(TSE Code: 8982)

Top REIT, Inc.

Presentation on
Business Results forthe 10ｔｈ Fiscal Period
November 1, 2010－
April 30, 2011

June 16, 2011

IndexTopics:
1．Overview since Listing
2．Impact of the Great East Japan Earthquake on Portfolio
3．Measures for Environmental Issues
I. Summary of Results of the Tenth Fiscal Period (Ended April 30, 2011)
I-1. Highlights of the Tenth Fiscal Period
I-2. Summary of the Tenth Fiscal Period
II. Results of Past Periods and Forecasts
II-1. Results of Past Periods and Forecasts
II-2. Results of Past Periods and Forecasts (Detail)III. Growth Strategy: Leaping for the Next Stage
III-1. Market Prospects
III-2. Strategy for Recovery of the Dividend Level
III-3. Leasing Policy of Akasaka Oji Building
III-4. Growth Strategy for the Next Stage

VI. Tenth Fiscal Period Results (Ended April 30, 2011)
VI-1. Statements of Income (Summary) / Statements of Cash Distributions
VI-2. Balance Sheets (Summary)VI-3. Major Financial Indicators
VI-4. Unitholders
VI-5. Unit Price Performance and Volume (March 1, 2006 – May 31, 2011)
VII. Appendix: Portfolio Overview
VII-1. Portfolio Map
VII-2. Portfolio Summary (as at end of 10th FP)
VII-3. Portfolio Overview (as at end of 10th FP)
VII-4. Appraisal Values at End of Period
VII-5. Appraisal Cap Rate
VII-6. Operating Income by Property (Tenth Fiscal Period)
VII-7~9. Property Details
VII-10. Measures for Electricity Conservation in this Summer
VII-11. Questions Received After the Earthquake Regarding Properties
VIIl. Appendix: Structure of Related Parties

IV. Tenth Fiscal Period Operating Results and Future Initiatives
IV-1. Operating Results: History of Asset GrowthIV-2. Operating Results: History of Occupancy Rate
IV-3. Operating Results: Results from Rent Revisions (excluding residential)
IV-4. Operating Strategies: Management Policy and Schedule of Future Rent Revisions

Vlll-1. Characteristics of Top REIT and Operational Strategies
Vlll-2. Overview of Asset Manager

V. Financial Strategies
V-1. Financial Strategies: Stable Financial management
V-2. Financial Strategies: Financial Status / Extend Borrowing Periods
V-3. Financial Strategies: Issuer Rating and Loans at End of Tenth Fiscal Period

1

TOPICS 1． Overview since Listing

Asset
Sizes

1ｓｔ ・ 2nd ・ 3ｒｄ FP

4th ・ 5th ・ 6th FP

7th ・ 8th ・ 9th FP

10th FP

11th FPMar 1, 2006 – Oct 31, 2008

Nov 1, 2007～Apr 30,2009

May 1, 2009～Oct 31, 2010

Nov 1, 2010～
Apr 30, 2011

May 1, 2011～
Oct 31, 2011

1st
1st
End
End of
of FP
FP

IPO
IPO
77 properties
properties

88 properties
properties¥113.286bn¥113.286bn¥104.386bn¥104.386bn

2nd
2nd ・・ 3rd
3rd
EndEnd ofof FP
FP
11
11 properties
properties¥130.846bn¥130.846bn

5th
5th ・・ 6th
6th ・・ 7th
7thEndEnd of
of FP
FP

4th
4th
End
End ofof FP
FP

14
14 properties
properties¥162.347bn¥162.347bn

13
13 properties
properties¥157.187bn¥157.187bn

8th
8th ・・ 9th
9th
EndEnd of
of FP
FP

10th
10th
End
End ofof FP
FP

15
15 properties
properties

15
15 properties
properties¥175.047bn¥175.047bn¥175.047bn¥175.047bn

Mar. 2006 Harumi Island Triton Square Office Tower Y ¥33 bn, Akasaka Oji Building ¥9.66 bn,
Kanda Park Plaza ¥5.156 bn, Faret East Building ¥1.52 bn, Nittetsu Honmachi Building ¥1.1 bn,
NEC Head Office Building ¥41.95 bn
Mar. 2008 Faret East Building 8th Floor ¥0.571 bn
Shiba-Koen Building ¥5.77 bn
Harumi Island Triton Square Office Tower Z ¥20 bn

Jan. 2010 Kanda Nishiki-cho 3-chome
Building ¥12.7 bn (formerly called
Sumitomo Corporation Nishiki-cho
Building)

External
GrowthMar. 2006 Sagamihara Shopping Center ¥12 bn
Jun. 2006 Ito-Yokado Higashi-Narashino ¥8.9 bn
Mar. 2007 Musashiurawa Shopping Square ¥4.335 bn
Dec. 2006 Fukasawa House Towers H&I ¥10.635 bn
May 2008 Ecology Toyosu Procentury ¥5.16 bn
Mar.2007 OAK PLAZA ¥2.59bn

Jun. 2010
26 bn
IPO
bn
IPO 82.
82.26
Offering Price ¥550,000 per unit

Financial
StatusInvestment Corporation
Bonds Ｉｓｓｕｅｄ

1st

2nd

3rd

4th

5th

6th・7th

8th

9th

10th

End of FP
Debt¥35.9 bn
ＬＴＶ
28.0%

End of FP
Debt¥54.3bn
ＬＴＶ
37.1%

End of FP
Debt¥54.4 bn
ＬＴＶ
37.3%

End of FP
Debt¥83.0 bn
ＬＴＶ
47.4%

End of FP
Debt¥82.0 bn
ＬＴＶ
47.3%

End of FP
Debt¥81.74 bn
ＬＴＶ
47.3%

End of FP
Debt¥94.24bn
ＬＴＶ
50.6%

End of FP
Debt¥94.17bn
ＬＴＶ
50.5%

End of FP
Debt¥94.10bn
ＬＴＶ
50.5%

1st
1st

2nd
2nd

3rd
3rd

4th
4th

5th
5th

6th
6th

7th
7th

8th
8th

9th
9th

10th
10th

¥17,609¥17,609¥14,992¥14,992¥11,921¥11,921¥11,884¥11,884¥12,863¥12,863¥13,206¥13,206¥12,654¥12,654¥13,484¥13,484¥14,220¥14,220¥13,922¥13,922

Dividend2

Damage by
Earthquake

Casualties

Impact ofEarthquake

TOPICS 2 : Impact of the Great East Japan Earthquake on Portfolio

Capitalexpenditures

Owned Assets
by Region

Property
damageRestoration
expensesCentralTokyo

None
Minor Damage – Inspections by external experts were conducted on 14 properties, or all owned properties
except the one property in Kansai.
・Minor interior, exterior and facilities damage was found at 13 of the 14 properties
・Part of the restoration work was completed in the 10th FP and the remaining will be completed in the 11th FP

None¥37.0 million[Percentage as comparedto acquisition price of all
15 properties]
0.02%

8 properties, 74.7%

Tokyo
Metropolitan 6 properties, 24.6%
Area
Kansai

Posted as extraordinary
losses for the 10th FP

1 property, 0.6%

[Portfolio PML]
2.4%
*PML of individual properties arelisted on p. 36

Dealing with Earthquake Risk
Standards of Property Acquisition(must meet the following 3 criterion)
・Meets or exceeds the New Earthquake ResistantStandard (a standard implemented in 1981 that buildings
must meet in order to attain permission to build)・Has a PML of below 20%
・Portfolio PML is maintained at below 10%

PML
PLM refers to the probable maximum loss that would result from an earthquake.
It is the rate of the amount of maximum loss (with 90% probability of non-Regarding Earthquake Insurance

exceedance) that would be incurred in the case of an earthquake of the largest

In view of cost effectiveness of premiums, properties
are not covered by earthquake insurance.

scale that may occur during the period the building is in use (large earthquake withmore than 10% possibility of occurring in 50 years, or that would occur once in 475
years) against the cost of reacquisition (total loss/building reacquisition cost).

3

TOPICS 3 : Measures for Environmental Issues
NEC Head Office Building
3 properties certified as sub-top level of“Superior Special Global WarmingCountermeasure Office Building”
which is based on the Tokyo Metropolitan Ordinanceon Environmental Preservation(Certified May 26, 2011)- Number of Top Level Office Buildings Certified in 2011 -(Tokyo)Top level office buildings： 14
Sub-top level office buildings： 22

Superior Special Global Warming Countermeasure Office Buildings
Office buildings with extremely superior levels of promoting global
warming countermeasures are certified as “top level” and those withsuperior levels of such are certified “sub-top level” according to thestandards set by the governor or Tokyo. Greenhouse gas emissions
reduction obligations, imposed on large-scale office buildings, is reduced
for certified buildings. Various facility performances and operational
systems are subject to assessment.

Harumi Island Triton Square (Office Towers Y&Z)
4

I. Summary of Results of the Tenth Fiscal Period (Ended April 30, 2011)5I-1. Highlights of the Tenｔｈ Fiscal Period《《 Flawless
Flawless Management
Management ofof Existing
Existing Properties
Properties 》》◆ Secured Management
・ Rent revision periods concentrated within the assumed range⇒ Decreased 12.7% on average compared with the level before renewal of contracts with 16 tenants in 10th FP(representing about 30% of monthly total rents)
・ Maintained and improved occupancy rate through coordination of asset management and property managementcompanies under continuously severe market conditions⇒ Achieved occupancy rates of 100% at Faret East Building (Tachikawa) and Nittetsu Honmachi Building(Osaka) which previously had partial vacancies⇒ Maintained high occupancy rates at residential properties Fukasawa House (period end occupancy rate
94.6%) and Ecology Toyosu procentury (period end occupancy rate 97.7%)

Occupancy rate atend of 10th FP

99.7%《《 Financial
Financial Strategy
Strategy 》》◆ Refinancing
・ ¥6.7 billion Repayment date in February 2011 → After refinancing to short-term loan, refinanced to an
approximately 5 year long-term loan in March 2011 before maturity(expanded fund procurement base through transactions withnew lenders)・ ¥16.7 billion Repayment date in March 2011 → Refinanced to an approximately 5 year long-term loan
(fixed all interest payments through execution of interest rate
swap agreement)⇒ Average remaining period of interest-bearing liabilities(End of 9th FP: 1 year & 9 months →End of 10th FP: 2 years & 6 months)

Averageremaining period
of interestbearing liabilities
Extended《《 Dividend
Dividend 》》
Cash Dividend forTenth Fiscal Period
13,922 yen◆ Maintained steady dividends even under severe environment
・ Increased revenues through high occupancy rate at residential
properties (Fukasawa House, Ecology Toyosu procentury)
・ Ordinary income-based dividends: approx. ¥14,160 per unit

14,220-Impact of EarthquakeEarthquake-

13,484

13,922

12,65437 million yen posted as
extraordinary losses for 10th FP⇒Dividends decreased due tothe losses ((-¥238 per unit)
7th FP

8th FP

9th FP

10th FP6

I-2. Summary of the Tenth Fiscal Period
10th FP Results
November 1, 2010
- April 30, 2011

10th FP Forecast(Announced on
December 15，2010)

181

181

-

-

184

-

-

Operating revenue¥5,967mn¥5,976mn(¥8mn)(0.1%)¥6,060mn(¥93mn)(1.5%)

Operating income¥2,971mn¥2,951mn

¥20mn

0.7%

¥3,019mn(¥47mn)(1.6%)

Ordinary income¥2,194mn¥2,169mn

¥24mn

1.1%

¥2,204mn(¥10mn)(0.5%)

Extraordinary loss

¥37mn

-

¥37mn

-

-

¥37mn

-

¥2,157mn¥2,170mn(¥12mn)(0.6%)¥2,204mn(¥46mn)(2.1%)

Number of units issued
and outstanding (unit)

