0
October 12, 2012 Prepared by ORIX Asset Management Corporation
ORIX JREIT Inc.The 21st Fiscal Period Results (ended August 31,2012)
1List of Contents
Highlights of FP21 Appendix
Highlights of FP21 (ended August 31, 2012) 3 Financial Highlights (Results) 22
Financial Results and Forecasts FP21 Leasing Results ①~③ 23~25
Comparison between FP21 results and FP21 forecast 5 Major Tenants 26
and new FP22 forecastApproach to bottoming out Internal Growth (Image) ①~② 27~28
FP21 financial results, FP22 forecast and FP23 forecast 6 New Acquisition from FP21 onwards①~⑤ 29~33
Internal Growth External Growth ~Basic Investment Policy~ 34
Highlights of Improved Occupancy Rates in FP21 8 Market Outlook and Investment Strategy 35
Maintenance and Improvement of Occupancy Rates 9 Retail Market Outlook and Investment Strategy 36
Rent Downward Revision 10 OJR’s Target Retail Facilities 37
Composition of Rent Levels 11 Office Market Outlook and Investment Strategy 38
External Growth Residential Market Outlook and Investment Strategy 39
External Growth in FP21 13 Industrial Market Outlook and Investment Strategy 40
Financial Strategy Portfolio Strategy 41
Financial Strategy 15 Effect of Property Type Diversification 42
Future Management Policies and Strategies List of Properties Disposition 43
Future Management Policies and Strategies 17 Synergy with the ORIX Group 44
Change of Distributions 18 Portfolio Summary 45
Approaching to bottoming out Internal Growth 19 Portfolio Map 46
Summary 20 Portfolio Data ①~② 47~48
Overview of Appraisal Value 49
Appraisal Value List at the end of FP21 ①~② 50~51
Financial Data 52
Investment Units 53
Transactions with Sponsors and Compliance System 54
Organization of OAM 55
2
Highlights of FP21
3
Acquired 2 retail facilities and 4 residences Sold 1 logistics facility Already acquired 2 properties (a senior house and a residence) in FP22 Concluded rent guarantee-type master lease agreements with our sponsor for 2 properties acquired
from outside
Reduced average funding costs (based on total interest-bearing debts, ¥171 billion) by approximately0.1% annual rate through refinancings
Newly concluded a commitment line contract with the Tokyo-Mitsubishi UFJ Bank, Ltd. (¥4 billion) Controlled the total asset-based LTV at 50% level
Achieved distributions of ¥11,656, exceeding initial forecast by ¥1,156 Secured ¥11,095 without gain on property sale
FP21 Actual: ¥11,656(+¥1,156 compared to initial forecast)
Office occupancy rate increased from 93.9% at end of FP20 to 96.1% Succeeded in completely filling RC Shibuya and RC Shinjuku where major tenants vacated (including
cancellation noticed)
Reduced funding costs, maintained and strengthened stabilityof financial base
Office occupancy rate increased
Increased stability and profitability through diversifiedinvestments
Highlights of FP21 (ended August 31, 2012)
Internal Growth
External Growth
Financial Strategy
Distributions
4
Financial Results and Forecasts
5
Variance between FP21 Actual vs. Forecast +74 Variance between FP22 New and Old Forecast ▲ 1
・Asset/city planning tax decrease for existing properties +61・Asset/city planning tax decrease for existing properties
acquired in 2011+62
・Rental income increase from existing properties +12 ・Rental revenue increase from existing properties +13
・Utilities costs +21 ・Increase of brokerage fee and advertising expenses ▲ 39
・Repair cost increase for existing properties ▲ 38 ・Utilities costs ▲ 27
・Repair costs increase for existing properties ▲ 20
Variance between FP21 Actual vs. Forecast +220 Variance between FP22 New and Old Forecast +215
・3 Properties acquired in FP21 (Togoshi,Sapporo,Morioka)
+66・Income from sale and acquisition of properties in FP21and FP22
+215
・Property sold in FP21 (Koshigaya) +160―Of this, 3 Properties acquired in FP21 (Togoshi, Sapporo, Morioka)
and 2 Properties acquired in FP22 (Shinurayasu, Meguro)(+287)
―Of this, Loss of incomes from Property sold in FP21 (Koshigaya) (▲ 73)
Variance between FP21 Actual vs. Forecast +35 Variance between FP22 New and Old Forecast ▲ 15
Total +328 Total +199
Internal Growth Factors Internal Growth Factors
External Growth Factors External Growth Factors
Other Factors Other Factors
Net Income 3,315 328 2,986 Net Income 3,185 199 2,986
Distribution per Unit 11,656 yen 1,156 yen 10,500 yen Distribution per Unit 11,200 yen 700 yen 10,500 yen
Distribution per Unit
(excluding the property
sale gain)11,095 yen 595 yen 10,500 yen
Distribution per Unit
(excluding the property
sale gain)11,200 yen 700 yen 10,500 yen
Item
(millions of yen)
FP21 ActualFP21 Forcast(B)(as at FP20 account
announcement )Item
(millions of yen)
FP22 Forcast(A)(as at FP21 account announcement )
FP22 Forcast(B)(as at FP20 account
announcement )
(Aug. 2012) (A-B) (Aug. 2012) (Feb. 2013) (A-B) (Feb. 2013)
(millions of yen)
ActualActual Distribution for FP21 wasDistribution for FP21 was ¥¥11,656, exceeding11,656, exceeding initial forecast,initial forecast, without propertywithout property sale gainsale gain ¥¥11,09511,095was achieved.was achieved.
Forecast distribution for FP22 is increased toForecast distribution for FP22 is increased to ¥¥11,200 by11,200 by ¥¥700 plus from initial forecast.700 plus from initial forecast.【Variance between FP21 Actual vs. Forecast】 【Variance between FP22 New and Old Forecast】
① Increase ofrental income
by leasingacceleration
② Increase ofincome fromcontinuous
propertyreplacements
Comparison between FP21 results and FP21 forecastand new FP22 forecast
6
Net Income 3,430 3,315 ▲ 115 3,185 ▲ 129 3,071 ▲ 113
Distribution per Unit 11,822 yen 11,656 yen ▲ 166 yen 11,200 yen ▲ 456 yen 10,800 yen ▲ 400 yen
Distribution per Unit
(excluding the
property sale gain)
11,752 yen 11,095 yen ▲ 657 yen 11,200 yen 105 yen 10,800 yen ▲ 400 yen
FP23 Forcast(D)
(Feb. 2012) (Aug. 2012) (B-A) (Feb. 2013) (C-B)
Item
(millions of yen)
FP20 Actual(A) FP21 Actual(B) FP22 Forcast(C)
(Aug. 2013) (D-C)
Cange ▲ 328 Cange ▲ 174 Cange ▲ 146
・Asset/city planning tax decrease for existing
properties+65 ・Repair cost decrease for existing properties +107 ・Decrease of brokerage fees +33
・Rental income decrease from existing properties ▲ 236 ・Rental income decrease from existing properties ▲ 156 ・Rental income decrease from existing properties ▲ 134
・Repair cost increase for existing properties ▲ 175 ・Utilities ▲ 49 ・Increase of loss on retirement ▲ 36
・Decrease of penalty and cancellation fees ▲ 41 ・Decrease of other operating income(ex. utilities) ▲ 29 ・Decrease of penalty and cancellation fees ▲ 19
・Decrease of penalty and cancellation fees ▲ 19
Cange +131 Cange ▲ 24 Cange ▲ 39
・Income from acquisition of properties
in FP21 and FP22+175
・Income from acquisition of properties
in FP21 and FP22+136
― Of this, 2 Properties acquired in FP20 (Kobe
Sannomiya, Musashi Sendai) and 6 Properties
acquired in FP21 (Mishuku,Miyamachi, Bansui,
Togoshi, Sapporo, Morioka)
(+224)
― Of this, 6 Properties acquired in FP21 (Misyuku,
Miyamachi, Bansui,Togoshi,Sapporo,Morioka)
and 2 Properties acquired in FP22
(Shinurayasu,Meguro)
(+220)・Fixed asset/city planning tax for 9 properties
acquisition in 2012▲ 54
― Of this, increase of funding-related
expenses for acquisition(▲ 23)
― Of this, increase of funding-related expenses
for acquisition(▲ 18)
― Of this, Property sold in FP20 (Shirogane) (▲ 26) ― Of this, Property sold in FP21 (Koshigaya) (▲ 67)
・Increase of property sale gain +72・Loss of sale gain from property sold in
FP21 (Koshigaya)▲ 160
― Property sold in FP21 (Koshigaya) (+160)
― Property sold in FP20 (Shirogane) (▲ 88)
・Fixed asset/city planning tax for 12 properties
acquisition in 2011▲ 110
Cange +82 Cange +68 Cange +72
・Decrease of funding-related expenses +54 ・Decrease of funding-related expenses +86 ・Decrease of funding-related expenses +66
― Of this, reduction in interest expenses (+72) ―Of this, reduction in interest expenses (+59) ―Of this, reduction in interest expenses (+93)
― Of this, factor of operating days (▲ 19) ―Of this, factor of operating days (+27) ―Of this, factor of operating days (▲ 27)
・Decrease of general business commission
(asset storage and accounting) expenses+43
Total ▲ 115 Total ▲129 Total ▲113
FP21 Actual vs FP20 Actual FP22 Forcast vs FP21 Actual FP23 Forcast vs FP22 Forcast
Internal
Growth
Factors
External
Growth
Factors
Other
Factors
(millions of yen)
②Reduction ofFunding costs
③ Increase of income fromproperty replacements continues
④Upside factors
①Improvement ofrental incomedecline rangeat existingproperties
FP21 financial results,FP22 forecast and FP23 forecast
Aim for bottoming out distribution per unit atAim for bottoming out distribution per unit at ¥¥11,00011,000 level by continuously progressing inlevel by continuously progressing inproperty acquisitions through asset replacements.property acquisitions through asset replacements.
7
②決算概要及び業績予想
Internal Growth
8
Major Leasing Results
Highlights of Improved Occupancy Rates in FP21
End ofJun. 2012
79.4%
End ofOct. 2011
60.3%
End ofFeb. 2012
81.2%
End ofJune 2012
74.7%
End ofDec. 2012
100%
End ofFeb. 2012
100%
→
→
→
→
End ofJan. 2013
61.5%
End ofApr. 2012
0%
→
→
→
→
aune Kohoku
Seafort SquareCenter Building
Aoyama SuncrestBuilding
Round-CrossShinjuku
Round-CrossShibuya
Increase in Occupancy RatesFactorsName of Property
End ofOct. 2012
93.0%
Implementation of renewal strategy in utilizingarea characteristics
Filled up office vacant space with tutor schoolsand restaurants highly demanded in surroundingarea
End ofOct. 2012
82.2%
End ofAug. 2012
95.8%
Implementation of leasing strategies that utilizingproperty and area characteristics
End ofJuly 2012
98.6%
Implementation of flexible leasing strategiesincluding the short-term use
End ofFeb. 2013
100%
Utilizing location characteristic, 1st and 2nd floorleased to retail tenant, higher floor leased tofinancial service company
100% filled up space vacated by a major tenantdeparture
End ofSep. 2012
100%
100% filled up entire space vacated by a singletenant departure mainly with multi tenants
Implementation of direct property management in utilizing areacharacteristics
Implementation of tenant merchandising
Strengthen relationships with tenants
Retail Lots
Office Lots
Retail Lots
Office Lots
Retail Lots
Office Lots
Utilizing ORIX groupUtilizing ORIX group’’s leasing network.s leasing network. Achieved high occupancy rates by taking care ofAchieved high occupancy rates by taking care ofvarious tenant needsvarious tenant needs
9
-25,000
-20,000
-15,000
-10,000
-5,000
0
5,000
10,000
15,000
20,000
25,000
【 Period End Occupancy Rates 】
【Tenanted/Vacated Area and Rent Fluctuation Rate at Tenant Replacement (excluding residences)】
96.2
97.2 97.298.0
92.7
95.6
93.9
96.1
99.2 98.399.1 99.0
90
95
100
Overall Office Non-Office Office(Forecast as at FP 20 account settlement)
Tenanted (confirmed to move in for FP22 onward)
Vacated (confirmed to vacated for FP22 onward)
Projected to be tenantedProjected to be vacated
-18.0%
-24.2%
-20.3% -20.0%
Period End Occupancy Rates and Tenanted/Vacated Area
(%)
Office occupancy rate increased to 96.1%, exceedingOffice occupancy rate increased to 96.1%, exceeding initialinitial forecastforecast
(㎡)
PL impact ofapprox.▲¥100 millionby DepartureAssumed
Maintenance and Improvement of Occupancy Rates
Projected to be tenanted as at FP20 financial announcement
Projected to be vacated as at FP 20 financial announcement
Rent Fluctuation rate at Tenant Replacements (dotted line is projection) -30%
-20%
-10%
FP18(Feb.11)
FP19(Aug.11)
FP20(Feb.12)
FP21(Aug.12)
FP22(Feb.13)
(Projection)
FP23(Aug.13)
(Projection)
FP18(Feb.11)
FP19(Aug.11)
FP20(Feb.12)
FP21(Aug.12)
FP22(Feb.13)
(Projection)
FP23(Aug.13)
(Projection)
10
-8.9%
-17.3%
-9.3%-10.7%
-20%
-15%
-10%
-5%
0%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
【Rent Downward Revision Area(exclude residences)】(㎡)
Rent Downward Revision Area and Rent Decline Rate
Rent Downward Revision AreaRent Downward Revision Area ofof FPFP21 was suppressed to a level below forecast at the beginning21 was suppressed to a level below forecast at the beginningofof fiscalfiscal periodperiod
Rent Downward Revision Area and RentRent Downward Revision Area and Rent DeclineDecline RatRatee inin FPFP22 and22 and FPFP23 are assumed to23 are assumed to bebeapproximately as sameapproximately as same levellevel between Decline FP18 and FP21between Decline FP18 and FP21
Note: Excluding the rent remained and increased.
