November 14, 2007
JAPAN REAL ESTATE INVESTMENT CORPORATIONANNOUNCEMENT OF TWELFTH FISCAL PERIOD RESULTS

1. Summary of Financial Results
In the 12th fiscal period (six months ended September 30, 2007), Japan Real Estate Investment Corporation(“JRE”) recorded operating revenues of 17,530 million yen*, up 3.4% from the previous period. Operating
income rose 5.2% to 8,739 million yen. After deducting expenses for interest payments on loans and othercosts, ordinary income increased 5.6% to 7,586 million yen and net income climbed 5.6% to 7,585 million
yen.
JRE’s policy with regard to profit appropriation is to distribute dividends of approximately 100% of
taxable income in order to enjoy the tax benefit available under Article 67-15 of the Special Taxation
Measures Law of Japan applicable to Japanese Real Estate Investment Trusts (J-REITs). For the period
under review, we declared a cash dividend of 18,500 yen per unit.
Note: *Includes gain on the sale of a property of 397 million yen
2. Results of Operations(1) Property Management and Acquisition/Sales (Strengthening Portfolio Quality)
During the period under review, despite concerns regarding the impact of the subprime loan crisisin the United States on global financial and capital markets, the Japanese economy continued toshow a favorable trend. Factors that contributed to the economy’s soundness included strong capital
expenditure attributable to continued improvements in corporate sector performance and increased
demand. Furthermore, improvements in the employment environment have sustained thecorporate sector’s healthy conditions.
As a result of favorable corporate performance, the market for leased office space is seeing
an increase in demand, which is leading to improved vacancy rates throughout the country.
Demand is especially robust in central Tokyo, reflected in noticeably falling vacancy rates andclimbing rents for new tenants.
Under these circumstances, JRE was able to maintain a high occupancy rate of 98.7% (asof September 30, 2007) by (1) acquiring top-level properties and upgrading building facilities
through optimal refurbishment in order to maintain and improve functions; and (2) developing
finely tuned building management policies from the perspective of tenants, while undertaking
vigorous activities to attract new tenants. In light of the recovery in the market for leased officespace in central Tokyo, JRE has also undertaken concrete initiatives aimed at further increasing
revenues and raising rent levels.
Regarding the property market, property values remained on an upward trend as a resultof expanding demand for office properties amid the continuing economic recovery, as well as
increased investments in real estate not only by J-REITs but also by such entities as private funds,
pension funds and institutional investors. The official land price announced in September 2007
revealed that robust demand for office space and inflow of investment funds have positively
affected land prices nationwide. In more specific terms, the national average price of commercial
land climbed for the first time in 16 years. In particular, certain districts under redevelopment inJapan’s three major metropolitan areas showed significant increases in value ranging from the upper
20% range to approximately 40%, compared with the previous year.
In this sort of market environment, JRE undertook the acquisition of a competitive
property as well as the following property transfer as part of revisions aimed at further
strengthening the quality of its portfolio. As a result, JRE’s properties as of September 30, 2007
consisted of 50 office buildings with a total acquisition amount of 446,940 million yen. Total

leasable space was 406,605 m2 (approximately 122,998 tsubo), with a total of 879 tenants.
Name of Property
Kobe Itomachi Building

Location
Kobe City, Hyogo
Prefecture

Type of Specified Asset
Trust beneficiary right in trustof real estateTransfer Price
1,770 million yen(2) Finance Activities
JRE issued Japan Real Estate Investment Corporation Fifth and Sixth Unsecured Bonds on June 18,
2007, with the amount of each issue totaling 10,000 million yen and 15,000 million yen, respectively.
Proceeds from the bond issues were used for the June 21, 2007 redemption of the Japan Real
Estate Investment Corporation First Unsecured Bond, with the amount of the issue having totaled
25,000 million yen.
Name of the Investment Corporation
Bond
Total Amount of the Bond Issue
Date of the Bond Issue
Term

Japan Real Estate Investment Corporation Fifth Unsecured Bond
(No finance-related special covenants, such as negative pledge)
10,000 million yen
June 18, 2007
5 years

Interest Rate

1.67% (annual)

Subscription Method

Public offering

Secured Mortgage or Guarantee
Name of the Investment Corporation
Bond
Total Amount of the Bond Issue
Date of the Bond Issue
Term

There is no secured mortgage or guarantee on the bond.
Japan Real Estate Investment Corporation Sixth Unsecured Bond
(No finance-related special covenants, such as negative pledge)
15,000 million yen
June 18, 2007
7 years

Interest Rate

1.91% (annual)

Subscription Method

Public offering

Secured Mortgage or Guarantee

There is no secured mortgage or guarantee on the bond.

