NOMURA REAL ESTATE OFFICE FUND, INC.
Sixth Fiscal Period Semi-Annual Report

Sixth Fiscal Period

Semi-Annual Report
May 1, 2006

http://www.nre-of.co.jp/english/

October 31, 2006

Corporate Data

ProfileNomura Real Estate Office Fund, Inc. (referred to as “Nomura Office Fund” or the “Company” hereafter) was listed on theTokyo Stock Exchange on December 4, 2003 as a real estate investment corporation formed to own and invest in officeproperties, subject to the Law Concerning Investment Trusts and Investment Corporations of Japan. The Company’s basic
investment policy is to assure stable rent revenues and steady portfolio growth over the medium- to long-term.
Nomura Real Estate Asset Management Co., Ltd. (referred to as “NREAM” hereafter), a wholly owned subsidiary of
Nomura Real Estate Holdings, Inc. is in charge of asset management on behalf of Nomura Office Fund in accordance withthe basic investment policy as described above. Through coordination with Nomura Real Estate Holdings, Inc. and othergroup companies, NREAM aims to achieve these goals and more.

Corporate Name
Nomura Real Estate Office Fund, Inc.
Corporate Office8-5-1 Nishi Shinjuku Shinjuku-ku, Tokyo
160-0023, Japan
http://www.nre-of.co.jp/english/
Date of Incorporation
August 7, 2003

Strength of Nomura Office Fund

Stock Listing
Tokyo Stock Exchange (Securities Code: 8959)

J-REIT with large-capitalization specialized in office buildings

Unit Price (¥)

Market Capitalization (¥ mln)

1,000,000

Portfolio of 30 properties at a total acquisition price of¥259.1 billion (as of October 31, 2006)
Market capitalization of ¥263.5 billion (as of October 31, 2006)
Constituent of MSCI Standard Index

600,000

900,000

500,000

800,000

400,000

700,000

300,000

600,000

200,000

500,000

100,000

Track record of stable management
Six consecutive fiscal periods of growth in revenues and earnings
Steady growth in DPS

400,000
Dec. 4
2003

Collaboration with Nomura Real Estate Group
NREAM, in charge of the Company’s asset management,
belongs to Nomura Real Estate Group
Supported by the group companies through provision of sales
information and management expertise

Apr. 30
2004

Oct. 29
2004

Operating Revenues (Lth)Apr. 282005

Oct. 312005

Net Income (Lth)(¥ mln)12,000(¥)
16,00015,905
10,73914,5209,810

Rated A by three domestic and foreign rating agencies

Number of Unitholders
15,205 (as of October 31, 2006)

Disclaimer

8,641

Long-term rating: A
Short-term rating: A-1

6,000

Moody’s Investors Service, Inc.

Issuer rating: A2

4,000

Rating and Investment Information, Inc.

Issuer rating: A+

12,000

7,106

6,656

10,273

10,000
4,531

2,000

3,596

8,000

the meaning and interpretation.

6,000

In general, accounting principles and practices used by real estate investment corporations in Japan (“J-REITs”) in
preparing its financial statements conform with accounting principles generally accepted in Japan (“Japanese GAAP”).

2,681

1,526

0

4,000
1st
Period2nd
PeriodThis semiannual report includes translations of certain Japanese documents originally filed under the Securities andExchange Law of Japan. This report was prepared in English solely for the convenience of and reference by readers
outside Japan and should not be considered as a disclosure statement. The original Japanese documents always govern

4,229
3,484
2,606

Holding to conservative financial strategies
Promoting long-term fixed-rate arrangements for interest-bearing debt

Investor Relations
For further information, please contact the Asset Management
Company:
Nomura Real Estate Asset Management Co., Ltd.
8-5-1 Nishi Shinjuku Shinjuku-ku, Tokyo 160-0023, Japan
Tel: +81-3-3365-0507

14,0008,000

Standard & Poor’s Ratings Services

Number of Units Issued
265,903 (as of October 31, 2006)

Independent Auditors
Ernst & Young ShinNihon
Hibiya Kokusai Bldg. 2-2-3 Uchisaiwai-cho Chiyoda-ku,
Tokyo 100-0011, Japan

Cash Distribution per Unit (Rth)15,150
14,114

Capital¥156,767,193,535 (as of October 31, 2006)

Business Office of the Transfer Agent
Corporate Agency Department
Mitsubishi UFJ Trust and Banking Corporation
7-10-11 Higashisuna Koto-ku, Tokyo 137-8081, Japan
Tel: +81-3-5683-5111

0Oct. 312006

Apr. 28
2006

15,63810,000Fiscal Period
Six months ending on April 30 and October 31

Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation
1-4-5 Marunouchi Chiyoda-ku, Tokyo 100-8212, Japan

3rd
Period4th
Period5th
Period6th
PeriodHowever, they may differ from generally accepted accounting principles applied in certain other countries. Potential
investors should consult their own professional advisors for an understanding of the differences between Japanese GAAP
and generally accepted accounting principles in the United States (“U.S. GAAP”) or other jurisdictions and how thosedifferences might affect the financial information contained herein.
Estimates for Nomura Office Fund’s future operating results contained in this semiannual report are forward-looking
statements and are based on information currently available to Nomura Office Fund and its asset management company

Contents
To Our Investors ....................................................................................1

Property Details ...................................................................................10

Financial Highlights ...............................................................................2

Performance Report ............................................................................17

Portfolio Highlights ...............................................................................3

Financial Section..................................................................................35

Management Summary of the Sixth Fiscal Period .............................4

Business Structure...............................................................................47

Financial Status of the Sixth Fiscal Period .........................................7

Profile of the Asset Management Company......................................48

Summary of Portfolio Properties .........................................................8

Corporate Data ......................................................................Back Coverand are subject to risks and uncertainties. Consequently, these projections should not be relied upon as the sole basis forevaluating Nomura Office Fund. Actual results may differ substantially from the projections depending on a number offactors.

Portfolio Map .........................................................................................9

Printed in JapanTo Our Investors
Dear Investors,
We are delighted to be able to present to you the financial results for the sixth fiscal period (ending October 31, 2006)
and report on our activities during the period herein.
We booked operating revenues for this period of ¥10,739 million, current profits of ¥4,230 million, and net
income of ¥4,229 million. Cash distribution per unit was ¥15,905.
Some of the major developments during the sixth period included new investments in two properties, located
Sapporo City and Chiyoda-ku, Tokyo respectively. As a result of these investments, the number of properties in theportfolio now totals 30 with a total value of ¥259.1 billion on an acquisition cost basis, promoting further
diversification of the portfolio in terms of both properties and geographical location.
Turning your eyes to property leasing operation, successful property management contributed to continuously
mark a stable and high occupancy rate of 98.2% for this period. Please also note that various refurbishment andrenovation works have been conducted to keep up and further enhance the competitiveness of the properties, with aview to increase rent revenues over the mid- to long-term.
On the financial aspects, we have made a public offering of investment units for the third time since listing. Thishas contributed to lowering the interest-bearing debt ratio, helping to build a more stable financial base, and securing
the potentiality of future growth on the back of expanded asset base. In compliance with our policy to seek mid- tolong-term optimization, we will continue adhering to the conservative investment policies in future.
Lastly, we would like to thank you again for your patronage in the past periods, and would like to ask for yourcontinued support for the years to come.

Isamu Okada
Executive Director
Nomura Real Estate Office Fund, Inc.

1

Financial Highlights
FINANCIAL SUMMARY

Operating Revenues¥ mln

6th Period

5th Period

4th Period

3rd Period

2nd Period

from May 1, 2006
to Oct. 31, 2006

from Nov. 1, 2005
to Apr. 30, 2006

from May 1, 2005
to Oct. 31, 2005

from Nov. 1, 2004
to Apr. 30, 2005

from May 1, 2004
to Oct. 31, 2004

10,739

9,810

8,641

7,106

6,656

Net Operating Income (NOI) (Note 1)

¥ mln

7,591

6,952

6,125

4,970

4,451

Income before Income Taxes

¥ mln

4,230

3,597

3,485

2,682

2,607

Net Income

¥ mln

4,229

3,596

3,484

2,681

2,606

Total Assets¥ mln

288,060

268,559

239,067

208,003

173,545

Unitholders’ Capital¥ mln

156,767

124,610

124,610

92,16892,168

Number of Units Issued

unit

265,903229,970229,970

184,650

184,650

Net Assets per Unit¥

605,499

557,492

557,004

513,672

513,266

Total Cash Distribution

¥ mln

4,229

3,596

3,484

2,681

2,606

Cash Distribution per Unit¥

15,905

15,63815,15014,520

14,114

Funds from Operation (FFO) per Unit (Note 2)¥

21,58521,88920,55920,142

19,255Note 1: NOI (Net Operating Income) = Real Estate Rental Revenues – Real Estate Rental Expenses + Depreciation
Note 2: FFO per Unit = (Net Income + Depreciation + Amortization of Investment Corporation Bonds Issuance Costs) / Number of Units Issued

CHANGES IN KEY FIGURES
Operating Revenues (¥ mln)
12,00010,7399,810

10,000Total Assets (¥ mln)
300,000

268,559

7,106

15,63815,9055th
Period6th
Period15,150
14,114

14,52014,000208,003
200,000

6,656

16,000239,067

250,000

8,641
8,000

Cash Distribution per Unit (¥)
288,060

173,545
12,000150,000

6,000
100,000
10,0004,000

50,000

2,000

8,000

0
2nd
Period3rd
Period4th
Period5th
Period2nd
Period6th
Period3rd
Period4th
Period5th
Period6th
Period2nd
Period3rd
Period4th
PeriodCHANGES IN UNIT PRICE AND MARKET CAPITALIZATION
Unit Price (¥)

Market Capitalization (¥ mln)
600,000

1,000,000

500,000

900,000
Market capitalization (as of Oct. 31, 2006)....................... ¥ 263,510 mln
All-time high price ............................................................¥1,040,000 per unit
All-time low price .............................................................¥ 505,000 per unit

800,000

4th public offering¥926,100

700,000
2nd public offering¥588,000

400,000

300,000

3rd public offering¥740,782

600,000

200,000

100,000

500,000
Initial public offering¥500,0000400,000
Dec. 4
2003

2

Apr. 30
2004

Oct. 29
2004

Apr. 282005

Oct. 312005

Apr. 28
2006

Oct. 312006Portfolio Highlights
CHANGES IN OCCUPANCY RATE (Average)
The average occupancy rate maintained stable and high level throughout the sixth fiscal period.

Total leasable space (m2)

Average occupancy rate (%)

98.4

98.3

100.0

97.7

98.0

98.1

307,323.56

307,323.56

307,311.25

90.0
293,464.10

80.0

97.7

98.2

316,132.49

316,132.49

293,591.98

400,000
350,000
300,000

70.0

250,000

60.0

200,000

50.0

150,000
Apr. 30,
2006

May 31,
2006

Jun. 30,
2006

Jul. 31,2006

Aug. 31,2006

Sep. 30,
2006(End of 5th Period)

Oct. 31,2006(End of 6th Period)

CHANGES IN SIZE OF PORTFOLIO
Diversification of the portfolio, which has steadily increased since listing, has also been promoted.

30 bldgs(¥ bln)300

28 bldgs
23 bldgs
19 bldgs

250

18 bldgs
12 bldgs

150

259.1

210.1

15 bldgs

200

240.8

184.6
151.5

127.2
104.2

100
50
0
Initial Listing
1st Period
2nd Period
Dec. 2003 Apr. 30, 2004 Oct. 31, 2004

3rd Period
Apr. 30, 2005

4th Period
Oct. 31, 2005

6th Period
5th Period
Apr. 30, 2006 Oct. 31, 2006

DIVERSITY IN LOCATION
5th Fiscal Period(as of Apr. 30, 2006)

6th Fiscal Period(as of Oct. 31, 2006)
Other Regional Cities

Other Regional Cities

18.2%

16.7%

66.7%

Suburban Tokyo
16.2%

Central Tokyo

Central Tokyo
67.0%

Suburban Tokyo
15.1%

Note: Central Tokyo ..................Six central wards consisting of Chiyoda, Chuo, Minato, Shinjuku, Shinagawa and Shibuya
Suburban Tokyo ..............Other areas of Tokyo and the surrounding three prefectures including Kanagawa, Saitama and Chiba
Other Regional Cities ......Major regional cities in other areas3Management Summary of the Sixth Fiscal Period
New Investments
New investments were made to acquire “Sapporo North Plaza” and“Secom Medical Building” with the total acquisition price of ¥18.3 billion.

Sapporo North Plaza
Location

Chuo-Ku, Sapporo City, Hokkaido

Date Acquired

June 1, 2006

Acquisition Price¥6,820 million

Property Profile
Situated in the business and commercial center of Sapporo, the economic hubof Hokkaido area, this property has an excellent transportation convenience ofbeing located within 4 minutes’ walking distance from Sapporo Station andalso on the corner plot facing Ekimae-Odori main street. Furthermore, it isplanned to link the basement level of the property to the undergroundpassage connecting to Sapporo Station and Odori Park, which is due tocomplete in the year 2010. This additional feature will further enhance thelocational rarity value of this property in the snowy city of Sapporo.
Steady demands can therefore be expected from wide-ranging tenants not
only for regional branch offices of nationwide corporations, but also for basesof certain types of businesses that are frequently visited by customers.

Asahikawa
Otaru
KushiroSapporoTomakomai
o Stn.

JR

JR Tower
Daimaru
Dept. Store

Keio Plaza Hotel
SapporoTokyu
Dept. Store
Loft

Asty 45

ANA Hotel
SapporoSeibu
Dept. Store

Botanic Garden of
Hokkaido University

Sapporo Stn.

ne

Sapporo
City Office

Toho LiBank of Japan

Clock Tower

Line

Sapporo North Plaza

Namboku

Hokkaido Pref.
Hokkaido Pref. Congress Hall Sapporo
Grand Hotel
Police Headquarters
Chuo Police Station

Hotel
New Otani
SapporoSubwaySubwayHokkaido Pref.
Government Office
Ishikari
Subprefectural
Former Hokkaido Pref.
OfficeGovernment Office

Sapporo Media Park
Spica

r

Hakodate

ve
Sosei Ri

SapporLine

The Hokkaido
Shimbun Press
Odori Stn.

rk

Odori Pa
Subway4eTozai Lin

Marui ImaiNHK
TV TowerIkebukuro

Sunshine City
UenoPark

Ueno

Tokyo Dome

Shinjuku

Imperial Palace

YotsuyaTokyo
Roppongi Hills

ShibuyaTokyo International Forum

Tokyo Tower

Yamanote Line

ShinagawaSecom Medical Building
Location

Nibancho Chiyoda-ku, Tokyo

Date Acquired

September 1, 2006

Acquisition Price¥11,500 million

Property Profile
V
on T
Nipp

Tokyo Metro
Namboku Line
JR Chuo Line

Dori

Atre
Yotsuya

Secom Medical Bulding

Yotsuya Stn.
JR Yotsuya Stn.

Sotobori Dori

Situated in Chiyoda-ku, where some of Tokyo’s central functions concentrate, this property isconveniently located within 5 minutes’ walking distance from JR and Subway Yotsuya Stationand 3 minutes’ walking distance from Subway Kojimachi Station. Completed on February2005 with a seismic isolation structure and a total floor space of 8,600m2, this office building
is extremely attractive and competitive in that it can satisfy demands for wide-ranging
tenants. Stable revenues from the property can be expected over the mid-to long-term as theentire building is rented out to SECOM Co., Ltd. on a long-term contract basis, which expires
at the end of February 2025.

Head Office ofSeven & I Holdings
Co., Ltd.

Shin
juk
uD
St. Ignatiusori
ChurchNippon TV
Kojimachi Building

Embassy ofEmbassy of Isreal
Belgium
Kojimachi Stn.

Kokusai Kaikan
Sophia University

Akasaka
GoyouchiState Guest House

Tokyo Metro
Marunouchi Line
aka
Kioiz

House of Councilors
Kojimachi DormitoryHotel
New Otani Tokyo

Tokyo Metro
Yurakucho Line5

Management Summary of the Sixth Fiscal Period
RENEWAL WORKS TO ENHANCE REVENUES
Several works have been done to refurbish and renovate the properties from a strategic point of view. They are meant to maintain andincrease revenues by differentiating our properties from the surrounding ones.

