Japan Real Estate Investment Corporation

SEMIANNUAL REPORT
September 2014
For the period from April 1, 2014 to September 30, 2014

Profile
Japan Real Estate Investment Corporation (“the Company”) was established as one of
the first real estate investment corporations in Japan following revisions to the Law
Concerning Investment Trusts and Investment Corporations of Japan, as amended, or
the Investment Trust Law. Its investments focus primarily on office buildings, and it isaiming to maintain geographical diversity while seeking stable growth and dividends
in the medium to long term. The Company was listed on the Tokyo Stock Exchange
on September 10, 2001 (Securities Code: 8952).
Note: Investment‌corporations, including the Company, are special legal entities incorporated and operated underthe Investment Trust Law. Accordingly, the “units” of such investment corporations, including the units of
the Company, are governed by the Investment Trust Law and represent the equity interests in such investment
corporations, which may differ in certain material respects from the “shares” governed by the Corporation Law
of Japan 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 suchdifferences when reviewing this semiannual report and making any investment decision on or in respect of theunits 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 otherconsequences of 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 and guidelines or their interpretation.

Contents
The Strengths of Japan Real Estate Investment Corporation

p. 1

To Our Unitholders

p. 2

Financial Highlights

p. 6

Top 10 Unitholdersp. 6

Unit Price Performance

p. 6

Portfolio Highlights

p. 7

Asset Management Summaryp. 8

Asset Size, Property Acquisitions and Performance Trends

p.10

The Portfolio of Japan Real Estate Investment Corporation

p.12

Overview of Portfolio Properties

p.17

Financial Section

p.23

Corporate Data

p.49

The Strengths of Japan Real Estate Investment Corporation
STRENGTHS

Stable Dividends

Collaboration withSponsors— Actual dividend per unit— ‌Expertise offor the 26th fiscal period:¥7,648Mitsubishi Estate Co., Ltd.
and Mitsui & Co., Ltd.
is being fully utilized.

— Forecasted dividend per unit
for the 27th fiscal period:¥7,650

Steady Growth with
Quality Portfolio

Sound Financial Base
As of September 30, 2014

As of September 30, 2014

— Total acquisition price:¥838,055million—
64
Maintainsproperties— ‌The first listed J-REIT, showing steady
performance for 26 consecutive periods—	‌Highest level of credit ratings for a J-REIT:

A+
AA

from S&P,

A1

from Moody’s,

from R&I—	‌LTV (Interest-bearing debt / Total assets):

39.8%—	‌Long-term, fixed-interest bearing debt ratio*:

90.3%* ‌Long-term, fixed-interest loan + Investment corporation bonds (including
current portion of Long-term, fixed-interest loans and Investment corporation bonds) / Total interest-bearing debts

Japan Real Estate Investment Corporation1

To Our Unitholders
Continuing to engage in external growth-oriented operations, the Company acquired­additional co-ownership interest of Nishiki Park Building in June of the 26th fiscal period.
Moreover, the Company decided on the acquisition of Shinjuku Eastside Square in September,and ­completed the acquisition at the beginning of the 27th fiscal period. The Company is­furthering its efforts to enhance the competitive edge of its portfolio by continuing to acquireprime properties.
Business Performance for The 26th
Fiscal Period

In the market for leased office space, with the limited supply of
new buildings, there was a decline in vacancy rates and an improvement in rent levels, primarily in large-scale buildings and well-located

Summary of Financial Results and Cash Dividendbuildings with the competitive specification and BCP readiness in the

In the 26th fiscal period (April 1, 2014 to September 30, 2014) JapanTokyo metro area. This helped to meet the need to consolidate office

Real Estate Investment Corporation (“the Company”) recorded operat-

spaces and improve locations. However, the overall increase in demanding revenues totaling 27,760 million yen, up 4.4% compared with thefor office buildings was limited, and it takes longer to fill secondary

previous period. On the earnings front, operating income increased

vacancies for older buildings and small or medium-sized buildings.

3.9% to 11,255 million yen. After deducting expenses for interest pay-

While the demand for office spaces outside the Tokyo metropolitan

ments on loans and other costs, ordinary income increased 5.5% toarea varies according to each region, more time is needed for overall

9,582 million yen and net income increased 5.5% to 9,572 million yen.

rent levels to improve.

Turning to dividends, the Company will make cash distributions

In the investment market for real estate, amidst intensifying com-using accounting profits based on the dividend policy outlined inpetition to acquire properties, the market is visibly more active with

Article 32-2 of the Company’s Articles of Incorporation, in an amountrising current market value and transactions of a certain number of vis-that exceeds 90% of earnings available for dividends as required byible large-scale buildings, thanks to the expectation of an accommoda-

Article 67-15 of the Special Taxation Measures Law of Japan. Based ontive fund-raising environment and improvements in the office market

this policy, transferring the revised amount for deferred tax liabilities,

in urban areas.

which accompanied changes to the statutory tax rate, to the reserve for

Under such market conditions, the Company has delivered on

reduction entry, the Company was able to maintain retained earnings

its commitment to provide stable dividends for the current periodbrought forward as the amount of dividends did not exceed earnings

under review, in line with the Investment Guideline, which was set

available for distribution at the end of the period. Therefore, the total

forth at the time of listing on the Tokyo Stock Exchange and remains

amount of dividends that the Company has determined to pay out isunchanged to this date, to achieve the stated goal of providing stable

9,571,701,440 yen for the period under review, which is a multiple ofdividends to unitholders.

1,251,530—the number of units outstanding as of September 30, 2014.
Accordingly, the per-unit cash dividend totaled 7,648 yen.

As a result of our efforts to fill vacancies in buildings that holda competitive specification, the Company’s occupancy rate rose
1.1 points, from 96.7% as of March 31, 2014, to 97.8% as ofOperating Environment and Performance2

September 30, 2014.

During the period under review, there was concern in the Japanese

Meanwhile, as for external growth, the Company acquired addi-

economy that consumer spending and manufacturing activities may

tional co-ownership interest of Nishiki Park Building for 650 million

weaken due to the drop in demand that surged ahead of the consump-yen, in an effort to acquire additional interest in existing portfolio

tion tax increase. However, there were signs that corporate earnings

properties that are expected to continue stable operations. As a result

are improving steadily, and overall, the economy is on a moderateof this acquisition, the Company’s ratio of share of ownership roserecovery trend.

from 57.04651% to 68.63831%.

Japan Real Estate Investment Corporation

In the 27th fiscal period, the Company will maintain its focus on external growth. At the sametime, as the market for leased office space gradually recovers, the Company will put greater
focus on improving revenues from existing properties. The Company will continue to makestrides in both internal and external growth by leveraging its high-quality portfolio and soundfinancial profile. In doing so, the Company aims for increased stable growth of dividends
moving forward.
At the end of the fiscal period under review, September 30, 2014,

The Company entered into interest-rate swap agreements to hedge

the Company’s portfolio consisted of 64 properties with a total

against interest-rate fluctuation risk for the 5,000 million yen long-acquisition price of 838,055 million yen. Total leasable space stoodterm loans procured on June 17, 2014.

at 752,723 m , with a total of 1,239 tenants.
2

Additionally, the Company decided to acquire 14% co-ownership

Additionally, the Company used cash reserves to prepay 3,400
million yen in short-term loans on September 18, 2014.

interest of Shinjuku Eastside Square (Shinjuku-ku, Tokyo), directly

As a result of these financing activities, as of September 30, 2014,

connected to Higashi-Shinjuku Station of subway lines, for 23,100

the Company’s total interest-bearing debt amounted to 323,550 mil-million yen on September 26, 2014, and completed the acquisition onlion yen. This amount consists of long-term loans totaling 252,050

October 1, 2014.

million yen (including the current portion of long-term loans totaling

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

19,600 million yen), short-term loans totaling 31,500 million yen, andFinance Activities
At the Board of Directors meetings held on March 27, 2014, and April
8, 2014, the Company decided to issue new investment units (57,500
units through public offering, 5,750 units through third-party allocation). As a result, the Company procured 27,968 million yen on April
15, 2014, from the public offering and approximately 2,796 million
yen on May 14, 2014, from the third-party allocation portion.
With the proceeds of the offering in addition to the cash reserves,
the Company prepaid 5,000 million yen of short-term loans on April
15, 2014, 7,000 million yen on April 18, 2014, 7,700 million yen on
April 24, 2014, 5,000 million yen on April 30, 2014, 1,200 million yen
on May 2, 2014, and 3,000 million yen on May 7, 2014, as well as
3,000 million yen short-term loan on April 30, 2014, which was dueon original due date.
On June 17, 2014, in order to refinance the 6th unsecured investment corporation bond (15,000 million yen), which was due on June

investment corporation bonds totaling 40,000 million yen (including
the current portion of investment corporation bonds totaling 20,000
million yen).
As of September 30, 2014, the Company’s long-term, fixedinterest bearing debt ratio (ratio of long-term, fixed-interest bearing
debt (which includes the current portion of long-term loans andinvestment corporation bonds) to total interest-bearing debt) stood at
90.3%, and the LTV ratio (ratio of interest-bearing debt to total assets)was 39.8%. These results reflect the Company’s sound and conservative
financial profile.
Subsequently, the Company procured 7,000 million yen in longterm loans, and 13,000 million yen in short-term loans on October 1,
2014 to fund the acquisition of Shinjuku Eastside Square. In addition,
as a new initiative, the Company also procured 13,000 million yen
through a general syndication style loan, which was syndicated out primarily to financial institutions that do not have existing lending relationship with the Company, on November 14, 2014. The proceeds
were used to prepay 13,000 million yen in short-term loans on
November 17, 2014. Also, on November 17, 2014, the Company carried out the refinancing of 1,000 million yen in long-term loans thathave reached maturity (period of 5 years).

18, 2014, the Company raised 10,000 million yen in short-term loans,and 5,000 million yen in long-term loans. In addition, on September 2,
2014, the Company rolled over 3,800 million yen in short-term loans.
Japan Real Estate Investment Corporation

3

The Company’s credit ratings as of September 30, 2014 were as
follows:

	The Company will work to further solidify these relationships by
anticipating tenants’ needs and providing tailored services toincrease tenant satisfaction, thereby maintaining and improving

Rating Agency

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

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

Moody’s Japan K.K.

Rating: A1; Outlook: Negative

Rating and Investment
Information, Inc.

(ii) Fill vacancies promptly

Rating: AA; Outlook: Stable	In cooperation with the property management companies men-occupancy rates, raising rent levels, and curtailing demands forrent reduction.

tioned above, the Company will actively seek the most appropriate
tenants for each property, based on location and features, in order
to fill current and anticipated vacancies as rapidly as possible.

OutlookFurthermore, the Company will work to uncover additional needs
for floor space among existing tenants.

Operating Environment
In the Japanese economy, although there is a concern that the con-(iii) Stabilize revenues and earnings

sumption tax increase may overshadow consumer spending, which	With the aim of stabilizing revenues and earnings, the Company

can slow down capital investments and manufacturing activities,

will endeavor to secure fixed and long-term leasing agreements

gradual recovery is expected to continue thanks mainly to improved

with its large-scale tenants.

personal income and labor market, as well as support from various
political measures.

(iv) Reduce management costs

In the market for leased office space, with the supply of new

	The Company has introduced sound competitive principles for its

buildings remaining below past run-rate, the trend of low vacancy rates

multiple property management companies to follow and isand rising rent levels is expected to extend beyond just large-scalerevamping their management systems and cost structures on anbuildings with a competitive specification and excellent location in theongoing basis.

Tokyo metropolitan area, to the rest of the market for leased office space.
Regarding the investment market for real estate, it remains tobe seen whether the trend of rising current market value, due to theProperty Acquisitions and Sales
The Company has adopted the following policies for acquiring properties.

decline in expected yield particularly from large-scale buildings andwell-located buildings against the backdrop of accommodative funding(i)	To access information quickly, the Company continues toenvironment, will extend into small to medium-sized buildings in theenhance its property information channels while working to developTokyo metropolitan area and regional urban centers.

new channels.

Property Management(ii)	In its acquisition activities, the Company continues to meticu-

Based on the conditions stated above, the Company will adhere

lously monitor and examine economic, physical and legal factors,

to the following management policies in order to maintain andincluding rights-related issues, when selecting properties. In partic-

improve profitability.

ular, with regard to the structure of buildings, the Company
requires buildings to meet or exceed new earthquake-resistance(i) Strengthen relationships of trust with existing tenants

standards, verifies the need for renovations by appropriately grasp-

	The Company has contracts with numerous property management

ing current conditions based on engineering reports, and exclu-

companies. Most of these companies were already handling thesively targets properties capable of maintaining a competitive edge

management of their buildings before the Company acquiredin terms of the facilities they offer over the medium to long term.

them and had thus built relationships of trust with their tenants.

4

Japan Real Estate Investment Corporation

Noritada Terasawa (Left)
Executive Director of Japan Real Estate Investment Corporation

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

(iii)	In accordance with its acquisition policies, the Company shallmaintain its portfolio so that 70% or more of the portfolio proper-

Performance Forecasts for the 27th and28th Fiscal Periods

ties are located within the Tokyo metropolitan area, with the

For the 27th fiscal period (October 1, 2014 to March 31, 2015), theremaining 30% or fewer located in other major cities.

Company forecasts operating revenues totaling 28,070 million yen,operating income totaling 11,230 million yen, ordinary income total-

Under these policies, the Company will continue to acquire highlying 9,580 million yen, and net income totaling 9,570 million yen. The

competitive properties. At the same time, in order to further enhance

Company plans to declare a cash dividend totaling 7,650 yen per unit.

the quality of its portfolio, the Company will remain open to the

For the 28th fiscal period (April 1, 2015 to September 30, 2015),

replacement of portfolio properties with due consideration given

the Company forecasts operating revenues totaling 28,440 million yen,

to timing.

operating income totaling 11,340 million yen, ordinary income totaling
9,750 million yen, and net income totaling 9,740 million yen. The

Financial Policy

Company plans to declare a cash dividend totaling 7,780 yen per unit.

(i)	In principle, the Company shall maintain an LTV ratio that does

You have placed considerable trust in us. Going forward, we seek

not exceed 65%,with the target level under normal business con-to continue earning that trust through sustainable growth and perfor-

ditions of 30% to 40%.

mance. Thank you for your steadfast support.

(ii)	The total amount of loans and investment corporation bonds
shall not exceed 1 trillion yen.
(iii)	In case of loans, the lenders are limited to Qualified Institutional
Investors as defined in the Special Taxation Measures Law of Japan.

Noritada Terasawa

Executive Director of Japan Real Estate Investment Corporation(iv)	The Company may enter into commitment facility agreements or
establish overdraft agreements as appropriate in order to maintainadequate level of liquidity.

Hiroshi Katayama

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

(v)	The Company shall endeavor to achieve best execution throughnegotiation with several counterparties on financial transactions
when possible.

