ORIX JREIT REPORT 12th period

orixjreit.com

ORIX JREIT REPORT 12th period

ORIX JREIT REPORT 12th period

FROM: September 1, 2007 TO: February 29, 2008

4-1, Hamamatsucho 2-chome, Minato-ku, Tokyo 105-6135, Japan http://www.orixjreit.com/english/

ORIX JREIT REPORT ORIX JREIT Inc.


Profile

On June 12, 2002, ORIX JREIT Inc. (OJR) was listed on the Tokyo Stock

Exchange as a diversified REIT, the first such listing in Japan. OJR invests

in a wide variety of real estate properties, centered on office buildings,

and also including logistics facilities, retail facilities, hotels, and

other properties.

Contents

Message from the Management ... 01

Investment Policy ... 02

Financial Highlights ... 03

OJR´s Growth Strategy ... 04

Investment Performance ... 10

The Portfolio of OJR ... 12

Portfolio Map ... 14

Main Properties in the Greater Tokyo Area ... 15

Unit Information ... 19

Outline of OJR and its Asset Management Company ... 20

Performance Report ... 21

Financial Statements ... 38

Corporate Data ... 51


Message from the Management

We, ORIX JREIT Inc. (OJR) and its asset

management company,

ORIX Asset Management Corporation

(OAM), are pleased to report the business

performance of OJR to our unitholders.

During the current period, we raised ¥16,954 million in capital

through the issuance of new investment units. We used these funds

to reduce our interest-bearing debt and prepare for property

acquisitions. We also sold Round-Cross Aoyama (transfer price:

¥5,250 million) as to raise the quality of our portfolio while at the

same time improving internal growth through the upward revision of

rents following from the previous period.

Through these efforts, operating revenues were ¥9,975 million,

operating income was ¥4,926 million, and net income was ¥4,085

million. Distribution per unit was ¥16,233.

Furthermore, on March 28, 2008, we acquired the following buildings:

the ORIX Suidobashi Building (acquisition price: ¥3,000 million); the ST

WORLD Building (acquisition price: ¥3,500 million); and the Toda Park

Logistics Center (acquisition price: ¥9,600 million). Through the

acquisition of these three properties (total acquisition price: ¥16,100

million) as of the announcement date of financial results for the 12th

period (April 15, 2008), our portfolio comprised 46 properties for a

total acquisition price of ¥247,197 million.

Going forward, our objective is to achieve greater growth by

continuing to work on scalability through external growth and

improvements in profitability through internal growth. We aim to

deliver a stable and satisfactory level of profit distribution and

increase the asset value of our portfolio in the medium and long

term. We thank all our investors and look forward to your continued

support and encouragement.

Yoshio Ono*

Executive Director of ORIX JREIT Inc.

Mitsuo Sato

Representative Director and

President of ORIX Asset Management

Corporation

* Yoshio Ono was appointed Executive Director of OJR in accordance with a resolution at the unitholders´

meeting held on May 29, 2008.

ORIX JREIT REPORT 12th Period 01


Investment Policy

A Diversified REIT Focused on Office Buildings and Greater Tokyo

In order to diversify risk and deliver stable distributions to

unitholders, OJR invests with particular focus on the following

4 considerations: property use diversification, regional

diversification, property size, and portfolio management.

Others

Others

Offices

No less than 80%

Greater Tokyo Area

Tokyo, Kanagawa,

Saitama and Chiba

Use

1

Generally speaking, we will invest in office buildings with a value of no less than 80% (on an acquisition price basis) of our total portfolio. Also

through investing in wide variety of real estate properties, including logistics facilities, retail facilities, hotels, and other properties, we aim to

construct a portfolio based on an integrated model as we expect such use diversification will reduce our exposure to risk. Our investment

targets will be restricted to properties that do not have the main intended use of residential (excluding properties acquired on or before

February 29, 2008).

2

Region

We will invest no less than 80% of the total portfolio (on an acquisition price basis) in the Greater Tokyo Area (Tokyo, Kanagawa, Saitama and

Chiba). In order to improve profitability in total portfolio, we invest candidates based on set criteria outside Greater Tokyo.

Property Size

3

Our general rule for investment is to focus on medium-sized office buildings* or larger, but at the same time, reduce the investment risk

concentrated in each specific property. Our investment focus for office building properties in Greater Tokyo will be on properties valued at no

less than five billion yen.

* The term ”medium-sized office building“ here refers to an office building with a total floor area of between 3,000 and 15,000 m 2 .

4

Portfolio Management

To enable us to respond effectively to changes in the business environment by adjusting our portfolio accordingly, we employ a flexible policy

allowing us to make swift decisions on acquiring, holding, and selling properties.

Note:

On March 3, 2008, our asset management company, ORIX Asset Management Corporation (OAM) made changes to its internal code named “Regulation for Asset Management and Property

Management for OJR.” Consequently, the terms “use” sector and “region” sector were changed.

02

ORIX JREIT REPORT 12th Period


Financial Highlights

Three new properties acquired using the capital raised through the

issuance of new investment units

During the 12th period, we worked to further raise the quality of our portfolio

through property sales and achieve internal growth through the upward revision of

rents. Furthermore, using the ¥16,954 million in capital raised through the issuance

of new investment units, we purchased three new properties (total acquisition price:

¥16,100 million), enabling us to expand the scale of our assets in March 2008 (the

13th period).

Topics

Oct. 3, 2007

Oct. 30, 2007

Dec. 26, 2007

Mar. 28, 2008

May 29, 2008

Issued new investment units by a public offering

(number of units issued: 25,000 units; aggregate issue price: ¥16,147 million)

Issued new investment units by third party allotment

(number of units issued: 1,250 units; aggregate issue price: ¥807 million)

Sold Round-Cross Aoyama (transfer price: ¥5,250 million)

Acquired the ORIX Suidobashi Building (acquisition price: ¥3,000 million),

the ST WORLD Building (acquisition price: ¥3,500 million)

and the Toda Park Logistics Center (acquisition price: ¥9,600 million)

Convened Unitholders´ Meeting and voted on partial revision of Articles of

Incorporation and election of directors

12th Period

Operating Results

Distribution per unit

¥16,233

Total distribution ¥4,085 million

Total number of outstanding units 251,622 units

Operating revenues

Operating income

Net income

Total assets

Net assets

Net assets per unit (¥)

(Millions of yen)

9,975

4,926

4,085

248,759

141,899

563,936

Five-Year Summary

Operating Results

Operating revenues

Millions of yen

10,000

8,000

8,131

8,894

8,477

9,161

9,975

Operating income

Net income

6,000

4,000

2,000

4,016 4,271

3,442 3,665

3,865 4,127

3,347 3,284

4,926

4,085

0

8th period 9th period 10th period 11th period 12th period

Five-Year Summary

Distribution

Total number of

units issued

Yen

18,000

15,000

12,000

15,274

16,261

14,850 14,572

225,372 225,372 225,372 225,372

16,233

251,622

Unit

300,000

250,000

200,000

Distribution per unit

9,000

6,000

150,000

3,000

0

8th period 9th period 10th period 11th period 12th period

0

ORIX JREIT REPORT 12th Period 03


OJR´s Growth Strategy

External Growth Strategy

New Acquisitions

Using a collaborative relationship with the ORIX Group (ORIX

Synergy) in March 2008, we acquired the following three new

properties: the ORIX Suidobashi Building, the ST World

Building, and the Toda Park Logistics Center. Through the

acquisition of “Offices” in “Greater Tokyo,” for which growth is

forecast in the medium- and long-term, we were able to not

only further strengthen our portfolio base, but also reduce

risk by means of property use diversification through the

acquisition of our second logistics facility.

Moreover, at the same time as we acquired new properties,

we also sold Round-Cross Aoyama, one of our properties with

limited potential, to increase asset value as part of efforts to

further improve the quality of the portfolio. In future, we will

continue to invest discerningly in high-quality properties,

working to increase medium- and long-term asset value and

expand the scale of our assets.

Office

ORIX Suidobashi Building

The Suidobashi area in which this

property is located contains many

aging small-sized properties and very

few recently constructed properties

with high specifications. The ORIX

Suidobashi Building is in an excellent

location close to train stations, a oneminute

walk from JR Suidobashi

Station and a three-minute walk from

Suidobashi Station on the Toei Subway

Line. This property is a recently

constructed office building completed

in October 2005 and has high

specifications.

Property Information

Location

Completion

Number of Floors

Land

Total Floor Area

Acquisition Date

Acquisition Price

Chiyoda-ward, Tokyo

October 2005

6 floors

488.05 m 2

2,429.74 m 2

March 28, 2008

¥3,000 million

























04

ORIX JREIT REPORT 12th Period


OJR´s Growth Strategy

Office

ST WORLD Building

The Shibuya area, where this property

is located, is developed around the

function of Shibuya Station as a

terminal for multiple transportation

routes, beginning with the JR railway

and Tokyo Metro subway lines. In

addition to being a commercial center

boasting some of the nation’s

greatest crowd-drawing capacity,

Shibuya is also highly popular as an

office area. Located a nine-minute

walk from Shibuya Station, this

property is a newly constructed office

building completed in March 2007

and has high specifications.

Property Information

Location

Completion

Number of Floors

Land

Total Floor Area

Acquisition Date

Acquisition Price

Shibuya-ward, Tokyo

March 2007

9 floors

366.51 m 2

1,836.48 m 2

March 28, 2008

¥3,500 million

























ORIX JREIT REPORT 12th Period 05


OJR´s Growth Strategy

External Growth Strategy

Logistics

Toda Park Logistics Center

Property Information

Location

Completion

Number of Floors

Land

Total Floor Area

Acquisition Date

Acquisition Price






























Toda-city, Saitama

March 2005

5 floors

19,473.82 m 2

36,158.60 m 2

March 28, 2008

¥9,600 million







Completed in March 2005, this property

is a large-scale multilevel logistics

facility with a floor area of over 10,000

tsubo (33,000 m 2 ). Toda City, where the

property is located, is highly convenient

for delivery services covering not only

the central Tokyo district but also

western Tokyo and Chiba areas, making

this a popular area for logistics facility

sites. Even within the Toda area, the

property’s location is particularly

convenient for being positioned close to

entry/exit ramps for the Metropolitan

and Tokyo Gaikan Expressways.

Moreover, the area also has an ample

supply of various kinds of cargohandling

facilities, making this a highly

competitive property.

06

ORIX JREIT REPORT 12th Period


OJR´s Growth Strategy

Improvement of Portfolio Quality through Portfolio Management

At the same time as selling small-scale aging properties, we

also acquire high-quality, recently constructed, medium-scale

or large properties from ORIX Group companies as part of our

efforts to raise the quality of our portfolio. During this period,

by selling Round-Cross Aoyama, one of our properties with

limited potential for increasing asset value, and acquiring the

ST WORLD Building and other recently constructed properties

in March 2008, we were able to further raise the quality of our

portfolio.

Comparison of Averages per Portfolio Property

Acquisition price Property size (total floor area) Building age

(Millions of yen) (m 2 ) (Years)

6,000

28,000

15

5,374

21,000

23,908

12

4,000

14,000

15,735

9

2,000

2,554

6

7,000

3

2.1 times

1.5 times

12.1

-2.0Years

10.1

0

0

0

End of 1st period

(as of Aug. 31, 2002)

As of Apr. 15, 2008

End of 1st period

(as of Aug. 31, 2002)

As of Apr. 15, 2008

End of 1st period

(as of Aug. 31, 2002)

As of Apr. 15, 2008

Notes:

1. The weighted averages for property size and building age are described based on the acquisition price of each property respectively. Figures for property size are rounded to the nearest full

number. Figures for building age are rounded to the nearest first decimal place.

2. The above “property size (total floor area)” refers to the total floor space of the buildings, regardless of the equity stake of the company in the property.

Portfolio Growth

Through the acquisition of three new properties (total

acquisition price: ¥16,100 million) using ORIX Synergy, as of

the announcement date of financial results for the 12th

Period (April 15, 2008) our portfolio comprised 46 properties

for a total acquisition price of ¥247,197 million. In the future,

we will continue to work to increase external growth through

investments in carefully selected high-quality properties with

the aim of achieving our medium- to long-term goal of ¥300,000

million in asset scale (total acquisition price).

Total acquistion price

(Billions of yen)

250

200

150

100

Other properties

Properties acquired through collaborative relationship with ORIX Group companies after listing

Properties held at the time of listing

99.6 99.6 104.9

5.3

114.5

14.9

141.5

41.9

153.3 149.0

7.7 7.7

46.0

46.0

176.8 174.9

21.3

61.6

21.3

65.3

198.0

26.9

95.1

209.0

26.9

108,2

235.6

30.0

131.7

231.1

30.0

131.7

247.2

30.0

147.8

50

0

99.6 99.6 99.6 99.6

99.6

99.6

95.3

93.9

88.3

76.0

73.9

73.9

69.4

69.4

At the

time of

listing

End of

1st

period

(02/8)

End of

2nd

period

(03/2)

End of

3rd

period

(03/8)

End of

4th

period

(04/2)

End of

5th

period

(04/8)

End of

6th

period

(05/2)

End of

7th

period

(05/8)

End of

8th

period

(06/2)

End of

9th

period

(06/8)

End of

10th

period

(07/2)

End of

11th

period

(07/8)

End of

12th

period

(08/2)

As of

Apr.15,

2008

Notes:

1. The outstanding balance of “properties held at the time of listing” is calculated by deducting the total acquisition price of the properties sold during the period from the aggregate

acquisition price of the properties held at the time of listing.

2. “Properties acquired through collaborative relationship with ORIX Group companies after listing” refers to assets purchased from ORIX Group companies or acquired with the assistance of

ORIX Group companies.

3. “Other properties” refers to those properties that do not fall under the category of “properties held at the time of listing” or “properties acquired through collaborative relationship with

ORIX Group companies after listing.”

