http://www.top-reit.co.jp
1-13-1 Nihonbashi, Chuo Ward, Tokyo

Business Report for the 7th Fiscal Period(May 1, 2009 ~ October 31, 2009)ESTABLISHING a FOOTHOLD
FOR THE NEXT STAGE

An Open LineTOP REIT’s Declaration

A Letter from the Executive Officer of the investment corporation
TOP REIT is committed to providing our investors with stable returns and steady portfolio growth in the medium- to long-term
through the management of a diversified portfolio and optimal utilization of our sponsors.

Dear Investor,
A decision was made during thisSponsor Strengths

fiscal period to have Nobuhito Endo,
President and Representative Director of✣ Ability to supply properties: Sponsors provide information on properties by utilizing
their pipeline functions and brokerage networks, as well as supply properties they
develop or own✣ Fund-raising ability endorsed by the sponsors' credibility
The Sumitomo Trust and Banking

Nippon Steel City Produce

Oji Real Estate(a wholly-owned subsidiary of Nippon Steel)(a wholly-owned subsidiary of Oji Paper)

Growth inasset size

Stable payment
of dividends

and solely focus on his responsibilities
as president of the asset manager. I
assumed the Executive Officer post in
corporate governance of TOP REIT. We
this personnel decision.

Tokyo
Metropolitan Area

25.6%
Long-Term or
Fixed-RateRent Agreements

Kansai

26.6%

0.7%

Central Tokyo (others)

and strong portfolio. The Seventh

12,654 yen.

Fiscal Period (May 1, 2009 ~ October
31, 2009) presented another difficult
environment for J-REITs with thecontinuing financial concerns andeconomic recession. Thankfully
TOP REIT has been able to minimize
the impact of the deteriorating
market through our steady portfolio
management centered on long-termlease contracts and fixed-rate rents
and our solid financial management
based on good relations with financial

Despite the fact that there are somesigns of an economic recovery, Japan
has just voted in a new political
government that will probably leadto a certain length of time where thepolitical world and business world
try to find their way. Within thesedevelopments, TOP REIT will continue
to take definite reliable steps toward thenext growth stage by acquiring newproperties while applying the strengthsof our blue-chip sponsors and the highdegree of trust they enjoy in the market.

As a result, TOP REIT once again posted

We believe in this TOP REIT edge andreliable figures with operating revenue

ask that you continue to support TOP

of 5,608 million yen, ordinary income

REIT.

of 1,960 million yen and net income of

71.2%*Percentages based on rent

unit was also able to surpass forecasts at

Central Tokyo(office buildings)

1.6%

53.1%

1,961 million yen. Our dividend per

REIT is a result of its robust sponsors

institutions.

Geographical Composition of the Portfolio

Others21.2%

post as Executive Officer of TOP REIT

ask for your understanding regarding✣ Building a portfolio comprised primarily of large-scale office buildings in central Tokyo✣ Properties used by well-rated tenants as their head offices or major operational bases✣ Maintaining high occupancy rates (over 99% since IPO)

Harumi Island Triton Square
Office Tower Y

manager for TOP REIT, resign from his

August 2009, to further enhance the

Securing stable revenues through long-term and fixed-rate rent agreementswith well-rated tenantsLong-Term or Fixed-Rate Rent Agreements

TOP REIT Asset Management, the asset

The strong fund-raising ability of TOP

Hiroaki Amano*Percentages based on acquisition price

Executive Officer
TOP REIT, Inc.
Amano entered Sumitomo Trust and Banking Co., Ltd. in 1970. After serving as the General Manager of the Fukuoka Branch,
and Director and General Manager of Corporate Business Department I of the Head Office, he entered Wakachiku Co., Ltd.
in 2001 and served as managing director. He was appointed advisor to TOP REIT Asset Management in July 2009 and has
assumed the post of Executive Officer of TOP REIT since August 2009.

SEVENTH FISCAL PERIOD

Performance Highlights
7th Fiscal Period
Performance

Category

8th Fiscal Period
Forecast

9th Fiscal Period
Forecast(announced on December 15, 2009)(announced on December 15, 2009)

Period of asset management		

184 days		

181 days		

184 days

operating revenue¥

5,608 million¥

5,803 million¥

6,034 million

Operating income¥

2,630 million¥

2,851 million¥

3,051 million

Ordinary income¥

1,960 million¥

2,078 million¥

2,171 million

Net income¥

1,961 million¥

2,077 million¥

2,170 million

Number of investment units

		 155,000 units

Dividend per unit¥

12,654

Portfolio size		

14 properties

Appraised value of portfolio¥ 164,948 million*The forecasts should not be construed as a guarantee of the actual dividends

 Business Report for Seventh Fiscal Period

		 155,000 units¥

		 155,000 units

13,400¥14,000		 15 properties		

15 properties--[ CONTENTS ]1 TOP REIT’s Declaration

10 Robust Support Key to Stability and Future Growth

1 Seventh Fiscal Period Performance Highlights

11 Property Highlights

2 An Open Line: A Letter from the Executive Officer of the 14 Portfolio
Investment Corporation
16 Portfolio List
3 An Open Line: A Letter from the President of the Asset
17 Financial Standing and Strategy
Management Company
18 Unit Price Performance and Volume/IR Schedule/
6 New Acquisition
Unitholders
7 Portfolio Management
9 Top REIT Asset Management’s Commitment to Making
TOP REIT a Top Brand

Business Report for Seventh Fiscal Period An Open Linea Letter from the President of
the asset management company

ESTABLISHING a FOOTHOLD
FOR THE NEXT STAGE

deterioration and difficulties raising

moving in at the end of November.

capital in the present environment.

