16th Period
NBF Report January – June 2009

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

Reaffirming
Our
Fundamentals

PROFILE
On September 10, 2001, Nippon Building Fund Inc. (NBF) became the firstJapanese real estate investment trust (J-REIT) investment corporation with its listingon the J-REIT section of the Tokyo 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 toinvest in real estate, real estate-backed securities, trust beneficiary rights and otherassets with the objective of sustainable growth in portfolio value and stable profits ona 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, other Greater Tokyoand 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 thatcompany’s expertise to invest in carefully selected, high-quality
properties, with the aim of generating further asset growth.

Reaffirming
Our
Fundamentals
On the Cover

The NBF Hibiya Building, acquired in 2005, is
NBF’s flagship property. A core asset, it generates
the highest rental revenue in NBF’s portfolio.
Situated in one of Tokyo’s most prestigious officeareas, the NBF Hibiya Building stands on the
grounds of the former Rokumeikan, a Meiji-era
building commissioned by the government forsocializing with foreign guests that ushered in an
era of Westernization.

CONTENTS
Building on Our Strengths

2

Portfolio Overview

22

Financial Highlights

4Management Team and Management Structure

24

To Our Shareholders

6

Management’s Discussion and Analysis

28

Feature: Reaffirming Our Fundamentals

8

Financial Statements

39

A Track Record of Steady Growth and High Occupancy Rates 12

Appendix

53

Acquisitions during the 16th Period

13

Investment and Distribution Policies

55

Planned Acquisitions in the 18th Period

13

Corporate Data

64

Main Properties

14

Investors’ Information

65

Location of Office Properties

20

BUILDING ON OUR STRENGTHS

Japan’s First andLargest J-REIT
Over the 16 periods, or roughly eight
years, since its listing on the J-REIT sectionof the Tokyo Stock Exchange in September
2001, NBF has established a track record of
stable profit distribution.

◆ In September 2001, NBF was listed as the first real estate
investment corporation in Japan on the J-REIT section of
the Tokyo Stock Exchange.
◆ The largest total market capitalization of any J-REIT(¥447.7 billion)*◆ The largest scale of managed assets (¥783.1 billion)*(total acquisition price)

As a result of steady growth, NBF has
built a solid position in the J-REIT market
from several perspectives, including scaleadvantage, portfolio scope, financial
stability and level of return.
NBF will continue to make maximum useof its strengths and competitive advantages, as well as the expertise of Mitsui
Fudosan Co., Ltd., to steadily increase value
for shareholders.

High-Quality
Properties◆ Specializes in investing in office buildings◆ Possesses 61* properties, mainly large-scale officebuildings in the Tokyo Central Business Districts◆ Diversified in other Tokyo markets as well as inregional cities◆ Total rentable area of 770,270m2*◆ 926* diversified tenants

2 NBF Report January – June 2009

Stable Returns◆ Cash distribution of ¥21,775 per share for the 16th Period◆ Aims to increase distributions to shareholders
over the medium to long term
(Cash distribution per share: Yen)

NBF’s Strengths

21,77525,00019,391

20,00014,582
15,00010,0005,000
0Sound Finances◆ Ratings*■ Standard & Poor’s

Long-term Corporate: A+, Short-term Corporate: A-1■ Moody’s Issuer Rating: A1■ R & I Issuer Rating: AA

5th

Period10th

Strategic Partnershipwith Mitsui Fudosan◆ Access to the expertise of Mitsui Fudosan Co., Ltd., theleading real estate company in Japan◆ LTV: 47.0%*■◆ Percentage of long-term, fixed-rate debt included ininterest-bearing debt: 73.5%*■ Use of property information-gathering capabilities◆ Average years remaining on long-term, fixed-rate interestbearing debt: 4.56 years*

16th

Acquisition of properties developed by Mitsui Fudosanof Mitsui Fudosan■ Use of Mitsui Fudosan’s tenant mediation and building

management capabilities in office management◆ Total average cost: 1.58%** As of June 30, 2009

NBF Report January – June 2009 3

FINANCIAL HIGHLIGHTS
16th Period

15th Period

14th Period

13th Period

16th Period

from January 1, 2009 toJune 30, 2009

from July 1, 2008 to
December 31, 2008

from January 1, 2008 toJune 30, 2008

from July 1, 2007 to
December 31, 2007

from January 1, 2009 toJune 30, 2009
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¥ 30,761
11,803
11,802¥ 31,218
12,062
12,061¥ 30,088
12,223
12,222¥ 27,814
10,227
10,226$ 319,033
122,412
122,402

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

Note 3

17,157

17,417

16,63015,394

177,939

Note 3(a)21,005
11,802

21,346
12,061

20,318
12,222

18,905
10,226

217,846
122,403(b)Note 3

783,793
338,500
397,97847.0%

766,249
318,500
398,23745.5%

725,627
280,500
398,39842.8%

672,195
272,500
356,67244.3%

8,128,948
3,510,682
4,127,546(c)(b) / (c)(a) / (c)542,000
734,276
21,775542,000
734,753
22,252542,000
735,050
22,549508,000
702,110
20,1297,615
226

Note 331,65432,13431,06630,303328

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 ¥96.42 = U.S.$1.00, the approximate exchange rate on June 30, 2009.
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 June 30, 2009)
Regional Allocation

Average Age(Average age of properties weighted byacquisition price of each property)

5 years or less

Other Cities*¥90,931 million(11.6%)
Other Greater*Tokyo¥189,180 million(24.2%)

18.7%
Total
acquisition
price¥783,189

years

Between 5
and 10 years
9.0%

millionTokyo CBDs*¥503,078 million(64.2%)* Tokyo CBDs (Central Business Districts): The 9 central wards of Tokyo, comprising Chiyoda, Minato,Chuo, Shinjuku, Shinagawa, Shibuya, Toshima, Bunkyo and Meguro
Other Greater Tokyo: The other 14 wards of Tokyo, and neighboring cities
Other Cities: Principal regional cities

4 NBF Report January – June 2009

14.86

Over 10 years
72.3%

Operating revenues / Net income

Funds from operations per share

Net operating income fromproperty leasing activities(Yen in millions)(Yen in millions)(Yen)

35,00025,00040,00030,00020,00030,00025,00020,00015,00015,00010,00020,00010,00010,000

5,000
5,000

0

0
12th
Period13th
Period14th
Period15th
Period16th
Period0
12thPeriod13th
Period14th
Period15th
Period16th
Period12th
Period13th
Period14th
Period15th
Period16th
PeriodO
Operatingrevenues
Net income
N

Total assets

LTV(Yen in millions)(%)

800,000

50

700,000

48

600,000

46

500,000

44

400,000
300,000

Net assets per share /Distribution per share
(Yen)

(Yen)

750,000

25,000700,000

20,000650,000

15,00042600,000

10,00040

550,000

5,000

0

0
Jun. 30, Dec. 31, Jun. 30, Dec. 31, Jun. 30,
2007
2007
2008
2008
2009

0
Jun. 30, Dec. 31, Jun. 30, Dec. 31, Jun. 30,
2007
2007
2008
2008
2009

0
12th
Period13th
Period14th
Period15th
Period16th
PeriodNet assets per share (left scale)N
D
Distribution
per share (right scale)

Property Concentration Risk Diversification

Tenant Risk Diversification(Ratio of total acquisition price of top 3 properties
to total acquisition price)(Top 10 tenants’ share of total floor space)

Top 9 tenants’ share(excluding Mitsui Fudosan Co., Ltd.)
20.9%

Top 3 properties
19.0%

19.0%

Other properties
81.0%

44.1%

(20.9%)

Top 10 tenants’ share(including Mitsui Fudosan Co., Ltd.)
44.1%

NBF Report January – June 2009 5

TO OUR SHAREHOLDERS
Performance during the Six Months Ended June 30, 2009

Accurately perceiving market
changes, NBF aims for steady
distributions to shareholders overthe medium-to-long term bygenerating well-balanced internaland external growth based on its
sound financial strategy.

Due to worsening market conditions, such as a decreasein the occupancy rate, distribution per share was¥21,775.
During the six months ended June 30, 2009 (the “16thPeriod”), the Japanese economy further weakened, reflecting theimpact the turmoil in global financial markets and the economic
slowdown that originated in the United States had on corporate
profits, capital investment and consumer spending.
In the office building leasing environment, the overall occupancy
rate and rent levels continued to decrease due to pressure to
reduce costs resulting from weaker corporate earnings. In addition,
property sales were weak due to turmoil in financial markets.
Under these conditions, NBF further enhanced its portfolio by
acquiring the Mitsuiseimei Ochanomizu Building (acquisition price:¥20,840 million), for which NBF signed the purchase contract inMarch 2008. As a result, NBF’s real estate portfolio at June 30,
2009 comprised 61 properties with a total investment value of¥783.1 billion on an acquisition price basis.
Operating revenues for the six months ended June 30, 2009
decreased ¥457 million, or 1.5 percent, compared with the previous six-month period to ¥30,761 million. Factors included a
decrease in rental revenue due to the decrease in the occupancy
rate and an increase in property and other real estate taxes resulting from properties acquired in 2008. Operating income
decreased ¥294 million, or 2.0 percent, to ¥14,297 million. Net
income decreased ¥259 million, or 2.1 percent, to ¥11,802
million. Distribution per share decreased ¥477 to ¥21,775.

Koichi Nishiyama

Performance Outlook (As of August 14, 2009)

Executive Director of
Nippon Building Fund Inc.
President and CEO of
Nippon Building FundManagement Ltd.

Operating revenues
Net income
Distribution per share (Yen)

6 NBF Report January – June 2009

(Yen in millions)17th Period (Projected)
from July 1, 2009 to December 31, 200918th Period (Projected)
from January 1, 2010 to June 30, 2010

¥29,722
10,02718,500¥28,125
8,726
16,100Operating Environment
Challenging conditions continue in both the officebuilding leasing and real estate acquisition markets, but
signs of change are beginning to appear.

Based on this assumption, NBF expects distributions per shareof ¥18,500 for the six months ending December 31, 2009 (the“17th Period”) and ¥16,100 per share for the six months ending
June 30, 2010 (the “18th Period”).

In the office building leasing market, there were many contract
cancellations in March and April as companies moved to reduce
costs in response to the economic downturn. Consequently,
conditions weakened throughout Japan, including a drop in
occupancy rates and rent levels. However, since May many
contracts have been signed due to increased demand for office

Future Management Policies
NBF will work to maintain or improve the occupancy
rate as a priority issue and aim for steady distributions
over the medium-to-long term with an eye on external
growth.

relocation and integration as a result of lower rents.
NBF expects occupancy rates to bottom out by the end of

NBF expects that challenging conditions will continue.

2009 or early in 2010, and rents to follow suit about six months

However, NBF will minimize the impact of the poor operating

later, around the middle of 2010.

environment by further strengthening its leasing activities based

Meanwhile, the number of sales in the office building acquisition market remains low.
NBF recognizes that these economic conditions offer an opportunity to acquire high-quality properties. However, few of theon the high-quality portfolio it has built up since it began asset
management. In addition, NBF will work to maintain or improve
the occupancy rate as a priority issue through flexible rent revision
based on an accurate perception of market trends.

A-class buildings that NBF targets are available. Nevertheless,Moreover, with signs of change beginning to appear in the

NBF believes that more information on properties will become

office building acquisition market, NBF intends to seriously consider

available as individual companies’ circumstances change.

expanding revenues through external growth based on financing

NBF recognizes that financing has become more stable. In

capabilities that leverage its strong fundamentals.

September 2009, a public-private fund was established for the

The operating environment for J-REITs has been challenging

redemption of investment corporation bonds. NBF believes thissince autumn 2008. However, as Japan’s first and largest REIT,

safety net is an advantage for J-REITs.

NBF will steadfastly continue to implement its fundamental policyof providing steady distributions to shareholders over the
medium-to-long term by generating well-balanced internal and

Outlook for the Next Twelve Months

external growth based on our sound financial strategy, and making

NBF expects challenging conditions over the next
twelve months due to market lag.

the most of our relationship with Mitsui Fudosan Co., Ltd. andthe high-level asset management know-how we have built up
since our establishment.

In the office building leasing market, tenants are active, andthere is a sense that occupancy rates will bottom out by the endof 2009 or early in 2010. However, NBF expects challenging
conditions to continue for the next twelve months or so because

Koichi Nishiyama

the Japanese office building leasing market lags economic trends

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

as a result of national business customs, such as the need for six
months’ advance notice for contract cancellation.
As a result, NBF expects rental revenue to decrease an annualized 8 percent over the next twelve months.

NBF Report January – June 2009 7

Feature:

REAFFIRMING OUR FUNDAMENTALS

Outlook for Internal Growth
Vacancy Rate in Tokyo CBDs,
Osaka CBDs and Nagoya CBDs

Office Floor Space Supply inthe 23 Wards of Tokyo(%)(Thousand m2)

25

2,500

Nagoya

20

2,000

Osaka
15

1,500

10

1,000

5

500

Tokyo
0

Dec.
2002

Dec.
2003

Dec.
2004

Dec.
2005

Dec.
2006

Dec.
Dec. Jun.
2007
2008 2009
Source: Miki Shoji Co., Ltd.

02002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
(Proj.) (Proj.) (Proj.) (Proj.) (Proj.)

Source: Mori Building Co., Ltd.

Tokyo CBDs: Chiyoda, Chuo, Minato, Shinjuku and Shibuya
Osaka CBDs: Umeda, Minami-Morimachi, Yodoyabashi/Honcho, Senba, Shinsaibashi/Namba, Shin-Osaka
Nagoya CBDs: Meieki, Fushimi, Sakae, Marunouchi

Fully leveraging an excellent portfolio for steady asset management
In the office building leasing market, vacancy rates in the Tokyo CBDs, Osaka CBDs and Nagoya
CBDs are up due to the economic environment. In particular, the vacancy rate in the Tokyo CBDs is at
the 2003 level.
In addition, based on actual and projected office supply in the 23 wards of Tokyo, some people predictthat construction plans to meet anticipated supply from 2011 will be postponed due to limited tenant
demand.
NBF’s portfolio occupancy assumptions include longer times to fill vacancies.
In March and April 2009, tenants surrendered leases and reduced the amount of space they leased inorder to lower costs. However, with the decrease in rents, from May companies began looking for better
deals on office space, and reorganized businesses began looking for better properties.

