Invesco Office J-REIT, Inc.€¦ · Invesco Global Real Estate Asia Pacific, Inc. To Our Unitholders Financial Highlights As of the end of October 2018 Distributions Financial Summary

9th Fiscal Period Semi-Annual ReportFrom May 1, 2018 to October 31, 2018

(Securities Code: 3298)

Invesco Office J-REIT, Inc.

6-10-1, Roppongi, Minato-ku Tokyohttp://www.invesco-reit.co.jp/en/


FP1(Actual)

FP2(Actual)

FP3(Actual)

FP4(Actual)

FP5(Actual)

FP7(Actual)

FP8(Actual)

FP9(Actual)

FP10(Forecast)

FP6(Actual)

(¥)

0200400

800600

125 325 321 337 341 454 370 439 379400

We would like to express our sincere gratitude for your continued support and business with Invesco Office J-REIT, Inc. (hereinafter referred to as the “Investment Corporation”).

The Investment Corporation was listed on the Tokyo Stock Exchange on June 5, 2014, with the fundamental goal of maximizing investor value by making focused investments in large-scale office buildings located in metropolitan areas.

The Investment Corporation has completed its ninth fiscal period (ended October 31, 2018; hereinafter referred to as “FP9”), and we are pleased to report the following results.

Operating results for FP9 included operating revenues of 8,625 million yen, operating income of 4,339 million yen, ordinary income of 3,799 million yen and net income of 3,797 million yen. Distributions per unit (hereinafter referred to as “DPU”) came to 439 yen. On the asset management front, the occupancy rate for the overall portfolio was 98.0% as of the end of October 2018, due to steady leasing activities for vacant spaces in the portfolio assets.

Meanwhile, the Investment Corporation raised approximately 28,400 million yen by means of capital increases through a public offering and a third-party allotment in May 2018, the beginning of FP9. The Investment Corporation steadily pursued external growth and achieved an asset size of 200,000 million yen, which was its medium and long-term target. Such external growth was achieved with the acquisition of the IBF Planning Building, which was acquired using proceeds from the sale of the Sendai Honmachi Building, as well as the acquisition of the Nishi Shinjuku Prime Square, the Kojimachi Crystal City, the Prime Tower Shin-Urayasu and the Techno Wave 100 using proceeds from capital increase and new borrowings.

With your support, we look forward to continuing to work diligently to build a strong portfolio by making focused investments in large-scale office buildings located in metropolitan areas, while maximizing investor value by securing stable earnings over the medium and long-term and steadily enhancing the value of assets.

We ask for the continued support and encouragement of our investors as we pursue these goals.

Yugo Minemura Yasuyuki TsujiExecutive Director,

Invesco Office J-REIT, Inc.Representative in Japan,

Invesco Global Real Estate Asia Pacific, Inc.

To Our Unitholders Financial Highlights

As of the end of October 2018

Distributions

Financial Summary

¥3,797 million ¥15,591Net Income NAV per Unit (Note)

¥8,625 million

¥439

Operating Revenues

FP9 Actual DPU

¥245,448 million

¥379

Total Assets

FP10 DPU Forecast

¥4,339 million

Operating Income

¥110,378 million

Net Assets

¥3,799 million

Ordinary Income

¥12,770Net Asset per Unit

Changes in DPU

Table of Contents

(Note 1) As the Investment Corporation has not made cash distribution in excess of retained earnings, actual DPU and DPU forecast for FP10 described above do not include any portion of the amount in excess of retained earnings.

(Note 2) The Investment Corporation implemented an eight-for-one unit split with February 28, 2018 as the record date and March 1, 2018 as the effective date. For comparison, DPU for FP1 to FP7 described in the graph above are equivalent to figures which divides the actual DPU for each fiscal period by 8.

(Note) NAV per unit is calculated dividing net asset value (which includes the difference between book value and appraisal value of investment assets) by the number of outstanding investment units.

To Our Unitholders/Overview of Invesco Office J-REIT, Inc.

Financial Highlights ···································· 1

Current Major Events and Future Growth Strategy ·········································· 2

ESG Initiatives ·············································· 3

Further Diversification in the Portfolio ······ 4

External Growth··········································· 6

New Portfolio Properties in FP9 ··········· 7

Internal Growth ········································· 10

Overview of Portfolio Properties ······· 12

Overview of Portfolio Data··················· 14

Portfolio Properties ································· 15

Financial Information ······························ 20

Investment Unit Information ··············· 21

IR Activities for Retail Investors ········ 21

Asset Management Report ·················· 22

Balance Sheets ········································· 50

Statements of Income ···························· 52

Statements of Changes in Net Assets ···· 53

Statements of Cash Distributions ······ 55

Statements of Cash Flows ···················· 56

Notes to Financial Statements ··········· 57

Independent Auditor’s Report ············ 80

Overview of Invesco Group ·················· 81

Overview of Invesco Office J-REIT, Inc.1 Focused investment in large-scale office buildings in metropolitan areas

The Investment Corporation believes that metropolitan areas—centers for economic activity where companies and labor concentrate—have relatively large size of office building markets, and consequently, there are abundant investment opportunities and relatively high leasing demand can be expected.

Large-scale office buildings are believed to enjoy relatively high and stable rents paid by quality corporate tenants with ample rent payment capacity.

2 Asset management that leverages the Invesco Group’s high levels of specialization Invesco Group is one of the world’s leading independent asset managers and provides global management capabilities.