Japan Real Estate Investment Corporation

5

Financial Highlights
Millions of yen
For the period from
April 1, 2014 toSeptember 30, 2014

Operating Revenues¥

27,760For the period from
October 1, 2013 toMarch 31, 2014¥

For the period from
April 1, 2013 to
September 30, 2013

For the period from
October 1, 2012 toMarch 31, 2013

For the period from
April 1, 2012 to
September 30, 2012

26,582¥ 26,225¥ 25,357¥ 24,222

Operating Income

11,255

10,831

10,781

10,631

10,212

Ordinary Income

9,582

9,083

9,143

8,749

8,372

Net Income

9,572

9,070

9,129

8,824

8,448

Net Operating Income (NOI) (Note 1)

18,105

17,481

17,205

16,76815,997

Funds from Operations (FFO) (Note 2)

13,356

15,455

14,71914,61914,032FFO Multiple (Times) (Note 3)

22.9

20.9

23.4

27.2

16.2

Cash Distribution

9,571

9,070

9,129

8,995

8,619

1,251,530

1,188,280

594,140

594,140

549,040

7,648

7,633

15,36615,14015,700

Number of Units (Note 4)
Dividend per Unit (Yen) (Note 4)

Notes	‌1: NOI = Property-Related Revenues – Property-Related Expenses (excluding Depreciation)
2: FFO = Net Income + Depreciation – Gain (Loss) on Sale of Properties – Gain on transfer of development rights of floor area – Dividends earned
3: ‌FFO Multiple = Unit Price at End of the Respective Term ÷ FFO per Unit (Annualized)(Annualized portion of the calculation given in Note 3 assumes a fiscal period of 183 days for the period ended September 30, 2012, 182 days for the period ended March
31, 2013, 183 days for the period ended September 30, 2013, 182 days for the period ended March 31, 2014, and 183 days for the period ended September 30,
2014.)
4: The Company implemented a 2-for-1 split of each investment unit as of January 1, 2014.

Top 10 Unitholders

As of September 30, 2014

Unitholders

Units% of total units
outstanding

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

215,40317.21%

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

102,378

8.18%

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

101,683

8.12%

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

56,933

4.55%

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

28,924

2.31%

CBLDN-STICHTING PGGM DEPOSITARY-LISTED REAL ESTATE PF FUND ..................................................................................................................................................

25,2382.02%

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

21,707

1.73%

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

20,3201.62%

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

18,226

1.46%

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

17,534

1.40%

Unit Price Performance
TSE REIT Index   

325%

TOPIX   The Company

300%
275%
250%
225%
200%
175%
150%
125%
100%
75%
50%
Sept. Mar. Sept. Mar. Sept. Mar. Sept. Mar. Sept. Mar. Sept. Mar. Sept. Mar. Sept. Mar. Sept. Mar. Sept. Mar. Sept. Mar. Sept. Mar. Sept. Mar. Sept.
2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 20146

Japan Real Estate Investment Corporation

Portfolio Highlights
Trends in the state of portfolio management

Total leasable space (m2)

Number ofbuildings

Total number oftenants

Total leasable
space (m2)Occupancy
rate (%)

September 2001

20

213

133,927

94.6

March 2002

24

353

201,884

94.0

September 2002

27

362

215,928

95.3

March 2003

30

383

236,69394.4

September 2003

32

407

246,062

95.1

March 2004

36

477

273,157

94.8

September 2004

39

504

293,105

93.6

March 2005

46

669

336,026

97.6

September 2005

50

814

364,610

98.6

March 2006

52

866

400,090

98.7

September 2006

49

835

396,173

98.2

March 2007

50

887

397,928

97.8

September 2007

50

879

406,605

98.7

March 2008

53

931

479,87795.9

September 2008

54

970

508,296

96.1

March 2009

55

993

516,41195.5

September 2009

55

977

516,421

93.3

March 2010

55

979

566,27793.0

September 2010

55

992

567,612

92.4

March 2011

57

1,004

588,984

93.2

September 2011

56

1,009

584,964

94.6

March 2012

57

1,058

629,761

94.7

September 2012

58

1,082

645,787

95.5

March 2013

60

1,131

700,759

96.7

September 2013

61

1,146

713,180

96.3

March 2014

63

1,223

750,956

96.7

April 2014

63

1,219

750,91796.8

May 2014

63

1,223

750,917

97.0

June 2014

63

1,228

752,770

97.1

July 2014

63

1,232

752,770

97.3

August 2014

63

1,237

752,773

97.5

September 2014

63

1,239

752,723

97.8

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

0

200,000

400,000

600,000

800,000

1,000,000

26th
period

50.0

60.0

70.0

80.0

90.0

100.0
Occupancy rate (%)

Portfolio breakdown As of September 30, 2014
Properties by geographic region

Tenants by industry type

(Percentage based on acquisition price)(Percentage based on leased space)
Ceramics
Electricity andheat supply service 1.6%

Other major cities 14.9%

Others 9.7%

Finance 9.2%

Medical 2.6%

Tokyo 23 wards

76.7%* ‌Nippon Brunswick Building(land with leasehold interest)
is not included.

Information services 9.7%
Electric devices 9.4%

Public services andassociations 2.5%

Tokyo metropolitan
area excluding
Tokyo 23 wards

8.4%

1.5%

Insurance 3.0%

Service industries

8.6%

Machinery 3.3%
Special services(consulting, etc.) 3.7%

Real estate

8.3%

4.0%
Construction 4.9%

Communications

Media and advertisement

5.6%

Retail and restaurants
Pharmaceuticals

6.2%

6.3%

Japan Real Estate Investment Corporation

7

Asset Management Summary
For the period from April 1, 2014 to September 30, 2014

Acquired Real Estate:

Nishiki Park Building (Additional Share)
Property Summary
●

●

●

●

●

Location: 	‌2-4-3 Nishiki, Naka-ku, Nagoya City, Aichi Prefecture
Site area: 	‌2,170.45 m2 (Total land area for the building site including leased land (term leasehold interest) of 384 m2)
Floor area of buildings: 	‌25,091.91 m2 (Total floor space for the entire building)
Structure: 	‌Steel-framed, steel-framed concrete, and steel-reinforced
concrete structure, flat roof
Floors: 	‌Above ground: 22 floors
Below ground: 4 floors●

Completion: 	‌August 1995●

Acquisition date: 	‌June 9, 2014●

Acquisition price: 	‌¥650 million●

Type of ownership: 	‌L‌and: ‌Ownership(137,135/1,000,000 co-ownership of 1 lot: 1,786.45 m2)

	‌B‌uilding: ‌‌Compartmentalized building units (share of
co-ownership)‌(138,158/1,000,000 co-ownership from the 1st floor to
the 20th floor in office and shop spaces: 13,296.06 m2)· Share of ownership of the building: 11.5918%·C hanges in JRE’s share of ownership of this building after
the acquisition of additional share:
57.04651% ⇒ 68.63831%●

Seller:Seibu Shinjuku
Line

Legal Affairs Bureau
Government Building
Aichi Prefectural Library●

Sakuradori Line
Marunouchi Sta.

Kokusai Center Sta.

ine

ine
iL

Na
go
ya
L
ets
u

am
Ao
n

nt
Ki

a.

Sta.

Shi efficiency, along with(2) ‌Improvement of building operation and management
nju
ku
St.
Ko
shu
asset valueMaruK

injuku St

Shirakawa Park

Shinjuku

Sh
OdakyuJapan Real Estate Investment Corporation

Line

8

ai
Subway Tsurum

e

in
oya L

u Nag

ts
Meite

Issuance of
New Investment Units

This property is located in the Fushimi
Alta zone, which has one of the highest concentrationsof offices in the Nagoya district. With
Shinjuku theSta. nearest Marunouchi station located within a oneminute walk on the Subway Sakuradori Line andIsetan
Tsurumai Line, the property
boasts superior
juku Line
Toei Shintraffic convenience as well as high visibility from
Sakuradori
Shinjuku
3-Chome Sta. Avenue, which faces the building.
Meiji St.

Fushimi Sta.

Nagoya Sta.

uni S
t.

ine

Subway Higashiyama Line

Shinjuku
Ward Office

Yasu
k

osh
in L

Meitetsu Nagoya Sta.

(1) Superior location

Fukut

Nagoya Sta.

Shinjuku Eastside Square

CultureThe Company evaluated the following two points in theShinjuku
determination
Centerof acquisition.

i
NishiguchShinjuku
Sta.

Subway Sak

Seibu Shinjuku Sta.

euradori Lin

Higashiyama Line
Nagoya Sta.

ine

Tsurumai Line Marunouchi Sta.

*‌The details concerning one corporation and five individuals
Higashi Shinjuku
among the sellers are undisclosed
Sta. due to their non-approval
Nukebenten St.
of disclosure.
Shokuan St.

Property management company: Mitsubishi Estate Co., Ltd.
L
Oedo
Toei

Nishiki Park Building

DYNAS, Ltd., 1 corporation and 5 individuals*

ai

nou

chi
do
Lproperty
ine
As the Company’s share of ownership of the building with regard
to thiswill
increase from 57.04651% to 68.63831%, building operation and management efficiency
along with asset value can be expected to improve.

1. Public offering of new investment units
Number of units newly issued:

57,500 units

Offer price (subscription price):

501,760 yen per unit

Aggregate amount of offer price (subscription price):

28,851,200,000 yen

Issue price (paid-in price):

486,400 per unit

Aggregate amount of issue price (paid-in price):

27,968,000,000 yen

Payment date:

April 15, 2014

Acquired Real Estate (Subsequent Event):

Shinjuku Eastside Square
Property Summary●

Location: 	‌27-30, 6-Chome, Shinjuku, Shinjuku-ku, Tokyo●

Site area: 	‌25,320.28 m2 (Total land area for the building site)●

Floor area of buildings: 	‌167,245.46 m2 (Total area for the building)*Including retail outlets in the attached building (214.27 m2)●●

Structure: 	‌Steel-framed, reinforced concrete structure, flat roof
Floors: 	‌Above ground: 20 floors
Below ground: 2 floors●

Completion: 	‌March 2012●

Acquisition date: 	‌October 1, 2014●

Acquisition price: 	‌¥23,100 million●

Type of ownership: 	‌L‌and: ‌Ownership(14/100 co-ownership of 1 lot: 25,320.28 m2)

	‌B‌uilding: ‌Ownership(14/100 co-ownership of 1 building 167,245.46 m2)●

Seller:●Shinjuku Rokuchome Special Purpose Company (TMK)

Property management company: Mitsubishi Estate Co., Ltd.

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

e
Lin

ine

oy
a

iL

juku Line

Toei Shin

Shinjuku 3-Chome Sta.

Shi
n
Ko
sh

uK

aid

o

juk
uS
t.
Mar
uno
uc

hi L

ine

Ao
n

am

Meiji St.

Isetan

ine

in L

uN
ag

uni S
t.

tosh

Alta

Fuk
u

ets

Shinjuku
Ward Office

Yasu
k

Sta.

nt

Shinjuku Culture
CenterShinjuku

Ki

Seibu Shinjuku Sta.

Line

Line

Shirakawa Park

Shinjuku Eastside Square

Shinjuku Sta.

Sta.
Shinjuku
Odakyuai
Subway Tsurum

goya

u Na

ts
Meite

Marunouchi Sta.
Completed in March 2012, theKokusai
property
has an office building
equipped with the latest
Center Sta.
Nagoya Sta.
specifications and its officespace
isapproximately
1,800
tsubo
per
floor, one of the largest
Meitetsu Nagoya Sta.
in central Tokyo. With the use of a double-skin façade and air barrier system, the building
Subway Higashiyama Line
Fushimienhances energy
efficiency
and reduces environmental burdens.
In Sta.
addition, it has highNagoyaSta.
functionality in terms of earthquake-resistance and disaster prevention since it is equippedwith an emergency generator and a damping device.

Higashi Shinjuku
Sta.
Nukebenten St.

Shokuan St.

Line(2) Brand new office building with sophisticated features
Sakuradori Linehi
NishigucShinjukuSta.

dori Lineura
Subway Sak

ine

Higashiyama Line
Nagoya Sta.

L
Oedo
Toei

Government BuildingThis property is a recently-built large office building and a rare property
located in
Aichi Prefectural Library
Shinjuku, a world-class business district with a high concentration of commercial facilities. The
property offers superior traffic convenience as it is directly connected to Higashi-Shinjuku
Station of the Toei Oedo Line and the Tokyo Metro’s Fukutoshin Line. Shinjuku 3-Chome
Nishiki Park Building
Station is also within walking distance.
Tsurumai Line Marunouchi Sta.
It is also possible to take advantage of the well-developed traffic network from Shinjuku Station.

Seibu Shinjuku

Legal Affairs Bureau(1) Superior location

2. Issuance of new investment units through third-party allocation
Number of units newly issued:

5,750 units

Issue price (paid-in price):

486,400 yen per unit

Aggregate amount of issue price (paid-in price):

2,796,800,000 yen

Payment date:

May 14, 2014

Allottee:

SMBC Nikko Securities Inc.

The Company used the funds procured by issuing new investment units
through the public offering and cash reserves to make repayments of 28,900
million yen in short-term loans prior to maturity and scheduled repayments of
3,000 million yen in short-term loans by May 7, 2014. As for the funds procured by issuing new investment units through the abovementioned third-party
allocation, a portion was used to supplement cash reserves allocated to therepayment of short-term loans.

Japan Real Estate Investment Corporation

9

Asset Size, Property Acquisitions and Performance Trends
Occupancy rate

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

In September 2001, the Company became the first J-REIT in Japan listed on the Tokyo Stock Exchange. Since
then, the Company has targeted stable management to fulfill its goal of maintaining or increasing dividends perunit over the medium to long term. The Company’s growth is based on external growth strategies that aim toincrease earnings through the acquisition and transfer of properties as well as internal growth strategies that seek tooptimize earnings from properties already held. The size of the Company’s assets (total acquisition price) has grownfrom ¥92.8 billion at IPO to ¥838.0 billion as of the 26th fiscal period end due to the steady achievement of external growth strategies. However, in terms of internal growth strategies, ongoing efforts are being made in such areas
as maintaining stable occupancy rates and reducing building management costs.

Total acquisition price (Number of properties)

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

¥144
¥92

billion¥290¥164
billion

¥183

¥192

billionbillion¥218
billion¥239

billion

¥412

¥418

billionbillion

¥441

¥446

billionbillion¥326
billionbillionbillion

(20)

(24)

(27)

(30)

(32)

(36)

(39)

(46)

(50)

(52)

(49)

(50)

(50)

At IPO

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended¥6,426¥7,227¥7,558¥7,301¥7,355¥7,912¥7,975¥8,086¥8,651¥8,760¥9,250

Sept. 2001 Mar. 2002 Sept. 2002 Mar. 2003 Sept. 2003 Mar. 2004 Sept. 2004 Mar. 2005 Sept. 2005 Mar. 2006 Sept. 2006 Mar. 2007 Sept. 2007

Dividend per unit*¥7,491

Listing and issuance of units
Sept. 2001
Listed on TSE
as first J-REIT

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

Oct. 2003
Second Follow-On

Apr. 2005
Third Follow-On

Oct. 2006
Fourth Follow-On

Sept. 2001
IPO
* JRE implemented a 2-for-1 split of each investment unit as of January 1, 2014. The figures for the 1st through the 24th periods are taken the split into account.

10

Japan Real Estate Investment Corporation

95.9% 96.1% 95.5% 93.3% 93.0% 92.4% 93.2% 94.6% 94.7% 95.5% 96.7% 96.3% 96.7% 97.8%

JRE’s asset size has
increased sevenfold
since being listed ten
years ago.

