Japan Prime Realty Investment Corporation
Analyst Meeting Materials for the
17th Fiscal Period Ended June 2010

17th
Japan Prime Realty Investment Corporation(Securities Code: 8955 TSE)
URL: http://www.jpr-reit.co.jp/

CONTENTS
17th Fiscal Period (Ended June 2010): Financial Summary

Future Management Strategy

4. Topics for the 17th Fiscal Period
5. Highlights of Financial Results for the 17th Fiscal Period
6. Perfomance over the Past Five Fiscal Periods
7. Statement of Income and Retained Earnings for the 17th Fiscal Period
8. Balance Sheet as of the End of the 17th Fiscal Period
9. Distribution for the 17th Fiscal Period and Retained Earnings Brought Forward

27. Future Management Policies – Focused Investment in Office Buildings inTokyo –
28. Office Transaction Market Conditions
29. Rental Office Market Conditions
30. Environmental Recognition and Investment Strategy for External Growth
31. Investment Target – Investment Strategies for Upside Advantages
32. Internal Growth Strategy

Forecasts for the 18th and 19th Fiscal Periods
11. Projected Trends of Occupancy Rates (Entire Portfolio)
12. Forecasts for the 18th Fiscal Period
13. [Reference]Forecasts of Rent Revenue － Real Estate andExpenses Related to Rent Business for the 19th Fiscal Period

Management Results of the 17th Fiscal Period
15. Policy on Constructing Portfolio and History of Portfolio Expansion (1)16. Policy on Constructing Portfolio and History of Portfolio Expansion (2)17. Strategic Property Replacement and Improvement in Portfolio Quality (1)18. Strategic Property Replacement and Improvement in Portfolio Quality (2)19. Management Results
20. Stability in Revenues and Profits – Leasing Overview of Urban Retail
Properties21. Continued Implementation of JPR Brand Strategy and Energy-Saving
Measures (1)22. Continued Implementation of JPR Brand Strategy and Energy-Saving
Measures (2)23. Financial Strategy
24. Breakdown of Interest-Bearing Liabilities and Fund Procurement Resultsfrom the Capital Market in the 17th Fiscal
25. History of JPR’s Unit price and Trade Volume （Jan. 4, 2010 –Aug. 12, 2010)【Appendix】
34. Historical Unitholder Composition (Number of Units by Investor Type)
35. Principal Unitholders
36. Milestones Since IPO and Historical Unit Price (June 2002- August 2010)
37. Changes in Variation Between Appraisal Value and Book Value at End of
Period38. Appraisals and Cap Rates at End of Period
39. NOI Yield by Property for the 17th Fiscal Period (Tokyo CBDs)
40. NOI Yield by Property for the 17th Fiscal Period (Greater Tokyo)
41. NOI Yield by Property for the 17th Fiscal Period (Other Cities)
42. Contracting Status of Tenants by Property for the 17th Fiscal Period
43. Office Vacancy Rates and Average Advertised Rents in Major Investment
Areas
44. Overview of the Asset Manager

The contents of this document (English and Japanese) are posted on the website of Japan Prime Realty Investment Corporation
http://www.jpr-reit.co.jp/

Japan Prime Realty Investment Corporation ｜ 2

17th Fiscal Period (Ended June 2010): Financial Summary

17thJapan Prime Realty Investment Corporation ｜ 3

Topics for the 17th Fiscal Period
Steadily expanded portfolio size by shifting to a proactive approach at an early stage
 Successfully acquired four properties totaling 28.7 billion yen (including acquisition of additional equity in the

BYGS Shinjuku Building in July) in the focused investment category of office buildings in Tokyoz

Changed direction and proactively acquired properties based on the judgment that Tokyo office building
prices have entered the bottom range since autumn of last yearz

As a result, acquired six properties totaling 39.9 billion yen since autumn of last year Continued efforts to replace assets from other cities/retail properties to Tokyo/office buildings, and successfully

sold the JPR Nagoya Sakae Building in Marchz

Sale price: 4.9 billion yen, Capital gains: 350 million yen

Maintained high occupancy level through endeavors that prioritized occupancy
 Placed top priority on maintaining occupancy as we attracted new tenants and negotiated with existing tenants,

and maintained an occupancy rate of 95.5% at the end of the 17th fiscal period
 Continued endeavors to enhance the level of services, including responding quickly to tenant needs, based on

JPR’s brand strategy

Successfully procured funds for growth from the capital market
 Successfully procured funds for growth from the capital market, based on JPR’s shift to external growthz

Issued new investment units in February (number of units issued: 90,000 units, total procured funds; 14.6
billion yen)z

Issued corporate bonds in March and May (Eleventh Series of Corporate Bonds: 5 years to maturity andtotaling 6.0 billion yen, Twelfth Series of Corporate Bonds: 5 years to maturity and totaling 7.0 billion yen)

 Maintained a stable financial foundation
 Ratio of interest-bearing liabilities at end of period: 45.0%, Ratio of long-term, fixed-rate borrowings at end of

period: 81.7%, Issuer ratings: AA- (R&I), A2 (Moody’s) and A (S&P)
Japan Prime Realty Investment Corporation ｜ 4

Highlights of Financial Results for the 17th Fiscal Period
Secured cash distribution for the 17th fiscal period at the level surpassing the beginning-of-period forecast.
Highlights of Financial Results for the 17th Fiscal Period(JPY mn unlessotherwise stated)
Operating Revenue

17th Period (a)16th Period (b)Jan. 1, 2010 -Jul. 1, 2009

Jun. 30, 2010

Dec. 31, 2009

12,314

11,493Comparison with Forecasts(JPY mn unlessotherwise stated)

Change(a) - (b)821

Operating Revenue

Forecasts for the
17th Fiscal Period
(c)

(4)

6,484

5,827

656

Ordinary Income

4,964

4,333

Operating Income

267

6,216

Net Income

4,963

4,332

Ordinary Income

243

4,720

Total Assets

358,339

332,380(Change 7.8%)
NAV

176,303

161,058

15,245(Change 9.5%)

NAV per Unit (JPY)

246,578

257,693-11,115(Change -4.3%)

NAV Ratio

49.2%

48.5%

DPU (JPY)

6,770

6,933

Net Income

244

4,719

(Change -2.4%)(2)Number of Units
Outstanding (Units)

715,000

625,000

90,000(Change 14.4%)(1) Recorded total acquisition price (excluding acquisition costs and other expenses). The number of properties sold in the
17th period and the prices include the sale of land of JPR Jingumae 432 for expropriation as land for a road.
(2) For distribution per unit, the Special Measures on Taxation for Investment Corporations (Special Taxation Measures
Law, Article 67-15), the Special Deduction from Income for Expropriated Land or Other Property (Special Taxation
Measures Law, Article 65-2) and the Special Measures in Case Land or Other Property is Acquired in Advance in 2010 or2011 (Special Taxation Measures Law, Article 66-2) have been applied to internally reserve a certain amount of
unappropriated retained earnings within the scope that no burden is borne on unitholders due to the additional levy ofcorporate tax, etc.
(3) Change (%) has been rounded to the first decimal place.

4,890(Change 5.2%)
DPU (JPY)

170

6,600

6,770

(Change 2.6%)
Number of Units
Outstanding (Units)

0715,000

715,000(Change 0.0%)

Highlights of Properties(JPY mn unlessotherwise stated)

0.7% points
-163

4,891

(Change 5.2%)(Change 14.6%)
25,9596,436(Change 4.3%)(Change 14.6%)
631

12,283(Change 1.7%)(Change 11.3%)
630(Reference)
Revised Forecasts
as of Jul. 6, 2010

205

12,109(Change 7.1%)
Operating Income

Change from 17th
Fiscal Period
Forecasts (a) - (c)17th Period

16th Period

Jan. 1, 2010 -Jul. 1, 2009

Jun. 30, 2010

Dec. 31, 2009

Properties Owned at
End of Fiscal Period

55

53

Total Acquisition Price(at period end)

331,284

310,619

3/25,400

2/11,200

2/4,735

-/-

96.1%

96.4%

(number/price of properties
acquired for current
peirod)(1)(number/price of properties
sold for current peirod) (1)Average Monthly
Occupancy Rate during
PeriodJapan Prime Realty Investment Corporation ｜ 5

Performance over the Past Five Fiscal Periods
Operating Revenue, Operating Income and Net Income

Changes in Distributions per Unit (DPU) and FFO per Unit
(JPY)
10,000(JPY mn)
16,0009,000

14,0008,000
12,0007,000

10,000

6,000

8,000

5,000
4,000

6,000

3,000
4,000

2,000

2,000

1,000
0

0
13th Period
Results

14th Period
Results

Operating Revenue

15th Period
Results

16th Period
Results

Operating Income

13th Period
Results

17th Period
Results

14th Period
Results

15th Period
Results

FFO Per Unit (1) (2)Net Income

16th Period
Results

17th Period
Results

DPU (1)(JPY)(JPY mn)

13th Period
Results

14th Period
Results

15th Period
Results

16th Period
Results

17th Period
Results

FFO Per Unit (1) (2)10,031

9,977

10,015

9,892

8,952

6,484

DPU (1)

7,122

7,092

3,731

6,933

6,770

4,963

Total Units
Outstanding

625,000

625,000

625,000

625,000

715,000

13th Period
Results

14th Period
Results

15th Period
Results

16th Period
Results

17th Period
Results

Operating Revenue

10,83011,171

14,33011,493

12,314

Operating Income

5,280

5,482

6,568

5,827

Net Income

4,451

4,432

2,331

4,332

(1) DPU and FFO per unit are calculated by dividing distributions and FFO by the total units outstanding as of the end of each fiscal period.
(2) FFO per unit = (Net income – Gains on sale of real estate – Gains on sale of investment securities – Extraordinary revenues and expenses + Depreciation + Other real estaterelated depreciation) / Total units outstanding

Japan Prime Realty Investment Corporation ｜ 6

Statement of Income and Retained Earnings for the 17th Fiscal Period
Operations of properties acquired in the 16th and 17th periods andand gains on sales accompanying asset replacements contributed to earnings(JPY mn)Item

17th Fiscal Period
Jan 1, 2010 - Jun. 30, 2010
AmountOperating Income and Loss

• Properties owned at end of 15th period:

Rent revenue - real estate

11,014

10,684

%
93.0%

330

%
3.1%

Other rent revenue
Rent revenue - real estate (1)840
11,855

6.8%
96.3%

809
11,4937.0%
100.0%

31
361

3.8%
3.1%

Gain on sales of real estate properties
Operating revenue

459
12,314995

3.7%
100.0%
8.1%－
11,493885－
100.0%
7.7%

459
821
109

100.0%
7.1%
12.4%

2,252
497
630

18.3%
4.0%
5.1%

2,274
488
663

19.8%
4.2%
5.8%

-22
9
-32

-1.0%
1.9%
-4.9%

30
214
219

0.2%
1.7%
1.8%

30
230
214

0.3%
2.0%
1.9%

0
-16
4

0.2%
-7.1%
2.3%

569
91
1,896

4.6%
0.7%
15.4%

569
78
1,850

5.0%
0.7%
16.1%

0
12
46

-0.1%
16.4%
2.5%

5,144
447
68

41.8%
3.6%
0.6%

5,010
416
67

43.6%
3.6%
0.6%

133
31
0

2.7%
7.6%
0.7%

6
48

0.1%
0.4%

6
48

0.1%
0.4%

0
0

0.0%
0.5%

Other operating expenses
Operating expenses
Operating income

115
5,830
6,484

0.9%
47.3%
52.7%

116
5,665
5,827

1.0%
49.3%
50.7%

0
164
656

-0.8%
2.9%
11.3%

Profits ((1) - (2))
Net operating income (NOI)

6,710
8,607
79

54.5%
69.9%
0.6%

6,482
8,332
18

56.4%
72.5%
0.2%

228
274
61

3.5%
3.3%
338.9%

1,598
1,439
89

13.0%
11.7%
0.7%

1,511
1,420
74

13.2%
12.4%
0.6%

86
19
15

5.7%
1.4%
20.7%

16
50
2

0.1%
0.4%
0.0%

12

0.1%

－
4

－
0.0%

3
50
-2

28.1%
100.0%-47.6%

Ordinary income
Income before income taxes

4,964
4,964

40.3%
40.3%

4,333
4,333

37.7%
37.7%

630
630

14.6%
14.6%

Net income
Unappropriated retained earnings

4,963
4,963

40.3%
40.3%

4,332
4,332

37.7%
37.7%

631
631

14.6%
14.6%

Property and other taxes
Outsourcing expenses
Utilities expenses
Casualty insurance
Repairs and maintenance
Property management fees
Management association accounts

OthersDepreciation
Expenses related to rent business (2)Asset management fees
Adm. service/custody fees
Directors' compensation
Trust fees

Non-operating income
Non-operating expenses
Interest expenses (incl. investment corporation bonds)

Borrowing expenses
Amortization of investment corporation bond issuance costs

New unit issuance costs
Other non-operating expenses

Distributions per unit (JPY)(Note) Figures were rounded off to a million yen.

6,770 yen (Note 2)

Amount1. Rent revenue - real estate

Change%89.4%

Other expenses related to rent business

Ordinary Income and Loss

16th Fiscal Period
Jul 1, 2009 - Dec. 31, 2009

6,933 yenAmount-163 yen• Property acquired in 16th period:• Properties sold in 17th period:• Property acquired in 17th period:-280 mn yen+363 mn yen+407 mn yen-129 mn yen

2. Gain on sales of real estate properties+354 mn yen• JPR Nagoya Sakae Building• A portion of land of JPR Jingumae 432 (Note 1)+105 mn yen
3. Expenses related to rent business• Properties owned at end of 15th period:-2 mn yen ）+0 mn yen (of which, depreciation:• Property acquired in 16th period:+89 mn yen (of which, depreciation:+17 mn yen ）• Property acquired in 17th period:+100 mn yen (of which, depreciation:+45 mn yen ）• Properties sold in 17th period:-56 mn yen (of which, depreciation:-14 mn yen )4. Non-operating income• Of which, settlement of management association accounts:+49 mn yen
5. Non-operating expenses• New unit issuance costs+50 mn yen(For the issuance conducted in February 2010)(Note 1) Recorded gain on partial sale of land of JPR Jingumae 432 for
expropriation as land for road (sold on June 1, 2010)(Note 2) For distribution per unit, the Special Measures on Taxation for
Investment Corporations (Special Taxation Measures Law, Article 67-15),
the Special Deduction from Income for Expropriated Land or Other Property(Special Taxation Measures Law Article 65-2) and the Special Measures inCase Land or Other Property is Acquired in Advance in 2010 or 2011(Special Taxation Measures Law, Article 66-2) have been applied tointernally reserve a certain amount of unappropriated retained earnings
within the scope that no burden is borne on unitholders due to the additional
levy of corporate tax, etc.
(Reference)
In January 2002 (before the IPO), investment units (500,000 yen per unit)
were split into 2.5 units (200,000 yen per unit) to make investment units
easier to invest in. Therefore, the distribution per unit for the 16th fiscal
period based on the pre-split level would be 16,925 yen.