Invesco Real Estate, one business division of the Invesco Group, has accumulated asset management expertise by engaging in management of global real property direct investment and investment in real estate-related products such as publicly traded real property securities on a world-leading scale.

3 Asset management by an independent asset manager with an ample track record The Asset Manager has conducted real property investment and asset management in Japan for the past 19 years, has accumulative investment amount of approximately ¥1.2 trillion, and has experience in investment and managing as many as 128 properties.

1


Current Major Events and Future Growth Strategy ESG Initiatives

Medium-term goalsAfter 4.5 years from IPO in 2014, stabilized DPU improved by ¥101 or 38.7% and AUM increased by ¥141.8bn to 2.8 times. As its medium-term goal, the Investment Corporation aims to achieve stabilized DPU of ¥ 400 – 430.

Issuance of green bonds (Note)

In December 2018, the Investment Corporation issued green bonds by using the subsidy scheme established by the Ministry of the Environment, Japan and it was the first case for J-REITs to use such scheme. The overview of the issuance is described below. The proceeds from the issuance of green bonds was used to prepay the part of loan which the Investment Corporation borrowed to acquire Ebisu Prime Square, an eligible green property.

GRESB participationGRESB (Global Real Estate Sustainability Benchmark) was established by a group of European pension funds in order to assess the environment, society and governance (ESG) performance of the real estate sector. Invesco Group has been a member of GRESB since 2014. IOJ is preparing to join GRESB for the first time in 2019.

Green building certificationsAs one of the environmental initiatives, the Investment Corporation acquired green building certificates such as Comprehensive Assessment System for Built Environment Efficiency (CASBEE) or DBJ Green Building Certification Program by Development Bank of Japan, Inc. for the assets described below.

Nagoya Prime Central Tower

Rank S

As of January 26, 2015

Asset size

Top 5 tenant ratio

Credit rating (JCR)

NAV per unit

LTV book value

Index inclusion

¥300 - 400bn¥220.4bn at the end of FP9 (10/2018)

Up to 10%18.7% at the end of FP9 (10/2018)

AAA+ (positive) as of November 28, 2018

¥16,000 - ¥19,000¥15,591 at the end of FP9 (10/2018)

Up to 50%49.4% at the end of FP9 (10/2018)

TSE REIT Core IndexNot included at the end of FP9 (10/2018)

Medium term goal DPU target (stabilized base) : ¥400 — ¥430Adjusted FP10 (4/2019) DPU forecast (Note) : ¥365

Aiming to further improve investor value and valuation by conducting timely and effective active management initiatives

Key drivers to achieve the medium term goal

CASBEE real estate certification DBJ green building certificationThe Comprehensive Assessment System for Bui l t Environment Efficiency (“CASBEE”) is a system for comprehensively assessing and ranking the environmental performance of buildings based on a five evaluation scoring model (S rank, A rank, B+ rank, B− rank and C rank; excellent order) with regards to aspects such as the enhancement of environmental performance including consideration for the landscape, on top of the aspect of environmental consideration such as energy saving and recycling with a lower environmental burden.

The DBJ Green Building Certification System is a grading system which certifies high quality buildings that meet various stakeholders’ social requirements, such as environmental design, security and disaster prevention based on a five evaluation scoring model (from 5 stars to 1 star; excellent order) originally developed by DBJ. This system aims to promote the expansion of “Green Building” techniques which lead to a sustainable environment.

CS Tower

Rank A

As of September 5, 2014

ORTO Yokohama

Rank A

As of October 29, 2015

Tokyo Nissan Nishi-Gotanda Bldg.

Rank A

As of December 25, 2015

Nishi-Shinjuku Prime Square

Rank A

As of November 30, 2018

Prime Tower Shin-Urayasu

Rank B+

As of November 30, 2018

Ebisu Prime Square

3 Stars

As of February 27, 2017

32.8%of the portfolio (by floor area) has achieved a green building

certification

NameIssuance

DateIssued amount

(¥ million)Term

Interest rate (%)

Redemption date

Fourth Series Unsecured Investment Corporation Bond (Green Bond)

December 13, 2018

5,500 5 years 0.580December 13,

2023

(Note) Excluded property tax effects from FP10 DPU forecast.

(Note) Green bonds are a type of bond instrument issued by corporations and local municipalities, for the purpose of allocating the proceeds to domestic/international green projects (that have the effect of improving the environment, such as renewable energy business, construction or renovation of eco-friendly buildings, projects to prevent and manage environmental pollution etc.). The proceeds of green bonds are 1) allocated to green projects only, 2) tracked and 3) secured transparency through reporting after the issuance.

2 3


Further Diversification in the Portfolio

IPO FP1(End of October 2014)

FP2(End of April 2015)

FP3(End of October 2015)



December 2016 FP6(End of April 2017)




Number of owned asset 5 5 5 8 8 13 12 14 14 14 18

Asset size 78.6 78.6 78.6 104.9 104.9 154.2 144.9 161.9 161.9 159.9 220.4

Ebisu Prime Square

Harumi Island Triton Square Office Tower Z

Cs Tower, Cs Tower Annex

Queen's Square Yokohama Nagoya Prime Central Tower

Listed in May 2014

Aqua Dojima East

Kinshicho Prime Tower

Asset acquired in 2017 ¥17bn


Kojimachi Crystal City


Techno Wave 100

IBF Planning Building

The 3rd public offering in May 2018The Investment Corporation aims to expand asset size which leads to improvement of investor value.

