October 21, 2010 ORIX Asset Management Corporation 0. (ended August 31, 2010)

Transcription

1 October 21, 2010 ORIX Asset Management Corporation 0 (ended August 31, 2010)

2 1 External Growth Acquired properties/replaced assets for greater stability and profitability Acquired 8 properties and sold 4 properties, realizing approx billion in external growth Established new growth strategy to promote a diversified JREIT (Planning to recommence investment in residential real estate, etc.) Internal Growth Endeavored to maintain occupancy rates/rent levels and cutting costs Achieved 97.0% average occupancy rate and 5.2% leasing NOI yield Finance Strategy Steadily refinanced long-term debt Raised funds for acquisition of properties: 6.5 billion through new borrowing, and 5 billion by issuing investment corporation bonds

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4 3 Item (Million Yen) Operating Revenues Operating Income Net Income Distribution per Unit 17th period (Aug 2010) Income-Boosting Factors (million yen) Change Forecast Actual Contribution from unforseen acquisition + 22 of one property Contribution from unforeseen sale of two + 57 properties Disparity in forecast utility income/expenses + 42 Decrease in repair exp. for existing properties + 28 Decrease in ad. exp. for existing properties ,522 11, ,664 5, ,087 4, ,218 Yen 16,061 Yen 843 Yen Revenue and earnings rose due mainly to i) acquisition and sale of properties not factored into forecast assumptions, and ii) an increase in the utility income/expenses balance.

5 th th 4 Item (Million Yen) Operating Revenues Operating Income 9,790 11,701 1,911 4,502 5,887 1,385 Net Income 3,344 4, Distribution per Unit 16th period 17th period (Feb 2010) (Aug 2010) Change 13,290 Yen 16,061 Yen 2,771 Yen Income-boosting Factors (million yen) Contribution from 7 properties acquired Contribution from 4 properties sold Decrease in depreciation expenses from + 37 existing properties Income-decreasing Factors (million yen) Decrease in rental revenue from existing properties 96 Asset taxes for 2 properties acquired in 15th period 44 Increase in repair expenses for existing properties 69 Increase in lending-related costs 101 Increase in investment corporation bond expenses 139 Increase in adjustments for corporation tax, etc 173 (17th period tax-effect accounting) Note: 440 million to internal reserves [Tax effect accounting: 173 million Advanced depreciation (after tax): 266 million] Achieved an increase in revenue and earnings, offsetting the decline in earnings due to the decrease in rental revenue from existing properties, etc. by external growth acquisition and sale of properties

6 5 Item 17th Period 18th Period Forecast (Million Yen) Aug 2010 Feb 2011 Operating Revenues Operating Income 11,701 10,632 1,069 10, ,887 4,771 1,116 4, Net Income 4,308 3,269 1,038 3, Distribution per Unit Income- Boosting Factors Income- Decreasing Factors Change 19th Period Forecast Change 17th to 18th Aug th to 19th 16,061 Yen 12,992 Yen 3,069 Yen 12,206 Yen 786 Yen Change (17th to 18th) (million yen) Change (18th to 19th) (million yen) Full contribution of 7 properties acquired in 17th Contribution of 1 property acquired in 18th + 15 Contribution of 1 property acquired in 18th Increase in rental revenue from existing properties + 11 Decrease in repair expenses for existing properties + 58 Decrease depreciation expenses for exist. properties + 22 Decrease in corp. tax adjustment (tax-effect account.) Loss of gains/incomes from 4 FP17-sold properties 1,206 Increase in brokerage fees for existing properties 31 Decrease in rental revenue from existing properties 315 Asset taxes for 8 properties acquired in 17th and 18th 146 Increase in lending-related costs 57 Increase in repair expenses for existing properties 29 Increase in investment corp. bond-related expenses 32 18th period: Forecasting downturn in revenue and earnings due to loss of gains on property sales, falling rent levels and rising incidence of down time 19th period: Forecasting revenue growth from contribution of newly acquired properties and recovery in rents for existing properties, but earnings may decline due to increase in leasing business expenses, including fixed asset and city planning taxes

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8 No. Asset Size Leasing NOI Yield (1) No. Current Conditions External Growth Policy Results FP17 Onward FP17 Estimates if no sales/acquisitions Increasing stability/ profitability + Expanding asset size FP-end portfolio Asset Size Leasing NOI Yield (3) Outlook for office leasing market remains unclear Cap rates becoming more stabilized in real estate market, providing good opportunity for external growth Stepping up asset replacement and property acquisition for greater stability and profitability 8 properties acquired and 4 sold, realizing approx billion in external growth billion 5.1% Acquire Sell billion 5.3% No. 8 4 Features: Stable cash flow due to smaller difference from market rents than other offices Non-Office use included in the above 4 No. 4 Price (billion yen) 42.1 Offices included in the above Price (billion yen) 14.5 Leasing NOI Yield (2) 6.7% 6.7% 6.7% Features: Cash flow secured over medium to long term due to agreements prohibiting early cancellation by tenants Leasing NOI Yield (2) 5.8% Features: (1) Sale makes risk lower: reduced competitiveness due to small size and aging; area concentration risk also lowered (2) Sale realizes latent profit Office Sakai Logistics Center North Bldg. aune Kohoku 7 ORIX OX Tamachi Omiya ORE Meguro Bldg. Bldg. Shimocho Sapporo Bldg. 1-chome Bldg. Non-Office Office ORIX Shinjuku Bldg. ORIX Jimbo-cho Bldg. Kobe Momoyamadai aune SC(site) Makuhari Round-Cross Akasaka Mitsuke Residential Grand Maison Hakusan Note 1: FP17 estimate of leasing NOI yield if there had been no sales/acquisitions is based on FP17 actual NOI for existing properties and FP16 actual NOI for sold properties. Note 2: Properties leasing NOI shows FP19 forecast figures after accounting for fixed asset/city planning taxes for acquired properties, and FP16 actual figures for sold properties. Note 3: FP-end leasing NOI for the portfolio is based on FP17 actual figures for existing properties and FP19 forecast figures after accounting for fixed asset/city planning taxes for acquired properties.

