Ordinary income

10,816,159

10,958,806

Income before income taxes

10,816,159

10,958,806

Income taxes - current

11,82011,323

Income taxes - deferred

51,040(2)

Total non-operating expenses

Total income taxes
Profit26

62,86011,321

10,753,298

10,947,485

Retained earnings brought forward

31,991

32,275

Unappropriated retained earnings

10,785,290

10,979,760

Japan Real Estate Investment Corporation

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

For the period from October 1, 2015 to March 31, 2016
Thousands of yen

Unitholders’ equity
Surplus
Unitholders’capitalBalance at beginning of current period

458,016,096

Voluntary retained earnings
Reservefor reduction
entry

Total voluntary
retainedearnings

243,360

243,360

Total
net assets

Total surplus

Totalunitholders’equity10,751,141

468,767,237

468,767,237(10,475,789) (10,475,789)(10,475,789)(10,475,789)

Unappropriatedretainedearnings

10,507,781

Changes of items during period
Dividends of surplus

10,753,298

10,753,298

10,753,298

10,753,298

—

—

—

277,509277,509277,509277,509458,016,096

243,360

243,360

10,785,290

11,028,651

469,044,747

469,044,747

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

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

Unitholders’ equity
Surplus
Unitholders’capitalBalance at beginning of current period

458,016,096

Voluntary retained earnings
Reservefor reduction
entry

Total voluntary
retainedearnings

243,360

243,360

120,108

120,108

Total
net assets

Total surplus

Totalunitholders’equity10,785,290

11,028,651

469,044,747

469,044,747(120,108)

Unappropriatedretainedearnings

Changes of items during period
Provision of reserve for reduction entry
Dividends of surplus
ProfitTotal changes of items during period
Balance at end of current period

—

—

—

(10,632,906) (10,632,906)(10,632,906)(10,632,906)

10,947,485

10,947,485

10,947,485

10,947,485—

120,108

120,108

194,469

314,578

314,578

314,578

458,016,096

363,469

363,469

10,979,760

11,343,229

469,359,325

469,359,325

Japan Real Estate Investment Corporation27

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

	 
Item

I	  Retained earnings

For the period
from October 1, 2015 to March 31, 2016

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

Amount (Yen)Amount (Yen)

10,785,290,543

10,979,760,350

II	  Reversal of voluntary retained earnings—

69,530

10,632,906,510

10,947,140,910(8,121)(8,361)

	  Provision of reserve for reduction entry

120,108,982—

V	  Retained earnings brought forward

32,275,051

32,688,970

The Company will make cash distributions using accounting profits based on
the cash distribution policy outlined in
Article 32-1(2) of the Company’s Articles
of Incorporation, in an amount thatexceeds 90% of the “amount of distributable profit” as set forth in Article 67-15 of
the Special Taxation Measures Act. Basedon this policy, the Company secures thereserve for reduction entry in accordancewith Article 66-2 “Special Provisions for
Taxation in the Case of Advanced
Acquisition of Land, etc., in 2009 and2010” of the same Act as well as Article
42 “Inclusion in Gross Expense of
Advanced Depreciation of Fixed Assets,etc. Acquired with National Subsidy,etc.” of the Corporation Tax Act. The
Company also reserves the retained earnings brought forward. As a result, the total
amount of dividends that the Company
has determined to pay out is10,632,906,510 yen for the period
under review, which is a multiple of
1,309,310 — the number of units
outstanding as of March 31, 2016.
Furthermore, the Company does not pay
out dividends that exceed accounting
profits as outlined in Article 32-1(3) ofthe Company’s Articles of Incorporation.

The Company will make cash distributions using accounting profits based on
the cash distribution policy outlined in
Article 32-1(2) of the Company’s Articles
of Incorporation, in an amount thatexceeds 90% of the “amount of distributable profit” as set forth in Article 67-15
of the Special Taxation Measures Act.
Based on this policy, the Company has
decided that the total amount of dividends, which is set not to exceed theunappropriated retained earnings andalso to secure retained earnings brought
forward, is 10,947,140,910 yen for theperiod under review, which is a multipleof 1,309,310 — the number of units
outstanding as of September 30, 2016.
Furthermore, the Company does not pay
out dividends that exceed accounting
profits as outlined in Article 32-1(3) ofthe Company’s Articles of Incorporation.

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

Computation Method for Determining Dividends

28Japan Real Estate Investment Corporation

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

Thousands of yen

For the period
from October 1, 2015
to March 31, 2016

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

Income before income taxes

10,816,159

10,958,806

Depreciation

6,487,255

6,501,082

5,539

5,539

Dividend income—(7,401)

Interest income(4,490)(480)Interest expenses

1,500,943

1,395,458

7,744(78,017)

Cash flows from operating activities

Amortization of investment corporation bond issuance costs

Decrease (increase) in operating accounts receivable
Decrease (increase) in supplies
Decrease (increase) in prepaid expenses
Decrease due to sale of property, plant and equipment
Increase (decrease) in operating accounts payable249—

68,644(72,832)

4,168,218—(42,710)

228,507

Increase (decrease) in accounts payable - other

94,892(55,105)

Increase (decrease) in accrued consumption taxes

518,230(599,970)

Increase (decrease) in accrued expenses

(136)

(136)

Increase (decrease) in advances received(389,971)

412,299

Decrease (increase) in long-term prepaid expenses

108,172

105,294

Other, net(156,038)(22,326)

Subtotal

23,182,702

18,770,716

5,700

7,867

(1,496,209)(1,486,087)

Interest and dividend income received
Interest expenses paid

(10,451)(12,418)

21,681,741

17,280,078

Payments into time deposits(2,817,000)(3,347,000)

Proceeds from withdrawal of time deposits

7,817,000

3,347,000

Purchase of property, plant and equipment(1,863,127)(1,803,437)(422,278)(673,099)

Purchase of intangible assets—(17,762)

Proceeds from collection of lease and guarantee deposits—

220

Repayments of tenant leasehold and security deposits(1,391,023)(828,495)

Proceeds from tenant leasehold and security deposits

1,015,067

1,358,111

Net cash provided by (used in) investing activities

2,338,638(1,964,462)

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

Purchase of property, plant and equipment in trust

Cash flows from financing activities
Proceeds from short-term loans payable

9,700,000

36,000,000

Repayments of short-term loans payable(23,700,000)(13,000,000)

