Top REIT Investment Corporation
11th Business Report(Semi-Annual Report 11th)

May 1, 2011 – October 31, 2011

I. Letter from the Executive Officer of the Investment Corporation
Dear Investors,
I, Jumpei Norimatsu, took office as Executive Officer of Top REIT, Inc. (Top REIT) as of August 1, 2011,
after being appointed to the post at the Fourth General Meeting of Unitholders of Top REIT held on July26, 2011. I intend to do my utmost to meet your expectations and look forward to serving you.
Concerning the recent economic situation in Japan and overseas, while the worsening European debt
problem and concerns of slowdown in the U.S. economy, stagnating growth of emerging countries another factors are causing increasingly greater instability, the Japanese economy showed signs of a gradualrebound from the Great East Japan Earthquake that hit in March 2011. However, persistent concerns over
the appreciation of the yen and it hovering at a high level due to fiscal and monetary uncertainty inEurope and the U.S., as well as flooding in Thailand forcing the shutdown of factories of local Japanesefirms, raised a sense of uncertainty over corporate earnings in Japan. These, among other factors, suggestthat the situation is still unpredictable. Under such circumstances, it is not expected to be easy to steer Top
REIT through this difficult phase, but we will strive to overcome such difficulties together with the asset
manager.
As for performance in the fiscal period ended October 31, 2011 (eleventh fiscal period) of Top REIT,
decrease in rent revenue owing to agreement being reached in April on reduction of rent amount in major
rent revisions, and termination of the lease contract with a major tenant of Akasaka Oji Building in
September resulted in operating revenue of 5,812 million yen (period-on-period decrease of 2.6%),
ordinary income of 1,986 million yen (period-on-period decrease of 9.5%) and net income of 1,985
million yen (period-on-period decrease of 8.0%). In addition, Top REIT declared a dividend per unit of
12,809 yen.
Top REIT will remain committed to prudent management of portfolio assets even under the forecasted
prolonged severe environment, along with the quest to achieve the NEXT STAGE that has been pursued
from before by steadily expanding asset size. We thank you and ask for your continued support andunderstanding.

Jumpei Norimatsu
Executive Officer
Top REIT, Inc.

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II. Special Feature – On to the NEXT STAGE –Implement Strategy for Recovering Dividend Level
The following is an overview of the performance of Top REIT, Inc. (Top REIT) in its eleventh fiscal
period (May 1, 2011 – October 31, 2011) and future management strategy from the perspective of theasset manager. The overview is presented by Nobuhito Endo, President and Representative Director of
Top REIT Asset Management Co., Ltd. (TRAM).
The recent office leasing market conditions in central Tokyo are seeing an improvement in the vacancy
rate at relatively-new large buildings equipped with high earthquake resistance performance and in-house
power generation equipment as tenants’ awareness of disaster prevention rose due to the Great East Japan
Earthquake and rent level decreased. On the other hand, the situation at existing small- and medium-sizedbuildings and aged buildings remains severe and the vacancy rate also remains at a high level.
Furthermore, amid the uncertain economic situation in Japan and overseas, further rising of the vacancy
rate and dropping of rent level, etc. has been a concern with the worsening of the supply-demand balanceby the upcoming scheduled large supply of newly-built office buildings in central Tokyo. Recovery ofvacancy rate and rent level is thus thought to require a substantial amount of time.
Moreover, in the J-REIT market, backed by steady investment unit price movements from the Bank ofJapan’s purchase of J-REIT investment units in the fall of 2010, some J-REITs resumed capital increases
through public offering from the beginning of 2011 and properties were newly acquired using the funds
procured from such. Although suspended temporarily due to the Earthquake and its effects, it resumed
gradually in and after May when the confusion in the aftermath of the Earthquake began to settle down.
Recently, however, future uncertainty and other factors have caused weak J-REIT investment unit market
conditions.

Nobuhito Endo
President and Representative Director2

1. Severe Leasing Market Conditions Necessitate Decrease in Dividends and Fall in Period-End
Occupancy Rate in Eleventh Fiscal Period
Until the fiscal period ended April 30, 2011 (tenth fiscal period), relatively stable management wasachieved amid severe leasing market conditions. In the eleventh fiscal period (current fiscal period),
however, the biennial major rent revisions with a total of 16 tenants in April 2011 – including rent
revision negotiations with six tenants of Harumi Island Triton Square Office Tower Y , and one tenant of
Kanda Nishiki-cho 3-chome Building, as well as review of leasing terms and conditions upon contract
renewal with the subleasing company of Harumi Island Triton Square Office Tower Z due to maturity of
the fixed-term lease contract – resulted in agreements being reached within the assumed range, but therevisions generally ended up being reductions in amount.
Furthermore, the termination of the lease contract with a major tenant of Akasaka Oji Building, in
September 2011, also caused a decrease of about 1.5-months’ worth of rent revenue, unfortunately
necessitating a decrease in dividends in the eleventh fiscal period.
In addition, the period-end occupancy rate, which has been constantly maintained at 99% or higher sincelisting, fell to the 97% level at the end of the eleventh fiscal period due to the abovementioned moving
out of a major tenant of Akasaka Oji Building.
As the asset manager, TRAM continues to focus on lease-up activities in recognition of the lease-up
of Akasaka Oji Building as an urgent task, but weakness of leasing market conditions makes thesituation a difficult one for lease-up. Please refer to page 5（（3）Lease-Up Activities for Akasaka Oji
Building） for details.

2. Progress of Recovery Plan during Eleventh Fiscal Period(1)Overview of Recovery Plan that Foresees the Twelfth Fiscal Period Dividend Level as the Bottom

In the forecast of performance for the eleventh and twelfth fiscal periods of Top REIT, announced withthe earnings results for the tenth fiscal period, a decrease in revenues and dividends were forecasted withthe abovementioned major rent revisions resulting in reductions in amount, and moving out of a major
tenant of Akasaka Oji Building. A recovery plan was created at that time for ensuring by any means thatthe dividend level of the twelfth fiscal period is the bottom and will be on track for recovery in thethirteenth fiscal period and after based on implementation of the following measures.

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① TRAM will proactively work to lease up Akasaka Oji Building so that the vacancy period can be
minimized and work to lease up tenants that will pay a certain level of rent.
② TRAM will continue to prudently manage the other portfolio properties and further strengthen tenant
relations as a means to defend against further tenant relocations and to maintain the occupancy rate.
③ TRAM will diligently negotiate with tenants on rent revisions that Top REIT faces in the eleventh andtwelfth fiscal periods.
④ TRAM and Top REIT will strive to acquire new properties by broadly examining not only officebuildings in central Tokyo but also competitive rental apartments with strong location and access.
(2)

Steadily Expanding Asset Size and First Replacement of Assets

In the current real estate market, it is difficult to close contracts as the volume of information on disposing
office buildings in central Tokyo is extremely low and the gap in the price perspective (level) ofproperties between sellers and buyers has been expanding. Furthermore, even properties held by private
placement funds expected to maintain high occupancy rate and cash flows are not put up for disposition
because financial institutions, etc. are accepting refinancing requests.
Although these factors formed a difficult environment for acquisition of office buildings in central Tokyo
that meet Top REIT’s investment targets, Top REIT obtained preferential negotiating rights from theseller of one office building in central Tokyo, and entrusted detailed investigation of the property to third
parties. As a result of the investigations, it was found that much more time and costs would be required tomake the acquisition and the decision was made to forgo acquisition of said property. Ongoing efforts will
be made to source information for acquisition of office buildings.
Residential properties, on the other hand, are reflect economic fluctuations on a relatively smaller scale
and the gap of price perspective between sellers and buyers is even because of stable occupancy rate andrent level resulting in transactions being consistently made. In an effort to recover the level of dividends
for the twelfth fiscal period and after, and in view of acquisition of residential properties of which
acquisition is absolutely feasible, Top REIT also focused on sourcing information on residential
properties comprised mainly of studio units in central Tokyo which offer convenient location and accesswith secure stable occupancy rates and are expected to greatly contribute to earnings over the medium- tolong- term. As a result, two residential properties – Impress Musashi-Koganei located in Koganei City,
Tokyo (acquisition price: approximately 1.2 billion yen) and TOP Residence Yoga located in Setagaya
Ward, Tokyo (acquisition price: approximately 1.1 billion yen) – were acquired in the eleventh fiscal
period.

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Furthermore, the decision was made to implement asset replacement in the eleventh fiscal period for the
first time at Top REIT. The decision was made concerning the office building Nittetsu Honmachi Building,which was the only portfolio asset held in the Osaka area, to recover the occupancy rate to 100% during
the tenth fiscal period and then sell the property to a third party on November 25, 2011. At the same time,a decision was made to acquire Premier Stage Nihonbashi Kayabacho, which is comprised primarily ofstudio units, on February 1, 2012. Taking into consideration the possibility of the supply-demand balance
deteriorating due to a large supply of office buildings resulting from the upcoming scheduled completionof redevelopment plans near the Osaka Station area, and the risks of corresponding rent drops, etc., asset
replacement is being implemented for a residential property in central Tokyo from which a more stable
occupancy rate and earnings can be expected.
Moreover, there were capital gains on the disposition of Nittetsu Honmachi Building of approximately
250 million yen. For the purpose of enhancing Top REIT’s financial strategy, plans are to implement a
reduction entry of part of the capital gains on sale by applying special provisions for taxation and set
aside approximately 80 million yen as internal reserves in the fiscal period ending April 30, 2012 (twelfth
fiscal period).
(3) Lease-Up Activities for Akasaka Oji Building
Concerning lease-up activities for Akasaka Oji Building, along with the lease-up activities that have beenproactively underway since the beginning of 2011, construction work to renew the entrance hall, elevatorhall, restrooms and other common areas was conducted after the previous tenant moved out in order toenhance the building’s tenant competitiveness.
However, amid weakening real estate leasing market conditions and coupled with the impact of the
Earthquake, there were tenants temporarily suspending or postponing relocation plans, etc., while tenants
proceeding with relocation plans seem to be adopting a cautious stance with increasingly heightened
consciousness for rent level, building earthquake resistance performance, installment of in-house power
generators and stable ground, etc.
Under such an environment, the number of previews by subsequent tenant candidates for the property had
been increasing gradually from the summer of 2011 upon the end of general shareholders meetings ofcompanies. However, tenant candidates are also simultaneously considering several properties aspotential relocation destinations and, not only that, the rent level presented by candidates is lower thanour estimated level in certain cases, causing a situation in which more time will be required to make thefinal decision. As of December 14, 2011, the lease-up status is that lease contracts (including
pre-contracts) have been executed with two tenants for a portion of the 8F (about 110 tsubos) and about5400 tsubos of the 1F and 2F. Accordingly, the rentable floor space for which contracts are yet to be closed
is about 1,500 tsubos (3F to 7F and 9F).

3. Top REIT’s Management Policy Going Forward
Concerning the twelfth fiscal period, a portion of the capital gains on the sale of Nittetsu Honmachi
Building, Top REIT’s only office building located in Osaka, will be set aside as internal reserves andalmost the entire amount after deduction of such is scheduled to be distributed, thus the forecast for
performance in the twelfth fiscal period announced at the time of release of the earnings results for thetenth fiscal period was revised upward. As the asset manager, TRAM has been implementing a recovery
plan to ensure the dividend level bottoms out in the twelfth fiscal period and is on track for recovery fromthe thirteenth fiscal period. However, as time is required for lease-up of Akasaka Oji Building, we regret
to announce that the forecast has been revised as follows and apologize for the concern this may cause
you. TRAM will continue to implement the management strategy (recovery plan) to ensure the dividendlevel bottoms out in the thirteenth fiscal period and is on track for recovery from the fourteenth fiscal
period.
(1) Projected Performance for the Twelfth and Thirteenth Fiscal Periods
The following are assumptions on which the projections of performance for the twelfth and thirteenthfiscal periods are based. Please see below table for the forecast operating revenue, etc.
12TH FISCALPERIODFORECAST

13TH FISCALPERIODFORECAST(ANNOUNCED ON
December 14, 2011)(ANNOUNCED ON
December 14, 2011)

184days

182days184days

OPERATING REVENUE¥ 5,812 million¥ 5,641million¥ 5,379 million

OPERATING INCOME¥ 2,779 million¥ 2,738 million¥ 2,476 million

ORDINARY INCOME¥ 1,986 million¥ 1,998 million¥ 1,783 million

NET INCOME¥ 1,985 million¥ 1,967 million¥ 1,782 million

DIVIDEND PER UNIT

¥

¥

¥

NUMBER OF INVESTMENT UNITS

155,000 units

155,000 units

155,000 units

PORTFOLIO SIZE

17 properties

17 properties

17 properties

CATEGORY

11TH FISCALPERIODPERFORMANCEPERIOD OF ASSET MANAGEMENT

12,80912,40011,500① Portfolio Assets
The forecast is based on the 16 properties owned by Top REIT as of December 14, 2011 (Nittetsu
Honmachi Building, sold), plus Premier Stage Nihonbashi Kayabacho scheduled to be acquired on
February 1, 2012, totaling 17 properties.

6② Operating Revenue
For real estate revenue for existing properties, TOP REIT takes into consideration execution of newagreements, early termination of agreements, etc. that have been finalized as of December 14, 2011, alongwith current real estate leasing market conditions, and also takes into account factors that may cause
fluctuations in such aspects as risks of reductions in revenue due to decreased amounts of rent of tenants
when they reach their rent revision period hereafter. Concerning the tenants of Akasaka Oji Building, theforecast factors in the about 650 tsubos of the 1F, 2F and 8F. In addition, the forecast projects
approximately 250 million yen in the twelfth fiscal period as capital gains on the sale from Nittetsu
Honmachi Building on November 25, 2011.
③ Interest-Bearing Liabilities
The assumption is that the balance of interest-bearing liabilities will be 94,037 million yen, and that the
19,040 million yen in loans payable due for repayment during the twelfth fiscal period (November 30,2011) has been fully refinanced and the 17,500 million yen in loans payable due for repayment during thethirteenth fiscal period (June 29, 2012) will be fully refinanced. Moreover, it is assumed that 67 million
yen of long-term loans payable will be paid in each of the twelfth and thirteenth fiscal periods as agreed
upon.
④ Dividends per Unit
It is assumed that concerning the approximately 250 million yen in capital gains on the sale of Nittetsu
Honmachi Building accrued in the twelfth fiscal period, internal reserves (approximately 80 million yen)will be set aside by utilizing the system of “Special Provisions for Taxation in the Event of Advance
Acquisition of Land, etc. in 2009 and 2010” and that almost the entire amount after deduction of such will
be distributed.
Based on the assumptions above, the forecast dividend per unit for the twelfth and thirteenth fiscal
periods are as the above table described in Page 6. While the forecast is a reduction in dividends per unit, as theasset manager, TRAM will work to recover the dividend level by focusing on (2) through (4) below.
(2) Placing Top Priority on Solicitation of Subsequent Tenants to Realize Early Lease-Up of Akasaka Oji
Building
The greatest issue facing Top REIT is to ensure there are prospects for the lease-up of Akasaka Oji
Building. Presently, lease agreements have been concluded with subsequent tenants for two and a half
floors. For the remaining six floors, several tenant candidates are currently taking the property into
consideration, but final responses are yet to be received. Furthermore, the rent level presented by7

candidates is lower than the level estimated by Top REIT in many cases. In addition, requests for
so-called “free rent,” meaning no rent will be payable for a period of at least approximately six months
from the time tenants move into the property, is becoming stronger even for office buildings in central
Tokyo and Akasaka Oji Building is no exception. Consequently, the rent corresponding to the period offree rent will not be earned and this will cause delay in recovery of the dividend level.
Therefore, Top REIT intends to improve revenues and recover the dividend level by soliciting subsequenttenants immediately, and continue to approach tenant candidates, as well as contacting a wide range ofbrokers and corporate groups of sponsors.
(3) Focus on New Acquisitions of Office Buildings in Central Tokyo
As explained heretofore, amid stagnation in office building transaction market conditions, Top REIT
implemented investment in residential properties comprised primarily of studio units that are expected tomaintain a stable occupancy rate and earnings before acquisition of office buildings by drawing on theadvantages of skilled management of a diversified portfolio and effectively utilizing cash on hand during
the eleventh fiscal period. The transaction market conditions for superior residential properties have beensolid, but presently market conditions seem to be overheating. So transaction prices are forecasted to rise.
On the other hand, the acquisition environment for excellent office buildings continues to be severe, but
the transaction price level of superior office buildings is estimated to be at the bottom level. Goingforward, Top REIT aims to improve revenues and recover the dividend level through the acquisition of
new properties by utilizing the approximately 3 billion yen currently remaining in cash on hand, andapplying Top REIT’s forte of “sponsors’ strengths,” as well as drawing on the information network
channel that TRAM has established on its own, in view of acquisition of competitive office buildings incentral Tokyo.
(4) Defend Against Tenant Relocations by Further Strengthening Tenant Relations
Amid concerns over a prolonged recovery for domestic corporate earnings due to future uncertainty of theeconomic situation in Japan and overseas, there is heightening consciousness among firms for further cost
reductions and this is increasing the risk of tenant relocations and tenant requests for rent reduction. As
the asset manager, TRAM will continue to further strengthen tenant relations as a means to defend against
tenant relocations and prudently manage portfolio properties to maintain and recover the occupancy rate
based on the spirit of “Tenants First (maintaining and improving tenant satisfaction)” that has been
adopted since listing.

