0
Financial Briefing for the 22nd Fiscal Periodended February 28, 2013
April 12, 2013Prepared by ORIX Asset Management Corporation
1ContentOJR’s Management Philosophy 2 External Growth StrategyAchievements from FP22 onward Real Estate Market Outlook 27Management Highlights 4 Achievements of External growth strategyInternal Growth Strategy ~Major Leasing Achievements~ 5 ~After the previous PO~ 28External Growth Strategy ~The Strategy of Asset Diversified Investments 29Replacements in Line with Equity Finance through AppendixPublic Offering~ 6 Actual Financial Highlights 31Financial Strategy 7 Major Tenants 32Stable Growth of Unitholders’ Value (1) 8 New Acquisitions from FP22 onward (1) 33Stable Growth of Unitholders’ Value (2) 9 New Acquisitions from FP22 onward (2) 34Future Management Policies and Strategies New Acquisitions from FP22 onward (3) 35Management Tactics in Line with Current New Acquisitions from FP22 onward (4) 36Environment Perceptions 11 New Acquisitions from FP22 onward (5) 37External growth strategy Portfolio Strategy 38~Investment Strategy for Offices~ 12 Utilization of the ORIX Synergy (1) 39External growth strategy Utilization of the ORIX Synergy (2) 40~Investment Strategy for Retail Facilities (1)~ 13 Portfolio Summary 41External growth strategy Portfolio Map 42~Investment Strategy for Retail Facilities (2)~ 14 Portfolio Data (1) 43Financial Strategy ~Cash Management ~ 15 Portfolio Data (2) 44Financial Results and Forecasts Overview of Appraisal Value 45Comparison between FP22 Results and FP22 Forecast 17 Appraisal Value List at the end of FP22 (1) 46FP22 Results and FP23 and FP24 Forecasts 18 Appraisal Value List at the end of FP22 (2) 47Internal Growth Strategy Financial Data 48Maintenance and Improvement of Occupancy Rates 20 Investment Units 49Rent Downward Revision 21 Transactions with Sponsors and Compliance System 50Specific Measures for Enhancing Internal Growth of Organization of OAM 51Office Portfolio 22 Terminology 52~54Approach to Bottoming Out Internal Growth of Offices ~Image (1)~ 23
Approach to Bottoming Out Internal Growth of Offices ~Image (2)~ 24
Composition of Rent Levels 25
2OJR’s Management Philosophy Improve profitability and stability of the portfolio, reduce financial costs and increase
financial stability, aiming for stable growth of unitholders’ value
External Growth Strategy• Diversification of property types and
regions as a diversified portfolio REIT• Property replacement• Utilization of the ORIX synergy
Internal Growth Strategy• Diversification of property types, regions
and tenants as a diversified portfolio REIT• Direct property management• Utilization of the ORIX synergy
AssetImprovement of profitability and stability of the portfolio
Financial Strategy• Reduction of financing costs• Improvement of financial stability• Appropriate cash management
Stable growth of unitholders’ value
Equity
DebtReduction of financial costs and improvement of financial stability
3
Achievements from FP22 onward
4
(Note) As of March 1, 2013, OJR implemented a 5-for-1 split of its investment units. Taking this split into account, one fifth of Actual DPU of FP22 and five times ofForecast DPU from FP23 onward are respectively shown in brackets.
Asset Debt
Equity
Internal growth strategy
External growth strategy
Maintained high occupancy rate for offices at approx. 96.5% at the end of the FP22
Successfully filled up vacated space at Round-Cross Ichi-bancho and Seafort Square with multiple tenants after departures of major tenants
Leasing acceleration, improvement of lease conditions and cost management were successful; rental revenue of existing properties in FP22 increased 133 million yen from initial forecasts
The assumed floor area of tenant departure for FP23 was reduced to approx. 6,200㎡ from 10,000㎡ at the beginning of the period; prospects for a bottoming out of internal growth
■FP22 Acquired 1 senior housing property with nursing care and 1
residential property
■FP23 Acquired 4 retail facilities
Disposed 1 residential property
Entrusted the operational management of 4 acquired retail facilities to an ORIX Group company; utilized the ORIX Synergy, i.e. know-how of retail facility operational management
Increased the portfolio’s profitability and stability Reduced financial costs and increased financial stability
Financial strategy Lengthened borrowing periods and diversified repayment dates
Reduced the average funding costs based on total interest-bearing debts in FP22 by 7 basis points compared to FP21 through refinancing
Newly concluded a commitment line contract of 5 billion yen with Sumitomo Mitsui Banking Corporation
Reduced LTV based on total assets by 1.5% points by equity finance through public offering; increased acquisition capacity
Steadily increased unitholders’ value
Revised actual DPU and DPU forecasts upwards with promotion of various strategies
FP22 (Actual ) : 11,764yen (2,352yen)Compared with previous
forecast :+564yen
FP23 (Forecast ) : (11,400yen ) 2,280yenCompared with previous
forecast: +120yen
FP24 (Forecast ) : (11,600yen ) 2,320yen -
Revised actual DPU and DPU forecasts upwards (note)
Increased the liquidity of investment units through the 5-for-1 split of investment units
Management Highlights
5
Retail Area Retail Area
Internal Growth Strategy~Major Leasing Achievements~
Utilized Direct Property Management and the ORIX Synergy to maintain high occupancy and diversify tenants
Asset
Launched leasing activities that addressed in detail the varying needs of tenants■Filled up vacated space at properties with multiple tenants after departures of major tenants■Addressed positive needs such as relocations for larger spaces and increasing floor area within the
properties■Incorporated business types with strong performance
Property name Factors in Improvements of occupancy rate Improvements of occupancy rateRound-Cross Ichi-bancho
Due to the relocation of a corporation to a self-owned building which it newly acquired, the property was faced with approx. 424 tsubos (2 and a half floors) of vacated space at the end of August 2012.
Succeeded in fully refilling the property and diversifying tenants by addressing the positive needs such as improvement of location and property and relocation for larger spaces of 4 companies including a consulting firm and an IT-related company
End of Sep. 2012
66.5%→
End of Apr. 2012
(prospected)100%
Seafort Square / Center Building Implemented tenant merchandising such as by
incorporating business types that were lacking in the building (for example a Chinese restaurant)
End ofOct. 201159.7%
→End of
Dec. 201282.5%
→End of
Feb. 201384.4%
Even with the departure of a foreign financial institution (approx. 292 tsubos; end of Jan. 2013), a high level of occupancy has been maintained by addressing the positive needs such as improvement of property and relocation for larger spaces of IT-related companies, wholesale companies, etc.
End of Feb. 2012
81.2%→
End of Dec. 2012
96.3%
→End of
Apr. 2013(prospected)
96.0%Carrot Tower The vacated space (approx. 136 tsubos; end of
Aug. 2012) was split and leased to 2 companies. Further, the vacated space on another floor was filled up by addressing the need of a city bank to expand its floor space within the same building.
End of Sep. 2012
88.1%→
End of Jan. 2013
100%
Office Area Office Area
6Asset External Growth Strategy ~Strategy of Asset Replacements in Line with Equity Finance through Public Offering~
Implemented an external growth strategy leading to improvement of DPU
FP21 End FP22 EndReplacements in line with PO As of financial
announcement date(Apr. 12, 2013)Acquisitions Disposition
Acquisition price (million yen) 350,994 355,874 32,770 5,550 383,094
Number of properties 68 70 4 1 73Leasing NOI yield 5.0% 5.0% 5.1% 6.1% 5.0%Yield after depreciation 3.6% 3.6% 4.0% 2.6% 3.6%Occupancy Rates 98.0% 98.4% 99.8% 96.7% 98.5%Unrealized gain/loss (million yen) ▲5,489 ▲2,104 846 404 ▲1,663
Improvement of Portfolio’s Profitability and Stability■Acquisition of 4 Retail Facilities OJR acquired 4 retail facilities that are both profitable and stable
along with the public offering in view of the current real estate market environment.
With diversification of property types and regions of retail facilities, OJR is promoting external growth that will lead to greater profitability and stability.
Neighborhood shopping centers Category killersUrban-type retail facilities
■Asset Replacements Through the disposition of 1 residential property with relatively low
yield after depreciation of 2.6% and acquisition of 4 retail facilities with average yield after depreciation of 4.0%, OJR improved the profitability of the overall portfolio.
■Utilization of the ORIX synergy Entrusted management of acquired retail facilities to an ORIX
Group company Utilized t ORIX Group’s leasing abilities, value-adding abilities and
nationwide network
7Financial StrategyReduced funding costs and increased financial stability Increased Acquisition Capacity by reducing LTV
Debt
Under a favorable financial environment, funding costs (average funding cost ) were reduced while the balance with the stability of the financial base was maintained
Refinancing with an early repayment of borrowings (9.9 billion yen) was implemented using the gain on property sales arising from the property replacements
For refinancings of loans due for repayment, borrowing periods were lengthened and maturity dates were diversified
Increased the acquisition capacity (approximately 9 billion yen to LTV at 50% level) by reducing the interest-bearing debt ratio (LTV)
Newly concluded a commitment line contract of 5 billion yen with Sumitomo Mitsui Banking Corporation, expanding line limit to 31.5 billion yen
Reduced funding costs
Reduced LTV (total asset base)
Increased financial stability
Expansion of commitment line
(millions of yen)
Financial Institution LimitAozora Bank, Ltd. 7,500Sumitomo Mitsui Trust Bank, Limited. 6,000Mitsubishi UFJ Trust and Banking Corporation 6,000Sumitomo Mitsui Banking Corporation 5,000The Bank of Tokyo-Mitsubishi UFJ, Ltd. 4,000Mizuho Corporate Bank, Ltd. 3,000Total 31,500
49.6% 49.6%
50.3%
48.8%48.0%
49.0%
50.0%
51.0%
FP20
(Feb. 2012)
FP21
(Aug. 2012)
FP22
(Feb. 2013)
Financial announcement
(Apr 12, 2013)
11,000
4,0009,900
7,000
5,000
8,460
0
10,000
20,000
30,000
40,000
50,000
60,000
2013 2014 2015 2016 2017 2018 2019 2020 2021
New procurementRefinancing in FP22Refinancing in FP23Investment corporation bondsBorrowings
Early repayment ・refinancing
(millions of yen)
(millions of yen)
2.00%1.92%
1.85%
1.5%
2.0%
2.5%
FP20
(Feb. 2012)
FP21
(Aug. 2012)
FP22
(Feb. 2013)FP23 (forecast)
(Aug. 2013)
FP24 (forecast)
(Feb. 2014)
Refinancing New funding
Balance ofinterest-bearing
debt171,068 175,493 9,900 8,460 183,890
Total assets 344,997 349,154 376,703
LTV(total asset base) 49.6% 50.3% 48.8%
Average fundingcost 1.92% 1.85%
Aim for furtherreduction of
funding costs
End of FP21 End of FP22
By equity financethrough public offering As of financial
announcement(Apr.12, 2013)
27,565
▲1.5%points
8
95
100
105
110
115
120
125
1‐Mar‐13 8‐Mar‐13 15‐Mar‐13
東証REIT指数 OJR
8Stable Growth of Unitholders’ Value (1) Split of investment units and equity finance through public offering
As of March 1, 2013, OJR implemented a 5-for-1 split of its investment units.The purpose of split is to further expand the investor base and enhance the liquidity of investment units by
creating an environment favorable to invest by lowering the price of each investment unit.
