Japan Real Estate Investment Corporation

SEMIANNUAL REPORT
September 2015
For the period from April 1, 2015 to September 30, 2015

Profile
Japan Real Estate Investment Corporation (“the Company”) was established as one of
the first real estate investment corporations in Japan following revisions to the Act on
Investment Trusts and Investment Corporations of Japan, as amended, or the ITA. Its
investments focus primarily on office buildings, and it is aiming to maintain geographical diversity while seeking stable growth and dividends in the medium- to long-term.
The Company was listed on the Tokyo Stock Exchange on September 10, 2001
(Securities Code: 8952).
Note: Investment‌corporations, including the Company, are special legal entities incorporated and operated underthe ITA. Accordingly, the “units” of such investment corporations, including the units of the Company, aregoverned by the ITA and represent the equity interests in such investment corporations, which may differ incertain material respects from the “shares” governed by the Corporation Law of Japan and representing theequity interests in Japanese ordinary corporations incorporated and operated under the Corporation Law ofJapan. Investors and readers are specifically reminded to pay attention to such differences when reviewing thissemiannual report and making any investment decision on or in respect of the units of the Company.
“Unitholders” of the Company may be construed accordingly. Each investor and reader should consult theirown legal, tax and other advisors regarding all Japanese legal, tax and other consequences of an investment in
the units of the Company, with specific reference to their own legal, tax and other situation and any recentchanges in applicable laws and guidelines or their interpretation.

Contents
The Strengths of Japan Real Estate Investment Corporation

p. 1

To Our Unitholders

p. 2

Financial Highlights

p. 6

Top 10 Unitholdersp. 6

Unit Price Performance

p. 6

Portfolio Highlights

p. 7

Asset Management Summaryp. 8

Asset Size, Property Acquisitions and Performance Trends

p.10

The Portfolio of Japan Real Estate Investment Corporation

p.12

Overview of Portfolio Properties

p.17

Financial Section

p.23

Corporate Data

p.51

The Strengths of Japan Real Estate Investment Corporation
STRENGTHS

Stable Dividends

Collaboration withSponsors— Actual dividend per unit— ‌Expertise offor the September 2015 period:¥8,001

Mitsubishi Estate Co., Ltd.
and Mitsui & Co., Ltd.
is being fully utilized.

— Forecasted dividend per unit
for the March 2016 period:¥8,080

Steady Growth with
Quality Portfolio

Sound Financial Base
As of September 30, 2015

As of September 30, 2015

— Total acquisition price:¥927,778 million—
70
Maintainsproperties— ‌The first listed J-REIT, showing steady
performance for 28 consecutive periods—	‌Highest level of credit ratings for a J-REIT:

A+
AA

from S&P,

A1

from Moody’s,

from R&I—	‌LTV (Interest-bearing debt / Total assets):

41.5%—	‌Long-term, fixed interest-bearing debt ratio*:

90.2%* ‌Long-term, fixed interest loans + Investment corporation bonds (including
current portion of Long-term, fixed interest loans and Investment corporation bonds) / Total interest-bearing debt

Japan Real Estate Investment Corporation1

To Our Unitholders
In the September 2015 period, we were able to return to a dividend in the 8,000 yen range
for the first time in three and a half years. By continuing operations that put an emphasis on
external growth, we acquired three new properties for a total of 44.2 billion yen. Meanwhile,for internal growth, we actively made efforts in upward rent revisions and were able to continue raising rent levels of existing buildings following the March 2015 period.

Business Performance for the September 2015 Period

In the investment market for real estate, against a backdrop of continued favorable conditions in the financing environment and antici-

Summary of Financial Results and Cash Dividend

pation of further improvement in the market for office buildings, theIn the September 2015 period (April 1, 2015 to September 30, 2015)

desire of domestic and overseas investors to acquire properties

Japan Real Estate Investment Corporation (“the Company”) recorded

has been strong and, as a result, competition to acquire properties isoperating revenues totaling 29,980 million yen, up 5.9% comparedbecoming increasingly more severe.

with the previous period. On the earnings front, operating income

Under such market conditions, the Company made soundincreased 7.2%, to 12,054 million yen. After deducting expenses forinvestments under the Investment Guideline of providing stable divi-interest payments on loans and other costs, ordinary income increased

dends to unitholders, which was set forth at the time of the Company’s

9.0%, to 10,487 million yen, and profit increased 8.9%, to 10,476 mil-listing on the TSE and remains unchanged to this date. Accordingly,

lion yen.

the Company was able to set its dividend at the 8,000 yen level for theTurning to dividends, the Company will make cash distributions
using accounting profits based on the dividend policy outlined in
Article 32-2 of the Company’s Articles of Incorporation, in an amountfirst time in three and a half years (seven periods) for the current
period under review.
For internal growth, as the Company made efforts to maintain andthat exceeds 90% of earnings available for dividends as required by

improve occupancy rates through meticulous property leasing, theArticle 67-15 of the Special Taxation Measures Law of Japan. Based on

Company’s occupancy rate was 97.7% as of September 30, 2015,

this policy, the Company was able to maintain retained earnings

remaining at nearly the same level as the 97.8% occupancy rate asbrought forward as the amount of dividends did not exceed earningsof March 31, 2015.

available for distribution at the end of the period. Therefore, the total

As for external growth, the Company acquired the Umeda Squareamount of dividends that the Company has determined to pay out is

Building (Osaka City, Osaka Prefecture), located in the Umeda area—

10,475,789,310 yen for the period under review, which is a multiple

the center of Osaka’s business district—for 15,523 million yen on Aprilof 1,309,310—the number of units outstanding as of September 30,

1, 2015. In addition, the Company also acquired an additional 5.0%

2015. Accordingly, the per-unit cash dividend is 8,001 yen.

quasi-co-ownership interest of trust beneficiary right in trust of realestate pertaining to the Shiodome Building (Minato-ku, Tokyo) for

Operating Environment and Performance

10,100 million yen on May 1, 2015, in an effort to acquire additional

During the period under review, the Japanese economy continued

interest in existing portfolio properties. Accordingly, the Company’s

on a gradual trend toward improvement due to improved corporate

quasi-co-ownership percentage of the Shiodome Building rose from

earnings and a recovery in capital investment, as well as steady personal

40.0% to 45.0%. Furthermore, on September 1, 2015, the Company

consumption supported by improvement in employment conditions.

acquired a 55.35443% share of ownership of the AER (Sendai City,

In addition, in the market for leased office space, there was further

Miyagi Prefecture) for 18,640 million yen, a large-scale multi-func-

improvement in the supply-demand balance, primarily within thetional building that is directly connected to the JR Sendai Station via

central Tokyo, and advertised rents continued to rise modestly, mainly

elevated pedestrian walkways. In this way, the Company is working tofor relatively new buildings located in excellent locations. Furthermore,

improve the quality and expand the size of its portfolio.

in other major cities, a gradual improvement in occupancy rates was seen.

2

Japan Real Estate Investment Corporation

We will continue to focus our efforts on external growth moving forward. However, amid
severe competition for property acquisition, we will adhere to a consistent evaluation criteria
and acquire properties that possess a medium- to long-term competitive edge. In addition,
as the market for leased office space steadily recovers, we will focus on improving earnings
from existing buildings by raising rent levels. In this way, we will aim for stable dividend
growth at an even higher level.
As a result of the above, the Company’s portfolio at the end of the

The funds procured from issuing new investment units by public

fiscal period under review, September 30, 2015, consisted of 70 proper-

offering were used to repay short-term loans and redeem the 7thties, with a total acquisition price of 927,778 million yen. Total leasable

investment corporation bond totaling 10,000 million yen, whichspace stood at 832,030m , with a total of 1,461 tenants.

matured on April 23, 2015. The funds were also allocated to the addi-

2

Notes: 1.‌The part of the Jingumae Media Square Building site (acquisition price: 614
million yen) that was expropriated by the Tokyo Metropolitan Government
on October 30, 2009, is included in the total acquisition price. The totalacquisition price in the subsequent sections follows the same convention.
2.‌The Nippon Brunswick Building (land with leasehold interest), whosebuilding ownership was transferred on August 23, 2013, is included in theabove number of properties and total acquisition price, but is not included
in total leasable space or total number of tenants.

tional acquisition of co-ownership interest pertaining to the Shiodome
Building mentioned above. Funds procured from issuing new investment units by third-party allocation were also used to repay short-termloans. Also, in regard to the 8th investment corporation bond totaling
10,000 million yen, which matured on July 23, 2015, the Company
temporarily used funds procured from short-term loans to carry out
the bond’s redemption. Afterwards, the Company made a partial

Finance Activities

repayment of these short-term loans using borrowings through general

In addition to maintaining LTV ratio (ratio of interest-bearing debt tosyndication (6,500 million yen) and cash reserves (2,000 million yen).

total assets) of 30% to 40% under normal business conditions, theAs a result of these financing activities, as of September 30, 2015,

Company strives to maintain a sound and conservative financial profile

the Company’s total interest-bearing debt was 373,450 million yen.

by raising its long-term fixed interest-bearing debt ratio (ratio of long-term

This amount consists of long-term loans totaling 316,750 million yen

fixed interest-bearing debt (including the current portion of long-term(including the current portion of long-term loans totaling 32,100

loans and investment corporation bonds) to total interest-bearing debt).

million yen), short-term loans totaling 36,700 million yen, andConcerning new loans related to property acquisition and the refinancing of existing loans, the Company carries out loans strategicallyand flexibly after giving close consideration to borrowing cost and theinvestment corporation bonds totaling 20,000 million yen (there isno current portion of investment corporation bonds).
As of September 30, 2015, the Company’s long-term fixed

relationship the Company has with the lenders. The Company alsointerest-bearing debt ratio stood at 90.2%, maintaining a level of overtakes into consideration such factors as staggering maturities, extended

90%. In addition, the LTV ratio stood at 41.5%.

durations, diversity of stable lenders, and the possibility of repayment

Also, on September 18, 2015, the Company increased thewith funds procured from issuing new investment units. Moreover, in

commitment line from 43,000 million yen to 50,000 million yen.

the event that interest rate fluctuation occurs on a long-term loan, theCompany reduces future risk of interest rate fluctuation by making use

The Company’s credit ratings as of September 30, 2015 were as follows:of interest-rate swap transactions.
Rating Agency

Credit RatingStandard & Poor’s Ratings Japan K.K.

Long-term: A+;
Short-term: A-1;
Outlook: Stable

units by public offering and 3,780 units by third-party allocation).

Moody’s Japan K.K.

Rating: A1; Outlook: Negative

As a result of this issuance, the Company procured approximately

Rating and Investment
Information, Inc.

Rating: AA; Outlook: Stable

In regard to funding activities in the fiscal period under review, at
the Board of Directors’ meetings held on March 18, 2015, and March
30, 2015, the Company decided to issue new investment units (54,000

29,189 million yen on April 6, 2015, from the public offering portion
and approximately 2,043 million yen on May 11, 2015, from thethird-party allocation portion.

Japan Real Estate Investment Corporation3

Outlook(iii) Stabilize revenues and earnings	With the aim of stabilizing revenues and earnings, the Company

Operating Environment

will endeavor to secure fixed and long-term leasing agreements

In the Japanese economy, amid a continued trend toward improve-with its large-scale tenants.

ment in corporate earnings, employment, and personal income, it isanticipated that the introduction of various political policies will(iv) Reduce management costs

support further economic recovery. However, depending on such

	The Company has introduced sound competitive principles forfactors as monetary policy in the United States and deceleration of theits multiple property management companies to follow and is

Chinese economy and other emerging nations in Asia, it is stillrevamping their management systems and cost structures onnecessary to bear in mind the risk of an economic downturn.

an ongoing basis.

In the market for leased office space, although the pace of declining
vacancy rates is expected to slow down, thanks to steady demand for office

Property Acquisitions and Sales

spaces, it is anticipated that the gradual rise in rent levels will continue,

The Company has adopted the following policies for acquiring

especially for buildings with a strong competitive edge.

properties.

Meanwhile, in the investment market for real estate, intensifying
competition to acquire properties and transactions carried out at(i)	To access information quickly, the Company continues tohigher valuation is likely to continue as the financing market isenhance its property information channels while working to

expected to remain favorable.

develop new channels.

Property Management(ii)	In its acquisition activities, the Company continues to meticulously

Based on the conditions stated above, the Company will adhere tomonitor and examine economic, physical, and legal factors,

the following management policies in order to maintain and improve

including rights-related issues, when selecting properties. In par-profitability.

ticular, with regard to the structure of buildings, the Company
requires buildings to meet or exceed new earthquake-resistance(i) Strengthen relationships of trust with existing tenants

standards, verifies the need for renovations by appropriately grasp-

	The Company has contracts with numerous property management

ing current conditions based on engineering reports, and exclusively

companies. Most of these companies were already handling thetargets properties capable of maintaining a competitive edge inmanagement of their buildings before the Company acquired

terms of the facilities they offer over the medium- to long-term.

them and had thus built relationships of trust with their tenants.
The Company will work to further solidify these relationships by(iii)	In accordance with its acquisition policies, the Company shallanticipating tenants’ needs and providing tailored services tomaintain its portfolio so that 70% or more of the portfolio

increase tenant satisfaction, thereby maintaining and improving

properties are located within the Tokyo metropolitan area, withoccupancy rates, raising rent levels, and curtailing demands forthe remaining 30% or less located in other major cities.

rent reduction.
Under these policies, the Company will continue to acquire highly(ii) Fill vacancies promptly

competitive properties. At the same time, in order to further improve the	In cooperation with the property management companies men-quality of its portfolio, the Company will remain open to the replace-tioned above, the Company will actively seek the most appropriate
tenants for each property, based on location and features, in order
to fill current and anticipated vacancies as rapidly as possible.
Furthermore, the Company will work to uncover additional needs
for floor space among the existing tenants.

4

Japan Real Estate Investment Corporation

ment of portfolio properties with due consideration given to timing.

Hiroshi Nakajima (Left)
Executive Director of Japan Real Estate Investment Corporation

Hiroshi Katayama (Right)
CEO & President of Japan Real Estate Asset Management Co., Ltd.

Financial Policy(i)	In principle, the Company shall maintain an LTV ratio that does

Performance Forecasts for the March 2016 and
September 2016 Fiscal Periods

not exceed 65%. To ensure an even lower interest-bearing debt

For the March 2016 period (October 1, 2015 to March 31, 2016), theratio, the Company adopts the conservative target level ofCompany forecasts operating revenues totaling 30,380 million yen,

30% to 40%.

operating income totaling 12,150 million yen, ordinary income totaling 10,590 million yen, and profit totaling 10,580 million yen. The(ii)	The Company shall set the ceiling for the combined total of loans
and investment corporation bonds at one trillion yen.

Company plans to declare a cash dividend is 8,080 yen per unit.
For the September 2016 period (April 1, 2016 to September 30,2016), the Company forecasts operating revenues totaling 30,870(iii)	When obtaining a loan, the Company shall only negotiate withmillion yen, operating income totaling 12,310 million yen, ordinary

qualified institutional investors (limited to those defined underincome totaling 10,760 million yen, and profit totaling 10,740 million

Article 67-15 of the Act on Special Measures Concerning Taxation)yen. The Company plans to declare a cash dividend is 8,210 yen per unit.

before executing a loan agreement.

Operating revenues, operating income, ordinary income, profit, andcash dividend per unit may vary depending on changes in the market(iv)	With the purpose of maintaining liquidity at an appropriate level,

situation.

the Company may establish preliminary borrowing frameworks
such as overdraft agreements and commitment line agreements,
or may conclude preliminary contracts for loans, as needed.
(v)	The Company aims for the best possible execution of financialtransactions by negotiating with numerous financial institutions.

Hiroshi Nakajima
Executive Director of Japan Real Estate Investment Corporation

Hiroshi Katayama
CEO & President of Japan Real Estate Asset Management Co., Ltd.

Japan Real Estate Investment Corporation

5

Financial Highlights
Millions of yen
For the period from
April 1, 2015 to
September 30, 2015

For the period from
October 1, 2014 toMarch 31, 2015

For the period from
April 1, 2014 toSeptember 30, 2014

For the period from
October 1, 2013 toMarch 31, 2014

For the period from
April 1, 2013 to
September 30, 2013

Operating revenues¥29,980¥28,314¥27,760¥26,582¥26,225

Operating income

12,054

11,243

11,255

10,831

10,781

Ordinary income

10,487

9,625

9,582

9,083

9,143

Profit10,476

9,619

9,572

9,070

9,129

Net operating income (NOI) (Note 1)

19,67018,412

18,105

17,481

17,205

Funds from operations (FFO) (Note 2)

16,80815,62915,455

14,71914,619

21.5

22.6

22.9

20.9

23.4

10,475

9,613

9,571

9,070

9,129

1,309,310

1,251,530

1,251,530

1,188,280

594,140

8,001

7,681

7,648

7,633

15,366

FFO multiple (Times) (Note 3)
Cash distribution
Number of units (Note 4)
Dividend per unit (Yen) (Note 4)

Notes: 1. NOI = Property-related revenues – Property-related expenses (excluding Depreciation)
2. FFO = Profit + Depreciation – Gain (loss) on sale of properties
3. FFO multiple = Unit price at end of the respective term / FFO per unit (Annualized)(Annualized portion of the calculation given in Note 3 assumes a fiscal period of 183 days for the period ended September 30, 2013, 182 days for the period ended March
31, 2014, 183 days for the period ended September 30, 2014, 182 days for the period ended March 31, 2015 and 183 days for the period ended September 30, 2015.)
4. The Company implemented a 2-for-1 split of each investment unit as of January 1, 2014.

Top 10 Unitholders As of September 30, 2015
Unitholders

Units% of total units
outstanding

Japan Trustee Services Bank, Ltd. (Shintaku Acc.) ...........................................................................................................................................................................................................................................................

248,783

19.00%The Master Trust Bank of Japan, Ltd. (Shintaku Acc.) ................................................................................................................................................................................................................................................

109,242

8.34%

Trust & Custody Services Bank, Ltd. (Toshin Acc.) .......................................................................................................................................................................................................................................................

103,528

7.91%

The Nomura Trust and Banking Co., Ltd. (Toshin Acc.) .........................................................................................................................................................................................................................................

54,608

4.17%

STATE STREET BANK WEST CLIENT-TREATY 505234 .........................................................................................................................................................................................................................

24,994

1.91%

CBLDN-STICHTING PGGM DEPOSITARY-LISTED REAL ESTATE PF FUND ..................................................................................................................................................

24,801

1.89%

STATE STREET BANK AND TRUST COMPANY 505223 .......................................................................................................................................................................................................................

