Japan Real Estate
Investment Corporation
June 2002
Japan Real Estate Asset Management Co., Ltd.
CEO & President Ryoichi Kakehashi

Information regarding Forecasts
This presentation contains the information regarding the forecasts reflecting the planand outlook of Japan Real Estate Investment Corporations (“JRE”). Among thedescriptions in this presentation, all the descriptions are related to the forecasts,
except the ones describing the current or past facts. These descriptions regarding
the forecasts are based upon the assumptions, judgment and information we areable to obtain at this moment from Japan Real Estate Asset Management (“J­Rea”)
and other investment corporations. These information may contain known andunknown risks, uncertainty or other factors. The forecasts might be affected by
known and unknown risks, uncertainty or other factors, especially, as to whether
JRE will be able to achieve internal and external growths as planned, or to improve
the profitability per share as expected. The said risks, uncertainty or other factors
might bring drastically different result regarding JRE’s future performances,management effects and financials presented implicitly and explicitly. JRE shall not
be required to update and disclose the descriptions regarding the said forecasts
after the date on this presentation.

1

About J­REIT System
What is J-REIT?
· “J-REIT” is a newly established system of Japanese Real Estate Investment Trust.
· The amendment of Japanese investment trust law has enabled investment trusts (typically corporate type)to invest in real estate.
· The equity securities issued by J-REITs are listed on the Tokyo Stock Exchange (TSE) and are freely

tradable like stocks of normal corporations.
· Currently, 5 J-REITs including JRE are listed on the TSE.
· While US REITs are typically normal corporations who are exempt from corporate income taxes under IRS

codes, J-REITs are special purpose entities and are not subject to the same regulations of normal
corporations.
J-REIT Characteristics
Asset Manager System

Tax Exempt Status

Listing

J-REITs do not have employees.
All investment decision making
and administrative work must be
outsourced to a licensed asset
management company.

As long as J-REITs pay dividends
of more than 90% of their taxable
income, all dividends are treated as
expenses which thereby makes JREIT exempt from corporate
income taxes.

The equity securities issued by JREITs are listed on the Tokyo
Stock Exchange and are freely
tradable like stocks of normal
corporations.

2

JRE’s organizational structure
Asset Management Company

Tokyo Stock
Exchange

Japan Real Estate
Investment Corporation
Japan
Japan Real
Real Estate
EstateAsset
Asset Management
Management

Dividend
Asset
Management
Agreement

Investors
Trade

Stock

Board
Board
Investment

Investors

Investment
Trade

３６％

Rental Revenue

Investment

Investors

２７％
２７％
１０％

OfficeOffice Buildings
Buildings
3

Portfolio Profile ①

Property Type

Office buildings

Geographical Diversification

Diverse investments in major cities
throughout Japan

Number of Properties

24

Average Property Age

13.9 years

Portfolio Size

Total acquisition price：144,697 million yen

Occupancy Rate

94.0%

Diverse Tenant Base

Total number of tenants: 328

Aggregate Net Rentable Area

201,884㎡

Note: As of March 31, 2002

4

Portfolio Profile ②
Tokyo 23 Wards

Shibuya Cross Tower

Shiba 2­chome
Daimon Building

Tokyo Metropolitan Area
(excluding 23 wards)

Mitsubishi Soken
Building

Otsuka Higashi­
Ikebukuro Building

Kodenmacho Shin­Cosmo Kanasugibashi
Nihonbashi Building
Building

Takanawa Building Ikebukuro 2­chome Omori­eki Higashiguchi
Building
Building

JTS
Building

Kawasaki Isago Building

Urawa Dai­Ichi­Seimei
Ericsson Shin­
Dowa Kasai Building Yokohama Building

Other Locations

Midosuji Daiwa
Building

Kyoto
Shijokawaramachi
Building

Hinode Tenjin Building

Nigata Ishizuecho Nishi­
bandaibashi Building

Kanazawa Park
Building

Sendai Honcho
Honma Building

Tosei Tenjin Building

NagoyaHirokoji
Building
Kobe Itomachi
Building

Fukusuke
Kanazawa Minamicho
Sakaisujihonmachi Building
Building

5

JRE’s History of Activities
1. First J­REIT
l Initial Public Offering
ü

ü

ü

ü

Establishment of
Investment Corporation on
May 11, 2001
Issued 160,000 units andraised 81.1 billion yen
equity capital
Listed on the Tokyo Stock
Exchange on September
10, 2001
20 initial properties
contributed mainly from
Mitsubishi Estate, Tokio
Marine and Dai­ichi MutualLife

2. Management Track RecordslExternal Growth: Acquisitionof Additional Properties
ü
ü

ü

ü

Number of properties: 20 → 24
Aggregate acquisition price:
92,845 → 144, 697 million yen
Aggregate net rentable area:
133,927 → 201, 884㎡
Number of the tenants:
198 → 328lStable Operationsü

Occupancy Rate:around 94%l

Debt Financing

ü

Total bank loans: 64 billion yen
Obtained high credit ratings fromrating agencies

ü

3．Recent Financing
l
ü

ü

ü

l
ü

Secondary Equity OfferingFirst secondary equity offeringof J­REIT
Issued 65,000 additional units
and raised 30.8 billion yen
Post­offering total unitholders’equity: 112.1 billion yen

J­REIT BondFirst 25 billion yen 5 year
J­REIT bond in June
(S&P: A+, Moody’s: A2)

6

Credit Ratings
First J­REIT to obtain credit ratings from S&P and Moody’sLong­term rating
Short­term rating
OutlookA+
RatingA2

Outlook

StableA­1StableAnnouncement 3/15/02

Announcement 2/14/02
Commentary

Commentaryu Strong business position and conservative
capital structureu Leading J­REIT

u Stable cash flowu Conservative financial policyu High quality portfoliou High debt service coverage ratiou Excellent investment skills

u Highly diversified tenant mix

u Stable business conditions

u Credibility of sponsors* Rating is for issuer, not for public shares or other specific securities issued by the investment company.

