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

IR Presentation in Europe(January 21－25, 2008)(Disclaimer
1．Recent Highlights
2．External Growth Strategy
3．Outline of Property
4．Internal Growth Strategy
5．Financial Strategy
6．Appendix

Ⓒ

2)
3
4
9
11
15
17

2008 Prospect Residential Advisors, Co., Ltd.

January 17, 2008

Disclaimer

Prospect Residential Investment Corporation

The attached document contains a translation of the majority of the information provided in JapaneseJapaneselanguage materials prepared for a presentation at the Global REIT
REIT Conference Tokyo 2007, which
was held on December 4, 2007.
This English language document is provided solely for the convenience
convenience of and reference by nonnonJapanese investors, and is not intended to constitute a disclosure
disclosure document. The Japanese language
presentation material should be referred to as the original of this
this document. The English translation oflegal, accounting, tax and business terms used herein may not precisely
precisely convey the identical meaningof equivalent Japanese terms. With respect to any and all terms herein, including without limitation,
financial statements, if there exist any discrepancies in the meaning
meaning or interpretation thereof between
the original Japanese document and English translation contained herein, the original Japanese
document will govern the meaning and interpretation. Neither PRI,
PRI, Prospect Residential Advisors, Co.,
Ltd. (“(“the Asset Management Company”
Company”) nor any of their respective directors, officers, employees,
partners, shareholders, agents or affiliates will be responsible or liable for the completeness,
appropriateness or accuracy of this English translation or any portion(s)portion(s) of any document(s)document(s) translated
into English. No person has been authorized to give any information
information or make any representations
other than those contained in this document in relation to mattersmatters set out in this document, and if given
or made, such information or representation must not be relied upon
upon as having been authorized by PRI,
Prospect Residential Advisors, Co., Ltd. or any of their respective
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 other jurisdictions.
Many provisions within this document contain information that constitutes
constitutes forwardforward-looking statements.
These forwardforward-looking statements are not a guarantee of future performance and involve risks anduncertainties. Therefore, actual results may differ materially fromfrom those in the forwardforward-looking
statements as a result of various factors.
All rights are reserved. Unauthorized duplication and copy of this
this document and contents herein inany measures is strictly prohibited.
Contact Information:
Investor Relations
Prospect Residential Advisors, Co., Ltd.
2-2-1, Marunouchi,
Marunouchi, ChiyodaChiyoda-ku,
ku, Tokyo, 100100-0005, Japan
ir@proresiir@proresi-advisors.co.jpⒸ

2008 Prospect Residential Advisors, Co., Ltd.

2

1. Recent Highlights

Prospect Residential Investment Corporation(Fourth fiscal period) Acquisition of 11 properties and sale of 1 property

External Growth(Fifth fiscal period, through to November 2007) Acquisition of 6 properties andsale of 1 property
Internal Growth

Largearge-scale renovations of U House Goki
GokisoFurther costcost-reduction efforts

Financial Strategy

Received a longlong-term issuer credit rating of A–
A–, submitted a registration
for issuance of investment corporation bonds
Issued the First Series Investment Corporation Bonds totaling JPY5,000
JPY5,000
million in October 2007
(JPY million)
Third fiscal period
results(Six months
from Aug 1, 2006
to Jan 31, 2007)

Fifth fiscal period
forecasts*(Six months
from Aug 1, 2007
Pop % chg
to Jan 31, 2008)

Fourth fiscal period results (Six months fromFeb 1, 2007 to July 31, 2007)
Pop change

Operating Revenues

2,231

2,148

△82

△3.7%

2,294

Operating Expenses

1,227

1,176

△50

△4.2%

－

Ordinary Income

1,003

972

△31

△3.2%

997

743

709

△34

△4.6%

696

Distribution per Unit

JPY9,901

JPY9,448

JPY△453△4.6%

JPY9,268

Number of Property

39

49

93,795 sq m

122,477sq m

95.5 %

95.2%

25

89

1,439

1,500

Net Income(at the end of fiscal periods)
Total Leasable Floor Space

Occupancy Rate (By Space)(at the end of fiscal periods)

Capex
NOI (Leasing Operations)* Forecast of revenues and earnings for the fifth fiscal period (August 1, 2007 to January 31, 2008) is as follows. These forecasts are
based on “Assumptions for Forecasts for the Fifth Fiscal Period” mentioned afterwards.
* 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 ofvarious factors, actual results may differ materially from those in the forward-looking statements.

Ⓒ

2008 Prospect Residential Advisors, Co., Ltd.

3

2. External Growth Strategy

Prospect Residential Investment Corporation

Active Replacement Strategy
Fourth fiscal period results : PRI’s acquisition of 11 properties is the largest
number of acquisitions it has undertaken since listing on the TSE.
Acquisition

Total Acquisition Prices：
JPY 10,732 million
Total Leasable Floor Space ：30,642.54 sq m
Total No. of Leasable Residential Units ： 795
Property Name

Occupancy
Rate atAcquisition

Acquisition
Price(JPY Million)

Completion Date

Acquisition Date

Prospect Kawaramachi-Gojo

January, 2007

March 15, 2007

36.2%

803

Prospect HatsudaiFebruary, 2006

March 15, 2007

96.1%

730

May, 2006

March 15, 2007

97.9%

700

Prospect Morishita

January, 2006

March 15, 2007

100.0%

1,480

Prospect Nishi-Sugamo

June, 2006

March 30, 2007

100.0%

1,419

Sky Hills N15

March, 2000

May 31, 2007

100.0%

932

Sky Hills Sakaimachi

February, 2002

May 31, 2007

100.0%

1,115

Domy Chitose

March, 1999

May 31, 2007

100.0%

592

Sky Hills Takadai I

January, 1992

May 31, 2007

100.0%

691

Exceria Ikebukuro West II

September, 2006

June 28, 2007

83.2%

1,020

Prospect Monzennakacho

January, 2007

June 28, 2007

90.0%

1,250

Prospect Chuo-Rinkan

Sales

Ⓒ

Property Code

F011

Property NameO Fort Nishi-Kasai

Sales Date

July 31, 2007

Sales Price

JPY 1,080 million

Book ValueJPY 937 million

Gains on sale of real estate

JPY 146 million

2008 Prospect Residential Advisors, Co., Ltd.

4

2. External Growth Strategy

Prospect Residential Investment Corporation

Acquisition of newly built or relatively new properties
in collaboration with the Sponsor Company
Occupancy conditions associated withutilizing warehousing functions:

Newly built properties
Positive aspects: highly competitive;
lower repair expenses
Negative aspects: high expenses during
the lease-up period to secure near or fulloccupancy; high leasing risks

100％
Acquisitions by PRI50％

PRI acquires properties of which theSponsor Company, Prospect Co., Ltd.
(KKP) undertakes leasing activities
aimed at raising occupancy rates.
Utilizing the warehousing functions of
the Sponsor Company enables PRI to acquire
newly built or relatively new properties
as well as to diminish the expense burden
during lease-up periods.

