Wall Street Watch

JPY 25 Billion of Debt Securities Affected

Tokyo, June 07, 2002 -- Moody's Investors Service has assigned its A2 rating to the proposed issue of Series 1 JPY 25 billion unsecured straight bonds due 2007 by Japan Real Estate Investment Corporation (JRE)and its outlook is stable.

The A2 rating reflects JRE's structural feature as J-REIT such as limited business scope, its leadership position, and the quality of the portfolio that comprises 25 office buildings and generates stable cash flow. In addition, it reflects the management quality of the asset management company, Japan Real Estate Asset Management Co., Ltd. (JREA) and its reasonably conservative financial policy.

These positive factors are partially offset by the concentration on top 4 properties in the portfolio, the limited experience of timely de-leverage in a growth phase, and limited management track records of JREA. However, those concerns are mitigated because the portfolio is expected to be more diversified due to the growth plan (JPY 300 billion in March 2006) and because JRE successfully raised equity by public offering last May. Moreover, JREA has a discipline for investment eligibility, an integrated asset management policy & procedure, and professionals from the sponsors.

Moody's assumes that total debt ratio to the gross assets, DSCR, and secured debt ratio to the gross assets are managed conservatively due to JREA's financial policy.

JRE is a listed Japanese Real Estate Investment Trust and focuses on investing in and managing above-average office buildings. Its revenue for the fiscal year ended March 2002 is JPY 6,493 million.

Tokyo
Takuji Masuko
Asst Vice President - Analyst
Structured Finance Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100

Tokyo
Kei Kitayama
Managing Director
Structured Finance Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100