¥718

Steady growth inasset size

¥518
billionbillion

¥564

¥564

billion

¥660

¥657

(55)

(57)

(56)

¥641

¥643

billion

¥542

¥740

billionbillion¥782
billion

¥794

¥837

¥838

(64)

(64)

billionbillionbillionbillionbillionbillionbillion

(53)

(54)

(55)

(55)

(55)

(57)

Period ended

Period ended

Period ended

Period ended

Period ended

Sept. 2010

Period ended

Period ended

Mar. 2011

Sept. 2011

Mar. 2012

Sept. 2012

Mar. 2013

Sept. 2013

Mar. 2014

Period ended

Period ended¥14,611¥9,536¥9,510¥9,599¥9,021¥8,314¥7,821¥7,925¥8,095¥7,850¥7,570¥7,683¥7,633¥7,648Feb. 2012
Seventh Follow-On

Period ended(62)

Period ended

Dec. 2009
Sixth Follow-On

Period ended(60)

Mar. 2008 Sept. 2008 Mar. 2009 Sept. 2009 Mar. 2010

Mar. 2008
Fifth Follow-On

Period ended(58)

Oct. 2012
Eighth Follow-On

Period ended

Sep. 2014

Apr. 2014
Ninth Follow-On

Japan Real Estate Investment Corporation

11

The Portfolio of Japan Real Estate Investment Corporation
As of September 30, 2014

Properties roster
NumberName of building

Location

Type ofspecified asset

Acquisition date

Acquisition price(¥ millions)Tokyo 23 wards●

I- 1

Genki Medical Plaza

Iidabashi, Chiyoda-ku

Real property

10/31/2002

5,000(0.6%)●

I- 2

Kitanomaru Square

Kudan-Kita, Chiyoda-ku

Real property

02/24/2006

81,555(9.7%)●I- 3

MD Kanda Building

Kanda-Mitoshirocho, Chiyoda-ku

Real property

05/31/2002

9,520(1.1%)●

I- 4

Kandabashi Park Building

Kanda-Nishikicho, Chiyoda-ku

Real property

08/15/2002

4,810(0.6%)●

I- 5

Otemachi Financial City North Tower

Otemachi, Chiyoda-ku

Real property

03/31/2014

15,462(1.8%)●

I- 6

Nibancho Garden

Nibancho, Chiyoda-ku

Real property

04/01/2005

14,700(1.8%)●

I- 7

Mitsubishi UFJ Trust and Banking Building

Marunouchi, Chiyoda-ku

Real property

03/28/2007

44,700(5.3%)●

I- 8

Burex Kojimachi Building

Kojimachi, Chiyoda-ku

Real property

07/29/2005

7,000(0.8%)●

I- 9

Sanno Grand Building

Nagatacho, Chiyoda-ku

Real property

01/31/2005

10,20004/03/2006

10,700total

20,900(2.5%)●

I- 10

Yurakucho Denki Building

Yurakucho, Chiyoda-ku

Real property

08/01/2003

7,200(0.9%)●

I- 11

Kodenmacho Shin-Nihonbashi Building

Nihonbashi-Kodenmacho, Chuo-ku

Trust

09/25/2001

3,173(0.4%)●

I- 12

Kyodo Building (Kayabacho 2-Chome)

Nihonbashi-Kayabacho, Chuo-ku

Trust

03/01/2011

4,410(0.5%)●

I- 13

Burex Kyobashi Building

Kyobashi, Chuo-ku

Real property

07/22/2002

5,250(0.6%)●

I- 14

Ginza Sanwa Building

Ginza, Chuo-ku

Real property

03/10/2005

16,830(2.0%)●

I- 15

Ryoshin Ginza East Mirror Building

Ginza, Chuo-ku

Real property

03/15/2005

5,353

05/24/2010

2,645
7,999

(1.0%)●

I- 16

Harumi Front

Harumi, Chuo-ku

Real property

01/07/2013

31,300(3.7%)●

I- 17

Harumi Center Building

Harumi, Chuo-ku

Real property

12/18/2007

26,800(3.2%)●

I- 18

Akasaka Park Building

Akasaka, Minato-ku

Real property

11/15/2011

60,800(7.3%)●I- 19

Aoyama Crystal Building

Kita-Aoyama, Minato-ku

Real property

03/14/2003

7,680(0.9%)●

I- 20

Shiodome Building

Kaigan, Minato-ku

Trust

12/19/2008

21,25001/15/2010

54,600total

75,850(9.1%)●

I- 21

Shiba 2Chome Daimon Building

Shiba, Minato-ku

Trust

09/10/2001

4,859(0.6%)●

I- 22

Cosmo Kanasugibashi Building

Shiba, Minato-ku

Trust

09/25/2001

2,808(0.3%)●

I- 23

Shinwa Building

Nishi-Shinjuku, Shinjuku-ku

Real property

09/01/2004

7,830(0.9%)●

I- 24

Tokyo Opera City Building

Nishi-Shinjuku, Shinjuku-ku

Real property

09/13/2005

9,350

03/24/2010

22,426

total

31,776(3.8%)

22,000(2.6%)●I- 25

TIXTOWER UENO

Higashi-Ueno, Taito-ku

Real property

06/15/2012

●

I- 26

Higashi-Gotanda 1Chome Building

Higashi-Gotanda, Shinagawa-ku

Real property

11/01/2004

5,500(0.7%)●

I- 27

Osaki Front Tower

Osaki, Shinagawa-ku

Real property

02/01/2011

12,300(1.5%)●I- 28

Omori-Eki Higashiguchi Building

Omori-Kita, Ota-ku

Trust

09/10/2001

5,123(0.6%)●

I- 29

Nippon Brunswick Building (Land with leasehold interest)

Sendagaya, Shibuya-ku—

03/24/2004

6,670

08/23/2013(1,170)

total

5,500

(0.7%)

8,700(1.0%)●

I- 30

Yoyogi 1Chome Building

Yoyogi, Shibuya-ku

Real property

04/01/2004

●

I- 31

da Vinci Harajuku

Jingumae, Shibuya-ku

Real property

11/22/2002

4,885(0.6%)●

I- 32

Jingumae Media Square Building

Jingumae, Shibuya-ku

Real property

10/09/2003

12,200(1.5%)●

I- 33

Shibuya Cross Tower

Shibuya, Shibuya-ku

Real property

11/30/2001

34,600(4.1%)●

I- 34

Ebisu Neonato

Ebisu, Shibuya-ku

Real property

11/14/2003

3,740

●

12

total

I- 35

Harmony Tower

Honcho, Nakano-ku

Real property

04/01/2004

360

02/18/2014

10,512

total

14,612

02/28/2005

8,500(1.7%)

12/19/2012

520

total

9,020

(1.1%)●I- 36

Otsuka Higashi-Ikebukuro Building

Higashi-Ikebukuro, Toshima-ku

Trust

09/25/2001

3,541(0.4%)●

I- 37

Ikebukuro 2Chome Building

Ikebukuro, Toshima-ku

Trust

09/25/2001

1,728(0.2%)●

I- 38

Ikebukuro YS Building

Minami-Ikebukuro, Toshima-ku

Real property

08/02/2004

4,500(0.5%)

Japan Real Estate Investment Corporation

Percentage of ownershipof the building

Completion

Appraisal value atthe end of period (¥ millions)

Total leasable space

Leased space

Occupancy rate

Total number oftenants

Revenues fromleasing operations (¥ millions)100.0%

1985

6,640

4,791m2

4,791m2

100.0%

1

225(0.8%)

100.0%

2006

76,10025,678m

2

25,678m2

100.0%

4

1,680(6.1%)

100.0%

1998

7,620

6,269m2

6,269m2

100.0%

8222(0.8%)

56.76%

1993

4,130

3,687m2

3,687m2

100.0%

9113(0.4%)

3.3852192%

2012

17,2005,112m2

5,112m2

100.0%

2

252(0.9%)

31.345%

2004

17,4009,316m2

9,316m2

100.0%

1477(1.7%)

19.38402%

2003

44,60011,904m2

11,904m2

100.0%

10993(3.6%)

100.0%

2005

6,220

4,495m2

4,495m2

100.0%

1

150(0.5%)

99.0%

1966

30,00020,858m2

19,571m2

93.8%

34

897

(3.2%)

10.78%

1975

7,410

4,697m2

4,185m2

89.1%

12

240

(0.9%)

100.0%

1991

2,940

3,897m2

3,897m2

100.0%

10

115(0.4%)

100.0%

1991

5,060

4,467m2

4,015m2

89.9%

8

129

(0.5%)

100.0%

2002

6,560

4,279m2

4,279m2

100.0%

1

150(0.5%)

70.95%

1982

15,8004,329m2

4,329m2

100.0%

10378(1.4%)

100.0%

1998

5,400

4,255m2

4,255m2

100.0%

12152(0.5%)

100.0%

2012

37,40033,369m2

33,183m2

99.4%

5

1,242

(4.5%)

100.0%

2006

20,10020,812m2

20,812m2

100.0%

9644(2.3%)

100.0%

1993

64,80045,013m2

45,013m2

100.0%

27

2,169(7.8%)

100.0%

1982

7,150

4,898m2

4,898m2

100.0%

8

198(0.7%)

40.0%

2007

80,00032,155m2

31,590m2

98.2%

35

1,862

(6.7%)

100.0%

1984

6,070

9,606m2

9,530m2

99.2%

24

269

(1.0%)

100.0%

1992

2,810

4,062m2

4,062m2

100.0%

6

109(0.4%)

100.0%

1989

5,620

5,997m2

5,997m2

100.0%

14

188(0.7%)

31.325%

1996

29,90035,082m2

33,463m2

95.4%

95

1,345

(4.8%)

94.040229%

2010

24,10015,020m2

14,475m2

96.4%

17

685

(2.5%)

100.0%

2004

5,700

5,205m2

5,205m2

100.0%

4171(0.6%)

100.0%

2005

15,80016,856m2

16,856m2

100.0%

1667(2.4%)

100.0%

1989

5,210

7,756m2

7,756m2

100.0%

23229(0.8%)

—

—

5,420

—

—

—

—

60

(0.2%)

100.0%

2003

9,880

7,745m2

7,745m2

100.0%

9291(1.0%)

100.0%

1987

6,400

3,147m2

3,147m2

100.0%

4191(0.7%)

100.0%

1998

9,750

5,558m2

5,558m2

100.0%

5312(1.1%)

100.0%

1976

42,90030,532m2

28,904m2

94.7%

61

1,339

(4.8%)

44.71839%

1994

14,4008,700m2

8,700m2

100.0%

5432(1.6%)

32.113115%

1997

11,00011,998m2

11,998m2

100.0%

18374(1.3%)

100.0%

1987

4,040

7,224m2

7,224m2

100.0%

6

204(0.7%)

100.0%

1990

1,600

2,186m2

1,921m2

87.9%

8

67

(0.2%)

100.0%

1989

4,130

5,932m2

5,932m2

100.0%

10173(0.6%)

Japan Real Estate Investment Corporation

13

NumberName of building

Location

Acquisition price(¥ millions)Type ofspecified asset

Acquisition date

Real property

03/31/2005

3,300

03/19/2008

2,379

Tokyo metropolitan area, excluding Tokyo 23 wards
●

●

II- 1

II- 2

Hachioji First Square

Saitama Urawa Building

Hachioji, Tokyo

Saitama, Saitama Prefecture

Real property

total

5,679

09/25/2001

1,232

10/11/2001

1,342

total

(0.7%)

2,574(0.3%)●II- 3

MM Park Building

Yokohama, Kanagawa Prefecture

Real property

03/24/2008

37,400(4.5%)●

II- 4

Queen’s Tower A

Yokohama, Kanagawa Prefecture

Trust

01/31/2014

17,200(2.1%)●II- 5

Kawasaki Isago Building

Kawasaki, Kanagawa Prefecture

Trust

09/25/2001

3,375(0.4%)●

II- 6

Musashi Kosugi STM Building

Kawasaki, Kanagawa Prefecture

Real property

03/25/2008

4,000(0.5%)

Other major cities●

III- 18∙3 Square Kita Building

Sapporo, Hokkaido

Real property

06/01/2007

7,100(0.8%)●

III- 2

Jozenji Park Building

Sendai, Miyagi Prefecture

Real property

01/31/2005

1,000(0.1%)●

III- 3

Higashi Nibancho Square

Sendai, Miyagi Prefecture

Real property

01/07/2013

9,950(1.2%)●

III- 4

Sendai Honcho Honma Building

Sendai, Miyagi Prefecture

Trust

09/25/2001

2,924

●

●

III- 6

Nishiki Park Building

Kanazawa, Ishikawa Prefecture

Nagoya, Aichi Prefecture

Real property

Real property

250

total

3,174

02/28/2002

2,880

03/03/2003

1,700

total

4,580

10/02/2006

3,850

11/01/2006

1,300(0.4%)(0.5%)

06/09/2014

650

total

5,800

(0.7%)

8,567(1.0%)●

III- 7

Nagoya Hirokoji Place

Nagoya, Aichi Prefecture

Trust

07/31/2013●

III- 8Hirokoji Sakae Building

Nagoya, Aichi Prefecture

Real property

09/22/2006

1,680(0.2%)●

III- 9

Nagoya Hirokoji Building

Nagoya, Aichi Prefecture

Real property

09/10/2001

14,533(1.7%)●

III- 10

Nagoya Misono Building

Nagoya, Aichi Prefecture

Real property

08/08/2003

1,865(0.2%)●

III- 11

Shijo Karasuma Center Building

Kyoto, Kyoto Prefecture

Real property

09/03/2013

4,400(0.5%)●

III- 12

Kyoto Shijo Kawaramachi Building

Kyoto, Kyoto Prefecture

Real property

12/20/2001

2,650(0.3%)●

III- 13Shin-Fujita Building

Osaka, Osaka Prefecture

Trust

09/01/2008

24,000(2.9%)●

III- 14

Sakaisujihonmachi Building

Osaka, Osaka Prefecture

Real property

09/25/2001

2,264

12/26/2003

1,900

●

14

III- 5

Kanazawa Park Building

06/28/2006

III- 15

Midosuji Daiwa Building

Osaka, Osaka Prefecture

Trust

total

4,164

09/25/2001

6,934(0.5%)

02/28/2002

7,380

total

14,314(1.7%)(0.6%)●

III- 16

Lit City Building

Okayama, Okayama Prefecture

Real property

02/01/2006

4,650

●

III- 17

NHK Hiroshima Broadcasting Center Building

Hiroshima, Hiroshima Prefecture

Real property

03/25/2004

1,320

03/03/2008

1,450
2,770

(0.3%)●

III- 18

Tosei Tenjin Building

Fukuoka, Fukuoka Prefecture

Real property

09/25/2001

1,550(0.2%)●

III- 19

Tenjin Crystal Building

Fukuoka, Fukuoka Prefecture

Real property

06/01/2005

5,000(0.6%)●

III- 20

Hinode Tenjin Building
Total

Fukuoka, Fukuoka Prefecture

Trust

09/10/2001

3,657
838,055(0.4%)(100.0%)Japan Real Estate Investment Corporation

totalPercentage of ownershipof the building

Completion

Appraisal value atthe end of period (¥ millions)

Total leasable space

Leased space

Occupancy rate

Total number oftenants

Revenues fromleasing operations (¥ millions)

80.4%

1996

4,480

10,068m2

9,935m2

98.7%

49

238

(0.9%)

100.0%

1990

2,120

4,510m2

4,510m2

100.0%

19

102(0.4%)

100.0%

2007

36,10038,426m2

36,792m2

95.7%

27

1,235

(4.5%)

11.11481%

1997

17,70026,667m2

26,273m2

98.5%

52

998

(3.6%)

100.0%

1990

2,430

6,831m2

6,831m2

100.0%

13

136(0.5%)

34.32%

1990

3,910

5,378m2

5,378m2

100.0%

26

158(0.6%)

100.0%

2006

6,900

12,265m2

12,145m2

99.0%

8

290

(1.0%)

50.0%

1993

907

2,518m2

2,518m2

100.0%

1766(0.2%)

100.0%

2008

12,40020,526m2

19,546m2

95.2%

20

454

(1.6%)

100.0%

1991

2,250

6,234m2

6,064m2

97.3%

24

128

(0.5%)

89.0%

1991

4,380

20,889m2

19,891m2

95.2%

73

471

(1.7%)

68.63831%

1995

4,580

9,850m2

9,527m2

96.7%

59

243

(0.9%)

100.0%

2004

9,690

13,200m2

12,593m2

95.4%

23

360

(1.3%)

100.0%

1987

1,560

3,911m2

3,232m2

82.6%

13

86

(0.3%)

100.0%

1987

11,90021,624m2

21,497m2

99.4%

34

582

(2.1%)

100.0%

1991

1,130

3,448m2

3,367m2

97.6%

15

70

(0.3%)

100.0%

2010

4,620

6,634m2

6,634m2

100.0%

6

196(0.7%)

100.0%

1982

1,770

6,805m2

6,079m2

89.3%

33

116

(0.4%)

100.0%

1995

16,90028,414m2

26,296m2

92.5%

41

718

(2.6%)

100.0%

1992

3,170

11,520m2

11,520m2

100.0%

22

230(0.8%)

100.0%

1991

13,00020,450m2

20,200m2

98.8%

42

537

(1.9%)

27.7488%

2005

4,290

9,965m2

9,965m2

100.0%

41263(0.9%)

48.753%

1994

2,510

9,860m2

9,860m2

100.0%

12264(1.0%)

100.0%

1992

1,300

3,995m2

3,760m2

94.1%

20

77

(0.3%)

100.0%

1993

2,510

5,973m2

5,823m2

97.5%

29

148

(0.5%)

74.4844%

1987

3,600
843,367

5,841m2
752,723m2

5,841m2
735,863m2

100.0%
97.8%

4
1,239

173
27,760(0.6%)(100.0%)Japan Real Estate Investment Corporation15

Major tenants roster
Leased space% of total leased space

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Name of tenant

Harumi Front (also includes 3 other buildings)

Name of building

33,910m2

4.6%(Note)

Kitanomaru Square (also includes 2 other buildings)

26,061m2

3.5%

Mitsubishi Estate Co., Ltd.

