ORIX JREIT ( OJR ) Report

ORIX JREIT ( OJR ) Report The 28 th Fiscal Period From September 1, 2015 to February 29, 2016

Ⅰ Performance Report Investment Performance Overview 1. Financial Highlights 2. Performance Review for Current Period Fund Overview 1. Capitalization 2. Overview of borrowings 3. Overview of bonds 4. Major Unitholders 5. Unitholder Type Portfolio Overview 1. Portfolio Summary 2. Selected Property Data 3. Selected Financial Data by Property 4. Selected Data by Investment Security 5. Major Tenants Capital Expenditure 1. Projects 29 th Period Onward 2. Results 28 th Period 3. Cash Reserve for Capital Improvements Administrative Expenses Transaction Activities during Current Period 1. Real Estate, Real Estate Held in Trust and Asset-Backed Securities 2. Other Assets 3. Transactions with Related Parties of Asset Management Company 1

Investment Performance Overview 1. Financial Highlights 27 rh Period 28 th Period From March 1, 2015 to August 31, 2015 From September 1, 2015 to February 29, 2016 (In millions of yen, unless otherwise indicated) Operating revenues 19,403 19,895 Rental revenues 16,015 16,705 Other operating revenues 2,089 1,998 Gains on sale of real estate properties 1,299 954 Dividend income - 238 Operating expenses 10,282 10,526 Property-related expenses 8,854 9,021 Operating income 9,121 9,369 Ordinary income 7,276 7,706 Net income 7,253 7,699 Total assets (a) 532,695 559,742 Net assets (b) 259,747 273,193 Unitholders capital 252,424 264,720 Total number of units issued (units) (c) 2,235,735 2,320,701 Net assets per unit (Yen) (b)/(c) 116,180 117,720 Total cash distribution (d) 6,549 6,937 Distribution per unit (Yen) (d)/(c) 2,929 2,989 Distribution of retained earnings per unit (Yen) 2,929 2,989 Distribution in excess of retained earnings per unit (Yen) - - ROA (%) (1) 1.4(2.8) 1.4(2.8) ROE (%) (1) 2.9(5.8) 2.9(5.8) Equity ratio (%) (b)/(a) 48.8 48.8 Payout ratio (%) (1) 89.8 90.0 Supplemental Information Number of real estate properties 96 102 Number of tenants 712 744 Total rentable area (m²) 958,613.18 992,857.11 Occupancy rate (%) (5) 98.6 98.9 Depreciation 3,629 3,718 Capital expenditures 254 795 NOI from property leasing activity (1) (2) 12,971 13,487 FFO (1) (2) 9,675 10,550 Notes: 1. These indicators are calculated according to the following formulas. ROA = Ordinary income divided by average total assets ROE = Net income divided by average net assets Payout ratio = Distribution per unit divided by net income per unit (*) *Net income per unit = Net income divided by the weighted average numbers of units outstanding NOI (Net Operating Income) from property leasing activity = Rental revenues + Other operating revenues + Depreciation Property-related expenses FFO (Funds From Operation) =Net income + Depreciation Gain on sale of real estate properties Financial data included in the field have been prepared on a 6-month basis. However, the ratios in parentheses represent annualized data. 2. Rental revenues and property-related expenses include revenues from finance lease of property and cost of finance lease of property, respectively. NOI from property leasing activity and FFO are computed after adding the cost of finance lease of property. 3. The number of tenants, the total rentable area and the occupancy rate are computed including the numbers for properties recorded as investment in finance lease. 4. The payout ratio is rounded down to the first decimal place. 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. 2

2. Performance Review for Current Period Major changes in the fund During the 28 th fiscal period, OJR acquired DUPLEX GINZA TOWER 2/11 (acquisition price: 5,200 million), VIA INN SHINSAIBASHI BLDG. (acquisition price: 3,100 million), HOTEL KEIHAN SAPPORO (acquisition price: 2,550 million) and Richmond Hotel Yamagata Ekimae (acquisition price: 2,300 million) on September 30, 2015, the 25% co-ownership interest in ARK Hills South Tower (acquisition price: 22,000 million) on October 15, 2015 by exercising the first refusal right attached to the preferred equity securities held by OJR, KONAMI SPORTS CLUB KORIEN (acquisition price: 1,600 million) on October 30, 2015, KANDA MATSUNAGACHO BUILDING (acquisition price: 4,202 million) on January 26, 2016, Kita Aoyama Building (acquisition price: 900 million) on February 1, 2016 and Aoyama Suncrest Building (additional acquisition) (acquisition price: 6,720 million) on February 2, 2016; and sold Park Axis Nishi Azabu Stage (sale price: 1,100 million) on January 27, 2016, and The Kitahama PLAZA (sale price: 5,710 million) on January 29, 2016. As a result of the aforementioned activities, OJR s portfolio included 102 properties as of February 29, 2016 (50 office buildings, 5 logistics facilities, 28 retail facilities, 14 residential properties and 5 other properties), with 992,857.11 m 2 of total rentable floor space, 744 tenants and an occupancy rate of 98.9%. The total amount invested in real estate and real estate held in trust (total of acquisition prices), which included the properties accounted for as investment in finance lease, was 558,056 million. The total of book values and calculated prices (appraisal values based on the evaluations by six appraisers) of the real estates and real estates held in trust, which included the properties accounted for as investment in finance lease, as of February 29, 2016 were 524,373 million and 594,210 million, respectively. Subsequent to the end of the 28 th fiscal period, OJR acquired SAPPORO BRICK CUBE (acquisition price: 5,200 million) on April 14, 2016, Hamamatsu Act Tower (acquisition price: 11,800 million) on April 15, 2016, and ORIX Yodoyabashi Bldg. (acquisition price: 5,012 million) on May 2, 2016. These transactions will bring the total number of properties to 105 and the total amount invested in real estate and real estate held in trust (total of acquisition prices) to 580,068 million, which includes the properties accounted for as investment in finance lease. In the 28 th period, operating revenues were 19,895 million and net income was 7,699 million. Total cash distribution was 6,937 million, the distribution per unit was 2,989 (a 7.52% increase compared to our estimated distribution per unit of 2,780), and the distribution payout ratio was 90.0%. As of the end of the 28 th period, total assets were 559,742 million, total interest-bearing liabilities were 256,950 million (long-term debt excluding investment corporation bonds: 237,450 million, investment corporation bonds: 19,500 million), net assets were 273,193 million, and net assets per unit were 117,720. Business environment and fund performance Japanese economy The monthly economic report of April 2016 issued by the Japanese government stated that the Japanese economy was on a moderate recovery, while weakness could be seen recently. Specifically, the government reported that: (i) private consumption had been almost flat, while consumer confidence had appeared to be pausing; (ii) business investment had been picking up; (iii) exports had been almost flat; (iv) industrial production had been flat; (v) corporate profits had shown a trend toward improvement, mainly among non-manufacturers. Firms judgment on current business conditions had shown cautiousness; (vi) the employment situation had been improving; and (vii) consumer prices had been rising moderately. Concerning short-term prospects, the report stated that the economy had been expected toward recovery, supported by the effects of the policies, while employment and income situation was improving. However, there had been downside risks of the Japanese economy including slowing down of emerging Asian economies including the Chinese economy and countries with natural resources amid the weakness of overseas economies. In addition, attention should be given to the increased uncertainty in overseas economies and the effects of fluctuations in the financial and capital markets under such circumstances. Also, full attention should be given to the economic impact of the 2016 Kumamoto Earthquake. Management Environment Surrounding OJR The Japanese economy surrounding OJR has seen a recovery trend in corporate business performance backed 3

