Japan Real Estate Investment Corporation

MARCH 2004 SEMIANNUAL REPORTFor the period from October 1, 2003 to March 31, 2004

Profile
Japan Real Estate Investment Corporation (the “Company”) wasestablished as one of the first real estate investment corporations inJapan, following revisions to the Law Concerning Investment Trusts
and Investment Corporations of Japan, as amended, or theInvestment Trust Law. Its investments focus primarily on officebuildings, 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 (“TSE”) on
September 10, 2001. (Securities Code: 8952)
Note: Investment corporations, including Japan Real Estate Investment Corporation, are special legal entities
incorporated and operated under the Investment Trust Law. Accordingly, the “shares” of suchinvestment corporations, including the shares of the Company, are governed by the Investment Trust
Law and represent the equity interests in such investment corporations, which may differ in certain
material respects from the “shares” governed by the Commercial Code of Japan and representing theequity interests in Japanese ordinary corporations incorporated and operated under the Commercial
Code of Japan. Investors and readers are specifically reminded to pay attention to such differences whenreviewing this semiannual report and making any investment decision on or in respect of the “shares” of
the Company. “Shareholders” of the Company may be construed accordingly. See “About J-REIT
System” (pages 46–48) for more details. Each of the investors and readers should consult their own
legal, tax and other advisors regarding all Japanese legal, tax and other consequences of an investment in
the shares of the Company, with specific reference to their own legal, tax and other situation and any
recent changes in applicable laws, guidelines or their interpretation.

The Strengths of Japan Real Estate Investment Corporation• Portfolio of 36 high-quality office buildings as of March 31, 2004 (One newproperty and additional ownership in one existing property were acquired on
April 1, 2004.)• Steady growth — Total amount of acquistion prices surpassed 218 billion
yen, aiming to achieve the goal of 300 billion yen by March 31, 2006

Contents
Financial Highlights
p. 1
Top 10 Shareholders
p. 1
Share Price Performancep. 1
Additional Issues of Sharesp. 1
Portfolio Highlights
p. 2
New Portfolio Properties
p. 3
History after IPO
p. 6
To Our Shareholders
p. 8
The Portfolio of Japan Real Estate
Investment Corporation
p.14
Overview of Portfolio Properties
p.17
The Company’s Investment Policies p.22
Financial Section
p.30
About J-REIT System
p.46
Profile of J-Rea
p.49
Corporate Data
p.50

• Superior geographic and tenant diversity with a 94.8% occupancy rate (as ofMarch 31, 2004)• Collaboration with Mitsubishi Estate Co., Ltd., The Tokio Marine and Fire
Insurance Co., Ltd., The Dai-ichi Mutual Life Insurance Company, andMitsui & Co., Ltd.
• Highest issuer credit ratings of any office REIT in the world: A+ fromStandard & Poor’s and A2 from Moody’s Investors Service. At the same time,
Moody’s Investors Service changed their outlook rating from stable topositive on January 26, 2004
• Praise from investors — Awarded “Deal of the Year” 4th prize in Equity
Finance by the “Nikkei Bonds & Financial Weekly” during 2002, following
3rd place in 2001
• Healthy financial strategy that supports strong growth through additional
issues of shares and bonds

Financial Highlights
For the Period from October 1, 2003 to March 31, 2004

Thousands of U.S. dollars(Note 1)Millions of yen

Operating Revenues
Operating Profits
Income before Income Taxes
Net Income
Net Operating Income (NOI) (Note 2)
Funds from Operations (FFO) (Note 3)
FFO Multiple (Note 4)
Cash Distribution
Number of Shares
Dividend per Share (Yen/U.S. dollars)

For the period from
October 1, 2003 to
March 31, 2004

For the period from
April 1, 2003 to
September 30, 2003

For the period from
October 1, 2002 to
March 31, 2003

For the period from
April 1, 2002 to
September 30, 2002

For the period from
October 1, 2003 to
March 31, 2004

9,560
4,341
3,803
3,802
6,455
5,301
20.4 times
3,802
260,400
14,602

8,965
3,898
3,408
3,407
5,950
4,801
15.2 times
3,407
225,400
15,117

8,500
3,687
3,259
3,258
5,702
4,568
14.6 times
3,258
225,400
14,455

7,910
3,386
2,898
2,897
5,211
4,091
14.1 times
2,897
225,400
12,85390,461
41,07535,98635,97761,08050,15720.4 times
35,977
260,400
138.16

Notes: 1. Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥105.69 = US$1.00, the foreignexchange rate on March 31, 2004, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese
yen has been or could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.
2. NOI = (Property-Related Revenues – Property-Related Expenses) + Depreciation
3. FFO = Net Income – Gains (Losses) from Sales of Specified Assets + Depreciation
4. FFO Multiple = Share Price at End of the Respective Term ÷ FFO per Share (Annualized)(Annualized portion of the calculation given in note 4 assumes a fiscal period of 183 days for the period ended September 30, 2002, 182 days forthe period ended March 31, 2003, 183 days for the period ended September 30, 2003 and 183 days for the period ended March 31, 2004.)

Top 10 Shareholders
Shares% of Total Shares
Outstanding

10,160
8,995
8,120
7,766
7,300
7,003
6,330
5,181
5,119
4,947

3.90%
3.45%
3.12%
2.98%
2.80%
2.69%
2.43%
1.99%
1.97%
1.90%

Company

Mitsubishi Estate Co., Ltd. .................................................................
The Chugoku Bank, Ltd. ....................................................................
The Tokio Marine and Fire Insurance Co., Ltd. ..................................
The Bank of Ikeda, Ltd. ......................................................................
The Yamanashi Chuo Bank, Ltd. ........................................................
Japan Trustee Services Bank, Ltd. (Shintaku Acc.) ..............................
Trust & Custody Services Bank, Ltd. (Toshin Acc.) ............................
The Chase Manhattan Bank, N.A. London .........................................
The Joyo Bank, Ltd. ............................................................................
The Master Trust Bank of Japan, Ltd. (Shintaku Acc.) .......................

Share Price Performance
155%
145%
135%
125%
115%
105%
95%
85%
75%
65%
55%
45%

Sept

2001

TOPIX

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May June

July Aug Sept

2002

Share Price

Oct

Nov

Dec Jan

2003

Feb

Mar

Apr May June

July

Aug Sept Oct

Nov DecJan

Feb Mar Apr

May June

July

Aug

2004

PO Price

Additional Issues of Shares
Issuance date:...............................October 25, 2003
Subscription price:................................629,000 yen
Number of shares issued: ...................35,000 shares

Total amounts of issue price: ........22,015 million yen
Starting date of thecalculation of dividends:.................October 1, 2003

Japan Real Estate Investment Corporation

1

Portfolio Highlights
TRENDS IN THE STATE OF PORTFOLIO MANAGEMENT
Number ofbuildings

Total numberof tenants Total leasable Occupancy(Note 1)
floor spacerate

130,000

160,000

190,000

220,000

250,000

280,000

Total leasable
floor space (m2)September 2001

20

198

133,927m2

94.6%

Total leasable
floor space

October 2001

20

197

136,381m2

93.9%

Occupancy rate

November 2001

21

248

164,883m2

94.7%

December 2001

22

266

171,734m2

93.8%

January 2002

23

269

178,698m2

94.1%

February 2002

24

325

201,934m2

94.0%

March 2002

24

328

201,884m2

94.0%

April 2002

24

326

201,580m2

93.3%

May 2002

25

329

207,914m2

93.6%

June 2002

25

334

207,914m2

94.4%

July 2002

26

333

212,194m2

94.3%

August 2002

27

340

215,928m2

95.2%

September 2002

27

339

215,928m2

95.3%

October 2002

28

340

220,720m2

94.8% (Note 2)

November 2002

29

347

223,771m2

95.5%

December 2002

29

345

223,771m2

95.3%

January 2003

29

348

223,771m2

95.2%

February 2003

29

351

223,771m2

95.6%

March 2003

30

359

236,693m2

94.4%

April 2003

30

356

236,702m2

94.4%

May 2003

30

356

236,702m2

94.9%

June 2003

30

356

237,897m2

94.4%

July 2003

30

362

237,897m2

94.9%

August 2003

32

386

246,062m2

95.3%

September 2003

32

384

246,062m2

95.1%

October 2003

33

396

251,631m2

95.4%

November 2003

34

400

253,806m2

92.5%

December 2003

34

401

260,003m2

93.2%

January 2004

34

403

260,032m2

92.5%

February 2004

34

407

260,211m2

93.2%

March 2004

36

444

273,157m2

94.8%
60.0

65.0

70.0

75.0

80.0

85.0

90.0

95.0

Notes: 1. In the event that the same tenant occupies several buildings, the tenant is calculated as one tenant in the total number of tenants.
2. Occupancy rate of “Genki Medical Plaza” is not considered in the calculation of October 2002, because the property was acquired at
the end of that month, and its rent contracts started at the begining of November 2002.

PORTFOLIO BREAKDOWN
Properties by geographic region

Tenants by industry type

(Percentage based on acquisition price)(Percentage based on leased area)
Nonferrous metals
and metal products 2.3%

Temporary staff agency
1.8%

Transport services / Travel 2.4%
Ceramics.3.0%
Other major cities(25.3%)

Others9.1%

Construction 3.3%

Finance,insurance
13.7%

Communications 3.9%
Tokyo metropolitan area,
excluding 23 wards(4.1%)

Tokyo 23 wards(70.6%)

Serviceindustries
16.1%

Retail and restaurants 4.3%
Information
service12.7%

Textiles 4.5%
Machinery 4.6%
Real estate 4.9%
Electric devices
6.6%

2 Japan Real Estate Investment Corporation

Pharmaceuticals
6.8%

Occupancy
rate (%)

New Portfolio Properties
Properties acquired during the period ended March 31, 2004 and on April 1, 2004

Jingumae Media Square Building
Property Summary
Type of specified asset: Ownership
Acquisition price:¥12,200 million ($115.4 million)
Acquisition date:
October 9, 2003
Location:
Shibuya-ku, Tokyo
Intended use:
Office Space, Retail Stores
Site area:
2,261.68m2 (24,344.50ft2)
Floor area of building: 9,420.42m2 (101,400.46ft2)
Structure:
Above ground: 9 floors
Below ground: 2 floors
Completion:
March 1998

Leasing Conditions (As of March 31, 2004)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:

7 tenants
5,558m2 (59,825.76ft2)
5,074m2 (54,616.03ft2)
91.3%

Shinjuku
Harajuku

Tokyo

ShibuyaProperty Acquisition Merits
This new building faces Meijidori, one of Tokyo’s major
streets in the Harajuku area.
The Harajuku area offers themost attractive market for theapparel / music / PR and retailindustries, and has a low
probability for new supply of
office space.

ShinagawaEbisu Neonato
Property Summary
Type of specified asset: Ownership (Note)
Acquisition price:¥3,740 million ($35.4 million) /¥360 million ($3.4 million)
Acquisition date:November 14, 2003 / April 1, 2004
Location:
Shibuya-ku, Tokyo
Intended use:
Office Space
Site area:
5,005.70m2 (53,880.85ft2)
Floor area of building: 36,598.38m2 (393,941.30ft2)
Structure:
Above ground: 18 floors
Below ground: 2 floors
Completion:
October 1994
Note: 12.3% co-ownership in land and ownership of the 3rd and 4th floors of thebuilding in two transactions

Leasing Conditions (As of March 31, 2004 / April 1, 2004)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:

3 tenants / 1 tenant
2,225m2 (23,949.68ft2) / 237m2 (2,551.04ft2)
2,225m2 (23,949.68ft2) / 237m2 (2,551.04ft2)
100.0% / 100.0%

Shinjuku
Harajuku

Tokyo

ShibuyaProperty Acquisition Merits
Ebisu is a commercial, retailand entertainment area inmetropolitan Tokyo. Locatedin Ebisu, with direct access to
JR Ebisu Station by pedestriandeck, this building offers
strong competitiveness with its
high-quality construction andfirst-class facilities.

ShinagawaJapan Real Estate Investment Corporation

3

Sakaisujihonmachi Building (Note)
Property Summary
Type of specified asset: Ownership
Acquisition price:¥2,264 million ($21.4 million) /¥1,900 million ($18.0 million)
Acquisition date:
September 25, 2001 / December 26, 2003
Location:
Osaka, Osaka Prefecture
Intended use:
Office Space
Site area:
2,036.22m2 (21,917.67ft2)
Floor area of building: 17,145.59m2 (184,553.42ft2)
Structure:
Above ground: 13 floors
Below ground: 2 floors
Completion:
October 1992

Leasing Conditions (As of March 31, 2004)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:

7 tenants
11,574m2 (124,581.38ft2)
8,877m2 (95,551.14ft2)
76.7%

Note: On July 1, 2004, “Fukusuke Sakaisujihonmachi Building” was renamed to“Sakaisujihonmachi Building.”

Property Acquisition Merits
A relatively new building, theSakaisujihonmachi Building
delivers a host of merits. It has
a prominent interior andexterior design, and boasts
high construction and facility
specifications including
separated air conditioning,high ceilings and is close totransport.

Tokyo
Osaka

Nippon Brunswick Building
Property Summary
Type of specified asset: Ownership
Acquisition price:¥6,670 million ($63.1 million)
Acquisition date:
March 24, 2004
Location:
Shibuya-ku, Tokyo
Intended use:
Office Space
Site area:
1,497.52m2 (16,119.16ft2)
Floor area of building: 11,957.38m2 (128,708.04ft2)
Structure:
Above ground: 9 floors
Below ground: 2 floors
Completion:
March 1974

Leasing Conditions (As of March 31, 2004)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:

16 tenants
7,347m2 (79,082.37ft2)
6,549m2 (70,492.78ft2)
89.1%

Shinjuku
Harajuku

Tokyo

Shibuya

Shinagawa4 Japan Real Estate Investment Corporation

Property Acquisition Merits
The Nippon Brunswick
Building is situated in close
proximity to Shinjuku Station,a terminal for a number ofleading transportation lines.
Despite being 30 years old, thebuilding has sufficientdurability against earthquakes
and has recently undergone
extensive fittings renovation.

NHK Hiroshima Broadcasting Center Building
Property Summary
Type of specified asset: Ownership and joint leasehold interest
Acquisition price:¥1,320 million ($12.5 million)
Acquisition date:
March 25, 2004
Location:
Hiroshima, Hiroshima Prefecture
Intended use:
Office Space
Site area:
3,296.46m2 (35,482.77ft2)
Floor area of building: 35,217.28m2 (379,075.28ft2)
Structure:
Above ground: 23 floors
Below ground: 2 floors
Completion:
August 1994

Leasing Conditions (As of March 31, 2004)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:

15 tenants
5,470m2 (58,878.53ft2)
5,470m2 (58,878.53ft2)
100.0%

Property Acquisition Merits
Located in the business districtin the center of Hiroshima, thisbuilding is a landmark for its
location, size and artistic
exterior. It boasts highintegrity specifications to meetthe needs of a wide variety oftenants.

