December 14, 2007
Summary of Earnings Results (Kessan Tanshin)
For the Fiscal Period Ended October 31, 2007
(From May 1, 2007, to October 31, 2007)
Top REIT, Inc. is listed on the Tokyo Stock Exchange with the securities code number 8982.
URL:http://www.top-reit.co.jp/
Representative: Nobuhito Endo, Executive Officer
Asset Management Company: Top REIT Asset Management Co., Ltd.
Representative: Nobuhito Endo, President and Representative Director
Contact: Hiroyuki Hayashi, General Manager, Planning & Administrative Dept.
Tel: +81-3-3243-2181
Scheduled date of submission of Securities Report: January 29, 2008
Scheduled date for commencing dividend payments: January 18, 2008
This summary of earnings results (kessan tanshin) has been prepared in accordance with generally accepted
accounting principles in Japan and Japanese law. Figures are in millions of yen with fractional amounts
omitted except as otherwise noted.

1.

Performance for the Third Fiscal Period (From May 1, 2007, to October 31, 2007)(1) Business Results
Operating
Revenue

Change(%)(in millions of yen with fractional digits omitted, except as otherwise noted)
Operating
ChangeOrdinary
ChangeIncome(%)
Income(%)

Third Fiscal Period

4,715

4.2

2,250

(15.0)

1,848(20.5)

Second Fiscal Period

4,526(16.5)

2,647(18.8)

2,324(14.9)Net Income to
Net Assets
Ratio (%)

Ordinary
Income toTotal Assets
Ratio (%)

Ordinary
Income toOperating
Revenues
Ratio (%)

Net
IncomeNet Income
Per Unit(Yen)

Change(%)

Third Fiscal Period

1,847(20.5)

11,921

2.2

1.3

39.2

Second Fiscal Period

2,323(14.9)

14,992

2.7

1.7

51.4

Note: Net income per unit is rounded to the nearest yen.

(2) Dividend(in millions of yen with fractional digits omitted, except as otherwise noted)
Dividend per
Unit (Yen)(Excluding
Dividend in
Excess ofEarnings)

Total Amount of
Dividends

Dividend in
Excess ofEarnings
per Unit(Yen)

Total Amount of
Dividends in
Excess ofEarnings

Dividend
Payout Ratio(%)

Dividend to
Net Asset
Ratio
(%)

Third Fiscal Period

11,921

1,847

0

－

100.0

2.2

Second Fiscal Period

14,992

2,323

0

－

100.0

2.7

1

(3) Financial Position(in millions of yen with fractional digits omitted, except as otherwise noted)
Net Assets
Net Assets
Net Assets
to Total Assets (%)
per Unit (Yen)

Total Assets
Third Fiscal Period

145,972

84,01957.6

542,060

Second Fiscal Period

146,31784,511

57.8

545,239

Reference: Net Assets
As of October 31, 2007
¥84,019 Million
As of April 30, 2007
¥84,511 Million
Note: Net assets per unit are rounded to the nearest yen.

(4) Cash Flows
Cash Flows fromOperating Activities(in millions of yen with fractional digits omitted, except as otherwise noted)
Cash and Cash
Cash Flows from
Cash Flows from
Equivalents at End of
Investing Activities
Financing Activities
PeriodThird Fiscal Period

5,000

(222)

(2,223)

12,989Second Fiscal Period

2,470(17,783)

15,67010,434

2. Forecast of Earnings Results for the Fourth Fiscal Period (From November 1, 2007, to April 30,
2008)(in millions of yen with fractional digits omitted, except as otherwise noted)
Operating
Revenue

Fourth Fiscal Period

4,661

Change(%)(1.2)

Operating
IncomeChange(%)

2,211

Ordinary
IncomeChange(%)

Net
IncomeChange(%)

Dividend per
Unit (Yen)(Excluding
Dividend in
Excess ofEarnings)

1,721

(6.9)

