Semi-Annual Report
Second Half of 2023
(45th Period – July to December 2023)

Nippon Building Fund Inc.

Contents
Performance Results ............................................................................................................................. 1

Overview of Performance and Distribution.......................................................................................... 1

Summary of Selected Financial Date .................................................................................................... 3

Management’s Discussion and Analysis ............................................................................................... 5

Financial Statements ........................................................................................................................... 21

Notes to Financial Statements ............................................................................................................ 25

Independent Auditor’s Report ............................................................................................................ 50

Performance Results:
During the period under review, the Japanese economy continued to recover moderately, despite the impact of rising
prices, with firm increases in capital investment by companies, a recovery in consumer spending due to higher wages
and expanding inbound demand.
On the other hand, there was an impact of higher interest rates due to global monetary tightening and the Bank ofJapan's more flexible YCC (Yield Curve Control) operations, but the impact in Japan was limited.
In the office building rental market in Tokyo CBD, demand continued to recover as companies reassessed their office
functions, with a recovery in attendance rates and further momentum to review office space requirements in linewith new employment and continued promotion of positive relocations to increase floor space within buildings andimprove locations. The market vacancy rate in Tokyo CBD remained in the 6% range and trended downward, despite
concerns about a large supply of office space in 2023.
With regard to the office building trading market, the market remained firm despite the impact of domestic andforeign monetary policies. The competitive environment for property acquisitions continued, as information on salesof prime properties remained limited.
Even under this environment, NBF enhanced its quality of portfolio by acquiring Nishi Shinjuku Mitsui Bldg." (realproperty; acquisition ¥121 million (additional acquisition)) in September 2023 and the exchange of the Yodoyabashi
Flex Tower (trust beneficiary right acquisition price: ¥9.8 billion) and NBF Ueno Bldg. (real property; disposition
price: ¥9.9 billion) and disposition of NBF Shibakouen Bldg." real property; disposition price: ¥8.5 billion) in
November 2023.
The occupancy rate of the existing portfolio has recovered in the 97% range, the cruising occupancy rate. NBF
executes leasing activities from a medium to long term perspective that accurately takes account of market trends
with a view to further improvement of the occupancy rate. With existing tenants, NBF strives to retain and improve
rent levels, prevent cancellations based on the fundamental policy of maintaining favorable relationships andenhancing tenant satisfaction. As a result of these activities, occupancy rates and rental revenues remains stable.
In addition, NBF’s pursuit to enhance competitiveness of its properties by implementing continuous cost reduction
measures through timely renovations will continue.

Overview of Performance and Distribution:
As the result of above operations, NBF's performance results during the period under review consisted of operating
revenues of 47,349 million (an increase of ¥318 million, or 0.7%, compared with the previous period), excluding
profits from dispositions, real estate rental revenues of ¥45,635 million (an increase of ¥486 million, or 1.1%,
compared with the previous period), operating income from leasing activities of ¥21,133 million (an increase of¥263 million, or 1.3%, compared with the previous period), operating income of ¥20,767 million (an increase of¥126 million, or 0.6% compared with the previous period), ordinary income of ¥19,513 million (an increase of ¥177
million, or 0.9%, compared with the previous period), and net income of ¥19,513 (an increase of ¥177 million, or
0.9%, compared with the previous period).

1

In accordance with the distribution policy prescribed in its Articles of Incorporation, NBF decided to distribute¥19,561 million, the entire amount arrived at by deducting provision of reserve for advanced depreciation (¥485
million) from the sum of retained earnings (¥19,513 million) and reversal of reserve for advanced depreciation ¥533
million), so that it will be able to deduct the maximum amount of cash distribution of profit from its taxable income
through the application of preferential tax measures to investment corporations (Article 67-15 of the Act on Special
Measures Concerning Taxation) (Net reversal of reserve for advanced depreciation is ¥48 million). As a result, thedistribution per unit was ¥11,500 same as the previous period).

2

Summary of Selected Financial Data
45th Period

44th Period

43rd Period

45th Period

from July 1, 2023

from January 1,

from July 1, 2022

from July 1, 2023

to December 31,

2023 to June 30,

to December 31,

to December 31,

2023

2023

2022

2023
U.S. dollars in

Yen in millions, except per unit data or where otherwise indicatedthousands except(Note 1)

per unit data
(Note 1, 2)

Operating revenues

Note 3¥47,349¥47,030¥47,366$336,003

45,63545,14845,172323,837

1,714

1,882

2,194

12,166

Operating expenses

26,582

26,39025,770188,635

Rental expenses

24,501

24,27823,672

173,869

Revenues from property leasing
Gains on sales of real estate
properties

Ordinary income

19,513

19,336

20,289138,475(a)

19,513

19,33520,288138,469

Note 425,771

25,32726,012

182,881

Note 4

29,10628,74329,418

206,546(b)

19,561

19,561

19,561

138,812

Depreciation and amortization

7,973

7,873

7,917

56,578

Capital expenditures

4,840

5,118

3,650

34,347

1,385,619

1,385,920

1,368,739

9,832,667

592,500

594,500

577,500

4,204,513(d)706,247

706,295

706,5215,011,689

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

Total assets(c)Interest-bearing debt
Net assets
Total number of units issued (Units)(e)

1,700,991

1,700,991

1,700,991

Net assets per unit (Yen/$)(d) / (e)415,197415,225

415,358

2,946

Distribution per unit (Yen/$)(b) / (e)11,50011,50011,50081

Note 415,15014,88915,292

107

Note 4

1.4%

1.4%

1.5%

(2.8%)(2.8%)(3.0%)

2.8%

2.7%

2.9%

Funds from operations per unit
(Yen/$)
ROA(Annual rate)
ROE

Note 4(Annual rate)
Loan to value (LTV)
Capital ratio
Payout ratio(5.5%)(5.5%)(5.7%)

Note 4

42.8%

42.9%

42.2%

(d) / (c)

51.0%

51.0%

51.6%

100.2%

101.1%

96.4%

184

181

184

69

70

71

(b) / (a),Note 5

Number of days
Number of real estate properties

Note 6

Number of tenants

Note 6

Total rentable area (m2)Occupancy rate (Average)

Note 6

1,534

1,552

1,547

1,194,435

1,202,427

1,219,233

97.4%

97.0%

95.9%

3

Notes:1. The amounts of yen in the annual report are rounded down to the nearest million yen. The amounts of U.S. dollar are
rounded after the decimal.
2. U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥140.92 = U.S. $1.00, the approximate
exchange rate on December 31, 2023.
3. Operating revenues do not include consumption tax.
4. 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 Gains and Losses on sales of real estate properties) + Depreciation andamortization
Net operating income from property leasing activities: (Revenue from property leasing – Rental expenses) + Depreciation
and amortization
Funds from operations per unit: (Net income (excluding Gains and Losses on Sales of real estate Properties) +Depreciation and amortization) / Weighted average number of units issued and outstanding during the period
ROA: Ordinary income / (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 / Total assets
5. Payout ratio figures are calculated to one decimal place only.
6. Number of real estate properties means units generally perceived to be one office building. Number of tenants meansgross number of tenants by building. Occupancy rate, end-tenant basis, is the weighted average of month-end occupancy
rate on a floor space basis.

4Management’s Discussion and Analysis
1. Distribution for the Current Period
Distribution per unit for the current period was ¥11,500. NBF expects to distribute almost all retained earnings
at the current period end remaining after deducting the amount appropriated to the reserve for advanced
depreciation of replacing specified assets as stipulated in Article 65-7 of the Act on Special Measures Concerning
Taxation to be eligible for special tax treatment (Article 67-15 of the Act on Special Measures Concerning
Taxation) that allows NBF to deduct its cash dividends of profits from taxable income.

For the six months
ended December 31,
2023

For the six months
ended June 30,
2023

For the six months
ended December 31,
2022(Yen in thousands, except per unit amounts)
Retained earnings
Undistributed earnings
Transfer to reserve for reduction entry
Reversal of reserve for reduction entry
Total cash distribution（Cash distribution per unit）
Distribution of accumulated earnings（Distribution of accumulated earnings per unit）
Cash distribution in excess of accumulated earnings（Per unit）¥19,513,116—
485,676
533,956
19,561,396
11,50019,561,396
11,500——¥19,335,863—
1,912,612
2,138,145
19,561,396
11,50019,561,396
11,500——¥20,288,900—
1,639,062
911,559
19,561,396
11,50019,561,396
11,500——Notes:
1. Above cash distributions were paid after the period end.

2. Changes in Assets, Liabilities and Net Assets
Assets
As of December 31, 2023, total assets decreased by ¥301 million to ¥1,385,619 million compared with June 30,
2023. Return on average total assets (ROA) for the six months ended December 31, 2023 was 1.4 percent same as
for the previous six-month period.
Current assets increased by ¥8,863 million to ¥19,785 million compared with June 30, 2023. Real estate properties
decreased by ¥9,434 million to ¥1,322,929 million compared with June 30, 2023. Intangible assets decreased by ¥15
million to ¥35,677 million compared with June 30, 2023.
5

Liabilities
Current liabilities increased by ¥6,011 million to ¥70,805 million compared with June 30, 2023, primarily becauseof an increase in Long-term debt due within one year compared with June 30, 2023.
Long-term debt decreased by ¥6,000 million to ¥536,500 million compared with June 30, 2023.
As a result, total interest-bearing liabilities decreased by ¥2,000 million to ¥592,500 million compared with June
30,2023. As of the end of the period under review, the ratio of long-term fixed interest-bearing debt was 90.5 percent.
The loan-to-value ratio, calculated as the ratio of interest-bearing liabilities to total assets, decreased to 42.8
percent as of December 31, 2023 from 42.9 percent as of June 30, 2023.
Notes:
1. Interest-bearing liabilities mean "Short-term loans", "Long-term debt due within one year" and "Long-term Debt".

Net assets
Net assets decreased by ¥48 million to ¥706,247 million compared with June 30, 2023.

3. Funding
Balance of Paid-in Capital
NBF was established on March 16, 2001 with initial paid-in capital of ¥100 million. NBF began investing
activities in May 2001 after ¥98,800 million was raised through private placements. As of December 31, 2023, NBF
had issued 1,700,991 units out of 4,000,000 total authorized units. NBF’s units 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 of more than one class of units, NBF’s units comprise thesole class of units authorized and issued by NBF.