22,332

1.71%

STATE STREET BANK-WEST PENSION FUND CLIENTS-EXEMPT 505233 ..........................................................................................................................................................

22,301

1.70%

NOMURA BANK (LUXEMBOURG) S.A. ..........................................................................................................................................................................................................................................................................

17,2251.32%

Mitsubishi Estate Co., Ltd. ............................................................................................................................................................................................................................................................................................................................

17,1201.31%

Unit Price Performance
TSE REIT Index   

325%

TOPIX   The Company

300%
275%
250%
225%
200%
175%
150%
125%
100%
75%
50%
Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sep. Mar. Sept. Mar. Sep. Mar. Sep. Mar. Sep.
2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 20156

Japan Real Estate Investment Corporation

Portfolio Highlights
Trends in the state of portfolio management

Total leasable space (m2)

Number ofbuildings

Total number oftenants

Total leasable
space (m2)Occupancy
rate (%)

September 2001

20

213

133,927

94.6

March 2002

24

353

201,884

94.0

September 2002

27

362

215,928

95.3

March 2003

30

383

236,69394.4

September 2003

32

407

246,062

95.1

March 2004

36

477

273,157

94.8

September 2004

39

504

293,105

93.6

March 2005

46

669

336,026

97.6

September 2005

50

814

364,610

98.6

March 2006

52

866

400,090

98.7

September 2006

49

835

396,173

98.2

March 2007

50

887

397,928

97.8

September 2007

50

879

406,605

98.7

March 2008

53

931

479,87795.9

September 2008

54

970

508,296

96.1

March 2009

55

993

516,41195.5

September 2009

55

977

516,421

93.3

March 2010

55

979

566,27793.0

September 2010

55

992

567,612

92.4

March 2011

57

1,004

589,00293.2

September 2011

56

1,009

584,982

94.6

March 2012

57

1,058

629,761

94.7

September 2012

58

1,082

645,787

95.5

March 2013

60

1,131

700,759

96.7

September 2013

61

1,146

713,180

96.3

March 2014

63

1,223

750,956

96.7

September 2014

63

1,239

752,723

97.8

March 2015

67

1,350

793,976

97.8

April 2015

68

1,387

804,346

97.6

May 2015

68

1,385

808,365

97.7

June 2015

68

1,382

808,365

97.5

July 2015

68

1,385

808,365

97.4

August 2015

68

1,390

September 2015

69

1,461

808,418
832,030

97.5
97.7

0

200,000

400,000

600,000

800,000

1,000,000

Sep. ’15
periodNotes: 1. The total number of tenants is the gross number of tenants by building.
2. Nippon Brunswick Building (land with leasehold interest) is not included.

50.0

60.0

70.0

80.0

90.0

100.0
Occupancy rate (%)

Portfolio breakdown As of September 30, 2015
Properties by geographic region

Tenants by industry type

(Percentage based on acquisition price)(Percentage based on leased space)
Electricity andheat supply services 1.4%

Nagoya city

3.5%

Osaka city and
Kyoto city

7.0%

Tokyo metropolitan
area excluding
Tokyo 23 wards

7.6%

Other area 7.7%

Other 9.7%

Ceramics 1.5%

Information services 9.8%

Public services andassociations 2.7%

74.2%

Machinery 3.2%

Finance

8.7%

Insurance 3.4%
Communications

3.7%

Real estateSpecialist services(consulting, etc.) 4.1%
Construction* ‌Nippon Brunswick Building(land with leasehold interest)
is not included.

Electric devices 9.0%

Medical 2.8%

Tokyo 23 wards

Service industries 10.1%

8.3%

4.5%

Media and advertisement

5.1%

Retail and restaurants
Pharmaceuticals

5.7%

6.5%

Japan Real Estate Investment Corporation

7

Asset Management Summary
For the period from April 1, 2015 to September 30, 2015

Kitashinchi Station

JR LinDaiichi Ke
ihin
i

Hamam
Station atsucho

Daimon D
or

Daimon Sta

tion

Ona
Statiorimonn

Shiodome Building

Umeda Square Building

Shiodome Building (Additional Acquisition)

Property Summary

Property Summary

Location:
12-17, 1 Chome, Umeda, Kita-ku, Osaka City, Osaka Prefecture● Site area: 	‌1,652.88m2● Floor area of building: 	‌18,673.28m2● Structure: 	‌Steel-framed, steel-framed reinforced concrete structure,flat roof● Floors: 	‌Above ground: 17 floors
Below ground: 3 floors● Completion:
July 1995● Acquisition date:
April 1, 2015
● Acquisition price: 	‌¥15,523,520 thousand● Type of ownership:
Land: Ownership
Building: Ownership● Seller:
Hayabusa Godo Kaisha● Property‌
management Mitsubishi Jisho Property Management Co., Ltd.
company:	‌●

Location: 	‌2-20, 1 Chome, Kaigan, Minato-ku, Tokyo
Site area: 	‌12,054.22m2● Floor area of building: 	‌115,930.83m2● Structure: 	‌Steel-framed, steel-framed reinforced concrete structure,flat roof● Floors: 	‌Above ground: 24 floors
Below ground: 2 floors● Completion: 	‌December 2007
● Acquisition date: 	‌May 1, 2015
● Acquisition price:¥10,100 million● Type of ownership: 	‌Land: Ownership
Building: Ownership (5% of quasi-co-ownership)● Seller:
Godo Kaisha Shiodome Investment● ‌Property management
Mitsubishi Jisho Property Management Co., Ltd.
company:●●

The Company evaluated the following two points in the determinationof acquisition.

The Company evaluated the following two points in the determinationof acquisition.

(1) Superior location(1) High competitiveness as an office buildingThis property is located in Umeda, the center area for business in Osaka, within a couple of minutes’ walk from Osaka Station of the JR Line, Kitashinchi Station of the JR
Tozai Line, Umeda Station of the Hanshin Electric Railway and the Hankyu Railway,
Umeda Station, Higashi-Umeda Station and Nishi-Umeda Station of the Osaka
Municipal subway. In addition, it is directly connected to the underground mall,
DIAMOR OSAKA, where there are lots of restaurants and shops. It provides high­convenience and attractiveness.

This property is located in front of Hamamatsucho Station of the JR Line and is
the south gateway of the Shiodome area. It is also within three minutes’ walk from
Hamamatsucho Station of the JR Line and Daimon Station of the Toei Asakusa Lineand the Toei Oedo Line. In addition, it is accessible to Tokyo Station and Shinagawa
Station, which are hub stations for Shinkansen, and also to Haneda Airport (Tokyo
International Airport), providing great traffic convenience. As for other features, it is
a comparatively new building completed in December 2007 and has over 1,000 tsubo
area and 2,900 mm ceiling height (with 100 mm of OA floor) of open-plan spacious
standard floor for leasing.

(2) High competitiveness as an office building

High level of visibility with its dignified appearance, its traffic convenience and 185
tsubo of standard floor area for leasing provide high competitiveness to meet a varietyof needs of tenants including those who weighs on accessibleness for their customers.
The common area of this building is expected to be strongly appealing for tenants as it
was renewed last year.

8on

Umeda Square
Buildinga Statiumed

Nishi-umeda Station

Um
in
nsh
Ha ation
St

Shiba-koen
Stationneda

iHigash

io
Stat
eda
Um

Osaka Station

Hibiya DorieAcquired Assets

Japan Real Estate Investment Corporation(2) Increase in share of co-ownership of the building
Since the Company’s shares of quasi-co-ownership of trust beneficiary right in trust of
this property went up to 45.0% from 40.0% after the above acquisition, further
improvement in operational efficiency and the value of the asset can be expected.

Issuance of New Investment Units

Public offering of new investment units

AER

ri
Do

Aoba

n

tio
ai StaSend

Sendai Station

Aoba DoritationDori S

54,000Offer price (subscription price):¥557,620 per unit

Aggregate amount of offer price(subscription price):¥30,111,480,000

Issue price:¥540,550 per unit

Aggregate amount of issue price:¥29,189,700,000

Payment date:

April 6, 2015

Issuance of new investment units by third-party allocation

Dori

i
isug
Kam

EkimaegoAta

Hirose Dori

Number of newly issued units:

AER
Property Summary

Location: 	‌3-1, 1 Chome, Chuo, Aoba-ku, Sendai City,
Miyagi Prefecture● Site area: 	‌6,591.05m2● Floor area of building: 	‌73,186.57m2● Structure: 	‌Steel-framed, steel-framed reinforced concrete structure,flat roof● Floors: 	‌Above ground: 31 floors
Below ground: 3 floors● Completion: 	‌March 1998
● Acquisition date: 	‌September 1, 2015
● Acquisition price:¥18,640 million● Type of ownership: 	‌Land: Ownership (share of co-ownership)
Building: Co-ownership of compartmentalized building units(share of ownership of the building: 55.35443%)*● Seller:
SCG16 Tokutei Mokuteki Kaisha● ‌Property management
Office units: Mitsubishi Jisho Property Management Co., Ltd.
company:
Retail units: CROPS, Inc.
●

* Share of ownership of the building represents the shares of communal space stipulated in the bylaw.

The Company evaluated the following two points in the determinationof acquisition.

Number of units issued:

3,780

Issue price:¥540,550 per unit

Aggregate amount of issue price:¥2,043,279,000

Payment date:

May 11, 2015

Allottee:

SMBC Nikko Securities Inc.

With the funds procured from the above public offering of
new investment units, the Company acquired an additional
5.0% (10,100 million yen) quasi-co-ownership interest oftrust beneficiary right in trust of real estate pertaining to
the Shiodome Building. In addition, the Company maderepayments of short-term loans and redeemed investment
corporation bonds. The remaining funds have been allocated as cash reserves for acquiring specified assets andrepaying loans in the future.
In addition, with the funds procured from the­issuance of new investment units by third-party allocation,
the Company made a prepayment of short-term loans.
The remaining funds have been allocated as cash reserves
for acquiring specified assets and repaying loans in the future.

(1) Superior location
This property has a strong advantage as a business hub as it provides a high conveniencein traffic due to its direct connection to Sendai Station, which is a terminal station for
the Tohoku region, with an elevated pedestrian walkway (only a two-minute walk),
and is also accessible to the Sendai-Miyagi exit of the Tohoku expressway and the
Sendai Airport.

(2) High competitivenessThis property is a multi-tenant, large-scale multi-functional building completed in1998 with a municipal center named the “Sendai City Information & Industrial Plaza”,
which includes a multi-purpose hall used for variety of events, and retail floors, where
many specialty stores can be found. In addition, approx. 300 tsubo leasable areas on
the standard office floor can be divided into eight zones (of approx. 30 or 60 tsubo)and it corresponds to the BCP (Business Continuity Plan) with built-in passive massdampers (vibration control device). Its competitiveness is very high for this area.

Japan Real Estate Investment Corporation

9

Asset Size, Property Acquisitions and Performance Trends
Occupancy rate

94.6% 94.0% 95.3% 94.4% 95.1% 94.8% 93.6% 97.6% 98.6% 98.7% 98.2% 97.8% 98.7% 95.9%

In September 2001, the Company became the first J-REIT in Japan listed on the Tokyo Stock
Exchange. Since then, the Company has targeted stable management to fulfill its goal of maintaining or increasing dividend per unit over the medium- to long-term. The Company’s growth is basedon external growth strategies that aim to increase earnings through the acquisition and transfer ofproperties as well as internal growth strategies that seek to optimize earnings from properties alreadyheld. The size of the Company’s assets (total acquisition price) has grown from ¥92.8 billion at IPO
to ¥927.7 billion as of the period ended September 30, 2015 due to the steady achievement of external growth strategies. However, in terms of internal growth strategies, ongoing efforts are being

Steady growthin asset size

made in such areas as maintaining stable occupancy rates and reducing building management costs.

¥518

Total acquisition price (Number of properties)

First J-REIT listed on
TSE began with
¥92.8 billion in assets

¥144
¥92

billionbillion¥290¥164
billion

¥218

¥239

billion

¥412

¥418

billionbillion¥441 ¥446
billionbillion¥326
billionbillion

¥183

¥192

billionbillion

(30)

(32)

(36)

(39)

(46)

(50)

(52)

(49)

(50)

(50)

(53)

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended¥7,227¥7,558¥7,301¥7,355¥7,912¥7,975¥8,086¥8,651¥8,760¥9,250¥14,611billionbillion(20)
At IPO(24)(27)

Period ended Period ended

Sep. 2001 Mar. 2002 Sep. 2002 Mar. 2003 Sep. 2003 Mar. 2004 Sep. 2004 Mar. 2005 Sep. 2005 Mar. 2006 Sep. 2006 Mar. 2007 Sep. 2007 Mar. 2008

Dividend per unit*¥7,491¥6,426

Listing and issuance of units
Sep. 2001
Listed on TSE
as first J-REIT

May 2002
First Follow-On(First for a J-REIT)

Oct. 2003
Second Follow-On

Apr. 2005
Third Follow-On

Oct. 2006
Fourth Follow-On

Mar. 2008
Fifth Follow-On

Sep. 2001
IPO* JRE implemented a 2-for-1 split of each investment unit as of January 1, 2014. The figures for the March 2002 through the September 2013 periods have taken the split into account.

10

Japan Real Estate Investment Corporation

96.1% 95.5% 93.3% 93.0% 92.4% 93.2% 94.6% 94.7% 95.5% 96.7% 96.3% 96.7% 97.8% 97.8% 97.7%

¥718
¥660
¥641 ¥643 billion ¥657
billion¥542

billionbillionbillion¥740¥782 ¥794
billion¥837 ¥838
billionbillion¥883¥927
billionbillionbillionbillion¥564 ¥564
billionbillion

(54)

(55)

(55)

(55)

(55)

(57)

(56)

(57)

(58)

(60)

(62)

(64)

(64)

(68)

(70)

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended

Period ended¥9,536¥9,510¥9,599¥9,021¥8,314¥7,821¥7,925¥8,095¥7,850¥7,570¥7,683¥7,633¥7,648¥7,681¥8,001billion

Sep. 2008 Mar. 2009 Sep. 2009 Mar. 2010 Sep. 2010 Mar. 2011 Sep. 2011 Mar. 2012 Sep. 2012 Mar. 2013 Sep. 2013 Mar. 2014 Sep. 2014 Mar. 2015 Sep. 2015

Dec. 2009
Sixth Follow-On

Feb. 2012
Seventh Follow-On

Oct. 2012
Eighth Follow-On

Apr. 2014
Ninth Follow-On

Apr. 2015
Tenth Follow-On

Japan Real Estate Investment Corporation

11

The Portfolio of Japan Real Estate Investment Corporation
As of September 30, 2015

Properties roster
NumberName of building

Location

Type ofspecified asset

Acquisition date

Acquisition price(¥ millions)Tokyo 23 wards●

I- 1

Genki Medical Plaza

Iidabashi, Chiyoda-ku

Real property

10/31/2002

5,000(0.5%)●

I- 2

Kitanomaru Square

Kudan-Kita, Chiyoda-ku

Real property

02/24/2006

81,555(8.8%)●I- 3

MD Kanda Building

Kanda-Mitoshirocho, Chiyoda-ku

Real property

05/31/2002

9,520(1.0%)●

I- 4

Kandabashi Park Building

Kanda-Nishikicho, Chiyoda-ku

Real property

08/15/2002

4,810(0.5%)●

I- 5

Otemachi Financial City North Tower

Otemachi, Chiyoda-ku

Real property

03/31/2014

15,462(1.7%)●

I- 6

Nibancho Garden

Nibancho, Chiyoda-ku

Real property

04/01/2005

14,700(1.6%)●

I- 7

Mitsubishi UFJ Trust and Banking Building

Marunouchi, Chiyoda-ku

Real property

03/28/2007

44,700(4.8%)●

I- 8

Burex Kojimachi Building

Kojimachi, Chiyoda-ku

Real property

07/29/2005

7,000(0.8%)●

I- 9

Sanno Grand Building

Nagatacho, Chiyoda-ku

Real property

01/31/2005

10,20004/03/2006

10,700Total

20,900(2.3%)●

I- 10

Yurakucho Denki Building

Yurakucho, Chiyoda-ku

Real property

08/01/2003

7,200(0.8%)●

I- 11

Kodenmacho Shin-Nihonbashi Building

Nihonbashi-Kodenmacho, Chuo-ku

Trust

09/25/2001

3,173(0.3%)●

I- 12

Kyodo Building (Kayabacho 2Chome)

Nihonbashi-Kayabacho, Chuo-ku

Trust

03/01/2011

4,410(0.5%)●

I- 13

Burex Kyobashi Building

Kyobashi, Chuo-ku

Real property

07/22/2002

5,250(0.6%)●

I- 14

Ginza 1Chome East Building

Ginza, Chuo-ku

Trust

03/02/2015

6,459(0.7%)●

I- 15

Ginza Sanwa Building

Ginza, Chuo-ku

Real property

03/10/2005

16,830(1.8%)●I- 16

Ryoshin Ginza East Mirror Building

Ginza, Chuo-ku

Real property

03/15/2005

5,353

05/24/2010

2,645
7,999

(0.9%)●

I- 17

Harumi Front

Harumi, Chuo-ku

Real property

01/07/2013

31,300(3.4%)●

I- 18

Harumi Center Building

Harumi, Chuo-ku

Real property

12/18/2007

26,800(2.9%)●

I- 19

Akasaka Park Building

Akasaka, Minato-ku

Real property

11/15/2011

60,800(6.6%)●

I- 20

Aoyama Crystal Building

Kita-Aoyama, Minato-ku

Real property

03/14/2003

7,680(0.8%)●

I- 21

Clover Shiba-koen

Shiba-koen, Minato-ku

Trust

01/20/2015

4,500(0.5%)●

I- 22

Shiodome Building

Kaigan, Minato-ku

Trust

12/19/2008

21,25001/15/2010

54,60005/01/2015

10,100Total

85,950(9.3%)

4,859(0.5%)●

I- 23

Shiba 2Chome Daimon Building

Shiba, Minato-ku

Trust

09/10/2001

●

I- 24

Cosmo Kanasugibashi Building

Shiba, Minato-ku

Trust

09/25/2001

2,808(0.3%)●

I- 25

Shinjuku Eastside Square

Shinjuku, Shinjuku-ku

Real property

10/01/2014

23,100(2.5%)●

I- 26

Shinwa Building

Nishi-Shinjuku, Shinjuku-ku

Real property

09/01/2004

7,830(0.8%)●

I- 27

Tokyo Opera City Building

Nishi-Shinjuku, Shinjuku-ku

Real property

09/13/2005

9,350

03/24/2010

22,426

Total

31,776(3.4%)

