Japan Real Estate Investment Corporation

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

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

Contents
The Strengths of Japan Real Estate Investment Corporation

p. 1

To Our Unitholders

p. 2

Financial Highlights

p. 6

Top 10 Unitholdersp. 6

Unit Price Performance

p. 6

Portfolio Highlights

p. 7

Asset Management Summaryp. 8

Asset Size, Property Acquisitions and Performance Trends

p.10

The Portfolio of Japan Real Estate Investment Corporation

p.12

Overview of Portfolio Properties

p.17

Financial Section

p.23

Other Information

p.48

Corporate Data

p.51

The Strengths of Japan Real Estate Investment Corporation
STRENGTHS

Stable Dividends

Collaboration withSponsors— Actual dividend per unit— ‌Expertise offor the March 2016 period:¥8,121

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

— Forecasted dividend per unit
for the September 2016 period:¥8,250

Steady Growth with
Quality Portfolio

Sound Financial Base
As of March 31, 2016

As of March 31, 2016

— Total acquisition price:¥923,448 million—
68
Maintainsproperties— ‌The first listed J-REIT, showing steady
performance for 29 consecutive periods—	‌Highest level of credit ratings for a J-REIT:

A+
AA

from S&P,

A1

from Moody’s,

from R&I—	‌LTV (Interest-bearing debt / Total assets):40.8%—	‌Long-term, fixed interest-bearing debt ratio*:

93.8%* ‌Long-term, fixed interest loans + Investment corporation bonds (including
current portion of Long-term, fixed interest loans and Investment­corporation bonds) / Total interest-bearing debt

Japan Real Estate Investment Corporation1

To Our Unitholders
In the March 2016 period, we declared a dividend of 8,121 yen, a 120 yen increase comparedwith the previous period due to contributions from the full operation of properties acquired insaid period. Concentrating on internal growth, we actively pursued initiatives toward upward
rent revisions, thereby raising the rent levels of existing buildings for the third consecutive
period. In addition, taking advantage of the favorable sales market, we disposed two p­ roperties
as a part of the asset refreshment.

Business Performance for the March 2016 Period
Summary of Financial Results and Cash Dividend

Operating Environment and Performance

In the March 2016 period (October 1, 2015 to March 31, 2016), Japan

During the March 2016 period, the Japanese economy continued on a

Real Estate Investment Corporation (“the Company”) recorded

gradual trend toward improvement due to recovering capital­operating revenues totaling 30,589 million yen increased 2.0%

­investment and operational profits mainly in the non-manufacturing­compared with the previous period. On the earnings front, operating

industries, as well as continued improvement in employment condi-

income increased 2.5%, to 12,352 million yen. After deducting

tions. However, the latest flux of economy, stirring insecurity about

expenses for interest payments on loans and other costs, ordinary

future prospects, has made some companies err on the cautions side,

income increased 3.1%, to 10,816 million yen, and profit increased

while the domestic consumption has lost an impetus to a degree,

2.6%, to 10,753 million yen.

together rendering the economy to slow down in some aspects.

Turning to dividends, the Company will make cash distributions

In the market for leased office, the trend of decreasing vacancies

using accounting profits based on the dividend policy outlined in

and increasing advertised rents continued mainly in the Tokyo metro-

Article 32-2 of the Company’s Articles of Incorporation, in an amountpolitan area. In other major cities, the occupancy also improved.

that exceeds 90% of earnings available for dividends as required by

In the investment market for real estate, continued favorable

Article 67-15 of the Special Taxation Measures Act. Based on this­conditions for the financing environment were reinforced by the­policy, in order to stabilize and level out the dividend payout, the­anticipation of further improvement in the office buildings market,

Company secures the reserve for reduction in accordance with Article

and domestic and overseas investors appear to exhibit a sound appetite

66-2 “Special Provisions for Taxation in the case of Advanced

for property acquisition, as a result of which competition in property

Acquisition of Land, etc., in 2009 and 2010” of the same Law as wellacquisition is likely to intensify.

as Article 42 “Inclusion in Gross Expenses of Advanced Depreciation

Under such market conditions, the Company made soundof Fixed Assets, etc. Acquired with National Subsidy, etc.” of the­investments under the Investment Guideline of providing stable

Corporation Tax Act. The Company also partially reserves the retained­dividends to unitholders, which was set forth at the time of theearnings brought forward. As a result, the total amount of dividends

Company’s listing on the TSE and remains unchanged to this date.

that the Company has determined to pay out is 10,632,906,510 yen for

Accordingly, the Company has been able to provide the dividend at

the period under review, which is a multiple of 1,309,310–the number

the 8,121 yen, which is an increase by 120 yen on the previous periodof units outstanding as of March 31, 2016. Accordingly, the per-unit

during which the dividend was restored to the 8,000-yen mark.

cash dividend is 8,121 yen.

In the period under review, as a result of our efforts to improve
occupancy rates through meticulous property leasing, the Company’s
occupancy rate was improved to 98.3% as of March 31, 2016, from
97.7% occupancy rate as of September 30, 2015.

2

Japan Real Estate Investment Corporation

As the market for leased office space steadily recovers, we will focus on improving earnings
from existing buildings through such means as raising rent levels and will aim for stable­dividend growth at an even higher level. As for external growth, amid severe competition forproperty acquisition, we will adhere to a consistent evaluation criteria and acquire properties
that possess a medium to long term competitive edge.

As for external growth, the Company transferred the following

Concerning new loans related to property acquisition and the refi-properties as part of the asset refreshment initiative to improve thenancing of existing loans, the Company carries out loans strategically

portfolio quality: Hirokoji Sakae Building (Nagoya City, Aichi

and flexibly after giving close consideration to the above-mentioned

Prefecture) for 1,850 million yen on March 30, 2016 and Kyoto Shijomeans, as well as the possibility of repayment with funds procured

Kawaramachi Building (Kyoto City, Kyoto Prefecture) for 2,516

from issuing new investment units. Moreover, where a long-term loan

­million yen on March 31, 2016. These transfers are pursued in tandem

is based on variable interest, the Company reduces a future risk ofwith the acquisition of a large-scale complex building AER (Sendai

interest rate fluctuation by making use of interest-rate swap transactions.

City, Miyagi Prefecture) conducted in the September 2015 period,

As for the fiscal period under review, the revenue from the transfers

as part of the asset refreshment, and the selection was based on the factof Hirokoji Sakae Building and Kyoto Shijo Kawaramachi Building wasthat those properties exceeded the average age of building (17.0 years as

put forward to the repayment of existing loans with the cash reserve.

of March 31, 2016) in the Company’s portfolio.
As a result of the above, the Company’s portfolio at the end of the

As a result of these financing activities, as of March 31, 2016, theCompany’s total interest-bearing debt was 363,400 million yen, 10,050

fiscal period under review, March 31, 2016, consisted of 68 properties,

million yen down from the end of the previous period. This amountwith a total acquisition price of 923,448 million yen. Total leasable

consists of long-term loans totaling 320,700 million yen (including thefloor area stood at 820,381 m2 with 1,420 tenants in total.

current portion of long-term loans totaling 44,400 million yen), short-

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

Finance Activities
The Company strives to maintain a sound and conservative financial
profile by staggering maturities, extension of durations and diversification of stable lenders among other possibilities as well as maintaining

term loans totaling 22,700 million yen, and investment corporation
bonds totaling 20,000 million yen (there is no current portion of investment corporation bonds). In addition, the LTV ratio stood at 40.8%.
The Company’s credit ratings as of March 31, 2016 were as follows:
Rating Agency

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

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

Moody’s Japan K.K.

Rating: A1; Outlook: Stable

Rating and Investment
Information, Inc.

Rating: AA; Outlook: Stablean LTV ratio of 30 to 40% under normal business conditions, while
taking into consideration the borrowing cost and existing relationships
with lenders.

Japan Real Estate Investment Corporation3

Outlook
Operating Environment(ii) Fill vacancies promptly

In the Japanese economy, amid a continued trend toward improve-	In cooperation with the property management companies men-

ment in employment and personal income, it is anticipated that thetioned above and their leasing brokers, the Company will actively

introduction of various political policies will support further gradualseek the most appropriate tenants for each property, based on loca-

economic recovery. However, depending on such factors as the global

tion and features, in order to fill current and anticipated vacancies

impact of monetary policy in the United States, the economic currents

as rapidly as possible. Furthermore, the Company will work toin Europe, and the deceleration of the economy in China and otheruncover additional needs for floor space among the existing

emerging nations in Asia as well as natural resource suppliers, the risk

tenants.

of economic downturn in Japan must be closely watched.
In the market for leased office space, vacancy rates in the Tokyo
metropolitan area continue to decline due to the slowing supply of(iii) Stabilize revenues and earnings	With the aim of stabilizing revenues and earnings, the Company

new properties, and the gradual rise in rent levels will continue,

will endeavor to promote fixed lease agreements and secure long-­especially for buildings with a strong competitive edge. In other majorterm leasing with its large-scale tenants.

cities, further decline in vacancy rate is expected. Meanwhile, bearing
in mind the risk of economic downturn, the recovery of the market for(iv) Reduce management costs

leased office space may not be as vigorous as hoped through the growth	The Company has introduced sound competitive principles for its

in the demand for offices, but a trend of moderate recovery is antici-

multiple property management companies to follow and ispated for a period in the future.

revamping their management systems and cost structures on

In the investment market for real estate, while the financing­environment is expected to remain favorable, a general shortage ofan ongoing basis while ensuring and improving the tenant­satisfaction levels.

desirable properties for sales and the decline in expected yield suggestthat transactions carried out at higher valuation are likely to continue,

Property Acquisitions and Sales

with a possibility of intensifying competition.

The Company has adopted the following policies for acquiringproperties.

Property Management
Based on the conditions stated above, the Company will adhere to thefollowing management policies in order to maintain and improve

enhance its property information channels while working to

profitability.

develop new channels.

(i) Strengthen relationships of trust with existing tenants

4(i)	To access information quickly, the Company continues to(ii)	In its acquisition activities, the Company continues to meticulously

	The Company has contracts with numerous property managementmonitor and examine economic, physical, and legal factors, includ-

companies. Each property management company has developed

ing rights-related issues, when selecting properties. In particular,

relationships of trust with their tenants through their daily dili-with regard to the structure of buildings, the Company requires

gence in managing their respective properties over the years. The

buildings to meet or exceed new earthquake-resistance standards,

Company will work to further solidify these relationships by antic-

verifies the need for renovations by appropriately grasping current

ipating tenants’ needs and providing tailored services to increase

conditions based on engineering reports, and exclusively targets

tenant satisfaction, thereby maintaining and improving occupancy

properties capable of maintaining a competitive edge in terms

rates and raising rent levels.

of the facilities they offer over the medium to long term.

Japan Real Estate Investment Corporation

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

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

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

Performance Forecasts for the September 2016 andMarch 2017 Fiscal Periods

erties are located within the Tokyo metropolitan area, with the

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

remaining 30% or less located in other major cities.

the Company forecasts operating revenues totaling 30,560 million yen,operating income totaling 12,280 million yen, ordinary income total-

Under these policies, the Company will continue to acquire highly com-

ing 10,810 million yen, and profit totaling 10,800 million yen. The

petitive properties. At the same time, in order to further improve theCompany plans to declare a cash dividend of 8,250 yen per unit.

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

For the March 2017 period (October 1, 2016 to March 31, 2017),

ment of portfolio properties with due consideration given to timing.

the Company forecasts operating revenues totaling 30,560 million yen,operating income totaling 12,390 million yen, ordinary income total-

Financial Policy

ing 10,960 million yen, and profit totaling 10,950 million yen. The(i)	In principle, the Company shall maintain an LTV ratio that does

Company plans to declare a cash dividend of 8,360 yen per unit.

not exceed 65%. To ensure an even lower interest-bearing debt

Operating revenues, operating income, ordinary income, profit, andratio, the Company adopts the conservative target level of 30%

cash dividend per unit may vary depending on changes in the market

to 40%.

situation.

(ii)	The Company shall set the ceiling for the combined total of loans
and investment corporation bonds at 1 trillion yen.
(iii)	When obtaining a loan, the Company shall only negotiate withqualified institutional investors (limited to those defined underHiroshi Nakajima
Executive Director of Japan Real Estate Investment Corporation

Article 67-15 of the Special Taxation Measures Act) before executing a loan agreement.
(iv)	With the purpose of maintaining liquidity at an appropriate level,
the Company may establish preliminary borrowing frameworks

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

such as overdraft agreements and commitment line agreements,
or may conclude preliminary contracts for loans, as needed.
(v)	The Company aims for the best possible execution of financialtransactions by negotiating with numerous financial institutions.

Japan Real Estate Investment Corporation

5

Financial Highlights
Millions of yen
For the period from
October 1, 2015 toMarch 31, 2016

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

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

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

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

Operating revenues¥30,589¥29,980¥28,314¥27,760¥26,582

Operating income

12,352

12,054

11,243

11,255

10,831

Ordinary income

10,816

10,487

9,625

9,582

9,083

Profit10,753

10,476

9,619

9,572

9,070

Net operating income (NOI) (Note 1)

19,973

19,67018,412

18,105

17,481

Funds from operations (FFO) (Note 2)

17,07916,80815,62915,455

14,719

25.0

21.5

22.6

22.9

20.9

Cash distribution

10,632

10,475

9,613

9,571

9,070

Number of units

1,309,310

1,309,310

1,251,530

1,251,530

1,188,280

8,121

8,001

7,681

7,648

7,633

FFO multiple (Times) (Note 3)

Dividend per unit (Yen)

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

Top 10 Unitholders As of March 31, 2016
Unitholders

Units% of total units
outstanding

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

232,035

17.72%The Master Trust Bank of Japan, Ltd. (Shintaku Acc.) ................................................................................................................................................................................................................................................