Nomura Hiroshima Building before and after the renewal work on the entrance.

After

BeforeTHE THIRD PUBLIC OFFERING OF INVESTMENT UNITS SINCE LISTING
For the third time since listing, we increased capital by ¥32.1 billion* through a public offering during this period. (* This amount includes
the third party allotment done in June 2006.)

Effects of capital increase

Changes in Interest-bearing Debt Ratio
1. Secured sustainable external growth potential
50%

Increased capital-asset ratio and secured further growth potential
by new acquisitions.

45%

44.7%

-7.9%
40%

36.8%

2. Maintenance and improvement of financial stability

35%

Lowered interest-bearing debt ratio to hedge the risk of interest
rate hike.

30%

5th Period(Apr. 30, 2006)

6th Period(Oct. 31, 2006)

Changes in Net Assets per Unit

3. Improvement in value and efficiency of capital(¥)
620,000¥605,499
600,000

Improved the value of capital and net assets per unit.
Profit per unit also improved as a result of better capital efficiency.

+8.6%

580,000
560,000¥557,492

540,000
520,000
500,000
5th Period(Apr. 30, 2006)

6

6th Period(Oct. 31, 2006)

Financial Status of the Sixth Fiscal Period
TURNING OF SHORT-TERM FLOATING-RATE DEBTS TO LONG-TERM FIXED-RATE DEBTS
In anticipation of potential increase in interest rates in the future, we have turned interest-bearing-rate debts to long-term fixed-rate debts
where possible, thus securing a more stable financial base. The following pie charts illustrate the breakdown of interest-bearing debts.

By the length of loan period
Long-term:¥86.5 billion

By the type of interest rate

Short-term:¥19.5 billion

81.6%

Floating-rate:¥8.0 billion

Fixed-rate:¥98.0 billion

18.4%

7.5%

92.5%

Note: “Short-term” debts include long-term debts

Note: “Fixed-rate” debts include floating-rate debts

due for repayment within one year.

swapped into fixed-rate debts.

DIVERSITY OF REPAYMENT DATES
We have diversified the repayment dates of interest-bearing debts to avoid concentration on any specific period or timing, thus reducing therefinance risk and stabilizing the cash flow.

(¥ bln)Borrowings

20

Corporation Bonds

19
17.5

17.5
15

15

10

10

6
5

5

4
2

0

7th

8th

5

4
1

9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20st 21st 22nd 23rd 24th 25th 26th 27th 28th 29th 30st 31st 32nd 33rd 34th

(period)

CREDIT RATINGS
To diversify the method of funding, including issuance of investment corporation bonds, we have obtained credit ratings from three credit
rating companies.

Rating Company

RatingOutlookA:Long-term corporate credit rating

A-1:

Short-term corporate credit rating

Moody’s Investors Service, Inc.

A2:

Issuer rating

StableRating and Investment Information, Inc.

A+:

Issuer rating

Positive

Standard & Poor’s Ratings Services

StableNote: After the closing of the sixth fiscal period, on 17 November 2006, Moody’s’ Investors Service Inc. announced that it upgraded the Company’s Issuer Rating to A2 up from A3,
and considered the outlook of the Company to be “stable”.

7Summary of Portfolio Properties
Location

Leasable Space(m2)

Date Acquired

Shinjuku Nomura Bldg.

Shinjuku-ku, Tokyo

31,589.26

Dec. 8, 2003

38,730

14.9

JAL Bldg.

Shinagawa-ku, Tokyo

42,084.11

Mar. 18, 2005

33,080

12.8

NOF Nihonbashi Honcho Bldg.

Chuo-ku, Tokyo

19,233.28

Dec. 5, 2003

20,600

7.9

Tennozu Park Side Bldg.

Shinagawa-ku, Tokyo

18,051.61

Feb. 27, 2004

14,8005.7

NOF Shibuya Koen-dori Bldg.

Shibuya-ku, Tokyo

3,420.16

Sep. 28, 2004

12,000

4.6

Secom Medical Bldg.

Chiyoda-ku, Tokyo

8,821.24

Sep. 1, 2006

11,500

4.4

Name of Property

Acquisition Price(¥ mln)Portion(%)

Central TokyoNOF Shiba Bldg.

Minato-ku, Tokyo

8,165.10

May 25, 2004

10,000

3.9

Nishi-Shinjuku Showa Bldg.

Shinjuku-ku, Tokyo

5,659.96

Nov. 30, 2005

8,800

3.4

NOF Tameike Bldg.

Minato-ku, Tokyo

4,715.20

Sep. 29, 2005

7,400

2.9

NOF Shinagawa Konan Bldg.

Shinagawa-ku, Tokyo

7,850.99

Dec. 8, 2003

5,500

2.1

NOF Surugadai Plaza Bldg.

Chiyoda-ku, Tokyo

4,160.94

Feb. 27, 2004

5,150

2.0

NOF Kanda Iwamoto-cho Bldg.

Chiyoda-ku, Tokyo

4,076.38

Feb. 26, 2004

3,080

1.2

NOF Minami Shinjuku Bldg.

Shibuya-ku, Tokyo

2,464.71

Jun. 25, 2004

Total Central Tokyo (13 Properties)

160,292.94

2,280

0.9

172,920

66.7

Suburban TokyoNOF Toyo-cho Bldg.

Koto-ku, Tokyo

18,218.17

Dec. 5, 2003

7,550

2.9

NOF Technoport Kamata Center Bldg.

Ota-ku, Tokyo

13,683.46

Dec. 5, 2003

6,430

2.5

Crystal Park Bldg.

Musashino City, Tokyo

3,900.85

Feb. 28, 2006

3,700

1.4

Faret Tachikawa Center Square

Tachikawa City, Tokyo

6,853.38

Dec. 5, 2003

3,290

1.3

NOF Kawasaki Higashiguchi Bldg.

Kawasaki City, Kanagawa

8,255.26

Jun. 30, 2005

9,500

3.7

NOF Yokohama Nishiguchi Bldg.

Yokohama City, Kanagawa

6,817.76

May 12, 2005

5,050

1.9

NOF Shin-Yokohama Bldg.

Yokohama City, Kanagawa

8,074.83

Dec. 5, 2003

3,600

1.4

39,12015.1

Total Suburban Tokyo (7 Properties)

65,803.71

Other Regional Cities
Sapporo North Plaza

Sapporo City, Hokkaido

13,767.12

Jun. 1, 2006

6,820

2.6

NOF Sendai Aoba-dori Bldg.

Sendai City, Miyagi

6,165.70

Nov. 30, 2005

3,200

1.2

NOF Utsunomiya Bldg.

Utsunomiya City, Tochigi

5,887.40

Dec. 5, 2003

2,970

1.1

NOF Nagoya Yanagibashi Bldg.

Nagoya City, Aichi

4,655.74

Sep. 29, 2005

3,550

1.4

NOF Midosuji Bldg.

Osaka City, Osaka

12,240.88

Nov. 30, 2005

12,9005.0

Nomura Osaka Bldg.

Osaka City, Osaka

16,977.79

Dec. 5, 2003

6,410

2.5

Nomura Yotsubashi Bldg.

Osaka City, Osaka

11,558.68

Dec. 5, 2003

3,940

1.5

NOF Kobe Kaigan Bldg.

Kobe City, Hyogo

6,427.01

Dec. 5, 2003

3,280

1.3

Hiroshima Tatemachi NOF Bldg.

Hiroshima City, Hiroshima

4,443.55

Nov. 30, 2005

2,100

0.8

Nomura Hiroshima Bldg.

Hiroshima City, Hiroshima

7,911.97

Dec. 5, 2003

1,930

0.7

Total Other Regional Cities (10 Properties)

90,035.84

47,10018.2

Grand Total (30 Properties)

316,132.49

259,140100.0

Note : Secom Medical Building and Crystal Park Building are directly held as real estate, while all the other properties are held in the form of beneficial interests in real estate trust.
Note : "Portion" reflects the percentage of each property's leasable space in the total portfolio (30 properties). The sum of the figure may not necessarily add up to 100.0 due torounding.
Note : Shinjuku Nomura Building is held through the quasi co-ownership of trust beneficial interest. Therefore, "Acquisition Price" and "Leasable Space" of the building reflect the
portion of the quasi co-ownership which is 50.1 percent.
Note : The name of the property has been changed as shown in the following table.

8

New Name

Previous NameNOF Nihonbashi Honcho Bldg.
NOF Shiba Bldg.
NOF Kanda Iwamoto-cho Bldg.
NOF Minami Shinjuku Bldg.
NOF Toyo-cho Bldg.
NOF Kawasaki Higashiguchi Bldg.
NOF Shin-Yokohama Bldg.
NOF Sendai Aoba-dori Bldg.
NOF Utsunomiya Bldg.

Itopia Nihonbashi Honcho Bldg.
Isuzu Shiba Bldg.
Kanda Iwamoto-cho Tosei Bldg.
Seiwa Shinjuku Bldg.
TT Landic Toyo-cho Bldg.
Kawasaki Higashiguchi Sanshin Bldg.
Shin-Yokohama Nikko Bldg.
Sendai Chowa Bldg.
Utsunomiya NF Bldg.

Date Changed

New Name

Jun. 1, 2006

NOF Kobe Kaigan Bldg.
NOF Yokohama Nishiguchi Bldg.
NOF Nagoya Yanagibashi Bldg.
NOF Midosuji Bldg.
NOF Tameike Bldg.
NOF Shinagawa Konan Bldg.
NOF Surugadai Plaza Bldg.
NOF Technoport Kamata Center Bldg.
Hiroshima Tatemachi NOF Bldg.

Previous Name

Date Changed

Kobe Kaigan Bldg.
Jun. 1, 2006
Asahi Seimei Yokohama Nishiguchi Bldg.
Yanagibashi Sanshin Bldg.
Aug. 1, 2006
Osaka Chowa Bldg.
Toshin Tameike Bldg.
Shinagawa NF Bldg.
Surugadai Plaza Bldg.
Oct. 1, 2006
Technoport Kamata B Ridge
Hiroshima Chowa Bldg.

Portfolio Map

01

Shinjuku-ku

11

08

12
03

Chiyoda-ku

13

06

Chuo-ku

Shibuya-ku

09
05

21
07

Minato-ku

1004
Shinagawa-ku
02
Central Tokyo

01 Shinjuku Nomura Building

08 Nishi-Shinjuku Showa Building

02 JAL Building

09 NOF Tameike Building

22

03 NOF Nihonbashi Honcho Building 10 NOF Shinagawa Konan Building
04 Tennozu Park Side Building

11 NOF Surugadai Plaza Building

05 NOF Shibuya Koen-dori Building

12 NOF Kanda Iwamoto-cho Building

06 Secom Medical Building

13 NOF Minami Shinjuku Building

23

07 NOF Shiba Building

29
30

28

24
25
26
27

Saitama

1716 Tokyo

20
Other Regional Cities

21 Sapporo North Plaza

14

Chiba

15
18

19
Kanagawa

22 NOF Sendai Aoba-dori Building
23 NOF Utsunomiya Building

Suburban Tokyo

24 NOF Nagoya Yanagibashi Building

14 NOF Toyo-cho Building

25 NOF Midosuji Building

15 NOF Technoport Kamata Center Building

26 Nomura Osaka Building

16 Crystal Park Building

27 Nomura Yotsubashi Building

17 Faret Tachikawa Center Square

28 NOF Kobe Kaigan Building

18 NOF Kawasaki Higashiguchi Building

29 Hiroshima Tatemachi NOF Building

19 NOF Yokohama Nishiguchi Building

30 Nomura Hiroshima Building

20 NOF Shin-Yokohama Building
9

Property Details

01

Shinjuku Nomura Building

Location:
Completion:
Area:
Stories:
Property Managed by:Type of Ownership:

1-26-2 Nishi-Shinjuku Shinjuku-ku, Tokyo
May 1978Land
9,298.21 m2 (Entire area)
Floor
117,258.88 m2 (Entire area)
B5 / 50F
Nomura Real Estate Development Co., Ltd.
Land
Quasi co-ownership of 50.1%
Building Quasi co-ownership of 50.1%

Note: The portfolio consists of the front building and adjacent compound area shown in the picture.

02

JAL Building

Location:
Completion:
Area:
Stories:
Property Managed by:Type of Ownership:03

NOF Nihonbashi Honcho Building

Location:
Completion:
Area:
Stories:
Property Managed by:

04

2-7-1 Nihonbashi Honcho Chuo-ku, Tokyo
April 1961 (Extension April 1968)
Land
3,196.31 m2
Floor
29,430.67 m2
B3 / 8F
ITOCHU Urban Community Co., Ltd.

Tennozu Park Side Building

Location:
Completion:
Area:
Stories:
Property Managed by:Type of Ownership:

102-4-11 Higashi-Shinagawa Shinagawa-ku, Tokyo
June 1996
Land
11,670.40 m2 (Entire area)
Floor
25,260.48 m2 (Exclusively owned area)
B2 / 26F
Nomura Real Estate Development Co., Ltd.
Land
Co-ownership of 50.89619%
Building Compartmentalized ownership

2-5-8 Higashi-Shinagawa Shinagawa-ku, Tokyo
January 1995
Land
5,816.26 m2 (Entire area)
Floor
17,587.30 m2 (Exclusively owned area)
B2 / 21F
Nomura Real Estate Development Co., Ltd.
Land
Co-ownership of 68.98%
Building Compartmentalized ownership

05

NOF Shibuya Koen-dori Building

Location:
Completion:
Area:
Stories:
Property Managed by:

06

Secom Medical Building

Location:
Completion:
Area:
Stories:
Property Managed by:07

7-7 Niban-cho Chiyoda-ku, Tokyo
February 2005
Land
1,844.44 m2
Floor
8,683.73 m2
B1 / 7F
Nomura Real Estate Development Co., Ltd.

NOF Shiba Building

Location:
Completion:
Area:
Stories:
Property Managed by:08

20-17 Udagawa-cho Shibuya-ku, Tokyo
September 1987
Land
637.08 m2
Floor
5,358.55 m2
B2 / 8F
Nomura Real Estate Development Co., Ltd.

4-2-3 Shiba Minato-ku, Tokyo
March 1991
Land
2,074.65 m2
Floor
11,425.20 m2
B1 / 7F
Ikoma TBM K.K.

Nishi-Shinjuku Showa Building

Location:
Completion:
Area:
Stories:
Property Managed by:Type of Ownership:

1-13-12 Nishi-Shinjuku Shinjuku-ku, Tokyo
April 1982
Land
1,101.49 m2 (Entire area)
Floor
5,858.26 m2 (Exclusively owned area)
B2 / 11F
Nomura Real Estate Development Co., Ltd.
Land
Co-ownership of 84.25%
Building Compartmentalized ownership

11

Property Details

09

NOF Tameike Building

Location:
Completion:
Area:
Stories:
Property Managed by:

10

NOF Shinagawa Konan Building

Location:
Completion:
Area:
Stories:
Property Managed by:

11

Stories:
Property Managed by:

2-5-12 Kanda Surugadai Chiyoda-ku, Tokyo
April 1997
Land
1,056.92 m2
Floor
5,782.27 m2
B1 / 8F
Nomura Real Estate Development Co., Ltd.

NOF Kanda Iwamoto-cho Building

Location:
Completion:
Area:
Stories:
Property Managed by:

12

1-2-5 Higashi-Shinagawa Shinagawa-ku, Tokyo
November 1987
Land
3,240.30 m2
Floor
10,077.02 m2
B1 / 8F
Nomura Real Estate Development Co., Ltd.

NOF Surugadai Plaza Building

Location:
Completion:
Area:

12

1-1-14 Akasaka Minato-ku, Tokyo
August 1959
Land
690.67 m2
Floor
6,478.50 m2
B1 / 9F
Nomura Real Estate Development Co., Ltd.

3-8-16 Iwamoto-cho Chiyoda-ku, Tokyo
July 1988
Land
773.32 m2
Floor
4,698.97 m2
9F
ITOCHU Urban Community Co., Ltd.