22,000(2.4%)●I- 28

TIXTOWER UENO

Higashi-Ueno, Taito-ku

Real property

06/15/2012

●

I- 29

Higashi-Gotanda 1Chome Building

Higashi-Gotanda, Shinagawa-ku

Real property

11/01/2004

5,500(0.6%)●

I- 30

Osaki Front Tower

Osaki, Shinagawa-ku

Real property

02/01/2011

12,300(1.3%)●I- 31

Omori-Eki Higashiguchi Building

Omori-Kita, Ota-ku

Trust

09/10/2001

5,123(0.6%)●

I- 32

Nippon Brunswick Building (Land with leasehold interest)

Sendagaya, Shibuya-ku

Real property

03/24/2004

6,670

08/23/2013(1,170)

Total

5,500

(0.6%)

8,700(0.9%)●

I- 33

Yoyogi 1Chome Building

Yoyogi, Shibuya-ku

Real property

04/01/2004

●

I- 34

da Vinci Harajuku

Jingumae, Shibuya-ku

Real property

11/22/2002

4,885(0.5%)●

I- 35

Jingumae Media Square Building

Jingumae, Shibuya-ku

Real property

10/09/2003

12,200(1.3%)●

I- 36

Shibuya Cross Tower

Shibuya, Shibuya-ku

Real property

11/30/2001

34,600(3.7%)●

I- 37

Ebisu Neonato

Ebisu, Shibuya-ku

Real property

11/14/2003

3,740

●

12

Total

I- 38

Harmony Tower

Honcho, Nakano-ku

Real property

04/01/2004

360

02/18/2014

10,512

Total

14,612

02/28/2005

8,500

12/19/2012

520

03/27/2015

2,100(1.6%)

Total

11,120(1.2%)●I- 39

Otsuka Higashi-Ikebukuro Building

Higashi-Ikebukuro, Toshima-ku

Trust

09/25/2001

3,541(0.4%)●

I- 40

Ikebukuro 2Chome Building

Ikebukuro, Toshima-ku

Trust

09/25/2001

1,728(0.2%)●

I- 41

Ikebukuro YS Building

Minami-Ikebukuro, Toshima-ku

Real property

08/02/2004

4,500(0.5%)

Japan Real Estate Investment Corporation

Leased space

Occupancy rate

Total number oftenants

4,791m2

4,791m2

100.0%

1

224(0.7%)

25,678m2

25,678m2

100.0%

5

1,658(5.5%)

6,269m2

6,269m2

100.0%

9221(0.7%)

4,320

3,687m2

3,687m2

100.0%

9111(0.4%)

2012

17,8005,112m2

5,112m2

100.0%

2354(1.2%)

31.345%

2004

17,4009,316m2

9,316m2

100.0%

1479(1.6%)

19.38402%

2003

47,70011,904m2

11,904m2

100.0%

10999(3.3%)

100.0%

2005

6,430

4,495m2

4,495m2

100.0%

1

150(0.5%)

99.0%

1966

31,50020,830m2

20,353m2

97.7%

36

889

(3.0%)

10.78%

1975

7,800

4,697m2

4,452m2

94.8%

12

240

(0.8%)

100.0%

1991

2,760

3,897m2

3,897m2

100.0%

10

106(0.4%)

100.0%

1991

4,780

4,464m2

4,464m2

100.0%

10142(0.5%)

100.0%

2002

7,300

4,279m2

4,279m2

100.0%

1

150(0.5%)

100.0%

2008

6,800

4,513m2

2,925m2

64.8%

6

98

(0.3%)

70.95%

1982

16,8004,329m2

4,329m2

100.0%

10383(1.3%)

100.0%

1998

5,700

4,255m2

4,255m2

100.0%

12160(0.5%)

100.0%

2012

38,70033,369m2

33,369m2

100.0%

8

1,235(4.1%)

100.0%

2006

20,50020,812m2

20,812m2

100.0%

9606(2.0%)

100.0%

1993

69,20045,013m2

45,013m2

100.0%

28

2,227(7.4%)

100.0%

1982

7,670

4,898m2

4,898m2

100.0%

7202(0.7%)

100.0%

2006

4,600

2,550m2

2,550m2

100.0%

8102(0.3%)

45.0%

2007

94,10036,174m2

35,355m2

97.7%

35

2,008

(6.7%)

100.0%

1984

6,100

9,606m2

9,606m2

100.0%

25276(0.9%)

100.0%

1992

2,910

4,062m2

4,062m2

100.0%

6

109(0.4%)

14.0%

2012

25,20016,365m2

15,669m2

95.7%

41

458

(1.5%)

100.0%

1989

6,360

5,997m2

5,997m2

100.0%

13

202(0.7%)

31.325%

1996

30,40035,082m2

33,580m2

95.7%

99

1,455

(4.9%)

94.040229%

2010

25,30015,020m2

15,020m2

100.0%

17673(2.2%)

100.0%

2004

5,770

5,205m2

5,205m2

100.0%

4

185(0.6%)

100.0%

2005

16,30016,856m2

16,856m2

100.0%

1697(2.3%)

100.0%

1989

5,360

7,756m2

7,756m2

100.0%

23

232(0.8%)

—

—

5,490

—

—

—

—

60

(0.2%)

100.0%

2003

10,7007,745m2

7,340m2

94.8%

8

290

(1.0%)

100.0%

1987

6,720

3,147m2

3,147m2

100.0%

4192(0.6%)

100.0%

1998

10,0005,558m2

5,558m2

100.0%

5301(1.0%)

100.0%

1976

48,70030,532m2

29,222m2

95.7%

58

1,390

(4.6%)

44.718394%

1994

15,1008,700m2

8,700m2

100.0%

6443(1.5%)

38.382307%

1997

13,60014,340m2

13,956m2

97.3%

20

464

(1.5%)

100.0%

1987

4,150

7,224m2

7,224m2

100.0%

7

195(0.7%)

100.0%

1990

1,650

2,186m2

2,186m2

100.0%

965(0.2%)

100.0%

1989

4,310

5,932m2

5,932m2

100.0%

10

185(0.6%)

Appraisal value atthe end of period (¥ millions)

Percentage of ownershipof the building

Completion

100.0%

1985

6,890

100.0%

2006

78,300100.0%

1998

7,940

56.76%

1993

3.385219%

Total leasable space

Revenues fromleasing operations (¥ millions)Japan Real Estate Investment Corporation

13

NumberName of building

Acquisition price(¥ millions)

Location

Type ofspecified asset

Acquisition date

Hachioji, Tokyo

Real property

03/31/2005

3,300

03/19/2008

2,379

Tokyo metropolitan area, excluding Tokyo 23 wards
●

●

II- 1

II- 2

Hachioji First Square

Saitama Urawa Building

Saitama, Saitama Prefecture

Real property

Total

5,679

09/25/2001

1,232

10/11/2001

1,342

Total

(0.6%)

2,574(0.3%)●II- 3

MM Park Building

Yokohama, Kanagawa Prefecture

Real property

03/24/2008

37,400(4.0%)●

II- 4

Queen’s Tower A

Yokohama, Kanagawa Prefecture

Trust

01/31/2014

17,200(1.9%)●II- 5

Kawasaki Isago Building

Kawasaki, Kanagawa Prefecture

Trust

09/25/2001

3,375(0.4%)●

II- 6

Musashi Kosugi STM Building

Kawasaki, Kanagawa Prefecture

Real property

03/25/2008

4,000(0.4%)

Other major cities●

III- 1

8.3 Square Kita Building

Sapporo, Hokkaido

Real property

06/01/2007

7,100(0.8%)●

III- 2

Jozenji Park Building

Sendai, Miyagi Prefecture

Real property

01/31/2005

1,000(0.1%)●

III- 3

Higashi Nibancho Square

Sendai, Miyagi Prefecture

Real property

01/07/2013

9,950(1.1%)●

III- 4

Sendai Honcho Honma Building

Sendai, Miyagi Prefecture

Trust

09/25/2001

2,924

●
●

●

250

Total

3,174

(0.3%)(2.0%)

III- 5

AER

Sendai, Miyagi Prefecture

Real property

09/01/2015

18,640III- 6

Kanazawa Park Building

Kanazawa, Ishikawa Prefecture

Real property

02/28/2002

2,880

03/03/2003

1,700

III- 7

Nishiki Park Building

Nagoya, Aichi Prefecture

Real property

Total

4,580

10/02/2006

3,850

11/01/2006

1,300(0.5%)

06/09/2014

650

Total

5,800

(0.6%)

8,567(0.9%)●

III- 8

Nagoya Hirokoji Place

Nagoya, Aichi Prefecture

Trust

07/31/2013●

III- 9Hirokoji Sakae Building

Nagoya, Aichi Prefecture

Real property

09/22/2006

1,680(0.2%)●

III- 10

Nagoya Hirokoji Building

Nagoya, Aichi Prefecture

Real property

09/10/2001

14,533(1.6%)●

III- 11

Nagoya Misono Building

Nagoya, Aichi Prefecture

Real property

08/08/2003

1,865(0.2%)●

III- 12

Shijo Karasuma Center Building

Kyoto, Kyoto Prefecture

Real property

09/03/2013

4,400(0.5%)●

III- 13

Kyoto Shijo Kawaramachi Building

Kyoto, Kyoto Prefecture

Real property

12/20/2001

2,650(0.3%)●

III- 14

Umeda Square Building

Osaka, Osaka Prefecture

Trust

04/01/2015

15,523(1.7%)●

III- 15

Shin-Fujita Building

Osaka, Osaka Prefecture

Trust

09/01/2008

24,000(2.6%)●

III- 16

Sakaisujihonmachi Building

Osaka, Osaka Prefecture

Real property

09/25/2001

2,264

12/26/2003

1,900

●

III- 17

Midosuji Daiwa Building

Osaka, Osaka Prefecture

Trust

Total

4,164

09/25/2001

6,934(0.4%)

02/28/2002

7,380

Total

14,314(1.5%)●

III- 18

Amagasaki Front Building

Amagasaki, Hyogo Prefecture

Trust

03/25/2015

9,300(1.0%)●

III- 19

Lit City Building

Okayama, Okayama Prefecture

Real property

02/01/2006

4,650(0.5%)●

III- 20

NHK Hiroshima Broadcasting Center Building

Hiroshima, Hiroshima Prefecture

Real property

03/25/2004

1,320

03/03/2008

1,450
2,770

(0.3%)●

III- 21

Tosei Tenjin Building

Fukuoka, Fukuoka Prefecture

Real property

09/25/2001

1,550(0.2%)●

III- 22

Tenjin Crystal Building

Fukuoka, Fukuoka Prefecture

Real property

06/01/2005

5,000(0.5%)●

III- 23

Hinode Tenjin Building

Fukuoka, Fukuoka Prefecture

Trust

09/10/2001

3,657(0.4%)

927,778(100.0%)

Total

14

06/28/2006

Japan Real Estate Investment Corporation

Total

Percentage of ownershipof the building

Completion

Appraisal value atthe end of period (¥ millions)

Total leasable space

Leased space

Occupancy rate

Total number oftenants

Revenues fromleasing operations (¥ millions)

80.4%

1996

4,720

10,068m2

10,010m2

99.4%

50

239

(0.8%)

100.0%

1990

2,290

4,510m2

4,283m2

95.0%

17

105

(0.4%)

100.0%

2007

37,90038,426m2

37,060m2

96.4%

28

1,263

(4.2%)

11.11481%

1997

18,50026,667m2

25,691m2

96.3%

51

982

(3.3%)

100.0%

1990

2,530

6,831m2

6,831m2

100.0%

13

144(0.5%)

34.32%

1990

4,050

5,378m2

5,378m2

100.0%

26

159(0.5%)

100.0%

2006

7,340

12,265m2

12,265m2

100.0%

9318(1.1%)

50.0%

1993

956

2,518m2

2,518m2

100.0%

1763(0.2%)

100.0%

2008

13,20020,526m2

20,254m2

98.7%

21

566

(1.9%)

100.0%

1991

2,300

6,234m2

6,234m2

100.0%

25

131(0.4%)

55.35443%

1998

19,00023,612m2

22,966m2

97.3%

61

95

(0.3%)

89.0%

1991

4,540

20,942m2

19,994m2

95.5%

78

434

(1.5%)

68.63831%

1995

4,700

9,850m2

9,737m2

98.8%

61

263

(0.9%)

100.0%

2004

9,970

13,200m2

13,200m2

100.0%

27379(1.3%)

100.0%

1987

1,620

3,911m2

3,800m2

97.2%

17

91

(0.3%)

100.0%

1987

12,40021,636m2

20,743m2

95.9%

32

553

(1.8%)

100.0%

1991

1,210

3,448m2

3,448m2

100.0%

16

72(0.2%)

100.0%

2010

4,820

6,634m2

6,301m2

95.0%

9

145

(0.5%)

100.0%

1982

1,860

6,805m2

6,352m2

93.3%

34

121

(0.4%)

100.0%

1995

16,20010,369m2

10,034m2

96.8%

38

425

(1.4%)

100.0%

1995

17,60028,414m2

23,897m2

84.1%

42

655

(2.2%)

100.0%

1992

3,180

11,520m2

11,520m2

100.0%

22

233(0.8%)

100.0%

1991

13,50020,450m2

20,450m2

100.0%

43539(1.8%)

100.0%

2008

9,510

15,500m2

15,351m2

99.0%

31

432

(1.4%)

27.7488%

2005

4,530

9,965m2

9,965m2

100.0%

39

260(0.9%)

48.753%

1994

2,610

9,860m2

9,860m2

100.0%

12264(0.9%)

100.0%

1992

1,320

3,995m2

3,920m2

98.1%

21

81

(0.3%)

100.0%

1993

2,540

5,973m2

5,973m2

100.0%

31

153(0.5%)

74.4844%

1987

3,660

5,841m2

5,841m2

100.0%

4169(0.6%)

977,666

832,030m2

813,130m2

97.7%

1,461

29,980(100.0%)Japan Real Estate Investment Corporation15

Major tenants roster
Name of tenant

Name of building

Leased space (m2)

% of total leased space

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Harumi Front (also includes 3 other buildings)

33,9104.2%(Note)

Kitanomaru Square (also includes 2 other buildings)

22,305

2.7%(Note)

Osaki Front Tower (also includes 2 other buildings)

21,806

2.7%

General Electric Company

Akasaka Park Building

13,683

1.7%

NTT Communications Corporation

Shiodome Building

13,289

1.6%

HAKUHODO DY HOLDINGS INCORPORATED

Akasaka Park Building (also includes 1 other building)

12,831

1.6%

TOTO LTD.

Shiodome Building (also includes 2 other buildings)

11,127

1.4%

MM Park Building (also includes 1 other building)

10,6491.3%

Mitsubishi UFJ Trust and Banking Building

10,598

1.3%

Queen’s Tower A

9,536

1.2%

JGC Corporation
Mitsubishi UFJ Trust and Banking Corporation
Minato Mirai 21 District Heating and Cooling Co., Ltd.
Note: Not disclosed due to tenant’s request

Location of portfolio properties
II- 1 to II- 6:
Tokyo metropolitan area, excluding Tokyo 23 wards

III- 1

II- 2

II- 1

III- 1 to III- 23:
Other major cities

II- 6
II- 5
II- 3
II- 4

III- 2
III- 3
III- 4
III- 5
III- 6

III- 12
III- 13
III- 18
III- 19
III- 21
III- 22
III- 23

III- 20
III- 14
III- 15
III- 16
III- 17

III- 7
III- 8
III- 9III- 10
III- 11
I- 40

I- 39

I- 41
I- 28
I- 3, I- 4

I- 8 I- 7
I- 38

I- 1
I- 2

I- 25

I- 26
I- 27
I- 32 I- 6
I- 33
I- 9
I- 34
I- 35

I- 5
I- 10 I- 14

I- 20 I- 19

I- 36
I- 37

I- 22
I- 21

I- 15

I- 11
I- 12

Tokyo Station
I- 13
I- 16
I- 17, I- 18

I- 23, I- 24

I- 29
I- 30

I- 31

I- 1 to I- 41:
Tokyo 23 wards

16Japan Real Estate Investment Corporation

Overview of Portfolio Properties
As of September 30, 2015

Genki Medical
Plaza●

Kitanomaru
SquareI- 1●

MD Kanda
Building

I- 2

●

I- 3

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Site area:

1,052.80m2

Site area:

5,821.03m2

Site area:

1,085.83m2

Floor area of building:

6,722.02m2

Floor area of building:

57,279.20m2

Floor area of building:

8,185.11m2

Structure:		Above ground: 8 floors
Below ground: 1 floor

Structure:		Above ground: 26 floors
Below ground: 2 floors

Structure:

Above ground: 10 floors

Completion:

February 1998

Completion:

September 1985

Completion:

January 2006

Kandabashi Park
Building●

OtemachiFinancial City
North Tower

I- 4

●

Nibancho
Garden
●

I- 6

I- 5

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Site area:

1,218.56m2

Site area:

14,108.16m2

Site area:

11,003.87m2

Floor area of building:

9,370.25m2

Floor area of building:239,769.07m2

Floor area of building:

57,031.06m2

Structure:		Above ground: 10 floors
Below ground: 1 floor

Structure:		Above ground: 35 floors
Below ground: 4 floors

Structure:		Above ground: 14 floors
Below ground: 2 floors

Completion:

July 1993

Completion:

October 2012

Completion:

April 2004

Mitsubishi UFJ
Trust andBanking Building●

Burex Kojimachi
Building●

Sanno Grand
Building

I- 8

●

I- 9

I- 7

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Location:

Chiyoda-ku, Tokyo

Site area:

8,100.39m2

Site area:

967.67m2

Site area:

3,663.93m2

Floor area of building:

108,171.67m2

Floor area of building:

6,526.64m2

Floor area of building:

33,875.95m2

Structure:		Above ground: 29 floors
Below ground: 4 floors

Structure:		Above ground: 11 floors
Below ground: 1 floor

Structure:		Above ground: 10 floors
Below ground: 3 floors

Completion:

February 2003

Completion:

January 2005

Completion:

September 1966

Yurakucho Denki
Building●

Kodenmacho
Shin-Nihonbashi
Building

I- 10●

Kyodo Building(Kayabacho
2Chome)

I- 11

●

I- 12

Location:

Chiyoda-ku, Tokyo

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Site area:

5,749.91m2

Site area:

773.28m2

Site area:

754.26m2

Floor area of building:

70,287.65m2

Floor area of building:

5,822.88m2

Floor area of building:

5,505.80m2

Structure:		Above ground: 20 floors
Below ground: 4 floors

Structure:		Above ground: 9 floors
Below ground: 1 floor

Structure:		Above ground: 9 floors
Below ground: 1 floor

Completion:

September 1975

Completion:

November 1991

Completion:

April 1991

Japan Real Estate Investment Corporation

17

Burex Kyobashi
Building●

Ginza 1Chome
East Building

I- 13

●

Ginza Sanwa
Building

I- 14●

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Site area:

756.03m2

Site area:

702.41m2

Site area:

1,119.27m2

Floor area of building:

5,470.54m2

Floor area of building:

4,976.85m2

Floor area of building:

8,851.00m2

Structure:		Above ground: 8 floors
Below ground: 1 floor

Structure:		Above ground: 9 floors
Below ground: 1 floor

Structure:		Above ground: 9 floors
Below ground: 2 floors

Completion:

February 2002

Completion:

May 2008

Completion:

October 1982

Ryoshin Ginza
East Mirror
Building●

Harumi Front●

Harumi Center
Building

I- 17

●

I- 18

I- 16

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Location:

Chuo-ku, Tokyo

Site area:

864.91m2

Site area:

7,250.15m2

Site area:

4,664.63m2

Floor area of building:

5,751.68m2

Floor area of building:

45,458.90m2

Floor area of building:

26,447.27m2

Structure:		Above ground: 8 floors
Below ground: 1 floor

Structure:		Above ground: 17 floors
Below ground: 1 floor

Structure:

Above ground: 10 floors

Completion:

November 2006

Completion:

October 1998

Completion:

February 2012

Akasaka Park
Building●

Aoyama Crystal
Building

I- 19●

CloverShiba-koen

I- 20

●

I- 21

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Site area:

14,198.20m2

Site area:

989.30m2

Site area:

528.58m2

Floor area of building:

97,489.16m2

Floor area of building:

8,094.36m2

Floor area of building:

3,496.01m2

Structure:		Above ground: 30 floors
Below ground: 2 floors

Structure:		Above ground: 10 floors
Below ground: 4 floors

Structure:		Above ground: 9 floors
Below ground: 1 floor

Completion:

July 1993

Completion:

December 1982

Completion:

Febuary 2006

Shiodome
Building●

Shiba 2Chome
Daimon Building

I- 22

●

Cosmo
Kanasugibashi
Building

I- 23

●

18

I- 15

I- 24

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Location:

Minato-ku, Tokyo

Site area:

12,054.22m2

Site area:

2,820.90m2

Site area:

758.54m2

Floor area of building:

115,930.83m2

Floor area of building:

16,235.10m2

Floor area of building:

5,420.93m2

Structure:		Above ground: 24 floors
Below ground: 2 floors

Structure:		Above ground: 8 floors
Below ground: 2 floors

Structure:		Above ground: 9 floors
Below ground: 1 floor

Completion:

December 2007

Completion:

March 1984

Completion:

March 1992

Japan Real Estate Investment Corporation

Shinjuku Eastside
Square●Shinwa Building●

Tokyo Opera
City Building

I- 26

I- 25

●

I- 27

Location:

Shinjuku-ku, Tokyo

Location:

Shinjuku-ku, Tokyo

Location:

Shinjuku-ku, Tokyo

Site area:

25,320.28m2

Site area:

822.00m2

Site area:

18,236.94m2

Floor area of building:

167,245.46m2

Floor area of building:

8,291.69m2

Floor area of building:

232,996.81m2

Structure:		Above ground: 20 floors
Below ground: 2 floors

Structure:		Above ground: 10 floors
Below ground: 1 floor

Structure:		Above ground: 54 floors
Below ground: 4 floors

Completion:

March 2012

Completion:

November 1989

Completion:

July 1996

TIXTOWER
UENO●

Higashi-Gotanda
1Chome Building

I- 28

●

Osaki Front
Tower

I- 29

●

I- 30

Location:

Taito-ku, Tokyo

Location:

Shinagawa-ku, Tokyo

Location:

Shinagawa-ku, Tokyo

Site area:

2,412.80m2

Site area:

1,539.95m2

Site area:

3,684.38m2

Floor area of building:

23,727.48m2

Floor area of building:

6,460.39m2

Floor area of building:

23,673.92m2

Structure:		Above ground: 18 floors
Below ground: 1 floor

Structure:

Above ground: 8 floors

Structure:

Above ground: 15 floors

Completion:

July 2004

Completion:

June 2005

Completion:

July 2010

Omori-Eki
Higashiguchi
Building●

Nippon Brunswick Building(Land with leasehold interest)●

Yoyogi 1Chome
Building

I- 32

●

I- 33

I- 31

Location:

Ota-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Site area:

2,199.30m2

Site area:

1,497.52m2

Site area:

1,755.75m2

Floor area of building:

14,095.34m2

Floor area of building:—Floor area of building:

10,778.10m2

Structure:		Above ground: 11 floors
Below ground: 2 floors

Structure:—

Completion:—

Structure:		Above ground: 14 floors
Below ground: 1 floor

Completion:

July 1989

Completion:

October 2003

da Vinci
Harajuku●

Jingumae Media
Square Building

I- 34

●

Shibuya Cross
Tower

I- 35

●

I- 36

Location:

Shibuya-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Location:

Shibuya-ku, Tokyo

Site area:

839.66m2

Site area:

2,124.59m2

Site area:

5,153.45m2

Floor area of building:

4,359.20m2

Floor area of building:

9,420.42m2

Floor area of building:

61,862.33m2

Structure:		Above ground: 7 floors
Below ground: 2 floors

Structure:		Above ground: 9 floors
Below ground: 2 floors

Structure:		Above ground: 32 floors
Below ground: 3 floors

Completion:

December 1987

Completion:

March 1998

Completion:

April 1976

Japan Real Estate Investment Corporation

19

Ebisu Neonato●

Harmony Tower

I- 37

●

Otsuka HigashiIkebukuro
Building

I- 38●

Location:

Shibuya-ku, Tokyo

Location:

Nakano-ku, Tokyo

Location:

Toshima-ku, Tokyo

Site area:

5,005.70m2

Site area:

10,020.52m2

Site area:

2,121.39m2

Floor area of building:

36,598.38m2

Floor area of building:

72,729.31m2

Floor area of building:

9,531.28m2

Structure:		Above ground: 18 floors
Below ground: 2 floors

Structure:		Above ground: 29 floors
Below ground: 2 floors

Structure:		Above ground: 8 floors
Below ground: 1 floor

Completion:

October 1994

Completion:

March 1997

Completion:

November 1987

Ikebukuro
2Chome Building●

Ikebukuro YS
Building

I- 40●

Hachioji First
Square

I- 41

●

II- 1

Location:

Toshima-ku, Tokyo

Location:

Toshima-ku, Tokyo

Location:

Hachioji, Tokyo

Site area:

397.26m2

Site area:

1,384.56m2

Site area:

2,989.33m2

Floor area of building:

3,157.51m2

Floor area of building:

7,464.64m2

Floor area of building:

18,329.98m2

Structure:		Above ground: 9 floors
Below ground: 1 floor

Structure:		Above ground: 8 floors
Below ground: 1 floor

Structure:		Above ground: 12 floors
Below ground: 1 floor

Completion:

May 1990

Completion:

December 1989

Completion:

July 1996

Saitama Urawa
Building●

MM Park
Building

II- 2●

Queen’s Tower A
●

II- 4

II- 3

Location:

Saitama, Saitama Prefecture

Location:

Yokohama, Kanagawa Prefecture

Location:

Yokohama, Kanagawa Prefecture

Site area:

1,533.06m2

Site area:

6,825.77m2

Site area:

44,406.40m2

Floor area of building:

6,258.59m2

Floor area of building:

49,037.51m2

Floor area of building:

498,282.77m2

Structure:

Above ground: 8 floors

Completion:

March 1990

Structure:		Above ground: 15 floors
Below ground: 1 floor

Structure:		Above ground: 37 floors
Below ground: 5 floors

Completion:

December 2007

Completion:

June 1997

Kawasaki Isago
Building
●

20

I- 39

Musashi Kosugi
STM Building

II- 5

●

8∙3 Square Kita
Building

II- 6●

III- 1

Location:

Kawasaki, Kanagawa Prefecture

Location:

Kawasaki, Kanagawa Prefecture

Location:

Sapporo, Hokkaido

Site area:

1,594.50m2

Site area:

3,552.15m2

Site area:

5,541.60m2

Floor area of building:

9,623.83m2

Floor area of building:

22,839.61m2

Floor area of building:

16,096.97m2

Structure:		Above ground: 12 floors
Below ground: 1 floor

Structure:		Above ground: 8 floors
Below ground: 2 floors

Structure:		Above ground: 11 floors
Below ground: 1 floor

Completion:

December 1990

Completion:

October 1990

Completion:

December 2006

Japan Real Estate Investment Corporation

Jozenji Park
Building●

HigashiNibancho Square

III- 2●

Sendai Honcho
Honma Building

III- 3●

III- 4

Location:

Sendai, Miyagi Prefecture

Location:

Sendai, Miyagi Prefecture

Location:

Sendai, Miyagi Prefecture

Site area:

1,566.68m2

Site area:

3,191.27m2

Site area:

1,437.47m2

Floor area of building:

7,648.33m2

Floor area of building:

27,680.45m2

Floor area of building:

8,247.50m2

Structure:		Above ground: 8 floors
Below ground: 1 floor

Structure:		Above ground: 14 floors
Below ground: 1 floor

Structure:

Above ground: 11 floors

Completion:

November 1991

Completion:

January 1993

Completion:

July 2008

AER●

Kanazawa Park
Building

III- 5●

Nishiki Park
Building

III- 6●

III- 7

Location:

Sendai, Miyagi Prefecture

Location:

Kanazawa, Ishikawa Prefecture

Location:

Nagoya, Aichi Prefecture

Site area:

6,591.05m2

Site area:

6,642.71m2

Site area:

2,170.45m2

Floor area of building:

73,186.57m2

Floor area of building:

43,481.20m2

Floor area of building:

25,091.91m2

Structure:		Above ground: 31 floors
Below ground: 3 floors

Structure:		Above ground: 12 floors
Below ground: 2 floors

Structure:		Above ground: 22 floors
Below ground: 4 floors

Completion:

March 1998

Completion:

October 1991

Completion:

August 1995

Nagoya Hirokoji
Place●

Hirokoji Sakae
Building

III- 8●

Nagoya Hirokoji
Building

III- 9●III- 10

Location:

Nagoya, Aichi Prefecture

Location:

Nagoya, Aichi Prefecture

Location:

Nagoya, Aichi Prefecture

Site area:

2,401.43m2

Site area:

786.79m2

Site area:

4,095.81m2

Floor area of building:

15,947.29m2

Floor area of building:

6,445.08m2

Floor area of building:

33,377.73m2

Structure:

Above ground: 10 floors

Completion:

December 2004

Structure:		Above ground: 9 floors
Below ground: 2 floors

Structure:		Above ground: 18 floors
Below ground: 2 floors

Completion:

September 1987

Completion:

May 1987

Nagoya Misono
Building●

Shijo Karasuma
Center Building

III- 11●

Kyoto Shijo
Kawaramachi
Building

III- 12●

III- 13

Location:

Nagoya, Aichi Prefecture

Location:

Kyoto, Kyoto Prefecture

Location:

Kyoto, Kyoto Prefecture

Site area:

805.04m2

Site area:

1,371.16m2

Site area:

1,471.57m2

Floor area of building:

5,348.00m2

Floor area of building:

9,185.98m2

Floor area of building:

9,701.04m2

Structure:		Above ground: 7 floors
Below ground: 1 floor

Structure:		Above ground: 8 floors
Below ground: 1 floor

Structure:		Above ground: 9 floors
Below ground: 1 floor

Completion:

September 1991

Completion:

January 2010

Completion:

November 1982

Japan Real Estate Investment Corporation

21

Umeda Square
Building●

Shin-Fujita
Building

III- 14●

Sakaisujihonmachi
Building

III- 15●

III- 16

Location:

Osaka, Osaka Prefecture

Location:

Osaka, Osaka Prefecture

Location:

Osaka, Osaka Prefecture

Site area:

1,652.88m2

Site area:

6,159.61m2

Site area:

2,036.22m2

Floor area of building:

18,673.28m2

Floor area of building:

45,411.31m2

Floor area of building:

17,145.59m2

Structure:		Above ground: 17 floors
Below ground: 3 floors

Structure:		Above ground: 21 floors
Below ground: 2 floors

Structure:		Above ground: 13 floors
Below ground: 2 floors

Completion:

July 1995

Completion:

April 1995

Completion:

October 1992

Midosuji Daiwa
Building●

Amagasaki Front
Building

III- 17●

Lit City Building●

III- 19

III- 18

Location:

Osaka, Osaka Prefecture

Location:

Amagasaki, Hyogo Prefecture

Location:

Okayama, Okayama Prefecture

Site area:

3,044.65m2

Site area:

3,975.20m2

Site area:

7,596.44m2

Floor area of building:

31,213.27m2

Floor area of building:

24,055.58m2

Floor area of building:

52,653.19m2

Structure:		Above ground: 15 floors
Below ground: 2 floors

Structure:

Above ground: 10 floors

Completion:

October 2008

Structure:		Above ground: 20 floors
Below ground: 2 floors

Completion:

September 1991

Completion:

June 2005

NHK Hiroshima
Broadcasting
Center Building●

Tosei Tenjin
Building●

Tenjin Crystal
Building

III- 21●

III- 22

III- 20

Location:

Hiroshima, Hiroshima Prefecture

Location:

Fukuoka, Fukuoka Prefecture

Location:

Fukuoka, Fukuoka Prefecture

Site area:

3,296.46m2

Site area:

1,221.31m2

Site area:

1,835.17m2

Floor area of building:

35,217.28m2

Floor area of building:

5,588.57m2

Floor area of building:

10,432.04m2

Structure:		Above ground: 23 floors
Below ground: 2 floors

Structure:

Above ground: 8 floors

Completion:

March 1992

Structure:		Above ground: 14 floors
Below ground: 1 floor

Completion:

August 1994

Completion:

August 1993

Hinode Tenjin
Building●

22

III- 23

Location:

Fukuoka, Fukuoka Prefecture

Site area:

1,452.15m2

Floor area of building:

12,527.07m2

Structure:

Above ground: 10 floors
Below ground: 2 floors

Completion:

August 1987

Japan Real Estate Investment Corporation

Note:	Concerning real estate or trust beneficiary rights in trust ofreal estate of which the Company is a partial owner throughco-ownership or compartmentalized building units or quasi-coownership, the figures for “Site area” and “Floor area of building”
represent total site area and total floor area for the entire building.

Financial Section
Selected Financial Data ........................................................................................................................ p.23
Balance Sheets ................................................................................................................................................ p.24
Statements of Income and Retained Earnings ........................................................... p.26
Statements of Changes in Unitholders’ Equity ......................................................... p.27
Basis of Calculations Used to Determine Cash Distributions ................. p.28
Statements of Cash Flows ................................................................................................................. p.29
Notes to Financial Statements ...................................................................................................... p.30
Independent Auditor’s Report ..................................................................................................... p.50

Selected Financial Data
Millions of yen

For the period from
April 1, 2015 to
September 30, 2015

For the period from
October 1, 2014 toMarch 31, 2015

For the period from
April 1, 2014 toSeptember 30, 2014

For the period from
October 1, 2013 toMarch 31, 2014

For the period from
April 1, 2013 to
September 30, 2013

Operating revenues

29,98028,314

27,76026,582

26,225

Operating expenses

17,926

17,071

16,50515,751

15,444

Operating income

12,054

11,243

11,255

10,831

10,781

Ordinary income

10,487

9,625

9,582

9,083

9,143

Income before income taxes

10,487

9,625

9,582

9,083

9,143

Profit10,476

9,619

9,572

9,070

9,129

Total assets

899,938

852,679

813,931

817,130

775,066

Interest-bearing debt

373,450

361,000

323,550

358,900

320,150

Net assets

468,767

436,671436,622405,355

405,415

Unitholders’ capital

458,016

426,783

426,783

396,018

396,018

Number of units

1,309,310

1,251,530

1,251,530

1,188,280

594,140

Net assets per unit (Yen) (Note 1)

358,026

348,909348,871

341,128

682,356

Cash distribution

10,475

9,613

9,571

9,070

9,129

Dividend payout ratio

99.9%

99.9%

99.9%

99.9%

99.9%

Dividend per unit (Yen)

8,001

7,681

7,648

7,633

15,366

Net operating income (NOI)

19,67018,412

18,105

17,481

17,205

Funds from operations (FFO)

16,80815,62915,455

14,71914,619Return on assets (ROA) (Note 2)

1.2%
1.2%
1.1%
1.2%
1.2%
(2.4% annualized) (2.3% annualized) (2.3% annualized) (2.3% annualized) (2.4% annualized)

Return on equity (ROE) (Note 3)

2.2%
2.2%
2.2%
2.3%
2.2%
(4.5% annualized) (4.4% annualized) (4.4% annualized) (4.5% annualized) (4.5% annualized)

EOP equity ratio (Note 4)

52.1%

51.2%

53.6%

49.6%

52.3%

EOP interest-bearing debt ratio
on total assets (Note 5)

41.5%

42.3%

39.8%

43.9%

41.3%

FFO multiple (Times)

21.5

22.6

22.9

20.9

23.4

Debt service coverage ratio (Times) (Note 6)

12.1

10.8

10.5

9.6

9.5

Notes: 1.	The Company implemented a 2-for-1 split of each investment unit with an effective date of January 1, 2014. Net assets per unit is calculated as if the split had occurredat the start of the fiscal period ended March 31, 2014.
2.	ROA = Ordinary income ÷ Average of Total assets during the period
3.	ROE = Profit ÷ Average of Net assets during the period(Annualized portion of the calculation given in Note 2 and Note 3 assumes a fiscal period of 183 days for the period ended September 30, 2013, 182 days for the period
ended March 31, 2014, 183 days for the period ended September 30, 2014, 182 days for the period ended March 31, 2015 and 183 days for the period ended­September 30, 2015.)
4.	EOP equity ratio = (Net assets at the end of period ÷ Total assets at the end of period) × 100
5.	EOP interest-bearing debt ratio on total assets = (Interest-bearing debt at the end of period ÷ Total assets at the end of period) × 100
6.	Debt service coverage ratio = Profit before Interest, Taxes, Depreciation and Amortization ÷ Interest expenses