125,817

9.61%

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

100,794

7.70%

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

51,227

3.91%

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

29,807

2.28%

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

23,178

1.77%

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

22,674

1.73%

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

18,931

1.45%

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

17,9701.37%

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

17,1201.31%

Unit Price Performance
TSE REIT Index   

325%

TOPIX   The Company

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

6

Japan Real Estate Investment Corporation

Portfolio Highlights
Trends in the state of portfolio management
September 2001
March 2002
September 2002
March 2003
September 2003
March 2004
September 2004
March 2005
September 2005
March 2006
September 2006
March 2007
September 2007
March 2008
September 2008
March 2009
September 2009
March 2010
September 2010
March 2011
September 2011
March 2012
September 2012
March 2013
September 2013
March 2014
September 2014
March 2015
September 2015
October 2015
November 2015
December 2015
January 2016
February 2016
March 2016

Total leasable space (m2)

Number ofbuildings

Total number oftenants

Total leasable
space (m2)Occupancy
rate (%)

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

213
353
362
383
407
477
504
669
814
866
835
887
879
931
970
993
977
979
992
1,004
1,009
1,058
1,082
1,131
1,146
1,223
1,239
1,350
1,461
1,457
1,463
1,463
1,469
1,471
1,420

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

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

831,153
831,153
831,153
831,154
831,182
820,381

97.8
97.8
97.9
98.1
98.1
98.3

0

200,000

400,000

600,000

800,000

1,000,000

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

50.0

60.0

70.0

80.0

90.0

100.0
Occupancy rate (%)

Portfolio breakdown As of March 31, 2016
Properties by geographic region

Tenants by industry type

(Percentage based on acquisition price)(Percentage based on leased space)
Electricity andheat supply services 1.5%

Nagoya city

3.3%

Osaka city and
Kyoto city

6.8%

Tokyo metropolitan
area excluding
Tokyo 23 wards

7.6%

Other area 7.7%

Other 9.9%

Ceramics 1.5%

Service industries 10.1%

Public services andassociations 2.4%

74.6%

Insurance 3.1%

Finance

8.7%

Machinery 3.2%
Communications

3.7%

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

Electric devices 8.8%

Medical 2.8%

Tokyo 23 wards

Information services 10.2%

8.5%

4.3%

Media and advertisement

5.0%

Retail and restaurants
Pharmaceuticals

5.7%

6.3%

Japan Real Estate Investment Corporation

7

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

Transferred Assets

Acquired Asset (Subsequent Event)

Hirokoji Sakae Building
Transaction Summary

Transferee:
TOTEC AMENITY LIMITEDTransfer price: 	‌¥1,850 million● Book value: 	‌¥1,681 million● Appraisal value: 	‌¥1,640 million (as of February 1, 2016)● Transfer date: 	‌March 30, 2016
● Acquisition price: 	‌¥1,680 million●●

Legal Affairs Bureau
Government Building

Aichi Prefectural Library

Property Summary (as of March 30, 2016)

Nishiki Park Building

Location:
Nagoya City, Aichi Prefecture
Site area: 	‌786.79 m2● Floor area of building:
6,445.08 m2● Structure: 	‌Steel-framed reinforced concrete structure, flat roof
● Floors: 	‌Above ground: 9 floors
Below ground: 2 floors● Completion date: 	‌September 1987
● Occupancy rate: 	‌92.1%●

Tsurumai Line
Marunouchi Sta.

●

Higashiyama Line
Nagoya Sta.

dori Lineura
Subway Sak

Sakuradori Line
Marunouchi Sta.

Kokusai
Center Sta.
Meitetsu Nagoya Sta.

Nagoya Sta.

Subway Higashiyama Line

Fushimi Sta.

Nagoya Sta.

i
Subway Tsuruma

ts
Meite

e

Transferee:
Keihan Electric Railway Co., Ltd.
Transfer price: 	‌¥2,516 million● Book value: 	‌¥2,487 million● Appraisal value: 	‌¥1,960 million (as of March 1, 2016)● Transfer date: 	‌March 31, 2016
● Acquisition price: 	‌¥2,650 million●●

Property Summary (as of March 31, 2016)

Location:
Kyoto City, Kyoto Prefecture
Site area: 	‌1,471.57 m2● Floor area of building:
9,701.04 m2● Structure: 	‌Steel-framed reinforced concrete structure, flat roof
● Floors: 	‌Above ground: 9 floors
Below ground: 1 floor● Completion date:November 1982
● Occupancy rate: 	‌93.7%
●

ine
iL
am

ets

uN
ag

oy
a

Lin

Transaction Summary

Line

Ao
n

Ki

nt

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

Kyoto Shijo Kawaramachi Building

Shirakawa Parke

Property Summary

in
oya L

u Nag

Nishiki Park Building (Additional Acquisition)* The details concerning the three individuals are undisclosed due totheir non-approval of disclosure.

●

●

‌
Property
managementcompany:

Mitsubishi Estate Co., Ltd.

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

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

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

8

Japan Real Estate Investment Corporation

SHINJUKU EASTSIDE SQUAREKITANOMARU SQUAREAsset Size, Property Acquisitions and Performance Trends
Occupancy rate

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

In September 2001, the Company became the first J-REIT in Japan listed on the Tokyo Stock
Exchange. Since then, the Company has targeted stable management to fulfill its goal of maintaining or increasing dividend per unit over the medium to long term. The Company’s growth is basedon external growth strategies that aim to increase earnings through the acquisition and transfer ofproperties as well as internal growth strategies that seek to optimize earnings from properties alreadyheld. The size of the Company’s assets (total acquisition price) has grown from ¥92.8 billion at IPO
to ¥923.4 billion as of the period ended March 31, 2016 due to the steady achievement of external
growth strategies. However, in terms of internal growth strategies, ongoing efforts are being made insuch areas as maintaining stable occupancy rates and reducing building management costs.

¥518

Total acquisition price (Number of properties)

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

¥144
¥92

billion

(20)

(24)

¥542
billionbillion

¥290
¥218

¥239

billion

¥412

¥418

billionbillion¥441 ¥446
billionbillion¥326
billionbillion

¥183

¥192

billionbillion

(30)

(32)

(36)

(39)

(46)

(50)

(52)

(49)

(50)

(50)

(53)

(54)

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended¥7,227¥7,558¥7,301¥7,355¥7,912¥7,975¥8,086¥8,651¥8,760¥9,250¥14,611¥9,536¥164
billionbillionbillionAt IPO(27)

Period ended Period ended

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

Dividend per unit*¥7,491¥6,426

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

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

Oct. 2003
Second Follow-On

Apr. 2005
Third Follow-On

Oct. 2006
Fourth Follow-On

Mar. 2008
Fifth
Follow-On

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

10

Japan Real Estate Investment Corporation

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

¥740

¥718
¥660
¥641 ¥643 billion ¥657
billionbillionbillion¥782 ¥794
billion¥837 ¥838
billionbillion¥883¥927 ¥923
billionbillionbillionbillionbillionbillion¥564 ¥564
billionbillion

(55)

(55)

(55)

(55)

(57)

(56)

(57)

(58)

(60)

(62)

(64)

(64)

(68)

(70)

(68)

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended¥9,510¥9,599¥9,021¥8,314¥7,821¥7,925¥8,095¥7,850¥7,570¥7,683¥7,633¥7,648¥7,681¥8,001¥8,121Mar. 2009 Sep. 2009 Mar. 2010 Sep. 2010 Mar. 2011 Sep. 2011 Mar. 2012 Sep. 2012 Mar. 2013 Sep. 2013 Mar. 2014 Sep. 2014 Mar. 2015 Sep. 2015 Mar. 2016

Dec. 2009
Sixth Follow-On

Feb. 2012
Seventh Follow-On

Oct. 2012
Eighth Follow-On

Apr. 2014
Ninth Follow-On

Apr. 2015
Tenth Follow-On

Japan Real Estate Investment Corporation

11

The Portfolio of Japan Real Estate Investment Corporation
As of March 31, 2016

Properties roster
NumberName of building

Location

Type ofspecified asset

Acquisition date

Acquisition price(¥ millions)Tokyo 23 wards●

I- 1

Genki Medical Plaza

Iidabashi, Chiyoda-ku

Real property

10/31/2002

5,000(0.5%)●

I- 2

Kitanomaru Square

Kudan-Kita, Chiyoda-ku

Real property

02/24/2006

81,555(8.8%)●I- 3

MD Kanda Building

Kanda-Mitoshirocho, Chiyoda-ku

Real property

05/31/2002

9,520(1.0%)●

I- 4

Kandabashi Park Building

Kanda-Nishikicho, Chiyoda-ku

Real property

08/15/2002

4,810(0.5%)●

I- 5

Otemachi Financial City North Tower

Otemachi, Chiyoda-ku

Real property

03/31/2014

15,462(1.7%)●

I- 6

Nibancho Garden

Nibancho, Chiyoda-ku

Real property

04/01/2005

14,700(1.6%)●

I- 7

Mitsubishi UFJ Trust and Banking Building

Marunouchi, Chiyoda-ku

Real property

03/28/2007

44,700(4.8%)●

I- 8

Burex Kojimachi Building

Kojimachi, Chiyoda-ku

Real property

07/29/2005

7,000(0.8%)●

I- 9

Sanno Grand Building

Nagatacho, Chiyoda-ku

Real property

01/31/2005

10,20004/03/2006

10,700Total

20,900(2.3%)●

I- 10

Yurakucho Denki Building

Yurakucho, Chiyoda-ku

Real property

08/01/2003

7,200(0.8%)●

I- 11

Kodenmacho Shin-Nihonbashi Building

Nihonbashi-Kodenmacho, Chuo-ku

Trust

09/25/2001

3,173(0.3%)●

I- 12

Kyodo Building (Kayabacho 2Chome)

Nihonbashi-Kayabacho, Chuo-ku

Trust

03/01/2011

4,410(0.5%)●

I- 13

Burex Kyobashi Building

Kyobashi, Chuo-ku

Real property

07/22/2002

5,250(0.6%)●

I- 14

Ginza 1Chome East Building

Ginza, Chuo-ku

Trust

03/02/2015

6,459(0.7%)●

I- 15

Ginza Sanwa Building

Ginza, Chuo-ku

Real property

03/10/2005

16,830(1.8%)●I- 16

Ryoshin Ginza East Mirror Building

Ginza, Chuo-ku

Real property

03/15/2005

5,353

05/24/2010

2,645
7,999

(0.9%)●

I- 17

Harumi Front

Harumi, Chuo-ku

Real property

01/07/2013

31,300(3.4%)●

I- 18

Harumi Center Building

Harumi, Chuo-ku

Real property

12/18/2007

26,800(2.9%)●

I- 19

Akasaka Park Building

Akasaka, Minato-ku

Real property

11/15/2011

60,800(6.6%)●

I- 20

Aoyama Crystal Building

Kita-Aoyama, Minato-ku

Real property

03/14/2003

7,680(0.8%)●

I- 21

Clover Shiba-koen

Shiba-koen, Minato-ku

Trust

01/20/2015

4,500(0.5%)●

I- 22

Shiodome Building

Kaigan, Minato-ku

Trust

12/19/2008

21,25001/15/2010

54,60005/01/2015

10,100Total

85,950(9.3%)

4,859(0.5%)●

I- 23

Shiba 2Chome Daimon Building

Shiba, Minato-ku

Trust

09/10/2001

●

I- 24

Cosmo Kanasugibashi Building

Shiba, Minato-ku

Trust

09/25/2001

2,808(0.3%)●

I- 25

Shinjuku Eastside Square

Shinjuku, Shinjuku-ku

Real property

10/01/2014

23,100(2.5%)●

I- 26

Shinwa Building

Nishi-Shinjuku, Shinjuku-ku

Real property

09/01/2004

7,830(0.8%)●

I- 27

Tokyo Opera City Building

Nishi-Shinjuku, Shinjuku-ku

Real property

09/13/2005

9,350

03/24/2010

22,426

Total

31,776(3.4%)

22,000(2.4%)●I- 28

TIXTOWER UENO

Higashi-Ueno, Taito-ku

Real property

06/15/2012

●

I- 29

Higashi-Gotanda 1Chome Building

Higashi-Gotanda, Shinagawa-ku

Real property

11/01/2004

5,500(0.6%)●

I- 30

Osaki Front Tower

Osaki, Shinagawa-ku

Real property

02/01/2011

12,300(1.3%)●I- 31

Omori-Eki Higashiguchi Building

Omori-Kita, Ota-ku

Trust

09/10/2001

5,123(0.6%)●

I- 32

Nippon Brunswick Building (Land with leasehold interest)

Sendagaya, Shibuya-ku

Real property

03/24/2004

6,670

08/23/2013(1,170)

Total

5,500

(0.6%)