On the other hand, there is downward
pressure on the occupancy of the

Despite these difficult conditions, TOP

Nittetsu Honmachi Building in Osaka

REIT has been able to demonstrate the
The following is an overview of TOP REIT, Inc.’s (TOP REIT) performance over its
Seventh Fiscal Period (May 1, 2009 ~ October 31, 2009) from the perspective of
the asset manager. The overview is presented by Nobuhito Endo, President andRepresentative Director of TOP REIT Asset Management Co., Ltd.

STABLE PERFORMANCE despite

progress in adjusting their inventories

A DIFFICULT ENVIRONMENT

and the benefits of economic measures
the overseas economic environment

deceleration of the global economy

centering on the Chinese economy.

brought on by the global financial

StrongNobuhito Endo

supported by strong financial institution

Sponsors

President and Representative Director
TOP REIT Asset Management Co., Ltd.

relations and market trust in its sponsors
to once again produce steady revenues

Endo entered Sumitomo Trust and Banking Co.,
Ltd. in April 1978. He was promoted to General
Manager of the Real Estate Management
Department in April 2004 and served as theGeneral Manager of the Real Estate Information
Development Department from April 2006. He wasappointed President and Representative Directorof TOP REIT Asset Management in July 2007 andExecutive Officer of TOP REIT in October 2007. He
resigned as Executive Officer in July 2009 to focus
on his asset management duties.

combined with improvements inJapan has not been immune to thestrengths of a robust portfolio and beenand earnings. This fiscal period we areproud to report a dividend per unit of
12,654 yen, an amount greater thanStrongFund
Raising
Abilityand the market condition surrounding
it is slightly difficult. Fortunately,
though, the buildings with vacancies

Strongin our portfolio are small with respect

Portfolio

to the overall portfolio. Our income
from large properties that house the

TOP REIT is a leading J-REIT because of its strong portfolio,
strong sponsor and strong fund-raising ability

originally predicted.

headquarters of major corporations inlong-term, fixed-rate rent agreements
is stable and these agreements havecontributed to minimizing the impact

are all fully occupied and our three(1) TOP REIT maintains a highof the market deterioration.

retail properties also maintained 100%

occupancy once again

occupancy. Of course we were not(2) TOP REIT maintains stable rental

panic and credit crunch since the fall

In the office rental market, downward

Even within this difficult environment,of 2008. Japanese corporate revenues

pressure on the average advertised

entirely unaffected by the market’s

TOP REIT was able to maintain a highand capital investment has shrunkrents continue even in central Tokyo

downturn. In some of our officetremendously and the employment

and the rise in vacancy rates caused

occupancy for the entire portfolio ofbuildings, tenants moved out andGenerally, the origin of J-REIT revenues

situation has deteriorated. These andby tenants merging office spaces and99.2% (end of fiscal period), the samecaused some vacancies but weis of course the rents paid by eachother factors have continued to makereducing office spaces to cut costs

strong level as the last fiscal period.

are actively working to lease thesetenant. There are primarily two factors

the environment severe. However,continues. The real estate buying and

The NEC Head Office Building, ourproperties presently. The Shiba-Koen

behind major decreases in rental

there are also emerging signs thatselling market has also witnessed fewer

portfolio’s flagship property, Harumi

Building had an occupancy of 84.8%

revenues under the recent severe

the economy has hit bottom and istransactions due to the economic

Island Triton Square’s Office Towers

at the end of this fiscal period but has

economic environment. One is whenreturning with some companies making

slowdown, office rental market

Y and Z and the Akasaka Oji Building

improved to 92.7% with a new tenant

key tenants move out and a large

incomeProperty Shares of Monthly Rents
NEC Head Office Building 26.7%

Kanda Park Plaza

Dividends Table(yen)

15,00012,00013,40014,992
13,116

11,921

9,000

11,884

12,863

13,206

14,000

Ito-Yokado
Higashi-Narashino Store

%

100

99.8

99.9

99.5

99.7

99.5

99.5

99.2

99.2

12,654

4.6%

Fukazawa House H&I

7.9%

Occupancy (%)

3,000

Akasaka Oji Building

2nd
FP

3rd
FP

4th
FP

5th
FP

6th
FP

7th
FP

Long-Term and Fixed-Rate Rent Agreements

Sagamihara
Shopping Center

90

1st
FP

Other

13.4%

4.7%

6,000

0

3.5%

History of Occupancy

8th FP

9th FP

Forecast Forecast(FP ending in
October 2010)*The actual number of days in the First Fiscal Period was 245. The above number for the First
Fiscal Period is adjusted by using the following calculation method: (fiscal period results)/245 days
x 365 days/2.

