JPR-第六期 C1-4 3/14 05.3.29 11:39 AM ページ 1

J PR
Japan Prime Realty Investment Corporation
Sixth Fiscal Period Business Report
July 1, 2004 – December 31, 2004

Printed in Japan

JPR-第六期 C2-3 3/22-入稿用 05.3.29 11:41 AM ページ 41

PROFILECORPORATE DATA

Established on September 14, 2001, Japan Prime Realty Investment Corporation
is a closed-end, corporate type fund that invests primarily in high-quality office buildings
and retail properties located in Tokyo and other major cities in Japan.
With its geographically diverse portfolio, JPR’s primary objective is to achieve sustainablegrowth and stable cash distributions to its investors.

Head Office
9-9 Yaesu 1-Chome, Chuo-ku, Tokyo 103-8285, Japan
Tel: +81-3-3231-1051
Fax: +81-3-3274-7775
Date of Establishment
September 14, 2001
Listing
Tokyo Stock Exchange (Securities Code: 8955)
Fiscal Period Ends
June 30 and December 31 of each year
General Meeting of Unitholders
More than once every two years
Cash Distribution Payment Eligibility
Unitholders of record as of June 30 and December 31 ofeach year

Location of Records
Mizuho Trust & Banking Co., Ltd.
2-1 Yaesu 1-chome, Chuo-ku, Tokyo
Main Branch, Stock Transfer Agency Division
Mailing Address Mizuho Trust & Banking Co., Ltd.
1-17-7 Saga, Koto-ku, Tokyo 135-8722
Stock Transfer Agency Division
Telephone+81-3-5213-5213 (Representative)
AgentsMizuho Trust & Banking Co., Ltd.
(All branches nationwide)
Mizuho Investors Securities Co., Ltd.
(Head office and all branches
nationwide)
Note: On March 12, 2003, Mizuho Trust & Banking Co., Ltd. merged with Mizuho Asset
Trust & Banking Co., Ltd., to establish a new trust and banking entity under the name ofMizuho Trust & Banking Co., Ltd. As a result, Mizuho Trust & Banking's main branchchanged its address on the same date.

Web site
http://www.jpr -reit.co.jp/jpr_e/index.html

Transfer Agent
Mizuho Trust & Banking Co., Ltd.
2-1 Yaesu 1-chome, Chuo-ku, Tokyo

English page
This Web site has been createdspecifically for our English-speaking
readers.

Performance
Trends in occupancy rate byarea and purpose; trends ininvestment conditions. Updated
monthly.

ANNUAL SCHEDULE (PROVISIONAL)

DEC.

12 Balance date for the six-month period ended December 31
FEB.

2

FAQ

Announcement of results for the six-month period ended December 31
MAR.

3

Publication of December Performance Information Report
Payment of cash distributions for the six-month period ended December 31

Balance date for the six-month period ended June 30

8 AUG.

Publication of June Performance Information Report
Payment of cash distributions for the six-month period ended June 30

9 SEPT.

Note: Performance Information Report is prepared pursuant to the Investment Trust Law of Japan.

FINANCIAL HIGHLIGHTS 3

ACTIVITY HIGHLIGHTS 7

PORTFOLIO BREAKDOWN 5

SUBSEQUENT ACTIVITY HIGHLIGHTS 9

REIT STRUCTURE AND EXTERNAL SERVICE PROVIDERS 21
FINANCIAL STATEMENTS 28

Investor Relations
News releases are posted here as appropriate, as well as
information useful to unitholders and investors in evaluating
the status of JPR, including financial statements and otherlegally mandated reports.

6 JUNE

Announcement of results for the six-month period ended June 30

CONTENTS: TO OUR INVESTORS 1

Answers to commonly asked
questions by our unitholders
and investors are found here.

PROPERTY PORTFOLIO OF JPR 10

MANAGEMENT’S DISCUSSION AND ANALYSIS 24

UNITHOLDER INFORMATION 39

MEMBERS OF THE BOARD 40 CORPORATE DATA 41

This document contains a translation of selected information described in the Financial Report (Kessan Tanshin) dated February 17, 2005, prepared under the timely disclosure requirements of theTokyo Stock Exchange, as well as the Financial Statements and Performance Information Report prepared pursuant to the Investment Trust Law of Japan, for the period from July 1, 2004 to
December 31, 2004 of Japan Prime Realty Investment Corporation (“JPR”).
This English language document was prepared solely for the convenience of and reference by non-Japanese investors and is not intended to constitute a disclosure document. The Japanese
language Financial Report, Financial Statements and Performance Information Report for the aforementioned period should be referred to as the originals of this document.
English translations for legal, accounting, tax and business concepts used herein may not convey precisely identical concepts of the equivalent Japanese terms. The figures presented in the financial
statements may differ from the Company’s Financial Report (Kessan Tanshin) due to rounding. 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 documents and English documents contained herein, the original Japanese documents will govern themeaning and interpretation. Neither JPR, Tokyo Realty Investment Management, Inc., nor any of their respective directors, officers, employees, partners, unitholders, agents or affiliates will be
responsible or liable for the completeness, appropriateness or accuracy of English translations or the selection of the portion(s) of any document(s) translated into English. No person has beenauthorized to give any information or make any representations other than as contained in this document in relation to the 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 JPR, Tokyo Realty Investment Management, Inc., or any of their respective directors, officers, employees, partners,
unitholders, agents or affiliates.
The financial statements of JPR have been prepared in accordance with generally accepted accounting principles in Japan (Japanese GAAP), which may materially differ in certain respects fromgenerally accepted accounting principles in other jurisdictions.
Many provisions of this document contain information that constitute forward-looking statements. These forward-looking statements are not a guarantee of future performance and involve risks
and uncertainties, and actual results may differ materially from those in the forward-looking statements as a result of various factors.

41

TO OUR INVESTORSJapan Prime Realty Investment Corporation (“JPR” or “the Company”) together with Tokyo Realty Investment
Management, Inc. (TRIM), its asset management company, are pleased to report impressive results for the six-month
period ended December 31, 2004 (the Company’s sixth fiscal period). A leader in its industry, JPR continued to overcome
challenging conditions and the impact of increased competition in the acquisition of investment properties. For theperiod under review, operating revenues climbed 13.2% compared with the previous fiscal period to ¥7,686 million,
while the portfolio occupancy rate as of December 31, 2004, rose 1.9 percentage points to 95.1%.
On the earnings front, increased profits for the full fiscal period from JPR’s property portfolio including newly
acquired properties, the aforementioned improvement in the occupancy rate, and ongoing efforts to reduce costs, all contributed to double-digit percentage growth. Operating profits surged 13.3% to ¥3,469 million, while net
income grew ¥254 million to ¥2,869 million. JPR is confident the foundation exists for long-term stableprofits underpinned by its quality portfolio and competitive advantage compared with other publicly
listed Japanese real estate investment trusts (J-REITS). On an annualized basis, portfolio net
operating income (NOI) yield of 6.1% compared favorably with the industry average.

Hirohito Kaneko (left)
Executive Officer, Japan Prime Realty Investment Corporation
Toshihiro Hagiwara (right)
President and CEO, Tokyo Realty Investment Management, Inc.

Another key consideration of the Company is the return of profits to its unitholders. In the sixth fiscal period, cash distribution per unit was ¥6,671, representing
100% of distributable income, an increase of 9.7% compared with ¥6,081 for the previous fiscal period. The number ofinvestment units issued and outstanding as of December 31, 2004, remained unchanged and stood at 430,000 units.
OVERVIEW OF THE SIXTH FISCAL PERIOD
Office Buildings
Underpinned by a slowdown in the supply of new properties, which alleviated downward pressures on overall rental
rates, conditions in the market for leased office space were favorable, buoyed by the general upswing in the economy andincreasing parity between supply and demand. In much of Greater Tokyo, vacancy rates fell to approximately 5% withincreased demand for large-scale premier properties. In regional business districts, particularly in Osaka, Nagoya,Fukuoka, and other major metropolitan cities, this positive trend was more pronounced. While rentals in these areas continued in an adjustment phase, demand for prime locations appeared on the upswing.
Commercial Facilities
Conditions in the commercial facilities sector were stagnant as the pace of growth, previously exhibited by the IT anddigital consumer electronics industries, slowed. General business conditions were also impacted by inclement weather inthe second half, which prompted a drop in retail and department store sales. In the retail property market, rental rates
1

declined in commercial business districts (CBDs). This was despite the ongoing shift by domestic appliance volume-retailers
and “do-it-yourself ” home improvement centers from the suburbs to urban areas. In regional areas, the focus on locationand facilities also continued unabated, with signs of a recovery in rental rates for prime, high-specification properties.
Real Estate
For the fiscal period under review, Japan’s real estate market continued to attract investment, fueled by a soft recovery in
the Japanese macro economy, prospects of improved parity between supply and demand for lease rental properties, andother favorable factors. Demand from overseas and domestic investment funds also increased, reflecting the lack of more
attractive opportunities given the prolonged low interest rate environment in Japan, the relative cost advantages of realestate markets in Japan compared with overseas markets, and a global capital surplus. In Japan’s property sales market,
demand for prime properties, particularly in Tokyo’s CBDs, continued to intensify. Underpinned by a number of private
real estate funds and the increase in J-REITs, the market experienced a significant increase in property prices in comparison with their appraisal values. This trend was also evident for retail properties and real estate located in areas such as
Osaka, Nagoya, Fukuoka, and other cities.

“A general upswing in the economy and improved parity between
supply and demand for lease rental properties has created favorable
conditions for investment in Japan’s real estate market.”

Acquisitions and Divestments
Under these circumstances and in accordance with its fundamental investment policy, JPR continued efforts to establish astable revenue stream, to improve the quality of its portfolio, and to diversify its asset holdings based on geographicallocation, type of use, tenant composition, and investment amount. The Company also maintains a number of pipelines
in connection with the acquisition of investment properties. These primarily comprise acquisitions through sponsor collaboration and acquisitions through direct negotiation.
The six months to December 31, 2004, was also a period in which JPR redefined and clarified this fundamental investment policy, adopting a more flexible and aggressive approach. While the Company continues to apply existing criteria
on an “in principle” basis, namely to maintain a 6:4 ratio of properties held in Tokyo and other regions and an 8:2 ratio
of office buildings and commercial facilities, to secure a diverse tenant profile, and to acquire properties at a cost of¥1,000 million and above, JPR anticipates it will occasionally step outside these guidelines as it aggressively pursues business opportunities. Leveraging its high-quality portfolio and competitive advantage, the Company will selectively assume
higher risks based on calculated and appropriate returns.
In the fiscal period under review, JPR acquired the Shinjuku Square Tower on July 2, 2004 (co-ownership for aninvestment of ¥10,000 million), the SS Daikanyama on October 5, 2004 (for an investment of ¥2,160 million), the BYGS
Shinjuku Building on November 9, 2004 (co-ownership for an investment of ¥2,900 million), the Shin-Kojimachi
Building on November 12, 2004 (increase in co-ownership for an investment of ¥200 million), and the Across Shinkawa
Building Annex on November 26, 2004 (co-ownership for an investment of ¥710 million). As a result of these acquisi-

2

FINANCIAL HIGHLIGHTS

All amounts in millions of yen
unless otherwise stated

All amounts in millions of yen
unless otherwise stated

6th period ended
December 31, 2004

5th period ended
June 30, 2004

6th period ended
December 31, 2004

Operating revenues

7,686

6,791

73.8

Operating expenses

4,217

3,729

40.5

Operating profits

3,469

3,062

33.3

Income before income taxes

2,870

2,616

27.5

Net income

2,869

2,615

27.5

Total assets

198,674

182,254

1,906.5

Interest-bearing liabilities

51,066

77,166490.0

Total unitholders’ equity

91,982

91,729882.7

Unitholders’ capital

89,114

89,114855.1

Cash distributions

2,868

2,614

27.5

Dividend payout ratio

100%

100%

—

Number of units (units)

430,000

430,000—

Unitholders’ equity per unit (yen/U.S. dollars)

213,912213,3222,052.7

Cash distribution per unit (yen/U.S. dollars)

6,671

6,081

64.0

Funds from operations (FFO) per unit (yen/U.S. dollars)

9,907

8,874

95.1

Return on total assets (annualized)

3.0%

3.1%

—

Return on total unitholders’ equity (annualized)

6.2%

5.7%

—

Equity ratio

46.3%

50.3%

—

Interest-bearing liabilities to total assets

46.8%

42.3%

—

Debt service coverage ratio (times)

9.4

10.4

—

Property net operating income (NOI)

5,404

4,722

51.9

6.1%

6.2%

—

Property net cash flows (NCF)

4,939

4,253

47.4

NCF yield (annualized)(***)

5.6%

5.6%

—

Number of properties

42

38

—

Number of tenants

496

437

—

273,330.52

256,329.13

—

95.1%

93.2%

—

NOI yield (annualized)(**)

Total leasable floor space (square meters)
Occupancy rate

All amounts in millions of
U.S. dollars unless otherwise stated (*)(*) The rate of ¥104.21=US$1.00, the foreign exchange rate on December 31, 2004, has been used for translation.
(**) NOI yield expressed as a percentage is calculated using the weighted average acquisition price on a pro-rated basis.
(***) NCF yield expressed as a percentage is calculated using the weighted average acquisition price on a pro-rated basis.