7

JRE’s Financial Performances

Income Statement
Term# of Days
Operating Revenues
Operating Profits
Recurring Profits
Net Income
Dividend
Number of Units
Dividend per Unit
Dividend per Unit (semi­annualized)

1st Fiscal Period(Forecast)203days
5,100
3,000
2,100
2,100
2,100
160,400
13,00011,687

Balance Sheet as of 3/31/2002
Item
Total Current Assets
Total Fixed Assets
Investments and Others

16,162
145,579
67

Total Assets

161,809

1st Fiscal Period(Actual Result)203days
6,492
3,632
2,405
2,403
2,403
160,400
14,983
13,506(In millions of yen, excluding dividend per unit)
2nd Fiscal Period
3rd Fiscal Period(Forecast)(Forecast)
183days
182days
7,700
7,800
3,800
4,000
2,800
3,000
2,800
3,000
2,800
3,000
225,400
225,400
12,40013,60012,40013,600(In millions of yen)
Item
Total Current Liabilities
41,728
Total Long­term Liabilities
36,418
Total Liabilities
78,146
Total Unitholders' Equity
83,663
Total Liabilities and Unitholders' Equity
161,8098

JRE’s Financial Ratios

Financial Indices
Return on Assets (ROA)

2.0％（3.6％ annualized） *Recurring profits/（BOP total assets + EOP total assets）/2 (203 working days)

Return on Equity (ROE)

2.9％（5.2％ annualized） *Net income/（BOP worth + term­EOP net worth）/2 (203 working days)

EOP equity ratio

51.7% *EOP networth/ EOP total assets * 100

EOP interest­bearing debt ratio on total assets （LTV）

39.6% *EOP interest­bearing debt/ EOP total assets * 100

Debt service coverage ratio

x15.5 *Net income before interest and depreciation/ interest expenses

Net Operating Income

4,732 million yen *（Rental revenues ­ rental expenses） + Depreciation

Funds From Operations (FFO)

3,503 million yen * Net income + Depreciation

FFO multiple

13.5 * Unit price at end of March（530,000 yen）/FFO per unit （annualized）

Note : BOP ­ Beginning of period
EOP ­ End of period

9

JRE’s Market Position
Million Yen

Japanese Listed Real Estate Companies’ Market Cap
1 ,4 0 0 ,0 0 0

1 ,2 0 0 ,0 0 0

JRE is the 5th largest listed
real estate company in Japan

1 ,0 0 0 ,0 0 0

8 0 0 ,0 0 0
3 0 0 ,0 0 0
6 0 0 ,0 0 0
1 ,3 2 5 ,1 6 9
2 5 0 ,0 0 0
4 0 0 ,0 0 0

8 9 7 ,0 6 6

2 9 9 ,6 1 5

2 0 0 ,0 0 0

1 5 6 ,3 5 00
1 5 0 ,0 0 0

M it s u b is h i
E s ta t e (8 8 02 )M it s u i
F udos an(88 0 1 )S u m it o m o
R e a lt y &D e v e lo p m e n t(8 8 3 0 )N B F (8 95 1 )J R E (8 9 5 2 )D a ib iru (8 8 0 6 )

1 1 6 ,7 5 7

1 0 0 ,0 0 0

O R I X R E IT
(8 9 5 4 )J P R (89 5 5 )To k y o
Ta t e m o n o(8 8 0 4 )J R F (8 95 3 )

8 0 ,8 6 1
6 2 ,1 7 9

5 7 ,9 2 0

5 0 ,4 1 9

5 0 ,0 0 0
2 4 ,4 7 1

0
M it s u b is h i
E s ta t e (8 8 02 )M it s u i
F udos an(88 0 1 )S u m it o m o
R e a lt y &D e v e lo p m e n t(8 8 3 0 )N B F (8 9 5 1 )J R E (8 9 5 2 )D a ib iru (8 8 0 6 )O R I X R E IT
(8 9 5 4 )J P R (8 9 5 5 )To k y o
Ta te m o n o(8 8 0 4 )J R F (8 9 5 3 )Note: As of June 14, 2002.
Source: Bloomberg

10

JRE’s Unitholder Composition

Number of Units

Individuals/Others
３１,５８３（１９.７%）

FinancialInst.
６６,５６１（４１.５%）

１２,０４５（９５.８％）

Number of Unitholders

Note: As of March 31, 2002.

Foreign
Corporations
Corp./
２２,３１０Individuals（１３.９%）
３９,９４６（２４.９%）

１０８（０.９％）

３１５（２.５％）

１０６（０.８％）

11

Tokyo Real Estate Market Environmentu Due to ongoing corporate restructuring and the current economic

slump in Japan, demand for office space is expected to be soft for thenear­term.
u At the same time, a significant supply of new office buildings is

expected in the near future, the so­called the “Year 2003 Problem.”u Consequently, market vacancy rates will likely rise and rental rates will

generally decline, which may result in sluggish growth in rental
revenues.
u On the other hand, as a result of severe restructuring activities arisingfrom the corporate sector, a number of office buildings are expected to
be up for sale.

12Tokyo Real Estate Market (Prime 5 Wards)
Asking Rent (Monthly base)
Yen/Tsubo

Vacancy Ratio

35,000

10.0%

9.4%
9.0%

8.9%

30,0008.0%

7.9%
25,0007.0%

5.9%

20,000

5.9%

6.0%

5.9%
5.3%

5.1%

4.6%

15,000

5.0%

4.5%
4.0%

4.2% 4.4%4.0%
3.6% 3.4% 3.4%

3.6%
3.0%

10,000

2.0%
5,000
1.0%
0

0.0%
92

93

94

95

96

97

98

99

00.3

00.6

00.9

Asking Rent (yen / tsubo)

00.12

01.3

01.6

01.9

01.12

02.3

Vacancy Ratio

Note: “Prime 5 wards” is including Chiyoda, Chuo, Minato, Shinjuku and Shibuya
Source: IKOMA/CB Richard Ellis

13

Year 2003 Problem
It is yet too early to be optimistic, but, the impact of the “Year 2003 Problem” on JRE’s
performances is expected to be minimal.
Reasons：u JRE owns few properties that directly compete with newly supplied buildingsu Stable revenues through fixed­term lease contracts (Revenue­wise, share of fixed­term lease
contracts is 24.4% in JRE’s Tokyo metropolitan area portfolio)
u Leasing contracts with the sponsors (Revenue­wise, share of fixed­term lease contracts is 5.8%
in JRE’s Tokyo metropolitan area portfolio)u J­Rea and JRE have shown strong capability to attract tenantsu New supply/ concentration of buildings/ tenants will positively impact on adjacent sub­markets’
performances. (Favorable impact will be brought to Shiba / Hamamatsu­cho areas as Dentsu
and Nippon Television Network will relocate their headquarters to Shiodome area.)u Mitigated risks by geographical diversification and tenant diversification.
Action Plans:u Improve occupancy rates by offering flexible terms and conditions to tenants and understanding
accurate needs of tenantsu Mid­long term maintenance plan and capital expenditure to improve property quality for tenantsatisfaction
u Reduction of property management expenses
14

APPENDIX

15

1. 1st Fiscal Period Results forJapan Real Estate Investment Corporation

16

1st Fiscal Period Income Statement (5/11/01 – 3/31/02)
uInitial Forecast and Actual Resultsu

1st Fiscal Period YTD Results(Calculated with the premises of full operation of all properties)(In millions of yen）
Forecast at IPO
Item(20 properties)

