A Solid Market Drives Steady Growth

13 th Period
NBF Report July – December 2007

Nippon Building Fund Inc.
http://www.nbf-m.com/nbf_e/

Profile
On September 10, 2001, Nippon Building Fund Inc. (NBF)
became the first Japanese real estate investment trust (J-REIT)
investment corporation with its listing on the J-REIT section of theTokyo Stock Exchange. Today, NBF has the largest market capitalization and assets under management among J-REITs.
NBF employs funds raised through shareholder subscriptions
and borrowing to invest in real estate, real estate-backed securities, trust beneficiary rights and other assets with the objective ofsustainable growth in portfolio value and stable profits on a
medium-to-long-term basis. Its fiscal periods are six months long.
NBF primarily invests in office buildings in the central business
districts of Tokyo, Greater Tokyo and other cities in Japan. The
Investment Trust Law of Japan requires an external entity to manage the assets of an investment corporation; NBF entrusts asset
management to Nippon Building Fund Management Ltd. (NBFM).
NBF maintains a close relationship with NBFM’s major shareholder
Mitsui Fudosan Co., Ltd., and employs this company’s expertise toinvest in carefully selected, high-quality properties, with the aim ofgenerating further asset growth.

Contents
Building on Our Strengths

2

Financial Highlights

4

To Our Shareholders

6

A Solid Market Drives Steady Growth8

A Continuing Record of Achievement

12

A Track Record of Steady Growth andHigh Occupancy Rates

12

Ongoing Improvement in Portfolio Quality

13

Planned New Acquisitions

14

Main Properties

17

Location of Office Properties

20

Portfolio Overview

22Management Team and Management Structure

24Management’s Discussion and Analysis

28

Financial Statements

39

On the CoverAppendix

53

Investment and Distribution Policies

55

Corporate Data

64

Investors’ Information

65

In March 2008, NBF acquired NBF Toyosu
Garden Front for ¥25 billion. Purchased as adevelopment property under a contract with
Shimizu Corporation, the building was handed
over at 100 percent occupancy.

A Solid Market Drives
Steady Growth

NBF Report July-December 20071

Building on Our Strengths

Over the 13 periods, or roughly 6 years, since its listingon the J-REIT section of the Tokyo Stock Exchange in
September 2001, NBF has established a track record of
stable profit distribution.
As a result of steady growth, NBF has built a solid position in the J-REIT market from several perspectives, including scale advantage, portfolio scope, financial stability andlevel of return.
NBF will continue to make maximum use of its

Japan’s First andLargest J-REIT◆ In September 2001, NBF was listed as the first real estate
investment corporation in Japan on the J-REIT section of theTokyo Stock Exchange.
◆ The largest total market capitalization of any J-REIT(¥797.5 billion)*◆ The largest scale of managed assets (¥674.3 billion)*strengths and competitive advantages, as well as theexpertise of Mitsui Fudosan Co., Ltd., to steadily increasevalue for shareholders.

High-Quality
Properties◆ Specializes in investing in office buildings◆ Possesses 56 properties*, mainly large-scale office buildingsin the Tokyo Central Business Districts◆ Diversified in other Tokyo markets as well as in regional cities◆ Total rentable area of 692,286m2*◆ 897* diversified tenants

2 NBF Report July–December 2007

Strong Returns◆ Cash distribution of ¥20,129 per share for the 13th Period

NBF’s Strengths◆ 218.7% total return** since Tokyo Stock Exchange listingon September 10, 2001
◆ 1.8% total return** for NBF in most recent year, comparedwith a drop of 3.1% in the TSE J-REIT index** Total return includes reinvested distributions.
(Source: NBF calculations, based on data published by Bloomberg L.P.)

Sound Finances◆ Ratings*■ Standard & Poor’s

Strategic
Partnership with
Mitsui FudosanLong-term Corporate: A+, Short-term Corporate: A-1■ Moody’s Issuer Rating: A1■ R & I Issuer Rating: AA◆ LTV: 44.3%*◆ Percentage of long-term, fixed-rate debt included in interestbearing debt: 78.9%*◆ Average years remaining on long-term, fixed-rate interestbearing debt: 5.41 years*◆ Access to the expertise of Mitsui Fudosan Co., Ltd., the leading
real estate company in Japan■

Acquisition of properties developed by Mitsui Fudosan■ Use of property information-gathering capabilities

of Mitsui Fudosan■ Use of Mitsui Fudosan’s tenant mediation and building

management capabilities in office management◆ Total average cost: 1.59%** As of December 31, 2007

NBF Report July–December 2007

3

Financial Highlights
13th Period

12th Period

11th Period

10th Period

13th Period

from July 1, 2007 to
December 31, 2007

from January 1, 2007 toJune 30, 2007

from July 1, 2006 to
December 31, 2006

from January 1, 2006 toJune 30, 2006

from July 1, 2007 to
December 31, 2007
U.S. dollars in thousands(Note 1)

(Yen in millions, except per share data or where otherwise indicated)

Operating revenues
Income before income taxes
Net income

Note 2¥ 27,814
10,227
10,226¥ 26,641
10,064
10,063¥ 25,894
9,767
9,766

¥ 24,307
9,852
9,851

$ 248,981
91,54791,537

Funds from operations
Net operating income
from property leasing activities
Total amount of cash distribution

Note 3

15,394

15,18814,754

12,951

137,803

Note 3(a)18,905
10,226

18,442
10,063

17,787
9,766

15,936
9,851

169,231
91,536(b)Note 3672,195
272,500
356,67244.3%

680,266
281,500
356,50944.9%

634,117
236,500
356,21340.9%

633,693
237,500
356,29741.0%

6,017,321
2,439,352
3,192,842(c)(b) / (c)(a) / (c)508,000
702,110
20,129508,000
701,790
19,809508,000
701,206
19,224

508,000
701,373
19,3916,285
180Note 330,30329,89729,04327,395271

Total assets
Interest-bearing debt
Net assets
LTV (Loan to value)
Total number ofcommon shares issued (shares)
Net assets per share (Yen/$)Distribution per share (Yen/$)Funds from operations
per share (Yen/$)Notes: 1. U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥111.71 = U.S.$1.00, the approximate exchange rate on December 31, 2007.
2. Operating revenues do not include consumption taxes.
3. Funds from operations: Net income (excluding Gain on sale of investment properties + Gain on exchange of investment properties) + Depreciation and amortization
Net operating income from property leasing activities: (Revenue from property leasing – Rental expenses) + Depreciation and amortization
Loan to value: (Interest-bearing debt + Deposits under management) / Total assets
Funds from operations per share: (Net income (excluding Gain on sale of investment properties + Gain on exchange of investment properties) + Depreciation and amortization) /Weighted average number of common shares issued and outstanding during the period

Portfolio Highlights (As of December 31, 2007)
Asset Allocation

Total Assets¥672,195
millionRegional Allocation
Deposits andOther Assets¥32,363 million

Other Cities¥79,627 million(4.8%)(12.4%)

Real Estate¥253,031 million

Other GreaterTokyo¥144,435 million(37.6%)(22.6%)

Real Estate Held in Trust¥386,800 million

Tokyo CBDs*¥415,770 million(57.5%)(65.0%)

Total Real
Estate, Etc.

¥639,832
million* Central Business Districts

4 NBF Report July–December 2007

Operating revenues / Net income(Yen in millions)

Funds from operations per share

Net operating income fromproperty leasing activities(Yen in millions)

(Yen)

13th
Period13th
Period13th
Period12th
Period12th
Period12th
Period11th
Period11th
Period11th
Period10th
Period10th
Period10th
Period9th
Period9th
Period9th
Period05,000 10,000 15,000 20,000 25,000 30,000
Operating revenues
Net income

Total assets

0

5,000

10,00015,00020,000

LTV(%)(Yen in millions)0

10,00025,000550,000 600,000 650,000
0Distribution per share (top scale)
Net assets per share (bottom scale)

700,000

750,000

13th
Period12th
Period12th
Period12th
Period11th
Period11th
Period11th
Period10th
Period10th
Period10th
Period9th
Period9th
Period9th
Period
0

40

42

44

46

48

50

(Yen)

20,00013th
Period10,00040,00015,00013th
Period300,000 400,000 500,000 600,000 700,000

30,000Distribution per share /Net assets per share
5,000

0

20,000

List of Major Tenants
Name

1
2
3
4
5
6
7
8
9
10

Mitsui Fudosan Co., Ltd.1
IBM Japan, Ltd.2
GlaxoSmithKline K.K.2
AXA Life Insurance Co., Ltd.2
Fuji Xerox Co., Ltd.
Nippon Steel Corporation2
Nikkei Business Publications, Inc.2
Transcosmos Inc.2
The Resolution and Collection Corporation
NTT Communications Corporation

Leased Space(m2)

Percentage of Total
Leased Area3

169,913
28,184
20,515
17,895
16,106
15,333
13,135
11,826
8,569
8,493

24.9%
4.1%
3.0%
2.6%
2.4%
2.2%
1.9%
1.7%
1.3%
1.2%

Notes: 1. NBF receives lease revenue from Mitsui Fudosan Co., Ltd. after Mitsui Fudosan has taken a fixed percentage commission of the lease revenue from the tenants of the sub-leased
space.
2. Indicates tenants with long-term lease contracts (IBM Japan, Ltd.’s contract expires December 2009; GlaxoSmithKline K.K.’s contract (GSK Building) expires September 2010; AXA
Life Insurance Co., Ltd.’s contract expires November 2010; Nippon Steel Corporation’s contract expires November 2009; Nikkei Business Publications, Inc.’s contract expires
November 2009; Transcosmos Inc.’s contract (Shibuya Garden Front) expires September 2009)
3. Percentage of total leased area = Leased space / Total leased area of all properties in portfolio

NBF Report July–December 2007

5

To Our Shareholders

NBF emphasizes external and internal growth, financial
strategy and compliance in working to increase distributions over the medium and long term with the aim of
expanding shareholder value.

Performance during the Six Months Ended
December 31, 2007
During the 13th Period, full-period occupancy at properties acquired in the previous period and increased
rent for existing tenants generated internal growth. As
a result, revenues and earnings both increased, anddistribution per share was ¥20,129 exceeding ¥20,000
for the first time.
During the six months ended December 31, 2007 (the “13th Period”),
NBF maintained a high occupancy rate (98.6 percent as of December 31,2007), and negotiated rent increases for existing tenants totaling ¥52 million* per month, exceeding our expectations.
In addition to these initiatives, properties acquired during the previous
period were occupied for the full duration of the 13th Period. As a result,operating revenues for the six months ended December 31, 2007
increased 4.4 percent, or ¥1,173 million, compared with the previous sixmonth period to ¥27,814 million. Operating income increased 2.8 percent,Koichi Nishiyama
Executive Director of Nippon Building Fund Inc.
President and CEO of Nippon Building Fund Management Ltd.

or ¥345 million, to ¥12,457 million. Net income increased 1.6 percent, or¥163 million, to ¥10,226 million, and distribution per share increased¥320 compared with the previous six-month period to ¥20,129, exceeding¥20,000 for the first time.
* Total of monthly rent increases due to contract renewals during the period

Initiatives to Generate External Growth
NBF generates steady external growth by selectively
investing in outstanding properties that are highly competitive and can be expected to provide stable rental cash flow.
The real estate market continues to be strong, with office building acquisition prices remaining high. In these extremely competitive conditions, weavoid investment for the sake of scale alone. We will deploy our scale, accumulated know-how and information network to selectively invest in superior
assets that will maintain their value over the medium to long term as we
continue working to build a high-quality portfolio.
NBF made no new property acquisitions in the six months ended

6 NBF Report July–December 2007

Performance Outlook(Yen in millions)14th Period

15th Period(Projected)
from January 1, 2008
to June 30, 2008

(Projected)
from July 1, 2008 to
December 31, 2008

Acquisition schedule (as of January) will:
Increase portfolio value to ¥709 billion
Increase LTV to 47% by the end of
PublicOfferingof the 14th Period*.
●●

Operating revenues

28,58029,777

Net income

10,569

11,219Distribution per
share (Yen)

19,50020,700* Assuming payment for 3 properties scheduled
for acquisition in the 14th Period is completely
funded by loans.

Public offering will:
Lower LTV to 42%
Allow additional acquisitions totaling¥120 billion before reaching
LTV of 50% by the end of
the 14th Period.
●●

December 31, 2007, but we have already entered into seven contracts forby generating steady, continuous growth under four key policies. We will

properties (as of March 31, 2008) since the start of the current period. In

acquire additional properties to build the foundation for external growth.

addition to purchasing NBF Shibuya East from the Mitsui Fudosan Group in

We will also strengthen profitability for internal growth. In addition, NBF

January 2008, we increased our stake in Nakanosakaue Sunbright Twin,
expanded the NBF Nagoya Hirokoji Building and integrated NBF Toyosu

will execute a stable, conservative financial strategy and will further
strengthen compliance and risk management.
As ongoing increases in rents steadily raise the profitability of our

Garden Front with the adjacent IST Building in March. We also entered into aexisting portfolio, NBF believes this year presents a good opportunity tocontract for the Surugadai Project (tentative name) and acquired the Shin-acquire new properties and boost external growth due to relatively high

Urayasu Center Building and NBF Kumamoto Building.

liquidity in the real estate market. Consequently, NBF secured approximately ¥120 billion through an equity issue in February 2008 to ensure

Initiatives to Generate Internal Growth
Against the backdrop of the stable office building
leasing market, NBF continues to work to strengthen
earnings by increasing rent when renewing the contracts of existing tenants

the ability to acquire properties, because new acquisitions would havecaused NBF to approach its targeted upper LTV (loan-to-value) limit of 50
percent. Having secured additional equity funding, in March 2008 NBF
acquired four properties at a total cost of ¥41.2 billion (including property
values calculated on a contract basis).
Under these measures, NBF projects operating revenues of ¥28,580

Ongoing high demand for corporate office space is supporting the con-

million, operating income of ¥13,023 million, net income of ¥10,569 mil-tinued stable growth of Tokyo’s building leasing market, based chiefly onlion and a distribution of ¥19,500 per share for the 14th Period. For thelarge-scale office buildings of a high standard. Moreover, the supply of

period ending December 31, 2008 (the “15th Period”), we project operat-

new office buildings is unlikely to increase significantly for the time being.
NBF has extensive holdings of outstanding large-scale properties in theing revenues of ¥29,777 million, operating income of ¥13,590 million, net
income of ¥11,219 million and a distribution of ¥20,700 per share.
(These projections are valid as of February 14, 2008 and assume nocentral business districts (CBDs) of Tokyo. In order to maximize the bene-

acquisitions or transfers of buildings other than those under contract atfits of this booming market, we focused on negotiating rent increases forthat time, and no issue of new shares.)our existing tenants. As a result, we increased monthly rental revenue by

NBF will manage its assets according to its investment policy of achiev-¥52 million during the 13th Period. During the six months ending Juneing sustainable growth in portfolio value and stable profits over the medium

30, 2008 (the “14th Period”) we plan to increase monthly rental revenue

to long term. Our objective will be increased shareholder value. We will beby an additional ¥64 million.

counting on your continued support as we work towards these goals.

Fundamental Management Policies
and Outlook
NBF aims to increase distributions to shareholders
over the long term, with continued well-balanced

Koichi Nishiyama
Executive Director of Nippon Building Fund Inc.
President and CEO of Nippon Building Fund Management Ltd.

internal and external growth
NBF aims to increase distributions to shareholders over the long term

NBF Report July–December 2007

7

A Solid Market Drives Steady Growth

A Solid Market…
Vacancy Rates
Remain Low
1.8% in Greater Tokyo
1.7% in Tokyo CBDs

Rents Continue to Rise●●

7.1% year-on-year increase in average new
tenant lease rates in Greater Tokyo●

Tokyo 23 Wards Average New Tenant Lease Rates

Vacancy Rates in Major Cities
(%)

15.0
12.0

(Yen per tsubo*)

14,00013,5009.0
13,0006.0
12,5003.0
0.0

Dec. 2005
Jun. 2006
Dec. 2006
Jun. 2007
Dec. 2007
Mar. 2006
Sep. 2006
Mar. 2007
Sep. 2007

5 Central Tokyo Wards
Sendai
Nagoya12,000Dec. 2005
Jun. 2006
Dec. 2006
Jun. 2007
Dec. 2007
Mar. 2006
Sep. 2006
Mar. 2007
Sep. 2007

Tokyo 23 Wards
Sapporo
Osaka
Hiroshima
Fukuoka(Source : CB Richard Ellis Japan)(Source : CB Richard Ellis Japan)*1 tsubo = approx. 3.3m2

During the six months ended December 31, 2007 (the “13th Period”), the real estate leasing market for Tokyo
office buildings remained firm, despite a decline in the Japanese stock market, including the J-REIT market,
stemming from the subprime loan problem. In the real estate retail market, NBF has increased opportunities toacquire new properties.
Low Vacancy Rate in Tokyo Central Business Districts (CBDs)
Corporate demand for office buildings continues to be brisk, and the vacancy rate remains low. Rates remained particularly low in
NBF’s main areas of investment, at 1.7 percent in the five central Tokyo wards — Chiyoda-ku, Chuo-ku, Minato-ku, Shinjuku-ku andShibuya-ku — and at 1.8 percent for all 23 Tokyo wards (as of December 31, 2007).

8 NBF Report July–December 2007

Rents for Large-Scale
Properties Are Increasing
18.4% year-on-year growth in average new●

tenant lease rates for properties over 3,000 tsubo

Tokyo 23 Wards Average New Tenant Lease Rateby Property Size
(Yen per tsubo)

26,000●

New rentable area could decrease by half in 2008.

●

Continuing strong demand is forecast.

Tokyo 23 Wards Supply and Demand(Tsubo)400,000

250,000

22,00018,000100,000

14,00010,000

Supply Is
Expected to Tighten

0-50,000
Sep. 2006

Dec. 2006

Over 3,000 tsubo
500-1,000 tsubo

Mar. 2007

Jun. 2007

Sep. 2007

1,000-3,000 tsubo
Under 500 tsubo(Source : CB Richard Ellis Japan)

Dec. 2007

2002

2003

2004

2005

2006

2007

2008
(Projected)

New rentable area supply
New rentable area demand(Source : CB Richard Ellis Japan)

Continued Solid Growth in Average New Tenant Lease Rates in Tokyo CBDs
The demand for office buildings in the Tokyo CBDs is stable, as vacancy rates remain at a low level. Average lease rates for new tenants in the five central Tokyo wards increased 6.4 percent from June to December 2007, and 5.4 percent for all 23 Tokyo wards. NBF
expects demand for office buildings in the Tokyo CBDs to remain stable, and while we do not foresee a rise in market lease rates on thescale of the past two years, we believe they will hold steady or increase slightly. In particular, we forecast steady growth in the new tenant lease rates for outstanding large-scale properties as corporate demand for large-scale buildings in the Tokyo CBDs remains brisk.

