SEMI-ANNUAL REPORT FOR THE PERIODSEPTEMBER 1ST 2007 TO FEBRUARY 29TH 2008

http://www.ncrinv.co.jp/eng/

Financial Highlights
Message from the Top

Summary of 2nd to 6th Period Results

New City Residence Investment Corporation (New City Residence) has successfully closed its accounts for its
6th period ended on February 29, 2008. We thank you, our investors, for your support in making this possible.
This period featured intense ﬂuctuations in the market. The global adjustments in the ﬁnancial markets
triggered by the subprime mortgage crisis also had an immense impact on Japanese ﬁnancial markets since lastsummer and led to J-REITs entering a severe phase. Simultaneously, the rapid credit crunch has also led to asudden contraction of the real estate investment market.
On the other hand, the rental housing market has performed admirably. Strong rental demand backed by thecontinued shift of the population to central Tokyo and steep rise in for-sale condominium prices has enabled
New City Residence to post steady cash ﬂow from its high-quality residences centered in downtown Tokyo.
During this period, New City Residence acquired seven properties for 13.3 billion yen and sold three properties
for 6.7 billion yen as we continued on our quest to expand our portfolio and further improve its quality. The
size of our portfolio as of the end of the period has grown to 108 properties with a total acquisition price of
189.3 billion yen and 6,875 leasable units. As a result, we were able to post increases in both revenues andproﬁts during the 6th period with operating revenues of 6,252 million yen (9.1% period-on-period increase), net income of 2,453 million yen (11.7%
period-on-period increase) and distribution per unit of 14,954 yen.
The following is a list of management highlights for the 6th period.
Achieved target asset size of 200 billion yen as of the end of 2007 on a contract basis
Heightened occupancy rates: Posting an end-of-period overall portfolio occupancy of 93.8% (92.0% at end of previous period) and property occupancies
were solidly maintained at around 95% once stabilized
Our core target investment area, Tokyo Central Area (8 wards), comprises about 57% of our overall investment area – in line with our aim to build aportfolio with “close,” “new” and “large” properties as core assets
Average unit price of rent for the overall portfolio was 11,110 yen per tsubo: Targeting zones with a deep layer of rental demand
Announced Eco Declaration: Commencing environmentally friendly measures
Promoted brand strategy: Expanding of the tenant service program
Reinforced ﬁnancial strategy: Reﬁnancing of secured long-term borrowings (3 years) to unsecured long-term borrowings (5 years)
Raised rating: Receiving a higher rating by Moody’s from A3 to A2

Operating period
Operating revenues
Income before income taxes
Net income
NOI (Note 1)
FFO (Note 2)
Total cash distribution
Total assets
Total interest-bearing liabilities
Unitholders’ equity
LTV (Note 3)

Steps to Achieve Financial Stability
Our greatest theme for the 7th period is the improvement of ﬁnancial stability. One of the measures implemented within this strategy was the 5.1 billion yen
equity ﬁnancing conducted through a third-party allotment in May. In addition to this capital, we will apply funds from the planned sale of properties in the
future to repay short-term borrowings and lower our risks related to reﬁnancing.
Strengthen Competitiveness of Portfolio
The pivot or focus of our growth strategies will be transferred from external growth to internal growth. New City Residence is working to raise the NOI returnon our portfolio by improving occupancy rates, lowering intermediary commissions by reducing the number of units being newly leased and reducing property
operating expenses by reviewing building management costs. We will also strengthen our competitiveness through property replacements.
Contribution to Revenues by NCR Ikebukuro Precious Tower (tentative name)
New City Residence plans to acquire the NCR Ikebukuro Precious Tower (tentative name), which is to become a core property in our portfolio, by no later thanthe end of October for about 27.7 billion yen. It is a landmark tower condominium in a key downtown Tokyo area with 32 ﬂoors and a total of 404 leasable
units and the contribution to revenues by improved occupancy rate of this property will lead to an expansion in cash ﬂow.
New City Residence will resolutely implement the above measures in the 7th period. I am personally conﬁdent that their implementation will lead us to thenext stage of strong growth.
Thank you for your unwavering support and continued commitment.

Jun Arai
Executive Director, New City Residence Investment Corporation
President, CBRE Residential Management K.K.

2,637 million yen
1,934 million yen
1,433 million yen

3,293 million yen
2,282 million yen
1,630 million yen

3,615 million yen
3,175 million yen
2,437 million yen

4,122 million yen
3,044 million yen
2,197 million yen

4,327 million yen
3,373 million yen
2,453 million yen

135,663 million yen
66,900 million yen
66,539 million yen
49.3%

164,094 million yen
94,600 million yen
66,756 million yen
57.6%

181,509 million yen
90,300 million yen
88,242 million yen
49.7%

195,685 million yen
104,350 million yen
88,006 million yen
53.3 %

202,743 million yen
111,195 million yen
88,245 million yen
54.8%

122,612 units
11,692 yen
542,687 yen
15,774 yen

122,612 units
13,302 yen
544,451 yen
18,616 yen

164,068 units
14,858 yen
537,843 yen
19,351 yen

164,068 units
13,393 yen
536,404 yen
18,555 yen

164,068 units
14,954 yen
537,859 yen
20,562 yen

Outstanding investment units issued
Distribution per unit
Unitholders’ equity per unit
FFO per unit

Note 1: NOI = Rental income for the period (rental revenues – rental expenses) + depreciation for the period
Note 2: FFO = Net income for the period + depreciation for the period
Note 3: LTV (Loan to value ratio) = Total interest bearing liabilities/total assets at end of period

Operating Revenues
and Net Income
Operating revenues

JPY Million

Total Assets
and Unitholders’ Equity
Net income

8,000

JPY Millio
MillionTotal assets

6,000
4,000

5,730

6,252

4,201

100,000

3,346

2,000
1,433

1,630

2nd
period3rd
period200,000
150,000

2,437

2,197

4th
period5th
period2,453

50,000

164,094

Issuer Ratings(as of February 29, 2008)

Unitholders’ Equity

250,000

5,678

Some keys for us in the 7th period are as follows.

6th Period
2nd Period
3rd Period
4th Period
5th Period(ended Feb 28, 2006) (ended Aug 31, 2006) (ended Feb 28, 2007) (ended Aug 31, 2007) (ended Feb 29, 2008)
182 days
184 days
181 days
184 days
181 days
6,252 million yen
5,730 million yen
5,678 million yen
4,201 million yen
3,346 million yen
2,456 million yen
2,199 million yen
2,442 million yen
1,635 million yen
1,435 million yen
2,453 million yen
2,197 million yen
2,437 million yen
1,630 million yen
1,433 million yen

Rating Agency

IssuerRatingRatingOutlook

Moody's InvestorsService, Inc.

A2

StableA+

Stable195,685

202,743

88,24288,00688,245Rating and Investment
Information, Inc.

4th
period5th
period6th
periodNote: Moody’s rating was upgraded to A2 from A3 in
December 2007.

181,509

135,663
66,53966,756

2nd
period3rd
period00

6th
periodTable of Contents
Financial Highlights
Portfolio Growth and Occupancy Rate
“Close,” “New” and “Large” Properties as Core Assets
Diversiﬁcation Highlights
Rent Trends of New and Renewed Contracts
Financial Strategy
Eco Declaration Issued
Brand Strategy
Acquisitions in the 6th Period
Portfolio Map
Portfolio List
Overview of New City Residence
Organizational Chart of Asset Management Company
Governance for Conﬂicts of Interest
Financial Statements
Principal Investment Information

1
2
3
4
5
6
8
9
10
14
16
18
19
19
21
inside Back Cover1

Portfolio Growth and Occupancy Rate

“Close,” “New” and “Large” Properties as Core Assets

Portfolio Growth“Close,” “New” and “Large” Rental Residences“Close”

Total acquisition price(JPY Billion)
320
93

280

Locations close to business zones.

108

104

Properties must be close to CBDs (central business

94

district) as well as a short distance from railway

86
77

240
Number of assets

200
160

Portfolio size

120

(No. of leasable units)

80

61.0
(2,067)122.4(4,526)96.8(3,766)167.0(5,779)150.4(5,409)50

stations.

189.3(6,875)181.9(6,479)“Large”“New”

40

Dec 2004

Aug 2005

Feb 2006

Aug 2006

Feb 2007

Aug 2007

Feb 2008(At listing)(End of 1st period)(End of 2nd period)(End of 3rd period)(End of 4th period)(End of 5th period)(End of 6th period)

Buildings constructed based on recent
regulations.