Actual Results
Initial 20
Additional
Properties(*)
Propertis

Operating Revenues
Rental revenues
Other rental revenues
Operating Expenses
Property management fees
Utility charges
Property and other taxes
Insurance expenses
Maintenance expenses
Other operating expenses
NOI
Depreciation and amortization
Operating Profits
Administrative expenses
Asset management fees
Other administrative expenses
Net Operating Profits
Non­Operating Revenues
Interest received
Other non­operating revenues
Non­Operating Expenses
Interest expenses
Deferred start­up costs
New unit­issuance costs
Unit­listing expenses
Other non­operating expenses
Recurring Profits
Income before Income Taxes
Taxes
Net Income
Retained Earnings

5,100

2,100
2,100

671
389
281
2,961
2
2
0
559
241
90
121
74
31
2,405
2,405
1
2,403
2,403

FFO (Net Income＋Depreciation）

2,900

Dividend per unit (160,400 units)

13,000 yen

1,300

3,800
800
3,000
450

2,550
0

450
150
300

2,100
2,100

5,206
5,186
19
1,389
731
394
0
11
244
9
3,817
848
2,969

Total

1,285 6,492
1,240 6,427
4565
365 1,759
183 915
99 49344
3
15
76 3210
10920 4,732
251 1,100
665 3,632

Change1,392

459(In millions of yen）
1st Term
Item% Change

27.3%

35.3%

Annualized

Operating Revenues
Rental revenues
Other rental revenues
Operating Expenses
Property management fees
Utility charges
Property and other taxes
Insurance expenses
Maintenance expenses
Other operating expenses
NOI
Depreciation and amortization
Operating Profits
Administrative expenses
Asset management fees
Other administrative expenses
Net Operating Profits
Non­Operating Revenues
Interest received
Other non­operating revenues
Non­Operating Expenses
Interest expenses
Deferred start­up costs
New unit­issuance costs
Unit­listing expenses
Other non­operating expenses
Recurring Profits
Income before Income Taxes
Taxes
Net Income
Retained Earnings

15,063
14,888
175
5,500
2,127
1,094
1,516
706
57

l

l

l
l

Operating Income / Expense (excluding depreciation) ：Annualized by operating days
Property tax and the Tokyo metropolitan area tax ：Amortization for 24 properties in 2001(1,509 million yen)
was added to “Property and other taxes”
Depreciation ：Annualized by operating months
Administrative expenses and Non­operating profit / loss：
Posted the total amount of the administrative expenses
and non­operating profit / loss for the 2nd and 3rd period

9,563
2,267
7,296
1,279
747
532
6,017
4
4
0
822
757
0
35
30
0
5,199
5,199
4
5,195
5,195

932

24.5%

663

22.1%

411

16.1%

109
91

24.2%
60.7%

305
305

14.5%
14.5%

303

14.4%

3,503

603

20.8%

FFO (Net Income＋Depreciation）

7,462

14,983 yen

1,983

15.3%

Dividend per unit (160,400 units)

32,380 yen

Dividend per units (225,400 units)

23,040 yen(*)The above performance of the “Initial 20 Properties” includes the profit / loss status for the additionally acquired partial of the Urawa Dai­Ichi­Seimei
Dowa Kasai Building (acquired on October 11, 2001) and that of the Midosuji Daiwa Building (acquired on February 28, 2002).

17

1st Fiscal Period Balance Sheet （As of 3/31/02）
uComparison of the balance sheets (As of 9/30/01 vs. as of 3/31/02)(In millions of yen）

(In millions of yen）
Item

As of Sep. 30,
2001

As of March
31, 2002

Differenct

Cash and entrusted cash

20,962

15,323

Other current assets

1,546

838

22,50916,162△ 5,639 Decreased by properties acquisition△ 708 Decreased by returning consumption tax△ 6,347

Fixed Assets
Property and equipment (Including entrusted property and equipment)
Buildings
Structures

As of Sep. 30, As of March
2001
31, 2002

Difference

Factors for Differences

Liabilities

Current Assets

Total Current Assets

Item

Factors for Differences

29,15345,413

16,260

0

262

262

Current Liabilities
Short-term borrowing

0

40,00040,000 Borrowed for properties acquisition

Rent received in advance

519

998

479

Other current liabilities

880

730

△ 150

Total Current Liabilities

1,399

41,72840,32924,00024,0000Long-term Liabilities
Long-term borrowings
Increased by properties acquisition

0

944

944

Deposits from tenants

8,935

12,4183,483 Increased by properties acquisitionLand

63,436

99,61436,178

Total Long-term Liabilities

32,93536,4183,483

Accumulated depreciation△ 117△ 1,100△ 983 Increased by properties acquisition

34,33578,14643,811

Total Property and Equipment

92,472

145,135

52,663

444

444

0

81,26081,2600Machinery and equipment

Unitholders' Equity

Intangible Assets
Entrusted lease hold rights
Total Intangible Assets
Total Fixed Assets

Total Liabilities

444

444

0

92,916

145,579

52,663

67

67

0

67

67

0

90

0

△ 90 Amortized at a time in the 1st term

90

0

△ 90

115,585

161,80946,224

Unitholders' capital

△ 10

2,403

2,413 Net income for the 1st term

Total Unitholders' Equity

Retained earnings

81,24983,663

2,414

Total Liabilities and Unitholders' Equity

115,585

161,80946,224

Investments and Others
Long-term prepaid expenses, etc
Total Investments and Others
Deffered Assets
Deffered start-up costs
Total Deffered Assets
Total Assets(*) The above is a comparison of balance sheets as of September 30, 2001 and March 31, 2002. September 2001 balance sheet was prepared for administrative purposes, which has not been
audited.