Stable Demand for Office Buildings in Tokyo CBDs
Demand in 2007 continued to grow steadily. The supply of new office buildings exceeded the number in 2006, at 256,000 tsubo,
which in turn was exceeded by demand of 276,000 tsubo. While demand is expected to remain steady in 2008, the supply of new largescale properties will decrease, and the overall volume of new supply is forecast to be only slightly more than 50 percent of the 2007 level.
As a result, Tokyo CBD office building occupancy rates and average new tenant lease rates will both continue to grow steadily.

NBF Report July–December 20079

…Drives Steady Growth
NBF Has the Largest Scaleof Assets among J-REITs¥797 billion market capitalization

NBF’s Occupancy Rates
Remain High
98.6% occupancy rate (end of 13th Period)(end of 13th Period)● Able to take maximum advantage of market growth

●

●

●

NBF’s high-quality portfolio is strongly competitive.

Occupancy Rate

Portfolio Value (Acquisition price basis)(%)(Yen in billions)

625

625

10th
Period11th
Period674

709¥34.8*

98.1

98.1

98.7

97.8

99.0

98.6

8th
Period9th
Period10th
Period11th
Period12th
Period13th
Period

539
414

8th
Period9th
Period12th
Period13th
Period* Contract completed: contract basis

Japan’s real estate market conditions are favorable, with low vacancy rates and steady growth in tenant lease
rates. As the largest Japanese real estate investment trust (J-REIT) with a portfolio chiefly comprising largescale properties in Tokyo, NBF expects to enjoy continued strong growth.
The Largest Scale and Highest Quality Portfolio among J-REITs
NBF has established predominance through the scale of its assets (¥709.1 billion on a contract price basis as of December 31,2007) — the largest of all J-REITs — and the quality of its portfolio.

A Continued High Level of Occupancy Rates
Rather than relying solely on the boost from the solid office building rental market, NBF worked to raise tenant satisfaction by determining tenant needs through surveys and then implementing measures such as upgrading facilities and equipment and sponsoring a
concert. As a result, NBF has maintained a high occupancy rate. As of December 31, 2007, it stood at 98.6 percent, higher than the98.2 percent average occupancy rate over the last five period-ends.

10 NBF Report July–December 2007

A Solid Market Drives Steady Growth

NBF Has Broad Growth Potential●¥52 million per month in
the 13th Period, with ¥64 million per month

Rent increases totaled

projected in the 14th Period*.
* Total of monthly rent increases due to contract renewals during each period

Breakdown of Lease Contracts (As of December 31, 2007)
Lease contracts
with more than 2
years until renewal

A Capital Increase to
Accommodate Further Growth●

31,800 shares through public
offering, 2,200 shares throughIssuance ofthird-party offering
Per-Share Issue Prices(Yen)

Current rent below
expected rent level

1,205,400
1,019,200

16.6%

916,300

66.1%
17.3%

Lease contracts
with potential
rent increases
within 2 years

Current rent above expected rent level/
lease contracts to be renewed within 2 years

759,500
625,000
500,000

May 2001 Sept. 2001
PrivateIPO
placement

July 2004
Publicoffering

Aug. 2005 Mar. 2006
PublicPublicoffering
offering

Feb. 2008
Publicoffering

Strong Potential for Internal Growth
During the six months ended December 31, 2007, NBF worked to raise profitability by raising rents. Renegotiation of existing lease
contracts of existing tenants facing renewal during this six-month period increased total monthly rental revenue by ¥52.0 million, morethan initially predicted. As of December 31, 2007, contracts up for renewal within two years with rents below expected rent levels
accounted for 66.1 percent of NBF’s total rental revenue. This indicates strong potential for internal growth.

High Investor Trust
In light of the favorable state of the real estate market and the foundation for growth it has established, NBF secured equity financing in January 2008 for balanced internal and external future growth. The issue price of ¥1,205,400 exceeded the ¥1,019,200 issue
price of our previous equity financing, amid a continuing decline in the Japanese stock market, including the J-REIT market, since lastsummer stemming from the subprime loan problem. We see this as a sign of the high level of trust NBF has earned from its investors.

NBF Report July–December 2007

11

A Continuing Record of Achievement
A Track Record of Steady Growth and High Occupancy Rates

Occupancy rate (%)

100.0

96.9

97.5

97.7

97.4
95.0

97.5

98.1

98.1

98.7

97.8

99.0

98.6

94.8
92.3
Total rentable area (m2)90.0
800,000

Acquisition price692,222 692,286

Tokyo CBDs

Acquisition price(Yen in billions)670,249 670,513

700,000

Other Greater Tokyo

800

Other Cities
709.1

578,243700

674.3

Occupancy rate
Total rentable area

624.8

600,000¥34.8 billion(contract completed)*

624.8

488,323
460,901600

500,000

539.3

419,511500

400,000

400

277,054

303,486

322,344414.1

340,497300

200

300,000

336.1

247,687

226.5

393.8

358,940

246.0

260.2

276.0

285.6
200,000

192.1

100,000
100

0

22

24

26

28

29

33

43

43

47

52

55

55

56

58

Buildings

Buildings

Buildings

Buildings

Buildings

Buildings

Buildings

Buildings

Buildings

Buildings

Buildings

Buildings

Buildings

Buildings

May 23,
Dec. 31,
Jun. 30,
Dec. 31,
Jun. 30,
Dec. 31,
Jun. 30,
Dec. 31,
Jun. 30,
Dec. 31,
Jun. 30,
Dec. 31,
Jun. 30,
Dec. 31,
2001
2001
2002
2002
2003
2003
2004
2004
2005
2005
2006
2006
2007
2007
* Contract basis (NBF Shibuya East: ¥8 billion, NBF Nagoya Hirokoji Bulding: ¥1.8 billion, NBF Toyosu Garden Front: ¥25 billion, TOTAL: ¥34.8 billion)(Investment commencement date)

12 NBF Report July–December 20070

Ongoing Improvement in Portfolio Quality
End of the 1st Period

End of the 9th Period

End of the 13th Period(December 31, 2001)(December 31, 2005)(December 31, 2007)

39.0%

45.4%
20.5%

Diversifying tenant risk
(Top 10 tenants’ share of total floor space)

31.9%

54.3%

Top 10 tenants’ share excluding Mitsui Fudosan Co., Ltd. (Top 10 tenants at the end of the 1st Period)

Mitsui Fudosan Co., Ltd.

Diversifying property concentration risk
(Ratio of total acquisition price of top three properties to total acquisition price of all owned properties)

22.1%

32.0%

54.0%

Average age(Average age of properties weighted by acquisition price of each property at the end of each period)

17.72 years

16.38 years
20.4%

11.5%

14.30 years
20.0%
15.6%

5.4%

88.5%

64.4%

74.3%
Over 10 years

Between 5 and 10 years

5 years or less

Portfolio PML (Probable Maximum Loss)

4.8%

3.8%
1.5%

NBF Report July–December 200713

Planned New Acquisitions
57 NBF Toyosu Garden Front

Acquisition date

March 31, 2008

Site area

12,551.33m2

Floor area of building

35,621.93m2

Structure

9 floors above ground

Location

15-6, Toyosu 5-chome, Koto-ku, Tokyo

Acquisition price¥25,018 million

45 NBF Nagoya Hirokoji Building

Acquisition date

March 17, 2008

Site area

431.30m2

Floor area of building

3,388.10m2

Structure

9 floors above ground

Location

311, Sakae 2-chome, Naka-ku, Nagoya, Aichi

Acquisition price¥1,826 million

14 NBF Report July–December 2007

59 Surugadai Project ( tentative name )58 NBF Shibuya East

Acquisition date

January 9, 2008

Site area

1,418.21m2

Floor area of building

7,615.76m2

Structure

8 floors above ground, 2 floors below

Location

3-5, Shibuya 3-chome, Shibuya-ku, Tokyo

Acquisition price¥8,000 million

Acquisition date

April 30, 2009 (scheduled)

Site area

1,767.94m2

Floor area of building

9,773.30m2

Structure

11 floors above ground, 1 floor below

Location

3, Kanda-Surugadai 2-chome, Chiyoda-ku, Tokyo

Acquisition price¥20,840 million

NBF Report July–December 200715

60 Shin-Urayasu Center Building

Acquisition date

March 27, 2008

Site area

15,875.86m2

Floor area of building

38,421.81m2

Structure

20 floors above ground, 2 floors below

Location

5-2, Irifune 1-chome, Urayasu, Chiba

Acquisition price¥15,700 million

16 NBF Report July–December 2007

61 NBF Kumamoto Building

Acquisition date

March 24, 2008

Site area

1,775.52m2

Floor area of building

9,712.11m2

Structure

10 floors above ground

Location

3-20, Karashima-cho, Kumamoto City, Kumamoto

Acquisition price¥4,500 million

Main Properties

From upper left
1 Yamato Seimei Building●
2 Nishi-Shinjuku Mitsui Building●
From lower left
3 Shiba NBF Tower●
4 NBF Platinum Tower●

NBF Report July–December 200717

From upper left
5 Gate City Ohsaki●
6 Toranomon Kotohira Tower●
From lower left
12 NBF Toranomon Building●
15 NBF Alliance●
8 Nakameguro GT Tower●

18 NBF Report July–December 2007

Main Properties

From upper left
28 Nakanosakaue Sunbright Twin●
29 NBF Toyosu Canal Front●
From lower left
47 Shinanobashi Mitsui Building●
46 ●52 Aqua Dojima NBF Tower, Aqua Dojima East●

NBF Report July–December 200719

Location of Office Properties
As of December 31, 2007

Tokyo CBDs
Kita-ku

1 Yamato Seimei Building
2 Nishi-Shinjuku Mitsui Building
3 Shiba NBF Tower

Arakawa-ku

25 24

4 NBF Platinum Tower

Toshima-ku

5 Gate City Ohsaki
6 Toranomon Kotohira Tower
7 NBF Nihonbashi Muromachi Center Building

Taito-ku

Bunkyo-ku

Nakano-ku

8 Nakameguro GT Tower
28

9 NBF Ginza Street Building
10 Shinjuku Mitsui Building No. 2

Sumida-ku
59

Shinjuku-ku

2

23

11 GSK Building

Chiyoda-ku

10

12 NBF Toranomon Building
13 Kowa Nishi-Shinbashi Building B

7

16
Imperial
Palace11

14 Nippon Steel Building No. 2

26

Chuo-ku

20

15 NBF Alliance

Koto-ku

1

Shibuya-ku

16 Yotsuya Medical Building

6

17 Shibuya Garden Front

12

9

13

15
17 58

18 NBF Shibakouen Building
19 NBF Takanawa Building

Setagaya-ku

20 NBF Akasaka Sanno Square

8

Minato-ku

22

3

14

57 29

18

27
4

21 Sumitomo Densetsu Building

19
21

22 NBF Higashi-Ginza SquareTokyo Bay

Meguro-ku

23 NBF Ogawamachi Building
24 NBF Ikebukuro Tower
25 NBF Ikebukuro City Building

5

26 NBF Sudacho Verde Building

Shinagawa-ku

27 NBF Ebisu-minami Building
58 NBF Shibuya East
59 Surugadai Project (tentative name)

Other Greater Tokyo
28 Nakanosakaue Sunbright Twin
29 NBF Toyosu Canal Front
57 NBF Toyosu Garden Front

7 NBF Nihonbashi●

16 Yotsuya Medical Building●

Muromachi Center Building

20 NBF Report July–December 2007

17 Shibuya Garden Front●

18 NBF Shibakouen●

Building

22 NBF Higashi-Ginza Square●

Other Greater TokyoTOCHIGI

30 Shin-Kawasaki Mitsui Building
31 Yokohama ST Building

UTSUNOMIYA

35

32 Parale Mitsui Building

34

33 NBF Atsugi Building

IBARAKITo Omiya

36 37

34 Tsukuba Mitsui Building
35 NBF Utsunomiya Building

SAITAMA

36 S-ino Omiya North Wing
37 Daido Life Omiya Building

38

38 NBF Urawa Building
39 NBF Matsudo BuildingTOKYO

60 Shin-Urayasu Center Building

39

CHIBA
28
57 29

60

Other Cities
Tokyo Bay3040 Sapporo L-Plaza

32

41 NBF Sapporo Minami Nijo Building
42 NBF Sendai Honcho Building

31

33

43 NBF Unix Building

40 41

44 NBF Niigata Telecom Building

KANAGAWA

45 NBF Nagoya Hirokoji Building
46 Aqua Dojima NBF Tower
47 Shinanobashi Mitsui Building
44

48 Sun Mullion NBF Tower

42
43

49 Sakaisuji-Honmachi Center Building
50 NBF Sakai-Higashi Building
51 NBF Tanimachi Building

53

45

52 Aqua Dojima East

54 55
56
61

46 47 48 49

53 NBF Shijo Karasuma Building

50 51 52

54 NBF Hiroshima Tatemachi Building
55 Hiroshima Fukuromachi Building
56 NBF Hakata Gion Building
61 NBF Kumamoto Building

32 Parale Mitsui Building●

36 S-ino Omiya North Wing●

40 Sapporo L-Plaza●

48 Sun Mullion NBF Tower●

49 Sakaisuji-Honmachi●

Center Building

NBF Report July–December 200721

Portfolio Overview
NBF’s properties as of December 31, 2007 are as follows:
Investment
Type

Name of Building

Type of Ownership

Percentageof OwnershipYear Built

Acquisition
Price

(%)

Book Value(Yen in millions)Tokyo CBDs
1 Yamato Seimei Building●
2 Nishi-Shinjuku Mitsui Building●
3 Shiba NBF Tower●
4 NBF Platinum Tower●
5 Gate City Ohsaki●
6 Toranomon Kotohira Tower●
7 NBF Nihonbashi Muromachi Center Building●
8 Nakameguro GT Tower●
9 NBF Ginza Street Building●
10 Shinjuku Mitsui Building No. 2●
11 GSK Building●
12 NBF Toranomon Building●
13 Kowa Nishi-Shinbashi Building B●
14 Nippon Steel Building No. 2●
15 NBF Alliance●
16 Yotsuya Medical Building●
17 Shibuya Garden Front●
18 NBF Shibakouen Building●
19 NBF Takanawa Building●
20 NBF Akasaka Sanno Square●
21 Sumitomo Densetsu Building●
22 NBF Higashi-Ginza Square●
23 NBF Ogawamachi Building●
24 NBF Ikebukuro Tower●
25 NBF Ikebukuro City Building●
26 NBF Sudacho Verde Building●
27 NBF Ebisu-minami Building●

Trust
Ownership
Trust
Trust
Ownership
Ownership
Trust
Ownership
Trust
Trust
Trust
Trust
Trust
Ownership
Trust
Trust
Ownership
Ownership
Trust
Trust
Trust
Trust
Ownership
Trust
Trust
Ownership
Ownership

Fee simple
Comparted ownershipFee simple
Fee simple
Comparted ownership
Comparted ownershipFee simple
Comparted ownershipFee simple
Fee simple
Fee simple
Fee simple
Co-ownership of comparted ownershipFee simple
Fee simple
Fee simple
Co-ownershipFee simple
Fee simple
Fee simple
Fee simple
Fee simple
Comparted ownershipFee simple
Fee simple
Fee simple
Fee simple

100.0
85.1
100.0
100.0
12.9
100.0
100.0
93.1
100.0
100.0
100.0
100.0
83.0
100.0
100.0
100.0
50.0
100.0
100.0
100.0
100.0
100.0
83.8
100.0
100.0
100.0
100.0

1984
1999
1986
2005
1999
2004
1986
2002
1990
1983
1990
1963
1994
1989
1989
2004
2003
1990
1987
1989
1991
2005
1986
1993
1993
1988
1991

63,50044,90332,00031,00030,10024,54323,94523,85617,00016,285
15,616
13,337
13,217
12,614
9,126
8,800
8,700
6,770
6,667
6,250
5,365
5,200
4,940
4,695
4,428
3,280
1,000

64,56836,812
31,28930,98424,884
21,35023,96722,368
17,627
15,861
14,015
13,726
12,20911,805
9,511
8,666
8,391
6,812
6,293
6,278
4,869
5,073
4,952
4,546
4,493
3,397
1,024

80.6 Note 4
100.0
35.0
75.0
97.5
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1996
2004
1989
1987
1990
1991
1990
1996
2004
1991
1990
1992

40,59435,20020,30013,529
3,800
2,300
8,876
2,435
16,816
2,361
2,000
2,455

39,97234,01819,756
12,560
3,341
2,173
7,570
2,519
16,063
2,199
1,957
2,308

46.2
100.0
100.0
100.0
100.0
100.0
100.0
99.0
100.0
49.3
100.0
100.0
23.7
100.0
100.0
10.4
100.0

2003
1990
1987
1994
1989
2000
1996
1982
1996
1991
1991
1993
1993
1991
1991
2002
1993

4,404
1,870
3,566
4,029
3,958
5,406
17,81014,40010,500
6,500
2,227
1,944
1,914
1,627
2,930
835
2,629
674,354

4,188
1,747
3,698
3,357
3,684
5,233
17,111
11,895
9,115
6,356
2,036
1,905
1,863
1,378
2,949
763
2,352
639,832

Other Greater Tokyo
28 Nakanosakaue Sunbright Twin●
29 NBF Toyosu Canal Front●
30 Shin-Kawasaki Mitsui Building●
31 Yokohama ST Building●
32 Parale Mitsui Building●
33 NBF Atsugi Building●
34 Tsukuba Mitsui Building●
35 NBF Utsunomiya Building●
36 S-ino Omiya North Wing●
37 Daido Life Omiya Building●
38 NBF Urawa Building●
39 NBF Matsudo Building●

Ownership/Trust Co-ownership of comparted ownership
Trust
Fee simple
Ownership
Co-ownership
Trust
Co-ownership
Ownership
Co-ownership of comparted ownership
Ownership
Fee simple
Trust
Fee simple
Ownership
Fee simple
Ownership
Fee simple
Trust
Fee simple
Ownership
Fee simple
Ownership
Fee simple

Other Cities
40 Sapporo L-Plaza●
41 NBF Sapporo Minami Nijo Building●
42 NBF Sendai Honcho Building●
43 NBF Unix Building●
44 NBF Niigata Telecom Building●
45 NBF Nagoya Hirokoji Building●
46 Aqua Dojima NBF Tower●
47 Shinanobashi Mitsui Building●
48 Sun Mullion NBF Tower●
49 Sakaisuji-Honmachi Center Building●
50 NBF Sakai-Higashi Building●
51 NBF Tanimachi Building●
52 Aqua Dojima East●
53 NBF Shijo Karasuma Building●
54 NBF Hiroshima Tatemachi Building●
55 Hiroshima Fukuromachi Building●
56 NBF Hakata Gion Building●
Total

Ownership
Trust
Trust
Trust
Trust
Ownership
Trust
Ownership
Trust
Ownership
Trust
Trust
Trust
Trust
Ownership
Ownership
Trust

Comparted ownershipFee simple
Fee simple
Fee simple
Fee simple
Fee simple
Fee simple
Co-ownershipFee simple
Co-ownership of comparted ownershipFee simple
Fee simple
Co-ownership of comparted ownershipFee simple
Fee simple
Co-ownership of comparted ownershipFee simple

Notes: 1. Percentage of total revenues is the ratio of revenue from each office property to total revenues from all office properties.
2. Consent for disclosure was not obtained from tenants from whom rent revenue accounts for more than 80% of total rent revenue for the property. However, relevant figures are included in the total.
3. Figures stated above are based on NBF‘s ownership interest.
4. This figure does not include the Nakanosakaue Sunbright Annex, in which NBF has 50.3% ownership interest.

