Top REIT Investment Corporation
15th Business Report(Semi-Annual Report 15th)

May 1, 2013 – October 31, 2013

1

Letter from the Executive Officer of the Investment Corporation
Dear Investors,
Thank you for your continued loyal patronage to Top REIT, Inc. (Top REIT).
The Japanese economy, which had shown a trend of improvement with expectations for the policiesof the government and the Bank of Japan, stayed on track to recovery. The recovery was led byexports, primarily of automobiles, which continued increasing due to such factors as the strong
recovery of the U.S. economy and the positive impact of the weakening yen, and through anincrease in capital investment as a result of the improvement in corporate earnings and business
confidence. Such an environment supported strong growth in personal consumption of high-end
products primarily by high-net-worth individuals thanks to the financial assets effect resulting
from the weaker yen and higher stock prices. However, improvement of the income environments isstill slow and on top of the rise in energy and foodstuff prices, the scheduled increase in the
consumption tax rate and other factors have cooled consumer sentiment. Looking ahead, we believe
the economic policies will continue to be effective and the Japanese economy will head for
self-sustaining recovery, which is anticipated to help improve the income situation.
Meanwhile, the upward trend in the J-REIT market had appeared to come to a stop in the lastsummer due to a lack of positive news, but given the stimulating impact of Tokyo being selected tohost the 2020 Olympic Games, the TSE REIT Index took an upward turn. More recently, the market
has again settled and become more stable. In the context of these moves, J-REITs have continued toeagerly conduct fund procurement by issuing new investment units through public offering since
the end of last year, and the acquisition of real estate properties by J-REITs has continued to be
active throughout our fifteenth fiscal period (May 1, 2013 – October 31, 2013).
Under these circumstances, the financial results of Top REIT in the fifteenth fiscal period wereoperating revenue of 5,154 million yen (period-on-period decrease of 11.8%), ordinary income of
1,580 million yen (period-on-period decrease of 13.3%), net income of 1,579 million yen(period-on-period decrease of 13.3%) and dividend per unit of 10,191 yen. Although dividend perunit decreased 13.3% period-on-period due to the move-out of a major tenant from Harumi Island
Triton Square Office Tower Y, it surpassed the previous forecast due to measures taken by the asset
manager and other factors.
In terms of asset management in the fifteenth fiscal period, Top REIT focused on leasing activities
to attract succeeding tenants for Harumi Island Triton Square Office Tower Y as well as ongathering information for new property acquisitions and selecting candidate properties. These
efforts led to progress in tenant solicitation and new opportunities to acquire properties and, after
entering the sixteenth fiscal period, allowed Top REIT to implement a capital increase throughpublic offering of new investment units for the first time since listing. In association with thecapital increase, Top REIT newly acquired two office buildings and a retail property totaling 12.3
billion yen, which increased the asset size to 197.8 billion yen. The figure is now close to the 210.0
billion yen that Top REIT has targeted since listing (the asset size that keeps the ratio of NEC Head
Office Building, the flagship property, at 20% or less of the entire portfolio).
Going forward, Top REIT will continue to collaborate with the asset manager and the sponsor
companies to seize prime opportunities for external growth, through which we aim to maximize
unitholder value. Thank you to our unitholders for your continued support and understanding.

Junichi Sahara
Executive Officer
Top REIT, Inc.

2

Letter from the President of the Asset Management Company
Dear Investors,
Thank you very much for your strong support for Top REIT, Inc. (Top REIT) and our activities.
On behalf of the asset manager, I would like to explain the overview of the business results of Top
REIT for the 15th fiscal period (May 1, 2013 – October 31, 2013), its present status, future asset
management strategies and other issues.
In the fifteenth fiscal period, the Japanese economy, which had been on track to recovery driven by
expectations, was modestly but steadily headed for full-fledged recovery backed by the strong
recovery of the U.S. economy, bottoming-out of the European economy and the expansion indomestic demand. Hereafter, the Japanese economy will continue to recover with exports increasing
against the backdrop of the depreciating yen and rising stock prices as well as capital investment
resulting from the government’s economic measures starting to affect the real economy. On theother hand, there is no denying the uncertainty of the world economy, and close monitoring isrequired especially for the movements in emerging markets, tapering of monetary easing in the U.S.
and the impact of the consumption tax increase and other factors in Japan.
Meanwhile, the J-REIT market, which had been on an upward trend thanks to the purchase of
J-REIT investment units by the Bank of Japan and expectations for the effect of the Abenomics,
went into an adjustment phase due to concerns for higher interest rates with assumed tapering ofmonetary easing in the U.S. and other causes. However, the market again took an upward turn,triggered by the selection of Tokyo in September last year to hold the 2020 Olympic Games. Looking
ahead, it is expected that demand for office space and the rent levels will recover as a result offurther improvement in corporate earnings in addition to Abenomics extending its effect to the real
economy more widely and infrastructure investments being undertaken toward the 2020 Olympic
Games in Tokyo. For the moment, given a temporary lull in the supply of new buildings and rising
expectations for economic growth, tenants are becoming increasingly active in investigating
relocations to office buildings with higher specifications as they anticipate an increase in rents. Thishas caused the vacancy rate of office buildings in central Tokyo to show a downward trend. On theother hand, the outlook is becoming somewhat brighter for rents, which tend to increase lagging
behind improvement in the vacancy rate, although it will take more time to realize full-fledged
recovery.
Under these circumstances, Top REIT continued to position solicitation of successor tenants toHarumi Island Triton Square Office Tower Y as the top priority issue, while focusing on selecting
properties for new acquisitions. Consequently, Top REIT not only made progress in soliciting
successor tenants to Harumi Island Triton Square Office Tower Y, but also successfully laid thefoundation for acquiring properties in the sixteenth fiscal period. Top REIT was also able to present
revised dividend forecast for the sixteenth fiscal period ending April 2014 that surpasses the 9,700
yen per unit as disclosed upon the announcement of the financial results for the fourteenth fiscal
period. In addition, Top REIT conducted a capital increase through public offering of new
investment units early in the sixteenth fiscal period for the first time since listing against a
backdrop of these performances.

Nobuhito Endo
President and Representative Director

3Financial Highlights
CATEGORY

15TH FISCALPERIODPERFORMANCE

16TH FISCALPERIODFORECAST(ANNOUNCED ON
December 19, 2013)17TH FISCALPERIODFORECAST(ANNOUNCED ON
December 19, 2013)

PERIOD OF ASSETMANAGEMENTOPERATING REVENUE

184days￥5,154 million￥2,172 million￥1,580 million￥1,579 million￥10,191
155,000 units
19 properties

181days￥5,586 million￥2,466 million￥1,840 million￥1,839 million￥10,450
176,000 units
22 properties

184days￥5,729million￥2,481million￥1,849 million￥1,848 million￥10,500
176,000 units
22 properties

OPERATING INCOME
ORDINARY INCOME
NET INCOME
DIVIDEND PER UNIT
NUMBER OF INVESTMENT UNITSPORTFOLIO SIZE

Preconditions for 16h Fiscal Period and 17th Fiscal Period Forecasts(1) Portfolio Assets
The forecast is based on 22 properties Top REIT owns as of December 19, 2013.
(2) Number of Investment Units Outstanding
It is assumed that the number of investment units outstanding is 176,000 units, the number as ofDecember 19, 2013.
(3) Operating Revenue
For real estate rent revenue related to existing properties, Top REIT takes into consideration executionof new lease agreements and cancellation of lease agreements that have been finalized as of December
19, 2013, along with current real estate leasing market conditions, as well as factors that may cause
fluctuations in such aspects as risks associated with rent revision due to fluctuations in rent of tenantsreaching their rent revision period or contract renewal period. The occupancy rates of Harumi Island
Triton Square Office Tower Y are assumed to be 68.9% as of the end of November and December
2013, 70.8% as of the end of January 2014, and 87.5% from the end of February 2014 onward,
respectively.
(4) Interest-Bearing Liabilities
It is assumed that the total amount of interest-bearing liabilities is ¥100,497 million, which is theamount as of December 19, 2013. As to the short-term loan payable of ¥4,500 million borrowed on
November 28, 2013, it will be fully repaid before maturity and refinanced to a long-term borrowing at
the end of March, 2014 in the sixteenth fiscal period. In the seventeenth fiscal period, it is assumed
that the loan payable of ¥4,000 million with the due date of June 30, 2014 will be fully refinanced to along-term borrowing. For the sixteenth and seventeenth fiscal period, it is assumed that the ¥67
million in long-term loans payable will be repaid as agreed upon.
(5) Dividend per Unit
With regard to the internal reserves of 78 million yen, Top REIT will not reverse the amount ofinternal reserves for the sixteenth and seventeenth fiscal period.

4

I.

ASSET MANAGEMENT REPORT【1】Overview of Asset Management Operation
1. Operating Results and Financial Position
Fiscal period

11th

12th

13th

14th

15th

As of/for six months ended

October 31,
2011

April 30,
2012

October 31,
2012

April 30,
2013

October 31,
2013(1) Operating results
Operating revenue(Of which, rental revenue)
Operating expenses(Of which, expenses related to rental
business)
Operating income
Ordinary income
Net income(2) Assets, etc. (end of period)
Total assets(Period-on-period variation)
Interest-bearing liabilities
Net assets(Period-on-period variation)
Unitholders’ capital(3) Cash distributions
Total cash distributions
Dividend payout ratio(4) Per unit information
Number of units
Outstanding
Net assets per unit
(Note 2)
Dividend per unit
(Earnings distribution per unit)(Distribution in excess of earnings perunit)(5) Financial indices
Ratio of ordinary income tototal assets (Note 3)
Ratio of net income tounitholders’ equity (Note 3)
Ratio of unitholders’ equity tototal assets(Period-on-period variation)
LTV
Rental NOI (Note 4)(6) Other referential information
Number of properties at end of period
Number of tenants at end of period(Note 5)
Total rentable area at end of period
Occupancy rate at end of period(Note 6)
Depreciation and amortization at endof period
Capital expenditure at end of period

mn yenmn yenmn yen

5,812
5,812
3,033

5,693
5,437
2,921

5,636
5,636
2,939

5,844
5,844
3,397

5,154
5,154
2,981
2,438

mn yen

2,479

2,383

2,384

2,848

mn yenmn yenmn yen

2,779
1,986
1,985

2,772
2,029
1,999

2,697
2,002
2,001

2,447
1,823
1,822

2,172
1,580
1,579

mn yen%mn yenmn yen%mn yen185,459(0.5)
94,037
84,245(0.2)
82,260188,407
1.6
96,97084,2590.0
82,260188,440
0.0
96,90284,3040.1
82,260187,003(0.8)
96,065
84,127(0.2)
82,260186,169(0.4)
95,997
83,871(0.3)
82,260mn yen
%

1,985
100.0

1,949
97.5

2,001
100.0

1,822
100.0

1,579
100.0

units

155,000

155,000

155,000

155,000

155,000yen

543,520543,610

543,900

542,758

541,105yen
yen

12,80912,80912,577
12,577

12,912
12,912

11,75911,75910,191
10,191

yen

－

－

－

－

－

%

1.1 <2.1>

1.1<2.2>

1.1<2.1>

1.0<2.0>

0.8<1.7>%

2.4 <4.7>

2.4<4.8>

2.4<4.7>

2.2<4.4>

1.9<3.7>

%

45.4
0.1

44.7
(0.7)

44.7
0.0

45.0
0.3

45.1
0.1

%
mn yen

50.7
4,393

51.5
4,126

51.4
4,368

51.4
4,117

51.6
3,831

cases

17

18

18

19

19

cases

48

40

42

39

40

2

m

295,215.03

300,294.23

300,294.23

301,825.87

301,825.87

%

97.3

98.5

99.2

94.5

96.7

mn yen

1,060

1,072

1,116

1,121

1,115

mn yen

234

442

108

443

176

Note 1: Operating revenue dose not include consumption taxes, etc.
Note 2: Net assets per unit have been rounded to the nearest yen.
Note 3: The indices above are calculated using the following formulas. In addition, annualized figures derived from the management period are
indicated in brackets<>.
Ratio of ordinary income to total assets ＝ Ordinary income /((Total assets at beginning of period＋Total assets at end of period)/2)×100
Ratio of net income to unitholders’ equity ＝Net income/((Net assets at beginning of period＋Net assets at end of period)/2)×100
Note 4: Rental NOI (Net Operating Income) ＝Rental revenue－Expenses related to rental business＋Depreciation and amortization.
Note 5: Number of tenants at end of period indicates total number of tenants of each property as of the end of period. In the case a master leaseagreement is concluded, it is counted as 1 tenant. In the case 1 tenant rents multiple units, it is counted as 1 tenant if the units are in the same
property and as multiple tenants if the units are in multiple properties.
Note 6: Occupancy rate at end of period＝Total leased floor areas at end of period/Total leasable floor areas at end of period
When a pass-through type master lease agreement has been concluded, the area subleased to the end tenants have been used as the leased
floor area.
Note 7: Unless otherwise mentioned in the report, fractions of figures not indicated are rounded off for monetary amounts and rounded for ratios.

