TRIM-第七期 C1-4̲0929 05.10.17 2:46 PM ページ1

J PR
Japan Prime Realty Investment Corporation
Seventh Fiscal Period Business Report
January 1, 2005– June 30, 2005

Printed in Japan

TRIM-第七期 C2-3̲1006 05.10.17 2:42 PM ページ41

PROFILECORPORATE DATA

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

Head Office
9-9 Yaesu 1-chome, Chuo-ku, Tokyo 103-8285, Japan
Tel: +81-3-3231-1051
Fax: +81-3-3274-7775
Date of Establishment
September 14, 2001

growth and stable cash distributions to its investors.

Listing
Tokyo Stock Exchange (Securities Code: 8955)
Fiscal Period Ends
June 30 and December 31 of each year
General Meeting of Unitholders
More than once every two years
Cash Distribution Payment Eligibility
Unitholders of record as of June 30 and December 31 ofeach year

Transfer Agent
Mizuho Trust & Banking Co., Ltd.
2-1 Yaesu 1-chome, Chuo-ku, Tokyo
Location of Records
Mizuho Trust & Banking Co., Ltd.
2-1 Yaesu 1-chome, Chuo-ku, Tokyo
Main Branch, Stock Transfer Agency Division
Mailing Address Mizuho Trust & Banking Co., Ltd.
1-17-7 Saga, Koto-ku, Tokyo 135-8722
Stock Transfer Agency Division
Telephone+81-3-5213-5213 (Representative)
AgentsMizuho Trust & Banking Co., Ltd.
(All branches nationwide)
Mizuho Investors Securities Co., Ltd.
(Head office and all branches nationwide)
Web site
http://www.jpr-reit.co.jp/jpr_e/index.html

English page
PerformanceThis Web site has been created specificallyfor our English-speaking readers.

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

ANNUAL SCHEDULE (PROVISIONAL)

DEC.

FAQ

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

2

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

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

3

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

Balance date for the six-month period ended June 30

6 JUNE

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

8 AUG.

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

9 SEPT.

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

CONTENTS: TO OUR INVESTORS 1

FINANCIAL HIGHLIGHTS 3

PROPERTY PORTFOLIO OF JPR 10
FINANCIAL STATEMENTS 28

PORTFOLIO BREAKDOWN 5ACTIVITY HIGHLIGHTS 7

REIT STRUCTURE AND EXTERNAL SERVICE PROVIDERS 21

UNITHOLDER INFORMATION 39

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

SUBSEQUENT ACTIVITY HIGHLIGHTS 9

MANAGEMENT’S DISCUSSION AND ANALYSIS 24

MEMBERS OF THE BOARD 40 CORPORATE DATA 41

This document contains a translation of selected information described in the Financial Report (Kessan Tanshin) dated August 18, 2005, prepared under the timely disclosure requirements of the Tokyo
Stock Exchange, as well as the Financial Statements and Performance Information Report prepared pursuant to the Investment Trust Law of Japan, for the period from January 1, 2005 to June 30, 2005of Japan Prime Realty Investment Corporation (“JPR”).
This English language document was prepared solely for the convenience of and reference by non-Japanese investors and is not intended to constitute a disclosure document. The Japanese
language Financial Report, Financial Statements and Performance Information Report for the aforementioned period should be referred to as the originals of this document.
English translations for legal, accounting, tax and business concepts used herein may not convey precisely identical concepts of the equivalent Japanese terms. The figures presented in thefinancial statements may differ from the Company’s Financial Report (Kessan Tanshin) due to rounding. With respect to any and all terms herein, including without limitation, financial statements, if
there exist any discrepancies in the meaning or interpretation thereof between the original Japanese documents and English documents contained herein, the original Japanese documents will
govern the meaning and interpretation. Neither JPR, Tokyo Realty Investment Management, Inc., nor any of their respective directors, officers, employees, partners, unitholders, agents or affiliates will
be responsible or liable for the completeness, appropriateness or accuracy of English translations or the selection of the portion(s) of any document(s) translated into English. No person has beenauthorized to give any information or make any representations other than as contained in this document in relation to the matters set out in this document, and if given or made, such information or
representation must not be relied upon as having been authorized by JPR, Tokyo Realty Investment Management, Inc., or any of their respective directors, officers, employees, partners, unitholders,
agents or affiliates.
The financial statements of JPR have been prepared in accordance with generally accepted accounting principles in Japan (Japanese GAAP), which may materially differ in certain respects fromgenerally accepted accounting principles in other jurisdictions.
Many provisions of this document contain information that constitute forward-looking statements. These forward-looking statements are not a guarantee of future performance and involve risks
and uncertainties, and actual results may differ materially from those in the forward-looking statements as a result of various factors.

41

TO OUR INVESTORSIn its seventh fiscal period, Japan Prime Realty Investment

ment properties; capital and maintenance expenditure

Corporation (“JPR” or “the Company”) and its asset manage-

required to maintain competitive advantage and to support

ment company, Tokyo Realty Investment Management, Inc.

JPR’s “A/3S” and “Value Up” strategies, and; social concerns(“TRIM”) worked hand in hand to deliver impressive results,

such as the use of asbestos in buildings, which could affectconsistent with our previous performance. Despite sustained

properties the Company currently owns. JPR is confident,

intense competition in the acquisition of investment proper-

however, that the strength of its management, its systems

ties, JPR has continued to overcome challenging conditions

and procedures including due diligence, and the quality ofand further cement its position as a leader in Japan’s real

its portfolio provides considerable security and the basis forestate investment trust (J-REIT) market.

long-term stable profits.

For the fiscal period under review, the six-month period

Linked to JPR’s efforts to overcome issues and secure

ended June 30, 2005, operating revenues totaled ¥8,503

stable growth, the Company places themillion, an increase of ¥817 million,

utmost importance on theor 10.6%, compared with the previ-

return of profits to its unithold-ous fiscal period.

ers. In the seventh fiscal period,

On the earnings front, the fol-cash distribution per unit waslowing factors contributed to the¥6,370, representing 100% of

double-digit growth for the second

distributable income. Duringconsecutive fiscal period: income forthe full fiscal period from the four properties acquired during the previous

the fiscal period under review,
Hirohito Kaneko (left)
Executive Officer, Japan Prime Realty Investment Corporation

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

fiscal period; contributions from the

JPR issued additional new investment units. As a result, the numberof investment units outstanding as

three newly acquired properties and increases in ownershipof June 30, 2005 was 530,000 units, up from 430,000 units asof two existing properties; a 0.3 percentage point improve-of December 31, 2004.

ment in the portfolio occupancy rate to 95.4%, and; the saleof three existing properties. For the fiscal period under

OVERVIEW OF THE SEVENTH FISCAL PERIOD

review, operating profits rose ¥485 million, or 14.0%, toMarket Environment¥3,955 million, while net income jumped ¥508 million, or

Office Building Leasing

17.7%, to ¥3,376 million.

During the fiscal period ended June 30, 2005, vacancy rates

In the period ahead, JPR is likely to confront a number ofacross the nation improved as the spate of new office build-challenging issues, not the least of which are increased com-

ings coming onto the market came to an end. While thepetition, and the Company’s ability to acquire new invest-

decline in vacancy rates has been most prominent for large-1

sized office buildings, positive conditions have extended toin the locations targeted by JPR were relatively steady.

medium- and small-sized buildings reflecting demand from
corporate tenants. In particular, vacancy rates in Tokyo’s

Real Estate Acquisition Environment

central business districts (CBDs) are approaching a level

During JPR’s seventh fiscal period, the real estate market saw

below 5%, a key benchmark in determining the status of theaggressive property acquisitions, primarily by real estatemarket. In addition, Osaka, Nagoya and Fukuoka are experi-

investment trusts and private funds. From the second half ofencing an improvement in vacancy rates. This trend is2004, intensifying competition for real estate purchases andextending to other major cities, for example in Sapporo,

the resultant increase in real estate prices became increas-

where the vacancy rate has fallen below 10%. Rents for large-

ingly prominent. Accordingly, prices for real estate located insized buildings tended to bottom out and were particularly

Tokyo’s CBDs have experienced a marked rise. This phenom-

strong (on a contractual basis) for office buildings located inenon has prompted increasing interest in other major cities

Tokyo’s CBDs. Despite these posi-

across Japan, including Osaka,tive signs, rents remained weak in

Nagoya and Fukuoka, where yields

regional areas, firmly entrenched

for certain properties are now“Intensifying competition and the resultant increase in real estate prices in Tokyo haveprompted increasing interest in other major cities across Japan,
where yields for certain properties are now approaching Tokyo’s levels.”in an adjustment phase.

approaching Tokyo’s levels.
Underpinned by a strong capital

Retail Property Leasing

market, favorable interest rates,

Since the implementation of the Large-Scale Retail Stores

and a decrease in expected returns, real estate prices are

Location Law in 2000, the number of new construction noti-

expected to remain on an upward trend.

fications has progressed smoothly together with the shift
toward large-scale retail complexes. In the fiscal period

JPR’s Acquisitions and Divestments

under review, major retailers continued their active stance

As in each previous fiscal period, JPR pursued every opportu-

toward new openings amid an increase in population and anity to establish a stable revenue stream, to improve thedrop in real estate prices in Tokyo’s CBDs and other major

quality of its portfolio, and to diversify its asset holdings based

metropolitan areas. In addition, rents were healthy for high-on geographical location, type of use, tenant composition,

quality commercial districts that attract major brand shops,

and investment amount, all in line with its fundamental

flagship shops and other equivalent stores.

investment policy. Efforts to acquire new investment proper-

Despite lingering difficult conditions in the retail industry
due to the prolonged slump in household consumer spending, continued intense competition and other factors, rents

2

ties have been made through discussions with sponsor companies and through independent direct negotiation.
Guided by these principles and based on strict selection

FINANCIAL HIGHLIGHTS

All amounts in millions of yen
unless otherwise stated

All amounts in millions of yen
unless otherwise stated

7th period ended
June 30, 2005

6th period ended
December 31, 2004

7th period ended
June 30, 2005

Operating revenues

8,503

7,686

76.9

Operating expenses

4,549

4,217

41.1

Operating profits

3,955

3,469

35.8

Income before income taxes

3,377

2,870

30.5

Net income

3,376

2,869

30.5

Total assets

216,574

198,674

1,957.8

Interest-bearing liabilities

83,666

93,066756.3

Total unitholders’ equity

118,808

91,982

1,074.0

Unitholders’ capital

115,432

89,114

1,043.5

Cash distributions

3,376

2,868

30.5

Dividend payout ratio

100%

100%

—

Number of units (units)

530,000

430,000—

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

224,165

213,9122,026

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

6,370

6,671

57.6

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

8,214

9,907

74.3

Return on total assets (annualized)

3.3%

3.0%

—

Return on total unitholders’ equity (annualized)

6.5%

6.2%

—

Equity ratio

54.9%

46.3%

—

Interest-bearing liabilities to total assets

38.6%

46.8%

—

Debt service coverage ratio (times)

9.3

9.4

—

Property net operating income (NOI)

5,477

5,404

49.5

NOI yield (annualized)(**)

5.9%

6.1%

—

Property net cash flows (NCF)

5,120

4,939

46.3

5.5%

5.6%

—

Number of properties

42

42

—

Number of tenants

459

496

—

281,408.97

273,330.52

—

95.4%

95.1%

—

NCF yield (annualized)(***)

Total leasable floor space (square meters)
Occupancy rate

All amounts in millions of
U.S. dollars unless otherwise stated (*)(*) The rate of ¥110.62=US$1.00, the foreign exchange rate on June 30, 2005, has been used for translation.
(**) NOI yield expressed as a percentage is calculated using the weighted average acquisition price on a pro-rated basis.
(***) NCF yield expressed as a percentage is calculated using the weighted average acquisition price on a pro-rated basis.

3

criteria, the Company acquired prime office buildings, retailCo., Ltd., Meiji Yasuda Life Insurance Company, Taisei

properties, and increased its ownership in certain existing

Corporation, Yasuda Real Estate Co., Ltd. and Sompo Japan

holdings to the tune of approximately ¥23,800 million. At theInsurance Inc. In this context, JPR maintains strict criteriasame time, JPR divested its interests in select existing proper-

toward transactions with interested parties, with the aim ofties as part of the Company’s “Value Up” strategy and in line

avoiding conflicts of interest, and ensures compliance with

with efforts to improve portfolio quality. As reported in the

all regulatory requirements and accepted commercial prac-

sixth fiscal period, JPR sold the JPR Ikebukuro Building, thetices. Leveraging its leading position in the J-REIT market and

JPR Square Hakata East/West, and the JPR Park Westan established track record, JPR also conducts direct negotia-

Takamatsu. In the fiscal period under review, the Company

tions with sellers in efforts to enhance its portfolio. As of June

reported a net gain of ¥467 million in connection with these30, 2005, properties acquired through sponsor collaboration

properties.

comprised 60.7% of the entire portfolio, while direct negotia-

As a result of these activities,
JPR held 42 properties as of June30, 2005, totaling ¥197,652 million

tion led to 63.9% on an acquisition
price basis.
JPR consistently recog-“Periodic discrepancies with established investment criteria
guidelines are the result of our forward-looking posture anda comprehensive analysis of risks and returns.”

on an acquisition price basis, withnizes portfolio quality as the key

total leasable floor space of

to financial stability and the plat-

281,408.97 m2 and 459 tenants.

form for future growth. The

Notwithstanding the Company’s “in principle” investment

Company will continue to secure a quality portfolio capable

criteria to maintain a 6:4 ratio of properties held in Tokyoof generating efficient cash flows and stable dividends, whileand other regions, and an 8:2 ratio of office buildings andtaking full consideration of risk and return factors and theretail properties, as of June 30, 2005, these ratios stood at

general improvement in portfolio composition and balance.