18

Statement of Cash Flows (5/11/01 – 3/31/02)(In millions of yen)

Item
Cash flow from operating activities
Net income before tax
Depreciation and adjustments
Cash flow from investing activities
Cash flow from financing activities
Increase in short­ and long­ term loans
Proceeds from issuance of equity units
Net increase in Cash and Cash Equivalents
Balance of Cash and Cash Equivalents at beginning of period
Balance of Cash and Cash Equivalents at end of period

Amount
4,340
2,405
1,935
△ 134,276
145,260
64,00081,26015,323­
15,32319

Statement for 1st Fiscal Period Dividend (5/11/01 – 3/31/02)

Net income before distribution
Total amount of dividends
Retained earnings¥2,403,333,973¥2,403,273,200¥60,773* Dividend per unit is: １４，９８３ yen

20Summary of Cash Flows by Property ①uTokyo Metropolitan Area (Tokyo 23 wards)
Item

Number of Operating Days
Revenues
Operating Expenses（Excluding Depreciation)
NOI
Depreciation and Amortization
Operating Profits（Property Information）
Year Built
Acquisition PriceAppraised Value (As of the end of the period)
Gross Building Areas（㎡）Occupancy Rate
Number of Tenants

Item
Number of Operating Days
Revenues
Operating Expenses（Excluding Depreciation)
NOI
Depreciation and Amortization
Operating Profits（Property Information）
Year Built
Acquisition PriceAppraised Value (As of the end of the period)
Gross Building Areas（㎡）Occupancy Rate
Number of Tenants

Mitsubishi
Kodenmacho
Soken
Shin­Nihonbashi
Building
Building
188
188
1,026
159
248
37
778
122
74
32
704
90
July­70
27,26727,80026,37397.4%
4

Shiba 2 chome
Cosmo
DaimonKanasughibashi
Building
Building
203
188
359
142
102
34
256
108
34
26
222
82

November­91
3,173
3,160
5,823
87.3%
5

Omori­Eki
OtsukaHigashiguchi Higashi­Ikebukuro
Building
Building
203
188
317
205
97
46
220
159
70
49
150
110
July­89
5,123
4,900
14,095
95.7%
19

November­87
3,541
3,550
9,531
98.6%
9

March­84
4,859
4,730
16,23589.3%
20
Ikebukuro
2chomeBuilding

March­92
2,808
2,790
5,421
87.7%
8
Shibuya

188
74
18
56
16
40

Cross Tower
122
1,081
319
762
193
569

May­90
1,728
1,600
3,158
59.2%
3

April­76
34,60034,50061,86295.8%
52(In millions of yen)
JTS

Takanawadai
Building

Building
188
155
33
122
27
95

203
106
35
72
17
54

January­91
2,738
2,840
5,763
100.0%
1

September­91
1,362
1,320
5,270
100.0%
1

Tokyo Metropolitan
23 Wards
Total
3,623
968
2,655
537
2,118

87,19987,190
153,53194.2%
119* Occupancy rate is calculated by dividing total rented areas by net rentable areas.
* The same tenant in multiple properties is counted as one tenant in the total number of tenants.

21

Summary of Cash Flows by Property ②uTokyo Metropolitan Area (Excluding Tokyo 23 wards)
Urawa Dai­Ichi­Seimei
Dowa Kasai
Item
Building
Number of Operating Days
188
Revenues
149
Operating Expenses（Excluding Depreciation)
36
NOI
113
Depreciation and Amortization
25
Operating Profits
89（Property Information）
Year Built
March­90
Acquisition Price
2,574
Appraised Value (As of the end of the period)
2,700
Gross Building Areas（㎡）6,259
Occupancy Rate
95.0%
Number of Tenants
13

Kawasaki
Isago
Building(In millions of yen)
Tokyo Metropolitan(Except 23 Wards)
Total

EricssonShin­Yokohama
Building
188
188
60
128
52
76

63
64
14
50
22
28

401
110
292
98
193

December­90
3,375
3,320
9,624
86.0%
7

April­92
3,000
3,010
10,403100.0%
2

8,949
9,030
26,28693.5%
21* Occupancy rate is calculated by dividing total rented areas by net rentable areas.
* The same tenant in multiple properties is counted as one tenant in the total number of tenants.

22

Summary of Cash Flows by Property ③uRegional Cities
Item

Number of Operating Days
Revenues
Operating Expenses（Excluding Depreciation)
NOI
Depreciation and Amortization
Operating Profits（Property Information）
Year Built
Acquisition PriceAppraised Value (As of the end of the period)
Gross Building Areas（㎡）Occupancy Rate
Number of Tenants

Item
Number of Operating Days
Revenues
Operating Expenses（Excluding Depreciation)
NOI
Depreciation and Amortization
Operating Profits（Property Information）
Year Built
Acquisition PriceAppraised Value (As of the end of the period)
Gross Building Areas（㎡）Occupancy Rate
Number of Tenants

Sendai Honcho Niigata Ishizuecho
Honma
Nishi­Bandaibashi
Building
Building
188
188
177
85
40
60
137
24
36
13
101
11
November­91
2,924
2,870
8,248
100.0%
12
Midosuji
Daiwa
Building

November­84
1,010
970
6,410
83.7%
8

Fukusuke
Sakaisujihonmachi
Building
188
188
497
165
87
41
411
124
81
30
330
94

September­91
14,31414,30031,213100.0%
20

October­92
2,264
2,230
17,146
91.6%
7

188
96
28
68
16
53

32
55
13
42
18
24

203
884
277
608
170
438

(In millions of yen)
Kyoto Shijyo
Kawaramachi
Building
102
86
18
68
19
50

March­87
1,331
1,290
5,163
87.0%
12

October­91
2,880
3,090
43,481
91.5%
60

May­87
14,533
14,70033,37898.6%
31

November­82
2,650
2,660
9,701
76.3%
21

Kanazawa
Minamicho
Building

Kanazawa
Park
Building

Kobe
Itomachi
Building

NagoyaHirokoji
Building

HinodeTenjinBuilding

Tosei
TenjinBuilding

Other Major
Cities
Total

188
96
26
69
17
52

203
229
62
166
40
126

188
98
27
71
25
46

2,468
678
1,790
464
1,325

September­89
1,436
1,400
4,894
92.3%
12

August­87
3,657
3,680
12,527100.0%
9

March­92
1,550
1,530
5,589
80.4%
17

48,54948,720177,750
93.9%
200* Occupancy rate is calculated by dividing total rented areas by net rentable areas.
* The same tenant in multiple properties is counted as one tenant in the total number of tenants.

23

Property Acquisitions after IPO
Total Acquisition Price (Million Yen)

# of Properties

150,000

25
144,697

144,697

140,000

24
134,437

24

131,437

24

128,787

130,000

23
23
120,00022
22
110,000
21
21

100,000
92,845

94,18720
90,0002020

1980,00070,00018
September, 2001

Name of Properties
Additionally Acquired

October
Urawa Dai­
Ichi­Seimei
Dowa Kasai

November

DecemberJanuary, 2002

Shibuya

Kyoto Shijo
Kawaramachi

Ericsson Shin­Yokohama

Cross

February

March

Kanazawa Park
Midousuji Daiwa

24

Net Rentable Area and Occupancy Rates
NRA (㎡）

Occupancy Rate

220,000㎡
94.6%

93.9%

94.7%

93.8%

94.1%

94.0%

94.0%

201,934㎡

201,884㎡

90.0%

80.0%

200,000㎡

70.0%
178,698㎡

180,000㎡

60.0%

171,734㎡
164,883㎡

50.0%
160,000㎡
40.0%
140,000㎡

136,381㎡

30.0%

133,927㎡

20.0%
120,000㎡
10.0%

100,000㎡

0.0%
September, 2001

Total # of Tenants:

198

OctoberNovember

DecemberJanuary, 2002

February

March

197

248

266

269

325

328

* The same tenant housed in multiple properties is counted as one tenant.