80

March October April October April October April October
2006
2007
2008
2009 7th fiscal

8.0%

Harumi Island Triton Square
Office Tower Y 21.2%
Harumi Island Triton Square
Office Tower Z 9.5%

Other

46.9%

period end

Long-TermandFixed-Rate
Rent
Agreements

53.1%

26.7%

Harumi Island Triton Square
Office Tower Z 9.5%
Sagamihara Shopping
Center 8.0%

Musashi Urawa
Shopping Square 2.5%
OAK PLAZA 1.8%

NEC Head Office Building

Ito-Yokado
Higashi-Narashino Store 4.6%

*The above graph is based on rents

 Business Report for Seventh Fiscal PeriodBusiness Report for Seventh Fiscal Period New Acquisition:
TOP REIT BEGINS NEW PORTFOLIO GROWTH
SUMITOMO CORPORATIONNISHIKI-CHO BUILDING
amount of time is needed to replace

severe business climate of the Seventh

The new property is leased entirely by

the tenant since no rents are collected

Fiscal Period and was able to prepare

the subsidiary of a blue-chip listed firm

during vacancies and another is thatfor taking the next step towards futurewith excellent credit that is located atrental negotiations with key tenants

growth.

3-chome Kanda Nishiki-cho, Chiyoda

lead to lower rents due to economic
factors and other reasons. Therefore, it
is key to mitigate these two risks. TOP
REIT does this through a number ofstrategies: 1) build our portfolio throughcompetitive and superior properties,2) enter into long-term, fixed-rate rent
agreements with key tenants, 3) invest
in properties that serve as head offices
or other key bases of tenants, and 4)
work to maintain good relations withtenants and to implement managementthat fulfills and satisfies tenant needs.
During the Seventh Fiscal Period, TOP
REIT negotiated rents with six tenants
and in only one case was unable toWard, Tokyo. TOP REIT was able to
TOP REIT TAKES THIS EXCELLENTOPPORTUNITY TO ACQUIRE ITSFIRST PROPERTY IN TWO YEARSWith regard to the property TOP REIT
acquired this time, we have been
considering it since the fall of 2008. At
that time we decided not to acquire it

point 1

The competitiveness andsuperiority of the building

TOP REIT acquired the Sumitomo Corporation Nishiki-cho Building on
January 13, 2010. This property is wholly leased by the subsidiary of a bluechip listed firm with an excellent market reputation. This acquisition brings
the total portfolio of TOP REIT to 175,047 million yen on an acquisition basis.

acquire the property for 12.7 billion yen
from its seller Sumitomo Corporation.
The appraisal value for the property
obtained from Japan Real Estate
Institute in line with the acquisition was
14.1 billion yen. Please see the next
page for details on the building.

for the time being because of the global

The capital for acquiring this property

financial and economic panic caused by

was acquired through a new 12.5

the Lehman Shock leading to a sudden

billion yen loan from the strong bankrecession in Japan. We have discerned

formation that already supports us

the timing when the real estateand enabled TOP REIT to borrow theinvestment environment would bottom

funds despite the difficult capital-raisingout.

environment.

● This property enjoys an excellent location
at 3-chome Kanda-Nishikicho, Chiyoda
Ward that has access to a number ofsubway stations. It is only a 3-minute walkto Takebashi Station on the Tokyo Metro
Tozai Line, and a 5-minute walk to Jimbocho
Station on the Tokyo Metro Hanzomon
Line and Toei Subway Shinjuku and Mita
Lines. This gives the property excellent
convenience. It is also in close proximity toOtemachi and Marunouchi, arguably theleading central business district of Japan.
The area is a mature office area, meaning thebuilding is in an excellent environment. There
are also large redevelopment plans in thesurrounding area pointing to future growth.
● Although the building is relatively old
having been completed in 1973, largescale renovations were implemented in
November 2001 that installed facilities on alevel equivalent to the latest office buildings.
In addition, in October 2009 the building
had anti-seismic reinforcement construction
implemented to meet the standards of the
Act on Promotion of Seismic Retrofitting of
Buildings.

avoid a slight decrease in the rent. In

In the present overall economy there

the other cases, we were always able toare some signs of the bottoming out ofmaintain the current rents. As a result,prices and the market recovering. In

our rental income during the Seventh

particular, blue-chip office buildings

Fiscal Period was able to be maintainedin central Tokyo are showing signs

point 2at almost the same level as the previousof having bottomed out with deals

fiscal period.

happening again. We have interpreted

Wholly leased by a subsidiaryof a blue-chip listed company

these developments as the perfect
OUR STRATEGY FOR THE NEXT
STAGE

timing for investing in blue-chip
office buildings in central Tokyo, aninvestment target of our investment

Address

 -11-1 Kanda-Nishikicho,
3
Chiyoda Ward, Tokyo wnershipO
12,169.78m2
9 floors (2 basement
floors), steel-reinforced
concrete

As is clear, TOP REIT committed itself

policy, and took the step to acquire thisType of title

to steady management within theproperty.