8,700(0.9%)●

I- 33

Yoyogi 1Chome Building

Yoyogi, Shibuya-ku

Real property

04/01/2004

●

I- 34

da Vinci Harajuku

Jingumae, Shibuya-ku

Real property

11/22/2002

4,885(0.5%)●

I- 35

Jingumae Media Square Building

Jingumae, Shibuya-ku

Real property

10/09/2003

12,200(1.3%)●

I- 36

Shibuya Cross Tower

Shibuya, Shibuya-ku

Real property

11/30/2001

34,600(3.7%)●

I- 37

Ebisu Neonato

Ebisu, Shibuya-ku

Real property

11/14/2003

3,740

●

12

Total

I- 38

Harmony Tower

Honcho, Nakano-ku

Real property

04/01/2004

360

02/18/2014

10,512

Total

14,612

02/28/2005

8,500

12/19/2012

520

03/27/2015

2,100(1.6%)

Total

11,120(1.2%)●I- 39

Otsuka Higashi-Ikebukuro Building

Higashi-Ikebukuro, Toshima-ku

Trust

09/25/2001

3,541(0.4%)●

I- 40

Ikebukuro 2Chome Building

Ikebukuro, Toshima-ku

Trust

09/25/2001

1,728(0.2%)●

I- 41

Ikebukuro YS Building

Minami-Ikebukuro, Toshima-ku

Real property

08/02/2004

4,500(0.5%)

Japan Real Estate Investment Corporation

Leased space

Occupancy rate

Total number oftenants

4,791m2

4,791m2

100.0%

1223(0.7%)

25,678m2

25,678m2

100.0%

5

1,716(5.6%)

6,269m2

6,269m2

100.0%

9219(0.7%)

4,460

3,687m2

3,687m2

100.0%

10105(0.3%)

2012

18,2005,121m2

5,121m2

100.0%

2336(1.1%)

31.345%

2004

17,8009,316m2

9,316m2

100.0%

1479(1.6%)

19.38402%

2003

49,30011,904m2

11,904m2

100.0%

10997(3.3%)

100.0%

2005

6,600

4,495m2

4,495m2

100.0%

1

150(0.5%)

99.0%

1966

32,30020,665m2

20,326m2

98.4%

37

917

(3.0%)

10.78%

1975

7,980

4,697m2

4,697m2

100.0%

13

256(0.8%)

100.0%

1991

2,800

3,897m2

3,897m2

100.0%

11

107(0.4%)

100.0%

1991

4,800

4,464m2

4,464m2

100.0%

10143(0.5%)

100.0%

2002

7,520

4,279m2

4,279m2

100.0%

1155(0.5%)

100.0%

2008

7,010

4,513m2

4,513m2

100.0%

8126(0.4%)

70.95%

1982

17,8004,329m2

4,329m2

100.0%

10382(1.3%)

100.0%

1998

5,910

4,255m2

4,255m2

100.0%

12159(0.5%)

100.0%

2012

39,50033,369m2

33,369m2

100.0%

8

1,229(4.0%)

100.0%

2006

20,60020,812m2

20,812m2

100.0%

9604(2.0%)

100.0%

1993

71,40045,013m2

45,013m2

100.0%

29

2,207(7.3%)

100.0%

1982

7,890

4,898m2

4,898m2

100.0%

7

222(0.7%)

100.0%

2006

4,600

2,550m2

2,550m2

100.0%

8110(0.4%)

45.0%

2007

96,80036,174m2

33,724m2

93.2%

34

1,748

(5.7%)

100.0%

1984

6,250

9,606m2

9,606m2

100.0%

25274(0.9%)

100.0%

1992

3,000

4,062m2

4,062m2

100.0%

6

107(0.4%)

14.0%

2012

25,90016,365m2

16,363m2

100.0%

43574(1.9%)

100.0%

1989

6,560

5,997m2

5,997m2

100.0%

13

208(0.7%)

31.325%

1996

31,20035,083m2

33,478m2

95.4%

98

1,451

(4.8%)

94.040229%

2010

25,30015,020m2

15,020m2

100.0%

17681(2.2%)

100.0%

2004

5,910

5,205m2

5,205m2

100.0%

4

182(0.6%)

100.0%

2005

16,30016,856m2

16,856m2

100.0%

1710(2.3%)

100.0%

1989

5,480

7,756m2

7,756m2

100.0%

23

232(0.8%)

—

—

5,490

—

—

—

—

60

(0.2%)

100.0%

2003

10,9007,745m2

7,745m2

100.0%

9294(1.0%)

100.0%

1987

6,920

3,147m2

3,147m2

100.0%

4191(0.6%)

100.0%

1998

10,5005,558m2

3,321m2

59.8%

4

188

(0.6%)

100.0%

1976

51,30029,762m2

29,712m2

99.8%

58

1,410

(4.6%)

44.718394%

1994

15,6008,700m2

8,700m2

100.0%

6449(1.5%)

38.382307%

1997

13,90014,340m2

14,340m2

100.0%

19440(1.4%)

100.0%

1987

4,430

7,224m2

7,224m2

100.0%

7

188(0.6%)

100.0%

1990

1,690

2,186m2

2,186m2

100.0%

963(0.2%)

100.0%

1989

4,640

5,932m2

5,932m2

100.0%

10186(0.6%)

Appraisal value atthe end of period (¥ millions)

Percentage of ownershipof the building

Completion

100.0%

1985

6,890

100.0%

2006

78,300100.0%

1998

8,170

56.76%

1993

3.3852192%

Total leasable space

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

13

NumberName of building

Acquisition price(¥ millions)

Location

Type ofspecified asset

Acquisition date

Hachioji, Tokyo

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

Saitama, Saitama Prefecture

Real property

Total

5,679

09/25/2001

1,232

10/11/2001

1,342

Total

(0.6%)

2,574(0.3%)●II- 3

MM Park Building

Yokohama, Kanagawa Prefecture

Real property

03/24/2008

37,400(4.1%)●

II- 4

Queen’s Tower A

Yokohama, Kanagawa Prefecture

Trust

01/31/2014

17,200(1.9%)●II- 5

Kawasaki Isago Building

Kawasaki, Kanagawa Prefecture

Trust

09/25/2001

3,375(0.4%)●

II- 6

Musashi Kosugi STM Building

Kawasaki, Kanagawa Prefecture

Real property

03/25/2008

4,000(0.4%)

Other major cities●

III- 1

8.3 Square Kita Building

Sapporo, Hokkaido

Real property

06/01/2007

7,100(0.8%)●

III- 2

Jozenji Park Building

Sendai, Miyagi Prefecture

Real property

01/31/2005

1,000(0.1%)●

III- 3

Higashi Nibancho Square

Sendai, Miyagi Prefecture

Real property

01/07/2013

9,950(1.1%)●

III- 4

Sendai Honcho Honma Building

Sendai, Miyagi Prefecture

Trust

09/25/2001

2,924

●
●

●

250

Total

3,174

(0.3%)(2.0%)

III- 5

AER

Sendai, Miyagi Prefecture

Real property

09/01/2015

18,640III- 6

Kanazawa Park Building

Kanazawa, Ishikawa Prefecture

Real property

02/28/2002

2,880

03/03/2003

1,700

III- 7

Nishiki Park Building

Nagoya, Aichi Prefecture

Real property

Total

4,580

10/02/2006

3,850

11/01/2006

1,300(0.5%)

06/09/2014

650

Total

5,800

(0.6%)●

III- 8

Nagoya Hirokoji Place

Nagoya, Aichi Prefecture

Trust

07/31/2013

8,567(0.9%)●

III- 9

Nagoya Hirokoji Building

Nagoya, Aichi Prefecture

Real property

09/10/2001

14,533(1.6%)●

III- 10

Nagoya Misono Building

Nagoya, Aichi Prefecture

Real property

08/08/2003

1,865(0.2%)●

III- 11

Shijo Karasuma Center Building

Kyoto, Kyoto Prefecture

Real property

09/03/2013

4,400(0.5%)●

III- 12

Umeda Square Building

Osaka, Osaka Prefecture

Trust

04/01/2015

15,523(1.7%)●

III- 13Shin-Fujita Building

Osaka, Osaka Prefecture

Trust

09/01/2008

24,000(2.6%)●

III- 14

Sakaisujihonmachi Building

Osaka, Osaka Prefecture

Real property

09/25/2001

2,264

12/26/2003

1,900

●

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(1.6%)●

III- 16

Amagasaki Front Building

Amagasaki, Hyogo Prefecture

Trust

03/25/2015

9,300(1.0%)●

III- 17

Lit City Building

Okayama, Okayama Prefecture

Real property

02/01/2006

4,650(0.5%)●

III- 18

NHK Hiroshima Broadcasting Center Building

Hiroshima, Hiroshima Prefecture

Real property

03/25/2004

1,320

03/03/2008

1,450
2,770

(0.3%)●

III- 19

Tosei Tenjin Building

Fukuoka, Fukuoka Prefecture

Real property

09/25/2001

1,550(0.2%)●

III- 20

Tenjin Crystal Building

Fukuoka, Fukuoka Prefecture

Real property

06/01/2005

5,000(0.5%)●

III- 21

Hinode Tenjin Building

Fukuoka, Fukuoka Prefecture

Trust

09/10/2001

3,657(0.4%)

923,448(100.0%)Total

Transferred properties
Hirokoji Sakae Building
Kyoto Shijo Kawaramachi Building
Total

14

06/28/2006

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

4,800

10,068m2

10,068m2

100.0%

50

241(0.8%)

100.0%

1990

2,310

4,510m2

4,510m2

100.0%

18

106(0.3%)

100.0%

2007

38,70038,426m2

37,849m2

98.5%

29

1,277

(4.2%)

11.11481%

1997

19,40026,667m2

26,121m2

98.0%

51

1,000

(3.3%)

100.0%

1990

2,560

6,831m2

6,831m2

100.0%

13

143(0.5%)

34.32%

1990

4,100

5,378m2

5,378m2

100.0%

26

159(0.5%)

100.0%

2006

7,510

12,265m2

12,265m2

100.0%

9319(1.1%)

50.0%

1993

958

2,518m2

2,417m2

96.0%

16

63

(0.2%)

100.0%

2008

13,50020,526m2

19,548m2

95.2%

21

537

(1.8%)

100.0%

1991

2,350

6,234m2

6,164m2

98.9%

24

132

(0.4%)

55.35443%

1998

19,00023,612m2

23,137m2

98.0%

61

605

(2.0%)

89.0%

1991

4,590

20,942m2

20,427m2

97.5%

78

465

(1.5%)

68.63831%

1995

4,700

9,850m2

9,796m2

99.4%

62

263

(0.9%)

100.0%

2004

10,40013,200m2

12,989m2

98.4%

26

375

(1.2%)

100.0%

1987

12,40021,610m2

20,743m2

96.0%

31

577

(1.9%)

100.0%

1991

1,240

3,448m2

3,448m2

100.0%

16

71(0.2%)

100.0%

2010

4,920

6,634m2

6,301m2

95.0%

9

183

(0.6%)

100.0%

1995

16,30010,370m2

10,370m2

100.0%

42438(1.4%)

100.0%

1995

17,80028,414m2

26,811m2

94.4%

46

639

(2.1%)

100.0%

1992

3,240

11,520m2

11,350m2

98.5%

21

227

(0.7%)

100.0%

1991

13,80020,450m2

20,385m2

99.7%

42

529

(1.7%)

100.0%

2008

9,690

15,500m2

15,351m2

99.0%

31

435

(1.4%)

27.7488%

2005

4,370

9,965m2

9,965m2

100.0%

39

253(0.8%)

48.753%

1994

2,660

9,860m2

9,860m2

100.0%

12261(0.9%)

100.0%

1992

1,320

3,995m2

3,844m2

96.2%

22

80

(0.3%)

100.0%

1993

2,590

5,964m2

5,911m2

99.1%

30

150

(0.5%)

74.4844%

1987

3,720

5,869m2

5,869m2

100.0%

3

169(0.6%)

996,828

820,381m2

806,782m2

98.3%

1,420
94

(0.3%)

126(0.4%)

30,428(100.0%)Japan Real Estate Investment Corporation15

Major tenants roster
Name of tenant

Name of building

Leased space (m2)

% of total leased space

The Bank of Tokyo-Mitsubishi UFJ, Ltd

Harumi Front (also includes 3 other buildings)

33,9104.2%(Note)

Kitanomaru Square (also includes 2 other buildings)

22,3052.8%(Note)

Osaki Front Tower (also includes 2 other buildings)

21,985

2.7%

NTT Communications Corporation

Shiodome Building

13,289

1.6%

HAKUHODO DY HOLDINGS INCORPORATED

Akasaka Park Building (also includes 1 other building)

12,831

1.6%

TOTO LTD.