Tokyo
Hiroshima

Yoyogi 1chome Building
Property Summary
Type of specified asset: Ownership
Acquisition price:¥8,700 million ($82.3 million)
Acquisition date:
April 1, 2004
Location:
Shibuya-ku, Tokyo
Intended use:
Office Space
Site area:
1,755.75m2 (18,898.72ft2)
Floor area of building: 10,778.10m2 (116,014.39ft2)
Structure:
Above ground: 14 floors
Below ground: 1 floor
Completion:
October 2003

Leasing Conditions (As of April 1, 2004)
Number of tenants:
Leasable floor space:
Leased area:
Occupancy rate:

1 tenant
7,772m2 (83,657.03ft2)
7,772m2 (83,657.03ft2)
100.0%

Shinjuku
Tokyo

Harajuku
Shibuya

Shinagawa

Property Acquisition Merits
The Yoyogi 1chome Building
is located in Yoyogi, a stable
market with expected demand
from the preparatory school
industry. It is also a link to
Shinjuku, a core business area.
It is a brand-new building
completed in October 2003
and as such offers superior
specifications.

Japan Real Estate Investment Corporation

5

History after IPO

95.3%
Total price of acquisition

Occupancy rate

94.6%

94.0%

Continuing Growth
after IPO
¥144.6¥164.2
BillionBillionFirst Follow-On(May 2002)¥92.8
BillionFirst Investment Corporation
Bond Issue (Jun. 2002)

Mar. 2002

Sep. 2001
Listed on TSE

6 Japan Real Estate Investment Corporation

Sep. 2002

Acquired Issuer Credit RatingStandard & Poor’s A+
Moody’s A2(Feb. / Mar. 2002)

95.1%

94.8%¥218.4
Billion94.4%¥192.6
Billion¥183.5
BillionSecond Follow-On(Oct. 2003)

Second / Third
Investment
Corporation Bond
Issue (Apr. 2003)

Mar. 2004
Moody’s amended its outlook
for JRE’s credit ranking (A2)from stable to positive(Jan. 2004)

Sep. 2003

Shareholder Composition

300,000 (Shares)

Mar. 2003

260,400
250,000

200,000

Number of
SharesIssued225,400
60,509(26.8%)

160,400
150,000
39,946(24.9%)

100,000

50,000022,310(13.9%)

26,156(11.6%)

225,400
51,023(22.6%)

26,774(11.9%)

225,400

39,075(15.0%)

Foreign Corporations
and Individuals

34,393(15.3%)

26,851(10.3%)

Other Corporations

150,750(57.9%)

Financial Institutions

Individuals

26,293(11.7%)

126,323(56.0%)

92,830(41.2%)

106,993(47.5%)

45,905(20.4%)

40,610(18.0%)

38,391(17.0%)

43,724(16.8%)

Sep. 2002

Mar. 2003

Sep. 2003

Mar. 2004

66,561(41.5%)

31,583(19.7%)

Mar. 2002

Japan Real Estate Investment Corporation

7

To Our Shareholders“EQUINOX”— A sign of change —8 Japan Real Estate Investment CorporationW

e feel that we are entering a new phase, a time ofchange we think of as an “equinox.”

Japan Real Estate Investment Corporation’s (“JRE”)
fifth period, the six months to March 31, 2004, wasalso our fifth consecutive period of growth. Solid
investments, careful attention to market informationand skillful management has allowed us to build astrong portfolio. JRE is distinguished by its expertisefounded on experience.
Having built a solid base of 36 properties, with
operating revenue in excess of ¥9 billion, we feelthat we are entering a new phase, a time of change
we think of as an “equinox.” We have acquired
some exciting new properties and expanded ourfinancing with an additional public offering, towhich our shareholders have responded favorably.
I would like to highlight some of the majorachievements during the fifth period, and discuss our
strategies and forecasts for the sixth period andbeyond.

OVERVIEW OF FIFTH PERIOD
Our fifth consecutive period of rising revenue
and profit
The general economy showed signs of an export-led
economic recovery, urged along by greater business
confidence in the United States and around theworld. Domestic demand also picked up, as arecovery in corporate capital investment led to ameasured improvement in market sentiment.
JRE has achieved continuous growth in revenues
and profits over five consecutive periods since IPO.
Full contributions have been realized from properties
acquired in the fourth period, and we have alreadyreceived substantial contributions from properties
acquired during the fifth period.
In the six months to March 31, 2004 JRE
recorded gross revenues of ¥9.6 billion ($90.5
million), up 6.6 percent from the previous period.
Operating profits rose 11.4 percent, to ¥4.3 billion($41.1 million), and net income was up 11.6 percent,to ¥3.8 billion ($36.0 million). In line with ourpolicy of distributing dividends of close to 100
percent of taxable income, I am pleased to reportthat we were able to provide our shareholders with acash dividend of ¥14,602 ($138.16) per share, ¥400
above our original estimate of ¥14,200 (US$134.36).

New acquisitions
The property market is growing increasinglycompetitive, making a solid and far-reaching
information network an indispensable means forcollecting data on property sales. JRE has its own
information network based on its history of actual
property purchases. Meticulous examination andskillful use of the information we have accumulated
has given us an edge in not only locating andacquiring preferred properties, but determining
optimal prices that ensure profit stability and an
expected rate of return from the entire portfolio.
We made five new acquisitions during the fifth
period namely the Jingumae Media Square Building,Ebisu Neonato, an increase in our investment in the
Sakaisujihonmachi Building, the Nippon Brunswick
Building, and the NHK Hiroshima Broadcasting
Center Building (Total; ¥25.8 billion, $244.4
million). Three of these properties are located inbusiness districts earmarked for potential growth incentral Tokyo, and the remaining two are in prime
locations in important urban centers, which willquickly make them important elements of ourportfolio. Details on these buildings and theirrespective merits are presented in the new portfolio
properties section. As of March 31, 2004, JRE’s
assets consisted of 36 office buildings, with a total
value of ¥218.4 billion ($2,066.8 million), total
leasable floor space of 273,157 m2 (2,940,235 ft2),
and a total of 444 tenants.

Japan Real Estate Investment Corporation

9

Property management initiatives
JRE’s fifth period overcame the peak of the so-called“Year 2003 Problem,” an excessive supply of newly
constructed office buildings in central Tokyo. An
economic upturn and JRE’s attractive portfolio didmuch to ease the negative effects of thisphenomenon. However, demand for office floor
space in regional urban centers was weak ascompanies continue to integrate and downsize
offices.

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

RYOICHI KAKEHASHI

Despite the cancellation of the lease agreementwith Nippon Ericsson K.K., JRE’s third largest
tenant, we were able to achieve an occupancy rate of
94.8% (as of March 31, 2004). This was
accomplished by (1) acquiring top-level properties
and upgrading building facilities through optimalrefurbishment in order to maintain and improvefunctions; (2) developing finely tuned building
management policies from the perspective of tenants
while undertaking structured marketing activities;and (3) raising its emphasis on fixed-term and longterm lease contracts.
With reference to the second point in particular, it
is our basic policy to lower property management
fees and utility expenses by 5% within the first three
years of new property acquisition. Our goal is to
reduce costs and further enhance profit stability.
Despite being midway through the program period,
we have already reduced the costs of 27 properties
acquired before our fourth fiscal period by 10% per
year.
The real estate market overall has seen an increasein supply from bad-debt write-offs by financial
institutions and the adoption of asset-impairment
accounting (which will become mandatory in 2006).
Private funds, pension funds, and qualified
institutional investors are beginning to turn theirattention to the acquisition of real estate in the faceof changing management conditions. Thoughcompetition is growing, we are confident that ourexperience, information network and appeal totenants will allow us to remain a leader in themarket.

10 Japan Real Estate Investment Corporation

In light of recent increases in demand, JRE believes that
now is the time when its true acquisition capabilities will
be demonstrated.

Rating upgrade from Moody’s
On January 26, 2004, Moody’s Investors Service
amended its outlook for JRE’s issuer credit rating
and rating for unsecured long-term debt (A2) fromstable to positive. We are proud that ourachievements have been recognized in this way,taking it as outside confirmation that the conduct ofour business is on the right track.

JRE’s issuer credit ratings:
Ratings Agency

RatingOutlookStandard & Poor’s

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

StableMoody’s InvestorsService

A2

Positive

Additional public offering
During its fifth period JRE became the first J-REIT
to make a second follow-on. The second offer of
35,000 shares, made on October 25, 2003,
generated approximately ¥21.3 billion ($201.5
million), increasing the number of issued shares to
260,400, with a total value of ¥133.4 billion($1,262.6 million).
Flexible capital procurement is necessary when
acquiring property. By increasing capital andestablishing a sound financial base, we can ensure
ample borrowing reserves to further expand ouroperating asset base. While issuing additional sharesis vital for the further growth of JRE, we consider
the appropriate timing and scale of such issues,
taking into account financial market conditions andour own plans for property acquisitions.
To ensure flexibility in capital procurement, JRE
took out a short-term loan of ¥12.0 billion ($113.5
million), to finance its purchase of the Jingumae

Media Square Building. This temporarily raised
short-term borrowings to approximately ¥19.0
billion ($179.8 million). Following the additional
share issue, however, we repaid ¥14.0 billion ($132.5
million) of such borrowings. We then borrowed¥13.0 billion ($123.0 million) in March 2004 to
acquire the Nippon Brunswick Building and the
Yoyogi 1chome Building. This figure included a ¥4.0
billion ($37.8 million) floating-rate short-term loan,
taken out to ensure flexibility, and a ¥9.0 billion($85.2 million) fixed-rate long-term loan. JRE isconscious of maintaining balance in fixed andfloating rate interest-bearing debt and an acceptabledebt maturity profile to minimize the risks of interest
rate fluctuation and the potential need forrefinancing.
We expect interest rates to rise, and place highpriority on long-term loans with fixed interest rates
when procuring capital. On March 31, 2004, JRE
had total borrowings of ¥42.0 billion ($397.4
million) (¥33.0 billion ($312.2 million) in long-termloans) and outstanding corporate bonds valued at¥45.0 billion ($425.8 million).

OUTLOOK FOR THE SIXTH PERIOD
Operating environment
Based on expectations for an interest rate hike in the
U.S. along with a recovery in the economy, theJapanese economy is gradually exiting from a periodof prolonged deflation, reflected in expectations for
an increase in long-term interest rates. Although thepicture remains cloudy overall, the economy appears
to have bottomed. In the office building market,
occupancy rates are showing signs of improving incentral Tokyo, and demand seems to have bottomed
for office floor space in other urban centers.
Tenants are also making more stringent demands
not only with respect to location, building quality,

Japan Real Estate Investment Corporation

11

and facilities, but also for high-quality building
management. For these reasons, tenants havebecome more and more discriminating whenselecting buildings. JRE is focusing on providing
services that correctly and promptly reflect the needsof tenants and deliver added value that differentiates
its buildings from the competition.
In the real estate market, properties will continue
being sold to settle non-performing loans and for
asset impairment accounting purposes, due to theongoing deflationary climate. In light of recent
increases in demand, JRE believes that now is thetime when its true acquisition capabilities will bedemonstrated.

Property management policies
Although we expect the office building rental market
to soften overall, JRE is adopting the following
management policies in order to maintain andimprove earnings.

Strengthen relationships of trust with existing
tenants
As of March 31, 2004, JRE had contracts with nine
property management companies. Most of thesecompanies were already managing their respective
buildings before they were acquired by JRE, and sohave built relationships of trust with their tenants.
Strengthening these relationships by anticipating
tenants’ needs and providing tailored services helps
increase tenant satisfaction, prevent cancellation ofcontracts, reduce turnover, and curb demands for
reduced rents.

Fill vacancies promptly
In cooperation with the property managementcompanies mentioned above, JRE actively seeks thebest tenants for each property, based on location andfeatures, in order to fill current and anticipatedvacancies as rapidly as possible. We are also working
to uncover additional demand for office floor spaceamong our existing tenants.

12 Japan Real Estate Investment Corporation

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

New property acquisition
JRE has set a number of policy guidelines foracquiring properties in order to improve earnings
through steady asset expansion and growth.
Adherence to these policies has underpinned our
success, and will be the foundation for future growth.
To access important information quickly, JRE isenhancing its property information channels,
including strengthening its relationship with building
owners, with whom it has previously conductedbusiness. We are also working to develop newchannels.
In its acquisition activities, JRE will continue tometiculously monitor and examine economic,
physical, and legal factors, including rights-related
issues. We will also take business conditions into
account when selecting properties. With regard to thestructure of buildings, we require buildings to meetor exceed new earthquake-resistant standards, andwe are targeting properties capable of maintaining acompetitive edge over the medium and long terms.
JRE’s general target for regional diversity ofproperty ownership, in accordance with its
acquisition policies, is for 60 percent to 80 percent ofproperties to be located within the Tokyo
metropolitan area, with the remaining 20 percent to40 percent located in regional urban centers. It is
possible, however, that future trends in officedemand may prompt JRE to temporarily depart fromthese ratios and increase the proportion of its
holdings in the greater Tokyo area.
The appropriate timing for property acquisition
cannot be ascertained in advance. When funding
property acquisition, therefore, JRE’s policy is totake out short-term loans at the time of purchase andlater select various options for capital procurement,

including corporate share issues, according to trends
in financial markets. When effecting a loan, ourpolicy is to minimize funding costs by negotiatingwith several qualified institutional investors before
settling on a lender.
JRE is currently considering the acquisition of
additional properties, based on rigorous evaluationsof potential, assessments of return, and suitability tothe overall portfolio. Once acquisition decisions
have been made, these will be announced via press
release.

Performance forecasts
We expect our strong performance to continue
during the six-month period from April 1 to
September 30, 2004. We forecast operating revenuesof ¥9.9 billion ($93.7 million), and net income of¥3.8 billion ($36.0 million). We expect to declare acash dividend of ¥14,600 ($138.14) per share.
Our forecasts for the seventh fiscal period(October 1, 2004, to March 31, 2005) are operating
revenues of ¥9.7 billion ($91.8 million), net incomeof ¥3.7 billion ($35.0 million), and cash dividends of¥14,300 ($135.30) per share.
These estimates are based on the following
conservative assumption. First, the Company
maintains a portfolio of the 36 properties as ofMarch 31, 2004, together with the Yoyogi 1chome
Building and the additional co-ownership in Ebisu
Neonato acquired as of April 1, 2004 and excludes
any other additional acquisition.
Second, we consider probable maximum losses(PMLs), primarily the maximum risk of decreasing
revenues due to rent reductions or a possible fall in
occupancy rates to 91.3% by the end of the sixth
fiscal period for termination of contracts, including
already confirmed declines, as well as the gradualleasing of vacant space over time.

Executive Director of Japan Real Estate Investment Corporation

YONEICHIRO BABA (Left)
CEO & President of Japan Real Estate Asset Management Co., Ltd.

RYOICHI KAKEHASHI (Right)

added value, and exercising skillful management tomaintain a first-rate portfolio. Although in the
beginning the J-REIT market was criticized forhaving conflicts of interest between shareholders ofreal estate investment corporations and sponsors ofasset management companies, our approach tocollaborating with sponsors has become strategicallyimportant as the operating environment reaches aperiod of equinox. As we come through our“equinox” period, realizing even greater expansion,
we will continue to work diligently to ensure that
JRE is the standard by which all J-REITs are judged.

Thank you for your continued support of JRE.