8 NBF Report January – June 2009

NBF Properties and Market
Occupancy Rates
(%)

100.0

NBF properties occupancy rate

Average Asking Rents in Tokyo CBDs
(Yen per tsubo )40,000

New buildings
95.0

35,00090.0

Market occupancy rate*

30,000

85.0

Average asking rent

25,00080.0
20,00075.002001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
(Proj.) (Proj.) (Proj.)*Source: Mori Building Co., Ltd.

0

Existing buildings
Jun.
2006

Dec.
2006

Jun.
2007

Dec.
2007

Jun.
2008

Dec.
Jun.
2008
2009
Source: Miki Shoji Co., Ltd.

The occupancy rate for NBF properties declined as numerous tenants undertook partial surrender of
their leases in March and April. However, as mentioned previously, firm demand began to appear fromMay. NBF expects the occupancy rate to bottom out by the end of 2009 or early in 2010.
Average asking rents in the Tokyo CBDs decreased substantially for new office buildings. However,rents were stable overall because of steady asking rents for existing properties, which make up the majority
of office buildings in Tokyo.
NBF’s current portfolio is concentrated in Greater Tokyo and has diversified rent levels. Over half of theproperties have monthly rents of less than ¥25,000/tsubo. These properties have exhibited smaller, thoughconsistent, rent decreases.
In addition, rent levels appear to be bottoming out as lower rents and business reorganization have spurredcompanies to begin aggressively looking for better lease conditions.

NBF Report January – June 2009 9

Outlook for External Growth
Occupancy Rate, Real GDP and Acquisition Price
(%)

(%)

NBF occupancy rate (left scale)

100

3.0
0

95
90

Market occupancy rate* (left scale)Real GDP (right scale)

-6.0

85

■ Bursting of IT bubble■ “2003 Problem” foroffice leasing■ Recovery from bursting of IT bubble■ Economic growth■ Subprimeloan crisis■ Financial crisis■ Economic crisis■ Recovery from crisis■ Hope for economic recovery■ Real estate market hits bottom

billi )
(Yen in billions)

800
600

-3.0

Acquisition price

400

Selected iinvestment
for future growth200(Enhancement of portfolio)

0 Dec.

Jun.
Dec.
Jun.
Dec.
Jun.
Dec. Jun.
Dec.
Jun.
Dec.
Jun.
Dec.
Jun.
Dec.
Jun.
Dec.
Jun.
Dec.
Jun.
Dec.
2001 2002
2002 2003
2003 2004 2004 2005 2005 2006
2006 2007 2007 2008 2008 2009 20092010 2010 2011 2011
(Proj.) (Proj.) (Proj.) (Proj.) (Proj.)
2*Tokyo 23 wards; floor area over 10,000m
Source: Market occupancy rate: Mori Building Co., Ltd.; Real GDP: Cabinet Office, Government of Japan; Projections for April 2009 - March 2011: Japan Center for Economic Research

Selectively investing in excellent properties to augment ahigh-quality portfolio
In an environment of financial crisis and economic slowdown, NBF approaches the market with due
caution, but also sees excellent opportunities to acquire high-quality assets with high returns. Therefore,
NBF will selectively invest in outstanding assets based on strict guidelines while also considering asset
turnover.
Past results show that NBF has expanded its assets under management during the recovery since theIT bubble burst in 2003. This has contributed to internal growth and increased distributions.
Currently, occupancy rates and asking rents are at very low levels, and GDP projections point toward a
gradual recovery in Japan’s economic fundamentals projections.
NBF believes that more property data will become available from the end of 2009, and that the time
has come to shift its orientation from internal to external growth.

10 NBF Report January – June 2009

Feature: REAFFIRMING OUR FUNDAMENTALSA Strong Financial Foundation
Diversified Maturities ofInterest-Bearing Debt

Stable Financial Track Record(%)(Yen in billions)Long-term fixed-rate
debt ratio

100.0

80

80.0

Short-term loans
Bonds
Long-term debt

60

60.0

LTV

40

40.0
20
20.0

0.0 Dec.
2005

Jun.
2006

Dec.
2006

Jun.
2007

Dec.
2007

Jun.
2008

Dec.
2008

Jun.
2009

0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
(As of June 30, 2009)

Creating a strong financial foundation based on a steady financial strategy
Japanese financial institutions remain reluctant to lend to the real estate sector, but NBF steadilyprocures funds due to the excellent portfolio it has built up and its strong financial foundation.
Moreover, financing has started to normalize due to the September 2009 establishment of a publicprivate fund to provide government support that will mitigate the refinancing risk associated withinvestment corporation bonds issued by J-REITs.
NBF’s loan-to-value (LTV) ratio at the end of the 16th Period was 47.0 percent, within the target rangeof 40 to 50 percent (maximum 60 percent).
NBF is also working to procure long-term fixed-rate loans, and has set a target ratio for fixed-rate longterm debt to total interest-bearing liabilities of 80 to 90 percent. At the end of the 16th Period, this ratio
was 73.5 percent, but as of September 30, 2009 it was 85.5 percent.
Furthermore, in addition to diversifying maturities of interest-bearing debt, NBF established an additional
commitment line of ¥20.0 billion in the 16th Period, securing a stable foundation for fund procurement with a
total commitment line of ¥50.0 billion. These solid initiatives have earned us high ratings from rating agencies.

NBF Report January – June 2009 11

A TRACK RECORD OF STEADY GROWTH AND HIGH OCCUPANCY RATES

Occupancy rate (%)

100.0

97.7

96.9

97.5

98.1

98.1

98.7

97.8

99.0

98.6

97.4

96.8

95.4

92.3

90.0

Total rentable area (m2)

750,701

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

700,000

692,286

Other Cities

794.4
725.2

578,243

Occupancy rate

¥11.2 billion(contract basis)*

762.3
700

674.3

Total rentable area
624.8

600,000

674.3

624.8

488,323
460,901600

800,000

692,222

Other Greater Tokyo

800

763,658 770,270

500,000

539.3

419,511500

400,000

358,940393.8

400

300,000

336.1

247,687
300

414.1

285.6
200,000

200

192.1

100,000

100

22

33

43

Buildings

Buildings

May 23,
Dec. 31,
2001
2003(Investment commencement date)

0

12 NBF Report January – June 2009

52

55

55

56

56

58

60

61

43

47

Buildings

Buildings

Buildings

Buildings

Buildings

Buildings

Buildings

Buildings

Buildings

Buildings

Buildings

Jun. 30,
2004

Dec. 31,2004

Jun. 30,
2005

Dec. 31,2005

Jun. 30,
2006

Dec. 31,2006

Jun. 30,
2007

Dec. 31,2007

Jun. 30,
2008

Dec. 31,2008

Jun. 30,
2009

(62*)

*Higashi-Ueno 4-chome Bldg. (tentative name): ¥11.2 billion contract completed.
(As of June 30, 2009)0ACQUISITIONS DURING THE 16TH PERIOD

10 Mitsuiseimei Ochanomizu Building●
Acquisition date

April 30, 2009

Site area

1,767.94m2

Floor area of building

9,258.36m2

Structure

11 floors above ground,
1 floor below

Location

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

Acquisition price¥20,840 million

PLANNED ACQUISITIONS IN THE
18TH PERIOD
62 Higashi-Ueno 4-chome Building (tentative name )●Acquisition date

April 30, 2010 (scheduled)

Site area

2,405.22m2 (NBF share: approx. 77%)

Floor area of building

15,949.26m2 (NBF share: approx. 77%)

Structure

13 floors above ground, 2 floors below

Location

38-2, Higashi-Ueno 4-chome, Taito-ku, Tokyo

Acquisition price¥11,175 million

NBF Report January – June 2009 13

MAIN PROPERTIES
2 Nishi-Shinjuku Mitsui Building●

3 Shiba NBF Tower●

1 NBF Hibiya Building●

14 NBF Report January – June 2009

4 NBF Platinum Tower●

5 NBF Minami-Aoyama Building●

6 Gate City Ohsaki●

7 Toranomon Kotohira Tower●

NBF Report January – June 2009 15

9 Nakameguro GT Tower●

14 NBF Toranomon Building●

12 Shinjuku Mitsui Building No. 2●

13 GSK Building●

15 Kowa Nishi-Shinbashi Building B●

16 NBF Report January – June 2009

MAIN PROPERTIES

19 Shibuya Garden Front●

17 NBF Alliance●

32 Nakanosakaue Sunbright Twin●

23 NBF Akasaka Sanno Square●

NBF Report January – June 2009 17

33 NBF Toyosu Canal Front (top) /●34 NBF Toyosu Garden Front (bottom)●

35 Shin-Kawasaki Mitsui Building●

36 Yokohama ST Building●

18 NBF Report January – June 2009

MAIN PROPERTIES

41 S-ino Omiya North Wing●

51 ●56 Aqua Dojima NBF Tower, Aqua Dojima East●

52 Shinanobashi Mitsui Building●

NBF Report January – June 2009 19

LOCATION OF OFFICE PROPERTIESAs of June 30, 2009

Tokyo CBDs
1 NBF HIbiya Building
2 Nishi-Shinjuku Mitsui Building
3 Shiba NBF Tower
4 NBF Platinum Tower
5 NBF Minami-Aoyama Building
6 Gate City Ohsaki
7 Toranomon Kotohira Tower
8 NBF Nihonbashi Muromachi Center Building
9 Nakameguro GT Tower
10 Mitsuiseimei Ochanomizu Building
11 NBF Ginza Street Building
12 Shinjuku Mitsui Building No. 2
13 GSK Building
14 NBF Toranomon Building
15 Kowa Nishi-Shinbashi Building B
16 Nippon Steel Building No. 2
17 NBF Alliance
18 Yotsuya Medical Building
19 Shibuya Garden Front
20 NBF Shibuya East
21 NBF Shibakouen Building
22 NBF Takanawa Building
23 NBF Akasaka Sanno Square
24 NBF Shibakouen Daimon Street Building
25 Sumitomo Densetsu Building
26 NBF Higashi-Ginza Square
27 NBF Ogawamachi Building
28 NBF Ikebukuro Tower

Kita-ku

Arakawa-ku

29 28

Toshima-ku
Taito-ku

Bunkyo-ku

Nakano-ku

62

32

Sumida-ku
10

Shinjuku-ku

2

27

30

Chiyoda-ku
12Imperial
Palace13

19 20

Setagaya-ku
9

14
15

7

5
17

Minato-ku
21

31
4

Chuo-ku
Koto-ku

1

23

Shibuya-ku

29 NBF Ikebukuro City Building
30 NBF Sudacho Verde Building
31 NBF Ebisu-Minami Building

8

18

11

26

3

16

34 33

24

22
25

Tokyo Bay

Meguro-ku
6

Shinagawa-ku

Other Greater Tokyo
32 Nakanosakaue Sunbright Twin
33 NBF Toyosu Canal Front
34 NBF Toyosu Garden Front
62 Higashi-Ueno 4-chome Building (tentative name)(Scheduled for acquisition in April 2010)

8 NBF Nihonbashi●

16 Nippon Steel Building No. 2●

Muromachi Center Building

20 NBF Report January – June 200918 Yotsuya Medical Building●

26 NBF Higashi-Ginza Square●

21 NBF Shibakouen●

Building

Other Greater TokyoTOCHIGI

35 Shin-Kawasaki Mitsui Building
36 Yokohama ST Building
37 Parale Mitsui Building
38 NBF Atsugi Building
39 Tsukuba Mitsui Building
40 NBF Utsunomiya Building
41 S-ino Omiya North Wing
42 NBF Urawa Building
43 Shin-Urayasu Center Building
44 NBF Matsudo Building

UTSUNOMIYA

40

39

IBARAKITo Omiya41

SAITAMA
42

TOKYO

44

CHIBA
62

32

34 33

43

Other Cities
Tokyo Bay

35

45 Sapporo L-Plaza

37

46 NBF Sapporo Minami Nijo Building
47 NBF Sendai Honcho Building

36

38

48 NBF Unix Building

45 46

49 NBF Niigata Telecom Building

KANAGAWA

50 NBF Nagoya Hirokoji Building
51 Aqua Dojima NBF Tower
52 Shinanobashi Mitsui Building
49

53 Sun Mullion NBF Tower

47
48

54 Sakaisuji-Honmachi Center Building
55 NBF Sakai-Higashi Building
56 Aqua Dojima East

57

50

57 NBF Shijo Karasuma Building

59 58
60
61

51 52 53 54

58 NBF Hiroshima Tatemachi Building

55 56

59 Hiroshima Fukuromachi Building
60 NBF Hakata Gion Building
61 NBF Kumamoto Building

37 Parale Mitsui Building●

43 Shin-Urayasu Center Building ●45 Sapporo L-Plaza●

53 Sun Mullion NBF Tower●

54 Sakaisuji-Honmachi●

Center Building

NBF Report January – June 2009 21

PORTFOLIO OVERVIEW
NBF’s properties as of June 30, 2009 are as follows:
Name of Building

Investment
Type

Type of Ownership

Percentageof OwnershipYear Built

Acquisition
Price

(%)

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

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

100.0
85.1
100.0
100.0
100.0
12.9
100.0
100.0
93.1
100.0
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
87.0
100.0
100.0
83.8
100.0
100.0
100.0
100.0

1984
1999
1986
2005
1995
1999
2004
1986
2002
2009
1990
1983
1990
1963
1994
1989
1989
2004
2003
1992
1990
1987
1989
1991
1991
2005
1986
1993
1993
1988
1991

63,50044,90332,00031,00031,00030,10024,54323,94523,856
20,84017,00016,285
15,616
13,337
13,217
12,614
9,126
8,800
8,700
8,000
6,770
6,667
6,250
6,100
5,365
5,200
4,940
4,695
4,428
3,280
1,000

