Prospect Reit Investment Corporation

Prospect Reit Investment Corporation
Listed on the Tokyo Stock Exchange with the securities code 8969

Ninth Fiscal Period Results(August 1, 2009 to January 31, 2010)

March 15, 20101

Prospect Reit Investment Corporation
Disclaimer
This document contains a translation of the majority of the information provided in the Japanese material for thepresentation of ninth fiscal period results held on March 17, 2010 as well as some information provided in the Financial
Report (Kessan Tanshin) dated March 15, 2010, and others, with some updated data.
This English language document is provided solely for the convenience of and reference by non-Japanese investors, and is
not intended to constitute a disclosure document. The Japanese language presentation material should be referred to as theoriginal of this document. The English translation of legal, accounting, tax and business terms used herein may not precisely
convey the identical meaning of equivalent Japanese terms. With respect to any and all terms herein, including without
limitation, financial statements, if there exist any discrepancies in the meaning or interpretation thereof between the original
Japanese document and English translation contained herein, the original Japanese document will govern the meaning andinterpretation. Neither PRI, Prospect Reit Advisors, Co., Ltd. (“the Asset Management Company”) nor any of theirrespective directors, officers, employees, partners, shareholders, agents or affiliates will be responsible or liable for thecompleteness, appropriateness or accuracy of this English translation or any portion(s) of any document(s) translated into
English. No person has been authorized to give any information or make any representations other than those contained inthis document in relation to matters set out in this document, and if given or made, such information or representation mustnot be relied upon as having been authorized by PRI, Prospect Reit Advisors, Co., Ltd. or any of their respective directors,
officers, employees, partners, shareholders, agents or affiliates.
The financial statements of PRI have been prepared in accordance with generally accepted accounting principles in Japan(Japanese GAAP), which may materially differ in certain respects from generally accepted accounting principles in otherjurisdictions.
Many provisions within this document contain information that constitutes forward-looking statements. These
forward-looking statements are not a guarantee of future performance and involve risks and uncertainties. Therefore, actual
results may differ materially from those in the forward-looking statements as a result of various factors.
All rights are reserved. Unauthorized duplication and copy of this document and contents herein in any measures is strictly
prohibited.
Contact Information:
Investor Relations
Prospect Reit Advisors, Co., Ltd.
2-2-1, Marunouchi, Chiyoda-ku, Tokyo, 100-0005, Japan
ir@pra.co.jp

2

Prospect Reit Investment Corporation

Prospect Reit Investment Corporation("PRI" or "the Investment Corporation")
Representative: Takeo Nishiyoshi, Executive Officer
Address: 2-2-1 Marunouchi, Chiyoda-ku, Tokyo
Prospect Reit Investment Corporation is listed
as a Japanese Real Estate Investment Trust (J-REIT) on
the Tokyo Stock Exchange with the securities code 8969
(URL of English website http://www.prospect-reit.co.jp/en/index.html)
Planned date of submission of the Company Report (Yukashoken Hokokusho): April 23, 2010
Planned date of distribution payment commencement: April 19, 2010
(1) Operating Performance and Assets for the Fiscal Period Ended January 31, 2010
1) Operating Performance(Millions of yen rounded down unless otherwise stated)

Fiscal Period
Ended

Operating Revenues

Operating Income%

Ordinary Income%

Net Income%%

January 31, 2010

2,191

-2.0

878

4.2

194

-46.4

193

-46.6

July 31, 2009

2,236

-0.8

843

-6.6

361

-19.8

362

-19.2

Fiscal Period
Ended

Net Income per Unit

Return on Net Assets

Yen
2,577
4,825

January 31, 2010
July 31, 2009

%
0.6
1.0

2) Distributions
Fiscal Period
Ended
January 31, 2010
July 31, 2009

Total
Distribution
193
362

Distributions
in Excess of
Earnings per
Unit (Yen)
−
−

Total
Distributions in
Excess ofEarnings−−

PayoutRatio

Distribution
Ratio to Net
Assets

100.0
100.0

0.6
1.0

(Millions of yen rounded down unless otherwise stated)

Fiscal Period
Ended
January 31, 2010
July 31, 2009

Total Assets

Net Assets

71,397
71,68334,73734,906

4) Cash Flow Situation

January 31, 2010
July 31, 2009

Ordinary Income toOperating Revenues
%
8.9
16.2

(Millions of yen rounded down unless otherwise stated)

Distributions per
Unit Excluding
Excess ofEarnings (Yen)
2,577
4,826

3) Financial Position

Fiscal Period
Ended

Ordinary Income toTotal Assets
%
0.3
0.5

Net Assets
to Total Assets
48.7
48.7

Net Assets
per Unit (Yen)462,548464,804(Millions of yen rounded down unless otherwise stated)

Cash Flows fromOperating
Activities
750
702

Cash Flows from
Investing
Activities
-111
-167

Cash Flows from
Financing
Activities
-412
-448

Cash and Cash Equivalents
at The End of The Period
3,285
3,059

(2) Forecast of the Deemed Business Year Revenues and Earnings (for the Tenth Fiscal Period: February 1, 2010 toJuly 30, 2010)
Operating
Revenues

DeemedBusiness Year

1,874 (4.9)

Operating
Income689 (-3.8)(Millions of yen rounded down unless otherwise stated, pop % change)
Distributions
per Unit
Distributions in
Ordinary
Excluding
Excess of Earnings
Net Income
IncomeExcess ofper Unit (Yen)
Earnings (Yen)

31 (-80.1)

30 (-80.6)

406(Reference Material) Estimated net income per unit for the tenth fiscal period ending June 30, 2010 (deemed business year): JPY 406*1: The period-on-period percentage changes for the deemed business year are calculated by converting the figures to increases/decreases per day.

3−

Prospect Reit Investment Corporation*2: The current forecast of expenses to be incurred in association with the merging of PRI and JRH is JPY 140 million. These expenses are not included in
the above forecast figures. These expenses are to be accounted for by PRI as prepaid expenses and then accounted for by JRH after the merger with
the negative goodwill from the merger.
In addition, expenses subject to the condition precedent that the merger takes effect will be incurred separately from the above in the amount of JPY
190 million. These expenses are to be similarly accounted for by JRH after the merger with the negative goodwill from the merger and thus are notincluded in the above forecast figures.

[Forecast of Revenues and Earnings (for the Tenth Fiscal Period: February 1, 2010 to July 30, 2010)]
Operating
Revenues
Full Fiscal Period

2,252 (0.7)

Operating
Income910 (7.3)(Millions of yen rounded down unless otherwise stated, pop % change)
Distributions
Distributions
per Unitin Excess ofOrdinary
Excluding
Net Income
Earnings per
IncomeExcess of
Unit (Yen)
Earnings (Yen)

357 (1.3)

356 (1.8)

4,740

−

(3) Others
1) Changes in accounting policies
A. Changes due to accounting standards: None
B. Other changes: None
2) Investment units outstanding
A. Investment units outstanding (including units owned by PRI) at fiscal period-ends:
75,100 units as of January 31, 2010; 75,100 units as of July 31, 2009
B. Investment units owned by PRI at fiscal period-ends:
0 units as of January 31, 2010; 0 units as of July 31, 2009
* Please refer to ‘Information per Unit’ on page 22 with respect to the number of investment units used as the base to calculate the aforementioned‘net income per investment unit.’* Disclaimer regarding ‘Forecasts of Revenues and Earnings’
Forward-looking statements such as forecasts of revenues and earnings in this document are based on many sources including current
information available to PRI’s management as well as the assumptions judged to be rational by management. These forward-looking
statements are not guarantees of future performance and they involve risks and uncertainties. As a result of various factors, actual results
may differ materially from those in the forward-looking statements. With respect to the assumptions underlying such forecasts, pleaserefer on page 9 “2. Management Policy and Operating Conditions (4) Forecast of Revenues and Earnings”.

4Prospect Reit Investment Corporation
1. Structure of the Investment Corporation
Please refer to “Structure of the Investment Corporation” on page 43.

2. Management Policy and Operating Conditions(1) Management Policy
Because there have been no changes from the last Company Report (Yukashoken Hokokusho), submitted on October 23, 2010,
disclosure is omitted.

(2) Operating Conditions
The Asset Management Company, as founder, filed for the establishment of PRI in accordance with the Investment Trust andInvestment Corporation Law. PRI was established on April 22, 2005 with total capitalization of JPY 201 million, and registered on
May 25, 2005 with the Kanto Local Finance Bureau (Registration No. 34). Thereafter, PRI undertook a public offering of additional
investment units (74,698 units) raising JPY 34,420 million. On July 12, 2005, PRI was listed on the Real Estate Investment Trust
Section of the Tokyo Stock Exchange under the securities code 8969. To date, PRI has continued to pursue business activities
focusing on residential properties for rental purposes pursuant to its management policy.

1) Operating Conditions during the Fiscal Period under Review
A. Investment Environment
In the fiscal period under review (ninth fiscal period: the six-month period ended January 31, 2010), while economic
recovery continued overseas centering on Asia, the Japanese economy began to show signs of picking up in general but
there still remain traces of weakness. In the real estate market, the Prefectural Land Price Survey announced in
September 2009 reported the land price trends for the one-year period from July 2009 reflected the severe economic
conditions, resulting in the drops found in the previous analysis for all land uses following into this period as evident
by such statistics as residential land prices falling 4.0% and commercial land prices falling 5.9% on average. In thereal estate transaction market, the weak note persisted, reflecting the financing stance of financial institutions. In therental housing market, although not to the extent of the deterioration seen in the rental office market, deteriorating
trends continued for such properties as high-rent properties in central Tokyo. On the other hand, quality rental
properties with reasonable rent levels located in such areas as the outskirts of Tokyo and other major cities remain
relatively strong backed by robust demand.

B. Management Performancea. Although PRI is, consistent with its basic investment policy, dedicated to sourcing properties for new acquisition andconsiders replacing investment assets and other restructuring of the portfolio for improvement of the portfolio in an
aim to secure steady growth and stable earnings from a medium- to long-term perspective, detailed considerations of
the financing, real estate transaction market trends and other factors resulted in no property acquisitions or sales
being made during the fiscal period under review. During the fiscal period under review, nevertheless, there wereneither acquisitions nor sales.
b. Existing property management (Internal Growth)
In an effort to increase occupancy rates and profitability, PRI examined the merits of a variety of property
management companies in terms of their individual characteristics, strengths, service contents and fees. Furthermore,
property management companies were selected and dismissed, and property management rates set and revised, basedon quantitative and qualitative assessments by the Asset Management Company.
c. Funds Procurement
PRI procured funds from Aozora Bank, Ltd. in the amount of JPY 5,000 million for a term of four months in October
2009 for redemption of JPY 5,000 million in existing investment corporation bonds. PRI also procured funds from
Aozora Bank, Ltd. in the amount of JPY 3,000 million for a term of three months in September 2009 to refinance anexisting loan and in the amount of JPY 2,950 million for a term of two months in December 2009 to refinance theforegoing JPY 3,000 million yen. The interest-bearing debt ratio as of January 31, 2010 was 49.5% with total
JPY35,354 million of interest bearing debt.
d. PRI and PRA have been studying various measures, aiming at attaining remarkable growth in PRI’s corporate value,
including asset growth and a strengthening of its fundamentals.

C. Operating Results and Cash Distribution
Accounting for the aforementioned factors, operating revenues totaled JPY 2, 191 million in the fiscal period ended
January 31, 2010. Ordinary income was JPY 194 million while net income amounted to JPY 193 million.
PRI distributes the total amount of its inappropriate retained earnings for each period. Accordingly, cash distribution
for the ninth fiscal period was JPY 2, 577 per unit (rounded down to the nearest yen).

2) Outlook
A. Operating Environment
While the Japanese economy is in the process of recovery, the real estate transaction market is starting to see the gap
between the perspectives of buyers and sellers gradually narrow and also some financial institutions relaxing theirfinancing stance for real estate. In light of such factors, a gradual upward trend in the real estate transaction market is
expected. In the rental housing market, while such properties as high-rent properties in central Tokyo are highly likely
to see stronger deteriorating trends, quality rental properties with reasonable rent levels located in such areas as theoutskirts of Tokyo and other major cities are expected to remain relatively strong as robust demand is anticipated.

5

Prospect Reit Investment Corporation
B. Property Management (Internal Growth)
Carrying on from the previous fiscal period, PRI shall examine the merits of a variety of property managementcompanies in terms of their individual characteristics, strengths, service contents and fees. Based on a philosophy ofstrict competition, PRI shall select property management companies that can contribute to increasing occupancy andprofitability. Furthermore, PRI will continue to implement checks by internal specialists including first-class architectswith the aims of reducing costs and securing the increased trust of tenants and investors.

C. Financial Strategy
PRI aims to carry out flexible procurement of short- and long-term loans with conservative LTV (Loan To Value) level
while broadening the types of lenders and diversifying repayment dates. PRI will work to extend the repayment periodsof debt and to obtain fixed-interest rates by continuing to issue the second series Investment Corporation bonds in the
future.

D. PRI and PRA have been studying various measures, aiming at attaining remarkable growth in PRI’s corporate
value, including asset growth and a strengthening of its fundamentals.

(3) Important Subsequent Events
The following important subsequent events took place at PRI subsequent to the end of the ninth fiscal period (January
31, 2010).
I. PRI and Japan Rental Housing Investments Inc. (JRH) decided at meetings held on February 26, 2010 by theirrespective board of officers to enter into a letter of intent regarding merging of the investment corporations (the“LOI”). The LOI was entered into on the same date.
1) Purpose of Merger
In seek of new growth opportunities, JRH and PRI made a detailed consideration of their respective growth strategies andfinancial strategies and, as a result, reached the common understanding that realization of expansion of asset size,
application of negative goodwill, stabilization of financial aspects and such by merging the two investment corporations
will contribute to further enhancement of their corporate value. It is based on this understanding that JRH and PRI haveentered into the LOI.
The new investment corporation resulting from the merger will be a REIT specializing in residential properties that will
boast one of the largest asset sizes in Japan from which stabilization of cash flows, as well as stabilization of balance sheetsfrom lower financial leverage, are anticipated. Going forward, JRH and PRI will pursue merging of the two investment
corporations with the support of their major unitholders and major financial institutions in accordance with the LOI.
Furthermore, as of the effective date of the merger, the asset management agreement entered into by and between PRI and
Prospect REIT Advisors Co., Ltd. (PRA) is scheduled to be terminated as agreed to by both parties and the post-merger
investment corporation’s asset management is scheduled to be conducted by Mi-Casa Asset Management Inc. (MAM).
Consequently, MAM’s parent company AppleRingo Holdings B.V. (ARH), PRA’s parent company K.K. Prospect (KKP)
and PRA have agreed, in principle, for all PRA shares issued and outstanding held by KKP to be transferred to MAM on thesame date as the effective date of the merger and for MAM and PRA to merge on the same date with MAM as thecorporation surviving the merger (the “Integration of Asset Management Companies”).

