Japan Real Estate Investment Corporation

M A RC H
2010

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

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

Contents
Financial Highlights

p. 1

Top 10 Unitholdersp. 1

Unit Price Performancep. 1

The Highlights of Japan Real Estate
Investment Corporation

p. 2

Portfolio Highlights

p. 3

Asset Management Summaryp. 4

Subsequent Events

p. 5

History after IPO

p. 6

To Our Unitholders

p. 8

The Portfolio of Japan Real Estate
Investment Corporation

p.12

Overview of Portfolio Properties

p.15

Financial Section

p.23

Corporate Datap.41

Financial Highlights
Thousands of U.S.dollars(Note 1)Millions of yen
For the period from
October 1, 2009 to
March 31, 2010

Operating Revenues
Operating Income
Income before Income Taxes
Net Income

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

For the period from
October 1, 2008 to
March 31, 2009

For the period from
April 1, 2008 to
September 30, 2008

For the period from
October 1, 2007 to
March 31, 2008

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

21,665
10,5388,876
8,875

21,524
10,054
8,505
8,504

20,716
9,955
8,426
8,425

19,805
9,807
8,449
8,448

25,743
14,21812,946
12,945

232,866
113,266
95,403
95,396Net Operating Income (NOI) (Note 2)
Funds from Operations (FFO) (Note 3)
FFO Multiple (Note 4)

14,414
11,91416.3 times

13,95011,57714.1 times

14,575
12,21313.7 times

14,173
12,00915.5 times

12,1978,078
31.9 times

154,927
128,057
16.3 times

Cash Distribution
Number of Units
Dividend per Unit (Yen/U.S.dollars)

8,826
489,200
18,0438,504
443,000
19,1988,425
443,000
19,0208,448
443,000
19,072

12,945443,000
29,223

94,869489,200
193.93

Notes: 1. Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥93.04 = US$1.00, the foreign exchange rate on
March 31, 2010, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen amounts have been or could bereadily converted, realized or settled into U.S. dollars at that rate or any other rate.
2. NOI = Property-Related Revenues – Property-Related Expenses (excluding Depreciation)
3. FFO = Net Income + Depreciation – Gain (Loss) on Transfer of Properties – Dividends Earned – Gain on Transfer of Development Rights of Floor Area
– Compensation for the Property Transfer
4. FFO Multiple = Unit Price at End of the Respective Term ÷ FFO per Unit (Annualized)(Annualized portion of the calculation given in note 4 assumes a fiscal period of 183 days for the period ended March 31, 2008, 183 days for the period
ended September 30, 2008, 182 days for the period ended March 31, 2009, 183 days for the period ended September 30, 2009 and 182 days for the period
ended March 31, 2010.)

Top 10 Unitholders
As of March 31, 2010
Company

Japan Trustee Services Bank, Ltd. (Shintaku Acc.) ..................................................................................................
Trust & Custody Services Bank, Ltd. (Toshin Acc.) ................................................................................................
NCT Trust and Banking Corporation (Toshin Acc.) ..............................................................................................
The Master Trust Bank of Japan, Ltd. (Shintaku Acc.) ...........................................................................................
The Nomura Trust and Banking Co., Ltd. (Toshin Acc.) .......................................................................................
THE BANK OF NEW YORK, TREATY JASDEC ACCOUNT ..........................................................................
Mitsubishi Estate Co., Ltd. .....................................................................................................................................
North Pacific Bank, Ltd. .........................................................................................................................................
The Chugoku Bank, Ltd. ........................................................................................................................................
AIG Edison Life Insurance Company GA NON DIMA .........................................................................................

Units% of total units
outstanding

46,316
41,63638,441
21,827
19,903
10,959
10,160
7,493
6,930
6,520

9.47%
8.51%
7.86%
4.46%
4.07%
2.24%
2.08%
1.53%
1.42%
1.33%

TOPIX

The Company

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

Mar.

2001

2002

Sept.

Mar.

2003

Sept.

Mar.

2004

Sept.

Mar.

2005

Sept.

Mar.

2006

Sept.

Mar.

2007

Sept.

Mar.

2008

Sept.

Mar.

2009

Sept.

Mar.

2010

Japan Real Estate Investment Corporation 1

The Highlights of Japan Real Estate Investment Corporation

Highlights

Stable Dividends and Steady Performance— The first listed J-REIT, showing steady performance for 17 consecutive periods— Actual dividend per unit for the 17th fiscal period:¥18,043¥16,360($193.93)*— Forecasted dividend per unit for the 18th fiscal period:($175.84)*, *** The foreign exchange rate of ¥93.04 = US$1.00, as of March 31, 2010, has been used for this translation.
** The forecasted dividend was disclosed with the announcement of the 17th fiscal period earnings results on May 17, 2010.

Acquisitions— Acquisition of additional quasi-co-ownership of trust beneficiary rights to

Shiodome Building for ¥54,600 million ($587 million) in January 2010
— Acquisition of additional share of the co-ownership of compartmentalized building units ofTokyo Opera City Building for ¥22,426 million ($241 million) in March 2010

Collaboration with Sponsors— Expertise of Mitsubishi Estate Co., Ltd., The Dai-ichi Life

Insurance Company, Limited and Mitsui & Co., Ltd. is being fully utilized

Steady Growth with Quality Portfolio— Total acquisition price:— Maintains

55¥641,245million($6,892 million)

high-quality office buildings

Sound Financial Base— Highest credit ratings for a J-REIT:(as of March 31, 2010)

AA-

from S&P,

A1

from Moody’s,AAfrom R&I

41.2%***— Long-term, fixed-interest debt ratio: 85.1%— LTV(Interest-bearing debt / Total assets):***Long-term, fixed-interest loans + Investment corporation bonds (including current portions of Long-term, fixed-interest loans andInvestment corporation bonds) / Total Interest-bearing debt

2 Japan Real Estate Investment Corporation

Portfolio Highlights

Trends in the state of portfolio management
Number ofbuildings(Note 1)

Total numberof tenants(Notes 1, 2)

Total leasable
space(Note 1)

Occupancy
rate(Note 1)

September 2001

20

213

133,927m 2

94.6%

March 2002

24

353

201,884m 2

94.0%

September 2002

27

362

215,928m 2

95.3%

March 2003

30

383

236,693m 2

94.4%

September 2003

32

407

246,062m 2

95.1%

March 2004

36

477

273,157m 2

94.8%

September 2004

39

504

293,105m

2

93.6%

March 2005

46

669

336,026m 2

97.6%

September 2005

50

814

364,610m 2

98.6%

March 2006

52

866

400,090m 2

98.7%

September 2006

49

835

396,173m

2

98.2%

March 2007

50

887

397,928m 2

97.8%

September 2007

50

879

406,605m 2

98.7%

March 2008

53

931

479,877m 2

95.9%

September 2008

54

970

508,296m

2

96.1%

March 2009

55

993

516,411m 2

95.5%

September 2009

55

977

516,421m 2

93.3%

October 2009

55

974

516,421m 2

92.6%

November 2009

55

966

516,422m 2

91.7%

December 2009

55

966

516,460m

2

91.8%

January 2010

55

964

540,565m 2

92.0%

February 2010

55

967

540,565m 2

91.9%

March 2010

55

979

566,277m 2

93.0%

Notes: 1. The number of buildings, total number of tenants, total leasable
space and occupancy rate do not include the land and building
adjacent to the Ryoshin Ginza East Mirror Building.
2. The total number of tenants is the gross number of tenants
by building.

Total leasable space (m 2)200,000

100,000

300,000

400,000

500,000

600,000

700,000

Total leasable
space
Occupancy rate

17th period

60.0

65.0

70.0

75.0

80.0

85.0

90.0

95.0

100.0

Occupancy rate (%)

Portfolio breakdown
As of March 31, 2010

Properties bygeographic
region(Percentage based on
acquisition price)

Tenants byindustry
type

Other major
cities15.9%(Percentage basedon leased space)

Steel and metals 1.1%
Transport services and travel 1.3%
Ceramics 1.4%
Staffing agencies 1.9%

Others
12.5%

Textiles 2.5%

Serviceindustries
15.7%
Financeandinsurance
10.7%

Machinery 3.9%

Tokyo metropolitan area
excluding 23 wards
8.3%

Communications 4.8%

Information
services
9.5%

Tokyo 23 wards
75.8%
Real estate 6.1%

Construction 6.1%

Pharmaceuticals 6.9%

Retail andrestaurants
8.5%

Electric devices 7.0%

Japan Real Estate Investment Corporation 3

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

Acquisition of Prime Properties

Floors:Completion:
Property managementcompany:

it a Lo

D ai m on

Ha m am a ts u chne

Da im onO ed o Li

a Li ne

Structure:

Shiodome Building

To ei As ak us

Ownership:

To e iM

Floor area of building:January 15, 2010
¥54,600 million ($587 million)
1-2-20, Kaigan, Minato-ku, Tokyo
Approx. 12,046m2 (129,662ft2)(total land area of the building site) (Note 1)
115,930.83m2 (1,247,868ft2)(total floor area of the entire building)
30.0% quasi-co-ownership of the trust
beneficiary right of this property (Note 2)
Steel-framed, steel-framed reinforced
concrete, flat roof
Above ground: 24 floors
Below ground: 2 floors
December 2007

SheiibM
jijak
inoe
gunm aeAcquisition date:
Acquisition price:
Location:
Site area:Onarin e i m o n

Shiodome Building (Additional Acquisition)

KyuShibarikyu
Onshi
Teien

Mitsubishi Jisho Property Management Co., Ltd.

Notes: 1. As the property lies within an area designated for execution of the Shiodome Land Readjustment Project under the Tokyo Metropolitan Urban Land Development
Business Plan, the land area for the building site presented above is the total of the land area of the designated provisional replotting.
2. The Company initially acquired 10.0% of the quasi-co-ownership of the trust beneficiary rights to the property on December 19, 2008. Through the additional
acquisition described above, the Company currently owns 40.0% of the trust beneficiary rights to the property.

Tokyo Opera City Building (Additional Acquisition)
Acquisition date:
Acquisition price:
Location:
Site area:
Floor area of building:Tokyo Opera City
Building

l
na
tio
Na
w re
Ne heatT

Ownership:

March 24, 2010
¥22,426 million ($241 million)
3-20-2, Nishi-Shinjuku,
Shinjuku-ku, Tokyo
18,236.94m2 (196,301ft2)(total land area of the building site)
232,996.81m2 (2,507,954ft2)(total floor area of the entire building)
Land: Ownership
Building:
Compartmentalized building units(ownership percentage for building:22.957%) (Note )

H

Ke
at

su

da

Ke

io

Li

i

e
oN

w

Li

ne

ne

i

*Includes the rights to unused space in the adjacent New National Theatre, Tokyo.

Structure:
Floors:Completion:
Property managementcompany:

Steel-framed, steel-framed reinforced concrete, reinforced concrete,flat roof, galvanized sheet steel roof
Above ground: 54 floors Below ground: 4 floors
July 1996
Tokyo Operacity Property Management Co., Ltd.

Note : The Company initially acquired a portion of the property (ownership share: 8.368%) on September 13, 2005. Through the additional acquisition described above,
the Company currently holds a 31.325% ownership.

To the greatest extent possible the Company avoids excessive market competition in property acquisition. To this end, theCompany is diversifying its schemes for property acquisition. The two additional acquisitions described above are in line withthis diversification approach.

Benefit of Additional Acquisition 1

Benefit of Additional Acquisition 2

When a co-owner or compartmentalized owner is selling his
or her co-ownership or compartmentalized ownership, otherco-owners or compartmentalized owners of the property arelikely to purchase through negotiation such co-ownership orcompartmentalized ownership on preferential terms. Thismeans that the other co-owners or compartmentalized owners
who intend to acquire additional share of the property enjoy
increased buying opportunities.

Because the acquirer, as an existing co-owner orcompartmentalized owner, is knowledgeable about theoverview and history of as well as other information regarding
the property, the acquirer is able to reduce risks relating to theproperty. In addition, an increase in share of ownership canlead to more efficient building management and improved
asset value.