1,720

(6.9)

11,100(1.7)

Dividend
in ExcessofEarnings
per Unit(Yen)－

Reference: Estimated net income per unit for the fourth fiscal period: ¥11,100

3. Others(1) Changes in Accounting Policies
a. Changes accompanying revisions in accounting standards, etc.
b. Changes aside from a above(2) Number of investment units issued
a. Number of units issued (including treasury units)
As of October 31, 2007 155,000 units
As of April 30, 2007
155,000 units
b. Number of treasury units issued
As of October 31, 2007 0 units
As of April 30, 2007
0 units

No.
No.

Explanation related to the appropriate application of the earnings results forecasts and other items
Certain forward-looking statements contained in this document such as business results forecasts are based on reasonable assumptions judged byand information currently available to Top REIT, and the actual results may differ materially due to various factors. Accordingly, Top REIT does
not guarantee any forecasted dividend amount.
The information above is translated from the Japanese “Kessan Tanshin” report, dated December 14, 2007. Consequently, discrepancies may
exist, and Top REIT, Inc. makes no assurance or warranty with respect to the completeness or accuracy of this English translation. To guarantee
complete and accurate information, please refer to the original report in Japanese.

2

A. Main Developments at Top REIT (Since IPO)
Top REIT, Inc. (hereinafter “Top REIT”) was established on November 2, 2005, in accordance with the Law
Concerning Investment Trusts and Investment Corporations Law (Law No. 198 of 1951. including the amendments to
the Law, hereinafter “ITL”). On March 1, 2006, Top REIT (Securities Code: 8982) listed with 145,500 total units
outstanding on the REIT Section of the Tokyo Stock Exchange (hereinafter “TSE”). Top REIT issued new units (9,500)
by private placement on March 23, 2006. Total number of units outstanding is 155,000 as of October 31, 2007.
Top REIT acquired one retail property, one residential property and one other asset for multiple use in the second fiscal
period in addition to the eight properties acquired during first fiscal period after Top REIT listed on the TSE. Top REIT
holds eleven properties with a total acquisition price of ¥130,846 million.
Top REIT manages its property assets with a strategic focus on two areas: (1) the “skilled management of a diversified
portfolio,” and (2) the “optimal use of our sponsors’ strengths” in order to maximize unitholder value with stable growthin both income and portfolio assets over the medium and long term.
(Note) Unless otherwise stated, fractions less than a unit are omitted as to amounts or rounded as to ratios.
B. Operational Results for the Third Fiscal Period(a) Acquisitions and Transfers of Assets
Top REIT began the period under review with eleven properties (total acquisition price: ¥130,846 million)
under management. Amidst the intensifying competition for the acquisition of properties, Top REIT, through“optimal use of our sponsors’ strengths," has received information on many properties and deliberated overwhether to make acquisitions. Because results of valuations of properties did not match or justify our target
yields, this resulted in foregoing the acquisition of new properties.
As a result, the total acquisition price of our assets under management at the end of the third fiscal period was
unchanged from the second fiscal period at ¥130,846 million.
(Note 1) Sponsor companies are Top REIT Asset Management shareholders, and the parent organizations
that established Top REIT, Inc.
(b) Operation and Management of Portfolio Properties
The basic investment strategy of Top REIT is to increase profits over the medium to long term by maintaining
and improving tenant satisfaction (“Tenant First" Policy) and keeping management costs at appropriate levels.
Top REIT strived to maintain trust with its tenants, understand tenant needs using its property managementcompany (hereinafter “PM company”), and maintain high occupancy levels. As a result of an increase in thefloor space of existing tenants and the attraction of new tenants, the occupancy rate of our overall portfolio
properties reached 99.7%. In addition, based on the yearly management plans of individual properties, Top
REIT revised rents to attract new tenants and wholeheartedly implemented measures to improve earnings
through rent increases of existing tenants after grasping the discrepancies in these rents from current market
levels.
Regarding administration and management of properties, Top REIT follows up these activities with
understanding management and administrative conditions as well as the steady implementation ofmanagement plans by working together with the PM company. Consequently, Top REIT has reduced the
management costs of some of its portfolio properties. Also, based on management plans, Top REIT carried out
maintenance and repair works that contributed to the improvement of the competitiveness of properties, andthe maintenance and improvement of the property functionality. The company kept costs at appropriate levels
for planned maintenance and repair works and reviewed the timing for carrying out these works.
3