9 [Reference] Application of Exceptional Handling of Taxation in the Event of In-Advance Acquisition of Land, etc. in 2009 and 2010 for Future Use 8 Conditions OJR s Case (1) Acquisition of land, etc., in 2009 or 2010 Acquired 2 properties below in FP15 (ended Aug. 2009) ORIX Real Estate Nishi Shinjuku Building Omiya Miyacho Building (2) Sale of other land holdings within ten years of the following fiscal year Sold 4 properties below in FP17 (ended Aug ) ORIX Shinjuku Building ORIX Jimbo-cho Building Round-Cross Akasaka Mitsuke Grand Maison Hakusan Effects Using advanced depreciation (or otherwise setting aside reserves through appropriation of surplus), a maximum of 80% (in the case of 2009 acquisition*) or 60% (in the case of 2010 acquisition only) of the gain on the sale of land in (2) above may be recorded to internal reserves, up to a maximum of the total of the land acquired in (1) above. * : If land, etc. is acquired in 2009, a maximum of 80% of the gain on the sale of land in (2) above with regard to land, etc., acquired during 2010 may also be recorded to Internal reserves. OJR s Case Whichever amount is the lower of A or B below may be recorded to internal reserves A. 当該税制の特例が定める上限 The maximum stipulated by special taxation rule Gain on land sale in (2) above x 80% B. Amount not conflicting with requirements for inclusion of loss on distribution payment Less than 17 th period net income before taxes x 10% Using this treatment, 440 million scheduled to be recorded to internal reserves strengthening financial base B. 支払配当損金算入要件に抵触しない金額

10 Excellent location for convenient transport and high profile Six minutes walk from Meguro station with access to a number of lines: JR, Tokyo Metro, Toei subway, and Tokyu lines Close to Meguro Dori and Yamanote Dori avenues; easy access to Meguro ramp of Metropolitan Expressway Route No. 2 Meguro Line Located alongside Meguro River, giving the property a high profile 9 Location Meguro-ku, Tokyo Acquired July 29, 2010 Price 6,350 million Built January 1996 Floors Land Area Total Floor Seller 10 floors 1B 3, m2 11, m2 A. T. S Co., Ltd. Exceptional features satisfying tenants needs High standard of specifications including over 70-car parking spaces, individually controlled air conditioning, and automated security system Rentable area on a standard floor: approximately 680m 2 (206 tsubo)

11 10 Located in Sapporo City s s Chuo Ward, at the heart of Hokkaido Chuo Ward in Sapporo City is the center of politics, economics, and culture in Hokkaido. It is Hokkaido s premier business area where a large number of government offices and branches of financial institutions and major companies are concentrated Outstanding location for convenient transport - only four minutes walk from Sapporo station and five minutes from Odori station on the Sapporo municipal subway; nine minutes walk from JR line Sapporo station Location Chuo-ku, Sapporo-City, Tokyo Acquired October 1, 2010 Price 4,250 million Built November 2008 Floors Land Area Total Floor Seller 12 floors 1, m2 15, m2 ORIX Real Estate New building with high level of specifications Built only in November 2008 High level of specifications including 70-car parking spaces, individually controlled air conditioning, automated security system, ceiling heights of 2,800mm, and 100mm OA floors Leaseable area on a standard floor: approximately 1,038m 2 (314 tsubo). The standard floor can be divided into ten individual separate areas This property is built on a fixed-term land leasehold.

12 11 OX Tamachi Building Omiya Shimocho 1-chome Building Location Minato-ku, Tokyo Acquired March 29, 2010 Price 6,730 million Built January 1986 Floors Land Area Total Floor 10 floors 1, m2 7, m2 Seller Joint Ark 01 Location Omiya-ku, Saitama-City, Saitama Acquired March 29, 2010 Price 3,750 million Built August 2009 Floors Land Area Total Floor Seller 8 floors 1, m2 6, m2 ORIX Real Estate

13 12 Sakai Logistics Center North Building Location Sakai-ku, Sakai-City, Osaka Acquired March 30, 2010 Price 10,200 million Built July 2009 Floors Land Area Total Floor Seller 4 floors 34, m2 64, m2 ORIX Real Estate Location Tarumi-ku, Kobe-City, Hyogo Acquired March 5, 2010 Price Land Area Bought from 3,260 million 59, m2 O. M. One

14 13 aune Makuhari Location Tsuzuki-ku, Yokohama-City, Kanagawa Acquired March 10, 2010 Price 4,000 million Built March 2008 Floors Land Area Total Floor Seller 7 floors 2 B 1, m2 8, m2 Joint Ark X01 Location Mihama-ku, Chiba-City, Chiba Acquired March 10, 2010 Price 3,600 million Built February 2008 Floors Land Area Total Floor Seller 6 floors 1 B 2, m2 7, m2 Joint Ark X01

15 14 Rent Revision Status (by Floor Area) Revision-Based Rent Trends Floor area covered by lease renewals and new leases during each fiscal period (10,000 m2 ) % 31% 15% 49% Rent increase (existing tenant) Rent increase (new tenant) No change Rent decrease (existing tenant) Rent decrease (new tenant) -34 4% 1% 1% 66% 31% 22% 11% -42 1% 24% 59% 22% 16% Rent adjustment (monthly base) * Figures are after deducting the amount of decrease % 14th 15th 16th 17th (09.2) (09.8) (10.2) (Millions of Yen) 0.3% 27% 63% 9% (10.8) (%) th (09.2) 16th (10.2) Levels of Office Rents (for 1 tsubo) (As of Aug. 31, 2010) 25,000 or higher Below 30, % 20,000 or higher Below 25, % Lease renewals New leases Total th (09.8) ,000 or higher 2.4% Below 15, % 15,000 or higher Below 20, % th (10.8)

16 FP17: Occupancy rates maintained at a certain level despite rising vacancy rates in the market FP18: Tenant cancellations increased in Oct 2010, but afterwards the area and number of cancellations became stabilized throughout the period Occupancy Rates and Tenanted / Vacated Area (%) All Offices Offices in greater Tokyo Offices provincial 80 6,000 ( m2 ) Average Occupancy for 16th Period Overall: 96.9% Offices: 95.1% Average Occupancy for 17th Period Overall: 97.0% Offices: 93.7% Estimated Average Occupancy for 18th Period Overall: 96.6% Offices: 93.4% 4,000 2, ,000 Tenanted Vacated -4,000-6,000 16th 17th 18th 09/9 09/10 09/11 09/12 10/1 10/2 10/3 10/4 10/5 10/6 10/7 10/8 10/9 10/10 10/11 10/12 11/1 11/2