Properties having well-equipped common
spaces that only large properties can afford.

Properties must comply with the most recent/newest

Properties must have well-equipped common spaces

standards for earthquake resistance, building

including hotel-like entrance halls, concierge services

speciﬁcations and security facilities.

and lounges with excellent views.

Note 1: The asset management company partially revised its Management Guidelines on March 1, 2008.
Note 2: The revised Management Guidelines designate Minato, Shibuya, Shinjuku, Chiyoda, Chuo, Shinagawa, Toshima and Meguro Wards as the Tokyo Central Area, and positions it as thecore focus area of the portfolio.

Tokyo Central Area and Core Assets
Occupancy Rate by Area

New City Residence owns “close,” “new” and “large” core assets located in the Tokyo Central Area, as indicated in the table below.
NCR Ikebukuro Precious Tower(tentative name) (to be acquired)

3rd period(March 2006~August 2006)(%)

4th period(September 2006~February 2007)

5th period(March 2007~August 2007)

6th period(September 2007~February 2008)

100

95

Catherina Mita Towersuite (NCR)

L o c a t i o n : 3-21-13, Nishi Ikebukuro,
Toshima-Ku, Tokyo
Acquisition price: 27,691 million yen
Acquisition date: To be acquired by October 31, 2008
Number of units: 404 units
Structure, ﬂoors: RC, 32F/B2F
Completion date: December 2006

L o c a t i o n : 4-16-1, Shiba, Minato-Ku, Tokyo(West Ark)
4-16-2, Shiba, Minato-Ku, Tokyo(East Ark)
Acquisition price: 16,200 million yen
Acquisition date: December 22, 2006
Number of units: 264 units (compartmentalized
ownership equity of 34.5%),
Structure, ﬂoors: RC, 36F/B2F (East Ark)RC, 28F/B2F (West Ark)
Completion date: August 2006

Toshima-Ku
Ikebukuro

Shinjuku-Ku

90

Shinjuku

Chiyoda-Ku
Tokyo

85

Shibuya-Ku

80

Tokyo Central Area

Tokyo 23 Wards excl. Central Area

Greater Tokyo excl. Tokyo 23 Wards

Regional Cities

Minato-Ku

Chuo-Ku

ShibuyaTotal

NCR Takanawa

75

Mar
2006

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan
2007

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan
2008

Feb

Mar-06

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan-07

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan-08Feb

MeguroShinagawaMeguro-Ku

Total 94.4% 90.6% 91.5% 89.4% 91.1% 92.3% 93.7% 94.0% 94.6% 90.0% 92.5% 94.2% 91.1% 91.9% 92.4% 93.8% 95.1% 92.0% 92.3% 91.5% 92.1% 92.7% 93.0% 93.8%

Core assets
Other properties

Shinagawa-Ku<End of 4th period: 94 properties>
94.2% 94.7% 94.3% 94.5% 95.2% 95.5% 95.6% 95.6% 94.2% 94.8% 95.0% 95.2% 95.4%

NCR Shinagawa Seaside Tower<End of 5th period: 104 properties>
92.0% 92.8% 93.4% 93.9% 94.1% 94.2% 94.4%

Note: “Tokyo Central Area” comprises Minato, Shibuya, Shinjuku, Chiyoda, Chuo, Shinagawa, Toshima and Meguro Wards. “Tokyo 23 Wards excluding Tokyo Central Area” comprises all
Tokyo 23 wards excluding the aforementioned 8 wards. “Greater Tokyo excluding Tokyo 23 Wards” comprises Tokyo Prefecture (excluding Tokyo 23 wards), and Kanagawa, Chiba andSaitama Prefectures. “Regional Cities” comprises all other areas excluding the aforementioned.

2

L o c a t i o n : 2-17-12, Takanawa,
Minato-Ku, Tokyo
Acquisition price: 10,995 million yen
Acquisition date: January 11, 2006
Number of units: 169 units
Structure, ﬂoors: SRC, 12F
Completion date: August 2005

L o c a t i o n : 4-10-18, Higashi-Shinagawa,Shinagawa-Ku, Tokyo
Acquisition price: 9,350 million yen
Acquisition date: June 30, 2006
Number of units: 208 units
Structure, ﬂoors: RC, 25F/B2F
Completion date: November 2005

3

Diversiﬁcation Highlights

Rent Trends of New and Renewed Contracts
Rent Trends

5th Period (as of August 31, 2007)

6th Period (as of February 29, 2008)

No. of Properties (properties)

104

108

(Fiscal Period)

Portfolio Size (JPY billion)

181.9

189.3

2nd

No. of Leasable Units (units)

6,479

6,875

3rd

29.8% (230)

58.3% (451)

11.9% (92)

PML (%)

2.5

2.5

4th

27.1% (260)

64.0% (614)

9.0% (86)Comparing new rents to old rents at the time of tenant replacement (new leases) and renewals

Increase

Unchanged

Decrease

Total
24.4% (133)

57.6% (314)

18.0% (98)Note: PML, or probable maximum loss, refers to the probability of the maximum loss from an earthquake and in this case the level of damage that may result from the assumed
maximum earthquake size (large earthquake that occurs once every 475 years = large earthquake with 10% or greater probability of occurring within 50 years) assumed for the

5th

36.5% (487)

57.9% (773)

5.6%
(75)

6th

36.2% (403)

59.6% (663)

4.2%
(47)

assumed scheduled use period expressed as a percentage (%) of the replacement cost of the expenses expected to be required to restore the damages.

Geographic
SpreadVacated (new leases)
19.8%

22.2%

2nd

Tokyo Central Area

36.2% (113)

33.3% (104)3rd

49.8% (218)4th

52.5% (246)

30.4% (95)
29.7% (130)

20.5% (90)Tokyo 23 wards(excluding Central Area)

9.8%

60.0%

Greater Tokyo(excluding Tokyo 23 wards)
Regional

56.5%

9.5%

10.3%

11.9%

5th

59.8% (390)6th62.9% (385)

33.5% (157)

14.1% (66)28.8% (188)11.3% (74)

29.6% (181)

7.5%
(46)

Renewals

Building Age
8.3%

8.0%

8.6% (20)

90.1% (210)

1.3% (3)

3rd

3.6%
(12)

95.8% (321)

0.6% (2)

4th

2.9%
(14)

93.1% (457)

4.1% (20)5th14.2% (97)85.7% (585)

0.1% (1)

6th

3.6%
(18)

96.2% (482)

0.2% (1)

4.9%

5.2%

26.0%

Less than 2 years
2 to 4 years

2nd

18.6%

37.3%
20.6%

4 to 6 years
6 to 8 years
More than 8 years

Note 1: The number in parentheses is the number of units.

30.9%

Average building
age: 3.5 years

Average building
age: 3.8 years

40.2%

Unit Type

Unit Price of Rent Per Tsubo (occupied area basis)
4.9% 0.6%

5.1% 0.6%

110

Overall Portfolio

SingleUrban Family

Note 2: The percentages represent the proportion of the total number of units.

30.3%

28.6%

108

33.8%

34.9%

106

FamilyPremium

104

Other
30.9%

30.4%

102
100

Note 1: Ratios of building age and geographic spread are based upon acquisition price. That of unit type is based on net rentable area.
Note 2: Other in the unit type includes non-residential-use areas such as retail outlets, ofﬁces and other commercial spaces.
Note 3: “Tokyo Central Area” comprises Minato, Shibuya, Shinjuku, Chiyoda, Chuo, Shinagawa, Toshima and Meguro Wards. “Tokyo 23 Wards excluding Tokyo Central Area”
comprises all Tokyo 23 wards excluding the aforementioned 8 wards. “Greater Tokyo excluding Tokyo 23 Wards” comprises Tokyo Prefecture (excluding Tokyo 23 wards), andKanagawa, Chiba and Saitama prefectures. “Regional Cities” comprises all other areas excluding the aforementioned.
Note 4: Figures are rounded to the nearest ﬁrst decimal point. Thus, the above sums may not necessarily be 100%.
Note 5: CBRE Residential Management K.K. (asset management company) changed part of the Management Guidelines on March 1, 2008. Geographical spread is based on the98
Aug 2005(End of 1st Period)

Feb 2006(End of 2nd Period)

Aug 2006(End of 3rd Period)

Feb 2007(End of 4th Period)

Aug 2007(End of 5th Period)

Feb 2008(End of 6th Period)

Note 1: Entered ﬁgures are indexes calculated by setting the unit price of rent per tsubo (rent per 3.3m 2) at the end of August 2005 (end of 1st period) as 100. Assets already sold havebeen excluded.
Note 2: Based on leased space exclusive of space for shops and ofﬁces.
Note 3: Figures have been rounded to the ﬁrst decimal place.