ORIX JREIT REPORT 12th Period 07


OJR´s Growth Strategy

Internal Growth Strategy

Efforts to Maintain High Occupancy Rates and Revise Rent Increases

OJR has teamed up with a property management company

with the aim to improve our relationship with tenants by

focusing on quality maintenance of our properties and prompt

responsiveness to tenant needs. Moreover, in revising rents

and undertaking new leasing, we are working to implement

appropriate rent increases by accurately understanding

Rent adjustments

Floor space for which contracts were renewed during the period

Revision of contracts for higher rent

New contracts for higher rent

Net rent increase (monthly)

No change

New and revised contracts for

lower rent

(m 2 ) (Thousands of yen)

100,000

23,455

25,000

21,150

21,276

80,000

20,000

49% 14%

24%

43%

60,000 16% 22%

10%

15,000

6%

6%

40,000

20,000

0

72%

4,894

6%

9th period

(06/8)

47%

4%

10th period

(07/2)

75%

1%

11th period

(07/8)

46%

9%

42%

3%

12th period

(08/2)

10,000

55%

5,000

0

rental/leasing market conditions. Through these efforts, we

have been able to maintain a high occupancy rate of more

than 97% during this period. For lease contracts coming up for

renewal during this period or newly concluded lease contracts,

we were able to revise rent increases in a majority of cases

based on property floor area.

Rent increases in 12th period

Number of lease contracts

(Performance in previous period)

Leased area (m 2 )

(Performance in previous period)

Monthly rent increase (thousand yen)

(Performance in previous period)

Rent increase range per tsubo (%)

(Performance in previous period)

Average rent increase per tsubo (%)

(Performance in previous period)

Lease

Renewal

21

(22)

19,683

(11,067)

18,067

(6,381)

32.0 to 3.1

(29.2 to 1.9)

16.5

(10.1)

New

Leases

12

(20)

3,707

(8,398)

6,000

(17,287)

48.6 to 1.4

(60.7 to 0.3)

27.5

(37.6)

Note: “Rent increase range per tsubo” and “average rent increase per tsubo” are

rounded to the first decimal place.

Combined

33

(42)

23,390

(19,465)

24,067

(23,668)

48.6 to 1.4

(60.7 to 0.3)

18.2

(22.4)

Note: “Net rent increase” is calculated by deducting rent decreases during the period.

Increase in Portfolio Profitability

With regard to the office building market, not only the lease

market but also the sales market boomed during this period,

particularly in the Greater Tokyo Area, and there was a

downward trend for yields at the time of office building

acquisition (prices increased). Even in such an environment,

by using “ORIX Synergy,” we endeavored to avoid the intense

Leasing NOI and leasing NOI yield (based on acquisition price)

Leasing NOI yield of 31 properties

continuously held from end of

6th fiscal period through to

end of 12th fiscal period

Leasing NOI yield, all properties

NOI yield of newly acquired

properties in initial fiscal period

of acquisition (based on

discounted cash flow method

for appraisal value at acquisition)

(Millions of yen)

6,000

4,000

Leasing NOI, all properties

2,000

0

5.9

5.4

5.0

5,326

9th period

(06/8)

6.1

5.7

4.2

5,762

6.2

5.7

6.5

5.9

10th period 11th period 12th period

(07/2) (07/8) (08/2)

(%)

7.0

6.0

5.0

4.5 No newly acquired

properties in 12th

fiscal period

4.0

6,899

6,441

competition for property acquisitions and to acquire

properties with appropriate yields, as well as to balance the

expansion of our asset scale against profitability increases

through the upward revision of rents and the maintenance of

high occupancy rates.

There was a downward trend in yields at the time of acquisition

of new properties, but the yield for our portfolio overall

increased because we were able to achieve internal growth

from existing properties.

Notes:

1. “Leasing NOI” is calculated by adding depreciation to leasing activity profit and loss for

each period.

2. “Leasing NOI yield” is an annualized figure calculated by dividing leasing NOI for each

property by the acquisition price and calculating weighted average figures on a pro-rate

basis in accordance with the acquisition price of target properties, with figures rounded

off to 2 decimal places. The total acquisition price for all properties was ¥231,097 million,

and for the 31 properties maintained continuously since the end of the 6th period until

the end of the 12th period, the total acquisition price was ¥117,767 million yen.

3. “NOI yield of newly acquired properties in initial fiscal period of acquisition” is an

annualized figure calculated by dividing the NOI of each property in the initial fiscal

period of acquisition with DCF method which is listed in the appraisal report on

acquisition by the acquisition price and calculating weighted average figures in

accordance with the acquisition price of target properties, with figures rounded off to 2

decimal places.

08

ORIX JREIT REPORT 12th Period


OJR´s Growth Strategy

Financial Strategy

OJR has been pursuing a financial policy by paying attention

to maintaining well-balanced liabilities and assets, (1)

ensuring financial soundness through increasing unsecured

borrowings, fixing interest rates of debts on a long-term basis

and dispersion of repayment dates, (2) improving the financial

flexibility through diversification of financing methods, and

(3) developing and implementing a sound and efficient

capitalization policy.

Debts outstanding

and interest-bearing debt ratio

Long-term fixed-interest debt ratio

and unsecured debt ratio

Debts outstanding

Interest-bearing debt ratio

Long-term fixed-interest debt ratio (excluding debts payable within a year)

Unsecured debt ratio

(Billions of yen)

120

100

80

39.0 41.5

85.7

60

40

77.2

48.1

112.0

39.4

89.7

43.4

105.8

(%)

50

40

30

(%)

100

80

60

40

65.7

55.7

60.7

59.1

92.3

75.6

90.4 91.8

85.9

72.8

20

20

0

End of

9th period

(06/8)

End of

10th period

(07/2)

End of

11th period

(07/8)

End of

12th period

(08/2)

As of

Apr. 15, 2008

0

End of

9th period

(06/8)

End of

10th period

(07/2)

End of

11th period

(07/8)

End of

12th period

(08/2)

As of

Apr. 15, 2008

Average years to debt repayment dates

and average interest rate on fund procurement

Debts outstanding by repayment term

(as of April 15, 2008)

(Year)

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0

Average years to debt repayment dates

Average interest rate on fund procurement

1.56

2.9

End of

9th period

(06/8)

1.51 1.54

2.2

End of

10th period

(07/2)

2.6 2.7

End of

11th period

(07/8)

1.65

End of

12th period

(08/2)

1.59

2.2

(%)

2.00

1.75

1.50

1.25

1.00

As of

Apr. 15, 2008

(Billions of yen)

30.0

25.0

28.8

20.0

23.0

15.0

15.0 15.0

17.0

10.0

5.0

7.0

0

2008 2009 2010 2011 2012 2013

Notes:

1. “Interest-bearing debt ratio” is obtained by dividing interest-bearing debts outstanding as of each period by the total amount of interest-bearing debts outstanding and unitholders´ capital

as of the same period. Figures are rounded to the first decimal place.

2. “Long-term fixed-interest debt ratio” is obtained by dividing outstanding long-term fixed-interest debts as of each period by outstanding interest-bearing debts as of the same period.

Figures are rounded to the first decimal place.

3. “Unsecured debt ratio” is obtained by dividing unsecured debts outstanding as of each period by interest-bearing debts outstanding as of the same period. Figures are rounded to the first

decimal place.

4. “Average interest rate on fund procurement” represents the weighted-average interest rate (annual rate) at the end of each period.

Figures are rounded to the second decimal place. With regard to the average interest rate on the portion of borrowings for which the company concluded interest-rate swap agreements

to hedge against interest rate fluctuation risk, the company used weighted-average interest rates adjusted for the effect of relevant interest-rate swaps.

5. “Debts outstanding by repayment term” indicates the distribution of OJR’s debts as of April 15, 2008 that will decrease due to repayments at the end of the years listed above.

ORIX JREIT REPORT 12th Period 09


Investment Performance

Occupancy Rate Situation (September 2007 to February 2008)

100.0%

95.0%

90.0%

85.0%

Sept. 30, 2007 Oct. 31, 2007 Nov. 30, 2007 Dec. 31, 2007 Jan. 31, 2008 Feb. 29, 2008

Offices

97.0%

96.6%

96.7%

96.9%

97.3%

97.3%

Logistics Facilities

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

Retail Facilities

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

Hotels

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

Others

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

Overall

97.6%

97.3%

97.4%

97.6%

97.8%

97.8%

Portfolio Growth

(Billions of yen)

300

250

200

Total rentable area

302,165

243,848 246,153 265,574 262,368

188,245 196,296 189,604 215,026 208,932 247.2

142,360 142,360 146,997 152,447 235.6 231.1

209.0

198.0

176.8 174.9

(m 2 )

300,000

200,000

100,000

150

Total acquisition price

141.5

153.3 149.0

100

99.6 99.6

104.9

114.5

50

0

At the

time of

listing

End of

1st

period

End of

2nd

period

End of

3rd

period

End of

4th

period

End of

5th

period

End of

6th

period

End of

7th

period

End of

8th

period

End of

9th

period

End of

10th

period

End of

11th

period

End of

12th

period

13th

period

(planned)

10

ORIX JREIT REPORT 12th Period


Investment Performance

Portfolio Data Based on Acquisition Prices (as of April 15, 2008)

Use

Hotels

6.1%

Retail Facilities

2.0%

Logistics Facilities

5.5%

Others

1.6%

Property size (Total floor area)

Under 3,000 m 2

11.0%

35.5%

Over 15,000 m 2

Average 23,908 m 2

84.8%

Offices

53.5%

3,000 to 15,000 m 2

Area

Building age

Other Areas

3 Central Tokyo Wards

Over 20y.

Other Parts

of the Greater

Tokyo Area

14.1%

17.1%

32.1%

Under 5y.

36.0%

11.0%

Average 10.1y.

19.8%

15-20y.

36.7%

16.8%

16.4%

10-15y.

Remaining Tokyo Wards

5-10y.

Notes:

1. Percentage figures in the above graphs are rounded to the first decimal place. Total amounts do not necessarily come to 100% due to rounding up/down.

2. The weighted averages for property size and building age are described based on the acquisition price of each property respectively. Figures for property size are rounded to the

nearest full number. Figures for building age are rounded to the nearest first decimal place.

3. The above “acquisition prices” refers to acquisition prices shown on the purchase contracts (consumption tax is not included in the acquisition prices).

4. The above “property size (total floor area)” refers to the total floor space of the buildings, regardless of the equity stake of the company in the property.

ORIX JREIT REPORT 12th Period 11


The Portfolio of OJR

As of April 30, 2008

Use Area Property

Acquisition

Price

(¥ million)

Share in Total

Acquisition Price

(%)

Completion

Total

Rentable Area

(m 2 )

Occupancy

Rate

(%)

Offices

3 Central Tokyo Wards

Aoyama Suncrest Building

3,356

1.4

September 1979

2,769.48

100.0

Round-Cross Ichi-bancho

3,900

1.6

March 1994

3,300.66

100.0

Beside Shirogane

1,301

0.5

September 1989

2,088.71

95.7

Round-Cross Akasaka Mitsuke

1,650

0.7

February 1988

1,323.28

88.7

Nihonbashi East Building

1,720

0.7

October 1989

2,270.04

100.0

Round-Cross Minami Azabu

1,394

0.6

May 1992

3,172.76

83.8

Round-Cross Akasaka

2,624

1.1

October 1978

2,785.45

90.4

Round-Cross Mita

1,748

0.7

May 1990

2,298.23

98.0

Shiba Daimon Building

2,195

0.9

October 1988

2,588.50

100.0

Round-Cross Tsukiji

3,378

1.4

May 1992

3,996.48

97.3

ORIX Jimbo-cho Building

4,177

1.7

March 1997

3,211.50

100.0

ORIX Shiba 2-chome Building

7,500

3.0

January 2003

6,753.13

100.0

Aoyama 246 Building

5,200

2.1

November 1990

2,406.22

100.0

ORIX Akasaka 2-chome Building

21,860

8.8

November 2004

10,336.33

98.1

Nihonbashi Honcho 1-chome Building

10,500

4.2

March 2006

5,099.70

100.0

ORIX Suidobashi Building

3,000

1.2

October 2005

2,087.65

100.0

Remaining Tokyo Wards

Carrot Tower

5,479

2.2

November 1996

6,939.10

100.0

Toyo MK Building

5,270

2.1

April 1997

9,814.55

100.0

Round-Cross Moto Yoyogi

5,091

2.1

April 1992

7,723.68

100.0

Round-Cross Nishi Shinjuku

2,650

1.1

June 1999

1,248.18

94.2

Beside Kiba

2,450

1.0

August 1991

4,824.54

100.0

DT Gaien

2,430

1.0

February 1990

2,567.50

100.0

Yoyogi Forest Building

1,473

0.6

June 1987

1,912.42

99.4

ORIX Ikebukuro Building

9,577

3.9

July 2002

5,539.92

100.0

ORIX Shinjuku Building

8,300

3.4

May 2003

6,203.05

100.0

Round-Cross Shinjuku

8,020

3.2

October 2005

4,736.17

100.0

Seafort Square Center Building

18,000

7.3

June 1992

22,000.77

94.3

Round-Cross Kamata

5,640

2.3

February 1994

7,900.10

100.0

Round-Cross Shinjuku 5-chome

4,500

1.8

October 2006

3,089.29

100.0

KN Jiyugaoka Plaza

3,110

1.3

December 2001

1,231.44

100.0

ST WORLD Building

3,500

1.4

March 2007

1,550.86

100.0

12

ORIX JREIT REPORT 12th Period


The Portfolio of OJR

As of April 30, 2008

Use Area Property

Acquisition

Price

(¥ million)

Share in Total

Acquisition Price

(%)

Completion

Total

Rentable Area

(m 2 )

Occupancy

Rate

(%)

Offices

Other Parts of the

Greater Tokyo Area

Neo City Mitaka

Round-Cross Kawasaki

2,200

4,130

0.9

1.7

September 1993

January 1993

4,622.21

5,519.91

100.0

83.8

Other Areas

Nagoya Itochu Building

4,500

1.8

February 1981

11,204.85

100.0

Round-Cross Shinsaibashi

13,600

5.5

April 1986

16,471.10

89.5

ORIX Koraibashi Building

5,560

2.2

July 2004

6,857.61

100.0

ORE Nagoya Fushimi Building

10,040

4.1

February 2004

12,216.13

100.0

Lunar Sendai

8,500

3.4

February 1998

9,954.82

94.2

Offices Total

209,523

84.8

-

210,616.32

97.2

Logistics

Facilities

Other Parts of the

Greater Tokyo Area

Koshigaya Logistics Center

Toda Park Logistics Center

4,000

9,600

1.6

3.9

January 2006

March 2005

19,200.00

36,158.60

100.0

100.0

Logistics Facilities Total

13,600

5.5

-

55,358.60

100.0

Retail

Facilities

3 Central Tokyo Wards

Remaining Tokyo Wards

Nihon Jisho Minami Aoyama Building

CUBE Daikanyama

2,548

2,435

1.0

1.0

November 1997

January 2003

997.36

899.82

100.0

100.0

Retail Facilities Total

4,983

2.0

-

1,897.18

100.0

Hotels

Other Parts of the

Greater Tokyo Area

Cross Gate

Hotels Total

15,040

15,040

6.1

6.1

September 2000

-

25,942.59

25,942.59

100.0

100.0

Others

3 Central Tokyo Wards

Park Axis Nishi Azabu Stage

1,219

0.5

April 2000

1,337.31

100.0

Remaining Tokyo Wards

Grand Maison Hakusan

455

0.2

May 1993

1,160.17

100.0

Sonet Kami Ikebukuro

2,377

1.0

February 1997

5,853.00

100.0

Others Total

4,051

1.6

-

8,350.48

100.0

Grand Total

247,197

100.0

-

302,165.17

98.0

Notes:

1. Share in total acquisition price and occupancy rate, are rounded to the first decimal place, and may not necessarily add up to totals due to rounding up/down.