64,42036,08330,41030,14531,817
24,414
20,84624,155
21,476
21,624
17,61015,88913,827
13,566
11,96911,479
9,492
8,468
8,222
8,235
6,689
6,251
6,250
6,305
4,758
4,953
4,944
4,560
4,421
3,368
1,011

81.0 Note 4
100.0
100.0
35.0
75.0
97.5
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1996
2004
2007
1989
1987
1990
1991
1990
1996
2004
1990
1990
1992

40,75035,20025,01820,30013,529
3,800
2,300
8,876
2,435
16,8162,000
15,7002,455

39,21933,411
25,12518,72912,668
3,254
2,127
7,326
2,506
15,575
1,916
15,844
2,256

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

2003
1990
1987
1994
1989
2000
1996
1982
1996
1991
1991
1993
1991
1991
2002
1993
2008

4,404
1,870
3,566
4,029
3,958
7,232
17,81014,40010,500
6,500
2,227
1,914
1,627
2,930
835
2,629
4,500
783,189

4,003
1,713
3,644
3,198
3,676
7,233
16,736
11,663
8,671
6,241
1,982
1,806
1,409
2,940
729
2,290
4,573
740,125

Other Greater Tokyo
32 Nakanosakaue Sunbright Twin●
33 NBF Toyosu Canal Front●
34 NBF Toyosu Garden Front●
35 Shin-Kawasaki Mitsui Building●
36 Yokohama ST Building●
37 Parale Mitsui Building●
38 NBF Atsugi Building●
39 Tsukuba Mitsui Building●
40 NBF Utsunomiya Building●
41 S-ino Omiya North Wing●
42 NBF Urawa Building●
43 Shin-Urayasu Center Building●
44 NBF Matsudo Building●

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

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

Ownership
Trust
Trust
Trust
Trust
Ownership
Trust
Ownership
Trust
Ownership
Trust
Trust
Trust
Ownership
Ownership
Trust
OwnershipComparted ownershipFee simple
Fee simple
Fee simple
Fee simple
Fee simple
Fee simple
Co-ownershipFee simple
Co-ownership of comparted ownershipFee simple
Co-ownership of comparted ownershipFee simple
Fee simple
Co-ownership of comparted ownershipFee simple
Fee 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 January – June 2009

Revenue

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

61
1
26
5
8
1
1
14
1
0
1
37
1
11
2
2
9
1
1
4
7
4
6
7
1
8
1
13
12
3
3

1,674
1,490
1,191
1,492
644
1,194
1,029
972
1,171
1
Note 2696
Note 2558
Note 2
Note 2278
264
Note 2
210
340
359
259
190
Note 2
255
213
231
204
Note 2
63

5.4
4.8
3.9
4.9
2.1
3.9
3.4
3.2
3.8
0.0
Note 2
2.3
Note 2
1.8
Note 2
Note 20.9
0.9
Note 2
0.7
1.1
1.2
0.8
0.6
Note 2
0.8
0.7
0.8
0.7
Note 2
0.2

99.9
100
100
100
94.0
100
77.1
88.5
87.4
100
100
91.8
100

8
9
3
1
85
1
15
63
32
35
14
36
25

1,261
1,148
1,156
998
753
303
134
500
142
799
110
639
129

4.1
3.7
3.8
3.2
2.5
1.0
0.4
1.6
0.5
2.6
0.4
2.1
0.4

100
100
97.9
92.0
78.4
88.5
90.2
100
87.7
94.5
97.8
81.0
75.4
91.7
100
100
77.2
95.4

12
4
9
51
34
13
41
1
28
42
21
17
13
26
17
8
10
926

329
111
211
275
191
300
785
728
438
328
131
99
88
148
41
157
158
30,761

1.1
0.4
0.7
0.9
0.6
1.0
2.6
2.4
1.4
1.1
0.4
0.3
0.3
0.5
0.1
0.5
0.5
100.0

Appraisal Value

Rentable
Area

Leased Area at
End of Period

Occupancy Rate at
End of Period(Yen in millions)

(m2)

(m2)

(%)

64,20052,00032,20054,40022,60032,60033,30029,40029,30015,30014,60019,10022,90017,60020,50014,04010,7008,020
14,500
7,300
8,320
7,910
7,850
5,460
6,210
7,580
6,020
5,430
5,190
3,760
1,400

27,64032,96824,72833,503
9,618
20,713
16,84816,30621,4236,627
3,440
14,921
20,426
10,123
10,08817,338
4,043
7,450
8,258
4,993
7,087
10,458
5,258
3,431
5,991
4,871
4,805
5,652
5,127
2,971
1,595

24,14232,96824,51533,503
9,094
20,713
16,84815,40821,4230
3,440
12,622
20,426
9,320
10,061
17,338
4,043
7,450
8,258
4,993
7,087
10,458
4,793
3,431
5,991
4,871
4,805
5,652
5,127
2,855
1,595

87.3
100
99.1
100
94.6
100
100
94.5
100
0.0
100
84.6
100
92.1
99.7
100
100
100
100
100
100
100
91.2
100
100
100
100
100
100
96.1
100

34,60038,60031,70018,10017,500
3,840
2,250
8,830
2,540
20,2002,140
12,9002,430

32,082
36,66828,33027,92420,06912,545
5,230
16,755
6,197
20,6983,455
22,7894,770

32,04636,65528,33027,924
18,873
12,545
4,032
14,825
5,417
20,6983,455
20,914
4,770

6,420
1,590
3,520
3,480
3,070
8,250
21,30014,400
9,490
7,440
1,910
2,140
1,520
3,040
845
2,560
3,760
870,055

11,396
5,351
7,539
13,39010,214
9,890
21,917
25,237
14,954
11,438
5,308
3,243
3,931
5,612
1,309
5,416
7,913
770,270

11,396
5,351
7,381
12,321
8,005
8,748
19,77025,237
13,10810,804
5,194
2,626
2,964
5,144
1,309
5,416
6,105
734,593

Total Number ofTenants at
End of Period

NBF Report January – June 2009 23

MANAGEMENT TEAM AND MANAGEMENT STRUCTURE(As of June 30, 2009)

Nippon Building Fund Inc. (NBF) is an investment corporation that takes a medium-to-long-term perspective withthe aim of generating steady asset growth and stable profits. NBF believes that fair, transparent management iscentral to increasing return on investment.

in attendance, unless otherwise stipulated by laws, regulations or

Nippon Building Fund Inc.
Nippon Building Fund Inc. is an investment corporation estab-

NBF’s articles of incorporation. Decisions on substantive matters such

lished with the objective of investing in assets, primarily Designatedas changes in the articles of incorporation require the attendance ofAssets as defined by the Investment Trust Law of Japan. NBF entrusts

shareholders that control a simple majority of total shares issued andmanagement of its assets to Nippon Building Fund Management

outstanding, and a two-thirds majority of the voting rights of suchLtd., which is an asset management company.

shareholders. In addition, any change in the asset management poli-

NBF’s primary investment objective is to achieve sustainablecies and standards, which are stipulated by NBF’s articles of incorpo-

growth in portfolio value and stable profits on a medium-to-long-ration, requires an extraordinary resolution of shareholders as out-term basis. NBF achieves this objective by investing in real estate

lined above.

consisting of buildings primarily used for offices with their underlying
land located in the central business districts (CBDs) of Tokyo, other

Executive Directors, Supervisory Directors and theGreater Tokyo and other cities in Japan. NBF also invests in securities,

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

beneficiary certificates representing beneficial interests in trusts andmore executive directors and four or fewer supervisory directors (butother assets backed by office properties.

the number of supervisory directors must always be at least one
greater than the number of executive directors). As of June 30, 2009,

General Meeting of Shareholders

NBF had two executive directors and four supervisory directors.

Specific matters pertaining to NBF that are subject to theInvestment Trust Law of Japan or the Company’s articles of incorpora-

NBF’s executive directors are responsible for business execution. Intion are decided by resolution of the General Meeting of Shareholders,

addition, they have authority for all judicial and extrajudicial proceed-

which convenes at least once every two years, in principle. The sixth

ings related to the operations of NBF.
Supervisory directors are responsible for supervising execution by

General Meeting of Shareholders convened on March 12, 2009. The
date of the next General Meeting of Shareholders has not been set.

the executive directors.

The General Meeting of Shareholders adopts or vetoes resolutions

The Board of Directors consists of the executive and supervisoryon the basis of a simple majority of the voting rights of shareholders

directors. Its responsibilities include authorizing business execution

General Meeting of
Shareholders

Asset Custody

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

Asset Custody
Entrustment

NIPPON BUILDING FUND Inc. (NBF)
OfficeManagement
Entrustment

Board of Directors

AssetManagement
Entrustment
Borrowings /Bonds and
Notes
Debt
Service

Liabilities
Investment

Real Estate, etc.
Rent, etc.

24 NBF Report January – June 2009

AssetsShareholders’EquityQualified Institutional
Investors / Bondholders
Independent Auditors
KPMG AZSA & Co.

NBF Office Management Co., Ltd.
Office Management

NIPPON BUILDINGFUND MANAGEMENT Ltd. (NBFM)

Investment

Shareholder

Distribution

Shareholder

TradingManagement Team

Seated from left:

Sadafumi Abe
Koichi Nishiyama
Standing from left:

Sadao Kamiyama
Hideo Fukazawa
Hatsuo Komatsu
Yoshiyuki Hirai

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 March 2005 after serving as a deputy director of
the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), and director of theGovernment 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.
Appointed Supervisory Director of NBF in March 2009. Real Estate Appraiser.

Koichi Nishiyama
Supervisory Directors Hideo Fukazawa

Hatsuo Komatsu
Sadao Kamiyama
Yoshiyuki Hirai

and supervising the performance of the executive directors.

The terms of office of executive directors and supervisory direc-

Resolutions by the Board of Directors require a simple majority withtors are two years from the time they assume office. The terms of

more than half of the members of the Board in attendance.

executive directors and supervisory directors selected to fill a vacancy

The bylaws of NBF’s Board of Directors stipulate that executive

or to increase the number of directors expire at the same time as theand supervisory directors may not participate in decisions in which

remaining terms of their predecessors or the current directors. Boththey have a vested interest. Executive and supervisory directors withof the two executive directors and all four supervisory directors weresuch financial interest shall not be included in the number of execu-

elected at the General Meeting of Shareholders held on March 12,

tive and supervisory directors in attendance for such decisions.

2009, and assumed office on March 17, 2009.

NBF Report January – June 2009 25

Management Structure

Nippon Building Fund Management Ltd.
NBF entrusts asset management to Nippon Building Fund

General Meeting of Shareholders

Management Ltd. under an asset management agreement.
Auditor

Matters Entrusted toCompliance Committee

Nippon Building Fund Management Ltd.

Risk Management Board

Board of Directors
Executive Board

As the asset management company required by the Investment

CEO

Investment
Review Board

Accounting Auditor

Trust Law of Japan, Nippon Building Fund Management Ltd. manages
NBF’s assets in accordance with the asset management objectives andpolicies stipulated by NBF’s articles of incorporation. In addition, in

Compliance
Officer

Investment & FinanceGroup

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

Real EstateManagement
Team

Real Estate
Investment
Team

Research
Team

Financial
Team

Fund
Operation
Team

Corporate
Risk
Planning &Management
Administration & Compliance
Team
Team

executes certain responsibilities in connection with the operation of
the General Meeting of Shareholders and the Board of Directors as

operations of Nippon Building Fund Management Ltd. The heads ofmanager of general administration.

the Investment & Finance Group and the Corporate Operation
Group also serve as directors, and oversee their respective divisions

Management Structure ofunder the direction and oversight of the president. Corporate audi-

Nippon Building Fund Management Ltd.

tors conduct accounting audits and operational audits of Nippon

The Board of Directors makes decisions on the basic manage-

Building Fund Management Ltd. An internal audit unit conducts

ment policies of Nippon Building Fund Management Ltd. and over-internal audits covering the operations and departments of Nippon

sees execution of the duties of the representative director. The presi-

Building Fund Management Ltd. at the request of the Board ofdent, who is the representative director, supervises and executes the

Directors.

Nippon Building Fund Management Ltd. Management Team
Name

Title

Career Summary

Koichi Nishiyama

President and CEO
and Representative
Director

April 1974
April 2000
Sept. 2000

Yasushi Nakayama

Director, Head ofInvestment& Finance GroupRiichi Morihiro

Director, Head ofCorporate Operation
Group

Hideharu Matsumoto Director (Part-time)
Masato Shikata
Director (Part-time)
Noriaki Moromachi
Corporate Auditor(Part-time)
Corporate Auditor
Toru Suzuki(Part-time)

26 NBF Report January – June 2009

Aug. 2001
April 1981
April 2001
April 2006
April 2007
April 1978
Oct. 2002
April 2005
April 2006
March2009
April 2009
April 2003

Joined Mitsui Fudosan Co., Ltd.
Manager of Building Fund Office, Building Division of Mitsui Fudosan
President and representative director of MF Asset Management Co., Ltd.
(now Nippon Building Fund Management Ltd.) (current position)
Became Executive Director of NBF (current position)
Joined Mitsui Fudosan Co., Ltd.
Head of Building Business Division, Building Department of Mitsui Fudosan
Manager of Building Department, Chiyoda Development Division of Mitsui Fudosan
Became Director of Nippon Building Fund Management Ltd. (current position)
Joined Sumitomo Life Insurance Company
Assistant Manager, Financial Corporation Division of Sumitomo Life Insurance
Director and Manager of Residential Planning Division, Eisen Realty Co., Ltd.
Became Director of Nippon Building Fund Management Ltd. (current position)
Became Director of Nippon Building Fund Management Ltd. (current position)
Became Director of Nippon Building Fund Management Ltd. (current position)
Became Auditor of Nippon Building Fund Management Ltd. (current position)

April 2008

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

guidelines for management, acquisition and sale of assets; financial
guidelines for fund procurement and management policies; account-Ltd. conduct honest and appropriate business activities while main-ing guidelines for tax accounting and dividend distribution policies;

taining rigorous compliance by adhering to all relevant laws and reg-and guidelines on transactions with potential conflicts of interest.