by the financial stimulus package and monetary easing against the backdrop of the government s economic policy called Abenomics. Although private consumption is believed to also indicate some signs of recovery, downside risk is growing due to economic slowdown in China and other emerging nations and strong yen, among others. Under such economic circumstances, the expected cap rate continues to be on a downward trend for all property types in the real estate transaction market as competition over acquisitions has intensified regardless of property type due to the continuation of monetary easing and other reasons. In the real estate rental market, strong demand for office relocation to central Tokyo and other factors have brought lower vacancy rates and higher rents to the office market, and such trends are also spreading to regional cities. A hike in rents for shop-visit type tenant sections (including retail sections) in office buildings, urban-type retail facilities and the like, backed by such factors as the recovery in corporate business performance and improved consumer sentiment are also observed. However, the timing and scale of full-fledged rent increase remain difficult to predict since the degree of improvements in rent conditions differs depending on property-specific factors, and more companies are considering relocation prior to a full-fledged rent increase among other reasons. In the real estate market described above, the need for operational capabilities to take action through combining external growth, internal growth and financial strategies is increasing more than ever. Based on the aforementioned environmental recognition of the real estate market, OJR will draw up and strive to promote a growth strategy. New acquisitions DUPLEX GINZA TOWER 2/11 Acquisition price: 5,200 million Acquisition date: September 30, 2015 (As of May 24, 2016) The location is highly convenient as it is located approximately a 2-minute walk from subway Ginza-itchome Station and Higashi-Ginza Station and is within walking distance from 8 stations on 7 lines including JR Yurakucho Station, subway Ginza Station and Takaracho Station. Located in Ginza, one of the largest commercial districts in Japan, the property stands in an area where restaurants and medium-scale offices are concentrated. The property has high visibility with a characteristic glass facade facing Showa-dori Street. The property is a medium-scale office building with two elevators in the open entrance offering a strong appeal to shop-visit type tenants. With the standard floor area of approximately 222.55m 2 in a regular shape, the location and specifications are suitable for both office and shop use. Internal growth through flexible leasing can be expected. The property currently has 13 tenants, mainly companies that are economy-sensitive such as IT-related companies, a foreign bedclothing company s showroom, a gym and beauty clinic. The increase in the number of people working nearby due to a series of large-scale developments in Ginza and its surrounding areas also brings business opportunities for tenants. VIA INN SHINSAIBASHI BLDG. Acquisition price: 3,100 million Acquisition date: September 30, 2015 The property is located in the Shinsaibashi area, Osaka s representative shopping spot which is also popular among foreign tourists. Out of a total of 205 guest rooms, 184 are single rooms. A convenience store on the 1st floor provides convenience to guests. The lessee of the hotel is West Japan Railway Daily Service Net Company Co., Ltd., a subsidiary of West Japan Railway Company, and the operating company is its subsidiary, West Japan Railway VIA INN Co., Ltd. HOTEL KEIHAN SAPPORO Acquisition price: 2,550 million Acquisition date: September 30, 2015 The property stands in an area in front of Sapporo Station, a hub for business and sightseeing in Hokkaido, where the demand is strongest in both aspects, and is located approximately a 5-minute walk from the station. Out of a total of 200 guest rooms, 112 are single rooms. As to facilities, a large bath is a differentiating feature. The lessee and operating company of the hotel, Hotel Keihan, is a subsidiary of Keihan Electric Railway Co., Ltd. 4