2. Buildings newly acquired in the 13th period are presented in red. The three new properties: The ORIX Suidobashi Building, the ST WORLD Building and the Toda Park Logistics Center were

acquired on March 28, 2008.

ORIX JREIT REPORT 12th Period 13


Portfolio Map

Remaining Tokyo Wards and

Other Parts of the Greater Tokyo Area

JR Musashino Line

Koshigaya Logistics Center

Toda Park Logistics Center

ORE Nagoya Fushimi Building

JR Saikyo Line

JR Joban Line

Sonet Kami Ikebukuro


Nagoya Itochu Building

Lunar Sendai

ORIX Ikebukuro Building


Grand Maison Hakusan

JR Chuo Line, Sobu Line

JR Yamanote Line


Neo City Mitaka

Round-Cross


Round-Cross Shinjuku 5-chome

Nishi Shinjuku

ORIX Shinjuku Building

Round-Cross Shinjuku

Yoyogi Forest Building

Round-Cross Moto Yoyogi

ST WORLD Building DT Gaien


JR Sobu Line


Toyo MK Building

Beside Kiba




CUBE Daikanyama

Carrot Tower

KN Jiyugaoka Plaza

Seafort Square

Center Building

ORIX Koraibashi Building

Round-Cross Shinsaibashi

Other Areas

Round-Cross

Kamata

JR Tokaido Line,

Keihin Tohoku Line

3 Central Tokyo Wards

Round-Cross


Kawasaki

JR Yamanote Line

Cross Gate

JR Lines

Subway Tozai Line

Subway Chiyoda Line

Private Line Tokyu Denentoshi Line

Private Line Tokyu Toyoko Line

JR Chuo Line, Sobu Line

Round-Cross

Akasaka Mitsuke



ORIX Suidobashi

Building


ORIX Jimbo-cho

Building


Round-Cross Ichi-bancho

ORIX Akasaka 2-chome

Aoyama Suncrest

Building

Building



Round-Cross

Round-Cross Aoyama

Akasaka


Aoyama 246

Building

Nihon Jisho

Minami Aoyama Building

Park Axis

Nishi Azabu Stage

Minato ward

Chiyoda ward


Shiba Daimon

Building


Round-Cross

Tsukiji


Nihonbashi

East Building


Nihonbashi Honcho

1-chome Building

Chuo ward


Offices

Round-Cross

Minami Azabu


ORIX Shiba 2-chome

Building


Round-Cross Mita






Logistics Facilities

Retail Facilities

Hotels

Others

Beside Shirogane


JR Lines

Subway Ginza Line

Subway Chiyoda Line

Subway Hibiya Line

Subway Nanboku Line

Subway Mita Line

Subway Asakusa Line

Subway Oedo Line

14

ORIX JREIT REPORT 12th Period


Main Properties in the Greater Tokyo Area

Office

ORIX Akasaka 2-chome Building

Office

Seafort Square Center Building

ORIX JREIT REPORT 12th Period 15


Main Properties in the Greater Tokyo Area

Office

Nihonbashi Honcho 1-chome

Building

Office

Round-Cross Shinjuku

16

ORIX JREIT REPORT 12th Period


Main Properties in the Greater Tokyo Area

Office

Round-Cross Shinjuku

5-chome

Office

Aoyama 246 Building

ORIX JREIT REPORT 12th Period 17


Main Properties in the Greater Tokyo Area

Aoyama Suncrest Building ORIX Ikebukuro Building ORIX Shinjuku Building

Carrot Tower ORIX Shiba 2-chome Building Round-Cross Kawasaki

18

ORIX JREIT REPORT 12th Period


Unit Information

The changes of unit price and transaction volume on the Tokyo Stock Exchange from September

1, 2007 to February 29, 2008 (the last trading day during the period) are as follows.

Unit price

(Yen)

900,000

800,000

700,000

600,000

500,000

Transaction volume

(Unit)

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Sept. 1, 2007 Oct. 1, 2007 Nov. 1, 2007 Dec. 1, 2007 Jan. 1, 2008 Feb. 1, 2008 Feb. 29, 2008

The breakdown of unitholder types as of February 29, 2008 is as follows:

Number of units by unitholder type

Total 251,622 units

Overseas Investors

60,043

23.86%

36,245

14.40%

Individuals and Others

Number of unitholders by unitholder type

Total 15,436 unitholders

Financial Institutions

(including securities brokers)

127

0.82%

Other Corporate

221

1.43%

Overseas Investors

173

1.12%

Other Corporate

5,342

2.12%

149,992

59.61%

14,915

96.62%

Financial Institutions

(including securities brokers)

Individuals and Others

Note: Percentages in the above graphs are rounded to the second decimal place. Total amounts may not total to 100% due to rounding up/down.

ORIX JREIT REPORT 12th Period 19


Outline of OJR and its Asset Management Company

Structure

Japanese real estate investment trusts, so called JREITs, are closedend

investment funds that primarily invest in real estate or realestate-backed

securities and deliver distribution to unitholders from

rental income and capital gains from asset sales, etc. The Law

Concerning Investment Trusts and Investment Corporation requires

JREITs to be managed by an external entity.

Real Estate

Investment

Income

Real Estate Investment Trust

ORIX JREIT Inc. (OJR)

Investment

Distribution

Investors

Entrustment

Entrustment

Asset Custodian

Asset Management Company

ORIX Asset Management Corporation

(OAM)

General Affairs Trustee

Organization of OAM (As of April 15, 2008)

Shareholders’ Meeting

Independent Public Accountants

Corporate Auditor

Board of Directors

Representative Director and President

Corporate Executive Vice President

Risk Management and Compliance Committee

Executive Officer

Risk Management and Compliance Department

[Major Assignments]

1. Risk management and compliance

2. Legal affairs

3. Property assessment

Internal Audit Department

[Major Assignments]

1. Conducting of internal audits

2. Formulation of audit plans

Executive Officer

Corporate Senior Vice President

OJR Investment and Asset Management Department Finance and Accounting Department Corporate Planning Department

[Major Assignments]

1. Strategy planning

2. Acquisition and disposition of properties

3. Property management

4. Real estate market research

[Major Assignments]

1. Accounting and tax

2. Proposals regarding debt finance

3. Accounting, tax, general affairs and personnel

affairs of OAM

[Major Assignments]

1. Corporate planning

2. Support for committees, etc.

3. Investor relations

4. Proposals regarding equity finance

20

ORIX JREIT REPORT 12th Period


Performance Report

Investment Performance Overview

1. Financial Highlights

2. Performance Review for Current Period

Fund Overview

1. Capitalization

2. Major Unitholders

3. Unitholder Type

Portfolio Overview

1. Portfolio Summary

2. Selected Property Data

3. Selected Financial Data by Property

4. Major Tenants

Capital Expenditure

1. Projects – 13 th Period Onward

2. Results – 12 th Period

3. Cash Reserve for Capital Improvements

Administrative Expenses

Transaction Activities during Current Period

1. Real Estate and Real Estate Held in Trust

2. Other Assets

3. Transactions with Related-Parties

ORIX JREIT REPORT 12th Period 21


Investment Performance Overview

1. Financial Highlights

12 th Period 11 th Period

From September 1, 2007

to February 29, 2008

From March 1, 2007

to August 31, 2007

(In millions of yen, except otherwise indicated)

Operating revenues 9,975 9,161

Rental and other operating revenues 9,500 9,161

Gains on sale of real estate properties 475

Operating expenses 5,049 5,034

Property-related expenses 4,240 4,304

Operating income (1) 4,926 4,127

Ordinary income 4,061 3,285

Net income (a) 4,085 3,284

Total assets (b) 248,759 253,136

Net assets (c) 141,899 124,145

Unitholders’ capital 137,814 120,860

Total number of units issued (units) (d) 251,622 225,372

Net assets per unit (¥) (c)(d) 563,936 550,843

Total cash distribution (e) 4,085 3,284

Distribution per unit (¥) (e)(d) 16,233 14,572

Distribution of retained earnings per unit (¥) 16,233 14,572

Distribution in excess of retained earnings per unit (¥)

ROA (%) (2) 1.6(3.2) 1.4(2.7)

ROE (%) (2) 3.1(6.1) 2.6(5.3)

Equity ratio (%) (c)(b) 57.0 49.0

Payout ratio (%) (3) (e)(a) 100.0 99.9

Supplemental Information

Number of real estate properties (4) 43 44

Number of tenants 318 336

Total rentable area (m²) 262,368.47 265,574.15

Occupancy rate (%) (5) 97.8 98.3

Depreciation 1,639 1,584

Capital expenditures 43 195

NOI from property leasing activity (2) 6,899 6,441

FFO (2) 5,724 4,868

Notes:

1. Operating income = Property-related expenses + Asset management fees + Administrative service fees + Other expenses

(excluding non-operating expenses)

2. These ratios are calculated according to the following formulas.

ROA = Ordinary income divided by average total assets

ROE = Net income divided by average net assets

NOI (Net Operating Income) from property leasing activity =

Rental and other operating revenues + Depreciation – Property-related expenses

FFO (Funds From Operation)=Net income + Depreciation

Financial data included in the field has been prepared on a 6 months basis.

However, the ratios in brackets represent annualized data.

3. The payout ratio is rounded down to the first decimal place.

4. In the 12 th period ended February 29, 2008, OJR sold Round-Cross Aoyama.

5. The occupancy rate is the proportion of rented space to the total rentable space at each period-end.

6. Accounting data does not include consumption taxes.

22

ORIX JREIT REPORT 12th Period


2. Performance Review for Current Period

Major changes in the fund

OJR sold Round-Cross Aoyama (transfer price: ¥5,250 million). As a result, OJR’s portfolio included 43

properties as of February 29, 2008 (36 office buildings, 1 logistics center, 2 retail facilities, 1 hotel and 3

residential properties), with 262,368.47m 2 of total rentable floor space, 318 tenants and an occupancy rate of

97.8 %. The invested amount (total of acquisition prices) was ¥231,097 million and the calculated price

(appraisal value based on the evaluation by 5 appraisers) was ¥265,350 million.

Also, in the 13th Period, OJR acquired the ORIX Suidobashi Building (acquisition price: ¥3,000 million),

the ST WORLD Building (acquisition price: ¥3,500 million) and the Toda Park Logistics Center (acquisition

price: ¥9,600 million) on March 28, 2008. These acquisitions brought the total number of properties to 46

and the invested amount (total of acquisition prices) to ¥247,197 million.

In the 12th Period, operating revenues were ¥9,975 million, net income was ¥4,085 million, total cash

distribution was ¥4,085 million, the distribution per unit was ¥16,233 (compared to our estimated

distribution per unit of ¥13,818, a 17.5% increase), and a distribution payout ratio was 100.0%.

As of the end of the 12th Period, total assets were ¥248,759 million, total interest-bearing liabilities were

¥89,650 million (long-term debt: ¥85,650 million (including ¥8,650 million of current portion of long-term

debt), short-term debt: ¥4,000 million), net assets were ¥141,899 million, and net assets per unit were

¥563,936.

The issuance of new investment units

In the 12th period, matters concerning the issuance of new investment units through a public offering and

through third party allotment were resolved at the OJR’s board of directors’ meeting held on September 11,

2007; proceeds were paid in full on October 3, 2007 for the 25,000 units through a public offering and on

October 30, 2007 for the 1,250 units through third party allotment. As a result, the unitholders’ capital is

now ¥137,814 million, and the total number of units is 251,622. OJR used the proceeds from the issuance of

new investment units to improve the financial position by repaying the borrowings that OJR undertook in

order to acquire properties during the 11th period.

Business environment and fund performance

Japanese economy

The monthly economic report of April 18, 2008 issued by the Japanese government stated that the economic

recovery appeared to be pausing recently. Specifically, the report stated that (i) exports had been increasing

moderately while production had been unchanged, (ii) corporate profits had been in a weak tone and

business investment had been almost unchanged, (iii) the employment situation appeared to be pausing with

some severe aspects remaining, (iv) private consumption was almost flat, and (v) housing construction was

generally recovering.

As for short-term prospects, the same report stated that against the backdrop of gradual resolution of the

impact of the revised Building Standard Law the economy was expected to recover moderately with an

increasing trend of exports. Attention, however, was called for the downside risks increased by the recession

risk in the U.S. economy and the fluctuations in the stock and exchange markets triggered by the subprime

mortgage loan problem, and effects of changes in crude oil prices.

Overview of the real estate market relating to our portfolio

Offices

Lease market:

The pace of vacancy ratio improvement is gradually slowing nationwide. Although conditions vary

between cities, the slowdown is thought to be due to the complex effects of some businesses beginning to

exhibit a cautious attitude towards expanding their business offices in the face of a decrease in the number

of high-quality vacant properties, rising rent for existing buildings, an increase in the number of new

buildings advertising for tenants at above-market rental rates and the subsequent latency in demand, as

well as increasing risks accompanying the recent decline in economic conditions.

In the Tokyo 23 wards, the average vacancy ratio for December 2007 was 1.8%, putting the brakes on the

vacancy ratio improvement of the past three years. However, we take it as a slight worsening of conditions

in a situation where improving vacancy ratios are difficult since the strong demand for properties remains

unchanged regardless of the area. While vacancy ratios remain at low levels, the average asking rent has

continued to increase for two consecutive years since June 2006.

In Osaka, sustained improvement in the vacancy ratio has continued since June 2003, with a ratio of 5.6%

for December 2007. While the vacancy ratio improvement is gradual compared with other regional cities,

ORIX JREIT REPORT 12th Period 23


its stability is drawing attention. Both office expansion by a broad range of businesses on the demand side

and stock adjustments due to the demolition of old buildings in addition to the limited supplies of new

properties on the supply side are contributing to the stable improvement of vacancy ratios.