155,000

155,000--

155,000--

Dividend per unit (yen)¥13,922¥14,000(¥78)(0.6%)¥14,220(¥298)(2.1%)

Number of properties

15

15

-

-

15

-

-

Appraisal value total¥170,670mn

-

-

-

¥175,351mn(¥4,681mn)(2.7%)

Items
Period of asset management(days)Net income

9th FP Results
May 1, 2010 October 31, 2010

Net Change(Results vs Forecast)■ Differences between Forecasts and Actual Results
Operating Revenue: - ¥8mn
 Decrease in revenue from utility expenses borne by tenants Decrease in revenue through rent revision (1 month rent holiday at 1 tenant)■ Other References
Items

10th FP Results

9th FP Results

46

46

291,627.72㎡

291,627.72㎡

Occupancy rate

99.7%

99.5%

Depreciation andamortization¥1,086mn¥1,081mn

Capital expenditures¥464mn¥83mn

Term-end unit price (yen)¥491,500¥457,000¥76,182.5mn¥70,835mn

Number of tenants
Total rentable floor space

Operating Income: +¥20mn
 Decrease in utility expenses
 Reduced property management expenses at Harumi Island Triton Square

Ordinary Income: +¥24mn

Net Change(10th FP Results vs.
9th FP Results)

 Reduced interest rate costs

Net Income：- ¥12mn
 Posted restoration work costs, etc. due to earthquake

Term-end market
capitalization

7

II. Results of Past Periods and Forecasts8

II-1. Results of Past Periods and Forecasts
Posted revenue equivalent to
expenses for restoring to original
condition (¥142 mn) due to a major
tenant moving out of Akasaka Oji
Building

OperatingOperating Revenue
Revenue

Posted expenses for restoring tooriginal condition (¥142 mn) due toa major tenant moving out of
Akasaka Oji Building

OperatingOperating Expenses
Expenses(million yen)(million yen)

4,000

7,000
6,060
6,000

5,584

5,606

5,608

5,814

5,967

5,806
5,320

5,000

4,817

4,715

2,933

2,978

2,964

3,041

2,995

3,054

2,905

5th FP

6th FP

7th FP

8th FP

9th FP

10th FP

11th FP 12th FP(Forecast) (Forecast)

3,000
2,465

2,464

3rd FP

4th FP

2,855

1,878

2,000
1,610

4,526
4,037

1,000

4,000

0

3,000
1st FP

2nd FP

3rd FP

4th FP

5th FP

6th FP

7th FP

8th FP

9th FP

10th FP

11th FP 12th FP(Forecast) (Forecast)

1st FP

2nd FP

OperatingOperating Income
Income(million yen)
4,000

2,849

3,000
2,427

2,647
2,250

2,353

2,651

2,700

2,630

5th FP

6th FP

7th FP

3,019

2,971

2,752
2,465

2,000

1,000

0
1st FP

2nd FP

3rd FP

4th FP

8th FP

9th FP

10th FP

11th FP
12th FP(Forecast) (Forecast)*The actual number of days in the First Fiscal Period was 245. The above numbers are calculated by the following calculation method: (First Fiscal Period Results / 245 Days) x 365 Days / 2.
In addition, the above forecast figures are calculated under certain preconditions as of the date of this material and are subject to change. Moreover, the dividend is not guaranteed.

9II-1. Results of Past Periods and Forecasts
Net
Net Income
Income(million yen)
2,500

2,000

2,323
1,988

1,847

1,993

2,046

1,841

2,090

2,204

2,157

1,961

1,953
1,720

1,500

1,000

500

0
1st FP

2nd FP

3rd FP

4th FP

5th FP

6th FP

7th FP

8th FP

9th FP

10th FP

11th FP
12th FP(Forecast) (Forecast)

Dividend
Dividend(yen)

16,00014,992
14,22014,00012,863

12,82911,921

12,00013,922

13,484

13,206

12,60012,654

11,884
11,10010,0008,000
1st FP

2nd FP

3rd FP

4th FP

5th FP

6th FP

7th FP

8th FP

9th FP

10th FP

11th FP
12th FP(Forecast) (Forecast)*The actual number of days in the First Fiscal Period was 245. The above numbers are calculated by the following calculation method: (First Fiscal Period Results / 245 Days) x 365 Days / 2.
In addition, the above forecast figures are calculated under certain preconditions as of the date of this material and are subject to change. Moreover, the dividend is not guaranteed.

10II-2. Results of Past Periods and Forecasts (Detail)Item

5th Fiscal
Period

6th Fiscal
Period

7th Fiscal
Period

8th Fiscal
Period

9th Fiscal
Period11th Fiscal
Period(Forecast)

10th Fiscal
Period12th Fiscal
Period(Forecast)

Period of asset
management (days)

184

181

184

181

184

181

184

182

Operating revenue¥5,584mn¥5,606mn¥5,608mn¥5,814mn¥6,060mn¥5,967mn¥5,806mn¥5,320mn

Operating expenses¥2,933mn¥2,905mn¥2,978mn¥2,964mn¥3,041mn¥2,995mn¥3,054mn¥2,855mn¥701mn¥718mn¥762mn¥711mn¥783mn¥741mn¥838mn¥680mn

Of which, expenses
related to rent business(excluding taxes and dues, anddepreciation and amortization)

Of which, taxes anddues
Of which, depreciation
and amortization¥522mn¥476mn¥561mn¥567mn¥586mn¥586mn¥611mn¥611mn¥1,147mn¥1,151mn¥1,105mn¥1,127mn¥1,081mn¥1,086mn¥1,050mn¥1,029mn

Operating income¥2,651mn¥2,700mn¥2,630mn¥2,849mn¥3,019mn¥2,971mn¥2,752mn¥2,465mn

Ordinary income¥1,994mn¥2,047mn¥1,960mn¥2,091mn¥2,204mn¥2,194mn¥1,954mn¥1,721mn

Net income¥1,993mn¥2,046mn¥1,961mn¥2,090mn¥2,204mn¥2,157mn¥1,953mn¥1,720mn

Net operating income fromproperty leasing¥4,360mn¥4,412mn¥4,284mn¥4,535mn¥4,691mn¥4,639mn¥4,356mn¥4,028mn

FFO¥3,141mn¥3,198mn¥3,066mn¥3,217mn¥3,286mn¥3,243mn¥3,003mn¥2,749mn

Number of units issued andoutstanding (units)

155,000

155,000

155,000

155,000

155,000

155,000

155,000

155,000

Dividend per unit (yen)¥12,863¥13,206¥12,654¥13,484¥14,220¥13,922¥12,600¥11,100

FFO per unit (yen)¥20,266¥20,635¥19,785¥20,755¥21,200¥20,929¥19,380¥17,741

Precondition
11th Fiscal Period
12th Fiscal Period

Number of properties: 15
Loans outstanding: End of 11th period ¥94.037bn. / End of 12th fiscal period ¥93.97bn
Operating revenue: Takes into consideration execution of new agreements, early termination of agreements, etc. that have been finalized as of June 14, 2011, as
well as factors that may cause fluctuations in such matters as risks of reductions in revenue due to decreased amounts of rent of tenants when
they reach their rent revision period hereafter.
Non-operating expenses: (11th FP) ¥801mn (of which, interest of loans and investment corporation bonds and related expenses: ¥798mn)(12th FP) ¥746mn (of which, interest of loans and investment corporation bonds and related expenses: ¥740mn)
Note: The forecasts should not be construed as a guarantee of the actual dividends

11III. Growth Strategy: Leaping for the Next Stage12

III-1. Market Prospects
Real
Real Estate
Estate Leasing
Leasing Market
Market[Present state]◆ Office vacancy rates in 5 central wards of Tokyo remain highat around 8%◆ Office rents remain weak in central Tokyo◆ Further severe renting conditions presented by new officetenants◆ Studio and family rental residences with high convenienceshowing steady performance[Future prospects]◆ Due to the impact of the earthquake, companies may adopt acautious stance and relocate for reasons such as office integration◆ Vacancy rates will remain high◆ Further delay of rent recovery due to deteriorating results ofcompanies⇒TOP REIT’s strategy
・Strengthen preventive measures of tenant’s moving out as wellas leasing activities

Real
Real Estate
Estate Transaction
Transaction Market
Market[Present state]◆ Sale of high-grade office properties are low due to gap inprice perspectives of seller and buyer, and there is nodifference in basic perspectives even after the earthquake◆ The market for rental residential property transactions is
steady◆ How to compromise the price perspective difference between
seller and buyer◆ The market for rental residential property transactions willremain steady⇒TOP REIT’s strategy
Continue to focus on gathering information on high-grade
office buildings in central Tokyo and residential properties
with excellent transit access

Financial
Financial // Capital
Capital Market
Market[Present state]◆ Continuation of de facto zero interest rate monetary policy by
the Bank of Japan◆ No particular change the lending attitude of banks since theearthquake◆ Doubling in purchasing amount of J-REIT units by the Bankof Japan and favorable performance of J-REIT investments
are supporting unit prices[Future prospects][Future prospects]◆ Market interest rates will remain low in the meantime◆ REIT market is looking for sources of recovery⇒TOP REIT’s strategy
While closely monitoring the market environment, selectbank loans, investment corporation bonds, public offerings,
etc.

13

13

III-2. Strategy for Recovery of the Dividend Level

Current Management Policy●Factors of Dividend Decrease at 11th FP and 12th FP
・Major tenant moving out Akasaka Oji Building
・Possibility of free rent requests from new tenants
・Weak rents due to delayed recovery of company results
・Putting off of acquisition of new properties

Completion
Completion ofof early
early leasingleasingof
AkasakaOji
of Akasaka Oji Building
Building◆ Secure foothold for revenues through flawless management of existing properties

Minimize
Minimize range
range ofofdecreasedecrease inin rent
rent revision
revision・Place utmost focus on securing tenants for Akasaka Oji Building
・In addition to continuing to strengthen tenant relations, implement measures to prevent tenants moving out and maintain highoccupancy rates.
◆ External growth that perceives good acquisition opportunities for superior properties(acquisition of superior properties with cash on hand + additional bank loans)・Utilize the sponsor’s strengths (properties owned or brokered by sponsors) as well as various information channels
・Target office buildings in central Tokyo and residential properties in the Tokyo Metropolitan Area

『 Early recovery of the dividend level ¥13,000 ～ ¥14,000 』
Asset class

Offices

Other than offices

Property acquisition target

Accumulate
Accumulate greater
greaterrevenues
revenues with
with acquisitionacquisitionofof new
new properties
properties

Portfolio share◆ Excellent location in Central Tokyo◆ High-quality specifications◆ Properties with strong competitiveness (ability to attract
tenants, long-life and stable operations)

Approx. 75%◆ Primary focus on residential properties
・Located in Central Tokyo and surrounding areas, close torailway stations and with excellent transit access・Stable occupancy rates and rent levels

Approx. 25%

14

III-3. Leasing Policy of Akasaka Oji Building
Overview
Overview ofofRelocation
Relocation Plan
Plan by
byMajor
Major Tenant
Tenant

The grounds of the
Akasaka Estate

Akasaka-mitsuke Sta.
The Houses of the Diet

【Name of Major Tenant】
・ Sony Computer Entertainment Inc.
【Lease Termination Date】
・ September 18，2011【Leased Floor Space/Proportion to Total Leased Floor Space of the Property】
・ 6,779.82m2 / 93.1%【Proportion to Total Leased Floor of Entire Portfolio】
・ 2.3%

Superiority
Superiority ofof Akasaka
Akasaka Oji
Oji Building
Building

Akasaka Oji Building
Aoyamaitchome Sta.
ya
Ao

m

Embassy of Canada
TBS

t
aS

Tameike-sanno Sta.

Akasaka Sta.