Acquisitions by KKP
0％

Ｆ０２４

Property Number

Time→

Ｓ０２２

Ｆ０２５

Prospect Hatsudai

Prospect Chuo-Rinkan

Prospect Morishita

1-5-17 Hon-cho, Shibuyaku, Tokyo

5-1-10 Chuo-rinkan,
Yamato-shi, Kanagawa

2-16-10 Morishita, Koto-ku,
TokyoAcquisition Price(Millions of Yen)

730

700

1,480

Acquisition Date

March 15, 2007

March 15, 2007

March 15, 2007

Completion Date

February 2006

May 2006

January 2006

Structure

S/3F

RC/13F

RC/9F

Occupancy Rate at
Acquisition

96.1%

100.0%

100.0%

Total Leasable Floor Space

817.71 sq m

1,098.24 sq m

2,399.23 sq m

Total No. of Leasable
Residential Units

22

48

45

Direct DCF Yield

4.5%

5.1%

4.9%

Property Name

Photo

LocationⒸ

2008 Prospect Residential Advisors, Co., Ltd.

5

2. External Growth Strategy

Prospect Residential Investment Corporation

Acquisition of properties with fixed-rent contracts
By adding properties with fixed-rent contracts to its portfolio, PRI strengthens
its revenue and earnings stability and decreases the risks associated with leasing
and tenant turnover. PRI has set a target of approximately 10% of its total
portfolio to consist of properties with fixed-rent contracts within the next two years.
Property Number

Ｆ０２６

Ｓ０２３

Ｓ０２４

Property Name

Prospect Nishi-Sugamo

Sky Hills N15

Sky Hills Sakaimachi

5-6-5 Takinogawa, Kita-ku,
Tokyo

3-21-319 Kita-jyugojonishi, Kita-ku, Sapporoshi, Hokkaido

4-19-1 Sakaimachi,
Chitose-shi, Hokkaido

Acquisition Price(Millions of Yen)

1,419

932

1,115

Acquisition Date

March 30, 2007

May 31, 2007

May 31, 2007

Completion Date

June 2006

March 2000

February 2002

Structure

RC/15F

SRC/RC/15F

RC/10F

Total Leasable Floor Space

2,023.42 sq m

4,754.86 sq m

6,775.39 sq m

Total No. of Leasable
Residential Units

42

111

134

Direct DCF Yield

5.1%

5.8%

6.3%

Photo

Location

Ｓ０２５

Property Number

Ｓ０２６

Domy Chitose

Sky Hills Takadai I

2-5-10 Takadai, Chitoseshi, Hokkaido

4-1-6 Takadai, Chitose-shi,
Hokkaido

Acquisition Price(Millions of Yen)

592

691

Acquisition Date

May 31, 2007

May 31, 2007

Completion Date

March 1999

January, 1992

Structure

RC/6F

SRC/11F

Total Leasable Floor Space

3,383.02 sq m

4,712.47 sq m

Total No. of Leasable
Residential Units

111

120

Direct DCF Yield

6.9%

6.5%

Property Name

Photo

LocationⒸ

2008 Prospect Residential Advisors, Co., Ltd.

6

2. External Growth Strategy

Prospect Residential Investment Corporation

Acquisition of properties in good locations and with strong potential
for high occupancy rates
100％

Exceria Ikebukuro West II

91.7%

81.3%

80.6%

93.8%
91.9%

Prospect Monzennakacho
83.2%

76.6%

58.0%
64.9%

50％

Prospect Kawaramachi-Gojo

52.6%
36.2%

0％
At acquisition

One monthafter acquisition

Two months
after acquisition

Ｓ０２１

Property Number

Three months
after acquisition

Ｓ０２７

Ｓ０２８

ProspectKawaramachi-Gojo

Exceria IkebukuroWest II

ProspectMonzennakacho

758-6 Nishihashizume-cho,
Gojo Noboru, Teramachidori, Shimogyo-ku, Kyoto

1-13-4, Kanamecho,
Toshima-ku, Tokyo

2-2-3, Hiranocho, Koto-ku,
TokyoAcquisition Price(Millions of Yen)

803

1,020

1,250

Acquisition Date

March 15, 2007

June 28, 2007

June 28, 2007

Completion Date

January 2007

September 2006

January 2007

Structure

RC/12F

RC/13F

RC/9F

Total Leasable Floor Space

1,528.12 sq m

1,379.52 sq m

1,790.56 sq m

Total No. of Leasable
Residential Units

52

48

62

Direct DCF Yield

5.1%

4.8%

4.9%

Property Name

Photo

LocationⒸ

2008 Prospect Residential Advisors, Co., Ltd.

7

2. External Growth Strategy

Prospect Residential Investment Corporation

Active Replacement Strategy
Results in Fifth fiscal period (up to November 30, 2007) : PRI acquired 6 properties andsold 1 property
Acquisition
Property Name
Acquisition Date
Location
Acquisition Price
Structure
Completion Date
Total No. of Leasable
Residential Units

Prospect KALON
MinowaSeptember 7, 2007
Taito-ku, Tokyo
JPY1,930 million
RC15F with B1
February 2007

Property Name

Prospect Nihonbashi
Koamicho

Acquisition Date
Location
Acquisition Price

October 19, 2007
Chuo-ku, Tokyo
JPY 946 million

Structure
Completion Date

SRC 10F
March, 200782

Total No. of Leasable
Residential Units

37

Total Leasable
Floor Space

1,364.02 sq m

Direct DCF Yield

4.9%

Property Name
Acquisition Date
Location
Acquisition Price

Palais D’Or Maruyama
October 19, 2007
Sapporo, Hokkaido
JPY 1,250 million

Structure

SRC 10F

Total Leasable Floor Space 3,032.37 sq m

Direct DCF Yield
Property Name
Acquisition Date
Location
Acquisition Price
Structure
Completion Date
Total No. of Leasable
Residential Units

5.0%
Prospect Kawasaki
October 19, 2007
Kawasaki, Kanagawa
JPY 1,717 million
RC 14F
August, 2006
52