Management Guidelines after the change.

45

Financial Strategy

Financial Strategy (2)Financial Strategy for 6th Fiscal Period

Diversiﬁcation of Maturity Datest&YUFOEFEBOETQSFBEPVUSFQBZNFOUEBUFT

Reduction of reﬁnancing risks – Reﬁnancing from secured long-term borrowing (3 years) to unsecured long-term borrowing (5 years)(JPY Billion)
t%JWFSTJmFEQSPDVSFNFOUNFBOTBOETQSFBEPVUMFOEFST

(As of the end of February 2008)

40.0

Investment corporation bonds

Securing ﬁnancing mobility and stability – Expanding correspondent ﬁnancial institutions, issuance of investment corporation bonds

Loans

30.1

30.0

t1SPNPUFETIJGUUPMPBOTXJUImYFEJOUFSFTUSBUFT

30.1
22.0

Reduction of the risk that interest rates will rise − Purchased interest rate swaps
20.0

18.9

18.4

14.0

18.9

t3FDFJWFEJNQSPWFESBUJOHT

12.0
11.0

10.0

11.0

5.7

8.0

5.7

Interest-bearing Debt

Investment corporation bonds(JPY Billion)

Short-term loans (Note)

5.0

6.4

5.0

0

7th
7th
7t
Periodd

Long-term loans

8th
88t
th
Pe
Period

99th
10th
10thh
Periodd Period
Pe

11th
11
Period
Per d

12th
12thh
Period13th
13PeriodPer

14th
Periodd

15th
15thh
Periodd

16th
166thhPeriodPe

17
17thPeriodPe

18th
Periodd

19
19th
thh
Period

150
120

111.1

104.3

90
60

62.2
25.5

30

36.7

66.9
14,0

94.6
14.0

90.3
14.0

31.0

36.9

38.8

43.6

Average interest rate

49.0
37.5

(Years)

29.7

6.0

16.0

0

Average remaining period of long-term loans

31.1

36.9
43.7

Average Remaining Loan Periods and Changes in Average Interest Rate

31.0

End of 1st Period

End of 2nd Period

End of 3rd Period

End of 4th Period

End of 5th Period

End of 6th Period(Aug-2005)(Feb-2006)(Aug-2006)(Feb-2007)(Aug-2007)(Feb-2008)

1.19%

4.0

Note: Short-term loans include long-term loans payable due within one year.

1.55%

1.42%

0.92%

0.83%

0.82%

3.8 years
3.1 years

3.0 years

2.7 years

2.5 years

2.0
1.9 years

Ratios of Long-term Fixed Interest Rate Borrowings and Long-term Liabilities
0

(%)

76.1%

80

71.5%
53.8%

60

64.2%

58.5%

55.8%

52.3%

25.6%

Ratio of long-term ﬁxed interest rateborrowings (%) (Note 2)

16.4%
0

Aug-06

Feb-07Aug-07(End of 3rd period)(End of 4th period)(End of 5th period)(End of 6th period)

5th
Period6th
PeriodChanges in LTV Ratios

Ratio of long-term liabilities (Note 1)

36.2%
20

Feb-06(End of 2nd period)

67.7%

41.0%
40

Feb-08Aug-05(End of 1st period)

End of 1st Period

End of 2nd Period

End of 3rd Period

End of 4th Period

End of 5th Period

End of 6th Period(Aug-2005)(Feb-2006)(Aug-2006)(Feb-2007)(Aug-2007)(Feb-2008)

65%
60%

2nd
Period1st
Period4th
Period3rd
Period56.4%

55%Note 1: Interest-bearing liabilities with 1 year or more remaining until the repayment date expressed as a percentage of the balance of interest-bearing liabilities.
Note 2: Interest-bearing liabilities with ﬁxed interest rates (including the recent interest rate swap agreement) expressed as a percentage of the balance of interest-bearing liabilities.
Note 3: The ﬁgures have been rounded to the ﬁrst decimal place.

50%
45%
40%
35%

Aug-05

Feb-06

Aug-06

Feb-07Aug-07

Feb-08Note : LTV (Loan to Value Ratio) = Total interest-bearing liabilities / (Total interest-bearing liabilities + Unitholders' capital)

6

7

Eco Declaration Issued

Brand Strategy
Tenant Service Programs that Support Living in Rental Housing

Eco Declaration
We propose “leading to the future” as a new value of rental housing.
New City Residence is convinced that if we are conscious of our imminent environment then it
will alleviate environmental issues on a global scale. Consequently, while enhancing New City
Residence’s value as an investment corporation engaged in the rental housing business throughthe provision of residential space in which tenants can lead an afﬂuent lifestyle, we will seek tocontribute to realizing a sustainable society by promoting environmental actions together withtenants.

This mark symbolizes the stance ofenvironmental initiatives launched
by New City Residence. This mark isused with activities related toenvironmental services conductedby New City Residence.

New City Club Off

New City Residence Card

Tenants living in New City Residence

Tenants will be issued an exclusive “New City Residence” credit card

properties can use services at discount rates.

upon application.

[Service menu]- Resorts- Entertainment- Gourmet- Leisure- Esthetics- Sports, etc[Beneﬁts]- Bonus or mileage point system linked to thepayment of rent
- Automatic bank account debit for the paymentof rent- Guarantor not required for leases, etc.

New City 24

New City Patrol

New City 24 is New City Residence's around-the-clock call center

New City Patrol comprises a team of building

staffed by dedicated maintenance personnel ready to assist tenants

and security professionals that make monthly

with everything from water leaks and air conditioning

inspections of New City Residence properties from

Environmental Action Plan
1.“Environment” shall be added as a focus of investment in order to promote investment in environmentally-friendly rental housing, and efforts
shall be made to develop housing with relatively low environmental loads and enrich portfolio assets.
2. Living styles that make effective use of resources and energy shall be proposed by offering “environmental services” for tenants that emphasize
sharing and other use values.
3. In addition to, of course, complying with environmental laws and regulations, business shall be advanced with a conscious awareness of social
responsibilities, and measures shall be taken that are intended to minimize environmental loads associated with business activities and raisingproblems to questions from new tenants before moving in.

environmental awareness with the partners that are engaged in the business.

the perspective of the tenant,
Coordination

Reportingconﬁrming the proper upkeep ofthe exterior, cleaning, building
management, and security features.

Environmental Services
Car Sharing
In the car sharing service, New City Residence provides cars that tenants can jointly use.

New City Reform

Living Option

Unit renovations are provided under a central structure handling

A variety of services are provided in relation
to clothing, meals and living.

everything from orders to construction via New City Residence's

New City Residence not only believes the service is economical and convenient, but hopes

property manager, New City Property Reformation and renovation casethat it will deepen environmental consciousness.

Services K.K., and a partner company

Tatami unit

(within the Tokyo Metropolitan Area
and Osaka Area).

Akari Anshin Service (ﬂuorescent lamp recycling)*

User

Operating
Owner Agreement

Lighting in common spaces at properties owned by New City Residence is provided by using

Proper disposal

Lending

ﬂuorescent lamps and incandescent lamps rented by the service provider. After lamps are used fortheir full life, they are returned to the service provider for recycling in an appropriate manner.

Management of manifest
Contract with processor
Verification of disposal center

Service Contract
Client[Services]- Home delivery of food
- Cleaning of clothes- Housecleaning- Furniture and home appliance rentals- Shopping services, etc.
(through direct contracts between tenants andservice companies)

ReturnFurthermore, the ﬂuorescent and incandescent lamps use recycled glass.
* Akari Anshin Service is a registered trademark of Matsushita Electric Industrial Co., Ltd., and the service is currently in application for a business model patent.

Bicycle Sharing

Increased Greenery

New City Residence provides a bicycle

New City Residence provides tenants with ambience andsharing service in which tenants can jointly

comfort by building an environment in which they can sense

use bicycles in a casual manner. With the“greenery.” New City Residence is working to provide more

service, New City Residence supports thegreenery to meet the requirements for “living with nature

reduced use of resources and energy in dailynear at hand,” in a manner suitable to the situation.