Floor space
STRUCTURE
Sumitomo Corporation Nishiki-cho Building

Completion
Acquisition pricePortfolio share

Jimbocho Stn.

302

Sumitomo Corporation
Nishiki-cho Building

401

403

Takebashi Stn.

March 1973
12,700 milllion yen
7.3%

The core properties of the TOP REIT portfolio
are comprised of office buildings located incentral Tokyo that serve as the head officesof their tenants like the NEC Head Office
Building, and like it are leased by a single
tenant. This property is wholly leased by thesubsidiary of a blue-chip listed company withan excellent market reputation.

301

Imperial Palace
Otemachi Stn.

point 3High cap rate that raises
the dividend
Yoshihiko Taniyama
Director and General Manager of Investment Department
TOP REIT Asset Management Co., Ltd.
Taniyama joined Nippon Steel in April 1991 and became involved in the urban
development business. Taniyama was seconded to Nippon Steel City Produce
in April 2001. After serving as the Planning Coordination Group Leader in theTokyo Metropolitan Area Housing Division and as the City Creation Unit Headin the Housing Division, he was appointed the General Manager of Investment
Department of TOP REIT Asset Management in July 2008. Taniyama became
the Director and General Manager of Investment Department in April 2009.

 Business Report for Seventh Fiscal Period

In the present buyer’s real estate market, it
has become possible to buy this property
below the real estate appraisal price at a high
NOI return despite being a strong property incentral Tokyo. This means the property helps
to raise our dividend. Furthermore, the present
tenant revised its rents after the financial crisisand so there is little risk of the rents falling.

Business Report for Seventh Fiscal Period PORTFOLIO MANAGEMENT
Portfolio management is the investment of capital inline with an investment policy and the managementof assets with the goal of maximizing the value

Medium- to Long-Term Targets

Medium- tolong-term targets(No. of properties)

Asset size: ¥210bn
No. of properties: 16-20
LTV: 40-50%

20

and prof itability of the overall portfolio. TOP
REIT pursues both external growth and qualitative
improvement of assets based on the basic policy

15

New Property
acquisition (8th FP)

of c o mp r e h e n s ive p or t fol io m a n a g e m e nt a n dmaximum use of sponsor strengths. TOP REIT isthus committed to creating additional value for its

Asset size: ¥175.047bn
No. of properties: 15
LTV: 50.5%

10Targeting asset sizeof ¥210bn, reducing
NEC Head Officebuilding's share of
the portfolio to 20%

As at end of 7th FP
Asset size: ¥162.347bn
No. of properties: 14
LTV: 47.3%

existing portfolio properties by optimally applying
the management abilities of its asset manager's staff
and sponsor strengths.

Acquisition ofaddtional ¥35bn
Appropriately
control LTV(Asset size) 150

future investment policy/stance

160

170

180

190

Property acquisition target

OfficeExpand the asset size while maintinaning
present shares in the portfolio
Other thanofficesenable positive return results.
The portfolio management success of TOP REIT is clearlytenants to be negotiated with over the future fiscal periods.

managed to maintain stable rental revenues over the seven

TOP REIT intends to continue posting the positive results it

fiscal periods. The skilled and committed staff of TOP REIT

has generated to date over the next few periods.

Office: Rent Revision Results

Investment share

200

Investment share

25%

Monthly rent before revision
Revised monthly rent

100

After Acquisition of Sumitomo
Corporation Nishiki-cho Building

End of 7th Fiscal Period
EcologyToyosu Procentury

Expansion of Portfolio

4th FP revision
14.9% increase

1st FP revision
0.2% increase

3rd FP revision
9.1% increase

12.70 billion yen

113.29 billion yen

Housing 9.7%

Diversification of Uses
Retailfacilities

Office buildings

Housing 9.0% Other 1.5%
Retail facilities

14.4%

37.0%

25.8%

Other

41.5%

24.0%

45.8%
Harumi Island Triton Square
Office Tower Y 20.3%

Harumi Island Triton Square
Office Tower Y 29.1%

NEC Head
Office Building

NEC Head Office Building
Other

Harumi Island Triton Square
Office Tower Z 12.3%

7th FP✣R ent revised upward: 0 tenants✣ Rent unchanged: 5 tenants✣R ent revised downward: 1 tenant(-16.6% for an area of 239.05m2)

Rent Revisions in 8th FP and After
8th FP 9.7%
9th FP 1.9%
Less than 1 year

11.6%
1 year or more

88.4%
10th FP and after
88.4%

Harumi Island
Triton Square
Office Tower Z
8.7%(On a monthly rent basis: after the acquisition of the Sumitomo Corporation Nishiki-cho Building in January 2010)

Diversification of Property Share Risk

33.8%

Kanda Park Plaza 3.2%
Shiba-Koen Building 1.7%
Faret East Building 2.6%
Nittetsu Honmachi Building 1.5%

