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

Sixth Fiscal Period Results(February 1, 2008 to July 31, 2008)

September 12, 2008

Prospect Residential Investment Corporation
Disclaimer
This document contains a translation of information provided in the Financial Report (Kessan Tanshin) of Prospect
Residential Investment Corporation (“PRI”) dated September 12, 2008, and prepared under the timely disclosure
requirements of the Tokyo Stock Exchange for the period from February 1, 2008 to July 31, 2008.
This English language document is provided solely for the convenience of and reference by non-Japanese investors, andis not intended to constitute a disclosure document. The Japanese language Financial Report should be referred to as theoriginal of this document. The English translation of legal, accounting, tax and business terms used herein may notprecisely convey the identical meaning of equivalent Japanese terms. With respect to any and all terms herein, including
without limitation, financial statements, if there exist any discrepancies in the meaning or interpretation thereof between
the original Japanese document and English translation contained herein, the original Japanese document will govern
the meaning and interpretation. Neither PRI, Prospect Residential Advisors, Co., Ltd. (“the Asset Management
Company”) nor any of their respective directors, officers, employees, partners, shareholders, agents or affiliates will be
responsible or liable for the completeness, appropriateness or accuracy of this English translation or any portion(s) of
any document(s) translated into English. No person has been authorized to give any information or make any
representations other than those contained in this document in relation to matters set out in this document, and if given
or made, such information or representation must not be relied upon as having been authorized by PRI, Prospect
Residential Advisors, Co., Ltd. or any of their respective directors, officers, employees, partners, shareholders, agents oraffiliates.
The financial statements of PRI have been prepared in accordance with generally accepted accounting principles inJapan (Japanese GAAP), which may materially differ in certain respects from generally accepted accounting principles
in other jurisdictions.
Many provisions within this document contain information that constitutes forward-looking statements. These
forward-looking statements are not a guarantee of future performance and involve risks and uncertainties. Therefore,
actual results may differ materially from those in the forward-looking statements as a result of various factors.
Contact Information:
Investor Relations
Prospect Residential Advisors, Co., Ltd.
ir@proresi-advisors.co.jp

2

Prospect Residential Investment Corporation

Prospect Residential Investment Corporation("PRI" or "the Investment Corporation")
Representative: Takeo Nishiyoshi, Executive Officer
Address: 2-2-1 Marunouchi, Chiyoda-ku, Tokyo
Prospect Residential Investment Corporation is listed
as a Japanese Real Estate Investment Trust (J-REIT) on
the Tokyo Stock Exchange with the securities code 8969
(URL of English website http://www.prospect-reit.co.jp/en/index.html)
Planned date of submission of the Company Report (Yukashoken Hokokusho): October 23, 2008
Planned date of distribution payment commencement: October 17, 2008
(1) Operating Performance and Assets for the Fiscal Period Ended July 31, 2008
1) Operating Performance(Millions of yen rounded down unless otherwise stated)
Fiscal Period
Ended

Operating Revenues

Operating Income

Ordinary Income

Net Income

%

%

%

%

July 31, 2008

2,499

7.2

1,114

5.4

711

7.2

710

7.2

January 31, 2008

2,330

8.5

1,057

8.8

663

-6.7

662

-6.6

Fiscal Period
Ended

Net Income per Unit

%
2.0
1.9

Ordinary Income toTotal Assets
%
1.0
0.9

Return on Net
Assets

Yen
9,458
8,820

July 31, 2008
January 31, 2008
2) Distributions
Fiscal Period
Ended
July 31, 2008
January 31, 2008

Distributions per
Unit Excluding
Excess ofEarnings (Yen)
9,458
8,820

Total
Distribution
710
6623) Financial Position
Fiscal Period
Ended
July 31, 2008
January 31, 2008

Ordinary Income toOperating Revenues
%
28.5
28.5

(Millions of yen rounded down unless otherwise stated)
Distributions
Total
Distributio
Payoutin Excess ofDistribution
n Ratio to
Earnings per
s in Excess
Ratio
Net Assets
Unit (Yen)of Earnings
−
−
99.9%
2.0%
−
−
100.0%
1.9%(Millions of yen rounded down unless otherwise stated)
Net Assets
Net Assets
Net Assets
to Total Assets
per Unit (Yen)35,262
48.5%
469,544
35,203
47.4%
468,752

Total Assets
72,77074,343(Reference Material) Net worth, JPY 35,262 million as of July 31, 2008 and JPY 35,203 million as of January 31, 2007

4) Cash Flow Situation
Fiscal Period
Ended
July 31, 2008
January 31, 2008

Cash Flows fromOperating
Activities
3,920
2,050

(Millions of yen rounded down unless otherwise stated)
Cash Flows from
Cash Flows from
Cash and CashInvesting
FinancingEquivalents at The
Activities
Activities
End of The Period-1,420-2,191
3,272-8,2965,8842,963(2) Forecast of Revenues and Earnings (for the Seventh Fiscal Period: August 1, 2008 to January 31, 2009)(Millions of yen rounded down unless otherwise stated, yoy % change)

Fiscal PeriodEndingOperating
Revenues

Operating
IncomeOrdinary
IncomeJanuary 31, 2009

2,268 (-9.2)

899 (-19.3)

453(-36.3)

Net Income452(-36.3)

Distributions
per Unit
Excluding
Excess ofEarnings (Yen)Distributions
in Excess of
Earnings per
Unit (Yen)

6,020

−

(Reference Material) Estimated net income per unit for the sixth fiscal period ending July 31, 2009: JPY 6,020

3

Prospect Residential Investment Corporation(3) Others
1) Changes in accounting policies
A. Changes due to accounting standards: None
B. Other changes: None
2) Investment units outstanding
A. Investment units outstanding (including units owned by PRI) at fiscal period-ends:
75,100 units as of July 31, 2008; 75,100 units as of January 31, 2008
B. Investment units owned by PRI at fiscal period-ends:
0 units as of July 31, 2008; 0 units as of January 31, 2008
(Note) Please refer to ‘Information per Unit’ on page 24 with respect to the number of investment units used as thebase to calculate the aforementioned ‘net income per investment unit.’* Disclaimer regarding ‘Forecasts of Revenues and Earnings’
Forward-looking statements such as forecasts of revenues and earnings in this document are based on many sources
including current information available to PRI’s management as well as the assumptions judged to be rational bymanagement. These forward-looking statements are not guarantees of future performance and they involve risks anduncertainties. As a result of various factors, actual results may differ materially from those in the forward-looking
statements. With respect to the assumptions underlying such forecasts, please refer to 2) Management Policy andOperating Conditions (2) Operating Conditions.

4

Prospect Residential Investment Corporation
1) Structure of the Investment Corporation
Please refer to “Structure of the Investment Corporation” on page 35.
2) Management Policy and Operating Conditions(1) Management Policy
Because there have been no changes from the last Company Report (Yukashoken Hokokusho), submitted on April 22,
2008, disclosure is omitted..
(2) Operating Conditions
The Asset Management Company, as founder, filed for the establishment of PRI in accordance with theInvestment Trust and Investment Corporation Law. PRI was established on April 22, 2005 with total
capitalization of JPY 201 million, and registered on May 25, 2005 with the Kanto Local Finance Bureau(Registration No. 34). Thereafter, PRI undertook a public offering of additional investment units (74,698
units) raising JPY 34,420 million. On July 12, 2005, PRI was listed on the Real Estate Investment Trust
Section of the Tokyo Stock Exchange under the securities code 8969. To date, PRI has continued to pursue
business activities focusing on residential properties for rental purposes pursuant to its management policy.
1) Operating Conditions during the Fiscal Period under Review
A. Investment Environmenta. In the sixth fiscal period, the six-month period ended July 31, 2008, conditions surrounding
the Japanese economy increasingly deteriorated amid the rapidly decelerating world economy,
which was impacted by a deepening of the subprime loan crisis in the United States and asubstantial appreciation of prices for primary commodities such as crude oil and agricultural
products. The future outlook appeared uncertain, indicated by negative year-on-year results
reported in the monthly mining and industrial output index for two consecutive quarters fromJanuary to March 2008. The employment situation was also unclear as the unemployment
rate slightly worsened to 4.1% in December 2007, rising from 3.6% in July 2007, while thenumber of workers with regular employment grew by more than 1.5% year on year over thesame time span. Total cash wage income, according to the Working Statistics Survey, also
showed a year-on-year decline of 0.6% as of June 2008 on a flash report basis. Personal
consumption weakened, affected by the sharp rise in gasoline prices. Financial markets
remained depressed as various negative effects from the subprime loan crisis were felt on a
global scale. The Nikkei Stock Average dropped below JPY 12,000 in the middle of March
2008, and the Average displayed a slight drop during the six-month period ended January 31,
2008. While the world’s financial authorities implemented an assortment of measures aimed atcurtailing further downside risks in financial markets, uncertainty regarding the global
economy remained high, in response to the substantial appreciation of primary commodity
prices and their reverberations in the real economy.
b. Against the background of these shifting financial conditions, from an investment perspective,
demand from Japan’s real estate investment trust companies and investment funds decreased
On the other hand, demand from overseas investors, including Sovereign Wealth Funds
remained solid primarily for quality properties. Prices of residential complexes for rental
purposes either remained almost flat or slightly depreciatated.
c.
Demand for prime rental residential properties remains firm due to the continuing shift
in population toward Tokyo and other major cities, cutbacks in corporate dormitories andhousing, as well as other factors. While certain companies that have successfully bolstered
their financial standing are undertaking development of their idle property holdings, the trend
toward large-scale leasing demand is showing signs of decline.
During the fiscal period under review, occupancy and rental rates for prime residential
properties continued to rise. Based on a survey by Recruit Co., Ltd., residential property rental
rates in the Tokyo Metropolitan area bottomed out in autumn 2005. In certain select city center
locations, rental rates have experienced a moderate increase.
B. Management Performancea. As of January 1, 2008, Prospect Residential Investment Corporation (“PRI”) managed a5

Prospect Residential Investment Corporation
portfolio comprising 54 properties (3,311 rental condominiums with a total leasable floor
space of 133,950.14 sq m) worth JPY 69,739 million on an acquisition price basis. Consistent
with its basic management policy to secure steady growth and stable earnings from a mediumto long-term perspective, PRI carried out active acquisition activities and acquired one
property (Prospect Musashi-Shinjo) during the fiscal period under review. The property was
newly built and is leased entirely to a group company of a major corporation in Japan, andtherefore contributed to enhancing the overall quality of the portfolio and lowering the averagebuilding age. In order to improve the quality of the portfolio through an active replacement
strategy of selective property purchases and sales, PRI considers selling certain properties thatare either located in highly competitive urban areas or characterized by comparatively low
earnings. PRI sold Maison de Ville Azabudai, posting a net gain on sale of JPY 157 million.
b.

As a result of its management performance in the period under review, PRI acquired one
property worth JPY 1,230 million on an acquisition price basis, with a total leasable floor
space of 1,855.03 sq m, and sold one property at a sales price of JPY 2,956 million, with total
leasable floor space of 2,567.09 sq m. As of July 31, 2008, PRI maintained an investment
property portfolio comprising 54 properties (3,305 rental condominiums with a total leasable
floor space of 133,238.08 sq m) worth JPY 68,249 million on an acquisition price basis.

c.

Existing property management (Internal Growth)
In an effort to increase occupancy rates and profitability, PRI examined the merits of a variety
of property management companies in terms of their individual characteristics, strengths,
service contents and fees. Furthermore, property management companies were selected anddismissed, and property management rates set and revised, based on quantitative andqualitative assessments by the Asset Management Company.
PRI also carried out large-scale renovations of SK Residence, which was constructed 17 years
ago, with earnings improving as a result.

d.