JRE has also taken out a long-term loan of 6,500 million yen to finance the acquisition of
the 8•3 Square Kita Building. As a result of these above, along with refinancing of existing
long-term loans, JRE had total interest-bearing debt of 144,500 million yen on September 30, 2007,
consisting of 89,500 million yen in long-term loans and outstanding investment corporation bonds
with a par value of 55,000 million yen, including a 10,000 million yen current portion of investment
corporation bonds. (JRE had no short-term loans as of the end of the period under review.)
As a result of the aforementioned finance activities, JRE’s long-term, fixed-interest debt
ratio (ratio of long-term, fixed-interest debt including current portion of long-term loans andinvestment corporation bonds to total interest-bearing debt) stood at 100% as of September 30,
2007.
The LTV ratio (the ratio of interest-bearing debt to total assets) stood at 32.1% as of
September 30, 2007, compared with 31.5% at the end of the previous fiscal period. Relative to its
targeted LTV ratio of the 30% level, JRE has been able to maintain a sound and disciplined
financial standing.
JRE’s credit ratings as of September 30, 2007 are as follows.
Rating Agency
Standard & Poor’s Ratings Services
Moody’s Investors Services, Inc.
Rating and Investment Information, Inc.

Credit Rating
Long-term: A+; Short-term: A-1; Outlook: Positive
Issuer rating: A1; Outlook: Positive
Issuer rating: AA; Outlook: Stable3. Outlook(1) Operating Environment
Although it will be necessary to pay close attention to the impact of the U.S. economy on theJapanese market, as well as the impact of rising interest rates and increasing crude oil and raw
material prices on corporate earnings performance and consumer confidence and spending, thestable, favorable turnabout in the Japanese economy centered on the corporate sector is expected tocontinue for the foreseeable future.
In the market for leased office space, both vacancy rates and rent levels are demonstrating
favorable trends, supported by the active demand for office space spurred by the robust corporate
performance.
On the other hand, when selecting buildings, tenants in this market are making increasingly
stringent demands ranging from location, building quality, and features to building management andvalue-added services. We anticipate that it will become even more important for suppliers to provide
services that correctly and promptly reflect the needs of tenants and to deliver added value thatdifferentiates their buildings from the competition.
In the real estate market, JRE expects active real estate investment to be continued by
J-REITs, in addition to such entities as private funds, pension funds and institutional investors.
Accordingly, we expect that competition to acquire prime properties will become more intense.
a. Property Management
In accordance with the aforementioned, while business conditions in the market for leased
office space are trending toward full recovery, JRE adheres to the following management
policies in order to maintain and improve earnings.
(i) Strengthen relationship of trust with existing tenants and raise rent levels
As of September 30, 2007, JRE had contracts with 12 property management companies.
Most of these companies were already managing their respective buildings before JRE
acquired them, and so have built relationships of trust with their tenants. JRE will work tofurther strengthen these relationships by anticipating tenants’ needs and providing tailoredservices in order to increase tenant satisfaction, and subsequently uncover additional
demand for office space and raise rent levels. In addition, we are endeavoring to raise rent
levels for those tenants whose rents are significantly below market value.
(ii) Fill vacancies promptly
In cooperation with the property management companies mentioned above, JRE actively
seeks the most appropriate tenants for each property, based on location and features, inorder to fill current and anticipated vacancies as rapidly as possible. We are also working to
uncover additional demand for office floor space among our existing tenants.
(iii) Stabilize revenues
With the aim of stabilizing revenues, JRE is endeavoring to apply fixed- and long-term
leasing agreements with its large-scale tenants.
(iv) Reduce management costs
JRE has introduced sound competitive principles for its multiple property managementcompanies to follow. These companies are also revamping their management systems andcost structures on an ongoing basis.
b. Property Acquisitions and Sales
JRE has adopted the following policies for acquiring properties.