Service
ProviderWelcome Kit

Exclusive Website for Tenants

Upon signing of new rental contracts, tenantsUseful information can be obtained through

New City Residence
Eventsare given booklets describing available services

the exclusive tenant homepage, which also

Soccer and pet events have been held.

and providing useful information.

serves as a communication conduit between
tenants and property management.

[Content]- Maps of surrounding area
- Schedule chart for moving in- Contacts for inquiries- Available services- Questionnaire postcard, etc.

situations.
Note: The environmental services are provided through New City Property Services K.K.

8

Note 1: The tenant service programs are provided through New City Property Services K.K., a main property management company for New City Residence.
Note 2: The tenant service programs are not provided at all of the properties and real estate in trusts that New City Residence owns. At some properties, a limited number of service programs are provided.

9Acquisitions in the 6th Period
R-26

NCR Higobashi Tower

C-39

NCR Shinjuku
Location

2-6-11, Shinjuku,
Shinjuku-ku, Tokyo

Acquisition price

3,597 million yen

Acquisition date

January 30, 2008

Structure, ﬂoors

RC, 15F/ B1F

NRA

3,150.80m

Number of units

122 units

Unit typeS (76%),UF (22%),2other (2%)
Completion dateNovember 2007

Appraisal value

3,650 million yen(CR 4.5% (NCF))

M-30 NCR Yoga

Location
Acquisition price
Acquisition date
Structure, ﬂoors

1-2-24, Tosabori, Nishi-ku Osaka-shi
4,200 million yen
October 19, 2007
RC, 21F/B1F
26,230.20m
NRA
Number of units 194 units
Unit typeS (69%), UF (31%)
Completion date March 2007
Appraisal value 4,200 million yen (CR 5.0% (NCF))

10*Appraisal values are based on the appraisal reports as of the date of acquisition. Cap rates are based on net cash ﬂow.

Location

1-3-12, Tamagawadai, Setagaya-ku, Tokyo

Acquisition price

1,305 million yen

Acquisition date

October 19, 2007

Structure, ﬂoors

RC, 9F

NRA

1,472.38m

Number of units

45 units

Unit typeS (47%), UF (53%)

Completion dateJune 2007

Appraisal value

1,310 million yen (CR 4.8% (NCF))

2*Appraisal values are based on the appraisal reports as of the date of acquisition. Cap rates are based on net cash ﬂow.

11Acquisitions in the 6th Period (continued)
R-17

M-31 NCR Sumiyoshi
Location

NCR Maruyama Urasando

2-8-11, Sumiyoshi,

Location

Koto-ku, Tokyo

21-1-47, Minami Nijo Nishi,
Chuo-ku, Sapporo-shi, Hokkaido

Acquisition price

1,170 million yen

Acquisition date

October 31, 2007

Acquisition price

486 million yen

Structure, ﬂoors

SRC, 11F

Acquisition date

September 27, 2007

NRA

1,362.60m

Number of units

60 units

Structure, ﬂoors

RC, 10F

Unit typeS (100%)NRA

1,522.89m

Completion date

September 2007

Number of units

36 units

Appraisal value

1,170 million yen
Unit type

UF (42%), F (58%)

Completion dateAugust 2007

Appraisal value

517 million yen (CR 5.8% (NCF))

2(CR 4.7% (NCF))

R-19

2

NCR Hakataeki Higashi

M-35 NCR Oshiage
Location

3-5-2, Mukoujima,
Sumida-ku, Tokyo

Acquisition price

1,267 million yen

Acquisition date

December 19, 2007

Structure, ﬂoors

RC, 11F

NRA

1,785.24m

Number of units

60 units

Unit typeS (58%),UF (42%)

Completion dateAugust 2007

Appraisal value

1,280 million yen

2(CR 5.0% (NCF))

12*Appraisal values are based on the appraisal reports as of the date of acquisition. Cap rates are based on net cash ﬂow.

Location
Acquisition price
Acquisition date
Structure, ﬂoors
NRA
Number of units
Unit type
Completion date
Appraisal value

5-31, Hie-cho, Hakata-ku, Fukuoka-shi, Fukuoka Prefecuture
1,230 million yen
November 30, 2007
RC, 10F
2
3,061.60m
115 units
S (81%), UF (19%)
November 2007
1,250 million yen(CR 5.5% (NCF))*Appraisal values are based on the appraisal reports as of the date of acquisition. Cap rates are based on net cash ﬂow.

13

Portfolio M
Map
ap
TOKYO CENTRAL AREATOKYO 23 WARDS
M-27
M-19 M-10
M-35
M-22
M-3
M-15

Toshima
C-41

C-45

C-44

M-29

M-25
C-43

R-17

M-14

C-16

M-16
C-20
C-23 C-4

C-17

M-30

C-25



 C-29

C-39

C-37
C-28
C-19
C-18 C-22

Chiyoda

C-5
C-15

M-28

M-6
M-9

M-11

C-11 C-24
C-10 C-30
C-34

C-1 C-3
C-2

Chuo

C-33
C-32

Shibuya

GREATER TOKYO

M-2

C-9 C-8
C-35

C-12
C-14

M-31

M-13
M-8

M-4
Shinjuku

SapporoR-1

G-6

MinatoC-13 C-38

C-40

Sendai
R-23

C-27
C-31 C-36

MeguroR-22

Shinagawa
C-47
C-42

R-24

C-48

C-46

R-6

OSAKA CITY
Asahi

Yodogawa

Fukuoka
R-3
R-4
R-19

R-5

R-9

R-7

Nagoya

TOKYO

R-21
R-2

OSAKA

R-15

Miyako
jima

Kita
Nishi
yodogawa

TsurumiFukushima

Joto

R-12
Chuo

Nishi

Konohana

Higashinari
MinatoNaniwaTennoji
Ikuno

REGIONAL CITIESTaisho
Nishi
nari
Abeno

Note 1:“Tokyo Central Area” comprises Minato, Shibuya, Shinjuku, Chiyoda, Chuo, Shinagawa, Toshima and Meguro Wards. “Tokyo 23 Wards excl. Central Area comprises the 23 wards”
excluding the aforementioned 8 wards. “Greater Tokyo excl. Tokyo 23 Wards” comprises the Tokyo Metropolitan Area excluding the 23 wards, but including Kanagawa, Chiba,
and Saitama prefectures. “Regional Cities” comprises all other areas excluding the aforementioned.

14

15

Portfolio List
As of the end of the 6th period (February 29, 2008)

Property Name (Note 2)
No.
Tokyo Central Area (Note 1)
C-1
NCR Minami Aoyama
C-2
NCR Nishi Azabu Twin Tower
NCR Nishi Azabu
C-3
C-4
NCR Ochanomizu
C-5
NCR Sangubashi
NCR Shinjuku Ichibankan (Note 7)
C-6
NCR Shinjuku Nibankan (Note 7)
C-7
C-8
NCR Nihonbashi East
NCR Nihonbashi WestC-9
NCR Ginza Twin I
C-10
C-11
NCR Ginza Twin II
C-12
NCR Harajuku
C-13
NCR Mita
NCR Yoyogi Uehara
C-14
NCR Sendagaya
C-15
C-16
NCR Shinjuku 7 Chome
NCR Ichigaya Sanaicho
C-17
NCR Nihonbashi Ningyocho I
C-18
NCR Nihonbashi Ningyocho II
C-19
NCR Shin-Ochanomizu
C-20
NCR Nihonbashi Ningyocho III
C-22
NCR Jinbocho II
C-23
C-24
NCR Ginza East III
NCR Shinjuku Gyoen I
C-25
NCR Sasazuka (Note 7)
C-26
NCR Takanawadai
C-27
C-28
NCR Nihonbashi Ningyocho IV
NCR Shinjuku Gyoen II
C-29
NCR Ginza East IV
C-30
NCR Takanawadai II
C-31
NCR Minami Azabu
C-32
NCR Minami Azabu East
C-33
NCR Ginza
C-34
C-35
NCR Nihonbashi Suitengu
NCR Takanawa
C-36
C-37
NCR Higashi Nihonbashi
Catherina Mita Towersuite
C-38(New City Residence)
NCR Shinjuku
C-39
NCR Meguro
C-40
C-41
NCR Otsuka
C-42
NCR Jiyugaoka
C-43
NCR Mejiro East
NCR Ikebukuro
C-44
C-45
NCR Kaname-cho
NCR Shinagawa Seaside Tower
C-46
C-47
NCR Yakumo
C-48
NCR TogoshiginzaTokyo 23 Wards excl. Central Area (Note 1)
NCR Todoroki
M-2
NCR Honjo Azumabashi
M-3
NCR Kitazawa
M-4
NCR Senzokukoen
M-6
NCR Monzennakacho
M-8
NCR Denenchofu
M-9
NCR Negishi
M-10
NCR Kamiikedai
M-11
NCR Morishita
M-13
NCR Wakabayashi Koen
M-14
NCR Asakusabashi
M-15
NCR Gakugeidaigaku
M-16
NCR Iriya
M-19
NCR Ueno Tower
M-22
NCR Morishita West
M-25
NCR Minowa
M-27
NCR Jiyugaoka West
M-28
NCR Nakano
M-29