Funds procurement
In May 2008, PRI procured debt financing from Aozora Bank, Ltd. totaling JPY 8,000 million,
comprised of JPY 4,000 million for a period of one year and JPY 4,000 million for threemonths. This procurement was undertaken to replace four bank loans (also totaling JPY 8,000
million) with repayment dates in May 2008, June 2008, and September 2008, and as such, PRI
believes the transaction contributed to strengthening its financial stability. As of July 31, 2008,
the balance of debt financing was JPY 36,028 million, and the ratio of interest-bearing debt tototal assets was 49.5%.
In July 2007, PRI received a long-term issuer credit rating of A– for long-term senior debt
from Japan Credit Rating Agency, Ltd. Then in September 2007, PRI submitted a“Registration for Issuance of Investment Corporation Bonds” to the Kanto Finance Office of
the Financial Services Agency, applying for a maximum issuance of JPY 50,000 million.
Based on this registration, PRI issued the first series of unsecured investment corporation
bonds of JPY 5,000 million in October 2007. Subsequently, PRI concluded an interest swap
contract covering the entire investment corporation bonds issue totaling JPY 5,000 million. As
a result, the interest rate for the two-year bond issue has been fixed at 2.183%. Furthermore,
PRI has three contracts for the purchase of yen interest rate caps covering a total of JPY
15,000 million in debt financing (bank borrowings), with the goal of hedging against the riskof increases in interest rate
* The rating of long-term senior debts represents an assessment of an obligor’s financial capacity to pay
their overall financial obligations. This rating differs from ratings concerning specific financial
obligations, which take into account the nature and provisions of the obligation and its senior/subordinate
status, as well as the obligor’s standing in terms of bankruptcy or liquidation. (Source: JCR’s English
Web site)For further details of the rating, please refer to JCR’s Web sites: http://www.jcr.co.jp/english/ (English);6

Prospect Residential Investment Corporation
http://www.jcr.co.jp/ (Japanese)e.
PRI and PRA have been studying various measures, aiming at attaining remarkable growth in
PRI’s corporate value, including asset growth and a strengthening of its fundamentals.
C. Operating Results and Cash Distribution
Accounting for the aforementioned factors, operating revenues totaled JPY 2, 499 million in thefiscal period ended July 31, 2008. Ordinary income was JPY 711 million while net income
amounted to JPY 710 million.
PRI distributes the total amount of its inappropriate retained earnings for each period. Accordingly,
cash distribution for the third fiscal period was JPY 9, 458 per unit (rounded down to the nearestyen).
2) Outlook
A. Operating Environment
From an investment perspective, demand to acquire real estate properties in Japan is expected todeteriorate. In the absence of a marked improvement in the financial situation, weak demand fromJapan’s real estate investment trust companies and investment funds will likely continue. Althoughdemand from overseas investors, including Sovereign Wealth Funds, is expected to remain solid, it
is unlikely to offset the fall in domestic demand. Prices of residential complexes for rental purposes
are expected to remain slightly low.
Rental rates for residential properties are expected to rise moderately only in select areas of Tokyo’s
23 wards.
B. Acquisition of New Properties (External Growth)
Under these circumstances and in addition to trust banks that have traditionally served as a key
source of information, PRI will foster a wide variety of relationships with the aim of collecting
invaluable property information. Through these means, PRI will pursue the acquisition of prime
properties from a medium- to long-term perspective.
In an effort to expand its asset scale, and taking into consideration future increases in interest rates,
PRI will focus on properties that can generate profit growth and provide a basis for improved cash
distribution.
C. Property Management (Internal Growth)
Carrying on from the previous fiscal period, PRI shall examine the merits of a variety of property
management companies in terms of their individual characteristics, strengths, service contents andfees. Based on a philosophy of strict competition, PRI shall select property management companies
that can contribute to increasing occupancy and profitability. Furthermore, PRI will continue to
implement checks by internal specialists including first-class architects with the aims of reducing
costs and securing the increased trust of tenants and investors.
D. Financial Strategy
PRI aims to carry out flexible procurement of short- and long-term loans with conservative LTV(Loan To Value) level while broadening the types of lenders and diversifying repayment dates. PRI
will work to extend the repayment periods of debt and to obtain fixed-interest rates by continuing toissue the second series Investment Corporation bonds in the future.
E. PRI and PRA have been studying various measures, aiming at attaining remarkable growth in PRI’s
corporate value, including asset growth and a strengthening of its fundamentals.
(3) Important Subsequent Events
PRI undertook the following debt financing and repayment after July 31, 2008.
(Millions of yen unless otherwise stated)

7

Prospect Residential Investment Corporation
Debt
Financing /RepaymentInterest
Rate

Drawdown Date

LenderDebt
Financing

August 29,
2008

Aozora Bank, Ltd.

4,000

Floating

Repayment

May 30, 2008

Aozora Bank, Ltd.

4,000

Floating

Maturity /Repayment
Date
November 28,
2008
August 29,
2008

Application of Funds /Repayment Method

Remarks

Rollover

SecuredRepayment

Secured(4) Forecast of Revenues and Earnings
Forecast of revenues and earnings for the seventh fiscal period (August 1, 2008 to January 31, 2009) is as follows.
These forecasts are based on “Assumptions for Forecasts for the Seventh Fiscal Period” mentioned afterwards.
Forecast of revenues and earnings for the seventh fiscal period (August 1, 2008 to January 31, 2009)
Operating revenues
JPY 2, 268 million
Operating income
JPY 899 million
Ordinary income
JPY 453 million
Net income
JPY 452 million
Distributions per unit
JPY 6,020
Note: Forecasts for operating revenues, ordinary income, net income and distributions per unit may differ from actual results due tochanges in the operating environment and a variety of factors. Accordingly, PRI does not guarantee any distribution amount.

Assumptions for Forecasts for the Seventh Fiscal Period (August 1, 2008 to January 31, 2009)
Operating Period
Managed Assets
Investment Units
IssuedInterest-Bearing
Debt Ratio

Operating Expenses

Assumptions
Seventh fiscal period: From August 1, 2008 to January 31, 2009 (184 days)
Forecasts are based on a property portfolio comprising 54 properties held as of July 31, 2008.
The property portfolio may change, however, due to property acquisition or sale.
Forecasts are based on the assumption that PRI shall not issue additional investment units.
The interest-bearing debt ratio as of July 31, 2008 was 51.0%. Forecasts are, however, basedon an interest-bearing debt ratio of approximately 51.0% as of January 31, 2009, taking into
account an increase in debt financing to acquire additional properties as well as repayment
stemming from the above sale of one property.
The interest-bearing debt ratio is calculated as follows:
Interest-bearing debt ratio = Interest-bearing debt ÷ (Interest-bearing debt + Unitholders’capital) × 100
Of the amount of property tax and city planning tax assessed for the property portfolio, theapplicable portion is recorded as rental business expenses for each fiscal period. For properties
acquired during each period, property tax and city planning tax are allocated to the seller andpurchaser on a pro rata basis at the time of acquisition settlement. In the case of PRI, anamount equivalent to the portion allocated to the purchaser is included in the acquisition priceof the property and not recorded as an expense.
Repairs, maintenance and renovation expenses are estimated based on amounts consideredessential for each property for each fiscal period. Actual repairs, maintenance and renovation
expenses for each fiscal period, however, may differ significantly from these amounts due tounforeseen circumstances or emergencies. Forecasts are based on the assumption that PRI shallpost repairs, maintenance and renovation expenses of JPY 92 million (a decrease of JPY 2
million compared with the previous fiscal period) and shall post property tax and city planningtax of JPY 107 million.

Non-Operating
Expenses
Cash Distribution

Depreciation is calculated using the straight-line method inclusive of incidental expenses.
Forecasts are based on the assumption that PRI shall post depreciation expenses of JPY 503
million.
Forecasts are based on the assumption that PRI shall post total interest expenses of JPY 329
million (an increase of JPY 4 million compared with the previous fiscal period).anddebt-related expenses of JPY 114 million (an increase of JPY 38 million compared with theprevious fiscal period).
Forecasts are based on the assumption that PRI shall distribute the full amount of retained
earnings each fiscal period in line with its distribution policy.

8

Prospect Residential Investment Corporation
3) Financial Statements(1) Balance Sheets(Thousands of yen)
Notes
ASSETS
ＩCurrent assets
Cash and deposits
Entrusted cash and deposits
Rental receivables
Prepaid expenses
Deferred tax assets

Fifth Fiscal Period(As of January 31, 2008)

Sixth Fiscal Period(As of July 31, 2008)

1,122,528
1,841,193
24,663
104,425
2,344

1,466,535
1,805,995
29,093
123,997
8,816

Derivative assets
844
Other current assets
11,009Reserve for possible losses of−receivables
Total current assets
3,107,008
II Fixed assets
1. Property and equipment:＊1
Buildings
857,922
Accumulated depreciation
73,780784,141＊1
Structures
1,131
Accumulated depreciation
252
879
＊1
Machinery and equipment
6,189
Accumulated depreciation
1,978
4,211
Tools, furniture and fixtures ＊1
2,835
Accumulated depreciation
90
2,744
＊1
Land
794,545＊1 32,525,381
Entrusted buildings
Accumulated depreciation
1,734,521 30,790,860＊1
Entrusted structures
141,241
Accumulated depreciation
23,654
117,587
Entrustedmachinery
320,034
Accumulated depreciation
67,001
253,032
Entrusted tools, furniture and44,116
Accumulated depreciation
7,788
36,328＊1
Entrusted land
38,187,083−
Entrusted construction account

5,419
25,515

Total property and equipment
2. Intangible assets:
Other intangible assets
Total intangible assets
3. Investments and other assets:Long-term prepaid expenses
Deferred tax assets
Leasehold and security
deposits received
Long-term derivative assets
Total investments andother assets
Total fixed assets＊1△73
3,465,300

4.2

860,91290,967
1,131
308
6,189
2,373
3,307
338

Increase(Decrease)

4.8

358,292

11.5

769,944
823
3,815
2,968
794,545

32,328,239
2,125,629 30,202,610
153,668
29,531
124,137
354,454
81,867
272,586
50,17911,466
38,71236,880,302
23,62570,971,413

95.5

69,114,072

95.0△1,857,341

△2.6

4,447
4,447

0.0

3,726
3,726

0.0

△721

△16.2

△65,4190.2
95.2 △11,923,481

△27.9
△2.7

117,133
50,26072,70336,26538,35228,852

23,57836,632

234,599
71,210,460

9

0.3
95.8

169,180
69,286,979

Prospect Residential Investment Corporation
III. Deffered assets:
Expenses to issue Investment
Corpration Bonds
Total deffered assets

26,020Total assets
Notes

LIABILITIESＩ Current liabilities
Operating payables
Short-term debt
Other payables
Accrued expenses
Accrued income taxes
Accrued consumption taxes
Advances received
Other current liabilities
Total current liabilities
II Long-term liabilities
Investment Corporation Bonds
Long-term debt

＊1

Leasehold and security deposits
Total long-term liabilities
Total liabilities＊2
NET ASSETS
I Unitholders’ capital
1. Unitholders’ capital
Unitholders’ capital
2. Retained earnings
Unappropriated retained
earnings for the period
Total retained earnings
Total unitholders’ capital
II Evaluation and conversions
1. Earnings on deferred hedgetransactions
Total evaluation andconversions
Total net assets
Total liabilities and net assets

0.0

18,333
18,33374,343,489 100.0

72,770,613

Fifth Fiscal Period(As of January 31, 2008)

Sixth Fiscal Period(As of July 31, 2008)

26,020123,753
8,000,000
65,337244,398602
12,342259,530
189
8,706,154

11.7

5,000,000
24,558,000

90,4368,000,000
36,816223,247571
28,890254,841
3,471
8,638,274

0.0△7,686△29.5

100.0 △1,572,876△2.1(Thousands of yen)
Increase(Decrease)

11.9△67,879

△0.8

39.6
51.5

△1,564,506△1,632,386

△5.1
△4.2

5,000,000
23,028,000

876,02230,434,022
39,140,177

40.9
52.6

841,516
28,869,516
37,507,791

34,621,838

46.6

34,621,838

47.6

−

−

662,390662,390
35,284,228

0.9
47.5

710,320
710,320
35,332,158

1.0
48.6

47,92947,9297.2
0.1△80,916 △0.1
35,203,312 47.4

△69,336 △0.1
35,262,821 48.5

11,57959,50914.3
0.2

74,343,489 100.0

72,770,613 100.0△1,572,876△2.1△80,916

10△69,336

Prospect Residential Investment Corporation(2) Statements of Income(Thousands of yen)
Notes

