Asset Management Report for 15th Period(Semi-Annual Report for 15th Period)
From July 1, 2013 to December 31, 2013

I. Greetings
To Our Unitholders
We would like to express our sincere gratitude for your continued support of Japan Excellent, Inc.
(JEI) and Japan Excellent Asset Management Co., Ltd.
My name is Hidehiko Ogawa and I was inaugurated as the Executive Director of JEI in November
2013 and as the President of Japan Excellent Asset Management Co., Ltd. in March this year. JEI
will continue to pursue both stability and growth of revenues and expansion of asset size centeringon high-spec, large-scale buildings in central Tokyo in an aim to maximize unitholders’ value in linewith the product characteristics of a REIT that seeks stable medium- to long-term growth.
We hereby report the financial results of JEI for the 15th period (from July 1, 2013 to December 31,2013). JEI recorded total revenues of 8,850 million yen and net income of 2,774 million yen. The
distribution per unit for the period was 12,334 yen, surpassing the previous period.
During the period, the tenant departure rate decreased at owned properties and vacancies were filled
up, resulting in an overall portfolio occupancy rate of 98.7% at the end of the period. We believe
this is due to the close collaboration with the property management companies and focus on leasing
activities.
Moreover, in January this year JEI implemented its third public offering in three years. It alsoacquired a total of 18.5 billion yen of assets centering on HAMARIKYU INTERCITY, a relatively
new and large-scale property in central Tokyo acquired from a sponsor, and external growthcontinues to be steady.
About Future Asset Management
In the office building leasing market, the balance of supply and demand of offices is gradually
recovering backed by the economic recovery and expectations for improvement in corporate
performance, and the vacancy rate continues to be on a downward trend.
With this perspective, JEI will strengthen coordination with the property management companies
more than ever before and endeavor to secure stable occupancy and maximize profitability of theportfolio over the medium- to long-term. At the same time, we will pursue opportunities to invest in
excellent real estate properties for continued growth of the portfolio in view of achieving theimmediate target of 300 billion yen and even greater expansion in asset size.
In terms of finance, we will continue our efforts in conducting stable financial operations bypromoting conversion to fixed interest rates in preparation for the risk of interest rate rises, as well
as striving to diversify maturity dates and minimize borrowing costs.
In addition, JEI remains committed to strict adherence to the Financial Instruments and Exchange
Act and other laws and regulations to promote compliance, as well as to accurate and easy-tounderstand disclosure of the status of our operations and asset management to our unitholders.
We kindly ask for your continued understanding and support.
Hidehiko Ogawa
Executive Director, Japan Excellent, Inc.
President, Japan Excellent Asset Management Co., Ltd.
Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

2II. Asset Management Report
1. Outline of asset management operation(1) Operating results and financial position of the Investment Corporation
11th Period 12th Period 13th Period
14th Period 15th Period
July 1, 2011
January 1, July 1, 2012 to January 1, July 1, 2013 toto December 2012 to June December 31, 2013 to June December 31,
2013
31, 2011
30, 2012
2012
30, 2013

Fiscal period(Millions of
yen)

7,085

7,740

7,599

8,418

8,850

(Rental revenues)(Millions of
yen)

7,085

7,587

7,597

8,409

8,848

Operating expenses(Millions of
yen)

4,116

4,400

4,427

4,871

5,140

(Millions of
yen)

3,645

3,901

3,950

4,350

4,605

Operating income(Millions of
yen)

2,969

3,340

3,172

3,546

3,709

Ordinary income(Millions of
yen)

2,237

2,435

2,310

2,589

2,775

Net income(Millions of
yen)

2,236

2,434

2,309

2,598

2,774

Total assets(Millions ofyen)

227,249

228,818

228,020

257,613257,901

(8.6)

(0.6)

(－0.3)(12.9)(0.1)

104,338

104,537

104,545

120,683

120,713

(0.0)

(0.1)

(0.0)

(15.4)(0.0)(Millions ofyen)

102,052

102,052

102,052

117,901

117,901

Outstanding investment units(units)188,650

188,650

188,650

224,950

224,950

Net assets per unit (Note 2)(yen)

553,081554,134

554,175

107,297

107,324

Net income per unit (Note 3)(yen)

11,853

12,906

12,241

2,376

2,466

(Millions of
yen)

2,236

2,301

2,309

2,744

2,774

(yen)

11,854

12,20012,242

12,200(2,440)12,334(2,466)(yen)

11,854

12,20012,242

12,200(2,440)12,334(2,466)(Of this, distribution in excess of earnings
per unit after split)(Note 4)

(yen)

(－)

(－)

(－)

(－)
(－)

(－)
(－)

Return on assets (Note 5)

(%)

1.0

1.1

1.0

1.1

1.1

(%)

(2.0)

(2.1)

(2.0)

(2.2)

(2.1)

(%)

2.1

2.3

2.2

2.3

2.3

(Annualized rate)

(%)

(4.3)

(4.7)

(4.4)

(4.7)

(4.6)

Capital ratio (Note 7)

(%)

45.9

45.7

45.8

46.8

46.8

(%)

(－4.0)(－0.2)

(0.1)

(1.0)

(-0.0)

(%)

100.0

94.5

100.0

105.6

99.9

Number of investment properties(properties)

23

24

24

28

28

Number of tenants(tenants)

124

136

134

152

157

Revenues(Property operating expenses)(Period-on-period change)(Note 1)
Net assets(Period-on-period change)(Note 1)
Unitholders’ capital

Total distribution(%)(Millions of
yen)
(%)

Distribution per unit
(Distribution per unit after split)(Note 4)

(Profit distribution per unit)(Of this, profit distribution per unit after
split)(Note 4)(Distribution in excess ofearnings per unit)(Annualized rate)
Return on equity (Note 6)(Period-on-period change)
Payout ratio (Note 8)

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

3

Total leasable space(㎡)

262,464

266,981

266,915

302,505

302,505

Occupancy rate

(%)

93.8

94.7

94.0

97.1

98.7

Depreciation(Millions of
yen)

1,156

1,260

1,284

1,433

1,504

Capital expenditure(Millions of
yen)

357

393

283

572

775

Net operating income (NOI)(Note 9)Funds from operation (FFO) per
unit (Note 10)
FFO multiples (Note 11, 12)
Debt service coverage ratio(DSCR) (Note 13)(Millions of
yen)

4,595

4,946

4,932

5,493

5,747

(yen)

17,982

18,78019,050

3,584

3,804

(times)

8.4

10.5

12.7

15.4

16.3

(times)

4.3

4.2

4.0

4.4

4.4

112,800

113,800

113,300

125,400

125,400

Interest-bearing debt

(Millions ofyen)

Loan-to-value (Note14)

(%)

49.6

49.7

49.7

48.7

48.6

Number of days in operation(days)

184

182

184

181

184

(Note 1)
(Note 2)

Period-on-period change of total assets and net assets are rounded down to one decimal place.
A five-for-one split of investment units was implemented with January 1, 2014 as the effective date. Net assets per unit iscalculated assuming the split of investment units was implemented at the beginning of the fourteenth period.

(Note 3)

Net income per unit is calculated by dividing the net income by the weighted-average number of units outstanding during
the six months period. Moreover, a five-for-one split of investment units was implemented with January 1, 2014 as theeffective date. Net income per unit is calculated assuming the split of investment units was implemented at the beginningof the fourteenth period.

(Note 4)A five-for-one split of investment units was implemented with January 1, 2014 as the effective date. Distribution per unit
after spit, of this, profit distribution per unit after split and of this, distribution in excess of earnings per unit after split arecalculated assuming the split of investment units was implemented at the beginning of the fourteenth period (figures arerounded down to the nearest whole number).

(Note 5)Return on assets = Ordinary income / [(Period beginning total assets) + (Period end total assets) / 2] × 100 (The ratio isrounded to one decimal place.)(Note 6)Return on equity = Net income / [(Period beginning net assets) + (Period end net assets)/ 2] × 100 (The ratio is rounded to
one decimal place.)(Note 7)(Note 8)

Capital ratio = Period end net assets / Period end total assets × 100 (The ratio is rounded to one decimal place.)
Payout ratio = Total distribution / Net income × 100 (The ratio is rounded down to one decimal place.)(Note 9) NOI = Rental revenues – Property operating expenses + Depreciation(Note 10) FFO per unit = (Net income + Depreciation – Gain on sale real estate + Loss on sale of real estate) / Number of
Outstanding investment units (the figure is rounded down to the whole number). Moreover, a five-for-one split ofinvestment units was implemented with January 1, 2014 as the effective date. Outstanding investment units is calculated
assuming the split of investment units was implemented at the beginning of the fourteenth period.
(Note 11) FFO multiples = Period end investment unit price / Annualized FFO per unit (The rate is rounded down to one decimal
place.)(Note 12) A five-for-one split of investment units was implemented with January 1, 2014 as the effective date. FFO
multiples for the fourteenth and fifteenth periods are calculated based on the period end investment unit pricecalculated assuming the split of investment units was implemented.
(Note 13) DSCR = Net income before interest and taxes / (Interest expenses + Interest expense on investment corporation bonds)(The ratio is rounded to one decimal place.)(Note 14) Loan-to-value = Period end interest-bearing debt / Period end total assets × 100 (The ratio is rounded to one decimal
place.)

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

4

(2) Asset Management Development
Japan Excellent, Inc. (JEI) was founded on February 20, 2006 under the Law Concerning Investment Trusts andInvestment Corporations of Japan (hereinafter referred to the “Investment Trust Law”). On March 15, 2006, it
completed the corporate registration to the Kanto Finance Bureau (registration number 52, issued by the Head of
the Kanto Local Finance Bureau) and listed on the Real Estate Investment Trust Section of the Tokyo Stock
Exchange (Securities Code: 8987) on June 27, 2006. Since the listing, we have continued investment management
primarily in office buildings with the aim of maintaining sound corporate growth and stable revenues from themedium- to long-term perspectives. On December 31, 2013, we settled our fifteenth period.

1) Business conditions and results
During the period, the Japanese economy saw an improvement of personal consumption with the
improvement of consumer sentiment due to rising stock prices and rush demand ahead of the consumption
tax hike. Furthermore, corporate earnings were bolstered by the combination of the picking up of overseas
economies and the yen depreciation effect, and capital investment is showing signs of recovery.
In the office building leasing market, the supply-demand balance of offices is modestly recovering backed
by economic recovery and expectations for improvement in corporate performance, and the vacancy ratecontinues to be on an improving trend. Concerning the rent level, while remaining roughly flat overall withan ongoing mix of ups and downs, some excellent buildings in central Tokyo are seeing rents make anupturn after bottoming out as rent increases are being anticipated and some tenants are seeking long-term
contracts.
Under these circumstances, JEI made steady progress in renewing contracts with existing tenants andleasing up vacant spaces, resulting in the portfolio occupancy rate at the end of the period increasing fromthe previous period’s 97.1% by 1.6 points to 98.7% in the period under review.
In the real estate investment market, with J-REITs newly listed and procuring funds through public
offerings one after another, transactions of investment properties increased. Among these, many of thetransactions of properties regarded as being “large” and “excellent” were made between J-REITs and theirsponsors. On the other hand, transactions by overseas investors, private funds, etc. are trending upwards
and the real estate transaction market which entered a recovery stage is performing roughly strong. JEI
acquired ownership interests in an anonymous association of an SPC that owns Aoba-dori Plaza and Daiwa
Minami-morimachi Building, with an intention of eventually acquiring the underlying properties(regarding JEI’s acquisition of Aoba-dori Plaza and Daiwa Minami-morimachi Building in February 2014,
please see “2) Policy and issues on future investment management” below).
The entire real estate portfolio of JEI at the end of the period was 28 properties in terms of the number ofproperties held, 245.5 billion yen in investment amount (on an acquisition price basis) and 302,505.42m2(91,507.88 tsubo) in total leasable space at a period-end.
2) Fund raising highlights
During the period, JEI continued to make efforts as during the previous period to convert floating-rate
debts to fixed-rate debts and diversify maturity dates while reducing borrowing costs.
For the refinancing of long-term loans of 8.0 billion yen which matured on December 27, 2013, JEI issued
the 5th series unsecured investment corporation bonds (period of 4.9 years) of 5.0 billion yen on November
25, 2013 and procured 3.0 billion yen of long-term loans (period of 6.1 years) on December 27, 2013.
Furthermore, the interest rates of the long-term loans were fixed through interest rate swap transactions.
As a result, as of the end of the period, JEI had the average remaining debt maturity of interest-bearing
debts at 2.85 years, long-term borrowing ratio at 100.0 percent, fixed rate ratio at 90.8 percent, andweighted average interest rate for loans purchased at 1.26 percent. Outstanding interest-bearing debts
totaled 125.4 billion yen, 96.4 billion yen in long-term loans (including 15.5 billion yen in long-term loans
due within one year) and 29 billion yen in investment corporation bonds (including12.0 billion yen ofinvestment corporation bonds scheduled to be redeemed within one year). (The loan to value ratio to thetotal assets was 48.6 percent as of the end of the period.)
Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

5

JEI has registered the issuance of investment corporation bonds for the purpose of dynamic arrangementof long-term funds as follows:(Bond Issuance Registration Highlight)
Scheduled issue
TypeamountInvestment
100 billion yen
corporation bond

Scheduled period for issuance
From February 9, 2014 to February 8, 2016

The ratings granted to JEI by the following rating agencies are shown below:(Ratings as of December 31, 2013)
Individual debt issue rating
Issuer rating (outlook)
Credit rating agency(Note)
Japan Credit Rating Agency, Ltd.
Long-term issuer rating
AA(JCR)
AA- (Stable)
Issuer rating
Rating and Investment Information,
A+
Inc. (R&I)
A+ (Stable)
Issuer rating
Moody’s Japan―
A3 (Stable)(Note) The rating of JRC is for the 1st series unsecured investment corporation bonds, 2nd series unsecured
investment corporation bonds, 3rd series unsecured investment corporation bonds, 4th series unsecured
investment corporation bonds and 5th series unsecured investment corporation bonds. The rating of R&I isfor the 1st series unsecured investment corporation bonds, 2nd series unsecured investment corporation
bonds, 3rd series unsecured investment corporation bonds and 4th series unsecured investment corporation
bonds.

3) Financial results and distribution highlights
As a result of the above management, JEI posted 8,850 million yen in total revenues, 3,709 million yen in
operating income, 2,775 million yen in ordinary income and 2,774 million yen in net income for the period
under review.
Considering distributions in the period under review, JEI determined to distribute the whole unappropriatedretained earnings (except for the portion of less than one yen per unit) to be eligible for special provisions of thetax system on investment corporations (Section 67-15 of the Special Taxation Measures Law), that allows JEI
to deduct the amount of profit distribution from its taxable income. Accordingly, distribution per unit for theperiod was 12,334 yen.

