Semi-Annual Report. 11th Fiscal Period From April 1, 2011 to September 30, , Shinbashi, Minato-ku, Tokyo

Transcription

1 Semi-Annual Report 11th Fiscal Period From April 1, 2011 to September 30, , Shinbashi, Minato-ku, Tokyo.

2 I. Outline of the Investment Corporation Financial Highlights Investment highlight The 11th fiscal period (ended September 2011) 7th period (ended September 2009) 8th period (ended March 2010) 9th period (ended September 2010) Operating revenues 3,494 million 3,528 million 4,618 million Operating income 1,212 million 1,301 million 1,580 million Net income 480 million 679 million 13,005 million (*663) 10th period (ended March 2011) 5,632 million (*5,607) 680 million (*2,379) -2,785 million (*1,430) 11th period (ended September 2011) 5,632 million 2,287 million 1,465 million Total assets 111,914 million 114,322 million 165,441 million 159,804 million 163,975 million Net assets 60,034 million 66,236 million 90,245 million 86,735 million 86,770 million Net assets per unit 358, ,862 67,813 65,175 65,202 Capital adequacy ratio at the end of the period Status of distributions 53.6% 57.9% 54.5% 54.3% 52.9% * (Note) Figures for the 9th period do not include gains on negative goodwill, and figures for the 10th period do not take the transfer of properties and impairment losses, etc. into account. Total distributions 480 million 679 million 723 million 1,430 million 1,465 million Distribution per unit 2,870 2, ,075 1,101 Payout ratio 100.0% 99.8% 4.7% 100.0% The payout ratio for the 10th period is not stated, as net income per unit is negative. Operating revenues Net income (million yen) 6,000 * 5,607 5,632 5,632 5,733 (million yen) 2,000 5,000 4,000 3,494 3,528 4,618 1,500 * 1,430-2,785 1,465 1,530 3,000 2,000 1,000 1, * , th period 8th period 9th period 10th period 11th period 12th period (forecast) 0 7th period 8th period 9th period 10th period 11th period 12th period (forecast) * (Note) Figures for the 9th period do not include gains on negative goodwill, and figures for the 10th period do not take the transfer of properties and impairment losses, etc. into account. Figures in parentheses are those in formal results. Net assets per unit (yen) 400, ,463 Distribution per unit (yen) 4, , ,862 3,000 2,870 2, ,000 2, ,000 89,615 70,965 67,813 65,175 65,202 1, ,075 1,101 1, th period 8th period 9th period 10th period 11th period 0 7th period 8th period 9th period 10th period 11th period 12th period (forecast) *We completed a four-for-one investment unit split in July Net assets per unit and distribution per unit will be the values after the split from the ninth fiscal period ended September For reference purposes, net assets per unit and distribution per unit that are a quarter of historical values are listed (bar graphs in orange). 1

3 Japan Rental Housing Investment Inc. To Our Unitholders I would like to begin by expressing my sincere appreciation for the ongoing support that all unitholders have shown Japan Rental Housing Investments Inc. over the years. On behalf of the Investment Corporation, I also want to take this opportunity to convey my heartfelt sympathy once again to all those affected by the Great East Japan Earthquake and the subsequent aftershocks. During the fiscal period under review, the Japanese economy suffered weak consumption and declines in the production and export of goods due to domestic supply chain blockages in many regions following the Great East Japan Earthquake and the subsequent accident at the Fukushima Daiichi Nuclear Power Plant of The Tokyo Electric Power Company. While the economy has finally begun to show signs of recovery as supply chains are restored, the downside risks for the Japanese economy remain concerns, given the prolonged appreciation of the yen and new risks that emerged from the second half of July, such as the economic slowdown in Europe and the United States and the worsening of the sovereign debt problem in certain European countries. Responding to these circumstances, Japan Rental Housing Investments Inc. ( the Investment Corporation ) improved the average occupancy rate of assets under management during the period by 1.0 percentage point from the previous fiscal period, to 95.7%, the result of a range of initiatives undertaken from the beginning of the period, to benefit from its merger with the former Prospect Reit Investment Corporation in July 2010 and additional improvements in the quality of its portfolio of investments. With respect to new properties, we acquired two properties, in Ota-ku and Taito-ku, Tokyo, for 4.1 billion in September The properties feature excellent profitability, size, location, and competitive advantage. We also reduced financial costs by refinancing borrowings worth 13.8 billion in June and made progress in cutting expenses by revising PM fees. Consequently, our asset management operations generally remained solid and in line with our plan. As a result, net income for the fiscal period under review amounted to 1,465 million, and we have decided to increase distributions per investment unit by 51 (4.9%) from our initial plan, to 1,101 (compared to 1,075 in the previous fiscal period). The Investment Corporation will remain focused on continuing to expand its assets and stabilizing revenues from investment properties. We respectfully ask for the continued support and encouragement of our valued investors. Toshiya Kuroda Executive Director Japan Rental Housing Investments Inc. Contents I Outline of the Investment Corporation Financial Highlights 1 To Our Unitholders 2 Management Performance in the 11th Period and Management Policies for the 12th Period 3 Focused Strategies in the 11th Period and Results 5 Two properties acquired in the 11th period 6 Portfolio of Japan Rental Housing Investments Inc. 7 Outline of Japan Rental Housing Investments Inc. 9 Outline of the Asset Management Company 11 Financial Strategy 12 Growth Strategy 13 Status of Portfolio 15 Portfolio Roster 17 Portfolio Properties 21 Unitholder Information 30 II Asset Management Report Overview of Asset Management 32 Overview of the Investment Corporation 41 Investment Assets under Management 43 Capital Expenditure for Properties in the Portfolio 54 Expenses and Liabilities 55 Transactions during the Period under Review 57 Financial Status 58 Others 58 Financial Section 59 2

4 Management Performance in the 11th Period and Management Policies for the 12th Period Yutaka Higashino President and CEO Mi-Casa Asset Management Inc. On behalf of Japan Rental Housing Investments Inc. ( the Investment Corporation ), please let me express my sincere gratitude for the continued support of our unitholders Mi-Casa Asset Management Inc., an asset management company of the Investment Corporation, will explain here its management performance in the 11th period and management policies for the 12th period. Management Performance in the 11th period (April 1, 2011 to September 30, 2011) In the fiscal period under review, to further benefit from the merger with the former Prospect Reit Investment Corporation ( Former PRI ), which we concluded in July 2010, and improve portfolio quality, we focused on the following four points as our key strategies: 1. Maintaining and improving occupancy rates (strengthening the focus on priority properties, etc.); 2. Acquiring new properties; 3. Reducing property-related and other expenses; and 4. Improving the refinancing terms of borrowings of 13.8 billion. As a result, net income increased 67 million from the initial plan, to 1,465 million, and we were able to achieve an increase of 51 (4.9%) in the distribution per investment unit from the initial plan, to 1,101. Major Financial Data:Performance in the 11th Period and Plan for the 12th Period Million yen 6,000 5,000 4,000 3,000 2,000 1, ,562 5,632 5,733 2,280 2,287 2,355 Plan for the 11th period Performance in the 11th period Plan for 12th period 1,397 1,465 1,530 Operating revenues Operating income Net income Distribution per unit:performance in the 11th Period and Plan for the 12th Period Yen 1,200 1,150 1,100 1,101 1,150 1,050 1,050 1,000 Plan for the 11th period Performance in the 11th period Plan for the 12th period 3