2) Method of Merger
The merger agreement is scheduled to be entered into in March 2010 and the plan is for the merger to be in the form of anabsorption-type merger in which JRH is the corporation surviving the absorption-type merger and PRI is the corporation
absorbed in the absorption-type merger.

3) Merger Ratio
JRH and PRI have agreed, in principle, that JRH investment units shall be allocated at a ratio of 0.75 JRH investment units
per 1 PRI investment unit. The foregoing merger ratio is subject to change upon consultation and agreement between thetwo investment corporations if an event that causes material impact on the grounds for calculation of the foregoing merger
ratio does or is ascertained to take place.

4) Summary of Corporation Surviving Absorption-Type Merger’s Most Recent Fiscal Period (JRH’s Six-Month
Period Ended September 30, 2009)
Business description Invests in and manages primarily specified assets pursuant to the Investment Trust and Investment
Corporation Law

Operating revenues
Net income
AssetsLiabilities
Net assets

JPY
JPY
JPY
JPY
JPY

3,494 million
480 million
111,914 million
51,879 million
60,034 million

6Prospect Reit Investment Corporation
5) Schedule of Merger
The effective date of the merger is scheduled to be July 1, 2010.

II. Extension of Borrowing Term
PRI extended the term of the twelfth bank loan for properties and thirteenth bank loan for properties, which were
due on February 15, 2010, as follows
LenderBorrowing date
Repayment date
Loan amountInterest rates*
The twelfth bank loan
for properties
The thirteenth bankloan for properties

Aozora Bank, Ltd.

October 8, 2009

March 15, 2010

JPY5,000,000,000

5.25545%

Aozora Bank, Ltd.

December 25, 2009

March 15, 2010

JPY2,950,000,000

2.20545%*The interest rate applicable from February 16, 2010 to March 15, 2010.

III. Partial Early Repayment of Borrowings
PRI repaid some of the principal of borrowings in the amount of JPY 700 million in total on March 3, 2010.
Below is the breakdown of the repayment amount by loan.
The third bank loan for properties

Amount of refund money
52,152,514

The fourth bank loan for properties

57,894,439

The tenth bank loan for properties

89,098,828

The twelfth bank loan for properties

98,998,698

The thirteenth bank loan for properties

58,409,232

The bank loan for acquired properties
Total

343,446,289
700,000,000

IV. Borrowing of Funds
PRI took out the following borrowing of funds subsequent to the date of closing of accounts.
The fourteenth bank loan forproperties
Aozora Bank, Ltd.
Sumitomo Mitsui Banking
Corporation,
The Sumitomo Trust &Banking Corporation
The Musashino Bank Ltd.,NTT Finance Corp.
JPY11,817,931,466

The fifteenth bank loan forproperties[Trustee] The Sumitomo Trustand Banking Co., Ltd. (realestate stabilization fund account)

The sixteenth bank loan forproperties
Aozora Bank, Ltd.

JPY10,000,000,000

JPY2,977,214,315

Interest rate

TIBOR+1.7%

TIBOR+4.98368%

TIBOR+1.7%

Start of the loan period

May 15, 2010
Last day of each of January,
April, July and October, andmaturity date
Payment in full on theprincipal repayment dates

May 15, 2010
Last day of each of January,
April, July and October, andmaturity dateOne-time repayment on
repayment deadline

SecuredRefinancing with twelfth bankloan for properties, thirteenthbank loan for properties andbank loan for acquired properties
becoming due

LenderAmount of loan

Repayment dates

September 15, 2010

May 15, 2010
15th day of each of March, June,
September and December, andmaturity date
Repayment made in installmentsof JPY 25 million on September
15, 2010 and 15th day of each of
March, June, September andDecember of every year
thereafter, until repayment iscompleted with repayment ofremaining amount on repayment
deadline
September 18, 2012

Security
Fund utilization

SecuredRefinancing with twelfth bankloan for properties, thirteenthbank loan for properties andbank loan for acquired
properties becoming due

SecuredRefinancing with twelfth bankloan for properties, thirteenthbank loan for properties andbank loan for acquired properties
becoming due

Interest payment date
Repayment of principal

September 15, 2010

(4) Forecast of Revenues and Earnings
Forecast of revenues and earnings for the deemed business year (tenth fiscal period: February 1, 2010 to June 30, 2010)7

Prospect Reit Investment Corporation
based on “2. Management Policy and Operating Conditions; (3) Important Subsequent Events; I. 5) Schedule ofMerger” on page 4 is as follows. Please refer to “Assumptions for Forecast for the Deemed Business Year (TenthFiscal Period: February 1, 2010 to June 30, 2010)” below for the assumptions underlying the forecast.
Forecast of revenues and earnings for the tenth fiscal period (February 1, 2010 to June 30, 2010)
Operating revenues
Operating income
Ordinary income
Net income
Distributions per unit

JPY 1,874 million
JPY 689 million
JPY 31 million
JPY 30 million
JPY 406*1. Forecasts for operating revenues, ordinary income, net income and distributions per unit may differ from actual results due to changes in the operating
environment and a variety of factors. Accordingly, PRI does not guarantee any distribution amount.
*2. The current forecast of expenses to be incurred in association with the merging of PRI and JRH is JPY 140 million. These expenses are not includedin the above forecast figures. These expenses are to be accounted for by PRI as prepaid expenses and then accounted for by JRH after the merger with
the negative goodwill from the merger.
In addition, expenses subject to the condition precedent that the merger takes effect will be incurred separately from the above in the amount of JPY
190 million. These expenses are to be similarly accounted for by JRH after the merger with the negative goodwill from the merger and thus are notincluded in the above forecast figures.

8Prospect Reit Investment Corporation
Assumptions for Forecasts for the Tenth Fiscal Period (February 1, 2010 to June 30, 2010)
Operating Period
Managed Assets
Investment Units
IssuedInterest-Bearing
Debt Ratio

Operating Expenses

Non-Operating
Expenses

OthersCash Distribution

Assumptions
Tenth fiscal period: From February 1, 2010 to June 30, 2010 (150 days)
Forecasts are based on a property portfolio comprising 53 properties held as of January 31,
2010. The property portfolio may change, however, due to property acquisition or sale.
Forecasts are based on the assumption that PRI shall not issue additional investment units.
The interest-bearing debt ratio as of January 31, 2010 was 49.5%. Forecasts are, however,based on an interest-bearing debt ratio of approximately 49.7% as of June 30, 2010, taking into
account an increase in debt financing to acquire additional properties as well as repayment
stemming from the above sale of one property.
The interest-bearing debt ratio is calculated as follows: Interest-bearing debt ratio =Interest-bearing debt ÷ (Interest-bearing debt + Unitholders’ capital) × 100
Forecasts are based on the assumption that PRI shall post repairs, maintenance and renovation
expenses of JPY 93 million. Repairs, maintenance and renovation expenses are estimatedbased on amounts considered essential for each property for each fiscal period. Actual repairs,
maintenance and renovation expenses for each fiscal period, however, may differ significantly
from these amounts due to unforeseen circumstances or emergencies. Forecasts are also basedon the assumption that PRI shall post property management expenses of JPY 180 million.
Of the amount of property tax and city planning tax assessed for the property portfolio, theapplicable portion is recorded as rental business expenses for each fiscal period. For properties
acquired during each period, property tax and city planning tax are allocated to the seller andpurchaser on a pro rata basis at the time of acquisition settlement. In the case of PRI, anamount equivalent to the portion allocated to the purchaser is included in the acquisition priceof the property and not recorded as an expense. Forecasts are based on the assumption that PRI
shall post property tax and city planning tax of JPY 102 million.
Depreciation is calculated using the straight-line method inclusive of incidental expenses.
Forecasts are based on the assumption that PRI shall post depreciation expenses of JPY 407
million.
Forecasts are based on the assumption that PRI shall post total interest expenses of JPY 395
million, and debt-related expenses of JPY 258 million.
Forecasts for the deemed business year are based on the balance outstanding of JPY 7,950
million in short-term debt (repayment due on February 15, 2010), as well as the balance
outstanding after voluntary early repayment of about JPY 343 million (repayment due on
March 3, 2010) is made from the balance outstanding of JPY 17,346 million in long-term debt
(repayment due on March 15, 2010), being refinanced in the same amount.
Plans are to strive to enhance corporate value and unitholder value by promoting the merging
of PRI and JRH.
Forecasts are based on the assumption that PRI shall distribute the full amount of retained
earnings each fiscal period in line with its distribution policy. Forecasts are also based on theassumption that PRI shall have no distributions in excess of earnings.

9

Prospect Reit Investment Corporation[Factors to Decreases in Amount Compared to Ninth Fiscal Period]
Decreases in revenues and income are forecast for the tenth fiscal period, primarily due to the following increase in interest expenseand debt-related expenses in correlation with the calculation period being shorter as a result of the merger (decrease in number of daysof asset management) and the execution of refinancing of JPY 24,795 million in total on March 15, 2010 as outlined in “(3) Important
Subsequent Events; IV. Borrowing of Funds.” Please refer to below for the breakdown of factors by item.

<Breakdown of Increases/Decreases per Day by Key Item>(Thousands of yen)
Ninth Fiscal Period

Tenth Fiscal Period

Amount of increase anddecrease

Operating revenues

11,912

12,493581

Operating income

4,777

4,594

-183

(Interest expense and debt-related expenses) *

3,654

4,355

701

Ordinary income

1,054

210

-844

Net income

1,052

203

-849

184 days

150 days-34 days

Reference: Number of days of asset management* Interest expense and debt-related expenses for the ninth fiscal period include bonds interest expense and amortization for issuance expense of investment
corporation bonds.

[Note] The effective date of the merging of PRI and JRH is currently scheduled for July 1, 2010, but future unforeseen circumstances may
possibly cause a delay in the effective date of the merger. In the event of such delay, forecast of revenues and earnings for the full
fiscal period (tenth fiscal period: February 1, 2010 to July 31, 2010) is as follows

Tenth Fiscal Period (February 1, 2010 to June 30, 2010)
Operating revenues
Operating income
Ordinary income
Net income
Distributions per unit

JPY 2,229 million
JPY 851 million
JPY 22 million
JPY 21 million
JPY 292*1. Forecasts for operating revenues, ordinary income, net income and distributions per unit may differ from actual results due to changes in the operating
environment and a variety of factors. Accordingly, PRI does not guarantee any distribution amount.
*2. The current forecast of expenses to be incurred in association with the merging of PRI and JRH is JPY 140 million. These expenses are not includedin the above forecast figures. These expenses are to be accounted for by PRI as prepaid expenses and then accounted for by JRH after the merger
with the negative goodwill from the merger.
In addition, expenses subject to the condition precedent that the merger takes effect will be incurred separately from the above in the amount of JPY
190 million. These expenses are to be similarly accounted for by JRH after the merger with the negative goodwill from the merger and thus are notincluded in the above forecast figures.

10Prospect Reit Investment Corporation
3. Financial Statements(1) Balance Sheets(Thousands of yen)Notes

Eighth Fiscal Period(As of July 31, 2009)

Ninth Fiscal Period(As of January 31, 2010)ASSETSI Current assets
Cash and deposits
Entrusted cash and deposits*1

1,291,069

1,501,188

1,768,022

1,784,152

Rental receivables

17,15818,812

Prepaid expenses

222,713

192,756

23,862409
279
25,87550,816―120
2,805△2,634
3,346,755△2,031
3,548,621

Deferred tax assets
Consumption tax receivables
Derivative assets
Other current assets
Reserve for possible losses ofreceivables
Total current assets
II Fixed assets
1. Property and equipment:
Buildings
Accumulated depreciation
Structures
Accumulated depreciation
Machinery and equipment
Accumulated depreciation
Tools, furniture and fixtures
Accumulated depreciation
Land
Entrusted buildings
Accumulated depreciation
Entrusted structures
Accumulated depreciation
Entrusted machinery and equipment
Accumulated depreciation
Entrusted tools, furniture and fixtures
Accumulated depreciation
Entrusted land
Entrusted construction accountTotal property and equipment

*1
*1
*1
*1
*1
*1
*1

*1
*1
*1

866,388△125,472
1,131
△395
6,189
△3,1643,307△838

740,916
735
3,024
2,468
794,545

32,441,755△3,001,016
162,742△42,051
358,359△107,197
70,793△20,051

29, 440,739
120,690
251,161
50,742
36,725,573
11,21068, 141,808

2. Intangible assets:
Other intangible assets
Total intangible assets
3. Investments and other assets:Long-term prepaid expenses
Deferred tax assets
Leasehold and security
deposits received
Long-term derivative assets
Total investments andother assets
Total fixed assets
III Deferred assets:
Expenses to issue Investment
Corporation Bonds
Total deferred assets
Total assets

11

867,550△142,829
1,131
△439
6,189
△3,5603,848△1,12032,537,860△3,445,496
164,852△48,637
358,583△119,325
88,055△25,989

724,721
692
2,629
2,728
794,545
29, 092,363
116,214239,257
62,06636,725,573―
67, 760,791

5,696
5,696

4,588
4,588

135,098
27,02860,268―23,393
777

23,250―186,298
68, 333,802

83,51867, 848,898

2,959
2,959
71,683,518――
71,397,520

Prospect Reit Investment Corporation(Thousands of yen)
Notes

Eighth Fiscal Period(As of July 31, 2009)

Ninth Fiscal Period(As of January 31, 2010)

LIABILITIESICurrent liabilities
Operating payables
Short-term debt
Long-term Borrowing with repayment
dates within one year
Current Portion of Investment
Corporation Bonds

100,025

72,718*13,000,000

7,950,000*1

17,346,000

17,346,000

5,000,000―

Other payables

37,80054,504

Accrued expenses

196,489

162,591

Accrued income taxes

605

605

Accrued consumption taxes

―

3,856

264,637

254,911

Advances received

II

Other current liabilities

1,486

1,390

Total current liabilities

25,947,044

25,846,577

Long-term liabilities
Long-term debt

10,058,000

10,058,000

Leasehold and security deposits

771,640

755,533

Total long-term liabilities

10,829,640

10,813,533

36,776,684

36,660,111

Unitholders’ capital

34,621,838

34,621,838

2. Retained earnings
Unappropriated retained
earnings for the period

362,436

193,579

Total retained earnings

362,436

193,579

Total unitholders’ capital

34,984,275

34,815,418

Evaluation and conversions
1. Earnings on deferred hedgetransactions△77,441△78,009△77,441△78,009