Split of investment units
Number of OJR investment units issued and outstanding before split 284,434 units
Number of OJR investment units issued and outstanding after split 1,422,170 units
Item Content
Number of new investment units issued168,960 units
(160,915 units in the primary offering and 8,045 units through third-party allotment)
Number of investment units after the issue of new investment units 1,591,130 units
Issue price (offer price) 122,655 yen
Total issue price (total offer price) 20,723 million yen
Paid-in amount (purchase price) 118,629 yen
Total paid-in amount (total purchase price) 20,043 million yen
Date of resolution authorizing issuance March 8, 2013
Pricing date March 18, 2013
Payment date (primary offering) March 26, 2013
Pricing date (March 18)
125,800 yen
Following the decision to issue new investment units, the investment unit price rose by approx. 19% up to the pricing date and outperformed the TSE REIT Index by 7.8%.
Newly issued investment units amounting to approx. 12% the number of investment units issued and outstanding. Due to the increase of investment unit price following the resolution of new issuance, approx. 20 billion yen was procured and realized reduction in LTV and increase of acquisition capacity
Equity
Public Offering implemented in March, 2013
(Note) The number of investment units after the issue of new investment units assumes all of the new investment units scheduled to be issued through third-party allotment (over-allotment) will be issued.
+18.9%Outperformed TSE
REIT Index in the same period by +7.8%
TSE REIT Index
(Note) Indexed with the closing price 105,800 yen of the date of resolution of issuance as 100.
Mar.1, 2013 Mar.8, 2013 Mar.15, 2013
Date of resolution (March 8)
105,800 yen
9
12,571
11,82211,656 11,764
2,160
2,280
2,320
10,000
11,000
12,000
13,000
第19期
(2011/8期)
第20期
(2012/2期)
第21期
(2012/8期)
第22期
(2013/2期)
第23期予想
(2013/8期)
第24期予想
(2014/2期)
分配金実績 第21期決算発表時予想 第22期決算発表時予想
Stable Growth of Unitholders’ Value (2)
Distributions =InternalGrowth +
ExternalGrowth +
FinancialStrategy
0 = + +
Distributions =InternalGrowth +
ExternalGrowth +
FinancialStrategy
= 0 + +
improving distributions
Aiming for annual DPU of 4,600 yen (23,000 yen) level
(2,514)
(2,364)(2,331) (2,352)
DPU has improved
As of FP21 financial announcement date(Oct. 12, 2012)
As of FP22 financial announcement date
(Apr. 12, 2013)
DPU(yen)
FP22 11,200 (2,240) 11,764 (2,352)
FP23 forecast (10,800) 2,160 (11,400) 2,280
FP24 forecast - (11,600) 2,320
As of end of FP21 As of end of FP22
NAV per unit (yen) 511,213(102,242) 523,112(104,622) (531,626)106,325
(10,800)
(11,600)
11,200(2,240)
Equity
(Note) As of March 1, 2013, OJR implemented a 5-for-1 split of its investment units. Taking this split into account, one fifth of Actual DPU for FP22 and earlier and five times of Forecast DPU from FP23 onward are shown in brackets.
(11,400)Blue : Actual
Red : Forecast
(yen)Forecast as at FP21 financial announcementActual DPU Forecast as at FP22
financial announcement
FP19(Aug. 11)
FP20(Feb. 12)
FP21(Aug. 12)
FP22(Feb. 13)
FP23(Aug. 13)forecast
FP24(Feb. 14)forecast
bottoming out distributions
bottoming out distributions improving distributions
(bottoming out)
(Upside from capacity to acquire properties)(bottoming out)
10
Future Management Policies and Strategies
11
Asset Debt
Equity
Internal growth strategy
External growth strategy
Financial strategy
Management Tactics in Line with Current Environment Perceptions
■ Environment perceptions The fundraising environment is excellent due to monetary easing
measures and interest rates continuing to stay low
On the other hand, there is risk of downturn again due to concerns of financial deterioration, etc
■ Financial management tactics Take advantage of the healthy funding environment, promote the
reduction of the average funding costs and improvement of financial stability
Control the total asset based LTV at around 50% and preferentially utilize funds of free cash flow for new acquisition of properties for external growth
■ Environment perceptions (Rental market) The stage where the vacancy rate of offices in central Tokyo was
increasing has ended; new asking rents are making a turnaround primarily on high-grade office
■ Management tactics Realize the bottoming out of internal growth by preventing tenant
departures and start focusing on the next step of improvement of contracted lease conditions
■ Environment perceptions Equity finance by REITs is active due to expectations for recovery of
real estate market
■ Policy Aim to improve DPU and NAV for the stable growth of unitholders’
value
Equity finance in the future shall contribute to the stable growth of unitholders’ value
■ Environment perceptions (Transaction market) Expected yield of residential properties and logistics facilities has
moved to expansion stage but that of offices and retail facilities has been yet in early recovery stage
Investment in retail facilities is an opportunity to gain high profits for investors with operational management abilities as it requires high expertise
Demand for prime properties in the office market is strong and the shortage of prime properties for sale is ongoing but due to the improved outlook of buyers on future rent, the sellers are becoming more aligned to the buyers’ price perceptions
■ Investment tactics Invest primarily in retail facilities to increase profitability and stability
and also consider investment in offices from which growth can be expected
With the inclusion of properties acquired with equity finance through the public offering, retail facilities outperform 5% NOI yield and 3.6% yield after depreciation of the existing portfolio
Work to improve the portfolio’s profitability and quality through property replacements
1212External growth strategy~Investment Strategy for Offices~
Consider investment primarily in medium-sized (Note 1) or larger offices in the Greater Tokyo Area For offices in the outside of Greater Tokyo Area, focus on stability and profitability Consider acquisition of complex facilities comprised primarily of offices and/or offices with retail tenants, etc.
Seafort Square / Center Building
Round-Cross Shinjuku
ORIX Kobe Sannomiya Building
ORE SapporoBuildingORIX Akasaka 2-
chome BuildingAkihabara
Business Center
Greater Tokyo Area Outside of Greater Tokyo Area Complex / Retail-type
(Note1) “Medium-sized” offices stand for offices with a total floor area of 3,000m2 to 15,000m2.(Note2) “Complex facilities comprised primarily of offices” stand for offices including retail facilities and residence units in the same building.
Property type Points
High-spec offices in Greater Tokyo Area’s prime areas such as connected to station, etc. Seek potential for growth in both rental revenue and yields
Offices in cities where there is little concern over supply of new offices in the outside of Greater Tokyo Area
Seek not only growth potential but also stability of rental revenue Utilize ORIX Group’s nationwide network
Complex facilities comprised primarily of offices (Note 2)
occupied by retail tenants, etc. Utilize the features of diversified portfolio REIT and the ability to manage retail
facilities, residential properties, etc.
Older office properties Make decisions based on whether or not increased value is possible
through renovations such as renewal of air conditioning systems, installation of LED lighting, etc.
Offices occupied by single tenant or by large tenants
Make careful decisions on the probabilities of existing tenants’ renewal andof filling up vacated spaces in the case of tenant departures, and the market rent gap
Utilize leasing abilities through direct property management
13
Profitability Stability
Expertise is required; provide opportunities for higher revenues & yield relative to the substantial risks for investors who are able to assess risks and have sufficient operational management abilities
Increase stability through diversifiedinvestment in properties featuring tenants being close to daily life
Investment Policy for retail facilities
< Portfolio level >
Diversification of property types,
Regions, Tenants, etc.Locational features, Trade areas, Tenants
Comprehensively take location feature strengths, trade area, tenants’ business types, priorities and alternatives, as well as lease contract type into consideration
Construct the portfolio with diversification of property types, regions, tenants, etc.
<Individual property level>
Take features of individual properties as well as portfolio diversification into consideration and promote selective investments
Work to realize both profitability and stability
External growth strategy~Investment Strategy for Retail Facilities (1)~
14
Urban-type retail facilities Neighborhood shopping centers (NSC) Category killers
Retail facilities located nearby major train stations in the Greater Tokyo Area and government
ordinance designated cities from which growth in profitability can be expected
Community-oriented retail facilities fully lined up with stores retailing daily necessities
Large-scale specialty stores that specialize in a certain type of products with vast product selection and strong
price competitiveness
Vast trade area(Customers come primarily by train)
Small trade areas with 3 to 5 km radius mainly targeting nearby residential areas
(Customers come by car, bicycle or on foot)Medium-sized trade areas up to 10 km
radius (Customers come mainly by car)
Comprised mainly of tenants dealing with daily used Restaurants, specialty stores, etc.
Comprised mainly of tenants usedon daily basis
Anchor tenants are such as food supermarkets, etc.
National top-class and successful tenants Electronic appliance retailers
Home centers, etc.
Primarily 5 to 10 years Mainly long-term and fixed-term lease Mainly long-term and fixed-term lease and fixed-term business-use leasehold
Urban-type retail facilities
Neighborhood shopping centers (NSC)
Category killers
General merchandise stores (GMS)
Large-scale shopping centers
Others
aune Kohoku
Maruetsu Sagamino Home Center MusashiSendai Izumi (Land)
aune Sapporo Ekimae
Okayama KumeRetail Facility
Morioka Minami Shopping Center Sansa
CUBEDaikanyama
Nihon Jisho Minami Aoyama Building
auneMakuhari
ORE Yurakucho The Kitahama PLAZACROSS GARDEN
KAWASAKIKobe Momoyamadai
Shopping Center (Land)Tecc Land Totsuka (Land)
Type features
Trade area
Tenants
Contract
Owned properties
External growth strategy~Investment Strategy for Retail Facilities (2)~
Investment Strategy for retail facilities Prioritize investment in types of properties where OJR’s strengths such as the ORIX synergy
can be easily utilized
■ Features of property types prioritized investment targetsThe priority of GMS and large shopping centers are low due to the retail environment and other factors
Prioritized investment targets
15
2,2602,485 2,429 2,464
0
500
1,000
1,500
2,000
2,500
3,000
FP19(Aug. 11)
FP20(Feb. 12)
FP21(Aug. 12)
FP22(Feb. 13)
CAPEX Free cash flow
Financial Strategy ~Cash Management ~
New property acquisitions
LTV control
Capital Returns to unitholderincluding OPD =Optimal Payable Distributions
Asset
Debt
Equity
(million yen)
Stable free cash flow generated for each financial period
Status of Free Cash Flow Utilization of Free Cash Flow
Promote an external growth strategy by utilizing the abundant free cash flow
Take the current capital and borrowing costs into consideration and aim for the growth of unitholders’ value through new property acquisitions with profitability greater than that of the existing portfolio, i.e. yield after depreciation of 3.6% with utilization of free cash flow
16
Financial Results and Forecasts
17
3,346 160 3,185
DPU 11,764 yen 564 yen 11,200 yen
(reference distribution) (2,352 yen) (112 yen) (2,240 yen)
Net Income(millions of yen)
(Feb. 2013) (A-B) (Feb. 2013)Item
FP22 Actual (A)FP22 Forcast (B)(As of FP21 financial
announcement )
(Note) The above reference distribution is five times of DPU after the split of investment unit, shown in consideration of the 5-for-1 split of investment units implemented on March 1, 2013.
Variance between FP22 results and forecast +0
Variance between FP22 results and forecast +133 ・Rental income increase from existing properties +40 ・Decrease of brokerage fee and advertising expenses +41 ・Improvement of utilities costs +26
Variance between FP22 results and forecast +26Total +160
External Growth Factors
Internal Growth Factors
Other
(millions of yen)
[Variance between FP22 actual and forecast]
Comparison between FP22 Results and FP22 ForecastDPU increased 564 yen more than initial forecasts at the beginning of the period due to leasing
acceleration at existing properties, improvement of lease conditions, reduction of advertising expenses, etc.
Increased due to leasing of offices acceleration, improvement of lease conditions, etc.
Decreased due to reduction of advertising expenseswith decreased turnover of residential properties, incurring delay of office brokerage fees, etc.