5 1. Maintaining and Improving Occupancy Rates (Strengthening the Focus on Priority Properties, etc.) The Investment Corporation strengthened the focus on priority properties by identifying them on a monthly basis to maintain and improve occupancy rates, as in the previous fiscal period. We also bolstered our management system, including the human element, by taking steps such as carefully investigating individual causes of long-term vacancies by promptly figuring out the situation of individual properties and fully enforcing a three-week rule for original state restoration work to minimize opportunity losses (swiftly re-commercializing vacant rooms). We also focused on improving the quality of properties by upgrading and renovating rooms on a large scale when re-commercializing them. As a result, the average occupancy rate during the period of six months rose to 95.7%, up 1.0 point from 94.7% in the previous financial period. It also remained stable between 95.4% and 96.2% on a monthly basis. 2. Acquisition of New Properties The management policy of the Investment Corporation for the foreseeable future is to 1) acquire new properties in the greater Tokyo metropolitan area, centering on the 23 wards of Tokyo, and 2) replace properties owned by selling certain small properties ( 500 million or less per property) located in areas other than the greater Tokyo metropolitan area and acquire large first-class local buildings ( 1 billion or more per property in principle). Based on this policy, we acquired two properties (total appraisal value of 4,440 million) located in Ota-ku, Tokyo (a studio-type property located a four-minute walk from the Heiwajima Station of Keihin Kyuko Main Line) and Taito-ku, Tokyo (a family-type property located four-minute walk from the Iriya Station of subway Hibiya Line), for a total of 4,110 million on September 20, These two properties are expected to contribute to income from the next fiscal period. We borrowed a total of 4.0 billion (a term of five years) from four existing relationship banks of the Investment Corporation as funds to acquire the two properties above, using syndicated loans originated by the Bank of Tokyo-Mitsubishi UFJ, Ltd., which was the arranger and agent. 3. Reduction of Property-related Expenses and Others After the merger with the Former PRI, the Investment Corporation focused on improving the efficiency of our property management (PM) activities and reducing costs in the fiscal period under review, following the reduction of BM expenses in the previous fiscal period. It substantially reduced the number of PM companies, from 19 at the time of the merger to 11 as of October 1, As a result, we are also likely to reduce PM fees by around 26 million per period after the next fiscal period. Not only propertyrelated expenses such as appraisal expenses, but selling, general, and administrative expenses such as general administration and asset custody expenses are also expected to be reduced by approximately 17 million. per period as a result of our efforts to reduce costs. 4. Improvement of Refinancing Terms of Borrowings of 13.8 billion The Investment Corporation was able to reduce financial expenses (by around 27 million compared to the initial plan for the fiscal period under review) and extend borrowing periods (approximately 11.6 billion was refinanced with a term of five years, and approximately 2.1 billion was refinanced with a term of three years) for existing borrowings of approximately 13.8 billion that were scheduled to come due on June 22, 2011, thanks to support of the Bank of Tokyo-Mitsubishi UFJ, Ltd., which was the arranger and agent, and other existing relationship banks. As a result of the refinancing, the average borrowing period of the Investment Corporation was extended from 3.1 years before the refinancing to 3.7 years, and the long-term interest-bearing debt to total interestbearing debt ratio improved from 80.2% to 84.1%. Repair work for damages caused by the Great East Japan Earthquake that occurred on March 11, 2011 to properties owned by the Investment Corporation was almost completed during the fiscal period under review. As we had recorded an extraordinary loss (provision of reserve for disaster losses) of 63 million in the previous fiscal period in preparation for repair work expenses that arose in the fiscal period under review, the impact on the closing accounts in the fiscal period under review was limited. Management Policies for the 12th Period (October 1, 2011 to March 31, 2012) Given concerns about the impact on the Japanese economy and the financial markets of the economic slowdown in Europe and the United States, including the sovereign debt problem in certain eurozone countries and the prolonged appreciation of the yen, we believe that it is necessary to closely monitor future developments. In the brokerage market for rental residential properties, brokerage trading is increasing amid rising real estate prices, reflecting the stable performance of rental residential properties and firm demand for quality properties. For the next fiscal period, real estate prices are expected to remain firm, given a limited supply of new quality residential properties to the market, among other factors. In addition, new contracted rents and occupancy rates are expected to remain stable in quality residential properties and properties owned by REITs. In this environment, with respect to the expected asset management operations of the Investment Corporation for the next fiscal period, we forecast operating revenue of 5,733 million, net income of 1,530 million, and distribution per unit of 1,150. We will continue our efforts to increase profit available for distribution through higher rental revenues by maintaining occupancy rates and improving management efficiency (strengthening the focus on priority properties, etc.), as well as taking steps to acquire new properties to improve the quality of our portfolio. As we pursue these initiatives, I respectfully ask for your continued support. 4

6 I. Outline of the Investment Corporation Focused Strategies in the 11th Period and Results (1) Maintenance and Improvement of Occupancy Rates (Strengthening the Focus on Priority Properties, etc.) Changes in Period-end Occupancy Rate (%) Occupancy rate (%) The average occupancy rate during the six-month period rose to 95.7%, up 1.0 point from 94.7% in the previous financial period (it also remained stable between 95.4% and 96.2% on a monthly basis) through measures such as selecting priority properties on a monthly basis and strengthening the focus on these properties, carefully investigating the individual causes for long-term vacancies, and fully enforcing a three-week rule to minimize opportunity losses. As a result, rental revenues increased 5,632 million (0.6%). 90 9th period 10th period 11th period (2) Acquisition of New Properties (two properties described on the next page) We acquired two properties located in Heiwajima (Ota) and Ueno (Taito) in the 23 wards of Tokyo for approximately 4.1 billion on September 20, Property number O F Property name Joyce Court Glana Ueno Area classification Three major metropolitan areas (Ota, Tokyo) Three major metropolitan areas (Taito, Tokyo) Category of residential rental properties Acquisition price (A) Appraisal value (B) (A) (B) Actual NOI yield Studio 3,010 million yen 3,210 million yen 200 million yen 6.40% Family 1,100 million yen 1,230 million yen 130 million yen 6.82% Total 4,110 million yen 4,440 million yen 330 million yen 6.51% (Note 1) The three major metropolitan areas mean the Kanto metropolitan area excluding the seven wards of central the Tokyo, Chukyo and Kinki metropolitan areas. (Note 2) The appraisal values of the two properties acquired are those at the time of acquisition. (3) Reduction of Property-Related Expenses and Others We focused on improving property management (PM) and building management services, etc. from the standpoint of improving management efficiency and reducing costs. As a result, we consolidated the number of property management companies from 19 at the time of the merger to 11 and anticipate cost savings in the items listed below. (Unit: thousand yen) 10th period Reduction 11th period Reduction 12th period Expected reduction 13th period Expected reduction PM fees BM expenses Appraisal expenses 4 SG&A expenses * Excluding Appraisal expenses Total (4) Improvement of Refinancing Terms of Borrowings of 13.8 billion Weighted average borrowing period by fiscal period (Year) Borrowing period (year) 3.74 For borrowings of 13,890 million that were to come due on June 22, 2011, we were able to reduce the average interest-rate spread by 0.7 points from the level at the time of refinancing in June/July Also with respect to the borrowing period, we extended it to five years for 11,690 million of the total amount and to three years for 2,198 million. The overall average borrowing period came to 3.7 years. We also raised 4,000 million with almost the same terms (a term of five years) as funds to acquire the two properties mentioned above. 0 8th period 9th period 10th period 11th period 5

7 I. Outline of the Investment Corporation Two properties acquired in the 11th period Japan Rental Housing Investment Inc. 1) Joyce Court (Ota, Tokyo) Joyce Court is a condo building (154 units) aimed at single occupants, located four minutes on foot from the Keikyu Main Line s Heiwajima Station, where both limited express and express trains stop. In the surrounding area are daily goods stores, a post office, parks, a hospital and other spots that make it a highly convenient location for living. The property is highly competitive with its accessibility to the city center (about 20 minutes from the nearest station) and close proximity to Haneda Airport, and it is also well positioned to Kawasaki Station and Yokohama Station in Kanagawa Prefecture. Entrance hall Property number Location Asset type Type Main use Area O Omori-Nishi, Ota, Tokyo Real estate Studio Residence Three major metropolitan areas Total number of leasable units 154 Total leasable floor area 6, m 2 Structure/number of stories RC/SRC, 1 basement floor, 14-story building with flat roof Time of construction November 24, ) Glana Ueno (Taito, Tokyo) Glana Ueno is a condo building (36 units) aimed at families, located four minutes on foot from Iriya Station on the Tokyo Metro Hibiya Line. Factors such as accessibility to the city center (around 15 minutes from the nearest station), facilities for convenient living nearby, and brilliance of the interior and exterior finish as well as facility standards make it an appealing option for DINK (double-income-no-kids) couples and families who value the ease of living in the heart of the city. Entrance hall Property number F Location Kita-Ueno, Taito, Tokyo Asset type Real estate Type Family Main use Residence, garage Area Three major metropolitan areas Total number of leasable units 36 Total leasable floor area 2, m 2 Structure/number of stories RC, 13-story building with flat roof Time of construction August 18,