Acquisition Price No. of Leasable
Units (units)(million yen)
(Note 4)Completed(Note 3)
3,783
3,315
3,143
2,300
1,734
1,622
1,480
1,133
968
1,220
986
765
695
626
577
1,230
1,290
1,160
1,662
1,470
841
3,140
1,180
842
580
510
1,530
840
1,260
4,000
3,332
10,995
4,930

RentalOccupancy Rate
Revenueat End of Period(%) (Note 5) (thousand yen)

Percentage of Total
Rental Revenue(%) (Note 6)

84.8
88.2
90.9
95.0
95.4
98.6
94.2
98.0
93.8
100.0
96.2
100.0
79.2
94.8
100.0
97.7
100.0
100.0
90.1
98.4
95.3
100.0
96.7
100.0
100.0
100.0
98.0
83.3
95.0
91.4
90.6
90.8
97.1

110,108
85,98482,08959,282
47,841
20,0239,409
51,504
43,97935,26629,56230,47831,56822,883
20,33818,773
17,32337,301
39,31533,76650,29542,33525,84290,00030,68832,367
27,83317,022
17,301
43,07722,727
40,661
104,338
99,792
286,064
139,942

1.9
1.5
1.5
1.0
0.8
0.4
0.2
0.9
0.8
0.6
0.5
0.5
0.6
0.4
0.4
0.3
0.3
0.7
0.7
0.6
0.9
0.7
0.5
1.6
0.5
0.6
0.5
0.3
0.3
0.8
0.4
0.7
1.8
1.8
5.1
2.5

94.1

503,486

8.9

Nov. 2007
Apr. 2000
Sep. 2004
Apr. 2004
Apr. 2005
Jan. 2005
Aug. 2005
Nov. 2005
Nov. 2005
May 2006

RC, 14F
SRC, 15F/B1F
RC, 5F/B1F
RC, 8FRC, 4F/B1F
RC, 10F
SRC, 12F
RC, 12F
SRC, 12FRC, 5F
SRC, 11F
RC, 4F/B1F
RC, 4FRC, 5F/B1F
RC, 4F/B1F
SRC, 13F
SRC, 12F
SRC, 10F/B1F
RC, 10F
RC, 11F
SRC, 12F
SRC, 15F
RC, 9F
SRC, 13FRC, 10F
SRC, 11F
RC, 6F/B1F
RC, 6FRC, 9FRC, 14F
SRC, RC, 12F
SRC, 12F
RC, 16F/B1F
RC, 28F/B2F,
RC, 36F/B2F
RC, 15F/B1F
RC, 7F
SRC, 13FRC, 5FRC, 8F
SRC, 14F
RC, 13FRC, 25F/B2F
RC, 3F/B1F
RC, 10F

100.0
97.6
97.9
96.9
92.6
100.0
97.3
94.6
84.0
95.4

8,545
30,61240,22743,33038,067
95,614
43,198275,878
30,78865,173

0.2
0.5
0.7
0.8
0.7
1.7
0.8
4.9
0.5
1.2

Mar. 1993
Sep. 2003
Jan. 2002
Apr. 1995
Sep. 2000
Jul. 1995
Jul. 2000
Mar. 2002
Sep. 2004
Feb. 2004
Jan. 2005
Apr. 2005
Jun. 2005
Feb. 2005
May 2007Jun. 2007
Aug. 2007
Mar. 2007

RC, 3F/B2F
SRC, RC, 14F
RC, 4FRC, 3FRC, 9FRC, 3FRC, 8F
S, 4F
RC, 11FRC, 4FRC, 9FRC, 4F
SRC, 12F
SRC, 14F/B1F
RC, 11F
RC,15FRC, 3F/B1F
RC,12F

100.0
93.4
93.8
94.2
100.0
100.0
90.3
100.0
100.0
91.1
100.0
100.0
100.0
95.5
100.0
90.6
87.1
100.0

57,56537,052
24,59528,552
17,712
19,605
10,786
8,932
31,88529,371
31,11840,53825,286
93,08828,127
34,623
13,383
28,104

1.0
0.7
0.4
0.5
0.3
0.3
0.2
0.2
0.6
0.5
0.6
0.7
0.4
1.6
0.5
0.6
0.2
0.5

Aug. 2002
Mar. 2003
Mar. 2002
Aug. 2002
Oct. 1998
Apr. 2003
Apr. 2003
Sep. 2003
Sep. 2003
Sep. 2000
Feb. 2003
Oct. 2000
Mar. 2000
Jan. 1995
Sep. 2000
Aug. 2004
Aug. 2004
Jul. 2004
Dec. 2004
May 2004
Jun. 2004
Sep. 2003
Feb. 2004
Apr. 2003
Mar. 2004
Dec. 2003
Sep. 2004
Jul. 2004
Sep. 2005
Oct. 2005
Jul. 2005
Aug. 2005
Feb. 2006

3,597
1,050
1,290
1,470
1,080
3,227
1,360
9,350
1,160
1,960

62
60
37
44
26
62
55
40
33
21
30
25
21
23
21
32
38
32
63
60
41
108
32
48
27
20
40
24
40
96
88
169
103
264
(759) (note 8)
122
26
54
40
29
87
73
208
18
80

1,850
1,122
1,070
921
524
511
356
238
985
970
870
1,210
675
2,990
810
1,720
720
1,250

22
35
15
19
31
17
12
12
38
23
32
38
22
102
40
78
28
42

16,200

Structure
Floor

Aug. 2006

Property Name (Note 2)No.
M-30
NCR Yoga
M-31
NCR Sumiyoshi
M-35
NCR Oshiage
Greater Tokyo excl. Tokyo 23 Wards (Note 1)
G-1
NCR Yokohama East
G-2
NCR Funabashi Honcho
G-3
SH Motosumiyoshi
G-4
NCR Toyoda
G-5
NCR Nishi Funabashi
G-6
NCR Maihama
G-7
NCR Ichikawamyoden
G-8
NCR Kumegawa
G-9
NCR Urayasu
G-10
NCR Minamigyotoku I
G-11
NCR Minamigyotoku II
G-12
NCR Nogeyama
G-13
NCR Minamirinkan
G-14
NCR Shonan
G-15
LM Fuchinobe Honcho
G-16
LM Higashi Oume Daisan
G-17
PT Ichikawa
G-18
PT Shioyaki
G-19
PT Horie
Regional Cities (Note 1)
R-1
NCR Ohdori-koen
R-2
Goshikiyama Heights
R-3
NCR Nishikoen
R-4
NCR Nishi Ohori
R-5
NCR Kakogawa
R-6
LM Maebashi Nishikatakai
R-7
Aprile Tarumi
R-9
Crest Kusatsu
R-10
NCR Honmachi East
R-11
NCR Shin-Umeda
R-12
NCR Shizuoka Takajo
R-13
NCR Abeno
R-14
NCR Otedori
R-15
NCR Sakae
R-16
NCR Nipponbashi Kouzu
R-17
NCR Maruyama Urasando
R-19
NCR Hakataekihigashi
R-20
NCR Shinsaibashi East Tower
R-21
NCR Sannomiya
R-22
NCR Kotodaikoen
R-23
NCR Ichibancho
R-24
NCR Omachi
R-25
NCR Uemachidai
R-26
NCR Higobashi Tower
TOTAL

Acquisition Price No. of Leasable
Units (units)
Structure,(million yen)
(Note 4)Completed
Floor(Note 3)
Jun. 2007 RC, 9F
1,305
45
Sep. 2007 SRC, 11F
1,170
60
Aug. 2007 RC, 11F
1,267
60

