November 20, 2008
JAPAN REAL ESTATE INVESTMENT CORPORATIONANNOUNCEMENT OF FOURTEENTH FISCAL PERIOD RESULTS

1. Summary of Financial Results
In the 14th fiscal period (six months ended September 30, 2008), Japan Real Estate
Investment Corporation (“JRE”) recorded operating revenues of 19,805 million yen, down
23.1% compared with the previous period. Despite an increase in both revenues and earnings
in its mainstay property leasing business, this decline is mainly attributable to the absence of
extraordinary factors such as dividends received totaling 7,935 million yen on its preferred
capital contribution from Harumi Front Tokutei Mokuteki Kaisha recorded in the previous
fiscal period. On the earnings front, operating income declined 31.0% to 9,807 million yen.
After deducting expenses for interest payments on loans and other costs, ordinary income
contracted 34.7% to 8,449 million yen, and net income decreased by the same percentage to
8,448 million yen.
JRE’s policy with regard to profit appropriation is to distribute dividends ofapproximately 100% of taxable income in order to enjoy the tax benefits available under
Article 67-15 of the Special Taxation Measures Law of Japan applicable to Japanese Real
Estate Investment Trusts (J-REITs). For the period under review, JRE accordingly declared acash dividend of 19,072 yen per unit.
2. Results of Operations(1) Property Management and Acquisition
During the period under review, market sentiment toward the Japanese economy wasincreasingly characterized by concerns in connection with the downturn in both
corporate-sector earnings and capital investment. This was attributable to the impact ofdestabilized global financial markets, triggered by the subprime loan crisis in the UnitedStates, and the impact of a slowdown in the global economy.
Amid growing uncertainty toward future economic and real estate market conditions,trends within the market for leased office space were mixed. Demand for corporate officespace mainly in central Tokyo, for example, remained firm, despite an upswing invacancy rates as tenants adopted a “wait-and-see” attitude. Vacancy rates also rose incertain regional cities.
Under these circumstances, JRE maintained a high occupancy rate of 96.1% at theend of the period under review reflecting the high quality of its existing properties heldand efforts to upgrade building facilities through refurbishment to maintain and enhancefunctions, while engaging in vigorous activities to attract new tenants. At the same time,
JRE improved portfolio profitability by implementing upward rent revisions and finely
tuned, customer-oriented building management policies.
Turning to the property market, property prices polarized against the backdrop of
the prudent stance toward financing adopted by domestic and overseas banking facilities
in response to the subprime loan crisis. In this context, some investors have become lesswilling to invest in small- and medium-sized buildings, while investment fromwell-financed institutional investors both in Japan and overseas remains robust forcompetitive prime properties.
In this market environment, JRE undertook the acquisition of competitive properties
to further strengthen the quality of its portfolio. Specifically, JRE acquired two properties:
The land and building adjacent to the Ryoshin Ginza East Mirror Building (in Chuo Ward,
Tokyo), acquired for 1,800 million yen on July 4, 2008 for the purpose of building
extension, and the Shin-Fujita Building (in Osaka City), acquired for 24,000 million yen
on September 1, 2008. As a result, JRE’s properties as of September 30, 2008 consistedof 54 office buildings with a total acquisition price of 542,969 million yen. Total leasable
space was 508,296 m2 (approximately 153,759 tsubo), with a total of 970 tenants.** The number of properties, total acquisition price, total leasable space and the number of tenants do notinclude the land and building adjacent to the Ryoshin Ginza East Mirror Building acquired for the purposeof building extension.

(2) Finance Activities
JRE procured 14,000 million yen on April 24, 2008 and 3,000 million yen on June 13,2008 in long-term loans for the redemption of its second investment corporation bond
(10,000 million yen) on April 30, 2008, while refinancing short-term loans to long-termloans. Furthermore, JRE procured 22,000 million yen in total in both short- and long-termloans for the acquisition of the Shin-Fujita Building. As a result of these finance activities,
as of September 30, 2008, JRE’s total interest-bearing debt amounted to 199,500 million
yen, consisting of long-term loans of 126,500 million yen (including the current portionof 7,000 million yen), short-term loans of 28,000 million yen, and investment corporation
bonds of 45,000 million yen.
As of September 30, 2008, JRE’s long-term, fixed-interest debt ratio1 stood at
86.0%, and the loan-to-value (LTV) ratio2 was 36.7%. As these results indicate, JRE has
been able to maintain a sound and conservative financial standing.