8Concerning Sagamihara Shopping Center that was due for rent revisions in August 2011, continuing todiligently negotiate with tenant Ito-Yokado Co., Ltd. resulted in agreement to keep the rent unchanged
under severe consumption market conditions. Rent revisions scheduled for April 2012 in relation to one
tenant at Harumi Island Triton Square Office Tower Y has almost been finalized.

4. Strategy for the NEXT STAGE
As explained heretofore, Top REIT and TRAM intend to recover the dividend level by continuing toi mp l e m e n t t h e r e c o v e r y p l a n t h a t h a s b e e n u n d e r w a y s i n c e t h e e l e v e n t h f i s c a l p e r i o d .
Top REIT has set 210 billion yen as the immediate target for asset size, accomplishment of which would
require additional acquisitions in the amount of approximately 33 billion yen. Through full utilization of
the networks of sponsors – Sumitomo Trust and Banking, Nippon Steel City Produce (Nippon SteelGroup) and Oji Real Estate (Oji Paper Group) – as well as drawing on the information network that
TRAM has built on its own, focus will be placed on acquiring blue-chip properties that have been“carefully selected based on a comprehensive view of area, size, cap rate and other factors” to steadily
expand asset size to 210 billion yen and maintain a stable dividend level in an ongoing quest to achieve
the NEXT STAGE.
In closing, TRAM’s stance as the asset manager is to keep striving for prudent management and growthof Top REIT’s portfolio by continuing to adapt rapidly to changes in the market and environment. Your
continued understanding and support greatly appreciated.

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I.

ASSET MANAGEMENT REPORT【1】Overview of Asset Management Operation
1. Operating Results and Financial Position
Fiscal period
7th
8th
9th
10th
11th
As of/for six months ended
October 31, 2009
April 30, 2010
October 31, 2010
April 30, 2011
October 31, 2011
(1) Operating results
Operating revenue
mn yen
5,608
5,814
6,060
5,967
5,812
(Of which, rental revenue)
mn yen
5,608
5,814
6,060
5,967
5,812
Operating expenses
mn yen
2,978
2,964
3,041
2,995
3,033
(Of which, expenses related to rental
mn yen
2,429
2,405
2,451
2,414
2,479
business)
Operating income
mn yen
2,630
2,849
3,019
2,971
2,779
Ordinary income
mn yen
1,960
2,091
2,204
2,194
1,986
Net income
mn yen
1,961
2,090
2,204
2,157
1,985
(2) Assets, etc. (end of period)
186,336
185,459
Total assets
mn yen172,884
186,296
186,459(Period-on-period variation)
%
(0.0)
(7.8)
(0.1)
(−0.1)(−0.5)
Interest-bearing liabilities
mn yen81,74094,24094,172
94,10594,037
84,14084,41884,245
Net assets
mn yen84,28984,438(Period-on-period variation)
%
(0.2)
(0.2)
(−0.1)(−0.0)(−0.2)
Unitholders’ capitalmn yen82,26082,26082,26082,26082,260(3) Cash distributions
Total cash distributions
mn yen
1,961
2,090
2,204
2,157
1,985
Dividend payout ratio
%
100.0
100.0
100.0
100.0
100.0
(4) Per unit information
Number of units
units
155,000
155,000
155,000
155,000
155,000
Outstanding
Net assets per unit
yen542,842
543,805
544,768
544,632
543,520(Note 2)
Dividend per unit
yen
12,654
13,484
14,22013,922
12,809(Earnings distribution per unit)
yen
12,654
13,484
14,22013,922
12,809(Distribution in excess of earnings
yen
－
－
－
－
－
per unit)(5) Financial indices
Ratio of ordinary income to%1.1(2.2)
1.2(2.3)
1.2 (2.3)
1.2 (2.4)
1.1 (2.1)
total assets (Note 3)
Ratio of net income to%2.3(4.6)
2.5(5.0)
2.6 (5.2)
2.6 (5.2)
2.4 (4.7)
unitholders’ equity (Note 3)
Ratio of unitholders’ equity to total
48.7
45.2
45.3
45.3
45.4
assets
%
(0.1)
(0.0)
(0.0)
(−0.0)(−3.5)(Period-on-period variation)
LTV
%
47.3
50.6
50.5
50.5
50.7
Rental NOI (Note 4)
mn yen
4,284
4,535
4,691
4,639
4,393
(6) Other referential information
Number of properties at end of period
cases
14
15
15
15
17
Number of tenants at end of period
cases
42
44
46
46
48
(Note 5)2
Total rentable area at end of periodm283,622.23
291,647.88
291,627.72
291,627.72
295,215.03
Occupancy rate at end of period
%
99.2
99.2
99.5
99.7
97.3
(Note 6)
Depreciation and amortization at end
mn yen
1,105
1,127
1,081
1,086
1,060
of period
Capital expenditure at end of period
mn yen
97
544
83
464
234
Note 1: Operating revenue, etc. do not include consumption taxes.
Note 2: Net assets per unit have been rounded to the nearest yen.
Note 3: The indices above are calculated using the following formulas. In addition, annualized figures derived from the management period are
indicated in brackets.
Ratio of ordinary income to total assets ＝ Ordinary income /((Total assets at beginning of period＋Total assets at end of period)/2)×100
Ratio of net income to unitholders’ equity ＝Net income/((Net assets at beginning of period＋Net assets at end of period)/2×100
Note 4: Rental NOI (Net Operating Income) ＝Rental revenue－Expenses related to rental business＋Depreciation and amortization.
Note 5: Number of tenants at end of period indicates total number of tenants of each property as of the end of period. In the case a master leaseagreement is concluded, it is counted as 1 tenant. In the case 1 tenant rents multiple units, it is counted as 1 tenant if the units are in the same
property and as multiple tenants if the units are in multiple properties.
Note 6: Occupancy rate at end of period＝Total leased floor areas at end of period/Total leasable floor areas at end of period
When a pass-through type master lease agreement has been concluded, the area subleased to the end tenants have been used as the leased
floor area.
Note 7: Unless otherwise mentioned in the report, fractions of figures not indicated are rounded off for monetary amounts and rounded for ratios.

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2.Overview of Asset Management Operation for the Eleventh Fiscal Period
A. Brief Background of Top REIT
Top REIT, Inc. (Top REIT) was founded on November 2, 2005 based on the Investment Trusts and Investment
Corporations Law (Act No. 198 of 1951, as amended) with Top REIT Asset Management Co., Ltd. as theincorporator, and listed on the Real Estate Investment Trust Section of the Tokyo Stock Exchange (TSE) (Securities
Code: 8982) on March 1, 2006 with the number of investment units issued and outstanding totaling 145,500 units.
Later, Top REIT issued additional investment units (9,500 units) through a third party allotment on March 23, 2006.
As of the end of the eleventh fiscal period (October 31, 2011), the total number of investment units issued andoutstanding stands at 155,000 units.
Top REIT works to conduct management with the aim of maximizing the value for its unitholders by securing stablerevenues and achieving steady growth of its portfolio over a medium to long term. To do so, Top REIT focuses on
the two strategies of “skilled management of a diversified portfolio” and “optimal application of the sponsors’
strengths.” As of the end of the eleventh fiscal period, its portfolio consists of 17 properties with total acquisition
value of ¥177,435 million.

B. Investment Environment and Management Performance(a) Economy in General
Although the Japanese economy continued to be in severe circumstances due to the Great East Japan Earthquake
in March 2011, there were signs of economic activities in Japan recovering from the shock of the Earthquake andrestoring calm. This was evident by, for example, the disrupted automotive, semiconductor and other industry
supply chains (supply system of parts, etc.) and production facilities returning to normal at a rapid pace as well as
individual consumption showing gradual recovery trends with easing of the mood of voluntary restraint. However,in addition to the ongoing response to power shortages over the long term and rising costs due in part to raw
material prices hovering at a high level, there are concerns over the rapid appreciation of the yen and it hovering at
a high level for an extended period, leading to mounting concerns over decreases in corporate earnings among
export firms in particular. Moreover, the increasingly severe European debt problem and concerns of slowdown in
the U.S. economy, stagnating growth of emerging countries and other factors are causing greater instability in theeconomic climate worldwide. The situation ahead is thus estimated to be unpredictable.

(b) Real Estate Leasing Market[Office Buildings]
Reflecting the economic opaqueness, the vacancy rate in the office building leasing market for the five central
wards of Tokyo still hovers at a high level. There appeared to be no major impact on tenant evacuations such as
from the Earthquake. However, movements to temporarily suspend or postpone relocation plans were seen after
the Earthquake among tenants that had been planning office relocations as means of reducing costs, increasing
operational efficiency or other reasons. In addition, changes were found the selection of office buildings, such as
movements to give preference to such buildings as those boasting high earthquake resistance performance or thoseequipped with an in-house power generator. Signs of reversal in rent levels appeared for certain Class S and A
buildings in central Tokyo, but there were still no signs of bottoming out overall. Under the circumstances of no
economic recovery being foreseen, with the large volume of supply of office buildings scheduled in and after 2012,
there are such risks as the supply-demand balance further worsening. Recovery in the leasing market is thus
thought to require substantial amount of time.

[Retail Properties]
According to the analysis of commerce trends in the July to September 2011 period compiled by the Ministry of
Economy, Trade and Industry, large-scale retail store (department stores, supermarkets) sales value has gradually
recovered from the impact of the mood of voluntary restraint adopted immediately after the Earthquake and salesof certain luxury goods at department stores were seen. However, bad weather, heavy typhoons and other factors
caused stagnant growth overall, centering on apparel and other seasonal commercial goods. The result was
ongoing severe circumstances of decrease for about three years since April, 2008. Under such circumstances,major retailers held back from opening new stores and promoted restructuring through the closing of unprofitable
stores and such, as well as targeted improvement of earnings through such means as reviewing businessorganizations. Therefore, as a business operator engaged in the leasing of facilities, future trends of major retailers
need to be closely monitored.

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[Residential Properties]
The volume of new supply of rental residential properties in Tokyo and the Tokyo metropolitan area remains at alow level due to developers holding back on development plans. On the other hand, there was ongoing populationinflux and stable demand from single-person and small households resulting in the supply-demand moving
towards a good balance. Rental condominiums boasting excellent location (area) and transportation access which
are also competitive in terms of rent level continue to maintain stable occupancy rate. While the rent level
continues to hover on a weak note for luxury rental condominiums, a ceasing in the fall of the rent level for rental
condominiums comprised primarily of studio units targeting single-person and small households was seen.

(c) Real Estate Transaction Market
Although transactions were temporarily stagnant due to the Earthquake, there were no obvious signs of a feared
impact on price. With limited market players, the transaction market was led by consistent real estate transactions
by REITs using funds procured through public offerings. There were also movements to arrange new funds,
centering on foreign capital companies. However, with uncertainty in the future Japanese and overseas economies
and corporate earnings causing prolonged stagnation in real estate leasing market conditions and ongoing
relatively favorable financing environment, the number of office building transactions was at a low level as the gap
in the price perspective between sellers and buyers did not narrow and the transaction market is thus yet to recover.
Despite relatively strong movements with regard to rental residential properties, declining trends in cap rates began
to emerge for certain blue-chip properties and future increases in transaction prices are thus forecast.

<Asset Management Performance >(a) Acquisition and Disposition of Assets
Top REIT began the eleventh fiscal period with 15 properties (total acquisition value: ¥175,047 million), andinvestigated possible acquisition of properties based on information collected and carefully selected with a focus
on office buildings located in central Tokyo and residential properties located in central Tokyo and Tokyo
metropolitan areas through not only the “optimal application of sponsors’ strengths,” but also establishedinformation channels. As a result, Top REIT acquired two residential properties using cash on hand, Impress
Musashi-Koganei on August 12, 2011 (acquisition value: ¥1,223 million) and TOP Residence Yoga on October 14,
2011 (acquisition value: ¥1,165 million).
Thus, the number of properties owned by Top REIT expanded to 17 properties (total acquisition value: ¥177,435
million) as of the end of the eleventh fiscal period.
Furthermore, on October 26, 2011, Top REIT decided to acquire Premier Stage Nihonbashi Kayabacho(anticipated acquisition date: February 1, 2012) and dispose the Nittetsu Honmachi Building (disposition date:November 25, 2011). The disposition of Nittetsu Honmachi Building has been completed as planned.

(b) Management and Maintenance of Portfolio Assets
The basic asset management strategy of Top REIT centers on sustaining and increasing revenue over the
medium to long term by maintaining and improving tenant satisfaction (the “Tenants First” policy) andkeeping operational management costs at an appropriate level. Top REIT strived to improve tenantsatisfaction by sustaining relationships of trust with tenants and discerning tenant needs via property
management companies in order to maintain and improve high occupancy rates. The lease contract withSony Computer Entertainment Inc., the major tenant at Akasaka Oji Building, was terminated as of
September 18, 2011 and Top REIT has strived to solicit successor tenants, but these leasing activities
have not provided results due to the delay in the recovery in corporate earnings and opaqueness of theeconomic situation. As a result of such undertakings, the occupancy rate of Top REIT’s entire
portfolio at the end of the eleventh fiscal period was 97.3%.
Regarding maintenance, Top REIT followed up on ensuring that it had an appropriate grasp of theoperational management conditions and steady implementation of asset management plans for each
property. Top REIT also carried out renewal construction and repair work that contribute to enhancing
the competitiveness of properties and maintaining and improving the functionality of properties basedon asset management plans, took steps to keep relevant costs at an appropriate level, as well as
12

conducted efficient management of resources.
Furthermore, there was minor damage to owned properties due to the impact of Earthquake, but repairof such damage is almost complete as of the end eleventh fiscal period.
C. Procurement of Funds
Top REIT procures funds by adopting a financial policy that is based on stable financial management. In
the eleventh fiscal period, Top REIT repaid ¥67 million in the long-term loans payable as agreed upon
using cash on hand. Furthermore, Top REIT did not newly procure funds as there were no borrowings
which became due for repayment, and new property acquisitions during the eleventh fiscal period wereconducted using cash on hand.
As a result, at the end of the eleventh fiscal period, the total amount of interest-bearing liabilities stands
at ¥94,037 million and the ratio of interest-bearing liabilities to total assets at 50.7%. Of the total amountof interest-bearing liabilities, 52.6% are interest-bearing liabilities with fixed interest rates and 100.0%
are long-term interest-bearing liabilities (including the current portion).
Moreover, the ¥19,040 million in long-term loans payable due for repayment on November 30, 2011 wasrefinanced by long-term loans with 5 year periods on the same date to extend the average remaining
period of interest-bearing liabilities.
The credit ratings of Top REIT as of October 31, 2011 are as follows:
Credit rating agency

Issuer rating [Outlook]

Moody’s Japan K.K. (Moody’s)

A3 [Negative]

Rating and Investment Information, Inc. (R&I)

AA– [Stable]

D. Overview of Business Results and Dividends
As a result of the asset management and operations described above, Top REIT recorded asset
management performance during the eleventh fiscal period of ¥5,812 million in operating revenue,¥2,779 million in operating income and ¥1,986 million in ordinary income after deducting expenses
concerning borrowings, etc. and net income was ¥1,985 million.
As for dividends, with the aim of having an amount equivalent to profit dividends deducted as expenses
based on application of the special provision on taxation of investment corporations (Article 67-15 of the
Act on Special Measures Concerning Taxation [Act No. 26 of 1957, as amended; hereinafter, the “Special
Taxation Measures Act”]), Top REIT decided that the entire amount of unappropriated retained earningsof the eleventh fiscal period, excluding fractions of the dividend per investment unit that are less than ¥1,
would be paid out. Consequently, Top REIT declared a dividend per investment unit of ¥12,809.