Proceeds from long-term loans payable

6,000,000—

Repayments of long-term loans payable(2,050,000)(30,050,000)

Dividends paid

(10,475,520)(10,623,685)(17,673,685)

Net cash provided by (used in) financing activities(20,525,520)

Net increase (decrease) in cash and cash equivalents

3,494,859(2,358,069)

Cash and cash equivalents at beginning of period

21,409,924

24,904,784

Cash and cash equivalents at end of period

24,904,784

22,546,714

Japan Real Estate Investment Corporation

29

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

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 ina portfolio of office properties. The Company is externally managed by a licensed asset management company, Japan Real Estate AssetManagement Co., Ltd. (“J-Rea”). J-Rea is currently owned 90% by Mitsubishi Estate Co., Ltd. (“MEC”) and 10% by Mitsui & Co., Ltd.
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, Tokio Marine &Nichido Fire Insurance Co., Ltd. and The Dai-ichi Life Insurance Company, Limited under the ITA.
On September 10, 2001, the Company commenced operations when the Company was listed on the Tokyo Stock Exchange as one of
the first real estate investment corporations in Japan (“J-REITs”). The Company issued 160,000 units at a price of ¥506,625, generating
gross proceeds of ¥81,060 million.
As of September 30, 2016, the Company owned a portfolio of 68 office properties with an aggregate of approximately 820,917 m2 of­leasable space.
Basis of presenting financial statements

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

2. Summary of Significant Accounting Policies
Investment securities

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

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

30Japan Real Estate Investment Corporation

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

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

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

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

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

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

Consumption taxes withheld and consumption taxes paid are not included in the statements of income. The consumption taxes paid are
generally offset against the balance of consumption taxes withheld. As such, the excess of payments over amounts withheld are included in
Current assets and the excess of amounts withheld over payments are included in Current liabilities.
Cash and cash equivalents

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

Japan Real Estate Investment Corporation

31

Hedge accounting

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

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

32

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

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

Book value

As of March 31, 2016
Fair value(1) Cash and deposits

19,362,431

19,362,431—(2) Cash and deposits in trust

5,542,352

5,542,352—(3) Short-term loans

22,700,000

22,700,000—(4) Current portion of long-term loans

44,400,000

44,605,234

205,234(5) Investment corporation bonds

20,000,000

21,988,600

1,988,600(6) Long-term loans

276,300,000

283,574,360

7,274,360———(7) Derivative transactions

Difference

Thousands of yen

As of September 30, 2016
Book value

Fair value(1) Cash and deposits

16,231,988

16,231,988—(2) Cash and deposits in trust

6,314,725

6,314,725—(3) Short-term loans

45,700,000

45,700,000—(4) Current portion of long-term loans

42,850,000

43,090,739

240,739(5) Investment corporation bonds

20,000,000

21,946,300

1,946,300(6) Long-term loans

247,800,000

254,805,571

7,005,571———(7) Derivative transactions

Difference

Notes: 1. Measurement of fair value of financial instruments and matters concerning derivative transactions
		 (1) Cash and deposits and (2) Cash and deposits in trust			 Due to short tenor, the book values of these assets are reasonable approximations of the present value of these assets and hence used as their fair value.
		 (3) Short-term loans
			Since these loans’ tenor is short and rates are reset at a short interval, the book values of these liabilities are reasonable approximations of their present value andhence used as their fair values.
		 (4) Current portion of long-term loans and (6) Long-term loans
			For loans with floating interest rates, since the interest rates on such loans reflect market rates reasonably well over the short term and their book values are good
approximations of their fair values, the book values are presented as their fair values. (However, the fair values of floating-rate long-term loans hedged by an interest-rate and currency swap subject to integrated treatment or by an interest-rate swap subject to special accounting treatment are calculated by discounting theaggregated principal and the interest on such loans, after taking into account the effect of said interest-rate and currency swaps or interest-rate swaps, using reasonable estimates of the rates that would be applicable if the Company were to refinance the existing loans for the remaining period to maturity under the prevailingmarket conditions as of March 31, 2016 and September 30, 2016. Such floating-rate long-term loans are presented in Section 4. Derivative Transactions.) The fairvalues of the liabilities with fixed interest rates are calculated by discounting the aggregated amounts of the principal and the interest of the loans by the rates thatare reasonably estimated to be applicable if the Company were to refinance the existing loans for the remaining period to maturity under the prevailing market
conditions as of March 31, 2016 and September 30, 2016.
		 (5) Investment corporation bonds
			Their fair values are based on the values published by a financial data provider.
		 (7) Derivative transactions
			 Please refer to Section 4. Derivative Transactions.

Japan Real Estate Investment Corporation

33

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

As of March 31, 2016

As of September 30, 2016

577,168
49,197,812

577,168
49,727,428(*1) With regard to non-listed stock, which does not have a quoted market price in an active market and whose cash flows are not reasonably estimated, fair value cannot
be reliably measured and it is therefore presented at book value.
(*2) With regard to deposits received from tenants, which do not have a quoted market price in an active market and reasonably estimated tenor, their cash flows cannot
be reliably measured and they are therefore presented at their book value.
3. Redemption schedule for monetary claims after the closing dateThousands of yen

As of March 31, 2016

Cash and deposits
Cash and deposits in trust
Total

1 year or less
19,362,431
5,542,352
24,904,784

1 to 2 years———

2 to 3 years———

3 to 4 years———

4 to 5 years———

Over 5 years———

Thousands of yen

As of September 30, 2016

Cash and deposits
Cash and deposits in trust
Total

1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years

16,231,988
6,314,725
22,546,714

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

4 to 5 years——
39,000,000
39,000,000

Over 5 years—
10,000,000
114,300,000
124,300,000

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

As of March 31, 2016

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

1 year or less
22,700,000—
44,400,000
67,100,000

1 to 2 years——
46,500,000
46,500,000

2 to 3 years—
10,000,000
27,500,000
37,500,000

3 to 4 years——
49,000,000
49,000,000

Thousands of yen

As of September 30, 2016

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

1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years

45,700,000—
42,850,000
88,550,000—
10,000,000
36,000,000
46,000,000——
25,000,000
25,000,000——
44,500,000
44,500,000——
37,000,000
37,000,000—
10,000,000
105,300,000
115,300,000

4. Derivative Transactions(1) Derivatives not designated as hedging instruments
		 For the period from October 1, 2015 to March 31, 2016
		  “Not applicable”
		For the period from April 1, 2016 to September 30, 2016
		  “Not applicable”(2) Derivatives designated as hedging instruments
		 For the period from October 1, 2015 to March 31, 2016		 The contract amount or the equivalent principal amount set out in the contract as of the closing date for each derivative designated asa hedging instrument is as follows.