Sumitomo Corporation
Nishiki-cho Building 8.3%

75.1%

73.1%

NEC Head Office Building

6th FP

Harumi Island
Triton Square
Office Tower Y
19.5%

Akasaka Oji Building 7.3%
Office buildings

Office buildings

81.6%

5th FP

NEC Head
Office Building
24.5%

Residential properties 7.2%

175.05 billion yen

Other 1.6%

15.5%

18.4%

15 properties

0.57 billion yen

Retail facilities

Other

Largely maintaining prior levels despite the severe environment
Renewed contracts with six tenants, upon which rent was revised
downward by 1.4% on average compared with the level before renewal

Retail and other properties 15.5%

Faret East
Building (8th floor)

162.35 billion yen

4th FP

Composition of Monthly Rent by Property

5.77 billion yen
14 properties

3rd FP

Results of the Seventh Fiscal Period Rent Revision

Shiba-Koen
Building

8 properties

2nd FP

7th FP revision
1.4% decrease

Period Remaining until Next Rent Revision

20.00 billion yen

8.90 billion yen

1st FP

5th FP revision
7.8% increase

Sumitomo Corporation
Nishiki-cho Building

Harumi Island
Triton Square
Office Tower Z

5.16 billion yen

Ito-Yokado Higashi-Narashino Store

Increase in monthly rent(%)
Monthly rent before revision
6th FP revision
0.5% increase1500(as of January 31, 2010)

Rent revision results =2nd FP revision
0.1% increase50

End of 1st Fiscal Period

prop er ty, the rent renewal s che du le and the nu mb er of

tough economic climate. The chart below shows how we have

Portfolio share

Portfolio History

The following tables reveal the proportion of rents of eachapparent in our success renewing rental agreements in this(million yen)
250

75%

✣T
 arget residential properties

Asset Management managed to negotiate strong rents that

210 (billon yen)200

✣E xcellent location in Central Tokyo✣C lass A or higher grade and high-quality specifications✣P roperties with strong competitiveness (ability to attract
tenants, long-life and stable operations) 

RENT REVISIONSHarumi Island
Triton Square
Office Tower Y

18.9%
Harumi Island Triton Square
Office Tower Z 11.4%

Stable revenue is anticipated due to 88.4%
of office tenants with one year or moreremaining until the next rent revision.

Schedule of Rent Revisions in 8th and 9th Fiscal Periods
Property

8th Fiscal Period

9th Fiscal Period

Akasaka Oji Building

2 tenants-

Shiba-Koen Building

1 tenant-

Kanda Park Plaza

5 tenants

1 tenant

Faret East Building

2 tenants

2 tenants

Nittetsu Honmachi Building

3 tenants

3 tenants

Total(5 properties) 13 tenants(3 properties) 6 tenantsNote: The charts represent rounded figures and so totals sometime do not equal 100.0%

 Business Report for Seventh Fiscal PeriodBusiness Report for Seventh Fiscal Period Top REIT Asset Management’s Commitment to
Making TOP REIT a Top Brand

Robust Support Key to Stability and
Future Growth

As the asset manager of TOP REIT, Top REIT Asset

healthy and sound growth of the real estate investment

TOP REIT enjoys the robust support of three Japanesedevelopment arm of Nippon Steel; and Oji Real EstateManagement (TRAM) is committed to the successful

trust market and real estate market, contributing to thebusiness leaders through TRAM. TRAM is sponsored(31%), the real estate developer and planner for the Oji

m a n a g e m e n t o f t h e T O P R E I T p o r t fo l i o a n d t o

growth of society and the economy, and the formationand owned by Sumitomo Trust and Banking (38%);

Paper Group. The support provided by these sponsors

Nip p on St e e l Cit y P ro du c e (31%), t h e r e a l e st at e

is outlined in the figure below.

del iver i ng opti mal div idends and p er for manc e toof a desirable city.

investors. The management philosophy of the company
calls for building TOP REIT into a “top brand” that is

T he op erat i ng ph i losophy t hat TR AM fol lows torelied upon by investors, contributing to achieving theachieve these goals is outlined in the figure below.

TOP REIT

Building an optimal portfolio with high quality properties● Implementing appropriate management●

Mitigation of risk through diversified investment ●●Profitability

An external growth strategy that applies
the pipeline function of sponsors

Optimal Utilization of Sponsor Strengths

Growthpotential

Stability

Pipeline support
agreement

Building andManaging an
Optimal Portfolio

Fairness

Corporate governance ●that thoroughly
emphasizes complianceand risk management

Operating
Structure
Focused on
Investors

Transparency

Information disclosure ●Proactive IR ●Robust relationships with investors ● Business Report for Seventh Fiscal Period

Capturing Trust

TOP REIT ASSET MANAGEMENT

Agreement on providing
warehousing support

Sumitomo
Trust & Banking
Financial Strategy
that Effectively
Flexibility
Implements
Financial Know-how

Soundness
Capturing a Top
Brand Position●●

Flexible anddynamic
fund raising

Maintenance of a soundfinancial structure

Nippon SteelCity Produce(Nippon Steel Group)