Improved due to utilities costs management
18
Change ▲ 14 Change +816 Change ▲ 214
・Contribution of properties acquired in FP21 and FP22 +231 ・Contribution of properties acquired
in FP22 and FP23 +644 ・Full Contribution of properties acquired in FP23 +124
・Contribution of properties acquired in FP24
・Operating income of property sold in FP22 ▲ 68 ・Operating income of property sold
in FP23 ▲ 60
・Gain on property sale ▲ 159 ・Gain on property sale +390 ・Gain on property sale ▲ 390・Funding-related expenses ▲ 42・Cost of issuing new investment units ▲ 61 ・Cost of issuing new investment units +61・Fixed asset/city planning tax for properties acquired in 2012 ▲ 53
Change ▲ 49 Change ▲ 307 Change +17・Rental income decrease from existing properties ▲ 123 ・Rental income decrease from
existing properties ▲ 86 ・Rental income decrease from existing properties ▲ 0
・Repair cost decrease from existing properties +105 ・Repair cost increase from existing
properties ▲ 90 ・Repair cost decrease from existing properties +27
・Utilities costs ▲ 21 ・Utilities costs ▲ 29 ・Decrease of brokerage fees +15・Increase of loss on retirement ▲ 35 ・Increase of loss on retirement ▲ 46
Change +94 Change ▲ 227 Change +260・Decrease of funding-related expenses +79 ・Decrease of funding-related expenses +74 ・Decrease of funding-related expenses +52 ― Of this, reduction in funding costs (+52) ― Of this, reduction in funding costs (+101) ― Of this, reduction in funding costs (+25) ― Of this, factor of operating day (+27) ― Of this, factor of operating day (▲ 27) ― Of this, factor of operating day (+27)
・Early repayment expenses ▲ 255 ・Early repayment expenses +255・Asset management fees ▲ 61
Total +30 Total +281 Total +63
FP22 Actual vs FP21 Actual FP23 Forcast vs FP22 Actual FP24 Forcast vs FP23 Forcast
ExternalGrowthFactors
InternalGrowthFactors
OtherFactors
(Note) As of March 1, 2013, OJR implemented a 5-for-1 split of its investment units. Taking this split into account, one fifth of Actual DPU for FP22 and earlier and five times of Forecast DPU from FP23 onward are shown in brackets.
(millions of yen)
FP22 Results and FP23 and FP24 Forecasts
(3) Expected bottoming out of internal growth
(4) Reduced funding costs
(1) Continued increase ofrevenue through property replacements
(2) Upside factors
Acquisition capacity (i + ii):Approx. 11.5 billion yen
i. LTV up to 50%: Approx. 9 billion yen
ii. FCF of FP23: Approx. 2.5 billion yen
Aim for bottoming out of internal growth in FP24 as well as upside with more acquisition capacity generated by equity finance through public offering
3,315 3,346 30 3,627 281 3,691 63
beforesplit 11,656 yen 11,764 yen 108 yen (11,400 yen) (▲364 yen) (11,600 yen) (200 yen)
aftersplit (2,331 yen) (2,352 yen) (21 yen) 2,280 yen ▲72 yen 2,320 yen 40 yen
(Aug. 2013) (C-B) (Feb. 2014) (D-C)Net Income
(millions of yen)
DPU
ItemFP21 Actual (A) FP22 Actual (B) FP23 Forcast (C) FP24 Forcast (D)
(Aug. 2012) (Feb. 2013) (B-A)
19
②決算概要及び業績予想
Internal Growth Strategy
20
97.2 97.298.0 98.4
95.6
93.9
96.1 96.5
98.399.1
99.0 99.4
90
95
100Overall Office Non-Office Office(Forecast as of FP 21 financial announcement)
-25,000
-20,000
-15,000
-10,000
-5,000
0
5,000
10,000
15,000
20,000
25,000
-24.2%
-20.3% -20.0%
-17.3%
-30%
-20%
-10%
Period End Occupancy Rates
(%)
Assumed the office occupancy rate will be stable at the current level Tenant departures were successfully suppressed at approx. 6,200㎡ in FP23 against previous
forecast of approx. 10,000㎡
(㎡)
Tenanted/Vacated Area and Rent Fluctuation Rate at Tenant Replacement (excluding residences)
Maintenance and Improvement of Occupancy Rates
Tenanted (confirmed to move in for FP23 onward) Vacated (confirmed to vacated for FP23 onward) Projected to be tenanted Projected to be vacated
Projected to be tenanted as of FP21 financial announcement Projected to be vacated as of FP 21 financial announcement
FP19(Aug.11)
FP20(Feb.12)
FP21(Aug.12)
FP22(Feb.13)
FP23(Aug.13)
(Projection)
FP24(Feb.14)
(Projection)
Rent Fluctuation rate at Tenant Replacements (dotted line is projection)
FP19(Aug.11)
FP20(Feb.12)
FP21(Aug.12)
FP22(Feb.13)
FP23(Aug.13)
(Projection)
FP24(Feb.14)
(Projection)
21
-17.3%
-9.3% -10.7%-12.4%
-20%
-15%
-10%
-5%
0%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
【Rent Downward Revision Area(excluding residential properties)】(㎡)
Existing Tenants’Rent Downward Revision Area and Rent Decline Rate
During FP22, approx. 20,000㎡ of rent decrease realized on other sectors but PL impact was within the scope of initial budget
Aim to suppress the area of rent decrease for FP23 onwards
【Rent Decline Rate(excluding residential properties)】
Rent Downward Revision
(In the case of inclusion of other sectors)
-6.0%
Rent downward revision area is expected to
increase due to major tenant departure
suppressed in FP23
<Reference>Tenants’ renewal with same rent
(floor area ratio)61% 53% 61% 71%
(Excluding other sectors)Fluctuating around 50% to 70%
Rent downward revision area of other sectors (dotted line)
ConfirmedProjectionForecast as of FP21 financial announcement Rent Decline rate (dotted line is projection)
FP19(Aug.11)
FP20(Feb.12)
FP21(Aug.12)
FP22(Feb.13)
FP23(Aug.13)
(Projection)
FP24(Feb.14)
(Projection)(Note) Excluding the renewal rent remained and increased.
FP19(Aug.11)
FP20(Feb.12)
FP21(Aug.12)
FP22(Feb.13)
FP23(Aug.13)
(Projection)
FP24(Feb.14)
(Projection)
22Specific Measures for Enhancing Internal Growth of Office Portfolio
Target Measures for the recovery of office rental income
Increase the contract occupancy rate
Contract occupancy rate recovered to 96.1% as of end of FP21 (end of Aug.2012)
Maintained high occupancy at 96.5% as of end of FP22 (end of Feb. 2013)
Reduce tenant departures rate
Aim for an increase of the effective occupancy rate (Note) and reduction of rental income’s decrease when tenants are replaced
Improve contractedlease conditions
Aim for shortening of free rent periods and increase of contracted rent
Step.1
Step.2
Step.3
Strengthening tenant relations through direct PM
Increase the competitiveness of properties through direct PM
Understand tenants’ business performance and business nature; explore potential tenants needs
Promote existing tenant space expansion, relocation in the same building, short-term use, etc.
Propose and implement renewal construction in order to increase tenant satisfaction
◇Segmented adaptation of lots ◇Change of use ◇Environmental energy saving measures
Creation of rentable space which is more leasable by proposing relocations within the same building, etc.
Ensure the bottoming out of internal growth in Step 2 and move to the stage of rental income recovery in Step 3
Accomplished
(Note) The effective occupancy rate is the percentage in the total leasable space where rental income is actually being generated (contracted area subtracted by the free rent portion).
23
Approach to Bottoming Out Internal Growth of Offices ~ Image (1) ~
Increase of rental income
Reduction of rental income decline range
Work to increase the effective occupancy rate and improve the rent unit price decline rate byreducing tenant replacement rate through the prevention of departures
Increase of the effective occupancy rate (image)
1.5% increase of effective occupancy rate Impact of free rent on revenues mitigated with reduction of
replacement rate, even assuming long free rent periods
1.0% improvement of rent unit price decline rate
(Note1) The free rent ratio refers to the area for which rent cannot be collected due to free rent on the leasable space.(Note2) The area ratios are the percentages of tenant replacement and renewal with rent decline in the total leasable space of office properties.
Improvement of rent unit price decline rate (image)
24
87%
88%
89%
90%
91%
92%
93%
94%
95%
-4%
-2%
0%
2%
4%
FP20(Feb.12)
FP21(Aug.12)
FP22(Feb.13)
FP23(Aug.13)forecast
FP24(Feb.14)forecast
Actual occupancy factor (left axis)Rent unit price factor (left axis)Increase/decrease rate in rental income (left axis)Effective occupancy rate (right axis)
Rental income bottoming out due to improvement of effective occupancy rate as well as rent unit price declining rate
Image of Rental Income Bottoming Out (Office only)
Step2: Suppress tenant departuresStep1: Improvement of contract occupancy rate
Rental income declining Rental income bottoming out
Rental income
= Actual occupancy factor
+ Unit price factor
△2 to 3% = ±0% + △2 to 3%
Rental income
= Actual occupancy factor
+ Unit price factor
±0% = +1 to 2% + △1 to 2%
Rental income bottoming out due to improvement of effective occupancy rate as well as rent unit price declining rate
Rental income bottoming outRental income declining
Income increased due to improvement of effective occupancy rate
Rental income decline range reduced due to improvement in overall rent unit price declining
Approach to Bottoming Out Internal Growth of Offices ~ Image (2) ~
25
16.7%
14.4%
68.9%50.1%
20.3%
22.5%
5.8%
1.3%
21.4%
38.7%16.0%
12.7%
11.2%
30.9%
12.6%
56.5%
As of the end of FP14 (Feb. 09)just after the
“Lehman Shock”
Risk of rent decline and tenant departure decreased due to market rent gap reduction and tenant diversification
Average unit price of monthly rent:20,190 yen per tsubo
As of the end of FP22 (Feb. 13)
Composition of Rent Levels
Average unit price of monthly rent:16,624 yen per tsubo
Declined by Approx.17.7%
Below ¥15,000¥15,000 or higherBelow ¥20,000¥20,000 or higherBelow ¥25,000¥25,000 or higherBelow ¥30,000¥30,000 or higher
(for 1 tsubo / month)
Rent ratio 1% or more (office) Rent ratio 1% or more (non-office) Other
Non-office: total 5 tenantsTotal monthly rent
:¥191 million
Office: total 17 tenantsTotal monthly rent
: ¥470 million
Non-office: total 5 tenantsTotal monthly rent
: ¥234 million(Mainly long-term
contracts)
Office: total 9 tenantsTotal monthly rent
: ¥270 million(Rent ratio of largest
tenant is approx. 3.1%)
[Tenant ratio accounting for 1% or more in total contracted rental income(Note2) ]
(Note 1)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 Basis) (Note1) Tenant Diversification and Expansion of Customer Basis
(Note 2)If the same tenant is occupying multiple properties, it is countedas 1 tenant for each property.
26
External Growth Strategy
27
With regard to OJR’s 4 target property types (offices, retail facilities, logistics facilities and residential properties), cap rate of the respective transaction markets are improving in the order of residential properties, logistics facilities, offices and retail facilities, and rents for residential properties and logistics facilities in the rental market of the 4 main property types are in the “Recovery” stage whereas rents for offices and urban-type retail facilities are still in the “Bottom” stage.