Shiodome Building (also includes 2 other buildings)

11,1271.4%

JGC Corporation

MM Park Building (also includes 1 other building)

10,6491.3%

Mitsubishi UFJ Trust and Banking Building

10,598

1.3%

Queen’s Tower A

9,536

1.2%

Nibancho Garden

9,316

1.2%

Mitsubishi UFJ Trust and Banking Corporation
Minatomirai 21 District Heating and Cooling Co., Ltd.
Seven & i Holdings Co., Ltd.
Note: Not disclosed due to tenant’s request

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

III- 1

II- 2

II- 1

III- 1 to III- 21:
Other major cities

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

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

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

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

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

I- 39

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

I- 8 I- 7
I- 38

I- 1
I- 2

I- 25

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

I- 5
I- 10 I- 14

I- 20 I- 19

I- 36
I- 37

I- 22
I- 21

I- 15

I- 11
I- 12

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

I- 23, I- 24

I- 29
I- 30

I- 31

I- 1 to I- 41:
Tokyo 23 wards

16Japan Real Estate Investment Corporation

Overview of Portfolio Properties
As of March 31, 2016

Genki Medical
Plaza●

Kitanomaru
SquareI- 1●

MD Kanda
Building

I- 2

●

I- 3

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Site area:

1,052.80m2

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

Yurakucho Denki
Building●

Kodenmacho
Shin-Nihonbashi
Building

I- 10●

Kyodo Building(Kayabacho
2Chome)

I- 11

●

I- 12

Location:

Chiyoda-ku, Tokyo

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Site area:

5,749.91m2

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

Japan Real Estate Investment Corporation

17

Burex Kyobashi
Building●

Ginza 1Chome
East Building

I- 13

●

Ginza Sanwa
Building

I- 14●

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Site area:

756.03m2

Site area:

702.41m2

Site area:

1,119.27m2

Floor area of building:

5,470.54m2

Floor area of building:

4,976.85m2

Floor area of building:

8,851.00m2

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

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

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

Completion:

February 2002

Completion:

May 2008

Completion:

October 1982

Ryoshin Ginza
East Mirror
Building●

Harumi Front●

Harumi Center
Building

I- 17

●

I- 18

I- 16

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Site area:

864.91m2

Site area:

7,250.15m2

Site area:

4,664.63m2

Floor area of building:

5,751.68m2

Floor area of building:

45,458.90m2

Floor area of building:

26,447.27m2

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

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

Structure:

Above ground: 10 floors

Completion:

November 2006

Completion:

October 1998

Completion:

February 2012

Akasaka Park
Building●

Aoyama Crystal
Building

I- 19●

CloverShiba-koen

I- 20

●

I- 21

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Site area:

14,198.20m2

Site area:

989.30m2

Site area:

528.58m2

Floor area of building:

97,489.16m2

Floor area of building:

8,094.36m2

Floor area of building:

3,496.01m2

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

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

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

Completion:

July 1993

Completion:

December 1982

Completion:

February 2006

Shiodome
Building●

Shiba 2Chome
Daimon Building

I- 22

●

Cosmo
Kanasugibashi
Building

I- 23

●

18

I- 15

I- 24

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Site area:

12,054.22m2

Site area:

2,820.90m2

Site area:

758.54m2

Floor area of building:

115,930.83m2

Floor area of building:

16,235.10m2

Floor area of building:

5,420.93m2

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

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

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

Completion:

December 2007

Completion:

March 1984

Completion:

March 1992

Japan Real Estate Investment Corporation

Shinjuku Eastside
Square●Shinwa Building●

Tokyo Opera
City Building

I- 26

I- 25

●

I- 27

Location:

Shinjuku-ku, Tokyo

Location:

Shinjuku-ku, Tokyo

Location:

Shinjuku-ku, Tokyo

Site area:

25,320.28m2

Site area:

822.00m2

Site area:

18,236.94m2

Floor area of building:

167,245.46m2

Floor area of building:

8,291.69m2

Floor area of building:

232,996.81m2

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

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

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

Completion:

March 2012

Completion:

November 1989

Completion:

July 1996

TIXTOWER
UENO●

Higashi-Gotanda
1Chome Building

I- 28

●

Osaki Front
Tower

I- 29

●

I- 30

Location:

Taito-ku, Tokyo

Location:

Shinagawa-ku, Tokyo

Location:

Shinagawa-ku, Tokyo

Site area:

2,412.80m2

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●

Nippon Brunswick Building(Land with leasehold interest)●

Yoyogi 1Chome
Building

I- 32

●

I- 33

I- 31

Location:

Ota-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Site area:

2,199.30m2

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- 34

●

Shibuya Cross
Tower

I- 35

●

I- 36

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- 37

●

Otsuka HigashiIkebukuro
Building

I- 38●

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- 40●

Hachioji First
Square

I- 41

●

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- 39

Musashi Kosugi
STM Building

II- 5

●

8∙3 Square Kita
Building

II- 6●

III- 1

Location:

Kawasaki, Kanagawa Prefecture

Location:

Kawasaki, Kanagawa Prefecture

Location:

Sapporo, Hokkaido

Site area:

1,594.50m2

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

AER●

Kanazawa Park
Building

III- 5●

Nishiki Park
Building

III- 6●

III- 7

Location:

Sendai, Miyagi Prefecture

Location:

Kanazawa, Ishikawa Prefecture

Location:

Nagoya, Aichi Prefecture

Site area:

6,591.05m2

Site area:

6,642.71m2

Site area:

2,170.45m2

Floor area of building:

73,186.57m2

Floor area of building:

43,481.20m2

Floor area of building:

25,091.91m2

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

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

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

Completion:

March 1998

Completion:

October 1991

Completion:

August 1995

Nagoya Hirokoji
Place●

Nagoya Hirokoji
Building

III- 8●

Nagoya Misono
Building

III- 9●III- 10

Location:

Nagoya, Aichi Prefecture

Location:

Nagoya, Aichi Prefecture

Location:

Nagoya, Aichi Prefecture

Site area:

2,401.43m2

Site area:

4,095.81m2

Site area:

805.04m2

Floor area of building:

15,947.29m2

Floor area of building:

33,377.73m2

Floor area of building:

5,348.00m2

Structure:

Above ground: 10 floors

Completion:

December 2004

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

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

Completion:

May 1987

Completion:

September 1991

Shijo Karasuma
Center Building●

Umeda Square
Building

III- 11●Shin-Fujita
Building

III- 12●

III- 13

Location:

Kyoto, Kyoto Prefecture

Location:

Osaka, Osaka Prefecture

Location:

Osaka, Osaka Prefecture

Site area:

1,371.16m2

Site area:

1,652.88m2

Site area:

6,159.61m2

Floor area of building:

9,185.98m2

Floor area of building:

18,673.28m2

Floor area of building:

45,411.31m2

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

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

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

Completion:

January 2010

Completion:

July 1995

Completion:

April 1995

Japan Real Estate Investment Corporation

21

Sakaisujihonmachi
Building●

Midosuji Daiwa
Building

III- 14●

Amagasaki Front
Building

III- 15●

III- 16

Location:

Osaka, Osaka Prefecture

Location:

Osaka, Osaka Prefecture

Location:

Amagasaki, Hyogo Prefecture

Site area:

2,036.22m2

Site area:

3,044.65m2

Site area:

3,975.20m2

Floor area of building:

17,145.59m2

Floor area of building:

31,213.27m2

Floor area of building:

24,055.58m2

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

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

Structure:

Above ground: 10 floors

Completion:

October 2008

Completion:

October 1992

Completion:

September 1991

Lit City Building●

NHK Hiroshima
Broadcasting
Center Building

III- 17●

Tosei Tenjin
Building●

III- 19

III- 18

Location:

Okayama, Okayama Prefecture

Location:

Hiroshima, Hiroshima Prefecture

Location:

Fukuoka, Fukuoka Prefecture

Site area:

7,596.44m2

Site area:

3,296.46m2

Site area:

1,221.31m2

Floor area of building:

52,653.19m2

Floor area of building:

35,217.28m2

Floor area of building:

5,588.57m2

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

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

Structure:

Above ground: 8 floors

Completion:

March 1992

Completion:

June 2005

Completion:

August 1994

Tenjin Crystal
Building●

Hinode Tenjin
Building

III- 20●

III- 21

Location:

Fukuoka, Fukuoka Prefecture

Location:

Fukuoka, Fukuoka Prefecture

Site area:

1,835.17m2

Site area:

1,452.15m2

Floor area of building:

10,432.04m2

Floor area of building:

12,527.07m2

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

Structure:

Above ground: 10 floors
Below ground: 2 floors

Completion:

August 1993

Completion:

August 1987

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

22

Japan Real Estate Investment Corporation

Financial Section
Selected Financial Data ........................................................................................................................ p.23
Balance Sheets ................................................................................................................................................ p.24
Statements of Income and Retained Earnings ........................................................... p.26
Statements of Changes in Unitholders’ Equity ......................................................... p.27
Statements of Cash Distributions ............................................................................................ p.28
Statements of Cash Flows ................................................................................................................. p.29
Notes to Financial Statements ...................................................................................................... p.30
Independent Auditor’s Report ..................................................................................................... p.47

Selected Financial Data
Millions of yen

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

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

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

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

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

Operating revenues

30,58929,98028,314

27,76026,582

Operating expenses

18,237

17,926

17,071

16,50515,751

Operating income

12,352

12,054

11,243

11,255

10,831

Ordinary income

10,816

10,487

9,625

9,582

9,083

Income before income taxes

10,816

10,487

9,625

9,582

9,083

Profit10,753

10,476

9,619

9,572

9,070

Total assets

890,626

899,938

852,679

813,931

817,130

Interest-bearing debt

363,400

373,450

361,000

323,550

358,900

Net assets

469,044468,767

436,671436,622405,355

Unitholders’ capital

458,016

458,016

426,783

426,783

396,018

Number of units

1,309,310

1,309,310

1,251,530

1,251,530

1,188,280

Net assets per unit (Yen) (Note 1)

358,238

358,026

348,909348,871

341,128

Cash distribution

10,632

10,475

9,613

9,571

9,070

Dividend payout ratio

98.8%

99.9%

99.9%

99.9%

99.9%

Dividend per unit (Yen)

8,121

8,001

7,681

7,648

7,633

Net operating income (NOI)

19,973

19,67018,412

18,105

17,481

Funds from operations (FFO)

17,07916,80815,62915,455

14,719Return on assets (ROA) (Note 2)

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

Return on equity (ROE) (Note 3)

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

EOP equity ratio (Note 4)

52.7%

52.1%

51.2%

53.6%

49.6%

EOP interest-bearing debt ratio
on total assets (Note 5)

40.8%

41.5%

42.3%

39.8%

43.9%

FFO multiple (Times)

25.0

21.5

22.6

22.9

20.9

Debt service coverage ratio (Times) (Note 6)

12.5

12.1

10.8

10.5

9.6

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

Japan Real Estate Investment Corporation

23

Balance Sheets
As of September 30, 2015 and March 31, 2016

Thousands of yen

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

24Japan Real Estate Investment Corporation

As of September 30, 2015

As of March 31, 2016

20,564,934
5,844,989
209,386
393,532
953
23,84827,037,645

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

266,361,565(74,720,230)
191,641,335
3,193,164(643,744)
2,549,420
2,944,813(1,721,977)
1,222,835
376,537(187,315)
189,222452,965,989
1,310
76,541,120(16,201,956)
60,339,163
645,610(139,759)
505,851
939,320(615,178)
324,141
35,772(14,470)
21,302
151,935,120
1,278
861,696,973

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

6,064,832
444,160
828,095
7,337,088

6,049,002
444,160
828,095
7,321,258

577,168
1,573,641
814,254869,447
3,834,511
872,868,573

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

32,23932,239899,938,458

26,70026,700890,626,297

Thousands of yen

As of September 30, 2015

As of March 31, 2016

LIABILITIESCurrent liabilities   Operating accounts payable

1,478,287

2,230,597   Short-term loans payable

36,700,000

22,700,000   Current portion of long-term loans payable

32,100,000

44,400,000   Accounts payable - other

1,346,666

1,337,902

664,500

669,098  Accrued expenses   Income taxes payable   Accrued consumption taxes  Advances received  Other   Total current liabilities

9,466

10,835

610,379

1,128,609

3,478,134

3,088,163

101,701

9,618

76,489,136

75,574,825

Non-current liabilities   Investment corporation bonds

20,000,000

20,000,000   Long-term loans payable

284,650,000

276,300,000   Deposits received from tenants

49,573,768

49,197,812   Deferred tax liabilities

116,161

167,220   Asset retirement obligations

322,080

325,325  Other

20,074

16,366354,682,084

346,006,725

431,171,221

421,581,550

458,016,096

458,016,096

243,360

243,360   Total non-current liabilities
Total Liabilities
NET ASSETS
Unitholders’ equity  Unitholders’ capital  Surplus    Voluntary retained earnings    Reserve for reduction entry     Total voluntary retained earnings

243,360

243,360   Unappropriated retained earnings

10,507,781

10,785,290   Total surplus

10,751,141

11,028,651   Total unitholders’ equity

468,767,237

469,044,747

468,767,237

469,044,747

899,938,458

890,626,297

Total net assets
Total Liabilities and Net Assets

Japan Real Estate Investment Corporation25

Statements of Income and Retained Earnings
For the six months ended September 30, 2015 and March 31, 2016

Thousands of yen

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

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

29,886,578

30,290,297

Operating revenues
Rent revenues
Other lease business revenues
Gain on sales of real estate properties
Total operating revenues