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

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

Fundamental Policy on Conflict of Interest Transactions

Nippon Building Fund Management Ltd. is constantly aware of its

executive directors report on the execution of their duties and supervisory directors ensure that oversight and check-and-balance systems

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

are functioning properly.

transactions in which the interests of NBF and the interests of Nippon

Nippon Building Fund Management Ltd. views compliance as a

Building Fund Management Ltd. and its related corporations or cus-management strategy, with a fundamental compliance policy of

tomers may conflict. Nippon Building Fund Management Ltd. follows

conducting operations honestly and fairly while maintaining a rigor-

voluntary rules stipulated in laws and internal bylaws to proactively

ous compliance system based on a high level of corporate ethics.

prevent conflicts of interest.

Specifically, Nippon Building Fund Management Ltd. has establishedAll decisions made in executing the management of NBF’s assets

a Compliance Committee, consisting of the Compliance Officer, theare subject to the approval of the president, and are made after goingpresident, the head of the Investment & Finance Group, the head ofthrough discussions by the Investment Review Board and Executive

the Corporate Operation Group and an outside committee member.

Board of Nippon Building Fund Management Ltd. Sponsor companies

Initiatives to enhance awareness of and adherence to complianceare not permitted to intervene in the decision-making process.

include the establishment of Compliance Rules and a Compliance
Manual. In addition, a Compliance 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 internal bylaws to address transactions with parties, including
sponsor companies that have interests in Nippon Building Fund

Risk Management System
NBF and Nippon Building Fund Management Ltd. have estab-Management Ltd.
The voluntary rules require the Investment Division, which initiates

lished the following risk management system to avoid and minimize

the transaction, as well as the Compliance Department, the Assetrisks related to investments.

Management Examination Meeting and other units to protect NBF’s■

NBF

managed assets and profits by fully examining the transaction con-

NBF’s Risk Management Regulations define risk management poli-tents according to the voluntary rules set in the internal bylaws incies and procedures. The Risk Management Board convenes oncethe event of a transaction in which the interests of Nippon Building

every three months and undertakes deliberation, monitoring and other

Fund Management Ltd. and parties that have interests in Nippon

initiatives to ensure that the entrusted asset manager is conducting its

Building Fund Management Ltd. may conflict with the interests ofduties with due care in good faith in a manner consistent with its fidu-

NBF. These rules are designed from the standpoint of accountability

ciary duty to the conservation and maintenance of entrusted assets.

to NBF and its shareholders.

■

Nippon Building Fund Management Ltd.

Nippon Building Fund Management Ltd. formulates a

In examining the transaction contents, Nippon Building FundManagement Ltd. solicits the opinions of attorneys, certified tax

Management Policy, a Medium-to-Long-Term Asset Management

accountants and other third-party experts as needed. In addition,

Policy and an Annual Management Plan to follow in managing

when purchasing real estate or other assets from parties that have

NBF’s assets. In addition, Nippon Building Fund Management Ltd. hasinterests in Nippon Building Fund Management Ltd., the purchase

set Asset Management Guidelines as a set of standards to follow.

price is strictly set, in principle no higher than the appraised value

The Asset Management Guidelines consist of management

according to a real estate appraiser with no vested interest.

NBF Report January – June 2009 27

MANAGEMENT’S DISCUSSION AND ANALYSIS

Summary of Selected Financial Data
16th Period
from January 1, 2009 toJune 30, 2009

15th Period
from July 1, 2008 to
December 31, 2008

14th Period
from January 1, 2008 toJune 30, 2008

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

Operating revenues
Note 2
Revenue from property leasing activities
Gain on sale of investment properties
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¥ 30,761
30,761—
16,464
15,111
11,803
11,802
17,15721,005
11,802
5,355
836
783,793
338,500
397,978
542,000
734,276
21,77531,654
1.5%(3.1%)
3.0%(6.0%)
47.0%
50.8%
100.0%
18161
926
770,270
95.4%¥ 31,218
31,218—
16,627
15,22812,062
12,061
17,417
21,346
12,0615,356
2,146
766,249
318,500
398,237
542,000
734,753
22,252
32,134
1.6%(3.2%)
3.0%(6.1%)
45.5%
52.0%
99.9%
184
60
946
763,658
96.8%¥ 30,088
29,220868
15,55914,178
12,223
12,222
16,63020,318
12,222
5,276
1,620
725,627
280,500
398,398
542,000
735,050
22,54931,066
1.7%(3.5%)
3.2%(6.5%)
42.8%
54.9%
99.9%
182
58
931
750,701
97.4%

16th Period
from January 1, 2009 toJune 30, 2009
U.S. dollars in thousands
except per share data (Note 1)$ 319,033
319,033—
170,759
157,724
122,412
122,402
177,939
217,846
122,403
55,537
8,668
8,128,948
3,510,682
4,127,546
7,615
226
328

Notes: 1. U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥96.42 = U.S. $1.00, the approximate exchange rate on June 30, 2009.
2. Operating revenues do not include consumption tax.
3. All valuations are calculated through the following formulas. The figures in parentheses after ROA and ROE are annualized based on the six-month figures for the period.
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
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.
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
LTV: (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 January - June 2009Operating Environment and Results
During the six months ended June 30, 2009 (the “16th Period”), the sharp downturn of Japan’s economy continued, reflecting
the impact the turmoil in global financial markets and the worldwide economic slowdown had on corporate profits, capital investment and consumer spending.
In the office building leasing market, the overall occupancy rate decreased and rent levels also fell as a result of factors including
continued reductions in rented floor space and contract cancellations caused by rising pressure to reduce costs in response to weakercorporate earnings.
In the real estate acquisition market, sales were weak due to deterioration of the office building market resulting from turmoil infinancial markets and the economic downturn.
Under these conditions, NBF continued to manage its assets in accordance with its basic policy of investing in high-quality officebuildings that are highly competitive in terms of their location, size, facilities and infrastructure and are expected to have stable cash
flow from rents.
During the 16th Period, in April 2009, after careful deliberation in accordance with this policy, NBF took possession of the
Mitsuiseimei Ochanomizu Building, for which it signed the purchase contract in March 2008 (acquisition price: ¥20,840 million).
For its portfolio properties, NBF conducted property management, scheduled renovations and new construction to increase tenant satisfaction. NBF also worked to secure stable rental revenue by maintaining a sound grasp of the market, setting appropriate
rents for new tenants and revising rents for existing tenants who renewed their lease contracts.
As a result of these efforts, NBF’s real estate portfolio as of June 30, 2009 totaled 61 buildings. Total investment on an acquisition
price basis was ¥783.1 billion. Total rentable area was 770,270 m2 (233,007 tsubo). The occupancy rate declined 1.4 percentage
points from December 31, 2008 to 95.4 percent. Tenants totaled 926.

Occupancy rate

Total investment(%)(Yen in billions)¥794.4 billion(contract completed)*

900
800

100
98

700

96

600
500

94

400

92

300

90

200
100
0

0
Jun. 30,
2007

Dec. 31,2007

Jun. 30,
2008

Dec. 31,2008

Jun. 30,
2009

Jun. 30,
2007

Dec. 31,2007

Jun. 30,
2008

Dec. 31,2008

Jun. 30,
2009* Contract basis

NBF Report January - June 2009 29

Overview of Performance
As a result of this management, operating revenues for the six months ended June 30, 2009 decreased ¥457 million, or 1.5 percent, compared with the previous six-month period to ¥30,761 million. Operating income decreased ¥294 million, or 2.0 percent, to¥14,297 million. Net income decreased ¥259 million, or 2.1 percent, to ¥11,802 million. Distribution per share decreased ¥477 to¥21,775. Main factors were a decrease in rental revenue due to the decrease in the occupancy rate and an increase in property andother real estate taxes resulting from the acquisition of new properties in 2008.

Operating revenues

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

35,00020,00030,00025,00015,00020,00010,00015,00010,000

5,000

5,000
0

12th
Period13th
Period14th
Period15th
Period0

16thPeriod12th
Period13th
Period14th
Period15th
Period16th
PeriodDistribution for the Current Period
Distribution per share for the current period was ¥21,775. NBF expects to distribute almost all retained earnings at thecurrent period end 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
June 30, 2009

For the six months ended
December 31, 2008

For the six months ended
June 30, 2008

(Yen in thousands, except per share amounts)

Retained earnings
Undistributed earnings
Total cash distribution(Cash distribution per share)
Distribution of accumulated earnings(Distribution of accumulated earnings per share)
Cash distribution in excess of accumulated earnings(Per share)¥11,802,315
265
11,802,050
21,775
11,802,050
21,775——¥12,060,900
316
12,060,584
22,252
12,060,584
22,252——¥12,221,797
239
12,221,558
22,54912,221,558
22,549——Note: Above cash distributions were paid after the period end.

Total cash distribution

Distribution per share(Yen)(Yen in millions)

25,00012,50020,00010,00015,0007,500
10,000
5,000
5,000
0

0

12th

13th

14th

15th

16th

PeriodPeriodPeriodPeriodPeriod30 NBF Report January - June 200912th
Period13th
Period14th
Period15th
Period16th
PeriodMANAGEMENT’S DISCUSSION AND ANALYSIS

Changes in Assets, Liabilities and Net Assets
Assets
As of June 30, 2009, total assets increased ¥17,544 million to ¥783,793 million compared with December 31, 2008. Returnon average total assets (ROA) for the six months ended June 30, 2009 decreased to 1.51 percent from 1.62 percent for the previous six-month period.
Current assets increased ¥720 million to ¥39,267 million compared with December 31, 2008. Investment properties increased¥16,756 million to ¥740,092 million compared with December 31, 2008.

Liabilities
Current liabilities increased ¥11,517 million to ¥97,747 million compared with December 31, 2008, primarily because of anincrease in long-term debt due within one year compared with December 31, 2008.
Long-term debt increased ¥6,750 million to ¥248,750 million compared with December 31, 2008.
As a result, total interest-bearing liabilities increased ¥20,000 million to ¥338,500 million compared to December 31, 2008.
However, the ratio of fixed-rate long-term debt to total interest-bearing liabilities decreased to 73.5 percent from 76.0 percent asof June 30, 2009. The loan-to-value ratio, calculated as the ratio of interest-bearing liabilities plus deposits under management tototal assets, increased to 47.0 percent from 45.5 percent as of June 30, 2009.
In addition, NBF worked to diversify funding sources. In January 2009, NBF submitted a shelf registration to publicly offer up
to ¥200 billion in bonds. As of June 30, 2009, NBF had issued bonds totaling ¥80 billion under this shelf registration.

Net Assets
Net assets decreased ¥259 million to ¥397,978 million compared with December 31, 2008.

Net assets

Total assets(Yen in millions)(Yen in millions)

800,000

400,000

300,000

600,000

200,000

400,000
100,000

00Jun. 30,
2007

Dec. 31,2007

Jun. 30,
2008

Dec. 31,2008

Jun. 30,
2009

Jun. 30,
2007

Dec. 31,2007

Jun. 30,
2008

Dec. 31,2008

Jun. 30,
2009

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 June 30, 2009, NBF had issued 542,000 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
2001 upon the completion of a public offering. As the Investment Trust Law of Japan does not contain any provision for the issue ofmore than one class of shares, NBF’s common shares comprise the sole class of shares authorized and issued by NBF.

NBF Report January - June 2009 31

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
February 4, 2008 Public offering
Third party
March 4, 2008
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 831,800539,800

37,159383,605

Note 92,200

542,000

2,571

386,176

Note 10Notes: 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 shares for ¥625,000 per share (excluding underwriting fee: ¥603,125) to repay debt and to fund property acquisition.
4. Public offering of new shares for ¥759,500 per share (excluding underwriting fee: ¥735,475) to repay debt, etc.
5. Additional issue of new shares (third party allocation) for ¥735,475 per share undertaken pursuant to the public offering in Note 4.
6. Public offering of new shares for ¥916,300 per share (excluding underwriting fee: ¥887,782) to repay debt and to fund property acquisition.
7. Public offering of new shares for ¥1,019,200 per share (excluding underwriting fee: ¥988,000) to repay debt and to fund property acquisition.
8. Additional issue of new shares (third party allocation) for ¥988,000 per share undertaken pursuant to the public offering in Note 7.
9. Public offering of new shares for ¥1,205,400 per share (excluding underwriting fee: ¥1,168,500) to repay debt and to fund property acquisition.
10. Additional issue of new shares (third party allocation) for ¥1,168,500 per share undertaken pursuant to the public offering in Note 9.