13

NOF Minami Shinjuku Building

Location:
Completion:
Area:
Stories:
Property Managed by:

14

NOF Toyo-cho Building

Location:
Completion:
Area:
Stories:
Property Managed by:

15

1-6-35 Shinsuna Koto-ku, Tokyo
November 1989
Land
8,926 m2
Floor
18,051.08 m2
7F
Nomura Building Management Co., Ltd.

NOF Technoport Kamata Center Building

Location:
Completion:
Area:

Stories:
Property Managed by:Type of Ownership:

16

5-32-7 Sendagaya Shibuya-ku, Tokyo
March 1986
Land
545.87 m2
Floor
3,160.05 m2
B1 / 8F
Nomura Real Estate Development Co., Ltd.

2-16-1 Minami-Kamata Ota-ku, Tokyo
September 1990
Land(a) 9,429.59 m2(b) 3,483.90 m2
Floor
21,516.54 m2 (Exclusively owned area)
B1 / 11F
Nomura Real Estate Development Co., Ltd.
Land(a) Exclusively owned area, (b) Co-owned area of 30%
Building Compartmentalized ownership

Crystal Park Building

Location:
Completion:
Area:
Stories:
Property Managed by:Type of Ownership:

1-1-3 Gotenyama Musashino City, Tokyo
October 1991
Land
1,057.14 m2 (Entire area)
Floor
3,868.36 m2 (Exclusively owned area)
B2 / 11F
The Dai-Ichi Building Co., Ltd.
Land
Co-ownership of 3,970,795 / 4,435,360
Building Compartmentalized ownership

13

Property Details

17

Faret Tachikawa Center Square

Location:
Completion:
Area:
Stories:
Property Managed by:Type of Ownership:18

NOF Kawasaki Higashiguchi Building

Location:
Completion:
Area:
Stories:
Property Managed by:

19

Stories:
Property Managed by:

1-11-11 Kita-Saiwai Nishi-ku Yokohama City, Kanagawa
October 1985
Land
1,502.94 m2
Floor
10,055.13 m2
B1 / 9F
Nomura Real Estate Development Co., Ltd.

NOF Shin-Yokohama Building

Location:
Completion:
Area:
Stories:
Property Managed by:

14

3-1 Ekimae Honcho Kawasaki-ku Kawasaki City, Kanagawa
March 1988
Land
1,275.70 m2
Floor
10,932.69 m2
B1 / 12F
Nomura Building Management Co., Ltd.

NOF Yokohama Nishiguchi Building

Location:
Completion:
Area:

20

2-36-2 Akebono-cho Tachikawa City, Tokyo
December 1994
Land
4,454.59 m2 (Entire area)
Floor
6,865.80 m2 (Exclusively owned area)
B2 / 12F
Nomura Real Estate Development Co., Ltd.
Land
Co-ownership of 45.698%
Building Compartmentalized ownership

2-15-16 Shin-Yokohama Kohoku-ku Yokohama City, Kanagawa
October 1990
Land
1,320 m2
Floor
11,149.99 m2
B1 / 9F
Nomura Real Estate Development Co., Ltd.

21

Sapporo North Plaza

Location:
Completion:
Area:
Stories:
Property Managed by:

22

NOF Sendai Aoba-dori Building

Location:
Completion:
Area:
Stories:
Property Managed by:*Note:

4-2-2 Kitaichijo-Nishi Chuo-ku, Sapporo City, Hokkaido
August 1981
Land
2,363.79 m2
Floor
18,842.51 m2
B2 / 12F
The Dai-Ichi Building co., Ltd.

2-1-2 Ichiban-cho Aoba-ku Sendai City, Miyagi
July 1968
Land
2,321.61 m2
Floor
12,977.45 m2
B2 / 11F*
The Dai-Ichi Building Co., Ltd.

The Notice of Confirmation issued in accordance with the Building Standard Law describes it as "8 stories above theground and 3 stories of penthouse with 2 stories below ground".

23

NOF Utsunomiya Building

Location:
Completion:
Area:
Stories:
Property Managed by:24

NOF Nagoya Yanagibashi Building

Location:
Completion:
Area:
Stories:
Property Managed by:

25

2-1-1 Baba-dori Utsunomiya City, Tochigi
December 1999
Land
1,545.13 m2
Floor
10,479.63 m2
B2 / 10F
Nomura Building Management Co., Ltd.

1-16-28 Meieki-Minami Nakamura-ku Nagoya City, Aichi
March 1991
Land
934.20 m2
Floor
7,363.25 m2
B2 / 12F
Nomura Building Management Co., Ltd.

NOF Midosuji Building

Location:
Completion:
Area:
Stories:
Property Managed by:

3-5-7 Kawaramachi Chuo-ku Osaka City, Osaka
April 1974
Land
2,366.99 m2
Floor
21,007.98 m2
B2 / 10F
Nomura Real Estate Development Co., Ltd.

15

Property Details

26

Nomura Osaka Building

Location:
Completion:
Area:
Stories:
Property Managed by:27

Nomura Yotsubashi Building

Location:
Completion:
Area:
Stories:
Property Managed by:

28

Stories:
Property Managed by:

Stories:
Property Managed by:

1-20 Tatemachi Naka-ku Hiroshima City, Hiroshima
November 1966
Land
925.55 m2
Floor
8,206.91 m2
B2 / 12F*
Nomura Real Estate Development Co., Ltd.

The Notice of Confirmation issued in accordance with the Building Standard Law describes it as "9 stories above theground and 3 stories of penthouse with 2 stories below ground".

30

Nomura Hiroshima Building

Location:
Completion:
Area:
Stories:
Property Managed by:

16

3 Kaigan-dori Chuo-ku Kobe City, Hyogo
February 1998
Land
1,451.31 m2
Floor
10,292.93 m2
B1 / 16F
The Dai-Ichi Building Co., Ltd.

Hiroshima Tatemachi NOF Building

Location:
Completion:
Area:*Note:

1-4-4 Awaza Nishi-ku Osaka City, Osaka
November 1991
Land
1,865.34 m2
Floor
16,845.87 m2
B2 / 15F
Nomura Real Estate Development Co., Ltd.

NOF Kobe Kaigan Building

Location:
Completion:
Area:

29

1-8-15 Azuchi-cho Chuo-ku Osaka City, Osaka
December 1983
Land
3,136.56 m2
Floor
23,522.82 m2
B2 / 12F
Nomura Real Estate Development Co., Ltd.

2-23 Tatemachi Naka-ku Hiroshima City, Hiroshima
July 1976
Land
1,319.15 m2
Floor
11,950.37 m2
B2 / 9F
Nomura Real Estate Development Co., Ltd.

Performance Report

Shinjuku Nomura Building

Contents

Asset Management Report ..........................................18
Profile of the Company.................................................23
Status of Investment Assets of the Company .............25
Capital Expenditures.....................................................28
Expenses and Liabilities ...............................................29
Trading during the Sixth Fiscal Period ..........................32
Other Information ........................................................34

17

Asset Management Report
1. CHANGES IN KEY INDICATORS
6th Period (Note 10)
5th Period
4th Period
3rd Period
2nd Period
from May 1, 2006 from Nov. 1, 2005 from May 1, 2005 from Nov. 1, 2004 from May 1, 2004
to Oct. 31, 2006
to Apr. 30, 2006 to Oct. 31, 2005 to Apr. 30, 2005 to Oct. 31, 2004

Operating Revenues¥ mln

10,739

9,810

8,641

7,106

6,656

of which Real Estate Rental Revenues¥ mln

10,739

9,810

8,641

7,106

6,656

Operating Expenses

¥ mln

5,556

5,251

4,530

3,877

3,725

of which Real Estate Rental Expenses

¥ mln

4,619

4,257

3,745

3,159

3,154

Operating Income

¥ mln

5,182

4,558

4,111

3,228

2,930

Current Profits

¥ mln

4,230

3,597

3,485

2,682

2,607

Net Income

¥ mln

4,229

3,596

3,484

2,681

2,606

Total Assets¥ mln

288,060

268,559

239,067

208,003

173,545%(+7.3)(+12.3)(+14.9)(+19.9)(+17.3)

Interest-Bearing Debts¥ mln

106,000

120,000

93,00096,50064,500Net Assets¥ mln

161,004

128,206

128,094

94,84994,774(+29.4)(Changes from Previous Period)%(+25.6)(+0.1)(+35.0)(+0.1)

Unitholders’ Capital¥ mln

156,767

124,610

124,610

92,16892,168

Number of Units Issued

units

265,903229,970229,970

184,650

184,650
513,266(Changes from Previous Period)¥

605,499

557,492

557,004

513,672

¥ mln

4,229

3,596

3,484

2,681

2,606

Cash Distribution per Unit¥

15,905

15,63815,15014,520

14,114of which Cash Distribution of Profits¥

15,905

15,63815,15014,520

14,114

Net Assets per Unit
Total Cash Distributionof which Cash Distribution in excess of Profits

¥

–

–

–

–

–

ROA (Return on Assets) (Note 1)

%

1.5

1.4

1.5

1.4

1.6

Annualized ROA (Note 2)

%

3.0

2.9

3.1

2.8

3.1

ROE (Return on Equity) (Note 3)

%

2.7

2.8

2.7

2.8

2.8

Annualized ROE (Note 2)

%

5.4

5.7

5.4

5.7

5.6

Capital Adequacy Ratio (Note 4)

%

55.9

47.7

53.6

45.6

54.6

(Changes from Previous Period)%(+8.2)(5.9)(+8.0)(9.0)(+5.1)
37.2

LTV (Loan-to-Value) (Note 5)

%

36.8

44.7

38.9

46.4

Number of Business Days

days

184

181

184

181

184

Payout Ratio (Note 6)

%

99.9

100.0

99.9

99.9

100.0

Number of Properties Held

bldgs

30

28

23

19

18

Total Leasable Floor Spacem

194,673.65

316,132.49

293,464.10

261,428.50

236,904.67

tenants

512

467

357

287

277

%

98.2

98.4

97.3

98.1

94.4

Depreciation

¥ mln

1,471

1,399

1,229

1,023

949

Capital Expenditures

¥ mln

588

934

1,016

484

511

NOI (Net Operating Income) (Note 7)

¥ mln

7,591

6,952

6,125

4,970

4,451

FFO (Funds from Operation) (Note 8)

¥ mln

5,739

5,034

4,727

3,719

3,555

¥

21,58521,88920,55920,142

19,255

Number of Tenants
Occupancy Rate

FFO per Unit (Note 9)2

Note 1: “ROA (Return on Assets)” = Current Profits / {(Total Assets at the beginning of term + Total Assets at the end of term) / 2} x 100
As for the second, fourth, and sixth fiscal periods, the Total Assets were time-adjusted due to the additional issuance of investment units.
Note 2: “ROA” and “ROE” are annualised using the following number of business days. 2nd period: 184 days, 3rd period: 181 days, 4th period: 184 days, 5th period: 181 days,and 6th period: 184 days.
Note 3: “ROE (Return on Equity)” = Net Income / {(Net Assets at the beginning of term + Net Assets at the end of term) / 2} x 100
As for the second, fourth, and sixth fiscal periods, Net Assets is time-adjusted due to the additional issuance of investment units.
Note 4: “Capital Adequacy Ratio” = Net Assets / Total Assets x 100
Note 5: “LTV (Loan-to-Value)” = Interest-Bearing Debts / Total Assets x 100
Note 6: Rounded off to the first decimal place.
Note 7: “NOI (Net Operating Income)” = Real Estate Rental Revenues – Real Estate Rental Expenses + Depreciation
Note 8: “FFO (Funds from Operation) = Net Income + Depreciation + Amortization of Investment Corporation Bonds Issuance Costs
Note 9: ”FFO per Unit” = FFO / Number of Units Issued
Note 10: ”Accounting Standard for Presentation of Net Assets in the Balance Sheet” (Statement No.5 issued by the Accounting Standards Board of Japan on December 9, 2005) )and the “Financial Accounting Standard Implementation Guidance” (Statement No. 8 issued by the Accounting Standards Board of Japan on December 9, 2005) havebeen implemented from the sixth fiscal period.

18

2. OUTLINE OF INVESTMENTS IN THE SIXTH FISCAL PERIOD
Nomura Real Estate Office Fund, Inc., incorporated on August 7, 2003 under the Law Concerning Investment Trusts and Investment
Corporations of Japan, listed the unit certificates in the Real Estate Investment Trust (REIT) Market of the Tokyo Stock Exchange on
December 4, 2003 (TSE code 8959). The Company’s basic investment policy is to assure stable income from, and steady growth of,investment assets over the mid- to long-term. In accordance with this policy, we invest in properties mostly for office use in threelargest conurbations and other major cities, or in property-backed securities that are backed by such properties.
Note: The Law Concerning Investment Trusts and Investment Corporations of Japan (Law No. 198 of 1951) is referred to as the “Investment Trust Law” hereinafter.
The term “unit certificates” are the securities issued by the Company and may be referred to as “investment units” or “units” hereinafter.
The term “investment assets” refers to those assets that belong to the Company.
Unless otherwise stated, for the purpose of this report, the concept of “property(ies)” is construed to include leasehold and superficies.
The term “property(ies)” refers to those assets defined in Section 27, Paragraph 1, Article (1) and (2), and “property-backed securities” refers to those assets defined in
Section 27, Paragraph 1, Article (3) respectively of the Articles of Incorporation of the Company.
The terms “property(ies)” and “property-backed securities” are collectively referred to as “property-related assets” hereinafter.
The properties and underlying properties of the property-related assets are collectively referred to as the “investment properties”.

(1) Market Environments(a) Office Leasing Market
The office leasing market continued to see recovery from the previous period. Increased demands for office, particularly inCentral Tokyo and some of the regional cities, were seen among companies expanding their businesses or embarking upon
new businesses. On the other hand, although there were supplies of new office to the market in a certain magnitude,
demands generally overwhelmed supplies making the equilibrium of demand and supply fairly tight. Undersupply of quality andspacious office has become even more significant. Consequently, vacancy rate of those properties attracting tenants in termsof location and basic quality has continued to drop. Improvement in the level of rent has also become more obvious following
increase in the rent of not only the new move-ins but also the contract-renewed tenants.
Vacancy rate has continued to go down in Suburban Tokyo and some Other Regional Cities, showing a sign ofimprovement in the level of rent in these areas.
However, the general market environments have remained tough in no regard of the area for the buildings that are lesscompetitive in terms of location, floor space and basic features. The trend towards bipolarization of the level of rent andoccupancy rate has continued.
Note: “Central Tokyo”, “Suburban Tokyo” and “Other Regional Cities” refers to six central districts consisting of Chiyoda-ku, Chuo-ku, Minato-ku, Shinjuku-ku, Shinagawaku and Shibuya-ku, other areas of Tokyo and the surrounding three prefectures including Kanagawa, Saitama and Chiba, and major regional cities in other areas,
respectively.

(b) Real Estate Sales Market
In light of strong demands for office in Central Tokyo as a benchmark, keen-eyed institutional investors and pension funds
continued to be in an aggressive pursuit of better investment opportunities. Desire of J-REITs and private funds to acquire
good properties also remained highly intense.
Supply of properties to the market by corporations and private funds has been on a gradually decreasing trend. We haveseen improvement in real estate revenue, attributable primarily to increase in rent, and trend of increasing land price on one
hand, while we have continued to see highly competitive investment circumstances on the other because of tight equilibriumof demand and supply of quality properties.
*Note: The “private funds” herewith refers to an accumulation of money of a limited number of private investors, or other form of assets acquired by such accumulatedmoney.