Fifth Fiscal Period(August 1, 2007 to
January 31, 2008)

Sixth Fiscal Period(February 1, 2008 to
July 31, 2008)

Increase(Decrease)

I. Operating Revenues
Real estate rental revenues＊12,157,743

2,206,734

Other rental revenues＊189,150135,040

Gain on sale of real estate＊2

84,053＊1

984,820

1,102,044

147,748

144,032

Custodian fees

3,613

3,666

Administrative service fees

21,722

21,962

Directors’ fees
Transferred to reserve forpossible losses of receivables

6,000

6,000

−

73

−

855

2,330,947 100.0

157,3032,499,077 100.0

168,130

7.2

1,384,537

55.4

111,338

8.7

1,114,540

44.6

56,791

5.4

3,313

0.1

△605

△15.5

406,533

16.2

8,226

2.1

II. Operating Expenses
Real estate rental expenses
Asset management fees

Losses of receivables
Other operating expenses

109,294

Operating income

1,273,198

54.6

1,057,748

45.4

105,903

III. Non-Operating Income
Interest income

2,187

2,558

Additional refunds

1,335

−

Other non-operating income

396

3,919

0.2

754

IV. Non-Operating Expenses
Interest expense

265,286

269,845

Bonds interest expense

33,19354,771

Bonds issuance expense

4,726

7,686

Debt-related expenses

92,62671,455

Other non-operating expenses

2,473

398,307

17.1

Ordinary income

663,36128.5

711,32028.5

47,959

7.2

Income before income taxes

663,36128.5

711,32028.5

47,959

7.2

1,008

0.1

18

1.8

710,31128.4

47,941

7.2

Income taxes

979

Deferred taxes

10

Net income
Retainedearnings
forward

2,773

1,009
990

0.1

662,370

28.4△1

brought

Retained earnings at the end of
the period

19

8

△11

△57.8

662,390

710,32047,9297.2

11

Prospect Residential Investment Corporation(3) Statement of Changes in Net Assets(August 1, 2007 to January 31, 2008)
Unitholders’ Capital
Retained Earnings
Unitholders’Capital*1
Balance as of theprevious fiscal
period-end
Movements during
the fiscal period
ended January 31,
2008
Distributionofretained earnings
Net income
Net change due toitems other thanunitholders’ capital
Total
Balance
as ofJanuary 31, 2008

UnappropriatedRetained
Earnings

Total
Unitholders’ Capital

Total
Retained
Earnings(Thousands of yen)
Evaluation andConversions
Earnings
Total Net
Total
(Loss) on
Assets
Evaluation
DeferredandHedge
Transactio Conversions
ns

34,621,838

709,564

709,564

35,331,402△14,476△14,476

35,316,925−−△709,544
662,370△709,544
662,370△709,544
662,370−−−−△709,544
662,370

−

−

−

−

△66,439△66,439△66,439−△47,174△47,174△47,174△66,439△66,439△113,613

34,621,838

662,390662,390

35,284,228△80,916△80,916

35,203,312(February 1, 2008 to July 31, 2008)
Unitholders’ Capital
Retained Earnings
Unitholders’Capital*1
Balance as of theprevious fiscal
period-end
Movements during
the fiscal period
ended July 31,
2008
Distributionofretained earnings
Net income
Net change due toitems other thanunitholders’ capital
Total
Balance as of July
31, 2008

UnappropriatedRetained
Earnings

Total
Unitholders’ Capital

Total
Retained
Earnings(Thousands of yen)
Evaluation andConversions
Earnings
Total Net
Total
on
Assets
Evaluation
DeferredandHedge
Transactio Conversions
ns

34,621,838

662,390662,390

35,284,228△80,916△80,916

35,203,312−−△662,382
710,311△662,382
710,311△662,382
710,311−−−−△662,382
710,311

−

−

−

−

11,579

11,579

11,579−47,92947,92947,929

11,579

11,57959,50934,621,838

710,320

710,320

35,332,158△69,336△69,336

35,262,821

12

Prospect Residential Investment Corporation(4) Basis for Calculating Cash Distribution
Fifth Fiscal Period(August 1, 2007 to
January 31, 2008)
I

Unappropriated retained earnings
at the end of the fiscal period
II Total distribution(Distribution per unit)
III Retained earnings carried forward
Method of Calculating the Amountof Distribution(Yen)
Sixth Fiscal Period(February 1, 2008 to
July 31, 2008)

662,390,183

710,320,012

662,382,000

710,295,800（8,820）8,183（9,458）24,212

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

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

PRI has therefore decided to
distribute the maximum amountof retained earnings at the end of
the period: JPY 662,382,000 to
75,100units
issuedandoutstanding. Procedures for the
distributionofamounts
exceeding distributable income
are outlined in Article 34.1-4 of
PRI’s Articles of Incorporation.
PRI decided not to distributecash in excess of distributable
income for the fiscal period.

PRI has therefore decided to
distribute the maximum amountof retained earnings at the end of
the period: JPY 710,295,800 to
75,100units
issuedandoutstanding. Procedures for the
distributionofamounts
exceeding distributable income
are outlined in Article 34.1-4 of
PRI’s Articles of Incorporation.
PRI decided not to distributecash in excess of distributable
income for the fiscal period.

13

Prospect Residential Investment Corporation(5) Statements of Cash Flows(Thousands of yen)Fifth Fiscal Period(August 1, 2007 to
January 31, 2008)
I Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Interest income
Reserve for possible losses of receivables
Amortization for issuance expense ofinvestment corporation bonds
Interest expense
Decrease (increase) in operating receivables
Decrease in other receivables

II Cash flows from investing activities:
Payments for the purchase of property andEquipment
Payments for the purchase of entrusted
property and equipment
Payments for leasehold and security deposits
Proceeds from leasehold and security
deposits received
Payments for leasehold and security deposits received

Net cash used in investing activities
III Cash flows from financing activities:
Proceeds from short-term debt
Payments of short-term debt
Proceeds of long-term debt
Payments of long-term debt
Proceeds of investment corporation bonds
Payments for issuance expense ofinvestment corporation bonds
Payments for distributions to unitholders
Net cash (used in) provided by financing Activities

IV Net change in cash and cash equivalents
VI Cash and cash equivalents at the beginningof the period
VI Cash and cash equivalents at the end of
the period

Increase(Decrease)663,361
483,3704,726−

711,320
504,438
7,686
73

47,95921,0692,960
73△2,187
298,479△2,353
1,042
78,412
15,52486
31,05012,342
25,48834,74319,806△2,558324,617△4,429249−△19,572
2,165△29,616
16,547△21,151△4,68844,430△372
26,138△2,077△794△78,412△35,097
2,079△60,667
4,204△46,639△39,431
24,624

724,903△69,715
2,319,082
2,187△269,380△1,4182,050,470

2,703,743
10,1744,243,430
2,558△324,617△1,0403,920,331

1,978,841
79,8901,924,348
372△ 55,237
378
1,869,861△5,879△8,812△2,933△8,323,524△37,570△1,376,791△126

6,946,733
37,444

138,658△68,033△8,296,348

90,290△124,796△1,420,235△48,369△56,7636,876,113

2,400,000△3,200,000
2,924,000△500,000
5,000,000

8,000,000△8,000,000−△1,530,000−

5,600,000△4,800,000△2,924,000△1,030,000△5,000,000△30,747△708,264
5,884,988−△661,286△2,191,286

30,747
46,978△8,076,275△360,889

308,809669,699

3,324,611

2,963,721△360,890

2,963,721

3,272,531

308,810Decrease in consumption tax and other receivables(Increase) decrease in prepaid expenses(Decrease) increase in operating payables
Decrease in other payables
Increase in accrued consumption taxes(Decrease) increase in accrued expenses(Decrease) increase in advances received
Decrease in long-term prepaid expenses
Loss on sale of entrusted property andEquipment
Other
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by operating activities

Sixth Fiscal Period(February 1, 2008 to
July 31, 2008)14

Prospect Residential Investment Corporation(6) Notes for Items Related to Important Accounting Policies

1. Depreciation
method for fixed
assets2.
Accounting
standards to post
revenues
andexpenses

Fifth Fiscal Period(August 1, 2007 to
January 31, 2008)

Sixth Fiscal Period(February 1, 2008 to
July 31, 2008)(1) Tangible fixed assets (including entrusted
assets)
The straight-line method has been adopted.
Estimated years of use for major tangible
fixed assets are as follows:
Buildings
3 – 58 years
Structures
2 – 45 years
Machinery and equipment 3 – 15 years
Tools, furniture, and fixtures 3 – 15 years(1) Tangible fixed assets (including entrusted
assets)
The straight-line method has been adopted.
Estimated years of use for major tangible
fixed assets are as follows:
Buildings
3 – 60 years
Structures
2 – 45 years
Machinery and equipment 3 – 15 years
Tools, furniture, and fixtures 3 – 15 years(2) Intangible fixed assets
The straight-line method has been adopted.

(2) Intangible fixed assets
Same as fourth fiscal period(3) Long-term prepaid expenses
The straight-line method has been adopted.

(3) Long-term prepaid expenses
Same as fourth fiscal period

Method to post fixed asset taxes and other Method to post fixed asset taxes and other
taxes
taxes
In terms of fixed asset taxes, city planningtaxes, depreciable taxes, and others levied onholding real estate and others, the tax amountto be paid in this period is posted as expenses
in the period.

In terms of fixed asset taxes, city planningtaxes, depreciable taxes, and others levied onholding real estate and others, the tax amountto be paid in this period is posted as expenses
in the period.

In terms of settled amounts for fixed asset
taxes and other taxes for the first year in thecase of acquiring real estate or trust
beneficiary rights (with real estate as
entrusted assets) from sellers, such amounts
are not posted as expenses but included inbook values at the time of acquisition of such
real estate or trust beneficiary rights.

In terms of settled amounts for fixed asset
taxes and other taxes for the first year in thecase of acquiring real estate or trust
beneficiary rights (with real estate as
entrusted assets) from sellers, such amounts
are not posted as expenses but included inbook values at the time of acquisition of such
real estate or trust beneficiary rights.

Such fixed assets and other taxes included inbook values at the time of acquisition of such
real estate and trust beneficiary rights totaled
JPY 4,599 thousand.

Such fixed assets and other taxes included inbook values at the time of acquisition of such
real estate and trust beneficiary rights totaled
JPY 1,024 thousand.

16

3.
Hedge
accounting
methodProspect Residential Investment Corporation(1) Hedge accounting method
Deferred hedge method. In the cases ofinterest swaps meet conditions for special
treatment, special treatment is adopted.

(1) Hedge accounting method
Deferred hedge method(2) Hedge type and objective
Hedge typeInterest rate swap transaction
Interest rate cap transaction
Hedge objective
Interest payment on borrowing(2) Hedge type and objective
Same as fifth fiscal period(3) Hedge policy(3) Hedge policy
PRI carries out derivative transactions to Same as fifth fiscal period
hedge risks based on its risk management
policy and in accordance with the Articles of
the Investment Corporation.
(4) Method to evaluate effectiveness ofhedge accounting
PRI judges the effectiveness of hedge
accounting based on such indicators asaccumulated cash flow changes incomparison with hedging objects andhedging methods, during commence ofhedge and the time to judge effectives.

4. Compositionof cash and cash
equivalents
inthe statements ofcash flows(4) Method to evaluate effectiveness ofhedge accounting
PRI judges the effectiveness of hedge
accounting based on such indicators asaccumulated cash flow changes incomparison with hedging objects andhedging methods, during commence ofhedge and the time to judge effectives. In thecases of interest swaps meet conditions for
special treatment, effective judgement isomitted.

Cash and cash equivalents in the statements Same as fifth fiscal periodof cash flows consist of cash in hand,
entrusted cash, cash and entrusted deposits
that can be withdrawn easily, and short-term
investments redeemable within three months
from acquisition that pose minimal risk ofvalue fluxuations and are easily convertible
to cash.