In Nagoya since mid-2006, the vacancy ratio has remained flat while experiencing repeated declines and

improvements. The main reason that improvements have not continued is that the large supply exceeds

new demand. Added to this, companies have been exhibiting a cautious attitude towards expanding their

business offices since the beginning of the year, thus the vacancy ratio improvement is dragged. The large

supply of properties is expected to continue, with new supplies in 2008 amounting to approximately 90%

of the 2007 figure. Based on current tenancy trends, there is a high probability that vacancies for newly

constructed buildings will accumulate.

Sales market:

During this half-year period, large-scale transactions (Toranomon, Ginza, North Shinjuku, etc.) have been

announced one after the other. Real estate trading continues to be active, and the declining cap rate trend is

ending. This is thought to be mainly due to expectations that interest rates would rise until mid-2007, while

since then due to the brake on the fall of real estate risk premiums as a result of the progression of financial risk

reevaluation sparked by the subprime loan problem and apprehension over the slowdown in economic growth.

Domestically, the private fund market continues to expand, while procurement of debt funding is said to be

slightly difficult for certain funds. Under the current circumstances, it is difficult to imagine a large increase

in new buyers in the near future. Foreign capital is expected to influence the trend to curb real estate

investment in general as a result of the subprime loan problem, but there are also those who would reevaluate

the Japanese real estate market in terms of the comparative sensitivity of yield spread of long-term interest

rates and income returns for various countries, as well as the stability of the rental market, and investment

can be expected from certain foreign capital and funds backed by governments of developing nations. Thus

we are currently entering a “current rip” situation in which factors raising the cap rate are mixed with factors

lowering the cap rate.

Logistics Facilities

In the three large metropolitan cities, the supply of new properties in 2007 was active due to expansion of

investment targets in the real estate investment market. On the demand side, demand continued to increase

due to businesses consolidating their bases to improve logistics efficiency and the expansion of outsourcing

to logistics companies. However, trends in the demand-supply balance differ slightly between areas. In the

greater Tokyo area, the supply of new properties from real estate development companies in 2007 was the

highest since 2002, and vacancy ratios continued strong at 5% to 9%. In the Kansai area, the supply of new

properties was the highest since 2004, exceeding demand, with the vacancy ratio worsening from 16.7% at

the end of 2006 to 26.1% at the end of 2007. The supply of new properties in the Kansai area for 2008 is

expected to drop to 70% of the figure for the previous year but is still slightly large among the previous five

years, and there is a tendency towards excess supply.

Average asking rent in the Tokyo 23 wards and Kanagawa Prefecture are in an upward trend due to tight

supply and demand. Due to decreasing tenant rent-paying capacity as a result of high oil prices amidst high

cost-consciousness, it is difficult to forecast any leeway for the rental price increase to continue. In the

greater Tokyo area, the supply of new properties is low in Tokyo and Kanagawa, despite a large stock supply,

but increasing in Chiba and Saitama Prefectures. In the Kansai area, the supply of new properties is low in

Osaka, despite the large stock supply, but increasing in Hyogo Prefecture. Moreover, in areas outside the

three large metropolitan cities, there is a supply of new properties in Hokkaido, Miyagi, and Fukuoka

Prefectures in response to stock, with a trend towards the new property supply area expanding nationwide.

Retail Facilities

As a long-term trend, with restricted commercial floor space and falling sales having bottomed out, large

retail establishments (department stores and supermarkets) nationwide have now reached a turning point

where a recovery in commercial floor efficiency is expected. This trend is particularly strong in Kanagawa

and Hiroshima Prefectures, where major adjustments of commercial floor space have been carried out. In the

second half of 2007, disposable income decreased slightly, but consumer spending was surprisingly strong,

with long-declining supermarket sales also maintaining an upward trend over the previous year since the

beginning of 2007. Although in the current economic environment a strong recovery in consumer spending

in the near future is difficult to expect, sales productivity is expected to remain stable due to supply

adjustments resulting from revisions to the three urbanization laws. In the short-term, however, worsening of

the demand-supply balance is possible due to the impact of last-minute openings prior to implementation of

those revised laws.


24

ORIX JREIT REPORT 12th Period


Hotels

The number of hotels and hotel rooms in Japan has continued to increase, with the number of hotels reaching

9,165 and the number of rooms 721,098 in 2006.

The trend of opening ultra-luxury foreign hotels has spread to regional major cities, with large-scale hotel

developments planned for Kyoto in 2008 and Osaka in 2010 and 2011.

In regional cities, the supply of no-frills business hotels continues to be as strong as ever, with the major

chains planning double-digit supply for 2008 and beyond. In regional cities where competition has

intensified due to the entry of these no-frills business hotels, medium class business hotels with aging

facilities and hot spring hotels in particular continue to face difficult circumstances. The number of hotel/inn

bankruptcy cases, which had temporarily been on the decrease, is again on a gradual upward trend.

Occupancy levels in the 55 cities nationwide for the second half of 2007 (July to December) are much the

same as in the previous year, with an average room occupancy rate of 78.2% (78.8% for the same period in

the previous year), and an average capacity occupancy rate of 69.5% (70.4% for the same period in the

previous year). Moreover, in Tokyo, Yokohama, Nagoya, and Osaka, capacity occupancy rate dropped

slightly, but the room occupancy rate continues to maintain a high level.

Others; Residential Properties

As in the second half of 2007, apartment rents in the greater Tokyo area for the second half of 2007

leveled out for 1R type apartments and showed a gradually rising trend for DK and FA types, with the

result that the demand-supply balance remains steady. In addition to strong demand, the low supply trend

of new properties in Tokyo and Kanagawa is also believed to be a contributing factor. Although the

screening of areas and properties is expected to continue, the market as a whole is expected to continue to

enjoy stable demand, supporting the rent level.

In the overall new condominium market, due to delays in processing application for building confirmation

stemming from the amended Building Standard Law in addition to a slowing supply trend, the number of

units released for sale during the second half of 2007 was 35,057 units (16.8% lower over the same period

in the previous year). Added to the lowest level since 1994 recorded for the first half of 2007, the number

of units released for the year was 63,341 units, the first drop below 70,000 units in nine years. Purchasers

are becoming increasingly discerning, and selling conditions for properties without the appeal of

convenience or product superiority are expected to become harsh in the future. Moreover, stock is in

excess of 10,000 units, and completed stock is expected to increase towards the end of the year.

In the used condominium market in the Tokyo metropolitan area, a supply of high-quality central-city

properties has begun appearing, and the rising price of new condominiums is supporting demand for

seemingly undervalued used condominiums, with high contract prices continuing. However, since this is

believed to have been influenced by price adjustments for new condominiums, careful attention needs to

be given to trends in the used condominium market in the future.



New acquisitions

ORIX Suidobashi Building

ST WORLD Building

Acquisition price: ¥3,000 million

Acquisition date: March 28, 2008

This property is situated in a convenient location just a one-minute

walk from the JR Sobu Line’s Suidobashi Station and a three-minute

walk from the Toei Subway Mita Line’s Suidobashi Station. It is a

relatively new, high-spec building, completed in October 2005 and

boasting individually controlled air conditioning systems, OA floors,

a 24-hour security system, and other advanced features.

Acquisition price: ¥3,500 million

Acquisition date: March 28, 2008

This property is a nine-minute walk from Shibuya Station, a major

train hub served by JR, Tokyo Metro, Tokyu Line, Keio Line, and

other railways. Service to Shibuya Station via a new Tokyo Metro

subway line is scheduled to commence in June 2008, which is

expected to further enhance the convenience of access. Because this is

a new, high-spec office building, completed in March 2007, it has a

number of features that make it very competitive in comparison to

other buildings of the same size in the area. These include an

individually controlled air conditioning system, OA floors, a 24-hour

security system, and a rectangular room layout that is easy to use.

ORIX JREIT REPORT 12th Period 25


Toda Park Logistics Center

Acquisition price: ¥9,600 million

Acquisition date: March 28, 2008

This property offers easy access to central Tokyo via the Shin-Omiya

Bypass. In addition, the Tokyo-Gaikan Expressway allows easy

coverage of the Chiba area and western Tokyo from this highly

convenient area. There is also excellent access to the Metropolitan

Expressway, all of which makes this property a superior distribution

site. Two docking berths, four freight elevators, four vertical

conveyors, floor loading of 1.5t/m 2 , floor height of 7.6m – 5.9m, and

nine meter column spacing give this property a great deal of

versatility. This large scale, multistory distribution facility has a total

floor area of more than 33,000 m 2 (10,000 tsubo). OJR believes that

this property’s superior suitability for shipping and versatility make it

highly competitive.

Financing activities

[In the 12 th Period]

OJR is aiming for a strategic approach towards unsecured loans, switching to fixed-interest rate loans,

diversifying repayment periods, and reducing fund procurement cost in line with the monetary environment.

As such, the following financing activities were implemented.

Equity Finance:

OJR issued new investment units to improve the financial position by repaying the borrowings undertaken in

order to acquire properties during the 11th period. OJR issued 25,000 new investment units through a public

offering on October 3, 2007 and 1,250 units through third party allotment on October 30, 2007, raising

16,954 million yen in total by the issuance of these 26,250 investment units.

Debt Finance:

OJR took out a short-term loan of ¥26,300 million (floating rate, unsecured) based on a commitment line for

the purpose of refinancing on September 20, 2007. Following this, OJR used funds raised through the

issuance of additional investment units to reduce the short-term loan under the commitment line to ¥10,000

million on October 10, 2007. On November 5, 2007, OJR borrowed a long-term loan of ¥1,000 million

(fixed rate, unsecured) as refinancing from The Shizuoka Bank, Ltd. In addition, OJR applied the proceeds

from the sale of Round-Cross Aoyama to further reduce the short-term loan under the commitment line to

¥4,000 million on January 21, 2008.

As a result, the loans outstanding stood at ¥89,650 million as of February 29, 2008. The interest-bearing debt

ratio was 39.4%, the fixed-rate borrowing ratio was 95.5%, the long-term borrowing ratio was 85.9%

(excluding the current portion of long-term debt), and the unsecured borrowing ratio was 90.4%.

OJR’s credit ratings as of April 15, 2008 were as below.

Rating agency and Details of ratings

Standard & Poor’s

Rating agency

Rating and Investment Information, Inc.

Details of ratings

Long-term corporate credit rating: A-

Short-term corporate credit rating: A-2

Outlook: Stable

Issuer rating: A+

Rating outlook: Stable

[In the 13 th Period (ending August 2008)]


Debt Finance:

OJR took out a short-term loan of ¥4,000 million (floating rate, unsecured) based on a commitment line for

the purpose of refinancing on March 21, 2008. Also, a new debt finance of ¥16,100 million (floating rate,

unsecured) based on a commitment line was made on March 28, 2008 for the acquisitions of the ORIX

Suidobashi Building, the ST WORLD Building and the Toda Park Logistics Center.

As a result, the loan balance as of April 15, 2008 was ¥105,750 million, the interest-bearing debt ratio was

43.4%, the fixed-interest ratio was 81.0%, the long-term debt ratio was 72.8% (excluding the current portion

of long-term borrowing) and the unsecured debt ratio was 91.8%.


26

ORIX JREIT REPORT 12th Period


Financial results and distribution

OJR recorded operating revenues of ¥9,975 million and net income of ¥4,085 million for this particular

period ended February 29, 2008.

The distribution per unit was ¥16,233 nearly equal to the unappropriated profit per unit (fractions omitted),

so that the distribution in cash can be tax-deductible under Article 67-15 of the Special Taxation Measures

Law, which requires a payout ratio of more than 90%.

Fund Overview

1. Capitalization

Paid-in capital

In the 12th period (the six months ended February 29, 2008), OJR issued 25,000 new units through a public

offering, and 1,250 new units through third party allotment. As a result, the number of investment units

outstanding increased to 251,622 and the total amount of unitholders’ capital increased to ¥137,814 million .

The following table shows capital increases carried out in previous periods.

Date

Remarks

Investment Units

Outstanding

Paid-in Capital

(In millions of yen)

Increase Balance Increase Balance

September 10, 2001 Private Placement (1) 400 400 200 200

March 13, 2002 Additional Issuance of Units (2) 41,000 41,400 61,500 61,700

April 22, 2002 Unit Split (3) 81,972 123,372 61,700

September 18, 2003 Additional Issuance of Units (4) 52,000 175,372 24,121 85,821

September 14, 2005 Additional Issuance of Units (5) 47,500 222,872 33,287 119,108

October 12, 2005 Third party allotment (6) 2,500 225,372 1,752 120,860

October 3, 2007 Additional Issuance of Units (7) 25,000 250,372 16,147 137,007

October 30, 2007 Third party allotment (8) 1,250 251,622 807 137,814

Notes:

1. ORIX Corporation paid the initial capital of ¥200 million and received 400 units at ¥500,000 per unit.

2. Issuance of 41,000 additional units to ORIX Corporation at ¥1,500,000 per unit.

3. 1 for 2.98 split.

4. First public equity offering of 52,000 new units at ¥480,200 per unit (issue price per unit was ¥463,873) to acquire

properties and repay debt.

5. Second public equity offering of 47,500 new units at ¥725,200 per unit (issue price per unit was ¥700,780) to acquire

properties and repay debt.

6. Along with the public offering of note 5, additional 2,500 units were allocated through private placement at ¥700,780 per

unit.

7. Third public equity offering of 25,000 new units at ¥668,360 per unit (issue price per unit was ¥645,854) to repay debt.

8. Along with the public offering of note 7, additional 1,250 units were allocated through private placement at ¥645,854 per

unit.