(i) To access important information quickly, JRE is enhancing its property information
channels, including strengthening its relationships with building owners with whom it has
previously conducted business. We are also working to develop new channels.
(ii) In its acquisition activities, JRE will continue to meticulously monitor and examine
economic, physical, and legal factors, including rights-related issues, while also taking
business conditions into account when selecting properties. With regard to the structureof buildings, we require buildings to meet or exceed new earthquake-resistance standards
and are targeting properties capable of maintaining a competitive edge in terms of the
facilities they offer over the medium to long term.
(iii) In accordance with its acquisition policies, JRE’s general target for regional diversity ofproperties is for 70% or more of properties to be located within the Tokyo metropolitanarea, with the remaining 30% or less located in other regional urban centers.
Under these policies, JRE will continue to acquire highly competitive properties while
also considering suitable timing for the sales of properties in order to further strengthen thequality of its portfolio with an optimum property mix.
Concerning the financing of property acquisitions, JRE flexibly selects a variety offinancial instruments, including the issue of investment corporation bonds, while monitoring
trends in financial markets. When procuring a loan, our policy is to minimize funding costs bynegotiating with several qualified institutional investors before settling on a lender.
(2) Performance Forecasts
For the 13th fiscal period (October 1, 2007 to March 31, 2008), JRE forecasts operating revenues of
25,430 million yen, ordinary income of 12,190 million yen and net income of 12,190 million yen.
We plan to declare a dividend of 29,730 yen per unit.
Our forecasts for the 14th fiscal period (April 1, 2008 to September 30, 2008) are operating
revenues of 18,050 million yen, ordinary income of 7,460 million yen and net income of 7,460
million yen. We plan to declare a dividend of 18,210 yen per unit.
The above estimates for the 13th and 14th periods are based on assumptions of theportfolio consisting of 50 properties as of September 30, 2007, and the acquisition of the Harumi
Center Building from Harumi Front Special Purpose Company (“Harumi Front TMK*1”)
scheduled on December 18, 2007. Estimates are subject to change in accordance with theacquisition or sale of other properties. The estimates are also based on the 410,000 investment units
outstanding as of September 30, 2007, and on the assumptions that (1) JRE’s operating revenues forthe 13th fiscal period will include 7,800 million yen as dividends for its holding of preferred capital
contribution certificates issued by Harumi Front TMK, from which it will acquire the Harumi
Center Building, as noted above; (2) JRE’s operating expenses will include asset management fees
(term and incentive fees) payable to the Asset Management Company for the 13th fiscal period
totaling 2,530 million yen with an increased portion in relation to the aforementioned dividends tobe received; and (3) the amount of dividends to be paid to JRE will be approved by a general
meeting of members of Harumi Front TMK scheduled to be held in March 2008, etc.
After September 30, 2007, JRE plans to acquire the office building described below.
Harumi Center Building
Outline of the acquisition
Asset to be acquired:
Scheduled acquisition date:
Acquisition price:
Seller:Real property
December 18, 2007
26,800 million yen
Harumi Front TMK*1

Outline of the asset
Location (Address):

2-5-24 Harumi, Chuo-ku, Tokyo

Usage:Land area:
Building area:
Structure:
Completion date:
Type of ownership:
Total number of tenants:
Total leasable space:
Total leased space:Occupancy rate:

Office, shop
4,664.63 m2
26,447.27 m2
Steel-framed structure, flat roof
Above ground: 10 floors
November 2006
(Land) Ownership(Building) Ownership
7*2
20,812 m2 *2
20,425 m2 *2
98.1%*2

Notes:*1
The seller, Harumi Front TMK, is a special purpose company defined under the Act on
Securitization of Assets. JRE holds approximately 49.9% of preferred capital contribution
certificates issued by this special purpose company.
*2
Total number of tenants, total leasable space, total leased space and occupancy rate areprojections for the office building as of the scheduled acquisition date (December 18, 2007)
and based on data provided by the seller.

Income Statement for the 12th Period(In millions of yen; Dividend per Unit in yen)Item

12th Period-end

11th Period-end(Sep 30, 2007)(Mar 31, 2007)

Operating Revenues
Rental revenues
Non-rental revenues
Gain on transfer of properties（*1）
Property-related Expenses（*2）
Property management expenses
Utilities expenses
Property and other taxes
Casualty insurance
Repairing expenses
Other rental expenses
NOI（*3）
Depreciation
Property-related Profits and Losses（*3）
Gross Operating Income
Administrative Expenses
Asset management fees
Other administrative expenses
Operating Income
Non-operating Revenues
Interest income
Other non-operating revenues
Non-operating Expenses
Interest expense
Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance costs
Other non-operating expenses
Ordinary Income
Income before income taxes
Income taxes
Net Income
Retained Earnings at End of Period

17,53017,079
53
397
5,059
1,875
1,177
1,346
37
580
42
12,073
2,835
9,237
9,635
896
661
234
8,739
32
29
2
1,185
695
413
16
60
7,586
7,586
1
7,585
7,585

