Tenth Fiscal Period Business Report
July 1, 2006 December 31, 2006

Corporate Profile
Established on September 14, 2001, Japan Prime Realty Investment Corporation (JPR or the Company) is a
closed-end corporate fund that focuses on a geographically diverse investment portfolio of office andretail properties. Through its investment activities, JPR has been awarded high credit ratings from rating
agencies, reflecting the Company's high-quality portfolio, earnings stability and sound financial standing.
As of December 31, 2006, JPR had an investment portfolio totaling 222.48 billion yen on an acquisitionbasis, 479 tenants and 46 properties, and is recognized as one of the top diversified REITs in Japan.

Contents Investment Highlights

1

Message to Our Unitholders

2

Account Highlights

3

Investment Unit Status

4

New Acquisitions during the 10th and 11th Fiscal Periods

5

Portfolio Topics

6

Property Portfolio

8

Overview of Portfolio Properties

14

Characteristics and Corporate History

20

Overview of the Asset Manager

22

Overview of Asset Management24

Overview of Investment Corporation

31

Status of JPR's Assets under Management

32

Capital Expenditures of Owned Real Estate

36

Expenses and Liabilities

37

Acquisition and Sale during the 10th Fiscal Period

39

Overview of Accounting/Other

41

Balance Sheets

42

Statement of Income and Retained Earnings

44

Statement of Changes in Unitholders' Equity

45

Notes to Financial Statements

46

Report of Independent Auditors

52

Statements of Cash Flows (Information Only)53

JPR Investment Policies (Reference)

55

Investor Information

65

Investment Highlights
Profile Overview•Top ranked diversified J-REIT•Focusing on high quality office buildings and popular retail properties•Sponsored by major real estate developers, a general contractor, etc.

Growth Strategy•Selective investment focused on future potential•Leverage sponsor pipeline•Focus on acquiring additional properties from Tokyo Tatemono•Focus on incorporating development projects of Taisei Corporation•Seek growth through rent hikes

Management Views•Targets•Portfolio exceeding 300 billion yen•Aim to raise cash distribution per unit, which has been stable at the 6,000
yen level, to the 7,000 yen level1Message to Our Unitholders
We are delighted to have this opportunity to provide an overview of the asset management
and financial results of Japan Prime Realty Investment Corporation (JPR) for its 10th fiscal
period (July 1, 2006 to December 31, 2006).
The JPR portfolio grew to 46 properties, or 222.48 billion yen on an acquisition price basis, asof the end of December 31, 2006 due to the acquisition of two properties: Chayamachi Grande
Bldg. and JPR Musashikosugi Bldg. (totaling 13.26 billion yen). Our continuous stable financial
standing has also been rewarded by the fund procurement for acquiring the abovementioned
two properties using our available credit line as well as the issuance of corporate bonds, worth
4.5 billion yen with 20-year maturity, in December 2006.
As for our financial results, we posted operating revenues of 9,088 million yen and recurring
profits of 3,643 million yen primarily due to the full-period operations of properties acquired
during the previous period, partial contribution of properties acquired during the 10th fiscal
period and enhanced occupancy of existing properties. These efforts and performance led to
net income for the 10th fiscal period reaching 3,642 million yen.
As a result, the cash distribution per unit was set at 6,873 yen.
Our expectations are that the environment surrounding the real estate investment trust
industry will continue to be severe, particularly with regards to the acquisition of properties.
We will continue working with our asset manager, Tokyo Realty Investment Management,
within these circumstances to realize stable growth over the medium to long term while
maintaining a consistent focus on compliance.
We ask for your continued understanding and support of our operations.

Hirohito Kaneko
Executive Officer
Japan Prime Realty Investment Corporation2

Account Highlights(All amounts in millions of yen unless otherwise stated)
6th Fiscal Period
ended
December 2004

7th p Fiscal Period
endedJune 2005

Operating revenues

7,685

8,503

Recurring profits

2,869

Net income

Total cash distributions

8th Fiscal Period
ended
December 2005

9th Fiscal Period
endedJune 2006

10th Fiscal Period
ended
December 2006

8,587

8,588

9,088

3,377

3,399

3,450

3,643

2,868

3,376

3,398

3,449

3,642

2,868

3,376

3,397

3,449

3,642

Total assets

198,673

216,574

225,882

231,523

244,691

Total unitholders' equity

91,982

118,807

118,829

118,881

119,074

Equity ratio

46.3%

54.9%

52.6%

51.3%

48.7%

Unitholders' equity per unit (yen)213,912224,165

224,206

224,304

224,668

Cash distribution per unit (yen)

6,671

6,370

6,411

6,509

6,873

Oper
at
i
ngRevenuesandNetI
ncome

Tot
alAs
s
et
sandTot
alUni
t
hol
der
s
'Equi
t
y

25,
000

10,
000

Cas
hDi
s
t
r
i
but
i
onperUni
t

8,
000

20,
000
7,
500

6,
000

15,
000
5,
000

4,
000
10,
000

2,
500

2,
000
5,
000

0

0
6t
h
7t
h
8t
h
9t
h
10t
h
Fi
s
cal Fis
cal Fis
cal Fis
cal Fiscal
Per
iod Peri
od Peri
od Peri
od Per
i
od

0
6t
h
7t
h
8t
h
9t
h
10t
h
Fi
s
cal Fis
cal Fis
cal Fis
cal Fiscal
Per
iod Peri
od Peri
od Peri
od Per
i
od

Oper
at
i
ngr
evenues(milli
onyen)

Tot
alas
s
et
s(
mi
l
l
i
onyen)

Neti
ncome(
milli
onyen)

Tot
aluni
t
hol
der
s
'equi
t
y(
mi
l
l
i
onyen)

6t
h
7t
h
8t
h
9t
h
10t
h
Fi
s
cal Fis
cal Fis
cal Fis
cal Fiscal
Per
iod Peri
od Peri
od Peri
od Per
i
od

Cas
hdi
s
t
r
i
but
i
on(
yen)

3

Investment Unit Status
Historical Unit Price
Trading
VolumeUnit
Price

Trading Volume (units)
Unit Price (yen)16,00014,00012,000500,000
As of February 7, 2007
Market capitalization: ¥282.1 billion
High: ¥478,000 (January 24, 2007)
Low: ¥199,000 (June 14, 2002)
Unit price at end of period: ¥432,000 (December 29, 2006)

460,000

PO
Offering: ￥449,820

420,000

10,000380,000

8,000

340,000

6,000

300,000

PO
Offering: ￥272,440

4,000

260,000

PO
Offering: ￥237,160

2,000

220,000

Listed on Tokyo Stock Exchange
Offering: ￥200,000

Jun 0 Julye 14
, 2001
2

Jan.
6, 20
03

July
1

Jan.
5, 20
04

July
1

Jan.
4,

2005

July
1

Jan.
4,

2006

July
1

180,000
Feb. 7, 2
007(Note) Unit prices are based on closing prices.

Breakdown of Unitholders at End of Period

Number ofUnitholders

Units530,000 units

530,000 units

27,50010.72%
56,832 units

9.61%
50,975 units

25,00014.11%
74,822 units

13.96%
74,030 units

13.84%
73,381 units

9.88%
52,366 units

12,38%
65,647 units

13,57%
71,947 units

550,000

530,000 units

530,000 units

500,000

14.73%
78,077 units12.32%
65,324 units

450,000

430,000 units

400,000

15.45%
66,438 units

350,000

300,000

16.91%
72,727 units

14.56%
77,214 units

20,0006.89%
36,564 units

17,50015,0007.19%
30,944 units

250,000

12,500200,000

10,000150,000

100,000

7,500
60.43%
259,891 units

63.80%
338,145 units

63.67%
337,488 units

62.92%
333,491 units

62.96%
333,697 units

50,000

0

5,000

2,500

6th fiscal period

7th fiscal period

Financial Institutions(including securities firms)

8th fiscal period

ForeignInvestors

9th fiscal period

Other Domestic
Corporations(Note) The composition ratio is rounded to two decimal places.

422,500Individuals

10th fiscal period
Number of Individual
Investors0New Acquisitions during the 10th and 11th Fiscal Periods
Properties Acquired in the 10th Fiscal Period
Chayamachi Grande Bldg.

C

JPR Musashikosugi Bldg.

5(Retail)(Retail)
Location

Location

Osaka City, Osaka

Kawasaki City, Kanagawa

Acquisition Date

Acquisition Date

Acquisition Price

Acquisition Price

Site Area

Site Area

August 30, 2006

September 28, 2006

￥6,000million￥7,260million

2592.45m

Total Floor Space2

4,761.62m

Total Floor Space2

2

3,219.36m

18,394.32m

Floors

Structure

Floors

Structure

9F

S/SRC

4

B

B1/6F

SRC/RS/S

Completed

Completed

June 1994

March 1983

Properties Acquired in the 11th Fiscal Period
Tachikawa Business Center Bldg.
B 8(additional ownership)(Office)
Location

Tachikawa City, Tokyo

Acquisition Date

February 2007

Acquisition Price￥2,300million

Site Area2

608.90m

Total Floor Space2

3,065.63m
Floors

Structure

B1/12F

S/SRC
Completed

December 1994

Shinjuku Sanchome East Bldg.

A

B

Rise Arena Bldg.

(Retail)(Office)

Location

Location

Acquisition Date

Acquisition Date

Shinjuku Ward, Tokyo
March 2007

Acquisition Price￥540 million

Site Area

22,578.69m

Total Floor Space2

26,360.56m
Floors

Structure

S/RC/SRC

B3/14F

Completed

January 2007

Toshima Ward, Tokyo
March 2007

Acquisition Price￥5,831 million

Site Area

2

9,377.28m

Total Floor Space2

37,444.50m
Structure

S/SRC/RC

FloorsB2/15F

Completed

January 2007

5

Portfolio Topics
Portfolio Growth
Occupancy rate (%)

100.0
90.0
Total leasable
floor space (m2)

Total acquisition
price (billion yen)

350,000

2,800
Total acquisition priceTotal leasable floor space

2,400

300,000

2,000

250,000

1,600

200,000

1,200

150,000

800

100,000

400

50,00000
End of
Nov.
2001

Total
acquisition
price(billion yen)Total
leasable
floor
space
(m2 )

40.73

End of
Jun.
2002

92.18

End ofDec.
2002

End of
Jun.
2003

94.59

125.79End ofDec.
2003

End ofJun.
2004

139.64163.65End ofDec.
2004

End ofJun.
2005

179.62End ofDec.
2005

197.65End ofJun.
2006

202.66209.22End ofDec.
2006

222.4894,935.49 162,739.50 168,987.78 201,808.72 218,734.67 256,329.13 273,330.52 281,408.97 308,205.26 315,156.84 337,382.05

Occupancy
rate (%)

96.3

94.1

93.4

93.5

92.7

93.2

95.1

95.4

97.2

98.0

98.6

Properties

13

25

27

30

32

38

42

42

42

44

46

Total numberof tenants

133

281

311

324

357

437

496

459

441

462

479

(Note 1) When a single tenant leases multiple rooms in the same property, the tenant is counted as one.
If the leased rooms are in multiple buildings, the tenant is counted in plural.
(Note 2) Each sectional owner of Shinjuku Square Tower leases its portions to Shinjuku Square Tower Management Co., Ltd.
collectively, and the firm subleases them to sub-lessees.
Accordingly, the leasable floor space of the building as it relates to JPR's ownership is calculated by multiplying the total contracted areas of offices, shops
and warehouses the management company can sublease to sub-lessees by 39.70457%, the rent allocation ratio of JPR, to arrive at the rent allocated to JPR.
The subleased areas used to calculate the occupancy rate are the subleased areas to sub-lessees multiplied by the rent allocation ratio.
Each figure has been rounded to the second decimal point.
The number of sub-lessees of the Shinjuku Square Tower is also regarded as the number of tenants.

6

Portfolio Diversification by Region
Tokyo CBDs

Greater Tokyo

Value breakdownby acquisition price

Other Cities

Other Cities
Value breakdownby monthly rental revenue
at period end

Tokyo CBDs

36.5％

42.5％

（￥81,107 million）（￥94,461 million）

Other Cities
37.5％

Tokyo CBDs（￥538 million）

35.9％（￥515 million）

Value breakdownby leased floor spaceat period end

Other Cities

24.3％

42.7％

2

（141,926.12m ）26.7％（￥383 million）

21.1％（￥46,915 million）（80,810.89m2 ）33.0％（109,925.79m2 ）Greater Tokyo

Gr
eat
erTokyoGreater Tokyo

Tokyo CBDs

Portfolio Diversification by Asset Class
Retail properties

Office buildings

Value breakdownby monthly rental revenue
at period end

Value breakdownby acquisition price

Retail properties
34.6％（￥77,070 million） Office buildings

65.4％

Retail properties
29.8％（￥428 million）
Office buildings
70.2％（￥145,413 million）（￥1,008 million）

Value breakdownby leased floor spaceat period end

Retail properties
42.3％
Office buildings
2（140,843.81m ）57.7％
2（191,818.99m ）Major Tenants#

TenantProperty

Leased floor areaat period end (m 2 )Percentage of totalleased floor areaat period end

1

The Seiyu, Ltd.

Tanashi ASTA, Tsurumi fuga 1

40,700.31

12.2%

2

ABC Development Corporation

Housing Design Center Kobe

35,444.13

10.7%

3

Ito-Yokado Co., Ltd.

JPR Musashikosugi Bldg.

19,740.95

5.9%

4

The Loft Co., Ltd.

JPR Umeda Loft Bldg.

18,586.97

5.6%

5

Shinjuku Square Tower Management Co., Ltd.

Shinjuku Square Tower

10,982.03

3.3%

6

TOWER RECORDS JAPAN INC.

JPR Shibuya Tower Records Bldg.

8,076.85

2.4%

7

UFJ Central Leasing Co., Ltd.

UFJ Central Leasing Head Office Bldg.

7,123.07

2.1%

6,590.10

2.0%

Kawaguchi Center Bldg.,

8

Sompo Japan Insurance Inc.

Sompo Japan Sendai Bldg.,
Sompo Japan Wakayama Bldg.

9

The Maruetsu, Inc.

Cupo-la Main Bldg.

5,963.00

1.8%

10

Iwatani International Corporation

Tokyo Tatemono Honmachi Bldg.

5,959.86

1.8%(Note) The areas of co-owned buildings corresponding to the portions owned by JPR are indicated.

7

Property Portfolio

A Tokyo CBDs

Ueno

B-7

Shinjuku Ward
Shinjuku

A-11

Shibuya Ward

A-12
A-

B-1
A-5
A-9 Chiyoda
Ward
A-4 Tokyo

Ichigaya

A-3

A-1

A-2

Minato Ward

A-10

A-2

A-11

A-3

A-12

A-4

A-13

A-5

A-1

A-6

A-2

A-7

A3

Kanematsu Bldg. Annex
JPR Ningyo-cho Bldg.

A-6
GotandaA-7

Shin-Kojimachi Bldg.
JPR Crest Takebashi Bldg.
MS Shibaura Bldg.

Shinagawa

A-10

Gotanda First Bldg.

A-8

Fukuoka Bldg.

OhsakiShinagawa Ward

SAITAMA

A-1

Kanematsu Bldg.

TamachiB Greater Tokyo

A-3

A-13
A-1
A-8
A-2
Chuo Ward

Harajuku

Shibuya

Kinshicho

A-9

JPR Ichigaya Bldg.

Oval Court Ohsaki Mark West
Shinjuku Square Tower
BYGS Shinjuku Bldg.
Across Shinkawa Bldg. Annex
JPR Shibuya Tower Records Bldg.
JPR Daikanyama
JPR Jingumae 432

11th Fiscal Period Acquisition (Planned)A-

Shinjuku Sanchome East Bldg.

B-6
B-3

Kawaguchi

CHIBA

B-8

TOKYO
TanashiB-1

Ikebukuro

B- UenoShinjuku

TachikawaTokyo

B-7 B-1
Kinshicho

Shibuya
Chiba
Shinagawa

B-4
KANAGAWA

B-5
Shin-Yokohama

TsurumiB-2

Yokohama
Nihon-Odori

B-3

B-2

B-1 Arca East
B-2 JPR Chiba Bldg.
B-3 JPR Yokohama Nihon Odori Bldg.
B-5 Shinyokohama 2nd Center Bldg.
B-6 Kawaguchi Center Bldg.
B-7 JPR Ueno East Bldg.
B-8 Tachikawa Business Center Bldg.
B-1 Tanashi ASTA
B-2 Tsurumi fuga 1(sale planned for April 2007)
B-3 Cupo-la Main Bldg.
B-4 JPR Musashikosugi Bldg.*
11th Fiscal Period Acquisition (Planned)
B- Rise Arena Bldg.

*JPR Musashikosugi Bldg. is the new name for the formar Tokyokikai Musashikosugi Bldg. The name change took
place on November 1, 2006.

8

C Other Cities
C-1
C-6

SAPPORO

C-10

Niigata Ekinan Center Bldg.
JPR Takamatsu Bldg.
(sale planned for April 2007)

C-7 JPR Hakata Bldg.
C-9 JPR Naha Bldg.
C-10 NORTH 33 Bldg.
C-12 Sompo Japan Sendai Bldg.
C-13 Sompo Japan Wakayama Bldg.
C-14 Tenjin 121 Bldg.
C-16 JPR Nagoya Sakae Bldg.
C-18 JPR Hakata-chuo Bldg.*
C-19 UFJ Central Leasing Head Office Bldg.
C-2 Strasse Ichibancho
C-4 Housing Design Center Kobe

SENDAI

C-12
C-2

NIIGATA

C-1
OSAKA
See below
KOBE

C-4
FUKUOKA

C-7
C-14
C-18

NAGOYA

TAKAMATSU

C-6

NAHA

C-16
C-19
WAKAYAMA

C-13

C-9*JPR Hakata-chuo Bldg. is the new name for the former Semba Fukuoka Bldg. The name change took place on October 1, 2006.

Other Cities
C (Osaka
City)

C-1
C-5

A

Hankyu_Umeda

Chiyoda Ward
Chuo Ward
Minato Ward

Osaka

C-2

Tokyo CBDs
C-17

Shinjuku Ward
Shinagawa Ward
Shibuya Ward

Kitahama

Yodoyabashi

C-4

B
Greater Tokyo

All other areas of Tokyo
and Chiba, Kanagawa andSaitama Prefectures

HommachiC-2 Meiji Yasuda Life Osaka Umeda Bldg.
C-4 Tokyo Tatemono Honmachi Bldg.
C-17 JPR Dojima Bldg.*
C-1 JPR Umeda Loft Bldg.
C-3 Benetton Shinsaibashi Bldg.
C-5 Chayamachi Grande Bldg.

C-3
Shinsaibashi

C

Namba

Other Cities

All other areas in Japan*JPR Dojima Bldg. is the new name for the former Dojima F Bldg. The name change took place on January 1, 2007.

9

Location
Category

Tokyo
CBDs

Asset
Class

No.

OfficeA-1

Kanematsu Bldg.

Office

A-2

OfficeProperty Name

Location

Completed

Acquired

Chuo Ward, Tokyo

1993.2

2001.12

Kanematsu Bldg. Annex

Chuo Ward, Tokyo

1993.2

2001.12A-3

JPR Ningyo-cho Bldg.

Chuo Ward, Tokyo

1989.122001.11

OfficeA-4

Shin-Kojimachi Bldg.

Chiyoda Ward, Tokyo

1984.10

2001.11〜2004.11

OfficeA-5

JPR Crest Takebashi Bldg.

Chiyoda Ward, Tokyo

1999.92002.6

OfficeA-6

MS Shibaura Bldg.

Minato Ward, Tokyo

1988.2

2003.3

OfficeA-7

Gotanda First Bldg.

Shinagawa Ward, Tokyo

1989.7

2003.7

OfficeA-8

Fukuoka Bldg.

Chuo Ward, Tokyo

1990.5

2003.10〜
2005.4

OfficeA-9

JPR Ichigaya Bldg.

Chiyoda Ward, Tokyo

1989.3

2004.5

OfficeA-10

Oval Court Ohsaki Mark West

Shinagawa Ward, Tokyo

2001.6

2004.6

OfficeA-11

Shinjuku Square Tower

Shinjuku Ward, Tokyo

1994.10

2004.7

OfficeA-12

BYGS Shinjuku Bldg.

Shinjuku Ward, Tokyo

1985.4

2004.11〜
2005.4

OfficeA-13

Across Shinkawa Bldg. Annex

Chuo Ward, Tokyo

1994.6

2004.11RetailA-1

JPR Shibuya Tower Records Bldg.

Shibuya Ward, Tokyo

1992.2

2003.6

RetailA-2

JPR Daikanyama

Shibuya Ward, Tokyo

2002.7

2004.10RetailA-3

JPR Jingumae 432

Shibuya Ward, Tokyo

2006.2

2006.3

OfficeB-1

Arca East

Sumida Ward, Tokyo

1997.3

2001.11

OfficeB-2

JPR Chiba Bldg.