Derivative accounting method

Type of derivative transaction

Hedged item

Receive floating, pay fixedLong-term loansinterest-rate swap transactions
Integrated Treatment (Special Treatment Receive floating USD, pay fixed JPY,
and Allocation Treatment) for interestinterest-rate and currency swap transLong-term loans
rate and currency swap transactions
actions (with initial and final exchange)
Hedge accounting

34

Japan Real Estate Investment Corporation

Contract valueOver one year

Thousands of yen

Fair value

Measurementof fair value

64,300,000

64,300,000*—

10,000,000

10,000,000*—		For the period from April 1, 2016 to September 30, 2016			The contract amount or the equivalent principal amount set out in the contract as of the closing date for each derivative designated asa hedging instrument is as follows.


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

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

Hedged item

Contract valueOver one year

Thousands of yen

Fair value

Measurementof fair value

Long-term loans

64,300,000

64,300,000*—

Long-term loans

10,000,000

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

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

As of March 31, 2016

As of September 30, 2016

Acquisition costs

Book value

Acquisition costs

Book valueLand

450,267,151

450,267,151

450,384,924

450,384,924

Buildings and structures

269,282,674  Accumulated depreciation(79,298,438)

Machinery and equipment

2,962,534  Accumulated depreciation(1,795,372)

Tools, furniture and fixtures

384,059  Accumulated depreciation(209,733)

Construction in progress
Land in trust

270,429,495
189,984,235(84,232,457)

186,197,038

2,992,615
1,167,161(1,880,589)

174,325(232,002)

1,112,026

396,617
164,615

2,250

2,250

2,250

2,250

151,935,120

151,935,120

151,935,120

151,935,120

60,180,123(19,162,609)

304,328(665,333)

Buildings and structures in trust

77,929,669  Accumulated depreciation(17,749,545)

Machinery and equipment in trust

945,736  Accumulated depreciation(641,407)

78,402,068
59,239,459

948,336
283,002

Tools, furniture and fixtures in trust

38,850  Accumulated depreciation(16,610)

22,240(19,071)

29,110Construction in progress in trust

2,299

2,299

2,299

2,299

854,039,237

854,039,237

849,349,846

849,349,846

Total

48,182The compressed amount of tangible assets with government grants under the Corporation Tax Law of Japan was ¥50 million as ofMarch 31, 2016 and ¥50 million as of September 30, 2016.

Japan Real Estate Investment Corporation

35

6. Loans
The condition of loans by financial institutions as of September 30, 2016 is as follows.

Drawdown Date

Balance at
Beginning ofCurrent Period(¥ thousand)

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

Repayment
Date

Repayment
MethodUse of Proceeds

Notes

April 1, 2015

5,500,000—

0.1245

April 1, 2016

BulletPurchase real estate trust
beneficiary rights

Floating interest rate

March 25, 2016

5,500,000

5,500,000

0.08027

March 27, 2017

BulletRepay existing
short-term loans

Floating interest rate

April 1, 2016—

5,500,000

0.08007

April 3, 2017

BulletRepay existing
short-term loans

Floating interest rate

June 23, 2016—

5,000,000

0.07238

December 26, 2016

BulletRepay existing loans

Floating interest rate
Floating interest rate

Segment
LenderMizuho Bank, Ltd.

The Bank of TokyoMitsubishi UFJ, Ltd.

Short-term loans

Mitsubishi UFJ
Trust and Banking
Corporation
Sumitomo Mitsui
Trust Bank, Limited

Shinsei Bank, Limited

April 1, 2015

3,500,000—

0.1245

April 1, 2016

BulletPurchase real estate trust
beneficiary rights

March 2, 2016

1,500,000

1,500,000

0.07995

March 2, 2017

BulletRepay existing
short-term loans

Floating interest rate

April 1, 2016—

3,500,000

0.08007

April 3, 2017

BulletRepay existing
short-term loans

Floating interest rate

June 23, 2016—

5,000,000

0.07238

December 26, 2016

BulletRepay existing loans

Floating interest rate

April 4, 2016—

3,000,000

0.08027

April 4, 2017

BulletRepay existing loans

Floating interest rate

June 23, 2016—

5,000,000

0.07238

December 26, 2016

BulletRepay existing loans

Floating interest rate
Floating interest rate

March 31, 2016

1,700,000

1,700,000

0.07933

March 31, 2017

BulletRepay existing
short-term loans

June 23, 2016—

5,000,000

0.07238

December 26, 2016

BulletRepay existing loans

Floating interest rate

September 1, 2015

2,000,000—

0.08169

September 1, 2016

BulletPurchase real estate

Floating interest rate

September 1, 2016—

2,000,000

0.0718September 1, 2017

BulletRepay existing
short-term loans

Floating interest rate

September 1, 2015

1,000,000—

0.08169

September 1, 2016

BulletPurchase real estate
and repay existing
short-term loans

Floating interest rate

September 1, 2016—

1,000,000

0.0718September 1, 2017

BulletRepay existing
short-term loans

Floating interest rate

January 7, 2016

1,000,000

1,000,000

0.08151January 10, 2017

BulletRepay existing
short-term loans

Floating interest rate
Floating interest rate

Resona Bank, Limited

The 77 Bank, Ltd.

September 1, 2015

1,000,000—

0.08169

September 1, 2016

BulletRepay existing
short-term loans

September 1, 2016—

1,000,000

0.0718September 1, 2017

BulletRepay existing
short-term loans

Floating interest rate

22,700,000

45,700,000
Fixed interest rate

Shinkin Central Bank

Subtotal
Mitsubishi UFJ
Trust and Banking
Corporation

Long-term loans to be repaid within 1 year

36

The Bank ofFukuoka, Ltd.