Completion Date November, 1989
64

Total No. of Leasable
Residential Units

Total Leasable Floor 3,377.53㎡
Space

Direct DCF Yield

5.2%

Property Name

ProspectNakanoshima
October 19, 2007
Osaka, Osaka

Acquisition Date
Location
Acquisition Price
Structure
Completion Date
Total No. of Leasable
Residential Units

4,678.32㎡

Direct DCF Yield 5.7%

JPY 1,000 million
RC 14F
August, 2006
63

Property Name
Acquisition Date
Location
Acquisition Price
Structure

Prospect Ogikubo
November 7, 2007
Suginami-ku, Tokyo
JPY 880 million
RC 5F

Completion Date

February, 200740

Total No. of Leasable
Residential Units

Total Leasable Floor 1,572.48 sq m
SpaceTotal Leasable Floor
Space

1,106.63 sq m

Direct DCF Yield

Direct DCF Yield

4.6%

5.2%

Acquired 6 Properties
Total Acquisition Prices：

JPY 7,723 million
Total Leasable Floor Space ：15,131.25 sq m
Total No. of Leasable
Residential Units ： 338Ⓒ

Total Leasable
Floor Space

Sales
Property Code
Property Name
Location (Address)
Sales PriceBook Value
Gains on sale of realestateSales Date2008 Prospect Residential Advisors, Co., Ltd.

F013
Garden City Kita-Toda
4-40-1 Sasame, Toda City, Saitama
JPY 811 million
JPY 724 million
JPY 80 million (approx.)
August 31, 20078

3. Outline of property

Prospect Residential Investment Corporation

Geographic diversification(As of November 30, 2007)

Other Regions
Number of property: 23
Total acquisition price：
JPY 17,044 million
Total Leasable Floor Space ：58,982.25㎡
Total No. of Leasable
Residential Units： 1,364

Tokyo Metropolitan Area
(excluding Tokyo’
Tokyo’s 23 Wards)
Number of property: 5
Total acquisition price：
JPY 4,911 million
Total Leasable Floor Space ：11,180.65㎡
Total No. of Leasable
Residential Units： 267
Tokyo’
Tokyo’s 23 Wards
Number of property: 26
Total acquisition price：
JPY 47,783 million
Total Leasable Floor Space ：63,787.24㎡
Total No. of Leasable
Residential Units： 1,680

Portfolio changes by region on an acquisition price basis （JPY million）

70,00017,04460,00050,00040,000

7,497
3,225

10,661
3,225

14,794
10,661
3,225

3,925

39,05544,027

4,911

30,00020,00041,16045,06547,783

10,0000
At the end of Jan At the end of July At the end of Jan At the end of July At the end of Nov
2006 (First fiscal 2006 (Second 2007 (Third fiscal 2007 (Fourh
2007
period)fiscal period)
period)fiscal period)

Tokyo’s 23 WardsⒸ

Tokyo Metropolitan Area (excluding Tokyo’s 23 Wards)

2008 Prospect Residential Advisors, Co., Ltd.

Other Regions9

3. Outline of property

Prospect Residential Investment Corporation

Portfolio growth on an
acquisition-price basis

Number of properties in the portfolio（JPY billion)

54
49
39

35

42

45

30

52.9

58.9

51.8

40

62.7

60

69.7

Number of property

15

20

Jan
Jan
July
July
2007
2006
2007
2006
(First) (Second) (Third) (Fourth)(At the end of fiscal period)

Jan
2006
(First)Nov 30,2007

Total No. of leased residential units
3,500

July
2006
(Second)Jan
2007(Third)July
2007(Fourth)Nov 30,2007

Average age of property
since completion on a weighted-average basis
8 years

3,022

3,000

3, 311

7.2

2,500

7.0

Jan
2006
(First)

2,254

2,402

6 years

2,107

2,000

7 years

July
2006(Second)Jan
2007(Third)

6.1

6.1

Jan
2006
(First)July
2006(Second)

5 years

July
2007(Fourth)Nov 30,
2007

Jan
2007
(Third)July
2007(Fourth)Occupancy rate by space

Portfolio PML
10%

100%
9.0%

9%

90%

94.8%

95.5%

95.2%

Jan
2007
(Third)July
2007(Fourth)

8.2%
8.1%

89.5%

8%

80%
7.7%

7%

70%

Jan
2006
(First)

Ⓒ

July
2006
(Second)Jan
2007(Third)July
2007(Fourth)2008 Prospect Residential Advisors, Co., Ltd.

Jan
2006
(First)July
2006(Second)10

4. Internal Growth Strategy

Prospect Residential Investment Corporation

Planned large-scale renovations to raise property values
U House Gokiso
After large-scale renovations

Before large-scale renovations◆ Waterproofing workon building roofs◆ Renovation work andexterior painting◆ Installment of large dividers on
balconies and in open corridors◆ Color coordination design

May 2007

July 2007

September 2007

88.3%

86.8%

93.6%

Completion ofRenovation Works

As of September, 2007,
the occupancy rate rose by
five percentage points
compared with May , 2007.

Capital Expenditure Plan (in the fifth period consisting of items from JPY 5 million)
Property Name

PurposePlanned period

Planned work amount(millions of yen)

SK Residence

Large-scale repair work

Late November 2007

29.0

Deim-Hashimoto

Painting of steel parts andreplacement of a large sheet at
the RC staircase and corridors

Early November 2007

10.5

BELNOS 34

Water-supply, sewerage, andsanitation facilities

Late September 2007

8.5

Dome Yotsuya

Large-scale repair work

Early October 2007

6.0

Takasagoseki
Nibankan

Replacementment ofwaterproofing material

Mid-October 2007

5.2

Abreast Shin-Osaka

Replacementment of water-supply
meters and water-heater meters

Mid-November 2007

5.2Ⓒ

2008 Prospect Residential Advisors, Co., Ltd.

11

4. Internal Growth Strategy

Cost reduction efforts under way

Reduction of building management fees Reduction of common area maintenancefees and utility rates
Maison de Ville Takanawa Gyoranzaka
Maison de Ville Azabudai
Park Terrace Ebisu
Prospect Kiyosumi-Teien
Prospect Omori-Kaigan
Angel Heim Nishi-Rokugo No.2
Prospect Dogenzaka
Roppongi Rise HouseTK Flats Shibuya
Prospect Shinonomebashi
Fragrance Kawasaki
TK Flats Denenchofu Annex
Deim-Hashimoto
O Fort Nishi-Kasai
Living Stage Minami-Sendai
Living Stage Higashi-Sendai
Takasagoseki Nibankan
Prospect Glarsa Hiroo
SK Residence
Prospect Onshi-Koen