Total liabilities
NET ASSETSI

Unitholders’ capital
1. Unitholders’ capitalII

Total evaluation and conversions
Total net assets*2

Total liabilities and net assets

12

34,906,833

34,737,409

71,683,518

71,397,520

Prospect Reit Investment Corporation(2) Statements of Income(Thousands of yen)
Eighth Fiscal Period(February 1, 2009 to July 31, 2009)

Ninth Fiscal Period(August 1, 2009 to January 31, 2010)*1*2

2,121,562
115,305−

2,115,122
76,711−*1

1,133,698

1,065,331−
122,267
3,584
22,8486,000−
116,704
3,576
23,590
8,400

−
1,322
103,944−450
94,812Notes

I. Operating Revenues
Real estate rental revenues
Other rental revenues
Gain on sale of real estate
II. Operating Expenses
Real estate rental expenses
Loss on sales of real estate
properties
Asset management fees
Custodian fees
Administrative service fees
Directors’ fees
Transferred to reserve for possible
losses of receivables
Losses of receivables
Other operating expenses
Operating income
III. Non-Operating Income
Interest income
Additional refunds
Other non-operating income
IV. Non-Operating Expenses
Interest expense
Bonds interest expense
Bonds issuance expense
Debt-related expenses
Other non-operating expenses
Ordinary income
Income before income taxes
Income taxes
Deferred taxes*12,236,868

1,393,667
843,200

512

−

−
2,218

284,995
54,3647,686
129,020
7,442

483,510
361,908
362,488

605
△544

60

Net income
Retained earnings brought forward
Retained earnings at the end of theperiod13

1,312,864
878,9691,431
787

2,191,833

359
336,20921,2792,959
311,913
13,459

605
442

871

685,820
194,020
194,623
1,047

362,428

193,5758

4362,436

193,579

Prospect Reit Investment Corporation(3) Statement of Changes in Net Assets
Eighth Fiscal Period (February 1, 2009 to July 31, 2009)(Thousands of yen)
Unitholders’Capital*1
Balance as of theprevious fiscal
period-end
Movements during
the fiscal period
ended July 31, 2009
Distribution ofretained earnings
Net income
Net change due toitems other thanunitholders’ capital
Total
Balance as of July 31,
2009

Unitholders’ Capital
Retained Earnings
Unappropriate
Total
d Retained
Retained
Earnings
Earnings

Total
Unitholders’Capital

Evaluation and Conversions
Earnings on
Total
Deferred
Evaluation
Hedge
and
Transactions
Conversions

Total Net
Assets34,621,838

448,355448,355

35,070,193△89,902△89,902

34,980,291−−△448,347
362,428△448,347
362,428△448,347
362,428−−−−△448,347
362,428

−

−

−

−

12,461

12,461

12,461−△85,918△85,918△85,918

12,461

12,461△73,457

34,621,838

362,436

362,436

34,984,275△77,441△77,441

34,906,833

Ninth Fiscal Period (August 1, 2009 to January 31, 2010)(Thousands of yen)
Unitholders’Capital*1
Balance as of theprevious fiscal
period-end
Movements during
the fiscal period
ended January 31,
2010
Distribution ofretained earnings
Net income
Net change due toitems other thanunitholders’ capital
Total
Balance as of January
31, 2010

Unitholders’ Capital
Retained Earnings
Unappropriate
Total
d Retained
Retained
Earnings
Earnings

Total
Unitholders’Capital

Evaluation and Conversions
Earnings on
Total
Deferred
Evaluation
Hedge
and
Transactions
Conversions

Total Net
Assets34,621,838

362,436

362,436

34,984,275△77,441△77,441

34,906,833−−△362,432
193,575△362,432
193,575△362,432
193,575−−−−△362,432
193,575

−

−

−

−

△567

△567

△567

−

△168,856△168,856△168,856

△567

△567

△169,424

34,621,838

193,579

193,579

34,815,418△78,009△78,009

34,737,409

14

Prospect Reit Investment Corporation(4) Basis for Calculating Cash Distribution(Yen)
Eighth Fiscal Period(February 1, 2009 to
July 31, 2009)I

Unappropriated retained earnings at
the end of the fiscal period
II Total distribution

362,436,651

193,579,723

362,432,600

193,532,700(Distribution per unit)(4,826)(2,577)

4,051

47,023

PRI determines the amount of
distribution in accordance with
Article 34.1 of its Articles ofIncorporation. The amount must
exceed 90% of distributable income
as stipulated in Articles 67.15 of theSpecial Taxation Measures Law.

PRI determines the amount of
distribution in accordance with
Article 36.1 of its Articles ofIncorporation. The amount must
exceed 90% of distributable income
as stipulated in Articles 67.15 of theSpecial Taxation Measures Law.

PRI has therefore decided to
distribute the maximum amount ofretained earnings at the end of theperiod: JPY 362,432,600 to 75,100
units issued and outstanding.
Procedures for the distribution ofamounts exceeding distributable
income are outlined in Article 36.1-4
of PRI’s Articles of Incorporation.
PRI decided not to distribute cash inexcess of distributable income forthe fiscal period.

PRI has therefore decided to
distribute the maximum amount ofretained earnings at the end of theperiod: JPY 193,532,700 to 75,100
units issued and outstanding.
Procedures for the distribution ofamounts exceeding distributable
income are outlined in Article 36.1-4
of PRI’s Articles of Incorporation.
PRI decided not to distribute cash inexcess of distributable income forthe fiscal period.

III Retained earnings carried forward

Method of Calculating the Amountof Distribution

Ninth Fiscal Period(August 1, 2009 to
January 31, 2010)15

Prospect Reit Investment Corporation(5) Statements of Cash Flows
Eighth Fiscal Period(February 1, 2009 to
July 31, 2009)
I Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Interest income
Reserve for possible losses of receivables
Amortization for issuance expense of investment
corporation bonds
Interest expense
Decrease (increase) in operating receivables
Decrease in other receivables
Decrease in consumption tax and other receivables(Increase) decrease in prepaid expenses(Decrease) increase in operating payables
Decrease in other payables
Increase in accrued consumption taxes(Decrease) increase in accrued expenses(Decrease) increase in advances received
Decrease in long-term prepaid expenses
Loss on sale of entrusted property andEquipment
Other
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by operating activities
II Cash flows from investing activities:
Payments for the purchase of property andEquipment
Payments for the purchase of entrusted property andequipment
Payments for leasehold and security deposits
Proceeds from leasehold and security deposits
received
Payments for leasehold and security deposits received
Net cash used in investing activities
III Cash flows from financing activities:
Proceeds from short-term debt
Payments of short-term debt
Proceeds of long-term debt
Payments for issuance expense of investment
corporation bonds
Payments for distributions to unitholders
Net cash (used in) provided by financing Activities
IV Net change in cash and cash equivalents
VI Cash and cash equivalents at the beginning of theperiodVI Cash and cash equivalents at the end of the period

362,488486,382
7,686△580

194,623
488,576
2,959△603△1,431
339,360
4,938△230
21,106△104,682
19,408△11,862△6,799△13,231
19,836△106,683△512
357,488△1,65325,177409
29,956△42,220
17,1603,856△4,286△9,72574,829−28,9281,044,637
1,431△341,522△2,373702,173−
1,440
1,137,476
514△387,100△605
750,285△1,812538△142,484
184△95,721143

83,315△108,499△167,295

53,904△70,011△111,146

6,500,000△11,000,000
4,500,000

10,950,000△6,000,000−−△448,955△448,955△5,000,000△362,889△412,889

85,922

226,249*1*1

16(Thousands of yen)
Ninth Fiscal Period(August 1, 2009 to
January 31, 2010)

2,973,170
3,059,092*1*1

3,059,092
3,285,341

Prospect Reit Investment Corporation(6) Notes for preconditions of going concern entities
Eighth Fiscal Period(February 1, 2009 to July 31, 2009)
None

Ninth Fiscal Period(August 1, 2009 to January 31, 2010)
None(7) Notes for Items Related to Important Accounting Policies

1. Depreciation
method for fixed
assets

2. Accounting
standards to post
revenues andexpenses

Eighth Fiscal Period(February 1, 2009 to July 31, 2009)

Ninth Fiscal Period(August 1, 2009 to January 31, 2010)(1) Tangible fixed assets (including entrusted
assets)
The straight-line method has been adopted.
Estimated years of use for major tangible fixed
assets are as follows:
Buildings
3 – 60 years
Structures
2 – 45 years
Machinery and equipment
3 – 15 years
Tools, furniture, and fixtures 3 – 15 years(1) Tangible fixed assets (including entrusted
assets)Same as eighth fiscal period(2) Intangible fixed assets
The straight-line method has been adopted.

(2) Intangible fixed assets
Same as eighth fiscal period(3) Long-term prepaid expenses
The straight-line method has been adopted.
Method to post fixed asset taxes and other taxes(3) Long-term prepaid expenses
Same as eighth fiscal period
Method to post fixed asset taxes and other taxes

In terms of fixed asset taxes, city planning taxes,
depreciable taxes, and others levied on holding
real estate and others, the tax amount to be paid inthis period is posted as expenses in the period.

Same as eighth fiscal period

In terms of settled amounts for fixed asset taxes
and other taxes for the first year in the case of
acquiring real estate or trust beneficiary rights(with real estate as entrusted assets) from sellers,such amounts are not posted as expenses but
included in book values at the time of acquisitionof such real estate or trust beneficiary rights.
Such fixed assets and other taxes included in bookvalues at the time of acquisition of such real estate
and trust beneficiary rights were none.

17

Prospect Reit Investment Corporation(1) Hedge accounting method
Deferred hedge method. In the cases ofinterest swaps meet conditions for special
treatment, special treatment is adopted.

(1) Hedge accounting method
Same as eighth fiscal period(2) Hedge type and objective
Hedge typeInterest rate swap transaction
Interest rate cap transaction
Hedge objective
Interest payment on borrowing(2) Hedge type and objective
Same as eighth fiscal period(3) Hedge policy
PRI carries out derivative transactions to hedge
risks based on its risk management policy and inaccordance with the Articles of the Investment
Corporation.

(3) Hedge policy
Same as eighth fiscal period(4) Method to evaluate effectiveness of hedge
accounting
PRI judges the effectiveness of hedge accounting
based on such indicators as accumulated cash
flow changes in comparison with hedging objects
and hedging methods, during commence of hedge
and the time to judge effectives. In the cases ofinterest swaps meet conditions for special
treatment, effective judgment is omitted.

(4) Method to evaluate effectiveness of hedge
accounting
Same as eighth fiscal period

4. Composition of
cash and cash
equivalents in thestatements of cash
flows

Cash and cash equivalents in the statements ofcash flows consist of cash in hand, entrusted cash,
cash and entrusted deposits that can be withdrawn
easily, and short-term investments redeemablewithin three months from acquisition that pose
minimal risk of value fluxuations and are easily
convertible to cash.

Same as eighth fiscal period

5. Otherimportant items forthe basis ofcompilingfinancialstatements(1) Accounting method with respect to trust
beneficiary rights to real estate and otherentrusted assets
With respect to trust beneficiary rights to realestate and other entrusted assets, all of the asset
and liability items within entrusted assets as well
as all revenue and expense items generated from
entrusted assets are posted in the corresponding
items in the balance sheets and statements ofincome.
Among entrusted asset items posted in suchcorresponding items, the following important
items are posted independently in the balance
sheets.
1) Entrusted cash and entrusted deposits
2) Entrusted buildings, entrusted
structures, entrusted machinery andequipment, entrusted tools, furnitureand fixtures, entrusted land, andentrusted construction account(1) Accounting method with respect to trust
beneficiary rights to real estate and otherentrusted assets
With respect to trust beneficiary rights to realestate and other entrusted assets, all of the asset
and liability items within entrusted assets as well
as all revenue and expense items generated from
entrusted assets are posted in the corresponding
items in the balance sheets and statements ofincome.
Among entrusted asset items posted in suchcorresponding items, the following important
items are posted independently in the balance
sheets.
3) Entrusted cash and entrusted deposits
4) Entrusted buildings, entrusted
structures, entrusted machinery andequipment, entrusted tools, furnitureand fixtures, entrusted land

(2) Accounting method for consumption tax andothers
The accounting method for consumption tax andlocal consumption tax is the tax-exclusive
method. Undeductable consumption taxes for
asset acquisition are included in book values at
the time of each respective asset acquisition.

(2) Accounting method for consumption tax andothersSame as eighth fiscal period

3. Hedge
accounting method18

Prospect Reit Investment Corporation(8) Notes to the Financial Statements[Notes for the Balance Sheets]
Eighth Fiscal Period(February 1, 2009 to July 31, 2009)

Ninth Fiscal Period(August 1, 2009 to January 31, 2010)*1. Assets put up for collateral or assets put up for collateralof secured debt are as follows:(Thousands of yen)
1,768,022
Entrusted cash and entrusted deposits
Buildings
740,916Structures
735
Machinery and equipment
3,024
Tools, furniture and fixtures
2,468
Entrusted buildings
794,545
Entrusted buildings
29,440,739
Entrusted structures
120,690
251,161
Entrusted machinery and equipment
50,742
Entrusted tools, furniture and fixtures
Entrusted land
36,725,573
Total
69,898,621*1. Assets put up for collateral or assets put up for collateralof secured debt are as follows:(Thousands of yen)
1,784,152
Entrusted cash and entrusted deposits
724,721
Buildings
692
Structures
2,629
Machinery and equipment
2,728
Tools, furniture and fixtures
794,545
Entrusted buildings
29,092,363
Entrusted buildings
116,214
Entrusted structures
239,257
Entrusted machinery and equipment
62,066
Entrusted tools, furniture and fixtures
36,725,573
Entrusted land
69,544,944
Total

Secured debt with collateral are as follows:

Secured debt with collateral are as follows:

Short-term debt
Long-term Borrowing with repayment
dates within one year
Long-term debt
Total

3,000,000
17,346,000

Short-term debt
Long-term Borrowing with repayment
dates within one year
Long-term debt
Total

10,058,000
30,404,000*2. Minimum net assets set by Article 67.4 of the Investment
Trust and Investment Corporation Law

7,950,000
17,346,000
10,058,000
35,354,000*2. Minimum net assets set by Article 67.4 of the Investment
Trust and Investment Corporation Law

JPY 50,000 thousand

Same as eighth fiscal period

19

Prospect Reit Investment Corporation[Notes to the Statements of Income]Eighth Fiscal Period(February 1, 2009 to July 31, 2009)

Ninth Fiscal Period(August 1, 2009 to January 31, 2010)*1. Breakdown of real estate rental revenues and earnings(Thousands of yen)