Japan Prime Realty Investment Corporation ｜ 7

Detailed Comparison of Actual Results and Forecasts for the 17th Fiscal Period（JPY mn）

Item

17th Fiscal Period

17th Fiscal Period Forecasts

Jan 1, 2010 - Jun. 30, 2010

Jan 1, 2010 - Jun. 30, 2010

Operating Income and Loss

Ordinary Income and Loss

AmountRent revenue - real estate
Rents
Common charges
Other rent revenue
Incidental income
Rent revenue - real estate (1)Gain on sales of real estate properties(Note 1)
Operating revenue
Property and other taxes
Other expenses related to rent businessOutsourcing expenses
Utilities expenses
Casualty insurance
Repairs and maintenance
Property management fees
Management association accounts
OthersDepreciation
Expenses related to rent business (2)Asset management fees
Adm. service/custody fees
Directors' compensation
Trust fees
Other operating expenses
Operating expenses
Operating income
Profits ((1) - (2))
Net operating income (NOI)
Non-operating income
Non-operating expenses
Interest expenses (incl. investment corporation bonds)
Ordinary income
Income before income taxes
Net income
Unappropriated retained earnings
Distributions per unit (JPY)(Note) Figures were rounded off to a million yen.

%
11,014
9,016
1,730
840
616
11,855459
12,314
995
2,252
497
630
30
214
219
569
91
1,896
5,144
447
68
6
48
115
5,830
6,484
6,710
8,607
79
1,598
1,439
4,964
4,964
4,963
4,963

6,770

89.4%
73.2%
14.0%
6.8%
5.0%
96.3%
3.7%
100.0%
8.1%
18.3%
4.0%
5.1%
0.2%
1.7%
1.8%
4.6%
0.7%
15.4%
41.8%
3.6%
0.6%
0.1%
0.4%
0.9%
47.3%
52.7%
54.5%
69.9%
0.6%
13.0%
11.7%
40.3%
40.3%
40.3%
40.3%

Amount%10,934
8,958
1,711
716
679
11,650458
12,109
963
2,374
496
738
31
219
215
574
98
1,874
5,213
436
69
6
48
117
5,892
6,216
6,437
8,312
49
1,545
1,405
4,720
4,720
4,719
4,719

6,600

90.3%
74.0%
14.1%
5.9%
5.6%
96.2%
3.8%
100.0%
8.0%
19.6%
4.1%
6.1%
0.3%
1.8%
1.8%
4.7%
0.8%
15.5%
43.1%
3.6%
0.6%
0.1%
0.4%
1.0%
48.7%
51.3%
53.2%
68.6%
0.4%
12.8%
11.6%
39.0%
39.0%
39.0%
39.0%

Change from 17th Period Forecasts
Amount

%
80
57
18
123
-63
204
1
205
31
-122
0
-108
-1
-4
3
-5
-6
21
-69
11
-1
0
0
-2
-61
267
273
295
30
53
34
243
243
244
244
170

0.7%
0.6%
1.1%
17.3%
-9.4%
1.8%
0.2%
1.7%
3.3%
-5.2%
0.1%
-14.6%
-4.5%
-2.2%
1.6%
-1.0%
-6.7%
1.2%
-1.3%
2.5%
-2.5%
0.0%
0.5%
-2.0%
-1.0%
4.3%
4.2%
3.6%
61.1%
3.5%
2.4%
5.2%
5.2%
5.2%
5.2%

(Note 1) Gain on sale of real estate in the 17th
fiscal period includes gain on partial sale of theland of “JPR Jingumae 432” expropriated for road(sold on June 1, 2010).
(Note 2) With regard to dividend per unit for the
17th fiscal period, applying the special provision
on taxation of investment corporations (Article 6715 of the Special Taxation Measures Law), a
special deduction for the acquisition of
expropriation, land exchange etc. (Article 65-2 ofthe Special Taxation Measures Law) and a special
provision for taxation in the case of advanceacquisition of land etc. during 2009 and 2010
(Article 66-2 of the Special Taxation MeasuresLaw), a certain amount of unappropriated retained
earnings for the period was reserved as retained
earnings to the extent not to reduce unitholders’value as a result of additional taxes.
(Note 3) The forecasts for the 17th fiscal period
were those released at the results announcement
for the 16th fiscal period (ended December 31,2009). It was based on total 55 properties, adding
two properties to be acquired in the 17th fiscal
period to 53 properties held as of the 16th fiscal
period.

Japan Prime Realty Investment Corporation ｜ 8

Balance Sheet as of the End of the 17th Fiscal Period
Worked to further enhance the financial standing by issuing investment units
via public offering and twice issuing investment corporation bonds
Item
Current assets
Cash and deposits
Cash and deposits in trust
Other current assets
Noncurrent assets
Property, plant and equipment
Real estate

AssetsBuildings and structures

Land
Real estate in trust
Buildings and structures

Land
Intangible assets
Leasehold rights
Other intangible assets
Investments and other assets
Lease and guarantee deposits

OthersDeferred assets
Investment corporation bond issuance costs

Total assets

As of Dec. 31, 2009
Amount%28,644
8.6%
13,972
4.2%
14,306
4.3%
364
0.1%
303,63791.4%
301,54990.7%
126,075
37.9%
43,06613.0%
83,00925.0%
175,474
52.8%
58,41617.6%
117,058
35.2%
1,547
0.5%
1,542
5
0.0%
540
0.2%
49
0.0%
491
0.1%
97
0.0%
97
0.0%
332,380 100.0%(JPY mn)
ChangeAmount
%
6,084
21.2%
5,674
40.6%
375
2.6%
34
9.5%
19,8006.5%
16,458
5.5%
12,193
9.7%
620
1.4%
11,572
13.9%
4,265
2.4%
832
1.4%
3,433
2.9%
3,251 210.1%
3,251 210.7%
0
2.8%
90
16.8%
－
－
90
18.4%
74
76.3%
74
76.3%
25,959
7.8%

Long-term loans payable
Investment corporation bonds
Total Liabilities

33,004
2,039
1,465
5,000
21,4993,000
149,031
17,26884,26347,500
182,035

9.2%
0.6%
0.4%
1.4%
6.0%
0.8%
41.6%
4.8%
23.5%
13.3%
50.8%

33,7482,363
1,416
16,252
6,716
7,000
137,572
16,66883,40437,500171,321

10.2%
0.7%
0.4%
4.9%
2.0%
2.1%
41.4%
5.0%
25.1%
11.3%
51.5%

-744
-324
48
-11,252
14,783-4,00011,458599
859
10,00010,714-2.2%-13.7%
3.5%-69.2%
220.1%-57.1%
8.3%
3.6%
1.0%
26.7%
6.3%

Unithoders' capital
Surplus
Total unitholders' equity

171,339
4,963
176,303

47.8%
1.4%
49.2%

156,725
4,333
161,058

47.2%
1.3%
48.5%

14,614630
15,245

9.3%
14.6%
9.5%

Total liabilities and unitholders' equity

358,339100.0%

332,380

100.0%

25,959

7.8%

Liabilities

Current liabilities
Accounts payable - other
Advances received
Short-term loans payable

As of Jun. 30, 2010
Amount%34,7289.7%
19,647
5.5%
14,681
4.1%
399
0.1%
323,43890.3%
318,00888.7%
138,268
38.6%
43,687
12.2%
94,581
26.4%
179,73950.2%
59,24816.5%
120,491
33.6%
4,799
1.3%
4,794
1.3%
5
0.0%
630
0.2%
49
0.0%
581
0.2%
172
0.0%
172
0.0%
358,339 100.0%

Current portion of long-term loans payable
Current portion of inv estment corporation bonds

Noncurrent liabilities

Unitholders' Equity

Tenant leasehold and security deposits(JPY mn)
1. Balance of interest-bearing debt

ChangeEnd of 17th Fiscal Period

End of 16th Fiscal Period

Total161,262

150,872

10,390(Breakdown) Unsecured loans payable

101,579

97,1894,390

Secured loans payable

9,183

9,183

Unsecured investment corporation bonds

50,50044,500－6,000

End of 17th Fiscal Period End of 16th Fiscal Period Change (P)2. Interest-bearing debt ratio, etc.
(1) Interest-bearing debt ratio
Interest-bearing debt / (Interest-bearing debt + Unitholders' capital)
48.5%
49.0%
-0.6
(2) Interest-bearing debt to total assets
1) Interest-bearing debt / Total assets at end of period
45.0%
45.4%
-0.4
Interest-bearing debt / (Total assets at end of period + Gains or2)losses from real estate valuation)
46.9%
45.5%
1.4

Long-term fixed-rate interest-bearing debt (*) / Interest-bearing debt
81.7%
80.1%
*Total amount of long-term fixed-rate debt with over 1 year to maturity

End of 17th Fiscal Period End of 16th Fiscal Period
3. Commitment line status1) Credit limit (total)
16,00016,0002) Outstanding debt at end of period－－
3) Unused commitment line at end of period
16,00016,000
4) Lenders (at the end of the 17th fiscal period)
Mizuho Corporate Bank, The Bank of Tokyo-Mitsubishi UFJ,
Resona Bank, Mitsubishi UFJ Trust and Banking

Change－－－*Agreements have been concluded separately with the respective banks listed above.

End of 17th Fiscal Period End of 16th Fiscal Period
4. Investment unit status
1) Total number of units issued and outstanding (units)
715,000
625,000
2) Total unitholders' equity per unit (yen)246,578
257,693

Change90,000-11,115(Note) Figures were rounded off to a million yen.

Japan Prime Realty Investment Corporation ｜ 9Distribution for the 17th Fiscal Period and Retained Earnings Brought Forward
Reserved 123 million yen internally in order to reinforce the financial standing as the foundation of continuous growth.
Distribution Information
Unappropriated retained earnings

4,963 million yen①

Distributions

4,840 million yen②(Distribution per unit)(Reference) Net income per unit: 6,942 yen (based on investment units at 17th period end)

6,770 yen

Voluntary deposits
Transferred from deposits foradvanced depreciation

Retained earnings brought forward

73 million yen

③

・・・・・

【1】

49 million yen④：①－②－③

・・・・・

【2】

【1】 Special Measures on Taxation for Cases Where Land andOther Properties Were Acquired in Advance in 2009 and 2010

【2】 Special Deduction from Income for ExpropriatedLand or Other Property for Public Purposes, etc.

Properties acquired in 2009

Property falling under expropriation

Olinas Tower

Rokubancho Building

Ryoshin Harajuku Building【Reference】 System Overview (Special Taxation Measures Law, Article 66-2)
When a corporation acquires land or other property located in Japan (hereafter called "land and other property acquired inadvance") in the period between January 1, 2009 and December 31, 2010, and sells other land or property it owns within ten
years after the end of the fiscal year to which the date of said acquisition belongs, and as long as it reduces the book value of
said land and other property acquired in advance by expense accounting within the range of an amount equivalent to 80% of
the gain on sale of said other land or property (hereafter, the "advanced depreciation limit"), or it accounts the amount equal
to or less than the advanced depreciation limit in accordance with the method where the amount is kept as deposits in the
finalized financial settlement for the fiscal year to which the date of said sale belongs (including the method where theamount is kept as deposits by disposing surplus by the date on which the financial settlement of said fiscal year is
finalized), the corporation may record the amount equivalent to the reduced or accounted value as losses in calculating
income for said fiscal year.

JPR Jingumae 432【Reference】 Overview of the System (Special Taxation
Measures Law, Article 65-2)
When a property owned by a corporation falls under a land or other property expropriatedfor public purposes, and when the compensation it receives for the condemned land orother property exceeds the combined amount of the book value and expenses required
for the transfer of said land and other property, the corporation may record the exceeding
portion of the amount or 50 million yen, whichever is lower, as losses in calculating theincome for the fiscal year to which the date of the transfer belongs.

(60% if all the land and other property acquired in advance were acquired between January 1, 2010 and December 31, 2010)

Japan Prime Realty Investment Corporation ｜ 10

Forecasts for the 18th and 19th
Fiscal Periods

18th~Japan Prime Realty Investment Corporation ｜ 11Projected Trends of Occupancy Rates (Entire Portfolio)
17th Period (June 2010)

18th Period (December 2010)

19th Period (June 2011)

100%
99%
98%
97%

96.4%

96%

95.5%

Forecast

95%
93.9%

A 1.0% increase
compared to the 94.5%
forecast at the time the16th fiscal period results
were announced.

94%
93%

92.6%
The occupancy level of all properties,
including finalized new tenants andscheduled contract terminations(-2.9% period-on-period)

92%
91%
90%
Average Occupancy Rate (ona monthmonth-end basis throughout
the fiscal period)

96.1％

94.1％

93.7％

(Reference) Total leasable area: 410,326.04m2 (as of the end of the 17th fiscal period)(1) The occupancy rate for the 18th fiscal period and after has been calculated based on the following:
18th Period: The occupancy rate of all 55 properties, including the acquisition of additional equity in the
BYGS Shinjuku Building in July 2010
19th Period: The occupancy rate of all 55 properties planned to be owned as of the end of the 18th fiscal period(2) The occupancy rate for the 18th fiscal period includes notices of contract terminations known as of July 31, 2010,
contracts already executed, and new tenants that are certain to move in.
(3) The occupancy rate for the 19th fiscal period includes some new tenants in addition to the above (2).

Japan Prime Realty Investment Corporation ｜ 12

Forecasts for the 18th Fiscal Period
Rent revenue is forecast to decrease period-on-period, impacted by move outs of tenants and reduced rents
at existing properties, despite newly acquired properties contributing to an increase in earnings(JPY mn)

Assumptions for the 17th
Fiscal Period Forecast

Item
Rent revenue - real estate

Portfolio as of end of 17th fiscal
period:55 properties

Other rent revenue
Rent revenue - real estate (1)Properties to be acquired in the 18th
fiscal period:
1 property

Jan 1, 2010 - Jun. 30, 2010

Jul 1, 2010 - Dec. 31, 2010

Operating Income and Loss

Amount%Amount%11,01489.4%

10,819

92.0%

-194

-1.8%

840

6.8%

938

8.0%

98

11.7%

11,85596.3%

11,758100.0%

-96

-0.8%

459

3.7%

－

－

-459

-100.0%12,314100.0%

11,758100.0%

-556

-4.5%

Property and other taxes

995

8.1%

981

8.3%

-14

-1.4%

2,252

18.3%

2,405

20.5%

153

6.8%

Other expenses related to rent business

Ordinary Income and Loss%

Change from the 17th
Fiscal Period Results

Operating revenue

Gain on sales of real estate properties

Properties to be sold in the 18th
fiscal period:
none<Average Monthly Occupancy during
Period>18th Fiscal Period Forecast

Amount<Portfolio>

The number of properties owned at the end of
the 18th period is projected to be 55, as theacquisition conducted in the period is the
additional acquisition of co-ownership equity.