Executive Director of Japan Real Estate Investment Corporation

JRE, as one of the first and most successful
J-REITs, has become the benchmark for those thathave followed. Though competition in the real estatemarket is increasing, JRE has adhered to a basic
formula of utilizing a far-reaching information
network to find the best properties, paying carefulattention to client needs and providing them with

YONEICHIRO BABA

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

RYOICHI KAKEHASHIJapan Real Estate Investment Corporation

13

The Portfolio of Japan Real Estate Investment Corporation
As of March 31, 2004

PROPERTIES ROSTER
NumberName of building

Location

Type ofspecified asset

Acquisitiondate

Acquisition
price(¥ millions)

Iidabashi, Chiyoda-ku
Kandamitoshirocho, Chiyoda-ku
Kandanishikicho, Chiyoda-ku
Otemachi, Chiyoda-ku
Yurakucho, Chiyoda-ku
Nihonbashikodenmacho, Chuo-ku
Kyobashi, Chuo-ku
Kita-Aoyama, Minato-ku
Shiba, Minato-ku
Shiba, Minato-ku
Higashi-Gotanda, Shinagawa-ku
Shimo Meguro, Meguro-ku
Omori Kita, Ota-ku
Sendagaya, Shibuya-ku
Jingumae, Shibuya-ku
Jingumae, Shibuya-ku
Shibuya, Shibuya-ku
Ebisu, Shibuya-ku
Higashi-Ikebukuro, Toshima-ku
Ikebukuro, Toshima-ku

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

10/31/2002
5/31/2002
8/15/2002
9/25/2001
8/1/2003
9/25/2001
7/22/2002
3/14/2003
9/10/2001
9/25/2001
9/25/2001
9/10/2001
9/10/2001
3/24/2004
11/22/2002
10/9/2003
11/30/2001
11/14/2003
9/25/2001
9/25/2001

5,000 (2.3%)
9,520 (4.4%)
4,810 (2.2%)
27,267 (12.5%)
7,200 (3.3%)
3,173 (1.5%)
5,250 (2.4%)
7,680 (3.5%)
4,859 (2.2%)
2,808 (1.3%)
2,738 (1.3%)
1,362 (0.6%)
5,123 (2.3%)
6,670 (3.1%)
4,885 (2.2%)
12,200 (5.6%)
34,600 (15.8%)
3,740 (1.7%)
3,541 (1.6%)
1,728 (0.8%)

9/25/2001
10/11/2001
total
1/28/2002
9/25/2001

1,232
1,342
2,574
3,000
3,375

Tokyo 23 wards● I- 1 Genki Medical Plaza● I- 2 MD Kanda Building● I- 3 Kandabashi Park Building● I- 4 Mitsubishi Soken Building● I- 5 Yurakucho Denki Building● I- 6 Kodenmacho Shin-Nihonbashi Building● I- 7 Burex Kyobashi Building● I- 8 Aoyama Crystal Building● I- 9 Shiba 2chome Daimon Building● I- 10 Cosmo Kanasugibashi Building● I- 11 Takanawadai Building● I- 12 JAL Travel Building● I- 13 Omori-Eki Higashiguchi Building● I- 14 Nippon Brunswick Building● I- 15 da Vinci Harajuku● I- 16 Jingumae Media Square Building● I- 17 Shibuya Cross Tower● I- 18 Ebisu Neonato● I- 19 Otsuka Higashi-Ikebukuro Building● I- 20 Ikebukuro 2chome Building
Tokyo metropolitan area excluding 23 wards● II- 1

Saitama Urawa Building

Saitama, Saitama Prefecture

Ownership● II- 2● II- 3Shin-Yokohama First Building (Note 1)
Kawasaki Isago Building

Yokohama, Kanagawa Prefecture
Kawasaki, Kanagawa Prefecture

Ownership
Trust(1.2%)(1.4%)(1.5%)

Other major cities● III-1● III-2● III-3

Sendai Honcho Honma Building
Sendai, Miyagi Prefecture
Niigata Ishizuecho Nishi-Bandaibashi Building Niigata, Niigata Prefecture
Kanazawa Park Building
Kanazawa, Ishikawa Prefecture

Trust
Trust
Ownership● III-4● III-5● III-6● III-7● III-8

Kanazawa Minamicho Building
Nagoya Hirokoji Building
Nagoya Misono Building
Kyoto Shijo Kawaramachi Building
Sakaisujihonmachi Building (Note 2)

Kanazawa, Ishikawa Prefecture
Nagoya, Aichi Prefecture
Nagoya, Aichi Prefecture
Kyoto, Kyoto Prefecture
Osaka, Osaka Prefecture

Trust
Ownership
Ownership
Ownership
Ownership● III-9

Midosuji Daiwa Building

Osaka, Osaka Prefecture

Kobe, Hyogo Prefecture● III-10 Kobe Itomachi Building● III-11 NHK Hiroshima Broadcasting Center Building Hiroshima, Hiroshima Prefecture
Fukuoka, Fukuoka Prefecture● III-12 Tosei Tenjin Building
Fukuoka, Fukuoka Prefecture● III-13 Hinode Tenjin Building

Trust

Trust
Ownership
OwnershipTrust

9/25/2001
9/25/2001
2/28/2002
3/3/2003
total
9/25/2001
9/10/2001
8/8/2003
12/20/2001
9/25/2001
12/26/2003
total
9/25/2001
2/28/2002
total
9/25/2001
3/25/2004
9/25/2001
9/10/2001
total

2,924 (1.3%)
1,010 (0.5%)
2,880
1,700
4,580 (2.1%)
1,331 (0.6%)
14,533 (6.7%)
1,865 (0.9%)2,650 (1.2%)
2,264
1,900
4,164 (1.9%)
6,934
7,380
14,314 (6.6%)
1,436 (0.7%)
1,320 (0.6%)
1,550 (0.7%)
3,657 (1.7%)
218,437 (100.0%)

MAJOR TENANTS ROSTER
Rank

1
2
3
4
5
6

Name of tenant

Mitsubishi Research Institute, Inc. (Note 1)
The Dai-ichi Mutual Life Insurance Company
TOTO Ltd.
N.I. Teijin Shoji Co., Ltd. (Note 2)
Center for Health Care & Public Concern (Note 3)
Casio Computer Co., Ltd.

Name of building

Mitsubishi Soken Building
Midosuji Daiwa Building (also includes 7 other buildings)
Midosuji Daiwa Building (also includes 2 other buildings)
Sakaisujihonmachi Building
Genki Medical Plaza
Midosuji Daiwa Building

Notes: 1. Lease with this tenant is a fixed-term lease for the period from February 1, 2001 to March 31, 2011.
This tenant has agreed not to terminate the contract during the lease period.
2. The contract with N.I. Teijin Shoji Co., Ltd. was terminated as of May 31, 2004.
3. Lease with this tenant is a fixed-term lease for the period from November 1, 2002 to October 31, 2017.
This tenant has agreed not to terminate the contract during the lease period.

14 Japan Real Estate Investment Corporation

Leased area

14,529m2 (156,389ft2)
10,341m2 (111,309ft2)
7,302m2 ( 78,598ft2)
5,636m2 ( 60,665ft2)
4,791m2 ( 51,570ft2)
4,418m2 ( 47,555ft2)

Percentage ofownership of thebuilding (%)

Completion

Appraisal value
at the end of period(¥ millions)

100
100
56.76
100
10.78
100
100
100
100
100
100
100
100
100
100
100
100
11.11
100
100

1985
1998
1993
1970
1975
1991
2002
1982
1984
1992
1991
1991
1989
1974
1987
1998
1976
1994
1987
1990

5,510
8,110
4,940
30,400
6,780
3,240
5,110
7,170
5,110
2,840
2,830
1,390
5,180
6,930
5,010
12,41034,100
3,760
3,370
1,490

4,791m2
6,269m2
3,687m2
18,006m2
4,694m2
3,897m2
4,279m2
4,916m2
9,643m2
4,062m2
4,091m2
3,383m2
7,708m2
7,347m2
3,051m2
5,558m2
29,796m2
2,225m2
7,114m2
2,186m2(51,570ft2)(67,479ft2)(39,686ft2)(193,815ft2)(50,526ft2)(41,947ft2)(46,059ft2)(52,915ft2)(103,796ft2)(43,723ft2)(44,035ft2)(36,414ft2)(82,968ft2)(79,082ft2)(32,841ft2)(59,826ft2)(320,721ft2)(23,950ft2)(76,574ft2)(23,530ft2)

4,791m2
6,269m2
3,687m2
18,006m2
4,123m2
3,897m2
4,279m2
4,916m2
9,215m2
4,062m2
4,091m2
3,383m2
7,661m2
6,549m2
3,051m2
5,074m2
29,747m2
2,225m2
7,114m2
1,941m2(51,570ft2)(67,479ft2)(39,686ft2)(193,815ft2)(44,380ft2)(41,947ft2)(46,059ft2)(52,915ft2)(99,189ft2)(43,723ft2)(44,035ft2)(36,414ft2)(82,462ft2)(70,493ft2)(32,841ft2)(54,616ft2)(320,194ft2)(23,950ft2)(76,574ft2)(20,893ft2)

1
3
7
4
13
5
1
9
30
7
1
1
18
16
6
7
53
3
10
6

221
370
195
1,002
277
160
150
249
300
135
140
95
273
11
189
312
1,461
83
181
77

(2.3%)(3.9%)(2.0%)(10.5%)(2.9%)(1.7%)(1.6%)(2.6%)(3.1%)(1.4%)(1.5%)(1.0%)(2.9%)(0.1%)(2.0%)(3.3%)(15.3%)(0.9%)(1.9%)(0.8%)

100
100
100

1990
1992
1990

2,390
1,700
3,110

4,510m2
6,925m2
6,831m2(48,545ft2)(74,540ft2)(73,528ft2)

4,421m2
5,036m2
6,831m2(47,587ft2)(54,207ft2)(73,528ft2)

14
4
10

140
142
191

(1.5%)(1.5%)(2.0%)

93.39
100

1991
1984

2,970
771

5,829m2
4,383m2(62,743ft2)(47,178ft2)

5,573m2
4,198m2(59,987ft2)(45,187ft2)

11
10

163
83

(1.7%)(0.9%)

89.00
100
100
100
100

1991
1987
1987
1991
1982

5,460
1,090
14,6001,840
2,130

21,343m2
3,782m2
21,590m2
3,470m2
6,800m2(229,734ft2)(40,709ft2)(232,393ft2)(37,351ft2)(73,195ft2)

20,202m2
2,951m2
20,967m2
3,470m2
5,619m2(217,452ft2)(31,764ft2)(225,687ft2)(37,351ft2)(60,482ft2)

65
13
33
7
27

535
71
761
107
136

(5.6%)(0.7%)(8.0%)(1.1%)(1.4%)

100

1992

4,560

11,574m2(124,581ft2)

8,877m2(95,551ft2)

7226(2.4%)

100
100
27.085
100
76.18
—

1991
1989
1994
1992
1987
—

13,500
999
1,350
1,400
3,600
217,150

18,892m2 (203,352ft2)
3,277m2(35,273ft2)
5,470m2(58,879ft2)
3,755m2(40,418ft2)
5,248m2(56,489ft2)
258,885m2 (2,786,612ft2)

20
13
15
19
8
444

Total leasable
floor space

20,449m2(220,111ft2)(37,437ft2)
3,478m2(58,879ft2)
5,470m2(43,917ft2)
4,080m2
5,924m2(63,765ft2)
273,157m2 (2,940,235ft2)

Leased area

Total
number oftenants

Revenue fromleasing operations(¥ millions)758(7.9%)
69(0.7%)
6(0.1%)
94(1.0%)
180(1.9%)
9,560 (100.0%)

Notes: 1. On March 1, 2004, “Ericsson Shin-Yokohama Building” was renamed to “Shin-Yokohama First Building.”
2. On July 1, 2004, “Fukusuke Sakaisujihonmachi Building” was renamed to “Sakaisujihonmachi Building.”

Percent of totalleased area

5.6%
4.0%
2.8%
2.2%
1.9%
1.7%

Japan Real Estate Investment Corporation

15

LOCATIONS OF PORTFOLIO PROPERTIES
III-1 – III-13 : Other major cities

II-1 – II-3 : Tokyo metropolitan area
excluding 23 wards

II-1
III-1
III-4

III-2

II-3

III-3
III-9 III-6
III-5
III-11 III-10
III-7
III-8
III-13
III-12

II-2

I-20
I-19

I-1
I-14
I-15
I-16
I-8
I-17
I-18

I-3
I-4
I-5

I-2
I-6
I-7

I-9
I-10

I-12
I-11

I-13

I-1 – I-20 : Tokyo 23 wards

16 Japan Real Estate Investment Corporation

Overview of Portfolio Properties

PROPERTY PORTFOLIO As of March 31, 2004
Genki Medical PlazaMD Kanda Building

● I-1

● I-2

Location :Chiyoda-ku, Tokyo
Site area :1,052.80m2 (11,332.23ft2)
Floor area of building : 6,722.02m2 (72,355.15ft2)
Structure :Above ground: 8 floors
Below ground: 1 floor
Completion :September 1985

Location :Chiyoda-ku, Tokyo
Site area :1,085.83m2 (11,687.77ft2)
Floor area of building : 8,185.11m2 (88,103.71ft2)
Structure :Above ground: 10 floors
Completion :February 1998

Kandabashi Park
Building

Mitsubishi Soken
Building

● I-3

● I-4

Location :Chiyoda-ku, Tokyo
Site area :1,218.56m2 (13,116.46ft2)
Floor area of building : 9,370.25m2 (100,860.43ft2)
Structure :Above ground: 10 floors
Below ground: 1 floor
Completion :July 1993

Location :Chiyoda-ku, Tokyo
Site area :3,441.35m2 (37,042.35ft2)
Floor area of building : 26,372.92m2 (283,875.47ft2)
Structure :Above ground: 15 floors
Below ground: 2 floors
Completion :July 1970

Yurakucho Denki
Building

Kodenmacho ShinNihonbashi Building

● I-5

● I-6

Location :Chiyoda-ku, Tokyo
Site area :5,749.91m2 (61,891.46ft2)
Floor area of building : 70,287.65m2 (756,569.24ft2)
Structure :Above ground: 20 floors
Below ground: 4 floors
Completion :September 1975

Location :Chuo-ku, Tokyo
Site area :773.28m2 (8,323.51ft2)
Floor area of building : 5,822.88m2 (62,676.90ft2)
Structure :Above ground: 9 floors
Below ground: 1 floor
Completion :November 1991

Japan Real Estate Investment Corporation

17

Burex Kyobashi
Building

Aoyama Crystal
Building

● I-7

● I-8

Location :Chuo-ku, Tokyo
Site area :756.03m2 (8,137.83ft2)
Floor area of building : 5,470.54m2 (58,884.35ft2)
Structure :Above ground: 8 floors
Below ground: 1 floor
Completion :February 2002

Location :Minato-ku, Tokyo
Site area :989.30m2 (10,648.73ft2)
Floor area of building : 8,094.36m2 (87,126.88ft2)
Structure :Above ground: 10 floors
Below ground: 4 floors
Completion :December 1982

Shiba 2chome Daimon
Building

Cosmo Kanasugibashi
Building● I-9● I-10Location :Minato-ku, Tokyo
Site area :2,820.90m2 (30,363.89ft2)
Floor area of building : 16,235.10m2 (174,752.99ft2)
Structure :Above ground: 8 floors
Below ground: 2 floors
Completion :March 1984

Location :Minato-ku, Tokyo
Site area :758.54m2 (8,164.85ft2)
Floor area of building : 5,420.93m2 (58,350.35ft2)
Structure :Above ground: 9 floors
Below ground: 1 floor
Completion :March 1992