*1. Breakdown of real estate rental revenues and earnings(Thousands of yen)

A. Real estate rental revenues
Real estate rental revenues
Rental revenues
Common area maintenancefee revenues
Parking revenues
Other related revenues
Other rental revenues
Other rental revenues
Total real estate rental revenues

A. Real estate rental revenues
Real estate rental revenues
Rental revenues
Common area maintenancefee revenues
Parking revenues
Other related revenues
Other rental revenues
Other rental revenues
Total real estate rental revenues

1,936,298
80,19578,81426,253
115,305

2,121,562
115,305
2,236,868

B. Real estate rental expenses
Real estate rental expenses
Property management
expenses
Repair expenses
Water, electricity, and other rates

Taxes
Insurance premiums against losses

Trust fees
Depreciation expenses
Other rental expenses

1,928,988
84,94675,91425,272
76,711

2,115,122
76,711
2,191,833

B. Real estate rental expenses
Real estate rental expenses
Property management
expenses
Repair expenses

206,073
115,089
45,295120,201
6,858
44,183
485,275
110,721

Total real estate rental expenses

C. Real estate rental business earnings(A – B)

Water, electricity, and other rates

Taxes
Insurance premiums against losses

Trust fees
Depreciation expenses
Other rental expenses

1,133,698
1,133,698

172,168
77,42742,231
120,149
7,203
44,183
487,468
114,499

Total real estate rental expenses

C. Real estate rental business earnings(A – B)

1,103,169

20

1,065,331
1,065,331
1,126,502

Prospect Reit Investment Corporation[Notes to the Statement of Changes in Net Assets]
Eighth Fiscal Period(February 1, 2009 to July 31, 2009)

Ninth Fiscal Period(August 1, 2009 to January 31, 2010)*1. Total number of investment units authorized for issuanceand outstanding
Total number of investment units authorized for issuance
2,000,000
Total number of investment units outstanding
75,100*1. Total number of investment units authorized for issuanceand outstanding
Same as eighth fiscal period[Notes to the Statement of Cash Flows]
Eighth Fiscal Period(February 1, 2009 to July 31, 2009)

Ninth Fiscal Period(August 1, 2009 to January 31, 2010)*1. Relationship between cash and cash equivalents at the endof the period and items posted on the balance sheets
As of July 31, 2009 (Thousands of yen)
Cash and deposits
1,291,069
Entrusted cash and entrusted deposits
1,768,022
Cash and cash equivalents
3,059,092*1. Relationship between cash and cash equivalents at theend of the period and items posted on the balance sheets
As of January 31, 2010 (Thousands of yen)
Cash and deposits
1,501,188
Entrusted cash and entrusted deposits
1,784,152
Cash and cash equivalents

3,285,341(Disclosure is omitted for notes regarding lease transactions, derivatives transactions and others because of small necessity todisclose in this Financial Report <Kessan Tanshin>)[Notes regarding information per investment unit]
Eighth Fiscal Period(February 1, 2009 to July 31, 2009)

Ninth Fiscal Period(August 1, 2009 to January 31, 2010)
Net assets per investment unit
Net income per investment unit

Net assets per investment unit
JPY 464,804
Net income per investment unit
JPY 4,825
Because there are no latent investment units, PRI does notrecord net income per investment unit after adjustment oflatent investment units.

JPY 462,548
JPY 2,577

Same as eighth fiscal period

Note: Net income per investment unit is calculated using the following average investment units in the respective periods.

Average investment units in the seventh and eighth fiscal periods:
Ninth Fiscal Period (August 1, 2009 to January 31, 2010): 75,100 (no changes during the period)
Eighth Fiscal Period (February 1, 2009 to July 31, 2009): 75,100 (no changes during the period)
The calculation formulae for net income per unit are as follows.
Eighth Fiscal Period(February 1, 2009 to
July 31, 2009)(Thousands of yen)
Net income
362,428
Net income not distributed to−unitholders
Net income distributed to unitholders
362,428
Average number of units
75,100 units

21

Ninth Fiscal Period(August 1, 2009 to
January 31, 2010)(Thousands of yen)
193,575−
193,575
75,100 units

Prospect Reit Investment Corporation[Notes regarding subsequent events]
Eighth Fiscal Period(February 1, 2009 to July 31, 2009)
None.

Ninth Fiscal Period(August 1, 2009 to January 31, 2010)
Prospect Reit Investment Corporation (hereinafter referred toas “PRI”) and Japan Rental Housing Investment Inc.
(hereinafter referred to as “JRH”) announce that they decided
at their respective board of directors’ meetings on February
26, 2010 to enter into the Letter of Intent regarding REIT
MERGER (the “LOI”) as follows, and entered into the LOI
among their respective asset management companies,
Prospect Reit Advisors Co., Ltd. (“PRA”) and Mi-Casa AssetManagement Inc. (“MAM”) , on the same date.
Purpose of the Merger
PRI and JRH, with the purpose of seeking new growth
opportunities, considered thoroughly their respective growthstrategies and financial strategies, and, as a result, both
corporations reached the common understanding thatrealization of expansion of the asset scale, using negative
goodwill, and strengthening financial aspects and others willcontribute to the further enhancement of corporate value ofboth investment corporations. Therefore, PRI and JRH haveentered into the LOI on February 26, 2010.
New investment Corporation after the merger will be one of
the largest domestic REIT as a residential specialized REIT in
Japan, and stabilization of its cash flow and its balance sheet
in response to the lower LTV. PRI and JRH aim to realize themerger between both corporations (hereinafter referred to as
the “Merger”) with support of major unit holders as well as
main lenders of PRI and JRH in accordance with the LOI.
As of the effective date of the Merger, the asset managementagreement entered into by and between PRI and PRA shall beterminated and MAM will take over the role of the asset
management of the investment corporation after the Merger.
Appleringo Holding BV (hereinafter referred to as “ARH”),
MAM’s parent company, and K.K. Prospect (“KKP”), PRA’S
parent company, and PRA entered into a basic agreement that
all issued shares of PRA held by KKP shall be transferred to
MAM, and MAM and PRA shall implement the merger
where MAM shall be a surviving company upon the effective
date of the merger (“Integration of Asset Management
Companies”).
Method of the Merger
The conclusion of a merger agreement is scheduled forMarch, and the Merger will be an absorption-type merger
with JRH as the surviving corporation and PRI will bedissolved.
Allocation of Units under the Merger
PRI and JRH agreed that JRH shall allocate units of JRH at
a ratio of 0.75 units of JRH per one unit of PRI. If any eventthat materially affects the grounds for calculation of theabovementioned merger ratio occurs or is discovered, PRI
and JRH may amend the merger ratio upon agreement
through mutual consultation.

22

Prospect Reit Investment Corporation
Eighth Fiscal Period(February 1, 2009 to July 31, 2009)

Ninth Fiscal Period(August 1, 2009 to January 31, 2010)
Summary of Corporation Surviving Absorption-Type
Merger’s Most Recent Fiscal Period (JRH’s Six-Month
Period Ended September 30, 2009)(Millions of yen)
Invests in and manages
primarily specified assets
pursuant to the Investment
Business description
Trust and Investment
Corporation Law
Operating Revenue

3,494

Net Income

480

Total Asset

111,914

Total Liabilities

51,879Total Net Assets

60,034

Schedule of the Merger
The conclusion of a merger agreement is scheduled forMarch, and the merger is expected to take effect in July 1.
II. Extension of Borrowing Term
PRI extended the term of the twelfth bank loan for properties
and thirteenth bank loan for properties, which were due on
February 15, 2010, as follows
The twelfth bank loan for properties
Lender: Aozora Bank, Ltd.
Borrowing date: October 8, 2009
Repayment dates: March 15, 2010
Loan amount: JPY5,000,000,000
Interest rates (Annual rates): 5.25545%
The thirteenth bank loan for properties
Lender: Aozora Bank, Ltd.
Borrowing date: October 8, 2009
Repayment dates: March 15, 2010
Loan amount: JPY5,000,000,000
Interest rates (Annual rates): 5.25545%
III. Partial Early Repayment of Borrowings
PRI repaid some of the principal of borrowings in the amountof JPY 700 million in total on March 3, 2010. Below is thebreakdown of the repayment amount by loan.
Amount of refund money
The third bank loan for
52,152,514
properties
The fourth bank loan for
57,894,439
properties
The tenth bank loan for
89,098,828
properties
The twelfth bank loan for
98,998,698
properties
The thirteenth bank loan
58,409,232
for properties
The bank loan for acquired
343,446,289
properties
Total
700,000,000

23

Prospect Reit Investment Corporation
Eighth Fiscal Period(February 1, 2009 to July 31, 2009)

Ninth Fiscal Period(August 1, 2009 to January 31, 2010)
IV. Borrowing of Funds
PRI took out the following borrowing of funds subsequent to
the date of closing of accounts.
The fourteenth bank loan for properties
Lender: Aozora Bank, Ltd.
Sumitomo Mitsui Banking Corporation,
The Sumitomo Trust & Banking Corporation
The Musashino Bank Ltd.,NTT Finance Corp.
Loan amount: JPY11,817,931,466Interest rates (Annual rates): TIBOR+1.7%
Borrowing date: March 15, 2010
Interest payment date: Last day of each of January, April, Julyand October, and maturity date
Repayment method：One-time repayment on repayment dates
deadline
Repayment dates：September 15, 2010
Security: Secured
Fund utilization: Refinancing with twelfth bank loan forproperties, thirteenth bank loan for properties and bank loan
for acquired properties becoming due
The fifteenth bank loan for properties
Lender: [Trustee] The Sumitomo Trust and Banking Co., Ltd.
(real estate stabilization fund account)
Loan amount: JPY10,000,000,000
Interest rates (Annual rates): TIBOR+1.7%*
Borrowing date: March 15, 2010
Interest payment date:15th day of each of March, June,
September and December, and maturity date
Repayment method：Repayment made in installments of JPY
25 million on September 15, 2010 and 15th day of each of
March, June, September and December of every year
thereafter, until repayment is completed with repayment ofremaining amount on repayment deadline
Repayment dates：September 18, 2012
Security: Secured
Fund utilization: Refinancing with twelfth bank loan forproperties, thirteenth bank loan for properties and bank loan
for acquired properties becoming due
The sixteenth bank loan for properties
Lender: Aozora Bank, Ltd.
Loan amount: JPY2,977,214,315
Interest rates (Annual rates): TIBOR+1.7%
Borrowing date: March 15, 2010
Interest payment date: Last day of each of January, April, Julyand October, and maturity date
Repayment method：One-time repayment on repayment dates
deadline
Repayment dates：September 15, 2010
Security: Secured
Fund utilization: Refinancing with twelfth bank loan forproperties, thirteenth bank loan for properties and bank loan
for acquired properties becoming due

24Prospect Reit Investment Corporation(Disclosure is omitted for notes regarding lease transactions, derivatives transactions and others because of small
necessity to disclose in this Financial Report <Kessan Tanshin>)(9) Changes in total investment units outstanding
Public and private offerings from the establishment of PRI to the end of the ninth fiscal period (ended January 31,2010) are as follows:
Total investment units
Paid-in capital
outstanding (unit)(Millions of yen)
Date
Type
Notes
ChangeBalance
ChangeBalance
Established by private
April 22, 2005
402
402
201
201
*1
offering
July 12, 2005

Public offering

74,69875,10034,42034,621*2*1. PRI’s investment units were set at JPY 500,000 per unit at the time of establishment.
*2. PRI issued new investment units priced at JPY 480,000 per unit (underwritten price set at JPY 460,800) through a public offering for the
purpose of raising funds mainly for the new acquisition of property.

4. Changes in Officers
None
5. Reference material(1) Investment breakdown
A breakdown of PRI’s investment assets as of the end of the ninth fiscal period (ended January 31, 2010) is asfollows:
Eighth Fiscal Period(February 1, 2009 to
July 31, 2009)

Ninth Fiscal Period(August 1, 2009 to
January 31, 2010)

Total held
(Millions of yen)

Proportion to total(%)

66,58892.9

66,235

92.8

1,541

2.2

1,525

2.1

Deposit and other assets

3,552

5.0

3,636

5.1

Total assets

71,683100.0

71,397100.0Type of asset

Use

Trust beneficiary rights inreal estate

Residential
rental units
Residential
rental units

Real estate

Total held
(Millions of yen)

Proportion tototal(%)*Total held amounts are recorded on the balance sheets (total of book values after deducting depreciation).

(2) Investment properties classified as real estate or entrusted real estatea. Overview of investment properties
The following chart lists investment properties owned by PRI as of January 31, 2010. With the exception ofproperties S017, F017, and F022, which are classified as real estate, all other assets are classified as trust
beneficiary rights in real estate.
Code

Property Name

Acquisition Price Percentage Share Appraisal Value(Millions of Yen) of Total (%) (Millions of Yen)
*1

*2

Acquisition Date

*3

S001

TK Flats Shibuya

6,399

9.4

5,150

July 12, 2005

S002

Prospect Shinonomebashi

3,353

4.9

3,270

July 12, 2005

S004

Maison de Ville Takanawa
Gyoranzaka

1,768

2.6

1,540

July 14, 2005

S005

Prospect Omori-Kaigan

1,807

2.7

1,660

July 14, 2005

S006

Abreast Shin-Osaka

1,826

2.7

1,444

July 12, 2005

S007

Maison de Ville Naka-Meguro

1,189

1.7

1,080

July 14, 2005

S008

Roppongi Rise House

1,184

1.7

930

July 12, 2005

S009

Prospect Nihonbashi-Honcho

1,070

1.6

881

July 12, 2005

25

Prospect Reit Investment Corporation
S011

Fragrance Kawasaki

624

0.9

582

July 12, 2005

S012

Abreast Sakuragawa

516

0.8

415

July 12, 2005

S013

Dome Takamine

322

0.5

210

July 12, 2005

S014

Dome Yotsuya

275

0.4

183

July 12, 2005

S016

Abreast Nagase

209

0.3

155

July 12, 2005

S017

Living Stage Higashi-Sendai

435

0.6

336

August 31, 2005

S018

Prospect Toyonaka Hattori

396

0.6

382

February 10, 2006

S019

Prospect Bishoen

376

0.6

284

February 15, 2006

S020

Prospect Shimogamo

411

0.6

314

March 15, 2006

S021

Prospect Kawaramachi-Gojo

803

1.2

614

March 15, 2007

S022

Prospect Chuo-Rinkan

700

1.0

538

March 15, 2007

S023

Sky Hills N15

932

1.4

841

May 31, 2007

S024

Sky Hills Sakaimachi

1,115

1.6

878

May 31, 2007

S025

Domy Chitose

592

0.9

500

May 31, 2007

S026

Sky Hills Takadai I

691

1.0

507

May 31, 2007

S027

Exceria Ikebukuro West II

1,020

1.5

864

June 20, 2007

S028

Prospect Monzennakacho

1,250

1.8

1,080

June 20, 2007

S029

Prospect KALON Minowa

1,930

2.8

1,730

September 7, 2007

S030

Prospect Nakanoshima

1,000

1.5

768

October 19, 2007

S031

Prospect Ogikubo

880

1.3

708

November 7, 2007

S032

Prospect Musashi-Shinjo

1,230

1.8

1,090

May 30, 2008

F001

Prospect Kiyosumi-Teien

2,780

4.1

2,660

July 14, 2005

F002

Park Terrace Ebisu

2,712

4.0

2,160

July 14, 2005

F003

BELNOS34

2,534

3.7

1,890

July 12, 2005

F004

Prospect Dogenzaka

2,294

3.4

1,740

July 12, 2005

F005

U House Daikan-Cho

1,548

2.3

1,230

July 12, 2005

F006

U House Gokiso

1,406

2.1

1,124

July 12, 2005

F007

Angel Heim Nishi-Rokugo No.2

1,401

2.1

1,014

July 14, 2005

F008

Prospect Onshi-Koen

1,196

1.8

1,160

July 12, 2005

F009

Deim-Hashimoto

992

1.5

825

July 12, 2005

F010

SK Residence

1,020

1.5

876

July 12, 2005

F012

Prospect Urawa-Tokiwa (Note 4)