Hakata Prime East

Sun Towers Center Building

Akiba CO Building

Sendai Honcho Building

Shinagawa Seaside East Tower

The 2nd public offering in May 2016

Sendai Honcho Building

Asset disposed during FP9(Co-ownership 60%)

Asset disposed during FP8(Co-ownership 40%)

Tokyo Nissan Nishi Gotanda Building

ORTO Yokohama

Nishi Shinjuku KF Building

The 1st public offering in May 2015

Harumi Island Triton Square Office Tower Z

Asset disposed in December 2016

Achieved asset size of ¥100bn

(Note) Asset size is based on acquisition price.

Expansion of asset under managementAchieved asset size of ¥200bn

asset size of ¥78.6bn

4 5


FP8 (Note 1)

(As of the end of April 2018)FP9 (Note 1)

(As of the end of October 31, 2018)

No. of properties 14 properties 18 properties

Total purchase price ¥159.9 billion ¥220.4 billion

Average occupancy rate 99.6% 98.0%

NOI yield (Note2) 5.2% 4.9%

NOI yield after depreciation (Note2) 4.2% 4.1%

Diversification by Tenants (Note3)

Diversification in Area (Note 4)

LTV 49.6% 49.4%

The third public offering after IPOThe Investment Corporation acquired 5 new properties with acquisition price of 63.5 billion yen in total through public offering at the beginning of FP9, the third time after IPO, as well as asset replacement. Through these acquisitions, the Investment Corporation enhanced property and tenant diversification with steady portfolio expansion.

External Growth

Change in Portfolio and LTV

(Note 1) Regarding “Sendai Honcho Building”, the Investment Corporation disposed of 40% co-ownership interest of the trust beneficiary interests related to the property on April 18, 2018 and 60% co-ownership interest on May 17, 2018. The information for the end of FP8 shown above includes Sendai Honcho Building (co-ownership of 60%, however the information regarding tenant diversification shows the information for the entire building). On the other hand, the information for the end of FP9 does not include Sendai Honcho Building.

(Note 2) NOI is calculated by using the annualized actual NOI for each fiscal period. NOI yield is calculated by dividing total NOI by total acquisition price. However, we have applied adjustment to treat certain capitalized property-related taxes as expenses.

(Note 3) Tenant ratio is based on leased area and the ratio based on monthly rental income is shown in parentheses.(Note 4) Investment ratio is based on the acquisition price.

Top 10 tenant ratio36.0% (29.1%)

Top 10 tenant ratio28.7% (23.3%)

Top 10 tenant 36.0%Others 64.0%

Top 10 tenant 28.7%Others 71.3%

New Portfol io Properties in FP9


Tokyo Metro Marunouchi Line

Toei OedoLine

Shinjuku Sta.

Seibu-Shinjuku Sta.

Nishi-Shinjuku Prime Square Higashi-Shinjuku Sta.

Nishi-Shinjuku Sta.

Shinjuku-Nishiguchi Sta.

Tochomae Sta.

Shin-Okubo Sta.Okubo Sta.

Chuo Main Line

Yamanote Line

Kanda River

To

kyo

Met

ro F

uk

uto

shin

Lin

e

Residential Address 7-5-25, Nishi-Shinjuku, Shinjuku-ku, Tokyo

Date of Building November 1988

Gross Floor Area of the whole building 36,899.18 sqm

Ownership Structure (Land) Ownership

Ownership Structure (Building) Ownership

23 wards of Tokyo 66.8%

Tokyo metropolitan area other than the above 18.2%

Other major urban areas 13.1%

Other investment target regions 1.9%

23 wards of Tokyo 68.8%

Tokyo metropolitan area other than the above 16.3%

Other major urban areas 9.5%

Other investment target regions 5.4%

Investment ratio of Tokyo metropolitan area

85.0%

Investment ratio of Tokyo metropolitan area

85.1%

Total number of tenants

445


528

6 7


New Portfol io Properties in FP9

Residential Address 4-8-1, Kojimachi, Chiyoda-ku, Tokyo

Date of Building September 1992 (New construction)January 1998 (Enlargement)


Ownership Structure (Land) Co-ownership, Right of site (co-ownership)

Ownership Structure (Building)

Compartmentalized ownership (co-ownership interest of some part of compartmentalized ownership) (Note)

Residential Address 1-1-25, Shin Urashimacho, Kanagawa-ku, Yokohama-shi, Kanagawa

Date of Building July 1990


Ownership Structure (Land) Ownership (co-ownership)

Ownership Structure (Building) Co-ownership of compartmentalized ownership

Residential Address 1-5-2, Irifune, Urayasu-shi, Chiba

Date of Building October 1990


Ownership Structure (Land) Right of site

Ownership Structure (Building) Compartmentalized ownership (Note)

Residential Address 3-38-14, Sendagaya, Shibuya-ku, Tokyo

Date of Building January 2008




Prime Tower Shin-Urayasu IBF Planning Building

Shinjuku-dori St.

Sophia Univ.

Kojimachi Sta.

Kojimachi Crystal City

Yotsuya Sta.

Tokyo Metro Yurakucho Line

Nippon Television St.

