December 15, 2008

Earnings Digest for the Fifth Fiscal Period(From May 1, 2008 to October 31, 2008)
Top REIT, Inc. (listed on the Tokyo Stock Exchange with securities code 8982) hereby announces its
earnings results for the fiscal period ended October 31, 2008 (fifth fiscal period).
This earnings digest is a summary of earnings results translated from the Japanese “Kessan Tanshin”
report, dated December 15, 2008, which is prepared in accordance with generally accepted
accounting principles in Japan and Japanese law.
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.

A. Profile of Top REIT
Top REIT invests in office, retail and residential properties in Japan. The assets are managed with astrategic focus on (1) the “skilled management of a diversified portfolio” and (2) the “optimal application ofsponsor strengths,” in order to maximize unitholder value with stable growth in both revenue and portfolio
assets over the medium to long term.

B. Financial Highlights

Period of asset management
Operating revenue
Operating income
Ordinary income
Net income
Dividend per unit
(excluding dividend in excess of earnings)
Dividend in excess of earnings per unit

Fifth
Fiscal Period

FourthFiscal Period

Period-on-Period
Change184 days

182 days¥5,584 million¥2,651 million¥1,994 million¥1,993 million¥4,817 million¥2,353 million¥1,842 million¥1,841 million+15.9%+12.7%+8.2%+8.2%¥12,863¥11,884

+8.2%

¥0

¥0–%

(a) Business Results
Top REIT posted operating revenue of ¥5,584 million, operating income of ¥2,651 million, ordinary
income of ¥1,994 million and net income of ¥1,993 million.
(b) Dividends
To ensure an amount equivalent to profit dividends would be tax deductible by applying a special
corporation tax treatment (stipulated in Article 67, Paragraph 15 of the Special Taxation Measures Law),
Top REIT decided to pay out the entire amount of unappropriated retained earnings, excluding fractionsof the dividend per unit that are less than ¥1. Accordingly, Top REIT declared a dividend per unit of¥12,863.
1

(c) Financial Position
Total assets amounted to ¥173,241 million and net assets amounted to ¥84,141 million.
(d) Debt Financing
Of Top REIT’s loans payable, short-term loans payable accounted for ¥9,300 million, current portion oflong-term loans payable accounted for ¥16,700 million and long-term loans payable accounted for¥56,000 million. Top REIT has not issued investment corporation bonds.

C. Asset Management Performance(a) Acquisition and Selling of Assets
Top REIT began the fifth fiscal period with 13 properties (total acquisition value: ¥157,187 million).
Based on widely sourcing information on new properties through the “optimal application of sponsor
strengths,” Top REIT acquired Ecology Toyosu Procentury (acquisition value: ¥5,160 million) on May30, 2008. This property was acquired by utilizing pipeline support functions that Top REIT has with itssponsors.
As a result, the total acquisition value of Top REIT’s assets under management at the end of the fifth
fiscal period stands at ¥162,347 million.
(b) Management and Maintenance of Portfolio Assets
The basic asset management strategy of Top REIT centers on sustaining and increasing revenue over themedium to long term by maintaining and improving tenant satisfaction (the “Tenant First” policy) andkeeping operational management costs at an appropriate level.
Top REIT strives to sustain relationships of trust with tenants and discern tenant needs via property
management companies, and thereby maintain high occupancy rates. Moreover, floor space expansion
targeting existing tenants, solicitation of new tenants and other efforts were appropriately taken. As aresult of such undertakings, the occupancy rate of Top REIT’s entire portfolio at the end of the fifth fiscal
period was 99.5%. In addition, based on the annual asset management plans prepared for each property,
Top REIT was committed to implementing measures to improve revenue such as by upward revising theamount of rent with existing tenants after grasping the review of renewal and new advertised rents,
discrepancies with current market rent levels and other current conditions. Furthermore, a reduction ofabout ¥75 million, or the total amount of interest (2% per annum) that would have been payable for thenext 6 years on the security deposit for the Ito-Yokado Higashi-Narashino Store, was achieved based onnegotiations with tenant Ito-Yokado Co., Ltd. that resulted in an agreement to refund the security deposit
in lump-sum.
Regarding maintenance, while following up on ensuring an appropriate perception of the operational
management conditions and steady implementation of asset management plans for each property, TopREIT embarked on efforts to reduce administrative expenses for certain assets under management. Also,
while carrying out repair work and other measures that contributed to enhancing the competitiveness ofproperties and maintaining and improving the functionality of properties based on asset management
plans, Top REIT took such steps as to keep the costs of the construction work under the asset
management plans at an appropriate level and reviewing the timing of conducting the construction work
as it thought proper.