17th Fiscal Period

Outsourcing expenses

497

4.0%

514

4.4%

17

3.6%

Utilities expenses

630

5.1%

708

6.0%

77

12.3%

Casualty insurance

30

0.2%

32

0.3%

1

5.6%

Repairs and maintenance

214

1.7%

217

1.8%

2

1.3%

Property management fees

219

1.8%

214

1.8%

-5

-2.3%

Management association accounts

1. Rent revenue - real estate• Properties owned at end of 16th period: -201 mn yen• Property acquired in 17th period:+61 mn yen• Properties sold in 17th period:-93 mn yen• Property acquired in 18th period:+136 mn yen

2. Gain on sales of real estate properties• JPR Nagoya Sakae Building-354 mn yen• A portion of land of JPR Jingumae 432 (Note 1)-105 mn yen

3. Expenses related to rent business• Properties owned at end of 16th period:+77 mn yen• Property acquired in 17th period:+94 mn yen

569

4.6%

575

4.9%

6

1.1%

Others

91

0.7%

143

1.2%

52

56.8%

Depreciation

1,896

15.4%

1,927

16.4%

30

1.6%

5,144

41.8%

5,314

45.2%

169

3.3%

4. Non-operating income

Asset management fees

447

3.6%

418

3.6%

-28

-6.5%

• Of which, settlement of management association

Adm. service/custody fees

68

0.6%

71

0.6%

2

4.1%

accounts:<LTV Ratio>

Directors' compensation

6

0.1%

6

0.1%

0

0.0%

48.9% (as of end of 18th fiscal
period)Trust fees

48

0.4%

49

0.4%

0

1.2%

5. Non-operating expenses

Other operating expenses

115

0.9%

110

0.9%

-4

-4.0%

• Interest expenses

Operating expenses

5,830

47.3%

5,970

50.8%

139

2.4%

• New unit issuance costs

Operating income

6,484

52.7%

5,788

49.2%

-695

-10.7%

Profits ((1) - (2))

6,710

54.5%

6,444

54.8%

-266

-4.0%

Net operating income (NOI)

8,607

69.9%

8,371

71.2%

-235

-2.7%
-93.6%

94.1%<Total Number of Units Outstanding>
715,000 units

The forecasts for the 18th fiscal period were
calculated based on the above Assumptions
for the 18th Fiscal Period Forecast. Actual
operating revenue, ordinary income, net
income and cash distributions per unit may
change as a result of the acquisition of new
properties or the sale of owned properties, etc.
Furthermore, the forecasts are in no way a
guarantee of cash distribution amounts. For
details on the assumptions for the 18th fiscal
period forecasts, please refer to the“Assumptions for the 18th Fiscal Period
Forecast (July 1, 2010 – December 31, 2010)”
on page 7 of the “Japan Prime Realty
Investment Corporation 17th Fiscal Period
Results (January 1, 2010 – June 30, 2010).”

Expenses related to rent business (2)Non-operating income

79

0.6%

5

0.0%

-74

Non-operating expenses

1,598

13.0%

1,680

14.3%

82

5.1%

4,964

40.3%

4,112

35.0%

-852

-17.2%

Income before income taxes

4,964

40.3%

4,112

35.0%

-852

-17.2%Net income

4,963

40.3%

4,111

35.0%

-852

-17.2%Unappropriated retained earnings

4,963

40.3%

4,111

35.0%

-852

-17.2%

Ordinary income

Distributions per unit (JPY)6,770 (Note 2)

5,750円-1020(Note) Figures were rounded off to a million yen.

(715,000 units)(715,000 units)(0 units)• Properties sold in 17th period:-45 mn yen• Property acquired in 18th period:+43 mn yen-49 mn yen+110 mn yen-50 mn yen(Note 1) Recorded gain on partial sale of land of JPR
Jingumae 432 for expropriation as land for road(sold on June 1, 2010)(Note 2) For distribution per unit, the Special Measures on
Taxation for Investment Corporations (Special
Taxation Measures Law, Article 67-15), theSpecial Deduction from Income for ExpropriatedLand or Other Property (Special Taxation
Measures Law, Article 65-2) and the Special
Measures in Case Land or Other Property is
Acquired in Advance in 2010 or 2011 (Special
Taxation Measures Law, Article 66-2) have been
applied to internally reserve a certain amount of
unappropriated retained earnings within thescope that no burden is borne on unitholders dueto the additional levy of corporate tax, etc.

Japan Prime Realty Investment Corporation ｜ 13

[Reference] Forecasts of Rent Revenue – Real Estate andExpenses Related to Rent Business for the 19th Fiscal Period
Rent revenue for the 19th period will decrease, impacted by contract
contract terminations by large tenants in Osaka and Nagoya;
Projected to be on a recovering trend due to the cancellation of rentrent-free periods from the following period (20th period)(JPY mn)

Assumptions for the 19th
Fiscal Period Forecast

Item<Portfolio>
Portfolio as of end of 17th fiscal
period:55 properties

Rent revenue - real estate

The number of properties owned at the endof the 18th period is projected to be 55, as
the acquisition conducted in the period isthe additional acquisition of co-ownership
equity.

<Average Monthly Occupancy
during Period>
93.7%<Capital Expenditures>
Renewal of air-conditioning
systems at BYGS Shinjuku
Building
184 mn yen
Renewal of common space at
Shinjuku Center Building
239 mn yen
Renewal of lighting, etc at Olinas
Tower
60 mn yen
The forecasts of rent revenue – real estateand expenses related to the rent businessfor the 19th fiscal period were calculated
based on the above “Assumptions for the
19th Fiscal Period Forecast.” Actual rent
revenue – real estate, expenses related to
the rent business, profits, net operating
income (NOI), net cash flow and otherfigures may change as a result of theacquisition of new properties or the sale ofowned properties, etc.

Real Estate Rent Revenue and Expenses

Properties to be acquired or sold in
the 19th fiscal period:noneJul. 1, 2010 - Dec. 31, 2010

Jan. 1, 2011 - Jun. 30, 2011

AmountProperties to be acquired in the
18th fiscal period:
1 property
Properties to be sold in the 18th
fiscal period:none

18th Fiscal Period Forecast

Forecasts of Real Estate Rent
Revenue and Expenses for the
19th Fiscal Period%

Amount%Changes from the 18th
Fiscal Period Forecast
Amount%10,81992.0%

10,533

93.7%

-286

-2.6%

Other rent revenue

938

8.0%

707

6.3%

-231

-24.7%

Rent revenue - real estate (1)11,758100.0%

11,240100.0%

-518

-4.4%

Operating revenue

11,758100.0%

11,240100.0%

-518

-4.4%

Property and other taxes

981

8.3%

1,041

9.3%

60

6.1%

Other expenses related to rent business

2,405

20.5%

2,353

20.9%

-51

-2.2%

Outsourcing expenses

514

4.4%

511

4.6%

-3

-0.6%

Utilities expenses

708

6.0%

682

6.1%

-25

-3.7%

Casualty insurance

32

0.3%

32

0.3%

0

0.9%

Repairs and maintenance

217

1.8%

204

1.8%

-12

-5.6%

Property management fees

214

1.8%

203

1.8%

-10

-4.9%

Management association accounts

575

4.9%

575

5.1%

0

0.0%

Others

143

1.2%

143

1.3%

0

-0.2%

Depreciation

1,927

16.4%

1,893

16.8%

-33

-1.8%

Expenses related to rent business (2)

5,314

45.2%

5,288

47.1%

-25

-0.5%

Profits ((1) - (2))

6,444

54.8%

5,951

52.9%

-492

-7.6%

Net operating income (NOI)

8,371

71.2%

7,845

69.8%

-526

-6.3%

Capital expenditures

597

5.1%

820

7.3%

223

37.4%

7,774

66.1%

7,024

62.5%

-749

-9.6%

Net Cash Flow (ＮＣＦ)(Note) Figures were rounded off to a million yen.

Japan Prime Realty Investment Corporation ｜ 14

Management Results of the
17th Fiscal Period

17thJapan Prime Realty Investment Corporation ｜ 15

Policy on Constructing Portfolio and History of Portfolio Expansion (1)Due to steady expansion of the portfolio, the asset size (total acquisition price) grew to 331.3 billion yen
at the end of the 17th fiscal period and 334.6 billion yen as of August 16, 2010.
History of Expansion of Portfolio Size

350

(JPY bn)

331.3
Office (Tokyo)

Office (other cities)

Retail properties

Total properties sold

275.1

300
245.4
250
197.7
200

163.7
125.8

150
100
50
0
-50

92.2

94.6

40.1

41.6

38.8

39.8

13.2

13.2

52.8
39.8
33.2

57.5
43.9

48.0

209.2

91.3

48.0

99.3

100.2

100.2

45.3

45.3

45.3
63.8

77.1

-9.3

-9.3

38.2

38.2

40.4

50.0

-0.4

-0.4

-0.4

-6.2

-9.3

310.6

251.9

135.8

141.6

108.3

114.8

43.1

43.1

43.1

39.4

94.0

94.0

96.2

99.6

-14.5

-14.5

-14.5

-18.2

172.9

184.1

209.5

212.8

31.1

31.1

26.6

26.6

95.4

95.4

95.2

95.2

100.2

48.4

57.3

299.4

222.5

179.6

139.6
77.5

202.7

280.6

-30.7

-30.7
-35.4
1st Period 2nd Period 3rd Period 4th Period 5thPeriod 6th Period 7th Period 8thPeriod 9th Period 10th Period 11th Period 12th Period 13th Period 14th Period 15th Period 16th Period 17th Period
Jun.
2002

Dec.
2002

Jun.
2003

Dec.
2003

Jun.
2004

Dec.
2004

Jun.
2005

Dec.
2005

Jun.
2006

334.6

Dec.
2006

Jun.
2007

Dec.
2007

Jun.
2008

Dec.
2008

Jun.
2009

Dec.
2009

-35.4

Jun. As of Aug.
2010 16, 2010

Japan Prime Realty Investment Corporation ｜ 16

Policy on Constructing Portfolio and History of Portfolio Expansion (2) Revisions to the Asset Management Guidelines for JPR (Changes in Target Allocation Ratios)
Allocation Ratios as of the
End of the 17th Period (June 2010)

Revisions to the Asset Management Guidelines for JPR

Focus investment on office buildings
located in the Tokyo area to raise theinvestment weight for “Office (Tokyo).”Ex. Olinas Tower, Rokubancho Building,
Ryoshin Harajuku Building and Tokyo
Tatemono Kyobashi Building

Before revisions

After revisions
Other cities
10~
20%

Other cities
Target allocation ratio
by location

Set the ceiling to the investment ratio ofretail properties at 30% to maintain theinvestment weight for office buildings at ahigh level
Ｔhere is no change in the basic policy ofworking to realize the advantages ofdiversified investment in managing theportfolio, and JPR will also invest in bluechip properties in other cities and retailproperties that promise relatively highprofitability through even more rigorous
selection than before.

40%
60%

17.6%
80~
90%

Tokyo

Retail properties
20%

Other cities

Retail properties
10~30%

Target allocation ratioby asset class

82.4%

Tokyo

Tokyo

Retail properties
28.7%
70~
90%

80%

Office buildings

71.3%
Office buildings

Office buildings

Changes in Allocation Ratios
Allocation ratio by asset class

Allocation ratio by location
End of the 1st period(Jun. 30, 2002)
Tokyo
CBDs
29.2%

End of the 15th period(Jun. 30, 2009)
Other cities
21.0%

Tokyo
CBDs
42.6%

As of August 16, 2010
Other cities
17.4%

Tokyo
CBDs
50.0%

Other cities
42.1%
Tokyo
57.9%
Greater
Tokyo
28.7%

Greater
Tokyo
36.5%

Tokyo
79.0%

Greater
Tokyo
32.6%

End of the 1st period(Jun. 30, 2002)
Tokyo
Retailproperties 14.4%
14.4%

Office(othercities)
42.1%

Tokyo
82.6%

End of the 15th period(Jun. 30, 2009)

As of August 16, 2010
Other cities

Office(Tokyo)43.5%

Retailproperties
31.9%
Tokyo
21.3%

Ofice
buildings
85.6%

Office(othercities)Other cities
10.6%

OfficeBuildings
68.1%
Office(Tokyo)57.8%

Retail 9.5%
properties
28.5%
Tokyo
19.5%

OfficeBuildings
71.5%
Tokyo
63.6%

Other cities
7.9%

10.4%

(Note) The target allocation ratios were changed in accordance with the portfolio management standards reviewed in the 16th fiscal period.

Japan Prime Realty Investment Corporation ｜ 17

Strategic Property Replacement and Improvement in Portfolio Quality (1)Tokyo CBDs

Property Acquisitions in the 17th Fiscal Period

Chiyoda, Chuo, Minato,
Shinjuku, Shinagawa andShibuya Wards

Tokyo Tatemono Kyobashi Building
Ueno

Type of use
OfficeLocation
Chuo Ward, Tokyo
Acquisition date February 2010
Acquisition price JPY 5,250mn
Completion
January 1981
SellerTokyo Tatemono Co., Ltd.
Total floor space 4,419.79㎡

Shinjuku Ward
Shinjuku

Ichigaya

Kinshicho

Chiyoda WardTokyo

Shibuya Ward
Harajuku

Shibuya

ＴＫ Horidome Building
Type of use
OfficeLocation
Chuo Ward, Tokyo
Acquisition date March 2010
Acquisition price JPY 5,100 mn
Completion
June 2002
SellerUndisclosed (domestic SPC)
Total floor space 7,190.82㎡

Minato Ward

Chuo Ward

Tamachi

Osaki

Shinagawa

GotandaShinagawa Ward

Oimachi

JPR Sendagaya Building
Type of use
Location
Acquisition date
Acquisition priceCompletion
SellerOfficeShibuya Ward, Tokyo
May 2010
JPY 15,050 mn
May 2009
Sendagaya Kaihatsu Tokutei
Mokuteki Kaisha (Note 1)
Total floor space 7,683.19㎡

Equity acquisition by utilizing preferential purchase negotiating rights,
instead of acquisition through competition in the market

Number of properties owned as of August 16, 2010:55

Of which, number of properties with additional equity acquisitions:7

Property Acquisitions in the 18th Fiscal Period
BYGS Shinjuku Building (additional acquisition (Note 2))
Type of use
Location
Acquisition date
Acquisition priceCompletion
SellerOffice and retail space
Shinjuku Ward, Tokyo
July 2010
JPY 3,300 mn
April 1985
Central General Development Co.,Ltd.
Total floor space 25,733.10㎡

Advantage of acquiring
additional equity[Major properties with additional equity acquisitions]

The entire ownership as a resultof acquiring additional equity
should reduce risks involving coownership and cancel the
reduced appraisal value
associated with co-ownership.