52. Overview of Asset Management Operation for the Fifteenth Fiscal Period
A. Brief Background of Top REIT
Top REIT, Inc. (Top REIT) was founded on November 2, 2005 based on the Act on Investment Trusts
and Investment Corporations (Act No. 198 of 1951, as amended) with Top REIT Asset Management Co.,
Ltd. (Asset Manager) as the incorporator, and listed on the Real Estate Investment Trust Section of theTokyo Stock Exchange (TSE) (Securities Code: 8982) on March 1, 2006 with the number of investment
units issued and outstanding totaling 145,500 units. Later, Top REIT issued additional investment units(9,500 units) through a third-party allotment on March 23, 2006. As of the end of the fifteenth fiscal
period (October 31, 2013), the total number of investment units issued and outstanding stands at 155,000
units.
Top REIT works to conduct management with the aim of maximizing the investment value for its
unitholders by securing stable revenues over the medium to long term and achieving steady growth of its
portfolio. To do so, Top REIT focuses on the two strategies of “skilled management of a diversified
portfolio” and “optimal application of the sponsors’ strengths.” As of the end of the fifteenth fiscal period,
its portfolio consists of 19 properties with a total acquisition value of ¥185,555 million.
B. Investment Environment and Management Performance<Investment Environment>(a)Economy in General
With regard to the Japanese economy, following the new government taking office at the end of 2012,
drastic monetary easing and the dynamic public spending package under so called “Abenomics”
effectively brought about improvement in corporate performances in association with an increase ingovernment investment as well as an expansion in exports backed by the depreciating yen. The resulting
improvement in consumers’ sentiment also kept personal consumption strong.
As a result of the recovery in business sentiment and monetary easing by the Bank of Japan, the J-REIT
market saw an increase in property acquisitions, given an improved environment for fund procurement
through equity financing, among other factors.
(b)Real Estate Leasing Market[Office Buildings]
With expectations for economic growth increasing, proactive office demand has generated tenant
movement for leasing more floor areas within the same property and relocating for expanded spaces,
while considerations for disaster prevention have encouraged movement for relocating to officebuildings incorporating anti-disaster measures. Thus the vacancy rate of office buildings in central
Tokyo shows a downward trend especially for blue-chip properties. As for the rent levels, though no
definite trend for recovery is yet to be seen at present, they are believed to take an upward turn inaccordance with a progress in the recovery of the business sentiment and improvement of theemployment environment.
[Retail Properties]
According to the Consumer Confidence Survey September 2013 by the Cabinet Office, the consumer
confidence index (seasonally adjusted) of general households was 45.4, up 2.4 points month-on-month.
Presumably this is a reflection of the fact that recovery in corporate performance and expectations forrecovery in employment conditions, etc., under Abenomics has led to better consumer sentiment.
Meanwhile, retail companies are working on strategies to address such environmental changes as the
anticipated decrease in population on the macro level and the expansion of the E-commerce market on
the micro level. Accordingly, demand for retail properties will become more selective.
[Residential Properties]
In the residential properties leasing market, the occupancy rate remains at a high level in the Tokyo
metropolitan area, primarily for rental apartments that meet consumer demand, given the population
inflow as well as an increase in single-person households and small households. As for rent levels, rents
6have remained stable for properties with actual consumer demand and are anticipated to stay strong,while the unit rent for high-rent properties has probably come to stop decreasing.
(c) Real Estate Transaction Market
Property acquisitions by J-REITs became active against the backdrop of the favorable environment forfund procurement through equity financing, driving the real estate transaction market. In addition to
fundraising by J-REITs continuing in the future, foreign capital is anticipated to flow in, helping tofurther activate the real estate transaction market. On the other hand, market prices appear to be
somewhat overheated for all property types, which will cause to further strengthen buyers’ attitude ofbeing selective for properties.
<Asset Management Performance >(a)Acquisition and Disposition of Assets
Top REIT began the fifteenth fiscal period with 19 properties (total acquisition value: ¥185,555 million).
With an aim to acquire highly-competitive and highly-profitable properties, Top REIT considered
possible acquisition of properties through not only the “optimal application of the sponsors’ strengths”
but also by utilizing established information channels to collect and carefully select from property sale
information, with excellent office buildings located in central Tokyo at the core, as well as other asset
classes, by drawing on the characteristics of being a diversified REIT.
Furthermore, after the account was settled for the fifteenth fiscal period, Top REIT concluded property
sales agreements for three properties (Ginza Oji Building, Shinjuku EAST Building and Kojima×Bic
Camera Kashiwa Store) as of November 7, 2013 and completed their acquisition as of November 28,
2013. In order to partly fund the acquisition of these three properties, and also fund the acquisition of
specified assets or the repayment of loans in the future, Top REIT resolved the issuance of new
investment units through public offering and third-party allotment at its board of directors meetings held
on November 7 and November 18, 2013. Payment for the new investment units was completed on
November 25 and December 13, 2013, respectively. Moreover, Top REIT conducted new borrowings asof November 28, 2013 to partly fund the acquisition.
(b)Management and Maintenance of Portfolio Assets
The basic asset management strategy of Top REIT is sustaining and increasing revenue over the medium
to long term by maintaining and improving tenant satisfaction (the “Tenants First” policy) and keeping
operational management costs at an appropriate level. Top REIT strived to improve tenant satisfaction
and maintain and improve high occupancy rates while sustaining trusted relationships with tenants anddiscerning tenant needs via property management companies.
Particularly in the fifteenth fiscal period, positioning solicitation of successor tenants to Harumi Island
Triton Square Office Tower Y as a top priority issue, Top REIT focused on tenant solicitation activities.
As a result, the occupancy rate increased to 68.9% by the end of October 2013. Top REIT continues topursue further increase of occupancy rate for portfolio as a whole, including Harumi Island Triton
Square Office Tower Y.
Regarding maintenance, Top REIT followed up on ensuring that it had an appropriate grasp of theoperational management conditions and steady implementation of asset management plans for each
property. Top REIT also carried out renewal construction and repair work that contributed to enhancing
the competitiveness of properties and maintaining and improving the functionality of properties basedon asset management plans, took steps to keep relevant costs at an appropriate level, and conductedefficient management of resources.
C. Procurement of Funds
Top REIT procures funds under a financial policy based on stable financial management. In the fifteenthfiscal period, Top REIT conducted no fund procurement or repayment of borrowings except foragreed-upon repayment, as it had no property acquisitions or no borrowings that became due forrepayment during the period.
As a result, at the end of the fifteenth fiscal period, the total amount of interest-bearing liabilities stands
at 95,997 million (¥87,497 million in long-term loans (including the current portion) and ¥8,500 million7

in investment corporation bonds), and the ratio of interest-bearing liabilities to total assets is 51.6%.
Moreover, the ratio of long-term interest-bearing liabilities (including the current portion) is 100%,
while interest-bearing liabilities with fixed interest rates account for 44.0%.
The credit ratings of Top REIT as of October 31, 2013 are as follows:
Credit Rating Agency
Rating [Outlook]
Issuer rating: Baa1 [Negative]
Moody’s Japan K.K.
Senior unsecured long-term rating(Moody’s)(No. 1 Unsecured Investment Corporation Bonds):
Baa1 [Negative]
Issuer rating: A+ [Stable]
Rating and Investment Information, Inc.
Unsecured investment corporation bond rating(R&I)(No. 1 Unsecured Investment Corporation Bonds): A+
Moreover, Top REIT conducted shelf registration for investment corporation bonds, as indicated below,
in order to secure flexible procurement of long-term funds.
[Overview of Shelf Registration]
Object of Shelf Registration
Investment corporation bonds(excluding short-term corporation bonds)

Amount to be Issued

Scheduled Period of Issue¥100,000 million

From May 20, 2012 to May 19, 2014

D. Business Results and Dividends
As a result of the asset management and operations described above, Top REIT recorded asset
management performance during the fifteenth fiscal period of ¥5,154 million in operating revenue,¥2,172 million in operating income and ¥1,580 million in ordinary income after deducting expenses
concerning borrowings, etc., and net income was ¥1,579 million.
As for dividends, with the aim of having an amount equivalent to profit dividends deducted as expenses
based on the application of the special provision on taxation of investment corporations (Article 67-15 of
the Act on Special Measures Concerning Taxation [Act No. 26 of 1957, as amended; hereinafter, the“Special Taxation Measures Act”]), Top REIT decided that the entire amount of unappropriated retained
earnings of the fifteenth fiscal period, excluding fractions of the dividend per investment unit that are lessthan ¥1, would be paid out. Consequently, Top REIT declared a dividend per investment unit of ¥10,191.

8

3. Balance of Paid-in Capital
There was no change in paid-in capital for the fifteenth fiscal period. The outline of changes in paid-in
capital from the establishment of Top REIT to the end of the current fiscal period is as follows:
Issue date

Remarks

Total number of units
issued and outstanding(units)Increase
Balance

Total paid-in capital(million yen)

Note

Increase
Balance
Incorporation
November 2, 2005
200
200
100
100
Note 1(private)
February 28, 2006
Public offering
145,300
145,500
77,117
77,217Note 2
March 23, 2006
Third party allotment
9,500
155,000
5,042
82,260Note 3Note 1: Top REIT was established with initial capital of ¥500,000 per unit.
Note 2: New investment units were issued at a price of ¥550,000 per unit (issue value of ¥530,750 per unit)
through a public offering in order to raise funds for acquiring new properties.
Note 3: New investment units were issued at a value of ¥530,750 per unit through a third party allocation to raise
funds for acquired properties.

[Market Price of Investment Units]
The market price of the investment units on Tokyo Stock Exchange REIT Market during respective fiscal
periods is as follows:
Fiscal period
As of the end of fiscal
periodHighest price
Lowest price

11th

12th

13th

14th

15th

October, 2011

April, 2012

October, 2012

April, 2013

October, 2013

490,000yen
384,000yen

484,000yen
333,000yen

459,000yen
358,500yen

576,000yen
351,000yen

519,000yen
411,000yen

4. Cash Distribution
The dividend per unit for the current period was 10,191yen. Top REIT expects to distribute almost all
unappropriated retained earnings at the current period end to be eligible for special tax treatments (Special
Taxation Measures Law Article 67-15) that allows Top REIT to deduct an amount equivalent to
distributions of retained earnings as expenses from taxable income.
Fiscal period
As the end of
fiscal period
Unappropriatedretained earnings
Internal reserves
Total dividends(Dividend per unit)
Of which, dividend ofaccumulated earnings(Per unit)
Of which, repaymentof paid-in capital(Per unit)

Units
thousandyen
thousandyen
thousandyen(yen)
thousandyen(yen)
thousand
yen
(yen)

11th
October,2011

12thApril,
2012

13th
October,2012

14thApril,
2013

15th
October,
2013

1,985,468

1,999,419

2,001,377

1,822,649

1,579,617

73

49,98417

4

12

1,985,395

1,949,435

2,001,360

1,822,645

1,579,605

12,80912,577

12,912

11,75910,191

1,985,395

1,949,435

2,001,360

1,822,645

1,579,605

12,80912,577

12,912

11,75910,191

－

－

－

－

－

－

－

－

－

－

9

5. Management Policy and Future Issues(a)Management Strategy for Existing Properties
Top REIT will continue to follow its basic asset management strategy that centers on sustaining andincreasing revenue over the medium to long term by maintaining and improving tenant satisfaction (the“Tenants First” policy) and keeping operational management costs at an appropriate level. Under thisstrategy, Top REIT will focus on sustaining relationships of trust with tenants, leasing vacant spaces andsuch, as well as striving to maintain stable occupancy rates over the medium to long term.
Furthermore, Top REIT will also work to ensure an appropriate perception of the operational
management conditions for each property while steadily implementing such measures as to sustain andimprove revenues and keep operational management costs at an appropriate level. In addition, Top REIT
will carry out systematic repair work and such to enhance the competitiveness of properties and tomaintain and improve the functionality of properties, in an aim to secure stable revenues over the
medium to long term.
(b)Investment Strategy for New Properties
Top REIT aims to maintain and increase its dividends over the medium to long term by realizing
external growth through acquisition of new properties. Top REIT will continue to not only further
utilize pipeline support functions from sponsor companies, but also utilize various establishedinformation channels to collect information on new properties based on detailed analysis of market
environment of each asset classes, while placing emphasis on primarily competitive office buildings. By
doing so, Top REIT aims to expand the portfolio size while improving its quality.
Furthermore, Top REIT makes it a management policy to keep the ratio of the investment amount perproperty at less than 20% of the entire portfolio as a target over the medium to long term. For reference,
the acquisition value of the NEC Head Office Building accounts for 22.6% of the total acquisition valueof Top REIT’s properties as of the end of the fifteenth fiscal period. Going forward, Top REIT will work
to reduce the risk of concentration on specific properties by steadily advancing further external growth.
(c)Financial Strategy
Top REIT will continue to implement diversified and flexible fund procurement operations in
preparation for acquisition of new properties and refinancing of existing loans, etc. While securing
mobility and flexibility in fund procurement, Top REIT will work to reduce the risk involved in fundprocurement by extending borrowing periods and spreading out the repayment dates. At the same time,
Top REIT will manage the risk of interest rate fluctuations by taking into account the balance ofborrowings at floating and fixed interest rates, as it discerns the interest rate trends. Moreover, financial
soundness will be maintained by keeping the leverage at an appropriate level.
(d)Compliance and Risk Management, etc.
In addition to the supervision of the Executive Officer by Supervisory Directors at the Board of
Directors’ meetings and other occasions, Top REIT will continue its direction and supervision on the
Asset Manager that it can conduct management operations with full care given to market risks,
including rent decreases, and credit risks as well as with a focus on the protection of unitholders’interests in conducting transactions with interested parties and on other compliance issues.

106. Significant Subsequent Events
Issuance of new investment units
Top REIT resolved the issuance of new investment units, as described below, at its board of
directors’ meetings held on November 7 and November 18, 2013. Payment was completed on
November 25, 2013 for issuance of new investment units through public offering, and on
December 13, 2013 for third-party allotment, respectively.
(Issuance of New Investment Units through Public Offering)Number of investment units to be offered:
Issue price (offer price):
Total issue price (total offer price):
Amount to be paid in (purchase price):
Total amount to be paid in (total purchase price):
Payment date:

20,000 units
438,750 yen per unit
8,775,000,000 yen
423,000 yen per unit
8,460,000,000 yen
November 25, 2013

(Third-Party Allotment)
Number of investment units to be offered:Amount to be paid in (purchase price):
Total amount to be paid in (total purchase price):
Payment date:
Allottee:

1,000 units
423,000 yen per unit
423,000,000 yen
December 13, 2013
Daiwa Securities, Co. Ltd.