2

D. Procurement of Funds
Top REIT procures funds by adopting a financial policy that is based on stable financial management.
During the fifth fiscal period, Top REIT acquired a new property and repaid a portion of loans payable asfollows, each of which were funded by cash reserves obtained through the release of some tenant leasehold
deposits (*) and other means. Consequently, Top REIT did not procure funds from external sources during
the fifth fiscal period.
Top REIT acquired Ecology Toyosu Procentury on May 30, 2008 for ¥5,160 million using cash reserves.
Furthermore, of its short-term loans payable, Top REIT repaid ¥1,000 million on July 31, 2008 prior to therepayment date as cash reserves became available that allowed for such prepayment.
(*) Release of some tenant leasehold deposits
Concerning tenant leasehold deposits made by tenants of real estate in trust with The Sumitomo Trust& Banking Co., Ltd. as the trustee, the trustee deposited some of these tenant leasehold deposits withTop REIT under the objective of effective utilization of funds.
As a result, as at the end of the fifth fiscal period, total loans payable outstanding was ¥82,000 million andthe ratio of loans payable to total assets (LTV) was 47.3%. Of total loans payable, long-term loans payable(including the current portion of long-term loans payable) accounted for 88.7% and loans payable with
fixed interest rates accounted for 76.0%.
The credit ratings of Top REIT as of the date of this report are as follows:
Rating Agency
Issuer Rating [Outlook]
Moody’s Investors Service, Inc. (Moody’s)
A2 [Stable]
Rating and Investment Information, Inc. (R&I)
AA– [Stable]

E. Outlook for the Sixth and Seventh Fiscal Periods
The earnings results forecasts for the sixth fiscal period (from November 1, 2008 to April 30, 2009) and theseventh fiscal period (from May 1, 2009 to October 31, 2009) are as follows:
Sixth
Fiscal Period

SeventhFiscal Period

181 days

184 days¥5,620 million¥2,001 million¥2,000 million¥5,638 million¥1,939 million¥1,938 million¥12,900¥12,500¥0¥0

Period of asset management
Operating revenue
Ordinary income
Net income
Dividend per unit
(excluding dividend in excess of earnings)
Dividend in excess of earnings per unit

*Explanation on the Appropriate Use of Earnings Results Forecasts, and Other Matters of Special Note
The earnings results forecasts and other forward-looking statements contained in this document are basedon information currently available to and certain assumptions deemed reasonable by Top REIT.
Accordingly, the actual operating revenue, ordinary income, net income, dividend per unit and dividend inexcess of earnings per unit may differ materially due to a variety of factors. Moreover, the forecasts should
not be construed as a guarantee of the dividend amount.
3

F. Notes(a) Changes in Accounting Policies
a. Changes accompanying revisions in accounting standards, etc.:
b. Changes aside from a. above:YesNo(b) Number of Investment Units Outstanding
a. Number of investment units (including treasury investment units) outstanding at the end of thefiscal period:
Fifth Fiscal Period: 155,000 units
Fourth Fiscal Period: 155,000 units
b. Number of treasury investment units outstanding at the end of the fiscal period:
Fifth Fiscal Period:0 units
Fourth Fiscal Period:

40 units

G. Financial Statements(a) Balance Sheets(Unit: thousand yen)
Fourth Fiscal Period
Fifth Fiscal Period(As of April 30, 2008) (As of October 31, 2008)
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Accounts receivable – trade
Prepaid expenses
Deferred tax assets
Income taxes receivable
Consumption 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
Construction in progress in trust
Total property, plant and equipment
Intangible assets
Other
Total intangible assets
Investments and other assets
Lease and guarantee deposits
Long-term prepaid expenses
Deferred tax assets
Other
Total investments and other assets
Total noncurrent assets
Deferred assets
Deferred organization expenses
Total deferred assets
Total assets

5

Period-on-Period
Change6,054,171
8,850,048
41,961
63,8802,962
3,336
398,573395
15,415,329