(Note 1) The seller is a tokutei mokuteki kaisha (special purpose company) established in accordance with the Law Concerning Asset Liquidation. Tokyo Tatemono
Co., Ltd. has made preferred investment in the entity, and has been entrusted with asset management operations from it.
（Note 2) JPR acquired an additional 25% co-ownership, resulting in ownership of the entire property in which JPR holds rights.
(Note 3） Figures for the acquisition price, etc. indicated above have been rounded down to a million yen.

Shinjuku Sanchome
East Building

Tachikawa BusinessCenter Building

Fukuoka Building

Japan Prime Realty Investment Corporation ｜ 18

Strategic Property Replacement and Improvement in Portfolio Quality (2)Enhance portfolio quality by increasing the allocation ratio of Tokyo office buildings,
primarily through strategic sales of properties in regional cities
Properties Sold by the End of the 17th Fiscal Period (June 2010)(JPY mn)
Number ofproperties

12

Sale price(accumulated)

Book value at sale(accumulated)

Gains and losses(accumulated, net)

37,81634,556

3,260

NORTH33 Building

Park East Sapporo(Note) Partial disposals or transfers of preferred equity investment are excluded from the properties soldin the above table.

Sale date:
Acquisition price:
Sale price:
Building age at sale:
Reason for sale:

Sale date:
Acquisition price:
Sale price:
Building age at sale:
Reason for sale:November 2005
JPY 2,150mn
JPY 2,400 mn
20.1 years
Realizeenhanced value

October 2008
JPY 3,700 mn
JPY 3,520 mn
16.7 years
Improve portfolio
qualityStrasse Ichibancho
Sale date:
Acquisition price:
Sale price:
Building age at sale:
Reason for sale:

JPR Park West Takamatsu
Sale date:
Acquisition price:
Sale price:
Building age at sale:
Reason for sale:

March 2005
JPY 872mn
JPY 842 mn
23.6 years
Sorting of properties
within the area

JPR Ikebukuro Building
Sale date:
Acquisition price:
Sale price:
Building age at sale:
Reason for sale:

JPR Takamatsu Building
Sale date:
Acquisition price:
Sale price:
Building age at sale:
Reason for sale:

June 2009
JPY 4,200 mn
JPY 1,800 mn
6.7 years
Avoid asset
impairment

April 2007
JPY 2,130 mn
JPY 1,530 mn
24.6 years
Reconstruct area strategy

March 2005
JPY 2,040 mn
JPY 3,345 mn
24.4 years
Realize enhanced
value

Tsurumi Fuga 1
Sale date:
Acquisition price:
Sale price:
Building age at sale:
Reason for sale:

SK Hiroshima Building
Sale date:
Acquisition price:
Sale price:
Building age at sale:
Reason for sale:

September 2005
JPY 947 mn
JPY 1,040 mn
15.8 years
Realize enhancedvalue

JPR Square Hakata
East / West
Yasuda Life Tenroku Building
Sale date:
Acquisition price:
Sale price:
Building age at sale:
Reason for sale:

March 2005
JPY 2,873 mn
JPY 2,923 mn
21.1 years、18.4 years
Sorting of properties
within the area

Sale date:
Acquisition price:
Sale price:
Building age at sale:
Reason for sale:

September 2003
JPY 418 mn
JPY 609 mn
12.2 years
Realizeenhanced value

Meiji Yasuda Life Osaka Umeda Building
Sale date:
Acquisition price:
Sale price:
Building age at sale:
Reason for sale:

June 2009
JPY 8,300 mn
JPY 10,600 mn
9 years
Replacement with Tokyo
office buildings

April 2007
JPY 3,040 mn
JPY 4,270 mn
21.5 years
Improve
portfolio quality

JPR Nagoya Sakae Building
Sale date:
Acquisition price:
Sale price:
Building age at sale:
Reason for sale:

March 2010
JPY 4,550 mn
JPY 4,937 mn
7.2 years
Replacement with Tokyo
office buildings

Japan Prime Realty Investment Corporation ｜ 19

Management Results
Successful strategic property replacement helped JPR to maintain a relatively high occupancy level andsecure stable revenues in the 17th fiscal period despite the current business conditions
Changes in Rental Revenues(JPY mn)

Entire portfolio

14,00012,00010,00010,365

10,002

9,662

Properties ow ned as of the end of the 10th fiscal period
11,014

10,684

10,218

8,000
6,000
4,000

7,701

7,816

7,849

7,789

7,523

7,355

12th Period

13th Period

14th Period

15th Period

16th Period

17th Period

2,0000Dec. 2007
Jun. 2008
Dec. 2008
Jun. 2009
Dec. 2009
Jun. 2010____________________(Note 1) For properties owned at the end of the 10th fiscal period, the indicated figures are the sum of rents, common charges, parking rates and other revenues (excluding such variable revenues as incidental income) for
properties JPR owned at the end of the 10th fiscal period excluding properties replaced through transactions by the 17th fiscal period.
As for the entire rental revenue, the indicated figures are the sum of rents, common charges, parking rates and other revenues (excluding such variable revenues as incidental income) for all properties owned in respective
fiscal periods (including properties that were sold during the periods).
(Note 2) Figures have been rounded down to a million yen.

Changes in Occupancy Rates by Type of Use and Location
100.0

（%）
99.9%

95.0

95.5%

90.0

93.8%

85.0

Office (Tokyo)
Retail properties

92.4%

Office (other cities)
All properties

80.0
1st Period 2nd Period

Jun.
Dec.
2002
2002
____________________

3rd Period

4th Period

5th Period

6th Period

7th Period

8th Period

Jun.
2003

Dec.
2003

Jun.
2004

Dec.
2004

Jun.
2005

Dec.
2005

9th Period 10th Period 11th Period 12h Period 13th Period 14th Period 15th Period 16th Period 17th Period

Jun.
2006

Dec.
2006

Jun.
2007

Dec.
2007

Jun.
2008

Dec.
2008

Jun.
2009

Dec.
2009

Jun.
2010

(Note 1) Figures have been rounded to the first decimal place.
(Note 2) The occupancy rates are those of properties owned as of the end of June 2010, calculated based on the lease terms as of the same date, at the same date.

Japan Prime Realty Investment Corporation ｜ 20

Stability in Revenues and Profits – Leasing Overview of Urban Retail PropertiesOverview of Lease Contracts for Retail Properties
Type

Long
term

Short
term

No

Retail Properties

Lease Period

Overview of Lease Contract (No Cancellation, etc.)

1
2
3
4
5
6
7
8
9
10
11
－
－
－

JPR Shibuya Tower Records Bldg.

Through June 30, 2012

No cancellation allowed during the contract period on the left

Shinjuku Sanchome East Bldg.

Through January 31, 2027

No cancellation allowed until January 31, 2017, after which one-year notice is needed

Y urakucho Ekimae Building (Y urakucho Itocia)

Through October 6, 2027

No cancellation allowed until October 6, 2017, after which one-year notice is needed

Tanashi ASTA

Through February 9, 2015

No cancellation allowed during the contract period on the left (with penalty imposed)

Cupo-la Main Bldg.

Through March 16, 2026

No cancellation allowed during the contract period on the left

JPR Musashikosugi Bldg.

Through March 1, 2013

Cancellation allowed with one-year notice

Musashiurawa Shopping Square

Through October 31, 2025

No cancellation allowed until October 31, 2015, af ter which one-y ear notice is needed (with penalty imposed)

Kawasaki Dice Bldg.

Through August 27, 2013

No cancellation allow ed during the contract period on the left, for some tenants through August 2023

JPR Umeda Loft Bldg.

Through March 15, 2014

No cancellation allowed during the contract period on the left

Benetton Shinsaibashi Bldg.

Through February 14, 2033

Cancellation allowed with one-year notice but penalty is imposed.

Housing Design Center Kobe

Through March 31, 2019

No cancellation allowed during the contract period on the left

JPR Chayamachi Bldg.

Leasehold contract of tw o years as a rule

(Multi-tenant retail property) No cancellation allowed for 1F through 3F until May 10, 2015

JPR Daikanyama

Leasehold contract of tw o years as a rule

(Multi-tenant retail property)

JPR Jingumae 432

Leasehold contract of tw o years as a rule

(Multi-tenant retail property)

Distribution of Remaining Periods of Lease Contracts for Stability-Type Retail Properties and NOI Ratios (Note 1) against Entire Portfolio
16%(Total 13.81%)
14%
12%

9

4.32%

10%
8%

 Although the remaining periods of lease contracts
are relatively long, JPR will closely watch the sales
situation, etc. of tenants housed in properties thatare nearing contract renewals.

4
8
4.00%

11

6%

6
4%

10

2

5.95%
2%

1

5

3.54%

2.37%

7

0%
Less than 2
years

Up to 4 years(Total 4.69%)

3

1.95%

Up to 6 years

Up to 8 years

Up to 10 years

Up to 12 years

Up to 14 years

1.23%
0.66%
0.61%
0.88%
1.31%
14 years ormore JPR focuses its investment in retail properties on
urban retail properties located close to stations.
This assures high availability of tenants to fillvacancies.
(Note) The remaining periods of lease contracts are those as of the end of the 17h fiscal
period (June 30, 2010), while the NOI ratios are those of NOIs of individual retailfacilities against the NOI of the entire portfolio for the 17th fiscal period. The numbers
are linked to the above table of "Overview of Lease Contracts for Retail Properties."

Japan Prime Realty Investment Corporation ｜ 21

Continued Implementation of JPR Brand Strategy and Energy-Saving Measures (1)ＪＰＲ Brand Strategy: “A/3S” as brand concept
Energy-Saving Measures

JPR has been implementing the JPR Brand Strategy with the aim of perpetuallyenhancing its asset values. With the 3 S's (Service, Safety and Save Energy) at thecore, JPR is promoting it as a brand of buildings that provide the best A (Amenities).

Ａｍｅｎｉｔies
Create spaces thatsatisfy people whowork there・Replace air-conditioning units
・Introduce highly-efficient lighting equipment
・Introduce control systems compatible with suchenergy saving as restrictions on CO2 emissions, etc.

Enhance profitability ofproperties
Enhance asset values

ＳａｆｅｔｙＳｅｒｖｉcｅ

Proactively shift to energy-saving equipment

Provide safety andsecurity

Save Energy

Introduce and expand greenery in consideration ofurban environment

Enhance tenantsatisfaction

Provide elaborate services

・Prepare and enhance greenery around buildings
・Prepare rooftop and wall greenery

Ｓａｖｅ Ｅｎｅｒｇｙ
Operate facilities in considerationof the environment

Implement brand strategy

Conduct energy management in response to the
Revised Energy Conservation Law, etc.
・Proactively fulfill obligations to energy saving
・Study use of green energy
・Investigate purchase of ＣＯ2 emission rights

JPR will create facility spaces that always provide good amenities by providing highquality services and environmentally-friendly operations with consideration given to
the safety and security of all users.

Energy-saving results through renovation of air-conditioning systems, etc.

Property Name

Construction

Construction
Expenses(JPY mn)

Energy Type

Annual Energy
Consumption
beforeConstructions
kl/year (Note 1)

Annual Energy
Consumption afterConstructions
kl/year (Note 2)

Reductionkl/year

EnergyReduction Ratio
by AirConditioning
Units, etc.

JPR Chiba Bldg.

Replacement of air conditioning
units

205

Town gas

127

85

42

33.1%

JPR Hakata Bldg.

Replacement of air conditioning
units, lighting equipment for
exclusive and common areas

384

Electricity

426

345

81

19.1%

JPR Ichigaya Bldg.

Replacement of air conditioning
units

157

Electricity

318

299

18

5.8%

JPR Yokohama Nihon Odori Bldg.

Replacement of air conditioning
units

200

Electricity

439

348

92

20.9%

JPR Naha Bldg.

Replacement of air conditioning
units

99

Electricity

273

247

26

9.4%

Mitsubishi UFJ Lease & Finance
Nagoya Head Office Bldg.

Replacement of air conditioning
units

190

Electricity

357

289

68

19.2%

JPR Ueno East Bldg.

Renewal of air conditioning units
for exclusive and common areas

108

Electricity

499

411

88

17.6%

2,438

2,023

415

17.0%

Total

1,343

(Note 1) Annual energy consumption before constructions (kl/year) = Annual energy consumption before constructions x Reduced value / Average occupancy rate before constructions(Note 2) Annual energy consumption after constructions (kl/year) = Annual energy consumption after constructions x Reduced value / Average occupancy rate after constructions

Energy consumption ratio by use at general
office buildings[Consumption ratio in exclusive areas][Consumption ratio in office buildings]

Air conditioning
units

40.0%

33.0%

Commonareas

Lighting equipment

28.0%

Parking lot

60.2%

32.0%
Power outlets

Exclusive
areas

6.8%

(Note) Prepared based on the Consumption Ratio by Sector in the Energy Savingof Office Buildings published by The Energy Conservation Center, Japan

Japan Prime Realty Investment Corporation ｜ 22

Continued Implementation of JPR Brand Strategy and Energy-Saving Measures (2)Properties subject to obligations to reduce total emissions of greenhouse gas (GHG) and JPR’s responses to the first reduction period
 Most of the properties that JPR owns and are subject to obligations to reduce total emissions established by the Tokyo Prefecture Government (10 properties as
designated establishments) emitted GHG in volumes less than the emission standards in fiscal 2009. Accordingly, JPR expects it will be able to satisfy the emission
standards through operational endeavors.
 For properties built fairly recently where energy-saving measures have already been implemented, JPR will reduce emissions primarily through operational endeavors
while planning to buy emission rights and introduce green energy to compensate for insufficiency.
Reductions at JPR’s Properties Subject to Obligations and JPR’s Measures

Property NameMS Shibaura Bldg.