Japan Real Estate Investment Corporation

23

Balance Sheets
As of March 31, 2015 and September 30, 2015

Thousands of yen

ASSETS
Current assets   Cash and deposits   Cash and deposits in trust   Operating accounts receivable  Prepaid expenses   Deferred tax assets   Consumption taxes receivable  Other   Total current assets
Non-current assets   Property, plant and equipment   Buildings    Accumulated depreciation    Buildings, net   Structures    Accumulated depreciation    Structures, net   Machinery and equipment    Accumulated depreciation    Machinery and equipment, net    Tools, furniture and fixtures    Accumulated depreciation     Tools, furniture and fixtures, net   Land   Construction in progress   Buildings in trust    Accumulated depreciation    Buildings in trust, net   Structures in trust    Accumulated depreciation    Structures in trust, net    Machinery and equipment in trust    Accumulated depreciation     Machinery and equipment in trust, net    Tools, furniture and fixtures in trust    Accumulated depreciation     Tools, furniture and fixtures in trust, net   Land in trust    Construction in progress in trust    Total property, plant and equipment  Intangible assets   Leasehold rights    Leasehold rights in trust   Easement    Total intangible assets   Investments and other assets   Investment securities    Lease and guarantee deposits   Long-term prepaid expenses   Other    Total investments and other assets   Total non-current assets
Deferred assets   Investment corporation bond issuance costs   Total deferred assets
Total Assets

24Japan Real Estate Investment Corporation

As of March 31, 2015

As of September 30, 2015

15,561,878
4,687,042
127,501
155,505
979
833,719
27,314
21,393,942

20,564,934
5,844,989
209,386
393,532
953—
23,84827,037,645

260,036,543(70,005,181)
190,031,361
3,169,570(589,318)
2,580,252
2,929,200(1,638,100)
1,291,099
365,608(163,901)
201,706
439,594,248
1,310
71,500,994(14,792,492)
56,708,501
613,238(125,661)
487,577
963,001(604,071)
358,929
34,030(12,401)
21,629130,818,405
1,278
822,096,301

266,361,565(74,720,230)
191,641,335
3,193,164(643,744)
2,549,420
2,944,813(1,721,977)
1,222,835
376,537(187,315)
189,222452,965,989
1,310
76,541,120(16,201,956)
60,339,163
645,610(139,759)
505,851
939,320(615,178)
324,141
35,772(14,470)
21,302
151,935,120
1,278
861,696,973

6,080,662
444,160
828,095
7,352,918

6,064,832
444,160
828,095
7,337,088

577,168
1,071,830
145,061—
1,794,059
831,243,279

577,168
1,573,641
814,254869,447
3,834,511
872,868,573

41,873
41,873852,679,094

32,23932,239899,938,458

Thousands of yen

As of March 31, 2015

As of September 30, 2015

LIABILITIESCurrent liabilities   Operating accounts payable

1,491,516

1,478,287   Short-term loans payable

32,500,000

36,700,000   Current portion of investment corporation bonds

20,000,000—   Current portion of long-term loans payable

16,600,000

32,100,000   Accounts payable - other

1,233,343

1,346,666  Accrued expenses

768,834

664,500   Income taxes payable

11,1509,466—

610,379

3,346,275

3,478,134

60,024

101,701

76,011,145

76,489,136   Investment corporation bonds

20,000,000

20,000,000   Long-term loans payable

271,900,000

284,650,000   Deposits received from tenants

47,637,990

49,573,768   Deferred tax liabilities

116,161

116,161   Asset retirement obligations

318,867

322,080  Other

23,781

20,074

339,996,800

354,682,084

416,007,946

431,171,221

426,783,117

458,016,096    Reserve for reduction entry

236,745

243,360     Total voluntary retained earnings

236,745

243,360   Unappropriated retained earnings

9,651,286

10,507,781   Total surplus

9,888,031

10,751,141

436,671,148

468,767,237

436,671,148

468,767,237

852,679,094

899,938,458   Accrued consumption taxes  Advances received  Other   Total current liabilities
Non-current liabilities   Total non-current liabilities
Total Liabilities
NET ASSETS
Unitholders’ equity  Unitholders’ capital  Surplus    Voluntary retained earnings   Total unitholders’ equity
Total net assets
Total Liabilities and Net Assets

Japan Real Estate Investment Corporation25

Statements of Income and Retained Earnings
For the six months ended March 31, 2015 and September 30, 2015

Thousands of yen

For the period
from October 1, 2014
to March 31, 2015

For the period
from April 1, 2015
to September 30, 2015

28,048,535

29,886,578

Operating revenues
Rent revenues
Other lease business revenues
Total operating revenues

266,377

94,31428,314,912

29,980,892

Operating expenses
15,911,920

16,642,681

Asset management fee

772,029926,559

Asset custody fee

59,38760,569Administrative service fees

140,513

143,924

Directors' compensations

7,800

7,800

Commission fee

106,448

78,433

Other operating expenses

73,712

66,897

Total operating expenses

17,071,812

17,926,866

11,243,100

12,054,026

Interest income

3,979

4,611

Dividend income

—

6,494

Reversal of distribution payable

3,486

3,520

Refund of property taxes

21,718——37,037

Expenses related to rent business

Operating income
Non-operating income

Income on settlement of management association accounts
Other

3,281

5,448

Total non-operating income

32,466

57,111Non-operating expenses
1,332,133

1,329,408

Interest expenses on investment corporation bonds

270,090

191,891

Amortization of investment corporation bond issuance costs

16,398

9,633—

56,541

31,412

36,074

Interest expenses

Investment unit issuance expenses
Other

1,650,034

1,623,550

Ordinary income

9,625,531

10,487,587

Income before income taxes

9,625,531

10,487,587

Income taxes - current

12,292

11,449

Income taxes - deferred(6,641)25

Total non-operating expenses

Total income taxes
Profit26

5,650

11,4759,619,880

10,476,112

Retained earnings brought forward

31,40531,669Unappropriated retained earnings

9,651,286

10,507,781

Japan Real Estate Investment Corporation

Statements of Changes in Unitholders’ Equity
For the six months ended March 31, 2015 and September 30, 2015

For the period from October 1, 2014 to March 31, 2015
Thousands of yen

Unitholders’ equity
Surplus
Unitholders’capitalBalance at beginning of current period

426,783,117

Voluntary retained earnings
Reservefor reduction
entry

Total voluntary
retainedearnings

236,709236,709

35

35

Unappropriatedretainedearnings

Total surplus

Totalunitholders’ equity

9,603,143

9,839,852

436,622,969

Total
net assets

436,622,969

Changes of items during period
(35)

—

—

—

Dividends of surplus(9,571,701)(9,571,701)(9,571,701)(9,571,701)

Profit

9,619,880

9,619,880

9,619,880

9,619,880

Provision of reserve for reduction entry

—

35

35

48,143

48,17948,17948,179426,783,117

236,745

236,745

9,651,286

9,888,031

436,671,148

436,671,148

Total changes of items during period
Balance at end of current period

For the period from April 1, 2015 to September 30, 2015
Thousands of yen

Unitholders’ equity
Surplus
Unitholders’capitalBalance at beginning of current period

426,783,117

Voluntary retained earnings

Unappropriatedretainedearnings

Total
unitholders’ equity

Total
net assets

Reservefor reduction
entry

Total voluntary
retainedearnings

236,745

236,745

9,651,286—

31,232,979

31,232,979

6,615

6,615

(6,615)———(9,613,001)(9,613,001)(9,613,001)(9,613,001)

Total surplus

9,888,031 436,671,148 436,671,148

Changes of items during period
Issuance of new investment units

31,232,979

Provision of reserve for reduction entry
Dividends of surplus
Profit10,476,112

10,476,112

10,476,112

10,476,112

Total changes of items during period

31,232,979

6,615

6,615

856,494

863,110

32,096,089

32,096,089

Balance at end of current period

458,016,096

243,360

243,360

10,507,781

10,751,141 468,767,237 468,767,237

Japan Real Estate Investment Corporation27

Basis of Calculations Used to Determine Cash Distributions
For the six months ended March 31, 2015 and September 30, 2015

For the period
from October 1, 2014 to March 31, 2015

For the period
from April 1, 2015 to September 30, 2015

Amount (Yen)Amount (Yen)I	  Retained earnings

9,651,286,262

10,507,781,132

II	  Cash distribution

9,613,001,930

10,475,789,310(7,681)(8,001)	 Item	  (Dividend per investment unit)
III	  Voluntary retained earnings
	  Provision of reserve for reduction entry

6,615,210—

IV	  Retained earnings brought forward

31,669,122

31,991,822

The Company will make cash distributions using accounting profits based on
the cash distribution policy outlined in
Article 32-2 of the Company’s Articles ofIncorporation, in an amount that exceeds
90% of the “amount of distributableprofit” as set forth in Article 67-15 of the
Act on Special Measures Concerning
Taxation. Based on this policy, transferring the revised amount for deferred tax
liabilities, which accompanied changes tothe statutory tax rate, to the reserve for
reduction entry, the Company was able tomaintain retained earnings brought
forward. Therefore, the total amount ofdividends that the Company has determined to pay out is 9,613,001,930 yen
for the period under review, which is amultiple of 1,251,530 — the number ofunits outstanding as of March 31, 2015.
Furthermore, the Company does not pay
out dividends that exceed accounting
profits as outlined in Article 32-3 of theCompany’s Articles of Incorporation.

The Company will make cash distributions using accounting profits based on
the cash distribution policy outlined in
Article 32-2 of the Company’s Articles ofIncorporation, in an amount that exceeds
90% of the “amount of distributableprofit” as set forth in Article 67-15 of the
Act on Special Measures Concerning
Taxation. After maintaining retained
earnings brought forward in an amountnot exceeding unappropriated retained
earnings, the total amount of dividends
that the Company has determined to pay
out is 10,475,789,310 yen for the period
under review, which is a multiple of
1,309,310 — the number of units
outstanding as of September 30, 2015.
Furthermore, the Company does not pay
out dividends that exceed accounting
profits as outlined in Article 32-3 of theCompany’s Articles of Incorporation.

Computation Method for Determining Dividends

28Japan Real Estate Investment Corporation

Statements of Cash Flows
For the six months ended March 31, 2015 and September 30, 2015

Thousands of yen

For the period
from October 1, 2014
to March 31, 2015

For the period
from April 1, 2015
to September 30, 2015

Cash flows from operating activities
Income before income taxes

9,625,531

10,487,587

Depreciation

6,009,647

6,332,545

16,398

9,633

Investment unit issuance expenses—

56,541Dividend income—(6,494)

Amortization of investment corporation bond issuance costs

Interest income(3,979)(4,611)

Interest expenses

1,602,224

1,521,300

19,156(81,885)(833,719)

833,719

Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes refund receivable

(409)

—

Decrease (increase) in prepaid expenses

31,781(238,026)

Increase (decrease) in operating accounts payable(34,944)

315,567

Increase (decrease) in accounts payable - other188,917

135,172

Increase (decrease) in accrued consumption taxes(1,323,301)

610,379

Decrease (increase) in supplies

Increase (decrease) in accrued expenses

117

367

Increase (decrease) in advances received

65,525

131,859

Decrease (increase) in long-term prepaid expenses(59,466)(669,193)

Other, net
SubtotalInterest and dividend income received
Interest expenses paid

6,632

(829,188)

15,310,110

18,605,274

5,619

9,716

(1,567,622)(1,626,001)(6,147)(13,133)

13,741,960

16,975,856

Payments into time deposits(2,463,000)(7,519,000)

Proceeds from withdrawal of time deposits

7,463,000

2,519,000

Purchase of property, plant and equipment(27,617,071)(19,705,392)

Purchase of property, plant and equipment in trust(21,214,962)(26,558,326)—(501,810)(1,068,104)(833,198)

Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities

Payments for lease and guarantee deposits
Repayments of tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits

2,939,845

2,768,976

Net cash provided by (used in) investing activities(41,960,294)(49,829,752)

Cash flows from financing activities
Proceeds from short-term loans payable

34,200,000

33,000,000

Repayments of short-term loans payable(33,200,000)(28,800,000)

Proceeds from long-term loans payable

41,500,000

42,800,000

Repayments of long-term loans payable(5,050,000)(14,550,000)

Redemption of investment corporation bonds—(20,000,000)

Proceeds from issuance of investment units—

31,232,979—(56,541)

Dividends paid

(9,571,836)(9,611,537)

Net cash provided by (used in) financing activities

27,878,163

34,014,899

Payments for investment unit issuance expenses

Net increase (decrease) in cash and cash equivalents(340,170)

1,161,003

Cash and cash equivalents at beginning of period

20,589,091

20,248,921

Cash and cash equivalents at end of period

20,248,921

21,409,924

Japan Real Estate Investment Corporation

29

Notes to Financial Statements
March 31, 2015 and September 30, 2015

1. Organization and Basis of Presentation
Organization

Japan Real Estate Investment Corporation (“the Company”) is a real estate investment corporation formed to own and invest primarily ina portfolio of office properties. The Company is externally managed by a licensed asset management company, Japan Real Estate AssetManagement Co., Ltd. (“J-Rea”). J-Rea is currently owned 90% by Mitsubishi Estate Co., Ltd. (“MEC”) and 10% by Mitsui & Co., Ltd.
On May 11, 2001, the Company was incorporated with ¥200 million of original capital contribution by MEC, Tokio Marine &Nichido Fire Insurance Co., Ltd. and The Dai-ichi Life Insurance Company, Limited under the ITA.
On September 10, 2001, the Company commenced operations when the Company was listed on the Tokyo Stock Exchange as one of
the first real estate investment corporations in Japan (so-called “J-REITs”). The Company issued 160,000 units at a price of ¥506,625,
generating gross proceeds of ¥81,060 million.
The Company completed the eleventh public offering of 54,000 units at a price of ¥540,550 on April 6, 2015 and third-party allocationof 3,780 units at a price of ¥540,550 on May 11, 2015, generating gross proceeds of ¥29,189 million and ¥2,043 million, respectively.
As of September 30, 2015, the Company had unitholders’ capital of ¥458,016 million with 1,309,310 units outstanding.
At September 30, 2015, the Company owned a portfolio of 70 office properties with an aggregate of approximately 832,030 m2 of­leasable space.
Basis of presenting financial statements

The Company maintains its accounting records and prepares its financial statements in accordance with accounting principles generally
accepted in Japan (“Japanese GAAP”), including provisions set forth in the ITA, the Corporation Law of Japan, the Japanese Financial
Instruments and Exchange Law and the related regulations, which are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which were prepared inaccordance with Japanese GAAP and were presented in the Securities Report of the Company filed with the Kanto Local Finance Bureau.
In preparing the accompanying financial statements, certain reclassifications and modifications have been made to the financial statements
issued domestically in order to present them in a format that is more familiar to readers outside Japan. In addition, the notes to financial
statements include information that might not be required under Japanese GAAP but is presented herein as additional information.
As permitted under the Japanese Financial Instruments and Exchange Law, amounts of less than one million yen have been omitted.
As a result, the totals shown in the accompanying financial statements do not necessarily agree with the sum of the individual amounts.

2. Summary of Significant Accounting Policies
Investment securities

Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving average method.
Property and equipment, depreciation and impairment (except for leased assets)

Property and equipment is stated at cost, less accumulated depreciation. The cost of land, buildings and building improvements includes
the purchase price of property and acquisition costs. Depreciation is calculated on a straight-line basis over the estimated useful lives of theassets ranging as stated below:
Buildings ................................................................................................................................... 2-61 years
Structures ................................................................................................................................. 2-60 years
Machinery and equipment ................................................................................ 2-18 years
Tools, furniture and fixtures ............................................................................. 2-29 years

30Japan Real Estate Investment Corporation

Expenditures for repairing expenses are charged to income as incurred. Significant renewals and betterments are capitalized.
The Company reviews fixed assets for impairment whenever events or changes in circumstances indicate that the carrying amount of its
fixed assets may not be recoverable. According to the standard set by the Accounting Standards Board of Japan, companies are required torecognize an impairment loss in their statement of income if certain indicators of asset impairment exist and the book value of an asset
exceeds the undiscounted sum of future cash flows of the asset. The standard states that impairment losses should be measured as the excessof the book value over the higher of (i) the fair market value of the asset, net of disposition costs, and (ii) the present value of future cash
flows arising from ongoing utilization of the asset and from disposal after asset use. The standard covers land, factories, buildings and otherforms of property, plant and equipment as well as intangible assets. Fixed assets are grouped at the lowest level for which there is identifiable cash flows that are independent of cash flows of other groups of assets.
Intangible assets

Intangible assets primarily consist of leasehold rights and easement, which are stated at cost. Amortization of a term leasehold interest forbusiness use is calculated by the straight-line method based on the period of agreement.
Leased assets

Leased assets under finance lease transactions that do not transfer ownership of the leased assets to the lessees are capitalized and depreciated by the straight-line method over the lease term with no residual value.
Deferred charges

Investment corporation bond issuance costs are amortized using the straight-line method over the redemption periods.
New unit issuance costs are charged to income as incurred. The underwriters’ economic remunerations for underwriting the offering are
not recognized as new unit issuance costs in the financial statements since such costs are not paid by the Company as commission under
the so-called “spread-method”.
Under the spread-method, the difference between the offer price (the price paid by the unitholder) and the issue price (the price received
by the Company) is retained by the underwriters as remuneration.
Revenue recognition

Revenues from leasing of office space are recognized as rent accrues over the lease period.
Taxes on property and equipment

Property and equipment is subject to property taxes and city planning taxes on a calendar year basis. These taxes are generally charged toincome during the period. The sellers of the properties are liable for property taxes for the calendar year including the period from the dateof purchase by the Company through the end of the year since the taxes are imposed on the owner registered on the record as of January 1
based on the assessment made by the local government. The Company pays the amount equivalent to the property taxes to the sellers applicable to the period since acquisition and includes the amount equivalent to the taxes in the purchase price of each property and capitalizes
it as a cost of the property.
Consumption taxes

Consumption taxes withheld and consumption taxes paid are not included in the statements of income. The consumption taxes paid are
generally offset against the balance of consumption taxes withheld. As such, the excess of payments over amounts withheld are included in
Current assets and the excess of amounts withheld over payments are included in Current liabilities.
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 to cash and with insignificant risk of price fluctuation, with original maturity of three months or less.