Chiba City, Chiba

1991.1

2001.12

OfficeB-3

JPR Yokohama Nihon Odori Bldg.

Yokohama City, Kanagawa

1989.10

2001.11

OfficeB-5

Shinyokohama 2nd Center Bldg.

Yokohama City, Kanagawa

1991.8

2002.9

OfficeB-6

Kawaguchi Center Bldg.

Kawaguchi City, Saitama

1994.2

2004.2

OfficeB-7

JPR Ueno East Bldg.

Taito Ward, Tokyo

1992.10

2004.3

OfficeB-8

Tachikawa Business Center Bldg.

Tachikawa City, Tokyo

1994.122005.9RetailB-1

Tanashi ASTA

Nishitokyo City, Tokyo

1995.2

2001.11RetailB-2

Tsurumi fuga 1

Yokohama City, Kanagawa

1985.92001.11RetailB-3

Cupo-la Main Bldg.

Kawaguchi City, Saitama

2006.1

2006.3Retail

B-4

JPR Musashikosugi Bldg.

Kawasaki City, Kanagawa

1983.32006.9Total

Greater
Tokyo

Total
Notes: (1) Acquisition price does not include miscellaneous expenses of acquisition (real estate transaction brokerage fee and consumption tax).
(2) Percentages and ratios are rounded to the first decimal point.
(3) The ratio of proprietary ownership is shown on the deed for the land.
(4) Cupo-la Main Bldg. and JPR Musashikosugi Bldg. are leased to single tenants.
JPR was unable to obtain the tenants' approval to disclose rental information.

10

Acquisition
Price (1)(millionsof yen)Percentage
of Total(2)

Ownership(3) (%)

Site Area(m 2 )

Total Leasable
Floor Space(m2 )(JPR's portion)

Occupancy
Rate (2)

No. ofTenants

RentalRevenue(thousandsof yen)Percentage
of
Total (2)16,276

7.3

79.4

1,751.13

7,994.02

100.0

10

451,203

5.0

2,874

1.3

79.4

679.06

2,291.13

100.0

1104,611

1.2

2,100

0.9

100.0

550.062,788.98

100.0

4

100,862

1.1

2,420

1.1

2,105.44
901.36312.53

100.0
43.9
100.0

7
2
1

71,672
13,385
11,542

0.8
0.1
0.1

3,319.33

84.8

10

96,5991.1

77.3

657.80

4,000

1.8

100.0

636.903,265.34

87.8

8118,953

1.3

11,2005.0

36.0

8,992.18

14,429.09

100.0

8

544,268

6.0

2,920

1.3

61.8

1,551.19

4,243.58

100.0

2

134,424

1.5

2,920

1.3

21.8

1,302.17

1,250.06
687.34
1,937.40

100.0
100.0
100.0

1
1
2

64,66737,822
102,489

0.7
0.4
1.1

5,100

2.3

100.0

1,058.04

4,186.09

100.0

9

188,996

2.1

3,500

1.6

27.1

4,006.00

4,088.44

100.0

4177,168

2.0

10,0004.5

29.3

8,409.52

10,982.03

100.0

25

297,660

3.3

11,821

5.3

75.0

3,522.46

11,357.50

98.4

25

483,510

5.3

710

0.3

100.0

858.481,253.39

100.0

447,7830.5

12,0005.4

100.0

1,010.47

8,076.85

100.0

1345,576

3.8

2,160

1.0

100.0

277.12653.99100.0

447,149

0.5

4,460

2.0

100.0

218.21

1,027.33

100.0

596,384

1.1

94,46142.5

35,480.79

81,894.49

98.7

122

5,880

2.6

41.1

3,755.01

7,022.76

100.0

6285,469

3.2

2,350

1.1

100.0

1,382.35

5,562.97

92.8

27

137,678

1.5

2,927

1.3

100.0

1,100.59

6,066.53

93.4

10

139,264

1.5

920

0.4

50.0

841.712,641.19

100.0

15

74,690

0.8

8,100

3.6

86.5

4,524.61

15,461.98

99.3

39

486,947

5.4

3,250

1.5

100.0

1,242.97

6,512.45

90.9

8192,061

2.1

888

0.4

16.9

2,047.22

1,747.13

100.0

457,515

0.6

10,2004.6

42.1

12,326.30

31,121.71

100.0

1

596,400

6.6

3,040

1.4

64.4

1,962.18

9,578.60

100.0

1145,200

1.6

2,100

0.9

7.3

15,008.28

5,963.00

100.0

1(Note 4)(Note 4)

7,260

3.3

100.0

4,761.62

19,740.95

100.0

1

(Note 4)(Note 4)

46,91521.1

48,952.84

111,419.27

98.7

113

11

OtherCities

Asset
Class

No.

OfficeC-1

Niigata Ekinan Center Bldg.

Office

C-2

OfficeCompleted

AcquiredNiigata City, Niigata

1996.3

2001.11

Meiji Yasuda Life Osaka Umeda Bldg.

Osaka City, Osaka

2000.6

2001.12

C-4

Tokyo Tatemono Honmachi Bldg.

Osaka City, Osaka

1970.2

2001.11

OfficeC-6

JPR Takamatsu Bldg.

Takamatsu City, Kagawa

1982.92001.12

OfficeC-7

JPR Hakata Bldg.

Fukuoka City, Fukuoka

1985.6

2001.11

OfficeC-9

JPR Naha Bldg.

Naha City, Okinawa

1991.10

2001.11

OfficeC-10

NORTH 33 Bldg.

Sapporo City, Hokkaido

1992.2

2002.6

OfficeC-12

Sompo Japan Sendai Bldg.

Sendai City, Miyagi

1997.12

2002.6

OfficeC-13

Sompo Japan Wakayama Bldg.

Wakayama City, Wakayama

1996.7

2002.6

OfficeC-14

Tenjin 121 Bldg.

Fukuoka City, Fukuoka

2000.7

2002.6

OfficeC-16

JPR Nagoya Sakae Bldg.

Nagoya City, Aichi

B 2003.1
P 1986.12

2003.9

OfficeC-17

JPR Dojima Bldg.

Osaka City, Osaka

1993.10

2004.1

OfficeC-18

JPR Hakata-Chuo Bldg.

Fukuoka City, Fukuoka

1993.2

2004.6

Office

C-19

UFJ Central Leasing Head Office Bldg. Nagoya City, Aichi

1991.32005.3RetailC-1

JPR Umeda Loft Bldg.

Osaka City, Osaka

1990.4

2003.5-7

RetailC-2

Strasse Ichibancho

Sendai City, Miyagi

2002.10

2005.2RetailC-3

Benetton Shinsaibashi Bldg.

Osaka City, Osaka

2003.2

2005.5RetailC-4

Housing Design Center Kobe

Kobe City, Hyogo

1994.6

2005.9Retail

C-5

Chayamachi Grande Bldg.

Osaka City, Osaka

1994.6

2006.8Total

Property Name

Location

B Building
P ParkingTotal
Notes: (1) Acquisition price does not include miscellaneous expenses of acquisition (real estate transaction brokerage fee and consumption tax).
(2) Percentages and ratios are rounded to the first decimal point.
(3) The ratio of proprietary ownership is shown on the deed for the land.
(4) The Benetton Shinsaibashi Bldg. and the Housing Design Center Kobe are leased to single tenants.
JPR was unable to obtain the tenants' approval to disclose rental information.

12

Total Leasable
Floor Space(m 2 )(JPR's portion)

Occupancy
Rate (2)

No. oftenants

RentalRevenue(thousandsof yen)2,706.99

5,205.82

100.0

11

132,055

1.5

33.3

5,999.33

9,600.49

98.9

28

374,041

4.1

1.9

64.3

1,432.64

7,210.25

97.3

9246,197

2.7

2,130

1.0

100.0

1,407.78

5,037.05

89.6

29

86,261

1.0

2,900

1.3

100.0

1,214.63

6,581.15

88.7

27

143,208

1.6

1,560

0.7

100.0

959.87

3,947.70

95.5

17108,345

1.2

3,700

1.7

100.0

1,382.12

6,642.98

96.6

24

167,242

1.8

3,150

1.4

100.0

1,895.67

7,118.60

99.9

17205,120

2.3

1,670

0.8

100.0

1,128.45

4,874.91

96.6

16

119,363

1.3

2,810

1.3

52.2

1,164.39

3,292.02

100.0

15

114,546

1.3

4,550

2.0

100.0

992.31

5,461.90

100.0

21

234,186

2.6

2,140

1.0

100.0

668.11

3,941.40

100.0

11

134,788

1.5

1,920

0.9

100.0

680.63

3,349.57

100.0

689,532

1.0

4,137

1.9

100.0

1,610.38

7,123.07

100.0

1

193,291

2.1

13,0005.8

100.0

3,518.68

18,586.97

100.0

1

402,423

4.4

4,200

1.9

100.0

648.81

2,861.91

100.0

1

128,388

1.4

5,430

2.4

100.0

609.315,303.98

100.0

1(Note 4)(Note 4)

7,220

3.2

100.0

3,994.47

35,444.13

100.0

1

(Note 4)(Note 4)

6,000

2.7

100.0

592.452,484.39

100.0

894,715

1.0

81,10736.5

32,607.02

144,068.29

98.5

244

222,483

100.0

117,040.65

337,382.05

98.6

479

Acquisition
Price (1)(millionsof yen)Percentage
of Total(2)

Ownership(3) (%)

2,140

1.0

52.7

8,300

3.7

4,150

Site Area(m2 )9,056,584

Percentage
of
Total (2)

100.0

13

Overview of Portfolio Properties (as of December 31, 2006)
Tokyo CBDs

A 1

Kanematsu Bldg.

A 2

Kanematsu Bldg. Annex

Chuo Ward, Tokyo

Chuo Ward, Tokyo

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥2,874 million￥16,276 million

Site Area

7.3%

1,751.13m

Total Floor Space2

Total Floor Space

2

Structure/Floors

Structure/Floors

Completed

Completed

S/RC/SRC B2/13F

A 3

2

SRC B1/8F

February 1993

February 1993

JPR Ningyo-cho Bldg.

679.06m

4,351.46m

14,995.09m

A 4

Shin-Kojimachi Bldg.

Chuo Ward, Tokyo

Chiyoda Ward, Tokyo

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥2,420 million￥2,100 million

Site Area

0.9%

Site Area

2

Total Floor Space

550.06m

2657.80m

Structure/Floors

Completed

Completed

SRC B1/9F

SRC/RC B1/8F

December 1989

A 5

2

5,152.98m

Structure/Floors

JPR Crest Takebashi Bldg.

October 1984

A 6

MS Shibaura Bldg.

Chiyoda Ward, Tokyo

Minato Ward, Tokyo

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥11,200 million￥4,000 million
1.8%

Site Area

Total Floor Space

2

Structure/Floors

SRC/RC/S B2/13F

SRC B1/9F

CompletedFebruary 1988

September 1999

A 7

A 8

Fukuoka Bldg.

Shinagawa Ward, Tokyo2

31,020.21m

Structure/Floors

Gotanda First Bldg.

28,992.18m

636.90m

4,790.68m

Completed

5.0%

Site Area

2

Total Floor Space

Chuo Ward, Tokyo

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥2,920 million

Site Area

1.3%
2

1,551.19m

Total Floor Space2

10,553.34m￥2,920 million

Site Area

2

11,627.74m

Structure/Floors

Completed

Completed

July 1989

1.3%

1,302.17m2

Total Floor Space

Structure/Floors

SRC/RC B2/11F

1.1%

Total Floor Space

4,117.70m2

14

1.3%

Site Area

2

SRC B2/10F
May 1990

A 9

JPR Ichigaya Bldg.

A 10

Oval Court Ohsaki Mark West

Chiyoda Ward, Tokyo

Shinagawa Ward, Tokyo

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥3,500 million￥5,100 million

Site Area

2.3%

Site Area

1,058.04m2

4,006.00m2

Total Floor Space

Total Floor Space

Structure/Floors

Structure/Floors

Completed

Completed

28,575.80m2

5,888.82m2

S/SRC B2/17F

SRC B1/9F

June 2001

March 1989

A 11

Shinjuku Square Tower

A 12

BYGS Shinjuku Bldg.

Shinjuku Ward, Tokyo

Shinjuku Ward, Tokyo

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥10,000 million

Site Area￥11,821 million

4.5%
2

8,409.52m

Total Floor Space2

78,796.00m

Site Area

2

3,522.46m

25,733.10m2

Structure/Floors

Completed

Completed

S/RC/SRC B4/30F

5.3%

Total Floor Space

Structure/Floors

SRC B2/14F

October 1994

April 1985

JPR Shibuya Tower Records Bldg.

A 13

Across Shinkawa Bldg. Annex

A 1(Retail)

Chuo Ward, Tokyo

Shibuya Ward, Tokyo

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥710 million

Site Area0.3%
2858.48m

Total Floor Space

2

5,535.90m￥12,000 million

Site Area2

1,010.47m

Completed

Completed

June 1994

A 2

SRC/S B3/8F

February 1992A 3

JPR Jingumae 432(Retail)Shibuya Ward, Tokyo2

8,449.56m

Structure/Floors

S/SRC B2/10F

Shibuya Ward, Tokyo

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥2,160 million

Site Area2

277.12m

Total Floor Space
Structure/Floors
Completed

1.0%

2668.09m
RC B2/2F

July 2002

5.4%

Total Floor Space

Structure/Floors

JPR Daikanyama (Retail)1.6%￥4,460 million

Site Area2.0%
2

218.21m

Total Floor Space2

1,066.81m

Structure/Floors

S/SRC B1/7F

CompletedFebruary 2006

15

Greater Tokyo

B 1

Arca EastB 2

JPR Chiba Bldg.

Sumida Ward, Tokyo

Chiba City, Chiba

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥2,350 million￥ 5,880 million

Site Area

Site Area

3,755.01m2

Total Floor Space2

1,382.35m

Total Floor Space

Structure/Floors

Structure/Floors

Completed

Completed

S/SRC B1/13F

S/SRC B3/19F
March 1997

B 3

January 1991

B 5

Shinyokohama 2nd Center Bldg.

Yokohama City, Kanagawa

Yokohama City, Kanagawa

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥920 million￥2,927 million

Site Area

1.3%

Site Area

2

1,100.59m

Total Floor Space2

841.71m

2

2

7,781.93m

Structure/Floors

Structure/Floors

Completed

Completed

S/SRC B2/12F

SRC B1/11F

October 1989

August 1991

B 7

JPR Ueno East Bldg.

B 6

Kawaguchi Center Bldg.

Kawaguchi City, Saitama

Taito Ward, Tokyo

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥3,250 million￥8,100 million

Site Area

3.6%

Site Area

24,524.61m

Total Floor Space2

1,242.97m

Structure/Floors
Completed

Completed

S/SRC B1/8F

S/SRC B2/15F

February 1994

October 1992

B 1

Tanashi ASTA (Retail)Tachikawa City, Tokyo2

8,490.44m

Structure/Floors

B 8

Nishitokyo City, Tokyo

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥888 million
0.4%

Site Area

2

2,047.22m

Total Floor Space2

14,706.36m

Structure/Floors
Completed

S/SRC B1/12F

December 1994

1.5%

Total Floor Space2

28,420.85m

Tachikawa Business Center Bldg.

0.4%

Total Floor Space

9,146.52m

16

2

9,072.57m

234,281.86m

JPR Yokohama Nihon Odori Bldg.

1.1%

2.6%

￥10,200 million

Site Area

4.6%
2

12,326.30m

Total Floor Space2

80,675.27m

Structure/Floors

SRC B2/17F

CompletedFebruary 1995

B

Tsurumi fuga 1 (Retail)2

B

Cupo-la Main Bldg.

Yokohama City, Kanagawa

Kawaguchi City, Saitama

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥3,040 million

Site Area￥2,100 million

1.4%

Site Area

2

1,962.18m

Total Floor Space

3

0.9%
2

15,008.28m

Total Floor Space2

13,543.32m

248,321.96m

Structure/Floors

Structure/Floors

Completed

Completed

SRC B2/7F

S/RC/SRC B2/10F

September 1985

January 2006

Other Cities

Niigata Ekinan Center Bldg.

C 1

C 2

Meiji Yasuda Life Osaka Umeda Bldg.

Niigata City, Niigata

Osaka City, Osaka

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥2,140 million

Site Area￥8,300 million

1.0%

Site Area

22,706.99m

5,999.33m2

Total Floor Space

Total Floor Space

Structure/Floors

Structure/Floors

Completed

Completed

19,950.42m2

52,982.94m2

S/SRC B1/10F

S/SRC B2/31F

March 1996

C 4

Tokyo Tatemono Honmachi Bldg.

June 2000

C 6

JPR Takamatsu Bldg.

Takamatsu City, Kagawa

Osaka City, Osaka
Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥4,150 million

Site Area￥2,130 million

1.9%

Site Area

1,432.64m

2

2

Total Floor Space

Structure/Floors

Structure/Floors

Completed

Completed

14,619.52m2

7,409.08m2

SRC B3/9F

SRC B1/10F

February 1970

C 7
Fukuoka City, Fukuoka￥2,900 million

Percentage of Total
Site Area

1.3%

1,214.63m2

Total Floor Space

September 1982

C 9

JPR Naha Bldg.

Acquisition Price

2

9,828.73m

Naha City, Okinawa
Acquisition Price￥1,560 million

Percentage of Total
Site Area

Completed

S/RC B1/12F
S 1F

Building
June 1985
Parking November 2003

0.7%

959.87m2

Total Floor Space

5,780.71m2

Structure/Floors

Building
Parking

1.0%

1,407.78m

Total Floor SpaceJPR Hakata Bldg.

3.7%

Structure/Floors

SRC/S 12F

Completed

October 1991

17

C 10

NORTH 33 Bldg.

C 12

Sompo Japan Sendai Bldg.

Sapporo City, Hokkaido

Sendai City, Miyagi

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥3,150 million￥3,700 million

Site Area

1.7%

Site Area

1,382.12m2

Total Floor Space

Structure/Floors

Structure/Floors

Completed

Completed

10,783.52m2

10,568.23m2

SRC B1/12F

SRC B1/12F

December 1997

February 1992

C 13

C 14

Tenjin 121 Bldg.

Wakayama City, Wakayama

Fukuoka City, Fukuoka

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥2,810 million￥1,670 million

Site Area

0.8%

Site Area

2

1,128.45m

Total Floor Space

Structure/Floors

Structure/Floors

Completed

8,690.95m2
S/SRC 13F

S 9F

Completed

July 2000

July 1996

C 16

JPR Nagoya Sakae Bldg.

C 17

JPR Dojima Bldg.

Osaka City, Osaka

Nagoya City, Aichi
Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥4,550 million

Site Area

2.0%

992.31m

2

Total Floor Space

￥2,140 million

Site Area

7,340.18m
S B1/11F
S 1F

Structure/Floors

Structure/Floors

Completed

Building January 2003
Parking December 1986

C 18

JPR Hakata-Chuo Bldg.

5,696.01m2
SRC B2/9F

Completed

October 1993

UFJ Central Leasing Head Office Bldg.

Fukuoka City, Fukuoka

C 19

Nagoya City, Aichi

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥1,920 million

Site Area￥4,137 million

0.9%

680.63m

2

Site Area

2

Total Floor Space

Structure/Floors

Structure/Floors

3,874.81m2
SRC 8F

February 1993

1.9%

1,610.38m

Total Floor Space

Completed

1.0%

668.11m2

Total Floor Space

2

Building
Parking

1.3%

1,164.39m2

Total Floor Space

6,715.07m2

18

1,895.67m2

Total Floor Space

Sompo Japan Wakayama Bldg.

1.4%

10,201.44m2
SRC B1/9F

Completed

March 1991

C 1

JPR Umeda Loft Bldg. (Retail)C 2Strasse Ichibancho (Retail)Sendai City, Miyagi

Osaka City, Osaka
Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥13,000 million

Site Area

5.8%

3,518.68m

2￥4,200 million

Site Area

648.81m2

Total Floor Space

Total Floor Space

Structure/Floors

Structure/Floors

Completed

Completed

17,897.56m2
SRC B1/8F

April 1990

C 3

Benetton Shinsaibashi Bldg. (Retail)3,445.80m2

RC/S B1/8F

October 2002

C 4

Housing Design Center Kobe (Retail)Osaka City, Osaka

Kobe City, Hyogo

Acquisition Price

Acquisition Price

Percentage of Total

Percentage of Total￥5,430 million

Site Area

2.4%

609.31m2￥7,220 million

Site Area

Total Floor Space
Structure/Floors

Structure/Floors

Completed

S B2/10F

February 2003

3.2%

3,994.47m2

Total Floor Space

5,303.98m2

1.9%

33,877.71m2

SRC/S B2/11F

Completed

June 1994

19

Characteristics and Corporate History
The Objective and Basic Characteristics of JPR
The fundamental investment policy of JPR consists of our investment strategy based on the basic conceptof “investing in urban commercial real estate.” JPR’s investment targets are primarily comprised ofsuperior office buildings (urban work facilities), retail properties located in thriving commercial areas, theland on which they are located and asset-backed securities that have such real estate as their primary
investment. JPR makes investments in properties in which we are convinced that the benefits of portfolio
management can be demonstrated after carefully considering the risks and returns of the investment.
JPR also diversifies its investment geographically by not limiting itself to Tokyo but by also considering
assets in other major cities.