25

Geographical Diversification andEarthquake Risk Diversification
Others9.2%

Nagoya10.0%

The drop in the PML (Probable
Maximum Loss) from 5.36％ at thetime of IPO to 4.97％ shows
progressing earthquake risk
diversification.

Tokyo 23 Wards
60.3%

Osaka/Kobe/Kyoto
14.3%

Tokyo Metropolitan Area
(excluding 23 wards)
6.2%

The portfolio is well­balanced interms of locations: approximately
70% are properties located in theTokyo metropolitan area withhigh liquidity and stable rental
income, and the remaining 30%
are those located in other major
cities with attractive yields.

5.36%
4.97%

Upon IPO

As of March 31, 2002

20 Properties

24 Properties* Ratios are based on purchase prices.
* Tokyo metropolitan area encompasses Tokyo and 3 prefectures of Saitama, Chiba and Kanagawa.

26

Tenancy Profileu Business Diversification of Top 69
Tenants (based on their rented area)uTop 5 Tenants
Top 5 Tenants

Others (15 tenants)
11.4%
Real Estate
2.6%
Retail/Food Service
3.0%
Machinary
3.5%

Rent Area% of Total Rent
Area

Mitsubishi Research InstituteMitsubishi Soken Building

14,529㎡

7.7%

2

Dai-ichi Mutual Life

Midosuji Daiwa Building
Other 8 buildings

13,591㎡

7.2%

3

Ericsson Japan

Ericsson Shin-Yokohama Building

5,794㎡

3.1%

4

TOTO

Nagoya Hirokoji Building
Midosuji Daiwa Building

4,840㎡

2.6%

5

Janssen Pharmaceutical

Takanawadai Building
Tosei Tenjin Building

4,318㎡

2.3%

1

Financial
Institution/Insurance
17.4%

Property

Glass & Ceramics
3.5%
Information Services
16.1%

Pharmaceutical
3.7%
Textile & Apparel
3.8%
Nonferrous Metals
3.8%
Services
14.9%

Communication
5.2%.

Elctrical Machinery
10.9%* The above covers the top 69 tenants with more than 600 square meters of rented area.
* The total rented area of the 69 tenants accounts for about 72% of the entire NRA of the portfolio.

The number of tenants rose sharply
from 198 at IPO to 328. Rented
area ratios show tenant
diversification.
27

Property Price Comparison(In millions of yen)Area

23 WardsTokyo
Metropolitan
Area

Mitsubishi Soken Building

Trust Beneficiary Right

Kodenmacho Shin­Nihonbashi Building

Trust Beneficiary Right

Shiba 2chome Daimon Building

Trust Beneficiary Right

Cosmo Kanasugibashi Building

Trust Beneficiary Right

Takanawadai Building

Trust Beneficiary Right

JTS Building

Trust Beneficiary Right

Omori­Eki Higashiguchi Building

Trust Beneficiary Right

Otsuka Higashi­Ikebukuro Building

Trust Beneficiary Right

Ikebukuro 2chome Building

Trust Beneficiary Right

Shibuya Cross Tower

Real EstateAppraised Value at
End of Period
27,800
3,160
4,730
2,790
2,840
1,320
4,900
3,550
1,600
34,500Urawa Dai­Ichi­Seimei Dowa Kasai Building

Real Estate

2,700

Trust Beneficiary Right

Name

Excluding
23 Wards Kawasaki Isago Building

Asset Type

Kanazawa Minamicho Building

Trust Beneficiary Right

Kanazawa Park Building

Real Estate

Nagoya Hirokoji Building

Real Estate

Kyoto Shijo Kawaramachi Building

Real Estate

3,320
3,010
2,870
970
1,290
3,090
14,7002,660

Midosuji Daiwa Building

Trust Beneficiary Right

14,300Ericsson Shin­Yokohama Building

Real Estate

Sendai Honcho Honma Building

Trust Beneficiary Right

Niigata Ishizuecho Nishi­Bandaibashi Building Trust Beneficiary Right

Other Major Cities

Fukusuke Sakaisujihonmachi Building
Kobe Itomachi Building

Trust Beneficiary Right

Hinode Tenjin Building

Trust Beneficiary Right

Tosei Tenjin Building

Real Estate

Total /Average

2,230
1,400
3,680
1,530
144,940

Acquisition Price
27,267
3,173
4,859
2,808
2,738
1,362
5,123
3,541
1,728
34,600
1,232
1,342
3,375
3,000
2,924
1,010
1,331
2,880
14,533
2,650
6,934
7,380
2,264
1,436
3,657
1,550
144,697

％
18.8%
2.2%
3.4%
1.9%
1.9%
0.9%
3.5%
2.4%
1.2%
23.9%
0.9%
0.9%
2.3%
2.1%
2.0%
0.7%
0.9%
2.0%
10.0%
1.8%
4.8%
5.1%
1.6%
1.0%
2.5%
1.1%
100.0%

28

Summary of Loans
Loans（As of March 31, 2002）
Lender

0.85923％ per annum
to Dec. 25, 2001

Closing
date
Nov. 30,
2001

Maturity

Collateral

June 24, 2002

First­lien mortgage on Property

0.90077％ per annum
from Dec. 26,2001 to June24, 2002

Sumitomo Trust and Banking
Mitsubishi Trust Bank
Same as above

Remarks

2 billion yen

0.85231％ per annum
to Dec. 25, 2001

Dec. 20,
2001

June 24, 2002

First­lien mortgage on propertyof

SecuredNo guaranteeNon­subordinatedFor purchase
Propertyof

SecuredNo guaranteeNon­subordinatedFor purchasepropertyof

SecuredNo guaranteeNon­subordinatedFor purchase of a
total of 20 properties
purchased by JRE
by Oct. 11, 2001

SecuredNo guaranteeNon­subordinatedSecond­lien pledge on trust beneficiaryinterests of trust assets of Properties

7 billion yen

0.925％ per annum

Pledge on other certain cash deposit andclaim for insurance benefits
Feb. 28,
2002

June 24, 2002

First­lien pledge on trust beneficiary interestof Propety
Second­lien pledge on trust beneficiaryinterests of Properties．）

Long­term loan

For purchase
Propety

Pledge on other certain cash deposit andclaim for insurance benefits

0.90077％ per annum
from Dec. 26,2001 to June24, 2002
Same as above

Use of fundSecond­lien pledge on trust beneficiaryinterests of Properties

Note 2（）． ）Interest rate

Bank of Tokyo­ Mitsubishi（（

Short­term loan Informal line of credit Note 1

Industrial Bank of Japan(Note) 3.