Tokyo Midtown

ANAIntercontinental
Hotel

Roppongi Sta.

Conducted renewal construction ofcommon areas along with the work of
restoring to original conditions(all capital expenditures construction
planned)・ Faces Aoyama-dori Street (Route 246) to feature high visibility, while standing adjacent to Akasaka Imperial Gardens where Crown
Prince’s Palace is located and Canadian Embassy, which provide abundant greenery despite business surroundings
・ Located in four-minute walk from Aoyama 1-chome Station on the Tokyo Metro Ginza Line and Hanzomon Line and Toei Oedo
Line, enjoying high convenience for accessHighly praised by manypotential tenants for its
convenience and its
good environment

・ Has specifications comparable to most modern office buildings, including individually controlled air conditioning systems (renewedin 2006), office automation-compatible floors and ceiling height of 2,600mm
・ Leasable to multiple tenants
・ Administration by staff / mechanical security at night and on holidays

Leasing
Leasing Policy
Policy・ Promote the superiority of Akasaka Oji Building and approach IT companies, apparelcompanies and others regardless of their business・ While maintaining the level of rents, aim for a minimization of downtime⇒ Leasing activity which brings together the collective strengths of TOP REIT

Leasing
Leasing Condition
Condition (End(End ofof May)May)●Inquiries ：47●Property visits ：9●Consideration requests ：2●Agreements concluded ：115

III-4. Growth Strategy for the Next Stage◆ While securing a foothold for revenues, acquire competitive and highly profitable properties◆ Fully utilize the Top REIT Edge
Sponsor Strength
Superior Portfolio◆ Implement growth strategy with anextreme focus on the dividend level(¥13,000~14,000)

Growth Strategy
Strategy
GrowthGrowth Methods
Methods
GrowthContinued Implementation of Growth Strategy for the Next Stage◆ Flexibly select fund procurement means according to the market environment
・Bank loans: Flexibly utilize strong bank formation
・Investment corporation bonds: Consider in view of market environment, etc.
・Capital increases through public offerings: Consider investment unit price levels andproperty returns, as well as amount of net assets and dividend◆ Consider M&A and joining of new sponsors

Next Stage(No. of
Properties)

Asset
Asset Size
Size

Further Leap
ForwardAchieve ¥210.0bn

Dividend
Dividend Level
Level Maintain ¥13,000~14,000
20g

Next stage
Asset size: ¥210bn
No. of properties: around 18 – 20
LTV: 40 – 50%

Acquisitions ofadditional ¥35bn

15

Appropriately
control LTV

End of 10th FP
10

Asset size: ¥175.047bn
No. of properties: 15
LTV: 50.5%¥160bnTargetingTargeting asset
asset size
size ofof ¥210bn,¥210bn,reducing
reducingNEC
NECHeadHead Office
OfficeBuilding’s
Building’s share
share ofofthe
the portfolio
portfolioto
to
20%
20%

¥170bn¥180bn¥190bn¥200bn¥210bn(Asset Size)

16

IV. Tenth Fiscal Period Operating Results and Future Initiatives

17

IV-1. Operating Results: History of Asset Growth
History
History ofof Asset
Asset Growth
GrowthAcquisition price

Latent profit = (Appraisal value – Book value)

Appraisal value(billion yen)(billion yen)

200

30
25

180
20
160

15
10

140

5
120
0
100

-5
1st FP

Acquisition priceBook value
Appraisal value
Latentprofits and loses

2nd FP

3rd FP

4th FP

5th FP

6th FP

7th FP

8th FP

9th FP

10th FPEnd of 1st FP
Oct. 2006

End of 2nd FP
April. 2007

End of 3rd FP
Oct. 2007

End of 4th FP
April. 2008

End of 5th FP
Oct. 2008

End of 6th FP
April. 2009

End of 7th FP
Oct. 2009

End of 8th FP
April. 2010

End of 9th FP End of 10th FP
Oct. 2010
April. 2011\113.286bn\116.187bn\127.442bn\130.846bn\133.576bn\152.468bn\130.846bn\132.698bn\155.923bn\157.187bn\159.585bn\188.035bn\162.347bn\163.985bn\189.441bn\162.347bn\163.245bn\170.870bn\162.347bn\162.237bn\164.948bn\175.047bn\174.618bn\177.146bn\175.047bn\173.618bn\175.351bn\175.047bn\172.994bn\170.670bn\11.254bn\18.891bn\23.224bn\28.449bn\25.455bn\7.624bn\2.710bn\2.527bn\1.732bn(\2.324bn)*Acquisition price and appraisal value details are provided on P36 to P38.
*Figures less than one million yen have been rounded down for the above-mentioned values. As for latent profits and loses, figures less than one million yen have been rounded down
after deducting book value (total) from appraisal value (total).

18

IV-2. Operating Results: History of Occupancy Rate
Maintaining Stable and High Occupancy since IPO

Occupancy
Occupancy Rate
Rate (Portfolio)(Portfolio)
Gross rentable floor space(gross rentablefloor space: ㎡)

99.9%

99.8%

99.5%

99.7%

99.5%

99.5%

99.2%

Occupancy rate

99.2%

99.5%

99.2%

99.4%

99.5%

99.6%

99.5%

99.8%

99.7%

99.6%

(Ｏｃｃｕｐａｎｃｙ ｒａｔｅ)

325,000

100%

300,000

95%
291,627.72

275,000

90%

291,647.88
291,627.72

250,000

283,622.23
276,833.20

225,000

261,671.68

283,622.23

291,627.72

291,627.72

291,627.72
291,627.72

291,627.72

291,627.72

283,622.23

80%

261,671.67

229,231.70

200,000

85%

75%

178,104.46
175,00070%

150,00065%

125,000

March 2006
(IPO)

Apr.2008
Oct.2006
Apr.2007
Oct.2007
Oct.2010
Apr.2010
Apr.2009
Oct.2008
Oct.2009
End of 1st FP End of 2nd FP End of 3rd FP End of 4th FP End of 5th FP End of 6th FP End of 7th FP End of 8th FP End of 9th FP

Nov. 2010

Dec.2010

Jan. 2011

Feb. 2011

Mar. 2011

Apr. 2011
End of 10th FP

May. 201160%《 Major Long-Term Rent Agreement (3 years or more) 》
Property

Main tenant

Based on rent Based on rented Remaining
period ofper Share of floor space pershare ofcontract
portfolio
portfolio(years)Tenancy
period(years)Expiration date

Notes

NEC Head Office Building

NEC Corporation

25.8%

24.8%

14.7

Previous
ownerDec. 28, 2025

Fixed-rate rent by Dec. 2013 (16th FP)
Cancellation banned until Dec. 2013 (16th FP)

Ito-Yokado Higashinarashino Store

Ito-Yokado Co., Ltd.

4.4%

17.5%

3.6

16.3

Nov. 30, 2014

Expiration date of rent agreement :18th FP(some rent is to be calculated on sales of store)

Musashiurawa Shopping Square

Olympic Corporation
Nitori Co., Ltd. etc

2.4%

5.1%

14.5

5.4

Oct. 31,2025

Cancellation banned until Oct. 2015(19th FP)

Nippon Steel City Produce,
Ltd.

1.8%

2.1%

15.9

Previous
ownerMar. 31,2027

Fixed-rate rent until Mar. 2017(22nd FP)
Cancellation banned until Mar. 2017(22nd FP)

34.4%

49.5%

OAK PLAZA

Total

19

IV-2. Operating Results: History of Occupancy Rate
Occupancy
Occupancy Rate
Rate (Office)(Office)
Rentable office space(gross rentablefloor space: ㎡)

99.8%

99.7%

100.0%

100.0%

100.0%

99.6%

150,000

99.0%

99.6%

99.4%

99.1%

138,673.71

99.6%

Occupancy rate

99.6%

99.6%

99.6%

99.8%

99.8%

99.8%

(Ｏｃｃｕｐａｎｃｙ ｒａｔｅ)

139,312.77
138,929.87
138,929.87
139,312.77
139,312.77
138,929.87
138,929.87
138,929.87

130,249.39
131,531.52
130,408.56
130,968.26

120,000

100%

90%

116,369.99

116,089.69
116,015.47
116,370.00

90,00080%

60,00070%

30,00060%

0March 2006
(IPO)

Apr.2008
Apr.2007
Oct.2007
Oct.2006
Oct.2008
End of 1st FP End of 2nd FP End of 3rd FP End of 4th FP End of 5th FP

Apr.2009
Oct.2009
End of 6th FP End of 7th FP

Oct.2010
Apr.2010
End of 8th FP End of 9th FP

Nov. 2010

Dec.2010

Jan. 2011

Feb. 2011

Mar. 2011(*)

Apr. 2011
End of 10th FP

May. 2011

50%(*)Vacant space: Shiba-Koen Building (224.24m2)

Occupancy
Occupancy Rate
Rate (Residential)(Residential)(Ｏｃｃｕｐａｎｃｙ ｒａｔｅ)(gross rentablefloor space: ㎡)

Rented floor space

Occupancy rate (Fukasawa)

25,0009 7 .4 %9 4 .6 %8 9 .5 %9 3 .0 %9 3 .6 %20,0009 6 .6 %9 3 .9 %9 2 .2 %9 7 .7 %9 7 .5 %9 5 .6 %9 3 .3 %9 0 .7%

Occupancy rate (Toyosu)

9 5 .1 %9 7 .3 %9 4 .4 %9 8 .0 %9 6 .5 %9 3 .6 %9 2 .7 %9 3 .5 %9 9 .5 %9 7 .5 %9 7.4 %

100%
9 7.7 %
9 5.7 %

9 5 .6 %94 .6 %

9 2 .7 %9 1 .0 %Occupancy rate (residential total)
1 0 0 .0 %9 5 .9 %9 6 .2 %9 4 .5 %9 4 .6 %9 4 .2 %9 5 .9 %93 .6 %

90%

8 8 .7 %

1 7 ,6 8 6 .1 2
1 7 ,3 5 4 .3 2

1 7 ,6 8 0 .8 7
1 7 ,3 7 4 .2 8

1 7 ,2 6 2 .0 3

1 7 ,1 7 4 .9 1
1 7 ,0 3 3 .8 8

1 7 ,1 3 2 .9 9

1 7 ,1 6 8 .6 5

1 7 ,1 4 3 .2 3

1 6 ,9 8 3 .1 1

15,00080%

1 6 ,8 2 1 .9 470%

10,0001 0 ,6 3 3 .1 6

1 0 ,0 6 9 .1 1

1 0 ,1 6 4 .1 1

60%

5,000

50%

0

Apr.2007End of 2nd FP

Oct.2007End of 3rd FP

Apr.2008
End of 4th FP

Oct.2008
End of 5th FP

Apr.2009
End of 6th FP

Oct.2009
End of 7th FP

Apr.2010
End of 8th FP

Oct. 2010
End of 9th FP

Nov. 2010

Dec. 2010

Jan. 2011

Feb. 2011

Mar. 2011

Apr. 2011
End of 10th FP

May. 201120

IV-3. Operating Results: Results from Rent Revisions （excluding residential）
Office:Office: Rent
Rent Revision
Revision Results
Results (As(As atat endend ofof 10th
10th FP)
FP)
Revised monthly
rentMonthly rent before
revision(million yen)
300

Rent revision results ＝ Increase in monthly rent(%)
Monthly rent before revision

10th
10th FPFP revision:
revision:
13.8%
13.8% decrease
decrease250
6th
6th FPFP revision:
revision:
0.5%
0.5% increase
increase

2nd
2nd FPFP revision:
revision:
0.1%
0.1% increase
increase

200

150

100

1st
1st FPFP revision:
revision:
0.2%
0.2% increase
increase

50

0

8th
8th FPFP revision:
revision:
5.8%
5.8% decrease
decrease

4th
4th FPFP revision:
revision:
14.9%
14.9% increase
increase
5th
5th FPFP revision:
revision:
7.8%
7.8% increase
increase