Takanawadai Building

JAL Travel Building● I-11● I-12

Location :Shinagawa-ku, Tokyo
Site area :1,416.17m2 (15,243.51ft2)
Floor area of building : 5,762.70m2 (62,029.13ft2)
Structure :Above ground: 13 floors
Completion :January 1991

Location :Meguro-ku, Tokyo
Site area :1,401.52m2 (15,085.82ft2)
Floor area of building : 5,269.58m2 (56,721.23ft2)
Structure :Above ground: 6 floors
Below ground: 1 floor
Completion :September 1991

Omori-Eki Higashiguchi
Building

Nippon Brunswick
Building● I-13● I-14

Location :Ota-ku, Tokyo
Site area :2,199.30m2 (23,673.05ft2)
Floor area of building : 14,095.34m2 (151,720.83ft2)
Structure :Above ground: 11 floors
Below ground: 2 floors
Completion :July 1989

18 Japan Real Estate Investment Corporation

Location :Shibuya-ku, Tokyo
Site area :1,497.52m2 (16,119.16ft2)
Floor area of building : 11,957.38m2 (128,708.04ft2)
Structure :Above ground: 9 floors
Below ground: 2 floors
Completion :March 1974

da Vinci Harajuku

Jingumae Media Square
Building● I-15● I-16

Location :Shibuya-ku, Tokyo
Site area :839.66m2 (9,038.02ft2)
Floor area of building : 4,359.20m2 (46,921.99ft2)
Structure :Above ground: 7 floors
Below ground: 2 floors
Completion :December 1987

Location :Shibuya-ku, Tokyo
Site area :2,261.68m2 (24,344.50ft2)
Floor area of building : 9,420.42m2 (101,400.46ft2)
Structure :Above ground: 9 floors
Below ground: 2 floors
Completion :March 1998

Shibuya Cross Tower

Ebisu Neonato● I-17● I-18Location :Shibuya-ku, Tokyo
Site area :5,153.45m2 (55,471.22ft2)
Floor area of building : 61,862.33m2 (665,879.93ft2)
Structure :Above ground: 32 floors
Below ground: 3 floors
Completion :April 1976

Location :Shibuya-ku, Tokyo
Site area :5,005.70m2 (53,880.85ft2)
Floor area of building : 36,598.38m2 (393,941.30ft2)
Structure :Above ground: 18 floors
Below ground: 2 floors
Completion :October 1994

Otsuka Higashi-Ikebukuro
Building

Ikebukuro 2chome
Building● I-19● I-20Location :Toshima-ku, Tokyo
Site area :2,121.39m2 (22,834.43ft2)
Floor area of building : 9,531.28m2 (102,593.74ft2)
Structure :Above ground: 8 floors
Below ground: 1 floor
Completion :November 1987

Saitama Urawa Building

Location :Toshima-ku, Tokyo
Site area :397.26m2 (4,276.07ft2)
Floor area of building : 3,157.51m2 (33,987.12ft2)
Structure :Above ground: 9 floors
Below ground: 1 floor
Completion :May 1990

Shin-Yokohama First
Building (Note)

Note: On March 1, 2004, “Ericsson ShinYokohama Building” was renamed
to “Shin-Yokohama First Building.”● II - 1

Location :Saitama, Saitama Prefecture
Site area :1,533.06m2 (16,501.70ft2)
Floor area of building : 6,258.59m2 (67,366.84ft2)
Structure :Above ground: 8 floors
Completion :March 1990

● II - 2

Location :Yokohama, Kanagawa Prefecture
Site area :1,528.00m2 (16,447.24ft2)
Floor area of building : 10,403.41m2 (111,981.26ft2)
Structure :Above ground: 10 floors
Below ground: 2 floors
Completion :April 1992
Japan Real Estate Investment Corporation

19

Kawasaki Isago Building

Sendai Honcho Honma
Building● II - 3● III- 1

Location :Kawasaki, Kanagawa Prefecture
Site area :1,594.50m2 (17,163.04ft2)
Floor area of building : 9,623.83m2 (103,589.94ft2)
Structure :Above ground: 12 floors
Below ground: 1 floor
Completion :December 1990

Location :Sendai, Miyagi Prefecture
Site area :1,437.47m2 (15,472.78ft2)
Floor area of building : 8,247.50m2 (88,775.27ft2)
Structure :Above ground: 11 floors
Completion :November 1991

Niigata Ishizuecho
Nishi-Bandaibashi
Building

Kanazawa Park Building● III- 2● III- 3

Location :Niigata, Niigata Prefecture
Site area :957.90m2 (10,310.74ft2)
Floor area of building : 6,410.33m2 (69,000.15ft2)
Structure :Above ground: 8 floors
Below ground: 1 floor
Completion :November 1984

Location :Kanazawa, Ishikawa Prefecture
Site area :6,642.71m2 (71,501.47ft2)
Floor area of building : 43,481.20m2 (468,027.29ft2)
Structure :Above ground: 12 floors
Below ground: 2 floors
Completion :October 1991

Kanazawa Minamicho
Building

Nagoya Hirokoji
Building● III- 4● III- 5

Location :Kanazawa, Ishikawa Prefecture
Site area :887.17m2 (9,549.41ft2)
Floor area of building : 5,163.19m2 (55,576.06ft2)
Structure :Above ground: 9 floors
Completion :March 1987

Location :Nagoya, Aichi Prefecture
Site area :4,095.81m2 (44,086.89ft2)
Floor area of building : 33,377.73m2 (359,274.55ft2)
Structure :Above ground: 18 floors
Below ground: 2 floors
Completion :May 1987

Nagoya Misono
Building

Kyoto Shijo
Kawaramachi Building● III- 6● III- 7

Location :Nagoya, Aichi Prefecture
Site area :805.04m2 (8,665.37ft2)
Floor area of building : 5,348.00m2 (57,565.34ft2)
Structure :Above ground: 7 floors
Below ground: 1 floor
Completion :September 1991

20 Japan Real Estate Investment Corporation

Location :Kyoto, Kyoto Prefecture
Site area :1,471.57m2 (15,839.83ft2)
Floor area of building : 9,701.04m2 (104,421.02ft2)
Structure :Above ground: 9 floors
Below ground: 1 floor
Completion :November 1982

Sakaisujihonmachi
Building (Note)

Midosuji Daiwa
Building

Note: On July 1, 2004, “Fukusuke
Sakaisujihonmachi Building” wasrenamed to “Sakaisujihonmachi
Building.”● III- 8

Location :Osaka, Osaka Prefecture
Site area :2,036.22m2 (21,917.67ft2)
Floor area of building : 17,145.59m2 (184,553.42ft2)
Structure :Above ground: 13 floors
Below ground: 2 floors
Completion :October 1992

● III- 9

Location :Osaka, Osaka Prefecture
Site area :3,044.65m2 (32,772.31ft2)
Floor area of building : 31,213.27m2 (335,976.52ft2)
Structure :Above ground: 15 floors
Below ground: 2 floors
Completion :September 1991

Kobe Itomachi Building

NHK Hiroshima
Broadcasting Center
Building● III- 1 0● III- 1 1

Location :Kobe, Hyogo Prefecture
Site area :808.55m2 (8,703.15ft2)
Floor area of building : 4,894.09m2 (52,679.50ft2)
Structure :Above ground: 10 floors
Completion :September 1989

Location :Hiroshima, Hiroshima Prefecture
Site area :3,296.46m2 (35,482.77ft2)
Floor area of building : 35,217.28m2 (379,075.28ft2)
Structure :Above ground: 23 floors
Below ground: 2 floors
Completion :August 1994

Tosei Tenjin Building

Hinode Tenjin Building● III- 1 2● III- 1 3

Location :Fukuoka, Fukuoka Prefecture
Site area :1,221.31m2 (13,146.06ft2)
Floor area of building : 5,588.57m2 (60,154.81ft2)
Structure :Above ground: 8 floors
Completion :March 1992

Location :Fukuoka, Fukuoka Prefecture
Site area :1,452.15m2 (15,630.80ft2)
Floor area of building : 12,527.07m2 (134,840.13ft2)
Structure :Above ground: 10 floors
Below ground: 2 floors
Completion :August 1987

Japan Real Estate Investment Corporation

21

The Company’s Investment Policies(1) INVESTMENT POLICIES(i) Basic investment policies
The basic investment policies of the Company shall be as follows:
1 Basic policies (Article 23 of the Articles of Incorporation)
The Company shall invest primarily in specified assets (the “portfolio real estate assets”), consisting of certain real estate assets
and real estate related securities (as defined below) with the goals of achieving stable growth in value over a medium- to longterm period. The terms “real estate assets” and “real estate related securities” shall mean the items listed below.
I.

Real estate assets:

1. Real estate
2. Leaseholds of real estate
3. Surface rights
4. Trust beneficiary rights in trust of real estate, leaseholds of land, and surface rights. These assets referred to herein include
beneficiary certificates of comprehensive trusts over real estate and moneys incidental thereto, but do not include marketablesecurities as defined in Article 3, Item 1 of the Cabinet Order of Law on Investment Trusts and Investment Corporations(Cabinet Order No. 480 of 2000, as amended, the “Cabinet Order”)
5. Trust beneficiary rights in monetary trusts that are invested in real estate, leaseholds of real estate, and surface rights (except
for marketable securities)
6. Equity interests in anonymous partnership relating to a contract that (i) either party makes a contribution to the other party
for purposes of management of the assets described in any of the items listed in 1. through 5. above, (ii) the other party
manages the contribution as investments principally in any of such assets, and (iii) its profits are distributed (hereinafterreferred to as “anonymous partnership equity interest”)
II. Marketable securities, value of which derives principally from real estate assets (the “real estate related securities”) are as
follows:
1. Preferred Securities (as defined in Article 2, Paragraph 8 of Asset Liquidation Law, Law No. 105 of 1998, as amended, the“Asset Liquidation Law”) issued by a special purpose company under such Law whose objective is to invest more than halfof its assets in real estate assets
2. Beneficiary certificates (as defined in Article 2, Paragraph 12 of the Investment Trust Law) issued by an investment trust
whose objective is to invest more than half of its assets in real estate assets
3. Certificates for shares (as defined in Article 2, Paragraph 22 of the Investment Trust Law) issued by an investment
corporation under such Law whose objective is to invest more than half of its assets in real estate assets
4. Beneficiary certificates of a special purpose trust (as defined in Article 2, Paragraph 12 under the Asset Liquidation Law),
whose objective is to invest more than half of its assets in real estate assets (except for the trust beneficiary rights referred toin 4. and 5. of I. above)
2 Investment attitude (Article 24 of the Articles of Incorporation)
The following is the basic policy of investment attitude of the Company, especially its policy concerning the acquisition andholding of the Portfolio Real Estate as set forth in the Articles of Incorporation.
A. In accordance with the Ministerial Ordinance of the Ministry of Finance, the Company shall make an investment so that atleast 75% of its total assets is invested in real estate, leaseholds of real estate, surface rights, trust beneficiary rights (thatentrust solely in real estate, leaseholds of land and surface rights), and anonymous partnership equity interests (that invest
solely in real estate, leaseholds of real estate and surface rights). Anonymous partnership equity interests are equity invested
under a contract such that one of the parties makes a deposit for the purpose of management of assets by the second party,
and the second party invests and manages the deposited funds in the said assets, distributing the profits generated by thatmanagement.
B. It is the Company’s asset investment policy to make an investment, so that the ratio (the “specified real estate ratio”) of the

22 Japan Real Estate Investment Corporation

aggregate value of the specified real estate to the aggregate value of the specified assets is at least 75%. The specified realestate shall mean, among the specified assets, the real estate, leaseholds of real estate, surface rights or the trust beneficiaryrights of real estate, leaseholds of land and surface rights.
C. It is the Company’s asset investment policy that the ratio of the aggregate value of the real estate to that of the specified assets
acquired during any fiscal period (commencing on April 1, 2002) must be at least one half of the specified real estate ratio.
The policy set under this point shall be applied as long as the said requirements related to exceptions to standard taxation
under the real estate acquisition tax exist.
D. The Company shall principally invest in office buildings which are located in Tokyo and other major metropolitan areas ofJapan, including those as such designated by the relevant Cabinet Order.
E. The Company shall make investment decisions only after it conducts thorough and sufficient due diligence investigations of
the relevant real estate assets and becomes fully aware of the investment value in light of the investment climate.
F. The Company shall invest principally in real estate and trust beneficiary rights in trust of real estate, but may invest in otherreal estate assets (meaning any asset listed in “I. Real estate assets” above, but excluding the real estate and the trust
beneficiary rights in trust of the real estate) and real estate related securities in addition to those described above in light ofinvestment climate at that time and/or the size of the assets.
3 Leasing of corporate assets (Article 27 of the Articles of Incorporation)
The Company may enter into leasing contracts with third parties with regard to real estate assets being specified assets, for the
purpose of generating earnings, and may cause the trustees to enter into leasing contracts with third parties with regard to theunderlying real estate of the trust beneficiary rights.
4 Loans and corporate bonds (Article 30 of the Articles of Incorporation)
A. In order to manage the portfolio of the Company in an efficient and stable manner, the Company may make borrowings or
issue corporate bonds with a view to utilizing the proceeds thereof toward acquisitions of specified assets, capital improvements of the real estate for lease and the underlying real estate of the trust beneficiary rights and working capital.
B. The Company shall not make total borrowings, including loans and issuance of corporate bonds, in excess of an aggregate of¥1 trillion.
C. The Company may borrow only from qualified institutional investors (the “qualified institutional investors”) referred to in
Article 2, Paragraph 3, Item 1 of the Securities and Exchange Law of Japan (Law No. 25 of 1948, as amended).
(ii) Guidelines for investment and management of portfolio real estate assets based on basic investment policies
The asset management company, J-Rea, has internally established the asset management guidelines (the “Asset Management
Guidelines”), as the internal guidelines with regard to investment and management by the Company of its portfolio real estate
assets, based on the basic investment policies outlined in section (i), 1 through 4 above and in accordance with the asset
management agreement (the “Asset Management Agreement”) concluded between the Company and the asset managementcompany dated May 18, 2001, as amended on August 3, 2001 and April 1, 2003. Accordingly, the asset management company
manages the portfolio real estate assets in compliance with such Asset Management Guidelines, with the aim of managing theassets of the Company in an appropriate manner.
The Asset Management Guidelines have been formed, based on the current Japanese economic environment, real estate market
conditions, financial environment, statistics of economy, property conditions and performance of the Company, all at the time oflisting on the Tokyo Stock Exchange, or TSE, the medium- and long-term outlook for the real estate market, and experience andknow-how accumulated by the asset management company and other various complex factors then available to the investment
management company. As such, the asset management company intends to review the Asset Management Guidelines periodicallyto determine whether or not they appropriately fit with the external and internal environmental factors. If the asset managementcompany determines that it is in the best interests of the Company and its investors to revise the Asset Management Guidelines
to manage the portfolio, the Asset Management Guidelines may be revised periodically in line with the Articles of Incorporationand the asset management agreement.
The asset management company will pursue the achievement of internal growth as well as external growth in order to enhance
its earnings and stability. Internal growth means that the Company will maximize the profitability of its own existing real estate