17

5.
Other
important items
for the basis ofcompilingfinancialstatements

Prospect Residential Investment Corporation(1) Accounting method with respect to trust (1) Accounting method with respect to trust
beneficiary rights to real estate and other beneficiary rights to real estate and otherentrusted assets
entrusted assets
With respect to trust beneficiary rights to real Same as fifth fiscal period
estate and other entrusted assets, all of theasset and liability items within entrusted
assets as well as all revenue and expense
items generated from entrusted assets areposted in the corresponding items in thebalance sheets and statements of income.
Among entrusted asset items posted in suchcorresponding items, the following important
items are posted independently in thebalance sheets.
1) Entrusted cash and entrusted
deposits
2) Entrusted buildings,
entrusted
structures, entrusted machinery andequipment,
entrusted
tools,
furnitureandfixtures,andentrusted land
(2) Accounting method for consumption tax (2) Accounting method for consumption tax
and others
and others
The accounting method for consumption tax Same as fifth fiscal period
and local consumption tax is the
tax-exclusive
method.
Undeductableconsumption taxes for asset acquisition are
included in book values at the time of each
respective asset acquisition.

18

Prospect Residential Investment Corporation(7) Notes to the Financial Statements[Notes for the Balance Sheets]
Fifth Fiscal Period(August 1, 2007 to
January 31, 2008)

Sixth Fiscal Period(February 1, 2008 to
July 31, 2008)

Note 1. Assets put up for collateral or assets put up for Note 1. Assets put up for collateral or assets put up forcollateral of secured debt are as follows:collateral of secured debt are as follows:(Thousands of yen)(Thousands of yen)
Entrustedcash
andEntrustedcash
and1,724,166
1,772,369
entrusted deposits
entrusted deposits
Buildings
784,141
Buildings
769,944
Structures
879
Structures
823
Machinery
andMachinery
and
4,211
3,815
equipment
equipment
Tools, furniture andTools, furniture and
2,744
2,968
fixturesfixtures
Entrusted buildings
794,545
Entrusted buildings
794,545
Entrusted buildings
26,983,714
Entrusted buildings
29,626,525
Entrusted structures
98,231
Entrusted structures
109,989
Entrusted machinery and
Entrusted machinery and
214,030
233,445
equipment
equipment
Entrusted tools, furniture
Entrusted tools, furniture
36,091
38,712and fixturesand fixtures
Entrusted land
35,495,345
Entrusted land
36,229,304
Total
66,138,101
Total
69,582,445
Secured debt with collateral are as follows:
Short-term debt
Long-term debt
Total

Secured debt with collateral are as follows:

8,000,000
24,558,000
32,558,000

Short-term debt
Long-term debt
Total

8,000,000
23,028,000
31,028,000

Note 2. Commitment line contracts
Note 2. Commitment line contracts
PRI has commitment line contracts with client banks
None.
(Thousands of yen)
Total of commitment line contracts
7,000,000
Loan balance at the end of
the fifth fiscal period
6,000,000
Balance of unused contract
at the end of the fifth fiscal period
1,000,000
Note 3. Minimum net assets set by Article 67.4 of the Note 3. Minimum net assets set by Article 67.4 of theInvestment Trust and Investment Corporation Law
Investment Trust and Investment Corporation Law
JPY 50,000 thousand

Same as fifth fiscal period[Notes to the Statements of Income]19

Prospect Residential Investment Corporation
Fifth Fiscal Period(August 1, 2007 to
January 31, 2008)

Sixth Fiscal Period(February 1, 2008 to
July 31, 2008)

Note 1. Breakdown of real estate rental revenues and Note 1. Breakdown of real estate rental revenues and(Thousands of yen)earnings(Thousands of yen) earnings
A. Real estate rental
revenues
Real estate rental revenues
Rental revenues
1,974,742
Common area maintenance
77,776fee revenues
Parking revenues
79,267
Other related revenues
25,956
Other rental revenues
Other rental revenues
89,150Total real estate rental
revenues
B. Real estate rental
expenses
Real estate rental expenses
Property
management
160,806
expenses
Repair expenses
61,338Water, electricity, and other
43,563rates
Taxes
78,672
Insurance premiums against
8,105
lossesTrust fees
45,711
Depreciation expenses
482,648
Other rental expenses
103,973
Total real estate rental
expenses
C. Real estate rental business earnings(A – B)

A. Real estate rental
revenues
Real estate rental revenues
Rental revenues
2,018,143
Common area maintenance
80,947fee revenues
Parking revenues
80,941Other related revenues
26,701Other rental revenues
Other rental revenues
135,040
Total real estate rental
revenues
B. Real estate rental
expenses
Real estate rental expenses
Property
management
181,713
expenses
Repair expenses
94,943
Water, electricity, and other
43,665
rates
Taxes
115,161
Insurance premiums against
8,218
lossesTrust fees
44,641
Depreciation expenses
503,717
Other rental expenses
109,982
Total real estate rental
expenses
C. Real estate rental business earnings(A – B)

2,157,743
89,1502,246,894

984,820984,820
1,262,073

2,206,734
135,040
2,341,774

1,102,044
1,102,044
1,239,730

Note 2. Breakdown of real estate rental revenues and Note 2. Breakdown of real estate rental revenues andearnings(Thousands of yen)earnings(Thousands of yen)
Garden City Kita-Toda
Revenues from sale ofreal estate and others
Book value for sold realestate and others
Other expenses for sales
Profit from sale of realestate and others

Maison de Ville Azabudai
Revenues from sale ofreal estate and others
Book value for sold realestate and others
Other expenses for sales
Profit from sale of realestate and others

811,100
725,167
1,878
84,05320

2,956,150
2,704,644
94,202
157,303

Prospect Residential Investment Corporation[Notes to the Statement of Changes in Net Assets]
Fifth Fiscal Period(August 1, 2007 to
January 31, 2008)

Sixth Fiscal Period(February 1, 2008 to
July 31, 2008)

Note 1. Total number of investment units authorized for Note 1. Total number of investment units authorizedissuance and outstanding
for issuance and outstanding
Total number of investment units
Same as fifth fiscal periodauthorized for issuance
2,000,000
Total number of investment units
outstanding
75,100[Notes to the Statement of Cash Flows]
Fifth Fiscal Period(August 1, 2007 to
January 31, 2008)

Sixth Fiscal Period(February 1, 2008 to
July 31, 2008)

Note 1. Relationship between cash and cash
equivalents at the end of the period and items posted on
the balance sheets
As of January 31, 2008 (Thousands of yen)
Cash and deposits
1,122,528
Entrusted cash and entrusted deposits
1,841,193
Cash and cash equivalents
2,963,72Note 1. Relationship between cash and cash
equivalents at the end of the period and items postedon the balance sheets
As of July 31, 2008 (Thousands of yen)
Cash and deposits
1,466,535
Entrusted cash and entrusted deposits
1,805,995
Cash and cash equivalents
3,272,531(Disclosure is omitted for notes regarding lease transactions, derivatives transactions and others because of small
necessity to disclose in this Financial Report <Kessan Tanshin>)[Notes regarding information per investment unit]
Fifth Fiscal Period(August 1, 2007 to
January 31, 2008)

Sixth Fiscal Period(February 1, 2008 to
July 31, 2008)

Net assets per investment unit
JPY 468,752
Net assets per investment unit
JPY 469,544
Net income per investment unit
JPY 8,820
Net income per investment unit
JPY 9,458
Because there are no latent investment units, PRI does Same as fifth fiscal period
not record net income per investment unit after
adjustment of latent investment units.
Note: Net income per investment unit is calculated using the following average investment units in the respective
periods.
Average investment units in the third and fourth fiscal periods:
Sixth fiscal period (February 1, 2008 to July 31, 2008): 75,100 (no changes during the period)
Fifth fiscal period (August 1, 2007 to January 31, 2008): 75,100 (no changes during the period)

Net income
Net income not distributed
unitholders
Net income distributed tounitholders
Average number of units

toFifth Fiscal Period(August 1, 2007 to
January 31, 2008)(JPY thou)
662,370-21

Sixth Fiscal Period(February 1, 2008 to
July 31, 2008)(JPY thou)
710,311−662,370

710,31175,100 units

75,100 units

Prospect Residential Investment Corporation[Notes regarding subsequent events]
Fifth Fiscal Period(August 1, 2007 to
January 31, 2008)

Sixth Fiscal Period(February 1, 2008 to
July 31, 2008)

1. Property Sales
PRI carried out the following sale of property
Maison de Ville Azabudai
Sales Price
JPY2,956 million
Contract Date
February 15, 2008
Expected Sales Date April 23, 2008
Buyer
Phillip Estate Co. Ltd
Profits from real estate sale of approximately JPY 160
million to be posted as revenues(8) Changes in total investment units outstanding
Public and private offerings from the establishment of PRI to the end of the fourth fiscal period (ended July 31, 2007)
are as follows:

Date

Type

April 22, 2005

Total investment units
outstanding (unit)
ChangeBalance402
402

Paid-in capital(Millions of yen)
ChangeBalance
201
201

Notes

Established by private（Note 1）
offering
July 12, 2005
Public offering
74,69875,10034,42034,621（Note 2）
Note 1: PRI’s investment units were set at JPY 500,000 per unit at the time of establishment.
Note 2: PRI issued new investment units priced at JPY 480,000 per unit (underwritten price set at JPY 460,800) througha public offering for the purpose of raising funds mainly for the new acquisition of property.
1.

Officers and directors

Officers of PRI are as follows:

Title

Executive
OfficerSupervising
Officer

Name

Takeo
Nishiyoshi

ChikaoNomuraNumber ofInvestment
Units Held

Career Summary
Apr.
1988

Entered the Supreme Court Legal Training and Research Instituteof Japan

Apr.
1990

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

Jun.
2004

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

Apr.
2007

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

Apr.
1992

Entered the Management and Coordination Agency in Japan

Apr.
2003

Entered the Supreme Court Legal Training and Research Instituteof Japan

Oct.
2004

Admission to the Bar (The Daiichi Tokyo Bar Association)
Entered Hiroshi Hori Law Firm (currently Hori Law Firm)(present post)

Apr.
2005

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

22

0

0

Oct.
1982

Supervising
Officer

Kazuhiko
Chiba

Prospect Residential Investment Corporation
Entered the auditing firm Arthur Anderson in Japan (currently
KPMG AZSA & Co.)

Aug.
1988

Registered as a certified public accountant

May
2000

Appointed Managing Partner of Asahi & Co. (currently KPMG
AZSA & Co.)

Apr.
2004

Appointed Representative Director of AP Outsourcing Ltd.
(present post)

Jun.
2004

Registered as a certified public tax accountant

Apr.
2005

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

0

2. Reference material(1) Investment breakdown
A breakdown of PRI’s investment assets as of the end of the sixth fiscal period (ended July 31, 2008) is as follows:

Type of asset

Use

Fifth Fiscal Period(August 1, 2007 to
January 31, 2008)
Total held
Proportion to(Millions of yen)
total (%）

Residential
rental units
Residential
Real estate
rental units
Deposit and other assets

Trust beneficiary rights
in real estate

Sixth Fiscal Period(February 1, 2008 to
July 31, 2008)
Total held
Proportion to(Millions of yen)
total (%）

69,384

92.3

67,518

92.8

1,586

2.1

1,572

2.2

3,372

4.6

3,680

5.0

Total assets
74,343100.0
72,770Note: Total held amounts are recorded on the balance sheets (total of book values after deducting depreciation).

100.0(2) Investment properties classified as real estate or entrusted real estate① Overview of investment properties
The following chart lists investment properties owned by PRI as of July 31, 2008. With the exception of properties S017,
F017, and F022, which are classified as real estate, all other assets are classified as trust beneficiary rights in real estate.