(2) Status of Managements for the Sixth Fiscal Period
To comply with the basic policy of acquiring only such properties that would generate stable cash flow over the mid- to long-term, theCompany continues to invest in properties with strong competitiveness both in terms of locations and basic features.
In accordance with the above-mentioned basic policy, we have proactively collected information and carefully investigated anumber of opportunities brought to us in continuous collaboration with Nomura Real Estate Group. As a result of such efforts, wemade two new investments: one in Sapporo North Plaza (Chuo-ku, Sapporo City, at the acquisition price of ¥6.82 billion, beneficial
interest in real estate trust) in June 2006, and the other in Secom Medical Building (Chiyoda-ku, Tokyo, at the acquisition price of ¥11.5
billion, real estate) in September 2006. Acquisition of these two properties made possible by collaboration with Nomura Real EstateGroup was a good example that, despite difficult investment circumstances, we were able to utilize the excellent information network
to acquire quality properties.
As a result of the above two acquisitions totalling ¥18.3 billion at cost, the Company’s portfolio has steadily increased anddiversified. The entirety of the portfolio at the end of the sixth fiscal period included 30 properties totalling ¥259.1 billion on the basis ofacquisition price.
Concerning the property management, we have continuously put weight on the portfolio’s growth of revenue (or internal growthof portfolio), and improved the level of satisfaction of the existing tenants through conducting the spot-on property management,

19

which in turn enabled us to negotiate an up-ward revision of the rent. As for the prospect customers, based on and reflecting thegeneral market conditions, we strategically played out an individual marketing for each of the properties we have to invite the new
move-ins. As a result, the average occupancy rate hovered stably between 97.7% and 98.3% throughout this period. Furthermore,
about 33% of all the contract-renewed tenants agreed to an up-ward revision of rent, which was another steady improvement fromthe previous period.
Reflecting these results, the appraisal value of portfolio at the end of the period was ¥294 billion, up 5.2% from that of the latest
period, and the appraisal gain per investment unit was ¥130,000. (Appraisal value at the end of the fifth period was used for the 28
properties held at the end of the fifth period, and appraisal price at the time of acquisition was used for the other properties acquired
during the sixth period.)
Note 1: “Nomura Real Estate Group” refers to a corporate group consisting of the consolidated subsidiaries of Nomura Real Estate Holdings, Inc. (referred to as Nomura Real
Estate Holdings hereinafter) including Nomura Real Estate Development Co., Ltd. (referred to as Nomura Real Estate hereinafter) but excluding Nomura Real Estate
Asset Management Co., Ltd. (referred to as asset management company hereinafter).
Note 2: The “beneficial interest in real estate trust” refers to a beneficial interest arising from a trust in which real estates are the primary underlying assets.

(3) Status of Funding
In order to finance additional investments and stabilize the financial base, we issued 35,933 investment units (by public offering andthird party allotment) for the third time since listing to raise ¥32.1 billion during the sixth period. As a result, the total outstanding
investment units were 265,903 in number and ¥156,767 million in amount.
With regard to the borrowings, after making a payment of ¥16 billion out of the funds raised by the above-mentioned issuance,and carefully considering the composition of interest-bearing debts, we have executed borrowings of ¥2 billion on a Commitment Line
Agreement basis to finance the acquisition of Secom Medical Building. The outstanding interest-bearing debts as a result of these
operations were ¥106 billion at the end of the sixth period (end of October 2006).
We were also successful in pulling up the limit of borrowing on a Commitment Line Agreement basis to a total of ¥40 billion from¥20 billion, thus making more expeditious and stable financing possible.

3. STATUS OF CAPITAL
Changes in the number of units issued and unitholders’ capital for the last five years are as follows.
Number of Units Issued (Unit)

Unitholders’ Capital (¥ mln)

Date

Type of Issue

ChangeBalance

ChangeBalance

NoteAug. 7, 2003
Dec. 4, 2003
May 19, 2004
Jun. 16, 2004
May 1, 2005
May 24, 2005
May 25, 2006
Jun. 23, 2006

Initial Private Placement
Public Offering
Public Offering
Third-party Allotment
Public Offering
Third-party Allotment
Public Offering
Third-party Allotment

400
148,200
35,0001,050
44,0001,320
34,8001,133

400
148,600
183,600
184,650
228,650
229,970
264,770
265,903200
71,506
19,866595
31,496944
31,1431,013

200
71,706
91,572
92,168
123,665
124,610
155,753
156,767(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)Note 1: Initial private placement at the offer price of ¥500,000 per unit to incorporate the Company.
Note 2: Public offering at the offer price of ¥500,000 (issue price of ¥482,500) to finance acquisition of new properties.
Note 3: Public offering at the offer price of ¥588,000 (issue price of ¥567,600) to finance acquisition of new properties and to repay borrowings.
Note 4: Third-party allotment to Nomura Securities Co., Ltd. at the offer price of ¥567,600 following the public offering on May 19, 2004.
Note 5: Public offering at the offer price of ¥740,782 (issue price of ¥715,837) to finance acquisition of new properties and to repay borrowings.
Note 6: Third-party allotment to Nomura Securities Co., Ltd. at the offer price of ¥715,837 following the public offering on May 1, 2005.
Note 7: Public offering at the offer price of ¥926,100 (issue price of ¥894,915) to finance acquisition of new properties and to repay borrowings.
Note 8: Third-party allotment to Nomura Securities Co., Ltd. at the offer price of ¥894,915 following the public offering on May 25, 2006.

[Changes in Price at the Tokyo Stock Exchange]
Changes in prices of the Company’s investment units listed on the Tokyo Stock Exchange are as follows.
6th Period
5th Period
4th Period
3rd Period
2nd Period
from May 1, 2006 from Nov. 1, 2005 from May 1, 2005 from Nov. 1, 2004 from May 1, 2004
to Oct. 31, 2006
to Apr. 30, 2006
to Oct. 31, 2005
to Apr. 30, 2005
to Oct. 31, 2004

High
Low

20

(¥)
(¥)

1,040,000
803,000

1,030,000
778,000

850,000
748,000

798,000
678,000

779,000
591,000

4. RECORDS OF CASH DISTRIBUTION
In order for the maximum amount of cash distribution to be treated as deduction, subject to the provisions set forth in Article 67-15
of the Special Taxation Measures Law, the Company have decided to distribute almost the entire amount of the retained earnings as
at the end of this period. The amount of cash distribution per unit was ¥15,905 rounding off the fraction to unit.
6th Period
5th Period
4th Period
3rd Period
2nd Period
from May 1, 2006 from Nov. 1, 2005 from May 1, 2005 from Nov. 1, 2004 from May 1, 2004
to Oct. 31, 2006
to Apr. 30, 2006
to Oct. 31, 2005
to Apr. 30, 2005
to Oct. 31, 2004

Retained Earnings
Accumulated Earnings
Total Cash Distribution(Cash Distribution per Unit)of which Distribution of Profits(Distribution of Profits per Unit)of which Refund of Capital(Refund of Capital per Unit)(¥000)(¥000)(¥000)(¥)(¥000)(¥)(¥000)(¥)

4,229,293
106
4,229,187(15,905)
4,229,187(15,905)–(–)

3,596,294
23
3,596,270(15,638)
3,596,270(15,638)–(–)

3,484,171
126
3,484,045(15,150)
3,484,045(15,150)–(–)

2,681,225
107
2,681,118(14,520)
2,681,118(14,520)–(–)

2,606,196
46
2,606,150(14,114)2,606,150(14,114)–(–)

5. INVESTMENT POLICY AND FUTURE ISSUES(1) Investment Environments
Reflecting the continuing demands for new offices and the expansion of offices following the recovery in economy, further
improvement in the level of rent and occupancy rate is expected to progress in the office leasing market in central Tokyo and the
downtown area of other large cities.
However, the tendency towards bipolarization will intensify further during the above process, as the tenants have become more
selective of the properties in good location and with the more up-to-date features.
To mention about the conditions in the real estate market, due to improvement in the office leasing market and expectation ofhigher land price, we expect to see continued capital inflow from domestic and overseas sources to acquire profit-generating realestates. For these reasons, the investment circumstances will continue to be competitive as private funds and J-REITs, two of themain suppliers of such investment capital, will remain aggressive in seeking such properties.
(2) Investment Policy and Future Issues
With such environments in mind, the Company will employ the following investment policies to ensure stable income from, andsteady growth of the portfolio over the mid- to long-term.
(a) Property Management in a Mid- to Long-Term View
In addition to enhancement of property management to satisfy the requirements of existing tenants, proper recognition of theproperty features and market environments will help us market the potential tenants more organically. We will maintain anduplift the occupancy rate and level of rents in pursuit of sustainable and improved profitability of portfolio, namely internal
growth of portfolio, over the mid- to long-term.
By putting the know-how of Nomura Real Estate Group together, we seek to design the most suitable specifications of
how to manage and maintain each property in the most effective way, which in turn will ensure stable inflow of revenues.
In order to ensure stable revenues over the mid- to long-term, we will carry out strategic refurbishment and renovation
works to maintain and/or improve features of the properties, establishing their uniqueness and increasing theircompetitiveness.
(b) Continuation of Conservative Financial Policy
In order to assure stable financing capability and increase creditworthiness in the market over the mid- to long-term, we will
pay particular attention to debt finance. We will seek to continuously keep the LTV low by using more long-term funding atfixed rates, diversifying the repayment dates, and increasing the number of institutions we bank with.
We will closely monitor the conditions of financial markets, and carefully deliberate and choose the best means offunding, including the usage of commitment lines and issuance of investment corporation bonds (both by way of public
offering and private placement) from a wide range of available sources of funding to ensure a well-balanced structure ofinterest-bearing debts.
Note: “LTV (Loan-to-Value)” refers to ratio of interest-bearing debts over the total assets.

(c) Enlargement of Portfolio by Acquisition of New Properties
We will aim to increase the revenue by enlarging the size of the portfolio up to ¥500 billion in the medium term. The larger the
scale of the portfolio, the easier it will be to promote further diversity of investment, which in turn will decrease the potential
fluctuations in revenue, and enable us to control the cost of management and/or administration more effectively.

21

We do not think it is wise to engage in overly heated competition in acquiring investment properties. In order for us tomake right investments in properties of good value, we need to collect information earlier about the investment properties
offered in the market, and conduct an in-depth due diligence to assess the potential risks involved in such investments. To
make this protocol function and increase the trading opportunities for us, we will improve our own information-collecting
capacity in cooperation with other companies of Nomura Real Estate Group. By combining the professional know-how such as
market research and engineering organically, we believe we can strengthen our ability to appraise the properties and establish
further creditworthiness in the market.
In making an investment decision, we will adhere to strict rules to ensure that the new property will bring stable revenues
to the entire portfolio in the light of mid- to long-term perspective.

6. IMPORTANT EVENTS SUBSEQUENT TO THE SIXTH FISCAL PERIOD
There is no relevant matter under this subject.

22

Profile of the Company
1. STATUS OF UNITHOLDERS’ CAPITAL
6th Period
5th Period
4th Period
3rd Period
2nd Period(as of Oct. 31, 2006) (as of Apr. 30, 2006) (as of Oct. 31, 2005) (as of Apr. 30, 2005) (as of Oct. 31, 2004)

Maximum Number of Units Allowed to Issue Unit
Number of Units Issued
Unit
Amount of Unitholders’ Capital¥ mln
Number of Unitholders

2,000,000
265,903
156,767
15,2052,000,000
229,970
124,610
13,1292,000,000
229,970
124,610
15,8842,000,000
184,650
92,168
13,9542,000,000
184,650
92,16815,522

Number ofUnits Held
(Units)Portion in
the Total
Units Issued (%)

2. MATTERS CONCERNING THE INVESTMENT UNITS
The 10 largest unitholders as at the end of October 2006 were as follows.

NameJapan Trustee Service Bank, Ltd. (Trust Accounts)

24,343

9.15

NikkoCiti Trust and Banking Corp. (Trust Accounts)

20,323

7.64

Nomura Real Estate Development Co., Ltd.

13,326

5.01

Trust & Custody Services Bank, Ltd. (Securities Trust Accounts)

11,189

4.21

The Master Trust Bank of Japan, Ltd. (Trust Accounts)

11,165

4.20

Kawasaki Gakuen

7,000

2.63

The Hiroshima Bank, Ltd.

5,772

2.17

The Bank of Ikeda, Ltd.

5,494

2.07

The Gibraltar Life Insurance Co., Ltd. (Ordinary Accounts and others)

5,111

1.92

National Mutual Insurance Federation of Agricultural Cooperatives (Zen-Kyo-Ren)
Total

4,393

1.65

108,116

40.66

3. BREAKDOWN OF UNITHOLDERS
The breakdown of unitholders as at the end of October 2006 was as follows.
Number of

Number of Units

Unitholders

Portion (%)

per Unitholders

14,57395.8

36,878

13.9

Financial Institutions(Including Securities Companies)

191

1.3

163,604

61.5

Other Domestic Corporate Investors

242

1.6

27,032

10.2

Foreign Corporate Investors, etc.

199

1.3

38,38914.4

15,205100.0

265,903

100.0

Private and Other Investors

Total

Portion (%)

23

4. DIRECTORS AND AUDITOR
Name of directors and an auditor as at the end of October 2006 are as follows (Note1).
Title

Name

Other Major Title(s)President and Representative Director, Yokohama
Business Park Heating and Cooling Supply Co., Ltd.

Total Amount of Fees
Paid during 6th Period (¥000)

Executive Director

Isamu Okada

2,400Supervisory Director

Yutaka Hori (Note 2)

Representative Lawyer, Hori Yutaka Law Office

2,400Supervisory Director

Yoshiharu Hayakawa

Representative, Kasumi Empowerment Research Institute

2,400Supervisory Director

Shuhei Yoshida

Representative Lawyer, Yoshida Shuhei Law Office

2,400Supervisory Director

Eitoku Aikawa

Counsellor, Fair Appraisers, K.K. (Note 3)

2,400

Accounting Auditor

Earnst & Young ShinNihon–

17,500 (Note 4)

Note 1: No Executive Directors or Supervisory Directors are in possession of the Company’s investment units either under their own or other person’s name. Supervisory Directors
might serve as directors of other companies, but there are no mutual business interests whatsoever between such companies and the Company.
Note 2: Mr. Yutaka Hori resigned as Supervisory Director with effect from December 8, 2006.
Note 3: Mr. Eitoku Aikawa, Supervisory Director of the Company, resigned as Counsellor and became Director of Fair Appraisers K.K. with effect from November 11, 2006.
Note 4: The total amount of fees paid to Earnst & Young ShinNihon includes remuneration of ¥4 million in relation to a job (examination of agreed procedures concerning new issue
of investment units on May 25, 2006 and June 23, 2006), which is outside the stipulation of Article 2, Paragraph 1 of the Certified Public Accountant Law (Law No. 103 of
1948)

5. TRUSTEES, CUSTODIANS AND ADMINISTRATORSBusiness

Investment Trust Manager(Asset Management Company)

Company Name(s)Nomura Real Estate Asset Management Co., Ltd.

Custodian of Assets

Mitsubishi UFJ Trust and Banking Corporation

Administrative Agent (Underwriter)(Note 1)

Custodian of Unitholders Register

Mitsubishi UFJ Trust and Banking Corporation

Administrative Agent (Accounting, etc.)

Mitsubishi UFJ Trust and Banking Corporation

Administrative Agent(Investment Corporation Bonds)

The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Banking Corporation,
Nomura Securities Co., Ltd., Nikko Citigroup Limited, Mizuho Securities Co., Ltd.

Note 1: In association with the additional issuance of the investment units, the Company entered into underwriting agreements on May 17, 2006 with Nomura Securities Co., Ltd.
(the lead manager), Merrill Lynch Japan Securities Co., Ltd., Nikko Citigroup Limited, Mizuho Securities Co., Ltd., Daiwa Securities SMBC Co., Ltd., Mitsubishi UFJ
Securities Co., Ltd., UBS Securities Japan Ltd. and Takagi Securities Co., Ltd.. The underwriting agreement was terminated in its entirety upon completion of the pay-in on
May 25, 2006.

24

Status of Investment Assets of the Company
1. COMPOSITION OF ASSETS
6th Period (as of Oct. 31, 2006)
Type of Assets

Area

Total Amount (¥ mln)
(Note 1)

Central Tokyo
Real Estate

Real Estate in Trust

5th Period (as of Apr. 30, 2006)

Portion (%)(Note 2)

11,532

Total Amount (¥ mln)
(Note 1)

4.0

Portion (%)(Note 2)––Suburban Tokyo

3,721

1.3

3,741

1.4

Central Tokyo

162,693

56.5

163,104

60.7

Suburban Tokyo

34,77812.1

35,03313.0

46,72516.2

40,021

14.9

259,44990.1

241,901

90.1

Other Regional Cities
SubtotalCash, Deposits and Other Assets
Grand Total

28,6109.9

26,6589.9

288,060

100.0

268,559

100.0

Note 1: Total amount is taken from the balance sheet. (Real Estate and Real Estate in Trust represent the total book value after depreciation.)
Note 2: The percentage figures may not necessarily add up to 100.0 due to rounding to the nearest first decimal place.