878

1.3

779

July 12, 2005

F014

U House Tsurumai II

685

1.0

576

July 12, 2005

F017

Living Stage Minami-Sendai

275

0.4

222

August 31, 2005

F019

Prospect Glarsa Hiroo

3,905

5.7

3,930

February 15, 2006

F020

Prospect Katsura-

570

0.8

471

March 03, 2006

F021

Crown Heim Nishi-Tanabe

601

0.9

436

March 03, 2006

26

Prospect Reit Investment Corporation
F022

Takasagoseki Nibankan

810

1.2

619

March 15, 2006

F023

Prospect Machiya

547

0.8

497

November 07, 2006

F024

Prospect Hatsudai

730

1.1

560

March 15, 2007

F025

Prospect Morishita

1,480

2.2

1,260

March 15, 2007

F026

Prospect Nishi-Sugamo

1,419

2.1

1,170

March 30, 2007

F027

Palais D’Or Maruyama

1,250

1.8

824

October 19, 2007

F028

Prospect Kawasaki

1,717

2.5

1,600

October 19, 2007

F029

Prospect Nihonbashi-Koamicho

946

1.4

857

October 19, 2007

68,000100.057,417Total*1. Acquisition price does not include real estate brokerage fees and other expenses incurred through the acquisition of properties.
*2. Figures are rounded to the nearest first decimal place.
*3. Based on the Cabinet Office Ordinance Concerning Balance Sheets, Income Statements, Asset Management Reports, Cash Distribution
Statements and Other Supplementary Documents to be Prepared by Investment Corporations, appraisal values are drawn from valuation reports
prepared by Aoyama Realty Advisors Inc., Chuo Real Estate Appraisal Co., Ltd., Tanizawa Sogo Appraisal Co., Ltd., and Daiwa Real EstateAppraisal Co., Ltd as of the Investment Corporation’s closing date. Furthermore, the valuations are based on appraisals in the case of S022
Prospect Chuo-Rinkan, S026 Sky Hills Takadai I, F014 U House Tsurumai II, F024 Prospect Hatsudai and F025 Prospect Morishita, and pricesurveys in the case of the other properties.

b. Overview of real estate and entrusted real estate
The following chart lists property names, site areas, and other information for real estate and entrusted realestate.
Code Property NameS001

TK Flats
Shibuya

Prospect
S002 Shinonomeba
shi
Maison de
Ville
S004
Takanawa
Gyoranzaka

Location

Site Area

Total Leasable Total Leased
Floor Space
Floor Space

(m2)
*3

Total
Total No.
Total No. of Monthlyof
NumberLeasedRentalLeasableof
Residential Revenues
Residenti
tenants
Units(Thousands
al Unitsof Yen)Occupancy Ratio(By
Space)

Occupancy Ratio(By No.
of
Residenti
al Units)
(%)
*9

(m2)
*1

(m2)
*2

Shibuya-ku,
Tokyo

1,800.47

6,903.54

5,710.08

194

163

26,016

1

82.7

84.0

Koto-ku,Tokyo

1,385.45

4,849.20

4,673.08

171

165

17,803

1

96.4

96.5

Minato-ku,
Tokyo

638.65

1,778.37

1,653.12

70

65

7,825

1

93.0

92.9

*4

*5

*6

(%)
*8

*7

S005

Prospect
Ota-ku,Omori-Kaigan Tokyo

856.82

2,478.04

2,478.04

89

89

9,013

1

100.0

100.0

S006

AbreastShin-Osaka

Osaka-shi,
Osaka766.13

2,984.64

2,206.1792

70

13,767

37

73.9

76.1

Meguro-ku,
Tokyo

275.36

1,275.00

1,249.50

50

49

5,870

1

98.0

98.0

Minato-ku,
Tokyo

574.65

1,209.87

1,152.33

34

32

5,011

1

95.2

94.1

Chuo-ku,Tokyo

174.36

1,290.49

1,066.66

50

42

4,531

1

82.7

84.0

Maison de
S007 Ville
Naka-Meguro
S008

Roppongi
Rise House

Prospect
S009 Nihonbashi-H
oncho
S011

Fragrance
Kawasaki

Kawasaki-shi, Kanagawa

228.05

1,065.96

847.98

45

36

2,970

1

79.6

80.0

S012

AbreastSakuragawa

Osaka-shi,
Osaka

361.991,009.92

967.92

48

46

2,864

1

95.8

95.8

S013

Dome
Takamine

Nagoya-shi,
Aichi

983.60946.04786.20

36

30

1,633

1

83.1

83.3

S014

Dome
Yotsuya

Nagoya-shi,
Aichi

812.09765.90639.66

36

30

1,409

1

83.5

83.3

27

Prospect Reit Investment Corporation
S016

AbreastNagaseLiving Stage
S017 Higashi-Send
ai
Prospect
S018 Toyonaka
Hattori

Higashiosaka-shi, Osaka

318.54532.98471.74

26

23

1,257

23

88.5

88.5

Sendai-shi,
Miyagi904.001,539.41

1,304.59

52

44

2,376

1

84.7

84.6

Toyonaka-shi, Osaka

352.75986.34986.34

34

34

2,448

1

100.0

100.0

S019

Prospect
Bishoen

Osaka-shi,
Osaka313.24901.15901.15

26

26

2,010

1

100.0

100.0

S020

Prospect
Shimogamo

Kyoto-shi,
Kyoto

234.53675.51611.76

31

28

1,775

1

90.6

90.3

Prospect
S021 Kawaramachi-Gojo

Shimogyo-ku, Kyoto234.98

1,528.12

1,287.86

52

44

3,752

1

84.3

84.6

S022

Prospect
Chuo-Rinkan

Yamato-shi,
Kanagawa

589.73

1,098.24

1,075.36

48

47

3,403

1

97.9

97.9

S023

Sky Hills
N15

Sapporo-shi,
Hokkaido

1,232.73

3,443.55

3,443.55

111

111

5,106

1

100.0

100.0

S024

Sky Hills
Sakaimachi*10

Chitose-shi,
Hokkaido

4,189.97

5,194.78

5,194.78

134

134

6,039

1

100.0

100.0

S025

Domy
Chitose

Chitose-shi,
Hokkaido

1,796.60

2,145.70

2,145.70

110

110

4,081

1

100.0

100.0

S026

Sky Hills
Takadai I

Chitose-shi,
Hokkaido

2,401.78

3,697.20

3,697.20

120

120

5,500

1

100.0

100.0

Exceria
S027 IkebukuroWest II

Toshima-ku,
Tokyo

290.14

1,379.52

1,286.22

48

45

4,839

1

93.2

93.8

Prospect
S028 Monzennakacho

Koto-ku,Tokyo

613.01

1,790.56

1,657.70

62

57

6,030

1

92.6

91.9

Prospect
S029 KALON
MinowaTaito-ku,Tokyo

473.353,032.27

2,757.86

82

76

9,282

1

91.0

92.7

S030

ProspectNakanoshima

Kita-ku,Osaka

370.61

1,572.48

1,472.64

63

59

4,966

1

93.7

93.7

S031

ProspectOgikubo

Suginami-ku,
Tokyo

731.41

1,106.63

1,053.91

40

38

4,170

1

95.2

95.0

Prospect
S032 MusashiShinjo

Kawasaki-shi, Kanagawa

972.481,855.03

1,855.03

85

85

6,827

1

100.0

100.0

Prospect
F001 KiyosumiTeien

Koto-ku,Tokyo

1,586.77

5,556.73

5,491.37

77

76

14,894

1

98.8

98.7

Park Terrace
Ebisu

Shibuya-ku,
Tokyo

790.182,705.09

2,561.44

51

48

11,247

1

94.7

94.1

F003 BELNOS 34

Katsushika-ku, Tokyo

3,092.58

5,321.89

4,698.79

100

94

11,541

1

88.3

94.0

F004

Prospect
Dogenzaka

Shibuya-ku,
Tokyo

274.24

2,058.53

2,028.52

47

46

9,576

1

98.5

97.9

F005

U HouseDaikan-Cho

Nagoya-shi,
Aichi

2,060.52

5,944.44

5,356.01

96

87

8,775

1

90.1

90.6

F006

U HouseGokisoNagoya-shi,
Aichi

3,113.87

5,127.19

4,541.40

78

68

7,700

1

88.6

87.2

F002

28

Prospect Reit Investment Corporation
Angel Heim
F007 Nishi-Rokugo
No.2

Ota-ku,Tokyo

1,666.28

2,776.64

2,702.05

40

39

6,315

1

97.3

97.5

F008

ProspectOnshi-Koen

Koto-ku,Tokyo

772.002,033.77

1,954.74

61

58

6,439

1

96.1

95.1

F009

Deim-Hashim
otoSagamihara-shi, Kanagawa

898.13

3,170.41

2,934.34

92

88

6,101

1

92.6

95.7

F010 SK Residence

Toshima-ku,
Tokyo

474.55

1,624.49

1,584.09

30

29

5,160

1

97.5

96.7

F012

Prospect
Saitama-shi,
Urawa-Tokiwa Saitama

1,557.49

2,263.05

2,263.05

30

30

4,848

1

100.0

100.0

F014

U HouseTsurumai II

Nagoya-shi,
Aichi

615.51

2,262.63

2,135.01

34

32

3,660

1

94.4

94.1

Living Stage
Sendai-shi,
F017 Minami-Send
Miyagiai

476.23

1,277.10

851.25

27

18

1,352

1

66.7

66.7

Shibuya-ku,
Tokyo

803.31

3,846.27

3,503.01

112

104

17,686

1

91.1

92.9

F020 Prospect
KatsuraKyoto-shi,
Kyoto

1,354.29

1,769.96

1,769.96

29

29

3,215

1

100.0

100.0

Heim
F021 Crown
Nishi-Tanabe

Osaka-shi,
Osaka444.201,517.86

1,342.29

22

20

2,704

1

88.4

90.9

F022 Takasagoseki
Nibankan

Sendai-shi,
Miyagi

1,794.83

3,336.52

2,880.38

41

35

4,576

1

86.3

85.4

F023 Prospect
Machiya

Arakawa-ku,
Tokyo

251.44

1,169.37

1,057.72

21

19

2,805

1

90.5

90.5

F024

Prospect
HatsudaiShibuya-ku,
Tokyo

586.68817.71817.71

22

22

3,364

1

100.0

100.0

F025

ProspectMorishita

Koto-ku,Tokyo

736.43

2,399.23

2,258.86

45

43

6,978

1

94.1

95.6

F026

ProspectKoto-ku,Nishi-Sugamo Tokyo

368.152,023.42

1,569.77

42

32

5,263

1

77.6

76.2

F027

Palais D’Or
Maruyama

Chuo-ku,
Sapporo2,236.99

4,678.32

3,329.08

64

49

5,404

1

71.2

76.6

F028

ProspectKawasaki

Saiwai-ku,
Kawasaki

1,218.89

3,377.53

3,377.53

52

52

9,098

1

100.0

100.0

Chuo-ku,Tokyo

273.37

1,364.02

1,264.52

37

35

4,729

1

92.7

94.6

52,324.40

127,458.61

116,907.02

3,289

3,051

336,012

111

−

−

F019

Prospect
Glarsa Hiroo

ProspectF029 NihonbashiKoamicho

Total*1. In the ‘Site Area’ column, figures for total site area of real estate or entrusted real estate are based on data in register books or records. In somecases, such data might not be completely accurate.
*2. In the ‘Total Leasable Floor Space’ column, figures represent leasable floor space for portions of real estate or entrusted real estate acquired by
PRI. These figures are based on real estate registers or blueprints. In the cases of Sky Hills N15, Sky Hills Sakaimachi, Domy Chitose, Sky Hills
Takadai I, and Prospect Urawa-Tokiwa, the figures are based on sole ownership portions from February 1, 2009, changed from floor space figureson registers, taking into account being wholly leased.
*3. In the ‘Total Leased Floor Space’ column, figures represent leased floor space with lease contracts concluded with end-tenants. Such floor space
excludes leased site (land) area. Figures are based on lease contracts between end-tenants and master lessers or trust beneficiaries. Nevertheless, incases of apparent errors in lease contracts, floor space data are based on information given by the previous owner of the acquired properties,
information shown on plans at completion, etc.
*4. In the ‘Total Leasable Residential Units’ column, figures represent leasable units for portions of real estate or entrusted real estate acquired by PRI.
In the cases of Sky Hills Sakaimachi, and Domy Chitose, the figures exclude spaces for caretakers from February 1, 2009, changed from being
included, taking into account being wholly leased.
*5. In the ‘Total Leased Residential Units’ column, figures represent leased units to end-tenants with lease contracts concluded between end-tenants
and master lessers or trust beneficiaries as of January 31, 2010.
*6. In the ‘Total Monthly Rental Revenues’ column, figures represent total monthly revenues as recorded in lease contracts concluded between
end-tenants and master lessers or trust beneficiaries as of January 31, 2010. Such revenues include common area maintenance fee revenues but
exclude revenues from monthly contracted parking spaces or such supplemental facilities as storage and locker space.
*7. In the ‘Total Number of Tenants’ column, ‘1’ represents cases of lease contracts concluded between trust beneficiaries and master lessers. In suchcases, figures are based on the assumption that all end-tenants have agreed with their master lesser to be lessers (sub-lessers). In the cases that one
tenant leases more than one unit, the number of tenants is recorded as ‘1.’ These figures are based on information current as of January 31, 2010.