Code

Property Name

Acquisition Price(Millions of Yen)
(Note 1)

Percentage Share
Appraisal Valueof Total(Millions of Yen)（％）
(Note 2)
(Note 3)Acquisition Date

S001

TK Flats Shibuya

6,399

9.4

5,930

July 12, 2005

S002

Prospect Shinonomebashi

3,353

4.9

3,520

July 12, 2005

S004

Maison de
Gyoranzaka

1,768

2.6

1,800

S005

Prospect Omori-Kaigan

1,807

2.6

1,830

July 14, 2005

S006

Abreast Shin-Osaka

1,826

2.7

1,872

July 12, 2005

S007

Maison de Ville Naka-Meguro

1,189

1.7

1,200

July 14, 2005

S008

Roppongi Rise House

1,184

1.7

1,110

July 12, 2005

S009

Prospect Nihonbashi-Honcho

1,070

1.6

1,010

July 12, 2005

S011

Fragrance Kawasaki

624

0.9

618

July 12, 2005

S012

Abreast Sakuragawa

516

0.8

466

July 12, 2005

S013

Dome Takamine

322

0.5

258

July 12, 2005

Ville

Takanawa

23

July 14, 2005

Prospect Residential Investment Corporation
0.4
220
July 12, 2005

S014

Dome Yotsuya

275

S015

TK Flats Denenchofu Annex

249

0.4

216

July 12, 2005

S016

Abreast Nagase

209

0.3

171

July 12, 2005

S017

Living Stage Higashi-Sendai

435

0.6

404

August 31, 2005

S018

Prospect Toyonaka Hattori

396

0.6

440

February 10, 2006

S019

Prospect Bishoen

376

0.6

378

February 15, 2006

S020

Prospect Shimogamo

411

0.6

377

March 15, 2006

S021

Prospect Kawaramachi-Gojo

803

1.2

756

March 15, 2007

S022

Prospect Chuo-Rinkan

700

1.0

614

March 15, 2007

S023

Sky Hills N15

932

1.4

942

May 31, 2007

S024

Sky Hills Sakaimachi

1,115

1.6

1,010

May 31, 2007

S025

Domy Chitose

592

0.9

540

May 31, 2007

S026

Sky Hills Takadai I

691

1.0

668

May 31, 2007

S027

Exceria Ikebukuro West II

1,020

1.5

1,000

June 20, 2007

S028

Prospect Monzennakacho

1,250

1.8

1,220

June 20, 2007

S029

Prospect KALON Minowa

1,930

2.8

1,920

September 7, 2007

S030

Prospect Nakanoshima

1,000

1.5

967

October 19, 2007

S031

Prospect Ogikubo

880

1.3

901

November 7, 2007

S032

Prospect Musashi-Shinjo

1,230

1.8

1,230

May 30, 2008

F001

Prospect Kiyosumi-Teien

2,780

4.1

2,900

July 14, 2005

F002

Park Terrace Ebisu

2,712

4.0

2,640

July 14, 2005

F003

BELNOS34

2,534

3.7

2,160

July 12, 2005

F004

Prospect Dogenzaka

2,294

3.4

2,060

July 12, 2005

F005

U House Daikan-Cho

1,548

2.3

1,409

July 12, 2005

F006

U House Gokiso

1,406

2.1

1,297

July 12, 2005

F007

Angel Heim Nishi-Rokugo No.2

1,401

2.1

1,344

July 14, 2005

F008

Prospect Onshi-Koen

1,196

1.8

1,270

July 12, 2005

F009

Deim-Hashimoto

992

1.5

943

July 12, 2005

F010

SK Residence

1,020

1.5

979

July 12, 2005

F012

Garden City Urawa

878

1.3

776

July 12, 2005

F014

U House Tsurumai II

685

1.0

567

July 12, 2005

F017

Living Stage Minami-Sendai

275

0.4

268

August 31, 2005

F019

Prospect Glarsa Hiroo

3,905

5.7

4,470

February 15, 2006

F020

Prospect Katsura

570

0.8

550

March 03, 2006

F021

Crown Heim Nishi-Tanabe

601

0.9

566

March 03, 2006

F022

Takasagoseki Nibankan

810

1.2

782

March 15, 2006

F023

Prospect Machiya

547

0.8

541

November 07, 2006

24

Prospect Residential Investment Corporation
1.1
670
March 15, 2007

F024

Prospect Hatsudai

730

F025

Prospect Morishita

1,480

2.2

1,480

March 15, 2007

F026

Prospect Nishi-Sugamo

1,419

2.1

1,390

March 30, 2007

F027

Palais D’Or Maruyama

1,250

1.8

1,130

October 19, 2007

F028

Prospect Kawasaki

1,717

2.5

1,770

October 19, 2007

F029

Prospect Nihonbashi-Koamicho

946

1.4

995

October 19, 2007

68,249100.0

66,549Total

Note 1: Acquisition price does not include real estate brokerage fees and other expenses incurred through the acquisition ofproperties.
Note 2: Figures are rounded to the nearest first decimal place.
Note 3: Based on the Cabinet Office Ordinance Concerning Balance Sheets, Income Statements, Asset Management Reports,
Cash Distribution Statements and Other Supplementary Documents to be Prepared by Investment Corporations, appraisal
values are drawn from valuation reports prepared by Aoyama Realty Advisors Inc., Chuo Real Estate Appraisal Co., Ltd.,
Tanizawa Sogo Appraisal Co., Ltd., Mitsui Real Estate Sales Co., Ltd., and Daiwa Real Estate Appraisal Co., Ltd as of theInvestment Corporation’s closing date. The properties appraised by each appraiser are shown below, with the property
codes corresponding to those in the above table.
Aoyama Realty Advisors Inc.: S001 to S005, S007 to S009, S018 to S021, S029, F001, F003, F004, F009, F010, F012, F019
to F023, and F026, F027
Chuo Real Estate Appraisal Co., Ltd.: S006, S011 to S017, F005 to F007, F013, F014 and F017
Tanizawa Sogo Appraisal Co., Ltd.: S023 to S026, S030, F002, F008 and F029
Mitsui Real Estate Sales Co., Ltd.: S022, F024, and F025
Daiwa Real Estate Appraisal Co., Ltd.: S027, and S028
HIRO & REAS network Co., Ltd : S031

② Overview of real estate and entrusted real estate
The following chart lists property names, site areas, and other information for real estate and entrusted real estate.
Code Property Name

Location

Site Area

Total No.
Total Monthly
Numb
Total No. of
Total
of
Rentaler ofTotal Leased
LeasedLeasable
Leasable
Revenues
tenatnFloor Space
Residential
Floor Space
Residenti(Thousands of
s
Units
Yen)
al Units

(m2)

(m2)

(m2)

(Note 1)

(Note 2)

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)

Occupancy
Ratio (BySpace)

Occupancy
Ratio (ByNo. ofResidential
Units)(%)(%)(Note 8)(Note 9)S001 TK Flats
Shibuya
Prospect
S002 Shinonomeba
shi
Maison de
Ville
S004
Takanawa
Gyoranzaka
Prospect
S005 Omori-Kaigan

Shibuya-ku,
Tokyo

1,800.47

6,903.54

5,884.59

194

165

26,893

1

85.2

85.1

Koto-ku,Tokyo

1,385.45

4,849.20

4,403.51

171

156

16,636

1

90.8

91.2

638.65

1,778.37

1,726.02

70

68

8,367

1

97.1

97.1

Ota-ku,Tokyo856.82

2,478.04

2,478.04

89

89

8,974

1

100.0

100.0

S006 Abreast
Shin-Osaka
Maison de
S007 Ville
Naka-Meguro

Osaka-shi,
Osaka766.13

2,984.64

2,516.79

92

78

15,922

47

84.3

84.8

Meguro-ku,
Tokyo

275.36

1,275.00

1,275.00

50

50

6,051

1

100.0

100.0

S008 Roppongi
Rise House
Prospect
S009 Nihonbashi-H
oncho

Minato-ku,
Tokyo

574.65

1,209.87

1,063.41

34

31

4,854

1

87.9

91.2

Chuo-ku,Tokyo

174.36

1,290.49

1,194.69

50

48

5,130

1

92.6

96.0

S011 Fragrance
Kawasaki

Kawasaki-shi,
Kanagawa

228.05

1,065.96

1,022.84

45

43

3,579

1

96.0

95.6

S012 Abreast
Sakuragawa

Osaka-shi,
Osaka

361.991,009.92

967.92

48

46

2,869

1

95.8

95.8

Minato-ku,
Tokyo

25

Prospect Residential Investment Corporation
S013 Dome
Takamine

Nagoya-shi,
Aichi

983.60946.04708.58

36

27

1,482

1

74.9

75.0

S014 Dome
Yotsuya

Nagoya-shi,
Aichi

812.09765.90724.90

36

34

1,609

1

94.6

94.4

TK Flats
S015 Denenchofu
Annex

Ota-ku,Tokyo

286.90429.50336.61

14

11

1,203

1

78.4

78.6

S016 Abreast
NagaseLiving Stage
S017 Higashi-Send
ai
Prospect
S018 Toyonaka
Hattori