Market Price of Shares
High/Low (closing price) of shares on the TSE:
For the six months ended
June 30, 2009

For the six months ended
December 31, 2008
(Yen)

For the six months ended
June 30, 2008

¥993,000
739,000¥1,330,000
689,000¥1,560,0000
1,070,000

High
Low

Borrowings
Borrowings from financial institutions as of June 30, 2009 are shown below.
Short-term loans
LenderBalance

Averageinterest rate (%)

Due on(Note 1)

Repayment
methodUse of
funds

Notes

(Yen in millions)

The Chuo Mitsui Trust andBanking Co., LIMITED¥18,000
Mizuho Corporate Bank, Ltd.
8,000
The Sumitomo Trust and Banking
Company, Limited
5,000
Shinkin Central Bank
4,000
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
4,000
Mitsubishi UFJ Trust and Banking Corporation 3,000
THE KAGOSHIMA BANK, LTD.
2,000
The Gunma Bank, Ltd.
2,000
The Yamanashi Chuo Bank, Ltd.
1,500
The Chugoku Bank, Limited
1,000
The Joyo Bank, Ltd.
1,000
THE SHIZUOKA BANK, LTD.
1,000
The Yamaguchi Bank, Ltd.
1,000

Total short-term loans

32 NBF Report January - June 2009

¥51,500

0.8%
0.9%

July 31, 2009
July 31, 2009

1.0%
0.9%
0.8%
0.9%
0.8%
0.9%
0.7%
1.0%
0.9%
0.9%
1.0%

October 30, 2009
July 31, 2009
September 30, 2009
July 31, 2009
July 31, 2009
July 31, 2009
July 31, 2009
December 25, 2009
August 31, 2009
August 31, 2009
October 30, 2009

Bulletpayment(Note 3)

Unsecured/unguaranteed/pari passu,
See (Note 4)
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%
2.2%
1.7%
2.1%
1.2%
2.1%
1.9%
1.7%
1.5%
2.3%
1.5%
1.8%
1.5%
1.9%
1.8%
1.7%
1.8%
1.6%
1.6%
2.0%
1.9%
1.6%
1.4%
1.6%
1.6%
2.1%
2.2%
2.2%
1.2%
1.8%
1.4%
0.9%
0.8%
1.1%
1.2%
1.8%
2.0%
1.4%
1.9%
1.2%
1.7%
2.1%
1.3%
1.4%
1.8%
1.5%
1.7%
1.9%

November 28, 2014
September 11, 2015
September 27, 2017
February 15, 2016
May 30, 2018
April 28, 2019
July 16, 2009
July 19, 2011
February 3, 2010
May 23, 2018
May 23, 2016
June 1, 2011
September 11, 2015
May 30, 2016
April 30, 2013
June 27, 2013
December 28, 2012
April 28, 2014
June 30, 2014
February 13, 2012
March 30, 2012
November 1, 2012
December 13, 2013
May 30, 2013
May 29, 2014
March 30, 2011
December 30, 2011
September 30, 2013
April 27, 2012
December 21, 2011
April 27, 2012
May 23, 2012
February 26, 2010
June 27, 2013
December 30, 2011
October 30, 2009
April 1, 2010
October 19, 2010
February 3, 2010
March 30, 2012
October 31, 2014
October 4, 2013
July 12, 2012
February 12, 2010
December 15, 2014
July 11, 2014
September 9, 2011
December 2, 2013
June 26, 2014
February 7, 2012
May 29, 2014
April 30, 2014

Repayment
methodUse of
funds

Notes

(Yen in millions)¥ 4,000
10,00010,00010,00010,0005,000
Sumitomo Life Insurance Company
5,000
5,000
3,000
7,000
5,000
Zenkyoren
1,000(The National Mutual Insurance
10,000Federation of Agricultural Cooperatives) 10,000
Sumitomo Mitsui Banking Corporation
5,000
5,000
4,000
6,000
1,000
MITSUI LIFE INSURANCE COMPANY, LIMITED 2,000
4,000
2,000
3,000
2,000
3,000
The Chuo Mitsui Trust and Banking
5,000
Co., LIMITED
10,000The Sumitomo Trust and
5,000Banking Company, Limited
7,000
Meiji Yasuda Life Insurance Company
3,000
4,000
1,000
2,000
Shinkin Central Bank
4,000
3,000
Nippon Life Insurance Company
3,000
2,000
2,000
DAIDO LIFE INSURANCE COMPANY
2,000
1,000
1,000
1,000
THE BANK OF FUKUOKA, Ltd.
4,000
TAIYO LIFE INSURANCE COMPANY
1,000
1,000
2,000
Resona Bank, Limited
3,000
The Hachijuni Bank, Ltd.
1,000
2,000
Mizuho Corporate Bank, Ltd.
2,000
The Chugoku Bank, Limited
2,000
The Iyo Bank, LTD.
1,000
Total long-term debt
¥207,000
Total borrowings (Note 5)¥258,500
Development Bank of Japan Inc.

(Note 2)

Bulletpayment(Note 3)

Unsecured/unguaranteed/pari passu,
See (Note 4)
Fixed rate

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. Scheduled for repayment of ¥125 million at six-month intervals and ¥2,625 million at the final maturity date.
3. Use of funds for the above includes acquisition of real estate or beneficiary interests, repayment of borrowings and working capital.
4. 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.
5. 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 January - June 2009 33

(Yen in millions)
1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years¥8,250¥45,250¥26,250¥25,250

Amount Borrowed

NBF Bonds
Issue date

Balance as ofJune 30, 2009
(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

10,0001.60%

No. 6 Unsecured Bonds
No. 7 Unsecured Bonds

March 9, 2005
November 9, 2005

10,00010,000

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

10,00010,00010,000

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)

Amount Borrowed

Within 1 year

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years¥20,000—¥20,000—¥10,000

Others
NBF had security deposits totaling ¥39,249 million as of June 30, 2009.

34 NBF Report January - June 2009

MANAGEMENT’S DISCUSSION AND ANALYSIS

Capital Expenditures
Planning
As of June 30, 2009, 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 for construction, repair and renovation of facilities, a program of renewal construction is being implemented inorder to increase competitive power in the market as well as to increase the level of tenant satisfaction based on the results oftenant satisfaction surveys and neighboring competitive building specification surveys, etc.

Name of property

Objective

Estimated
duration

Total amounts

Estimated amounts
Payment for thecurrent period(from January 1, 2009
to June 30, 2009)(Yen in millions)

Cumulative
amount paid

NBF Takanawa Bldg.

Renovation of air conditioning(1st stage)

From February 2010
to June 2010

¥209

¥—

¥—

NBF Ogawamachi Bldg.

Renovation of air
conditioning

From August 2009
to November 2009

111

¥—

¥—

NBF Ikebukuro Tower

Renovation of
HVAC equipment (2nd stage)

From September 2009
to November 2009

60

¥—

¥—

NBF Ikebukuro Tower

Renovation of
HVAC equipment (3rd stage)

From March 2010
to May 2010

57

¥—

¥—

NBF Unix Bldg.

Renovation of central
monitoring facilities

From November 2009
to November 2009

45

¥—

¥—

Parale Mitsui Bldg.

Renovation of lighting
equipment (1st stage)

From July 2009
to September 2009

34

¥—

¥—

Parale Mitsui Bldg.

Renovation of lighting
equipment (2nd stage)

From January 2010
to March 2010

34

¥—

¥—

NBF Sapporo
Minami Nijo Bldg.

Renovation of hot andchilled water generator

From May 2010
to May 2010

34

¥—

¥—

NBF Urawa Bldg.

Renovation of air conditioning(7th, 8th floor)

From March 2010
to May 2010

25

¥—

¥—

NBF Urawa Bldg.

Renovation of exterior

From March 2010
to May 2010

24

¥—

¥—

NBF Report January - June 2009 35

Capital Expenditures for the Current Period
The following table sets forth the capital expenditures for the current period. NBF posted ¥836 million in capital expenditures
together with ¥669 million for repairs and maintenance expenses.
Name of property

NBF Ikebukuro Tower

NBF Shijo Karasuma Bldg.
Other buildings

Objective

Expenditure(Yen in millions)

PeriodRenovation of HVAC equipment (1st stage),renovation of lighting equipment (common areas),barrier-free construction (entrance areas), etc.
Renovation of air conditioning (1st to 3rd floors),
installation of OA flooring (1st, 6th floors), etc.
Asset preservation construction and other renewal
construction to improve tenant satisfaction.

¥106
From January 2009
to June 2009

25
705

Total

¥836

Cash Reserve for Capital Improvements
NBF accumulates cash reserves from cash flows to prepare for large-scale mid-term to long-term capital improvements andrepairs and maintenance that will be conducted in accordance with NBF’s business plan for each property.
As of June 30, 2009

As of December 31, 2008
(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

¥ 856
2,877
2,175
¥1,558

¥ 948
2,463
2,555
¥ 856

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 needs and contracts with organizations responsible 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 accumulated to ¥4,019 million as of June 30, 2009.

36 NBF Report January - June 2009

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
June 30, 2009

For the six months ended
December 31, 2008
(Yen in millions)

For the six months ended
June 30, 2008

¥1,13436¥1,15434¥1,109
32

51
19
13
100
¥1,353

51
19
13
128
¥1,399

54
19
13
155
¥1,382Item

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, there are asset management fees of ¥72 million for the period from January 1, 2009 to June 30, 2009 and ¥121 million for the period
from July 1, 2008 to December 31, 2008 related to acquisition of investment properties which were booked on each property acquired.

Trading Activities during the Current Period
1. Trading of Real Estate and Real Estate Held in Trust
The following table shows a summary of real estate and real estate held in trust, acquired by NBF in the current period.
(Yen in millions)
Acquisitions
Name of building

Surugadai Project (tentative name) (Note 2)
Total

Date

Acquisition price (Note 1)

April 30, 2009

¥20,840¥20,840

Notes: 1. “Acquisition price” does not include national consumption tax, regional consumption tax and miscellaneous costs of acquisition.
2. The name of “Surugadai Project (tentative name)” was changed to the “NBF Ochanomizu Bldg.” after delivery of the property.

2. 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 bankdeposits included in assets held in trust.

NBF Report January - June 2009 37

MANAGEMENT’S DISCUSSION AND ANALYSIS

3. Transactions with Related Parties and Transactions with Major Shareholders of Asset Management Company(1) Ongoing Transactions
None. (No purchases, or sales or other transactions involving interested parties.)(2) Fees Paid for the Period from January 1, 2009 to June 30, 2009
Description of transactions with related parties (Note 1)
Category

Total fees paid(A)
(Yen in millions)

Office management fees, etc.
(Note 2)
Property maintenance fees

¥1,231

Leasing related service fees

119

2,708

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 Rehouse Tokyo Co., Ltd.
Mitsui Real Estate Sales Co., Ltd.

Amount ofpayment (B)(Yen in millions)

B/A(Note 3)

¥1,192
32
426
346
117
105
11
2
94
7
1
0

96.9%
2.6%
15.7%
12.8%
4.3%
3.9%
0.4%
0.1%
79.4%
6.2%
0.4%
0.4%

Notes: 1. “Related parties” are defined as related parties of asset management companies under asset management agreement with NBF as defined in Article 123 of Order for
Enforcement of the Law Concerning Investment Trusts and Investment Corporations, and Article 26, Section 27 of the Regulations regarding management report of theInvestment trusts and Investment corporations set by the Investment Trusts Association, Japan. “Major shareholders” are the major shareholders of asset managementcompanies as defined in Article 29, Section 4, Paragraph 2 of the Financial Instruments and Exchange Law. During the 16th Period, transactions with and fees paid to,
Mitsui Fudosan Co., Ltd., NBF Office Management Co., Ltd., First Facilities 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 Rehouse Tokyo Co., Ltd., and Mitsui Real Estate Sales Co., Ltd. are as described above.
2. Properties that have not entrusted office management businesses through such means as master leasing by Mitsui Fudosan Co., Ltd. (10 properties: Nishi-Shinjuku
Mitsui Bldg., Gate City Ohsaki, Nakameguro GT Tower, Toranomon Kotohira Tower, NBF Ogawamachi Bldg., Shin-Kawasaki Mitsui Bldg., Parale Mitsui Bldg.,
Shinanobashi Mitsui Bldg., Sakaisuji-Honmachi Center Bldg. and Yotsuya Medical Bldg.) have entrusted them to NBF Office Management Co., Ltd. as business representative of the property owners or lessors.
3. 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.
Mitsui Fudosan Building Management Co., Ltd.
Mitsui Fudosan Co., Ltd.
First Facilities West Co., Ltd.
Mitsui Home Linkage Co., Ltd.
MITSUI Designtec Co., Ltd.
Mitsui Fudosan Housing Lease Co., Ltd.
Mitsui Real Estate Sales Co., Ltd.
Daiichi Engei Co., Ltd.

38 NBF Report January - June 2009

¥349
152
125
122
1
1
0
0
0

FINANCIAL STATEMENTS
NBF Report January – June 2009

NBF Report January - June 2009 39

BALANCE SHEETSNIPPON BUILDING FUND INC.
As of June 30, 2009 and December 31, 2008

As ofJune 30, 2009

As of
December 31, 2008
(Yen in millions)

AssetsCurrent Assets:
Cash and cash equivalents
Tenant receivables
Other current assets
Total current assets
Investment Properties:
Land including trust accounts (Note 4)
Buildings and improvements including trust accounts (Note 4)
Other tangible assets (Note 4)
Less: accumulated depreciation (Note 4)
Leasehold rights in trust accounts and other intangible assets
Total investment properties, net
Other Assets
Total Assets
Liabilities
Current Liabilities:
Short-term loans (Note 6)Long-term debt due within one year (Note 6)
Accounts payable
Rents received in advanceAccrued expenses and other liabilities
Total current liabilities
Long-term Debt (Note 6)
Tenant Security Deposits
Other Liabilities
Total Liabilities
Net Assets (Note 5)
Shareholders’ Equity
Common shares, non-par value
Shares authorized: 2,000,000 shares
Shares issued and outstanding: 542,000 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 January - June 2009

¥ 38,121
653
493
39,267¥ 37,576
412
559
38,547475,660
275,8308,183(55,240)
35,659740,092
4,434¥783,793

459,488
270,386
7,760(49,959)
35,661
723,3364,366¥766,249¥ 51,500
38,250
2,911
3,614
1,472
97,747
248,750
39,24969
385,815¥ 56,500
20,000
4,014
3,774
1,942
86,230242,000
39,71864
368,012386,176

386,176

11,802397,978¥783,793

12,061
398,237¥766,249

STATEMENTS OF INCOMENIPPON BUILDING FUND INC.
For the six months ended June 30, 2009, December 31, 2008 and June 30, 2008

For the six months ended
June 30, 2009

For the six months ended
December 31, 2008
(Yen in millions)

For the six months ended
June 30, 2008

¥27,903
2,858—
30,761¥28,069
3,149—
31,218¥26,708
2,512
868
30,088

3,973
2,557
36
669
2,521
5,355
1,134
219
16,464
14,297

4,030
2,247
37
829
2,729
5,356
1,154
245
16,627
14,591

3,612
2,288
35
781
2,186
5,276
1,109
272
15,55914,5292236

31(2,527)(27)—(32)
11,733(2,447)(27)—(91)
12,062(2,193)
(38)
(79)
(27)
12,22370
11,803(1)¥11,802—
12,062(1)¥12,061—
12,223(1)¥12,222

Operating Revenues and Expenses
Operating Revenues:
Rental (Note 7)
Other revenues related to property leasing (Note 7)
Gain on sale of investment properties (Note 8)
Total Operating Revenues
Operating Expenses:
Property management fees (Note 7)
Real estate taxes (Note 7)
Insurance (Note 7)
Repairs and maintenance (Note 7)
Other rental expenses (Note 7)
Depreciation and amortization (Note 7)
Asset management fees
Other operating expenses
Total Operating Expenses
Operating Income
Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Non-Operating Expenses:
Interest expense
Amortization of bond issue costs
New investment shares issue costs
Other non-operating expenses, net
Ordinary Income
Extraordinary Income:
Adjustment of depreciation for prior periods (Note 3)
Income before Income Taxes
Current and deferred income taxes (Note 9)
Net Income
The accompanying notes to financial statements are an integral part of these statements.