3rd
3rd FPFP revision:
revision:
9.1%
9.1% increase
increase
1st FP

2nd FP

3rd FP

4th FP

5th FP

9th
9th FPFP revision:
revision:
6.5%
6.5% decrease
decrease

7th
7th FPFP revision:
revision:
1.4%
1.4% decrease
decrease

6th FP

7th FP

8th FP

9th FP

10th FP◆ Results of 10th FP Rent Revision (Total) ◆Retail：Rent
Retail：Rent Revision
Revision Results
Results (As(As atat endend ofof 10th
10th FP)FP)● Musashiurawa Shopping Square
Contracts were renewed with unchanged rents~ Concluded nearly mostly within assumed range ~・Office
Office buildings 13 cases： 13.8%% decrease on average(Unchanged:2, Decreased:11)
Decreased:11)
・Retail properties：
Unchanged
properties：■ Total (excluding residential)：
residential)： 12.7% decrease on average*The master lease agreement with Obayashi Corporation at Harumi Island Triton Square Office Tower Z expired and a sublease agreement with guaranteed rent was
concluded with the previous sublease company

21

IV-4. Operating Strategies:
Management Policy and Schedule of Future Rent Revisions「Tenants First」 Policy = 「Maintaining and Improving tenants satisfaction」
Maintain and enhance asset value by discerning and appropriately incorporating tenant needs
Secure stable revenue for the long term by creating a favorable relationship with superior tenants

Schedule
Schedule ofof Rent
Rent Revisions
Revisions inin thethe 11th
11th FPFP && 12th12th FPFP(million yen)
12,00011th FP

10,000

8,000

6,000

4,000

2,000

*Based on monthly rent0
May.2011

Jun.2011

Jul.2011

Aug.2011

Sep.2011

Oct.2011 Nov.2011

11th FP

Rent
Rent Revision
Revision Policy
PolicyDec.2011

Jan.2012 Feb.2012

12th FP

Mar.2012

Apr.2012

12th FP

Shiba-Koen Building(parts of tenants)
Kanda Park Plaza(parts of tenants)
Faret East Building(parts of tenants)
Nittetsu Honmachi Building(parts of tenants)
Sagamihara Ｓhopping
Center（※）
Harumi Island Triton Y(parts of tenants)
Akasaka Oji Building(parts of tenants)
Shiba-Koen Building(parts of tenants)
Kanda Park Plaza(parts of tenants)
Faret East Building(parts of tenants)
Nittetsu Honmachi Building(parts of tenants)

６

tenants

11

tenants*Rent revision of Sagamihara Shopping Center were with
Ito-Yokado

Conduct persistent negotiations using the good relations with tenants
22

V. Financial Strategies23V-1. Financial Strategies: Stable Financial Management
Financial Policies (Stable Financial Management)
Maintain stable bank formationand secure financial flexibility

Short-Term

Changes in Fund Procurement Status (Debt)

60%(billion yen)

47.4%

47.3%

75

10.3

9.3

Manage Risk of Fluctuating Interest
Rates

37.1%

The market interest rate is currently low and stable. In viewof the risk of future interest rate fluctuations, TOP REIT willin the meantime operate with a ratio of fixed-rate interest
borrowings of 50% while enjoying the present benefits. TOP
REIT will watch for interest rate trends and deliberate on
raising the ratio of fixed-rate interest borrowings.

50

27.8%

11.3%

6.7

50.6%

50.5%

47.3%

50%
50.5%

13.3

37.3%

40%

87.5

2.5

72.7

72.7

68.5

30%

94.1

87.5

68.5

20%

Conduct operation with a target ratio of loans to total assets(LTV) of around 50% in contrast to the 60% ceiling

10%

54.4

25
33.4

33.4

33.4

IPO

1st FP

2nd FP0%0
3rd FP

4th FP

5th FP

6th FP

7th FP

8th FP

9th FP

52.8%

52.8%

47.2%

47.2%

10th FP

Ratio
Ratio ofof Loans
Loans with
with Fixed
Fixed Interest
Interest Rates
Rates
16.2%

16.2%

7.1%

100%

7.1%

19.1%
35.9%

80%

38.5%

80%

13.3

6.7

28.0%

Ratio
Ratio ofof Long-Term
Long-Term Loans
Loans
12.4%

47.3%

20.9

Manage Risk of Fluctuating Interest Rates

7.0%

Long-Term

100

Extend Borrowing Periods and Spread
Out Repayment Dates

100%

LTV

24.9%

24.0%
37.9%

37.9%

57.6%

47.3%

60%

60%

100.0%

100.0%

93.0%

87.6%

40%

88.7%

83.8%

83.8%

92.9%

92.9%

100.0%

100.0%

64.1%

61.5%

ShortTerm

20%

LongTerm

0%
IPO

1st FP

2nd FP

80.9%

40%

3rd FP

4th FP

5th FP

6th FP

7th FP

8th FP

9th FP 10th FP

75.1%

76.0%
62.1%

62.1%

42.4%

20%

52.7%

Floating
Fixed

0%
IPO

1st FP

2nd FP

3rd FP

4th FP

5th FP

6th FP

7th FP

8th FP

9th FP

10th FP•Regarding all graphs on this page, figures for the end of the 9th and 10th FP include ¥8.5 bn of investment corporation bonds.

24

V-2. Financial Strategies: Financial Status / Extend Borrowing Periods
Refinancing
Refinancing andand Extend
Extend Borrowing
Borrowing Periods
Periods
Refinancing in the 10th FP
・Feb. 2011 ¥6.7bn in short-term loans ⇒ Refinanced with short-term loans
・Mar. 2011 ¥6.7bn in short-term loans ⇒ Refinanced before maturity with long-term loans(approx. 5 year)
・Mar. 2011 ¥16.7bn in long-term loans ⇒ Refinanced with long-term loans (approx. 5 year)(fixed rate)*Scheduled repayment of 67.5 million yen each period between 9th FP and 21st FP(million yen)
25,00020,0006,70 0

6 ,7 00
1,67 015,0004,90 8
9 ,8 00
9 ,0 00
1,27 3

No. 1 Unsecured
Investment
Corporation Bonds

10,000
16 ,7 00

16 ,7 00

3,00 0
11 ,1 89

5,000

8,50 0

8 ,5 00
6 ,3 00
4,00 0

1 ,8 23

-

10th
FP

11th
FP

The Sumitomo Trust and Banking Co., Ltd.

12th
13th
FP
FP
¥22,689mn

14th
15th
16th
FP
FP
FP
26.5% Development Bank of Japan, Inc.

17th
FP

18th
FP
¥6,565mn

19th
FP
7.7%

Outstanding Balance ofLoans by Lender

Mizuho Corporate Bank, Ltd.

¥15,946mn

18.6%

Dai-Ichi Life Insurance Company Ltd.

¥1,000mn

1.2%

Sumitomo Mitsui Banking Corporation¥12,570mn

14.7%

Resona Bank, Limited¥1,000mn

1.2%

The Bank of Tokyo Mitsubishi UFJ, Ltd.

¥12,570mn

14.7%

The Bank of Fukuoka, Ltd.

¥3,000mn

3.5%

The Chuo Mitsui Trust and Banking, Co., Ltd¥4,190mn

4.9%

The Hiroshima Bank, Ltd.

¥1,000mn

1.2%

Mitsubishi UFJ Trust and Banking Corporation¥4,075mn

4.8%

The Yamaguchi Bank, Ltd.

¥1,000mn

1.2%¥85,605mn

100.0%¥8,500mn－¥94,105mn－

SUB TOTAL

No. 1 Unsecured Investment Corporation Bonds
TOTAL

20th
FP

21st
FP

22nd
FP

Implemented enhancement offunding base in preparation of
expansion of asset size.
Maintaining a stable bank formation
centering on previous lenders.

(as of Apr.30, 2011)25

V-3. Financial Strategies: Issuer Rating and Loans at End of
Tenth Fiscal Period
Issuer Rating

LenderCategory

Development Bank of Japan, IncA3(Negative) Assigned by Moody’s Japan K.K.

Loan
Balance

Interest Rate(end of April
2011)

Loan Execution
Date

Repayment
Date¥135mn2.42%(fixed)January 13,
2010

November 30,
2016

Remaining
PeriodNote

Scheduled
repayment

Unsecured
and without
guarantee

AA－ (Stable) Assigned by Rating and Investment Information, Inc. (R&I)

LenderCategory

Loan
Balance

Interest Rate(end of April
2011)

Loan Execution
Date

Repayment
Date¥9,800mn

1.24%(floating)January 13,
2010

November 30,
2012

Remaining
PeriodThe Sumitomo Trust and Banking, Co., Ltd.
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo Mitsubishi UFJ, Ltd.

¥135mn1 year&7 months
Unsecured
and without
guarantee

Mitsubishi UFJ Trust and Banking Corporation
The Sumitomo Trust and Banking, Co., Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust and Banking Corporation

Resona Bank, Limited¥11,189mn

1.24%(floating)March 3, 2009

November 30,
2011

7 months

Note

Unsecured
and without
guarantee

Development Bank of Japan, Inc.

¥2,497mn

2.42%(fixed)January 13,
2010

November 30,
2016

5 years

1. 24%(floating)March 26, 2010 June 29, 2012

1 year&2 months

Unsecured
and without
guarantee

1.39%(fixed)March 3, 2011

February 29,
2016

4 years&
10 months

Unsecured
and without
guarantee

0.76%(floating)March 31, 2011

February 29,
2016

4 years&
10 months

Unsecured
and without
guarantee¥11,189mn¥12,297mn
The Sumitomo Trust and Banking, Co., Ltd.
Sumitomo Mitsui Banking Corporation

Current
Portion of Mitsubishi UFJ Trust and Banking Corporation
Long-Term
Loans¥1,273mn

1. 24%(floating)March 27, 2009 November 30,
2011

7 months

Unsecured
and without
guarantee

The Sumitomo Trust and Banking, Co., Ltd.
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust and Banking Corporation¥1,273mn
Mizuho Corporate Bank, Ltd.
The Bank of Tokyo Mitsubishi UFJ, Ltd.

¥4,908mn

1. 24%(floating)

November 30,
2009

November 30,
2011

7 months

Unsecured
and without
guarantee¥4,908mn

The Chuo Mitsui Trust and Banking, Co., Ltd.

¥1,670mn

1. 24%(floating)February 26,
2010

November 30,
2011

7 months

Unsecured
and without
guarantee

Long-Term
Loans¥9,000mn¥9,000mn
The Sumitomo Trust and Banking Co., Ltd.
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo Mitsubishi UFJ, Ltd.
The Chuo Mitsui Trust and Banking, Co., Ltd.
Mitsubishi UFJ Trust and Banking Corporation¥16,700mn¥16,700mn¥1,670mn

Subtotal
The Sumitomo Trust and Banking Co., Ltd.
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo Mitsubishi UFJ, Ltd.
The Chuo Mitsui Trust and Banking, Co., Ltd.
Mitsubishi UFJ Trust and Banking Corporation¥19,175mn

1.25%(avg.)¥8,500mn

1.95%(fixed)The Sumitomo Trust and Banking Co., Ltd.
The Bank of Fukuoka, Ltd.
The Hiroshima Bank, Ltd.
The Yamaguchi Bank, Ltd.

7 months(avg..)

June 29, 2007

June 29, 2012

1 year&2 months

Unsecured
and without
guarantee¥6,700mn¥6,700mn¥66,430mn

1.39%(avg.)

No. 1 Unsecured Investment Corporation Bonds¥8,500mn

1.00%(fixed)Total¥94,105mn

1.38%(avg. )

Subtotal

2 years &5 months(avg.)¥8,500mn

Long-Term
Loans

The Sumitomo Trust and Banking, Co., Ltd.