【Rent Decline Rate(exclude residences)】
Rent Downward Revision
Confirmed
Projection
Forecast as at FP20 financial announcement
Rent Decline rate (dotted line is projection)
FP18(Feb.11)
FP19(Aug.11)
FP20(Feb.12)
FP21(Aug.12)
FP22(Feb.13)
(Projection)
FP23(Aug.13)
(Projection)
FP18(Feb.11)
FP19(Aug.11)
FP20(Feb.12)
FP21(Aug.12)
FP22(Feb.13)
(Projection)
FP23(Aug.13)
(Projection)
11
48.9%
20.5%
23.6%
5.8%
1.2%
21.4%
38.7%16.0%
12.7%
11.2%
30.9%
12.6%
56.5%
18.0%
14.5%
67.5%
As at the end ofFP14 (Feb. 09)just after the
Lehman Shock
Risk of rentRisk of rent declinedecline and tenant departure decreased due to market rent gapand tenant departure decreased due to market rent gapreductionreduction and tenant diversificationand tenant diversification
Average unit price of monthly rent:¥20,190/tsubo
As at the end ofFP21 (Aug. 12)
Composition of Rent Levels
Average unit price of monthly rent:¥16,813/tsubo
Declined by Approx.16.7%
¥30,000 or higher
Below ¥30,000
¥25,000 or higher
Below ¥25,000
¥20,000 or higher
Below ¥20,000
¥15,000 or higher
below ¥15,000
(for 1 tsubo / month)
OtherRent ratio 1% or more (non-office)Rent ratio 1% or more (office)
Non-office: total 5 tenantsTotal monthly rent
:¥191 million
Office: total 17 tenantsTotal monthly rent
: ¥470 million
Non-office: total 5 tenantsTotal monthly rent
: ¥235 million(Mainly long-term contracts)
Office: total 10 tenantsTotal monthly rent
: ¥292 million(Rent ratio of largest
tenant is approx. 3.1%)
[Tenant ratio accounting for 1% or more in total contracted rental income]
Note:Calculation based on total rentable area of OJR’s office buildings, excluding office area for non-office use.
Composition of Rent Levels (Offices only, Area Base) (Note) Tenant Diversification and Expansion of Customer Base
12
External Growth
13
SoldSold aa relatively smallrelatively small scale logistics facilityscale logistics facility and selectively acquired retail facilities andand selectively acquired retail facilities andresidences with high stability and profitabilityresidences with high stability and profitability
3.9%
5.4%
Propertiessold in
FP21(Note 3)
4.6%Yield after
depreciation
6.3%
Propertiesacquired inFP21(Note 2)
Leasing NOIyield
Profitability
10.8 yearsExisting properties
(as of August 31, 2012)
16.6 yearsNew acquisition in FP21
(at time of acquisition)
Average age
Belle Face Mishuku (Note1)
Acquired
Sold
Belle Face Togoshi Statio
Belle Face Miyamachi
Heiseikankou SapporoEkimae Building
Belle Face Bansui-Street
Morioka MinamiShopping Center Sansa
94.8%Price/appraisal rate
GK CREPinvestment J
Seller
5.1%Leasing NOI yield
¥2,110 millionAppraisal Value¥2,000 millionPrice
SetagayaWard,Tokyo
Location
95.0%Price/appraisal rate
ORIX RealEstateCorporation
Seller
5.1%Leasing NOI yield
¥2,782 millionAppraisal Value¥2,642 millionPrice
Shinagawaward, TokyoLocation
96.0%Price/appraisal rate
ORIX RealEstateCorporation
Seller
6.6%Leasing NOI yield
¥1,980 millionAppraisal Value¥1,900 millionPrice
Sapporo City,Hokkaido
Location
94.9%Price/appraisal rate
ORIX RealEstateCorporation
Seller
7.0%Leasing NOI yield
¥1,580 millionAppraisal Value¥1,500 millionPrice
Sendai City,Miyagi
Location
95.4%Price/appraisal rate
ORIX RealEstateCorporation
Seller
6.9%Leasing NOI yield
¥873 millionAppraisal Value¥832 millionPrice
Sendai City,Miyagi
Location
90.9%Price/appraisal rate
Dufftown GKSeller7.3%Leasing NOI yield
¥3,080 millionAppraisal Value¥2,800 millionPrice
Morioka City,Iwate
Location
Koshigaya LogisticsCenter (Note 3)
Mitsui FudosanPrivate REIT Inc.Buyer
¥159 millionGain on sale5.4%Leasing NOI yield¥3,830 millionSale price Acquired 6 properties
(Total:¥11,674 million) andsold 1 property (¥3,830million)
94.1%Properties acquired in FP21
Acquisition Price/AppraisalValue Ratio
Properties indicatedwith blue frame wereacquired from outsideof ORIX Group.
External Growth in FP21
(Note 1) “Belle Face Mishuku” was renamed from “Lios Mishuku” asof October 1, 2012.
(Note 2) Calculated in dividing the anticipated income/expenditurebalance under the stabilized occupancy (but excludingextraordinary factors that may occur in the first year ofacquisition calculated by Asset Management Company) bythe acquisition price.
(Note 3) Leasing NOI yield is calculated in dividing the actual figuresof the 20FP by the acquisition price.Yield after depreciation is calculated in dividing the actualfigures of the 20FP by the book value.
14
Financial Strategy
15
Amount \15.0 billion \3.5 billion
Interest type Fixed Variable
Interest rate 1.10% 0.84%
Average maturity 5.53 years 5 years
New Terms
Amount \15.0 billion \3.5 billion
Interest type Fixed Variable
Interest rate 1.69% 1.24%
Average maturity 4.13 years 3 years
PreviousTerms
Amount \16.0 billion \4.0 billion
Interest type Variable Variable
Interest rate 0.88% 0.83%
Average maturity 5 years 4 years
New TermsPrevious Terms
Amount \20.0 billion
Interest type Fixed
Interest rate 1.79%
Average maturity 5 years
Note: Average funding costs is calculated in dividing annualized total amount of interest expense, interest on investment corporation bonds, loan fees and depreciation ofinvestment corporation bonds issuance costs by average outstanding total interest-bearing debts during borrowing period.
2.01% 2.02% 2.00%
1.92%
1.5%
2.0%
2.5%
第18期
(2011/2期)
第19期
(2011/8期)
第20期
(2012/2期)
第21期
(2012/8期)
第22期想定
(2013/2期)
第23期想定
(2013/8期)
Refinancing since FP21
FP21 FP22
Reduced averageReduced average fundingfunding costcostss under favorable financialunder favorable financial circumstancecircumstance Controlled (total asset based) LTV at 50%Controlled (total asset based) LTV at 50% levellevel Concluded a commitment line contract (Concluded a commitment line contract (¥¥4.0 billion) newly with the Bank of Tokyo4.0 billion) newly with the Bank of Tokyo--Mitsubishi UFJMitsubishi UFJ
(expanded(expanded CLCL¥¥22.5 billion22.5 billion ⇒⇒ CLCL¥¥26.5 billion)26.5 billion)
Financial Indicators(as of August 31, 2012)
Average Funding Costs (Note)
Financial Strategy
FP18(Feb.11)
FP19(Aug.11)
FP20(Feb.12)
FP21(Aug.12)
FP22(Feb.13)
(Projection)
FP23(Aug.13)
(Projection)
Debts outstanding \171.0 billions
LTV (Total asset base) 49.6 %
LTV (Unitholders' equity base) 53.1 %
Average interest rate 1.61 %
Average funding cost 1.92 %
Fixed-interest debt ratio 86.3 %
Commitment Lines
(Total for 5 lenders)\26.5 billions
16
Future Management Policiesand Strategies
17
Circumstance Future Policies and StrategiesE
xte
rnal
Gro
wth
Inte
rnalG
row
thF
inan
cia
lS
trate
gy
Economic recovery situation is inconsistent but OJR aim for continuous increase of distributions
Future Management Policies and Strategies
Rental Market in Japan (Office)
Vacancy rates affected by large supply in Tokyo are peaking out
Companies dependent on foreign demand continue to shrink orvacate as future global economy is still uncertain
Domestic demand is relatively steady, and optimistic rental demandis increasing particularly from information and communications-related companies, etc.
Overall, improvement of lease conditions will still need some time
Bottoming out rental revenue from existingproperties without depending on market recovery
Maintain high occupancy rate
Increase actual occupancy rates and reduce rental income declineat tenant replacements, by reducing tenant departures rate
Property Market in Japan
There is a strong drive by REITs, etc. to acquire properties. Caprates trend downward
Market sentiment of prime properties shortage still remains.Property transactions are especially limited for offices as sale priceperception between sellers and buyers don't match
Number of transactions trends upward for retail and residentialproperties including those in regional areas
Continuously progressing in improvement onprofitability and quality of portfolio through assetreplacements in placing emphasis on yield afterdepreciation
Invest in retail and other properties that are both “stable” and“profitable”
Utilize ORIX Group’s pipeline and also focus on external source
Financial Market in Japan
Japanese financial institutions continue to keep their positivelending stance.
While stock market is soft, REIT market is steady due to stabledistributions
Continuously progressing in costs reduction andstrengthening of stability
Reduce funding costs
Expand number of financial institutions
Exte
rnalG
row
th
18
12,571
11,82211,656
10,500 10,500
11,200
10,800
10,000
11,000
12,000
13,000
FP19(Aug. '11)
FP20(Feb. '12)
FP21(Aug. '12)
FP22(Feb. '13)forecast
FP23(Aug. '13)forecast
FP24onwards
projection
Actual Distributions Forecast as at FP20 financial announcement
Forecast as at FP21 financial announcement Target Distributions
Red : Actual figures
Blue : Forecast figures
Distributions
Distributions Forecasts
Aim for distributionAim for distribution ¥¥11,000 or more for FP23 through external growth11,000 or more for FP23 through external growth
Aim forAim for bottoming outbottoming outdistributionsdistributions
Aim for bottoming out distributions by externalAim for bottoming out distributions by externalgrowth and financial strategygrowth and financial strategy
Aim for improving distributions by bottomingAim for improving distributions by bottomingout rental revenueout rental revenue
(yen)
ExternalGrowth
+
+
+=±0
FinancialStrategy
+InternalGrowth
=Distributions
Change of Distributions
FP22: ¥11,200 per unit (+¥700 compared to initial forecast) / FP23: ¥10,800 per unit (Existing portfolio base)
improving distributionsimproving distributionsbottoming out distributionsbottoming out distributions
bottoming out distributions :FP21 to FP23 improving distributions :FP24 onwards
ExternalGrowth
+
+
+±0=
FinancialStrategy
+InternalGrowth
=Distributions
19
Propose and implement renewal construction in order to increase tenant satisfaction
◆Segmented adaptation
◆Change of use
◆Environmental and energy saving measures
Creation of rentable space which can be more leaseable by proposing relocations and ,etc.in the same building
SStetep.1p.1
Specific Measures for ImprovingInternal Growth
Steps for Improving Internal Growth
The following measuresThe following measures areare implemented to maintain high occupancy rates and suppress tenanimplemented to maintain high occupancy rates and suppress tenantt
departuresdepartures
Approaching to bottoming out Internal Growth
Understand tenants’ business performance and business nature; Explore tenant potential needs
Promote existing tenant space expansion and relocation in the same building, and short-term use, etc.