NBF Report January - June 2009 41

STATEMENTS OF SHAREHOLDERS’ EQUITYNIPPON BUILDING FUND INC.
For the six months ended June 30, 2009, December 31, 2008 and June 30, 2008

(Yen in millions)

Balance as of December 31, 2007

Number ofCommonSharesCommonSharesRetained
Earnings

Total

508,000¥346,446¥ 10,226¥356,672

Cash dividends declaredIssuance of new shares through public offering
as of February 4, 2008——

(10,226)(10,226)

31,80037,159—37,159Issuance of new shares through allocation to a third party
as of March 4, 2008

2,200

2,571

—

2,571

—

—

12,222

12,222542,000

386,176

12,222

398,398————(12,222)
12,061(12,222)
12,061

542,000

386,176

12,061

398,237————(12,061)
11,802(12,061)
11,802542,000¥386,176¥ 11,802¥397,978

Net income
Balance as of June 30, 2008
Cash dividends declared
Net income
Balance as of December 31, 2008
Cash dividends declared
Net income
Balance as of June 30, 2009
The accompanying notes to financial statements are an integral part of these statements.

42 NBF Report January - June 2009

STATEMENTS OF CASH FLOWSNIPPON BUILDING FUND INC.
For the six months ended June 30, 2009, December 31, 2008 and June 30, 2008

For the six months ended
June 30, 2009

For the six months ended
December 31, 2008
(Yen in millions)

For the six months ended
June 30, 2008

¥ 11,803
5,355
27
2,527
70
(241)
(1,108)(160)—(2,459)—540(463)
15,751¥ 12,062
5,356
27
2,447
—
49
901
171
—
(2,385)510—908
20,046¥ 12,223
5,276
38
2,193
—
(137)
100
393
4,080
(2,200)
(510)
—
(893)
20,563(22,565)
1,531(2,000)(9)(107)(23,150)(40,374)
3,133(2,296)(10)(28)(39,575)(57,893)
6,615(2,581)(3)(184)(54,046)(5,000)27,000(2,000)—(12,056)
7,944
545
37,576¥ 38,121

20,00026,000(8,000)—(12,219)
25,781
6,252
31,324¥ 37,576(2,000)21,000(15,000)
39,649(10,223)
37,426
3,943
27,381¥ 31,324

Cash Flows from Operating Activities:
Income before income taxes
Depreciation and amortization
Amortization of bond issue costs
Interest expense
Adjustment of depreciation for prior periods(Increase) Decrease in tenant receivables
Increase (Decrease) in accounts payable
Increase (Decrease) in rents received in advance
Decrease in investment properties in trust due to sale
Cash payments of interest expense(Increase) Decrease in consumption tax refund receivable
Proceeds from a settlement
Other, net
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Payments for purchases of investment properties
Proceeds from tenant security deposits
Payments for tenant security deposits
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 (Repayment of) short-term loans, net
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of new common shares
Payment of dividends
Net Cash 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 January - June 2009 43

NOTES TO FINANCIAL STATEMENTSNIPPON BUILDING FUND INC.
For the six months ended June 30, 2009, December 31, 2008 and June 30, 2008

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 Law
Concerning Investment Trusts and Investment Corporations of Japan (hereinafter 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,
is engaged 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 June 30, 2009, NBF had ownership or beneficiary interests in 61 office properties containing approximately 770,270 square
meters of rentable office space. As of June 30, 2009, NBF had leased office space to 926 tenants engaged in a variety of businesses.
The occupancy rate for the office properties was approximately 95.4%.

Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in the Investment Trust
Law of Japan and the Japanese Financial Instruments and Exchange Law and their related accounting regulations, and in conformity
with accounting principles generally accepted in Japan (hereinafter “Japanese GAAP”), which are different in certain respects as toapplication 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
prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as
required by the Financial Instruments and Exchange Law. Some supplementary information included in the statutory Japanese language financial statements, but not required 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, related costs and expenses for acquisitionof the office properties and the beneficiary interests of properties in trust. Property and equipment balances are depreciated using
the straight-line 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

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

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

44 NBF Report January - June 2009

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

New Investment Shares Issue Cost
The issue costs of new investment shares are expensed when incurred.

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 and expensed when incurred. In terms of newly purchased
properties, NBF capitalizes a portion of the real estate taxes that relate to a period from the purchase date of each property until theend of the calendar year as part of the acquisition cost of the relevant property. Capitalized real estate taxes amounted to ¥12 million
for the period ended June 30, 2009, ¥68 million for the period ended December 31, 2008 and ¥205 million for the period ended
June 30, 2008.

Revenue Recognition
NBF operates office properties that are rented to tenants on lease terms of generally two years, with monthly payments due inadvance. 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
and expenses incurred from assets in trust are recorded in the relevant balance sheets and income statement accounts.

Reclassifications
Certain reclassifications have been made to prior periods’ financial statements to conform with the presentation used for theperiod ended June 30, 2009.

NBF Report January - June 2009 45

Note 3 – Additional Information
With respect to a 35% co-ownership interest in the Shin-Kawasaki Mitsui Building (henceforth “the Property”) acquired on
March 31, 2006, certain differences of opinion concerning the interpretation of the Sale and Purchase Agreement thereof arose
between NBF and Mitsui Fudosan Co., Ltd., the seller. NBF therefore filed a petition for reconciliation with the Tokyo District Court on
March 28, 2008. The aforementioned differences were settled through the conciliation process on February 27, 2009, and NBF
received a settlement amount of ¥567 million on April 30, 2009.
Based on the management judgment that it is reasonable to treat the settlement amount of ¥540 million (after consumption
taxes and other items) as a reduction of the original acquisition cost, NBF has written down the book value of the Property by¥471 million, and recorded ¥70 million at extraordinary income as an adjustment of depreciation for prior periods.

Note 4 – Schedule of Tangible Assets of Investment Properties
Tangible assets as of June 30, 2009 and December 31, 2008 consisted of the following:
As of June 30, 2009

As of December 31, 2008
(Yen in millions)

Acquisition
Costs

Book Value

Acquisition
Costs

—

¥219,228¥203,056

Accumulated
Depreciation

Book Value¥—¥203,056

Land¥219,228

Land in trust
Land including trust total

256,432
475,660——

256,432
475,660

256,432
459,488——

256,432
459,488

Buildings and improvements
Buildings and improvements in trust

141,542
134,288(19,456)(32,994)

122,086
101,294

136,550
133,836(16,960)(30,508)

119,590103,328

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

275,830
2,232
1,100
744
1,889
1,339
867
12
—

(52,450)
(643)
(357)
(251)
(488)
(611)
(440)
—
—

223,380
1,589
743
493
1,401
728
427
12
—

270,386
2,185
955
578
1,874
1,325
826
11
6

(47,468)
(568)
(313)
(211)
(439)
(567)
(393)
—
—

222,918
1,617
642
367
1,435
758
433
11
6

Other tangible assets total
Total

46 NBF Report January - June 2009¥

Accumulated
Depreciation

8,183(2,790)

5,393

7,760

(2,491)

5,269¥759,673¥(55,240)¥704,433¥737,634¥(49,959)¥687,675

NOTES TO FINANCIAL STATEMENTS

Note 5 – Net Assets
NBF issues only non-par value shares in accordance with the Investment Trust Law of Japan and all of the issue prices of newshares are designated as stated capital. NBF maintains at least ¥50 million as the minimum net assets as required by the Investment
Trust Law of Japan.

Note 6 – 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-term loans outstanding are floating rates and on June 30, 2009 and December 31, 2008 ranged from 0.53% to 1.01% andfrom 0.95% to 1.19%, respectively. Long-term debt is at fixed rates and as of June 30, 2009 and December 31, 2008 consisted of
the following:

As of June 30, 2009

As of December 31, 2008
(Yen in millions)

Unsecured loans due 2009 to 2019 principally from banks and insurancecompanies with interest rates mainly ranging from 0.8% to 2.4%
1.04% unsecured bonds due 2009 (Note 1)
0.80% unsecured bonds due 2010 (Note 2)
1.60% unsecured bonds due 2011 (Note 1)
1.48% unsecured bonds due 2012 (Note 2)
1.74% unsecured bonds due 2014 (Note 2)
1.85% unsecured bonds due 2015 (Note 2)
2.04% unsecured bonds due 2017 (Note 2)
2.00% unsecured bonds due 2018 (Note 1)
Less: amount due within one year

¥207,000
10,00010,00010,00010,00010,00010,00010,00010,000¥182,000
10,00010,00010,00010,00010,00010,00010,00010,000287,000

262,000

38,25020,000¥248,750¥242,000

Notes: 1. Subject to provision of collateral and financial restrictions pursuant to material decline in credit rating.
2. Subject to provision of collateral pursuant to material decline in credit rating.

The annual maturities of long-term debt as of June 30, 2009 were as follows:(Yen in millions)

2009
2010
2011
2012
2013
Thereafter¥ 8,125
12,25030,25031,25026,25098,875

During the period ended June 30, 2009, NBF obtained committed credit lines of ¥50 billion with certain financial institutions to
reduce refinancing risk. The unused amount of such committed credit lines was ¥41 billion on June 30, 2009.

NBF Report January - June 2009 47

Note 7 – Rental Revenues and Expenses
Rental revenues and expenses for the periods ended June 30, 2009, December 31, 2008 and June 30, 2008 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
June 30, 2009

For the six months ended
December 31, 2008
(Yen in millions)

For the six months ended
June 30, 2008

¥24,804
2,974
125
27,903¥24,8833,060
126
28,069¥23,626
2,957
125
26,708

588
151
1,695
345
79
2,858
30,761

599
147
2,032
324
47
3,149
31,218

589
149
1,657
54
63
2,512
29,220

3,973
2,557
669
36
2,521
5,355
15,111

4,030
2,247
829
37
2,729
5,356
15,228

3,612
2,288
781
35
2,186
5,276
14,178¥15,650¥15,990¥15,042

Note 8 – Gain on Sale of Investment Properties
Gain on sale of investment properties for the period ended June 30, 2008 was as follows:

Daido Life Omiya Building
Proceeds from sale of investment property
Cost of sale of investment property
Other related sale expenses
Gain on sale of investment property(Yen in millions)

NBF Tanimachi Building
Proceeds from sale of investment property
Cost of sale of investment property
Other related sale expenses
Gain on sale of investment property(Yen in millions)

48 NBF Report January - June 2009

¥2,707
2,191
84
¥ 432

¥2,400
1,889
75
¥ 436

NOTES TO FINANCIAL STATEMENTS

Note 9 – 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 estimatedas 0.01% for the periods ended June 30, 2009, December 31, 2008 and June 30, 2008. The following table summarizes the significant differences between the statutory tax rates and NBF’s effective tax rates for financial statement purposes.

Statutory tax rate (Note 1)
Deductible dividends
Others
Effective tax rate

For the six months ended
June 30, 2009

For the six months ended
December 31, 2008

For the six months ended
June 30, 200839.33%(39.33)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 earnings available for dividends for a period and other requirements prescribedin Japanese tax regulations are met, the investment corporation is allowed to deduct total amount of dividends in calculating its taxable income under Japanese tax regulations.
Note 1. The statutory tax rate was revised due to change in corporate business tax rate and creation of local corporate special tax, which is effective for fiscal years beginning on
or after October 1, 2008.

Note 10 – Per Share Information
Information about earnings per share for the periods ended June 30, 2009, December 31, 2008 and June 30, 2008 and net
assets per share as of June 30, 2009, December 31, 2008 and June 30, 2008 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
June 30, 2009

For the six months ended
December 31, 2008
(Yen)

For the six months ended
June 30, 2008

¥ 21,774¥ 22,252¥ 22,831

542,000

542,000

535,298

As of June 30, 2009

As of December 31, 2008

As of June 30, 2008

¥734,276¥734,753¥735,050

NBF Report January - June 2009 49

Note 11 – Leases
As Lessor
NBF leases some of its investment properties to outside parties under non-cancelable operating leases. As of June 30, 2009 andDecember 31, 2008 future minimum rental revenues under the non-cancelable operating leases are as follows:
As of June 30, 2009

Due within one year
Due after one year
Total

As of December 31, 2008
(Yen in millions)¥11,932
13,024¥24,956¥12,293
14,596¥26,889

Note 12 – Transactions with Related Parties(January 1, 2009 - June 30, 2009)(1) Parent Company and Major Corporate Shareholders
None applicable.
(2) Subsidiaries
None applicable.
(3) Sister Companies
None applicable.
(4) 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 3)

Amount oftransaction
Yen in millions

Account

Balance at
end of period
Yen in millions¥1,206(Notes 2 and 4)

Accounts
payable¥386(Note 4)

¥7(Note 4)

Accounts
payable¥1(Note 4)

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. The amount of asset management fees includes ¥72 million for management related to acquisition of properties included in the book value of each investment property, etc.
3. 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.
4. Consumption taxes are not included in transaction amounts. Consumption taxes are included in the balance at the end of the period.