Real Estate Market OutlookCurrent Situation
Image of cap rate Image of rents
Expansion
Recovery(Falling
cap rate)
Recession(Rising
cap rate)
Bottom
Residences
Logistics
Offices
Retail
Expansion
Recovery (Rising rents)
Recession(Falling rents)
BottomResidences
Logistics
Offices Retail
28
Dispositions
-10,000
-5,000
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
FP19(Aug.2011)
After privious PO
FP20(Feb.2012)
FP21(Aug.2012)
FP22(Feb.2013)
Financialannouncement(Apr.12,2013)
Offices Logistics Retail Residences Others
Achievements of external growth strategy ~After the previous PO~
Promoting flexible asset replacements in consideration of the real estate market changes
Disposed an old and relatively small office building and acquired a new office building
Acquired 2 residential properties as the rental residential market in the Sendai area anticipated a turnaround
Yield after depreciation of entire portfolio increased after disposition of residential properties and acquisition of retail facilities
Disposed a relatively small logistics facility as the logistics facilities transaction market anticipated a turnaround
Asset Acquisitions and Dispositions after the Previous PO Acquisitions
(millions of yen)
Acquired a 1st fee-based senior housingfacility for OJR
(Note) Variance between sale price and book value at the end of the previous period when the respective disposition recorded is described.
Period Property TypeSale price(million
yen)
SaleGain/Loss
(Note)(mil l ion yen)
Leasing NOIyield before
sale
Yield afterdepreciationbefore sale
FP20 Beside Shirogane Offices 1,360 95 6.9% 5.6%
FP21 Koshigaya Logistics Center Logistics 3,830 144 5.4% 3.9%
Financialannounce
mentShibaura Island Bloom Tower Residences 5,630 426 6.1% 2.6%
10,820 665 5.9% 3.4%Total 3
Period Property Type
Acquisitionprice
(millionyen)
AssumedLeasing NOI
yield atacquisition
AssumedYield after
depreciationat
acquisition
Building ageat
acquisition(years)
To totalappraisalvalue at
acquisition
Komaki Logistics Center Logistics 2,700 6.1% 3.1% 0.8 100.0%
Shibaura Island Air Tower Residences 6,030 6.7% 3.5% 4.4 100.0%
ORIX Kobe Sannomiya Building Offices 3,800 6.3% 3.6% 2.1 99.5%
Retail
(Category killers)
Belle Face Mishuku Residences 2,000 5.7% 4.3% 4.8 94.8%
Belle Face Miyamachi Residences 1,500 7.3% 4.6% 4.6 94.9%
Belle Face Bansui-street Residences 832 6.8% 4.3% 4.2 95.4%
Belle Face Togoshi Statio Residences 2,642 5.4% 3.2% 2.5 95.0%
Retail
(Urban-type)
Retail
(NSC)
GOOD TIME LIVING Shin-urayasu Others 1,550 6.9% 5.8% 5.9 94.5%
Belle Face Meguro Residences 3,330 5.1% 3.7% 2.7 96.0%
31,434 6.3% 4.2% 4.5 96.7%
Retail
(Urban-type)
Retail
(Urban-type)
Retail
(NSC)
Retail
(Category killers)
32,770 5.1% 4.0% 3.8 97.5%
64,204 5.7% 4.1% 4.2 97.1%Total 16
2.1 97.4%
Tecc Land Totsuka (Land) 6,020 5.5% 5.5% - 98.9%Follo
win
g th
e re
cent
PO
Financialannouncement
CROSS GARDEN KAWASAKI 12,950
ORE Yurakucho 9,900 4.2% 3.8%
Total 4
The Kitahama PLAZA 3,900 5.7% 3.1% 4.0
5.4% 3.8%
5.6% 5.7 90.9%
6.0 97.1%
96.9%
FP22
Total 12
6.2% - 95.8%
FP21
aune Sapporo Ekimae 1,900 6.5% 5.7% 18.0 96.0%Afte
r the
pre
viou
s P
O
FP19
FP20 Home Center Musashi SendaiIzumi (Land) 2,350 6.2%
Morioka Minami ShoppingCenter Sansa 2,800 7.4%
29
Aiming to increase the profitability and stability of portfolio by leveraging the strengths of a diversified portfolio REIT and advancing diversified investments
Diversified Investments
Portfolio Overall Offices
Total acquisition price ¥383.0 bil Total acquisition price ¥241.0 bil
No. 73 No. 41
Occupancy rate 98.5% Occupancy rate 96.5%
Leasing NOI yield 5.0% Leasing NOI yield 4.5%
Yield after depreciation 3.6% Yield after depreciation 3.3%
Logistics Facilities Retail Facilities
Total acquisition price ¥30.8 bil Total acquisition price ¥60.7bil
No. 4 No. 14
Occupancy rate 100.0% Occupancy rate 99.9%
Leasing NOI yield 5.6% Leasing NOI yield 5.9%
Yield after depreciation 3.5% Yield after depreciation 4.8%
Residential Properties Others
Total acquisition price ¥33.9 bil Total acquisition price ¥16.5 bil
No. 12 No. 2
Occupancy rate 97.2% Occupancy rate 100.0%
Leasing NOI yield 5.9% Leasing NOI yield 5.9%
Yield after depreciation 3.6% Yield after depreciation 4.4%
As of financial announcement of FP22(April 12, 2013)
Portfolio Diversification (acquisition price base)
Retail Facilities15.9%
Residential Properties
8.9%
Others4.3%
Offices62.9%Logistics
Facilities8.0%
30
Appendix
31Actual Financial Highlights(million yen)
(million yen)
FP18 FP19 FP20 FP21 FP22Feb. 2011 Aug. 2011 Feb. 2012 Aug. 2012 Feb. 2013
Funds From Operation 5,587 5,472 6,090 5,965 6,198
Depreciation 2,171 2,408 2,660 2,722 2,764
Finance Lease Cost 74 85 86 87 87
CAPEX 54 234 262 379 387
Free Cash Flow 2,190 2,260 2,485 2,429 2,464
FP18 FP19 FP20 FP21 FP22Feb. 2011 Aug. 2011 Feb. 2012 Aug. 2012 Feb. 2013
Operating Revenues 10,741 11,533 12,151 12,271 12,177
Operating Income 4,790 4,963 5,187 5,032 5,016
Ordinary Income 3,292 3,245 3,462 3,321 3,356
Net Income 3,291 3,308 3,430 3,315 3,346
Unitholders' Capital 137,814 150,895 150,895 150,895 150,895
Net Assets 141,373 154,471 154,326 154,279 154,310
Total Assets 318,738 341,514 345,469 344,997 349,154Number of investment units issued
(units) 251,622 284,434 284,434 284,434 284,434
Net Assets per Unit (yen) 561,847 543,084 542,575 542,409 542,517
Distribution per Unit (yen) 13,083 12,571 11,822 11,656 11,764
32Major TenantsTop 10 Tenants as of 22nd Period End (Reference) As of 21st 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 with the trustee.
Sector Property Name Rented Space(㎡)
Share of TotalRented Space
(%)
1NIPPON EXPRESSCo., Ltd.
Transportation Sakai Logistics Center NorthBuilding 64,004.80 10.2
2Arcland SakamotoCo., Ltd. Retailer
Home Center Musashi SendaiIzumi (Land) 56,109.95 8.9
3 SENKO Co., Ltd. Transportation Ichikawa Logistics Center 37,456.96 6.0
4 Keiyo DistributionWarehouse Co., Ltd. Warehousing Toda Logistics Center 36,158.60 5.8
5 DAIKYO REALDOINCORPORATED
Real Estate
Round-Cross minamiazabuRound-Cross TsukijiWe Will HatchoboriBelle Face Togoshi StatioBelle Face KamataBelle Face Hongo YumichoBelle Face Osaka ShinmachiBelle Face MiyamachiBelle Face Bansui-street
33,998.18 5.4
7 ORIX Real EstateCorporation Real Estate
Morioka Minami ShoppingCenter SansaShibaura Island Bloom TowerGOOD TIME LIVINGShin-urayasu
23,618.26 3.8
6 Fujita Kanko Inc. Hotel Cross Gate 19,744.39 3.1
8 (Not disclosed) (Note 2) Transportation Komaki Logistics Center 18,089.76 2.9
9 Cainz Co., Ltd. Retailer Kobe Momoyamadai ShoppingCenter (Land) 16,715.94 2.7
10
Mitsui Fudosan HousingLease Co.,Ltd.R.A. AssetManegement Inc.(Note 3)
Real Estate Shibaura Island Air Tower 12,357.65 2.0
318,254.49 50.7Total
Name of Tenant Rented Space(㎡)
Share of TotalRented Space
(%)
1 NIPPON EXPRESSCo., Ltd. 64,004.80 10.4
2 Arcland SakamotoCo., Ltd. 56,109.95 9.1
3 SENKO Co., Ltd. 37,456.96 6.1
4 Keiyo DistributionWarehouse Co., Ltd. 36,158.60 5.8
5 DAIKYO REALDOINCORPORATED 33,389.32 5.4
6 Fujita Kanko Inc. 19,744.39 3.2
7 ORIX Real EstateCorporation 19,474.66 3.2
8 (Not disclosed) (Note 2) 18,089.76 2.9
9 Cainz Co., Ltd. 16,715.94 2.7
10
Mitsui Fudosan HousingLease Co.,Ltd.R.A. Asset ManegementInc.(Note 3)
12,423.04 2.0
313,567.42 50.7
Name of Tenant
Total
33
ORE Yurakucho
Location Chiyoda Ward, Tokyo
Acquired April 1, 2013
Price ¥9,900 million
Appraisal Value ¥10,200 million
Price/Appraisal 97.1%
Built February 2007
Floors9 above ground3 below ground
Land Area 454.41㎡
Total Floor Area 4,286.53㎡
Seller ORIX Real Estate Corporation
Acquired a Urban retail facility located nearby JR Yurakucho Station
New Acquisitions from FP22 onward (1)
The tenants are comprised of restaurants, i.e. family restaurants, izakaya, etc. and an amusement facility, i.e. karaoke.
Many of the restaurants can expect not only office workers but also a wide customer base including seniors and lady shoppers throughout day and night, especially the convenient family restaurants and such. All kinds of shops are lined up for various customer scenes.
In addition, synergetic effects among tenants and with close retail facilities can be expected.
Tenant Features
This property is relatively new, completed about 6 years ago, and developed by ORIX Real Estate Corporation.
After the acquisition, operational management was entrusted to ORIX Real Estate Corporation, the previous owner who was involved from the stage of planning and development and is very familiar with the property.
ORIX Synergy
The property is located in Yurakucho, one of Japan’s foremost commercial and office areas.
Access is excellent as the property is directly connected to Hibiya Station on the Tokyo Metro Hibiya Line and is a 2-minute walk from JR Yurakucho Station, and the property is expected to attract a good level of customers due to its high visibility.
Location and Trade Area
34
The Kitahama PLAZA
The property is directly connected to Kitahama Station of the Osaka Municipal Subway Line and faces Sakaisuji.
It is a retail facility with 6 floors aboveground and 1 underground built next to the building of 54 storied 465 condominium units.
A population influx into the neighborhood area is expected due to construction of condominiums in recent years at former sites of old office buildings and such.
Demand from office workers as well as neighborhoodresidents can be expected due to locational features.
Location and Trade Area
The tenants comprise mainly of neighborhood trade area tenants such as a fitness club “Konami Sports”, a medical mall and a food supermarket.
Long-term fixed leasing agreements with periods of more than 10 years are contracted with the three anchor tenants, fitness club, medical mall and food supermarket and stable revenues can be expected.
Tenant Features
After the acquisition, operational management was entrusted to ORIX Real Estate Corporation.
ORIX Synergy
Location Osaka City, Osaka
Acquired April 1, 2013
Price ¥3,900 million
Appraisal Value ¥4,026 million
Price/Appraisal 96.9%
Built February 2009
Floors6 above ground 1 below ground
Land Area 5,124.56㎡(Note 1)
Total Floor Area 11,111.89㎡(Note 2)
Seller Godo Kaisha North Beach
New Acquisitions from FP22 onward (2) Acquired a Urban retail facility directly connected to Kitahama Station of the
Osaka Municipal Subway Line
(Note 1) The property is a compartmentalized ownership building and the site’s ownership ratio is 175,818 of 1,000,000.