Richmond Hotel Yamagata Ekimae Acquisition price: 2,300 million Acquisition date: September 30, 2015 The property is located in front of Yamagata Station, where supply of new hotels is low and the supply-demand environment is favorable. As there are commercial facilities such as a supermarket nearby, the location is highly convenient for guests. Out of a total of 220 rooms, 170 are single rooms. High customer satisfaction is achieved by providing large guest rooms and breakfast using local ingredients. The lessee and operating company of the hotel, RNT HOTELS Co., Ltd, is a subsidiary of ROYAL HOLDINGS Co., Ltd. ARK Hills South Tower Acquisition price: 22,000 million Acquisition date: October 15, 2015 The property is a relatively new large office building that the ORIX Group was involved in the development of. It is in the Roppongi area that is increasingly becoming more of an office area, including large-scale development such as Roppongi Hills and Tokyo Midtown etc. In addition to the scarcity value of being directly connected to the Roppongi-itchome Station on the Tokyo Metro Namboku Line, it is at a highly convenient location within walking distance of five stations on five lines (Roppongi Station, Kamiyacho Station, Tameike-Sanno Station, and Akasaka Station) and has excellent access to main city center terminals. The location is surrounded by high-quality residential areas (Akasaka, Azabu, and Aoyama), which is a selling point for IT companies and foreign companies highly responsive to economic conditions that have needs for the workplace to be near homes due to a high awareness of the work-life balance. The property has 18 office tenants and 15 store tenants for a total of 33 tenants. IT companies account for approximately 60% of the office rental floor area, while foreign companies account for 30% of this area. Small compartment floors are located on the lower floors in order to actively attract growing businesses and foreign companies establishing a foothold in Japan. The commercial area has restaurants and supermarkets in response to the needs of workers and residents in the area. The property is composed of shaped standard floors with an area of approximately 570 tsubo that allows for flexible leasing. With ample specs that include a ceiling height of 2,900 m 2 and lighting from four directions, high competitiveness can be expected through the provision of a comfortable working environment. In addition to high energy-saving performance achieved through the adoption of low-e glass, ( *1) automatic adjustment LED lighting, etc., the property features high seismic capacity using vibration control devices on each floor, and excellent business continuity features that include an exclusive diesel power generator that can provide continuous power for up to 72 hours and a dedicated tenant power generator installation space that can support the independent BCP guidelines of each company. *1. Low-E glass is an abbreviation for Low Emissivity glass and refers to double-layered glass with special metallic film attached on the internal sides. It has higher heat insulating performance compared to conventional double layered glass as the metallic film achieves conduction of radiant heat. KONAMI SPORTS CLUB KORIEN Acquisition price: 1,600 million Acquisition date: October 30, 2015 The property is for a sports club located in a commuter town in Osaka and is approximately an 11-minute walk from Korien Station on the Keihan Main Line. The trade area within a radius of 3km from the property has a thick population of approximately 240,000 with residents comprising wide-ranging and well-balanced age groups from children to middle-aged and elderly people. As such, the area provides a good location suitable for an integrated sports club. The location offers excellent ability to attract customers as people can easily get around through a concentration of food supermarkets, home centers, various clothes shops, hospitals and other facilities. The property features good access from the National Route 170 (Outer Loop Road), which is the main highway, and provides high convenience for users with parking lots for 138 vehicles and 150 bicycles available. On top of such basic facilities as pools, machine gyms and studios, the property is equipped with a 5

gym suitable for child programs, a orthopedic clinic that is highly demanded by elderly people and an esthetic salon for women, etc., in response to a wide range of exercise- and health-related demand. The tenant is Konami Sports Club Co., Ltd., the largest operator in the fitness industry. KANDA MATSUNAGACHO BUILDING Kita Aoyama Building Acquisition price: 4,202 million Acquisition date: January 26, 2016 The property is located a 2-minute walk from Akihabara Station on the JR Yamanote, Keihin Tohoku and Sobu/Chuo Lines, as well as on Tokyo Metro Hibiya Line and Tsukuba Express. It boasts excellent transport convenience having good access from various areas of Greater Tokyo. JR Akihabara Station is one of the largest terminal stations in Tokyo. The number of passengers using the station per day has been increasing for 10 consecutive years since the opening of Tsukuba Express in 2005. Akihabara is also well recognized overseas as an electronics quarter and a subculture town, and receives many foreign visitors. As a concentration of office buildings progresses along with the recent redevelopment projects around the station, the area can be expected to be more attractive for shop-visit type tenants. The property stands on Showa-dori avenue and two other roads, enjoying high visibility. The property has a standard floor of approximately 70 tsubo, which is a convenient size for either leasing of the entire building or leasing by floor. As its location and specifications are suitable for a wide range of businesses including shop-visit type tenants, internal growth through flexible leasing can be expected. Acquisition price: 900 million Acquisition date: February 1, 2016 The location is highly convenient as it is located approximately a 2-minute walk from Gaiemmae Station on the Tokyo Metro Ginza Line as well as approximately an 8-minute walk from Omote-sando Station on the Tokyo Metro Ginza, Chiyoda and Hanzomon Lines, and is along Aoyama-dori Street (Route 246). The property has high visibility with a wide frontage to Aoyama-dori Street (Route 246) in the Aoyama area, which is one of the most renowned trendsetting areas in Japan. It stands in an area with high potential since the redevelopment of the main stadium, etc. for the 2020 Tokyo Olympic Games is planned in the surrounding area. With a standard floor area of approximately 29.75m 2 (approximately 9 tsubo) in a regular shape, housing a popular confectionery shop on the first floor, the property is able to find tenants unique to Aoyama (sales of luxury food and beverages, beauty care shops, etc.) Aoyama Suncrest Building (additional acquisition) Acquisition price: 6,720 million Acquisition date: February 2, 2016 The location is highly convenient as it is located approximately a 2-minute walk from Gaiemmae Station on the Tokyo Metro Ginza Line and has high visibility as it faces Aoyama-dori Street where there are offices as well as shops. There are redevelopments nearby in addition to the scheduled construction of main facilities for the Tokyo 2020 Olympic Games and therefore the area is expected to become more vibrant. The property is in full ownership of OJR as a result of the additional acquisition of compartmentalized ownership (approximately 60%). As OJR has full ownership, redevelopment is easy to consider and an increase in asset value through increased liquidity is possible. A decrease in operational costs and implementation of flexible leasing strategies are possible from the operational point of view. There are eight tenants including a financial institution, goods planner and bedding seller. Four of the tenants are shop-visit type tenants. SAPPORO BRICK CUBE Acquisition price: 5,200 million Acquisition date: April 14, 2016 The property is conveniently located only approximately a 1-minute walk from Sapporo Station on Sapporo Subway and also within a walking distance from Sapporo Station on JR Line and Odori Station on Sapporo Subway. The property is also situated in front of the entrance/exit of an underground passage between JR 6