8 I. Outline of the Investment Corporation Portfolio of Japan Rental Housing Investments Inc. Established stable portfolios through diversified investment in three rental apartment categories (studio, family, and premium properties) throughout Japan. Investments (number of properties) by area Hokkaido15 Entire Portfolio: 183 properties Shinetsu 3 Tohoku properties in the 23 words in Tokyo Of them, 24 properties in the seven wards of central Tokyo and 35 properties in other 16 wards Itabashi Adachi Chugoku 2 Tokai 23 Kanto 87 Kita Nerima Katsushika Arakawa Toshima Nakano Bunkyo Taito Sumida Suginami Shinjuku Chiyoda Edogawa Shibuya Chuo Koto Setagaya Minato Meguro Shinagawa Kyushu 7 Kinki 36 Ohta The Investment Corporation invests in highly profitable properties that meet market needs mainly in large urban areas centering on central Tokyo and three major metropolitan areas, by analyzing needs tailored to local characteristics and tenant lifestyles. Since rental condominiums are less susceptible to business fluctuations than offices, stable revenues are expected. Rent and occupancy rates remained relatively stable in residential REITs even under the recent economic conditions. 7

9 Japan Rental Housing Investment Inc. Portfolio Strategy Breakdown of investments according to investment policy 1) The basic investment policy of the Investment Corporation is to acquire a combination of residential property types in geographically diversified locations throughout Japan. By rental apartment category By investment target area Family % Studio % Other major cities 4) Seven wards of central Tokyo 2) 0-25% 10-30% Premium 20% or less Three major metropolitan areas 3) 50 80% (Note 1) The breakdowns are based on acquisition prices. (Note 2) The seven wards of central Tokyo are Chiyoda, Chuo, Minato, Shinjuku, Shibuya, Setagaya, and Meguro. (Note 3) The three major metropolitan areas are the Kanto metropolitan area, excluding the seven wards of central Tokyo, the Chukyo metropolitan area, and the Kinki metropolitan area. (Note 4) Other major cities mean Sapporo, Sendai, Niigata, Shizuoka, Hamamatsu, Hiroshima, Kitakyushu and Fukuoka metropolitan areas and core cities with a population of 300,000 or more. Investment in three rental apartment categories The Investment Corporation s policy is to invest by selecting real estate that will generate a stable income and by combining properties. The selection is made from three rental apartment categories in the nation that we have defined based on user characteristics. Studio type Family type Premium type Household Single Family Type of room Studio type Family type Upper-middle class DINKS, etc. Compact type less than 100 m 2 Luxury type over 100 m 2 Location/Environment Less than a 5-minute walk from the nearest major transportation facility Less than a 12-minute walk from the nearest major transportation facility, or availability of parking lots within the premises Close to the office Good environment Located in a metropolitan area Investment area Nationwide Nationwide Metropolitan areas 8

10 I. Outline of the Investment Corporation Outline of Japan Rental Housing Investments Inc. Investment Corporation Structure General Administrator Asset Custodian Transfer Agent Special Account Administrator (B) The Investment Corporation Japan Rental Housing Investments Inc. (D) Special Account Administrator Mizuho Trust & Banking Co., Ltd. Mitsubishi UFJ Trust and Banking Corporation Unitholders Meeting Board of Directors (E) General Administrator regarding Operation of Institutions General Administrator Heiseikaikeisha Tax Corporation (C) Executive Director : Executive Director : Supervisory Director : Supervisory Director : Supervisory Director : Supervisory Director : Toshiya Kuroda Robert Zulkoski Kouhei Yabuta Jun Nagamine Danforth Thomas Kiyohiko Tsukada Nijubashi Partners Attorney: Kazuhiro Kawamura Attorney: Makoto Nei Real Estate Agencies in Alliance HASEKO LIVENET, Inc. TAKARA Inc. TAKARA ESTATE SERVICE Co., Ltd. MAINICHI COMNET Co., Ltd. Miyoshi-Fudosan Inc. (F) Accounting Auditor Grant Thornton Taiyo ASG (A) The Asset Management Company Mi-Casa Asset Management Inc. (A) Asset management entrustment (B) General administration entrustment/ Asset custody entrustment/ Investment unit agency entrustment Agreement on special account administration (C) General administration entrustment (D) Agreement on special account administration (E) General administration entrustment regarding operation of institutions (F) Business collaboration agreement Credit Ratings Name Rating Agency Rating Long-term senior debt rating JCR (Japan Credit Rating Agency, Ltd.) A- (Direction: Stable) Issuer Rating R&I (IRating and Investment Information, Inc.) BBB (Direction: Positive) Outline Name Japan Rental Housing Investments Inc. Representative Executive Director: Toshiya Kuroda Executive Director: Robert Zulkoski Address , Shinbashi, Minato-ku, Tokyo Contact for Administration Mi-Casa Asset Management Inc. TEL: Fiscal Period Six months from April 1 to September 30, and from October 1 to March 31 of the following year, respectively History October 7, 2005 November 9, 2005 June 22, 2006 January 21, 2009 July 1, 2010 re-plus residential investment inc. was established and registered under Article 166 of the Investment Trust and Investment Corporation Act. Registration under Article 187 of the Investment Trust and Investment Corporation Act was submitted. (Registration Number: No. 45, Director of the Kanto Local Finance Bureau) The Investment Corporation was listed on the Real Estate Investment Trust Section of the Tokyo Stock Exchange. (Securities Code: 8986) The corporation name was changed to Japan Rental Housing Investments Inc. The Investment Corporation merged with Prospect Reit Investment Corporation. 9

11 Japan Rental Housing Investment Inc. Cooperation with the Master Group The Investment Corporation and Mi-Casa Asset Management Inc. ( Asset Management Company ) built a cooperative framework with the Master Group 1). As of September 30, 2011, the Master Group was the largest investor, owning approximately 43% of investment units issued by the Investment Corporation. As of September 30, 2011, the Master Group owned 98% of the stock issued by the Asset Management Company. The Master Group also assigned external board directors to provide management support to the Investment Corporation. The Investment Corporation and the Asset Management Company will continue to expand the scale of assets, stabilize the revenues of individual investment properties, and strengthen their financial position based on cooperative ties with the Master Company Group. (As of September 30, 2011) Advice OCM Netherlands Opportunities Coöperatief U.A. (Netherlands) 100% 100% AppleRingo Holdings B.V. AppleRingo Investments B.V. Approx. 87% Approx. 11% Ringo Residential Tokutei Mokuteki Kaisha Approx. 4% Total approx. 43% Approx. 40% Total approx. 98% Japan Rental Housing Investments Inc. Asset management entrustment Mi-Casa Asset Management Inc. Approx. 2% The Bank of Tokyo-Mitsubishi UFJ, Ltd./ Sumitomo Mitsui Banking Corporation (Note 1) Master Group includes OCM Netherlands Opportunities Coöperatief U.A. (hereinafter the Master Company ) and the subsidiaries directly or indirectly wholly owned by the Master Company. The Master Company receives advice from Oaktree Capital Management, L.P. (hereinafter Oaktree ). Oaktree, which provides advice to the Master Company, is a leading investment management corporation listed on the GSTrUE (Goldman Sach s Tradable Unregistered Equity OTC Market), managing approximately $79.5 billion (as of June 30, 2011) in assets and providing management and advice in relation to alternative and cutting-edge investments. Oaktree manages and provides advice on investment products, including distressed debt, high-yield debt, convertible bonds, private equity (including investments in energy and infrastructure), real estate, securities in emerging markets, Japanese stocks and mezzanine finance, emphasizing opportunistic, solid risk management. Headquartered in Los Angeles, Oaktree was established in 1995 by a team formed in the mid-1980s. It has 13 offices and approximately 770 employees in 10 countries worldwide (as of June 30, 2011). It has also achieved good results from diverse investment properties, including real estate investment in the Japanese market, since the establishment of its Tokyo Office in (Note 2) The percentages above are the investment ratios of investment units and shares and are rounded off to the closest whole number. 10