22 NBF Report July–December 2007

Revenue

Percentage ofTotal Revenues(Yen in millions)(Note 1)
(%)

58
1
26
5
1
1
14
1
1
44
1
11
2
2
9
1
1
7
5
6
1
8
1
13
12
3
3

1,960
1,478
1,072
1,504
1,077
999
921
1,095
Note 2749
Note 2574
Note 2
Note 2314
286
Note 2
343
343
230
Note 2
242
196
231
189
117
63

7.0
5.3
3.9
5.4
3.9
3.6
3.3
3.9
Note 22.7
Note 22.1
Note 2
Note 21.1
1.0
Note 21.2
1.2
0.8
Note 2
0.9
0.7
0.8
0.7
0.4
0.2

100
99.6
100
98.6
100
100
90.8
97.2
100
94.5
100
83.5

8
9
1
88
1
19
68
35
35
13
14
21

1,189
1,164
1,004
763
315
142
533
147
784
120
115
120

4.3
4.2
3.6
2.7
1.1
0.5
1.9
0.5
2.8
0.4
0.4
0.4

100
100
98.4
88.9
97.8
97.3
97.4
100
100
96.4
98.9
100
100
100
88.8
96.3
94.0
98.6

12
6
9
52
36
9
38
1
31
44
21
3
21
19
23
15
7
897

322
100
199
284
262
235
871
737
464
335
120
Note 2
124
101
145
41
156
27,814

1.2
0.4
0.7
1.0
0.9
0.8
3.1
2.6
1.6
1.2
0.4
Note 2
0.4
0.4
0.5
0.1
0.6
100.0

Appraisal Value

Rentable
Area

Leased Area at
End of Period

Occupancy Rate at
End of Period(Yen in millions)

(m2)

(m2)

(%)

70,90056,30037,00059,90035,80036,50034,10032,00016,50024,40020,30019,70021,60015,66011,6009,170
17,400
8,900
8,920
8,630
6,650
7,790
6,390
6,220
5,620
4,470
1,520

27,64032,96824,72833,503
20,714
16,84816,30621,423
3,440
14,91920,426
10,193
10,08817,338
4,043
7,450
8,258
7,087
10,473
5,258
5,991
4,871
4,805
5,666
5,127
2,971
1,595

26,88432,96824,72833,503
20,714
16,84816,30621,423
3,440
14,692
20,426
9,966
10,08817,338
4,043
7,450
8,258
7,087
10,458
4,555
5,991
4,871
4,805
5,666
5,127
2,637
1,595

97.3
100
100
100
100
100
100
100
100
98.5
100
97.8
100
100
100
100
100
100
99.9
86.6
100
100
100
100
100
88.8
100

39,90039,50021,90022,300
4,490
2,540
9,710
2,830
22,700
2,580
2,150
2,760

31,93636,76427,92420,06912,545
5,230
16,834
6,197
20,698
3,574
3,455
4,770

31,936
36,61527,924
19,796
12,545
5,230
15,285
6,024
20,698
3,378
3,455
3,985

6,770
1,820
4,190
4,370
4,570
6,510
24,80015,70010,900
7,880
2,330
2,210
2,490
1,860
3,230
955
2,800
860,685

11,396
5,351
7,539
13,47910,220
6,873
21,917
25,237
14,954
11,438
5,308
4,939
3,243
3,931
5,612
1,309
5,416
692,286

11,396
5,351
7,415
11,983
9,997
6,687
21,33925,237
14,954
11,027
5,249
4,939
3,243
3,931
4,985
1,260
5,090
682,822

Total Number ofTenants at
End of Period

NBF Report July–December 200723

Management Team and Management Structure(As of December 31, 2007)

Corporate Structure and Management
Nippon Building Fund Inc. (NBF) is an investment corporation that takes a medium-to-long-term
perspective with the aim of generating steady asset growth and stable earnings. NBF believes that
fair, transparent management is central to increasing return on investment.

Nippon Building Fund Inc.

dance, unless otherwise stipulated by laws, regulations or NBF’s articles

Nippon Building Fund Inc. is an investment corporation establishedof incorporation. Decisions on substantive matters such as changes in thewith the objective of investing in assets, primarily Designated Assets asarticles of incorporation require the attendance of shareholders that con-defined by the Investment Trust Law of Japan. NBF entrusts management

trol a simple majority of total shares issued and outstanding, and a two-of its assets to Nippon Building Fund Management Ltd., which is an asset

thirds majority of the voting rights of such shareholders. In addition, any

management company.

change in the asset management policies and standards, which are stipu-

NBF’s primary investment objective is to achieve sustainable growth inportfolio value and stable profits on a medium-to-long-term basis. NBF

lated by NBF’s articles of incorporation, requires an extraordinary resolution of shareholders as outlined above.

achieves this objective by investing in real estate consisting of buildings
primarily used for offices with their underlying land located in central

Executive Directors, Supervisory Directors and thebusiness districts (CBDs) in Tokyo, Greater Tokyo and other cities in

Board of Directors

Japan. NBF also invests in securities, beneficiary certificates representing

NBF’s articles of incorporation stipulate that NBF must have one or

beneficial interests in trusts (beneficiary certificates) and other assets

more executive directors and four or fewer supervisory directors (but thebacked by office properties.

number of supervisory directors must always be at least one greater than
the number of executive directors). As of December 31, 2007, NBF had
two executive directors and four supervisory directors.

General Meeting of Shareholders
Specific matters pertaining to NBF that are subject to the Investment

NBF’s executive directors are responsible for business execution. In

Trust Law of Japan or the Company’s articles of incorporation are decided

addition, they have authority for all judicial and extrajudicial proceedings

by resolution of the General Meeting of Shareholders, which convenes atrelated to the operations of NBF.
Supervisory directors are responsible for supervising execution by theleast once every two years, in principle. The fifth General Meeting of
Shareholders convened on March 8, 2007. The date of the next General

executive directors.
The Board of Directors consists of the executive and supervisory direc-

Meeting of Shareholders has not been set.
The General Meeting of Shareholders adopts or vetoes resolutions on

tors. Its responsibilities include authorizing business execution and super-

the basis of a simple majority of the voting rights of shareholders in atten-

vising the performance of the executive directors. Resolutions by theGeneral Meeting of
Shareholders

Asset Custody

The Chuo Mitsui Trustand Banking Co., Ltd.
Mitsui Fudosan Co., Ltd.

Asset
Management
Entrustment

Asset Custody
Entrustment

NIPPON BUILDING FUND Inc. (NBF)
OfficeManagement
Entrustment

Board of Directors

NBF Office Management Co., Ltd.

Qualified Institutional
Investors / Bondholders
Independent Auditors

Liabilities

Office Management
Investment

Real Estate, etc.
Rent, etc.

24 NBF Report July–December 2007

Borrowings /Bonds and
Notes
Debt
Service

NIPPON BUILDINGFUND MANAGEMENT Ltd. (NBFM)

AssetsShareholders’EquityInvestment
Distribution

Shareholder
Trading

Shareholder

Management Team

Seated from left:

Sadafumi Abe
Koichi Nishiyama
Standing from left:

Sadao Kamiyama
Akira Nishizawa
Hideo Fukazawa
Hatsuo Komatsu

Executive Directors

Name

Background Summary

Sadafumi Abe

Appointed Executive Director of NBF in March 2005 after serving as Corporate Auditor of
Mitsui Fudosan Co., Ltd.
Representative Director of Nippon Building Fund Management Ltd. Executive Director of
NBF since August 2001.
Appointed Supervisory Director of NBF in August 2001. Real estate appraiser. Tokyo
District Court Appraisal Committee member.
Appointed Supervisory Director of NBF in March 2005 after serving as a deputy director of
the Ministry of Land, and director of the Government Housing Loan Corporation.
Attorney. Appointed Supervisory Director of NBF in March 2007.
Certified Public Accountant. Certified Public Tax Accountant. Appointed Supervisory
Director of NBF in March 2007.

Koichi Nishiyama
Supervisory Directors Akira Nishizawa
Hideo Fukazawa
Hatsuo Komatsu
Sadao Kamiyama

Board of Directors require a simple majority with more than half of thetors and supervisory directors selected to fill a vacancy or because of an

members of the Board in attendance.

increase in the number of directors expire at the same time as the

The bylaws of NBF’s Board of Directors stipulate that executive andremaining terms of their predecessors or the current directors. Both of thesupervisory directors may not participate in decisions in which they have

two executive directors and all four supervisory directors were elected at

a vested interest. Executive and supervisory directors with such financial

the General Meeting of Shareholders held on March 8, 2007, andinterest shall not be included in the number of executive and supervisory

assumed office on March 17, 2007.

directors in attendance for such decisions.
The terms of office of executive directors and supervisory directors are
two years from the time they assume office. The terms of executive direc-

NBF Report July–December 200725

Nippon Building Fund Management Ltd.

Management Structure

NBF entrusts asset management to Nippon Building FundManagement Ltd. under an asset management agreement.

General Meeting of Unitholders
AuditorBoard of Directors

Matters Entrusted toInternal Audit Organization

Nippon Building Fund Management Ltd.
As the asset management company required by the Investment Trust

Executive Board

CEO
Accounting Auditor

Investment
Review Board

Law of Japan, Nippon Building Fund Management Ltd. manages NBF’s

Risk
Management
Board

assets in accordance with the asset management objectives and policies
Investment & Finance Group

stipulated by NBF’s articles of incorporation. In addition, in accordance with

Corporate Operation Groupthe manager of general administration contract designating Nippon Building
Fund Management Ltd. as the institutional manager of NBF’s assets, Nippon

Real EstateManagement
Team

Real Estate
Investment
Team

Research
Team

FinancialTeam

Building Fund Management Ltd. also executes certain responsibilities in

Fund
Operation
Team

Corporate
Risk
Planning &Management
Administration & Compliance
Team
Team

connection with the operation of the General Meeting of Shareholders andthe Board of Directors as manager of general administration.

Building Fund Management Ltd. The heads of the Investment & FinanceGroup and the Corporate Operation Group also serve as directors, andManagement Structure ofoversee their respective divisions under the direction and oversight of the

Nippon Building Fund Management Ltd.

president. Corporate auditors conduct accounting audits and operational

The Board of Directors makes decisions on the basic management

audits of Nippon Building Fund Management Ltd. An internal audit unit

policies of Nippon Building Fund Management Ltd. and oversees execution

conducts internal audits covering the operations and departments ofof the duties of the representative director. The president, who is the rep-

Nippon Building Fund Management Ltd. at the request of the Board ofresentative director, supervises and executes the operations of Nippon

Directors.

Nippon Building Fund Management Ltd. Management Team
Name

Title

Career Summary

Koichi Nishiyama

President and CEO
and Representative
Director

Yasushi Nakayama

Director, Head ofInvestment& Finance GroupRiichi Morihiro

Director, Head ofCorporate Operation
Group

Hiroshi Matsumoto
Tamotsu Shinyama
Toru Suzuki

Director (Part-time)
Director (Part-time)
Corporate Auditor(Part-time)
Corporate Auditor(Part-time)

April 1974 Joined Mitsui Fudosan Co., Ltd.
April 2000 Manager of Building Fund Office, Building Division of Mitsui Fudosan
Sept. 2000 President and representative director of MF Asset Management Co., Ltd.
(now Nippon Building Fund Management Ltd.) (current position)
Aug. 2001 Became Executive Director of NBF (current position)
April 1981 Joined Mitsui Fudosan Co., Ltd.
April 2001 Head of Building Business Division, Building Department of Mitsui Fudosan
April 2006 Manager of Building Department, Chiyoda Development Division of Mitsui Fudosan
April 2007 Became Director of Nippon Building Fund Management Ltd. (current position)
April 1978 Joined Sumitomo Life Insurance Company
Oct. 2002 Assistant Manager, Financial Corporation Division of Sumitomo Life Insurance
April 2005 Director and Manager of Residential Planning Division, Eisen Realty Co., Ltd.
April 2006 Became Director of Nippon Building Fund Management Ltd. (current position)
April 2008 Became Director of Nippon Building Fund Management Ltd. (current position)
April 2002 Became Director of Nippon Building Fund Management Ltd. (current position)
April 2008 Became Auditor of Nippon Building Fund Management Ltd. (current position)

Noriaki Moromachi

26 NBF Report July–December 2007

April 2003 Became Auditor of Nippon Building Fund Management Ltd. (current position)

Management Team and Management Structure
Compliance Initiatives
The management of NBF and Nippon Building Fund Management Ltd.
conduct honest and appropriate business activities while maintaining rig-

fund procurement and management policies; accounting guidelines for
tax accounting and dividend distribution policies; and guidelines on transactions with potential conflicts of interest.

orous compliance by adhering to all relevant laws and regulations, basedon a high level of corporate ethics.
The bylaws of NBF’s Board of Directors stipulate that Board of
Directors meetings are to be held at least once every three months. In

Policy and Management System for
Dealing with Conflict of Interest Transactions■

Fundamental Policy on Conflict of Interest Transactions

practice, NBF holds such meetings once a month. At Board meetings,

Nippon Building Fund Management Ltd. is constantly aware of its

executive directors report on their execution of their duties and superviso-

accountability to NBF and NBF’s shareholders with regard to any transac-

ry directors ensure that oversight and check-and-balance systems aretions in which the interests of NBF and the interests of Nippon Building

functioning properly.

Fund Management Ltd. and its related corporations or customers may con-

Nippon Building Fund Management Ltd. views compliance as a man-flict. Nippon Building Fund Management Ltd. follows voluntary rules stipu-

agement strategy, with a fundamental compliance policy of conducting

lated in laws and internal bylaws to proactively prevent conflicts of interest.

operations honestly and fairly while maintaining a rigorous complianceAll decisions made in executing the management of NBF’s assets are

system based on a high level of corporate ethics. Specifically, Nippon

subject to the approval of the president, and are made after going throughBuilding Fund Management Ltd. requires that a compliance officer be

discussions by the Investment Review Board and Executive Board ofassigned to the Corporate Operation Group, and has establishedNippon Building Fund Management Ltd. Sponsor companies are not per-Compliance Rules and a Compliance Manual. In addition, a Compliancemitted to intervene in the decision-making process.

Program is formulated each year to verify the progress of the execution■

plan for that year and identify any problem areas.

Voluntary Rules for Conflict of Interest Transactions
Stipulated in Internal Bylaws

Nippon Building Fund Management Ltd. has set voluntary rules in its

Risk Management Systeminternal bylaws to address transactions with parties, including sponsor

NBF and Nippon Building Fund Management Ltd. have established thecompanies that have interests in Nippon Building Fund Management Ltd.

following risk management system to avoid and minimize risks related to

The voluntary rules require the Investment Division, which initiates theinvestments.

transaction, as well as the Compliance Department, the Asset■

NBF

Management Examination Meeting and other units to protect NBF’s man-

NBF’s Risk Management Regulations define risk management policies

aged assets and profits by fully examining the transaction contents

and procedures. The Risk Management Board convenes once every threeaccording to the voluntary rules set in the internal bylaws in the event of amonths and undertakes deliberation, monitoring and other initiatives totransaction in which the interests of Nippon Building Fund Management

ensure that the entrusted asset manager is conducting its duties with due

Ltd. and parties that have interests in Nippon Building Fund Management

care in good faith in a manner consistent with its fiduciary duty to theLtd. may conflict with the interests of NBF. These rules are designed fromconservation and maintenance of entrusted assets.

the standpoint of accountability to NBF and its shareholders.

■

Nippon Building Fund Management Ltd.

In examining the transaction contents, Nippon Building Fund

Nippon Building Fund Management Ltd. formulates a Management

Management Ltd. solicits the opinions of attorneys, certified tax account-

Policy, a Medium-to-Long-Term Asset Management Policy and an Annual

ants and other third-party experts as needed. In addition, when purchas-

Management Plan to follow in managing NBF’s assets. In addition, Nippon

ing real estate or other assets from parties that have interests in Nippon

Building Fund Management Ltd. has set Asset Management Guidelines as

Building Fund Management Ltd., the purchase price is strictly set no high-a set of standards to follow.

er than the appraised value according to a real estate appraiser, who, as a

The Asset Management Guidelines consist of management guidelines

rule, shall have no vested interest.

for management, acquisition and sale of assets; financial guidelines for

NBF Report July–December 200727

Management’s Discussion and Analysis
Summary of Selected Financial Data
13th Period
from July 1, 2007 to
December 31, 2007

12th Period
from January 1, 2007 toJune 30, 2007

11th Period
from July 1, 2006 to
December 31, 2006

(Yen in millions, except per share data or where otherwise indicated)

Operating revenues
Note 2
Revenue from property leasing
Revenue from capital gain
Operating expenses
Rental expenses
Income before income taxes
Net income(a)Funds from operations
Note 3
Net operating income from property leasing activities Note 3
Total amount of cash distribution(b)
Depreciation and amortization
Capital expenditures
Total assets(c)Interest-bearing debt
Net assets(d)Total number of common shares issued (shares)(e)
Net assets per share (Yen)(d) / (e)Distribution per share (Yen)(b) / (e)Funds from operations per share (Yen)
Note 3
ROA
Note 3(Annual rate)
ROE
Note 3(Annual rate)
LTV (Loan to Value)
Note 3
Capital ratio(d) / (c)Payout ratio(b) / (a) Note 4
Number of days
Number of investment properties
Note 5
Number of tenants
Note 5
Total rentable area (m2)Occupancy rate
Note 5¥ 27,814
27,814—
15,357
14,077
10,227
10,226
15,39418,905
10,226
5,168
1,193
672,195
272,500
356,672
508,000
702,110
20,12930,3031.51%(3.02%)
2.87%(5.74%)
44.3%
53.1%
99.9%
184
56
897
692,286
98.6%¥ 26,641
26,641—
14,52913,323
10,064
10,063
15,18818,442
10,0635,125
1,210
680,266
281,500
356,509508,000
701,790
19,80929,897
1.53%(3.06%)
2.82%(5.65%)
44.9%
52.4%
100.0%
181
56
910
692,22299.0%¥ 25,894
25,894—
14,242
13,0959,767
9,766
14,754
17,787
9,766
4,988
1,317
634,117
236,500
356,213508,000
701,206
19,22429,043
1.54%(3.08%)
2.74%(5.48%)
40.9%
56.2%
99.9%
184
55
892
670,51397.8%

13th Period
from July 1, 2007 to
December 31, 2007
U.S. dollars in thousands
except per share data (Note 1)$ 248,981
248,981—
137,468
126,016
91,54791,537
137,803169,231
91,536
46,266
10,683
6,017,321
2,439,352
3,192,842
—
6,285
180
271

Notes: 1. U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥111.71 = U.S. $1.00, the approximate exchange rate on December 31, 2007.
2. Operating revenues do not include consumption tax.
3. All valuations are calculated through the following formulas. The figures in parentheses are annualized based on the 6-month figures for the period.
ROA: Income before income taxes / (Initial total assets + Total assets at end of period) ÷ 2
ROE: Net income / (Initial net assets + Net assets at end of period) ÷ 2
Net operating income from property leasing activities: (Revenue from property leasing – Rental expenses) + Depreciation and amortization
Funds from operations: Net income (excluding Gain on sale of investment properties + Gain on exchange of investment properties) + Depreciation and amortization
Funds from operations per share: (Net income (excluding Gain on sale of investment properties + Gain on exchange of investment properties) + Depreciation and amortization) / Weighted average
number of common shares issued and outstanding during the period.
Loan to value: (Interest-bearing debt + Deposits under management) / Total assets
4. Payout ratio figures are calculated to one decimal place only.
5. Number of investment properties means units generally perceived to be one office building. Number of tenants means gross number of tenants by building. Occupancy rate is the ratio of grossleased area to total rentable area at the end of the period.