6.4:3.6 and 7.5:2.5, respectively. Leveraging its high-quality
portfolio and competitive advantage, JPR will adopt a proac-

EQUITY AND FUNDS MANAGEMENT

tive approach to securing an optimal portfolio mix in terms

The Company’s fundamental policy for funds procurement isof location and property type. Periodic discrepancies withto establish the optimum mix between stable medium-/established investment criteria guidelines are the result of

long-term funds and short-term financing. In its seventh

this forward-looking posture and a comprehensive analysis

fiscal period, JPR procured ¥26,318 million from the issue ofof risks and returns.

100,000 additional investment units. As a result, the number

A defining feature of the Company is its strong relationship with sponsor companies comprising Tokyo Tatemono

4of investment units outstanding as of June 30, 2005 was
530,000 units with a book value of ¥115,432 million.

PORTFOLIO BREAKDOWNNOI Breakdown by Region

Value Breakdown by Region

Other cities(¥70,984 million)

Other cities(¥2,069 million)

Tokyo CBDs(¥90,001 million)

35.9%

Total Leased Floor Space by Region

270,242.83 m2¥5,477 million¥197,652 million

37.8%

45.5%

29.1%

38.1%

40.9%
30.0%

Greater Tokyo(¥1,318 million)

Greater Tokyo(81,044.44 m2)

Total Leased Floor Space by TypeNOI Breakdown by Type

Value Breakdown by Type¥197,652 million
Retail properties(¥50,030 million)

Tokyo CBDs
(78,554.57 m2)

24.1%

18.6%

Greater Tokyo(¥36,667 million)

Other cities(110,643.82 m2)

Tokyo CBDs(¥2,090 million)

270,242.83 m2¥5,477 million
Retail properties(¥1,477 million)

Retail properties(76,184.01 m2)

27.0%

25.3%

28.2%

74.7%

73.0%

71.8%

Offices(¥147,622 million)

Offices(¥4,000 million)

Offices(194,058.82 m2)

Total Leasable Floor Space and Occupancy Rate

Portfolio Growth

Total leasable floor space (m2)(%) Occupancy rate100

300,000
280,000

95
260,000

Accumulated
Investment

Properties

42¥197.65 billion

42¥179.63 billion

38¥163.65 billion
90

240,000

32¥139.65 billion
220,00085¥125.80 billion

80¥94.60 billion¥92.18 billion

75¥72.66 billion

30

200,000
180,000
160,000
140,00070¥40.73 billion

120,000

25

27

June
2002

Dec.
2002

18

13

65
100,000
60

80,000

Nov.
2001

Dec.
2001

Mar.
2002

June
2002

Sept.
2002

Dec.
2002

Mar.
2003

June
2003

Dec.
2003

June
2004

Dec.
2004

June
2005

Purchase
Period

Nov.
2001

Dec.
2001

June
2003

Dec.
2003

June
2004

Dec.
2004

June
2005

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

5

In the area of debt financing, the balance of total outstanding borrowings as of June 30, 2005 stood at ¥41,666

last look right of acquisition.
Conscious of tenant movements and the critical nature of

million, with the balance of unsecured corporate bonds

maintaining high occupancy rates, JPR has adopted a

totaling ¥42,000 million. Standard & Poor’s, Moody’s Investor

number of initiatives to secure and maintain a competitive

Service, and Rating and Investment Information, Inc. rated

advantage. Consistent with the Company’s efforts to estab-these corporate bonds A-, A3, and A+, respectively. In anlish a brand strategy, JPR has adopted the A/3S concept,

effort to reduce exposure to the risk of potential increases inwhich emphasizes “Amenities” based on a three “S” platform

interest rates, the Company took steps to repay a portion ofof “Service, Safety and Saving energy.”

its short-term borrowings and to convert a portion to longterm fixed rate borrowings.
Stemming from these initiatives, 93.8% of total outstand-Through its brand strategy, JPR is endeavoring to establish a competitive advantage and to further distinguish its
property holdings from other real estate funds. As part ofing debt is long-term fixed rate

these efforts, the Company

debt with an average maturity of

installed energy-saving air condi-

4.3 years. The average interest ratetioning systems at the Kawaguchi“In its efforts to establish a brand strategy, JPR has adopted
the A/3S concept, which emphasizes ‘Amenities’ based on a three ‘S’platform of ‘Service, Safety and Saving energy.’ ”

for its medium- / long-term debt

Center Building with the aim ofduring the fiscal period ended

reducing power consumption.

June 30 was 1.3%.

Estimates indicate power savings

The interest-bearing debt to total assets ratio was 38.6%.

in the vicinity of 36.3%. Similar and other efforts are being
implemented for other properties within the portfolio as and

STEERING THE RIGHT COURSE

when considered appropriate.

JPR recognizes external and internal factors as springboards

Critical to the Company’s success is tenant financial

for future growth. Looking at external factors, the Company

standing, diversification and the incidence of long-term lease

maintains guidelines for investment and divestment toagreements. In this context, JPR is adopting the aforemen-

ensure stability in operations and secure adequate returns totioned measures as well as streamlining and collaborating

unitholders. Notwithstanding these guidelines, however, JPR

with property managers with the aim of ensuring high andis adopting a more proactive approach to investment taking

stable occupancy.

full consideration of its risk and return profile. At the sametime, the Company is seeking opportunities to increase own-

LOOKING AHEAD

ership in invested properties in which it currently holds part

Tempered by a conservative outlook of the future, JPR never-ownership, and for which it maintains a first look right and/ortheless maintains a positive view of the future. Despite

6

ACTIVITY HIGHLIGHTS

Acquisitions
Strasse Ichibancho

Site Area (m2):

On February 4, 2005, JPR purchased the Strasse Ichibancho, located on Sendai’s most
fashionable shopping promenade. Housing Five Foxes Co., Ltd, the property is unrivalled as an attractive fashion center in Sendai. It is situated twelve minutes on footfrom JR Sendai Station and four minutes on foot from Hirose-Dori Subway Station.

Total Floor Space (m2):648.81
3,445.80
Structure/Floors:

RC/S B1/8F
Completed:

October 2002

UFJ Central Leasing Head Office Building

Site Area (m2):

In accordance with JPR’s fundamental investment policies to acquire properties inmajor regional cities, the UFJ Central Leasing Head Office Building, located in
Nagoya, was acquired on March 22, 2005. The building is seven minutes on footfrom Fushimi Station, serviced by the Higashiyama and Tsurumai Subway Lines.

Total Floor Space (m2):

1,610.38
10,201.44
Structure/Floors:

SRC B1/9F
Completed:

March 1991

Benetton Shinsaibashi Building

Site Area (m2):

The Benetton Shinsaibashi Building is situated in a prime location just two minutes onfoot from Shinsaibashi Station in Osaka’s Shinsaibashi area, which is known for its
major department stores and brand shops. Purchased on May 30, 2005, this standout
building won the Osaka Governor’s Award at the 50th Osaka Architectural Contest.

Total Floor Space (m2):

609.315,303.98
Structure/Floors:

S B2/10F
Completed:February 2003

Fukuoka Building

BYGS Shinjuku Building
JPR increased its ownership of the
BYGS Shinjuku Building to 75% on
April 12, 2005. The building consists of both office space andshops, and is conveniently locatedabove Shinjuku-Sanchome
Station, which is serviced by the
Toei Shinjuku Subway Line.
(See page 15)

Site Area (m2):

3,522.46
Total Floor Space (m2):

25,733.10
Structure/Floors:

SRC B2/14F
Completed:

April 1985

Ownership of the Fukuoka
Building was increased on April
15, 2005. This office building is situated in Tokyo’s main businessarea, six minutes on foot from JR
Tokyo Station and two minutes onfoot from Kyobashi Station, serviced by the Ginza Subway Line.
(See page 15)

Site Area (m2):

1,302.17
Total Floor Space (m2):

11,627.74
Structure/Floors:

SRC B2/10F
Completed:May 1990

Divestments
In the period under review, JPR undertook the sale of three properties, namely the JPR Ikebukuro Building, the JPR Square Hakata
East/West, and the JPR Park West Takamatsu for an aggregate gain on sale. In accordance with its investment policies and Value Up
strategy, JPR’s decision was based on multiple factors including an examination of the impact on dividends, changes in current andforecast revenues and asset values, and the geographical distribution and overall composition of its portfolio. After accounting for
capital gains and losses and the payment of sales commissions, the sale of these properties produced a net gain of ¥467 million,
which demonstrates the success of JPR’s Value Up strategy and efforts to promote large-scale renovations to increase occupancy
rates before sale.

Issue of New Investment Units
In an overall effort to secure stable growth, JPR issued additional investment units during the period under review. The Company
undertook a primary offering of 95,000 new investment units and a third-party offering of 5,000 investment units, raising the total
number of investment units issued and outstanding to 530,000 units, as of June 30, 2005. Gross proceeds based on the purchase priceof approximately ¥25.0 billion from the primary offering and ¥1.3 billion from the third-party offering were paid on February 1, 2005,
and March 1, 2005, respectively. JPR intends to use these proceeds for the acquisition of properties and repayment of short-term debt.

7

increased competition in connection with the acquisition of

the Park East Sapporo and the SK Hiroshima Building, JPR will

new investment properties, JPR is well placed as an estab-enjoy net gains of approximately ¥177 million and ¥31

lished leader in the J-REIT market and through the support ofmillion, respectively.

first-class sponsor companies.

Buoyed by a gentle upswing in business confidence by

While the Company has reviewed its investment in devel-

the corporate sector, as of August 18, 2005, JPR forecasts

opment proposals, limiting current exposure and considera-

operating revenues in the eighth fiscal period of ¥8,174

tion to the Cupo-la Main Building (1-1 Kawaguchi

million, operating profits of ¥3,604 million, net income of

Redevelopment Project) scheduled to come on line during¥3,021 million, and a cash distribution per investment unit of

the ninth fiscal period, JPR will aggressively pursue invest-¥5,700 for the fiscal period ending December 31, 2005.

ment property acquisition including those in the develop-

Based on the implementation of a strict investment

ment field.

policy, JPR’s ongoing goal is to secure stable medium- /Turning to subsequent events,

long-term growth backed by a

JPR contracted to acquire a bene-

strong financial position, and we

ficiary interest in the Tachikawa

are confident that the strategies“JPR is well placed as an established leader in the J-REIT market
through the support of first-class sponsor companies.”

Business Center Building for an

are in place to maintain ourinvestment of ¥888 million onleading position in the market.

August 9, 2005, and to settle on

The Company is supported in

September 30, 2005. The Company acquired the Housing

these efforts by TRIM, an innovative asset management

Design Center Kobe for an investment of ¥7,220 million andcompany, and a number of outstanding sponsor company

executed a purchase agreement to acquire the Rise Arena

relationships. JPR will continue to reduce expenses, improve

Building (Higashi-Ikebukuro 4-chome Redevelopment

occupancy, and acquire prime investment properties in an

Project) for an investment of ¥5,467 million. The Rise Arenaeffort to enhance unitholder value. We hope this business

Building is currently under construction (see page 9) andreport will provide readers with a better understanding ofrepresents JPR’s second development purchase. The

the Company, its policies, strategies and future. JPR looks

Company has contracted to sell the Park East Sapporo at a

forward to the continued support and understanding of all

sales price of ¥2,400 million and the SK Hiroshima Building at

its investors.

a sales price of ¥1,040 million. Following the divestiture ofHirohito Kaneko, Executive Officer,
Japan Prime Realty Investment Corporation

8

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

SUBSEQUENT ACTIVITY HIGHLIGHTS

Acquisitions
Housing Design Center Kobe
Located in West Kobe’s Harborland district, avibrant economic and cultural center, theHousing Design Center Kobe is a landmark building of the highest quality. The building consists ofshops, office space and an exhibition hall, and issituated in front of JR Kobe Station and threeminutes on foot from Kosoku Kobe Station.

3,994.47

Site Area (m2):

Total Floor Space (m2): 33,877.71
Structure/Floors:

SRC/S B2/11F

Completed:

June 1994

Location:

Kobe-shi, Hyogo

Acquisition Date:

September 28, 2005

Acquisition Price:¥7,220 million

Tachikawa Business Center Building
The Tachikawa Business Center Building was purchased in accordance with JPR’s fundamental
investment policies to acquire new office buildings in Greater Tokyo. The building is five minutes
on foot from Tachikawa Station, serviced by the
JR Chuo Line, Ome Line and Nambu Line.
Consisting of office space and parking facilities, ithouses four tenants including Ricoh Sales Co., Ltd.

2,047.22

Site Area (m2):

Total Floor Space (m ): 14,706.36
2Structure/Floors:

S/SRC B1/12F

Completed:

December 1994

Location:

Tachikawa-shi, Tokyo

Acquisition Date:

September 30, 2005

Acquisition Price:¥888 million

Rise Arena Building (Higashi-Ikebukuro 4-chome Redevelopment Project)
The Rise Arena Building is under construction at
the Higashi-Ikebukuro 4-chome Redevelopment
Project. This building will be a state-of-the-art
office complex near Sunshine City, a large shopping center in the commercial area of Ikebukuro.
It is conveniently located one minute on footfrom Higashi-Ikebukuro Subway Station andnine minutes on foot from Ikebukuro Station, amajor hub serviced by JR, Seibu, and several
subway lines.

9,377.28

Site Area (m2):

Total Floor Space (m ): 37,596.19
2Structure/Floors:

S/SRC/RC B2/15F

Completion:

January 2007 (planned)

Location:

Toshima-ku, Tokyo

Contract Date:

September 30, 2005

Settlement Date:

March 2007 (planned)

Acquisition Price:¥5,467 million

Note: In the event profitability improves as a result of efforts by the seller toattract tenants, the acquisition price is subject to revision based on apredetermined formula.