Top REIT received from Ito-Yokado Co., Ltd., the sole tenant of the Ito-Yokado Higashi-Narashino Store(hereinafter “Ito-Yokado”), a notice of early termination of its lease agreement with the intent to take effect theend of February 2008. After negotiations and discussions with Ito-Yokado, Top REIT entered into anagreement with Ito-Yokado as follows:
1. Withdrawal of the early termination notice
Ito-Yokado will withdraw in its entirety its expression of intent dated February 22, 2007, to terminate thelease agreement for its Higashi-Narashino Store, and Top REIT agrees to such withdrawal.
2. Agreement on revision of rent
(1) Rent calculation method will change from the fixed-rate rent to a combination of fixed-rate rent andsales-based rent.
*The sales-based rent is the amount obtained from multiplying the excess over a certain amount ofannual sales generated during a fiscal period from March to February of the next year from the lots
directly operated by Ito-Yokado to a specific rate. This amount will be the sales-based rent for thefollowing fiscal year. This sales-based rent will not accrue in and before February 2008 but may
apply from March 2008.
(2) The amount of fixed rent will be ¥471,449,628 per annum (the newly agreed monthly rent multiplied by
12, not including consumption tax) from August 1, 2007.
(Reference)
The previous amount of fixed rent before this revision was ¥725,307,120 per annum (the former
monthly rent multiplied by 12, not including consumption tax).
(3) Terms and conditions of the rent agreement, including the method of calculation of the fixed rent and thesales-based rent, shall not be changed until November 30, 2014, the maturity of the lease agreement.
(4) Top REIT is entitled to request Ito-Yokado to give a reasonable explanation of its business plan for thestore. Ito-Yokado shall submit to Top REIT the sales results and visiting customer numbers(c) Funds procurement
Top REIT procures funds with a financial policy based on stable financial management. During this period, thetotal amount of ¥20.9 billion in short-term loans procured in the first and second fiscal period with anuncommitted short-term loan facility for the acquisition of the properties was newly refinanced with a longterm loan of ¥21 billion. As of the end of this fiscal period, our total outstanding loan amounts are ¥54.4 billion.
The loan/total asset ratio is 37.3%, interest bearing interest/total asset ratio is 38.1%, and the long term loan
ratio is 100%. Also, part of the above ¥21 billion long-term loan includes a loan of ¥19 billion with a variableinterest rate, but is covered by an interest rate swap contract resulting virtually in a loan with a fixed rate. As aresult, the fixed rate interest ratio at the end of this fiscal period is 80.9%.
Top REIT has been procuring funds that are neither secured nor guaranteed since it was listed on the stock
exchange, and we strive to manage our financing operations to extend maturities and spread out maturity dates.
The credit rating of Top REIT as of the submission date of this report:
Rating agency:
Moody’s Investors Service Inc.
Issuer rating:
A2
Outlook:
Stable4(d) Business results and dividend
As a result of business operations mentioned above, the company posted as results this fiscal period operating
revenue of ¥4,715 million, operating income of ¥2,250 million, ordinary income of ¥1,848 million, and net
income of ¥1,847 million.
As for dividends, Top REIT plans for the amount corresponding to profit dividend to be counted as a tax
deductible dividend by applying a “special treatment" of corporate tax (stipulated in Article 67-15 of theSpecial Taxation Measures Law), and the dividend per unit shall be ¥11,921, distributing the total amount of
unappropriated retained earnings for the current period excluding the amounts consisted from the less than one
yen per each unit.