4 Japan Real Estate Investment Corporation

Transfer of Asset (Part of Jingumae Media Square Building Site)
In response to land expropriation aimed at expanding Meiji-Dori Street and for other purposes following project approvals granted
on March 31, 2004, the Company transferred its share of the Jingumae Media Square Building site to the Tokyo Metropolitan
Government on October 30, 2009.
Outline of the transfer

um

ae

iji

Tokyo City
Planning
Road Line

ma

ing

gu

Site Map

ijij

jin

Me

Site (excluding
servient land)e

Ch iyo da Lin e

Li n

e

Transfer area:
Transfer price:Transfer date:

Land (part of Jingumae Media Square Building site)
6-25-53, 54 and 55, Jingumae, Shibuya-ku, Tokyo;
6-319-5, 28 and 30, Jingumae, Shibuya-ku, Tokyo
137.01m2 (1,475ft2)¥1,507 million ($16 million)
October 30, 2009

Me

Object of transaction:
Location:eij
MTransferred land
(137.01m 2 )A gain on the transfer, totaling ¥885 million ($10 million),
was recorded in the period ended March 31, 2010.

i-d

or

Fu

iS

ku

t.

tos

hin

Building

Jingumae Media Square
Building

Issue of New Investment Units
Issue of new investment units through public offering

Issue of new investment units through third-party allocation

Number of units issued:
Offer price:

Number of units issued:
Issue price:

42,000¥597,520 per unit($6,422 per unit)
Aggregate amount of issue price:¥24,319,680,000($261,389,510)
Offer price determination date:
December 1, 2009
Payment date:
December 8, 2009
Starting date for dividend calculation: October 1, 2009

Aggregate amount of issue price:
Payment date:
Allottee:

4,200¥579,040 per unit($6,224 per unit)¥2,431,968,000($26,138,951)
December 22, 2009
Nikko Cordial Securities Inc.

Of the funds procured through the new unit issuances described above, ¥20,000 million ($215 million) was used to acquire an additional
share of the Shiodome Building. Using the remainder and cash on hand, the Company made early repayments of short-term loans in theamounts of ¥5,000 million ($54 million) and ¥6,000 million ($64 million) on December 24, 2009 and January 4, 2010, respectively.

Subsequent Events
After the period ended March 31, 2010

Issue of Investment Corporation Bond
Issue of the Seventh Investment Corporation Bond
Total amount:
Issue date:
Final redemption date:
Yield:
Collateral:
Financial covenant:¥10,000 million ($107 million)
April 23, 2010
April 23, 2015
1.26% per annum
No secured mortgage/guarantee
None

Completion of Construction to Extend the Ryoshin Ginza East Mirror Building
Construction was completed on May 24, 2010, and the extension was handed over to the Company on the same date.

Japan Real Estate Investment Corporation 5

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

Occupancy rate
(Note)

94.6%

94.0%

95.3%

95.1%

94.4%

97.6%

94.8%

93.6%

Steady growth inasset size

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

Total acquisition price¥290,510(Number of properties)(Note)¥144,697¥92,845

million(24)¥164,277
million(27)¥183,542 ¥192,607
million(32)

million(30)¥218,437 ¥239,827
million(39)

million(36)

million(46)

million(20)

Dividend per unit

At IPO

Period ended

Period ended Period ended

Period ended

Period ended

Period ended

Period ended

Sept. 2001

Mar. 2002

Sept. 2002

Mar. 2003

Sept. 2003

Mar. 2004

Sept. 2004

Mar. 2005¥14,983¥12,853¥14,455¥15,117¥14,602¥14,711¥15,824

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

Bond issues

Listing and issuanceof units

Sept. 2001
Listed on TSE
as first J-REIT

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

Apr. 2003
Second/Third Investment
Corporation Bond Issue

Oct. 2003
Second Follow-On

Sept. 2001
IPO
Note: Total acquisition price, number of properties and occupancy rate do not include the land and building adjacent to the Ryoshin Ginza East Mirror Building.
Also, the acquisition price for a part of the Jingumae Media Square Building site, which was sold at ¥1,507 million on October 30, 2009, is included in the above graph.

6 Japan Real Estate Investment Corporation

already held. The size of the Company’s assets (total acquisition price) has grown from ¥92.8 billion at
IPO to ¥641.2 billion as of the 17th fiscal period end due to the steady achievement of external
growth strategies. However, in terms of internal growth strategies, ongoing efforts are being made insuch areas as maintaining stable occupancy rates and reducing building management costs.

95.9%
98.6%

98.7%

98.2%

97.8%

96.1%

95.5%

98.7%

93.3%

Built a portfolio that is worth
over ¥640 billion¥641,245
million(55)

Keep stable
occupancy rate
¥518,969¥412,766 ¥418,693

93.0%¥441,276 ¥446,940
millionmillion(53)¥564,219¥542,969 ¥564,219
millionmillionmillion
(54)

(55)

(55)

million(50)(50)

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Sept. 2006

Mar. 2007

Sept. 2007

Mar. 2008

Sept. 2008

Mar. 2009

Sept. 2009

Period ended
Mar. 2010¥17,302¥17,521¥18,500¥29,223¥19,072¥19,020¥19,198¥18,043

million(52)

million(49)

Period ended

Period ended

Sept. 2005

Mar. 2006¥15,951¥16,172¥326,560
million(50)

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

Apr. 2005
Third Follow-On

Oct. 2006
Fourth Follow-On

June 2007
Fifth/Sixth Investment
Corporation Bond Issue

Mar. 2008
Fifth Follow-On

Dec. 2009
Sixth Follow-On

Japan Real Estate Investment Corporation 7

To Our Unitholders

On April 1, 2010, the baton was passed to me, and I began to orchestrate the important businessaffairs of Japan Real Estate Asset Management Co., Ltd.—which performs the asset
management operations of Japan Real Estate Investment Corporation ( the Company ).
The Company is committed to pursuing quality-focused, steady investment management
operations and will continue to pursue further business growth. As the new CEO & President ofJapan Real Estate Asset Management, I would like to thank all unitholders of the Company andask for their unwavering understanding and continued support.

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

8 Japan Real Estate Investment Corporation

BUSINESS PERFORMANCEFOR THE 17TH FISCAL PERIOD
Summary of Financial Results and Cash Dividend
In the 17th fiscal period (October 1, 2009 to March 31, 2010),
Japan Real Estate Investment Corporation (“the Company”)
recorded operating revenues totaling ¥21,665 million, up 0.7%
compared with the previous period. On the earnings front,
operating income increased 4.8% to ¥10,538 million. After
deducting expenses for interest payments on loans and othercosts, income before income taxes rose 4.4% to ¥8,876 million,
and net income also rose 4.4% to ¥8,875 million. The Company
decided to pay out a per-unit cash dividend of ¥18,043* for theperiod under review.
* During the period under review, the Company posted a gain on transfer of a partof the Jingumae Media Square Building site in connection with land expropriationby the Tokyo Metropolitan Government. In accordance with stipulations under
Article 65-2 of the Special Taxation Measures Law of Japan, a special tax exemption
relating to land expropriation and exchange was applied to this gain. The Company
decided to set aside as an internal reserve a portion of its retained earnings at theend of the 17th fiscal period, setting the maximum limit of such reserve at an amountequal to the special tax exemption (¥50 million) and determining the amount ofsuch reserve so that additional income taxes and burdens on unitholders would be
avoided. Reflecting this decision, the Company has determined to pay out cash
dividends in an amount that does not exceed the amount of retained earnings at
period-end, less the amount of the aforementioned internal reserve, which is the
maximum integral multiple of 489,200—the number of units outstanding as ofMarch 31, 2010. In accordance with these principles, the amount allocated for thepayment of cash dividends for the period under review totaled ¥8,826,635,600.

specifically, the Company acquired an additional 30% of
quasi-co-ownership of trust beneficiary rights to the highly
competitive Shiodome Building while acquiring an additional
share of the co-ownership of compartmentalized building
units (share of ownership of the building: 22.957%) of thealso competitive Tokyo Opera City Building.
In addition, in conjunction with land expropriation
after the March 31, 2004 securing of approvals for publicprojects related to the expansion of Meiji-Dori St., etc., theCompany sold a part of the Jingumae Media Square Buildingsite to the Tokyo Metropolitan Government during the period
under review. Brief details of this transaction are as follows.
Outline of Asset Transfer
Property name
Jingumae Media Square Building
Location
Shibuya-ku, Tokyo
Land
Type of specified asset(part of Jingumae Media Square Building site)
Transfer price¥1,507 million

As a result of these activities, the Company's portfolio
as of March 31, 2010 consisted of 55 office buildings with a totalacquisition price of ¥641,245 million. Total leasable space stood
at 566,277 m2 (6,095,358 ft2), with a total of 979 tenants.**** The total leasable space and the number of tenants do not include the land andbuilding that have been acquired for the purpose of extending the adjacent
Ryoshin Ginza East Mirror Building.

Operating Environment and Performance
During the period under review, the Japanese economy showedsigns of steady recovery, including a bottoming out of overall
capital investment and improvement in personal spending andemployment conditions. However, lacking an internal driving
force, the economy continued to face severe conditions,
including ongoing high unemployment.
The worst of the harsh conditions in the market forleased office space seems to be approaching an end.
Nevertheless, overall corporate sector performance remains
weak, and stagnant demand for office space has yieldedunfavorable conditions nationwide in the form of risingvacancy rates and declining rent levels.
In the property market, certain private funds andJapanese real estate investment trusts (J-REITs) started toacquire properties, indicating a turnaround in market
conditions. Nevertheless, the transaction volume continued
to trend lower.
Amid this severe environment, the Company worked
diligently to keep reinforcing the competitiveness of its
portfolio properties. Particular initiatives included theupgrading of building and facility specifications throughappropriate renovations and aggressive activities to attract
new tenants. At the same time, the Company endeavored tofurther bolster the quality of its property portfolio. MoreFinancial Activities
In order to provide funds to acquire specified assets and repay
existing loans, the Company's Board of Directors passed a
resolution regarding the issue of 42,000 new investment units
through public offering and 4,200 new investment units
through third-party allocation during the period under review.
Through these new unit issuances, the Company procured¥24,319 million on December 8, 2009 and ¥2,431 million on
December 22, 2009, respectively.
Using a portion of the funds procured through these
new unit issuances and cash on hand, the Company made early
repayments of short-term loans in the amounts of ¥5,000
million and ¥6,000 million on December 24, 2009 and January
4, 2010, respectively.
To provide funds for the repayment of other existingloans, the Company procured loans of ¥2,000 million on
December 15, 2009 and ¥20,000 million on December 21, 2009.
To fund the acquisition of the additional share of thequasi-co-ownership of trust beneficiary rights to the Shiodome
Building, the Company procured ¥31,000 million on January
15, 2010 through loans. Furthermore, to fund the acquisitionof an additional share of the co-ownership of compartmentalizedbuilding units of the Tokyo Opera City Building and therepayment of existing loans, the Company procured ¥39,500

Japan Real Estate Investment Corporation 9

By implementing initiatives with absolute confidence and professionalpassion, and with the aim of maximizing value for our unitholders,we will work to guide the Company through successes to come.

million on March 24, 2010 through loans. As a result of thesefinancing activities, as of March 31, 2010, the Company's totalinterest-bearing debt amounted to ¥262,500 million. This
amount consists of long-term loans totaling ¥178,500 million(including the current portion totaling ¥9,100 million) in
addition to short-term loans totaling ¥39,000 million andinvestment corporation bonds totaling ¥45,000 million(including the current portion totaling ¥10,000 million).
As of March 31, 2010, the Company's long-term,
fixed-interest debt ratio (ratio of long-term, fixed-interest
debt, including the current portion of long-term loans andinvestment corporation bonds, to total interest-bearing debt)
stood at 85.1%, and the LTV ratio (ratio of interest-bearing
debt to total assets) was 41.2%. As these figures indicate, theCompany has been able to maintain a sound and conservative
financial standing.
The Company's credit ratings as of March 31, 2010
were as follows.
Rating Agency

Credit Rating

Long-term: AA-; Short-term: A-1+;
Standard & Poor’s Ratings Services
Outlook: Negative
Moody’s Investors Service Inc.

Rating: A1; Outlook: Stable

Rating and Investment
Information, Inc.