13

3. Balance of Paid-in Capital
There was no change in paid-in capital for the 11th fiscal period. The outline of changes in paid-in capitalfrom the establishment of Top REIT to the end of the current fiscal period is as follows:
Total number of units Total paid-in capitalissued and outstanding(million yen)
Issue date
Remarks
Note(units)Increase
Balance
Increase
BalanceNovember 2, 2005
Incorporation (private)
200
200
100
100
Note 1February 28, 2006
Public offering
145,300
145,500
77,117
77,217Note 2
March 23, 2006
Third party allotment
9,500
155,000
5,042
82,260Note 3Note 1: Top REIT was established with initial capital of ¥500,000 per unit.
Note 2: New investment units were issued at a price of ¥550,000 per unit (issue value of ¥530,750 per unit)
through a public offering in order to raise funds for acquiring new properties.
Note 3: New investment units were issued at a value of ¥530,750 per unit through a third party allocation to raise
funds for acquired properties.

Market Price of Investment Units
The market price of the investment units on Tokyo Stock Exchange REIT Market during respective fiscal
periods is as follows:
Fiscal period
7th
8th
9th
10th
11th
As of the end of fiscal
October, 2009
April, 2010
October, 2010
April, 2011
October, 2011
periodHighest price
436,000yen
494,500yen
489,000yen
567,000yen
490,000yen
Lowest price
326,000yen
358,000yen
388,000yen
410,000yen
384,000yen

14

4. Cash Distribution
The dividend per unit for the current period was 12,809yen. Top REIT expects to distribute almost all
unappropriated retained earnings at the current period end to be eligible for special tax treatments (Special
Taxation Measures Law Article 67-15) that allows Top REIT to deduct an amount equivalent to distributions ofretained earnings as expenses from taxable income.
Fiscal period
7th
8th
9th
10th
11th
Units
As the end of fiscal
October,
October,
October,
April, 2010
April, 2011
period
2009
2010
2011
Unappropriatedthousand
1,961,454
2,090,112
2,204,126
2,157,918
1,985,468
retained earnings
yenInternal reserves
thousand
84
92
26
8
73
yen
Total dividends
thousand
1,961,370
2,090,020
2,204,100
2,157,910
1,985,395
yen(Dividend per unit)(yen)(12,654)(13,484)(14,220)(13,922)(12,809)
Of which, dividend of
thousand
1,961,370
2,090,020
2,204,100
2,157,910
1,985,395
accumulated earnings
yen(Per unit)(yen)(12,654)(13,484)(14,220)(13,922)(12,809)
Of which, repayment
thousand－－－－－of paid-in capitalyen(Per unit)
(yen)
－
－
－
－
－

5. Management Policy and Future Issues(a) Management Strategy for Existing Properties
Top REIT will continue to follow its basic asset management strategy that centers on sustaining andincreasing revenue over the medium to long term by maintaining and improving tenant satisfaction (the“Tenants First” policy) and keeping operational management costs at an appropriate level. Under thisstrategy, Top REIT will focus on sustaining relationships of trust with tenants and leasing vacant spaces,
striving to maintain stable occupancy rates over the medium to long term. Furthermore, Top REIT
positions the leasing activities to attract subsequent tenants for Akasaka Oji Building as a top priority
and will focus on leasing activities to attract subsequent tenants as early as possible and selectcandidates with high potential from a wide range of sources while continuously approaching candidates
currently considering.
Top REIT will also work to ensure an appropriate perception of the operational management conditions
for each property while steadily implementing such measures as to sustain and improve revenues andkeep operational management costs at an appropriate level. In addition, Top REIT will carry out
systematic repair work and such to enhance the competitiveness of properties and to maintain andimprove the functionality of properties, in an aim to secure stable revenues over the medium to longterm.
(b) Investment Strategy for New Properties
Top REIT aims to increase its dividends over the medium to long term by realizing external growththrough acquisitions of new properties. Along with continuing to further utilize pipeline support
functions from sponsor companies and utilizing various cultivated information channels, Top REIT willcollect information on new properties from a wide range of sources. Based on this information, Top
REIT will consider investment targets centering on highly competitive office buildings in central Tokyo
including residential properties that are expected to have stable occupancy among office buildings, retailproperties, residential properties and other asset classes. By doing so, Top REIT aims to expand theportfolio size while improving its quality.

15

Furthermore, Top REIT makes it a management policy to keep the ratio of the investment amount perproperty at less than 20% of the entire portfolio as a target over the medium to long term. For reference,
the acquisition value of the NEC Head Office Building accounts for 23.6% of the total acquisition valueof Top REIT’s properties as of the end of the eleventh fiscal period. Going forward, Top REIT will work
to reduce the risk of concentration on specific properties by steadily advancing further external growth.
(c) Financial Strategy
Top REIT will continue to implement diversified and flexible fund procurement operations in
preparation for acquisition of new properties and refinancing of existing loans, etc. While securing
mobility and flexibility in fund procurement, Top REIT will work to reduce the risk involved in fundprocurement by extending borrowing periods and spreading out the repayment dates. At the same time,
Top REIT will manage the risk of interest rate fluctuations by taking into account the balance ofborrowings at floating and fixed interest rates, as it discerns the interest rate trends. Moreover, financial
soundness will be maintained by keeping the leverage at an appropriate level.
(d) Compliance and Risk Management, etc.
In addition to the supervision of the Executive Officer by Supervisory Directors at the Board of
Directors meetings and other occasions, Top REIT will continue its direction and supervision on the
Asset Manager so that it can conduct management operations with full care given to market risks,
including rent decreases, and credit risks as well as with a focus on the protection of unitholders’interests in conducting transactions with interested parties and on other compliance issues.
6. Significant Subsequent Events
Regarding the Disposition of Assets
Top REIT disposed the owned property described below on November 25, 2011, after the end of theeleventh fiscal period (October 31, 2011). The overview of the disposition of the property is as follows.
<Overview of Disposition>(i) Disposed Assets:(ii) Name of Property:(iii) Address:(iv) Disposition Price:(v) Book Value:(vi) Capital Gains:(vii) Sales Agreement Date:(viii) Disposition Date:(ix) Purchaser:

Trust beneficiary interest in real estate in Japan
Nittetsu Honmachi Building
1-10-24, Utsubohonmachi, Nishi Ward, Osaka City, Osaka (residentialbuilding address)¥1,300 million¥1,003 million (as of October 31, 2011)
Approximately ¥250 million
October 28, 2011
November 25, 2011
SK Housing Corporation

16

［Reference Information］
Top REIT decided to acquire assets on October 26, 2011 as follows:<Overview of Acquisition>
Type of Title
Name of Property
TrusteeTerm of Trust Agreement
Anticipated Acquisition Price
Date of Sales Agreement
Anticipated Acquisition Date
Seller
Source of Funding
Method of Settlement
Address

Ownership of trust beneficiary interest in real estate in Japan
Premier Stage Nihonbashi Kayabacho
The Chuo Mitsui Trust and Banking Company, Limited (Note 1)
March 26, 2004 to March 31, 2014 (Note 1)
2,400 million yen (Note 2)
October 26, 2011
February 1, 2012
Premier Investment Corporation
Cash on hand (To be scheduled)
Lump-sum payment on the acquisition date
(Registered Address) 3-12-6, Nihonbashi Kayabacho, Chuo Ward, Tokyo(Residential Building Address) 3-4-1, Nihonbashi Kayabacho, Chuo Ward,Tokyo
About a 3 minute walk from Kayabacho Station on the Tokyo Metro Hibiya
AccessLine, about a 4 minute walk from Kayabacho Station on the Tokyo Metro
Tozai Line and about a 7 minute walk from Nihonbashi Station on the Toei
Subway Asakusa Line.
Usage
Apartment building
Structure/Floors
Steel and reinforced concrete structure with a flat roof;
14 floors above ground
Area
Land
479.93m2
Building
4,540.70m2 (total floor area)
Type of Title Land
Ownership
Building
OwnershipCompletion Date
February 2004
(Note 1) The information on the Trustee and the Term of Trust Agreement are based on the real estate trust
agreement that was executed between Premier Investment Corporation, the seller, and The Chuo
Mitsui Trust and Banking Company, Limited, the trustee as of October 26, 2011.
(Note 2) The anticipated acquisition price is the price for sale specified in the sales agreement for trust
beneficiary interest in real estate (excluding consumption tax and equivalents) which does notinclude acquisition expenses, real property tax, city planning tax, etc.

17

【2】Outline of Top REIT
1. Status of Unitholders’ Capital
Fiscal period
As of the end of fiscal period
Number of issuable investment units (units)
Number of units issued and outstanding (units)
Unitholders’ capital (million yen)
Number of unitholders

7th
October,
2009
2,000,000
155,000
82,260
6,733

8thApril, 2010
2,000,000
155,000
82,2606,879

9th
October,
2010
2,000,000
155,000
82,260
6,830

10thApril, 2011
2,000,000
155,000
82,2607,090

11th
October,
2011
2,000,000
155,000
82,2607,031

2. Matters Concerning the Investment Units
Major unitholders as of October 31, 2011 were as follows:
Number of units held
(units)Japan Trustee Services Bank (trust account)
27,536
Nomura Trust and Banking (investment trust account)
11,907
Trust & Custody Services Bank (securities investment trust account)
7,038
North Pacific Bank, LTD.
6,139
The Master Trust Bank of Japan (trust account)
5,916
The Senshu Ikeda Bank, Ltd.
4,540
American Life Insurance Company GA Company JPY
4,000
The Fuji Fire and Marine Insurance Company, Limited
3,465
The Sumitomo Trust and Banking Co., Ltd.
3,176
Nippon Steel City Produce, Inc.
3,162
Oji Real Estate Co., Ltd.
3,162
Trust and Custody Services Bank (money trust tax account)
2,850
NOMURA BANK (LUXEMBOURG) S.A.
2,701
Mizuho Trust & Banking Co., Ltd
2,062
The Minami Nippon Bank, Ltd.
1,550
Total
89,204Note 1: The share of total is calculated by rounding to the second decimal place.
Name

18

Share of total(%) (Note 1)
17.77
7.68
4.54
3.96
3.82
2.93
2.58
2.24
2.05
2.04
2.04
1.84
1.74
1.33
1.00
57.55

3. Officer and Auditor
A: Name of directors and auditor as of October 31, 2011 were as follows:
Post

Name

Major additional post

Total amount of fee paid
during the current period(thousand yen)Jumpei Norimatsu(Note 1) (Note 2)
Yasuyuki Kuribayashi
Supervisory Director(Note 1)

Auditor, The Sumishin Shinko
1,350Company Limited
Partner
Attorney,City-Yuwa
1,800
Partners (Note 3)
Managing
Partner,
Tsuneyama
Certified Public Accountants OfficeKunio Tsuneyama
Managing
Partner,
Kunio
Supervisory Director
1,800(Note 1)
Tsuneyama
LicensedTax
Accountants Office(Note 3)
Accounting Auditor KPMG AZSA & Co.
10,000－Note 1: There are no investment units of Top REIT held by the Executive Officer or Supervisory Directors in theirown name or others' names.
Note 2: Jumpei Norimatsu, Executive officer, was elected executive officer in the fourth Unitholders’ General
Meeting held on July 26, 2011, and served in the post since August 1, 2011. Further, Hiroaki Amano
resigned from executive officer on July 31, 2011.
Note 3: Although Supervisory Directors may have additional posts in entities other than those listed above, there
is no conflict of interest between those companies including those listed above and Top REIT.
Executive Officer

B: Policy on determination of dismissal and denial of reappointment of accounting auditor
The Board of Directors shall decide after taking various factors into consideration.
4. Asset Manager, Asset Custodian and Administrative Agents
Asset manager, etc. as of October 31, 2011 were as follows:Business
Asset manager
Assets custodian services
Administrative agent services (running of theorganization, accounting matters, etc.)
Administrative agent services (unitholders’ register,
special accounts)
Administrative agent services (investment corporation
bonds)

19

Company name
Top REIT Asset Management Co., Ltd.
The Sumitomo Trust and Banking Co., Ltd.
The Sumitomo Trust and Banking Co., Ltd.
The Sumitomo Trust and Banking Co., Ltd.
The Sumitomo Trust and Banking Co., Ltd.

【3】 Status of Investment Assets
1. Composition of Assets

Type ofassetsAsset class

Officebuildings

Area

Central Tokyo
Subtotal
Central Tokyo
Tokyo
Metropolitan
OfficeAreabuildings
KansaiSubtotal
Tokyo
Metropolitan
Real estate Retailfacilities
Area
in trust
Subtotal
Tokyo
Metropolitan
Residential
Area
Subtotal
Central Tokyo
OthersSubtotal
Subtotal of real estate and real estate in trust
Cash, deposits and other assets
Real estate

10th
As of April 30, 2011
As a
Total amountpercentage of
owned
total assets(million yen)(%)
(Note 1)
(Note 2)
5,880
3.2
5,880
3.2
122,314
65.6

11th
As of October 31, 2011
As a
Total amountpercentage of
owned
total assets(million yen)(%)
(Note 1)
(Note 2)
5,890
3.2
5,890
3.2
121,804
65.7

1,746

0.9

1,746

0.9

1,014
125,076

0.6
67.1

1,003
124,554

0.5
67.1

23,728

12.7

23,54012.7

23,728

12.7

23,54012.7

15,602

8.4

18,0579.7

15,602
8.4
18,057
9.7
2,706
1.4
2,701
1.5
2,706
1.4
2,701
1.5
172,99492.8
174,745
94.2
13,342
7.2
10,714
5.8
186,336
100.0
185,459
100.0
Total assets (Note 3)(172,994)(92.8)(174,745)(94.2)
Note 1: Total amount owned is based on the amounts appropriated on the Balance Sheet at the end of each period.
(Real estate and real estate in trust represent the book values after deducting depreciation). Total Amountfigures were rounded down to the nearest million yen.
Note 2: (Total amount owned) As a percentage of total assets is rounded to first decimal place.
Note 3: Figures in parenthesis of total assets represent the portions of actually owned properties in the object
assets.

20

< Geographical Classification >Area

RegionSupplementary note

Central Tokyo

Chiyoda, Chuo, Minato, Shibuya, Shinjuku―
and Shinagawa Wards

Tokyo
Metropolitan
Area

Tokyo
(excluding
centralTokyo),―
Kanagawa, Saitama and Chiba Prefectures

KansaiRegional economic zone centering on Osaka, Kyoto, Hyogo,
Osaka
Wakayama Prefectures

ChukyoMajor cities
Across thecountry

Shiga,

Regional economic zone centering on
Aichi, Gifu and Mie Prefectures
NagoyaCities designated by government ordinanceand other major cities (excluding cities ―
belonging to the above classifications)

21

Nara

and

2.