Higashiosakashi, Osaka

318.54532.98532.98

26

26

1,413

26

100.0

100.0

Sendai-shi,
Miyagi904.001,539.41

1,360.47

52

46

2,484

1

88.4

88.5

Toyonaka-shi,
Osaka

352.75986.34986.34

34

34

2,448

1

100.0

100.0

S019 Prospect
Bishoen

Osaka-shi,
Osaka313.24901.15870.55

26

25

2,176

1

96.6

96.2

S020 Prospect
Shimogamo

Kyoto-shi,
Kyoto

234.53675.51592.71

31

27

1,714

1

87.7

87.1

Prospect
S021 Kawaramachi-Gojo

Shimogyo-ku,
Kyoto

234.98

1,528.12

1,307.85

52

45

3,898

1

85.6

86.5

S022 Prospect
Chuo-Rinkan

Yamato-shi,
Kanagawa

589.73

1,098.24

1,052.48

48

46

3,320

1

95.8

95.8

S023 Sky
N15

Hills

Sapporo-shi,
Hokkaido

1,232.73

4,754.86

4,754.86

111

111

5,106

1

100.0

100.0

Hills
S024 Sky
Sakaimachi

Chitose-shi,
Hokkaido

4,189.46

6,775.39

6,775.39

135

135

6,039

1

100.0

100.0

S025 Domy
Chitose

Chitose-shi,
Hokkaido

1,796.60

3,383.02

3,383.02

111

111

4,081

1

100.0

100.0

Hills
S026 Sky
Takadai I
Exceria
S027 IkebukuroWest II

Chitose-shi,
Hokkaido

2,401.78

4,712.47

4,712.47

120

120

5,500

1

100.0

100.0

Toshima-ku,
Tokyo

290.14

1,379.52

1,303.70

48

45

4,899

1

94.5

93.8

Prospect
S028 Monzennakacho

Koto-ku,Tokyo

613.01

1,790.56

1,760.10

62

61

6,395

1

98.3

98.4

Prospect
S029 KALON
MinowaTaito-ku,Tokyo

473.353,032.27

2,900.24

82

79

9,755

1

95.6

96.3

S030 Prospect
Nakanoshima

Kita-ku,Osaka

370.61

1,572.48

1,397.76

63

56

5,005

1

88.9

88.9

S031 Prospect
Ogikubo

Suginami-ku,
Tokyo

731.41

1,106.63

1,041.76

40

38

4,225

1

94.1

95.0

Kawasaki-shi,
Kanagawa

972.481,855.03

1,855.03

85

85

6,827

1

100.0

100.0

Koto-ku,Tokyo

1,586.77

5,556.73

5,350.72

77

74

14,468

1

96.3

96.1

F002 Park Terrace
Ebisu

Shibuya-ku,
Tokyo

790.182,705.09

2,528.56

51

47

11,458

1

93.5

92.2

F003

Katsushika-ku, Tokyo

3,092.58

5,321.89

4,355.02

100

87

10,870

1

81.8

87.0

Prospect
S032 MusashiShinjo
Prospect
F001 KiyosumiTeien

BELNOS 34

26

Prospect Residential Investment Corporation
F004 Prospect
Dogenzaka

Shibuya-ku,
Tokyo

274.24

2,058.53

1,869.83

47

43

9,269

1

90.8

91.5

F005 U House
Daikan-Cho

Nagoya-shi,
Aichi

2,060.52

5,944.44

5,526.80

96

89

9,050

1

93.0

92.7

F006 U House
GokisoAngel Heim
F007 Nishi-Rokugo
No.2

Nagoya-shi,
Aichi

3,113.87

5,127.19

4,447.66

78

72

7,706

1

86.7

92.3

Ota-ku,Tokyo

1,666.28

2,776.64

2,776.64

40

40

6,453

1

100.0

100.0

F008 Prospect
Onshi-Koen

Koto-ku,Tokyo

772.002,033.77

2,033.77

61

61

6,655

1

100.0

100.0

F009 Deim-Hashim
otoSagamihara-shi, Kanagawa

898.13

3,170.41

2,972.39

92

87

6,210

1

93.8

94.6

F010

Toshima-ku,
Tokyo

474.55

1,624.49

1,624.49

30

30

5,326

1

100.0

100.0

F012 Garden City
Urawa

Saitama-shi,
Saitama

1,557.49

2,468.51

2,468.51

30

30

4,965

1

100.0

100.0

F014 U House
Tsurumai II
Living Stage
F017 Minami-Sendai

Nagoya-shi,
Aichi

615.51

2,262.63

2,191.20

34

33

3,792

1

96.8

97.1

Sendai-shi,
Miyagi476.23

1,277.10

1,182.65

27

25

1,873

1

92.6

92.6

F019 Prospect
Glarsa Hiroo

Shibuya-ku,
Tokyo

803.31

3,846.27

3,524.46

112

105

18,310

1

91.6

93.8

F020 Prospect
KatsuraKyoto-shi,
Kyoto

1,354.29

1,769.96

1,708.72

29

28

3,065

1

96.5

96.6

F021 Crown Heim
Nishi-Tanabe

Osaka-shi,
Osaka444.201,517.86

1,196.64

22

18

2,400

1

78.8

81.8

F022 Takasagoseki
Nibankan

Sendai-shi,
Miyagi

1,794.83

3,336.52

3,192.32

41

39

5,204

1

95.7

95.1

F023 Prospect
Machiya

Arakawa-ku,
Tokyo

251.441169.37

1,002.88

21

18

2,642

1

85.8

85.7

F024 Prospect
HatsudaiShibuya-ku,
Tokyo

586.68817.71708.49

22

19

2,971

1

86.6

86.4

F025 Prospect
Morishita
ProspectF026 Nishi-SugamoKoto-ku,Tokyo

736.43

2,399.23

2,399.23

45

45

7,458

1

100.0

100.0

Koto-ku,Tokyo

368.152,023.42

2,023.42

42

42

6,610

1

100.0

100.0

SK Residence

F027

Palais D’Or
Maruyama

Chuo-ku,
Sapporo2,236.99

4,678.32

3,526.78

64

48

5,925

1

75.4

75.0

F028

ProspectKawasaki

Saiwai-ku,
Kawasaki

1,218.89

3,377.53

3,377.53

52

52

9,010

1

100.0

100.0

Chuo-ku,Tokyo

273.37

1,364.02

1,364.02

37

37

5,217

1

100.0

100.0

133,238.08

124,243.34

3,305

3,105

345,767

125

93.2

93.9

ProspectF029 NihonbashiKoamicho

Total

Note 1. In the ‘Site Area’ column, figures for total site area of real estate or entrusted real estate are based on data in register books orrecords. In some cases, such data might not be completely accurate.
Note 2. In the ‘Total Leasable Floor Space’ column, figures represent leasable floor space for portions of real estate or entrusted realestate acquired by PRI.
Note 3. In the ‘Total Leased Floor Space’ column, figures represent leased floor space with lease contracts concluded with
end-tenants. Such floor space excludes leased site (land) area. Figures are based on lease contracts between end-tenants and master
lessers or trust beneficiaries. Nevertheless, in cases of apparent errors in lease contracts, floor space data are based on information
given by the previous owner of the acquired properties, information shown on plans at completion, etc.
Note 4. In the ‘Total Leasable Residential Units’ column, figures represent leasable units for portions of real estate or entrusted realestate acquired by PRI.

27

Prospect Residential Investment Corporation
Note 5. In the ‘Total Leased Residential Units’ column, figures represent leased units to end-tenants with lease contracts concluded
between end-tenants and master lessers or trust beneficiaries as of July 31, 2008.
Note 6. In the ‘Total Monthly Rental Revenues’ column, figures represent total monthly revenues as recorded in lease contracts
concluded between end-tenants and master lessers or trust beneficiaries as of July 31, 2008. Such revenues include common area
maintenance fee revenues but exclude revenues from monthly contracted parking spaces or such supplemental facilities as storageand locker space.
Note 7. In the ‘Total Number of Tenants’ column, ‘1’ represents cases of lease contracts concluded between trust beneficiaries andmaster lessers. In such cases, figures are based on the assumption that all end-tenants have agreed with their master lesser to belessers (sub-lessers). In the cases that one tenant leases more than one unit, the number of tenants is recorded as ‘1.’ These figures are
based on information current as of July 31, 2008.
Note 8. In the ‘Occupancy Ratio (By Space)’ column, percentage figurees represent the proportion of leased floor space to leasable
floor space of each real estate or entrusted real estate property. In addition, percentage numbers are rounded to the nearest firstdecimal place. The ‘Total’ percentage figure represents the proportion of total leased floor space to total leasable floor space as ofJuly 31, 2008.
Note 9. In the ‘Occupancy Ratio (By No. of Residential Units)’ column, percentage figures represent the proportion of leased floor
space to leasable floor space of each asset. In the ‘Occupancy Ratio (By Space)’ column, percentage figures are rounded to thenearest first decimal place. The ‘Total’ percentage figure represents the proportion of total leased floor space to total leasable floor
space as of July 31, 2008.

(３）Capital Expenditures for Investment Properties① Capital Expenditure Plan (consisting of items from JPY 1 million)

Property Name

PurposePlanned period

Planned work amount (millions of
yen)
Note
Paid in this
Total
Total
periodpaid

Abreast Shin-Osaka

Large-scale repair work

From October 2008 to
January 2009

23

−

−

Maison de Ville Naka-Meguro

New installation of security
camerasAugust 2008

1

−

−

Dome Takamine

New installation of security
camerasAugust 2008

1

−

−

Dome Yotsuya

New installation of security
camerasAugust 2008

1

−

−

Sky Hills Sakaimachi

New installation of security
camerasOctober 2008

2

−

−

BELNOS 34

Renovation of retail space on
the second floor

From October 2008 to
January 2009

35

−

−

U House Daikan-Cho

Large-scale repair work

From June 2008 to
October 2008

83

23

23

U House Daikan-Cho

Renovation of store space on
the first floor

From October 2008 to
December 2008

5

−

−

U House Gokiso

Renovation of office space on
the first floor

From October 2008 to
December 2008

30

−

−

U House Gokiso

Renovation of five rooms

From August 2008 to
January 2009

15

−

−

Angel Heim Nishi-Rokugo No.2

Waterproofing of roof

4

−

−

Deim-Hashimoto

Renovation of three rooms

10

−

−

September 2008

1

−

−

September 2008

1

−

−

October 2008

2

−

−

Living Stage Minami-Sendai
Takasagoseki Nibankan
Palais D'Or Maruyama

Replacementmentofwater-supply meters
Replacementmentofwater-supply meters
Installation of new parking
facilities for bicycles

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

28

From December 2008
to January 2009
From August 2008 to
January 2009

Prospect Residential Investment Corporation②Capital expenditures in the period under review
Amount paid
(millions of yen)

Purpose

PeriodU House Gokiso

Renovation of room No. 221

From July 1, 2008 to July 31,
2008

2

U House Gokiso

Renovation of room No. 213

From June 3, 2008 to June 30,
20082

Deim-Hashimoto

Renovation of room No. 802

From February 25, 2008 to
March 16, 2008

2

Deim-Hashimoto

Renovation of room No. 702

From March 1, 2008 to March
29, 2008

2

SK Residence

Replacement of air conditioners
for office space on the second
floor

April 13, 2008

4

SK Residence

Repair of joint-water pipes

July 11, 2008

1

Prospect Kawasaki

New installation of security
camerasFrom March 4, 2008 to March
5, 2008

1

OthersReplacementmentof
airconditioners, water heaters, andothersFrom July 1, 2008 to July 31,
2008

25

Total

42

Note. Numbers are rounded down to the nearest first decimal place.
③Reserve for repair expenses
PeriodItems

Fifth Fiscal Period(August 1, 2007 to
January 31, 2008)(Millions of yen)
Sixth Fiscal Period(February 1, 2008 to
July 31, 2008)

Reserve balance at the end of
previous fiscal period

384

428

Reserved amount in the period

73

81

Withdrawal in the period
Balance carried forward

28
428

40
469

４）Figures in Engineering Reports① Outline of building engineering reports
In addition to receiving support from research firms, PRI commissions them for the following items for eachof its investment real estate or entrusted real estate properties.
—Examination of building deterioration, planning of short- and long-term repair expenses, research ofcompliance in accordance with the Building Standards Law, research of hazardous material contents inbuildings, and research of soil conditions.
Nevertheless, the contents of these reports are the opinions of the respective research firms, and PRI does notguarantee the appropriateness and accuracy of such contents.
② Outline of earthquake risk reports
PRI commissions Tokyo Bldg-Tech Center Co., Ltd. (TBTC) for earthquake risk reports and other reports foreach investment real estate and entrusted real estate property.
Nevertheless, the contents of the reports are the opinions of TBTC, and PRI does not guarantee theappropriateness and accuracy of such contents.

29

Prospect Residential Investment Corporation

Code

S001
S002
S004
S005
S006
S007
S008
S009
S011
S012
S013
S014
S015
S016
S017
S018

Property nameTK Flats Shibuya
Prospect Shinonomebashi
Maisonde
Ville
Takanawa Gyoranzaka
Prospect Omori-Kaigan
Abreast Shin-Osaka
MaisondeVille
Naka-Meguro
Roppongi Rise House
ProspectNihonbashi-Honcho
Fragrance Kawasaki
Abreast Sakuragawa
Dome Takamine
Dome Yotsuya
TK Flats Denenchofu
Annex
Abreast Nagase
LivingStage
Higashi-Sendai
ProspectToyonaka
Hattori

S019

Prospect Bishoen

S020

Prospect Shimogamo
ProspectKawaramachi-Gojo
Prospect Chuo-Rinkan
Sky Hills N15
Sky Hills Sakaimachi
Domy Chitose
Sky Hills Takadai I
Exceria Ikebukuro WestII
Prospect Monzennakacho
Prospect
KALON
MinowaProspect Nakanoshima
Prospect Ogikubo
Prospect Musashi-Shinjo
Prospect Kiyosumi-Teien
Park Terrace Ebisu
BELNOS34
Prospect Dogenzaka
U House Daikan-Cho
U House Gokiso
Angel
Heim
Nishi-Rokugo No.2
Prospect Onshi-Koen
Deim-Hashimoto
SK Residence
Garden City Urawa
U House Tsurumai II
LivingStage
Minami-Sendai

S021
S022
S023
S024
S025
S026
S027
S028
S029
S030
S031
S032
F001
F002
F003
F004
F005
F006
F007
F008
F009
F010
F012
F014
F017
F019

Prospect Glarsa Hiroo

F020

Prospect Katsura

Research firm
(Note 1)

Estimate of repair expenses(thousands of yen rounded
down)
Urgen Withint
one yearRebuilding
price ofbuilding(millionsof yenOver 12roundedyears
down)
184,420
2,174
10,1801,450Month andyear ofbuilding
engineering
reports