12 I. Outline of the Investment Corporation Outline of the Asset Management Company Mi-casa is a trade name owned by the Asset Management Company that means my home in Spanish. The Asset Management Company offers comfort and security through the residential spaces it operates, endeavoring to provide an atmosphere where tenants feel the warmth of truly being at home. The Asset Management Company believes that home is a place for direct and frank discussions an attitude it extends to its highly transparent communications with investors. Name Mi-Casa Asset Management Inc. Established February 25, 2005 Approval April 15, 2005 Building Lots and Buildings Transaction Business (Tokyo Governor (1) No ) July 15, 2005 Discretionary Transaction Agent (Minister of Land, Infrastructure and Transportation No. 40) October 4, 2005 Investment Trust Agency (Prime Minister No. 53) September 30, 2007 Registration as a Financial Instruments Firm (Registration Number: Director of the Kanto Local Finance Bureau No. 416) President & Chief Executive Officer Location of head office Business Capital Yutaka Higashino , Shinbashi, Minato-ku, Tokyo Asset management 400 million Shareholders (holding) AppleRingo Holdings B.V. Approx. 87% AppleRingo Investments B.V. Approx. 11% The Bank of Tokyo-Mitsubishi UFJ, Ltd. Approx. 1% Sumitomo Mitsui Banking Corporation Approx. 1% * The shareholding ratios above are rounded off to the closest whole number. Investment Committee Asset Management Department Shareholders Meeting Board of Directors President & Chief Executive Officer Corporate Auditors Compliance Committee Compliance Office Business Management Department Organization of Decision-making Proposal Probation Deliberation Decision Proposal Compliance Office Compliance Committee Investment Committee Board of Directors Board of Directors of the Investment Corporation Compliance Officer Compliance Officer President & Chief Executive Officer Full-time Director Executive Officer Head of Business Management Department External committee member (lawyers, certified public accountants) President & Chief Executive Officer Director Executive Officer Head of Business Management Department Head of Asset Management Department External committee member (Individuals with specialized knowledge of real estate investment) Executive Officers Supervisory Directors Proposal for acquisition and sales of properties 11 Deliberation on compliance with laws and regulations If any questions arise 1. Transactions with all related parties To the Compliance Committee 2. Transactions other than those with related parties To the Investment Committee (Or, to the Compliance Committee if the Compliance Officer deems it necessary) Unanimous decision at a meeting where two-thirds or more of the committee members are present Supporting votes from majority of the attended committee members where two-thirds or more of the committee member are present Supporting votes from majority of the attended directors where majority of the directors are present Decision Report

13 I. Outline of the Investment Corporation Financial Strategy Japan Rental Housing Investment Inc. Limit LTV to Target Levels Change in Interest-bearing Debt and LTV (Loan to Value) (million yen) 80,000 60,000 40,000 20,000 0 Short-term borrowings 1) Long-term borrowings 1) Investment corporation bonds LTV (Loan to Value) 1) ,480 9, September 30, 2006 (end of the 1st period) , , ,960 March 31, 2007 (end of the 2nd period) ,960 4,100 39, September 30, 2007 (end of the 3rd period) ,643 8,100 37, March 31, 2008 (end of the 4th period) ,744 8,100 21, September 30, 2008 (end of the 5th period) ,933 8,000 21, March 31, 2009 (end of the 6th period) ,268 7,800 27, September 30, 2009 (end of the 7th period) ,268 31, March 31, 2010 (end of the 8th period) 15, , September 30, 2010 (end of the 9th period) 13, , March 31, 2011 (end of the 10th period) 11, , September 30, 2011 (end of the 11th period) (Note 1) Short-term borrowings are loans where due dates come in less than one year. Long-term borrowings are loans where due dates come in over one year. (Long-term borrowings due within one year are included in short-term borrowings.) LTV = total interest-bearing debt at the end of the period/(total interest-bearing debt at the end of the period + unitholders capital) 100 (LTV from the 9th period after the merger = interest-bearing debt /(interest-bearing debt + unitholders capital + capital surplus + negative goodwill) 100) (Note 2) Interest-bearing debt is divided into short-term borrowings and long-term borrowings, long-term borrowings that are due within one year are included in short-term borrowings, and investment corporation bonds up to the end of the 5th period are included in long-term borrowings while those at the end of the 6th period are included in short-term borrowings as they are due within one year. (Note 3) Ratios are rounded off to the first decimal place. Amounts are rounded down to the nearest million yen. Status of Investment Units Date Number of investment units issued Number of total investment units issued Amount of unitholders capital issued (million yen) (As of September 30, 2011) Total amount of unitholders capital (million yen) October 7, December 13, ,800 18,000 8,900 9,000 June 21, ,400 61,400 18,748 27,748 April 26, ,300 95,700 18,595 46,343 May 24, ,777 97, ,307 August 28, , ,477 12,250 59,557 October 2, , ,340 6,000 65,557 June 30, , ,375 5,000 70,557 July 1, 2010 (Investment unit split) 829,125 1,105,500 70,557 July 1, 2010 (Merger) 225,300 1,330,800 70,557 Extended Repayment Terms/Diversify Repayment Dates Repayment Terms for Interest-Bearing Debt ( hundred million) 300 Loans th period (Fiscal Period Ending March 2012) 13th period (Fiscal Period Ending September 2012) 14th period (Fiscal Period Ending March 2013) 15th period (Fiscal Period Ending September 2013) 16th period (Fiscal Period Ending March 2014) 17th period (Fiscal Period Ending September 2014) 18th period (Fiscal Period Ending March 2015) 19th period (Fiscal Period Ending September 2015) 20th period (Fiscal Period Ending March 2016) 21st period (Fiscal Period Ending September 2016) 12

14 I. Outline of the Investment Corporation Growth Strategy External Growth Strategy a. Improvement of Portfolio Quality and Sustainable Growth of Asset Scale The Investment Corporation and the Asset Management Company aim to improve portfolio quality and achieving sustainable growth in asset scale, to distribute stable profits to investors over the long term by enhancing earnings power. Specifically, as our management policy for the foreseeable future, we will seek to 1) acquire new properties in the greater Tokyo metropolitan area, centering on the 23 wards of Tokyo, and 2) replace properties owned by selling small properties ( 500 million or less per property in particular) located in areas other than the greater Tokyo metropolitan area and acquiring large first-class buildings in each area ( 1 billion or more per property in principle). With respect to the pipeline of properties to acquire, the Investment Corporation and the Asset Management Company receive extensive information from a number of quarters, including real estate private funds, asset management companies of real estate investment corporations, financial institutions, real estate firms, real estate agents, and investors, as we do not belong to any particular group of real estate developers, trading companies, or financial institutions, etc. We are examining the information with a flexible approach, to enable us to acquire properties on an ongoing basis. Even if a loss arises from the sale of properties, the Investment Corporation is able to appropriate distribution deposits (approximately 8.0 billion at the end of the 11th period) based on gains on negative goodwill arising from the merger with the Former PRI on July 1, 2010 to the loss with the amount of unappropriated distribution deposits as the limit. Consequently, it is possible to avoid the impact of reduced dividends. b. Consideration of J-REIT Reorganization The Investment Corporation and the Asset Management Company continue to view mergers with other real estate investment corporations and reorganizations as important steps in our external growth strategy, making use of our experience and expertise through the merger between the Investment Corporation and the Former PRI. In light of current trends in the J-REIT market, mergers with other real estate investment corporations not only give us economies of scale through rationalization, but also enable us to rapidly diversify and expand our portfolio, as we will be able to acquire numerous properties in bulk in a short period of time. We will therefore continue to work on external growth with an eye to mergers and reorganizations, while benefiting from support such as the financial strength and real estate expertise of the Master Group. Transitional Changes of the Invested Assets Total acquisition price (million yen) Number of properties 160, , , , Total acquisition price Number of properties ,000 83,555 99, , , , , , ,675 53,468 56,401 40,000 35, December 15, 2005 (at the time of starting asset management operations) June 22, 2006 (at the time of listing) September 30, 2006 (end of the 1st period) March 31, 2007 (end of the 2nd period) September 30, 2007 (end of the 3rd period) March 31, 2008 (end of the 4th period) September 30, 2008 (end of the 5th period) March 31, 2009 (end of the 6th period) September 30, 2009 (end of the 7th period) March 31, 2010 (end of the 8th period) September 30, 2010 (end of the 9th period) March 31, 2011 (end of the 10th period) September 30, 2011 (end of the 11th period) 0 13