April 4, 2011

5,000,000—

1.0325

April 4, 2016

BulletRepay existing loans

April 4, 2011—

5,000,000

1.205

April 4, 2017

BulletRepay existing loans

Fixed interest rate

June 1, 2011—

12,000,000

1.12625

June 1, 2017

BulletRepay existing loans

Fixed interest rate

August 31, 2011—

2,000,000

0.9025

August 31, 2017

BulletRepay existing loans

Fixed interest rate
Fixed interest rate

June 15, 2012—

2,500,000

0.66

June 15, 2017

BulletRedeem investment
corporation bonds

August 31, 2012—

1,000,000

0.57125

August 31, 2017

BulletRepay existing loans

Fixed interest rate

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

5,000,000

5,000,000

1.54375

March 30, 2017

BulletRepay existing loans

Fixed interest rate

Mizuho Bank, Ltd.

December 21, 2010

5,000,000

5,000,000

1.30625

December 21, 2016

BulletRepay existing
short-term loans

Fixed interest rate

The Iyo Bank, Ltd.

June 15, 2012—

2,500,000

0.66

June 15, 2017

BulletRedeem investment
corporation bonds

Fixed interest rate

Shinsei Bank, Limited

June 15, 2012—

2,500,000

0.66

June 15, 2017

BulletPurchase real estate

Fixed interest rate

Resona Bank, Limited

March 1, 2011

2,000,000

2,000,000

1.255

March 1, 2017

BulletPurchase real estate trust
beneficiary rights

Fixed interest rate

Development Bankof Japan Inc.

March 24, 2010

1,400,000

1,350,000
*2

1.665

March 24, 2017

Repayment ininstallments*2

Purchase real estate

Fixed interest rate

Japan Real Estate Investment Corporation

Drawdown Date

Balance at
Beginning ofCurrent Period(¥ thousand)

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

Repayment
Date

Repayment
MethodUse of Proceeds

Notes

The Hachijuni
Bank, Ltd.

June 15, 2012—

1,000,000

0.66

June 15, 2017

BulletPurchase real estate

Fixed interest rate

Shinkin Central Bank

November 15, 2011

1,000,000

1,000,000

0.7525

November 15, 2016

BulletPurchase real estate

Fixed interest rate

6,000,000—

6,000,000—

0.90875

June 23, 2016

BulletRepay existing loans

Fixed interest rate

6,000,000—

6,000,000—

1,000,000

—

1.595

April 25, 2016

BulletRedeem investment
corporation bonds

Fixed interest rate

44,400,000

42,850,000

Segment
LenderLong-term loans to be repaid within 1 year

Mitsubishi UFJ
Trust and Banking
Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui
Trust Bank, Limited

June 23, 2011

The Bank of TokyoMitsubishi UFJ, Ltd.
Taiyo Life Insurance
Company

April 24, 2008

Subtotal
Total

Mitsubishi UFJ
Trust and Banking
Corporation

Long-term loans

The Bank of TokyoMitsubishi UFJ, Ltd.

Sumitomo Mitsui
Trust Bank, Limited

67,100,000

88,550,000

April 4, 2011

5,000,000

—

1.205

April 4, 2017

BulletRepay existing loans

Fixed interest rate

June 1, 2011

12,000,000—

1.12625

June 1, 2017

BulletRepay existing loans

Fixed interest rate

June 1, 2011

10,000,000

10,000,000

1.31125

June 1, 2018

BulletRepay existing loans

Fixed interest rate

November 15, 2011

3,000,000

3,000,000

1.13875

November 15, 2019

BulletPurchase real estate

Fixed interest rate

June 15, 2012

4,000,000

4,000,000

0.9525June 15, 2020

BulletPurchase real estate

Fixed interest rate
Fixed interest rate

June 15, 2012

2,500,000

2,500,000

1.2725June 15, 2022

BulletRedeem investment
corporation bonds

December 21, 2012

5,000,000

5,000,000

0.80125

December 21, 2020

BulletRepay existing loans

Fixed interest rate

January 31, 2014

4,000,000

4,000,000

0.64225*3

January 29, 2021

BulletPurchase real estate trust
beneficiary rights

Floating interest rate*3

December 19, 2014

10,000,000

10,000,000

0.42375*4

December 19, 2023

BulletRepay existing
short-term loans

Floating interest rate
*4

September 1, 2015

3,500,000

3,500,000

0.63

September 2, 2024

BulletPurchase real estate

Fixed interest rate
Fixed interest rate
Fixed interest rate

March 24, 2011

2,000,000

2,000,000

1.3975

March 26, 2018

BulletRepay existing
short-term loans

November 15, 2011

3,000,000

3,000,000

1.13875

November 15, 2019

BulletPurchase real estate

June 15, 2012

4,000,000

4,000,000

1.1975June 15, 2022

BulletPurchase real estate

Fixed interest rate

December 21, 2012

5,000,000

5,000,000

0.80125

December 21, 2020

BulletRepay existing loans

Fixed interest rate

January 15, 2013

5,500,000

5,500,000

0.71

January 15, 2020

BulletRepay existing loans

Fixed interest rate

January 15, 2013

5,500,000

5,500,000

0.83625

January 15, 2021

BulletRepay existing loans

Fixed interest rate

April 24, 2013

5,000,000

5,000,000

0.775

April 26, 2021

BulletRepay existing loans

Fixed interest rate

September 1, 2015

5,000,000

5,000,000

0.2

September 2, 2019

BulletPurchase real estate

Fixed interest rate
Fixed interest rate

September 1, 2015

2,000,000

2,000,000

0.47125

September 1, 2022

BulletRepay existing
short-term loans

January 17, 2011

3,000,000

3,000,000

1.43375

January 17, 2018

BulletRepay existing
short-term loans

Fixed interest rate

September 26, 2011

5,500,000

5,500,000

1.16

September 26, 2019

BulletRepay existing
short-term loans

Fixed interest rate

November 15, 2011

3,000,000

3,000,000

0.98375

November 15, 2018

BulletPurchase real estate

Fixed interest rate

June 15, 2012

4,000,000

4,000,000

0.9525June 15, 2020

BulletPurchase real estate

Fixed interest rate

2,000,000

0.62575*3

January 29, 2021

BulletPurchase real estate trust
beneficiary rights

Floating interest rate
*3
Fixed interest rate

January 31, 2014

2,000,000

May 29, 2015

5,000,000

5,000,000

0.2075

May 29, 2019

BulletRepay existing loans

June 15, 2015

3,000,000

3,000,000

0.3425June 15, 2020

BulletRepay existing loans

Fixed interest rate

3,800,000

0.536
*3

BulletRepay existing
short-term loans

Floating interest rate
*3

September 2, 2015

3,800,000

September 2, 2024

Japan Real Estate Investment Corporation

37

Drawdown Date

Balance at
Beginning ofCurrent Period(¥ thousand)