3

tions, JPR held 42 properties as of December 31, 2004 totaling ¥179,629 million on an acquisition basis, an increase of 4
properties and ¥15,970 million, respectively, compared with the previous period. Total leasable floor space was273,330.52 m2, up 17,001.39 m2, leased to 496 tenants, an increase of 59. Adopting this more flexible approach, the ratio
of properties located in Tokyo and other regions was 66.1% and 33.9%, respectively, with office buildings comprising
77.5% and commercial facilities 22.5%.
A defining and distinguishing feature of JPR is its strong relationship with sponsor companies and the acquisition ofproperties through direct negotiation with sellers. While the Company adopts strict criteria toward transactions withinterested parties, its sponsors comprise publicly listed corporations, including Tokyo Tatemono Co., Ltd., Taisei
Corporation, and Sompo Japan Insurance Inc., and other leading non-listed companies such as Meiji Yasuda Life
Insurance Company and Yasuda Real Estate Co., Ltd., themselves subject to disclosure and compliance requirements. As
of December 31, 2004, properties acquired through sponsor collaboration comprised 66.8% of the entire portfolio, while
direct negotiation led to 66.8% on an acquisition-price basis.
In the fiscal period under review, JPR contracted to acquire a portion of the Cupo-la Main Building (1-1 Kawaguchi
Redevelopment Project) on November 25, 2004 for a planned investment of ¥2,100 million. The Cupo-la Main Building“JPR has adopted a more flexible and aggressive investment
policy that will take advantage of its high-quality portfolio andcompetitive advantage.”is a joint construction project including sponsor company, Taisei Corporation. Scheduled for completion in March 2006,
this project is JPR’s first foray into property development. On December 20, 2004, the Company also contracted toacquire the Strasse Ichibancho, a commercial facility, for an investment amount of ¥4,200 million.
In addition to those properties acquired during the period, JPR contracted to sell a portion of its property holdings.
This is consistent with the Company’s “Value Up, Cost Down” strategies, and also represents efforts to improve portfolio
quality and ensure a balance between high and low risk investments. JPR has decided to dispose of the JPR Ikebukuro
Building, the JPR Square Hakata East/West, and the JPR Park West Takamatsu for an aggregate gain on sale. In the case of
the JPR Park West Takamatsu, the loss is attributed to renovation costs incurred following acquisition. Through these
efforts, JPR will secure a portfolio capable of generating efficient cash flows and stable dividends and generate improvements in portfolio balance and quality.
EQUITY AND FUNDS MANAGEMENTJPR continues to adopt strategies aimed at ensuring a sound financial position. The Company worked to steadily expand
its property portfolio and procured short-term funds for flexibility and long-term funds for improved stability. In thecontext of its long-term funds procurement, JPR issued corporate bonds with the aim of diversifying maturities of its
interest-bearing debt in anticipation of an increase in interest rates. As a result of these efforts, the balance of total outstanding debt as of December 31, 2004, stood at ¥51,066 million, with the balance of unsecured corporate bonds totaling¥42,000 million. Standard & Poor’s, Moody’s Investor Service, and Rating and Investment Information, Inc., rated these4

PORTFOLIO BREAKDOWN

Value Breakdown by Region

NOI Breakdown by Region

Total Leased Floor Space by Region¥179,629 million¥5,404 million

259,925.13 m2

33.9%

35.7%

40.0%

(¥60,962 million)(¥1,931 million)(104,090.42 m2)

44.5%

35.2%

27.0%

(¥79,960 million)(¥1,902 million)(70,196.36 m2)

21.6%

29.1%

33.0%

(¥38,707 million)(¥1,571 million)(85,638.35 m2)■■ Tokyo CBDs ■■ Greater Tokyo ■■ Other cities

Value Breakdown by TypeNOI Breakdown by Type

Total Leased Floor Space by Type¥179,629 million¥5,404 million

259,925.13 m2

22.5%

25.3%

26.2%

(¥40,400 million)(¥1,366 million)(68,018.12 m2)

77.5%

74.7%

73.8%

(¥139,229 million)(¥4,038 million)(191,907.01 m2)■■ Offices ■■ Retail properties

Total Leasable Floor Space and Occupancy Rate

Portfolio Growth

Total leasable floor space (m2)(%) Occupancy rate

Accumulated
Investment100

280,000

Properties 42¥179.63 billion
260,000
95

38¥163.65 billion

240,000
90
220,000

32¥139.65 billion

200,000
180,000
160,00085¥125.80 billion

80¥94.60 billion¥92.18 billion

75¥72.66 billion

30

25

27

June
2002

Sept. 2002 to
Dec. 2002

18

140,00070¥40.73 billion

120,000

13

65

100,000

60

80,000

Nov.
2001

Dec.

Mar.
2002

June

Sept.

Dec.

Mar.
2003

June

Dec.

June
2004

Dec.

Purchase
Period

Nov.
2001

Dec.
2001

Jan. 2003 toJune 2003

July 2003 to
Dec. 2003

Jan. 2004 toJune 2004

July 2004 to
Dec. 2004

Note: Accumulated investment does not include miscellaneous acquisition expenses,
fixed assets tax, city-planning tax and consumption tax.

5

corporate bonds A-, A3, and A+, respectively. With the aim of reducing exposure to potential increases in interest rates,
77.3% of total outstanding debt is long-term with fixed interest rates and a maturity of more than one year (average
maturity five years). The average interest rate during the fiscal period was 1.2% and the interest-bearing debt to total
assets ratio was 46.8%.
EXTERNAL AND INTERNAL FACTORS THAT IMPACT GROWTH
In its efforts to ensure sustainable growth and a consistent return to investors, JPR is confronted by external and internal
factors.
External Growth Factors
The Japanese real estate market in which JPR operates is increasingly impacted by a variety of external factors including
fierce competition in the acquisition of investment properties following the increase in publicly listed J-REITS andprivate funds, and a growing disparity in property acquisition prices and appraisal values. In order to address thesefactors, the Company has redefined and clarified its investment policy, with particular emphasis on three areas. First,“To further increase brand awareness, JPR has increased
the number of buildings within its portfolio bearing the JPR name,and introduced standardized brand criteria into all areasof the Company’s business activities.”while JPR maintains an “in principle” policy to restrict acquisitions from interested parties to their appraisal value and tolimit them to a maximum of 105% of appraisal values in the case of acquisitions from third parties, in future theCompany will adopt a more flexible approach in the event medium- and long-term benefits to portfolio quality andreturns are deemed appropriate. Transactions with interested parties are also subject to a three-level process of checks andbalances in order to ensure commercial viability. Second, JPR will in certain circumstances acquire properties with anappraisal value less than ¥1,000 million. Third, the Company will actively pursue the purchase and sale of properties
emphasizing quality and risk/return. Through these measures, JPR is confident it will overcome external impediments tosustainable growth and ensure continuous improvement of its investment portfolio.
Internal Growth Factors
Enhancing tenant satisfaction and maximizing economies of scale are two internal factors over which JPR retains significant
control. Directly impacting growth and the Company’s ability to secure profits, JPR has adopted a brand strategy, a project
management company strategy, and implemented investment incentives, in its efforts to address internal growth factors.
There are several facets to the establishment of the JPR brand. The Company’s A/3S concept, for example, emphasizes“Amenities” based on a three “S” platform of Service, Safety, and Saving energy. To further increase brand awareness, JPR
has increased the number of buildings within its portfolio bearing the JPR name. Another aspect of the brand strategy is
the introduction of standardized brand criteria into all areas of the Company’s business activities, divided along management (service, rapid response criteria, and other factors) and building (safety and energy-saving criteria) lines.

6

ACTIVITY HIGHLIGHTS

Shinjuku Square Tower
Acquired on July 2, 2004, this conveniently located office space is a mere eight minutes on footfrom Nishi-Shinjuku Station, on the busy Tokyo Metro Marunouchi Subway Line. The single
tenant is the Shinjuku Square Tower Management Co., Ltd.

• Site Area (m2):• Total Floor Space (m2):

8,409.52
78,796.00• Structure/Floors:• Completed:

S/RC/SRC B4/30F
October 1994

SS Daikanyama
Located in Tokyo’s trendy Daikanyama residential and shopping area, one minute on footfrom Daikanyama Station, Tokyu Toyoko Line, this building houses one shop operated by PAL
Co., LTD. It was purchased on October 5, 2004.

• Site Area (m2):• Total Floor Space (m2):

277.12668.09• Structure/Floors:• Completed:

RC B2/2F
July 2002

BYGS Shinjuku Building
In accordance with JPR’s fundamental investment policies to acquire new office buildings inTokyo Central Business Districts, the BYGS Shinjuku Building was acquired on November 9,
2004. Consisting of both office space and shops, this building is situated above ShinjukuSanchome Station, Toei Shinjuku Subway Line. Actus Co., LTD., and Kimoto Co., Ltd., areamong its twenty-two tenants.

• Site Area (m2):• Total Floor Space (m2):

3,522.46
25,733.10• Structure/Floors:• Completed:

SRC B2/14F
April 1985

Across Shinkawa Building Annex
On November 26, 2004, JPR purchased the Across Shinkawa Building Annex in Tokyo’s Chuo
Ward, situated five minutes on foot from Kayaba-cho Station, serviced by the Tokyo Metro
Tozai Subway and Hibiya Subway Lines. Consisting of office space with parking facilities, thisbuilding houses five tenants, including UCHIDA SPECTRUM, INC.

• Site Area (m2):• Total Floor Space (m2):

858.485,535.90• Structure/Floors:• Completed:

S/SRC B2/10F
June 1994

7

JPR has also adopted measures to streamline its property management requirements based on location, expertise andcosts. Concomitant with these scale benefits, the Company has also introduced an incentive scheme based on enhancing
economies of scale and reducing costs.
Through these initiatives, JPR strives to increase occupancy rates, rental income and portfolio value and to generatehigher property income and investor returns.
LOOKING AHEAD
JPR has continued to make progress in furthering its acquisition strategy with the purchase of Strasse Ichibancho on
February 4, 2005. In the short- to medium-term, the Company will maintain a focus on the Tokyo metropolitan areawith a view to acquiring significant landmark properties. In order to offset an anticipated drop in Tokyo property yields,
JPR will also identify prime return-oriented properties in other regional areas, particularly in Osaka, Nagoya, andFukuoka. In the commercial facility market, the Company will select properties such as Strasse Ichibancho, with anemphasis on stable cash flows and portfolio stability. At the same time, JPR will adopt a more proactive approach withregard to development projects making an earlier commitment to participation.

“JPR will maintain a focus on the Tokyo metropolitan area witha view of acquiring significant landmark properties, and also
identify prime return-oriented properties in other regional areas.”

Among publicly listed J-REITS, JPR boasts a strong relationship with sponsor companies and will continue to leverage these strengths. Given its track record and the revised policies adopted, the Company is well on track to achieve its
mid-term goal of ¥300,000 million assets in 2006.
JPR continues to experience upward movement in all key operating and financial indicators and has undertaken an
additional issue of 100,000 new investment units as a means to pursue continued growth. For the six-month period
ending June 30, 2005, JPR is forecasting operating revenues of ¥8,216 million and operating profits of ¥3,675 million.
Forecast net income is ¥3,074 million with an expected cash distribution per unit of ¥5,800 reflecting dilution from the
new unit issue.
JPR is confident the strategies are in place to secure sustainable growth and will continue to leverage its competitive
advantage. We hope this business report will provide all investors with a better understanding of the Company, its policies and the future. We thank you for your support and ask for your continued understanding.

Hirohito Kaneko, Executive Officer,
Japan Prime Realty Investment Corporation

8

Toshihiro Hagiwara, President and CEO,Tokyo Realty Investment Management, Inc.

SUBSEQUENT ACTIVITY HIGHLIGHTS

Acquisition

Strasse Ichibancho
The Strasse Ichibancho was acquired in accordance with JPR’s
fundamental investment policies to acquire new commercial facilities. The building is situated on the most fashionable shopping
promenade in Sendai, twelve minutes on foot from JR Sendai
Station and four minutes on foot from Hirose-Dori Station,
Sendai City Subway. The single tenant is Five Foxes Co., Ltd.

• Site Area (m2):648.81• Total Floor Space (m2):
3,445.80• Structure/Floors:
RC/S B1/8F• Completed:
October 2002
• Location:
Sendai-shi, Miyagi• Acquisition Date:
February 4, 2005
• Acquisition Price:¥4,200 million

Divestments
In the period under review, JPR contracted to sell three properties, namely the JPR Ikebukuro Building, the JPR Square
Hakata East/West, and the JPR Park West Takamatsu for an aggregate gain on sale. This is in accordance with theCompany’s fundamental investment policy, which aims to raise quality and ensure a balanced portfolio. The sale of theJPR Ikebukuro Building for ¥3,345 million, ¥743 million above its book value, exemplifies the Company’s Value Up
Strategy. Following the completion of large-scale renovations, the occupancy rate improved over 10% at the end of theperiod under review.

Issue of New Investment Units
In an effort to ensure financial stability and to sustain growth, the Company undertook a primary offering of 95,000 new
investment units, and granted an option by way of third-party allotment to a maximum of 5,000 investment units forwhich an option was exercised. The Company procured approximately ¥26 billion, which is earmarked for the repaymentof short-term debt and the acquisition of properties. Payments for each offering were completed on February 1, 2005 andMarch 1, 2005, respectively. Unitholders’ capital was approximately ¥115 billion. The number of investment units issued
and outstanding subsequent to the issue was 530,000 units.

9

PROPERTY PORTFOLIO OF JPR

Locations of Portfolio Properties
A Tokyo CBDs
Office A-11Shinjuku-ku
Office A-12 Office A-9
Office A-5
Office A-3
Office A-4
Chiyoda-ku Office A-1
Shibuya-ku
Office A-2
Office A-8
Office A-13
Retail A-1
Chuo-ku
Office A-6
Retail A-2

Hokkaido
C – 10 11

Minato-ku

Office A-7
Office A-10

Shinagawa-ku

B Greater Tokyo
Saitama

Office B-6
Office B-7

Retail B-1
Tokyo
Kanagawa

Office B-5
Office B-3

C – 12

Office B-2

Office B-1

TohokuRetail B-2
Chiba

Hokuriku
C – 1

BChugokuC – 15A
C – 16 Chubu

Osaka
C – 2

C – 6

Shikoku

Kyushu
C – 7

4

17

1

C – 13

Kinki

14 18

Tokyo CBDs

Chiyoda, Chuo, Minato, Shinjuku,
Shinagawa, Shibuya

B

Greater Tokyo

All other areas of Tokyo and Chiba
Prefecture, Kanagawa Prefecture,
Saitama Prefecture

C

Other Cities

All other areas in Japan

A

C – 9

Okinawa10

A Tokyo CBDs
■

■ A-1
■ A-2
■ A-3
■ A-4
■ A-5
■ A-6
■ A-7
■ A-8
■ A-9
■ A-10■ A-11■ A-12■ A-13● A-1● A-2

Kanematsu Bldg.
Kanematsu Bldg. Annex
JPR Ningyo-cho Bldg.
Shin-Kojimachi Bldg.
JPR Crest Takebashi Bldg.
MS Shibaura Bldg.
Gotanda First Bldg.
Fukuoka Bldg.
JPR Ichigaya Bldg.
Oval Court Ohsaki Mark West
Shinjuku Square Tower
BYGS Shinjuku Bldg.
Across Shinkawa Bldg. Annex
JPR Shibuya Tower Records Bldg. (Retail)
SS Daikanyama (Retail)

B Greater Tokyo
■

■ B-1
■ B-2
■ B-3
■ B-5
■ B-6
■ B-7
● B-1
● B-2

Arca East
JPR Chiba Bldg.
JPR Yokohama Nihon Odori Bldg.
Shinyokohama 2nd Center Bldg.
Kawaguchi Center Bldg.
JPR Ueno East Bldg.
Tanashi ASTA (Retail)Tsurumi fuga 1 (Retail)

C Other Cities—Hokkaido, Tohoku and Hokuriku■■ C-10■ C-11■ C-12■ C-1

North 33 Bldg.
Park East Sapporo
Sompo Japan Sendai Bldg.
Niigata Ekinan Center Bldg.