Japan Real Estate Investment Corporation

31

Hedge accounting

The Company enters into derivative transactions to hedge against interest-rate risk and other forms of risk based on the risk management
policies outlined in the Company’s Articles of Incorporation. The Company uses interest-rate swap transactions for hedging fluctuations ininterest rates on floating-rate loans. The Company has also executed interest-rate and currency swap transactions as a method of hedging
against currency exchange and interest-rate fluctuation risks. Deferred hedge accounting is generally used for such interest-rate swaps andinterest-rate and currency swap transactions, and the effectiveness of hedging is measured by comparing the total cash flow fluctuation of
the hedged item and that of the hedging instrument since the inception of the hedge.
For interest-rate swaps that qualify for hedge accounting and meet certain criteria provided under Japanese GAAP, however, theCompany applies special accounting treatment. Under such special accounting treatment, the differentials paid or received under the swap
agreements are recognized and included in interest expense of the hedged loans, and the interest-rate swaps are not required to be separately
valued. For interest-rate swaps that meet the specific criteria for such special accounting treatment, ongoing assessments of hedge effectiveness are not required and hence not performed.
In addition, for interest-rate and currency swap transactions that meet certain criteria provided under Japanese GAAP, the Integrated
Treatment is applied. Under such Integrated Treatment, the interest-rate and currency swaps that hedge foreign currency denominatedfloating rate payments into yen-denominated fixed rate payments are treated as an integral part of the hedged foreign currency borrowing,
and the loan is accounted for as a yen-denominated fixed-rate borrowing.

3. Financial Instruments
For the six months ended March 31, 2015 and September 30, 2015
1. Status of financial instruments(1) Policies for dealing financial instruments
		Concerning the financing of property acquisitions, the Company shall use several funding sources including bank loans, issuance ofinvestment corporation bonds and issuance of investment units. When executing such financing activities, the Company endeavors toretain the ability to secure stable and low-cost financing by maintaining high credit ratings and thereby limiting the financial covenants
that may restrict the financial flexibility of the Company. To achieve these goals, the Company intends to further develop and reinforce
the confidence of debt holders and rating agencies in the Company by bolstering the capital base and controlling the loan-to-value
ratio (“LTV”) at an adequate level.
		  In order to hedge against future interest-rate fluctuations, the Company may enter into derivative transactions, which shall be
executed solely for the purpose of hedging against interest-rate fluctuation and other risks, and not for speculative purposes.
		  With respect to management of excess funds, as a matter of policy the Company uses time deposits as its main vehicle, while securities and monetary claims are also eligible for such investment.
(2) Characteristics and risk profile of each financial instrument and risk management system		The Company regularly re-evaluates the appropriateness and effectiveness of its risk management system in order to improve on it.
		The characteristics and risk profile of financial instruments and the system in place to manage such risks are as follows:		The deposits, which are typically large time deposits used to manage excess funds, are exposed to the credit risk of the deposit-taking
financial institutions. The Company manages credit risk by restricting the tenor of the deposit to relatively short periods and setting
a minimum credit rating requirement for the deposit-taking financial institutions.
		  The funding proceeds from borrowings and issues of investment corporation bonds are applied mainly to acquire real estate properties and repay outstanding loans and bonds. While floating-rate short-term and long-term loans are exposed to the risk of interest-rate
hikes, such risk is mitigated by the Company’s low LTV and relatively high percentage of long-term fixed-rate debts within the totalborrowing. The Company also utilizes derivative transactions (interest-rate swap transactions) as a hedge against interest-rate risk
derived from floating-rate long-term loans, thereby maintaining the overall interest rates on the loans at an effectively fixed level.
Foreign currency-denominated loans are also exposed to currency exchange and interest-rate fluctuation risk. However, the Company
uses derivative transactions as a method of hedging against these risks (interest-rate and currency swap transactions). For more detailed
information on the hedge accounting method, hedging instruments, hedged items, hedge policies and the evaluation method of hedge
effectiveness, please refer to the previous Section 2. Summary of Significant Accounting Policies: Hedge accounting.

32

Japan Real Estate Investment Corporation		  Loans and investment corporation bonds involve liquidity risk at the time of maturity. To manage such liquidity risk, the Company
implements measures such as (i) maintaining and strengthening its ability to access equity markets to secure funds, (ii) maintaining
commitment lines with major financial institutions (There is no amount outstanding under the facility as of March 31, 2015 and
September 30, 2015) and (iii) preparing monthly financial plans.
(3) Supplementary note regarding fair value of financial instruments		The fair values of financial instruments presented in this report are based on their market value, and in cases where market values
are not available, reasonably calculated values are presented. Since calculation of fair value is based on certain assumptions, the fairvalue could differ depending on the assumptions used. In addition, the contract value of derivative transactions, which is presented
in Section 4. Derivative Transactions, is not an exact representation of market risk attributable to derivative transactions.
2. Fair value of financial instruments

Fair value of financial instruments, their values carried on the balance sheet and the differences between them as of March 31, 2015 and
September 30, 2015 are as follows.
The financial instruments whose fair values are extremely difficult to estimate are excluded from the following schedule (Note 2):
Thousands of yen

Book value

As of March 31, 2015
Fair value(1) Cash and deposits

15,561,878

15,561,878—(2) Cash and deposits in trust

4,687,042

4,687,042—(3) Short-term loans

32,500,000

32,500,000—(4) Current portion of investment corporation bonds

20,000,000

20,034,500

34,500(5) Current portion of long-term loans

16,600,000

16,649,373

49,373Difference(6) Investment corporation bonds

20,000,000

21,795,300

1,795,300(7) Long-term loans

271,900,000

276,786,681

4,886,681———(8) Derivative transactions

Thousands of yen

As of September 30, 2015
Book value

Fair value(1) Cash and deposits

20,564,934

20,564,934—(2) Cash and deposits in trust

5,844,989

5,844,989—(3) Short-term loans

36,700,000

36,700,000

—

—

—

—

32,100,000

32,260,394

160,394(4) Current portion of investment corporation bonds(5) Current portion of long-term loans

Difference(6) Investment corporation bonds

20,000,000

21,692,400

1,692,400(7) Long-term loans

284,650,000

289,975,910

5,325,910———(8) Derivative transactions

Notes: 1. Measurement of fair value of financial instruments and matters concerning derivative transactions(1)	Cash and deposits and (2) Cash and deposits in trust		 Due to short tenor, the book values of these assets are reasonable approximations of the present value of these assets and hence used as their fair value.
(3) Short-term loans		Since these loans’ tenor is short and rates are reset at a short interval, the book values of these liabilities are reasonable approximations of their present value and hence
used as their fair values.
(4) Current portion of investment corporation bonds and (6) Investment corporation bonds
		 Their fair values are based on the values published by a financial data provider.
(5)	Current portion of long-term loans and (7) Long-term loans		For loans with floating interest rates, since the interest rates on such loans reflect market rates reasonably well over the short term and their book values are good
approximations of their fair values, the book values are presented as their fair values. (However, the fair values of floating-rate long-term loans hedged by an interest-rate
and currency swap subject to integrated treatment or by an interest-rate swap subject to special accounting treatment are calculated by discounting the aggregatedprincipal and the interest on such loans, after taking into account the effect of said interest-rate and currency swaps or interest-rate swaps, using reasonable estimates of
the rates that would be applicable if the Company were to refinance the existing loans for the remaining period to maturity under the prevailing market conditions asof March 31, 2015 and September 30, 2015. Such floating-rate long-term loans are presented in Section 4. Derivative Transactions.) The fair values of the liabilities
with fixed interest rates are calculated by discounting the aggregated amounts of the principal and the interest of the loans by the rates that are reasonably estimated tobe applicable if the Company were to refinance the existing loans for the remaining period to maturity under the prevailing market conditions as of March 31, 2015
and September 30, 2015.
(8) Derivative transactions
		 Please refer to Section 4. Derivative Transactions.
Japan Real Estate Investment Corporation

33

2. Financial instruments whose fair values cannot be reliably measured
Thousands of yen

As of March 31, 2015
577,168
47,637,990(1) Non-listed stock (*1)
(2) Deposits received from tenants (*2)

As of September 30, 2015
577,168
49,573,768(*1) With regard to non-listed stock, which does not have a quoted market price in an active market and whose cash flows are not reasonably estimated, fair value cannot
be reliably measured and it is therefore presented at book value.
(*2) With regard to deposits received from tenants, which do not have a quoted market price in an active market and reasonably estimated tenor, their cash flows cannot
be reliably measured and they are therefore presented at their book value.
3. Redemption schedule for monetary claims after the closing dateThousands of yen

1 year or less
15,561,878
4,687,042
20,248,921

Cash and deposits
Cash and deposits in trust
Total

1 to 2 years———

As of March 31, 2015
2 to 3 years
3 to 4 years
—
—
—
—
—
—

1 to 2 years———

As of September 30, 2015
2 to 3 years
3 to 4 years
—
—
—
—
—
—

4 to 5 years———

Over 5 years———

4 to 5 years———

Over 5 years———

4 to 5 years——
39,000,000
39,000,000

Over 5 years—
10,000,000
117,000,000
127,000,000

4 to 5 years——
44,500,000
44,500,000

Over 5 years—
10,000,000
136,300,000
146,300,000

Thousands of yen

1 year or less
20,564,934
5,844,989
26,409,924

Cash and deposits
Cash and deposits in trust
Total

4. Repayment schedule for investment corporation bonds, long-term loans and other interest-bearing debt after the closing dateThousands of yen

1 year or less
32,500,000
20,000,000
16,600,000
69,100,000

Short-term loans
Investment corporation bonds
Long-term loans
Total

1 to 2 years——
44,400,000
44,400,000

As of March 31, 2015
2 to 3 years
3 to 4 years———
10,000,000
46,500,000
25,000,000
46,500,000
35,000,000
Thousands of yen

As of September 30, 2015
1 year or less
36,700,000—
32,100,000
68,800,000

Short-term loans
Investment corporation bonds
Long-term loans
Total

1 to 2 years——
42,850,000
42,850,000

2 to 3 years—
10,000,000
36,000,000
46,000,000

3 to 4 years——
25,000,000
25,000,000

4. Derivative Transactions(1) Derivatives not designated as hedging instruments
		 For the period from October 1, 2014 to March 31, 2015
		  “Not applicable”
		 For the period from April 1, 2015 to September 30, 2015
		  “Not applicable”(2) Derivatives designated as hedging instruments
		 For the period from October 1, 2014 to March 31, 2015		 The contract amount or the equivalent principal amount set out in the contract as of the closing date for each derivative designatedas a hedging instrument is as follows.


Derivative Accounting Method
Hedge accounting
Integrated Treatment (Special Treatment
and Allocation Treatment) for interestrate and currency swap transactions

34

Japan Real Estate Investment Corporation

Type of Derivative Transaction

Hedged Item

Receive floating, pay fixedLong-term loansinterest-rate swap transactions
Receive floating USD, pay fixed JPY,
interest-rate and currency swap trans- Long-term loans
action (with initial and final exchange)

Contract Value
Over One Year

Thousands of yen

Fair Value

Measurementof Fair Value

47,500,000

47,500,000*—

10,000,000

10,000,000*—		 For the period from April 1, 2015 to September 30, 2015			The contract amount or the equivalent principal amount set out in the contract as of the closing date for each derivative designated asa hedging instrument is as follows.


Derivative Accounting Method

Type of Derivative Transaction

Receive floating, pay fixedinterest-rate swap transactions
Integrated Treatment (Special Treatment Receive floating USD, pay fixed JPY,
and Allocation Treatment) for interest- interest-rate and currency swap transrate and c­ urrency swap transactions
action (with initial and final exchange)
Hedge accounting

Contract Value

Hedged Item

Over One Year

Thousands of yen

Fair Value

Measurementof Fair Value

Long-term loans

60,800,000

60,800,000*—

Long-term loans

10,000,000

10,000,000

*

—

*B
 ecause the derivative transactions eligible for the Special Treatment of interest-rate swaps and Integrated Treatment (Special Treatment for interest-rate swaps and Allocation
Treatment for currency swaps) are accounted for as integral parts of the hedged loans, the fair value of those derivative transactions is included in that of the underlying longterm loans as of March 31, 2015 and September 30, 2015. Please refer to the measurement of fair value of financial instruments in Note 1 of “2. Fair value of financial instruments” under Section 3. Financial Instruments as well as subheadings (5) and (7) of Note 1 concerning derivative transactions.

5. Property and Equipment
Property and equipment as of March 31, 2015 and September 30, 2015 consisted of the following:Thousands of yen

As of March 31, 2015

As of September 30, 2015

Acquisition costs

Book value

Acquisition costs

Book valueLand

439,594,248

439,594,248

452,965,989

452,965,989

Buildings and structures

263,206,113  Accumulated depreciation(70,594,500)

Machinery and equipment

2,929,200  Accumulated depreciation(1,638,100)

Tools, furniture and fixtures

365,608  Accumulated depreciation(163,901)

Construction in progress

269,554,730
192,611,613(75,363,974)

1,291,099(1,721,977)

201,706(187,315)

194,190,756

2,944,813
1,222,835

376,537
189,222

1,310

1,310

1,310

1,310

Land in trust

130,818,405

130,818,405

151,935,120

151,935,120

Buildings and structures in trust

72,114,232  Accumulated depreciation(14,918,153)

Machinery and equipment in trust

963,001  Accumulated depreciation(604,071)

77,186,731
57,196,078(16,341,715)

60,845,015

939,320
358,929(615,178)

324,141

Tools, furniture and fixtures in trust

34,030  Accumulated depreciation(12,401)

21,629(14,470)

21,302

Construction in progress in trust

1,278

1,278

1,278

1,278

822,096,301

822,096,301

861,696,973

861,696,973

Total

35,772The compressed amount of tangible assets with government grants under the Corporation Tax Law of Japan was ¥50 million as ofMarch 31, 2015 and ¥50 million as of September 30, 2015.

Japan Real Estate Investment Corporation

35

6. Loans
The condition of loans by financial institutions as of September 30, 2015 is as follows.

Drawdown Date

Balance at
Beginning ofCurrent Period(¥ million)

Balance at
End ofCurrent Period(¥ million)

Average
Interest
Rate*1(%)

Repayment
Date

October 1, 2014

3,500

2,500

0.18

October 1, 2015

January 7, 2015

2,000

—

0.18

January 7, 2016

March 25, 2015

5,500

5,500

0.18

March 25, 2016

BulletMarch 31, 2015

2,000

2,000

0.18

March 31, 2016

BulletApril 1, 2015

—

5,500

0.18

April 1, 2016

BulletOctober 1, 2015

Bullet*4

Purchase real estate

Floating interest rate

BulletPurchase real estate trust
beneficiary rights

Floating interest rate

Purchase real estate

Floating interest rate

Segment
LenderMizuho Bank, Ltd.

October 1, 2014
The Bank of TokyoMitsubishi UFJ, Ltd.
Short-term loans

Sumitomo Mitsui
Trust Bank, Limited

3,500

—
3,500

0.18
0.18

March 2, 2016

Bullet*2
Bullet*3

Bullet*3
Bullet*5

March 27, 2015

2,000

—

0.18

March 28, 2016

April 1, 2015

—

3,500

0.18

April 1, 2016

September 2, 2014

3,800

—

0.18

September 2, 2015

BulletMarch 31, 2015

3,700

3,700

0.18

March 31, 2016

BulletUse of Proceeds

Notes

Purchase real estate

Floating interest rate

Repay existing
short-term loans
Purchase real estate trust
beneficiary rights
Repay existing
short-term loans
Purchase real estate trust
beneficiary rights

Purchase real estate trust
beneficiary rights
Repay existing
short-term loans
Repay existing
short-term loans
Repay existing
short-term loans
Purchase real estate
Purchase real estate
and Repay existing
short-term loans
Repay existing
short-term loans
Repay existing
short-term loans
Repay existing
short-term loans

Floating interest rate
Floating interest rate
Floating interest rate
Floating interest rate

Floating interest rate
Floating interest rate
Floating interest rate

August 24, 2015

—

1,500

0.17

August 24, 2016

BulletSeptember 1, 2015

—

2,000

0.17

September 1, 2016

BulletResona Bank, ­Limited

September 1, 2015

—

2,000

0.17

September 1, 2016

BulletShinkin Central Bank

September 1, 2015

—

2,000

0.17

September 1, 2016

Bullet

The Daishi Bank, Ltd.

January 7, 2015

1,500

1,500

0.18

January 7, 2016

BulletThe 77 Bank, Ltd.

January 7, 2015

1,000

1,000

0.18

January 7, 2016

BulletOctober 1, 2014

500

500

0.18

October 1, 2015

BulletPurchase real estate

Floating interest rate

32,50036,700

—

6,000

—

6,000

0.90875

June 23, 2016

BulletRepay existing loans

Fixed interest rate

—

6,000

—

6,000

—

5,000

1.0325

April 4, 2016

BulletRepay existing loans

Fixed interest rate

Shinsei Bank, ­Limited

Long-term loans to be repaid within 1 year

Mitsubishi UFJ
Trust and Banking
Corporation
Subtotal
Mitsubishi UFJ
Trust and Banking
Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui
Trust Bank, Limited
The Bank of TokyoMitsubishi UFJ, Ltd.
Mitsubishi UFJ
Trust and Banking
Corporation
The Hachijuni
Bank, Ltd.
The Iyo Bank, Ltd.
Taiyo Life Insurance
Company

Development Bankof Japan Inc.
The Chugoku Bank,
LimitedThe Dai-ichi Life
Insurance Company,
LimitedThe Hiroshima
Bank, Ltd.
Subtotal
Total

36

March 2, 2015

3,500

Repayment
MethodJune 23, 2011

April 4, 2011

Floating interest rate
Floating interest rate
Floating interest rate
Floating interest rate
Floating interest rate
Floating interest rate

January 15, 2013

1,000

1,000

0.3825January 15, 2016

BulletRepay existing loans

Fixed interest rate

January 15, 2013
May 31, 2007

1,000
1,500

1,000
—

0.3825
1.86875

January 15, 2016
May 29, 2015

BulletBulletFixed interest rate
Fixed interest rate

April 24, 2008

—

1,000

1.595

April 25, 2016

BulletSeptember 1, 2008

2,000

—

1.65

September 1, 2015

BulletRepay existing loans
Purchase real estate
Redeem investment
corporation bonds
Purchase real estate trust
beneficiary rights
Purchase real estate

Fixed interest rate

Fixed interest rate
Fixed interest rate

March 24, 2010

100

100

1.665

March 24, 2017

Repayment ininstallments*6

June 15, 2010

3,000

—

1.20875

June 15, 2015

BulletRepay existing loans

Fixed interest rate

May 31, 2007

5,000

—

1.86875

May 29, 2015

BulletPurchase real estate

Fixed interest rate

3,000

—

1.1875June 15, 2015

BulletRepay existing loans

Fixed interest rate

16,60049,10032,10068,800June 14, 2010

Japan Real Estate Investment Corporation

Drawdown Date

Balance at
Beginning ofCurrent Period(¥ million)

Balance at
End ofCurrent Period(¥ million)

Average
Interest
Rate*1(%)

Repayment
Date

Repayment
MethodApril 4, 2011
April 4, 2011
June 1, 2011
June 1, 2011
November 15, 2011
June 15, 2012

5,000
5,000
12,00010,000
3,000
4,000

—
5,000
12,00010,0003,000
4,000

1.03251.205
1.12625
1.31125
1.13875
0.9525

April 4, 2016
April 4, 2017
June 1, 2017
June 1, 2018
November 15, 2019
June 15, 2020

BulletBulletBulletBulletBulletBulletSegment
LenderMitsubishi UFJ
Trust and Banking
Corporation

The Bank of TokyoMitsubishi UFJ, Ltd.