Corporate History
Description

Date
September 6, 2001

The founder (Tokyo Realty Investment Management, Inc.) filed
for establishment of the Investment Corporation under the Investment Trust Law

September 14, 2001

Japan Prime Realty Investment Corporation was established

November 16, 2001

Started asset management (acquisition of 13 real estate in trust with underlying trust assets of 11
office buildings and 2 commercial properties) (¥40,730 million in total value)

January 22, 2002

Investment unit split (2.5 units for 1 existing unit)

June 14, 2002

Listed on the Real Estate Investment Trust Section of the Tokyo Stock Exchange

Investment Corporation Structure
Asset Management Company

General Tenant Services Agent/
Property Transfer Agent/
Construction Management AgentTokyo Tatemono Co., Ltd.

Tokyo Realty Investment
Management, Inc.
Asset Management

Asset Management
Investment Corporation

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

Japan Prime Realty
Investment Corporation
Loans
Liabilities

Property, etc.

AssetsCorporate Bonds

Investment

Unitholder

Unitholders'EquityProperty Manager

Cash Distribution
Asset Custodian

Asset Custodian
Mizuho Trust & Banking Co., Ltd.

20

LenderCorporate Bond Investor

Administrative Agent
Administrative Agent
Mizuho Trust & Banking Co., Ltd.

Unitholder

Members of the Board (As of December 31, 2006)

Executive Officer

Hirohito Kaneko
Dec. 19, 2001 Executive Officer, Japan Prime Realty Investment Corporation
Apr. 1, 1979 Representative Counsel, Hirohito Kaneko Law Office (currently held position)
Apr. 1, 1977 Bar admission (Tokyo Bar Association), Shigeru Yamada Law Office
Supervising Officer

Sosuke Yasuda
Oct. 1, 2006
Jun. 23, 2006
Jun. 28, 2005
Sep. 14, 2001
Oct. 1, 1999
Jul. 2, 1993
Feb. 16, 1983
Jun. 27, 1980
Dec. 1, 1975
Apr. 1, 1968

CPA and Director, Gyosei Audit Corporation (Tokyo Hakuto & Co. and Serizawa Accouting Firm merged)
Outside Auditor, Nomura Research Institute, Ltd. (currently held position)
Outside Auditor, Mitsui Sumitomo Insurance Company, Limited (currently held position)
Supervising Officer, Japan Prime Realty Investment Corporation
Director and Senior Partner, Tokyo Hokuto & Co.
(Tokyo Akasaka Audit Co. merged with Hokuto Audit Co. ) (currently held position)
Senior Partner, Tokyo Akasaka Audit Co.
Representative, Tokyo Akasaka CPA Joint Office
Sosuke Yasuda Tax Accountant Office (currently held position)
Masamitsu Serizawa Accounting Firm
Main Store, KK Ohgiya

Supervising Officer

Shigeru SugimotoJan. 24, 2006

Representative Director, SAKURA Holdings Corporation(former Sakura Holdings Co., Ltd.) (currently held position)
Sep. 14, 2001 Supervising Officer, Japan Prime Realty Investment Corporation
Auditor, Moriomoto Co., Ltd. (currently held position)
Jun. 1, 2001
Representative Director, Tokyo SPC Services (currently held position)
Oct. 2, 1999
Jun. 24, 1998 Senior Partner, Horwath Sakura & Co.
(former Sakura Audit Corporation) (currently held position)
Dec. 1, 1996 Horwath International
Dec. 22, 1995 Representative Partner, Sakura Audit Corporation
Representative Director, Sakura & Co. (currently held position)
Jul. 1, 1988
Nov. 1, 1985 Ohta Showa Audit Corporation
Apr. 1, 1982 Housing and Urban Development Public Corporation (currently Urban Renaissance Agency)

21

Overview of the Asset Manager
Corporate Profile
Name

Tokyo Realty Investment Management, Inc. (TRIM)

Core Business

Asset management for investment corporation

Capitalization

350 million yen

Shareholders

Tokyo Tatemono Co., Ltd. (26%)
Meiji Yasuda Life Insurance Company (24%)
Taisei Corporation (20%)
Yasuda Real Estate Co., Ltd. (20%)
Sompo Japan Insurance Inc. (10%)

History
Organization

April 28, 2000 Founded
October 13, 2000 Approved for real estate transaction service
March 16, 2001 Approved as discretionary transaction agent
June 20, 2001 Approved for asset management of investment corporation

Services(1) Asset management for JPR (including all decision-making in connection with the acquisition/dispositionor leasing of properties and acting as an agent or broker of such transactions based on relevant
evaluation and judgment)(2) Funding by JPR(3) Reporting to JPR(4) Any other services related to or affiliated with the above

Organization

Shareholder's Meeting

Auditors

Board of Directors
CEO
Investment Committee

Compliance Committee

Investment Management
Division

ResearchGroup

Investment
Group

Corporate Plannig/
Administration Division

Financial Division

Asset
Management
Group

FinancialGroup

IR Group

FundManagement
Group

GeneralAdministrationGroup

Planning
Group

ComplianceGroup

TRIM's Decision-Making Process of Investment Management
The Investment Committee (including the Due Diligence Subcommittee) was established to make investment
management decisions and has the Investment Subcommittee and Fund Management Subcommittee below it. Membersof these committees and subcommittees include the CEO, CIO, CFO, CAO, Fund Manager, Research Manager, AssetManager and the Investment Management Manager. However, regarding the Due Diligence Subcommittee, theCompliance Manager is also included to enhance compliance in due diligence for the targeted investment asset.
The Board of Directors is responsible for the targeted investment assets and policies. The Investment Committee
formulates management plans, while the Investment Subcommittee is in charge of decisions on issues regarding theacquisition and disposition of individual assets. The Fund Management Subcommittee is responsible for issues regarding
the management of individual assets. The Board of Directors is given the final decision-making powers on theacquisition and disposition of individual assets greater than a certain value.

22

Directors of Tokyo Realty Investment Management, Inc.
President and CEO

Toshihiro Hagiwara
Jan. 23, 2001
Apr. 1, 1999
Jan. 1, 1998

President, Tokyo Realty Investment Management, Inc.
Director and Head of Osaka Branch Office
Head, Development Business Department of Kinshicho Project (Tokyo); Led negotiations
for city planning of large-scale developments of more than 28,000m2
Director, Secretary’s Office and Human Resources
Planning of redevelopment scheme connecting Akihabara and Okachimachi (Tokyo) for JR
East Urban Development Corporation (Joint Venture with The East Japan Railway Company)
Property management and acquisition businesses of Building Department
Joined Tokyo Tatemono Co., Ltd.

Mar. 28, 1992
Apr. 20, 1989
Jul. 1, 1985
Apr. 1, 1968

Director and Chief Administrative Officer

Kazuo Kitami

Oct. 1, 2004
Apr. 1, 1997

Director and Chief Administrative Officer, Tokyo Realty Investment Management, Inc.
Manager, Credit Assessment Dept. 2 of the Management and Administration Division; Responsible
for loan administration and credit administration involved in the bulk sale of non-performing
loans and participated in self-assessment and formulation of the insurance investigation manual;Manager, Loan Administration between August 2000 and March 2003, responsible forloan-related accounting

Apr. 1, 1995
Sep. 1, 1989

Manager of Real Estate Development and responsible for overall operations
Manager of Real Estate Development Dept. of the Real Estate Division; Involved in real estate
investment activities, property leasing and property management
Asset Management Division (Loans, Real Estate and Other), engaged in loan front office
operations and participated in the establishment of a leasing subsidiary
Joined the Yasuda Mutual Life Insurance Company (currently Meiji Yasuda Life Insurance Company)

Mar. 1, 1977
Apr. 1, 1975

Director and Chief Investment Officer

Seiji Miwa
Mar. 30, 2006
Oct. 1, 2004
Jul. 1, 2003
Jan. 1, 2000

Jul. 1, 1998

Apr. 1, 1991
Apr. 1, 1989
Apr. 1, 1983

Director and Chief Investment Officer
General Manager, Investment Management Division (responsible for Asset Management Group)
Joined Tokyo Realty Investment Management, Inc.
Engaged in activities relating to the establishment of a J-REIT; Appointed Group Leader, responsible
for preparations for the establishment of an asset manager and Japan Prime Realty Investment
Corporation; Appointed a member of a J-REIT project team responsible for the acquisition ofassets for the Tokyo Tatemono Group and growing the portfolio up to the public listing; During thisperiod, assumed responsibility for the development of real estate investment structures including
real estate syndications and structured finance; Participated in forming structures for investment
and development using SPCsManager, Investment Service Department (currently the Investment Management Division);
responsible for the securitization of serviced apartments, establishment of Takanawa Apartments
Inc. (SPC), which was Japan’s first real estate securitization project, the formulation of securitizationplans, the issuance of real estate securities and obtaining a credit rating from Standard & Poor’s
for the issuance of qualified bonds.
Assistant Manager, Development Department 1
Assigned to Development Department 1
Joined Tokyo Tatemono Co., Ltd.

Director and Chief Financial Officer

Yasuo Furuya

Jun. 9, 2006
Apr. 28, 2006
Apr. 1, 2006
Jan. 1, 2004
Apr. 1, 2000
Oct. 21, 1998
Apr. 1, 1997
Apr. 1, 1995
Apr. 1, 1984

Apr. 1, 1983
Apr. 1, 1980

Director and Chief Financial Officer
Chief Financial Officer
Tokyo Realty Investment Management, Inc.
Group Manager, Risk Management of Meiji Yasuda Life Insurance Company
Manager, Investment Risk Management Department
Manager, Investment Planning & Research Department
Manager, Investment Administration Department
Manager, Investment Planning & Research Department
Following completion of outside assignment, transferred to the asset management
operations of The Yasuda Mutual Life Insurance Company; Spent eight years in securities
investment operations engaged in interest rate analysis, as well as the establishment of bondinvestment and asset management companies; Undertook activities related to variable insurance
securities management and oversaw securities investment activities as Chief Bond Trader; Later,
gained further experience in stock market investment operations.
Joined the Medium and Small Business Research Institute
Joined the Yasuda Mutual Life Insurance Company (currently Meiji Yasuda Life Insurance Company)

23

Overview of Asset Management(1) Operational Performance of JPR

Unit
Operating Revenues
Real estate rental revenues
Gain on sale of real estate

7th
8th
9th
10th
6th
Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period(July 1, 2004 - (Jan. 1, 2005 - (July 1, 2005 - (Jan. 1, 2006 - (July. 1, 2006 Dec. 31, 2004) June 30, 2005) Dec. 31, 2005) June 30, 2006) Dec. 31, 2006)

7,685
Million yen

7,685

8,587

8,588

9,088

7,801

8,372

8,552

9,056

702

214

8,503

Dividends received

Operating
Performance Operating Expenses

31
4,714

4,216

4,548

4,602

Million yen

3,672

3,768

4,044

4,013

4,151

Operating Profits

Million yen

3,469

3,954

3,984

4,024

4,373

Recurring Profits

Million yen

3,399

3,450

3,643

Net Income

Million yen

3,398

3,449

3,642

Total Assets

Million yen

231,523

244,691(% Change)%

Real estate rental expenses
Loss on sale of real estate

Assets, etc.

35
4,564

235

2,869
2,868

3,377
3,376

198,673

216,574

225,882(+9.0)(+9.0)(+4.3)(+2.5)(+5.7)
109,466
119,074

Interest-bearing Debt

Million yen

93,066

83,66690,966

97,466

Total Unitholders' Equity

Million yen

91,982

118,807

118,829

118,881%(+0.3)(+29.2)(+0.0)(+0.0)(+0.2)

Unitholders' CapitalMillion yen

89,113

115,431

115,431

115,431

115,431

Total Cash Distributions

Million yen

2,868

3,376

3,397

3,449

3,642

%

99.9

100.0

99.9

100.0

100.0

Units

430,000

530,000

530,000

530,000

530,000

Yen

213,912224,165

224,206

224,304

224,668

6,671

6,370

6,411

6,509

6,873

6,671

6,370

6,411

6,509

6,873

(% Change)

Dividend payment ratio

CashDistribution Number of Units Outstanding
per Unit, etc.
Total Unitholders' Equity per Unit
Cash Distribution per Unit
Distribution amount

Yen

Exceeding profit distribution amount

Recurring Profits on Total Assets (Note 1)
Annualized (Note 10)

Return on Total Unitholders' Equity (Note 2-1)
Annualized (Note 10)
Total unitholders' equity
at beginning of period (Note 2-2)

Unitholders' Equity Ratio
at End of Period (Note 3)
Financial
Indices%%Million yen%(Year-on-year increase/decrease)

Interest-Bearing Debt toTotal Assets at End of Period (Note 4)%

DSCR (Note 5)
Net income before interest
and amortization

Million yen

Annualized NOI yield (Notes 9 and 10)

NCF from Leasing (Note 8)
Annualized NCF yield (Notes 9 and 10)

Million yen%
Million yen%

Properties Owned (Note 11)
Reference
Information

1.6

1.5

1.5

1.5

3.3

3.0

3.0

3.0

3.1

3.2

2.9

2.9

3.1

6.2

6.5

5.7

5.9

6.1

91,72891,982

118,807

118,829

118,881

46.3

54.9

52.6

51.3

48.7

(-4.0)(+8.6)(-2.3)(-1.3)(-2.7)

46.8

38.6

40.3

42.1

44.7

9.4

9.3

9.6

9.7

8.8

4,771

4,878

5,261

5,585

5,891

545

574

668

6,100

6,485

510

Interest paid (Notes)

NOI from Leasing (Note 7)

1.5
3.0

5,404

5,476

5,860

6.0

5.4

5.6

5.9

5.8
6,053
5.4

4,939

5,119

5,381

5,785

5.5

5.1

5.2

5.6

42

44

46

42

Number of Tenants

524

42

496

459

441

462

479

Total Leasable Floor Spacem2

273,330.52

281,408.97

308,205.26

315,156.84

337,382.05

Occupancy Rate

%

95.1

95.4

97.2

98.0

98.6

(Note 1) Recurring profit / (total assets at beginning of period + total assets at end of period) / 2(Notes 2-1 and 2-2) Net income / (total unitholders' equity at beginning of period + total unitholders' equity at end of period) / 2(Note 3) Total unitholders' equity at end of period/total assets at end of period x 100(Note 4) Interest-bearing debt / total assets at end of period x 100(Note 5) Net income before interest and amortization (excluding gain or loss on sale of real estate) / interest paid
(Note 6) Interest paid in this table includes interest on corporate bonds(Note 7) (Real estate rental revenues - real estate rental expenses) + depreciation(Note 8) NOI from leasing - capital expenditures(Note 9) Annualized NOI from leasing / purchase price of property (6th fiscal period : ￥179.62 bilion, 7th fiscal period : ￥203.43 billion, 8th fiscal period: ￥205.76 billion,
9th fiscal period : ￥209.22 billion and 10th fiscal period : ￥222.48 billion)
Annualized NCF from leasing / purchase price of property(Note 10) Annualization is based on 365 days for a year and calculated by using the following management days:6th fiscal period: 184 days, 7th fiscal period: 181 days,
8th fiscal period : 184 days, 9th fiscal period : 181 days and 10th fiscal period : 184 days
(Note 11) The following properties are counted as one for respective purchases in different fiscal periods: Shin-Kojimachi Bldg. (1st, 2nd and 6th fiscal periods), Fukuoka Bldg.
(4th and 7th fiscal periods), BYGS Shinjuku Bldg. (6th and 7th fiscal periods) and JPR Umeda Loft Bldg. (3rd and 4th fiscal periods).
(Note 12) Any ratio indicated on financial indices are rounded to the first decimal point (except for the dividend payment ratio, which is rounded off to the first decimal point.)24

(2) 10th Fiscal Period Asset Management
1) Milestones of JPR
Japan Prime Realty Investment Corporation (JPR) was established on September 14, 2001 under theInvestment Trusts and Investment Corporations Law (hereafter, the Investment Trusts Law), and was listedon the Tokyo Stock Exchange Real Estate Investment Trust Section (securities code: 8955) on June 14,
2002, with 289,600 outstanding investment units. JPR made an additional public offering of 140,400
units (including an over allotment of 6,000 units) in July 2003, followed by another public offering of
100,000 units (including over allotment of 5,000 units) in February 2005. These public offerings havebrought the number of investment units issued and outstanding to 530,000 units today. JPR has assigned
the asset management of its portfolio to Tokyo Realty Investment Management, through which JPR aims tomaximize unitholder value by efficiently managing the portfolio of office buildings and retail properties.

2) Management Environment
The Office Building Leasing Market
The recovery of the Japanese economy remains sustained with buoyant corporate performance offsetting
the weakness of personal consumption. The strong performance in the corporate sector has createdvoracious demand for office space in Tokyo and other major cities, leading to vacancy rates dropping inall such areas excluding Sapporo where a new large building has just been completed.
There is a strong sense of a lack of available office space in Tokyo CBDs centering on young large officebuildings and the vacancy rate has plummeted to the 2% level. Additionally, both new and continuing
rents are increasing. In the other major cities, there has been an improved balance in the supply-demand
relationship in Osaka and Nagoya and the vacancy rates are nearing 5%, the target for a well balanced
supply-demand relationship. The supply-demand relationship has also improved in Sendai and Fukuoka
and their vacancy rates have dropped.

The Retail Property Leasing Market
Strong performance by the corporate sector continues and the economy is expanding gradually. The
improved employment and income environment has spread to households and personal consumption is
showing a weak though increasing trend. An analysis of the consumer price history reveals signs that theeconomy is on the verge of escaping from deflation when extraordinary factors like rising costs for
petroleum products are excluded.
There were diverse changes to the 2006 market represented by many new large shopping centers opening
in the Tokyo metropolitan area, the entry of department stores into central areas of Tokyo and Osaka andsignificant expansion of their sales floors, and an increase in neighborhood shopping centers in small
trade zones.
Despite consumption being in the process of recovery, the recovery lacks strength and careful attention
should be placed on market trends here on out, also.

The For-Sale Real Estate Market
Continuing on from the preceding fiscal period, domestic and overseas investment capital continues toflow into the real estate market via private funds and J-REITs as a result of the low interest rates anddifficulty managing capital presently. This has continued to intensify the competition in the real estatefor-sale market. In the case of J-REITs, the comprehensive portfolio of investment properties they havebought on an acquisition price basis has surpassed 5 trillion yen. Further, new J-REITs are expected to list
and the competition over the acquisition of properties is expected to intensify even further. In central
Tokyo the expected cap rate has plummeted and property prices have risen due to the lack of blue-chip
investment properties and proactive investment by private funds and J-REITs. In the core regional cities
there continues to be a ravenous appetite for investment in real estate due to the rising prices ofproperties in Tokyo and the apparent lack of properties.
The targets of real estate investment have also extended forth from just office buildings and retailproperties to also include a wide variety of uses such as hotels, warehouses and nursing homes.

3) New Property Acquisitions by JPR
JPR has continued to acquire properties based on a rigorous standard for selecting excellent officebuildings and retail properties that can generate stable cash flow and possess the potential for future rent
increases. JPR's key strategy in expanding our portfolio has been to stabilize portfolio earnings andbalance the diversification of the portfolio both by location and asset class. JPR has been emphasizing theacquisition of properties in Tokyo and 5 major cities (Osaka, Nagoya, Fukuoka, Sendai and Sapporo).
During the tenth fiscal period, we acquired Chayamachi Grande Bldg. (6 billion yen) and JPR
Musashikosugi Bldg. (7.26 billion yen). As a result, the balance of assets under management now totals 46
properties, or 222.48 billion yen on an acquisition price basis. The total leasable floor space is now
2337,382.05m and the number of tenants is 479.

254) Operational Management of Portfolio
The overall occupancy rate of the portfolio in the 10th fiscal period was 98.0%. Since there is little room
for improvement in the occupancy rate, JPR positioned measures to increase rents as the most importantmanagement measure this fiscal period. Consequently, JPR reviewed the rents for prospective new
tenants, tackled rental increases for existing tenants and strove for internal growth through thisadditional rental income.
The overall occupancy rate for the portfolio as of the end of this fiscal period was 98.6%; once again JPR
successfully realized stable occupancy at a high level.

