NEWSContact:

Tokyo
Osamu Hiyane
Associate Analyst
Structured Finance Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100

TokyoTakuji Masuko
VP - Senior Credit Officer
Structured Finance Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100

Moody's upgrades JRE Ratings to Aa3 from A1; outlook stable
Tokyo, June 6, 2008 -- Moody's Investors Service has upgraded to Aa3 from A1 its issuer rating
and senior unsecured long-term debt rating of Japan Real Estate Investment Corporation (JRE).
The action reflects the improvement in the company's portfolio quality and profitability resulting
from collaboration with its sponsor companies, including Mitsubishi Estate Co., Ltd. (MitsubishiEstate). The company has improved its ability to manage financial risk because of its growing
assets as well as its accumulated experience in leverage management. Moody's also expects thatthe company will maintain a leading position in the Japanese real estate investment trust(J-REIT) market. This rating action concludes the review initiated on March 18, 2008. The
outlook is stable.
JRE's assets have grown to 53 properties, valued at about JPY 518.9 billion (based on acquisition
prices). Recent acquisitions include (1) Mitsubishi UFJ Trust and Banking Building, through an
exchange of assets with one of its sponsor companies, Mitsubishi Estate; (2) Harumi Center
Building, through a subscription of preferred shares of a tokutei mokuteki kaisha (Japanesespecial purpose company); and (3) the new MM Park Building. The acquisitions have lowered
the average age of JRE's property portfolio to roughly 13 years (as of the end of March 2008)
from 18 years (as of the end of September 2005) and improved the portfolio's overall quality.
Additionally, the portfolio's profitability has improved, thanks to the existing properties' ongoinghigh occupancy rates and revenue increases as the result of rent revisions. Moody's expects thatthe portfolio quality will continue to improve as the company acquires competitive properties
with scarcity value at an appropriate price by actively collaborating with sponsor companies.
Moody's also believes that JRE will sustain its stable portfolio cash flow by leveraging its
expertise in property management.
JRE has raised funds through five public offerings, as a result of which the company has reduced
LTV (total interest-bearing debt/total assets) to the upper 20% to lower 30% range, even as it
maintains a more conservative leverage management policy than its peers, through which it aims
to stabilize LTV in the 30-40% range. Although the REIT equity market has slowed down sincelast year and a number of J-REITs have faced difficulty raising funds through public offerings,
JRE was successful in public offerings in March 2008 thanks to its solid business base. LTV
declined to 33.6% as of the end of March 2008, and Moody's expects continued external growtheven as the company maintains sound financials.

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Moody's Japan K.K., Atago Green Hills Mori Tower 20Fl. 2-5-1, Atago, Minato-ku, Tokyo 105-6220, Japan • Moody's has used due care and caution in the preparation of this rating decision. The information herein has beenobtained from sources believed to be accurate and reliable, but because of the possibility of human and mechanical error, its accuracy or completeness is not guaranteed. Moody's ratings are opinions, not recommendations tobuy or sell; accordingly investors are always encouraged to weigh ratings solely as one factor in an investment decision.

Despite the difficult overall funding situation in the real estate market stemming from lenders'
growing reluctance to extend new loans, JRE has maintained solid business relationships withfinancial institutions, including its main banks. Additionally, refinancing risk is mitigated by thecompany's conservative leverage control, long-term debt, diversified debt maturity dates, and acommitment line equivalent to JPY 25 billion. In Moody's view, JRE will maintain its
conservative financial strategy and by extension, its stable fund raising capability.
Japan Real Estate Investment Corporation is a listed J-REIT, which focuses on investing in andmanaging high-quality office buildings. Its revenues totaled about JPY 25.7 billion for the fiscal
year ended March 2008.
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