16,96016,397
103
459
5,200
1,815
1,133
1,241
38
916
54
11,300
2,717
8,582
9,042
737
452
284
8,304
37
36
1
1,157
666
376
9
104
7,184
7,184
0
7,183
7,183

FFO（*4）

10,022

Dividend per Unit

18,500*1 Gain on sale of properties＋Gain on exchange of properties*2 Excluding Depreciation*3 Excluding Gain on transfer of properties*4 Net income＋Depreciation - Gain on transfer of properties

ChangeChange (%)

570

3.4%

-140

- 2.7%

772

6.8%

654
593
158

7.6%
6.6%
21.5%

434
-4

5.2%
- 12.8%

28

2.4%

401
401

5.6%
5.6%

401

5.6%

9,441

580

6.2%

17,521979

5.6%

Balance Sheet for the 12th Period(In millions of yen)Item

12th Period-end 11th Period-end

ChangeReason for change(Sep 30, 2007)(Mar 31, 2007)

16,41913,877

2,542

326

1,764

-1,437

16,746

15,642

1,104

Buildings (including those held in trust)

149,020

144,441

4,578

Structures (including those held in trust)

1,695

1,639

55

Machinery and equipment(including that held in trust)

2,291

2,216

75

Land (including that held in trust)

296,188

293,773

2,414

Accumulated depreciation-20,763-18,089-2,674

Total Property and Equipment

428,431423,981

4,449

3,032

3,032

0

3,032

3,032

0

1,272

1,272

0

25

24

1

1,298

1,297

1

432,761

428,310

4,450

134

19

114 5th and 6th investment corporation bonds issue

134

19

114

449,643

443,973

5,670

Current Assets
Cash and entrusted cash
Other current assets
Total Current Assets
Fixed Assets
Property and Equipment

Increased due to acquisition ofproperty and capital expenditure, anddecreased due to transfer of property

Intangible Assets
Leasehold rights, etc.
(including those held in trust)
Total Intangible Assets
Investments and Other Assets
Investment securities
Long-term prepaid expenses, etc.
Total Investments and Other Assets
Total Fixed Assets
Deferred Assets
Deferred investment corporation bondissuance costs
Total Deferred Assets
Total Assets

(In millions of yen)Item

12th Period-end 11th Period-end(Sep 30, 2007)(Mar 31, 2007)

Short-term loan00Current portion of long-term loans

ChangeReason for change

Liabilities
Current Liabilities

0

0

6,000

-6,000 Decreased due to refinancing

Current portion of investment corporation
bonds

10,00025,000-15,000 bonds and decreased due to redemption

Rent received in advance

2,195

2,102

92

Other current liabilities

3,107

2,927

180

Total Current Liabilities

15,302

36,029-20,727

Investment corporation bonds

45,00030,00015,000 bonds and increased due to new issuanceLong-term loans

89,50079,00010,500 Increased due to new borrowings and refinancing

Deposits received from tenants

27,571

27,075495 and decreased due to transfer of property

Other long-term liabilities

0

0

0

Total Long-term Liabilities

162,071

136,075

25,995

177,374

172,105

5,268

Unitholders' Capital

264,683

264,6830Retained Earnings

7,585

7,183

401

Total Net Assets

272,269

271,867

401

Total Liabilities and Net Assets

449,643

443,973

5,670

Increased due to decrease of remaining periods ofLong-term Liabilities

Total Liabilities

Decreased due to decrease of remaining periods of

Increased due to acquisition of property

Net Assets

Property Data
（In millions of yen）

Name

12th Period
Appraisal
Value(Sep 30, 07)

11th Period
Appraisal
Value(Mar 31, 07)

Genki Medical Plaza

6,300

6,220

80

5,136

1,163

5,000

Kitanomaru Square

85,60083,9001,700

80,897

4,702

81,555

MD Kanda Bldg.

11,400

10,200

1,200

9,153

2,246

9,520

Kandabashi Park Bldg.

6,310

5,600

710

4,626

1,683

4,810

Area

ChiyodaChuo

MinatoTokyo 23 Wards
Shinjuku

Shinagawa
Ota

ShibuyaNakanoToshima

12th Period
Book Value

Amount ofDifference(Sep 30, 07)

12th Period
Appraisal
Value-Book
Value

Acquisition
Price

Nibancho Garden

17,60016,4001,200

14,375

3,224

14,700Mitsubishi UFJ Trust and Banking Bldg.