5) Fund Procurement
JPR secured even greater financial stability this fiscal period by taking out new short-term borrowings thatemphasize flexibility within the expansion of the portfolio and issued unsecured investment corporation
bonds with a fixed interest rate to hedge against the future risk of interest rate hikes and to spread out
maturities of borrowings and bonds.
As a result, the balance of total outstanding borrowings as of the end of the fiscal period reached 62.96
billion yen, with unsecured corporate bonds of 46.5 billion yen. Of these, long-term interest-bearing debt
with repayment periods of more than one year that hedged against risk of future interest rate hikes now
comprises 75.3% of all interest-bearing debt and the average maturity is 5.1 years (note 1).
Additionally, with regards to JPR’s overall interest-bearing debt, the average interest as of the end of the
fiscal period (Note 2) is 1.3%, the interest-bearing debt ratio (Note 3) is 48.7% and the LTV (interestbearing debt to total assets ratio) at the end of the period (Note 4) is 44.7%.
Moreover, Moody’s Investors Service, Inc. raised the issuer rating and rating of JPR’s unsecured long-termbonds from A3 to A2 on November 17, 2006 and the following represents the JPR issuer rating andunsecured corporate bond rating as of the end of this period.

Details of Unsecured Corporate Bonds and Corporate Credit Ratings as of December 31, 2006
Corporate Bonds(1st to 7th Issuance)

Ratings Agency

Corporate Credit Rating

Rating and Investment Information, Inc.

A+ (Stable)

A+ (Note 5)

Moody's Investor Services

A2 (Stable)

A2

Standard & Poor's

Long-term: A- (Stable)
Short-term: A-2 (Stable)

A-(Note 1) Average maturity of long-term interest-bearing debt is arrived at by calculating a weighted average of maturities
from the end of the 10th fiscal period to the repayment deadlines for long-term interest-bearing debt
with repayment periods of more than one year, based on the balance of each debt.
(Note 2) Average interest is arrived at by calculating a weighted average of interest rates as of the end of the 10th fiscal period
based on the balance of each debt.
(Note 3) Interest-bearing debt ratio (%): interest-bearing debt/(interest-bearing debt + unitholders' capital) x 100(unitholders' capital: 115.43 billion yen)
(Note 4) Interest-bearing debt to total assets ratio at end of period (%): interest-bearing debt/total assets
at end of period x 100 (total assets at the end of the 10th fiscal period: 244.69 billion yen)
(Note 5) 7th series of corporate bonds have not obtained a rating from Rating and Investment Information, Inc.

26

(3) Additional Offerings, etc.
JPR did not make any additional offerings during the 10th fiscal period and there was no change in unitholders' capital.
The table below indicates offerings provided by JPR prior to the 9th fiscal period.

Date

Number of Units Outstanding

Event

Unitholders' Capital (million yen)

Remarks

Variation

Balance

Variation

Balance

240

240

120

120

(Note 1)

September 14, 2001 Established by private placement

62,00062,24031,00031,120(Note 2)January 22, 2002

Split of investment units

93,360155,600-

31,120(Note 3)June 14, 2002

Initial public offering

134,000

289,600

25,862

56,982(Note 4)

134,400

424,000

30,75887,740(Note 5)

November 16, 2001 Additional private placement

July 15, 2003

Additional public offering

August 9, 2003

Third-party allotment

6,000

430,000

1,373

89,113(Note 6)

February 2, 2005

Additional public offering

95,000525,000

25,001

114,115(Note 7)

March 2, 2005

Third-party allotment

5,000

530,000

1,315

115,431(Note 8)(Note 1) JPR was formed by the investment of three companies -- Tokyo Tatemono Co., Ltd. (100 units), Taisei Corporation (100 units), and Tokyo
Realty Investment Management, Inc. (40 units) -- at 500,000 yen per unit.
(Note 2) An additional offering was made via private placement at 500,000 yen per unit. JPR then acquired 13 beneficiary interests in real estate trustand started management.
(Note 3) A single investment unit was split into 2.5 units.
(Note 4) New investment units were issued through public offering at 200,000 yen per unit (underwriting price of 193,000 yen per unit) to repay
short-term debt, finance the acquisition of new specific assets and the like.
(Note 5) New investment units were issued through public offering at 237,160 yen per unit (underwriting price of 228,859 yen per unit) to repay
short-term debt, acquire new specific assets, etc.
(Note 6) New investment units were issued through a third-party allotment at 228,859 yen per unit to repay short-term debt, acquire new specificassets, etc.
(Note 7) New investment units were issued through public offering at 272,440 yen per unit (underwriting price of 263,177 yen per unit) to repay
short-term debt, acquire new specific assets, etc.
(Note 8) New investment units were issued through a third-party allotment at 263,177 yen per unit to repay short-term debt, acquire new specific assets, etc.

(4) Cash Distributions
Under the Special Taxation Measures Law of Japan, an investment corporation is allowed to deduct dividends ofprofits paid to investors from its taxable income. In order to have the maximum amount of dividend
distribution deducted, JPR decided to distribute all the retained earnings for the 10th fiscal period except for
fractional portions that make distributions per unit less than 1 yen. As a result, the cash distribution per unit for the
10th fiscal period was set at 6,873 yen.
(Thousands of yen unless otherwise indicated)

Date
Retained Earnings at End of Period
Internal Reserves
Total Cash Distributions(Cash distribution per unit)
Total Cash Distributions from Net Income(Cash distribution from net income per unit)
Repayment of Paid-in Capital(Repayment of paid-in capital per unit)

6th
Fiscal Period(as ofDecember 31,
2004)

7th
Fiscal Period(as ofJune 30, 2005)

8th
Fiscal Period(as ofDecember 31,
2005)

9th
Fiscal Period(as ofJune 30, 2006)

10th
Fiscal Period(as ofDecember 31,
2006)

2,868,599

3,376,139

3,398,137

3,449,967

3,642,765

69

39

307

197

75

2,868,530

3,376,100

3,397,830

3,449,770

3,642,690(6,671 yen)

(6,370 yen)

(6,411 yen)

(6,509 yen)

(6,873 yen)

2,868,530

3,376,100

3,397,830

3,449,770

3,642,690(6,671 yen)

(6,370 yen)

(6,411 yen)

(6,509 yen)

(6,873 yen)

-

-

-

-

–

(-)

(-)

(-)

(-)

(–)

27

(5) Future Management Policy and Vital Issues
A. Management Projections
The Japanese economy has been supported by strong foreign demand (exports) and the private sector’s(corporate and household division) demand has driven the economy by compensating for the drop in
public sector generated business. Autonomous and sustainable growth under stable prices is expected tocontinue.
Corporate earnings are also expected to steadily grow since petroleum prices have settled down after
temporarily soaring. The economy is showing stronger signs of a national recovery and the strength of therecovery is growing particularly in the major metropolitan areas of Tokyo, Osaka and Nagoya.
In the office leasing market, there has been a nationwide drop in the vacancy rate excluding some regional
cities. In the Tokyo CBDs, in particular, there has been a remarkable rise in both new and continuing
rents.
In the for-sale real estate market, transaction prices have risen due to a further drop in the implied cap
rates resulting from the inclusion of future rent increases because of the emergence of rent increases dueto the economic recovery. The investment appetite of foreign and domestic funds remains strong andthere has been an intensification of the competition over the acquisition of properties and the feelingremains that the quantity of blue-chip properties is insufficient.
The J-REIT market has also been supported by the huge influx of capital, the increase in J-REITs via IPOs
and the expansion of the market size. On the other hand, polarization of the market has grown withdifferences among J-REITs increasing in clarity.
As a result of these conditions, JPR will proceed with management that exercises caution regarding thefollowing matters as we strive to maximize the shareholder value while also taking note of economic andinterest rate trends.

1. Acquisition of New Properties
JPR will implement the following policy while emphasizing our investment policy, distributions
per unit, etc.; striving to improve stability through location and asset class diversification; andimproving the investment efficiency through an expansion in the portfolio size.
*JPR will focus its investment on Tokyo and the five other major cities of Osaka, Nagoya,Fukuoka, Sendai and Sapporo and focus on acquiring properties with strong future potential
and competitiveness from a perspective of medium to long-term management. In considering
properties, JPR will strive to acquire properties under appropriate terms by emphasizing thegeographic superiority and future potential of properties while negotiating price based on adetailed market study and property appraisal.
*JPR will proactively gather information on development-type properties to ensure a planned
acquisition of superior properties and endeavor to secure properties at an early stage throughdetailed research and risk analysis to heighten our competitiveness in the acquisition process.
*As for the information channels for available properties, JPR will strive to acquire blue-chipproperties by endeavoring to expand its unique information channels while also collaboratingwith sponsor companies of JPR's asset manager, Tokyo Realty Investment Management, Inc. (TRIM).
JPR will continue to strive to expand our portfolio by acquiring solid new properties via aproactive collection of information and carefully researched investment value including
determining the future potential by accurately grasping market trends.

28

2. Management of Portfolio
JPR has negotiated with existing tenants primarily in Tokyo CBDs to raise their rents and willcontinue to emphasize this policy next fiscal period. JPR will achieve strong internal growth byworking to increase rental revenues.
JPR will continue to provide high quality services and a comfortable office space as the pillars to
the JPR Brand Strategy. These measures will be used to improve tenant satisfaction andmaintain the high occupancy rate of our portfolio. JPR will also continue to give adequate
consideration to legal compliance and the securing of safety.
Measure to increase rents
Measures to increase rents will continue to be emphasized in the 11th fiscal period as they werein the 10th fiscal period. In addition to trying to secure contracts with new tenants at highrents, we will work on revising contracts with existing tenants at higher rents. In order toheighten the ability to realize this, JPR has introduced an incentive fee for real estate
management firms that correlates to their performance beginning with the 11th fiscal period.
Brand strategy
JPR will continue the respective measures it has to steadfastly spread the provision of highquality services both in software and hardware based on the brand concept of A/3S
(Amenity/Service, Safety and Save Energy). Additionally, JPR will heighten the quality of its
properties by feeding back the results of continual tenant satisfaction studies to our tenant
services team.
Reducing operating and management costs
JPR will continue to pursue cost reductions while maintaining an awareness of our brandconcept and striving to maintain service quality and secure safety.
Renovations
Renovations will be implemented in a planned manner based on the long-term repair andmaintenance plans established for each property. Priority will be given to renovations thatheighten tenant satisfaction by analyzing tenant needs based on the results of the tenantsatisfaction study. In this manner, JPR will realize the JPR brand it has conceptualized andfocused on to date.

(6) Fund Procurement
JPR's fundamental policy for fund procurement calls for an efficient combination of long-term steady fundprocurement and short-term fund procurement that emphasizes dynamism. In line with this policy, JPR
will procure funds centering on unsecured and unguaranteed bank borrowings. JPR will continue to focus
on the diversification of fund procurement means and consistently strive to diversify the maturities
employed by also considering the issuance of corporate bonds with an eye on the trends of the bondmarket, etc.
Furthermore, JPR conducted a follow-on offering of new investment units (see the following “(8) Important
Facts Arising after the Settlement” below for details) and repaid 19.5 billion yen in short-term borrowings.

(7) Information Disclosure
JPR has positioned the proactive voluntary disclosure of information as one of its key management policies
and will voluntarily disclose information believed to be essential to investment decisions of JPR along withthe timely disclosure of items to the Tokyo Stock Exchange. JPR will proactively employ its website(http://www.jpr-reit.co.jp/) as a vital means for implementing voluntary disclosure and to date JPR has
promptly disclosed performance information and run videos on its primary properties using this site. We
are committed to further enriching our information disclosure activities.

29

(8) Important Facts Arising after the Settlement

Issue of New Investment Units through Public Offering
Payment in connection with new investment units, the issue and pricing of which were approved at Board of
Directors meeting held on January 17, 2007 and January 29, 2007, respectively, was completed o February 6,
2007, terms and conditions briefly as follows. As a result, unitholders’ capital totaled 154,552,073,600 yen,while the number of investment units issued and outstanding was 620,000 as of February 6, 2007.
Number of new investment units issued: 90,000
Purchase (public offering) price: ¥449,820 per investment unit
Gross proceeds: ¥40,483,800,000
Purchase (underwriting) price: ¥434,673 per investment unit
Gross proceeds: ¥39,120,570,000
Payment date: February 6, 2007
Delivery date: February 7, 2007
Starting date of computation for cash distribution: January 1, 2007
Issue of New Investment Units through Third-Party Allotment
JPR resolved to undertake a secondary offering (over-allotment option) by way of third-party allotment at
Board of Directors meetings held on January 17, 2007 and January 29, 2007, brief details as follows. JPR also
proved the granting of an option (the “Greenshoe Option”) by way of third-party allotment to Mizuho Securities
Co., Ltd. The greenshoe option may be exercised by no later than March 2, 2007.
Number of new investment units issued: 5,000 (maximum)
Purchase price: ¥434,673 per investment unit
Gross proceeds: ¥2,173,365,000 (maximum)
Third-party allottee: Mizuho Securities Co., Ltd.
Payment date: March 7, 2007
Delivery date: March 8, 2007
Starting date of computation for cash distribution: January 1, 2007

< Reference Information >Property Acquisition
JPR has acquired the following property.

Tachikawa Business Center Bldg. (acquisition of additional ownership)
Property overview
Address:
2-38-5 Akebonocho, Tachikawa City, Tokyo (residential)
Type of ownership :Land: Co-ownership
Building :Unit ownership
Site area :2,047.22m2 (608.90m2 owned by JPR)
Gloss total floor area :14,706.36m2 (3,065.63m2 is dedicated area)
Type of structure :S・SRC B1/12F
Completion date :December 1994
Number of tenants :16
Total leasable floor space : 2,980.90m2
Total leased floor space : 2,980.90m2
Occupancy rate :100%*The number of tenants, total leasable floor space, total leased floor space and the occupancy rate are the figures as of February 19, 2007.

Acquisition Terms
Acquisition price :Asset type :Acquisition date :2,300 million yen
Real estate
February 28, 2007

JPR has concluded a contract to acquire the following property.

Shinjuku Sanchome East Bldg.
Property overview
3-1-26 Shinjuku, Shinjuku Ward, Tokyo (residential: planned)
Address:
Land: Ownership
Type of ownership :Co-ownership (4.3%)
Building:
2,578.69m2 (area of unit site to be acquired by JPR: 70.33m2)
Site area:
26,360.56m2 (area of proprietary site to be acquired by JPR: 478.51m2 )Gloss total floor area :S・RC・SRC with flat roof, B3/14F
Type of structure :January 2007
Completion date :1
Number of tenants:
Total leasable floor space : 11,173.47m2 (co-owned section)
Total leased floor space : 11,173.47m2 (co-owned section)
100%
Occupancy rate :Acquisition terms
Acquisition price :540 million yen
Asset type :Real estate
Planned acquisition date : March 2007

*The number of tenants, total leasable floor space, total leased floor space and the occupancy rate are the figures as of February 19, 2007. In
addition, the indications in the building construction authorization application are used for the gross total floor area and structure.

30

Overview of Investment Corporation(1) Unitholders' Capital

6th Fiscal Period
as ofDecember 31, 2004

7th Fiscal Period
as ofJune 30, 2005

8th Fiscal Period
as ofDecember 31,2005

9th Fiscal Period
as ofJune 30, 2006

10th Fiscal Period
as ofDecember 31, 2006

Total number of authorized units

5,000,000

5,000,000

5,000,000

5,000,000

5,000,000

Total number of units issued
and outstanding

430,000

530,000

530,000

530,000

530,000

Unitholders' capital (millions of yen)

89,113

115,431

115,431

115,431

115,431

Total number of unitholders

18,636

22,674

19,70917,316

15,604(2) Primary Investors

The following table shows the 10 largest investors by the percentage of their owned investment units to the total number ofunits outstanding as of the end of the 10th fiscal period.

Name

Number of
Owned Units

Address

Percentageof the Total Units
Outstanding (%)

Japan Trustee Services Bank, Ltd.

Chuo Ward, Tokyo

42,643

8.05

Nikko Citi Trust and Banking Corporation

Shinagawa Ward, Tokyo

39,024

7.36

Tokyo Tatemono Co., Ltd.

Chuo Ward, Tokyo

29,3005.53

Kawasaki Gakuen

Kurashiki City, Okayama

25,0004.72

Meiji Yasuda Life Insurance Company

Chiyoda Ward, Tokyo

24,000

4.53

Trust & Custody Services Bank, Ltd.

Chuo Ward, Tokyo

23,791

4.49

The Master Trust Bank of Japan, Ltd.

Minato Ward, Tokyo

17,801

3.36

AIG Star Life Insurance Co., Ltd.

Chuo Ward, Tokyo

13,1902.49

North Pacific Bank, Ltd.

Sapporo City, Hokkaido

11,763

2.22

The Hiroshima Bank, Ltd.

Hiroshima City, Hiroshima

10,298

1.94

236,810

44.68

Total

(3) Items Related to Directors
Other Assignments
Currently on Service

Position

Name

Executive Officer

Hirohito Kaneko

Representative Counsel, Hirohito Kaneko Law Office

Sosuke Yasuda

Accountant, Sosuke Yasuda Tax Accountant Office
CPA and Director, Gyosei Audit Corporation
Outside Auditor, Mitsui Sumitomo Insurance Company, Limited
Outside Auditor, Nomura Research Institute, Ltd.

Supervising
Officer (Note 1)

Senior Partner, CPA, Accountant andShigeru Sugimoto Real Estate Appraiser, Horwath Sakura & Co.

Total Directors'
Fee during
the 10th Fiscal Period(
thousands of yen)

Numberof Owned
Units

2,100

3,600

Representative Director, Sakura & Co.
Independent
Auditor (Note 2)

Ernst & Young
ShinNihon

19,300(Note 1) Supervising officers may be directors of corporations other than those indicated above, but have no conflict of interest with JPR at those and the above positions.
(Note 2) The independent auditor fees include fees regarding auditing of JPR’s English financial statements, fees regarding creation of comfort letters for issuing JPR’s 7thseries of unsecured corporate bonds as well as fees regarding services not indicated designated in Article 2-1 of Certified Public Accountants Law (fees regarding verificationof data related to assets under management (5,000 thousand yen) and fees regarding AUP (Agreed Upon Procedures) report for issuance of JPR’s 7th series of unsecured
corporate bonds (2,300 thousand yen)).

(4) Asset Manager, Asset Custodian and Administrative Agent

The asset manager, asset custodian and administrative agents of JPR at the end of the 10th fiscal period are as follows.
Outsoursing Category

Name

Asset management company

Tokyo Realty Investment Management, Inc.

Asset custodian

Mizuho Trust & Banking Co., Ltd.

Administrative agent(Administration, etc. concerning
unitholders of record, etc.)

Mizuho Trust & Banking Co., Ltd.

Administrative agent(administration concerning
corporate bonds)

Mizuho Trust & Banking Co., Ltd.
Mizuho Securities Co., Ltd.
Mizuho Corporate Bank, Ltd.
Shikin Securities Co., Ltd.
Merrill Lynch Japan Securities Co., Ltd.
Nomura Securities Co., Ltd.

31

Status of JPR's Assets under Management(1) JPR's Asset Structure
Asset Type

Area

Real estate

Real estate in trust

9th Fiscal Period(as of June 30, 2006)

10th Fiscal Period(as of December 31, 2006)

Assets owned
by JPR

Percentage of
total assets (%)

Tokyo CBDs

16,116,501

7.0

16,082,558

6.6

Greater Tokyo

6,300,287

2.7

13,752,135

5.6

Other Cities

16,229,852

7.0

16,169,562

6.6

Tokyo CBDs

77,824,365

33.6

77,438,662

31.6

Greater Tokyo

31,235,719

13.5

30,939,230

12.6

57,837,269

25.0

63,741,582

26.0

1,558,460

0.7

1,558,460

0.6

10.5

25,009,765

Other Cities
Preferred securities

24,420,843

Deposits and other assets(

Total assets)(

Assets owned
by JPR)

231,523,301

100.0(205,543,997)(88.8)(

Percentage of
total assets (%)

)

10.2
(

)

244,691,958

100.0(218,123,732)(89.1)(Note 1) Total assets owned are based on the amounts appropriated on the balance sheet as of the settlement date (book values after depreciation for real estate and real estate in trust).
(Note 2) Figures in parenthesis are portions that practically fall on real estate owned in the object assets.
(Note 3) For separation of areas, refer to PP 8 -9(Note 4) Various survey expenses (3,120 thousand yen for the 9th fiscal period and 3,120 thousand yen for the 10th fiscal period) appropriated with regard to planned acquisition
properties are appropriated in deposits and other assets as construction in progress in this table.
(Note 5) JPR owns 8,490 units from 84,900 units of preferred securities issued by Kawasaki Dice TMK (with preferred securities of 10.0%). Furthermore, the value arrived at bymultiplying the amounts of real estate and others on the balance sheet of Kawasaki Dice TMK for the latest settlement period by JPR's preferred securities is 1,736,623 thousand yenor the 9th fiscal period and 1,716,347 thousand yen for the 10th fiscal period.