Oji Real Estate(Oji Paper Group)

Provision ofreal estate
investment
opportunities

Provision of
information
on properties
owned ordeveloped bysponsors or
their groups

Pipeline Function
Sponsors provide information
on available third party andsponsor group properties to
TOP REIT

Originationof structures
for acquiringproperties

Investment
andfinancing of
SPCs

Warehousing Function
Sponsors provide a temporary
ownership function for realestate to TOP REIT, enabling it
to secure blue-chip properties
in advanceReal estate
operation
andmanagementthat utilizes
the expertiseand riskmanagement
capabilities ofthe sponsors

Leasing
activities that
apply theinformationon leasing
demandpossessed bysponsorgroupsManagement Expertise
Sponsors provide value-add
property and othermanagement services

Business Report for Seventh Fiscal Period 10

property HIGHLIGHTS
Musashiurawa
Shopping Square

NEC Head Office Building
The NEC Head Office Building is one of the core assets in the Top REIT portfolio. This
property greatly contributes to the steady and stable operations of Top REIT due to thelong-term, fixed-rate lease agreement with NEC. This building is a Tokyo icon and houses
the headquarters of globally renowned NEC. It is widely known by the nickname of “NECSuper Tower.”

The anchor tenants of the Musashiurawa
Shopping Square are the major retailers
Olympic and Nitori. The B1 basement floor
and floors 1 and 2 house the sales space;
while floors 3 and 4 provide parking. The
Square has 350 car parking spots and over
500 bicycle parking spots.

The building lies along Hibiya-dori Avenue and is near the Dai-ichi Keihin Street. It
also enjoys good access to the expanding Haneda Airport and Marunouchi area. It has
excellent train access and tenants can use the JR Yamanote and Keihin-Tohoku Lines, andthe Toei Subway Mita and Asakusa Lines. Thus it is easy to access from almost anywhere
throughout the Tokyo metropolitan area.

Address

5-7-1 Shiba, Minato Ward, Tokyo

Type of title

 wnership (50% of beneficiary interests
Oin real estate)

Floor space

144,476.05m2

Completion

October 2005

Acquisition price

41,950 million yen

Portfolio share 25.8% (based on acquisition price)

Tokyo Tower

The excellent location in front ofMusashiurawa Station guarantees use bytravelers and commuters on the JR Saikyo
and Musashino Lines and its positioning
along National Highway No. 17 guarantees
excellent access for those travelling by car.
The phenomenal location is situated within
a 5-kilometer trade zone that was fast
approaching 700,000 people when opened
and has continued to grow since. The
Square itself has evolved into a critical andessential facet of the landscape and lives ofresidents.

Daimon Sta.

1

Shibakoen Sta.
2

7-3-1 Bessho, Minami Ward, Saitama City, Saitama PrefectureL and – Ownership, Building – Compartmentalized ownershipinterest (kubun shoyu-ken) (50% of beneficiary interests in real

Hamamatsucho Sta.

estate)C1

Embassyof Italy

NEC
Head Office Building

Keio Univ.

Mita Sta.

15

Tamachi Sta.

11 Business Report for Seventh Fiscal Period

Address
Type of title

1

Floor space

28,930.36m2

Completion

October 2005

Acquisition price

4,335 million yen

Portfolio share

2.7% (based on acquisition price)

Kita-Urawa Sta.

Saitama City Office
Saitama Prefectural
Government Office

Urawa Sta.

Musashiurawa
Shopping Square

Minami Urawa Sta.

Nishi-Urawa Sta.
17

Business Report for Seventh Fiscal Period 12

property HIGHLIGHTSTOP REIT Remains Committed to Building a Strong, Diversified
Portfolio Centered on the Tokyo Area

Portfolio(as of the end of January 2010)

Ecology Toyosu
Procentury

CentralKeisei Ueno

Tokyo

The Ecology Toyosu Procentury is a large rental condominium
complex featuring 224 units. The property boasts an excellent
location a mere 4-minute walk from Toyosu Station on the Tokyo
Metro Yurakucho Subway Line and only about 10 minutes from
central Tokyo, making it very convenient for commuting to workand school. The project also has great access to entertainmentand shopping as it is only minutes from the large LaLaport
TOYOSU shopping and entertainment complex.

Takadanobaba

BUNKYOWARDSHINJUKU
WARD

NakanoAsakusa
Ueno
Oshiage

Akihabara
KameidoOak plaza

NAKANO
WARD

Kanda

ShinjukuThis convenient location is proven by the fact that about half ofthe contracts are corporate contracts and the above featuresof the property contribute to its high occupancy level. Ecology
Toyosu Procentury is also environmentally friendly as it provides
high energy conservation through a construction method thatblocks out external heat.