17 Due to high occupancy rates and strong profitability, non-office use contributes to improving portfolio stability 16 Portfolio Diversification (as of the end of 17 th period) Trends in Occupancy Rates by Property Type (Acquisition Price Basis) Non-office properties Acquisition Price Ratio Leasing NOI Yield :22.1% : 6.1% 102.0% 100.0% 98.0% 96.0% Offices Logistics Retail Hotel Other Offices 77.9% 94.0% 92.0% 90.0% th Fiscal Period Results 18 th Fiscal Period Results (Forecast) Logistics Facilities Retail Facilities Hotels Other (Residential) Acquisition price ratio Total price No. Name 10.7% 32,100 million 4 Koshigaya Logistics Center, 3 others Acquisition price ratio Total price No. Name 5.3% 15,843 million 5 CUBE Daikanyama, 4 others Acquisition price ratio Total price No. Name 5.0% 15,040 million 1 Cross Gate Acquisition price ratio Total price No. Name 1.2% 3,596 million 2 Park Axis Nishi-Azabu Stage, 1 others Leasing NOI Yield 5.7% Leasing NOI Yield 7.2% Leasing NOI Yield 6.0% Leasing NOI Yield 5.6% Note1: Leasing net operating income (NOI) yield = (Rental operating revenues - Rental operating expenses + Depreciation) acquisition price Note2: Rental operating revenues and rental operating expenses include leasing sales amount and leasing cost of sales amount, respectively. For the calculation of the leasing NOI, the leasing cost of sales amount is added to the rental operating income (rental operating revenues - rental operating expenses)

18 17 Leasing NOI yield, all properties Leasing NOI, all properties Leasing NOI yield of the 27 properties continuously held from the end of the 6 th fiscal period through to the account settlement announcement day of the 17 th fiscal period Leasing NOI yield of newly acquired properties in the initial fiscal period of acquisition (based on the discounted cash flow method for determining the appraisal value at acquisition) (Million yen) 10, (%) , ,000 4,000 2, No new properties acquired in 16 th period th 15th 16th 17th 18th projected 19th projected 2.0 Note1: Leasing net operating income (NOI) yield = (Rental operating revenues - Rental operating expenses + Depreciation) acquisition price Note2: Rental operating revenues and rental operating expenses include leasing sales amount and leasing cost of sales amount, respectively. For the calculation of the leasing NOI, the leasing cost of sales amount is added to the rental operating income (rental operating revenues - rental operating expenses)

19 Outstanding Interest-Bearing Debt, Loan-to-Value Ratio 16th End 17th End Oct. 20, 2010 Outstanding Interestbearing Debt ( million) 138, , ,105 Loan-to-Value Ratio (1) (out of unitholders capital, %) Loan-to-Value Ratio (2) (out of total assets, %) Long-term Interest-bearing Debt Ratio (3) (%) Fixed-rate Interest Ratio (%) Composition of Interestbearing Debt as of Oct. 20, 2010 (billion yen) Investment Corporation Bond 17.0 (11.4%) Short-term Borrowing 13.8 (9.3%) Long-term Borrowing 85.0 (57.0%) 18 Long-term Borrowing Due within 1 Year 33.2 (22.3%) Average Borrowing Rate (4) 16th End 17th End Oct. 20, 2010 Short-term Interest-bearing Debt (%) Long-term Interest-bearing Debt due within 1 year (%) Long-term Interest-bearing Debt (3) (%) Average (%) Outstanding Interest-bearing Debt acc. to Maturity (As of October 20, 2010) Investment Corporation Bond Commitment Line short-term Borrowing (billion yen) Long-term Borrowing Average Years Left to Maturing Loans 16th End 17th End Oct. 20, 2010 Long-term Interest-bearing Debt (3) (years) Note 1: Loan-to-Value Ratio out of unitholeders capital = outstanding interest-bearing debt/(outstanding interest-bearing debt + unitholeders capital ) Note 2: Loan-to-Value Ratio out of total assets = Outstanding interest-bearing debt/total assets Note 3: Excludes long-term interest-bearing debt due within one year Note 4: Weighted average of per-annum interest rate of the outstanding interest-bearing debt as of each point of time Average (years)

20 19 Credit Ratings S&P Long-term rating: A-, Short-term rating: A-2 R&I Issuer rating: A+ Outlook: Stable Rating outlook: Stable Commitment Line Commitment line of debt set at 15.0 billion in total provided by three financial institutions Investment Corporation Bond Balance Interest Issued Redemption Unsecured Investment Corporation Bond No billion 2.08% February 25, 2010 February 25, 2013 Unsecured Investment Corporation Bond No billion 1.44% August 12, 2010 August 12, 2014 List of Lenders (as of October 20, 2010) Lender Name Balance (Billion Yen) Share Sumitomo Trust & Banking Co., Ltd % Sumitomo Mitsui Banking Corporation % Mitsubishi UFJ Trust and Banking Corporation % Development Bank of Japan Inc % National Mutual Insurance Federation of Agricultural Cooperatives % Mizuho Corporate Bank, Ltd % Norinchukin Bank % Shinkumi Federation Bank % ORIX Trust and Banking Corporation % Bank of Fukuoka, Ltd % Total: billion owed to 20 lenders Lender Name ShinGinko Tokyo, Ltd. Balance (Billion Yen) 0.5 Share Resona Bank, Ltd % Chiba Bank, Ltd % Mitsui Life Insurance Company Limited % Aozora Bank, Ltd % Shizuoka Bank, Ltd % Taiyo Life Insurance Company % Hyakugo Bank, Ltd % Fuji Fire and Marine Insurance % 0.4% Toho Bank, Ltd % Note: Cells colored indicate new lenders after the beginning of 17th fiscal period