Issue date

March 16, 2001
May 23, 2001
September 8, 2001
July 14, 2004

Remarks
Initial capital(private)
Privateplacement
Public offering
Public offering

Units issued andoutstanding
Increase
Balance(units)Paid-in capital
Increase
Balance(Yen in millions)

Notes

200

200

¥100

¥100

Note 1

197,600

197,800

98,80098,900Note 282,90080,000280,700
360,700

49,99958,838148,899
207,737

Note 3Note 46

August 11, 2004
August 10, 2005
March 16, 2006
March 29, 2006
February 4, 2008
March 4, 2008
January 26, 2011
February 22, 2011
January 25, 2012
February 21, 2012
January 23, 2013
January 31, 2013
January 1, 2014
March 19, 2014
March 28, 2014
October 26, 2020
November 6, 2020
January 19, 2022
January 28, 2022

Third party
allocation
Public offering
Public offering
Third party
allocation
Public offering
Third party
allocation
Public offering
Third party
allocation
Public offering
Third party
allocation
Public offering
Third party
allocation
Unit split
Public offering
Third party
allocation
Public offering
Third party
allocation
Public offering
Third party
allocation

4,000
58,00080,0005,300

364,700
422,700
502,700
508,000

2,941
51,491
79,0405,236

210,678
262,170
341,210
346,446

Note 5Note 6Note 7Note 831,800539,800

37,158383,605

Note 92,200

542,000

2,570

386,175

Note 1034,000576,000

26,957413,132

Note 112,500

578,500

1,982

415,114

Note 1230,000608,500

18,172433,287

Note 134,500

613,000

2,725

436,013

Note 1474,000687,000

63,973499,986

Note 155,000

692,000

4,322

504,308Note 16

692,000
26,5001,384,000
1,410,500―
14,022504,308
518,331

Note 17
Note 18

1,500

1,412,000

793

519,124Note 19

229,000

1,641,000

117,041

636,166

Note 20

11,5001,652,500

5,877

642,044

Note 2147,5001,700,000

30,369672,413

Note 22991

1,700,991

633

673,047

Note 23

Notes: 1. NBF was established with initial capital of ¥500,000 per unit.
2. Follow-on private offering at ¥500,000 per unit to raise funds for acquisition of 22 properties.
3. Public offering of new units for ¥625,000 per unit (excluding underwriting fee: ¥603,125) to repay debt and to fundproperty acquisition.
4. Public offering of new units for ¥759,500 per unit (excluding underwriting fee: ¥735,475) to repay debt, etc.
5. Additional issue of new units (third party allocation) for ¥735,475 per unit undertaken pursuant to the public offering in
Note 4.
6. Public offering of new units for ¥916,300 per unit (excluding underwriting fee: ¥887,782) to repay debt and to fundproperty acquisition.
7. Public offering of new units for ¥1,019,200 per unit (excluding underwriting fee: ¥988,000) to repay debt and to fundproperty acquisition.
8. Additional issue of new units (third party allocation) for ¥988,000 per unit undertaken pursuant to the public offering in
Note 7.
9. Public offering of new units for ¥1,205,400 per unit (excluding underwriting fee: ¥1,168,500) to repay debt and to fundproperty acquisition.
10. Additional issue of new units (third party allocation) for ¥1,168,500 per unit undertaken pursuant to the public offering in
Note 9.
11. Public offering of new units for ¥818,025 per unit (excluding underwriting fee: ¥792,855) to repay debt and to fundproperty acquisition.
12. Additional issue of new units (third party allocation) for ¥792,855 per unit undertaken pursuant to the public offering in
Note 11.
13. Public offering of new units for ¥624,975 per unit (excluding underwriting fee: ¥605,745) to repay debt and to fundproperty acquisition.
14. Additional issue of new units (third party allocation) for ¥605,745 per unit undertaken pursuant to the public offering in
Note 13.
15. Public offering of new units for ¥891,800 per unit (excluding underwriting fee: ¥864,500) to repay debt and to fund7

property acquisition.
16. Additional issue of new units (third party allocation) for ¥864,500 per unit undertaken pursuant to the public offering in
Note 15.
17．Effective January 1, 2014, NBF implemented a 2-for-1 unit split of its investment units.
18．Public offering of new units for ¥545,860 per unit (excluding underwriting fee: ¥529,150) to repay debt and to fundproperty acquisition.
19．Additional issue of new units (third party allocation) for ¥529,150 per unit undertaken pursuant to the public offering in
Note 18.
20．Public offering of new units for ¥527,240 per unit (excluding underwriting fee: ¥511,100) to fund property acquisition.
21．Additional issue of new units (third party allocation) for ¥511,100 per unit undertaken pursuant to the public offering in
Note 20.
22．Public offering of new units for ¥659,540 per unit (excluding underwriting fee: ¥639,350) to fund property acquisition.
23．Additional issue of new units (third party allocation) for ¥639,350 per unit undertaken pursuant to the public offering in
Note 22.

Market Price of Units
High/Low (closing price) of units on the TSE:
For the six months ended
December 31, 2023

High
Low

For the six months ended
June 30, 2023

For the six months ended
December 31, 2022

(Yen)
¥589,000
540,000¥629,000
580,000¥708,000
580,000

Borrowings
Borrowings from financial institutions as of December 31, 2023 are shown below.

Short-term loans
Interest

LenderDue onrate (%)

Balance(Note 1)

Repayment
methodUse of
funds

Notes

（Note 3）

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

Use of
funds

Notes

（Note 2）

(Yen in millions)Mizuho Bank, Ltd.

¥5,000Total short-term loans

0.105% January 31, 2024

Bulletpayment¥5,000Long-term loans
Interest

LenderBalancerate (%)（Note 2）

MUFG Bank, Ltd.

(Yen in millions)¥7,000
4,000
3,000
3,000
5,000
8,000
2,000
7,000

Due on(Note 1)0.358% June 1, 2028
0.180% March 1, 2027
0.104% February 28, 2025
0.138% February 27, 2026
0.400% July 2, 2029
0.400% February 28, 2030
0.270% February 26, 2027
0.270% May 31, 2027

8

Repayment
methodDevelopment Bank of Japan Inc.

Sumitomo Mitsui Banking Corporation

Sumitomo Mitsui Trust Bank, Limited

6,000
4,000
5,000
5,000
5,000
6,000
4,000
3,000
2,000
4,000
13,00010,00010,0005,000
5,000
10,000
6,000
2,500
5,000
3,000
9,000

0.150% July 31, 2024
0.400% July 31, 2030
0.320% January 7, 2028
0.400% January 7, 2030
0.450% January 7, 2031
0.450% February 28, 2031
0.180% February 27, 2026
0.400% June 28, 2030
0.335% January 31, 2029
0.396% March 31, 2028
0.747% September 10,2027
0.357% February 15, 2028
0.256% April 8, 2026
0.250% June 1, 2026
0.387% September 14, 2028
0.491% September 27, 2029
0.230% May 30, 2024
0.417% May 23, 2029
0.400% August 3, 2029
0.450% January 7, 2031
0.528% June 28, 2030
0.176%
June 1, 2029
(Note 5)0.150% April 26, 2024
0.450% January 7, 2031
0.320% January 7, 2028
0.350% June 29, 2029
0.383% December 30, 2026
0.468% February 26, 2027
0.693% February 28, 2029
0.806% February 28, 2030
0.318% April 30, 2027
0.597% April 30, 2030
0.223% May 31, 2024
0.113%
May 31, 2024
(Note 5)0.090% January 25, 2024
0.270% September 11, 2026
0.210% December 30, 2025
0.270% January 27, 2027
0.400% January 7, 2030
0.450% March 30, 2032
0.815% December 29, 2028
0.300% February 3, 2026
0.250% May 22, 2026
0.655% July 16, 2032
0.646% April 28, 2033
0.403% April 28, 2028
0.364% March 31, 2032
0.650% May 23, 2034
0.500% January 7, 2032
0.700% January 7, 2036
0.700% July 16, 2036
0.931% October 31, 2034
0.890% September 30, 2033
1.005% March 30, 2035
0.120%
November 30, 2025
(Note 5)0.450% January 7, 2031
0.425% July 7, 2030
0.155%
May 27, 2032
(Note 5)0.246% April 30, 2026
0.250% September 14, 2026
0.381% December 30, 2026
0.356% June 1, 2027
0.433% July 12, 2027
0.219% March 29, 2024
0.100% December 30, 2025

11,0006,000
20,00010,000
1,000
4,000
5,000
3,000
2,000
3,000
2,000
6,000
4,000

Sumitomo Life Insurance Company

Mizuho Bank, Ltd.

5,000
3,000
10,0003,000
10,000
5,000
3,000
3,000
5,000
5,000
5,000
2,000
2,000
3,000
5,000
5,000
5,000
1,000
2,000
2,000
7,000
10,0005,000
10,000Shinkin Central Bank

3,000
5,000
3,000
3,000
4,000
4,000
3,000

9

Bulletpayment

Bulletpayment（Note 3）

Unsecured/unguaranteed/pari passu
See (Note 4)

Unsecured/unguaranteed（Note 3）/pari passu,
See (Note 4)

The Norinchukin Bank

Nippon Life Insurance Company

Mizuho Trust & Banking Co., Ltd.

2,000
6,000
5,000
3,000
2,000
2,000
5,000
5,000
1,000
3,000
3,000
2,000
2,000
2,000
5,000
5,000
3,000
4,000
4,000
3,000
3,000

TAIJU LIFE INSURANCE COMPANY
LIMITED

THE BANK OF FUKUOKA, Ltd.

2,000
1,000
1,000
1,000
2,000
2,000
2,000
2,000
2,000
2,000
2,000
1,000
2,000

The Yamaguchi Bank, Ltd.

Daishi Hokuetsu Bank, Ltd.

The Hachijuni Bank, Limited

The Yamanashi Chuo Bank, Ltd.

The Iyo Bank, LTD.

1,000
2,000
1,000
1,000
1,000
2,000
2,000
2,000
2,000
2,000
2,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000

DAIDO LIFE INSURANCECOMPANYTAIYO LIFE INSURANCE COMPANY

1,000
1,000
1,000
1,000
1,000
1,500

10

0.188% April 28, 2028
0.307% June 22, 2029
0.450% January 7, 2031
0.300% June 21, 2027
0.270% June 19, 2026
0.300% March 24, 2028
0.270% September 30, 2027
0.320% January 7, 2028
0.616% October 31, 2030
0.851% March 30, 2033
0.760% May 31, 2032
0.400% May 23, 2029
0.200% May 29, 2026
0.450% December 27, 2030
0.425% January 30, 2032
0.712% April 30, 2032
0.868% April 30, 2033
0.165%
October 31, 2032
(Note 5)0.115%
February 29, 2028
(Note 5)0.105%
February 28, 2025
(Note 5)0.105%
February 27, 2026
(Note 5)1.486% May 30, 2025
0.084% March 31, 2025
0.416% January 31, 2030
0.400% February 13, 2030
0.491% January 30, 2032
1.008% November 1, 2034
0.987% March 30, 2035
0.238% May 31, 2024
0.300% May 21, 2027
0.400% January 7, 2030
0.710% June 30, 2032
0.767% October 29, 2032
0.170%
June 30, 2033
(Note 5)0.477% January 10, 2029
0.400% May 23, 2029
0.500% August 31, 2032
0.500% January 7, 2032
0.855% October 31, 2033
0.936% March 30, 2034
0.257% March 1, 2024
0.245% June 28, 2024
0.400% January 7, 2030
0.320% April 27, 2029
0.270% June 26, 2027
0.270% December 2, 2027
0.320% January 7, 2028
0.767% October 31, 2032
0.272% October 11, 2024
0.275% May 14, 2025
0.322% March 28, 2031
0.767% October 29, 2032
0.059%
June 30, 2025
(Note 5)0.320% April 28, 2028
0.320% January 26, 2029
0.165%
October 29, 2032
(Note 5)0.302% March 7, 2029
0.400% October 2, 2030
0.716% June 30, 2034
1.033% September 9, 2033
0.650% May 31, 2035
0.350% July 9, 2029

Bulletpayment（Note 3）

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

1,500
1,000
1,000
2,000
1,000
1,000
1,000
1,000
2,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
3,000
1,000
1,000
1,000
1,000
1,000
1,000

Resona Bank, Limited.