C Other Cities—Osaka
■

■ C-2
■ C-4
■ C-17● C-1

Meiji Yasuda Life Osaka Umeda Bldg.
Tokyo Tatemono Honmachi Bldg.
Dojima F Bldg.
JPR Umeda Loft Bldg. (Retail)

C Other Cities—Chubu, Kinki, Chugoku and Shikoku■■ C-16■ C-13■ C-15■ C-6

JPR Nagoya Sakae Bldg.
Sompo Japan Wakayama Bldg.
SK Hiroshima Bldg.
JPR Takamatsu Bldg.

C Other Cities—Kyushu and Okinawa
■

■ C-7
■ C-9
■ C-14■ C-18JPR Hakata Bldg.
JPR Naha Bldg.
Tenjin 121 Bldg.
Semba Fukuoka Bldg.

11

Tokyo CBDs

Region

Type

No.

Name

Location

Completed

Acquired

Office

A-1

OfficeA-2

Kanematsu Bldg.

Chuo-ku, Tokyo

1993. 2

2001.12.27

Kanematsu Bldg. Annex

Chuo-ku, Tokyo

1993. 2

2001.12.27

OfficeA-3

JPR Ningyo-cho Bldg.

Chuo-ku, Tokyo

1989.122001.11.16

OfficeA-4

Shin-Kojimachi Bldg.

Chiyoda-ku, Tokyo

1984.10

2001.11.16
2002.11.21
2004.11.12(Total)OfficeA-5

JPR Crest Takebashi Bldg.

Chiyoda-ku, Tokyo

1999. 92002. 6.21

OfficeA-6

MS Shibaura Bldg.

Minato-ku, Tokyo

1988. 2

2003. 3.28

OfficeA-7

Gotanda First Bldg.

Shinagawa-ku, Tokyo

1989. 7

2003. 7.23

OfficeA-8

Fukuoka Bldg.

Chuo-ku, Tokyo

1990. 5

2003.10.15

OfficeA-9

JPR Ichigaya Bldg.

Chiyoda-ku, Tokyo

1989. 3

2004. 5.28

OfficeA-10

Oval Court Ohsaki Mark West

Shinagawa-ku, Tokyo

2001. 6

2004. 6. 1

OfficeA-11

Shinjuku Square Tower

Shinjuku-ku, Tokyo

1994.10

2004. 7. 2

OfficeA-12

BYGS Shinjuku Bldg.

Shinjuku-ku, Tokyo

1985. 4

2004.11. 9

OfficeA-13

Across Shinkawa Bldg. Annex

Chuo-ku, Tokyo

1994. 6

2004.11.26

RetailA-1

JPR Shibuya Tower Records Bldg.

Shibuya-ku, Tokyo

1992. 2

2003. 6.30

RetailA-2

SS Daikanyama

Shibuya-ku, Tokyo

2002. 7

2004.10. 5

OfficeB-1

Arca East

Sumida-ku, Tokyo

1997. 3

2001.11.16

OfficeB-2

JPR Chiba Bldg.

Chiba, Chiba

1991. 1

2001.12.13

OfficeB-3

JPR Yokohama Nihon Odori Bldg.

Yokohama, Kanagawa

1989.10

2001.11.16

Greater Tokyo

Total

OfficeB-4

JPR Ikebukuro Bldg.*

Toshima-ku, Tokyo

1980.10

2002. 6.21

OfficeB-5

Shinyokohama 2nd Center Bldg.

Yokohama, Kanagawa

1991. 8

2002. 9.25

OfficeB-6

Kawaguchi Center Bldg.

Kawaguchi-shi, Saitama

1994. 2

2004. 2.13

OfficeB-7

JPR Ueno East Bldg.

Taito-ku, Tokyo

1992.10

2004. 3. 1

RetailB-1

Tanashi ASTA

Nishitokyo, Tokyo

1995. 2

2001.11.16

RetailB-2

Tsurumi fuga 1

Yokohama, Kanagawa

1985. 92001.11.16

OfficeC-1

Niigata Ekinan Center Bldg.

Niigata, Niigata

1996. 3

2001.11.16

OfficeC-2

Meiji Yasuda Life Osaka Umeda Bldg.

Osaka, Osaka

2000. 6

2001.12.25

OfficeC-4

Tokyo Tatemono Honmachi Bldg.

Osaka, Osaka

1970. 2

2001.11.16

Other Cities

Total

OfficeC-5

JPR Park West Takamatsu*

Takamatsu, Kagawa

1981. 8

2001.11.16

OfficeC-6

JPR Takamatsu Bldg.

Takamatsu, Kagawa

1982. 92001.12.18

OfficeC-7

JPR Hakata Bldg.

Fukuoka, Fukuoka

OfficeC-8

JPR Square Hakata East/West*

Fukuoka, Fukuoka

2001.11.16

OfficeC-9

JPR Naha Bldg.

Naha, Okinawa

1985. 6
1984. 2 (East)
1986.10 (West)1991.10

Office

C-10

North 33 Bldg.

Sapporo, Hokkaido

1992. 2

2002. 6.18

Office

C-11

Park East Sapporo

Sapporo, Hokkaido

1985.11

2002. 6.18

OfficeC-12

Sompo Japan Sendai Bldg.

Sendai, Miyagi

1997.12

2002. 6.26

OfficeC-13

Sompo Japan Wakayama Bldg.

Wakayama, Wakayama

1996. 7

2002. 6.26

OfficeC-14

Tenjin 121 Bldg.

Fukuoka, Fukuoka

2000. 7

2002. 6.21

Office

C-15

SK Hiroshima Bldg.

Hiroshima, Hiroshima

OfficeC-16

JPR Nagoya Sakae Bldg.

Nagoya-shi, Aichi

2001.11.16

2001.11.16

1989.12

2002.10. 4

building 2003. 1
parking 1986.12

2003. 9. 1

OfficeC-17

Dojima F Bldg.

Osaka, Osaka

1993.10

2004. 1.23

OfficeC-18

Semba Fukuoka Bldg.

Fukuoka, Fukuoka

1993. 2

2004. 6.11

RetailC-1

JPR Umeda Loft Bldg.

Osaka, Osaka

1990. 4

2003.5.15/7.16

Total

Total
Note 1: Acquisition price does not include miscellaneous expenses of acquisition (real estate agent’s fee and consumption tax).
Note 2: Percentages and ratios are rounded to the first decimal point.
Note 3: The ratio of proprietary ownership is shown on the deed for the land.
12 Note 4: Items marked with an asterisk are those for which a transfer contract was signed on December 20, 2004. Those contracts were executed on March 18, 2005.
For detailed information, see pages 4 and 9.

Acquisition
Price

Appraisal
Value

Ownership

Site Area

(%)

(m2)

Total Leasable
Floor Space (m2)

Total Leased
Floor Space (m2)

(JPR’s portion)(JPR’s portion)(millions of yen)%of Total(millions of yen)

16,276

9.1%

12,70079.4%

1,751.13

7,976.30

2,874

1.6%

2,480

79.4%

679.06

2,291.13

2,100

1.2%

1,870

100.0%

550.062,788.98

1,670
550
200
(2,420)

0.9%
0.3%
0.1%
(1.3%)

657.802,105.44
901.36312.53(3,319.33)

49.0%
21.0%
7.3%
2,410

Occupancy
Rate

# of
Tenants

7,775.46

97.5%

2,291.13

100.0%

2,788.98
2,105.44
901.36312.53(3,319.33)

RentalRevenue(thousands of yen)%of Total

10385,1375.0%

1

106,1141.4%

100.0%

4

95,6381.2%

100.0%
100.0%
100.0%(100.0%)

7
3
1
(11)

63,60330,6593,056(97,318)

0.8%
0.4%
0.0%
(1.2%)

4,000

2.2%

3,220

100.0%

636.903,265.34

3,265.34

100.0%

9125,100

1.6%

11,200

6.2%

11,30036.0%

8,992.18

14,429.09

14,429.09

100.0%

7496,100

6.5%

2,920

1.6%

2,810

57.4%

1,551.19

4,243.58

4,243.58

100.0%

2

138,084

1.8%

1,800

1.0%

1,798

10.5%

1,302.17

1,250.06

1,250.06

100.0%

1

64,667

0.8%

5,100

2.8%

5,080

100.0%

1,058.04

4,181.66

4,181.66

100.0%

9

196,401

2.6%

3,500

2.0%

3,680

23.9%

4,006.00

4,088.44

4,088.44

100.0%

2

170,375

2.2%

10,000

5.6%

9,670

29.3%

8,409.52

10,982.03

9,265.45

84.4%

17

265,420

3.5%

2,900

1.6%

2,910

25.0%

3,522.46

3,787.78

3,320.28

87.7%

22

42,973

0.6%

710

0.4%

730

35.4%

858.481,246.72

1,246.72

100.0%

5

7,355

0.1%

12,0006.7%

12,700100.0%

1,010.47

8,076.85

8,076.85

100.0%

1

345,576

4.5%

100.0%

2,160

1.2%

2,080

79,96044.5%

75,438277.12653.99653.99100.0%

1

24,9770.3%

35,262.58

72,581.28

70,196.36

96.7%

102

2,561,235

33.3%

5,880

3.3%

5,450

41.1%

3,755.01

7,050.10

6,567.98

93.2%

4

321,686

4.2%

2,350

1.3%

2,927

1.6%

1,988

100.0%

1,382.35

5,561.68

5,330.51

95.8%

29

142,935

1.9%

2,490

100.0%

1,100.59

6,082.25

5,532.80

91.0%

10

140,463

1.8%

2,040
920

1.2%

2,200

100.0%

772.77

4,605.76

4,229.75

91.8%

7

104,270

1.4%

0.5%

1,020

50.0%

841.712,640.80

2,381.03

90.2%

11

68,466

0.9%

8,100

4.5%

8,600

86.7%

4,524.61

15,478.43

15,270.77

98.7%

38

503,889

6.6%

3,250

1.8%

3,320

100.0%

1,242.97

6,512.45

5,625.20

86.4%

8

164,313

2.1%

10,2005.7%

10,93042.1%

12,326.30

31,121.71

31,121.71

100.0%

1

635,400

8.2%

3,040

1.7%

3,280

64.4%

1,962.18

9,578.60

9,578.60

100.0%

1

145,200

1.9%

38,707

21.6%

39,27827,908.49

88,631.78

85,638.35

96.6%

109

2,226,622

29.0%

2,140

1.2%

2,057

52.7%

2,706.99

5,206.82

5,206.82

100.0%

14

130,621

1.7%

8,300

4.6%

8,630

33.3%

5,999.33

9,600.79

8,811.24

91.8%

21

360,818

4.7%

4,150

2.3%

3,990

64.3%

1,432.64

7,210.25

7,106.76

98.6%

10

250,747

3.3%

872

0.5%

742

100.0%

579.992,496.02

2,004.53

80.3%

23

43,914

0.6%

2,130

1.2%

1,340

100.0%

1,407.78

5,023.53

4,332.49

86.2%

26

91,236

1.2%

2,900

1.6%

2,660

100.0%

1,214.63

6,581.15

5,874.26

89.3%

26

153,879

2.0%

2,873

1.6%

2,600

100.0%

2,500.86

8,447.48

6,820.86

80.7%

14

172,583

2.2%

1,560

0.9%

1,490

100.0%

959.87

3,947.69

3,445.43

87.3%

15

96,929

1.3%

3,700

2.1%

2,790

100.0%

1,382.12

6,642.98

6,379.46

96.0%

23

171,000

2.2%

2,150

1.2%

1,690

100.0%

1,808.26

7,648.62

6,954.10

90.9%

23

117,962

1.5%

3,150

1.7%

3,170

100.0%

1,895.67

7,050.84

6,720.47

95.3%

10

188,735

2.5%

1,670

0.9%

1,680

100.0%

1,128.45

4,891.36

4,580.08

93.6%

16

117,168

1.5%

2,810

1.6%

2,590

52.2%

1,164.39

3,292.02

3,181.01

96.6%

13

104,927

1.4%

947

0.5%

836

100.0%

502.41

2,738.06

1,928.57

70.4%

15

55,431

0.7%

4,550

2.5%

4,655

100.0%

992.31

5,461.90

5,461.90

100.0%

20

221,395

2.9%

2,140

1.2%

2,130

100.0%

668.11

3,941.40

3,345.90

84.9%

9123,693

1.6%

1,920

1.1%

1,960

100.0%

680.63

3,349.57

3,349.57

100.0%

6

94,4271.2%

100.0%

13,0007.2%

11,8003,518.68

18,586.97

18,586.97

100.0%

1

402,4115.2%

60,96233.9%

56,81030,543.12

112,117.45

104,090.42

92.8%

285

2,897,876

37.7%

179,629100.0%

171,526

93,714.19

273,330.52

259,925.13

95.1%

496

7,685,733

100.0%

13

Over view of Portfolio Properties(As of December 31, 2004)

Tokyo CBDs
A -■
1
■

Chuo-ku, Tokyo

Kanematsu Bldg.

Chuo-ku, Tokyo

JPR Ningyo-cho Bldg.
Acquisition Price(millions of yen):

2,100% of Total:

1.2%

Site Area (m2):550.06A -■3■

Total Floor Space (m2): 4,117.70
Structure/Floors:

SRC/RC
B1/8F

Completed:

December
1989

Chiyoda-ku, Tokyo

Shin-Kojimachi Bldg.
Acquisition Price(millions of yen):

2,420% of Total:

1.3%

Site Area

16,276

Total Floor Space% of Total:

9.1%

Structure/Floors:

Site Area (m2):

1,751.13

SRC
B1/9F

Total Floor Space (m2):

14,995.09

Completed:

October
1984

Structure/Floors:

S/RC/SRC B2/13F

Completed:February 1993

Chuo-ku, Tokyo

A -■
2
■

(m2)

: 5,152.98

Chiyoda-ku, TokyoJPR Crest Takebashi Bldg.

Acquisition Price(millions of yen):

2,874

Acquisition Price(millions of yen):

4,000% of Total:

1.6%% of Total:

2.2%

Site Area (m2):679.06Site Area (m2):

636.90Total Floor Space (m2): 4,351.46

14657.80:(m2)

Acquisition Price (millions of yen):

Kanematsu Bldg. Annex

A -■
4
■

A -■
5
■

Total Floor Space (m2): 4,790.68

Structure/Floors:

SRC
B1/8F

Structure/Floors:

SRC
B1/9F

Completed:February
1993

Completed:

September
1999

Note 1: Acquisition price does not include miscellaneous expenses (real estate agent’s fee and consumption tax).
Note 2: Percentages and ratios are rounded to the first decimal point.
Note 3: Abbreviations under “Structure/Floors” indicate S: Steel-frame, RC: Reinforced concrete, and SRC: Steel-frame reinforced concrete.

Minato-ku, TokyoMS Shibaura Bldg.