Rating: AA; Outlook: Stable

OUTLOOK
Trends in the Office Leasing Market
Despite the lingering severity of employment conditions, theJapanese economy is expected to remain on a mild recovery
course, supported by emergency economic policy packages implemented by the government and other factors.
Nevertheless, there are risks that could place downward
pressure on the domestic economy, including a possible slowdownin overseas economies, persistent deflation and the potential offurther deterioration in employment conditions. Due to suchrisks, making forecasts still requires a conservative approach.
In the market for leased office space, due to the fact that
rent levels have been adjusted downward, the vacancy rate is
expected to peak out in central Tokyo. However, reflecting still
weak business sentiment in the corporate sector, for the time

10 Japan Real Estate Investment Corporation

being optimism is not warranted with regard to future rent levels.
On the other hand, in the property market, the volume ofreal estate transactions is anticipated to recover gradually, buoyedby adjustments in real estate prices. As it moves to take full advantage of the opportunities for acquiring prime properties these circumstances will present, the Company believes that both thesoundness of its financial standing and its ability to procure funds
will be more important than ever before.

Growth Strategies
In accordance with the aforementioned, the Company adheresto the following management policies in order to maintain andimprove profitability.
First, the Company works to strengthen the relationshipof trust with existing tenants and strategically raise rent levels.
As of March 31, 2010, the Company had contracts with 11
property management companies. Most of these companies
were already managing their respective buildings before theCompany acquired them and have thus built relationships oftrust with their tenants. The Company works to further
strengthen these relationships by anticipating tenants' needs
and providing tailored services to increase tenant satisfaction
and subsequently maintain occupancy rates and restrain rent
reduction requests.
Second, we endeavor to implement effective initiatives
to fill vacancies in a prompt manner. In cooperation with theproperty management companies mentioned above, theCompany actively seeks the most appropriate tenants for each
property, based on location and features, in order to fill current
and anticipated vacancies as rapidly as possible. Furthermore,
the Company works to uncover additional needs for floor spaceamong existing tenants.
Third, we constantly strive to stabilize our revenues andearnings. To this end, the Company endeavors to apply fixedand long-term leasing agreements with its large-scale tenants.
Lastly, we aim to continuously reduce management
costs. The Company has introduced sound competitive
principles for its multiple property management companies tofollow. These companies revamp their management systems
and cost structures on an ongoing basis.

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

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

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

Financing Strategies
In principle, the Company shall maintain an LTV ratio that
does not exceed 65%. To ensure an even lower interest-bearing
debt ratio, the Company adopts the conservative target level of
30% to 40%.
Concerning the financing of property acquisitions, theCompany shall use, in a flexible manner, a variety of funding
schemes—including the issue of investment corporation
bonds—while maintaining a sound and conservative financial
standing and closely monitoring trends in financial markets.
When obtaining loans, the Company shall strictly adhere to its
financial policies. More specifically, with the aim of minimizing
funding costs, the Company shall negotiate with several
qualified institutional investors (limited to those defined under
the Special Taxation Measures Law of Japan) before executing
any loan agreement.

Performance Forecasts for the 18th and 19th Fiscal Periods
For the 18th fiscal period, (April 1, 2010 to September 30,2010), the Company forecasts operating revenues totaling¥22,100 million, operating income totaling ¥9,850 million,
income before income taxes totaling ¥8,000 million and net
income totaling ¥8,000 million. The Company plans to declarea cash dividend totaling ¥16,360 per unit.
For the 19th fiscal period (October 1, 2010 to March
31, 2011), the Company forecasts operating revenues totaling¥22,020 million, operating income totaling ¥9,960 million,
income before income taxes totaling ¥8,050 million and net
income totaling ¥8,050 million. The Company plans to declarea cash dividend totaling ¥16,460 per unit.
As discussed above, the Japanese economy has returned
to a mild recovery course. Still, it is highly possible for thepace to economic recovery to slow even further. With due
consideration given to such a possibility, we believe that wemust take a careful, somewhat defensive approach inforecasting the future environment surrounding the J-REIT
market. Even under these conditions, the Company willcontinue to take actions consistent with being a J-REIT leader
boasting unparalleled investment management capabilities
and superior financial soundness. Implementing the said
initiatives with absolute confidence and professional passion,
and with the aim of maximizing value for our unitholders, wewill work to guide the Company through successes to come.
And, ultimately, we will do our utmost to always remain awinner in the J-REIT market.
As a going concern bearing significant responsibility to
manage your invaluable investment, we appreciate you for yoursteadfast trust in us and ask for your resolute support.

Taketo Yamazaki
Executive Director of Japan Real Estate Investment Corporation

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

Japan Real Estate Investment Corporation 11

The Portfolio of Japan Real Estate Investment Corporation As of March 31, 2010
Properties Roster
Location

Type ofspecified asset

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

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

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

●
●
●
●
●
●
●
●

I- 9
I- 10
I- 11
I- 12
I- 13
I- 14
I- 15
I- 16

Yurakucho Denki Building
Kodenmacho Shin-Nihonbashi Building
Burex Kyobashi Building
Ginza Sanwa Building
Ryoshin Ginza East Mirror Building
Harumi Center Building
Aoyama Crystal Building
Shiodome Building

Yurakucho, Chiyoda-ku
Nihonbashi-Kodenmacho, Chuo-ku
Kyobashi, Chuo-ku
Ginza, Chuo-ku
Ginza, Chuo-ku
Harumi, Chuo-ku
Kita-Aoyama, Minato-ku
Kaigan, Minato-ku

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

●
●
●
●

I- 17
I- 18
I- 19
I- 20

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

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

Trust
Trust
Real property
Real property

●
●
●
●
●
●
●
●
●

I- 21
I- 22
I- 23
I- 24
I- 25
I- 26
I- 27
I- 28
I- 29

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

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

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

Harmony Tower
Otsuka Higashi-Ikebukuro Building
Ikebukuro 2Chome Building
Ikebukuro YS Building
Tokyo metropolitan area, excluding 23 wards● II- 1
Hachioji First Square

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

Real property
Trust
Trust
Real property

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

5,000
81,555
9,520
4,810
14,70044,7007,000
10,20010,70020,900
7,200
3,173
5,250
16,8305,353
26,8007,680
21,25054,60075,850
4,859
2,808
7,830
9,350
22,426
31,776
2,738
5,500
5,123
6,670
8,700
4,885
12,20034,600
3,740
360
4,100
8,500
3,541
1,728
4,500

Hachioji, Tokyo

Real property

II- 2

Saitama, Saitama Prefecture

Real property

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

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

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

7,100
1,000
2,924
250
3,174
2,880
1,700
4,580
3,850
1,300
5,150
1,680
14,5331,865
2,650
24,000
2,264
1,900
4,164
6,934
7,380
14,314
4,650
1,320
1,450
2,770
1,550
5,000
3,657
641,245

Number●●●●●Name of building

I- 30
I- 31
I- 32
I- 33

Saitama Urawa Building

II- 3
II- 4
II- 5

MM Park Building
Kawasaki Isago Building
Musashi Kosugi STM Building
Other major cities● III- 1
8.3 Square Kita Building● III- 2
Jozenji Park Building● III- 3
Sendai Honcho Honma Building

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

Real property
Trust
Real property

Sapporo, Hokkaido
Sendai, Miyagi Prefecture
Sendai, Miyagi Prefecture

Real property
Real property
Trust

●

III- 4

Kanazawa Park Building

Kanazawa, Ishikawa Prefecture

Real property●

III- 5

Nishiki Park Building

Nagoya, Aichi Prefecture

Real property

●
●
●
●
●
●

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

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

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

Real property
Real property
Real property
Real property
Trust
Real property●

III- 12

Midosuji Daiwa Building

Osaka, Osaka Prefecture

Trust

●
●

III- 13
III- 14

Lit City Building
NHK Hiroshima Broadcasting Center Building

Okayama, Okayama Prefecture
Hiroshima, Hiroshima Prefecture

Real property
Real property●●●

III- 15
III- 16
III- 17

Tosei Tenjin Building
Tenjin Crystal Building
Hinode Tenjin Building
Total

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

Real property
Real property
Trust

●
●
●

Acquisition price(¥ mil)Note : The land and building adjacent to the Ryoshin Ginza East Mirror Building (acquisition price: ¥1,800 million) are not included in the above list.
Also, the acquisition price for a part of the Jingumae Media Square Building site, which was sold at ¥1,507 million on October 30, 2009, is included in the above list.

12 Japan Real Estate Investment Corporation(0.8%)(12.7%)(1.5%)(0.8%)(2.3%)(7.0%)(1.1%)(3.3%)(1.1%)(0.5%)(0.8%)(2.6%)(0.8%)(4.2%)(1.2%)(11.8%)(0.8%)(0.4%)(1.2%)(5.0%)(0.4%)(0.9%)(0.8%)(1.0%)(1.4%)(0.8%)(1.9%)(5.4%)(0.6%)(1.3%)(0.6%)(0.3%)(0.7%)(0.9%)(0.4%)(5.8%)(0.5%)(0.6%)(1.1%)(0.2%)(0.5%)(0.7%)(0.8%)(0.3%)(2.3%)(0.3%)(0.4%)(3.7%)(0.6%)(2.2%)(0.7%)(0.4%)(0.2%)(0.8%)(0.6%)(100.0%)Percentage ofownership of thebuilding

Completion

Appraisal value atthe end of
period (¥ mil)

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

1985
2006
1998
1993
2004
2003
2005
1966

6,050
71,9009,320
5,480
16,20046,5006,570
28,4004,791m2
25,678m2
6,269m2
3,687m2
9,316m2
11,922m2
4,495m2
20,865m2(51,577ft2)(276,402ft2)(67,480ft2)(39,695ft2)(100,282ft2)(128,332ft2)(48,384ft2)(224,594ft2)

4,791m2
25,678m2
5,735m2
3,354m2
9,316m2
11,922m2
4,495m2
20,544m2

10.78%
100.0%
100.0%
70.95%
100.0%
100.0%
100.0%
40.0%

1975
1991
2002
1982
1998
2006
1982
2007

7,910
3,730
6,500
15,3004,410
21,4008,340
79,6004,694m2
3,897m2
4,279m2
4,329m2
2,875m2
20,812m2
4,898m2
32,151m2(50,531ft2)(41,950ft2)(46,068ft2)(46,604ft2)(30,949ft2)(224,022ft2)(52,724ft2)(346,080ft2)

100.0%
100.0%
100.0%
31.325%

1984
1992
1989
1996

6,310
3,090
7,460
33,5009,631m2
4,062m2
6,197m2
35,035m2

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

1991
2004
1989
1974
2003
1987
1998
1976
1994

2,150
6,030
5,410
7,550
10,8006,370
11,90041,6003,330

29.253305%
100.0%
100.0%
100.0%

1997
1987
1990
1989

80.4%

Occupancy
rate

Numberof tenants(51,577ft2)(276,402ft2)(61,734ft2)(36,109ft2)(100,282ft2)(128,332ft2)(48,384ft2)(221,142ft2)

100.0%
100.0%
91.5%
91.0%
100.0%
100.0%
100.0%
98.5%

1
5
6
5
1
10
1
44

223
1,811
272
224
485
981
162
1,048

(1.1%)(8.7%)(1.3%)(1.1%)(2.3%)(4.7%)(0.8%)(5.0%)

4,095m2
3,897m2
4,279m2
4,329m2
2,875m2
20,425m2
4,511m2
32,048m2(44,081ft2)(41,950ft2)(46,068ft2)(46,604ft2)(30,949ft2)(219,858ft2)(48,556ft2)(344,971ft2)

87.2%
100.0%
100.0%
100.0%
100.0%
98.1%
92.1%
99.7%

13
10
1
11
8
7
6
29

287
158
150
387
139
754
252
1,333

(1.4%)(0.8%)(0.7%)(1.9%)(0.7%)(3.6%)(1.2%)(6.4%)(103,671ft2)(43,726ft2)(66,708ft2)(377,122ft2)

8,773m2
2,866m2
6,197m2
32,884m2(94,440ft2)(30,858ft2)(66,708ft2)(353,970ft2)

91.1%
70.6%
100.0%
93.9%

16
7
10
96

316
108
275
533

(1.5%)(0.5%)(1.3%)(2.6%)