Divestments
In accordance with its fundamental investment policy, JPR contracted to sell Park East Sapporo and the SK Hiroshima Building during theperiod under review. The sale of these two properties is the result of an examination of the impact on dividends, future property prices
and earnings potential, portfolio composition and diversification, and other factors. Sale prices of ¥2,400 million for the Park East
Sapporo and ¥1,040 million for SK Hiroshima Building represent net gains of approximately ¥177 million and ¥31 million, respectively.

9

PROPERTY PORTFOLIO OF JPR

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

Hokkaido
C – 10 11

Minato-ku

Office A-7
Office A-10

Shinagawa-ku

B Greater Tokyo
Saitama

Office B-6
Office B-7

Retail B-1
Tokyo

Office B-1
Kanagawa

Office B-5
Office B-3

TohokuOffice B-2

Retail B-2

C – 12Chiba

2Hokuriku
C – 1

BChugokuA

C – 15

C – 16 19 Chubu

Osaka
C – 2

4

17

1

3

C – 6
C – 13

Shikoku

Kinki

Kyushu
C – 7

14 18

C – 9

Okinawa

10

A

Tokyo CBDs

Chiyoda, Chuo, Minato, Shinjuku,
Shinagawa, Shibuya

B

Greater Tokyo

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

C

Other Cities

All other areas in Japan

A Tokyo CBDs
■

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

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

B Greater Tokyo
■

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

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

C Other Cities—Hokkaido, Tohoku and Hokuriku■■ C-10■ C-11■ C-12■ C-1● C-2

North 33 Bldg.
Park East Sapporo
Sompo Japan Sendai Bldg.
Niigata Ekinan Center Bldg.
Strasse Ichibancho (Retail)

C Other Cities—Osaka
■

■ C-2
■ C-4
■ C-17● C-1● C-3

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

C Other Cities—Chubu, Kinki,Chugoku and Shikoku■■ C-16■ C-19■ C-13■ C-15■ C-6

JPR Nagoya Sakae Bldg.
UFJ Central Leasing Head Office Bldg.
Sompo Japan Wakayama Bldg.
SK Hiroshima Bldg.
JPR Takamatsu Bldg.

C Other Cities—Kyushu and Okinawa
■

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

11

Tokyo CBDs

Region

Type

No.

Name

Location

OfficeA-1

Kanematsu Bldg.

Chuo-ku, Tokyo

OfficeA-2

Kanematsu Bldg. Annex

OfficeA-3

JPR Ningyo-cho Bldg.

OfficeA-4

Office

A-5

Office

A-6

Office

A-7

OfficeOfficeCompleted

Acquired

1993. 2

2001.12Chuo-ku, Tokyo

1993. 2

2001.12Chuo-ku, Tokyo

1989.122001.11Shin-Kojimachi Bldg.

Chiyoda-ku, Tokyo

1984.10

2001.11–2004.11

JPR Crest Takebashi Bldg.

Chiyoda-ku, Tokyo

1999. 92002. 6

MS Shibaura Bldg.

Minato-ku, Tokyo

1988. 2

2003. 3

Gotanda First Bldg.

Shinagawa-ku, Tokyo

1989. 7

2003. 7

A-8

Fukuoka Bldg.

Chuo-ku, Tokyo

1990. 5

2003.10–2005. 4

A-9

JPR Ichigaya Bldg.

Chiyoda-ku, Tokyo

1989. 3

2004. 5

OfficeA-10

Oval Court Ohsaki Mark West

Shinagawa-ku, Tokyo

2001. 6

2004. 6

OfficeA-11

Shinjuku Square Tower

Shinjuku-ku, Tokyo

1994.10

2004. 7

OfficeA-12

BYGS Shinjuku Bldg.

Shinjuku-ku, Tokyo

1985. 4

2004.11–2005. 4

OfficeA-13

Across Shinkawa Bldg. Annex

Chuo-ku, Tokyo

1994. 6

2004.11RetailA-1

JPR Shibuya Tower Records Bldg.

Shibuya-ku, Tokyo

1992. 2

2003. 6

RetailA-2

JPR Daikanyama

Shibuya-ku, Tokyo

2002. 7

2004.10

OfficeB-1

Arca East

Sumida-ku, Tokyo

1997. 3

2001.11

OfficeB-2

JPR Chiba Bldg.

Chiba, Chiba

1991. 1

2001.12Greater Tokyo

Total

OfficeB-3

JPR Yokohama Nihon Odori Bldg.

Yokohama, Kanagawa

1989.10

2001.11

OfficeB-4

JPR Ikebukuro Bldg.*1

Toshima-ku, Tokyo

1980.10

2002. 6

OfficeB-5

Shinyokohama 2nd Center Bldg.

Yokohama, Kanagawa

1991. 8

2002. 9

OfficeB-6

Kawaguchi Center Bldg.

Kawaguchi, Saitama

1994. 2

2004. 2

OfficeB-7

JPR Ueno East Bldg.

Taito-ku, Tokyo

1992.10

2004. 3RetailB-1

Tanashi ASTA

Nishitokyo, Tokyo

1995. 2

2001.11RetailB-2

Tsurumi fuga 1

Yokohama, Kanagawa

1985. 92001.11

OfficeC-1

Niigata Ekinan Center Bldg.

Niigata, Niigata

1996. 3

2001.11

OfficeC-2

Meiji Yasuda Life Osaka Umeda Bldg.

Osaka, Osaka

2000. 6

2001.12

Other Cities

Total

OfficeC-4

Tokyo Tatemono Honmachi Bldg.

Osaka, Osaka

1970. 2

2001.11

OfficeC-5

JPR Park West Takamatsu*1

Takamatsu, Kagawa

1981. 8

2001.11

OfficeC-6

JPR Takamatsu Bldg.

Takamatsu, Kagawa

1982. 92001.12

OfficeC-7

JPR Hakata Bldg.

Fukuoka, Fukuoka

2001.11

OfficeC-8

JPR Square Hakata East/West*1

Fukuoka, Fukuoka

OfficeC-9

JPR Naha Bldg.

Naha, Okinawa

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

2001.112001.11

Office

C-10

North 33 Bldg.

Sapporo, Hokkaido

1992. 2

2002. 6

Office

C-11

Park East Sapporo

Sapporo, Hokkaido

1985.11

2002. 6

OfficeC-12

Sompo Japan Sendai Bldg.

Sendai, Miyagi

1997.12

2002. 6

OfficeC-13

Sompo Japan Wakayama Bldg.

Wakayama, Wakayama

1996. 7

2002. 6

OfficeC-14

Tenjin 121 Bldg.

Fukuoka, Fukuoka

2000. 7

2002. 6

Office

C-15

SK Hiroshima Bldg.

Hiroshima, Hiroshima

2002.10

OfficeC-16

JPR Nagoya Sakae Bldg.

Nagoya, Aichi

OfficeC-17

Dojima F Bldg.

Osaka, Osaka

1989.122003. 1 (building)1986.12 (parking)1993.10

OfficeC-18

Semba Fukuoka Bldg.

Fukuoka, Fukuoka

1993. 2

2004. 6

Office

C-19

UFJ Central Leasing Head Office Bldg.

Nagoya, Aichi

1991. 32005. 3

2003. 92004. 1RetailC-1

JPR Umeda Loft Bldg.

Osaka, Osaka

1990. 4

2003.5–7

RetailC-2

Strasse Ichibancho

Sendai, Miyagi

2002.10

2005. 2RetailC-3

Benetton Shinsaibashi Bldg.

Osaka, Osaka

2003. 2

2005. 5

Total

Total
Note 1: Acquisition price does not include miscellaneous expenses of acquisition (real estate agent’s fee and consumption tax).
12 Note 2: Percentages and ratios are rounded to the first decimal point. Note 3: The ratio of proprietary ownership is shown on the deed for the land.

Acquisition
Price

Appraisal
Value(millions of yen)%of Total(millions of yen)

Ownership

Site Area

(%)

(m2)

16,276

8.2%

12,70079.4%

1,751.13

2,874

1.5%

2,100

1.1%

2,560

79.4%

1,960

100.0%

2,420

1.2%

4,000

2.0%

2,420

77.3%

657.803,360

100.0%

636.90

11,2002,920

5.7%

12,40036.0%

8,992.18

1.5%

2,990

61.8%

1,551.19

2,900

1.5%

2,900

21.8%

5,100

2.6%

5,250

100.0%

Total Leasable
Floor Space (m2)

RentalRevenue

Occupancy
Rate

# of
Tenants(thousands of yen)%of Total

7,976.30

97.5%

10

442,5975.4%

679.06

2,291.13

100.0%

1

102,4651.3%

550.062,788.98

100.0%

4

98,6671.3%

3,319.33

100.0%

11

110,894

1.4%

3,265.34

100.0%

9

128,990

1.7%

14,429.09

100.0%

7

517,868

6.6%

4,243.58

100.0%

2

133,5311.7%

1,302.17

1,937.40

100.0%

2

80,7391.0%

1,058.04

4,181.66

100.0%

9

182,359

2.3%(JPR’s portion)

3,500

1.8%

4,130

27.1%

4,006.00

4,088.44

100.0%

2

144,791

1.9%

10,000

5.1%

8,840

29.3%

8,409.52

10,982.03

84.4%

17

253,066

3.2%

11,821

6.0%

11,90075.0%

3,522.46

11,363.35

81.6%

21

271,661

3.5%

710

0.4%

735

100.0%

858.481,253.39

100.0%

4

45,9220.6%

12,000

6.1%

13,400100.0%

1,010.47

8,076.85

100.0%

1

345,576

4.4%

2,160

1.1%

1,920

100.0%

277.12653.99100.0%

1

52,2050.7%

90,00145.5%

87,46535,262.58

80,850.86

95.0%

101

2,891,336

37.1%

5,880

3.0%

5,300

41.1%

3,755.01

7,050.10

70.7%

4

147,540

1.9%

2,350

1.2%

2,020

100.0%

1,382.35

5,562.97

93.4%

28

146,012

1.9%

2,927

1.5%

2,420

100.0%

1,100.59

6,082.25

97.3%

11

134,189

1.7%

—

—

—

100.0%————

39,156

0.5%

920

0.5%

1,020

50.0%

841.712,640.86

88.0%

11

68,890

0.9%

8,100

4.1%

8,990

86.5%

4,524.61

15,478.43

99.5%

38

494,682

6.3%

3,250

1.6%

3,460

100.0%

1,242.97

6,512.45

100.0%

9

170,233

2.2%

10,2005.2%

10,90042.1%

12,326.30

31,121.71

100.0%

1

596,400

7.6%

64.4%

3,040

1.5%

3,300

36,667

18.6%

37,4101,962.18

9,578.60

100.0%

1

145,200

1.9%

27,135.72

84,027.37

96.5%

103

1,942,305

24.9%

2,140

1.1%

2,100

8,300

4.2%

8,670

52.7%

2,706.99

5,206.82

100.0%

14

131,215

1.7%

33.3%

5,999.33

9,600.63

95.9%

23

342,678

4.4%

4,150

2.1%

—

—

3,990

64.3%

1,432.64

7,210.25

98.6%

10

244,8463.1%—

100.0%————

19,459

0.2%

2,130
2,900

1.1%

1,360

100.0%

1,407.78

5,023.53

91.2%

28

97,372

1.2%

1.5%

2,730

100.0%

1,214.63

6,581.15

89.6%

26

153,281

2.0%

—

—

—

100.0%————

60,313

0.8%

1,560

0.8%

1,530

100.0%

959.87

3,947.69

84.6%

14

98,497

1.3%

3,700

1.9%

2,860

100.0%

1,382.12

6,642.98

98.0%

24

169,958

2.2%

2,150

1.1%

1,720

100.0%

1,808.26

7,655.89

89.4%

22

127,816

1.6%

3,150

1.6%

3,290

100.0%

1,895.67

7,107.40

91.0%

11

174,349

2.2%

1,670

0.8%

1,680

100.0%

1,128.45

4,891.36

88.5%

15

115,637

1.5%

2,810

1.4%

2,560

52.2%

1,164.39

3,292.02

96.6%

13

116,167

1.5%

947

0.5%

840

100.0%

502.41

2,742.22

85.9%

17

52,114

0.7%

4,550

2.3%

4,790

100.0%

992.31

5,461.90

100.0%

20

219,372

2.8%

2,140

1.1%

2,130

100.0%

668.11

3,941.40

84.9%

9117,664

1.5%

1,920

1.0%

1,960

100.0%

680.63

3,349.57

87.5%

5

92,549

1.2%

4,137

2.1%

3,970

100.0%

1,610.38

7,123.07

100.0%

1

104,679

1.3%

13,000

6.6%

12,000100.0%

3,518.68

18,586.97

100.0%

1

402,412

5.2%

4,200

2.1%

3,820

100.0%

648.81

2,861.91

100.0%

1

104,6971.3%*2

609.315,303.98

100.0%

1*2

67,03030,330.77

116,530.74

94.9%

255

2,967,533

38.0%

191,905

92,729.07

281,408.97

95.4%

459

7,801,176

100.0%

5,430

2.7%

5,030

70,98435.9%

197,652

100.0%

100.0%*1: Property sold on March 16, 2005.
*2: The entire Benetton Shinsaibashi Building is leased to a single tenant. JPR was unable to obtain the tenant's approval to disclose of rental information.