Strengthen tenant relationship through direct PM
Increase competitiveness of properties
Utilize the ORIX Group’s nation-wide leasing network
Step.Step.22
SStetep.p.33
Improvement of contractoccupancy rate
Suppress tenantdepartures
Improvement of leaseterms
Office contract occupancy rate: Achieved 96.1% at end of FP21
Improve effective occupancy rate and reduce rentalincome decline at tenant replacements
Shorten free rent periods and increase contracted rent
Realize bottoming out internal growth
Move on to stage of full-fledged recovery of rental income
20
FP21 (Aug. 2012) Actual Results
Future Policies
Summary
Aim for improvement of annual distribution per unit
from the ¥22,000 level to the ¥23,000 level
Internal growthInternal growth
External growthExternal growth
Financial strategyFinancial strategy
Occupancy rate increased primarily in offices
Improved stability and profitability through diversified investments
Reduce financial costs, maintain and strengthen stability on financial base
Endeavor to bottom out rental revenue without depending on market recovery
Promote improvement of profitability and quality of portfolio through assetreplacement while continuously emphasizing on yield after depreciation
Continuously promote cost reduction and reinforce stability on financial base
Achieved ¥11,656 distribution per unit
(¥1,156 more than forecast at the beginning of fiscal period)
Internal growthInternal growth
External growthExternal growth
Financial strategyFinancial strategy
21
Appendix
22Financial Highlights (Results)
FP17 FP18 FP19 FP20 FP21
Aug. 2010 Feb. 2011 Aug. 2011 Feb. 2012 Aug. 2012
Depreciation 2,069 2,171 2,408 2,660 2,772
Funds From Operation 5,293 5,537 5,472 6,090 5,965
CAPEX 78 54 234 262 379
(Million yen)
(Million yen)
FP17 FP18 FP19 FP20 FP21
Aug. 2010 Feb. 2011 Aug. 2011 Feb. 2012 Aug. 2012
Operating Revenues 11,701 10,741 11,533 12,151 12,271
Operating Income 5,887 4,790 4,963 5,187 5,032
Net Income 4,308 3,291 3,308 3,430 3,315
Unitholders' Capital 137,814 137,814 150,895 150,895 150,895
Net Assets 142,122 141,373 154,471 154,326 154,279
Total Assets 305,619 318,738 341,514 345,469 344,997
No.of investment units issued (units) 251,622 251,622 284,434 284,434 284,434
Net Assets per Unit (yen) 564,825 561,847 543,084 542,575 542,409
Distribution per Unit (yen) 16,061 13,083 12,571 11,822 11,656
Funds Fom Operations=Calculated in adding depreciation and amortization expenses to earnings excruded sale gain&loss
23
Round-Cross Shibuya Round-Cross Shinjuku
Incorporated the needs of shops based on customervisits utilizing the property’s good accessibility fromShinjuku Station and visibility as it is located on Koshu-kaido Street, and attracted a convenience store to the1st floor and a retail store to the 2nd floor.
Attracted a finance-related firm to the upper floorswhich are office areas.
Succeeded in 100% leasing up without down time.
Aoyama Suncrest Building
Implementation of flexible leasing strategiesImplementation of flexible leasing strategies
Feb. 2012100%
Apr. 20120%
Sep. 2012100%
Dec. 2012100%
Jan. 201361.5%
Feb. 2013100%
Jun. 201274.7%
Jul. 201298.6%
FP21 Leasing Results ① Completely filled up the building vacated byCompletely filled up the building vacated by aa
single tenantsingle tenant Fully filled up the space vacated by aFully filled up the space vacated by a
major tenantmajor tenant
Single tenant vacated in March 2012
We dug deep into the needs of domestic demand relatedcompanies such as information and communications-relatedcompanies, utilizing the characteristics of the Shibuya areawhich is home to many IT-related companies. After attentiveinteraction with several candidate tenants, the property wassuccessfully filled up 100% by the end of September 2012.
Incorporated short-term use needs from the property’scloseness to Gaienmae Station and location excellence as it issituated along Aoyama-dori Street, and attracted a residentialmodel room by the fixed-time house rental.
24
・
Tenants with various business lines were strategically attracted to the propertyutilizing its merits as a complex facility comprised of offices, retail and hotelsections, etc., and strategically formulating the property’s overall image,direction, brand, etc. after conducting a survey of the market area.
Realized a composition of a variety of tenants, most from business typeslacking in the area, such as clinics, a variety of restaurants, wedding hall, etc.
Leased out primarily to Asian firms and companies with many business tripsinside and outside the company by advertising the property’s favorableaccess to Haneda Airport.
Attentively dealt with companies that are small but growing significantlysuch as by segmenting floor space. Succeeded in contracting with 12tenants during FP21 by utilizing the mobility of direct PM.
Implementation of leasing strategies in utilizing characteristicImplementation of leasing strategies in utilizing characteristics property and areas property and area
Seafort Square Center Building
Re
tail
Lo
tO
ffice
Lo
t
Implementation of Tenant MerchandisingImplementation of Tenant Merchandising
Strengthening of Tenant RelationsStrengthening of Tenant Relations
Stronger relations were established with existing tenants with attentiveinteraction such as operational cooperation, etc.
Contracts were renewed with all 7 tenants (out of a total of 26 tenants) whosecontracts expired. Rents were successfully increased with a portion of tenants.The stable occupancy of existing tenants was firmly maintained.
Implementation of Direct PM Utilizing Area CharacteristicsImplementation of Direct PM Utilizing Area Characteristics
Feb. 201281.2%
Dec. 201295.8%
Oct. 201160.3%
Oct. 201282.2%
FP21 Leasing Results ②
25
7F6F5F New shop4F3F2F1FB1F OfficeB2F Shop
Tutorschool
Shop
7F6F5F4F3F2F1FB1F OfficeB2F Shop
Office
Shop
aune Kohoku
5Fchangedproperty use
Before After
Introduce new tenants by changing property useIntroduce new tenants by changing property use
Jan. 2012
79.4%
Oct. 201293.0%
<Image of new restaurant area>
FP21 Leasing Results ③Implementation of renewal strategy to meet area characteristicsImplementation of renewal strategy to meet area characteristics
The property’s superiority as a retail facility is high, with its transportation convenience (1-minutewalk from Yokohama Municipal Subway Center-Minami Station) and excellent visibility due to itslocation in front of station square.
This property is located in one of Japanese preeminent commuter towns, Kohoku New Town.Two tutor schools were brought into the upper floors by utilizing the characteristics which is oneof the highest educational standard neighborhood in Kanagawa Prefecture.
The neighborhood is short of restaurant against the number of office workers at ward office,etc. , so the leasing strategy for the 5th floor was changed from office to retail. Consequently,the extension of contract periods was realized.
Under the market circumstance mentioned above, the restaurant zone composed of four floorsis a strong point. By implementing the tenant merchandising to meet the propertycharacteristics which can target office workers on weekdays and families on weekends, arestaurant which opens their shop in Kanagawa market was successfully secured.Contracted first lease with one tenant. Received lease applications from two tenants.
26Major Tenants
Top 10 Tenants as of 21th Period End (Reference) As of 20th Period End
Note 1. Share of total rented space uses figures as of the end of the fiscal period.
Note 2. The name is not disclosed because the tenant has not consented to disclosure.
Note 3. The master lessees of the same level listed in the master lease agreement.
Sector Property NameRented Space
(㎡)
Share of Total
Rented Space
(%)
1NIPPON EXPRESS
Co., Ltd.Transportation
Sakai Logistics Center
North Building64,004.80 10.4
2Arcland Sakamoto
Co., Ltd.Retailer
Home Center Musashi
Sendai Izumi (Land)56,109.95 9.1
3 SENKO Co., Ltd. Transportation Ichikawa Logistics Center 37,456.96 6.1
4Keiyo Distribution
Warehouse Co., Ltd.Warehousing Toda Logistics Center 36,158.60 5.8
5DAIKYO REALDO
INCORPORATEDReal Estate
Belle Face Osaka Shinmachi
Belle Face Miyamachi
Belle Face Kamata
Belle Face Hongo Yumicho
Belle Face Togoshi Statio
We Will Hatchobori
Belle Face Bansui-street
Round-Cross minamiazabu
Round-Cross Tsukiji
33,389.32 5.4
6 Fujita Kanko Inc. Hotel Cross Gate 19,744.39 3.2
7ORIX Real Estate
CorporationReal Estate
Morioka Minami Shopping
Center Sansa
Shibaura Island Bloom
Tower
19,474.66 3.2
8 (Not disclosed)Note 2 Transportation Komaki Logistics Center 18,089.76 2.9
9 Cainz Co., Ltd. RetailerKobe Momoyamadai
Shopping Center (Land)16,715.94 2.7
10
Mitsui Fudosan
Housing Lease
Co.,Ltd.
R.A. Asset
Manegement Inc.Note 3
Real Estate Shibaura Island Air Tower 12,423.04 2.0
313,567.42 50.7Total
Name of Tenant
Rented
Space
(㎡)
Share of Total
Rented Space
(%)
1NIPPON EXPRESS
Co., Ltd.64,004.80 10.7
2Arcland Sakamoto
Co., Ltd.56,109.95 9.4
3 SENKO Co., Ltd. 37,456.96 6.3
4Keiyo Distribution
Warehouse Co., Ltd.36,158.60 6.0
5DAIKYO REALDO
INCORPORATED21,967.72 3.7
6 Fujita Kanko Inc. 19,744.39 3.3
7 (Not disclosed)Note 2 19,200.00 3.2
8 (Not disclosed)Note 2 18,089.76 3.0
9 Cainz Co., Ltd. 16,715.94 2.8
10
Mitsui Fudosan
Housing Lease
Co.,Ltd.