Achieved
reduction of
approximat
ely JPY 13
million on
an annualbasis(Percent of shares*)Takasagoseki Nibankan
U House Daikan-Cho
U House Tsurumai II
U House Gokiso
Abreast Sakuragawa
Abreast Nagase
Prospect Shinonomebashi
Maison de Ville Azabudai
Prospect Omori-Kaigan
Maison de Ville Naka-Meguro
Prospect Kiyosumi-Teien
Park Terrace Ebisu

Achieved
reduction of
approximat
ely JPY 2.4
million on
an annualbasis

BELNOS 34

Prospect Dogenzaka
Garden City Kita-Toda
Prospect Glarsa Hiroo

Major expense items
Property management expenses
Building management expenses
Repair and maintenance expenses
Water, electricity, and other utilities

9%

6%

3%

(First fiscal
period)(Secondfiscal period)(Thirdfiscal period)(Fourth fiscal
period)* Percent of shares to total leasing revenues, excluding capital gains on sales of real estate.

Ⓒ

2008 Prospect Residential Advisors, Co., Ltd.

12

4. Internal Growth Strategy

Prospect Residential Investment Corporation

Actively pursuing rent increase strategy
PRI carried out rent increases at properties mainly in the Tokyo Metropolitan area,
including Prospect Shinonomebashi and Prospect Glarsa Hiroo
Rent increases: 121 contracts primarily in city centers
Rent decreases: 61 contracts mainly in regional areas
Analyzing local leasing market

and property characteristics

Positive potential

Status quo

Defensive strategy

Prospect Shinonomebashi

Abreast Sakuragawa

Living Stage Higashi-Sendai

Aggressive efforts toincrease rent levels

Active efforts toincrease rent levels

Proactive efforts tomaintain rent levels

Aggressive rent increase strategy and efforts focusing on positive potential

PRI will endeavor to raise average rent levels.

Ⓒ2008 Prospect Residential Advisors, Co., Ltd.

13

4. Internal Growth Strategy

Prospect Residential Investment Corporation

Occupancy rate
Occupancy rate by type of unit (floor-space basis)
(%)

100
95
90
85

Aug
2006

Sept

Oct

Nov

Dec

Jan
2007

Feb

Mar

Apr

May

June

July

Total

94.7

95.2

95.3

94.4

95.3

95.5

95.4

95.0

94.0

94.4

94.3

95.2

Unmarried individual

94.5

95.5

95.3

95.3

95.4

94.9

94.7

92.4

92.6

94.5

94.0

94.6

Family

94.8

95.0

95.3

93.9

95.3

95.8

95.8

96.5

94.8

94.4

94.6

95.9

Occupancy rate by region (floor-space basis)
(%)

100
95
90
85

Ⓒ

Aug
2006

Sept

Oct

Nov

Dec

Jan
2007

Feb

Mar

Apr

May

June

July

Tokyo's 23 Wards

94.8

95.7

95.5

93.9

95.9

95.6

95.8

96.2

94.2

93.4

93.7

95.3

Tokyo Metropolitan Area
(excluding Tokyo's 23 Wards)

98.3

96.6

98.8

98.2

96.5

97.1

98.4

98.1

96.0

95.9

95.3

94.8

Other Regions

93.3

93.7

93.8

93.9

94.0

94.7

93.8

91.9

93.0

95.3

94.9

95.2

2008 Prospect Residential Advisors, Co., Ltd.

14

5. Financial Strategy

Prospect Residential Investment Corporation

Received a long-term issuer credit rating of A–
In July 2007, PRI received a long-term issuer credit rating of A– for long-term senior debt
from Japan Credit Rating Agency, Ltd. PRI aims to diversify repayment periods of debts, obtain
fixed-interest rates, and issue unsecured investment corporation bonds.

Long-term issuer credit rating
for long-term senior debt

Ａ－（single A minus）

Outlook:
Stable•The rating of long-term senior debts represents an assessment of an obligor’s financial capacity to pay
their overall financial obligations.
•This rating differs from ratings concerning specific financial obligations, which take into account the natureand provisions of the obligation and its senior/subordinate status, as well as the obligor’s standing in terms of bankruptcy or
liquidation. (Source: JCR’s English Web site)- For further details of the rating, please refer to JCR’s Web sites: http://www.jcr.co.jp/english/ (English); http://www.jcr.co.jp/(Japanese) 。

Issuance of the First Series Unsecured Investment Corporation Bonds
In September 2007, PRI submitted a registration for issuance of investment corporation bonds
to the Kanto Finance Office of the Financial Services Agency, applying
applying for approval toa maximum issuance of JPY 50,000 million up to the period ending September 2009
Following this, in October 2007 PRI issued its First Series Unsecured
Investment Corporation Bonds totaling JPY 5,000 million, a two-year bond issue
with a floating interest rate (six-month LIBOR plus 100 bps).
Subsequently, PRI concluded an interest swap contract covering the entire
investment corporation bonds issue totaling JPY 5,000 million.
As a result, the interest rate for the two-year bond issue has been fixed at 2.183%.

Contracts for the purchase of yen interest rate caps
In July and August 2007, PRI concluded four contracts for the purchasepurchase of yen interest rate caps
covering a total of JPY 20,000 million in debt financing (bank borrowings), with the goal ofhedging against the risk of increases in interest rates. The strikestrike rate for three of the contracts(totaling JPY 15,000 million) is 1.0%, with the remaining corridor
corridor--type contract(totaling JPY 5,000 million) having a first strike of 1.0% and second
second strike of 2.0%.

Ⓒ

2008 Prospect Residential Advisors, Co., Ltd.

15

5. Financial Strategy

Prospect Residential Investment Corporation

Diversification of repayment periods (maturity ladder chart)（JPY million）

20,00015,00010,000

5,000

0

Ⓒ

Repayments scheduled in Repayments scheduled in Repayments scheduled in Repayments scheduled in
CY 2008
CY 2009
CY 2010
CY 20122008 Prospect Residential Advisors, Co., Ltd.