4,067m2
5,205m2
7,708m2
7,356m2
7,745m2
3,147m2
5,558m2
29,789m2
2,462m2(43,783ft2)(56,035ft2)(82,972ft2)(79,180ft2)(83,373ft2)(33,876ft2)(59,832ft2)(320,652ft2)(26,511ft2)

0m2
5,205m2
7,519m2
7,356m2
7,745m2
3,147m2
5,075m2
28,756m2
605m2(0ft2)(56,035ft2)(80,934ft2)(79,180ft2)(83,373ft2)(33,876ft2)(54,634ft2)(309,528ft2)(6,517ft2)

0.0%
100.0%
97.5%
100.0%
100.0%
100.0%
91.3%
96.5%
24.6%

0
4
18
21
7
5
7
59
1

24
217
260
296
354
203
347
1,456
118

(0.1%)(1.0%)(1.3%)(1.4%)(1.7%)(1.0%)(1.7%)(7.0%)(0.6%)

10,700
3,820
1,600
4,480

10,929m2
7,183m2
2,186m2
5,797m2(117,646ft2)(77,319ft2)(23,532ft2)(62,401ft2)

10,651m2
7,183m2
2,186m2
5,797m2(114,647ft2)(77,319ft2)(23,532ft2)(62,401ft2)

97.5%
100.0%
100.0%
100.0%

15
6
9
8

358
192
72
193

(1.7%)(0.9%)(0.3%)(0.9%)

1996

4,730

10,068m2(108,378ft2)

9,473m2(101,968ft2)

94.1%

38

253

(1.2%)

100.0%

1990

2,080

4,510m2(48,550ft2)

4,421m2(47,588ft2)

98.0%

14

111

(0.5%)

100.0%
100.0%
34.32%

2007
1990
1990

36,2002,950
3,590

38,496m2
6,831m2
5,394m2(414,374ft2)(73,537ft2)(58,071ft2)

36,525m2
6,831m2
5,338m2(393,157ft2)(73,537ft2)(57,459ft2)

94.9%
100.0%
98.9%

26
12
22

1,369
159
160

(6.6%)(0.8%)(0.8%)

100.0%
50.0%
100.0%

2006
1993
1991

6,630
979
2,920

12,265m2
2,518m2
6,241m2(132,030ft2)(27,106ft2)(67,185ft2)

12,265m2
2,518m2
5,474m2(132,030ft2)(27,106ft2)(58,928ft2)

100.0%
100.0%
87.7%

8
18
18

329
70
141

(1.6%)(0.3%)(0.7%)

89.0%

1991

5,410

20,918m2(225,161ft2)

17,027m2(183,284ft2)

81.4%

69

456

(2.2%)

57.04651%

1995

4,240

8,059m2(86,747ft2)

7,847m2(84,470ft2)

97.4%

51

272

(1.3%)

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

1987
1987
1991
1982
1995
1992

1,510
14,0001,210
1,860
18,2004,120

3,911m2
21,624m2
3,470m2
6,802m2
28,414m2
11,574m2(42,103ft2)(232,763ft2)(37,354ft2)(73,220ft2)(305,852ft2)(124,587ft2)

3,274m2
20,245m2
2,840m2
4,622m2
21,965m2
10,613m2(35,246ft2)(217,923ft2)(30,575ft2)(49,754ft2)(236,430ft2)(114,238ft2)

83.7%
93.6%
81.9%
68.0%
77.3%
91.7%

12
26
9
25
40
16

98
696
65
105
679
256

(0.5%)(3.4%)(0.3%)(0.5%)(3.3%)(1.2%)

100.0%

1991

15,20020,450m2(220,127ft2)

18,265m2(196,607ft2)

89.3%

29

606

(2.9%)

27.7488%
48.753%

2005
1994

4,810
3,020

9,965m2
9,860m2(107,269ft2)(106,134ft2)

8,716m2
9,628m2(93,823ft2)(103,642ft2)

87.5%
97.7%

35
11

254
266

(1.2%)(1.3%)

100.0%
100.0%
74.4844%

1992
1993
1987

1,320
2,830
3,720
645,239

3,924m2(42,243ft2)
4,746m2(51,095ft2)
5,776m2(62,182ft2)
526,597m2 (5,668,238ft2)

98.1%
78.9%
98.7%
93.0%

19
26
8
979

90
134
180
20,758(0.4%)(0.6%)(0.9%)(100.0%)

Leasable space

4,000m2(43,057ft2)
6,014m2(64,743ft2)
5,852m2(62,995ft2)
566,277m2 (6,095,358ft2)

Leased space

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

Major Tenants Roster
Rank

Name of tenant

Name of building

1
2
3
4
5
6
7
8
9
10

Banyu Pharmaceutical Co., Ltd.
NTT Communications Corporation
Mitsubishi UFJ Trust and Banking Corporation
Seven & i Holdings Co., Ltd.
Space Design, Inc.
FAST RETAILING CO., LTD. (Note 1)
JSOL Corporation(Note 2)
TOTO LTD.
Sanofi-aventis K.K.

Leased space

Kitanomaru Square (also includes 1 other building)
17,014m2 (183,144ft2)
Shiodome Building
11,813m2 (127,157ft2)
Mitsubishi UFJ Trust and Banking Building
10,665m2 (114,802ft2)
Nibancho Garden
9,316m2 (100,282ft2)
Burex Kojimachi Building (also includes 1 other building)
8,774m2 (94,453ft2)
Kitanomaru Square
8,476m2 (91,245ft2)
Harumi Center Building
7,634m2 (82,178ft2)
MM Park Building (also includes 1 other building)
7,027m2 (75,643ft2)
Midosuji Daiwa Building (also includes 1 other building)
6,906m2 (74,341ft2)
Tokyo Opera City Building (also includes 2 other buildings) 6,243m2 (67,201ft2)% of totalleased space

3.2%
2.2%
2.0%
1.8%
1.7%
1.6%
1.4%
1.3%
1.3%
1.2%

Notes: 1. The lease agreement with FAST RETAILING CO., LTD. was terminated as of March 31, 2010.
2. Not disclosed as per tenant request

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

III-1 to III-17: Other major cities

III-1

II-2
II-1
III-2

III-3

II-5
II-3

III-4

II-4

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

I-1 to I-33: Tokyo
23 wards

I-32
I-33 I-31
I-30

I-2

I-1

I-3
I-5
I-19
I-4
I-24
I-10
I-7
I-20
I-6
I-11
I-25 I-26
I-8
I-12
I-9
I-27
I-13
I-28
I-15
I-17 I-16 I-14
I-29
I-18
I-21
I-22

I-23

Tokyo Station

14 Japan Real Estate Investment Corporation

Over view of Portfolio Properties As of March 31, 2010
Note: Concerning real estate or trust beneficiary rights in trust of real estate of which the Company is a partial owner through co-ownership or compartmentalized building units or
quasi-co-ownership, the figures for “Site area” and “Floor area of building” represent total site area and total floor space for the entire building.

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

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

Genki Medical Plaza

Kitanomaru Square

● I-1

● I-2

Chiyoda-ku, Tokyo
1,052.80m2 (11,332ft2)
6,722.02m2 (72,355ft2)
Above ground: 8 floors
Below ground: 1 floor
September 1985

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

MD Kanda Building

Kandabashi Park
Building

● I-3

● I-4

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

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

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

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

Chiyoda-ku, Tokyo
5,821.03m2 (62,657ft2)
57,279.20m2 (616,548ft2)
Above ground: 26 floors
Below ground: 2 floors
January 2006

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

Nibancho Garden

Mitsubishi UFJ Trust andBanking Building

● I-5

● I-6

Chiyoda-ku, Tokyo
11,003.87m2 (118,445ft2)
57,031.06m2 (613,877ft2)
Above ground: 14 floors
Below ground: 2 floors
April 2004

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

Chiyoda-ku, Tokyo
8,100.39m2 (87,192ft2)
108,171.67m2 (1,164,349ft2)
Above ground: 29 floors
Below ground: 4 floors
February 2003

Burex Kojimachi
Building

Sanno Grand Building

● I-7

● I-8

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

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

Chiyoda-ku, Tokyo
3,663.93m2 (39,438ft2)
33,875.95m2 (364,637ft2)
Above ground: 10 floors
Below ground: 3 floors
September 1966

Japan Real Estate Investment Corporation 15

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

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

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

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

Yurakucho Denki
Building

Kodenmacho Shin-Nihonbashi
Building● I-9● I-10Chiyoda-ku, Tokyo
5,749.91m2 (61,891ft2)
70,287.65m2 (756,569ft2)
Above ground: 20 floors
Below ground: 4 floors
September 1975

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

Chuo-ku, Tokyo
773.28m2 (8,324ft2)
5,822.88m2 (62,677ft2)
Above ground: 9 floors
Below ground: 1 floor
November 1991

Burex Kyobashi
Building

Ginza Sanwa Building● I-11● I-12Chuo-ku, Tokyo
756.03m2 (8,138ft2)
5,470.54m2 (58,884ft2)
Above ground: 8 floors
Below ground: 1 floor
February 2002

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

Chuo-ku, Tokyo
1,119.27m2 (12,048ft2)
8,851.00m2 (95,271ft2)
Above ground: 9 floors
Below ground: 2 floors
October 1982

Ryoshin Ginza East
Mirror Building

Harumi Center Building● I-13● I-14Chuo-ku, Tokyo
615.25m2 (6,622ft2)
4,104.71m2 (44,183ft2)
Above ground: 8 floors
Below ground: 1 floor
October 1998

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

Chuo-ku, Tokyo
4,664.63m2 (50,210ft2)
26,447.27m2 (284,676ft2)
Above ground: 10 floors
November 2006

Aoyama Crystal
Building

Shiodome Building● I-15● I-16

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

16 Japan Real Estate Investment Corporation

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

Minato-ku, Tokyo
Approx. 12,046m2 (129,662ft2)
115,930.83m2 (1,247,868ft2)
Above ground: 24 floors
Below ground: 2 floors
December 2007

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

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

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

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

Shiba 2Chome
Daimon Building

Cosmo Kanasugibashi
Building● I-17● I-18Minato-ku, Tokyo
2,820.90m2 (30,364ft2)
16,235.10m2 (174,753ft2)
Above ground: 8 floors
Below ground: 2 floors
March 1984

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

Minato-ku, Tokyo
758.54m2 (8,165ft2)
5,420.93m2 (58,350ft2)
Above ground: 9 floors
Below ground: 1 floor
March 1992

Shinwa Building

Tokyo Opera City
Building● I-19● I-20Shinjuku-ku, Tokyo
822.00m2 (8,848ft2)
8,291.69m2 (89,251ft2)
Above ground: 10 floors
Below ground: 1 floor
November 1989

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

Shinjuku-ku, Tokyo
18,236.94m2 (196,301ft2)
232,996.81m2 (2,507,954ft2)
Above ground: 54 floors
Below ground: 4 floors
July 1996

Takanawadai Building

Higashi-Gotanda
1Chome Building● I-21● I-22

Shinagawa-ku, Tokyo
1,416.17m2 (15,244ft2)
5,762.70m2 (62,029ft2)
Above ground: 13 floors
January 1991

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

Shinagawa-ku, Tokyo
1,539.95m2 (16,576ft2)
6,460.39m2 (69,539ft2)
Above ground: 8 floors
July 2004

Omori-Eki Higashiguchi
Building

Nippon Brunswick
Building● I-23● I-24

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

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

Shibuya-ku, Tokyo
1,497.52m2 (16,119ft2)
11,957.38m2 (128,708ft2)
Above ground: 9 floors
Below ground: 2 floors
March 1974

Japan Real Estate Investment Corporation 17

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

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

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

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

Yoyogi 1Chome
Buildingda Vinci Harajuku● I-25● I-26

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

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

Shibuya-ku, Tokyo
839.66m2 (9,038ft2)
4,359.20m2 (46,922ft2)
Above ground: 7 floors
Below ground: 2 floors
December 1987

Jingumae Media
Square Building

Shibuya Cross Tower● I-27● I-28

Shibuya-ku, Tokyo
2,124.59m2 (22,869ft2)
9,420.42m2 (101,400ft2)
Above ground: 9 floors
Below ground: 2 floors
March 1998