2. BRIEF OF MAJOR PROPERTIES OWNED
The major components of assets (the 10 largest properties by book value at the end of the sixth fiscal period) are as follows.
Book Value(¥ mln)Leasable Space(m2)

Leased Space(m2)

Occupancy(%)

Portionof Rental
Revenues (%)

Primary Use

Shinjuku Nomura Bldg.

39,12531,589.26

31,349.11

99.2

16.7

OfficeJAL Bldg.

33,80542,084.11

42,084.11

100.0(Note 1)

OfficeNOF Nihonbashi-Honcho Bldg. (Note 2)

20,557

19,233.28

19,233.28

100.0

7.9

OfficeTennozu Park Side Bldg.

14,067

18,051.61

18,051.61

100.0

7.4

OfficeNOF Midosuji Bldg. (Note 2)

12,811

12,240.88

12,240.88

100.0

4.6

OfficeNOF Shibuya Koen-dori Bldg.

12,5833,420.16

3,420.16

100.0

3.4

OfficeSecom Medical Bldg.

11,5328,821.24

8,821.24

100.0(Note 1)

Medical Office(Note 3)NOF Shiba Bldg. (Note 2)

10,166

8,165.10

7,927.28

97.1

3.1

OfficeNOF Kawasaki Higashiguchi Bldg. (Note 2)

9,688

8,255.26

8,255.26

100.0

2.9

OfficeNishi-Shinjuku Showa Bldg.

8,793

5,659.96

5,466.42

96.6

2.7

Office173,132

157,520.86

156,849.35

99.6

57.7 (Note 4)

Name of Property

Total

Note 1: Not disclosed due to compelling reasons.
Note 2: The name of the property has been changed during the 6th period as illustrated in the table on page 8.
Note 3: Although this property is currently registered as “clinic/car park” on the registry book, it was originally designed to be used as offices. The Company’s Articles ofIncorporation allows us to invest in the non-office properties given that they can easily be converted into offices.
Note 4: Despite the above restrictions, the total includes the portion of JAL Bldg. and Secom Medical Bldg.

25

3. DETAILS OF PORTFOLIO PROPERTIESName of Property

Location(Postal Address)

Type ofOwnership

Appraisal Valueat the End of Book Value
6th Period (¥ mln) (¥ mln)
(Note 1)
(Note 2)Central Tokyo
Shinjuku Nomura Bldg. (Note 3)

1-26-2 Nishi-Shinjuku, Shinjuku-ku, Tokyo

JAL Bldg.

2-4-11 Higashi-Shinagawa, Shinagawa-ku, TokyoNOF Nihonbashi-Honcho Bldg.
(Note 4)
Tennozu Park Side Bldg.

2-7-1 Nihonbashi-Honcho, Chuo-ku, TokyoNOF Shibuya Koen-dori Bldg.

20-17 Udagawa-cho, Shibuya-ku, Tokyo

Secom Medical Bldg.

2-7-7 Chiyoda-ku, Tokyo (Note 5)

NOF Shiba Bldg. (Note 4)

4-2-3 Shiba, Minato-ku, Tokyo

Nishi-Shinjuku Showa Bldg.

1-13-12 Nishi-Shinjuku, Shinjuku-ku, TokyoNOF Tameike Bldg. (Note 4)

1-1-14 Akasaka, Minato-ku, TokyoNOF Shinagawa Kounan Bldg.
(Note 4)
NOF Surugadai Plaza Bldg.
(Note 4)
NOF Kanda Iwamoto-cho Bldg.
(Note 4)
NOF Minami-Shinjuku Bldg.
(Note 4)
Subtotal

1-2-5 Higashi-Shinagawa, Shinagawa-ku, Tokyo

2-5-8 Higashi-Shinagawa, Shinagawa-ku, Tokyo

2-5-12 Kanda Surugadai, Chiyoda-ku, Tokyo
3-8-16 Iwamoto-cho, Chiyoda-ku, Tokyo
5-32-7 Sendagaya, Shibuya-ku, Tokyo

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Real Estate

54,20039,12531,22033,80523,50020,557

17,90014,067

13,90012,583

11,50011,532

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust

10,40010,166

10,000

8,793

7,900

7,655

6,260

5,422

5,520

5,178

3,550

3,059

2,550

2,277

198,400

174,225

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Real Estate

8,100

7,175

7,040

6,268

3,900

3,721

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust

4,740

3,124

9,690

9,688

5,952

5,071

3,920

3,449

43,34238,499

6,825

6,858

3,380

3,171

3,320

2,772

3,590

3,642

13,30012,811

8,560

6,339

5,510

3,798

3,420

3,096

2,100

2,081

2,290

2,152

52,295
294,037

46,725
259,449

Suburban TokyoNOF Toyo-cho Bldg. (Note 4)

1-6-35 Shinsuna, Koto-ku, TokyoNOF Technoport Kamata Center
Bldg. (Note 4)
Crystal Park Bldg.

2-16-1 Minami-Kamata, Ota-ku, Tokyo

Faret Tachikawa Center Square

2-36-2 Akebono-cho, Tachikawa City, TokyoNOF Kawasaki Higashiguchi Bldg.
(Note 4)
NOF Yokohama Nishiguchi Bldg.
(Note 4)
NOF Shin-Yokohama Bldg.
(Note 4)
Subtotal

3-1 Ekimae Honcho, Kawasaki-ku, Kawasaki City,
Kanagawa (Note 5)
1-11-11 Kita-Saiwai, Nishi-ku, Yokohama City,
Kanagawa
2-15-16 Shin-Yokohama, Kohoku-ku, Yokohama City,
Kanagawa

1-1-3 Gotenyama, Musashino City, Tokyo

Other Regional Cities
Sapporo North PlazaNOF Sendai Aoba-dori Bldg.
(Note 4)
NOF Utsunomiya Bldg. (Note 4)
NOF Nagoya Yanagibashi Bldg.
(Note 4)
NOF Midosuji Bldg. (Note 4)
Nomura Osaka Bldg.
Nomura Yotsubashi Bldg.
NOF Kobe Kaigan Bldg. (Note 4)
Hiroshima Tatemachi NOF Bldg.
(Note 4).
Nomura Hiroshima Bldg.
Subtotal
Grand total

26

4-2-2 Kitaichijo-nishi, Chuo-ku, Sapporo City, Hokkaido Beneficial Interest
in Real Estate Trust(Note 5)
Beneficial Interest
2-1-2 Ichiban-cho, Aoba-ku, Sendai City, Miyagi
in Real Estate Trust
Beneficial Interest
2-1-1 Baba-dori, Utsunomiya City, Tochigi
in Real Estate Trust
Beneficial Interest
1-16-28 Meieki-Minami, Nakamura-ku, Nagoya City,
in Real Estate Trust
Aichi
Beneficial Interest
3-5-7 Kawaramachi, Chuo-ku, Osaka City, Osakain Real Estate Trust
Beneficial Interest
1-8-15 Azuchi-cho, Chuo-ku, Osaka City, Osakain Real Estate Trust
Beneficial Interest
1-4-4 Awaza, Nishi-ku, Osaka City, Osakain Real Estate Trust
Beneficial Interest
3 Kaigan-dori, Chuo-ku, Kobe City, Hyogo (Note 5)
in Real Estate Trust
1-20 Tatemachi, Naka-ku, Hiroshima City, Hiroshima Beneficial Interest
in Real Estate Trust
2-23 Tatemachi, Naka-ku, Hiroshima City, Hiroshima Beneficial Interest
in Real Estate Trust

Note 1: “Appraisal Value at the End of 6th Period” stands for the prices appraised by the estate surveyors in accordance with the provisions of the Company’s Articles Of
Incorporation and the “Rules Concerning Calculations of Investment Corporations” (Cabinet Office Regulation No. 47 of 2006). The appraisal prices are calculated by
Tanizawa Sogo Appraisal Co., Ltd., Appraisal Firm A-Square Co., Ltd., Daiwa Real Estate Appraisal, Co., Ltd., HIRO & REAS Network, Inc., Morii Appraisal & Investment
Consulting Inc., or Chuo Real Estate Appraisal Co., Ltd., or Japan Real Estate Agency (judicial foundation) using the capitalization approach, with the end of the sixth fiscal
period, i.e. October 31, 2006, being taken as the point of evaluation.
Note 2: “Book Value” stands for the aggregate purchase price of lands, buildings, structures, machinery and equipments, tools and fixtures, and construction in progress, owned
directly or held in trust, less depreciation including expenses associated with these purchases.
Note 3: The Company’s stake in this property is quasi co-ownership of 50.1% of entirety. The appraisal value and book value at the end of the sixth fiscal period accounted solely
for the quasi co-ownership.
Note 4: The name of the property has been changed as shown in the table on page 8.
Note 5: Residential indication of the property is not available yet.

6th Period (from May 1, 2006 to Oct. 31, 2006)
as at the End of Period
Number of
Tenants
Occupancy(Note 1)
Rate (%)

Name of Property

Central Tokyo
Shinjuku Nomura Bldg.
JAL Bldg.
NOF Nihonbashi-Honcho Bldg.
Tennozu Park Side Bldg.
NOF Shibuya Koen-dori Bldg.
Secom Medical Bldg.
NOF Shiba Bldg.
Nishi-Shinjuku Showa Bldg.
NOF Tameike Bldg.
NOF Shinagawa Kounan Bldg.
NOF Surugadai Plaza Bldg.
NOF Kanda Iwamoto-cho Bldg.
NOF Minami-Shinjuku Bldg.

RentalRevenues
Portionduring theof Rental
Period (¥ mln) Revenues (%)

5th Period (from Nov. 1, 2005 to Apr. 30, 2006)
as at the End of Period
Number of
Tenants
Occupancy(Note 1)
Rate (%)

RentalRevenues
Portionduring theof Rental
Period (¥ mln) Revenues (%)

86
1
13
14
3
1
9
18
12
5
1
8
5

99.2
100.0
100.0
100.0
100.0
100.0
97.1
96.6
90.7
100.0
100.0
100.0
100.0

1,794
(Note 2)
845
791
366
(Note 2)
331
286
190
260
(Note 2)
149
104

16.7
(Note 2)
7.9
7.4
3.4
(Note 2)
3.1
2.7
1.8
2.4
(Note 2)
1.4
1.0

86
1
13
14
3
–
10
18
12
5
1
8
5

99.2
100.0
100.0
100.0
100.0
–
100.0
96.6
90.7
100.0
100.0
100.0
100.0

1,745
(Note 2)
784
774
366
–
326
240
180
257
(Note 2)
148
102

17.8
(Note 2)
8.0
7.9
3.7
–
3.3
2.5
1.8
2.6
(Note 2)
1.5
1.0

176

99.3

6,282
(Note 3)

58.5

176

99.4

6,002
(Note 3)

61.2

1
14
11
16
27
29
3

100.0
97.7
100.0
100.0
100.0
100.0
100.0

(Note 2)
439
124
227
316
246
(Note 2)

(Note 2)
4.1
1.2
2.1
2.9
2.3
(Note 2)

1
13
11
15
27
29
3

100.0
97.7
100.0
96.7
100.0
100.0
100.0

(Note 2)
438
41
224
315
228
(Note 2)

(Note 2)
4.5
0.4
2.3
3.2
2.3
(Note 2)

101

99.5

1,845
(Note 3)

17.2

99

99.2

1,735
(Note 3)

17.7

43
28
25
10
16
28
17
29
24
15

91.0
96.5
100.0
82.8
100.0
100.0
100.0
87.5
77.1
96.8

288
169
176
118
497
523
329
187
104
216

2.7
1.6
1.6
1.1
4.6
4.9
3.1
1.8
1.0
2.0

–
27
26
9
16
29
18
28
23
16

–
94.7
98.8
76.3
98.9
100.0
100.0
88.9
81.5
98.2

–
139
172
108
400
456
313
184
87
209

–
1.4
1.8
1.1
4.1
4.6
3.2
1.9
0.9
2.1

Subtotal

235

95.2

2,612

24.3

192

95.7

2,073

21.1

Grand Total

512

98.2

10,739(Note 3)

100.0

467

98.4

9,810
(Note 3)100.0

Subtotal
Suburban TokyoNOF Toyo-cho Bldg.
Technoport Kamata Center Bldg.
Crystal Park Bldg.
Faret Tachikawa Center Square
NOF Kawasaki Higashiguchi Bldg.
NOF Yokohama Nishiguchi Bldg.
NOF Shin-Yokohama Bldg.
Subtotal
Other Regional Cities
Sapporo North PlazaNOF Sendai Aoba-dori Bldg.
NOF Utsunomiya Bldg.
NOF Nagoya Yanagibashi Bldg.
NOF Midosuji Bldg.
Nomura Osaka Bldg.
Nomura Yotsubashi Bldg.
NOF Kobe Kaigan Bldg.
Hiroshima Tatemachi NOF Bldg.
Nomura Hiroshima Bldg.

Note 1: In the case a master lease agreement is in place, in which the master tenant of the said lease agreement subleases a part or whole of the leased floor spaces to the end
tenants, only the master tenant is counted as the number of tenants. In the case more than one space within the same building are leased by the same tenant, such
spaces are combined to count for just one tenant. However, when the same tenant leased floor spaces in more than one building, such spaces are counted separately foreach building as if they are leased by different tenants. As for Shinjuku Nomura Building, the number of tenants in the entire building is taken into account.
Note 2: Not disclosed due to compelling reasons.
Note 3: Despite above Note 2, Subtotals and Grand Total include those not disclosed due to compelling reasons.

4. OUTSTANDING AMOUNT AND CURRENT PRICE OF SPECIFIED TRANSACTIONS
The outstanding amount and current price of the specified transactions as at the end of the sixth fiscal period are as follows.
Contract Amount (¥ mln) (Note 1)
Segment

Longer than a Year

Type of Transaction

Interest rate swap
Transaction other than market transaction (Receiving
variable rate, paying fixed rate)
Total

Current
Price (¥ mln)
(Note 2)49,00036,50012

49,00036,50012Note 1: Presented based on notional principal of contract.
Note 2: Evaluated at the price provided by the counterparty based on the prevailing market rate.

5. STATUS OF THE OTHER ASSETS
Other than the Trust Beneficial Interest and Real Estate listed in the table under the title “3. Details of Portfolio Properties” theCompany had no other assets to integrate into the portfolio as at the end of the sixth fiscal period.

27

Capital Expenditures
1. PLAN OF CAPITAL EXPENDITURES
The table below lists major capital expenditures in conjunction with the refurbishment and / or renewal works scheduled for the future(finished in part) on the properties held as at the end of the sixth fiscal period. The estimated cost of works includes the amount to be
charged as “expenses” for accounting purposes.
Name of Property (Location)

Description of Works (Purpose)

Estimated
PeriodEstimated Cost (¥ mln) (Note 1)
Paid during
Paid before
Total
6th Period
6th Period

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Renewal of sanitary piping(To increase quality)(Note 2)

From: Dec. 2006
To:
Mar. 2009

160

–

2

NOF Nihonbashi-Honcho Bldg.
(Chuo-ku, Tokyo)

Renewal of heat pipes andAHU (To increase quality)(Note 2)

From: Nov. 2006
To:
Apr. 2009

210

–

–

NOF Shinagawa Kounan Bldg.
(Shinagawa-ku, Tokyo)

Renewal of air-conditioning
system (To increase
quality) (Note 2)

From: Nov. 2006
To:
May 2007

127

–

–

Sapporo North Plaza(Chuo-ku, Sapporo City)

Renewal of air-conditioning
system (To increase
quality) (Note 2)

From: Dec. 2006
To:
Dec. 2007

298

–

–

NOF Midosuji Bldg.
(Chuo-ku, Osaka City)

Renewal of air-conditioning
system and AHU (Toincrease quality) (Note 2)

From: Jan. 2007
To:
Apr. 2008

165

–

–

Nomura Osaka Bldg.
(Chuo-ku, Osaka City)

Renewal of the central
monitoring system (Toincrease quality) (Note 2)

From: Nov. 2006
To:
Apr. 2007

83

–

–

Hiroshima Tatemachi NOF Bldg.
(Naka-ku, Hiroshima City)

Aseismic retrofitting(To increase quality)

From: Jan. 2007
To:
Oct. 2007

226

–

–

Note 1: As for Nomura Shinjuku Building, the posted amount of cost represents 50.1%, our portion of quasi co-ownership, of the total cost of refurbishment of the entire building.
Note 2: These works have already been implemented as of the date of this report.