Outstandin
g loanamount31 billion
yen

Fixed pledge on other certain cash deposit
and claim for insurance benefits
Industrial Bank of Japan(Note)3.
Bank of Tokyo­ Mitsubishi
Sumitomo Trust and Banking
Mitsubishi
Trust
Bank
Yasuda Fire and Marine
Insurance

24
yenbillion1.12％ per annum
However, the interest rate
after the planned principal
repayment date should be
decided two business days
before that date

Sept.25,
2001

Planned repayment day of
principal
June 23, 2006

First­lien pledge on trust beneficiary interestof trust assets of Properties
Pledge on other certain cash deposit

Final repayment
principal
June 23, 2008

day

of

（Note）1．All properties to be purchased with proceeds from the informal line of credit shall be joint collateral of the loan.
（Note）2．There exists a basic agreement of the informal line of credit between JRE and lenders, but such lenders are legally not obligated to disburse additional loans. JRE must pay fees to each lender at the time of
disbursement. Also, JRE must pay fees to Bank of Tokyo­Mitsubishi and Industrial Bank of Japan (Note 3), who concurrently serve as agents for long and short­term loans on respective interest payment day based on
the outstanding balance of loans.
（Note）3．The transaction between JRE and Industrial Bank of Japan was succeeded by to Mizuho Corporate Bank on April 1, 2002.

29

Major Unitholders at Fiscal Period Endu

Major unitholders as of March 31, 2002 are as follows:

CompanyUnits

The Chase Manhattan Bank, N.A. London
12,514
Mitsubishi Estate Co., Ltd.
10,160The Tokio Marine and Fire Insurance Co., Ltd
8,120
The Yamanashi Chuo Bank, Ltd.
5,300
The Hachijuni Bank, Ltd.
5,023
The Dai-ichi Mutual Life Insurance Company
4,920
Goldman Sachs International
3,284
The Nomura Trust & Banking Co., Ltd
3,124
The Mitsubishi Trust and Banking Corporation (Trust Account) 2,550
Fidelity Funds-Japan Fund (Fidelity Investments Luxembourg) 2,165% of Total Shares
Outstanding

7.8%
6.3%
5.0%
3.3%
3.1%
3.0%
2.0%
1.9%
1.5%
1.3%

30

2．Participation of Mitsui & Co.

31

Participation in J­Rea by Mitsui & Co.
u

Mitsui & Co. (“Mitsui”) received 10% shares of J­Rea from the 3
existing shareholders, and will participate in management of J­REIT.

uWith the participation of Mitsui, J­Rea will further promote transparent
asset management through the partnership of four sponsors withdifferent industry types and corporate groups.

u

Two experienced employees will be seconded from Mitsui to J­Rea.
Also, Mitsui will provide strong acquisition information channels.

uUpon participation, Mitsui will sell its MD Kanda Building to JRE.

32

Profile of MD Kanda Building【Property Summary】
u Address：

９－１, Mitoshiro­cho,
Kanda, Chiyoda­ku, Tokyo

u Area：＜Land＞１，０８５．８３ ㎡＜Building＞８，１８５．１１ ㎡

u Structure：

Steel Framed Reinforced Concrete
Structure / 10 Stories

u Built in：

February 1998 (Age: 4 years)

u Type of Ownership：

Fee Simple

u Net Rentable Area： ６，３３４㎡【Transaction Summary】
u Seller：

Mitsui & Co.

u Acquisition Price： ９，５２０ million yen
u Appraised Value： ９，５３０ million yen (As of 3/31/02)
u Acquisition Date： May ３１, ２００２

（Source） http://map.yahoo.co.jp/

Excellent,: 1 ­ 9 minute walk frommajor JR stations, “Kanda” and“Ochanomizu”, subway stations,“Ogawa­cho,”“Awaji­cho,” “Shin­
Ochanomizu,” “Kanda” and“Otemachi.”33

3. Other Information

34

JRE Stock Price Performance
As of June 17, 2002
High
Low
Stock Pr ice
To IPO Offer ing Price
580,000yen

560,000円
480,000円
517,000円-1.52%

03/18/02
01/16/02

10000unit

560,000yen
8000unit
540,000yen

IPO Offering Price : 525,000yen
6000unit

520,000yen

500,000yen

4000unit

480,000yen
2000unit
460,000yen

9/

9/

19
10
/
10 1
/1
10 1
/2
10 2
/3
1
11
/9
11
/2
11 0
/3
12 0
/1
12 1
/2
0
1/
7
1/
17
1/
28
2/
6
2/
18
2/
27
3/
8
3/
19
3/
29
4/
9
4/
18
4/
30
5/
13
5/
22
5/
31
6/
11

0unit

10

440,000yen

VolumeStock Price＊Share prices used for making graphs are based on closing prices of each day.
＊Stock price performance above is historical one, not an indication of future one.

35

Stock Price Performances to Indexes
As of June 17, 2002
JRE

NBF

TOPIX

TPREAL110%

100%

Weighted Average Price/
IPO Offering Price

90%

80%

70%

6
6/

23
5/

5/
9

4/
22

4/
8

3/
25

8
3/

2/
22

2/
7

1/
24

1/
9

9
12
/1

0

12
/5

11
/2

3

/6
11

/2
10

10
/9

9/

21

60%

＊Share performance is measured based on the offering price of 525,000 yen for JRE and 625,000 yen for NBF (100%) and based on the Sept. 7
closing price of 1,080.83 yen for TOPIX and 770.21 yen for TPREAL (100%).
＊TPREAL (the TOPIX Real Estate Index) is a capitalization­weighted index designed to measure the performance of the real estate sector of the
TOPIX Index.
＊Share prices used for making graphs are based on closing prices of each day.
＊Stock price performance above is historical one, not an indication of future one.