(Note 2) OJR holds 80% of the property’s co-ownership.
35
CROSS GARDEN KAWASAKI
Development is expected for this area in the future such as large-scale developments nearby, i.e. condominiums, etc.
The population within 1 to 5 km radius trade area of the property is increasing.
The ratio of families with 2 to 4 people household is high in the walking distance trade area of 1 km radius and there are many relatively young families in their 30s or 40s.
Customers are expected to not only come by car but also by walk.
Location and Trade Area
With a food supermarket and Yamada Denki Co., Ltd., an large electronic appliance retailer, as the anchor tenants, there are 17 daily life-related tenants in total including a medical mall, drug store, 100 yen = one dollar shop, restaurant and game.
Tenant Features
The property is relatively new, completed about 2 years ago, and was developed by ORIX Real Estate Corporation.
Aiming to stabilize the property’s revenues and add value by entrusting operational management to ORIX Real Estate Corporation, the previous owner who was involved from the stage of planning and development and is very familiar with the property and by contributing to tenant sales with periodic events and such.
ORIX Synergy
Location Kawasaki City, Kanagawa
Acquired March 29, 2013
Price ¥12,950 million
Appraisal Value ¥13,300 million
Price/Appraisal 97.4%
Built February 2011
Floors4 above ground 1 below ground
Land Area 13,473.70㎡
Total Floor Area 29,965.35㎡
Seller ORIX Real Estate Corporation
New Acquisitions from FP22 onward (3) Acquired a NSC located in Kawasaki city, Kanagawa
36
Tecc Land Totsuka (land) Located 1-minute walk from Odoriba Station of the
Yokohama Municipal Subway Line. Area population is increasing and concentrated due to
accessibility to JR Yokohama Station and JR Totsuka Station.
It is located along a main road and is highly accessible by car
The trade area widely ranges from Totsuka Ward and Izumi Ward of Yokohama City to parts of Ayase City and has a rich market population.
Location and Trade Area
A business fixed-term land lease right contract is concluded with Yamada Denki Co., Ltd., a large electronic appliance retailer, and stable cash flow is expected to go forward.
Tecc Land Totsuka is its flagship store with wide shop space of 1,432 tsubos on the first floor and 1,420 tsubos on the second floor, aggregated to total of 2,852 tsubos. Besides home appliances and computers, it sells food, household goods, books, toys, etc., a wide variety of products.
Tenant Features
Acquired a Category Killers located in Yokohama city, Kanagawa
ORIX Real Estate Corporation acquired the land and is renting it to Yamada Denki Co., Ltd.
Yamada Denki opened its Tecc Land Totsuka store in 2011. After the acquisition, operational management was entrusted
to ORIX Real Estate Corporation, the previous owner who is very familiar with the property.
ORIX Synergy
Location Yokohama City, Kanagawa
Acquired April 1, 2013
Price ¥6,020 million
Appraisal Value ¥6,090 million
Price/Appraisal 98.9%
Land Area 11,989.96㎡
Seller ORIX Real Estate Corporation
New Acquisitions from FP22 onward (4)
37
Acquired a Fee-based senior House with nursing care which stable occupancy isexpected to go forward and acquired a residential property in central Tokyo, with excellent convenience as well as profitability & stability
New Acquisitions from FP22 onward (5)
GOOD TIME LIVING Shin-urayasu Belle Face Meguro
Location Shinagawa Ward, TokyoAcquired October 19, 2012Price ¥3,330 million
Appraisal Value ¥3,470 millionPrice/Appraisal 96.0%Built February 2010
Floors14 above ground 1 below ground
Land Area 1,203.17㎡
Total Floor Area 4,643.24㎡
Seller ORIX Real Estate Corporation
Location Urayasu City, ChibaAcquired September 6, 2012
Price ¥1,550 million
Appraisal Value ¥1,640 millionPrice/Appraisal 94.5%Built October 2006
Floors 4 above ground
Land Area 4,958.86㎡
Total Floor Area 4,111.04㎡
SellerHospitality・Residence・Two Special Purpose Companies
38
383.0
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
-50
0
50
100
150
200
250
300
350
400
Portfolio Strategy
(billions of yen)
Office Logistics Retail Residential Others Sold
FP1 FP2 FP3 FP4 FP5 FP6 FP7 FP8 FP9 FP10 FP11 FP12 FP13 FP14 FP15 FP16 FP17 FP18 FP19 FP20 FP21 FP22 Financial
End End End End End End End End End End End End End End End End End End End End End Endannouncem
ent
(8.02) (2.03) (8.03) (2.04) (8.04) (2.05) (8.05) (2.06) (8.06) (2.07) (8.07) (2.08) (8.08) (2.09) (8.09) (2.10) (8.10) (2.11) (8.11) (2.12) (8.12) (2.13) (4.12.13)
Promoted flexible property replacements in consideration of the real estate market changes
Financialannouncement
39Utilization of the ORIX Synergy (1)
The ORIX Group is involved not only in real estate but also debt, equity, operation and other varieties of business. The Group’s vast network is available to OJR for leasing and acquisition of properties.
The Group develops and manages offices, logistics facilities, retail facilities and residential properties and, furthermore, has the developmental and operational abilities for hotels and senior housing. This real estate business know-how of the ORIX Group can be used by OJR as it effectively and appropriately manages properties of a wide range of sectors and regions.
Promoted the utilization of the ORIX Group’s extensive business foundation and network for OJR’s external growth, internal growth and for the enhancement of personnel in the Asset Management Company
Utilization of the ORIX Group’s Business Network
OJR is able to use the ORIX Group’s business network of more than 1,000 based nationwide for leasing, market research, etc.
Utilization of the ORIX Group’s Regional Network
Operation
Debt
Equity
Real Estate
Life Insurance
Banking
Investment
Servicer
Automobilities
Ships/Aircraft
Environment/Energy
Investment Banking
Leasing
1. Group SapporoRepresentatives (54)
ORIX Corporation (1)ORIX Auto Corporation (50)ORIX Rentec Corporation (1)ORIX Life Insurance Corporation (1)Other (1)
Tokyo and Kanto Region (431)ORIX Corporation (22)ORIX Auto Corporation (320)ORIX Rentec Corporation (7)ORIX Life Insurance Corporation (9)ORIX Bank Corporation (2)Other (71)
3. Group Nagoya Representatives (232)ORIX Corporation (11)ORIX Auto Corporation (207)ORIX Rentec Corporation (1)ORIX Life Insurance Corporation (3)Other (10)
4. Group OsakaRepresentatives (139)
ORIX Corporation (8)ORIX Auto Corporation (83)ORIX Rentec Corporation (2)ORIX Life Insurance Corporation (5)ORIX Bank Corporation (1)Other (40)
5. Group Chugoku Representatives (97)
ORIX Corporation (7)ORIX Auto Corporation (78)ORIX Rentec Corporation (1)ORIX Life Insurance Corporation (3)Other (8)
6. Group FukuokaRepresentatives (193)
ORIX Corporation (8)ORIX Auto Corporation (158)ORIX Rentec Corporation (2)ORIX Life Insurance Corporation (4)ORIX Bank Corporation (2)Other (19)
The figures in parenthesis are the number of basesSource: ORIX Corporation
・Development and rental・Facility operation・Asset management・Investment and advisory services
・Loan servicing・Non-performing loan
investment
・Principal investment・Business rehabilitation support・Bond investment・Venture capital
・Car rental・Maintenance services・Vehicle management・Car sharing
・Asset management・Ship/aircraft investment
・Waste disposal and recycling・Energy-saving measures・Sale of solar power systems・Electric business
・M&A advisory・Fund management
Source: ORIX Corporation
・Machinery and equipment leasing・Automobile leasing・Leasing and rental of precision
measuring devices and IT-related equipment
・Ship/aircraft leasing
・Corporate finance・Housing loans・Card loans
Lending
2. Group Sendai Representatives (76)
ORIX Corporation (6)ORIX Auto Corporation (66)ORIX Rentec Corporation (1)ORIX Life Insurance Corporation (1)Other (2)
40
Promoted the utilization of the ORIX Group’s extensive business foundation and network for OJR’s external growth, internal growth and for the enhancement of personnel in the Asset Management Company
Examples of Utilization of the ORIX Synergy at OJR’s owned properties
■ GOOD TIME LIVING Shin-urayasu
Leasing utilized the ORIX Group’s information network
Tenant leasing for this property is conducted using the information network of ORIX Group’s Sapporo branch. Given that the area has a food culture, OJR succeeded in tenanting a local restaurant through the introduction of the ORIX Group’s Sapporo branch.
■ Morioka Minami Shopping Center Sansa
Market research and master leasing utilized the ORIX Group’s information networkBefore the acquisition of the property, OJR used the information of the ORIX Group’s Morioka branch to survey the property’s customer status by day of the week and hour, product strengths, reputation, etc. OJR decided to acquire the property as it evaluated that the local community-oriented services of the tenants was excellent.Following the acquisition, OJR concluded a rent guarantee-type master lessee agreement with ORIX Real Estate Corporation, contributing to the stability of rental income.
Management, operation and master leasing by the ORIX Group
This is OJR’s first investment in a fee-based senior housing facility. ORIX Living Corporation, which is very experienced in managing fee-based senior housing, has managed the property since its opening. In addition, ORIX Living Corporation provided information on the property’s locational features, occupancy status and satisfaction of residents when OJR was considering acquisition. OJR decided to acquire the property after it deemed the property excellent based on the information provided.
■ aune Sapporo Ekimae, formerly known as Heiseikankou Sapporo Ekimae Building (Note)
■ aune Kohoku Leasing utilized the ORIX Group’s information network
A restaurant was brought as a new tenant through the introduction of the ORIX Group. Furthermore, given that the area is one of Japan’s foremost bed towns with a large family population and is very education-oriented even in Kanagawa, some floors of the property were transformed from offices to tutor schools and restaurants, thereby realizing a new tenant composition in line with consumer demand.
■ Belle Face Bansui-Street and Belle Face Miyamachi Market research utilized the ORIX Group’s information network
Using the information network of the ORIX Group’s Sendai branch to grasp at an early stage the turnaround of the Sendai area’s rental market following the Great East Japan Earthquake, 2 rental apartments in Sendai were acquired.
Utilization of the ORIX Synergy (2)
(Note) “aune Sapporo Ekimae” was renamed from “Heiseikankou Sapporo Ekimae Building” as of April 1, 2013.