1,000

Mitsui Sumitomo Insurance Company,
LimitedKiraboshi Bank, Ltd.
Kansai Mirai Bank, Limited

1,000

0.500% July 9, 2032
0.400% May 23, 2029
0.400% March 25, 2030
0.616% June 30, 2031
0.386% March 3, 2027
0.300% February 28, 2028
0.616% October 31, 2030
0.270% May 19, 2027
0.320% May 26, 2028
0.320% January 7, 2028
0.539% October 31, 2029
0.598% March 30, 2030
1.533% May 30, 2025
0.450% January 31, 2031
0.851% March 30, 2033
0.450% April 27, 2032
0.616% October 31, 2030
0.503% March 30, 2029
0.851% March 30, 2033
0.258% June 27, 2025
0.270% May 22, 2026
0.724% September 30, 2031
0.851% March 30, 2033
0.616% October 31, 2030
0.767% October 29, 2032
0.136%
June 1, 2027
(Note 5)0.320% January 7, 2028

1,000
1,000

0.792% September 30, 2032
0.767% October 31, 2032

The 77 Bank, Ltd.
The Joyo Bank, Ltd.
The Chugoku Bank, Limited
The Gunma Bank, Ltd.
SBI Shinsei Bank, Limited
The Keiyo Bank,Ltd.
The Asahi Shinkin BankThe Chiba Bank, Ltd.
Momiji Bank,Ltd.
THE SHIGA BANK，LTD．

Total long-term loans (Note 6)
Total borrowings¥540,500¥545,500

Notes:
1. With respect to the date of repayment in case of more than one short-term loan from the same lender, the earliest date of
repayment for all such loans coming due is given.
2. Interest Rate is rounded down to the 3rd decimal point.
3. Use of funds for the above includes acquisition of real estate or beneficiary interests, repayment of borrowings and working
capital, etc.
4. A special agreement attached to “Loan Agreement” entered into between NBF and each financial institution provides that theabove borrowings from all financial institutions rank pari passu to each other.
5. This loan is a floating rate loan. Other long-term loans are all fixed rate loans.
6. The total amount of long-term loans (i.e. excluding those expected to be repaid within one year) repayable within 5 years of thedate of the balance sheet and expected to be repaid by specific year(s) is as follows:(Yen in millions)Long-term loans

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years¥33,000¥56,000¥60,000¥66,000

11

NBF Bonds

Issue date

Balance as ofDecember 31,
2023(Yen in millions)No. 14 Unsecured Bonds

June 9, 2016

¥5,000No. 15 Unsecured Bonds

May 22, 2017

No. 16 Unsecured Bonds

CouponRedemption

Use offunds

1.000% June 8, 2046

Bullet payment

Note 25,000

0.914% May 22, 2037

Bullet payment

Note 2Notes
3 and 4

May 23, 2018

5,000

0.220% May 23, 2025

Bullet payment

Note 2Notes
3 and 4

No. 17 Unsecured Bonds

May 23, 2018

5,000

0.888% May 21, 2038

Bullet payment

Note 2Notes
3 and 4

No. 18 Unsecured Bonds

December 19, 2018

7,000

0.200% January 10, 2024 Bullet payment

Note 2Notes
3 and 4

No. 19 Unsecured Bonds

August 14, 2020

15,0000.180% August 14, 2025 Bullet payment

Note 2Notes
3 and 4

No. 20 Unsecured Bonds(Green Bonds)

March 22, 2021

5,000

0.150% March 19, 2026 Bullet payment

Note 2Notes
3 and 4

Issue

Total (Note 5)(Note 1)Maturity date

¥47,000

Notes:
1. Interest Rate is rounded down to the 3rd decimal point.
2. Use of funds includes repayment of borrowings and investment corporation bonds, etc.
3. Rank pari passu with all other publicly and privately issued bonds.
4. Subject to provision of collateral restrictions.
5. 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)

Investment
corporation bonds

Within 1 year

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years¥7,000¥20,000¥5,000――

Others
NBF has security deposits totaling ¥71,942 million as of December 31, 2023.

12

Notes
Notes
3 and 4

■ Capital Expenditures
1. Planning
As of December 31, 2023, 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 in order to increase competitive power in the market aswell as to increase the level of tenant satisfaction based on the results of tenant satisfaction surveys andneighboring competitive building specification surveys, etc.
Estimated amounts
Name of property

Objective

Estimated
duration

Totalamounts

Payment for thecurrent period(from July 1, 2023 to
December 31, 2023)(Yen in millions)
For the six months ending June 30, 2024 (the 46th fiscal period from January 1, 2024 to June 30, 2024)
Nishi-Shinjuku Mitsui
From July 2023
Renovation of air
¥320
¥－
Bldg.
to February 2024
conditioning
From January 2024
Renovation of
Shiba NBF Tower
308－
to June 2024
restroom
Kowa Nishi-Shinbashi
From January 2024
Renovation of air
200－
Bldg. Bto June 2024
conditioning
Renovation of lighting From November 2023
NBF Platinum Tower
200－
to June 2024
equipment
From January 2024
Renovation of lower
Shinjuku Mitsui Bldg.
194－
to May 2024
surface area
From July 2023
Renovation ofGate City Ohsaki
157－
to March 2024
restroom
Sakaisuji-Honmachi Center
From November 2023
Renovation of air
151
－
Bldg.
to April 2024
conditioning
NBF COMODIO
Renovation of lighting From November 2023
131－
Shiodome
to February 2024
equipment
Celestine Shiba Mitsui
Renovation of central From January 2024
122
－
Bldg.
to June 2024
monitoring facilities
Renovation of lighting From January 2024
S-ino Omiya North Wing
115－
to June 2024
equipment
From January 2024
Renovation of
NBF Ikebukuro City Bldg.
113－
to June 2024
restroom
Renovation of lighting From January 2024
Hakata Gion M-SQUARE
108－
to June 2024
equipment
Nishi-Shinjuku Mitsui
From August 2023
Renovation of lower
107
－
Bldg.
to February 2024
common area
Renovation of central From August 2023
Nakameguro GT Tower
107－
to March 2024
monitoring facilities
Renovation of lighting From January 2024
Aqua Dojima NBF Tower
104－
to June 2024
equipment

13

Cumulative
amount paid

¥－
－
－
－
－
－
－
－
－
－
－
－
－
－
－

From November 2023
Renovation of air
89－
to January 2024
conditioning
From May 2024
Renovation of
NBF Ogawamachi Bldg.
77－
to May 2024
substation equipment
NBF Akasaka Sanno
From May 2023
Renovation of
68－
Squareto June 2024
substation equipment
Renovation of lighting From May 2024
Ryukakusan Bldg.
68－
to June 2024
equipment
From July 2023
Renovation of key
Sapporo L-Plaza
43－
to March 2024
control system
Hiroshima Fukuromachi
Renovation of lighting From January 2024
22
－
Bldg.
to June 2024
equipment
For the six months ending December 31, 2024 (the 47th fiscal period from July 1, 2024 to December 31, 2024)
Renovation of
From June 2022
Nakanoshima Mitsui Bldg.
¥751¥－
automatic control
to July 2024
equipment
From July 2024
Renovation of
Shiba NBF Tower
279－
to December 2024
restroom
Renovation of
From January 2024
Yokohama ST Bldg.
270－
emergency power
to December 2024
equipment
From October 2023
Renovation of air
NBF Toyosu Garden Front
251－
to July 2024
conditioning
Renovation of lighting From May 2024
NBF Platinum Tower
220－
to December 2024
equipment
Renovation of lighting From July 2024
NBF Osaki Bldg.
186－
to December 2024
equipment
Renovation of
From May 2024
Shinjuku Mitsui Bldg.
160－
equipment within theto November 2024
ceiling
Sakaisuji-Honmachi Center
From May 2024
Renovation of air
150
－
Bldg.
to October 2024
conditioning
Kowa Nishi-Shinbashi
From July 2024
Renovation of air
150－
Bldg. Bto December 2024
conditioning
From May 2024
Renovation of
Yokohama ST Bldg.
135－
to December 2024
elevator
From June 2023
Renovation of
NBF Ikebukuro East132－
to October 2024
substation equipment
From January 2024
Parale Mitsui Bldg.
126
125
Renovation of exterior
to December 2024
Renovation of lighting From July 2024
S-ino Omiya North Wing
114－
to December 2024
equipment
Renovation of lighting From July 2024
Aqua Dojima NBF Tower
104－
to December 2024
equipment
From July 2023
Renovation of
NBF Shibuya East102－
to December 2024
substation equipment
From January 2024
Sumitomo Densetsu Bldg.
71－
Renovation of pantry
to July 2024
From August 2023
Renovation of
NBF Ikebukuro City Bldg.
58－
to December 2024
substation equipment
From July 2024
Renovation of key
Sapporo L-Plaza33－
to December 2024
control system
For the six months ending June 30, 2025 (the 48th fiscal period from January 1, 2025 to June 30, 2025)
Sakaisuji-Honmachi Center
From January 2025
Renovation of
¥672
¥－
Bldg.
to June 2025
substation equipment
Yotsuya Medical Bldg.

14

－
－
－
－
－
－

¥－
－
－
－
－
－
－
－
－
－
－
125
－
－
－
－
－
－

¥－

From November 2023
Renovation of399－
to March 2025
restroom
From January 2024
Renovation of
Parale Mitsui Bldg.
363－
to March 2025
restroom
From January 2025
Renovation of
Shiba NBF Tower
336－
to June 2025
restroom
Nishi-Shinjuku Mitsui
From April 2024
Renovation of air
331
－
Bldg.
to March 2025
conditioning
Renovation of lighting From January 2025
NBF Osaki Bldg.
191－
to June 2025
equipment
Kowa Nishi-Shinbashi
From January 2025
Renovation of air
185－
Bldg. Bto June 2025
conditioning
Renovation of central From April 2024
Nakameguro GT Tower
134－
to March 2025
monitoring facilities
Nishi-Shinjuku Mitsui
From August 2024
Renovation of
125
－
Bldg.
to February 2025
restroom
From November 2024
Renovation of
Yokohama ST Bldg.
118－
to June 2025
elevator
From January 2025
Renovation of air
Yotsuya Medical Bldg.
117－
to June 2025
conditioning
Renovation of lighting From January 2025
S-ino Omiya North Wing
115－
to June 2025
equipment
Renovation of
Celestine Shiba Mitsui
From May 2024
114－
automatic fireBldg.
to January 2025
information facilities
From April 2025
Renovation of
NBF Ikebukuro Tower
50－
to April 2025
substation equipment
For the six months ending December 31, 2025 (the 49th fiscal period from July 1, 2025 to December 31, 2025)
Renovation of lighting From July 2025
NBF Osaki Bldg.
¥190¥－
to December 2025
equipment
From July 2025
Renovation of
Shiba NBF Tower
113－
to December 2025
restroom
Renovation of lighting From July 2025
S-ino Omiya North Wing
110－
to December 2025
equipment
For the six months ending June 30, 2026 (the 50th fiscal period from January 1, 2026 to June 30, 2026)
From November 2024
Renovation ofGate City Ohsaki¥413¥－
to March 2026
restroom
Nishi-Shinjuku Mitsui
From May 2025
Renovation of
314
－
Bldg.
to February 2026
restroom
Renovation of central From April 2025
Nakameguro GT Tower
115－
to March 2026
monitoring facilities
From November 2025
Renovation of
Yokohama ST Bldg.
114－
to June 2026
elevator
Gate City Ohsaki

－
－
－
－
－
－
－
－
－
－
－
－
－

¥－
－
－

¥－
－
－
－

2. Capital Expenditures for the Current Period
The following table sets forth the capital expenditures for the current period. NBF posted ¥4,840 million incapital expenditures together with ¥1,344 million for repairs and maintenance expenses. In total, ¥6,184 million
was spent on construction.