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)63) Capital Increase
JEI had no changes in the number of outstanding investment units for the period under review. The outline of thechanges is as follows:

Paid-up Date

Capital transaction

ChangeFebruary 20, 2006

Private placement
for incorporation

June 26, 2006

Unitholders’ capital(Millions of yen)

Capital transaction (units)
Balance

ChangeRemarks

Balance

400

400

200

200

(Note 1)

Public offering

128,000

128,400

64,23064,430(Note 2)

July 21, 2006

Allocation of
investment units toa third party

6,400

134,800

3,211

67,641(Note 3)

July 11, 2007

Public offering

19,000

153,800

18,702

86,344(Note 4)

August 8, 2007

Allocation of
investment units toa third party

750

154,550738

87,083(Note 5)January 31, 2011

Public offering

31,000185,550

13,608100,691(Note 6)

February 28, 2011

Allocation of
investment units toa third party

3,100

188,650

1,360

102,052(Note 7)January 30, 2013

Public offering

33,000221,650

14,408116,460(Note 8)February 27, 2013

Allocation of
investment units toa third party

3,300

224,950

1,440

117,901(Note 9)(Note 1) JEI was incorporated through private placement at a price of 500,000 yen per unit.
(Note 2) New investment units were issued at an offer price of 520,000 yen per unit (issue price of 501,800 yen per unit) through apublic offering in order to fund acquisition of new properties which were acquired at the time of the listing.
(Note 3) New investment units were issued at an issue price of 501,800 yen per unit through an allocation of investment units to athird party in order to partially fund new property acquisitions.
(Note 4) New investment units were issued at an offer price of 1,019,200 yen per unit (issue price of 984,360 yen per unit) through apublic offering in order to partially repay debts procured to acquire properties in the second period.
(Note 5) New investment units were issued at an issue price of 984,360 yen per unit through an allocation of investment units to athird party in order to partially repay debts procured to acquire properties in the second period.
(Note 6) New investment units were issued at an offer price of 454,930 yen per unit (issue price of 438,984 yen per unit) through apublic offering in order to repay short-term loans procured to acquire properties in the ninth period and to fund acquisitionof a new property which was acquired in the tenth period.
(Note 7) New investment units were issued at an issue price of 438,984 yen per unit through an allocation of investment units to athird party in order to repay short-term loans procured to acquire new properties in the ninth period and to fund acquisitionof a new property which was acquired in the tenth period.
(Note 8) New investment units were issued at an offer price of 451,425 yen per unit (issue price of 436,609 yen per unit) through apublic offering in order to fund acquisition of new properties which were acquired at the fourteenth period.
(Note 9) New investment units were issued at an issue price of 436,609 yen per unit through an allocation of investment units to athird party in order to fund acquisition of properties acquired in the fourteenth period.

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

7

[Market price of the investment securities]
The period-on-period fluctuations in the highest and lowest (closing) prices of JEI’s investment units listed on theReal Estate Investment Trust Section of the Tokyo Stock Exchange during each period is as follows:
11th period
13th period
Fiscal period
12th period
14th period
15th period(December(December(June 2013) (December 2013)(closing date)(June 2012)
2011)
2012)
Investment unit
market priceHighest (yen)408,000
430,000
511,000
739,000
639,000
Lowest (yen)295,500

297,600

371,000

463,000

515,000(Note) The highest and lowest prices of investment units refer to the closing prices on the Real Estate Investment Trust Section of theTokyo Stock Exchange.

(4) Distributions Paid
The distribution per unit for the period (the fifteenth period) was 12,334 yen per unit, based on JEI’s decision to
distribute the whole unappropriated retained earnings (except for the portion of less than one yen per unit) to beeligible for the special tax treatment on investment corporations (Article 67-15 of the Special Taxation Measures
Law) that allows JEI to deduct the amount of profit distribution from its taxable income.
Fiscal period

11th period

12th period

13th period

14th period

15th period

Accounting period

July 1, 2011 to
December 31,
2011

January 1, 2012
to June 30, 2012

July 1, 2012 to
December 31,
2012

January 1, 2013
to June 30, 2013

July 1, 2013 to
December 31,
2013

2,236,262

2,434,824

2,309,504

2,598,369

2,774,683

5

133,294

51

－

149

2,236,257

2,301,530

2,309,453

2,744,390

2,774,533(11,854)(12,200)(12,242)(12,200)(12,334)(2,440)(2,466)

Retained earnings at end of
period (Thousands of yen)
Retained income (Thousandsof yen)Total cash distribution
amount (Thousands of yen)
(Cash distributions perunit) (yen)(Distribution per unit after
split)(yen) (Note)
Of which, total profit
distributions (Thousands ofyen)(Profit distribution per unit)(yen)(Profit distribution per unit
after split)(yen) (Note)
Total refund of investment
equity(Refund of investment per
unit)(Refund of investment perunit after split)(yen) (Note)(Note)

2,236,257

2,301,530

2,309,453

2,744,390

2,774,533(11,854)(12,200)(12,242)(12,200)(12,334)(2,440)(2,466)

－

－

－

－

－

(－)

(－)

(－)

(－)

(－)

(－)

(－)

JEI implemented a five-for-one split of investment units with January 1, 2014 as the effective date. Distribution per unit
after split, profit distribution per unit after split and refund of investment per unit after split are calculated assuming the
split of investment units was implemented at the beginning of the fourteenth period. In addition, figures are rounded down
to the nearest whole number.

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

8

(5) Policy and Issues on Future Investment Management
1) Outlook for investment environment
In the Japanese economy ahead, a temporary slowdown is forecast with the rebound of rush demand aheadof the anticipated consumption tax hike in April 2014. However, with expectations for the recovery ofexports backed by the yen depreciation and recovery of overseas economies as well as for the recovery ofcapital investment supported by improvements in corporate earnings, the possibility of economic recession
is seen to be little. Nonetheless, future trends must be watched with care as the downswing of overseas
economies may become a downward risk factor for the Japanese economy.
In the office building leasing market, with expectations for continued strong growth in office demand, thevacancy rate is expected to continue to be on an ongoing trend of improving, albeit gradually. Furthermore,
new rents are starting to make a turnaround at properties whose vacancies are being eliminated centering
on large-scale, excellent buildings in central Tokyo, and some existing tenants that moved in withdiscounted rents are being consulted for increase of rent. Therefore, the rent level is forecast to gradually
make a turnaround from a point of bottoming out.
In the real estate investment market, sellers of properties are not seeking sales to the point of lowering
prices and have the option of either selling at high prices or continuing ownership due to the fundprocurement environment continues to be favorable, and so J-REITs and other investment sectors arecompeting for many of the properties that are out for sale in the market. Investment needs in the real estate
investment market is strong and real estate transaction prices are expected to increase going forward withan increase in buyers in the market that lower their standards for expected yields due to a sense of scarcity
and competition for acquisitions.
2) Policy and issues on future investment management
Amid the recovery trend in the office building leasing market materializing gradually, JEI expects earnings
from the existing portfolio to turn around in the next period onward, because there are prospects of steadyearly narrowing of the rent gap and improvement of the occupancy rate through leasing up of vacant spaceas early as possible at low-occupancy properties and also because of full-period contribution of the newlyacquired properties. Going forward, in addition to maintaining a high occupancy rate we will endeavor tomaintain and improve earnings of the entire portfolio by keeping and raising the rent level based on market
trends. Moreover, in order to maintain asset value and improve property competitiveness over the medium
to long term, we will consistently implement additional strategic investment plans.
For external growth, we will continue to keep aiming for acquisition of competitive properties, including
asset replacements, with well-balanced investments based on size, concentration and target area in mind toincrease asset size and realize stable profitability in our portfolio over the medium- to long-term. To thisend, we will continue enhancing further interaction and collaboration with sponsor companies and have ourasset management company cultivate and refine property information sources in an effort to proactively
gain access to market information and thereby keep seizing the right business opportunities. On a further
note, JEI acquired HAMARIKYU INTERCITY (additional acquisition of compartmentalized ownership),Aoba-dori Plaza and Daiwa Minami-morimachi Building during February 2014 using proceeds from thepublic offering implemented in January 2014.
Regarding financial operations, the fund-raising environment is generally favorable for REITs. Still, we
will consistently work on stable and sound financial operations to address future changes in situations inand outside Japan, through endeavoring to convert floating-rate debts to fixed-rate debts, diversify maturity
dates, lengthen the remaining period of debts, ensure liquidity by renewing commitment lines and maintainappropriate ratio of interest-bearing debts.
(6) Subsequent Events
1) Split of investment units
The Investment Corporation implemented a five-for-one split of its investment units (hereinafter the “Split ofInvestment Units”) with December 31, 2013 as the record date and January 1, 2014 as the effective date.
(1) Purpose of split
Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

9The purpose of the split is to widen the spectrum of investors and increase the liquidity of the Investment
Corporation’s investment units by decreasing the per unit price of investment units.
(2) Method of split
The Investment Corporation implemented a five-for-1 split of its investment units held by unitholders statedor recorded on the unitholder registry as of December 31, 2013, the day before the effective date of the Split
of Investment Units.
(3) Increase in number of investment units through the split
Number of investment units issued
and outstanding before split:
Increase in number of investment
units through split
Number of investment units issued
and outstanding after split
Total number of investment units
authorized after split:

224,950 units:

899,800 units:

1,124,750 units:

10,000,000 units(Note) The total number of investment units authorized after the split is changed from 2,000,000 units to 10,000,000 units
in accordance with the ratio of the split (five-for-one).

2) Issuance of new investment units through public offering (primary offering)
The board of directors of JEI resolved the following issuance of new investment units through public offering
at its meetings held on January 8, 2014 and January 20, 2014. The payment for the offering was completed
on January 27, 2014.
As a result, unitholders’ capital is 127,036,971,100 yen and the number of investment units issued andoutstanding is 1,204,750 as of January 27, 2014.
<Overview of the issuance of new investment units through public offering>(1) Number of new investment units issued

80,000 units(2) Offer price

118,072 yen per unit

(3) Total offer price

9,445,760,000 yen(4) Issue price

114,196 per unit

(5) Total issue price

9,135,680,000 yen(6) Payment date

January 27, 2014

③ Issuance of new investment units through third-party allotment (greenshoe option)
The board of directors of JEI resolved the following issuance of new investment units through third-party
allotment at its meetings held on January 8, 2014 and January 20, 2014. JEI granted Mizuho Securities Co.,
Ltd. an option to receive allotment of new investment units to be issued through third-party allotment(greenshoe option). The exercise period of the option expires on February 25, 2014.
<Overview of the issuance of new investment units through third-party allotment>(1) Number of new investment units issued(maximum)8,000 units(2) Issue price

114,196 yen per unit

(3) Total issue price913,568,000 yen(4) Name of third party

Mizuho Securities Co., Ltd.

(5) Payment date (planned)

February 26, 2014

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

10

④ Asset Acquisition (HAMARIKYU INTERCITY(Additional Acquisition of Compartmentalized
Ownership)
On January 8, 2014, JEI concluded the following purchase agreement for trust beneficiary interest in realestate. The property was handed over to JEI on February 4, 2014.
＜Overview of acquisition asset＞(1) Acqusition asset

Trust beneficiary interest in real estate(2) Property name

HAMARIKYU INTERCITY(Additional Acquisitionof Compartmentalized Ownership)(3) Location

1-9-1 and 15 Kaigan, Minato-ku, Tokyo(4) Acquisition price (Note)

12,000,000,000 yen(5) Date of execution of purchase agreement

January 8, 2014(6) Handover dateFebruary 4, 2014(7) Seller

NIPPON STEEL KOWA REAL ESTATE CO.,LTD.

(Note) The acquisition price represents the sale price of the trust beneficiary interest excluding costs related to theacquisition, JEI’s share of the real estate tax and city planning tax, and consumption taxes.

⑤ Asset Acquisition (Aoba-dori Plaza)
On January 8, 2014, JEI concluded the following purchase agreement for trust beneficiary interest in realestate. The property was handed over to JEI on February 4, 2014.
＜Overview of acquisition asset＞(1) Acqusition asset

Trust beneficiary interest in real estate(2) Property nameAoba-dori Plaza(3) Location

3-2-1 Chuo, Aoba-ku, Sendai-shi, Miyagi(4) Acquisition price (Note)

2,120,000,000 yen(5) Date of execution of purchase agreement

January 8, 2014(6) Handover dateFebruary 4, 2014(7) Seller

Bois Vert LLC(Note) The acquisition price represents the sale price of the trust beneficiary interest excluding costs related to theacquisition, JEI’s share of the real estate tax and city planning tax, and consumption taxes.

⑥ Asset Acquisition (Daiwa Minami-morimachi Building)On January 8, 2014, JEI concluded the following purchase agreement for trust beneficiary interest in realestate. The property was handed over to JEI on February 4, 2014.
＜Overview of acquisition asset＞(1) Acqusition asset

Trust beneficiary interest in real estate(2) Property nameDaiwa Minami-morimachi Building(3) Location

2-6, 2-chome Kita, Tenjinbashi, Kita-ku, Osaka-shi,
Osaka(4) Acquisition price (Note)

4,410,000,000 yen(5) Date of execution of purchase agreement

January 8, 2014

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

11

(6) Handover dateFebruary 4, 2014(7) Seller

Bois Vert LLC(Note) The acquisition price represents the sale price of the trust beneficiary interest excluding costs related to theacquisition, JEI’s share of the real estate tax and city planning tax, and consumption taxes.

7) Debt financing
As of January 30, 2014, JEI concluded an individual loan agreement under the Revolving Credit Facility
Agreement, as described below, in order to fund the acquisition of HAMARIKYU INTERCITY (additional
acquisition of compartmentalized ownership), Aoba-dori Plaza and Daiwa Minami-morimachi and partiallyfund various expenses related to the acquisition.
(1) Lender

Mizuho Bank, Ltd.

(2) Loan amount

9,000,000,000 yen(3) Interest rate

0.58% (Floating rate)(4) Drawdown dateFebruary 4, 2014(5) Interest payment date

March 11, 2014(6) Principal repayment date

March 11, 2014(7) Principal repayment method

To be repaid in full on the principal repayment date(early repayment permitted)(8) Collateral

Unsecured/Non-guaranteed

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)12

2. Outline of the Investment Corporation(1) Investment units
11th
As of December
31, 2011

Fiscal period

2,000,000
Number of units
authorizedunits
Number of units
issued and outstanding 188,650 units
102,052 million
Unitholders’ capital
yen

12th
As of June 30,
2012

13th
As of December
31, 2012

14th
As of June 30,
2013

15th
As of December
31, 2013

2,000,000
units

2,000,000
units

2,000,000
units

2,000,000
units

188,650 units

188,650 units

224,950 units

224,950 units

102,052 million
yen102,052 million
yen

117,901 million
yen

117,901 million
yen

Number of unitholders 7,875 individuals 7,447 individuals 6,760 individuals 7,361 individuals 6,846 individuals(2) Unitholders
Major unitholders as of December 31, 2013 are as follows:
Number ofunits held
(Units)Ratio of number ofunits held tooutstanding
investment units(%)

59,83326.60

2-11-3 Hamamatsu-cho, Minato-ku, Tokyo

16,4397.31

1-15-5 Minami Aoyama, Minato-ku, Tokyo

14,312

6.36

Harumi Island Toriton Square Office Tower Z,
1-8-12 Harumi, Chuo-ku, Tokyo

13,297

5.91

2-2-2 Otemachi, Chiyoda-ku, Tokyo

12,0195.34

BATIMENT A, 33, RUE DE GASPERICH,
L-5826, LUXEMBOURG

5,625

2.50

1-13-1 Yuraku-cho, Chiyoda-ku, Tokyo

4,132

1.84

3,189

1.42

2,480

1.10

2,400

1.07

133,726

59.45

Name

Address

Japan Trustee Services Bank, Ltd.
1-8-11 Harumi, Chuo-ku, Tokyo(Trust Account)
The Master Trust Bank of Japan,
Ltd. (Trust Account)
NIPPON STEEL KOWA REALESTATE CO., LTD.
Trust & Custody Services Bank,
Ltd. (Securities Investment Trust
Account)
The Nomura Trust and Banking
Co., Ltd. (Investment Trust
Account)
NOMURA BANK(LUXEMBOURG) S.A.
The Dai-ichi Life Insurance
Company, Limited
STATE STREET BANK AND
TRUST COMPANY 505223
The Fuji Fire and Marine
Insurance
RBC ISB A/C DUB NONRESIDENT - TREATY RATE

P.O. BOX 351 BOSTONMASSACHUSETTS 02101 U.S.A
1-18-11 Minami-Senba, Chuo-ku, Osaka-shi,Osaka
14 PORTE DE FRANCE, ESCH-SURALZETTE, LUXEMBOURG, L-4360
Total(Note) Ratio of number of units held to outstanding investment units is rounded to two decimal places.

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

13

(3) Officers
1) Directors and accounting auditor
Name

Post
Executive
Director

Chifumi Toda (Note 2)

Executive
Director

Hidehiko Ogawa (Note 3)

Supervisory
Director
Supervisory
Director
Supervisory
Director
Supervisory
Director
Accounting
AuditorCompensation or fee forthe six months ended
December 31, 2013
(Thousands of yen)

Major additional post
President and Director, Japan Excellent AssetManagement Co., Ltd.
Advisor, Japan Excellent Asset Management Co.,

－

Ltd.