29

Prospect Reit Investment Corporation*8. In the ‘Occupancy Ratio (By Space)’ column, percentage figures represent the proportion of leased floor space to leasable floor space of each realestate or entrusted real estate property. In addition, percentage numbers are rounded to the nearest first decimal place. The ‘Total’ percentage
figure represents the proportion of total leased floor space to total leasable floor space as of January 31, 2010.
*9. In the ‘Occupancy Ratio (By No. of Residential Units)’ column, percentage figures represent the proportion of leased floor space to leasable floor
space of each asset. In the ‘Occupancy Ratio (By Space)’ column, percentage figures are rounded to the nearest first decimal place. The ‘Total’
percentage figure represents the proportion of total leased floor space to total leasable floor space as of January 31, 2010.
*10. The site area figure was changed on February 5, 2009, following compilation of official maps at Sapporo Registration Office.

(3) Capital Expenditures for Investment Properties
a. Capital Expenditure Plan (consisting of items from JPY 1 million)

Property Name

Planned work amount (millionsof yen)Note
Paid in
Total
Total
this
paid
periodPurposePlanned period

TK Flats Shibuya

Replacement of inhouse
power generation facility
battery and emergency UPS

From February 2010
to April 2010

1

−

−

Dome Takamine

New installation of security
camerasFrom February 2010
to March 2010

1

−

−

Dome Takamine

Repair of drainage pump andwater tank

From May 2010 toJuly 2010

3−−

Dome Yotsuya

New installation of security
camerasFrom February 2010
to March 2010

1

−

−

Sky Hills Sakaimachi

New installation of cover toprevent falling of wing wall
fragments

From April 2010 toJuly 20104−−

Sky Hills Takadai I

Replacement of pressurizedwater supply pump

From February 2010
to March 2010

1

−

−

Sky Hills Takadai I

New installation of outdoor
parking

From June 2010 toJuly 2010

4−−

From June 2010 toJuly 20107−−

BELNOS34

Maintenance of mechanicalparking systems

BELNOS34

New installation of security
camerasFrom June 2010 toJuly 2010

2−−

BELNOS34

Renovation of retail space on
the second floor

From February 2010
to July 2010

35

−

−

U House Daikan-Cho

Repair of incoming power
distribution board

From April 2010 toJuly 20104−−

U House Daikan-Cho

Replacement of water-supply
metersFrom April 2010 toJuly 20103−−

U House Gokiso

Construction to install digital
cable television

From July 2010 toJuly 2010

1−−

U House Gokiso

Replacement of mail box

From April 2010 toApril 2010

1

−

−

U House Gokiso

Renovation of three rooms

From February 2010
to July 2010

9

−

−

Deim-Hashimoto

Renovation of three rooms

From February 2010
to July 2010

9

−

−

SK Residence

Maintenance of mechanicalparking systems

From May 2010 toJuly 2010

5−−

Prospect Katsura

Repair of waterproofing
material of roof

From June 2010 toJune 2010

10

−

−

30

Prospect Reit Investment Corporation
Takasagoseki Nibankan
Palais D’Or Maruyama
Palais D’Or Maruyama
Prospect Kawasaki

Replacement of emergency
lightsFrom June 2010 toJune 2010

1−−

Replacement of pressurizedwater supply pump
Replacement of air
conditioners for office of retail
space

From February 2010
to March 2010

1

−

−

From February 2010
to February 2010

6

−

−

Replacement of drainage
pump; Addressing sump water

From February 2010
to March 2010

1

−

−

*Numbers are rounded down to the nearest first decimal place.

b. Capital expenditures in the period under review
Property Name

PurposeAmount paid
(millions of yen)

PeriodSky Hills Takadai I

Large-scale repair work

From August 2009 toNovember 200949

U House Gokiso

Renovation of two rooms

From June 2009 to August
20096

Deim-Hashimoto

Renovation of 1F assembly room andstore beam

From July 2009 to
September 20092

U House Tsurumai II

Large-scale repair work

From June 2009 to
December 200936

U House Tsurumai II

Replacement of turning parts of
tower parking

From November 2009 toNovember 20093

OthersReplacement of air conditioners,
water heaters, and others

12

Total

111

*Numbers are rounded down to the nearest first decimal place.

c. Reserve for repair expenses
PeriodItems

Eighth Fiscal Period(February 1, 2009 to
July 31, 2009)(Millions of yen)
Ninth Fiscal Period(August 1, 2009 to
January 31, 2010)

Reserve balance at the end of previous
fiscal period

548

512

Reserved amount in the period

69

56

Withdrawal in the period

104

28

Balance carried forward

512

540

(4)Figures in Engineering Reports
Outline of building engineering reports
In addition to receiving support from research firms, PRI commissions them for the following items for each of its investment
real estate or entrusted real estate properties.
Examination of building deterioration, planning of short- and long-term repair expenses, research of compliance in accordancewith the Building Standards Law, research of hazardous material contents in buildings, and research of soil conditions.
Nevertheless, the contents of these reports are the opinions of the respective research firms, and PRI does not guarantee theappropriateness and accuracy of such contents.
Nevertheless, the contents of the reports are the opinions of TBTC, and PRI does not guarantee the appropriateness andaccuracy of such contents.

31

Prospect Reit Investment Corporation

Code
S001
S002
S004
S005
S006
S007
S008
S009
S011
S012
S013
S014
S016
S017
S018
S019
S020
S021
S022
S023
S024
S025
S026
S027
S028
S029
S030
S031
S032
F001
F002
F003
F004
F005
F006
F007
F008
F009
F010
F012
F014
F017
F019
F020
F021
F022
F023
F024
F025
F026
F027
F028
F029

Property nameTK Flats Shibuya
Prospect Shinonomebashi
Maison de Ville Takanawa Gyoranzaka

Prospect Omori-Kaigan
Abreast Shin-Osaka
Maison de Ville Naka-Meguro
Roppongi Rise House
Prospect Nihonbashi-Honcho
Fragrance Kawasaki
Abreast Sakuragawa
Dome Takamine
Dome Yotsuya
Abreast Nagase
Living Stage Higashi-Sendai
Prospect Toyonaka Hattori
Prospect Bishoen
Prospect Shimogamo
Prospect Kawaramachi-Gojo
Prospect Chuo-Rinkan
Sky Hills N15
Sky Hills Sakaimachi
Domy Chitose
Sky Hills Takadai I
Exceria Ikebukuro West II
Prospect Monzennakacho
Prospect KALON Minowa
Prospect Nakanoshima
Prospect Ogikubo
Prospect Musashi-Shinjo
Prospect Kiyosumi-Teien
Park Terrace Ebisu
BELNOS34
Prospect Dogenzaka
U House Daikan-Cho
U House Gokiso
Angel Heim Nishi-Rokugo no.2

Prospect Onshi-Koen
Deim-Hashimoto
SK Residence
Prospect Urawa-Tokiwa
U House Tsurumai II
Living Stage Minami-Sendai
Prospect Glarsa Hiroo
Prospect Katsura
Crown Heim Nishi-Tanabe
Takasagoseki Nibankan
Prospect Machiya
Prospect Hatsudai
Prospect Morishita
Prospect Nishi-Sugamo
Palais D’Or Maruyama
Prospect Kawasaki
Prospect Nihonbashi-Koamicho

Total portfolio

Research
firm*1
Takenaka
TBTC
TBTC
TBTC
TBTC
TBTC
TBTC
TBTC
TBTC
TBTC
Takenaka
Takenaka
TBTC
TBTC
Takenaka
Takenaka
TBTC
TBTC
TBTC
Takenaka
Takenaka
Takenaka
TBTC
TBTC
TBTC
TBTC
TBTC
TBTC
Takenaka
Takenaka
TBTC
TBTC
TBTC
Takenaka
Takenaka
Takenaka
TBTC
TBTC
TBTC
TBTC
Tokyo Kntei

TBTC
TBTC
TBTC
TBTC
TBTC
TBTC
TBTC
TBTC
TBTC
TBTC
TBTC
TBTC

Estimate of repair expenses*2
Rebuilding price(thousands of yen rounded down)of building *2(millionsof yenWithinOver 12
Urgentrounded down)
one year
years
490
184,420
2,174−
10,1801,450−−
47,800
463
−
−
6,830
600
−
−
94,760910−−
37,070
372
−
−
3,570
362
−
−
3,830
385
−
−
2,990
274
−
−
11,570275−−
870
49,760161−
370
49,250138−
21,200160−−
300
46,660312−
18,490
277
−
−
8,360
209
−
−
2,460
203
−
−
4,320
440
−
−
3,960
301
−
−
300
52,710609−
98,660850−−
300
63,750415−
83,480
818
−
−
4,860
350
−
−
5,400
410
−
−
8,000
970
−
−
5,210
534
−
−
3,300
305
−
−
26,960501−−
100
238,790
1,332−
41,750700−−
150174,670
1,735
−
4,130
552
−
−
250
410
228,290
1,563
500
165,900
1,141−
130
108,540
580
−
4,980
574
−
−
150
38,280646−
36,930447−−
14,980657−−
19,270513−−
150
36,750300−
270
16,6801,185−
41,620
351
−
−
160
7,070
405
−
150
80,220
761
−
2,680
290
−
−
2,190
179
−
−
4,930
616
−
−
3,890
504
−
−
300
96,650
975
−
5,810
862
−
−
4,150
399
−
−
850
4,500
2,338,960
32,498Month and year ofbuilding engineering
reports
June 2005
April 2005
April 2005
April 2005
May 2005
April 2005
April 2005
April 2005
April 2005
June 2005
June 2005
June 2005
May 2005
August 2005
February 2006
February 2006
March 2006
January 2007
February 2007
March 2007
March 2007
March 2007
January 2010
May 2007
May 2007
July 2007
August 2007
August 2007
May 2008
March 2003
April 2005
April 2005
February 2005
January 2009
July 2007
March 2003
February 2005
April 2005
April 2005
June 2009
January 2010
August 2005
December 2005
March 2006
March 2006
February 2006
October 2006
January 2007
February 2007
February 2007
August 2007
September 2007
August 2007

*1. In the ‘Research firm’ column, TBTC stands for Tokyo Bldg-Tech Center Co., Ltd., Tokyo Kantei stands for Tokyo Kantei Co., Ltd., andTakenaka stands for Takenaka Corporation.

32

Prospect Reit Investment Corporation*2. The month and year of building engineering reports and the month and year of earthquake risk reports refer to the first reports issued.

(5) Outline of earthquake risk reports
PRI commissions Tokyo Bldg-Tech Center Co., Ltd. (TBTC) for earthquake risk reports and other reports for each
investment real estate and entrusted real estate property.
Nevertheless, the contents of the reports are the opinions of TBTC, and PRI does not guarantee the appropriatenessand accuracy of such contents.
Code

Property Name

S001
S002
S004
S005
S006
S007
S008
S009
S011
S012
S013
S014
S016
S017
S018
S019
S020
S021
S022
S023
S024
S025
S026
S027
S028
S029
S030
S031
S032
F001
F002
F003
F004
F005
F006
F007
F008
F009
F010
F012
F014
F017
F019
F020
F021
F022
F023
F024
F025

TK Flats Shibuya
Prospect Shinonomebashi

Probable Maximum Loss*1
(%)

8.0
19.0
12.0
10.0
12.0
7.0
15.0
12.0
13.0
15.0
6.0
5.0
12.0
7.0
9.0
14.0
5.0
12.0
14.0
2.0
4.0
3.0
4.0
10.0
19.0
14.0
12.0
11.0
12.0
15.0
11.0
12.0
9.0
11.0
10.0
11.0
25.0
13.0
11.0
5.0
17.0
7.0
7.0
7.0
11.0
11.0
14.0
8.0
11.0

Maison de Ville Takanawa Gyoranzaka

Prospect Omori-Kaigan
Abreast Shin-Osaka
Maison de Ville Naka-Meguro

Roppongi Rise House
Prospect Nihonbashi-Honcho

Fragrance Kawasaki
Abreast Sakuragawa
Dome Takamine
Dome Yotsuya
Abreast Nagase
Living Stage Higashi-Sendai

Prospect Toyonaka Hattori
Prospect Bishoen
Prospect Shimogamo
Prospect Kawaramachi-Gojo

Prospect Chuo-Rinkan
Sky Hills N15
Sky Hills Sakaimachi
Domy Chitose
Sky Hills Takadai I
Exceria Ikebukuro West II
Prospect Monzennakacho
Prospect KALON Minowa
Prospect Nakanoshima
Prospect Ogikubo
Prospect Musashi-Shinjo
Prospect Kiyosumi-Teien
Park Terrace Ebisu
BELNOS34
Prospect Dogenzaka
U House Daikan-Cho
U House Gokiso
Angel Heim Nishi-Rokugo No.2

Prospect Onshi-Koen *2
Deim-Hashimoto
SK Residence
Prospect Urawa-Tokiwa
U House Tsurumai II
Living Stage Minami-Sendai

Prospect Glarsa Hiroo
Prospect Katsura
Crown Heim Nishi-Tanabe
Takasagoseki Nibankan
Prospect Machiya
Prospect Hatsudai
Prospect Morishita

33

Month and year ofearthquake risk reports

January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010
January 2010

F026
F027
F028
F029

Prospect Reit Investment Corporation
10.0
January 2010
2.0
January 2010
10.0
January 2010
12.0
January 2010
January 2010
7.6

Prospect Nishi-Sugamo
Palais D’Or Maruyama
Prospect Kawasaki
Prospect Nihonbashi-Koamicho
Total portfolio*1. Probable Maximum Loss (PML) is a ratio that represents the probability of a maximum loss, and is calculated for each asset and the overall
portfolio. In this document, PML is defined as a ratio of a building’s estimated restoration cost to its rebuilding price resulting from amaximum-magnitude earthquake projected to occur within a 50-year period every 475 years, therefore having a 10% probability every 50 years.
*2. PRI has purchased earthquake insurance for this property.