(Use of funds)
Top REIT allocated the proceeds from the public offering to part of the funds for theacquisition of specified assets. The proceeds from the issuance of new investment units by
way of third-party allotment will be allocated to funds for the future acquisition of specified
assets or for the repayment of loans.
[Reference Information]① Property acquisition
Top REIT acquired the following properties on November 28, 2013. Overview of theproperties is described below.
Acquisition
Price
Name of Property
Asset Type
Address(millionsof yen)(Note 1)
Ginza Oji Building
2,000 Chuo-ku, Tokyo
Ownership of trust
Shinjuku EAST
5,800 Shinjuku-ku, Tokyo
beneficiary interest in
Building
real estate in Japan
Kojima×Bic Camera
4,500 Kashiwa-shi, Chiba
Kashiwa Store
Total

12,300(Note 1) “Acquisition Price” of each property is the price for sale specified in the respective
sales agreement (excluding consumption tax and equivalents) which does not include
acquisition expenses, real property tax, city planning tax, etc.

② New borrowings
Top REIT entered into a loan agreement as described below on November 26, 2013 topartially fund the property acquisition in ① above and related expenses.
Short-term loan (Term Loan No. 22)
Sumitomo Mitsui Trust Bank, Limited.
LenderAmount of loan
JPY 4,500 million
Interest rate
0.49818% (for the period from November 28, 2013 to
December 30, 2013)11

Execution date
Borrowing method
Principal repayment
date
Principal repayment
methodCollateral, etc.

November 28, 2013
Borrowing based on the loan agreement concluded on
November 26, 2013
April 30, 2014
Bullet repayment on the principal repayment dateUnsecured and unguaranteed12

【2】Outline of Top REIT
1. Status of Unitholders’Capital
Fiscal period
As of the end of fiscal period
Number of issuable investment units (units)
Number of units issued and outstanding(units)Unitholders’ capital (million yen)
Number of unitholders

11th
October,
2011
2,000,000

12thApril,
2012
2,000,000

13th
October,
2012
2,000,000

14th
April,
2013
2,000,000

15th
October,
2013
2,000,000

155,000

155,000

155,000

155,000

155,000

82,2607,031

82,2606,912

82,2607,823

82,2607,872

82,2607,590

2. Matters Concerning the Investment Units
Major unitholders as of October 31, 2013 were as follows:
NameJapan Trustee Service Bank (trust account)
The Master Trust Bank of Japan (trust account)
Trust and Custody Services Bank (securities investment trust account)
Nomura Trust and Banking (investment trust account)North Pacific Bank, LTD.
THE FUJI FIRE AND MARINE INSURANCE COMPANY,LIMITED
Sumitomo Mitsui Trust Bank, Limited.
Oji Real Estate Co., Ltd.
NIPPON STEEL KOWA REAL ESTATE CO.,LTD.
MetLife Alico Life Insurance K.K GA Company JPY
The Asahi Fire & Marine Insurance Co., Ltd.
NOMURA BANK (LUXEMBOURG) S.A.
The Iyo Bank, Ltd.
The Gibraltar Life insurance Co., Ltd (general accounts J-REIT
account)
The Minami Nippon Bank, Ltd.
Total

Number of units held
(units)45,315
8,848
8,616
5,246
4,024
3,465
3,176
3,162
3,162
2,075
2,010
1,593
1,500

Share of total(%) (Note)
29.24
5.71
5.56
3.38
2.60
2.24
2.05
2.04
2.04
1.34
1.30
1.03
0.97

1,318

0.85

1,270
94,7800.82
61.15

Note: The share of total is calculated by rounding to the second decimal place.

3. Officer and Auditor
A: Name of directors and auditor as of October 31, 2013 were as follows:
Post
Executive Officer
Supervisory Director

Name
Junichi Sahara(Note 1) (Note 2)
Yasuyuki Kuribayashi(Note 1)Supervisory Director

Kunio Tsuneyama(Note 1)

Accounting Auditor

KPMG AZSA LLC

Major additional post

Total amount of fee paid
during the current period(thousand yen)

Adviser, Sumitomo Mitsui Trust
Guarantee Co., Ltd.
Partner Attorney,
City-Yuwa Partners (Note 3)
Managing Partner, Tsuneyama
Certified Public Accountants Office
Managing Partner, Tsuneyama Sogo
Accountants Office
Non Executive Director in Kuroda
Electric Co., Ltd.
(Note 3)
－

1,350
1,800

1,800

10,000Note 1: There are no investment units of Top REIT held by the Executive Officer or Supervisory Directors in theirown name or others' names.
Note 2: Junichi Sahara, Executive officer, was elected executive officer in the fifth Unitholders’ General Meeting
held on July 25, 2013, and served in the post since August 1, 2013. Further, Jumpei Norimatsu resigned
from executive officer on July 31, 2013.
Note 3: Although Supervisory Directors may have additional posts in entities other than those listed above, there
is no conflict of interest between those companies including those listed above and Top REIT.

B: Policy on determination of dismissal and denial of reappointment of accounting auditor
The Board of Directors shall decide after taking various factors into consideration.
4. Asset Manager, Asset Custodian and Administrative Agents

13

Asset manager, etc. as of October 31, 2013 were as follows:Business
Asset manager
Assets custodian
Administrative agent(running of the organization, accounting matters, etc.)
Administrative agent(unitholders’ register, special accounts)
Administrative agent(investment corporation bonds)

Company name
Top REIT Asset Management Co., Ltd.
Sumitomo Mitsui Trust Bank, Limited.
Sumitomo Mitsui Trust Bank, Limited.
Sumitomo Mitsui Trust Bank, Limited.
Sumitomo Mitsui Trust Bank, Limited.

14【3】 Status of Investment Assets
1. Composition of Assets

Type of assets

Asset classArea

Central Tokyo
Subtotal
Central Tokyo
Tokyo
OfficeMetropolitan Areabuildings
Subtotal
Tokyo
Metropolitan Area
Retail facilities
Other
Real estate
Major Cities
in trust
Subtotal
Central Tokyo
Tokyo
Residential
Metropolitan Area
Subtotal
Central Tokyo
OthersSubtotal
Subtotal of real estate and real estate in trust
Cash, deposits and other assets
Real estate

Officebuildings

Total assets (Note 3)

14th
As of April 30, 2013
Total amount
As a percentage
owned
of total assets(million yen)(%)
(Note 1)
(Note 2)
5,857
3.1
5,857
3.1
126,390
67.6

15th
As of October 31, 2013
Total amount
As a percentage
owned
of total assets(million yen)(%)
(Note 1)
(Note 2)
5,844
3.1
5,844
3.1
125,809
67.6

1,647

0.9

1,624

0.9

128,037

68.5

127,434

68.5

23,075

12.3

22,934

12.3

1,234

0.7

1,226

0.7

24,309
2,431

13.0
1.3

24,160
2,403

13.0
1.3

17,6549.4

17,5209.4

20,0862,712
2,712
181,003
6,000
187,003<181,003>

10.7
1.5
1.5
96.8
3.2
100.0
<96.8>

19,9232,700
2,700
180,064
6,104
186,169<180,064>

10.7
1.5
1.5
96.7
3.3
100.0
<96.7>

Note 1: Total amount owned is based on the amounts appropriated on the Balance Sheet at the end of each period.
(Real estate and real estate in trust represent the book values after deducting depreciation). Total Amountfigures were rounded down to the nearest million yen.
Note 2: As a percentage of total assets show the ratio of respective assets to total assets and is rounded to firstdecimal place.
Note 3: Figures in brackets <> of total assets represent the portions of actually owned properties in the object
assets.

< Geographical Classification >Area

RegionSupplementary note

Central Tokyo

Chiyoda-ku, Chuo-ku, Minato-ku, Shibuya-ku,
Shinjuku-ku and Shinagawa-ku

―

Tokyo
Metropolitan Area

Tokyo (excluding central Tokyo),
Kanagawa, Saitama and Chiba Prefectures―

KansaiRegional economic zone centering
on Osaka

Osaka, Kyoto, Hyogo, Shiga, Nara andWakayama Prefectures

ChukyoRegional economic zone centeringon Nagoya

Aichi, Gifu and Mie Prefectures

Major cities
Across thecountry

Cities designated by government ordinance andother major cities (excluding cities belonging to
the above classifications)15―

2. Major Properties Owned
The major properties (top ten properties by book value) that Top REIT owns as of October 31, 2013 wereas follows:Book value

Property name(million yen)

Leasable floor
space(Note 1)

Leased floor
space(Note 2)

Occupancy
rate(Note 3)

Portion ofrentalrevenue

2

2

(%)

(%)

Primary use

(m )

(m )

42,67572,238.03

72,238.03

100.0

26.6

Office30,37323,170.40

15,954.62

68.9

12.8

Office19,457

10,914.20

10,914.20

100.0

Office12,6898,025.65

8,025.65

100.0

Office11,261

61,763.28

61,763.28

100.0

7.3

10,116

11,357.44

10,411.92

91.7

4.5 Residential

9,760

7,301.15

7,301.15

100.0

5.2

Office7,814

51,098.42

51,098.42

100.0

4.6

Retailproperty

Ito-Yokado
Higashi-Narashino
Store(Trustbeneficiaryinterest)(Trustbeneficiaryinterest)(Trustbeneficiaryinterest)(Trustbeneficiaryinterest)(Trustbeneficiaryinterest)(Trustbeneficiaryinterest)(Trustbeneficiaryinterest)(Trustbeneficiaryinterest)

Shiba-Koen Building(Real estate)

5,844

3,060.43

1,908.99

62.4

1.5

Office(Trustbeneficiaryinterest)

5,789

6,032.24

6,032.24

100.0

3.9

Office155,784

254,961.24

245,648.50

96.3

81.8

NEC Head Office
Building
Harumi Island
Triton Square
Office Tower Y
Harumi Island
Triton Square
Office Tower Z
Kanda Nishiki-cho
3-chome Building
Sagamihara Shopping
CenterFukasawa House
Towers H&I
Akasaka Oji
Building

Shinkawa
Chuo Building
Total

Retailproperty

Note 1: Leasable floor space is total leasable space for each asset as of the end of the fifteenth fiscal period. Furthermore, in thecase of co-ownership (including quasi-co-ownership), the stated figure is given by multiplying the leasable floor space of
the whole building by the ratio of co-ownership, and rounded to the second decimal place.
Note 2: Leased floor space is floor space based on lease agreements effective as of the end of the fifteenth fiscal period.
Furthermore, in the case of co-ownership (including quasi-co-ownership), the stated figure is given by multiplying theleased floor space of the whole building by the ratio of co-ownership, and rounded to the second decimal place. In thecase of contracting the master-lease agreements as pass-through type, the floor space subleased to end-tenants is
calculated as the leased area.
Note 3: Occupancy rate is the figure given by dividing leased floor space as of the end of the fifteenth fiscal period by leasable
floor space, and rounded to the first decimal place.
Note 4: Portion of rental revenue is rounded to first decimal place. Portion of rental revenue for Harumi Island Triton Square
Office Tower Z and Kanda Nishiki-cho 3-chome is not disclosed due to being unable to obtain the consent of the tenants.

16

Asset class

3. Details of Portfolio Properties① Details of Properties
A. The details of properties owned by Top REIT as of October 31, 2013 were as follows

Area

Property name

NEC Head Office
Building
Harumi Island
Triton Square
Office Tower Y
Akasaka Oji
Building

Residential

Retail property

Office building

Kanda Park PlazaCentral Tokyo

Shiba-Koen
Building
Harumi Island
Triton Square
Office Tower Z
Kanda Nishiki-cho
3-chome Building
Shinkawa Chuo
Building

Tokyo
Metropolitan
Faret East Building
Area
Subtotal (9 Properties)
Sagamihara
Shopping
CenterTokyo
Ito-Yokado
Metropolitan
Higashi-Narashino
Area
Store
Musashiurawa
Shopping Square
Other
MEL Building
Major Cities
Subtotal (4 Properties)
Top ResidenceCentral Tokyo Nihonbashi
Kayabacho
Fukasawa House
Towers H&I
Ecology Toyosu
Tokyo
Procentury
Metropolitan
Impress
Area
Musashi-Koganei
Top Residence Yoga

Address

5-7-1 Shiba,Tokyo
1-8-11Tokyo

Type of title

Other

OAK PLAZABook value at
end of 15th
period(million yen)

Minato-ku,

Trust beneficiaryinterest

50,10042,675Chuo-ku,

Trust beneficiaryinterest

29,50030,373

8,540

9,760

4,910

5,063

Harumi,8-1-22 Akasaka,
Minato-ku, Tokyo
2-2-2 Kajicho,
Chiyoda-ku, Tokyo
3-5-5 Shiba, Minato-ku,
Tokyo

Trust beneficiaryinterest
Trust beneficiaryinterest
Real estate

3,540

5,844

1-8-12Tokyo

Trust beneficiaryinterest

12,60019,457

14,20012,689

5,790

5,789

2,450

1,624

131,630

133,279

Harumi,Chuo-ku,

3-11-1 Kanda Nishiki-cho,
Chiyoda-ku, Tokyo
1-17-24, Shinkawa,Chuo-ku, Tokyo

Trust beneficiaryinterest
Trust beneficiaryinterest

2-34-7 Akebonocho,
Tachikawa-shi, Tokyo

Trust beneficiaryinterest

3-13-33
Kobuchi,Minami-ku, Sagamihara-shi,
Kanagawa

Trust beneficiaryinterest

8,330

11,261

7-3-1 Higashi Narashino,
Narashino-shi, Chiba

Trust beneficiaryinterest

5,620

7,814

7-3-1 Bessho, Minami-ku,
Saitama-shi, Saitama
2-7-28 Chuo, Aoba-ku,
Sendai-shi, Miyagi

Trust beneficiaryinterest
Trust beneficiaryinterest

3,880

3,857

1,280

1,226

19,11024,160

2,580

2,403

7,120

10,116

5,080

4,940

1,270

1,254

1,180

1,207

17,23019,923

2,500

2,700

2,500

2,700

3-4-1 Nihonbashi
Kayabacho, Chuo-ku,
Tokyo
2-1-2 Fukasawa,
Setagaya-ku, Tokyo
4-8-8 Toyosu, Koto-ku,
Tokyo
4-14-18 Nakamachi,
Koganei City, Tokyo
1-14-12 Tamagawadai,
Setagaya-ku, Tokyo

Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest
Trust beneficiaryinterest

Subtotal (5 Properties)
Central Tokyo

Appraisalvalue at end of
15th period(million yen)
(Note)

2-10-6 Kanda Awajicho,
Chiyoda-ku, Tokyo

Subtotal (1 Property)

Trust beneficiaryinterest

Total (19 Properties)
170,470
180,064
Note: For “Appraisal value at end of period,” Top REIT indicates the assessed value based on the appraisal by real estate appraisers
following the asset evaluation method and standards stipulated in Top REIT’s Articles of Incorporation and rules of The
Investment Trusts Association, Japan (based on real estate appraisal reports prepared by Tanizawa Sogo Appraisal Co, Ltd;
Japan Real Estate Institute and Daiwa Real Estate Appraisal Co, Ltd) as of October 31, 2013 as the points of evaluation.