46,50044,7001,800

30,64215,85744,700Burex Kojimachi Bldg.

7,040

6,930

110

6,869

170

7,000

Sanno Grand Bldg.

28,80026,8002,000

21,721

7,078

20,9007,200

Yurakucho Denki Bldg.

8,240

7,980

260

7,669

570

Kodenmacho Shin-Nihonbashi Bldg.

3,890

3,430

460

2,891

998

3,173

Burex Kyobashi Bldg.

7,050

6,610

440

5,099

1,950

5,250

Ginza Sanwa Bldg.

17,80017,500300

17,064735

16,830Ryoshin Ginza East Mirror Bldg.

4,980

4,790

190

5,399

-419

5,353

Aoyama Crystal Bldg.

9,150

8,900

250

7,568

1,581

7,680

Shiba 2Chome Daimon Bldg.

7,510

6,990

520

4,936

2,573

4,859

Cosmo Kanasugibashi Bldg.

3,590

3,560

30

2,589

1,000

2,808

Shinwa Bldg.

9,060

8,450

610

7,788

1,271

7,830

Tokyo Opera City Bldg.

11,90011,600

300

8,969

2,930

9,350

Takanawadai Bldg.

2,840

2,780

60

2,570

269

2,738

Higashi-Gotanda 1Chome Bldg.

7,050

6,720

330

5,315

1,734

5,500

Omori-Eki Higashiguchi Bldg.

5,720

5,520

200

4,600

1,119

5,123

Nippon Brunswick Bldg.

9,030

8,480

550

6,715

2,314

6,670

Yoyogi 1Chome Bldg.

13,00011,800

1,200

8,348

4,651

8,700

da Vinci Harajuku

6,420

6,090

330

4,946

1,473

4,885

Jingumae Media Square Bldg.

15,60015,300300

12,0403,559

12,200

Shibuya Cross Tower

51,10045,8005,300

38,414

12,68534,600Ebisu Neonato

5,620

5,520

100

3,866

1,753

4,100

Harmony Tower

13,60012,700

900

8,561

5,038

8,500

Otsuka Higashi-Ikebukuro Bldg.

3,920

3,500

420

3,390

529

3,541

Ikebukuro 2Chome Bldg.

1,630

1,560

70

1,635

-5

1,728

Ikebukuro YS Bldg.

5,630

5,570

60

4,669

960

4,500
3,300

Hachioji City Hachioji First Square

3,690

3,390

300

3,188

501

Saitama City Saitama Urawa Bldg.

2,720

2,550

170

2,423

296

2,574

Kawasaki City Kawasaki Isago Bldg.

3,360

3,360

0

2,938

421

3,375

Sendai City

Jozenji Park Bldg.

1,130

1,070

60

1,024

105

1,000

Sendai Honcho Honma Bldg.

3,690

3,600

90

2,881

808

3,174
4,580

Kanazawa City Kanazawa Park Bldg.

6,590

6,300

290

4,476

2,113

Nishiki Park Bldg.

5,390

5,210

180

5,179

210

5,150

Hirokoji Sakae Bldg.

1,730

1,680

50

1,710

19

1,680

Nagoya Hirokoji Bldg.

16,00015,900100

14,072

1,927

14,533

Nagoya Misono Bldg.

1,940

1,890

50

1,629

310

1,865

Kyoto City Kyoto Shijo Kawaramachi Bldg.

2,350

2,140

210

2,877

-527

2,650

Sakaisujihonmachi Bldg.

4,800

4,700

100

3,975

824

4,164

Midosuji Daiwa Bldg.

Nagoya City
Other Areas

Osaka City

18,90016,8002,100

13,616

5,283

14,314

Okayama City Lit City Bldg.

5,550

5,400

150

4,516

1,033

4,650

Hiroshima City NHK Hiroshima Broadcasting Center Bldg.

1,790

1,780

10

1,253

536

1,320

Tosei Tenjin Bldg.

1,530

1,510

20

1,388

141

1,550

Fukuoka City Tenjin Crystal Bldg.

4,980

4,970

10

4,877

102

5,000

Hinode Tenjin Bldg.

3,870

3,640

230

3,538

331

3,657

523,890497,790

26,100424,045

99,844439,840

7,210

−

−

7,417

-207

7,100

531,100−−

431,463

99,636446,940

Total (49 properties)
Property Acquired after the 11th Period

8・3 Square Kita Bldg.

Total (50 properties)