94,314

138,195—

161,378

29,980,892

30,589,871

16,642,681

16,941,905

926,559

933,354

Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee

60,56961,279Administrative service fees

143,924

145,512

Directors' compensations

7,800

7,800

Commission fee

78,43369,199Other operating expenses

66,89778,22017,926,866

18,237,271

12,054,026

12,352,600

Interest income

4,611

4,490

Dividend income

6,494

—

Reversal of distribution payable

3,520

3,341

—

1,492

Total operating expenses
Operating income
Non-operating income

Refund of property taxes
Income on settlement of management association accounts

37,037

—

Other

5,448

31

Total non-operating income

57,1119,356

1,329,408

1,347,628

191,891

153,314

Amortization of investment corporation bond issuance costs

9,633

5,539

Investment unit issuance expenses

56,541—Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds

Other
Total non-operating expenses

39,314
1,545,797

Ordinary income

10,487,587

10,816,159

Income before income taxes

10,487,587

10,816,159

11,44911,820

Income taxes - current
Income taxes - deferred
Total income taxes
Profit26

36,074
1,623,550

25

51,04011,47562,86010,476,112

10,753,298

Retained earnings brought forward

31,66931,991

Unappropriated retained earnings

10,507,781

10,785,290

Japan Real Estate Investment Corporation

Statements of Changes in Unitholders’ Equity
For the six months ended September 30, 2015 and March 31, 2016

For the period from April 1, 2015 to September 30, 2015
Thousands of yen

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

426,783,117

Voluntary retained earnings
Reservefor reduction
entry

Total voluntary
retainedearnings

236,745

236,745

Unappropriatedretainedearnings

9,651,286

Total
net assets

Total surplus

Totalunitholders’equity9,888,031

436,671,148

436,671,148—

31,232,979

31,232,979

Changes of items during period
Issuance of new investment units

31,232,979
6,615

Provision of reserve for reduction entry

6,615

Dividends of surplus(6,615)———(9,613,001)(9,613,001)(9,613,001)(9,613,001)

10,476,112

10,476,112

10,476,112

10,476,112

Total changes of items during period

31,232,979

6,615

6,615

856,494

863,110

32,096,089

32,096,089

Balance at end of current period

458,016,096

243,360

243,360

10,507,781

10,751,141

468,767,237

468,767,237

Profit

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

Unitholders’ equity
SurplusTotal
net assets

Total surplus

Totalunitholders’equity10,751,141

468,767,237

468,767,237

Dividends of surplus(10,475,789) (10,475,789)(10,475,789)(10,475,789)

Profit10,753,298

10,753,298

10,753,298

10,753,298

Unitholders’capitalBalance at beginning of current period

458,016,096

Voluntary retained earnings
Reservefor reduction
entry

Total voluntary
retainedearnings

243,360

243,360

Unappropriatedretainedearnings

10,507,781

Changes of items during period

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

—

—

—

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

243,360

243,360

10,785,290

11,028,651

469,044,747

469,044,747

Japan Real Estate Investment Corporation27

Statements of Cash Distributions
For the six months ended September 30, 2015 and March 31, 2016

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

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

Amount (Yen)Amount (Yen)I	  Retained earnings

10,507,781,132

10,785,290,543

II	  Cash distribution

10,475,789,310

10,632,906,510(8,001)(8,121)—

120,108,982

31,991,822

32,275,051

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 theSpecial Taxation Measures Act. After
maintaining retained earnings brought
forward in an amount not exceeding
unappropriated retained earnings, thetotal amount of dividends that theCompany has determined to pay out is
10,475,789,310 yen for the period underreview, which is a multiple of 1,309,310— the number of units outstanding as of
September 30, 2015. Furthermore, theCompany does not pay out dividends thatexceed accounting profits as outlined in
Article 32-3 of the Company’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 theSpecial Taxation Measures Act. Based on
this policy, the Company secures thereserve for reduction entry in accordancewith Article 66-2 “Special Provisions for
Taxation in the Case of Advanced
Acquisition of Land, etc., in 2009 and2010” of the same Act as well as Article
42 “Inclusion in Gross Expense of
Advanced Depreciation of Fixed Assets,etc. Acquired with National Subsidy,etc.” of the Corporation Tax Act. The
Company also reserves the retained
earnings brought forward. As a result,
the total amount of dividends that theCompany has determined to pay out is10,632,906,510 yen for the period
under review, which is a multiple of
1,309,310 — the number of units
outstanding as of March 31, 2016.
Furthermore, the Company does not pay
out dividends that exceed accounting
profits as outlined in Article 32-3 of theCompany’s Articles of Incorporation.

	 
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

Statements of Cash Flows
For the six months ended September 30, 2015 and March 31, 2016

Thousands of yen

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

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

Income before income taxes

10,487,587

10,816,159

Depreciation

6,332,545

6,487,255

Amortization of investment corporation bond issuance costs

9,633

5,539

Investment unit issuance expenses

56,541—Dividend income(6,494)—

Interest income(4,611)(4,490)Interest expenses

1,521,300

1,500,943

Decrease (increase) in operating accounts receivable(81,885)

7,744

Decrease (increase) in consumption taxes refund receivable

833,719——249(238,026)

68,644

Cash flows from operating activities

Decrease (increase) in supplies
Decrease (increase) in prepaid expenses—

4,168,218

Increase (decrease) in operating accounts payable

315,567(42,710)

Increase (decrease) in accounts payable - other

135,172

94,892

Increase (decrease) in accrued consumption taxes

610,379

518,230

Decrease due to sale of property, plant and equipment

Increase (decrease) in accrued expenses

367

(136)

Increase (decrease) in advances received

131,859(389,971)

Decrease (increase) in long-term prepaid expenses(669,193)

108,172

Other, net(829,188)(156,038)

Subtotal

18,605,274

23,182,702

9,716

5,700

(1,626,001)(1,496,209)(13,133)(10,451)

16,975,856

21,681,741

Payments into time deposits(7,519,000)(2,817,000)

Proceeds from withdrawal of time deposits

2,519,000

7,817,000

Purchase of property, plant and equipment(19,705,392)(1,863,127)

Purchase of property, plant and equipment in trust(26,558,326)(422,278)Interest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities

Payments for lease and guarantee deposits(501,810)—

Repayments of tenant leasehold and security deposits(833,198)(1,391,023)

Proceeds from tenant leasehold and security deposits

2,768,976

1,015,067

Net cash provided by (used in) investing activities(49,829,752)

2,338,638

Proceeds from short-term loans payable

33,000,000

9,700,000

Repayments of short-term loans payable(28,800,000)(23,700,000)

Proceeds from long-term loans payable

42,800,000

6,000,000

Repayments of long-term loans payable(14,550,000)(2,050,000)

Redemption of investment corporation bonds(20,000,000)—

Proceeds from issuance of investment units

31,232,979—

Cash flows from financing activities(56,541)—

Dividends paid

(9,611,537)(10,475,520)

Net cash provided by (used in) financing activities

34,014,899(20,525,520)

Net increase (decrease) in cash and cash equivalents

1,161,003

3,494,859

Cash and cash equivalents at beginning of period

20,248,921

21,409,924

Cash and cash equivalents at end of period

21,409,924

24,904,784

Payments for investment unit issuance expenses

Japan Real Estate Investment Corporation

29

Notes to Financial Statements
September 30, 2015 and March 31, 2016

1. Organization and Basis of Presentation
Organization

Japan Real Estate Investment Corporation (“the Company”) is a real estate investment corporation formed to own and invest primarily ina portfolio of office properties. The Company is externally managed by a licensed asset management company, Japan Real Estate AssetManagement Co., Ltd. (“J-Rea”). J-Rea is currently owned 90% by Mitsubishi Estate Co., Ltd. (“MEC”) and 10% by Mitsui & Co., Ltd.
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, Tokio Marine &Nichido Fire Insurance Co., Ltd. and The Dai-ichi Life Insurance Company, Limited under the ITA.
On September 10, 2001, the Company commenced operations when the Company was listed on the Tokyo Stock Exchange as one of
the first real estate investment corporations in Japan (“J-REITs”). The Company issued 160,000 units at a price of ¥506,625, generating
gross proceeds of ¥81,060 million.
At March 31, 2016, the Company owned a portfolio of 68 office properties with an aggregate of approximately 820,381 m2 of­leasable space.
Basis of presenting financial statements

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

2. Summary of Significant Accounting Policies
Investment securities

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

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

30Japan Real Estate Investment Corporation

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

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

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

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

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

Property and equipment is subject to property taxes and city planning taxes on a calendar year basis. These taxes are generally charged toincome during the period. The sellers of the properties are liable for property taxes for the calendar year including the period from the dateof purchase by the Company through the end of the year since the taxes are imposed on the owner registered on the record as of January 1
based on the assessment made by the local government. The Company pays the amount equivalent to the property taxes to the sellers applicable to the period since acquisition and includes the amount equivalent to the taxes in the purchase price of each property 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
Current assets and the excess of amounts withheld over payments are included in Current liabilities.
Cash and cash equivalents

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

Japan Real Estate Investment Corporation

31

Hedge accounting

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

3. Financial Instruments
For the six months ended September 30, 2015 and March 31, 2016
1. Status of financial instruments(1) Policies for dealing financial instruments
		Concerning the financing of property acquisitions, the Company shall use several funding sources including bank loans, the issuance ofinvestment corporation bonds and the issuance of investment units. When executing such financing activities, the Company endeavors
to retain the ability to secure stable and low-cost financing by maintaining high credit ratings and thereby limiting the financial covenants that may restrict the financial flexibility of the Company. To achieve these goals, the Company intends to further develop andreinforce the confidence of debt holders and rating agencies in the Company by bolstering the capital base and controlling the loan-tovalue ratio (“LTV”) at an adequate level.
		  In order to hedge against future interest-rate fluctuations, the Company may enter into derivative transactions, which shall be
executed solely for the purpose of hedging against interest-rate fluctuation and other risks, and not for speculative purposes.
		  With respect to management of excess funds, as a matter of policy the Company uses time deposits as its main vehicle, while securities and monetary claims are also eligible for such investment.
(2) Characteristics and risk profile of each financial instrument and risk management system		The Company regularly re-evaluates the appropriateness and effectiveness of its risk management system in order to improve on it.
		The characteristics and risk profile of financial instruments and the system in place to manage such risks are as follows:		The deposits, which are typically large time deposits used to manage excess funds, are exposed to the credit risk of the deposit-taking
financial institutions. The Company manages credit risk by restricting the tenor of the deposit to relatively short periods and setting
a minimum credit rating requirement for the deposit-taking financial institutions.
		  The funding proceeds from borrowings and issues of investment corporation bonds are applied mainly to acquire real estate properties and repay outstanding loans and bonds. While floating-rate short-term and long-term loans are exposed to the risk of interest-rate
hikes, such risk is mitigated by the Company’s low LTV and relatively high percentage of long-term fixed-rate debts within the totalborrowing. The Company also utilizes derivative transactions (interest-rate swap transactions) as a hedge against interest-rate risk
derived from floating-rate long-term loans, thereby maintaining the overall interest rates on the loans at an effectively fixed level.
Foreign currency-denominated loans are also exposed to currency exchange and interest-rate fluctuation risk. However, the Company
uses derivative transactions as a method of hedging against these risks (interest-rate and currency swap transactions). For more detailed
information on the hedge accounting method, hedging instruments, hedged items, hedge policies and the evaluation method of hedge
effectiveness, please refer to the previous Section 2. Summary of Significant Accounting Policies: Hedge accounting.

32

Japan Real Estate Investment Corporation		  Loans and investment corporation bonds involve liquidity risk at the time of maturity. To manage such liquidity risk, the Company
implements measures such as (i) maintaining and strengthening its ability to access equity markets to secure funds, (ii) maintaining
commitment lines with major financial institutions (There is no amount outstanding under the facility as of September 30, 2015 andMarch 31, 2016) and (iii) preparing monthly financial plans.
(3) Supplementary note regarding fair value of financial instruments		The fair values of financial instruments presented in this report are based on their market value, and in cases where market values
are not available, reasonably calculated values are presented. Since calculation of fair value is based on certain assumptions, the fairvalue could differ depending on the assumptions used. In addition, the contract value of derivative transactions, which is presented
in Section 4. Derivative Transactions, is not an exact representation of market risk attributable to derivative transactions.
2. Fair value of financial instruments

Fair value of financial instruments, their values carried on the balance sheets and the differences between them as of September 30, 2015
and March 31, 2016 are as follows.
The financial instruments whose fair values are extremely difficult to estimate are excluded from the following schedule (Note 2):
Thousands of yen

Book value

As of September 30, 2015
Fair value(1) Cash and deposits

20,564,934

20,564,934—(2) Cash and deposits in trust

5,844,989

5,844,989—(3) Short-term loans

36,700,000

36,700,000—(4) Current portion of long-term loans

32,100,000

32,260,394

160,394(5) Investment corporation bonds

20,000,000

21,692,400

1,692,400(6) Long-term loans

284,650,000

289,975,910

5,325,910———(7) Derivative transactions

Difference

Thousands of yen

As of March 31, 2016
Book value

Fair value(1) Cash and deposits

19,362,431

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

5,542,352

5,542,352—(3) Short-term loans

22,700,000

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

44,400,000

44,605,234

205,234(5) Investment corporation bonds

20,000,000

21,988,600

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

276,300,000

283,574,360

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

Difference

Notes: 1. Measurement of fair value of financial instruments and matters concerning derivative transactions
		 (1) Cash and deposits and (2) Cash and deposits in trust			 Due to short tenor, the book values of these assets are reasonable approximations of the present value of these assets and hence used as their fair value.
		 (3) Short-term loans
			Since these loans’ tenor is short and rates are reset at a short interval, the book values of these liabilities are reasonable approximations of their present value andhence used as their fair values.
		 (4) Current portion of long-term loans and (6) Long-term loans
			For loans with floating interest rates, since the interest rates on such loans reflect market rates reasonably well over the short term and their book values are good
approximations of their fair values, the book values are presented as their fair values. (However, the fair values of floating-rate long-term loans hedged by an interest-rate and currency swap subject to integrated treatment or by an interest-rate swap subject to special accounting treatment are calculated by discounting theaggregated principal and the interest on such loans, after taking into account the effect of said interest-rate and currency swaps or interest-rate swaps, using reasonable estimates of the rates that would be applicable if the Company were to refinance the existing loans for the remaining period to maturity under the prevailingmarket conditions as of September 30, 2015 and March 31, 2016. Such floating-rate long-term loans are presented in Section 4. Derivative Transactions.) The fairvalues of the liabilities with fixed interest rates are calculated by discounting the aggregated amounts of the principal and the interest of the loans by the rates thatare reasonably estimated to be applicable if the Company were to refinance the existing loans for the remaining period to maturity under the prevailing market
conditions as of September 30, 2015 and March 31, 2016.
		 (5) Investment corporation bonds
			Their fair values are based on the values published by a financial data provider.
		 (7) Derivative transactions
			 Please refer to Section 4. Derivative Transactions.