15

Name of property

Objective

PeriodExpenditure(Yen in millions)Shiba NBF Tower

Renovation of lighting equipment,
renovation of restroom/water supply anddrainage equipment in office kitchenette
system, renovation of service entrance
hallway, etc.

¥427

NBF Platinum Tower

Renovation of lighting equipment,
renovation of security system,exchange of electric energy meter, etc.

382

Ryukakusan Bldg.

Renovation of restroom, renovation ofelevator, renovation of lighting equipment,
etc.

279

Celestine Shiba Mitsui Bldg.

Renovation of central monitoring facilities,
renovation of security system, renovation of
air conditioning, etc.

230

Kowa Nishi-Shinbashi Bldg. B

Renovation of air conditioning, renovationof lighting equipment, renovation of
restroom, etc.

192

River City M-SQUARE

Renovation of emergency generator,
renovation of fire extinguishing facilities,
renovation of air conditioning, etc.

Hakata Gion M-SQUARE

Renovation of lighting equipment,
renovation of parking facilities, renovationof air conditioning, etc.

182

Roppongi T-CUBE

Renovation of air conditioning, renovationof internet environment, renovation ofabsorption hot and chilled water generator,
etc.

177

S-ino Omiya North Wing

Renovation of lighting equipment,
renovation of air conditioning, renovation ofcarpet and door for common area, etc.

175

NBF COMODIO Shiodome

Renovation of lighting equipment,
renovation of water supply unit, renovationof parking facilities, etc.

174

NBF Ikebukuro City Bldg.

Renovation of restroom, renovation ofelevator, construction of deodorizer for
stinky smoking room, etc.

143

NBF Hatchobori Terrace

Renovation of substation equipment,
exchange of air conditioning indoor unit
parts, renovation of parking facilities, etc.

142

NBF Sapporo Minami Nijo Bldg.

Renovation of hot and chilled water
plumbing, renovation of air conditioning,
renovation of automatic door, etc.

129

16

From July 2023
to December 2023

191

Sumitomo Mitsui Banking
Nagoya Bldg.

Renovation of air conditioning,
renovation of disaster prevention system,
renovation of parking facilities, etc.

125

Nakanoshima Central Tower

Renovation of lighting equipment,
renovation of air conditioning,
renovation of electric energy meter, etc.

120

NBF Ikebukuro Tower

Renovation of restroom, improvement of
shutter, renovation of pump priming tank,
etc.

117

NBF Matsuyama Nichigin-mae
Bldg.

Renovation of lighting equipment,
renovation of humidifier element,
renovation of outdoor unit compressor, etc.

113

Chofu South Gate Bldg.

Renovation of lighting equipment,
renovation of clean/miscellaneous water
pump, renovation of ice heat storage systemelectric parts, etc.

109

Yotsuya Medical Bldg.

Renovation of air conditioning,
renovation of electric energy meter,renovation of pressurization supply pump,etc.

NBF Shinagawa Tower

Renovation of lighting equipment, leasehold
improvement, renovation of air conditioning
central monitoring board, etc.

101

NBF Takanawa Bldg.

Renovation of lighting equipment,
renovation of security camera, renovation of
restroom, etc.

90

Sumitomo Densetsu Bldg.

Renovation of elevator,
construction of fire protection and fall
preventing system ceiling,exchange of automatic door parts outsidewind break room, etc.

72

Nihonbashi Kabuto-cho MSQUARE

Renovation of lighting equipment,
renovation of automatic door, renovation of
restroom, etc.

51

Sapporo L-Plaza

Renovation of automatic fire information
facilities, renovation of east/west exterior
and buried plumbing, renovation of central
monitoring facilities, etc.

30

Other buildings

Asset preservation construction and otherrenewal construction to improve tenantsatisfaction, etc.

974

Total

From July 2023
to December 2023

105

¥4,84017

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

For the six months

For the six months

ended December 31,

ended June 30,

ended December 31,

2023

2023

2022

Item
Asset management fees
Asset custody fees
Agent fees (stock transfer, accounting
and administrative)
Directors’ remuneration
Auditor’s fees
Other expenses
Total¥1,74465(Yen in millions)¥1,72663¥1,756
64

49
12
15
193
¥2,080

54
12
15
239
¥2,111

48
12
15
200
¥2,09718

■ 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 or sold by NBF in
the current period.
(Yen in millions)
Acquisition
Name of building

Nishi-Shinjuku Mitsui Bldg. (additional acquisition)
Yodoyabashi Flex Tower

Acquisition price(Note 1)Date

September 7, 2023
November 30, 2023

¥121
¥9,833¥9,954

Total(Yen in millions)
Sale
Name of building

NBF Ueno Bldg.
NBF Shibakouen Bldg.

Date

November 30, 2023
November 30, 2023

Total

Sale price¥9,900¥8,500¥18,400

Notes: 1. “Acquisition price” does not include national consumption tax, local consumption tax and miscellaneous costs of acquisition.

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 orbank deposits included in assets held in trust.

3. Transactions with Related Parties of Asset Management Company(1) Ongoing Transactions
None. (No purchases, or sales or other transactions involving related parties.)19

(2) Fees Paid for the Period from July 1, 2023 to December 31, 2023
Description of transactions with related parties (Note 1)

Category

Amount ofpayment (B)Paid toTotal fees paid(A)

(Yen in millions)(Yen in millions)

Office management fees, etc.

¥1,330(Note 4)

Property maintenance fees

5,461

Mitsui Fudosan Co., Ltd.
NBF Office Management Co., Ltd.
Mitsui Fudosan Co., Ltd.
Mitsui Fudosan Facilities Co., Ltd.
Mitsui Fudosan Building Management Co.,Ltd.

Leasing related service fees

145

B/A

Mitsui Fudosan Facilities West Co., Ltd.
Mitsui Fudosan Residential Lease Co., Ltd.
Mitsui Fudosan Co., Ltd.
NBF Office Management Co., Ltd.
Mitsui Fudosan Realty Co., Ltd.

¥1,266
63
1,504
544

95.2%
4.7%
27.5%
10.0%

359

6.6%

205
0
64
28
4

3.8%
0.0%
44.4%
19.3%
2.8%

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 the Investment trusts andInvestment corporations set by the Investment Trusts Association, Japan. During the period from July 1, 2023 to
December 31, 2023, transactions with and fees paid to, Mitsui Fudosan Co., Ltd., NBF Office Management Co., Ltd.,
Mitsui Fudosan Facilities Co., Ltd., Mitsui Fudosan Facilities West Co., Ltd., Mitsui Fudosan Building Management Co.,
Ltd. and Mitsui Fudosan Residential Lease Co., Ltd. which meet either of the said definitions, are as described above.
2. Figures indicate contractual sales prices.
3. Figures in parentheses indicate percentages of total prices.
4. In terms of properties for which NBF has not entrusted office management businesses to Mitsui Fudosan Co., Ltd. due to
its master leasing (20 properties: Shinjuku Mitsui Bldg., IIDABASHI GRAND BLOOM, Roppongi T-CUBE, NishiShinjuku Mitsui Bldg., Celestine Shiba Mitsui Bldg., Toranomon Kotohira Tower, Yotsuya Medical Bldg.,

NBF

Ogawamachi Bldg., Panasonic Tokyo Shiodome Bldg., Gate City Ohsaki, Osaki Bright Core – Bright Plaza,
Nakameguro GT Tower, Toyosu Bayside Cross Tower, OSAKI BRIGHT TOWER, Higashi Gotanda Square, Parale
Mitsui Bldg., Nagoya Mitsui New Bldg., Nagoya Mitsui Main Bldg., Nakanoshima Mitsui Bldg., and Shinanobashi
Mitsui Bldg.), NBF has entrusted them to NBF Office Management Co., Ltd. as business representative of the property
owners or lessors.
5. In addition to the above fees paid, the following have been paid to related parties for repair and maintenance work, etc.
(Yen in millions)

Mitsui Fudosan Building Management Co., Ltd.

¥1,568Mitsui Fudosan Co., Ltd.

1,350

Mitsui Fudosan Facilities West Co., Ltd.

73

Mitsui Fudosan Facilities Co., Ltd.

41

Mitsui Fudosan Realty Co., Ltd.

10

MITSUI Designtec Co., Ltd.

4

Harajuku-no-mori Co., Ltd.

4

Mitsui Fudosan Residential Lease Co., Ltd.

0

20

Financial Statements

NIPPON BUILDING FUND INC.
BALANCE SHEETSAs of December 31, 2023 and June 30, 2023

As ofDecember 31, 2023

As ofJune 30, 2023

(Yen in millions)
AssetsCurrent Assets:
Cash and cash equivalents
Tenant receivables
Prepaid expenses
Other current assets
Total current assets
Real Estate Properties:
Land including trust accounts（Notes 4,7,16）
Buildings and improvements including trust accounts（Notes 4,16）
Other tangible assets（Notes 4,16）
Less: accumulated depreciation（Notes 4,16）
Total real estate properties, net
Intangible assets:
Superficies（Note 16）
Leasehold rights in trust accounts（Note 16）
Other intangible assets（Note 16）
Total intangible assets
Long-term Prepaid Expenses（Note 16）
Other Assets
Total Assets
Liabilities
Current Liabilities:
Short-term loans（Note 6）Long-term debt due within one year（Notes 3,6）
Accounts payable
Rents received in advanceAccrued expenses and other liabilities
Total current liabilities
Long-term debt（Notes 3,6）
Tenant Security Deposits Including Trust Accounts（Note 3）
Other Liabilities
Total Liabilities
Net Assets（Note 5）
Unitholders' Equity
Unitholders' capital
Units authorized: 4,000,000 units
Units issued and outstanding: 1,700,991 units
Reserve for reduction entry
Retained earnings
Total Net Assets
Total Liabilities and Net Assets
The accompanying notes to financial statements are an integral part of these statements.