Probable Month andMaximumyear of
Loss (%) earthquake(Note 2) risk reports

Takenaka
TBTC
TBTC

−
−

490
−

−

−

47,800

463

TBTC
TBTC
TBTC

−
−

−
−

6,830
94,760600
910

April 2005
May 2005−−

37,070372

April 2005

715

April 2005
May 2005
April 2005
April 2005
April 2005

13
15
6
5

April 2005
April 2005
April 2005

8
19
12
10
12

July 2008
July 2008
July 2008
July 2008
July 2008
July 2008

TBTC
TBTC

−

−

3,570

−

−

3,830

362 February 2005
April 2005
385

TBTC
TBTC
Takenaka
Takenaka
TBTC

−
−
−
−

−
−
870
370

2,990
11,57049,76049,250

274
275
161
138

−

−

21,040

108

TBTC
TBTC

−

−

21,200160

May 2005

12

−

300

46,660312

August 2005

7

−

−

18,490

277

−

−

8,360

209

TBTC
TBTC

−

−

2,460

203

December
2005
December
2005
March 2004

−

−

4,320

440

January 2007

12

TBTC

−
300
−
300
1,200

−
−
−
−
680

3,960
52,71098,66063,750133,960

301
609
850
415
581

February 2007
March 2007
March 2007
March 2007
March 2007

14
2
4
3
4

−

−

4,860

350

May 2007

10

−

−

5,400

410

May 2007

19

July 2008

−

−

8,000

970

July 2007

14

July 2008

TBTC
TBTC
TBTC
Takenaka
TBTC
TBTC
TBTC
Takenaka
Takenaka

−
−
−
−
−
−
−
−
−

−
−
−
100
−
150
−
1,990
500

5,210
3,300
26,960238,790
41,750174,670
4,130
260,200
165,900

534
August 2007
305
August 2007
501
May 2008
1,332
March 2003
April 2005
700
April 2005
1,735
552 February 2005
1,181
March 2003
1,141
July 2007

12
11
12
15
11
12
9
11
10

Takenaka
TBTC
TBTC
TBTC
TBTC

−

130

108,540

580

March 2003

11

July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008

−
−
−
−
−

−
150
−
−
820

4,980
38,28036,93054,830125,540

574
646
447
605
491

February 2005
April 2005
April 2005
April 2005
April 2005

25
13
11
5
17

−

150

36,750300

August 2005

7

−

270

16,680

1,185

−

−

41,620351

Takenaka
Takenaka

Takenaka
Takenaka
Takenaka
Takenaka
TBTC
TBTC
TBTC

Takenaka
TBTC
TBTC
TBTC

30

December
2005
March 2006

12

10

9
14
5

7
7

July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008

July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008

F022
F023
F024
F025
F026
F027

Crown
Heim TBTC
Nishi-Tanabe
TBTC
Takasagoseki Nibankan
TBTC
Prospect Machiya
TBTC
Prospect Hatsudai
TBTC
Prospect Morishita
TBTC
Prospect Nishi-Sugamo
Palais D’Or Maruyama
TBTC

F028

Prospect Kawasaki

F021

ProspectNihonbashi-Koamicho
Total portfolio
F029

Prospect Residential Investment Corporation
−

160

7,070

405

March 2006

11

150
−
−
−
−
300
−

80,220
2,680
2,190
4,930
3,890
96,650761 February 2006
290 October 2006
179 Janurary 2007
616 February 2007
504 February 2007
975
August 2007
September
862
2007

11
14
8
11
10
2

TBTC

−
−
−
−
−
−
−

TBTC

−

−

4,150

399

12

1,800

7,580

2,593,100

32,185

5,810

August 2007

10

July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008
July 2008

7.6

Note 1. In the ‘Research firm’ column, TBTC stands for Tokyo Bldg-Tech Center Co., Ltd., and Takenaka stands for
Takenaka Corporation.
Note 2. Probable Maximum Loss (PML) is a ratio that represents the probability of a maximum loss, and is calculated
for each asset and the overall portfolio. In this document, PML is defined as a ratio of a building’s estimated restoration
cost to its rebuilding price resulting from a maximum-magnitude earthquake projected to occur within a 50-year period
every 475 years, therefore having a 10% probability every 50 years.
Note 3. PRI has purchased earthquake insurance for this property.
Note 4. The month and year of building engineering reports and the month and year of earthquake risk reports refer tothe first reports issued.
5）Outline of tenants and others① Outline of leasing conditions for each real estate or entrusted real estate property

Code

Property Name

S001
S002
S003
S004
S005
S006
S007
S008
S009
S011
S012
S013
S014
S015
S016
S017
S018
S019
S020
S021
S022
S023
S024
S025
S026
S027
S028

TK Flats Shibuya
Prospect Shinonomebashi
Maison de Ville Azabudai
Maison de Ville Takanawa Gyoranzaka

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

Roppongi Rise House
Prospect Nihonbashi-Honcho

Fragrance Kawasaki
Abreast Sakuragawa
Dome Takamine
Dome Yotsuya
TK Flats Denenchofu Annex

Abreast Nagase
Living Stage Higashi-Sendai

Prospect Toyonaka Hattori
Prospect Bishoen
Prospect Shimogamo
Prospect Kawaramachi-Gojo

Prospect Chuo-Rinkan
Sky Hills N15
Sky Hills Sakaimachi
Domy Chitose
Sky Hills Takadai I
Exceria Ikebukuro West II
Prospect Monzennakacho

Total Leasable
Floor Space(㎡)

Total Leased
Floor Space(㎡)

Number oftenants

6,903.54
4,849.20−
1,778.37
2,478.04
2,984.64
1,275.00
1,209.87
1,290.49
1,065.96
1,009.92
946.04765.90429.50532.981,539.41
986.34901.15675.51
1,528.12
1,098.24
4,754.86
6,775.39
3,383.02
4,712.47
1,379.52
1,790.56

5,884.59
4,403.51−
1,726.02
2,478.04
2,516.79
1,275.00
1,063.41
1,194.69
1,022.84
967.92708.58724.90336.61
532.981,360.47
986.34870.55592.71
1,307.85
1,052.48
4,754.86
6,775.39
3,383.02
4,712.47
1,303.70
1,760.10

1
1
−
1
1
47
1
1
1
1
1
1
1
1
26
1
1
1
1
1
1
1
1
1
1
1
1

31

(As of July 31, 2008)
Total
Percentage
Monthly
share to total
Rentalrevenues
Revenues(%)(Thousandsof Yen)
185
7.9
113
4.9
35
1.5
53
2.3
62
2.7
101
4.3
38
1.6
32
1.4
33
1.4
22
1.0
19
0.8
11
0.5
10
0.4
8
0.4
8
0.4
17
0.8
15
0.6
13
0.6
13
0.6
26
1.1
24
1.1
32
1.4
39
1.7
25
1.1
35
1.5
30
1.3
39
1.7

S029
S030
S031
S032
F001
F002
F003
F004
F005
F006
F007
F008
F009
F010
F012
F014
F017
F019
F020
F021
F022
F023
F024
F025
F026
F027
F028
F029

Prospect KALON Minowa
Prospect Nakanoshima
Prospect Ogikubo
Prospect Musashi-Shinjo
Prospect Kiyosumi-Teien
Park Terrace Ebisu
BELNOS34
Prospect Dogenzaka
U House Daikan-Cho
U House Gokiso
Angel Heim Nishi-Rokugo No.2

Prospect Onshi-Koen
Deim-Hashimoto
SK Residence
Garden City Urawa
U House Tsurumai II
Living Stage Minami-Sendai

Prospect Glarsa Hiroo
Prospect Katsura
Crown Heim Nishi-Tanabe
Takasagoseki Nibankan
Prospect Machiya
Prospect Hatsudai
Prospect Morishita
Prospect Nishi-Sugamo
Palais D’Or Maruyama
Prospect Kawasaki
Prospect Nihonbashi-Koamicho

Total

3,032.27
1,572.48
1,106.63
1,855.03
5,556.73
2,705.09
5,321.89
2,058.53
5,944.44
5,127.19
2,776.64
2,033.77
3,170.41
1,624.49
2,468.51
2,262.63
1,277.10
3,846.27
1,769.96
1,517.86
3,336.52
1,169.37
817.71
2,399.23
2,023.42
4,678.32
3,377.53
1,364.02

Prospect Residential Investment Corporation
2,900.24
1
61
1,397.76
132
1,041.76
1
26
1,855.031
15
5,350.72
1102
2,528.56
1
75
4,355.02
177
1,869.83
1
60
5,526.80
160
4,447.66
154
2,776.64
155
2,033.77
142
2,972.391
38
1,624.491
36
2,468.51129
2,191.20
127
1,182.651
123,524.46
1133
1,708.72
124
1,196.64
1
18
3,192.32
1
37
1,002.88
1
18
708.491202,399.231
51
2,023.421
39
3,526.78145
3,377.53157
1,364.021
31

133,238.08

124,243.34

125

2,341

2.6
1.4
1.1
0.6
4.4
3.2
3.3
2.6
2.6
2.3
2.4
1.8
1.6
1.6
1.3
1.2
0.5
5.7
1.0
0.8
1.6
0.8
0.9
2.2
1.7
2.0
2.5
1.3

100.0

Note: Leasing operations started from May 2008 for Prospect Musashi-Shinjo (Code: S032). Leasing operations ended
on April 22, 2007 for Maison de Ville Azabudai (S003).
② Occupancy rates
Code

S001
S002
S003
S004
S005
S006
S007
S008
S009
S011
S012
S013
S014
S015
S016
S017
S018
S019
S020
S021
S022

Property NameTK Flats Shibuya
Prospect Shinonomebashi
Maison de Ville Azabudai
Maison de Ville Takanawa Gyoranzaka

Prospect Omori-Kaigan
Abreast Shin-Osaka
Maison de Ville Naka-Meguro
Roppongi Rise House
Prospect Nihonbashi-Honcho
Fragrance Kawasaki
Abreast Sakuragawa
Dome Takamine
Dome Yotsuya
TK Flats Denenchofu Annex
Abreast Nagase
Living Stage Higashi-Sendai
Prospect Toyonaka Hattori
Prospect Bishoen
Prospect Shimogamo
Prospect Kawaramachi-Gojo
Prospect Chuo-Rinkan(End of each month)January
2008

February
2008

89.9
100.0
94.2
98.6
98.7
87.5
100.0
97.6
90.6
100.0
93.7
78.0
97.2
92.9
100.0
83.1
100.0
96.6
100.0
82.3
95.8

90.0
100.0
94.6
100.0
100.0
87.5
100.0
100.0
89.9
97.7
93.7
100.0
88.7
92.9
100.0
85.0
100.0
96.6
100.0
85.7
95.8

32

March
2008
90.9
98.7
95.1
100.0
100.0
85.4
96.0
97.6
94.4
100.0
100.0
80.0
97.0
92.8
100.0
90.5
100.0
100.0
96.9
83.6
95.8

April
2008

May
2008

June
2008

July
2008

91.1
95.9

90.2
92.4

88.0
91.7

85.2
90.8

98.6
95.4
85.4
98.0
95.2
92.8
98.0
95.8
80.4
94.4
78.4
100.0
96.3
100.0
100.0
84.7
83.8
95.8

97.2
100.0
85.4
100.0
87.9
92.8
96.0
97.9
74.9
94.6
78.4
96.2
90.5
100.0
100.0
84.7
83.8
97.9

95.6
98.7
85.4
98.0
87.9
96.5
96.0
95.8
74.9
94.6
78.4
100.0
88.4
100.0
100.0
84.7
87.4
100.0

97.1
100.0
84.3
100.0
87.9
92.6
96.0
95.8
74.9
94.6
78.4
100.0
88.4
100.0
96.6
87.7
85.6
95.8

Prospect Residential Investment Corporation
S023
S024
S025
S026
S027
S028
S029
S030
S031
S032
F001
F002
F003
F004
F005
F006
F007
F008
F009
F010
F012
F014
F017
F019
F020
F021
F022
F023
F024
F025
F026
F027
F028
F029