16

Prospect Residential Investment Corporation

6. APPENDIXⒸ

2008 Prospect Residential Advisors, Co., Ltd.

17

Statements of Income

Prospect Residential Investment Corporation

Fourth Fiscal Period (February 1, 2007 to July 31, 2007)（Thousand of yen）
Operating revenues

Real estate rental
revenues
Other rental revenues
Gain on sale of real estate
Operating expenses

Real estate rental expenses
Loss on sale of real estate
Asset management fees
Custodian fees
Administrative service fees
Directors’ fees
Bad debt loss
Operating income
Non-operating income

Interest income
Other non-operating income
Non-operating expenses

Interest expense
Debt-related expenses
Other non-operating expenses

Fourth Fiscal Period
2,148,292

100.0

Third Fiscal Period
2,231,175

1,884,684

1,809,251

146,548

326,161

117,059

95,762

1,176,267

54.8

1,227,234

918,295

852,118－

130,567

132,273

115,738

3,181

2,962

20,24916,978

4,800

3,600

97,467105,268

Change100.0△82,883

△3.7

55.0

△50,967△4.2

972,02545.2

1,003,941

45.0△31,915

△3.2

900

0.0

407

0.0

493

121.1

11.6

2,416

0.9

883

245

16

162

262,19012.2

259,773

172,163

121,319

87,332

137,244

2,693

1,209

Ordinary income

710,735

33.0

744,574

33.4△33,839△4.5

Income before income taxes

710,735

33.0

744,574

33.4△33,839

△4.5

1,182

0.0

1,002

0.0

180

18.0

709,552

33.0

743,572

33.3△34,019△4.6

Income taxes
Net income

Retained earnings brought forward
Retained earnings at the end of
period

Ⓒ

11

4

7

177.3

709,564

743,576△34,012△4.6

2008 Prospect Residential Advisors, Co., Ltd.

18

Balance Sheets

Prospect Residential Investment Corporation

Fourth Fiscal Period (As of July 31, 2007)（Thousand of yen）
Current assets
Cash and deposits
Entrusted cash anddeposits
Derivative assets
Other current assets
Fixed assets

Fourth Fiscal Period
3,559,271
1,671,760

3,258
231,401

2,962
129,21264,030,194

Entrusted land
Intangible assets
Other intangible assets
Investments and other assets
Total assets
Current liabilities
Operating payables
Short-term debt
Current portion of longterm debt
Advances received
LIABILITIESFixed liabilities

34,940,138
5,168
5,168
214,879
67,589,465
9,333,141
308,354
8,800,000

NET
ASSETSⒸ

Leasehold and security deposits
Total liabilities
Unitholders’ capital
Unitholders’ capital
Retained earnings
Evaluation and conversions
Earnings on differedhedge transactions
Total net assets
Total liabilities and net assets

3,006,108
1,375,115
1,498,817

63,810,145
794,683
794,545
27,280,777

Long-term debt

Third Fiscal Period

1,652,851

Property and equipment
Buildings
Land
Entrusted buildings

ASSETS

5.3

94.7

0.0
0.3
100.0
13.8

29,121,832
5,889
5,889
11,20656,755,902
20,654,822
417,212
7,279,306

18.4

94.7

10,280,399

19.1

0.0

△721

△12.2

0.0
100.0
36.4

203,673
10,833,562△11,321,681

－
19.1
△54.8

1.3

22,206,695

－

37.7
62.3

10,885,013△34,012

50.9
△0.1

0.0

△17,438

－

62.3
100.0

△51,451
10,833,562

△0.1
19.1

12,747,125

33.9

211,177
732,702805,398

732,702

22,134,000
32,272,539
35,331,402
34,621,838
709,564△14,476－
21,387,525
35,365,414
34,621,838
743,576
2,962

47.7
52.3

△0.0

△14,476
35,316,925
67,589,465

553,162

53,732,698
807,663794,545
23,008,657－
224,786
22,939,398

53,749,749

Change

5.3

2,962
52.3
100.0

2008 Prospect Residential Advisors, Co., Ltd.

35,368,377
56,755,902

19

Interest-bearing Debt

Prospect Residential Investment Corporation

Interest-bearing debt balance (at the end of the Fourth Fiscal Period as of July 31, 2007)(Millions of yen unless otherwise stated)
LenderShort-termborrowings

Aozora Bank, Ltd.,The Norinchukin Bank

April 16, 2007

Aozora Bank, Ltd.,The Norinchukin Bank

May 31, 2007

Aozora Bank, Ltd.,The Norinchukin Bank

June 28, 2007

Mitsubishi UFJ Trust and Banking
Corporation

March 30, 2007

The Tokyo Star Bank, Ltd.

Long-term
borrowings

Drawdown
Date

Debt
Average
Interest
Financing / Interest
Rate
Repayment Rate (%)

May 31, 2007

Maturity /Repayment Date

1,700

1.649

Floating

1,600

1.850

Floating

2,000

1.850

Floating

1,500

1.354

Floating

2,000

1.550

Floating

Aozora Bank, Ltd.

4,875

Floating

Sumitomo Mitsui Banking Corporation

2,925

Floating

The Sumitomo Trust & Banking Corporation
The Musashino Bank, Ltd.

March 15, 2007

1.600

9,262

Floating

NTT Finance Corp.

487

Floating

June 28, 2007

2,634

June 27, 2008

September 28, 2007
May 30, 2008

Floating

The Norinchukin Trust & Banking
Corporation

The Norinchukin Trust & Banking
Corporation

May 30, 2008

SecuredSecuredSecuredSecuredSecuredFloating

975
975

September 28, 2007

Remarks

1.800

Floating

March 15, 2010

SecuredJuly 31, 2012

Secured30,934

Debt financing, repayment, and issuance of bonds (up to November 30, 2007)

Debt
Financing

Repayment

IssuanceⒸ(Millions of yen unless otherwise stated)
Debt
Interest Maturity /Financing /Rate
Repayment Date
Repayment

LenderDrawdown Date

Lehman Brothers Japan Inc.

September 7, 2007

2,924

Floating

October 31, 2012

September 7, 2007

2,400

Floating

September 5, 2008 Secured

March 30, 2007

1,500

Floating

September 7, 2007 Secured

1,700

Floating

September 7, 2007 Secured

500

Floating

August 31, 2007

Secured

October 9,
2009Unsecured

Aozora Bank, Ltd.,The Norinchukin Bank
Mitsubishi UFJ Trust and Banking Corporation
Aozora Bank, Ltd.,The Norinchukin Bank
The Norinchukin Trust & Banking Corporation
Aozora Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Sumitomo Trust & Banking Corporation
The Musashino Bank, Ltd.
NTT Finance Corp.
First Series Unsecured
Investment Corporation Bonds

April 16, 2007

March 15, 2007

October 12, 20072008 Prospect Residential Advisors, Co., Ltd.

5,000

Six-month
LIBOR plus
100 bpsRemarks
Secured20

Prospect Residential Investment Corporation

Structure of the Investment Corporation

Property Provider
Prospect Co., Ltd.