JRE’s credit ratings as of September 30, 2008 were as follows.
Rating Agency

Credit RatingStandard & Poor’s Rating Services

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

Moody’s Investors Service Inc.

Rating: Aa3; Outlook: Stable*

Rating and Investment Information, Inc. Rating: AA; Outlook: Stable* On June 6, 2008, Moody’s Investors Service Inc. raised JRE’s rating from A1 to Aa3.
Notes:
1. Long-term, fixed-interest debt ratio = Ratio of long-term, fixed-interest debt including the current portion of
long-term loans to interest-bearing debt
2. LTV ratio = Ratio of interest-bearing debt to total assets

3.

Outlook(1) Operating Environment
The U.S. subprime loan crisis that occurred in the summer of 2007 triggered the current
turmoil in the global economy. Meanwhile, Japan is evidently facing a decelerating
economy, after enjoying the longest postwar period of economic expansion—expansionthat has continued since 2002. The real estate industry also experienced a rapidly
deteriorating fund-raising environment on the back of shrinking investment funds, and it
is going through an intensive adjustment period. Therefore, it is difficult to foresee future
trends. Along with major cities in other regions, vacancy rates in the 23 wards of Tokyo
began to increase in the rental office market.
On the other hand, when selecting buildings, tenants in this market are making
increasingly stringent demands ranging from location, building quality and features, tobuilding management and value-added services. We anticipate that it will be even more
important for suppliers to provide services that correctly and promptly reflect the needs oftenants and to deliver added value that differentiates their buildings from thecompetitions.
In the real estate market, banking facilities have adopted a more prudent stance towardfinancing for the real estate sector. In this context, we believe that both the soundness of
JRE’s financial standing and its ability to procure funds are increasingly the key
strategies for acquiring prime properties.
a. Property Management
In accordance with the aforementioned, JRE expects the relative merits of properties tobecome increasingly evident reflecting area differences between central Tokyo,
metropolitan areas and regional cities. Therefore, JRE adheres to the following
management policies in order to maintain and improve earnings.

(i)Strengthen relationship of trust with existing tenants and raise rent levels
As of September 30, 2008, JRE had contracts with 11 property managementcompanies. Most of these companies were already managing their respective
buildings before JRE acquired them and have thus built relationships of trust with
their tenants. JRE will work to further strengthen these relationships by
anticipating tenants’ needs and providing tailored services in order to increasetenant satisfaction and subsequently uncover additional demand for office floor
space and raise rent levels. In addition, we are endeavoring to raise rent levels for
those tenants whose rents are significantly below market.

(ii)

Fill vacancies promptly
In cooperation with the property management companies mentioned above, JRE
actively seeks the most appropriate tenants for each property, based on locationand features, in order to fill current and anticipated vacancies as rapidly as
possible. We are also working to uncover additional demand for office floor spaceamong our existing tenants.

(iii)

Stabilize revenues
With the aim of stabilizing revenues, JRE is endeavoring to apply fixed- andlong-term leasing agreements with its large-scale tenants.

(iv)

Reduce management costs
JRE has introduced sound competitive principles for its multiple property
management companies to follow. These companies are also revamping their
management systems and cost structures on an ongoing basis.

b. Property Acquisitions and Sales
JRE has adopted the following policies for acquiring properties.
(i)

To access important information quickly, JRE is enhancing its property
information channels while working to develop new channels.

(ii)

In its acquisition activities, JRE will continue to meticulously monitor andexamine economic, physical, and legal factors, including rights-related issues,
while also taking business conditions into account when selecting properties. With
regard to the structure of buildings, we require buildings to meet or exceed newearthquake-resistance standards and are targeting properties capable ofmaintaining a competitive edge in terms of the facilities they offer over the
medium to long term.

(iii)In accordance with its acquisition policies, JRE’s general target for regional
diversity of properties is for 70% or more of its properties to be located within theTokyo metropolitan area, with the remaining 30% or less located in other major
cities.