21 8th 9th 10th 11th 12th 13th 14th 15th 16th 17th (End of (End of (End of (End of (End of (End of (End of (End of Aug 2006) Feb 2007) Aug 2007) Feb 2008) Aug 2008) Feb 2009) Aug 2009) Feb 2010) (End of Feb 2006) 20 (End of Aug 2010) Number of properties Appraisal value (billion yen) Book value (billion yen) Unrealized gain (billion yen) Unrealized gain loss ratio (%) (bllion yen) Unrealized gain Unrealized gain loss ratio th 9th 10th 11th 12th 13th 14th 15th 16th 17th Note 1: Unrealized gain/loss is calculated by subtracting the book value from the appraisal value (both as of the end of the fiscal period). Note 2: Unrealized gain/loss ratio is calculated by dividing the unrealized gain/loss by the book value (both as of the end of the fiscal period) (billion yen) % (%)

22 21 Investors Share (%) Investors Share (%) Change Share Investors (%) Individuals, etc. 15, , Finance Major Banks Regional Banks Trust Banks Life Insurance Non-life Ins Others Total Unitholder Categories Individuals, etc. Finance Unitholder Categories Securities Other Corp. Overseas Units 16th 16th Share (%) Units 17th Share (%) Change Share Units (%) 41, , , , , , Major Banks 3, , , Regional Banks 16, , Trust Banks 75, , , Life Insurance 18, , Non-life Ins. 5, , Others 7, , Securities 2, , Other Corp. 6, , Overseas 73, , , Total 251, , th , , th period 251,622 units 16.35% 17th period 251,622 units 18.01% Top 10 Unitholders Japan Trustee Services Bank, Ltd. (trust account) The Nomura Trust and Banking Co., Ltd. (investment accounts) Trust & Custody Service Bank, Ltd. (securities investment trust accounts) STATE STREET BANK AND TRUST COMPANY The Master Trust Bank of Japan, Ltd. (trust accounts) Units Share (%) Units Share (%) Units Share (%) 20, , , , , , , , , , , , , ORIX Life Insurance Corporation 6, , AIGStar Life Insurance Co., Ltd. (general accounts) 5, , American Life Insurance Company GAL 4, , National Mutual Insurance Federation of Agricultural Cooperatives Individuals, 個人 その他 etc. 金融機関 Finance 証券会社 Securities Other その他法人 Corp. 外国法人等 Overseas 50.83% 52.92% 16th 1.16% 2.53% 1.28% Change 3, , Fuji Fire and Marine Insurance 3, , th 29.13% 2.78% 25.00% 0% 20% 40% 60% 80% 100% Note: In the Top 10 Unitholders table, the third decimal place of the ownership share is cut off, except for Change data.

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24 23 (1) Flexible/mobile external growth strategy, keeping step with changes in the environment Change in portfolio policy (minimum office investment, recommencement of investment in residential) (2) Step up pace of external growth Aiming at 500 billion yen in assets, increasing stability and liquidity (3) Investment and management policies based on cash flow characteristics of each sector Implementing asset management, drawing on the expertise of the ORIX Group Building a solid portfolio with high stability/growth potential that can adapt to changes in the environment Maintaining and increasing profit distributions over the medium/long term * As of the date of the account settlement of 17 th period, the Articles of Incorporation of OJR stipulates OJR should not invest in residential properties. This above change of investment policy is conditional upon the resolution to be taken at the October 26 general meeting of unitholders, concerning the amendment of the Articles of Incorporation to make it possible to invest in residential properties.

25 Portfolio construction policy has been changed. It is to increase the scope for a diversification of property use, which is the strength of a diversified JREIT, and to establish a business structure that can make flexible and mobile acquisition of real estate for various uses with different profitability in step with trends in the real estate sales and leasing markets. (1) Objective investment ratio of offices to the entire portfolio changed to approx. 60% or more (2) Investment in residential properties, characterized by relatively high cash flow stability, recommenced (3) "Hotels sector now included in Other due to poor previous investment results and future potential Offices Logistics facilities Retail facilities Hotels Other Main Changes to Portfolio Building Policy Before After Sector 80% or more 20% or less Greater Tokyo area 80% or more Area Other areas 20% or less Percentages shown are approximate figures for general guidelines. Greater flexibility/mobility Offices Logistics facilities Retail facilities Residential properties Other Sector 60% or more 40% or less Greater Tokyo area 80% or more Area 24 Other areas 20% or less Percentages shown are approximate figures for general guidelines. The percentage of each area is the rate of the amount invested in the properties of all sectors in the area to the total amount invested. The exact investment percentage of each sector in each area shall be set forth in the Investment Policy.

26 25 Stepping up pace of external growth by broadening the investment range Expanding asset size, in order to reduce risk related to individual properties or tenants (to enhance stability) and to increase liquidity in JREIT market 5, OJR External Growth Trends (Acquisition price basis) (billion yen) Target: 500 billion yen 4, , Sold properties Residential Hotel Retail Logistics Office Strengthened stability Increased liquidity 305.1billion yen 2, , billion yen 0 Sold properties -1, st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th 13th 14th 15th 16th (02.8)(03.2)(03.8)(04.2)(04.8)(05.2)(05.8)(06.2)(06.8)(07.2)(07.8)(08.2) (08.8)(09.2)(09.8) (10.2) 17th (10.8) Present (10.10)

27 Formulate and Implement Investment / Management Policy based on Cash Flow Features of Each Sector ORIX Group has the expertise and business network cultivated in the finance business and the real estate development/management skills fostered as a developer. Will apply these to asset management. 26 Sector Investment and management policy Area Size Main investment targets and focus of investment and management Offices Greater Tokyo: Min. 80% Other: Max..20% Min. 5 billion Focusing primarily on Greater Tokyo area, newly built, and medium or large size As for offices in local areas, selective investment in consideration of the location, stability and earning potentials Logistics facilities Greater Tokyo: Min. 60% Other: Max. 40% Min. 5 billion Focusing on facilities with excellent location and high level of operational functions Main consideration: tenant-credit type and long-term lease agreement for built-to-suit (BTS), ease of tenant replacement and form of lease for multiple-type facilities Retail facilities Greater Tokyo: Min. 50% Other:.Max. 50% Min. 1.5 billion Consider location, ease of tenant replacement and business types (competitiveness). Pursue growth potential and stability, combining investment in urban/suburban retail facilities As for suburban facilities, selectively invest in those facilities that handle everyday commodities with steady consumer demand Apply the ORIX Group s operation/management expertise responding to property characteristics Residential Greater Tokyo: Min. 80% Other: Max. 20% Min. 1 billion Carefully consider the location (max. 10 minutes to nearest station, access to hub stations, etc.) Focus on single/compact type houses, targeting middle-income groups (the volume market) Apply the operation/management expertise of the ORIX and DAIKYO groups Note 1: The above table is prepared based on the Investment Policy, which is part of the internal regulations of the asset management company. The ratios and figures above are approximate standards. Circumstances that do not match the criteria above may arise as a result of unforeseen changes in the real estate market, opportunities to acquire properties, and other circumstances. Note 2: The single type house is defined as one having less than 40m 2 of exclusive area; the compact type house having at least 40m 2 but less than 60m 2.