A -■
6
■

Shinagawa-ku, Tokyo

Gotanda First Bldg.

Acquisition Price(millions of yen):

11,200Acquisition Price(millions of yen):

2,920% of Total:

6.2%% of Total:

1.6%

Site Area (m2):

8,992.18

Site Area (m2):

1,551.19

Total Floor Space (m2): 31,020.21

Total Floor Space (m2): 10,553.34

Structure/Floors:

SRC/RC/S
B2/13F

Structure/Floors:

SRC/RC
B2/11F

Completed:February
1988

Completed:

July
1989

Chuo-ku, Tokyo

Fukuoka Bldg.

A -■
8
■

Chiyoda-ku, Tokyo

JPR Ichigaya Bldg.

Acquisition Price(millions of yen):

1,800

Acquisition Price(millions of yen):

5,100% of Total:

1.0%% of Total:

2.8%

1,302.17

Site Area: 11,627.74

Total Floor Space

Structure/Floors:

SRC
B2/10F

Structure/Floors:

SRC
B1/9F

Completed:May 1990

Completed:

March 1989

Site Area(m2):

Total Floor Space(m2)

Shinagawa-ku, Tokyo

Oval Court Ohsaki Mark West

A -■
10
■

A -■
9
■

1,058.04:(m2): 5,888.82(m2)

Shinjuku-ku, Tokyo

Shinjuku Square Tower

Acquisition Price(millions of yen):

3,500

Acquisition Price(millions of yen):

10,000% of Total:

2.0%% of Total:

5.6%

Site Area (m2):

4,006.00

Site Area (m2):

8,409.52

Total Floor Space (m2): 28,575.80

A -■
7
■

A -■
11
■

Total Floor Space (m2): 78,796.00

Structure/Floors:

S/SRC
B2/17F

Structure/Floors:

S/RC/SRC
B4/30F

Completed:

June 2001

Completed:

October 1994

15

Shinjuku-ku, TokyoBYGS Shinjuku Bldg.

A -■
12
■

Chuo-ku, Tokyo

Across Shinkawa Bldg. Annex

Acquisition Price(millions of yen):

2,900

Acquisition Price(millions of yen):710% of Total:

1.6%% of Total:

0.4%

Site Area (m2):

3,522.46

Site Area (m2):

858.48

Total Floor Space (m2): 25,733.10

Total Floor Space (m2): 5,535.90

Structure/Floors:

SRC
B2/14F

Structure/Floors:

S/SRC
B2/10F

Completed:

April 1985

Completed:

June 1994

Shibuya-ku, Tokyo

JPR Shibuya Tower Records Bldg.

A -●1 (Retail)■Shibuya-ku, Tokyo

SS Daikanyama

Acquisition Price(millions of yen):

12,000Acquisition Price(millions of yen):

2,160% of Total:

6.7%% of Total:

1.2%

1,010.47

Site Area: 8,449.56

Total Floor Space

Structure/Floors:

SRC/S
B3/8F

Structure/Floors:

RC
B2/2F

Completed:February
1992

Completed:

July 2002

Site Area:(m2)

Total Floor Space

A -■
13
■

(m2)

A -●
2 (Retail)■277.12:(m2): 668.09(m2)

Greater Tokyo
B -■
1
■

Sumida-ku, Tokyo

Arca East

JPR Chiba Bldg.

Acquisition Price(millions of yen):

5,880

Acquisition Price(millions of yen):

2,350% of Total:

3.3%% of Total:

1.3%

Site Area (m2):

3,755.01

Site Area (m2):

1,382.35

Total Floor Space (m2): 34,281.86

16

Chiba, Chiba

Total Floor Space (m2): 9,072.57

Structure/Floors:

S/SRC
B3/19F

Structure/Floors:

S/SRC
B1/13F

Completed:

March
1997

Completed:

January
1991

B -■
2
■

Yokohama, Kanagawa

JPR Yokohama Nihon Odori Bldg.

B -■
3
■

Yokohama, Kanagawa

Shinyokohama 2nd Center Bldg.

Acquisition Price(millions of yen):

2,927

Acquisition Price(millions of yen):920% of Total:

1.6%% of Total:

0.5%

Site Area (m2):

1,100.59

Site Area (m2):

841.71

Total Floor Space (m2): 9,146.52

Total Floor Space (m2): 7,781.93

Structure/Floors:

SRC
B1/11F

Structure/Floors:

S/SRC
B2/12F

Completed:

October
1989

Completed:

August1991

Kawaguchi, Saitama

Kawaguchi Center Bldg.

B -■
6
■

Taito-ku, Tokyo

JPR Ueno East Bldg.

Acquisition Price(millions of yen):

8,100

Acquisition Price(millions of yen):

3,250% of Total:

4.5%% of Total:

1.8%

4,524.61

Site Area: 28,420.85

Total Floor Space

Structure/Floors:

S/SRC
B2/15F

Structure/Floors:

S/SRC
B1/8F

Completed:February
1994

Completed:

October
1992

Site Area(m2):

Total Floor Space(m2)

Nishitokyo, Tokyo

Tanashi ASTA

B -●1 (Retail)■Tsurumi fuga 1

10,2003,040% of Total:% of Total:

5.7%

1.7%

B -●
2 (Retail)■

Site Area (m2):(m2)

12,326.30

1,962.18

Total Floor Space

(m2)

:

Total Floor Space (m2):80,675.27

13,543.32

Structure/Floors:

Structure/Floors:

SRC B2/17F

SRC B2/7F

Completed:: 8,490.44(m2)

Yokohama, Kanagawa

Acquisition Price(millions of yen):

:

B -■
7
■

1,242.97:(m2)

Acquisition Price(millions of yen):

Site Area

B -■
5
■

February 1995

Completed:

September 1985

17

Other Cities — Hokkaido, Tohoku and Hokuriku
Sapporo, Hokkaido

North 33 Bldg.

C -■
10
■

Sapporo, Hokkaido

Park East Sapporo

Acquisition Price(millions of yen):

3,700

Acquisition Price(millions of yen):

2,150% of Total:

2.1%% of Total:

1.2%

Site Area (m2):

1,382.12

Site Area (m2):

1,808.26

Total Floor Space (m2): 10,568.23

Total Floor Space (m2): 10,865.75

Structure/Floors:

SRC
B1/12F

Structure/Floors:

SRC
B1/8F

Completed:February
1992

Completed:

November
1985

Sendai, Miyagi

Sompo Japan Sendai Bldg.

C -■
12
■

Niigata, Niigata

Niigata Ekinan Center Bldg.

Acquisition Price(millions of yen):

3,150

Acquisition Price(millions of yen):

2,140% of Total:

1.7%% of Total:

1.2%

1,895.67

Site Area: 10,783.52

Total Floor Space

Structure/Floors:

SRC
B1/12F

Structure/Floors:

S/SRC
B1/10F

Completed:

December
1997

Completed:

March
1996

Site Area:(m2)

Total Floor Space

C -■
11
■

(m2)

C -■
1
■

2,706.99

:

(m2)

(m2)

: 19,950.42

Other Cities — Osaka
Osaka, Osaka

Meiji Yasuda Life Osaka Umeda Bldg.

Osaka, Osaka

Tokyo Tatemono Honmachi Bldg.

Acquisition Price(millions of yen):

8,300

Acquisition Price(millions of yen):

4,150% of Total:

4.6%% of Total:

2.3%

Site Area (m2):5,999.33

Site Area (m2):

1,432.64

Total Floor Space (m2): 52,982.94

18

C -■
2
■

Total Floor Space (m2): 14,619.52

Structure/Floors:

S/SRC
B2/31F

Structure/Floors:

SRC
B3/9F

Completed:

June 2000

Completed:February
1970

C -■
4
■

Osaka, Osaka

Dojima F Bldg.

C -■
17
■

Osaka, OsakaJPR Umeda Loft Bldg.

Acquisition Price(millions of yen):

2,140

Acquisition Price(millions of yen):

13,000% of Total:

1.2%% of Total:

7.2%

Site Area (m2):

668.11Site Area (m2):

3,518.68

Total Floor Space (m2): 5,696.01

C -●1 (Retail)■

Total Floor Space (m2): 17,897.56

Structure/Floors:

SRC
B2/9F

Structure/Floors:

SRC
B1/8F

Completed:

October
1993

Completed:

April
1990

Other Cities — Chubu, Kinki, Chugoku and Shikoku
Nagoya-shi, Aichi

JPR Nagoya Sakae Bldg.

C -■
16
■

Wakayama, Wakayama

Sompo Japan Wakayama Bldg.

Acquisition Price(millions of yen):

4,550

Acquisition Price(millions of yen):

1,670% of Total:

2.5%% of Total:

0.9%

992.31Site Area: 7,340.18

Total Floor Space

Site Area(m2):

Total Floor Space(m2)

Structure/Floors:

Building: S B1/11F
Parking: S 1F

C -■
13
■

1,128.45:(m2): 6,715.07(m2)

Structure/Floors:

S 9F

Completed:

July 1996

Completed:

Building: January
2003
Parking: December
1986

Hiroshima, Hiroshima

SK Hiroshima Bldg.

C -■
15
■

Takamatsu, Kagawa

JPR Takamatsu Bldg.

Acquisition Price(millions of yen):

947

Acquisition Price(millions of yen):

2,130% of Total:

0.5%% of Total:

1.2%

Site Area (m2):

502.41Site Area (m2):

1,407.78

Total Floor Space (m2): 4,268.70

C -■
6
■

Total Floor Space (m2): 7,409.08

Structure/Floors:

SRC B1/9F

Structure/Floors:

Completed:

December
1989

SRC
B1/10F

Completed:

September
1982
March
1984
(extension)

19

Other Cities — Kyushu and Okinawa
Fukuoka, Fukuoka

JPR Hakata Bldg.

C -■
7
■

Naha, Okinawa

JPR Naha Bldg.

Acquisition Price(millions of yen):

2,900

Acquisition Price(millions of yen):

1,560% of Total:

1.6%% of Total:

0.9%

Site Area (m2):

1,214.63

Site Area (m2):

959.87

Total Floor Space (m2): 9,828.73

Total Floor Space (m2): 5,780.71

Structure/Floors:

Structure/Floors:

S/SRC
12F

Completed:

October
1991

Building: S/RC
B1/12F
Parking: S1F
Completed:

C -■
9
■

Building: June 1985
Parking: November
2003

Fukuoka, Fukuoka

Tenjin 121 Bldg.

Fukuoka, Fukuoka

Semba Fukuoka Bldg.

Acquisition Price(millions of yen):

2,810

Acquisition Price(millions of yen):

1,920% of Total:

1.6%% of Total:

1.1%

1,164.39

Site Area: 8,690.95

Total Floor Space

Structure/Floors:

S/SRC
13F

Structure/Floors:

SRC
8F

Completed:

July 2000

Completed:February
1993

Site Area:(m2)

Total Floor Space

20

C -■
14
■

(m2)

680.63

:

(m2)

(m2)

: 3,874.81

C -■
18
■

REIT STRUCTURE AND EXTERNAL SERVICE PROVIDERS

Asset Management Company

Advisor on Construction
Management/
Property Transfer AgentTokyo Realty Investment
Management, Inc.

Tokyo Tatemono Co., Ltd.

Asset Management

Tenant Agents

Tokyo Tatemono Co., Ltd.
Yasuda Real Estate Co., Ltd.
Taisei Corporation

Investment Corporation

Japan Prime Realty
Investment Corporation

Liabilities

Loans
Corporate Bonds

LenderCorporate Bond
Investor

AssetsInvestment

Real Estate, etc.

Unitholder

Unitholders’ Equity

Cash Distribution

Property Manager

Unitholder

Asset Custodian

Asset Custodian
Mizuho Trust & Banking Co., Ltd.

Tokyo Tatemono Co., Ltd., performs agency services forthe signing of real estate leasing contracts (“generaltenant agency services”) under a commission from theowners of real estate, in order to provide uniform tenant
recruitment and sales services for the Company. Tokyo
Tatemono also has been commissioned by TRIM toundertake “property transfer services.” Tokyo Tatemono

Administrative Agent

Administrative Agent
Mizuho Trust & Banking Co., Ltd.

also provides advice on rental operations management
and construction planning management work (“leasing
management/construction management services” or“LM /CM services”) to TRIM.
Yasuda Real Estate Co., Ltd., and Taisei Corporation
provide general tenant agency services for real estate, ascommissioned by the trustees.

21

Tokyo Realty Investment Management, Inc.
Tokyo Realty Investment Management, Inc., (“TRIM”)
concluded the asset management contract with JPR on
September 27, 2001. Based on the contract, TRIM provides asset management services as a REIT Management
Company under the Investment Trust Law.
TRIM is assigned to provide (1) services regarding
asset management for JPR (including all decision-

making in connection with the acquisition or leasing ofproperties and acting as an agent or broker of suchtransactions based on relevant judgement), (2) services
regarding funding by JPR, (3) reporting to JPR, and (4)any other services related to or affiliated with the above(the above services are collectively called “AssetManagement Service” or “AM Service”).

Shareholders’ Meeting
Auditors
Board of Directors
CEO
Compliance Committee

Investment Committee
Investment Management
Division

ResearchGroup

Investment
Group

Asset
Management
Group

Financial Division

FinanceGroup

IR Group

FundManagement
Group

Shareholders in TRIM (As of December 31, 2004)

10%
Sompo Japan Insurance Inc.
26%
Tokyo Tatemono Co., Ltd.
20%
Yasuda Real Estate Co., Ltd.
24%
Meiji Yasuda Life Insurance Company*
20%
Taisei Corporation
Note: The Yasuda Mutual Life Insurance Company and Meiji Life Insurance Company
merged on January 1, 2004 to form Meiji Yasuda Life Insurance Company.

22

Corporate Planning/
Administration Division

Accounting
Group

Planning/
Human
ResourcesGroup

ComplianceGroupDecision-Making Process of Investment Management
The “Investment Committee” is set as a committee tomake investment decisions as well as its sub-organizations,the “Investment Subcommittee” and the “FundManagement Subcommittee.” Members of these organizations include the CEO, CIO, CFO, CAO, FundManager, Research Manager, Asset Manager andInvestment Management Manager.
The “Investment Committee” is a committee which
formulates fundamental investment policy for the
medium and long term within two fiscal periods, whilethe “Investment Subcommittee” or “Management
Subcommittee” has charge of decisions on issues regarding
acquisitions, dispositions and management of individual
assets respectively. The Board of Directors is given the
final authorization on acquisitions or dispositions ofindividual assets of a certain amount.