13

Overview of Portfolio Properties(As of June 30, 2005)

Tokyo CBDs
Chuo-ku, Tokyo

Kanematsu Bldg.
Acquisition Price(millions of yen)

16,276% of Total
Site Area (m2)Chuo-ku, Tokyo

Kanematsu Bldg. Annex
Acquisition Price(millions of yen)

2,874

8.2%

% of Total

1.5%

1,751.13

Site Area

Total Floor Space (m2)

14,995.09

Total Floor Space

Structure/Floors

S/RC/SRC
B2/13F

Structure/Floors

SRC
B1/8F

CompletedFebruary
1993

CompletedFebruary
1993

Chuo-ku, Tokyo

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

2,100

% of Total
Site Area

A -■
3
■

(m2)

4,351.46

Chiyoda-ku, Tokyo

Shin-Kojimachi Bldg.
Acquisition Price

2,420

1.1%

% of Total

1.2%

550.06Site Area

4,117.70

Total Floor Space

Structure/Floors

SRC/RC
B1/8F

Structure/Floors

SRC
B1/9F

Completed

December
1989

Completed

October
1984

(m2)
(m2)

Chiyoda-ku, TokyoJPR Crest Takebashi Bldg.
Acquisition Price(millions of yen)

4,000

% of Total

A -■
5
■

A -■
2
■

679.06(m2)(millions of yen)

Total Floor Space

14

A -■
1
■

A -■
4
■

657.80(m2)(m2)

5,152.98

Minato-ku, TokyoMS Shibaura Bldg.
Acquisition Price(millions of yen)

11,200

2.0%% of Total

5.7%

Site Area (m2)

636.90Site Area (m2)

8,992.18

Total Floor Space (m2)

4,790.68

Total Floor Space (m2)

31,020.21

Structure/Floors

SRC
B1/9F

Structure/Floors

SRC/RC/S
B2/13F

Completed

September
1999

CompletedFebruary
1988

A -■
6
■

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

Shinagawa-ku, Tokyo

Gotanda First Bldg.
Acquisition Price(millions of yen)

2,920

% of Total

A -■
7
■

A -■
8
■

Chuo-ku, Tokyo

Fukuoka Bldg.
Acquisition Price(millions of yen)

2,920

1.5%

% of Total

1.5%

Site Area (m2)

1,551.19

Site Area (m2)

1,302.17

Total Floor Space (m2)

10,553.34

Total Floor Space (m2)

11,627.74

Structure/Floors

SRC/RC
B2/11F

Structure/Floors

SRC
B2/10F

Completed

July 1989

CompletedMay 1990

Chiyoda-ku, Tokyo

JPR Ichigaya Bldg.
Acquisition Price

A -■
9
■

Shinagawa-ku, Tokyo

Oval Court Ohsaki Mark West
Acquisition Price(millions of yen)

3,500

2.6%

% of Total

1.8%

1,058.04

Site Area

5,888.82

Total Floor Space

Structure/Floors

SRC
B1/9F

Structure/Floors

S/SRC
B2/17F

Completed

March
1989

Completed

June 2001(millions of yen)

5,100

% of Total
Site Area(m2)

Total Floor Space(m2)

Shinjuku-ku, Tokyo

Shinjuku Square Tower
Acquisition Price

A -■
11
■

4,006.00

(m2)
(m2)

28,575.80

Shinjuku-ku, TokyoBYGS Shinjuku Bldg.
Acquisition Price(millions of yen)

11,821

5.1%% of Total

6.0%

Site Area (m2)

8,409.52

Site Area (m2)

3,522.46

Total Floor Space (m2)

78,796.00

Total Floor Space (m2)

25,733.10

Structure/Floors

S/RC/SRC
B4/30F

Structure/Floors

SRC
B2/14F

Completed

October
1994

Completed

April 1985

(millions of yen)

10,000% of Total

A -■
10
■

A -■
12
■

15

Chuo-ku, Tokyo

Across Shinkawa Bldg. Annex
Acquisition Price(millions of yen)710

% of Total

A -■
13
■

Shibuya-ku, Tokyo

JPR Shibuya Tower Records Bldg.
Acquisition Price(millions of yen)

12,0000.4%% of Total

6.1%

Site Area (m2)

858.48Site Area (m2)

1,010.47

Total Floor Space (m2)

5,535.90

Total Floor Space (m2)8,449.56

Structure/Floors

S/SRC
B2/10F

Structure/Floors

SRC/S
B3/8F

Completed

June 1994

CompletedFebruary
1992

A -●1 (Retail)■Greater Tokyo
Shibuya-ku, TokyoJPR Daikanyama

B -■
1
■

Sumida-ku, Tokyo

Arca East
Acquisition Price

Acquisition Price(millions of yen)

2,160

(millions of yen)

5,880

% of Total

1.1%% of Total

3.0%

Site Area

277.12Site Area

668.09Total Floor Space

Structure/Floors

RC
B2/2F

Structure/Floors

S/SRC
B3/19F

Completed

July 2002

Completed

March
1997

(m2)

Total Floor Space(m2)

Chiba, Chiba

JPR Chiba Bldg.
Acquisition Price

16

A -●
2 (Retail)■(millions of yen)

2,350

% of Total

B -■
2
■

3,755.01

(m2)
(m2)

34,281.86

Yokohama, Kanagawa

JPR Yokohama Nihon Odori Bldg.
Acquisition Price(millions of yen)

2,927

1.2%

% of Total

1.5%

Site Area (m2)

1,382.35

Site Area (m2)

1,100.59

Total Floor Space (m2)

9,072.57

Total Floor Space (m2)9,146.52

Structure/Floors

S/SRC
B1/13F

Structure/Floors

SRC
B1/11F

Completed

January
1991

Completed

October
1989

B -■
3
■

Yokohama, Kanagawa

Shinyokohama 2nd Center Bldg.
Acquisition Price(millions of yen)920

% of Total

B -■
5
■

Kawaguchi, Saitama

Kawaguchi Center Bldg.
Acquisition Price(millions of yen)

8,100

0.5%

% of Total

4.1%

Site Area (m2)

841.71Site Area (m2)

4,524.61

Total Floor Space (m2)

7,781.93

Total Floor Space (m2)

28,420.85

Structure/Floors

S/SRC
B2/12F

Structure/Floors

S/SRC
B2/15F

Completed

August1991

CompletedFebruary
1994

Taito-ku, Tokyo

JPR Ueno East Bldg.
Acquisition Price(millions of yen)

3,250

% of Total
Site Area(m2)

Total Floor Space

(m2)

B -■
7
■

Tanashi ASTA
(millions of yen)

10,200

1.6%% of Total

5.2%

1,242.97

Site Area

12,326.30

8,490.44

Total Floor Space (m2)Structure/Floors

SRC B2/17F

October
1992

Completed(m2)

80,675.27

S/SRC
B1/8F

Structure/Floors

B -●
1 (Retail)■Nishitokyo, Tokyo

Acquisition Price

B -■
6
■

CompletedFebruary 1995

Other Cities — Hokkaido, Tohoku and Hokuriku
Yokohama, Kanagawa

Tsurumi fuga 1
Acquisition Price

B -●2 (Retail)
■

C -■
10
■

Sapporo, Hokkaido

North 33 Bldg.
Acquisition Price(millions of yen)

3,040

(millions of yen)

3,700

% of Total

1.5%% of Total

1.9%

Site Area (m2) 1,962.18

Site Area (m2)

1,382.12

Total Floor Space (m2)

Total Floor Space (m2)

10,568.23

Structure/Floors

SRC
B1/12F

CompletedFebruary
1992

13,543.32
Structure/Floors

SRC B2/7F
Completed

September 1985

17

Sapporo, Hokkaido

Park East Sapporo
Acquisition Price(millions of yen)

2,150

% of Total

C -■
11
■

Sendai, Miyagi

Sompo Japan Sendai Bldg.
Acquisition Price(millions of yen)

3,150

1.1%

% of Total

1.6%

Site Area (m2)

1,808.26

Site Area (m2)

1,895.67

Total Floor Space (m2)

10,865.75

Total Floor Space (m2)

10,783.52

Structure/Floors

SRC
B1/8F

Structure/Floors

SRC
B1/12F

Completed

November
1985

Completed

December
1997

Niigata, Niigata

Niigata Ekinan Center Bldg.
Acquisition Price(millions of yen)

2,140

% of Total
Site Area

C -■
1
■

Sendai, Miyagi

Strasse Ichibancho
Acquisition Price(millions of yen)

4,200

1.1%

% of Total

2.1%

2,706.99

Site Area

19,950.42

Total Floor Space

Structure/Floors

S/SRC
B1/10F

Structure/Floors

RC/S
B1/8F

Completed

March
1996

Completed

October
2002(m2)

Total Floor Space

(m2)

C -■
12
■

C -●
2 (Retail)■648.81(m2)(m2)

3,445.80

Other Cities — Osaka
Osaka, Osaka

Meiji Yasuda Life Osaka Umeda Bldg.
Acquisition Price18(millions of yen)

8,300

% of Total

C -■
2
■

Osaka, Osaka

Tokyo Tatemono Honmachi Bldg.
Acquisition Price(millions of yen)

4,150

4.2%

% of Total

2.1%

Site Area (m2)5,999.33

Site Area (m2)

1,432.64

Total Floor Space (m2)

52,982.94

Total Floor Space (m2)

14,619.52

Structure/Floors

S/SRC
B2/31F

Structure/Floors

SRC
B3/9F

Completed

June 2000

CompletedFebruary
1970

C -■
4
■

C -■
17
■

Osaka, Osaka

Dojima F Bldg.
Acquisition Price

Osaka, OsakaJPR Umeda Loft Bldg.

(millions of yen)

2,140

% of Total

Acquisition Price(millions of yen)

13,0001.1%% of Total

6.6%

Site Area (m2)

668.11Site Area (m2)

3,518.68

Total Floor Space (m2)

5,696.01

Total Floor Space (m2)

17,897.56

Structure/Floors

SRC
B2/9F

Structure/Floors

SRC
B1/8F

Completed

October
1993

Completed

April 1990

C -●1 (Retail)■

Other Cities — Chubu, Kinki, Chugoku and Shikoku
Osaka, Osaka

Benetton Shinsaibashi Bldg.

C -●3 (Retail)■

Nagoya, Aichi

JPR Nagoya Sakae Bldg.
Acquisition Price

Acquisition Price(millions of yen)

5,430

(millions of yen)

4,550

% of Total

2.7%% of Total

2.3%

Site Area

609.31Site Area

5,303.98

Total Floor Space

Structure/Floors

S B2/10F

CompletedFebruary
2003

Structure/Floors
Building
Parking(m2)

Total Floor Space(m2)

992.31(m2)(m2)

Completed
Building
Parking

Wakayama, Wakayama

Sompo Japan Wakayama Bldg.
Acquisition Price

C -■
13
■

C -■
16
■

7,340.18
S B1/11F
S 1F
January
2003
December
1986

Nagoya, Aichi

UFJ Central Leasing Head Office Bldg.
Acquisition Price(millions of yen)

1,670

(millions of yen)

4,137

% of Total

0.8%% of Total

2.1%

Site Area (m2)

1,128.45

Site Area (m2)

1,610.38

Total Floor Space (m2)

6,715.07

Total Floor Space (m2)

10,201.44

Structure/Floors

S 9F

Structure/Floors

Completed

July 1996

SRC
B1/9F

Completed

March
1991

C -■
19
■

19

Hiroshima, Hiroshima

SK Hiroshima Bldg.
Acquisition Price(millions of yen)947

% of Total

C -■
15
■

Takamatsu, Kagawa

JPR Takamatsu Bldg.
Acquisition Price(millions of yen)

2,130

0.5%

% of Total

1.1%

Site Area (m2)

502.41Site Area (m2)

1,407.78

Total Floor Space (m2)

4,268.70

Total Floor Space (m2)

7,409.08

Structure/Floors

SRC B1/9F

Structure/Floors

Completed

December
1989

SRC
B1/10F

Completed

September
1982

C -■
6
■

Other Cities — Kyushu and Okinawa
Fukuoka, Fukuoka

JPR Hakata Bldg.
Acquisition Price(millions of yen)

2,900

% of Total
Site Area(m2)

Total Floor Space(m2)

Structure/Floors
Building
Parking
Completed
Building
Parking

JPR Naha Bldg.
Acquisition Price

1,560

1.5%

% of Total

0.8%

1,214.63

Site Area

9,828.73

Total Floor Space

S/RC
B1/12F
S1F

959.87(m2)(m2)

5,780.71

Structure/Floors

SRC/S
12F

Completed

October
1991

June 1985
November
2003

Tenjin 121 Bldg.

20

C -■
9
■

Naha, Okinawa(millions of yen)

Fukuoka, Fukuoka

Acquisition Price

C -■
7
■

(millions of yen)

2,810

% of Total

C -■
14
■

Fukuoka, Fukuoka

Semba Fukuoka Bldg.
Acquisition Price(millions of yen)

1,920

1.4%

% of Total

1.0%

Site Area (m2)

1,164.39

Site Area (m2)

680.63

Total Floor Space (m2)

8,690.95

Total Floor Space (m2)

3,874.81

Structure/Floors

S/SRC
13F

Structure/Floors

SRC
8F

Completed

July 2000

CompletedFebruary
1993

C -■
18
■

REIT STRUCTURE AND EXTERNAL SERVICE PROVIDERS

General Tenant Services Agent/
Property Transfer Agent/
Construction Management Agent

Asset Management Company

Tokyo Realty Investment
Management, Inc.
Asset Management

Asset Management

Tenant Agents

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

Tokyo Tatemono Co., Ltd.

Investment Corporation

Japan Prime Realty
Investment Corporation

Liabilities

Loans
Corporate Bonds

LenderCorporate Bond
Investor

AssetsInvestment

Property

Unitholder

Unitholders’ Equity

Cash Distribution

Property Manager

Unitholder

Asset Custodian

Asset Custodian
Mizuho Trust & Banking Co., Ltd.

Tokyo Tatemono Co., Ltd., performs agency services for thesigning of real estate leasing contracts (“general tenant agency
services”) under a commission from the owners of real estate, inorder to provide uniform tenant recruitment and sales services
for the Company. Tokyo Tatemono also has been commissioned
by TRIM to undertake “property transfer services.” Tokyo
Tatemono also provides advice on rental operations

Administrative Agent

Administrative Agent
Mizuho Trust & Banking Co., Ltd.

management and construction planning management work(“leasing management/construction management services” or“LM /CM services”) to TRIM.
Yasuda Real Estate Co., Ltd., and Taisei Corporation provide
general tenant agency services for real estate, as commissionedby the trustees.