Type ofOwnership

Unit ownership

Building
DesignatedCompletion
Ownership Equity Establishment
Date
Ratio (%)
(Note 1)

1988/257.98%○

SpecifiedEstablishment(Note 2)

Reduction
Target forthe 1st
Period

○6.0%(Zonal air
conditioning)

2,984

Total
Total Emission
Reduction Ratio inStandards (1) Emissions
2009 against(t-CO2/year) in 2009 (2) Emission Standards(t-CO2/year) ((2)-(1))/(1) (Note 4)(Note 3)Major Constructions for Energy Saving in
Coming 5 Years under JPR’s Mid- toPlanned Additional Constructions in Coming 5
Long-Term Repair Plans (portions to beYears (portions to be borne by JPR)
borne by JPR)
Renewal of lighting equipment in exclusive areas (JPY

2,705

(9.3%) 72mn)
Replacement of air conditioning system (JPY 480mn)
Increase efficiency of heat source equipment by changing theset temperature for coolant
Change the control method of transfer pumps for cold and hot
water (JPY 2mn)

Oval Court Ohsaki Mark West

Unit ownership

2001/627.12%

○

○

8.0%

2,839

2,473

(12.9%)

Shinjuku Square Tower

Unit ownership

1994/1038.30%○○

6.0%(Zonal air
conditioning)

3,930

3,886

(1.1%) 36mn)

6.0%(Zonal air
conditioning)

11,294Introduce LEDs and other highly-efficient lighting equipment toRenewal of lighting equipment in exclusive areas (JPY common areas (JPY 24mn)
Renewal of central monitoring system (JPY 110mn)

Renewal of daily-use elevators and escalators (JPY 303mn)

Co-ownership ofunit ownership

1979/10

Shinjuku Sanchome East Bldg.

Co-ownership ofunit ownership

2007/119.27%○

Yurakucho Ekimae Building(Yurakucho Itocia)

Co-ownership ofunit ownership

2007/10

4.30%○

Arca East

Unit ownership

1997/337.90%○○

6.0%(Zonal air
conditioning)

Rise Arena Bldg.

Unit ownership

2007/115.92%○○

8.0%

Olinas Tower

Unit ownership

2006/229.05%(Office and retailfloors)

○

○

8.0%

19,58018,406(6.0%)

Tanashi ASTA

Co-ownership ofunit ownership

1995/252.88%

○

○

8.0%

9,356

7,405

(20.9%) Renewal of air conditioning units (JPY 95mn)

Shinjuku Center Building

8.61%

○

○

○

Additionally install inverters to air conditioning units (JPY 1mn)
Introduce intermittent operation control for mechanical systemfacilities (JPY 2mn)

10,260(9.2%) Renewal of lighting equipment in exclusive areas (JPY 52mn)
Renewal of transformers (JPY 210mn)

8.0%

3,856

Under investigation

8.0%

12,481

Under investigation

3,899

3,245

(16.8%)

Under investigation

Introduce LED lighting equipment to common areas (JPY 20mn)
Introduce CO2 control for exclusive rooms (JPY 34mn)

Can be achieved due to the construction for energy saving
conducted in 2007

(Note 1) Designated establishment for global warming countermeasures: Place of work where 1,500kl or larger volume of energy (as converted to crude oil) was consumed in the previous fiscal year.
(Note 2) Specified establishment for global warming countermeasures: Place of work where 1,500kl or larger volume of energy (as converted to crude oil) was consumed annually for 3 consecutive years from 2006 through 2008; subject to obligations to reduce emissions.
(Note 3) Standard emissions: Emissions volume used as the base or calculation of the obligatory reduction volume based on the average emissions in the past 3 consecutive years.
(Note 4) Operational countermeasures have been implemented for the buildings under review based on the conventional “System for Plans on Global Warming Countermeasures,” and JPR has confirmed the effectiveness of these measures for last year over the base year.

Japan Prime Realty Investment Corporation ｜ 23

Financial Strategy
Realize conservative financial operations by focusing on increasing
increasing the ratio of longlong-term, fixedfixed-rate borrowings anddiversifying repayment dates by fiscal period, so as to maintain a high credit rating level
Changes in Unitholders’ Capital, Ratio of Interest-Bearing Liabilities and Ratio of Interest-Bearing Liabilities to Total
Assets at End of Period

Status of JPR’s Ratings and Interest
Bearing Liabilities(as of August 16, 2010)

200
Rating agency

Issuer ratings

R&I (issuer rating)AA-

Moody’s (issuer rating)

A2

S&P (long-term issuer credit rating)A

Unitholders’ capital(JPY bn)

Ratio (%)
100%

150

75%
54.9%

100

39.4%

Ratio of long-term fixed-rate borrowings

82.04%

37.1%

40.6%

46.4%

47.9%

(as of August 16, 2010)

Average maturity of long-term interestbearing liabilities
Average interest rate of long-term interestbearing liabilities
Average maturity of interest-bearing
liabilities

Unitholders’ capital
Ratio of interest-bearing liabilities to total assets at end of period
Ratio of interest-bearing liabilities

42.3%

50

4.03 years

51.1%

36.5%

56

56

56

1st
Period2nd
Period3rd
Period

Jun.

Dec.

Jun.

44.1% 45.8% 48.7%
37.2%

46.8%
40.3%

89

115

115

115

4th
5th
Period Period

6thPeriod7th
Period

Dec.

Dec.

Jun.

89

89

38.9%

42.1% 44.7%

38.6%

33.5%

35.6%

42.0%

44.1% 45.2%

40.7% 41.8%

48.9%

49.0%

48.5%

50%
45.6%

45.4%

45.0%

34.3%

35.7%

115

156

156

156

156

156

156

171

8th
Period9th
10th
Period Period

11thPeriod12th
Period13th
14th
Period Period

15thPeriod16th
Period76th
Period

Dec.

Jun.

Jun.

Dec.

Jun.

Dec.

Jun.

25%

0
1.87%
3.42 years

0%

Jun.

Dec.

Jun.

Dec.

2002
2002
2003
2003
2004
2004
2005
2005
2006
2006
2007
2007
2008
2008
2009
2009 2010____________________(Note 1 ) Ratio of interest-bearing liabilities (%) = Interest-bearing liabilities / (Interest-bearing liabilities + Unitholders’ capital), Ratio of interest-bearing liabilities to total assets at end of
period (%) = Interest-bearing liabilities / Total assets at end of period(Note 2) Unitholders’ capital has been rounded down to the nearest billion yen.
(Note 3) The ratio of interest-bearing liabilities and the ratio of interest-bearing liabilities to total assets at end of period have been rounded to the first decimal place.

____________________(Note) Long-term interest-bearing liabilities are interest-bearing
liabilities with a period of one year or more to therepayment dates.

Overview of Commitment Line Contract



Limit

16 billion yen (total)

25

Maturity dateNovember 30, 2010

20
15

Lenders

Mizuho Corporate Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Resona Bank, Ltd.
Mitsubishi UFJ Trust and Banking
Corporation

Diversification of Repayment Dates of Interest-Bearing Liabilities
Long-term borrowings (as of August 16, 2010)
Short-term borrowings
Corporate bonds(JPY bn)

6.2

15.1

10

5
5

5.1

9.7

6.3
3

0
18th
Period19th
Period

11.3

5
20th
Period

12
16.5

21st
Period9
22ndPeriod

13.3

0.1
11

5
23rd
Period24th
25th
Period Period

10

13
0.1

0.1

0.1

0.1

0.1

0.1

0.1

2.1

4.5

26th
Period27th
Period28th
Period29th
Period30th
31st
Period Period

32ndPeriod33rd
Period34th
Period35th
Period36th
Period50th
PeriodDec. Jun. Dec. Jun. Dec. Jun. Dec. Jun. Dec.
2010 2011 2011 2012 2012 2013 2013 2014 2014____________________*Figures have been rounded down to the nearest 100 million yen.

Jun.
2015

Dec.
2015

Jun.
2016

Dec.
2016

Dec.
2017

Jun.
2018

Dec.
2018

Jun.
2019

Dec.
2019

Dec.
2026

Jun.
2017

Japan Prime Realty Investment Corporation ｜ 24

Breakdown of Interest-Bearing Liabilities and Fund Procurement Results from the
Capital Market in the 17th Fiscal Period
Work to further diversify fund procurement methods and sources,and elaborately construct relationships with lenders
Breakdown of Balance of Borrowings by Lender
Short-term borrowings

Lenders

Long-term borrowings

Balance as ofDecember 31, 2009

Balance as ofJune 30, 2010

Security

Resona Bank, Limited

4,000

4,000

Mizuho Corporate Bank, Ltd.

3,972

1,000

Mitsubishi UFJ Trust and Banking Corporation

4,280

-

The Bank of Tokyo-Mitsubishi UFJ, Ltd

4,000

-

Total short-term borrowings

16,2525,000

Lenders

Balance as ofDecember 31, 2009

Balance as ofJune 30, 2010

Mizuho Corporate Bank, Ltd.

10,90013,800Mitsubishi UFJ Trust and Banking Corporation
American Family Life Assurance Company of Columbus

9,917
10,00012,83410,000Mitsubishi UFJ Trust and Banking Corporation

7,000

7,000

Zenkyoren (The National Mutual Insurance Federation of Agricultural Cooperatives)

7,000

7,000

Aozora Bank, Ltd.

4,300

5,300

Development Bank of Japan Inc.

4,870

4,745

Sompo Japan Insurance Inc.

4,000

4,000

Sumitomo Life Insurance Company

4,000

4,000

The Bank of Fukuoka, Ltd.

3,000

3,000

The Chugoku Bank, Ltd.

3,000

3,000

Shinsei Bank, Limited

3,000

3,000

Mizuho Trust & Banking Co., Ltd.

-

3,000

The Shinkumi Federation Bank

-

3,000

ORIX Trust and Banking Corporation

-

3,000

Type of offerings
Unsecured / Unguaranteed /Non-subordinated

Security

Unsecured / Unguaranteed /Non-subordinated

2,900
2,000

Taiyo Life Insurance Company

2,000

2,000

Daido Life Insurance Company

2,000

2,000

The Iyo Bank, Ltd.

1,000

1,000

Meiji Yasuda Life Insurance Company

9,183

9,183 Secured / Unguaranteed / Non-subordinatedTotal long-term borrowings

90,12044,500
Balance as ofDecember 31, 2009

Total interest-bearing liabilities

150,872

Total number of units offered/rate of dilution

90,000Of which, via public offering

82,000Of which, via secondary offering (over-allotment)

8,000

14.4% of issued investment units

Total procured amount

14,614 million yen

13,784 million yen

Of which, via public offering

13,315 million yen

1,345 million yen

Of w hich, via third-party allotment ingreenshoe option

1,299 million yen

15,129 million yen

Portion

2,950

Total corporate bonds

625,000

Of which, via secondary offering (over-allotment)

2,000

106,372

Total number of issued investment units

Of which, via public offering

The Hachijuni Bank, Ltd.

Balance as ofDecember 31, 2009

Issue of new investment units via public offering in Japan and secondary offering (over-allotment)

Total amount of offerings

Sumitomo Mitsui Banking Corporation

Total borrowings

Overview of Issue of New Investment Units (17th Period)(JPY mn)

55% by general investors and 45% by institutional investors

Issue price (offer price)

168,101 yen (closing price on the pricing date: 173,300 yen)

Purchase price

162,382 yen

Resolution date

January 21, 2010 (Thursday)

Pricing dateFebruary 1, 2010 (Monday)

Payment date/additional listing dateFebruary 8, 2010 (Monday)

Underwriters

Mizuho Securities and Merrill Lynch Japan Securities (collectively referred to as the joint lead managers), Nomura
Securities (manager), Daiwa Securities Capital Markets, Nikko Cordial Securities, Mitsubishi UFJ Securities andTokai Tokyo Securities (collectively referred to as the syndicated underwriters)/

February 9, 2010 (Tuesday)

105,762

Issue of Corporate Bonds (17th Period)

110,762
Balance as ofJune 30, 2010

Security

50,500 Unsecured / Unguaranteed / Non-subordinatedBalance as ofJune 30, 2010

161,262

Security

Total Issue
Amount (JPY mn)

Coupon Rate(per annum)

Term toMaturity

Maturity Date

Mar. 12, 2010

6,000

1.68%

5 yearsMar. 12, 2015

May 21, 2010

7,000

1.27%

5 years

May 21, 2015

Name

Issue Date

Eleventh Series of Corporate Bonds
Twelfth Series of Corporate Bonds
Balance of corporate bonds

50,500Japan Prime Realty Investment Corporation ｜ 25

History of JPR’s Unit price and Trade Volume （Jan. 4, 2010 – Aug. 12, 2010)
After completing the capital increase via public offering (after payment), JPR’
JPR’s investment unit price showed almost the same moves with
the TSE REIT Index. The price has remained low since May, impacted
impacted by the lowered stock prices worldwide against the background of
financial turmoil in Greece and other countries, tight monetary policies by emerging countries and other factors.
(Unit price)(JPY)(Volume)(Unit)
60000

230,000

55000

220,000

50000
210,000
45000
200,000
40000
190,000

35000

180,000

30000
25000

170,000*The TSE REIT Index and other figures have been
indexed with January 4, 2010 as the base date, andthe chart shows relative performances.

160,000

20000
15000

150,000
10000
140,000

5000

130,000
2010/1

2010/2

2010/4

Unit price

JPR

2010/50
2010/8

2010/6
VolumeTSE REIT Index

TOPIX

TP REAL Index

JPR

Japan Prime Realty Investment Corporation ｜ 26

Future Management Strategy

18th~Japan Prime Realty Investment Corporation ｜ 27

Future Management Policies – Focused Investment in Office Buildings in Tokyo –External Growth Strategy (Preparations for Returning to a Growth Track) Focused investment in office buildings in Tokyo with growth potentialz

The present situation continues to provide opportunities to acquire office buildings in Tokyo at favorable
terms and conditions

 Examine strictly selected investment in retail properties that produce stable revenues and allow expectations for arise in property values over the medium to long term Examine strictly selected investment in properties whose value can be enhanced based on our strong leasing

capabilities, in anticipation of the bottoming out of the rental office market in Tokyo Aim to expand the portfolio size to 500 billion yen in the futureInternal Growth Strategy (Endeavor to Increase Rental Revenues)
 Given the prospects of occupancy rates bottoming out, continue to focus on leasing to new tenants and shorten

vacant periods in an effort to raise occupancy rates
 With a growing trend in the number of inquiries on possible move-ins from new tenants since March 2010, aim toincrease rental revenues as we move forward
 Focus on constructions that should heighten tenant satisfaction in an effort to differentiate our properties through

JPR’s brand strategy as well as maintain and reinforce the competitiveness of the properties

Financial and IR Strategies (Reduce Debt Financing Costs and Reinforce IR for Retail Investors)
 Work to enhance capital efficiency by utilizing cash on hand and reduce procurement costs of debt financing, while

maintaining conservative financial operations
 Take a cautious approach to the next round of equity financing with a close look at the recovery in the J-REIT

market, as the investment unit price still remains at low levels
 Continue to implement proactive IR activities. In particular, reinforce IR efforts for retail investors through suchmeasures as participating in various investment seminars and enhancing JPR's website
Japan Prime Realty Investment Corporation ｜ 28

Office Transaction Market Conditions
Changes in Lending Attitude of Financial Institutions D.I. andFinancial Position D.I.