41
Date Price(¥million)
Toda Logistics Center March 28. 2008 9,600 2.5Ichikawa Logistics Center September 29. 2008 8,300 2.2Subtotal 2 properties 17,900 4.7Sakai Logistics Center North Building March 30. 2010 10,200 2.7Komaki Logistics Center June 30. 2011 2,700 0.7Subtotal 2 properties 12,900 3.4Logistics Facilities Total 4 properties 30,800 8.0Nihon Jisho Minami Aoyama Building October 31. 2003 2,548 0.7CUBE Daikanyama March 31. 2004 2,435 0.6ORE Yurakucho(Note 3) April 1. 2013 9,900 2.6Subtotal 3 properties 14,883 3.9aune Kohoku March 10. 2010 4,000 1.0aune Makuhari March 10. 2010 3,600 0.9Maruetsu Sagamino March 1. 2011 2,350 0.6CROSS GARDEN KAWASAKI(Note 3) March 29. 2013 12,950 3.4Tecc Land Totsuka (Land)(Note 3) April 1. 2013 6,020 1.6Subtotal 5 properties 28,920 7.5Kobe Momoyamadai Shopping Center (Land) March 5. 2010 3,260 0.9Okayama Kume Retail Facility January 31. 2011 2,750 0.7Home Center Musashi Sendai Izumi (Land) January 11. 2012 2,350 0.6aune Sapporo Ekimae(Note 4) June 29. 2012 1,900 0.5Morioka Minami Shopping Center Sansa July 31. 2012 2,800 0.7The Kitahama PLAZA(Note 3) April 1. 2013 3,900 1.0Subtotal 6 properties 16,960 4.4Retail Facilities Total 14 properties 60,763 15.9Park Axis Nishi Azabu Stage December 1. 2001 1,219 0.3We Will Hatchobori June 1. 2011 2,370 0.6Shibaura Island Air Tower July 28. 2011 6,030 1.6Belle Face Togoshi Statio May 9. 2012 2,642 0.7Belle Face Meguro(Note 3) October 19. 2012 3,330 0.9Subtotal 5 properties 15,591 4.1Belle Face Kamata June 1. 2011 3,550 0.9Belle Face Hongo Yumicho June 1. 2011 3,340 0.9Belle Face Mishuku March 30. 2012 2,000 0.5Subtotal 3 properties 8,890 2.3Belle Face Osaka Shinmachi June 1. 2011 3,684 1.0Belle Face Amagasaki June 1. 2011 3,440 0.9Belle Face Miyamachi April 5. 2012 1,500 0.4Belle Face Bansui-street April 5. 2012 832 0.2Subtotal 4 properties 9,456 2.5Residential 12 Total 33,937 8.9Cross Gate January 10. 2002 15,040 3.9GOOD TIME LIVING Shin-urayasu(Note 3) September 6. 2012 1,550 0.4Subtotal 2 properties 16,590 4.3Others Total 2 properties 16,590 4.3
383,094.0 100.0
Other Areas
Other Parts ofthe GreaterTokyo Area
RetailFacilities
ResidentialProperties
Others
AreaType
Other Areas
6 CentralTokyo Wards
Other Parts ofthe GreaterTokyo Area
Other Areas
6 CentralTokyo Wards
RemainingTokyo Wards
LogisticsFacilities
Grand Total 73 properties
% toTotal Acquisition Price
(Note 1)(Note 2)Property
Acquisition
Other Parts ofthe GreaterTokyo Area
Portfolio Summary
(Note 1) “Percentage to the total acquisition price” refers to the acquisition price of each property under management as a proportion of the total acquisition price.(Note 2) Figures are rounded to the first decimal place for the “Percentage to the total acquisition price.” Totals for the “Percentage to the total acquisition price” may not tally due to this rounding.(Note 3) The properties acquired in and after the 22nd Fiscal Period are GOOD TIME LIVING Shin-urayasu, Belle Face Meguro, ORE Yurakucho, The Kitahama PLAZA, CROSS GARDEN KAWASAKI and Tecc Land Totsuka (Land).(Note 4) “aune Sapporo Ekimae” was renamed from “Heiseikankou Sapporo Ekimae Building” as of April 1, 2013.
Date Price(¥million)
Aoyama Suncrest Building December 1. 2001 3,356 0.9Round-Cross Ichi-bancho December 1. 2001 3,900 1.0Round-Cross Nishi Shinjuku December 1. 2001 2,650 0.7DT Gaien December 21. 2001 2,430 0.6Nihonbashi East Building December 21. 2001 1,720 0.4Yoyogi Forest Building December 21. 2001 1,473 0.4Round-Cross Minami Azabu December 21. 2001 1,394 0.4Round-Cross Akasaka January 10. 2002 2,624 0.7Round-Cross Mita January 10. 2002 1,748 0.5Shiba Daimon Building January 10. 2002 2,195 0.6Round-Cross Tsukiji January 10. 2002 3,378 0.9ORIX Shiba 2-chome Building September 29. 2003 7,500 2.0Aoyama 246 Building March 3. 2004 5,200 1.4Round-Cross Shinjuku April 28. 2006 8,020 2.1
September 30. 2005April 28. 2006
June 26 . 2006December 4. 2006
Round-Cross Shinjuku 5-chome April 26. 2007 4,500 1.2Nihonbashi Honcho 1-chome Building March 28. 2007 10,500 2.7Round-Cross Shibuya March 28. 2008 3,500 0.9ORIX Suidobashi Building March 28. 2008 3,000 0.8ORIX Shinagawa Building June 27. 2008 15,200 4.0ORIX Real Estate Nishi Shinjuku Building March 27. 2009 13,600 3.6OX Tamachi Building March 29. 2010 6,730 1.8Subtotal 23 properties 144,478 37.7Carrot Tower December 1. 2001 5,479 1.4Toyo MK Building December 1. 2001 5,270 1.4Beside Kiba December 21. 2001 2,450 0.6ORIX Ikebukuro Building April 18. 2003 9,577 2.5Round-Cross Kamata March 1. 2006 5,640 1.5KN Jiyugaoka Plaza May 30. 2007 3,110 0.8ORIX Meguro Building July 29. 2010 6,350 1.7Akihabara Business Center June 1. 2011 5,060 1.3Subtotal 8 properties 42,936 11.2Neo City Mitaka December 1. 2001 2,200 0.6Round-Cross Kawasaki April 27. 2004 4,130 1.1Omiya Miyacho Building March 27. 2009 4,400 1.1Omiya Shimocho 1-chome Building March 29. 2010 3,750 1.0Subtotal 4 properties 14,480 3.8Nagoya Itochu Building September 29. 2003 4,500 1.2ORIX Koraibashi Building April 27. 2005 5,560 1.5Lunar Sendai June 28. 2007 8,500 2.2ORIX Nagoya Nishiki Building September 29. 2008 12,500 3.3ORE Sapporo Building October 1. 2010 4,250 1.1ORIX Kobe Sannomiya Building September 29. 2011 3,800 1.0Subtotal 6 properties 39,110 10.2Offices Total 41 properties 241,004 62.9
% toTotal Acquisition
Price(Note 1)(Note 2)
Property
Seafort Square / Center Building
Acquisition
18,000
5.7
Other Areas
4.7
21,860ORIX Akasaka 2-chome Building
Offices
6 CentralTokyo Wards
RemainingTokyo Wards
Other Parts ofthe GreaterTokyo Area
AreaType
List of all real estate owned by ORIX JREIT as of financial announcement (April 12, 2013)
42Portfolio Map
43Portfolio Data (1)Average Disposition/Acquisition Price after IPO Property Size (Floor area)
Acquisition Price Ranges Building Age
Average22,171
㎡
Under3,000 m2
3.17billion yen
5.96billion yen
Average15,734
㎡
End of 1st Period(Aug. 31, 2002)
Over 15,000 m2
3,000 m2-15,000 m2
Under3,000 m2
40.3%
46.0%
13.6% Over 15,000 m2
3,000 m2-15,000 m2
63.6%
28.9%
Financial announcement of FP22(Apr. 12, 2013)
(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)
Financial announcement of FP22(Apr. 12, 2013)
Average¥2.55billion
¥1-¥5billion50.2% ¥5-¥10billion
15.9%
Under¥1billion
7.2% Over ¥10billion26.7%
End of 1st Period(Aug. 31, 2002)
¥1-¥5billion34.9%
Over ¥10billion33.9%Average
¥5.24billion
¥5-¥10billion31.0%
Financial announcement of FP22(Apr. 12, 2013)
5-10yr24.8%
Under 5yr19.0%
15-20yr6.2%
10-15yr29.6%
Over 20yr20.4%
Average 12.1
years
Average10.8
years
5-10yr41.8%
Under 5yr19.2%
15-20yr11.3%
10-15yr11.2%
Over 20yr16.5%
Under ¥1billion 0.2%
7.5%
44Portfolio Data (2)Area Type
End of 1st Period(Aug. 31, 2002)
Other Area2.1%
Other Parts of the Greater Tokyo Area
17.3%
17.1% 63.5%
6 Central Tokyo Wards
Remaining Tokyo Wards
Financial announcement of FP22(Apr. 12, 2013)
Other Area20.5% 6 Central
Tokyo Wards
45.7%
Remaining Tokyo Wards
13.5%
20.3%
Other Parts of the Greater Tokyo Area
End of 1st Period(Aug. 31, 2002)
Financial announcement of FP22(Apr. 12, 2013)
Residentialproperties
4.1%Retailfacilities 1.5%
Others15.1%
Logisticsfacilities
8.0%
Offices62.9%
Offices79.4%
Retail facilities
15.9%
Others4.3%
8.9%
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.
45Overview of Appraisal Value Unrealized gain/loss continues to improve due to depreciation and property
acquisitions below the appraisal value, etc. in addition to improvement of cap rate
(Note 1) Unrealized gain/loss is calculated in subtracting the book value from the appraisal value, both as of the end of 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 fiscal period.