Chuo

Mai

n Li

ne

Tokyo Metro Nanboku Line

Keiyo Line


Shin-Urayasu Sta.

Toky

o Bay

road

Sakai River

Metro

polita

n Exp

ress

way W

anga

n Line

Kojimachi Crystal City Techno Wave 100

(Note) The compartmentalized ownership which the Investment Corporation owns through the trustee is the whole office tower of Shin-Urayasu Prime Tower and the floor area of the exclusive use space is 38,421.81 sqm based on real estate registry.

Daiichikeihin-dori St.Yokohama Line

Techno Wave 100

Yokohama Sta.

Tammachi Sta.

Higashi-hakuraku Sta.

Higashi-kanagawa Sta.

KanagawaSta.

Kanagawa-Shinmachi Sta.

Metropo

litan E

xpress

way Ka

nagaw

a

Route

No.1 Yo

kohane

LineKe

ikyu M

ain Li

ne

Dainike

ihin-do

ri St.

Toka

ido M

ain L

ine

Tokyu Toyoko Line

Koyasu Sta.

Shinjuku Sta. Shinjuku Sanchome Sta.Tochomae Sta.

Yoyogi Sta.Sendagaya Sta.

Shinjuku GyoenNational Garden

Chuo Main Line

Kita-Sando Sta.

Harajuku Sta.

Meiji Jingumae Sta.

IBF Planning Building

Yamanote Line

Yoyogi Park

Meiji Jingu

Omote-Sando Sta.

Gaiemmae Sta.

Toky

o M

etro

Fuku

tosh

in L

ine

Meiji Jingu Gaien

(Note) The exclusive use area, which the Investment Corporation owns through the trustee, is consisted of a part of the second basement to the ground floor, from the 2nd floor to 6th floor (co-ownership of compartmentalized ownership), and the 7th floor to 14th floor of Kojimachi Crystal City East Tower. The total area of the exclusive use area is 5,969.15 sqm based on the management bylaws.

8 9


Internal Growth

Successful in Leasing and Occupancy ImprovementsThe occupancy rate of the entire portfolio resulted 98.0% as of the end of October 31, 2018 (end of FP9). As for the occupancy rate for FP9, the average occupancy rate maintained 98.4% as the leasing situation improved in Sun Towers Center Building and the vacant spaces of Nishi-Shinjuku KF Building and Aqua Dojima East were filled.

For FP10, the Investment Corporation intends to focus on leasing of ORTO Yokohama, Prime Tower Shin-Urayasu and Techno Wave 100. The occupancy rate for entire portfolio is expected to be lower than that of FP9. The expected average occupancy rate for the entire portfolio for FP10 is 97.9%. The Investment Corporation aims to improve the occupancy rate by continuing proactive leasing activities.

Leasing initiatives and future plan for newly acquired assets

(%)

85

90

95

100(m2)

0

15,000

12,000

9,000

6,000

3,000

FP8 2018May June July August September October November December

(Forecast)

2019January

(Forecast)February(Forecast)

March(Forecast)

April(Forecast)

(Month)

FP898.9%

FP998.4%

FP10 (Estimated)97.9%

Portfolio average occupancy rate during fiscal period

Leasing Achievements and Occupancy

Summary for Lease Renewal Status and Portfolio Average RentThe Investment Corporation renewed 82 contracts in FP9 of which 29 contracts (33.6% of total leased area renewed in FP9) were renewed with upward revisions and the average rent increased by 6.5% from FP8. In addition, 53 contracts (66.4% of total leased area renewed in FP9) were renewed with the same rent.

Aiming to continuously raise rents in FP10 due to potential for further upward rent revisions for the tenants whose rent is lower than the market price to improve rental revenue.

Move-in Move-out Actual occupancy rate Estimated occupancy rate

(%)

0

50

100

FP7 FP8 FP9

14.0%(11 contracts)

84.4%(34 contracts)

23.6%(14 contracts)

76.4%(56 contracts)

33.6%(29 contracts)

66.4%(53 contracts)

1.6%(2 contracts)

(¥/ tsubo) (%)

14,500

15,000

15,500

16,000

17,000

16,500

-2.0

0.0

2.0

4.0

8.0

6.0

FP8 (13 assets) (Note 2) FP9 (13 assets) (Note 2)

15,718

17,161

15,638

16,804

6.9

8.4

Lease Renewal Status (Leased Area Basis) Average Rent at the end of Fiscal Period (including CAM)

Upward revision Flat Downward revision Portfolio average rent Market rent (Note 1) Rent gap

Proactive Asset Managemento Occupancy rate is expected to improve to 94.7% in January 2019 which represents a 7.3% improvement from pre-acquisition occupancy rate forecast.

o Aim to further improvement of occupancy with further active management.

Property value enhancemento Creating comfortable work environments through renovating common area.

o Newly built Shin-Urashima bridge improves the car access to the property and accessibility is expected to be enhanced.

Proactive Asset Managemento Occupancy rate is expected to improve to 95.6% in December 2018 which represents a 10.5% improvement from pre-acquisition occupancy rate forecast.

Cost controlo Achieved a 17% cost reduction in building maintenance costs from December 2018 through a competitive bidding.

o In anticipation of an increase in insurance premiums, the Investment Corporation seeks a blanket insurance for al l properties (Note) through a competitive bidding process.

o By introducing multiple location policy through the blanket insurance, the annual insurance cost is expected to be reduced by 19%.