Makoto Sakagami (Note 4)

Makoto Sakagami Certified Public Accounting
OfficeTsuyoshi Nagahana

Advisor, Anderson, Mori & Tomotsune

Shunichi Maekawa

Professor, Faculty of Real Estate, Meikai
University

Eiji Takagi

Eiji Takagi Certified Public Accounting Office

Ernst & Young ShinNihon
LLC

－

6,540

17,000(Note 6)－(Note 1) There is no investment unit of JEI held by the Executive Director nor the Supervisory Directors. Although Supervisory
Directors may have additional posts in companies other than those listed above, there is no conflict of interests between thosecompanies, including those listed above, and JEI.
(Note 2) Chifumi Toda retired as Executive Director on October 31, 2013 as his term expired.
(Note 3) Hidehiko Ogawa was elected as Executive Director at the fifth general unitholders’ meeting held October 24, 2013 andassumed the post on November 1, 2013.
(Note 4) Makoto Sakagami retired as Supervisory Director on October 31, 2013 as his term expired.
(Note 5) Eiji Takagi was elected as Supervisory Director at the fifth general unitholders’ meeting held October 24, 2013 and assumed
the post on November 1, 2013.
(Note 6) The total amount of compensation or fee shown above is an estimated amount and includes the fee for the English financial
statements audit and the fee for the preparation of a comfort letter and other services upon the issuance of the 5th series
investment corporation bonds in November 2013.

2) Policy on dismissal and discontinuation of re-election of accounting auditor
The board of directors of JEI shall deliberate dismissal of accounting auditor in accordance with the provisions
set out in the Law Concerning Investment Trusts and Investment Corporations, and deliberate discontinuationof reelection based on circumstances in all respects.

(4) Name of Asset Management Company, Asset Custodian and Administrative Agents
Our asset management company, asset custodian and administrative agents as of December 31, 2013 are as follows:
Classification

Name

Asset management company

Japan Excellent Asset Management Co., Ltd.

Asset custodian

Mizuho Trust & Banking Co., Ltd.

Administrative agent(Transfer agent and other administrative work for accounting Mizuho Trust & Banking Co., Ltd.
and institution operation)
Administrative agent(Investment corporation bonds)

Mizuho Bank, Ltd. (Note)(Note) Mizuho Corporate Bank, Ltd., which is the administrative agent for JEI’s investment corporation bonds, merged with Mizuho
Bank, Ltd. on July 1, 2013 and changed its trade name to Mizuho Bank, Ltd.

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

14

3. Investment Portfolio of the Investment Corporation(1) Investment Portfolio by Area
Classification

Use

Area

14th Period(June 30, 2013)

15th Period(December 31, 2013)

Total
Total
Investment
Investment
acquisitionacquisition
ratio inratio inprice (Millions portfolio (%) price (Millions portfolio (%)(Note 2)
(Note 2)of yen) (Note 1)of yen) (Note 1)
Area I (Note 4)

3,866

1.5

3,853

1.5

Area II (Note 4)

4,514

1.8

4,510

1.7

Area I (Note 4)

122,56347.6

122,234

47.4

Area II (Note 4)

9,274

3.6

9,256

3.6

Area III (Note 4)

80,16031.1

79,92531.0

Area IV (Note 4)

11,546

4.5

11,440

4.4

Area I (Note 4)

6,936

2.7

6,882

2.7

238,86192.7

238,103

92.3

－

－

114

0.0

Deposits in bank and other assets

18,751

7.3

19,683

7.6

Total assets

257,613100.0

257,901

100.0

Real estate property(Note 3)

OfficeTrust beneficiaryinterest in realestate (Note 3)

Trust beneficiaryinterest in realestateOthers
Total

Ownership interests in an anonymous association (Note 5)(Note 1) Total acquisition price is based on the amounts accounted for in the balance sheets as of the settlement date (amounts of realestate property and trust beneficiary interest in real estate are based on the book value after depreciations).
(Note 2) Investment ratio in portfolio is rounded to one decimal place.
(Note 3) Leasehold rights owned in combination with buildings and other structures are included in real estate property and trust
beneficiary interest in real estate at the combined amount.
(Note 4) Areas are classified as follows:
Area I: Six central wards of Tokyo (Chiyoda, Chuo, Minato, Shinjuku, Shinagawa and Shibuya)
Area II: Central Osaka (Umeda, Dojima, Nakanoshima, Yodoyabashi, Honmachi, etc.), central Nagoya (Meieki, Fushimi,
Sakae, etc.) and central Fukuoka (Tenjin, Hakata-ekimae, etc.)
Area III: Tokyo other than Area I, and its vicinity (Kanagawa, Saitama, and Chiba)
Area IV: Areas in Osaka, Nagoya and Fukuoka other than Area II, and other government designated cities.
(Note 5)This represents the ownership interests in an anonymous association managed by Bois Vert LLC.

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

15

(2) Major Property
The principal properties (top ten properties in net book value) owned by JEI as of December 31, 2013 are as
follows:
Ratio of rental
Book value
Leasable space Leased space Occupancy revenue to total
Name(Millions ofMajor use
rate (%)(m ) (Note 1)(m ) (Note 2)
rental revenues(Note 3)yen)(%) (Note 4)
Kowa Kawasaki
Office30,13538,375.66
38,205.96
99.6
10.8
Nishiguchi Building
2

2

AKASAKA INTERCITY

27,624

11,021.04

10,132.00

91.9

6.7

OfficeAkasaka Garden City

22,656

8,769.53

8,769.53

100.0

3.9

OfficeOmori Bellport D

21,571

25,591.12

25,591.12

100.0

10.6

Office12,751

25,159.49

25,159.49

100.0

9.0

Office10,63012,122.85

12,122.85

100.0

3.8

Office9,983

18,612.72

18,612.72

100.0(Note 5)

OfficeShiba 2-Chome Building

9,100

11,749.30

11,559.68

98.4

4.2

OfficeJEI Hamamatsucho
Building

8,353

6,411.26

6,411.26

100.0

2.9

OfficeNo. 35 Kowa Building

8,245

9,377.16

9,377.16

100.0(Note 5)

Office161,054

167,190.13

165,941.77

99.3(Note 5)－

Musashikosugi Tower
Place
Daiba Garden City
Building
Kowa Kawasaki
Higashiguchi Building

Total(Note 1) Leasable space refers to space available for lease of which ownership is attributable to JEI as of December 31, 2013 and isrounded to two decimal places. For properties with joint ownership, the value is obtained by multiplying the total leasable
space of the shared real estate by the percentage of the interest owned by JEI.
(Note 2) Leased space refers to space with lease contracts concluded with end tenants as of December 31, 2013 and is rounded to two
decimal places. For properties with joint ownership, the value is obtained by multiplying the total leased space of the shared
real estate by the percentage of the interest owned by JEI. The leased space of end tenants who terminated their leasearrangement but have not yet moved out as of the end of period is included in the leased space. This also applies to thecalculations of occupancy rate in (Note 3) below and the total number of tenants in (Note 1) in (3) Portfolio Ownership
Breakdown.
(Note 3) Occupancy rate is a percentage of total leased space to total leasable space as of December 31, 2013 and rounded to one
decimal place.
(Note 4) Ratio of rental revenue to total rental revenues is rounded to one decimal place.
(Note 5) The values of Kowa Kawasaki Higashiguchi Building and No. 35 Kowa Building are not disclosed as consents on disclosure
from the end tenants have not been obtained.

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

16

(3) Portfolio Ownership Breakdown
Real estate properties and their forms of ownership as of December 31 2013 are as follows:
Property
No.

Property nameLocation (Residential address)

Form of ownershipAppraisal value
at end of period Net book value(Millions of yen) (Millions of yen)
(Note)

Ⅰ-1

Omori Bellport D

6-26-3 Minami-Oi, Shinagawa-ku, Tokyo

Trust beneficiaryinterest in realestate23,30021,571

Ⅰ-2

Shiba 2-Chome Building

2-6-1 Shiba, Minato-ku, Tokyo

Trust beneficiaryinterest in realestate11,2009,100

Ⅰ-3

JEI Hamatsucho Building

2-2-12 Hamamatsu-cho, Minato-ku, Tokyo

Trust beneficiaryinterest in realestate

7,210

8,353

Ⅰ-4

No. 32 Kowa Building

5-2-32 Minami-Azabu, Minato-ku, Tokyo

Trust beneficiaryinterest in realestate

6,680

7,384

Ⅰ-7

Akasaka Garden City

4-15-1 Akasaka, Minato-ku, Tokyo

Trust beneficiaryinterest in realestate16,60022,656

Ⅰ-8

AKASAKA INTERCITY

1-11-44 Akasaka, Minato-ku, Tokyo

Trust beneficiaryinterest in realestate25,00027,624

Ⅰ-9

Kowa Shirokanedai Building

3-19-1 Shirokanedai, Minato-ku, Tokyo

Trust beneficiaryinterest in realestate

5,010

4,868

Ｉ-10

Daiba Garden City Building

2-3-5 Daiba, Minato-ku, Tokyo

Trust beneficiaryinterest in realestate12,000

10,630Ⅰ-11

No. 35 Kowa Building

1-14-14 Akasaka, Minato-ku, Tokyo

Trust beneficiaryinterest in realestate

9,160

8,245

Ⅰ-12

HAMARIKYU INTERCITY

1-9-1 and 15 Kaigan, Minato-ku, Tokyo

Trust beneficiaryinterest in realestate

7,890

6,882

Ⅰ-13

Shintomicho Building

3-10-9 Irifune, Chuo-ku, Tokyo

Trust beneficiaryinterest in realestate

1,820

1,798

Ⅰ-14

Kowa Nishi-Shimbashi Building

2-1-1 Nishi-Shimbashi, Minato-ku, Tokyo

Real estate

4,150

3,853

130,020

132,970

Area I
Ⅱ-1

NHK Nagoya Housou-Center
Building

1-13-3 Higashi-Sakura, Higashi-ku, Nagoya-shi,
Aichi

Real estate

4,190

4,510

Ⅱ-2

JEI Nishi-Honmachi Building

1-3-15 Awaza, Nishi-ku, Osaka-shi, Osaka

Trust beneficiaryinterest in realestate

4,220

7,391

Ⅱ-3

Osaka Kogin Building (Land with
Leasehold Interest)

4-1-1 Koraibashi, Chuo-ku, Osaka-shi, Osaka

Trust beneficiaryinterest in realestate

1,770

1,865

Area II

10,18013,766

16,50012,751

Ⅲ-1

Musashikosugi Tower Place

1-403 Kosugi-machi, Nakahara-ku, Kawasaki-shi,
Kanagawa

Trust beneficiaryinterest in realestateⅢ-2

Kowa Kawasaki Higashiguchi
Building

1-53 Nisshin-cho, Kawasaki-ku, Kawasaki-shi,
Kanagawa

Trust beneficiaryinterest in realestate

8,350

9,983

Ⅲ-3

JEI Hongo Building

2-38-16 Hongo, Bunkyo-ku, Tokyo

Trust beneficiaryinterest in realestate

4,560

5,171

Ⅲ-5

Kawasaki Nisshincho Building

7-1 Nisshin-cho, Kawasaki-ku, Kawasaki-shi,
Kanagawa

Trust beneficiaryinterest in real

3,780

4,561

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

17estateⅢ-6

No. 44 Kowa Building

1-2-7 Higashiyama, Meguro-ku, Tokyo

Trust beneficiaryinterest in realestate

1,540

972

Ⅲ-7

JEI RYOGOKU BUILDING

3-25-5 Ryogoku, Sumida-ku, Tokyo

Trust beneficiaryinterest in realestate

2,130

2,338

Ⅲ-8

Ebina Prime Tower

2-9-50 Chuo, Ebina-shi, Kanagawa

Trust beneficiaryinterest in realestate

3,690

5,936

Ⅲ-9

66-2 Horikawa-cho, Saiwai-ku, Kawasaki-shi,
Kowa Kawasaki Nishiguchi Building Kanagawa

Trust beneficiaryinterest in realestate24,60030,135

Ⅲ-10

Pacific Square Sengoku

2-29-24 Hon-Komagome, Bunkyo-ku, Tokyo

Trust beneficiaryinterest in realestate

1,560

1,652

Ⅲ-11

Core City Tachikawa

2-37-7 Akebono-cho, Tachikawa-shi, Tokyo

Trust beneficiaryinterest in realestate

6,980

6,420

Area III

73,69079,925

3,880

3,236

Ⅳ-2

JEI Kyobashi Building

2-2-48 Kata-machi, Tsushima-ku, Osaka-shi,
Osaka

Trust beneficiaryinterest in realestateⅣ-3

JEI Hiroshima Hacchobori Building

14-4 Hacchobori, Naka-ku, Hiroshima-shi,
Hiroshima

Trust beneficiaryinterest in realestate

2,660

2,748

Ⅳ-4

SE Sankyo Building

1-1-2 Kitananajonishi Kita-ku, Sapporo-shi,
Hokkaido

Trust beneficiaryinterest in realestate

6,010

5,455

Area IV

12,55011,440Total

226,440

238,103(Note) Appraisal value at end of period indicates the appraisal value described in the real estate appraisal report prepared by realestate appraisers belonging to Japan Real Estate Institute, Chuo Real Estate Appraisal Co., Ltd., Japan Valuers Co., Ltd. andDaiwa Real Estate Appraisal Co., Ltd. as of December 31, 2013 pursuant to the articles of incorporation of JEI and theregulations stipulated by the Investment Trusts Association, Japan. For properties with joint ownership in the current portfolio,
the value is obtained by multiplying the total value of the shared real estate by the percentage of the interest owned by JEI or
the trustee.

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

18

14th Period
January 1, 2013 to June 30, 2013
Property
No.