(2) Major Assets Owned by JPR
The following is the overview of the major assets (ten largest properties by book value at end of period)
owned by JPR as of the end of the 10th fiscal period.
Book Value(
thousandsof yen)Property Name (Note 1)

Leasable Floor
Space (
m2 )Leased Floor
Space (
m2 )Occupancy
Rate (%)

Rate of Monthly
Contracted Rent
Asset Classat End of Period (%)

Kanematsu Bldg.

15,624,338

7,994.02

7,994.02

100.0

4.9

OfficeJPR Umeda Loft Bldg.

12,904,133

18,586.97

18,586.97

100.0

4.7

RetailBYGS Shinjuku Bldg.

11,994,810

11,357.50

11,176.08

98.4

5.0

OfficeJPR Shibuya Tower Records Bldg.

11,901,854

8,076.85

8,076.85

100.0

4.1

RetailMS Shibaura Bldg.

11,247,147

14,429.09

14,429.09

100.0

5.6

OfficeShinjuku Square Tower

9,869,501

10,982.03

10,982.03

100.0

3.6

OfficeTanashi ASTA

8,974,759

31,121.71

31,121.71

100.0

7.1

RetailKawaguchi Center Bldg.

7,912,610

15,461.98

15,358.16

99.3

5.2

OfficeMeiji Yasuda Life Osaka Umeda Bldg.

7,628,767

9,600.49

9,490.24

98.9

4.0

OfficeJPR Musashikosugi Bldg.

7,509,621

19,740.95

19,740.95

100.0

2.3

Retail

105,567,546

147,351.59

146,956.10

99.7

46.6

Total

(Note 1) Rate of monthly contracted rent at end of period is the rate arrived at by dividing the monthly contracted rent at end of period for each property by the total rents for all properties.
(Note 2) Each sectional owner of Shinjuku Square Tower leases its portions to Shinjuku Square Tower Management Co., Ltd. collectively, and the firm subleases them to sub-lessees.
Accordingly, the leasable floor space of the building is calculated by multiplying the total contracted areas of offices, shops and warehouses which the company rents and can subleaseto sub-lessees by 39.70457%, the rent allocation ratio of JPR. The subleased areas used to calculate the occupancy rate are the subleased areas to sub-lessees multiplied by the rent
allocation ratio. Each figure has been rounded to the second decimal point.

32

(3) Acquired Properties
A.Real estate and other acquired properties

The overview of the real estate and beneficiary interest in real estate in which JPR invests are as follows.

Location
Category

Asset
Class

Property NameGreaterTokyo

Beneficiary Interest

15,624,338

14,800,000

Beneficiary Interest

2,664,374

2,960,000

JPR Ningyo-cho Bldg.

Chuo Ward, Tokyo

Beneficiary Interest

2,430,000

Shin-Kojimachi Bldg.

Chiyoda Ward, Tokyo

Beneficiary Interest

1,992,622
1,663,522
578,737
205,933

JPR Crest Takebashi Bldg.

Chiyoda Ward, Tokyo

Beneficiary Interest

3,772,660

3,780,000

MS Shibaura Bldg.

Minato Ward, Tokyo

Beneficiary Interest

11,247,147

16,497,000

Shinagawa Ward, Tokyo Beneficiary Interest

2,795,467

3,640,000

1,810,094
1,160,979

2,980,000
5,330,000

OfficeOther
CitiesFukuoka Bldg.

Chuo Ward, Tokyo

JPR Ichigaya Bldg.

Chiyoda Ward, Tokyo

Beneficiary Interest

5,243,911

Oval Court Ohsaki Mark West

Shinagawa Ward, Tokyo Beneficiary Interest

3,474,249

4,160,000

Shinjuku Square Tower

Shinjuku Ward, Tokyo

Beneficiary Interest

9,869,501

11,790,000

BYGS Shinjuku Bldg.

Shinjuku Ward, Tokyo

Real Estate

11,994,810

12,200,000

Across Shinkawa Bldg. Annex

Chuo Ward, Tokyo

Real Estate

702,160

829,000

JPR Shibuya Tower Records Bldg.

Shibuya Ward, Tokyo

Beneficiary Interest

11,901,854

14,800,000

JPR Daikanyama

Shibuya Ward, Tokyo

Real Estate

2,224,609

1,730,000

JPR Jingumae 432

Shibuya Ward, Tokyo

Beneficiary Interest

4,594,248

4,510,000

Arca East

Sumida Ward, Tokyo

Beneficiary Interest

5,292,794

7,070,000

JPR Chiba Bldg.

Chiba City, Chiba

Beneficiary Interest

2,355,841

2,060,000

JPR Yokohama Nihon Odori Bldg.

Yokohama City, Kanagawa Beneficiary Interest

2,661,569

2,700,000

Yokohama City, Kanagawa Real Estate

929,1091,420,000

Kawaguchi City, Saitama Beneficiary Interest

7,912,610

10,100,000

JPR Ueno East Bldg.

Taito Ward, Tokyo

Real Estate

3,226,238

4,420,000

Tachikawa Business Center Bldg.

Tachikawa City, Tokyo

Beneficiary Interest

866,095

1,370,000

Tanashi ASTA

Nishitokyo City, Tokyo

Beneficiary Interest

8,974,759

13,200,000

Tsurumi fuga 1

Yokohama City, Kanagawa Beneficiary Interest

2,875,558

3,720,000

Cupo-la Main Bldg.

Kawaguchi City, Saitama Real Estate

2,087,166

2,570,000

JPR Musashikosugi Bldg.

Kawasaki City, Kanagawa Real Estate

7,509,621

7,010,000

Niigata Ekinan Center Bldg.

Niigata City, Niigata

Beneficiary Interest

1,913,912

2,270,000

Meiji Yasuda Life Osaka Umeda Bldg.

Osaka City, Osaka

Beneficiary Interest

7,628,767

10,300,000

Tokyo Tatemono Honmachi Bldg.

Osaka City, Osaka

Beneficiary Interest

4,121,224

4,210,000

JPR Takamatsu Bldg.

Takamatsu City, Kagawa Beneficiary Interest

2,283,796

1,510,000

JPR Hakata Bldg.

Fukuoka City, Fukuoka

Beneficiary Interest

3,052,770

2,870,000

JPR Naha Bldg.

Naha City, Okinawa

Beneficiary Interest

1,480,990

1,510,000

NORTH 33 Bldg.

Sapporo City, Hokkaido Beneficiary Interest

3,529,046

2,970,000

Sompo Japan Sendai Bldg.

Sendai City, Miyagi

Beneficiary Interest

2,804,271

4,070,000

Sompo Japan Wakayama Bldg.

Wakayama City,Wakayama Beneficiary Interest

1,512,475

1,900,000

Tenjin 121 Bldg.

Fukuoka City, Fukuoka

Beneficiary Interest

2,600,857

2,820,000

JPR Nagoya Sakae Bldg.

Nagoya City, Aichi

Real Estate

4,584,177

5,610,000

JPR Dojima Bldg.

Osaka City, Osaka

Beneficiary Interest

2,135,372

2,540,000

JPR Hakata-chuo Bldg.

Fukuoka City, Fukuoka

Beneficiary Interest

1,921,430

2,140,000

Real Estate

4,147,771

4,390,000

Beneficiary Interest

12,904,133

16,190,000

UFJ Central Leasing Head Office Bldg. Nagoya City, Aichi
Osaka City, OsakaJPR Umeda Loft Bldg.
Retail

3,020,000

Beneficiary Interest
Real Estate

Office Shinyokohama 2nd Center Bldg.
Kawaguchi Center Bldg.

RetailBook Value
Appraisal Value(as of Dec. 31,(
as of Dec. 31, 2006)
2006)(thousandsof yen)(thousands of yen)

Chuo Ward, Tokyo
Chuo Ward, Tokyo

Office Gotanda First Bldg.

RetailAsset Type

Kanematsu Bldg. Annex

Kanematsu Bldg.

Tokyo
CBDs

Location

Strasse Ichibancho

Sendai City, Miyagi

Beneficiary Interest

4,103,959

4,010,000

Benetton Shinsaibashi Bldg.

Osaka City, Osaka

Beneficiary Interest

5,566,849

5,680,000

Housing Design Center Kobe
Chayamachi Grande Bldg.

Kobe City, Hyogo

Real Estate

7,437,613

7,720,000

Osaka City, Osaka

Beneficiary Interest

6,181,723

5,560,000

218,123,732

249,366,000

Total(Note 1) The calculated values at end of period are either appraisal values or survey values by real estate appraisers, based on the Cabinet Office Order on " Regulations on calculations ofinvestment corporations."(Note 2) Aside from properties indicated in the table above, JPR owns 8,490 units from 84,900 units of preferred securities issued by Kawasaki Dice TMK (with preferred securities of 10.0%).
Furthermore, the value arrived at by multiplying the amounts of real estate and others on the balance sheet of Kawasaki Dice TMK for the latest settlement period by JPR's preferred
securities is 1,736,623 thousand yen for the 9th fiscal period and 1,716,347 thousand yen for the 10th fiscal period .

33

History of Rental Business for JPR's Each Real Estate and Beneficiary Interest in
Real Estate Investments.
Location
Category

9th Fiscal Period (from Jan. 1, 2006
to June 30, 2006)

Asset
Class

Property Name

RentalNumber Occupancy
Revenuesofthousands
rate (%) (Tenantsof yen)

Tokyo
CBDs

NumberofTenants

% of
Total

10

100.0

439,467

5.1

10

100.0

451,203

5.0

1

100.0

102,721

1.2

1

100.0

104,611

1.2

JPR Ningyo-cho Bldg.

4

100.0

98,477

1.2

4

100.0

100,862

1.1

100.0

71,2000.8

100.0

71,6720.8

43.9

36,231

0.4

43.9

13,3850.1

100.0

11,3700.1

100.0

11,542

0.1

10

10

JPR Crest Takebashi Bldg.

9

100.0

127,045

1.5

8

87.8

118,953

1.3

MS Shibaura Bldg.

8

100.0

529,991

6.2

8

100.0

544,268

6.0

Gotanda First Bldg.

2

100.0

132,815

1.6

2

100.0

134,424

1.5

100.0

64,6670.8

100.0

64,6670.7

100.0

37,8220.4

100.0

37,822

0.4

Fukuoka Bldg.

2

JPR Ichigaya Bldg.

9

100.0

182,763

2.1

9

100.0

188,996

2.1

Oval Court Ohsaki Mark West

4

100.0

170,518

2.0

4

100.0

177,168

2.0

Shinjuku Square Tower

25

98.8

277,465

3.2

25

100.0

297,660

3.3

BYGS Shinjuku Bldg.

25

98.3

449,609

5.3

25

98.4

483,510

5.3

Across Shinkawa Bldg. Annex

4

100.0

46,245

0.5

4

100.0

47,7830.5

JPR Shibuya Tower Records Bldg.

1

100.0

345,576

4.0

1

100.0

345,576

3.8

4

100.0

47,132

0.6

4

100.0

47,1490.5

JPR Jingumae 432

5

100.0

49,237

0.6

5

100.0

96,384

1.1

Arca East

6

100.0

253,745

3.0

6

100.0

285,469

3.2

JPR Chiba Bldg.

26

89.5

135,338

1.6

27

92.8

137,678

1.5

JPR Yokohama Nihon Odori Bldg.

11

97.5

138,288

1.6

10

93.4

139,264

1.5

Office Shinyokohama 2nd Center Bldg.
Kawaguchi Center Bldg.

15

100.0

74,231

0.9

15

100.0

74,690

0.8

37

98.0

486,763

5.7

39

99.3

486,947

5.4

JPR Ueno East Bldg.

8

90.9

188,623

2.2

8

90.9

192,061

2.1

Tachikawa Business Center Bldg.

4

100.0

56,899

0.7

4

100.0

57,515

0.6

Tanashi ASTA

1

100.0

596,400

7.0

1

100.0

596,400

6.6

Tsurumi fuga 1

1

100.0

145,200

1.7

1

100.0

145,200

1.6

Cupo-la Main Bldg.

1

100.0

(
Note 2) (Note 2)

1

100.0

(
Note 2) (Note 2)

1

100.0

(
Note 2) (Note 2)

Niigata Ekinan Center Bldg.

11

100.0

133,168

1.6

11

100.0

132,055

1.5

Meiji Yasuda Life
Osaka Umeda Bldg.

27

98.5

358,652

4.2

28

98.9

374,041

4.1

Tokyo Tatemono Honmachi Bldg.

9

97.3

251,550

2.9

9

97.3

246,197

2.7

JPR Takamatsu Bldg.

28

80.5

88,009

1.0

29

89.6

86,261

1.0

JPR Hakata Bldg.

26

81.5

144,595

1.7

27

88.7

143,208

1.6

JPR Naha Bldg.

16

95.3

101,315

1.2

17

95.5

108,345

1.2

NORTH 33 Bldg.

23

95.5

168,978

2.0

24

96.6

167,242

1.8

15

97.1

197,319

2.3

17

99.9

205,120

2.3

Sompo Japan Wakayama Bldg.

17

95.1

114,903

1.3

16

96.6

119,363

1.3

Tenjin 121 Bldg.

14

91.5

109,757

1.3

15

100.0

114,546

1.3

JPR Nagoya Sakae Bldg.

21

100.0

218,083

2.5

21

100.0

234,186

2.6

JPR Dojima Bldg.

11

100.0

118,205

1.4

11

100.0

134,788

1.5

JPR Hakata-chuo Bldg.

6

100.0

82,344

1.0

6

100.0

89,532

1.0

UFJ Central Leasing
Head Office Bldg.

1

100.0

190,710

2.2

1

100.0

193,291

2.1

JPR Umeda Loft Bldg.

1

100.0

402,413

4.7

1

100.0

402,423

4.4

Strasse Ichibancho

1

100.0

128,388

1.5

1

100.0

128,388

1.4

Retail Benetton Shinsaibashi Bldg.

1

100.0

(
Note 2) (Note 2)

1

100.0

(
Note 2) (Note 2)

Housing Design Center Kobe

1

100.0

(
Note 2) (Note 2)

1

100.0

8

100.0

(
Note 2) (Note 2)
94,715
1.0

479

98.6

RetailJPR Musashikosugi Bldg.

Office Sompo Japan Sendai Bldg.
Other
CitiesRentalOccupancy Revenues
thousands
rate (%) (of yen)Kanematsu Bldg. Annex

Retail JPR Daikanyama

Greater
Tokyo

% of
Total

Kanematsu Bldg.

Shin-Kojimachi Bldg.

Office10th Fiscal Period (from July 1, 2006
to Dec. 31, 2006)

Chayamachi Grande Bldg.

Total

462

98.0

8,552,819

100.0

2

9,056,584 100.0(Note 1) The number of tenants at end of period is counted as follows except for Shinjuku Square Tower: when a single tenant leases multiple rooms, it is counted as one
if the tenant uses the same property. If the leased rooms are in multiple buildings, the tenant is counted in plural.
(Note 2) The tenant to whom the entire building is leased has not agreed to our disclosing rents and other information. Therefore, JPR does not disclose them as it falls undercases in which disclosure is impossible due to inevitable reasons.

34

B. Details of Investment Securities Acquired as Properties
Book Value
Securities Name

Asset Type

Unit Price(yen)

Kawasaki Dice TMK

Preferred securities

Appraisal ValueUnits

8,490 units

Value (yen)Unit Price(yen)

Value (yen)Gains or
LossesRemarksfrom
Valuation

183,564 1,558,460,000 183,564 1,558,460,000(Note 1)
(Note 2)

(Note 1) The appraisal value of the preferred securities are their acquisition cost.
(Note 2) JPR owns 8,490 units from 84,900 units of preferred securities issued by Kawasaki Dice TMK (with preferred securities of 10.0%).

(4) Status of Other Properties

Beneficiary interests with real estate as major entrusted properties have been entered in the Real Estate andother Aquired Properties in the previous pages.

35Capital Expenditures of Owned Real Estate(1) Planned Captal Expenditures

The following are major items of capital expentidures for currently planned renovations, etc. for JPR-owned realestate and entrusted real estate regarding beneficiary interests in real estate. Further, the planned construction
expenses include portions that are classified as expenses in accounting.
Planned (millions of yen)
Property Name

Payment

Location

PurposeSchedule

JPR Hakata Bldg.

Fukuoka City,
Fukuoka

Replacement of
5th - 8th floor
air-conditioning units

Jan. 2007~
June 2007

119

JPR Dojima Bldg.

Osaka City,
Osaka

Renewal of
exterior repair seals

Mar. 2007~
May 2007

50

JPR Chiba Bldg.

Chiba City,
Chiba

Repairs of B1,
9th - 13th floor
toilets

Mar. 2007~
June 200716

Total Value during
the 10th
Fiscal Period

AmountAlreadyPaid(2) Capital Expenditures during the 10th Period

The following are the capital expenditure amounts JPR invested in real estate and entrusted real estate during the 10th
period. Among major capitral expenditures, renewal of exterior repair seals for maintenance are renovations in an effort tomaintain and enhance tenant satisfaction as well as improvements to common-use areas and the installation of officeautomation floors for leasedoffices with the aim of attracting new tenants. Besides, JPR conducted construction of
150 million yen (*), which was appropriated as expenditures for repair and maintenance, aside from these constructions.
Property Name

Location

Purpose

PeriodConstruction Expenses(millions of yen)

Housing Design Center Kobe

Kobe City,
Hyogo

Renewal of
exterior repair seals

Aug. 2006~
Dec. 2006

103

JPR Hakata Bldg.

Fukuoka City,
Fukuoka

Replacement of 9th - 11th floor
air-conditioning units

Aug. 2006~
Dec. 200689

JPR Umeda Loft Bldg.

Osaka City,
Osaka

Repairs of 4th and5th floor toilets

July 2006~
Oct. 2006

25

Shin-Kojimachi Bldg.

Chiyoda Ward,Tokyo

Renewal of
second floor

June 2006~
July 2006

21

Sompo Japan Wakayama Bldg.

Wakayama City,
Wakayama

Interior renewal ofcommon area

Nov. 2006~
Dec. 2006

19

JPR Chiba Bldg.

Chiba City,
Chiba

Repairs of 2nd, 4th, 6th
and 8th floor toilets

Oct. 2006~
Dec. 2006

15

Other Properties

Repairs of common area, installation of office automation
floors, preparation of parking lots, air conditioners anddisaster prevention facilities

155

Total

431

* Expenditures for repair and maintenance included 3,000,000 yen of construction management fees paid to construction management companies as well as
the amounts for repair and maintenance constructions themselves.

(3) Amounts Reserved for Long-Term Repairs and Maintenance Plans

JPR has deposited the following amounts from the redundant cash flow (including one accompanying internal
reserve of profits) such as depreciation in order to conduct large-scale repairs and maintenance work, based onlong-term repairs and maintenance plans for individual properties.
(Millions of yen)

36

Operation Period

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

7th Fiscal Period(Jan. 1, 2005 ~June 30, 2005)

8th Fiscal Period(July 1, 2005 ~Dec. 31, 2005)

9th Fiscal Period(Jan. 1, 2006 ~June 30, 2006)

10th Fiscal Period(July 1, 2006 ~Dec. 31, 2006)

Balance of deposits at
end of previous period

750

850

716

667

678

Deposits during the period

220

43

228

141

297

Amounts used from
deposits during the period

120

177

277

130

277

Deposits carried forward
to the next period

850

716

667

678

698

Expenses and Liabilities(1) Details of Expenses Related to Management
Item(Thousands of yen)

9th Fiscal Period (Jan. 1, 2006 - June 30, 2006) 10th Fiscal Period (July 1, 2006 - Dec. 31, 2006)(a) Asset Management Fees

￥356,054￥350,947

Fixed compensation￥75,000￥75,000

Incentive-based compensation 1￥169,249￥168,395

Incentive-based compensation 2￥106,697￥112,659(b) Administrative Service and Custodian Fees

￥68,880￥63,682(c) Directors' Fee￥5,700￥5,700(d) Trust Fees

￥50,561￥51,987(e) Other Expenses
Total￥75,316￥85,674￥551,405￥563,098(2) Status of Borrowings

As of December 31, 2006, JPR has the following borrowings.
Drawdown
Date

LenderCategory

Balance as of Balance as of Average
December 31, Interest Rate
June 30,(%) (Note 1)
2006
2006
(millions of yen) (millions of yen) (Note 2)

Mitsubishi

Sep. 27, 2005

5,000

0.498

Sep. 27, 2006

UFJ Trust andMar. 30, 2006

1,000

0.435

July 5, 2006

Banking Corp.

July 5, 2006

0.593

Mar. 16, 2007

Shinsei Bank, Ltd.

Sep. 27, 2005

1,500

0.390

July 5, 2006

Mar. 30, 2006

1,500

0.385

July 5, 2006

0.600

Mar. 16, 2007

3,000

July 5, 2006
The Hachijuni
Bank, Ltd.