Under these policies, JRE will continue to acquire highly competitive properties
while also considering suitable timing for the replacement of assets in order to further
strengthen the quality of its portfolio.
Concerning the financing of property acquisitions, JRE flexibly selects a variety offinancial instruments, including the issue of investment corporation bonds, while
maintaining a sound and conservative financial standing and monitoring trends infinancial markets. When procuring a loan, we are guided by prudent and stable financial
policies. Working to minimize funding costs, we also negotiate with several qualified
institutional investors before determining the various components that encompass loan
procurement.
(2) Performance Forecasts
For the 15th fiscal period (October 1, 2008 to March 31, 2009), JRE forecasts operating
revenues of 20,280 million yen, operating income of 9,640 million yen, ordinary incomeof 8,150 million yen and net income of 8,150 million yen. We plan to declare a cash
dividend of 18,410 yen per unit.
For the 16th fiscal period (April 1, 2009 to September 30, 2009), JRE forecasts
operating revenues of 20,580 million yen, operating income of 9,470 million yen,ordinary income of 7,900 million yen and net income of 7,900 million yen. We plan to
declare a cash dividend of 17,830 yen per unit.
The above estimates for the 15th and 16th periods are based on assumptions of theportfolio consisting of 54 properties as of September 30, 2008. Estimates are subject tochange in accordance with the acquisition or sale of other properties. The estimates arealso based on the 443,000 investment units outstanding as of September 30, 2008 and on
the assumption that the loan-to-value (LTV) ratio will be at around the 30%–40% level
on March 31, 2009 and September 30, 2009.

Income Statement for the 14th Period(In millions of yen; Dividend per unit in yen)
→ Change →Term 13th Period(Mar 31, 2008)
Actual/Forecast

Operating Revenues
Property-related Revenues
Rental Revenues
Non-rental Revenues
Gain on Transfer of Properties (*2)
Dividends Earned
Operating Expenses

Actual← Change ←14th Period(Sep 30, 2008)(amount)(%)

Actual14th Period(Sep 30, 2008)(amount)(%)

Initial Forecast(*1)

25,743-5,937 -23.1%

19,805235

1.2%

19,57017,807

1,997

19,805235

1.2%

19,57011.2%

17,761

19,716

45
-

89
0

-

-

-

7,935

-7,935 -100.0%

-

-

-

11,524-1,526 -13.2%

9,998

-41

-0.4%

10,040

5,609

22

0.4%

5,632

-117

-2.0%

5,750

Property Management Expenses

1,925

126

6.6%

2,052

Property Management Costs

1,831

13,810Property-related Expenses (*3)

Brokerage Fees, etc.

2,001

94

51

Utilities Expenses

1,201

250

20.9%

1,452

Property and Other Taxes

1,509

1,338

170

12.8%

Casualty Insurance

37

4

10.7%

41

Repairing Expenses

991-479 -48.4%

511

Other Expenses
NOI (*4)114-50 -43.7%

64

12,197

1,975

16.2%

14,173

363

2.6%

3,068

492

16.0%

3,560

60

1.7%

3,500

Property-related Profits and Losses (*4)

9,129

1,483

16.2%

10,612302

2.9%

10,310Gross Operating Income

17,065-6,452 -37.8%

10,612302

2.9%

10,3102,846-2,041 -71.7%

805

25

3.3%

780

2,574

-2,042 -79.3%

531

11

2.2%

520

287

3.0%

9,520

-21

-1.6%

1,400

339

4.2%

8,110

338

4.2%

8,110

762

4.2%

18,310Depreciation

Administrative Expenses
Asset Management Fees
Other Administrative Expenses
Operating Income

272
14,218273-4,411 -31.0%

9,807

Non-operating Revenues

33

Interest Income

33

38

Other Non-operating Revenues

012

Non-operating Expenses

50

1,305

1,408

Interest Expense

773

196

25.5%

970

Interest Expense on Investment Corporation Bonds

438

-30

-7.0%

408

Amortization of Investment Corporation Bond Issuance Cost

20

10

Other Non-operating Expenses

72

19

Ordinary Income

12,946

Income before Income Taxes

12,946

Income Taxes-4,496 -34.7%

8,449
8,449

0

0

Net Income

12,945-4,496 -34.7%

8,448

Retained Earnings at Period-end

12,945

FFO (*5)

8,078

48.7%

12,009Dividend per Unit

29,223 -10,151 -34.7%

19,072

8,448
3,931

*1 The initial forecast means the 14th Period performance forecast announced on May 15, 2008.
*2 Gain on sale of properties＋Gain on exchange of properties*3 Excluding Depreciation*4 Excluding Gain on transfer of properties and Dividends earned*5 Net income＋Depreciation – Gain on transfer of properties – Dividends earned