Property name

Total numberoftenants(At endof period)

Occupancy Rental revenue
rate (At end(Interim)of period)(Millions of
(%))
yen)

(Note 1)

15th Period
July 1, 2013 to December 31, 2013
Ratio ofrentalrevenue tototal rental
revenues(%)

Total numberoftenants(At endof period)

Occupancy Rental revenue
rate (At end(Interim)of period)(Millions of
(%))
yen)

(Note 1)

(Note 2)

Ratio ofrentalrevenue tototal rental
revenues(%)(Note 2)

Ⅰ-1

Omori Bellport D

1

100.0

944

11.2

1

100.0

934

10.6

Ⅰ-2

Shiba 2-Chome Building

2

98.4

372

4.4

2

98.4

370

4.2

Ⅰ-3

JEI Hamamatsucho
Building

1

100.0

253

3.0

1

100.0

255

2.9

Ⅰ-4

No. 32 Kowa Building

1

100.0

249

3.0

1

100.0

253

2.9

Ⅰ-7

Akasaka Garden City

1

82.3

364

4.3

1

100.0

342

3.9

Ⅰ-8

AKASAKA
INTERCITY

12

91.9

563

6.7

12

91.9

592

6.7

Ⅰ-9

Kowa Shirokanedai
Building

1

100.0

163

1.9

1

100.0

177

2.0

Ｉ-10

Daiba Garden City
Building

1

100.0

338

4.0

1

100.0

336

3.8

Ⅰ-11

No. 35 Kowa Building

1

100.0

(Note 3)(Note 3)1100.0(Note 3)(Note 3)

Ⅰ-12

HAMARIKYUINTERCITY

6

97.9

280

3.3

6

99.1

284

3.2

Ⅰ-13

Shintomicho Building

9

100.0

71

0.9

9

100.0

71

0.8

Ⅰ-14

Kowa Nishi-Shimbashi
Building

6100.0(Note 3)(Note 3)6100.0(Note 3)(Note 3)

42

97.5

-

-

42

99.0

-

-

Area I
Ⅱ-1

NHK Nagoya Housou
Center

30

96.6

301

3.6

29

95.9

297

3.4

Ⅱ-2

JEI Nishi-Honmachi
Building

1

98.6

218

2.6

1

100.0

219

2.5

Ⅱ-3

Osaka Kogin Building(Land with Leasehold
Interest)

1

100.0

67

0.8

1

100.0

83

0.9

32

98.0

-

-

31

98.4

-

-

Ⅲ-1

Musashikosugi Tower
Place

37

100.0

787

9.4

37

100.0

800

9.0

Ⅲ-2

Kowa Kawasaki
Higashiguchi

1

100.0

(Note 3)(Note 3)1100.0(Note 3)(Note 3)Ⅲ-3

JEI Hongo Building

1

100.0

(Note 3)(Note 3)1100.0(Note 3)(Note 3)

Ⅲ-5

Kawasaki Nisshincho
Building

1

96.3

165

2.0

1

100.0

192

2.2

Ⅲ-6

No. 44 Kowa Building

1

100.0

90

1.1

1

100.0

92

1.0

Ⅲ-7

JEI Ryogoku Building

1

100.0

100

1.2

1

100.0

105

1.2

Ⅲ-8

Ebina Prime Tower

24

82.5

339

4.0

30

94.8

372

4.2

Ⅲ-9

Kowa Kawasaki
Nishiguchi Building

1

99.6

937

11.1

1

99.6

952

10.8

Ⅲ-10

Pacific Square Sengoku

7

94.9

59

0.7

7

94.9

67

0.8

Ⅲ-11

Core City Tachikawa

1

98.5

228

2.7

1

96.1

296

3.4

75

96.3

-

-

81

98.6

-

-

1

100.0

180

2.2

1

100.0

187

2.1

1

96.3

143

1.7

1

99.0

145

1.6

Area II

Area III
Ⅳ-2

JEI Kyobashi Building

Ⅳ-3

JEI Hiroshima
Hacchobori BuildingththAsset Management Report for 15 period (Semi-Annual Report for 15 Period)

19

Ⅳ-4

SE Sankyo Building

1

100.0

243

2.9

1

98.5

373

4.2

Area IV

3

99.1

-

-

3

99.0

-

-

Total

152

97.1

8,409

100.0

157

98.7

8,848

100.0

(Note 1) Total number of tenants indicates the total number of tenants in each property as of the end of each period. For properties forwhich master lease agreements have been concluded, the number of tenants is counted as one per property. When a tenant
has multiple tenancies in the same property, it is counted as one tenant, and when in multiple properties, it is counted as
multiple tenants. As for Osaka Kogin Building (Land with Leasehold Interest), total number of tenants is counted as one
based on the lease agreement for the leased land.
(Note 2) Ratio of rental revenue to total rental revenues is rounded to one decimal place.
(Note 3) No. 35 Kowa Building, Kowa Nishi-Shimbashi Building, Kowa Kawasaki Higashiguchi and JEI Hongo Building are notdisclosed as consents on disclosure from the end tenants have not been obtained.

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

20

(4) Securities Portfolio
The following shows the securities owned by JEI in its portfolio as of December 31, 2013.
Appraisal value
Gain (loss)(Note 1)
on valuation
Securities name
Type of asset Volume
AmountAmount (Thousands Remarks
Unit
Unit
(Thousands(Thousandsof yen)value
value
of yen)of yen)Ownership interests in
Ownership
an anonymousinterest in－－
114,512－
114,512－－
association managed by anonymous
Bois Vert LLC (Note 2) association
Book value

Total

－

－

114,512－

114,512－－(Note 1) The appraisal value indicates their book value.
(Note 2) The investment portfolio is a real estate trust beneficiary interest in Aoba-dori Plaza and Daiwa Minami-morimachi
Building.

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

21

(5) Other Assets
1) Contract amount and fair value of specified transactions and foreign exchange forwards transactions

Contract amount (Thousands of yen) (Note 1)
Classification

Type

Fair value(Thousands of yen)
(Note 2)

Over one year

Over-the-countertransaction

Interest rate swap
transactions
Fixed interest rate
payableFloating interest ratereceivable

57,900,000

57,900,000－(Note 1) Contract amount of swap transactions is calculated based on notional principal.
(Note 2) Fair value is omitted for presentation as over-the-counter transactions meet requirements for special accounting under the
Accounting Standard for Financial Instruments.

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)22

4. Capital Expenditures for Owned Properties(1) Scheduled Capital Expenditures
The following table shows major items of scheduled capital expenditures for repairs and maintenance planned
for the properties owned by JEI as of December 31, 2013. The values below include portions to be expensed foraccounting purposes.
Estimated construction costs(Millions of yen)
Payment
for the six
Property nameLocation
PurposeSchedule term
Total ofmonthsadvance
Total
ended
payment
December31, 2013
Kowa Kawasaki
Renewal of airFrom January 2014
Saiwai-ku,
conditioning systems
Nishiguchi
72－－
Kawasaki-shi
To February 2014
(2nd
term)
Building
JEI
Renewal of airFrom March 2014
conditioning systems
Hamamatsucho
Minato-ku, Tokyo53－－
To June 2014
(5th term)
Building
Installation of
Ebina Prime
From January 2014
Ebina-shi, Kanagawa emergency power
50
－
－
Tower
To March 2014
generator
Replacement of multiSE Sankyo
From March 2014
Kita-ku, Sapporo-shi level parking lot no. 4
49－－
Building
To May 2014
pallet floorboard(2) Capital Expenditures for the Six months Ended December 31, 2013
The following table shows constructions conducted by JEI during the period for properties it owned as ofDecember 31, 2013 and expensed as capital expenditures. Capital expenditures for the period ended December
31, 2013 were 775 million yen and, when combined with repairs and maintenance costs of 121 million yenclassified as expenses, the amount of constructions completed totaled 897 million yen.
Amounts
Paid
Property nameLocation
PurposeScheduled term(Millions ofyen)
Kowa Kawasaki
Nishiguchi Building

Saiwai-ku,
Kawasaki-shi

Renewal of canteens foroffice workers (2nd term)

From January 2013
To July 2013

198

Kowa Kawasaki
Nishiguchi Building

Saiwai-ku,
Kawasaki-shi

Renewal of air-conditioning From February 2012
systems (1st term)
To November 2013

176

JEI Hamatsucho Building

Minato-ku, Tokyo

Renewal of air-conditioning
systems (4th term)

SE Sankyo Building

Kita-ku, Sapporo-shi

Replacement of multi-level
From November 2013
parking lot no. 3 pallet
To December 2013
floorboard

48

From November 2013
To December 2013

34

－

237

Construction of 5th floor
rental rooms

AKASAKA INTERCITY Minato-ku, Tokyo

From April 2013
To July 2013

Other constructions
Total

79

775

(3) Reserved Funds for Long-term Repairs and Maintenance Plans
Based on our long-term repairs and maintenance plans developed for each property, JEI has set aside thefollowing cash reserves, derived from depreciation and other excess cash flows, in order to fund large-scale
repairs and maintenance and other construction.
Asset Management Report for 15th period (Semi-Annual Report for 15th Period)23

(Unit: Millions of yen)Item

11th Period
13th Period
12th Period
14th Period
July 1, 2011 toJuly 1, 2012 toJanuary 1, 2012
January
1, 2013
December 31,
December 31,
to June 30, 2013
to June 30, 2012
2011
2012

15th Period
July 1, 2013 to
December 31,
2013

Reserved funds at beginning of
period

251

299

267

281

299

Increase

48

14

14

25

364

Decrease

－

47

－

7

354

Reserved funds at the end of
period

299

267

281

299

309

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)24

5. Expenses and Liabilities(1) Expenses Associated with Asset Management(Unit: Thousands of yen)Account

14th Period
January 1, 2013
to June 30, 2013

15th Period
July 1, 2013
to December 31, 2013(a) Asset management fees

370,459389,209(b) Custodian fees

17,261

19,332(c) Administrative service fees

33,07238,363(d) Compensation for directors

6,540

6,540

(e) Accounting auditor fees

11,00011,000(f) Other

83,261

71,071

521,594535,516

Total

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

25

(2) Borrowings
Borrowings by each financing source as of the end of the 15th period (ended December 31, 2013) are as follows:
Classification
Drawdown
dateLenderLong-termloans due
withinThe Norinchukin Bank
one year
June 29,2010

Maturity
date

Repayment
methodUse－

Mitsubishi UFJ Trust and Banking

1,800,000－

Mizuho Trust & Banking Co., Ltd.

1,300,000－－

2,000,000

2.25875(Note 2)Development Bank of Japan Inc.

－

2,000,000

2.28417(Note 2)

Mitsubishi UFJ Trust and Banking－

4,000,000－

3,900,000

Mizuho Trust & Banking Co., Ltd.

－2,400,000

Resona Bank, Ltd.

－

1,200,000

Sub Total

8,000,000

Repaymentof existing
borrowing

December27, 2013

Lumpsum
July 31,2014

Acquisitionof realestate0.87091

December29, 2014

Repaymentof existing
borrowing

15,500,000

1.23234－2,000,000－－

Development Bank of Japan Inc.

2,000,000－－

Mitsubishi UFJ Trust and Banking

4,000,000－

3,900,000－

2,400,000－

1,200,000－

3,000,000

3,000,000

Development Bank of Japan Inc.

2,000,000

2,000,000

Mizuho Trust & Banking Co., Ltd.

1,620,000

1,620,000

1,620,000

1,620,000

650,000

650,000

Mizuho Bank, Ltd.(Note 3)

370,000

370,000

Sumitomo Mitsui Banking
Corporation

280,000

280,000

Mizuho Bank, Ltd.(Note 3)

500,000

500,000

500,000

500,000

500,000

500,000

Aozora Bank, Ltd.

200,000

200,000

The Bank of Fukuoka

300,000

300,000

2,000,000

2,000,000

1,500,000

1,500,000

500,000

500,000

Mizuho Bank, Ltd.(Note 3)

The Dai-ichi Life Insurance
Company Limited

Mizuho Bank, Ltd.(Note 3)
Mizuho Trust & Banking Co., Ltd.

July 31,2007

June 29,
2011

July 31,2007

June 29,2011

Resona Bank, Ltd.
The Dai-ichi Life Insurance
Company Limited

October
24, 2008

Aozora Bank, Ltd.
Aozora Bank, Ltd.

Mitsubishi UFJ Trust and Banking
Resona Bank, Ltd.

November29, 2011

January
31, 2012

The Norinchukin Bank
Mizuho Trust & Banking Co., Ltd.
Resona Bank, Ltd.

July 31,
2012

Remarks－－

The Dai-ichi Life Insurance
Company Limited(Note 4)

3,100,000

1,800,000

Mizuho Bank, Ltd.(Note 3)Long-term
loans

Balance atBalance at end
beginning of
Averageof period
periodinterest rate
(Thousands of(Thousands of(%) (Note 1)
yen)
yen)

－

July 31,
2014

－

－

－

Acquisitionof realestateDecember29, 2014
LumpRepayment
sumof existing
borrowing

2.27344(Note 2)

Unsecured
andunguaranteed

Unsecured
andunguaranteed

June 30,2015

1.13750(Note 2)Acquisitionof realestateNovember30, 2015

1.14125(Note 2)
Repaymentof existing
borrowing

0.97125(Note 2)

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

26

Mitsubishi UFJ Trust and Banking

4,600,000

4,600,000

4,400,000

4,400,000

Sumitomo Mitsui Banking
Corporation

4,000,000

4,000,000

Sumitomo Mitsui Trust Bank,
Limited

1,620,000

1,620,000

1,080,000

1,080,000

Mitsubishi UFJ Trust and Banking

540,000

540,000

Mizuho Bank, Ltd. (Note 3)

520,000

520,000

2,000,000

2,000,000

1,500,000

1,500,000

Sumitomo Mitsui Banking
Corporation

1,500,000

1,500,000

Mizuho Bank, Ltd.(Note 3)

1,500,000

1,500,000

Mitsubishi UFJ Trust and Banking

1,300,000

1,300,000

1,200,000

1,200,000

Sompo Japan Insurance Inc.

2,000,000

2,000,000

Tokio Marine & Nichido Fire
Insurance Co., Ltd.

1,000,000

1,000,000

6,000,000

6,000,000

1,000,000

1,000,000

1,000,000

1,000,000

Sumitomo Mitsui Banking
Corporation

1,000,000

1,000,000

Mizuho Bank, Ltd.(Note 3)

1,000,000

1,000,000

500,000

500,000

500,000

500,000

Sompo Japan Insurance Inc.

500,000

500,000

Tokio Marine & Nichido Fire
Insurance Co., Ltd.

500,000

500,000

3,000,000

3,000,000

Mizuho Bank, Ltd.(Note 3)

5,000,000

5,000,000

Mitsubishi UFJ Trust and Banking

2,000,000

2,000,000

1,100,000

1,100,000

1,000,000

1,000,000

Resona Bank, Ltd.

200,000

200,000

The Bank of Fukuoka

700,000

700,000

Shinkin Central Bank

1,000,000

1,000,000

2,000,000

2,000,000

500,000

500,000

500,000

500,000

1,000,000

1,000,000

Mizuho Bank, Ltd. (Note 3)

Sumitomo Mitsui Banking
Corporation

June 29,2011

November29, 2011

Mizuho Bank, Ltd. (Note 3)
Mitsubishi UFJ Trust and Banking

Sumitomo Mitsui Banking
Corporation

Development Bank of Japan Inc.

January
31, 2012

July 31,2012

November30, 2010

Mizuho Bank, Ltd.(Note 3)
Mitsubishi UFJ Trust and Banking

July 31,
2012

Aozora Bank, Ltd.
Resona Bank, Ltd.

The Dai-ichi Life Insurance
Company Limited

Sumitomo Mitsui Banking
Corporation
The Norinchukin Bank

Development Bank of Japan Inc.

June 28,2013

June 29,2011

June 28,2013

January
31,2012Mizuho Bank, Ltd.(Note 3)
Mitsubishi UFJ Trust and Banking
Sumitomo Mitsui Banking
Corporation

June 28,2013

1.36375(Note 2)June 29,2016

1.24375(Note 2)

November29, 2016

1.24750(Note 2)1.03000(Note 2)January
31, 2017

1.09734(Note 2)
1.73875(Note 2)

1.08375(Note 2)
November30, 2017
1.04550(Note 2)

1.19212(Note 2)1.65125(Note 2)June 29,2018

0.81225(Note 2)June 30,

1.60000(Note 2)

2018

January
31, 2020

1.36400(Note 2)

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)27

Mizuho Trust & Banking Co., Ltd.

600,000

600,000

1,000,000

1,000,000－

1,162,500－

675,000

Mitsubishi UFJ Trust and Banking－

675,000

Mizuho Trust & Banking Co., Ltd.

－487,500

2,000,000

2,000,000

1.60750(Note 2)June 30,
2021

Sub Total

93,400,000

80,900,000

1.28409

－

－

－

－

Total

101,400,000

96,400,000

1.27577

－

－

－

－

The Dai-ichi Life Insurance
Company Limited
The Norinchukin Bank
December27, 2013

Mizuho Bank, Ltd.

Development Bank of Japan Inc.

June 28,2013

1.31261(Note 2)1.00000(Note 2)

(Note 1) The average interest rates are calculated using a weighted-average of the loan balance at the end of period by multiplying
the interest rate of each loan agreement as of period-end, rounding to five decimal places. Borrowings hedged by interest
rate swaps to avoid interest rate fluctuation risk are calculated using a weighted average rate adjusting the effect of theinterest rate swaps.
(Note 2) The loans are fixed-rate loans (including loans with fixed-rate interest using interest rate swaps).
(Note 3) Mizuho Corporate Bank, Ltd. merged with Mizuho Bank, Ltd. on July 1, 2013 and changed its trade name to Mizuho Bank,
Ltd.
(Note 4) The following table shows annual total amount of long-term loans (excluding those due within one year) for each year after
the balance sheet date.