36

J­REIT Market Overview

JRE 8952
2001/9/10

NBF 8951
2001/9/10

JRF 8953
2002/3/12

ORIX 8954
2002/6/10

JPR 8955
2002/6/14

Sponsors

Mitsubishi Estate/ Tokio
Marine/ Dai­ichi Mutual Life

Mitsui Fudosan

Mitsubishi Corp./ UBSAG

OrixTokyo Tatem ono/ Yasuda
Life/ Taisei

Asset type

OfficeOfficeComm ercial properties

Office/Residence/Hotel/
Com m ercial properties/
Others

Office/ Comm ercial
properties

Office 100％

Office 100％

Com mercial Properties
100 ％Office79 ％/Redidence4 ％/Hotel 15％/Com m ercial
properties2 ％Office86％/Com mercial
Properties14 ％Total acquisition price154,370

227,835

40,917

99,616

92,180

Number of properties

25

24

4

40

25

Offering price525,000

625,000

470,000

520,000

200,000

Current price as of 6/17/2002

517,000

557,000

468,000

511,000

201,000­1.5%­10.9%

­0.4%

­1.7%

0.5%

Total number of Issued units

225,400

280,700

52,400123,372

289,600

Equity market cap (Million yen)

116,532

156,350

24,52363,04358,210

Listing date

Asset allocation(vs. IPO price)

Data: As of 6/17/2002
Note: Aggregate J­REIT Market Cap as of 6/18/2002 is 418.6 billion yen.
Source: TSE, Company filing

37

JRE Historical Volatility
As of 17 June, 2002

35.0
33.4
33.0
31.0
29.0
26.5

27.0
25.0
23.0

24.0
22.2

21.0
19.0
17.0
15.0
JRE

TOPIX

NBF

TPREAL＊Volatility is a measure of the change in price of a financial instrument over a given period of time. By convention, historical volatility is thestandard deviation of day­to­day logarithmic price changes, expressed as an annualized percentage. We calculated each volatility by analyzing asample of the 187trading day closing prices (2001/9/10~2002/6/17).
＊Source: Bloomberg

38

4. Performance Forecast

39Forecasted Income Statements（In millions of yen, excluding dividend per unit）
Term

st

nd

st

1 Fiscal Period

1 Fiscal Period (Semi-anualized)

Property Taxes# of Properties

Capitalized
24

Expense24# of Days（203 days）（183 days）

2rd

Fiscal Period

3 Fiscal Period(Forecast)(Forecast)（183 days）

Existing 24 properties（182 days）

MD Kanda

Total

Operating Revenues

6,492

5,852

7,500

250

7,700

7,800

Operating Expenses

1,759

2,159

2,700

30

2,700

2,700

0

573

620

0

620

620

NOI

4,732

3,694

4,800

220

5,000

5,100

Depreciation and Amortization

1,100

992

1,100

40

1,200

1,100

Operating Profits

3,632

2,702

3,700

180

3,800

4,000

Administrative Expenses

671

605

600

600

Net Operating Profits

2,961

2,097

3,200

3,400

Non-Operating Profits

▲ 557

▲ 502

▲ 400

▲ 400

▲ 400

（Interest Expenses）

▲ 241

▲ 217

▲ 400

▲ 400

▲ 400

Recurring Profits

2,405

1,595

2,700

2,800

3,000

Net Income

2,403

1,595

2,700

2,800

3,000

Dividend

2,403

1,595

2,700

2,800

3,000

Number of Units

160,400

160,400

225,400

225,400

Dividend per Unit

14,983 yen

Dividend per Unit (semi-anualized)

13,506 yen

12,400 yen

13,600 yen（Property and Other Taxes）

9,943 yen

600
3,100

225,400

11,900 yen

40

2nd Fiscal Period Balance Sheet Forecast (As of 9/30/02)
uComparison with March 31, 2002
(In millions of yen)
Item

As of March
31, 2002

As of Sep. 30,
2002

Differences

15,32340,200

Other current assets
Total Current Assets

As of March
31, 2002

As of Sep. 30,
2002

40,00040,000Differences

Factors of Differences

Liabilities

Current Assets
Cash and entrusted cash

Item

Factors of Differences

Current Liabilities

24,000

Short-term borrowing

838
16,16240,20024,000

Fixed Assets

0

Rent received in advance

998

Other current liabilities

730

Total Current Liabilities

41,72841,800Long-term borrowings

24,00024,0000

Deposits from tenants

12,41813,5001,200

36,41837,5001,200

78,14679,3001,200

30,900 Increased by issuing new units on May 7, 2002

1,800

0
Assuming the constant debt balance

Property and Equipment (Including entrusted property and equipment)
Buildings

45,41348,0002,600

Structures

262

300

0

Machinery and equipment

0

Fixed Liabilities

944

940

0

99,614

106,700

7,100

Accumulated depreciation△ 1,100△ 2,300

Total Property and Equipment

145,135

153,600

8,500

444

450

0

Unitholder's capital

81,260112,200

444

450

0

Retained earnings

2,403

2,800

400

145,579

154,050

8,500

Total Unitholder's Equity

83,663

115,000

31,30067

50

0 Amotization of up-front fees of bank loans

67

50

0

161,809

194,300

32,500Total Liabilities and Unitholder's equity

161,809

194,300

32,500Land

Increased by the acquisition of MD Kanda Building△ 1,200 Increased by the accumulated depreciation of the 2nd period

Intangible Assets
Entrusted lease hold rights
Total Intangible Assets
Total Fixed Assets

Total Fixed Liabilities
Total Liabilities

Unitholders' Equity

Investments and Others
Long-term prepaid expenses
Total Investments and Others

Total Assets

Estimated Debt Ratio as of September 30, 2001

33%

41

Property Occupancy Rates
Area

Name

Mitsubishi Soken Building
Kodenmacho Shin-Nihonbashi Building
Shiba 2chome Daimon Building
Cosmo Kanasugibashi Building
Takanawadai Building
23 Wards
JTS Building
Tokyo
Metropolitan
Omori-Eki Higashiguchi Building
Area
Otsuka Higashi-Ikebukuro Building
Ikebukuro 2chome Building
Shibuya Cross Tower
Urawa Dai-Ichi-Seimei Dowa Kasai Building
Excluding
23 Wards Kawasaki Isago Building
Ericsson Shin-Yokohama Building
Sendai Honcho Honma Building
Niigata Ishizuecho Nishi-Bandaibashi Building
Kanazawa Minamicho Building
Kanazawa Park Building
Nagoya Hirokoji Building
Other Major Cities
Kyoto Shijo Kawaramachi Building
Midosuji Daiwa Building
Fukusuke Sakaisujihonmachi Building
Kobe Itomachi Building
Hinode Tenjin Building
Tosei Tenjin Building
Weighted Average

As of 3/31/02
97.4%
87.3%
89.3%
87.7%
100.0%
100.0%
95.7%
98.6%
59.2%
95.8%
95.0%
86.0%
100.0%
100.0%
83.7%
87.0%
91.5%
98.6%
76.3%
100.0%
91.6%
92.3%
100.0%
80.4%
94.0%

As of 9/30/02(forecast)
96.3%
100.0%
84.0%
83.2%
100.0%
100.0%
95.7%
98.6%
88.9%
98.3%
93.1%
86.0%
100.0%
100.0%
82.9%
88.4%
93.3%
98.8%
69.9%
99.1%
91.6%
73.8%
100.0%
80.4%
94.0%

42

5．Investment Policies

43Tenant Management Strategies: Countermeasure for Year 2003 ProblemuCompetition in the office building market is expected to grow, because a number of new large buildings
in central Tokyo are scheduled to be completed around 2003.

u

To mitigate the impact of the “Year 2003 Problem,” JRE plans to implement the following tenant
management strategy and acquire new assets. JRE aims to stabilize its cash flows and dividends by“enhancing the profit base (prevention of rent decline and vacancy rate increase)” and “reducing costs(reduction of operational costs and close control of capital expenditure)”u

In order to cope with the above challenges, JRE plans to improve tenant satisfaction, strengthen therelationship with tenants, and reduce operating costs.