(6) Outline of tenants and othersa. Outline of leasing conditions for each real estate or entrusted real estate property

Code

Property Name

S001
S002
S004
S005
S006
S007
S008
S009
S011
S012
S013
S014

TK Flats Shibuya
Prospect Shinonomebashi

S015
S016
S017
S018
S019
S020
S021
S022
S023
S024
S025
S026
S027
S028
S029
S030
S031
S032
F001
F002
F003
F004
F005
F006
F007
F008
F009
F010
F012

Maison de Ville Takanawa Gyoranzaka

Prospect Omori-Kaigan
Abreast Shin-Osaka
Maison de Ville Naka-Meguro
Roppongi Rise House
Prospect Nihonbashi-Honcho
Fragrance Kawasaki
Abreast Sakuragawa
Dome Takamine
Dome Yotsuya
TK Flats Denenchofu Annex
Abreast Nagase
Living Stage Higashi-Sendai
Prospect Toyonaka Hattori
Prospect Bishoen
Prospect Shimogamo
Prospect Kawaramachi-Gojo
Prospect Chuo-Rinkan
Sky Hills N15
Sky Hills Sakaimachi
Domy Chitose
Sky Hills Takadai I
Exceria Ikebukuro West II
Prospect Monzennakacho
Prospect KALON Minowa
Prospect Nakanoshima
Prospect Ogikubo
Prospect Musashi-Shinjo
Prospect Kiyosumi-Teien
Park Terrace Ebisu
BELNOS34
Prospect Dogenzaka
U House Daikan-Cho
U House Gokiso
Angel Heim Nishi-Rokugo No.2
Prospect Onshi-Koen
Deim-Hashimoto
SK Residence
Garden City Urawa

Total Leasable
Floor Space(㎡)

Total Leased
Floor Space(㎡)

Number oftenants

6,903.54
4,849.20
1,778.37
2,478.04
2,984.64
1,275.00
1,209.87
1,290.49
1,065.96
1,009.92
946.04765.90532.981,539.41
986.34901.15675.51
1,528.12
1,098.24
3,443.55
5,194.78
2,145.70
3,697.20
1,379.52
1,790.56
3,032.27
1,572.48
1,106.63
1,855.03
1,275.00
5,556.73
2,705.09
5,321.89
2,058.53
5,944.44
5,127.19
2,776.64
2,033.77
3,170.41
1,624.49
2,263.05

5,710.08
4,673.08
1,653.12
2,478.04
2,206.17
1,249.50
1,152.33
1,066.66
847.98967.92786.20639.66471.74
1,304.59
986.34901.15611.76
1,287.86
1,075.36
3,443.55
5,194.78
2,145.70
3,697.20
1,286.22
1,657.70
2,757.86
1,472.64
1,053.91
1,855.03
1,249.50
5,491.37
2,561.44
4,698.79
2,028.52
5,356.01
4,541.40
2,702.05
1,954.74
2,934.34
1,584.09
2,263.05

1
1
1
1
37
1
1
1
1
1
1
1
23
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1

34

Total
Monthly
RentalRevenues(Thousandsof Yen)
177
114
48
57
85
35
31
30
22
19
10
8
8
15
15
12
11
24
22
32
38
25
35
31
39
62
31
24
42
35
95
69
80
59
56
54
54
40
38
34
30

Percentage
share to total
revenues
(%)
8.1
5.2
2.2
2.6
3.9
1.6
1.5
1.4
1.0
0.9
0.5
0.4
0.4
0.7
0.7
0.6
0.5
1.1
1.0
1.5
1.7
1.2
1.6
1.4
1.8
2.9
1.4
1.1
1.9
1.6
4.4
3.2
3.7
2.7
2.6
2.5
2.5
1.9
1.8
1.6
1.4

F014
F017
F019
F020
F021
F022
F023
F024
F025
F026
F027
F028
F029

U House Tsurumai II
Living Stage Minami-Sendai
Prospect Glarsa Hiroo
Prospect Katsura
Crown Heim Nishi-Tanabe
Takasagoseki Nibankan
Prospect Machiya
Prospect Hatsudai
Prospect Morishita
Prospect Nishi-Sugamo
Palais D’Or Maruyama
Prospect Kawasaki
Prospect Nihonbashi-Koamicho
Total

2,262.63
1,277.10
3,846.27
1,769.96
1,517.86
3,336.52
1,169.37
817.71
2,399.23
2,023.42
4,678.32
3,377.53
1,364.02

Prospect Reit Investment Corporation
2,135.011
28
851.251
83,503.011108
1,769.96
1
24
1,342.291162,880.38131
1,057.72
1
18
817.711
20
2,258.861
43
1,569.77
1
35
3,329.081
36
3,377.53
1
59
1,264.52
1
28

127,458.61

116,907.02

111

2,191

1.3
0.4
5.0
1.1
0.8
1.4
0.8
0.9
2.0
1.6
1.7
2.7
1.3

100.0

b. Occupancy rates(End of each month)

Code

Property Name

S001
S002
S004
S005
S006
S007
S008
S009
S011
S012
S013
S014
S015
S016
S017
S018
S019
S020
S021
S022
S023
S024
S025
S026
S027
S028
S029
S030
S031
S032

TK Flats Shibuya
Prospect Shinonomebashi

F001
F002
F003
F004
F005
F006

Maison de Ville Takanawa Gyoranzaka

Prospect Omori-Kaigan
Abreast Shin-Osaka
Maison de Ville Naka-Meguro
Roppongi Rise House
Prospect Nihonbashi-Honcho
Fragrance Kawasaki
Abreast Sakuragawa
Dome Takamine
Dome Yotsuya
TK Flats Denenchofu Annex
Abreast Nagase
Living Stage Higashi-Sendai
Prospect Toyonaka Hattori
Prospect Bishoen
Prospect Shimogamo
Prospect Kawaramachi-Gojo
Prospect Chuo-Rinkan
Sky Hills N15
Sky Hills Sakaimachi
Domy Chitose
Sky Hills Takadai I
Exceria Ikebukuro West II
Prospect Monzennakacho
Prospect KALON Minowa
Prospect Nakanoshima
Prospect Ogikubo
Prospect Musashi-Shinjo
Prospect Kiyosumi-Teien
Park Terrace Ebisu
BELNOS34
Prospect Dogenzaka
U House Daikan-Cho
U House Gokiso

July
2009
90.3
98.3
90.1
97.0
78.1
90.0
81.8
92.9
100.0
95.8
88.6
77.9
100.0
85.0
100.0
100.0
100.0
85.8
91.7
90.3
100.0
100.0
100.0
100.0
95.9
95.8
94.8
92.1
88.6
100.0
100.0
84.5
86.4
96.5
89.4
89.0

AugustSeptember
2009
2009
87.3
89.2
99.5
100.0
91.5
91.5
98.0
96.7
77.1
77.1
84.0
92.0
100.0
95.2
92.9
89.1
100.0
100.0
100.0
100.0
85.9
83.1
77.9
86.6
96.2
96.2
82.9
82.9
100.0
100.0
100.0
100.0
96.9
96.9
85.8
84.1
95.8
93.8
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
95.9
93.9
94.8
97.5
93.7
96.8
78.0
73.0
100.0
100.0
87.3
89.2
100.0
100.0
86.5
87.1
88.3
89.6
100.0
100.0
88.8
89.2
89.0
92.5

35

October November December January
2009
2009
2009
2010
88.3
85.8
83.5
82.7
97.5
97.5
96.4
96.4
90.1
88.7
90.1
93.0
95.7
95.9
97.7
100.0
75.0
75.0
75.0
73.9
98.0
98.0
98.0
98.0
95.2
97.6
100.0
95.2
88.7
88.7
84.7
82.7
100.0
100.0
75.0
79.6
100.0
100.0
100.0
95.8
83.1
80.4
77.6
83.1
86.6
83.7
80.8
83.5
96.2
92.4
92.3
88.5
86.8
86.6
86.6
84.7
100.0
100.0
100.0
100.0
96.6
96.6
96.6
100.0
96.9
93.8
93.8
90.6
87.7
89.4
86.0
84.3
91.7
93.8
97.9
97.9
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
98.2
100.0
95.0
93.2
95.9
95.9
94.2
92.6
96.0
92.5
92.4
91.0
98.4
98.4
93.7
93.7
77.0
92.9
95.2
95.2
100.0
100.0
100.0
100.0
88.3
85.8
83.5
82.7
98.7
97.6
97.5
98.8
91.0
97.0
93.4
94.7
85.3
86.5
87.4
88.3
100.0
100.0
98.5
98.5
89.0
88.8
90.1
90.1
90.8
86.6
84.4
88.6

F007
F008
F009
F010
F012
F014
F017
F019
F020
F021
F022
F023
F024
F025
F026
F027
F028
F029

Angel Heim Nishi-Rokugo No.2
Prospect Onshi-Koen
Deim-Hashimoto
SK Residence
Garden City Urawa
U House Tsurumai II
Living Stage Minami-Sendai
Prospect Glarsa Hiroo
Prospect Katsura
Crown Heim Nishi-Tanabe
Takasagoseki Nibankan
Prospect Machiya
Prospect Hatsudai
Prospect Morishita
Prospect Nishi-Sugamo
Palais D’Or Maruyama
Prospect Kawasaki
Prospect Nihonbashi-Koamicho

Prospect Reit Investment Corporation
100.0
97.3
97.3
97.3
97.3
98.8
97.3
97.3
94.3
96.1
90.8
93.2
93.2
93.9
92.6
91.7
88.7
97.1
100.0
97.5
100.0
100.0
100.0
100.0
100.0
97.5
97.5
94.4
94.4
94.4
62.9
62.9
62.9
66.7
66.7
82.8
88.5
92.4
89.4
91.1
96.5
100.0
100.0
100.0
100.0
84.2
84.2
84.2
84.2
88.4
82.0
84.1
86.3
86.3
86.3
90.5
90.5
95.1
90.5
90.5
100.0
100.0
100.0
100.0
100.0
86.4
95.3
96.1
96.1
94.1
84.2
87.5
87.5
82.9
77.6
67.4
68.3
68.3
71.2
71.2
97.9
97.9
93.9
100.0
100.0
80.5
79.0
89.9
92.7
92.7

97.6
94.9
90.8
91.7
100.0
97.5
62.9
82.9
93.1
84.2
79.8
95.1
100.0
87.3
79.1
69.0
97.9
80.5

92.6
94.9
89.5
94.3
100.0
97.5
62.9
85.9
93.1
84.2
77.6
90.3
95.9
88.2
79.2
72.5
97.9
82.6

*The formula to calculate occupancy rate is ‘leased floor space/leasable floor space,’ with results rounded to the nearest first decimal place.

(7) Revenues and earnings of individual assets
Revenues and earnings of individual assets are shown in the table below. The Leasing NOI (Net Operating
Income) of each property includes the real estate rental business earnings of each property plus depreciation
expenses. Monetary amounts are rounded down to the nearest thousand yen unless otherwise stated.
(Thousands of yen)S001
TK Flats
Shibuya

S002

S004

S005

Prospect
Shinonomebashi

Maison de Ville
Takanawa
Gyoranzaka

S006

Prospect
Omori-Kaigan

AbreastShin-Osaka

Total real estate rental
revenues

177,587

114,689

48,23357,25485,785

Real estate rental revenues

171,190

110,105

45,98754,002

84,580

Other rental revenues

6,396

4,584

2,245

3,252

1,204

Real estate rental expenses

89,48642,872

20,68623,317

63,247

Taxes

10,962

4,718

1,938

2,680

3,718

Other expenses

14,344

5,972

4,043

4,211

2,499

16,448

6,458

5,064

4,090

30,879

5,703

1,155

461

641

4,702

Repair expenses

9,223

1,182

2,553

2,332

1,484

Depreciation expenses

32,804

23,385

6,623

9,362

19,962

88,10071,81627,54633,936

22,538120,904

95,202

34,17043,29942,500Property management
expenses
Water, electricity, and other
rates

Real estate rental businessearnings
NOI (Net Operating
Income)36

Prospect Reit Investment Corporation
S007

S008

S009

Maison de Ville
Naka-Meguro

Roppongi RiseHouse

ProspectNihonbashi-Honc
ho

S011

S012

Fragrance
Kawasaki

AbreastSakuragawa

Total real estate rental
revenues

35,53331,81630,32922,696

19,037

Real estate rental revenues

34,12530,55429,27021,09518,441Other rental revenues

1,408

1,261

1,059

1,601

596

Real estate rental expenses

14,556

14,95813,042

10,324

10,492

Taxes

1,418

2,020

1,608

1,160

928

Other expenses

2,276

2,141

2,158

1,635

1,354

2,760

3,517

1,570

1,671

1,170

517

383

486

270

899

Repair expenses

2,358

1,519

742

144

639

Depreciation expenses

5,223

5,377

6,475

5,441

5,501

20,977

16,857

17,286

12,372

8,545

26,201

22,23423,762

17,813

14,046

Property management
expenses
Water, electricity, and other
rates

Real estate rental businessearnings
NOI (Net Operating
Income)

S013

S014

S016

S017

S018

Dome Takamine

Dome Yotsuya

Abreast Nagase

Living Stage
Higashi-Sendai

ProspectToyonaka Hattori

Total real estate rental
revenues

10,223

8,923

8,470

15,51015,058

Real estate rental revenues

10,115

8,760

8,362

15,187

15,058

108

163

108

322

−

6,386

5,764

5,526

10,053

7,830

698

568

476

1,176

1,062

1,317

1,208

399

1,218

1,426

481

826

1,512

1,049

300

426

391

422

852

375

Repair expenses

1,261

1,396

167

598

25

Depreciation expenses

2,201

1,374

2,549

5,157

4,640

3,837

3,158

2,943

5,456

7,228

6,038

4,532

5,493

10,614

11,868Other rental revenues
Real estate rental expenses
Taxes
Other expenses
Property management
expenses
Water, electricity, and other
rates

Real estate rental businessearnings
NOI (Net Operating
Income)37

Prospect Reit Investment Corporation
S019

S020

Prospect Bishoen

S021

S022

S023

Prospect
ProspectKawaramachi-Go
Chuo-RinkanjoProspect
Shimogamo

Sky Hills N15

Total real estate rental
revenues

12,108

11,77524,642

22,74032,090Real estate rental revenues

11,804

11,641

23,827

21,41832,090

304

134

815

1,321

−

6,264

6,761

13,922

12,68812,760

826

640

1,682

1,323

3,864

1,354

1,441

2,354

2,074

1,161

482

345

1,490

1,154

500

142

507

1,072

388

40

168

399

534

330

292

3,290

3,427

6,788

7,416

6,900

5,844

5,013

10,72010,051

19,330

9,134

8,441

17,50917,46826,231Other rental revenues
Real estate rental expenses
Taxes
Other expenses
Property management
expenses
Water, electricity, and other
rates
Repair expenses
Depreciation expenses
Real estate rental businessearnings
NOI (Net Operating
Income)