(Unit: Thousands of yen)Classification
Long-term loans

Due after 1 year Due after 2 years Due after 3 years Due after 4 years
Due after 5 years
through 2 years through 3 years through 4 years through 5 years
15,540,000

16,760,000

24,000,000

14,000,000

10,600,000

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

28

(3) Investment Corporation Bonds
The outstanding investment corporation bonds issued by JEI as of December 31, 2013 are as follows:
Issue

1st series unsecured
investment corporationbonds
2nd series unsecured
investment corporationbonds
3rd series unsecured
investment corporationbonds
4th series unsecured
investment corporation
bonds
5th series unsecured
investment corporation
bonds
Total

Balance atBalance at end
beginning ofof period
Issuance dateperiod(Thousands of(Thousands of
yen)
yen)

Interest rate
(Note 1)(%)

Maturity date

Repayment
methodUse

Remarks

March 11,2014

Lump-sum(Note 2)

(Note 4)

March 11,2010

12,000,000

12,000,000

1.52000

June 28, 2010

5,000,000

5,000,000

1.29000 June 26, 2015

Lump-sum(Note 2)

(Note 4)

November 4,
2011

5,000,000

5,000,000

1.01000

November 4,
2016

Lump-sum(Note 3)(Note 4)

November 4,
2011

2,000,000

2,000,000

1.40000

November 2,
2018

Lump-sum(Note 3)(Note 4)

November25, 2013－

5,000,000

0.46000

November 2,
2018

Lump-sum(Note 2)

(Note 4)24,000,000

29,000,000

1.20138(Note 1) The interest rate indicated in the total column is calculated using a weighted average of the balance at the end of period bymultiplying the loan interest rate of each investment corporation bond, rounding to five decimal places.
(Note 2) The funds were used for repaying existing borrowings.
(Note 3) The funds were used for acquiring new properties.
(Note 4) The bonds are with special pari passu conditions among specified investment corporation bonds.

(4) Short-Term Investment Corporation Bonds
JEI has no outstanding short-term investment corporation bonds as of December 31, 2013.

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)29

6. Condition of Investment Transactions(1) Transactions of Property and Asset-Backed Securities, Etc.
(Unit: Millions of yen)Transfer

Acquisition
Name of property

Type of assets

Acquisition date
Ownership
interests inanonymous
association

Ownership interests
in an anonymous
association managed
by Bois Vert LLC

Acquisition
Transfer
price
date(Note 1)

Transfer
Gain (loss)
Net book
amounton transfer
value(Note 1)
(Note 2)

August 29, 2013

100

－

－

－

－

－

100

－

－

－

－

Total

(Note) The acquisition price does not include the various expenses required in the acquisition of the ownership interest in ananonymous association.

(2) Transactions of Other Assets
Other than those described above, major assets transacted are mainly bank deposits and bank deposits in trust.

(3) Appraisal and Research for Specified Asset Value, Etc.
1) Real estate, etc.
None2) Ownership interests in an anonymous association(Unit: Millions of yen)
Acquisition ortransfer

Name of property

Transaction date

Acquisition

Ownership interests in an anonymous
association managed by Bois Vert
LLC

August 29, 2013

Acquisition Researched specified
priceassets value
100

100

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)303) Others
Of the transactions of JEI that are subject to research for specified assets value and other particulars under
Section 201 of the Investment Trust Law, those other than what are described in 1) Real estate, etc. and 2)
Ownership interests in an anonymous association are researched and reported by Ernst & Young ShinNihon
LLC.
One interest rate swap transaction was subject to the research during the period from July 1, 2013 to
December 31, 2013 and we have received the related research report from Ernst & Young ShinNihon LLC. In
the research, Ernst & Young ShinNihon LLC is requested to report on the name of counterparty, currency,
contractual interest rate, transaction term and other matters pertaining to the subject interest rate swap
transactions.

(4) Transactions with Interested Parties or Major Shareholders
1) Transactions
None2) Amounts of fees paid and other expenses

Classification
Property management
costs and fees

(Unit: Thousands of yen)
Breakdown of transactions with interested parties
B/A
and major shareholders
Total amount paid (A)(Note 4)
Paid toAmount paid (B)Nippon Steel Kowa Real
1,132,190 Estate Co., Ltd.

(Note 2)

Sekisui House, Ltd.
Total

1,132,190－

416,12636.8%

58,791

5.2%

474,91741.9%(Note 1) Figures indicate fees paid to interested parties and major shareholders of asset management companies with whom JEI had
transactions during the six months ended December 31, 2013.
(Note 2) Property management costs and fees include construction management fees that were not expensed but capitalized inproperty management fees and expenses.
(Note 3) The amounts do not include consumption tax and other taxes.
(Note 4) Figures are rounded to one decimal place.

(5) Transactions with Asset Management Company Concerning the Additional Businessesof the Asset Management Company
The Asset Management Company (Japan Excellent Asset Management Co., Ltd.) does not conduct any
additional business falling under the categories of the type I financial instruments business, type II financial
instruments business, building lots and buildings transaction business, or real estate specified joint enterprise,and had no applicable transactions.

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)31

7. Accounting(1) Assets, Liabilities, Principal, and Profit and Loss
For assets, liabilities, principal, and profit and loss, please refer to the attached Balance Sheets, Statements ofIncome and Retained Earnings, Statements of Changes in Net Assets, Notes to Financial Statements andDistribution Information.

(2) Change in Depreciation Calculation Method
No changes were made during the period.

(3) Change in Asset Valuation Method
No changes were made during the period

8. Others(1) Investment Trust Beneficiary Certificates Incorporated by JEIThere were no applicable items during the period.

(2) Scheduled Meetings
1) General unitholders’ meeting
The fifth general unitholders’ meeting of JEI was held on October 24, 2013. The following table summarizes
the major matters approved by the unitholders’ meeting.
Proposal

Partial amendments to the articles ofincorporation

Election of one executive director

Summary
The articles of incorporation was amended as follows:・In response to the law to amend the Law Concerning Investment
Trusts and Investment Corporations of Japan was approved andpassed by the Diet, establishment of provision that allows for theacquisition of JEI’s investment units at a fee and establishment of
supplementary provision to eliminate the aforementioned
provision after the effective date of the amendment law at its
enforcement date (a date to be determined by government
ordinance within one year and six months after the date ofpromulgation of the revision law).
・Delete a provision stating that the general unitholders’ meetingshall convene in Tokyo’s 23 wards in preparation for a case inwhich it becomes difficult to hold the general unitholders’meeting in Tokyo’s 23 wards due to disasters and such.
・ Partial revision of a provision for the treatment of officers whoare substitutes who were not elected at general unitholders’meetings at which substitute officers are being elected,
concerning the period in which a resolution on the election ofsubstitute officers is effective,
・In response to the partial amendment of the “Rules on Real
Estate Investment Trust and Real Estate Investment
Corporations” by the Investment Trusts Association, Japan,
establish provisions concerning distributions in excess of income.
・Delete description regarding fees that ought to be paid to JEI’s
asset management company entrusted with the management ofassets during the initial operating period at JEI’s establishment.
・Other changes are the mention of Investment Trusts Association,
Japan becoming a general incorporated association and changes
in the text for the alteration, consolidation and clarification of
expressions, modification of wording and number of clauses.
Hideki Ogawa was elected as an executive director. The term of his
office is two years from November 1, 2013.

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

32

Election of one substitute executive
director
Election of three supervisory directors

Toshihiko Sasaki was elected as a substitute executive director.
Tsuyoshi Nagahama, Shunichi Maekawa and Eiji Takagi were
elected as supervisory directors. The term of their office is two
years from November 1, 2013.

2) Board of directors meeting
There were no applicable items during the period.

(3) Other
Unless otherwise stated, monetary amounts have been rounded down and percentage figures have beenrounded off to the nearest indicated unit in this Report.

Asset Management Report for 15th period (Semi-Annual Report for 15th Period)

33

Financial Statements
Japan Excellent, Inc.
For the six-month periods ended
December 31, 2013 and June 30, 2013
with Independent Auditor’s ReportJapan Excellent, Inc.
Balance Sheets
As of December 31, 2013 and June 30, 2013

AssetsCurrent assets:
Cash and cash equivalents including trust
accounts (Notes 4 and 6)
Rental receivables
Consumption taxes refundable
Other current assets
Total current assets

As of
As of
December 31,
June 30,
2013
2013(Thousands of yen)

As ofDecember 31,
2013(U.S. dollars)(Note 2)

¥ 17,914,434
833,899–
157,471
18,905,804¥ 16,632,393
728,928
397,252
211,552
17,970,125$ 169,966,163
7,911,761－
1,494,032
179,371,956

Property and equipment (Note 8):
Buildings and building improvements
Machinery and equipment
Furniture and fixtures
Land
Construction in progress
Buildings and building improvements for trust
accounts
Machinery and equipment for trust accounts
Furniture and fixtures for trust accounts
Land for trust accounts
Construction in progress for trust accounts
Less: accumulated depreciation
Net property and equipment

4,798,600
5,125
8,860
3,022,966
3,241

4,757,565
265
2,285
3,022,576
2,777

45,527,511
48,62984,05828,680,895
30,75092,745,310
518,882
146,763
143,748,477
16,835(15,477,022)
229,538,037

92,103,927
454,947
101,813
143,746,869
76,475(13,972,662)
230,296,837

879,936,532
4,922,977
1,392,436
1,363,837,542
159,725(146,840,816)
2,177,780,239

Investments and other assets:
Leasehold rights
Leasehold rights for trust accounts
Investment securities (Note 5)
Security deposits
Long-term prepaid expenses
Investment corporation bond issuance costs
Other assets
Total investments and other assets
Total assets

1,185,045
7,380,017
114,513
15,181
393,471
65,606
303,666
9,457,499¥257,901,340

1,185,045
7,380,017–
15,181
417,599
52,312
296,011
9,346,165¥ 257,613,127

11,243,310
70,019,135
1,086,458
144,038
3,733,121
622,443
2,881,085
89,729,590$2,446,881,785

The accompanying notes are an integral part of these financial statements.
36

Liabilities
Current liabilities:
Accounts payable – trade
Investment corporation bonds due within one year
(Notes 6 and 10)
Long-term debt due within one year (Notes 6 and 9)
Accounts payable – otherAccrued consumption taxes
Other current liabilities
Total current liabilities
Long-term liabilities:
Investment corporation bonds (Notes 6 and 10)
Long-term debt (Notes 6 and 9)
Security deposits from tenants (Note 6)
Security deposits from tenants for trust accounts(Note 6)
Total long-term liabilities
Total liabilities
Net assets (Note 11):Unitholders’ equity:
Unitholders’ capital
Units authorized: 2,000,000 units
Units issued and outstanding:
224,950 units as of December 31, 2012 and
224,950 units as of June 30, 2013
Surplus
Voluntary reserve
Reserve for advanced depreciation of
non-current assets
Retained earnings
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets

As of
As of
December 31,
June 30,
2013
2013(Thousands of yen)

As ofDecember 31,
2013(U.S. dollars)(Note 2)¥$762,932¥

717,640

7,238,445

12,000,000
15,500,000
337,804
243,807392,035
29,236,578

12,000,000
8,000,000
318,029–
388,181
21,423,850

113,851,992
147,058,824
3,204,972
2,313,161
3,719,491
277,386,885

17,000,000
80,900,000
638,826

12,000,000
93,400,000
640,175

161,290,323
767,552,182
6,060,967

9,412,615
107,951,441
137,188,019

9,466,074
115,506,249
136,930,099

89,303,751
1,024,207,223
1,301,594,108

117,901,291

117,901,291

1,118,608,075

37,3472,774,683
2,812,030
120,713,321
120,713,321¥ 257,901,340

183,3682,598,369
2,781,737
120,683,028
120,683,028¥ 257,613,127

354,336
26,325,266
26,679,602
1,145,287,677
1,145,287,677$ 2,446,881,785

The accompanying notes are an integral part of these financial statements.
37

Japan Excellent, Inc.
Statements of Income and Retained Earnings
For the periods from July 1, 2013 to December 31, 2013
and from January 1, 2013 to June 30, 2013

For the period
For the period
from July 1,
from
2013
January 1,
to December 31, 2013 to June 30,
2013
2013
(Thousands of yen)
Revenues:
Rental revenues (Note 14)
Other (Note 14)
Dividend income from investment in anonymous
association
Total revenues
Operating expenses:
Property operating expenses (Note 14)
Asset management fees
Custodian fees
Administrative service fees
Compensation for directors
Other
Total operating expenses
Operating income
Other income:Interest income(Note 14)
Other
Other expenses:
Interest expense
Loan arrangement fees
New unit issuance costs
Interest expense on investment corporation bonds
Amortization of investment corporation bondissuance costs
Other
Ordinary income
Extraordinary income:Gain on donation of non-current assets
Income before income taxes
Income taxes (Note 13):
Current
Deferred
Net income
Retained earnings at beginning of period
Retained earnings at end of period

For the period
from July 1,
2013
to December 31,
2013(U.S. dollars)(Note 2)

¥7,957,889
890,351¥7,716,520
692,993$75,501,794
8,447,351

2,139
8,850,379

9,173
8,418,686

20,296
83,969,441

4,605,010
389,209
19,33338,363
6,540
82,0715,140,526
3,709,853

4,350,117
370,459
17,26133,073
6,540
94,261
4,871,711
3,546,975

43,690,792
3,692,687
183,424
363,977
62,049778,667
48,771,596
35,197,845

1,937
3,401

1,569
1,506

18,37632,275644,155
108,127－
166,580

598,529
140,900
45,991
161,4076,111,531
1,025,871－
1,580,456

14,607
5,965
2,775,757

13,692181
2,589,350

138,582
56,597
26,335,459

－

9,893

－

2,775,757

2,599,243

26,335,459

1,082
(8)
2,774,683－¥2,774,683

917
8
2,598,318
51¥2,598,369

10,270(77)
26,325,266－$26,325,266

The accompanying notes are an integral part of these financial statements.
38

Japan Excellent, Inc.
Statements of Changes in Net Assets
For the periods from July 1, 2013 to December 31, 2013
and from January 1, 2013 to June 30, 2013

Balance as of December 31, 2012
Changes during the fiscal period:
Issuance of new units
Distributions from retained
earnings
Net income
Total changes during the fiscal
periodBalance as of June 30, 2013

Balance as of June 30, 2013
Changes during the fiscal period:
Reversal of reserve foradvanced depreciation of
non-current assets
Distributions from retained
earnings
Net income
Total changes during the fiscal
periodBalance as of December 31,
2013

Balance as of June 30, 2013
Changes during the fiscal period:
Reversal of reserve foradvanced depreciation of
non-current assets
Distributions from retained
earnings
Net income
Total changes during the fiscal
periodBalance as of December 31, 2013

For the period from January 1, 2013 to June 30, 2013
Net assets
Unitholders’ equity
Surplus
Voluntary
reserve
Reserve foradvanceddepreciation of
Total
non-current
Retained
unitholders’assetsearnings
Total surplus
equity(Thousands of yen)

Numberof units
in issueUnitholders’capital188,650¥102,052,384¥183,368¥ 2,309,505¥ 2,492,873¥104,545,257¥104,545,257

36,30015,848,907

–

–

–

15,848,907

15,848,907

–
–

–
–

–
–

(2,309,454)
2,598,318(2,309,454)
2,598,318(2,309,454)
2,598,318(2,309,454)
2,598,318–
224,950

15,848,907¥117,901,291–¥183,368

288,864¥ 2,598,369

288,864¥ 2,781,737

16,137,771¥120,683,028

16,137,771¥120,683,028

For the period from July 1, 2013 to December 31, 2013
Net assets
Unitholders’ equity
Surplus
Voluntary
reserve
Reserve foradvanceddepreciation of
Total
non-current
Retained
unitholders’assetsearnings
Total surplus
equity(Thousands of yen)

Total net assets

Numberof units
in issueUnitholders’capital224,950¥117,901,291¥183,368––(146,021)–(146,021)(146,021)(146,021)

–
–

–
–

–
–

(2,598,369)
2,774,683(2,598,369)
2,774,683(2,598,369)
2,774,683(2,598,369)
2,774,683––