Such measures include:a) Acquisitions of property or assets from interested parties
The “investment amount” for any real estate or real estate intrust property must be the appraised value or less (deemed tobe the purchase price only, exclusive of taxes and acquisition
costs, etc.). Prior approval of the Board of Directors of theCompany is required. For other designated assets, theinvestment amount must be at market prices for assets forwhich market prices are available, otherwise at theappraised value or less.

b) Sales of property or assets to interested parties
The “sales price” for any real estate or real estate in trust
property must be the appraised value or more (deemed tobe sales price only, exclusive of taxes and selling costs, etc.).
Prior approval of the Board of Directors of the Company isrequired. For other designated assets, the sales price must be
at market prices for assets for which market prices are available,
otherwise at the appraised value or more.

Measures to Prevent Conflicts of Interest
TRIM has established the “Compliance Committee” and“Compliance Subcommittee.” The “Compliance
Subcommittee” oversees the aforementioned committees
and determines whether their decision-making activities
strictly adhere to laws and regulations.
TRIM has rules in place governing transactions with“interested parties” so as to avoid conflicts of interest.
The Compliance Committee serves to prevent transactions
with conflicts of interest based on the advice of an outside
attorney who is a special member of the committee.
Interested parties are defined as specific parties withwhich transactions have been made or to which
commissions or other payments have been made in therelevant term. These include the following parties, whichhave an investment in TRIM or employees serving as
directors or staff at TRIM: Tokyo Tatemono Co., Ltd.,The Meiji Yasuda Life Insurance Company (formed
following the merger between The Yasuda Mutual Life
Insurance Company and Meiji Life Insurance Company
on January 1, 2004), Yasuda Real Estate Co., Ltd., Taisei
Corporation, Sompo Japan Insurance Inc. (formerly The
Yasuda Fire & Marine Insurance Co., Ltd.) and theiraffiliates.

c) Leasing of properties to interested parties
Properties may be leased to interested parties provided thatleasing is done under appropriate terms and conditions as
determined from the viewpoint of market trends and standard
leasing terms for the property.

d)Property management commissions to interested parties
Commissions are based on the Property Management
Standards. Prior approval of the Board of Directors of theCompany is required.

e) Trading/leasing intermediation fees paid to interested
parties
Trading intermediation fees are limited to up to 3% of the
trading price. Prior approval of the Board of Directors of
the Company is required. Leasing intermediation fees arelimited to the amount equivalent to the contracted rent forone month.

f) Commissioning of construction work to interested
partiesCommissions of construction work worth ¥10 million ormore require a comparison against third-party estimatesand proposals. Prior approval of the Board of Directors of
the Company is required.

g) Borrowings from interested parties
Terms of borrowings must be at market levels. Prior approvalof the Board of Directors of the Company is required.

23

MANAGEMENT’S DISCUSSION AND ANALYSISRESULTS OF OPERATIONS
The table below is a summary of business results for the periods ended December 31, 2004 and June 30, 2004.

OPERATING REVENUES:
Real estate rental revenues

thousands of yen

U.S. dollars

6th Period(July 1, 2004–
Dec. 31, 2004)

5th Period(Jan 1, 2004–
June 30, 2004)

6th Period(July 1, 2004–
Dec. 31, 2004)¥7,685,733¥6,790,658$73,752,358

7,685,733

6,790,658

73,752,358

OPERATING EXPENSES

4,216,528

3,729,108

40,461,843

OPERATING PROFITS

3,469,205

3,061,550

33,290,515

13,874

109,341

133,133

NON-OPERATING REVENUESNON-OPERATING EXPENSES

613,523555,137

5,887,365

INCOME BEFORE INCOME TAXES

2,869,556

2,615,754

27,536,283

NET INCOME¥2,868,548¥2,614,785$27,526,605

In the sixth fiscal period ended December 31, 2004, JPR
experienced across-the-board growth in most facets of its
business operations. The Company’s property portfolio as ofDecember 31, 2004, comprised 42 properties, an increase of fourtenanted properties, amounting to ¥179,629 million on an
acquisition basis, covering a leasable floor space of 273,330.52 m2
and 496 tenants. During the period, JPR acquired the Shinjuku
Square Tower on July 2 for an investment of ¥10,000 million, theSS Daikanyama on October 5 for ¥2,160 million, the BYGS
Shinjuku Building on November 9 for ¥2,900 million, and theAcross Shinkawa Building Annex on November 26 for ¥710
million. JPR also increased its ownership of the Shin-Kojimachi
Building on November 12. All of these properties are located inTokyo’s CBDs. Accordingly, the Company’s property portfolio
increased a total of ¥15,970 million based on acquisition value,
which contributed significantly to JPR’s increased revenues andearnings for the period. During the period under review, theCompany did not divest any of its interests.
Operating revenues for the sixth fiscal period rose 13.2% to¥7,686 million and comprised real estate rental revenues, which
climbed 11.1% from ¥6,791 million. For the period under review,
the occupancy rate increased 1.9 percentage points to 95.1%.
Operating expenses amounted to ¥4,217 million, an increase of
13.1%, which included property tax and other items expensed
during the period. As a result of the aforementioned factors,
operating profits grew 13.3% to ¥3,469 million. In line with theacquisition of additional properties, JPR incurred an increase in
non-operating expenses relating to the increased debt and theissue of corporate bonds. Despite these factors, income before
income taxes rose 9.7% to ¥2,870 million and net income
climbed by the same margin to ¥2,869 million.

CASH DISTRIBUTIONSIn the sixth fiscal period, cash distribution per unit was ¥6,671,
representing 100% of distributable income, compared with
¥6,081 in the fifth fiscal period. The number of investment units

outstanding at the end of December 31, 2004, remained
unchanged at 430,000 units.
thousands of yen except per unit data

Cash distributions for theperiod ended Dec. 31, 2004

Cash distributions for theperiod ended June 30, 2004

Net income¥2,868,548¥2,614,785

Total cash distributions

2,868,530

2,614,830

6,671

6,081

Cash distribution per unit

CAPITALIZATION
Paid-In Capital
For the sixth fiscal period JPR reported net income of ¥2,869
million and total unitholders’ equity of ¥91,982 million.
Unit Information
The Company was listed on the Tokyo Stock Exchange on June
14, 2002, under the securities code 8955 with the issue of

24

289,600 investment units. Since initial public offering, JPR has
increased capital through an additional public offering in July
2003, with the current number of investment units outstandingat the end of December 31, 2004, totaling 430,000. The high andlow closing prices for the periods indicated are provided in thetable that follows:

yen

Month

June 2002
July 2002
Aug. 2002
Sept. 2002
Oct. 2002
Nov. 2002
Dec. 2002
Jan. 2003
Feb. 2003
Mar. 2003
Apr. 2003
May 2003
June 2003
July 2003
Aug. 2003
Sept. 2003

High

Low

202,000
203,000
205,000
205,000
219,000
240,000
240,000
239,000
227,000
229,000
249,000
283,000
271,000
255,000
251,000
254,000

199,000
200,000
202,000
203,000
203,000
215,000
225,000
220,000
219,000
217,000
227,000
246,000
222,000
234,000
241,000
240,000

yen

Month

Oct. 2003
Nov. 2003
Dec. 2003
Jan. 2004
Feb. 2004
Mar. 2004
Apr. 2004
May 2004
June 2004
July 2004
Aug. 2004
Sept. 2004
Oct. 2004
Nov. 2004
Dec. 2004

Equity and Debt Financing
As part of its strategy that places the utmost importance on
financial stability, the Company concerned itself with steadilyextending asset value, undertaking the raising of stable mediumterm and flexible short-term financing. In addition, as one of its
diversified debt financing methods, the Company set up acommitment line. Moreover, JPR issued a series of bonds.

High

Low

265,000
270,000
268,000
272,000
264,000
305,000
299,000
293,000
293,000
284,000
296,000
308,000
311,000
308,000
307,000

251,000
260,000
260,000
260,000
257,000
262,000
269,000
272,000
282,000
278,000
274,000
291,000
299,000
301,000
290,000

Striving to ensure an acceptable debt maturity profile, a portionof JPR’s corporate bonds is of 10-year maturity. On the issue ofcorporate bonds, JPR was assigned a rating of A– from Standard& Poor’s, A+ from Rating and Investment Information, Inc., andA3 from Moody’s Investors Service. As a result, debts
outstanding were ¥51,066 million as of December 31, 2004, andthe balance of corporate bonds had reached ¥42,000 million.

Investment performance of JPR since its IPO on June 14, 2002
Unit Price (yen)Performance (%)

JPR Unit Price Performance (left scale)160

300,000

TOPIX Performance (left scale)140

275,000

JPR Unit Price (right scale)120

250,000

100

225,000

80

200,00060

175,000

40
2002/6 7

8

9

10

11

12 2003/1 2

3

4

5

6

150,000
7

8

9

10

11

12 2004/1 2

3

4

5

6

7

8

9

10

11

12

Borrowings-1
Category

LenderThe Bank of Fukuoka, Ltd.
The Chugoku Bank, Ltd.
The Norinchukin Bank
The Bank of Tokyo-Mitsubishi, Ltd.

Short-Term
Borrowings

UFJ Bank Limited
The Mitsubishi Trust & Banking Corp.
Aozora Bank, Ltd.
The Iyo Bank, Ltd.
Resona Bank, Limited
The Hachijuni Bank, Ltd.
Mizuho Corporate Bank, Ltd.
Total

Drawdown
DateJan. 23, 2004
Feb. 13, 2004
May 27, 2004
Nov. 8, 2004
Feb. 13, 2004
July 1, 2004
Feb. 27, 2004
July 1, 2004
Mar. 25, 2004
July 1, 2004
May 27, 2004
May 27, 2004
June 10, 2004
Sept. 30, 2004
May 27, 2004
June 10, 2004
Oct. 1, 2004
Nov. 8, 2004

Balance as ofDec. 31, 2004
(thousands of yen)¥——
1,000,000
1,000,000—
3,500,000
3,000,000
3,500,000
2,000,000
3,500,000———
1,100,000——
1,000,000
1,500,000¥21,100,000

Balance as ofJune 30, 2004
(thousands of yen)
¥ 2,000,000
4,000,000
1,000,000—
3,500,000—
3,000,000—
2,000,000—
3,500,000
3,000,000
1,000,000—
1,000,000
1,200,000——¥25,200,000

Average
Interest
Rate
0.688%
0.585%
0.537%
0.488%
0.688%
0.586%
0.539%
0.586%
0.589%
0.586%
0.536%
0.536%
0.536%
0.484%
0.636%
0.536%
0.481%
0.488%

Repayment
Date
Jan. 23, 2005
Feb. 10, 2005
May 27, 2005
Nov. 8, 2005
Feb. 10, 2005
June 27, 2005
Feb. 25, 2005
June 27, 2005
Mar. 25, 2005
June 27, 2005
Jan. 27, 2005
Jan. 27, 2005
Jan. 27, 2005
Sept. 27, 2005
Jan. 27, 2005
Jan. 27, 2005
Sept. 27, 2005
Mar. 31, 2005

Repayment
MethodPrincipal
lump sum
repayment
on maturity

Remarks

Unsecured/
Unguaranteed/
Non-subordinated25

Borrowings-2
Category

Lender
Sompo Japan Insurance Inc.

Long-Term
Borrowings

The Chuo Mitsui Trust andBanking Company, Limited
SumitomoLife Insurance Company
Resona Bank, LimitedAozora Bank, Ltd.
Meiji Yasuda
Life Insurance Company

Drawdown
Date

Balance as ofDec. 31, 2004
(thousands of yen)

Balance as ofJune 30, 2004
(thousands of yen)

Average
Interest
Rate

Repayment
Date

Mar. 25, 2004

¥ 1,000,000¥ 1,000,000

0.873%

Mar. 23, 2007

Dec. 27, 2001

6,500,000

6,500,000

1.234%

Dec. 27, 2006

Dec. 27, 2001

6,500,000

6,500,000

1.234%

Dec. 27, 2006

June 19, 2002
June 19, 2002
Dec. 27, 2001
June 21, 2002
Mar. 28, 2003

1,000,000
1,000,000
4,783,000
4,783,000
4,400,000¥29,966,000¥51,066,000

1,000,000
1,000,000
4,783,000
4,783,000
4,400,000¥29,966,000¥55,166,000

1.295%
1.295%
1.700%
2.050%
1.750%

Dec. 27, 2006
Dec. 27, 2006
Dec. 26, 2008
June 21, 2011
Mar. 28, 2013

Total
Total Borrowings Balance

Repayment
MethodPrincipal
lump sum
repayment
on maturity

Remarks
Unsecured/Unguaranteed/
Non-subordinated

Secured/
Unguaranteed/
Non-subordinatedCorporate Bonds
Total Issue
AmountIssue Price

Coupon Rate

Subscription
Date

Payment
Date

CollateralFirst Series of Corporate Bonds
Japan Prime Realty Investment Corporation’sFirst Series Unsecured Bonds¥10 billion¥100 with a parvalue of ¥100

0.84% perannum

Jan. 29, 2004

Feb. 12, 2004

Unsecured/
Unguaranteed

Second Series of Corporate Bonds
Japan Prime Realty Investment Corporation’s
Second Series Unsecured Bonds¥7 billion¥100 with a parvalue of ¥100

1.38% perannum

Jan. 29, 2004

Feb. 12, 2004

Unsecured/
Unguaranteed

Third Series of Corporate Bonds
Japan Prime Realty Investment Corporation’s
Third Series Unsecured Bonds¥5 billion¥100 with a parvalue of ¥100

2.32% perannum

Jan. 29, 2004

Feb. 12, 2004

Unsecured/
Unguaranteed

Fourth Series of Corporate Bonds
Japan Prime Realty Investment Corporation’s
Fourth Series Unsecured Bonds¥10 billion¥100 with a parvalue of ¥100

0.92% perannum

Oct. 21, 2004

Nov. 4, 2004

Unsecured/
Unguaranteed

Fifth Series of Corporate Bonds
Japan Prime Realty Investment Corporation’s
Fifth Series Unsecured Bonds¥5 billion¥100 with a parvalue of ¥100

1.44% perannum

Oct. 21, 2004

Nov. 4, 2004

Unsecured/
Unguaranteed

Sixth Series of Corporate Bonds
Japan Prime Realty Investment Corporation’s
Sixth Series Unsecured Bonds¥5 billion¥100 with a parvalue of ¥100

2.00% perannum

Oct. 21, 2004

Nov. 4, 2004

Unsecured/
Unguaranteed

MAJOR TENANTS
The following table shows JPR’s top ten tenants by leased floor space as of December 31, 2004:#

Tenant1

The Seiyu, Ltd.

2The Loft Co., Ltd.

Industry

4
5

Sompo Japan Insurance Inc.

Casualty Insurance

6
7

Iwatani International Corporation
Tohmatsu & Co.

8Japan Future Information Technology &Systems Co., Ltd.

3

9
10

Mitsubishi Electric Information Systems
Corporation
CMIC Co., Ltd.