LocationLeasable

areaOccupancy rate

7 mins walk from Keikyu Main Line “Kanagawa Shinmachi” station

22,085.89 sqm

87.3% as of November 30, 2018

LocationLeasable

areaOccupancy rate

Directly connected to JR Keiyo Line and JR Musashino Line “Shin-Urayasu” station

22,240.39 sqm

94.9% as of November 30, 2018

(Note 1) Market rent above represents contract rent for a typical floor of assets managed by the Investment Corporation evaluated by CBRE.(Note 2) For comparison, the five assets acquired and the one asset disposed in FP9 are excluded.

(Note) Pre-acquisition occupancy rate forecast is described in the Securities Registration Statement filed in April 2018.

(Note) Pre-acquisition occupancy rate forecast is described in the Securities Registration Statement filed in April 2018.

(Note) Excludes Tokyo Nissan Nishi-Gotanda Building which is covered under co-owner’s insurance policy.

Techno Wave 100

Achieving a 19% annual reduction (estimated)


Operating expense reduction

(approximately ¥4.7mm reduction per annum)

Occupancy rate forecast

Occupancy rate forecast

87.4%pre-acquisition (Note)

85.1%pre-acquisition (Note)

94.7%in Jan. 2019

95.6%in Dec. 2018

10 11


515

13

No. Property LocationPurchase

price(¥ million)

Appraisalvalue (Note 1)

(¥ million)

Investment ratio (Note 2)

(%)

14 Kinshicho Prime Tower Koto-ku, Tokyo 15,145 16,600 6.9

15 Aqua Dojima East Osaka-shi, Osaka 1,910 2,060 0.9

16 Nishi-Shinjuku Prime Square Shinjuku-ku, Tokyo 34,835 38,300 15.8

17 Kojimachi Crystal City Chiyoda-ku, Tokyo 6,405 7,070 2.9

18 Prime Tower Shin-Urayasu Urayasu-shi, Chiba 11,860 12,400 5.4

19 Techno Wave 100 Yokohama-shi, Kanagawa 6,900 7,160 3.1

20 IBF Planning Building Shibuya-ku, Tokyo 3,500 3,670 1.6

Total 220,462 251,502 100.0

Portfolio Map

NagoyaFukuoka

Osaka

Overview of Portfolio Properties As of the end of FP9

No. Property LocationPurchase

price(¥ million)

Appraisalvalue (Note 1)

(¥ million)

Investment ratio (Note 2)

(%)

1 Ebisu Prime Square Shibuya-ku, Tokyo 25,014 27,832 11.3

3 CS Tower / CS Tower Annex Taito-ku, Tokyo 13,700 18,300 6.2

4 Queen's Square Yokohama Yokohama-shi, Kanagawa 16,034 19,400 7.3

5 Nagoya Prime Central Tower Nagoya-shi, Aichi 14,600 19,800 6.6

6 Tokyo Nissan Nishi-Gotanda Building Shinagawa-ku, Tokyo 6,700 7,670 3.0

7 ORTO Yokohama Yokohama-shi, Kanagawa 13,000 14,600 5.9

8 Nishi-Shinjuku KF Building Shinjuku-ku, Tokyo 6,600 7,160 3.0

9 Shinagawa Seaside East Tower Shinagawa-ku, Tokyo 25,066 27,300 11.4

10 Akiba CO Building Chiyoda-ku, Tokyo 8,078 9,580 3.7

11 Sun Towers Center Building Setagaya-ku, Tokyo 6,615 7,770 3.0

13 Hakata Prime East Fukuoka-shi, Fukuoka 4,500 4,830 2.0

Property summary

(Note 1) Appraisal value are as of the end of October 2018.(Note 2) The investment ratio is based on the acquisition price. As percentage of investment ratio is rounded to the second decimal place, total of the ratio may not be 100%.

16

11

9

18

3

TokyoMetropolitan Area

1410

1720

168

4

Yokohama

719

12 13


Portfol io Properties

Ebisu Prime Square

CS Tower / CS Tower Annex

1

3

Ebisu Sta.JR Ebisu Sta.

Tokyo Metro Hibiya Line

JR Line

Meiji St.

Komazawa St.

Ebisu Prime Square

Shibuya-bashi

Residential Address 1-1-7/39/40, Hiroo, Shibuya-ku, Tokyo

Date of Building January 31, 1997


Ownership Structure (Land)

Ownership rights (quasi-co-ownership interests of the trust beneficial interests: 49%)


Ownership rights (quasi-co-ownership interest of the trust beneficial interests: 49%)

Residential Address 5-20-8/6, Asakusabashi, Taito-ku, Tokyo

Date of Building August 31, 1991

Gross Floor Area of the whole building 32,996.92 sqm (Note)

Ownership Structure (Land) Rights to site


Compartmentalized ownership (co-ownership interests of some part of the compartmentalized ownership)

Asakusabashi Sta.

Iwamotocho Sta.

Kiyosubashi-dori St.

Akihabara Sta.

JR Akihabara Sta.

Bakurocho Sta.

CS Tower/CS Tower Annex

Kuramaebashi-dori St.