224,950¥117,901,291¥¥ 2,598,369¥ 2,781,737¥120,683,028

Total net assets¥120,683,028(146,021)

176,31430,29330,29330,29337,347¥ 2,774,683¥ 2,812,030¥120,713,321¥120,713,321

For the period from July 1, 2013 to December 31, 2013
Net assets
Unitholders’ equity
Surplus
Voluntary
reserve
Reserve foradvanceddepreciation of
Total
non-current
Retained
unitholders’assetsearnings
Total surplus
equity(U.S. dollars) (Note 2)

Numberof units
in issueUnitholders’capital224,950$1,118,608,075$1,739,732––(1,385,396)–(1,385,396)(1,385,396)(1,385,396)

–
–

–
–

–
–

(24,652,460)
26,325,266(24,652,460)
26,325,266(24,652,460)
26,325,266(24,652,460)
26,325,266–
224,950–$1,118,608,075(1,385,396)$ 354,336

1,672,806$ 26,325,266

287,410$ 26,679,602

287,410$1,145,287,677

287,410$1,145,287,677$ 24,652,460$ 26,392,192$1,145,000,267

Total net assets$1,145,000,267

The accompanying notes are an integral part of these financial statements.
39

Japan Excellent, Inc.
Statements of Cash Flows
For the periods from July 1, 2013 to December 31, 2013
and from January 1, 2013 to June 30, 2013

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Amortization of investment corporation bondissuance costs
New unit issuance costs
Interest income
Interest expense
Increase in rental receivables
Decrease (increase) in consumption taxes refundable
Decrease (increase) in prepaid expenses
Increase in accounts payable – trade
Increase (decrease) in accounts payable – other
Increase (decrease) in unpaid consumption taxes(Decrease) increase in advances received
Decrease (increase) in long-term prepaid expenses
Gain on donation of non-current assets
Other, net
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Purchases of investment securities
Proceeds from redemption of investment securities
Purchases of property and equipment
Purchases of property and equipment for trust
accounts
Proceeds from security deposits from tenants
Payments for security deposits to tenants
Proceeds from security deposits from tenants fortrust accounts
Payments for security deposits to tenants for trust
accounts
Net cash used in investing activities
Cash flows from financing activities
Proceeds from short-term loans
Repayment for short-term loans
Proceeds from long-term debt
Repayment for long-term debt
Proceeds from issuance of new units
Proceeds from issuance of investment corporation
bonds
Payments for investment corporation bond issuance
costs
Payments for new unit issuance costs
Distributions to unitholders
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents

For the period
For the period
from
from
July 1,January 1,
2013 to2013 toDecember 31,
June 30,
2013
2013(Thousands of yen)

For the period
fromJuly 1,2013 toDecember 31,
2013(U.S. dollars)(Note 2)

¥ 2,775,757
1,504,417

2,599,243
1,433,885$ 26,335,459
14,273,406

14,607－(1,937)810,735(104,972)
397,252
44,97725,457
24,566
243,807(15,458)
24,128－(4,104)
5,739,232
1,937(790,680)(1,441)
4,949,048

13,69245,991(1,569)759,937(78,055)(397,252)(71,643)
84,318(9,370)(136,379)
78,472(86,142)(9,893)(178,138)
4,047,097
1,569(776,179)(5,196)
3,267,291

138,582－(18,376)
7,691,987(995,940)
3,768,996
426,724
241,526
233,070
2,313,161(146,657)
228,919－(38,937)
54,451,920
18,376(7,501,705)(13,674)
46,954,917(113,020)
2,715(27,134)–
196,305(3,968,886)(1,072,292)
25,761(257,441)(700,319)
3,931(5,280)(25,014,760)
216,628(3,427)(6,644,394)
37,292(50,094)

192,759

1,424,105

1,828,835(246,217)(892,565)(401,505)(27,551,540)(2,336,029)(8,468,362)－－
3,000,000(8,000,000)－

17,100,000(17,600,000)
19,600,000(7,000,000)
15,848,907－－
28,462,998(75,901,328)－

5,000,000－

47,438,330(27,900)－(2,746,542)(2,774,442)－(45,991)(2,311,540)
25,591,376(264,706)－(26,058,278)(26,322,984)

1,282,041

1,307,127

12,163,571¥

The accompanying notes are an integral part of these financial statements.
40

Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

16,632,393¥ 17,914,434

15,325,266¥ 16,632,393

157,802,592$ 169,966,163

The accompanying notes are an integral part of these financial statements.
41

Japan Excellent, Inc.
Notes to Financial Statements
For the periods from July 1, 2013 to December 31, 2013
and from January 1, 2013 to June 30, 2013

1.

Organization

Japan Excellent, Inc. (hereinafter, “JEI”), established on February 20, 2006 under the Law
Concerning Investment Trusts and Investment Corporations of Japan (the “Investment TrustLaw”), is a real estate investment corporation which primarily invests in office buildings.
JEI is externally managed by a licensed asset management company, Japan Excellent AssetManagement (“JEAM”). JEAM is owned 45% by NIPPON STEEL KOWA REAL ESTATE
CO., LTD., 20% by The Dai-ichi Life Insurance Company, Limited, 15% by Sekisui House,
Ltd. and 20% by other corporations.
JEI was listed on the Tokyo Stock Exchange on June 27, 2006. As of December 31, 2013, JEI
held 28 properties with 302,505 square meters of total leasable space and had leases with 157
tenants excluding residential tenants.

2.

Basis of Presentation

JEI maintains its accounting records and prepares its financial statements in accordance withaccounting principles generally accepted in Japan (“Japanese GAAP”), including provisions
set forth in the Investment Trust Law, the Corporation Law of Japan, the Financial
Instruments and Exchange Law of Japan and related regulations, which are different in certain
respects as to the application and disclosure requirements of International Financial ReportingStandards.
The accompanying financial statements are a translation of the financial statements of JEI,
which were prepared in accordance with Japanese GAAP and presented in the securities
report of JEI filed with the Kanto Local Finance Bureau. In preparing the accompanying
financial statements, certain reclassifications and modifications have been made for theconvenience of readers outside Japan. In addition, the notes to the financial statements include
information that might not be required under Japanese GAAP but is presented herein as
additional information. Amounts have been rounded to the nearest thousand yen in theaccompanying financial statements and in the notes thereto, whereas amounts were truncatedin the Japanese financial statements prepared in accordance with Japanese GAAP.
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The
rate of ¥105.40 = U.S.$1.00, the foreign exchange rate prevailing on December 31, 2013, hasbeen used for translation. The inclusion of such amounts is not intended to imply thatJapanese yen have been or could be readily converted, realized or settled into U.S. dollars atthat or any other rate.

42

3.

Summary of Significant Accounting Policies

Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks and short-term
investments which are highly liquid, readily convertible into cash with an insignificant risk ofprice fluctuation and with an original maturity of three months or less.
Investment securities
Non-marketable securities classified as other securities are carried at cost. Cost of securities
sold is determined by the moving average method. For ownership interests in an anonymous
association, JEI adopts the method of factoring in the net amount of anonymous association
income (loss) in proportion to its ownership interests.
Property and equipment including trust accounts and trademark rights
Depreciation is computed by the straight-line method over the estimated useful lives of therespective assets as follows:
Buildings
Building improvements
Machinery and equipment
Furniture and fixtures

2 – 60 years
2 – 59 years
7 – 16 years
3 – 15 years

Amortization of trademark rights is computed using the straight-line method over a period of
10 years.
Deferred assets
Investment corporation bond issuance costs are amortized using the straight-line method over
the amortization periods.
Income taxes
Income taxes are accounted for on the basis of taxable income for financial statement
purposes. The asset and liability method is used to recognize deferred tax assets and liabilities
for the expected future tax consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities.
Consumption taxes
Consumption taxes received and paid are not included in the accompanying statements ofincome and retained earnings. Consumption tax related to properties, which has not been
deducted, is included in the cost of the properties.
Property-related taxes
Principally, property-related taxes including property taxes, urban planning taxes anddepreciable property taxes are imposed on a calendar-year basis and are expensed as property
and other taxes (refer to Note 14).

43

3.

Summary of Significant Accounting Policies (continued)

JEI capitalizes the property-related taxes allocated to the sellers of properties to JEI at thetime of acquisition of such properties including trust accounts. No property-related taxes were
capitalized for the period from July 1, 2013 to December 31, 2013.The capitalized amount forthe period from January 1, 2013 to June 30, 2013 was ¥210,444 thousand.
Revenue recognition
Rental revenues are generally recognized on an accrual basis over the life of each lease.
Derivatives and hedge accounting
JEI utilizes interest-rate swap agreements as derivative financial instruments solely for the
purpose of hedging its exposure to fluctuation in interest rates. JEI has entered into certain
interest-rate swap contracts to hedge variable rates for its long-term debt obligations.
The corresponding interest-rate swap meets the criteria for the special hedge accounting
treatment under Japanese GAAP, and it is therefore not recorded at fair value.
The amounts paid or received via the swap transaction are recognized as interest adjustments.
An assessment of hedge effectiveness is omitted accordingly.
Properties in trust accounts
All assets and liabilities held in trust, for which real estate in possession of JEI was entrusted,
and all earnings and expenses resulting from such trust, are properly reflected in theaccompanying balance sheets and statements of income and retained earnings, respectively.

4.

Cash and Cash Equivalents

Cash and cash equivalents including trust accounts in the accompanying balance sheets andcash and cash equivalents in the accompanying statements of cash flows at December 31,
2013 and June 30, 2013 consisted of the following:

Cash and cash deposits
Cash in trust and deposits in trust
Cash and cash equivalents including
trust accounts

As of
As of
December 31,
June 30,
2013
2013(Thousands of yen)

As ofDecember 31,
2013(U.S. dollars)¥ 4,707,845
13,206,589¥ 3,600,763
13,031,630$ 44,666,462
125,299,701¥17,914,434¥16,632,393$169,966,163

44

5.

Investment Securities

Investment securities represent the ownership interests in an anonymous association issued byBois Vert LLC, which are backed by cash flows from real estate properties managed by Bois
Vert LLC.
These securities do not have a readily available market price. Additionally, due to a lack ofclearly identifiable cash flow information from the underlying properties, there is inherent
difficulty in estimating fair value. Accordingly, they are excluded from fair value disclosures.
6.

Financial Instruments

For the periods from July 1, 2013 to December 31, 2013 and from January 1, 2013 toJune 30, 2013
Overview(1) Policy for Financial Instruments
JEI borrows from banks, issues investment corporation bonds and issues investment units
to procure funds required to grow its assets under management and to repay liabilities,
based on the financial policy set forth by JEAM and the Company’s Annual Funds
Procurement Plan. When procuring funds by means of interest-bearing debt, matters suchas seeking longer durations and maturities, securing fixed interest rates and diversifying
maturity dates are taken into consideration to achieve a more stable financial situation
and avoid the risk of future interest rate hikes. Surplus funds may be invested in deposits
and safe, liquid financial assets and investment securities, but are, in principle, placed indeposits. Derivative transactions are used solely for the purpose of hedging against therisk of fluctuations in interest rates of borrowings and the like.
(2) Types of Financial Instruments, Related Risks and Risk Management System(a) Market Risks (Interest Rate Fluctuation Risks)Borrowings and investment corporation bonds are primarily used to acquire
properties or to refinance existing borrowings. Some of such debt are floating rate
instruments and thus are exposed to the risk of interest rate fluctuations. Based oninterest rate forecasts developed through constant monitoring activities, JEI hedges
against the risk of interest rate fluctuations using derivative transactions(interest-rate swaps), which swap a floating interest rate for a fixed interest rate. To
reduce credit risk, derivative transactions (interest-rate swaps) are entered into
exclusively with counterparties that are financial institutions having a high credit
rating. For hedging accounting methods, hedging instruments, hedged items,
hedging policies and methods for evaluation the effectiveness of hedging activities,
see “Derivatives and hedge accounting” under Summary of Significant Accounting
Policies. Investment securities represent equity investments in a special purpose
company as ownership interests in an anonymous association, and are exposed tocredit risk of the issuer and interest rate fluctuation risk. JEI works to reduce suchrisks by regularly evaluating the results of operations and the financial condition of
the issuer, etc.

45

6.

Financial Instruments (continued)(b) Liquidity Risk (the risk of being unable to procure funds required for repayments)
Borrowings and investment corporation bonds are exposed to liquidity risk. This risk
is reduced by diversifying maturity dates and funding sources, executing
commitment line agreements (as described in Note 9, “Short-Term Loans andLong-Term Debt,” there is no balance outstanding under the facility agreements asof December 31, 2013), and liquidity risk is managed through the constantmanagement of liquidity on hand.

(3) Supplementary Explanation of the Estimated Fair Value of Financial Instruments
The fair value of financial instruments is based on their quoted market price, if available.
When there is no quoted market price available, fair value is reasonably estimated. Sincevarious assumptions and factors are reflected in estimating the fair value, different
assumptions and factors could result in a different fair value.
Fair value of financial instruments
The following are carrying values and fair values as of December 31, 2013 and June 30, 2013of financial instruments and the differences between them. When fair value is difficult toascertain, it is excluded from the following table (Note 2).
As of December 31, 2013
As of June 30, 2013
Carrying value
Fair value
Difference
Carrying value
Fair value
Difference(Thousands of yen)
(1) Cash and cash deposits(2) Cash in trust anddeposits in trust
Total assets¥(3) Short-term loans(4) Investment corporation
bonds due within one
year(5) Long-term debt due
within one year(6) Investment corporation
bonds(7) Long-term debt
Total liabilities¥(8) Derivative transactions *¥4,707,845

13,206,589¥ 17,914,434
–

¥

–

¥

13,206,589¥ 17,914,434¥––

13,031,630¥ 16,632,393

–

¥

–

¥

¥

¥

4,707,845

3,600,763–

As of December 31, 2013
Carrying value
Fair value
Difference(U.S. dollars)

¥

–

$

13,031,630¥ 16,632,393¥––

125,299,701$ 169,966,163

–

¥

–

$

¥

¥

3,600,763

44,666,462–

44,666,462$–

125,299,701$ 169,966,163

$

–
–

–

$

–

$

$

12,000,000

12,030,000

30,00012,000,000

12,086,400

86,400113,851,992

114,136,622

284,630

15,500,000

15,537,316

37,3168,000,000

8,000,000–

147,058,824

147,412,867

354,043

17,000,000
80,900,000¥ 125,400,000

17,204,445
82,082,964¥126,854,725

204,445
1,182,964¥ 1,454,725

12,000,000
93,400,000¥125,400,000

12,150,200
94,393,798¥ 126,630,398

150,200
993,798¥1,230,398

161,290,323
767,552,182$ 1,189,753,321

163,230,029
778,775,753$ 1,203,555,271

1,939,706
11,223,571$ 13,801,950

–

¥

–

¥

–

¥

–

¥

–

¥

–

$

–

$

–

$

–

* The value of assets and liabilities arising from derivatives is shown at net value, with the amount inparentheses representing net liability position.

(Note 1)
Methods for calculating the fair value of financial instruments and matters related toderivatives transactions
Assets(1) Cash and cash deposits and(2) Cash in trust and deposits in trust
Carrying value approximates fair value because of the short maturities of these
instruments.

46

6.