Tanashi ASTA
Tsurumi fuga 1
JPR Umeda Loft Bldg.

RetailShinjuku Square Tower Management
Co., Ltd.
TOWER RECORDS JAPAN INC.

Property

Leased Floor Space(m2)%

40,700.31

15.7

18,586.97

7.2

Shinjuku Square Tower

10,982.03

4.2

8,076.85

3.1

6,508.19

2.5

Wholesale
Accounting Firm

JPR Shibuya Tower Records Bldg.
Sompo Japan Sendai Bldg.
Sompo Japan Wakayama Bldg.
Kawaguchi Center Bldg.
Tokyo Tatemono Honmachi Bldg.
MS Shibaura Bldg.

5,959.86
4,903.42

2.3
1.9

Other Services

Arca East

4,475.62

1.7

Electronics and Electrical Appliances

MS Shibaura Bldg.

3,922.74

1.5

Other Services

Gotanda First Bldg.

3,295.52

1.3

PROPERTY MANAGEMENT
In order to establish a portfolio that successfully attracts new
tenants and highlights differentiation with other competing26

properties, planned refurbishment and repair work, together
with proactive measures, are necessary. To give particularexamples, renovations to the common areas of the SK
Hiroshima Building and the JPR Square Hakata East/West are
intended to improve customer satisfaction. Despite thecontinuing difficult business conditions in the office leasing

market in regional cities, the overall occupancy rate at the end of
the period was 95.1%, an increase of 1.9 percentage points
compared with the end of the previous fiscal period.

Planned Capital Expenditures
JPR has the following capital expenditure plan for maintenanceas of December 31, 2004, on its properties. Planned project costs

include portions classified into expenses for accounting
purposes.

Property Name

PurposeSchedule

Planned Project Cost (millions of yen)

Total

Paid infiscal year
under review

Total
payments

Kanematsu Bldg.

Renew exterior repair seals (stage 2 construction)

Feb. 2005 – June 2005

80

—

—

JPR Umeda Loft Bldg.

Cooling and heating generator equipment upgradeFeb. 2005 – May 2005

41

—

—

JPR Takamatsu Bldg.

Air-cooling equipment upgradeMar. 2005 – May 2005

31

—

—

Smoking room renovation

May 2005 – June 2005

25

—

—

Shin-Kojimachi Bldg.

7th floor renovation

Feb. 2005 – Mar. 2005

19

—

—

SK Hiroshima Bldg.

New air conditioner on 3rd floor

Feb. 2005 – June 2005

17

—

—

Rooftop gardening work

Mar. 2005 – May 2005

15

—

—

4th – 9th floor toilet repairs

Apr. 2005 – May 2005

11

—

—

Kawaguchi Center Bldg.

Tokyo Tatemono Honmachi Bldg.
JPR Ningyo-cho Bldg.

Capital Expenditures During the Fiscal Year Under Review
JPR made the following capital expenditures related to its
properties. Most capital expenditures comprised repair work tomaintain and improve tenant satisfaction, maintenance oncommon areas to attract new tenants, and construction,
including the installation of energy-saving facilities. JPR also
spent ¥156 million on improvements besides those listed. JPR

Property Name

successfully reduced property management costs for 25
properties with outsourced property management byapproximately 3% on an annual basis, compared with the end of
the previous period. This reduction was the result of changes inthe scope of property management, different management
methods and a review of outsourcing commissions.

PurposeJPR Umeda Loft Bldg.

Capital Expenditure(millions of yen)

55

Exterior maintenanceOct. 2004 – Dec. 2004

Renew exterior repair seals

Aug. 2004 – Oct. 2004

23

Maintenance on exterior of parking facility

Oct. 2004 – Dec. 2004

23

North 33 Bldg.
JPR Takamatsu Bldg.

Schedule

Kanematsu Bldg.

Renew exterior repair seals (stage 1 construction)

Oct. 2004 – Dec. 2004

22

JPR Yokohama Nihon Odori Bldg.

Renew exterior repair seals (stage 2 construction)

Nov. 2004 – Dec. 2004

21

Repair interior of common spaces (stage 2 construction)

Aug. 2004 – Sept. 200420

New air conditioner on 2nd floor

July 2004 – Aug. 2004

15

Renew exterior repair seals

Nov. 2004 – Dec. 2004

9

JPR Square Hakata East/WestSK Hiroshima Bldg.
SK Hiroshima Bldg.
Other capital expenditures

Repairs of common areas, installation of office equipment floors,
maintenance of parking, air conditioners, and disaster prevention facilities

Total

271
465

Note: Improvement costs include construction management compensation (¥4 million) paid to real estate management companies in addition to amounts for improvement
work.

Value Up Realty Strategy
Regarding the Company’s Value Up Strategy and of the six
properties to which it applies, three, including the JPR

Ikebukuro Building, had witnessed improvements in occupancy
rates of over 10% at the end of the period under review
following completion of large-scale renovations.

SUBSEQUENT EVENTSIn the subsequent six-month period, ending June 30, 2005, JPR
has continued to make progress with furthering its acquisition
strategy. As a part of this strategy, the Company acquired theStrasse Ichibancho commercial facility in Miyagi for ¥4,200
million on February 4, 2005. JPR has also contracted to sell threeproperties, namely the JPR Ikebukuro Building, the JPR Square
Hakata East/West, and the JPR Park West Takamatsu for an
aggregate gain on sale. In an effort to ensure financial stability
and to sustain growth, the Company has also undertaken a
primary offering of 95,000 additional new investment units.

Apart from the primary offering, JPR has also granted an option
by way of third-party allotment to a maximum of 5,000
investment units for which an option was exercised. Proceedsfrom this equity funding are earmarked for the repayment ofshort-term debt and the acquisition of properties. Payments forthe primary offering and secondary offering by way of thirdparty allocation were completed on February 1, 2005 and March
1, 2005, respectively. The number of investment units issued andoutstanding as of March 2, 2005, was 530,000 units.

27

FINANCIAL STATEMENTS

BALANCE SHEETS(As of December 31, 2004 and June 30, 2004)
thousands of yen

U.S. dollars

End of 6th Period(as of Dec. 31, 2004)

End of 5th Period(as of June 30, 2004)

End of 6th Period(as of Dec. 31, 2004)¥ 18,778,730¥ 17,999,938$ 180,200,844

158,642

148,578

1,522,334—

372,948—

ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Rental receivables
Consumption tax refundable
Other current assets
Total current assets

552,064

208,133

5,297,608

19,489,436

18,729,597

187,020,786

PROPERTY AND EQUIPMENT AT COST:Land

107,315,134

97,139,926

1,029,796,893

Buildings and structures

76,481,264

69,736,603

733,914,823

Machinery and equipment

1,290,710

1,230,050

12,385,666

Tools, furniture and fixtures

15,923

12,687

152,797

Construction in progress
SubtotalLess accumulated depreciation

7,464

1,869

71,621

185,110,495

168,121,135

1,776,321,800(6,128,729)(4,737,067)(58,811,336)

178,981,766

163,384,068

1,717,510,464

Intangible assets

3,744

—

35,928Deposits

10,10010,10096,920Long-term prepaid expenses

3,051

4,450

29,278

185,491

125,393

1,779,973¥198,673,588¥182,253,608$1,906,473,349

Net property and equipment

INVESTMENTS AND OTHER ASSETS:

Deferred corporate bond issuance costs
TOTAL ASSETS
The accompanying notes form an integral part of these financial statements.

28

End of 6th Period(as of Dec. 31, 2004)

thousands of yen

U.S. dollars

End of 5th Period(as of June 30, 2004)

End of 6th Period(as of Dec. 31, 2004)

LIABILITIESCURRENT LIABILITIES:
Trade accounts payable
Other accounts payable¥

793,747¥

890,323$

7,616,800

449,145

352,922

4,309,998

Short-term debt

21,100,000

25,200,000

202,475,770

Accrued expenses

182,659

139,995

1,752,803

976

930

9,365

Accrued income taxes
Accrued consumption taxes

37,941—

364,079

Rent received in advance812,367

766,494

7,795,480

23,376,835

27,350,664

224,324,295

Corporate bonds

42,000,000

22,000,000

403,032,338

Long-term debt

29,966,000

29,966,000

287,553,977

Deposits received from tenants

11,348,350

11,208,259

108,898,861

Total long-term liabilities

83,314,350

63,174,259

799,485,176

TOTAL LIABILITIES

106,691,185

90,524,923

1,023,809,471

89,113,804

89,113,804

855,136,778

Total current liabilities

LONG-TERM LIABILITIES:UNITHOLDERS’ EQUITY:
Unitholders’ capital
Retained earnings
TOTAL UNITHOLDERS’ EQUITYTOTAL LIABILITIES AND UNITHOLDERS’ EQUITY

2,868,599

2,614,881

27,527,100

91,982,403

91,728,685

882,663,878¥198,673,588¥182,253,608$1,906,473,349

29

STATEMENTS OF INCOME AND RETAINED EARNINGS(For the six-month periods ended December 31, 2004 and June 30, 2004)

OPERATING REVENUES:
Real estate rental revenues
OPERATING EXPENSES:

thousands of yen

U.S. dollars

6th Period(July 1, 2004–
Dec. 31, 2004)

5th Period(Jan. 1, 2004–
June 30, 2004)

6th Period(July 1, 2004–
Dec. 31, 2004)¥7,685,733¥6,790,658$73,752,358

7,685,733

6,790,658

73,752,358

4,216,528

3,729,108

40,461,843

Real estate rental expenses

3,672,910

3,268,801

35,245,282

Asset management fees

317,710

293,872

3,048,748

Administrative service fees

65,67964,529630,256

Other operating expenses
OPERATING PROFITSNON-OPERATING REVENUES:Interest received
Income on settlement of management association accounts
Other non-operating revenues
NON-OPERATING EXPENSES:Interest expenses

160,229

101,906

1,537,557

3,469,205

3,061,550

33,290,515

13,874

109,341

133,133

118

114

1,132

—

106,678—

13,7562,549

132,001

613,523555,137

5,887,365

319,171294,764

3,062,770

Loan arrangement fees

40,164

95,808385,411

Interest expense on corporate bonds

190,871

113,262

1,831,599

Amortization of corporate bond issuance costs

42,11425,079404,125

Other non-operating expenses

21,203

26,224203,460

INCOME BEFORE INCOME TAXES

2,869,556

2,615,754

27,536,283

999

953

9,590

INCOME TAXES:
Current
Deferred
NET INCOMERETAINED EARNINGS BROUGHT FORWARD

9

16

88

2,868,548

2,614,785

27,526,605

51

96

495

¥2,868,599¥2,614,881$27,527,100

sharesthousands of yen

430,000¥91,581,240

Cash distributions paid—

(2,467,340)

Net income—

2,614,785

430,000

91,728,685$880,229,203—(2,614,830)(25,091,930)

RETAINED EARNINGS AT END OF PERIOD
The accompanying notes form an integral part of these financial statements.

STATEMENTS OF CHANGES IN UNITHOLDERS’ EQUITY(For the six-month periods ended December 31, 2004 and June 30, 2004)
unitholders’ equity

BALANCE AS OF DECEMBER 31, 2003

BALANCE AS OF JUNE 30, 2004
Cash distributions paid
Net income
BALANCE AS OF DECEMBER 31, 2004
The accompanying notes form an integral part of these financial statements.

30

U.S. dollars—

2,868,548

27,526,605

430,000¥91,982,403$882,663,878

STATEMENTS OF CASH FLOWS(For the six-month periods ended December 31, 2004 and June 30, 2004)
thousands of yen

U.S. dollars

6th Period(July 1, 2004–
Dec. 31, 2004)

5th Period(Jan. 1, 2004–
June 30, 2004)

6th Period(July 1, 2004–
Dec. 31, 2004)¥ 2,869,556¥ 2,615,754$ 27,536,283

1,391,662

1,200,523

13,354,403

CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes
Depreciation
Amortization of corporate bond issuance costs

42,11425,079404,125

Interest income

(118)

(114)

(1,132)

Interest expense

510,042408,026

4,894,369

Increase in rental receivables(10,064)(43,008)(96,573)

Decrease (increase) in consumption tax refundable

372,948(372,948)

3,578,809

Decrease in trade accounts payable(96,577)(88,743)(926,752)

Increase (decrease) in other accounts payable

102,064(12,603)

979,406

Increase (decrease) in accrued consumption taxes

37,941(56,860)

364,079

Increase in rent received in advance

45,873

211,224440,198

Long-term prepaid expenses paid—

(3,900)—(342,201)(82,416)(3,283,765)

4,923,240

3,800,014

47,243,450

118

114

1,132

(467,378)(278,965)(4,484,959)(953)(1,050)(9,148)4,455,027

3,520,113

42,750,475

Purchases of property and equipment(6,015,462)(3,420,184)(57,724,426)

Purchases of entrusted property and equipment(10,973,897)(21,941,192)(105,305,606)(4,084)—(39,194)(158,770)(25,262)(1,523,555)

Change in other current assets/liabilities
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of intangible assets
Payment of leasehold and security deposits received
Proceeds from leasehold and security deposits received

498,529442,706

4,783,893

Payment of entrusted leasehold and security deposits received(655,841)(1,272,811)(6,293,452)

Proceeds from entrusted leasehold and security deposits received
Net cash used in investing activities

456,172

1,488,654

4,377,432(16,853,353)(24,728,089)(161,724,908)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt

34,300,000

25,200,000

329,143,076

Repayment of short-term debt

(38,400,000)(12,900,000)(368,486,709)

Proceeds from long-term debt—

1,000,000—

Repayment of long-term debt—

(10,600,000)—

20,000,000

22,000,000

191,920,161(102,211)(150,472)(980,822)

Proceeds from corporate bonds
Payments of corporate bond issuance costs
Distributions to unitholders
Net cash provided by financing activities
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIODCASH AND CASH EQUIVALENTS AT END OF PERIOD(2,620,671)(2,452,631)(25,147,980)

13,177,118

22,096,897

126,447,726

778,792

888,921

7,473,293

17,999,938

17,111,017

172,727,551¥ 18,778,730¥ 17,999,938$ 180,200,844

The accompanying notes form an integral part of these financial statements.