C. Forecasts for Fourth Fiscal Period(a) Operational strategy of existing properties
The basic investment strategy of Top REIT continues to be “Tenant First” = “Maintenance and Improvement of
Tenant Satisfaction,” as well as maintain and improve profits in the medium to long term by keeping management
costs at appropriate levels. By strongly focusing our attention on maintaining trust with tenants and securing leases
for vacant properties, Top REIT will maintain stable occupancy rates over the medium to long term and negotiate torevise rents to appropriate levels based on an understanding of conditions in commercial areas and current market
rents.
In addition, by carrying out planned maintenance and repair works whose purpose is to maintain and improve thefunctionality of our properties as well as increase their competitiveness, we aim to ensure stable profits in the medium
to long term.

(b) Operational strategy of new properties
Top REIT is aiming for medium to long term improvements in dividend, through achieving external growth from theacquisition of new properties. Although the current environment is severe for the acquisition of new properties, Top
REIT continues to utilize even more the pipeline support contracts with its sponsor companies as well as collectinformation widely on new properties. Centering on the three areas of office buildings, retail properties andresidential properties, Top REIT is pursuing both external growth and quality asset management through investments
in highly-profitable properties from among various target investment areas.
Although the policy of Top REIT is restrict investment in a single property to within 20% of the total portfolio value
over the medium to long term, as of the end of this fiscal period, the ratio of acquisition value of the NEC head officebuilding to our total acquisition value of our portfolio is 32.1%. We are trying to reduce the concentration of risk in asingle, specific property by steadily moving forward with external growth activities hereafter.

(c) Financial strategy
As for funds for the acquisition of new properties, Top REIT will select from among multiple procurement measures,
including making use of agile procurement of short term loans based on a basic loan agreement with an uncommitted
based short-term facility and taking into consideration financial market trends.
For further acquisition, we continue to secure flexible financing arrangements-continuing to extend maturities andspread out maturity dates in preparation for the risk of rising interest rates and refinancing. We will maintain financial
soundness by keeping an appropriate level of leverage.

5(d) Forecast of earning results
Fourth fiscal period (From November 1, 2007, to April 30, 2008)
Operating Revenue¥4,661 million
Ordinary Income¥1,721 million
Net income¥1,720 million
Dividend per unit
¥11,100
Dividend in excess of earning per unit ¥0
Fifth fiscal period (From May 1, 2008, to October 31, 2008)
Operating Revenue¥4,712 million
Ordinary Income¥1,706 million
Net income¥1,705 million
Dividend per unit
¥11,000
Dividend in excess of earning per unit ¥0(Note) Forecasts presented above are based on certain assumptions at this moment. Actual operating revenue,
ordinary income, net income, dividend per unit and dividend in excess of earning per unit may differ according tochanges of situation. Top REIT does not guarantee any forecasted dividend amount.

6D. Financial Statements(a) Balance Sheet
PeriodAccounting Item

Third Fiscal Period

Second Fiscal Period(As of October 31, 2007)(As of October 31, 2007)

Value

(％)

(Thousand yen)

Change
Value

Value

(％)

(Thousand yen)(Thousand

(％)

yen)

（Assets）
I Current Assets
Cash and deposits

4,745,435

593,848

4,151,587

Cash and deposits held in trust account8,243,700

9,840,227(1,596,527)

Tenants receivables

32,84730,741

2,105

Prepaid expenses

38,30449,990(11,686)

Deferred tax assets
Corporate tax refund receivable
Consumption tax refund receivable
Other current assets
Total Current Assets

21

21

0

1,863

572

1,290

-

2,055,701(2,055,701)

415

315
9.0

13,062,588

12,571,419

100
8.6

491,168

3.9

II Fixed Assets
1. Investment Properties
Buildings in trust (Including accompanying
facilities)
Accumulated depreciation
Structures in trust