17

B. Operating results for each fiscal period of each property owned were as follows:

Area

Name ofproperty

1,370

23.5

1

100.0

1,370

26.6

3

41.8

1,372

23.5

5

68.9

659

12.8

6
10
2

98.8
100.0
62.4

239
173
87

4.1
3.0
1.5

6
9
2

100.0
94.2
62.4

268
177
78

5.2
3.4
1.5

Harumi Island Triton
Square Office Tower Z

1

100.0

1

100.0

Kanda Nishiki-cho
3-chome Building

1

100.0

1

100.0

Shinkawa Chuo Building

1

100.0

199

3.4

1

100.0

201

3.9

Faret East
Building

1

89.6

139

2.4

1

100.0

144

2.8

26

89.1

4,400

75.3

27

93.9

3,693

71.7

2

100.0

407

7.0

2

100.0

374

7.3

1

100.0

236

4.0

1

100.0

236

4.6

3

100.0

129

2.2

3

100.0

129

2.5

1

100.0

0

0.0

1

100.0

58

1.1

7

100.0

773

13.2

7

100.0

798

15.5

Top Residence
Nihonbashi Kayabacho

1

95.2

88

1.5

1

96.3

89

1.7

Fukasawa House Towers
H&I

1

97.3

238

4.1

1

91.7

234

4.5

Ecology Toyosu
Procentury

1

92.5

167

2.9

1

97.1

162

3.1

Impress Musashi-Koganei

1

90.5

44

0.8

1

97.0

43

0.8

Top Residence Yoga

1
5

94.7
95.0

37
576

0.6
9.9

1
5

92.6
94.3

37
567

0.7
11.0

1

100.0

94

1.6

1

100.0

94

1.8

MEL
Building

Central Tokyo
CentralTokyo
Tokyo Metropolitan
Area

Subtotal (5 properties)
CentralTokyo

Occupancy Rent revenue Ratio ofrate- real estate
rental(end of(for period) revenue toperiod) (million yen) total rental(Note 2)revenues
(%)
(%)

100.0

Kanda Park Plaza
Shiba-Koen Building

Retail property
Other
Tokyo
Major
Metropolitan
CitiesArea

Number oftenants(end ofperiod)(case)(Note1)

1

Subtotal (4 properties)

Residential

Occupancy Rent revenue Ratio ofrate- real estate
rental(end of(for period) revenue toperiod) (million yen) total rental(Note 2)revenues(%)(%)

Harumi Island Triton
Square Office Tower Y

Subtotal (9 properties)
Sagamihara Shopping
Center
Ito-Yokado
Higashi-Narashino Store
Musashiurawa Shopping
SquareOther

Number oftenants(end ofperiod)(case)(Note1)

15th Fiscal Period
From May 1, 2013
to October 31, 2013

NEC Head Office Building

Akasaka Oji Building

Tokyo
Metropolitan
Area

Office building

Asset class

14th Fiscal Period
From November 1, 2012
to April 30, 2013

OAK PLAZA

1
100.0
94
1.6
1
100.0
94
1.8
39
94.5
5,844
100.0
40
96.7
5,154
100.0
Note1: Number of tenants indicates total number of tenants of each property as of the end of period. In the case a master leaseagreement is concluded, it is counted as 1 tenant. In the case 1 tenant rents multiple units, it is counted as 1 tenant if the units
are in the same property and as multiple tenants if the units are in multiple properties.
Note 2: Rent revenue for Harumi Island Triton Square Office Tower Z and Kanda Nishiki-cho 3-chome is not disclosed due to being
unable to obtain the consent of the tenants.
Note 3: Ratio of rental revenue to total rental revenues is rounded to first decimal place. Ratio of rental revenue to total rental
revenues for Harumi Island Triton Square Office Tower Z and Kanda Nishiki-cho 3-chome is not disclosed due to being
unable to obtain the consent of the tenants.
Subtotal (1 property)
Total (19 properties)18

② Details of Investment Securities
There are none applicable.
4. Contracted Amount and Market Price of Specified Transactions
The contracted amount and market price of the specified transactions of Top REIT as of October 31,
2013 were as follows:
Contract amount (Note 1) (Note 2)
Segment

Type of transaction

Longer than a year

Transaction other than Interest-rate swap
market transaction(receiving floating-rate, Paying fixed-rate)

27,20025,200(Million yen)
Market price(Note 1)
(Note 3)
(214)

Total
27,20025,200(214)
Note 1: The above figures are rounded down to the nearest million yen.
Note 2: Contract amounts of interest-rate swap transactions represent figures based on the estimated principal.
Note 3: Market price is evaluated at the price calculated by the counterparty of the concerned transaction contract based on theprevailing market rate.

5. Status of Other Assets
All real estate and trust beneficiary interests in real estate are listed in the table under the “3-① Detailsof Portfolio Properties. ”There were no significant specified assets that are main investment targets of
Top REIT other than those listed above as of October 31, 2013.
6. Status of Assets by Country and Region
There are none applicable.

19【4】Capital Expenditures for Properties Owned(1) Schedule of Capital Expenditures
The table below lists the estimated amounts of significant capital expenditures for repair andmaintenance work of properties held by Top REIT, planned as of October 31, 2013. The estimatedconstruction costs shown in the table below include those charged to expenses in accounting.

Name of property

NEC Head
Office Building

Location

Minato-ku,
Tokyo

Scheduled term forconstruction
or maintenancePurposeRenewal of security
equipment

May 2013 toJanuary 2014
May 2013 toJanuary 2014
May 2013 toMarch 2014
May 2013 toMarch 2014
May 2013 toMarch 2014
May 2013 toNovember 2013
May 2013 toMarch 2014
May 2013 toMarch 2014
May 2013 toMarch 2014
November 2013 to
December 2013
August 2013 toNovember 2013
February 2014 toMarch 2014

Renewal of carpet

December 2013

11

－

－

March 2014

20

－

－

Renewal of gondola
Renewal of lighting
SystemRenewal of automatic fire
alarm system
Renewal of plumbing
equipment
Renewal of equipment forreuse of waste water
Renewal of air
Condition facility
Renewal of air
conditioning duct
Renewal of monitoring
deviceRenewal of moving roof

Akasaka Oji
Building
Faret East
Building

Harumi Island
Triton Square
Office Tower Z
Sagamihara
Shopping Center

Minato-ku,
TokyoTachikawa City,Tokyo

Chuo-ku, Tokyo

Estimated construction cost
(million yen)
Total of
Payment for
Total
advancethe period
payment

Renewal ofwaterproof equipment
Renewal of external
wall and ceiling

Sagamihara City, Renewal of air
Kanagawa
Condition facility

20

74

－

－

17

－

－

47

－

－

20

－

－

28

－

－

22

－

－

15

－

－

46

－

－

34

－

－

14

－

－

30

－

－

11

－

－

(2) Capital Expenditures Made During the Period
The following table is an overview of construction work conducted during the fifteenth fiscal periodthat fall under the category of capital expenditures for properties held. Capital expenditures during thefifteenth fiscal period amounted to ¥176 million and combined with ¥75 million in repairs andmaintenance costs that fall under expenses for the fifteenth fiscal period, a total of ¥252 million of
construction work was implemented.
Name of property

Location

NEC Head
Office Building

PurposeRenewal of
automatic fireMay 2013 to September 2013
alarm system
Renewal of common
March 2013 to May 2013
spacesRenewal of drain piping
June 2013
Renewal of ventilationequipment
and
air August 2013 to September 2013
blowers
Renewal ofAugust 2013 to October 2013
common restrooms
Renewal of function
May 2013 to October 2013
Total

Minato-ku,
Tokyo

HarumiIslandTriton Chuo-ku,
Square Office Tower YTokyo

Akasaka Oji Building

Minato-ku,
TokyoShinkawa Chuo Building

Chuo-ku,Tokyo

Scheduled term forconstruction or maintenance

OthersCapitalexpenditures(million yen)
12
50
17
14
19
62
176

(3) Funds Reserved for the Long-term Repair and Maintenance Plan
Fiscal period

11th
From
May 1,
2011
to October 31,
2011

12th
From
November 1,
2011
to April 30,
2012

13th
From
May 1,
2012
to October 31,
2012

14th
From
November 1,
2012
to April 30,
2013(Million yen)
15th
From
May 1,
2013
to October 31,
2013

330

443

347

410

375

197

197

197

197

197

84

292

133

232

158

443

347

410

375

414

Balance of reserved funds at
beginning of current period
Amount reserved during thecurrent period
Amount used from reserved
funds during the current period
Balance carried forward to thenext period【5】Condition of Expenses and Liabilities(1) Details of Expenses Related to Management
Fiscal Period
Item(a) Asset management fees (Note)(b) Asset custodian fees andadministrative service fees(c) Directors’ compensation(d) Audit fees(e) Other expenses
Total

416

(Million yen)
15th
From May 1, 2013
to October 31, 2013
406

72

73

6
10
42
548

6
10
46
542

14th
From November 1, 2012
to April 30, 2013

Note: In addition to the amounts described above, asset management fees consisted of ¥6 million in 14th fiscal
period in association with the acquisition of new properties recorded as book value of the respective
properties.

21

(2) Status of Borrowings
Status of borrowings from respective financial institutions as of October 31, 2013 is as follows.

Current Portion of Long-Term Loans
PayableLenderDate borrowed

Sumitomo Mitsui
Trust Bank, Limited.
Term Loan
No. 5

Term Loan
No. 11Development Bankof Japan, Inc.

June 29,
2007

Long Term Loans Payable

Term Loan
No. 14

Term Loan
No. 152,000

2.27（Note2）

Repayment
methodUse ofproceeds

Remarks

June 30,
2014

Bulletrepaymentonrepayment
date(Note 3)

Unsecured
andunguaranteed

November30, 2016(Note 4)(Note 5)

Unsecured
andunguaranteed

―

―

―

Unsecured
andunguaranteed

2.42

November30, 2016(Note 4)(Note 5)

Unsecured
andunguaranteed

1.39（Note2）February29, 2016

Bulletrepaymentonrepayment
date(Note 6)

Unsecured
andunguaranteed

0.74

February29, 2016

Bulletrepaymentonrepayment
date(Note 3)

Unsecured
andunguaranteed

0.53

November30, 2016

Bulletrepaymentonrepayment
date(Note 6)

Unsecured
andunguaranteed

0.63

October
31, 2016

Bulletrepaymentonrepayment
date(Note 5)

Unsecured
andunguaranteed

―

1,000

2.40

135

135

2.42

135

4,135

2,000

―

―

1,000

―

―

1,000

―

―

2,160

2,092

Sumitomo
MitsuiTrust Bank, Limited.

6,012

6,012

Mizuho Bank, Ltd.

3,841

3,841

3,006

3,006

The Dai-ichi Life
Insurance Co., Ltd.

Development Bankof Japan, Inc.

January 13,
2010

Development Bankof Japan, Inc.

June 29,
2007

The Dai-ichi Life
Insurance Co., Ltd.

Development Bankof Japan, Inc.

Sumitomo
Mitsui
Banking Corporation
The
Bank
of
Tokyo-Mitsubishi
UFJ, Ltd.
Mitsubishi
UFJ
Trust and Banking
Corporation
Sumitomo
MitsuiTrust Bank, Limited.
The Bank ofFukuoka, Ltd.
The
Hiroshima
Bank, Ltd.
The
Yamaguchi
Bank, Ltd.
Sumitomo
MitsuiTrust Bank, Limited.

January 13,
2010

March 3,2011

March 31,2011

Sumitomo
Mitsui
Banking Corporation
The
Bank
of
Tokyo-Mitsubishi
UFJ, Ltd.
Mitsubishi
UFJ
Trust and Banking
Corporation
Sumitomo
MitsuiTrust Bank, Limited.

November30, 2011

Mizuho Bank, Ltd.

Term Loan
No. 17―

Repayment
date

2.40

Mizuho Bank, Ltd.

Term Loan
No. 16

Averageinterest rate(%)
(Note 1)1,000

Sumitomo Mitsui
Trust Bank, Limited.

Term Loan
No.11

Balance atthe end of
the current
period(million yen)―

Subtotal

Term Loan
No. 5

Balance atthebeginning of
the current
period(million yen)

Sumitomo
Mitsui
Banking Corporation
The
Bank
of
Tokyo-Mitsubishi
UFJ, Ltd.
Mitsubishi
UFJ
Trust and Banking
CorporationMarch
30, 2012

3,006

3,006

835

835

1,700

1,700

3,000

3,000

1,000

1,000

1,000

1,000

6,687

6,687

4,440

4,440

3,474

3,474

3,474

3,474

965

965

1,008

1,008

644

644

504

504

504

504

340

340

22

Long Term Loans Payable

Term Loan
No. 18Term Loan
No. 19-①

Sumitomo
MitsuiTrust Bank, Limited.

5,660

5,660

Mizuho Bank, Ltd.

4,255

4,255

3,330

3,330

Sumitomo
Mitsui
Banking Corporation
The
Bank
of
Tokyo-Mitsubishi
UFJ, Ltd.
Mitsubishi UFJ TrustandBanking
Corporation
Sumitomo
MitsuiTrust Bank, Limited.
Sumitomo
Mitsui
Banking Corporation
The
Bank
of
Tokyo-Mitsubishi
UFJ, Ltd.
ResonaBank,
LimitedSumitomo
MitsuiTrust Bank, Limited.