Financial Instruments (continued)

Liabilities(3) Short-term loans,(5) Long-term debt due within one year and(7) Long-term debt
Where floating rates apply, fair value is based on book value. The fair value of suchliabilities is considered to be close to book value because floating rates reflect market
interest rates within a short period of time.
If the loan is part of long-term debt, in the case of floating-rate debt hedged by aninterest-rate swap, the fair value is calculated in a similar manner using the total principal
and interest amount, treated in combination with the interest-rate swap, given that theinterest-rate swap is subject to the special treatment of interest-rate swaps under Japanese
GAAP.
The fair value of long-term fixed-rate debt and long-term fixed-rate debt due within one
year are calculated by discounting the combined value of principal and interest of theapplicable long-term debt by a reasonable rate assuming the same amount were to beborrowed anew.
(4) Investment corporation bonds due within one year and(6) Investment corporation bonds
The fair value of investment corporation bonds issued by JEI is based on quoted market
prices.
(8) Derivative transactions
Please refer to Note 16, “Derivative Transactions.”(Note 2)Financial instruments for which fair value is deemed extremely difficult to determine(1) Investment securities (*1)(2) Security deposits from tenants(*2)(3) Security deposits from tenants fortrust accounts (*2)

As of
As of
December 31,
June 30,
2013
2013(Thousands of yen)

As ofDecember 31,
2013(U.S. dollars)¥ 114,513¥－$ 1,086,458¥ 638,826¥ 640,175$ 6,060,967¥9,412,615¥9,466,074$89,303,751(*1) Investment securities (ownership interests in an anonymous association) do not have a readily
available market price and reasonable estimates of cash flows from the underlying properties cannot
be made, so the fair value is deemed extremely difficult to determine. Accordingly, they are excluded
from fair value disclosures.
(*2) Security deposits from tenants and security deposits from tenants for trust accounts in leased properties
are not subject to fair value disclosure because such deposits have no market price. Moreover, it isdifficult to calculate the actual period of time on deposit, namely, from the time the tenant moves in
until the time the tenant vacates, and it is extremely difficult to rationally estimate cash flow.

47

6.

Financial Instruments (continued)(Note 3)The scheduled redemption amounts date of financial assets after the balance sheet dateCash and cash deposits
Cash in trust anddeposits in trust
Total

Cash and cash deposits
Cash in trust anddeposits in trust
Total

Cash and cash deposits
Cash in trust anddeposits in trust
Total

As of December 31, 2013
2 to 3 years 3 to 4 years(Thousands of yen)

1 year or less

1 to 2 years¥ 4,707,845

¥

–

¥

–

¥

–

¥

–

¥

–

13,206,589¥17,914,434

¥

–
–

¥

–
–

¥

–
–

¥

–
–

¥

–
–

1 year or less

1 to 2 years$ 44,666,462

$

–

$

–

$

–

$

–

$

–

125,299,701$169,966,163

$

–
–

$

–
–

$

–
–

$

–
–

$

–
–

1 year or less

1 to 2 years¥ 3,600,763

¥

–

¥

–

¥

–

¥

–

¥

–

13,031,630¥16,632,393

¥

–
–

¥

–
–

¥

–
–

¥

–
–

¥

–
–

As of December 31, 2013
2 to 3 years 3 to 4 years(U.S. dollars)

As of June 30, 2013
2 to 3 years 3 to 4 years(Thousands of yen)

4 to 5 years

4 to 5 years

4 to 5 years

Over 5 years

Over 5 years

Over 5 years(Note 4)The scheduled redemption amounts of borrowings, investment corporation bonds and otherinterest-bearing debt after the balance sheet date
1 year or less
Short-term loans
Investment
corporation bonds
due within one year
Long-term debt due
within one year
Investment
corporation bonds
Long-term debt
Total

¥

–

1 to 2 years¥–

As of December 31, 2013
2 to 3 years
3 to 4 years(Thousands of yen)
¥

–

¥

–

4 to 5 years¥–

Over 5 years¥–

12,000,000

–

–

–

–

–

15,500,000

–

–

–

–

–

–
–
¥ 27,500,000

5,000,000
15,540,000¥ 20,540,000

5,000,000
16,760,000¥ 21,760,000–
24,000,000¥ 24,000,000

7,000,000
14,000,000¥ 21,000,000–
10,600,000¥ 10,600,000

48

6.

Financial Instruments (continued)
1 year or less

Short-term loans
Investment
corporation bonds
due within one year
Long-term debt due
within one year
Investment
corporation bonds
Long-term debt
Total

Short-term loans
Investment
corporation bonds
due within one year
Long-term debt due
within one year
Investment
corporation bonds
Long-term debt
Total

7.

–

$

As of December 31, 2013
2 to 3 years
3 to 4 years(U.S. dollars)

1 to 2 years
–

$

–

$

–

$

4 to 5 years–$

Over 5 years–$

113,851,992

–

–

–

–

–

147,058,824

–

–

–

–

–

–
–
$260,910,816

47,438,330
147,438,330$194,876,660

47,438,330
159,013,283$ 206,451,613–
227,703,985$ 227,703,985

66,413,663
132,827,324$199,240,987–
100,569,260$ 100,569,260

1 year or less

1 to 2 years

As of June 30, 2013
2 to 3 years
3 to 4 years(Thousands of yen)

4 to 5 years

Over 5 years

¥

–

¥

–

¥

–

¥

–

¥

–

–

¥

12,000,000

–

–

–

–

–

8,000,000

–

–

–

–

–

–
–
¥ 20,000,000

5,000,000
20,500,000¥ 25,500,000–
23,540,000¥ 23,540,000

5,000,000
15,760,000¥ 20,760,000–
26,000,000¥ 26,000,000

2,000,000
7,600,000¥ 9,600,000

Investment and Rental Property

For the periods from July 1, 2013 to December 31, 2013 and from January 1, 2013 toJune 30, 2013
JEI owns rental office buildings and other properties in Tokyo and other regions for the
purpose of generating rental income. The following is the carrying value and fair value as ofDecember 31, 2013 and June 30, 2013 for such real estate for lease.
As ofJune 30, 2013
¥238,861,898

As ofJune 30, 2013
$2,266,241,921

Carrying value
ChangeAs ofduring period (*1)
December 31, 2013
(Thousands of yen)¥(758,799)¥238,103,099

Carrying value
ChangeAs of(*1)
during period
December 31, 2013
(U.S. dollars)$(7,199,238)$2,259,042,683

Fair value
As ofDecember 31, 2013
¥226,440,000
Fair value
As ofDecember 31, 2013
$2,148,387,097

49

7.

Investment and Rental Property (continued)
Carrying value
ChangeAs of(*2)
during period
June 30, 2013
(Thousands of yen)

As ofDecember 31, 2012
¥211,177,823¥27,684,075

Fair value
As ofJune 30, 2013

¥238,861,898¥225,682,000(Note 1)
Carrying value represents the acquisition cost less accumulated depreciation.
(Note 2)(*1) Changes during period comprise an increase of ¥396,969 thousand ($3,766,318) related
to the capital expenditure for the Kowa Kawasaki-Nishiguchi Building and a decreaseof ¥1,504,360 thousand ($14,272,865) for depreciation costs.
(*2) Changes during period comprise increases of ¥10,260,613 thousand related to theacquisition of AKASAKA INTERCITY (Additional acquisition of compartmentalized
ownership), ¥3,877,473 thousand related to the acquisition of Kowa Nishi-Shimbashi
Building, ¥1,865,265 thousand related to the acquisition of Osaka Kogin Building(Land with leasehold interest), ¥537,656 thousand related to the acquisition of
Kawasaki Nisshincho Building (Additional acquisition of co-ownership interest),¥6,490,587 thousand related to the acquisition of Core City Tachikawa, ¥5,552,239
thousand related to the acquisition of SE Sankyo Building and a decrease of ¥1,433,828
thousand for depreciation costs.
(Note 3)
Fair value as of December 31, 2013 and June 30, 2013 is appraisal value provided bythird-party real estate appraisers.

8.

Property and Equipment

Property and equipment at December 31, 2013 and June 30, 2013 consisted of the following:
As of December 31, 2013
As of June 30, 2013
Acquisition
Accumulated
Net
Acquisition
AccumulatedNet
cost
depreciation
book value
cost
depreciation
book value(Thousands of yen)
Buildings and building
improvements¥
4,798,600
Machinery andequipment
5,125
Furniture and fixtures
8,860
Land
3,022,966
Construction in progress
3,241
Buildings and building
improvements for trust
accounts
92,745,310
Machinery andequipment for trust
accounts
518,882
Furniture and fixtures
for trust accounts
146,763
Land for trust accounts
143,748,477
Construction in progress
16,835for trust accounts
Total¥ 245,015,059¥(658,713)¥

4,139,887¥

4,757,565¥(588,678)¥

4,168,887

Acquisition
cost$

As of December 31, 2013
AccumulatedNet
depreciation
book value(U.S. dollars)

45,527,511$(6,249,648)$

39,277,863

(302)
(859)
–
–

4,823
8,001
3,022,966
3,241

265
2,285
3,022,576
2,777

(72)
(668)
–
–

193
1,617
3,022,576
2,777

48,62984,05828,680,895
30,750(2,867)(8,149)––45,76275,90928,680,895
30,750(14,556,797)

78,188,513

92,103,927(13,147,516)

78,956,411

879,936,532(138,110,026)

741,826,506(206,234)

312,648454,947(190,383)

264,564

4,922,977(1,956,681)

2,966,296(54,117)–

92,646
143,748,477

101,813
143,746,869(45,345)–

56,468
143,746,869

1,392,436
1,363,837,542(513,445)–

878,991
1,363,837,542–¥ (15,477,022)

16,835¥ 229,538,037

76,475¥ 244,269,499–¥ (13,972,662)

76,475¥ 230,296,837

159,725$ 2,324,621,055–$ (146,840,816)

159,725$ 2,177,780,239

50

9.

Short-Term Loans and Long-Term Debt

Short-term loans and long-term debt as of December 31, 2013 and June 30, 2013 consisted of
the following:
As of December 31, 2013
Weighted-averageAmountinterest rate (*1)
(Thousands ofyen)Long-term debt due within
one year:
Unsecured loans from banks due on
December 27, 2013
Unsecured loans from an insurancecompany due on July 31, 2014
Unsecured loans from a bank due on
July 31, 2014
Unsecured loans from banks due on
December 29, 2014
SubtotalLong-term debt:
Unsecured loans from an insurancecompany due on July 31, 2014
Unsecured loans from a bank due on
July 31, 2014
Unsecured loans from banks due on
December 29, 2014
Unsecured loans from an insurancecompany and a bank due on June 30,
2015
Unsecured loans from banks due on
November 30, 2015
Unsecured loans from banks due on
November 30, 2015
Unsecured loans from banks due on
November 30, 2015
Unsecured loans from banks due on
June 29, 2016
Unsecured loans from banks due on
November 29, 2016
Unsecured loans from banks due on
January 31, 2017
Unsecured loans from banks due on
January 31, 2017
Unsecured loans from insurancecompanies due on January 31, 2017
Unsecured loans from a bank due on
November 30, 2017
Unsecured loans from banks due on
November 30, 2017
Unsecured loans from banks due on
November 30, 2017
Unsecured loans from insurancecompanies due on November 30,
2017
Unsecured loans from an insurancecompany due on June 29, 2018
Unsecured loans from banks due on
June 30, 2018
Unsecured loans from a bank due on
January 31, 2020
Unsecured loans from banks due on
January 31, 2020
Unsecured loans from an insurancecompany due on January 31, 2020
Unsecured loans from banks due on
January 31, 2020
Unsecured loans from a bank due on
June 30, 2021
Subtotal
Total

–

–

As of June 30, 2013
Weighted-averageAmountinterest rate (*1)
(Thousands of
yen)

As of
December 31,
2013
Amount(U.S. dollars)

8,000,000

0.98000%–

2,000,000

2.25875%

(*2)

–

–

18,975,332

2,000,000

2.28417% (*2)––

18,975,332

11,500,000
15,500,000

0.87091%–
8,000,000–

109,108,160
147,058,824––

2,000,000

2.25875% (*2)

–

–

–

2,000,000

2.28417%

(*2)

–

–

–

11,500,000

0.88000%

5,000,000

2.27344% (*2)

47,438,330

4,540,000

1.13750%(*2)

43,074,004

1.14125%(*2)

18,975,332(*2)

37,950,664–

5,000,000

2.27344% (*2)

4,540,000

1.13750%(*2)

1.14125%(*2)

4,000,000

0.97125%(*2)

4,000,000

0.97125%

13,000,000

1.36375% (*2)

13,000,000

1.36375% (*2)

123,339,659

3,760,000

1.24375%(*2)

3,760,000

1.24375%(*2)

35,673,624

1.24750%(*2)

1.24750%(*2)

47,438,330

4,000,000

1.03000%(*2)

4,000,000

1.03000%(*2)

37,950,664

3,000,000

1.09734% (*2)

3,000,000

1.09734% (*2)

28,462,998

6,000,000

1.73875%(*2)

6,000,000

1.73875%(*2)

56,925,996

1.08375%(*2)

1.08375%(*2)

28,462,998

2,000,000

1.04550 %(*2)

2,000,000

1.04550 %(*2)

18,975,332

1,000,000

1.19212% (*2)

1,000,000

1.19212% (*2)

9,487,666

3,000,000

1.65125%(*2)

3,000,000

1.65125%(*2)

28,462,998

11,000,000

0.81225%(*2)

11,000,000

0.81225%(*2)

104,364,327

2,000,000

1.60000% (*2)

2,000,000

1.60000% (*2)

18,975,332

2,600,000

1.36400% (*2)

2,600,000

1.36400% (*2)

24,667,932

1,000,000

1.31261%(*2)

1,000,000

1.31261%(*2)

9,487,666

1. 00000%

(*2)

–

–

1.60750% (*2)

2,000,000
93,400,000¥ 101,400,000

2,000,000

5,000,000

3,000,000

3,000,000
2,000,000
80,900,000¥ 96,400,000

2,000,000

5,000,000

3,000,000

1.60750% (*2)

28,462,998
18,975,332
767,552,182$ 914,611,006(*1) The weighted-average interest rate is weighted by the balance of each borrowing at the end of the period
and rounded to the nearest fifth decimal place. As for the borrowings, which were hedged by interest-rate
swaps for the purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used to
calculate the weighted average of interest.
(*2) These are fixed-rate debt. (Fixed-rate debt by the interest-rate swaps agreement is included.)

51

9.

Short-Term Loans and Long-Term Debt (continued)

The scheduled repayment amounts of long-term debt after the balance sheet date (excluding
the long-term debt due within one year) are as follows:

Long-term debt

Long-term debt

1 to 2 years

2 to 3 years

3 to 4 years
4 to 5 years(Thousands of yen)Over 5 years¥15,540,000¥16,760,000¥24,000,000¥14,000,000¥10,600,000

1 to 2 years

2 to 3 years

3 to 4 years(U.S. dollars)

4 to 5 years

Over 5 years$147,438,330$159,013,283$227,703,985$132,827,324$100,569,260

JEI has commitment lines of ¥14,000 million ($132,827 thousand) with three financial
institutions to reduce refinancing risk and enhance financial stability. The full amount of suchcommitment lines was unused at December 31, 2013.

10. Investment Corporation Bonds
Details of total investment corporation bonds outstanding as of December 31, 2013 and June30, 2013 are summarized as follows:

Unsecured bond due on
March 11, 2014
Unsecured bond due on
June 26, 2015
Unsecured bond due on
November 4, 2016
Unsecured bond due on
November 2, 2018
Unsecured bond due on
November 2, 2018
Total

As of
December 31,
2013

As of December 31, 2013
WeightedaverageAmountinterest rate
(Thousandsof yen)As of June 30, 2013
WeightedaverageAmountinterest rate
(Thousandsof yen)¥12,000,000

1.52000%¥12,000,000

5,000,000

1.29000%

5,000,000

1.29000%

47,438,330

5,000,000

1.01000%

5,000,000

1.01000%

47,438,330

2,000,000

1.40000%

2,000,000

1.40000%

18,975,332

5,000,000¥29,000,000

0.46000%－¥24,000,000－

47,438,330$275,142,315

Amount(U.S. dollars)

1.52000% $113,851,993

The scheduled redemption amounts of investment corporation bonds after the balance sheet
date are as follows:

Investment
corporation bonds

Investment
corporation bonds

1 year or less

1 to 2 years

2 to 3 years
3 to 4 years(Thousands of yen)

¥12,000,000¥5,000,000¥5,000,000

1 year or less

1 to 2 years

2 to 3 years
3 to 4 years(U.S. dollars)$113,851,992 $47,438,330$47,438,330––

4 to 5 years

Over 5 years–¥7,000,000
4 to 5 years

Over 5 years$66,413,663–

52

11. Net Assets
In accordance with the Investment Trust Law, JEI issues only non-par value investment units
and maintains net assets of at least ¥50 million.