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

Shibuya-ku, Tokyo
5,153.45m2 (55,471ft2)
61,862.33m2 (665,880ft2)
Above ground: 32 floors
Below ground: 3 floors
April 1976

Ebisu Neonato

Harmony Tower● I-29● I-30

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

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

Nakano-ku, Tokyo
10,020.52m2 (107,860ft2)
72,729.31m2 (782,851ft2)
Above ground: 29 floors
Below ground: 2 floors
March 1997

Otsuka Higashi-Ikebukuro
Building

Ikebukuro 2Chome
Building● I-31● I-32

Toshima-ku, Tokyo
2,121.39m2 (22,834ft2)
9,531.28m2 (102,594ft2)
Above ground: 8 floors
Below ground: 1 floor
November 1987

18 Japan Real Estate Investment Corporation

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

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

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

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

Ikebukuro YS
Building

Hachioji First
Square● I-33● II-1

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

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

Saitama Urawa
Building

MM Park Building● II-2● II-3

Saitama, Saitama Prefecture
1,533.06m2 (16,502ft2)
6,258.59m2 (67,367ft2)
Above ground: 8 floors
March 1990

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

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

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

Hachioji, Tokyo
2,989.33m2 (32,177ft2)
18,329.98m2 (197,302ft2)
Above ground: 12 floors
Below ground: 1 floor
July 1996

Yokohama, Kanagawa Prefecture
6,825.77m2 (73,472ft2)
49,037.51m2 (527,835ft2)
Above ground: 15 floors
Below ground: 1 floor
December 2007

Kawasaki Isago
Building

Musashi Kosugi
STM Building● II-4● II-5

Kawasaki, Kanagawa Prefecture
1,594.50m2 (17,163ft2)
9,623.83m2 (103,590ft2)
Above ground: 12 floors
Below ground: 1 floor
December 1990

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

Kawasaki, Kanagawa Prefecture
3,552.15m2 (38,235ft2)
22,839.61m2 (245,843ft2)
Above ground: 8 floors
Below ground: 2 floors
October 1990

8 . 3 Square Kita
Building

Jozenji Park Building● III-1● III-2

Sapporo, Hokkaido
5,541.60m2 (59,649ft2)
16,096.97m2 (173,266ft2)
Above ground: 11 floors
Below ground: 1 floor
December 2006

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

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

Japan Real Estate Investment Corporation 19

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

Sendai Honcho
Honma Building

Kanazawa Park
Building● III-3● III-4

Sendai, Miyagi Prefecture
1,437.47m2 (15,473ft2)
8,247.50m2 (88,775ft2)
Above ground: 11 floors
November 1991

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

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

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

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

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

Nishiki Park Building

Hirokoji Sakae
Building● III-5● III-6

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

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

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

Nagoya Hirokoji
Building

Nagoya Misono
Building● III-7● III-8

Nagoya, Aichi Prefecture
4,095.81m2 (44,087ft2)
33,377.73m2 (359,275ft2)
Above ground: 18 floors
Below ground: 2 floors
May 1987

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

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

Kyoto Shijo
Kawaramachi Building

Shin-Fujita Building● III-9● III-10

Kyoto, Kyoto Prefecture
1,471.57m2 (15,840ft2)
9,701.04m2 (104,421ft2)
Above ground: 9 floors
Below ground: 1 floor
November 1982

20 Japan Real Estate Investment Corporation

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

Osaka, Osaka Prefecture
6,159.61m2 (66,301ft2)
45,411.31m2 (488,803ft2)
Above ground: 21 floors
Below ground: 2 floors
April 1995

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

Sakaisujihonmachi
Building

Midosuji Daiwa
Building● III-11● III-12

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

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

NHK Hiroshima
Broadcasting Center
Building

Lit City Building● III-13

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

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

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

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

● III-14

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

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

Tosei Tenjin Building

Tenjin Crystal
Building● III-15● III-16

Fukuoka, Fukuoka Prefecture
1,221.31m2 (13,146ft2)
5,588.57m2 (60,155ft2)
Above ground: 8 floors
March 1992

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

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

Hinode Tenjin
Building● III-17

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

Fukuoka, Fukuoka Prefecture
1,452.15m2 (15,631ft2)
12,527.07m2 (134,840ft2)
Above ground: 10 floors
Below ground: 2 floors
August 1987

Japan Real Estate Investment Corporation 21

22 Japan Real Estate Investment Corporation

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

p.23
p.24
p.26
p.26
p.27
p.28
p.40

Selected Financial Data
Thousands of U.S. dollars

Millions of yen(Note 1)For the period from

For the period from

For the period from

October 1, 2008 to

April 1, 2008 to

October 1, 2007 to

October 1, 2009 to

March 31, 2009

September 30, 2008

March 31, 2008

March 31, 2010

¥ 21,524¥ 20,716¥ 19,805¥ 25,743$5,232,866

11,46910,761

9,998

11,524

119,599

9,807

14,218113,266

8,449

12,946

95,403For the period from

For the period from

October 1, 2009 to

April 1, 2009 to

March 31, 2010

September 30, 2009

Operating Revenues¥ 21,665

Operating Expenses

11,127

Operating Income

10,53810,054

9,955

Income before Income Taxes

8,876

8,505

8,426

For the period fromNet Income

8,875

8,504

8,425

8,448

12,945

95,396

Total Assets

637,326

564,528565,022542,920

527,537

6,850,026

Interest-Bearing Debts

262,500

220,500

220,500

199,500

177,500

2,821,367

Net Assets

333,228

306,106

306,027

306,050

310,547

3,581,565

Unitholders’ Capital

324,353

297,601

297,601

297,601

297,601

3,486,168

Number of Units

489,200

443,000

443,000

443,000

443,000

489,200

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

681,170

690,984

690,806

690,858

701,009

7,321

Cash Distribution

8,826

8,504

8,425

8,448

12,945

94,869Dividend Payout Ratio

99.4%

100.0%

99.9%

100.0%

100.0%

99.4%

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

18,04319,19819,02019,072

29,223193.93

Net Operating Income (NOI)

14,414

13,95014,575

14,173

12,197

154,927

Funds from Operations (FFO)

11,914

11,577

12,213

12,0098,078

128,057

Return on Assets (ROA) (Note 2)

1.5%

1.5%

1.5%

1.6%

2.6%

1.5%

(3.0% annualized)

Return on Equity (ROE) (Note 3)

2.7%(5.5% annualized)

EOP Equity Ratio (Note 4)(3.0% annualized)

2.8%(5.5% annualized)(3.1% annualized)

2.8%(5.5% annualized)(3.1% annualized)

2.7%(5.5% annualized)(5.3% annualized)

4.7%(9.3% annualized)(3.0% annualized)

2.7%(5.5% annualized)

52.3%

54.2%

54.2%

56.4%

58.9%

52.3%

41.2%

39.1%

39.0%

36.7%

33.6%

41.2%

FFO Multiple

16.3 times

14.1 times

13.7 times

15.5 times

31.9 times

16.3 times

Debt Service Coverage Ratio (Note 6)

9.0 times

9.0 times

8.9 times

9.7 times

14.2 times

9.0 times

EOP Interest-Bearing Debt Ratioon Total Assets (Note 5)

Notes 1:

2:
3:

4:
5:
6:

Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥93.04 = US$1.00, the foreign exchange rate on March 31,
2010, 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.
ROA = Income before Income Taxes ÷ Average of Total Assets during the period
ROE = Net Income ÷ Average of Net Assets during the period(Annualized portion of the calculation given in note 2 and note 3 assumes a fiscal period of 183 days for the period ended March 31, 2008, 183 days for the period
ended September 30, 2008, 182 days for the period ended March 31, 2009, 183 days for the period ended September 30, 2009 and 182 days for the period
ended March 31, 2010.)
EOP Equity Ratio = (Net Assets at end of period ÷ Total Assets at end of period) × 100
EOP Interest-Bearing Debt Ratio on Total Assets = (Interest-Bearing Debt at end of period ÷ Total Assets at end of period) × 100
Debt Service Coverage Ratio = Net Income before Interest, Taxes, Depreciation and Amortization ÷ Interest Expenses

Japan Real Estate Investment Corporation

23

Balance Sheets
As of March 31, 2010 and September 30, 2009

As ofMarch 31, 2010

Thousands of yen
As ofSeptember 30, 2009

U.S. dollars (Note 1)
As ofMarch 31, 2010

¥ 18,753,604)¥ 21,420,595)$ 201,564,969)

154,218)

181,137)

1,657,553)

3,790)

3,705)

40,737)

819,013)―)8,802,806)

ASSETS
Current Assets:
Cash and bank deposits
Rental receivables
Refundable income taxes
Refundable consumption taxes
Other current assets

176,709)109,247)

1,899,288)

19,907,336)

21,714,685)

213,965,353)

Land

423,030,382)

369,693,850)

4,546,758,198)

Buildings and structures

222,885,082)

200,774,443)

2,395,583,435)

Machinery and equipment

3,016,602)

2,835,882)

32,422,642)

Tools, furniture and fixtures

116,069)

103,472)

1,247,520)

Total current assets

Property and Equipment, at Cost:

Construction in progress
Subtotal

228,711)

511,316)

649,276,848)

573,918,965)

2,458,206)
6,978,470,001) )Accumulated depreciation(38,693,393)(34,747,806)(415,879,122))

Total property and equipment

610,583,455)

539,171,159)

6,562,590,879)

Investment securities

577,168

2,797

6,203,440)

Deposits

29,33021,902

315,245)

Long-term prepaid expenses

23,76917,091

255,480)

5,306,643

2,691,724

57,036,152)

Easement

828,095

828,095

8,900,423)

Deferred investment corporation bond issuance costs

70,574

81,402758,541)¥637,326,373¥564,528,859$6,850,025,513

Investments and Other Assets:

Leasehold rights

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

24 Japan Real Estate Investment Corporation

As ofMarch 31, 2010

Thousands of yen
As ofSeptember 30, 2009

U.S. dollars (Note 1)
As ofMarch 31, 2010¥¥

LIABILITIESCurrent Liabilities:,706,431$ ,10,645,016

Other payables

Trade accounts payable

866,972

754,253

9,318,275

Short-term loans

39,000,000

48,000,000

419,174,549

Current portion of long-term loans

9,100,000

18,000,000

97,807,395

Current portion of investment corporation bonds

10,000,000

10,000,000

107,480,653

816,801

730,669

8,779,039

Accrued expenses,990,412

Accrued income taxes―

Accrued consumption taxes
Rent received in advance
Other current liabilities
Total current liabilities

45

―

―

343,337―

2,393,764

2,261,891

25,728,339

11,643

4,955

125,140

63,179,594

80,801,584

679,058,405

Long-Term Liabilities:
Investment corporation bonds

35,000,000

35,000,000

376,182,287

Long-term loans

169,400,000

109,500,000

1,820,722,270

36,517,967

33,121,070

392,497,502

Total long-term liabilities

Deposits received from tenants

240,917,967

177,621,070

2,589,402,059

Total Liabilities

304,097,561

258,422,654

3,268,460,464

324,353,108

297,601,460

3,486,168,401

NET ASSETS
Unitholders’ capital
Authorized:

2,000,000 units

Issued:489,200 units as of March 31, 2010 and
443,000 units as of September 30, 2009
8,875,704

8,504,745

95,396,648

Total net assets

Retained earnings

333,228,812

306,106,205

3,581,565,048

Total Liabilities and Net Assets¥637,326,373¥564,528,859$6,850,025,513

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

Japan Real Estate Investment Corporation25

Statements of Income and Retained Earnings
For the six months ended March 31, 2010 and September 30, 2009
Thousands of yen

U.S. dollars (Note 1)

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

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

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

Operating Revenues and Expenses
Operating Revenues:
Rental revenues
Non-rental revenues
Gain on sale of properties
Gain on transfer of development rights of floor area
Compensation for the property transfer¥20,635,057)
123,901)
885,059―
21,795)¥20,682,990)
112,800)―
728,572―$221,786,950)
1,331,699)
9,512,676)―)
234,257)

Total operating revenues

21,665,813)