28 27 Financial services business Real estate-related business Development, leasing and investment of logistics facilities Development, leasing and investment of office buildings Real estate finance Development, leasing and investment of retail facilities Development and sales of condominiums OAM Development, sales, leasing and management of condominiums by DAIKYO group Development, operation and rehabilitation of hotels Implement asset management through the integration of expertise of the ORIX groups ORIX JREIT Inc.

29 History of ORIX Group s Real Estate Business Office 1996: Office building business begins 2001: Building maintenance business begins Minatomirai Center Buliding Business network/expertise cultivated in financial business Akihabara Business Center Building Logistics 2002: Logistics facility business begins (Provisional) Kawagoe Industrial Complex Logistics Center (Provisional) Yokohama Machida IC Logistics Center Retail Residential 1993: Condominium sales begins 1996: Retail facilities business begins Crossmall Sakai (Provisional) Cross Garden Kawasaki Note 1: In this property, the ORIX Group has established and owns trust beneficiary interests for some of the equity. Note 2: As of October 20, 2010, OJR has no plans to acquire all the properties shown on this page Note 3: Building age at time of acquisition. 1986: Dormitory rental Business begins Shibaura Island Bloom Tower Note1 Balance of Leased Real Estate Assets in Real Estate Segment (billion yen) Office Logistics Retail Rental condo Other Total 28 Summary of Properties Acquired by Capitalizing on Synergies with the ORIX Group since IPO (As of October 20, 2010) No. of properties acquired Total acquisition price Ratio of all properties acquired since IPO By building age (Note3) 57.4% Retail Logistics billion By type 5.4% 12.9% Source: Settlement briefing materials for the 1st quarter of the fiscal year ending March 2011, ORIX Corporation Over 2 years of age New construction (2 years or less) Average age years (Note3) 89.3% Offices 81.7%

30 29 Strengths of Group s Residential Business Daikyo Group s Comprehensive Strength Development capabilities Extensive experience in development, including large-scale towers Total housing management leveraging Group capabilities Condominium sales: Main Group company DAIKYO INCORPORATED Brand strength Sanctus series for sale, Belle Face series for lease Brokerage and leasing management: Main Group company DAIKYO REALDO INCORPORATED Condominium management: Main group company DAIKYO ASTAGE INCORPORATED Results of ORIX Group Housing Business THE TOKYO TOWERS Note 1 The Tower Osaka Dressia Kami Ikebukuro Note2 DAIKYO REALDO s Property Management System Number of Condominium Units Managed by DAIKYO ASTAGE Group Property management Construction management 4 (Billion) 393,449 units Brokerage Marketing services Leasing management 3 Note 1: The ORIX Group owns part of the trust beneficiary interest in this property. Note 2: The ORIX Group owns part of the equity In this property. Note 3: As of October 20, 2010, OJR has no plans to acquire all the properties shown on this page Offering high quality services /3 2009/3 2010/3 (Source: DAIKYO INCORPORATED)

31 [Reference] Overview of ORIX Group Real Estate Business - Retail Facilities 30 Strengths of ORIX Group s Retail Facility Related Business Location and commercial area analysis capabilities Will fully utilize skills of location and commercial area analysis, based on experience in retail facility development and investment activities in real estate industry Leasing capabilities Will fully utilize leasing expertise based on strong tenant relationships through nationwide business network, having over 60 branches Retail facilities-related business being developed mainly by ORIX Real Estate Investment in retail facilities began in 1996 Development and operation of retail facilities began in 1999 Credit analysis expertise Will fully utilize capabilities in assessment of tenant rent payment capacity and mid-lease risk management, based on credit analysis expertise cultivated in finance business ORIX Group has made investment in over 500 properties Having extensive expertise in retail facility development and investment activities

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33 Millions of yen 13th Period 14th Period 15th Period 16th Period 17th Period Aug 2008 Feb 2009 Aug 2009 Feb 2010 Aug 2010 Operating Revenues 10,052 10,522 11,465 9,790 11,701 Operating Income 4,713 5,039 5,838 4,502 5,887 Net Income 3,818 4,016 4,761 3,344 4,308 Unitholders' Capital 137, , , , ,814 No. of investment units issued (units) 251, , , , ,622 Net Assets 141, , , , ,122 Total Assets 280, , , , ,619 Net Assets per Unit (yen) 562, , , , ,825 Distribution per Unit (yen) 15,174 15,963 18,922 13,290 16, (Millions of Yen) 15,000 12,000 9,000 6,000 3,000 0 Operating Results Operating Revenues Operating Income Net Income 10,052 10,522 11,465 4,713 5,039 5,838 3,818 4,016 4,761 9,790 4,502 3,344 11,701 5,887 4,308 13th 14th 15th 16th 17th 20,000 15,000 10,000 5,000 0 (Yen) 15, ,622 Distribution per Unit Distribution per Unit(yen) No. of investment units issued(units) 18,922 16,061 15,963 13,290 (Units) 300, , , ,000 13th 14th 15th 16th 17th