2. CAPITAL EXPENDITURES DURING THE SIXTH FISCAL PERIOD
The table below lists capital expenditures during the sixth fiscal period in conjunction with the major works of renovation. During thesixth fiscal period, we have conducted engineering works totalling ¥787 million: capital expenditures of ¥588 million and repair
expenses of ¥198 million combined all together.

Name of Property (Location)

Period of Works

Cost of
Works (¥mln)

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Refurbishment of the common space on
the standard floor (To increase revenues)

From: May 2006
To:
Sep. 2006

105

NOF Shibuya Koen-dori Bldg.
(Shibuya-ku, Tokyo)

Refurbishment of the main entrance(To increase revenues)

From: Sep. 2006
To:
Oct. 2006

15

NOF Tameike Bldg.
(Minato-ku, Tokyo)

Refurbishment of the exterior wall of
lower floors (To increase revenues)

From: Aug. 2006
To:
Oct. 200638

NOF Kawasaki Higashiguchi Bldg.
(Kawasaki-ku, Kawasaki City)

Refurbishment of the entrance andother areas (To increase revenues)

From: Jul. 2006
To:
Aug. 2006

14

NOF Nagoya Yanagibashi Bldg.
(Nakamura-ku, Nagoya City)

Refurbishment of interior decoration of
the common space on the standard floor(To increase revenues)

From: Jun. 2006
To:
Aug. 2006

31

Nomura Yotsubashi Bldg.
(Nishi-ku, Osaka City)

Renewal of the central monitoring system(To increase quality)

From: May 2006
To:
Sep. 2006

35

Nomura Hiroshima Bldg.
(Naka-ku, Hiroshima City)

Refurbishment of the entrance(To increase revenues)

From: Sep. 2006
To:
Oct. 2006

30

Other Properties

Improvement of features

From: May 2006
To:
Oct. 2006

317

Total

28

Description of Works (Purpose)588

3. FUNDS RESERVED FOR THE LONG-TERM REPAIR PLANS
Subject to the long-term schedule for repairs and maintenance set down for each building, the Company has accounted for reserves fromthe operating cash flow to prepare for large-scale engineering works to be carried out in the future.
6th Period
2nd Period
5th Period
4th Period
3rd Period
from May 1, 2006 from Nov. 1, 2005 from May 1, 2005 from Nov. 1, 2004 from May 1, 2004
to Oct. 31, 2006 to Apr. 30, 2006
to Oct. 31, 2005
to Apr. 30, 2005
to Oct. 31, 2004
¥mln
¥mln
¥mln
¥mln
¥mln

Balance Brought forward from the Previous Period
Amount Reserved during the Period
Amount Used during the Period
Balance Brought forward to the Next Period

761
671
497
935

1,054
600
893
761

833
528
307
1,054

548
524
239
833

184
487
124
548

Expenses and Liabilities
1. EXPENSES RELATED TO ASSET MANAGEMENT

Asset Management Fees (Note 1)of which Management Fee I
of which Management Fee IIof which Management Fee III
Custodian Fees
General Administrative Fees
Directors’ Compensation
Other Expenses
Total

6th Period
from May 1, 2006
to Oct. 31, 2006
¥000

5th Period
from Nov. 1, 2005
to Apr. 30, 2006
¥000

781,981
479,844
302,137–
23,58559,932
12,00059,458936,957

851,350
437,984
272,416
140,948
25,19451,40512,00054,383994,333

Note 1: In the Asset Management Agreement between the Company and the Asset Management Company, there is no provision for the acquisition fees, which are payable to the
Asset Management Company by the Company on acquisition of a new property, and such fees are non-existent.

29

2. STATUS OF BORROWINGThe status of borrowing from the financial institutions as at the end of the sixth fiscal period is as follows.

Financial Institutions
Short-term Borrowing
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
The Mizuho Corporate Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Chuo Mitsui Trust & Banking Co.
The Nomura Trust & Banking Co.
The Hachijuni Bank, Ltd.
The Yamanashi Chuo Bank, Ltd.
The Chugoku Bank, Ltd.
The Hiroshima Bank, Ltd.
The Iyo Bank, Ltd.
The Bank of Fukuoka, Ltd.
The Aozora Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Mizuho Corporate Bank, Ltd.
SubtotalLong-term Borrowing Due Within a Year
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Chuo Mitsui Trust & Banking Co., Ltd.
The Nomura Trust & Banking Co., Ltd.
The Chiba Bank, Ltd.
The Hiroshima Bank, Ltd.
The Iyo Bank, Ltd.
The Dai-Ichi Mutual Life Insurance Company
Meiji Yasuda Life Insurance Company
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Subtotal
Total Short-term Borrowing

30

Date
Borrowed

Nov. 29,
2005

Aug. 31,2006

Dec. 8,2003

Dec. 8,2003
Feb. 28, 2005

Outstanding as at
Outstanding as at
Averagethe End of 6th Period the End of 5th Period Interest Rate(%) (Note 1)(¥000)(¥000)

–
–
–
–
–
–
–
–
–
–
–
–
–
–
900,000
500,000
200,000
200,000
200,000
2,000,000

2,000,000
1,000,000
1,000,000
1,000,000
1,000,000
2,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000–––––
16,000,000

2,000,000
2,000,000
1,000,000
2,000,000
1,000,000
2,000,000
1,000,000
500,000
1,000,000
2,000,000
1,000,000
2,000,000
17,500,000
19,500,000

2,000,000
2,000,000
1,000,000
2,000,000
1,000,000
2,000,000
1,000,000
500,000
1,000,000
2,000,000
1,000,000–
15,500,000
31,500,000

0.39000

Date of
Repayment

Method of
Use ofRepayment Borrowings

Note

May 29,2006

0.84000

Nov. 30,2006

1.14500

Dec. 82006

1.04500

Dec. 8,2006

1.06909

Aug. 28, 2007

Balloonpayment(Note 2)

Unsecured/
Uninsured

Balloonpayment(Note 2)

Unsecured/
UninsuredFinancial Institutions
Long-term Borrowing
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
The Chiba Bank, Ltd.
The Hachijuni Bank, Ltd.
The Hiroshima Bank, Ltd.
The Keiyo Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
The Chuo Mitsui Trust & Banking Co., Ltd.
The Iyo Bank, Ltd.
The Dai-Ichi Mutual Life Insurance Company
The Yamanashi Chuo Bank, Ltd.
The Chugoku Bank, Ltd.
The Bank of Fukuoka, Ltd.
The Aozora Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
The Iyo Bank, Ltd.
The Norinchukin Bank, Ltd.
Mitsui Life Insurance Company
Taiyo Life Insurance Company
Daido Life Insurance Company
Mitsui Sumitomo Insurance Company
The Chiba Bank, Ltd.
The Hachijuni Bank, Ltd.
The Norinchukin Bank
Mitsui Life Insurance Company
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Mizuho Corporate Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Nomura Trust & Banking Co., Ltd.
Mitsui Life Insurance Company
Taiyo Life Insurance Company
Daido Life Insurance Company.
National Mutual Insurance Federation of Agricultural Cooperatives
Development Bank of Japan
National Mutual Insurance Federation of Agricultural Cooperatives
Development Bank of Japan
Subtotal
Total

Date
Borrowed

Feb. 28, 2005

Dec. 8,2004

Feb. 26,
2004

Feb. 26, 2004
Dec. 9,2005

Dec. 8,2003

Dec. 8,2003
Feb. 27,
2006
Feb. 26, 2004
Feb. 26, 2004

Feb. 27,
2006

Nov. 29,2005

Dec. 9, 2005
Mar. 17, 2005

Outstanding as at
Outstanding as atthe End of 6th Period the End of 5th Period(¥000)(¥000)–
4,000,000
1,000,000
500,000
1,000,000
1,000,000
1,000,000
2,000,000
1,500,000
2,500,000
1,000,000
500,000
3,000,000
1,000,000
1,000,000
1,000,000
1,000,000
2,000,000
2,000,000
1,000,000
1,000,000
2,000,000
2,000,000
1,000,000
1,000,000
1,000,000
1,500,000
500,000
3,000,000
1,000,000
1,000,000
1,000,000
500,000
3,000,000
2,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
56,500,000
76,000,000

2,000,000
4,000,000
1,000,000
500,000
1,000,000
1,000,000
1,000,000
2,000,000
1,500,000
2,500,000
1,000,000
500,000
3,000,000
1,000,000
1,000,000
1,000,000
1,000,000
2,000,000
2,000,000
1,000,000
1,000,000
2,000,000
2,000,000
1,000,000
1,000,000
1,000,000
1,500,000
500,000
3,000,000
1,000,000
1,000,000
1,000,000
500,000
3,000,000
2,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
58,500,000
90,000,000

Average
Interest Rate(%) (Note 1)

Date of
Repayment

1.06909

Aug. 28,2007

1.00625

Dec. 8,2007

1.22500

Feb. 26,
2008

1.05250

Feb. 26, 2008

0.91909

Aug. 26,
2008

1.66750

Dec. 8,
2008

Method of
Use ofRepayment Borrowings

Balloonpayment

1.51625

Dec. 8,2008

1.19000

Feb. 26,
2009

1.77500
1.50625

Feb. 26, 2010
Feb. 26, 2010

1.68000

Feb. 26,2011

1.43750

Aug. 26,2012

1.53625
1.75250

Aug. 26, 2012
Feb. 26, 2013

(Note 2)

Note

Unsecured/
Uninsured

Note 1: The average interest rate is weighted by the balance of each borrowing as at the end of the term and rounded to the nearest fifth decimal place. As for the borrowings,
which were hedged by interest rate swaps for the purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used to calculate the weighted averageof interest.
Note 2: The use of borrowings is to purchase property-related assets.

31

3. STATUS OF INVESTMENT CORPORATION BONDS
The status of investment corporation bonds issued as at the end of the sixth fiscal period is as follows.
Balance as at the Balance as at theEnd of 6th Period End of 5th Period(¥ mln)(¥ mln)Interest
Rate(%)

Maturity Date

Method of
Repayment

1.85

Mar. 16,
2015

Balloonpayment (Note 1)(Note 2)

Balloonpayment (Note 1)(Note 2)

Use ofProceeds

Name of Bonds

Issue DateFirst Series Unsecured
Investment Corporation Bonds

Mar. 16,
2005

Second Series Unsecured
Investment Corporation Bonds

Mar. 16,
2005

5,000

5,000

2.47

Mar. 16,
2020

Third Series Unsecured
Investment Corporation Bonds

Nov. 28,
2005

10,00010,0001.19

Nov. 29,2010

Balloonpayment (Note 1)(Note 3)

Fourth Series Unsecured
Investment Corporation Bonds

Nov. 28,
2005

10,00010,0002.05

Nov. 30,
2015

Balloonpayment (Note 1)(Note 3)30,00030,000

Total

5,000

5,000

Note

Note 1: The uses of proceeds are to purchase the property-related assets, pay for the costs, and to repay borrowings.
Note 2: Ranking Pari Passu among the investment corporation bonds for qualified institutional investors only.
Note 3: Ranking Pari Passu among the specified investment corporation bonds

Trading during the Sixth Fiscal Period
1. STATUS OF REAL ESTATES AND ASSET-BACKED SECURITIES TRADING
Disposition

Acquisition
Type of Asset

Beneficial Interest in
Real Estate Trust
Real Estate

Name of Property

Date

Sapporo North Plaza

Jun. 1, 2006

Secom Medical Bldg.

Sep. 1, 2006

Total

Price (Note1)(¥ mln)

Date

Price
(¥ mln)

–

–

6,820

Book Value Gain (Loss)(¥ mln)(¥ mln)––11,500––––18,320––––Note 1: The “Price” refers to the acquisition price of a given property, which is described in the Transfer Agreement of Trust Beneficial Interest or Real Estate, and does not include
other expenses relevant to acquisition of the properties such as intermediary fees, taxes and duties.

2. STATUS OF OTHER ASSETS
Other than the above-mentioned properties and asset-backed securities, the Company’s assets are mostly comprised of direct bankdeposits and bank deposits in trust.

3. PRICE INVESTIGATION(1) Real Estates

Type of Asset

Name of Property

Acquisition
Date

Beneficial Interest in
Real Estate Trust

Sapporo North Plaza

Jun. 1, 2006

Secom Medical Bldg.

Sep. 1, 2006

Real Estate
Total

Acquisition
Price (¥ mln)
(Note 1)

Appraisal
Value (¥ mln)
(Note 2)

6,820

6,820

11,50011,50018,32018,320Note 1: “Price” refers to the price described in the Transfer Agreement of Trust Beneficial Interest or Real Estate, and does not include other expenses relevant to acquisition of
the properties such as intermediary fees, taxes and duties.
Note 2: The price investigation procedures were conducted by Ernst & Young ShinNihon at the time of acquisition in accordance with the guidance under “Price Investigation ofSpecified Assets Held by Investment Trusts and Investment Corporations”, Industry Audit Committee Report No. 23 issued by The Japanese Institute of Certified Public
Accountants. The Company has received detailed reports including the location and lot number to identify these properties.

(2) Others
There were no transactions subject to investigation during the period from May 1, 2006 to October 31, 2006.

32

4. TRANSACTIONS WITH RELATED PARTIES AND MAJOR SHAREHOLDERS(1) Transactions
Table of transactions in respect of specified assets entered into with related parties and major shareholders during the sixth fiscal
period is as follows.
Purchase (¥000)(%)

18,320,000–

Amount purchased from related parties andmajor shareholders
11,500,000(62.8%)

Total amountSale (¥000)

–

(%)

–

Amount sold to related parties andmajor shareholders
–

( –%)

Details of transaction with related parties and major shareholders
Nibancho Development TMK

11,500,000(100.0%)

–

( –%)

Total

11,500,000(100.0%)–( –%)Note 1: Related parties and major shareholders refer to those bodies that have business interest and major stake in the Investment Trust Managers defined by Article 9,
Paragraph 3 of Investment Trust Law, with which the Company, stipulated by Article 20 of Enforcement Order of Investment Trust Law, has an Asset Management
Agreement.

(2) Fees Paid to Related Parties and Major Shareholders
Table of fees paid to related parties and major shareholders during the sixth fiscal period is as follows.

Name of Related Party and Major Shareholders

Contract-out Fees
Property Management Fees
Other Expenses

Amount Paid (A)(¥000)

Nomura Building Management Co., Ltd. (Note 1)
Flagship Properties Inc. (Note 2)
Nomura Real Estate Development Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Real Estate Development Co., Ltd.

471,427
916
172,949
16,612
20,823
20,211

Total Amount Paid (B)(¥000)

824,344
240,892
57,959Portion(A) / (B)
(%)

57.2
0.1
71.8
6.9
35.9
34.9

Note 1: In addition to the Property Management Agreement, the Company has entrusted Nomura Building Management Co., Ltd. with daily maintenance of building and equipments, the cost of which is included in “Contract-out Fees”.
Note 2: The Company has entrusted certain jobs such as receipt of rents, payment of disbursements and notification of repairs in conjunction with the sublease of JAL Building to
Flagship Properties. The Contract-out fees paid to Flagship Properties include remuneration for these services.
Note 3: Besides the above, the Company has made the following payments for repair works during the sixth fiscal period.
Name of Related Party
Nomura Real Estate Development Co,. Ltd.
Nomura Building Management Co,. Ltd.

Amount Paid (¥000)
17,470244,619

33

The management fees paid to the property management companies, which are related parties, are broken down as follows.
Name of Property

Shinjuku Nomura Bldg.
JAL Bldg.
Tennozu Park Side Bldg.
NOF Shibuya Koen-dori Bldg.
Secom Medical Bldg.
Nishi-Shinjuku Showa Bldg.
NOF Tameike Bldg.
NOF Shinagawa Nankou Bldg.
NOF Surugadai Plaza Bldg.
NOF Minami-Shinjuku Bldg.
NOF Technoport Kamata Center Bldg.
Faret Tachikawa Center Square
NOF Yokohama Nishiguchi Bldg.
NOF Shin-Yokohama Bldg.
NOF Midosuji Bldg.
Nomura Osaka Bldg.
Nomura Yotsubashi Bldg.
Hiroshima Tatemachi NOF Bldg.
Nomura Hiroshima Bldg.
NOF Toyo-cho Bldg.
NOF Kawasaki Higashiguchi Bldg.
NOF Utsunomiya Bldg.
NOF Nagoya Yanagibashi Bldg.