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

Repayment
Date

Repayment
MethodUse of Proceeds

Notes

November 1, 2011

6,000,000

6,000,000

1.2075

November 1, 2019

BulletRepay existing short-termloans and other loans

Fixed interest rate

November 15, 2011

3,000,000

3,000,000

1.13875

November 15, 2019

BulletPurchase real estate

Fixed interest rate

June 15, 2012

4,000,000

4,000,000

1.07375

June 15, 2021

BulletPurchase real estate

Fixed interest rate

January 15, 2013

5,000,000

5,000,000

0.96625

January 17, 2022

BulletRepay existing loans

Fixed interest rate

April 24, 2013

3,000,000

3,000,000

0.87375

April 25, 2022

BulletRepay existing loans

Fixed interest rate

September 1, 2015

2,500,000

2,500,000

0.17

March 1, 2019

BulletPurchase real estate

Fixed interest rate

Repay existing
short-term loans

Fixed interest rate

Segment
LenderMizuho Bank, Ltd.

October 1, 2015

2,500,000

2,500,000

0.5575October 1, 2024

BulletJanuary 7, 2013

3,000,000

3,000,000

1.115

January 6, 2023

BulletPurchase real estate

Fixed interest rate
Fixed interest rate

January 31, 2014

5,000,000

5,000,000

0.9325January 31, 2023

BulletPurchase real estate trust
beneficiary rights

September 1, 2015

7,000,000

7,000,000

0.7175September 1, 2025

BulletPurchase real estate andrepay existing loans

Fixed interest rate

The Daishi Bank, Ltd.

1,800,000

1,800,000

The Hokuetsu
Bank, Ltd.

1,400,000

1,400,000

Sony Bank
Incorporated

1,400,000

1,400,000

The Toho Bank, Ltd.

1,400,000

1,400,000

The Shinkumi
Federation Bank

1,000,000

1,000,000

900,000

900,000

900,000

900,000

November 15, 2021

Bullet900,000

900,000

0.463*3

Repay existing
short-term loans

Floating interest rate*3

The 77 Bank, Ltd.

900,000

900,000

The Tochigi
Bank, Ltd.

900,000

900,000

The Higo Bank, Ltd.

500,000

500,000

The Bank of
Iwate, Ltd.

500,000

500,000

The Yamagata
Bank, Ltd.

500,000

500,000

Development Bankof Japan Inc.

The Akita Bank, Ltd.
The Fukui Bank, Ltd.
The Gunma
Bank, Ltd.
Long-term loans

Shinkin Central Bank

November 14, 2014

January 7, 2013

2,000,000

2,000,000

0.71375

January 7, 2020

BulletPurchase real estate

Fixed interest rate

January 15, 2013

5,000,000

5,000,000

0.71

January 15, 2020

BulletRepay existing loans

Fixed interest rate

April 24, 2013

5,000,000

5,000,000

0.52775

April 24, 2018

BulletRepay existing loans

Fixed interest rate

January 31, 2022

BulletPurchase real estate trust
beneficiary rights

Floating interest rate
*3

January 31, 2014

3,500,000

3,500,000

0.757
*3

June 17, 2014

3,000,000

3,000,000

0.6785*3

June 17, 2022

BulletRedeem investment
corporation bonds

Floating interest rate
*3

March 25, 2015

3,500,000

3,500,000

0.46825*3

March 27, 2023

BulletPurchase real estate trust
beneficiary rights

Floating interest rate
*3

The Chugoku
Bank, Limited

1,000,000

1,000,000

The Daishi Bank, Ltd.

1,000,000

1,000,000

The Fukui Bank,Ltd.

1,000,000

1,000,000

1,000,000

1,000,000

August 10, 2022

BulletThe Shinkumi
Federation Bank

0.3925*3

Repay existing
short-term loans

Floating interest rate*3

1,000,000

1,000,000

The Toho Bank, Ltd.

1,000,000

1,000,000

The Tochigi
Bank, Ltd.

500,000

500,000

2,000,000

2,000,000

0.45

March 26, 2018

BulletRepay existing loans

Fixed interest rate

October 1, 2021

BulletPurchase real estate

Floating interest rate
*3

June 15, 2023

BulletRepay existing loans

Floating interest rate
*3

The Norinchukin
Bank

The Gunma
Bank, Ltd.

August 10, 2015

March 25, 2013
The Chugoku
Bank, Limited

38

October 1, 2014

1,000,000

1,000,000

0.4725*3

June 15, 2015

3,000,000

3,000,000

0.61175*3

Japan Real Estate Investment Corporation

Balance at
Beginning ofCurrent Period(¥ thousand)

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

Repayment
Date

August 31, 2011

3,000,000

3,000,000

1.0475June 15, 2012

2,500,000—

0.66

Segment
Drawdown Date
Lender

Shinsei Bank, Limited

Taiyo Life Insurance
Company
Sumitomo Mitsui
Banking Corporation

The Bank ofFukuoka, Ltd.