Sapporo Station and the Susukino area, providing easy access between the two areas even in bad weather, including heavy snow. The property has a regular-shaped typical floor area of about 280 tsubo, 4 elevators and a parking for 65 cars. The common areas and elevators were renovated and OA floors were installed in 2014, which, as well as its location, is expected to make the property highly competitive. In the Sapporo area, the office rents have been rising due to extremely low vacancy rates, and the new office supply is likely to be limited in the near future. Thus, the property is expected to generate stable income. The property has a total of 36 tenants, including a call center, an advertisement firm and an insurance agency. Hamamatsu Act Tower Acquisition price: 11,800 million Acquisition date: April 15, 2016 The property is a high-rise building directly connected to JR Hamamatsu Station having 47 floors above ground with a height of 212m, and is equipped with damping devices. As such, it has become a landmark of Hamamatsu city. It comprises office, hotel and commercial sections and has a track record of being managed utilizing the operational know-how of the ORIX Group in a wide range of property types. Hamamatsu city has a population of approximately 810,000 people and is a government-designated city with a population second only to Nagoya city in the Chubu region. It has developed as a manufacturing city and has a concentration of head offices, plants, and R&D bases in the transportation equipment, textile, musical instrument, and advanced technology industries. It is located between Tokyo and Osaka and connected with the major metropolitan areas by the Tokaido Shinkansen, and the Tomei Expressway and Shin-Tomei Expressway. The property is the tower building that serves as the core of the large complex Act City Hamamatsu directly connected to Hamamatsu Station. Act City Hamamatsu is a facility jointly developed by Hamamatsu city and private companies, and is composed of Act Tower, as well as a main hall, a concert hall, a congress center, an exhibition event hall, a seminar and exchange center, and a museum of musical instruments that are owned by Hamamatsu city. Synergies that are made uniquely possible by the various functions of a complex can be expected. In association with the acquisition of the property, OAM acquired 76% of the shares of the building management company who works as a facility manager of the whole of Act City Hamamatsu in order to manage the facility smoothly. (Hamamatsu city owns 24% of the shares.) <Overview of office and commercial facilities> On the intermediate floors, there are spacious office sections with approximately 600 tsubo, or 1,980m 2, per floor (half floors have approximately 300 tsubo of space with no pillars). Flexible office layouts are possible as one floor can be subdivided into up to 20 sections with a minimum size of approximately 22 tsubo. An annex provides abundant parking, making it suitable for broad sales activities based in Hamamatsu. The property can be leased to various tenants, flexibly meeting each of their needs. The property has excellent views of Hamamatsu city and Mt. Fuji from the floors. As the building has the largest scale and the status as a landmark and is in the best location in Hamamatsu city, its scarcity value is high as an office that can improve tenants corporate image and effectiveness for recruiting employees. Approximately 140 office tenant companies are diversified in various sectors including finance, manufacturing, service, and IT, and stable high occupancy has been achieved. The majority of these tenants are listed companies or their group companies, and some of them are public institutions. Companies from outside the prefecture including foreign-affiliated companies account for 70% of the tenants, making it a building that is used as a business base in Hamamatsu. The commercial area on the lower floors houses tenants such as restaurants, a culture center, language schools, as well as tenants catering daily needs such as convenience stores, a post office, and clinics. The stable occupancy of the office section has led to improvement in the utilization of these tenants. <Overview of the hotel> Okura Act City Hotel Hamamatsu is located on the upper floors. The lessee is Okura Act City Hotel Hamamatsu Co., Ltd., a hotel management company, managed by ORIX Group. The property has high competitive advantages as a 7

hotel thanks to its direct connection with a station where the Shinkansen (bullet train) stops and location within a complex. As a result, accommodation demand for events including weddings, academic conferences, and meetings can be expected. Business demand is high and robust demand of inbound tourists is also increasing. The hotel features spacious accommodations, even with single rooms that are approximately 23 m 2 or larger. Partially variable rent is going to be set as the rent in the contract. Internal growth can be expected through improvements in the room occupancy rate and average daily rate, or ADR. Hamamatsu city is located in the middle of the so-called golden route for foreign visitors between Tokyo, Osaka, and Mt. Fuji, and the total number of foreign guests has grown significantly. ORIX Yodoyabashi Bidg. Acquisition price: 5,012 million Acquisition date: May 2, 2016 The office is favorably located approximately a 1-minute walk from Yodoyabashi Station on the Osaka Municipal Subway Midosuji Line and the Keihan Main Line, and is also within a walking distance from Kitahama Station on the Osaka Municipal Subway Sakaisuji Line and Oebashi Station on the Keihan Nakanoshima Line. The Yodoyabashi area is one of Osaka s representative business areas where major companies including financial institutions and public facilities are concentrated. This area enjoys stable office demand thanks to its name recognition as a traditional business area and its excellent access to broad regions. Yodoyabashi Station is located one station away with approximately a 3-minute ride from Umeda Station (Osaka Station), and four stations away with approximately 10-minute ride from Shin-Osaka Station via the Midosuji Line. This is a property developed through the acquisition of the adjoining land and the extension of the original building by the ORIX Group. The common areas and air conditioning equipment in the original building have been renewed. Efforts have been made to diversify the 30 tenants for the office section, which include tenants such as trading companies and IT companies, and stable operation can be expected in the future. The property also houses retail tenants including restaurants and an office supplies store at the lower floors, thanks to the bustling atmosphere due to its location over a station and the high level of visibility facing Tosabori-dori Street. Financing activities OJR is aiming for a strategic approach towards unsecured s, switching to fixed-interest rate s, diversifying re periods, and reducing fund procurement costs in line with the monetary environment. As such, the following financing activities were implemented. Equity Finance On September 1, 2015, OJR issued new investment units through public offering (84,966 units, the total paid-in amount (issue value) of 12,296 million) to procure funds for new property acquisitions. Debt Finance OJR took out long-term s of 12,100 million in October 2015 for the acquisition of ARK Hills South Tower. Then, OJR took out short-term s of 5,000 million in November 2015 to redeem investment corporation bonds, and subsequently long-term s of 6,900 million in December 2015 to repay the aforementioned short-term s of 5,000 million and long-term s of 1,900 million. For 13,000 million out of the long-term s taken out during the period, OJR has concluded interest rate swap agreements to hedge against the risk of interest rate fluctuations of borrowings. As to the commitment line contracts, the limit was set at 33,500 million in order to secure stable funding. As a result of the activities above, as of February 29, 2016, outstanding s amounted to 237,450 million, the balance of investment corporation bonds stood at 19,500 million, and the balance of interest-bearing debt totaled 256,950 million. The LTV (based on total assets) (Note 1) was 45.9%, LTV (based on unitholders capital) (Note 2) was 49.3%, the fixed-rate debt ratio (Note 3) was 91.4%, and the long-term debt ratio (Note 4) was 91.5%. 8