28 NBF Report July–December 2007

Operating Environment and Results
During the six months ended December 31, 2007 (the “13th Period”), Japan’s economy was solid overall, with steady growth in capital
investment and consumer spending against a backdrop of strong corporate earnings, despite emerging causes of uncertainty such as theturmoil in global financial markets caused by the U.S. subprime loan crisis, and the rising price of crude oil.
In the office building leasing market, strong corporate performance led to aggressive business expansion and rising employment, which
continued to fuel demand for office space in the central business districts (CBDs) of Tokyo. Rents for new tenants continued to rise, while
increases in rents for lease contract renewals narrowed the gap between new and existing rates, as growth in the leasing market
remained strong.
The real estate acquisition market was highly competitive, as continued aggressive investment by domestic and foreign funds, institutional investors and others meant that the conditions for acquiring superior real estate remained challenging.
Under these conditions, NBF continued to manage its assets based on a strategy of investing in high-quality, highly competitive officebuildings with comparatively stable rental cash flow and little risk of decline in asset value. During the 13th Period, NBF exercised careful
deliberation that made the most of its accumulated expertise and original information channels such as the Mitsui Fudosan Group. In
December 2007, NBF decided to acquire NBF Shibuya East (acquisition price: ¥8,000 million, date of transfer: January 2008).
For its portfolio properties, NBF worked to expand internal growth by implementing various measures to increase tenant satisfaction,
including providing meticulous property management services and conducting scheduled renovations and new construction of facilities. At
the same time, NBF increased rents for existing tenants who renewed their lease contracts in the strong office building leasing market.
As a result of these efforts, NBF’s real estate portfolio as of December 31, 2007 totaled 56 buildings. Total investment on an acquisition price basis was ¥674,354 million. Total rentable area was 692,286m2 (209,417 tsubo ). The occupancy rate declined 0.4 percentage
points from June 30, 2007 to 98.6 percent. Tenants totaled 897.

Occupancy rate

Total investment(Yen in billions)

December 31,
2007¥21.8 billion(contract completed)*

June 30,
2007(%)

December 31,
2007
June 30,
2007

December 31,
2006

December 31,
2006

June 30,
2006

June 30,
2006

December 31,
2005

December 31,
2005
0

100

200

300

400

500

600

700

0

90 91 92 93 94 95 96 97 98 99 100* Contract basis. NBF Toyosu Garden Front
calculated as ¥20 billion for convenience.

Overview of Performance
Operating revenues for the six months ended December 31, 2007 increased 4.4 percent, or ¥1,173 million, compared with the previous six-month period to ¥27,814 million. Operating income in the property leasing business increased 3.1 percent, or ¥419 million, to¥13,736 million. Operating income increased 2.8 percent, or ¥345 million, to ¥12,457 million.

NBF Report July–December 2007

29

Operating income increased due to an increase in operating revenues resulting from the full-period occupancy at Nakanosakaue
Sunbright Twin, Nakanosakaue Sunbright Annex and the NBF Ginza Street Building, which NBF acquired during the six months ended June30, 2007, as well as internal growth resulting from factors including rent increases for existing tenants who renewed their leases.

Operating revenues(Yen in millions)Operating income from property
leasing activities(Yen in millions)

13th

13th
PeriodPeriod12th
Period12th
Period11th
Period11th
Period10th
Period10th
Period9th
Period9th
Period005,000 10,000 15,000 20,000 25,000 30,000

5,000

10,00015,000Distribution for the Current Period
Distribution per share for the current period was ¥20,129. NBF expected to distribute almost all taxable income for the current period
to be eligible for special tax treatment (Special Taxation Measures Law of Japan Article 67-15) that allows NBF to deduct its cash dividends of profits from taxable income.
For the six months ended
December 31, 2007

For the six months ended
June 30, 2007

For the six months ended
December 31, 2006

(Yen in thousands, except per share amounts)

Retained earnings
Undistributed earnings
Total cash distribution(Total cash distribution per share)
Distribution of accumulated earnings(Distribution of accumulated earnings per share)
Cash distribution in excess of accumulated earnings(Per share)¥10,225,655
123
10,225,532
20,12910,225,532
20,129——¥10,063,002
30
10,062,972
19,80910,062,972
19,809——¥9,766,001
209
9,765,792
19,224
9,765,792
19,224——

Note: Above cash distributions were paid after the period end.

Distribution per share

Total cash distribution
(Yen)

13th

(Yen in millions)

13th

PeriodPeriod12th
Period12th
Period11th
Period11th
Period10th
Period10th
Period9th
Period9th
Period0

5,000

10,00015,00030 NBF Report July–December 2007

20,000

0

5,000

7,500

10,00012,500Management’s Discussion and Analysis

Changes in Assets, Liabilities and Net Assets
Assets
As of December 31, 2007, total assets decreased ¥8,071 million to ¥672,195 million compared with June 30, 2007. Return on average total assets (ROA) for the six months ended December 31, 2007 decreased to 1.51 percent from 1.53 percent for the previous sixmonth period.
Current assets decreased ¥4,310 million to ¥28,131 million compared with June 30, 2007. Investment properties decreased ¥3,829
million to ¥639,814 million compared with June 30, 2007.

Liabilities
Current liabilities decreased ¥11,571 million to ¥65,617 million compared with June 30, 2007, primarily because of a decrease in
short-term loans and long-term debt due within one year compared with June 30, 2007.
Long-term debt increased ¥3,000 million compared with June 30, 2007 to ¥215,000 million.
As a result, total interest-bearing liabilities decreased ¥9,000 million to ¥272,500 million compared to June 30, 2007. However, theratio of fixed-rate long-term debt to total interest-bearing liabilities increased to 78.9 percent from 75.3 percent as of December 31,
2007. The loan-to-value ratio, calculated as the ratio of interest-bearing liabilities plus deposits under management to total assets,
decreased to 44.3 percent from 44.9 percent as of December 31, 2007.
In addition, NBF worked to diversify funding sources. In January 2007, NBF submitted a shelf registration to publicly offer up to ¥200
billion in bonds. As of December 31, 2007, NBF had issued bonds totaling ¥30 billion under this shelf registration.

Net Assets
Net assets increased ¥163 million to ¥356,672 million compared with June 30, 2007.

Total assets

Net assets(Yen in millions)

13th
Period(Yen in millions)

13th
Period12th
Period12th
Period11th

11th
PeriodPeriod10th

10th
PeriodPeriod9th
Period0300,000 400,000 500,000 600,000 700,000

9thPeriod0100,000

200,000

300,000

400,000

Funding
Balance of Paid-in Capital
NBF was established on March 16, 2001 with initial paid-in capital of ¥100 million. NBF began investing activities in May 2001 after¥98,800 million was raised through private placements. As of December 31, 2007, NBF had issued 508,000 common shares out of
2,000,000 total authorized shares. NBF’s common shares were listed on the J-REIT section of the Tokyo Stock Exchange in September

NBF Report July–December 200731

2001 upon the completion of a public offering. As the Investment Trust Law of Japan does not contain any provision for the issue of morethan one class of shares, NBF’s common shares comprise the sole class of shares authorized and issued by NBF.
Issue dateCommon shares outstanding
Increase
Balance(Shares)

Remarks

Initial capital(private)
May 23, 2001
Private placement
September 8, 2001 Public offering
July 14, 2004
Public offering
Third party
August 11, 2004
allocation
August 10, 2005
Public offering
March 16, 2006
Public offering
Third
party
March 29, 2006
allocation
March 16, 2001

200

200

197,600
82,90080,000197,800
280,700
360,700

4,000

Paid-in capital
Increase

Balance

Notes(Yen in millions)

¥

100

¥

100

Note 1

98,80049,99958,83898,900148,899
207,737

Note 2
Note 3Note 4

364,700

2,942

210,679

Note 558,00080,000422,700
502,700

51,491
79,040262,170
341,210Note 6Note 75,300

508,000

5,236

346,446

Note 8Notes: 1. NBF was established with initial capital of ¥500,000 per share.
2. Follow-on private offering at ¥500,000 per share to raise funds for acquisition of 22 properties.
3. Public offering of new units for ¥625,000 per share (excluding underwriting fee: ¥603,125) to repay debt and to fund property acquisition.
4. Public offering of new units for ¥759,500 per share (excluding underwriting fee: ¥735,475) to repay debt, etc.
5. Additional issue of new units (third party allocation) for ¥735,475 per share undertaken pursuant to the public offering in Note 4.
6. Public offering of new units for ¥916,300 per share (excluding underwriting fee: ¥887,782) to repay debt and to fund property acquisition.
7. Public offering of new units for ¥1,019,200 per share (excluding underwriting fee: ¥988,000) to repay debt and to fund property acquisition.
8. Additional issue of new units (third party allocation) for ¥988,000 per share undertaken pursuant to the public offering in Note 7.

Market Price of Shares
High/Low (closing price) of shares on the TSE:

High
Low

For the six months ended
December 31, 2007

For the six months ended
June 30, 2007
(Yen)

For the six months ended
December 31, 2006

¥1,790,000
1,340,000¥1,990,000
1,550,000¥1,580,000
1,080,000

Borrowings
Borrowings from financial institutions as of December 31, 2007 are shown below.
Short-term debt
LenderBalance

Averageinterest rate (%)

Due on(Note 1)

1.0%
1.0%
1.0%
1.0%
1.1%
1.1%
1.1%
1.1%
1.1%
1.1%
1.1%
1.1%

January 25, 2008
January 25, 2008
January 25, 2008
January 25, 2008
March 26, 2008
January 31, 2008
January 31, 2008
January 31, 2008
February 29, 2008
March 26, 2008
January 31, 2008
March 26, 2008

Repayment
methodUse of
funds

Notes

(Yen in millions)

The Sumitomo Trust and Banking¥10,000
Company, Limited
Shinkin Central Bank
7,000
The Chuo Mitsui Trust and Banking Co., LIMITED
6,000
Mitsubishi UFJ Trust and Banking Corporation
3,000
The Hachijuni Bank, Ltd.
2,000
The Yamaguchi Bank, Ltd.
1,000
THE KAGOSHIMA BANK, LTD.
1,000
The Gunma Bank, Ltd.
1,000
THE SHIZUOKA BANK, LTD.
1,000
The Chugoku Bank, Limited
1,000
The Iyo Bank, Ltd.
1,000
The Yamanashi Chuo Bank, Ltd.
500

Total short-term debt

¥34,500

32 NBF Report July–December 2007

Bulletpayment(Note 2)

Unsecured/unguaranteed/pari passu,
See (Note 3)
Floating rate

Management’s Discussion and Analysis

Long-term debt
LenderBalance

Averageinterest rate (%)

Due on(Note 1)

1.8%
1.5%
1.8%
2.0%
2.4%
1.7%
1.7%
2.1%
1.2%
1.7%
1.5%
2.3%
1.7%
1.8%
1.6%
1.6%
2.0%
2.1%
2.2%
2.2%
1.2%
1.1%
0.9%
0.8%
1.1%
1.2%
1.6%
1.5%
1.5%
1.2%
1.8%
2.0%
1.4%
1.2%
1.7%
2.1%
1.9%
0.8%

November 28, 2014
September 11, 2015
September 27, 2017
February 15, 2016
May 30, 2018
May 23, 2008
July 16, 2009
July 19, 2011
February 3, 2010
June 1, 2011
September 11, 2015
May 30, 2016
February 13, 2012
March 30, 2012
November 1, 2012
December 13, 2013
May 30, 2013
December 21, 2011
April 27, 2012
May 23, 2012
February 26, 2010
November 20, 2008
October 30, 2009
April 1, 2010
October 19, 2010
March 30, 2009
March 30, 2011
June 30, 2009
April 30, 2013
February 3, 2010
March 30, 2012
October 31, 2014
October 4, 2013
February 12, 2010
December 15, 2014
July 11, 2014
July 12, 2012
February 13, 2008

1.5%
1.4%

February 7, 2012
May 23, 2008

Repayment
methodUse of
funds

Notes

(Yen in millions)¥ 4,000
10,00010,00010,00010,000Sumitomo Life Insurance Company
12,000
5,000
5,000
3,000
Zenkyoren
1,000(The National Mutual Insurance
10,000Federation of Agricultural Cooperatives) 10,000
MITSUI LIFE INSURANCE COMPANY,
2,000
LIMITED
4,000
2,000
3,000
2,000
Meiji Yasuda Life Insurance Company
3,000
4,000
1,000
2,000
The Norinchukin Bank
8,000
Nippon Life Insurance Company
3,000
2,000
2,000
The Chuo Mitsui Trust and
1,000Banking Co., LIMITED
5,000
Sumitomo Mitsui Banking Corporation
1,000
5,000
DAIDO LIFE INSURANCE COMPANY
2,000
1,000
1,000
1,000
TAIYO LIFE INSURANCE COMPANY
1,000
1,000
2,000
THE BANK OF FUKUOKA, Ltd.
4,000
The Dai-Ichi Mutual Life
2,000
Development Bank of Japan

Bulletpayment(Note 2)

Unsecured/unguaranteed/pari passu,
See (Note 3)
Fixed rate

Insurance Company
Mizuho Corporate Bank, Ltd.
The Joyo Bank, Ltd.

Total long-term debt
Total borrowings (Note 4)

2,000
1,000
¥158,000¥192,500

Notes: 1. With respect to the date of drawdown and date of repayment in case of more than one short-term loan from the same lender, the earliest date of repayment for all suchloans coming due is given.
2. Use of funds for the above includes acquisition of real estate or beneficiary interests, repayment of borrowings and working capital.
3. A special agreement attached to “Loan Agreement” entered into between NBF and each financial institution provides that the above borrowings from all financial
institutions rank pari passu to each other.
4. The total amount of long-term borrowings (i.e. excluding those expected to be repaid within one year) repayable within 5 years of the date of the balance sheet andexpected to be repaid by specific year(s) is as follows.

NBF Report July–December 2007

33

(Yen in millions)

Amount Borrowed

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years¥10,000¥12,000¥14,000¥20,000

NBF Bonds
Issue date

Balance as ofDecember 31, 2007
(Yen in millions)

CouponNo. 3 Unsecured Bonds
No. 4 Unsecured Bonds

June 12, 2003
September 22, 2004

¥10,000¥10,000

2.00%
1.04%

No. 5 Unsecured Bonds

September 22, 2004

¥10,000

1.60%

No. 6 Unsecured Bonds
No. 7 Unsecured Bonds

March 9, 2005
November 9, 2005

¥10,000¥10,000

0.80%
1.85%

No. 8 Unsecured Bonds
No. 9 Unsecured Bonds
No. 10 Unsecured Bonds

March 7, 2007
May 24, 2007
May 24, 2007

¥10,000¥10,000¥10,000

1.48%
1.74%
2.04%

Issue

Total (Note 6)

MaturitydateJune 12, 2018
September 22,
2009
September 22,
2011
March 9, 2010
November 9,
2015
March 7, 2012
May 23, 2014
May 24, 2017

Redemption

Use ofproceeds

Notes

Bullet payment
Bullet payment

Note 1 Notes 2 and 4
Note 1 Notes 2 and 4

Bullet payment

Note 1 Notes 2 and 4

Bullet payment
Bullet payment

Note 1 Notes 3 and 5
Note 1 Notes 3 and 5

Bullet payment
Bullet payment
Bullet payment

Note 1 Notes 3 and 5
Note 1 Notes 3 and 5
Note 1 Notes 3 and 5¥80,000

Notes: 1. Use of funds includes acquisition of Real Estate, etc., repayment of borrowings and working capital.
2. These bonds are only issued to qualified institutional investors and rank pari passu with other bonds issued.
3. Rank pari passu with all other publicly and privately issued bonds.
4. Subject to provision of collateral and financial restrictions pursuant to material decline in credit rating.
5. Subject to provision of collateral pursuant to material decline in credit rating.
6. The total amount of bonds repayable within 5 years of the date of the balance sheet and expected to be repaid by specific year(s) is as follows.
(Yen in millions)
Within 1 year

Amount Borrowed—

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years¥10,000¥10,000¥10,000¥20,000

Others
NBF had security deposits totaling ¥34,848 million as of December 31, 2007.

34 NBF Report July–December 2007

Management’s Discussion and Analysis

Capital Expenditures
Planning
As of December 31, 2007, NBF is planning the following capital expenditures for the renovation of its properties. The amounts below
include repairs and maintenance costs that will be expensed as incurred. Moreover, in addition to a steady program of expenditures forconstruction, repair and renovation of facilities, a program of renewal construction is being implemented in order to increase competitive
power in the market as well as to increase the level of tenant satisfaction based on the results of tenant satisfaction surveys and neighboring competitive building specification surveys, etc.