21

Tokyo Realty Investment Management, Inc.
Tokyo Realty Investment Management, Inc., (“TRIM”) concluded
the asset management contract with JPR on September 27,
2001. Based on the contract, TRIM provides asset management
services as a REIT Management Company under the Investment
Trust Law.
TRIM is assigned to provide (1) services regarding asset management for JPR (including all decision-making in connection
with the acquisition/ disposition or leasing of properties andacting as an agent or broker of such transactions based on relevant evaluation and judgment), (2) services regarding funding
by JPR, (3) reporting to JPR, and (4) any other services related toor affiliated with the above (the above services are collectively
called “Asset Management Service” or “AM Service”).

Decision-Making Process of Investment Management
The “Investment Committee” is set as a committee to makeinvestment decisions along with its sub-organizations, the“Investment Subcommittee” and the “Fund Management
Subcommittee.” Members of these organizations include theCEO, CIO, CFO, CAO, Fund Manager, Research Manager, AssetManager, Investment Management Manager, and other relatedGroup managers.
The “Investment Committee” formulates fundamental
investment policy for the medium and long term within two
fiscal periods, while the “Investment Subcommittee”or “FundManagement Subcommittee” have charge of decisions on
issues regarding acquisitions, dispositions and management of
individual assets respectively. The Board of Directors is given the
final authorization on acquisitions or dispositions of individual
assets of a certain amount.

Shareholders’ Meeting
Auditors
Board of Directors
CEO
Compliance Committee

Investment Committee
Investment Management
Division

ResearchGroup

Investment
Group

Asset
Management
Group

Financial Division

FinancialGroup

IR Group

Shareholders in TRIM (As of June 30, 2005)

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

22

Fund
Management
Group

Corporate Planning/
Administration Division

Accounting
Group

Planning/
Human
ResourcesGroup

ComplianceGroupMeasures to Prevent Conflicts of Interest
TRIM adopts strict measures with the aim of preventing conflicts of interest.
Transaction counterparties comprise “Related Parties,” whoare defined under the Implementation Ordinance of theInvestment Trust Law and subject to certain transaction limitations pursuant to the Investment Trust Law, and “Interested
Parties*,” who are defined under internal rules. Transactions
between JPR and either Related Parties or Interested Parties(collectively referred to as “interested parties”) are recognized as“Interested-Party Transactions.”* Interested Parties
Interested parties are defined as specific parties with which transactions have been made or towhich commissions or other payments have been made in the relevant term. Interested parties
comprise Tokyo Tatemono Co., Ltd., Meiji Yasuda Life Insurance Company, Taisei Corporation,
Yasuda Real Estate Co., Ltd., Sompo Japan Insurance Inc., and their affiliated companies thatinvest in TRIM or dispatch directors or personnel to TRIM.

TRIM has established the Compliance Committee, which
together with external attorneys assess the relevance and validity of interested-party transactions. TRIM also has theCompliance Subcommittee to monitor the aforementioned
committees and determine whether their decision-making
activities strictly adhere to laws and regulations. Such measures
include:a) Acquisitions of property and assets from interested parties
i. Real estate and beneficiary interest may be acquired withthe prior approval of JPR’s Board of Directors.
ii. Other specific assets are acquired at market value if applicable. If not applicable, specific assets are considered under i.
above.
b) Sales of property or assets to interested parties
i. Regarding real estate and beneficiary interest, the sale priceof each property (not including taxes and sales commissions) shall be greater than the appraised value. In addition,prior approval from JPR’s Board of Directors is required.
ii. Other specific assets are sold at market value if applicable. If
not applicable, specific assets are considered under i. above.
c) Property management commissions to interested parties
Commissions are based on in-house property management
standards. Prior approval of JPR’s Board of Directors is required.
d) Trading intermediation fees paid to interested parties
Trading intermediation fees are limited to up to 3% of the

trading price plus ¥60,000, excluding consumption tax andother costs, with the prior approval of JPR’s Board of Directors.
e) Commissioning of construction work to interested parties
Commissions of construction work worth ¥10 million or more
require a comparison against third-party estimates and proposals. Prior approval of JPR’s Board of Directors is required.
f ) Borrowings from interested parties
Terms of borrowings must be at market levels. Prior approvalof JPR’s Board of Directors is required.

Compensation Paid to the Asset Management Company
The compensation scheme has been established with simplicity
in mind and is in line with the unitholders’ interest.
Compensation to the Asset Management Company is calculated on the following basis:
1. Fixed compensation: ¥12.5 million per month
2. Incentive-based compensation 1: 2% of each fiscal period’s
total revenue (1.5% for amounts in excess of ¥8 billion)
3. Incentive-based compensation 2: 3% of each fiscal period’s
distributable income prior to the deduction of incentivebased compensation 2
NOTE 1: Total revenue is defined as rental income from real estate, maintenance fees, parking
space fees, supplementary fees, facility usage fees, facility installation fees, late-payment
fees, contract cancellation fees and other similar amounts, as well as income from otherleasing operations, interest and dividend income and other types of income. Total
revenue does not include property sales.
NOTE 2: Distributable income is defined in Article 28-1 of the Articles of Incorporation, andinclude profits from the sale of property.

The adoption of incentive-based compensation 1 is designed toleverage scale merits by cutting down the compensation rate,
as total revenue increases with asset size growth.
Incentive-based compensation 2 is a performance-based
compensation scheme that is designed to match the interestsof unitholders.
By not adopting property acquisition-based compensation, JPR
aims to avoid the relentless pursuit of asset growth.
By not setting property disposition-based compensation, JPR
aims to align management with unitholders’ interests throughincentive-based compensation 2, which is otherwise focusedon profits from disposition.

23

MANAGEMENT’S DISCUSSION AND ANALYSISRESULTS OF OPERATIONS
The table below is a summary of business results for the periods ended June 30, 2005 and December 31, 2004.

OPERATING REVENUES:
Real estate rental revenues
Gain on sale of real estate
OPERATING EXPENSES
Costs on sale of real estate
OPERATING PROFITSNON-OPERATING REVENUESNON-OPERATING EXPENSES
INCOME BEFORE INCOME TAXESNET INCOME

thousands of yen

U.S. dollars

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

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

7th Period(Jan. 1, 2005–June 30, 2005)¥8,503,222
7,801,176
702,0464,548,529
235,2393,954,693
91,224
668,857
3,377,060¥3,376,071¥7,685,733
7,685,733—
4,216,528—
3,469,205
13,874
613,5232,869,556¥2,868,548$76,868,766
70,522,298
6,346,468
41,118,509
2,126,551
35,750,257
824,658
6,046,441
30,528,474$30,519,533

In the seventh fiscal period ended June 30, 2005, JPR reported
improved results in every facet of its business operations. The
Company’s property portfolio as of June 30, 2005, comprised 42
properties, totaling ¥197,652 million on an acquisition price basis,
with total leasable floor space of 281,408.97 m2 and 459 tenants. In
the fiscal period under review, JPR acquired the Strasse Ichibancho(for an investment of ¥4,200 million), the UFJ Central Leasing Head
Office Building (for an investment of ¥4,137 million), the BYGS
Shinjuku Building (increase in co-ownership portion for an investment of ¥8,921 million), the Fukuoka Building (increase in unit
ownership for an investment of ¥1,120 million), and the Benetton
Shinsaibashi Building (for an investment of ¥5,430 million).
In addition to these property acquisitions, JPR also undertook tosell a portion of its property holdings. Based on its Value Up strategy,
and considerations relating to the development and maintenanceof a quality portfolio characterized by efficient and stable cash flows,
the Company undertook the sale of the JPR Ikebukuro Building, theJPR Square Hakata East/West Building, and the JPR Park West
Takamatsu Building. The net gain on the sale of real estate was ¥467
million, based on a total sales amount of ¥7,110 million, with total
book value and sales expenses of ¥6,643 million.
For the sixth-month period ended June 30, 2005, operating
revenues rose 10.6% to ¥8,503 million, and were comprised of realestate rental revenues, which edged up 1.5% to ¥7,801 million, anda gain on the sale of real estate of ¥702 million. The rental revenue

growth is attributed to the full-period’s contribution from properties
acquired during the sixth fiscal period, and income from properties
acquired during the fiscal period under review, as well as anincrease in the occupancy rate, which rose by 0.3 of a percentage
point to 95.4% as of June 30, 2005.
On the earnings front, operating expenses amounted to ¥4,549
million, up 7.9% compared with the previous fiscal period. As a partof the Company’s divestiture activities, JPR incurred costs on sale ofreal estate of ¥235 million.
From an overall perspective, this increase in operating expenses,
which was the result of a rise in real estate-related taxes due to theincrease in portfolio scale, was however significantly less than the
improvement in operating revenues. Throughout the fiscal period,
JPR continued efforts to enhance efficiency and curtail expenditurethrough the implementation of its A/3S strategy. Buoyed byseasonal factors, utility expenses also declined from ¥578 million to¥447 million, contributing to a drop in incidental charges. As aresult, operating profits climbed 14.0% to ¥3,955 million.
In line with the acquisition of new properties and additional
acquisitions in existing properties, JPR incurred an increase in nonoperating expenses relating to the settlement of management
association accounts, which are mainly reported during the fiscal
period ended June each year, and debt and one-off costs inconnection with the issue of additional new investment units.
Despite these factors, net income rose 17.7% to ¥3,376 million.

CASH DISTRIBUTIONSIn the seventh fiscal period, cash distribution per unit was¥6,370, representing 100% of distributable income, comparedwith ¥6,671, in the sixth fiscal period. The drop in cash
distribution is attributed to the issue of additional new

investment units. The number of investment units issued andoutstanding as of June 30, 2005 was 530,000, up from 430,000
units as of December 31, 2004.

thousands of yen except per unit data

Net income
Total cash distributions
Cash distribution per unit

Cash distributions for theperiod ended June 30, 2005

Cash distributions for theperiod ended Dec. 31, 2004

¥3,376,071
3,376,100
6,370¥2,868,548
2,868,530
6,671

CAPITALIZATION

24

Paid-In Capital
For the seventh fiscal period, JPR procured ¥26,318 million fromthe issue of additional new investment units and reported net

income of ¥3,376 million. Total unitholders’ equity as of the endof the fiscal period under review was ¥118,808 million.

Unit Information
The Company was listed on the Tokyo Stock Exchange Real
Estate Investment Trust Section on June 14, 2002, under the
securities code 8955 with the issue of 289,600 investment units.
Since the initial public offering, JPR has increased capital throughan additional public offering in July 2003, and again on February
1, and March 1, 2005. The current number of investment units
issued and outstanding is 530,000 units. The high and low
closing prices for the periods indicated are provided in the tablethat follows.

yen

Month

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

High

Low

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

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

yen

Month

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

High

Low

255,000
251,000
254,000
265,000
270,000
268,000
272,000
264,000
305,000
299,000
293,000
293,000
284,000

234,000
241,000
240,000
251,000
260,000
260,000
260,000
257,000
262,000
269,000
272,000
282,000
278,000

Equity and Debt Financing
As part of its strategy that places the utmost importance on
financial stability, the Company makes use of financial markets
through prudent debt financing from major financial institutions
and the issue of corporate bonds. As of June 30, 2005, thebalance of corporate bonds remained unchanged from the endof the previous fiscal period. On the issue of corporate bonds,
JPR was assigned a rating of A– from Standard & Poor’s, A+ from
Rating and Investment Information, Inc., and A3 from Moody's
Investors Service. In light of anticipation of an increase in interest
rates in the near future, JPR repaid its short-term borrowings, a

yen

Month

Aug. 2004
Sept. 2004
Oct. 2004
Nov. 2004
Dec. 2004
Jan. 2005
Feb. 2005
Mar. 2005
Apr. 2005
May 2005
June 2005

High

Low

296,000
308,000
311,000
308,000
307,000
298,000
295,000
312,000
310,000
326,000
330,000

274,000
291,000
299,000
301,000
290,000
278,000
281,000
290,000
297,000
303,000
319,000

portion of which was refinanced through additional long-termborrowings. Later undertaking new short-term borrowings, thetotal borrowings balance outstanding (short-term and longterm) as of June 30, 2005 was ¥41,666 million, down from
¥51,066 million as of December 31, 2004.
The balance of corporate bonds remained unchanged at¥42,000 million with a prudent spread of maturities to ensure
the Company does not confront undue liquidity pressures. In aneffort to ensure flexibility in funds procurement, JPR also
maintains a revolving line of credit with a consortium of leading
financial institutions.

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

JPR Unit Price Performance (left scale)180

330,000

TOPIX Performance (left scale)160

305,000

JPR Unit Price (right scale)140

280,000

120

255,000

100

230,000

80

205,000

60
2002/6 789

10 11 12 2003/1 2

3

4

5

6

180,000
78

9

10 11 12 2004/1 2

3

4

5

6

7

8

9

10 11 12 2005/1 2

3

4

5

6

Borrowings-1
Category

Lender
The Chugoku Bank, Ltd.
The Norinchukin Bank
The Bank of Tokyo-Mitsubishi, Ltd.

Short-Term
Borrowings

UFJ Bank LimitedAozora Bank, Ltd.
The Hachijuni Bank, Ltd.
Mizuho Corporate Bank, Ltd.
Shinsei Bank, Ltd.
Total

Drawdown
Date
May 27, 2004
Nov. 8, 2004
July 1, 2004
Feb. 27, 2004
July 1, 2004
Mar. 25, 2004
July 1, 2004
Sept. 30, 2004
Oct. 1, 2004
Nov. 8, 2004
May 27, 2005
May 27, 2005

Balance as ofJune 30, 2005
(thousands of yen)
¥
—
—
—
—
—
—
—
—
—
—
3,200,000
2,000,000¥5,200,000

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

Average
Interest
Rate
0.543%
0.492%
0.593%
0.530%
0.593%
0.584%
0.593%
0.493%
0.493%
0.488%
0.330%
0.330%

Repayment
Date
May 27, 2005
Nov. 8, 2005
June 27, 2005
Feb. 25, 2005
June 27, 2005
Mar. 25, 2005
June 27, 2005
Sept. 27, 2005
Sept. 27, 2005
Mar. 31, 2005
May 27, 2006
May 27, 2006

Repayment
MethodPrincipal
lump sum
repayment
on maturity

Remarks

Unsecured/
Unguaranteed/
Non-subordinated25

Borrowings-2
Drawdown
Date

Balance as ofJune 30, 2005
(thousands of yen)

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

Average
Interest
Rate

Repayment
Date

Sompo Japan Insurance Inc.