Major Properties Owned

The principal properties (top ten properties by book value) that Top REIT owns as of October 31, 2011 were as
follows:

Book value

Leased floor
space(Note 2)

(million yen)

(m2)

(m2)

(%)

42,857

72,238.03

72,238.03

100.0

23.6

Office31,233

23,219.46

23,219.46

100.0

22.3

Office19,92010,914.20

10,914.20

100.0

7.0

Office12,8208,025.65

8,025.65

100.0

7.7

Office11,43561,763.28

61,763.28

100.0

7.0 Retail property

10,372

11,357.44

10,714.89

94.3

4.1

Residential

9,867

7,300.35

865.55

11.9

7.9

Office8,055

51,098.42

51,098.42

100.0

4.1 Retail property(Real estate)

5,890

3,060.43

2,836.19

92.7

1.8

Office(Trustbeneficiaryinterest)

5,120

6,789.03

6,627.57

97.6

2.8

Residential

157,572

255,766.29

248,303.24

97.1

88.3

Property name

NEC Head Office
Building
Harumi Island
Triton Square
Office Tower Y
Harumi Island
Triton Square
Office Tower Z
Kanda
Nishiki-cho
3-chome Building
Sagamihara
Shopping Center
Fukasawa House
Towers H&I
Akasaka Oji
Building
Ito-Yokado
Higashi-Narashino StoreShiba-Koen
Building
Ecology Toyosu
Procentury
Total

Occupanc
Portion ofyrentalrate
revenue(Note 3)

Leasable floor
space(Note 1)

(Trustbeneficiaryinterest)(Trustbeneficiaryinterest)(Trustbeneficiaryinterest)(Trustbeneficiaryinterest)(Trustbeneficiaryinterest)(Trustbeneficiaryinterest)(Trustbeneficiaryinterest)(Trustbeneficiaryinterest)

Primary use(%)

Note 1: Leasable floor space is total leasable space for each asset as of the end of the current period. Furthermore, in the case ofco-ownership (including quasi-co-ownership), the stated figure is given by multiplying the leasable floor space of thewhole building by the ratio of co-ownership, and rounded to the second decimal place.
Note 2: Leased floor space is floor space based on lease agreements effective as of the end of the current fiscal period.
Furthermore, in the case of co-ownership (including quasi-co-ownership), the stated figure is given by multiplying theleased floor space of the whole building by the ratio of co-ownership, and rounded to the second decimal place. In thecase of contracting the master-lease agreements as pass-through type, the floor space subleased to end-tenants is
calculated as the leased area.
Note 3: Occupancy rate is the figure given by dividing leased floor space as of the end of the current fiscal period by leasable
floor space, and rounded to the first decimal place.

22

3. Details of Portfolio Properties① Details of Properties

Asset class

A. The details of properties owned by Top REIT as of October 31, 2011 were as follows:

Area

Property name

Address

Type of title(million yen)

NEC
Head
OfficeBuilding
Harumi Island Triton
Square Office Tower Y
Akasaka Oji Building

Office building

Central Tokyo

Kanda Park Plaza
Shiba-Koen Building
Harumi Island Triton
Square Office Tower Z
Kanda Nishiki-cho
3-chome Building

5-7-1 Shiba, Minato Ward,Tokyo
1-8-11 Harumi, Chuo Ward,Tokyo
8-1-22 Akasaka, Minato
Ward, Tokyo
2-2-2 Kajicho, Chiyoda
Ward, Tokyo
3-5-5 Shiba, Minato Ward,Tokyo
1-8-12 Harumi, Chuo Ward,Tokyo
3-11-1, Kanda Nishiki-cho,
Chiyoda Ward, Tokyo

Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Real estate
Trust beneficiaryinterest
Trust beneficiaryinterest

Retail property

Book value
atend of 11th
period(Note 1)(million yen)

47,75042,85738,50031,233

9,560

9,867

4,930

5,105

3,410

5,890

14,20019,92014,00012,820Tokyo
Metropolitan
Area

Faret East Building

2-34-7
Akebonocho,
Tachikawa City, Tokyo

Trust beneficiaryinterest

2,390

1,746

KansaiNittetsu Honmachi
Building (Note 2)

1-10-24 Utsubohonmachi,
Nishi Ward, Osaka City,
Osaka

Trust beneficiaryinterest

1,430

1,003

135,920

130,445

10,30011,435

5,560

8,055

3,810

4,047

19,67023,5386,960

10,372

4,780

5,120

1,270

1,315

1,170

1,249

14,18018,057

2,670

2,701

2,670

2,701

172,440

174,742

Subtotal (9 Properties)

Residential

Appraisalvalue at endof 11thperiodTokyo
Metropolitan
Area

Sagamihara Shopping
Center

Ito-Yokado
Higashi-Narashino Store
Musashiurawa Shopping
SquareSubtotal (3 Properties)
Fukasawa House Towers
Tokyo
H&I
Metropolitan
Ecology Toyosu
Area
Procentury
Impress
Musashi-Koganei
Top Residence Yoga

3-13-33 Kobuchi, Minami
Ward, Sagamihara City,
Kanagawa
7-3-1 Higashi Narashino,
Narashino City, Chiba
7-3-1, Bessho, Minami Ward,
Saitama City, Saitama

Trust beneficiaryinterest

2-1-2 Fukasawa, Setagaya
Ward, Tokyo
4-8-8 Toyosu, Koto Ward,Tokyo
4-14-18 Nakamachi Koganei
City Tokyo,
1-14-12 Tamagawadai,
Setagaya Ward, Tokyo

Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest

2-10-6 Kanda Awajicho,
Chiyoda Ward, Tokyo

Trust beneficiaryinterest

Trust beneficiaryinterest
Trust beneficiaryinterest

Other

Subtotal (4 Properties)
Central Tokyo

Total(17 Properties)OAK PLAZA

Subtotal (1 Property)

Note 1: For “Appraisal value at end of period,” Top REIT indicates the assessed value based on the appraisal by real estateappraisers following the asset evaluation method and standards stipulated in Top REIT’s Articles of Incorporation andrules of The Investment Trusts Association, Japan (based on real estate appraisal reports prepared by Tanizawa Sogo
Appraisal Co, Ltd; Japan Real Estate Institute and Daiwa Real Estate Appraisal Co, Ltd) as of October 31, 2011 as thepoints of evaluation.
Note 2: The property was disposed to the third party on November 25, 2011.

23

Area

Asset class

B. Operating results for each fiscal period of each property owned were as follows:

Name of property

Tenth Fiscal Period

Eleventh Fiscal Period

From November 1, 2010
to April 30, 2011

From May 1, 2011
to October 31, 2011

Number ofOccupancy

tenants

rate(end of period) (end of period)

Number ofOccupancy

tenants

rate

real estaterevenue to total(for period)

rental revenues (end of period) (end of period)

Rent revenue - Ratio of rental
real estaterevenue to(for period)

total rental
revenues(Note1)(%)(Note 2)(case)(%)(Note1)(million yen)(%)

(Note 2)(case)(million yen)

(%)

1

100.0

1,370

23.0

1

100.0

1,370

23.6

7

100.0

1,309

21.9

7

100.0

1,296

22.3

2

100.0

431

7.2

2

11.9

460

7.9

10

100.0

169

2.8

10

100.0

179

3.1

2

92.7

110

1.9

2

92.7

108

1.8

1

100.0

582

9.8

1

100.0

7.0

1

100.0

7.7

1

100.0

7.7

1

100.0

160

2.7

1

95.0

159

2.8

12

100.0

92

1.5

12

100.0

98

1.7

37

99.8

4,687

78.5

37

95.0

4,526

77.9

2

100.0

407

6.8

2

100.0

407

7.0

1

100.0

236

4.0

1

100.0

236

4.1

3

100.0

129

2.2

3

100.0

129

2.2

6

100.0

772

13.0

6

100.0

772

13.3

1

94.6

239

4.0

1

94.3

236

4.1

1

97.7

173

2.9

1

97.6

161

2.8

－

－

－

－

1

91.8

17

0.3

－

－

－

－

1

92.0

3

0.0

Subtotal (4 properties)

2

95.7

412

6.9

4

95.0

418

7.2

CentralTokyo

NEC Head OfficeRent revenue - Ratio of rental

OAK PLAZA

1

100.0

94

1.6

1

100.0

94

1.6

Subtotal (1 property)

1

100.0

94

1.6

1

100.0

94

1.6

46

99.7

5,967

100.0

48

97.3

5,812

100.0

Building
Harumi Island
Triton Square

Office building

Central Tokyo

Office Tower Y
Akasaka Oji
Building
Kanda Park Plaza
Shiba-Koen
Building
Harumi Island
Triton Square
Office Tower Z
Kanda Nishiki-cho

KansaiTokyo
Metropolitan
Area

3-chome Building

Faret East Building

Nittetsu Honmachi
Building (Note 3)

Tokyo Metropolitan
Area

Retail property

Subtotal (9 properties)
Sagamihara
Shopping Center
Ito-Yokado
Higashi-NarashinoStore
Musashiurawa
Shopping SquareTokyo
Metropolitan
Area

Residential

Subtotal (3 properties)
Fukasawa House
Towers H&I
Ecology Toyosu
Procentury
Impress
Musashi-Koganei
Top Residence

Other

Yoga

Total (17 properties)

24

Note 1: Number of tenants indicates total number of tenants of each property as of the end of period. In the case a master leaseagreement is concluded, it is counted as 1 tenant. In the case 1 tenant rents multiple units, it is counted as 1 tenant if theunits are in the same property and as multiple tenants if the units are in multiple properties.
Note 2: Rent revenue for Harumi Island Triton Square Office Tower Z and Kanda Nishiki-cho 3-chome is not disclosed due tobeing unable to obtain the consent of the tenants.
Note 3: This property was disposed to the third party on October 25, 2011.

② Details of Investment Securities
There are none applicable.

4. Contracted Amount and Market Price of Specified Transactions
The contracted amount and market price of the specified transactions of Top REIT as of October 31, 2011 were as
follows:
Contract amount (Note 1) (Note 2)
Segment

Type of transaction

Longer than a year

Transaction other Than Interest-rate swap
market transaction(receiving floating-rate, Paying fixed-rate)

33,50025,000(Million yen)
Market price(Note 1)
(Note 3)
(353)

Total
33,50025,000(353)
Note 1: The above figures are rounded down to the nearest million yen.
Note 2: Contract amounts of interest-rate swap transactions represent figures based on the estimated principal.
Note 3: Market price is evaluated at the price calculated by the counterparty of the concerned transaction contract based on theprevailing market rate.

5. Status of Other Assets
All real estate and trust beneficiary interests in real estate are listed in the table under the “3-① Details of Portfolio
Properties.” There were no significant specified assets that are main investment targets of Top REIT other thanthose listed above as of October 31, 2011.

6. Status of Assets by Country and Region
There are none applicable.

25

【4】Capital Expenditures for Properties Owned(1) Schedule of Capital Expenditures
The table below lists the estimated amounts of significant capital expenditures for repair and maintenancework of properties held by Top REIT, planned as of October 31, 2011.
The estimated construction costs shown in the table below include those charged to expenses in accounting.

Name of property

Location

PurposeScheduled term forconstruction or
maintenanceConstruction ofsnow melting snow
deviceMay 2011 toMarch 2012

Renewal of Gondola

NEC Head Office
Building

Sagamihara
Shopping Center

Renewal of lighting
systemRenewal of highpressure electric
equipment
Establishment of
power board
electricity meter
Minato Ward,
Renewal ofTokyo
feed pump
Renewal ofcooling tower
Renewal ofheat source pump
Renewal air
Condition facility
Renewal ofrefrigerator
Renewal of central
monitor system
Renewal of
ITV equipment
Repair and painting
Minami Ward,of external wall
Sagamihara
City, Kanagawa Renewal of restroom
equipment

26

Estimated construction cost
(million yen)
Payment Total of
Total
for the advance
period payment
33

－

－

49

－

－

24

－

－

May 2011 toMarch 2012

13

－

－

May 2011 toMarch 2012

14

－

－

May 2011 toMarch 2012
May 2011 toMarch 2012

May 2011 toJanuary 2012
May 2011 toMarch 2012
May 2011 toJanuary 2012
May 2011 toJanuary 2012
May 2011 toMarch 2012
May 2011 toMarch 2012
May 2011 toMarch 2012
January 2012 toFebruary 2012
January 2012 toFebruary 2012

11
27
20
43
46
42
10
110
31

(2) Capital Expenditures Made During the Period
The following table is an overview of construction work conducted during the fiscal period that fall under the
category of capital expenditures for properties held.
Capital expenditures during the fiscal period amounted to ¥234 million and combined with ¥175 million inrepairs and maintenance costs (including expenses equivalent of the restoration relocated tenant at Akasaka
Oji building) that fall under expenses for the fiscal period, a total of ¥410 million of construction work was
implemented.

Name of property
Akasaka Oji
Building
Faret East
Building
Shiba-Koen
Building
OthersLocation

PurposeMinato Ward, Renewal of rental spaces
Tokyo
Renewal of common spaces
SubtotalTachikawa
Renewal of central monitor
City, Tokyo
board
Minato Ward, Renewal of external wall andTokyoceilingRenewal of function
Total

27

Term for construction or
maintenanceJuly 2011 to September 2011
July 2011 to October 2011

Capitalexpenditures(million yen)
57
78
135

December 2010 to May 2011

36

April 2011 to August 201120

May 2011 to October 2011

41234

(3) Funds Reserved for the Long-term Repair and Maintenance Plan
(Million yen)

Fiscal period

7thFrom May 1,
2009 to
October 31,
2009

Balance of reserved funds at
beginning of current period
Amount reserved during thecurrent period
Amount used from reserved
funds during the current
periodBalance carried forward to
the next period

8th
From
November 1,
2009
to April 30,
2010

9th
From May 1,
2010 to
October 31,
2010

10th
From
November 1,
2010
to April 30,
2011

11th
From May 1,
2011
to October 31,
2011

461

647

346

530

330

188

195

197

197

197

2

496

13

396

84

647

346

530

330

443

【5】Condition of Expenses and Liabilities(1) Details of Expenses Related to Management(Million yen)

Fiscal period
Item

10th
From November 1, 2010
to April 30, 2011(a) Asset management fees (Note)(b) Asset custodian fees and administrative

11th
From May 1, 2011
to October 31, 2011
450

424

71
72
service fees(c) Directors’ compensation
66(d) Audit fees1010(e) Other expenses
42
40
Total
581
553
Note: Asset management fees in the 11th fiscal period consisted of ¥11 million in association with the acquisitionof new properties recorded as book value of the respective properties in addition to the amounts describedabove.

28

(2) Status of Borrowings
Status of borrowings from respective financial institutions as of October 31, 2011 is as follows.
Category

Long-Term Loans Payable

Current Portion of Long-Term Loans Payable

LenderDateborrowed

The Sumitomo Trust andBanking, Co., Ltd.
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Term Loan
The Bank of Tokyo-Mitsubishi June 29, 2007
No. 4
UFJ, Ltd.
The Chuo Mitsui Trust andBanking, Co., Ltd.
Mitsubishi UFJ Trust andBanking Corporation
The Sumitomo Trust andBanking, Co., Ltd.
Sumitomo Mitsui Banking
Term Loan Corporation
March 3,
No. 8
The Bank of Tokyo-Mitsubishi
2009
UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation
The Sumitomo Trust andBanking, Co., Ltd.
Term Loan Sumitomo Mitsui Banking March 27,
No. 9
Corporation
2009
Mitsubishi UFJ Trust andBanking Corporation

Balance at the Balance at the
beginning of theend of thecurrent period current period(million yen)(million yen)

Averageinterest
Repayment Repayment Use of
rate
date
methodproceeds(%)(Note 1)

Remarks

－

8,500

1.95

June 29, 2012

Bulletrepayment on
repayment
date(Note 2)

Unsecured
and without
guarantee

11,18911,189

1.24

November30, 2011

Bulletrepayment on
repayment
date(Note 3)

Unsecured
and without
guarantee

Bulletrepayment on
repayment
date(Note 2)

Unsecured
and without
guarantee

1,273

1,273

1.24

November30, 2011

Mizuho Corporate Bank, Ltd.
Term Loan
November
The Bank of Tokyo-Mitsubishi
No. 1030, 2009
UFJ, Ltd.