Short-Term
Borrowings

Repayment
Date

Sep. 27, 2005

1,000

0.508

Sep. 27, 2006

Mar. 23, 2006

1,000

0.435

July 5, 2006

0.593

Mar. 16, 2007

Repayment
MethodUse

Remarks

Mizuho Corporate July 5, 2006
Bank, Ltd.
Sep. 27, 2006

3,500

0.737

July 5, 2006

Dec. 26, 2006

8,000

0.720

0.435

Mar. 16, 2007 Principal
Unsecured/lump
Unguaranteed/
July 5, 2006
(Note 3) NonsumMar. 16, 2007
repayment
subordinatedJuly 5, 2006
on maturity

0.593

Mar. 16, 2007

0.737

July 5, 2006

0.435

July 5, 2006

0.643

Mar. 16, 2007

0.720

Mar. 16, 2007

Aozora Bank, Ltd.

Mar. 23, 2006

0.593

July 5, 2006
Mar. 23, 2006

Resona Bank,

0.435

1,000
1,000

July 5, 2006

Limited

3,000

Sep. 27, 2006

The Bank ofMar. 23, 2006

1,000

Tokyo-Mitsubishi
UFJ, Ltd.

July 5, 2006

Sumitomo Mitsui
Banking Corp.

Dec. 26, 2006

2,000
14,00019,500Mar. 25, 2004

1,000

1,000

0.873

Mar. 23, 2007

Mar. 31, 2005

2,000

2,000

0.493

Apr. 13, 2007

The Bank ofFukuoka, Ltd.

Apr. 11, 2005

2,000

2,000

0.478

Apr. 11, 2007

The Chugoku

Apr. 11, 2005

1,500

1,500

0.478

Apr. 11, 2007

Apr. 11, 2005

1,000

1,000

0.478

Apr. 11, 2007

Trust and Banking Dec. 27, 2001
Company, Limited

6,500

1.234

Dec. 27, 2006

SumitomoLife Insurance
Company

Dec. 27, 2001

6,500

1.234

Dec. 27, 2006

Aozora Bank, Ltd.

June 19, 2002

1,000

1.295

Dec. 27, 2006

June 19, 2002

1,000

1.295

Dec. 27, 2006

Total
Sompo Japan
Insurance Inc.
Nippon Life
Insurance
Company

Bank, Ltd.
Current
Portionof Long-Term The Iyo Bank, Ltd.
Borrwoings The Chuo MitsuiResona Bank,
LimitedTotal

22,500Unsecured/
Unguaranteed/
NonsubordinatedPrincipal
lump(Note 3)sum
repayment
on maturity
Secured/
Unguaranteed/
Nonsubordinated

7,500

37

Category

Zenkyoren(The National
Mutual Insurance
Federation ofAgricultural
Cooperatives)
Mitsubishi UFJ
Trust andBanking Corp.

Balance as of Average
December 31, Interest Rate(%) (Note 1)
2006(millions of yen) (millions of yen) (Note 2)

Drawdown
Date

Balance as ofJune 30,
2006

Nov. 24, 2005

5,000

LenderRepayment
Date

Repayment
MethodUse

Remarks

5,000

1.453

Nov. 27, 2012

Aug. 29, 2006

6,000

1.734

Aug. 29, 2011

Sep. 26, 2006

3,000

1.356

Sep. 24, 2010

Sep. 26, 2006

1,000

1.356

Sep. 24, 2010

Sep. 26, 2006

1,000

1.356

Sep. 26, 2006

1,000

1.356

Dec. 26, 2006

1,000

1.642

Taiyo Life
Dec. 26, 2006
Insurance Company

1,000

1.858

Sep. 24, 2010 Principal
lump
Sep. 24, 2010 sum(Note 3)Apr. 11, 2012 repayment
on maturity
Dec. 27, 2013

Daido Life
Dec. 26, 2006
Insurance Company

1,000

1.858

Dec. 27, 2013

Sumitomo Life
Insurance Company Dec. 27, 2006

2,000

1.858

Dec. 27, 2013

Shinsei Bank, Ltd.
The Bank ofFukuoka, Ltd.
The Chugoku
Bank, Ltd.

Long-Term
Borrowings The Hachijuni
Bank, Ltd.

Meiji Yasuda Life
Insurance
Company

Dec. 27, 2001

4,783

4,783

1.700

Dec. 26, 2008

Jun. 21, 2002

4,783

4,783

2.050

Jun. 21, 2011

4,400

4,400

1.750

Mar. 28, 2013

18,96635,966

Mar. 28, 2003

Total

Unsecured/
Unguaranteed/
Nonsubordinated

Secured/
Unguaranteed/
Nonsubordinated(Note 1) The average interest rates are weighted-average figures during the period and are rounded to the third decimal point. Furthermore, fees related to loan arrangement paid
to the above lenders are not included.
(Note 2) Short-term borrowings are floating-rate borrowings. Long-term borrowings are fixed-rate borrowings.
(Note 3) Funds are mainly used for purchasing real estate or real estate beneficiary interest in trust (including accompanying expenses)
and repaying borrowings.
(Note 4) Short-term borrowings of ￥5 billion from Mitsubishi UFJ Trust and Banking Corp., Mizuho Corporate Bank, Ltd., Aozora Bank, Ltd., Resona Bank, Ltd. and The Bank ofTokyo-Mitsubishi UFJ, Ltd. (￥1 billion respectively) undertaken on July 5, 2006 were repaid on December 15, 2006.

(3) Corporate Bonds

Details of corporate bonds outstanding as of December 31, 2006 are as follows.

Issue DateFirst Series ofCorporate
Bonds
Second Series ofCorporate
Bonds
Third Series ofCorporate
Bonds
Fourth Series ofCorporate
Bonds
Fifth Series ofCorporate
Bonds
Sixth Series ofCorporate
Bonds
Seventh Series ofCorporate
Bonds
Total

Balance as of
Balance as of
Coupon Rate
December 31,
June 30, 2006
(per annum)(millions of yen) 2006
(millions of yen)

Maturity
Date

Feb. 12, 2004

10,00010,0000.84

Feb. 12,2008

Feb. 12, 2004

7,000

7,000

1.38

Feb. 12,2010

Feb. 12, 2004

5,000

5,000

2.32

Feb. 12,2014

Nov. 4, 2004

10,00010,0000.92

Nov. 4,2009

Nov. 4, 2004

5,000

5,000

1.44

Nov. 4,2011

Nov. 4, 2004

5,000

5,000

2.00

Nov. 4,
2014

4,500

2.90

Dec. 14,2026

Dec. 14, 2006
42,000

Redemption

Use

Remarks(Note 1)
Purchase ofproperties

Bulletpayment

and
Repayment ofborrowings(Note 2)

Repayment ofborrowings(Note 3)46,500(Note 1) These are equipped with a same rank rider limited among corporate bonds, and with limitations on private placement among small number of investors and on resale among
qualified institutional investors.
(Note 2) These are equipped with a same rank rider limited among corporate bonds and limitations on resale among qualified institutional investors.
(Note 3) These are equipped with a same rank rider limited among certain corporate bonds.

38

Acquisition and Sale during the 10th Fiscal Period(1) Aqcuisition and Sale of Real Estate and Asset-Backed Securities
Acquisition
Real Estate
Name

Type of Asset

Sale

Acquired
Date

AcquisitionPrice(thousandsof yen)(Note)

BeneficiaryInterest in
Real Estate

Chayamachi
GrandeBldg.

Aug. 30,2006

6,000,000

Real Estate

JPR
Musashikosugi
Bldg.

Sep. 28,
2006

7,260,000

Total

Sale
Date

Sale
Price (A)(thousandsof yen)(Note)

Difference (C) SaleBook
Expenses(D)(A) - (B)
Value (B)(thousands (thousands of (thousandsof yen)yen)of yen)Sale Profit
and Loss(C) - (D)(thousandsof yen)13,260,000(Note) Values of "acquisition price" or "sale price" are amounts (transaction price indicated in the transaction contract) excluding expenses (such as real estate transaction brokeragefees) required for acquisition or sale of the relevant real estate.

(2) Acquisition and Sale of Other Assets
There were no acquisitions or sales of other assets.

(3) Survey on Values of Specified Assets, etc.
Acquisition Price orSale Price (Note 1)(thousands of yen)

Survey Value ofSpecified Assets (Note 2)(thousands of yen)

Acquisition or Sale

Real Estate Name

Acquisition

Chayamachi Grande
Bldg.

Aug. 30, 2006

6,000,000

5,500,000

Acquisition

TokyokikaiMusashikosugi
Bldg. (Note 3)

Sep. 28, 2006

7,260,000

7,010,000

Transaction
Date(Note 1) Values of "acquisition price or sale price" are amounts (transaction price indicated in the transaction contract) excluding expenses (such as real estate transaction brokeragefees) required for acquisition or sale of the relevant real estate.
(Note 2) Surveys on the values of specified assets indicated above were conducted by Ernst & Young ShinNihon at times of acquisition or sale of properties based on the Report
No. 23, "surveys on values of specified assets of investment trusts and investment corporations," issued by the Industry Audit Committee of the Japanese Institute ofCertified Public Accountants. Besides, aside from the value surveys shown above, JPR has received survey reports on locations, addresses and other items needed for
identifying relevant real estate.
(Note 3) The Tokyokikai Musashikosugi Bldg. changed its name to the JPR Musashikosugi Bldg. on November 1, 2006.

(4) Transactions with Interested Parties and Major Shareholders
A.Transaction Status
There were no transactions with interested parties or major shareholders

39

B.Values of Fee Expenses(Thousands of yen)
Breakdown of Transactions with Interested Parties
Total Paid Fees
(A)

Property Brokerage FeesManagement Fees
(Note 2)

Outsourcing Fees

Tenant Brokerage Fees,
etc.
Corporate Bonds
Underwriting Fees

397,860

183,145467,098

10,251

22,500

Paid Party

Paid Amount(B)

Ratio to Total
Amount (B/A)(% of total)

Tokyo Tatemono Real Estate Sales Co., Ltd.

217,800

54.7

Tokyo Tatemono Co., Ltd.

124,391

67.9

Yasuda Real Estate Co., Ltd.

8,305

4.5

Meiji Yasuda Building Management, Co., Ltd.

20,756

11.3

Sompo Japan Building Management, Co., Ltd.

10,753

5.9

Tokyo Tatemono Co., Ltd.

304,297

65.1

Yasuda Real Estate Co., Ltd.

24,674

5.3

Meiji Yasuda Building Management, Co., Ltd.

47,413

10.2

Sompo Japan Building Management, Co., Ltd.

32,229

6.9Tokyo Tatemono Co., Ltd.

7,709

75.2

Meiji Yasuda Building Management, Co., Ltd.

1,453

14.2

Sompo Japan Building Management, Co., Ltd.

685

6.7

22,500100.0

Merrill Lynch Japan Securities Co., Ltd.

(Note 1) Interested parties and major shareholders refers to the interested parties of the asset management company who has concluded an asset management agreementwith JPR and is regulated as designated in Article 20 of the Enforcement Order of as the Investment Trusts and Investment Corporations Law and the major
shareholders of the asset management companyregulated defined in Article 9-3 of the Investment Trusts and Investment Corporations Law.
(Note 2) The management fees indicated in the above table include construction management fees (total of 11,863 thousand yen for JPR) appropriated as assets and nothandled as expenses.
(Note 3) Aside from transactions indicated in the above table, JPR paid the following amounts for repairs, etc. conducted by the parties
indicated during the 10th fiscal period.

Tokyo Tatemono Co., Ltd.

207,478 thousand yen

Tokyo Tatemono Techno-build Co., Ltd.

46,400 thousand yen

Yasuda Real Estate Co., Ltd.

16,091 thousand yen

Meiji Yasuda Building Management Co., Ltd.

16,294 thousand yen

Sompo Japan Building Management Co., Ltd.

10,570 thousand yen(5) Transactions with the Asset Management Company regarding Concurrent
Work Conducted by the Asset Management Company
Tokyo Realty Investment Management, Inc., the asset management company of JPR, does not concurrently conduct
securities business, land and building transaction business, or real estate syndication business, and has no suchtransactions with JPR.

40

Overview of Accounting(1) Assets, Liabilities, Principal and Profits and Loss
Please refer to the Balance Sheets, Statement of Income and Retained Earnings,
Statement of Changes in Unitholers’ Equity and Notes to Financial Statements
as well as Distribution Information.

(2) Changes in Calculation Method of Depreciation
No change has been made.

(3) Changes in Valuation Method of Real Estate
No change has been made.

Other(1) Notice
Details of major issues related to conclusion and change of major contracts
approved by JPR’s Board of Directors meeting are as follows.

Date of the meeting

Approved issues

Consignment of administration concerning
Sept. 27, 2006

transferring unsecured corporate bonds tobook-entry transfer corporate bonds

Consignment of administrative services
Nov. 29, 2006

concerning issue of seventh series of
unsecured corporate bonds (note)

Details

With the transfer of unsecured corporate
bonds to book-entry transfer corporate
bonds, JPR has consigned issue andpayment services to Mizuho Trust &Banking for first to third series of corporate
bonds and Mizuho Corporate Bank for
fourth to sixth series of corporate bonds inaddition to on-going administrative services.

By having Executive Officers’ decision of theissue of the seventh series of unsecured
corporate bonds as stop condition, JPR has
consigned services related to JPR’s corporate
bonds to Merrill Lynch Japan Securities andMizuho Corporate Bank.

(Note) A comprehensive resolution concerning issue of JPR’s corporate bonds was made at Board of Directors meeting held on December 20, 2005. Based on this, theseventh corporate bonds were issued on December 14, 2006.

(2) Other
Unless otherwise stated, figures indicated in this Business Report are rounded off for values androunded up for ratios to the last figure. The aggregation of each individual item will not add up
to the total from hereon.

41

Balance Sheets(As of December 31, 2006 and June 30, 2006)(Thousands of yen)

End of 10th Fiscal Period End of 9th Fiscal Period(as of December 31, 2006)(information only)(as of June 30, 2006)￥10,653,563￥10,478,692

13,997,165

13,600,136

Rental receivables

134,365

157,002

Prepaid expenses

138,530

97,900% Change

ASSETS
CURRENT ASSETS:
Cash and bank deposits
Entrusted cash and deposits

Deferred tax assets

192

467

9,811

11,50624,933,629

24,345,705

Buildings

18,431,800

16,316,514

Entrusted buildings

72,363,796

71,065,665

Other current assets
Total Current Assets

2.4%

FIXED ASSETS:PROPERTY AND EQUIPMENT:

Structures

4,714

4,714

Entrusted structures

70,74368,034

Machinery and equipment

151,968

148,754

1,358,449

1,332,492

13,85912,310

Entrusted machinery and equipment
Tools, furniture and fixtures
Entrusted tools, furniture and fixtures

65,022

58,466

Land

28,581,792

23,036,551

Entrusted land

108,824,129

103,665,465

6,428

3,853

Construction in progress
Entrusted construction in progress

200(
11,749,213)(
10,169,358)

218,123,491

205,543,666

Other intangible assets

5,471

5,969

Total Intangible Assets

5,471

5,969

1,558,460

1,558,460

10,10010,100Less : accumulated depreciation
Net Property and Equipment

6.1%

Intangible Assets:（8.3%）INVESTMENTS AND OTHER ASSETS:
Investment securities
Deposits
Other
Total Investments and Other Assets
Total Fixed Assets

250

250

1,568,810

1,568,810

219,697,773

207,118,445

60,55559,149

6.1%

Deferred Assets:
Corporate bond issuance costs
Total Deferred Assets

TOTAL ASSETS(Note) See accompanying Notes to Financial Statements

42

60,55559,1492.4%￥244,691,958￥231,523,301

5.7%

(Thousands of yen)

End of 10th
Fiscal Period(as of December 31, 2006)

End of 9th
Fiscal Period(information only)(as of June 30, 2006)% Change

LIABILITIESCURRENT LIABILITIES:
Trade accounts payable￥923,005￥785,828

Short-term borrowings

19,500,000

14,000,000

Current portion of long-term borrowings

7,500,000

22,500,000

Other accounts payable

473,515

441,179

Accrued expenses

184,597

169,453

Accrued income taxes
Accrued consumption taxes

609

773

145,485

147,979

1,014,037

946,386

29,741,250

38,991,600

Corporate bonds

46,500,000

42,000,000

Long-term borrowings

35,966,000

18,966,000

Leasehold and security deposits received

3,098,556

2,718,246

Entrusted leasehold
and security deposits received

10,311,883

9,965,983

Total Long-Term Liabilities

95,876,439

73,650,230

30.2%

125,617,689

112,641,830

11.5%

115,431,503

115,431,503

3,642,765

3,449,967

5.6%

TOTAL UNITHOLDERS' EQUITY

119,074,268

118,881,470

0.2%

TOTAL LIABILITIESAND UNITHOLDERS' EQUITY￥244,691,958￥231,523,301

5.7%

Rent received in advance
Total Current Liabilities（23.7%）

LONG-TERM LIABILITIES:TOTAL LIABILITIESUNITHOLDERS' EQUITY:
Unitholders' capital
5,000,000 units authorized
530,000 units issued and outstanding

Retained earnings(Note) See accompanying Notes to Financial Statements

43

Statements of Income and Retained Earnings(For the six-month periods ended December 31, 2006 and June 30, 2006)(Thousands of yen)

10th Fiscal Period

9th Fiscal Period(July 1, 2006 December 31, 2006)(January 1, 2006 June 30, 2006)

OPERATING REVENUES:￥9,088,175￥8,588,774

Real estate rental revenues

9,056,584

8,552,819

31,59135,955OPERATING EXPENSES:

4,714,416

4,564,632

Real estate rental expenses

4,151,317

4,013,227

Asset management fees

356,054

350,947

Administrative service
and custodian fees

63,682

68,880

Directors' fee

5,700

5,700

Trust fees

51,98750,561Other operating expenses

85,67475,316

4,373,758

4,024,141

8.7%

NON-OPERATING REVENUES:

4,380

67,432(93.5%)

Interest income

1,135

93

Dividends received

OPERATING PROFITS

Income on settlement ofmanagement association accounts
Other non-operating revenues% Change
5.8%

3.3%

60,249

3,245

7,089

734,652

640,847

Interest expense

378,907296,526

Loan arrangement fees

18,507

18,241

Interest expense on corporate bonds

289,135

277,882

Amortization of
corporate bond issuance costs

42,221

42,113

Other non-operating expenses

5,879

6,083

Recurring Profits

3,643,487

3,450,727

5.6%

Income Before Income Taxes

3,643,487

3,450,727

5.6%

Current income taxes

643

858

Deffered income taxes

275

208

3,642,568

3,449,659

5.6%

RETAINED EARNINGSBROUGHT FORWARD

197

307

(35.9%)RETAINED EARNINGSAT END OF PERIOD￥3,642,765￥3,449,967

5.6%

NON-OPERATING EXPENSES:NET INCOME(Note) See accompanying Notes to Financial Statements

44(information only)

14.6%

Statements of Changes in Unitholders' Equity(For the six-month periods ended December 31, 2006 and June 30, 2006 )(Thousands of yen)

Balance as of December 31, 2005

Unitholders' capital

Retained earnings

Total￥115,431,503￥3,398,137￥118,829,641

51,82951,829(3,397,830)(3,397,830)

3,449,659

3,449,659￥3,449,967￥118,881,470

192,798

192,798(3,449,770)(3,449,770)

3,642,568

3,642,568￥3,642,765￥119,074,268

Changes during the period
Cash distributions paid
Net Income

Balance as of June 30, 2006

￥115,431,503

Changes during the period
Cash distributions paid
Net Income

Balance as of December 31, 2006

￥115,431,503(Note) See accompanying Notes to Financial Statements

45

Notes to Financial Statements
Basis of Presenting Financial Statements

Japan Prime Realty Investment Corporation (“JPR”) 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 Company Law and 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 basically a translation of the financial statements of JPR,
which were prepared in accordance with Japanese GAAP, the Investment Trust Laws and the related
regulations. In preparing the accompanying financial statements, certain reclassifications have been
made to the financial statements issued domestically in order to present them in a format which is morefamiliar 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.
JPR's accounting period ends at the end of June and December. JPR's 10th accounting period began on
July 1, 2006 and ended on December 31, 2006.

Significant Accounting Policies
1. Assets Valuation Standards and Methods
Investment securities include other securities. Other securities without market value are stated on a costbasis using the moving-average method.

2. Depreciation Method for Property and Equipment(1) Property and Equipment (including entrusted properties)
Depreciation is calculated using the straight-line method. The estimated useful lives of major property
and equipment range are as follows:
Buildings
Structures
Machinery and equipment
Tools, furniture and fixtures

3 - 65 years
10 - 20 years
3 - 17 years
5 - 15 years

Assets with acquisition prices of 100,000 yen or more but less than 200,000 yen are depreciated inthree years based on the Corporation Tax Law.
(2) Intangible Assets
Intangible assets are depreciated utilizing the straight-line method.

3. Accounting for Deferred Assets
Corporate bond issuance costs are depreciated utilizing the straight-line method over the depreciation
periods. The corporate bond issuance costs recorded on the balance sheets for the 9th fiscal period
and before were depreciated over three years, with an equal amount depreciated in each fiscal period.