Japan Real Estate Investment Corporation

23

and other assets. External growth means that the Company will acquire new portfolio real estate assets within such an
appropriate price range as may be considered in the best interests of the Company. The asset management company shallconduct the management by taking into account the stability of the cash flow and the expected return from a comprehensive
perspective. The asset management company will, in managing the assets, consider various factors, including portfolio
composition in terms of geographical diversification, use, size and age as well as the capitalization rate (meaning the returnobtained by dividing the cash flow, excluding capital expenditures but after deduction of cost of repairs, by the property
acquisition costs). The Company is continuously engaged in market research activities, for the purpose of the external growth, toseek an opportunity to acquire new portfolio real estate assets. Once the Company makes an acquisition decision, the Company
shall promptly make a public announcement thereof.
1 Guidelines for acquisition of portfolio real estate assets
To achieve the external growth, the guidelines concerning the acquisition of portfolio real estate assets are as follows:
A. Geographic portfolio composition
1. The basic geographical diversification is to make investment of approximately 60–80% of the funds in real estate located in
the greater Tokyo metropolitan area and the approximately remaining 20–40% of the funds in cities in other parts of Japan.
2. It is, however, possible that the funds are invested in different investment allocation percentages as outlined above, if a
relatively high rate of return is expected from such investment even though supply and demand are balanced and steady.
3. During the course of expansion of the asset base of the Company, the portfolio composition may tentatively deviate from theinvestment allocation percentages as outlined above.
B. Property type portfolio composition
In principle, the asset management company will recommend the Company to invest in portfolio real estate assets used for
office buildings.
While these assets may mainly be used for office buildings, they may also partially be used for commercial use or, dependingon the relevant local municipal regulations, may be used for residential use. Accordingly, the Company may acquire the officebuildings with certain portion thereof used for commercial facilities or residential areas.
C. Building size and age in portfolio composition
1. In principle, the asset management company will recommend the Company to invest in land and buildings thereon that havetotal floor space or size of 3,000 square meters or more per building.
2. In principle, the asset management company will recommend the Company to invest in buildings with the latest earthquake
resistance capabilities in compliance with the earthquake resistance standards or buildings with the equivalent capabilities asstated above.
3. In addition to the criteria referred to in 1. and 2. above, the asset management company will recommend the Company tomake an investment decision by taking into account such factors as location, building structures (including earthquake
resistance standards), facilities (including ceiling height, floor wiring, space per floor, electrical supply, and so forth), and thecomplexity of ownership and other rights.
D. Due diligence conducted at the time of acquisition
1. Acquisition of the real property
To thoroughly and accurately assess the quality of properties, the asset management company will conduct a comprehensive
due diligence of the property from an economic, physical, and legal standpoint.
The asset management company will make use of analytical assessment based on real estate appraisal reports, engineering
reports, and seismic reports and real estate market reports issued by independent third party professionals who possess
analytical capability and relevant experience.
The asset management company will also make an on-site inspection of the property and hold interviews with persons incharge of property management of the building.

24 Japan Real Estate Investment Corporation

2. The following table shows the due diligence items based on the above.
Type of Research

Economic Analysis

Details of Research

Source Materials— Supply and demand conditions for office buildings in the location

real estate appraisal reports,

under consideration including a future outlook; analysis of market

market reports,

rental rates

on-site inspection— Frontage condition, access to major roads and public transportation— Level of discount rate and capitalization rate
— Analysis of the current operating costs of the building and room forreduction— Reflection of inspection of the physical conditions of building, legal
due diligence, economic analysis of the current building operation— Evaluation of dispositions
Physical Inspection— Searching the boundary with neighboring properties and status of the

documents from the seller,

over boundary

engineering reports,— The level of maintenance for the building and facilities and its state

seismic report,of deterioration

on-site inspection— Medium- and long-term estimated repairs and capital expenditure— Building and facility specifications (room layout, ceiling height, heat,ventilation and air-conditioning (HVAC) systems, electrical supply, etc.)— Earthquake resistance capability of the building— Investigation for existence of toxic substances within the building orwithin the property site
— Whether or not there has been any actual damage to the building as aresult of natural disasters, such as typhoons, earthquakes, etc.
Legal Research— Research into ownership and other rights and mortgages

documents from the seller,— Research into lease contracts

engineering reports,— Certification of the property boundary line, agreement regarding theon-site inspection

boundary— Research into the level of compliance with legal requirements forconstruction and management of the building— Research into management rules, agreements among the owners, andleasehold agreements in cases where the building and land are notowned by a single owner— Research into existence and substance of any agreements with theowners in the neighborhood regarding the countermeasures against
defective television radiation acceptance, etc.
Research on the— Investigation into the operations of the property management

documents from the seller,

State of Property

company and compliance with building management manual

on-site inspection

Management— Research into whether or not there have been any suggestions and/or
complaints made by tenants against the building management— Tenant composition— Research into the existence of any rules or stipulations governingbuilding management in cases where the property is not owned by asingle owner

Japan Real Estate Investment Corporation

25

E. Targeted capitalization rate
1. The asset management company will set a certain target for its capitalization rate and make acquisition of portfolio real estate
assets by taking into account the capitalization rate set for the total portfolio.
2. The capitalization rate referred to above may be adjusted from time to time in accordance with changes in the Company’s
financing policy and/or changes in interest rates.
* The capitalization rate addressed in this section is based on the return calculated by dividing the cash flow (excluding capital expenditure
and after deduction of the cost of repairs) by the property acquisition costs.

2 Guidelines for management of portfolio real estate assets
To achieve internal growth, the policy for maintenance and management of portfolio real estate assets is as follows:
A. Policy for maintenance and management
For purposes of internal growth, the asset management company will ensure to make ongoing and scheduled capital
expenditures and management for the existing facilities and equipment of real estate owned by the Company with proper
repairs and maintenance to enhance tenant satisfaction, the competitiveness of the property, and revenues (by increasing
rental rates over time and the occupancy rate), and at the same time minimize the relevant expenses (by reducing outsourced
maintenance costs and reduction of water, gas and electricity costs, and so forth). The asset management company will makeeffective use of the multiple property management companies in order to achieve these goals.
B. Insurance policy
In principle, the Company will carry comprehensive casualty and liability insurance covering all of the properties owned by
the Company to protect the properties either from damages to or reduction in revenue arising from natural causes or
accidents or any possible financial losses arising from liability claims of third parties. In connection with procuring
earthquake insurance, the Company will make a determination based on the amount of the probable maximum loss, or PML,
on its properties.
*1. The Company will carry comprehensive casualty insurance to compensate for financial losses due to damages and accidents except forearthquakes, floods, tidal waves and wars. This type of insurance can also include a special provision that compensates for corporate
profits.
*2. Liability insurance covers the Company from possible financial losses arising from legal claims with regard to physical harm or financial
damage to third parties that results from possession, use, occupancy or management of the building.

3 Guidelines for disposal of portfolio real estate assets
In principle, the Company seeks to hold investments over a reasonably long-time and has no particular intention to engage inshort-term buying and selling of the properties. In determining the sale of a property, the Company makes a comprehensive
analysis and determination by taking into consideration such factors as the outlook for future profitability of that property, theamount that the property has changed in value and the outlook for future additional change in value, the economic outlook andstability for the region in which the portfolio real estate assets are located, the deterioration of the real estate and other assets
and the estimate of future expenses associated with its maintenance, and how well the particular property fits with theCompany’s total portfolio of properties.
(iii) Financing guidelines
The Company has stipulated the following financial guidelines in its Asset Management Guidelines.
1 In order to manage the assets of the Company in an efficient and stable manner, the Company may make borrowings or issue
corporate bonds for purposes of making acquisitions of specified assets, capital improvements for the existing portfolio realestate assets and working capital.
2 The Company shall not make total borrowings, including loans and issuance of corporate bonds, in excess of an aggregate of¥1 trillion.
3 The Company shall borrow only from qualified institutional investors.
4 In principle, the Company shall not borrow funds (including corporate bonds) in excess of 65% of the total value of its total

26 Japan Real Estate Investment Corporationassets (the “debt ratio”), and will seek to maintain an even lower debt ratio.
5 The Company shall seek to borrow funds at the most favorable possible terms in consideration of the economic climate at thetime of borrowing, with a view to reducing the future effects of refinancing and achieving the lowest possible financing costs .
The Company will compare terms presented from several qualified institutional investors, such as ratio of fixed interest loan,borrowing periods, requirement of collateral for borrowing and so forth, to achieve the best possible terms. However, thefinancing costs may fluctuate due to changes in unforeseeable economic conditions in instances where penalties, which may
arise from prepayment of borrowings, will be determined by the interest rate environment at that time.
6 The Company may establish lines of credit facility in advance, including a maximum line of credit facilities and a commitmentline or future loan agreements to finance timely in need of capital whenever it becomes necessary to acquire additional
specified assets.
7 The Company may use its properties as collateral for borrowing funds.
Borrowing and repayment of funds in the near term will be based on the following points.
1 As a flexible response is required when borrowing funds for the additional acquisition of specific assets, short-term borrowing
will be the main means for procuring the necessary funds.
2 Short-term borrowing procured for the additional acquisition of specified assets shall be converted to long-term fixed-interest
borrowing or corporate bonds as appropriate, with reference to the finance environment, to achieve low and stable fundprocurement costs.

(2) INVESTMENT ASSETS(i) Assets in which the Company may invest are as follows:
1 Real estate assets and real estate related securities
2 Other specified assets
1. The Company may invest in the following marketable securities:
a. Government bonds
b. Municipal government bondsc. Bonds issued by special legal entities under special law
d. Corporate bonds (except for convertible bonds, bonds with warrants and bonds with stock acquisition rights)
e. Specified corporate bonds issued by special purpose companies, as set forth in Article 2, Paragraph 1, Item 3-2 of the
Securities and Exchange Law
f. Commercial paper, as set forth in Article 2, Paragraph 1, Item 8 of the Securities and Exchange Law
g. Securities or certificates which fall within any of the types described in a. through f. above and which are issued by foreign
governments or foreign legal entities
h. Beneficiary certificates except for those described in section (i), 1, II. 2. of (1) of the investment policy above
i. Certificates for shares of investment corporations except for those described in section (i), 1, II. 3. of (1) of the investment
policy above
j. Corporate bonds issued by investment corporations, as set forth in Article 2, Paragraph 25 of the Investment Trust Law
k. Shares issued by foreign investment corporations, as set forth in Article 220, Paragraph 1 of the Investment Trust Law
l. Trust beneficiary certificates of foreign loan receivables, as set forth in Article 2, Paragraph 1, Item 10 of the Securities andExchange Law
m. Securities or certificates representing options, as set forth in Article 2, Paragraph 1, Item 10-2 of the Securities andExchange Law
n. Depositary receipts denominated in Japanese yen of the same nature as for those in a. through d. above, as described in
Article 2, Paragraph 1, Item 10-3 of the Securities and Exchange Law

Japan Real Estate Investment Corporation27

o. Negotiable certificates of deposit issued by foreign entities denominated in Japanese yen
p. Trust beneficiary certificates of loan receivables, as set forth in Article 2, Paragraph 2, Item 1 of the Securities andExchange Law
q. Rights against a foreign entity which are of the same nature as the rights in item p. above
2. The Company may invest in monetary claims, with the exception of those described in Article 3, Items 1, 12 and 14 of the
Cabinet Order.
3. The Company may invest in financial derivatives, as described in Article 3, Item 14 of the Cabinet Order.
(ii) Investment criteria and future investment plan in terms of property type, geographical location, and business sector and so
forth
Please refer to (i) Basic investment policies and (ii) Guidelines for investment and management of portfolio real estate assets
based on basic investment policies under (1) Investment Policies above.

(3) DISTRIBUTION POLICYThe Company will make cash distributions subsequent to each fiscal period in accordance with the following guidelines.
(i) In connection with the total cash amount to be distributed to shareholders, accounting profits will be calculated inaccordance with the generally accepted accounting principles in Japan (Japanese GAAP).
(ii) In making cash distributions to the extent of accounting profits, the Company will distribute profits as cash distributions inexcess of 90% of the taxable income as defined in Article 67-15 of the Special Taxation Measures Law of Japan.
(iii) At the appropriate discretion of the board of directors, the Company may, in accordance with Article 136, Paragraph 1 ofthe Investment Trust Law, make distributions in excess of accounting profits based on the Cash Distribution Statement
approved pursuant to Article 131, Paragraph 1 of the Investment Trust Law.
(iv) The Company is allowed to make distributions in excess of accounting profits to the extent of the amount equivalent to theaggregate of the amount of depreciation for the current period and the amount of accounting profits. However, in cases
where cash distributions for the relevant period do not exceed 90% of the “distributable amount” stipulated by Article 3932-3 of the Cabinet Order of Enforcement of the Special Taxation Measures Law of Japan, the Company may make
distributions in excess of accounting profits to the extent of 91% of such distributable amount.
(v) Distributions need to be made in cash in proportion to the number of shares registered on the final records of shareholders(including the records of beneficial shareholders) as of the close of each fiscal period.
(vi) In the event that the Company issues additional shares during a business period, the value of the dividends in connection
with those shares may be calculated on a daily pro-rated basis, as determined by the board of directors.
(vii) Besides the above provisions, the Company shall comply with the rules on investment trusts and investment corporations(established on March 16, 2001, as amended) stipulated by the Investment Trusts Association of Japan.
(viii) If investors need to calculate a gain or loss upon distribution in excess of accounting profits, the Company will not make
distributions in excess of accounting profits to the shareholders. However, the Company will be able to make distributions
in excess of accounting profits in the following three cases pursuant to clauses (i) through (vii) above.

28 Japan Real Estate Investment Corporation

1. Due to changes of the tax codes or other reasons, it becomes no longer necessary for an individual investor to calculate again or loss upon distribution in excess of accounting profits for the period.
2. Due to changes of the tax codes or other reasons, the board of directors determines that it is appropriate to make
distributions in excess of accounting profits since it would become a common practice for an investor to file an individual
tax return to report a gain or loss upon payouts.
3. The board of directors determines that it is necessary to make distributions in excess of accounting profits to meet the
distribution requirements.

(4) INVESTMENT RESTRICTIONSIn accordance with the Articles of Incorporation, the investment restrictions of the Company are as follows:
1 The Company shall not seek to invest aggressively in the marketable securities and monetary claims described in (2)Investment Assets above, but rather make investment to secure stability and liquidity (Article 26 of the Articles ofIncorporation).
2 The Company shall limit its trading activity in financial derivatives to the extent of hedging the interest rate volatility risks,with regard to its debts and other risks (Article 26 of the Articles of Incorporation).
3 In order to manage the portfolio of the Company in an efficient and stable manner, the Company may make borrowings or
issue corporate bonds (not in excess of ¥1 trillion) with a view to utilizing the proceeds thereof toward acquisitions ofspecified assets, capital improvements of the real estate for lease and the underlying real estate of trust beneficiary rights andworking capital (Article 30 of the Articles of Incorporation).
4 The Company shall borrow only from qualified institutional investors (Article 30 of the Articles of Incorporation).