4,908

4,908

1.24

November30, 2011

Bulletrepayment on
repayment
date(Note 2)

Unsecured
and without
guarantee

Term Loan Development Bank of Japan,
No. 11
Inc.

January 13,
2010

135

135

2.42

November30, 2016(Note 4)(Note 5)

Unsecured
and without
guarantee

The Chuo Mitsui Trust andTerm Loan
February 26,
Banking, Co., Ltd.
No. 12
2010

1,670

1,670

1.24

November30, 2011

Bulletrepayment on
repayment
date(Note 2)

Unsecured
and without
guarantee

－

9,000

1.24

June 29, 2012

Bulletrepayment on
repayment
date(Note 3)

Unsecured
and without
guarantee

19,17536,675

8,500

－

1.95

June 29, 2012

Bulletrepayment on
repayment
date(Note 2)

Unsecured
and without
guarantee

2,000

2,000

2.27

1,000

1,000

2.40

(Note 2)

Unsecured
and without
guarantee

1,000

1,000

2.40

Bulletrepayment onJune 30, 2014
repayment
date

4,000

4,000

The Sumitomo Trust andBanking, Co., Ltd.
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking
Term Loan
March 26,
Corporation
No. 132010
The Bank of Tokyo-Mitsubishi
UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation
Subtotal
The Sumitomo Trust andBanking, Co., Ltd.
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Term Loan
The Bank of Tokyo-Mitsubishi June 29, 2007
No. 4
UFJ, Ltd.
The Chuo Mitsui Trust andBanking, Co., Ltd.
Mitsubishi UFJ Trust andBanking Corporation
The Sumitomo Trust andBanking, Co., Ltd.
Development Bank of Japan,
June 29, 2007
Term Loan Inc.
No. 5
The Dai-ichi Life InsuranceCo., Ltd.
Subtotal

29

The Sumitomo Trust andBanking, Co., Ltd.
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Term Loan
March 27,
The Bank of Tokyo-Mitsubishi
No. 7
2008
UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation
Development Bank of Japan,
Inc.
Subtotal
The Sumitomo Trust andBanking, Co., Ltd.
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
January 13,
The Bank of Tokyo-Mitsubishi
2010
UFJ, Ltd.
Term Loan
Mitsubishi UFJ Trust andNo. 11Banking Corporation
Resona Bank, Limited
Development Bank of Japan,
Inc.

January 13,
2010

Subtotal
The Sumitomo Trust andBanking, Co., Ltd.
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking
Term Loan
March 26,
Corporation
No. 132010
The Bank of Tokyo-Mitsubishi
UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation
The Sumitomo Trust andBanking, Co., Ltd.
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Term Loan
March 3,
The Bank of Tokyo-Mitsubishi
No. 142011
UFJ, Ltd.
The Chuo Mitsui Trust andBanking, Co., Ltd.
Mitsubishi UFJ Trust andBanking Corporation
The Sumitomo Trust andBanking, Co., Ltd.
Term Loan
March 31,
The Bank of Fukuoka, Ltd.
No. 152011
The Hiroshima Bank, Ltd.
The Yamaguchi Bank, Ltd.
Subtotal
Total

6,300

6,300

3,000

3,000

9,300

9,300

1.48

March 27,2013

Bulletrepayment on
repayment
date(Note 4)

Unsecured
and without
guarantee

Bulletrepayment on
repayment
date(Note 5)

Unsecured
and without
guarantee

1.53

9,800

9,800

1.24

November30, 2012

2,430

2,362

2.42

November30, 2016(Note 4)(Note 5)

Unsecured
and without
guarantee

12,23012,162

9,000

－

1.24

June 29, 2012

Bulletrepayment on
repayment
date(Note 3)

Unsecured
and without
guarantee

16,70016,7001.39

BulletFebruary 29, repayment on
2016
repayment
date(Note 3)

Unsecured
and without
guarantee

0.83

BulletFebruary 29, repayment on
2016
repayment
date(Note 2)

Unsecured
and without
guarantee

6,700

6,700

66,43085,60548,86285,537Note 1: The average interest rate is the interest rate of borrowings for the respective loan contracts (weighted by the balance
during the period) and rounded to the second decimal place. Furthermore, the average interest rate related to theborrowing hedged by an interest rate swap transaction for the purpose of reducing interest rate fluctuation risk isweighted by considering the effect of the relevant interest rate swap.
Note 2: The use of borrowings is for repayment of short-term loans payable.
Note 3: The use of borrowings is for repayment of long-term loans payable.
Note 4: Repayment of ¥67.5 million will be made at the end of June and December each year starting on June 30, 2010, with theremaining payment of ¥1,822.5 million to be repaid on November 30, 2016, the final repayment date.
Note 5: The use of borrowings is for acquisition of trust beneficiary interest in real estate.

30

(3) Status of Investment Corporation Bonds
Investment corporation bonds issued and outstanding as of October 31, 2011 are as follows.
Balance as ofthe end of thecurrent
period(million yen)Interest
Rate(%)

Maturity
Date

Redemption
methodUse ofproceeds

Remark

1.00

June 4, 2015

Bulletpayment

Repaymentofborrowing

Unsecured
and without
guarantee

Name of Bonds

Issue Date

Balance as of the
beginning of thecurrent period(million yen)

No.1
Unsecured Investment
Corporation Bonds(Note)

June 4,
2010

8,500

8,500

8,500

8,500

Total

Note: This bond is equipped with special pari passu conditions among the specified investment corporation bonds.

(4) Status of Short-Term Investment Corporation Bonds
There are none applicable.

31

【6】Status of Acquisitions and Dispositions During the Period(1) Acquisitions and Dispositions of Real Estate, etc. and Asset Backed Securities

Type ofAssetsName of Property

Acquisition
AcquisitionPrice
Acquisition Date(million yen)
(Note 1)

Disposition
Disposition Book Value
Disposition
Price (million (million
Date
yen)
yen)

Capital Gainand Loss(million
yen)

Trust
Beneficiary
Impress
Interest in
August 12,2011
1,223
―
―
―
―
Musashi-Koganei
Real Estate(Note 2)Trust
BeneficiaryInterest in
Top Residence Yoga
October 14, 2011
1,165
―
―
―
―
Real Estate(Note 2)
(Note 1) Acquisition Price is the amount (acquisition price indicated in the sales agreement) excluding expenses (such as realestate transaction brokerage fees, real estate tax, etc.) required for transaction of the relevant property.
(Note 2) The two properties described above were trusted beneficiary interest in real estate at the same acquisition date.

(2) Acquisitions and Dispositions of Others Assets
Other major assets besides real estate and asset backed securities stated above consist mostly of bank deposits or bankdeposits within assets held in trust.

(3) Research on Prices of Specified Assets
Transactions during the current period that require research on prices of specified assets stipulated by Article
201 of the Investment Trusts and Investment Corporations Law are as follows.

①Real estate, etc
Acquisition
or
Disposition
Acquisition

Name of Properties
Impress Musashi-Koganei

Transaction Date
August 12,2011

Acquisition Price(million) (Note 1)

Research on Price ofSpecified Assets(million)(Note 2)

1,223

1,270

Acquisition
TOP Residence Yoga
October 14,2011
1,165
1,170
(Note 1) Acquisition Price is the amount (acquisition price indicated in the sales agreement) excluding expenses (such as realestate transaction brokerage fees, real estate tax, etc.) required for transaction of the relevant property.
(Note 2) The research on prices of specified assets described above table was conducted by KPMG AZUSA LLC., at timesof transaction of properties based on the Report No. 23,“Research on price of specified assets of Investment Trust andInvestment corporation” issued by the Industry Audit Committee of the Japanese Institution of Certified Public
Accountants. Furthermore, aside from the research on price described above, the investigation reports had been
received on locations, addresses and other items needed for specifying the properties, etc.

② Others
There are none applicable32

(4) Transaction with Interested Parties, etc. and Major Unitholders① Status of Transaction
There are none applicable.
② Amounts of Fees Paid, etc.
Fees paid to interested parties, etc. and major unitholders during the current period are as follows.

Item

Total amount offees paid (A)(thousand yen)

Property management fees

389,317

Trust compensation
Asset custodian fees
Administrative service fees

20,748
8,358
63,912Other fees paid

15,007

Transactions with interested parties, etc. and major unitholders
Paid toNippon Steel City Produce, Inc.
Oji Real Estate Co., Ltd.
Nippon Steel Community Service Co., Ltd.
The Sumitomo Trust and Banking, Co., Ltd.
The Sumitomo Trust and Banking, Co., Ltd.
The Sumitomo Trust and Banking, Co., Ltd.
The Sumitomo Trust and Banking, Co., Ltd.
The Sumitomo Trust and Banking, Co., Ltd.
Nippon Steel City Produce, Inc.
Oji Real Estate Co., Ltd.
The Sumitomo Trust and Banking, Co., Ltd.

Amount ofpayment (B)(thousand yen)
48,292
27,66814,094
1,250
17,7508,358
63,912
1,369
41
551,145

Ratio against
total amount
B/A
(%)
12.4
7.1
3.6
0.3
85.5
100.0
100.0
9.1
0.3
0.0
37.4

Borrowing related expenses
136,618
Investment
corporationbond
5,576 The Sumitomo Trust and Banking, Co., Ltd.
624
11.2
related expenses
Other operating expenses
3,138 The Sumitomo Trust and Banking, Co., Ltd.
729
23.3
Other non-operating expenses
3,105 The Sumitomo Trust and Banking, Co., Ltd.
342
11.0
Other expenses related to rent
5,860 Oji Real Estate Co., Ltd.
488
8.3
business
Note 1: Interested parties, etc. and major unitholders means interested parties, etc. of the asset manager which concluded asset
management entrustment contract with Top REIT as prescribed in Article 123 of the Enforcement Order of theInvestment Trust and Investment Corporations Law and major unitholders of the asset manager as defined in Article
29-4, Paragraph 2 of the Financial Instruments and Exchange Law (Law No. 25, 1948. including the amendments
thereafter). However, the table above also includes transactions with interested parties as provided in the internal rulesof the asset manager (including special purpose companies, etc. to which interested parties, etc. have been entrustedwith asset management). Please note that the parties to which payments were made during the current period were The
Sumitomo Trust and Banking Co., Ltd., Nippon Steel City Produce, Inc., Nippon Steel Community Service Co., Ltd.
and Oji Real Estate Co., Ltd.
Note 2: In addition to the fees paid described above, the amounts paid for repair and maintenance work placed with interested
parties, etc. during the current period are as follows. Furthermore, the concerned payments include construction
management fees.
Oji Real Estate Co., Ltd.:
Nippon Steel City Produce, Inc.:¥21,779 thousand¥86,945 thousand(5) Status of Transactions with the Asset Manager Regarding Additional Work Conducted
Top REIT Asset Management Co., Ltd. the asset management company of Top REIT, does not concurrently
conduct any type 1 financial instruments transaction business, type 2 financial instruments transaction business,land and building transaction business, or real estate syndication business, and has no such transactions withTop REIT.

【7】Overview of Accounting(1) Assets, Liabilities, Principal and Profit / Loss
Please refer to accompanying Balance Sheets, Statements of Income and Retained Earnings, Statements ofUnitholders’ Equity, Notes to Financial Statements and Statements of Cash Dividends.

(2) Change in Depreciation Method
There are none applicable.

33

(3) Change in Valuation Methods of Real Estate, etc.
There are none applicable.

(4) Status of Investment Trust Beneficiary Certificates of Top REIT, etc.
There are none applicable.

【8】Others(1) Notice① Hold of the General Meeting of Unitholders
The Fourth General Meeting of Unitholders of Top REIT was held on July 26, 2011. These agenda items
were approved by general meeting of unitholders are as follows:First Item
Second Item

Agenda item
Partial amendments to the Articles ofIncorporation
Appointment of 1 Executive Officer

Third Item

Appointment of 2 substitute Executive
Officers

Fourth Item

Appointment of 2 Supervisory Directors

SummaryThis item was approved per the original proposal.
This item was approved per the original proposal andJumpei Norimatsu was appointed executive officer.
This item was approved per the original proposal,
Nobuhito Endo and Koji Murata were appointed
substitute executive officers.
This item was approved per the original proposal,
Yasuyuki Kuribayashi and Kunio Tsuneyama wereappointed supervisory directors.

② Board of Directors
There was no execution or modification of significant agreements approved by the Board of Directors of the
Top REIT during the fiscal period.

(2) Others
Unless otherwise stated, fractions less than the specified unit are rounded down to the nearest
specified unit for monetary amounts and rounded to the nearest specified unit for percentage
figures.

34II. Balance Sheets(Unit: thousand yen)
Tenth Fiscal Period(as of April 30, 2011)
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Deferred tax assets
Income taxes receivable
Other
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Total property, plant and equipment
Intangible assets
Assets in trust and other intangible assets
Other
Total intangible assets
Investments and other assets
Lease and guarantee deposits
Long-term prepaid expenses
Other
Total investments and other assets
Total noncurrent assets
Deferred assets
Investment corporation bond issuance costs
Total deferred assets
Total assets

35

Eleventh Fiscal Period(as of October 31, 2011)

8,244,212
4,204,759
28,260259,065
18
267
2,333
12,738,917

5,405,178
4,512,649
27,275236,504
21
319
1,845
10,183,794

1,116,573(129,310)
987,262
4,452(2,596)
1,855
11,436(9,210)
2,226
1,370
(560)
810
4,888,525
58,107,314(9,962,605)
48,144,709
680,914(199,312)
481,601
212,861(81,959)
130,902204,392(81,894)
122,498
118,234,009
172,994,401

1,143,383(145,279)
998,103
4,452(2,732)
1,719
11,436(9,493)
1,943
1,370
(683)
686
4,888,525
59,611,048(10,964,364)
48,646,683
699,737(219,949)
479,788
242,090(92,931)
149,159
227,793(92,531)
135,261
119,440,939
174,742,811

－
191
191

2,343
170
2,513

10,000389,548
157,734
557,282
173,551,875

10,000304,061
176,125
490,187
175,235,512

45,93245,932
186,336,725

40,42040,420185,459,727

(Unit: thousand yen)
Tenth Fiscal Period(as of April 30, 2011)

Eleventh Fiscal Period(as of October 31, 2011)

Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Current portion of long-term loans payable
Accounts payable – otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Derivatives liabilities
Provision for loss on disaster
Other
Total current liabilities

210,849―
19,175,000
262,699
254,237528
49,858868,261―
26,742
2,425

163,924―
36,675,000
254,070
261,532
512
63,072
941,986
―
747
3,647

20,850,602

38,364,493

8,500,000
66,430,000
144,487
5,993,537
79

8,500,000
48,862,500
144,487
5,342,641
35

81,068,104
101,918,707

62,849,665
101,214,158

82,260,100

82,260,100

2,157,918

1,985,468

2,157,918

1,985,468

84,418,018

84,245,568―――
84,418,018
186,336,725―
84,245,568
185,459,727

Noncurrent liabilities
Investment corporation bondLong-term loans payable
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Long-term advances received
Total noncurrent liabilities
Total liabilities
Net Assets
Unitholders’ equity
Unitholders’ capital
Surplus
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

36

Ⅲ. Statements of Income(Unit: thousand yen)
Tenth Fiscal Period(November 1, 2010 –April 30, 2011)