Rating agency and details of rating OJR s credit ratings as of May 24, 2016 were as shown below. Rating agency Standard & Poor s Ratings Japan K.K. Rating and Investment Information, Inc. Japan Credit Rating Agency, Ltd. Details of rating corporate credit rating: A- Short-term corporate credit rating: A-2 Outlook: Positive Issuer rating: A+ Rating outlook: Stable senior debt ratings: AA Rating outlook: Stable Notes: 1. LTV (based on total assets) is the figure obtained by dividing the balance of interest-bearing debt by total assets stated on the balance sheet and is rounded to the first decimal place. 2. LTV (based on unitholders capital) is the figure obtained by dividing the balance of interest-bearing debt by the sum of unitholders capital on the balance sheet and the balance of interest-bearing debt and is rounded to the first decimal place. 3. The fixed-rate debt ratio is the figure obtained by dividing the balance of fixed-rate debt (including s whose rates were fixed through interest rate swaps) by the balance of interest-bearing debt and is rounded to the first decimal place. 4. The long-term debt ratio is the figure obtained by dividing the balance of long-term debt (except long-term debt to be reimbursed or redeemed within one year) by the balance of interest-bearing debt and is rounded to the first decimal place. Financial results and distribution OJR recorded operating revenues of 19,895 million and net income of 7,699 million for the 28 th fiscal period. The distribution in cash can be tax-deductible under Article 67-15 of the Special Taxation Measures Law, which requires dividend distribution in excess of 90% of the amount available for distributions. Based on this distribution policy, OJR determined to pay out a distribution in cash of 6,937 million, which is nearly equal to the retained earnings remaining after deducting the amount appropriated to the reserve for advanced depreciation of non-current assets as of February 29, 2016. As a result, the distribution per unit was 2,989. 9

Fund Overview 1. Capitalization Paid-in capital In the 28 th period (the six months ended February 29, 2016), OJR issued 84,966 new units through public offering. OJR also issued 95,830 and 4,792 new units through public offering and third party allotment, respectively, during the 29 th period. The following table shows capital increases carried out in the recent five years. Date Remarks Investment Units Outstanding Paid-in Capital Increase Balance Increase Balance May 25, 2011 Additional Issuance of Units (1) 31,250 282,872 12,459 150,273 June 24, 2011 Third party allotment (2) 1,562 284,434 623 150,896 March 1, 2013 Split of Units 1,137,736 1,422,170-150,896 March 26, 2013 Additional Issuance of Units 160,915 1,583,085 19,089 169,985 April 24, 2013 Third party allotment (5) 8,032 1,591,117 953 170,938 October 30, 2013 Additional Issuance of Units (6) 91,788 1,682,905 10,517 181,455 November 27, 2013 Third party allotment (7) 4,589 1,687,494 525 181,980 March 18, 2014 Additional Issuance of Units (8) 265,410 1,952,904 31,536 213,516 April 16, 2014 Third party allotment (9) 13,270 1,966,174 1,576 215,092 September 17, 2014 Additional Issuance of Units (10) 147,343 2,113,517 18,569 233,661 October 9, 2014 Third party allotment (11) 7,367 2,120,884 929 234,590 March 17,2015 Additional Issuance of Units (12) 109,381 2,230,265 16,985 251,575 April 10, 2015 Third party allotment (13) 5,470 2,235,735 849 252,424 September 1, 2015 Additional Issuance of Units (14) 84,966 2,320,701 12,296 264,720 March 16, 2016 Additional Issuance of Units (15) 95,830 2,416,531 15,270 279,990 April 12, 2016 Third party allotment (16) 4,792 2,421,323 764 280,754 Notes: 1. Fourth public equity offering of 31,250 new units at 412,735 per unit (issue price per unit was 398,693) to acquire properties 2. Along with the public offering of Note 1, additional 1,562 units were allocated through private placement at 398,693 per unit. 3. Effective March 1, 2013, OJR implemented a 5-for-1 unit split of the units held by unitholders registered on the register of unitholders as of February 28, 2013. 4. Fifth public equity offering of 160,915 new units at 122,655 per unit (issue price per unit was 118,629) to acquire properties 5. Along with the public offering of Note 4, additional 8,032 units were allocated through private placement at 118,629 per unit. 6. Sixth public equity offering of 91,788 new units at 118,462 per unit (issue price per unit was 114,574) to acquire properties 7. Along with the public offering of Note 6, additional 4,589 units were allocated through private placement at 114,574 per unit. 8. Seventh public equity offering of 265,410 new units at 122,850 per unit (issue price per unit was 118,818) to acquire properties 9. Along with the public offering of Note 8, additional 13,270 units were allocated through private placement at 118,818 per unit. 10. Eighth public equity offering of 147,343 new units at 130,162 per unit (issue price per unit was 126,023) to acquire properties 11. Along with the public offering of Note 10, additional 7,367 units were allocated through private placement at 126,023 per unit. 12. Ninth public equity offering of 109,381 new units at 160,387 per unit (issue price per unit was 155,287) to acquire properties 13. Along with the public offering of Note 12, additional 5,470 units were allocated through private placement at 155,287 per unit. 14. Tenth public equity offering of 84,966 new units at 149,467 per unit (issue price per unit was 144,714) to acquire properties 15. Eleventh public equity offering of 95,830 new units at 164,580 per unit (issue price per unit was 159,347) to acquire properties. 16. Along with the public offering of Note 15, additional 4,792 units were allocated through private placement at 159,347 per unit. 10

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 27 th and 28 th periods are shown below in yen: From March 1, 2015 From September 1, 2015 to August 31, 2015 to February 29, 2016 High 179,800 177,300 Low 150,500 143,100 11