21¥18,884266
371
263
19,785¥9,956333456
175
10,922

1,031,812
473,098
17,052(199,035)
1,322,929

1,034,059
477,154
16,866(195,717)
1,332,363

11,882
23,72667
35,6775
7,221¥1,385,619

11,882
23,726
82
35,692
5
6,937¥1,385,920¥5,00051,000
8,278
4,336
2,190
70,805536,500
71,942
124
679,372¥5,00047,000
7,416
4,360
1,017
64,794
542,500
72,202
127
679,625

673,047

673,047

13,687
19,513706,247¥1,385,619

13,912
19,335706,295¥1,385,920

NIPPON BUILDING FUND INC.
STATEMENTS OF INCOME
For the six months ended December 31, 2023, June 30, 2023 and December 31, 2022

For the six months

For the six months

For the six months

ended December

ended June

ended December

31, 2023

30, 2023

31, 2022(Yen in millions)Operating Revenues and Expenses
Operating Revenues:
Rental revenue（Note 8）¥42,126¥41,895¥41,508

Other revenues related to property leasing（Note 8）

3,508

3,253

3,664

Gains on sales of real estate properties（Note 9）

1,714

1,882

2,194

47,34947,03047,366

Property management fees（Note 8）

6,678

6,164

6,258

Real estate taxes（Note 8）

4,536

4,587

4,191

Repairs and maintenance（Note 8）

1,344

1,189

979

43

43

42

Other rental expenses（Note 8）

3,925

4,419

4,282

Depreciation and amortization（Note 8）

7,973

7,873

7,917

Asset management fees

1,744

1,726

1,756

Other operating expenses

336

384

340

Total Operating Expenses

26,582

26,39025,770Operating Income

20,767

20,64021,596

Interest income

0

0

0

Property tax refund and interest on tax refund

0

—

1

Other non-operating revenues

4

5

3

(1,210)(1,251)(1,253)

Amortization of bond issuance costs

(17)

(20)

(20)

Other non-operating expenses

(29)

(37)

(38)

Ordinary Income

19,513

19,336

20,289

Income before Income Taxes

19,513

19,336

20,289

(0)

(0)

(0)

¥19,513¥19,335¥20,288

Total Operating Revenues
Operating Expenses:

Insurance（Note 8）

Non-Operating Revenues and Expenses
Non-Operating Revenues:

Non-Operating Expenses:
Interest expense

Current and deferred income taxes（Note 11）
Net Income

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

22

NIPPON BUILDING FUND INC.
STATEMENTS OF CHANGES IN NET ASSETSFor the six months ended December 31, 2023, June 30, 2023 and December 31, 2022

(Yen in millions)
Reserve for
Number of Unitholders’
Units
Balance as of June 30, 2022. . . . . . . . . . . . . .. . . 1,700,991

reduction

Retained

Capitalentry

Earnings

Total¥673,047¥10,667¥25,439¥709,154

Transfer to reserve for reduction entry . . . . . . . .

—

—

2,517

(2,517)—

Cash dividends declared . . . . . . . . . . . . . . . . . . . . .

—

—

—

(22,922)(22,922)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

—

—

—

20,28820,288

Balance as of December 31, 2022. . . . . . . . . . . . . 1,700,991

673,047

13,18520,288706,521Transfer to reserve for reduction entry . . . . . . . .

—

—

1,639

(1,639)—

Reversal of reserve for reduction entry . . . . . . . . .

—

—

(911)

911

—

Cash dividends declared . . . . . . . . . . . . . . . . . . . . .

—

—

—

(19,561)(19,561)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

—

—

19,335

19,335

Balance as of June 30, 2023. . . . . . . . . . . . . . . . . . 1,700,991

673,047

13,912

19,335706,295

Transfer to reserve for reduction entry . . . . . . . .

—

—

1,912

(1,912)—

Reversal of reserve for reduction entry . . . . . . . . .

——(2,138)2,138—

Cash dividends declared . . . . . . . . . . . . . . . . . . . . .

—

—

—

(19,561)(19,561)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

—

—

19,513

19,513

Balance as of December 31, 2023. . . . . . . . . . . . 1,700,991¥673,047¥13,687¥19,513¥706,247

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

23

NIPPON BUILDING FUND INC.
STATEMENTS OF CASH FLOWSFor the six months ended December 31, 2023, June 30, 2023 and December 31, 2022

For the six
months ended
December 31,
2023

For the six
months ended
June 30,2023

For the six
months ended
December 31,
2022(Yen in millions)
Cash Flows from Operating Activities:
Income before income taxes
Depreciation and amortization
Amortization of bond issuance costs
Interest expense(Increase) Decrease in tenant receivables
Increase (Decrease) in accounts payable
Increase (Decrease) in rents received in advance
Decrease in real estate properties due to sales
Cash payments of interest expense(Increase) Decrease in consumption tax refund
receivable
Others, net
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Payments for purchases of real estate properties
Proceeds from tenant security deposits
Payments for tenant security deposits
Payments for security deposits paid to lessors
Refunds from security deposits paid to lessors
Others, net
Net Cash Used in Investing Activities
Cash Flows from Financing Activities:
Net proceeds from (repayment of) short-term loans
Proceeds from long-term debt
Repayment of long-term debt
Payment of dividends
Net Cash Provided by (Used in) 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¥19,513
7,973
17
1,210
67
976
(23)
6,795
(1,203)¥19,336
7,873
20
1,251
(19)
418
(66)
21,482(1,277)¥20,289
7,917
20
1,253
9
(1,312)
102
14,697(1,352)

—

—

430

1,158
36,486(1,663)47,357

1,976
44,032(5,399)3,326(3,586)(2)
0(334)(5,997)(52,116)
4,103(2,309)(3)—(572)(50,897)(18,791)
2,276(2,286)(0)
3(686)(19,486)—
1,000(3,000)(19,561)(3,000)69,000(49,000)(19,561)(6,000)33,000(24,000)(22,919)(21,561)
8,928
9,956
¥18,884(2,561)(6,101)
16,058¥9,956(19,919)
4,627
11,430¥16,058

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

24

NIPPON BUILDING FUND INC.
Notes To Financial Statements
For the six months ended December 31, 2023, June 30, 2023 and December 31, 2022
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., Sumitomo Mitsui Trust Bank, Limited., 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 46% of NBFM while Sumitomo Life Insurance Company owns 35% and theremaining 19% is mainly owned by financial institutions.
On September 10, 2001, NBF had raised approximately ¥50,000 million through an initial public offering ofunits. Those units are listed on the J-REIT section of the Tokyo Stock Exchange.
As of December, 31, 2023, NBF had ownership or beneficiary interests in 69 office properties containing
approximately 1,194,435 square meters of rentable office space. As of December, 31, 2023, NBF had leased
office space to 1,534 tenants engaged in a variety of businesses. The occupancy rate for the office properties wasapproximately 97.4%.

Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in theInvestment 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 to application and disclosure requirements ofInternational 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 forfair presentation, is not presented in the accompanying financial statements. NBF does not prepare consolidated
financial statements, as NBF has no subsidiary.

25

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.

Real Estate Properties
Real estate properties are recorded at cost, which includes the allocated purchase price, related costs andexpenses for acquisition of the office properties and the beneficiary interests of properties in trust. Property andequipment balances are depreciated using the straight-line method over the estimated useful lives. The estimateduseful lives of the principal tangible fixed assets (including assets held in trust) are as follows:
Buildings and improvements including trust accounts
Buildings and improvements
2-50 years
Other tangible assets
Structures
2-50 years
Machinery and equipment
2-17 years
Tools, furniture and fixtures
2-20 years
Costs related to the renovation, construction and improvement of properties are capitalized. Expenditures forrepairs and maintenance which do not add to the value or prolong the useful life of a property, are expensed
when incurred.

Investment Corporation Bond Issuance Costs
Deferred investment corporation bond issuance costs are amortized using the straight-line method over therespective terms of the bonds.

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.

Revenue Recognition
The main performance obligations related to revenue arising from contracts with customers of NBF and thenormal time for satisfying such performance obligations (the normal time for recognizing revenue) are as
follows:(1) Sales of real estate properties
NBF recognizes revenue from the sale of real estate properties when the purchaser, as the customer, obtains
control of the real estate property by fulfilling the delivery obligations stipulated in the contract for the sale ofreal estate property. In the statements of income, “Gains on sales of real estate properties” or “Losses on sales ofreal estate properties” are presented as the amount obtained by deducting “Cost of sale of real estate property”
which is the book value of the real estate sold, and “Other related sale expenses” which are various costs directly
incurred in the sale, from “Proceeds from sale of real estate property” which is the proceeds from the sale of realestate.
(2) Utilities income
NBF recognizes utilities income based on the supply of electricity, water, etc. to the lessee as the customer inaccordance with the terms of the real estate lease contract and related agreements. In the income statement, it ispresented as “Other revenues related to property leasing”, and it is presented as “Incidental income” in the notes
to the statements of income.
26

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 thepurchase date of each property until the end of the calendar year as part of the acquisition cost of the relevant
property. Capitalized real estate taxes amounted to ¥3 million for the period ended December 31, 2023, ¥111
million for the period ended June 30, 2023 and ¥9 million for the period ended December 31, 2022.

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 sheet
and income statement accounts.

Note 3 – Financial Instruments
Status of Financial Instruments
Policy for Financial Instruments
NBF procures funds for acquisition of assets and repayment of debt, which includes repayment of tenantsecurity deposits, loans and investment corporation bonds, through issuance of new investment units, bank loans
and issuance of investment corporation bonds, with the aim of ensuring steady asset growth and stable earnings
from a mid- and long-term angle.
As a general rule NBF invests surplus funds in deposits considering safety of the investments.
NBF may enter into derivative transactions solely for the purpose of reducing interest rate risks and otherrisks arising from liabilities. NBF does not engage in speculative transactions. Currently NBF is not engaged inany derivative transactions.
Financial Instruments, Their Risks and Risk Management System
Deposits are used for investment of NBF’s surplus funds. These deposits are exposed to credit risks such as
bankruptcy of the depository financial institutions. NBF limits credit risk by using only short-term deposits infinancial institutions with high credit ratings.
Proceeds from loans and investment corporation bonds are used mainly to acquire real estate properties andrepay outstanding loans and bonds. While these loans and bonds are exposed to liquidity risk, such risk ismanaged in the following ways such as diversifying the means of funding and lending institutions, dispersing
repayment dates, establishing committed credit line, keeping sufficient liquidity in hand, and monitoring cash
flows projected monthly.
Floating rate loans are exposed to interest-rate fluctuation. NBF limits the impact of such risks by maintaining
the ratio of interest-bearing liabilities to total assets low and the level of long-term fixed-rate debt high.
Tenant security deposits are exposed to liquidity risk arising from vacating of properties by tenants due to thetermination of contract. NBF manages this risk by monitoring forecasted cash flows on a monthly basis toensure it has sufficient funds.
Supplemental Explanation regarding Fair Values of Financial Instruments
Since the fair value of financial instruments is calculated based on certain assumptions, different assumptions
and factors could result in a different value.