Name of property

Objective

NBF Nagoya Hirokoji Bldg. Renovation of building
facilities at time of addition
Yokohama ST Bldg.
Renovation of exterior
Aqua Dojima NBF Tower

NBF Matsudo Bldg.

Renovation of central
monitoring facilities
Renovation of air conditioning
and heating equipment
Renovation of standard
floor bathrooms (2nd Period)
Renovation of central
monitoring facilities
Renovation of HVAC
equipment (1st Period)
Renovation of HVAC
equipment (2nd Period)
Renovation of bathrooms(1st Period)
Renewal of air conditioning(2nd Period)
Renewal of air conditioning(1st Period)
Renovation of bathrooms(2nd Period)
Renewal of lighting
equipment (1st Period)
Exterior wall renovation

NBF Urawa Bldg.

Exterior wall renovation

NBF Shibuya East Bldg.
Tsukuba Mitsui Bldg.
NBF Ogawamachi Bldg.
NBF Ikebukuro Tower
NBF Ikebukuro Tower
NBF Hiroshima
Tatemachi Bldg.
NBF Hiroshima
Tatemachi Bldg.
NBF Hiroshima
Tatemachi Bldg.
NBF Hiroshima
Tatemachi Bldg.
Parale Mitsui Bldg.

NBF Sendai Honcho Bldg.

Floor work to facilitate
office automation on 7th,
8th and 10th-13th floors
NBF Shijo Karasuma Bldg. Renovation of air conditioning(5th, 6th and 7th floor systems)
NBF Utsunomiya Bldg.
Renovation of bathrooms(1st Period)
NBF Utsunomiya Bldg.
Renovation of bathrooms(2nd Period)
NBF Shijo Karasuma Bldg. Renovation of air conditioning(8th and 9th floor systems)

Estimated
duration

From December 2006
to March 2008
From November 2007
to July 2008
From July 2008
to December 2008
From January 2008
to May 2008
From August 2008
to October 2008
From March 2008
to May 2008
From April 2008
to May 2008
From October 2008
to December 2008
From April 2008
to June 2008
From July 2008
to October 2008
From March 2008
to June 2008
From July 2008
to September 2008
From October 2008
to December 2008
From July 2008
to November 2008
From July 2008
to November 2008
From February 2008
to June 2008
From October 2008
to November 2008
From April 2008
to June 2008
From July 2008
to August 2008
From April 2008
to May 2008

Total amounts

Estimated amounts
Payment for thecurrent period(from July 1, 2007
to December 31, 2007)(Yen in millions)

Cumulative
amount paid

¥266

¥—

¥—

¥255

¥—

¥—

¥180

¥—

¥—

¥116

¥—

¥—

¥81

¥—

¥—

¥75

¥—

¥—

¥59

¥—

¥—

¥59

¥—

¥—

¥56

¥—

¥—

¥52

¥—

¥—

¥49

¥—

¥—

¥49

¥—

¥—

¥45

¥—

¥—

¥40

¥—

¥—

¥40

¥—

¥—

¥38

¥—

¥—

¥31

¥—

¥—

¥31

¥—

¥—

¥31

¥—

¥—

¥20

¥—

¥—

NBF Report July–December 200735

Capital Expenditures for the Current Period
The following table sets forth the capital expenditures for the current period. NBF posted ¥1,193 million in capital expenditures together
with ¥721 million for repairs and maintenance expenses.
Name of property

Objective

PeriodShinjuku Mitsui Bldg. No. 2

Tenant restoration construction work,
air conditioning facilities renewal (2nd floor),
air conditioning equipment renewal (basement),
renovation of ventilation regulators (8th floor)
NBF Sendai Honcho Bldg.
Air conditioning facilities renewal(3rd, 4th, 5th, 6th floors), OA flooring construction(12th, 13th floors)
Parale Mitsui Bldg.
Installation of automatic faucets and hot waterin wash basins in toilets on each floor, renewal of
guide lights, renewal of air conditioning equipment
including inverters
NBF Sapporo Minami Nijo Bldg. OA flooring installation for rental units on 1st and3rd floors, renewal of fire prevention equipment
NBF Tanimachi Bldg.
Renewal of central monitoring facilities,
construction of hot water supply facilities in toilet
wash basins, replacement of western stylelavatories on 3rd to 9th floors
Other buildings
Asset preservation construction and other renewal
construction to improve tenant satisfaction

Expenditure(Yen in millions)

¥ 211

110

34
From July 2007 to
December 2007
32
22

784

Total

¥1,193

Cash Reserve for Capital Improvements
NBF accumulates cash reserves from cash flows to prepare for large-scale mid-term to long-term capital improvements and repairs
and maintenance that will be conducted in accordance with NBF’s business plan for each property.
As of December 31, 2007

As of June 30, 2007
(Yen in millions)

Reserve balance at the beginning of the period
Amount accumulated in the current period
Withdrawal from reserves in the current period
Amount carried forward

¥ 586
1,853
1,901
¥ 538

¥ 949
1,536
1,899
¥ 586

Notes: 1. The reserve figures represent only the amount of reserves attributable to NBF’s ownership interest; the amount of reserves attributable to other owners has been
excluded.
2. In addition to the above reserves, there are other reserves set up, based on maintenance and other contracts with responsible organizations for management of properties, for the purpose of retaining funds to be used for future repair and maintenance. This reserve is not included in the above reserves and totaled ¥3,745 million as ofDecember 31, 2007.

36 NBF Report July–December 2007

Management’s Discussion and Analysis

Expenses regarding Entrustment, etc.
The following table sets forth the breakdown of entrustment fees, etc. paid by NBF.
For the six months ended
December 31, 2007

For the six months ended
June 30, 2007
(Yen in millions)

For the six months ended
December 31, 2006

¥1,012
32

¥ 977
30

¥ 949
30

48
19
13
155
¥1,279

58
19
13
108
¥1,20556
19
12
80¥1,147

Item

Asset management fees
Asset custody fees
Agent fees (stock transfer, accounting andadministrative)
Directors’ remuneration
Auditor’s fees
Other expenses
Total

Note: In addition to the amounts stated above, asset management fees totaling ¥161 million were included in acquisition costs of each investment property, for the period fromJanuary 1, 2007 to June 30, 2007.

Trading Activities during the Current Period
Trading of Real Estate and Real Estate Held in Trust
Not applicable.

Trading of Other Assets Including Total Amount and Transactions
Other major assets besides real estate and real estate held in trust stated above consist mostly of bank deposits or bank deposits
included in assets held in trust.

Transactions with Interested Parties and Transactions with Major Shareholders of the AssetManagement Company(1) Ongoing Transactions
None. (No purchases, sales or other transactions involving interested parties)

NBF Report July–December 200737

Management’s Discussion and Analysis(2) Fees Paid for the Period from July 1, 2007 to December 31, 2007
Description of transactions with related parties (Note 1)
Category

Total fees paid(A)
(Yen in millions)

Office management fees, etc.
(Note 3)

¥1,113

Property maintenance fees

2,483

Leasing related service fees

161

Paid toMitsui Fudosan Co., Ltd.
NBF Office Management Co., Ltd.
First Facilities Co., Ltd.
Mitsui Fudosan Co., Ltd.
First Facilities West Co., Ltd.
Mitsui Fudosan Building Management Co., Ltd.
First Facilities Yokohama Co., Ltd.
Mitsui Fudosan Housing Lease Co., Ltd.
Mitsui Fudosan Co., Ltd.
NBF Office Management Co., Ltd.
Mitsui Real Estate Sales Co., Ltd.
Mitsui Fudosan Housing Lease Co., Ltd.

Amount ofpayment (B)(Yen in millions)

B/A(Note 2)

1,078
28
336
331
125
80
11
1
117
16
3
1

96.9%
2.5%
13.5%
13.3%
5.0%
3.2%
0.5%
0.0%
72.5%
9.9%
1.6%
0.3%

Notes: 1. “Interested parties” are as defined in Article 123 of the government ordinance regarding investment trusts and investment corporations, principally, parties related to
NBF and the asset management company to which it entrusts investment trust management under the contract. “Major shareholders of the asset management company” are as defined by Article 29-4-2 of Financial Instrument and Exchange Law. During the period ended December 31, 2007, transactions with and fees paid to Mitsui
Fudosan Co., Ltd., First Facilities Co., Ltd., First Facilities West Co., Ltd., Mitsui Fudosan Building Management Co., Ltd., NBF Office Management Co., Ltd., First
Facilities Yokohama Co., Ltd., Mitsui Fudosan Housing Lease Co., Ltd. and Mitsui Real Estate Sales Co., Ltd. were as described above.
2. Figures indicate percentages of total prices.
3. NBF leases Nishi-Shinjuku Mitsui Bldg., Gate City Ohsaki, Naka-Meguro GT Tower, Toranomon Kotohira Tower, NBF Ogawamachi Bldg., Shin-Kawasaki Mitsui Bldg.,
Parale Mitsui Bldg. and Shinanobashi Mitsui Bldg. to Mitsui Fudosan Co., Ltd., which sub-leases them to sub-lessees. Further, Sumitomo Trust & Banking Co., Ltd., astrustee, also leases the Yotsuya Medical Bldg. to Mitsui Fudosan Co., Ltd., which sub-leases it to sub-lessees. Accordingly, NBF does not entrust the office managementbusiness for those properties to Mitsui Fudosan. Instead, NBF Office Management Co., Ltd. has been entrusted to undertake such business on behalf of NBF, the ownerand lessor of those properties.
4. In addition to the above fees paid, the following have been paid to related parties for repair and maintenance work.
(Yen in millions)First Facilities Co., Ltd.
First Facilities West Co., Ltd.
Mitsui Fudosan Co., Ltd.
Mitsui Fudosan Building Management Co., Ltd.
Mitsui Designtech Co., Ltd.
First Facilities Yokohama Co., Ltd.
Mitsui Fudosan Housing Lease Co., Ltd.
Rehouse Escrow Co., Ltd.
Mitsuihome Linkage Co., Ltd.

38 NBF Report July–December 2007

326
190
94
82
63
13
8
2
1

F i n a n c ial St at emen t s

NBF Report July – December 200739

Balance Sheets
NIPPON BUILDING FUND INC.
As of December 31, 2007 and June 30, 2007

As of
December 31, 2007

As ofJune 30, 2007
(Yen in millions)

AssetsCurrent Assets:
Cash and cash equivalents
Tenant receivables
Consumption tax refund receivables and other current assets
Total current assets
Investment Properties:
Land including trust accounts (Note 3)
Building and improvements including trust accounts (Note 3)
Other tangible assets (Note 3)
Less: accumulated depreciation (Note 3)
Leasehold rights in trust accounts and other intangible assets
Total investment properties, net
Other assets
Total Assets
Liabilities
Current Liabilities:
Short-term loans (Note 5)Long-term debt due within one year (Note 5)
Accounts payable
Rents received in advanceAccrued expenses and other liabilities
Total current liabilities
Long-term debt (Note 5)
Tenant security deposits
Other liabilities
Total Liabilities
Net Assets (Note 4)
Shareholders’ equity
Common shares, non-par value
Shares authorized: 2,000,000 shares
Shares issued and outstanding: 508,000 shares
Retained earnings
Total Net Assets
Total Liabilities and Net Assets
The accompanying notes to financial statements are an integral part of these balance sheets.

40 NBF Report July–December 2007

¥ 27,380
324
427
28,131¥ 31,383
509
549
32,441

390,824
247,073
6,215(39,963)
35,665
639,8144,250¥672,195

390,757
245,9116,108(34,801)
35,668643,643
4,182¥680,266¥ 34,500
23,000
3,014
3,210
1,893
65,617215,000
34,84858
315,523¥ 37,500
32,000
3,439
3,181
1,068
77,188212,000
34,515
54323,757

346,446

346,446

10,226356,672¥672,195

10,063356,509¥680,266

Statements of Income
NIPPON BUILDING FUND INC.
For the six months ended December 31, 2007, June 30, 2007 and December 31, 2006

For the six months ended
December 31, 2007

For the six months ended
June 30, 2007
(Yen in millions)

For the six months ended
December 31, 2006

¥25,056
2,758
27,814¥23,992
2,649
26,641¥23,121
2,773
25,894

3,613
2,157
34
721
2,384
5,168
1,012
268
15,357
12,45730(2,178)(47)(35)
10,227(1)¥10,226

3,327
2,178
35
618
2,041
5,125
977
228
14,52912,11216(1,944)(64)(56)
10,064(1)¥ 10,063

3,403
1,765
36
593
2,310
4,988
949
198
14,242
11,652
3(1,822)
(36)
(30)
9,767
(1)
¥ 9,766

Revenues:
Rental (Note 6)
Other revenues related to property leasing (Note 6)
Total Revenues
Operating Expenses:
Property management fees (Note 6)
Real estate taxes (Note 6)
Insurance (Note 6)
Repairs and maintenance (Note 6)
Other rental expenses (Note 6)
Depreciation and amortization (Note 6)
Asset management fees
Other expenses
Total Operating Expenses
Operating Income
Interest income
Interest expense
Amortization of bond issue costs
Other expenses, net
Income before Income Taxes
Current and deferred income taxes (Note 7)
Net Income
The accompanying notes to financial statements are an integral part of these statements.

NBF Report July–December 2007

41

Statements of Shareholders’ Equity
NIPPON BUILDING FUND INC.
For the six months ended December 31, 2007, June 30, 2007 and December 31, 2006

(Yen in millions)

Balance as of June 30, 2006
Cash dividends declared
Net income
Balance as of December 31, 2006
Cash dividends declared
Net income
Balance as of June 30, 2007
Cash dividends declared
Net income
Balance as of December 31, 2007
The accompanying notes to financial statements are an integral part of these statements.

42 NBF Report July–December 2007

Number ofCommonSharesCommonSharesRetained
Earnings

Total

508,000¥346,446¥ 9,851¥356,297————(9,850)9,766(9,850)9,766

508,000

346,446

9,767

356,213————(9,767)
10,063(9,767)
10,063508,000

346,446

10,063356,509————(10,063)
10,226(10,063)
10,226

508,000¥346,446¥ 10,226¥356,672

Statements of Cash FlowsNIPPON BUILDING FUND INC.
For the six months ended December 31, 2007, June 30, 2007 and December 31, 2006

For the six months ended
December 31, 2007

For the six months ended
June 30, 2007
(Yen in millions)

For the six months ended
December 31, 2006

¥ 10,227
5,169
47
2,178
185
(247)
29
(2,194)190
797
16,381¥ 10,064
5,125
64
1,944
(173)
818
193
(1,889)(190)(1,400)14,556¥ 9,767
4,988
36
1,822
4
(209)
31
(1,815)2,219
1,082
17,925(1,523)—2,014(1,681)—(2)(131)(1,323)(44,515)(6,936)
3,167(2,187)9(14)(1,877)(52,380)(2,341)—
1,900(1,188)—(9)(81)(1,719)211,000(214,000)(6,000)0(10,060)(19,060)(4,002)
31,383¥ 27,381

125,000(99,000)
19,000(164)(9,760)35,076(2,748)34,131¥ 31,383

24,000(24,000)(1,000)—(9,844)(10,844)
5,362
28,769¥ 34,131

Cash Flows from Operating Activities:
Income before income taxes
Depreciation and amortization
Amortization of bond issue costs
Interest expense(Increase) Decrease in tenant receivables
Increase (Decrease) in accounts payable
Increase (Decrease) in rents received in advanceCash payments of interest expense(Increase) Decrease in consumption tax refund receivable
Other, net
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Payments for purchases of investment properties
Payments for purchases of intangible assets
Proceeds from tenant security deposits
Payments for tenant security deposits
Refunds from security deposits paid to lessors
Payments for security deposits paid to lessors
Payments for purchases of other assets
Net Cash Used in Investing Activities
Cash Flows from Financing Activities:
Proceeds from short-term loans
Repayment of short-term loans
Proceeds from (Repayment of) long-term debt, net
Payments for bond issue costs
Payment of dividends
Net Cash Used in (Provided by) Financing Activities
Net Change in Cash and Cash Equivalents
Cash and cash equivalents at the beginning of period
Cash and Cash Equivalents at the End of Period
The accompanying notes to financial statements are an integral part of these statements.

NBF Report July–December 200743

Notes to Financial Statements
NIPPON BUILDING FUND INC.
For the six months ended December 31, 2007, June 30, 2007 and December 31, 2006

Note 1 – Organization and Basis of Presentation
Organization
Nippon Building Fund Inc. (hereinafter “NBF”) was formed on March 16, 2001 as an investment corporation under the Investment Trust
Law of Japan with Mitsui Fudosan Co., Ltd., The Chuo Mitsui Trust and Banking Co., Ltd., and Nippon Building Fund Management Ltd. (hereinafter “NBFM”) acting as sponsors. Registration with the Kanto Local Finance Bureau of the Ministry of Finance was completed on May 10,
2001 and NBF started acquisition of office properties on May 23, 2001.
NBF is an externally managed real estate fund, formed as an investment corporation. NBFM, as NBF’s asset management company, isengaged in acquiring, managing, leasing, and renovating office properties. Mitsui Fudosan Co., Ltd. currently owns 43% of NBFM while
Sumitomo Life Insurance Company owns 35% and the remaining 22% is mainly owned by financial institutions.
On September 10, 2001, NBF had raised approximately ¥50,000 million through an initial public offering of common shares. Those common shares are listed on the J-REIT section of the Tokyo Stock Exchange.
As of December 31, 2007, NBF had ownership or beneficiary interests in 56 office properties containing approximately 692,286 rentable
square meters of office space. As of December 31, 2007, NBF had leased office space to 897 tenants engaged in a variety of businesses. The
occupancy rate for the office properties was approximately 98.6%.

Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in the Investment Trust Law ofJapan and the Japanese Securities and Exchange Law and its related accounting regulations, and in conformity with accounting principles
generally accepted in Japan (hereinafter “Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements have been restructured and translated into English from the financial statements of NBF preparedin accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the
Securities and Exchange Law. Some supplementary information included in the statutory Japanese language financial statements, but notrequired for fair presentation, is not presented in the accompanying financial statements. NBF does not prepare consolidated financial statements, as NBF has no subsidiaries.

Note 2 – Summary of Significant Accounting Policies
Cash and Cash Equivalents
NBF considers all highly liquid investments with original maturity of three months or less to be cash and cash equivalents.

Investment Properties
Investment properties are recorded at cost, which includes the allocated purchase price and related costs and expenses for acquisition of
the office properties and the beneficiary interests of properties in trust. Property and equipment balances are depreciated using the straightline method over the estimated useful lives. The estimated useful lives of the principal tangible fixed assets (including assets held in trust) are
as follows:

Buildings and improvements
Structures
Machinery and equipment
Tools, furniture and fixtures

44 NBF Report July–December 2007

2-50 years
2-52 years
2-17 years
2-19 years

Costs related to the renovation, construction and improvement of properties are capitalized. Expenditures for repairs andmaintenance which do not add to the value or prolong the useful life of a property, are expensed as incurred.