Japan Real Estate Investment Corporation

29

Financial Section
Financial Overview of Japan Real Estate Investment Corporation
Balance Sheets
Statements of Income and Retained Earnings
Statements of Cash Flows (Unaudited)
Statements of Changes in Shareholders’ Equity
Notes to Financial Statements
Independent Auditors’ Report

p.30
p.34
p.36
p.37
p.38
p.38
p.45

Financial Overview of Japan Real Estate Investment Corporation
1. SELECTED FINANCIAL DATA
Thousands of U.S. dollars(Note 1)Millions of yen
For the period from
October 1, 2003 to
March 31, 2004

Operating Revenues

¥

9,560

For the period from
April 1, 2003 to
September 30, 2003

¥

8,965

For the period from
October 1, 2002 to
March 31, 2003

¥

8,500

For the period from
April 1, 2002 to
September 30, 2002

¥

7,910

For the period from
October 1, 2003 to
March 31, 2004$

90,461

Operating Expenses

5,219

5,067

4,812

4,523

49,386

Operating Profits

4,341

3,898

3,687

3,386

41,075

Income before Income Taxes

3,803

3,408

3,259

2,898

35,986Net Income

3,802

3,407

3,258

2,897

35,977

Total Assets

244,523

209,581200,022

185,397

2,313,595

Interest-Bearing Liabilities

87,00076,00066,80054,000823,162

Total Shareholders’ Equity

137,250

115,559

115,410

115,049

1,298,618

Shareholders’ Capital

133,448

112,152

112,152

112,152

1,262,640

Number of Shares

260,400

225,400

225,400

225,400

260,400

Total Shareholders’ Equity per Share (Yen/U.S. dollars)

527,077

512,688

512,026

510,424

4,987
35,977

Cash Distribution

3,802

3,407

3,258

2,897

Dividend Payout Ratio

99.9%

99.9%

99.9%

99.9%

99.9%

Dividend Per Share (Yen/U.S. dollars)

14,602

15,117

14,455

12,853138.16Net Operating Income (NOI)

6,455

5,950

5,702

5,211

61,080Funds from Operations (FFO)

5,301

4,801

4,568

4,091

50,157Return on Assets (ROA) (Note 2)

1.6%(3.2% annualized)

1.7%(3.3% annualized)

1.7%(3.4% annualized)

1.6%(3.2% annualized)

1.6%(3.2% annualized)

Return on Equity (ROE) (Note 3)

2.8%(5.7% annualized)

3.0%(5.9% annualized)

2.8%(5.7% annualized)

2.7%(5.4% annualized)

2.8%(5.7% annualized)

EOP Equity Ratio (Note 4)

56.1%

55.1%

57.7%

62.1%

56.1%

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

35.6%

36.3%

33.4%

29.1%

35.6%

FFO Multiple

20.4 times

15.2 times

14.6 times

14.1 times

20.4 times

Debt Service Coverage Ratio (Note 6)

13.9 times

12.6 times

14.5 times

13.9 times

13.9 times

Note 1: Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥105.69=US$1.00, the foreign exchange rateon March 31, 2004, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen has been or could bereadily converted, realized or settled into U.S. dollars at that rate or any other rate.
Note 2: ROA = Income before Income Taxes 4 Average of Total Assets during the period
Note 3: ROE = Net Income 4 Average of Net Worth during the period(Annualized portions of the calculations given in notes 2 and 3 above assume a fiscal period of 183 days for the period ended September 30, 2002,
182 days for the period ended March 31, 2003, 183 days for the period ended September 30, 2003 and 183 days for the period ended March 31,
2004.)
Note 4: EOP Equity Ratio = (Net Worth at end of period 4 Total Assets at end of period) x 100
Note 5: EOP Interest-Bearing Debt Ratio on Total Assets = (Interest-Bearing Debt at end of period 4 Total Assets at end of period) x 100
Note 6: Debt Service Coverage Ratio = Net Income before Interest, Taxes, Depreciation and Amortization 4 Interest Expenses

30 Japan Real Estate Investment Corporation

2. CASH DISTRIBUTION
The cash distribution for the period from October 1, 2003 to March 31, 2004 consisted of almost all taxable income for theperiod, qualifying the Company for special tax treatment as stipulated in Article 67-15 of the Special Taxation Measures Law ofJapan. The dividend per share was ¥14,602 ($138.16). With 260,400 shares outstanding, the cash distribution totaled¥3,802,360 thousand ($35,976,543). Retained earnings carried forward totaled ¥145,925 ($1,381).
(From October 1, 2003 to March 31, 2004)

Net income(Thousands of yen)

(U.S. dollars)

3,802,382

35,976,742

Retained earnings of beginning of period
Distribution

125

1,181

3,802,360

35,976,543

145

1,381

(Dividend per share : ¥14,602)
Retained earnings carried forward

3. PAID-IN CAPITALThe Company was established with funding from Mitsubishi Estate Co., Ltd. (160 shares), The Tokio Marine and Fire InsuranceCo., Ltd. (120 shares) and The Dai-ichi Mutual Life Insurance Company (120 shares), each share representing ¥500,000($4,731). Additional 160,000 shares were issued in an initial public offering at ¥525,000 ($4,967) each (acceptance price of¥506,625 ($4,793)). An additional 65,000 shares were issued on May 8, 2002, at ¥490,980 ($4,645) per share (acceptance priceof ¥475,268 ($4,497)).
In the period, an additional 35,000 shares were issued on October 25, 2003, at ¥629,000 ($5,951) per share (acceptance price of¥608,456 ($5,757)).
Common shares outstanding

Increase

BalancePaid-in capital

Increase

Balance

Issue date

Remarks(¥ millions) (U.S. $ thousands)(¥ millions)(U.S. $ thousands)

May 11, 2001

Private placement

400

400

200

1,892

200

1,892

September 8, 2001

Additional share issue (Initial Public Offering)

160,000

160,400

81,060766,960

81,260768,853

May 8, 2002

Additional share issue

65,000225,400

30,892292,293

112,152 1,061,146

October 25, 2003

Additional share issue

35,000260,400

21,295

201,495

133,448 1,262,641

The Company was listed on the Tokyo Stock Exchange on September 10, 2001. Market quotations from that time are as follows:
Month

September 2001
(September 10, 2001 to September 28, 2001)
October 2001
November 2001
December 2001
January 2002
February 2002
March 2002
April 2002
May 2002
June 2002
July 2002
August 2002
September 2002
October 2002
November 2002
December 2002
January 2003

High

Low

¥550,000¥491,000¥551,000¥549,000¥542,000¥510,000¥531,000¥560,000¥524,000¥527,000¥525,000¥528,000¥534,000¥540,000¥543,000¥563,000¥609,000¥609,000¥534,000¥536,000¥485,000¥480,000¥499,000¥527,000¥495,000¥497,000¥512,000¥518,000¥520,000¥505,000¥508,000¥531,000¥552,000¥560,000Month

February 2003
March 2003
April 2003
May 2003
June 2003
July 2003
August 2003
September 2003
October 2003
November 2003
December 2003
January 2004
February 2004
March 2004
April 2004
May 2004
June 2004
July 2004

High

Low

¥595,000¥603,000¥641,000¥699,000¥660,000¥657,000¥665,000¥678,000¥655,000¥669,000¥678,000¥707,000¥715,000¥840,000¥830,000¥771,000¥765,000¥795,000¥569,000¥573,000¥591,000¥631,000¥626,000¥630,000¥640,000¥636,000¥634,000¥639,000¥656,000¥678,000¥692,000¥714,000¥748,000¥702,000¥735,000¥753,000

Japan Real Estate Investment Corporation31

4. OVERVIEW OF BORROWINGSThe following is a list of the Company’s borrowings showing amounts and lending institutions as of March 31, 2004.
Balance
Category

LenderShort-term The Chugoku Bank, Ltd.
debt
The Yamanashi Chuo Bank, Ltd.
The Chugoku Bank, Ltd.
The Hachijuni Bank, Ltd.
SubtotalLong-term The Bank of Tokyo
debt
Mitsubishi, Ltd.
Mizuho Corporate Bank, Ltd.
The Sumitomo Trust &(U.S.$
Average(¥ millions) thousands) interest rate (%)

28,38518,92318,92318,92385,15556,7700.549290.54929
0.415
0.415

6,000
5,200

56,77049,2001.12
1.12

The Mitsubishi Trust &5,200Banking Co., Ltd.
Sompo Japan Insurance, Inc.
1,600
The Iyo Bank, Ltd.
2,000
The Dai-ichi Mutual Life
5,000
Insurance Company
The Taiyo Life Insurance Company 2,000
Subtotal
33,00042,00049,2001.12

June 23, 2008

15,13918,92347,3081.12
1.0575
1.015

March 24, 2009
March 30, 2009

18,923
312,234
397,389

1.47125

March 30, 2011

1.12

Banking Co., Ltd.

Total

Due

3,000
2,000
2,000
2,000
9,000
6,000

Use of funds

Remarks

June 15, 2004
June 15, 2004
March 24, 2005
March 24, 2005

Purchase of real estate

Unsecured/Unguaranteed/
Senior/Floating rate

Anticipated date forprincipal repayment:
June 23, 2006
Final date forPurchase of real estate
trust beneficiary rights

Secured/Unguaranteed/
Senior/Fixed rate

Purchase of real estate

Unsecured/Unguaranteed/
Senior/Fixed rate

principal repayment:

5. BONDS ISSUED BY THE COMPANY
Our past corporate bond issues are as follows, as of March 31, 2004.
First issue of corporate bonds
Total principal amount of bonds¥25 billion (U.S.$ 237 million)

Issue price¥100 (U.S.$ 0.95) (par value)Interest Rate

1.32% annually

Closing Date

June 21, 2002

Guaranty

Unsecured/unguaranteed

Redemption method/datePrincipal redeemed in full on June 21, 2007
Cancellation upon repurchase may be made at any time.

Second issue of corporate bonds
Total principal amount of bonds¥10 billion (U.S.$ 95 million)

Issue price¥100 (U.S.$ 0.95) (par value)Interest Rate

0.69% annually

Closing Date

April 30, 2003

Guaranty

Unsecured/unguaranteed

Redemption method/datePrincipal redeemed in full on April 30, 2008
Cancellation upon repurchase may be made at any time.

Third issue of corporate bonds
Total principal amount of bonds¥10 billion (U.S.$ 95 million)

Issue price¥100 (U.S.$ 0.95) (par value)Interest Rate

0.98% annually

Closing Date

April 30, 2003

Guaranty

Unsecured/unguaranteed

Redemption method/datePrincipal redeemed in full on April 30, 2010
Cancellation upon repurchase may be made at any time.

32 Japan Real Estate Investment Corporation

6. CAPITAL EXPENDITURES FOR EXISTING PROPERTIES
a. PLANNED CAPITAL EXPENDITURES
The following table represents the main capital expenditures planned for renovations of existing properties, as of March 31,
2004. The total expected construction amount includes portions that will be accounted for as ordinary expenses.
Expected construction amounts (Millions of yen)
Total
Property (Location)

Objective

Shibuya Cross Tower(Shibuya-ku, Tokyo)

Functional maintenance(Drainage-related equipment
works for toilets on standard
floors, and in common
corridors)
Upgrading (Interior finishingof rentable area)

Takanawadai Building(Shinagawa-ku, Tokyo)(Millionsof yen)(Thousands of
U.S. dollars)

Planned payment
for the period
under review

Previously
paid total

From July 2003 to
May 2004(finished)

369

3,491

—

—

From October 2004
to October 2004

30

284

—

—

Estimated durationb. CAPITAL EXPENDITURES DURING THE PERIOD ENDED MARCH 31, 2004
The following table represents the main capital expenditures for acquired properties during the period under review. Capital
expenditures amounted to ¥1,219 million (U.S.$11,534 thousand), with repairs and maintenance adding ¥365 million(U.S.$3,453 thousand) throughout the term for a total of ¥1,585 million (U.S.$14,997 thousand).
The main capital expenditures in the period under review were for “Lending-related works” on Shin-Yokohama First
Building and other works, as listed below. Other works on properties include regular replacement works and upgrading of toilets
and other common facilities.
Property (Location)

Shin-Yokohama First Building(Yokohama, Kanagawa prefecture)
Niigata Ishizuecho
Nishi-Bandaibashi Building(Niigata, Niigata prefecture)
Kyoto Shijo
Kawaramachi Building(Kyoto, Kyoto prefecture)
Other properties
Total

Construction amounts(Millions of yen)(Thousands of U.S. dollars)

Objective

Upgrading (Interior finishing of rentable area)

69

653

Upgrading (Refurbishment of toilets on all
floors).

28

265

Upgrading (Renewal of common areas)

100

946

1,022
1,219

9,670
11,534c. CASH RESERVES AT END OF PERIOD (RESERVES FOR CAPITAL IMPROVEMENTS)
In order to prepare for renovation of facilities useful for maintaining the value of properties for the future, the Company
accumulates cash reserves each period for capital improvements that will be conducted based on the medium- to long-term
renovation strategy formulated for each of the properties. Cash reserves over the period under review were as follows:(Thousands of
U.S. dollars)(Millions of yen)

For the period from For the period from For the period from For the period from For the period from
October 1, 2003 to
April 1, 2003 to
October 1, 2002 to
April 1, 2002 to
October 1, 2003 to
March 31, 2004
September 30, 2003
March 31, 2003
September 30, 2002
March 31, 2004

Reserve balance at the beginning of the period
Amount accumulated
Withdrawal from reserves
Amount carried forward

181
729
756
155

316
695
830
181

1,104
145
933
316

719
838
453
1,104

1,713
6,898
7,153
1,467

Japan Real Estate Investment Corporation

33

Balance Sheets
As of March 31, 2004 and September 30, 2003

Thousands of yen

U.S. dollars (Note 1)

As of March
31, 2004

As of September
30, 2003

As of March
31, 2004

ASSETS
Current Assets:¥ 24,779,461¥ 15,377,753$ 234,454,166

Rental receivables

Cash and bank deposits

72,787

69,703

688,683

Consumption tax refundable

109,734—

1,038,265

Other current assets

482,937

961,941

4,569,369

25,444,919

16,409,397

240,750,483

Land

153,254,024

135,687,541

1,450,033,346

Buildings and structures

69,093,823

60,439,152

653,740,405

Machinery and equipment

1,250,776

1,195,302

11,834,383

Tools, furniture and fixtures

13,887

9,002

131,392

Construction in progress

5,500

—

52,039223,618,010

197,330,997

2,115,791,565(6,496,834)(4,998,158)(61,470,659)

217,121,176

192,332,839

2,054,320,906

Deposits

14,234

14,234

134,677

Long-term prepaid expenses

31,45338,082

297,597

1,083,336

725,600

10,250,131

Total current assets

Property and Equipment, at Cost:

Less accumulated depreciation
Net property and equipment

Investments and Other Assets:

Leasehold rights
Easement

828,095—

7,835,134

Deferred corporate bond issuance costs—

61,125

—

Other

599

525

5,662

¥244,523,812¥209,581,802$2,313,594,590

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

34 Japan Real Estate Investment Corporation

Thousands of yen

As of March
31, 2004

U.S. dollars

As of September
30, 2003

As of March
31, 2004

LIABILITIESCurrent Liabilities:
Trade accounts payable¥

958,026¥

224,753$

9,064,496

Other payables

565,076

696,484

5,346,539

Short-term loans

9,000,000

7,000,000

85,154,698

Accrued expenses

243,398

268,299

2,302,944

Accrued consumption taxes—

13,024—

Accrued income taxes

997

1,123

9,434

Rent received in advance

1,582,154

1,444,695

14,969,763

Other current liabilities

9,403

3,938

88,96912,359,054

9,652,316

116,936,843

Corporate bonds

45,000,000

45,000,000

425,773,489

Long-term loans

33,000,000

24,000,000

312,233,892

Deposits from tenants

16,913,871

15,369,570

160,032,837

Total long-term liabilities

94,913,871

84,369,570

898,040,218

Total Liabilities

107,272,925

94,021,886

1,014,977,061

Total current liabilities

Long-Term Liabilities:

SHAREHOLDERS’ EQUITY
Shareholders’ capital

133,448,380

112,152,420

1,262,639,606

Retained earnings

3,802,507

3,407,496

35,977,923

Total shareholders’ equity

137,250,887

115,559,916

1,298,617,529

Total Liabilities and Shareholders’ Equity¥244,523,812¥209,581,802$2,313,594,590

The accompanying notes form an integral part of these financial statements

Japan Real Estate Investment Corporation

35

Statements of Income and Retained Earnings
For the six months ended March 31, 2004 and September 30, 2003

Thousands of yen

U.S. dollars (Note 1)

For the Period from
October 1, 2003 to
March 31, 2004

For the Period from
April 1, 2003 to
September 30, 2003

For the Period from
October 1, 2003 to
March 31, 2004

¥9,461,852¥8,951,557$89,524,575

98,92014,217935,949

9,560,772

8,965,774

90,460,524

Property-related expenses

4,603,885

4,409,254

43,560,286

Asset management fees

325,666

393,650

3,081,334

Administrative service fees

186,469

161,423

1,764,296

Operating Revenues and Expenses
Operating Revenues:
Rental revenues
Non-rental revenues

Operating Expenses:

Other operating expenses

103,561

103,032

979,852

5,219,581

5,067,359

49,385,768

4,341,191

3,898,415

41,074,756

Interest income

99

109

940

Other non-operating revenues

128

4,028

1,208

Interest expense

163,980

177,251

1,551,518

Interest expense on corporate bonds

248,500

236,8112,351,216

Amortization of corporate bond issuance costs

61,125

61,125578,342

New share issuance costs

49,183—465,353

Other non-operating expenses

15,225

18,831

144,052

Income before Income Taxes

3,803,405

3,408,534

35,986,423

Current

1,017

1,144

9,621

Deferred

6

(8)

60

3,802,382

3,407,398

35,976,742

Operating profits

Non-Operating Revenues and Expenses
Non-Operating Revenues:

Non-Operating Expenses:

Income Taxes:

Net Income
Retained Earnings brought forward

125

99

1,181

Retained Earnings at end of period¥3,802,507¥3,407,497$35,977,923

The accompanying notes form an integral part of these financial statements

36 Japan Real Estate Investment Corporation

Statements of Cash Flows (Unaudited)
For the six months ended March 31, 2004 and September 30, 2003

Thousands of yen

U.S. dollars (Note 1)

For the Period from
October 1, 2003 to
March 31, 2004

For the Period from
April 1, 2003 to
September 30, 2003

For the Period from
October 1, 2003 to
March 31, 2004

Income before income taxes¥ 3,803,405¥ 3,408,534$ 35,986,423

Depreciation and amortization

1,498,676

1,393,642

14,179,925

Amortization of corporate bond issuance costs

61,125

61,125578,342

New share issuance costs

465,353

Cash Flows from Operating Activities

49,183—

Interest income

(99)

(109)

(940)

Interest expense

412,480

414,062

3,902,734

Rental receivables and other receivables(3,084)

18,798(29,180)

Consumption tax refundable(109,734)

59,328(1,038,265)

Prepaid expenses(23,367)

19,256(221,086)

Other current assets

2,364(2,364)22,368Trade accounts payable

733,274(257,859)

6,937,967(1,243,343)

Other payables(131,409)

50,076

Accrued expenses(24,089)

24,089(227,926)

Consumption tax payable(13,024)

13,024(123,225)

Rent received in advance

137,459

109,253

1,300,588

Other current liabilities

5,465(7,283)51,710Long-term prepaid expenses

6,629

9,557

62,7186,405,254

5,313,129

60,604,163

99

109

940

(413,245)(358,625)(3,909,970)(1,142)(996)(10,809)5,990,966

4,953,617

56,684,324

Purchases of property and equipment(25,787,014)(11,088,956)(243,987,260)

Purchases of intangible assets(1,185,904)(72)(11,220,590)

—

(134)

—

Proceeds from lease deposits received

2,529,171

1,096,068

23,930,084

Repayment of lease deposits(984,870)(861,811)(9,318,480)(25,428,617)(10,854,905)(240,596,246)

SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash Flows from Investing Activities

Payments of deposits

Net cash used in investing activities
Cash Flows from Financing Activities
Proceeds from short-term borrowings

16,000,000

5,000,000

151,386,129

Repayment of short-term loans(14,000,000)(15,800,000)(132,462,863)

Proceeds from long-term loans

9,000,000—

85,154,698

Proceeds from corporate bond—

20,000,000—

Payments of corporate bond issuance costs—(122,250)—

Proceeds from issuance of new shares

21,295,960—

201,494,560

Payment of new share issuance costs(49,183)—(465,352)(3,407,418)(3,258,131)(32,239,742)

28,839,359

5,819,619

272,867,430

Dividends to shareholders
Net cash provided by financing activities
Net Increase in Cash and Cash Equivalents

9,401,708(81,669)

88,955,508

Cash and Cash Equivalents at beginning of Period

15,377,753

15,459,422

145,498,658¥24,779,461¥15,377,753$234,454,166

Cash and Cash Equivalents at end of Period
The accompanying notes form an integral part of these financial statements

Japan Real Estate Investment Corporation

37

Statements of Changes in Shareholders’ Equity
For the six months ended March 31, 2004 and September 30, 2003

Shareholders’ equity

Balance as of March 31, 2003
Cash dividends paid
Net income

SharesThousands of yen

225,400¥115,410,675—(3,258,157)

U.S. dollars—

3,407,398

Balance as of September 30, 2003

225,400

115,559,916$1,093,385,529

Public offering

35,00021,295,960

201,494,560—(3,407,371)(32,239,302)

Cash dividends paid
Net income
Balance as of March 31, 2004—

3,802,382

35,976,742

260,400¥137,250,887$1,298,617,529

The accompanying notes form an integral part of these financial statements

Notes to Financial Statements
March 31, 2004 and September 30, 2003

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Japan Real Estate Investment Corporation (the “Company”) is a real estate investment corporation formed to own and invest
primarily in a portfolio of office properties. The Company is externally managed by a licensed asset management company,
Japan Real Estate Asset Management Co., Ltd. (“J-Rea”). J-Rea is currently owned 36% by Mitsubishi Estate Co., Ltd.
(“MEC”), 27% by The Tokio Marine and Fire Insurance Co., Ltd. (“TM”), 27% by The Dai-ichi Mutual Life Insurance
Company (“DL”) and 10% by Mitsui & Co., Ltd.
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, TM and DL
under the Law Concerning Investment Trusts and Investment Corporations of Japan, or the Investment Trust Law.
On September 10, 2001, the Company commenced operations when the Company was listed on the Tokyo Stock Exchange
as one of the first real estate investment corporations in Japan (so-called “J-REITs”). The Company issued 160,000 shares at a
price of ¥525,000, generating gross proceeds of ¥84,000 million. The proceeds from the offering of the shares, net ofunderwriters’ discount, were ¥81,060 million.
On May 8, 2002, the Company completed a second offering of 65,000 shares at a price of ¥ 490,980, generating grossproceeds of ¥ 31,914 million. The proceeds from the offering of the shares, net of underwriters’ discount, were ¥30,892 million.
On June 21, 2002, the Company issued ¥25,000 million of unsecured corporate bond due June 2007 with an interest rate of
1.32% to the qualified investors.
On April 30, 2003, the Company issued ¥10,000 million of unsecured corporate bond due April 2008 with an interest rateof 0.69% to the qualified investors and ¥10,000 million of unsecured corporate bond due April 2010 with an interest rate of
0.98% to the qualified investors.
On October 25, 2003, the Company completed a third public offering of 35,000 shares at a price of ¥629,000, generating
gross proceeds of ¥22,015 million. The proceeds from the offering of the shares, net of underwriters’ discount, were ¥21,296
million. As of March 31, 2004, the Company had total shareholders’ equity of ¥133,448 million with 260,400 shares.
At March 31, 2004, the Company owned a portfolio of 36 office properties containing an aggregate of approximately
273,000 square meters of net rentable area.

38 Japan Real Estate Investment Corporation

Basis of presenting financial statements
The Company maintains its accounting records and prepares its financial statements in accordance with accounting principles
and practices generally accepted in Japan (“Japanese GAAP”), including provisions set forth in the Investment Trust Law, theJapanese Commercial Code, the Securities and Exchange Law of Japan and the related regulations, which are different in certain
respects as to the application and disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which wereprepared in accordance with Japanese GAAP and were presented in the Securities Report of the Company filed with the Kanto
Local Finance Bureau. In preparing the accompanying financial statements, certain reclassifications and modifications have been
made to the financial statements issued domestically in order to present them in a format that is more familiar to readers outside
Japan. In addition, the notes to financial statements include information that might not be required under Japanese GAAP but ispresented herein as additional information.
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥105.69=US$1.00, theforeign exchange rate on March 31, 2004, has been used for translation. The inclusion of such amounts is not intended to imply
that Japanese yen has been or could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESProperty and equipment
Property and equipment is stated at cost, less accumulated depreciation. The costs of land, buildings and building improvements
include the purchase price of property, legal fees and acquisition costs. Depreciation is calculated on a straight-line basis over theestimated useful lives of the assets ranging as stated below:
Buildings ...................................................................................................2-61 years
Structures..................................................................................................5-49 years
Machinery and equipment.........................................................................3-18 years
Tools, furniture and fixtures .....................................................................3-15 years
Expenditures for repairs and maintenance are charged to operations as incurred. Significant renewals and betterments arecapitalized.
Deferred charges
Deferred charges include bond issuance costs and new share issuance costs. Bond issuance costs are amortized using the straightline method over one year. New share issuance costs are charged to operations as incurred. The underwriters’ commissions of the
public offering are not recognized as new share issuance costs in the financial statements since such costs are not payable by theCompany under the so-called “spread method.” Under the spread method, the difference between the offering price (the pricepaid by the shareholder) and the purchase price (the price received by the Company) is directly paid to the underwriters.
Revenue recognition
Revenues from leasing of office space are recognized as rent accrued over the lease period.
Taxes on property and equipment
Property and equipment is subject to property taxes and city planning taxes on a calendar year basis. These taxes are generally
charged to expense during the period. The sellers of the properties were liable for property taxes for the calendar year including
the period from the date of purchase by the Company through the end of the year since the taxes are imposed on the ownerregistered in the record as of January 1 based on the assessment made by the local government. The Company paid the amountequivalent to the property taxes to the sellers applicable to the period since acquisition and included the amount equivalent to
the taxes in the purchase price of each property and capitalized as cost of the property.

Japan Real Estate Investment Corporation

39

Consumption taxes
Consumption taxes withheld and consumption taxes paid are not included in the statements of income. The consumption taxes
paid are generally offset against the balance of consumption taxes withheld. As such, the excess of payments over amounts
withheld are included in the current assets and the excess of amounts withheld over payments are included in the current
liabilities.
Cash and cash equivalents
The statements of cash flows are provided for information purposes only since they are not required to be prepared by theInvestment Trust Law, the Japanese Commercial Code, the Securities and Exchange Law of Japan or the related regulations.
Cash and cash equivalents consists of cash on hand, deposits placed with bank and short-term investments which are highly
liquid, readily convertible to cash and with insignificant risk of price fluctuation, with original maturity of three months or less.

3. PROPERTY AND EQUIPMENT
Property and equipment at March 31, 2004 and September 30, 2003 consisted of the following:Thousands of yen

As of March 31, 2004

U.S. dollars

As of September 30, 2003

As of March 31, 2004

Acquisition Costs

Book Value

Acquisition Costs

Book Value

Acquisition Costs

Book ValueLand¥96,586,560¥96,586,560¥77,793,726¥77,793,726$913,866,588$913,866,588

Buildings and structures

44,861,830

Accumulated depreciation

3,560,614

Machinery and equipment

606,568

Accumulated depreciation

160,635

Tools, furniture and fixtures

6,431

Accumulated depreciation

1,000

5,431

665

3,157

9,459

51,385Construction in progress

5,500

5,500

—

—

52,03952,039Land in trust

56,667,464

56,667,464

57,893,815

57,893,815

536,166,758

536,166,758

Buildings and structures in trust

24,231,993

Accumulated depreciation

2,586,742

Machinery and equipment in trust

644,208

Accumulated depreciation

187,174

Tools, furniture and fixtures in trust
Accumulated depreciation
Total

40 Japan Real Estate Investment Corporation

35,456,373
41,301,216

32,923,869

523,699445,933

114,308409,391

2,194,044

156,263

22,788,735

6,787

374

4,219,258

24,474,804

204,799,420

6,095,258
515,340

5,180¥217,121,176

1,519,867

229,274,224

671,603
457,034

390,776,952

60,84424,982,779
21,645,251

33,689,229
5,739,125

3,822

7,456
669

2,532,504

424,466,181

1,770,969

4,324,289

70,5484,806¥192,332,839

6,331

64,217$2,054,320,906

4. SHORT-TERM LOANS
Short-term loans at March 31, 2004 and September 30, 2003 consisted of the following:Thousands of yen

U.S. dollars

As of March
31, 2004

As of September
30, 2003

As of March
31, 2004

Unsecured loan from a bank with variable interest,
due on October 31, 2003¥—

¥2,000,000$

Unsecured loan from banks with variable interest,
due on June 15, 2004

5,000,000

5,000,000

47,308,166

Unsecured loans from banks with variable interest,
due on March 24, 2005

4,000,000—

37,846,532¥9,000,000¥7,000,000$85,154,698—

The weighted average interest rates applicable to the bank loans at March 31, 2004 and September 30, 2003 were 0.48961%
and 0.54605%, respectively, per annum.

5. LONG-TERM LOANS
Long-term loans at March 31, 2004 and September 30, 2003 consisted of the following:Thousands of yen

1.120% secured loans from banks, trust banks,
and an insurance company, due on June 23, 2006

U.S. dollars

As of March
31, 2004

As of September
30, 2003

As of March
31, 2004¥24,000,000¥24,000,000$227,079,194

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

2,000,000—

18,923,266

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

5,000,000—

47,308,166

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

2,000,000—

18,923,266¥33,000,000¥24,000,000$312,233,892

The weighted average interest rates applicable to the loans at March 31, 2004 and September 30, 2003 were 1.122% and1.120%, respectively, per annum.

6. SECURED ASSETSAt March 31, 2004 and September 30, 2003, the following assets were pledged as collateral for the following loans:Thousands of yen

U.S. dollars

Pledged assets:

As of March
31, 2004

As of September
30, 2003

As of March
31, 2004

Bank deposits¥ 7,863,049¥ 7,812,232$ 74,397,280

Land and leasehold rights

47,765,093

47,765,093

451,935,785

Buildings and structures

16,956,351

17,124,219

160,434,774

Machinery and equipment

387,604

419,326

3,667,362

Tools, furniture and fixtures

6,787

4,807

64,217¥72,978,884¥73,125,677$690,499,418

Total

Japan Real Estate Investment Corporation

41

Thousands of yen

Loans secured by the pledged assets:Long-term loans

U.S. dollars

As of March
31, 2004

As of September
30, 2003

As of March
31, 2004¥24,000,000¥24,000,000$227,079,194

7. SHAREHOLDERS’ EQUITYThe Company is required to maintain net assets of at least ¥50 million ($473 thousand), as required pursuant to the Investment
Trust Law.