Balance Sheet for the 14th Period(In millions of yen)
13th Period-end 14th Period-end
Item

ChangeReason for change(Mar 31, 2008)(Sep 30, 2008)

Cash and Bank Deposits

13,124

15,0691,945

Other Current Assets

9,621

319

-9,302

22,746

15,389-7,357

Buildings (including those held in trust)

182,535

194,209

11,674Structures (including those held in trust)

1,979

2,223

243

Machinery and Equipment (including that held in trust)

2,862

2,893

31

Land (including that held in trust)

336,310

351,928

15,618

Accumulated Depreciation-23,832-27,392-3,560Total Property and Equipment

499,856

523,862

24,006

3,519

3,519

0

3,519

3,519

0

1,272

2

-1,270Long-term Prepaid Expenses, etc.

28

42

13

Total Investments and Other Assets

1,301

45

-1,256504,677

527,427

22,750

114

103

-10

114

103

-10

527,537

542,920

15,382

AssetsⅠ Current Assets

Total Current Assets

Decreased due to receipt of the dividend
receivables from Harumi Front TMK, etc.

Ⅱ Fixed Assets
Property and Equipment

Increased due to acquisition of properties
and capital expenditure, etc.

Intangible Assets
Leasehold rights, etc. (including those held in trust)
Total Intangible Assets
Investments and Other Assets
Investment Securities

Total Fixed Assets
Ⅲ Deferred Assets
Deferred Investment Corporation Bond Issuance Costs
Total Deferred Assets
Total Assets

Decreased due to retirement of the preferred
capital contribution into Harumi Front TMK

(In millions of yen)
13th Period-end 14th Period-end
Item

ChangeReason for change(Mar 31, 2008)(Sep 30, 2008)

Short-term Loans

23,00028,000Current Portion of Long-term Loans

7,000

7,000

-

Current Portion of Investment Corporation Bonds

10,000--10,000

Rent Received in Advance

2,239

2,260

20

Other Current Liabilities

5,767

2,142

-3,62448,00739,402-8,604

Investment Corporation Bonds

45,00045,000-Long-term Loans

92,500

119,500

27,000 and the investment corporation bond redemption cost

Deposits Received from Tenants

31,48332,966

1,483 Increased due to acquisition of properties, etc.

168,983

197,466

28,483

216,990

236,869

19,879Unitholders' Capital

297,601

297,601-

Retained Earnings

12,945

8,448-4,496

Total Net Assets

310,547

306,050-4,496

Total Liabilities and Net Assets

527,537

542,920

15,382

Liabilities
Ⅰ Current Liabilities

Total Current Liabilities

5,000 Increased due to acquisition of properties

Decreased due to the redemption of the 2nd
investment corporation bond

Ⅱ Long-term Liabilities

Total Long-term Liabilities
Total Liabilities

Increased due to the financing for the property acquisition

Net Assets

Property Data
(In millions of yen)
Area

Name

14th Period

13th Period

Appraisal
Value

Appraisal
Value

14th Period

Amount ofDifference(Sep 30, 08) (Mar 31, 08)

Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Tokyo 23 Wards
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas
Other Areas

ChiyodaChiyodaChiyodaChiyodaChiyodaChiyodaChiyodaChiyodaChiyoda
Chuo
Chuo
Chuo
Chuo
Chuo
MinatoMinatoMinatoShinjuku
Shinjuku
ShinagawaShinagawa
Ota
ShibuyaShibuyaShibuyaShibuyaShibuyaShibuyaNakanoToshimaToshimaToshimaHachioji
Saitama
Yokohama
Kawasaki
Kawasaki
SapporoSendaiSendaiKanazawa
NagoyaNagoyaNagoyaNagoya
Kyoto
Osaka
Osaka
Okayama
Hiroshima
Fukuoka
Fukuoka
Fukuoka