Eleventh Fiscal Period(May 1, 2011 –October 31, 2011)

Operating revenue
Rent revenue – real estate

5,947,270

5,661,876

Other lease business revenue

20,165

150,602

Total operating revenue

5,967,436

5,812,479

2,414,304

2,479,757

450,347

424,168

Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee

8,367

8,358

Administrative service fees

63,117

63,912

Directors’ compensations

6,900

6,600

Audit fee

10,00010,000

Other operating expenses
Total operating expenses
Operating income

42,80840,204

2,995,845

3,033,001

2,971,591

2,779,477

3,373

3,894

795

686

Non-operating income
Interest income
Reversal of dividends payable
Insurance income

2,235

2,195

Reversal of provision for loss on disaster

－

1,672

Other

144

－

6,549

8,448

Interest expenses

615,788613,254

Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance

42,03442,870

5,511

5,511

Borrowing related expenses

115,568

136,618

4,702

3,170

Total non-operating income
Non-operating expenses

Other
Total non-operating expenses
Ordinary income

783,605

801,426

2,194,535

1,986,499

1,361

－

1,361

－

Extraordinary income
Refunded Property taxes
Total extraordinary income
Extraordinary loss
Loss on disaster

10,277－

Provision for loss on disaster

26,742－

Total extraordinary loss

37,019－

Income before income taxes

2,158,876

1,986,499

986

1,041

Income taxes – current
Income taxes – deferred

(1)

(2)

Total income taxes

985

1,039

2,157,891

1,985,460

26

82,157,918

1,985,468

Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)37

IV. Statements of Changes in Net Assets (Unitholders’ Equity)(Unit: Thousand yen)
Tenth Fiscal Period(November 1, 2010 –April 30, 2011)

Eleventh Fiscal Period(May 1, 2011 –October 31, 2011)

Unitholders’ equity
Unitholders’ capital
Balance at the beginning of the period

82,260,100

82,260,100

Changes of items during the period
Total changes of items during the period――

82,260,100

82,260,100

2,204,126

2,157,918

Dividends from surplus(2,204,100)(2,157,910)

Net income

2,157,891

1,985,460

Total changes of items during the period(46,208)(172,449)

2,157,918

1,985,468

2,204,126

2,157,918

Dividends from surplus(2,204,100)(2,157,910)

Net income

2,157,891

1,985,460

Total changes of items during the period(46,208)(172,449)

2,157,918

1,985,468

84,464,226

84,418,018

Dividends from surplus(2,204,100)(2,157,910)

Net income

2,157,891

1,985,460

Total changes of items during the period(46,208)(172,449)

84,418,018

84,245,568(25,241)－

25,241－

25,241－――(25,241)－

25,241－

25,241－――

84,438,984

84,418,018

Dividends from surplus(2,204,100)(2,157,910)

Net income

2,157,891

1,985,460

Balance at the end of current period
Surplus
Unappropriated retained earnings (undisposed loss)
Balance at the beginning of the period
Changes of items during the period

Balance at the end of current period
Total surplus
Balance at the beginning of the period
Changes of items during the period

Balance at the end of current period
Total unitholders’ equity
Balance at the beginning of the period
Changes of items during the period

Balance at the end of current period
Valuation and translation adjustments
Deferred gains or losses on hedges
Balance at the beginning of the period
Changes of items during the period
Changes of items other than unitholders’ equity(net)
Total changes of items during the period
Balance at the end of current period
Total valuation and translation adjustments
Balance at the beginning of the period
Changes of items during the period
Changes of items other than unitholders’ equity(net)
Total changes of items during the period
Balance at the end of current period
Total net assets
Balance at the beginning of the period
Changes of items during the period

Changes of items other than unitholders’ equity (net)25,241－

Total changes of items during the period(20,966)(172,449)

84,418,018

84,245,568

Balance at the end of current period

38

V. Notes to Financial Statements
Note 1. Premise of the Going Concern
Tenth Fiscal Period (Reference)
For the period
from November 1, 2010
to April 30, 2011
There are none applicable

Eleventh Fiscal Period
For the period
from May 1, 2011
to October 31, 2011
There are none applicable

Note 2. Significant Accounting Policies

Classification

1.

Tenth Fiscal Period (Reference)

Eleventh Fiscal Period

For the period
from November 1, 2010
to April 30, 2011

For the period
from November 1, 2010
to April 30, 2011

Methodof (1) Property, Plant and Equipment (including trust (1) Property, Plant and Equipment (including trust
Depreciation andassets)assets)amortizationof
Adopts the straight-line method. Further, theAdopts the straight-line method. Further, theproperty, etc.
estimated useful lives of the major property, plant
estimated useful lives of the major property, plantand equipment are as follows.
and equipment are as follows.
Building
Structures
Machinery and equipment
Tools, furniture and fixtures2.

Treatment Methodof Differed Assets

3.

Standard
Posting
Provision

2~59 years
2~54 years
2~15 years
2~12 years

Building
Structures
Machinery and equipment
Tools, furniture and fixtures

2~59 years
2~54 years
2~15 years
2~12 years(2) Intangible Assets
Adopts the straight-line method.

(2) Intangible Assets
Adopts the straight-line method.

(3) Long-Term Prepaid Expenses
Adopts the straight-line method.

(3) Long-Term Prepaid Expenses
Adopts the straight-line method.

Investment Corporation Bonds Issuance Costs
Amortized on the straight-line method over thematurity period of the bonds

Investment Corporation Bonds Issuance Costs
Amortized on the straight-line method over thematurity period of the bondsfor Provision for Loss on Disaster
Provision for Loss on Disasterof
In order to prepare for payments for restoration
In order to prepare for payments for restoration
expenses for property, plant and equipment
expenses for property, plant and equipment
damaged in the Great East Japan Earthquake, thedamaged in the Great East Japan Earthquake, theamount that is reasonably estimated at the end ofamount that is reasonably estimated at the end of
the current period is posted.
the current period is posted.

39

4.

Standard
for Method of treatment concerning Taxes on Property Method of treatment concerning Taxes on Property
Posting of Income and Equipment
and Equipment
and Expenses
Top REIT adopts the method of treating property
Top REIT adopts the method of treating property
taxes, city planning taxes and depreciable asset
taxes, city planning taxes and depreciable asset
taxes, etc. on owned real estate, etc, as expenses
taxes, etc. on owned real estate, etc, as expenses
related to the rent business in the amountrelated to the rent business in the amountcorresponding to the management period out ofcorresponding to the management period out of
the assessed and determined taxation amount.
the assessed and determined taxation amount. In
addition, as for the acquisition of real estate or
beneficiary interests in trust in real estate, theadjustments equivalent to property tax for theacquired fiscal year paid to the transferor will be
included in acquisition costs, and thus will not berecorded as expenses in the corresponding period.
Furthermore, during the 11th fiscal period, theamount equivalent to the property taxes included
as the acquisition costs of real estate totaled 2,226
thousand yen.

5.

Treatment Method (lessee)(lessee)for
Lease
Among finance lease transactions other than thoseAmong finance lease transactions other thanTransaction
recognized as being a transfer of ownership of thethose recognized as being a transfer of ownershipleased property to the lessee, equipment leaseof the leased property to the lessee, equipment
transactions with a commencement date whichlease transactions with a commencement datefalls under the fiscal period that starts before April
which falls under the fiscal period that starts
1, 2008 are treated by accounting methods inbefore April 1, 2008 are treated by accounting
accordance with ordinary rent transactions.
methods in accordance with ordinary rent
transactions.

6.

Method of Hedge (1) Method of Hedge Accounting on Deferred
Accounting
Hedge, etc.
Deferred hedge accounting is adopted.
However, special treatment is adopted for thosethat meet the requirements for special treatment ofinterest rate swaps.
(2) Hedging Instruments and Hedged Items
Hedging instruments:
Interest rate swap transactions
Hedged items:
Borrowing interest rates(3) Hedging Policy
Top REIT enters into derivative transactions tohedge against risks stipulated in the Articles ofIncorporation in accordance with the financial
policy.
(4) Method for Assessing the Effectiveness of
Hedging
The effectiveness of hedging is assessed bycomparing the cumulative change in hedged items
and the cumulative change in hedging instruments
and then examining the ratio of the amount ofchange in both.

40(1) Method of Hedge Accounting on Deferred
Hedge, etc.
Deferred hedge accounting is adopted.
However, special treatment is adopted for thosethat meet the requirements for special treatment
of interest rate swaps.
(2) Hedging Instruments and Hedged Items
Hedging instruments:
Interest rate swap transactions
Hedged items:
Borrowing interest rates(3) Hedging Policy
Top REIT enters into derivative transactions tohedge against risks stipulated in the Articles ofIncorporation in accordance with the financial
policy.
(4) Method for Assessing the Effectiveness of
Hedging
The effectiveness of hedging is assessed bycomparing the cumulative change in hedged
items and the cumulative change in hedging
instruments and then examining the ratio of theamount of change in both.

7.

Other Significant (1) Accounting Treatment Method on Trust(1) Accounting Treatment Method on Trust
Items
Beneficiary Interest in Real Estate as Property in
Beneficiary Interest in Real Estate as Property in
Fundamental to
Trust
Trust
PreparingtheFinancial
For the trust beneficiary interest in owned real
For the trust beneficiary interest in owned realStatements
estate, all accounts of assets and liabilities held in
estate, all accounts of assets and liabilities held in
trust as well as all income generated and expenses
trust as well as all income generated and expenses
incurred from the trust are recorded in the
incurred from the trust are recorded in theconcerned items accounts on the balance sheet
concerned items accounts on the balance sheet
and statements of income and retained earnings,
and statements of income and retained earnings,
respectively.
respectively.
Furthermore, the following significant accounts
are separately stated in the balance sheet for
properties in trust recorded in relevant accounts.

Furthermore, the following significant accounts
are separately stated in the balance sheet for
properties in trust recorded in relevant accounts.

1.Cash and Deposits in trust
2.Building in trust, Structures in trust,machinery and equipment in trust, Tools,
furniture and fixtures in trust, otherproperties in trust, land in trust
3.Land leasehold right in trust
4.Lease and guarantee deposits in trust
5.Tenant leasehold and security deposits in trust

1.Cash and Deposits in trust
2.Building in trust, Structures in trust,machinery and equipment in trust, Tools,
furniture and fixtures in trust, otherproperties in trust, land in trust, otherintangible assets in trust
3.Land leasehold right in trust
4.Lease and guarantee deposits in trust
5.Tenant leasehold and security deposits intrust(2) Accounting Treatment Method of Consumption
Taxes
National and local consumption taxes areaccounted with the consumption taxes excluded.
Furthermore, consumption taxes related toacquisition of properties, which has not been
deducted, is included in the acquisition costs of
the respective properties.

41(2) Accounting Treatment Method of Consumption
Taxes
National and local consumption taxes areaccounted with the consumption taxes excluded.
Furthermore, consumption taxes related toacquisition of properties, which has not been
deducted, is included in the acquisition costs of
the respective properties.

Note 3. Additional Information

Tenth Fiscal Period (Reference)

Eleventh Fiscal Period

For the period

For the period

from November 1, 2010

from May 1, 2011

to April 30, 2011

to October 31, 2011.

Effective from the changes in accounting and revisions of pasterrors to be conducted after the beginning of the fiscal period－

ended October 31, 2011, Top REIT applied the "AccountingStandard for Accounting Changes and Error Corrections"(Accounting Standards Board of Japan (ASBJ) Statement No.
24 issued on December 4, 2009) and the "Guidance on
Accounting Standard for Accounting Changes and Error
Corrections" (ASBJ Guidance No. 24 issued on December 4,2009).

42

Note 4. Changes in Presentation Method

Statements ofTenth Fiscal Period (Reference)

Eleventh Fiscal Period

For the period

For the period

from November 1, 2010

from May 1, 2011

to April 30, 2011

to October 31, 2011

Income andRetained Earnings

Income from insurance (273 thousand yen in the previous
period),

which

has

been

presented

withinThere is none applicable“other”

non-operating income until the previous period, is separately
stated as “insurance income” as of the current period because it
exceeds ten-hundredths of non-operating income.

Note 5. Balance Sheet
Tenth Fiscal Period (Reference)
As of

Eleventh Fiscal Period

April 30, 2011

As of

October 31, 2011

1. Asset Pledged as Collateral and Secured Liabilities

1. Asset Pledged as Collateral and Secured Liabilities

Assets pledged as collateral are as follows.

Assets pledged as collateral are as follows.

(Thousand yen)(Thousand yen)

Building in trust
Structures in trust

2,499,645

Building in trust

89,101

Structures in trust

2,456,506
86,428Land in trust

8,892,092

Land in trust

8,892,092

Total

11,480,839

Total

11,435,026

Secured liabilities are as follows.

Secured liabilities are as follows.

(Thousand yen)(Thousand yen)

Tenantleaseholdandsecurity

719,800

Tenant leasehold and security

deposits in trust

719,800

deposits in trust

Total

719,800

Total

719,800

2. Minimum Total Net Asset Designated in Article 67-4 in the 2. Minimum Total Net Asset Designated in Article 67-4 in theInvestment Trust Law

Investment Trust Law
50,000thousand yen

43

50,000thousand yen

Note 6. Statement of Income and Retained Earnings
1. Breakdown of Property Rental Business Revenues and Expenses(Thousand yen)

Tenth Fiscal Period(Reference)

Eleventh Fiscal Period

For the period
from November 1, 2010
to April 30, 2011

For the period
from May 1, 2011
to October 31, 2011

A. Revenue related to rent business
Rental and parking revenue

5,573,158

5,304,873

Other lease revenue

374,112357,003

Other lease business revenue

19,150149,523

Cancellation penalty received

1,015

1,079

5,967,436

5,812,479

Property management costs and fees

389,591

389,317

Utilities expenses

202,422

208,408

Property-related taxes and dues

586,678

609,130

Non-life insurance expenses

8,839

9,090

110,594

175,945

1,086,104

1,060,958

30,072

26,906

Total expenses related to rent business

2,414,304

2,479,757

C. Revenue and expenses of real estate rent business (A − B)

3,553,132

3,332,721

Total revenue related to rent business
B. Expenses related to rent business:

Repair expenses
Depreciation and amortization
Other

2. Breakdown of extraordinary loss

Breakdown of extraordinary loss

Tenth Fiscal Period (Reference)
For the period
from November 1, 2010
to April 30, 2011
These are restoration expenses, etc.
for property, plant and equipmentin accordance with the Great East
Japan Earthquake.

44

Eleventh Fiscal Period
For the period
from May 1, 2011
to October 31, 2011－

Note 7. Unitholders’ Equity(1) Number of units

Number of issuable investment units
Number of investment units issued and outstanding
Note 8.

Tenth Fiscal Period(Reference)

Eleventh Fiscal Period

For the period
from November 1, 2010
to April 30, 2011

For the period
from May 1, 2011
to October 31, 2011

2,000,000 units

2,000,000 units

155,000 units

155,000 unitsTax Effect Accounting

1. Breakdown of deferred gains or losses by cause(Deferred Tax Assets)(Thousand yen)

Tenth Fiscal Period(Reference)

Eleventh Fiscal Period

For the period
from November 1, 2010
to April 30, 2011

For the period
from May 1, 2011
to October 31, 2011

Income taxes – current payable

18

21

Deferred gains or losses on hedges－－

Total deferred tax assets

18

21(Net deferred tax assets)

18

21

2. Breakdown by main items that caused differences between the effective statutory tax rate and the effective tax
rate after applying tax effect accounting.