Mar. 25, 2004

¥ 1,000,000¥ 1,000,000

0.873%

Mar. 23, 2007

Nippon Life Insurance Company
The Bank of Fukuoka, Ltd.
The Chugoku Bank, Ltd.
The Iyo Bank, Ltd.
The Chuo Mitsui Trust andBanking Company, Limited
SumitomoLife Insurance Company

Mar. 31, 2005
Apr. 11, 2005
Apr. 11, 2005
Apr. 11, 2005

2,000,000
2,000,000
1,500,000
1,000,000————

0.493%
0.478%
0.478%
0.478%

Apr 13, 2007
Apr 11, 2007
Apr 11, 2007
Apr 11, 2007

Dec. 27, 2001

6,500,000

6,500,000

1.234%

Dec. 27, 2006

Dec. 27, 2001

6,500,000

6,500,000

1.234%

Dec. 27, 2006

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

4,783,000
4,783,000
4,400,000
1,000,000
1,000,000¥36,466,000¥41,666,000

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

1.700%
2.050%
1.750%
1.295%
1.295%

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

Category

Long-Term
Borrowings

LenderMeiji Yasuda
Life Insurance Company
Resona Bank, LimitedAozora Bank, Ltd.
Total
Total Borrowings Balance

Repayment
MethodRemarks

Unsecured/
Unguaranteed/
Non-subordinatedPrincipal
lump sum
repayment
on maturity
Secured/
Unguaranteed/
Non-subordinatedCorporate Bonds
Issue Date

Maturity Date

Total Issue
Amount(thousands of yen)First Series of Corporate Bonds

Jan. 29, 2004

Feb. 12, 2008

¥10,000,000

0.84%

Second Series of Corporate Bonds

Jan. 29, 2004

Feb. 12, 2010

¥7,000,000

1.38%

Third Series of Corporate Bonds

Jan. 29, 2004

Feb. 12, 2014

¥5,000,000

2.32%

Fourth Series of Corporate Bonds

Oct. 21, 2004

Nov. 4, 2009

¥10,000,0000.92%

Coupon Rate(per annum)

Fifth Series of Corporate Bonds

Oct. 21, 2004

Nov. 4, 2011

¥5,000,000

1.44%

Sixth Series of Corporate Bonds

Oct. 21, 2004

Nov. 4, 2014

¥5,000,000

2.00%

Total

Redemption

Collateralbullet payment

Unsecured/
Unguaranteed¥42,000,000

MAJOR TENANTS
The following table shows JPR’s top ten tenants by leased floor
space as of June 30, 2005.
The Company is acutely aware of the impact of lease
contract maturity and cancellation. During the fiscal period
under review for example, JPR incurred a significant temporary#
1

The Seiyu, Ltd.

2The Loft Co., Ltd.

Industry
RetailProperty

Leased Floor Space(m2)%

Tanashi ASTA
Tsurumi fuga 1
JPR Umeda Loft Bldg.

40,700.31

15.1

18,586.97

6.9

Real Estate

Shinjuku Square Tower

10,982.03

4.1

4
5

Shinjuku Square Tower Management
Co., Ltd.
TOWER RECORDS JAPAN INC.
UFJ Central Leasing

RetailFinancial Services

8,076.85
7,123.07

3.0
2.6

6

Sompo Japan Insurance Inc.

Casualty Insurance

6,536.34

2.4

7

Iwatani International Corporation

Wholesale

8

Mitsui Fudosan

Real Estate

910

Benetton Japan
Tohmatsu & Co.

Retail
Accounting Firm

JPR Shibuya Tower Records Bldg.
UFJ Central Leasing Head Office Bldg.
Sompo Japan Sendai Bldg.
Sompo Japan Wakayama Bldg.
Kawaguchi Center Bldg.
Tokyo Tatemono Honmachi Bldg.
Oval Court Ohsaki Mark West
Strasse Ichibancho
Benetton Shinsaibashi Bldg.
MS Shibaura Bldg.

3

26

Tenantdrop in occupancy following cancellation of certain leaseagreements at Arca East. This temporary decline was quickly
resolved through new lease agreements. Looking at theportfolio as a whole, property renovation and active leasing
efforts contributed to the improvement in occupancy rates.

5,959.86

2.2

5,354.79

2.0

5,303,98
4,903.42

2.0
1.8

PROPERTY MANAGEMENT
In the context of property management, JPR has a strong trackrecord in successfully attracting new tenants. This differentiation
with other competing properties is the result of planned
refurbishments and repair work, together with proactive

measures, to ensure a competitive advantage. Through theseand other measures, the overall occupancy rate at the end of theperiod was 95.4%, an increase of 0.3 of a percentage pointcompared with the end of the previous fiscal period.

Planned Capital Expenditures
JPR has the following capital expenditure plan for maintenanceon its properties as of June 30, 2005. Planned project costs

include portions classified into expenses for accounting
purposes.

Property Name

Kanematsu Bldg.

PurposeSchedule

Planned Project Cost (millions of yen)

Total

Paid infiscal year
under review

Total
payments—

Renewal of exterior repair seals

Apr. 2005 – July 2005

70—

Replacement of heat source water pump

Sept. 2005 – Nov. 2005

51

—

—

Replacement of 12th floor air-conditioning units and lighting

Sept. 2005 – Dec. 2005

49

—

—

JPR Umeda Loft Bldg.

Repairs of 2nd-3rd floor toilets

Sept. 2005 – Nov. 2005

28

—

—

Kanematsu Bldg. Annex

Renewal of exterior repair seals

Apr. 2005 – July 2005

27

—

—

Renewal of exterior repair seals

May 2005 – July 2005

26

—

—

Replacement of central monitoring system

Sept. 2005 – Nov. 2005

25

—

—

JPR Shibuya Tower Records Bldg.
JPR Hakata Bldg.

JPR Ningyo-cho Bldg.
JPR Yokohama Nihon Odori Bldg.

Capital Expenditures During the Fiscal Period Under Review
JPR made the following capital expenditures related to its
properties. Most capital expenditures were comprised of repair

work to maintain and improve tenant satisfaction, maintenance oncommon areas to attract new tenants and construction including
the installation of energy-saving facilities.

Property Name

PurposeSchedule

Capital Expenditure(millions of yen)

JPR Takamatsu Bldg.

Air-cooling equipment upgrade

Apr. 2005

26

JPR Umeda Loft Bldg.

Cooling and heating generator upgrade

Apr. 2005 – May 2005

23

JPR Hakata Bldg.

Renewal of exterior repair seals

Apr. 2005 – June 2005

23

Rooftop gardening work

May 2005 – June 200515

Installation of new air conditioner on 3rd floor

Jan. 2005 – Feb. 200515

Installation of new inverter equipment

Jan. 2005

14

Tokyo Tatemono Honmachi Bldg.
SK Hiroshima Bldg.
Kawaguchi Center Bldg.
JPR Ningyo-cho Bldg.

Repairs of 4th – 9th floor toilets

Apr. 2005 – May 2005

10

Shin-Kojimachi Bldg.

Renovation of 7th floor

Apr. 2005 – May 2005

10

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

216

Other capital expenditures
Total

357

Note: Improvement costs include construction management compensation (¥3 million) paid to property management companies in addition to amounts for improvement
work.

Value Up Strategy
While the Value Up strategy is an integral part of the Company’s
overall business policy, JPR will adopt a selective approach to thefurther divestment of investment properties. In the fiscal period
under review, JPR reported a gain of ¥702 million (after

accounting for sales commissions in connection with all of theCompany’s sales activities) from the divestiture of the JPR
Ikebukuro Building. As of the date of this report, the Company’s
Value Up strategy remains unchanged.

SUBSEQUENT EVENTSIn the subsequent six-month period, ending December 31, 2005,
JPR acquired the Tachikawa Business Center Building and the
Housing Design Center Kobe. The Company has also executedan agreement to purchase the Rise Arena Building (HigashiIkebukuro 4-chome Redevelopment Project). This building iscurrently under construction and due for completion in January

2007. In connection with divestments, JPR sold the Park East
Sapporo and the SK Hiroshima Building, for net capital gains ofapproximately ¥177 million and ¥31 million, respectively. In the
future, JPR will work to cement its position and to further fortify
its platform for future growth.

27

FINANCIAL STATEMENTS

BALANCE SHEETS(As of June 30, 2005 and Dec. 31, 2004)
thousands of yen

U.S. dollars

End of 7th Period(as of June 30, 2005)

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

End of 7th Period(as of June 30, 2005)¥ 20,304,126¥ 18,778,730$ 183,548,421

Rental receivables

191,263

158,642

1,729,006

Consumption tax refundable

51,773—

468,026ASSETS
CURRENT ASSETS:
Cash and cash equivalents

Other current assets

92,373552,064

835,046

20,639,535

19,489,436

186,580,499

Land

120,398,583

107,315,134

1,088,397,964

Buildings and structures

81,252,899

76,481,264

734,522,681

Machinery and equipment

1,385,247

1,290,710

12,522,570

Tools, furniture and fixtures

43,144

15,923390,016

Total current assets
PROPERTY AND EQUIPMENT AT COST:

Construction in progress
SubtotalLess accumulated depreciation
Net property and equipment

3,110

7,464

28,114203,082,983

185,110,495

1,835,861,345(7,307,245)(6,128,729)(66,057,174)

195,775,738

178,981,766

1,769,804,171

INVESTMENTS AND OTHER ASSETS:
Intangible assets

3,335

3,744

30,154

Deposits

10,10010,10091,304Long-term prepaid expenses
Deferred corporate bond issuance costs
Other
TOTAL ASSETS
The accompanying notes form an integral part of these financial statements.

28

1,675

3,051

15,143

143,377

185,491

1,296,122

250

—

2,260

¥216,574,010¥198,673,588$1,957,819,653

End of 7th Period(as of June 30, 2005)

thousands of yen

U.S. dollars

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

End of 7th Period(as of June 30, 2005)

LIABILITIESCURRENT LIABILITIES:
Trade accounts payable
Other accounts payable¥

900,822¥793,747$

8,143,391

435,199

449,1453,934,175

Short-term debt

5,200,000

21,100,000

47,007,774

Accrued expenses

161,014

182,659

1,455,562

1,598

976

14,448

Accrued income taxes
Accrued consumption taxes
Rent received in advance
Total current liabilities—

37,941—

850,132

812,367

7,685,160

7,548,765

23,376,835

68,240,510

42,000,000

42,000,000

379,678,178

LONG-TERM LIABILITIES:Corporate bonds
Long-term debt

36,466,000

29,966,000

329,651,058

Deposits received from tenants

11,751,601

11,348,350

106,233,967

Total long-term liabilities

90,217,601

83,314,350

815,563,203

TOTAL LIABILITIES

97,766,366

106,691,185

883,803,713

115,431,504

89,113,804

1,043,495,784

UNITHOLDERS’ EQUITY:
Unitholders’ capital

3,376,140

2,868,599

30,520,156

TOTAL UNITHOLDERS’ EQUITY

Retained earnings

118,807,644

91,982,403

1,074,015,940

TOTAL LIABILITIES AND UNITHOLDERS’ EQUITY¥216,574,010¥198,673,588$1,957,819,653

29

STATEMENTS OF INCOME AND RETAINED EARNINGS(For the six-month periods ended June 30, 2005 and Dec. 31, 2004)
thousands of yen

U.S. dollars

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

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

7th Period(Jan. 1, 2005–
June 30, 2005)¥8,503,222¥7,685,733$76,868,766

Real estate rental revenues

7,801,176

7,685,733

70,522,298

Gain on sale of real estate

702,046—

6,346,468

4,548,529

4,216,528

41,118,509

Real estate rental expenses

3,768,567

3,672,910

34,067,689

Asset management fees

337,265

317,710

3,048,857

Loss on sale of real estate

235,239—

2,126,551

Administrative service and custodian fees

86,666

65,679783,458

OPERATING REVENUES:OPERATING EXPENSES:

Other operating expenses
OPERATING PROFITSNON-OPERATING REVENUES:Interest income

120,792

160,229

1,091,954

3,954,693

3,469,205

35,750,257

91,224

13,874

824,658

148

118

1,341

Income on settlement of management association accounts

77,279—698,595

Other non-operating revenues

13,797

13,756

124,722

668,857

613,523

6,046,441

245,541

319,1712,219,681

NON-OPERATING EXPENSES:Interest expense
Loan arrangement fees

18,30040,164

165,430

Interest expense on corporate bonds

278,620

190,8712,518,716

Amortization of corporate bond issuance costs

42,114

42,114

380,708

New unit-issuance costs

65,469—591,838

Other non-operating expenses

18,813

21,203

170,068

INCOME BEFORE INCOME TAXES

3,377,060

2,869,556

30,528,474

Current

1,628

999

14,715

Deferred(639)

9(5,774)NET INCOME

3,376,071

2,868,548

30,519,533

69

51

623

¥3,376,140¥2,868,599$30,520,156

units

thousands of yen

430,000¥ 91,728,685

Cash distributions paid—

(2,614,830)

Net income—

2,868,548

430,000¥ 91,982,403—(2,868,530)(25,931,387)

100,000

26,317,700

237,910,866—

3,376,071

30,519,533

530,000¥118,807,644$1,074,015,940

INCOME TAXES:RETAINED EARNINGS BROUGHT FORWARD
RETAINED EARNINGS AT END OF PERIOD
The accompanying notes form an integral part of these financial statements.