JR Sobu Line

Kanda River

JR Line

Tokyo Metro Hibiya Line

Toei Shinjuku Line

Portfolio Diversification

Diversification in Area (Note1) Diversification by Tenants (Note2)

23 wards of Tokyo

68.8%

Tokyo metropolitan area other than the above

16.3%

Other major urban areas

9.5%

Other investment target regions

5.4%

Diversification by Size Diversification by Asset Type

Gross Floor Area of over

10,000 sqm or above 89.7%

Gross Floor Area of less than

10,000 sqm 10.3%

Top10 tenants

28.7% (23.3%) Others

71.3% (76.7%)

Office

86.4%

Retail

7.5%

Hotel

4.1%

Residential

1.7%

Other

0.2%

¥220.4 billion

Acquisition Price

98.0%

Average Portfolio Occupancy Rate

¥12.2 billion

Average Acquisition Price per Property

4.9%

Average NOI Yield

2.72%

Portfolio PML

59,621.78 sqm

Average Gross Floor Area per Property

(Note 1)

(Note 2)



(Note 1) NOI is calculated by using the annualized actual NOI for each fiscal period. NOI yield is calculated by dividing total NOI by total acquisition price. However, we have applied adjustments to treat certain capitalized property-related taxes as expenses.

(Note 2 ) Average gross floor area is the average of the gross floor area of the whole building as indicated in the registry. For each asset's gross floor area of the whole building in the registry, please refer to the information on “Gross Floor Area of the whole building" in “New Portfolio Properties in FP9” and “Portfolio Properties” section.

(Note 1) Investment ratio is based on the purchase price.(Note 2) Tenant ratio based on leased area and the ratio based on monthly rental income is shown in parentheses.

(Note) This section states the structure/ stories and gross floor area of the whole building including this property, inclusive of those corresponding to the interests of the other compartmentalized owners and co-owners.

Overview of Portfolio Data As of the end of FP9


528

14 15



Residential Address

2-27-8, Meieki, Nishi-ku, Nagoya, Aichi Prefecture

Date of Building March 18, 2009

Gross Floor Area of the whole building 59,602.89 sqm (Note)


Ownership rights (co-ownership interests)


(Office) Compartmentalized ownership(Parking lot) Interests acquired for the common spaces under the regulations and the common spaces of the condominium

(Note) The gross floor area of the whole building for the parking space of Nagoya Prime Central Tower.

Residential Address

4-32-1/9, Nishi-Gotanda, Shinagawa-ku, Tokyo

Date of Building

April 25, 1990 (completed renewal works in 2010)

Gross Floor Area of the whole building

21,404.84 sqm (Note)


Rights to site


Compartmentalized ownership

(Note) The structure/number of stories and the gross floor area are stated for the whole building that make up the subject property and the area includes common areas as well as other exclusive use areas of a condominium.

Residential Address

2-3-2/3/4/5/7/8/9, Minatomirai, Nishi-ku, Yokohama, Kanagawa

Date of Building June 30, 1997


498,282.77 sqm (Note)


Ownership rights (co-ownership interests)


Compartmentalized ownership (co-ownership interests)

Nagoya Prime Central Tower5

Tokyo Nissan Nishi-Gotanda Building6

4 Queen’s Square Yokohama

(Note) The area of the entire building of Queen’s Square Yokohama recorded on the registry is stated here.

Residential Address

8-14-24, Nishi-Shinjuku, Shinjuku-ku, Tokyo

Date of Building January 29, 1993


9,828.37 sqm (Note)


Rights to site


Compartmentalized ownership (Note)

(Note) Although ownership structure for the subject property is compartmentalized ownership, the seller owns the entire compartmentalized ownerships of the subject property though the trustee.

Residential Address

4-12-8, Higashi-Shinagawa, Shinagawa-ku, Tokyo



43,014.06 sqm


Ownership


Ownership

Residential Address

1-2-4/5, Shin-Koyasu, Kanagawa-ku, Yokohama, Kanagawa

Date of Building November 30, 2000


57,261.81 sqm (Note)


Rights to site


Compartmentalized ownership (co-ownership interests of some part of the compartmentalized ownership)

Nishi-Shinjuku KF Building8

Shinagawa Seaside East Tower9

7 ORTO Yokohama

(Note) The structure/number of stories and the gross floor area are stated as total spaces of office building, commercial building, parking Garage and the area includes common areas as well as other exclusive use space of a condominium.

Minatomirai Line

Minatomirai Sta.

Queen’s Square Yokohama

Kokusai Center Sta.

Nagoya Prime Central Tower

JR Nagoya Sta.

Nagoya Sta.

Meitetsu Nagoya Sta.

Kintetsu Nagoya Sta.

Meitetsu Nagoya Main Line

JR Line

Nagoya City Subway

Higashiyama Line

Nagoya City Subway

Sakura-dori Line

Meguro Sta.

Fudo-Mae Sta.

Gotanda Sta.Central Circular Route

Yamate-dori St.

Metropolitan Expressway

Route No.2 Meguro Line

JR Yamanote

Line

Tokyu Meguro Line

Tokyo Nissan Nishi-Gotanda Building

Toei Asakusa Line

Koyasu Sta.

Shin-Koyasu Sta. Keikyu-Shin-Koyasu Sta.

Daiichi Keihin Rd.

Daini Keihin Rd.

Keikyu LineJR Keihin-Tohoku Line

JR Yokoham

a Line ORTO Yokohama

JR Shinjuku Sta.

Tochomae Sta.

Shinjuku Nishiguchi Sta.

Nishi-Shinjuku Sta.

Ome Kaido St.