12. Per Unit Information
Net assets per unit were ¥107,324 ($1,018) as of December 31, 2013 and ¥536,488 as of June30, 2013. Net income per unit was ¥2,466 ($23) for the period from July 1, 2013 to December
31, 2013, and ¥11,884 for the period from January 1, 2013 to June 30, 2013 and wascomputed based on the weighted-average number of units outstanding during the respective
periods.
JEI implemented a five-for-one split of its investment units with January 1, 2014 as theeffective date. Net assets per unit as of December 31, 2013 and net income per unit for theperiod from July 1, 2013 to December 31, 2013 are calculated assuming that the split ofinvestment units was implemented at the beginning of the period.

13. Income Taxes
JEI is subject to income taxes in Japan.
JEI’s policy is to make dividend distributions in excess of 90% of distributable income foreach fiscal period in order to meet the condition set forth in the Special Taxation Measures
Law of Japan concerning the deductibility of cash dividends paid for income tax purposes.
Details of significant components of deferred tax assets and liabilities as of December 31,
2013 and June 30, 2013 are summarized as follows:
As of
As of
December 31,
June 30,
2013
2013(Thousands of yen)
Deferred tax assets:
Accrued enterprise taxes
Total deferred tax assets
Net deferred tax assets

¥23
23
¥23

¥15
15
¥15

As of
December 31,
2013(U.S. dollars)
$221
221
$221

A reconciliation of the differences between the statutory tax rate and the effective tax rate forthe periods from July 1, 2013 to December 31, 2013 and from January 1, 2013 to June 30,
2013 is as follows:
For the period
For the period
from July 1, 2013 from January 1,
to December 31, 2013 to June 30,
2013
2013
Statutory tax rate
Reconciliation:
Deductible distributions paid
Other
Effective tax rate

36.59%

36.59%(36.57)0.02
0.04%(38.63)
2.08
0.04%
53

14. Breakdown of Property Rental Business Revenues and Expenses
For the period
For the period
from July 1, 2013 from January 1,
to December 31, 2013 to June 30,
2013
2013
(Thousands of yen)
Rental business revenues:
Rental revenues
Other
Total rental businessrevenues
Property operating expenses:
Property management costs
and fees
Utilities
Property and other taxes
Insurance
Repairs and maintenance
Depreciation
Other
Total property operating
expensesProfit

For the period
from July 1, 2013
to December 31,
2013(U.S. dollars)¥7,957,889
890,351¥7,716,520
692,993$75,501,794
8,447,351

8,848,240

8,409,513

83,949,145

1,110,059
1,005,469
632,315
24,956
121,725
1,504,360
206,126

1,136,773
804,651629,281
23,915
109,881
1,433,828
211,788

10,531,867
9,539,556
5,999,191
236,773
1,154,882
14,272,865
1,955,658

4,605,010¥4,243,230

4,350,117¥4,059,396

43,690,792$40,258,353

Interest income
Interest income received related to negotiable certificates of deposit of ¥328 thousand (U.S.
$3,119) in the period from July 1, 2013 to December 31, 2013 was included in interest incomein the statements of income and retained earnings
15. Leases
JEI leases properties on which rental revenues are earned. At December 31, 2013 and June 30,
2013, future lease revenues under non-cancelable operating leases are summarized as follows:
As of
As of
December 31,
June 30,
2013
2013(Thousands of yen)
Due within one year
Due after one year
Total

¥ 442,335
517,255¥ 959,590¥ 590,411
734,191¥1,324,602

As ofDecember 31,
2013(U.S. dollars)$ 4,196,726
4,907,540$ 9,104,266

54

16. Derivative Transactions
Derivative Transactions as of December 31, 2013
(1) Hedge accounting not applied
Not applicable.
(2) Hedge accounting applied
The following are the contract values or values corresponding to the principal amount as
stipulated by contract as of December 31, 2013 for each hedge accounting method
applied.
Hedge
accounting
methodType of derivativetransaction

Contract amount
Fair
More thanvalue
one year(Thousands of yen)

Hedgeditem

SpecialInterest-rate swap
treatment ofLong-term
Receive floating,interest-rate
debt
pay fixed
swaps¥57,900,000¥57,900,000

Method ofcalculating
the fair value*

Contract amount
Fair
More thanvalue
one year(U.S. dollars)$549,335,863$549,335,863

Method ofcalculating
the fair value** Since the above interest-rate swap qualifies for hedge accounting and meets certain matching criteria, theswap is not recorded at fair value on the accompanying balance sheets, as described in the summary ofsignificant accounting policies.
In addition, since the swap and the long-term debt hedged by the swap are accounted for as a unit, the fairvalue of the swap is disclosed as part of the fair value of the hedged long-term debt in the fair value
disclosure in Note 6, “Financial Instruments.”

Derivative Transactions as of June 30, 2013
(1) Hedge accounting not applied
Not applicable.
(2) Hedge accounting applied
The following are the contract values or values corresponding to the principal amount as
stipulated by contract as of June 30, 2013 for each hedge accounting method applied.
Hedge
accounting
methodType of derivativetransaction

Hedgeditem

SpecialInterest-rate swap
treatment ofLong-term
Receive floating,interest-rate
debt
pay fixed
swaps

Contract amount
Fair
More thanvalue
one year(Thousands of yen)
¥54,900,000¥54,900,000

Method ofcalculating
the fair value** Since the above interest-rate swap qualifies for hedge accounting and meets certain matching criteria, theswap is not recorded at fair value on the accompanying balance sheets, as described in the summary ofsignificant accounting policies.
In addition, since the swap and the long-term debt hedged by the swap are accounted for as a unit, the fairvalue of the swap is disclosed as part of the fair value of the hedged long-term debt in the fair value
disclosure in Note 6, “Financial Instruments.”55

17. Related Party Transactions
For the period from July 1, 2013 to December 31, 2013
(1) Parent company and major corporate unitholders
Not applicable.
(2) Affiliates
Not applicable.
(3) Sister companies
Not applicable.
(4) Directors and major individual unitholders
Name

Description oftransaction

Chifumi Toda

Payment of asset
management fees to
JEAM

Amount(Thousands(U.S. dollars)of yen)¥389,209$3,692,687

Account
Accounts
payableBalance at the end of period(Thousands(U.S. dollars)of yen)¥250,277$2,374,551

For the period from January 1, 2013 to June 30, 2013
(1) Parent company and major corporate unitholders
Not applicable.
(2) Affiliates
Not applicable.
(3) Sister companies
Not applicable.
(4) Directors and major individual unitholders
Name
Chifumi Toda

Description oftransaction
Payment of asset
management fees to
JEAM

Amount(Thousands of yen)
¥370,459

Account
Accounts
payableBalance at the end of period(Thousands of yen)
¥242,991

56

18. Segment Information
For the periods from July 1, 2013 to December 31, 2013 and from January 1, 2013 toJune 30, 2013
Since JEI has been engaged in the real-estate leasing business as a single segment, segment
information has been omitted.
Information about products and services
Since revenues from external customers for a single segment of similar products and services
accounted for more than 90% of total operating revenues, information about products andservices has been omitted.
Information about geographic area
(1) Revenues
Since 100% of the total operating revenues were generated from external customers
within Japan, geographical breakdown of revenues has been omitted.
(2) Property and equipment
Since 100% of total property and equipment on the balance sheet are located within
Japan, geographical breakdown of such property and equipment has been omitted.
Information about major clients
Since no single external client represents 10% or more of JEI’s total operating revenues,
information about major clients has been omitted.

19. Distribution Information
In accordance with Section 33.1.2 of the bylaws set forth by JEI for distributions of cash
dividends, the amount of dividends payable, which is limited by the amount of unappropriatedretained earnings, shall be in excess of 90% of its distributable income for the fiscal period as
set forth in Section 67.15 of the Special Taxation Measures Law. Consequently, JEI set
income available for distributions of dividends at ¥2,774,533,300 ($26,323,845), which is the
maximum integral multiple of the 224,950 units issued not exceeding unappropriated retained
earnings at December 31, 2013. No cash distribution exceeding the income amount set forthin Section 33.1.4 of the bylaws of JEI shall be made.
On February 17, 2014, the Board of Directors approved a resolution to make a cash
distribution of ¥12,334 ($117) per unit aggregating to ¥2,774,683,020 ($26,325,266) tounitholders of record as of December 31, 2013.

57

20. Significant Subsequent Events(1) Split of investment units
JEI implemented a five-for-one split of its investment units (hereinafter the “Split ofInvestment Units”) with December 31, 2013 as the record date and January 1, 2014 as theeffective date.
A. Purpose of split
The purpose of the split is to widen the spectrum of investors and increase theliquidity of JEI’s investment units by decreasing the per unit price of investment
units.
B. Method of split
JEI implemented a five-for-one split of its investment units held by unitholders statedor recorded on the unitholder registry as of December 31, 2013, the day before theeffective date of the Split of Investment Units.
C.

Increase in number of investment units through the split
Number of investment units issued and outstanding before split: 224,950 units
Increase in number of investment units through split: 899,800 units
Number of investment units issued and outstanding after split: 1,124,750 units
Total number of investment units authorized after split: 10,000,000 units(Note) The total number of investment units authorized after the split was changed
from 2,000,000 units to 10,000,000 units in accordance with the ratio of the
split (five for one).

(2) Issuance of new units
On January 8, 2014 and January 20, 2014, the Board of Directors approved resolutions tocomplete a public offering and third-party allocation, respectively of new units asoutlined below. JEI received payments on January 27, 2014 and February 26, 2014 forthe said units, which were issued in accordance with the conditions outlined below. As
a result of the issuance of new units, JEI had unitholders’ capital of ¥127,950 million($1,213,952 thousand) with 1,212,750 units in issue at February 26, 2014.
A. Issuance of new units through a public offering(i) Method of issuance(ii) Number of units issued(iii) Issue price (offer price)(iv) Total offer price(v) Proceeds per unit(vi) Aggregate proceeds(vii) Payment datePublic offering
80,000 units¥118,072 ($1,120) per unit
¥9,445 million ($89,618 thousand)¥114,196 ($1,083)¥9,135 million ($86,676 thousand)January 27, 2014

B. Issuance of new units through allocation to a third party(i) Method of issuance(ii) Number of units issued(iii) Proceeds per unit(iv) Aggregate proceeds(v) Payment date(vi) Allottee

Allocation to a third party
8,000 units¥114,196 ($1,083) per unit
¥913 million ($8,667 thousand)February 26, 2014
Mizuho Securities Co., Ltd.
58

20. Significant Subsequent Events (continued)(3) Acquisition of properties
The following properties were acquired subsequent to December 31, 2013:
A. HAMARIKYU INTERCITY
1.
2.

Type of asset acquired
Asset

3.
4.
5.
6.
7.

Location
Acquisition priceContract date
Delivery dateSellerTrust property
HAMARIKYU INTERCITY (Additional acquisitionof compartmentalized ownership)
1-9-11, 15 Kaigan, Minato-ku, Tokyo¥12,000 million ($113,852 thousand) (Note)
January 8, 2014
February 4, 2014NIPPON STEEL KOWA REAL ESTATE CO., LTD.

(Note) The acquisition price does not include fees related to the acquisition, JEI’s
proportional share of the applicable real estate tax and city planning tax, andconsumption tax.
B. Aoba-dori Plaza
1.
2.
3.
4.
5.
6.
7.

Type of asset acquired
Asset
Location
Acquisition priceContract date
Delivery dateSellerTrust property
Aoba-dori Plaza
3-2-1 Chuo, Aoba-ku, Sendai-shi, Miyagi¥2,120 million ($20,114 thousand) (Note)
January 8, 2014
February 4, 2014
Bois Vert LLC(Note) The acquisition price does not include fees related to the acquisition, JEI’s
proportional share of the applicable real estate tax and city planning tax, andconsumption tax.
C. Daiwa Minami-morimachi Building
1.
2.
3.

Type of asset acquired
Asset
Location

4.
5.
6.
7.

Acquisition priceContract date
Delivery dateSellerTrust property
Daiwa Minami-morimachi Building
2-6, 2-chome Kita, Tenjinbashi, Kita-ku, Osaka-shi,
Osaka¥4,410 million ($41,841 thousand) (Note)
January 8, 2014
February 4, 2014
Bois Vert LLC(Note) The acquisition price does not include fees related to the acquisition, JEI’s
proportional share of the applicable real estate tax and city planning tax, andconsumption tax.

59

20. Significant Subsequent Events (continued)(4) Debt financing
A. On January 30, 2014, JEI entered into an individual loan agreement to use as a
portion of the payment (including related expenses) for the acquisition of
HAMARIKYU INTERCITY (Additional acquisition of compartmentalized
ownership) and Aoba-dori Plaza and Daiwa Minami-morimachi Building.
1.

LenderMizuho Bank, Ltd.

2.

Loan amount¥9,000 million ($85,389 thousand)

3.

Interest rate

0.58% (Floating rate)

4.

Scheduled drawdown dateFebruary 4, 2014

5.

Principal repayment date

March 11, 2014

6.

Principal repayment method

To be repaid in full on the principal repayment
date (early repayment permitted)

7.

Collateral

Unsecured/Non-guaranteed

B. On March 6, 2014, JEI concluded the following term-loan agreement effective
March 10, 2014 to be allocated for a portion of the funds for the repayment of ¥9.0
billion of borrowings maturing on March 11, 2014.
1.

Lenders

Mizuho Bank, Ltd.,The Norinchukin Bank,

Mitsubishi UFJ Trust and Banking Corporation,and Mizuho Trust & Banking Co., Ltd.
2.

Loan amount¥3,750 million ($35,578 thousand)

3.

Interest rate

0.745% (Fixed rate)

4.

Scheduled drawdown date

March 11, 2014

5.

Principal repayment dateNovember 1, 20186.

Principal repayment method

To be repaid in full on the principal repayment
date (early repayment permitted)

7.

Collateral

Unsecured/Non-guaranteed60

20. Significant Subsequent Events (continued)
C. On March 6, 2014, JEI concluded the following term-loan agreement effective
March 10, 2014 to be allocated for a portion of the funds for the repayment of ¥9.0
billion of borrowings maturing on March 11, 2014.
1.

Lenders

Mizuho Bank, Ltd.,The Norinchukin Bank,

Mitsubishi UFJ Trust and Banking Corporation,and Mizuho Trust & Banking Co., Ltd.
2.

Loan amount¥3,750 million ($35,578 thousand)

3.

Interest rate

0.775% (Fixed rate)

4.

Scheduled drawdown date

March 11, 2014

5.

Principal repayment date

March 8, 20196.

Principal repayment method

To be repaid in full on the principal repayment
date (early repayment permitted)

7.

Collateral

Unsecured/Non-guaranteed(5) Issuance of Investment Corporation Bonds
On March 10, 2014, JEI issued the following investment corporation bonds (total
amount of ¥13.0 billion) to be allocated to the full amount for the redemption of the 1st
Series Unsecured Investment Corporation Bonds and for a portion of the funds for the
repayment of ¥9.0 billion of borrowings maturing on March 11, 2014.
A. 6th Series Unsecured Investment Corporation Bonds
1.

Name

6th Series Unsecured Investment Corporation
Bonds

2.

Issue date

March 10, 20143.

Total issue amount¥5,000 million ($47,438 thousand)

4.

Interest rate

0.46%

5.

Redemption date

March 11, 20196.

Collateral

Unsecured/Non-guaranteed

B. 7th Series Unsecured Investment Corporation Bonds
1.

Name

7th Series Unsecured Investment Corporation
Bonds

2.

Issue date

March 10, 20143.

Total issue amount¥8,000 million ($75,901 thousand)

4.

Interest rate

1.13%

5.

Redemption date

March 11, 2024

6.

Collateral

Unsecured/Non-guaranteed

61