¥2,000mn

2.27%(fixed)Development Bank of Japan, Inc.

¥1,000mn

2.40%(fixed)Dai-Ichi Life Insurance Company Ltd.

¥1,000mn

2.40%(fixed)June 29, 2007

June 30, 2014

3 years&
2 months

Unsecured
and without
guarantee

June 4, 2010

June 4, 2015

4 years &1 monthUnsecured
and without
guarantee¥4,000mn
The Sumitomo Trust and Banking Co., Ltd.
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust and Banking Corporation¥6,300mn

Development Bank of Japan, Inc.

¥3,000mn

1.48%(fixed)March 27,
2008
1.53%
(fixed)March 27,2013

1 year
&11 months

Unsecured
and without
guarantee

2 years&
6 months(avg.)

Note: Interest rates are rounded to the second decimal place, and the remaining periods are rounded to a whole number.
The averages for interest rates and remaining periods are weighted averages based on the balance at the end of fiscal period.

¥9,300mn

26

VI. Tenth Fiscal Period Results (Ended April 30, 2011)27

VI-1. Statements of Income (Summary) /Statements of Cash Distributions■ Statements of Income
Account■ Statements of Cash Distributions
9th FPMay 1, 2010 October 31, 2010
(184 days)

10th FP
November 1, 2010 April 30, 2011
(181 days)

AmountAmountAccount

I. Operating revenue andexpenses
1.Operating revenue¥6,060mn¥5,967mn

2.Operating expenses¥3,041mn¥2,995mn

Expenses related torent business¥2,451mn¥2,414mn¥455mn¥450mnAsset management fees
Other
Operating income¥134mn¥131mn¥3,019mn¥2,971mn

II. Non-operating income
and expenses
1.Non-operating income¥7mn¥6,060mn¥6mn

Interest income

¥6mn

¥3mn

Other

¥1mn

¥3mn

2.Non-operating expenses¥822mn¥783mnInterest expenses¥665mn¥615mnInterest expenses oninvestment corporation bonds

¥34mn

¥42mn

¥5mn

-

¥115mn¥125mn¥2,204mn¥2,194mn-¥37mn¥2,204mn¥2,158mn

Income taxes-current

¥0mn

¥0mn

Income taxes-deferred

¥0mn

¥0mn

Net income¥2,204mn¥2,157mn

Unappropriatedretained earnings¥2,204mn¥2,157mn

Amortization of deferredorganization expenses
Other
Ordinary income
Extraordinary loss
Income before income taxes

9th FPMay 1, 2010 October 31, 2010
(184 days)

10th FP
November 1, 2010 April 30, 2011
(181 days)

AmountAmountUnappropriatedretained earnings¥2,204mn¥2,157mn

Total dividend amount¥2,204mn¥2,157mn<Dividend per unit><¥14,220><¥13,922>

Retained earnings
carried forward--【Expenses related to rent business】
 Depreciation and amortization:¥1,086mn

 Property management expenses:¥389mn Utilities expenses:¥202mnand others28VI-2. Balance Sheets (Summary)
Account

9th FP(as of October 31, 2010)

10th FP(as of April 30, 2011)

AmountAmountAccount

Assets

9th FP(as of October 31, 2010)

10th FP(as of April 30, 2011)

AmountAmountLiabilities
I. Total current liabilities
Operating accounts payable¥25,244mn¥187mn¥20,850mn¥210mnShort-term loans payable¥6,700mn-¥16,835mn¥19,175mn¥271mn¥239mn¥134mn¥810mn¥62mn¥3mn¥76,776mn¥262mn¥254mn¥49mn¥868mn¥29mn¥81,068mn

I. Total current assets¥12,426mn¥12,738mn

Cash and deposits¥7,343mn¥8,244mn

Cash and deposits in trust¥4,769mn¥4,204mn¥313mn¥289mnII. Total noncurrent assets¥173,981mn¥173,551mn

1. Total property, plant andequipment¥173,618mn¥172,994mn

Buildings, etc.

¥1,012mn¥992mnCurrent portion of long-termloans payable
Accounts payable － otherAccrued expenses
Accrued consumption taxes
Advances received
Derivative liabilities
Other
II. Total noncurrent liabilities

Land¥4,888mn¥4,888mn

Investment Corporation Bond

¥8,500mn¥8,500mn

Buildings, etc. in trust¥49,483mn¥48,879mn

Long-term loans payable¥62,137mn¥66,430mn

Land in trust¥118,234mn¥118,234mn¥146mn¥144mn2. Total intangible assets

¥0mn

¥0mn

Intangible assets

¥0mn

¥0mn

Other

Tenant leasehold and security
deposits
Tenant leasehold and security
deposits in trust
Total liabilities¥5,992mn¥5,993mn¥102,020mn¥101,918mn

Net assets
I. Total unitholders’ equity
1.Unitholders’ capital¥84,464mn¥82,260mn¥84,418mn¥82,260mn¥2,204mn¥2,157mn¥2,204mn¥2,157mn(¥25mn)-(¥25mn)-Total net assets¥84,438mn¥84,418mn

Total liabilities and net assets¥186,459mn¥186,336mn

3. Total investment andother assets¥363mn¥557mnLease and guarantee deposits

¥10mn

¥10mn

Long-term prepaid expenses¥198mn¥389mnOther¥154mn¥157mn2.Surplus
Unappropriatedretained earnings
Total surplus

¥51mn

¥45mn

II. Total valuation and translation
adjustments

-

-

¥51mn

¥45mn

¥186,459mn¥186,336mn

III. Total deferred assets
Deferred organization expenses
Investment corporation bondissuance costs
Total assets

Deferred gains or losses on hedge29

VI-3. Major Financial Indicators
8th Fiscal Period
November 1, 2009 –April 30, 2010

Item
Period of asset management

9th Fiscal Period
May 1, 2010 –October 31, 2010

10th Fiscal Period
November 1, 2010 –April 30, 2011

Remark181days184days181days

50.6%

50.5%

50.5%

Interest-bearing liabilities at end of period / Total assets at endof period¥4,535mn¥4,691mn¥4,639mn

Rent revenue – Expenses related to rent business + Depreciation
and amortization

5.4%

5.4%

5.3%

¥3,217mn¥3,286mn¥20,755¥21,200

Ratio of ordinary income to total
assets (return on assets (ROA))

1.2%

1.2%

1.2%

Annualized[2.3%][2.4%][2.4%]

2.5%

2.6%

2.6%

[5.0%][5.2%][5.1%]

Implied Cap Rate

5.9%

5.8%

NOI / ( Market capitalization at end of period +Net Debt at end of
5.6% period (Total liabilities at end of period – Total current assets at
end of period))

NAV multiple

0.79

0.82

Market capitalization at end of period / (Net assets at end of
0.93 period + (Appraisal value at end of period – Book value at end of
period))Ratio of unitholders' equity tototal
assets at the end of period

45.2%

45.3%

45.3% Net assets at end of period / Total assets at end of period

Ratio of interest-bearing liabilities
tototal assets at end of period (LTV)
Rental NOI(Net operating income)Rental NOI yield
Funds from Operation (FFO)
FFO per unit

Ratio of net income to unitholders'equity (return on equity (ROE))
Annualized

Rental NOI x 2 / Sum total of the acquisition price of allproperties in the portfolio at end of period¥3,243mn Net income + Depreciation and amortization¥20,929 FFO / Number of units issued and outstanding at end of period

Ordinary income / ((Total assets at beginning of period + Total
assets at end of period) / 2)

Net income / ((Net assets at beginning of period + Net assets at
end of period) / 2)30

VI-4 . Unitholders
Unitholdings
Unitholdings (as(as atat endend of10th
of10th FP)
FP)
Category

NumberNumber ofof Unitholders
Unitholders

Number of Units Held

Individuals / other
Financial institutions(incl. securities firms)
Other domestic
corporations
Overseas corporations /individuals
Total

Number of Unitholders

20,592

13.3%

6,718

94.8%

97,259

62.7%

113

1.6%

13,475

8.7%

145

2.0%

23,674

15.3%

114

1.6%

155,000

100.0%

7,090

100.0%

Top
Top 1515 Unitholders
Unitholders (as(as atat endend ofof 10th
10th FP)
FP)
Rank

Name

Number of
Share of Total
Units Held

1 Japan Trustee Service Bank (trust account)

23,33615.06

2 Nomura Trust and Banking (investment trust account)

13,768

8.88

Trust and Custody Services Bank (securities investment
3 trust account)

7,680

4.95

4 The Master Trust Bank of Japan (trust account)

6,449

4.16

5 North Pacific Bank, LTD.

6,139

3.96

6 The Senshu Ikeda Bank, Ltd

4,540

2.93

7 American Life Insurance Company GAL

3,900

2.52

8 NOMURA BANK（LUXEMBOURG）S.A.

3,800

2.45

9 The Fuji Fire and Marine Insurance Company, Limited

3,465

2.24

10 The Sumitomo Trust and Banking Co., Ltd.

3,176

2.05

11 Nippon Steel City Produce, Inc

3,162

2.04

11 Oji Real Estate Co., Ltd.

3,162

2.04

Trust and Custody Services Bank (money trust tax
13account)

2,844

1.83

14 Mizuho Trust & Banking co., Ltd

2,062

15 The Minami Nippon Bank, Ltd.

1,550

1.00

89,033

57.44

Total

1.33

Financial institutions (incl. securities firms):
Other domestic corporations:
Overseas corporations / individuals:

8th Fiscal Period
Total number ofunitholders at endof period: 6,879

98 [1.4%]
144 [2.1%]
124 [1.8%]

Individuals / other 6,513 [94.7%]
Financial institutions (incl. securities firms):
Other domestic corporations:
Overseas corporations / individuals:

9th Fiscal Period
Total number ofunitholders at endof period: 6,830

105 [1.5%]
139 [2.0%]
113 [1.7%]

Individuals / other 6,473 [94.8%]
Financial institutions (incl. securities firms):
Other domestic corporations:
Overseas corporations / individuals:

10th Fiscal Period
Total number ofunitholders at endof period: 7,090

113 [1.6%]
145 [2.0%]
114 [1.6%]

Individuals / other 6,718 [94.8%]

0%

20%

40%

60%

80%

100%

NumberNumber ofof Units
Units Held
Held
Individuals / other:
19,969 [12.9%]

8th Fiscal Period
Total number of units
issued andoutstanding at end of
period: 155,000

Other domestic corporations:
14,220 [9.2%]

Overseas
corporations /individuals:
26,656 [17.2%]

Financial institutions (incl. securities firms):
94,155 [60.7%]
Individuals / other:
19,556 [12.6%]

9th Fiscal Period
Total number of units
issued andoutstanding at end of
period: 155,000

Other domestic corporations:
13,870 [9.0%]
Overseas
corporations /individuals:
20,601 [13.3%]

Financial institutions (incl. securities firms):
100,973 [65.1%]
Individuals / other:
20,592 [13.3%]

10th Fiscal Period
Total number of units
issued andoutstanding at end of
period: 155,000

Other domestic corporations:
13,475 [8.7%]
Overseas
corporations /individuals:
23,674 [15.3%]

Financial institutions (incl. securities firms):
97,259 [62.7%]

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

31

VI-5. Unit Price Performance and Volume (March 1, 2006 – May 31, 2011)
Top REIT Trading Volume

（yen）
第10期

Top REIT

第10期

TSE REIT Index（Unit）
第10期

TOPIX

1,000,000

10,00010th FP

11th FP

900,000
8,000
800,000

700,000

6,000

600,000
4,000

500,000

400,000
2,000
300,0000

200,000
Apr.2006

Oct. 2006

Apr. 2007

10th
10th Fiscal
Fiscal Period
Period End
End
Unit
Price
Unit Price(based(based on
on closing
closing price)
price)

Oct. 2007

Apr. 2008

Oct. 2008

Apr. 2009IPO
IPO PricePrice¥491,500(April 28, 2011)

Historical
Historical HighHigh since
since IPO
IPO
(basedon
closing(based on closing price)
price)
Historical
Historical Low
Low since
since IPO
IPO
(based(based on
on closing
closing price)
price)

Oct. 2009¥550,000

Apr. 2010

Oct. 2010

Apr. 2011

Mar. 1, 2006

¥998,000 Feb. 16, 2007
¥208,000 Oct. 28, 200832

VIl. Appendix: Portfolio Overview

33VII-1. Portfolio Map
Kansai (Osaka
Metropolitan
Area)

Tokyo Metropolitan
Area
Musashiurawa
Shopping
SquareFaret East Building

Amagasaki Sta.
ItoIto-Yokado
HigashiHigashi-Narashino
Store

Fukasawa House Towers H&I
Fukasawa House
Towers H&I
Sagamihara
Shopping Center

Shin-Osaka Sta.