21,524,362)

232,865,582)

Operating Expenses:
Property-related expenses
Asset management fees
Administrative service fees
Other operating expenses

10,290,164)
529,379)
180,909)
127,080)

10,646,300)
540,800)
174,534)
107,809)110,599,358)
5,689,801)
1,944,427)
1,365,872)

Total operating expenses

11,127,533)

11,469,445)

119,599,458)

Operating income

10,538,280)

10,054,917)

113,266,125)

Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Other non-operating revenues
Non-Operating Expenses:
Interest expense
Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance costs
New unit issuance costs
Other non-operating expenses

19,716)
10)

24,514)
252)

211,910)107)

1,196,686)
403,852)
10,828)50,590)19,753)

1,139,585)
402,286)
10,887)―)
21,273)

12,862,068)
4,340,629)
116,381)543,754)
212,308)

Income before Income Taxes

8,876,295)

8,505,651)

95,403,001)

605)
17)

971)
2)

6,503)
192)
95,396,307)

Income Taxes:
Current
Deferred

8,875,672)

8,504,678)

Retained Earnings Brought Forward

31)

67)

341)

Retained Earnings at End of Period¥ 8,875,704)¥ 8,504,745)$ 95,396,648)

Units

Unitholders’ capital

Retained earnings

Total

443,000¥297,601,460¥8,425,927)¥306,027,387)――(8,425,860)(8,425,860)

8,504,678)

8,504,678)¥8,504,745)―¥306,106,205)―(8,504,714)(8,504,714)

8,875,672)

8,875,672)

489,200¥324,353,108¥8,875,704)¥333,228,812)

Units

Unitholders’ capital

Retained earnings

Total

Balance as of September 30, 2009

443,000$3,198,639,940$91,409,563)

New unit issuance

46,200287,528,461―$3,290,049,503)―(91,409,222)(91,409,222)

95,396,307)

95,396,307)$3,486,168,401$95,396,648)$3,581,565,048)

Net Income

Statements of Changes in Unitholders’ Equity
For the six months ended March 31, 2010 and September 30, 2009
Thousands of yen

Balance as of March 31, 2009
Cash dividends paid
Net income――

Balance as of September 30, 2009

443,000¥297,601,460

New unit issuance

46,20026,751,648

Cash dividends paid
Net income
Balance as of March 31, 2010―――

26,751,648

U.S. dollars (Note 1)

Cash dividends paid
Net income
Balance as of March 31, 2010
The accompanying notes form an integral part of these financial statements.

26 Japan Real Estate Investment Corporation――

489,200―

287,528,461)

Statements of Cash Flows
For the six months ended March 31, 2010 and September 30, 2009

Thousands of yen

U.S. dollars (Note 1)

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

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

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

Income before income taxes¥ 8,876,295)¥ 8,505,651)$ 95,403,001)

Depreciation and amortization

3,945,587)

3,801,232)

42,407,430)

10,828)

10,887)

Cash Flows from Operating Activities

Amortization of investment corporation bond issuance costs
New unit issuance costs
Interest income
Interest expense
Rental receivables
Refundable income taxes
Refundable consumption taxes
Prepaid expenses
Trade accounts payable

116,381)

50,590)(19,716)
1,600,538)―(24,514)
1,541,871)

543,754)(211,910)
17,202,697)

26,918)51,571)

289,323)(85)

4,090)(819,013)(50,453)
163,659)―)
4,133)(94,515)(914)(8,802,806)(542,282)
1,759,025)

Other payables(8,828)(6,511)(94,886)

Accrued expenses(343,474)(80,790)(3,691,684)

Rent received in advance

131,872)(88,450)

614,142)(6,677)(12,600)―)
2,413)
30,378)(1,417,378)

Decrease due to sale of tangible fixed asset
Long-term prepaid expenses
Other
Sub-total

14,159,584)

13,657,449)

152,188,143)

Interest received

21,977)23,154)

236,216)(1,514,269)(1,544,603)(16,275,465)

Interest paid
Income taxes paid

6,600,839)(71,774)(135,431)

(650)

(976)

(6,991)

12,666,642)

12,135,024)

136,141,904)

Payments of time deposits(6,143,000)(11,861,229)(66,025,365)

Proceeds from time deposits

12,643,000)

5,361,229)

135,887,790)

Purchases of property and equipment(75,747,620)(235,106)(814,140,379)

Purchases of intangible assets
Purchases of investment securities
Payments for lease and guarantee deposits
Repayments of lease and guarantee deposits received(2,601,260)(574,370)(7,428) (2,362,163)

Net cash provided by operating activities

Cash Flows from Investing Activities

Proceeds from lease and guarantee deposits received
Net cash used in investing activities

―)
―)
―)
(1,288,351)(27,958,520))(6,173,372))
 (79,840))(25,388,686)

5,759,060)

880,377)

61,898,762)(69,033,782)(7,143,080)(741,979,610)

Cash Flows from Financing Activities
Proceeds from short-term loans

29,500,000)

22,500,000)

317,067,928)

Repayments of short-term loans(38,500,000)(22,500,000)(413,800,516)

Proceeds from long-term loans

63,000,000)

Repayments of long-term loans
Proceeds from issuance of units
Payments of new unit issuance costs
Dividends to unitholders(12,000,000)
26,751,648)(50,590)(8,500,907)

―)
―)
―)
(8,420,515)(128,976,784)
287,528,461)(543,754)(91,368,312)
647,035,139)

Net cash provided by (used in) financing activities―)

677,128,117)

60,200,149)(8,420,515)

Net Increase (Decrease) in Cash and Cash Equivalents

3,833,009)(3,428,571)

41,197,433)

Cash and Cash Equivalents at Beginning of Period

14,920,595)

18,349,167)

160,367,536)

Cash and Cash Equivalents at End of Period¥18,753,604)¥14,920,595)$201,564,969)

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

Japan Real Estate Investment Corporation

27

Notes to Financial Statements
March 31, 2010 and September 30, 2009

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 63% by Mitsubishi Estate Co., Ltd. (“MEC”), 27% by The Dai-ichi Mutual Life Insurance Company (currently renamed The
Dai-ichi Life Insurance Company, Limited, “DL”) and 10% by Mitsui & Co., Ltd.
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, Tokio Marine & Nichido Fire Insurance Co.,
Ltd. (“TMN”) and DL under the Law Concerning Investment Trusts and Investment Corporations of Japan, or the Investment Trust Law.
On September 10, 2001, the Company commenced operations when the Company was listed on the Tokyo Stock Exchange as one of the first real estate
investment corporations in Japan (so-called “J-REITs”). The Company issued 160,000 units at a price of ¥506,625 ($5,445), generating gross proceeds of¥81,060 million ($871,238 thousand) (Note 1).
The Company completed a seventh public offering of 42,000 units at a price of ¥579,040 ($6,224) on December 8, 2009 and third party allocation of 4,200
units at a price of ¥579,040 ($6,224) on December 22, 2009, generating gross proceeds of ¥24,319 million ($261,390 thousand) and ¥2,431million($26,139 thousand). As of March 31, 2010, the Company had total unitholders’ capital of ¥324,353 million ($3,486,168 thousand) with 489,200
outstanding units (Note 1).

At March 31, 2010, the Company owned a portfolio of 55 office properties concerning an aggregate of approximately 566,277 square meters of leasable
space.

Note1: The foreign exchange rate of ¥93.04=US$1.00, as of March 31, 2010, has been used for translation.

Basis of presenting financial statements
The Company maintains its accounting records and prepares its financial statements in accordance with accounting principles generally accepted in Japan(“Japanese GAAP”), including provisions set forth in the Investment Trust Law, the Corporation Law of Japan, the Financial Instruments 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 were prepared in accordance withJapanese 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 ina format that is more familiar to readers outside Japan. In addition, the notes to financial statements include information that might not be required underJapanese GAAP but is presented herein as additional information.
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥93.04=US$1.00, the foreign exchange rate on March
31, 2010, has been used for translation. The inclusion of such amounts is not intended to imply that Japanese yen has been or could be readily converted,
realized or settled into U.S. dollars at that rate or any other rate.
As permitted under the Japanese Financial Instruments and Exchange Law, amounts of less than one million yen have been omitted. As a result, the totals
shown in the accompanying financial statements do not necessarily agree with the sum of the individual amounts.

28 Japan Real Estate Investment Corporation

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESInvestment securities
Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving average method.
Property and equipment
Property and equipment is stated at cost, less accumulated depreciation. The costs of land, buildings and building improvements include the purchase priceof property, legal fees and acquisition costs. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets ranging as statedbelow:
Buildings………………………………………………………………………………………

2-61 years

Structures………………………………………………………………………………………

5-50 years

Machinery and equipment………………………………………………………………….….

3-18 years

Tools, furniture and fixtures…………………………………………..………………..……...

3-15 years

Expenditures for repairing expenses are charged to income as incurred. Significant renewals and betterments are capitalized.
The Company reviews fixed assets for impairment whenever events or changes in circumstances indicate that the carrying amount of its fixed assets may
not be recoverable. Companies are required to recognize an impairment loss in their statement of income if certain indicators of asset impairment exist andthe book value of an asset exceeds the undiscounted sum of future cash flows of the asset. The standard states that impairment losses should be measured
as the excess of the book value over the higher of (1) the fair market value of the asset, net of disposition costs and (2) the present value of future cash
flows arising ongoing utilization of the asset and from disposal after asset use. The standard covers land, factories, buildings and other forms of property,
plant and equipment as well as intangible assets. Fixed assets are grouped at the lowest level for which there is identifiable cash flows that are independentof cash flows of other groups of assets.

Deferred charges
Deferred charges include investment corporation bond issuance costs and new unit issuance costs.
Investment corporation bond issuance costs are amortized using the straight-line method over the amortization periods.
New unit issuance costs are charged to income as incurred. The underwriters’ economic remunerations for underwriting the offering are not recognized as
new unit issuance costs in the financial statements since such costs are not paid by the Company as commission under the so-called “spread-method”.
Under the spread method, the difference between the offer price (the price paid by the unitholder) and the issue price (the price received by the Company)
is retained by the underwriters as remunerations. The spread so incurred at the seventh offering on December 8, 2010 was ¥776 million ($8,342 thousand).

Revenue recognition
Revenues from leasing of office space are recognized as rent accrued over the lease period.

Taxes on property and equipment
Property and equipment is subject to property taxes and city planning taxes on a calendar year basis. These taxes are generally charged to income 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 owner registered in the record as of January 1 based on the assessment made by the local
government. The Company paid the amount equivalent to the property taxes to the sellers applicable to the period since acquisition and included theamount equivalent to the taxes in the purchase price of each property and capitalized as cost of the property.

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

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

Japan Real Estate Investment Corporation29

3. FINANCIAL INSTRUMENTS
For the period from October 1, 2009 to March 31, 2010
1. Status of financial instruments(1) Policies for dealing financial instruments
Concerning the financing of property acquisitions, the Company shall use several funding sources including bank loans, issuance of investment
corporation bonds and issuance of investment units. When executing such financing activities, the Company endeavors to retain the ability to securestable and low-cost financing by maintaining high credit rating and thereby limiting the financial covenants which may restrict the financial flexibility of
the Company.

To achieve these goals, the company intends to further develop and reinforce the confidence of debt holders and rating agencies in the

Company by bolstering capital base and controlling loan-to-value ratio (“LTV”) at adequate level.
In order to hedge against future interest-rate fluctuations, the Company may enter in derivative transactions, which shall be executed solely for the
purpose of controlling risks, and not for speculative purposes.
At the time of this report, the Company holds no position in derivative transactions.
With respect to management of excess fund, as a matter of policy the Company uses time deposit as its main vehicle, while securities and monetaryclaims are also eligible for such investment.

(2) Characteristics, and risk profile of each financial instrument and risk management system
J-Rea regularly re-evaluates appropriateness and effectiveness of risk management system in order to improve on it.
Characteristics, and risk profile of financial instruments and risk management system are as follows:
Deposits which are typically large time deposit used to manage the excess funds, are exposed to credit risk of the deposit-taking financial institutions.
The Company manages credit risk by restricting the tenor of the deposit relatively short and setting a minimum credit rating requirement for thedeposit-taking financial institutions.