Genki Medical Plaza
Kitanomaru Square
MD Kanda
Kandabashi Park
Nibancho Garden
Mitsubishi UFJ Trust
Burex Kojimachi
Sanno Grand
Yurakucho Denki
Kodenmacho
Burex Kyobashi
Ginza Sanwa
Ryoshin Ginza EM
Harumi Center
Aoyama Crystal
Shiba 2Chome Daimon
Cosmo Kanasugibashi
ShinwaTokyo Opera City
Takanawadai
Higashi-Gotanda 1Chome
Omori-Eki Higashiguchi
Nippon Brunswick
Yoyogi 1Chomeda Vinci Harajuku
Jingumae MS
Shibuya Cross Tower
Ebisu Neonato
Harmony Tower
Otsuka Higashi-Ikebukuro
Ikebukuro 2Chome
Ikebukuro YS
Hachioji First
Saitama Urawa
MM Park
Kawasaki Isago
Musashi Kosugi STM
8･3 Square Kita
Jozenji Park
Sendai Honma
Kanazawa Park
Nishiki Park
Hirokoji Sakae
Nagoya Hirokoji
Nagoya Misono
Kyoto Kawaramachi
Sakaisujihonmachi
Midosuji Daiwa
Lit City
NHK Hiroshima
Tosei Tenjin
Tenjin Crystal
Hinode Tenjin

Properties held as of the end of the Tokyo 23 Wards
13th and 14th Periods, during which
Other Areas
the shares of ownership remainunchanged
Total (53 properties)

14th Period

Appraisal
Value －
(Sep 30, 08) Book ValueBook Value

Acquisition
Price

6,300
88,60012,1006,520
17,60050,2007,040
30,700
8,810
4,200
7,150
18,0005,190
26,300
9,300
7,980
3,910
9,890
12,100
2,840
7,050
6,150
9,570
13,5006,610
16,20053,0005,710
13,600
4,000
1,650
5,670
6,170
2,720
37,400
3,360
4,000
7,210
1,130
3,690
6,590
5,390
1,730
16,000
1,570
2,350
4,840
19,100
5,560
3,260
1,440
4,610
3,940

6,300
88,60012,1006,520
17,60050,0007,040
30,700
8,600
4,200
7,070
18,0005,150
26,300
9,230
7,980
3,910
9,890
12,100
2,840
7,050
6,040
9,570
13,4006,420
16,10053,0005,710
13,600
4,000
1,650
5,670
6,170
2,720
37,400
3,360
4,000
7,210
1,130
3,690
6,590
5,390
1,730
16,000
1,940
2,350
4,840
19,100
5,560
3,260
1,530
4,910
3,940

0
0
0
0
0
200
0
0
210
0
80
0
40
0
70
0
0
0
0
0
0
110
0
100
190
100
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
-370
0
0
0
0
0
-90
-300
0

5,095
80,013
9,070
4,576
14,16830,404
6,736
21,655
7,713
2,847
5,024
17,043
5,321
26,698
7,535
4,902
2,552
7,742
8,768
2,592
5,224
4,587
6,817
8,197
5,013
11,93538,919
3,789
8,392
3,545
1,623
4,620
5,526
2,412
37,444
2,905
4,042
7,259
1,027
2,836
4,336
5,043
1,743
14,372
1,571
2,848
3,892
13,584
4,374
2,693
1,386
4,766
3,514

1,204
8,586
3,029
1,943
3,431
19,795
303
9,044
1,096
1,352
2,125
956
-131
-398
1,764
3,077
1,357
2,147
3,331
247
1,825
1,562
2,752
5,302
1,596
4,264
14,080
1,920
5,207
454
26
1,049
643
307
-44
454
-42
-49
102
853
2,253
346
-13
1,627
-1
-498
947
5,515
1,185
566
53
-156
425

5,000
81,555
9,520
4,810
14,70044,7007,000
20,900
7,200
3,173
5,250
16,8305,353
26,800
7,680
4,859
2,808
7,830
9,350
2,738
5,500
5,123
6,670
8,700
4,885
12,20034,600
4,100
8,500
3,541
1,728
4,500
5,679
2,574
37,400
3,375
4,000
7,100
1,000
3,174
4,580
5,150
1,680
14,533
1,865
2,650
4,164
14,314
4,650
2,770
1,550
5,000
3,657

477,440

476,340

1,100

373,127

104,312388,104

142,060

142,820-760

127,583

14,476130,865

619,500

619,160

340

500,710

118,789

518,969

25,200－－24,793406

24,000477,440
167,260
644,700

－
－
－

－
－
－

373,127
152,376525,503104,312
14,883
119,196

388,104
154,865
542,969

Property acquired during the 14th Period

Other Areas

Osaka

Shin-Fujita

54 properties held as of the end of the 14th PeriodTokyo 23 Wards
Other Areas
Total (54 properties)*The appraisal value of the land and building adjacent to Ryoshin Ginza East Mirror Building at the end of the 14th Period is ¥1,170 million.