Sky Hills N15
Sky Hills Sakaimachi
Domy Chitose
Sky Hills Takadai I
Exceria Ikebukuro West II
Prospect Monzennakacho
Prospect KALON Minowa
Prospect Nakanoshima
Prospect Ogikubo
Prospect Musashi-Shinjo
Prospect Kiyosumi-Teien
Park Terrace Ebisu
BELNOS34
Prospect Dogenzaka
U House Daikan-Cho
U House Gokiso
Angel Heim Nishi-Rokugo No.2
Prospect Onshi-Koen
Deim-Hashimoto
SK Residence
Garden City Urawa
U House Tsurumai II
Living Stage Minami-Sendai
Prospect Glarsa Hiroo
Prospect Katsura
Crown Heim Nishi-Tanabe
Takasagoseki Nibankan
Prospect Machiya
Prospect Hatsudai
Prospect Morishita
Prospect Nishi-Sugamo
Palais D’Or Maruyama
Prospect Kawasaki
Prospect Nihonbashi-Koamicho

100.0
100.0
100.0
100.0
100.0
100.0
97.9
90.5
88.3

100.0
100.0
100.0
100.0
96.1
100.0
98.9
92.1
90.7

100.0
100.0
100.0
100.0
96.9
98.3
99.0
93.7
100.0

100.0
100.0
100.0
100.0
94.5
98.3
96.0
88.9
100.0

98.6
96.0
84.8
86.3
98.2
80.7
97.3
100.0
78.3
100.0
100.0
96.8
85.2
96.5
100.0
95.7
84.4
100.0
95.2
98.0
100.0
78.6
100.0
96.4

98.6
95.8
77.0
90.4
98.2
79.8
95.0
97.7
81.4
97.2
100.0
100.0
85.2
96.0
96.5
95.7
88.8
100.0
95.2
98.0
100.0
84.5
100.0
93.5

100.0
95.8
79.6
91.8
95.2
87.3
95.2
95.9
86.6
97.4
100.0
100.0
85.2
94.8
89.7
100.0
95.6
100.0
91.8
100.0
100.0
86.1
100.0
93.5

94.8
94.1
79.8
93.3
96.2
88.2
100.0
97.0
91.5
100.0
100.0
100.0
88.9
95.4
96.5
83.1
100.0
100.0
87.3
97.5
100.0
80.9
100.0
97.8

100.0
100.0
100.0
100.0
94.5
98.3
95.2
90.5
93.8
0.0
96.1
90.7
79.8
92.5
93.8
88.2
100.0
98.8
91.1
94.2
100.0
100.0
88.9
96.4
96.5
78.8
100.0
100.0
90.7
100.0
100.0
81.8
100.0
97.8

100.0
100.0
100.0
100.0
94.5
98.3
96.0
88.9
94.1
100.0
98.6
92.8
79.0
89.1
91.9
87.6
100.0
100.0
91.2
94.2
100.0
96.8
88.9
94.3
96.5
83.1
95.7
95.3
86.6
100.0
100.0
81.8
100.0
97.8

100.0
100.0
100.0
100.0
94.5
98.3
95.6
88.9
94.1
100.0
96.3
93.5
81.8
90.8
93.0
86.7
100.0
100.0
93.8
100.0
100.0
96.8
92.6
91.6
96.5
78.8
95.7
85.8
86.6
100.0
100.0
75.4
100.0
100.0

Note: The formula to calculate occupancy rate is ‘leased floor space/leasable floor space,’ with results rounded to thenearest first decimal place.
（６）Information related to major real estate and major entrusted real estate
None of the real estate or entrusted real estate properties owned by PRI independently accounted for at least 10%of total real estate rental revenues in the fifth fiscal period.
（７）Portfolio diversification
Portfolio diversification by region, years after construction, and type of units is as follows:① By region
Percentage share
Percentage share
Total leasable
Acquisition priceof acquisitionof floor space tofloor space
Number of(millions of yen
price to total
total
Regionrounded down)
property
(㎡)
(%)
(%)
(Note 2)
(Note 4)(Note 3)(Note 3)66.0
61,220.15
45.9
Tokyo's 23 Wards
25
45,064
Tokyo
Metropolitan
Area
13,035.68
9.8
9.0
6
6,141
(excluding Tokyo's 23 Wards)
25.0
58,982.25
44.3
Other Regions (Note 1)
23
17,044
Total

54

68,24933

100.0

133,238.08

100.0

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

② Years after construction
Percentage share
Percentage share
Total leasable
Acquisition priceof acquisitionof floor space tofloor space
Number of (millions of yen
price
to
total
total
propertyrounded down)
(㎡)
(%)
(%)
(Note 1)
(Note 3)(Note 2)
(Note 2)Years after construction

Up to one year

1

1,230

1.8

1,855.03

1.4

More than one year and up to five years

23

28,64942.0

41,884.18

31.4

More than five years and up to ten years

13

21,452

31.4

38,792.31

29.1

More than ten years

17

16,91824.8

50,706.56

38.1

Total

54

68,249100.0

133,238.08

100.0

Note 1. Transaction prices exclude consumption tax recorded on sales contracts.
Note 2. Percentage numbers are rounded to the nearest first decimal place.
Note 3. Leasable space owned by PRI excluding certain sites (ground-level parking spaces).
（8）Outline of major tenants and outline of overall tenants① List of major tenants
The following chart shows the names of major tenants with leased floor space and total monthly rents forproperty owned by PRI at the end of the fourth fiscal period. To be designated as a major tenant, leased floor
space must account for at least 10% of the total leased floor space of PRI’s portfolio. All of these tenants aremaster lessers.

Percentage share to
Total Leased Floor
Space
(％)
(Note 2)

Total Monthly
RentalRevenues(Thousands of
Yen)(Note 3)

Percentage share tototal revenues(%)(Note 4)

Tenant Name

Industry

Total Leased
Floor Space(㎡)

Haseko Livenet Co., Ltd

Real estate

50,322.31

40.5

151,51743.8

Tokyu Community Co., Ltd

Real estate

33,693.88

27.1

47,29013.7

Mitsui Fudosan Residential Lease
Co., Ltd (Note 1)

Real estate

16,134.98

13.0

55,771

16.1

Total of Major Tenants

100,151.17

80.6

254,575

73.6

Total Portfolio

124,243.34

100.0

345,767

100.0

Note 1. Mitsui Fudosan Residential Lease Co., Ltd. succeeded the condominium leasing operations of Mitsui Fudosan
Real Estate Sales Co., Ltd. on April 1, 2003. Hence, Mitsui Fudosan Real Estate Sales is used in master lease contracts.
Note 2. Percentage numbers are rounded to the nearest first decimal place.
Note 3. In the ‘Total monthly rents’ column represents total monthly rent received by trust beneficiaries of real estate or
entrusted real estate properties based on master lease contracts.
Note 4. Percentage numbers are rounded to the nearest first decimal place.

34

Prospect Residential Investment Corporation
６． Corporations and entities related to PRI (in reference material 1．Corporations and entities related to PRI）
（1）Structure of the Investment Corporation
Memorandum
Concerning
Preferential
Information
Provision

Property Provider
Prospect Co., Ltd.

Prospect Residential
Investment Corporation

Asset Custody
Contract

Asset Custodian
Sumitomo Trust andBanking Co., Ltd.

Adminstrative
Duty Contract

Administrative Agent
Sumitomo Trust andBanking Co., Ltd.

General Meeting ofUnitholders
Board of Officers
Executive officer:
Property Information
ProviderMitsui Real Estate Sales
Co., Ltd.

Memorandum
Concerning
Information
Provision

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

Unitholders’RegisterAdministration
Contract

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

Asset Management
Contract
Memorandum Concerning
Information Provision

Asset Management Company
Prospect Residential Advisors
Co., Ltd.

Accouting Auditor
Ernst & Young ShinNihon

Memorandum
Concerning Preferential
Information Provision(2) Names, operational roles, and outline of related operations
Operational roles

Names

Investment Corporation

Prospect Residential Investment
Corporation

Asset Management Company

Prospect Residential Advisors Co.,Ltd.

Outline of related operations
PRI invests primarily in properties wholly or partly forresidential use, and defined as real estate or real estate
related assets (Notes) backed by real estate. With the aim ofachieving steady growth and securing stable earnings andprofits over the medium to long term, PRI carries out the
management of its investment assets.
PRI outsources all asset management operations to Prospect
Residential Advisors Co., Ltd. (the "Asset Management
Company"). Based on the Asset Management Contract
signed between the two parties on April 22, 2005 (the"Contract," as amended thereafter), the Asset Management
Company has formulated its Investment Management
Policy (the "Policy") to function as in-house rules andregulations regarding the management of the Investment
Assets.
In accordance with the Policy, the Asset Management
Company formulates Annual Asset Management Plans("Plans") for each of the Investment Corporation's operating
periods. The Plans present period-specific reports
concerning the acquisition, disposition and management ofreal estate-related assets; fund procurement and otherfinancing schemes; and distribution strategies.
The outsourced operations to the Asset Management
Company from PRI are as follows:① Operations for asset management, ② fund raising
operations, ③ reporting on asset conditions ④compilingproperty management plans , ⑤ related operations of ①
and ④ which are commissioned occasionally by PRI.

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Asset Custodian

Sumitomo Trust and Banking Co.,

Administrative AgentLtd.

Unitholders’ Register
Administrator

Prospect Residential Investment Corporation
Sumitomo Trust engages in the following operations basedon the Administrative Duty Contract as an administrative
duty contractor, in accordance with the Investment TrustLaw:① Operations for calculations of PRI (excluding
unitholders’ register administrative operations), ②
operations to compile accounting books for PRI, ③
taxation accounting for PRI, ④ operations for board
meetings of officers of PRI and general meetings ofunitholders of PRI, and ⑤ related operations of ① and④ . Sumitomo Trust also engages in asset custodyoperations and related cash management and book keeping
operations as an asset custodian in accordance with theAsset Custody Contract and the Investment Trust Law:

Mizuho Trust and Banking Co., Ltd.

Mizuho Trust engages in the following operations based on
the Unitholders’ Register Administrative Contracts as aunitholders’ register administrator, in accordance with theInvestment Trust Law:
① Change of names of unitholders, ② operations to issue
investment securities, ③ operations to compile invitations
to general meetings of unitholders, notices of decisions
made on such meetings and reference documents, proxydocuments, and reception support at such meetings, ④operations to calculate and pay distributions to unitholders,⑤ operations to respond to inquiries about investment
units, to issue related certificates, and to handle applicationsof mishaps, ⑥ operations to sort out and keep documents
and undelivered postal items related to outsourced
operations, ⑦ operations to compile statistics ofinvestment units needed by PRI based on related laws andprovisions as well as contracts with PRI, and ⑧ related
operations of ① and ⑦.

Notes:
Real estate related assets are defined in a. and c.
PRI primarily invests in the following designated assets, as set in Item 28.1of its Articles of Incorporationa. real estateb. real estate equivalent assets, as follows
i)leasing rights to real estateii)
surface rights
iii)
trust beneficiary rights to real estate, leasehold, and surface rights
iv)
cash trust beneficiary rights to real estate, leasehold, and surface rightsv)
equity contracts with the above a. and b.i), and iv) as investment assetsvi)
cash trust beneficiary rights to anonymous partnership equity with real estate as major trust assets
c. More than half or equal to half of backed assets investmented in real estatei)
preferred equity securities (according to Article 2.12 of the Asset Liquidation Act)ii)
beneficiary securities (according to Article 2.12 of the Investment Trust Law)iii)
investment securities (according to Article 2.22 of the Investment Trust Law)iv)
beneficiary securities for designated purpose trusts (according to Article 2.15 of the Asset Liquidation Act, excluding
the above b. iii. iv. and v.)（３）Major related parties other than the aforementioned
Names

Operational roles

Outline of related operations
KKP concluded the Memorandum Concerning Preferential
Information Provision with PRI as well as PRA. Based on theProperty Provider

Prospect Co., Ltd. (KKP)

memorandum, KKP agrees to supply certain information about(Note)

real estate and to give preferential negotiation rights to PRI withrespect to acquiring real estate as well as real estate related assets

Property Information
ProviderMitsui Real Estate Sales Co.,Ltd.

it owns, will own or develop.
Mitsui Real Estate Sales Co., Ltd. concluded the Memorandum
Concerning Information Provision with PRI as well as PRA.
Based on the memorandum, it supplies PRI as well as PRA
information about certain real estate to be sold.

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

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