Property Provider
Shin-Nihon Tatemono
Co., Ltd.

Memorandum
Concerning
Preferential
Information
Provision
Pipeline Support
Contract

Prospect Residential
Investment Corporation

Property Information
ProviderMitsui Real Estate Sales
Co., Ltd.

Asset Custodian
Sumitomo Trust andBanking Co., Ltd.

Adminstrative
Duty Contract

Administrative Agent
Sumitomo Trust andBanking Co., Ltd.

General Meeting ofUnitholders
Board of Officers
Executive officer:

Memorandum
Concerning
Information
Provision

Asset Custody
Contract

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

Unitholders’ Register
Administration
Contract

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

Asset Management
Constract
Memorandum Concerning
Information Provision

Asset Management Company
Prospect Residential Advisors
Co., Ltd.

Pipeline Support Contract

Accouting Auditor
Ernst & Young
ShinNihon

Memorandum
Concerning Preferential
Information Provision

At the Third Meeting of Unitholders held on April 11, 2007, Executive Officer Takeo Okada resigned
and was replaced by Takeo Nishiyoshi.

Title

Executive
Officer

Ⓒ

Name

Takeo
Nishiyoshi

Career Summary
Apr. 1988

Entered the Supreme Court Legal Training and ResearchInstitute of Japan

Apr. 1990

Admission to the Bar (The Daini Tokyo Bar Association)
Entered the law firm Saruyama & Fujimaki

Jun. 2004

Opened the law firm Saruyama, Nishiyoshi & Sasaki (present
post)

Apr. 2007

Appointed Executive Officer, Prospect Residential Investment
Corporation (present post)

Number ofInvestment Units
Held02008 Prospect Residential Advisors, Co., Ltd.

21

Compliance Structure

Prospect Residential Investment Corporation

Basic Policy
Transactions with interested parties must be approved in advance by the Investment Corporation’s Board of Officers.
In the acquisition of a real estate-related asset, the acquisition price shall not exceed the appraisal value. Corporate
entities, including their directors and employees, that have special interests in transactions of real estate-related assets
shall not be given voting rights for the resolution of agendas related to such transactions.

Compliance Structure１

Proposals drafted by the Investment Management Department

２

Prior approval for proposals by the Compliance Officer
Feedback and/orchange request

３

Deliberation at Compliance Committee meetings

４

Resolution by the Investment Committee

５

Prior approval for interested-party transactions by PRI’s Board of Officers

Acquisition and disposition of real estate-related assets

Investment Committee
Compliance Committee
The Compliance Committee includes external
experts (lawyers) in order to secure soundcompliance at the Asset Management Company.

Compliance Committee Members
Compliance Officer, Representative Director
and President, directors and the general managerof each department of the Asset Management
Company, as well as one or more external expertsⒸ

The Investment Committee is the supremedecision-making body within the Asset Management
Company regarding asset management operations.
The committee has the authority to make important
decisions relating to the acquisition and dispositionof real estate-related assets, fund procurement,
asset management and property management.

Investment Committee Members
Representative Director and President, Compliance
Officer, directors and the general manager of eachdepartment of the Asset Management Company

2008 Prospect Residential Advisors, Co., Ltd.

22

Unitholder Composition

Prospect Residential Investment Corporation

Unitholder Composition
Individuals and others
Japanese corporations

Financial institutions (including securities companies)
Foreign investors (individuals and corporations)

Number of investment units held by type of unitholders

Fourth fiscal period

11,573

14,9492,952

45,626

Third fiscal period

12,261

14,992

3,329

44,518

Second fiscal period

14,22917,950First fiscal period

15,153

17,6760

10,00020,0003,737

39,184

14,50030,00040,00027,77150,00060,00070,00080,000

Number of unitholders by type of unitholders
Fourth fiscal period

4,745

132

60→
131

Third fiscal period

5,025

Second fiscal period

68 →

5,474

First fiscal period

119
163
72 →

80 →

6,098
0

1,000

2,000

3,000

64
188

4,000

5,000

242

6,000

49

7,000

Major Unitholders(As of July 31, 2007)
Number ofinvestment units
held

Percentage share of
total number ofoutstanding
investment units

Morgan Stanley & Co. Incorporated

10,80914.4%

State Street Bank and Trust Company 506155

7,173

9.6%

NikkoCiti Trust and Banking Corporation (Investment trust account)

4,613

6.1%

CGML-IPB Customer Collateral account

3,346

4.5%

HSBC Bank Plc, Clients Non-tax Treaty

2,881

3.8%

Deutsche Bank AG London PB Non-Treaty Clients 613

2,115

2.8%

Japan Trustee Services Bank, Ltd. (Trust account)

1,708

2.3%

The Bank of New York, Treaty JASDEC Account

1,574

2.1%

HSBC Fund Services Account 006 JF

1,424

1.9%

Goldman Sachs International

1,379

1.8%

Total

37,022

49.3%

Name of unitholderⒸ

2008 Prospect Residential Advisors, Co., Ltd.

23

Major Properties

Prospect Residential Investment Corporation

S001

TK Flats Shibuya

F019

Prospect Glarsa Hiroo

S002

Acquisition Price
Acquisition Date
Completion Date

JPY 6,399 million

Acquisition Price
Acquisition Date
Completion Date
Total Leasable
Floor SpaceJPY 3,905 million

Acquisition Price
Acquisition Date
Completion Date
Total Leasable
Floor SpaceJPY 3,353 million

NOI (fourth period)

JPY 109,559 thousand

NOI (fourth period)

JPY 93,800 thousand

S003

Maison de Ville Azabudai

F002

Park Terrace Ebisu

Total Leasable
Floor SpaceNOI (fourth period)

F001

July, 2005
November, 2002
6,903.54 sq m
141,517 thousand

Prospect Kiyosumi-Teien

Acquisition Price
Acquisition Date
Completion Date
Total Leasable
Floor SpaceJPY 2,780 million

NOI (fourth period)

JPY 77,752 thousand

F003

July, 2005
February, 2002
5,556.73 sq m

BELNOS 34

Acquisition Price
Acquisition Date
Completion Date
Total Leasable
Floor SpaceJPY 2,534 million

NOI (fourth period)Ⓒ

February, 2006
November, 2005
3,846.27 sq m

Acquisition Price
Acquisition Date
Completion Date
Total Leasable
Floor SpaceJPY 2,720 million

NOI (fourth period)