Changes in Cap Rates of Offices
7.3%

Otemachi/Marunouchi

Nihonbashi

Nishi-Shinjuku

Shibuya

Osaki

NagoyaOsaka

25
Lending Attitude of Financial Institutions D.I.
(Real estate industry)
Financial Position D.I. (Real estate industry)

6.8%

15

6.3%
5.8%

5

5.3%

-5
4.8%

-15

4.3%
3.8%

-25

3.3%
Oct.
2003

Apr.
2004

Oct.
2004

Apr.
2005

Oct.
2005

Apr.
2006

Oct.
2006

Apr.
2007

Oct.
2007

Apr.
2008

Oct.
2008

Apr.
2009

Oct.
2009

Apr.
2010

(Note) Prepared by Tokyo Realty Investment Management, Inc. based on the Cap Rate of Average-Sized Class A Office Building in The JapaneseReal Estate Investor Survey published by Japan Real Estate InstituteCap rates of office buildings in Tokyo have begun to increase or remained flat

Major Transaction Cases of Office Buildings in Tokyo by Other REITs (Jan. – Jun. 2010)
Acquisition
Date

Buyer

Jan. 2010

TOP

Jan. 2010

JRE

Property Name

Location

AcquisitionPrice(billion yen)

Cap Rate

Sumitomo Corporation
Nishiki-cho Building
Shiodome Building

Chiyoda Ward, Tokyo

12.7

5.2%

Minato Ward, Tokyo

54.6

4.1%

Feb. 2010

KRI

Pacific Marks Nishi Shinjuku

Shinjuku Ward, Tokyo

6.8

4.6%

Mar. 2010

DAO

ORIX Jinbo-cho Building

Chiyoda Ward, Tokyo

4.2

5.2%

Mar. 2010

TRI

Kojimachi Square

Chiyoda Ward, Tokyo

9.0

4.7%

Mar. 2010

JRE

Tokyo Opera City Building

Shinjuku Ward, Tokyo

22.4

5.0%

Mar. 2010

MHR

Roppongi Hills Mori Tower

Minato Ward, Tokyo

6.8

3.8%

Mar. 2010

MHR

ARK Mori Building

Minato Ward, Tokyo

3.4

3.8%

Mar. 2010

TRI

ORIX Shinjuku Building

Shinjuku Ward, Tokyo

9.0

4.5%

Mar. 2010OJR

OX Tamachi Building

Minato Ward, Tokyo

6.7

5.0%

Mar. 2010

CIC

Kayabacho Heiwa Building

Chuo Ward, Tokyo

4.8

6.0%

Apr. 2010

MTR

Tokyo Shiodome Building

Minato Ward, Tokyo

110.0

4.4%

May 2010

PIC

Iwamotocho Building

Chiyoda Ward, Tokyo

6.7

5.0%

-35
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

(Note) Prepared by Tokyo Realty Investment Management, Inc. based on the TANKAN report published by the Bank of Japan

Financial institutions took a more relaxed lending attitudeafter becoming most severe in March 2009

Views on the Market by an Independent Institution
 Prospects of expected cap rates of offices in Tokyo• The number of transaction cases has begun to increase, causing

expected cap rates to stop rising and stay at a high level. With thenumber of transaction cases increasing in the future, expected cap
rates are anticipated to start decreasing outright.
• Expected cap rates of class A buildings are anticipated to slowly

decrease through 2014, as risk premiums will drop and improved
rental revenues will cause expected cap rates to lower.
However, expected cap rates will stay almost flat throughout 2010
until coming to a turning point, since the supply of properties islimited and the transaction market has not yet regained soundness.
(Note) Prepared by Tokyo Realty Investment Management, Inc. based on the Real Estate Market Research Report (surveyed in March 2010) by
STB Research Institute Co., Ltd.

(Note 1) Prepared by Tokyo Realty Investment Management, Inc. based on press releases by respective REITs, with acquisition prices rounded off to 100
million yen(Note 2) Cap rates are values through direct capitalization method based on appraisal values indicated in the press releases.

Japan Prime Realty Investment Corporation ｜ 29

Rental Office Market Conditions
Changes in Effective Rate of Job Offers to Job Seekers andVacancy Rate of Office Buildings in Tokyo

Changes in Vacancy Rate and Rents of Office Buildings in Tokyo
（％）

10.0

1.1

9.0

9.0

1

8.0

8.0

7.0

7.0

6.0

6.0

5.0

5.0

4.0

4.0

3.0

3.0

2.0

2.0

1.0

1.0

0.9
0.8

(yen/tsubo)

(%)

10.0

(times)1.2

24,000Rent

Vacancy rate

Vacancy rate

23,000Rent

22,00021,0000.7

20,0000.6

19,0000.5
0.4
Effective ratio of job offers to job seekers (left axis)

0.3

18,00017,000

Actual figures←

Vacancy rate (right axis)

0.2
2001

2002

2003

2004

2005

2006

2007

2008

2009

（ (Note) Prepared by Tokyo Realty Investment Management, Inc. based on the Effective Ratio of Job Offers to Job Seekers published by the Ministry of
Health, Labour and Welfare and the Office Data (Average Vacancy Rates and Average Rents in Tokyo CBDs) published by Miki Shoji Co., Ltd.

•200

SupplyDemand154 157

153

125

100

88

140

121

76

65
54

45

45
34

31

2008

2009

0
2000

2001

2002

2003

2004

2005

2006

2007

2009

2010

2011

Vacancy rates are anticipated to peak in the middle of 2010 and decrease toward
the year end.
Average contract rents are anticipated to bottom out in 2010 and rise in 2011.

2010

New supply (of all buildings recognizable in the office areas in the 23 wards ofTokyo) in 2011 will remain at the same volume level as 2010, arguably as arebound of large projects concentrating around 2012. On the other hand, demand
will surpass supply due to recovery in the economy and employment as well as
relatively low rents. In particular, the finance and insurance industries (especiallysecurities firms) and the IT industry are anticipated to lead demand for the
moment.
• For 2012, it is anticipated that supply will surpass demand as many large
buildings will be completed and supplied in large quantity.
•

85 87

86

77

50

2008

 Prospects for supply and demand of offices in Tokyo

91

72

•

145

119 122115

2007

 Prospects for office rents in Tokyo

161

142

150

2006

 Prospects for vacancy rates of offices in Tokyo

Forecasts

Actual figures

2005

Views on the Market by an Independent Institution(10,000m2 )
223

2004

Past trends allow the projection that rents of office buildingsin Tokyo will bottom out next spring.

Supply and Demand Forecast for Office Buildings in Tokyo(23 Wards, More than 10,000m2 per building)
216

2003

(Note) Actual figures were prepared by Tokyo Realty Investment Management, Inc. based on the Office Data (Average Vacancy Rates andAverage Rents in Tokyo CBDs) published by Miki Shoji Co., Ltd. Forecasts are projected by Tokyo Realty Investment Management, Inc.

Is the vacancy rate peaking as the effective ratio of job offers toapplicants (employment) shows an improving trend?

250

16,0002002

2010→ Forecasts

2011

2012

2013

2014

(Note) Prepared by Tokyo Realty Investment Management, Inc. based on the Market Trend Survey of Large-scale Office Buildings in Tokyo's 23 Wards published by Mori Building Co., Ltd.

Although a large volume of supply will continue, demand is anticipated tosurpass supply for the next three years, as needs for office spaces will revive
among foreign-capital companies and financial/insurance businesses.

(Note) Prepared by Tokyo Realty Investment Management, Inc. based on the Real Estate Market Research Report (surveyed in March 2010) by
STB Research Institute Co., Ltd.

Japan Prime Realty Investment Corporation ｜ 30

Environmental Recognition and Investment Strategy for External GrowthPresent Status of the Real Estate Transaction Market

Future Prospects for the Real Estate Transaction Market

J-REITs and privately placed funds that have strong fund procurement
capabilities have shifted to a proactive approach to investment,
anticipating the bottoming out of the rental office market.

Competition over acquisitions may quickly become harsh if it becomes
clear that the economy is showing continuous recovery and the rental
office market is bottoming out.

The number of transaction cases have not yet increased, as perspectives
on prices differ between sellers and buyers while information onproperties for sale has decreased in number.

Demand from buyers is particularly strong for office buildings in Tokyo
priced at around 5 billion yen, and there is a concern that their cap rates
will decrease (prices increase) in the future.

Changes in the Number of Cases in Which Information on Properties for Sale Was Provided to JPR and Which JPR InvestigatedTotal of 13th
Period(Jun. 2008)

Total of 14th
Period(Dec. 2008)

Total of 15th
Period(Jun. 2009)

Total of 16th
Period(Dec. 2009)

January

February

March

April

May

June

Total of 17th
Period(Jun. 2010)

Number of cases inwhich information wasprovided to JPR

137

80

31

145

2

20

7

26

16

12

83

Number of properties
JPR investigated

31

6

7

24

1

4

3

5

1

3

17

Fairly new information on properties for sale is extremely limited, as many of the cases provided to JPR are repeated
information on properties that were available for sale in the market in the past.
There are many cases in which foreign-capital privately placed funds secure properties in bulk, showing that thecompetitive advantages of J-REITs are quickly disappearing.

Secure blue-chip, core office buildings in Tokyo by obtaining fairly new property information, fully utilizing the sponsors’ pipelines.
Proactively seek opportunities to acquire additional equity of existing properties by utilizing preferential purchase negotiating rights.
Investigate limited investments in retail properties and properties whose value can be enhanced and for which there is less competition.

Japan Prime Realty Investment Corporation ｜ 31Investment Target – Investment Strategies for Upside Advantages
Core Office Buildings in the Tokyo Area that Allow Expectations for
Future Revenue Increases
 Properties that allow expectations for increased rents over the medium to long termz Recently built large-scale office buildings in Tokyoz Medium-sized or larger office buildings located in Tokyo CBDs, equipped with a certain
level of facilities
 Properties that allow expectations for increased property values over the medium to longterm
z Properties that can be acquired at relatively low prices for their valuez Equity of other right holders for existing properties (use of JPR’s preferential purchasenegotiating rights)
z Excellent properties that can be acquired at reasonable price levels by cooperating with thesponsors to avoid excessive competition in the market[Example
properties]

MS Shibaura
Building

Ryoshin Harajuku
Building

TK Horidome
Building

BYGS Shinjuku
Building

Retail Properties in the Tokyo Area Targeting Stable Revenue
Investigate re-start of investment in retail properties (limited to the Tokyo area) by utilizing thecharacteristics of a diversified REIT, as retail properties see less competition than officebuildings.
Total investment amount should be rather limited, as there is no change in JPR’s policy ofraising the allocation ratio of office buildings.
 Properties that allow expectations for enhanced value over the medium to long termz Properties than can be acquired at relatively inexpensive prices
z Properties that house multiple tenants and are highly capable of tenant replacementz Properties that have particularly good locations and feature tenants under lease
contracts based on fixed rents over a long term

[Example
properties]

JPR Shibuya Tower
Records Building

Kawasaki Dice Building

Properties Capable of Enhanced Value, Limited to Office Buildings Located in Tokyo CBDs
 Background of investigating investment in properties capable of enhanced value
Given the emerging prospects of the bottoming out of the rental office market in Tokyo, JPR believes it is a good time to obtain upside achievements over the medium term
JPR seeks to implement its proprietary strategies amid intensifying competition over core offices in Tokyo CBDs

 Properties whose value can be enhanced as investment targets
z JPR targets investment in properties with occupancy rates upon acquisition ofroughly 80% or lower and that allow expectations for upside revenues byreinforcing leasing, rather than aged properties in anticipation of repairs and otherinvestment becoming effective.
z Total investment amount should be rather limited in consideration of downside risks.

Properties Sold to Obtain Realized Gains of Enhanced Values after Achieving ValueEnhancement Strategies
Yasuda Life
Tenroku Building

JPR Ikebukuro Building

SK Hiroshima Building

Park East Sapporo

Gain on sale: JPY 38mn

Gain on sale: JPY 249mn

 Achieve value enhancementz Shift to core properties by achieving enhanced revenue-generating capabilities andmore stabilityz Also investigate obtaining realized gains of enhanced values on property sales

Gain on sale: JPY 190mn

Gain on sale: JPY 768mn*Gains on sale indicated above have been calculated by excluding such expenses as brokerage fees.

Japan Prime Realty Investment Corporation ｜ 32

Internal Growth Strategy
Changes in Rents and Other Income from the Entire Portfolio(JPY mn)

Recovery is expected forthe 20th period due tocancellation of rent-free
periods, especially forproperties in Tokyo CBDs.

11,200Changes in the Number of Tenant Changes at Existing Properties(cases)80
15th Period
17th Period

60

10,800The number of downward
revisions of rents is
expected to decrease in the
18th period.

40

11,014
10,81910,40016th Period
18th Period (Forecast)

10,734

10,684
10,53320

10,365
10,21810,00014th Period(Dec. 2008)

15th Period(Jun. 2009)

16th Period(Dec. 2009)17th Period(Jun. 2010)

18th Period(Forecast)(Dec. 2010)

19th Period(Forecast)(Jun. 2011)

20th Period(Forecast)(Dec. 2011)

0Move-out

Rents and other income remained weak, with recovery slower than expected at the
beginning of the year. However, occupancy rates and rents and other income will bottom
out in the 18th and 19th periods, respectively.

Changes in the Number of Tenant Inquiries on Move-Ins
50(cases)Downward RevisionMove-in

Upward Revision

The number of tenant move-outs and downward revisions of rents in the
17th and 18th periods increased more than expected at beginning of the year.

Changes in Monthly Occupancy Rates of Office Buildings with
Improving Occupancy
100%

TK Horidome
Building

Other cities

40

Greater
Tokyo
Tokyo CBDs

Forecast for Jan. 2011: 100%JPR Ichigaya
Building

80%

Forecast for Jan. 2011: 92.8%

30

Kanematsu Building
Forecast for Jan. 2011: 90.0%

60%
20

10

The temporary increase in theoccupancy rate of Mitsubishi UFJ
Lease & Finance Nagoya Head
Office Building is due to thetemporary duplication of periods of
new move-ins and partial move-outs
upon relocation for larger spaces
within the building.

40%

JPR Sendagaya
Building
Forecast for Jan. 2011: 80.9%

Mitsubishi UFJ
Lease & Finance
Nagoya Head Office
Building

0

Forecast for Jan. 2011: 57.5%

2008/1 2008/3 2008/5 2008/7 2008/9 2008/11 2009/1 2009/3 2009/5 2009/7 2009/9 2009/11 2010/1 2010/3 2010/5

20%

The number of inquiries from tenants started to increase in March 2010.