34 Appraisal value of properties at the end of the 17th fiscal period (1) Area symbol: 3 Central Tokyo Wards Remaining Tokyo Wards Other Parts of the Greater Tokyo Area Other Areas Type End of the 17th Fiscal Period Area Property Book value Appraisal CR Gain/loss (\million) (\million) (\million) Aoyama Suncrest Building 3,505 3, % 384 Round-Cross Ichi-bancho 3,551 3, % 418 Beside Shirogane 1,281 1, % 68 Nihonbashi East Building 1,599 1, % -439 Round-Cross Minami Azabu 1,275 1, % 64 Round-Cross Akasaka 2,833 2, % -342 Round-Cross Mita 1,694 1, % -330 Shiba Daimon Building 2,175 2, % -38 Round-Cross Tsukiji 3,156 3, % 437 ORIX Shiba 2-chome Building 6,859 7, % 978 Aoyama 246 Building 5,435 6, % 1,478 ORIX Akasaka 2-chome Building 21,240 20, % -560 Nihonbashi Honcho 1-chome Building 10,228 8, % -2,018 ORIX Suidobashi Building 2,955 2, % -505 ORIX Shinagawa Building 15,080 10, % -4,280 OX Tamachi Building 6,786 6, % -56 Carrot Tower 4,489 5, % 1,290 Toyo MK Building 4,427 4, % 532 Round-Cross Moto Yoyogi 4,438 5, Round-Cross Nishi Shinjuku 2,534 2, % 55 Beside Kiba 2,217 2, % 622 DT Gaien 2,296 2, % -266 Yoyogi Forest Building 1,445 1, % -175 ORIX Ikebukuro Building 8,853 10, % 1,216 Seafort Square Center Building 17,396 15, % -1,526 Round-Cross Kamata 5,468 5, % 353 Round-Cross Shinjuku 7,866 8, % 293 Round-Cross Shinjuku 5-chome 4,324 3, % -1,184 KN Jiyugaoka Plaza 3,158 2, % -318 ST WORLD Building 3,463 2, % -603 ORIX Real Estate Nishi Shinjuku Building 13,675 12, % -1,475 ORIX Meguro Building 6,424 6, % -74 Neo City Mitaka 2,004 2, % 985 Round-Cross Kawasaki 3,978 5, % 1,050 Omiya Miyacho Building 4,345 4, % -5 Omiya Shimocho 1-chome Building 3,795 3, % 4 Nagoya Itochu Building 5,034 4, % -354 ORIX Koraibashi Building 5,096 4, % -457 Lunar Sendai 8,126 4, % -3,266 ORIX Nagoya Nishiki Building 12,228 7, % -4,358 Change from the 16th Period Change % Change CR Change Chg gain/loss (\million) (\million) % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% -24-1, % 0.0% -1, % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.1% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.1%

35 34 Appraisal value of properties at the end of the 16th fiscal period (2) End of the 17th Fiscal Period Type Area Property Book value Appraisal CR Gain/loss (\million) (\million) (\million) Koshigaya Logistics Center 3,791 3, % -359 Logistics Toda Logistics Center 9,428 8, % -708 Ichikawa Logistics Center 8,160 7, % -750 Sakai Logistics Center North Building 10,198 10, % 1 Nihon Jisho Minami Aoyama Building 2,514 3, % 806 CUBE Daikanyama 2,467 2, % -5 Retail aune Kohoku 4,027 4, % -27 aune Makuhari 3,624 3, % -24 Kobe Momoyamadai SC (site) 3,312 3, Hotel Cross Gate 11,977 13, % 1722 Other Park Axis Nishi Azabu Stage 1, % -138 Sonet Kami Ikebukuro 2,061 1, % -181 Appraisal value by type Type No. of property (* 4) (*5) End of the 17th Fiscal Period Book value Appraisal CR Gain/loss (\million) (\million) (\million) Offices , , % -12,276 Logistics Facilities 3 21,380 19, % -1,818 Retail Facilities 2 4,981 5, % 801 Hotels 1 11,977 13, % 1,722 Others 2 3,171 2, % -320 Total , , % -11,890 Change from the 16th Period Change % Change CR Change Chg gain/loss (\million) (\million) 3 0.1% 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% 21 Change from the 16th Period Change % change CR change Chg gain/loss (\million) (\million) -5, % 0.0% -4, % 0.0% % 0.0% % 0.0% % 0.0% 22-5, % 0.0% -3,477 Appraisal value for offices by area Area No. of property (* 4) (* 5) End of the 17th Fiscal Period Book value Appraisal CR Gain/loss (\million) (\million) (\million) 3 Central Tokyo Wards 15 82,872 78, % -4,684 Remaining Tokyo Wards 14 81,617 80, % -1,185 Other Parts of the Greater Tokyo Area 3 10,327 12, % 2,031 Other Areas 4 30,486 22, % -8,437 Total , , % -12,276 Change from the 16th Period Change % change CR change Chg gain/loss (\million) (\million) -2, % 0.0% -2,368-1, % 0.0% % 0.0% 95-1, % 0.0% , % 0.0% -4,109 Note 1: Figures below the decimal point for Book Value are cut off. Note 2: In its current form, Round Cross Moto Yoyogi is not an approved architectural structure. The direct capitalization method, which presupposes net operating income permanence, is also considered inappropriate as a tool for determining an appraisal value. Accordingly, calculations for profit price and CR have not been made. Note 3: For the Kobe Momoyamadai SC (site), the appraisal value and CR are not calculated based on the direct capitalization method. Note 4: For fair comparison with the previous period, Appraisal value by Type and Appraisal value for offices by area are calculated excluding the seven properties acquired and the four properties sold during the FP17, and also excluding the Round-Cross Moto Yoyogi Building for which the CR is not calculated based on the direct capitalization method. Note 5: Figures for CR in Appraisal Value by Type and Appraisal Value for Offices by Area are calculated on a weighted average basis and rounded to the first decimal place.

36 35 Comparison with the 16th Fiscal Period Type Change in Appraisal NCF Change CR CR Change Offices -2.7% -3.1% 5.0% 0.0% Logistics Facilities 0.2% 0.2% 5.6% 0.0% Retail Facilities -0.5% -0.4% 4.6% 0.0% Hotels 1.5% 1.4% 6.4% 0.0% Others (Residentials) -0.2% -0.6% 6.0% 0.0% Total -2.2% -2.4% 5.2% 0.0% Virtually no change in CR for two successive fiscal periods NCF decreases less than in 16 th period (previous NCF Change in total:- 4.5%) Note: For fair comparison with the previous period, figures above are calculated excluding the seven properties acquired and the four properties sold during the FP17, and also excluding the Round-Cross Moto Yoyogi Building for which the CR is not calculated based on the direct capitalization method.