3,054,980
5,814,175
44,267
61,621
1,839
1,863
–
25,043
9,003,791(2,999,191)(3,035,872)
2,306(2,259)(1,122)(1,473)(398,573)
24,647(6,411,538)

1,104,579(6,855)
1,097,723
3,630
(144)
3,485
11,436(507)
10,929506(21)484
4,885,146
52,920,348(3,653,406)
49,266,942
629,045(76,375)
552,670
190,814(20,580)
170,234
35,965(10,449)
25,516
103,572,802–
159,585,937

1,111,657(27,517)
1,084,139
3,630(579)
3,051
11,436(2,029)
9,407
506
(84)
421
4,888,525
55,414,168(4,735,387)
50,678,781
654,166(98,398)
555,768
194,250(30,332)
163,918
98,979(21,093)
77,886
106,523,104
147
163,985,153

7,078(20,662)(13,584)
–
(434)
(434)
–
(1,521)(1,521)
–(63)
(63)
3,379
2,493,820(1,081,981)
1,411,839
25,120(22,022)
3,097
3,435
9,751
(6,316)63,014(10,644)
52,3702,950,301
147
4,399,216

318
318

297
297

(21)
(21)

10,00079,91839,32867,588
196,835
159,783,091

10,00063,50371,32585,042229,871
164,215,322–(16,414)
31,996
17,45333,036
4,432,231

28,35028,350175,226,770

22,68022,680173,241,793(5,670)(5,670)(1,984,976)

(Unit: thousand yen)
Fourth Fiscal Period
Fifth Fiscal Period(As of April 30, 2008) (As of October 31, 2008)
Liabilities
Current liabilities
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
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Derivatives liabilities
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

6

Period-on-Period
Change158,370
10,300,000
16,700,000
308,917
181,84542–718,375
11,0483,326
28,381,926

82,9009,300,000
16,700,000
256,456
211,782
57
197,557
742,5148,307
2,240
27,501,815(75,470)(1,000,000)–(52,461)
29,936
14
197,557
24,139(2,740)(1,086)(880,111)

56,000,000
169,769
6,526,349
111,63962,807,759
91,189,685

56,000,000
169,769
5,235,545
193,533
61,598,849
89,100,664––(1,290,803)
81,893(1,208,910)(2,089,021)

82,260,100

82,260,100–

1,842,032
1,842,032
84,102,132

1,993,858
1,993,858
84,253,958

151,825
151,825
151,825(65,047)(65,047)
84,037,085
175,226,770(112,828)(112,828)
84,141,129
173,241,793(47,781)(47,781)
104,044(1,984,976)

(b) Statements of Income(Unit: thousand yen)
Fourth Fiscal Period(November 1, 2007 –April 30, 2008)
Operating revenue
Rent revenue – real estate
Other lease business revenue
Total operating revenue
Operating expenses
Expenses related to rent business
Loss on retirement of real estate properties
Asset management fee
Asset custody fee
Administrative service fees
Directors’ compensations
Audit fee
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Amortization of deferred organization expenses
Other
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)

7

Fifth Fiscal Period(May 1, 2008 –October 31, 2008)

Period-on-Period
Change4,802,941
14,425
4,817,366

5,572,195
12,5455,584,740

769,254(1,880)767,374

1,974,314–
367,640
6,993
55,9643,600
10,00045,8062,464,319
2,353,047

2,370,668
897
434,587
7,811
58,8523,600
10,00046,8062,933,224
2,651,516

396,353897
66,946
817
2,888
–
–
1,000
468,904
298,469

23,123
1,169
24,292

16,078
6,868
22,947(7,044)
5,698(1,345)499,672
5,670
29,046534,389
1,842,951
1,842,951
1,003
4
1,008

642,118
5,670
31,779679,568
1,994,895
1,994,895
1,055
(5)
1,050

142,446–
2,732
145,179
151,944
151,94452(10)
411,841,942
90
1,842,032

1,993,845
12
1,993,858

151,902(77)
151,825(c) Statements of Cash Flows(Unit: thousand yen)
Fourth Fiscal Period(November 1, 2007 –April 30, 2008)
Cash Flows from Operating Activities
Income before income taxes
Depreciation and amortization
Loss on retirement of real estate properties
Amortization of deferred organization expenses
Amortization of trademark
Interest income and interest income on securities
Interest expenses
Decrease (increase) in accounts receivable – trade
Decrease (increase) in consumption taxes refund receivable
Decrease (increase) in income taxes receivable
Decrease (increase) in prepaid expenses
Decrease (increase) in other current assets
Increase (decrease) in 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
Income taxes paid
Net cash provided by (used in) operating activities
Cash Flows from Investment Activities
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Proceeds from tenant leasehold and security deposits
Payments of tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits in trust
Payments of tenant leasehold and security deposits in trust
Net cash provided by (used in) investment activities
Cash Flows from Financing Activities
Increase in short-term loans payable
Decrease in short-term loans payable
Proceeds from long-term loans payable
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