2. Overview of borrowings Category Lender Balance at beginning of the period Balance at the period end Average interest rate(%) (1) The Norinchukin Bank (term 20) 1,500 Floating rate 1,500 0.65802% (term 17) (2) (term 19) (2) (term 21) (2) (term 22) (2) (term 23) (2) (term 25, tranche A) (2) (term 27, tranche B) (2) Mitsubishi UFJ Trust and Banking Corporation 2,000 2,000 Aozora Bank, Ltd. 2,700 2,700 THE NISHI-NIPPON CITY BANK, LTD. 1,800 1,800 Shinsei Bank, Limited 1,500 1,500 The Shinkumi Federation Bank 1,400 1,400 THE BANK OF FUKUOKA, LTD. 1,000 1,000 MITSUI LIFE INSURANCE COMPANY LIMITED 1,000 1,000 Resona Bank, Ltd. 1,000 1,000 THE SHIMANE BANK, LTD. 600 600 THE MINATO BANK, LTD. 300 300 Subtotal 13,300 13,300 Aozora Bank, Ltd. 1,000 1,000 THE KAGAWA BANK, LTD 1,000 1,000 Shinsei Bank, Limited 1,000 1,000 Resona Bank, Ltd. 1,000 1,000 The Shinkumi Federation Bank 400 400 THE SHIMANE BANK, LTD. 300 300 THE MINATO BANK, LTD. 300 300 Subtotal 5,000 5,000 Aozora Bank, Ltd. 1,000 1,000 Resona Bank, Ltd. 1,000 1,000 Sumitomo Mitsui Trust Bank, Limited 6,000 6,000 Mitsubishi UFJ Trust and Banking Corporation 5,500 5,500 The Norinchukin Bank 4,500 4,500 Subtotal 16,000 16,000 Sumitomo Mitsui Trust Bank, Limited 4,000 4,000 Mizuho Bank, Ltd. 2,000 2,000 Resona Bank, Ltd. 1,000 1,000 Subtotal 7,000 7,000 The Shinkumi Federation Bank 3,000 3,000 The Toho Bank, Ltd. 500 500 Subtotal 3,500 3,500 THE BANK OF FUKUOKA, LTD. 3,000 3,000 Aozora Bank, Ltd. 1,550 1,550 The Hiroshima Bank, Ltd. 1,000 1,000 The Bank of Yokohama, Ltd. 1,000 1,000 Subtotal 2,000 2,000 Mitsubishi UFJ Trust and Banking Corporation 300 300 Sumitomo Mitsui Trust Bank, Limited 700 700 Sumitomo Mitsui Banking Corporation 1,200 1,200 ORIX Bank Corporation 1,000 1,000 Mizuho Bank, Ltd. 500 500 The Shinkumi Federation Bank 300 300 Subtotal 4,000 4,000 Resona Bank, Ltd. 2,000 2,000 THE NISHI-NIPPON CITY BANK, LTD. 1,500 1,500 The Daishi Bank, Ltd. 1,000 1,000 1.66592% 1.56954% 1.29328% 1.29328% Floating rate 0.71091% 1.05815% Floating rate 0.68091% 1.05815% 1.02067% 0.84402% 0.90802% 0.49600% 0.49600% 0.49600% Due on March 18, 2016 March 30, 2016 July 27, 2016 September 28, 2016 September 28, 2016 March 17, 2017 September 19, 2017 September 19, 2017 September 19, 2017 October 4, 2017 February 21, 2018 March 19, 2018 April 1, 2018 April 1, 2018 April 1, 2018 Use of funds Re method Note 12

Category (term 24) (2) (5) (term 28, tranche A) (2) (term 28, tranche B) (2) (term 26) (2) tranche A (term 30) (2) Lender Balance at beginning of the period Balance at the period end The 77 Bank, Ltd. 1,000 1,000 The Daishi Bank, Ltd. 1,000 1,000 The 77 Bank, Ltd. 1,000 1,000 THE SHIZUOKA BANK, LTD. 1,000 1,000 Sumitomo Mitsui Banking Corporation 2,000 2,000 Mitsubishi UFJ Trust and Banking Corporation 1,000 1,000 Sumitomo Mitsui Trust Bank, Limited 2,000 2,000 Subtotal 5,000 5,000 Shinsei Bank, Limited 1,900 - Sumitomo Mitsui Trust Bank, Limited 2,400 2,400 Sumitomo Mitsui Banking Corporation 2,400 2,400 Mitsubishi UFJ Trust and Banking Corporation 2,000 2,000 Mizuho Bank, Ltd. 1,200 1,200 Subtotal 8,000 8,000 Sumitomo Mitsui Trust Bank, Limited 138 138 Sumitomo Mitsui Banking Corporation 138 138 Mitsubishi UFJ Trust and Banking Corporation 115 115 Mizuho Bank, Ltd. 69 69 Subtotal 460 460 Aozora Bank, Ltd. 1,000 1,000 Mitsubishi UFJ Trust and Banking Corporation 2,640 2,640 Sumitomo Mitsui Trust Bank, Limited 2,640 2,640 Sumitomo Mitsui Banking Corporation 2,640 2,640 Mizuho Bank, Ltd. 1,980 1,980 Subtotal 9,900 9,900 National Mutual Insurance Federation of Agricultual Cooperatives 2,000 2,000 Development Bank of Japan 4,000 4,000 The Bank of Tokyo-Mitsubishi UFJ, Ltd. - 3,000 Aozora Bank, Ltd. 1,000 1,000 Shinsei Bank, Limited 1,000 1,000 Resona Bank, Ltd. 1,000 1,000 Subtotal 3,000 3,000 Shinsei Bank, Limited 1,560 1,560 Mizuho Trust & Banking Co., Ltd. 1,560 1,560 Resona Bank, Ltd. 1,560 1,560 National Mutual Insurance Federation of Agricultual Cooperatives 3,000 3,000 The Norinchukin Bank 3,350 3,350 Mizuho Trust & Banking Co., Ltd. 1,500 1,500 Average interest rate(%) (1) 0.86400% 0.72700% 0.72700% 0.72700% 1.18934% 1.61697% 0.97492% 0.97492% 0.83000% 1.06802% 1.30500% 2.26875% 0.34625% 0.81687% 0.90500% 0.90500% 0.90500% 1.80000% 0.91250% 0.55600% Due on April 26, 2018 August 31, 2018 August 31, 2018 August 31, 2018 September 19, 2018 September 28, 2018 October 1, 2018 October 1, 2018 January 10, 2019 March 20, 2019 April 26, 2019 July 27, 2019 September 20, 2019 October 1, 2019 November 1, 2019 November 1, 2019 November 1, 2019 December 2, 2019 December 20, 2019 December 24, 2019 Use of funds Re method Note 13