Nishi-Shinjuku KF Building

Toei Oedo Line

Tokyo Metro Marunouchi Line

JR Line

Shinagawa SeasideEast Tower

National Route N

o.357

Daiichi Keihin Rd.

ShinagawaSeaside Sta.

Rinkai Line of theTokyo Waterfront AreaRapid Transit

TokyoMonorail

Oimachi Sta.

Samezu Sta.

Aomono-yokocho Sta.

Metropolitan Expressw

ayRoute N

o.1 Haneda Line

Keikyu Line

Tokaido Line

16 17



Residential Address

2-11-22, Sangen-jaya, Setagaya-ku, Tokyo

Date of Building June 22, 1992


25,577.35 sqm


Ownership (compartmentalized ownership) (Note)


Compartmentalized ownership

(Note) The land of the Property is owned partially by each compartmentalized owner and the compartmentalized owners agree to use other compartmentalized owners’ land each other.

Residential Address

2-10-35, Hakataeki-Higashi, Hakata-ku, Fukuoka-shi, Fukuoka

Date of Building April 22, 1992


9,213.20 sqm


Ownership


Compartmentalized ownership (Note)

(Note) Although ownership structure for the subject property is compartmentalized ownership, the seller owns the entire compartmentalized ownerships of the subject property though the trustee.

Residential Address

3-16-12 Soto-Kanda, Chiyoda-ku, Tokyo

Date of Building May 23, 2000


6,957.74 sqm


Ownership


Ownership

Sun Towers Center Building11

Hakata Prime East13

10 Akiba CO Building

Akiba CO Building

Kuramaebashi-dori St.Suehirocho Sta.

JR Akihabara Sta.

AkihabaraDai Building

Akihabara UDX

Sobu Line

Ginza Subw

ay Line

Tsukuba Express

Yamanote Line,

Keihin-Tohoku Line

Chuo-dori St.

Sun TowersCenter Building

Sangen-jaya Sta.

Sangen-jaya Sta.

Carrot Tower

Metropolitan ExpresswayRoute No.3 Shibuya Line

Setagaya-dori St.

National Route No.246

National Route No.246

Tokyu Den-en-toshi Line

Tokyu Den-en-toshi LineTokyu Setagaya Line

Subway Kuko Line

Nakahie Park Dori St.

Chikushi Dori St.

HakataSta.

Hakata Prime EastNakahieParkNakahiePark

Sanyo-Shinkansen LineKyusyu-Shinkansen LineJR Line

KinshichoPrime Tower

Kameido Sta.Kinshicho Sta.

Kinshi Park

Sobu Line

Metropolitan Expressway

Route No.7 Komatsugawa Line

Hanzom

on Subway Line

Keiyo Road

Kuramaebashi-dori St.

KinshichoExit

Watanabebashi Sta. Oebashi Sta.

Yodoyabashi Sta.

Naniwabashi Sta.

Osaka Sta.

Umeda Sta.

Nishi-Umeda Sta. Higashi-Umeda Sta.

Kitashinchi Sta.

Aqua Dojima East

Osaka City Hall

Hanshin Expressway RouteNo.1 Loop Line

Mido-suji Ave.

Tokaido Line

Osaka Loop Line

Yotsubashi-sujiAve.

Kinshicho Prime Tower14

Aqua Dojima East15

Residential Address 1-5-7, Kameido, Koutou-ku, Tokyo





Residential Address 1-4-4, Dojimahama, Kita-ku, Osaka-shi, Osaka

Date of Building April 21, 1993


Ownership Structure (Land) Ownership (compartmentalized ownership) (Note)

Ownership Structure (Building) Co-ownership of compartmentalized ownership

(Note) The land of the Property is owned partially by each compartmentalized owner and the compartmentalized owners agree to use other compartmentalized owners' land each other.

18 19


FP10 FP11 FP12 FP13 FP14 FP15 FP16 FP17 FP18 FP19 FP20

(¥mn)

0

5,000

10,000

15,000

25,000

20,000

4,50012,000 13,350 10,600 12,900 12,550 13,500

1,800

15,50012,000

5,500

5,500

1,600

Investment Unit Information

IR Activities for Retail Investors

Unitholders Composition

(Note) The bond rating is for the first, second, third and fourth series bonds.

Breakdown by Units (Units) Total 8,643,356 Breakdown by Unitholders (Unitholders) Total 22,851 Domestic individuals

1,632,306 (18.9%) Financial institutions

(including financial instruments business operators)

3,864,324 (44.7%) Domestic corporations

240,286 (2.8%) Foreign corporations and individuals

2,906,440 (33.6%)

Domestic individuals

22,180 (97.1%) Financial institutions

(including financial instruments business operators)

89 (0.4%) Domestic corporations

347 (1.5%) Foreign corporations and individuals

235 (1.0%)

Investment Unit Price (Closing price: ¥) Trading Volume (No. of units)

Financial Stability and FlexibilityThe fundamental policy of Investment Corporation is the conduct of stable and sound financial management to ensure stable income over the medium to long term together with steady growth in asset value. In regard to borrowings, the Investment Corporation will seek stable financial management through building diversified bank formation centered on leading Japanese financial institutions.