Osaki Front Tower (also includes 1 other building)

17,213m2

2.3%

General Electric Company

Akasaka Park Building

13,683m2

1.9%

HAKUHODO DY HOLDINGS INCORPORATED

Akasaka Park Building (also includes 1 other building)

12,831m2

1.7%

NTT Communications Corporation

Shiodome Building

11,813m2

1.6%

JGC Corporation

MM Park Building (also includes 1 other building)

10,649m2

1.4%

Mitsubishi UFJ Trust and Banking Corporation

Mitsubishi UFJ Trust and Banking Building

10,598m2

1.4%

TOTO LTD.
Minato Mirai 21 District Heating and Cooling Co., Ltd.

Shiodome Building (also includes 2 other buildings)
Queen’s Tower A

10,570m2

1.4%

9,536m2

1.3%

Note: Not disclosed due to tenant’s request

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

III- 1

II-2

II-1

III-1 to III-20:
Other major cities

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

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

III- 11
III- 12
III- 16
III- 18
III- 19
III- 20

III- 17
III- 13
III- 14
III- 15

III- 6
III- 7
III- 8
III- 9III- 10
I- 37

I- 36

I- 38
I- 25
I- 3, I- 4

I- 8 I- 5
I- 35

I- 23

I- 24
I- 30

I- 29 I- 6

I- 7

I- 19

I- 33
I- 34

I- 18
I- 20

I- 11
I- 12

I- 10

I- 9

I- 31

I- 32

I- 2
I- 1

I- 14

Tokyo Station
I- 13
I- 15
I- 16 , I- 17

I- 21, I- 22

I- 26
I- 27

I- 28

I-1 to I-38:
Tokyo 23 wards

16Japan Real Estate Investment Corporation

Overview of Portfolio Properties
As of September 30, 2014

Note:	Concerning real estate or trust beneficiary rights in trust of real estate ofwhich 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 forthe entire building.

Genki Medical
Plaza●

Kitanomaru
SquareI-1●

MD Kanda
Building

I-2

●

I-3

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Site area:

1,052.80m2

Site area:

5,821.03m2

Site area:

1,085.83m2

Floor area of building:

6,722.02m2

Floor area of building:

57,279.20m2

Floor area of building:

8,185.11m2

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

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

Structure:

Above ground: 10 floors

Completion:

February 1998

Completion:

September 1985

Completion:

January 2006

Kandabashi Park
Building●

OtemachiFinancial City
North Tower

I-4●

Nibancho
Garden●I-6

I-5

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Site area:

1,218.56m2

Site area:

14,108.16m2

Site area:

11,003.87m2

Floor area of building:

9,370.25m2

Floor area of building:239,769.07m2

Floor area of building:

57,031.06m2

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

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

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

Completion:

July 1993

Completion:

October 2012

Completion:

April 2004

Mitsubishi UFJ
Trust andBanking Building●

Burex Kojimachi
Building●

Sanno Grand
Building

I-8

●

I-9

I-7

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Site area:

8,100.39m2

Site area:

967.67m2

Site area:

3,663.93m2

Floor area of building:

108,171.67m2

Floor area of building:

6,526.64m2

Floor area of building:

33,875.95m2

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

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

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

Completion:

February 2003

Completion:

January 2005

Completion:

September 1966

Japan Real Estate Investment Corporation

17

Yurakucho Denki
Building●

Kodenmacho
Shin-Nihonbashi
Building

I-10●

Kyodo Building(Kayabacho
2Chome)

I-11●

Location:

Chiyoda-ku, Tokyo

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Site area:

5,749.91m2

Site area:

773.28m2

Site area:

754.26m2

Floor area of building:

70,287.65m2

Floor area of building:

5,822.88m2

Floor area of building:

5,505.80m2

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

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

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

Completion:

September 1975

Completion:

November 1991

Completion:

April 1991

Burex Kyobashi
Building●

Ginza Sanwa
Building

I-13●

Ryoshin Ginza
East Mirror
Building

I-14

●

I-15

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Site area:

756.03m2

Site area:

1,119.27m2

Site area:

864.91m2

Floor area of building:

5,470.54m2

Floor area of building:

8,851.00m2

Floor area of building:

5,751.68m2

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

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

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

Completion:

February 2002

Completion:

October 1982

Completion:

October 1998

Harumi Front●

Harumi Center
Building

I-16●

Akasaka Park
Building

I-17

●

I-18

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Location:

Minato-ku, Tokyo

Site area:

7,250.15m2

Site area:

4,664.63m2

Site area:

14,198.20m2

Floor area of building:

45,458.90m2

Floor area of building:

26,447.27m2

Floor area of building:

97,489.16m2

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

Structure:

Above ground: 10 floors

Completion:

November 2006

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

Completion:

February 2012

Completion:

July 1993

Aoyama Crystal
Building
●

18

I-12

Shiodome
Building

I-19●

Shiba 2Chome
Daimon Building

I-20

●

I-21

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Site area:

989.30m2

Site area:

approx. 12,046m2

Site area:

2,820.90m2

Floor area of building:

8,094.36m2

Floor area of building:

115,930.83m2

Floor area of building:

16,235.10m2

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

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

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

Completion:

December 1982

Completion:

December 2007

Completion:

March 1984

Japan Real Estate Investment Corporation

CosmoKanasugibashi
Building●

Shinwa Building●

Tokyo Opera
City Building

I-23

●

I-24

I-22

Location:

Minato-ku, Tokyo

Location:

Shinjuku-ku, Tokyo

Location:

Shinjuku-ku, Tokyo

Site area:

758.54m2

Site area:

822.00m2

Site area:

18,236.94m2

Floor area of building:

5,420.93m2

Floor area of building:

8,291.69m2

Floor area of building:

232,996.81m2

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

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

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

Completion:

March 1992

Completion:

November 1989

Completion:

July 1996

TIXTOWER
UENO●

Higashi-Gotanda
1Chome Building

I-25

●

Osaki Front
Tower

I-26

●

I-27

Location:

Taito-ku, Tokyo

Location:

Shinagawa-ku, Tokyo

Location:

Shinagawa-ku, Tokyo

Site area:

2,412.80m2

Site area:

1,539.95m2

Site area:

3,684.38m2

Floor area of building:

23,727.48m2

Floor area of building:

6,460.39m2

Floor area of building:

23,673.92m2

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

Structure:

Above ground: 8 floors

Structure:

Above ground: 15 floors

Completion:

July 2004

Completion:

June 2005

Completion:

July 2010

Omori-Eki
Higashiguchi
Building●

NipponBrunswick
Building

Yoyogi 1Chome
Building●

I-30(Land with leasehold interest)

I-28

●

I-29

Location:

Ota-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Site area:

2,199.30m2

Site area:

1,497.52m2

Site area:

1,755.75m2

Floor area of building:

14,095.34m2

Floor area of building:—Floor area of building:

10,778.10m2

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

Structure:—

Completion:—

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

Completion:

July 1989

Completion:

October 2003

da Vinci
Harajuku●

Jingumae Media
Square Building

I-31

●

Shibuya Cross
Tower

I-32

●

I-33

Location:

Shibuya-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Site area:

839.66m2

Site area:

2,124.59m2

Site area:

5,153.45m2

Floor area of building:

4,359.20m2

Floor area of building:

9,420.42m2

Floor area of building:

61,862.33m2

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

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

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

Completion:

December 1987

Completion:

March 1998

Completion:

April 1976

Japan Real Estate Investment Corporation

19

Ebisu Neonato●

Harmony Tower

I-34

●

Otsuka HigashiIkebukuro
Building

I-35●

Location:

Shibuya-ku, Tokyo

Location:

Nakano-ku, Tokyo

Location:

Toshima-ku, Tokyo

Site area:

5,005.70m2

Site area:

10,020.52m2

Site area:

2,121.39m2

Floor area of building:

36,598.38m2

Floor area of building:

72,729.31m2

Floor area of building:

9,531.28m2

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

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

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

Completion:

October 1994

Completion:

March 1997

Completion:

November 1987

Ikebukuro
2Chome Building●

Ikebukuro YS
Building

I-37●

Hachioji First
Square

I-38

●

II-1

Location:

Toshima-ku, Tokyo

Location:

Toshima-ku, Tokyo

Location:

Hachioji, Tokyo

Site area:

397.26m2

Site area:

1,384.56m2

Site area:

2,989.33m2

Floor area of building:

3,157.51m2

Floor area of building:

7,464.64m2

Floor area of building:

18,329.98m2

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

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

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

Completion:

May 1990

Completion:

December 1989

Completion:

July 1996

Saitama Urawa
Building●

MM Park
Building

II-2●

Queen’s Tower A
●

II-4

II-3

Location:

Saitama, Saitama Prefecture

Location:

Yokohama, Kanagawa Prefecture

Location:

Yokohama, Kanagawa Prefecture

Site area:

1,533.06m2

Site area:

6,825.77m2

Site area:

44,406.40m2

Floor area of building:

6,258.59m2

Floor area of building:

49,037.51m2

Floor area of building:

498,282.77m2

Structure:

Above ground: 8 floors

Completion:

March 1990

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

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

Completion:

December 2007

Completion:

June 1997

Kawasaki Isago
Building
●

20

I-36

Musashi Kosugi
STM Building

II-5

●

8∙3 Square Kita
Building

II-6

●

III-1

Location:

Kawasaki, Kanagawa Prefecture

Location:

Kawasaki, Kanagawa Prefecture

Location:

Sapporo, Hokkaido

Site area:

1,594.50m2

Site area:

3,552.15m2

Site area:

5,541.60m2

Floor area of building:

9,623.83m2

Floor area of building:

22,839.61m2

Floor area of building:

16,096.97m2

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

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

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

Completion:

December 1990

Completion:

October 1990

Completion:

December 2006

Japan Real Estate Investment Corporation

Jozenji Park
Building●

HigashiNibancho Square

III-2

●

Sendai Honcho
Honma Building

III-3

●

III-4

Location:

Sendai, Miyagi Prefecture

Location:

Sendai, Miyagi Prefecture

Location:

Sendai, Miyagi Prefecture

Site area:

1,566.68m2

Site area:

3,191.27m2

Site area:

1,437.47m2

Floor area of building:

7,648.33m2

Floor area of building:

27,680.45m2

Floor area of building:

8,247.50m2

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

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

Structure:

Above ground: 11 floors

Completion:

November 1991

Completion:

January 1993

Completion:

July 2008

Kanazawa Park
Building●

Nishiki Park
Building

III-5●

Nagoya Hirokoji
Place

III-6

●

III-7

Location:

Kanazawa, Ishikawa Prefecture

Location:

Nagoya, Aichi Prefecture

Location:

Nagoya, Aichi Prefecture

Site area:

6,642.71m2

Site area:

2,170.45m2

Site area:

2,401.43m2

Floor area of building:

43,481.20m2

Floor area of building:

25,091.91m2

Floor area of building:

15,947.29m2

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

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

Structure:

Above ground: 10 floors

Completion:

December 2004

Completion:

October 1991

Completion:

August 1995

Hirokoji Sakae
Building●

Nagoya Hirokoji
Building

III-8●

Nagoya Misono
Building

III-9●

III-10Location:

Nagoya, Aichi Prefecture

Location:

Nagoya, Aichi Prefecture

Location:

Nagoya, Aichi Prefecture

Site area:

786.79m2

Site area:

4,095.81m2

Site area:

805.04m2

Floor area of building:

6,445.08m2

Floor area of building:

33,377.73m2

Floor area of building:

5,348.00m2

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

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

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

Completion:

September 1987

Completion:

May 1987

Completion:

September 1991

Shijo Karasuma
Center Building●

Kyoto Shijo
Kawaramachi
Building

III-11●Shin-Fujita
Building●

III-13

III-12

Location:

Kyoto, Kyoto Prefecture

Location:

Kyoto, Kyoto Prefecture

Location:

Osaka, Osaka Prefecture

Site area:

1,371.16m2

Site area:

1,471.57m2

Site area:

6,159.61m2

Floor area of building:

9,185.98m2

Floor area of building:

9,701.04m2

Floor area of building:

45,411.31m2

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

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

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

Completion:

January 2010

Completion:

November 1982

Completion:

April 1995

Japan Real Estate Investment Corporation

21

Sakaisujihonmachi
Building●

Midosuji Daiwa
Building

III-14●●

III-16

III-15

Location:

Osaka, Osaka Prefecture

Location:

Osaka, Osaka Prefecture

Location:

Okayama, Okayama Prefecture

Site area:

2,036.22m2

Site area:

3,044.65m2

Site area:

7,596.44m2

Floor area of building:

17,145.59m2

Floor area of building:

31,213.27m2

Floor area of building:

52,653.19m2

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

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

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

Completion:

October 1992

Completion:

September 1991

Completion:

June 2005

NHK Hiroshima
Broadcasting
Center Building●

Tosei Tenjin
Building●

Tenjin Crystal
Building

III-18●

III-19

III-17

Location:

Hiroshima, Hiroshima Prefecture

Location:

Fukuoka, Fukuoka Prefecture

Location:

Fukuoka, Fukuoka Prefecture

Site area:

3,296.46m2

Site area:

1,221.31m2

Site area:

1,835.17m2

Floor area of building:

35,217.28m2

Floor area of building:

5,588.57m2

Floor area of building:

10,432.04m2

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

Structure:

Above ground: 8 floors

Completion:

March 1992

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

Completion:

August 1994

Completion:

August 1993

Hinode Tenjin
Building●

III-20Location:

Fukuoka, Fukuoka Prefecture

Site area:

1,452.15m2

Floor area of building:

12,527.07m2

Structure:

Above ground: 10 floors
Below ground: 2 floors

Completion:

22

Lit City Building

August 1987

Japan Real Estate Investment Corporation

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

Selected Financial Data
Millions of yen

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

For the period from
October 1, 2013 toMarch 31, 2014

For the period from
April 1, 2013 to
September 30, 2014

For the period from
October 1, 2012 toMarch 31,2013

For the period from
April 1, 2012 to
September 30, 2012

Operating Revenues

27,76026,582

26,22525,357

24,222

Operating Expenses

16,50515,751

15,444

14,72514,009Operating Income

11,255

10,831

10,781

10,631

10,212

Ordinary Income

9,582

9,083

9,143

8,749

8,372

Income before Income Taxes

9,582

9,083

9,143

8,749

8,372

Net Income

9,572

9,070

9,129

8,824

8,448

Total Assets

813,931

817,130

775,066

765,628

724,851

Interest-Bearing Debts

323,550

358,900

320,150

311,200

305,750

Net Assets

436,622405,355

405,415405,280

372,429

Unitholders’ Capital

426,783

396,018

396,018

396,018

363,371

Number of Units

1,251,530

1,188,280

594,140

594,140

549,040
678,328

348,871

341,128

682,356

682,130

Cash Distribution

9,571

9,070

9,129

8,995

8,619

Dividend Payout Ratio

99.9%

99.9%

99.9%

101.9%

102.0%Net Assets per Unit (Yen) (Note 1)

Dividend per Unit (Yen)

7,648

7,633

15,36615,14015,700Net Operating Income (NOI)

18,105

17,481

17,205

16,76815,997

Funds from Operations (FFO)

15,455

14,71914,61914,032

13,356Return on Assets (ROA) (Note 2)

1.1%
1.2%
1.2%
1.2%
1.2%
(2.3% annualized) (2.3% annualized) (2.4% annualized) (2.4% annualized) (2.3% annualized)

Return on Equity (ROE) (Note 3)

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

EOP Equity Ratio (Note 4)

53.6%

49.6%

52.3%

52.9%

51.4%

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

39.8%

43.9%

41.3%

40.6%

42.2%

FFO Multiple (Times)

22.9

20.9

23.4

27.2

16.2

Debt Service Coverage Ratio (Times) (Note 6)

10.5

9.6

9.5

8.7

8.3

Notes 1:	The Company implemented a 2-for-1 split of each investment unit with an effective date of January 1, 2014. Net assets per unit is calculated as if the split had occurredat the start of the fiscal period ended March 31, 2014.
2:	ROA = Ordinary Income ÷ Average of Total Assets during the period.
3:	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 September 30, 2012, 182 days for theperiod ended March 31, 2013, 183 days for the period ended September 30, 2013, 182 days for the period ended March 31, 2014 and 183 days for the period ended
September 30, 2014.)
4: EOP Equity Ratio = (Net Assets at the end of the period ÷ Total Assets at the end of the period) × 100
5:	EOP Interest-Bearing Debt Ratio on Total Assets = (Interest-Bearing Debt at the end of the period ÷ Total Assets at the end of the period) × 100
6: 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, 2014 and September 30, 2014

Thousands of yen

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

24Japan Real Estate Investment Corporation

As of March 31, 2014

As of September 30, 2014

20,633,688
4,409,989
134,048
139,959
1,039
398,464
24,36025,741,550

20,650,366
4,938,725
146,658
187,287953—
107,610
26,031,601

249,745,895(60,666,845)
189,079,049
2,798,970(494,082)
2,304,887
2,896,723(1,479,416)
1,417,307
304,053(122,610)
181,442420,000,107
361,593
62,239,080(12,626,618)
49,612,462
579,704(102,230)
477,473840,044(575,077)
264,966
30,297(9,298)20,999118,445,649
782,165,939

251,314,069(65,297,431)
186,016,637
2,933,708(536,728)
2,396,979
2,899,420(1,565,756)
1,333,663
349,680(141,262)
208,417420,415,192
358,948
62,506,633(13,685,828)
48,820,805
583,214(113,721)
469,493
846,483(588,971)
257,51230,297(10,792)
19,505
118,440,720
778,737,876

6,105,136
444,160
828,095
7,377,392

6,096,492
444,160
828,095
7,368,748

577,168
1,071,830
119,267
1,768,265
791,311,597

577,168
1,071,830
85,594
1,734,592
787,841,217

77,182
77,182
817,130,330

58,271
58,271
813,931,090

Thousands of yen

As of March 31, 2014

As of September 30, 2014   Operating accounts payable  1,396,469  1,131,944   Short-term loans payable

56,800,000

31,500,000   Current portion of investment corporation bonds

15,000,000

20,000,000   Current portion of long-term loans payable

5,100,000

19,600,000   Accounts payable - other

1,234,453

925,217  Accrued expenses

800,158

734,114   Income taxes payable

11,551

5,006—

1,323,301

3,288,284

3,280,750

259,813

125,583

83,890,731

78,625,919   Investment corporation bonds

40,000,000

20,000,000   Long-term loans payable

242,000,000

232,450,000   Deposits received from tenants

45,418,762

45,766,249   Deferred tax liabilities

122,812

122,776   Asset retirement obligations

312,538

315,687  Other

29,532

27,488327,883,645

298,682,201

411,774,376

377,308,121

396,018,317

426,783,117    Reserve for reduction entry

236,709236,709     Total voluntary retained earnings

236,709236,709   Unappropriated retained earnings

9,100,926

9,603,143   Total surplus

9,337,636

9,839,852

405,355,953

436,622,969

405,355,953

436,622,969

817,130,330

813,931,090

LIABILITIESCurrent liabilities   Accrued consumption taxes  Advances received  Other   Total current liabilities
Non-current liabilities   Total non-current liabilities
Total Liabilities
NET ASSETS
Unitholders’ equity  Unitholders’ capital  Surplus    Voluntary retained earnings   Total unitholders’ equity
Total net assets
Total Liabilities and Net Assets

Japan Real Estate Investment Corporation25

Statements of Income and Retained Earnings
For the six months ended March 31, 2014 and September 30, 2014

Thousands of yen

For the period
from October 1, 2013
to March 31, 2014

For the period
from April 1, 2014
to September 30, 2014

26,357,478

27,604,566

Operating revenues
Rent revenues
Other lease business revenues
Total operating revenues

225,489

155,847

26,582,967

27,760,413

Operating expenses
14,750,867

15,538,009

Asset management fee

675,187

638,740

Asset custody fee

57,16458,445Administrative service fees

137,480

138,607

Directors' compensations

7,800

7,800

Commission fee

58,22261,803

Other operating expenses

64,373

61,876

Total operating expenses

15,751,096

16,505,284

10,831,870

11,255,129

Expenses related to rent business

Operating income
Non-operating income
Interest income

6,658

6,257

Dividend income—

19,724

2,261

2,666

Refund of property taxes

—

8,358

Income on settlement of management association accounts

—

8,524

Other

—

2,556

8,920

48,086

Reversal of distribution payable

Total non-operating income
Non-operating expenses

1,297,612

1,291,376Interest expenses on investment corporation bonds

410,928

329,603

Amortization of investment corporation bond issuance costs

21,97818,910—53,606

26,951

27,206

Interest expenses

Investment unit issuance expenses
Other

1,757,470

1,720,703

Ordinary income

9,083,320

9,582,512

Income before income taxes

9,083,320

9,582,512

Income taxes - current

13,16910,104

Income taxes - deferred

(2)

50

Total non-operating expenses

Total income taxes
Net income

26

13,166

10,1549,070,153

9,572,357

Retained earnings brought forward

30,77330,785

Unappropriated retained earnings

9,100,926

9,603,143

Japan Real Estate Investment Corporation

Statements of Changes in Unitholders’ Equity
For the six months ended March 31, 2014 and September 30, 2014

For the period from October 1, 2013 to March 31, 2014
Thousands of yen

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

396,018,317

Voluntary retained earnings
Reservefor reduction
entry

236,709

Voluntary
retainedearnings

Total net
assetsUnappropriatedretainedearnings

Total surplus

Totalunitholders’ equity

9,160,328

9,397,037

405,415,354

405,415,354(9,129,555)(9,129,555)(9,129,555)(9,129,555)

236,709

Changes of items during period
Dividends of surplus

9,070,153

9,070,153

9,070,153

9,070,153———(59,401)(59,401)(59,401)(59,401)

396,018,317

236,709236,7099,100,926

9,337,636

405,355,953

405,355,953

Total surplus

Totalunitholders’ equity

Net income
Total changes of items during period
Balance at end of current period

For the period from April 1, 2014 to September 30, 2014
Thousands of yen

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

396,018,317

Voluntary retained earnings
Reservefor reduction
entry

236,709

Voluntary
retainedearnings

236,709

Unappropriatedretainedearnings

Total net
assets9,100,926

9,337,636 405,355,953 405,355,953
30,764,800

30,764,800

Dividends of surplus(9,070,141)(9,070,141)(9,070,141)(9,070,141)

Net income

9,572,357

9,572,357

9,572,357

9,572,357

502,216

31,267,016

31,267,016

Changes of items during period
Issuance of new investment units

30,764,800

Total changes of items during period

30,764,800——

502,216

Balance at end of current period

426,783,117

236,709236,7099,603,143

9,839,852 436,622,969 436,622,969

Japan Real Estate Investment Corporation27

Basis of Calculations Used to Determine Cash Distributions
For the six months ended March 31, 2014 and September 30, 2014

For the period
from October 1, 2013 to March 31, 2014

For the period
from April 1, 2014 to September 30, 2014

Amount (Yen)Amount (Yen)I	  Retained Earnings

9,100,926,837

9,603,143,216

II	  Cash Distribution

9,070,141,240

9,571,701,440(7,633)(7,648)	 Item	  (Dividend per Investment Unit)
III	  Voluntary retained earnings
	  Provision of reserve for reduction entry
IV	  Retained Earnings Brought Forward

Computation Method for Determining Dividends

28Japan Real Estate Investment Corporation—

35,95430,785,597

31,405,822

The Company will make cash distributions using accounting profits based on
the cash distribution policy outlined in
Article 32-2 of the Company’s Articles ofIncorporation, in an amount that exceeds
90% of the “amount of distributableprofit” as set forth in Article 67-15 of the
Act on Special Measures Concerning
Taxation. Based on this policy, theCompany was able to maintain retained
earnings brought forward as the amount
did not exceed retained earnings at theend of the period. Therefore, the total
amount of dividends that the Company
has determined to pay out is9,070,141,240 yen for the period underreview, which must be divisible by
1,188,280 — the number of units
outstanding as of March 31, 2014.
Furthermore, the Company does not pay
out dividends that exceed accounting
profits as outlined in Article 32-3 of theCompany’s Articles of Incorporation.

The Company will make cash distributions using accounting profits based on
the cash distribution policy outlined in
Article 32-2 of the Company’s Articles ofIncorporation, in an amount that exceeds
90% of the “amount of distributableprofit” as set forth in Article 67-15 of the
Act on Special Measures Concerning
Taxation. Based on this policy, transferring the revised amount for deferred tax
liabilities, which accompanied changes tothe statutory tax rate, to the reserve for
reduction entry, the Company was able
to maintain retained earnings brought
forward. Therefore, the total amount ofdividends that the Company has determined to pay out is 9,571,701,440 yen
for the period under review, which is amultiple of 1,251,530 — the number ofunits outstanding as of September 30,
2014. Furthermore, the Company does
not pay out dividends that exceed
accounting profits as outlined in Article
32-3 of the Company’s Articles ofIncorporation.

Statements of Cash Flows
For the six months ended March 31, 2014 and September 30, 2014

Thousands of yen

For the period
from October 1, 2013
to March 31, 2014

For the period
from April 1, 2014
to September 30, 2014  9,083,320

9,582,512

5,649,556

5,883,291

Cash flows from operating activities
Income before income taxes
Depreciation

21,97818,910Investment unit issuance expenses—

53,606

Dividend income—(19,724)

Amortization of investment corporation bond issuance costs

Interest income(6,658)(6,257)

Interest expenses

1,708,541

1,620,980

54,136(12,609)(398,464)

398,464

Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes refund receivable

3

(71)

Decrease (increase) in prepaid expenses(23,195)(47,328)

Increase (decrease) in operating accounts payable(107,934)(35,401)

Increase (decrease) in accounts payable - other

185,815(223,961)

Increase (decrease) in accrued consumption taxes(601,862)

1,323,301

Decrease (increase) in supplies

Increase (decrease) in accrued expenses

117

(117)

Increase (decrease) in advances received

447,588(7,534)

Decrease (increase) in long-term prepaid expenses(96,060)

33,672Other, net

143,373(71,886)

Subtotal

16,060,256

18,489,846

7,965

24,997(1,694,512)(1,686,905)

Interest and dividend income received
Interest expenses paid

(9,569)(16,650)

14,364,139

16,811,288

Payments into time deposits(9,486,000)(10,431,000)

Proceeds from withdrawal of time deposits

15,486,000

9,431,000

Purchase of property, plant and equipment(28,482,929)(2,317,879)

Purchase of property, plant and equipment in trust(17,843,444)(578,573)

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

Purchase of intangible assets
Repayments of tenant leasehold and security deposits—(7,185)(1,207,724)(920,666)

Proceeds from tenant leasehold and security deposits

3,992,279

1,268,154

Net cash provided by (used in) investing activities(37,541,820)(3,556,150)

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

45,800,000

13,800,000

Repayments of short-term loans payable(14,000,000)(39,100,000)

Proceeds from long-term loans payable

20,000,000

5,000,000

Repayments of long-term loans payable(13,050,000)(50,000)

Redemption of investment corporation bonds—(15,000,000)

Proceeds from issuance of investment units—

30,764,800—(53,606)

Dividends paid

(9,126,830)(9,070,918)

Net cash provided by (used in) financing activities

29,623,169(13,709,724)

Payments for investment unit issuance expenses

Net increase (decrease) in cash and cash equivalents

6,445,489(454,586)

Cash and cash equivalents at beginning of period

14,598,188

21,043,677

Cash and cash equivalents at end of period

21,043,677

20,589,091

Japan Real Estate Investment Corporation

29

Notes to Financial Statements
March 31, 2014 and September 30, 2014

1. Organization and Basis of Presentation
Organization

Japan Real Estate Investment Corporation (the “Company”) is a real estate investment corporation formed to own and invest primarily ina portfolio of office properties. The Company is externally managed by a licensed asset management company, Japan Real Estate AssetManagement Co., Ltd. (“J-Rea”). J-Rea is currently owned 90% by Mitsubishi Estate Co., Ltd. (“MEC”) and 10% by Mitsui & Co., Ltd.
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, Tokio Marine &­Nichido Fire Insurance Co., Ltd. (“TMN”) and The Dai-ichi Mutual Life Insurance Company (currently renamed The Dai-ichi Life
­Insurance Company, Limited, “DL”) under the Law Concerning Investment Trusts and Investment Corporations of Japan, or the­Investment 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,
generating gross proceeds of ¥81,060 million.
The Company completed the tenth public offering of 57,500 units at a price of ¥486,400 on April 15, 2014 and third-party allocationof 5,750 units at a price of ¥486,400 on May 14, 2014, generating gross proceeds of ¥27,968 million and ¥2,796 million, respectively.
As of September 30, 2014, the Company had a total unitholders’ capital of ¥426,783 million with 1,251,530 units outstanding.
On September 16, 2014, the transfer of 77,142 J-Rea shares owned by DL (27.0% of outstanding shares) to MEC was approved by theboard of directors. Upon the completion of the share transfer on September 29, the percentage of J-Rea’s shares held by MEC increased
from 63.0% to 90.0%, while the balance is held by Mitsui & Co., Ltd.
At September 30, 2014, the Company owned a portfolio of 64 office properties with an aggregate of approximately 752,723 square
meters of leasable space.
Basis of presenting financial statements

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

2. Summary of Significant Accounting Policies
Investment securities

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

Property and equipment is stated at cost, less accumulated depreciation. The costs of land, buildings and building improvements include
the purchase price of property, legal fees and acquisition costs. Depreciation is calculated on a straight-line basis over the estimated useful
lives of the assets ranging as stated below:
Buildings ................................................................................................................................... 2-61 years
Structures ................................................................................................................................. 3-60 years
Machinery and equipment ................................................................................ 2-18 years
Tools, furniture and fixtures ............................................................................. 2-29 years

30Japan Real Estate Investment Corporation

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

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

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

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

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

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

Consumption taxes withheld and consumption taxes paid are not included in the statements of income. The consumption taxes paid are
generally offset against the balance of consumption taxes withheld. As such, the excess of payments over amounts withheld are included in
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 and with insignificant risk of price fluctuation, with original maturity of three months or less.