27

Estimated Fair Value of Financial Instruments
Book value, fair value and difference between the two as of December 31, 2023 are as follows.
Since “Cash and cash equivalents” and “Short-term loans” are cash or due to be settled in a short period, andtheir fair values approximate their book values, the notes are omitted.
(Yen in millions)(As of December 31, 2023)

Book value
(1)
(2)
(3)

Fair value

DifferenceLong-term debt due within
one year¥51,000¥51,003¥3

Long-term debt

536,500

528,495(8,004)

71,942

71,025(916)

Tenant security deposits
including trust accounts

Notes:
1. Methods to Estimate Fair Value of Financial Instruments(1) Long-term debt due within one year
Long-term debt due within one year which includes Investment corporation bonds and Long-term loans are as follows:(Yen in millions)(As of December 31, 2023)

Book value

Fair value

Difference(1)

Investment corporation bonds¥7,000¥7,000¥—(2)

Long-term loans

44,00044,003

3

Total¥51,000¥51,003¥3(1) Investment corporation bonds
Fair values of investment corporation bonds are based on observable market value, if available. When there is noobservable market value available, fair values are calculated based on the present value of principal and interest cash
flows discounted at the current interest rate that is estimated by taking into consideration the remaining term of theinvestment corporation bonds and their credit risk.

(2) Long-term loans
Fair values of floating rate long-term loans are based on the book values because the market interest rates arereflected within a short term period and the book values are considered to approximate fair values. Fair values of fixed
rate long-term loans are based on the present value of principal and interest cash flows discounted at the current interest
rate estimated to be applied if similar new loans were entered into.

(2) Long-term debt
Long-term debt which includes Investment corporation bonds and Long-term loans are as follows:28

(Yen in millions)(As of December 31, 2023)

Book value

Fair value

Difference(1)

Investment corporation bonds¥40,000¥37,747¥(2,252)(2)

Long-term loans

496,500

490,748(5,751)

Total¥536,500¥528,495¥(8,004)(1) Investment corporation bonds
Fair values of investment corporation bonds are based on observable market value, if available. When there is noobservable market value available, fair values are calculated based on the present value of principal and interest cash
flows discounted at the current interest rate that is estimated by taking into consideration the remaining term of theinvestment corporation bonds and their credit risk.

(2) Long-term loans
Fair values of floating rate long-term loans are based on the book values because the market interest rates arereflected within a short term period and the book values are considered to approximate fair values. Fair values of fixed
rate long-term loans are based on the present value of principal and interest cash flows discounted at the current interest
rate estimated to be applied if similar new loans were entered into.

(3) Tenant security deposits including trust accounts
Fair values of tenant security deposits including trust accounts are based on the present value of the total of cash flow
discounted by an interest rate determined taking into account the remaining period of each item and current credit risk.

Book value, fair value and difference between the two as of June 30, 2023, are as follows.
Since “Cash and cash equivalents” and “Short-term loans” are cash or due to be settled in a short period, andtheir fair values approximate their book values, the notes are omitted.
(Yen in millions)(As of June 30, 2023)

Book value
(1)
(2)
(3)

Fair value

DifferenceLong-term debt due within
one year¥47,000¥46,995¥(4)Long-term debt

542,500

539,935(2,564)

72,202

71,276(926)

Tenant security deposits
including trust accounts

Notes:
1. Methods to Estimate Fair Value of Financial Instruments(1) Long-term debt due within one year
Long-term debt due within one year which includes Investment corporation bonds and Long-term loans were as follows:29

(Yen in millions)(As of June 30, 2023)

Book value

Fair value

Difference(1)

Investment corporation bonds¥7,000¥7,000¥—(2)

Long-term loans

40,00039,995(4)

Total¥47,000¥46,995¥(4)(1) Investment corporation bonds
Fair values of investment corporation bonds are based on observable market value, if available. When there is noobservable market value available, fair values are calculated based on the present value of principal and interest cash
flows discounted at the current interest rate that is estimated by taking into consideration the remaining term of theinvestment corporation bonds and their credit risk.

(2) Long-term loans
Fair values of floating rate long-term loans are based on the book values because the market interest rates arereflected within a short term period and the book values are considered to approximate fair values. Fair values of fixed
rate long-term loans are based on the present value of principal and interest cash flows discounted at the current interest
rate estimated to be applied if similar new loans were entered into.

(2) Long-term debt
Long-term debt which includes Investment corporation bonds and Long-term loans were as follows:(Yen in millions)(As of June 30, 2023)

Book value

Fair value

Difference(1)

Investment corporation bonds¥40,000¥38,453¥(1,547)(2)

Long-term loans

502,500

501,482(1,017)

Total¥542,500¥539,935¥(2,564)(1) Investment corporation bonds
Fair values of investment corporation bonds are based on observable market value, if available. When there is noobservable market value available, fair values are calculated based on the present value of principal and interest cash
flows discounted at the current interest rate that is estimated by taking into consideration the remaining term of theinvestment corporation bonds and their credit risk.

(2) Long-term loans
Fair values of floating rate long-term loans are based on the book values because the market interest rates arereflected within a short term period and the book values are considered to approximate fair values. Fair values of fixed
rate long-term loans are based on the present value of principal and interest cash flows discounted at the current interest
rate estimated to be applied if similar new loans were entered into.

30

(3) Tenant security deposits including trust accounts
Fair values of tenant security deposits including trust accounts are based on the present value of the total of cash flow
discounted by an interest rate determined taking into account the remaining period of each item and current credit risk.

2. Repayment Schedule for Loans and Investment Corporation Bonds as of December 31, 2023
(Yen in millions)Due within
one year

Due after

Due after

Due after

Due after

one to two

two to three

three to four

four to five

years

years

years

years

Due after
five years

Investment
corporation¥7,000¥20,000¥5,000¥―¥―¥15,000

44,00033,00056,00060,00066,000281,500¥51,000¥53,000¥61,000¥60,000¥66,000¥296,500

bonds
Long-term
loans
Total

Repayment Schedule for Loans and Investment Corporation Bonds as of June 30, 2023
(Yen in millions)Due within
one year

Due after

Due after

Due after

Due after

one to two

two to three

three to four

four to five

years

years

years

years

Due after
five years

Investment
corporation¥7,000¥5,000¥20,000¥―¥―¥15,000

40,00020,00061,00052,00081,000288,500¥47,000¥25,000¥81,000¥52,000¥81,000¥303,500

bonds
Long-term
loans
Total

31

Note 4 – Tangible Assets of Real Estate Properties
Tangible assets as of December 31, 2023 and June 30, 2023 consisted of the following:
As of December 31, 2023

As of June 30, 2023

(Yen in millions)
AccumuAcquisi-

latedtion costs

depreci-

AccumuBook value

Acquisi-

latedtion costs

depreci-ation

Book value

ation

Land

¥687,360¥—¥687,360¥696,313¥—¥696,313

Land in trust

344,452—

344,452

337,745—

337,745

Land including trust total

1,031,812—

1,031,812

1,034,059—

1,034,059

Buildings and improvements

269,235(92,443)

176,791

277,089(92,387)

184,701

203,863(95,766)

108,097

200,064(92,735)

107,329

473,098(188,209)

284,889

477,154(185,123)

292,031Structures

3,719(2,223)

1,495

3,736

(2,194)

1,541

Machinery and equipment

2,305(1,583)

722

2,356

(1,663)692

Tools, furniture and fixtures

3,294(1,835)

1,458

3,320

(1,720)1,600

Structures in trust

2,885(1,940)

944

2,880

(1,893)

987

2,093

(1,576)

517

2,060

(1,542)

518

2,615

(1,665)

950

2,512

(1,579)

932

138

—

138

—

—

—

17,052(10,825)

6,227

16,866(10,593)

6,272¥1,521,964¥(199,035)¥1,322,929¥1,528,080¥(195,717)¥1,332,363

Buildings and improvements
in trust
Buildings and improvements
including those in trust total

Machinery and equipment in
trust
Tools, furniture and fixtures intrust
Construction in process
Other tangible assets total
Total

Note 5 – Net Assets
NBF issues only non-par value units in accordance with the Investment Trust Law of Japan and all of the issue
prices of new units 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.

32

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 annualinterest rates on short-term loans outstanding are floating rates, and on December 31, 2023, it was at 0.105%.
Long-term debt as of December 31, 2023 and June 30, 2023 consisted of the following:
As of
December 31,
2023

As of
June 30, 2023

(Yen in millions)
Unsecured loans due 2024 to 2036 principally from banks andinsurance companies with interest rates mainly ranging from0.059% to 1.533% ............................................................................

¥540,500¥542,500

0.200% unsecured bonds due 2024 (Note 1) ....................................

7,000

7,000

0.180% unsecured bonds due 2025 (Note 1) ....................................

15,00015,0000.220% unsecured bonds due 2025 (Note 1) ....................................

5,000

5,000

0.150% unsecured bonds due 2026 (Note 1) ....................................

5,000

5,000

0.914% unsecured bonds due 2037 (Note 1) ....................................

5,000

5,000

0.888% unsecured bonds due 2038 (Note 1) ....................................

5,000

5,000

1.000% unsecured bonds due 2046 (Note 1) ....................................

5,000

5,000

587,500

589,500

51,00047,000¥536,500¥542,500

Less: amount due within one year........................................................
Notes: 1. Subject to provision of collateral restrictions.

The annual maturities of long-term debt as of December 31, 2023 were as follows:(Yen in millions)Due after one to two years
Due after two to three years
Due after three to four years
Due after four to five years
Due after five years……………………………………
……………………………………
……………………………………
……………………………………
……………………………………

¥53,000
61,00060,00066,000296,500

During the period ended December 31, 2023, NBF had commitment credit line contracts of ¥60 billion withseveral financial institutions to reduce refinancing risk. The unused amount of such committed credit lines was ¥60
billion as of December 31, 2023.

Note 7 – Reduction Entry for Property
The acquisition costs of certain land in trust acquired through exchange were reduced in the accumulative
amount of ¥1,701 million as of December 31, 2023.
33

Note 8 – Rental Revenues and Expenses
Rental revenues and expenses for the periods ended December 31, 2023, June 30, 2023 and December 31, 2022
were as follows:
For the six

For the six

For the six

months ended

months ended

months ended

December 31,

June 30, 2023

December 31,

2023

2022

(Yen in millions)

Revenues from Property Leasing:
Rental revenue:
Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
Common area charges . . . . . . . . . . . . . . . . . . . . . . ..
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 maintenance . . . . . . . . . . . . . . . . . . . . .
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other rental expenses . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . .
Total rental expenses . . . . . . . . . . . . . . . . . .. . . . . . . . .
Operating Income from Property Leasing Activities. . .