Property Management Company

Property Management Fees(¥000) (Note 1) (Note 2)

Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.

44,5203,416
15,151
6,191
1,263
8,579
9,324
6,138
3,941
2,304
9,803
6,515
6,108
4,221
12,87914,551
9,603
2,873
5,561
2,017
6,751
4,913
2,930

Note 1: “Property Management Fees” are the aggregated sum of the basic fee and the incentive fee.
Note 2: Daily maintenance of building and equipments is entrusted to Nomura Building Management, but the fees associated with such works are not included here.

5. STATUS OF BUSINESS WITH THE ASSET MANAGEMENT COMPANY OVER ITS SUBSIDIARY BUSINESSThere is no relevant matter under this subject as Nomura Real Estate Asset Management Co., Ltd., the asset management companyof the Company, is not in any subsidiary business.

Other Information
1. NOTICE
There is no relevant matter under this subject.

2. OTHER MATTERS
For the purpose of this report, the numbers of amount below unit are truncated and the numbers in percentage are rounded to unit
unless otherwise mentioned specifically.

34

Financial Section

Tennozu Park Side Building

Contents

Balance Sheets.............................................................36
Statements of Income and Retained Earnings .............38
Statements of Changes in Unitholders' Equity ............39
Statements of Cash Flows ...........................................40
Notes to Financial Statements .....................................41

35

Balance Sheets
As of October 31, 2006

Thousands of Yen
As of April 30, 2006ASSETS
Current Assets:
Cash and bank deposits
Rental receivables
Consumption taxes refundable
Other current assets
Total current assets¥ 27,869,275
173,916
4,373
189,529
28,237,093¥ 25,587,120
160,862
55,091
289,350
26,092,423

Property and Equipment, at Cost:Land
Buildings and structures
Machinery and equipment
Tools, furniture and fixtures
Construction in progress
SubtotalLess accumulated depreciation
Net property and equipment

184,865,860
80,505,750
731,277
80,047
5,705
266,188,639(6,738,812)
259,449,827

171,703,489
74,787,278
605,246
64,843
7,291
247,168,147(5,267,086)
241,901,061

2,031
13,403
211,230
23,059124,007¥ 288,060,650

2,001
8,160
211,230
181,746
162,437¥ 268,559,058

Investments and Other Assets:
Intangible assets
Long-term prepaid expenses
Security deposits
Derivative assets
Deferred investment corporation bonds issuance costs
Total Assets
The accompanying notes to financial statements are an integral part of these statements.

36

As of October 31, 2006

Thousands of Yen
As of April 30, 2006

LIABILITIESCurrent Liabilities:
Trade accounts payable
Other accounts payable
Short-term debt
Accrued expenses
Accrued income taxes
Rent received in advance
Other current liabilities
Total current liabilities¥

553,400
795,106
19,500,000
457,042475
1,759,142
116,559
23,181,724¥

511,875
879,136
31,500,000
470,646899
1,643,280
61,58435,067,420

Long-term Liabilities:
Investment corporation bonds
Long-term debt
Deferred tax liabilities
Security deposits from tenants
Deferred hedge gains
Total long-term liabilities

30,000,000
56,500,000
9,083
17,365,646–
103,874,729

30,000,000
58,500,000–
16,603,384
181,747
105,285,131

Total Liabilities

127,056,453

140,352,551

156,767,193
4,229,293
7,711
161,004,197

124,610,213
3,596,294–
128,206,507¥ 288,060,650¥ 268,559,058

UNITHOLDERS’ EQUITY
Unitholders’ capital
Retained earnings
Deferred hedge gains
Total Unitholders’ Equity
Total Liabilities and Unitholders’ Equity
The accompanying notes to financial statements are an integral part of these statements.

37

Statements of Income and Retained Earnings
For the period
from May 1, 2006
to October 31, 2006

Thousands of Yen
For the period
from November 1, 2005
to April 30, 2006

Operating Revenues and Expenses
Operating Revenues:
Real estate rental revenues¥10,739,836
10,739,836¥ 9,810,526
9,810,526

4,619,929
781,982
83,51771,4585,556,886

4,257,492
851,350
76,59966,3835,251,824

5,182,950

4,558,702

2,917
10,897
13,814

138
9,651
9,789

510,508
68,116
270,423
38,42963,58815,378966,442482,884
101,660
244,722
38,429–103,697
971,392

4,230,322

3,597,099

Income Taxes:
Current
Deferred

1,058
(6)

927
4

Net Income

4,229,270

3,596,168

23

126¥ 4,229,293¥ 3,596,294

Operating Expenses:
Real estate rental expenses
Asset management fees
Administrative service and custodian fees
Other operating expenses

Operating Profits

Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Other non-operating revenues

Non-Operating Expenses:
Interest expenses
Loan arrangement fees
Interest expenses on investment corporation bonds
Amortization of investment corporation bonds issuance costs
New investment units issuance costs
Other non-operating expenses

Income before Income Taxes

Retained earnings brought forward
Retained Earnings at end of period
The accompanying notes to financial statements are an integral part of these statements.

38

Statements of Changes in Unitholders' Equity
Thousands of Yen
Unitholders’CapitalRetained
Earnings

229,970¥124,610,213¥3,596,294–¥128,206,507

34,80031,143,042––

31,143,042

1,133

1,013,938––

1,013,938–––
265,903–––¥156,767,193(3,596,271)
4,229,270–¥4,229,293

–
–
7,711
¥7,711(3,596,271)
4,229,270
7,711¥161,004,197

Units

Balance as of April 30, 2006
Additional issuance of new investment units
through public offering on May 25, 2006
Additional issuance of new investment units
through third-party allotment on June 23, 2006
Cash distribution paid
Net income
Interest-rate swap
Balance as of October 31, 2006

DeferredHedge Gains

Total

The accompanying notes to financial statements are an integral part of these statements.

39

Statements of Cash Flows
For the period
from May 1, 2006
to October 31, 2006

Thousands of Yen
For the period
from November 1, 2005
to April 30, 2006

Cash Flows
Cash Flows from Operating Activities
Income before income taxes
Depreciation
Amortization of long-term prepaid expenses
Amortization of investment corporation bonds issuance costs
Interest income
Interest expenses
Loss on disposal of property and equipment
Increase in rental receivables
Decrease (Increase) in consumption taxes refundable
Increase (Decrease) in trade accounts payable
Increase (Decrease) in other accounts payable
Increase in rent received in advance
Changes in other current assets/liabilities
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by operating activities¥ 4,230,322
1,471,854
809
38,429(2,917)780,931175(13,054)
50,71841,524(101,964)
115,861
148,538
6,761,226
2,917(794,535)(1,482)
5,968,126¥ 3,597,099
1,399,446
725
38,429(138)
727,606–(22,812)(51,350)(17,526)
138,097
203,434(104,188)
5,908,822
138(548,030)(1,009)5,359,921

Cash Flows from Investing Activities
Payments for purchases of property and equipment
Payments for purchases of intangible assets
Payments of security deposits from tenants
Proceeds from security deposits from tenants
Payments of long-term prepaid expenses
Net cash used in investing activities(19,004,691)(132)(363,327)
1,125,589(6,053)(18,248,614)(31,619,557)(105)(478,677)
2,229,343–(29,868,996)

Cash Flows from Financing Activities
Proceeds from short-term debt
Repayments of short-term debt
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from investment corporation bonds
Payments of investment corporation bonds issuance costs
Proceeds from issuance of new investment units
Distributions to unitholders
Net cash provided by financing activities

2,000,000(16,000,000)––––
32,156,981(3,594,338)
14,562,643

18,000,000(23,000,000)
19,500,000(7,500,000)
20,000,000(140,026)–(3,480,350)
23,379,624

Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at beginning of period
Cash and Cash Equivalents at end of period

2,282,155
25,587,120¥27,869,275(1,129,451)
26,716,571¥25,587,120

The accompanying notes to financial statements are an integral part of these statements.

40

Notes to Financial Statements
1. ORGANIZATION
Nomura Real Estate Office Fund, Inc. (the “Company”) is a real estate investment corporation formed to own and invest primarily in
office properties. The Company is externally managed by a licensed asset management company, Nomura Real Estate AssetManagement Co., Ltd. (“NREAM”). NREAM is a wholly owned subsidiary of Nomura Real Estate Holdings, Inc.
On August 7, 2003, the Company was incorporated under the Law Concerning Investment Trusts and Investment Corporations(the “Investment Trust Law”) of Japan. On December 4, 2003, the Company was listed on the Tokyo Stock Exchange as the 9th JREIT and started operations on the following day. As of October 31, 2006, the Company owned a portfolio of 30 office properties
containing an aggregate of approximately 316,132.49 square meters of leasable area and leased office space to 512 tenants.

2. BASIS OF PRESENTATIONThe Company maintains its accounting records and prepares its financial statements in accordance with accounting principles
generally accepted in Japan (“Japanese GAAP”), including provisions set forth in the Investment Trust Law of Japan, the JapaneseCorporation Law, the Securities and Exchange Law of Japan and related regulations, which are different in certain respects as to theapplication and disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which wereprepared in accordance with Japanese GAAP and were presented in the Securities Report of the Company filed with the Kanto Local
Finance Bureau. In preparing the accompanying financial statements, certain reclassifications and modifications have been made to
the financial statements issued domestically in order to present them in a format that is more familiar to readers outside Japan. In
addition, the notes to financial statements include information that might not be required under Japanese GAAP but is presented
herein as additional information. Amounts have been rounded to the nearest thousand of Yen in the accompanying financial
statements and their notes whereas amounts have been truncated in the Japanese financial statements prepared in accordance withJapanese GAAP.
The Company’s fiscal period is a six-month period, which ends at the end of April and October of each year, respectively. The
Company does not prepare consolidated financial statements because it has no subsidiaries.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESCash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments that are highly
liquid, readily convertible to cash, with insignificant risk of market value fluctuation, and with a maturity of three months or lesswhen purchased.
Property and equipment
Property and equipment are stated at cost, which includes the purchase price and related costs for acquisition, lessaccumulated depreciation. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as
below;
Buildings
3 - 69 years
Structures
2 - 45 years
Machinery and equipments
3 - 15 years
Tools, furniture and fixtures
3 - 15 years
Intangible assets
Intangible assets are amortized on a straight-line method.
Impairment of fixed assets
The Company reviews fixed assets for impairment whenever events or changes in circumstances indicate that the carrying
amount of its fixed assets may not be recoverable. An impairment loss is recognized if the carrying amount of its fixed assets
exceeds the aggregate of the estimated future cash flows. If the fixed assets are determined to be impaired, it is written down
to its recoverable amount and the written-down is recorded as an impairment loss during the current period. No such
impairment losses have been recognized to date.
Investment corporation bonds issuance costs
Investment corporation bonds issuance costs are amortized over 3 years, comprised of six fiscal periods, with an equalamount in each fiscal period.

41

New investment units issuance costs
The entire costs associated with the issuance of the new investment units are expensed as incurred.
The public offering of new investment units on May 25, 2006 was conducted through an underwriting agreement underwhich underwriting securities companies underwrote all of the new investment units at an agreed issue price and sold them at
an offer price, which is different from the issue price to investors (“Spread Method”). The Company does not pay any fees tothe underwriting securities companies under the Spread Method because the difference between the offer price and the issue
price represents the underwriting commission received by the underwriting securities companies. In the case of the public
offering of new investment units on May 25, 2006, the total amount of the difference between the offer price and the issue
price was ¥1,085,238,000. If the underwriting securities companies had underwritten the new investment units at the issue
price and offered the units to investors at an offer price equal to the issue price (known as the “Conventional Method”), a
commission would have been incurred and it would have been expensed as new investment units issuance costs. Therefore,
under the Spread Method, the new investment units issuance costs were reported ¥1,085,238,000 less, and operating income
and income before income taxes were reported ¥1,085,238,000 more than if the Conventional Method was applied.
Accounting treatment of beneficial interests in real estate
All the assets and liabilities held in trust, to which the real estates in possession of the Company were entrusted, and all theearnings and expenses incurred from the trust are properly reflected on the balance sheets and income statements,
respectively.
Accounting standards for presentation of net assets in the balance sheet
Beginning the fiscal period ended October 31, 2006, the Company adopted ”Accounting Standard for Presentation of Net
Assets in the Balance Sheet” (Statement No.5 issued by the Accounting Standards Board of Japan on December 9, 2005) andthe “Financial Accounting Standard Implementation Guidance” (Statement No. 8 issued by the Accounting Standards Board ofJapan on December 9, 2005). Unitholders' equity calculated under the former accounting standard would have been
¥160,996,487 thousand.
Revenue recognition
Operating revenues consist of rental revenues including base rents and common area charges, and other operating revenues
including utility charge reimbursements, parking space rental revenues and other income. Rental revenues are generally
recognized on an accrual basis over the life of each lease. Utility charge reimbursements are recognized when earned and theiramounts are to be reasonably estimated.
Property related taxes
Property related taxes including property taxes, urban planning taxes and depreciable property taxes imposed during the fiscal
period are charged as rental expenses.
On the other hand, the Company paid the amount equivalent to the property related taxes to the sellers applicable to theperiod since acquisition and capitalized as part of the costs to acquire such properties or beneficial interests in real estate. The
capitalized property related taxes amounted to ¥48,328 thousand for the period from May 1, 2006 to October 31, 2006.
Income taxes
Deferred tax assets and liabilities are computed based on the difference between the financial statements and income tax
bases of assets and liabilities using the statutory tax rates.
Consumption taxes
Consumption taxes received and paid are not included in the statements of income.
Derivative financial instruments
The Company utilizes interest rate swap contracts as derivative financial instruments only for the purpose of hedging its
exposure to changes in interest rates. The Company deferred recognition of gains or losses resulting from changes in fairvalue of interest rate swap contracts which meet the criteria for deferral hedging accounting.

42

4. SCHEDULE OF PROPERTY AND EQUIPMENT
Property and equipment as of October 31, 2006 and April 30, 2006 consist of the following:Thousands of Yen
As of October 31, 2006

As of April 30, 2006

Acquisition Costs

Book Value¥ 11,000,964¥ 11,000,964

Buildings and structures
Accumulated depreciation

4,194,710(45,044)

4,149,666

1,136,277(10,376)

Machinery and equipment
Accumulated depreciation

106,015(3,049)102,966

8,966
(672)

8,294

Land in trust

173,864,896

173,864,896

169,096,222

169,096,222

Buildings and structures in trust
Accumulated depreciation

76,311,040(6,514,235)

69,796,805

73,651,001(5,124,260)

68,526,741

Machinery and equipment in trust
Accumulated depreciation

625,262(165,320)

459,942596,280(125,923)

470,357

Tools, furniture and fixtures in trust
Accumulated depreciation

80,047(11,164)

68,88364,843(5,855)58,988Construction in progress in trust

5,705

5,705

7,291

7,291

¥ 259,449,827¥ 259,449,827¥ 241,901,061¥ 241,901,061

Land

Total

Acquisition Costs¥

2,607,267

Book Value¥

2,607,267
1,125,901

5. SHORT-TERM DEBT
Short-term debt as of October 31, 2006 and April 30, 2006 consists of the following:
As of October 31, 2006
Amount(thousandsof Yen)Unsecured loans from banks due on May 29, 2006
Unsecured loans from banks due on November 30, 2006
Unsecured loans from banks due on December 8, 2006
Unsecured loans from insurance companies due on
December 8, 2006
Unsecured loans from a bank due on August 28, 2007
Total

Weightedaverageinterest rate

As of April 30, 2006
Amount(thousandsof Yen)Weightedaverageinterest rate–
¥ 2,000,000
12,500,000–
0.84000%
1.14500%¥ 16,000,000–
12,500,000

0.39000%–
1.14500%

3,000,000

1.04500%

3,000,000

1.04500%

2,000,000¥ 19,500,000

1.06909%–¥ 31,500,000–

The Company entered into ¥40,000 million and ¥20,000 million credit facilities in the form of commitment lines with fivefinancial institutions for the period ended October 31, 2006 and April 30, 2006, respectively. The unused amount of such credit
facilities was ¥38,000 million as of October 31, 2006 and ¥20,000 million as of April 30, 2006.