15 Japan Rental Housing Investment Inc. Internal Growth Strategy a. Alliances with Real Estate Agents throughout Japan The Investment Corporation has entered into a property management alliance with Haseko Livenet in connection with 115 properties located mostly in metropolitan areas. We will continue to practice high-quality property management and leasing activities in close cooperation with Haseko Livenet. We have also entered into another alliance with Mainichi Comnet for ten student studio properties located in the Kanto area of Japan. The Investment Corporation and the Asset Management Company have also concluded agreements with nine property management companies throughout Japan for the remaining 58 properties in its portfolio. Through alliances with these companies, we are accessing a powerful network of leading real estate agents with regional and property expertise, and we have established a structure for cooperative rental agency and rental management services to maintain and raise occupancy rates. Moving forward, we will continue to strengthen ties to leading real estate agencies throughout Japan, engaging in effective leasing activities tailored to the respective property type and location. This will result in higher occupancy rates, improved rent levels, reduced tenant turnover, greater use of parking facilities, and the expansion of revenue sources through the introduction of antenna facilities, among other measures. In pursuing these policies, the Investment Corporation and the Asset Management Company strive to improve profitability for specific properties and reduce costs, while also increasing the rental profitability for our overall portfolio. b. Reduction of Management Expenses The Asset Management Company seeks to increase the income of the Investment Corporation by continuing to reduce property-related expenses as well as costs related to investment management. We will also work on measures such as a further realignment of property management companies, which we have reduced to 11, a review of outsourcing expenses, and a reduction of utilities expenses, in addition to efforts to reduce costs by standardizing restitution work and shortening the re-commercialization period. We will also acquire new properties as actual real estate, rather than as beneficiary interests, as much as possible and reduce management expenses during the period by reviewing existing trust agreements. Nationwide network of PM companies * Property management companies have been changed to 11 companies listed below as of October 1, Niigata City Shinano-Tochi Corporation Okayama City Keiai Community Corporation Wide area Haseko Livenet, Inc. Sapporo Ciry Takara Inc. Morioka City VERSITY HOUSE Co., Ltd. Sendai City TOKYU COMMUNITY CORP. One-eyed Capital Advisors, Inc. Kanto area RA Asset Management Inc. Shimizu Comprehensive Development Corporation Tokyu Livable, Inc. Mainichi Comnet Co., Ltd. 14

16 I. Outline of the Investment Corporation Status of Portfolio (as of September 30, 2011) Portfolio Diversification 57,346 million yen 37.2 % Asset type 9,008 million yen 5.9 % 87,640 million yen 56.9 % Asset area 20,245 million yen 13.1 % 96,864 million yen 62.9 % 36,885 million yen 24.0 % 23 wards of Tokyo Asset scale 77,606 million yen 50.4 % Studio Family Premium Building age Seven wards of central Tokyo Three major metropolitan areas Other major cities Asset size Greater Tokyo metropolitan area Asset scale 98,030 million yen 63.7 % 24,157 million yen 15.7 % 11,187 million yen 7.3 % 35,635 million yen 23.1 % 29,429 million yen 19.1 % 24,960 million yen 16.2 % 16,861 million yen 10.9 % 66,153 million yen 43.0 % 56,309 million yen 36.6 % 43,296 million yen 28.1 % 5 years or less More than 5 years up to 10 years More than 10 years up to 15 years More than 15 years up to 20 years More than 20 years 0.5 billion or less More than 0.5 billion up to 1.0 billion More than 1.0 billion up to 3.0 billion More than 3.0 billion (Note 1) Portfolio amounts and ratios are based on pre-tax purchase prices. (Note 2) The seven wards of central Tokyo are Chiyoda, Chuo, Minato, Shinjuku, Shibuya, Setagaya, and Meguro. (Note 3) The three major metropolitan areas are the Kanto metropolitan area excluding the seven wards of central Tokyo, the Chukyo metropolitan area, and the Kinki metropolitan area. (Note 4) Other major cities means Sapporo, Sendai, Niigata, Shizuoka, Hamamatsu, Hiroshima, Kitakyushu and Fukuoka metropolitan areas and core cities with a population of 300,000 or more. (Note 5) Amounts are rounded down to the nearest million yen. (Note 6) Ratios are rounded off to the first decimal place. 15

17 Japan Rental Housing Investment Inc. Changes in Portfolio Occupancy Rate Occupancy rate by category of asset type Studio Family Premium Entire portfolio * (Reference) The dotted lines are occupancy rates excluding Hill Top Yokohama Negishi September December March 2007 June 2007 September December March 2008 June 2008 September December March 2009 June 2009 September December March 2010 June 2010 September December March 2011 June 2011 September 2011 Occupancy rate by asset area 100 Seven wards of central Tokyo 1) Three major metropolitan areas 2) Other major cities 3) Entire portfolio * (Reference) The dotted lines are occupancy rates excluding Hill Top Yokohama Negishi September December March 2007 June 2007 September December March 2008 June 2008 September December March 2009 June 2009 September December March 2010 June 2010 September December March 2011 June 2011 September 2011 Occupancy rate by building age years or less More than 5 years up to 10 years More than 10 years up to 15 years More than 15 years up to 20 years More than 20 years Entire portfolio * (Reference) The dotted lines are occupancy rates excluding Hill Top Yokohama Negishi September December March 2007 June 2007 Occupancy rate by asset size September December March 2008 June 2008 September December March 2009 June 2009 September December March 2010 June September December billion or less More than 0.5 billion up to 1.0 billion More than 1.0 billion up to 3.0 billion More than 3.0 billion Entire portfolio * (Reference) The dotted lines are occupancy rates excluding Hill Top Yokohama Negishi. September December March 2007 June 2007 September December March 2008 June 2008 September December March 2009 June 2009 September December March 2010 June September December March 2011 March 2011 June 2011 June 2011 September 2011 September 2011 (Note 1) The seven wards of central Tokyo mean Chiyoda, Chuo, Minato, Shinjuku, Shibuya, Setagaya, and Meguro. (Note 2) The three major metropolitan areas mean Kanto metropolitan area excluding the seven wards of central Tokyo, Chukyo metropolitan area, and Kinki metropolitan area. (Note 3) Other major cities means Sapporo, Sendai, Niigata, Shizuoka, Hamamatsu, Hiroshima, Kitakyushu and Fukuoka metropolitan areas and core cities with a population of 300,000 or more. (Note 4) The occupancy rate is based on the leased floor area at the end of the month, which is rounded off to the first decimal place. (Note 5) Given the effect of the termination of the fixed-term building lease contract (sub-lease contract) of Hill Top Yokohama Negishi (already transferred on September 17, 2010) on April 1, 2010, occupancy rates declined significantly from April to August