Market price of OJR units

OJR’s investment units are traded on the TSE JREIT section. The high and low closing prices per unit for

the 12 th and 11 th periods are shown below in yen:

From September 1, 2007 From March 1, 2007

to February 29, 2008 to August 31, 2007

High 817,000 1,230,000

Low 594,000 742,000

ORIX JREIT REPORT 12th Period 27


Overview of borrowings

Category

Short-term debt

(9)

Short-term debt

(6)

Lender

THE SHIZUOKA BANK, LTD. 1,000

The Sumitomo Trust and Banking Company,

Limited

Balance at

the period end

Balance at

beginning of the period

5,274

Mitsubishi UFJ Trust and Banking Corporation 5,274

Sumitomo Mitsui Banking Corporation 4,615

Average interest

rate 1

Floating rate

1.11750%

Floating rate

1.10250%

(2)

Due on

November

5, 2007

September

20, 2007

Use of

funds

(3)

(3)

In millions of yen

Repayment

method

Bullet

payment

Bullet

payment

Note

Un-Secured,

Non-guaranteed,

Pari passu

Un-Secured,

Non-guaranteed,

Pari passu

Mizuho Corporate Bank, Ltd. 2,637

Subtotal 17,800

Short-term debt

(7)

The Sumitomo Trust and Banking Company,

Limited

2,519

Mitsubishi UFJ Trust and Banking Corporation 2,519

Sumitomo Mitsui Banking Corporation 2,203

Floating rate

1.09866%

(2)

September

20, 2007

(3)

Bullet

payment

Un-Secured,

Non-guaranteed,

Pari passu

Mizuho Corporate Bank, Ltd. 1,259

Subtotal 8,500

Short-term debt

(8)

The Sumitomo Trust and Banking Company,

Limited

Mitsubishi UFJ Trust and Banking Corporation

Sumitomo Mitsui Banking Corporation



Floating rate

1.07900%

(2)

Ocotober

10, 2007

(3)

Bullet

payment

Un-Secured,

Non-guaranteed,

Pari passu

Mizuho Corporate Bank, Ltd.

Subtotal

Short-term debt

(10)

The Sumitomo Trust and Banking Company,

Limited

Mitsubishi UFJ Trust and Banking Corporation

Sumitomo Mitsui Banking Corporation



Floating rate

1.21917%

(2)

January

21, 2008

(3)

Bullet

payment

Un-Secured,

Non-guaranteed,

Pari passu

Mizuho Corporate Bank, Ltd.

Subtotal

The Sumitomo Trust and Banking Company,

Limited

1,185

Mitsubishi UFJ Trust and Banking Corporation

Short-term debt

1,185

Sumitomo Mitsui Banking Corporation 1,037

Floating rate

1.13917%

(2)

March

21, 2008

(3)

Bullet

payment

Un-Secured,

Non-guaranteed,

Pari passu

Mizuho Corporate Bank, Ltd. 593

Subtotal 4,000

Short-term debt total

The Sumitomo Trust and Banking Company,

Limited

4,000 27,300

1,750 1,750

Mitsubishi UFJ Trust and Banking Corporation 2,150 2,150

The Norinchukin Bank 1,250 1,250

Long-term debt

(term loan 3)

Sumitomo Mitsui Banking Corporation 1,000 1,000

Sompo Japan Insurance Inc. 500 500

The Chiba Bank, Ltd. 500 500

Tokio Marine & Nichido Fire Insurance Co.,

Ltd.

500 500

The Hachijuni Bank, Ltd. 500 500

Fixed rate

1.84646%

(2)

September

20, 2008

(4)

(5)

(3)

Bullet

payment

(4)

(5)

Secured,

Non-guaranteed,

Pari passu

Mizuho Trust & Banking Co., Ltd. 500 500

Subtotal 8,650 8,650

28

ORIX JREIT REPORT 12th Period


Category

Lender

The Sumitomo Trust and Banking Company,

Limited

National Mutual Insurance Federation of

Agricultural Cooperatives

Balance at

the period end

Balance at

beginning of the period

4,000 4,000

3,000 3,000

THE BANK OF FUKUOKA, LTD. 3,000 3,000

Average interest

rate 1

Due on

Use of

funds

In millions of yen

Repayment

method

Note

Long-term debt

(term loan 4)

The Shinkumi Federation Bank 2,000 2,000

The Hyakugo Bank, Ltd. 1,000 1,000

Aioi Insurance Company, Limited 500 500

Fixed rate

1.09000%

(2)

September

24, 2009

(5)

(3)

Bullet

payment

(5)

Un-secured,

Non-guaranteed,

Pari passu

The Toho Bank, Ltd. 500 500

THE DAI-ICHI MUTUAL LIFE INSURANCE

COMPANY

500 500

NIPPONKOA Insurance Company, Limited 500 500

Subtotal 15,000 15,000

The Sumitomo Trust and Banking Company,

Limited

2,500 2,500

Mitsubishi UFJ Trust and Banking Corporation 1,000 1,000

Long-term debt

(term loan 6)

Sumitomo Mitsui Banking Corporation 4,200 4,200

Tokio Marine & Nichido Fire Insurance Co.,

Ltd.

2,500 2,500

Mizuho Corporate Bank, Ltd. 1,800 1,800

Fixed rate

1.44663%

(2)

March

19, 2010

(5)

(3)

Bullet

payment

(5)

Un-secured,

Non-guaranteed,

Pari passu

Sompo Japan Insurance Inc. 1,000 1,000

The Shinkumi Federation Bank 1,000 1,000

Subtotal 14,000 14,000

Long-term debt THE SHIZUOKA BANK, LTD. 1,000

The Sumitomo Trust and Banking Company,

Limited

4,000 4,000

Sumitomo Mitsui Banking Corporation 3,500 3,500

Fixed rate

1.51500%

November

5, 2010

(5)

(3)

Bullet

payment

(5)

Un-Secured,

Non-guaranteed,

Pari passu

Resona Bank, Limited. 2,300 2,300

Long-term debt

(term loan 5)

Mitsubishi UFJ Trust and Banking Corporation 1,400 1,400

MITSUI LIFE INSURANCE COMPANY

LIMITED

1,400 1,400

The Chiba Bank, Ltd. 1,400 1,400

Fixed rate

1.99541%

(2)

April

27, 2011

(5)

(3)

Bullet

payment

(5)

Un-secured,

Non-guaranteed,

Pari passu

The Hyakugo Bank, Ltd. 1,000 1,000

Aozora Bank, Ltd. 1,000 1,000

TAIYO LIFE INSURANCE COMPANY 1,000 1,000

Subtotal 17,000 17,000

Long-term debt

(term loan 7)

The Sumitomo Trust and Banking Company,

Limited

6,000 6,000

Mitsubishi UFJ Trust and Banking Corporation 5,500 5,500

Fixed rate

1.78543%

(2)

March

19, 2012

(5)

(3)

Bullet

payment

(5)

Un-secured,

Non-guaranteed,

Pari passu

Long-term debt

(term loan 8)

Long-term debt

Subtotal 11,500 11,500

The Norinchukin Bank 8,500 8,500

National Mutual Insurance Federation of

Agricultural Cooperatives

Long-term debt total

Grand total of short-term and long-term debt

Notes:

1. The average interest rate is the weighted-average one based on debt amounts at the end of the period. The average interest rate relating

to the debt hedged by an interest rate swap for the purpose of avoiding interest rate volatility risk is the weighted-average interest rate

after reflecting the effect of the relevant interest rate swap.

2. Same terms and conditions, including interest rates and maturities, apply to each lender of each debt category.

3. All borrowings have been used to finance the acquisitions of real estate and real estate held in trust, or to refinance other debts.

4. Maturity dates are followed by two years of tail period, during which the interest rates applied to the remaining period will increase by 2%.

5. The following table shows the total amounts of long-term debt to be repaid for each year:

Due within one year

Due after one

to two years

3,000 3,000

7,000 7,000

85,650 84,650

89,650 111,950

Due after two

to three years

Long-term

debt

6. OJR fully repaid short-term debt of ¥17,800 million on September 20, 2007.

7. OJR fully repaid short-term debt of ¥8,500 million on September 20, 2007.

8. OJR fully repaid short-term debt of ¥26,300 million on October 10, 2007.

9. OJR fully repaid short-term debt of ¥1,000 million on November 5, 2007.

10. OJR fully repaid short-term debt of ¥10,000 million on January 21, 2008.

Fixed rate

1.78543%

Fixed rate

1.39875%

Fixed rate

2.19625%


Due after three

to four years

March

19, 2012

(5)

September

20, 2012

(5)

April

26, 2013

(5)

Due after four

to five years

(In millions of yen)

Due after five years

8,650 15,000 15,000 17,000 23,000 7,000

(3)

(3)

(3)

Bullet

payment

(5)

Bullet

payment

(5)

Bullet

payment

(5)

Un-secured,

Non-guaranteed,

Pari passu

Un-secured,

Non-guaranteed,

Pari passu

Un-secured,

Non-guaranteed,

Pari passu

ORIX JREIT REPORT 12th Period 29


2. Major unitholders

Name

The Master Trust Bank of Japan, Ltd.

(Trust accounts)

Japan Trustee Services Bank, Ltd.

(Trust accounts)

NikkoCiti Trust and Banking Corporation

(Investment accounts)

Trust & Custody Services Bank, Ltd.

(Securities investment trust accounts)

The Nomura Trust and Banking Co., Ltd.

(Investment accounts)

ORIX Life Insurance Corporation

AIG Star Life Insurance Co., Ltd.

General account

Goldman Sachs International

The Bank of New York Treaty JASDAQ

Account

American Life Insurance Company GAL

Address

11-3, Hamamatsucho 2-chome,

Minato-ku, Tokyo

8-11, Harumi 1-chome, Chuo-ku,

Tokyo

Citigroup Center,

3-14, Higashishinagawa

2-chome, Shinagawa-ku, Tokyo

Harumi Island Triton Square

Offices Tower Z Building, 8-12,

Harumi 1-chome, Chuo-ku, Tokyo

2-2, Otemachi 2-chome,

Chiyoda-ku, Tokyo

Shinjuku Monorisu, 3-1,

Nishishinjuku 2-chome,

Shinjuku-ku, Tokyo

1-3, Taihei 4-chome, Sumida-ku,

Tokyo

133 Fleet Street London EC4A

2BB, U.K

Avenue Des Arts, 35 Kunstlaan,

1040 Brussels, Belgium

1-3, Marunouchi 1-chome,

Chiyoda-ku, Tokyo

(As of February 29, 2008)

Number of

Ownership

Units

(%)

Owned

23,531 9.35

20,888 8.30

18,660 7.41

16,405 6.51

10,364 4.11

7,312 2.90

5,656 2.24

5,520 2.19

3,881 1.54

3,755 1.49

Total 115,972 46.08

Note: Ratio of ownership, rounded down to the second decimal place, may not add up to totals due to rounding.

3. Unitholder Type

(As of February 29, 2008)

Number of

Number of

Unitholder type

%

%

Unitholders

Units

Domestic 15,263 98.88 191,579 76.14

Individuals and Others 14,915 96.62 36,245 14.40

Financial Institutions 127 0.82 149,992 59.61

Bank 30 0.19 20,708 8.23

Trust Bank 12 0.08 92,308 36.69

Life Insurance 12 0.08 19,213 7.64

Fire and Marine Insurance 4 0.03 5,855 2.33

Other Financial 43 0.28 8,288 3.29

Securities Brokers 26 0.17 3,620 1.44

Other Corporate 221 1.43 5,342 2.12

Overseas 173 1.12 60,043 23.86

Total 15,436 100.00 251,622 100.00

Note: Individual ratio, rounded to the second decimal place, may not add up to totals due to rounding.

30

ORIX JREIT REPORT 12th Period


Portfolio Overview

1. Portfolio

Summary

As of February 29, 2008

Asset Type

Area / Type

Amount (1)

Percentage of total

In millions of yen assets (2) (%)

Offices 72,087 28.98

Logistics Facilities

3 Central Tokyo Wards Retail Facilities 2,536 1.02

Hotels

Others 1,151 0.46

Offices 79,509 31.96

Logistics Facilities

Remaining Tokyo Wards Retail Facilities 2,500 1.01

Hotels

Real Estate

Others 2,593 1.04

Offices 6,192 2.49

Logistics Facilities 3,968 1.60

Other Parts of

Retail Facilities

the Greater Tokyo Area

Hotels 13,032 5.24

Others

Offices 43,080 17.32

Logistics Facilities

Other Areas

Retail Facilities

Hotels

Others

Deposits and Other Assets 22,111 8.89

Total Assets 248,759 100.00

Notes:

1. Amounts are the book values as of the end of February 2008, after subtracting the accumulated depreciation.

2. Percentage of total assets is rounded to the second decimal place. Individual numbers may not add up to 100% due to

rounding.

ORIX JREIT REPORT 12th Period 31


2. Selected Property Data

Offices

Logistics

Facilities

Retail

Facilities

Hotels

Others

Area

3 Central

Tokyo Wards

Remaining

Tokyo Wards

Other Parts of

the Greater

Tokyo Area

Other Areas

Other Parts of

the Greater

Tokyo Area

3 Central

Tokyo Wards

Remaining

Tokyo Wards

Other Parts of

the Greater

Tokyo Area

3 Central

Tokyo Wards

Remaining

Tokyo Wards

(As of February 29, 2008)

Property Name

Total Rentable Appraisal Value (1) Share in Appraisal Book Value Share in Book

Area () (In millions of yen) Value (2) (%) (In millions of yen) Value (2)(3) (%)