R.A. Asset
Manegement Inc.Note 3
12,528.51 2.1
301,976.63 50.4
Name of Tenant
Total
27
Free Rent Rate (Note1): approx. 4%
= Tenant replacement rate: 8% per 6months
× (Free rent: approx. 3 months ÷ 6 months)
Effective Occupancy Rate: approx. 92%
= Contracted Occupancy Rate: approx. 96% - Free Rent Rate: approx.4%
Average of Actual Occupancy Rates(Current situation)
Rent Unit Price (Current situation)
Rent unit price decline rate at tenantreplacement improved due toreduced tenant replacement ratethrough suppressing tenantdepartures
(Note2) Area ratio is the ratio of area where tenant replacements and rent downward revision respectively occur in total rentable area of office properties
Increase of rental income
Reduction of rental incomedecline range
Impact of free rent on rental revenueshrunk due to reduced tenantreplacement rate throughsuppressing tenant departures
△14%×18%=△2.6%(Total)
△10%×10%=△1.0%Renewal withrent decline
△20%×8%=△1.6%Tenant
replacement
Individual unitprice decline
rate×
Area ratio(Note2)=
Overall rent unitprice decline
rate
Reduced tenant replacement rate by focusing on suppressing tenanReduced tenant replacement rate by focusing on suppressing tenantt departuresdepartures
By reducing tenant replacement rate, work to increaseBy reducing tenant replacement rate, work to increase effectiveeffective occupancy rate and improveoccupancy rate and improverent unit price decline raterent unit price decline rate
(Note1) Free rent rate is the ratio of area where is affected by free rent in total rentable area of office properties
(Office only)
Approach to bottoming out Internal Growth (Image) ①
(Office only)
28
87%
88%
89%
90%
91%
92%
93%
94%
95%
-4%
-2%
0%
2%
4%
FP20(Feb. '12)
FP21(Aug. '12)
FP22(Feb. '13)forecast
FP23(Aug. '13)forecast
FP24onwards
projection
Actual occupancy factor (left axis)
Rent unit price factor (left axis)
Increase/decrease in rental income (left axis)
Effective occupancy rate (right axis)
RentalRental incomeincome bottoming out due tobottoming out due to improvement of effectiveimprovement of effective occupancy rateoccupancy rate as well asas well as rentrentunit priceunit price decliningdeclining raterate
-1 to 2%++1 to 2%=±0%
Unit price factor+Actual occupancyfactor
=Rentalincome
RentalRental incomeincome bottoming out due tobottoming out due to improvement of effectiveimprovement of effective occupancyoccupancyraterate as well as rent unit price decliningas well as rent unit price declining raterate
Rental income declining Rental income bottoming out
-2 to 3%+±0%=-2 to 3%
Unit price factor+Actual occupancyfactor
=Rentalincome
Image of Rental IncomeBottoming Out
Rental income bottoming outRental income bottoming outRental income decliningRental income declining
Rental income decline reduced due to improvement inoverall rent unit price declining
Income increased due to improvement ofeffective occupancy rate
Step2: Suppress tenant departuresStep2: Suppress tenant departuresStep1: Improvement of contractoccupancy rate
Step1: Improvement of contractoccupancy rate
(Office only)
Approach to bottoming out Internal Growth (Image) ②
29
HeiseikankouHeiseikankou SapporoSapporo EkimaeEkimae BuildingBuilding
96.0%Price/Appraisal
¥1,980 millionAppraisal Value
2,685.39㎡Total Floor Area
ORIX Real Estate CorporationSeller
323.96㎡Land Area
8 above ground and 2 belowground
Floors
Jul. 1994Built
¥1,900 millionPrice
June 29, 2012Acquired
Sapporo City, HokkaidoLocation
The property is a retail facility located an approximatelytwo minutes walk from JR Sapporo Station and a oneminute walk from the Sapporo Municipal SubwaySapporo Station in Chuo-ku of Sapporo City.
The surrounding area is a central commercial andbusiness area with many large-scale retail facilities andoffices. As it is very close to the entrance/exit of anunderpass connecting JR Sapporo Station and theMunicipal Subway Odori Station, the location hasexcellent accessibility to transportation.
LocationLocation
The property is a retail facility built in July 1994 with 8floors above ground and 2 floors underground. In 1995the building received the 7th Sapporo Urban DesignAward, given to buildings that positively contribute tothe urban landscape.
Currently, the property is contracted with 4 tenantswith medium to long-term lease agreements of 5 to 10years, and stable cash flow can be expected goingforward.
Building Facilities and TenantsBuilding Facilities and Tenants
Acquired aAcquired a ““StationStation--Front Retail FacilityFront Retail Facility”” nearby JR Sapporo Station with excellent transportationnearby JR Sapporo Station with excellent transportationaccessaccess
New Acquisition from FP21 onwards ①
30
Morioka Minami Shopping Center Sansa Located in a dense residential area approximately 5
kilometers south of central Morioka City. New generationfamily with high purchasing power make up a large proportionof the population in that area.
Population growth rate of the surrounding area showssignificant growth in Iwate Prefecture, with the trade zonehaving a population of approximately 57,000 within a 3kilometer radius and approximately 125,000 within a 5kilometer radius.
Location, trade areaLocation, trade area
Tenants are composed of approximately 30 shops with thesupermarket Universe, a supermarket with superiority inproduct lineup and freshness of goods, both considered topclass in the community, and drugstore Sundrug as the coretenants as well as mall-type shops selling daily commodities.
Mainly composed of shops selling goods that support dailyliving for the residents of the community, the commercialfacility has the ability to attract other customers as well.
Universe Co., Ltd., a main tenant, enjoys highcreditworthiness as it belongs to the ARCS group, whichconducts supermarket business centering on Hokkaido andNorth Tohoku districts and boasts the second largest salesvolume among food supermarket operators in Japan.
Business types, competitiveness, etc.Business types, competitiveness, etc.
AcquiredAcquired a Na Neighborhoodeighborhood--typetype SShoppinghopping CCenter (NSC) located inenter (NSC) located in thethe suburban area of Moriokasuburban area of MoriokaCityCity growinggrowing populationpopulation
Stable earnings is expected as a rent guarantee-type masterlease agreement was signed with ORIX Real EstateCorporation.
Contract TypeContract Type
90.9%Price/Appraisal
¥3,080 millionAppraisal Value
1 above groundfloor
Floors
November 2006Built
Dufftown GKSeller
17,101.50m2Total Floor Area
35,690.97m2Land Area
¥2,800 millionPrice
July 31, 2012Acquired
Morioka City, IwateLocation
New Acquisition from FP21 onwards ②
31
Belle Face Miyamachi Belle Face Bansui-Street
AcquiAcquiredred 22 rresidenceesidence propertiesproperties in Sendaiin Sendai AArea, expected for future growth.rea, expected for future growth.
94.9%Price/Appraisal
¥1,580 millionAppraisal Value
6,401.48㎡Total Floor Area
ORIX Real EstateCorporation
Seller
3,769.88㎡(Privateroad (common use)247.25 ㎡)
Land Area
10 above groundFloors
September 2007Built
¥1,500 millionPrice
April 5,2012Acquired
Sendai City,Miyagi
Location
95.4%Price/Appraisal
¥873 millionAppraisal Value
2,860.16㎡Total Floor Area
ORIX Real EstateCorporation
Seller
537.51㎡Land Area
12 above ground
1 below groundFloors
January 2008Built
¥832 millionPrice
April 5,2012Acquired
Sendai City,
MiyagiLocation
New Acquisition from FP21 onwards ③
32
Belle Face Togoshi Statio Belle Face MeguroBelle Face Mishuku
Acquired 3Acquired 3 residenceresidence properties in central Tokyoproperties in central Tokyo,, with excellent conveniencewith excellent convenienceas well as proas well as profitability & stabilityfitability & stability
94.8%Price/Appraisal
¥2,110 millonAppraisal Value
Building: 3,239.37 ㎡ (total floor area,includes 24.44 ㎡ garbage collectionancillary)
Total Floor Area
GK CREP investment JSeller
1,677.56㎡Land Area
4 above ground 1 below groundFloors
June 2007Built
¥2,000 millonPrice
March 30,2012Acquired
Setagaya Ward,TokyoLocation
95.0%Price/Appraisal
¥2,782 millionAppraisal Value
3,894.90m2Total Floor Area
ORIX Real Estate CorporationSeller
703.12m2Land Area
12 above groundFloors
November 2009Built
¥2,642 millionPrice
May 9, 2012Acquired
Shinagawa ward, TokyoLocation
96.0%Price/Appraisal
¥3,470 millionAppraisal Value
4,643.24㎡Total Floor Area
ORIX Real Estate CorporationSeller
1,203.17㎡Land Area
14 above ground 1 below groundFloors
Feburuary 2010Built
¥3,330 millionPrice
October 19, 2012Acquired (schedule)
Shinagawa ward, TokyoLocation
Note: “Belle Face Mishuku” was renamed from “Lios Mishuku” as of October 1, 2012.
New Acquisition from FP21 onwards ④
33
A highly popular area due to a superior livingenvironment with a cityscape of residential andcommercial facilities, parks and greenery, as well asroadways, etc. due to a well-planned land blockreorganization.
Property type is expected to have high demand into thefuture due to the advance of the aging society.
GOOD TIME LIVING Shin-urayasu
94.5%Price/Appraisal
¥1,640 millionAppraisal Value
4,111.04㎡Total Floor Area
HospitalityResidence/TwoSpecial PurposeCompanies
Seller
4,958.86㎡Land Area
4 above groundFloors
October 2006Built
¥1,550 millionPrice
September 6, 2012Acquired
Urayasu City, ChibaLocation
Location and Business PotentialLocation and Business Potential
The property is designed as fee-based senior housingwith nursing care and is comprised of 74 rooms in total,of which 66 rooms are single occupancy and 8 roomsare double occupancy. In addition, the facility includesrestaurants, party rooms, beauty/hair salon, etc.,providing “high quality living” not just limited to nursingcare and medical services.
The operator, ORIX Living Corporation, operates 20facilities in the greater Tokyo area and the Kansai areawith the concept of “providing a thorough combinationof living, nursing care and medical services” as part ofthe ORIX Group.
Building Facilities and OperatorsBuilding Facilities and Operators
AcquiredAcquired aa FFeeee--basedbased senior Hsenior Housousee with nursing care which stable occupancy is expected goingwith nursing care which stable occupancy is expected goingforwardforward
A rent guarantee-type master lease agreement hasbeen signed with ORIX Real Estate Corporation andstable earnings are expected.
Contract TypeContract Type
New Acquisition from FP21 onwards ⑤
34External Growth ~Basic Investment Policy~
Use Region
Property Size Portfolio Management
Generally speaking, we will invest in office-use real estate-relatedassets with a value of 60% or more (on an acquisition price basis)of our total portfolio. Also through investing in a wide variety ofreal estate-related assets, including logistics facilities, retailfacilities, residential and other properties, we aim to construct aportfolio based on an integrated model. Diverse investments areexpected to reduce exposure to risk, and help maintain andincrease the stability and growth potential of distributions over themedium to long term.
We will invest 80% or more of the total portfolio (on anacquisition price basis) in the greater Tokyo area (Tokyo,Kanagawa, Saitama and Chiba). In order to improveprofitabilityin total portfolio, we also invest in candidates based on setcriteria outside the greater Tokyo area.
For offices in particular, our general rule for investment is to focuson medium-sized or larger real estate-related assets, but at thesame time, reduce the investment risk concentrated in eachspecific property. With regard to real estate-related assets fornon-office use, OJR will make investment decisions taking intoconsideration a variety of factors including the characteristics ofeach sector such as property size.
To enable us to respond effectively to changes in the businessenvironment by adjusting our portfolio accordingly, we employa flexible policy allowing us to make swift decisions onacquiring, holding, and selling real estate-related assets.
Aiming at creating strong portfolio with both stability and growth potential
×
OthersOthers
GreaterTokyo AreaOffices
35
Yield
H
L
Current Situation
Investment Strategy
Investment focused on retail with both “profitability”and “stability” as caution is still required for the timebeing with regard to the office market.
By continuously selling properties with relatively low yieldafter depreciation as well as older small-scale properties,endeavor to improve the portfolio profitability (yieldafter depreciation) and quality by promoting assetreplacements.
Image of Acquisition Yields
Image of Positioning for Each Sector
Bottom Recovery Expansion Recession
Image of Rents Rents for residential and logistics are in a recovery but
that of offices and urban retail are still at the bottom. The vacancy rate of offices is high due to the excessive
supply in central Tokyo but a gradual improvement isexpected going forward. However, the situation stillneeds to be watched with caution due to globaleconomic uncertainties. Though rents seem to bebottoming out, some more time is thought to be neededfor a recovery.
For retail, sales at NSCs and category killers thathandle daily necessities are steady, generating stablerental revenue.
Market Outlook and Investment Strategy
Property MarketProperty Market
Rental MarketRental Market
Acquisition yields are on a recovery trend in the orderof residential, logistics, office and retail.
There is a strong drive primarily among REITs toacquire properties in all sectors, but there is shortage ofprime properties.
Bottom Recovery Expansion Recession
Note: Ovals indicate the range of properties that OJR envisages as targets for acquisition.
RetailOffice
Residential
Logistics
Retail
Office
Residential
Logistics
Office
Retail
Residential Logistics
More growth potential Profitability More stability
36
New asking rents are being adjusted especially in central Tokyo whererents had once increased, and there is a sense that rents are bottomingout.
Sales of supermarket and category killers that are closely-attached toliving are steady.
In the real estate rental market, there is an increasing drive amongrestaurants and retail stores to open, and new activities such as openingnew business type stores are seen.
Current Situation
Investment Strategy
Market sentiment image
NSC・Category killerRent
Yield
Selectively invest to construct stable portfolio.
• Comprehensive consideration of location, population size ofcommercial area, tenant business type, ease of tenant replacement,contract types, etc.
• Diversification of property types, regions, tenants, etc. In present environment, prioritize NSCs having supermarkets as core
tenants.