S024

S025

Sky Hills
Sakaimachi

S026

S027

S028

Sky Hills Takadai Exceria
Prospect
I
Ikebukuro West II Monzennakacho

Domy Chitose

Total real estate rental
revenues

38,03425,65335,43731,743

39,118

Real estate rental revenues

38,03425,65335,43730,90137,546

−

−

−

841

1,572

Real estate rental expenses

15,457

9,008

17,854

12,55914,155

Taxes

4,620

2,362

3,047

759

1,165

Other expenses

1,214

1,117

3,435

2,708

2,772

500

500

500

1,793

2,044

42

−

949

484

378

376

411

4,459

983

857

8,704

4,617

5,463

5,830

6,937

22,576

16,644

17,583

19,18424,96331,28021,261

23,04625,01531,901Other rental revenues

Property management
expenses
Water, electricity, and other
rates
Repair expenses
Depreciation expenses
Real estate rental businessearnings
NOI (Net Operating
Income)38

Prospect Reit Investment Corporation
S029

S030

Prospect KALON Prospect
MinowaNakanoshima

S031

S032

Prospect Ogikubo

ProspectMusashi-Shinjo

Total real estate rental
revenues

62,631

31,292

24,82542,458

Real estate rental revenues

58,88530,82422,45342,458Other rental revenues

3,745

468

2,372

−

Real estate rental expenses

31,965

20,542

13,613

17,525

893

2,064

686

2,885

5,171

2,929

2,227

3,153

6,212

3,101

3,318

893

810

429

422

575

Repair expenses

1,287

1,122

757

−

Depreciation expenses

17,58910,895

6,200

10,01630,666

10,75011,211

24,932

48,255

21,645

17,412

34,949

Taxes
Other expenses
Property management
expenses
Water, electricity, and other
rates

Real estate rental businessearnings
NOI (Net Operating
Income)F001
Prospect
Kiyosumi-Teien

F002

F003

F004

F005

Park Terrace
Ebisu

BELNOS34

Prospect
Dogenzaka

U HouseDaikan-Cho

Total real estate rental
revenues

95,777

69,43380,13559,04356,971

Real estate rental revenues

92,884

67,18478,411

58,20355,929Other rental revenues

2,893

2,248

1,724

840

1,042

Real estate rental expenses

36,41532,72638,494

18,72925,181

Taxes

6,240

3,331

6,945

2,380

3,490

Other expenses

5,455

4,903

6,161

2,757

3,740

4,612

7,301

5,496

3,442

3,041

1,092

665

2,332

558

785

Repair expenses

1,126

2,688

2,322

344

2,325

Depreciation expenses

17,888

13,835

15,235

9,246

11,79759,36236,70741,64040,314

31,79077,25150,54256,87649,561

43,588Property management
expenses
Water, electricity, and other
rates

Real estate rental businessearnings
NOI (Net Operating
Income)39

Prospect Reit Investment Corporation
F006

F007

U House Gokiso

F008

Angel Heim
Nishi-Rokugo
No.2

F009

ProspectOnshi-Koen

F010

Deim-Hashimoto SK Residence

Total real estate rental
revenues

54,68754,00340,98738,93534,197

Real estate rental revenues

53,11951,31239,58037,37132,815

Other rental revenues

1,567

2,690

1,406

1,564

1,381

Real estate rental expenses

28,57722,07918,92022,476

14,337

Taxes

4,338

3,106

1,728

2,157

1,962

Other expenses

4,597

5,119

3,310

2,649

3,573

3,188

2,590

1,794

2,919

2,078

1,631

383

408

406

617

Repair expenses

4,230

758

547

6,365

883

Depreciation expenses

10,591

10,120

11,131

7,978

5,222

26,10931,92422,067

16,45819,85936,70142,04433,19824,43725,082

Property management
expenses
Water, electricity, and other
rates

Real estate rental businessearnings
NOI (Net Operating
Income)

F012

F014

Garden CityUrawa

U HouseTsurumai II

F017

F019

F020

Living Stage
Minami-Sendai

Prospect Glarsa
Hiroo

Prospect Katsura

Total real estate rental
revenues

30,85328,755

8,655

108,962

24,020Real estate rental revenues

30,65524,931

8,407

104,437

22,578

198

3,824

248

4,524

1,442

Real estate rental expenses

15,85319,026

7,109

55,45011,423

Taxes

1,966

2,028

1,076

4,388

1,386

Other expenses

2,380

6,307

1,247

4,816

2,322

1,159

733

499

12,236

1,003

450

265

571

991

1,153

Repair expenses

1,013

4,137

354

3,056

377

Depreciation expenses

8,882

5,553

3,360

29,962

5,180

14,999

9,729

1,545

53,511

12,59623,882

18,9294,906

83,473

17,777

Other rental revenues

Property management
expenses
Water, electricity, and other
rates

Real estate rental businessearnings
NOI (Net Operating
Income)40

Prospect Reit Investment Corporation
F021

F022

Crown Heim
Nishi-Tanabe

F023

Takasagoseki
Nibankan

F024

F025

Prospect Machiya Prospect Hatsudai

ProspectMorishita

Total real estate rental
revenues

16,596

31,37918,427

20,675

43,621

Real estate rental revenues

16,09630,561

17,342

20,027

41,716

500

817

1,084

647

1,904

7,907

19,352

11,626

8,588

20,704

882

3,045

147

402

352

1,581

2,970

2,395

2,165

2,501

739

1,685

986

1,109

3,804

347

1,259

374

187

586

865

831

745

455

1,388

3,491

9,559

6,976

4,268

12,071

8,688

12,026

6,801

12,087

22,916

12,18021,585

13,77816,35534,988Other rental revenues
Real estate rental expenses
Taxes
Other expenses
Property management
expenses
Water, electricity, and other
rates
Repair expenses
Depreciation expenses
Real estate rental businessearnings
NOI (Net Operating
Income)F026
ProspectNishi-Sugamo

F027

F028

Palais D'Or
Maruyama

ProspectKawasaki

F029
ProspectNihonbashi-Koami
choTotal real estate rental
revenues

35,77036,86659,34528,028

Real estate rental revenues

33,68835,97955,495

26,577

Other rental revenues

2,082

886

3,849

1,450

Real estate rental expenses

17,58325,96926,91915,143

167

3,608

2,550

513

2,811

5,871

3,645

2,166

3,725

1,228

3,406

2,745

424

1,726

735

340

759

2,520

1,180

540

9,695

11,014

15,401

8,837

18,187

10,89732,426

12,88427,882

21,91147,827

21,721

Taxes
Other expenses
Property management
expenses
Water, electricity, and other
rates
Repair expenses
Depreciation expenses
Real estate rental businessearnings
NOI (Net Operating
Income)(8) Information related to major real estate and major entrusted real estate
None of the real estate or entrusted real estate properties owned by PRI independently accounted for at least 10%of total real estate rental revenues in the ninth fiscal period.
(9) Portfolio diversification
Portfolio diversification by region, years after construction, and type of units is as follows:41

Prospect Reit Investment Corporationa. By region
Total leasable
floor space*4(㎡)

44,815Percentage shareof acquisition
price to total*3
(%)
65.9

60,790.65

Percentage shareof floor space tototal*3
(%)
47.7

6

6,141

9.0

12,830.22

10.1

23

17,04425.1

53,837.74

42.2

53

68,000100.0127,458.61

100.0

Number ofproperty

Acquisition price*2(millions of yen
rounded down)

Tokyo's 23 Wards
Tokyo Metropolitan Area (excluding
Tokyo's 23 Wards)
Other Regions*1

24

Total

Region*1.The "other regions" category refers to government-designated cities and prefectural capitals, excluding regions within the Tokyo Metropolitanarea, as well as other cities of equivalent size and commuter belts for all of the aforementioned regions.
*2. Transaction prices exclude consumption tax recorded on sales contracts.
*3. Percentage numbers are rounded to the nearest first decimal place.
*4. Leasable space owned by PRI excluding certain sites (ground-level parking spaces).

b. Years after construction
Years after construction

Number ofproperty

Percentage share
Acquisition price*1
ofacquisition(millions of yen
price to total*2
rounded down)(%)

Total leasable
floor space*3(㎡)

Percentage shareof floor space tototal*2(%)

More than one year and up to five years

20

24,231

35.6

35,015.70

27.5

More than five years and up to ten years

12

23,09334.0

37,225.03

29.2

More than ten years

21

20,67630.4

55,217.88

43.3

53

68,000100.0127,458.61

100.0

Total

*1. Transaction prices exclude consumption tax recorded on sales contracts.
*2. Percentage numbers are rounded to the nearest first decimal place.
*3. Leasable space owned by PRI excluding certain sites (ground-level parking spaces).

(10) Outline of major tenants and outline of overall tenants
a. List of major tenants
The following chart shows the names of major tenants with leased floor space and total monthly rents forproperty owned by PRI at the end of the ninth fiscal period. To be designated as a major tenant, leased floor
space must account for at least 10% of the total leased floor space of PRI’s portfolio. All of these tenants aremaster lessers.
Percentage share to
Total Leased Floor
Space*2(%)

Total Monthly
RentalRevenues(Thousands of
Yen)

Percentage share tototal revenues*3(%)

Tenant Name

Industry

Total Leased
Floor Space(㎡)

Haseko Livenet Co., Ltd

Real estate

39,879.99

34.1

117,302

34.9

Tokyu Community Co., Ltd

Real estate

29,428.17

25.2

51,14615.2

Mitsui Fudosan Residential Lease
Co., Ltd *1

Real estate

16,135.52

13.8

55,164

16.4

Total of Major Tenants

85,443.68

73.1

223,614

66.5

Total Portfolio

116,907.02

100.0

336,012100.0*1. Mitsui Fudosan Residential Lease Co., Ltd. succeeded the condominium leasing operations of Mitsui Fudosan Real Estate Sales Co., Ltd. on
April 1, 2003. Hence, Mitsui Fudosan Real Estate Sales is used in master lease contracts.
*2. Percentage numbers are rounded to the nearest first decimal place.
*3. Percentage numbers are rounded to the nearest first decimal place.

42

Prospect Reit Investment Corporation
5. Corporations and entities related to PRI (in reference material 1.Corporations and entities related to PRI）
(1) Structure of the Investment Corporation

Property Provider
Prospect Co., Ltd.

Memorandum
Concerning
Preferential
Information
Provision

Prospect Reit Investment
Corporation

Memorandum
Concerning
Information
Provision

Takeo Nishiyoshi
Supervisory Officer:
Chikao Nomura
Supervisory Officer:
Kazuhiko Chiba

Administrative
Duty Contract

Administrative Agent
Sumitomo Trust andBanking Co., Ltd.

Unitholders’RegisterAdministration
Contract

Unitholders’ Register
Administrator
Mizuho Trust andBanking Co., Ltd.

Accounting Auditor
Grant Thornton Taiyo
ASG

Memorandum Concerning
Information Provision

Asset Management
Contract
Asset Management Company

Memorandum
Concerning Preferential
Information Provision

Asset Custodian
Sumitomo Trust andBanking Co., Ltd.

General Meeting ofUnitholders
Board of Officers
Executive officer:

Property Information
ProviderMitsui Real Estate Sales
Co., Ltd.

Asset Custody
Contract

Prospect Reit Advisors Co.,
Ltd.

43

Prospect Reit Investment Corporation(2) Names, operational roles, and outline of related operations
Operational roles

Investment Corporation

Names

Outline of related operations
PRI invests primarily in properties wholly or partly for residentialuse, and defined as real estate or real estate related assets (Notes)
backed by real estate. With the aim of achieving steady growth andsecuring stable earnings and profits over the medium to long term,
PRI carries out the management of its investment assets.

Prospect Reit Investment
Corporation

PRI outsources all asset management operations to Prospect
Residential Advisors Co., Ltd. (the "Asset Management
Company"). Based on the Asset Management Contract signed
between the two parties on April 22, 2005 (the "Contract," asamended thereafter), the Asset Management Company has
formulated its Investment Management Policy (the "Policy") tofunction as in-house rules and regulations regarding themanagement of the Investment Assets.

Asset Management Company

Prospect Reit Advisors Co., Ltd.

In accordance with the Policy, the Asset Management Company
formulates Annual Asset Management Plans ("Plans") for each of
the Investment Corporation's operating periods. The Plans present
period-specific reports concerning the acquisition, disposition andmanagement of real estate-related assets; fund procurement andother financing schemes; and distribution strategies.
The outsourced operations to the Asset Management Company
from PRI are as follows:(1)Operations for asset management, (2)fund raising operations,(3)reporting on asset conditions, (4)compiling property
management plans , (5)related operations of (1) and (4) which arecommissioned occasionally by PRI.

Asset Custodian
Administrative Agent

Unitholders’ Register
Administrator

Sumitomo Trust and Banking Co.,Ltd.

Mizuho Trust and Banking Co., Ltd.

44

Sumitomo Trust engages in the following operations based on the
Administrative Duty Contract as an administrative duty contractor,
in accordance with the Investment Trust Law:
(1)Operations for calculations of PRI (excluding unitholders’register administrative operations), (2)operations to compile
accounting books for PRI, (3)taxation accounting for PRI, (4)operations for board meetings of officers of PRI and general
meetings of unitholders of PRI, and (5)related operations of (1)and (4). Sumitomo Trust also engages in asset custody operations
and related cash management and book keeping operations as an
asset custodian in accordance with the Asset Custody Contract andthe Investment Trust Law:

Mizuho Trust engages in the following operations based on theUnitholders’ Register Administrative Contracts as a unitholders’register administrator, in accordance with the Investment Trust
Law:(1)Change of names of unitholders, (2)operations to issue
investment securities, (3)operations to compile invitations togeneral meetings of unitholders, notices of decisions made on suchmeetings and reference documents, proxy documents, andreception support at such meetings, (4)operations to calculate andpay distributions to unitholders, (5)operations to respond toinquiries about investment units, to issue related certificates, andto handle applications of mishaps, (6)operations to sort out andkeep documents and undelivered postal items related to outsourced
operations, (7)operations to compile statistics of investment units
needed by PRI based on related laws and provisions as well as
contracts with PRI, and (8)related operations of (1) and (7).

Prospect Reit Investment Corporation(3) Major related parties other than the aforementioned
Operational roles

Property Provider

Property Information
ProviderNames

Outline of related operations
KKP concluded the Memorandum Concerning Preferential Information
Provision with PRI as well as PRA. Based on the memorandum, KKP
agrees to supply certain information about real estate and to give
preferential negotiation rights to PRI with respect to acquiring real estate
as well as real estate related assets it owns, will own or develop.

Prospect Co., Ltd. (KKP)*

Mitsui Real Estate Sales Co., Ltd.

Mitsui Real Estate Sales Co., Ltd. concluded the Memorandum
Concerning Information Provision with PRI as well as PRA. Based on
the memorandum, it supplies PRI as well as PRA information aboutcertain real estate to be sold.

*KKP is a 100% shareholder of the Asset Management Company.

45