Use of Proceeds

Notes

August 31, 2018

BulletRepay existing loans

Fixed interest rate

June 15, 2017

BulletPurchase real estate

Fixed interest rate
Fixed interest rate

June 15, 2012

2,500,000

2,500,000

1.2725June 15, 2022

BulletRedeem investment
corporation bonds

March 30, 2011

2,000,000

2,000,000

1.39625

March 30, 2018

BulletRepay existing loans

Fixed interest rate

October 1, 2014

2,000,000

2,000,000

0.7825October 1, 2024

BulletPurchase real estate

Fixed interest rate

May 29, 2015

1,500,000

1,500,000

0.7375

May 29, 2025

BulletRepay existing loans

Fixed interest rate

November 15, 2011

3,000,000

3,000,000

0.98375

November 15, 2018

BulletPurchase real estate

Fixed interest rate

January 7, 2013

2,000,000

2,000,000

0.98

January 7, 2022

BulletPurchase real estate

Fixed interest rate

August 31, 2011

2,000,000—

0.9025

August 31, 2017

BulletRepay existing loans

Fixed interest rate

June 15, 2012

2,500,000—

0.66

June 15, 2017

BulletRedeem investment
corporation bonds

Fixed interest rate

August 31, 2012

1,000,000—

0.57125

August 31, 2017

BulletRepay existing loans

Fixed interest rate

January 31, 2014

2,500,000

2,500,000

0.63849*3

January 29, 2021

BulletPurchase real estate trust
beneficiary rights

Floating interest rate
*3

March 24, 2015

2,000,000

2,000,000

0.5125

March 24, 2023

BulletRepay existing loans

Fixed interest rate
Fixed interest rate

June 15, 2012

2,500,000—

0.66

June 15, 2017

BulletRedeem investment
corporation bonds

March 24, 2014

2,000,000

2,000,000

0.6035*3

March 24, 2021

BulletRepay existing loans

Floating interest rate*3

October 1, 2014

1,000,000

1,000,000

0.46525*3

October 1, 2021

BulletPurchase real estate

Floating interest rate
*3

January 15, 2016

1,000,000

1,000,000

0.265
*3

January 16, 2023

BulletRepay existing loans

Floating interest rate
*3

The Iyo Bank, Ltd.

Long-term loans

The Hachijuni
Bank, Ltd.

Repayment
MethodJune 15, 2012

1,000,000—

0.66

June 15, 2017

BulletPurchase real estate

Fixed interest rate

December 20, 2012

1,000,000

1,000,000

0.45625

December 20, 2017

BulletRepay existing loans

Fixed interest rate

March 25, 2013

1,000,000

1,000,000

0.45

March 26, 2018

BulletRepay existing loans

Fixed interest rate

January 16, 2023

BulletRepay existing loans

Floating interest rate
*3

January 15, 2016

1,000,000

1,000,000

0.265
*3

The Hiroshima
Bank, Ltd.

October 1, 2014

3,000,000

3,000,000

0.31575*3October 1, 2019

BulletPurchase real estate

Floating interest rate
*3

Mizuho Trust &Banking Co., Ltd.

March 2, 2015

3,000,000

3,000,000

0.5585*3

March 3, 2025

BulletPurchase real estate trust
beneficiary rights

Floating interest rate
*3
Fixed interest rate

Resona Bank, Limited

March 25, 2013

3,000,000

3,000,000

0.45

March 26, 2018

BulletRepay existing loans

The Yamaguchi
Bank, Ltd.

October 29, 2012

2,000,000

2,000,000

0.8

October 29, 2020

BulletRepay existing loans

Fixed interest rate

March 25, 2013

1,000,000

1,000,000

0.945

March 24, 2023

BulletRepay existing loans

Fixed interest rate

March 24, 2014

1,000,000

1,000,000

0.4105*3

March 25, 2019

BulletRepay existing loans

Floating interest rate
*3

November 17, 2014

1,000,000

1,000,000

0.316
*3

November 18, 2019

BulletRepay existing loans

Floating interest rate
*3

March 1, 2011

2,000,000

2,000,000

1.465

March 1, 2018

BulletPurchase real estate trust
beneficiary rights

Fixed interest rate

December 17, 2021

BulletRedeem investment
corporation bonds

Floating interest rate
*3

The Gunma
Bank, Ltd.
Nippon Life
Insurance Company
The Nishi-Nippon
City Bank, Ltd.

June 17, 2014

2,000,000

2,000,000

0.621
*3

The Yamanashi
Chuo Bank, Ltd.

December 15, 2014

2,000,000

2,000,000

0.266
*3

December 16, 2019

BulletRepay existing loans

Floating interest rate
*3

The Daishi Bank, Ltd.

January 7, 2016

1,500,000

1,500,000

0.2802*3

January 10, 2023

BulletRepay existing
short-term loans

Floating interest rate
*3

The Ashikaga
Bank, Ltd.

January 7, 2013

1,000,000

1,000,000

0.49125

January 9, 2018

BulletPurchase real estate

Fixed interest rate

The Joyo Bank, Ltd.

January 7, 2013

1,000,000

1,000,000

0.49125

January 9, 2018

BulletPurchase real estate

Fixed interest rate

276,300,000

247,800,000

Total*1. The average for floating interest rates is recorded as the weighted average during the period. The average is rounded off to the fifth decimal place.
*2. ¥50,000 thousand is repaid every six months respectively. ¥1,350,000 thousand is scheduled to be repaid on the final principal repayment date.
*3.	In order to hedge the risk of interest rate fluctuations, floating interest rates were swapped to fixed rates. Accordingly, the weighted average for interest rates during the period is calculated taking the effect of this swap into consideration.
*4.	In order to hedge the risk of exchange rate and interest rate fluctuations related to foreign currency-denominated loans, the Company conducted an interest-rate and currency swap transaction, which substantially secured exchange and interest rates. Accordingly, the weighted average for interest rates during the period is calculated taking theeffect of this interest-rate and currency swap into consideration.
Note: All floating interest rate loans and fixed interest rate loans procured are unsecured, unguaranteed and unsubordinated.

Japan Real Estate Investment Corporation

39

7. Investment Corporation Bonds including Current Portion of Investment Corporation Bonds
Outstanding investment corporation bonds as of September 30, 2016 are as follows.

Date of Issue

Balance at
Beginning ofCurrent Period(¥ thousand)

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

Repayment Period

Repayment
MethodUse ofProceeds

Notes

September 29, 2005

10,000,000

10,000,0002.56

September 29, 2025

Bullet*1*2

August 30, 2013

10,000,000

10,000,000

0.497

August 30, 2018

Bullet*1*2

20,000,000

20,000,000

Securities

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

*1.	The 4th unsecured investment corporation bond is used to fund the repayment of existing short-term loans.
		The 9th unsecured investment corporation bond is used to fund the repayment of loans and acquire specified assets (“specified assets” defined in Article 2, Paragraph 1of the ITA).
*2. Financial covenants, such as a negative pledge, are not included in these bonds.

