i can't believe, page-8

What I really wanted to indicate was that you cannot look with western rose coloured glasses at the Japanese market. The Japanese take on their commercial property market and the Western take on the Japanese commercial property market are poles apart and to some extent always have been. I get some pretty good feedback from a Japanese colleague in the industry and it seems a great time to buy and a very bad time to sell property. Some incredibly dumb deals were done over the past few years by foreign investors (desparate just to get into the market)with the new breed of Japanese developers, > 60% of which are now formally insolvent with some of the largest recorded development losses in Japanese history.

Despite this BJT has a very sound Tokyo based Japanese management team and this has underpinned their major city acquisitions. They also have a good tax structure for a foreign investors. However they, along with many other foreign REITS are regretting their forays into the outer provinces where they are stuck with product which seemed cheap at the time, but now cannot be moved and in some instances is not even current earthquake code compliant precluding cost effective refurbishment. Luckily for BJT this is the minority of their portfolio, unless they also get saddled with B&B's Okinawa/Niseko questionable assets as part of any exit deal with B&B.

As for jobs for life, that culture remains strong, but logic dictates that the scale of bankruptcy across all levels of business will lead to commercial vacancies. I personally know many Japanese who have lost jobs and companies that have moved to smaller premises in the last 3 months.

In relation to my comment on the currency risk on interest payments, please disregard as it appears they are now left with Japan sourced - yen loans only, although BJT's distributions have long term hedges Jpn/AUD risk that can reduce AUD returns up to 5 years out.

Overall, compared with all of Aust REITs with property in the US/Europe and the majority with Australian property I think BJT is pretty well placed to weather the storm, but I would expect further devaluations and pressure to pay down debt to the detriment of distributions in June.