CHIYODA
WARD
Sumitomo
Corporation
Nishiki-cho Building

SHIBUYA
WARD
Akasaka Oji
Building

Tokyo

Kanda Park Plaza

Shimbashi

MINATO
WARD

Shibuya
Shimokitazawa

CHUO
WARD

Hamamatsucho

SETAGAYAWARD
Sangenjaya

Kinshicho

Ecology Toyosu
Procentury

ToyosuShiba-Koen
Building

Shinkiba

Sengakuji

MEGURO
WARD
MeguroNEC Head Office
Building

Shinagawa

GotandaFukasawa House
Towers H & I

Harumi Island
Triton Square OfficeTowers Y & Z

Top REIT boasts a diversified portfolio built around central Tokyo office properties

Diversification of Assets in Portfolio

100%Address

4-8-8 Toyosu, Koto Ward, Tokyo

Type of title

Ownership

Floor space

9,630.96m2

Completion

January 2005

Acquisition pricePortfolio share

r

da
mi

Tsukishima Sta.

e
Riv

11.5%

80%

Retail

18.4%

60%

Harumi Island
Triton Square

LaLaport
TOYOSU

Ecology Toyosu
Procentury
Toyosu Sta.

40%

2.0%

Residential 8.1%
Retail19.3%

Su5,160 million yen
3.2% (based on acquisition price)

Other
RetailOffice88.5%

Office

81.6%

Office

70.6%

1.6%

Other

Residential 6.8%
Retail

16.1%

Office

Other

1.6%

Other

1.5%

Residential 9.7%

Residential 9.0%

RetailRetail

15.5%

Office

14.4%

Office

75.5%

73.1%

75.1%

End of
4th FP

End of
5th/6th/7th FP

End ofJan 2010

20%
0%
IPO

Shin-Toyosu Sta.

13 Business Report for Seventh Fiscal Period

AEON
Shopping CenterEnd of
1st FP

End of
2nd/3rd FP

Business Report for Seventh Fiscal Period 14

tokyoPortfolio list

metropolitan
area
Musashiurawa
Shopping Square

SAITAMA

The diversified portfolio of Top REIT is largely comprised of properties in the Central Tokyo area.
(as of the end of Seventh Fiscal Period)

CHIBA

TOKYO

Portfolio Data
Acquisition
Value(million yen)Appraised Valueat End of Period(million yen)

Investment
Breakdown(%)

41,95047,50028.8

33,00039,50023.9

20,00015,700

9.5

Akasaka Oji Building

9,660

14,400

8.7

Shiba-Koen Building

5,770

3,790

2.3

Kanda Park Plaza

5,156

5,179

3.1

Tokyo Metropolitan Area

Faret East Building

2,091

2,780

1.7

Kansai Area

Nittetsu Honmachi Building

1,100

1,440

0.9

118,727

130,289

79.0

Sagamihara Shopping Center

12,00010,7006.5

Ito-Yokado Higashi-Narashino
Store

8,900

5,416

3.3

Musashiurawa Shopping Square

4,335

3,790

2.3

25,235

19,906

12.1

Fukasawa House Towers H & I

10,6357,540

4.6

Ecology Toyosu Procentury

5,160

4,640

2.8

15,795

12,180

7.4

2,590

2,573

1.6

2,590

2,573

1.6

162,347

164,948

100.0

Asset
Class

Area

Property Name

Faret East
Building

NEC Head Office Building

Ito-Yokado HigashiNarashino StoreKANAGAWA

Sagamihara Shopping
CenterCentral Tokyo

OfficeKansaiSubtotal (8 properties)

Total acquisitions (as of January 31, 2009)¥175,047 million

Umeda
Osaka

Harumi Island Triton Square OfficeTower Y
Harumi Island Triton Square OfficeTower Z

KyobashiAppraised value (as of November 1, 2009)

RetailTokyo Metropolitan Area

¥179,048 million

Yodoyabashi

Subtotal (3 properties)

Properties

Kintetsu Nanba

15

Nanba

Residential

Rentable area

Nittetsu Honmachi
Building

Tokyo Metropolitan Area

Subtotal (2 properties)

291,647.86m

2

Other

Central TokyoOAK PLAZA

Subtotal (1 property)

Total

Note: Investment Breakdown indicates the proportion of each property’s appraised value to the total appraised value of all properties

Geographic Area

100%

Osaka 1.1%

Osaka 1.0%

Osaka 0.8%

Osaka 0.7%

Osaka

Tokyo 13.0%
Metropolitan Area

Tokyo
Metropolitan Area

Tokyo
Metropolitan Area

Tokyo
Metropolitan Area

Tokyo
Metropolitan Area

80%
60%
40%

Central Tokyo

19.8%

86.0%

Central Tokyo

IPO

End of
1st FP

79.2%

28.6%

Central Tokyo

70.6%

24.2%

0.7%

26.6%

Osaka

0.6%

24.6%

Central Tokyo

Central Tokyo

Central Tokyo

End of
4th FP

End of
5th/6th/7th FP

End ofJanuary 2010

75.1%

72.8%

Property Acquired after Seventh Fiscal Period

Tokyo
Metropolitan Area

74.7%

Asset Class
OfficeArea
Central Tokyo

Property Name
Sumitomo Corporation Nishiki-cho
Building

Acquisition
Value(million yen)Appraised Value AS OF
NOVEMBER 1, 2009
(million yen)

12,70014,10020%
0%15 Business Report for Seventh Fiscal Period

End of
2nd/3rd FP

Business Report for Seventh Fiscal Period 16

Unit Price Performance and Volume Table

Financial Standing and Strategy

Unit Price (thousand yen)

Trading Volume (unit)

1,000

10,000
Trading Volume on the first day

Unit Price (based on closing price)
Trading Volume

31,893 units
800

TOP REIT is committed to prudent financial management(2) A new loa n wa s t a ke n out to a c qu i re t he Su m itomo

based on a f inancial policy that is built around a stable

Corporation Nishiki-cho Building (12.5 billion yen) on

management of finances.