297.4 289.2273.3 262.2
277.9 285.0314.5 318.1 327.1 333.0
361.015.8
10.5
1.7
-1.8
-4.0 -4.3-3.0 -2.7
-1.7-0.6 -0.5
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
Book value Appraisal value Unrealized gain/loss ratio
FP13 End FP14 End FP15 End FP16 End FP17 End FP18 End FP19 End FP20 End FP21 End FP22 End Financial announcement
(billion yen) (%)
FP13 FP14 FP15 FP16 FP17 FP18 FP19 FP20 FP21 FP22 Financialannouncement
(End ofAug. 2008)
(End ofFeb. 2009)
(End ofAug. 2009)
(End ofFeb. 2010)
(End ofAug. 2010)
(End ofFeb. 2011)
(End ofAug. 2011)
(End ofFeb. 2012)
(End ofAug. 2012)
(End ofFeb. 2013)
(Apr 12.2013)
Number ofproperties 47 48 49 49 52 54 62 63 68 70 73
Appraisal value(billion yen) 297.4 289.2 273.3 262.2 277.9 285.0 314.5 318.1 327.1 333.0 361.0
Book value(billion yen) 256.7 261.8 268.8 266.9 289.4 297.9 324.3 326.7 332.6 335.1 362.6Unrealized
gain/loss (billion yen) 40.6 27.4 4.4 -4.7 -11.4 -12.8 -9.7 -8.6 -5.4 -2.1 -1.6Unrealized
gain/loss ratio (%) 15.8 10.5 1.7 -1.8 -4.0 -4.3 -3.0 -2.7 -1.7 -0.6 -0.5
46Appraisal Value List at the end of FP22 (1)
※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 22nd fiscal period
Book value Appraisal CR Gain/loss Change % Change CR Change Chg gain/Loss(\million) (\million) (\million) (\million) (\million)
● Aoyama Suncrest Building 3,436 3,360 4.7% -76 -60 -1.8% -0.1% -45
● Round-Cross Ichi-bancho 3,436 3,070 5.0% -366 -10 -0.3% -0.1% 10
● Round-Cross Nishi Shinjuku 2,488 2,810 4.5% 321 100 3.7% -0.1% 107
● DT Gaien 2,229 2,030 4.9% -199 30 1.5% -0.1% 46
● Nihonbashi East Building 1,586 1,210 5.4% -376 0 0.0% -0.1% -10
● Yoyogi Forest Building 1,411 1,260 5.2% -151 10 0.8% -0.1% 16
● Round-Cross Minami Azabu 1,232 1,302 5.9% 69 0 0.0% 0.0% 5
● Round-Cross Akasaka 2,794 2,396 5.6% -398 -26 -1.1% -0.2% -15
● Round-Cross Mita 1,702 1,405 5.4% -297 42 3.1% -0.1% 8
● Shiba Daimon Building 2,266 2,462 5.4% 195 43 1.8% -0.1% 52
● Round-Cross Tsukiji 3,062 3,391 5.5% 328 -36 -1.1% 0.0% -19
● ORIX Shiba 2-chome Building 6,616 8,213 5.1% 1,596 96 1.2% -0.1% 132
● Aoyama 246 Building 5,381 6,693 4.3% 1,311 -7 -0.1% 0.0% 1
● Round-Cross Shinjuku 7,700 8,380 4.4% 679 110 1.3% -0.1% 142
● Seafort Square / Center Building 16,934 13,750 4.8% -3,184 -300 -2.1% -0.2% -259 ● ORIX Akasaka 2-chome Building 20,699 19,250 4.3% -1,449 -90 -0.5% 0.0% 20● Round-Cross Shinjuku 5-chome 4,147 3,220 4.6% -927 30 0.9% -0.1% 65
● Nihonbashi Honcho 1-chome 9,950 8,020 4.1% -1,930 -420 -5.0% -0.3% -364
● Round-Cross Shibuya 3,387 2,240 4.3% -1,147 20 0.9% 0.0% 35
● ORIX Suidobashi Building 2,869 2,620 4.9% -249 0 0.0% 0.0% 17
● ORIX Shinagawa Building 14,776 11,200 4.3% -3,576 0 0.0% 0.0% 60
● ORIX Real Estate Nishi Shinjuku 13,457 11,500 4.4% -1,957 100 0.9% 0.0% 141
● OX Tamachi Building 6,726 6,760 4.8% 33 10 0.1% -0.1% 22
▲ Carrot Tower 4,231 5,550 5.3% 1,318 100 1.8% -0.1% 149
▲ Toyo MK Building 4,199 5,190 5.6% 990 80 1.6% -0.1% 112
▲ Beside Kiba 2,103 2,480 5.5% 376 -10 -0.4% -0.1% 12
▲ ORIX Ikebukuro Building 8,577 10,510 4.9% 1,932 -60 -0.6% 0.0% -8
▲ Round-Cross Kamata 5,245 5,724 5.6% 478 -47 -0.8% -0.1% 2
▲ KN Jiyugaoka Plaza 3,122 2,630 4.5% -492 0 0.0% 0.0% 6
▲ ORIX Meguro Building 6,429 6,130 5.0% -299 -40 -0.6% -0.1% 10
▲ Akihabara Business Center 4,969 5,200 4.7% 230 20 0.4% 0.0% 69
■ Neo City Mitaka 1,948 2,770 5.6% 821 -30 -1.1% -0.1% -15
■ Round-Cross Kawasaki 3,867 5,033 5.5% 1,165 61 1.2% -0.1% 80
■ Omiya Miyacho Building 4,136 4,330 5.6% 193 90 2.1% -0.1% 131
■ Omiya Shimocho 1-chome Building 3,616 3,910 5.6% 293 90 2.4% -0.1% 125
★ Nagoya Itochu Building 4,811 4,530 6.3% -281 50 1.1% -0.1% 86
★ ORIX Koraibashi Building 4,843 4,357 5.2% -486 -20 -0.5% 0.0% 31
★ Lunar Sendai 7,742 5,070 5.8% -2,672 0 0.0% 0.0% 56
★ ORIX Nagoya Nishiki Building 11,678 7,700 5.2% -3,978 0 0.0% 0.0% 111
★ ORE Sapporo Building 3,990 4,547 6.6% 556 19 0.4% 0.0% 91
★ ORIX Kobe Sannomiya Building 3,691 3,840 6.0% 148 20 0.5% 0.0% 71
227,502 216,043 - -11,459 - - - -
■ Toda Logistics Center 9,058 9,300 5.1% 241 170 1.9% -0.1% 244
■ Ichikawa Logistics Center 7,746 7,880 5.3% 133 140 1.8% -0.1% 222
★ Sakai Logistics Center North Building 9,407 11,200 5.6% 1,792 200 1.8% -0.1% 357
★ Komaki Logistics Center 2,599 2,870 5.9% 270 40 1.4% -0.1% 81
28,811 31,250 - 2,438 - - - -
Logi
stic
sFa
cilit
ies
Offi
ces
Type PropertyAreaEnd of the 22nd Fiscal Period Change from the previous Period
Offices Total
Logistics Facilities Total
47Appraisal Value List at the end of FP22 (2)
(Following are for reference)
(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 two properties acquired during FP22.(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) “aune Sapporo Ekimae” was renamed from “Heiseikankou Sapporo Ekimae Building” as of April 1, 2013.
Appraisal value by type (Note 2) (Note 3)
Book value Appraisal CR Gain/loss Change % Change CR Change Chg gain/Loss(\million) (\million) (\million) (\million) (\million)
● Nihon Jisho Minami Aoyama Building 2,495 3,356 4.3% 860 0 0.0% 0.0% 4
● CUBE Daikanyama 2,436 2,246 5.0% -190 0 0.0% 0.0% 6
■ aune Kohoku 3,854 3,970 5.6% 115 -30 -0.8% 0.0% -35
■ aune Makuhari 3,427 3,910 5.8% 482 10 0.3% 0.0% 50
■ Maruetsu Sagamino 2,324 2,430 6.0% 105 0 0.0% 0.0% 13
★ Kobe Momoyamadai SC (land) 3,314 3,230 - -84 20 0.6% - 11
★ Okayama Kume Retail Facility 2,671 2,867 6.8% 195 38 1.3% -0.1% 68
★ Home Center Musashi Sendai Izumi (land) 2,381 2,465 - 83 3 0.1% - 3
★ aune Sapporo Ekimae 1,916 2,007 6.1% 90 7 0.4% 0.0% 14
★ Morioka Minami Shopping Center Sansa 2,890 3,080 6.8% 189 0 0.0% 0.0% 0
27,711 29,561 - 1,849 - - - -
● Park Axis Nishi Azabu Stage 1,070 955 5.0% -115 17 1.8% -0.1% 24
● Shibaura Island Bloom Tower 5,203 5,608 5.4% 404 0 0.0% 0.0% 99
● We Will Hatchobori 2,323 2,356 4.8% 32 -13 -0.5% 0.0% 10
● Shibaura Island Air Tower 5,835 6,475 5.4% 639 -27 -0.4% 0.0% 65
● Belle Face Togoshi Statio 2,632 2,812 5.0% 179 28 1.0% -0.1% 56
● Belle Face Meguro 3,347 3,470 4.9% 122 - - - -
▲ Belle Face Kamata 3,464 3,758 5.3% 293 56 1.5% -0.2% 97
▲ Belle Face Hongo Yumicho 3,278 3,439 4.8% 160 -22 -0.6% 0.0% 10
▲ Belle Face Mishuku 2,042 2,148 5.1% 105 26 1.2% 0.0% 38
★ Belle Face Osaka Shinmachi 3,553 4,086 5.6% 532 92 2.3% 0.0% 149
★ Belle Face Amagasaki 3,349 3,403 5.8% 53 0 0.0% 0.0% 48
★ Belle Face Miyamachi 1,491 1,600 6.2% 108 20 1.3% -0.1% 40
★ Belle Face Bansui-Street 831 896 6.1% 64 14 1.6% -0.1% 24
38,423 41,006 - 2,582 - - - -
■ Cross Gate 11,091 13,500 6.3% 2,408 0 0.0% -0.1% 178
■ GOOD TIME LIVING Shin-urayasu 1,563 1,640 6.5% 76 - - - -
12,655 15,140 - 2,484 - - - -
335,104 333,000 - -2,104 - - - -
Type
Ret
ail F
acili
ties
Res
iden
tial P
rope
rtie
s
Total
Retail Facilities Total
Residential Properties Total
OthersOthers Total
AreaChange from the previous PeriodEnd of the 22nd Fiscal Period
Property
Book value Appraisal CR Gain/loss Change % Change CR Change Chg gain/Loss(\million) (\million) (\million) (\million) (\million)
Offices 41 227,502 216,043 5.0% -11,459 -35 0.0% -0.1% 1,299
Logistics Facilities 4 28,811 31,250 5.4% 2,438 550 1.8% -0.1% 905
Retail Facilities 8 22,016 23,866 5.8% 1,850 25 0.1% 0.0% 121
Residential Properties 12 35,076 37,536 5.3% 2,460 191 0.5% 0.0% 788
Others 1 11,092 13,500 6.3% 2,408 0 0.0% -0.1% 254
Total (excluding land and propertiesacquired in FP22) 66 324,497 322,195 5.2% -2,303 731 0.2% -0.1% 3,171
Land 2 5,695 5,695 - -1 23 0.4% - 14
Properties acquired in FP22 2 4,911 5,110 5.4% 198 - - - -
Total 70 335,104 333,000 - -2,104 - - - -
End of the 22nd Fiscal Period Change from the previous PeriodNo.ofPropertiesType
48Financial Data
【FP22】 【FP23】
Credit ratings
List of lenders Total: 25 institutions163,890 million yen
Total: 20,000 million yenInvestment corporation bonds
Financial indicators(As of April 12, 2013)
Refinancing since FP22
S&P Outlook : StableR&I Rating outlook : StableJCR Rating outlook : Stable
Long-term rating: A-, Short-time rating: A-2Issuer rating: A+Long-term senior debt rating : AA-
Amount \12.0 billion
Interesttype
Fixed
Interestrate
2.08%
Maturity 3 years
Previous Terms
Amount \5.0 billion \2.0 billion \5.0 billion
Interesttype
Fixed Fixed Fixed
Interestrate
0.76% 0.84% 1.45%
Maturity 5 years 5 years 8 years
New Terms
Amount \14.0 billion
Interesttype
Fixed
Interestrate
1.69%
Maturity 3 years
PreviousTerms
Amount \9.9 billion
Interesttype
Fixed
Interestrate
1.59%
Maturity 5 years
PreviousTerms New Terms
Amount \9.9 billion
Interesttype
Fixed
Interestrate
1.07%
Maturity 6 years
Amount \10.0 billion \4.0 billion
Interesttype
Fixed Fixed
Interestrate
0.75% 0.91%
Maturity 2 years 5 years
New Terms
Balance(million yen)
Interestrate Issued date Period
Unsecured InvestmentCorporation Bond No. 2 5,000 1.44% Aug. 12, 2010 4 yrsUnsecured InvestmentCorporation Bond No. 3 5,000 1.58% Nov. 18, 2010 5 yrsUnsecured InvestmentCorporation Bond No. 4 5,000 1.40% Jan. 27, 2011 3 yrsUnsecured InvestmentCorporation Bond No. 5 5,000 0.76% Feb. 8, 2013 5 yrs
Financial Institution Outstanding(million) Financial Institution Outstanding
(million)
Sumitomo Mitsui Trust Bank, Limited 26,538 16.2 % The Shizuoka Bank, Ltd. 2,000 1.2 %
Sumitomo Mitsui Banking Corporation 26,094 15.9 %THE NISHI-NIPPON CITY BANK,LTD. 1,800 1.1 %
Development Bank of Japan Inc. 21,125 12.9 %Mitsui Life Insurance CompanyLimited 1,000 0.6 %
Mitsubishi UFJ Trust and BankingCorporation 19,015 11.6 % The Hyakugo Bank, Ltd. 1,000 0.6 %
National Mutual Insurance Federation ofAgricultural Cooperatives 10,000 6.1 % Taiyo Life Insurance Company 1,000 0.6 %
Mizuho Corporate Bank, Ltd. 9,069 5.5 % THE KAGAWA BANK, Ltd. 1,000 0.6 %
The Norinchukin Bank 8,500 5.2 % The Hiroshima Bank,Ltd. 1,000 0.6 %
Aozora Bank, Ltd. 7,250 4.4 % The Bank of Yokohama,Ltd. 1,000 0.6 %
Resona Bank, Limited 6,300 3.8 % Shimane bank, Ltd. 900 0.5 %
The Shinkumi Federation Bank 5,800 3.5 % THE MINATO BANK, LTD. 600 0.4 %
Shinsei Bank, Limited 4,400 2.7 % The Toho Bank, Ltd. 500 0.3 %
The Bank of Fukuoka, Ltd. 4,000 2.4 % ShinGinko Tokyo, Limited 500 0.3 %
ORIX Bank Corporation 3,500 2.1 %
Ratio Ratio
Outstandinginterest-bearing debt ¥175,493 million ¥183,890 million
LTV(based on total assets) 50.3 % 48.8 %
LTV(based on unitholders’ capital) 53.8 % 52.0 %
Average interest rate 1.48 % 1.35 %
Average funding cost 1.85 % -
Fixed-interest debt ratio 86.6 % 86.7 %
Average remaining years tomaturity 3.1 years 3.5 years
Commitment lines(total for 6 lenders) ¥31,500 million ¥31,500 million
End of FP22(Feb.28, 2013)
Financialannouncement(Apr.12, 2013)
49
Individuals, etc. Financial, Inst. SecuritiesOther Corp. Overseas
Investment Units
21st period284,434 units
22nd 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 Ratio” data.