STATEMENTS OF CHANGES IN UNITHOLDERS’ EQUITY(For the six-month periods ended June 30, 2005 and Dec. 31, 2004)
unitholders’ equity

BALANCE AS OF JUNE 30, 2004

BALANCE AS OF DECEMBER 31, 2004
Cash distributions paid
Public offering
Net income
BALANCE AS OF JUNE 30, 2005
The accompanying notes form an integral part of these financial statements.

30

U.S. dollars$

831,516,928

STATEMENTS OF CASH FLOWS(For the six-month periods ended June 30, 2005 and Dec. 31, 2004)
thousands of yen

U.S. dollars

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

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

7th Period(Jan. 1, 2005–
June 30, 2005)¥ 3,377,060¥ 2,869,556$ 30,528,474

1,444,283

1,391,662

13,056,251

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

42,114

42,114

380,708

Interest income

(148)

(118)

(1,341)

Interest expense

524,161

510,042

4,738,397

Increase in rental receivables(32,620)(10,064)(294,886)(Increase) decrease in consumption tax refundable(51,773)

372,948(468,026)

Increase (decrease) in trade accounts payable

107,075(96,577)

967,955(Decrease) increase in other accounts payable(13,669)

102,064(123,566)(Decrease) increase in accrued consumption taxes(37,941)

37,941(342,982)

Increase in rent received in advance

37,76545,873341,398

6,503,193—

58,788,580

461,864(342,201)

4,175,232

12,361,364

4,923,240

111,746,194

148

118

1,341

(545,807)(467,378)(4,934,070)(1,005)(953)(9,089)11,814,700

4,455,027

106,804,376(24,741,447)(16,989,359)(223,661,610)

Decrease in property and equipment due to sale
Change in other current assets/liabilities
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
Purchases of intangible assets—(4,084)—

Payment of deposits received from tenants(903,825)(814,611)(8,170,541)

Proceeds from deposits received from tenants

1,307,076

954,701

11,815,914(24,338,196)(16,853,353)(220,016,237)

Proceeds from short-term debt

5,200,000

34,300,000

47,007,774

Repayment of short-term debt

(21,100,000)(38,400,000)(190,743,084)

Proceeds from long-term debt

6,500,000—

58,759,718

Proceeds from corporate bonds—

20,000,000—

Payments of corporate bond issuance costs—(102,211)—

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

Proceeds from issuance of units

26,317,700—

237,910,866

Distributions to unitholders(2,868,808)(2,620,671)(25,933,895)

Net cash provided by financing activities

14,048,892

13,177,118

127,001,379

NET INCREASE IN CASH AND CASH EQUIVALENTS

1,525,396

778,792

13,789,518

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIODCASH AND CASH EQUIVALENTS AT END OF PERIOD

18,778,730

17,999,938

169,758,903¥ 20,304,126¥ 18,778,730$ 183,548,421

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

31

NOTES TO FINANCIAL STATEMENTS(June 30, 2005 and December 31, 2004)

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

Ltd., 24% by Meiji Yasuda Life Insurance Company, 20% by
Yasuda Real Estate Co., Ltd., 20% by Taisei Corporation, and 10%
by Sompo Japan Insurance Inc.
On June 14, 2002, the Company raised ¥25,862 million
through an initial public offering and was listed on the Tokyo
Stock Exchange (Securities code: 8955).
On July 14, and August 9, 2003, the Company raised ¥32,132
million through a second offering (unitholders’ capital as ofDecember 31, 2003: ¥89,114 million).
As of June 30, 2005, the Company owned a portfolio of 42
properties containing an aggregate of approximately 281,408.97
square meters of leasable area, and leased its office space to 459
tenants. The occupancy rate is 95.4%.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBASIS OF PRESENTING FINANCIAL STATEMENTS
The Company maintains its accounting records and prepares its
financial statements in accordance with accounting principles
generally accepted in Japan (“Japanese GAAP”), including
provisions set forth in the Investment Trust Law, the JapaneseCommercial Code, the Securities and Exchange Law of Japanand the related regulations, which are different in certain
respects as to the application and disclosure requirements ofInternational Financial Reporting Standards.
The accompanying financial statements are a translation of
the financial statements of the Company, which were preparedin accordance with Japanese GAAP and were presented in the
Securities Report of the Company filed with the Kanto Local
Finance Bureau. In preparing the accompanying financial
statements, certain reclassifications have been made to thefinancial statements issued domestically in order to present
them in a format which is more familiar to readers outside Japan.
In addition, the notes to financial statements include information
which might not be required under Japanese GAAP but ispresented herein as additional information.
The Company’s accounting period ends at the end of Juneand December. The Company’s seventh accounting periodbegan on January 1, 2005 and ended on June 30, 2005.
Amounts in U.S. dollars are included solely for theconvenience of readers outside Japan. The rate of¥110.62=US$1.00, the foreign exchange rate on June 30, 2005,
has been used for translation. The inclusion of such amounts is
not intended to imply that Japanese yen has been or could bereadily converted, realized or settled into U.S. dollars at that rateor any other rate.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost, less accumulated
depreciation. The costs of land, buildings and building

32

improvements include the purchase price of property, legal fees
and acquisition costs. Depreciation of property and equipment
is calculated on a straight-line basis over the estimated useful
lives of the assets ranging as follows:
Buildings.......................................................................................................3–64 years
Structures..................................................................................................10–20 years
Machinery and equipment...............................................................3–17 years
Tools, furniture and fixtures..............................................................5–15 years
Expenditures for repairs and maintenance are charged tooperations as incurred. Significant renewals and betterments arecapitalized.
INTANGIBLE ASSETS
Intangible assets are amortized utilizing the straight-line
method.
DEFERRED ASSETS
Corporate bond issuance costs are amortized over a period of
approximately three years, comprised of six fiscal periods, withan equal amount amortized in each fiscal period.
New unit-issuance costs are charged to income as incurred.
In connection with the public offering of new investment
units conducted on February 2, 2005, the spread method was
utilized, under which the underwriter underwrote the newinvestment unit issue at the underwriting price and sold theinvestment units to the public at the offering price.
Under this method, the difference between the offering
price and the underwriting price represents the underwriting
commission. As a result of the application of this method, theCompany does not pay an underwriting commission to theunderwriter. The difference between the offering price and theunderwriting price for the public offering of new investment

by the local government. The Company paid the amountequivalent to the property taxes to the sellers applicable to theperiod since acquisition and included the amount equivalent to
the taxes in the purchase price of each property and capitalized
as cost of the property.

units conducted on February 2, 2005 was ¥879,985 thousand. In
the event the underwriter had offered the new investment units
to the public at the underwriting price (hereafter referred to as“the conventional method,” this amount would have beenaccounted as new unit-issuance costs.
The effect of the application of the spread method was toreduce new unit-issuance costs by ¥879,985 thousand andincrease income before income taxes by the same amount.

CONSUMPTION TAXES
Consumption taxes withheld and consumption taxes paid are
not included in the statements of income. The consumption
taxes paid are generally offset against the balance ofconsumption taxes withheld. As such, the excess of payments
over amounts withheld is included in the current assets and theexcess of amounts withheld over payments is included in thecurrent liabilities.

REVENUE RECOGNITION
Revenues from leasing of office space are recognized as rent
accrued over the lease period.
TAXES ON PROPERTY AND EQUIPMENT
Property and equipment is subject to property taxes and city
planning taxes on a calendar year basis. These taxes are generally
charged to expenses during the period. The sellers of theproperties were liable for property taxes for the calendar year
including the period from the date of purchase by the Company
through the end of the year since the taxes are imposed on theregistered owner as of January 1, based on the assessment made

CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, deposits
placed with bank and short-term investments which are highly
liquid, readily convertible to cash and with insignificant risk ofprice fluctuation, with original maturities of three months or less.

3. REAL ESTATE
Real estate at June 30, 2005 and December 31, 2004 consisted of the following:

As of June30, 2005

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

thousands of yen

U.S. dollars

As of December
31, 2004

As of June30, 2005

Acquisition Costs

Book Value

Acquisition Costs

Book Value

Acquisition Costs

Book Value¥ 19,967,713¥ 19,967,713¥ 9,510,751¥ 9,510,751$180,507,261$ 180,507,261

9,654,361
338,748

5,588,675
9,315,613

79,316
14,637

195,694

87,275,002
5,392,981

55,08164,679

8,417

8,596

3,062,271

84,212,731

717,01146,485289

132,322584,689

76,085

222

8,195

96

193

2,006

2,060

2,060

4,251

4,251

18,622

18,622

Entrusted land

100,430,870

100,430,870

97,804,383

97,804,383

907,890,703

907,890,703

Entrusted buildings and structures

71,598,538

Accumulated depreciation

6,571,891

Entrusted machinery and equipment

1,305,931

Construction in progress

70,892,589
65,026,647

5,597,147

647,247,679
65,295,442

1,235,629
325,376

59,409,604

Accumulated depreciation

378,627
34,727910,253

Accumulated depreciation

3,120

31,607

1,820

13,81428,204

Entrusted construction in progress

1,050

1,050

3,213

3,213

9,492

15,634¥195,775,738

587,838,075

11,805,559

Entrusted tools, furniture and fixtures

Total

927,304

74,0793,422,767

8,382,792

313,931¥178,981,766

285,727
9,492$1,769,804,171

33

4. SHORT-TERM DEBT
Short-term debt at June 30, 2005 and December 31, 2004 consisted of the following:
As of June30, 2005

Unsecured loans from banks due on May 27, 2006

Amount(thousandsof yen)Weightedaverageinterest rate

Amount(thousandsof yen)As of December
31, 2004

As of June30, 2005

Weightedaverageinterest rate

Amount(U.S. dollars)¥5,200,000

0.330%——$47,007,774

Unsecured loans from a bank due on November 8, 2005——

¥ 1,000,000

0.492%—

Unsecured loans from banks due on June 27, 2005——

10,500,000

0.593%—

Unsecured loans from banks due on September 27, 2005——

2,100,000

0.493%—

Unsecured loans from a bank due on March 31, 2005——

1,500,000

0.488%—

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

1,000,000

0.543%—

Unsecured loans from a bank due on February 25, 2005——

3,000,000

0.530%—

Unsecured loans from a bank due on March 25, 2005——

2,000,000

0.584%

Total¥5,200,000—¥21,100,000$47,007,774

5. CORPORATE BONDS
Details of total corporate bonds outstanding are briefly as follows:
As of June30, 2005

As of December
31, 2004

As of June30, 2005

Amount(thousandsof yen)Interest rate(%)

Amount(thousandsof yen)Interest rate(%)

Amount(U.S. dollars)

Unsecured bonds due on February 12, 2008

¥10,000,000

0.84%¥10,000,000

0.84%$ 90,399,566

Unsecured bonds due on February 12, 2010

7,000,000

1.38%

7,000,000

1.38%

63,279,697

Unsecured bonds due on February 12, 2014

5,000,000

2.32%

5,000,000

2.32%

45,199,783

Unsecured bonds due on November 4, 2009

10,000,000

0.92%

10,000,000

0.92%

90,399,566

Unsecured bonds due on November 4, 2011

5,000,000

1.44%

5,000,000

1.44%

45,199,783

5,000,000

2.00%

5,000,000

2.00%

45,199,783¥42,000,000—%¥42,000,000—%$379,678,178

As of December
31, 2004

As of June30, 2005
Amount(U.S. dollars)

Unsecured bonds due on November 4, 2014
Total

6. LONG-TERM DEBT
Long-term debt at June 30, 2005 and December 31, 2004 consisted of the following:
As of June30, 2005
Amount(thousandsof yen)Amount(thousandsof yen)Weightedaverageinterest rate

Unsecured loans from an insurance company due on March 23, 2007

¥ 1,000,000

0.873%¥ 1,000,000

0.873%

Unsecured loans from an insurance company due on April 13, 2007

2,000,000

0.493%——

18,079,913$

9,039,957

Unsecured loans from banks due on April 11, 2007

4,500,000

0.478%——

40,679,805

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

13,000,000

1.234%

13,000,000

1.234%

117,519,436

Secured loans from banks due on December 27, 2006

2,000,000

1.295%

2,000,000

1.295%

18,079,913

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

4,783,000

1.700%

4,783,000

1.700%

43,238,112

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

4,783,000

2.050%

4,783,000

2.050%

43,238,112

4,400,000

1.750%

4,400,000

1.750%

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

34

Weightedaverageinterest rate

¥36,466,000¥29,966,000

39,775,810$329,651,058

7. SECURED ASSETSAt June 30, 2005 and December 31, 2004, the following assets were pledged as collateral for the following debt:
Pledged assets:
thousands of yen

U.S. dollars

As of June30, 2005

As of December
31, 2004

As of June30, 2005

Cash and cash equivalents¥ 5,775,834¥ 6,029,990$ 52,213,288

Land

35,821,302

37,676,782

323,823,017

Buildings and structures

23,740,001

28,235,478

214,608,578

Machinery and equipment

229,806

403,797

2,077,438

Tools, furniture and fixtures

11,974

4,543

108,248

—

3,213

—

¥65,578,917¥72,353,803$592,830,569

Construction in progress
Total

Debt secured by the pledged assets:Long-term debt

thousands of yen

U.S. dollars

As of June30, 2005

As of December
31, 2004

As of June30, 2005¥28,966,000¥28,966,000$261,851,383

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

subsequent to the close of the accounting period. As such, theretained earnings of unitholders’ equity at June 30, 2005
included cash distribution of ¥3,376,100 thousand ($30,519,797)
subsequently made.