Urban-type rent
Transactions of retail facilities (including lands)
Sales by major retail business type(Year-on-year, all store basis)
Property MarketProperty Market
Rental MarketRental Market
Bottom Recovery Expansion Recession
Movement of acquisitions including in regional areas due in part to an increasein equity finance including IPOs by REITs.
Acquisitions are on an increasing trend with 2009 at the bottom. Competition over prime properties seen in line with improvement in fund
procurement environment.
Retail Market Outlook and Investment Strategy
Source: Prepared by OAM based on official data by Association of Japan Department Store,Association of Japan Franchise Chain, Association of Japan Super Market, Association of All JapanSuper Market, Association of New Japan Supermarket Market.
Source: Prepared by OAM based on real estate market Report second half of 2012 byTMAX Co, Ltd.
-5
0
5
10
15
1st halfof 2008
2nd halfof 2008
1st halfof 2009
2nd halfof 2009
1st halfof 2010
2nd halfof 2010
1st halfof 2011
2nd halfof 2011
1st halfof 2012
(No. of property)
Tokyo Metropolitan area SoldDistrict Increase
37OJR’s Target Retail Facilities
○○○△△
Urban-type retailfacilities
Category killersNSC
(Neighbourhood ShoppingCenter)(Note2)
Large-scaleShopping Center
GMS(General Marchandise
Store)(Note1)
Community-based NSCsCommunityCommunity--basedbased NSCsNSCs Category killersCategory killersCategory killers Urban retail facilitiesUrban retail facilitiesUrban retail facilities
Automobile Distance+ Walking Distance
Retail facilities with growthRetail facilities with growthpotentialpotential
by introducing tenants reflectingtrends
Specialty storesSpecialty storesretailing highly specialized products or
products with competitive price
HighHigh<<visiting frequencyvisiting frequency>>facilitiesfacilitiesfully lined up with stores retailing daily
necessities
Features
TargetArea
Tenant
Contract
Example(Miyagi Prefecture)
Maruetsu Sagamino
(Kanagawa Prefecture)
Home Center MusashiSendai Izumi
Okayama KumeRetail Facility
(Okayama Prefecture)
Morioka Minami ShoppingCenter Sansa
(Iwate Prefecture)
Heiseikankou SapporoEkimae Building
(Sapporo, Hokkaido Prefecture)
aune Kohoku
(Kanagawa Prefecture)
(Note 1) General merchandise stores (GMS) refer to supermarkets that develop large-scale stores comprehensively stocked with products necessary for living, fromfood, clothes, home electrical appliances to household goods, in a nationwide manner.
(Note 2) Neighborhood shopping centers (NSC) refer to shopping centers targeting small trade zones such as nearby communities and having a drugstore, homecenter, etc. as tenants and a supermarket as the core tenant.
Food stores and supermarkets anchoredFood stores and supermarkets anchored
Wide variety of tenants fromnational chain stores to local
leading companies
<Daily use>
Walking Distance targetingneighborhood residents
Successful category killers(national top class stores)
<Daily use & weekends>
HHome centers, discount stores, etc.ome centers, discount stores, etc.
Mix of tenants by taking advantageof the location’s features
<Visited by office workers on weekdaysand families on weekends>
RRestaurants and specialty shopsestaurants and specialty shops
Mainly long-term and fixed-term lease
Mainly long-term andfixed-term lease
Mainly medium-term (about 5 years)lease which can be expected upside rent
Terminal stationsin Greater Tokyo Area
38
0
1
2
3
4
5
6
7
8
9
10
0
5,000
10,000
15,000
20,000
25,000
Jan-2002 Jan-2003 Jan-2004 Jan-2005 Jan-2006 Jan-2007 Jan-2008 Jan-2009 Jan-2010 Jan-2011 Jan-2012
(%)(Yen/Tsubo)
Average rent/Average Vacancy rate/Average
4.5
5.0
5.5
6.0
6.5
7.0
1st half of2006
1st half of2007
1st half of2008
1st half of2009
1st half of2010
1st half of2011
1st half of2012
(%)
National average Sendai The 23 wards of Tokyo Osaka
Office Vacancy Rate and Rentin Tokyo Business Area
Capitalization Rates Change
Investment Strategy
Current Situation
Property MarketProperty Market
Rental MarketRental Market
Strong demand primarily among REITs to acquire properties, butshortage of prime properties. Concentration of new supply onClass S buildings, Market transactions are limited as priceperception between sellers and buyers does not match. However,the number of transactions is starting to increase.
Acquisition yields are showing signs of gradual decline mainly inGreater Tokyo Area.
It seems to be movements to acquire regional prime properties aspart of portfolio strategies.
Vacancy rate remains high due to excessive supply in centralTokyo. A gradual improvement is expected but the situation stillneeds to be watched with caution due to global economicuncertainties.
Rent seems to be bottoming out but it is believed that more timeis yet needed for recovery.
Place our emphasis on stability and selectively invest inproperties for which future potential can be expected.
• Properties of medium size (note) or larger with widetenant classes
• Competitive and relatively new properties in primelocations
• Properties with small market rent gap
Note: Medium-sized properties, particularly for offices, refer to those witha total floor area of 3,000m2 to 15,000m2.
Office Market Outlook and Investment Strategy
Source: Prepared by OAM based on data from Miki Shoji Co., Ltd.
Source: Prepared by OAM based on real estate market Report second half of 2012 by TMAX Co, Ltd.
39
4.5
5.0
5.5
6.0
6.5
7.0
1st half of2009
2nd half of2009
1st half of2010
2nd half of2010
1st half of2011
2nd half of2011
1st half of2012
(%)
National average Sendai The 23 wards of Tokyo Osaka
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1st half of2009
2nd half of2009
1st half of2010
2nd half of2010
1st half of2011
2nd half of2011
1st half of2012
(Yen/Tsubo)
National average Sendai The 23 wards of Tokyo Osaka
Occupancy Rate Change by Region
Investment Strategy
Contract Rent Change by Region
Capitalization Rate Change by Region
Residential Market Outlook and Investment Strategy
Current Situation
Property MarketProperty Market
Rental MarketRental Market
Demand for prime properties in Tokyo is strong and there isa sense of scarcity. As such, demand is spreading toregional areas and a decline of yields can be seen includingin the Sendai area.
Occupancy rates are improving both in central Tokyo andregional areas.
Sendai in particular has an occupancy rate close to 100%and rents are also rising due to factors such as relocationdemand due to the earthquake and such.
Primarily invest in single/compact types* targeting middle-income groups (the volume market) in which demand isstrong as rents are steady.
Focus on location, such as convenience in terms of work andschool commute (distance to nearest station and city center).
Target buildings 10 years old or less (at acquisition).
Note: The “single” type is defined as having less than 40m2 of exclusive area;the “compact” type as having at least 40m2 but less than 60m2.
Source: Prepared by OAM based on real estate market Report second half of 2012 by TMAX Co, Ltd.
85
90
95
100
1st half of2009
2nd half of2009
1st half of2010
2nd half of2010
1st half of2011
2nd half of2011
1st half of2012
(%)
National average Sendai The 23 wards of Tokyo Osaka
40
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1st halfof 2012
(Yen/Tsubo)
Tokyo Kanagawa Saitama Chiba
5.0
5.5
6.0
1st half of2009
2nd half of2009
1st half of2010
2nd half of2010
1st half of2011
2nd half of2011
1st half of2012
(%)
National average Tokyo Metropolitan AreaKeihanshin district
Current Situation
Investment Strategy
New Supply Space Change
Capitalization Rate Change
Average Asking Rent Change for Large Logistics Facilitiesin Tokyo Metropolitan Area
Industrial Market Outlook and Investment Strategy
Property MarketProperty Market
Rental MarketRental Market
Partly due to entry of new players such as REITs, overseasinvestors and private placement funds, there is a strong drive toacquire properties. On the other hand, the situation withshortage of prime properties is continuing and transaction yieldsare trending downwards.
Demand is steady especially for large and high-spec properties,coinciding with the business line expansion of third partylogistics (3PL) and the mail-order industry. There were signs ofrents increasing in some regions, but the upper limit of rent maybe slow to improve as there is large supply scheduled for theMisato and Kashiwa area and Atsugi and Sagamihara area inthe future.
Note : 「3PL」 refers to inclusive and comprehensive outsourcing services thataim to make logistics functions in corporate activities more effective andsophisticated.
Selective investment in properties that combine outstandinglocation with high standard specifications.
Emphasis on tenant credit worthiness and long-term leasecontract for build to suit (BTS) (Note 1); tenant substitutionand contract type for multiple-type (Note 2) facilities.
Note 1: Build to Suit (BTS) is a logistics facility developed to meet buildingspecifications requested by the tenant.
Note 2: A multiple type is a logistics facility developed on the assumption that itcan be used by multi-tenants at the same time.c
Source: Prepared by OAM based on data CBRE Japan K.K.
Source: Prepared by OAM based on data CBRE Japan K.K.
Source: Prepared by OAM based on real estate market Report second half of 2012 by TMAX Co, Ltd.
0
500,000
1,000,000
1,500,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012(Scheduled)
2013
(㎡)
41
99.6 104.9114.4
141.5153.2 148.9
176.7 174.8
197.9209.0
235.6 231.0
262.3 269.5 277.5 277.5
300.8311.0
338.4 343.3 350.9 355.8
-100.0
-50.0
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0 Office Retail Residential Other 系列5 Sold
Portfolio Strategy
(billions of yen)
Improvement of portfolio quality through asset replacementsImprovement of portfolio quality through asset replacements
Office Logistics Retail Residential Others Sold
(11.2)End
FP18
(11.8)End
FP19
(12.2)End
FP20
(10.8)End
FP17
(10.2)(09.8)(09.2)(08.8)(08.2)(07.8)(07.2)(06.8)(06.2)(05.8)(05.2)(04.8)(04.2)(03.8)(03.2)(02.8)EndEndEndEndEndEndEndEndEndEndEndEndEndEndEndEnd
FP16FP15FP14FP13FP12FP11FP10FP9FP8FP7FP6FP5FP4FP3FP2FP1
(12.8)End
FP21
Flexible and dynamic property acquisition, keeping stepFlexible and dynamic property acquisition, keeping stepwith changes in the circumstancewith changes in the circumstance
42
as of the end of FP21 (August 2012)
Portfolio Diversification (acquisition price base)
Retail Facilities8.0%
ResidentialProperties
10.3%
Others4.3%
Maintained overall portfolioMaintained overall portfolio’’s yield by selectively investing in residences, retail facilities yield by selectively investing in residences, retail facilitiessand logistics facilities with staband logistics facilities with stabilityility
Offices68.7%
LogisticsFacilities
8.8%
4.1%Yield after depreciation3.5%Yield after depreciation
5.7%Leasing NOI yield6.1%Leasing NOI yield
100.0%Occupancy rate95.7%Occupancy rate
1No.12No.
¥15.0 bilAcquisition price ratio¥36.1 bilAcquisition price ratio
Others (Cross Gate)Residential Properties
5.7%Yield after depreciation3.5%Yield after depreciation
6.9%Leasing NOI yield5.6%Leasing NOI yield
99.4%Occupancy rate100.0%Occupancy rate
10No.4No.
¥27.9 bilAcquisition price ratio¥30.8 bilAcquisition price ratio
Retail FacilitiesLogistics Facilities
3.3%Yield after depreciation3.6%Yield after depreciation
4.5%Leasing NOI yield5.0%Leasing NOI yield
96.1%Occupancy rate98.0%Occupancy rate
41No.68No.
¥241.0 bilAcquisition price ratio¥350.9 bilAcquisition price ratio
OfficesPortfolio Overall
Effect of Property Type Diversification
Note: Leasing NOI yields are calculated in dividing leasing NOI in 21FP byacquisition price. Yield after depreciation are calculated in dividinggain/loss from properties in 21FP by the book value.
43List of Properties Disposition
Note 1. The age of property is recorded on the date of sale.
Note 2. The book value is based on figures at the end of the fiscal period before the fiscal period in which the date of the sale falls.