Aoyama Suncrest Building 2,769.48 4,500 1.70 3,403 1.37

Round-Cross Ichi-bancho 3,300.66 4,840 1.82 3,669 1.48

Beside Shirogane 2,088.71 1,530 0.58 1,330 0.53

Round-Cross Akasaka Mitsuke 1,323.28 2,440 0.92 1,682 0.68

Nihonbashi East Building 2,270.04 1,740 0.66 1,652 0.66

Round-Cross Minami Azabu 3,172.76 1,444 0.54 1,332 0.54

Round-Cross Akasaka 2,785.45 3,074 1.16 2,884 1.16

Round-Cross Mita 2,298.23 1,722 0.65 1,723 0.69

Shiba Daimon Building 2,588.50 1,934 0.73 2,210 0.89

Round-Cross Tsukiji 3,996.89 3,781 1.42 3,263 1.31

ORIX Jimbo-cho Building 3,211.50 4,388 1.65 4,074 1.64

ORIX Shiba 2-chome Building 6,753.13 8,632 3.25 7,126 2.86

Aoyama 246 Building 2,406.22 7,614 2.87 5,459 2.19

ORIX Akasaka 2-chome Building 10,336.33 26,740 10.08 21,775 8.75

Nihonbashi Honcho 1-chome Building 5,099.70 10,600 3.99 10,505 4.22

Subtotal 54,400.88 84,979 32.03 72,087 28.98

Carrot Tower 6,939.10 6,350 2.39 4,811 1.93

Toyo MK Building 9,814.55 5,470 2.06 4,688 1.88

Round-Cross Moto Yoyogi 7,723.68 5,680 2.14 4,665 1.88

Round-Cross Nishi Shinjuku 1,248.18 3,120 1.18 2,585 1.04

Beside Kiba 4,824.54 3,410 1.29 2,337 0.94

DT Gaien 2,567.50 3,300 1.24 2,313 0.93

Yoyogi Forest Building 1,912.42 1,410 0.53 1,478 0.59

ORIX Ikebukuro Building 5,539.92 10,580 3.99 9,147 3.68

ORIX Shinjuku Building 6,203.05 10,540 3.97 8,044 3.23

Round-Cross Shinjuku 4,736.17 10,800 4.07 8,037 3.23

Seafort Square Center Building 22,000.77 18,050 6.80 18,001 7.24

Round-Cross Kamata 7,900.10 6,375 2.40 5,710 2.30

Round-Cross Shinjuku 5-chome 3,089.29 5,180 1.95 4,498 1.81

KN Jiyugaoka Plaza 1,231.44 3,110 1.17 3,195 1.28

Subtotal 85,730.71 93,375 35.19 79,509 31.96

Neo City Mitaka 4,622.21 3,210 1.21 2,067 0.83

Round-Cross Kawasaki 5,519.91 5,395 2.03 4,125 1.66

Subtotal 10,142.12 8,605 3.24 6,192 2.49

Nagoya Itochu Building 11,204.85 5,800 2.19 5,316 2.14

Round-Cross Shinsaibashi 16,471.10 14,000 5.28 14,229 5.72

ORIX Koraibashi Building 6,857.61 6,466 2.44 5,355 2.15

ORE Nagoya Fushimi Building 12,216.13 11,550 4.35 9,659 3.88

Lunar Sendai 9,954.82 8,420 3.17 8,521 3.43

Subtotal 56,704.51 46,236 17.42 43,080 17.32

Offices Total 206,978.22 233,195 87.88 200,868 80.75

Koshigaya Logistics Center 19,200.00 3,819 1.44 3,968 1.60

Subtotal 19,200.00 3,819 1.44 3,968 1.60

Logistics Facilities Total 19,200.00 3,819 1.44 3,968 1.60

Nihon Jisho Minami Aoyama Building 997.36 3,003 1.13 2,536 1.02

Subtotal 997.36 3,003 1.13 2,536 1.02

CUBE Daikanyama 899.82 2,581 0.97 2,500 1.01

Subtotal 899.82 2,581 0.97 2,500 1.01

Retail Facilities Total 1,897.18 5,584 2.10 5,036 2.02

Cross Gate 25,942.59 18,700 7.05 13,032 5.24

Subtotal 25,942.59 18,700 7.05 13,032 5.24

Hotels Total 25,942.59 18,700 7.05 13,032 5.24

Park Axis Nishi Azabu Stage 1,337.31 1,230 0.46 1,151 0.46

Subtotal 1,337.31 1,230 0.46 1,151 0.46

Grand Maison Hakusan 1,160.17 512 0.19 424 0.17

Sonet Kami Ikebukuro 5,853.00 2,310 0.87 2,169 0.87

Subtotal 7,013.17 2,822 1.06 2,593 1.04

Other Total 8,350.48 4,052 1.53 3,744 1.51

Grand Total 262,368.47 265,350 100.00 226,648 91.11

Notes:

1. Tanizawa Sogo Appraisal Co., Ltd., Chuo Real Estate Appraisal Co., Ltd., Morii Appraisal & Investment Consulting, Inc., JAPAN REAL ESTATE

INSTITUTE and HIRO & REAS network, Inc. conducted appraisals.

2. Share in appraisal value and share in book value rounded to the second decimal place, may not add up to total amount due to rounding.

3. Individual figures for shares in book value do not add up to 100%, since book value represents total assets as of February 29, 2008 (¥248,759

million) which include those other than property.

4. OJR sold Round-Cross Aoyama on December 26, 2007.

32

ORIX JREIT REPORT 12th Period


3. Selected Financial Data by Property

Offices

Logistics

Facilities

Retail

Facilities

Hotels

Others

Area

3 Central

Tokyo Wards

Remaining

Tokyo Wards

Other Parts of

the Greater

Tokyo Area

Other Areas

Other Parts of

the Greater

Tokyo Area

3 Central

Tokyo Wards

Remaining

Tokyo Wards

Other Parts of

the Greater

Tokyo Area

3 Central

Tokyo Wards

Remaining

Tokyo Wards

(For the period ended February 29, 2008)

Property Name

Number Occupancy Rate (1)(2) Revenue

Share in

of Tenants (1) (%)

(In millions of yen) Revenue (2) (%)

Aoyama Suncrest Building 4 100.0 162 1.7

Round-Cross Ichi-bancho 6 100.0 156 1.6

Beside Shirogane 14 95.7 52 0.5

Round-Cross Aoyama (4) - - 100 1.0

Round-Cross Akasaka Mitsuke 9 88.7 61 0.6

Nihonbashi East Building 5 100.0 70 0.7

Round-Cross Minami Azabu 5 100.0 72 0.8

Round-Cross Akasaka 13 100.0 132 1.4

Round-Cross Mita 2 98.0 - (3) - (3)

Shiba Daimon Building 1 100.0 - (3) - (3)

Round-Cross Tsukiji 8 88.7 144 1.5

ORIX Jimbo-cho Building 3 100.0 166 1.7

ORIX Shiba 2-chome Building 4 100.0 284 3.0

Aoyama 246 Building 9 100.0 203 2.1

ORIX Akasaka 2-chome Building 9 94.7 635 6.7

Nihonbashi Honcho 1-chome Building 3 100.0 249 2.6

Subtotal 95 97.6 2,639 27.8

Carrot Tower 6 100.0 263 2.8

Toyo MK Building 10 100.0 246 2.6

Round-Cross Moto Yoyogi 2 100.0 - (3) - (3)

Round-Cross Nishi Shinjuku 9 100.0 94 1.0

Beside Kiba 3 100.0 130 1.4

DT Gaien 5 100.0 117 1.2

Yoyogi Forest Building 12 99.4 56 0.6

ORIX Ikebukuro Building 3 100.0 351 3.7

ORIX Shinjuku Building 8 100.0 325 3.4

Round-Cross Shinjuku 7 100.0 302 3.2

Seafort Square Center Building 34 94.8 897 9.4

Round-Cross Kamata 3 100.0 258 2.7

Round-Cross Shinjuku 5-chome 7 100.0 139 1.5

KN Jiyugaoka Plaza 5 100.0 83 0.9

Subtotal 114 98.6 - (3) - (3)

Neo City Mitaka 6 100.0 170 1.8

Round-Cross Kawasaki 8 83.8 202 2.1

Subtotal 14 91.2 372 3.9

Nagoya Itochu Building 8 100.0 - (3) - (3)

Round-Cross Shinsaibashi 18 89.5 499 5.3

ORIX Koraibashi Building 13 100.0 239 2.5

ORE Nagoya Fushimi Building 6 100.0 406 4.3

Lunar Sendai 26 94.2 305 3.2

Subtotal 71 95.9 - (3) - (3)

Offices Total 294 97.3 8,209 86.4

Koshigaya Logistics Center 1 100.0 - (3) - (3)

Subtotal 1 100.0 - (3) - (3)

Logistics Facilities Total 1 100.0 - (3) - (3)

Nihon Jisho Minami Aoyama Building 1 100.0 - (3) - (3)

Subtotal 1 100.0 - (3) - (3)

CUBE Daikanyama 3 100.0 71 0.8

Subtotal 3 100.0 71 0.8

Retail Facilities Total 4 100.0 - (3) - (3)

Cross Gate 16 100.0 875 9.2

Subtotal 16 100.0 875 9.2

Hotels Total 16 100.0 875 9.2

Park Axis Nishi Azabu Stage 1 100.0 - (3) - (3)

Subtotal 1 100.0 - (3) - (3)

Grand Maison Hakusan 1 100.0 - (3) - (3)

Sonet Kami Ikebukuro 1 100.0 - (3) - (3)

Subtotal 2 100.0 - (3) - (3)

Other Total 3 100.0 150 1.6

Grand Total 318 97.8 9,500 100.0

Notes:

1. Number of tenants and occupancy rate are as of February 29, 2008.

2. Occupancy rate and share in revenue, rounded to the first decimal place, may not add up to totals due to rounding.

3. The number of tenants is either one or two, or over 80% of revenue for any relevant property is derived from a limited number of

specific tenants. Because of the confidentiality of the contractual terms, OJR does not disclose the revenue from operations of these

properties unless agreement to such disclosures has been specifically received from the tenant.

4. OJR sold Round-Cross Aoyama on December 26, 2007.

ORIX JREIT REPORT 12th Period 33


4. Major Tenants

According to JREIT regulations, OJR is required to disclose information about tenants who lease more than

10% of total rentable areas of the fund’s portfolio. As of the end of the 12 th fiscal period (at the end of February

2008), there was no tenant who is subject to this requirement.

The following list shows the ten largest tenants in terms of rented area as of February 29, 2008. Share in total

rented space is calculated based on the areas that OJR owns.

Name of Tenant Property Expiry Date (1) Rented Space (2)

()

Share in Total

Rented Space (2)

(%)

1 Fujita Kanko Co., Ltd. Cross Gate September 30, 2020 19,744.39 7.7

2 (3) 19,200.00 7.5

3 ITOCHU Corporation Nagoya Itochu Building March 31, 2009 9,200.22 3.6

4 NIKE JAPAN CORP.

Seafort Square Center

May 31, 2011 8,832.49 3.4

5

FUJITSU CHUBU

SYSTEMS LIMITED

Building

ORE Nagoya Fushimi

Building

February 29, 2008 7,466.70 2.9

6 (3) 7,387.13 2.9

7 Housing Kosan Co., Ltd. (4) Sonet Kami Ikebukuro October 31, 2008 5,853.00 2.3

8 (3) 5,060.30 2.0

9

Asunaro Aoki

ORIX Shiba 2-chome

Construction Co., Ltd. Building

May 31, 2009 4,906.46 1.9

ORIX Shinjuku Building April 30, 2008 1,448.31 0.6

10 ORIX Corporation (5) ORIX Koraibashi Building August 4, 2008 468.92 0.2

Cross Gate January 9, 2010 2,655.04 1.0

Total 92,222.96 35.9

Notes:

1. In cases where more than one lease contract has been concluded with a tenant, the date shown in expiry date is for the lease

contract with the earliest expiry date.

2. Rented space and total rented space refer to contracted floor area, which is generally the actual floor size, as opposed to the

registered size in the Japanese registry system. Share in total rented space is rounded to one decimal place. Individual numbers

may not add up to total amount due to rounding.

3. OJR does not have the tenant’s approval to disclose its name in this report.

4. Housing Kosan Co., Ltd. is entitled to sublease the property only if sub-lessees use the property for residential purposes. As a

sub-lessor, Housing Kosan Co., Ltd. may determine sublease conditions at its discretion.

5. Besides these three properties listed above, there are some other properties that ORIX Corporation leases to the end-tenants as a

sub-lessor, since OJR does not have consents from the end-tenants to transfer the leases for the properties from ORIX Corporation

to OJR.

34

ORIX JREIT REPORT 12th Period


Capital Expenditure

1. Projects – 13 th Period Onward

The following table shows the capital expenditure projects that are currently planned. Estimated amounts include

costs that may be recognized as expenses. OJR intends to continue providing such capital improvements to improve

tenant satisfaction and to enhance its portfolio competitiveness and property value.

Property

Location

Aoyama Suncrest Building

(Minato-ku, Tokyo)

Estimated AmountIn millions of yen

Project Estimated Period Total Payment due in Already paid

Amount 12 th period Amount

Total renovation

From February 2008

to August 2009

202 1 1

DT Gaien

(Shibuya-ku, Tokyo)

Renewal of air

conditioner

From July 2008

to January 2009

72

Yoyogi Forest Building

(Shibuya-ku, Tokyo)

Renewal of air

conditioner

From August 2008

to February 2009

49

Aoyama 246 Building

(Minato-ku, Tokyo)

Renewal of air

conditioner

From August 2007

to May 2008

54 7 7

Round-Cross Shinsaibashi

(Osaka City, Osaka)

Installation of open

access floor

From June 2008

to December 2008

24

Seafort Square Center Building

(Shinagawa-ku, Tokyo)

Replacement of

calorimeter for fan

coil unit

From February 2009

to February 2009

30

2. Results – 12 th Period

Total amount of capital expenditures in the 12 th period was ¥43 million and major projects are summarized

below. Combined with the repair costs of ¥130 million, total cost for capital improvements (repair cost and

capital expenditures) during the 12 th period is ¥173 million.

Property

Location

Aoyama 246 Building

(Minato-ku, Tokyo)

Project

Renewal of air conditioner

Period

From August 2007

to September 2007

Amount

In millions of yen

Other Capital Expenditures 36

Grand Total 43

7

3. Cash Reserve for Capital Improvements

Based on its property-specific medium to long-term repair plans, OJR maintains a cash reserve for capital

improvements from its cash flow. The following table shows the summary of cash reserves at the end of the

12 th and 11 th periods.

In millions of yen


For the period ended

February 29, 2008

Balance at the beginning 1,069 1,982

Amount reserved 0,371 1,324

Amount withdrawn 0,229 1,237

Amount carried forward 1,211 1,069

For the period ended

August 31, 2007

Note:

In addition to the above reserve, OJR set aside ¥327 million as of February 29, 2008 as reserve for repair work to properties that

OJR owns in compartmentalized ownership interests. The amount was included in “Others” in “Other assets” on the balance sheet

as of February 29, 2008. Such reserves are generally required in pursuant to the management regulation of the owners’

associations.

ORIX JREIT REPORT 12th Period 35


Administrative Expenses

The following table shows the breakdown of fees and expenses paid to the asset manager (ORIX Asset

Management Corporation), the asset custodian (The Sumitomo Trust & Banking Co., Ltd.), and others such as

for their administrative services.

In millions of yen

Item

For the period ended

February 29, 2008

Asset management fees 566 506

Asset custody fees 32 31

Agent fees 116 113

Officers’ fees 010 010

Auditors’ fees 012 011

Other expenses 073 059

Total 809 730

For the period ended

August 31, 2007

Note:

Above figures do not include the acquisition fee of ¥133 million for the 11 th period and the sale fee of ¥26 million for the 12 th

period that were paid to ORIX Asset Management. The acquisition fee has been capitalized as part of acquisition costs and the

sale fee was netted against gains on sale of real estate properties.

Transaction Activities during Current Period

1. Real Estate and Real Estate Held in Trust

In millions of yen

Sale

Property Date Price

Round-Cross Aoyama December 26, 2007 5,250

Total 5,250

Note:

Sale price does not include transaction costs such as brokerage fees and taxes.