Term Loan
No. 21

Note8:

925

925

3,000

3,000

1,500

1,500

1,000

1,000

1,428

1,428

1,264

1,264

989

989

989

989

2,355

2,355

Mizuho Bank, Ltd.

1,800

1,800

Mitsubishi UFJ TrustandBanking
Corporation

1,275

1,275

730

730

Sumitomo
Mitsui
Banking Corporation
The
Bank
of
Tokyo-Mitsubishi
UFJ, Ltd.
Development Bankof Japan, Inc.

ResonaLimitedTotal

Note5:
Note6:
Note7:

3,330

1,500

Subtotal

Note3:
Note4:

3,330

1,500

Sumitomo
MitsuiTrust Bank, Limited.

Note2:

November30, 2012

Mizuho Bank, Ltd.

Term Loan
No. 20Note1:

June 29,
2012

Bank,

May 27,2013

April 30,
2013
500

500

87,43083,362

87,56587,4970.71（Note7）

June 30,
2017

Bulletrepaymentonrepayment
date(Note 6)

Unsecured
andunguaranteed

0.63

September
30. 2015

Bulletrepaymentonrepayment
date(Note 6)

Unsecured
andunguaranteed

Bulletrepaymentonrepayment
date(Note5)

Unsecured
andunguaranteed

Bulletrepaymentonrepayment
date(Note 5)

Unsecured
andunguaranteed

0.75

March
27, 2018

1.08

0.63

September
30, 2015

0.75

April
30, 2018

The average interest rate is the interest rate of borrowings for the respective loan contracts (weighted by the balance during
the period) and rounded to the second decimal place. Furthermore, the average interest rate related to the borrowing hedgedby an interest rate swap transaction for the purpose of reducing interest rate fluctuation risk is weighted by considering theeffect of the relevant interest rate swap.
The borrowings are hedged by interest rate swap transactions and the average interest rates show the weighted-averageinterest rates adjusting the effect of interest rate swap transactions.
The use of borrowings is for repayment of short-term loans payable.
Repayment of ¥67.5 million will be made at the end of June and December each year starting on June 30, 2010, with theremaining payment of ¥1,822.5 million to be repaid on November 30, 2016, the final repayment date.
The use of borrowings is for acquisition of trust beneficiary interest in real estate.
The use of borrowings is for repayment of long-term loans payable.
A portion of borrowing amounting to ¥8,500 million is hedged by interest rate swap transaction and the average interest rate shows
the weighted-average interest rate adjusting the effect of interest rate swap transaction.
The use of borrowings is for repayment of short-term and long-term loans payable.

23(3) Status of Investment Corporation Bonds
Investment corporation bonds issued and outstanding as of October 31, 2013 are as follows.
Name of Bonds

No.1
Unsecured
Investment
Corporation
Bonds (Note)
Total

Issue
Date

Balance as of
the beginning of
the 15th fiscal
period(million yen)

Balance as ofthe end of the
15th fiscal
period(million yen)Interest
Rate(%)

Maturity
Date

Redemption
methodUse ofproceeds

Remark

June
4,
2010

8,500

8,500

1.00

June 4,2015

Bulletpayment

Repaymentofborrowing

Unsecured
andunguaranteed

8,500

8,500

Note: This bond is equipped with special pari passu conditions among the specified investment corporation bonds.

(4) Status of Short-Term Investment Corporation Bonds
There are none applicable.

24

【6】Status of Acquisitions and Dispositions During the Period(1) Acquisitions and Dispositions of Real Estate, etc. and Asset Backed Securities
There are none applicable.
(2) Acquisitions and Dispositions of Others Assets
Other major assets besides real estate and asset backed securities stated above consist mostly of bankdeposits or bank deposits within assets held in trust.
(3) Research on Prices of Specified Assets
Transactions during the current period that require research on prices of specified assets stipulated by
Article 201 of the Investment Trusts and Investment Corporations Law are as follows.
① Real estate, etc
There are none applicable.
② Others
There are none applicable(4) Transaction with Interested Parties, etc. and Major Unitholders① Status of Transaction
There are none applicable.
② Amounts of Fees Paid, etc.
Fees paid to interested parties, etc. and major unitholders during the 15th fiscal period are as
follows.

Item

Total amount offees paid (A)(thousand yen)

Property management fees

388,378

Trust compensation
Asset custodian fees
Administrative service fees

17,626
8,385
64,806

Other fees paid

20,906

Transactions with interested parties, etc.
and major unitholders
Amount ofPaid topayment (B)(thousand yen)
Oji Real Estate Co., Ltd.
24,491
Sumitomo Mitsui Trust Bank, Limited.
1,250
Sumitomo Mitsui Trust Bank, Limited.
15,125
Sumitomo Mitsui Trust Bank, Limited.
8,385
Sumitomo Mitsui Trust Bank, Limited.
64,806
Sumitomo Mitsui Trust Bank, Limited.
1,102
Oji Real Estate Co., Ltd.
8
Sumitomo Mitsui Trust Bank, Limited.
59,833

Ratio against
total amount
B/A
(%)
6.3
0.3
85.8
100.0
100.0
5.3
0.0
41.6

Borrowing related expenses
143,961
Investment corporation bond
5,576 Sumitomo Mitsui Trust Bank, Limited.
625
11.2
related expenses
Other operating expenses
2,268 Sumitomo Mitsui Trust Bank, Limited.
848
37.4
Other non-operating expenses
4,574 Sumitomo Mitsui Trust Bank, Limited.
342
7.5
Other expenses related to5,620 Oji Real Estate Co., Ltd.
488
8.7
rent business
Note 1: Interested parties, etc. and major unitholders means interested parties, etc. of the asset manager which concluded
asset management entrustment contract with Top REIT as prescribed in Article 123 of the Enforcement Order of
the Investment Trust and Investment Corporations Law and major unitholders of the asset manager as defined in
Article 29-4, Paragraph 2 of the Financial Instruments and Exchange Act (Act No. 25, 1948. including theamendments thereafter). However, the table above also includes transactions with interested parties as provided in
the internal rules of the asset manager (including special purpose companies, etc. to which interested parties, etc.
have been entrusted with asset management). Please note that the parties to which payments were made during thecurrent period were Sumitomo Mitsui Trust Bank, Limited. and Oji Real Estate Co., Ltd.
Note 2: In addition to the fees paid described above, the amounts paid for repair and maintenance work placed withinterested parties, etc. during the 15th fiscal period are Oji Real Estate Co., Ltd. of ¥32,666 thousand.
Furthermore, the concerned payments include construction management fees.

(5) Status of Transactions with the Asset Manager Regarding Additional Work Conducted
Top REIT Asset Management Co., Ltd., the asset management company of Top REIT, does notconcurrently conduct any type 1 financial instruments business, type 2 financial instruments business,building lots and buildings transaction business, or real estate specified joint enterprise business, and has
no such transactions with Top REIT.
25

【7】Overview of Accounting(1) Assets, Liabilities, Principal and Profit / Loss
Please refer to accompanying “Ⅱ.Balance Sheets”, “Ⅲ.Statements of Income”, “Ⅳ.Statementsof Changes in Net assets(Unitholders’Equity”, “ Ⅴ .Notes to Financial Statements”and“Ⅵ.Statements of Cash Dividends Distributions”.
(2) Change in Depreciation Method
There are none applicable.
(3) Change in Valuation Methods of Real Estate, etc.
There are none applicable.
(4) Status of Investment Trust Beneficiary Certificates of Top REIT, etc.
There are none applicable.

【8】Others(1) Notice①General Meeting of Unitholders
The Fifth General Meeting of Unitholders of Top REIT was held on July 25, 2013. Agenda items
approved by general meeting of unitholders are as follows:First Item
Second Item

Agenda item
Partial amendments to the Articles ofIncorporation
Appointment of 1 Executive Officer

Third Item

Appointment of 2 substitute Executive
Officers

Fourth Item

Appointment of 2 Supervisory Directors

SummaryThis item was approved in accordance with the original
proposal.
This item was approved in accordance with the original
proposal and Junichi Sahara was elected as executive
officer with 2-year term from August 1, 2013.
This item was approved in accordance with the original
proposal, and Nobuhito Endo and Shusaku Ohashi
were elected as substitute executive officers.
This item was approved in accordance with the original
proposal, and Yasuyuki Kuribayashi and Kunio
Tsuneyama were elected as supervisory directors with
2-year term from August 1, 2013.

② Board of Directors
There was no execution or modification of significant agreements approved by the Board of
Directors of the Top REIT during the fifteenth fiscal period.

(2) Others
Unless otherwise stated, fractions less than the specified unit are rounded down to the nearest
specified unit for monetary amounts and rounded to the nearest specified unit for percentage figures.

26

II. Balance Sheets
Fourteenth Fiscal Period(Reference)(as of April 30, 2013)
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Deferred tax assets
Other
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Total property, plant and equipment
Intangible assets
Other intangible assets in trust
Other
Total intangible assets
Investments and other assets
Lease and guarantee deposits
Long-term prepaid expenses
Other
Total investments and other assets
Total noncurrent assets
Deferred assets
Investment corporation bond issuance costs
Total deferred assets
Total assets

27(Unit: thousand yen)Fifteenth Fiscal Period(as of October 31, 2013)

520,404
4,180,585
27,442
317,24916
1,830
5,047,529

903,3143,939,421
103,255
329,13617
6,586
5,281,731

1,150,996(194,278)
956,718
5,559(3,153)
2,406
17,235(10,927)
6,308
5,013
(1,341)
3,671
4,888,525
62,648,114(13,869,346)
48,778,767
697,808(280,312)
417,496
255,258(118,488)
136,770
250,945(126,500)
124,444
125,686,918
181,002,027

1,150,996(210,309)
940,687
5,559(3,280)2,278
20,309(11,393)
8,915
5,717
(1,724)
3,992
4,888,525
62,810,594(14,921,677)
47,888,916
697,890(298,860)
399,030
256,518(131,514)
125,003
260,147(141,218)
118,928
125,686,918
180,063,196

1,603
106
1,709

1,356
85
1,441

10,000706,676
211,855
928,531
181,932,269

10,000562,703
231,780
804,484
180,869,122

23,88423,884
187,003,684

18,372
18,372
186,169,227

Fourteenth Fiscal Period(Reference)(as of April 30, 2013)(Unit: thousand yen)Fifteenth Fiscal Period(as of October 31, 2013)

Liabilities
Current liabilities
259,047

Operating accounts payable
Current portion of long-term loans payable
Accounts payable – otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Other
Total current liabilities
Noncurrent liabilities
Investment corporation bondLong-term loans payable
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Deferred tax liabilities
Long-term advances received
Derivatives liabilities
Total noncurrent liabilities
Total liabilities

135,000
247,216
130,623702
20,742
726,380
4,693
1,524,405

101,351,746
102,876,152

8,500,000
83,362,500
101,016
4,873,415
19,293
122
27,94996,884,297
102,297,927

82,260,100

82,260,100

49,95849,95849,958
1,579,617
1,629,576
83,889,676

8,500,000
87,430,000
101,016
5,286,521
26,141
166
7,901

Net Assets
Unitholders’ equity
Unitholders’ capital
Surplus
Voluntary retained earnings
Reserve for reduction entry
Total Voluntary retained earnings
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

49,958
1,822,649
1,872,608
84,132,708(5,177)(5,177)
84,127,531
187,003,684

28

136,532
4,135,000
239,584
131,320859
61,670705,8422,821
5,413,630(18,376)(18,376)
83,871,299
186,169,227

III. Statements of Income(Unit: thousand yen)Fifteenth Fiscal Period

Fourteenth Fiscal Period(Reference)(From November 1, 2012
to April 30, 2013)(From May 1, 2013
to October 31, 2013)

Operating revenue
Rent revenue – real estate

5,370,000

5,125,553

Other lease business revenue

474,649

28,748

Total operating revenue

5,844,649

5,154,302

2,848,597

2,438,852

416,586

406,366

Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee

8,443

8,385

Administrative service fees

64,41364,806

Directors’ compensations

6,300

6,300

Audit fee

10,00010,000

Other operating expenses

42,77946,9403,397,120

2,981,651

2,447,529

2,172,650

Interest income

1,346

641

Reversal of dividends payable

1,093

825

Insurance income

234

10,304

Other

798

71

3,472

11,842

Interest expenses

438,278

406,843

Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance

42,03442,965

5,511

5,511

Borrowing related expenses

136,221

143,961

Total operating expenses
Operating income
Non-operating income

Total non-operating income
Non-operating expenses

5,377

4,639

627,423

603,922

Ordinary income

1,823,578

1,580,570

Income before income taxes

1,823,578

1,580,570

945

958

Other
Total non-operating expenses

Income taxes – current
Income taxes – deferred

0(0)Total income taxes

946

957

1,822,632

1,579,612

17

4

1,822,649

1,579,617

Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)

29

IV. Statements of Changes in Net Assets (Unitholders’ Equity)
Fourteenth Fiscal Period(Reference)(From November 1, 2012
to April 30, 2013)
Unitholders’ equity
Unitholders’ capital
Balance at the beginning of the period
Changes of items during the period
Total changes of items during the period
Balance at the end of current period
Surplus
Voluntary retained earnings
Reserve for reduction entry
Balance at the beginning of the period
Changes of items during the period
Total changes of items during the period
Balance at the end of current period
Total Voluntary retained earnings
Balance at the beginning of the period
Changes of items during the period
Total changes of items during the period
Balance at the end of current period
Unappropriated retained earnings (undisposed loss)
Balance at the beginning of the period
Changes of items during the period
Dividends from surplus
Net income
Total changes of items during the period
Balance at the end of current period
Total surplus
Balance at the beginning of the period
Changes of items during the period
Dividends from surplus
Net income
Total changes of items during the period
Balance at the end of current period
Total unitholders’ equity
Balance at the beginning of the period
Changes of items during the period
Dividends from surplus
Net income
Total changes of items during the period
Balance at the end of current period
Valuation and translation adjustments
Deferred gains or losses on hedges
Balance at the beginning of the period
Changes of items during the period
Net changes of items other than unitholders’equity (net)Total changes of items during the period
Balance at the end of current period
Total valuation and translation adjustments
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than unitholders’equity (net)30(Unit: thousand yen)Fifteenth Fiscal Period(From May 1, 2013
to October 31, 2013)82,260,100

82,260,100－
82,260,100

82,260,100

49,95849,958－49,958－49,95849,95849,958－49,958－49,9582,001,377

1,822,649(2,001,360)
1,822,632(178,727)
1,822,649(1,822,645)
1,579,612(243,032)
1,579,617

2,051,336

1,872,608(2,001,360)
1,822,632(178,727)
1,872,608(1,822,645)
1,579,612(243,032)
1,629,576

84,311,436

84,132,708(2,001,360)
1,822,632(178,727)
84,132,708(1,822,645)
1,579,612(243,032)
83,889,676(6,909)(5,177)

1,732(13,199)

1,732(5,177)(13,199)(18,376)(6,909)(5,177)

1,732(13,199)―

Total changes of items during the period
Balance at the end of current period
Total net assets
Balance at the beginning of the period
Changes of items during the period
Dividends from surplus
Net income
Net changes of items other than unitholders’ equity(net)
Total changes of items during the period
Balance at the end of current period

1,732(5,177)(13,199)(18,376)

84,304,526

84,127,531(2,001,360)
1,822,632(1,822,645)
1,579,612(13,199)

1,732(256,231)
83,871,299(176,995)
84,127,531

V. Notes to Financial Statements
Note 1. Premise of the Going Concern
Fourteenth Fiscal Period (Reference)
For the period from November 1, 2012
to April 30, 2013

Fifteenth Fiscal Period
For the period from May 1, 2013
to October 31, 2013

There are none applicable

There are none applicable

Note 2. Significant Accounting Policies

Classification

1.