4. Standards for Recording Revenues and Expenses
Accounting treatment of Taxes on Properties and Equipment
In connection with property taxes, city planning taxes and depreciated asset taxes, JPR adopt themethod of charging the corresponding amounts of assessed taxes to the current fiscal period as realestate rental expenses. Furthermore, JPR included an amount equivalent to the property taxes paid tothe sellers during the first fiscal period as an acquisition cost, not as expenses, in connection with theacquisition of real estate or entrusted beneficiary interest with real estate as entrusted property.
During the 10th fiscal period, the amount equivalent to the property taxes included as an acquisition
cost of real estate totaled 18,070 thousand yen.

46

5. Other Significant Items Fundamental to Preparing the Financial Statements(1) Accounting Policies on Trust Beneficiary Interests in Real Estate as Entrusted Property
Regarding trust beneficiary interests in real estate, all asset and liability accounts of entrusted properties
as well as all revenue and expense accounts generated by the entrusted property are recorded in relevant
accounts on the balance sheet and statement of income.
Furthermore, the following material accounts are separately stated in the balance sheet for entrusted
properties recorded in relevant accounts.
a. Entrusted cash and deposits
b. Entrusted Buildings, entrusted structures, entrusted machinery and equipment, entrusted tools,
furniture and fixtures, entrusted land and entrusted construction in progressc. Entrusted leasehold and security deposits received(2) Accounting for Consumption Taxes
National and local consumption taxes are accounted with the consumption taxes excluded.

Notes to Balance Sheets
1. Assets Pledged as Collateral and Secured Liabilities
Assets pledged as collateral are as follows
Entrusted deposits
Entrusted buildings
Entrusted structures
Entrusted machinery and equipment
Entrusted tools, furniture and fixtures
Entrusted land
Total

（Thousands of yen)

End of 10th Fiscal Period End of 9th Fiscal Period(as of December 31, 2006)(information only)(as of June 30, 2006)￥2,786,491
10,274,951
5,382
82,638
7,811
11,024,226￥24,181,501￥5,955,605
23,033,094
30,750200,20920,40235,821,302￥65,061,363（Thousands of yen)

End of 10th Fiscal Period End of 9th Fiscal Period
Secured liabilities are as follows
Current portion of long-term borrowings
Long-term borrowings
Total(as of December 31, 2006)(information only)(as of June 30, 2006)￥13,966,000￥13,966,000￥15,000,000
13,966,000￥28,966,000

2. Balance of Unused Commitment LineJPR has executed a commitment line agreement with its principal banks to minimize refinancing risks（Thousands of yen)and enhance financial stability.

End of 10th Fiscal Period End of 9th Fiscal Period

Contract execution date
Credit limit
Outstanding debt at the end of the period
Unused commitment line at the end of the period(as of December 31, 2006)
December 1, 2006
￥20,000,000(information only)(as of June 30, 2006)
December 1, 2005
￥20,000,000￥20,000,000￥20,000,000

3. Minimum Total Unitholders' Equity Designated in Article 67-4 in the Investment Trust and Investment
Corporation Law（Thousands of yen)
End of 10th Fiscal Period End of 9th Fiscal Period(as of December 31, 2006)(information only)(as of June 30, 2006)￥50,000￥50,000

47

Notes to Statement of Income and Retained Earnings
1. Breakdown of Real Estate Rental Revenues and Expenses（Thousands of yen)

10th Fiscal Period

A.Real Estate Rental Revenues
Rental revenues
Rents
Common charges
Parking revenues
Advertising expenses
Antenna use fees
Other
Sub total
Other rental revenues
Incidental income
Time-based parking revenues
Cancellation charges
Income equivalent to expenses for restoration to as is condition
Other miscellaneous income
Sub total
Total real estate rental income

9th Fiscal Period(July 1, 2006 December 31, 2006)(information only)(January 1, 2006 June 30, 2006)￥6,790,723
1,416,714
211,283
13,811
9,622
13,564
8,455,719￥6,450,655
1,381,089
208,516
11,886
7,793
12,6898,072,631

562,219
9,256
7,684
5,752
15,951
600,864￥9,056,584

425,901
9,051
9,752
11,77023,711
480,188￥8,552,819￥467,098
590,974
744,41334,273
146,760
171,281
367,305
1,579,944
49,264￥4,151,317￥456,304
472,936
745,563
33,879165,731
166,693355,207
1,560,732
56,177￥4,013,227￥4,905,266￥4,539,591

B. Real Estate Rental Expenses
Rental expenses
Outsourcing expenses
Utilities expenses
Property and other taxes
Casualty insurance
Repairs and maintenance
Property management fees
Management association accounts
Depreciation
Other
Real estate rental expenses

C. Profits (A-B)

Notes to Statements of Changes in Unitholders' Equity
10th Fiscal Period

The number of units outstanding48

9th Fiscal Period(July 1, 2006 December 31, 2006)(information only)(January 1, 2006 June 30, 2006)

530,000 units

530,000 units

Tax Effect Accounting（Thousands of yen)

10th Fiscal Period

1. Breakdown of Main Causes for Deferred Tax Assets
and Deferred Tax Liabilities(July 1, 2006 December 31, 2006)(Deferred tax assets)

Enterprise tax not deductible for income tax purposes
Lump-sum depriciated assets not deductible for tax purposes
Total deferred tax assets
Net deferred tax assets

9th Fiscal Period(information only)(January 1, 2006 June 30, 2006)

￥61
406
467
￥467

￥1
190
192
￥192

2. Breakdown of Main Items that caused Differences between the Effective Statutory Tax Rate and the
Effective Tax Rate after Applying Tax Effect Accounting
10th Fiscal Period
9th Fiscal Period

Effective statutory tax rate
(Adjustment)
Deductible cash distributions
Other
Effective tax rate after applying tax effect accounting(July 1, 2006 December 31, 2006)
39.39%(information only)(January 1, 2006 June 30, 2006)
39.39%(39.38%)
0.02%
0.03%

(39.38%)
0.02%
0.03%

Property and Equipment Leased to JPR
10th Fiscal Period(July 1, 2006 - December31, 2006)

9th Fiscal Period (information only)(January 1, 2006 - June 30, 2006)

No property and equipment leased to JPR

No property and equipment leased to JPR

Transactions with Interested Parties
10th Fiscal Period(July 1, 2006 - December 31, 2006)

9th Fiscal Period (information only)(January 1, 2006 - June 30, 2006)

No transactions with interested parties

No transactions with interested parties

Per Unit Information
Total unitholders' equity per unit
Net income per unit

10th Fiscal Period（Yen)

9th Fiscal Period(July 1, 2006 December 31, 2006)(information only)(January 1, 2006 June 30, 2006)￥224,668￥6,872￥224,304￥6,508Net income per unit is computed by dividing net income by the weighted-average number of units
outstanding during the current fiscal period.
Diluted net income per unit has not been presented since no warrants and convertible bonds areoutstanding.
（Note)Net income per unit was calculated based on the following data:（Thousands of yen)

10th Fiscal Period

Net income
Amounts not attributable to ordinary unitholders
Net income attributable to ordinary investment units
Average number of units

9th Fiscal Period(July 1, 2006 December 31, 2006)￥3,642,568(information only)(January 1, 2006 June 30, 2006)￥3,449,659￥3,642,568
530,000 units￥3,449,659
530,000 units

49Subsequent Events
Issue of New Investment Units through Public Offering
Payment in connection with new investment units, the issue and pricing of which were approved at Boardof Directors meeting held on January 17, 2007 and January 29, 2007, respectively, was completed on
February 6, 2007, terms and conditions briefly as follows. As a result, unitholders’ capital totaled
154,552,073,600 yen, while the number of investment units issued and outstanding was 620,000 as ofFebruary 6, 2007.
Number of new investment units issued: 90,000
Purchase (public offering) price: ￥449,820 per investment unit
Gross proceeds: ￥40,483,800,000
Purchase (underwriting) price: ￥434,673 per investment unit
Gross proceeds: ￥39,120,570,000
Payment date: February 6, 2007
Delivery date: February 7, 2007
Starting date of computation for cash distribution: January 1, 2007

Issue of New Investment Units through Third-Party Allotment
JPR resolved to undertake a secondary offering (over-allotment option) by way of third-party allotment at
Board of Directors meetings held on January 17, 2007 and January 29, 2007, brief details as follows. JPR
also proved the granting of an option (the “Greenshoe Option”) by way of third-party allotment to Mizuho
Securities Co., Ltd. The greenshoe option may be exercised by no later than March 2, 2007.
Number of new investment units issued: 5,000 (maximum)
Purchase price:￥434,673 per investment unit
Gross proceeds:￥2,173,365,000 (maximum)
Third-party allottee: Mizuho Securities Co., Ltd.
Payment date: March 7, 2007
Delivery date: March 8, 2007
Starting date of computation for cash distribution: January 1, 2007

Additional Information
Sales of Tsurumi fuga 1 and JPR Takamatsu Bldg. were decided as of July 26, 2006 in accordance with JPR’s
investment policy stipulated in its regulations, but JPR has changed the transfer date from January 11,2007 to April 11, 2007 as of December 21, 2006, based on the mutual agreement with the transferee, as
described below.
The sales price does not include pro rata property taxes and urban planning taxes as well as consumption
taxes.
Details of the buyer have not been disclosed at the request of the buyer.

〈Tsurumi fuga 1 and JPR Takamatsu Bldg.〉a) Asset typeb) Sale pricec) Contract dated) Settlement datee) Impact on profit and loss

50

Trust beneficiary interest in real estate
5,800 million yen
July 26, 2006
April 11, 2007
JPR plans to record a gain on sale of properties in the amountof approximately 539 million yen in capital as operating
revenues during the 11th period(January 1, 2007-June 30, 2007).

Distribution Information
10th Fiscal Period

1. Retained earnings at end of period
2. Cash distributions(Distribution per unit)
3. Retained earnings carried forward（Yen)

9th Fiscal Period(July 1, 2006 December 31, 2006)(information only)(January 1, 2006 June 30, 2006)￥3,642,765,352
3,642,690,000(6,873)￥75,352￥3,449,967,136
3,449,770,000(6,509)￥197,136

In accordance with the distribution policy stipulated in Article 28-2 of the Articles of Incorporation, JPR
will be able to distribute only to the extent of the profits and needs to distribute in excess of 90% of JPR's
distributable income as stipulated in Article 67-15 of the Special Taxation Measures Law. Based on thispolicy, JPR decided on a total distribution of 3,642,690,000 yen for the 10th fiscal period (3,449,770,000 yen
for 9th fiscal period). This is the maximum value arrived at when the number of units outstanding(530,000 units) is multiplied by an integer, within the limit of retained earnings for the respective fiscal
period. Furthermore, JPR does not make cash distributions in excess of the profit as stipulated in Article28-4 of the Articles of Incorporation.

51

Report of Independent Auditors

52

Statements of Cash Flows (Information Only)(For the six-month periods ended December 31, 2006 and June 30, 2006)(Thousands of yen)

10th Fiscal Period

9th Fiscal Period￥3,643,487￥3,450,727

1,580,353

1,561,173

Amortization of corporate bond issuance costs

42,221

42,113

Interest income(1,135)(93)

Interest expense

668,043574,408

Decrease (increase) in rental receivables

22,636(30,776)(Increase) decrease in prepaid expenses(40,629)

47,699(Decrease) increase in trade accounts payable(50,749)

93,398(July 1, 2006December 31, 2006)(January 1, 2006June 30, 2006)

CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes
Depreciation

Increase in other accounts payable

26,577

13,539(Decrease) in accrued consumption taxes(2,494)(75,878)

Increase in rental received in advance

67,65024,795

Change in other current assets/liabilities(8,633)(45,793)

5,947,328

5,655,314

1,135

93

(652,899)(570,014)(2,588)(1,159)5,292,976

5,084,234

Purchases of property and equipment(7,578,563)(2,204,753)

Purchases of entrusted property and equipment(6,393,190)(4,968,166)(29,734)(1,210,549)

SubtotalInterest received
Interest paid
Income taxes paid

Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:Payments of leasehold and security deposits received
Proceeds from leasehold and security deposits received
Payments of entrusted leasehold and security deposits received
Proceeds from entrusted leasehold and security deposits received

420,911

196,265(125,521)(124,217)

476,231

291,048(13,229,867)(8,020,372)

Proceeds from short-term borrowings

24,500,000

6,500,000

Repayments of short-term borrowings(19,000,000)

Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from long-term borrowings

17,000,000

Repayments of long-term borrowings(15,000,000)

Proceeds from issuance of corporate bonds

4,500,000

Payments of corporate bond issuance costs(43,628)

Distributions to unitholders

Net cash provided by financing activities
NET CHANGES IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIODCASH AND CASH EQUIVALENTS AT END OF PERIOD(3,447,579)(3,395,973)

8,508,792

3,104,026

571,900

167,887

24,078,828

23,910,940￥24,650,729￥24,078,828

53

Siginificant Accounting Policies
Scope of funds (cash and cash equivalents) in the Statements of Cash Flows
Funds (cash and cash equivalents) in the Statements of Cash Flows include the following:(1) Cash on hand and entrusted cash(2) Deposits placed with bank and entrusted deposits that can be withdrawn at any time(3) Short-term investments that are readily convertible to cash, have insignificant risk of price fluctuationand original maturities of three months or less from the acquisition date.

Notes to Statements of Cash Flows（Thousands of yen)

Breakdown of cash and cash equivalents
Cash and deposits
Entrusted cash and deposits
Cash and cash equivalents

54

10th Fiscal Period

9th Fiscal Period￥10,653,563
13,997,165￥24,650,729￥10,478,692
13,600,136￥24,078,828(July 1, 2006December 31, 2006)(January 1, 2006June 30, 2006)

JPR Investment Policies (Reference)
A. INVESTMENT POLICIES
1 Basic Policies

JPR’s basic investment strategy centers on investment in urban commercial real estate. The Company will
invest primarily in real estate, which comprises superior urban office buildings and retail properties foundin thriving commercial areas, the land on which they are located, as well as in asset-backed securities thathave such real estate as their primary investments. In light of the returns and risks of these investments,
the Company will invest not only in Tokyo but will attempt to diversify into other cities so as to maximize
portfolio return.
The Company will diversify investments in terms of both tenants and properties, taking into account theamount of investment per property, and will thereby seek to achieve stable medium- and long-term
growth. Investment ratio targets are as shown on page 55 under “(3) Investment stance ii) Investment ratio
targets.”
Note: For the definitions of “real estate” and “asset-backed securities that have real estate as their primary investments,” please refer to the next section
under “(2) Types of Investment Assets I) and II)”

2 Types of Investment AssetsI) “Real estate” refers to the following:i) Real estateii) Real estate leasing rightsiii) Surface rightsiv) Beneficiary interests in the following trusts (including comprehensive trusts in which cash associated withreal estate is also entrusted, but excludes the marketable securities [referred to as “marketablesecurities” hereinafter] defined in Article 2:5 of the Law Concerning Investment Trusts andInvestment Corporations, No. 198 of 1951, including all subsequent amendments; referred to as the“Investment Trust Law” hereinafter)a) Real estateb) Surface rights and land leaseholdsv) Beneficiary certificates in monetary trusts (limited to trusts for which the primary purpose is investment in
the assets listed in i) to iii) above; excludes equivalents to securities)vi) Equity investment based on a contract that specifies that one party will provide funding to be invested in
the assets identified in i) to v) above and the other party will invest these funds in said assets, with theprofits and losses from these investments distributed to investors (“Tokumei Kumiai equity” in Japanese,referred to as “TK equity” hereinafter).

II) “Asset-backed securities that have real estate as their primary investments” refer to investment insecurities with over half of their investment backed by real estate, detailed as follows:i) Preferred securities as defined the Law Concerning Asset Liquidation (Law No. 105 of 1998, including all
subsequent amendments; referred to as the “Asset Liquidation Law” hereinafter)ii) Beneficiary certificates in investment trusts as defined under the Investment Trust Lawiii) Investment securities as defined under the Investment Trust Lawiv) Beneficiary certificates in special-purpose trusts as defined under the Asset Liquidation Law (excludes
beneficiary certificates in trusts listed in I) iv) and v) above)III) The Company may invest in the following designated assets in order to efficiently utilize surplus funds
remaining after the investments listed in I) and II) above:i) Bank depositsii) Call loansiii) Japanese government bondsiv) Municipal bondsv) Commercial paper (refers to instruments defined in Article 2:1:8 of the Securities and Exchange Law)vi) Transferable certificates of depositvii) Designated bonds as defined under the Asset Liquidation Law (refers to instruments defined in Article
2:1:3:2 of the Securities and Exchange Law; however, this is limited to instruments in which the assets
obtained as the business for liquidation by the special purpose company are primarily real estate)55

viii) Beneficiary certificates in loan credit trusts (refers to instruments defined in Article 2:2:1 of the
Securities and Exchange Law)ix) Cash credits, excluding securities and promissory notes, as defined in Article 3:12 of the Law
Concerning Investment Trusts and Investment Corporations Cabinet Order (Law No. 480 of 2000,
including all subsequent amendments; referred to as the “Investment Trust Law Cabinet Order”
hereinafter) and financial derivative transactions, as defined in Article 3:14 of the same lawx) Rights resulting from financial futures trading, as defined in Article 3:13 of the Investment Trust Law
Cabinet Orderxi) Rights resulting from financial derivatives trading, as defined in Article 3:14 of the Investment Trust
Law Cabinet Orderxii) Beneficiary interests in monetary trusts for the purpose of investments such as those described in i) to xi) above.
Furthermore, the Company may invest in stock (restricted to the stock of the building managementcompany and other companies in the course of the Company’s investment activities in specified assets
identified in I) and II) above).

IV) In addition to the specified assets identified in I) through III) above, the Company may invest in thefollowing assets when considered appropriate or of benefit to the Company in accordance with its basic
investment management policy:i) Trademarks, exclusive licenses and ordinary use rights based on the Trademark Law (Law No. 127 of
1959, including all subsequent amendments)ii) Rights to use the source of hot springs as set forth in the Hot Spring Law (Law No. 125 of 1948,
including all subsequent amendments) and facilities related to such hot springsiii) Other assets related to the real estate, which are considered appropriate to acquire together with thesubject real estateV) The Company may invest in assets other than the assets under management when consideredappropriate and in line with the organizational operation of trademarks, etc., relating to the Company’s name.

3 Investment Stancei) Investment horizon
The Company will, in principle, hold assets for the medium- and long-term (one to five years and over
five years, respectively) and will not acquire assets for the purpose of short-term trading (less than one year).
ii) Investment ratio targets

Type of Investment Asset

Real Estate

Target Ratios

By Asset Class

The target allocation ratio between office buildings and retail properties
based on acquisition price shall generally be 8:2

By Location

The target allocation ratio between Tokyo (1) and other cities (2)based on acquisition price shall generally be 6:4

Rental revenues from any individual tenant (total rental revenue when the tenant occupies
multiple compartments and/or properties) will, in principle, be limited to less than 10%
of total rental revenues (3)Asset-Backed
Securities,etc.

The total after-investment value of asset-backed securities(4) shall, in principle, be limited
to less than 10% of the net worth of the Company

Notes:(1) “Tokyo” includes two categories: CBDs (Central Business Districts) comprising Chiyoda, Chuo, Minato, Shinjuku, Shinagawa and Shibuya Wards;
and Greater Tokyo comprising all other areas of Tokyo, Chiba, Kanagawa and Saitama Prefectures.
(2) “Other cities” includes all other areas in Japan.
(3) “Rental revenues” includes common charges, parking revenues and storage revenues, but does not include additional usage fees
such as after-hours airconditioning charges. This ratio may be exceeded, however, if there is any potential for tenant changes
or if warranted by general considerations of leasing conditions and other factors.
(4) Investment in asset-backed securities assumes that there will be an opportunity to obtain the relevant property,
etc., at the end of the asset-backed security period.

56iii) Investment policies for development projects
The Company will, in principle, acquire only real estate that generates or is expected to generate stablerental revenues or similar revenues at the time of acquisition.
The Company will not engage in development investments (projects in which the Company itself develops
property from land and builds buildings). However, the Company may invest in buildings underconstruction by third parties prior to their completion if sufficient potential to secure tenants after
construction is determined and the buildings are confirmed as non-development investments. In addition,
the Company may invest in rebuilding projects for properties that it has already acquired, provided thatsufficient potential to secure tenants after rebuilding is determined and the projects are confirmed as
non-development investments.
iv) Equipment and fixtures investment policies
The Company will invest in equipment and fixtures in accordance with an efficient upkeep plan createdfor each property and designed to maintain and improve the competitiveness of the property frommedium- and long-term perspectives. In principle, such investments will be within the scope of thedepreciation expense of the individual property, but final decisions will be made in light of thedepreciation expense for the portfolio as a whole. However, repairs to common areas will be implemented
quickly by the Company from the perspective of tenant operational policies, and reinforcements will bemade quickly for buildings requiring earthquake resistance reinforcements in light of the status of tenant
operations.
v) Insurance policiesa) Criteria for selecting underwriting insurance companies:
The Company will select fair underwriting insurance companies through independent brokers. The
underwriting insurance company will, in principle, have an insurance rating of A3 or A- or betterfrom Moody’s Investors Service Inc. (referred to as “Moody’s” hereinafter) or Standard & Poor’s.
b) Earthquake insurance coverage criteria:
The decision to cover earthquake insurance will be made in light of comparisons between thepotential impact of the disaster and property insurance premiums based on the PML for the entire
portfolio. Earthquake insurance may be purchased individually for properties that have high PML.