The fund proceeds from borrowings and issues of investment corporate bonds are applied mainly to acquire real estate properties and repayment ofoutstanding loans and bonds. While floating-rate short-term loans are exposed to the risk of interest-rate hike, such risk is mitigated by the Company’s
low LTV and relatively high percentage of long-term fixed-rate debts within the total borrowing. Loans and investment corporate bonds involve liquidity
risk at the time of maturity. To manage such liquidity risk, the Company implements the measures such as (i) maintaining and strengthening its ability toaccess equity markets to secure funds, (ii) maintaining a commitment lines with major financial institutions (There is no outstanding under the facility asof March 31, 2010), and (iii) preparing monthly financial plan.

(3) Supplementary Note regarding fair value of financial instruments
The fair values of financial instruments presented in this report are based on their market value, and in case where market values are not available,reasonably calculated values are presented. Since calculation of fair value is based on certain assumptions, the fair value could differ depending on
assumptions used.

2. Fair value of financial instruments
Fair value of financial instruments, their value carried on the balance sheet and the difference between them as of March 31, 2010 are as follows.
The financial instruments whose fair values have extreme difficulty estimating are excluded from the following schedule (Note2).

Thousands of yen(1)

Cash and bank deposits(2)

Short-term loans

U.S.dollars

Book value

Fair value

DifferenceBook value

Fair value¥ 18,753,604¥ 18,753,604

39,000,000

39,000,000

10,000,000

10,001,900

Difference¥ －$ 201,564,969$ 201,564,969$ －－419,174,549

419,174,549

－

1,900

107,480,653

107,501,075

20,421

Current portion of investment(3)
corporation bonds(4)

Current portion of long-term loans

9,100,000

9,123,831

23,83197,807,395

98,063,539

256,144(5)

Investment corporation bonds

35,000,000

34,427,850△ 572,150

376,182,287

370,032,782△ 6,149,506(6)Long-term loans

169,400,000

170,352,153

952,153

1,820,722,270

1,830,956,077

10,233,807

30 Japan Real Estate Investment Corporation

Note1: Measurement of fair value of financial instruments(1) Cash and bank deposits
Due to short tenor, the book value of these assets are reasonable approximation of the present value of these assets and hence used as their fairvalue.
(2) Short-term loans
Since these loans’ tenor is short and rates are reset at short interval, the book values of these liabilities are reasonable approximation of theirpresent value and hence used as their fair values.
(3) Current portion of investment corporation bonds and (5) Investment corporation bonds
Their fair values are based on the values published by a financial data provider.
(4) Current portion of long-term loans and (6) long-term loans
The fair values of these liabilities are calculated by discounting the aggregated amounts of the principals and the interests of the loan by the rates
that are reasonably estimated to be applicable if the Company refinances the existing loans for the remaining period to maturity under theprevailing market conditions at March 31, 2010.

Note2: Financial instruments whose fair values cannot be reliably measured.

Classification(1)

Non-listed stock (*1）

(2)

Deposits received from tenants (*2)

Book value

Book value（Thousands of yen）

（U.S.dollars）¥

577,168$ 6,203,440

36,517,967

392,497,502(*1) With regard to non-listed stocks which do not have quoted market price in active market and whose cash flows are not reasonably estimated,their fair value cannot be reliably measured and therefore presented at their book value.
(*2) With regard to deposits received from tenants, which do not have quoted market price in active market, and their tenor cannot be reasonably

estimated, their cash flows cannot be reliably measured and therefore presented at their book value.

Note3: Redemption schedule for monetary claim after the closing date(Thousands of yen)

(U.S.dollars)

Cash and bank deposits

Cash and bank deposits

1year or less
1 to 2years
2 to 3years
3 to 4years
4 to 5years
Over 5years¥18,753,604
－
－
－
－
－

$201,564,969
－
－
－
－
－

Note4: Repayment schedule for investment corporation bonds, long-term loans and other interest-bearing debt after the closing date(Thousands of yen)

(U.S.dollars)

Investment
Short-term

Investment
Long-term

loans

Short-term
Total

corporation
loans

loans

bonds
1 year or less

¥39,000,000

Long-term
Total

corporation
loans
bonds

¥10,000,000¥ 9,100,000¥58,100,000$419,174,549$107,480,653$ 97,807,395$624,462,597

1 to 2 years－－

68,100,000

68,100,000－－

731,943,250

731,943,250

2 to 3 years－

10,000,000

49,100,000

59,100,000－

107,480,653

527,730,009

635,210,662

3 to 4 years－－

34,100,000

34,100,000－－

366,509,028

366,509,028

4 to 5 years－

15,000,000

2,100,000

17,100,000－

161,220,980

22,570,937

183,791,917

Over 5years－

10,000,000

16,000,000

26,000,000－

107,480,653

171,969,046

279,449,699

Japan Real Estate Investment Corporation

31

(Additional information)
Effective October 1, 2009, the Company adopted the Accounting Standard for Financial Instruments (The Accounting Standards Board of Japan(hereinafter referred to ASBJ) Statement No.10, March 10, 2008) and the Guidance on Accounting Standard for Disclosures about Fair Value of Financial
Instruments (ASBJ Guidance No.19, March 10, 2008).

4. PROPERTY AND EQUIPMENT
Property and equipment at March 31, 2010 and September 30, 2009 consisted of the following:Thousands of yen

U.S. dollars
As of September 30, 2009

As of March 31, 2010

As of March 31, 2010

Acquisition Costs

Book Value

Acquisition Costs

Book Value

Acquisition Costs

Book ValueLand¥319,406,060)¥319,406,060¥309,360,192)¥309,360,192$3,432,997,206)$3,432,997,206

Buildings and structures

175,443,969)

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

164,929,546)(30,459,585)

144,984,383(27,332,693)

1,885,683,252)
137,596,852

2,197,598)

2,209,482)(912,526)

1,296,956(839,404)

1,558,301,632

23,747,660)
1,358,194

94,748)107,344)(327,381,620)(9,807,891)

13,939,769

1,153,749)(55,808)

51,535(50,614)

44,133(599,838)

553,911

228,711)

228,711

511,316)

511,316

2,458,206)

2,458,206

Land in trust

103,624,322)

103,624,322

60,333,658)

60,333,658

1,113,760,992)

1,113,760,992

Buildings and structures in trust

47,441,113)

Accumulated depreciation(6,816,581)

Construction in progress

40,624,531(6,103,622)

362,431(417,525)(4,202)

4,522¥610,583,455)¥610,583,455

Machinery and equipment in trust

807,120)

Accumulated depreciation(444,688)

Tools, furniture and fixtures in trust
Accumulated depreciation
Total

35,844,895)

509,900,183)
29,741,273(73,265,062)

220,758(4,779,544)(3,944)

4,780(45,167)

48,604¥539,171,159)¥539,171,159$6,562,590,879)$6,562,590,879

638,283)

8,674,982)

8,724)

8,724)

436,635,122

3,895,438

93,771)

The compressed amount of tangible assets with government grants under the Corporation Tax Law of Japan was ¥50 million ($538 thousand) at March 31,
2010 and ¥50 million ($538 thousand) at September 30, 2009.

32 Japan Real Estate Investment Corporation

5. SHORT-TERM LOANS
Short-term loans at March 31, 2010 and September 30, 2009 consisted of the following:Thousands of yen
As ofMarch 31, 2010

As of
September 30, 2009

U.S. dollars
As ofMarch 31, 2010

0.56521%unsecured loan from banks and trust banks,
due on December 21, 2009¥―

¥20,000,000―

1,000,000―

1,000,000―

10,748,065$―

0.58943% unsecured loan from a bank, due on March 24,
2010
0.5554% unsecured loan from a bank, due on March 24,
2011
0.58943% unsecured loan from a bank, due on March 24,
2010
0.60174% unsecured loan from a bank, due on June 1, 2010―

4,500,000―

2,000,000

5,000,000

21,496,131

5,000,000―

53,740,327

4,500,000―

48,366,294

2,000,000―

21,496,131

2,000,000

2,000,000

21,496,131―

3,000,000―

2,000,000―

21,496,131

2,000,000

5,000,000

21,496,131

2,500,000

2,500,000

26,870,163

2,000,000―

21,496,131

1,000,000

3,000,000

10,748,065

5,000,000―

53,740,327

3,000,000―

32,244,196

2,000,000―

21,496,131―

2,000,000―

2,000,000―

21,496,131

0.56301% unsecured loan from a bank, due on December
21, 2010
0.5554% unsecured loan from a bank, due on March 24,
2011
0.5554% unsecured loan from a bank, due on March 24,
2011
0.59057% unsecured loan from a trust bank,due on September 1, 2010
0.61667% unsecured loan from a trust bank,due on September 24, 2010
0.5554% unsecured loan from a trust bank,due on March 24, 2011
0.60174% unsecured loan from a bank, due on September 1,
2010
0.58793% unsecured loan from a bank, due on September
24, 2010
0.5554% unsecured loan from a bank, due on March 24,
2011
0.60172% unsecured loan from a trust bank, due on
September 24, 2010
0.56301% unsecured loan from a trust bank, due on
December 21, 2010
0.55838% unsecured loan from a trust bank,due on January 17, 2011
0.5554% unsecured loan from a trust bank, due on March24, 2011
0.79823% unsecured loan from a bank, due on March 24,
2010
0.7454% unsecured loan from a bank, due on March 24,
2011
0.5554% unsecured loan from a bank, due on March 24,
2011

1,000,000―

10,748,065

Total¥39,000,000¥48,000,000$419,174,549

The Company has commitment lines of ¥25,000 million ($268,702 thousand) with four financial institutions to reduce a refinancing risk.
The unused amount of such commitment lines was ¥25,000 million ($268,702 thousand) at March 31, 2010.

Japan Real Estate Investment Corporation

33

6. INVESTMENT CORPORATION BONDS INCLUDING CURRENT PORTION OF INVESTMENT CORPORATION
BONDS
Details of total investment corporation bonds outstanding are summarized as follows:
As of
September 30, 2009

As ofMarch 31, 2010

As ofMarch 31, 2010

Amount(thousands of yen)Interest rate(%)

Amount(thousands of yen)Interest rate(%)

Amount(U.S. dollars)

Unsecured bond due on April 30, 2010

¥10,000,000

0.98%¥10,000,000

0.98%$107,480,653

Unsecured bond due on September 29, 2025

10,000,000

2.56%

10,000,000

2.56%

107,480,653

Unsecured bond due on June 18, 2012

10,000,000

1.67%

10,000,000

1.67%

107,480,653

Unsecured bond due on June 18, 2014

15,000,000

1.91%

15,000,000

1.91%

161,220,980

Total¥45,000,000―¥45,000,000―$483,662,941

7. LONG-TERM LOANS INCLUDING CURRENT PORTION OF LONG-TERM LOANS
Long-term loans at March 31, 2010 and September 30, 2009 consisted of the following:
U.S. dollars

Thousands of yen
As ofMarch 31, 2010

As of
September 30, 2009

As ofMarch 31, 2010―

$ 21,496,131

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

2,000,000¥―

2,000,000―

3,000,000

3,000,000

32,244,196

1.10625% unsecured loan from a bank, due on March 24, 2010―

2,000,000―

1.10625% unsecured loan from a bank, due on March 24, 2010―

2,000,000―

1.10625% unsecured loan from a bank, due on March 24, 2010―

3,000,000―

1.10625% unsecured loan from a bank, due on March 24, 2010―

2,000,000―

3,000,000

3,000,000

32,244,196―

1,000,000―

1,000,000―

10,748,065

100,000―

1,074,807―

2,000,000―

1,500,000

1,500,000

16,122,098

1,000,000

1,000,000

10,748,065

5,000,000

5,000,000

53,740,327

2,000,000

2,000,000

21,496,131

due on November 1, 2011

5,000,000

5,000,000

53,740,327

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

10,000,000

10,000,000

107,480,653

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

22,000,000

22,000,000

236,457,438

2012

5,000,000―

53,740,327

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

5,000,000―

53,740,327

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

2,000,000―

21,496,131

24,000,000

24,000,000

257,953,568

1.2875% unsecured loan from a bank, due on December 15, 2009
1.6225% unsecured loan from a bank, due on June 15, 2010