RentalPercentage of Total
Occupancy Rate
Revenueat End of Period
Rental Revenue(%) (Note 6)(%) (Note 5)(thousand yen)
96.0
19,5290.3
100.0
21,7860.4
100.0
14,332
0.3

6,753
1,083
1,058
1,053
997
844
769
715
653
648
447
469
456
445
222
175
620
310
193

228
86
57 (73) (note 8)
67
81
61
58
31
51
49
35
30
29
19
15 (26) (note 8)
33 (61) (note 8)
40
36
22

Mar. 2003
Mar. 1997
Apr. 1991
Jun. 1992
Mar. 2001
Mar. 2003
Mar. 2003
Dec. 1999
Feb. 2003
Mar. 2003
Mar. 2003
Sep. 2000
Apr. 2002
Feb. 2000
Aug. 1991
May 1992
Apr. 2004
Apr. 1993
Mar. 1991

RC, 21F
SRC, 10F/B1F
RC, 7F/B1F
SRC, 8F
SRC, 10FRC, 6FRC, 5F
SRC, 7FRC, 5FRC, 5FRC, 6FRC, 6FRC, 8FRC, 3F
SRC, RC, 9F
RC, 7FRC, 9FRC, 3FRC, 3F

97.4
100.0
95.3
94.1
98.8
98.4
100.0
97.0
100.0
93.9
94.3
100.0
100.0
84.2
100.0
75.9
100.0
88.9
77.3

231,784
39,73250,601
43,13734,14628,141
26,88622,90022,95021,81014,845
15,113
15,996
14,4799,774
7,053
19,852
13,325
7,301

4.1
0.7
0.9
0.8
0.6
0.5
0.5
0.4
0.4
0.4
0.3
0.3
0.3
0.3
0.2
0.1
0.4
0.2
0.1

726
720
379
258
274
202
1,710
3,830
1,740
1,640
770
5,400
382
1,361
4,780
486
1,230
4,693
1,485
655
965
842
3,214
4,200

40
33
30
17
34
23 (40) (note 8)
99
540
117
108
45
153
31
73
262
36
115
133
112
50
68
72
69
194

Oct. 2000
Aug. 1993
Oct. 2000
May 2000
Sep. 2000
Feb. 1992
Jan. 2003
Feb. 1999
Feb. 2005
Feb. 2005
Feb. 2006
Jan. 2006
Jan. 2006
Feb. 2007
Jan. 2006
Aug. 2007
Nov. 2007
Jan. 2007
Jan. 2007
Feb. 2007
Jun. 2007
Jun. 2007
Jan. 2007
Mar. 2007

RC, 9F/B1F
RC, 7FRC, 11FRC, 5FRC, 3FRC, 6FRC, 12F
RC, 11F/B2F
RC, 15FRC, 11F
RC, 12F
SRC, 15F
RC, 11F
RC, 13F
RC, 14F/B1F
RC, 10F
RC, 10FRC, 28F
RC, 15FRC, 11F/B1F
RC, 10F RC, 9F
RC, 13F
RC, 15F/B1F
RC, 21F/B1F

95.1
100.0
100.0
94.4
100.0
93.8
100.0
100.0
95.3
92.5
100.0
92.9
84.0
94.8
93.8
63.2
44.0
90.3
99.1
97.6
97.3
100.0
52.3
89.2

26,302
27,988
16,526
11,373
16,0699,683
62,148
158,862
62,39958,61432,620173,783
12,715
46,151
154,691
7,854
5,936
165,604
54,213
21,59536,23431,54930,72595,705

0.5
0.5
0.3
0.2
0.3
0.2
1.1
2.8
1.1
1.0
0.6
3.1
0.2
0.8
2.7
0.1
0.1
2.9
1.0
0.4
0.6
0.5
0.5
1.7

189,268

6,875

93.8

5,647,172

100.0

Note 1: “Tokyo Central Area” comprises Minato, Shibuya, Shinjuku, Chiyoda, Chuo, Shinagawa, Toshima and Meguro Wards. “Tokyo 23 Wards excl. Central Area”
comprises the 23 wards excluding the aforementioned 8 wards. “Greater Tokyo excl. Tokyo 23 Wards” comprises the Tokyo Metropolitan Area excluding the
23 wards, but including Kanagawa, Chiba, and Saitama prefectures. “Regional Cities” comprises all other areas excluding the aforementioned.
Note 2: Under the Property Name column, "NCR" is the acronym for New City Residence, "LM" for Lions Mansion, "SH" for Sonnen Heim and "PT" for Park Terrace.
Note 3: The Acquisition Price column has the acquisition price of already acquired assets entered.
Note 4: The No. of Leasable Units column indicates the leasable units of individual real estate and trust real estate as of February 29, 2008.
Note 5: The Occupancy Rate column indicates the ratio that the leased ﬂoor space of individual real estate and trust real estate comprises of their total leasable ﬂoor
space, and the data is as of February, 2008.
Note 6: The Percentage of Total Rental Revenue ﬁgures are rounded to the ﬁrst decimal place.
Note 7: C-6 (NCR Shinjuku Ichibankan), C-7 (NCR Shinjuku Nibankan) and C-26 (NCR Sasazuka) were sold on October 30, 2007. Figures entered in the above Rental
Revenue and Percentage of Total Rental Revenue columns are for the two months from September 1 to October 30, 2007.
Note 8: The No. of Leasable Condominiums column for the compartmentalized ownership buildings C-38 (Catherina Mita Towersuite), G-3 (SH Motosumiyoshi), G-15
(LM Fuchinobe Honcho), G-16 (LM Higashi Oume Daisan) and R-6 (LM Maebashi Nishikatakai), has the number of Condominiums included in acquired assets
entered with the number of Condominiums for the entire building entered in the parentheses.
Note 9: Figures indicated in the above table are rounded off to the last indicated ﬁgure. As such, the sum of the individual items may not add up to the subtotal or
total.

16

17

Overview of New City Residence

Organizational Chart of Asset Management Company
General Meeting ofUnitholders

Investment Corporation Structure

Statutory Auditor

Property Information Providers
Transfer Agent

The Chuo Mitsui Trust and Banking Co., Ltd.
Sumitomo Real Estate Sales Co., Ltd.
Tokyu Livable, Inc.
Mitsui Real Estate Sales Co., Ltd.

New City Residence
Investment Corporation

New City Corporation K.K.

Property Management Company

Executive Director
Jun Arai
Supervisory Director
Koichi ShimadaSupervisory Director
Rika Nakamura

Account Auditor(Temporary)PricewaterhouseCoopers Aarata

Asset Management
Company

Investment Committee
Outside Specialist

President
Administrative Agent/Asset CustodianCompliance & Risk
Management Ofﬁce

Internal Audit Ofﬁce

Mizuho Trust & Banking Co., Ltd.

Investment & AssetManagement Division
Investment Corporation BondManagement Company, Paying Agent
The Chuo Mitsui Trustand Banking Co., Ltd.

New City Property Services K.K.
and others

Compliance & Risk
Management Committee

General Meeting ofUnitholders
Board of Directors

Information and Property Provider

Mitsubishi UFJ Trustand Banking Corporation

Board of Directors

The Sumitomo Trust& Banking Co., Ltd.

Finance Division

Acquisition
Department

Capital Strategy
Department

Asset Management
Department

Finance
Department

Planning
Department

Accounting
Department

Administration Department

IR Department

Information Provider

Governance for Conﬂicts of Interest
interest
CB Richard Ellis Investors, LLC
CB Richard Ellis Investors Holdings K.K

CBRE Residential
Management K.K.

A three-layer check system, including outside personnel, has been established to monitor transactions
between stakeholders. The stakeholders are deﬁned in the Investment Trust Law of Japan as shareholders with a
10% or more share of the asset management company, or those who have established special-purpose vehicles onbehalf of asset management afﬁliates.
Drafting Department

Notes to the Investment Corporation Structure
ASSET MANAGEMENT COMPANY: CBRE Residential
Management K.K. provides services including mattersrelating to the management of investment assets andthe procurement of funds by New City Residence,submitting reports on investment assets to New City
Residence and establishing asset management plans.
ADMINISTRATIVE AGENT/ASSET CUSTODIAN: Mizuho
Trust & Banking Co., Ltd. undertakes administration
related to the issuance of investment units, administrationof accounting matters and tax payments, preparation of
accounting records and ﬁnancial statements and otherservices.
TRANSFER AGENT: Mitsubishi UFJ Trust and Banking
Corporation administrates the register of unitholders andpayment of distributions to unitholders under the
storage transfer system of the Japan Securities
Depository Center, Inc., and provides certain otherservices concerning unitholders.