Osaka Sta.

Kyobashi Sta.
日鉄本町ビルNittetsu Honmachi
Building
Tennoji Sta.

Harumi Island Triton Square
NEC Head Office Building
Office Tower Y&Z
Akihabara Sta.

Iidabashi Sta.OAK PLAZA

Central Tokyo

Kanda Nishiki-cho
3-chome Building
Shinjuku Sta.
Yotsuya Sta.

ShibuyaWard

Kanda Park Plaza
Kanda Sta.

ChiyodaWardTokyo Sta.
Sagamihara
Shopping Center

Akasaka Oji
Building
MinatoWard

Chuo Ward
Shinbashi Sta.

Shibuya Sta.
NEC Head
Office Building

Ecology Toyosu
Procentury

ShibaShiba-Koen Harumi Island
Building
Triton Square
Office Tower Y & Z

Shinagawa
Ward
Shinagawa Sta.

Kanda Nishiki-cho 3-chome Building(formerly called Sumitomo Corporation
Nishiki-cho Building)34

VII- 2．Portfolio Summary (as at end of 10th FP)
Total Acquisition Price ： ¥175.047bn.

Gross Rentable Floor Area ： 291,627.72㎡

Number of Properties ： 15

PML

： 2.4%

Asset Class (property type)
100%

11.5%

18.4%

2.0%
8.1%
19.3%

80%

2.0%
8.1%
19.3%

1.6%
6.8%
16.1%

1.6%
9.7%
15.5%

1.6%
9.7%
15.5%

1.6%
9.7%

Area

1.5%
9.0%

15.5%

1.5%
9.0%

14.4%

1.5%
9.0%

14.4%

100%

other

14.4%

0.8%

0.8%

28.6%

28.6%

70.6%

70.6%

End of 2ndFP

End of 3rd
FP

88.5%

(40.2%)

0.7%

0.7%

0.6%

0.6%

0.6%

24.2%

26.6%

26.6%

26.6%

24.6%

24.6%

24.6%

75.1%

72.8%

72.8%

72.8%

74.7%

74.7%

74.7%

End of 4thFP

End of 5thFP

End of 6thFP

End of 7thFP

End of 8thFP

End of 9thFP

End of 10thFP

kansai

19.8%

Tokyo
Metropolitan Area
Central Tokyo

81.6%(37.0%) (32.1%)

70.6%(32.1%)

75.5%

73.1%

(26.7%) (25.8%)

73.1%

73.1%

(25.8%) (25.8%)

75.1%

40%

75.1%

75.1%

(24.0%) (24.0%)(24.0%)

86.0%

79.2%

20%
( ) Share of
NEC Head Office
Building

0%

IPO

IPO

End of 1st End of 2nd End of 3rd End of 4th End of 5th End of 6th End of 7th End of 8th End of 9th End of 10th
FP
FP
FP
FP
FP
FP
FP
FP
FP
FP

End of 1stFP

Age of Buildings

Scale
Scale (based(based on
on total
total floor
floor space)
space)
6.0%
10.7%
80%

0.7%

80%

Office

0%

100%

0.7%

60%

70.6%
20%

1.0%

Retail

60%

40%

1.1%
13.0%

Residential

5.5%

6.8%

6.8%

100%
9.3%

12.2%

12.2%

12.2%

11.3%

11.3%

11.3%

10,000㎡49,999㎡

17.7%
26.8%

11.5%

26.8%

22.7%

21.9%

21.9%

21.9%

10.6%
9.2%

60%

9.2%

Less than
10,000㎡

7.6%

7.4%

7.4%

27.6%

27.6%

27.6%

6.9%

6.9%

6.9%

4.6%

5.9%

5.9%

80%

50,000㎡99,999㎡

49.4%

100,000㎡ or
more

7.4%

4.9%

46.5%

40.3%

40.3%

4.9%

37.2%

14.6%

71.8%

66.2%
57.3%

57.3%

60.4%

58.5%

58.5%

58.5%

54.2%

54.2%

14.0%

20%

IPO

End of 1stFP

End of 2ndFP

End of 3rdFP

End of 4thFP

End of 5thFP

End of 6thFP

End of 7thFP

End of 8thFP

End of 9thFP

End of 10thFP

20 years or
more

41.2%
43.4%

37.5%

31.6%

17.1%

17.1%

25.2%

25.2%

6.8%

6.8%

33.7%

32.6%

32.6%

41.2%

41.2%

42.9%

IPO

15 years19 years
10 years14 years
5 years-9
years
Less than
5 years

17.1%

17.1%

39.3%

41.8%

17.1%

1.3%

39.2%

29.1%
11.4%

11.4%

9.5%

12.4%

12.4%

End of 2ndFP

End of 3rdFP

End of 4thFP

End of 5thFP

End of 6th
FP

0%

0%

10.7%

19.8%

54.2%

20%

10.7%

60%

40%

40%

4.8%

End of 1st
FP

5.8%

2.5%

End of 7thFP

End of 8th
FP

41.8%

Ａｖｅｒａｇｅ
Ａｖｅｒａｇｅ17.2
17.2 years
years
End of 9thFP

End of 10thFP

※In the above graphs, percentage figures are calculated based on acquisition price and the average is a weighted average based on acquisition price.

35

VII-3. Portfolio Overview (as at end of 10th FP)
Asset
Class

Total Floor
RentableCompletion
Space (㎡) Floor Space (㎡)Date

NEC Head Office Building

Minato Ward,Tokyo

Mar 3, 2006

144,476.05

72,238.03

Jan. 1990

41,950

24.0

100.0

1

1.4

Harumi Island Triton Square
Office Tower Y

Chuo Ward,Tokyo

Mar 1, 2006

267,132.67

23,219.46

Oct. 2001

33,000

18.9

100.0

7

1.2

Harumi Island Triton Square
Office Tower Z

Chuo Ward,Tokyo

Mar 27, 2008 267,132.67

10,914.20

Oct. 2001

20,000

11.4

100.0

1

1.5

Kanda Nishiki-cho 3-chome
Building

Chiyoda Ward,Tokyo

Jan 13,2010

12,169.78

8,025.65

Mar.1973

12,700

7.3

100.0

1

7.0

Akasaka Oji Building

Minato Ward,Tokyo

Mar 1, 2006

10,063.05

7,281.83

Apr. 1989

9,660

5.5

100.0

2

6.4

Shiba-Koen Building

Minato Ward,Tokyo

Mar 19, 2008

4,958.29

3,060.43

May 1991

5,770

3.3

92.7

2

9.6

Kanda Park Plaza

Chiyoda Ward,Tokyo

Mar 1, 2006

5,511.83

4,537.66

Nov. 1959

5,156

2.9

100.0

10

14.1

Tokyo
Metropolitan Faret East Building
Area

Tachikawa City,Tokyo

Mar 1, 2006

16,206.34

5,850.23

Dec. 1994

2,091

1.2

100.0

1

2.8

Kansai

Osaka City, Osaka Mar 1, 2006

6,714.09

4,409.52

June 1991

1,100

0.6

100.0

12

8.5

－

139,537.01－

131,427

75.1

99.8

37

－

Mar 1, 2006

56,351.42

61,763.28

Aug. 1993
etc.

12,000

6.9

100.0

2

3.6

Jun 30, 2006

45,338.37

51,098.42

Oct. 1994

8,900

5.1

100.0

1

7.7

Mar 19, 2007

28,930.36

14,960.69

Oct. 2005

4,335

2.5

100.0

3

8.5

－

127,822.39－

25,235

14.4

100.0

6

－

Dec 8, 2006

12,135.36

11,357.44

June 2004

10,635

6.1

94.6

1

1.6

May 30, 2008

9,630.96

6,789.03

Jan. 2005

5,160

2.9

97.7

1

10.6

－

18,146.47－

15,795

9.0

95.7

2

－

6,121.85

6,121.85

Apr. 1985

2,590

1.5

100.0

1

7.7

－

6,121.85

－

2,590

1.5

100.0

1

－

－

291,627.72－

175,047

100.0

99.7

46

2.4

Property

OfficeNittetsu Honmachi Building
Subtotal

Sagamihara City,
Kanagawa Pref.
Tokyo
Ito-Yokado Higashi-Narashino
Narashino City,
Metropolitan
Store
Chiba Pref.
Area
SaitamaCity,
Musashiurawa Shopping Square
Saitama Pref.
Sagamihara Shopping Center

Subtotal
Fukasawa House Towers H&I
Tokyo
Metropolitan
Residential Area
Ecology Toyosu Procentury

Setagaya Ward,Tokyo
Koto Ward,Tokyo

Subtotal

Other

Portfolio Occupancy
Number of
Share
Rate
Tenants(%)(%)

Acquisition
Date

CentralTokyo

RetailAcquisitionPrice(mm yen)Address

Area

CentralTokyo

Chiyoda Ward,Tokyo

OAK PLAZA
Subtotal
Total

Mar 20, 2007

PML
(%)

36

VII-4. Appraisal Value as at End of Period(million yen)
Asset
Class

CentralTokyo

Difference inAppraisal Valuefrom End of 9thFP(C) – (B)

Acquisition
Price

Book Value at
End of 10th FP(A)

NEC Head Office Building

41,95043,06747,50047,75047,75047,950

4,882

200

Harumi Island Triton Square
Office Tower Y

33,00031,47239,50039,30039,00038,700

7,227

(300)

Harumi Island Triton Square
Office Tower Z

20,00020,04015,70015,50015,10014,300(5,740)(800)

Sumitomo Corporation Nishiki-cho
Building

12,70012,854-

14,10014,10014,000

1,145

(100)

Akasaka Oji Building

9,660

9,761

14,40013,30013,300

9,570

(191)

(3,730)

Shiba-Koen Building

5,770

5,880

3,790

3,710

3,410

3,410

(2,470)-Area

Property

Appraisal Value Appraisal Value
Appraisal Value Appraisal Valueat End of 9th FP at End of 10that End of 7th FP at End of 8th FP(B)
FP (Ｃ）

Difference
BetweenAppraisal Valueand Book Value（C）－（A）

OfficeRetailKanda Park Plaza

5,156

5,118

5,179

5,047

4,959

4,970

(148)

11

Tokyo
Metropolitan
Area

Faret East Building

2,091

1,746

2,780

2,500

2,500

2,430

683

(70)

KansaiNittetsu Honmachi Building

1,100

1,014

1,440

1,390

1,380

1,430

415

50

Subtotal

131,427

130,957

130,289

142,597

141,499

136,760

5,802(4,739)Sagamihara Shopping Center

12,000

11,48010,70010,70010,30010,300(1,180)-

Ito-Yokado Higashi-Narashino
Store

8,900

8,150

5,416

5,613

5,568

5,560

(2,590)(8)