37 List of all real estate held by ORIX JREIT as of October 20, 2010 Type Area Name of building Address GFA ( m2 ) Year Built Acquisition Price (JPY mn) Ratio (%) Aoyama Suncrest Bldg. Minato-ku, Tokyo 2, Sep-79 3, Offices 3 Central Tokyo Wards Remaining Tokyo Wards Round-Cross Ichi-bancho Chiyoda-ku, Tokyo 3, Mar-94 3, Beside Shirogane Minato-ku, Tokyo 2, Sep-89 1, Nihonbashi East Bldg. Chuo-ku, Tokyo 2, Oct-89 1, Round-Cross Minami Azabu Minato-ku, Tokyo 3, May-92 1, Round-Cross Akasaka Minato-ku, Tokyo 2, Oct-78 2, Round-Cross Mita Minato-ku, Tokyo 2, May-90 1, Shiba Daimon Bldg. Minato-ku, Tokyo 2, Oct-88 2, Round-Cross Tsukiji Chuo-ku, Tokyo 3, May-92 3, ORIXShiba 2-chome Bldg. Minato-ku, Tokyo 6, Jan-03 7, Aoyama 246 Bldg. Minato-ku, Tokyo 2, Nov-90 5, ORIXAkasaka 2-chome Bldg. Minato-ku, Tokyo 10, Nov-04 21, Nihonbashi Honcho 1-chome Bldg. Chuo-ku, Tokyo 5, Mar-06 10, ORIX Suidobashi Bldg. Chiyoda-ku, Tokyo 2, Oct-05 3, ORIXShinagawa Bldg. Minato-ku, Tokyo 5, Jun-06 15, OX Tamachi Bldg. Minato-ku, Tokyo 6, Jan-86 6, Carrot Tower Setagaya-ku, Tokyo 6, Nov-96 5, Toyo MK Bldg. Koto-ku, Tokyo 9, Apr-97 5, Round-Cross Moto Yoyogi Shibuya-ku, Tokyo 7, Apr-92 5, Round-Cross Nishi Shinjuku Shinjuku-ku, Tokyo 1, Jun-99 2, Beside Kiba Koto-ku, Tokyo 4, Aug-91 2, DT Gaien Shibuya-ku, Tokyo 2, Feb-90 2, Yoyogi Forest Bldg. Shibuya-ku, Tokyo 1, Jun-87 1, ORIX Ikebukuro Bldg. Toshima-ku, Tokyo 5, Jul-02 9, Round-Cross Shinjuku Shibuya-ku, Tokyo 4, Oct-05 8, Seafort Square Center Bldg. Shinagawa-ku, Tokyo 22, Jun-92 18, Round-Cross Kamata Ohta-ku, Tokyo 7, Feb-94 5, Round-Cross Shinjuku 5-chome Shinjuku-ku, Tokyo 3, Oct-06 4, KN Jiyugaoka Plaza Meguro-ku, Tokyo 1, Dec-01 3, ST WORLD Bldg. Shibuya-ku, Tokyo 1, Mar-07 3, ORIXReal Estate Nishi Shinjuku Bldg. Shinjuku-ku, Tokyo 7, Apr-07 13, ORIX Meguro Bldg. Meguro-ku, Tokyo 6, Jan-96 6, Type Area Name of building Address Note 1:The acquisition price is based on the selling price listed in the relevant sales agreement (rounded down to the nearest million yen). The price does not include consumption taxes and other expenses related to acquisition such as selling fees and public charges. Note 2:The acquisition prices for the following properties are based on the shares of ORIX JREIT holdings: Aoyama Suncrest Bldg., Round-Cross Tsukiji, Carrot Tower, Toyo MK Bldg., DT Gaien, Seafort Square Center Bldg., Neo-City Mitaka, Grand Maison Hakusan, Sonet Kami Ikebukuro. Note 3:Ratios indicate the percentages of individual acquisition prices compared with the total acquisition price of all properties in the portfolio. Note 4:Ratios are rounded to the nearest tenth of a percentage point. Due to rounding, the sum of the percentages may not add up to 100%. Note 5:Properties acquired in fiscal periods 17 th are indicated in red. Of these properties, Kobe Momoyamadai SC (site) was acquired on March 5, aune Kohoku and aune Makuhari were acquired on March 10, Omiya Shimocho 1-chome Bldg. OX Tamachi Bldg. were acquired on March 29, Sakai Logistics Center North Bldg. was acquired on March 30, ORIX Meguro Bldg. was acquired on July 29, And ORE Sapporo Bldg. was acquired on October 1, Note 6: ORIX Jimbo-cho Bldg. was sold on March 10, 2010, and ORIX Shinjuku Bldg. was sold on March 26, 2010, Grand Maison Hakusan was sold on June 10, 2010, and Round-Cross Akasaka Mitsuke was sold on July 15, Note 7:A meeting of the Board of Directors of ORIX JREIT was convened on October 20, 2010 to approve financial statements for the 17th fiscal period, in accordance with Article 131, Paragraph 2 of the Act on Securities Investment Trust and Securities Investment Corporations. Note 8:The total rentable area is based on figures available as of August 31, The total rentable area for properties acquired in the 18th fiscal period and beyond is based on figures available as of October 1, Logistics Offices Retail Facilities Others Hotels Facilities Other Greater Tokyo Other Areas Other Greater Tokyo Other Areas 3 Central Tokyo Wards Remaining Tokyo Wards Other Greater Tokyo Other Area Other Greater Tokyo 3 Central Tokyo Wards Remaining Tokyo Wards GFA ( m2 ) Year Built Acquisition Price (JPY mn) 36 Neo City Mitaka Mitaka-city, Tokyo 4, Sep-93 2, Round-Cross Kawasaki Kawasaki-city, Kanagawa Ratio (%) 5, Jan-93 4, Omiya Miyacho Bldg. Saitama-city, Saitama 4, Sep-08 4, Omiya Shimocho 1-chome Bldg. Saitama-city, Saitama 4, Aug-09 3, Nagoya Itochu Bldg. Nagoya-city, Aichi 11, Feb-81 4, ORIX Koraibashi Bldg. Osaka-city, Osaka 6, Jul-04 5, Lunar Sendai Sendai-city, Miyagi 9, Feb-98 8, ORIXNagoya Nishiki Bldg. Nagoya-city, Aichi 10, Jan-07 12, ORE Sapporo Bldg. Sapporo-city, Hokkaido 11, Nov-08 4, Koshigaya Logistics Center Koshigaya-city, Saitama 226, , , Jan-06 4, Toda Logistics Center Toda-city, Saitama 36, Mar-05 9, Ichikawa Logistics Center Ichikawa-city,Chiba 37, Jun-08 8, Sakai Logistics Center North Bldg. Sakai-city,Osaka 64, Jul-09 10, Nihon Jisho Minami Aoyama Bldg. 156, , Minato-ku, Tokyo Nov-97 2, CUBE Daikanyama Shibuya-ku, Tokyo Jan-03 2, aune Kohoku Yokohama-city, Kanagawa 5, Mar-08 4, aune Makuhari Chiba-city, Chiba 5, Feb-08 3, skobe Momoyamadai SC (site) Kobe-city, Hyogo 42, , Cross Gate Park Axis Nishi Azabu Stage Offices Retail Facilities Yokohama-city, Kanagawa 55, , , Sep-00 15, , , Minato-ku, Tokyo 1, Apr-00 1, Sonet Kami Ikebukuro Toshima-ku, Tokyo 5, Feb-97 2, Others Grand Total Total Logistics Facilities Total Hotels Total Total Total 7, , , ,