Japan Real Estate Investment Corporation

31

Hedge accounting

The Company enters into derivative transactions to hedge against interest-rate risk based on the risk management policies outlined in the
Company’s Articles of Incorporation. The Company uses interest-rate swap transactions for hedging fluctuations in interest rates on floating-rate loans. Deferred hedge accounting is generally used for such interest-rate swaps, and the effectiveness of hedging is measured bycomparing the total cash flow fluctuation of the hedged item and that of the hedging instrument since the inception of the hedge.
For interest-rate swaps that qualify for hedge accounting and meet certain criteria provided under Japanese GAAP, however, theCompany applies a special accounting treatment. Under the special accounting treatment, the differentials paid or received under the swap
agreements are recognized and included in interest expense of the hedged loans, and the interest-rate swaps are not required to be measured
at fair value separately. For interest-rate swaps that meet the specific criteria for the special accounting treatment, assessments of hedge
effectiveness are not performed.

3. Financial Instruments
For the six months ended March 31, 2014 and September 30, 2014
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 ofinvestment corporation bonds and issuance of investment units. When executing such financing activities, the Company endeavors toretain the ability to secure stable and low-cost financing by maintaining high credit ratings and thereby limiting the financial covenants
that may restrict the financial flexibility of the Company. To achieve these goals, the Company intends to further develop and reinforce
the confidence of debt holders and rating agencies in the Company by bolstering the capital base and controlling the loan-to-value
ratio (“LTV”) at an adequate level.
		  In order to hedge against future interest-rate fluctuations, the Company may enter into derivative transactions, which shall be
executed solely for the purpose of controlling risks, and not for speculative purposes.
		  With respect to management of excess funds, as a matter of policy the Company uses time deposits as its main vehicle, while securities and monetary claims are also eligible for such investment.
(2) Characteristics and risk profile of each financial instrument and risk management system		The Company regularly re-evaluates the appropriateness and effectiveness of its risk management system in order to improve on it.
		Characteristics and risk profile of financial instruments and the system in place to manage such risks are as follows:		  The deposits, which are typically large time deposits used to manage excess funds, are exposed to the credit risk of the deposit-taking
financial institutions. The Company manages credit risk by restricting the tenor of the deposit to relatively short periods and setting aminimum credit rating requirement for the deposit-taking financial institutions.
		  The funding proceeds from borrowings and issues of investment corporation bonds are applied mainly to acquire real estate properties and repay outstanding loans and bonds. While floating-rate short-term and long-term loans are exposed to the risk of interest rate
hikes, such risk is mitigated by the Company’s low LTV and relatively high percentage of long-term fixed-rate debts within the totalborrowing. The Company also utilizes derivative transactions (interest-rate swap transactions) as a hedge against interest-rate risk
derived from floating-rate long-term loans, thereby maintaining the overall interest rates on the loans at an effectively fixed level.
For more detailed information on the hedge accounting method, hedging instruments, hedged items, hedge policies and the e­ valuation
method of hedge effectiveness, please refer to previous section 2. Summary of Significant Accounting Policies: Hedge accounting.
		  Loans and investment corporation bonds involve liquidity risk at the time of maturity. To manage such liquidity risk, the Company
implements measures such as (i) maintaining and strengthening its ability to access equity markets to secure funds, (ii) maintaining
commitment lines with major financial institutions (There is no amount outstanding under the facility as of September 30, 2014 andas of March 31, 2014), and (iii) preparing monthly financial plans.

32Japan Real Estate Investment Corporation

(3) Supplementary note regarding fair value of financial instruments		The fair values of financial instruments presented in this report are based on their market value, and in cases where market values are
not available, reasonably calculated values are presented. Since calculation of fair value is based on certain assumptions, the fair value
could differ depending on the assumptions used. In addition, the contract value of derivative transactions, which is presented in thesection 4. Derivative Transactions, is not an exact representation of market risk attributable to derivative transactions.
2. Fair value of financial instruments

Fair value of financial instruments, their values carried on the balance sheet and the differences between them as of September 30, 2014
and as of March 31, 2014 are as follows.
The financial instruments whose fair values are extremely difficult to estimate are excluded from the following schedule (Note 2):
Thousands of yen

As of March 31, 2014
Book value

Fair value(1) Cash and deposits

20,633,688

20,633,688

Difference—(2) Cash and deposits in trust

4,409,989

4,409,989—(3) Short-term loans

56,800,000

56,800,000—(4) Current portion of investment corporation bonds

15,000,000

15,056,550

56,550(5) Current portion of long-term loans

5,100,000

5,129,403

29,403(6) Investment corporation bonds

40,000,000

41,632,000

1,632,000(7) Long-term loans

242,000,000

246,544,239

4,544,239———(8) Derivative transactions

Thousands of yen

As of September 30, 2014

(1) Cash and deposits

Book value

Fair value

20,650,366

20,650,366

Difference—(2) Cash and deposits in trust

4,938,725

4,938,725—(3) Short-term loans

31,500,000

31,500,000—(4) Current portion of investment corporation bonds

20,000,000

20,129,900

129,900(5) Current portion of long-term loans

19,600,000

19,740,007

140,007(6) Investment corporation bonds

20,000,000

21,668,300

1,668,300(7) Long-term loans

232,450,000

237,846,285

5,396,285———(8) Derivative transactions

Note 1: Measurement of fair value of financial instruments and matters concerning derivative transactions(1)	Cash and deposits and (2) Cash and deposits in trust		 Due to short tenor, the book values of these assets are reasonable approximations of the present value of these assets and hence used as their fair value.
(3) Short-term loans		Since these loans’ tenor is short and rates are reset at a short interval, the book values of these liabilities are reasonable approximations of their present value and hence
used as their fair values.
(4) Current portion of investment corporation bonds and (6) Investment corporation bonds
		 Their fair values are based on the values published by a financial data provider.
(5)	Current portion of long-term loans and (7) Long-term loans		For loans with floating interest rates, since the interest rates on such loans reflect market rates reasonably well over the short term and their book values are good
approximations of their fair values, the book values are presented as their fair values. (However, the fair values of floating-rate long-term loans hedged by interest-rate
swaps subject to the special treatment are calculated by discounting the aggregated principal and the interest on such loans, after taking into account the effect of saidinterest-rate swaps, using reasonable estimates of the rates that would be applicable if the Company were to refinance the existing loans for the remaining period tomaturity under the prevailing market conditions as of September 30, 2014 and March 31, 2014. Such floating-rate long-term loans are presented in the section
4. Derivative Transactions.) The fair values of the liabilities with fixed interest rates are calculated by discounting the aggregated amounts of the principals and theinterests of the loans by the rates that are reasonably estimated to be applicable if the Company were to refinance the existing loans for the remaining periods to­maturity under the prevailing market conditions as of September 30, 2014 and March 31, 2014.
(8) Derivative transactions
		 Please refer to the section 4. Derivative Transactions.

Japan Real Estate Investment Corporation

33

Note 2: Financial instruments whose fair values cannot be reliably measured.
Thousands of yen

As of March 31, 2014
577,168
45,418,762(1) Non-listed stock (*1)
(2) Deposits received from tenants (*2)

As of September 30, 2014
577,168
45,766,249(*1) With regard to non-listed stocks, which do not have a quoted market price in an active market and whose cash flows are not reasonably estimated, their fair value
cannot be reliably measured and they are therefore presented at their book value.
(*2) With regard to deposits received from tenants, which do not have a quoted market price in an active market, and their tenor cannot be reasonably estimated, their
cash flows cannot be reliably measured and they are therefore presented at their book value.
Note 3: Redemption schedule for monetary claims after the closing dateThousands of yen

1 year or less
20,633,688
4,409,989
25,043,677

Cash and deposits
Cash and deposits in trust
Total

1 to 2 years———

As of March 31, 2014
2 to 3 years
3 to 4 years
—
—
—
—
—
—

1 to 2 years———

As of September 30, 2014
2 to 3 years
3 to 4 years
—
—
—
—
—
—

4 to 5 years———

Over 5 years———

4 to 5 years———

Over 5 years———

4 to 5 years—
10,000,000
25,000,000
35,000,000

Over 5 years—
10,000,000
109,500,000
119,500,000

4 to 5 years——
12,500,000
12,500,000

Over 5 years—
10,000,000
109,000,000
119,000,000

Thousands of yen

1 year or less
20,650,366
4,938,725
25,589,091

Cash and deposits
Cash and deposits in trust
Total

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

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

1 year or less
56,800,000
15,000,000
5,100,000
76,900,000

1 to 2 years—
20,000,000
16,600,000
36,600,000

As of March 31, 2014
2 to 3 years
3 to 4 years————
44,400,000
46,500,000
44,400,000
46,500,000
Thousands of yen

As of September 30, 2014
Short-term loans
Investment corporation bonds
Long-term loans
Total

1 year or less
31,500,000
20,000,000
19,600,000
71,100,000

1 to 2 years——
32,100,000
32,100,000

2 to 3 years——
42,850,000
42,850,000

3 to 4 years—
10,000,000
36,000,000
46,000,000

4. Derivative Transactions(1) Derivatives not designated as hedging instruments
		 For the period from October 1, 2013 to March 31, 2014
		  “Not applicable”
		 For the period from April 1, 2014 to September 30, 2014
		  “Not applicable”(2) Derivatives designated as hedging instruments
		 For the period from October 1, 2013 to March 31, 2014		 The contract amount or the equivalent principal amount set out in the contract as of the closing date for each derivative designatedas a hedging instrument is as follows.


34

Derivative accounting method

Type of derivative transaction

Hedged item

Hedge accounting

Receive-floating, pay-fixedinterest-rate swap transactions

Long-term loans

Japan Real Estate Investment Corporation

Contract valueOver one year

15,000,000

15,000,000

Thousands of yen

Fair value

Measurementof fair value*—		 For the period from April 1, 2014 to September 30, 2014			The contract amount or the equivalent principal amount set out in the contract as of the closing date for each derivative designated asa hedging instrument is as follows.


Derivative accounting method

Type of derivative transaction

Hedged item

Hedge accounting

Receive-floating, pay-fixedinterest-rate swap transactions

Long-term loans

Contract valueOver one year

25,000,000

Thousands of yen

Fair value

Measurementof fair value*—

25,000,000* Because the transactions based on the special treatment of interest-rate swaps and the hedged long-term loans are treated as one item, the fair value is included under the fairvalue of long-term loans at the end of the fiscal period ended March 31, 2014 and September 30, 2014. Please refer to the measurement of fair value of financial instruments
in Note 1 of the section entitled “2. Fair value of financial instruments” under “Financial Instruments” as well as subheadings (5) and (7) of Note 1, which are related toderivative transactions.

5. Property and Equipment
Property and equipment at March 31, 2014 and September 30, 2014 consisted of the following:Thousands of yen

As of March 31, 2014

As of September 30, 2014

Acquisition costs

Book value

Acquisition costs

Book valueLand

420,000,107

420,000,107

420,415,192

420,415,192

Buildings and structures

252,544,865  Accumulated depreciation(61,160,927)

Machinery and equipment

2,896,723  Accumulated depreciation(1,479,416)

Tools, furniture and fixtures

304,053  Accumulated depreciation(122,610)

Construction in progress

254,247,777
191,383,937(65,834,159)

1,417,307(1,565,756)

181,442(141,262)

188,413,617

2,899,420
1,333,663

349,680
208,417361,593361,593358,948358,948

Land in trust

118,445,649

118,445,649

118,440,720

118,440,720

Buildings and structures in trust

62,818,784  Accumulated depreciation(12,728,848)

Machinery and equipment in trust

840,044  Accumulated depreciation(575,077)

Tools, furniture and fixtures in trust  Accumulated depreciation
Total

63,089,848
50,089,935(13,799,549)

49,290,298

846,483
264,966

30,297(588,971)

257,51230,297(9,298)20,999(10,792)

19,505782,165,939

782,165,939

778,737,876

778,737,876

The compressed amount of tangible assets with government grants under the Corporation Tax Law of Japan was ¥50 million at September
30, 2014 and ¥50 million at March 31, 2014.

Japan Real Estate Investment Corporation

35

6. Loans
The condition of loans by financial institutions as of September 30, 2014 is as follows.
Borrowing Date

Balance at
Beginning ofCurrent Period(¥ million)

Balance at
End of Current
Period(¥ million)

Average
Interest Rate*1.
(%)

Repayment
Deadline

Repayment
MethodUse of Money

Remarks

July 31, 2013

3,000

—

0.2263

April 30, 2014

Bullet repayment

Assigned to purchase real estate
trust beneficiary rights

Unsecured Unguaranteed
Unsubordinated Floating interest rate

January 7, 2014

4,000

2,000
*2.

0.2263January 7, 2015

Bullet repayment

Assigned to repay existing shortterm loans

Unsecured Unguaranteed
Unsubordinated Floating interest rate

February 18, 2014

3,500

—
*3.

0.2263February 18, 2015

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Floating interest rate

March 24, 2014

2,500

—
*4.

0.2263

March 24, 2015

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Floating interest rate

March 31, 2014

3,700

2,000
*5.

0.2163

March 31, 2015

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Floating interest rate

June 17, 2014

—

4,000

0.2163

March 17, 2015

Bullet repayment

Assigned to redeem investment
corporation bonds

Unsecured Unguaranteed
Unsubordinated Floating interest rate

January 7, 2014

1,500

1,500

0.2263January 7, 2015

Bullet repayment

Assigned to repay existing shortterm loans

Unsecured Unguaranteed
Unsubordinated Floating interest rate

January 15, 2014

5,000

—
*6.

0.2263January 15, 2015

Bullet repayment

Assigned to repay existing shortterm loans

Unsecured Unguaranteed
Unsubordinated Floating interest rate

March 24, 2014

2,500

2300
*7.

0.2263

March 24, 2015

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Floating interest rate

March 31, 2014

3,700

3,700

0.2163

March 31, 2015

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Floating interest rate

September 2, 2013

5,000

—
*8.

0.2263September 2, 2014

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Floating interest rate

October 7, 2013

1,000

—
*9.

0.2263October 7, 2014

Bullet repayment

Assigned to repay existing shortterm loans

Unsecured Unguaranteed
Unsubordinated Floating interest rate

March 24, 2014

2,500

—
*4.