JPY 53,111 thousand

F004

Prospect Dogenzaka

July, 2005
May, 2001
2,567.09 sq m

Acquisition Price
Acquisition Date

JPY 2,294 million
February, 2005

5,321.89 sq m

Completion Date
Total Leasable
Floor SpaceJPY 65,830 thousand

NOI (fourth period)

July, 2005
May, 1991

Prospect Shinonomebashi
July, 2005
March, 2004
4,849.20 sq m

Acquisition Price
Acquisition Date
Completion Date
Total Leasable
Floor SpaceJPY 2,712 million

NOI (fourth period)

JPY 63,735 thousand

S006

Abreast Shin-Osaka

July, 2005
October, 2000
2,705.09 sq m

Acquisition Price
Acquisition Date

JPY 1,826 million
March, 1996

2,058.53 sq m

Completion Date
Total Leasable
Floor SpaceJPY 50,028 thousand

NOI (fourth period)

JPY 56,474 thousand

July, 2005

2008 Prospect Residential Advisors, Co., Ltd.

July, 2005
2,984.64 sq m

24Property Data

Code

Property NameS001

TK Flats Shibuya
Prospect Shinonomebashi
Maison de Ville Azabudai
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 Takaodai I
Exceria Ikebukuro West II
Prospect Monzennakacho
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
Garden City Kita-Toda
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
Total

S002
S003
S004
S005
S006
S007
S008
S009
S011
S012
S013
S014
S015
S016
S017
S018
S019
S020
S021
S022
S023
S024
S025
S026
S027
S028
F001
F002
F003
F004
F005
F006
F007
F008
F009
F010
F012
F013
F014
F017
F019
F020
F021
F022
F023
F024
F025
F026

Ⓒ

Prospect Residential Investment Corporation

Acquisition
Price (Millions
of Yen)Percentage
Share of Total(%)

Appraisal
Value (Millions
of Yen)

6,399

10.2

6,450

3,353
2,720
1,768
1,807
1,826
1,189
1,184
1,070
624
516
322
275
249
209
435
396
376
411
803
700
932

5.3
4.3
2.8
2.9
2.9
1.9
1.9
1.7
1.0
0.8
0.5
0.4
0.4
0.3
0.7
0.6
0.6
0.7
1.3
1.1
1.5

3,490
2,720
1,820
1,830
1,934
1,220
1,140
1,030
610
486
269
232
216
183
419
452
385
388
804
700
950

1,115

1.8

1,120

592
691
1,020
1,250
2,780
2,712
2,534
2,294
1,548
1,406

0.9
1.1
1.6
2.0
4.4
4.3
4.0
3.7
2.5
2.2

598
694
996
1,220
2,930
2,680
2,380
2,170
1,427
1,344

1,401

2.2

1,344

1,196
992
1,020
878

1.9
1.6
1.6
1.4

1,260
1,030
976
868

731
685
275
3,905
570
601
810
547
730
1,480
1,419

1.2
1.1
0.4
6.2
0.9
1.0
1.3
0.9
1.2
2.4
2.3

724
560
279
4,500
565
598
810
557
732
1,510
1,420

62,746

100.0

63,0252008 Prospect Residential Advisors, Co., Ltd.

Acquisition Date
July 12, 2005
July 12, 2005
July 14, 2005
July 14, 2005
July 14, 2005
July 12, 2005
July 14, 2005
July 12, 2005
July 12, 2005
July 12, 2005
July 12, 2005
July 12, 2005
July 12, 2005
July 12, 2005
July 12, 2005
August 31, 2005
February 10, 2006
February 15, 2006
March 15, 2006
March 15, 2007
March 15, 2007
May 31, 2007
May 31, 2007
May 31, 2007
May 31, 2007
June 28, 2007
June 28, 2007
July 14, 2005
July 14, 2005
July 12, 2005
July 12, 2005
July 12, 2005
July 12, 2005
July 14, 2005
July 12, 2005
July 14, 2005
July 12, 2005
July 12, 2005
July 12, 2005
July 12, 2005
August 31, 2005
February 15, 2006
March 3, 2006
March 3, 2006
March 15, 2006
November 7, 2006
March 15, 2007
March 15, 2007
March 30, 200725

Property Data

Prospect Residential Investment Corporation(Fourth fiscal period results)

Code

Property Name

Location

Total Leasable
Floor Space

Total No.
Total
of
LeasedLeasable
Floor Space Residential

Total No.
of Leased
Residential
Units

Total
Monthly
RentalRevenues

Number oftenants

Occupancy
Ratio (BySpace)

Shibuya-ku, Tokyo
Koto-ku, Tokyo
Minato-ku, Tokyo

6,903.54

5,926.79

194

85.9

86.1

4,849.20

4,672.36

171

165

17,431

96.4

96.5

S003

TK Flats Shibuya
Prospect Shinonomebashi
Maison de Ville Azabudai(Thousandsof Yen)167
26,8672,567.09

2,285.77

91

82

11,342

89.0

90.1

S004

Maison de Ville Takanawa Gyoranzaka Minato-ku, Tokyo

1,778.37

1,753.32

70

69

8,558

98.6

98.6

S005

Prospect Omori-Kaigan

Ota-ku, Tokyo

2,478.04

2,478.04

89

89

8,955

100.0

100.0

S006

Abreast Shin-Osaka

Osaka-shi, Osaka2,984.64

2,734.32

92

84

17,152

91.6

91.3

S007

Meguro-ku, Tokyo
Minato-ku, Tokyo
Chuo-ku, Tokyo

1,275.00

1,173.00

50

46

5,521

92.0

92.0

1,209.87

1,094.63

34

30

4,892

90.5

88.2

S009

Maison de Ville Naka-Meguro
Roppongi Rise House
Prospect Nihonbashi-Honcho

1,290.49

1,245.59

50

49

5,393

96.5

98.0

S011

Fragrance Kawasaki

Kawasaki-shi, Kanagawa

1,065.96

1,044.40

45

44

3,649

98.0

97.8

S012

Abreast Sakuragawa

Osaka-shi, Osaka

1,009.92

967.92

48

46

2,868

95.8

95.8

S013

Dome Takamine

Nagoya-shi, Aichi

946.04790.28

36

30

1,642

83.5

83.3

S014

Nagoya-shi, Aichi
Ota-ku, Tokyo
Higashiosaka-shi, Osaka

765.90618.02

36

29

1,391

80.7

80.6

429.50429.50

14

14

1,537

100.0

100.0

S016

Dome Yotsuya
TK Flats Denenchofu Annex
Abreast Nagase

100.0

S017

Living Stage Higashi-Sendai

S018

Units
S001
S002

S008

S015

532.98532.98

26

26

1,404

100.0

Sendai-shi, Miyagi

1,539.41

1,187.01

52

40

2,211

77.1

76.9

Prospect Toyonaka Hattori
Prospect Bishoen
Prospect Shimogamo
Prospect Kawaramachi-Gojo