Bond Issue Costs
Deferred bond issue costs are amortized using the straight-line method over three years.

Income Taxes
Income taxes are accounted for on the basis of income for financial statement purposes. The tax effect of temporary differences between
the amounts of assets and liabilities for financial statements and for income tax purposes is recognized as deferred taxes.

Real Estate Taxes
Real estate taxes are imposed on properties on a calendar year basis. In terms of newly purchased properties, NBF capitalizes a portion of
the real estate taxes that relate to the purchase date of each property until the end of the calendar year as part of the acquisition cost of therelevant property. Capitalized real estate taxes amounted to ¥28 million for the period ended December 31, 2007 and ¥166 million for theperiod ended June 30, 2007, respectively. No capitalized real estate taxes were recorded for the period ended December 31, 2006.

Revenue Recognition
NBF operates office properties that are rented to tenants on lease terms of generally two years, with monthly payments due in advance.
Rental and other property income is recorded when due from tenants and is recognized monthly as it is earned. Common area charges provided for in tenant leases are recognized as income when earned and their amounts can be reasonably estimated.

Accounting Treatment of Beneficiary Interests in Trust Assets including Real Estate
For trust beneficiary interests in real estate, all accounts of assets and liabilities within assets in trust as well as all income generated andexpenses incurred from assets in trust are recorded in the relevant balance sheet and income statement accounts.

Reclassifications
Certain reclassifications have been made to prior periods’ financial statements to conform with the presentation used for the period ended
December 31, 2007.

Finance Leases
Finance leases that do not transfer ownership of the leased property to lessees are accounted for as operating leases under accounting
principles generally accepted in Japan.

NBF Report July–December 200745

Note 3 – Schedule of Tangible Assets of Investment Properties
Tangible assets as of December 31, 2007 and June 30, 2007 consisted of the following:
As of December 31, 2007

As of June 30, 2007
(Yen in millions)

Accumulated
Depreciation

Acquisition
Costs

Acquisition
Costs

—
—
—

¥137,674
253,150
390,824¥137,624
253,133
390,757

Land
Land in trust
Land including trust total¥137,674
253,150
390,824

Buildings and improvements
Buildings and improvements in trust

113,449
133,624(11,986)(26,051)

101,463
107,573

Building and improvements
including those in trust
Structures
Machinery and equipment
Tools, furniture and fixtures
Structures in trust
Machinery and equipment in trust
Tools, furniture and fixtures in trust
Construction in process
Construction in process in trust

247,073
1,594
829
364
1,369
1,303
721
29
6

(38,037)
(409)
(231)
(141)
(354)
(481)
(310)
—
—

6,215
¥644,112

Other tangible assets total
Total

¥

Book Value

Accumulated
Depreciation¥

Book Value———¥137,624
253,133
390,757

113,167
132,744(9,710)(23,438)

103,457
109,306

209,036
1,185
598
223
1,015
822
411
29
6

245,911
1,592
819
351
1,353
1,279
683
25
6

(33,148)
(337)
(193)
(108)
(314)
(433)
(268)
—
—

212,763
1,255
626
243
1,039
846
415
25
6

(1,926)

4,289

6,108

(1,653)

4,455¥(39,963)¥604,149¥642,776¥(34,801)¥607,975

Note 4 – Net Assets
NBF issues only non-par value shares in accordance with the Investment Trust Law of Japan and all of the issue price of new shares isdesignated as stated capital. NBF maintains at least ¥50 million as the minimum net assets as required by the Investment Trust Law of Japan.

46 NBF Report July–December 2007

Notes to Financial Statements

Note 5 – Short-Term Loans and Long-Term Debt
Short-term loans consist of short-term notes and short-term borrowings under loan agreements. The annual interest rates on short-termloans outstanding are floating rates and on December 31, 2007 and June 30, 2007 ranged from 0.95% to 1.15% and from 0.77% to 0.99%,
respectively. Long-term debt is at fixed rates and as of December 31, 2007 and June 30, 2007 consisted of the following:(Yen in millions)
As of December 31, 2007

As of June 30, 2007

¥158,000
10,00010,00010,00010,00010,00010,00010,00010,000¥164,000
10,00010,00010,00010,00010,00010,00010,00010,000238,000

244,000

Unsecured loans due 2009 to 2018 principally from banks and insurancecompanies with interest rates mainly ranging from 0.8% to 2.4%
1.04% unsecured bonds due 2009
0.80% unsecured bonds due 2010
1.60% unsecured bonds due 2011
1.48% unsecured bonds due 2012
1.74% unsecured bonds due 2014
1.85% unsecured bonds due 2015
2.04% unsecured bonds due 20172.00% unsecured bonds due 2018
Less: amount due within one year

23,00032,000¥215,000¥212,000

The annual maturities of long-term debt as of December 31, 2007 were as follows:(Yen in millions)

2008
2009
2010
2011
2012
Thereafter¥23,000
10,00012,00014,00020,00079,000During the period ended December 31, 2007, NBF obtained committed credit lines of ¥30 billion with certain financial institutions to
reduce refinancing risk. The unused amount of such committed credit lines was ¥30 billion on December 31, 2007.

NBF Report July–December 200747

Note 6 – Rental Revenues and Expenses
Rental revenues and expenses for the periods ended December 31, 2007, June 30, 2007 and December 31, 2006 were as follows:

Revenues from Property Leasing:
Rental:Rental revenues
Common area charges
OthersSubtotal
Other revenues related to property leasing:
Parking lots
Facility charge
Incidental income
Cancellation fees
Miscellaneous income
Subtotal
Total revenues from property leasing
Rental Expenses:
Property management fees
Real estate taxes
Repairs and maintenanceInsurance
Other rental expenses
Depreciation and amortization
Total rental expenses
Operating Income from Property
Leasing Activities

For the six months ended
December 31, 2007

For the six months ended
June 30, 2007
(Yen in millions)

For the six months ended
December 31, 2006

¥22,157
2,776
123
25,056¥21,099
2,770
123
23,992¥20,180
2,817
124
23,121

574
134
1,850
141
59
2,758
27,814

597
138
1,524
289
101
2,649
26,641

584
148
1,807
186
48
2,773
25,894

3,613
2,157
721
34
2,384
5,169
14,078

3,327
2,178
618
35
2,041
5,125
13,324

3,403
1,765
593
36
2,310
4,988
13,095¥13,736¥13,317¥12,799

Note 7 – Income Taxes
NBF is subject to income taxes in Japan. The effective tax rate on NBF’s income based on applicable Japanese tax law was 0.01% for theperiods ended December 31, 2007, June 30, 2007 and December 31, 2006. The following table summarizes the significant differences
between the statutory tax rates and NBF’s effective tax rates for financial statement purposes.

Statutory effective tax rate
Deductible dividends paid
Others
Effective tax rate

For the six months ended
December 31, 2007

For the six months ended
June 30, 2007

For the six months ended
December 31, 2006

39.39%(39.39)0.01
0.01%

39.39%(39.39)0.01
0.01%

39.39%(39.39)0.01
0.01%

NBF was established as an investment corporation under the Investment Trust Law of Japan, and as long as an investment corporation distributes to its shareholders at least 90% of taxable income for a period and other requirements prescribed in Japanese tax regulations are met,
the investment corporation is allowed to deduct the total amount of dividends paid in calculating its taxable income under Japanese tax regulations.

48 NBF Report July–December 2007

Notes to Financial Statements

Note 8 – Per Share Information
Information about earnings per share for the periods ended December 31, 2007, June 30, 2007 and December 31, 2006 and net assets
per share as of December 31, 2007, June 30, 2007 and December 31, 2006 were as follows.
The computation of earnings per share is based on the weighted average number of common shares outstanding during the period. The
computation of net assets per share is based on the number of common shares outstanding at each period end.

Earnings per Share of Common Shares:
Net income
Weighted average number ofcommon shares outstanding

Net Assets per Share

For the six months ended
December 31, 2007

For the six months ended
June 30, 2007
(Yen)

For the six months ended
December 31, 2006

¥20,129¥19,808¥19,224

508,000

508,000

508,000

As of December 31, 2007

As of June 30, 2007

As of December 31, 2006

¥702,110¥701,790¥701,206

Note 9 – Leases
Under Japanese accounting standards for leases, finance leases that have been deemed to transfer ownership of the leased property to
the lessee (“ownership-transfer finance leases”) are capitalized by the lessee, while other finance leases (“non-ownership-transfer financeleases”) are permitted to be accounted for as operating lease transactions.
NBF treats all non-ownership-transfer finance leases as operating leases. Accordingly, leased assets with respect to non-ownership-transfer finance leases where NBF is the lessee are not recognized in the accompanying balance sheets and lease payments are charged toincome when incurred.

As Lessee
Pro forma information of non-ownership-transfer finance leases contracted as a lessee, such as acquisition cost and related accumulated
depreciation of leased assets, obligation under finance leases and depreciation expense of finance leases, which is required under Japanese
accounting standards for leases for the six months ended December 31, 2007, is summarized as follows:(Yen in thousands)

Tools, furniture and fixtures

Acquisition cost

Accumulated depreciation

Net book value¥3,027¥2,623¥403

Obligations under finance leases as of December 31, 2007 and June 30, 2007 are as follows:
As of December 31, 2007
As of June 30, 2007
(Yen in millions)Due within one year
Due after one year
Total

¥ 1
—
¥ 1

¥ 1
—
¥ 1

The amount of obligations under finance leases includes the imputed interest expense portion.
Total payment for non-ownership-transfer finance leases for the six months ended December 31, 2007 was ¥302 thousand.
Depreciation expense, which is not reflected in the accompanying statements of income, is computed by the straight-line method over therespective lease period. The residual value at the end of the lease period is not considered for the calculation of depreciation. Depreciation
expense for the six months ended December 31, 2007 was equal to the above total payment for finance leases.

NBF Report July–December 200749

Note 10 – Transactions with Related Parties(July 1, 2007 – December 31, 2007)(1) Parent Company and Major Corporate Shareholders
None applicable.
(2) Directors and Major Individual Shareholders
Classification

Director
and/or close
relative

Name

Koichi
Nishiyama

Principal business or
occupation

Nature of transaction

Payment of asset
management fees to
Executive Director of
NBFM (Note 1)
NBF and
Payment for the provision
President & CEO of general administrationof NBFM
services relating toorganizational management to NBFM (Note 2)

Amount oftransaction
Yen in millions

Account

Balance at
end of period
Yen in millions¥1,012(Note 3)

Accounts
payable¥354(Note 3)¥2
(Note 3)

Accounts
payable¥1(Note 3)

Notes: 1. Koichi Nishiyama entered into this transaction as a representative of a third party (NBFM), and this amount is subject to the conditions set forth in the by-laws of NBF.
2. Koichi Nishiyama entered into this transaction as a representative of a third party (NBFM), and this amount is set forth in the “General Administration Agreement relating toOrganizational Management” concluded between NBF and NBFM.
3. Consumption taxes are not included in transaction amounts. Consumption taxes are included in the balance at the end of the period.

(3) Subsidiaries
Not applicable, because the Company has no subsidiaries in which it has invested.
(4) Sister Companies
None applicable.

(January 1, 2007 – June 30, 2007)(1) Parent Company and Major Corporate Shareholders
None applicable.
(2) Directors and Major Individual Shareholders
Classification

Director
and/or close
relative

Name

Koichi
Nishiyama

Principal business or
occupation

Nature of transaction

Payment of asset
management fees to
Executive Director of
NBFM (Note 1)
NBF and
Payment for the provision
President & CEO of general administrationof NBFM
services relating toorganizational management to NBFM (Note 2)

Amount oftransaction
Yen in millions

Account

Balance at
end of period
Yen in millions¥1,139(Note 3)

Accounts
payable¥348(Note 3)

¥7(Note 3)

Accounts
payable¥1(Note 3)

Notes: 1. Koichi Nishiyama entered into this transaction as a representative of a third party (NBFM), and this amount is subject to the conditions set forth in the by-laws of NBF.
2. Koichi Nishiyama entered into this transaction as a representative of a third party (NBFM), and this amount is set forth in the “General Administration Agreement relating to Organizational Management” concluded between NBF and NBFM.
3. Consumption taxes are not included in transaction amounts. Consumption taxes are included in the balance at the end of the period.

(3) Subsidiaries
Not applicable, because the Company has no subsidiaries in which it has invested.
(4) Sister Companies
None applicable.

50 NBF Report July–December 2007

Notes to Financial Statements

Note 11 – Significant Subsequent Events
Cash Distribution
At meetings of the Board of Directors held on January 16, 2008 and January 28, 2008, it was resolved to issue new shares as described
below. Payment for the new issuance portion via public offering was completed on February 4, 2008 and March 4, 2008, and issuanceoccurred under the conditions described below.
Based on the resolution of Directors’ meeting held on January 28, 2008, NBF decided to issue new shares through a public offering. The
payment for new shares was completed on February 4, 2008. The terms and conditions of the public offering are described below.
As a result, the total amount of stated capital increased to ¥386,176 million and the number of shares issued increased to 542,000.

A. Issuance of New Shares through Public Offering(I) Offering method

Public offering(II) Number of shares issued

31,800 shares(III) Offering price per share¥1,205,400 per share(IV) Total offering price¥38,332 million(V) Issue price per share¥1,168,500 per share(VI) Total issue price¥37,158 million(VII) Payment dateFebruary 4, 2008

(VIII) Initial date subject to distribution

January 1, 2008

B. Issue of New Shares through Public Allocation to a Third Party(I) Offering method

Allocation to a third party(II) Number of shares issued

2,200 shares(III) Issue price per share¥1,168,500 per share(IV) Total issue price¥2,571 million(V) Payment date

March 4, 2008

(VI) Initial date subject to distribution

January 1, 2008

(VII) Allottee

Nomura Securities Co., Ltd.

C. Use of Procured Proceeds
The funds procured by the public offering and third-party allocation will be used in NBF’s procurement of new specified assets (NBF Toyosu
Garden Front and one other property) and for repayment of borrowings.

NBF Report July–December 200751

Independent Auditors’ Report

To the Board of Directors of
Nippon Building Fund Inc.:

We have audited the accompanying balance sheets of Nippon Building Fund Inc. (a Japanese Real Estate
Investment Trust) as of December 31, 2007 and June 30, 2007, and the related statements of income, shareholders’ equity and cash flows for each of the six months ended December 31, 2007, June 30, 2007 andDecember 31, 2006 expressed in Japanese yen. These financial statements are the responsibility of theCompany’s management. Our responsibility is to independently express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of Nippon Building Fund Inc. as of December 31, 2007 and June 30, 2007, and the results of its operations and its cash flows for each of the six months ended December 31, 2007, June 30, 2007 and December
31, 2006 in conformity with accounting principles generally accepted in Japan.

Without qualifying our opinion, we draw attention to Note 12 to the financial statements, which states that
Nippon Building Fund Inc. issued new shares.

Tokyo, Japan
March 26, 2008

52 NBF Report July–December 2007

Appendix
Major Interested Parties
Nippon Building Fund Management Ltd. (Asset Management Company and Administrative Agent regarding theManagement of Institutions, herein “NBFM”)
NBFM, as Asset Management Company provided for in theManagement Fees 3

Investment Trust Law of Japan, performs management of NBF’s assets

In the event that Real Estate, etc. is newly-acquired, compensation

and undertakes management of the institutions of NBF. As of December

equivalent to the total amount of the acquisition price of said Real31, 2007, NBFM has been entrusted as an asset management company

Estate, etc. (meaning the acquisition price of both land and buildings,

only by NBF.

and in the event of the simultaneous acquisition of multiple units of RealAs of the same date, NBFM has paid-in capital of ¥495 million. There

Estate, etc., the acquisition price of each item; provided, however, thatis no capital relationship with NBF. Koichi Nishiyama, President & CEO ofnational consumption tax, regional consumption tax and miscellaneous

NBFM, is concurrently an executive director of NBF.

costs of acquisition are excluded) multiplied by the following percentage
rates will, in principle, be payable; provided, however, that with the

Operation■

approval of the directors of NBF, compensation will be calculated within

Undertakes asset management of NBF pursuant to an Assetthe scope decided up to the following maximum rates.

Management Entrustment Agreement based on an entrustment from●

The portion up to and including ¥10,000 million .......................... 0.5%

NBF in accordance with the Articles of Incorporation of NBF and the●

The portion exceeding ¥10,000 million up to andincluding ¥30,000 million ............................................................ 0.2%●

The portion exceeding ¥30,000 million up to andincluding ¥50,000 million ............................................................ 0.05%●

The portion exceeding ¥50,000 million ........................................ nothing

Investment Objects and Policies set forth therein.
■

Undertakes management of the general affairs of the general meetingof shareholders and the Board of Directors as Administrative Agent
regarding the Management of Institutions based on an entrustment
from NBF and pursuant to an Agreement for General Administration
Regarding the Management of Institutions.

Fees for the Asset Management Operation
Management Fees 1
The amount equivalent to 2.5% effective from July 1, 2003 of theamount of the revenue arising from Real Estate, etc. as calculated oneach closing date (provided, however, that revenues from the sale ofReal Estate, etc. and other Managed Assets will be excluded) will bepayable.

Management Fees 2
The amount equivalent to 3% of income before income tax (provided,
however, that in the event a loss is carried forward, then the amount ofincome before income taxes remaining after such loss has been covered) prior to deduction of Management Fees 2 as calculated on eachclosing date will be payable.

NBF Report July–December 200753

Appendix

History of NBFM

Directors and Staff

NBFM is an Asset Management Company which is a limited liability

As of December 31, 2007, the directors and corporate auditors ofcompany duly established under the laws of Japan. Major events in the

NBFM are as follows. The staff other than directors and auditors ofhistory of NBFM are as follows.

NBFM is comprised of 17 persons.

September 19, 2000 Established

Name of Directors and Auditors

Title

November 17, 2000

Obtained license as a building lots and building
transactions agent under the Building Lots andBuilding Transactions Law

Koichi Nishiyama

President & CEO (standing)

Yasushi Nakayama

Director, Head of Investment & Finance Group(standing)Obtained approval as a discretionary transaction
agent under the Building Lots and Building
Transactions Law

Riichi Morihiro

Director, Head of Administration Group(standing)

Tamotsu Shinyama

Director

January 29, 2001

Kaneo Maeda

Corporate Auditor

Noriaki Moromachi

Corporate Auditor

February 15, 2001

Registered as a general real estate investment advisor under the Real Estate Investment Advisor
Registration Regulations

March 7, 2001

Obtained approval as an Asset Management
Company under the Investment Trust Law of Japan

Outline of Financial Condition

March 22, 2001

Increased capital from ¥100 million to ¥198 million

Outline of principal assets and liabilities for the most recent fiscal year:

May 23, 2001

Changed name (from “MF Asset Management Co.,
Ltd.” to “Office Building Fund Management Japan
Limited”)

June 16, 2001

Increased capital from ¥198 million to ¥495 million

March 14, 2003

Changed name (from “Office Building Fund Management Japan Limited” to “Nippon Building FundManagement Ltd.”)