18

INVESTMENT CORPORATION BOND MANAGEMENTCOMPANY AND PAYING AGENT: The Chuo Mitsui Trustand Banking Co., Ltd. and The Sumitomo Trust &Banking Co., Ltd. receive payments, preserve debt,
conduct management functions related to investment
corporation bonds, repayment of principal to theinvestment corporation creditor of the investment
corporation bonds and payment of interest on thesebonds.
INFORMATION AND PROPERTY PROVIDER: New City
Corporation K.K. provides New City Residence with realestate information concerning properties for acquisition,in addition to other business support.
INFORMATION PROVIDER: CB Richard Ellis Investors LLC
and CB Richard Ellis Investors Holdings K.K. provide
certain information and advice in support of CBRE
Residential Management K. K.

PROPERTY MANAGEMENT COMPANY: New City
Property Services K.K. and other companies provide
services including the administration of repairs,
maintenance, renovation, improvements and inspection
on a limited basis, the purchase and supervision of
installation and related work regarding equipment,
ﬁxtures, materials and consumables; leasing
management service administration; lease execution andmaintenance, and collection of lease payments andoverdue rent.
PROPERTY INFORMATION PROVIDER: The Chuo Mitsui
Trust and Banking Co., Ltd., Sumitomo Real Estate Sales
Co., Ltd., Tokyu Livable, Inc. and Mitsui Real Estate Sales
Co., Ltd. provide information relating to real estate heldby, or to be developed and held by third parties.

Compliance Ofﬁcer
Chief Investment Ofﬁcer
Chief Financial Ofﬁcer
Compliance &Risk Management Committee[ Members ]All directors,
Chief Administration Ofﬁcer,
Chief Financial Ofﬁcer, Chief Investment Ofﬁcer
and Compliance Ofﬁcer

Investment Committee

Investment Committee[ Members ]President,
Chief Investment Ofﬁcer,
Chief Financial Ofﬁcer,
all directors including part-time
directors and outside specialists

Compliance & Risk
Management Committee
Board of Directors

Board of Directors[ Members ]All directors including part-time
directors and auditor

In addition to the efforts to conform to legal requirements, the asset management company has established provisions in its
internal rules that relate to behavior and transactions with extended interested parties, including the Management Guidelines andthe Committee Rules. These provisions have been established to better allow the asset management company to fulﬁll its
responsibilities in the management of investment assets.

19

Financial Statements
Report of Independent Auditors

22

Balance Sheets

23

Statements of Income

24Statements of Changes in Unitholders’ Equity

25

Statements of Cash Flows

26

Notes to Financial Statements

27

21

Report of Independent Auditors

Balance Sheets
Item
AssetsCurrent assets:
Cash and bank deposits
Cash and bank deposits in trust (Note 5)
Rental receivables
Prepaid expenses
Consumption tax refundable
Other current assets
Allowance for doubtful receivables
Total current assets¥

Fixed assets:
Property and equipment, at cost:
Land including trust accounts (Notes 4, 5)
Buildings including trust accounts (Notes 4, 5)
Other tangible assets including trust accounts (Notes 4, 5)
Accumulated depreciation (Note 4)
Total property and equipment

As of February 29, 2008

As of August 31, 2007

Thousands of yen

Thousands of yen

4,409,348
3,731,835
106,486
34,70390,83831,060(2,203)8,402,069¥

4,245,687
4,076,730
119,610
33,124
41,731
51,866(4,917)8,563,834

119,405,383
74,495,320
2,990,565(3,890,760)
193,000,508

115,105,970
71,007,807
2,726,564(3,081,700)
185,758,642

913,996
4,444
918,440

913,996
4,875
918,871

Investments and other assets
Deposits
Long-term prepaid expenses
Reserve for repairs and maintenanceDerivative assets
Total investments and other assets
Total ﬁxed assets

11,484
106,370
210,441–
328,296
194,247,245

11,454
108,445
197,441
12,110329,453
187,006,967

Deferred assets
Bond issuance costs
Total deferred assets
Total assets

93,68893,688
202,743,003

114,657
114,657
195,685,458

Intangible assets:
Leasehold interests in trust
Other intangible assets
Total intangible assets

Liabilities and Unitholders' Equity
Liabilities
Current liabilities:
Trade payables
Short-term loan payable (Note 7)Long-term loan payable due within one year (Notes 5, 7)
Other payables
Accrued expenses
Accrued income taxes
Rents received in advance
Deferred tax liabilities (Note 13)
Other current liabilities
Total current liabilities
Long-term liabilities
Investment corporation bonds (Note 8)Long-term loan payable (Notes 5, 7)
Deferred tax liabilities (Note 13)
Leasehold and security deposits
Leasehold and security deposits in trust
Derivative liabilities
Total long-term liabilities
Total liabilities
Unitholders' Equity (Note 6)
Unitholders' capital
Units authorized - 2,000,000 units
Units issued and outstanding - 164,068 units
as of February 29, 2008 and August 31, 2007
Unappropriated income
Unrealized gain
Unrealized gain from deferred hedge transactions
Total unitholders' equity
Total liabilities and unitholders' equity

¥

¥

¥

284,071
27,100,000
21,995,000
410,386
337,9623,205
548,013776
47,03750,726,453¥¥

222,623
17,500,000
12,200,000
571,083
283,164
1,484
508,475
7,274
42,084
31,336,189

31,000,000
31,100,000–
326,982
1,343,994–
63,770,977
114,497,430

31,000,000
43,650,000
4,770
262,001
1,425,269
477
76,342,519
107,678,709

85,791,179

85,791,179

2,453,542

2,197,443

851
88,245,573
202,743,003

18,12688,006,749
195,685,458¥

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

22

23

Statements of Income

Statements of Changes in Unitholders' Equity
For the six months ended August 31, 2007 and February 29, 2008

Item

For the six months ended

For the six months ended

February 29, 2008

August 31, 2007

Thousands of yen

Thousands of yen

Operating Revenues:

Balance as of February 28, 2007

Rental revenues (Note 9)
Gain on sale of properties (Note 10)
Total operating revenues¥

5,647,172

5,328,215

605,587

401,8936,252,759¥

5,730,109

Unappropriated income

Unitholders' capital

Unrealized gain fromdeferred hedgetransactions

Total

Thousands of yen

Thousands of yen

Thousands of yen

Thousands of yen

¥

¥

¥

¥

85,791,179

2,437,788

13,90688,242,874

Cash dividends paid–

(2,437,722)–(2,437,722)

Net income–

2,197,377–

2,197,377

Changes in unrealized gain on interest-rate swap

–

–

4,219

Balance as of Augusut 31, 2007¥

85,791,179¥

2,197,443¥

18,126

4,219¥

88,006,749

Cash dividends paid–

(2,197,362)–(2,197,362)

Net income–

2,453,461–

2,453,461

508,953

Changes in unrealized gain on interest-rate swap––

(17,274)

12,284

11,575

Balance as of February 29, 2008

Administrative service fees

31,755

19,945Ofﬁcers' salaries

4,200

4,200

Operating Expenses:
2,239,639

2,053,080

Asset management fees

542,312

Custodian fees

Property operating expenses (Note 9)

187,782

154,325

Total operating expenses

3,017,975

2,752,080

Operating income

3,234,784

2,978,028

Other operating expenses¥

85,791,179¥

2,453,542¥

851(17,274)¥

88,245,573

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

Non-Operating Income
Interest income
Other non-operating income (Note 11)

1,371

1,452

158,4512,090

522,000

423,048

Non-Operating Expenses
Interest expense on loans
Financing related expenses

71,88598,049Interest expense on bonds

271,577

238,862

Amortization of bond issuance costs

20,96819,041Other non-operating expenses

51,634

3,402

Ordinary income

2,456,541

2,199,166

Income before income taxes

2,456,541

2,199,166

Current

3,212

1,501

Deferred

(133)

287

Net income

2,453,461

2,197,377

Income taxes: (Note 13)

Unappropriated income

65

81

Income carried forward¥

2,453,542¥

2,197,443

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

24

25

Statements of Cash Flows

Notes to Financial Statements

Item

For the six months ended

For the six months ended

February 29, 2008

August 31, 2007

Thousands of yen

Thousands of yen

Cash Flows from Operating Activities
Income before income taxes¥

2,456,541¥

2,199,166

Depreciation

920,186

846,941

Amortization of long-term prepaid expenses

32,922

37,129Amortization of bond issuance costs

20,96819,041

Interest income(1,371)(1,452)