31

NOTES TO FINANCIAL STATEMENTS(December 31, 2004 and June 30, 2004)

1. ORGANIZATION
Japan Prime Realty Investment Corporation (the “Company”),
an externally managed real estate investment corporation, wasincorporated on September 14, 2001 under the Law Concerning
Investment Trusts and Investment Corporations of Japan, or theInvestment Trust Law. The Company was formed to invest
primarily in real estate in Japan.
The Company was originally formed by Tokyo Tatemono
Co., Ltd., Taisei Corporation, and Tokyo Realty Investment
Management, Inc. (“TRIM”), and commenced its operation on
November 16, 2001 by acquiring 13 properties. TRIM, a licensed
asset management company, provides professional asset
management services of office and retail properties to theCompany. TRIM is currently owned 26% by Tokyo Tatemono

Co., Ltd., 24% by Meiji Yasuda Life Insurance Company, 20% by
Yasuda Real Estate Co., Ltd., 20% by Taisei Corporation, and
10% by Sompo Japan Insurance Inc.
On June 14, 2002, the Company raised ¥25,862 million
through an initial public offering and was listed on the Tokyo
Stock Exchange (Securities code: 8955).
On July 14, and August 9, 2003, the Company raised ¥32,132
million through a second offering (unitholders’ capital as ofDecember 31, 2003: ¥89,114 million).
As of December 31, 2004, the Company owned a portfolioof 42 properties containing an aggregate of approximately
273,330.52 square meters of leasable area, and leased its officespace to 496 tenants. The occupancy rate is 95.1%.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBASIS OF PRESENTING FINANCIAL STATEMENTS
The Company maintains its accounting records and prepares its
financial statements in accordance with accounting principles
generally accepted in Japan (“Japanese GAAP”), including
provisions set forth in the Investment Trust Law, the JapaneseCommercial Code, the Securities and Exchange Law of Japanand the related regulations, which are different in certain
respects as to the application and disclosure requirements ofInternational Financial Reporting Standards.
The accompanying financial statements are a translation of
the financial statements of the Company, which were preparedin accordance with Japanese GAAP and were presented in the
Securities Report of the Company filed with the Kanto Local
Finance Bureau. In preparing the accompanying financial
statements, certain reclassifications have been made to thefinancial statements issued domestically in order to present
them in a format which is more familiar to readers outside
Japan. In addition, the notes to financial statements include
information which might not be required under Japanese GAAP
but is presented herein as additional information.
The Company’s accounting period ends at the end of Juneand December. The Company’s sixth accounting period began
on July 1, 2004 and ended on December 31, 2004.
Amounts in U.S. dollars are included solely for theconvenience of readers outside Japan. The rate of¥104.21=US$1.00, the foreign exchange rate on December 30,
2004, has been used for translation. The inclusion of suchamounts is not intended to imply that Japanese yen has been or
could be readily converted, realized or settled into U.S. dollars atthat rate or any other rate.

32

PROPERTY AND EQUIPMENT
Property and equipment is stated at cost, less accumulated
depreciation. The costs of land, buildings and building
improvements include the purchase price of property, legal fees
and acquisition costs. Depreciation of property and equipment
is calculated on a straight-line basis over the estimated useful
lives of the assets ranging as follows:
Buildings..........................................................................3–64 years
Structures.......................................................................10–20 years
Machinery and equipment .............................................3–17 years
Tools, furniture and fixtures ...........................................5–15 years
Expenditures for repairs and maintenance are charged tooperations as incurred. Significant renewals and betterments arecapitalized.
INTANGIBLE ASSETS
Intangible assets are amortized utilizing the straight-line
method.
DEFERRED ASSETS
Corporate bond issuance costs are amortized over a period of
approximately three years, comprised of six fiscal periods, withan equal amount amortized in each fiscal period.
REVENUE RECOGNITION
Revenues from leasing of office space are recognized as rent
accrued over the lease period.

CASH AND CASH EQUIVALENTS
The statements of cash flows are provided for information
purposes only since they are not required to be prepared by theInvestment Trust Law, the Japanese Commercial Code, theSecurities and Exchange Law of Japan and the related
regulations. Cash and cash equivalents consist of cash on hand,deposits placed with bank and short-term investments which arehighly liquid, readily convertible to cash and with insignificant
risk of price fluctuation, with original maturities of threemonths or less.

TAXES ON PROPERTY AND EQUIPMENT
Property and equipment is subject to property taxes and city
planning taxes on a calendar year basis. These taxes are generally
charged to expenses during the period. The sellers of theproperties were liable for property taxes for the calendar year
including the period from the date of purchase by the Company
through the end of the year since the taxes are imposed on theregistered owner as of January 1, based on the assessment madeby the local government. The Company paid the amountequivalent to the property taxes to the sellers applicable to theperiod since acquisition and included the amount equivalent to
the taxes in the purchase price of each property and capitalized
as cost of the property.
CONSUMPTION TAXES
Consumption taxes withheld and consumption taxes paid are
not included in the statements of income. The consumption
taxes paid are generally offset against the balance ofconsumption taxes withheld. As such, the excess of payments
over amounts withheld is included in the current assets and theexcess of amounts withheld over payments is included in thecurrent liabilities.

3. REAL ESTATE
Real estate at December 31, 2004 and June 30, 2004 consisted of the following:
As of December
31, 2004

Land
Buildings and structures
Accumulated depreciation
Machinery and equipment
Accumulated depreciation
Tools, furniture and fixtures
Accumulated depreciation

thousands of yen

U.S. dollars

As of June30, 2004

As of December
31, 2004

Acquisition Costs

Book Value

Acquisition Costs

Book Value

Acquisition Costs¥ 9,510,751¥ 9,510,751¥ 4,750,736¥ 4,750,736$ 91,265,243

5,588,675
195,694

4,352,438
5,392,981

55,0818,596

111,841

46,485

4,809

91,265,243

53,628,973
4,240,597

40,122289

Book Value$

1,877,887

51,751,086

528,565
35,313289

82,499446,066

2,778

96

193

69

220

917

1,861

4,251

4,251

—

—

40,78940,789Entrusted land

97,804,383

97,804,383

92,389,190

92,389,190

938,531,650

938,531,650

Entrusted buildings and structures

70,892,589

Construction in progress

Accumulated depreciation

5,597,147

Entrusted machinery and equipment

1,235,629

65,384,165
65,295,442

4,361,012

680,285,850
61,023,153

1,189,928
258,336

Accumulated depreciation

325,376
15,634

931,592

Accumulated depreciation

1,820

13,8141,000

11,39817,463

Entrusted construction in progress

3,213

3,213

1,869

1,869

30,832

12,398¥178,981,766

626,575,586

11,857,101

Entrusted tools, furniture and fixtures

Total

910,253

53,710,264
3,122,306

8,734,795

150,019¥163,384,068

132,556
30,832$1,717,510,464

33

4. SHORT-TERM DEBT
Short-term debt at December 31, 2004 and June 30, 2004 consisted of the following:
As of December
31, 2004
Amount(thousandsof yen)Weightedaverageinterest rate

As of December
31, 2004

Amount(thousandsof yen)Weightedaverageinterest rate

Amount(U.S. dollars)

Unsecured loans from a bank due on November 8, 2005

¥ 1,000,000

0.488%——$ 9,596,008

Unsecured loans from banks due on June 27, 2005

10,500,000

0.586%——

100,758,085

Unsecured loans from a bank due on September 27, 2005

1,100,000

0.484%——

10,555,609

Unsecured loans from a bank due on September 27, 2005

1,000,000

0.481%——

9,596,008

Unsecured loans from a bank due on March 31, 2005

1,500,000

0.488%——

14,394,012

Unsecured loans from a bank due on May 27, 2005

1,000,000

0.537%

1,000,000

0.537%

9,596,008

Unsecured loans from a bank due on February 25, 2005

3,000,000

0.539%

3,000,000

0.539%

28,788,024

Unsecured loans from a bank due on March 25, 2005

2,000,000

0.589%

2,000,000

0.589%

19,192,016

Unsecured loans from a bank due on January 23, 2005——

2,000,000

0.688%

Unsecured loans from a bank due on February 10, 2005——

4,000,000

0.588%

Unsecured loans from a bank due on February 10, 2005——

3,500,000

0.688%

Unsecured loans from banks and a trust bank due on January 27, 2005——

8,700,000

0.536%

Unsecured loans from a bank due on January 27, 2005——

1,000,000

0.636%

Total¥21,100,000¥

As of June30, 2004¥25,200,000$202,475,770

5. CORPORATE BONDS
Pursuant to a resolution of the Board of Directors’ meeting heldon October 21, 2004, the Company undertook issues of anadditional three series of corporate bonds due on November 4,
2009, November 4, 2011, and November 4, 2014. The expiry

date for settlement of the additional issues was November 4,
2004. In the previous fiscal period, the Company undertook
issues of three series of corporate bonds. Details of total
corporate bonds outstanding are briefly as follows:
As of December
31, 2004

As of June30, 2004

As of December
31, 2004

Interest rate(%)

Amount(U.S. dollars)

Amount(thousandsof yen)Interest rate(%)

Amount(thousandsof yen)Unsecured bonds due on February 12, 2008

¥10,000,000

0.84%¥10,000,000

0.84%$ 95,960,081

Unsecured bonds due on February 12, 2010

7,000,000

1.38%

7,000,000

1.38%

67,172,056

Unsecured bonds due on February 12, 2014

5,000,000

2.32%

5,000,000

2.32%

47,980,040

Unsecured bonds due on November 4, 2009

10,000,000

0.92%

—

—

95,960,081

Unsecured bonds due on November 4, 2011

5,000,000

1.44%

—

—

47,980,040

5,000,000

2.00%

—

—

47,980,040¥42,000,000—%¥22,000,000—%$403,032,338

As of June30, 2004

As of December
31, 2004

Unsecured bonds due on November 4, 2014
Total

6. LONG-TERM DEBT
Long-term debt at December 31, 2004 and June 30, 2004 consisted of the following:
As of December
31, 2004
Weightedaverageinterest rate

Amount(thousandsof yen)Weightedaverageinterest rate

Amount(U.S. dollars)

0.873%¥ 1,000,000

0.873%$ 9,596,008

Unsecured loans from an insurance company due on March 27, 2007

¥ 1,000,000

Secured loans from a trust bank and an insurance company
due on December 27, 2006

13,000,000

1.234%

13,000,000

1.234%

124,748,104

Secured loans from banks due on December 27, 2006

2,000,000

1.295%

2,000,000

1.295%

19,192,016

Secured loans from an insurance company due on December 26, 2008

4,783,000

1.700%

4,783,000

1.700%

45,897,707

Secured loans from an insurance company due on June 21, 2011

4,783,000

2.050%

4,783,000

2.050%

45,897,707

4,400,000

1.750%

4,400,000

1.750%

Secured loans from an insurance company due on March 28, 2013
Total

34

Amount(thousandsof yen)¥29,966,000¥29,966,000

42,222,435$287,553,977

7. SECURED ASSETSAt December 31, 2004 and June 30, 2004, the following assets were pledged as collateral for the following debt:
Pledged assets:
thousands of yen

U.S. dollars

As of December
31, 2004

As of June30, 2004

As of December
31, 2004

Cash and cash equivalents¥ 6,029,990¥ 6,257,041$ 57,863,829

Land

37,676,782

37,676,782

361,546,702

Buildings and structures

28,235,478

28,623,946

270,947,879

Machinery and equipment

403,797

415,183

3,874,836

Tools, furniture and fixtures

4,543

3,419

43,595Construction in progress

3,213

1,050

30,832¥72,353,803¥72,977,421$694,307,673

Total

Debt secured by the pledged assets:Long-term debt

thousands of yen

U.S. dollars

As of December
31, 2004

As of June30, 2004

As of December
31, 2004¥28,966,000¥28,966,000$277,957,969

8. UNITHOLDERS’ EQUITY
Under the Investment Trust Law and the related regulations, theappropriations of retained earnings and the declaration of a cash
distribution for the current accounting period are made by the
resolution of the Board of Directors at a meeting held

subsequent to the close of the accounting period. As such, theretained earnings of unitholders’ equity at December 31, 2004
included cash distribution of ¥2,868,530 thousand($27,526,437) subsequently made.

9. INCOME TAXESAt December 31, 2004, the Company’s deferred tax assets
consisted mainly of the accrued enterprise tax, which is notdeductible until paid for tax purposes. The reconciliation of tax
rate difference between the adjusted statutory tax rates and theeffective tax rates for the six-month periods ended December 31,
2004 and June 30, 2004 were as follows:
For the period
from July 1, 2004
to December 31, 2004

For the period
from January 1, 2004
to June 30, 2004

Statutory tax rate

39.39%

39.39%

Deductible dividends distribution(39.38%)(39.38%)Others

0.03%

0.03%

Effective tax rate

0.04%

0.04%

The Company is subject to Japanese corporate income taxes on
all of its taxable income. However, under the Special Taxation
Measures Law of Japan, or the STML, an investment corporationis allowed to deduct dividends of accounting profits, or dividend
distributions, paid to investors from its taxable income if certain
tax requirements are satisfied. Such tax requirements include
dividend distributions in excess of 90% of its taxable income forthe accounting period as stipulated by Article 67-15 of the
STML. Based on the distribution policy provided by the Articles
of Incorporation, the Company made a dividend distribution of
approximately 100% of retained earnings in the amount of¥2,868,530 thousand ($27,526,437) at December 31, 2004 andtreated it as tax deductible dividend. The Company will not
distribute the dividends in excess of accounting profit under the
Articles of Incorporation.

35

10. PER UNIT INFORMATION
The following table summarizes information about net assets per unit and net income per unit at December 31, 2004 and June 30,
2004, and for the six-month periods then ended:

Net assets at period-end per unit
Net income per unit

In calculating the net assets per unit, the amount of the net
assets included the cash distribution declared in the subsequent
period.
Net income per unit is computed by dividing net income by
the weighted-average number of units outstanding during eachperiod. The weighted-average number of units used in theyen

U.S. dollars

For the period
from July 1, 2004
to December 31, 2004

For the period
from January 1, 2004
to June 30, 2004

For the period
from July 1, 2004
to December 31, 2004

¥213,912¥213,322$2,053

6,671

6,081

64

calculation was 430,000 units for the six months ended June 30,
2004 and December 31, 2004. Diluted net income per unit has
not been presented since no warrants and convertible bonds
were issued during the period.