Method ofDepreciation andAmortization of
Property, etc.

Fourteenth Fiscal Period(Reference)

Fifteenth Fiscal Period

For the period
from November 1, 2012
to April 30, 2013

For the period
from May 1, 2013
to October 31, 2013

(1) Property, Plant and Equipment (including trust (1) Property, Plant and Equipment (including trust
assets)assets)Adopts the straight-line method. Further, theAdopts the straight-line method. Further, theestimated useful lives of the major property, plant
estimated useful lives of the major property, plantand equipment are as follows.
and equipment are as follows.
Building
Structures
Machinery and equipment
Tools, furniture and fixtures2.

Treatment
Method ofDiffered Assets

2~59 years
2~54 years
3~15 years
2~12 years

Building
Structures
Machinery and equipment
Tools, furniture and fixtures

2~59 years
2~54 years
3~15 years
2~12 years(2) Intangible Assets
Adopts the straight-line method.

(2) Intangible Assets
Adopts the straight-line method.

(3) Long-Term Prepaid Expenses
Adopts the straight-line method.

(3) Long-Term Prepaid Expenses
Adopts the straight-line method.

Investment Corporation Bonds Issuance Costs
Amortized on the straight-line method over thematurity period of the bonds

Investment Corporation Bonds Issuance Costs
Amortized on the straight-line method over thematurity period of the bonds

31

3.

4.

Standard for
Posting ofIncome andExpenses

Method of treatment concerning Taxes on Property Method of treatment concerning Taxes on Property
and Equipment
and Equipment
Top REIT adopts the method of treating property
taxes, city planning taxes and depreciable asset
taxes, etc. on owned real estate, etc, as expenses
related to the rent business in the amountcorresponding to the management period out of
the assessed and determined taxation amount.
In addition, as for the acquisition of real estate or
beneficiary interests in trust in real estate, theadjustments equivalent to property tax for theacquired fiscal year paid to the transferor will be
included in acquisition costs, and thus will not berecorded as expenses in the corresponding period.
Furthermore, during the 14th fiscal period, theamount equivalent to the property taxes included
as the acquisition costs of real estate totaled 4,143
thousand yen

Top REIT adopts the method of treating property
taxes, city planning taxes and depreciable asset
taxes, etc. on owned real estate, etc, as expenses
related to the rent business in the amountcorresponding to the management period out of
the assessed and determined taxation amount.
In addition, as for the acquisition of real estate or
beneficiary interests in trust in real estate, theadjustments equivalent to property tax for theacquired fiscal year paid to the transferor will be
included in acquisition costs, and thus will not berecorded as expenses in the corresponding period.
Furthermore, during the 15th fiscal period, there
was no amount equivalent to the property taxes
included as the acquisition costs of real estate.

Method of Hedge (1) Method of Hedge Accounting on Deferred
Accounting
Hedge, etc.
Deferred hedge accounting is adopted.
However, special treatment is adopted for thosethat meet the requirements for special treatment
of interest rate swaps.
(2) Hedging Instruments and Hedged Items
Hedging instruments:
Interest rate swap transactions
Hedged items:
Borrowing interest rates(3) Hedging Policy
Top REIT enters into derivative transactions tohedge against risks stipulated in the Articles ofIncorporation in accordance with the financial
policy.
(4) Method for Assessing the Effectiveness of
Hedging
The effectiveness of hedging is assessed bycomparing the cumulative change in hedged
items and the cumulative change in hedging
instruments and then examining the ratio of theamount of change in both.

(1) Method of Hedge Accounting on Deferred
Hedge, etc.
Deferred hedge accounting is adopted.
However, special treatment is adopted for thosethat meet the requirements for special treatment
of interest rate swaps.
(2) Hedging Instruments and Hedged Items
Hedging instruments:
Interest rate swap transactions
Hedged items:
Borrowing interest rates(3) Hedging Policy
Top REIT enters into derivative transactions tohedge against risks stipulated in the Articles ofIncorporation in accordance with the financial
policy.
(4) Method for Assessing the Effectiveness of
Hedging
The effectiveness of hedging is assessed bycomparing the cumulative change in hedged
items and the cumulative change in hedging
instruments and then examining the ratio of theamount of change in both.

32

5.

Other Significant
Items
Fundamental toPreparing the
Financial
Statements(1) Accounting Treatment Method on Trust
Beneficiary Interest in Real Estate as Property in
Trust(1) Accounting Treatment Method on Trust
Beneficiary Interest in Real Estate as Property in
Trust

For the trust beneficiary interest in owned realestate, all accounts of assets and liabilities held in
trust as well as all income generated and expenses
incurred from the trust are recorded in theconcerned items accounts on the balance sheet
and statements of income and retained earnings,
respectively.

For the trust beneficiary interest in owned realestate, all accounts of assets and liabilities held in
trust as well as all income generated and expenses
incurred from the trust are recorded in theconcerned items accounts on the balance sheet
and statements of income and retained earnings,
respectively.

Furthermore, the following significant accounts
are separately stated in the balance sheet for
properties in trust recorded in relevant accounts.

Furthermore, the following significant accounts
are separately stated in the balance sheet for
properties in trust recorded in relevant accounts.

1.Cash and Deposits in trust
2.Building in trust, Structures in trust, machineryand equipment in trust, Tools, furniture andfixtures in trust, other properties in trust, landin trust, other intangible assets in trust
3.Land leasehold right in trust
4.Lease and guarantee deposits in trust
5.Tenant leasehold and security deposits in trust

1.Cash and Deposits in trust
2.Building in trust, Structures in trust, machineryand equipment in trust, Tools, furniture andfixtures in trust, other properties in trust, landin trust, other intangible assets in trust
3.Land leasehold right in trust
4.Lease and guarantee deposits in trust
5.Tenant leasehold and security deposits in trust(2) Accounting Treatment Method of Consumption
Taxes
National and local consumption taxes areaccounted with the consumption taxes excluded.
Furthermore, consumption taxes related toacquisition of properties, which has not been
deducted, is included in the acquisition costs of
the respective properties.

33(2) Accounting Treatment Method of Consumption
Taxes
National and local consumption taxes areaccounted with the consumption taxes excluded.
Furthermore, consumption taxes related toacquisition of properties, which has not been
deducted, is included in the acquisition costs of
the respective properties.

Note 3. Balance Sheet
Fourteenth Fiscal Period(Reference)

Fifteenth Fiscal Period

As of April 30, 2013

As of October 31, 2013

1. Asset Pledged as Collateral and Secured Liabilities

1. Asset Pledged as Collateral and Secured Liabilities

Assets pledged as collateral are as follows.

Assets pledged as collateral are as follows.

(Thousand yen)
2,335,576
78,4108,892,092
11,306,078

Building in trust
Structures in trust
Land in trust
Total(Thousand yen)
2,293,491
75,7508,892,092
11,261,334

Building in trust
Structures in trust
Land in trust
Total

Secured liabilities are as follows.

Secured liabilities are as follows.
(Thousand yen)

Tenant leasehold and security
deposits in trust
Total(Thousand yen)
Tenant leasehold and security
deposits in trust
Total

719,800
719,800

326,648
326,648

2. Minimum Total Net Asset Designated in Article 67-4 in the 2. Minimum Total Net Asset Designated in Article 67-4 in theInvestment Trust and Investment Corporations Law
Investment Trust and Investment Corporations Law
50,000 thousand yen

50,000 thousand yen

Note 4. Statement of Income and Retained Earnings(Thousand yen)

Fourteenth Fiscal Period(Reference)

Fifteenth Fiscal Period

For the period
From November 1, 2012
to April 30, 2013

For the period
From May 1, 2013
to October 31, 2013

A. Revenue related to rent business
Rental and parking revenue

5,107,387

4,824,773

Other lease revenue

262,613300,780

Other lease business revenue

472,947

23,107

Cancellation penalty received

1,701

5,640

5,844,649

5,154,302

Property management costs and fees

400,198

388,378

Utilities expenses

207,102244,453

Property-related taxes and dues

564,682

581,017

Non-life insurance expenses

9,446

10,225

522,669

75,513

1,121,794

1,115,879

22,704

23,3852,848,597

2,438,852

2,996,051

2,715,449

Total revenue related to rent business
B. Expenses related to rent business:

Repair expenses
Depreciation and amortization
Other
Total expenses related to rent business
C. Revenue and expenses of real estate rent business(A − B)

34

Note 5. Unitholders’ Equity
Fourteenth Fiscal Period(Reference)

Fifteenth Fiscal Period

For the period
From November 1, 2012
to April 30, 2013

For the period
From May 1, 2013
to October 30, 2013

Number of issuable investment units
Number of investment units issued and outstanding

2,000,000 units

2,000,000 units

155,000 units

155,000 units

Note 6. Tax Effect Accounting
1. Breakdown of deferred gains or losses by cause(Deferred Tax Assets)(Thousand yen)

Fourteenth Fiscal Period(Reference)

Fifteenth Fiscal Period

For the period
From November 1, 2012
to April 30, 2013

For the period
From May 1, 2013
to October 31, 2013

Current assets
Income taxes – current payable

16

17

2,686

9,534

2,702

9,551

Noncurrent assets
Deferred gains or losses on hedges
Total deferred tax assets(Deferred Tax Liabilities)(Thousand yen)

Fourteenth Fiscal Period(Reference)

Fifteenth Fiscal Period

For the period
From November 1, 2012
to April 30, 2013

For the period
From May 1, 2013
to October 31, 2013

Noncurrent liabilities
Reserve for reduction entry

28,827

28,827

Total deferred tax liabilities

28,827

28,827

26,125

19,276(Net deferred tax liabilities)

2. Breakdown by main items that caused differences between the effective statutory tax rate and the effective tax rate
after applying tax effect accounting.

Effective statutory tax rate

Fourteenth Fiscal Period(Reference)

Fourteenth Fiscal Period(Reference)

For the period
From November 1, 2012
to April 30, 2013

For the period
From May 1, 2013
to October 30, 201336.59%

36.59%(36.57%)(36.57%)

0.03%

0.04%

0.05%

0.06%

(Adjustment)
Deductible cash distributions
Other
Effective tax rate after applying tax effect accounting

35

Note 7. Leases
There are none applicable.

Note 8. Financial Instruments
Information on financial instruments for the periods ended April 30, 2013 and October 31, 2013 required pursuant
to the revised accounting standards are as follows:
1. Matters Concerning Status of Financial Instruments(1) Policy for financial instruments
Top REIT procures necessary funds through bank loans, issuance of investment corporation bonds andissuance of investment units, with the aim of contributing to steady growth of assets managed and stableearnings from a mid-and long-term view in accordance with the financial policy stated by the asset manager.
Although management of surplus funds by using financial instruments targeting securities, monetary claims,
etc. in accordance with the investment limitations stipulated in the Articles of Incorporation, as a general rule,the surplus funds are managed by placing them in deposit.
Furthermore, derivative transactions shall be limited to those for the purpose of hedging interest rate
fluctuation risk and other risks in accordance with the investment limitations.
(2) Financial Instruments, Their Risks and Risk Management System
Top REIT and Top REIT Asset Management, Co., Ltd. (TRAM), the asset management company of Top REIT,
strive for advancing risk management through regular inspection of the adequacy and effectiveness of risk
management systems. Top REIT and TRAM adopt the structure that inspects various risks regularly andreflects the results of inspection on the risk management plan and the management plans. In addition, Top
REIT and TRAM inspect risks and reflect the results of inspection in the decision-making in a timely manner
through various transactions.
Top REIT and TRAM strive for risk management based on the incorporation rules of the asset manager
concerning individual financial instruments and their risks, and risk management system.
Credit risk concerning deposit and derivative transaction
Deposits, especially time deposits of large amounts, are used for investment of Top REIT’s surplus funds,
these deposits are exposed to credit risk of bankruptcy of the depository financial institutions and others.
Top REIT minimizes the risk through such measures as limiting them to short term deposits and setting
the standard of credit rating for depository financial institutions and establishing rules for the ceilingamounts of deposit. Derivative transactions are exposed to credit risks of transaction parties, Top REIT
limits credit risks by setting the standard of credit rating in transaction financial institutions and putting
in place a structure to monitor deals, the amount of estimated values and credit status of transaction
partners.
② Market risk concerning loans
Proceeds from loans and investment corporation bonds are used mainly to acquire real estate properties
and refinance existing loans and bonds.
Loans, especially floating-rate borrowings, are exposed to market risks, Top REIT manages to hedge
against interest-raising risk by fixed-rate interests entered into interest swap transactions and setting thetarget of fixed- rate interest ratios. In addition, when procuring new loans and refinancing, Top REIT
inspects interest-raising risks and studies borrowing methods that minimize risks. For the hedging
instruments and hedged items, hedging policy, method for assessing the effectiveness of hedging, etc. inhedge accounting, please refer to “4. Methods of Hedge Accounting” under “Note 2. Significant
Accounting Policies” above.