Effective statutory tax rate

Tenth Fiscal Period(Reference)

Eleventh Fiscal Period

For the period
from November 1, 2010
to April 30, 2011

For the period
from May 1, 2011
to October 31, 201139.33%

39.33%(39.31%)(39.31%)

0.03%

0.03%

0.05%

0.05%

(Adjustment)
Deductible cash distributions
Other
Effective tax rate after applying tax effect accounting

45

3.Content and Impact of Changes in Income Tax, Etc. if Such Changes Were Made after the Settlement Dates
Tenth Fiscal Period (Reference)
For the period
from November 1, 2010
to April 30, 2011

Content and Impact of Changes
in Income Tax, Etc. if Such
Changes Were Made after the
Settlement Dates－

Eleventh Fiscal Period
For the period
from May 1, 2011
to October 31, 2011
The Act to Partially Revise the Income
Tax Act, etc., in Order to Construct a
Tax System Addressing Changes in theSocio-Economic Structure (Act No. 114
of 2011) and the Act on Special
MeasuresforSecuring

Financial

Resources

toNecessary
Implement

Measures to Rebuild Areas Devastatedby the Great East Japan Earthquake (ActNo. 117 of 2011) were promulgated on
December 2, 2011. In accordance withthe promulgation, the effective statutory
tax rate used to calculate the deferred tax
assetsanddeferredtax

liabilities

concerning the temporary differences,etc.

expected to be reversed in theaccounting periods starting on May 1,2012 and after will be changed.

Thechange will have no impact on thedeferred tax assets and the deferred tax
liabilities of Top REIT.

Note 9.

Leases

1. Finance lease transactions other than those recognized as being a transfer of ownership of the leased property to
the lessee
As lessee:(1)Amount equivalent to acquisition value, amount equivalent to accumulated depreciation and amortization,
and amount equivalent to the balance at the end of the fiscal period for leased properties(Thousand yen)
Eleventh Fiscal Period

Tenth Fiscal Period (Reference)

Machinery and equipment
Total

For the period
from November 1, 2010
to April 30, 2011
AmountAmountAmountequivalent toequivalent toequivalent toaccumulatedbalance at end
acquisition
depreciationof periodvalue
andamortization
4,950
3,948
1,001
4,950

3,948

1,001

For the period
from May 1, 2011
to October 31, 2011
AmountAmountAmountequivalent toequivalent toequivalent toaccumulatedbalance atacquisition
depreciation
end of period
value
and
amortization
4,950
4,301
648
4,950

4,301

(Note) The amounts are shown for Top REIT’s portion. The amounts are rounded down to the nearest thousand yen.

46

648

(2) Amount equivalent to the balance of future lease payments at the end of the fiscal period(Thousand yen)

Due within 1 year
Due over 1 year

Tenth Fiscal Period (Reference)
For the period
from November 1, 2010
to April 30, 2011
766
326

Total

Eleventh Fiscal Period
For the period
from May 1, 2011
to October 31, 2011
713
－
713

1,093

(Note) The amounts are shown for Top REIT’s portion. The amounts are rounded down to the nearest thousand yen.

(3) Lease fees payable, amount equivalent to depreciation and amortization and amount equivalent to interest
expenses(Thousand yen)

Lease fees payable

Tenth Fiscal Period (Reference)
For the period
from November 1, 2010
to April 30, 2011
395

Eleventh Fiscal Period
For the period
from May 1, 2011
to October 31, 2011
395

Amount equivalent to depreciation andamortization

353

353

Amount equivalent to interest expenses

21

15(Note) The amounts are shown for Top REIT’s portion. The amounts are rounded down to the nearest thousand yen.

(4) Method for calculating amount equivalent to depreciation and amortization and amount equivalent to interest
expenses• The amounts are calculated by the straight-line method, with the lease period as the useful life and zero as theresidual value.
• The amount equivalent to interest expenses is calculated as the amount of difference in the total amount oflease fees and amount posted as lease assets, with the method for allocation to the respective fiscal periods
based on the interest method.
Note 10. Financial Instruments
Effective from the fiscal period ended October 31, 2010, Top REIT adopted the revised Accounting Standard,“Accounting Standard for Financial Instruments” (Accounting Standards Board of Japan (“ASBJ”) Statement
No.10 revised on March 10, 2080) and the “Guidance on Disclosures about Fair Value of Financial Instruments”(ASBJ Guidance No.19 revised on March 10, 2080).
Information on financial instruments for the periods ended April 30, 2011 and October 31, 2011 required pursuant
to the revised accounting standards are as follows:
1. Matters Concerning Status of Financial Instruments(1) Policy for financial instruments
Top REIT procures necessary funds through bank loans, issuance of investment corporation bonds andissuance of investment units, with the aim of contributing to steady growth of assets managed and stableearnings from a mid-and long-term view in accordance with the financial policy stated by the asset manager.
Although management of surplus funds by using financial instruments targeting securities, monetary claims,
etc. in accordance with the investment limitations stipulated in the Articles of Incorporation, as a general rule,the surplus funds are managed by placing them in deposit.
Furthermore, derivative transactions shall be limited to those for the purpose of hedging interest rate
fluctuation risk and other risks in accordance with the investment limitations.

47

(2) Financial Instruments, Their Risks and Risk Management System
Top REIT and Top REIT Asset Management, Co., Ltd. (TRAM), the asset management company of Top
REIT, strive for advancing risk management through regular inspection of the adequacy and effectivenessof risk management systems. Top REIT and TRAM adopt the structure that inspects various risks regularly
and reflects the results of inspection on the risk management plan and the management plans. In addition,
Top REIT and TRAM inspect risks and reflect the results of inspection in the decision-making in a timely
manner through various transactions.
Top REIT and TRAM strive for risk management based on the incorporation rules of the asset manager
concerning individual financial instruments and their risks, and risk management system.
① Credit risk concerning deposit and derivative transaction
Deposits, especially time deposits of large amounts, are used for investment of Top REIT’s surplus funds,
these deposits are exposed to credit risk of bankruptcy of the depository financial institutions and others.
Top REIT minimizes the risk through such measures as limiting them to short term deposits and setting
the standard of credit rating for depository financial institutions and establishing rules for the ceilingamounts of deposit. Derivative transactions are exposed to credit risks of transaction parties, Top REIT
limits credit risks by setting the standard of credit rating in transaction financial institutions and putting inplace a structure to monitor deals, the amount of estimated values and credit status of transaction partners.
② Market risk concerning loans
Proceeds from loans and investment corporation bonds are used mainly to acquire real estate properties
and refinance existing loans and bonds.
Loans, especially floating-rate borrowings, are exposed to market risks, Top REIT manages to hedge
against interest-raising risk by fixed-rate interests entered into interest swap transactions and setting thetarget of fixed- rate interest ratios. In addition, when procuring new loans and refinancing, Top REIT
inspects interest-raising risks and studies borrowing methods that minimize risks. For the hedging
instruments and hedged items, hedging policy, method for assessing the effectiveness of hedging, etc. inhedge accounting, please refer to “6. Methods of Hedge Accounting” under “Note 2. Significant
Accounting Policies” above.
➂

Liquidity risk concerning borrowings and tenant leasehold used in cash flow, etc
Borrowings, investment corporation bonds and tenant leasehold are exposed to liquidity risk at the time of
repayment of borrowing, redemption of investment corporation bonds and return of tenant leaseholds, but
Top REIT manages these risks by preparing monthly fund management plans. In addition, Top REIT
has established a management system for identifying liquidity risks regularly and at the time of varioustransactions by calculating the total amount of payments assumed, which is arrived at by taking the total
amount of borrowings and tenant leaseholds, etc. that are to become due for repayment in the fiscal
period and adding forecast dividends, and conducting a comparative inspection with liquidity on handthat factors in the liquidity of portfolio real estate properties and other assets under management.

(3) Supplemental Explanation About the Fair Value of Financial Instruments
The fair value of financial instruments is based on the quoted market price, if applicable. When there is noquoted market price available, fair value is reasonably estimated. Certain assumptions are used for theestimation of fair value. Accordingly, the result of such estimation may change if different assumptions areused. Furthermore, the contractual amounts of derivative transactions stated in “2. Matters Concerning
Estimated Fair Value, etc. of Financial Instruments” below do not represent the market risk involved inthese derivative transactions.

48

2. Matters Concerning Estimated Fair Value, etc. of Financial Instruments
For the period from November 1, 2010 to April 30, 2011 (10th fiscal period) (Reference)
The following table includes the book value, fair value and valuation difference of financial instruments as ofApril 30, 2011. The financial instruments that are recognized to be extremely difficult to estimate the fair value
for are not included in the table. (Please refer to Note 2).
(Thousand yen)

As of April 30, 2011
Book value

Fair value

Difference(1) Cash and deposits

8,244,212

8,244,212－(2) Cash and deposits in trust

4,204,759

4,204,759－

Total assets(3) Current portion of long-term loans
payable(4) Investment corporation bond

12,448,972

12,448,972－

19,175,000

19,176,306

1,306

8,500,000

8,500,850

850(5) Long-term loans payable

66,430,000

66,978,398

548,398

Total liabilities

94,105,000

94,655,554

550,554

－

－

－

－

－

－

Derivative transactions
Applied hedge accounting
Total derivative transactions(Note 1) Methods for calculating the fair value of financial instruments and matters related to derivative transactions

Assets(1) Cash and deposits, and(2) Cash and deposits in trust
As these are settled within a short period of time, the fair value is approximately the same as
the book value and is thus stated at that book value.
Liabilities(3) Current portion of long-term loans payable, and(5) Long-term loans payable
For long-term loans payable with floating interest rates, the fair value would be almost equal
to the book value because such loans reflect the market interest rate in a short-term period andthus are based on the concerned book value.
For fixed-rate long-term loans payable, the fair value is the present value calculated bydiscounting the sum total amount of its principal and interest payment on a rate reasonably
estimated to be applicable to similar long-term loans.
Furthermore, the fair value of long-term loans payable that qualifies for the special
treatment of interest-rate swap (refer to Derivative Transactions below) is the present
value calculated by the discounted sum total of its principal and interest payments net
calculated from the interest-rate swap on a rate reasonably estimated to be applicable tosimilar fixed-rate long-term loans.
(4) Investment corporation bonds
The fair value of investment corporation bonds issued by Top REIT is based on reference
trading statistics of the Japan Securities Dealers Association.

49

Derivative Transactions
Hedge accounting applied
The following are the contract values or values corresponding to the principal amounts as stipulated bycontracts for derivative transactions as of date of settlement for each hedge accounting method applied.
(Thousand yen)Hedge
accounting
methodType of
Hedge item
derivativetransactions
Interest rate
Specialtreatment ofLong-termswapinterest-rateloans payable
Pay fixed /swaps
receive floating

Contract amountMore than
one year

Fair
value

33,500,000 33,500,000

Method of calculating
the fair value(*1)(*1) Since the derivative transactions accounted by special treatment of interest-rate swaps are treated as one
transaction together with long-term loans payable which is the hedged item, the fair value is included in the fairvalue of the long-term loans payable (refer to Note 1(5)).
(Note 2) Financial instruments which are recognized to be extremely difficult to estimate the fair value of are as follows(Thousand yen)
Item
Carrying value
Tenant leasehold and security deposits in trust (*2)
5,993,537
Total
5,993,537(*2) Tenant leasehold and security deposits in trust are not subject to fair value disclosure because arriving at thefair value is extremely difficult due to the fact that the contract termination period, which is the repayment
date, is difficult to reasonably estimate as leases may be cancelled, renewed or re-signed even if a lease term
is set in the lease contract, making a reasonable estimate of future cash flows difficult.
(Note 3) Redemption Schedule amount for Monetary Claims after the end of the period(Thousand yen)
Due within one year
8,244,212
4,204,759
12,448,972

Cash and deposits
Cash and deposits in trust
Total(Note 4) Repayment Schedule amount for Investment Corporation Bonds and Long-Term Loans Payable after the end of
the period(Thousand yen)
Due after
Due after
Due after
Due after
Due after
Due withinthreefour to five
two to three
one to two
five years
one yearto four
years
years
years
Investment
corporation
bonds

－

－

－

－

8,500,000－

Long-termloans payable

19,175,000

36,735,000

135,000

4,135,000

23,535,000

1,890,000

Total

19,175,000

36,735,000

135,000

4,135,000

32,035,000

1,890,000

50

For the period from May 1, 2011 to October 31, 2011 (11th fiscal period)
The following table includes the book value, fair value and valuation difference of financial instruments as ofApril 30, 2011. The financial instruments that are recognized to be extremely difficult to estimate the fair value
for are not included in the table. (Please refer to Note 2).
(Thousand yen)

As of October 31, 2011
Book value

Fair value

Difference(1) Cash and deposits

5,405,178

5,405,178－(2) Cash and deposits in trust

4,512,649

4,512,649－

Total assets(3) Current portion of long-term loans
payable(4) Investment corporation bond

9,917,828

9,917,828－

36,675,000

36,676,430

1,430

8,500,000

8,543,350

43,35048,862,500

49,431,547

569,047

99,79999,799－94,137,299

94,751,127

613,828

－

－

－

－

－

－

(5) Long-term loans payable(6) Tenant leasehold anddeposits in trust
Total liabilities

security

Derivative transactions
Applied hedge accounting
Total derivative transactions(Note 1) Methods for calculating the fair value of financial instruments and matters related to derivative transactions

Assets(1) Cash and deposits, and(2) Cash and deposits in trust
As these are settled within a short period of time, the fair value is approximately the same as
the book value and is thus stated at that book value.
Liabilities(3) Current portion of long-term loans payable, and(5) Long-term loans payable
For long-term loans payable with floating interest rates, the fair value would be almost equal
to the book value because such loans reflect the market interest rate in a short-term period andthus are based on the concerned book value.
For fixed-rate long-term loans payable, the fair value is the present value calculated bydiscounting the sum total amount of its principal and interest payment on a rate reasonably
estimated to be applicable to similar long-term loans.
Furthermore, the fair value of long-term loans payable that qualifies for the special
treatment of interest-rate swap (refer to Derivative Transactions below) is the present
value calculated by the discounted sum total of its principal and interest payments net
calculated from the interest-rate swap on a rate reasonably estimated to be applicable tosimilar fixed-rate long-term loans.
(4) Investment corporation bonds
The fair value of investment corporation bonds issued by Top REIT is based on reference
trading statistics of the Japan Securities Dealers Association.
(6) Tenant leasehold and security deposits in trust
As these are settled within a short period of time, the fair value is approximately the same as
the book value and is thus stated at that book value.

51

Derivative Transactions
Hedge accounting applied
The following are the contract values or values corresponding to the principal amounts as stipulated bycontracts for derivative transactions as of date of settlement for each hedge accounting method applied.
(Thousand yen)Hedge
accounting
methodType of
Hedge item
derivativetransactions
Interest rate
Specialtreatment ofLong-termswapinterest-rateloans payable
Pay fixed /swaps
receive floating

Contract amountMore than
one year

Fair
value

33,500,000 25,000,000

Method of calculating thefair value(*1)(*1) Since the derivative transactions accounted by special treatment of interest-rate swaps are treated as one
transaction together with long-term loans payable which is the hedged item, the fair value is included in the fairvalue of the long-term loans payable (refer to Note 1(5)).
(Note 2) Financial instruments which are recognized to be extremely difficult to estimate the fair value of are as follows(Thousand yen)
Item
Carrying value
Tenant leasehold and security deposits in trust (*2)
5,242,841
Total
5,242,841(*2) Tenant leasehold and security deposits in trust which excluded the above (6) are not subject to fair value
disclosure because arriving at the fair value is extremely difficult due to the fact that the contract termination
period, which is the repayment date, is difficult to reasonably estimate as leases may be cancelled, renewed or
re-signed even if a lease term is set in the lease contract, making a reasonable estimate of future cash flows
difficult.
(Note 3) Redemption Schedule amount for Monetary Claims after the end of the period(Thousand yen)
Due within one year
5,405,178
4,512,649
9,917,828

Cash and deposits
Cash and deposits in trust
Total(Note 4) Repayment Schedule amount for Investment Corporation Bonds and Long-Term Loans Payable after the end of
the period(Thousand yen)
Due after
Due after
Due after
Due after
Due after
Due withinthreefour to five
two to three
one to two
five years
one yearto four
years
years
years
Investment
corporation
bonds

－

－

－

8,500,000－－

Long-term
loans
payable36,675,000

19,235,000

4,135,000

135,000

23,535,000

1,822,500

Total

36,675,000

19,235,000

4,135,000

8,635,000

23,535,000

1,822,500

Note 11. Investment and Rental Properties
Top REIT owns in the portfolio certain office buildings (including land), etc. located in Tokyo and other areas
which are for lease.
The following table is the amount posted on the balance sheet, amounts of increase (decrease) during the previous
period and fair value of these investment and rental properties as of the settlement date.