2010/1

2010/3

2010/5

2010/7

2010/92010/112011/1

Japan Prime Realty Investment Corporation ｜ 33

Appendix

17th~
Japan Prime Realty Investment Corporation ｜ 34

Historical Unitholder Composition (Number of Units by Investor Type)In the number of units held, the ratio of financial institutions, individuals and other domestic companies fell,
while foreign investors and investment trusts increased.
In the number of unitholders, individuals increased significantly as a result of issuing new investment units.

Number of

7 15,000 Unitholders
15,197(+446)

700,000
Units Outstanding

6 25,000

6 25,000

6 25,000

6 25,000

6 25,000

6 25,000
28.8%

600,000
5 30,000
500,000

400,000

300,000

5 30,000

22.1%

24.4%

24.6%

25.6%

24.9%

26.4%

12.4%
65,64714.0%
74,03013.6%
71,947
13.8%
73,381138,141

152,632

153,613160,245

155,403

165,224

11.9%
74,59811.8%
73,686

11.8%
74,05712.2%
75,986

12.3%
77,10012.4%
77,207

62.9%

63.0%

57.5%

56.5%

56.5%

54.9%

55.1%

53.1%

52.0%

333,491

333,697359,538

353,294353,212343,353344,227

332,009372,062

206,019
11.6%
82,846200,000
22.5%
119,10424.5%
129,658

24.9%
155,575

26.1%
163,24227.0%
168,91027.6%
172,655

27.7%
173,280

29.5%
184,30831.7%
226,535

10.7%
56,832

9.6%
50,975

8.4%
52,723

7.3%
45,388

7.1%
44,1187.3%
45,416

7.7%
48,2708.1%
50,5607.6%
54,073

275
(+18)
244
(+18)

117
(±0)
Of which, 8
are trust
banks
(-1)

100,000

0

End of Jun. End of Dec.
2006
2006

End of Jun. End of Dec.
2007
2007

Individuals

Financial Institutions

End of Jun. End of Dec.
2008
2008

End of Jun. End of Dec.
2009
2009

Other Domestic Companies

14,561(+410)End of Jun.
2010

Foreign Investors(Note 1) The composition ratios in the above graph have been rounded to the first decimal place.
(Note 2) Figures in parentheses in the graph represent the number of investment units owned by trust banks within the category of financial institutions (including securities companies).

Japan Prime Realty Investment Corporation ｜ 35

Principle Unitholders
17th Fiscal Period (Ended June 2010)
Name

Number ofUnits Owned

16th Fiscal Period (Ended December 2009)% of Units
Outstanding*Number ofUnits Owned

Name% of Units
Outstanding*Japan Trustee Services Bank, Ltd. (Trust
Account)

74751

10.45%

NikkoCiti Trust and Banking Corporation(Investment Trust Account)

50463

8.07%

NCT Trust and Banking Corporation(Investment Trust Account)

52809

7.38%

Japan Trustee Services Bank, Ltd. (Trust
Account)

48359

7.73%

Trust & Custody Services Bank, Ltd.
(Securities Investment Trust Account)

41216

5.76%

Trust & Custody Services Bank, Ltd.
(Securities Investment Trust Account)

34858

5.57%

Tokyo Tatemono Co., Ltd.

29300

4.09%

Tokyo Tatemono Co., Ltd.

29300

4.68%

The Nomura Trust and Banking Co., Ltd.
(Investment Trust Account)

28211

3.94%

Northern Trust Company (AVFC), Account Singapore
Clients (Standing Proxy: The Hongkong and Shanghai
Banking Corporation Ltd., Tokyo Branch)

27300

4.36%

Northern Trust Company (AVFC), Account Singapore
Clients (Standing Proxy: The Hongkong and Shanghai
Banking Corporation Ltd., Tokyo Branch)

27324

3.82%

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

25714

4.11%

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

25796

3.60%

Kawasaki Gakuen

25000

4.00%

Kawasaki Gakuen

25000

3.49%

Meiji Yasuda Life Insurance Company

24000

3.84%

Meiji Yasuda Life Insurance Company

24000

3.35%

The Nomura Trust and Banking Co., Ltd.
(Investment Trust Account)

19699

3.15%

AIG Star Life Insurance, Co., Ltd.

13190

1.84%

The Bank of Ikeda, Ltd.

13234

2.11%

34159747.77%

Total

29792747.66%

Total(Note) For the percentages of units outstanding, figures after the second decimal place have been rounded off.

Japan Prime Realty Investment Corporation ｜ 36

Milestones Since IPO and Historical Unit Price (June 2002 – August 2010)
Unit Price (closing): JPY187,100 (Aug. 12, 2010)
All-Time High (trading): JPY 564,000 (May 7, 2007)
All-Time Low (trading): JPY 130,300 (Oct. 28, 2008)

550,000 (JPY
Add-on Offering
Feb. 7, 2007
Offering Price: JPY 449,820
Units Issued/Sold: 95,000

530,000
510,000

MSCI Standard Index
introduced on
May 13, 2005

490,000
470,000
450,000
430,000
410,000
390,000
370,000

2007 Add-on Offering Price

Add-on Offering
Feb. 2, 2005
Offering Price: JPY 272,440
Units Issued/Sold: 100,000

Add-on Offering
Feb. 9, 2010
Offering Price: JPY 168,101
Units Issued/Sold: 90,000

350,000
330,000
310,000
290,000

Listed on Tokyo Stock Exchange
Jun. 14, 2002
Offering Price: JPY 200,000
Units Issued/Sold: 182,000
2005 Add-on Offering Price

270,000
250,000

2003 Add-on Offering Price

230,000
2002 Add-on Offering Price

210,000
190,000
170,000
150,000
130,000

Add-on Offering
Jul. 15, 2003
Offering Price: JPY 237,160
Units Issued/Sold: 144,400

2010 Add-on Offering Price

Jun. 2002 Dec. 2002Jun. 2003 Dec. 2003 Jun. 2004 Dec. 2004Jun. 2005 Dec. 2005Jun. 2006 Dec. 2006Jun. 2007 Dec. 2007 Jun. 2008 Dec. 2008Jun. 2009 Dec. 2009Jun. 2010
FiscalPeriod

1st Period 2nd Period 3rd Period 4th Period
Jun. 2002 Dec. 2002 Jun. 2003 Dec. 2003

5th Period
Jun. 2004

6th Period
Dec. 2004

7th Period 8th Period
Jun. 2005 Dec. 2005

9th Period 10th Period 11th Period 12th Period 13th Period 14th Period 15th Period 16th Period 17th Period
Jun. 2006 Dec. 2006
Jun. 2007 Dec. 2007
Jun. 2008 Dec. 2008 Jun. 2009
Dec. 2009 Jun. 2010

DPU

JPY2,545

JPY6,081

JPY6,671

JPY6,370

JPY6,509

JPY6,912

JPY6,873

JPY5,738

JPY6,411

JPY6,873

JPY6,996

JPY6,671

JPY7,122

JPY7,092

JPY3,731

JPY6,933

JPY6,770

Japan Prime Realty Investment Corporation ｜ 37

Changes in Variation Between Appraisal Value and Book Value at End of Period
Net assets per unit after including variation between the appraisal value
and book value (unrealized gains or losses) were 226,060 yen (Note 1)
End of 6th
PeriodEnd of 7h
PeriodEnd of 8th
PeriodEnd of 9th End of 10th End of 11th End of 12th End of 13th End of 14th End of 15th End of 16th End of 17th
PeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodDec. 2004 Jun. 2005 Dec. 2005 Jun. 2006 Dec. 2006 Jun. 2007 Dec. 2007 Jun. 2008 Dec. 2008 Jun. 2009 Dec. 2009 Jun. 2009
42

42

42

44

46

48

49

50

52

51

53

55

Appraisal value at end of
period (JPY mn)

171,526

191,905

210,601

224,773249,366

285,176

299,995

322,984

311,513300,509

301,979

308,134

Book value (JPY mn)

178,977

195,773

200,0193

218,123240,546

246,002

268,506

273,323

292,607

303,090322,804-7,451-3,868

10,582

19,23031,243

44,63053,99354,47838,190

7,902-1,111-14,670

-4.2%

-2.0%

5.3%

9.4%

14.3%

18.6%

21.9%

20.3%

14.0%

2.7%

-0.4%

-4.5%

Number of properties

Variation (unrealized
gains: JPY mn)
Ratio of unrealized gains
or losses (Note 2)(Note 1) Net assets per unit after including unrealized gains = (Net assets at end of period + Unrealized gains or losses) / Number of outstanding units issued at end of period(Note 2) Ratio of unrealized gains or loss = Variation / book value x 100(JPY mn)

53,993

Variation (unrealized gains or losses)

54,47844,63050,00038,19040,00031,24330,00019,23020,00010,000

10,582-7,451-3,868End of 6th
PeriodEnd of 7th
Period7,902-1,111-14,670

End of 16th
PeriodEnd of 17th
Period0-10,000-20,000
End of 8th
PeriodEnd of 9th
PeriodEnd of 10th End of 11th
PeriodPeriodEnd of 12th
PeriodEnd of 13th End of 14th
PeriodPeriodEnd of 15th
PeriodJapan Prime Realty Investment Corporation ｜ 38

Appraisals and Cap Rates at End of Period
End of 17th Period
No.

Property Name

1
Kanematsu Building
2
Kanematsu Building Annex
3
JPR Ningyo-cho Building
4
Shin-Kojimachi Building
5
JPR Crest Takebashi Building
6
MS Shibaura Building
7
Gotanda First Building
8
Fukuoka Building
9
JPR Ichigaya Building
10
Oval Court Ohsaki Mark West
11
Shinjuku Square Tower
12
BYGS Shinjuku Building
13
Across Shinkawa Building Annex
14
Shinjuku Center Building
15
Minami Azabu Building
16
Shinagawa Canal Building
17
Rokubancho Building
18
Ryoshin Harajuku Building
19 Tokyo Tatemono Kyobashi Building
20
TK Horidome Building
21
JPR Sendagaya Building
22 JPR Shibuya Tower Records Building
23
JPR Daikanyama
24
JPR Jingumae 432
25
Shinjuku Sanchome East Building
26 Yurakucho Ekimae Building (Yurakucho Itocia)
27
Arca East
28
JPR Chiba Building
29 JPR Yokohama Nihon Odori Building
30 Shinyokohama 2nd Center Building
31
Kawaguchi Center Building
32
JPR Ueno East Building
33 Tachikawa Business Center Building
34
Rise Arena Building
35
Yume-ooka Office Tower
36
Olinas Tower

Appraisal Value(Note 2)

10,300,000
2,310,000
2,380,000
3,090,000
3,530,000
14,800,000
2,850,000
3,240,000
4,970,000
4,320,000
8,912,000
9,930,000
863,000
13,100,000
2,880,000
1,620,000
3,020,000
7,570,000
5,120,000
5,900,000
10,900,000
12,600,000
1,310,000
4,000,000
2,350,000
2,660,000
5,530,000
1,550,000
2,460,000
775,000
9,420,000
4,920,000
3,190,000
5,740,000
5,550,000
31,500,000

Cap Rate(Note 3)

4.8%
5.1%
5.3%
5.0%
4.8%
5.0%
5.1%
4.6%
4.7%
4.8%
4.6%
4.8%
5.6%
4.3%
5.1%
5.1%
6.1%
4.5%
5.0%
4.9%
4.3%
4.5%
5.0%
3.5%
4.5%
4.2%
4.8%
6.1%
5.7%
6.2%
6.1%
5.2%
5.7%
5.6%
5.6%
4.8%

End of 17th Period

End of 16th Period
Appraisal Value(Note 2)

12,300,000
2,330,000
2,540,000
3,240,000
3,640,000
14,700,000
2,850,000
3,240,000
5,100,000
4,320,000
9,795,000
10,900,000
965,000
13,700,000
3,000,000
1,640,000
3,010,000
8,480,000
12,600,000
1,310,000
4,200,000
2,350,000
2,660,000
5,900,000
1,620,000
2,470,000
925,000
9,520,000
5,190,000
3,390,000
6,020,000
5,640,000
31,500,000

Cap Rate(Note 3)

4.8%
5.1%
5.3%
5.0%
4.8%
5.0%
5.1%
4.6%
4.7%
4.8%
4.6%
4.8%
5.6%
4.3%
5.1%
5.1%
6.0%
4.5%
4.5%
5.0%
3.4%
4.5%
4.2%
4.8%
6.1%
5.7%
6.2%
6.1%
5.2%
5.7%
5.5%
5.5%
4.8%

Appraiser
3
3
1
1
5
1
1
5
5
5
6
5
5
1
1
1
1
8
1
8
8
1
3
7
1
1
1
5
5
3
3
1
1
4
1
1

No.

Property Name

Appraisal Value(Note 2)

37
Tanashi ASTA
38
Cupo-la Main Building
39
JPR Musashikosugi Building
40
Musashiurawa Shopping Square
41
Kawasaki Dice Bldg.
42
Niigata Ekinan Center Building
43 Tokyo Tatemono Honmachi Building
44
JPR Hakata Building
45
JPR Naha Building
46
Sompo Japan Sendai Building
47 Sompo Japan Wakayama Building48
Tenjin 121 Building49
JPR Dojima Building50
JPR Hakata-chuo Building
51 Mitsubishi UFJ Lease & Finance Nagoya Head Office Building
52
JPR Umeda Loft Building
53
Benetton Shinsaibashi Building54
Housing Design Center Kobe
55
JPR Chayamachi Building
Total

12,200,000
2,480,000
5,940,000
3,890,000
14,664,000
2,090,000
3,030,000
2,940,000
1,600,000
3,350,000
1,800,000
2,460,000
2,370,000
1,820,000
2,510,000
14,000,000
4,630,000
6,550,000
4,650,000
308,134,000

Cap Rate(Note 3)

5.8%
5.9%
5.2%
5.4%
4.7%
6.7%
6.0%
6.0%
6.8%
6.4%
7.5%
5.7%
5.4%
5.7%
6.5%
4.8%
4.8%
6.3%
5.0%
-

End of 16th Period
Appraisal Value(Note 2)

12,200,000
2,480,000
5,940,000
3,890,000
14,664,000
2,090,000
3,660,000
2,970,000
1,600,000
3,460,000
1,820,000
2,590,000
2,450,000
1,830,000
3,420,000
15,100,000
4,590,000
6,540,000
4,640,000
296,979,000

Cap Rate(Note 3)

5.8%
5.9%
5.2%
5.4%
4.7%
6.7%
7.0%
6.0%
6.8%
6.4%
7.5%
5.7%
5.4%
5.7%
6.0%
4.7%
4.8%
6.3%
5.0%
-

Appraiser
5
1
8
8
7
2
1
2
2
1
1
1
1
1
4
6
4
4
4

(Note 2) At end of period (1,000 yen)
(Note 3) Direct Capitalization Method
Properties w hose appraisal values decreased by 10% or morecompared w ith those at the end of the 16th period
Properties w hose appraisal values increased compared w ith
those at the end of the 16th period

Appraiser
Japan Real Estate InstituteTanizawa Sogo Appraisal
Nippon Tochi-Tatemono
CB Richard Ellis
Daiwa Real Estate Appraisal Co., Ltd.
Nihon LCRA Square
HIRO & REAS Network

No.
1
2
3
4
5
6
7
8

(*1) The Direct Capitalization Method is a method for determining income using the capitalization method (a method that determines the asset price of targeted real estate by determining the sumof the current price of the net income that the targeted real estate is expected to produce in the future), which discounts the net income for a set period using the cap rate.