Note 1Note 2
Note 1Note 2
(Note1) (Note2)
Disposition Old , SmallDisposition Old , Small--Scaled Properties in consideration of PL impactScaled Properties in consideration of PL impact
FP of
Disposition
Date of
DispositionProperty
TypeAge of
property
(years)
Acquisition
Price
(Million yen)
Sale Price
(①)
(Million yen)
Book value
(②)(Million yen)
①-②
(Million yen)
Landic Akasaka Building Office 33.4 11,580 12,950 11,799 1,150
Landic Akasaka Building 3 Office 25.0 698 850 728 121
10th Sep 1, 2006 Akasaka Kyowa Building Office 28.3 2,087 2,500 2,077 422
12th Dec 26, 2007 Round-Cross Aoyama Office 21.2 4,529 5,250 4,723 526
14th Sep 25, 2008 Round-Cross Shinsaibashi Office 22.4 13,600 14,500 14,199 300
15th Mar 27, 2009 ORE Nagoya Fushimi Building Office 5.1 10,040 10,680 9,469 1,210
Mar 10, 2010 ORIX Jimbo-cho Building Office 13.0 4,177 4,150 3,989 160
Mar 26, 2010 ORIX Shinjuku Building Office 6.9 8,300 9,000 7,872 1,127
Jun 10, 2010 Grand Maison Hakusan Residential 17.1 455 425 411 13
Jul 15, 2010 Round-Cross Akasaka Mitsuke Office 22.5 1,650 1,785 1,661 123
18th Dec 27, 2010 Sonet Kami Ikebukuro Residential 13.9 2,377 2,146 2,061 84
19th Mar 1, 2011 Round-Cross Moto Yoyogi Office 18.9 5,091 4,807 4,393 413
20th Feb 14, 2012 Beside Shirogane Office 22.5 1,300 1,360 1,264 95
21th Aug 28, 2012 Koshigaya Logistics Center Logistics 6.6 4,000 3,830 3,685 144
9th
17th
Jun 1, 2006
(Note 1) (Note 2)
44
¥857.5 billionTotal
0,50.3Logistics
209.9Retail
163.2Rental condo
120.4Other
313.7Office
Balance of Leased Real Estate Assetsin Real Estate Segment (billions of yen)
Summary of Properties Acquired throughSynergies with the ORIX Group since IPO
Newconstruction
(2 years old orless)
51.0%
Over 2 yearsof age
Strengths of ORIX
Composed of domestic andforeign companies ranging
from small to mid-sized, andstable medium-scale to major
companies
Customer Base
Needs Propose solutions
MaintenanceLease
Realestate
Corporatefinancialservices
Retail Investment inbusinesses
Overseas
UniqueUniqueanswersanswers
Fusion ofFusion ofknowledgeknowledge
and team playand team play
Provide unique answers through the fusion ofknowledge and team play
Average age(Note)
4.2 years
Synergy with the ORIX Group
Source: Financial briefing materials for the 1st quarter of thefiscal year ending March 2013, ORIX Corporation
¥303.1 billionTotal acquisitionprice
89.7%
Ratio of allpropertiesacquired sinceIPO
50No. of propertiesacquired
〔As of August 31, 2012〕 〔By building age (Note)〕
Note: Age at time of acquisition.
45Portfolio Summary
Note : “Belle Face Mishuku” was renamed from “LIOS Mishuku” as of October 1, 2012
List of all real estate owned by ORIX JREIT at the end of the 21th fiscal period
Date Price(¥million)
Aoyama Suncrest Building December 1. 2001 3,356 1.0
Round-Cross Ichi-bancho December 1. 2001 3,900 1.1
Round-Cross Nishi Shinjuku December 1. 2001 2,650 0.8
DT Gaien December 21. 2001 2,430 0.7
Nihonbashi East Building December 21. 2001 1,720 0.5
Yoyogi Forest Building December 21. 2001 1,473 0.4
Round-Cross Minami Azabu December 21. 2001 1,394 0.4
Round-Cross Akasaka January 10. 2002 2,624 0.7
Round-Cross Mita January 10. 2002 1,748 0.5
Shiba Daimon Building January 10. 2002 2,195 0.6
Round-Cross Tsukiji January 10. 2002 3,378 1.0
ORIX Shiba 2-chome Building September 29. 2003 7,500 2.1
Aoyama 246 Building March 3. 2004 5,200 1.5
Round-Cross Shinjuku April 28. 2006 8,020 2.3
September 30. 2005
April 28. 2006
June 26 . 2006
December 4. 2006
Round-Cross Shinjuku 5-chome April 26. 2007 4,500 1.3
Nihonbashi Honcho 1-chome Building March 28. 2007 10,500 3.0
Round-Cross Shibuya March 28. 2008 3,500 1.0
ORIX Suidobashi Building March 28. 2008 3,000 0.9
ORIX Shinagawa Building June 27. 2008 15,200 4.3
ORIX Real Estate Nishi Shinjuku Building March 27. 2009 13,600 3.9
OX Tamachi Building March 29. 2010 6,730 1.9
Subtotal 23 properties 144,478 41.2
Carrot Tower December 1. 2001 5,479 1.6
Toyo MK Building December 1. 2001 5,270 1.5
Beside Kiba December 21. 2001 2,450 0.7
ORIX Ikebukuro Building April 18. 2003 9,577 2.7
Round-Cross Kamata March 1. 2006 5,640 1.6
KN Jiyugaoka Plaza May 30. 2007 3,110 0.9
ORIX Meguro Building July 29. 2010 6,350 1.8
Akihabara Business Center June 1. 2011 5,060 1.4
Subtotal 8 properties 42,936 12.2
Neo City Mitaka December 1. 2001 2,200 0.6
Round-Cross Kawasaki April 27. 2004 4,130 1.2
Omiya Miyacho Building March 27. 2009 4,400 1.3
Omiya Shimocho 1-chome Building March 29. 2010 3,750 1.1
Subtotal 4 properties 14,480 4.1
Nagoya Itochu Building September 29. 2003 4,500 1.3
ORIX Koraibashi Building April 27. 2005 5,560 1.6
Lunar Sendai June 28. 2007 8,500 2.4
ORIX Nagoya Nishiki Building March 29. 2010 12,500 3.6
ORE Sapporo Building October 1. 2010 4,250 1.2
ORIX Kobe Sannomiya Building September 29. 2011 3,800 1.1
Subtotal 6 properties 39,110 11.1
Offices Total 41 properties 241,004 68.7
AreaType
Offices
6 Central
Remaining
Other Parts of
Other Areas
5.1
21,860ORIX Akasaka 2-chome Building
% to
Total Acquisition
Price
Property
Seafort Square Center Building
Acquisition
18,000
6.2
Date Price(¥million)
Toda Logistics Center March 28. 2008 9,600 2.7
Ichikawa Logistics Center September 29. 2008 8,300 2.4
Subtotal 2 properties 17,900 5.1
Sakai Logistics Center North Building March 30. 2010 10,200 2.9
Komaki Logistics Center June 30. 2011 2,700 0.8
Subtotal 2 properties 12,900 3.7
Logistics Facilities Total 8 properties 30,800 8.8
Nihon Jisho Minami Aoyama Building October 31. 2003 2,548 0.7
CUBE Daikanyama March 31. 2004 2,435 0.7
Subtotal 2 properties 4,983 1.4
aune Kohoku March 10. 2010 4,000 1.1
aune Makuhari March 10. 2010 3,600 1.0
Maruetsu Sagamino March 1. 2011 2,350 0.7
Subtotal 3 properties 9,950 2.8
Kobe Momoyamadai Shopping Center (Land) March 5. 2010 3,260 0.9
Okayama Kume Retail Facility January 31. 2011 2,750 0.8
Home Center Musashi Sendai Izumi (Land) January 11. 2012 2,350 0.7
Heiseikankou Sapporo Ekimae Building June 29. 2012 1,900 0.5
Morioka Minami Shopping Center Sansa July 31. 2012 2,800 0.8
Subtotal 5 properties 13,060 3.7
Retail Facilities Total 10 properties 27,993 8.0
Park Axis Nishi Azabu Stage December 1. 2001 1,219 0.3
Shibaura Island Bloom Tower January 31. 2011 5,550 1.6
We Will Hatchobori June 1. 2011 2,370 0.7
Shibaura Island Air Tower July 28. 2011 6,030 1.7
Belle Face Togoshi Statio May 9. 2012 2,642 0.8
Subtotal 5 properties 17,811 5.1
Belle Face Kamata June 1. 2011 3,550 1.0
Belle Face Hongo Yumicho June 1. 2011 3,340 1.0
Belle Face Mishuku March 30. 2012 2,000 0.6
Subtotal 3 properties 8,890 2.5
Belle Face Osaka Shinmachi June 1. 2011 3,684 1.0
Belle Face Amagasaki June 1. 2011 3,440 1.0
Belle Face Miyamachi April 5. 2012 1,500 0.4
Belle Face Bansui-street April 5. 2012 832 0.2
Subtotal 4 properties 9,456 2.7
Residential 12 Total 36,157 10.3
Cross Gate January 10. 2002 15,040 4.3
Subtotal 1 properties 15,040 4.3
Others Total 1 properties 15,040 4.3
350,994.0 100.0Grand Total 68 properties
% to
Total Acquisition
Price
Property
Acquisition
the Greater
Tokyo Area
Other Areas
6 Central
Remaining
Logistics
Facilities
Other Areas
Other Parts of
Retail
Facilities
Apartment
Others
AreaType
Other Areas
6 Central
Other Parts of
46Portfolio Map
47Portfolio Data ①
Average Disposition/Acquisition Price after IPO Property Size (Floor area)
Acquisition Price Ranges Building Age
Average24,084
㎡
Under3,000 m2
8.1%
3.08
Billion yen
5.92Billion yen
Average15,734
㎡
End of 1st Period(Aug. 31, 2002)
Over 15,000 m2
3,000 m2 to15,000 m2
Under3,000 m2
40.3%
46.0%
13.6% Over 15,000 m2
3,000 m2 to15,000 m2
63.0%
28.9%
End of 21th Period(Aug. 31, 2012)
Note: Pie charts show the acquisition price of each property as a proportion of the total acquisition price for all properties with each figure rounded to the first decimal place.Totals may not tally due to rounding.
Disposition Acquisition
End of 1st Period(Aug. 31, 2002)
End of 21th Period(Aug. 31, 2012)
Average¥2.55billion
¥1 to ¥5 billion50.2%
¥5 to¥10 billion
15.9%
Under ¥1 billion7.2%
Over ¥10 billion
26.7%
End of 1st Period(Aug. 31, 2002)
¥1 to ¥5 billion
35.6%
Over ¥10 billion
33.3%Average¥5.16billion
¥5 to ¥10 billion30.9%
End of 21th Period(Aug. 31, 2012)
5-10yr
24.8%
Under 5yr19.0%
15-20yr6.2%
10-15yr29.6%
Over 20yr
20.4%
Average12.1
years
Average10.7
years
5-10yr
40.3%
Under 5yr
20.7% 15-20yr
10.1%
10-15yr12.3%
Over 20yr
16.6%
Under ¥1 billion
0.2%
48Portfolio Data ②
Area Type
End of 1st Period(Aug. 31, 2002)
Other Area2.1%
Other Parts of theGreater Tokyo Area
17.3%
17.1%63.5%
6 CentralTokyoWardsRemaining
Tokyo Wards
End of 21th Period(Aug. 31, 2012)
Other Area21.2% 6 Central
TokyoWards
47.7%
Remaining TokyoWards
14.8%
16.3%
Other Parts of theGreater Tokyo Area
End of 1st Period(Aug. 31, 2002)
End of 21th Period(Aug. 31, 2012)
Residentialproperties
4.1%
Retailfacilities1.5%
Others
15.1%
Logisticsfacilities
8.8% Offices
68.7%Offices
79.4%
Retailfacilities
8.0%
Others
4.3%10.3%
Residentialproperties
Note: Pie charts show the acquisition price of each property as a proportion of the total acquisition price for all properties with each figure rounded to the first decimal place.Totals may not tally due to rounding.
49
(%)(billion yen)
Overview of Appraisal Value
Appraised NCF of existing properties are improving due to reductAppraised NCF of existing properties are improving due to reduction of fixed asset/city planning taxion of fixed asset/city planning taxOverall unrealized gain/loss improved due to depreciation expensOverall unrealized gain/loss improved due to depreciation expenses, property acquisitions belowes, property acquisitions below
appraisal value, etc.appraisal value, etc.