1.5725% unsecured loan from a bank, due on June 14, 2010
1.10625% unsecured loan from a bank, due on March 24, 2010
1.10625% unsecured loan from a bank, due on December 20, 2010
1.665% unsecured loan from a bank, due on March 24, 2017
1.47125% unsecured loan from an insurance company,
due on March 30, 2011
1.86875% unsecured loan from an insurance company,
due on May 29, 2015
1.595% unsecured loan from an insurance company,
due on April 25, 2016
1.50125% unsecured loan from an insurance company,
due on August 31, 2011
1.55% unsecured loan from an insurance company,
due on October 29, 2012
1.33125% unsecured loan from another financial institution,

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

1.65925% unsecured loan from banks, trust banks, and an insurancecompany, due on June 23, 201134 Japan Real Estate Investment Corporation

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

5,000,000

5,000,000

53,740,327

due on March 30, 2017

5,000,000

5,000,000

53,740,327

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

1,000,000

1,000,000

10,748,065
21,496,131

1.54375% unsecured loan from an insurance company,

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

2,000,000―

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

5,000,000

5,000,000

53,740,327

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

3,000,000

3,000,000

32,244,196
53,740,327

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

5,000,000―

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

3,000,000

3,000,000

32,244,196

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

5,000,000―

53,740,327

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

2,000,000―

21,496,131

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

5,000,000

5,000,000

53,740,327

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

5,000,000―

53,740,327

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

11,000,000―

118,228,719

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

2,000,000―

21,496,131

2013

5,000,000

5,000,000

53,740,327

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

2,000,000―

21,496,131

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

2,000,000

2,000,000

21,496,131

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

1,900,000―

20,421,324―

1,000,000―

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

1,000,000―

10,748,065

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

1,000,000―

10,748,065

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

2,000,000

2,000,000

21,496,131

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

1,000,000―

10,748,065

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

2,000,000―

21,496,131

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

1,000,000―

10,748,065

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

2,000,000―

21,496,131

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

2,000,000―

21,496,131

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

3,000,000―

32,244,196

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

2,000,000―

21,496,131¥178,500,000¥127,500,000$1,918,529,665

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

1.10625% unsecured loan from a bank, due on December 20, 2010

Subtotal
Less: current portion of long-term loans
Total
(*)

9,100,000

18,000,000

97,807,395¥169,400,000¥109,500,000$1,820,722,270

Repayments of principal shall be made by installments of ¥50million for each 6 month period and ¥1,350 million on the final principal repayment date.

8. NET ASSETSThe Company is required to maintain net assets of at least ¥50 million ($537 thousand), as required pursuant to the Investment Trust Law.

Japan Real Estate Investment Corporation

35

9. INCOME TAXESAt March 31, 2010 and September 30, 2009, the Company’s deferred tax assets consisted 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,
2010 and September 30, 2009 were as follows:
For the period from October 1, 2009

For the period from April 1, 2009

to March 31, 2010

to September 30, 2009

Statutory tax rate…………………………………………………..……………39.33%………………………..39.33%
Deductible dividend distribution……………...……………………………….(39.11%) …………………….. (39.33%)
Special deductions resulting from expropriation……………………………….(0.22%)……………………....

－

Others……….…………………………………… ……..….……………………0.01%…………………………0.01%
Effective tax rate………………………………… ……………………………...0.01%…………………………0.01%

The Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation Measures Law of Japan, or
the STML, an investment corporation is allowed to deduct dividends of accounting profits, or dividend distributions, paid to investors from its taxable
income if certain tax requirements are satisfied. Such tax requirements include dividend distributions in excess of 90% of its earnings available fordividend for the fiscal period as stipulated by Article 67-15 of the STML. Based on the distribution policy provided by Article 32-2 of the Articles ofincorporation, the Company made a dividend distribution of multiple of number of units up to 100% of retained earnings, within a certain range where no
additional income taxes or further tax burden is incurred by the unitholders, in the amount of ¥8,826 million ($94,869 thousand) subsequent to March 31,
2010 and treated it as tax deductible dividend. The Company will not distribute the dividends in excess of retained earnings under Article 32-3 of the
Articles of incorporation.

10. RELATED PARTY TRANSACTIONS
For the six months ended March 31, 2010 and September 30, 2009
For the period from April 1, 2009 to September 30, 2009(1)

Parent Company and Major Corporation Unitholders“Not applicable”(2)

Subsidiaries“Not applicable”(3)

Sister Companies“Not applicable”(4)

Directors and Major Individual Unitholders“Not applicable”

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

Parent Company and Major Corporation Unitholders“Not applicable”(2)

Subsidiaries“Not applicable”(3)

Sister Companies“Not applicable”(4)

Directors and Major Individual Unitholders“Not applicable”

36 Japan Real Estate Investment Corporation

11. INVESTMENT AND RENTAL PROPERTY
For the period from October 1, 2009 to March 31, 2010
The Company owns primarily a portfolio of office properties in Tokyo and other prefectures in order to gain rental revenue from them.
The book values on balance sheets as of March 31, 2010, as of September 30, 2009 and the fair value as of March 31, 2010 are as follows:（Thousands of yen)Book Value（U.S.dollars）
Fair ValueBook Value

Fair Value

As of September 30,

ChangeAs of March 31,

As of March 31,

As of September

ChangeAs of March 31,

As of March 31,

2009

during period

2010

2010

30, 2009

during period

2010

2010

¥74,027,214¥616,718,194¥646,174,000$5,832,878,115$795,649,339$6,628,527,454$6,945,120,378¥542,690,979

Note1: Book value on balance sheet means the acquisition cost less accumulated depreciation.
Note2: Regarding change during period, the major reason of increase is acquisition of additional interest in Shiodome Building (¥54,867,413 thousands or$589,719 thousands) and Tokyo Opera City Building (¥22,680,527 thousands or $243,772 thousands). The major reason of decrease is the sale of apart of Jingumae Media Square Building site (¥614,142 thousands or $6,601 thousands).
Note3: Fair value as of March 31, 2010 is defined as the appraised value provided by external qualified professional appraiser.

(Additional information)
Effective October 1, 2009, the Company adopted the Accounting Standard for Disclosures about Fair Value of Investment and Rental Property (ASBJ
Statement No.20, November 28, 2008) and the Guidance on Accounting Standard for Disclosures about Fair Value of Investment and Rental Property(ASBJ Guidance No.23, November 28, 2008).

12. PER UNIT INFORMATION
The following table summarizes information about net assets per unit and net income per unit at March 31, 2010 and September 30, 2009, and for theperiods then ended respectively:
U.S. dollars

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

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

Net assets at period end per unit

¥681,170¥690,984$7,321

Net income per unit

¥ 18,819¥ 19,197$7,202For the period
from October 1, 2009
to March 31, 2010

Net income per unit is computed by dividing net income by the weighted average number of units outstanding during each period. Diluted net income perunit has not been presented since no warrants or convertible bonds were outstanding during the period.

Japan Real Estate Investment Corporation

37

13. BREAKDOWN OF PROPERTY-RELATED REVENUES AND EXPENSES
For the six months ended March 31, 2010 and September 30, 2009
Thousands of yen

U.S. dollars

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

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

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

¥20,758,959¥20,795,790$223,118,649

Property-Related Revenues

20,635,057

20,682,990

221,786,950

Rental revenues

15,894,747

15,801,630

170,837,790

Common service charges

2,999,979

3,056,165

32,243,981

543,914553,017

5,846,028

1,196,415

1,272,177

12,859,151

Rental Revenues

Parking revenues
Other rental revenues

123,901

112,800

1,331,699

Cancellation charges

96,49863,232

1,037,169

Other miscellaneous revenues

27,40349,567

294,530

10,290,164

10,646,300

110,599,358

Property management expenses

2,364,505

2,240,532

25,413,865

Utilities expenses

1,358,151

1,552,430

14,597,500

Property and other taxes

1,770,849

1,770,835

19,033,202

Non-Rental Revenues

Property-Related Expenses

Casualty insurance

45,34344,519487,352

Repairing expenses

756,162

1,119,621

8,127,287

3,945,587

3,801,232

42,407,430

Depreciation
Other rental expenses
Property-Related Profits

49,564

117,128

532,722¥10,468,794¥10,149,490$112,519,292

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

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

14. BREAKDOWN OF GAIN ON SALE OF PROPERTY
For the six months ended March 31, 2010 and September 30, 2009
Thousands of yen
For the period
from October 1, 2009
to March 31, 2010

U.S. dollars

Jingumae Media Square Building
Revenue from sale of a part of site

¥1,507,411

Cost of property¥

614,142

Other sales expenses

8,209

Gain on sale of property¥ 885,059¥―$16,201,756―

6,600,839―

88,241―$ 9,512,676

15. BREAKDOWN OF GAIN ON TRANSFER OF UNUSED FLOOR AREA
For the six months ended March 31, 2010 and September 30, 2009
Thousands of yen
For the period
from October 1, 2009
to March 31, 2010

U.S. dollars

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

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

Mitsubishi UFJ Trust and Banking Building
Revenue from transfer of development rights of floor area¥

Transfer expenses
Gain on transfer of development rights of floor area

38 Japan Real Estate Investment Corporation¥―¥729,984

―

1,412

―

¥728,572

$

―
―

$

―

16. SUPPLEMENTAL CASH FLOW INFORMATION
The following table represents a reconciliation of cash and cash equivalents at March 31, 2010 and September 30, 2009:
Thousands of yen

U.S. dollars
As ofSeptember 30, 2009

As ofMarch 31, 2010

¥18,360,347$159,198,634

3,941,763

3,060,247

42,366,335－

6,500,000－¥18,753,604¥14,920,595$201,564,969

As ofMarch 31, 2010

Cash and deposits with banks¥14,811,840

Cash and deposits with banks held in trust
Time deposits with maturities of more than three months
Cash and cash equivalents

17. LEASESThe Company owns office buildings under leases and earns rent income. As of March 31, 2010 and September30, 2009, the future lease revenues under the
non-cancelable operating leases are as follows:
Thousands of yen
As ofMarch 31, 2010

U.S. dollars

As ofSeptember 30, 2009

As ofMarch 31, 2010

Due within one year

¥16,231,346¥12,223,369$174,455,574

Due after one year

35,000,862

26,543,498

376,191,556

Total¥51,232,208¥38,766,867$550,647,130

18. SUBSEQUENT EVENTSIssuance of investment corporation bonds
Based on the approval by the Board of Director’s meeting held on April 16, 2010, the Company issued new investment corporation bonds on April 23,
2010.

1.

Name

: Japan Real Estate Investment Corporation Seventh Unsecured Bond2.

Total amount of the bond issue: 10 billion yen

3.

Payment amount: 100 yen per face value of 100 yen

4.

Redemption price: 100 yen per face value of 100 yen

5.

Yield on bonds: 1.26%

6.

Bond unit price: 100 million yen

7.

Subscription method: Public offering

8.

Closing date for subscription: April 16, 2010

9.

Payment date

: April 23, 201010.

Collateral and guarantee: Unsecured and unguaranteed

11.

Final Redemption date

: April 23, 2015

12.

Redemption method: Bonds can be redeemed by purchase anytime from date following the payment date

13.

Interest payment dates: Semiannual in arrears (April 23 and October 23 each year)

14.

Financial covenants: Not applicable15.

Use of proceeds: Scheduled redemption of the maturing investment corporation bonds

Japan Real Estate Investment Corporation

39

40 Japan Real Estate Investment Corporation

Corporate Data
As of March 31, 2010

Executives

Transfer Agent

Executive Director:

Taketo Yamazaki

The Sumitomo Trust & Banking Co., Ltd.

Supervisory Directors:

Kenji Kusakabe

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

Tomohiro Okanoya

Auditors
Paid-in Capital

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

Hibiya Kokusai Bldg.
2-2-23, Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011, Japan

Number of Units Outstanding

Incorporation

489,200

May 11, 2001

Number of Unitholders

Executive Office

14,893

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

Stock Listing
Tokyo Stock Exchange

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

Securities CodePlanning Department8952

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

Type of Investment Corporation

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

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

Japan Real Estate Investment Corporation 41

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