Musashiurawa Shopping Center

4,335

4,097

3,790

3,800

3,810

3,810

(287)

-

Subtotal

25,23523,72819,906

20,113

19,67819,670(4,058)(8)

Fukasawa House Towers H&I

10,635

10,437

7,540

7,180

6,980

6,990

(3,447)

10

Ecology Toyosu Procentury

5,160

5,165

4,640

4,560

4,520

4,590

(575)

70

Subtotal

15,795

15,602

12,18011,74011,500

11,580(4,022)80

OAK PLAZA

2,590

2,706

2,573

2,696

2,674

2,660

(46)

(14)

Subtotal

2,590

2,706

2,573

2,696

2,674

2,660

(46)

(14)

Total

175,047

172,994

164,948

177,146

175,351

170,670(2,324)(4,681)

Tokyo
Metropolitan
Area

Tokyo
Residential Metropolitan
Area

Other

CentralTokyo

37

VII-5. Appraisal Cap Rate
Property

6th Fiscal Period

7th Fiscal Period

DirectDiscounted Cash Flow
Capitaliz Method
ation
Terminal
Method: DiscountRate
Cap Rate
Cap
Rate

DirectDiscounted Cash Flow
Capitaliz Method
ation
Terminal
Method: DiscountRate
Cap Rate
Cap
Rate

4.6%

3.8%
(Next 44.3%
years)
4.3%(afterward)

4.6%

4.1%

4.6%

4.6%

4.3%

4.4%

4.1%

4.6%

4.6%

-

-

-

Akasaka Oji Building

4.5%

4.4%

Shiba-Koen Building

4.8%

Kanda Park Plaza

DirectCapitalization
Discount
Method:Rate
Cap Rate

4.3%

4.8%

4.6%

4.3%

4.8%

-

-

4.8%

4.5%

4.6%

4.9%

5.2%

4.7%

Faret East Building

5.6%

Nittetsu Honmachi Building
Sagamihara Shopping
Center
Ito-Yokado HigashiNarashino Store
Musashiurawa Shopping
SquareFukasawa House Towers
H&I

6.1%

Terminal
Cap Rate

10th Fiscal Period

Discounted Cash Flow
MethodDirectCapitalization
Discount
Method:Rate
Cap Rate

Terminal
Cap Rate

4.6%

3.8%
(Next 3
4.3%
years)
4.3%(afterward)

4.6%

4.3%

4.8%

4.6%

4.3%

4.6%

4.3%

4.8%

4.6%

-

5.2%

4.9%

5.4%

4.4%

4.8%

4.5%

4.4%

4.8%

4.6%

4.9%

4.8%

5.8%

5.3%

4.8%

5.9%

5.3%

5.8%

5.8%

5.5%

6.3%

6.4%

6.2%

6.4%

5.8%

5.6%

6.0%

6.0%

6.3%

5.4%

6.8%

5.6%

5.3%

5.1%

Ecology Toyosu Procentury
OAK PLAZA

Harumi Island Triton Square
Office Tower Y
Harumi Island Triton Square
Office Tower Z
Kanda Nishiki-cho 3-chome
Building

4.4%

9th Fiscal Period

Discounted Cash Flow
Method3.8%(Next 3
years)
4.3%(afterward)

NEC Head Office Building

3.8%(Next 44.3%
years)
4.3%(afterward)

8th Fiscal Period

Discounted Cash Flow
Direct
MethodCapitalization
Discount
Terminal
Method:Rate
Cap Rate
Cap Rate

4.3%

3.8%
(Next 2
years)
4.3%(afterward)

4.6%

4.8%

4.6%

4.3%

4.8%

4.3%

4.8%

4.6%

4.3%

4.8%

5.2%

4.9%

5.4%

4.9%

4.6%

5.1%

4.8%

4.5%

4.5%

4.8%

4.5%

4.5%

4.8%

4.6%

4.9%

5.0%

4.8%

5.1%

4.9%

4.7%

5.0%

5.3%

4.8%

5.9%

5.3%

4.8%

5.9%

5.3%

4.8%

5.6%

6.0%

5.8%

5.5%

6.0%

5.8%

5.5%

6.0%

5.8%

5.5%

6.0%

6.5%

6.2%

6.4%

6.5%

6.2%

6.3%

6.5%

6.2%

6.3%

6.5%

5.8%

6.2%

6.0%

5.8%

6.2%

6.0%

5.8%

6.1%

6.0%

5.8%

6.1%

6.4%

5.5%

6.9%

6.4%

5.5%

6.9%

6.4%

5.5%

6.9%

6.3%

6.1%

6.6%

5.9%

5.8%

5.5%

6.1%

5.8%

5.5%

6.1%

5.8%

5.5%

6.1%

5.8%

5.5%

6.1%

4.8%

5.3%

5.2%

4.9%

5.4%

5.2%

4.9%

5.4%

5.2%

4.9%

5.4%

5.1%

4.8%

5.3%

5.3%

5.1%

5.5%

5.4%

5.2%

5.6%

5.5%

5.3%

5.7%

5.5%

5.3%

5.7%

5.4%

5.2%

5.6%

4.7%

4.2%

5.3%

4.8%

4.3%

5.4%

4.8%

4.3%

5.4%

4.8%

4.3%

5.4%

5.2%

5.0%

5.5%

Appraisers

Properties

Tanizawa Sogo Appraisal Co., Ltd.

NEC Head Office Building, Akasaka Oji Building, Nittetsu Honmachi Building

Japan Real Estate institute

Harumi Island Triton Square Office Towers Y & Z, Kanda Nishiki-cho 3-chome Building, Kanda Park Plaza, Faret East Building, ItoYokado Higashi-Narashino Store, Fukasawa House Towers H&I, Ecology Toyosu Procentury, OAK PLAZADAIWA REAL ESTATE APPRAISAL Corporation

Shiba-Koen Building, Sagamihara Shopping Center, Musashiurawa Shopping Square* The appraisals were conducted by the above real estate appraisers based on the asset assessment methods and standards specified in TOP REIT’s articles of incorporation as well as the regulations set forth by The
Investment Trust Association, Japan.
* Since the appraisals at the end of the 10th FP, appraisers for some properties have been changed and aggregation of appraisers undertaken with the aim of increasing efficiency and lowering appraisal costs.

38

VII-6. Operating Income by Property (Tenth Fiscal Period)(million yen)

Operatingperiod (days)

NEC Head
OfficeBuilding

HarumiIslandTritonSquareOfficeTower Y

HarumiIslandTritonSquareOfficeTower Z

181days181days181days

Kanda
Nishiki-cho Akasaka
Oji Building
3-chome
Building
181days181days

ShibaKoen
Building

Musashi Fukasawa Ecology
Nittetsu Sagamihar Ito-Yokado
Kanda
Faret East Honmachi
HigashiurawaaShopping
House
ToyosuPark Plaza Building
Narashino Shopping Towers
Building
Center
H&I Procentury
Store
SquareOAK
PLAZA

181days181days181days181days181days181days181days181days181days181days

Total revenue
from property
leasing

1,370

1,309

582

431

110

169

160

92

407

236

129

239

173

94

Rent revenue－ real estate

1,370

1,309

582

431

110

169

160

92

407

236

129

233

159

94

231

359

129

111

30

41

72

43

60

52

18

61

38

23

1

164

43

30

9

8

29

12

2

1

1

34

25

0

223

94

42

40

9

15

12

9

55

29

15

16

6

14

Utilities
expenses

-

78

30

21

7

11

24

9

-

-

-

0

1

-

Repairexpenses

2

17

7

16

3

4

3

9

1

19

0

7

3

6

Non-life
insurance
expenses

1

2

0

0

0

0

0

0

0

0

0

0

0

0

Other

2

2

5

2

-

2

3

2

1

0

1

2

1

1

Total expenses
from property
leasing
Property
management
expenses
Taxes and dues

1,139

949

452

408

320

79

127

87

49

346

183

110

177

134

71

[5.4%][5.8%][4.5%][6.4%][6.6%][2.8%][4.9%][8.4%][9.0%][5.8%][4.1%][5.1%][3.3%][5.2%][5.5%]

221

243

119

34

29

20

13

46

16

53

107

49

66

51

11

Operatingincome

918

705

332

373

290

59

114

40

32

293

76

61

111

83

59

Capitalexpenditures

377

53

11

2

-

0

7

-

5

1

-

-

0

-

5

NOI
(NOI yield)
Depreciation
andamortization“Repair work based on the Long Term Repair Plans”
・ Renewal of the outer wall sealing
・ Renewal of the central monitoring system, etc.

・Installation of new partition walls
・Renewal of the emergency telephone facilities, etc.
*Some figures for Kanda Nishiki-cho 3-chome Building are not disclosed due to request by the tenant.

39VII-7. Property Details: Office Buildings

Property

NEC Head Office Building

Property

Harumi Island Triton Square Office Tower Y

Property

Harumi Island Triton Square Office Tower Z

Address

Shiba, Minato Ward, Tokyo

Address

Harumi, Chuo Ward, Tokyo

Address

Harumi, Chuo Ward, Tokyo

Floor Area

144,476.05m2

Floor Area

267,132.67m2

Floor Area

267,132.67m2

Completion

January 1990

Completion

October 2001

Completion

October 2001

Title

Co-ownership (50%)

Title

Co-ownership (3rd – 15th floors)

Title

Co-ownership (a part of the 17th floor and18th – 22nd floors)

Acquisition Price

41.95 billion yen

Acquisition Price

33 billion yen

Acquisition Price

20 billion yen

40VII-7. Property Details: Office Buildings

Property

Kanda Nishiki-cho 3-chome Building(formerly called “Sumitomo Corporation
Nishiki-cho Building”)

Address

Kanda Nishiki-cho, Chiyoda Ward, Tokyo

Floor Area

Property

Akasaka Oji Building

Property

Shiba-Koen Building

12,169.78m2

Address

Akasaka, Minato Ward, Tokyo

Address

Shiba, Minato Ward, Tokyo

Floor Area

10,063.05m2

Floor Area

4,958.29m2

Completion

March 1973 (large-scale renovation
undertaken in November 2001 andearthquake-resistant reinforcement
construction implemented in October 2009)

Completion

April 1989

Completion

May 1991

Ownership

Co-ownership (1st – 7th floors)

Ownership

Title

Title

Title

12.7 billion yen

Acquisition Price

9.66 billion yen

Acquisition Price

Acquisition Price

5.77 billion yen

41VII-7. Property Details: Office Buildings

Property

Kanda Park Plaza

Property

Faret East Building

Property

Nittetsu Honmachi Building

Address

Kajicho, Chiyoda Ward, Tokyo

Address

Akebonocho, Tachikawa City, Tokyo

Address

Utsubohonmachi, Nishi Ward, Osaka

Floor Area

5,511.83m2

Floor Area

16,206.34m2

Floor Area

6,714.09m2

Repair work to enhance earthquake
resistance in 2003

Completion

December 1994

Completion

June 1991

OwnershipTitle

Co-ownership (2nd – 5th and a part of the
6th and 8th floors)

Title

Ownership

Acquisition Price

2.091 billion yen

Acquisition Price

1.1 billion yen

Completion
Title

November 1959

Acquisition Price 5.156 billion yen

42VII-8. Property Details: Retail Properties

Property

Sagamihara Shopping Center

Property

Ito-Yokado Higashi-Narashino Store

PropertyMusashiurawa Shopping Square

Address

Bessho, Minami Ward, Saitama City,
Saitama Pref.

Address

Kobuchi, Sagamihara City, Kanagawa Pref.

Address

Higashinarashino, Narashino City, Chiba
Pref.

