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As of Aug. 11

In the August 2011 period the total value of our assets was 621.3 billion yen. The occupancy ratio in all of the portfolio is 99.6%, and this rate has consistently been at least 99% since JRF was listed on the stock exchange. Thus, JRF, which specializes in commercial property, has been able to maintain stable rental income not readily affected by changes in the economy.

Geographic Diversification

71 Properties

* Based on appraised value
* Including 12 properties acquired until Oct. 3, 2011

As a rule, we mainly invest in three metropolitan areas: Tokyo, Nagoya, and Osaka. However, we also invest in other major cities and elsewhere, including the cities in Japan that have been specially designated by government ordinance. Our targeted portfolio allocation is: Greater Tokyo Metropolitan Area, 40-60%; Osaka, Nagoya and Surrounding Area, 20-40%; Other Major Cities 10-30%; and Others, 0-20%. Our current portfolio is in accord with this allocation.

Scale

71 Properties

* Based on appraised value
* Including 12 properties acquired until Oct. 3, 2011

If a single property constituted an overly large percentage of our portfolio and if something happened with that property, risk would occur. However, among JRF’s properties, the largest constitutes less than 10% of our total portfolio. We are thus not overly concentrated in any one investment but rather have achieved a well-balanced diversity.

Tenants

71 Properties

* Based on annual rents
* Above figures are at the end of each period
* Including 12 properties acquired until Oct. 3, 2011

We have also achieved a diversity of tenants. In addition to such Japanese retail giants as Aeon Retail and Ito-Yokado, our tenants include Kintetsu Department Stores, Seibu Department Stores, and others. However, due to recent consolidation in the retail industry, the Aeon Group now comprises 45.1% of our tenants. In the future we will endeavor to diversify our tenants.

Investment Types

* Based on appraised value
* Including 12 properties acquired until Oct. 3, 2011

Income Type are investments from which a stable cash flow can be expected over the medium or long term. An example would be a commercial facility from which a long-term, stable flow of rental income can be obtained through a long-term lease contract with a key tenant who has been judged creditworthy and otherwise superior. Growth Type are investments regarding which we actively seek to increase both the value of the property and the cash flow by such means as replacing the tenants and raising the occupancy rate. We endeavor to achieve these goals by making the lease periods with tenants shorter than in the case of “Income Type” and by obtaining a percentage of the tenant’s sales revenue whenever possible. Our targeted portfolio allocation is: income type, 60-70%; growth type, 30-40%.

Lease Type

71 Properties

* Based on annual rents
* Including 12 properties acquired until Oct. 3, 2011

There are generally two types of lease contract: a master lease and a direct lease. A master lease is a lease contract that JRF signs directly with a master tenant on the condition that the latter will sublease the property. For example, if JRF owns the property ABC Mall and leases it in its entirety to XYZ Retail, XYZ Retail is the master tenant and, for JRF, the number of tenants (the number of lease contracts) for this property is one. Afterwards, even if XYZ Retail subleases ABC Mall’s 100 stores to 100 tenants, the number of JRF’s tenants at ABC Mall will still be only one. A direct lease is, for example, a lease contract that JRF would sign directly with the individual tenants that move into ABC Mall. In this case, the number of JRF’s tenants at ABC Mall would be 100. JRF has master leases for almost all of its suburban properties. We can thus obtain stable rental income over the long term regardless of store sales or occupancy rates. With direct leases, it is necessary to seek to understand the situation with each store but it is possible to obtain higher rents than with a master lease. Therefore, with direct leases we will be able to carry out strategic leasing and aim for the upside in every situation.

Rent Type

71 Properties

* Based on annual rents
* Including 12 properties acquired until Oct. 3, 2011

There are generally two types of rent: fixed rent, which is a set amount that can be consistently obtained without regard to store sales; and variable rent, which fluctuates with store sales. However, variable rent can also be divided into two types: sales-based rent, which will increase with an increase in tenant’s sales, on the other hand wihch will be 0 yen should the total amount of sales be 0 yen; and minimum guaranteed rent, which also fluctuates with sales but with which a certain minimum amount of rent is guaranteed even if sales should total 0 yen. Approximately 90% of JRF’s portfolio involves fixed rent that is not readily affected by changes in economic conditions. The remaining approximately 10% involves variable rent. However, this is mostly minimum guaranteed rent. The rental income from these properties will thus not be greatly affected even if store sales should slump.

Lease Contract Type

71 Properties

* Based on annual rents
* Including 12 properties acquired until Oct. 3, 2011

There are two types of tenancy contracts: an "Old style" leasehold contract and a "New style" leasehold contract. An "Old style" leasehold contract is a contract that, without legitimate reason, the landlord (JRF) cannot refuse to renew upon its expiration. A fixed-term tenancy contract is a contract whose period is set in advance and that thus concludes upon expiration of that period. A "New style" leasehold contract is a new form of contract first introduced in March 2000. It has thus hardly been introduced at the properties obtained in the initial period after JRF was listed and at our older properties. However, converting to "New style" leasehold contracts makes it possible to strategically replace tenants. In the future we thus intend to increase our percentage of such contracts.

Lease Expiration Schedule

71 Properties

For properties that can be described as large suburban commercial facilities, we generally conclude long-term lease contracts of about 20 years. At present approximately half of these contracts have a remaining period of over 10 years. This is the source of the ability of JRF, which specializes in commercial facilities, to obtain stable rental income over the long term.