34¥39,864
2,024
237
42,126¥39,699
1,985
210
41,895¥39,2692,032
207
41,508

661
304
2,366
118
56
3,508
45,635

664
308
2,180
39
60
3,253
45,148

653
312
2,417
240
39
3,664
45,172

6,678
4,536
1,344
43
3,925
7,973
24,501¥21,133

6,164
4,587
1,189
43
4,419
7,873
24,278¥20,870

6,258
4,191
979
42
4,282
7,917
23,672¥21,500

Note 9 – Gains and Losses on Sales of Real Estate Properties
Gains and losses on sales of real estate properties for the periods ended December 31,2023, June 30, 2023 andDecember 31, 2022 were as follows:
For the six months ended December 31, 2023
NBF Shibakouen Bldg.

(Yen in millions)

Proceeds from sale of real estate property¥8,500

Cost of sale of real estate property

6,728

Other related sale expenses

56

Gain on sale of real estate property¥1,714

For the six months ended June 30, 2023
Shin-Kawasaki Mitsui Bldg.

(Yen in millions)

Proceeds from sale of real estate property¥24,000

Cost of sale of real estate property

21,482Other related sale expenses

635

Gain on sale of real estate property¥1,882For the six months ended December 31, 2022
Toyo-cho Center Bldg.

(Yen in millions)

Proceeds from sale of real estate property¥9,600

Cost of sale of real estate property

9,034

Other related sale expenses

56

Gain on sale of real estate property¥508

NBF Niigata Telecom Bldg.

(Yen in millions)

Proceeds from sale of real estate property¥3,900

Cost of sale of real estate property

3,196

Other related sale expenses

28

Gain on sale of real estate property¥674

NBF Hiroshima Tatemachi Bldg.

(Yen in millions)

Proceeds from sale of real estate property¥3,520

Cost of sale of real estate property

2,482

Other related sale expenses

26

Gain on sale of real estate property¥1,01135

Note 10– Gains and Losses on Exchange of Real Estate Properties
Certain properties were acquired through exchange for the periods ended December 31,2023. Gains on exchangeof real estate properties were reduced from the acquisition costs of such properties as follows:
For the six months ended December 31, 2023
NBF Ueno Bldg.

(Yen in millions)

Proceeds from transfer of real estate property¥9,900

Cost of transfer of real estate property

8,131

Other related transfer expenses

66

Reduction entry of property

1,701

Gain and Loss on exchange of real estate property¥—

No real estate properties were exchanged during the periods ended June 30, 2023 and December 31, 2022.

36

Note 11 – Income Taxes
NBF is subject to income taxes in Japan. The effective tax rate on NBF's income was 0.00% for the periods
ended December 31, 2023 and June 30, 2023, and December 31, 2022. The following table summarizes thesignificant differences between the statutory tax rates and NBF's effective tax rates for financial statement
purposes.

Statutory tax rate . . . . . . . . . . . . . . . . . . . . . .
Deductible dividends . . . . . . . . . . . . . . . . . . . . .
Transfer to reserve for reduction
entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversal of reserve for
reduction entry . . . . . . . . . . . . . . . . . . . . . . . .
Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective tax rate. . . . . . . . . . . . . . . . . . . . . . . . . .

For the six months

For the six months

For the six months

ended December 31,

ended June 30,

ended December 31,

2023

2023

2022

31.46%(31.54)(0.78)

31.46%(31.83)(3.11)

31.46%(30.33)(2.54)

0.86
0.00
0.00%

3.48
0.00
0.00%

1.41
0.00
0.00%

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

37

Note 12 – Per Unit Information
Information about earnings per unit for the periods ended December 31, 2023, June 30, 2023 and December 31,
2022 and net assets per unit as of December 31, 2023, June 30, 2023 and December 31, 2022 were as follows.
The computation of earnings per unit is based on the weighted average number of units outstanding during theperiod. The computation of net assets per unit is based on the number of units outstanding at the end of eachperiod.
For the six months
ended December 31,
2023

For the six months
ended June 30, 2023

For the six months
ended December 31,
2022

Earnings per Unit:
Net income per unit (Yen)¥11,471¥11,367¥11,927

Weighted average number ofunits outstanding

1,700,991

1,700,991

1,700,991

As of

As of

As of

December 31, 2023

June 30, 2023

December 31, 2022

¥415,197¥415,225¥415,358

Net Assets per Unit (Yen)

Note 13 – Leases
As Lessor
NBF leases some of its real estate properties to outside parties under non-cancelable operating leases. As of
December 31, 2023 and June 30, 2023, future minimum rental revenues under the non-cancelable operating leases
are as follows:

As of December 31, 2023

As of June 30, 2023

(Yen in millions)Due within one year.....................

¥17,529¥21,425

Due after one year........................

22,171

24,951

Total .........................................

¥39,701¥46,376

As Lessee
Not applicable.

38

Note 14 – Significant Non-cash Transaction
NBF consummated this exchange transaction on November 30, 2023. As of December 31, 2023, the non-cash
component of this transaction is outlined below.
(Yen in millions)
Value of properties acquired through exchange¥(9,833)

Value of properties exchanged

9,900

Differential income on exchange transactions¥67(Included in "Decrease in real estate properties due to sales")No the non-cash component of transaction was occurred during the periods ended June 30, 2023 and December
31, 2022.

Note 15 – Transactions with Related Parties(1) Parent Company and Major Corporate Unitholders(For the six months ended December 31, 2023)
Not applicable.
(For the six months ended June 30, 2023)
Not applicable.
(For the six months ended December 31, 2022)
Not applicable.
(2) Affiliates(For the six months ended December 31, 2023)
Not applicable.
(For the six months ended June 30, 2023)
Not applicable.
(For the six months ended December 31, 2022)
Not applicable.
(3) Sister Companies(For the six months ended December 31, 2023)
Not applicable.
(For the six months ended June 30, 2023)
Not applicable.
(For the six months ended December 31, 2022)
Not applicable.
39(4) Directors and Major Individual Unitholders(For the six months ended December 31, 2023)
Not applicable.
(For the six months ended June 30, 2023)
Not applicable.
(For the six months ended December 31, 2022)
Not applicable.

40

Note 16 – Investment and Rental Properties
NBF owns office buildings (including land) for rent in Tokyo and other areas. The carrying amounts, net changes
in the carrying amounts and the fair value of the investment and rental properties are as follows:(Yen in millions)
For the six months ended

For the six months ended

December 31, 2023

June 30, 2023

Carrying amount(Note 1)
Balance at beginningof the Fiscal Period¥1,368,061¥1,344,812(9,587)

23,2491,358,473

1,368,061¥1,703,670¥1,711,380

Amount of increase(decrease) during
current period(Note 2)
Balance at end of the
Fiscal Period
Fair value at end of theperiod(Note 3)
Notes:
1. Carrying amounts represent acquisition cost less accumulated depreciation.
2. The major increase in the fiscal period ended December 31, 2023, was mainly due to the acquisitionsof 2 properties (Nishi-Shinjuku Mitsui Bldg. (additional acquisition) and Yodoyabashi Flex Tower,¥10,019 million) and the major decrease was mainly due to sale of 2 properties (NBF Shibakouen
Bldg., NBF Ueno Bldg., ¥14,859 million) and recognition of depreciation costs.
The major increase in the fiscal period ended June 30, 2023 was mainly due to the acquisitions of 2
properties (IIDABASHI GRAND BLOOM (additional acquisition) and Toyosu Bayside Cross Tower(additional acquisition) , ¥47,373million) and the major decrease was mainly due to sale of a property(Shin-Kawasaki Mitsui Bldg., ¥21,482 million) and recognition of depreciation costs.
3. Fair value at end of the period is based on appraisals provided by independent real estate appraisers.
Information about profit and loss from investment and rental properties is disclosed in Note 8 (Rental Revenues
and Expenses) and Note 9 (Gains and Losses on Sales of Real Estate Properties).

41

Note 17 – Segment Information
Segment Information
Segment information has been omitted as NBF has only one segment, which is real estate leasing business.

Related Information(For the six months ended December 31, 2023)
1. Information by Products and Services
Disclosure of this information has been omitted as NBF has a single product/service line those accounts formore than 90% of total operating revenues.

2. Information by Geographic Areas(1) Operating revenues
Disclosure of this information has been omitted as total domestic revenues account for more than 90% of
total operating revenues.
(2) Real estate properties
Disclosure of this information has been omitted as total domestic real estate properties account for morethan 90% of the book value of total real estate properties.

3. Information on Major Tenants(Yen in millions)
TenantOperating revenues

Mitsui FudosanCo., Ltd.

Related segment
Real estate¥21,570

leasing businessNote: NBF leases properties to Mitsui Fudosan Co., Ltd. under a master lease agreement, and Mitsui
Fudosan Co., Ltd. subleases such properties to subtenants. NBF leases other properties to
Mitsui Fudosan Co., Ltd.

(For the six months ended June 30, 2023)
1. Information by Products and Services
Disclosure of this information has been omitted as NBF has a single product/service line those accounts formore than 90% of total operating revenues.

2. Information by Geographic Areas(1) Operating revenues
Disclosure of this information has been omitted as total domestic revenues account for more than 90% of
total operating revenues.
(2) Real estate properties
Disclosure of this information has been omitted as total domestic real estate properties account for more42

than 90% of the book value of total real estate properties.

3.

Information on Major Tenants(Yen in millions)
TenantOperating revenues

Mitsui FudosanCo., Ltd.

Related segment
Real estate¥21,308

leasing businessNote: NBF leases properties to Mitsui Fudosan Co., Ltd. Under a master lease agreement, and Mitsui
Fudosan Co., Ltd. Subleases such properties to subtenants. NBF leases other properties to
Mitsui Fudosan Co., Ltd.

(For the six months ended December 31, 2022)
1. Information by Products and Services
Disclosure of this information has been omitted as NBF has a single product/service line those accounts formore than 90% of total operating revenues.

2. Information by Geographic Areas(1) Operating revenues
Disclosure of this information has been omitted as total domestic revenues account for more than 90% of
total operating revenues.
(2) Real estate properties
Disclosure of this information has been omitted as total domestic real estate properties account for morethan 90% of the book value of total real estate properties.

3. Information on Major Tenants(Yen in millions)
TenantOperating revenues

Mitsui FudosanCo., Ltd.

Related segment
Real estate¥21,461

leasing businessNote: NBF leases properties to Mitsui Fudosan Co., Ltd. under a master lease agreement, and Mitsui
Fudosan Co., Ltd. subleases such properties to subtenants. NBF leases other properties to
Mitsui Fudosan Co., Ltd.

43

Note 18 – Asset Retirement Obligations
NBF owns real estate properties containing asbestos material and is obligated to remove those materials upon
disposition of the properties. However, since sufficient information is not available to reasonably estimate theobligation amount due to uncertainty about the method and timing of settlement, asset retirement obligation is
not recognized for the obligations to remove asbestos materials.