38 37

39 38 Under 1 billion Average Sales/Acquisition Price after IPO 1 to 5 billion 50.2% 3.07 Billion yen billion Sale Sales 7.35 Billion yen Acquisition Acquisition Price Ranges 7.2% Over 10 billion 26.7% Average to 10 billion 15.9% Acquisition 1 to 5 billion 30.0% Average 5.76 billion 5 to 10 billion 31.7% Over 10 billion 38.3% Property Size (Floor area) Under 3,000 m % Over 15,000 m 2 Under 3,000 m 2 8.3% Over 15,000 m 2 3,000 m 2 to 15,000 m % Average 15,734 m2 End of 1st Period (Aug. 31, 2002) Under 5yr 19.0% 5-10yr 24.8% Average 12.1 years 40.3% Building Age Over 20yr 20.4% 10-15yr 29.6% 15-20yr 6.2% Average 23,256 m2 3,000 m 2 to 15,000 m % 28.8% Account settlement 17th Period (October 20, 2010) 5-10yr 19.8% Over 20yr 9.3% Under 5yr 15-20yr 37.5% Average 17.0% 10.1 years 10-15yr 16.4% End of 1st Period (Aug. 31, 2002) Account settlement 17th Period (October 20, 2010) End of 1st Period (Aug. 31, 2002) Account settlement 17th Period (October 20, 2010) Note 1: Pie charts show the acquisition price of each property as a proportion of the total acquisition price for all properties with each figure rounded to the first decimal place. Totals may not tally due to rounding. Note 2: Property size is based on the entire floor area of the property, and is not adjusted to reflect the share of ORIX JREIT s holdings. Note 3: Property size and building age has not been included for Kobe Momoyamadai Shopping Center (site).

40 39 Other Area 2.1% Other Parts of the Greater Tokyo Area 17.3% 3 Central Tokyo Wards Remaining Tokyo Wards 34.8% 45.8% Area Other Area 16.0% Other Parts of the Greater Tokyo Area 19.3% Remaining Tokyo Wards 33.4% 3 Central Tokyo Wards 31.3% Hotels 15.1% Retail facilities 1.5% Others 4.1% Offices 79.4% Type Retail facilities 5.2% Logistics facilities 10.5% Hotels 4.9% Others 1.2% Offices 78.2% End of 1st Period (Aug. 31, 2002) Account settlement 17th Period (October 20, 2010) End of 1st Period (Aug. 31, 2002) Account settlement 17th Period (October 20, 2010) Note: Pie charts show the acquisition price of each property as a proportion of the total acquisition price for all properties with each figure rounded to the first decimal place. Totals may not tally due to rounding.

41 40 Top 10 Tenants as of 17 th Period End (Reference) As of 16 th Period End 1 Name of Tenant NIPPON EXPRESS Co., Ltd. Sector Transportation Property Name Sakai Logistics Center North Building Rented Space ( m2 ) Share of Total Rented Space (%) 64, Name of Tenant Rented Space ( m2 ) Share of Total Rented Space (%) 1 SENKO Co., Ltd. 37, SENKO Co., Ltd. Transportation Ichikawa Logistics Center 37, Keiyo Distribution Warehouse Co., Ltd. 36, Keiyo Distribution Warehouse Co., Ltd. Warehousing Toda Logistics Center 36, Fujita Kanko Inc. 19, Fujita Kanko Inc. Hotel Cross Gate 19, (Not disclosed) , (Not disclosed) 19, Itochu Corporation 8, Cainz, Inc., Retail Kobe Momoyamadai Shopping Center (site) 16, Nike Japan Inc. 8, Itochu Corporation Wholesale Nagoya Itochu Building 8, (Not disclosed) 7, Nike Japan Inc. Wholesale Seafort Square Center Building 8, (Not disclosed) 7, (Not disclosed) - - 8, (Not disclosed) - - 7, (Not disclosed) 6, K.K. Housing Kousan 5, , Total Total 157,

42 41 13th Period 14th Period 15th Period 16th Period 17th Period (Million yen) Aug 2008 Feb 2009 Aug 2009 Feb 2010 Aug 2010 Depreciation 1,773 1,874 1,910 1,896 2,069 Repair and Maintenance Costs CAPEX Cash and Cash Equivalents 20,843 22,016 8,444 27,558 12,251 Depreciation/CAPEX/Cash Balance CAPEX/Repairs and Maintenance Costs 3,000 2,500 Depreciation (Lh) CAPEX (Lh) Cash and cash equivalent (Rh) (Millions of Yen) (Millions of Yen) 30, , CAPEX (Millions of Yen) Repair and Maintenance Costs 2,000 1,500 20,000 15, ,000 10, , th 14th 15th 16th 17th th 14th 15th 16th 17th