ü Our Tenant Management Strategy

Prevention
Prevention ofof
Rent
Rent Decline
Decline• Understand exact needs from tenants• Action to enhance tenant satisfaction

Enhancement
Enhancement ofof
ProfitProfit Basis
Basis

TenantTenantManagement
Management
Strategies
Strategies

Prevention
Prevention ofofVacancy
Vacancy
Rate
Rate Increase
Increase• Understand exact needs from tenants• Estimate the possibilities of tenants’leaving

Reduction
Reduction ofof
Operation
OperationCost
Cost• Cost reduction by introducing acomputerized system and improving
communication channels withproperty managers

Restraint
Restraint ofof Capital
CapitalExpenditure
Expenditure• Conduct necessary property
maintenance work through accurate
understanding of tenant needs

Cost
Cost Reduction
Reduction

Achieve
StableRentalRevenues

Achieve
StableDividend
Payment

44

Maintenance Plans and Internal Growth
１．J­Rea’s Renovation Work
l
l
l
l
l

Prepare mid­long term maintenance plans for each building
Conduct renovation work which will increase asset profitability
Implement maintenance work for appropriate asset management
Conduct maintenance for stable cash flows
Strict inspection on quotation prices and appropriate management of work procedures

２．Implementation and PlanslPrimary works in the 1st Yeara. Renovation to attract tenants
Purpose（In thousands of yen）
Construction amount

System ceiling change
Cleaning facade
Renewal of common area
Installing OA floors

18,11013,9268,497
6,205

Property Name
Shibuya Cross Tower
Omori­Eki Higashiguchi、Shiba 2chome Daimon
Hinode Tenjin、Cosmo Kanasugibashi
Tosei Tenjin、Omori­Eki Higashiguchi

lb. Renovation for appropriate asset management
Property Name
Shibuya Cross Tower
Mitsubishi Soken
Niigata Ishizuecho
Kawasaki Isago、Urawa Dai­Ichi Life Dowa Kasai

PurposeRenewal of air­conditioning
Changing facade sealing
Repair of facade tiles
Introduction of electrical parking facilities（In thousands of yen）
Construction amount
115,500
26,00019,450
6,034

Plans for 2nd and 3rd Yearsc. Renovation to attract tenants
Property Name
Kyoto Shijo Kawaramachi
Shibuya Cross Tower
Ikebukuro 2chome、Kawasaki Isago
Takanawadai

Purpose（In thousands of yen）
Expected construction amount

Increasing individual air­conditioning
Repair of entrance hallRenovation of common area
Introduction of air­conditioning facility

94,87052,00018,00014,508d. Renovation for appropriate asset management
Property Name
Kyoto Shijo Kawaramachi
Niigata Ishizuecho
Shiba 2chome Daimon
Midosuji Daiwa

Purpose（In thousands of yen）
Expected construction amountRepair of waterworks
Repair of computerized security system
Upgrading security systems
Changing deteriorated filling for cooling tower

71,00021,00020,00012,286

３．Cost Reduction by Strict Inspection (during 1st Fiscal Period)（ In thousands of yen）

Number of construction
Estimated amount before assessment
Final amount after assessment
Cost­cutting amount64
303,548
271,116
32,432 （▲ 10.7%）455­year Plan of Renovation Works

Renovation Work
Annual Depreciation Amount

2002
1,000
2,300

2003
600
2,300

2004
900
1,900

2005
2,000
1,700

（In thousands of yen）
2006
Total
1,700
6,200
1,600
9,800

* 25 properties including MD Kanda Building* Depreciation does not include the additional depreciation due to the new renovation works

46Property Management Cost Reduction Planu

Initial Target （１９ Properties）

Item
Property Management Expenses and Others
Utility Charges、Ｐroprty Management Fees
Total

u

Base Amount
2001（ １ year）

1,295
889
2,184

(Target) % Changes

­8.4%
­5.0%

(In millions of yen）
TargetAmount% Changes

1,186
889
2,075

109
0
109

Current Target （１９ Properties）

Item
Property Management Expenses and Others
Utility Charges、Ｐroprty Management Fees
Total

Base Amount
2001（ １ year）

1,295
889
2,184

(Target) % Changes­12.9%­7.6%(In millions of yen）
TargetAmount

1,128
889
2,017

% Changes

167
0
167

47

Deal Sourcing Summary ①uProperties currently under review
2001
Are a

Fir st Half o f FY 2 0 0 1

S e c o n d Half o f FY 2 0 0 1

A pr
13

May
15

Ju n
11

Ju l
26

Au g
11

O th e r Cit ie s

5

1

5

5

14

1

To t al

18

16

16

31

25

A pr
11

May

To kyo Me t ro po litan

S e p To tal
2298

Mar To t al
15
126

To t al

%

Oct
26

Sep
22

De c
22

J an
21

Fe b
20

224

78.6%

31

6

3

2

4

9

6

30

61

21.4%

23

129

32

25

24

25

29

21

156

285

100.0%

Sep

Oct

Sep

Mar

To t al

2002
Are a

Fir st Half o f FY 2 0 0 2
Ju l

Au g

S e c o n d Half o f FY 2 0 0 2
De c

J an

Fe b

To t al%5

To tal16

O th e r Cit ie s

10

2

12

12

42.9%

To t al

21

7

28

28

100.0%

To kyo Me t ro po litan

Ju n

16

57.1%

ü Among 313 candidates, 12 properties (45 billion yen) are currently underreview, and 6 of properties (27 billion yen) are under due diligence foracquisition purposes.

48Deal Sourcing Summary ②uu

Sources of Property Information
üReal estate divisions of trust banks

üDeveloper brokers

üReal estate brokerage divisions of trading companies and affiliatesüForeign asset management companies (principal and brokerage)

ü

General brokers

üReal estate divisions of construction companiesü

Office lease brokers

ü

Financial institutions

Future Policies
üPreemptive grasp of information through closer communication through existing channels

üIncrease and diversify information volume by developing new networküPreemptive grasp of information of redevelopments

ü

Direct approach to blue­chip propertiesü

Direct actions to corporate building owners who face requirements of asset disposition49