9. INCOME TAXESAt June 30, 2005, the Company’s deferred tax assets consisted
mainly of the accrued enterprise tax, which is not deductible
until paid for tax purposes. The reconciliation of tax rate
difference between the adjusted statutory tax rates and theeffective tax rates for the six-month periods ended June 30, 2005
and December 31, 2004 were as follows:
For the period
from January 1, 2005
to June 30, 2005

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

Statutory tax rate

39.39%

39.39%

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

0.02%

0.03%

Effective tax rate

0.03%

0.04%

The Company is subject to Japanese corporate income taxes on
all of its taxable income. However, under the Special Taxation
Measures Law of Japan, or the STML, an investment corporationis allowed to deduct dividends of accounting profits, or dividend
distributions, paid to investors from its taxable income if certain
tax requirements are satisfied. Such tax requirements include
dividend distributions in excess of 90% of its taxable income forthe accounting period as stipulated by Article 67-15 of the STML.
Based on the distribution policy provided by the Articles ofIncorporation, the Company made a dividend distribution of
approximately 100% of retained earnings in the amount of¥3,376,100 thousand ($30,519,797) at June 30, 2005 and treated
it as tax deductible dividend. The Company will not distributethe dividends in excess of accounting profit under the Articles ofIncorporation.

35

10. PER UNIT INFORMATION
The following table summarizes information about net assets per unit and net income per unit at June 30, 2005 and December 31,
2004, and for the six-month periods then ended:

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

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

U.S. dollars

For the period
from January 1, 2005
to June 30, 2005

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

For the period
from January 1, 2005
to June 30, 2005

¥224,165¥213,912$2,026

6,599

6,671

60

calculation was 511,547 units for the six months ended June 30,2005 and 430,000 units for the six months ended December 31,
2004. Diluted net income per unit has not been presented since
no warrants and convertible bonds were issued during theperiod.

11. RELATED PARTY TRANSACTIONSThe Company entered into the following related party transactions:
thousands of yen

U.S. dollars

For the period
from January 1, 2005
to June 30, 2005

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

For the period
from January 1, 2005
to June 30, 2005

Property brokerage fees

¥140,000¥87,000$1,265,594

Property management fees

32,631

41,175294,983

Leasing commissions

6,344

5,181

57,349Outsourced property operation

77,09098,577

696,890

Repairs and maintenance

48,86399,853441,719

12. BREAKDOWN OF OPERATING REVENUES AND EXPENSES
For the six-month periods ended June 30, 2005 and December 31, 2004.
thousands of yen

U.S. dollars

For the period
from January 1, 2005
to June 30, 2005

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

For the period
from January 1, 2005
to June 30, 2005

Real Estate Rental Revenues¥7,801,176¥7,685,733$70,522,298

Rental Revenues

7,340,901

7,097,927

66,361,427

Rental revenues

5,772,805

5,586,207

52,185,903

Common charges

1,344,062

1,301,555

12,150,262

Parking revenues

193,180

180,919

1,746,344

Other rental revenues

30,85429,246

278,918

Non-Rental Revenues

460,275

587,806

4,160,871

Incidental income

404,332

536,067

3,655,143

Cancellation charges

25,167

23,811

227,510

Other miscellaneous revenues

30,77627,928278,218

Real Estate Rental Expenses

3,768,567

3,672,910

34,067,689

Property management fees

159,350

153,226

1,440,516

Utilities expenses

446,897

578,443

4,039,934

Property and other taxes

706,269

541,134

6,384,642

Casualty insurance

37,391

38,246

338,016

Repairs and maintenance

113,768

151,755

1,028,459

1,444,283

1,391,662

13,056,251

860,609818,4447,779,871

4,032,609

4,012,823

36,454,609

Depreciation
Other rental expenses
Profits36

thousands of yen

U.S. dollars

For the period
from January 1, 2005
to June 30, 2005

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

For the period
from January 1, 2005
to June 30, 2005

Proceeds from sale of real estate¥3,345,000¥—$30,238,655

Cost of real estate

2,577,089—

23,296,770

Other related sales expense

65,865—595,417

Gain on sale of real estate

702,046—

6,346,468

Proceeds from sale of real estate¥3,765,000¥—$34,035,437

Cost of real estate

3,926,104—

35,491,811

Other related sales expense

74,135—670,177

Loss on sale of real estate

235,239—

2,126,551

Gain on sale of real estate

Loss on sale of real estate

13. LEASESThe Company leases office buildings and earns rental income. As of June 30, 2005 and December 31, 2004, the future lease revenues
under the non-cancelable operating leases are as follows:
thousands of yen

U.S. dollars

As of June 30, 2005

As of December 31, 2004

As of June 30, 2005

Due within one year

¥ 4,630,966¥ 3,965,044$ 41,863,732

Due after one year

26,239,874

20,483,242

237,207,322

Total¥30,870,840¥24,448,286$279,071,054

14. SUBSEQUENT EVENTSAPPROPRIATION OF RETAINED EARNINGS
On August 18, 2005, the Board of Directors resolved to effect the payment of a cash distribution of ¥6,370 per share aggregating ¥3,376
million ($30,520 thousand) to unitholders at the record date of June 30, 2005.

37

REPORT OF INDEPENDENT AUDITORS

38

UNITHOLDER INFORMATION

Breakdown of Unitholders (As of June 30, 2005)
By Number of Units Held

14.7%
Individuals and others

6.9%
Foreign investors
63.8%
Financial institutions

14.6%
Other domestic corporations

By Composition

0.5%
Foreign investors
0.8%
Financial institutions
1.4%
Other domestic corporations
97.3%
Individuals and others

Major Unitholders (As of June 30, 2005)
Units

(%)

Japan Trustee Services Bank, Ltd. (Trust Account)

50,253

9.5

Tokyo Tatemono Co., Ltd.

29,300

5.5

Kawasaki Gakuen

24,200

4.6

Meiji Yasuda Life Insurance Company

24,000

4.5

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

22,491

4.2

Trust & Custody Service Bank, Ltd.

17,2593.3

The Hiroshima Bank, Ltd.

10,837

2.0

AIG Star Life Insurance Co., Ltd.

10,208

1.9

NikkoCiti Trust and Banking Corporation

10,052

1.9

The Bank of Ikeda, Ltd.

9,461

1.8

39

MEMBERS OF THE BOARD (As of June 30, 2005)

Name Title
Biography*Number of Investment Units Held

Japan Prime Realty Investment Corporation

Hirohito Kaneko Executive Officer*0

Shigeru Sugimoto Supervising Officer

Dec. 19, 2001

Executive Officer, Japan Prime Realty Investment
Corporation

Sept. 14, 2001

Supervising Officer, Japan Prime Realty Investment
CorporationApr.

1, 1979

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

June 1, 2001

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

Oct.

Apr.

1, 1977

Bar admission (Tokyo Bar Association)
Shigeru Yamada Law Office

Representative Director of Tokyo SPC Services(currently on service)

Sosuke Yasuda Supervising Officer
Jun. 28, 2005
Sept. 14, 2001

Supervising Officer, Japan Prime Realty Investment
Corporation

Oct.

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

1, 19992, 1993

June 24, 1998

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

Dec. 1, 1996

Horwath International

Dec. 22, 1995

Sakura Audit Corporation

July

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

1, 1988

Nov. 1, 1985

Ohta Showa Audit Corporation

Apr.

Housing and Urban Development Public
Corporation

1, 1982

Senior Partner, Tokyo Akasaka Audit Co.

Feb. 16, 1983

Representative of Tokyo Akasaka CPA Joint Office

June 27, 1980

Sosuke Yasuda Tax Accountant Office(currently on service)

Dec. 1, 1975

Masamitsu Serizawa Accounting Firm

Apr.

Main Store, KK Ohgiya

1, 1968*0

Outside Auditor, Mitsui Sumitomo Insurance Company,
Limited (currently on service)

2, 1999*0

Tokyo Realty Investment Management, Inc.

Toshihiro Hagiwara President and CEO
Jan. 23, 2001

President, Tokyo Realty Investment Management, Inc.

Apr.

1, 1999

Director and Head of Osaka Branch OfficeJan.

1, 1998

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

Mar. 28, 1992

Director of Secretary’s Office and Human Resources

Apr. 20, 1989

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

July

Property management and acquisition businesses of
Building Department

Apr.

1, 1985
1, 1968*0July

1, 2001

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

Apr.

1, 2000

General Manager of Pension Management Department

Apr.

1, 1991

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

Oct.

1, 1989

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

Oct. 23, 1983

New York representative office of Yasuda Life

Apr.

Finance Department of The Yasuda Mutual Life
Insurance Company(Currently Meiji Yasuda Life Insurance Company)

1, 1973

Yukio Furuya Director and Chief Investment Officer
Jan. 23, 2000

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

Apr.

1, 1999

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

Jan.

1, 1998

Tenant-leasing team leader

June 1, 1993

Took charge of tenant leasing

Nov. 1, 1990

Tokyo Tatemono of America

Apr.

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

1, 1981

Kazuo Kitami Director and Chief Administrative Officer

*0

*0

Oct.

1, 2004

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

Apr.

1, 1997

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

Apr.

1, 1995

Manager of Real Estate Development responsible
for overall operations.

Tokyo Tatemono Co., Ltd.

Takeshi Maki Director and Chief Financial Officer

40*0

Sept. 1, 1989

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

Mar. 1, 1977

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

Apr.

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

1, 1975

TRIM-第七期 C2-3̲1006 05.10.17 2:42 PM ページ41

PROFILECORPORATE DATA

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

Head Office
9-9 Yaesu 1-chome, Chuo-ku, Tokyo 103-8285, Japan
Tel: +81-3-3231-1051
Fax: +81-3-3274-7775
Date of Establishment
September 14, 2001

growth and stable cash distributions to its investors.

Listing
Tokyo Stock Exchange (Securities Code: 8955)
Fiscal Period Ends
June 30 and December 31 of each year
General Meeting of Unitholders
More than once every two years
Cash Distribution Payment Eligibility
Unitholders of record as of June 30 and December 31 ofeach year

Transfer Agent
Mizuho Trust & Banking Co., Ltd.
2-1 Yaesu 1-chome, Chuo-ku, Tokyo
Location of Records
Mizuho Trust & Banking Co., Ltd.
2-1 Yaesu 1-chome, Chuo-ku, Tokyo
Main Branch, Stock Transfer Agency Division
Mailing Address Mizuho Trust & Banking Co., Ltd.
1-17-7 Saga, Koto-ku, Tokyo 135-8722
Stock Transfer Agency Division
Telephone+81-3-5213-5213 (Representative)
AgentsMizuho Trust & Banking Co., Ltd.
(All branches nationwide)
Mizuho Investors Securities Co., Ltd.
(Head office and all branches nationwide)
Web site
http://www.jpr-reit.co.jp/jpr_e/index.html

English page
PerformanceThis Web site has been created specificallyfor our English-speaking readers.

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

ANNUAL SCHEDULE (PROVISIONAL)

DEC.

FAQ

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

2

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

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

3

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

Balance date for the six-month period ended June 30

6 JUNE

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

8 AUG.

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

9 SEPT.

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

CONTENTS: TO OUR INVESTORS 1

FINANCIAL HIGHLIGHTS 3

PROPERTY PORTFOLIO OF JPR 10
FINANCIAL STATEMENTS 28

PORTFOLIO BREAKDOWN 5ACTIVITY HIGHLIGHTS 7

REIT STRUCTURE AND EXTERNAL SERVICE PROVIDERS 21

UNITHOLDER INFORMATION 39

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

SUBSEQUENT ACTIVITY HIGHLIGHTS 9

MANAGEMENT’S DISCUSSION AND ANALYSIS 24

MEMBERS OF THE BOARD 40 CORPORATE DATA 41

This document contains a translation of selected information described in the Financial Report (Kessan Tanshin) dated August 18, 2005, prepared under the timely disclosure requirements of the Tokyo
Stock Exchange, as well as the Financial Statements and Performance Information Report prepared pursuant to the Investment Trust Law of Japan, for the period from January 1, 2005 to June 30, 2005of Japan Prime Realty Investment Corporation (“JPR”).
This English language document was prepared solely for the convenience of and reference by non-Japanese investors and is not intended to constitute a disclosure document. The Japanese
language Financial Report, Financial Statements and Performance Information Report for the aforementioned period should be referred to as the originals of this document.
English translations for legal, accounting, tax and business concepts used herein may not convey precisely identical concepts of the equivalent Japanese terms. The figures presented in thefinancial statements may differ from the Company’s Financial Report (Kessan Tanshin) due to rounding. With respect to any and all terms herein, including without limitation, financial statements, if
there exist any discrepancies in the meaning or interpretation thereof between the original Japanese documents and English documents contained herein, the original Japanese documents will
govern the meaning and interpretation. Neither JPR, Tokyo Realty Investment Management, Inc., nor any of their respective directors, officers, employees, partners, unitholders, agents or affiliates will
be responsible or liable for the completeness, appropriateness or accuracy of English translations or the selection of the portion(s) of any document(s) translated into English. No person has beenauthorized to give any information or make any representations other than as contained in this document in relation to the matters set out in this document, and if given or made, such information or
representation must not be relied upon as having been authorized by JPR, Tokyo Realty Investment Management, Inc., or any of their respective directors, officers, employees, partners, unitholders,
agents or affiliates.
The financial statements of JPR have been prepared in accordance with generally accepted accounting principles in Japan (Japanese GAAP), which may materially differ in certain respects fromgenerally accepted accounting principles in other jurisdictions.
Many provisions of this document contain information that constitute forward-looking statements. These forward-looking statements are not a guarantee of future performance and involve risks
and uncertainties, and actual results may differ materially from those in the forward-looking statements as a result of various factors.

41

TRIM-第七期 C1-4̲0929 05.10.17 2:46 PM ページ1

J PR
Japan Prime Realty Investment Corporation
Seventh Fiscal Period Business Report
January 1, 2005– June 30, 2005

Printed in Japan