2. Other Assets

Except for real estate and real estate held in trust stated above, there is no significant acquisition or sale of other

assets. Other major assets consist mostly of ordinary bank deposits.

3. Transactions with Related-Parties and Major Shareholders

Transactions

Amount of Purchase Price etc.

Category

Purchase Price etc. (In millions of yen) Sale Price etc. (In millions of yen)

(%) 5,250 (%)

Amount of purchases

Amount of sales

Total Amount

from related parties and major shareholders of related parties and major shareholders

(%) 5,250 (100.0%)

Breakdown of transactions with related parties and major shareholders

OREIT Two Ltd. (%) 5,250 (100.0%)

Total (%) 5,250 (100.0%)

Note:

Figures in parentheses indicate percentages of total purchase prices and sale prices respectively.

36

ORIX JREIT REPORT 12th Period


Commissions paid

Item

(A)

Total Amount

(In millions of yen)

Description of Transactions

with Related Parties and Major Shareholders (1)

Paid to

(B)

Amount

(In millions of yen)

(B)/(A)

Leasing commission 28 ORIX Facilities Corporation 003 09.6%

ORIX Corporation 004 00.5%

Property maintenance fees 667 ORIX Facilities Corporation 149 22.3%

Seafort Community Co., Inc. 046 06.9%

Property management fees (2) 241 ORIX Nihon Jisho Corporation 005 02.0%

Legality investigation

payment (3) 072 ORIX Nihon Jisho Corporation 000 00.4%


Notes:

1. “Related Parties” and “Major Shareholders” refer to (i) the related parties of asset management companies under asset

management agreement with OJR, as defined in “the Law Concerning Investment Trust and Investment Corporation, Article

201, Section 1” and “Order for Enforcement of the Law Concerning Investment Trust and Investment Corporation, Article

123,” and (ii) the major shareholders of asset management companies, as defined in “the Financial Instruments and Exchange

Law, Article 29, Section 4, Paragraph 2.” In the 12 th period, they are ORIX Corporation, ORIX Facilities Corporation, ORIX

Nihon Jisho Corporation and Seafort Community Co., Inc. The above is record of payment of commission etc., to them.

2. Amount paid to ORIX Nihon Jisho Corporation is the commission for real estate management subcontracted by ORIX Asset

Management Corporation to ORIX Nihon Jisho, based on the real estate management contract between OJR and ORIX Asset

Management.

3. Amount paid to ORIX Nihon Jisho is the payment for investigations of the legality of properties subcontracted to ORIX

Nihon Jisho at the time of issue of investment units, and total issuance costs of new units are recorded as the total amount of

paid commissions.

4. Amounts paid to related-parties other than those listed above such as for repairs were as follows.

ORIX Facilities Corporation¥25 million (repairs)

Tennouzu Area Service Co., Inc.¥96 million (utility charges)

ORIX JREIT REPORT 12th Period 37


38

ORIX JREIT REPORT 12th Period


Financial Statements

Independent Auditors’ Report

Balance Sheets

Statements of Income

Statements of Unitholders’ Equity

Statements of Cash Flows

Notes to Financial Statements

ORIX JREIT REPORT 12th Period 39


40

ORIX JREIT REPORT 12th Period


ORIX JREIT Inc.

BALANCE SHEETS

As of February 29, 2008 and August 31, 2007

As of

February 29, 2008

(In millions of yen)

Assets

Current assets:

Cash and deposits

21,103 ¥ 18,789

Rental receivables

313 481

Consumption tax refundable

255

Income taxes refundable

6 3

Prepaid expenses

66 67

Other current assets

28 19

Less: Allowance for doubtful receivables

(5) (3)

Total current assets 21,511 19,611

Property and equipment, at cost:

Land

139,407 143,194

Buildings and structures

71,741 72,533

Building improvements

25,042 25,276

Machinery and equipment

2,144 2,158

Construction in progress

1

238,335 243,161

Less: Accumulated depreciation

(12,530) (11,075)

Net property and equipment 225,805 232,086

Other assets:

Leasehold interests

843 843

Others 600 596

Total assets 248,759 ¥ 253,136

Liabilities and Net assets

Liabilities

Current liabilities:

Trade and other payables

829 ¥ 904

Short-term debt

4,000 27,300

Long-term debt due within one year

8,650

Accrued expenses

290 340

Rents received in advance

1,476 1,487

Consumption tax payable

358

Other current liabilities

61 312

Total current liabilities 15,664 30,343

Non-current liabilities:

Long-term debt

77,000 84,650

Leasehold and security deposits received

14,196 13,998

Total liabilities 106,860 128,991

Net assets

Unitholders' capital

137,814 120,860

Units authorized: 2,000,000 units

Units issued and outstanding: 251,622 units as of

February 29, 2008 and 225,372 units as of August 31, 2007

Retained earnings

4,085 3,285

Total net assets 141,899 124,145

Total liabilities and net assets 248,759 ¥ 253,136

The accompanying notes to financial statements are an integral part of these balance sheets.

As of

August 31, 2007

ORIX JREIT REPORT 12th Period 41


ORIX JREIT Inc.

STATEMENTS OF INCOME

For the six months ended February 29, 2008 and August 31, 2007

Revenues:

Rental and other operating revenues ¥ 9,500 ¥ 9,161

Interest income 42 31

Gains on sale of real estate properties 475

Other revenues 7 3

Total revenues 10,024 9,195

Costs and expenses:

Property-related expenses 4,240 4,304

Asset management fees 566 506

Administrative service fees 148 144

Interest expense 783 804

Issuance costs of new units 72

Other expenses 154 152

Total costs and expenses 5,963 5,910

Ordinary income 4,061 3,285

Extraordinary income:

Compensation from the company's asset management company

25

Income before income taxes 4,086 3,285

Provision for income taxes 1 1

Net income ¥ 4,085 ¥ 3,284

Earnings per unit

Net income (In yen) ¥ 16,558 ¥ 14,572

Weighted average number of units outstanding 246,677 225,372

The accompanying notes to financial statements are an integral part of these statements.

For the six months ended

February 29, 2008 August 31, 2007

(In millions of yen)

For the six months ended

February 29, 2008 August 31, 2007

42

ORIX JREIT REPORT 12th Period


ORIX JREIT Inc.

STATEMENTS OF UNITHOLDERS’ EQUITY

For the six months ended February 29, 2008 and August 31, 2007

(In millions of yen)

Number of units Unitholders’ capital Retained earnings Total unitholders' equity

Balance as of February 28, 2007 225,372 ¥ 120,860 ¥ 3,347 ¥ 124,207

Cash dividends declared (3,346) (3,346)

Net income 3,284 3,284

Balance as of August 31, 2007 225,372 ¥ 120,860 ¥ 3,285 ¥ 124,145

Issuance of new units on October 3, 2007 25,000 16,147 16,147

Issuance of new units on October 30, 2007 1,250 807 807

Cash dividends declared (3,285) (3,285)

Net income 4,085 4,085

Balance as of February 29, 2008 251,622 ¥ 137,814 ¥ 4,085 ¥ 141,899

The accompanying notes to financial statements are an integral part of these statements.

ORIX JREIT REPORT 12th Period 43


ORIX JREIT Inc.

STATEMENTS OF CASH FLOWS

For the six months ended February 29, 2008 and August 31, 2007

Cash Flows from Operating Activities:

Income before income taxes

Adjustments to reconcile income before income taxes

to net cash provided by operating activities:

Depreciation

Amortization of long-term prepaid expenses

Issuance costs of new units

Allowance for doubtful receivables

Interest income

Interest expense

Loss on disposal of property and equipment

Changes in assets and liabilities:

For the six months ended

February 29, 2008 August 31, 2007

(In millions of yen)

4,086 ¥ 3,285

1,639 1,584

38 39

72

2 3

(42) (31)

783 804

4 57

Rental receivables

167 (169)

Consumption tax refundable

255 (255)

Consumption tax payable

358 (85)

Prepaid expenses

1 1

Payments of long-term prepaid expenses

(6) (111)

Decrease in property and equipment due to sale

4,712

Withdrawal from reserve for repairs and maintenance

4

Trade and other payables

(13) (11)

Rents received in advance

(11) 186

Others, net

(45) (14)

Subtotal 12,000 5,287

Cash proceeds from interest income

40 28

Cash payments of interest expense

(838) (705)

Cash payments of income taxes

(5) (3)

Net cash provided by operating activities

11,197 4,607

Cash Flows from Investing Activities:

Payments for investing in time deposits

Proceeds from maturity of time deposits

Purchases of property and equipment

Proceeds from leasehold and security deposits

Repayments of leasehold and security deposits

Others, net

Net cash provided by (used in) investing activities

Cash Flows from Financing Activities:

Proceeds from short-term debt

Repayments of short-term debt

Proceeds from long-term debt

Repayments of long-term debt

Proceeds from issuance of new units

Payment of issuance costs of new units

Payment of dividends

Net cash provided by (used in) financing activities

Net change in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

(2,055) (6,060)

7,036

(136) (27,012)

699 2,062

(707) (660)

(37) (26)

4,800 (31,696)

40,300 44,100

(63,600) (26,800)

1,000 34,000

(25,038)

16,954

(72)

(3,284) (3,348)

(8,702) 22,914

7,295 (4,175)

12,729 16,904

20,024 ¥ 12,729

The accompanying notes to financial statements are an integral part of these statements.

44

ORIX JREIT REPORT 12th Period


Notes to Financial Statements

For the six months ended February 29, 2008 and August 31, 2007

1. Organization

ORIX JREIT Inc. (“OJR”), a Japanese real estate investment corporation, was established on September 10,

2001, with ¥200 million of capital contribution by ORIX Corporation, under the Law Concerning Investment

Trusts and Investment Corporations of Japan, or the Investment Trust Law. OJR was formed to invest primarily

in real estate in Japan. On June 12, 2002, OJR was listed on the Tokyo Stock Exchange’s JREIT (Real Estate

Investment Trust in Japan) section as the fourth listed JREIT. OJR is the first diversified type listed JREIT that

invests in offices, logistics facilities, retail facilities, hotels and other categories of properties.


In its 12th period, OJR sold Round-Cross Aoyama (transfer price: ¥5,250 million). As a result, OJR’s portfolio

included 43 properties as of February 29, 2008 (36 office buildings, 1 logistics center, 2 retail facilities, 1 hotel

and 3 residential properties). The invested amount (total of acquisition prices) aggregated to ¥231,097 million.

2. Summary of Significant Accounting Policies

(a) Basis of presenting financial statements

The accompanying financial statements have been prepared in accordance with the provisions set forth in the

Financial Instruments and Exchange Law and its related accounting regulations, and in conformity with

accounting principles generally accepted in Japan (the “Japanese GAAP”), which are different in certain

respects as to application and disclosure requirements of International Financial Reporting Standards.

The accompanying financial statements have been restructured and translated into English (with some

reclassifications, expanded descriptions) from the financial statements of OJR prepared in accordance with

Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by

the Financial Instruments and Exchange Law. Some supplementary information included in the statutory

Japanese language financial statements, but not required for fair presentation, is not presented in the

accompanying financial statements. OJR has not prepared consolidated financial statements, as it has no

subsidiary.

(b) Property and equipment

Property and equipment are stated at cost. Depreciation of property and equipment is calculated on a

straight-line basis over the estimated useful lives of the assets ranging as stated below:

Buildings and structures …………………………………………………

Building improvements..…………………………………………………

Machinery and equipment………………………………………………..

10-50 years

6-18 years

15-18 years

From the previous period, OJR has changed the depreciation method of property and equipment due to the revision

of Corporate Tax Law. Residual value is no longer used for the property and equipment acquired on or after April 1,

2007. Instead, the whole acquisition cost of such property and equipment will be depreciated at the end of the useful

life with 1 yen remaining as a reminder. As a result of this change of accounting policy, the property-related

expenses for the period ended August 31, 2007 increased by 8 million yen, decreasing ordinary income, income

before income taxes by the same amount, as compared to the amounts that would have been recorded had the

previous method of depreciation been used for the same period.

Furthermore, the property and equipment acquired on or before March 31, 2007 continue to be depreciated to 5% of

the acquisition cost. However, in accordance with the 2007 revision of Corporate Tax Law, from the current period,

OJR has begun to further depreciate the remaining 5% of such assets in equal annual installment, leaving a reminder

price of ¥1, over five years following the business period in which they have been depreciated to 5% of the

acquisition cost. The impact of this treatment on operating income, ordinary income, and income before income

taxes for the current period was immaterial.

(c) Revenue recognition

Revenues from leasing of property are recognized on a straight-line accrual basis over the life of the lease.

(d) Taxes on property and equipment

Property and equipment are subject to various taxes, such as property taxes and city planning taxes. An owner of

properties is registered in a record maintained by the local government in each jurisdiction, and the taxes are imposed

ORIX JREIT REPORT 12th Period 45


on the owner registered in the record as of January 1, based on the assessment made by the local government.

When a property is purchased in a calendar year, these taxes for that calendar year are imposed on the seller.

OJR pays the seller the corresponding amounts of the taxes for the period from the property acquisition date to

December 31 of the calendar year and capitalizes these amounts as the acquisition cost of the property, rather

than expensing them in the period of acquisition. Subsequently, every calendar year, OJR recognizes the taxes

imposed on such properties as property-related expenses in a period when the assessment and decision is

notified and paid, if OJR has owned the properties since January 1 of the calendar year.

There was no acquisition of real estate properties in the period ended February 29, 2008. The amount of such

taxes included in the costs of real estate acquisition was ¥63 million for the period ended August 31, 2007.

(e) Allowance for doubtful receivables

To prepare for possible losses on uncollectible receivables, the allowance for doubtful receivables is provided

in amounts considered to be appropriate based on individual analysis of collectibility for certain doubtful

receivables and on past credit experiences for other receivables.

(f) Hedge accounting

OJR conducts a derivative transaction in order to hedge risks defined in its Articles of Incorporation based on

its financial policy. OJR uses a derivative financial instrument such as an interest rate swap only for the

purpose of avoiding future risks of interest rate increases relating to a loan, but does not enter into such

transactions for speculative or trading purposes. Since the interest rate swap currently used qualifies for hedge

accounting and meets certain matching criteria, the swap is not recorded at fair value but the differential paid or

received under the swap agreement is recognized and included in interest expense or income. In addition,

assessment of the hedge effectiveness has been omitted because the swap meets the matching criteria, as

permitted under the Japanese GAAP.