September 30, 2007

Registered as a financial instruments firm with the
Kanto Local Finance Bureau Chief (Financial
Instruments) No. 371

List of Shareholders (as of June 30, 2007)
Name

Numberof Shares Owned

Percent

Mitsui Fudosan Co., Ltd.

4,257

43.0%

Sumitomo Life Insurance Company

3,465

35.0

The Chuo Mitsui Trust andBanking Co., Ltd.

495

5.0

Sumitomo Mitsui Banking
Corporation

495

5.0

Daido Life Insurance Company

297

3.0

Mitsui Sumitomo InsuranceCo., Ltd.

297

3.0

Mitsui Mutual Life Insurance
Company297

3.0

Britel Fund Trustees Limited
Total

54 NBF Report July–December 2007

297

3.0

9,900

100.0%

An outline of the financial condition of NBFM is as follows.

As of March 31, 2007

(Yen in thousands)

Total Assets¥2,186,889

Total Liabilities
Net Assets

524,926¥1,661,963

Profit and loss for the most recent fiscal year:
Year ended March 31, 2007

(Yen in thousands)

Operating Income¥2,318,993

Ordinary Profit

1,678,473

Net Income

968,968

Investment and Distribution Policies
Investment Policies of NBF

A. Basic Policies
NBF’s primary investment objective is to achieve sustainable growthin portfolio value and stable profits on a mid-term to long-term basis.
NBF achieves this objective by investing in real estate consisting ofbuildings primarily used for offices with their underlying land located in
the Tokyo Central Business Districts (hereinafter “CBDs”), Other Greater
Tokyo and Other Cities in Japan as well as securities, beneficiary certifi-

Area and Allocation Ratio

Area Analysis

Tokyo CBDs■

Relatively high rent levels and low vacancy
rates compared to Other Cities; also, relatively large market scale (both leasing andpurchase/sale) with high growth rates.

■

Relatively low yearly NOI yields. Relatively
high liquidity at the time of sales.

■

Basic special characteristics are between
those of Tokyo CBDs and Other Cities.

9 central wards in Tokyo:
Chiyoda, Minato, Chuo, Shinjuku,
Shinagawa, Shibuya, Toshima,
Bunkyo and Meguro

Other Greater Tokyo

hereinafter “Real Estate, etc.”) (“Investment Objectives and Policies,”

Other 14 wards in Tokyo andneighboring cities (see Note 1
below) such as Musashino,
Tachikawa, Yokohama, Kawasaki,
Chiba, Kashiwa, Saitama, etc.

Articles of Incorporation). (Reference to: laws, legal documents, etc. used

Total of above two areas: 70% or morecates representing beneficial interests in trusts (hereinafter “beneficiary
certificates”) and other assets backed by office properties (collectively

as the basis or sources hereof are set forth in parenthesis herein.)
Other Cities

B. Investment Strategy
Nippon Building Fund Management Ltd. (“NBFM”), based on theinvestment strategy of NBF set forth below, invests and manages theassets of NBF. NBFM has established asset management guidelines
based on the Articles of Incorporation of NBF and in accordance with theinvestment strategy of NBF.

Principal regional cities such as
Sapporo, Sendai, Niigata,
Shizuoka, Hamamatsu, Nagoya,
Kyoto, Osaka, Kobe, Okayama,
Hiroshima, Takamatsu, Fukuoka,
Kumamoto, etc.

■

Rent levels relatively low and vacancy rates
relatively high compared to Tokyo CBDs.

■

Also, scale of market is relatively small andgrowth rates relatively low.

■

Relatively high yearly NOI yields. Relatively
low liquidity at the time of sales.

Total of above area: 30% or less
Notes: 1. “Neighboring cities” refers to the metropolis of Tokyo excluding its 23 wards, andthe 6 prefectures of Kanagawa, Chiba, Saitama, Ibaraki, Gunma and Tochigi.

(1) Strategy for Creation of the Portfolio

2. Due to unforeseeable events such as, extreme fluctuations in macro-economic
trends, financial trends, real estate market trends and so forth, it may not always be
possible to operate in accordance with each of the above criteria (“Investment
Objectives and Policies,” Articles of Incorporation).

The goal of the portfolio is to generate steady growth and stableprofits on a mid-term to long-term basis. The selection criteria of investment assets is based on the composition of investment assets in theportfolio and based on consideration of a quantitative proportion of the(2) Acquisition Strategy

office stock located in the various regions of Japan.

Ratio of Real Estate Assets

Area Diversification“Designated Real Estate Ratio.” As of December 31, 2007, NBF satisfied

NBF will maintain ratios of 75% or more with respect to the

The investment strategy of NBF divides the investment area into
three areas consisting of Tokyo CBDs, Other Greater Tokyo and Other
Cities in such manner that 70% or more of total investment assets(Real Estate, etc.) are allocated to Tokyo CBDs and Other Greater Tokyoand 30% or less to Other Cities. The purpose of this area diversification
is to mitigate cash flow risks such as earthquakes, risk of vacancies

the criteria.
■

The “Designated Real Estate Ratio” means the ratio of the total amountof Designated Real Estate to the total amount of Designated Assets
owned by NBF.

Note: Designated Real Estate includes real estate, real estate leasehold rights, superficies
and beneficiary certificates backed by real estate, land leasehold rights and superficies(as designated under Article 83.4.3.1 of the Special Taxation Measures Law of Japan).

and so forth.
The following table sets forth above said area diversification strategy.

Due Diligence
When investing in office properties, selections will be made throughcomprehensive research and analysis based on the forecast investment
yields resulting from their acquisition costs and their anticipated profits,
future prospects and stability of the area of location, availability of meas-

NBF Report July–December 200755

ures responding to risks of deterioration and obsolescence, insurability

Uncompleted or Unleasable Properties

and so forth. The details of the relevant criteria are set forth in the fol-

In principle, NBF acquires Real Estate, etc. which are leased/leasable

lowing table (“Investment Objectives and Policies,” Articles ofassets at the time of closing. NBF may acquire a property which is not

Incorporation).

yet leasable at the time of closing based on consideration of the impact

Though such consideration will involve the study of the criteria

on NBF’s asset management activities after taking into account theincluded in the following table, it is possible that when NBF acquires orinvestment amount, the date of completion or of becoming leasable,

intends to acquire operating assets, not all of the following criteria will

estimated revenue and so forth; provided, however, that the contract

be satisfied.

amount of any such unleasable asset combined with the total contract

Item

Points to be reviewed

Scale of building■

Construction type andspecifications of facilities■

Earthquake resistance■

Measures regarding
status of legal title

■

●

●

Tenancy characteristics

Environmental;
condition of land, etc.

■■

amount of previously acquired unleasable assets (but excluding

Net rentable area, including net rentable areaof entire building and standard net rentablearea per floor. Desired total net rentable area
is 1,650m 2 (approximately 500 tsubo ) or
more. Standard net rentable area per floor is
330m2 (approximately 100 tsubo) or more.

unleasable assets which thereafter become operational) will not exceed

Building design and floor plan suitable forleasing, with divisibility, adequate ceilingheight, electrical service, HVAC equipment,etc.

and such building is leased or leasable. Properties which are owned by

Ensure that construction quality exceeds
earthquake standards (meaning those required
pursuant to the Building Standards Law asamended in 1981) or standards equivalent
thereto.

scale renovation of a building).

In cases such as co-ownership, divided
condominium ownership, a building erected
on leased land, etc. where NBF will not
obtain complete ownership of a building, thefollowing matters are appropriately treated.
measures to protect security deposits, policies and measures regarding cash reserves
for long-term renovation plans.
appropriate measures regarding demands fordivision of co-owned interests or the sale ofa co-owner’s interest, etc.
Acceptable creditworthiness of tenants, purposes of use by tenants, configuration, andcondition of collectibility of rents, etc.
Absence of harmful substances such as
asbestos, (or countermeasures can be implemented for any such substances), non-existence of soil pollution, etc.

10% of the total assets indicated on the most recent balance sheet of
NBF. For this purpose, “leased/leasable assets” shall mean property withrespect to which the construction of the building has been completed
NBF and have become operational at some point shall be deemed“leasable” thereafter (including such cases as reconstruction or large-(3) Management and Disposition Policies
Regarding acquired operating properties, the goal is to obtain steady
growth of operating profits on a mid-term to long-term basis by planningto maintain and improve asset value and competitive ability throughinvestment in facilities and by expanding income (increasing rents, etc.,
increasing occupancy rates, extending the term of leases and rendering
them more stable, etc.) and reducing property-related expenses.
NBF will, in principle, for the purpose of assuring stable income on a
mid-term to long-term basis, lease out all operating properties included
in operating assets (including installation of parking lots, billboards, etc.).
When conducting such leasing, security deposits, etc. and other similar
monies may be received and said monies will be managed in accordance with the requirements of “Investment Objectives and Policies” ofthe Articles of Incorporation (“Investment Objectives and Policies,”
Articles of Incorporation).
NBF is entitled to establish reserves for long-term renovations
required to maintain and enhance the value of operating properties,
reserves for payables, reserves for cash distributions and any other similar reserves, etc. (Articles of Incorporation).

Reserves for Long-Term Renovations
From the reserves set forth above, a portion corresponding to renovations, repairs and tenant improvements will be determined based on

56 NBF Report July–December 2007

Investment and Distribution Policies

renovation plans for each building. As of December 31, 2007, foreseen

prospects and stability of the area of location, risks of deterioration andreserves provided from January to December 2008 are as follows:

obsolescence of real estate and predicted costs thereof as well as the

Item

Reasoncomposition of the portfolio, etc. Sell/hold studies will be periodicallyReserves forlong-term renovations■

Reserves for tenant improvements (reserves for future
construction expenses required
for spaces leased to tenants)■

Average annual amount over an approximately 10-year period based on engineering
reports
Expenses of providing “free access floor” (orraised floor); expenses for other move-in construction costs (partitions, etc.)

Total Foreseen Amount: (annual basis) ¥3,079 million
Notes: 1. In addition to the above-mentioned amount, certain amounts are set aside as cash
reserves for renovation pursuant to the administrative rules of the buildings in which
NBF owns condominium interests, etc.
2. The amount of reserves set forth above is the total amount of reserves with respect
to the 56 properties owned by NBF as of the end of December 2007.

undertaken with respect to all operating properties (“Investment
Objectives and Policies,” Articles of Incorporation).

(4) Financial Policies
Issuance of Shares
NBF may issue shares in order to undertake acquisition and renovation and so forth of assets and to provide allowance for funds required
for working capital as well as for the repayment of debt (including security deposits, borrowings and repayment of obligations regarding NBF
bonds, etc.)

Debt Financing
Measures to Avoid Reductions and Fluctuations in
Operating Income

NBF may raise capital (including use of the call loan market) andissue bonds in order to undertake acquisition and renovation and so

In order to avoid large-scale reductions and fluctuations in operating

forth of assets and to provide allowance for funds required for working

income due to fire damage, withdrawal of tenants and so forth, efforts,

capital as well as for the repayment of debt (including security deposits,

such as area diversification and obtaining adequate fire and casualty

borrowings and repayment of obligations regarding NBF bonds, etc.)

insurances, etc., will be exerted.

(“Investment Objectives and Policies,” Articles of Incorporation).
Borrowings are limited to those from Qualified Institutional Investors

Appraisal Value, etc.

as specified in Article 2.3.1 of the Securities and Exchange Law ofIn the event that valuation of real estate, land leasehold rights andJapan, in case capital is borrowed. Further, the total limit on all suchsuperficies (including beneficiary certificates, securities and tokumei-

borrowings and issues of NBF bonds will be ¥1,000,000 million. Whenkumiai ownership interests, and other asset-backed instruments) is

undertaking borrowings or when issuing NBF bonds, NBF may provide

undertaken for the purpose of disclosure in Performance Information

operating assets as collateral (Articles of Incorporation).

Reports, etc., the value to be used for disclosure will, in principle, be theappraisal valuation provided by a certified real estate appraiser (Articles
of Incorporation).

Loan-to-Value Ratio
The ratio of the total amount of borrowings, issues of NBF bonds and

The appraisal value of property with respect to the period commenc-

lease deposits under management to the total amount of assets of NBF

ing on the acquisition thereof and ending on the date of disclosure of(Loan-to-Value ratio) is envisioned to be limited to 60%, but may tem-such value with respect to the next following closure of NBF’s account-porarily exceed 60% when acquiring certain assets, etc. (Long- and mid-ing term shall be the acquisition price of the said property (excluding

term operating asset management policy and annual management plan

miscellaneous acquisition costs, fixed assets tax, city-planning tax andestablished by the Asset Management Company).

consumption tax) as stated in the sale and purchase contract, etc. forthe said property.

Derivatives
In order to avoid risks of fluctuation in the prices of operating assets

Disposition

as well as risks of fluctuations in interest rates, futures transactions,

In disposing of individual operating properties, selections will be

option transactions, swap transactions and forward rate transactions

made through comprehensive research and analysis based on the fore-

with respect to Japanese interest rates may be undertaken (“Investment

casted income, actual and predicted fluctuations in asset value, futureObjectives and Policies,” Articles of Incorporation).

NBF Report July–December 200757

Distribution Policies of NBF
A. Distributions of Profits

depreciation for the period. NBF is entitled to make cash distributions ofA registered investment corporation may deduct its cash dividends ofthe amounts described below in excess of the Distributable Earnings in

profits from taxable income under Japanese tax regulations if it distrib-

the following cases; provided, however, that the maximum amount ofutes to its shareholders in excess of 90% of its taxable income andsuch distributions will be the amount set forth in the rules of thecomplies with other organizational and operational requirements. NBF

Investment Trusts Association of Japan (Article 14.2 of the Articles ofintends to make dividend distributions that ensure that NBF satisfies

Incorporation).

those requirements.

■

Amount determined by NBF as being eligible for the requirements of
the Special Taxation Treatment for Investment Corporations, in case

NBF will, in principle, effect distributions in accordance with the fol-of the Distributable Earnings being less than the Taxable Income

lowing policies (Articles of Incorporation).

Available for Dividends

Earnings Available for Distributions■

Amount determined by NBF not in excess of the amount of depreciation

NBF’s earnings available for distributions are based on accounting offor the current term less the amount of appropriate reserves for the cur-profits prepared in accordance with the Investment Trust Law and therent term, if NBF determines it appropriate considering trends in macro

Securities and Exchange Law of Japan and in conformity with generally

economic environments, real estate markets and leasing markets

accepted accounting principles in Japan.
The distributable amount which results from operation of managed
assets of NBF (hereinafter, “Distributable Amount”) shall be the amount

NBF’s Current Policy on Distributions in Excessof Profits

of profit (the amount of net assets on the balance sheet less the amountAs for cash distributions in excess of profits, as long as the currentof total expenses, capital surplus reserves and estimated or equivalentJapanese taxation treatment applicable to NBF’s shareholders in Japanvariances) calculated on each closing date in accordance with theto whom such distributions are paid requires them to calculate capital

Investment Trust Law of Japan and corporate accounting principles gen-gain or loss at the time of each distribution, NBF will not make distribu-

erally deemed to be fair and appropriate.

tions in excess of profits.
Notwithstanding the above, NBF may make distributions in excess of

Cash Distribution of Profits

profits in accordance with the distribution policies stated above in order

The amount of cash distributions will be determined by NBF, suchto meet “Requirement for Deduction from taxable income of Dividends ofamount being in excess of 90% of taxable income available for dividends

Profit, etc.,” and if such distributions in excess of profits are deemedof NBF set forth in Article 67-15 of the Special Taxation Measures Law

necessary by the Board of Directors of NBF.

of Japan (hereinafter “Taxable Income Available for Dividends”); provided, however, that the maximum amount of distributions will be theC. Method of Distributions

Distributable Amount. NBF has the right to allow for long-term reserve

Distributions will be made in cash, in principle, within three months

for repair, reserve for outstanding claims, reserve for distributions andfrom the closing date, to such shareholders or registered pledgees asother reserves and allowances similar thereto which are deemed neces-are listed or recorded in the latest Shareholder Registry as of the closing

sary for maintenance or appreciation of the assets of NBF.

date, in proportion to the number of shares owned by them (Articles ofIncorporation).

B. Distribution in Excess of Earnings
A registered investment corporation is allowed to distribute cash to

D. Prescription for Cash Distributions, etc.

its shareholders in excess of retained earnings under the Investment

NBF will be discharged from the obligation to pay distributions ofTrust Law of Japan, although the Investment Trusts Association of Japanprofits three calendar years from the date of commencing payment.

has established rules such that a corporate-style J-REIT may pay out theInterest will not accrue on unpaid distributions (Articles of Incorporation).

excess of retained earnings for the period up to a maximum of 60% of

58 NBF Report July–December 2007

Investment and Distribution Policies

Investment Objectives
The Investment Objectives of NBF specified in the Articles ofIncorporation are as follows.

(8) Beneficiary Certificates of Money Trust (limited to those the trust
assets of which are primarily invested and Managed Assets referred
to in paragraph (1) or (3) above; provided, however, that those thatare deemed securities are excluded).

A. Principal Investment Objectives among
Designated Assets
NBF will principally invest in the below-listed Designated Assets withthe objective of assuring steady growth and stable profits from theManaged Assets.
(1) Real estate, real estate leasehold interests and superficies.

B. Other Investment Objectives among
Designated Assets
NBF may, in the course of efficiently managing funds or in othercases as necessary, invest in the following Designated Assets.
(1) Bank deposits(2) Beneficiary Certificates backed by real estate, land leasehold rights
and superficies, including inclusive trusts consisting of funds appurtenant to real estate.
(3) Tokumei-kumiai ownership interests (provided, however, that this is(2) Call loans(3) Japanese Government Bonds, Notes and Bills(4) Regional Treasury Bonds, Notes and Bills

limited to those the assets of which are primarily invested and(5) Commercial Paper

Managed Assets principally referred to in paragraphs (1) and (2)(6) Designated Bonds of Special Purpose Companies (meaning thoseabove).
(4) Preferred Investment Certificates of Special Purpose Companies(meaning those specified in Article 2.1.5.3 of the Securities andExchange Law of Japan; provided, however, that this is limited tothose the assets of which are primarily invested and Managed Assets
principally referred to in paragraphs (1) and (2) above).

specified in Article 2.1.3.2 of the Securities and Exchange Law ofJapan; provided, however, that this is limited to asset-backed
securities principally referred to in paragraphs (1) and (2) of section(A) above).
(7) Monetary Claims (limited to those claims that are deemed
Designated Assets under the Investment Trust Law of Japan otherthan those referred to above).