0.2263September 24, 2014

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Floating interest rate

March 31, 2014

3,700

3,700

0.2163

March 31, 2015

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Floating interest rate

September 2, 2014

—

3,800

0.1963September 2, 2015

Bullet repayment

Assigned to repay existing shortterm loans

Unsecured Unguaranteed
Unsubordinated Floating interest rate

July 31, 2013

3,000

—
*10.

0.2263

July 31, 2014

Bullet repayment

Assigned to purchase real estate
trust beneficiary rights

Unsecured Unguaranteed
Unsubordinated Floating interest rate

February 18, 2014

3,500

—
*3.

0.2263February 18, 2015

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Floating interest rate

March 24, 2014

2,500

—
*4.

0.2263

March 24, 2015

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Floating interest rate

March 31, 2014

3,700

—
*11.

0.2163

March 31, 2015

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Floating interest rate

June 17, 2014

—

4,000

0.2163

March 17, 2015

Bullet repayment

Assigned to redeem investment
corporation bonds

Unsecured Unguaranteed
Unsubordinated Floating interest rate

January 7, 2014

1,500

1,500

0.2263January 7, 2015

Bullet repayment

Assigned to repay existing shortterm loans

Unsecured Unguaranteed
Unsubordinated Floating interest rate

June 17, 2014

—

1,000

0.2163

March 17, 2015

Bullet repayment

Assigned to redeem investment
corporation bonds

Unsecured Unguaranteed
Unsubordinated Floating interest rate

The Gunma Bank,
Ltd.

June 17, 2014

—

1,000

0.2163

March 17, 2015

Bullet repayment

Assigned to redeem investment
corporation bonds

Unsecured Unguaranteed
Unsubordinated Floating interest rate

The 77 Bank, Ltd.

June 17, 2014

1,000

1,000

0.2263January 7, 2015

Bullet repayment

Assigned to repay existing shortterm loans

Unsecured Unguaranteed
Unsubordinated Floating interest rate

56,80031,500

Segment
LenderMizuho Bank, Ltd.

Mitsubishi UFJ
Trust and Banking
Corporation

Short-term loans

Sumitomo Mitsui
Trust Bank, Limited

The Bank of TokyoMitsubishi UFJ, Ltd.

The Daishi Bank, Ltd.

SubtotalLong-term loans to be repaid within 1 year

The Dai-ichi Life
Insurance Company,
LimitedMay 31, 2007

—

5,000

1.86875

May 29, 2015

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

The Chugoku Bank,
LimitedJune 15, 2010

—

3,000

1.20875

June 15, 2015

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

The Hiroshima Bank,
Ltd.

June 14, 2010

—

3,000

1.1875June 15, 2015

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

September 1, 2008

—

2,000

1.65

September 1, 2015

Bullet repayment

Assigned to purchase real estate
trust beneficiary rights

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

March 24, 2010

100

100
*12.

1.665

March 24, 2017

Repayment ininstallments *12.

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

The Bank ofFukuoka Ltd.

March 24, 2010

2,000

2,000

1.39875

March 24, 2015

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

The Yamanashi Chuo
Bank, Ltd.

December 15, 2011

2,000

2,000

0.645

December 15, 2014

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

Taiyou Life Insurance
Company

May 31, 2007

—

1,500

1.86875

May 29, 2015

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

The Gunma Bank,
Ltd.

November 15, 2011

1,000

1,000

0.615

November 17, 2014

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

5,100

19,60061,90051,100Development Bankof Japan Inc.

Subtotal
Total

36

Japan Real Estate Investment Corporation

Segment

Borrowing Date

Balance at
Beginning ofCurrent Period(¥ million)

Balance at
End of Current
Period(¥ million)

Average
Interest Rate*1.
(%)

Repayment
Deadline

Repayment
MethodUse of Money

Remarks

April 4, 2011

5,000

5,000

1.0325

April 4, 2016

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

April 4, 2011

5,000

5,000

1.205

April 4, 2017

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

June 1, 2011

12,00012,0001.12625

June 1, 2017

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

June 1, 2011

10,00010,0001.31125

June 1, 2018

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

November 15, 2011

3,000

3,000

1.13875

November 15, 2019

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

June 15, 2012

4,000

4,000

0.9525June 15, 2020

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

June 15, 2012

2,500

2,500

1.2725June 15, 2022

Bullet repayment

Assigned to redeem investment
corporation bonds

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

December 21, 2012

5,000

5,000

0.80125

December 21, 2020

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

January 31, 2014

4,000

4,000

0.64225*13.

January 29, 2021

Bullet repayment

Assigned to purchase real estate
trust beneficiary rights

Unsecured Unguaranteed
Unsubordinated Floating interest rate
*13.

March 24, 2011

2,000

2,000

1.3975

March 26, 2018

Bullet repayment

Assigned to repay existing shortterm loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

November 15, 2011

3,000

3,000

1.13875

November 15, 2019

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

June 15, 2012

4,000

4,000

1.1975June 15, 2022

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

December 21, 2012

5,000

5,000

0.80125

December 21, 2020

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

January 15, 2013

5,500

5,500

0.71

January 15, 2020

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

January 15, 2013

5,500

5,500

0.83625

January 15, 2021

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

April 24, 2013

5,000

5,000

0.775

April 26, 2021

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

December 21, 2010

5,000

5,000

1.30625

December 21, 2016

Bullet repayment

Assigned to repay existing shortterm loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

November 1, 2011

6,000

6,000

1.2075

November 1, 2019

Bullet repayment

Assigned to repay existing shortterm loans and other loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

November 15, 2011

3,000

3,000

1.13875

November 15, 2019

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

June 15, 2012

4,000

4,000

1.07375

June 15, 2021

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

January 15, 2013

5,000

5,000

0.96625

January 17, 2022

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

April 24, 2013

3,000

3,000

0.87375

April 25, 2022

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

6,000

6,000

0.90875

June 23, 2016

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

LenderMitsubishi UFJ
Trust and Banking
Corporation

The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

Long-term loans
Mizuho Bank, Ltd.

Mitsubishi UFJ
Trust and Banking
Corporation
Mizuho Bank, Ltd.

6,000

6,000

Sumitomo Mitsui
Trust Bank, Limited

6,000

6,000

The Bank of TokyoMitsubishi UFJ, Ltd.

6,000

6,000

January 17, 2011

3,000

3,000

1.43375

January 17, 2018

Bullet repayment

Assigned to repay existing shortterm loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

September 26, 2011

5,500

5,500

1.16

September 26, 2019

Bullet repayment

Assigned to repay existing shortterm loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

November 15, 2011

3,000

3,000

0.98375

November 15, 2018

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

June 15, 2012

4,000

4,000

0.9525June 15, 2020

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

January 31, 2014

2,000

2,000

0.62575*13.

January 29, 2021

Bullet repayment

Assigned to purchase real estate
trust beneficiary rights

Unsecured Unguaranteed
Unsubordinated Floating interest rate
*13.

Sumitomo Mitsui
Trust Bank, Limited

June 23, 2011

Japan Real Estate Investment Corporation

37

Segment

Borrowing Date

Balance at
Beginning ofCurrent Period(¥ million)

Balance at
End of Current
Period(¥ million)

Average
Interest Rate*1.
(%)

Repayment
Deadline

Repayment
MethodUse of Money

Remarks

November 15, 2011

1,000

1,000

0.7525

November 15, 2016

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

January 7, 2013

2,000

2,000

0.71375

January 7, 2020

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

January 15, 2013

5,000

5,000

0.71

January 15, 2020

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

April 24, 2013

5,000

5,000

0.52775

April 24, 2018

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

September 1, 2008

2,000

—

1.65

September 1, 2015

Bullet repayment

Assigned to purchase real estate
trust beneficiary rights

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

March 24, 2010

1,500

1,450
*12.

1.665

March 24, 2017

Repayment ininstallments*12.

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

January 7, 2013

3,000

3,000

1.115

January 6, 2023

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

January 31, 2014

5,000

5,000

0.9325January 31, 2023

Bullet repayment

Assigned to purchase real estate
trust beneficiary rights

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

August 31, 2011

2,000

2,000

0.9025

August 31, 2017

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

June 15, 2012

2,500

2,500

0.66

June 15, 2017

Bullet repayment

Assigned to redeem investment
corporation bonds

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

August 31, 2012

1,000

1,000

0.57125

August 31, 2017

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

January 31, 2014

2,500

2,500

0.63849*13.

January 29, 2021

Bullet repayment

Assigned to purchase real estate
trust beneficiary rights

Unsecured Unguaranteed
Unsubordinated Floating interest rate
*13.

August 31, 2011

3,000

3,000

1.0475

August 31, 2018

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

June 15, 2012

2,500

2,500

0.66

June 15, 2017

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

June 15, 2012

2,500

2,500

1.2725June 15, 2022

Bullet repayment

Assigned to redeem investment
corporation bonds

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

January 31, 2014

3,500

3,500

0.757
*13.

January 31, 2022

Bullet repayment

Assigned to purchase real estate
trust beneficiary rights

Unsecured Unguaranteed
Unsubordinated Floating interest rate
*13.

June 17, 2014

—

3,000

0.6785*13.

June 17, 2022

Bullet repayment

Assigned to redeem investment
corporation bonds

Unsecured Unguaranteed
Unsubordinated Floating interest rate
*13.

June 15, 2012

2,500

2,500

0.66

June 15, 2017

Bullet repayment

Assigned to redeem investment
corporation bonds

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

January 15, 2013

1,000

1,000

0.3825January 15, 2016

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

March 24, 2014

2,000

2,000

0.6035*13.

March 24, 2021

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Floating interest rate*13.

May 31, 2007

5,000

—

1.86875

May 29, 2015

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

March 30, 2009

5,000

5,000

1.54375

March 30, 2017

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

March 1, 2011

2,000

2,000

1.255

March 1, 2017

Bullet repayment

Assigned to purchase real estate
trust beneficiary rights

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

March 25, 2013

3,000

3,000

0.45

March 26, 2018

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

November 15, 2011

3,000

3,000

0.98375

November 15, 2018

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

January 7, 2013

2,000

2,000

0.98

January 7, 2022

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

June 15, 2012

1,000

1,000

0.66

June 15, 2017

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

December 20, 2012

1,000

1,000

0.45625

December 20, 2017

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

January 15, 2013

1,000

1,000

0.3825January 15, 2016

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

March 25, 2013

1,000

1,000

0.45

March 26, 2018

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

May 31, 2007

1,500

—

1.86875

May 29, 2015

Bullet repayment

Assigned to purchase real estate

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

April 24, 2008

1,000

1,000

1.595

April 25, 2016

Bullet repayment

Assigned to redeem investment
corporation bonds

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

March 30, 2011

2,000

2,000

1.39625

March 30, 2018

Bullet repayment

Assigned to repay existing loans

Unsecured Unguaranteed
Unsubordinated Fixed interest rate

LenderShinkinCentral Bank

Development Bank ofJapan Inc.

The Bank ofFukuoka, Ltd.

Shinsei Bank, Limited

Long-term loans

The Norinchukin BankThe Iyo Bank, Ltd.

The Dai-ichi Life
Insurance Company,
LimitedResona Bank
LimitedSumitomo Mitsui
Banking Corporation

The Hachijuni
Bank, Ltd.

Taiyo Life
Insurance Company

38

Japan Real Estate Investment Corporation

Segment

Borrowing Date

Balance at
Beginning ofCurrent Period(¥ million)

Balance at
End of Current
Period(¥ million)

Average
Interest Rate*1.
(%)

Repayment
Deadline

Repayment
MethodUse of Money

October 29, 2012

2,000

2,000

0.8

October 29, 2020

Bullet repayment

Assigned to repay existing loans

March 25, 2013

1,000

1,000

0.945

March 24, 2023

Bullet repayment

Assigned to repay existing loans

June 15, 2010

3,000

—

1.20875

June 15, 2015

Bullet repayment

Assigned to repay existing loans

LenderThe Yamaguchi
Bank, Ltd.

The Chugoku
Bank, Limited

Remarks

Long-term loans

March 25, 2013

2,000

2,000

0.45

March 26, 2018

Bullet repayment

Assigned to repay existing loans

Nippon Life
Insurance Company

March 1, 2011

2,000

2,000

1.465

March 1, 2018

Bullet repayment

Assigned to purchase real estate
trust beneficiary rights

The Nishi-Nippon
City Bank, Ltd.

June 17, 2014

—

2,000

0.621
*13.

December 17, 2021

Bullet repayment

Assigned to redeem investment
corporation bonds

The Ashikaga
Bank, Ltd.

January 7, 2013

1,000

1,000

0.49125

January 9, 2018

Bullet repayment

Assigned to purchase real estate

The Gunma
Bank, Ltd.

March 24, 2014

1,000

1,000

0.4105*13.

March 25, 2019

Bullet repayment

Assigned to repay existing loans

The Joyo Bank, Ltd.

January 7, 2013

1,000

1,000

0.49125

January 9, 2018

Bullet repayment

Assigned to purchase real estate

The Hiroshima
Bank, Ltd.

June 14, 2010

3,000

—

1.1875June 15, 2015

Bullet repayment

Assigned to repay existing loans

242,000

232,450

Total

Unsecured Unguaranteed
Unsubordinated Fixed interest rate
Unsecured Unguaranteed
Unsubordinated Fixed interest rate
Unsecured Unguaranteed
Unsubordinated Fixed interest rate
Unsecured Unguaranteed
Unsubordinated Fixed interest rate
Unsecured Unguaranteed
Unsubordinated Fixed interest rate
Unsecured Unguaranteed
Unsubordinated Floating interest rate
*13.
Unsecured Unguaranteed
Unsubordinated Fixed interest rate
Unsecured Unguaranteed
Unsubordinated Floating interest rate
*13.
Unsecured Unguaranteed
Unsubordinated Fixed interest rate
Unsecured Unguaranteed
Unsubordinated Fixed interest rate

*1. The average for floating interest rates is recorded as the weighted average during the period. The average is rounded off to the fifth decimal place.
*2. As of May 7, 2014, ¥2 billion has been repaid before the deadline.
*3. As of April 18, 2014, the entire amount of ¥3.5 billion has been repaid before the deadline.
*4. As of April 24, 2014, the entire amount of ¥2.5 billion has been repaid before the deadline.
*5. As of September 18, 2014, ¥1.7 billion has been repaid before the deadline.
*6. As of April 15, 2014, the entire amount of ¥5 billion has been repaid before the deadline.
*7. As of April 24, 2014, ¥200 million has been repaid before the deadline.
*8. As of May 2, 2014, ¥1.2 billion has been repaid before the deadline.
*9. As of May 7, 2014, the entire amount of ¥1 billion has been repaid before the deadline.
*10. As of April 30, 2014, the entire amount of ¥3 billion has been repaid before the deadline.
*11. As of April 30, 2014, ¥2 billion was repaid, and as of September 18, 2014, the remaining ¥1.7 billion was repaid, all before the deadline.
*12. ¥50 million is repaid every 6 months respectively. ¥1.35 billion is scheduled to be repaid on the final principal repayment date.
*13.	In order to avoid the risk of interest rate fluctuations, floating interest rates were swapped to fixed rates. Accordingly, the weighted average for interest rates during theperiod is calculated taking the effect of this swap into consideration.
Note: The Company has commitment lines totaling ¥43,000 million with five financial institutions to reduce refinancing risk. The unused amount of such commitment lines
was ¥43,000 million at September 30, 2014.

7. Investment Corporation Bonds including Current Portion of Investment Corporation Bonds
The condition of issued investment corporation bonds as of September 30, 2014 is as follows.