①③

Liquidity risk concerning borrowings and tenant leasehold used in cash flow, etc
Borrowings, investment corporation bonds and tenant leasehold are exposed to liquidity risk at the timeof repayment of borrowing, redemption of investment corporation bonds and return of tenant leaseholds,
but Top REIT manages these risks by preparing monthly fund management plans. In addition, Top
REIT has established a management system for identifying liquidity risks regularly and at the time ofvarious transactions by calculating the total amount of payments assumed, which is arrived at by taking
the total amount of borrowings and tenant leaseholds, etc. that are to become due for repayment in thefiscal period and adding forecast dividends, and conducting a comparative inspection with liquidity on
hand that factors in the liquidity of portfolio real estate properties and other assets under management.

(3) Supplemental Explanation About the Fair Value of Financial Instruments
The fair value of financial instruments is based on the quoted market price, if applicable. When there is no36

quoted market price available, fair value is reasonably estimated. Certain assumptions are used for theestimation of fair value. Accordingly, the result of such estimation may change if different assumptions areused. Furthermore, the contractual amounts of derivative transactions stated in “2. Matters Concerning
Estimated Fair Value, etc. of Financial Instruments” below do not represent the market risk involved inthese derivative transactions.
2. Matters Concerning Estimated Fair Value, etc. of Financial Instruments
For the period from November 1, 2012 to April 30, 2013 (14th fiscal period) (Reference)
The following table includes the book value, fair value and valuation difference of financial instruments as ofApril 30, 2013. The financial instruments that are recognized to be extremely difficult to estimate the fair value
are not included in the table. (Please refer to Note 2).
(Thousand yen)
As of April 30, 2013
Book value(1)

Cash and deposits(2)

Fair value

Difference

520,404

520,404－

Cash and deposits in trust

4,180,585

4,180,585－

Total assets(3) Current portion of long-term loans
payable(4) Investment corporation bond

4,700,990

4,700,990－

135,000

136,5241,524

8,500,000

8,562,050

62,05087,430,000

87,925,986

495,986

75,87075,870－96,140,870

96,700,431

559,560(7,901)(7,901)－(7,901)(7,901)－(5) Long-term loans payable(6) Tenant leasehold and security
deposits in trust
Total liabilities
Derivative transactions (*1)
Applied hedge accounting
Total derivative transactions(*1): The value of assets and liabilities arising from derivative transactions is shown in net value, with amount inparentheses representing the net liability position.

(Note1) Methods for calculating the fair value of financial instruments and matters related to derivativetransactions
Assets(1) Cash and deposits, and(2) Cash and deposits in trust
As these are settled within a short period of time, the fair value is approximately the same as thebook value and is thus stated at that book value.
Liabilities(3) Current portion of long-term loans payable, and(5) Long-term loans payable
For long-term loans payable with floating interest rates, the fair value would be almost equal to thebook value because such loans reflect the market interest rate in a short-term period and thus are
based on the concerned book value.
For fixed-rate long-term loans payable, the fair value is the present value calculated by discounting
he sum total amount of its principal and interest payment on a rate reasonably estimated to be
applicable to similar long-term loans.
Furthermore, the fair value of long-term loans payable that qualifies for the special treatment ofinterest-rate swap (refer to Derivative Transactions below) is the present value calculated by thediscounted sum total of its principal and interest payments net calculated from the interest-rate
swap on a rate reasonably estimated to be applicable to similar fixed-rate long-term loans.
(4) Investment corporation bonds
The fair value of investment corporation bonds issued by Top REIT is based on reference trading
statistics of the Japan Securities Dealers Association.

37

(6) Tenant leasehold and security deposits in trust
As these are settled within a short period of time, the fair value is approximately the same as thebook value and is thus stated at that book value.
Derivative Transactions
Hedge accounting applied
The following are the contract values or values corresponding to the principal amounts as stipulated
by contracts for derivative transactions as of date of settlement for each hedge accounting method
applied.
(Thousand yen)Hedge
accounting
methodPrincipal
treatment
methodType of
Hedge item
derivativetransactions
Interest rate swap Long-term
Pay fixed /loans
payablereceive floating

SpecialInterest rate swap Long-term
treatment of
Pay fixed /loansinterest-rate receive floating
payableswaps

Contract amountMore than
one year
8,500,000

Fair
value

8,500,000

18,700,000 18,700,000

Method of calculating
the fair value

Calculated on value(7,901) provided bycounterparty financial
institution(*2)―(*2) Since the derivative transactions accounted by special treatment of interest-rate swaps are treated as one transaction
together with long-term loans payable which is the hedged item, the fair value is included in the fair value of the said
long-term loans payable (refer to Note 1(5)).

(Note 2) Financial instruments which are recognized to be extremely difficult to estimate the fair value of are as
follows(Thousand yen)
Item
Tenant leasehold and security deposits in trust (*3)
TotalCarrying value
5,210,650
5,210,650(*3) Tenant leasehold and security deposits in trust which excluded the above (6) are not subject to fair value disclosure
because arriving at the fair value is extremely difficult due to the fact that the contract termination period, which is therepayment date, is difficult to reasonably estimate as leases may be cancelled, renewed or re-signed even if a lease term
is set in the lease contract, making a reasonable estimate of future cash flows difficult.

(Note 3) Redemption Schedule amount for Monetary Claims after the end of the period(Thousand yen)
Due within one year
520,404
4,180,585
4,700,990

Cash and deposits
Cash and deposits in trust
Total(Note 4) Repayment Schedule amount for Investment Corporation Bonds and Long-Term Loans Payable after
the end of the period(Thousand yen)
Due within
one year

Due after
one to twoyears

Due after
two tothree years

Due after
three tofour yeas

Due after
four to fiveyears

Due after
five years

Investment
corporation
bonds

－

－

8,500,000－－－

Long-term
loans
payable135,000

4,135,000

33,610,000

23,930,000

25,755,000

－

Total

135,000

4,135,000

42,110,000

23,930,000

25,755,000－

38

For the period from May 1, 2013 to October 31, 2013 (15th fiscal period)
The following table includes the book value, fair value and valuation difference of financial instruments as of
October 31, 2013. The financial instruments that are recognized to be extremely difficult to estimate the fairvalue are not included in the table. (Please refer to Note 2).
(Thousand yen)

As of October 31, 2013
Book value(1)

Cash and deposits(2)

Cash and deposits in trust

Total assets
Current portion of long-term loans
payable(4) Investment corporation bond
(3)

(5)
(6)

Long-term loans payable
Tenant leasehold anddeposits in trust
Total liabilities

security

Fair value

Difference

903,314903,314－3,939,421

3,939,421－

4,842,736

4,842,736－

4,135,000

4,177,692

42,6928,500,000

8,557,545

57,54583,362,500

83,630,591

268,091

781,889

781,889－

96,779,389

97,147,717

368,328(27,949)(27,949)－(27,949)(27,949)－

Derivative transactions (*1)
Applied hedge accounting
Total derivative transactions(*1): The value of assets and liabilities arising from derivative transactions is shown in net value, with amount inparentheses representing the net liability position.

(Note1) Methods for calculating the fair value of financial instruments and matters related to derivativetransactions
Assets(1) Cash and deposits, and(2) Cash and deposits in trust
As these are settled within a short period of time, the fair value is approximately the same as thebook value and is thus stated at that book value.
Liabilities(3) Current portion of long-term loans payable, and(5) Long-term loans payable
For long-term loans payable with floating interest rates, the fair value would be almost equal to thebook value because such loans reflect the market interest rate in a short-term period and thus are
based on the concerned book value.
For fixed-rate long-term loans payable, the fair value is the present value calculated by discounting
he sum total amount of its principal and interest payment on a rate reasonably estimated to be
applicable to similar long-term loans.
Furthermore, the fair value of long-term loans payable that qualifies for the special treatment ofinterest-rate swap (refer to Derivative Transactions below) is the present value calculated by thediscounted sum total of its principal and interest payments net calculated from the interest-rate
swap on a rate reasonably estimated to be applicable to similar fixed-rate long-term loans.
(4) Investment corporation bonds
The fair value of investment corporation bonds issued by Top REIT is referential figure disclosedby the financial data provider.
(6) Tenant leasehold and security deposits in trust
As these are settled within a short period of time, the fair value is approximately the same as thebook value and is thus stated at that book value.
Derivative Transactions

39

Hedge accounting applied
The following are the contract values or values corresponding to the principal amounts as stipulated
by contracts for derivative transactions as of date of settlement for each hedge accounting method
applied.
(Thousand yen)Hedge
accounting
methodPrincipal
treatment
methodType of
Hedge item
derivativetransactions
Interest rate swap Long-term
Pay fixed /loans
payablereceive floating

SpecialInterest rate swap Long-term
treatment of
Pay fixed /loansinterest-rate receive floating
payableswaps

Contract amountMore than
one year
8,500,000

Fair
value

Method of calculating
the fair value

Calculated on value
8,500,000 (27,949) provided bycounterparty financial
institution

18,700,000 16,700,000

(*2)

―

(*2) Since the derivative transactions accounted by special treatment of interest-rate swaps are treated as one transaction
together with long-term loans payable which is the hedged item, the fair value is included in the fair value of the said
long-term loans payable (refer to Note 1(5)).

(Note 2) Financial instruments which are recognized to be extremely difficult to estimate the fair value of are as
follows(Thousand yen)
Item
Tenant leasehold and security deposits in trust (*3)
TotalCarrying value
4,091,526
4,091,526(*3) Tenant leasehold and security deposits in trust which excluded the above (6) are not subject to fair value disclosure
because arriving at the fair value is extremely difficult due to the fact that the contract termination period, which is therepayment date, is difficult to reasonably estimate as leases may be cancelled, renewed or re-signed even if a lease term
is set in the lease contract, making a reasonable estimate of future cash flows difficult.

(Note 3) Redemption Schedule amount for Monetary Claims after the end of the period(Thousand yen)
Due within one year
903,3143,939,421
4,842,736

Cash and deposits
Cash and deposits in trust
Total(Note 4) Repayment Schedule amount for Investment Corporation Bonds and Long-Term Loans Payable after
the end of the period(Thousand yen)
Due after
Due after
Due after
Due after
Due within
Due after
one to two
two tothree tofour to five
one yearfive years
years
three years
four yeas
years
Investment
corporation
bonds

―

8,500,000

―

―

―

―

Long-term
loans
payable4,135,000

10,210,000

26,535,000

38,362,500

8,255,000

―

Total

4,135,000

18,710,000

26,535,000

38,362,500

8,255,000―

40

Note 9. Investment and Rental Properties
Top REIT owns in the portfolio certain office buildings (including land), etc. located in Tokyo and other areas
which are for lease.
The following table is the amount posted on the balance sheet, amounts of increase (decrease) during the previous
period and fair value of these investment and rental properties as of the settlement date.

For the period from November 1, 2012 to April 30, 2013 (14th fiscal period) (Reference)(Thousand yen)Book value
Balance at the
beginning of the period
180,446,329

Change during the period
557,301

Balance at the end of
the period
181,003,631

Fair value at end of theperiod172,360,000(Note 1) Summary of corresponding investment and rental properties are presented in “3-Status of Investment Assets.”(Note 2) Book value represents the acquisition cost less accumulated depreciation and amortization.
(Note 3) Of the amounts of increase (decrease) during the current period for investment and rental properties, the amount of
increase is primarily attributable acquisition of MEL Building (1,235,619 thousand yen), and decrease is mainly
due to the depreciation and amortization.
(Note 4) Fair value at the end of the period is the appraisal value as appraised by an outside real estate appraiser.

Furthermore, loss and profit concerning investment and rental properties for fiscal period ended April 30, 2013 ispresented in “Note 4. Statement of Income and Retained Earnings.”

For the period from May 1, 2013 to October 31, 2013 (15th fiscal period)(Thousand yen)Book value
Balance at the
beginning of the period
181,003,631

Change during the period(939,077)

Balance at the end of
the period
180,064,553

Fair value at end of theperiod170,470,000(Note 1) Summary of corresponding investment and rental properties are presented in “3-Status of Investment Assets.”(Note 2) Book value represents the acquisition cost less accumulated depreciation and amortization.
(Note 3) Of the amounts of increase (decrease) during the current period for investment and rental properties, the amount of
increase is primarily attributable to capital expenditures, and decrease is mainly due to the depreciation andamortization.
(Note 4) Fair value at the end of the period is the appraisal value as appraised by an outside real estate appraiser.

Furthermore, loss and profit concerning investment and rental properties for fiscal period ended October 31, 2013 ispresented in “Note 4. Statement of Income and Retained Earnings.”

41

Note 10. Transactions with Interested Parties
For the period from November 1, 2012 to April 30, 2013 (14th fiscal period) (Reference)

Attribution

Company
nameInterested
Party

Japan
Trustee
Services
Bank,Ltd.

Interested
Party and
AssetscustodianRatio ofBusiness investment units
description held among totalor
number ofoccupation investment units(Note 1)

Type oftransaction

25.15%(Note 3)

Rent revenue,
etc(Note 4)

Banking

Sumitomo
Mitsui
Trust
Banking
Bank,
Limited.