(5) Special Purpose Beneficiary Certificates (meaning those specified in
Article 2.1.7.4 of the Securities and Exchange Law of Japan; provided,(8) Securities (other than those listed above or in section (A)).

however, that this is limited to those the assets of which are primarily(9) Rights to financial futures transactions (limited to those deemed

invested and Managed Assets principally referred to in paragraphs

Designated Assets under the Investment Trust Law of Japan).

(1) and (2) above).

(10) Rights to financial derivative transactions (limited to those deemed(6) Beneficiary Certificates of investment trusts (meaning those specified

Designated Assets under the Investment Trust Law of Japan).

in Article 2.1.7 of the Securities and Exchange Law of Japan; provided,(11) Moreover, in order to avoid risks of fluctuation in the prices of the

however, that this is limited to those the assets of which are primarily

Managed Assets as well as risks of fluctuations in interest rates,

invested and Managed Assets principally referred to in paragraphs

futures transactions, option transactions, swap transactions and(1) and (2) above).

forward rate transactions with respect to Japanese interest rates(7) Investment Securities (meaning those specified in Article 2.1.7.2 of
the Securities and Exchange Law of Japan; provided, however, that
this is limited to those the assets of which are primarily invested andManaged Assets principally referred to in paragraphs (1) and (2)above).

may be undertaken. In addition, NBF may acquire shares of stock
in real estate management companies, etc. to the extent that suchacquisition is incidental to NBF’s investment in the principal
Designated Assets.
(12) Beneficiary Certificates of trusts for securities of monetary claims

NBF Report July–December 2007

59

C. Assets Other than Designated Assets

Investment Restrictions

NBF may, in the course of efficiently managing funds or in othercases as necessary, invest in the following assets.
(1) Certificates of deposit issued by Japanese legal entities(2) Equity interests of partnerships defined under Article 667 of the Civil
Code (limited to such partnerships established by contribution of realestate, real estate leasehold rights and superficies for the purpose ofleasing, operating or managing, etc., of the same; hereafter,“Voluntary Partnership Equity Interests”)(3) Trademark rights(4) Copyrights

A. The investment restrictions specified in the
Articles of Incorporation and the asset management guidelines applicable to NBF.
Please also refer to “Investment Policies of
NBF, B. Investment Strategy” herein.
Investment Location and Currencies
NBF will invest neither in real estate located outside of Japan nor in
assets denominated in non-Japanese currencies (“Investment Objectives
and Policies,” Articles of Incorporation).

(5) Chattels defined under the Civil Code (hereafter, “Chattels”)

Borrowing
D. Investment in Ordinary Securities
NBF does not, in principle, have the objective of investing in andmanaging assets which are securities, except for those described in A.
above.

See “Investment Policies of NBF, B. Investment Strategy, (4) Financial
Policies.”

Concentration of Investment
There is no limitation on concentration of investment. See“Investment Policies of NBF, B. Investment Strategy, (1) Strategy for
Creation of the Portfolio.”

Investment in Other Funds
See “Investment Objectives, A. Principal Investment Objectives
among Designated Assets.”
The real estate held by such funds may not include any real estate
located outside of Japan (Articles of Incorporation).

Subscription and Margin Trading of Securities
NBF may not subscribe to, or conduct margin trading of, securities.

Compliance with Laws and Regulations
The Managed Assets of NBF will be managed in compliance with
Investment Trust Law of Japan and related regulations, the rules stipulated by the Investment Trusts Association (as amended), as well as“Investment Objectives and Policies” of the Articles of Incorporation.

60 NBF Report July–December 2007

Investment and Distribution Policies

B. Compliance with the Investment Trust Law
of Japanand further, such transactions upon said conditions would be harmful tothe interests of the investment.

While a registered investment corporation must entrust business

related to the business of managing the assets of said investment cor-Other Transactions Specified in the Government
Ordinance regarding the Investment Trust Law ofJapan (§ 34.3.1.8)

poration. As a result, an investment corporation is subject to certain

In the addition to the foregoing, those acts specified in the govern-

investment restrictions (all references in parentheses below are to thement ordinance regarding the Investment Trust Law of Japan being cer-

provisions of the Investment Trust Law of Japan) besides restrictions

tain acts committed by an asset management company that would result

applied to a registered investment corporation. NBF will naturally comply

in failure to protect the interests of shareholders, damage the fairness ofwith such investment restrictions, a general overview of which follows.

the management of the assets of NBF, and pose a risk of damaging therelated to asset management to an asset management company, anasset management company is prohibited from performing certain acts

good public reputation of NBF are prohibited.

Reciprocal Transactions with Investment
Corporations (§ 34.3.1.5)
Transactions between investment corporations, the assets of which

Limitation on Acquisition of the Same Issue of
Shares (§ 194)

are managed by an asset management company, are prohibited except

A registered investment corporation may not acquire the samefor certain cases specified in the provisions of the government ordinanceshares issued by a corporation in excess of 50/100 of total number ofregarding the Investment Trust Law of Japan that are considered unlikely

said issued and outstanding shares.

to result in failure to protect the interests of shareholders.

Transactions by an Investment Corporation with
Investment Trust Assets (§ 15.1.3)
Transactions by an investment corporation with investment trust

Restriction on Acquisition of Own Shares andAcceptance of Pledge (§ 80.1)
An investment corporation may not acquire shares issued by itself, or
accept them for the purpose of pledge, unless it acquires shares issued

assets subject to asset management are prohibited except for certain

by itself in the following cases:

cases specified in the provisions of the government ordinance regarding●

when acquired as the result of merger;

the Investment Trust Law of Japan that are considered unlikely to result●

if necessary for attaining the purpose of exercising its rights; orin failure to protect the interests of shareholders.

●when purchasing shares pursuant to the provisions of the Investment
Trust Law of Japan.

Transactions for the Benefit of Third Parties(§ 34.3.1.6)
certain securities based on fluctuations in the price, index, value, orRestriction on Acquisition of Parent
Corporation’s Shares by Subsidiary Corporation(§ 81.1)

amount of consideration related to transactions in the assets of an

An investment corporation (e.g. subsidiary), a majority of the sharesinvestment corporation, without a legally valid reason, with the objectiveof which is owned by another investment corporation (e.g. parent), mayof benefiting a third party other than NBF or said investment.

not acquire the shares of such parent investment corporation except in

An asset management company may not undertake transactions in

the following cases:

Transactions Harmful to the Interests of NBF(§ 34.3.1.7)●

when acquired as the result of merger; or●if necessary for attaining the purpose of exercising its rights.

An asset management company may not undertake transactions thatare other than upon normal terms and conditions for such transactions,

NBF Report July–December 200761

Restrictions of Transactions with Interested
Parties(1) Restriction on an asset management company (§ 34.3)
In accordance with the provisions of laws and regulations, an asset
management company is prohibited from committing any of the following acts in connection with transactions with an Interested Party, etc.
“Interested Party, etc.” as used herein means a person who holds amajority of the shares of an asset management company or otherwise
has a close relationship with said asset management company as designated by the government ordinance regarding the Investment Trust Law
of Japan.
a) An investment trust agent, trust company, financial institution
engaged in trust business, investment advisor, residential land andbuilding specialist, etc. who is an Interested Party, etc. of an asset
management company undertakes a transaction which harms theinterests of NBF with the objective of benefiting a customer, etc.
specified in the Investment Trust Law of Japan.

e) In the event that an issuer, securities company or registered financial
institution, who is an Interested Party, etc. of an asset managementcompany, undertakes a primary offer or secondary distribution of
securities or participates in handling a primary offer, private offering,or secondary distribution at a time when the subscription amount of
said acquisition or the amount of purchase offer of securities to said
issuer, securities company or registered financial institution is notforeseen to reach that otherwise expected by said issuer, securities
company or registered financial institution, acquiring or purchasing
said securities with assets of NBF at the request of said issuer, securities company or registered financial institution.
f) In the event that a specified real estate syndicate, who is an
Interested Party, etc. of an asset management company, makes asolicitation in connection with the execution of a specified real estatesyndication agreement at a time when the contract amount of said
specified real estate syndication agreement is not foreseen to reachthat otherwise expected by said specified real estate syndicate,acquiring a tokumei kumiai interest pursuant to said specified realb) Undertaking transactions which harm the interests of an investment
corporation with the objective of benefiting an Interested Party, etc.

estate syndication agreement with assets of NBF at the request of
said specified real estate syndicate.

of NBFM.
g) In the event that the manager of a tokumei kumiai , who is anc) Undertaking transactions clearly recognized to be unnecessary in lightof the management policies for the assets of an investment corporation, the amount of net assets of NBF, or market conditions, with the
purpose of benefiting a securities company, registered financial institution, residential land and building specialist or other person specified in the government ordinance regarding the Investment Trust Law
of Japan who is an Interested Party, etc. of an asset managementcompany.
d) In the event that a securities company, who is an Interested Party,
etc. of an asset management company, acts as an underwriter in asecurities transaction, undertaking transactions with the objective offraudulently manipulating the market for the purpose of having an
influence upon the conditions of the primary offer or secondary distribution of said securities not reflecting correct market pricing.

Interested Party, etc. of an asset management company, makes asolicitation in connection with the execution of a tokumei kumiai
agreement at a time when the total investment amount otherwise
obtained pursuant to said tokumei kumiai agreement is not foreseen
to reach that expected by the manager of said tokumei kumiai,acquiring a tokumei kumiai interest pursuant to said tokumei kumiai
agreement with assets of NBF at the request of the manager of said

tokumei kumiai.
h) In the event that a trust company, who is an Interested Party, etc. ofan asset management company, makes a solicitation in connection
with the execution of a trust agreement at a time when the amount oftrust assets otherwise obtained pursuant to said trust agreement is
not foreseen to reach that expected by said trustee, acquiring a beneficiary certificate pursuant to said trust with assets of NBF at therequest of said trustee.

62 NBF Report July–December 2007

Investment and Distribution Policies

i) In the event that a distributor of trust beneficiary interests, who is an

the enforcement regulations of the Investment Trust Law with the con-Interested Party, etc. of an asset management company, distributes,

sent of said investment corporation the assets of which are managed byor acts as an agency or intermediary of distribution of, trust benefici-

said asset management company, other investment corporations (which

ary interests at a time when the total amount of purchase offer ofinvest in the same kind of assets as the said Designated Assets) the

said trust beneficiary interests to said distributor of trust beneficiary

assets of which are managed by said asset management company andinterests is not foreseen to reach that otherwise expected by said dis-other persons set forth under the government ordinance regarding thetributor of trust beneficiary interests, purchasing said trust beneficiary

Investment Trust Law.

interests with assets of NBF at the request of said distributor of trust
beneficiary interests.

(3) Restriction on an investment corporation
Restrictions on Asset Management (§ 195)

(2) Submission of written notice when conflict of interest is
anticipated

A registered investment corporation must not, in principle, acquire orsell securities, lend or borrow securities, acquire or sell real estate, lease

Submission of Written Notice When Conflict of Interest isreal estate or entrust the supervision of real estate (provided, however,

Anticipated (§ 34.6.2-4 of the Investment Trust Law)

that, it is acceptable to cause NBFM to act as an agent or broker con-

An asset management company must, in the event that any sale orcerning the purchase or leasing of residential building lots or buildings)

purchase of, or any other transaction set forth under the government

or otherwise engage in transactions concerning Designated Assets otherordinance regarding the Investment Trust Law with respect to, thethan the preparation of residential building lots and design of buildings,

Designated Assets (excluding the specified assets set forth under thewith its executive directors or supervisory directors, asset management

Investment Trust Law and such assets as are set forth under thecompanies who perform asset management, close relatives of executive

enforcement regulations of the Investment Trust Law, the same to apply

directors or supervisory directors, or persons or employees who performhereinafter in this paragraph) is conducted between an investment cor-

duties similar to directors or auditors of an asset management company

poration the assets of which are managed by said asset management

who perform asset management.

company on one hand, and said asset management company, its director or executive officer, any other investment corporation, investment
fund which directs management, Interested Party, etc. or other person
set forth under the government ordinance regarding the Investment Trust
Law on the other, submit written notice, in accordance with the enforcement regulations of the Investment Trust Law, to said investment corporation, other investment corporations (which invest in the same kind ofassets as the said Designated Assets) the assets of which are managed
by said asset management company and other persons set forth under
the government ordinance regarding the Investment Trust Law specifying
the matters relating to such transaction; provided, however, that in lieu
of such submission of written notice, said asset management company
may, in accordance with the government ordinance regarding theInvestment Trust Law, provide the matters to be specified in such written
notice by such methods as using electronic information processing systems or other telecommunication technology which are set forth under

NBF Report July–December 200763

Corporate Data
As of December 31, 2007

Corporate Office:38th Floor, GranTokyo North Tower, 9-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-6738, Japan+81-3-6259-8681
http://www.nbf-m.com/nbf_e/

Date of Inception:

March 16, 2001

Capital:Contributed capital and common shares issued and outstanding.
¥346,447 million
508,000 shares

Shareholders:

13,756

Transfer Agent:

The Chuo Mitsui Trust and Banking Co., Ltd.
33-1, Shiba 3-chome, Minato-ku, Tokyo, 105-8574, Japan

Business Office of the Transfer Agent:

Stock Transfer Agency Department of the Chuo Mitsui Trust and Banking Co., Ltd.
8-4, Izumi 2-chome, Suginami-ku, Tokyo, 168-0063, Japan+81-3-3323-7111

Independent Public Accountants:

KPMG AZSA & Co.
AZSA Center Building
1-2, Tsukudo-cho, Shinjuku-ku, Tokyo, 162-8551, Japan

Investor Relations:

For further information, please contact our Asset Management company:
Investor Relations of Financial Department
Nippon Building Fund Management Ltd.
38th Floor, GranTokyo North Tower, 9-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-6738, Japan+81-3-6259-8681

This document contains translations of selected information described in theor the selection of the portion(s) of any document(s) translated into English. No person

Securities Report (Yuka shoken hokokusho) filed on March 28, 2008 pursuant to thehas been authorized to give any information or make any representations other than as

Securities Exchange Law of Japan, and the Financial Statements and the Performancecontained in this document in relation to the matters set out in this document, and if

Information Report for the period from July 1, 2007 to December 31, 2007, of Nippon

given or made, such information or representation must not be relied upon as having

Building Fund Inc. prepared pursuant to the Investment Trust Law of Japan.

been authorized by Nippon Building Fund Inc., Nippon Building Fund Management Ltd.

This English language document was prepared solely for the convenience of andreference by overseas investors and neither corresponds to the original Japanese docu-

or any of their respective directors, officers, employees, partners, shareholders, agentsor affiliates.

ments nor is it intended to constitute a disclosure document. The Japanese language

The financial statements of Nippon Building Fund Inc. have been prepared in

Securities Report and the Financial Statements and the Performance Information Reportaccordance with generally accepted accounting principles in Japan (Japanese GAAP)

for the aforementioned period should always be referred to as originals of this docu-

which may materially differ in certain respects from generally accepted accounting

ment.

principles in other jurisdictions.

English terms for Japanese legal, accounting, tax and business concepts used here-

Many provisions of this document contain forward-looking statements and informa-

in may not be precisely identical to the concept of the equivalent Japanese terms. Withtion. We base these statements on our beliefs as well as our assumptions based solely

respect to any and all terms herein, including without limitation, financials statements, if

on certain limited information currently available to us. Because these statements reflect

there exist any discrepancies in the meaning or interpretation thereof between the origi-

our current views concerning future events, these statements involve known and

nal Japanese documents and English statements contained herein, the original

unknown risks, uncertainties and assumptions. Our future performance could materiallyJapanese documents will always govern the meaning and interpretation. None of Nippon

differ from those set out in these forward-looking statements. We do not undertake andBuilding Fund Inc., Nippon Building Fund Management Ltd. or any of their respective

will not undertake to release revisions of forward-looking statements to reflect future

directors, officers, employees, partners, shareholders, agents or affiliates will be respon-

events or circumstances or of any other statements or information contained herein.

sible or liable for the completeness, appropriateness or accuracy of English translations

64 NBF Report July–December 2007

Investors’ Information
As of December 31, 2007

Fiscal Period

Shareholders

Six months ending June 30 and December 31

Other domestic corporations
303 (2.2%)

Overseas investors 382 (2.8%)
Financial institutions(Including securities companies)

Total Number of Common Shares Issued

196 (1.4%)

13th Period (From July 1, 2007 to December 31, 2007)

508,000 shares

12th Period (From January 1, 2007 to June 30, 2007)

508,000 shares

Individuals and others
12,874 (93.6%)

Distributions
Total number of shareholders:Confirmed distribution for the 13th Period (ended December 2007)
For the operating period from July 1, 2007 to December 31, 2007 (6 months)

13,756¥20,129 per share

Expected distribution for the 14th Period (ending June 2008)
For the operating period from January 1, 2008 to June 30, 2008 (6 months)¥19,500 per share

Overseas investors
169,216 (33.3%)

Other domestic corporations
44,409 (8.7%)
Individuals and others
30,816 (6.1%)
Financial
institutions(Including
securities
companies)

263,558(51.9%)

Total number of shares:

508,000

Major Shareholders
Name

NikkoCiti Trust and Banking Corporation (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
The Master Trust Bank of Japan, Ltd. (Trust Account)
Trust & Custody Services Bank, Ltd. (Securities Investment Trust Account)
Mitsui Fudosan Co., Ltd.
The Bank of New York, Treaty JASDEC Account
The Nomura Trust and Banking Co., Ltd. (Trust Account)
UBS AG London Asia Equities
Sumitomo Life Insurance Company
The Chugoku Bank, Ltd.

Number of Shares Held

Percentage of Total

36,33635,82631,802
29,302
19,735
16,441
16,375
12,376
11,256
10,576

7.15%
7.05
6.26
5.76
3.88
3.23
3.22
2.43
2.21
2.08

Stock Price Range and Trading Volume(Yen)
2,000,000
1,800,000(Shares)

Trading Volume (Right scale)Closing Price (Left scale)

1,600,000

80,0001,400,000

70,0001,200,000

60,0001,000,000

50,000800,000

40,000600,000

30,000400,000

20,000200,000

10,0000

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12
2003
2004
2005
2006
2007

0

NBF Report July–December 2007

65

Nippon Building Fund Inc.
38th Floor, GranTokyo North Tower,
9-1, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-6738, Japan

http://www.nbf-m.com/nbf_e/

Printed in Japan