11. RELATED PARTY TRANSACTIONSThe Company entered into the following related party transactions:
For the period
from July 1, 2004
to December 31, 2004

thousands of yen

U.S. dollars

For the period
from January 1, 2004
to June 30, 2004

For the period
from July 1, 2004
to December 31, 2004

Property brokerage fees

¥87,000—$834,853

Property management fees

41,175¥46,224395,116

Leasing commissions

98,577

1,654

945,944

Outsourced property operation

5,181

114,727

49,720

Repairs and maintenance

99,853

84,637958,188

12. BREAKDOWN OF OPERATING REVENUES AND EXPENSES
For the six-month periods ended December 31, 2004 and June 30, 2004.
thousands of yen

U.S. dollars

For the period
from July 1, 2004
to December 31, 2004

For the period
from January 1, 2004
to June 30, 2004

For the period
from July 1, 2004
to December 31, 2004

Real Estate Rental Revenues¥7,685,733¥6,790,658$73,752,358

Rental Revenues

7,097,927

6,388,795

68,111,769

Rental revenues

5,586,207

5,034,902

53,605,284

Common charges

1,301,555

1,155,042

12,489,738

Parking revenues

180,919

171,596

1,736,099

Other rental revenues

29,24627,255

280,648

Non-Rental Revenues

587,806

401,863

5,640,589

Incidental income

536,067

386,432

5,144,105

Cancellation charges

23,811

548

228,488

Other miscellaneous revenues

27,92814,883267,996

3,672,910

3,268,801

35,245,282

Property management fees

153,226

144,554

1,470,359

Utilities expenses

578,443452,7215,550,747

Property and other taxes

541,134

541,486

5,192,728

Real Estate Rental Expenses

Casualty insurance

38,24634,364

367,008

Repairs and maintenance

151,755

135,619

1,456,242

1,391,662

1,200,523

13,354,403

818,444759,534

7,853,795

4,012,823

3,521,857

38,507,076

Depreciation
Other rental expenses
Profits36

13. LEASESThe Company leases office buildings and earns rental income. As of December 31, 2004 and June 30, 2004, the future lease revenues
under the non-cancelable operating leases are as follows:
thousands of yen

U.S. dollars

As of December 31, 2004

As of June 30, 2004

As of December 31, 2004

Due within one year

¥ 3,965,044¥ 3,966,507$ 38,048,594

Due after one year

20,483,242

22,883,779

196,557,355

Total¥24,448,286¥26,850,286$234,605,949

14. SUBSEQUENT EVENTSAPPROPRIATION OF RETAINED EARNINGSOn February 17, 2005, the Board of Directors resolved to effectthe payment of a cash distribution of ¥6,671 per share
aggregating ¥2,868 million ($27,526 thousand) to unitholders at
the record date of December 31, 2004.
ISSUE OF NEW INVESTMENT UNITSThe Company resolved to issue new investment units at Boardof Directors’ meetings held on January 13, 2005 and January 24,
2005. Accordingly, JPR undertook a primary offering and asecondary offering (over-allotment option) — the “Greenshoe
Option” — by way of third-party allotment. Payment for eachoffering was completed on February 1, 2005 and March 1, 2005,
respectively. As a result, unitholders’ capital totaled¥115,431,503,600, while the number of investment units issued
and outstanding was 530,000 as of March 2, 2005. The terms
and conditions for each issue were as follows.

Primary Offering for the Issue of New Investment Units
Number of new investment units issued:

95,000Offer price:¥272,440 per investment unit

Gross proceeds:¥25,881,800,000

Purchase price:¥263,177 per investment unit

Gross proceeds:¥25,001,815,000

Payment date:February 1, 2005

Settlement date:February 2, 2005

Starting date of computation for cash distribution:

January 1, 2005

Secondary Offering (Over-Allotment Option)— the “Greenshoe Option”
Number of new investment units issued:

5,000

Purchase price:¥263,177 per investment unit

Gross proceeds:¥1,315,885,000

Third-party allottee:

Mizuho Securities Co., Ltd.

Payment date:

March 1, 2005

Settlement date:

March 2, 2005

Starting date of computation for cash distribution:

January 1, 2005

37

REPORT OF INDEPENDENT AUDITORS

38

UNITHOLDER INFORMATION

Breakdown of Unitholders (As of December 31, 2004)
By Number of Units Held

15.5%
Individuals and others

7.2%
Foreign investors
60.4%
Financial institutions

16.9%
Other domestic corporations

By Composition

0.2%
Foreign investors
0.8%
Financial institutions
1.4%
Other domestic corporations
97.6%
Individuals and others

Major Unitholders (As of December 31, 2004)
Units

(%)

Japan Trustee Services Bank, Ltd. (Trust Account)

37,812

8.8

Tokyo Tatemono Co., Ltd.

29,300

6.8

Meiji Yasuda Life Insurance Company

24,000

5.6

Kawasaki Gakuen

19,700

4.6

The Master Trust Bank of Japan, Ltd. (Trust Account)

14,952

3.5

Trust & Custody Service Bank, Ltd.

12,574

2.9

The Hiroshima Bank, Ltd.

10,837

2.5

AIG Star Life Insurance Co., Ltd.

10,208

2.4

The Chugoku Bank, Ltd.

8,530

2.0

Goldman Sachs International

8,230

1.9

39

MEMBERS OF THE BOARD (As of December 31, 2004)

Name Title
Biography*Number of Investment Units Held

Japan Prime Realty Investment Corporation

Hirohito Kaneko Executive Officer*0

Shigeru Sugimoto Supervising Officer*0

Dec. 19, 2001

Executive Officer, Japan Prime Realty Investment
Corporation

Sept. 14, 2001

Supervising Officer, Japan Prime Realty Investment
CorporationApr.

1, 1979

Representative Counsel (currently on service)of Hirohito Kaneko Law Office

June 1, 2001

Auditor, Morimoto Co., Ltd. (currently on service)

Oct.

Apr.

1, 1977

Bar admission (Tokyo Bar Association)
Shigeru Yamada Law Office

Representative Director of Tokyo SPC Services(currently on service)

Sosuke Yasuda Supervising Officer
Sept. 14, 2001
Oct.

July

1, 19992, 1993

Director and Senior Partner (currently on service),
Tokyo Hokuto & Co., (Tokyo Akasaka Audit Co.
and Hokuto Audit Co. merged)
Senior Partner, Tokyo Akasaka Audit Co.

Feb. 16, 1983

Representative of Tokyo Akasaka CPA Joint Office

June 27, 1980

Sosuke Yasuda Tax Accountant Office(currently on service)

Dec. 1, 1975

Masamitsu Serizawa Accounting Firm

Apr.

Main Store, KK Ohgiya

1, 1968*0Supervising Officer, Japan Prime Realty Investment
Corporation2, 1999

June 24, 1998

Senior Partner (currently on service) of Horwath
Sakura & Co. (ex- Sakura Audit Corporation)

Dec. 1, 1996

Horwath International

Dec. 22, 1995

Sakura Audit Corporation

July

Representative Director of Sakura & Co.
(currently on service)

1, 1988

Nov. 1, 1985

Ohta Showa Audit Corporation

Apr.

Housing and Urban Development Public
Corporation

1, 1982

Tokyo Realty Investment Management, Inc.

Toshihiro Hagiwara President and CEO
Jan. 23, 2001

President, Tokyo Realty Investment Management, Inc.

Apr.

1, 1999

Director and Head of Osaka Branch OfficeJan.

1, 1998

Head of Development Business Department of
Kinshicho Project (Tokyo) and led negotiations forcity planning of large-scale development of morethan 28,000m2

Mar. 28, 1992

Director of Secretary’s Office and Human Resources

Apr. 20, 1989

Planning of redevelopment scheme connecting
Akihabara and Okachimachi (Tokyo) for JR East
Urban Development Corporation (Joint Venture ofJapan Railway East)

July

Property management and acquisition businesses of
Building Department

Apr.

1, 1985
1, 1968*0July

1, 2001

Director and Chief Financial Officer, Tokyo Realty
Investment Management, Inc.

Apr.

1, 2000

General Manager of Pension Management Department

Apr.

1, 1991

Manager of International Investment Department
in charge of investments in overseas real estate andfinancing activities

Oct.

1, 1989

Investment Banking Division of Paine Webber
Japan Inc. in Tokyo, where he was involved with
M&A and IPO businesses

Oct. 23, 1983

New York representative office of Yasuda Life

Apr.

Finance Department of The Yasuda Mutual Life
Insurance Company

1, 1973

Yukio Furuya Director and Chief Investment Officer*0

Jan. 23, 2000

Director and Chief Investment Officer, Tokyo
Realty Investment Management, Inc.

Apr.

1, 1999

Group leader of the Sales Planning Group Structureda system of property management services

Jan.

1, 1998

Tenant-leasing team leader

June 1, 1993

Took charge of tenant leasing

Nov. 1, 1990

Tokyo Tatemono of America

Apr.

Tokyo Tatemono Co., Ltd. Involved in real estate
investment, leasing to tenants and appraisalsof real estate

1, 1981

Kazuo Kitami Director and Chief Administrative Officer

*0

Oct.

1, 2004

Director and Chief Administrative Officer, Tokyo
Realty Investment Management, Inc.

Apr.

1, 1997

Manager of Credit Assessment Dept. 2, Management
and Administration Division. Responsible for loanadministration. Responsible for credit administration
involved in the bulk sale of non-performing loans,involved in self-assessment and formulation of insurance investigation manual. Manager, Loans
Administration between Aug. 2000 through Mar.
2003, responsible for loan-related accounting.

Apr.

1, 1995

Manager of Real Estate Development responsible
for overall operations.

Tokyo Tatemono Co., Ltd.

Takeshi Maki Director and Chief Financial Officer

40*0

Sept. 1, 1989

Manager of Real Estate Development Dept., Real
Estate Division. Involved in real estate investment
activities, property leasing and property management.

Mar. 1, 1977

Asset Management Division (Loans, Real Estate
and Other). Engaged in loan front office operations.
Involved in the establishment of a leasing subsidiary.

Apr.

The Yasuda Mutual Life Insurance Company(Currently Meiji Yasuda Life Insurance Company)

1, 1975

JPR-第六期 C2-3 3/22-入稿用 05.3.29 11:41 AM ページ 41

PROFILECORPORATE DATA

Established on September 14, 2001, Japan Prime Realty Investment Corporation
is a closed-end, corporate type fund that invests primarily in high-quality office buildings
and retail properties located in Tokyo and other major cities in Japan.
With its geographically diverse portfolio, JPR’s primary objective is to achieve sustainablegrowth and stable cash distributions to its investors.

Head Office
9-9 Yaesu 1-Chome, Chuo-ku, Tokyo 103-8285, Japan
Tel: +81-3-3231-1051
Fax: +81-3-3274-7775
Date of Establishment
September 14, 2001
Listing
Tokyo Stock Exchange (Securities Code: 8955)
Fiscal Period Ends
June 30 and December 31 of each year
General Meeting of Unitholders
More than once every two years
Cash Distribution Payment Eligibility
Unitholders of record as of June 30 and December 31 ofeach year

Location of Records
Mizuho Trust & Banking Co., Ltd.
2-1 Yaesu 1-chome, Chuo-ku, Tokyo
Main Branch, Stock Transfer Agency Division
Mailing Address Mizuho Trust & Banking Co., Ltd.
1-17-7 Saga, Koto-ku, Tokyo 135-8722
Stock Transfer Agency Division
Telephone+81-3-5213-5213 (Representative)
AgentsMizuho Trust & Banking Co., Ltd.
(All branches nationwide)
Mizuho Investors Securities Co., Ltd.
(Head office and all branches
nationwide)
Note: On March 12, 2003, Mizuho Trust & Banking Co., Ltd. merged with Mizuho Asset
Trust & Banking Co., Ltd., to establish a new trust and banking entity under the name ofMizuho Trust & Banking Co., Ltd. As a result, Mizuho Trust & Banking's main branchchanged its address on the same date.

Web site
http://www.jpr -reit.co.jp/jpr_e/index.html

Transfer Agent
Mizuho Trust & Banking Co., Ltd.
2-1 Yaesu 1-chome, Chuo-ku, Tokyo

English page
This Web site has been createdspecifically for our English-speaking
readers.

Performance
Trends in occupancy rate byarea and purpose; trends ininvestment conditions. Updated
monthly.

ANNUAL SCHEDULE (PROVISIONAL)

DEC.

12 Balance date for the six-month period ended December 31
FEB.

2

FAQ

Announcement of results for the six-month period ended December 31
MAR.

3

Publication of December Performance Information Report
Payment of cash distributions for the six-month period ended December 31

Balance date for the six-month period ended June 30

8 AUG.

Publication of June Performance Information Report
Payment of cash distributions for the six-month period ended June 30

9 SEPT.

Note: Performance Information Report is prepared pursuant to the Investment Trust Law of Japan.

FINANCIAL HIGHLIGHTS 3

ACTIVITY HIGHLIGHTS 7

PORTFOLIO BREAKDOWN 5

SUBSEQUENT ACTIVITY HIGHLIGHTS 9

REIT STRUCTURE AND EXTERNAL SERVICE PROVIDERS 21
FINANCIAL STATEMENTS 28

Investor Relations
News releases are posted here as appropriate, as well as
information useful to unitholders and investors in evaluating
the status of JPR, including financial statements and otherlegally mandated reports.

6 JUNE

Announcement of results for the six-month period ended June 30

CONTENTS: TO OUR INVESTORS 1

Answers to commonly asked
questions by our unitholders
and investors are found here.

PROPERTY PORTFOLIO OF JPR 10

MANAGEMENT’S DISCUSSION AND ANALYSIS 24

UNITHOLDER INFORMATION 39

MEMBERS OF THE BOARD 40 CORPORATE DATA 41

This document contains a translation of selected information described in the Financial Report (Kessan Tanshin) dated February 17, 2005, prepared under the timely disclosure requirements of theTokyo Stock Exchange, as well as the Financial Statements and Performance Information Report prepared pursuant to the Investment Trust Law of Japan, for the period from July 1, 2004 to
December 31, 2004 of Japan Prime Realty Investment Corporation (“JPR”).
This English language document was prepared solely for the convenience of and reference by non-Japanese investors and is not intended to constitute a disclosure document. The Japanese
language Financial Report, Financial Statements and Performance Information Report for the aforementioned period should be referred to as the originals of this document.
English translations for legal, accounting, tax and business concepts used herein may not convey precisely identical concepts of the equivalent Japanese terms. The figures presented in the financial
statements may differ from the Company’s Financial Report (Kessan Tanshin) due to rounding. 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 documents and English documents contained herein, the original Japanese documents will govern themeaning and interpretation. Neither JPR, Tokyo Realty Investment Management, Inc., nor any of their respective directors, officers, employees, partners, unitholders, agents or affiliates will be
responsible or liable for the completeness, appropriateness or accuracy of English translations or the selection of the portion(s) of any document(s) translated into English. No person has beenauthorized to give any information or make any representations other than as contained in this document in relation to the 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 JPR, Tokyo Realty Investment Management, Inc., or any of their respective directors, officers, employees, partners,
unitholders, agents or affiliates.
The financial statements of JPR have been prepared in accordance with generally accepted accounting principles in Japan (Japanese GAAP), which may materially differ in certain respects fromgenerally accepted accounting principles in other jurisdictions.
Many provisions of this document contain information that constitute forward-looking statements. These forward-looking statements are not a guarantee of future performance and involve risks
and uncertainties, and actual results may differ materially from those in the forward-looking statements as a result of various factors.

41

JPR-第六期 C1-4 3/14 05.3.29 11:39 AM ページ 1

J PR
Japan Prime Realty Investment Corporation
Sixth Fiscal Period Business Report
July 1, 2004 – December 31, 2004

Printed in Japan