Category (term 32, tranche A) (2) Lender Balance at beginning of the period Balance at the period end Mitsubishi UFJ Trust and Banking Corporation 350 350 Sumitomo Mitsui Trust Bank, Limited 900 900 Sumitomo Mitsui Banking Corporation 1,500 1,500 Mizuho Bank, Ltd. 650 650 The Shinkumi Federation Bank 700 700 Subtotal 4,100 4,100 THE SHIZUOKA BANK, LTD. 1,000 1,000 The Norinchukin Bank 1,500 1,500 Mizuho Bank, Ltd. 2,000 2,000 Aozora Bank, Ltd. 1,000 1,000 TAIYO LIFE INSURANCE COMPANY 1,000 1,000 The Hyakugo Bank, Ltd. 1,000 1,000 Average interest rate(%) (1) 0.54675% Floating rate 0.42091% 0.67400% 1.54400% 1.54400% 0.57000% 0.52700% Due on March 19, 2020 March 26, 2020 April 1, 2020 June 14, 2020 June 14, 2020 June 22, 2020 June 22, 2020 Use of funds Re method Note (term 33, tranche A) (2) Sumitomo Mitsui Trust Bank, Limited 1,000 1,000 Sumitomo Mitsui Banking Corporation 1,500 1,500 Subtotal 2,500 2,500 0.52700% June 22, 2020 (term 29) (2) (term 25, tranche B) tranche A (term 32, tranche B) (2) Development Bank of Japan 1,500 1,500 The Bank of Tokyo-Mitsubishi UFJ, Ltd. 1,500 1,500 Sumitomo Mitsui Banking Corporation 2,000 2,000 Mitsubishi UFJ Trust and Banking Corporation 2,000 2,000 Sumitomo Mitsui Trust Bank, Limited 1,500 1,500 Mizuho Bank, Ltd. 1,000 1,000 ShinGinko Tokyo, Limited 500 500 Subtotal 7,000 7,000 The Bank of Tokyo-Mitsubishi UFJ, Ltd. 3,000 3,000 Development Bank of Japan 5,000 5,000 Mitsubishi UFJ Trust and Banking Corporation 2,560 2,560 Mizuho Bank, Ltd. 1,280 1,280 Sumitomo Mitsui Banking Corporation 2,000 2,000 Mitsubishi UFJ Trust and Banking Corporation 350 350 Sumitomo Mitsui Trust Bank, Limited 900 900 Sumitomo Mitsui Banking Corporation 1,500 1,500 Mizuho Bank, Ltd. 650 650 Subtotal 3,400 3,400 Development Bank of Japan 4,740 4,740 Mizuho Trust & Banking Co., Ltd. 2,500 2,500 Shinsei Bank, Limited - 2,500 1.44375% 1.22000% 1.14500% 1.07000% 1.44744% 1.00600% 1.00600% 0.68105% 0.70425% 0.89100% 0.89100% 0.45960% July 31, 2020 August 31, 2020 September 24, 2020 November 1, 2020 February 21, 2021 April 2, 2021 April 2, 2021 June 21, 2021 September 21, 2021 October 1, 2021 October 1, 2021 December 20, 2021 14

Category (term 31) (2) (tranche B) (tranche A) (term 33, tranche B) (2) (tranche A) (tranche C) (tranche B) (term 33, tranche C) (2) Lender Balance at beginning of the period Balance at the period end Mitsui Sumitomo Insurance Company, Limited 1,000 1,000 Development Bank of Japan 1,400 1,400 Mizuho Bank, Ltd. 1,500 1,500 Sumitomo Mitsui Banking Corporation 2,500 2,500 The Bank of Tokyo-Mitsubishi UFJ, Ltd. 1,710 1,710 Sumitomo Mitsui Banking Corporation 2,560 2,560 Sumitomo Mitsui Trust Bank, Limited 2,560 2,560 Mitsubishi UFJ Trust and Banking Corporation 1,890 1,890 Sumitomo Mitsui Trust Bank, Limited 1,890 1,890 Sumitomo Mitsui Banking Corporation 1,890 1,890 Mizuho Bank, Ltd. 1,430 1,430 Subtotal 7,100 7,100 Development Bank of Japan 3,800 3,800 Shinsei Bank, Limited - 1,000 Mitsubishi UFJ Trust and Banking Corporation - 1,000 The Bank of Tokyo-Mitsubishi UFJ, Ltd. - 1,000 Sumitomo Mitsui Trust Bank, Limited 4,000 4,000 Sumitomo Mitsui Trust Bank, Limited 1,000 1,000 Sumitomo Mitsui Banking Corporation 1,500 1,500 Resona Bank, Ltd. 1,200 1,200 Subtotal 3,700 3,700 The Bank of Tokyo-Mitsubishi UFJ, Ltd. 2,000 2,000 Mitsubishi UFJ Trust and Banking Corporation 2,000 2,000 Sumitomo Mitsui Banking Corporation 1,000 1,000 Development Bank of Japan 2,000 2,000 THE BANK OF FUKUOKA, LTD. - 1,100 The Bank of Tokyo-Mitsubishi UFJ, Ltd. - 2,000 Sumitomo Mitsui Trust Bank, Limited 1,000 1,000 Sumitomo Mitsui Trust Bank, Limited 1,000 1,000 Sumitomo Mitsui Banking Corporation 1,500 1,500 Mitsubishi UFJ Trust and Banking Corporation 700 700 Resona Bank, Ltd. 1,100 1,100 Subtotal 4,300 4,300 Average interest rate(%) (1) 0.83000% 1.34300% 1.20350% 0.75925% 1.09000% 1.16180% 1.16180% 1.05175% 1.07600% 0.60630% 0.60630% 0.61630% 0.83625% 0.80450% 0.85910% 0.86910% 0.86910% 0.84100% 0.71725% 0.71225% 0.95375% 0.92075% Due on December 22, 2021 January 10, 2022 February 14, 2022 March 22, 2022 March 31, 2022 March 31, 2022 March 31, 2022 June 20, 2022 September 18, 2022 September 20, 2022 September 20, 2022 September 20, 2022 December 20, 2022 December 20, 2022 June 20, 2023 June 20, 2023 June 20, 2023 July 29, 2023 September 20, 2023 September 20, 2023 December 20, 2023 December 20, 2023 Use of funds Re method Note 15