Note 1: Unrealized gain/loss is calculated in subtracting the book value from the appraisal value (both as of the end of the fiscal period).Note 2: Unrealized gain/loss ratio is calculated in dividing the unrealized gain/loss by the book value (both as of the end of the fiscal period).
FP12 FP13 FP14 FP15 FP16 FP17 FP18 FP19 FP20 FP21(End of
Feb. 2008)(End of
Aug. 2008)(End of
Feb. 2009)(End of
Aug. 2009)(End of
Feb. 2010)(End of
Aug. 2010)(End of
Feb. 2011)(End of
Aug. 2011)(End of
Feb. 2012)(End of
Aug. 2012)
Number ofproperties
43 47 48 49 49 52 54 62 63 68
Appraisal value(billion yen)
2,653 2,974 2,892 2,733 2,622 2,779 2,850 3,145 3,181 3,271
Book value(billion yen)
2,266 2,567 2,618 2,688 2,669 2,894 2,979 3,243 3,267 3,326
Unrealized gain/loss(billion yen)
386 406 274 44 -47 -114 -128 -97 -86 -54
Unrealized gain/lossratio(%)
17.1 15.8 10.5 1.7 -1.8 -4.0 -4.3 -3.0 -2.7 -1.7
2,653 2,9742,892
2,733 2,622
2,7792,850
3,145 3,181 3,271
17.1%15.8%
10.5%
1.7%
-1.8%
-4.0% -4.3%-3.0% -2.7%
-1.7%
-10
-5
0
5
10
15
20
0
500
1,000
1,500
2,000
2,500
3,000
3,500
FP12 End FP13 End FP14 End FP15 End FP16 End FP17 End FP18 End FP19 End FP20 End FP21 End
Book value Appraisal value Unrealized gain/loss ratio
50
Book value Appraisal CR Gain/loss Change % Change CR Change Chg gain/Loss(\million) (\million) (\million) (\million) (\million)
● Aoyama Suncrest Building 3,451 3,420 4.8% -31 -110 -3.1% 0.0% -97● Round-Cross Ichi-bancho 3,457 3,080 5.1% -377 -220 -6.7% 0.0% -193● Round-Cross Nishi Shinjuku 2,496 2,710 4.6% 213 20 0.7% 0.0% 29● DT Gaien 2,245 2,000 5.0% -245 10 0.5% 0.0% 26● Nihonbashi East Building 1,575 1,210 5.5% -365 30 2.5% 0.0% 17● Yoyogi Forest Building 1,418 1,250 5.3% -168 0 0.0% 0.0% 7● Round-Cross Minami Azabu 1,238 1,302 5.9% 63 5 0.4% 0.0% 13● Round-Cross Akasaka 2,804 2,422 5.8% -382 -38 -1.5% 0.0% -32● Round-Cross Mita 1,669 1,363 5.5% -306 11 0.8% 0.0% 16● Shiba Daimon Building 2,275 2,419 5.5% 143 13 0.5% 0.0% 17● Round-Cross Tsukiji 3,079 3,427 5.5% 347 -50 -1.4% 0.0% -34● ORIX Shiba 2-chome Building 6,652 8,117 5.2% 1,464 58 0.7% 0.0% 105● Aoyama 246 Building 5,390 6,700 4.3% 1,309 -127 -1.9% 0.0% -117● Round-Cross Shinjuku 7,733 8,270 4.5% 536 240 3.0% -0.1% 270● Seafort Square Center Building 16,975 14,050 5.0% -2,925 -200 -1.4% 0.0% -120● ORIX Akasaka 2-chome Building 20,810 19,340 4.3% -1,470 -10 -0.1% 0.0% 90● Round-Cross Shinjuku 5-chome 4,183 3,190 4.7% -993 80 2.6% -0.1% 115● Nihonbashi Honcho 1-chome 10,006 8,440 4.4% -1,566 -10 -0.1% 0.0% 45● ST WORLD Building 3,402 2,220 4.3% -1,182 -10 -0.4% 0.0% 5● ORIX Suidobashi Building 2,886 2,620 4.9% -266 0 0.0% 0.0% 16● ORIX Shinagawa Building 14,837 11,200 4.3% -3,637 0 0.0% 0.0% 60● ORIX Real Estate Nishi Shinjuku 13,498 11,400 4.4% -2,098 100 0.9% 0.0% 144● OX Tamachi Building 6,738 6,750 4.9% 11 0 0.0% 0.0% 9▲ Carrot Tower 4,281 5,450 5.4% 1,168 -130 -2.3% 0.0% -87▲ Toyo MK Building 4,232 5,110 5.7% 877 20 0.4% 0.0% 64▲ Beside Kiba 2,126 2,490 5.6% 363 -30 -1.2% 0.0% -6▲ ORIX Ikebukuro Building 8,629 10,570 4.9% 1,940 -30 -0.3% 0.0% 24▲ Round-Cross Kamata 5,295 5,771 5.7% 475 16 0.3% 0.0% 53▲ KN Jiyugaoka Plaza 3,128 2,630 4.5% -498 -10 -0.4% 0.0% -2▲ ORIX Meguro Building 6,479 6,170 5.1% -309 10 0.2% 0.0% -54▲ Akihabara Business Center 5,019 5,180 4.7% 160 20 0.4% 0.0% 69■ Neo City Mitaka 1,963 2,800 5.7% 836 -130 -4.4% 0.0% -129■ Round-Cross Kawasaki 3,886 4,972 5.6% 1,085 -85 -1.7% 0.0% -55■ Omiya Miyacho Building 4,178 4,240 5.7% 61 -110 -2.5% 0.0% -68■ Omiya Shimocho 1-chome Building 3,652 3,820 5.7% 167 10 0.3% 0.0% 45★ Nagoya Itochu Building 4,847 4,480 6.4% -367 10 0.2% -0.1% 39★ ORIX Koraibashi Building 4,894 4,377 5.2% -517 97 2.3% -0.1% 146★ Lunar Sendai 7,799 5,070 5.8% -2,729 90 1.8% 0.0% 171★ ORIX Nagoya Nishiki Building 11,790 7,700 5.2% -4,090 -60 -0.8% 0.0% 52★ ORE Sapporo Building 4,063 4,528 6.6% 464 33 0.7% 0.0% 105★ ORIX Kobe Sannomiya Building 3,742 3,820 6.0% 77 0 0.0% 0.0% 51
228,836 216,078 - -12,758 - - - -
■ Toda Logistics Center 9,132 9,130 5.2% -2 60 0.7% 0.0% 134■ Ichikawa Logistics Center 7,828 7,740 5.4% -88 50 0.7% 0.0% 132★ Sakai Logistics Center North Building 9,564 11,000 5.7% 1,435 100 0.9% 0.0% 258★ Komaki Logistics Center 2,640 2,830 6.0% 189 50 1.8% -0.1% 91
29,167 30,700 - 1,532 - - - -
Offices
Offices Total
Logistics
Facilities
Logistics Facilities Total
Type Area PropertyEnd of the 21st Fiscal Period Change from the previous Period
※Area symbol: ● 6 Central Tokyo Wards ▲ Remaining Tokyo Wards ■ Other Parts of the Greater Tokyo Area ★ Other Areas
Appraisal value of all properties at the end of the 21st fiscal period
Appraisal Value List at the end of FP21 ①
51
Land 2 5,687 5,672 - -15 29 0.5% - 30
Properties acquired in FP21 6 11,882 12,448 5.9% 565 - - - -
Total 68 332,625 327,136 - -5,489 - - - -
Book value Appraisal CR Gain/loss Change % Change CR Change Chg gain/Loss(\million) (\million) (\million) (\million) (\million)
Offices 41 228,836 216,078 5.0% -12,758 -487 -0.2% 0.0% 818Logistics Facilities 4 29,167 30,700 5.5% 1,532 260 0.9% -0.0% 616Retail Facilities 6 17,298 18,761 5.6% 1,462 84 0.4% 0.0% 220Residential Properties 8 28,482 29,977 5.4% 1,494 440 1.5% 0.0% 839Others 1 11,270 13,500 6.4% 2,229 0 0.0% 0.0% 151Total (excluding land and propertiesacquired in FP21)
60 315,054 309,016 5.2% -6,038 297 0.1% -0.0% 2,646
No. of
Properties
End of the 21th Fiscal Period Change from the previous Period
Type
Book value Appraisal CR Gain/loss Change % Change CR Change Chg gain/Loss(\million) (\million) (\million) (\million) (\million)
● Nihon Jisho Minami Aoyama Building 2,500 3,356 4.3% 855 -46 -1.4% 0.0% -41● CUBE Daikanyama 2,442 2,246 5.0% -196 -27 -1.2% 0.0% -20■ aune Kohoku 3,849 4,000 5.6% 150 0 0.0% -0.1% 43■ aune Makuhari 3,467 3,900 5.8% 432 90 2.4% -0.1% 129■ Maruetsu Sagamino 2,337 2,430 6.0% 92 40 1.7% -0.1% 52★ Kobe Momoyamadai SC (land) 3,305 3,210 - -95 20 0.6% - 21★ Okayama Kume Retail Facility 2,701 2,829 6.9% 127 27 1.0% 0.0% 57★ Home Center Musashi Sendai Izumi (land) 2,381 2,462 - 80 9 0.4% - 9★ Heiseikankou Sapporo Ekimae Building 1,923 2,000 6.1% 76 - - - -★ Morioka Minami Shopping Center Sansa 2,889 3,080 6.8% 190 - - - -
27,799 29,513 - 1,713 - - - -
● Park Axis Nishi Azabu Stage 1,078 938 5.1% -140 4 0.4% 0.0% 11● Shibaura Island Bloom Tower 5,303 5,608 5.4% 304 0 0.0% 0.0% 100
● We Will Hatchobori 2,346 2,369 4.8% 22 12 0.5% 0.0% 35
● Shibaura Island Air Tower 5,927 6,502 5.4% 574 322 5.2% 0.0% 418
● Belle Face Togoshi Statio 2,661 2,784 5.1% 122 - - - -
▲ Belle Face Kamata 3,505 3,702 5.5% 196 35 1.0% 0.0% 75
▲ Belle Face Hongo Yumicho 3,310 3,461 4.8% 150 2 0.1% 0.0% 34
▲ Belle Face Mishuku 2,054 2,122 5.1% 67 - - - -
★ Belle Face Osaka Shinmachi 3,611 3,994 5.6% 382 70 1.8% -0.1% 127
★ Belle Face Amagasaki 3,397 3,403 5.8% 5 -5 -0.1% -0.1% 35★ Belle Face Miyamachi 1,511 1,580 6.3% 68 - - - -★ Belle Face Bansui-Street 841 882 6.2% 40 - - - -
35,551 37,345 - 1,793 - - - -
■ Cross Gate 11,270 13,500 6.4% 2,229 0 0.0% 0.0% 15111,270 13,500 - 2,229 - - - -
332,625 327,136 - -5,489 - - - -
ResidentialProperties
Residential Properties Total
OthersOthers Total
Total
End of the 21st Fiscal Period Change from the previous Period
RetailFacilities
Retail Facilities Total
Type Area Property
(Following are for reference)
Appraisal value by type (*2) (*3)
Appraisal Value List at the end of FP21 ②
Note 1: For the Kobe Momoyamadai SC (land) and Home Center Musashi Sendai Izumi (land), the appraisal value and CR are not calculated based on the direct capitalization method.Note 2: For fair comparison with the previous period, figures for “CR” in “Appraisal value by Type” are calculated excluding the Kobe Momoyamadai SC (land) and Home Center Musashi Sendai Izumi (land) for which the CR is
not calculated based on the direct capitalization method and also excluding the six properties acquired during FP21.Note 3: Figures for “CR” in “Appraisal value by Type” are calculated on a weighted average basis and rounded to the first decimal place.Note 4: “Belle Face Mishuku” was renamed from “LIOS Mishuku” as of October 1, 2012.