Note: “PML” refers to the probable maximum loss in the event of an earthquake. PML may be calculated for individual properties
or for the portfolio as a whole. While there is no strict definition of PML (valuation methods will differ depending on the institution
conducting the survey), it is generally found by calculating the probable damage from the largest foreseeable earthquake during
the expected period of use (50 years is the useful lifetime ordinarily assigned to buildings; the largest foreseeable earthquake isa major earthquake of a size seen once every 475 years, having a 10% probability of occurring during any 50 year span). The figure
represents the ratio of projected expenses for restoration of damage to the price of reacquisition.

vi) Sales policya) The Company will select real estate, asset-backed securities that have real estate as their primary investments,and other investments in its holdings to be sold based on overall considerations of the current status of the asset
to be sold, projections of its future profitability and changes in asset value, and the asset allocation of the portfolio as a whole.

b)The Company will determine asset values each fiscal term and an investment policy commiteew will study
whether to sell or hold any property that has declined more than 20% in terms of appraised value
compared with book value. In addition, the Company may also consider the sale of other properties
as it sees fit, as warranted by market conditions and other factors. The following are the main considerations
in determining sales:57• Market forecast• Development forecast for the surrounding area
• Profitability forecast• Estimated amount of future investments• Forecast changes in valuation• Considerations of the portfolio as a whole (diversification by geographical location, tenant andasset class, etc.; impact on dividends, etc.)vii) Value-up properties
Value-up properties refer to those properties that exhibit the potential for an increase in profitability andasset value, and have an immediate income stream on acquisition, along with any of the following characteristics:
1. An occupancy rate of less than 80% at the time of acquisition
2. Significant investment return following effective renovation work
In principle, value-up properties occupy a maximum 15% of the total property portfolio. (based on acquisition price)
The additional acquisition of value-up properties is also subject to a total portfolio occupancy rate in excess of 90%.
Utilizing the know-how of its asset management company, the Company implements the following key
strategies in the management of value-up properties:
1. Reinforce leasing activities with the aim of improving the occupancy rate
2. Carry out effective renovations to enhance market competitiveness3. Implement cost controls by increasing efficiencies in management structure
Value-up properties that contribute to stabilizing the total income of the portfolio and fulfill certain
criteria as determined by the Investment Committee are reclassified as “core properties,” which have thefollowing characteristics:
1. Improve occupancy rate
2. Raise property value (on an appraisal basis)
3. Increase and stabilize income
The Company will consider the sale of value-up properties, under the aforementioned criteria, on a
medium-term basis over two to four successive business periods. In addition, properties that arereclassified as core properties are, in principle, not reclassified as value-up properties.
The Company will consider the sale of value-up properties as one method to realize asset value
appreciation.
Core properties refer to office buildings other than value-up properties. Core properties are positioned as
those properties that contribute to the profit stability of the overall portfolio.

4 Investment Standards
When investing in individual real estate properties, asset-backed securities that have real estateas their primary investments, or other investments, the Company will, prior to making theinvestment, perform a general evaluation that considers the current status, future profitability,
risk, location, building and facilities maintenance and management, deterioration andobsolescence, earthquake resistance, rights, contracts with current tenants, environment,
topography, as well as other factors.
After acquisition of the investment, the Company will make ongoing and effective investments infacilities and equipment so as to maintain and improve the value and competitiveness of the asset,
and will seek to stabilize and expand profitability by increasing revenues and reducing costs.

58

The major specific investment criteria of the Company are as follows:i) Geographical location
Real estate to be invested in will be located in the following cities:a) Major urban areas: CBDs in Tokyo, Yokohama, Kawasaki, Chiba, Saitama, Nagoya, Osaka,
Kyoto and Kobeb) Other government-designated cities: CBDs in Sapporo, Sendai, Hiroshima, Fukuoka,
Kitakyushu and othersc) Other core cities such as prefectural capitals with populations of 300,000 or more
When investing in retail properties, the Company will identify and determine an appropriate
business area for the property; analyze the business area from a variety of perspectives,
including population, demographic trends, number of households and average income;appropriately measure the latent buying power and growth potential of the business area;and determine the suitability of the tenants and their businesses to the business area. The
Company will also study and analyze competitiveness from a variety of perspectives,
including current market competition, plans for the opening of competitive stores in thevicinity, and future room for development.
ii) Sizea) Office buildings
In principle, the Company will invest in office buildings with total floor space of at least
3,300 square meters and floor space of approximately 330 square meters for each standard
floor above the second story level.
b) Retail properties
In principle, the Company will invest in retail properties of an appropriate size in light of
the future growth potential of their areas, as determined by local characteristics, businessarea scale and the standard property size for similar businesses.
iii) Facilities and equipmenta) Office buildings
Giving general consideration to local characteristics or potential for post-acquisition
property modifications, etc., the Company will evaluate specifications on a case-by-case basis.
b) Retail properties
The Company will decide on retail properties individually, comparing them against standard
qualifications and judging from overall factors, including the local characteristics of theproperty’s area, versatility as a retail property, potential for conversion to other uses, visitor
access, etc.
iv) Earthquake resistance
The Company will, in principle, invest only in buildings that meet new earthquake-resistancestandards (specified under the Buildings Standards Law) or for which earthquake-resistancereinforcement work has been completed (including properties for which earthquakeresistance reinforcement work has not been done, but can be completed after acquisition).
v) Tenantsa) Office buildings
In principle, no single tenant will occupy more than 50% of a property (parent companies
and their subsidiaries are considered as a single tenant). If a tenant occupies more than 50%,
the Company can acquire the property after an evaluation of the tenant’s creditworthiness,suitability and substitution potential.
b) Retail properties
The Company will make a general evaluation of the tenant’s creditworthiness, suitability andsubstitution potential.
vi) Rightsa) Co-ownership• The Company will, in principle, seek a co-ownership ratio above 50% in order to assure
sufficient latitude in property management (leasing, improvements, etc.), but may acquire
properties with an ownership ratio below 50% on a case-by-case basis after considering thenature and creditworthiness of other owners and the characteristics of the property.

59• The Company shall, in order to assure sufficient latitude in disposal of the property, confirm whether
special contracts or other agreements providing for preferential purchasing rights or options among theother owners will be executed and whether restrictions will be placed on the transfer of rights, and if so,
the nature of these restrictions.
• The Company will attempt to assure the stability of revenues by fully confirming the nature andcreditworthiness of other owners and, where possible, providing for appropriate procedures. (This may
include, but is not limited to, signing contracts prohibiting the division of joint equity and reaching
agreements on the registration of rights and the mutual use of land).
b) Unit ownership• The Company will, in principle, reserve for itself at least 75% of the voting rights in meetings attended
by unit owners in order to assure sufficient latitude in improvements. However, it may make individual
decisions based on a general evaluation of the nature and creditworthiness of other unit owners.
• The Company shall, in order to assure sufficient latitude in disposal of the property, confirm whether
special contracts or other agreements providing for preferential purchasing rights or options among theother owners will be executed, and whether restrictions will be placed on the transfer of rights, and if so,
the nature of these restrictions.
• The Company will attempt to ensure the stability of revenues by confirming the operations of the
management union (reserves, liability ratios, insurance, etc.) and will take such individual measures as are
required. (This may include, but is not limited to, increasing accumulated amounts within the Company
itself, or providing for insurance on the joint areas and registration of land rights separately from the
management union.)c) Leaseholds• The Company will, in principle, invest in leaseholds as specified in the old Leasehold Law (Law No. 49 of1921, including all subsequent amendments) and the Land and Building Leasing Law (Law No. 90 of 1991,
including all subsequent amendments).
• The Company will carefully study the nature of the proprietary right holder of land and will make its
decision after fully investigating the impact of the provisions for rent revisions, charges for renewing theleasing contract, charges for approval of rebuilding proposals, charges for the approval of sales proposals
and other factors in concerning profitability.
d) Collateral rights and usufructuary rights• The Company will confirm the existence of mortgages or other collateral rights on the proposed
property at the time of purchase, and the possibility of extinguishing such rights on closing.
• The Company will make its decision after confirming the existence of usufructuary rights (for example,
surface rights or easements) set forth by third parties and the impact that such rights will have on
profitability.
vii) Investment amounta) Minimum investment per property
The minimum investment per property (only the purchasing price, exclusive of taxes, acquisition costs,etc.) will, in principle, be more than 1 billion yen. A property can be acquired for a lesser amount under
the following circumstances:• When acquiring part of a property valued in total at over 1 billion yen• When acquiring a property with an appraisal value of more than 1 billion yen, but acquired afternegotiation for a lesser amount• In cases where several properties are being acquired together as a packageb) Maximum investment per property
The ceiling on the investment amount per property will be one-third of the total investment in real estate,
asset-backed securities and other investments already held. Generally, however, properties that exceed
this ratio can be acquired in cases where this is deemed advisable. The “total investment in real estate,
asset-backed securities and other investments already held” refers to the total appraised value ofinvestments up to the previous period, plus the price of investments purchased in the current period(exclusive of taxes, acquisition costs, etc.), plus the amount to be invested in the new property (exclusiveof taxes, acquisition costs, etc.).

60c) Restrictions on acquisition price
The acquisition price for investments including real estate and asset-backed securities will, in principle, belimited to 105% of the appraised value of the investments. However, provided that the property
acquisition does not cause the total property acquisition fund to fall below the NOI yield criterion for thecurrent period, the above-mentioned appraised-value upper limit of 105% can be exceeded in thefollowing cases:• Properties that, by long-term fixed leasing contracts, are forecast to contribute to stable cash flow andthose that are expected to generate a certain profit for dividends in the medium- to long-term• Properties that, in terms of scale, location or general standpoint, are judged to contribute to an increase
in total fund quality and can be expected to generate a certain profit for dividendsviii) Selection guidelines concerning real estate acquisition ownership type
The Company acquires real estate under direct ownership or on an entrusted basis, acquiring beneficiaryinterests to the property. The decision as to which form of ownership the Company will take is determined
after considering the requirements of the existing owner, the cost of transferring rights and a number ofother factors.

B. FINANCIAL POLICIES

1 Fund Management Policies
I) Leasehold and security deposits
For beneficiary interests
All leasehold and security deposits by tenants will be accumulated within the trust account, but theCompany may consider reducing the reserve amount if warranted by accumulated historical data, theestablishment of commitment lines and other provisions.
For real estate, real estate leaseholds and surface rights
Leasehold and security deposits by tenants will be deposited in full to a commercial bank savings accountor time deposit account. However, the Company may reduce reserves in order to more effectively utilize
these funds if warranted by accumulated historical data, the establishment of commitment lines and otherprovisions for the maintenance of efficiency and security.
II) Cash and bank deposits in the trust account (for real estate in trust)
All cash will be deposited in ordinary savings accounts or time deposit accounts at banks with short-term
debt ratings of at least P-2 from Moody’s.
III) Cash and bank deposits in the Company accounts
The provisions of II) above will apply to cash and bank deposits in the Company accounts. However, thiswill not include savings accounts established for use in the execution of loans by financial institutions or
the payment of interest on loans.
Surplus funds will, in principle, be paid out in the following order of priority; any balances will beadministered as described below:• Reinvestment (refers to a use in purchasing properties or capital expenditures)• Cash distribution to investors (however, no cash distributions will be made to investors in excess of
profits in the absence of changes in current tax treatment of cash distributions in excess of profits)• Partial repayment of borrowings (however, this will be given the highest priority when the repayment
maturity date of the loan agreement arrives, regardless of the priorities listed above)IV) Derivatives
The Company will use financial futures, options and other derivatives only for the purpose of hedging
interest rate fluctuation risks and other risks generated by the liabilities of the Company.

61

2 Issuance of Additional Investment Units

The Company may issue additional investment units in a progressive manner for the purpose of assuring
stable, long-term asset growth as warranted by an accurate assessment of the market and upon
consideration of the dilution effects to existing units (reduction in equity of existing units from the issuingof new units; reduction in the per-unit net asset value or cash distribution of existing units).

3 Borrowings and Issuance of Corporate Bonds
I) Basic policies
The Company will seek to actively expand the size of assets and maintain stable cash distributions toinvestors by achieving an effective combination of stable long-term fund-raising and flexible short-termfund-raising.
II) Loan to value (LTV)
Loan to value (LTV) refers to a ratio calculated as shown below and will be used as a measurement of theratio of liabilities to total assets of the Company.
LTV = (Borrowings + Corporate bonds) / Total assets
The Company will, in principle, maintain LTV at levels of no higher than 55%, but may temporarily exceed
this level due to the acquisition of properties or changes in appraised values.
Note: For purposes of this calculation, total assets refers to the amount shown in the assets column of theperiod-end balance sheet for the most recent period prior to the calculation of LTV, and is found by
adjusting the period-end book value of tangible fixed assets for the difference between the period-end
book value of the tangible fixed asset and its appraised value.

C. PROPERTY-RELATED BUSINESS ADMINISTRATION POLICIESProperty-related business refers to property management, general tenant agency, lease manager/construction
manager services and property transfers.
This business is necessary and effective for the achievement of growth for the Company. The Company
will administer this business in accordance with the following policies.

1 Asset Manager and Property Manager
The growth of the Company requires integrated management by the Asset Manager (AM) and expert
management by the Property Manager (PM), with the PM overseeing the facilities management, leasing
management and construction management of individual properties.
In order to achieve more integrated management, the AM may seek the advice of third-parties regarding
leasing management and construction plans for real estate invested in. The Company initially selectedTokyo Tatemono Co., Ltd. as the party to provide this advice (the Lease Manager/Construction Manager).
The AM will select PMs with high degrees of management expertise, seek to concentrate the PMs for eachgeographical area, rigorously seek to homogenize management across the portfolio and work to maximize
unitholder profits.
The AM will compare the capabilities and merits of a number of companies in its selection of property
managers.
Existing PMs and candidates include: Tokyo Tatemono, a company that supports the AM in its leasing
management activities and refurbishment plans; PMs that operate under existing contracts of properties
acquired by the Company and possess established knowledge of tenants and locations; and other PMs.
Final selection is also based on a variety of factors such as management expertise and efforts to integrate
PMs in line with property proximity.

62

2 Commissioned General Tenant Agents
General tenant agencies will be commissioned to Tokyo Tatemono Co., Ltd., Yasuda Real Estate Co., Ltd.,
Taisei Corporation and other agents (Commissioned General Tenant Agents).

3 Property Transfer Agents
Tokyo Tatemono will be commissioned to provide property transfer services in order to ensure the smooth
execution of property purchases and sales. This will not be limited to the real estate, real estate leasing
rights and surface rights, but will include real estate in trust as well. Services will include confirmation ofleasing status, confirmation of building and facility maintenance and management, confirmation andestablishment of rights, preparation and confirmation of delivery and other ancillary work.

4 Other Investment Policies
I) The Company will administer its assets in such a way that the ratio of the total price of designated realestate (real estate, real estate leasing rights, surface rights, or real estate in trusts for which real estate,land leaseholds, or surface rights are the entrusted assets) to the total price of designated assets owned by
the Company is 75% or more.
II) The Company will administer its assets in such a way that the ratio of real estate, real estate leasing
rights, surface rights, real estate in trusts (refers only to trusts covering real estate, surface rights or landleaseholds), and TK equity (refers to contracts specifying only investment in real estate, real estate leasing
rights or surface rights) to total assets is 75% or more, which is the ratio established by the Ministry of Finance.
III) The Company may modify the above ratios at any time as warranted by factors such as funding trends,
market trends, general economic conditions and real estate market trends.
IV) Lending of assets in the portfolioa) The Company may lend (for such purposes as parking space and the installation of billboards) realestate, real estate leasing rights and surface rights from among the assets listed on page 54 in “A.
Investment Policies (2) Types of investment assets” in order to more efficiently administer assets andachieve higher investment performance.
b) If the lending of real estate described in a) above results in the acceptance of leasehold and security
deposits or other similar cash funds, the acceptance of these funds will follow the guidelines listed in “B.
Financial Policies (1) Fund management policies I) Leasehold and security deposits,” on page 60.
c) The Company shall not lend assets other than real estate, real estate leasing rights and surface rights.

D. DISTRIBUTION POLICIESThe Company’s fiscal period is for six months, from January 1 to June 30, and from July 1 to December 31,
each year. The Company makes cash distributions to unitholders listed on the unitholders’ list at the endof each fiscal period, or to eligible registered pledgees.

1 Distributable Amount

Income available for distribution by the Company (the “distributable amount”) equals the amount calculated byadding/deducting capital gains/losses and gains/losses on redemption to rent, common expenses, parking
charges, additional service charges, facility charges, facility installation fees, late payment penalties, termination
penalties or similar cash related to termination of lease agreements generated from real estate (including
beneficiary interests and underlying properties of any other assets acquired by the Company) and otherincome, interest/dividend income and similar income generated from other rental business and deducting
expenses (including depreciation and amortization), interest payments, asset management fees, and after
covering the entire amount of net loss carried forward if it exists.

2 Determining Amount of Distribution
The Company determines the amount of distribution, which must exceed 90% of the Company’s distributable
income as stipulated in Article 67:15 of the Special Taxation Measures Law (Law No. 26 of 1957, including all
subsequent amendments). However, the actual amount of distribution may not exceed the distributableamount, as defined above. In addition, the Company can reserve funds for capital expenditure, interest
payment, dividend payment or similar purposes, which are necessary for maintenance of or increasing thevalue of assets.

63

3 Retained Earnings
Retained earnings not distributed from the distributable amount will be allocated based on the asset
management policy of the Company.

4 Distribution of Cash Exceeding Earnings
In cases when the distribution is less than 90% of the distributable amount, or when the Company makes
an appropriate decision based on the trend of the economic environment, the real estate market, theleasing market or other conditions, the Company may distribute cash exceeding earnings for the relevant
period, as the sum of the distribution amount set in (2) above and the amount decided by the Company
with the upper limit of the depreciation amount reported at the end of the fiscal period. In such a case, if
the cash distribution does not meet the conditions of special tax treatments for the Company, the amountdecided by the Company for the purpose of meeting the conditions may be distributed in cash.
As long as the current tax treatment requires investors to calculate capital gains/losses each time suchinvestors receive cash distributions exceeding earnings, the Company will not conduct cash distribution
exceeding earnings to investors. However, if the board of the Company decides that cash distributions
exceeding earnings is required to satisfy the “qualification test of distribution deductible”, the distribution
exceeding earnings is allowed following the above distribution policy.

5 Method of Distribution
Distributions are paid in cash based on the number of investment units held to unitholders who are listedon the final unitholders’ list at the end of each fiscal period, or to eligible registered pledgees, within threemonths, in principle, from the end of each fiscal period.

6 Extinctive Prescription
The Company will be released from its payment obligation of distributions after a lapse of three years fromthe date of starting payment. No interest is payable in respect to unpaid distributions in arrears.

7 Issuance of Additional Investment Units

In the event the Company issues additional investment units during a fiscal period, the Company can pay
cash distributions in connection with the aforementioned additional investment unit issue, calculated on a
pro rata basis and subject to approval by the Company’s Board of Directors.

64

Investor Information
Address of Japan Prime Realty Investment Corporation (JPR)
9-9 Yaesu 1-chome, Chuo-ku, Tokyo 103-8285, Japan

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 of each year

Transfer Agent

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

Location of Records

Main Branch, Stock Transfer Agency Division
Mizuho Trust & Banking Co., Ltd./2-1 Yaesu 1-chome, Chuo-ku, Tokyo

Mailing Address

Stock Transfer Agency Division
Mizuho Trust & Banking Co., Ltd.
1-17-7 Saga, Koto-ku, Tokyo 135-8722

AgentsMizuho Trust & Banking Co., Ltd.
(All branches nationwide)
Mizuho Investors Securities Co., Ltd.
(Head office and all branches nationwide)

Web Site

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

Contact (Tokyo Realty Investment Management, Inc.)
Tel: +81-3-3231-1051
Fax: +81-3-3274-7775

Annual Schedule (Provisional)

Release of Business Report OctoberDecemberFiscal period ends

Cash distributions September

AugustAnnouncement of the fiscal
period results

Appropriate disclosure
on web site

February

Announcement of
the fiscal period results

June

Fiscal period ends

March
April

Cash distributions

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