(g) Income taxes

Deferred tax assets and liabilities are recognized based on the difference between the financial statements and

income tax bases of assets and liabilities using the enacted tax rate.

(h) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, deposits placed with bank and short-term investments,

which are highly liquid, readily convertible to cash, and with an insignificant risk of price fluctuation, with

original maturity of three months or less.

(i) Issuance costs of new units

Issuance costs of new units were recognized as expenses when incurred.

(j) Rounding of amounts presented in financial statements

The amounts in the financial statements have been rounded down to millions in the financial statements

originally prepared in Japanese and filed with regulatory authorities, whereas the amounts have been rounded

to the nearest millions in the accompanying financial statements in order to present them in a manner that is

more familiar to readers outside Japan.

3. Cash and Cash Equivalents

Cash and cash equivalents as of February 29, 2008 and August 31, 2007 were as follows.

(In millions of yen)

As of

February 29, 2008

As of

August 31, 2007

Cash and deposits……………………………………….… ¥ 21,103) ¥ 18,789)

Less: time deposits over three months…………………. . (1,079) . (6,060)

Cash and cash equivalents……………………….………... ¥ 20,024) ¥ 12,729)

46

ORIX JREIT REPORT 12th Period


4. Collateral Pledged and Secured Liabilities

Assets pledged as collateral and relevant secured liabilities were as follows.

(In millions of yen)

Assets pledged as collateral As of February 29, 2008 As of August 31, 2007

Cash and deposits ¥ 1,232 ¥ 1,093

Buildings and structures 8,844 8,943

Building improvements 2,777 2,901

Land 21,899 21,899

Total ¥034,752 ¥034,836

Secured liabilities As of February 29, 2008 As of August 31, 2007

Long-term debt due within one year ¥008,650

Long-term debt ¥008,650

5. Short-term and Long-term Debt

As of August 31, 2007, OJR had total interest bearing debt of ¥111,950 million comprised of ¥27,300 million

of short-term debt and ¥84,650 million of long-term debt.

OJR took out a short-term loan of ¥26,300 million (floating rate, unsecured) based on a commitment line for

the purpose of refinancing on September 20, 2007. Following this, OJR used funds raised through the issuance

of additional investment units to reduce the short-term loan under the commitment line to ¥10,000 million on

October 10, 2007. On November 5, 2007, OJR borrowed a long-term loan of ¥1,000 million (fixed rate,

unsecured) as refinancing from The Shizuoka Bank, Ltd. In addition, OJR applied the proceeds from the sale of

Round-Cross Aoyama to further reduce the short-term loan under the commitment line to ¥4,000 million on

January 21, 2008.

As of February 29, 2008, total interest bearing debt of OJR amounted to ¥89,650 million comprised of ¥4,000

million of short-term debt and ¥85,650 million of long-term debt (including ¥8,650 million of current portion

of long-term debt). Some of the long-term debt were secured by OJR’s 5 properties, cash and deposits, which

amounted to ¥8,650 million. Breakdown of the outstanding interest bearing debt as of February 29, 2008 and

August 31, 2007 were as follows:

(In millions of yen)

As of

February 29, 2008

As of

August 31, 2007


Floating rate debt unsecured due on November 5, 2007 with interest rate of 1.12% ¥ ¥ 1,000

Floating rate debt unsecured due on September 20, 2007 with interest rate of 1.10% ¥ ¥ 17,800

Floating rate debt unsecured due on September 20, 2007 with interest rate of 1.10% ¥ ¥ 8,500

Floating rate debt unsecured due on March 21, 2008 with interest rate of 1.14% ¥ 4,000 ¥ .

Total……………………………………………………………………………… ¥ 4,000 ¥ 27,300


Fixed rate debt secured due on September 20, 2008 with interest rate of 1.85% ¥ 8,650 ¥ 8,650

Fixed rate debt unsecured due on September 24, 2009 with interest rate of 1.09% 15,000 15,000

Fixed rate debt unsecured due on March 19, 2010 with interest rate of 1.45% 14,000 14,000

Fixed rate debt unsecured due on November 5, 2010 with interest rate of 1.52% 1,000

Fixed rate debt unsecured due on April 27, 2011 with interest rate of 2.00% 17,000 17,000

Fixed rate debt unsecured due on March 19, 2012 with interest rate of 1.79% 20,000 20,000

Fixed rate debt unsecured due on September 20, 2012 with interest rate of 1.40% 3,000 3,000

Fixed rate debt unsecured due on April 26, 2013 with interest rate of 2.20% . 07,000 . 07,000

Total………………………………………………………………………………………… . 85,650 . 84,650

Grand total of short-term and long-term debt …………………………………………………… ¥ 089,650 ¥ 111,950

The interest rate relating to the debt hedged by an interest rate swap for the purpose of avoiding interest rate

volatility risk is the interest rate after reflecting the effect of the relevant interest rate swap.

ORIX JREIT REPORT 12th Period 47


The annual maturities of long-term debt as of February 29, 2008 were as follows.


(In millions of yen)

Due within one year …………………………………... ¥08,650

Due after one to two years …………………………………... 15,000

Due after two to three years …………………………………... 15,000

Due after three to four years …………………………………... 17,000

Due after four to five years …………………………………... 23,000

Due after five years …………………………………... 7,000

OJR obtained a commitment line of ¥27,000 million with certain financial institutions to reduce refinancing

risk on June 6, 2007. The unused amount of such commitment line was ¥23,000 million on February 29, 2008.

6. Per Unit Information

Net asset values per unit as of February 29, 2008 and August 31, 2007 were ¥563,936 and ¥550,843,

respectively. Net income per unit was ¥16,558 for the six months ended February 29, 2008, and ¥14,572 for the

six months ended August 31, 2007.

The weighted average numbers of units outstanding that were used for the computation of the amounts of net

income per unit for the six months ended February 29, 2008 and August 31, 2007 was 246,677 and 225,372,

respectively.

7. Income Taxes

As of February 29, 2008 and August 31, 2007, OJR recorded deferred tax assets as follows:

(In millions of yen)

As of February 29, 2008 As of August 31, 2007

Business facility tax payable not qualifying for deduction on tax returns ¥ 1 ¥ 2

Allowance for doubtful receivables not qualifying for deduction

on tax returns ¥ 2 ¥ 1

Total deferred tax assets ¥ 3 ¥ 3

Net deferred tax assets ¥ 3 ¥ 3

The reconciliation of tax rate difference between the statutory tax rate and the effective tax rate was as follows:

For the six months ended

February 29, 2008 August 31, 2007

Statutory tax rate…………………………………………………… 39.67% 40.57%

Estimated allowable dividend distribution (*)…..………………… (39.66) (40.55)

Other………………………………….………………………….… 0.02% 0.02%

Effective tax rate…………………………………………………… 0.03% 0.04%

*OJR follows a policy of making dividend distributions in excess of 90% of taxable income for a period to

meet conditions set forth in the Special Taxation Measures Law of Japan to deduct dividend distributions for

income tax purposes. Based on this particular policy, OJR calculated the amounts of the dividend distributions,

as amounts nearly equal to the retained earnings. The dividend distributions as of February 29, 2008 and

August 31, 2007 were ¥4,085 million and ¥3,284 million, respectively, and OJR treated them as tax-deductible

dividend distributions as defined under the Special Taxation Measures Law of Japan.

8. Unitholders’ Equity

OJR shall maintain its net assets at least ¥50 million as required by the Investment Trust Law of Japan.

OJR may make distributions to unitholders out of, or even more than, accounting profits calculated by deducting

the sum of its unitholders’ contribution from its net asset; provided, however, that such an aggregate distribution

amount shall not exceed the amount remaining after deducting ¥100 million from its net asset amount.

Cash dividends are declared by the Board of Directors after the end of each period. Such dividends are payable to

unitholders of record at the end of each period. On April 15, 2008, the Board of Directors of OJR declared a cash

dividend (¥16,233 per unit) totaling ¥4,085 million, which will be paid to unitholders of record as of February 29,

2008. The declaration of this dividend has not been reflected in the financial statements as of February 29, 2008.

48

ORIX JREIT REPORT 12th Period


9. Related-Party Transactions

There were no related-party transactions that are required to be disclosed under Article 8 of regulations

concerning financial statements for the six months ended February 29, 2008 and August 31, 2007, respectively.

10. Breakdown of Rental and Other Operating Revenues, and Property-Related Expenses

Rental and other operating revenues and property-related expenses for the six months ended February 29, 2008

and August 31, 2007 consisted of the following:

(In millions of yen)

For the six months ended

Rental and other operating revenues: February 29, 2008 August 31, 2007

Rentals:

Rental revenues……………………………………………… ¥ 7,364 ¥ 6,956

Common-area charges.……………………………………… 974 981

Subtotal…………………………………………………… , 8,338 , 7,937

Others:

Parking lots…………………………………………….…… 207 202

Cancellation penalty received………………………………. 25 26

Miscellaneous…………………..…………………………... 930 996

Subtotal………………………………………….….……. . 1,162 . 1,224

Total rental and other operating revenues……………………... ¥, 9,500 ¥, 9,161

Property-related expenses:

Property management fees………………………………….. ¥ 957 ¥ 983

Depreciation………………………………………………… 1,639 1,584

Utility charges……………………………....………………. 801 825

Property and other taxes…………………………………….. 673 673

Others……………………………………………………….. 170 239

Total property-related expenses………………………………... ¥, 4,240 ¥, 4,304

11. Breakdown of Gains on Sale of Real Estate Properties

Gains on sale of real estate properties during the period ended February 29, 2008 were as follows. There was

no sale of real estate properties in the period ended August 31, 2007.

(In millions of yen)

For the six months ended February 29, 2008

Round-Cross Aoyama

Revenue from sale of real estate properties ¥ 05,250

Cost of real estate properties 4,712

Other sales expenses ¥ 0,0063

Gains on sale of real estate properties ¥ 0,0475

12. Extraordinary Items

There was an extraordinary income item of ¥25 million for the period ended February 29, 2008. It resulted

from compensation from OAM, which provides asset management services for OJR.

This compensation payment related to the sale of Round-Cross Aoyama. Although this property had one

section for which compliance with the Building Standard Law has not yet been confirmed, OJR sold the

property in its current condition. Therefore, OAM estimated the amount of expenses expected to be incurred

for taking corrective action that should have been taken at the time of the acquisition of the property and paid

that amount to OJR.


ORIX JREIT REPORT 12th Period 49


13. Leases

OJR operates its properties that are rented to tenants on lease terms of two years generally, with monthly payments

due in advance. For those lease contracts that include non-cancelable operating leases, the minimum future rentals on

non-cancelable operating leases as of February 29, 2008 and August 31, 2007 were as follows:

(In millions of yen)

As of February 29, 2008 As of August 31, 2007

Due within one year……………………………………………… ¥ 2,382 ¥ 2,048

Due after one year……………………………………………….. 7,559 8,112

Total……………………………………………………………… ¥ 09,941 ¥ 10,160

14. Derivative Transaction

OJR uses a derivative transaction in order to hedge risks defined in its Articles of Incorporation based on its

financial policy. OJR uses a derivative financial instrument such as an interest rate swap only for the purpose of

avoiding future risks of interest rate increases relating to a loan, but does not enter into such transactions for

speculative or trading purposes.

The derivative transactions as of February 29, 2008 and August 31, 2007 were as follows:

Notional amount

(In millions of yen)

Notional amount

exceeding one year

Estimated fair value

Unrealized gain (loss)


Interest-rate swap:

Fixed rate payable and floating rate receivable… ¥ 8,500 ¥ 8,500 ¥ (114)


Interest-rate swap:

Fixed rate payable and floating rate receivable… ¥ 8,500 ¥ 8,500 ¥ 0(26)

Since the above interest rate swap qualifies for hedge accounting and meets certain matching criteria, the swap

is not recorded at fair value on the accompanying balance sheets, as described in the summary of significant

accounting policies.

15. Subsequent Events

Cash Distribution Declared

On April 15, 2008, the Board of Directors of OJR resolved to distribute cash payment of ¥16,233 per unit,

aggregating to ¥4,085 million, to its unitholders of record as of February 29, 2008.

50

ORIX JREIT REPORT 12th Period


Corporate Data

Corporate Office

4-1, Hamamatsucho 2-chome,

Minato-ku, Tokyo 105-6135, Japan

PHONE : +81-3-3435-3286

FAX : +81-3-3435-3275

Date of Incorporation

September 10, 2001

Capital

¥137,814 million (As of February 29, 2008)

251,622 units (As of February 29, 2008)

Number of Unitholders

15,436 (As of February 29, 2008)

Transfer Agent

The Sumitomo Trust and Banking Company, Limited

5-33, Kitahama 4-chome, Chuo-ku, Osaka 540-8639, Japan

Independent Auditors

KPMG AZSA & Co.

1-2, Tsukudo-cho, Shinjuku-ku, Tokyo 162-8551, Japan

Investor Relations

For further information, please contact our asset management

company or visit our web site.

(http://www.orixjreit.com/english/)

ORIX Asset Management Corporation

World Trade Center Bldg., 4-1, Hamamatsucho 2-chome,

Minato-ku, Tokyo 105-6135, Japan

PHONE : +81-3-3435-3285

FAX : +81-3-3435-3275

Disclaimer

This report includes translations of certain Japanese documents originally filed under the Financial Instruments and Exchange Law of Japan and related accounting regulations. This

report was prepared in English solely as a reference for the convenience of readers outside Japan and is not intended to constitute a disclosure statement.

English terms for Japanese legal, accounting, tax, and business concepts used herein may not be precisely identical to the concepts of the equivalent Japanese terms. With respect to

all terms herein, including without limitation, the financial statements, the original Japanese documents shall govern in meaning and interpretation for any discrepancies between the

original Japanese documents and the corresponding English statements.

None of ORIX JREIT Inc. (OJR), ORIX Asset Management Corporation (OAM), or any of their respective directors, officers, employees, partners, shareholders, agents, or affiliates shall be

responsible or liable for the completeness, appropriateness, or accuracy of the English translations or the selection of any portion of any document translated into English.

The financial statements of OJR have been prepared in accordance with accounting principles generally accepted in Japan (the “Japanese GAAP”), which are different in certain

respects to the application and disclosure requirements of International Financial Reporting Standards.

This report 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 OAM. However, there are a number of known and unknown risks and uncertainties that can cause actual results or OJR performance to differ

materially from any explicit or implicit forecasts persented 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.

ORIX JREIT REPORT 12th Period 51

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