52

For the period from November 1, 2010 to April 30, 2011 (10th fiscal period) (Reference)(Thousand yen)Book value
Balance at the
beginning of the period
173,618,539

Change during the period(624,137)

Balance at the end of
the period
172,994,401

Fair value at end of theperiod170,670,000(Note 1) Summary of corresponding investment and rental properties are presented in “3-Status of Investment Assets.”(Note 2) Book value represents the acquisition cost less accumulated depreciation and amortization.
(Note 3) Of the amounts of increase (decrease) during the current period for investment and rental properties, the amount ofdecrease is mainly due to the depreciation and amortization.
(Note 4) Fair value at the end of the period is the appraisal value as appraised by an outside real estate appraiser.

Furthermore, loss and profit concerning investment and rental properties for fiscal period ended April 30, 2011 ispresented in “Note 6. Statement of Income and Retained Earnings.”
For the period from May 1, 2011 to October 31, 2011 (11th fiscal period)(Thousand yen)Book value
Balance at the
beginning of the period
172,994,401

Change during the period
1,750,753

Balance at the end of
the period
174,745,154

Fair value at end of theperiod172,310,000(Note 1) Summary of corresponding investment and rental properties are presented in “3-Status of Investment Assets.”(Note 2) Book value represents the acquisition cost less accumulated depreciation and amortization.
(Note 3) Of the amounts of increase (decrease) during the current period for investment and rental properties, the amount of
increase is primarily attributable acquisition of Impress Musashi-Koganei (1,323,817 thousand yen) and TOP
Residence Yoga (1,251,527 thousand yen), and decrease is mainly due to the depreciation and amortization.
(Note 4) Fair value at the end of the period is the appraisal value as appraised by an outside real estate appraiser. Furthermore,fair value at the end of the period of Nittetsu Honmachi Building is calculated based on the disposal price(1,300,000 thousand yen) in sales agreement on October 28, 2011.

Furthermore, loss and profit concerning investment and rental properties for fiscal period ended October 31, 2011 ispresented in “Note 6. Statement of Income and Retained Earnings.”
Note 12. Transactions with Interested Parties
For the period from November 1, 2010 to April 30, 2011 (10th fiscal period) (Reference)
Attribution

AssetscustodianCompany
nameRatio ofBusiness investment
units
description heldamong totalor
number ofoccupation investment
units

The
Sumitomo
Trust and Banking
BankingCo., Ltd.

2.05%

Type of transaction

Amount oftransaction(thousand yen)
(Note)

Item in balance
sheetsAdministrative
service fee

63,117 Accounts
payable-other

Trust fees

17,737

Other fees paid

1,373 Operating
accounts payable

Property management
expenses

1,250

Other non-operating
expenses

Borrowing related
expenses

Investment
corporation bondrelated expenses

Balance atperiod end(thousand yen)
(Note)―

Long-term
342 prepaid expenses

2,580

Prepaid expenses

720

Long-term
39,913 prepaid expenses

129,372

Prepaid expenses

72,567

Accounts
payable-other623 Investment
corporation bondissuance
expenses(Note) Consumption tax, etc. are excluded from the amounts of transactions. Consumption tax, etc. are included in thebalances at end period, but excluded only for investment corporation bond issuance costs.

53

57,441

53

4,672

Furthermore, transaction terms are determined based on prevailing market conditions.

For the period from May 1, 2011 to October 31, 2011 (11th fiscal period)
Attribution

AssetscustodianCompany
nameRatio ofBusiness investment
units
description held
among
total
or
numberofoccupation investment units

The
Sumitomo
Trust and Banking
BankingCo., Ltd.

Type of transaction

Amount oftransaction(thousand yen)
(Note)

Item in balance
sheetsAdministrative
service fee

63,912 Accounts
payable-other

Trust fees

17,750

Other fees paid

1,369 Operating
accounts payable

Property management
expenses

1,250

Other
expenses

operating

2.05% Other non-operating
expenses

Borrowing related
expenses

Balance atperiod end(thousand yen)
(Note)
57,382―729 Accounts
payable-other－

Long-term
342 prepaid expenses

2,220

Prepaid expenses

720

Long-term
51,145 prepaid expenses

103,233

Prepaid expenses

58,601

Accounts
payable-other

Investment
corporation bondrelated expenses

54

624 Investment
corporation bondissuance
expenses(Note) Consumption tax, etc. are excluded from the amounts of transactions. Consumption tax, etc. are included in thebalances at end period, but excluded only for investment corporation bond issuance costs.
Furthermore, transaction terms are determined based on prevailing market conditions.

4,111

Note 13. Per Unit Information
Tenth Fiscal Period (Reference)

Eleventh Fiscal Period

For the period

For the period

from November 1, 2010

from May 1, 2011

to April 30, 2011

to October 31, 2011

Net Assets per Unit

544,632 yen

Net Assets per Unit

543,520 yen

Net Income per Unit

13,922 yen

Net Income per Unit

12,809 yen

Diluted net income per unit has not been presented since

Diluted net income per unit has not been presented since

there are no outstanding warrants or convertible bonds.

there are no outstanding warrants or convertible bonds.

(Note)The per unit amounts are rounded to the nearest yen.

54

(Note)Base of calculation of net income per unit is as follows:
Tenth Fiscal Period (Reference)

Eleventh Fiscal Period

For the period

For the period

from November 1, 2010

from May 1, 2011

to April 30, 2011

to October 31, 2011

Net Income (thousand yen)Amounts not attributable to ordinary unitholders(thousand yen)
Net income attributable to ordinary investment
unit (thousand yen)
Weighted-average number of units during theperiod (unit)

2,157,891

1,985,460――

2,157,891

1,985,460

155,000

155,000

Note 14. Significant Subsequent Events
Tenth Fiscal Period (Reference)

Eleventh Fiscal Period

For the period

For the period

from November 1, 2010

from May 1, 2011

to April 30, 2011

to October 31, 2011
Regarding the Disposition of Assets

There is none applicable

Top REIT has disposed the owned property described below
on November 25, 2011, after the end of the eleventh fiscal
period (October 31, 2011). The overview of the dispositionof the property is as follows.
<Overview of Disposition>(x) Disposed Assets: Trust beneficiary interest in real estatein Japan(xi) Name of Property: Nittetsu Honmachi Building(xii) Address: 1-10-24, Utsubohonmachi, Nishi Ward, Osaka
City, Osaka (residential building address)(xiii) Disposition Price: ¥1,300 million(xiv) Book Value: ¥1,003 million (as of October 31, 2011)(xv) Capital Gains: Approximately ¥250 million(xvi) Sales Agreement Date: October 28, 2011(xvii) Disposition Date: November 25, 2011
(vix)

55

Purchaser: SK Housing Corporation

VI. Statements of Cash Dividend Distributions

Classification

Tenth Fiscal Period (Reference)
For the period
from November 1, 2010
to April 30, 2011
Amount(yen) (Note 1)

Eleventh Fiscal Period
For the period
from May 1, 2011
to October 31, 2011
Amount(yen) (Note 2)

I. Unappropriated retained earnings

2,157,918,140

1,985,468,894

II. Total Amount of Dividends(Dividend per unit)
III. Retained earnings brought
forward2,157,910,000(13,922)8,140

1,985,395,000(12,809)73,894Note 1: In accordance with the “cash distribution policy” stipulated in Article 34 of the Articles of Incorporation, the amounts ofdividends are limited to the amounts of income. The article also stipulates the policy that “Top REIT shall distribute amountin excess of the amount equivalent to 90% of its distributable profits as stipulated in Article 67-15 of the Special Taxation
Measures Law.” Based on these policies, Top REIT decided on a total distribution of 2,157,910,000 yen as distribution ofincome for the period. This is the maximum value arrived at when the number of units issued and outstanding (155,000
units) is multiplied by an integer, within the limit of unappropriated retained earnings for the fiscal period.
Furthermore, Top REIT does not make cash distributions in excess of the profit as stipulated in Article 34-2 of the
Articles of Incorporation.
Note 2: In accordance with the “cash distribution policy” stipulated in Article 34 of the Articles of Incorporation, the amounts ofdividends are limited to the amounts of income. The article also stipulates the policy that “Top REIT shall distribute amountin excess of the amount equivalent to 90% of its distributable profits as stipulated in Article 67-15 of the Special Taxation
Measures Law.” Based on these policies, Top REIT decided on a total distribution of 1,985,395,000 yen as distribution ofincome for the period. This is the maximum value arrived at when the number of units issued and outstanding (155,000
units) is multiplied by an integer, within the limit of unappropriated retained earnings for the fiscal period.
Furthermore, Top REIT does not make cash distributions in excess of the profit as stipulated in Article 34-2 of the
Articles of Incorporation.

Disclaimer:
The accompanying English financial information, comprising of balance sheets, statements of retained
earnings, statements of changes in unitholders’ capital, notes to financial information and statements of cash
dividends, have been translated from the Japanese financial statements of Top REIT prepared in accordancewith the Law Concerning Investment Trusts and Investment Corporations of Japan.
Under Article 130 of the Law Concerning Investment Trusts and Investment Corporations of Japan, theJapanese financial statements for the fiscal period ended October 31, 2011 have been audited by KPMG
AZUSA, in accordance with auditing standards generally accepted in Japan. However, this English translationof the Japanese language report of independent auditors is not attached herein because the accompanying
English translation of balance sheets, statements of retained earnings, statements of changes in unitholders’capital, notes to financial information and statements of cash dividends are unaudited.

56

VII. Statements of Cash Flows (Reference Information)(Unit: thousand yen)
Tenth Fiscal Period(Reference)(November 1, 2010 –April 30, 2011)

Eleventh Fiscal Period(May 1, 2011 –October 31, 2011)

Net cash provided by (used in) operating activities
Income before income taxes

2,158,876
1,086,104
―
21
5,511
(3,373)657,823―
26,742
14,206243―(8,494)―(5,169)(8,528)(84,285)
57,546(190,999)(17,961)3,688,263

1,986,499
1,060,958
―
21
5,511
(3,894)
656,125(1,672)
―
831
(51)
―
22,560―(60,823)(16,847)
13,21473,72585,486(85,204)
3,736,441

3,757(664,738)
(904)

4,396
(648,830)(24,323)(1,057)

3,026,378

3,066,626(300,000)
400,000(366)(417,894)―(2,105)646,653(645,250)(318,962)――(26,283)(2,692,868)(2,466)―70,026(720,768)(3,372,360)

Net cash provided by (used in) financing activities
Increase in short-term loans payable
Decrease in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Dividends paid
Net cash provided by (used in) financing activities

6,700,000(13,400,000)
23,400,000(16,767,500)(2,204,100)(2,271,600)―――(67,500)(2,157,910)(2,225,410)

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

435,816
12,013,156
12,448,972(2,531,143)
12,448,972
9,917,828

Depreciation and amortization
Amortization of deferred organization expenses
Amortization of right of trademark
Amortization of investment corporation bond issuance costs
Interest income and interest on securities
Interest expenses
Reversal of provision for loss on disaster
Provision for loss on disaster
Decrease (increase) in operating accounts receivable
Decrease (increase) in income taxes receivable
Decrease (increase) in consumption taxes receivable
Decrease (increase) in prepaid expenses
Decrease (increase) in other current assets
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable – other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in advances received
Decrease (increase) in long-term prepaid expenses
Other, net
SubtotalInterest income received
Interest expenses paid
Payment for Loss on disaster
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Purchase of intangible assets in trust
Repayments of tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits in trust
Repayments of tenant leasehold and security deposits in trust
Net cash provided by (used in) investing activities

57

Note Concerning Significant Accounting Policy [Reference Information]

Classification
Scope
of
funds
in
statements ofcash flows

Tenth Fiscal Period (Reference)
For the period
from November 1, 2010
to April 30, 2011
Funds (cash and cash equivalents) in statements ofcash flows consist of cash on hand and cash in trust,deposits placed with banks and deposits in trust thatcan be withdrawn at any time, and short-term
investments that are highly liquid and easily
convertible to cash, have a low risk of pricefluctuation and mature within three months from thedate of purchase.

Eleventh Fiscal Period
For the period
from May 1, 2011
to October 31, 2011
Funds (cash and cash equivalents) in statements ofcash flows consist of cash on hand and cash in trust,deposits placed with banks and deposits in trust thatcan be withdrawn at any time, and short-term
investments that are highly liquid and easily
convertible to cash, have a low risk of pricefluctuation and mature within three months from thedate of purchase.

Note Concerning Statements of Cash Flows [Reference Information]
Tenth Fiscal Period (Reference)
For the period
from November 1, 2010
to April 30, 2011
*1. Reconciliation of cash and cash equivalents at endof period and amount of items presented in balance
sheetsCash and deposits
Cash and deposits in trust
Cash and cash equivalents

Eleventh Fiscal Period
For the period
from May 1, 2011
to October 31, 2011
*1. Reconciliation of cash and cash equivalents at end of
period and amount of items presented in balance
sheets(as of April 30, 2011)(Unit: thousand yen)
8,244,212
4,204,759
12,448,972

Cash and deposits
Cash and deposits in trust
Cash and cash equivalents58(as of October 31, 2011)(Unit: thousand yen)
5,405,178
4,512,649
9,917,828

Ⅷ. Stock and Unitholders Information
第10期
Top REIT Trading Volume

Unit Price
第10期
（yen）
（thousand）
1,000,000
1,000

Top REITTES REIT Index

Trading Volume
第10期（Unit）（unit）

TOPIX

10,00010,00011th FP

12th FP

900,000
8,000
8,000
800
800,000

700,000

6,000
6,000

600
600,000

4,000
4,000

500,000

400
400,000
2,000
2,000

300,000

200
200,000
Apr
2006

Oct
2006

Apr
2007

Oct
2007

Apr
2008

Oct
2008

Apr
2009

Oct
2009

Apr
2010

Oct
2010

No. of Units Held
Individuals / other:
19,556 [12.6%]

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

Other domestic corporations:
13,870 [9.0%]

Overseas
corporations /individuals:
20,601 [13.3%]

Financial institutions (incl. securities firms):
100,973 [65.1%]

10th Fiscal Period
Total number of units
issued andoutstanding at end of
period: 155,000
11th Fiscal Period
Total number of units
issued andoutstanding at end of
period: 155,0000%Individuals / other:
20,592 [13.3%]

Other domestic corporations:
13,475 [8.7%]

Overseas
corporations /individuals:
23,674 [15.3%]

Financial institutions (incl. securities firms):
97,259 [62.7%]
Individuals / other:
20,516 [13.2%]

Other domestic corporations:
13,120 [8.5%]

Overseas
corporations /individuals:
20,427 [13.2%]

Financial institutions (incl. securities firms):
100,937 [65.1%]

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

No. of Unitholders
Financial institutions (incl. securities firms):
Other domestic corporations:
Overseas corporations / individuals:
9th Fiscal Period
Total number ofunitholders at endof period: 6,830

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

11th Fiscal Period
Total number ofunitholders at endof period: 7,031
0%

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

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

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

Individuals / other 6,718 [94.8%]
Financial institutions (incl. securities firms):
Other domestic corporations:
Overseas corporations / individuals:

111 [1.6%]
140 [2.0%]
105 [1.5%]

Individuals / other 6,675 [94.9%]

20%

40%

60%

80%

59

100%

Apr
2011

Oct
2011

00