Japan Real Estate Investment Corporation

33

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

As of September 30, 2015

As of March 31, 2016

577,168
49,573,768

577,168
49,197,812(*1) With regard to non-listed stock, which does not have a quoted market price in an active market and whose cash flows are not reasonably estimated, fair value cannot
be reliably measured and it is therefore presented at book value.
(*2) With regard to deposits received from tenants, which do not have a quoted market price in an active market and reasonably estimated tenor, their cash flows cannot
be reliably measured and they are therefore presented at their book value.
3. Redemption schedule for monetary claims after the closing dateThousands of yen

As of September 30, 2015

1 year or less
20,564,934
5,844,989
26,409,924

Cash and deposits
Cash and deposits in trust
Total

1 to 2 years———

2 to 3 years———

3 to 4 years———

4 to 5 years———

Over 5 years———

Thousands of yen

As of March 31, 2016

Cash and deposits
Cash and deposits in trust
Total

1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years

19,362,431
5,542,352
24,904,784

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

4 to 5 years——
44,500,000
44,500,000

Over 5 years—
10,000,000
136,300,000
146,300,000

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

As of September 30, 2015

1 year or less
36,700,000—
32,100,000
68,800,000

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

1 to 2 years——
42,850,000
42,850,000

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

3 to 4 years——
25,000,000
25,000,000

Thousands of yen

As of March 31, 2016

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

1 year or less

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years

22,700,000—
44,400,000
67,100,000——
46,500,000
46,500,000—
10,000,000
27,500,000
37,500,000——
49,000,000
49,000,000——
39,000,000
39,000,000—
10,000,000
114,300,000
124,300,000

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

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

34

Japan Real Estate Investment Corporation

Type of Derivative Transaction

Hedged Item

Receive floating, pay fixedLong-term loansinterest-rate swap transactions
Receive floating USD, pay fixed JPY,
interest-rate and currency swap transLong-term loans
actions (with initial and final exchange)

Contract Value
Over One Year

Thousands of yen

Fair Value

Measurementof Fair Value

60,800,000

60,800,000*—

10,000,000

10,000,000*—		 For the period from October 1, 2015 to March 31, 2016			The contract amount or the equivalent principal amount set out in the contract as of the closing date for each derivative designated asa hedging instrument is as follows.


Derivative Accounting Method

Type of Derivative Transaction

Contract Value

Hedged Item

Over One Year

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

Thousands of yen

Fair Value

Measurementof Fair Value

64,300,000

64,300,000*—

10,000,000

10,000,000

*

—

*B
 ecause the derivative transactions eligible for the Special Treatment of interest-rate swaps and Integrated Treatment (Special Treatment for interest-rate swaps and Allocation
Treatment for currency swaps) are accounted for as integral parts of the hedged loans, the fair value of those derivative transactions is included in that of the underlying­long-term loans as of September 30, 2015 and March 31, 2016. Please refer to the measurement of fair value of financial instruments in Note 1 of “2. Fair value of financial
instruments” under Section 3. Financial Instruments as well as subheadings (4) and (6) of Note 1 concerning derivative transactions.

5. Property and Equipment
Property and equipment as of September 30, 2015 and March 31, 2016 consisted of the following:Thousands of yen

As of September 30, 2015

As of March 31, 2016

Acquisition costs

Book value

Acquisition costs

Book value

Land

452,965,989

452,965,989

450,267,151

450,267,151

Buildings and structures

269,554,730  Accumulated depreciation(75,363,974)

Machinery and equipment

2,944,813  Accumulated depreciation(1,721,977)

Tools, furniture and fixtures

376,537  Accumulated depreciation(187,315)

Construction in progress

269,282,674
194,190,756(79,298,438)

1,222,835(1,795,372)

189,222(209,733)

189,984,235

2,962,534
1,167,161

384,059
174,325

1,310

1,310

2,250

2,250

Land in trust

151,935,120

151,935,120

151,935,120

151,935,120

Buildings and structures in trust

77,186,731  Accumulated depreciation(16,341,715)

Machinery and equipment in trust

939,320  Accumulated depreciation(615,178)

77,929,669
60,845,015(17,749,545)

60,180,123

945,736
324,141(641,407)

304,328

Tools, furniture and fixtures in trust

35,772  Accumulated depreciation(14,470)

21,302(16,610)

22,240Construction in progress in trust

1,278

1,278

2,299

2,299

861,696,973

861,696,973

854,039,237

854,039,237

Total

38,850The compressed amount of tangible assets with government grants under the Corporation Tax Law of Japan was ¥50 million as of
September 30, 2015 and ¥50 million as of March 31, 2016.

Japan Real Estate Investment Corporation

35

6. Loans
The condition of loans by financial institutions as of March 31, 2016 is as follows.

Drawdown Date

Balance at
Beginning ofCurrent Period(¥ thousand)

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

Repayment
Date

Repayment
MethodOctober 1, 2014

2,500,000

March 25, 2015

5,500,000—

0.18

October 1, 2015

Bullet—0.171

March 25, 2016

BulletMarch 31, 2015

2,000,000—

0.1707

March 31, 2016

BulletApril 1, 2015

5,500,000

5,500,000

0.1706

April 1, 2016

BulletMarch 25, 2016—

5,500,000

0.1136

March 27, 2017

BulletMarch 2, 2015

3,500,000—

0.18

March 2, 2016

BulletApril 1, 2015

3,500,000

3,500,000

0.1706

April 1, 2016

BulletMarch 2, 2016—

1,500,000

0.1136

March 2, 2017

Bullet0.1611

August 24, 2016

Bullet0.1606

September 1, 2016

BulletSegment
LenderMizuho Bank, Ltd.

The Bank of TokyoMitsubishi UFJ, Ltd.

Short-term loans

Shinsei Bank, Limited

August 24, 2015

1,500,000

September 1, 2015

2,000,000—*22,000,000

Purchase real estate
Purchase real estate trust
beneficiary rights
Repay existing
short-term loans
Purchase real estate trust
beneficiary rights
Repay existing
short-term loans
Purchase real estate trust
beneficiary rights
Purchase real estate trust
beneficiary rights
Repay existing
short-term loans
Repay existing
short-term loans
Purchase real estate
Repay existing
short-term loans
Repay existing
short-term loans
Purchase real estate
and Repay existing
short-term loans
Repay existing
short-term loans
Repay existing
short-term loans
Repay existing
short-term loans
Repay existing
short-term loans

Notes
Floating interest rate
Floating interest rate
Floating interest rate
Floating interest rate
Floating interest rate
Floating interest rate
Floating interest rate
Floating interest rate
Floating interest rate
Floating interest rate

March 31, 2015

3,700,000—

0.1707

March 31, 2016

BulletMarch 31, 2016—

1,700,000

0.1136

March 31, 2017

BulletSeptember 1, 2015

2,000,000

1,000,000*30.16486

September 1, 2016

BulletJanuary 7, 2015

1,000,000—

0.18

January 7, 2016

BulletJanuary 7, 2016—

1,000,000

0.14531January 10, 2017

BulletShinkin Central Bank

September 1, 2015

2,000,000

1,000,000*30.16486

September 1, 2016

Bullet

The Daishi Bank, Ltd.

January 7, 2015

1,500,000—

0.18

January 7, 2016

BulletOctober 1, 2014

500,000—

0.18

October 1, 2015

BulletPurchase real estate

Floating interest rate

36,700,000

22,700,000

6,000,000

6,000,000

6,000,000

6,000,000

0.90875

June 23, 2016

BulletRepay existing loans

Fixed interest rate

6,000,000

6,000,000

6,000,000

6,000,000

March 30, 2009—

5,000,000

1.54375

March 30, 2017

BulletRepay existing loans

Fixed interest rate

April 4, 2011

5,000,000

5,000,000

1.0325

April 4, 2016

BulletRepay existing loans

Fixed interest rate

Mizuho Bank, Ltd.

December 21, 2010—

5,000,000

1.30625

December 21, 2016

BulletResona Bank, Limited

March 1, 2011—

2,000,000

1.255

March 1, 2017

Sumitomo Mitsui
Trust Bank, Limited

Resona Bank, Limited

The 77 Bank, Ltd.

Mitsubishi UFJ
Trust and Banking
Corporation
Subtotal
Mitsubishi UFJ
Trust and Banking
Corporation
Mizuho Bank, Ltd.

Long-term loans to be repaid within 1 year

Sumitomo Mitsui
Trust Bank, Limited
The Bank of TokyoMitsubishi UFJ, Ltd.
The Dai-ichi Life
Insurance Company,
LimitedMitsubishi UFJ
Trust and Banking
Corporation

June 23, 2011

Development Bankof Japan Inc.

March 24, 2010

100,000

1,400,000
*4

1.665

March 24, 2017

Shinkin Central Bank

November 15, 2011—

1,000,000

0.7525

November 15, 2016

Taiyo Life Insurance
Company
The Hachijuni
Bank, Ltd.
The Iyo Bank, Ltd.

36

Use of Proceeds

April 24, 2008

1,000,000

1,000,000

1.595

April 25, 2016

BulletRepayment ininstallments*4
BulletBulletRepay existing
short-term loans
Purchase real estate trust
beneficiary rights

Floating interest rate
Floating interest rate
Floating interest rate
Floating interest rate
Floating interest rate
Floating interest rate
Floating interest rate

Fixed interest rate
Fixed interest rate

Purchase real estate

Fixed interest rate

Purchase real estate

Fixed interest rate

Redeem investment
corporation bonds

Fixed interest rate

January 15, 2013

1,000,000—

0.3825January 15, 2016

BulletRepay existing loans

Fixed interest rate

January 15, 2013

1,000,000—

0.3825January 15, 2016

BulletRepay existing loans

Fixed interest rate

Subtotal

32,100,000

44,400,000

Total

68,800,000

67,100,000

Japan Real Estate Investment Corporation

Segment
Drawdown Date
LenderMitsubishi UFJ
Trust and Banking
Corporation

The Bank of TokyoMitsubishi UFJ, Ltd.

Long-term loans
Sumitomo Mitsui
Trust Bank, Limited

Mizuho Bank, Ltd.

Balance at
Beginning ofCurrent Period(¥ thousand)