45,681,902
2,703,775
56,506

Machinery and equipment in trust

112,956

Accumulated depreciation

13,554

Accumulated depreciation
Land in trust
Total Investment Properties

1,804,071

475,899

Accumulated depreciation

Tools and furniture in trust

45,634,487
42,978,127
419,393

37,939(852,289)

437,960(18,566)

104,862(5,460)28,843(1,350)112,956
99,401

8,094

34,2796,786

43,830,416

475,899

32,09527,492

3,252

89,174,514

89,174,514

132,698,929

90.9

133,576,596

91.3(877,667)(0.7)

2. Intangible Assets
Other intangible assets
Total Intangible Assets

340

361

340

0.0

361

(21)
0.0

(21)

(5.9)

3. Investment and Other Assets
Leasehold and security deposits

10,00010,000-Long-term prepaid expenses

60,09937,73322,365

Deferred tax assets

57,57046,71910,851Other investments

48,70734,65014,057

Total Investment and Other Assets
Total Fixed Assets

176,3770.1

129,103

0.1

47,27436.6

132,875,647

91.0

133,706,061

91.4(830,413)(0.6)

III Deferred Assets
Organization expenses (initial expense)

34,020Total Deferred Assets

34,0200.0

39,6900.0(5,670)(14.3)

145,972,255

100.0

146,317,170

100.0(344,914)(0.2)

Total Assets

39,690

7(5,670)Period
Accounting Item

Third Fiscal Period

Second Fiscal Period(As of October 31, 2007)(As of October 31, 2007)

Value

(％)

(Thousand yen)

Value

Change(％)(Thousand yen)

Value
(Thousand yen)(％)

(Liabilities)
I Current Liabilities
Accounts payable
Short-term debt

57,85895,609(37,751)-

20,900,000(20,900,000)

Other account payable

240,694

283,391(42,697)

Expenses payable

143,390

88,99754,393

55

428

(373)

Income taxes payable
Consumption tax payable

171,120-

171,120

Rents received in advance

710,169

731,875(21,706)

Other current liabilities

2,044

3,408

(1,364)

Total Current Liabilities

1,325,332

0.9

22,103,712

15.1(20,778,380)(94.0)II Fixed Liabilities
Long-term debt

54,400,000

33,400,000

21,000,000

6,065,431

6,160,084(94,652)

Tenant lease and security deposits intrust
Derivative debt
Total Fixed Liabilities
Total Liabilities

162,131

141,375

20,756

60,627,563

41.5

39,701,459

27.1

20,926,103

52.7

61,952,895

42.4

61,805,171

42.2

147,723

0.2

82,260,100

56.3

82,260,100

56.2

-

-

（Net Assets）
I Unitholders’ Equity
1.

Unitholders’ equity

2.

Reserves

Retained earnings at period end

1,847,845

2,323,786(475,940)

Total reserves

1,847,845

1.3

2,323,786

1.6(475,940)(20.5)

Total Unitholders’ Equity

84,107,945

57.6

84,583,886

57.8(475,940)(0.6)

II Adjustments for valuation, conversion, etc.
Deferred hedge losses(88,585)(71,887)(16,698)

Total Adjustments for valuation,
conversion, etc.

(88,585)(0.0)(71,887)(0.0)(16,698)(23.2)

Total Net Assets

84,019,360

57.6

84,511,998

57.8(492,638)(0.6)

Total Liabilities and Net Assets

145,972,255

100.0

146,317,170

100.0(344,914)

(0.2)

8

(b) Income Statement
PeriodSecond Fiscal Period

Third Fiscal Period(From May 1, 2007 to October 31, 2007)

Accounting Item

Value

(％)

(Thousand yen)

(From November 1, 2006 to April 30,

Change

2007)
Value

(％)

(Thousand yen)

Value
(Thousand yen)(％)