18 I. Outline of the Investment Corporation Portfolio Roster (As of September ) Type Studio Property number Area classification 1) Property name Location Total number of leasable units 2) Total leasable floor area (m 2 ) 3) Acquisition price (thousand yen) 4) O Other major cities Satella Kita 34-jo Sapporo, Hokkaido 181 5, ,133,714 O Other major cities Carrera 2.9 Sapporo, Hokkaido ,285 O Other major cities Sapporo Hills Sapporo, Hokkaido 28 1, ,666 O Other major cities Satella Nagayama Asahikawa, Hokkaido 79 2, ,428 O Other major cities willdo Minami 12 jo Sapporo, Hokkaido 48 1, ,839 O Other major cities willdo Kita 24 jo Sapporo, Hokkaido 36 1, ,000 O Other major cities Flat Carerra Sapporo, Hokkaido ,000 O Other major cities s13w9 h+ Sapporo, Hokkaido 48 1, ,000 O Other major cities s9w12 h+ Sapporo, Hokkaido 55 2, ,000 O Other major cities willdo Minami hiragishi Sapporo, Hokkaido 36 1, ,000 O Other major cities Sky Hills N15 Sapporo, Hokkaido 111 3, ,000 O Other major cities Sky Hills Sakaemachi Chitose, Hokkaido 134 5, ,000 O Other major cities Domy Chitose Chitose, Hokkaido 110 2, ,000 O Other major cities Sky Hills Takadai I Chitose, Hokkaido 120 3, ,000 O Other major cities willdo Nishishitadai cho Morioka, Iwate 76 2, ,000 O Other major cities willdo Kamisugi 3chome Sendai, Miyagi 46 1, ,000 O Other major cities Grand Maison Shichifuku Sendai, Miyagi 38 1, ,000 O Other major cities Living Stage Higashi-Sendai Sendai, Miyagi 52 1, ,200 O Other major cities willdo Ishizuecho Niigata, Niigata 48 1, ,510 O Other major cities willdo Sasaguchi Niigata, Niigata 28 1, ,000 O Three major metropolitan areas willdo Koshigaya Koshigaya, Saitama 49 1, ,333 O Three major metropolitan areas Joyful Sayama Sayama, Saitama ,619 O Three major metropolitan areas Lumiere Hachioji Hachioji, Tokyo 94 1, ,761 O Three major metropolitan areas willdo Kiyosumi Koto, Tokyo 200 7, ,024,619 O Three major metropolitan areas Turkey s Denen-Chofu No.2 Ota, Tokyo ,523 O Three major metropolitan areas willdo Honchiba Chiba, Chiba 30 1, ,857 O Three major metropolitan areas willdo Yokohama-minami Yokohama, Kanagawa ,142 O Three major metropolitan areas Site Pia Sagamihara, Kanagawa 86 1, ,142 O Three major metropolitan areas VISTA Supreme Machida, Tokyo ,584 O Seven wards of central Tokyo Joy Oyamadai Setagaya, Tokyo 21 1, ,265 O Three major metropolitan areas willdo Otsuka Toshima, Tokyo 27 1, ,229 O Three major metropolitan areas willdo Niiza Niiza, Saitama 56 1, ,438 O Seven wards of central Tokyo Toshin Shoto Mansion Shibuya, Tokyo 27 1, ,000 O Seven wards of central Tokyo Harmony Kamikitazawa Setagaya, Tokyo ,000 O Three major metropolitan areas willdo Minami Urawa Saitama, Saitama ,000 O Three major metropolitan areas College Square Kitaikebukuro Itabashi, Tokyo 50 1, ,000 O Three major metropolitan areas College Square Tobu Nerima Itabashi, Tokyo 63 1, ,000 O Three major metropolitan areas College Square Akatsuka Nerima, Tokyo 54 1, ,000 O Three major metropolitan areas College Square Higashi Kurume Higashikurume, Tokyo ,000 O Three major metropolitan areas College Square Waseda II Toshima, Tokyo ,000 O Three major metropolitan areas College Square Myogadani Bunkyo, Tokyo 68 1, ,060,000 O Three major metropolitan areas College Square Shinkoiwa Katsushika, Tokyo 54 1, ,000 O Three major metropolitan areas College Square Kiba Koto, Tokyo ,000 O Three major metropolitan areas College Square Kinshicho Koto, Tokyo ,000 O Seven wards of central Tokyo College Square Waseda Shinjuku, Tokyo ,000 O Seven wards of central Tokyo Lexington Square Shinjuku Gyoen Shinjuku, Tokyo 48 1, ,010,000 O Seven wards of central Tokyo Prospect Nihonbashi-Honcho Chuo, Tokyo 50 1, ,000 O Seven wards of central Tokyo Maison de Ville Takanawa Gyoranzaka Minato, Tokyo 70 1, ,480,000 O Seven wards of central Tokyo Roppongi Rise House Minato, Tokyo 34 1, ,000 O Seven wards of central Tokyo TK Flats Shibuya Shibuya, Tokyo 194 6, ,770,000 O Seven wards of central Tokyo Maison de Ville Naka-Meguro Meguro, Tokyo 50 1, ,050,000 O Three major metropolitan areas Prospect KALON Minowa Taito, Tokyo 82 3, ,620,000 17

19 Japan Rental Housing Investment Inc. Type Studio Property number Area classification 1) Property name Location Total number of leasable units 2) Total leasable floor area (m 2 ) 3) Acquisition price (thousand yen) 4) O Three major metropolitan areas Prospect Shinonomebashi Koto, Tokyo 171 4, ,040,000 O Three major metropolitan areas Prospect Monzennakacho Koto, Tokyo 62 1, ,080,000 O Three major metropolitan areas Prospect Ogikubo Suginami, Tokyo 40 1, ,000 O Three major metropolitan areas Exceria Ikebukuro West II Toshima, Tokyo 48 1, ,000 O Three major metropolitan areas Prospect Omori-Kaigan Ota, Tokyo 89 2, ,480,000 O Three major metropolitan areas Prospect Musashi-Shinjo Kawasaki, Kanagawa 85 1, ,050,000 O Three major metropolitan areas Fragrance Kawasaki Kawasaki, Kanagawa 45 1, ,900 O Three major metropolitan areas Prospect Chuo-Rinkan Yamato, Kanagawa 48 1, ,000 O Seven wards of central Tokyo Gala Place Shinjuku Gyoen Shinjuku, Tokyo 104 2, ,170,000 O Three major metropolitan areas Joyce Court Ota, Tokyo 154 6, ,010,000 O Three major metropolitan areas willdo Kanayama masaki Nagoya, Aichi 48 1, ,095 O Three major metropolitan areas Excelsior Sakae Nagoya, Aichi 48 1, ,767 O Three major metropolitan areas willdo Hibino Nagoya, Aichi ,603 O Three major metropolitan areas willdo Chiyoda Nagoya, Aichi 60 1, ,000 O Three major metropolitan areas willdo Taiko dori Nagoya, Aichi 98 3, ,120,000 O Three major metropolitan areas willdo Kanayama Nagoya, Aichi ,000 O Three major metropolitan areas willdo Kanayama sawashita Nagoya, Aichi ,000 O Three major metropolitan areas willdo Kachigawa Kasugai, Aichi 64 1, ,000 O Three major metropolitan areas Stagea Kogane Nagoya, Aichi 67 1, ,000 O Three major metropolitan areas willdo Inaei Nagoya, Aichi 91 2, ,000 O Three major metropolitan areas willdo Higashibetsuin Nagoya, Aichi 66 1, ,000 O Three major metropolitan areas willdo Matsubara Nagoya, Aichi 54 1, ,000 O Three major metropolitan areas willdo Yokkaichi Unomori Yokkaichi, Mie 54 2, ,150 O Three major metropolitan areas willdo daikancho Nagoya, Aichi 55 1, ,000 O Three major metropolitan areas willdo Takabata Nagoya, Aichi 54 1, ,115 O Three major metropolitan areas Dome Takamine Nagoya, Aichi ,100 O Three major metropolitan areas Dome Yotsuya Nagoya, Aichi ,500 O Three major metropolitan areas willdo Ichioka Osaka, Osaka 62 1, ,761 O Three major metropolitan areas willdo Ebie Osaka, Osaka ,904 O Three major metropolitan areas wildo Imafuku nishi Osaka, Osaka 29 1, ,857 O Three major metropolitan areas Maison Flora Kobe, Hyogo 38 1, ,285 O Three major metropolitan areas Wind For Minami-Honmachi Itami, Hyogo ,142 O Three major metropolitan areas willdo Shin-Osaka s I Osaka, Osaka ,723 O Three major metropolitan areas Grand Mer Higashi Yodogawa Osaka, Osaka ,069 O Three major metropolitan areas willdo Fukae Minami Osaka, Osaka ,716 O Three major metropolitan areas willdo Dainichi Moriguchi, Osaka ,000 O Three major metropolitan areas willdo Tsukamoto Osaka, Osaka 66 1, ,000 O Three major metropolitan areas willdo Tenmabashi Osaka, Osaka ,000 O Three major metropolitan areas willdo Sakaisuji honmachi Osaka, Osaka ,000 O Three major metropolitan areas willdo Tanimachi Osaka, Osaka 54 1, ,040,000 O Three major metropolitan areas willdo Nanba wii Osaka, Osaka 45 1, ,000 O Three major metropolitan areas willdo Nanba wi Osaka, Osaka 66 1, ,000 O Three major metropolitan areas Zekubenten Osaka, Osaka 34 1, ,000 O Three major metropolitan areas willdo Tsurumi morokuchi Osaka, Osaka ,000 O Three major metropolitan areas willdo Hamasaki dori Kobe, Hyogo 199 5, ,280,000 O Three major metropolitan areas willdo Minami-morimachi Osaka, Osaka 31 1, ,000 O Three major metropolitan areas willdo Matsuyamachi Osaka, Osaka 60 1, ,000 O Three major metropolitan areas willdo Shin-Osaka Osaka, Osaka 66 1, ,000 O Three major metropolitan areas willdo Sannomiya East Kobe, Hyogo 63 1, ,000 O Three major metropolitan areas willdo Kamishinjyo wi Suita, Osaka ,000 O Three major metropolitan areas Student Heights Kujo Osaka, Osaka 63 1, ,000 O Three major metropolitan areas Abreast Shin-Osaka Osaka, Osaka 92 2, ,391,000 18