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

Repayment
Date

Repayment
MethodUse of Proceeds

Notes

April 4, 2011

5,000,000

5,000,000

1.205

April 4, 2017

BulletRepay existing loans

Fixed interest rate

June 1, 2011

12,000,000

12,000,000

1.12625

June 1, 2017

BulletRepay existing loans

Fixed interest rate

June 1, 2011

10,000,000

10,000,000

1.31125

June 1, 2018

BulletRepay existing loans

Fixed interest rate

November 15, 2011

3,000,000

3,000,000

1.13875

November 15, 2019

BulletPurchase real estate

Fixed interest rate

June 15, 2012

4,000,000

4,000,000

0.9525June 15, 2020

BulletPurchase real estate

Fixed interest rate

BulletRedeem investment
corporation bonds

Fixed interest rate

June 15, 2012

2,500,000

2,500,000

1.2725June 15, 2022

December 21, 2012

5,000,000

5,000,000

0.80125

December 21, 2020

BulletRepay existing loans

Fixed interest rate

January 31, 2014

4,000,000

4,000,000

0.64225*5

January 29, 2021

BulletPurchase real estate trust
beneficiary rights

Floating interest rate
*5

December 19, 2014

10,000,000

10,000,000

0.42375*6

December 19, 2023

BulletRepay existing
short-term loans

Floating interest rate
*6

September 1, 2015

3,500,000

3,500,000

0.63

September 2, 2024

BulletPurchase real estate

Fixed interest rate
Fixed interest rate
Fixed interest rate

March 24, 2011

2,000,000

2,000,000

1.3975

March 26, 2018

BulletRepay existing
short-term loans

November 15, 2011

3,000,000

3,000,000

1.13875

November 15, 2019

BulletPurchase real estate

June 15, 2012

4,000,000

4,000,000

1.1975June 15, 2022

BulletPurchase real estate

Fixed interest rate

December 21, 2012

5,000,000

5,000,000

0.80125

December 21, 2020

BulletRepay existing loans

Fixed interest rate

January 15, 2013

5,500,000

5,500,000

0.71

January 15, 2020

BulletRepay existing loans

Fixed interest rate

January 15, 2013

5,500,000

5,500,000

0.83625

January 15, 2021

BulletRepay existing loans

Fixed interest rate

April 24, 2013

5,000,000

5,000,000

0.775

April 26, 2021

BulletRepay existing loans

Fixed interest rate

September 1, 2015

5,000,000

5,000,000

0.2

September 2, 2019

BulletPurchase real estate

Fixed interest rate
Fixed interest rate

September 1, 2015

2,000,000

2,000,000

0.47125

September 1, 2022

BulletRepay existing
short-term loans

January 17, 2011

3,000,000

3,000,000

1.43375

January 17, 2018

BulletRepay existing
short-term loans

Fixed interest rate

September 26, 2011

5,500,000

5,500,000

1.16

September 26, 2019

BulletRepay existing
short-term loans

Fixed interest rate

November 15, 2011

3,000,000

3,000,000

0.98375

November 15, 2018

BulletPurchase real estate

Fixed interest rate

June 15, 2012

4,000,000

4,000,000

0.9525June 15, 2020

BulletPurchase real estate

Fixed interest rate

2,000,000

0.62575*5January 29, 2021

BulletPurchase real estate trust
beneficiary rights

Floating interest rate
*5
Fixed interest rate

January 31, 2014

2,000,000

May 29, 2015

5,000,000

5,000,000

0.2075

May 29, 2019

BulletRepay existing loans

June 15, 2015

3,000,000

3,000,000

0.3425June 15, 2020

BulletRepay existing loans

Fixed interest rate

September 2, 2015

3,800,000

3,800,000

0.536
*5

September 2, 2024

BulletRepay existing
short-term loans

Floating interest rate
*5

December 21, 2010

5,000,000—

1.30625

December 21, 2016

BulletRepay existing
short-term loans

Fixed interest rate

November 1, 2011

6,000,000

6,000,000

1.2075

November 1, 2019

BulletRepay existing short-termloans and other loans

Fixed interest rate

November 15, 2011

3,000,000

3,000,000

1.13875

November 15, 2019

BulletPurchase real estate

Fixed interest rate

June 15, 2012

4,000,000

4,000,000

1.07375

June 15, 2021

BulletPurchase real estate

Fixed interest rate

January 15, 2013

5,000,000

5,000,000

0.96625

January 17, 2022

BulletRepay existing loans

Fixed interest rate

April 24, 2013

3,000,000

3,000,000

0.87375

April 25, 2022

BulletRepay existing loans

Fixed interest rate

September 1, 2015

2,500,000

2,500,000

0.17

March 1, 2019

BulletPurchase real estate

Fixed interest rate

BulletRepay existing
short-term loans

Fixed interest rate

October 1, 2015—

2,500,000

0.5575October 1, 2024

Japan Real Estate Investment Corporation

37

Drawdown Date

Balance at
Beginning ofCurrent Period(¥ thousand)

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

Repayment
Date

Repayment
MethodUse of Proceeds

Notes

March 24, 2010

1,350,000

—

1.665

March 24, 2017

Repayment ininstallments*4

Purchase real estate

Fixed interest rate

January 7, 2013

3,000,000

3,000,000

1.115

January 6, 2023

BulletPurchase real estate

Fixed interest rate
Fixed interest rate

Segment
LenderDevelopment Bankof Japan Inc.

January 31, 2014

5,000,000

5,000,000

0.9325January 31, 2023

BulletPurchase real estate trust
beneficiary rights

September 1, 2015

7,000,000

7,000,000

0.7175September 1, 2025

BulletPurchase real estate andRepay existing loans

Fixed interest rate

The Daishi Bank, Ltd.

1,800,000

1,800,000

The Hokuetsu
Bank, Ltd.

1,400,000

1,400,000

Sony Bank
Incorporated

1,400,000

1,400,000

The Toho Bank, Ltd.

1,400,000

1,400,000

The Shinkumi­Federation Bank

1,000,000

1,000,000

The Akita Bank, Ltd.

900,000

900,000

900,000

900,000

0.463*5November 15, 2021

BulletRepay existing
short-term loans

Floating interest rate
*5

The Gunma Bank, Ltd.

900,000

900,000

The 77 Bank, Ltd.

900,000

900,000

The Tochigi Bank, Ltd.

900,000

900,000

The Higo Bank, Ltd.

500,000

500,000

The Bank of Iwate, Ltd.

500,000

500,000

The Yamagata
Bank, Ltd.

500,000

500,000

The Fukui Bank, Ltd.

Long-term loans

Shinkin Central Bank

The Bank ofFukuoka, Ltd.

The Norinchukin
Bank

Shinsei Bank,
LimitedNovember 14, 2014

November 15, 2011

1,000,000—

0.7525

November 15, 2016

BulletPurchase real estate

Fixed interest rate

January 7, 2013

2,000,000

2,000,000

0.71375

January 7, 2020

BulletPurchase real estate

Fixed interest rate

January 15, 2013

5,000,000

5,000,000

0.71

January 15, 2020

BulletRepay existing loans

Fixed interest rate

April 24, 2013

5,000,000

5,000,000

0.52775

April 24, 2018

BulletRepay existing loans

Fixed interest rate

August 31, 2011

2,000,000

2,000,000

0.9025

August 31, 2017

BulletRepay existing loans

Fixed interest rate

June 15, 2012

2,500,000

2,500,000

0.66

June 15, 2017

BulletRedeem investment
corporation bonds

Fixed interest rate

August 31, 2012

1,000,000

1,000,000

0.57125

August 31, 2017

BulletRepay existing loans

Fixed interest rate

January 29, 2021

BulletPurchase real estate trust
beneficiary rights

Floating interest rate
*5

March 24, 2023

BulletRepay existing loans

Fixed interest rate
Floating interest rate
*5

January 31, 2014

2,500,000

2,500,000

0.63849*5

March 24, 2015

2,000,000

2,000,000

0.5125January 31, 2022

BulletPurchase real estate trust
beneficiary rights

January 31, 2014

3,500,000

3,500,000

0.757
*5

June 17, 2014

3,000,000

3,000,000

0.6785*5June 17, 2022

BulletRedeem investment
corporation bonds

Floating interest rate
*5

March 25, 2015

3,500,000

3,500,000

0.46825*5

March 27, 2023

BulletPurchase real estate trust
beneficiary rights

Floating interest rate
*5

August 31, 2011

3,000,000

3,000,000

1.0475

August 31, 2018

BulletRepay existing loans

Fixed interest rate

June 15, 2012

2,500,000

2,500,000

0.66

June 15, 2017

BulletPurchase real estate

Fixed interest rate
Fixed interest rate

Floating interest rate
*5

June 15, 2012

2,500,000

The Chugoku Bank,
Limited1,000,000

1,000,000

The Daishi Bank, Ltd.

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

The Shinkumi
Federation Bank

1,000,000

1,000,000

The Toho Bank, Ltd.

1,000,000

1,000,000

The Tochigi Bank, Ltd.

500,000

500,000

The Fukui Bank,Ltd.
The Gunma Bank, Ltd.

38

2,500,000

August 10, 2015

Japan Real Estate Investment Corporation

1.2725June 15, 2022

BulletRedeem investment
corporation bonds

0.3925*5August 10, 2022

BulletRepay existing
short-term loans

Drawdown Date

Balance at
Beginning ofCurrent Period(¥ thousand)

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

Repayment
Date

Repayment
MethodUse of Proceeds

June 15, 2012

2,500,000

2,500,000

0.66

June 15, 2017

BulletRedeem investment
corporation bonds

Fixed interest rate

March 24, 2021

BulletRepay existing loans

Floating interest rate
*5

Segment
LenderMarch 24, 2014

2,000,000

2,000,000

0.6035*5October 1, 2014

1,000,000

1,000,000

0.46525*5October 1, 2021

BulletPurchase real estate

Floating interest rate
*5

January 15, 2016—

1,000,000

0.265
*5

January 16, 2023

BulletRepay existing loans

Floating interest rate
*5

The Iyo Bank, Ltd.

The Chugoku Bank,
LimitedTaiyo Life Insurance
Company
Sumitomo Mitsui
Banking Corporation

The Hachijuni
Bank, Ltd.

Notes

March 25, 2013

2,000,000

2,000,000

0.45

March 26, 2018

BulletRepay existing loans

Fixed interest rate

October 1, 2014

1,000,000

1,000,000

0.4725*5October 1, 2021

BulletPurchase real estate

Floating interest rate
*5

June 15, 2015

3,000,000

3,000,000

0.61175*5June 15, 2023

BulletRepay existing loans

Floating interest rate
*5

March 30, 2011

2,000,000

2,000,000

1.39625

March 30, 2018

BulletRepay existing loans

Fixed interest rate

October 1, 2014

2,000,000

2,000,000

0.7825October 1, 2024

BulletPurchase real estate

Fixed interest rate

May 29, 2015

1,500,000

1,500,000

0.7375

May 29, 2025

BulletRepay existing loans

Fixed interest rate

November 15, 2011

3,000,000

3,000,000

0.98375

November 15, 2018

BulletPurchase real estate

Fixed interest rate

January 7, 2013

2,000,000

2,000,000

0.98

January 7, 2022

BulletPurchase real estate

Fixed interest rate

June 15, 2012

1,000,000

1,000,000

0.66

June 15, 2017

BulletPurchase real estate

Fixed interest rate

December 20, 2012

1,000,000

1,000,000

0.45625

December 20, 2017

BulletRepay existing loans

Fixed interest rateLong-term loans

March 25, 2013

1,000,000

1,000,000

0.45

March 26, 2018

BulletRepay existing loans

Fixed interest rate

January 15, 2016—

1,000,000

0.265
*5

January 16, 2023

BulletRepay existing loans

Floating interest rate
*5

The Hiroshima
Bank, Ltd.

October 1, 2014

3,000,000

3,000,000

0.31575*5October 1, 2019

BulletPurchase real estate

Floating interest rate
*5

Mizuho Trust &Banking Co., Ltd.

March 2, 2015

3,000,000

3,000,000

0.5585*5March 3, 2025

BulletPurchase real estate trust
beneficiary rights

Floating interest rate
*5

March 1, 2011

2,000,000

—

1.255

March 1, 2017

BulletPurchase real estate trust
beneficiary rights

Fixed interest rate

March 25, 2013

3,000,000

3,000,000

0.45

March 26, 2018

BulletRepay existing loans

Fixed interest rate

October 29, 2012

2,000,000

2,000,000

0.8

October 29, 2020

BulletRepay existing loans

Fixed interest rate

March 25, 2013

1,000,000

1,000,000

0.945

March 24, 2023

BulletRepay existing loans

Fixed interest rate

March 24, 2014

1,000,000

1,000,000

0.4105*5March 25, 2019

BulletRepay existing loans

Floating interest rate
*5

November 17, 2014

1,000,000

1,000,000

0.316
*5

November 18, 2019

BulletRepay existing loans

Floating interest rate
*5

Nippon Life
Insurance Company

March 1, 2011

2,000,000

2,000,000

1.465

March 1, 2018

BulletPurchase real estate trust
beneficiary rights

Fixed interest rate

The Nishi-Nippon
City Bank, Ltd.

June 17, 2014

2,000,000

2,000,000

0.621
*5

December 17, 2021

BulletRedeem investment
corporation bonds

Floating interest rate
*5

The Yamanashi Chuo
Bank, Ltd.

December 15, 2014

2,000,000

2,000,000

0.266
*5

December 16, 2019

BulletRepay existing loans

Floating interest rate
*5

The Daishi Bank, Ltd.

January 7, 2016—

1,500,000

0.2802*5

January 10, 2023

BulletRepay existing
short-term loans

Floating interest rate
*5

The Ashikaga
Bank, Ltd.

January 7, 2013

1,000,000

1,000,000

0.49125

January 9, 2018

BulletPurchase real estate

Fixed interest rate

The Joyo Bank, Ltd.

January 7, 2013

1,000,000

1,000,000

0.49125

January 9, 2018

BulletPurchase real estate

Fixed interest rate

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

5,000,000—

1.54375

March 30, 2017

BulletRepay existing loans

Fixed interest rate

284,650,000

276,300,000

Resona Bank, Limited
The Yamaguchi
Bank, Ltd.

The Gunma Bank, Ltd.

Total

*1. The average for floating interest rates is recorded as the weighted average during the period. The average is rounded off to the fifth decimal place.
*2. As of March 24, 2016, the entire amount of ¥1,500,000 thousand has been repaid before the original maturity.
*3. As of March 1, 2016, ¥1,000,000 thousand has been repaid before the original maturity.
*4. ¥50,000 thousand is repaid every six months respectively. ¥1,350,000 thousand is scheduled to be repaid on the final principal repayment date.
*5.	In order to hedge the risk of interest rate fluctuations, floating interest rates were swapped to fixed rates. Accordingly, the weighted average for interest rates during the period is calculated taking the effect of this swap into consideration.
*6.	In order to hedge the risk of exchange rate and interest rate fluctuations related to foreign currency-denominated loans, the Company conducted an interest-rate and currency swap transaction, which substantially secured exchange and interest rates. Accordingly, the weighted average for interest rates during the period is calculated taking theeffect of this interest-rate and currency swap into consideration.
Note: All floating interest rate loans and fixed interest rate loans procured are unsecured, unguaranteed, and unsubordinated.

Japan Real Estate Investment Corporation

39

7. Investment Corporation Bonds including Current Portion of Investment Corporation Bonds
Outstanding investment corporation bonds as of March 31, 2016 are as follows.