50 NBF Report January - June 2009

NOTES TO FINANCIAL STATEMENTS(July 1, 2008 - December 31, 2008)(1) Parent Company and Major Corporate Shareholders
None applicable.
(2) Subsidiaries
None applicable.
(3) Sister Companies
None applicable.
(4) 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 3)

Amount oftransaction
Yen in millions

Account

Balance at
end of period
Yen in millions¥1,274(Notes 2 and 4)

Accounts
payable¥406(Note 4)¥2(Note 4)

Accounts
payable¥1(Note 4)

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. The amount of asset management fees includes ¥121 million for management related to acquisition of properties included in the book value of each investment property, etc.
3. 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.
4. Consumption taxes are not included in transaction amounts. Consumption taxes are included in the balance at the end of the period.

Additional Information
The Accounting Standard for Related Party Disclosures (Accounting Standards Board of Japan Statement No. 11, released October
17, 2006) and the Guidance on Accounting Standard for Related Party Disclosures (Accounting Standards Board of Japan Guidance No.
13, released October 17, 2006) are applied from the period ended December 31, 2008.
This caused no change to the scope of disclosure.

Note 13 – Significant Subsequent Events
None applicable.

NBF Report January - June 2009 51

INDEPENDENT AUDITORS’ REPORTTo 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 June 30, 2009 and December 31, 2008, and the related statements of income,shareholders’ equity and cash flows for each of the six months ended June 30, 2009, December 31,
2008 and June 30, 2008 expressed in Japanese yen. These financial statements are the responsibility of
the Company’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. Thosestandards 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 reasonablebasis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of Nippon Building Fund Inc. as of June 30, 2009 and December 31, 2008, and theresults of its operations and its cash flows for each of the six months ended June 30, 2009,
December 31, 2008 and June 30, 2008 in conformity with accounting principles generally acceptedin Japan.

Tokyo, Japan
September 28, 2009

52 NBF Report January - June 2009

APPENDIX
Major Interested Parties
Nippon Building Fund Management Ltd. (Asset Management Company and Administrative Agent
regarding the Management of Institutions, herein “NBFM”)
NBFM, as Asset Management Company provided for in theManagement Fees 3
In the event that Real Estate, etc. is newly acquired, compensa-

Investment Trust Law of Japan, performs management of NBF’s
assets and undertakes management of the institutions of NBF. As oftion equivalent to the total amount of the acquisition price of said

June 30, 2009, NBFM has been entrusted as an asset management

Real Estate, etc. (meaning the acquisition price of both land andcompany only by NBF.

buildings, and in the event of the simultaneous acquisition of

As of the same date, NBFM has paid-in capital of ¥495 million.

multiple units of Real Estate, etc., the acquisition price of each item,

There is no capital relationship with NBF. Koichi Nishiyama, President

provided, however, that national consumption tax, regional& CEO of NBFM, is concurrently an executive director of NBF.

consumption tax and miscellaneous costs of acquisition are
excluded) multiplied by the following percentage rates will, in

Operation■■

principle, be payable, provided, however, that with the approval of

Undertakes asset management of NBF pursuant to an Assetthe directors of NBF, compensation will be calculated within theManagement Entrustment Agreement based on an entrustment

scope decided up to the following maximum rates.

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

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

and the Investment Objects and Policies set forth therein.

●

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

Undertakes management of the general affairs of the general
meeting of 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 theManagement of Institutions.

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

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

NBF Report January - June 2009 53

APPENDIX

History of NBFM

Directors and Staff

NBFM is an Asset Management Company which is a limited

As of June 30, 2009, the directors and corporate auditors of

liability company duly established under the laws of Japan. Major

NBFM are as follows. The staff other than directors and auditors ofevents in the history of NBFM are as follows.

NBFM is comprised of 17 persons.

September 19, 2000 Established

Name of Directors and Auditors

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)

Masato Shikata

Director

Hideharu Matsumoto

Director

Noriaki Moromachi

Corporate Auditor

Toru Suzuki

Corporate Auditor

January 29, 2001

February 15, 2001

March 7, 2001

Registered as a general real estate investment advisor under the Real Estate Investment Advisor
Registration Regulations
Obtained approval as an Asset Management
Company under the Investment Trust Law of Japan

Title

Outline of Financial Condition

March 22, 2001

Increased capital from ¥100 million to ¥198 million

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

May 23, 2001

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

Outline of principal assets and liabilities for the most recent fiscal

June 16, 2001
March 14, 2003

September 30, 2007

Increased capital from ¥198 million to ¥495 million
Changed name (from “Office Building Fund Management Japan Limited” to “Nippon Building FundManagement Ltd.”)
Registered as a financial instruments firm with the
Kanto Local Finance Bureau Chief (Financial
Instruments) No. 371

List of Shareholders (as of June 30, 2009)
Numberof Shares Owned

Percent

Mitsui Fudosan Co., Ltd.

4,257

43.0%

Sumitomo Life Insurance Company

Name

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 January - June 2009

297

3.0

9,900

100.0%

year:
As of March 31, 2009

(Yen in thousands)

Total Assets¥2,143,988

Total Liabilities

460,765

Total Net Assets

1,683,223

Profit and loss for the most recent fiscal year:
Year ended March 31, 2009

(Yen in thousands)

Operating Income¥2,414,289

Ordinary Profit

1,638,901

Net Income

968,020

INVESTMENT AND DISTRIBUTION POLICIESInvestment Policies of NBF
A. Basic Policies
NBF’s primary investment objective is to achieve sustainable growthin portfolio value and stable profits on a medium-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.

(1) Strategy for Creation of the Portfolio
The goal of the portfolio is to generate steady growth and stableprofits on a medium-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 theoffice stock located in the various regions of Japan.

Area Diversification
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

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.
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).

(2) Acquisition Strategy
Ratio of Real Estate Assets
NBF will maintain ratios of 75% or more with respect to the“Designated Real Estate Ratio.” As of June 30, 2009, NBF satisfied thecriteria.
■

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 January - June 2009 55

ures responding to risks of deterioration and obsolescence, insurability

NBF. For this purpose, “leased/leasable assets” shall mean property withand so forth. The details of the relevant criteria are set forth in the follow-

respect to which the construction of the building has been completed

ing table (“Investment Objectives and Policies,” Articles of Incorporation).

and such building is leased or leasable. Properties which are owned byThough such consideration will involve the study of the criteria

NBF and have become operational at some point shall be deemedincluded in the following table, it is possible that when NBF acquires or“leasable” thereafter (including such cases as reconstruction or large-

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

scale renovation of a building).

be satisfied.
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.

■■

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.

(3) Management and Disposition Policies
Regarding acquired operating properties, the goal is to obtain steady
growth of operating profits on a medium-to-long-term basis by planningto maintain and improve asset value and competitive ability throughinvestment in facilities and by expanding income (increasing rents, etc.,

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

increasing occupancy rates, extending the term of leases and rendering

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

medium-to-long-term basis, lease out all operating properties included

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.

them more stable, etc.) and reducing property-related expenses.
NBF will, in principle, for the purpose of assuring stable income on ain 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 onrenovation plans for each building. As of June 30, 2009, foreseen
reserves provided from July 2009 to June 2010 are as follows:

Uncompleted or Unleasable Properties
In principle, NBF acquires Real Estate, etc. which are leased/leasable
assets at the time of closing. NBF may acquire a property which is not
yet leasable at the time of closing based on consideration of the impact
on NBF’s asset management activities after taking into account theinvestment amount, the date of completion or of becoming leasable,
estimated revenue and so forth, provided, however, that the contract
amount of any such unleasable asset combined with the total contract
amount of previously acquired unleasable assets (but excluding
unleasable assets which thereafter become operational) will not exceed
10% of the total assets indicated on the most recent balance sheet of

56 NBF Report January - June 2009

Item

ReasonReserves forlong-term renovations■

Average annual amount over an approximately 10-year period based on engineering
reports

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

Expenses of providing “free access floor” (orraised floor); expenses for other move-in construction costs (partitions, etc.)

Total Foreseen Amount: (annual basis) ¥3,512 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 61 properties owned by NBF as of June 30, 2009.

INVESTMENT AND DISTRIBUTION POLICIESMeasures to Avoid Reductions and Fluctuations in(4) Financial Policies

Operating Income

Issuance of Shares

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

NBF may issue shares in order to undertake acquisition and renova-

income due to fire damage, withdrawal of tenants and so forth, efforts,tion and so forth of assets and to provide allowance for funds required

such as area diversification and obtaining adequate fire and casualty

for working capital as well as for the repayment of debt (including secu-

insurances, etc., will be exerted.

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

Appraisal Value, etc.
In the event that NBF undertakes asset valuation for the purpose of

Debt Financing

disclosure in Performance Information Reports, etc. using methods and

NBF may raise capital (including use of the call loan market) andstandards different from those it has set forth, (a) the disclosure value toissue bonds in order to undertake acquisition and renovation and so

be used for real estate, real estate leasehold rights and superficies will,

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

in principle, be the appraised valuation provided by a certified real estate

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

appraiser and (b) the disclosure value to be used for beneficiary certifi-borrowings and repayment of obligations regarding NBF bonds, etc.)

cates, equity interests of tokumei kumiai and equity interests of partner-(“Investment Objectives and Policies,” Articles of Incorporation).

ships for which respective assets are real estate, real estate leasehold

Borrowings are limited to those from Qualified Institutional Investors

rights or superficies will be the calculated value of equity interests ofas specified in the Financial Instruments and Exchange Law of Japan, ineach based on the value of their respective assets as determined in (a)case capital is borrowed. Further, the total limit on all such borrowings

plus the fair value of any financial assets as determined in conformity

and issues of NBF bonds will be ¥1,000,000 million. When undertaking

with generally accepted accounting principles, less trust and totalborrowings or when issuing NBF bonds, NBF may provide operating

tokumei kumiai liabilities. (Articles of Incorporation).

assets as collateral (Articles of Incorporation).

The appraisal value of property with respect to the period commencing on the acquisition thereof and ending on the date of disclosure of

Loan-to-Value Ratio

such value with respect to the next following closure of NBF’s account-

The ratio of the total amount of borrowings, issues of NBF bonds anding term shall be the acquisition price of the said property (excluding

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

miscellaneous acquisition costs, fixed assets tax, city-planning tax and(loan-to-value ratio) is envisioned to be limited to 60%, but may tem-consumption tax) as stated in the sale and purchase contract, etc. forporarily exceed 60% when acquiring certain assets, etc. (medium-to-

the said property.

long-term operating asset management policy and annual management
plan established by the Asset Management Company).

Disposition
In disposing of individual operating properties, selections will be

Derivative Transactions

made through comprehensive research and analysis based on the fore-

NBF purchases rights in derivatives transactions solely to hedge

casted income, actual and predicted fluctuations in asset value, futureagainst risks, including risks of fluctuation in interest rates for debt, as

prospects and stability of the area of location, risks of deterioration andset out in Article 2.20 of the Financial Instruments and Exchange Law ofobsolescence of real estate and predicted costs thereof as well as theJapan.

composition of the portfolio, etc. Sell/hold studies will be periodicallyundertaken with respect to all operating properties (“Investment
Objectives and Policies,” Articles of Incorporation).

NBF Report January - June 2009 57

Distribution Policies of NBF
A. Distributions of Profits
A registered investment corporation may deduct its cash dividends of

however, that the maximum amount of such distributions will be theamount set forth in the rules of the Investment Trusts Association of

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

Japan (Article 14.2 of the Articles of Incorporation).

utes to its shareholders in excess of 90% of its taxable income and■Amount determined by NBF as being eligible for the requirements ofcomplies with other organizational and operational requirements. NBF

the Special Taxation Treatment for Investment Corporations, in caseintends to make dividend distributions that ensure that NBF satisfiesof the Distributable Amount being less than the Taxable Income

those requirements.

Available for Dividends

NBF will, in principle, effect distributions in accordance with the following policies (Articles of Incorporation).

■

Amount determined by NBF not in excess of the amount of depreciation
for the current term less the amount of appropriate reserves for the current term, if NBF determines it appropriate considering trends in macro

Earnings Available for Distributions

economic environments, real estate markets and leasing markets

NBF’s earnings available for distributions are based on accounting of
profits prepared in accordance with the Investment Trust Law and in
conformity with generally accepted accounting principles in Japan.

NBF’s Current Policy on Distributions in Excessof Profits

The distributable amount which results from operation of managed

As for cash distributions in excess of profits, as long as the current

assets of NBF (hereinafter, “Distributable Amount”) shall be the amountJapanese taxation treatment applicable to NBF’s shareholders in Japanof profit (the amount of net assets on the balance sheet less the amountto whom such distributions are paid requires them to calculate capitalof total expenses, capital surplus reserves and estimated or equivalent

gain or loss at the time of each distribution, NBF will not make distribu-

variances) calculated on each closing date.

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 earnings available for dividends ofProfit, etc.,” and if such distributions in excess of profits are deemed

NBF set forth in Article 67.15 of the Special Taxation Measures Law ofnecessary by the Board of Directors of NBF.

Japan (hereinafter “Distributable Earnings”), provided, however, that the
maximum amount of distributions will be the Distributable Amount. NBF

C. Method of Distributions

has the right to allow for long-term reserve for renovations, reserve forDistributions will be made in cash, in principle, within three months

payables, reserve for cash distributions and other reserves andfrom the closing date, to such shareholders or registered pledgees asallowances similar thereto which are deemed necessary for maintaining

are listed or recorded in the latest Shareholder Registry as of the closing

or enhancing the assets of NBF.

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

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 the Distributable Amount under the

NBF will be discharged from the obligation to pay distributions ofFinancial Instruments and Exchange Law of Japan, although theprofits three calendar years from the date of commencing payment.

Investment Trusts Association of Japan has established rules such that aInterest will not accrue on unpaid distributions (Articles of Incorporation).

corporate-style J-REIT may pay out the excess of retained earnings forthe period up to a maximum of 60% of depreciation for the period. NBF
is entitled to make cash distributions of the amounts described below inexcess of the Distributable Amount in the following cases, provided,

58 NBF Report January - June 2009

INVESTMENT AND DISTRIBUTION POLICIESInvestment Objectives of NBF
The Investment Objectives of NBF specified in the Articles ofIncorporation are as follows.