Long-term loans
Sumitomo Mitsui
Trust Bank, Limited

Mizuho Bank, Ltd.

Development Bankof Japan Inc.

June 15, 2012

2,500

2,500

1.2725June 15, 2022

BulletDecember 21, 2012

5,000

5,000

December 21, 2020

BulletJanuary 31, 2014

4,000

4,000

January 29, 2021

BulletDecember 19, 2014

10,00010,000December 19, 2023

BulletSeptember 1, 2015

—

3,500

0.80125
0.64225*70.42375*80.63

September 2, 2024

BulletMarch 24, 2011

2,000

2,000

1.3975

March 26, 2018

BulletNovember 15, 2011
June 15, 2012
December 21, 2012
January 15, 2013
January 15, 2013
April 24, 2013
September 1, 2015

3,000
4,000
5,000
5,500
5,500
5,000
—

3,000
4,000
5,000
5,500
5,500
5,000
5,000

1.13875
1.19750.801250.71
0.836250.775
0.2

November 15, 2019
June 15, 2022
December 21, 2020
January 15, 2020
January 15, 2021
April 26, 2021
September 2, 2019

BulletBulletBulletBulletBulletBulletBulletSeptember 1, 2015

—

2,000

0.47125

September 1, 2022

BulletJanuary 17, 2011

3,000

3,000

1.43375

January 17, 2018

BulletSeptember 26, 2011

5,500

5,500

1.16

September 26, 2019

BulletNovember 15, 2011
June 15, 2012

3,000
4,000

3,000
4,000

November 15, 2018
June 15, 2020

BulletBulletJanuary 31, 2014

2,000

2,000

May 29, 2015
June 15, 2015

—
—

5,000
3,000

September 2, 2015

—

3,800

0.98375
0.95250.62575*70.20750.34250.536*7December 21, 2010

5,000

5,000

1.30625

January 29, 2021

BulletMay 29, 2019
June 15, 2020

BulletBulletSeptember 2, 2024

BulletDecember 21, 2016

BulletNovember 1, 2011

6,000

6,000

1.2075

November 1, 2019

BulletNovember 15, 2011
June 15, 2012
January 15, 2013
April 24, 2013
September 1, 2015

3,000
4,000
5,000
3,000
—

3,000
4,000
5,000
3,000
2,500

1.13875
1.07375
0.966250.87375
0.17

November 15, 2019
June 15, 2021
January 17, 2022
April 25, 2022
March 1, 2019

March 24, 2010

1,400

1,350

1.665

March 24, 2017

January 7, 2013

3,000

3,000

1.115

January 6, 2023

BulletBulletBulletBulletBulletRepayment ininstallments*6
BulletJanuary 31, 2014

5,000

5,000

0.9325January 31, 2023

BulletSeptember 1, 2015

—

7,000

0.7175September 1, 2025

BulletUse of Proceeds

Notes

Repay existing loans
Repay existing loans
Repay existing loans
Repay existing loans
Purchase real estate
Purchase real estate
Redeem investment
corporation bonds
Repay existing loans
Purchase real estate trust
beneficiary rights
Repay existing
short-term loans
Purchase real estate
Repay existing
short-term loans
Purchase real estate
Purchase real estate
Repay existing loans
Repay existing loans
Repay existing loans
Repay existing loans
Purchase real estate
Repay existing
short-term loans
Repay existing
short-term loans
Repay existing
short-term loans
Purchase real estate
Purchase real estate
Purchase real estate trust
beneficiary rights
Repay existing loans
Repay existing loans
Repay existing
short-term loans
Repay existing
short-term loans
Repay existing short-termloans and other loans
Purchase real estate
Purchase real estate
Repay existing loans
Repay existing loans
Purchase real estate

Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Floating interest rate
*7
Floating interest rate
*8
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Floating interest rate
*7
Fixed interest rate
Fixed interest rate
Floating interest rate
*7
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate

Purchase real estate

Fixed interest rate

Purchase real estate
Purchase real estate trust
beneficiary rights
Purchase real estate andRepay existing loans

Fixed interest rate
Fixed interest rate
Fixed interest rate

Japan Real Estate Investment Corporation

37

Lender

Balance at
Beginning ofCurrent Period(¥ million)

Balance at
End ofCurrent Period(¥ million)

The Daishi Bank, Ltd.

1,800

1,800

The Hokuetsu
Bank, Ltd.

1,400

1,400

Sony Bank
Incorporated

1,400

1,400

The Toho Bank, Ltd.

1,400

1,400

The Shinkumi
Federation Bank

1,000

1,000

The Akita Bank, Ltd.

900

900

900

900

The Gunma Bank, Ltd.

900

900

The 77 Bank, Ltd.

900

900

The Tochigi Bank, Ltd.

900

900

The Higo Bank, Ltd.

500

500

The Bank of Iwate, Ltd.

500

500

Segment
Drawdown Date

The Fukui Bank, Ltd.

November 14, 2014

The Yamagata
Bank, Ltd.
Shinkin Central Bank

The Bank ofFukuoka, Ltd.

Long-term loans

The Norinchukin
Bank

Shinsei Bank,
Limited0.463*7

November 15, 2021

BulletRepay existing
short-term loans

Floating interest rate
*7

Purchase real estate
Purchase real estate
Repay existing loans
Repay existing loans
Repay existing loans
Redeem investment
corporation bonds
Repay existing loans
Purchase real estate trust
beneficiary rights
Repay existing loans
Purchase real estate trust
beneficiary rights
Redeem investment
corporation bonds
Purchase real estate trust
beneficiary rights
Repay existing loans
Purchase real estate
Redeem investment
corporation bonds

Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate

500
0.75250.713750.71
0.52775
0.9025

November 15, 2016
January 7, 2020
January 15, 2020
April 24, 2018
August 31, 2017

BulletBulletBulletBulletBulletJune 15, 2012

2,500

2,500

0.66

June 15, 2017

BulletAugust 31, 2012

1,000

1,000

January 31, 2014

2,500

2,500

March 25, 2015

3,500

3,500

August 31, 2011
June 15, 2012

3,000
2,500

3,000
2,500

0.57125
0.63849*70.51250.757*70.6785*7
0.46825*7
1.04750.66

June 15, 2012

2,500

2,500

March 24, 2015

2,000

2,000

January 31, 2014

3,500

3,500

June 17, 2014

3,000

3,000

1,000
1,000

The Fukui Bank,Ltd.

38

Notes

1,000
2,000
5,000
5,000
2,000

—
—

1,000

—

1,000

The Shinkumi
Federation Bank

—

1,000

The Toho Bank, Ltd.

—

1,000

The Tochigi Bank, Ltd.

—

500

March 25, 2013

2,000

2,000

October 1, 2014

1,000

1,000

June 15, 2015

—

3,000

June 15, 2012

2,500

2,500

Taiyo Life Insurance
Company

Use of Proceeds

500—

The Iyo Bank, Ltd.

Repayment
Method

1,000
2,000
5,000
5,000
2,000

The Daishi Bank, Ltd.

The Chugoku Bank,
LimitedRepayment
Date

November 15, 2011
January 7, 2013
January 15, 2013
April 24, 2013
August 31, 2011

The Chugoku Bank,
LimitedThe Gunma Bank, Ltd.

Average
Interest
Rate*1(%)

August 10, 2015

March 24, 2014

2,000

2,000

October 1, 2014

1,000

1,000

April 24, 2008

1,000

—

March 30, 2011
October 1, 2014
May 29, 2015

2,000
2,000
—

2,000
2,000
1,500

Japan Real Estate Investment Corporation

August 31, 2017

BulletJanuary 29, 2021

BulletMarch 24, 2023

BulletJanuary 31, 2022

BulletJune 17, 2022

BulletFixed interest rate
Fixed interest rate
Floating interest rate
*7
Fixed interest rate
Floating interest rate
*7
Floating interest rate
*7
Floating interest rate
*7
Fixed interest rate
Fixed interest rate

March 27, 2023

BulletAugust 31, 2018
June 15, 2017

BulletBullet1.2725June 15, 2022

Bullet0.3925*7

August 10, 2022

BulletRepay existing
short-term loans

Floating interest rate
*7

Fixed interest rate
Floating interest rate
*7
Floating interest rate
*70.45
0.4725*70.61175*70.66
0.6035*70.46525*7

March 26, 2018

BulletRepay existing loans

October 1, 2021

BulletPurchase real estate

June 15, 2023

BulletRepay existing loans

June 15, 2017

BulletRedeem investment
corporation bonds

March 24, 2021

BulletRepay existing loans

October 1, 2021

BulletPurchase real estate

1.595

April 25, 2016

Bullet1.39625
0.78250.7375

March 30, 2018
October 1, 2024
May 29, 2025

BulletBulletBulletRedeem investment
corporation bonds
Repay existing loans
Purchase real estate
Repay existing loans

Fixed interest rate

Fixed interest rate
Floating interest rate
*7
Floating interest rate
*7
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate

Drawdown Date

Balance at
Beginning ofCurrent Period(¥ million)

Balance at
End ofCurrent Period(¥ million)

Average
Interest
Rate*1(%)

Repayment
Date

Repayment
MethodUse of Proceeds

Notes

March 30, 2009

5,000

5,000

1.54375

March 30, 2017

BulletRepay existing loans

Fixed interest rate

March 1, 2011

2,000

2,000

1.255

March 1, 2017

BulletMarch 25, 2013
November 15, 2011
January 7, 2013
June 15, 2012
December 20, 2012
March 25, 2013

3,000
3,000
2,000
1,000
1,000
1,000

3,000
3,000
2,000
1,000
1,000
1,000

0.45
0.98375
0.98
0.66
0.45625
0.45

March 26, 2018
November 15, 2018
January 7, 2022
June 15, 2017
December 20, 2017
March 26, 2018

BulletBulletBulletBulletBulletBulletPurchase real estate trust
beneficiary rights
Repay existing loans
Purchase real estate
Purchase real estate
Purchase real estate
Repay existing loans
Repay existing loans

Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate
Fixed interest rate

The Hiroshima
Bank, Ltd.

October 1, 2014

3,000

3,000

0.31575*7October 1, 2019

BulletPurchase real estate

Floating interest rate
*7

Mizuho Trust &Banking Co., Ltd.

March 2, 2015

3,000

3,000

0.5585*7

March 3, 2025

BulletPurchase real estate trust
beneficiary rights

Floating interest rate
*7

The Yamaguchi
Bank, Ltd.

October 29, 2012
March 25, 2013

2,000
1,000

2,000
1,000

October 29, 2020
March 24, 2023

BulletBulletRepay existing loans
Repay existing loans

March 24, 2014

1,000

1,000

March 25, 2019

BulletRepay existing loans

November 17, 2014

1,000

1,000

November 18, 2019

BulletRepay existing loans

Fixed interest rate
Fixed interest rate
Floating interest rate
*7
Floating interest rate
*7

March 1, 2011

2,000

2,000

1.465

March 1, 2018

BulletPurchase real estate trust
beneficiary rights

Fixed interest rate

December 17, 2021

BulletRedeem investment
corporation bonds

Floating interest rate
*7

Segment
Lender
The Dai-ichi Life
Insurance Company,
LimitedResona Bank, Limited
Sumitomo Mitsui
Banking Corporation
The Hachijuni
Bank, Ltd.

Long-term loans

The Gunma Bank, Ltd.
Nippon Life
Insurance Company

0.8
0.945
0.4105*7
0.316*7

Fixed interest rate

The Nishi-Nippon
City Bank, Ltd.

June 17, 2014

2,000

2,000

0.621
*7

The Yamanashi Chuo
Bank, Ltd.

December 15, 2014

2,000

2,000

0.266
*7

December 16, 2019

BulletRepay existing loans

Floating interest rate
*7

The Ashikaga
Bank, Ltd.

January 7, 2013

1,000

1,000

0.49125

January 9, 2018

BulletPurchase real estate

Fixed interest rate

The Joyo Bank, Ltd.

January 7, 2013

1,000

1,000

0.49125

January 9, 2018

BulletPurchase real estate

Fixed interest rate

6,000

—

6,000

—

0.90875

June 23, 2016

BulletRepay existing loans

Fixed interest rate

6,000

—

Mitsubishi UFJ
Trust and Banking
Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui
Trust Bank, Limited
The Bank of TokyoMitsubishi UFJ, Ltd.
Total

July 23, 2011

6,000

—

271,900

284,650*1. The average for floating interest rates is recorded as the weighted average during the period. The average is rounded off to the fifth decimal place.
*2. As of May 12, 2015, ¥1,000 million has been repaid before the original maturity.
*3. As of April 7, 2015, the entire amount of ¥2,000 million has been repaid before the original maturity.
*4. As of May 12, 2015, ¥1,000 million and as of September 1, 2015, ¥2,500 million has been repaid before the original maturity.
*5. As of September 1, 2015, ¥2,000 million has been repaid before the original maturity.
*6. ¥50 million is repaid every six months respectively. ¥1,350 million is scheduled to be repaid on the final principal repayment date.
*7.	In order to hedge the risk of interest rate fluctuations, floating interest rates were swapped to fixed rates. Accordingly, the weighted average for interest rates during theperiod is calculated taking the effect of this swap into consideration.
*8.	In order to hedge the risk of exchange rate and interest rate fluctuations related to foreign currency-denominated loans, the Company conducted an interest-rate and currency swap transaction, which substantially secured exchange and interest rates. Accordingly, the weighted average for interest rates during the period is calculated taking
the effect of this interest-rate and currency swap into consideration.
Note: All floating interest rate loans and fixed interest rate loans procured are unsecured, unguaranteed, and unsubordinated.

Japan Real Estate Investment Corporation

39

7. Investment Corporation Bonds including Current Portion of Investment Corporation Bonds
Outstanding investment corporation bonds as of September 30, 2015 are as follows.

Date of Issue

Balance at
Beginning ofCurrent Period(¥ million)

Balance at End of
Current Period(¥ million)

Interest Rate(%)

Repayment Period

Repayment
MethodUse ofProceeds

Notes

September 29, 2005

10,00010,0002.56

September 29, 2025

Bullet*1*2

April 23, 2010

10,000—1.26

April 23, 2015

Bullet*1*2

July 23, 2010

10,000—

1.05

July 23, 2015

Bullet*1*2

August 30, 2013

10,00010,0000.497

August 30, 2018

Bullet*1*2

40,00020,000

Securities

4th unsecured investment
corporation bond
7th unsecured investment
corporation bond
8th unsecured investment
corporation bond
9th unsecured investment
corporation bondTotal

*1.	The 4th and 8th unsecured investment corporation bonds are used to fund the repayment of existing short-term loans. The 7th unsecured investment corporation bond isused to redeem existing investment corporation bonds.
		The 9th unsecured investment corporation bond is used to fund the repayment of loans and acquire specified assets (“specified assets” defined in Article 2, Paragraph 1of the ITA).
*2. Financial covenants, such as a negative pledge, are not included in these bonds.

8. Net Assets
The Company is required to maintain net assets of at least ¥50 million, as required pursuant to the ITA.

9. Income Taxes
The Company is subject to Japanese corporate income taxes on all of its taxable income. However, under the Special Taxation Measures
Law of Japan (hereinafter the STML), an investment corporation is allowed to deduct dividends of accounting profits, or dividend distributions, paid to unitholders from its taxable income if certain tax requirements are satisfied. Such tax requirements include dividend
distributions in excess of 90% of its earnings available for dividends for the fiscal period as stipulated by Article 67-15 of the STML. Basedon the distribution policy provided by Article 32-2 of the Articles of Incorporation, the Company made a dividend distribution in theamount of ¥10,475 million subsequent to September 30, 2015, which is the multiple number of units up to 100% of the unappropriatedretained earnings after deducting therefrom ¥31 million of retained earnings to be carried forward. The Company will not distribute dividends in excess of retained earnings under Article 32-3 of the Articles of Incorporation. The significant components of deferred tax assets
and liabilities as of March 31, 2015 and September 30, 2015 were as follows:
Thousands of yen

For the period from October 1, 2014
to March 31, 2015

Deferred tax assets:
Accrued enterprise tax
Amortization of a term leasehold interest
Asset retirement obligations
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserve for advanced depreciation of non-current assets
Total deferred tax liabilities
Net deferred tax liabilities

40

Japan Real Estate Investment Corporation

For the period from April 1, 2015
to September 30, 2015

979

953

42,62247,736

8,257

9,295

51,86057,986(50,880)(57,032)

979

953

116,161

116,161

116,161

116,161

115,181

115,207

The reconciliation of tax rate difference between the adjusted statutory tax rate and the effective tax rate for the six months ended March
31, 2015 and September 30, 2015 was as follows:
For the period from October 1, 2014
to March 31, 2015

Statutory tax rate
Deductible dividend distribution
Change in valuation allowance
Others
Effective tax rate

For the period from April 1, 2015
to September 30, 201537.11%

35.36%(37.06%)(35.32%)

0.07%

0.06%

(0.06%)

0.01%

0.06%

0.11%

10. Related Party Transactions
For the six months ended March 31, 2015 and September 30, 2015
Transactions with related parties defined under the Financial Instruments and Exchange Act are listed below.
(1) Parent Company and Major Corporation Unitholders
			 For the period from October 1, 2014 to March 31, 2015
				“Not applicable”
			 For the period from April 1, 2015 to September 30, 2015
				“Not applicable”(2) Subsidiaries
			 For the period from October 1, 2014 to March 31, 2015
				“Not applicable”
			 For the period from April 1, 2015 to September 30, 2015
				“Not applicable”(3) Sister Companies
			 For the period from October 1, 2014 to March 31, 2015
				“Not applicable”
			 For the period from April 1, 2015 to September 30, 2015
				“Not applicable”(4) Directors and Major Individual Unitholders
			 For the period from October 1, 2014 to March 31, 2015
				“Not applicable”
			 For the period from April 1, 2015 to September 30, 2015
				“Not applicable”
Transactions with related parties defined under the ITA are listed in the table on the next page.
In addition to controlling unitholders, major unitholders, subsidiary corporations, subsidiary companies of controlling unitholders, andofficers and their close relatives, the definition of a “related party” under the ITA also includes the asset management company and its
interested parties (parent and subsidiary corporations, specified individual shareholders, and major shareholders of the asset managementcompany defined as interested parties under Article 201 of the ITA and Article 123 of the enforcement order of the ITA), as well as theasset custody company.