Date of Issue

Balance at
Beginning ofCurrent Period(¥ thousand)

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

Repayment Period

Repayment
MethodUse ofProceeds

Notes

September 29, 2005

10,000,000

10,000,0002.56

September 29, 2025

Bullet*1*2

August 30, 2013

10,000,000

10,000,000

0.497

August 30, 2018

Bullet*1*2

20,000,000

20,000,000

Securities

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

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

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

9. Income Taxes
The Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation Measures
Act, an investment corporation is allowed to deduct dividends of accounting profits, or dividend distributions, paid to unitholders from its
taxable income if certain tax requirements are satisfied. Such tax requirements include dividend distributions in excess of 90% of its earnings available for dividends for the fiscal period as stipulated by Article 67-15 of the Special Taxation Measures Act. The significant
components of deferred tax assets and liabilities as of September 30, 2015 and March 31, 2016 were as follows:
Thousands of yen

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

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

40

Japan Real Estate Investment Corporation

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

953

972

47,736

51,542104,064

102,509

152,754

155,025(57,032)(61,631)

95,72293,394

94,76892,421

116,161

167,220

210,929

259,642

115,207

166,247

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

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

For the period from October 1, 2015
to March 31, 201635.36%

35.36%(35.32%)(34.76%)

0.06%

0.06%

—

(0.03%)

0.01%(0.05%)

0.11%

0.58%

For the adjustments to deferred tax assets and liabilities due to changes in income tax rates, the “Act for Partial Amendment of the Income
Tax Act, etc.” (Act No.15 of 2016) and the “Act for Partial Amendment, etc. of the Local Tax Act, etc.” (Act No.13 of 2016) were enacted
in the Japanese Diet session on March 29, 2016, and as a result, corporate income tax rates, etc. will change for periods beginning on orafter April 1, 2016 and again on or after April 1, 2018.
Accordingly, the effective statutory tax rates used to measure the Company’s deferred tax assets and liabilities were changed to 34.81%
for temporary differences expected to be recovered or settled from the September 2016 period to the March 2018 period, and to 34.60%
for temporary differences expected to be recovered or settled for the September 2018 period and thereafter. The effects of these changes
were immaterial.

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

Japan Real Estate Investment Corporation

41

Transactions with related parties defined under the ITA are listed below.
In addition to controlling unitholders, major unitholders, subsidiary corporations, subsidiary companies of controlling unitholders, andofficers and their close relatives, the definition of a “related party” under the ITA also includes the asset management company and its
interested parties (parent and subsidiary corporations, specified individual shareholders, and major shareholders of the asset managementcompany defined as interested parties under Article 201 of the ITA and Article 123 of the enforcement order of the ITA), as well as theasset custody company.
For the period from April 1, 2015 to September 30, 2015 (Unaudited)
Balance at
End of Period(¥ thousand)Type of Relationship

Name ofTransaction Partner

Type of Business

Percentage ofUnits Held

Transaction Details

Interested party

Mitsubishi EstateCo., Ltd.

Real estate

1.307%

Security deposit increase

Interested party

Mitsubishi Jisho­Property Management
Co., Ltd.

Real estate­management—

Property management ­expenses

1,937,719——

Interested party

Shiodome ­Investment LLC

Real estate—

Real estate purchase10,100,000——

Asset custody­company

Sumitomo Mitsui
Trust Bank, Limited

Short-term loans repayment

3,800,000—

Short-term loans
payable3,700,000

Bank

Long-term loans borrowing

11,800,000

Long-term loans
payable35,300,000

Transaction Amount(¥ thousand)Accounting Item

Rent revenue
Security deposit return

Transaction Amount(¥ thousand)

11,104,867

Accounting Item—

218,048 Deposits received
from tenants
170,772—
18,572,963

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

For the period from October 1, 2015 to March 31, 2016 (Unaudited)Type of Relationship

Name ofTransaction Partner

Type of Business

Percentage ofUnits Held

Transaction Details

Interested party

Mitsubishi EstateCo., Ltd.

Real estate

1.307%

Security deposit increase

Interested party

Mitsubishi Jisho
Property Management
Co., Ltd.

Real estate
management—

Property management
expenses

Asset custodycompany

Sumitomo Mitsui
Trust Bank, Limited

Bank

—

—

Rent revenue
Security deposit return

11,271,326—

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

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

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

11. Segment Information
For the six months ended September 30, 2015 and March 31, 2016
Since the Company has been engaged in real estate leasing business using a single segment, segment information has been omitted.
Information on products and services

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

42Japan Real Estate Investment Corporation

Information on geographic area

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

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

12. Asset Retirement Obligations
For the six months ended September 30, 2015 and March 31, 2016
Asset retirement obligations reported on balance sheets

The Company acquired Osaki Front Tower on February 1, 2011 under the term leasehold for business use agreement which, at the expiryof the leasehold, obligates the Company to restore the leased land to its original state. At the inception of a lease with such an obligation,
the Company recognized an asset retirement obligation and a corresponding capital asset in an amount equal to the present value of theestimated demolition cost required for the removal of the properties located on the leased land. The present value is calculated using
2.015% as the discount rate over 42 years, which is the term of the leasehold.
Change in the amount of the asset retirement obligations as of September 30, 2015 and March 31, 2016 consisted of the following:Thousands of yen

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

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

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

318,867

322,080

—

—

3,212

3,244

322,080

325,325

Asset retirement obligations other than those reported on balance sheets

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

Japan Real Estate Investment Corporation

43

13. Investment and Rental Property
For the six months ended September 30, 2015 and March 31, 2016
The Company owns primarily a portfolio of office properties in Tokyo and other prefectures in order to gain rental revenue from them.
The book values on balance sheets as of September 30, 2015 and March 31, 2016 and the fair values as of September 30, 2015 andMarch 31, 2016 are as follows:
Thousands of yen

Book value

Fair value

As of March 31, 2015

Change during period (*1)

As of September 30, 2015

As of September 30, 2015

829,449,219

39,584,842

869,034,061

977,666,000

Thousands of yen

Book value

Fair value

As of September 30, 2015

Change during period (*2)

As of March 31, 2016

As of March 31, 2016

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

861,360,496

996,828,000

Notes: 1. Book value on balance sheets means the acquisition cost less accumulated depreciation.
2. Significant changes
		 (*1)	As for increases/decreases for the period, the major reasons for the increase were the acquisitions of the Umeda Square Building (¥15,677,942 thousand) and theAER (¥18,889,617 thousand), as well as an additional 5.0% co-ownership interest of trust beneficiary right of real estate pertaining to the Shiodome Building(¥10,173,888 thousand). The major reason for the decrease was depreciation.
		 (*2)	As for increases/decreases for the period, the major reasons for the decrease were the sale of the Hirokoji Sakae Building (¥1,681,178 thousand) and the Kyoto Shijo
Kawaramachi Building (¥2,487,040 thousand), as well as depreciation.
3. Fair values as of September 30, 2015 and March 31, 2016 are defined as the appraised values provided by an external qualified professional appraiser.

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

14. Per Unit Information
The following table summarizes information about net assets per unit and profit per unit at September 30, 2015 and March 31, 2016 andfor the periods then ended, respectively:
Yen

Net assets at period end per unit
Profit per unit

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

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

358,026

358,238

8,015

8,212

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

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

44

Japan Real Estate Investment Corporation

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

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

10,476,112—
10,476,112
1,307,008 units

10,753,298—
10,753,298
1,309,310 units15. Breakdown of Property-Related Revenues and Expenses
For the six months ended September 30, 2015 and March 31, 2016
Thousands of yen

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

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

Property-Related Revenues

29,980,892

30,428,493

Rent revenues

29,886,578

30,290,297  Rental revenues

23,246,606

23,683,413   Common service charges

3,647,677

3,712,032  Parking revenues   Other rental revenues
Other lease business revenues

790,063799,252

2,202,231

2,095,599

94,314

138,195  Cancellation charges

81,45538,001   Other miscellaneous revenues

12,858100,194

Property-Related Expenses

16,642,681

16,941,905   Property management expenses

3,549,250

3,767,790  Utilities expenses

2,869,139

2,543,078   Property and other taxes

2,766,013

2,789,628  Casualty insurance

58,02058,655  Repairing expenses

881,171

1,101,189

6,332,545

6,487,255  Depreciation   Other rental expenses

186,539

194,306

Property-Related Profits

13,338,211

13,486,587

16. Breakdown of Gain on Sales of Real Estate Properties
For the period from April 1, 2015 to September 30, 2015
“Not applicable”
For the period from October 1, 2015 to March 31, 2016
Thousands of yen

Hirokoji Sakae Building
Revenue from sale of real estate property

1,867,031

Cost of real estate property sold

1,681,178

Other sales expenses

35,495Gain on sale of real estate property

150,357

Revenue from sale of real estate property

2,516,000

Cost of real estate property sold2,487,040

Kyoto Shijo Kawaramachi Building

Other sales expenses

17,938Gain on sale of real estate property

11,020Japan Real Estate Investment Corporation

45

17. Changes in Unitholders’ Equity
For the six months ended September 30, 2015 and March 31, 2016
Total number of investment units issuable
and number of units outstanding

As of September 30, 2015

As of March 31, 2016

Total number of investment units issuable

4,000,000 units

4,000,000 units

Number of units outstanding

1,309,310 units

1,309,310 units

18. Supplemental Cash Flow Information
Cash and cash equivalents

The following table represents a reconciliation of cash and cash equivalents at September 30, 2015 and March 31, 2016:
Thousands of yen

As of September 30, 2015

As of March 31, 2016

Cash and deposits

20,564,934

19,362,431

Cash and deposits in trust

5,844,989

5,542,352

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

Cash and cash equivalents

21,409,924

24,904,784

19. Leases
1. Leased assets under finance lease transactions that do not transfer ownership of the leased assets to the lessees are capitalized and depreciated by the straight-line method over the lease term with no residual value. Such capitalized leased assets primarily consist of tools,
furniture and fixtures.
2. The Company, as a lessor, owns office buildings under leases and earns rent income. As of September 30, 2015 and March 31, 2016,
the future lease revenues under the non-cancelable operating leases are as follows:
Thousands of yen

As of September 30, 2015

Due within one year

20,567,550

19,934,950

Due after one year

41,020,362

34,247,572

Total

61,587,912

54,182,523

20. Subsequent Events
For the six months ended March 31, 2016
“Not applicable”

46

As of March 31, 2016

Japan Real Estate Investment Corporation

Japan Real Estate Investment Corporation

47

Other Information
1. Risk Factors
The principal risks with respect to investment in JRE are as follows:• any adverse conditions in the Japanese economy could adversely affect JRE;
• JRE may not be able to acquire properties to execute the growth and investment strategy in a manner that is accretive to earnings;• illiquidity in the real estate market may limit the ability to grow or adjust the portfolio;• the past experience of the asset manager (the “AIFM”) in the Japanese real estate market is not an indicator or guarantee of future results;• JRE’s reliance on JRE’s sponsor companies, the AIFM and other third party service providers could have a material adverse effecton 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;

48

Japan Real Estate Investment Corporation• risks related to tax authority disagreement with the AIFM’s interpretations of the Japanese tax laws and regulations;• risks related to being unable to benefit from reductions in certain real estate taxes enjoyed by qualified J-REITs;• risks related to changes in Japanese tax laws; and• risk of dilution as a result of further issuances of units.

2. Information Required under Article 22(2)(d) of the EU Alternative Investment Fund Managers
Directive (AIFMD)(1) ‌Material Changes in Information Listed in Article 23 of AIFMD during the Financial Period Covered by the Report(Six-month fiscal period ended March 31, 2016)
In the section under the heading “The identity of the AIFM, AIF’s depository, auditor and any other service providers and a descriptionof their duties and the investors’ rights thereto” in Article 23 (1) (d), we added a note that Sumitomo Mitsui Trust Bank, as General
Administrator and Transfer Agent, was replaced with Mitsubishi UFJ Trust and Banking Corporation pursuant to anticipated agreements executed in June 2016. Please note that such replacement will be made effective in two stages, the first in June 2016 and thesecond in October, 2016.

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

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

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

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

Number of
person(s)remunerated

1

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

Japan Real Estate Investment Corporation

49

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

Remuneration based on compensation rules

33

Remuneration
Total

Fixed

Variable¥315 million¥205 million¥110 million

4. Conflict of Interest

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

50Japan Real Estate Investment Corporation

Corporate Data
As of March 31, 2016

Executives
Executive Director: 	Hiroshi Nakajima
Supervisory Directors: ‌Kenji Kusakabe
Tomohiro Okanoya
Paid-in Capital¥458,016,096,000
Number of Units Outstanding
1,309,310
Number of Unitholders
15,755
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* Sumitomo Mitsui Trust Bank, Limited was replaced with Mitsubishi UFJ Trust andBanking Corporation as of June 14, 2016.

Auditors
Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg.
2-2-3, Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011, Japan
Incorporation
May 11, 2001
Executive Office
Japan Real Estate Investment Corporation
3-3-1, Marunouchi, Chiyoda-ku, Tokyo 100-0005, JapanFor further information, please contact:
Japan Real Estate Asset Management Co., Ltd.
Planning Department
Tel: 81-3-3211-7951
Fax: 81-3-3212-8886
E-mail: j-rea-inquiry@j-rea.co.jp

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

Japan Real Estate Investment Corporation

51

Japan Real Estate Investment Corporation
SEMIANNUAL REPORTMarch 2016

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

Printed in Japan