1. Operating Revenue
Rental revenue
Other rental revenue

4,695,566
19,6594,518,913
4,715,226

100.0

7,280

4,526,193

100.0

189,032

4.2

2. Operating Expenses
Rental expenses

1,970,563

1,388,639

Asset management fees

367,691

367,325

Asset custody fees

6,567

6,273

Administrative agency fees

55,20852,758

Officers remuneration

3,600

3,600

Audit fee

10,0009,000

Other operating expenses

51,381

Operating Income

2,465,012

52.3

2,250,213

47.7

51,366

1,878,963

41.5

586,04831.2

2,647,230

58.5(397,016)(15.0)

10,0630.2

33,180329.7

332,489

7.3

112,10933.7

2,324,803

51.4(475,944)(20.5)

2,324,803

51.4(475,944)(20.5)

1,048

0.0

(9)

(0.9)

2,323,754

51.3

475,935(20.5)

3. Non-Operating Income
Interest received

16,061Other non-operating income

27,182

7,244
43,2440.9

2,818

4. Non-Operating Expenses
Interest paid

414,765

307,143

Amortization of funding costs

5,670

5,670

Other non-operating expenses

24,164

Ordinary Income
Net income before income taxes
Corporate residents and business taxes
Corporate tax adjustment
Net Income
Retained Earnings brought forward

444,599

9.4

1,848,858

39.2

1,848,858

39.2
1,031

1,039
(0)

19,675

1,039

0.0

1,847,819

39.2

17

26

31

(5)

1,847,845

2,323,786(475,940)

Unappropriated Retained Earnings
at the End of Period

9(c) Statement of Cash Flows
Item

I

Third Fiscal Period

Second Fiscal Period(From May 1, 2007 to October 31, 2007)(From November 1, 2006 to April 30, 2007)

Value (Thousand yen)

Value (Thousand yen)

Cash Flows from Operating Activities:
Net income before income taxes

1,848,858

2,324,803

Depreciation

927,266

873,253

5,670

5,670

Amortization of organization expenses
Amortization of trademark

21

21Interest received and on securities(16,061)(7,244)

Interest paid

414,765

307,143(Increase)/decrease in tenants receivables(2,105)(1,359)2,052,417(204,960)(1,290)-(Increase)/decrease in consumption tax refund(Increase)/decrease in corporate tax refund receivable(Increase)/decrease in other account receivables(Increase)/decrease in prepaid expenses-

250

11,686(23,703)(Increase)/decrease in other current assets

(415)

-

Increase/ (decrease) in accounts payable

11,260575

Increase/(decrease) in other accounts payable(10,787)(582,418)

Increase/(decrease) in consumption tax payable

171,248-

Increase/(decrease) in rents received in advance(21,706)

61,279(Increase)/decrease in long-term prepaid expenses(22,365)

3,815

Other, net(15,107)(14,206)

Subtotal

5,353,354

2,742,920

Interest received

16,0617,251(367,165)(276,547)

Interest paid
Income taxed paid
Net cash provided by operating activities(1,413)(2,812)5,000,836

2,470,811(127,364)(18,168,597)

II Cash Flows from Investing Activities:
Purchase of investment properties
Proceeds of tenant lease and security deposits in trust

33,712492,814

Payments of tenant lease and security deposits in trust(128,365)(107,396)

Net cash flow used in investing activities(222,016)(17,783,179)

Proceeds from short-term debt-

18,400,000

Repayments of short-term debt

(20,900,000)-

Proceeds from long-term debt

21,000,000-

Dividend payments(2,323,760)(2,729,395)

Net cash provided by financing activities(2,223,760)

15,670,605

III Cash Flows from Financing Activities:

IV Net change in cash and cash equivalents

2,555,060

358,237

V Cash and cash equivalents at beginning of period

10,434,076

10,075,838

VI Cash and cash equivalents at end of period

12,989,136

10,434,076

10