Securities

4th unsecured investment
corporation bond
6th unsecured investment
corporation bond
7th unsecured investment
corporation bond
8th unsecured investment
corporation bond
9th unsecured investment
corporation bond
Total

Date of Issue

Balance at
Beginning ofCurrent Period(¥ million)

Balance at
End of Current
Period (¥ million)

Interest Rate(%)

Repayment Period

September 29, 2005

10,00010,0002.56

September 29, 2025

June 18, 2007

15,000—1.91

June 18, 2014

April 23, 2010

10,00010,0001.26

April 23, 2015

July 23, 2010

10,00010,000

1.05

July 23, 2015

August 30, 2013

10,00010,0000.497

August 30, 2018

55,00040,000

Repayment
MethodBulletrepayment
Bulletrepayment
Bulletrepayment
Bulletrepayment
Bulletrepayment

Use ofMoney

Remarks

*1.

*2.

*1.

*2.

*1.

*2.

*1.

*2.

*1.

*2.

*1.	The 4th and 8th unsecured investment corporation bonds are used to fund the repayment of existing short-term loans. The 6th and 7th unsecured investment corporation
bonds are used to redeem existing investment corporation bonds.
	The 9th unsecured investment corporation bond is used to fund the repayment of loans and acquire specified assets (“specified assets” defined in Article 2, Paragraph 1 of the
Act on Investment Trusts and Investment Corporations).
*2. Financial covenants, such as a negative pledge, are not applicable to these bonds.

Japan Real Estate Investment Corporation

39

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

9. Income Taxes
The Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation Measures
Law of Japan (hereinafter 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 for dividends for the fiscal period as stipulated by Article 67-15 of the STML. Basedon the distribution policy provided by Article 32-2 of the Articles of Incorporation, the Company made a dividend distribution in theamount of ¥9,571 million subsequent to September 30, 2014, which is the multiple number of units up to 100% of the unappropriatedretained earnings after transferring the revised amount for deferred tax liabilities, which reflects changes of the statutory tax rate, to thereserve for reduction entry, and deducting therefrom ¥31 million of retained earnings to be carried forward. The Company will not
distribute dividends in excess of retained earnings under Article 32-3 of the Articles of Incorporation. The significant components of deferred
tax assets and liabilities as of March 31, 2014 and September 30, 2014 were as follows:
Thousands of yen

For the period from October 1, 2013
to March 31, 2014

For the period from April 1, 2014
to September 30, 2014

Deferred tax assets:
Accrued enterprise tax  1,039    953

Amortization of a term leasehold interest

34,24739,643

Asset retirement obligations

6,568

7,642

41,85648,239Valuation allowance(40,816)(47,285)

Total deferred tax assets

1,039

953

Reserve for advanced depreciation of non-current assets

122,812

122,776

Total deferred tax liabilities

122,812

122,776

121,772

121,823

Deferred tax liabilities:

Net deferred tax liabilities

The reconciliation of tax rate difference between the adjusted statutory tax rate and the effective tax rate for the six months ended
March 31, 2014 and September 30, 2014 were as follows:
For the period from October 1, 2013
to March 31, 2014

For the period from April 1, 2014
to September 30, 2014

Statutory tax rate

39.43%

37.11%

Deductible dividend distribution(39.37%)(37.07%)

Change in valuation allowance

0.08%

0.07%

Others0.01%(0.01%)

Effective tax rate

0.14%

0.11%

Adjustment in deferred tax assets and deferred tax liabilities due to tax rate change

Due to the regional corporation tax and amendments to parts of regional tax laws enacted on March 31, 2014, the regional corporation tax
was established at the beginning of the fiscal period starting October 1, 2014. In addition, following the incorporation of the special
regional corporate tax in the corporate enterprise tax, the statutory tax rate used to calculate deferred tax assets and deferred tax liabilities
changes to 34.15% for temporary differences expected to be eliminated from the 28th fiscal period ending in September 2015.
This change will have a minimal effect on earnings.

40Japan Real Estate Investment Corporation

10. Related Party Transactions
For the six months ended March 31, 2014 and September 30, 2014
Transactions with related parties defined under the Financial Instruments and Exchanges Act are listed below.
(1) Parent Company and Major Corporation Unitholders
			 For the period from October 1, 2013 to March 31, 2014
				“Not applicable”
			 For the period from April 1, 2014 to September 30, 2014
				“Not applicable”(2) Subsidiaries
			 For the period from October 1, 2013 to March 31, 2014
				“Not applicable”
			 For the period from April 1, 2014 to September 30, 2014
				“Not applicable”(3) Sister Companies
			 For the period from October 1, 2013 to March 31, 2014
				“Not applicable”
			 For the period from April 1, 2014 to September 30, 2014
				“Not applicable”(4) Directors and Major Individual Unitholders
			 For the period from October 1, 2013 to March 31, 2014
				“Not applicable”
			 For the period from April 1, 2014 to September 30, 2014
				“Not applicable”
Transactions with related parties defined under the Investment Trust Law are listed below.
In addition to controlling unitholders, major unitholders, subsidiary corporations, subsidiary companies of controlling unitholders, andofficers and their close relatives, the definition of a “related party” under the Investment Trust Law also includes the asset managementcompany and its interested parties (parent and subsidiary corporations, specified individual shareholders, and major shareholders of theasset management company defined as interested parties under Article 201 of the Investment Trust Law and Article 123 of the Order for
Enforcement of the Investment Trust Law), as well as the asset custody company.
For the period from October 1, 2013 to March 31, 2014 (Reference)
Type of Relationship

Name ofTransaction Partner

Interested party

Mitsubishi EstateCo., Ltd.

Asset custodycompany

Sumitomo Mitsui
Trust Bank, Limited

Type of Business

Real estate

Bank

Percentage ofUnits Held

1.71%

—

Transaction Details

Transaction Amount(Thousands of yen)

Real estate purchase

13,530,037

Rent revenue

9,681,070

Security deposit increase

955,802

Security deposit return

150,878

Short-term loans repayment

1,000,000

Short-term loans borrowing

7,200,000

Long-term loans repayment

2,000,000

Balance at End
of Period(Thousands of yen)Accounting
Item

—

—

Deposits received
from tenants

17,565,621

Short-term loans
payable12,200,000

Long-term loans
payable23,500,000

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

Japan Real Estate Investment Corporation

41

For the period from April 1, 2014 to September 30, 2014
Type of Relationship

Name ofTransaction Partner

Type of Business

Percentage ofUnits Held

Transaction Details

Rent revenue
Interested party

Interested party
Asset custodycompany

Mitsubishi EstateCo., Ltd.

Real estate

1.623%

Mitsubishi Jisho
Property
Management
Co., Ltd.

Real estate
management—

Sumitomo Mitsui
Trust Bank, Limited

Bank

—

Transaction Amount(Thousands of yen)

Balance at End
of Period(Thousands of yen)Accounting
Item

10,533,364——

Income on settlement ofmanagement associationaccounts

8,524

—

—

Security deposit increase

338,311

Security deposit return

254,224

Deposits received
from tenants

17,649,708

Property management
expenses

1,802,432——

Short-term loans borrowing

3,800,000

Short-term loans
payable7,500,000

Short-term loans repayment

8,500,000

Long-term loans
payable23,500,000

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

11. Segment Information
For the six months ended March 31, 2014 and September 30, 2014
Since the Company has been engaged in real-estate leasing business using a single segment, segment information has been omitted.
Information about products and services

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

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

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

12. Asset Retirement Obligations
For the six months ended March 31, 2014 and September 30, 2014
Asset retirement obligations reported on balance sheet

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

42

Japan Real Estate Investment Corporation

Change in the amount of the asset retirement obligations as of March 31, 2014 and September 30, 2014 consisted of the following:Thousands of yen

For the period from October 1, 2013
to March 31, 2014

For the period from April 1, 2014
to September 30, 2014

309,420

312,538

Balance at the beginning of the period
Increase in the tangible fixed assets——

Adjustment required over the period

3,117

3,148

312,538

315,687

Balance at the end of the period

Asset retirement obligations other than those reported on balance sheet

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

13. Investment and Rental Property
For the six months ended March 31, 2014 and September 30, 2014
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 the balance sheets as of September 30, 2014 and as of March 31, 2014 and the fair values as of September 30, 2014
and as of March 31, 2014 are as follows:
Thousands of yen

Book value

Fair value

As of September 30, 2013

Change during period (*1)

As of March 31, 2014

As of March 31, 2014

748,257,128

41,286,203

789,543,332

829,152,000

Thousands of yen

Book value

Fair value

As of March 31, 2014

Change during period (*2)

As of September 30, 2014

As of September 30, 2014

789,543,332(3,436,707)

786,106,624

843,367,000

Note 1: Book value on the balance sheet means the acquisition cost less accumulated depreciation.
Note 2: Significant changes
		 (*1) For the period ended March 31, 2014, the major reasons for the increase are the acquisition of Queen’s Tower A (¥17,520,660 thousand) and Otemachi Financial
City North Tower (¥15,623,199 thousand) as well as the additional acquisition of Ebisu Neonato (¥10,978,467 thousand). The major reason for the decrease isdepreciation.
		 (*2) As for increases/decreases for the period, the major reason for the increase was the additional acquisition of Nishiki Park Building (¥667,452 thousand). The major
reason for decrease was settlement payment related to fixed property taxes and city planning taxes on Queen’s Tower A (¥21,379 thousand), as well as depreciationon the properties in the portfolio.
Note 3: Fair values as of September 30, 2014 and as of March 31, 2014 are defined as the appraised values provided by an external qualified professional appraiser.

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

Japan Real Estate Investment Corporation

43

14. Per Unit Information
The following table summarizes information about net assets per unit and net income per unit at March 31, 2014 and September 30, 2014
and for the periods then ended, respectively:
Yen

For the period from October 1, 2013
to March 31, 2014

For the period from April 1, 2014
to September 30, 2014

341,128

348,871

7,633

7,683

Net assets at period end per unit
Net income per unit

Note 1:	‌Net income per unit is computed by dividing net income by the weighted average number of units outstanding during each period.
		 Diluted net income per unit has not been presented since no warrants or convertible bonds were outstanding during the period.
Note 2:	The Company implemented a 2-for-1 split of each investment unit with an effective date of January 1, 2014. Net income per unit is calculated as if the split had occurredat the start of the period ended March 31, 2014.
Note 3: The basis for the computation of net income per unit is as follows.
Thousands of yen

Net income
Amount not attributable to normal units holders
Net income applicable to normal investment units
Average number of units

For the period from October 1, 2013
to March 31, 2014
9,070,153—
9,070,153
1,188,280 units

For the period from April 1, 2014
to September 30, 2014
9,572,357—
9,572,357
1,245,780 units

15. Breakdown of Property-Related Revenues and Expenses
For the six months ended March 31, 2014 and September 30, 2014
Thousands of yen

Property-Related Revenues

For the period from April 1, 2014
to September 30, 2014

26,582,967

27,760,413

Rental Revenues

26,357,478

27,604,566  Rental revenues

20,301,286

21,334,732   Common service charges

3,445,407

3,485,270

627,183

722,801   Other rental revenues

1,983,600

2,061,761

Non-Rental Revenues

225,489

155,847  Cancellation charges

86,66492,532   Gain on donation of non-current assets

91,572

1,119   Other miscellaneous revenues

47,25262,195

14,750,867

15,538,009

Property management expenses

3,247,634

3,378,661

Utilities expenses

2,414,132

2,768,816

Property and other taxes

2,335,593

2,530,715

53,79255,303  Parking revenues

Property-Related Expenses

Casualty insurance
Repairing expenses
Depreciation

44

For the period from October 1, 2013
to March 31, 2014

887,210733,6095,649,556

5,883,291

Other rental expenses

162,947

187,611

Property-Related Profits

11,832,100

12,222,403

Japan Real Estate Investment Corporation

16. Changes in Unitholders’ Equity
For the six months ended March 31, 2014 and September 30, 2014
Total number of investment units issuable
and number of units outstanding

As of March 31, 2014

As of September 30, 2014

Total number of investment units issuable

4,000,000 units

4,000,000 units

Number of units outstanding

1,188,280 units

1,252,530 units

17. Supplemental Cash Flow Information
Cash and cash equivalents

The following table represents a reconciliation of cash and cash equivalents at March 31, 2014 and September 30, 2014:
Thousands of yen

As of March 31, 2014

As of September 30, 2014

Cash and deposits with banks

20,633,688

20,650,366

Cash and deposits with banks held in trust

4,409,989

4,938,725

Time deposits with maturities of more than three months(4,000,000)(5,000,000)

Cash and cash equivalents

21,043,677

20,589,091

18. Leases
1. Leased assets under finance lease transactions that do not transfer ownership of the leased assets to the lessees are capitalized and depreciated by the straight-line method over the lease term with no residual value. Such capitalized leased assets primarily consist of tools,
furniture and fixtures.
2. The Company, as a lessor, owns office buildings under leases and earns rent income. As of March 31, 2014 and September 30, 2014, thefuture lease revenues under the non-cancelable operating leases are as follows:
Thousands of yen

As of March 31, 2014

As of September 30, 2014

Due within one year

21,871,691

20,527,523

Due after one year

51,661,072

46,618,990

Total

73,532,764

67,146,514

19. Subsequent Events
For the six months ended September 30, 2014
“Not applicable”

Japan Real Estate Investment Corporation45

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

46

Japan Real Estate Investment Corporation

21. Remuneration Policy for the Asset Manager’s Directors, Corporate Auditors and Employees
For the beginning April 1, 2013 and ending March 31, 2014
1. Remuneration for Asset Manager Directors

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

1

Remuneration based on resolutions of theGeneral Meeting of Shareholders of Asset Manager

Corporate auditors

Remuneration

Number of
person(s)remunerated¥19.5 million

0

Total

Remuneration

Number of
person(s)remunerated

Remuneration¥0 million

1¥19.5 million

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

All employees
Number of employees

Remuneration based on compensation rules

31

Remuneration
Total

Fixed

Variable¥295 million (Note)¥199 million¥95 million

Note: Fixed and variable remuneration do not equal total remuneration because figures are rounded down to the nearest million.

Japan Real Estate Investment Corporation

47

48

Japan Real Estate Investment Corporation

Corporate Data
As of September 30, 2014

Executives
Executive Director: Noritada Terasawa
Supervisory Directors: ‌Kenji Kusakabe
Tomohiro Okanoya
Paid-in Capital¥ 426,783,117,000
Number of Units Outstanding
1,251,530
Number of Unitholders
16,174
Stock Listing
Tokyo Stock Exchange
Securities Code8952
Type of Investment Corporation
Closed-end corporate type fundTransfer Agent
Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan
Auditors
Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg.
2-2-3, Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011, Japan
Incorporation
May 11, 2001
Executive Office
Japan Real Estate Investment Corporation
3-3-1, Marunouchi, Chiyoda-ku, Tokyo 100-0005, JapanFor further information, please contact:
Japan Real Estate Asset Management Co., Ltd.
Planning Department
Tel: 81-3-3211-7921
Fax: 81-3-3212-8886
E-mail: j-rea-inquiry@j-rea.co.jp

This semiannual report includes translations of documents originally filed under the 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 containedin this report.
Estimates for the Company’s future operating results contained in this semiannual report are forward-looking statements and are basedon information currently available to the Company and its asset management company and are subject to risks and uncertainties.
Consequently, these projections should not be relied upon as the sole basis for evaluating the Company. Actual results may differ substantiallyfrom the projections depending on a number of factors.

Japan Real Estate Investment Corporation49http://www.j-re.co.jp/english/

Printed in Japan