Japan Real Estate Investment Corporation

41

For the period from October 1, 2014 to March 31, 2015 (Unaudited)
Balance at
End of Period(Thousands of Yen)

Type of Relationship

Name ofTransaction Partner

Type of Business

Percentage ofUnits Held

Transaction Details

Transaction Amount(Thousands of Yen)

Mitsubishi EstateCo., Ltd.

Rent revenue

11,034,759

Interested party

Real estate

1.623%

Security deposit increase

Interested party

Mitsubishi Jisho­Property Management
Co., Ltd.

Real estate­management—

Property management­expenses

1,756,731——

Interested party

Shinjuku Rokuchome
Special Purpose­Company (TMK)

Real estate—

Real estate purchase23,100,000——

Interested party

Amagasaki Eki-mae
Kaihatsu Y.K.

Real estate—

Real estate purchase9,300,000——

Asset custody­company

Sumitomo Mitsui
Trust Bank, Limited

Bank

—

—

Security deposit return

Accounting Item—

1,034,035 Deposits received
from tenants
158,056—
18,525,686—

Long-term loans
payable23,500,000

Accounting Item

Balance at
End of Period(Thousands of Yen)

Notes: 1. Consumption tax is not included in the above amounts.
2. Transaction terms were decided based on market conditions at the time the transaction was made.

For the period from April 1, 2015 to September 30, 2015 (Unaudited)Type of Relationship

Name ofTransaction Partner

Type of Business

Percentage ofUnits Held

Transaction Details

Transaction Amount(Thousands of Yen)

Mitsubishi EstateCo., Ltd.

Rent revenue

11,104,867

Interested party

Real estate

1.307%

Security deposit increase

Interested party

Mitsubishi Jisho­Property Management
Co., Ltd.

Real estate­management—

Property management­expenses

1,937,719——

Interested party

Shiodome ­Investment LLC

Real estate—

Real estate purchase10,100,000——

Asset custody­company

Sumitomo Mitsui
Trust Bank, Limited

Short-term loans repayment

3,800,000—

Short-term loans
payable3,700,000

Bank

Long-term loans borrowing

11,800,000

Long-term loans
payable35,300,000

Security deposit return—

218,048 Deposits received
from tenants
170,772—
18,572,963

Notes: 1. Consumption tax is not included in the above amounts.
2. Transaction terms were decided based on market conditions at the time the transaction was made.

11. Segment Information
For the six months ended March 31, 2015 and September 30, 2015
Since the Company has been engaged in real estate leasing business using a single segment, segment information has been omitted.
Information on 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 on products and services has been omitted.

42Japan Real Estate Investment Corporation

Information on geographic area

(1) Revenue		Since 100% of total operating revenues was generated from external customers within Japan, a geographical breakdown of revenues has
been omitted.
(2) Property and equipment
		Since 100% of total property and equipment on the balance sheet was located within Japan, a geographical breakdown of such property and equipment has been omitted.
Information on major clients

Since no single external client represents 10% or more of the Company’s total operating revenues, information on major clients has
been omitted.

12. Asset Retirement Obligations
For the six months ended March 31, 2015 and September 30, 2015
Asset retirement obligations reported on balance sheet

The Company acquired Osaki Front Tower on February 1, 2011 under the term leasehold for business use agreement which, at the expiryof the leasehold, obligates the Company to restore the leased land to its original state. At the inception of a lease with such an obligation,
the Company recognized an asset retirement obligation and a corresponding capital asset in an amount equal to the present value of theestimated demolition cost required for the removal of the properties located on the leased land. The present value is calculated using
2.015% as the discount rate over 42 years, which is the term of the leasehold.
Change in the amount of the asset retirement obligations as of March 31, 2015 and September 30, 2015 consisted of the following:Thousands of yen

Balance at the beginning of the period
Increase in tangible fixed assets
Adjustment required over the period
Balance at the end of the period

For the period from October 1, 2014
to March 31, 2015

For the period from April 1, 2015
to September 30, 2015

315,687

318,867

—

—

3,180

3,212

318,867

322,080

Asset retirement obligations other than those reported on balance sheet

Under the Road Act of Japan, the Company is obligated to remove the cable lines and the accompanying equipment originally installed forpreventing analog TV interference under the public roads close to Shibuya Cross Tower and to restore the public roads to their originalstates because analog TV broadcasting was discontinued.
Since the removal involves public roads currently in service and some of the locations of the underground structures are potentiallyaffected by the ongoing redevelopment projects near Shibuya Station, it is difficult to initiate such removal unilaterally without involving
other interested parties. Therefore, a reasonable estimate of the present value of asset retirement obligations cannot be made because themethod, the cost and the timing of the removal remains uncertain.
In consideration of such uncertainty, the asset retirement obligation is not reported in the financial statements, and instead noted herein.

Japan Real Estate Investment Corporation

43

13. Investment and Rental Property
For the six months ended March 31, 2015 and September 30, 2015
The Company owns primarily a portfolio of office properties in Tokyo and other prefectures in order to gain rental revenue from them.
The book values on balance sheets as of March 31, 2015 and September 30, 2015 and the fair values as of March 31, 2015 and September 30, 2015 are as follows:
Thousands of yen

Book value

Fair value

As of September 30, 2014

Change during period (*1)

As of March 31, 2015

As of March 31, 2015

786,106,624

43,342,594

829,449,219

912,125,000

Thousands of yen

Book value

Fair value

As of March 31, 2015

Change during period (*2)

As of September 30, 2015

As of September 30, 2015

829,449,219

39,584,842

869,034,061

977,666,000

Notes: 1. Book value on balance sheet means the acquisition cost less accumulated depreciation.
2. Significant changes
		 (*1)	As for increases/decreases for the period, the major reasons for the increase were the acquisitions of Shinjuku Eastside Square (¥23,396,427 thousand), the Clover
Shiba-koen (¥4,675,038 thousand), the Ginza 1Chome East Building (¥6,708,693 thousand), and the Amagasaki Front Building (¥9,390,082 thousand), as well as
the additional acquisition in Harmony Tower (¥2,191,941 thousand). The major reason for decrease was depreciation.
		 (*2)	As for increases/decreases for the period, the major reasons for the increase were the acquisitions of the Umeda Square Building (¥15,677,942 thousand) and theAER (¥18,889,617 thousand), as well as an additional 5.0% co-ownership interest of trust beneficiary right of real estate pertaining to the Shiodome Building(¥10,173,888 thousand). The major reason for decrease was depreciation.
3. Fair values as of March 31, 2015 and September 30, 2015 are defined as the appraised values provided by an external qualified professional appraiser.

Profits and losses related to investment and rental property are listed in Section 15. Breakdown of Property-Related Revenues and Expenses.

14. Per Unit Information
The following table summarizes information about net assets per unit and profit per unit at March 31, 2015 and September 30, 2015 andfor the periods then ended, respectively:
Yen

Net assets at period end per unit
Profit per unit

For the period from October 1, 2014
to March 31, 2015

For the period from April 1, 2015
to S
­ eptember 30, 2015

348,909358,026

7,686

8,015

Notes: 1.	Profit per unit is computed by dividing profit by the weighted average number of units outstanding during each period. Diluted profit per unit has not been presented
since no warrants or convertible bonds were outstanding during the period.
2.	‌The basis for the computation of profit per unit is as follows.
Thousands of yen

ProfitAmount not attributable to normal unitholders
Profit applicable to normal investment units
Average number of units

44

Japan Real Estate Investment Corporation

For the period from October 1, 2014
to March 31, 2015

For the period from April 1, 2015
to September 30, 2015

9,619,880—
9,619,880
1,251,530 units

10,476,112—
10,476,112
1,307,008 units15. Breakdown of Property-Related Revenues and Expenses
For the six months ended March 31, 2015 and September 30, 2015
Thousands of yen

For the period from October 1, 2014
to March 31, 2015

For the period from April 1, 2015
to ­September 30, 2015

Property-Related Revenues

28,314,912

29,980,892

Rent revenues

28,048,535

29,886,578  Rental revenues

21,748,842

23,246,606   Common service charges

3,458,878

3,647,677  Parking revenues   Other rental revenues
Other lease business revenues

741,840

790,0632,098,973

2,202,231

266,377

94,314  Cancellation charges

229,617

81,455   Other miscellaneous revenues

36,75912,858Property-Related Expenses

15,911,920

16,642,681   Property management expenses

3,447,650

3,549,250  Utilities expenses

2,694,344

2,869,139   Property and other taxes

2,531,043

2,766,013  Casualty insurance

55,60958,020  Repairing expenses

983,138

881,171

6,009,647

6,332,545  Depreciation   Other rental expenses

190,486

186,539

Property-Related Profits

12,402,991

13,338,211

16. Changes in Unitholders’ Equity
For the six months ended March 31, 2015 and September 30, 2015
Total number of investment units issuable
and number of units outstanding

As of March 31, 2015

As of September 30, 2015

Total number of investment units issuable

4,000,000 units

4,000,000 units

Number of units outstanding

1,251,530 units

1,309,310 units

17. Supplemental Cash Flow Information
Cash and cash equivalents

The following table represents a reconciliation of cash and cash equivalents at March 31, 2015 and September 30, 2015:
Thousands of yen

As of March 31, 2015

As of September 30, 2015

Cash and deposits

15,561,878

20,564,934

Cash and deposits in trust

4,687,042

5,844,989

Time deposits with maturities of more than three months
Cash and cash equivalents—(5,000,000)

20,248,921

21,409,924

Japan Real Estate Investment Corporation45

18. Leases
1. Leased assets under finance lease transactions that do not transfer ownership of the leased assets to the lessees are capitalized and depreciated by the straight-line method over the lease term with no residual value. Such capitalized leased assets primarily consist of tools,
furniture and fixtures.
2. The Company, as a lessor, owns office buildings under leases and earns rent income. As of March 31, 2015 and September 30, 2015, thefuture lease revenues under the non-cancelable operating leases are as follows:
Thousands of yen

As of March 31, 2015

As of September 30, 2015

Due within one year

19,462,992

20,567,550

Due after one year

45,119,164

41,020,362

Total

64,582,157

61,587,912

19. Subsequent Events
For the six months ended September 30, 2015
“Not applicable”

20. Risk Factors
The principal risks with respect to investment in JRE are as follows:• any adverse conditions in the Japanese economy could adversely affect JRE;
• JRE may not be able to acquire properties to execute the growth and investment strategy in a manner that is accretive to earnings;• illiquidity in the real estate market may limit the ability to grow or adjust the portfolio;• the past experience of the asset manager (the “AIFM”) in the Japanese real estate market is not an indicator or guarantee of future results;• JRE’s reliance on JRE’s sponsor companies, the AIFM and other third party service providers could have a material adverse effecton business;• there are potential conflicts of interest between JRE and its sponsor companies as well as the AIFM;• JRE’s revenues largely comprise leasing revenues from the portfolio properties, which may be negatively affected by vacancies, decreases
in rent, and late or missed payments by tenants;• JRE faces significant competition in seeking tenants and it may be difficult to find replacement tenants;• increases in interest rates may increase the interest expense and may result in a decline in the market price of the units;• JRE may suffer large losses if any of the properties incurs damage from a natural or man-made disaster;• most of the properties in the portfolio are concentrated in Tokyo and the Tokyo metropolitan area;• any inability to obtain financing for future acquisitions could adversely affect the growth of the portfolio;• JRE’s failure to satisfy a complex series of requirements pursuant to Japanese tax regulations would disqualify JRE from certain taxation
benefits and significantly reduce the cash distributions to the unitholders; and• ownership rights in some of JRE’s properties may be declared invalid or limited.

46

Japan Real Estate Investment Corporation

In addition, JRE is subject to the following risks:• risks related to increasing operating costs;• risks related to JRE’s dependence on the efforts of the AIFM’s key personnel;• risks related to the restrictive covenants under debt financing arrangement;• risks related to entering into forward commitment contracts;• risks related to third party leasehold interests in the land underlying JRE properties;• risks related to holding the property in the form of stratified ownership (kubun shoyū) interests or co-ownership interests(kyōyū-mochibun);• risks related to holding the property through trust beneficiary interests;• risks related to properties not in operation (including properties under development);• risks related to the defective title, design, construction or other defects or problems in the properties;• risks related to impairment losses relating to the properties;• risks related to tenant leasehold deposits and/or security deposits;• risks related to tenant’s default as a result of financial difficulty or insolvency;• risks related to the insolvency of master lessee;• risks related to the insolvency of a property seller following the purchase of a property by AIF;
• risks related to relying on expert appraisals and engineering, environmental and seismic reports as well as industry and market data;• risks related to the presence of hazardous or toxic substances in the properties, or the failure to properly remediate such substances;• risks related to strict environmental liabilities for the properties;• risks related to the amendment of applicable administrative laws and local ordinances;• risks related to infringing third party’s intellectual property right;• risks related to holding interests in properties through preferred shares of special purpose companies (tokutei mokuteki kaisha);• risks related to holding Japanese anonymous association (tokumei kumiai) interests;• risks related to investments in trust beneficiary interests;• risks related to the tight supervision by regulatory authorities and compliance with applicable rules and regulations;• risks related to tax authority disagreement with the AIFM’s interpretations of the Japanese tax laws and regulations;• risks related to being unable to benefit from reductions in certain real estate taxes enjoyed by qualified J-REITs;• risks related to changes in Japanese tax laws; and• risk of dilution as a result of further issuances of units.

Japan Real Estate Investment Corporation

47

21. I nformation Required under Article 22(2)(d) of the EU Alternative Investment Fund Managers
Directive (AIFMD)(1) ‌Material Changes in Information Listed in Article 23 of AIFMD during the Financial Period Covered by the Report(Six-month fiscal period ended September 30, 2015)
None

22. Remuneration Policy for the Asset Manager’s Directors, Corporate Auditors and Employees
Beginning April 1, 2014 and ending March 31, 2015
1. Remuneration for Asset Manager Directors

	The total amount of remuneration, bonuses, and other property benefits received by Asset Management Directors from the AssetManagement Company as compensation for their duties, as well as the individual amounts each Asset Management Director receives,
are decided by a resolution of a general meeting of unitholders. The policy for Asset Manager Director remuneration and bonuses
is as follows.
(1) The remuneration table is determined by the Director’s position.
(2) Remuneration will be paid to full-time Directors, and will not be paid to part-time Directors.
(3) Bonuses will not be paid to Directors, regardless of full-time or part-time position.
2. Remuneration for Asset Manager Corporate Auditors

	The total amount of remuneration, bonuses, and other property benefits received by Corporate Auditors from the Asset Management
Company as compensation for their duties, as well as the individual amounts each Corporate Auditor receives, are decided by a resolutionof a general meeting of unitholders. The policy for Corporate Auditor remuneration and bonuses is as follows.
(1) Remuneration will not be paid to part-time Corporate Auditors.
(2) Bonuses will not be paid to Corporate Auditors, regardless of full-time or part-time position.
Directors

Remuneration based on resolutionsof the General Meeting of Unitholders
of Asset Manager

48

Japan Real Estate Investment Corporation

Number of
person(s)remunerated

1

Corporate auditors

Remuneration

Number of
person(s)remunerated¥19.5 million

0

Total

Remuneration

Number of
person(s)remunerated

Remuneration¥0 million

1¥19.5 million

3. Remuneration for Asset Manager Employees(1)	Remuneration for employees of the Asset Management Company (payment period, payment method, pay raises, promotions, etc.) are
stipulated by pay regulations and personnel evaluation regulations, and decided by objective evaluation of the process as well as achievements which take into account the overall corporate performance.
(2) Monthly pay consists of base pay, work allowance, executive allowance, and overtime pay. Pay raises are based on the result of performance evaluations that take into account management results from the previous fiscal year, and are carried out in April every year.
Promotions are dealt with in the same way.
(3) As for bonuses, the base number of multiples of monthly pay as bonuses are paid is determined in advance by qualifications of theemployee. Increases (or decreases) in the amount paid are based on the result of performance evaluations, which take into accountcorporate performance in the previous fiscal year.
All employees
Number of employees

Remuneration based on compensation rules

31

Remuneration
Total

Fixed

Variable¥295 million¥197 million¥98 million

4. Conflict of Interest

There are potential conflicts of interest between the Company and the Asset Management Company with respect to remuneration for the
Directors, Corporate Auditors and employees of the Asset Management Company. The Company believes that the above remuneration
policy mitigates such potential conflicts. In addition, the Asset Management Company has adopted an internal set of rules that apply to all
related-party transactions, such as transactions between the Company and the Asset Management Company. These rules require strict
compliance by the Asset Management Company with laws and regulations regarding related-party transactions. They also contain specificprocedures to be followed in the event of a transaction that involves a related party, in order to implement arm’s length terms.

Japan Real Estate Investment Corporation

49

50

Japan Real Estate Investment Corporation

Corporate Data
As of September 30, 2015

Executives
Executive Director: 	Hiroshi Nakajima
Supervisory Directors: ‌Kenji Kusakabe
Tomohiro Okanoya
Paid-in Capital¥458,016,096,000
Number of Units Outstanding
1,309,310
Number of Unitholders
18,785
Stock Listing
Tokyo Stock Exchange
Securities Code8952
Type of Investment Corporation
Closed-end corporate type fundTransfer Agent
Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan
Auditors
Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg.
2-2-3, Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011, Japan
Incorporation
May 11, 2001
Executive Office
Japan Real Estate Investment Corporation
3-3-1, Marunouchi, Chiyoda-ku, Tokyo 100-0005, JapanFor further information, please contact:
Japan Real Estate Asset Management Co., Ltd.
Planning Department
Tel: 81-3-3211-7951
Fax: 81-3-3212-8886
E-mail: j-rea-inquiry@j-rea.co.jp

This semiannual report includes translations of documents originally filed under the Japanese Financial Instruments and Exchange Law ofJapan. This report was prepared in English solely for the convenience of readers outside Japan and should not be considered as a disclosurestatement. The original Japanese documents shall take precedence in the event of any discrepancies arising from the translations or interpretations contained in this report.
Estimates for the Company’s future operating results contained in this semiannual report are forward-looking statements and are basedon information currently available to the Company and its asset management company and are subject to risks and uncertainties.
Consequently, these projections should not be relied upon as the sole basis for evaluating the Company. Actual results may differ substantiallyfrom the projections depending on a number of factors.

Japan Real Estate Investment Corporation

51

Japan Real Estate Investment Corporation
SEMIANNUAL REPORT

September 2015

http://www.j-re.co.jp/english/

Printed in Japan