Japan Prime Realty Investment Corporation ｜ 39

NOI Yield by Property for the 17th Fiscal Period (Tokyo CBDs)(January 1, 2010 – June 30, 2010)

12.0%

10.0%

■ Portfolio NOI

5.7%■ Office building NOI

5.9%■ Retail property NOI

5.3%

8.4%

8.0%

7.4%

7.5%

7.4%

7.1%
6.5%

6.7%

6.7%

6.6%
6.1%

6.0%

4.0%

5.2%

4.9%

4.7%

4.5%

4.3%

5.1%

4.1%

3.8%

3.6%
3.4%

3.3%

3.3%

3.5%

3.4%

2.4%

2.0%

OfficeYurakucho Ekimae Building(Yurakucho Itocia)

Shinjuku Sanchome East Building

JPR Jingumae 432

JPR Daikanyama

JPR Shibuya Tower Records Building

TK Horidome Building

Tokyo Tatemono Kyobashi Building

Ryoshin Harajuku Building

Rokubancho Building

Shinagawa Canal Building

Minami Azabu Building

Shinjuku Center Building

Across Shinkawa Building Annex

BYGS Shinjuku Building

Shinjuku Square Tower

Oval Court Ohsaki Mark WestJPR Ichigaya Building

Fukuoka Building

Gotanda First Building

MS Shibaura Building

JPR Crest Takebashi Building

Shin-Kojimachi Building

JPR Ningyo-cho Building

Kanematsu Building Annex

Kanematsu Building

0.0%

Retail(Note 1) NOI yield = (Rental revenues - Rental expenses + Depreciation) x 365 / 184 ÷ Acquisition price. However, for properties acquired during the fiscal period, the annualized NOI yield has been calculated on a daily pro rata basis. The
entered properties are those owned as of the end of the 17th fiscal period.
(Note 2) JPR Sendagaya Building was excluded from the bar graph section as the property had only a short operational period. However, the property was included in the calculation of cap rates of the entire portfolio and office buildings.

Japan Prime Realty Investment Corporation ｜ 40

NOI Yield by Property for the 17th Fiscal Period (Greater Tokyo)
12.0%(January 1, 2010 – June 30, 2010)

11.3%

10.0%

10.0%

■ Portfolio NOI

5.7%■ Office building NOI

5.9%■ Retail property NOI

5.3%

8.0%

8.0%

7.4%

7.2%

6.5%
6.0%

6.2%

5.9%

6.0%
4.6%

4.7%

Arca East

JPR Chiba Building

5.2%
4.6%

4.6%

4.4%

4.0%

2.0%

OfficeKawasaki Dice Bldg.

Musashiurawa Shopping Square

JPR Musashikosugi Building

Cupo-la Main Building

Tanashi ASTA

Olinas Tower

Yume-ooka Office Tower

Rise Arena Building

Tachikawa Business Center Building

JPR Ueno East Building

Kawaguchi Center Building

Shinyokohama 2nd Center Building

JPR Yokohama Nihon Odori Building

0.0%

Retail(Note 1) NOI yield = (Rental revenues - Rental expenses + Depreciation) x 365 / 184 ÷ Acquisition price. However, for properties acquired during the fiscal period, theannualized NOI yield has been calculated on a daily pro rata basis. The entered properties are those owned as of the end of the 17th fiscal period.

Japan Prime Realty Investment Corporation ｜ 41

NOI Yield by Property for the 17th Fiscal Period (Other Cities)(January 1, 2010 – June 30, 2010)

10.0%
9.0%

■ Portfolio NOI

5.7%■ Office building NOI

5.9%■ Retail property NOI

5.3%

9.4%

8.0%

7.5%

7.3%

6.3%
5.7%

6.0%

8.5%

Niigata Ekinan Center Building

9.0%
8.6%

Sompo Japan Sendai Building

12.0%

6.2%

5.7%
4.8%
3.9%

4.0%

3.6%

2.0%

OfficeRetailOsaka

OfficeOfficeOfficeOfficeNagoyaFukuoka

SendaiOther Cities

JPR Naha Building

Sompo Japan Wakayama Building

JPR Hakata-Chuo Building

Tenjin 121 Building

JPR Hakata Building

Nagoya Head Office Building

Mitsubishi UFJ Lease & Finance

JPR Chayamachi Building

Housing Design Center Kobe

Benetton Shinsaibashi Building

JPR Umeda Loft Building

Tokyo Tatemono Honmachi Building

JPR Dojima Building

0.0%(Note 1) NOI yield = (Rental revenues - Rental expenses + Depreciation) x 365 / 184 ÷ Acquisition price. However, for properties acquired during the fiscal period, theannualized NOI yield has been calculated on a daily pro rata basis. The entered properties are those owned as of the end of the 17th fiscal period.

Japan Prime Realty Investment Corporation ｜ 42

Contracting Status of Tenants by Property for the 17th Fiscal Period
Net Increase / Decrease of Floor Space by
Property (Occupied-Vacated)

Occupied / Vacated Floor Space by Property(Unit: m2)(Unit: m2)

821

Kanematsu Bldg.

821

353

JPR Crest Takebashi Bldg.

353

445
510

JPR Ichigaya Bldg.

-65

Tokyo

-95

CBDs

285

BYGS Shinjuku Bldg.

380
200

Across Shinkawa Bldg. Annex

200

134
220

Shinjuku Center Building

-86

316

Shinagawa Canal Building

316

JPR Yokohama Nihon Odori Bldg.

-169

Greater81-1,820Tokyo
0Kawaguchi Center Bldg.

205
115
115
96

Tokyo Tatemono Honmachi Bldg.

63
76

JPR Hakata Bldg.

-216

Other
cities-391

292

JPR Naha Bldg.

-187

187

Tenjin 121 Bldg.

391

JPR Dojima Bldg.

-288

0

500

288
418

JPR Hakata-chuo Bldg.

418
-500

1,820
90

Niigata Ekinan Center Bldg.

-63-1,000401
320

Yume-ooka Of f ice Tower-96-1,500169

Shinyokohama 2nd Center Bldg.

Tachikawa Business Center Bldg.

-115-2,000182
214

JPR Chiba Bldg.

-32

1,000

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

(Unit: m )2

Occupied*The above graphs exclude properties at which there were no changes in tenants during the 17th fiscal period, but include
changes in tenants from the amendment of lease contracts.

VacatedNet

Office (Tokyo CBDs)

2,555

1,110

1,444

Office (Greater Tokyo)

789

2,843

-2,055

Office (Other cities)

494

1,316

-822

Retail

0

0

0

Total

3,837

5,270

-1,433

Japan Prime Realty Investment Corporation ｜ 43

Office Vacancy Rates and Average Advertised Rents in Major Investment Areas(Rents are average advertised rents for relevant periods. Vacancy rates are those as of the end of each fiscal period for relevant periods.)

5 Wards of Tokyo

Yokohama City
(JPY/Tsubo)

10,38010,3702010Q2

8,620

9,110

8,800

9,060

9,050

8,560
2010Q2

10,8202010Q1

2010Q1

11,3002009

2009

10,9502008

2008

10,9402007

2007

10,9302006

2006

11,1902005

13,65011,57013,8502010Q2

2004

14,4702010Q1

11,76015,260

2009

2003

11.8
12%

9.4

10%

8.4 8.6
8,790

8,730

9,390

9,260

9,980

8%
9,740

4%

10,430

7,630

7,580

7,770

5,000
8,080

8,370

8,520

8,570

8,650

8,840

9,370

9,550

4%

9,310

9,100

9,100

9,310

9,600

9,550

9,840

5,000

10,210

6%

8,830

8%

7.0

14%

12.7
11.6 11.5
10.7
10.3

9,250

8.0

6.9

10,000

8.1

9,150

8.3

9,120

10%

9.0

10,000

16%

9.9

6%
4%

2%

2%

2%

2010Q2

2010Q1

2009

2008

2005

2004

2003

2002

0%
2001

0
2000

2010Q2

2010Q1

2009

2008

2007

2006

2005

2004

2003

2002

0%
2001

0
2000

2010Q2

2010Q1

2009

2008

2007

2006

2005

2004

2003

2002

0%
2001

0
2000

2010Q2

2010Q1

2009

2008

2007

2006

2005

2004

19.8 20%
18.318.3
18%

6%
9,530

10,110

4%

0%
2003

(JPY/Tsubo)
15,00012%
10.910.911.2

8%

10,16010,51010,6905.2
5,000

10,640

9,630

9,610

9,610

9,690

9,580

9,570

9,570

9,690

9,880

10%

7.0

6%

2002

0%

6.3

0
2001

14%

9.6

2%

2000

(JPY/Tsubo)

8 7.9

7.7

8%

5.9
9,990

10,18010,120

5,000

8.6

4%

Sendai City

15,00012%

9.7

10,000

8.3

6.1 6.3

0

11.8

11.9
11.4

12%

7.4

0%

14%

14%

12.4

8.2

6%

2%

Sapporo City
14.314.1
13.9

15,000

10%

5,000

2007

14.2
13.8

8.2

12,120

14,2302008(JPY/Tsubo)(JPY/Tsubo)

8.7

2002

13,5002007

Fukuoka City

15,00010,000012,35013,4702006

13,11013,78013,2902010Q2

2005

13,8402010Q1

14,10014,5202009

2004

13,5902008

14,43013,0502007

Nagoya City

0%

5.7

2%

2%

2003

13,0302006

014,77013,320

2005

0%

2002

13,64013,9402002

2004

14,220
2001

2003

14,400
2000

1.7

2%

4%

5,000

2.3

5,000

1.7

4.2
3.4

4%

3.2

8%

7.1

6%

2001

2.6

3.6

3.6

4%

10,000

6.2

10,000

2000

3.3

5,000

6.6

4.2

4.0

15,010

4.3

6%

6.6

4.4

2001

3.8

5.7

10,000

7.8
8%

7.0

2006

6%

7.0

9,190

6.1

10,000

6.6

7.0

8.2

8,970

6.5

6.0

7.0

2000

6.1

6.9

7.5 8%

10%

8.7

2005

6.9

0

15,00015,000

7.5 8%

9.5

9.4

10%

8.9

11.1 12%10.310.5

10.410.6

2003

15,00010%(JPY/Tsubo)
15,0002004

10%11.5 11.9 12%
11.2

20,000

9,920

12%

9,620

20,0002002

12%

10,900(JPY/Tsubo)(JPY/Tsubo)
20,000

Osaka City

10,46023 Wards of Tokyo

2001

Vacancy rate

2000

Advertised rents

Source: Office Market Report (CB Richard Ellis)

Japan Prime Realty Investment Corporation ｜ 44

Overview of the Asset Manager
Overview of Tokyo Realty Investment Management, Inc.
Name:
Tokyo Realty Investment Management, Inc.
Capitalization:
350 million yen
Business description: Asset management for investment corporation

Take advantage of the strengths of the respective sponsors
The asset manager takes full advantage of the strengths in the areas of real estate and construction of Tokyo Tatemono Co., Ltd., Taisei Corporation and Yasuda Real Estate Co., Ltd., and the strengths
held by Meiji Yasuda Life Insurance Company and Sompo Japan Insurance Inc. as financial institutions, while also utilizing the know-how of the respective sponsors and conducting operations in a wellbalanced manner.

Real estate and construction
Tokyo Tatemono Co., Ltd.
(40%)
Taisei Corporation(20%)
Yasuda Real Estate Co., Ltd.
(20%)
Provide opportunities for property acquisitions
Provide information on property acquisitions andproperty sales
Conduct tenant leasing
Conduct property management
Provide know-how in technical support(Asset Manager)
Tokyo Realty Investment
Management, Inc.
Asset managementagreement

Japan Prime Realty
Investment Corporation

Finance
Meiji Yasuda Life Insurance Company (10%)
Sompo Japan Insurance Inc.
(10%)

Support establishing financial strategies
Provide funds through debt financing* Figures represent the ratio of shares owned by the respective
sponsors against the number of shares outstanding of the AssetManager.

Transaction projects with interested parties

Corporate governance system of the Asset Manager

The Asset Manager has established a rigorous monitoring system concerning transaction
projects with interested parties of the investment corporation, such as property acquisitions
from the sponsors, through internal and external checks and controls.






1st CheckCompliance Committee

Verification to be made in advance, with the participation of outside lawyers, on theappropriateness and rationality of transactions

Verification in advance
Decision-making institutions
Respective
Board of Directors’ orcommittees
Meeting

5 full-time directors （including one Compliance Officer ） + Outside lawyers (special members of
the Committee)

Board of Directors’ Meetingof the Investment Corporation
Transactions with interested parties to be approved in advance by directors who are
independent from shareholders of the Asset Manager

2nd Check

Acquisition and sale of properties and individual
assetsConsignment of property management
Brokerage or proxy of transactions
Placement of orders for construction (construction
works costing over 10 million yen)
Leasing of properties

Approval in advance

Implement transactions ofstrictly selected projects only

Japan Prime Realty Investment Corporation ｜ 45

Disclaimer Regarding Forward-Looking Statements
This material contains information that constitutes forward-looking statements. Such forward-looking
statements are made by Japan Prime Realty Investment Corporation and Tokyo Realty Investment
Management, Inc. based on information currently available, and are therefore not guarantees of future
performance. Actual results may differ materially from those in the forward-looking statements as aresult of various factors including known or unknown risks and uncertainties.
This material is solely for the purpose of providing information and it is not intended for the purpose ofoffering or soliciting investment, or as a recommendation to purchase or sell any specific product.
Please refer any inquiries for possible purchases of units or other products of Japan Prime Realty
Investment Corporation to a securities dealer.
Although Japan Prime Realty Investment Corporation takes all possible measures to ensure theaccuracy of the content provided in this material (including references to legislation and taxation), it
makes no guarantee as to the accuracy of the content. Furthermore, the content may be subject tochange without prior notification.
Please further note that this English material is a provisional translation of the original Japanesematerial.

Japan Prime Realty Investment Corporation ｜ 46