52
13,500
5,000
0
10,000
20,000
30,000
40,000
50,000
60,000
2012 2013 2014 2015 2016 2017 2018 2019
Refinanced in FP22
Refinanced in FP22
Bond
Loan
Financial Institution Limit
Aozora Bank, Ltd. 7,500 28.3 %Sumitomo Mitsui Trust Bank, Limited. 6,000 22.6 %Mitsubishi UFJ Trust and Banking Corporation 6,000 22.6 %The Bank of Tokyo-Mitsubishi UFJ, Ltd. 4,000 15.1 %Mizuho Corporate Bank, Ltd. 3,000 11.3 %
Ratio
Financial Institution Outstanding Financial Institution Outstanding
Sumitomo Mitsui Trust Bank, Limited 24,000 16.7 % ORIX Bank Corporation 3,500 2.4 %
Sumitomo Mitsui Banking Corporation 23,556 16.4 % THE NISHI-NIPPON CITY BANK, LTD. 1,800 1.2 %
Mitsubishi UFJ Trust and Banking Corporation 16,900 11.7 % Mitsui Life Insurance Company Limited 1,000 0.7 %
Development Bank of Japan Inc. 16,313 11.3 % Hyakugo Bank, Ltd. 1,000 0.7 %
National Mutual Insurance Federation of
Agricultural Cooperatives10,000 6.9 % Shizuoka Bank, Ltd. 1,000 0.7 %
Norinchukin Bank 8,500 5.9 % Taiyo Life Insurance Company 1,000 0.7 %
Mizuho Corporate Bank, Ltd. 5,800 4.0 % Fuji Fire and Marine Insurance 1,000 0.7 %
Shinkumi Federation Bank 5,800 4.0 % THE KAGAWA BANK, Ltd. 1,000 0.7 %
Aozora Bank, Ltd. 5,700 4.0 % Shimane bank, Ltd. 900 0.6 %
Resona Bank, Limited 5,300 3.7 % THE MINATO BANK, LTD. 600 0.4 %
Shinsei Bank, Limited 4,400 3.1 % Toho Bank, Ltd. 500 0.3 %
Bank of Fukuoka, Ltd. 4,000 2.8 % ShinGinko Tokyo, Ltd. 500 0.3 %
Ratio Ratio
49.7 49.0 49.6 49.6
45
50
55
FP18 End
(Feb. 2011)
FP19 End
(Aug. 2011)
FP20 End
(Feb. 2012)
FP21 End
(Aug. 2012)
1.7
2.8
2.4 2.5
1.0
1.5
2.0
2.5
3.0
FP18 End
(Feb. 2011)
FP19 End
(Aug. 2011)
FP20 End
(Feb. 2012)
FP21 End
(Aug. 2012)
Average years of outstanding borrowing period
History of total asset based LTV
Commitment Lines
Credit Ratings
List of Lenders
Financial Data
4 yrsAug. 12, 20101.44%15,000Unsecured Investment Corporation Bond No. 2
5 yrsNov. 18, 20101.58%15,000Unsecured Investment Corporation Bond No. 3
3 yrsJan. 27, 20111.40%15,000Unsecured Investment Corporation Bond No. 4
2.08%
Interest
3 yrs
Period
12,000
Balance
Feb. 25, 2010Unsecured Investment Corporation Bond No. 1
Issued
Investment Corporation Bonds
Debts outstanding according to Maturity
(years)
(%)
Total: 24 institutions,144,068 million yen
Total: 27,000 million yen
(millions of yen)
(millions of yen)
Rating outlook: StableIssuer rating: A+R&I
Rating outlook: StableLong-term senior debt rating: AA-JCR
Outlook: StableLong-term rating: A-, Short-term rating: A-2S&P
(millions of yen)
Total: 5 institutions,26,500 million yen
(millions of yen)
53
Individuals, etc. Finance Securities
Other Corp. Overseas
Investment Units
20th period284,434 units
21th period284,434 units
Note 1. In the Top 10 Unitholders table, the second decimal place of the ownership share is cut off, except for “Change” data
Note 2. Metlife Alico JPY. and National Mutual Insurance Federation of Agricultural Cooperatives were not among the 10 unitholders in the 21 th fiscal period, so the numbers of units and share for theprevious fiscal period are not shown.
UnitsShare
(%)Units
Share
(%)Units
Share
(%)Individuals, etc. 56,607 19.9 58,270 20.5 1,663 2.9
Finance 146,575 51.5 145,021 51.0 -1,554 -1.1
Major Banks 5,950 2.1 2,354 0.8 -3,596 -60.4
Regional Banks 19,899 7.0 14,105 5.0 -5,794 -29.1
Trust Banks 90,255 31.7 96,638 34.0 6,383 7.1
Life Insurance 15,082 5.3 19,183 6.7 4,101 27.2
Non-life Ins. 6,515 2.3 4,201 1.5 -2,314 -35.5
Others 8,874 3.1 8,540 3.0 -334 -3.8
Securities 3,924 1.4 6,221 2.2 2,297 58.5
Other Corp. 7,216 2.5 7,649 2.7 433 6.0
Overseas 70,112 24.6 67,273 23.7 -2,839 -4.0
Total 284,434 100.0 284,434 100.0 - -
Unitholder
Categories
FP20 FP21 Change
UnitholdersShare
(%)Unitholders
Share
(%)Unitholders
Share
(%)Individuals, etc. 17,863 97.0 17,837 97.1 -26 -0.1
Finance 78 0.4 74 0.4 -4 -5.1
Major Banks 2 0.0 1 0.0 -1 -50.0
Regional Banks 17 0.1 16 0.1 -1 -5.9
Trust Banks 13 0.1 13 0.1 0 0.0
Life Insurance 7 0.0 8 0.0 1 14.3
Non-life Ins. 4 0.0 3 0.0 -1 -25.0
Others 35 0.2 33 0.2 -2 -5.7
Securities 25 0.1 21 0.1 -4 -16.0
Other Corp. 260 1.4 257 1.4 -3 -1.2
Overseas 182 1.0 185 1.0 3 1.6
Total 18,408 100.0 18,374 100.0 -34 -0.2
FP21 ChangeUnitholder
Categories
FP20 UnitsShare
(%)Units
Share
(%)Units
Share
(%)Japan Trustee Services Bank, Ltd.
(Trust accounts)35,440 12.4 46,799 16.4 11,359 32.1
Trust & Custody Services Bank, Ltd.
(Securities investment trust accounts)24,472 8.6 20,846 7.3 -3,626 -14.8
The Nomura Trust and Banking Co., Ltd.
(Investment accounts)20,585 7.2 16,895 5.9 -3,690 -17.9
JP MORGAN CHASE BANK 385174 11,543 4.0 11,447 4.0 -96 -0.8
The Master Trust Bank of Japan, Ltd.
(Trust accounts)6,873 2.4 9,021 3.1 2,148 31.3
ORIX Life Insurance Corporation 8,905 3.1 8,905 3.1 0 0.0
NOMURA BANK (LUXEMBOURG)
S.A.6,554 2.3 8,168 2.8 1,614 24.6
Metlife Alico JPY (Note 2) - - 4,000 1.4 - -
The Asahi Fire & Marine Insurance Co.,
Ltd.3,924 1.3 3,924 1.3 0 0.0
National Mutual Insurance Federation of
Agricultural Cooperatives (Note 2)- - 3,901 1.3 - -
FP20 FP21 Change
Top 10 Unitholders
54
ORIX JREIT Inc. (OJR)
ORIX Asset Management Corporation(OAM)
Paid-in capital: ¥100 million
Asset management agreement
Advisory agreement(provision of information
relating to real estatetransaction , etc.)
Asset management company
Investment (100%)
Investment(100%)
・Engages in diversifiedbusinesses centering on thefinancial and real estate sectors
ORIX Corporation
・Core company of the Group’s real estatebusiness
・Leading the industry in development andtransaction of office buildings, logisticsfacilities, condominiums, etc.
ORIX Real Estate Corporation
Su
pp
lyo
fp
rop
ert
ies
(pip
elin
e)
Su
pp
lyo
fp
rop
ert
ies
(pip
elin
e)
Transactions with Sponsors and Compliance System
Avoid the excessive competition of bidding and acquire properties at appropriate prices from our sponsors
Compliance system for property sales and acquisitions
DraftInvestment andAsset Management
Department
Risk Managementand Compliance Department
RiskManagement
and ComplianceCommitteeJointly conduct DD*
Report DD* results
Property sale/acquisitiondecided
OJR’s Board of Directors(predominantly comprised
of supervisory directorswith no relationship
of interest)
OAMBoard ofDirectors
*Due Diligence
Inspection and assessment of properties from physical, legal and economic perspectives.
■OJR’s Board of Directors
・Comprised of 1 Executive Director and 3 SupervisoryDirectors (a real estate appraiser, lawyer and certifiedpublic accountant with no relationship of interest)
・Acquisitions from and sales to interested parties musthave majority support of the supervisory directors
■Asset Management Company (OAM)
・Conducts thorough due diligence* in accordance tovarious in-house regulations.
・If problems pertaining to compliance are detected, thedirector in charge of the Risk Management andCompliance Department will offer advice to discontinue,rectify, change, etc.
55Organization of OAM
Corporate PlanningDepartment
Executive Officer
Shareholders’ Meeting
Risk Management andCompliance Committee
Finance and AccountingDepartment
Independent PublicAccountants
Board of Directors
President and CEO
Investment andAsset Management Department
Executive Officer
Risk Management andCompliance Department
Internal AuditDepartment
Corporate Auditor
Executive Officer
Established specialized teams for each sector・3 teams for offices・1 team for logistics and retail facilities・1 team for residential properties
56
Numerical Data・Numerical data is rounded down to the nearest whole number, except that percentages for occupancy rates,
interest-bearing debt ratio, etc., are rounded to the first decimal place.
Real Estate Glossary・The “Greater Tokyo area” refers to the three prefectures (Kanagawa, Saitama and Chiba) in addition to Tokyo.・“Acquisition price” is the sale price recorded in the sale agreement, etc. with fractions rounded down to the nearest
whole number. The price does not include consumption tax or other expenses related to acquisition (brokerage fees,taxes and public charges).
・“Occupancy rate” records the total leased area as a proportion of the total leaseable area, as of the last day of eachmonth.
・“Property size (total floor area)” refers to the total floor space of the buildings, regardless of the equity stake of thecompany in the property.
・The Kobe Momoyamadai Shopping Center (land) and Home Center Musashi Sendai Izumi (land) are not included in“Property size” and “Building age.”
・Calculation of Leasing NOI YieldLeasing net operating income (NOI) yield = leasing NOI (rental operating revenues – rental operating expenses +depreciation + finance lease cost) ÷acquisition priceRental operating revenues and rental operating expenses include leasing sales amount and leasing cost of salesamount respectively.Leasing NOI is calculated by adding back the leasing cost of sales amount to rental operating income (rentaloperating revenue – rental operating expenses).
Finance Glossary・“LTV (unitholders’ equity base)” is obtained by dividing interest-bearing debts outstanding by the total amount of
interest-bearing debts outstanding and unitholders’ capital.・“LTV (total asset base)” is obtained by dividing interest-bearing debts outstanding by total assets .・“Average interest rate” represents the weighted-average interest rate (annual rate). With regard to the average
interest rate on the portion of borrowings for which the company concluded interest-rate swap agreements to hedgeagainst interest rate fluctuation risk, the company used weighted-average interest rates adjusted for the effect ofrelevant interest-rate swaps.
・“Fixed-interest debt ratio” is obtained by dividing outstanding fixed-rate interest-bearing debts by outstandinginterest-bearing debts.
Terminology
5757
This document was provided and released solely with the intent of providing information. Thisdocument should not be construed as an offer or solicitation to buy or sell any specific product,including investment units.
This document is not a disclosure document or statement of financial performance required by, orbased on, Japan’s Financial Instruments and Exchange Law, Investment Trust and InvestmentCorporation Law, related cabinet orders, cabinet office ordinances or rules, the rules governingcompanies listed on the Tokyo Stock Exchange, or any other applicable rules.
This document contains forward-looking statements, including forecasts of financial position, results ofoperations, and business-related matters, as well as statements related to the plans and goals of themanagement of ORIX Asset Management Corporation (OAM), the investment trust managementcompany that provides asset management services for OJR. However, there are a number of knownand unknown risks and uncertainties that can cause actual results or OJR’s performance to differmaterially from any explicit or implicit forecasts contained herein. These forward-looking statementsalso rest on a number of assumptions with regard to OJR’s present and future management strategies,as well as the political and economical environments in which OJR will conduct its future businessoperations.
Although the information contained in this document is the best available at the time of publication, noassurances can be given regarding the accuracy, certainty, validity or fairness of this information. Thecontent of this document can be modified or withdrawn without prior notice.