20 I. Outline of the Investment Corporation Portfolio Roster Type Property number Area classification 1) Property name Location Total number of leasable units 2) Total leasable floor area (m 2 ) 3) Acquisition price (thousand yen) 4) O Three major metropolitan areas Abreast Sakuragawa Osaka, Osaka 48 1, ,800 O Three major metropolitan areas Prospect Bishoen Osaka, Osaka ,000 O Three major metropolitan areas Prospect Nakanoshima Osaka, Osaka 63 1, ,000 O Three major metropolitan areas Prospect Toyonaka Hattori Toyonaka, Osaka ,000 O Three major metropolitan areas Prospect Shimogamo Kyoto, Kyoto ,000 O Three major metropolitan areas Prospect Kawaramachi-Gojo Kyoto, Kyoto 52 1, ,000 O Three major metropolitan areas Gransys Esaka Suita, Osaka 90 2, ,260,000 O Other major cities willdo Okayama-eki Nishiguchi Okayama, Okayama 109 3, ,220,000 O Other major cities willdo Okayamadaiku Okayama, Okayama 98 3, ,040,000 O Other major cities Stars Uchiyama Kitakyushu, Fukuoka ,000 O Other major cities Uchiyama-Minami Kokura-ekimae Building Kitakyushu, Fukuoka 48 3, ,761 O Other major cities willdo Tojin-machi Fukuoka, Fukuoka ,714 O Other major cities Stream Line Ohori Fukuoka, Fukuoka 48 1, ,857 O Other major cities willdo Nakasu Fukuoka, Fukuoka 175 5, ,460,000 O Other major cities willdo Gofuku-machi Fukuoka, Fukuoka ,000 Studio type subtotal 119 properties 6, , ,640,989 Type Family Property number Area classification 1) Property name Location Total number of leasable units 2) Total leasable floor area (m 2 ) 3) Acquisition price (thousand yen) 4) F Other major cities Palais d'or Maruyama Sapporo, Hokkaido 64 4, ,000 F Other major cities Royal Garden Shinrin Koen Sendai, Miyagi 29 2, ,190 F Other major cities Green Park Komatsujima Sendai, Miyagi 45 2, ,523 F Other major cities Dia Palace Izumizaki Sendai, Miyagi 37 2, ,095 F Other major cities willdo Takasago Sendai, Miyagi 32 1, ,904 F Other major cities Living Stage Minami-Sendai Sendai, Miyagi 27 1, ,500 F Other major cities Takasagoseki Nibankan Sendai, Miyagi 41 3, ,000 F Other major cities Ark Heim Niigata Niigata, Niigata 115 6, ,060,000 F Three major metropolitan areas Johanna Mansion Maebashi, Gunma 52 4, ,714 F Three major metropolitan areas Iruma-ekimae Building Iruma, Saitama 67 4, ,517,000 F Three major metropolitan areas Iruma-ekimae Building No. II Iruma, Saitama 53 3, ,666 F Three major metropolitan areas Sereno Omiya Saitama, Saitama 102 6, ,554,523 F Three major metropolitan areas Suzuran-kan Saitama, Saitama 20 1, ,190 F Three major metropolitan areas Bonheur Tokiwa Saitama, Saitama 28 1, ,904 F Three major metropolitan areas Profit Link Takenotsuka Adachi, Tokyo 46 2, ,333 F Three major metropolitan areas Dream Heights Itabashi, Tokyo 19 1, ,666 F Three major metropolitan areas Green Hills Asukayama Kita, Tokyo 28 1, ,238 F Three major metropolitan areas Oji Heights Kita, Tokyo ,857 F Three major metropolitan areas Sakagami Royal Heights No. II Arakawa, Tokyo 28 1, ,714 F Seven wards of central Tokyo willdo Todoroki Setagaya, Tokyo 26 2, ,764,809 F Three major metropolitan areas Chez Moi Sakuragaoka Tama, Tokyo 30 1, ,904 F Three major metropolitan areas Libest Nishi-chiba Chiba, Chiba , ,152,476 F Three major metropolitan areas Corinne Tsudanuma Narashino, Chiba 20 1, ,761 F Three major metropolitan areas Chigasaki Daikan Plaza Chigasaki, Kanagawa 34 1, ,571 F Three major metropolitan areas Winbell Chorus Hiratsuka No.13 Hiratsuka, Kanagawa 33 1, ,587 F Three major metropolitan areas Libest Higashi Nakayama Funabashi,Chiba 76 6, ,371,314 F Three major metropolitan areas MGA Kanamachi Katsushika, Tokyo 26 1, ,000 F Seven wards of central Tokyo Greenhills Roka Setagaya, Tokyo 22 1, ,000 F Three major metropolitan areas Lofty Hirai Edogawa, Tokyo ,000 F Three major metropolitan areas Colonnade Kasuga Bunkyo, Tokyo 46 4, ,115,277 F Seven wards of central Tokyo The Palms Yoyogi Uehara Cosmo Terrace Shibuya, Tokyo 30 1, ,250,000 F Seven wards of central Tokyo Sun Terrace Yoyogi Uehara Shibuya, Tokyo 21 1, ,180,000 F Seven wards of central Tokyo Prospect Nihonbashikoamicho Chuo, Tokyo 37 1, ,000 19

21 Japan Rental Housing Investment Inc. Type Family Property number Area classification 1) Property name Location Total number of leasable units 2) Total leasable floor area (m 2 ) 3) Acquisition price (thousand yen) 4) F Seven wards of central Tokyo Park Terrace Ebisu Shibuya, Tokyo 51 2, ,060,000 F Seven wards of central Tokyo Prospect Dogenzaka Shibuya, Tokyo 47 2, ,590,000 F Seven wards of central Tokyo Prospect Glarsa Hiroo Shibuya, Tokyo 112 3, ,560,000 F Seven wards of central Tokyo Prospect Hatsudai Shibuya, Tokyo ,000 F Three major metropolitan areas Prospect Nishi-Sugamo Kita, Tokyo 42 2, ,110,000 F Three major metropolitan areas Prospect Machiya Arakawa, Tokyo 21 1, ,000 F Three major metropolitan areas Prospect Kiyosumi-Teien Koto, Tokyo 77 5, ,630,000 F Three major metropolitan areas Prospect Morishita Koto, Tokyo 45 2, ,260,000 F Three major metropolitan areas Prospect Onshi-Koen Koto, Tokyo 61 2, ,110,000 F Three major metropolitan areas BELNOS 34 Katsushika, Tokyo 100 5, ,700,000 F Three major metropolitan areas SK Residence Toshima, Tokyo 30 1, ,000 F Three major metropolitan areas Angel Heim Nishi-Rokugo No.2 Ota, Tokyo 40 2, ,012,000 F Three major metropolitan areas Deim-Hashimoto Sagamihara, Kanagawa 92 3, ,000 F Three major metropolitan areas Prospect Kawasaki Kawasaki, Kanagawa 52 3, ,520,000 F Three major metropolitan areas Prospect Urawa-Tokiwa Saitama, Saitama 30 2, ,000 F Three major metropolitan areas Glana Ueno Taito, Tokyo 36 2, ,100,000 F Three major metropolitan areas willdo Temmacho Nagoya, Aichi 40 2, ,785 F Three major metropolitan areas Grace Mansion Fuji Yokkaichi, Mie 45 2, ,761 F Three major metropolitan areas Stellato City Sakurayama Nagoya, Aichi 26 1, ,000 F Three major metropolitan areas willdo Kurokawa Nagoya, Aichi 26 1, ,000 F Three major metropolitan areas Gran Casa Daikan-Cho 5) Nagoya, Aichi 96 5, ,082,000 F Three major metropolitan areas Gran Casa Gokiso 5) Nagoya, Aichi 78 5, ,500 F Three major metropolitan areas willdo Nishi Akashi Akashi, Hyogo 64 4, ,666 F Three major metropolitan areas La Vita Nipponbashi Osaka, Osaka 69 4, ,860,000 F Three major metropolitan areas Crown Heim Nishi-Tanabe Osaka, Osaka 22 1, ,000 F Three major metropolitan areas Prospect Katsura Kyoto, Kyoto 29 1, ,000 F Other major cities Image Kirigaoka Kitakyushu, Fukuoka 65 3, ,714 Family type subtotal 60 properties 2, , ,346,154 Type Premium Property number Area classification 1) Property name Location Total number of leasable units 2) Total leasable floor area (m 2 ) 3) Acquisition price (thousand yen) 4) P Seven wards of central Tokyo c-ma1 Minato, Tokyo ,095 P Seven wards of central Tokyo c-ma3 Minato, Tokyo 17 1, ,480,808 P Seven wards of central Tokyo n-om1 Minato, Tokyo 21 1, ,750,000 P Seven wards of central Tokyo Storia Jingumae Shibuya, Tokyo 49 2, ,160,000 Premium type subtotal 4 properties 91 5, ,008,903 Total of 183 Properties 9, , ,996,047 (Note 1) The seven wards of central Tokyo are Chiyoda, Chuo, Minato, Shinjuku, Shibuya, Setagaya, and Meguro. The three major metropolitan areas are the Kanto metropolitan area excluding the seven wards of central Tokyo, the Chukyo metropolitan area, and the Kinki metropolitan area. Other major cities are Sapporo, Sendai, Niigata, Shizuoka, Hamamatsu, Hiroshima, Kitakyushu and Fukuoka and core cities with populations of 300,000 or more. (Note 2) In the total number of leasable units column, the number of housing units that can be rented at each property acquired is shown. (Note 3) The leasable floor area is the area that can be leased in the building of each property under management. The areas that are leased in association with the main purpose of lessees, including warehouses, parking facilities, the building manager offices, signs, vending machines, and antennas, and the areas that the lessor leases to maintain the building (including areas with respect to which the lessor grants temporary use under loan-for-use agreements) are excluded. (Note 4) In the acquisition price column, the transaction amount of the real estate properties and the trust beneficiary interests in real estate (excluding consumption taxes) is shown. The price is rounded down to the nearest thousand yen. In the total and subtotal columns, the sum of the acquisition prices before rounding is shown. The sum is rounded down to the nearest thousand. (Note 5) U House Daikan-Cho and U House Gokiso were changed their names to Gran Casa Daikan-Cho and Gran Casa Gokiso on November 1,