6. INVESTMENT CORPORATION BONDS
Details of investment corporation bonds outstanding are briefly as follows:
As of October 31, 2006
Amount(thousandsof Yen)Unsecured bonds due on March 16, 2015
Unsecured bonds due on March 16, 2020
Unsecured bonds due on November 29, 2010
Unsecured bonds due on November 30, 2015
Total

¥ 5,000,000
5,000,000
10,000,000
10,000,000¥ 30,000,000

Weightedaverageinterest rate

1.85000%
2.47000%
1.19000%
2.05000%

As of April 30, 2006
Amount(thousandsof Yen)¥ 5,000,000
5,000,000
10,000,000
10,000,000¥ 30,000,000

Weightedaverageinterest rate

1.85000%
2.47000%
1.19000%
2.05000%

43

7. LONG-TERM DEBT
Long-term debt as of October 31, 2006 and April 30, 2006 consists of the following:
As of October 31, 2006
Amount(thousandsof Yen)Unsecured loans from a bank due on August 28, 2007–
Unsecured loans from banks due on December 8, 2007
¥ 8,500,000
Unsecured loans from banks due on February 26, 2008
7,500,000
Unsecured loans from an insurance company due on
3,000,000
February 26, 2008
Unsecured loans from banks due on August 26, 2008
4,000,000
Unsecured loans from banks due on December 8, 2008
8,000,000
Unsecured loans from insurance companies due on
5,000,000
December 8, 2008
Unsecured loans from banks due on February 26, 2009
2,000,000
Unsecured loans from a bank due on February 26, 2010
3,000,000
Unsecured loans from an insurance company due on
1,000,000
February 26, 2010
Unsecured loans from banks due on February 26, 2011
7,500,000
Unsecured loans principally from insurance companies due on
5,000,000
August 26, 2012
Unsecured loans from another financial institution due on
1,000,000
August 26, 2012
Unsecured loans from a bank due on February 26, 2013
1,000,000
Total¥ 56,500,000

Weightedaverageinterest rate

As of April 30, 2006
Amount(thousandsof Yen)Weightedaverageinterest rate–
1.00625%
1.22500%¥ 2,000,000
8,500,000
7,500,000

0.66455%
1.00625%
1.22500%

1.05250%

3,000,000

1.05250%

0.91909%
1.66750%

4,000,000
8,000,000

0.51455%
1.66750%

1.51625%

5,000,000

1.51625%

1.19000%
1.77500%

2,000,000
3,000,000

1.19000%
1.77500%

1.50625%

1,000,000

1.50625%

1.68000%

7,500,000

1.68000%

1.43750%

5,000,000

1.43750%

1.53625%

1,000,000

1.53625%

1.75250%

1,000,000¥ 58,500,000

1.75250%

8. UNITHOLDERS’ EQUITYThe Company issues only non-par value investment units in accordance with the Investment Trust Law of Japan. The entire amountof the issue price of new units is designated as stated capital. The Company is required to maintain net assets of at least ¥50,000
thousand as required by the Investment Trust Law of Japan.

9. PER UNIT INFORMATIONThe net asset value per unit as of October 31, 2006 and April 30, 2006 was ¥605,500 and ¥557,492, respectively. Net income perunit was ¥15,917 for the period ended October 31, 2006 and ¥15,638 for the period ended April 30, 2006.

10. INCOME TAXESThe Company, as an investment corporation, is subject to corporate income taxes at a regular statutory rate of approximately 40%.
However, the Company may deduct dividend distributions paid to its unitholders from its taxable income amounts, provided therequirements are met under the Special Taxation Measure Law of Japan. Under this law, an investment corporation must meet anumber of tax requirements, including a requirement to distribute in excess of 90% of its distributable income for the fiscal period, inorder to deduct such amounts. If the investment corporation does not satisfy all of the requirements, the entire taxable income of
the investment corporation will be subject to regular corporate income taxes.
Since the Company distributed approximately 100% of its distributable income in the form of cash distributions totaling¥4,229,187 thousand and ¥3,596,271 thousand for the period ended October 31, 2006 and April 30, 2006, respectively, such
distributions were treated as deductible distributions for purposes of corporate income taxes. The following summarizes thesignificant differences between the statutory tax rate and the effective tax rate:

Statutory tax rate
Deductible cash distributions
Other
Effective tax rate

44

For the period
from May 1, 2006
to October 31, 2006

For the period
from November 1, 2005
to April 30, 2006

39.39%(39.38)0.01
0.02%

39.39%(39.38)0.02
0.03%

11. BREAKDOWN OF REAL ESTATE RENTAL REVENUES AND EXPENSES
Rental real estate revenues and expenses for the six month periods ended October 31, 2006 and April 30, 2006 consist of thefollowing:Thousands of Yen
For the period
from May 1, 2006
to October 31, 2006

For the period
from November 1, 2005
to April 30, 2006

¥ 10,739,836¥ 9,810,526

9,531,459

8,815,222

Rental revenues

7,620,705

7,027,837

Common area charges

1,910,754

1,787,385

Non-Rental revenues

1,208,377

995,304

Parking revenues

222,897

189,349

Incidental income

913,792734,285

Other miscellaneous revenues

71,68871,6704,619,929

4,257,492

Property management costs

824,345756,532

Property management fees

240,893

224,826

Utilities expenses

882,913726,302

Property and other taxes

827,338

666,062

Casualty insurance

23,43922,318

Repairs and maintenance

198,793

302,896

1,471,826

1,399,418

Real estate rental revenues
Rental revenues

Real estate rental expenses

Depreciation
Other rental expenses
Profits

150,382

159,138¥ 6,119,907¥ 5,553,034

12. LEASESThe Company, as lessor, has entered into leases whose fixed monthly rents are due in advance with lease term of generally two
years for office. The future minimum rental revenues under existing non-cancelable operating leases as of October 31, 2006 andApril 30, 2006 are as follows:
Thousands of Yen
As of October 31, 2006

As of April 30, 2006

Due within one year

¥ 3,912,535¥ 5,053,380

Due after one year

24,915,924

16,797,113¥28,828,459¥ 21,850,493

Total

13. DERIVATIVES AND HEDGE ACCOUNTING
The Company has entered into interest rate swap contracts with several Japanese financial institutions to hedge its variable rate
long-term debt obligations. The Company utilizes interest rate swap contracts, which are derivative financial instruments, only for the
purpose of mitigating future risks of fluctuations of interest rates, but does not enter into such transactions for speculative or trading
purposes. The Company entered into such derivative transactions to hedge risk in accordance with its Articles of Incorporation andthe established risk management policies of NREAM.
The following summarizes the notional amounts and the estimated fair value of the interest–related positions outstanding as of
October 31, 2006 and April 30, 2006:
Thousands of Yen
Notional amount

Fair value

Unrealized gain (loss)

As of October 31, 2006
Interest rate swaps:
Receive/float and pay/fixed¥ 49,000,000¥ 12,722¥ 12,722

As of April 30, 2006
Interest rate swaps:
Receive/float and pay/fixed¥ 49,000,000¥ 139,816¥ 139,81645

46

Business Structure

Unitholders' Meeting

Asset
Custodian Agent
Mitsubishi UFJ Trust andBanking Corporation

GeneralAdministrative Agent
Mitsubishi UFJ Trust andBanking Corporation,
and Others

Auditor

Nomura Office Fund
Asset Custody
Agreement

Ernst & Young ShinNihon

Administrative
AgencyAgreement

Nomura Real Estate
Office Fund, Inc.
Board of Directors’Meeting
Debt Financing /Issue of Investment
Corporation Bonds

Liabilities
Repayment of
Principal & Interest

Financial Instituions, etc /Investors of Investment
Corporation Bonds

Investment

Unitholders

Asset
Capital Investment

Rent Income
and Others

Equitytrading
Distribution

Office Buildings(Real Estate
Related Assets)

Property
Management

Property Management
Companies
Nomura Real Estate
Development Co., Ltd.
Nomura Building Management
Co., Ltd.
ITOCHU Urban Community Ltd.
The Dai-ichi Building Co., Ltd.
IKOMA TBM K.K.

Unitholders

Property
Management
Agreement

Asset Management
Services Agreement

Market Research andOther Information Providers

Asset Management Company
Instructions forRents andManagement
RentalStrategies,
Plans ofRepairs, etc.

Property
Information

Service
Agreement, etc.

Nomura Real Estate
Development Co., Ltd.
Nomura Real Estate Urban
Net Co., Ltd.
Nomura Real Estate
Investment Management
Co., Ltd.

47

Profile of the Asset Management Company
PROFILE AND HISTORY OF INCORPORATION
Company:
Capital:Shareholder:
Incorporation:

Nomura Real Estate Asset Management Co., Ltd.
¥300 million (as of March 31, 2006)
Nomura Real Estate Holdings, Inc. (100%)January 24, 2003

PROCESS OF DECISION-MAKING
We have ensured transparency in the decision-making process by placing agenda through the Compliance Committee, in which two
external members with professional experience sit.
AGENDA
Proposal

COMPLIANCE OFFICER
When compliance is satisfied

COMPLIANCES COMMITTEE
Major objectives of the Compliance Committee are:to ensure compliance with the laws and regulations applicable tothe proposed agenda,
to deliberate the contents of trade with the related parties,
to check the legal matters for the Investment Committee inmaking investment decisions.

INVESTMENT COMMITTEE
Investment Committee deliberates on such subjects as:
Formulation and revision of investment guidelines,
Selection of properties for investment,
Formulation and revision of investment planning for the fiscal year,
Policy making on material articles such as funding.

DECISION MAKING
The entire process of deliberation and final decision is reported.

COMPLIANCE COMMITTEEUSE OF INFORMATION NETWORK OF NOMURA REAL ESTATE GROUP
In order to maximize opportunity to invest in better properties, we have collected as much information as possible not only from the AssetManagement Company but also from other companies of Nomura Real Estate group as listed below.

Nomura Real Estate Office Fund, Inc.
Nomura Real Estate Asset Management Co., Ltd.

Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Urban Net Co., Ltd.
Nomura Real Estate Investment Management Co., Ltd.

General Real Estate Market

48

Properties owned and developed by
Nomura Real Estate Urban Net andNomura Real Estate Development

Corporate Data

ProfileNomura Real Estate Office Fund, Inc. (referred to as “Nomura Office Fund” or the “Company” hereafter) was listed on theTokyo Stock Exchange on December 4, 2003 as a real estate investment corporation formed to own and invest in officeproperties, subject to the Law Concerning Investment Trusts and Investment Corporations of Japan. The Company’s basic
investment policy is to assure stable rent revenues and steady portfolio growth over the medium- to long-term.
Nomura Real Estate Asset Management Co., Ltd. (referred to as “NREAM” hereafter), a wholly owned subsidiary of
Nomura Real Estate Holdings, Inc. is in charge of asset management on behalf of Nomura Office Fund in accordance withthe basic investment policy as described above. Through coordination with Nomura Real Estate Holdings, Inc. and othergroup companies, NREAM aims to achieve these goals and more.

Corporate Name
Nomura Real Estate Office Fund, Inc.
Corporate Office8-5-1 Nishi Shinjuku Shinjuku-ku, Tokyo
160-0023, Japan
http://www.nre-of.co.jp/english/
Date of Incorporation
August 7, 2003

Strength of Nomura Office Fund

Stock Listing
Tokyo Stock Exchange (Securities Code: 8959)

J-REIT with large-capitalization specialized in office buildings

Unit Price (¥)

Market Capitalization (¥ mln)

1,000,000

Portfolio of 30 properties at a total acquisition price of¥259.1 billion (as of October 31, 2006)
Market capitalization of ¥263.5 billion (as of October 31, 2006)
Constituent of MSCI Standard Index

600,000

900,000

500,000

800,000

400,000

700,000

300,000

600,000

200,000

500,000

100,000

Track record of stable management
Six consecutive fiscal periods of growth in revenues and earnings
Steady growth in DPS

400,000
Dec. 4
2003

Collaboration with Nomura Real Estate Group
NREAM, in charge of the Company’s asset management,
belongs to Nomura Real Estate Group
Supported by the group companies through provision of sales
information and management expertise

Apr. 30
2004

Oct. 29
2004

Operating Revenues (Lth)Apr. 282005

Oct. 312005

Net Income (Lth)(¥ mln)12,000(¥)
16,00015,905
10,73914,5209,810

Rated A by three domestic and foreign rating agencies

Number of Unitholders
15,205 (as of October 31, 2006)

Disclaimer

8,641

Long-term rating: A
Short-term rating: A-1

6,000

Moody’s Investors Service, Inc.

Issuer rating: A2

4,000

Rating and Investment Information, Inc.

Issuer rating: A+

12,000

7,106

6,656

10,273

10,000
4,531

2,000

3,596

8,000

the meaning and interpretation.

6,000

In general, accounting principles and practices used by real estate investment corporations in Japan (“J-REITs”) in
preparing its financial statements conform with accounting principles generally accepted in Japan (“Japanese GAAP”).

2,681

1,526

0

4,000
1st
Period2nd
PeriodThis semiannual report includes translations of certain Japanese documents originally filed under the Securities andExchange Law of Japan. This report was prepared in English solely for the convenience of and reference by readers
outside Japan and should not be considered as a disclosure statement. The original Japanese documents always govern

4,229
3,484
2,606

Holding to conservative financial strategies
Promoting long-term fixed-rate arrangements for interest-bearing debt

Investor Relations
For further information, please contact the Asset Management
Company:
Nomura Real Estate Asset Management Co., Ltd.
8-5-1 Nishi Shinjuku Shinjuku-ku, Tokyo 160-0023, Japan
Tel: +81-3-3365-0507

14,0008,000

Standard & Poor’s Ratings Services

Number of Units Issued
265,903 (as of October 31, 2006)

Independent Auditors
Ernst & Young ShinNihon
Hibiya Kokusai Bldg. 2-2-3 Uchisaiwai-cho Chiyoda-ku,
Tokyo 100-0011, Japan

Cash Distribution per Unit (Rth)15,150
14,114

Capital¥156,767,193,535 (as of October 31, 2006)

Business Office of the Transfer Agent
Corporate Agency Department
Mitsubishi UFJ Trust and Banking Corporation
7-10-11 Higashisuna Koto-ku, Tokyo 137-8081, Japan
Tel: +81-3-5683-5111

0Oct. 312006

Apr. 28
2006

15,63810,000Fiscal Period
Six months ending on April 30 and October 31

Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation
1-4-5 Marunouchi Chiyoda-ku, Tokyo 100-8212, Japan

3rd
Period4th
Period5th
Period6th
PeriodHowever, they may differ from generally accepted accounting principles applied in certain other countries. Potential
investors should consult their own professional advisors for an understanding of the differences between Japanese GAAP
and generally accepted accounting principles in the United States (“U.S. GAAP”) or other jurisdictions and how thosedifferences might affect the financial information contained herein.
Estimates for Nomura Office Fund’s future operating results contained in this semiannual report are forward-looking
statements and are based on information currently available to Nomura Office Fund and its asset management company

Contents
To Our Investors ....................................................................................1

Property Details ...................................................................................10

Financial Highlights ...............................................................................2

Performance Report ............................................................................17

Portfolio Highlights ...............................................................................3

Financial Section..................................................................................35

Management Summary of the Sixth Fiscal Period .............................4

Business Structure...............................................................................47

Financial Status of the Sixth Fiscal Period .........................................7

Profile of the Asset Management Company......................................48

Summary of Portfolio Properties .........................................................8

Corporate Data ......................................................................Back Coverand are subject to risks and uncertainties. Consequently, these projections should not be relied upon as the sole basis forevaluating Nomura Office Fund. Actual results may differ substantially from the projections depending on a number offactors.

Portfolio Map .........................................................................................9

Printed in JapanNOMURA REAL ESTATE OFFICE FUND, INC.
Sixth Fiscal Period Semi-Annual Report

Sixth Fiscal Period

Semi-Annual Report
May 1, 2006

http://www.nre-of.co.jp/english/

October 31, 2006