Floor Area

56,351.42m2

Floor Area

45,338.37m2

Floor Area

28,930.36m2

Completion

August 1993

Completion

October 1994

Completion

October 2005

Title

Ownership

Title

OwnershipTitle

Co-ownership (50%)

Acquisition Price

12 billion yen

Acquisition Price

8.9 billion yen

Acquisition Price

4.335 billion yen

43VII-9. Property Details: Residential and Other Properties

Property

Fukasawa Towers H&I

Property

Ecology Toyosu Procentury

PropertyOAK PLAZA
Kanda Awajicho, Chiyoda Ward, Tokyo

Address

Fukasawa, Setagaya Ward, Tokyo

Address

Toyosu, Koto Ward, Tokyo

Address

Floor Area

12,135.36m2

Floor Area

9,630.96m2

Floor Area

6,121.85m2

Completion

June 2004

Completion

January 2005

Completion

April 1985

Title

Co-ownership (H&I)

Title

Ownership

Title

Ownership

Acquisition Price

10.635 billion yen

Acquisition Price

5.16 billion yen

Acquisition Price

2.59 billion yen

Completion of the conversion in 200744

VII-10. Measures for Electricity Conservation in this SummerA
A restriction
restriction ofof electricalelectrical power
power use
use camecame into
into effecteffect as
as ofof JuneJune 1,
1, 20112011 based
based onon article
article 27
27 ofof thethe Electricity
Electricity BusinessBusiness Act.
Act.
Subject
Subject toto thethe restriction
restriction areare large
large consumers
consumers with
with contract
contract electricity
electricity ofof 500kw
500kw oror moremore inin thethe supply
supply area
area ofof TokyoTokyo ElectricElectric
Power
Power andand Tohoku
Tohoku ElectricElectric Power.
Power. (Restriction(Restriction inin thethe supply
supply area
area ofof TokyoTokyo ElectricElectric Power:
Power: thethe hours
hours 9:00
9:00 –– 20:00
20:00 ofof July
July 1,
1,
2011
2011 toto September
September 22,
22, 2011
2011 except
except Saturdays,
Saturdays, Sundays
Sundays andand holidays)
holidays)
Subject
Subject properties
properties andand measures
measures ofof tenants
tenants
NEC Head Office
Building

The tenant, NEC Corporation, established a power saving task force and is also planning to implement two weeks holiday rotations
at all of its operational locations (excluding factories and data centers) by splitting them into 4 groups.

Harumi Island Triton Major tenant of Office Tower Y, Sumitomo Metal Industries, Ltd, has been introducing Summer Time Working Hours.
Square Office Tower At Office Tower Z, thorough efforts to turn off unnecessary lights, adjust lighting and use minimum air conditioning are being
implemented.
Y&Z
Kanda Nishiki-cho
3-chome Building

The building’s tenant (there is only one tenant) will turn off all lights at 18:00 during this period. Besides this, it is also implementing
thorough efforts to turn off unnecessary lights, adjust lighting and use minimum air conditioning.

.

Ito-Yokado Co., Ltd. is turning off the lights on their exterior billboards and have installed demand controllers to monitor and adjustelectric usage. Also, shops at Musashiurawa Shopping Square are turning off unnecessary lights, turning off lights of vending
machines and other measures.
Major tenant, Sony Computer Entertainment, Inc., will relocate in mid June and work for restoring to original conditions will takeAkasaka Oji Building place at the area they vacated, thus electricity usage of the building is anticipated to be largely reduced.

Retail PropertiesTOP
TOP REIT’s
REIT’s Measures
Measures* The following will be implemented at common areas and tenants
will be asked to cooperate・ Turn off unnecessary lights and suspend operation of some elevators
・ Raise air conditioning temperature and suspend some air conditioning
・ Turn off hand dryers at restrooms
・ Turn off exhaust fans
・ Turn off electric water heater at hot water supply room
・ Turn off lights of vending machines45

VII-11. Questions Received After the Earthquake Regarding Properties
What were the effects of the earthquake on Harumi Island Triton
Square?
☆When Harumi Island Triton Square opened, each tenant was given a pamphlet titled “Preparing for
Earthquakes.” We are more confident in earthquake resistance now.
◎Since Harumi is a landfill, does that mean the ground is weak?
Harumi Triton Square is supported by a strong stratum (Kazusa layer group) located about 30m below
ground with plenty of soil bearing capacity. The conditions are about the same as central urban regions
such as Marunouchi and Shiodome.
◎Aren’t skyscrapers prone to severe damage in earthquakes?
The building employs a damage level control structure which protects the main structural material bypassing the damage to the energy-absorbing material. It has the effect of not only protecting humans but
also mitigates the impact of earthquakes on facilities and appliances. Also, with the energy-absorbing
material, quick recovery from damage is made possible.
◎What about tsunamis?
The Harumi district is safeguarded by a seawall for earthquakes and is protected from tsunamis and hightides. Harumi Triton Square is especially well protected as it faces Asashio Canal which is surrounded by aseawall and a water gate. Also, Harumi is a designated regional evacuation area for times of disasters.

Has there been liquefaction at areas surrounding Ecology
Toyosu Procentury?

◎There have been reports of liquefaction at Urayasu and parts of the Toyosu district. Whatabout TOP REIT’s residential property in Toyosu?
There has been no liquefaction at Ecology Toyosu Procentury. Restoration works of some form or
another are taking place at 13 owned properties and restoration costs for this property is actually
the lowest of the 13 properties at ¥99,000. Only minimal restoration work was required and it has
already been completed.

46

VIIl. Appendix: Structure of Related Parties

47

VIII-1. Characteristics of Top REIT and Operational Strategies
Top
Top REITREIT Asset
Asset
Management
Management (TRAM)(TRAM)

Asset
Management

Top
Top REIT
REIT

1. Skilled Management of a Diversified Portfolio(1) Pursuit of both external growth and quality of assets managed

Diversified Portfolio(2) Pursuit of stability and growth potential of profitability through uniqueasset class

Development
Development
Brokerage
Brokerage
Property
Property
Management
Management

Capital+Human
Resources

OfficeDNA
DNA(3) Strategic application of commissioned reports from a think tank

RetailThree
Three Major
Major
Asset
Asset Types
Types

Residential

Other Asset
Types

2. Optimal Application of Sponsor Strengths

Asset
Asset
Management
Management

Sponsors
Sponsors
The Sumitomo
Trust and Banking(2) Agile acquisition of properties through warehousing function

31%

Oji Real Estate
A wholly-owned subsidiary of
Oji Paper(3) Achieving internal growth through “management-added benefits”

38%

Nippon Steel City Produce
A wholly-owned subsidiary of
Nippon Steel(1) Steady external growth through pipeline function

i.e., hotels andwarehouses

31%

Ensuring SteadyRevenue

SupportSteady Growth ofPortfolio

Maximizing Unitholders’ ValueSponsors’Sponsors’Strengths
Strengths

Utilizing Sponsor Strengths
Inheriting Sponsors’ DNATRAM was established in collaboration with three firms – The Sumitomo Trust andBanking, Nippon Steel City Produce and Oji Real Estate.

Excellent personnel have been dispatched to TRAM from the three sponsors toensure real estate investment expertise as well as inheritance of their corporategroups’ assets, that is, a long-term strategic view and diversified know-how acquired
through each of the sponsor’s businesses.

Sponsor skills shall be utilized to achieve steady growth by applying their real estatedevelopment abilities, brokerage networks and management skills, including leasing
activities that utilize the leasing demand from sponsors’ groups/clients.
Number of group companies (as of March 31, 2011)
Sumitomo Trust Group62

Nippon Steel Group344

Oji Paper Group

333

48

VIII-2. Overview of Asset Manager
Name

Top REIT Asset Management Co., Ltd.

Address

Nittetsu Nihonbashi Building
1-13-1 Nihonbashi, Chuo Ward, Tokyo

GeneralGeneral Meeting
Meeting ofof Stockholders
Stockholders
AuditorBoard of Directors

EstablishedOct. 22, 2004

Paid-in Capital
Shareholders

Investment and Management Committee
Risk and Compliance Committee¥300mnRepresentative
The Sumitomo Trust and Banking Co., Ltd. 38%
Director and President
Nippon Steel City Produce, Inc. 31%
Compliance Officer
Oji Real Estate Co., Ltd. 31%

Business
Description

Investment
Investment management business
Department(Registered Financial Instruments
Business Operator No. 365 (Kinsho), issued by the
Director-General of the Kanto Local Finance Bureau)

Asset
Management
Department

Finance
Department

Planning and
Administrative
Department

Compliance
OfficeFinance and Accounting GroupIR Group※The head of the Compliance Officeconcurrently serves as the Compliance
Officer

Directors

President and Representative
Director:

Nobuhito Endo

Milestones

Dec. 10, 2004:

Top REIT Asset Management (TRAM) obtained a license as a real estate agent (The Governorof Tokyo No. (1) 83904)
TRAM obtained approval for a discretionary agent license for real estate transactions(The Minister of Land, Infrastructure and Transport No. 35)
TRAM obtained approval as an asset manager for an investment corporation(The Prime Minister No. 47)
TRAM entered into an Asset Management Agreement with Top REIT, Inc.
TRAM was deemed a Registered Financial Instruments Business Operator (Investment
Management Business), No. 365 (Kinsho), issued by the Director-General of the Kanto Local
Finance Bureau
TRAM formally submitted applications to register as Financial Instruments Business Operator(Investment Management Business)
TRAM renewed a license as a real estate agent (The Governorof Tokyo No. (2) 83904)

May 10, 2005:
June 28, 2005:
Nov. 2, 2005:
Sept. 30, 2007:

Nov. 27, 2007:
Dec. 10, 2009:

Portfolio Management Group

49

VIII-2. Overview of Asset Manager【 Decision-Making Process 】

Report of minority opinions(Note 1)

(Note 2)

Risk and Compliance
Committee
Department in chargeof preparing proposal

Compliance Office

Examination

Examination
anddecision(Rejection)
ReturnBoard of Directors
Final
Decision

Investment andManagement Committee

Examination
anddecision(Rejection and/or Suspension)(Note 3)

Examination
anddecision(Rejection)(Note 1) Proposals will be passed to the Risk and Compliance Committee if they fall under eitherof the following:• Material transactions with interested parties defined in the rules on transactions with interested parties(a unanimous vote is required in this case.)• The head of the Compliance Office recognizes the discussion of the issues in the Risk and Compliance Committee to be necessary.
(Note 2) Proposals will be passed to the Board of Directors if they fall under any of the following:• The price of the proposed acquisition or sale is over 10 billion yen and over 10% of Top REIT’s total assets.
• Material transactions with interested parties defined in the rules on transactions with interested parties• Forward commitment transactions• Capital raising plans (final decisions on raising capital shall be made by the Board of Directors of Top REIT.)(Note 3) The head of the Compliance Office can suspend discussions and decisions and return the item to the Department in charge of the proposal if he or she
judges that the item has legal problems in the process of discussions or decision making at the Investment and Management Committee.

50

Contact
IR Contact
Koji Murata,
Tomio Kurokawa,
Junko Yoshii
Investor Relations
Top REIT Asset Management Co., Ltd. (Asset Manager)
Phone: +81-3-3243-2181
Fax:+81-3-3243-2182
E-mail: info-top@top-reit-am.co.jp
HP:
http://www.top-reit.co.jp/english/
The contents of this document, including summary notes, quotes, data and other information, are provided solely
for informational purposes and not intended to constitute an offer, solicitation and/or promotion of any specificproducts including investment units of Top REIT, Inc..
Forward looking statements in this document shall not be viewed as a guaranty of Top REIT’s future
performance.
Although every attention has been paid to the contents of this document, the accuracy and appropriateness of
the information included in this document is not guaranteed and the contents can be revised and/or cancelled
without notice.
All rights regarding use of these materials belong to Top REIT. No copy or use of the content shown in thesematerials shall be permitted without the prior consent of Top REIT.

51