22 I. Outline of the Investment Corporation Portfolio Properties (As of September 30, 2011) n Studio Type l Family Type Other Major Cities Hokkaido Area n Satella Kita 34-jo n Carrera 2.9 n Sapporo Hills n s9w12 h+ n willdo Minami-Hiragishi n Sky Hills N15 n Sky Hills Sakaemachi n Domy Chitose Other Major Cities Tohoku & Shinetsu Areas n willdo Nishishitadai-cho n willdo Kamisugi 3-chome n Grand Maison Shichifuku l Dia Palace Izumizaki l willdo Takasago l Living Stage Minami-Sendai l Takasagoseki Nibankan l Ark Heim Niigata Three Major Cities Kanto Area n willdo Koshigaya n Joyful Sayama n Lumiere Hachioji 21

23 Japan Rental Housing Investment Inc. n Satella Nagayama n willdo Minami 12-jo n willdo Kita 24-jo n Flat Carerra n s13w9 h+ n Sky Hills Takadai I l Palais d'or Maruyama n Living Stage Higashi-Sendai n willdo Ishizue-cho n willdo Sasaguchi l Royal Garden Shinrin Koen l Green Park Komatsujima n willdo Kiyosumi n Turkey s Denen-Chofu No.2 n willdo Honchiba n willdo Yokohama-Minami n Site Pia 22

24 I. Outline of the Investment Corporation Portfolio Properties n Studio Type l Family Type n VISTA Supreme n willdo Otsuka n willdo Niiza n willdo Minami-Urawa n College Square Kita-Ikebukuro n College Square Shinkoiwa n College Square Kiba n College Square Kinshi-cho n Prospect KALON Minowa n Prospect Shinonomebashi n Fragrance Kawasaki n Prospect Chuo-Rinkan n Joyce Court l Johanna Mansion l Iruma-Ekimae Building l Dream Heights l Green Hills Asukayama l Oji Heights l Sakagami Royal Heights No. II l Chez Moi Sakuragaoka l MGA Kanamachi l Lofty Hirai l Colonnade Kasuga l Prospect Nishi-Sugamo l Prospect Machiya 23

25 Japan Rental Housing Investment Inc. n College Square Tobu-Nerima n College Square Akatsuka n College Higashi-kurume n College Square Waseda II n College Square Myogadani n Prospect Monzennakacho n Prospect Ogikubo n Exceria Ikebukuro West II n Prospect Omori-Kaigan n Prospect Musashi-Shinjo l Iruma-ekimae Building No. II l Sereno Omiya l Suzuran-kan l Bonheur Tokiwa l Profit Link Takenotsuka l Libest Nishi-Chiba l Corinne Tsudanuma l Chigasaki Daikan Plaza l Winbell Chorus Hiratsuka No.13 l Libest Higashi Nakayama l Prospect Kiyosumi-Teien l Prospect Morishita l Prospect Onshi-Koen l BELNOS 34 l SK Residence 24

26 I. Outline of the Investment Corporation Portfolio Properties n Studio Type l Family Type Premium Type l Angel Heim Nishi-Rokugo No.2 l Deim-Hashimoto l Prospect Kawasaki l Prospect Urawa-Tokiwa l Glana Ueno Seven Wards of Central Tokyo Seven Wards of Central Tokyo n Joy Oyamadai n Toshin Shoto Mansion n Harmony Kamikitazawa n TK Flats Shibuya n Maison de Ville Naka-Meguro n Gala Place Shinjuku Gyoen l willdo Todoroki l Greenhills Roka l Prospect Glarsa Hiroo l Prospect Hatsudai c-ma1 c-ma3 n-om1 Three Major Metropolitan Areas Tokai Area n willdo Kanayama-Masaki n Excelsior Sakae n willdo Hibino 25

27 Japan Rental Housing Investment Inc. n College Square Waseda n Lexington Square Shinjuku Gyoen n Prospect Nihonbashi-Honcho n Maison de Ville Takanawa Gyoranzaka n Roppongi Rise House l The Palms Yoyogi Uehara Cosmo Terrace l Sun Terrace Yoyogi Uehara l Prospect Nihonbashikoamicho l Park Terrace Ebisu l Prospect Dogenzaka Storia Jingumae n willdo Chiyoda n willdo Taiko-dori n willdo Kanayama n willdo Kanayama-Sawashita n willdo Kachigawa 26

28 I. Outline of the Investment Corporation Portfolio Properties n Studio Type l Family Type n Stagea Kogane n willdo Inaei n willdo Higashi-Betsuin n willdo Matsubara n willdo Yokkaichi Unomori l Grace Mansion Fuji l Stellato City Sakurayama l willdo Kurokawa l Gran Casa Daikan-Cho l Gran Casa Gokiso Three Major Metropolitan Areas Kinki Area n willdo Ichioka n willdo Ebie n willdo Imafuku-Nishi n willdo Dainichi n willdo Tsukamoto n willdo Tenmabashi n willdo Sakaisuji-Honmachi n willdo Tanimachi n willdo Minamimori-machi n willdo Matsuya-machi n willdo Shin-Osaka n willdo Sannomiya East n willdo Kamishinjo w I * U House Daikan-Cho and U House Gokiso were changed their names to Gran Casa Daikan-Cho and Gran Casa Gokiso on November 1,

29 Japan Rental Housing Investment Inc. n willdo Daikan-cho n willdo Takabata n Dome Takamine n Dome Yotsuya l willdo Temmacho n Maison Flora n Wind Four Minami-Honmachi n willdo Shin-Osaka s I n Grand Mer Higashi Yodogawa n willdo Fukae Minami n willdo Nanba w II n willdo Nanba w I n Zekubenten n willdo Tsurumi-Morokuchi n willdo Hamasaki-dori n Student Heights Kujo n Abreast Shin-Osaka n Abreast Sakuragawa n Prospect Bishoen n Prospect Nakanoshima 28

30 I. Outline of the Investment Corporation Portfolio Properties n Studio Type l Family Type n Prospect Toyonaka Hattori n Prospect Shimogamo n Prospect Kawaramachi-Gojo n Gransys Esaka l willdo Nishi Akashi l La Vita Nipponbashi l Crown Heim Nishi-Tanabe l Prospect Katsura Other Major Cities Chugoku Area n willdo Okayama-eki Nishiguchi n willdo Okayama-Daiku Other Major Cities Kyushu Area n Stars Uchiyama n Uchiyama-Minami Kokura-Ekimae Building n willdo Tojin-machi n Stream Line Ohori n willdo Nakasu n willdo Gofuku-machi l Image Kirigaoka 29