8

Fifth Fiscal Period(May 1, 2008 –October 31, 2008)

Period-on-Period
Change1,842,951
987,715–5,670
21(23,123)499,672(9,114)(390,616)(1,473)(25,576)
38(7,563)(7,002)(171,248)
8,206(19,818)(17,598)
2,671,138
23,104(461,826)(1,016)2,231,400

1,994,895
1,147,426
897
5,670
21(16,078)
642,118(2,306)
390,782
1,473
2,259
254
10,76916,020198,814
24,13916,414(20,342)
4,413,227
16,097(611,678)(1,041)
3,816,605

151,944
159,710
897
–
–
7,044
142,446
6,807
781,398
2,946
27,835215
18,33323,023370,063
15,932
36,232(2,744)
1,742,089(7,007)(149,851)(25)
1,585,205(6,003,688)(21,697,104)
171,314–575,926(115,009)(27,068,561)(8,847)(5,708,454)–(1,544)
239,345(1,530,149)(7,009,649)

5,994,841
15,988,650(171,314)(1,544)(336,581)(1,415,140)
20,058,912

10,300,00–
18,300,000(1,847,755)
26,752,245
1,915,083
12,989,136
14,904,219–(1,000,000)–(1,842,020)(2,842,020)(6,035,063)
14,904,219
8,869,155(10,300,000)(1,000,000)(18,300,000)
5,735(29,594,265)(7,950,147)
1,915,083(6,035,063)

H. Portfolio Data

Asset
Class

Acquisition
Value

Appraised
Investment
Value atBreakdown
End of Period(million yen)(million yen)

NEC Head Office Building

41,95055,000

29.0

Harumi Island Triton Square
Office Tower Y

33,00044,300

23.4

Akasaka Oji Building

9,660

15,800

8.3

Kanda Park Plaza

5,156

5,651

3.0

Shiba-Koen Building

5,770

5,270

2.8

Harumi Island Triton Square
Office Tower Z

20,00019,600

10.3

TokyoMetropolitan
Area

Faret East Building

2,091

3,300

1.7

KansaiNittetsu Honmachi Building

1,100

1,800

1.0

118,727

150,721

79.6

Sagamihara Shopping Center

12,00011,9006.3

Ito-Yokado Higashi-Narashino Store

8,900

5,5422.9

Musashiurawa Shopping Square

4,335

4,190

2.2

25,235

21,632

11.4

Fukusawa House Towers H&I

10,6359,410

5.0

Ecology Toyosu Procentury

5,160

5,070

2.7

Subtotal (2 properties)

15,795

14,480

7.6

Central
Tokyo

2,590

2,608

1.4

2,590

2,608

1.4

162,347

189,441

100.0

Area

CentralTokyo
OfficeBuilding

Property Name

Subtotal (8 properties)

RetailPropertyTokyo
Metropolitan
Area

Subtotal (3 properties)Tokyo
Residential Metropolitan
Area
Property

Other
PropertyOAK PLAZA

Subtotal (1 property)

Total

9(%)

For more information, please visit our website http://www.top-reit.co.jp/english/
Contact for inquiries in Japanese;
Top REIT Asset Management Co., Ltd. (Asset Manager)
Koji Murata, Director, General Manager, Finance Department+81-3-3243-2181
Contact for inquiries in English:
Top REIT Asset Management Co., Ltd. (Asset Manager)
E-mail address: info-top@top-reit-am.co.jp

DISCLAIMER:
Top REIT, Inc. makes no assurance or warranty with respect to the completeness or accuracy of thisEnglish translation. In the event of any discrepancy between the Japanese original and this English
translation, the Japanese original shall prevail. For complete and accurate information, please refer to theJapanese original.

10