January 13, 2010.

With in the diff icult f inancial environ ment, TOP REIT

Presently, 17.3 billion yen of borrowings are scheduled to

was able to refinance 26 billion yen during the Sixth Fiscal

mature during the Eighth Fiscal Period in February andPeriod in March 2009 within the terms we had foreseen.

March 2010 and we are taking steps to refinance these withT h e S e ve nt h Fi s c a l Pe r io d h a d no m at u r i ng d e bt a n d

the corresponding financial institutions. TOP REIT will

no properties were acquired so new debt was not raised.

consider and implement diverse and flexible methods to raise

Therefore, our total borrowing statistics remained the same

capital from now on towards the acquisition of new properties

at 81,740 million yen of borrowings, an LTV of 47.3%, long-and refinancing of existing borrowings. TOP REIT willterm borrowings comprising 83.8% of total borrowings andalso prepare measures to hedge against the risk of interest

fixed-rate borrowings comprising 62.1% of borrowings.

rates changing in a manner that maintains the capacity to

8,000

6,000

600
IPO Price (¥550,000)
Market capitalization
400(based on closing price)

200

6/1

OCTOBER
1.9%

Diversification of Borrowing Maturities

67

A Strong Formation of Financial
Institutions Supports TOP REIT
(as of January 31, 2010)

100

16.7

50
0

167

85

85
8th
FP

98

111.89

90

93

49.08
9th
FP

10th
FP

11th
FP

12th
FP

40
13th
FP

14th
FP

12/1 1/4 3/1
2007

6/1

9/1

3/1
12/1 1/4
2008

6/1

9/1

12/1 1/4
3/1
2009

6/1

9/1

11/30

15th
FP

16th
FP

17th
FP

Sumitomo Trust andBankingMizuho Corporate
Bank

Sumitomo Mitsui
Banking Corporation

Bank of TokyoMitsubishi UFJ

Chuo-Mitsui Trustand Banking

Mitsubishi UFJ Trustand Banking

Development Bankof JapanDai-ichi Mutual Life
Insurance

Unitholders (as of end October 2009)

2009

the LTV level at an appropriate level.

diversify the maturities of borrowings.

150

9/1

IR Schedule

TOP REIT will also maintain sound finances by controllingto heighten the ratio of long-ter m borrowings and to

12.73

2,000

0

3/1
2006

borrowing maturities and the use of long-term borrowings.

(1) R e f i n a n c i ng wa s c ondu c t e d on Nove mb e r 30, 2 0 09

200

as of November 30, 20090risks related to raising capital through a diversification of

the following capital procurement was conducted.

250¥208,000

Historiacal low(based on closing price)

4,000¥998,000

Historical highraise capital adequately while also continuing to mitigate

After the end of the Seventh Fiscal Period in October 2009(100 million yen)

¥59,365.0 mn✣ While the ceiling is 60%, operate with about 50% as the targeted ratio of loans to total assets (LTV)✣ From the standpoint of stable financial management, extend borrowing periods and spread out repayment dates✣ While closely monitoring the market, prepare appropriately for interest rate fluctuation risks

132 (2.0%)

29,374 units (19.0%)

End of Seventh Fiscal Period

Other domestic corporations

Other domestic corporations

145 (2.2%)

13,206 units (8.5%)

Financial institutions

NOVEMBER
DECEMBER(including security firms)

Announce performanceof Seventh Fiscal Period

2010
JANUARY

Individuals/other

Financial institutions

97 (1.4%)

6,359 (94.4%)(including security firms)

93,805 units (60.5%)

Payment of dividendfor Seventh Fiscal Period

Individuals/other

18,615 units (12.0%)

FEBRUARY
MARCH
APRIL

Stable Financial Management

Overseas corporations/individuals

Overseas corporations/individuals

No. of Units Held

No. of Unitholders

Total No. of Units

Total No. of Unitholders

155,000

6,733

End of Eighth Fiscal Period

MAY
JUNE

Announce performance of Eighth Fiscal Period

JULY

Payment of dividend for Eighth Fiscal Period

AUGUST
Stable Bank Formation

SEPTEMBER✣ Maintain stable relationship with major financial institutions✣ All loans unsecured and without guarantee

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

17 Business Report for Seventh Fiscal PeriodBusiness Report for Seventh Fiscal Period 18