Diversification of Debt Maturities

Lender’s Diversification

Citibank, N.A., Tokyo Branch 4.7%

Development Bank of Japan Inc. 4.2%

The Nishi-Nippon City Bank, Ltd. 3.3%

The Bank of Fukuoka, Ltd. 2.3%

ORIX Bank Corporation 0.9%

Nippon Life Insurance Company 0.9%

49.4%

LTV

2.6 years

Average remaining years

96.3%

Long-term loan ratio

Fixed interest rate ratio

95.5%

¥121.3 billion

Interest bearing debt

Average borrowing rate

0.56%

Details of Credit Rating

Rating Agency Subject Rating Rating Outlook

Japan Credit Rating Agency, Ltd. (JCR)

Long-term Issuer Rating A+ Positive

Bond Rating (Note) A+ —

Borrowings Corporate Bonds for Institutional Investors Corporate Bonds for Retail Investors

Status of Credit RatingCurrent credit rating of the Investment Corporation is as follows.

Trend of Investment Unit PriceThe trend of the Investment Corporation's investment unit price at Tokyo Stock Exchange since June 5, 2014 is as follows. The data is as of December 14, 2018.

The Investment Corporation proactively participates in IR events to spread understanding among retail investors.

As of the end of December 28, 2018

As of the end of December 28, 2018


18,000

16,000

14,000

12,000

10,000

0

1,100,000

300,000

400,000

200,000

100,000

0June 29,

2018December 29,

2017December 14,

2018June 30,

2017December 30,

2016June 30,

2016December 30,

2015June 30,

2015December 30,

2014IPO

(Note) As percentage of unitholders ratio is rounded to the third decimal place, total of the ratio may not be 100%.

(Note) The Investment Corporation implemented an eight-for-one unit split with February 28, 2018 as the record date and March 1, 2018 as the effective date. For comparison, the investment unit prices from IPO to February 23, 2018 described in the graph above are equivalent to figures which divides the investment unit prices from IPO to February 23, 2018 by 8. Also, trading volume from IPO to February 23, 2018 is 8 times of the actual trading volume.

Financial Information As of December 28, 2018

Sumitomo Mitsui Banking Corporation 23.9%

MUFG Bank, Ltd. 19.8%

Sumitomo Mitsui Trust Bank, Ltd. 11.9%

Mizuho Bank, Ltd. 9.6%

Resona Bank, Ltd. 8.4%

Shinsei Bank Limited 5.4%

Aozora Bank, Ltd. 4.7%

Seminars for retail investors (actual)

Broadcasted on Radio NIKKEI “Morning Market Square Asazai” (available on-demand broadcasting)

http://www.radionikkei.jp/podcasting/asazai/2018/07/player-2018725.html

September 21, 2018 J-REIT Fair 2018

November 24, 2018 J-REIT Fan 2018 Fall

January 17, 2019 J-REIT Seminar in Osaka

J-REIT Fan 2018 Fall on November 24, 2018

20 21


Asset Management Report

22 23


24 25


26 27


28 29


30 31


32 33


34 35


36 37


38 39


40 41


42 43


44 45


46 47


48 49


50 51


52 53


54 55


56 57


58 59


60 61


62 63


64 65


66 67


68 69


70 71


72 73


74 75


76 77


78 79


The Invesco Group sets its mission as helping investors worldwide achieve their financial objectives, and is a world-leading independent asset manager that provides global investment management capabilities. The Invesco Group engages in business on a global scale and has offices in more than 20 countries. As of the end of September 2018, the balance of assets under management of Invesco Group was US$980.9 billion (approximately ¥111.4 trillion) (Note).

Invesco Ltd. is publicly traded on the NYSE. The credit rating agencies listed below have assigned the ratings indicated to Invesco Ltd.

Rating Company RatingMoody’s Investors Service A2 Stable

Standard & Poor’s BBB+/Stable

Fitch Ratings A- Positive

Invesco Real Estate, one business division of the Invesco Group, places priority on core asset management, but also has experience with value-added asset management and opportunistic asset management. Having experience with leasing and renewals as well as property sales and acquisitions and leverage control, Invesco Real Estate possesses diverse real estate management know-how.

Invesco Real Estate manages real estate and securities through 21 offices in 16 countries worldwide with assets under management of US$64.1billion (approximately ¥7.2 trillion) (Note) as of the end of September 2018.(Note) The yen amounts for assets under management presented above have been converted from U.S. dollars using the exchange rate as of the end of September 2018 (US$1 = ¥113.55).

Invesco Real Estate's Investment Properties

1 Office:Washington DC, USA

2 Office:San Francisco, CA, USA

3 Multiple Complex:Frankfurt, Germany

4 Retail:Seoul, South Korea

5 Retail:Las Vegas, NV, USA

6 Office:London, UK

7 Logistics:Melbourne, Australia

Overview of Invesco Group

Breakdown of Invesco Real Estate’s Asset Under Management (As of the end of September 2018)

North America

US$31.0 billion 48% Europe

US$11.5 billion 18% Asia

US$6.0 billion 9% Publicly traded real property securities

US$15.6 billion 24%

Real property direct investment

US$48.5 billion 76% Publicly traded real property securities

US$15.6 billion 24%

(Note) As percentage of asset under management is rounded total of the ratio may not be 100%.

1

5

3 42

6 7

80 81


Documents

Invesco Office J-REIT, Inc.€¦ · Invesco Global Real Estate Asia Pacific, Inc. To Our Unitholders Financial Highlights As of the end of October 2018 Distributions Financial Summary