(Note 2) “STATE STREET BANK AND TRUST COMPANY 505223” was not among the 10 unitholders in the 21st fiscal period, so the numbers of units and share for the previous fiscal period are not shown.
Units Share(%)
Units Share(%)
Units ChangeRatio (%)
Japan Trustee Services Bank, Ltd.(Trust accounts)
46,799 16.4 59,849 21.0 13,050 27.9
Trust & Custody Services Bank, Ltd.(Securities investment trust accounts)
20,846 7.3 18,217 6.4 -2,629 -12.6
The Master Trust Bank of Japan, Ltd.(Trust accounts)
9,021 3.1 13,195 4.6 4,174 46.3
The Nomura Trust and Banking Co., Ltd.(Investment accounts)
16,895 5.9 13,149 4.6 -3,746 -22.2
JP MORGAN CHASE BANK 385174 11,447 4.0 11,343 3.9 -104 -0.9
NOMURA BANK (LUXEMBOURG)S.A.
8,168 2.8 10,395 3.6 2,227 27.3
ORIX Life Insurance Corporation 8,905 3.1 8,905 3.1 0 0.0
Metlife Alico JPY 4,000 1.4 4,000 1.4 0 0.0
National Mutual Insurance Federation ofAgricultural Cooperatives
3,901 1.3 3,901 1.3 0 0.0
STATE STREET BANK AND TRUSTCOMPANY 505223 (Note 2)
- - 3,473 1.2 - -
Top 10 UnitholdersFP21 FP22 Change
UnitsShare(%)
UnitsShare(%)
UnitsChangeRatio(%)
Individuals, etc. 58,270 20.5 51,584 18.1 -6,686 -11.5Financial, Inst. 145,021 51.0 144,139 50.7 -882 -0.6
Major Banks, etc. 2,354 0.8 931 0.3 -1,423 -60.5Regional Banks 14,105 5.0 8,624 3.0 -5,481 -38.9Trust Banks 96,638 34.0 107,504 37.8 10,866 11.2Life Insurance 19,183 6.7 18,314 6.4 -869 -4.5Non-life Ins. 4,201 1.5 500 0.2 -3,701 -88.1Others 8,540 3.0 8,266 2.9 -274 -3.2
Securities 6,221 2.2 3,144 1.1 -3,077 -49.5Other Corp. 7,649 2.7 8,368 2.9 719 9.4Overseas 67,273 23.7 77,199 27.1 9,926 14.8
284,434 100.0 284,434 100.0 - -
UnitholderCategories
FP21 FP22 Change
Total
UnitholdersShare(%)
UnitholdersShare(%)
UnitholdersChangeRatio(%)
Individuals, etc. 17,837 97.1 17,253 96.9 -584 -3.3Financial, Inst. 74 0.4 68 0.4 -6 -8.1
Major Banks, etc. 1 0.0 1 0.0 0 0.0Regional Banks 16 0.1 13 0.1 -3 -18.8Trust Banks 13 0.1 12 0.1 -1 -7.7Life Insurance 8 0.0 7 0.0 -1 -12.5Non-life Ins. 3 0.0 3 0.0 0 0.0Others 33 0.2 32 0.2 -1 -3.0
Securities 21 0.1 16 0.1 -5 -23.8Other Corp. 257 1.4 262 1.5 5 1.9Overseas 185 1.0 205 1.2 20 10.8
18,374 100.0 17,804 100.0 -570 -3.1Total
FP22 ChangeUnitholderCategories
FP21
50
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 estate transaction , etc.)
Asset management company
100% owned
100%owned
・Engages in diversified businesses primarily on the financial and real estate sectors
ORIX Corporation
・Core company of the Group’s real estate business
・Leading the industry in development and transaction of office buildings, logistics facilities, condominiums, etc.
ORIX Real Estate Corporation
Supp
ly o
f pro
pert
ies
(pip
elin
e)
Supp
ly o
f pro
pert
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 dispositions and acquisitions
ApplicationInvestment and Operation
Department
Risk Managementand Compliance Department
RiskManagement
and ComplianceCommitteeJointly conduct DD*
Reporting DD* results
Property disposition/acquisition
decided
OJR’s Board of Directorsprimarily comprised
of supervisory directorswithout interest relationship
OAMBoard ofDirectors
(Note)”Due Diligence” is inspection and assessment of properties from physical, legal and economic perspectives.
■OJR’s Board of DirectorsComprised of 1 Executive Director and 3 Supervisory
Directors a real estate appraiser, lawyer and certifiedpublic accountant with no relationship of interest
Acquisitions from and dispositions to interested parties must gain majority approval from the supervisory directors
■Asset Management Company (OAM)Conducts thorough due diligence in accordance to
various 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.
51Organization of OAM
Shareholders’ MeetingIndependent Public
AccountantsBoard of Directors
President and CEO
Corporate Auditor
Established specialized teams for each real estate sector
Investment and OperationDepartment
Finance and AccountingDepartment
Corporate PlanningDepartment
Internal AuditDepartment
Risk Management andCompliance Department
Risk Management andCompliance Committee
52Numerical 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.
Glossary・A “diversified portofolio REIT” is a real estate investment corporation that invests in a variety of sectors of real estate, etc., such as offices, logistics facilities, retail facilities and residences.
・The“ORIX synergy”refers to the cooperative relationship between OJR, ORIX Corporation and its group companies.・“Direct property management” is the supplementation of property management operations by OJR’s asset management company, ORIX AssetManagement Corporation, through leasing activities, adding of value to properties and other means while utilizing the ORIX synergy.
・“Acquisition price” is the price recorded in the sale agreement, etc. and does not include consumption tax or other expenses related to acquisition.
・Calculation of“Leasing NOI (Net Operating Income)”: Rental operating income (Rental operating revenue–Rental operating expenses) +Depreciation “Leasing NOI yield” is obtained by dividing the “annualized leasing NOI” by the “acquisition price”. The figure is rounded to the nearest first decimal place.The“annualized leasing NOI”uses either of the following for each property depending on the period when it was acquired. Properties acquired during the 22nd Fiscal Period (ended February 2013) or earlier: Actual annualized figure for the 22nd Fiscal Period (endedFebruary 2013).Properties acquired during the 23rd Fiscal Period (ending August 2013): The net operating income for the first fiscal year in the discountedcash flow (DCF) method recorded in the appraisal at the time of acquisition.
・“Yield after depreciation” is obtained by dividing the “annualized income after depreciation” by the “book value”. The figure is rounded to thenearest first decimal place.“Annualized income after depreciation” uses either of the following for each property depending on the period when it was acquired.・Properties acquired during the 22nd Fiscal Period (ended February 2013): Actual annualized figure for the 22nd Fiscal Period (endedFebruary 2013).・Properties acquired during the 23rd Fiscal Period (ending August 2013): The net operating income for the first fiscal year in the discountedcash flow (DCF) method recorded in the appraisal at the time of acquisition less the expected depreciation calculated by OJR. OJRcalculates the expected depreciation using the straight-line method depending on the service life of the properties, the same as for OJR’sowned assets,taking into consideration information from engineering reports and such.
・“Book value” uses either of the following for each property depending on the period when it was acquired.・Properties acquired during the 22nd Fiscal Period (ended February 2013) or earlier: The book value as of the end of the 22nd Fiscal Period(ended February 2013). ・Properties acquired during the 23rd Fiscal Period (ending August 2013): The acquisition price.
・“Occupancy rate” is sought by dividing “rented space” by “rentable space” and is rounded to the nearest first decimal place. Figures as of theend of the 22nd Fiscal Period (ended February 2013) are used.“Rented space” and “rentable space” concern either the owned portions and ownership ratio of real estate managed by OJR. “Rented space” refers to the space included in the rentable space for which lease contracts are actually concluded.“Rentable space” refers to the total floor space in OJR’s owned portion of each real estate that is practically leasable (including the concernedspace when leasing common spaces, etc.).
Terminology
53
・“Unrealized gain/loss” is the difference between the “appraisal value” and the “book value”. Figures are rounded off to the nearest specified unit.“Appraisal value” uses either of the following for each property depending on the period it was acquired.・As for the properties acquired before FP 22, appraisal values at the end of FP 22 (Feb. 2013) are indicated. ・Properties acquired during the FP23 (ending August 2013): The appraisal value acquire when the acquisition of the property was decided.
・“Appraisal rate” is obtained by dividing the acquisition price by the appraisal value at the time of acquisition. The figure is rounded to the nearest first decimal place.
・“Sale price” is the amount recorded in the sale agreement, etc. and does not include consumption tax or other expenses related to acquisition.・“FFO” stands for Funds From Operation and is the amount sought by the below formula :
FFO = Net income + Depreciation expenses + Finance lease costs - Gain/loss on sale of real estate・“NAV” or Net Asset Value is the figure derived from the following formula:
NAV = Unitholders’ capital + Unrealized gain/loss based on appraisal value・“Outstanding interest-bearing debt” is rounded down to the nearest whole number.・“LTV (based on total assets)” is sought by dividing debt outstanding as of the specified period by total assets of the same period. The figure is
rounded to the nearest first decimal place. The total assets of “LTV (based on total assets)” as of the date of financial announcement is calculated with the following formula: Total assets at the end of the previous fiscal period + Net increase in unitholders’ capital through public offering + Net increase in interest-bearing debt after the end of the previous fiscal period.
・“LTV (based on unitholders’ capital)” is calculated by dividing the balance of interest-bearing debt by the sum of unitholders’ capital and the balance of interest-bearing debt and is rounded to the nearest first decimal place.
・“Average funding cost” is the annualization of the figure obtained by dividing “the sum of interest expenses, interest on investment corporation bonds, funding related expenses and depreciation of investment corporation bonds issuance costs,” recorded in the profit and loss statements, by the “average outstanding total interest-bearing debt” of the period of concern. The figure is rounded to the nearest second decimal place.
・“Average remaining years to maturity” is based on the weighted average of the remaining period from the specified point of each interest-bearing debt to its repayment date or maturity date based on the balance of outstanding interest-bearing debt as of the specified point. Figures are rounded to the first decimal place.
・“Free cash flow” is the amount sought using the following formula: Free cash flow = Depreciation expenses + Finance lease costs - CAPEX
54
This document was provided and released solely with the intent of providing information. This document 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, or based on, Japan’s Financial Instruments and Exchange Law, Investment Trust and Investment Corporation Law, related
cabinet orders, cabinet office ordinances or rules, the rules governing companies listed on the Tokyo Stock Exchange, or any other applicable rules. This document contains forward-looking statements, including forecasts of financial position, results of operations, and business-related matters, as well as statements related to the plans and goals of the management of ORIX Asset Management Corporation (OAM), the investment trust management company that provides asset management services for OJR. However, there are a number of known and unknown risks and uncertainties that can cause actual results or OJR’s performance to differ materially from any explicit or implicit
forecasts contained herein. These forward-looking statements also 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 business operations.Although the information contained in this document is the best available at the time of publication, no assurances can be given regarding the accuracy, certainty, validity or fairness of this information. The content of this document can be modified or withdrawn without prior notice.