Toyonaka-shi, Osaka
Osaka-shi, Osaka
Kyoto-shi, Kyoto
Shimogyo-ku, Kyoto

986.34986.34

34

34

2,448

100.0

100.0

901.15901.15

26

26

2,266

100.0

100.0

675.51675.51

31

31

1,966

100.0

100.0

1,528.12

1,250.12

52

43

3,736

81.8

82.7

Yamato-shi, Kanagawa
Sapporo-shi, Hokkaido
Chitose-shi, Hokkaido
Chitose-shi, Hokkaido
Chitose-shi, Hokkaido
Toshima-ku, Tokyo
Koto-ku, Tokyo
Koto-ku, Tokyo
Shibuya-ku, Tokyo
Katsushika-ku, Tokyo
Shibuya-ku, Tokyo

1,098.24

1,075.36

48

47

3,408

97.9

97.9

4,754.86

4,754.86

111

111

5,106

100.0

100.0

6,775.39

6,775.39

134

134

6,776

100.0

100.0

3,383.02

3,383.02

111

111

4,244

100.0

100.0

4,712.47

4,712.47

120

120

5,594

100.0

100.0

1,379.52

1,126.68

48

40

4,275

81.7

83.3

1,790.56

1,790.56

62

62

5,850

100.0

100.0

5,556.73

5,517.29

77

76

14,742

99.3

98.7

2,705.09

2,663.77

51

50

12,14098.5

98.0

5,321.89

4,986.64

100

93

13,521

93.7

93.0

F004

Prospect Chuo-Rinkan
Sky Hills N15
Sky Hills Sakaimachi
Domy Chitose
Sky Hills Kodai I
Exceria Ikebukuro West II
Prospect Monzennakacho
Prospect Kiyosumi-Teien
Park Terrace Ebisu
BELNOS34
Prospect Dogenzaka

2,058.53

1,878.15

47

43

9,358

91.2

91.5

F005

U House Daikan-Cho

Nagoya-shi, Aichi

5,944.44

5,842.38

96

94

9,758

98.3

97.9

F006

U House Gokiso

Nagoya-shi, Aichi

5,127.19

4,538.67

78

74

8,005

88.5

94.9

F007

Ota-ku, Tokyo
Koto-ku, Tokyo

2,776.64

2,776.64

40

40

6,716

100.0

100.0

2,033.77

2,003.95

61

60

6,499

98.5

98.4

Sagamihara-shi, Kanagawa

3,170.41

2,698.57

92

76

5,691

85.1

82.6

F010

Angel Heim Nishi-Rokugo No.2
Prospect Onshi-Koen
Deim-Hashimoto
SK Residence

Toshima-ku, Tokyo

1,624.49

1,581.56

30

29

5,237

97.4

96.7

F012

Garden City Urawa

Saitama-shi, Saitama

2,468.51

2,468.51

30

30

4,965

100.0

100.0

F013

Garden City Kita-Toda

Toda-shi, Saitama

3,678.83

3,603.66

49

48

5,392

98.0

98.0

F014

U House Tsurumai II

Nagoya-shi, Aichi

2,262.63

2,191.20

34

33

3,752

96.8

97.1

F017

Living Stage Minami-Sendai

Sendai-shi, Miyagi

1,277.10

1,135.35

27

24

1,868

88.9

88.9

F019

Prospect Glarsa Hiroo

Shibuya-ku, Tokyo

3,846.27

3,820.63

112

111

19,718

99.3

99.1

F020

Prospect Katsura

Kyoto-shi, Kyoto

1,769.96

1,649.88

29

27

3,294

93.2

93.1

F021

Crown Heim Nishi-Tanabe

Osaka-shi, Osaka

1,517.86

1,453.20

22

21

2,971

95.7

95.5

F022

Takasagoseki Nibankan

Sendai-shi, Miyagi

3,336.52

3,110.73

41

38

5,284

93.2

92.7

F023

Prospect Machiya
Prospect Hatsudai
Prospect Morishita
Prospect Nishi-Sugamo

Arakawa-ku, Tokyo
Shibuya-ku, Tokyo
Koto-ku, Tokyo
Koto-ku, Tokyo

1169.37

1,169.37

21

21

3,069

100.0

100.0
100.0

S019
S020
S021
S022
S023
S024
S025
S026
S027
S028
F001
F002
F003

F008
F009

F024
F025
F026

Total

Ⓒ

817.71817.71

22

22

3,423

100.0

2,399.23

2,352.89

45

44

7,238

98.1

97.8

2,023.42

2,023.42

42

42

6,610

100.0

100.0

122,497.72 116,649.56

3,021

2,865

325,742

95.2

94.8

2008 Prospect Residential Advisors, Co., Ltd.

26

Notes

Prospect Residential Investment Corporation

Assumptions for Forecasts for the Fifth Fiscal Period (August 1, 2007 to January 31, 2008)
Assumptions

Operating Period

Fifth fiscal period: From August 1, 2007 to January 31, 2008 (184 days)

Managed Assets

Forecasts are based on a property portfolio comprising 49 properties held as of July 31, 2007.
This total includes one additional property acquired as well as one property sold as of the dateof this report (please refer to page 7 and 8 for details). The property portfolio may change,
however, due to property acquisition or sale.

Investment Units
IssuedForecasts are based on the assumption that PRI shall not issue additional investment units.

Interest-Bearing
Debt Ratio

The interest-bearing debt ratio as of July 31, 2007 was 47.2%. Forecasts are, however, basedon an interest-bearing debt ratio of 48.5% as of January 31, 2008, taking into account anincrease in debt financing to acquire additional properties as well as repayment stemming fromthe 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

OperatingExpenses

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 theseller and purchaser on a pro rata basis at the time of acquisition settlement. In the case of PRI,
an amount equivalent to the portion allocated to the purchaser is included in the acquisition
price of the property and not recorded as an expense.
Repairs, maintenance and renovation expenses are estimated based on amounts consideredessential 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 tounforeseen circumstances or emergencies.
Depreciation is calculated using the straight-line method inclusive of incidental expenses.

Cash Distribution

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 not undertake distribution in excess of earnings.

Ⓒ

2008 Prospect Residential Advisors, Co., Ltd.

27