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

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

For the period from October 1, 2015
to March 31, 2016

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

40

Japan Real Estate Investment Corporation

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

972

943

51,54256,530102,509103,542

155,025

161,016(61,631)(67,652)

93,39493,36492,421

92,421

167,220

167,188259,642

259,610

166,247

166,245

The reconciliation of tax rate difference between the adjusted statutory tax rate and the effective tax rate for the six months ended
March 31, 2016 and September 30, 2016 was as follows:
For the period from October 1, 2015
to March 31, 2016

Statutory tax rate
Deductible dividend distribution
Change in valuation allowance
Effect of changes in tax rates
Others
Effective tax rate

For the period from April 1, 2016
to September 30, 201635.36%

34.81%(34.76%)(34.77%)

0.06%

0.06%

(0.03%)—(0.05%)

0.01%

0.58%

0.10%

10. Related Party Transactions
For the six months ended March 31, 2016 and September 30, 2016
Transactions with related parties defined under the Financial Instruments and Exchange Act are listed below.
(1) Parent Company and Major Corporation Unitholders
			 For the period from October 1, 2015 to March 31, 2016
				“Not applicable”
			For the period from April 1, 2016 to September 30, 2016
				“Not applicable”(2) Subsidiaries
			 For the period from October 1, 2015 to March 31, 2016
				“Not applicable”
			For the period from April 1, 2016 to September 30, 2016
				“Not applicable”(3) Sister Companies
			 For the period from October 1, 2015 to March 31, 2016
				“Not applicable”
			For the period from April 1, 2016 to September 30, 2016
				“Not applicable”(4) Directors and Major Individual Unitholders
			 For the period from October 1, 2015 to March 31, 2016
				“Not applicable”
			For the period from April 1, 2016 to September 30, 2016
				“Not applicable”

Japan Real Estate Investment Corporation

41

Transactions with related parties defined under the ITA are listed below.
In addition to controlling unitholders, major unitholders, subsidiary corporations, subsidiary companies of controlling unitholders, andofficers and their close relatives, the definition of a “related party” under the ITA also includes the asset management company and its
interested parties (parent and subsidiary corporations, specified individual shareholders, and major shareholders of the asset managementcompany defined as interested parties under Article 201 of the ITA and Article 123 of the enforcement order of the ITA), as well as theasset custody company.
For the period from October 1, 2015 to March 31, 2016 (Unaudited)Type of Relationship

Name ofTransaction Partner

Type of Business

Percentage ofUnits Held

Transaction Details

Interested party

Mitsubishi EstateCo., Ltd.

Real estate

1.307%

Security deposit increase

Interested party

Mitsubishi Jisho
Property Management
Co., Ltd.

Real estate
management—

Property management
expenses

Asset custodycompany

Sumitomo Mitsui
Trust Bank, Limited

Bank

—

—

Rent revenue
Security deposit return

Transaction Amount(¥ thousand)

11,271,326

Accounting Item—

265,400 Deposits received
from tenants
165,991
2,018,599—

Balance at
End of Period(¥ thousand)—
18,672,371—
Long-term loans
payable—35,300,000

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

For the period from April 1, 2016 to September 30, 2016 (Unaudited)Type of Relationship

Name ofTransaction Partner

Type of Business

Percentage ofUnits Held

Transaction Details

Interested party

Mitsubishi EstateCo., Ltd.

Real estate

1.307%

Security deposit increase

Interested party

Mitsubishi Jisho
Property Management
Co., Ltd.

Real estate
management—

Property management
expenses

2,101,261—

Asset custodycompany

Sumitomo Mitsui
Trust Bank, Limited

Bank

—

Long-term loans repayment

6,000,000

Long-term loans
payableRent revenue
Security deposit return

Transaction AmountAccounting Item(¥ thousand)

11,615,200

Balance at
End of Period(¥ thousand)—

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

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

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

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

42Japan Real Estate Investment Corporation

Information on geographic area

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

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

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

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

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

For the period from October 1, 2015
to March 31, 2016

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

322,080

325,325

—

—

3,244

3,277

325,325

328,602

Asset retirement obligations other than those reported on balance sheets

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

Japan Real Estate Investment Corporation

43

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

Book value

Fair value

As of September 30, 2015

Change during period (*1)

As of March 31, 2016

As of March 31, 2016

869,034,061(7,673,565)

861,360,496

996,828,000

Thousands of yen

Book value

Fair value

As of March 31, 2016

Change during period (*2)

As of September 30, 2016

As of September 30, 2016

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

856,657,737

1,011,368,000

Notes: 1. Book value on balance sheets means the acquisition cost less accumulated depreciation.
2. Significant changes(*1) A s for increases/decreases for the period, the major reasons for the decrease were the sale of the Hirokoji Sakae Building (¥1,681,178 thousand) and the Kyoto Shijo
Kawaramachi Building (¥2,487,040 thousand), as well as depreciation.
(*2) A s for increases/decreases for the period, the major reason for the increase was the additional acquisition of the Nishiki Park Building (¥180,157 thousand), while
the decrease was accounted for by depreciation.
3. Fair values as of March 31, 2016 and September 30, 2016 are defined as the appraised values provided by an external qualified professional appraiser.

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

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

Net assets at period end per unit
Profit per unit

For the period from October 1, 2015
to March 31, 2016

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

358,238

358,478

8,212

8,361

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

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

44

Japan Real Estate Investment Corporation

For the period from October 1, 2015
to March 31, 2016

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

10,753,298—
10,753,298
1,309,310 units

10,947,485—
10,947,485
1,309,310 units15. Breakdown of Property-Related Revenues and Expenses
For the six months ended March 31, 2016 and September 30, 2016
Thousands of yen

For the period from October 1, 2015
to March 31, 2016

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

Property-Related Revenues

30,428,493

30,773,968

Rent revenues

30,290,297

30,565,884  Rental revenues

23,683,413

23,994,977   Common service charges

3,712,032

3,598,719  Parking revenues   Other rental revenues
Other lease business revenues

799,252

786,817

2,095,599

2,185,369

138,195

208,084  Cancellation charges

38,001

10,883   Other miscellaneous revenues

100,194

197,200

Property-Related Expenses

16,941,905

17,091,090

Property management expenses

3,767,790

3,519,734

Utilities expenses

2,543,078

2,708,649

Property and other taxes

2,789,628

2,936,241

Casualty insurance

58,65557,814

Repairing expenses

1,101,189

1,181,022

Depreciation

6,487,255

6,500,062

Other rental expenses

194,306

187,565

Property-Related Profits

13,486,587

13,682,878

16. Breakdown of Gain on Sales of Real Estate Properties
For the period from October 1, 2015 to March 31, 2016
Thousands of yen