Note 19 – Revenue recognition
Breakdown information on revenues from contracts with customers
For the breakdown information on revenues from contracts with customers, refer to Note 8 (Rental Revenues
and Expenses) , Note 9 (Gains and Losses on Sales of Real Estate Properties) and Note 10 (Gains and Losses on
Exchange of Real Estate Properties).
These notes to Statements of Income include "Real estate rental revenues" and other revenues that are subject tothe "Accounting Standard for Lease Transactions" (ASBJ Statement No. 13) and therefore not subject to the"Accounting Standard for Revenue Recognition". The main revenues from contracts with customers that are
subject to the application are "Proceeds from sale of real estate property", "Proceeds from transfer of real estate
property" and "utility expenses" ("Incidental income" in "Other revenues related to property leasing").

Note 20 – Significant Subsequent Events
1. Conclusion sale and purchase agreements regarding acquisition
NBF concluded sale and purchase agreements regarding acquisition of the following asset on January 5, 2024,
and delivery is scheduled for March 29, 2024. An overview of the property as of the date of the conclusion of theagreements is as follows.
In addition, NBF shall pay to the seller a penalty equivalent to 10% of the acquisition price in the event of thetermination of a contract due to a breach of its contractual obligations.
Name of property: Toyosu Bayside Cross Tower (Additional Acquisition)
Category of asset: Real estate
Acquisition Price: ¥43,800 million
Seller: Mitsui Fudosan Co., Ltd
Acquisition date: March 29, 2024

2. Disposition of Property
NBF concluded sale and purchase agreements regarding disposition of the following asset on January 31, 2024
and disposed on March 28, 2024.
44

Name of property: Gran Tokyo South Tower (part of sectional ownership)
Category of asset: Real estate (Note 1)
Disposition Price: ¥41,200 million
Transferee: Tokyo Central Realty, LLC
Disposition date: March 28, 2024
Note:
1. Upon the disposition, the property was established as property in trust on the same date of disposition dateabove, and the beneficiary interests in trust was transferred.

3. Conclusion sale and purchase agreements regarding disposition
NBF concluded sale and purchase agreements regarding disposition of the following assets on January 5, 2024,
and delivery is scheduled for September 30, 2024. An overview of the property as of the date of the conclusion of
the agreements is as follows.
In addition, NBF shall pay to the buyer a penalty equivalent to the acquisition price in the event of the terminationof a contract due to a breach of its contractual obligations.
Name of property: Tsukuba Mitsui Bldg.
Category of asset: Trust beneficiary interest
Disposition Price: ¥10,920 million
Transferee: Domestic LLC
Disposition date: September 30, 2024

45

Ⅲ 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 the Investment Trust Law of Japan, performs
management of NBF's assets and undertakes management of the institutions of NBF. As of December 31,
2023, NBFM has been entrusted as an asset management company only by NBF.

Operation- Undertakes asset management of NBF pursuant to an Asset Management Entrustment Agreement based on an
entrustment from NBF in accordance with the Articles of Incorporation of NBF and the Investment Objects
and Policies set forth therein.
- Undertakes management of the general affairs of the general meeting of unitholders and the Board of
Directors as Administrative Agent regarding the Management of Institutions based on an entrustment from
NBF and pursuant to an Agreement for General Administration Regarding the Management of Institutions.

Fees for the Asset Management Operation
Management Fee 1
The amount equivalent to 2.5% of the total amount of (i) rent, common area charges, parking lot charges,
incidental income, facility charges, facility installation fees, delay damages, lease contract cancellation
penalty or monies similar thereto and other leasing operating revenues arising from leasing operations, plus(ii) dividends, distributions or monies similar thereto and other proceeds attributable to Real Estate, etc.
recorded by NBF (provided, however, that revenues from the sale of Real Estate, etc. will be excluded;
hereinafter, “Leasing Revenues, etc.” in this Paragraph) as calculated on each closing date (rounded down to
the nearest yen) will be payable.
Management Fee 2
The amount equivalent to 3% of net income before income taxes (provided, however, that in the event aloss is carried forward, then the amount of income before income taxes remaining after the entire amount ofsuch loss has been covered) prior to deduction of Management Fee 2 as calculated on each closing date(rounded down to the nearest yen; provided, however, that in the event of a negative amount, then 0 yen) will
be payable.
Management Fee 3
In the event that Real Estate, etc. is newly acquired (in the event of merger by NBF, then succeeded bysaid merger) as Managed Assets, the amount of the acquisition price of said Real Estate, etc. (meaning theacquisition price of both land and buildings; in the event of the simultaneous acquisition of multiple units ofReal Estate, etc., then the acquisition price of each Real Estate, etc., in the event of equity investment, thenthe equity investment amount, and in the event of merger by NBF, then the appraised value of each Real
Estate, etc. succeeded by said merger at the time of the merger; provided, however, that national consumption
tax, regional consumption tax and miscellaneous costs of acquisition or succession are excluded) multipliedby the following percentage rates, in principle, in total amount (rounded down to the nearest yen) will bepayable; provided, however, that with the approval of the board of directors of NBF, compensation may be
46

calculated using different rates not exceeding the following rates.
・The portion up to and including ¥10,000 million ………………………………… 0.5%
・The portion exceeding ¥10,000 million up to and including ¥30,000 million …… 0.2%
・The portion exceeding ¥30,000 million up to and including ¥50,000 million …… 0.05%
・The portion exceeding ¥50,000 million …………………………………………. Nothing
Management Fee 4
In the event of sale of Real Estate, etc. owned as Managed Assets, the amount of the sales price of said
Real Estate, etc. (in the event of the simultaneous sale of multiple units of Real Estate, etc., then the sales
price of each Real Estate, etc.; provided, however, that national consumption tax, regional consumption tax
and miscellaneous costs of sale are excluded) multiplied by the following percentage rates, in principle, in
total amount (rounded down to the nearest yen) will be payable; provided, however, that with the approval of
the board of directors of NBF, compensation may be calculated using different rates not exceeding thefollowing rates.
・The portion up to and including ¥10,000 million ………………………………… 0.5%
・The portion exceeding ¥10,000 million up to and including ¥30,000 million …… 0.2%
・The portion exceeding ¥30,000 million up to and including ¥50,000 million …… 0.05%
・The portion exceeding ¥50,000 million …………………………………………. nothing

History of NBFM
NBFM is an Asset Management Company which is a limited liability company duly established under thelaws of Japan. Major events in the history of NBFM are as follows:
September 19, 2000
November 17, 2000
January 29, 2001
February 15, 2001
March 7, 2001
March 22, 2001
May 23, 2001
June 16, 2001
September 30, 2007

EstablishedObtained license as a building lots and building transactions agent under the
Building Lots and Building Transactions Law
Obtained approval as a discretionary transaction agent under the Building Lots
and Building Transactions Law
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
Increased capital from ¥100 million to ¥198 million
Changed name (from “MF Asset Management Co., Ltd.” to " Nippon Building
Fund Management Ltd.")
Increased capital from ¥198 million to ¥495 million
Registered as a financial instruments firm with the Kanto Local Finance Bureau
Chief (Financial Instruments) No. 371

47

List of Shareholders (as of June 30, 2023)
NumberNameof Shares Owned

Percent

Mitsui Fudosan Co., Ltd.

4,554

46.0%

Sumitomo Life Insurance Company

3,465

35.0

Sumitomo Mitsui Trust Bank, Limited

495

5.0

Sumitomo Mitsui Banking Corporation

495

5.0

Daido Life Insurance Company

297

3.0

Mitsui Sumitomo Insurance Co., Ltd.

297

3.0

Britel Fund Trustees Limited

297

3.0

Total

9,900

100.0%48

Directors and Staff
As of December 31, 2023, the directors and corporate auditors of NBFM are as follows. The staff otherthan directors and auditors of NBFM is comprised of 41 persons.
Name of Directors and Auditors

Title

Eiichiro Onozawa

President & CEO (standing)

Hideki Shuto

Director, Head of Investment & Finance Group (standing)

Tetsuya Saito

Director, Head of Administration Group (standing)

Yusuke Ogata

Director

Ito Hirofumi

Director

Yasuki Nozue

Corporate Auditor

Takurou Kurumisawa

Corporate Auditor.

Outline of Financial Condition
An outline of the financial condition of NBFM is as follows.
Outline of principal assets and liabilities for the most recent fiscal year:
As of March 31, 2023

(Yen in millions)

Total Assets¥3,529Total Liabilities

590

Total Net Assets

2,938

49

Independent auditor’s report
To the Board of Directors of Nippon Building Fund Inc.:

Report on the Audit of the Financial Statements

OpinionWe have audited the accompanying financial statements of Nippon Building Fund Inc. (“the Corporation”),
which comprise the balance sheets as at December 31, 2023 and June 30, 2023, and the statements of income,statements of changes in net assets and statements of cash flows for each of the six months ended, December
31, 2023, June 30, 2023 and December 31, 2022, and a summary of significant accounting policies and otherexplanatory information.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of the Corporation as at December 31, 2023 and June 30, 2023, and its financial performance andcash flows for each of the six months ended, December 31, 2023, June 30, 2023 and December 31, 2022 inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Corporation in accordance with the ethicalrequirements that are relevant to our audit of the financial statements in Japan, and we have fulfilled our otherethical responsibilities in accordance with these requirements. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
We draw attention to Note 20 to the financial statements, which states that the Corporation entered into
agreements regarding acquisition of properties, disposed a property, and entered into an agreement regarding
disposition of a property.

50Our opinion is not modified in respect of this matter.

Other Information
The other information comprises the information included in the Semi-Annual Report, but does not include
the financial statements and our auditor’s report thereon. Management is responsible for the preparation andpresentation of the other information. Supervisory Directors are responsible for overseeing the executive
director’s performance of his duties with regard to the design, implementation and maintenance of thereporting process for the other information.
Our opinion on the financial statements does not cover the other information and we do not express any formof assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and Supervisory Directors for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordancewith accounting principles generally accepted in Japan, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Corporation’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern in accordance withaccounting principles generally accepted in Japan.
Supervisory directors are responsible for overseeing the executive director’s performance of his duties withregard to the design, implementation and maintenance of the Corporation’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free51

from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with auditing standards generally accepted in Japan will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence thatis sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures thatare appropriate in the circumstances, while the objective of the audit is not to express an opinion on theeffectiveness of the Corporation’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting andbased on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Corporation’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s reportto the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Corporation to cease to continue as a going
concern.



Evaluate whether the presentation and disclosures in the financial statements are in accordance withaccounting standards generally accepted in Japan, the overall presentation, structure and content of thefinancial statements, including the disclosures, and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

We communicate with the executive director regarding, among other matters, the planned scope and timing of
the audit, significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
52

We also provide the executive director with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with him all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threatsor safeguards applied.
Fee-related Information
Fees paid or payable to our firm and to other firms within the same network as our firm for audit provided to
the Corporation for the six-month period from July 1, 2023 to December 31, 2023 are 15 million yen, andthere are no fees paid or payable for non-audit services.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Corporation which is required to be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.

/S/ Jiro Tazawa
Designated Engagement Partner
Certified Public Accountant/S/ Tomoaki Takeuchi
Designated Engagement Partner
Certified Public Accountant

KPMG AZSA LLC
Tokyo Office, Japan
March 28, 2024

Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by the
Corporation and KPMG AZSA LLC.

53