(8) Investment Securities (meaning those specified in Article 2.1.11 of
the Financial Instruments and Exchange Law of Japan, provided,
however, that this is limited to those the assets of which are primarily
invested and Managed Assets principally referred to in paragraphs

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) and (2) above).
(9) Beneficiary Certificates of Money Trust (limited to those the trust
assets of which are primarily invested and Managed Assets referred
to in paragraph (1), (3) or (4) above, provided, however, that thosethat are deemed securities are excluded).

(1) Real estate, real estate leasehold interests and superficies.
(2) Beneficiary Certificates backed by real estate, real estate leasehold
rights and superficies, including inclusive trusts consisting of funds
appurtenant to real estate.

B. Other Investment Objectives among
Designated Assets
NBF may, in the course of efficiently managing funds or in other(3) Tokumei kumiai ownership interests (provided, however, that this islimited to those the assets of which are primarily invested andcases as necessary, invest in the following Designated Assets.
(1) Bank deposits

Managed Assets principally referred to in paragraphs (1) and (2)above).

(2) Certificates of deposit issued by Japanese legal entities(3) Call loans(4) Equity interests in partnerships as defined by Article 667 of the Civil
Code of Japan (limited to leased, operating and managed partnership(4) Japanese government bonds, notes and bills

assets primarily referred to in paragraphs (1) and (2) above that are(5) Regional treasury bonds, notes and bills

specified in Article 2.2.5 of the Financial Instruments and Exchange(6) Commercial paper

Law of Japan).

(7) Designated bonds of Special Purpose Companies (meaning those(5) Preferred Investment Certificates of Special Purpose Companies

specified in Article 2.1.4 of the Financial Instruments and Exchange(meaning those specified in Article 2.1.8 of the Financial Instruments

Law of Japan, provided, however, that this is limited to asset-

and Exchange Law of Japan, provided, however, that this is limited tobacked securities principally referred to in paragraphs (1) and (2) of

those the assets of which are primarily invested and Managed Assets

section A above).

principally referred to in paragraphs (1) and (2) above).
(6) Special Purpose Beneficiary Certificates (meaning those specified in
Article 2.1.13 of the Financial Instruments and Exchange Law of(8) Monetary claims (limited to those claims that are deemed
Designated Assets under the Investment Trust Law of Japan otherthan those referred to in section A and above).

Japan, provided, however, that this is limited to those the assets of(9) Securities (other than those listed in section A and above).

which are primarily invested and Managed Assets principally referred(10) Rights to financial derivative transactions (limited to those specified

to in paragraphs (1) and (2) above).
(7) Beneficiary Certificates of investment trusts (meaning those specified

in Article 2.20 of the Financial Instruments and Exchange Law ofJapan).

in Article 2.1.10 of the Financial Instruments and Exchange Law ofJapan, provided, however, that this is limited to those the assets ofwhich are primarily invested and Managed Assets principally referred
to in paragraphs (1) and (2) above).

NBF Report January - June 2009 59

C. Assets Other than Designated Assets
NBF may, in the course of efficiently managing funds or in other

Investment Restrictions

cases as necessary, invest in the following assets.
(1) Equity interests of partnerships, excluding assets in section A, paragraph (4)(2) Easements(3) Trademark rights

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.

(4) Copyrights(5) Chattels(6) Requisite ancillary rights to Designated Assets referred to in
section A

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).

Borrowing
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 Objectives
NBF does not invest aggressively in the Monetary Claims andSecurities referred to in “Investment Objectives, B. Other Investment
Objectives among Designated Assets.” Rather, NBF takes into accounttheir stability and liquidity based on the extent of their relationship with
Designated Assets referred to in “Investment Objectives, A. Principal
Investment Objectives among Designated Assets.” NBF invests in rights
to financial derivatives transactions solely to hedge against risks, including risks of fluctuation in interest rates for debt (“Investment Objectives
and Policies,” Articles of Incorporation).
Moreover, investment in other funds (investment securities orBeneficiary Certificates) is limited mainly to those the assets of which
are referred to in “Investment Objectives of NBF, A. Principal Investment
Objectives among Designated Assets,” paragraphs (1) and (2).
The real estate held by such funds may not include any real estate
located outside of Japan (Articles of Incorporation).

60 NBF Report January - June 2009

INVESTMENT AND DISTRIBUTION POLICIESCompliance with Laws and Regulations

certain financial instruments, indices or options based on fluctuations in

The Managed Assets of NBF will be managed in compliance with thethe price, index, value, or amount of consideration related to transactions

Financial Instruments and Exchange Law of Japan and related regula-in the assets of an investment corporation, without a legally valid reason,tions, the rules stipulated by the Investment Trusts Association (aswith the objective of benefiting a third party other than NBF or said

amended), as well as “Investment Objectives and Policies” of the Articles

investment.

of Incorporation.

B. Compliance with the Financial Instruments
and Exchange Law and the Investment Trust
Law of Japan
Pursuant to Article 198.1 of the Investment Trust Law of Japan, aregistered investment corporation must entrust business related to asset
management to an asset management company registered as a financial instrument firm, but an asset management company is prohibitedfrom performing certain acts related to the business of managing theassets of said investment corporation. As a result, an investment corpo-

Transactions Harmful to the Interests of NBF(§ 42.2.4)
An asset management company may not undertake transactions thatare other than upon normal terms and conditions for such transactions,and further, such transactions upon said conditions would be harmful tothe interests of the investment.

Other Transactions Specified in the Government
Ordinance regarding the Financial Instruments
and Exchange Law of Japan (§ 42.2.7)
In the addition to the foregoing, those acts specified in the govern-

ration is subject to certain investment restrictions (all references inparentheses below are to the provisions of the Financial Instruments andExchange Law of Japan, except where stated otherwise) besides restrictions applied to a registered investment corporation. NBF will naturally
comply with such investment restrictions, a general overview of which
follows.

Internal Transactions (§ 42.2.1)
Transactions between an asset management company and its direc-

ment ordinance regarding the Financial Instruments and Exchange Law
of Japan being certain acts committed by an asset management company that would result in failure to protect the interests of shareholders,damage the fairness of the management of the assets of NBF, and posea risk of damaging the good public reputation of NBF are prohibited.

Limitation on Acquisition of the Same Issue of
Shares (§ 194 of the Investment Trust Law)
An investment corporation may not acquire the same shares issued

tors or officers are prohibited except for certain cases specified in Article
128 of the government ordinance regarding the Financial Instruments
and Exchange Law that are considered unlikely to result in failure to protect the interests of shareholders, damage fair transactions or discredit
the financial instruments business.

Reciprocal Transactions with Managed Assets(§ 42.2.2)
Transactions between asset management companies of investment
corporation assets are prohibited except for certain cases specified in
the provisions of the government ordinance regarding the Financial

by a corporation in excess of 50/100 of total number of said issued andoutstanding shares.

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

when acquired from another investment corporation as the surviving
entity of a merger;●

when purchasing shares pursuant to the provisions of the Investment
Trust Law of Japan; or●when purchasing shares pursuant to a government ordinance regarding
the Investment Trust Law of Japan.

Instruments and Exchange Law of Japan that are considered unlikely toresult in failure to protect the interests of shareholders, damage fairtransactions or discredit the financial instruments business.

Transactions for the Benefit of Third Parties(§ 42.2.3)
An asset management company may not undertake transactions in

NBF Report January - June 2009 61

Restriction on Acquisition of Parent
Corporation’s Shares by Subsidiary Corporation(§ 81.1.2)c) Undertaking transactions clearly recognized to be unnecessary in light

An investment corporation (subsidiary), a majority of the shares of

purpose of benefiting a securities company, registered financial insti-

which is owned by another investment corporation (parent), may nottution, residential land and building specialist or other person speci-

acquire the shares of such parent investment corporation except in the

fied in the government ordinance regarding the Investment Trust Law

following cases:of Japan who is an Interested Party, etc. of an asset management●

when acquired from another investment corporation as the surviving
entity of a merger; or●

when purchasing shares pursuant to a government ordinance regarding the Investment Trust Law of Japan.

of the management policies for the assets of an investment corporation, the amount of net assets of NBF, or market conditions, with thecompany.
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 ofC. Other Restrictions

fraudulently manipulating the market for the purpose of having an

Subscription and Margin Trading of Securities

influence upon the conditions of the primary offer or secondary distri-Pursuant to the guidelines set by its asset management company,

bution of said securities not reflecting correct market pricing.

NBF may not subscribe to, or conduct margin trading of, securities.
e) In the event that an issuer, securities company or registered financial

Restrictions of Transactions with Interested
Partiesinstitution, 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,(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 desig-

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.

nated by the government ordinance regarding the Investment Trust Law
of Japan.

f) In the event that a specified real estate syndicate, who is an
Interested Party, etc. of an asset management company, makes aa) 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.

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

b) Undertaking transactions which harm the interests of an investment
corporation with the objective of benefiting an Interested Party, etc.
of NBFM.

62 NBF Report January - June 2009g) In the event that the manager of a tokumei kumiai , who is an
Interested Party, etc. of an asset management company, makes aINVESTMENT AND DISTRIBUTION POLICIES

solicitation in connection with the execution of a tokumei kumiai

company on one hand, and said asset management company, its direc-

agreement at a time when the total investment amount otherwise

tor or executive officer, any other investment corporation, investment

obtained pursuant to said tokumei kumiai agreement is not foreseenfund which directs management, Interested Party, etc. or other person

to reach that expected by the manager of said tokumei kumiai,

set forth under the government ordinance regarding the Investment Trust

acquiring a tokumei kumiai interest pursuant to said tokumei kumiai

Law on the other, submit written notice, in accordance with the enforce-agreement with assets of NBF at the request of the manager of said

ment regulations of the Investment Trust Law, to said investment corpo-

tokumei kumiai.

ration, other investment corporations (which invest in the same kind ofassets as the said Designated Assets) the assets of which are managedh) In the event that a trust company, who is an Interested Party, etc. ofby said asset management company and other persons set forth under

an asset management company, makes a solicitation in connection

the government ordinance regarding the Investment Trust Law specifying

with the execution of a trust agreement at a time when the amount of

the matters relating to such transaction, provided, however, that in lieu oftrust assets otherwise obtained pursuant to said trust agreement issuch submission of written notice, said asset management company

not foreseen to reach that expected by said trustee, acquiring a Bene-may, in accordance with the government ordinance regarding theficiary Certificate pursuant to said trust with assets of NBF at theInvestment Trust Law, provide the matters to be specified in such written

request of said trustee.

notice by such methods as using electronic information processing systems or other telecommunication technology which are set forth underi) 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.

NBF Report January - June 2009 63

CORPORATE DATA
As of June 30, 2009

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.
¥386,176 million
542,000 shares

Shareholders:

15,104

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 Auditors:

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 thetranslations or the selection of the portion(s) of any document(s) translated into English.

Securities Report (Yuka shoken hokokusho) filed on September 29, 2009 pursuant to

No person has been authorized to give any information or make any representations

the Securities Exchange Law of Japan, and the Financial Statements and theother than as contained in this document in relation to the matters set out in this docu-

Performance Information Report for the period from January 1, 2009 to June 30, 2009,

ment, and if given or made, such information or representation must not be relied uponof Nippon Building Fund Inc. prepared pursuant to the Investment Trust Law of Japan.

as having been authorized by Nippon Building Fund Inc., Nippon Building FundThis English language document was prepared solely for the convenience of andreference by overseas investors and neither corresponds to the original Japanese documents nor is it intended to constitute a disclosure document. The Japanese language

Management Ltd. or any of their respective directors, officers, employees, partners,
shareholders, agents or affiliates.
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

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

GAAP), which may materially differ in certain respects from generally acceptedment.

accounting principles in other jurisdictions.

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

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

herein may not be precisely identical to the concept of the equivalent Japanese terms.

tion. We base these statements on our beliefs as well as our assumptions based solelyWith respect to any and all terms herein, including without limitation, financial state-on certain limited information currently available to us. Because these statements reflect

ments, if there exist any discrepancies in the meaning or interpretation thereof between

our current views concerning future events, these statements involve known andthe original 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

64 NBF Report January – June 2009

INVESTORS’ INFORMATIONAs of June 30, 2009

Fiscal Periods

Shareholders

Six months ending June 30 and December 31

Other domestic corporations
351 (2.3%)

Overseas investors 408 (2.7%)
Financial institutions(Including securities companies)

Total Number of Common Shares Issued

179 (1.2%)

16th Period (From January 1, 2009 to June 30, 2009)

542,000 shares

15th Period (From July 1, 2008 to December 31, 2008)

542,000 shares

Individuals and others
14,166 (93.8%)

Individuals andothers35,814 (6.6%)

Total number of shareholders:

Financial
institutions

Other domestic
corporations
50,299 (9.3%)

Distributions
Confirmed distribution for the 16th Period (ended June 2009)
For the operating period from January 1, 2009 to June 30, 2009 (6 months)

15,104¥21,775 per share(Including
securities
companies)

Expected distribution for the 17th Period (ending December 2009)
For the operating period from July 1, 2009 to December 31, 2009 (6 months)

281,374(51.9%)¥18,500 per share

Overseas
investors
174,513(32.2%)

Total number of shares:

542,000

Major Shareholders
Name

Number of Shares Held

Percentage of Total

46,30440,71037,631
26,257
19,735
18,14912,256
11,362
8,584
7,024

8.54%
7.51
6.94
4.84
3.64
3.34
2.26
2.09
1.58
1.29

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

Historical Share Price(Yen)
2,000,000(Points)
3,000

NBF share price (left scale)
TSE REIT Index (right scale)
TOPIX (right scale))

2,500

1,600,000
2,000
1,200,000

1,500

1,000
800,000
500
400,000

Sep. 10, Dec. 31,
2001 2001

Jun. 30,
2002

Dec. 31,2002

Jun. 30,
2003

Dec. 31,2003

Jun. 30,
2004

Dec. 31,2004

Jun. 30,
2005

Dec. 31,2005

Jun. 30,
2006

Dec. 31,2006

Jun. 30,
2007

Dec. 31,2007

Jun. 30,
2008

Dec. 31,2008

Jun. 30,
2009

0

NBF Report January – June 2009 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