Category (tranche B) (term 33, tranche D) (2) (tranche B) Lender Balance at beginning of the period Balance at the period end Shinsei Bank, Limited - 1,900 Sumitomo Mitsui Banking Corporation 3,000 3,000 Sumitomo Mitsui Trust Bank, Limited 1,000 1,000 Sumitomo Mitsui Banking Corporation 1,800 1,800 Mitsubishi UFJ Trust and Banking Corporation 700 700 Subtotal 3,500 3,500 Sumitomo Mitsui Trust Bank, Limited 1,000 1,000 Mizuho Trust & Banking Co., Ltd. - 1,500 Resona Bank, Ltd. - 1,000 Mizuho Bank, Ltd. 2,000 2,000 Development Bank of Japan 3,000 3,000 Mizuho Bank, Ltd. - 3,000 total Grand total of short-term and long-term 220,350 237,450 220,350 237,450 Average interest rate(%) (1) 0.67385% 1.03080% 1.02950% 1.02950% 0.78175% 0.78175% 1.08700% 1.05100% 0.93750% Due on December 20, 2023 June 20, 2024 December 20, 2024 December 20, 2024 December 20, 2024 December 20, 2024 June 20, 2025 July 29, 2025 September 22, 2025 Use of funds Re method Note Notes: 1. The average interest rate is the weighted-average 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 related assets, to refinance other debts, or to redeem investment corporation bonds. 4. The following table shows the total amounts of long-term to be repaid for each year: Due within one year Due after one to two years Due after two to three years Due after three to four years Due after four to five years 21,800 33,050 26,960 34,430 32,100 5. OJR fully repaid its long-term of 1,900 million on December 21, 2015. 3. Overview of bonds Bond name The 3 rd unsecured bonds The 5 th unsecured bonds The 6 th unsecured bonds The 7 th unsecured bonds The 8 th unsecured bonds The 9 th unsecured bonds The 10 th unsecured bonds Issue date November 18, 2010 February 8, 2013 January 20, 2014 January 20, 2014 August 11, 2014 August 11, 2014 December 19, 2014 Balance at beginning of the period Balance at the period end Coupon (%) 5,000-1.580 5,000 5,000 0.760 Maturity date November 18, 2015 February 8, 2018 5,000 5,000 0.440 July 20, 2018 2,500 2,500 1.200 January 19, 2024 2,000 2,000 0.308 August 9, 2019 3,000 3,000 0.901 August 9, 2024 2,000 2,000 0.886 Total 24,500 19,500 December 19, 2024 Redemption Use of proceeds Note (1) (6) (2) (6) (6) (6) (6) (6) (5) (6) 16

Notes: 1. The bonds have been used to refinance other debts. 2. The bonds have been used to redeem The 1 st unsecured bonds. 3. The bonds have been used to redeem The 4 th unsecured bonds and to refinance other debts. 4. The bonds have been used to redeem The 2 nd unsecured bonds. 5. The bonds have been used to finance the acquisition of real estate held in trust. 6. The bonds were issued with pari passu conditions among specified investment corporation bonds. 4. Major Unitholders Name (As of February 29, 2016) Number of Units Ownership Owned (%) Japan Trustee Services Bank, Ltd. (Trust accounts) 548,566 23.63 Trust & Custody Services Bank, Ltd. (Securities investment trust accounts) 292,014 12.58 The Master Trust Bank of Japan, Ltd. (Trust accounts) 242,256 10.43 The Nomura Trust and Banking Co., Ltd (Investment accounts) 88,927 3.83 STATE STREET BANK AND TRUST COMPANY 505223 32,083 1.38 THE BANK OF NEW YORK, NON-TREATY JASDEC ACCOUNT 30,830 1.32 NOMURA BANK (LUXEMBOURG) S.A. 30,639 1.32 STATE STREET BANK- WEST PENSION FUND CLIENTS- EXEMPT 505233 25,146 1.08 Nomura Securities Co., Ltd. Proprietary Account 25,000 1.07 THE BANK OF NEW YORK MELLON SA/NV 10 24,884 1.07 Total 1,340,345 57.75 Note: Ratio of ownership, rounded down to the second decimal place, may not add up to equal the total due to rounding. 5. Unitholder Type (As of February 29, 2016) Unitholder type Number of Number of % Unitholders Units % Domestic 21,373 98.65 1,791,607 77.20 Individuals and Others 20,872 96.34 210,096 9.05 Financial Institutions 168 0.78 1,527,841 65.84 Bank 40 0.18 106,966 4.61 Trust Bank 16 0.07 1,222,849 52.69 Life Insurance 10 0.05 79,337 3.42 Fire and Marine Insurance 4 0.02 12,737 0.55 Securities Brokers 20 0.09 62,162 2.68 Other Financial Institutions 78 0.36 43,790 1.89 Other Corporate Entities 333 1.54 53,670 2.31 Overseas 293 1.35 529,094 22.80 Total 21,666 100.00 2,320,701 100.00 17

Note: Individual ratios, rounded to the second decimal place, may not add up to equal the total due to rounding. Portfolio Overview 1. Portfolio Summary (As of February 29, 2016) Asset Type Area / Type Amount (1) Percentage of total assets (%) (2) Offices 188,128 33.61 Logistics Facilities - - Six Central Tokyo Retail Facilities 31,936 5.71 Wards Residential Properties 20,665 3.69 Others - - Offices 32,029 5.72 Logistics Facilities - - Remaining Tokyo Retail Facilities 6,343 1.13 Wards Residential Properties 31,638 5.65 Others - - Real Estate and Real Estate Held in Trust Other Parts of the Greater Tokyo Area Other Areas Offices 20,483 3.66 Logistics Facilities 22,010 3.93 Retail Facilities 31,438 5.62 Residential Properties 4,351 0.78 Others 11,699 2.09 Offices 62,364 11.14 Logistics Facilities 10,810 1.93 Retail Facilities 33,935 6.06 Residential Properties 8,598 1.54 Others 7,945 1.42 Deposits and Other Assets 35,370 6.32 Total Assets 559,742 100.00 Notes: 1. Amounts are the book values as of the end of February 2016, after subtracting the accumulated depreciation. The amounts include the book value of property accounted for as investment in finance lease. 2. Percentage of total assets is rounded to the second decimal place. Individual numbers may not add up to 100% due to rounding. 3. The amount of Real Estate and Real Estate Held in Trust excludes the amount of construction in progress (including construction in progress held in trust). 18