8. INCOME TAXESAt March 31, 2004, the Company’s deferred tax assets consist mainly of the enterprise tax, which is not deductible for tax
purposes. The reconciliation of tax rate difference between the adjusted statutory tax rate and the effective tax rate for the six
months ended March 31, 2004 and September 30, 2003 were as follows:
For the period from October 1, 2003
to March 31, 2004

For the period from April 1, 2003
to September 30, 2003

Statutory tax rate ...............................................................................39.39%..........................................39.39%
Deductible dividend distribution........................................................(39.38%) .......................................(39.38%)
Others ..................................................................................................0.02%............................................0.02%
Effective tax rate ..................................................................................0.03%............................................0.03%

The Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation
Measures Law of Japan, or the STML, an investment corporation is allowed to deduct dividends of accounting profits, ordividend distributions, paid to investors from its taxable income if certain tax requirements are satisfied. Such tax requirements
include dividend distributions in excess of 90% of its taxable income for the fiscal period as stipulated by Article 67-15 of the
STML. Based on the distribution policy provided by Article 33-2 of the Articles of Incorporation, the Company made a dividend
distribution of approximately 100% of retained earnings in the amount of ¥3,802 million ($35,977 thousand) subsequent toMarch 31, 2004 and treated it as tax deductible dividend. The Company will not distribute the dividends in excess of accounting
profit under Article 33-3 of the Articles of Incorporation.

9. PER SHARE INFORMATION
The following table summarizes information about net assets per share and net income per share at March 31, 2004 and
September 30, 2003, and for the periods then ended:
Yen

U.S. dollars

For the period
from October 1, 2003
to March 31, 2004

For the period
from April 1, 2003
to September 30, 2003

For the period
from October 1, 2003
to March 31, 2004

Net assets at period end per share¥527,077¥512,688$4,987

Net income per share¥ 14,864¥ 15,117$ 141

In calculating the net assets per share, the amount of the net assets is adjusted for the cash distribution declared in thesubsequent period.

42 Japan Real Estate Investment Corporation

Net income per share is computed by dividing net income by the weighted average number of shares outstanding during eachperiod. Diluted net income per share has not been presented since no warrants or convertible bonds were outstanding during theperiod.

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

U.S. dollars

For the period
from October 1, 2003
to March 31, 2004

For the period
from April 1, 2003
to September 30, 2003

For the period
from October 1, 2003
to March 31, 2004

Property management fees

¥595,242¥591,674$5,631,961

Utilities

65,19970,848616,885

Insurance

50,637632

479,110

Other operating expenses

3,813

4,859

36,079Repair and maintenance¥121,775¥175,601$1,152,186

11. BREAKDOWN OF PROPERTY-RELATED REVENUES AND EXPENSES
For the six months ended March 31, 2004 and September 30, 2003
Thousands of yen

U.S. dollars

For the period
from October 1, 2003
to March 31, 2004

For the period
from April 1, 2003
to September 30, 2003

For the period
from October 1, 2003
to March 31, 2004

Property-Related Revenues¥9,560,772¥8,965,774$90,460,524

Rental Revenues

9,461,852

8,951,557

89,524,575

Rental revenues

6,866,542

6,452,935

64,968,698

Common area charges

1,608,498

1,548,432

15,219,019

Parking revenues

361,680

334,268

3,422,086

Other rental revenues

625,132

615,922

5,914,772

98,92014,217935,949

Cancellation charges

4,829

9,957

45,692Other miscellaneous revenues

94,091

4,260

890,257

4,603,885

4,409,254

43,560,286

Non-Rental Revenues

Property-Related Expenses
Property management fees

1,127,376

1,095,849

10,666,822

Utilities expenses

779,507

777,2887,375,414

Property and other taxes

791,908

797,787

7,492,746

Casualty insurance

24,54022,594

232,188

Repairs and maintenance
Depreciation
Other rental expenses
Profits

365,636

289,340

3,459,514

1,498,676

1,393,642

14,179,925

16,24232,754

153,677¥4,956,887¥4,556,520$46,900,238

Japan Real Estate Investment Corporation

43

12. LEASESThe Company leases office buildings and earns rent income. As of March 31, 2004 and September 30, 2003, the future lease
revenues under the non-cancelable operating leases are as follows:
Thousands of yen

U.S. dollars

As of March
31, 2004

As of September
30, 2003

As of March
31, 2004

Due within one year

¥ 5,283,438¥ 3,973,850$ 49,989,954

Due after one year

23,611,592

21,383,783

223,404,220

Total¥28,895,030¥25,357,633$273,394,174

13. SUBSEQUENT EVENTSAppropriation of retained earnings
On May 18, 2004, the Board of Directors resolved to effect the payment of a cash distribution of ¥14,602 per share aggregating¥3,802 million ($35,977 thousand) to shareholders at the record date of March 31, 2004.

44 Japan Real Estate Investment Corporation

Independent Auditors’ Report

To the Board of Directors and Shareholders ofJapan Real Estate Investment Corporation

We have audited the accompanying balance sheets of Japan Real Estate Investment Corporation as of March 31, 2004 and
September 30, 2003, the related statements of income and retained earnings, and changes in shareholders’ equity for the six
months ended March 31, 2004 and September 30, 2003, all expressed in yen. These financial statements are the responsibility of
the Company’s management. Our responsibility is to independently express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards, generally accepted in Japan. Those standards, require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements, expressed in yen, referred to above present fairly, in all material respects, the financial
position of Japan Real Estate Investment Corporation at March 31, 2004 and September 30, 2003, and the results of its
operations for the six months ended March 31, 2004 and September 30, 2003 in conformity with accounting principles generally
accepted in Japan.
The U.S. dollar amounts in the accompanying financial statements with respect to the six-month period ended March 31, 2004
are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our
opinion, such translation has been made on the basis described in Note 1.

Shin Nihon & Co.

Tokyo, JapanMay 18, 2004

Japan Real Estate Investment Corporation

45

About J-REIT System

J-REIT STRUCTURE AND RELATED ORGANIZATIONS
The organizational structure of the Company is shown in the diagram on the next page, but we feel it would be helpful to add afurther explanation of the role played by each of the related organizations. Understanding this relationship is the key tounderstanding the overall J-REIT system. (Numbers in the diagram correspond to the numbers below.)1) Investment Corporation: A special type of entity for the specific purpose of owning and operating real estate properties.
The investment corporation is a special type of entity, incorporated and operated under the Investment Trust Law, for the
purpose of owning and operating real estate properties using capital raised from investors. It has a board of directors andshareholders’ meeting just like an ordinary corporation under the Commercial Code of Japan, but since this structure of theinvestment corporation is simply a vehicle for owning and operating real estate properties, it is not permitted under its articles ofincorporation to engage in any other business activities.
The principal responsibility of the investment corporation is custody and management of its assets, as well as issuance ofequity securities. The corporation does not, however, control its assets directly, as all management functions must be outsourced
to a licensed asset management company.
2) Tokyo Stock Exchange & 3) Investors: Buy and sell the Company’s shares, and receive dividends.
Investors provide capital for the investment corporation and receive equity securities, just as they would receive shares of stock
issued by an ordinary corporation. Dividends are also paid to shareholders of record at the end of the fiscal period. Investors
may also buy and sell the equity securities on the Tokyo Stock Exchange just like shares of an ordinary corporation, and thesame trading regulations apply.
4) Asset Management Company: Real estate trust fund manager.
The investment corporation may not manage its assets by itself, but must outsource the investment decision and administration
work to an asset management company. The asset management company, therefore, performs a vital role for the real estate
investment corporation.
The asset management company is normally involved with the investment corporation from the time of its incorporation,
and afterwards performs the role of fund manager for the real estate properties on consignment from the investment corporation.
The asset management company must have a good grasp of the properties held by the investment corporation, and manage theassets to achieve higher earnings. As necessary, it will sell off some of the assets or acquire new ones.
In this way, the asset management company performs a series of duties in accordance with the Investment Trust Law.
5) Asset Holding Company/Administration Outsourcer
The investment corporation consigns the property holding function (physical possession of the property deeds) or trust
beneficiary certificates to trust banks or similar organizations. Administrative functions such as the transfer of share certificatesare also outsourced to trust banks or securities companies, just like for shares of ordinary corporations.
6) Property Management Companies
The primary responsibility of the property management companies is to manage the maintenance and leasing of buildings.
Building maintenance involves proper upkeep of the property to ensure long-term profitability for the investment corporation,and leasing services include monthly invoicing for rents and negotiating contract renewals.

46 Japan Real Estate Investment Corporation

ORGANIZATIONAL STRUCTURE OF JAPAN REAL ESTATE INVESTMENT CORPORATION

2) Tokyo Stock Exchange
4) Asset Management
Company
3) Investors

Shareholders’ Meeting
Japan Real Estate AssetManagement Co., Ltd.

Trade

Investors

Asset managementagreement
Cashdistribution

Trade

Stock
1) Investment Corporation
Investment

Investors

Instruction
Loans
Japan Real Estate Investment
Corporation

Interest
payments

Board
Property management
outsourcing
Rental revenue

Financial Institutions(Qualified institutional
investors)

Investment
Asset custodyoutsourcing
Administration
outsourcing
5) Asset Holding
Company6) Property Management
Companies

Real estate
management

Office Buildings

Administration
Outsourcer
The Sumitomo Trust &Banking Co., Ltd.

Japan Real Estate Investment Corporation

47

ROLE OF SHAREHOLDERS IN THE J-REIT SYSTEM
Set out below, in further detail, is the role shareholders of the investment corporation play in the J-REIT system. In particular,
we would like to present a description of certain principal rights of the shareholders of an investment corporation under theInvestment Trust Law, which is in effect as of March 31, 2004. This summary does not purport to be a comprehensive
description of all of the rights of the shareholders under Japanese law that may be relevant to an investment decision on theshares of the Company.
Voting Rights — A shareholder with one or more shares is entitled to one vote for each share. Except as otherwise provided bylaw or by the Articles of Incorporation, a resolution can be adopted at a general meeting of shareholders by a majority vote castin writing or through proxies who are also shareholders. Shareholders who do not attend and/or do not exercise their voting
rights at the general meeting of shareholders will be deemed to be in agreement with proposals submitted at the meeting.
Except in certain minor circumstances, the voting rights of shareholders apply to the following resolutions:Appointment and dismissal of executive director, supervisory directors and independent auditors; approval of the execution
or termination of the asset management agreement with an asset management company; consolidation of shares; mergers;
dissolution; amendment to the Articles of Incorporation; and any other matters so required by the Investment Trust Law, anyother law or the Articles of Incorporation.
Other Rights of Shareholders —In addition to the rights set out above, shareholders have the following rights:
Dividends upon resolution of the board of directors;
Derivative action;
Right to sue for annulment of resolutions;
Right to request bar on the executive director to prevent misconduct;
Right to void newly issued shares;
Right to sue for the nullification of merger;
Right to make submissions to shareholders’ meetings;
Right to convene a general meeting of shareholders;
Right to request the appointment of an inspector;
Right to request the removal of directors;
Right to request for the dissolution of an investment corporation; andRight to inspect books.
Consolidation or Split of Shares — An investment corporation may (i) consolidate shares upon resolution of the general meetingof shareholders, or (ii) split shares into a greater number of shares upon resolution of the board of directors.
No Redemption/Repurchase of Shares — As an investment corporation is a closed-end J-REIT, shareholders are not entitled torequest for redemption/repurchase of their shares from an investment corporation.
Issue of Additional Shares and Subscription Rights — Shareholders have no pre-emptive rights with respect to issuance ofadditional shares. Shares may be issued at the times and upon the terms approved by resolution of the board of directors.
Liquidation — In the event of liquidation, the assets remaining after payment of all debts, liquidation expenses and taxes will be
distributed among the shareholders in proportion to the numbers of shares held.

48 Japan Real Estate Investment Corporation

Profile of J-Rea (Asset Management Company)

ORGANIZATION
Shareholders’ Meeting
Auditors
Board of Directors

CEO & President

Compliance Department

Risk Management Department

DUTIES PERFORMED FOR JAPAN REALESTATE INVESTMENT CORPORATION*Duties related to compliance
DUTIES PERFORMED FOR J-Rea*Duties related to compliance

DUTIES PERFORMED FOR JAPAN REALESTATE INVESTMENT CORPORATION*Duties related to risk management
DUTIES PERFORMED FOR J-Rea*Duties related to risk management

Planning Department

Finance and Accounting Department

Real Estate Investment Department

Leasing Management Department

DUTIES PERFORMED FOR JAPAN REALESTATE INVESTMENT CORPORATION* Investor relations and disclosure
DUTIES PERFORMED FOR J-Rea* Planning and drafting ofmanagement strategies* General, labor and accounting
administration* In-house legal affairs* Negotiation with government
agencies and related groups* Research and analysis of realestate market

DUTIES PERFORMED FOR JAPAN REALESTATE INVESTMENT CORPORATION* Formulation of financing strategy* Equity financing* Debt financing* Cash management* Accounting and taxation

DUTIES PERFORMED FOR JAPAN REALESTATE INVESTMENT CORPORATION* Acquisition and disposal of realestate assets

DUTIES PERFORMED FOR JAPAN REALESTATE INVESTMENT CORPORATION
Leasing and management of realestate assets(Note)(Note)

Note: On April 1, 2004, the Real Estate Investment Department was divided into the Real Estate Investment
Department and the Leasing Management Department.

PRINCIPAL SHAREHOLDERS
Shareholder

Address

Mitsubishi Estate Co., Ltd.

6-1, Otemachi 1chome, Chiyoda-ku, Tokyo

Numbers of Shares

102,855

Percentage

36%

The Tokio Marine and Fire Insurance Co., Ltd.

2-1, Marunouchi 1chome, Chiyoda-ku, Tokyo

77,142

27%

The Dai-ichi Mutual Life Insurance Company

13-1, Yurakucho 1chome, Chiyoda-ku, Tokyo

77,14227%

Mitsui & Co., Ltd.

2-1, Otemachi 1chome, Chiyoda-ku, Tokyo

28,571

10%

Total

285,710

100%

Japan Real Estate Investment Corporation

49

Corporate Data
As of March 31, 2004

Transfer Agent

Executives
Executive Director:

Yoneichiro Baba

Supervisory Directors: Tsunaya Kawamura

The Sumitomo Trust & Banking Co., Ltd.
5-33, Kitahama 4chome, Chuo-ku, Osaka 540-8639, Japan

Kenji Kusakabe
Auditors
Paid-in Capital

Shin Nihon & Co.

¥133,448,380,000

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

Number of Shares Issued
260,400

Incorporation
May 11, 2001

Number of Shareholders
16,794

Executive Office
Japan Real Estate Investment Corporation

Stock Listing

3-1, Marunouchi 3chome, Chiyoda-ku, Tokyo 100-0005, JapanTokyo Stock Exchange
For further information, please contact :Securities CodeJapan Real Estate Asset Management Co., Ltd.

8952

Planning Department, Manager
Toshiya Kobayashi
Tel: 81-3-3211-7921
Fax: 81-3-3212-8886
E-mail: toshiya-kobayashi@j-rea.co.jp

50 Japan Real Estate Investment Corporation

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

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

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