Hirokoji Sakae Building
Revenue from sale of real estate property

1,867,031

Cost of real estate property sold

1,681,178

Other sales expenses

35,495Gain on sale of real estate property

150,357

Revenue from sale of real estate property

2,516,000

Cost of real estate property sold2,487,040

Kyoto Shijo Kawaramachi Building

Other sales expenses

17,938Gain on sale of real estate property

11,020For the period from April 1, 2016 to September 30, 2016
“Not applicable”

Japan Real Estate Investment Corporation

45

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

As of March 31, 2016

As of September 30, 2016

Total number of investment units issuable

4,000,000 units

4,000,000 units

Number of units outstanding

1,309,310 units

1,309,310 units

18. Supplemental Cash Flow Information
Cash and cash equivalents

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

As of March 31, 2016

As of September 30, 2016

Cash and deposits

19,362,431

16,231,988

Cash and deposits in trust

5,542,352

6,314,725

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

24,904,784

22,546,714

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

As of March 31, 201646

As of September 30, 2016

Due within one year

19,934,950

19,258,762

Due after one year

34,247,572

29,319,650

Total

54,182,523

48,578,413

Japan Real Estate Investment Corporation

20. Subsequent Events
For the six months ended September 30, 2016
Exchange of assets

Based on the asset exchange agreement of December 15, 2016, entered into with Mitsubishi Estate Co., Ltd, the Company will execute an
exchange transaction. The acquisition and delivery of the property concerned are scheduled to take place on January 25, 2017.
Regarding the land pertaining to the asset to be acquired through exchange, approximately 2 billion yen, which is an estimated valueof advanced depreciation limit, of the profit gained from the asset transferred for exchange shall be subtracted from the value gained bymeans of the asset acquired in this exchange, pursuant to the provisions in Article 50 of the Corporation Tax Act on advanced­depreciation accounting.
A. Assets to be transferred from exchange[Genki Medical Plaza]
Scheduled transfer priceBook value (as of September 30, 2016)
Type of the specified asset: 6,890 million yen: 4,790 million yen: Real property

B. Assets to be acquired from exchange[Shinjuku Eastside Square]
Scheduled acquisition priceType of the specified asset: 6,660 million yen: Trust beneficiary right

21. Additional Information
For the period from October 1, 2015 to March 31, 2016
“Not applicable”
For the period from April 1, 2016 to September 30, 2016
Starting from the period under review, the Company adopts the Implementation Guidance on Recoverability of Deferred Tax Assets(The Accounting Standards Board of Japan Guidance No.26 of March 28, 2016).

Japan Real Estate Investment Corporation

47

48

Japan Real Estate Investment Corporation

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

2. Information Required under Article 22(2)(d) of the EU Alternative Investment Fund Managers
Directive (AIFMD)(1) ‌Material Changes in Information Listed in Article 23 of AIFMD during the Financial Period Covered by the Report(Six-month fiscal period ended September 30, 2016)
Pursuant to the agreements executed in June and September 2016, the general administrator of the AIF, Sumitomo Mitsui Trust Bank,
Ltd., which had been providing transfer agency and special accounts administration services, as well as general administration services
for operation of administrative instruments and accounting, was to be replaced by Mitsubishi UFJ Trust and Banking Corporation,
made effective in two stages - the first in June 2016 with respect to transfer agency and special accounts administration services, and thesecond in October 2016 with respect to general administration services for operation of administrative instruments and accounting.
Japan Real Estate Investment Corporation49		  Therefore, in the section under the heading “The identity of the AIFM, AIF’s depository, auditor and any other service providers,and a description of their duties and the investors’ rights thereto” under Article 23 (1)(d), we added the identity of the new transfer
agent and special accounts administrator (Mitsubishi UFJ Trust and Banking Corporation) and a note stating that the general administrator for operation of administrative instruments and accounting would be replaced by Mitsubishi UFJ Trust and Banking
Corporation, effective October 1, 2016. Please note that such replacement has been made effective as scheduled.

3. Remuneration Policy for the Asset Manager’s Directors, Corporate Auditors and Employees
Beginning April 1, 2015 and ending March 31, 2016
1. Remuneration for Asset Manager Directors

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

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

1

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

Corporate Auditors

Remuneration

Number of
person(s)remunerated¥19.5 million

0

Total

Remuneration

Number of
person(s)remunerated

Remuneration¥0 million

1¥19.5 million

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

Remuneration based on compensation rules

33

Remuneration
Total

Fixed

Variable¥315 million¥205 million¥110 million

4. Conflict of Interest

There are potential conflicts of interest between the Company and the Asset Management Company with respect to remuneration for the
Directors, Corporate Auditors and employees of the Asset Management Company. The Company believes that the above remuneration
policy mitigates such potential conflicts. In addition, the Asset Management Company has adopted an internal set of rules that apply to all
related party transactions, such as transactions between the Company and the Asset Management Company. These rules require strict
compliance by the Asset Management Company with laws and regulations regarding related-party transactions. They also contain specificprocedures to be followed in the event of a transaction that involves a related party, in order to implement arm’s length terms.
50Japan Real Estate Investment Corporation

Corporate Data
As of September 30, 2016

Executives
Executive Director: 	Hiroshi Nakajima
Supervisory Directors: ‌Kenji Kusakabe
Tomohiro Okanoya
Paid-in Capital¥458,016,096,000
Number of Units Outstanding
1,309,310
Number of Unitholders
15,206
Stock Listing
Tokyo Stock Exchange
Securities Code8952
Type of Investment Corporation
Closed-end corporate type fundTransfer Agent
Mitsubishi UFJ Trust and Banking Corporation
1-4-5, Marunouchi, Chiyoda-ku, Tokyo 100-8212, Japan
Auditors
Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg.
2-2-3, Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011, Japan
Incorporation
May 11, 2001
Executive Office
Japan Real Estate Investment Corporation
3-3-1, Marunouchi, Chiyoda-ku, Tokyo 100-0005, JapanFor further information, please contact:
Japan Real Estate Asset Management Co., Ltd.
Planning Department
Tel: 81-3-3211-7951
Fax: 81-3-3212-8886
E-mail: j-rea-inquiry@j-rea.co.jp

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

Japan Real Estate Investment Corporation

51

Japan Real Estate Investment Corporation
SEMIANNUAL REPORT

September 2016

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

Printed in Japan