Amount oftransaction(thousand yen)
(Note 2)Item in balance
sheetsOperatingaccounts
531,391 receivable

6,936

Advances
received

68,255Administrative
service fee

64,413 Accounts
payable-otherBrokerage fee

10,000Trust fee

15,125

Other fees paid

Operating
1,429 accounts
payableProperty
management
expenses

1,250

Other
non-operating
2.04% expenses

Borrowing
related expenses

Investment
corporationbond related
expenses

Balance atperiod end(thousand yen)
(Note 2)

57,921―Long-term
prepaid
342 expenses

1,140

Prepaid
expenses

720

Long-term
prepaid
56,662 expenses

227,315

Prepaid
expenses

96,251

Accounts
payable-other53

623 Investment
corporationbond issuance
expenses

2,429(Note 1): Ratio of investment units held is rounded down to the second decimal place.
(Note 2): Consumption tax, etc. are excluded from the amounts of transactions. Consumption tax, etc. are included in
the balances at end period, but excluded only for investment corporation bond issuance costs.
Furthermore, transaction terms are determined based on prevailing market conditions.
(Note 3): The described above ratio was held to trust accounts. The ratio is rounded down to the second decimal place.
(Note 4): The described above rent revenues, etc. include rents and common service revenue as well as related utilities
revenue, additional facilities use revenue and parking revenue.

42

For the period from May 1, 2013 to October 31, 2013 (15th fiscal period)
Attribution

Company
nameInterested
Party

Japan
Trustee
Services
Bank,Ltd.

Ratio ofBusiness investment units
description held among totalor
number ofoccupation investment units(Note 1)

Type oftransaction

29.24%(Note 3)

Rent revenue,
etc(Note 4)

Banking

6,722

Advances
received

68,255

Trust fee

15,125

Other fees paid

1,102 Operating
accounts
payable
1,250

Other
2.05% non-operating
expenses

Borrowing
related expenses

Investment
corporationbond related
expenses

Balance atperiod end(thousand yen)
(Note 2)

Operatingaccounts
512,902 receivable

64,806 Accounts
payable-other

Other operating
expensesSumitomo
Mitsui
Trust
Banking
Bank,
Limited.

Item in balance
sheetsAdministrative
service fee

Property
management
expenses

Interested
Party and
AssetscustodianAmount oftransaction(thousand yen)
(Note 2)57,554―848 Accounts
payable-other―

Long-term
prepaid
342 expenses

780

Prepaid
expenses

720

Long-term
prepaid
59,833 expenses

179,536

Prepaid
expenses

95,905

Accounts
payable-other54

625 Investment
corporationbond issuance
expenses

1,868(Note 1): Ratio of investment units held is rounded down to the second decimal place.
(Note 2) Consumption tax, etc. are excluded from the amounts of transactions. Consumption tax, etc. are included in thebalances at end period, but excluded only for investment corporation bond issuance costs. Furthermore, transaction
terms are determined based on prevailing market conditions.
(Note 3) The described above ratio was held to trust accounts.
(Note 4) The described above rent revenues, etc. include rents and common service revenue as well as related utilities
revenue, additional facilities use revenue and parking revenue.

43

Note 11. Per Unit Information
Fourteenth Fiscal Period (Reference)

Fifteenth Fiscal Period

For the period
from November 1, 2012
to April 30, 2013

For the period
from May 1, 2013
to October 30, 2013

Net Assets per Unit

542,758 yen

Net Assets per Unit

541,105yen

Net Income per Unit

11,759 yen

Net Income per Unit

10,191yen

Diluted net income per unit has not been presented since
there are no outstanding warrants or convertible bonds.

Diluted net income per unit has not been presented since
there are no outstanding warrants or convertible bonds.

(Note)The per unit amounts are rounded to the nearest yen.

(Note)

Base of calculation of net income per unit is as follows:
Fourteenth Fiscal Period (Reference)

Fifteenth Fiscal Period

For the period
from November 1, 2012
to April 30, 2013

For the period
from May 1, 2013
to October 30, 2013

Net Income (thousand yen)

1,822,632

1,579,612

Amounts not attributable to ordinary unitholders(thousand yen)―－

Net income attributable to ordinary investment
unit (thousand yen)

1,822,632

1,579,612

Weighted-average number of units during theperiod (unit)

155,000

155,00044

Note 12. Significant Subsequent Events
Fourteenth Fiscal Period (Reference)

Fifteenth Fiscal Period

For the period
from November 1, 2012
to April 30, 2013

For the period
from May 1, 2012
to October l 30, 2013

There are none applicable.

Issuance of new investment units
Top REIT resolved on issuance of new investment units,
as described below, at its board of directors meetings
held on November 7 and November 18, 2013. Payment
was completed on November 25, 2013 for issuance of
new investment units through public offering, and on
December 13, 2013 for third-party allotment,
respectively.
(Issuance of New Investment Units through Public Offering)Number of investment units to
20,000 units
be offered:
Issue price (offer price):
438,750 yen per unit
Total issue price (total offer
8,775,000,000 yen
price):
Amount to be paid in
423,000 yen per unit
(purchase price):
Total amount to be paid in
8,460,000,000 yen(total purchase price):
Payment date:November 25, 2013
(Third-Party Allotment)
Number of investment
units to be offered:Amount to be paid in(purchase price):
Total amount to be paidin(totalpurchaseprice) :Payment date:
Allottee:

1,000 units
423,000 yen per unit
423,000,000 yen
December 13, 2013
Daiwa Securities, Co. Ltd.

(Use of funds)
Top REIT allocated the proceeds from the public
offering to part of the funds for the acquisition of
specified assets. The proceeds from the issuance of new
investment units by way of third-party allotment will beallocated to funds for the future acquisition of specified
assets or for the repayment of loans.

45VI. Statements of Cash Dividend Distributions

Classification

I. Unappropriated retained earnings
II. Total Amount of Dividends(Dividend per unit)
III. Retained earnings brought forward

Fourteenth Fiscal Period

Fifteenth Fiscal Period(Reference)
For the period
from November 1, 2012
to April 30, 2013
Amount(yen) (Note 1)

For the period
from May 1, 2013
to October 31, 2013
Amount(yen) (Note 2)

1,822,649,910
1,822,645,000(11,759)
4,910

1,579,617,747
1,579,605,000(10,191)
12,747Note1: In accordance with the “cash distribution policy” stipulated in Article 34 of the Articles of Incorporation, the amounts ofdividends are limited to the amounts of income. The article also stipulates the policy that “Top REIT shall distribute amountin excess of the amount equivalent to 90% of its distributable profits as stipulated in Article 67-15 of the Special Taxation
Measures Law.” Based on these policies, Top REIT decided on a total distribution of 1,822,645,000 yen as distribution ofincome for the period. This is the maximum value arrived at when the number of units issued and outstanding (155,000
units) is multiplied by an integer, within the limit of the balance of unappropriated retained earnings for the fiscal period.
Furthermore, Top REIT does not make cash distributions in excess of the profit as stipulated in Article 34-2 of the
Articles of Incorporation.
Note2: In accordance with the “cash distribution policy” stipulated in Article 34 of the Articles of Incorporation, the amounts ofdividends are limited to the amounts of income. The article also stipulates the policy that “Top REIT shall distribute amountin excess of the amount equivalent to 90% of its distributable profits as stipulated in Article 67-15 of the Special Taxation
Measures Law.” Based on these policies, Top REIT decided on a total distribution of 1,579,605,000 yen as distribution ofincome for the period. This is the maximum value arrived at when the number of units issued and outstanding (155,000
units) is multiplied by an integer, within the limit of the balance of unappropriated retained earnings for the fiscal period.
Furthermore, Top REIT does not make cash distributions in excess of the profit as stipulated in Article 34-2 of the
Articles of Incorporation.

Disclaimer:
The accompanying English financial information, comprising of balance sheets, statements of retained
earnings, statements of changes in unitholders’ capital, notes to financial information and statements of cash
dividends, have been translated from the Japanese financial statements of Top REIT prepared in accordancewith the Law Concerning Investment Trusts and Investment Corporations of Japan.
Under Article 130 of the Law Concerning Investment Trusts and Investment Corporations of Japan, theJapanese financial statements for the fiscal period ended October 31, 2013 have been audited by KPMG AZSA,
in accordance with auditing standards generally accepted in Japan. However, this English translation of theJapanese language report of independent auditors is not attached herein because the accompanying English
translation of balance sheets, statements of retained earnings, statements of changes in unitholders’ capital,
notes to financial information and statements of cash dividends are unaudited.

46

VII. Statements of Cash Flows (Reference Information)(Unit: thousand yen)
Fourteenth Fiscal Period(From November 1, 2012
to April 30, 2013)
Net cash provided by (used in) operating activities
Income before income taxes
Depreciation and amortization
Amortization of trademark
Amortization of investment corporation bond issuance costs
Interest income and interest on securities
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable – other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in advances received
Decrease (increase) in long-term prepaid expenses
Other, net
Subtotal

Fifteenth Fiscal Period(From May 1, 2013 –to October 31, 2013)

1,823,578
1,121,794
21
5,511(1,346)
480,3128,398(55,845)
32,816(7,612)(81,983)(219,570)(93,389)(19,154)
2,993,532

1,580,570
1,115,879
21
5,511
(641)
449,809(75,812)(11,887)(9,835)(1,280)40,927(20,537)
143,973(31,711)
3,184,987

1,346(523,755)(931)
2,470,191

641(449,111)(801)
2,735,714

Net cash provided by (used in) investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Repayments of tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits in trust
Repayments of tenant leasehold and security deposits in trust
Net cash provided by (used in) investing activities(192,000)
192,000(4,642)(1,519,956)(24,885)
251,829(477,907)(1,775,561)

－
－
(549)
(290,168)―
95,109(508,214)(703,823)

Net cash provided by (used in) financing activities
Increase in short-term loans payable
Decrease in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Dividends paid
Net cash provided by (used in) financing activities

2,800,000(2,800,000)
18,330,000(19,167,500)(2,001,360)(2,838,860)－－－(67,500)(1,822,645)(1,890,145)

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period(2,144,229)
6,845,219
4,700,990

141,745
4,700,990
4,842,736

Interest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities

47

Note Concerning Significant Accounting Policy [Reference Information]

Classification

Scope offunds instatementsof cash flows

Fourteenth Fiscal Period
For the period
from November 1, 2012
to April 30, 2013
Funds (cash and cash equivalents) in statements ofcash flows consist of cash on hand and cash in trust,deposits placed with banks and deposits in trust thatcan be withdrawn at any time, and short-term
investments that are highly liquid and easily
convertible to cash, have a low risk of pricefluctuation and mature within three months from thedate of purchase.

Fifteenth Fiscal Period
For the period
from May 1, 2013
to October 31, 2013
Funds (cash and cash equivalents) in statements ofcash flows consist of cash on hand and cash in trust,deposits placed with banks and deposits in trust thatcan be withdrawn at any time, and short-term
investments that are highly liquid and easily
convertible to cash, have a low risk of pricefluctuation and mature within three months from thedate of purchase.

Note Concerning Statements of Cash Flows [Reference Information]*1.

Fourteenth Fiscal Period
For the period
from November 1, 2012
to April 30, 2013
Reconciliation of cash and cash equivalents at end of
period and amount of items presented in balance
sheetsFifteenth Fiscal Period
For the period
from May 1, 2013
to October 30, 2013
*1. Reconciliation of cash and cash equivalents at end of
period and amount of items presented in balance
sheets(as of April 30, 2013)(Unit: thousand yen)
520,404
4,180,585
4,700,990

Cash and deposits
Cash and deposits in trust
Cash and cash equivalents

Cash and deposits
Cash and deposits in trust
Cash and cash equivalents(as of October 31, 2013)(Unit: thousand yen)903,3143,939,421
4,842,736

Stock and Unitholders Information
第10期 （yen）

TOP REIT Trading Volume

TOP REITTSE REIT Index

TOPIX（unit）
第10期

1,000,000

10,000thth

15 FP 16 FP
900,000
8,000
800,000

700,000

6,000

600,000
4,000

500,000

400,000
2,000
300,000

200,000

0
Mar
2006

Oct
2006

Apr
2007

Oct
2007

Apr
2008

Oct
2008

Apr
2009

Oct
2009

Apr
2010

48

Oct
2010

Apr
2011

Oct
2011

Apr
2012

Oct
2012

Apr
2013

Oct
2013

No. of Units Held
Financial institutions (incl. securities firms):106 [1.4%]
Other domestic corporations:
154 [2.0%]
Overseas corporations / individuals:
108 [1.4%]

13th Fiscal
PeriodTotal number ofunitholders at
end ofperiod:7,823

Individuals / other 7,455[95.3%]
Financial institutions (incl. securities firms): 98 [1.2%]
Other domestic corporations:
151 [1.9%]
Overseas corporations / individuals:
113 [1.4%]

14th Fiscal
PeriodTotal number ofunitholders at
end ofperiod:7,872

Individuals / other 7,510[95.4%]
Financial institutions (incl. securities firms): 93[1.2%]
Other domestic corporations:
150 [2.0%]
Overseas corporations / individuals:
130 [1.7%]

15th Fiscal
PeriodTotal numberof unitholders
at end ofperiod:7,590

Individuals / other 7,217[95.1%]

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

No. of Unitholders
13th Fiscal
PeriodTotal number ofunits issued andoutstanding at
end of period:
155,000
14th Fiscal
PeriodTotal number ofunits issued andoutstanding at
end of period:
155,000

15th Fiscal
PeriodTotal number ofunits issued andoutstanding at
end of period:
155,000

0%

Other domestic corporations:
13,572 [8.8%]

Individuals / other:
24,392 [15.7%]

Overseas
corporations /individuals:
22,600 [14.6%]

Financial institutions (incl. securities firms):
94,436 [60.9%]

Individuals / other:
24,296 [15.7%]

Other domestic corporations:
12,250 [7.9%]
Overseas
corporations /Financial institutions (incl. securities firms):
individuals:
101,431 [65.4%]
17,023 [11.0%]

Individuals / other
23,164 [14.9%]

Other domestic corporations:
12,143[7.8%]
Overseas
Financial institutions (incl. securities firms):
corporations /individuals:
104,319 [67.3%]
15,374[9.9%]

10%

20%

30%

40%

50%

49

60%

70%

80%

90%

100%