Interest expense

793,577

661,911(Increase) Decrease of rental receivables(66,557)(59,078)(Increase) Decrease of consumption tax refundable(49,107)(41,731)

Increase (Decrease) of trade payables

61,448(32,456)(Decrease) Increase of other payables(51,739)

79,510(Decrease) of consumption tax payable–(32,675)

Increase of rents received in advance

39,53872,324Long-term prepaid expenses(30,847)(29,418)

6,021,259

2,846,117

Decrease of property and equipment due to sale (including trust accounts)
Others, net
Subtotal(2,076)

48,773

10,144,743

6,614,103

Interest income received

1,371

1,452

Interest expense paid

(738,779)(533,959)

Income taxes paid

(1,491)(5,000)9,405,842

6,076,595

Net cash provided by operating activities
Cash Flows from Investing Activities
Purchases of property and equipment in trust
Purchases of property and equipment
Purchases of intangible assets(166,313)(34,696)(14,122,368)(17,912,736)

–

(57)

Proceeds from deposits–

39

Payments for deposits(30)(1,220)

Proceeds from leasehold and security deposits in trust

132,967

174,178

Payments for leasehold and security deposits in trust(148,569)(141,721)

Payments for restricted bank deposits in trust(132,295)(193,045)

Proceeds from restricted bank deposits in trust

219,084

214,842

Proceeds from leasehold and security deposits

102,852

68,760

Payments for leasehold and security deposits(23,863)(16,384)

Payments for restricted bank deposits(109,456)(79,432)

Proceeds from restricted bank deposits

63,87731,966

Payments for reserve for repairs and maintenance(13,135)(13,135)(14,197,250)(17,902,643)

17,900,000

9,200,000

Repayment of short-term loan payable(8,300,000)(17,000,000)

Proceeds from long-term loan payable

11,000,000

6,400,000

Repayment of long-term loan payable(13,755,000)(1,550,000)

Proceeds from issuance of investment corporation bonds–

17,000,000

Payments of bond issuance costs–(97,093)

Net cash used in investing activities
Cash Flows from Financing Activities
Proceeds from short-term loan payable

Payment of dividends(2,193,616)(2,429,259)

Net cash provided by investing activities

4,651,383

11,523,646

Net change in cash and cash equivalents(140,024)(302,401)

Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period (Note 3)
The accompanying notes are an integral part of these ﬁnancial statements.

26

6,838,162

6,535,761¥

6,395,736¥

6,535,761

1. Organization and Basis of Presentation
hOrganization
New City Residence Investment Corporation (“NCRI”) was established on September 27, 2004 and is based on the Investment Trust andInvestment Corporation Law (Law No. 198 of 1951, including amendments thereafter; hereinafter, “ITL”). On December 15, 2004, NCRI
listed in the Real Estate Investment Trust section of the Tokyo Stock Exchange (TSE), Securities Code: 8965. NCRI is dedicated to the
management of residential properties.
Asset management services are provided by CBRE Residential Management K.K. (the “Asset Manager”). The Asset Manager is composedof the following shareholders: CB Richard Ellis Investors Holdings K.K. (42.5%), New City Corporation K.K. (42.5%), CSK Holdings
Corporation (10.0%), Mizuho Trust & Banking Co., Ltd. (2.5%), and Mitsubishi UFJ Trust and Banking Corporation (2.5%).
Since NCRI went public, it has increased its property holdings. As of the end of February 2008, NCRI owns a total of 108 properties worth
189 billion yen (approximately 3 times its IPO level).

hBasis of presentation
The accompanying ﬁnancial statements have been prepared in accordance with the provisions set forth in the Japanese Financial
Instruments and Exchange Law, and its related accounting regulations, and in conformity with accounting principles generally accepted inJapan (hereinafter “Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of theInternational Financial Reporting Standards.
The accompanying ﬁnancial statements have been restructured and translated into English from the ﬁnancial statements of NCRI preparedin 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. In preparing the accompanying ﬁnancial statements, certain reclassiﬁcations and modiﬁcations
have been made to the ﬁnancial statements issued domestically in order to present them in a format that is more familiar to readers
outside Japan.
Amounts less than 1 thousand yen have been omitted. As a result, the total shown in the ﬁnancial statements and notes thereto do notnecessarily agree with the sum of the individual account balances.

2. Summary of Signiﬁcant Accounting Policies
hCash and cash equivalents
Cash and cash equivalents presented in the statements of cash ﬂows consist of cash on hand, cash held in trust, deposits that can bewithdrawn at any time, and short-term investments with maturities of three months or less from the date of acquisition. Cash and cash
equivalents are readily convertible and represent only minimal risk of value ﬂuctuation.

hProperty and equipment (including assets held in trust)
Property and equipment are carried at cost, less accumulated depreciation. Depreciation of property and equipment, except for land, iscomputed by using the straight-line method. Estimated useful lives of principal property and equipment are as follows:
Buildings
Structures
Machinery and equipment
Tools, furniture and ﬁxtures

2–65 years
10–65 years
17–30 years
2–30 years

In accordance with the amended Japanese tax law, properties and equipment acquired on or after April 1, 2007 are depreciated with aresidual value of one yen recognized at the end of the useful life. The impact of this change in accounting policy is immaterial for the six
months ended August 31, 2007.
Properties and equipment acquired before March 31, 2007 are depreciated over their taxable lives, with a residual value of 5% of theacquisition cost. However, in accordance with the amended Japanese tax law, effective from the six months ended February 29, 2008,
after these properties and equipment have been depreciated down to the residual value of 5% of the acquisition costs, the remaining
amounts are depreciated, beginning in the following ﬁscal year, over ﬁve years with a residual value of one yen. The impact of this change
is immaterial for the six months ended February 29, 2008.

27

Notes to Financial Statements
hIntangible assets

3. Cash and Cash Equivalents

Other intangible assets are depreciated using the straight-line method.
Cash and cash equivalents as of February 29, 2008 and August 31, 2007 consisted of the following:

hLong-term prepaid expenses
Long-term prepaid expenses are depreciated using the straight-line method and are comprised of deferred ﬁnancing costs and other items.

hBond issuance costs
Effective March 1, 2007, NCRI adopted a new accounting standard, “Tentative Solution on Accounting for Deferred Assets” (Practical
Solution No.19 issued by the Accounting Standards Board of Japan on August 11, 2006), which allows bond issuance costs to beamortized over the term of the bond using the straight line method.

(Thousands of yen)

As of February 29, 2008
¥4,409,348
3,731,835(357,363)(1,388,083)¥6,395,736

Cash and bank deposits
Cash and bank deposits in trust
Bank deposits retained for repayment of leasehold and security deposits
Bank deposits in trust retained for repayment of leasehold and security deposits in trust
Cash and cash equivalents

Bond issuance costs recorded as of and before February 28, 2007 were amortized over three years based on the previous accounting rulein accordance with the transition measurement of Practical Solution No.19.

4. Schedule of Tangible Assets of Property and Equipment

hAllowances

Tangible assets as of February 29, 2008 and August 31, 2007 consisted of the following:

To cover possible credit losses, an allowance for doubtful receivables is provided for any amount deemed uncollectible. The allowance iscalculated on the basis of historical default rates for normal claims or on the basis of individual assessments on speciﬁc claims on debtors
threatened with bankruptcy.

hRevenue recognition
Real estate rental revenue is recognized on an accrual basis based on the lease agreement.

hProperty-related taxes
Property-related taxes including city planning taxes, depreciable property taxes, and other taxes are imposed on property on a calendar
year basis. The amount of such taxes assessed in the period is charged to income as property operating expenses. Under the Japanese tax
rule, the seller of the property at the time of disposal is liable for property-related taxes on the property from the date of disposal to theend of the calendar year in which the property is disposed. In accordance with Japanese business practice, the seller, however, isreimbursed by the purchase of the property for the accrued property-related tax liabilities, and the amount of the settlement reﬂects thisadjustment. NCRI is allocated the portion of the property-related taxes for the period from the purchase date of each property through theend of the calendar year. Capitalized property-related taxes are 4,887 thousand yen for the period ended February 29, 2008 and 9,517
thousand yen for the period ended August 31, 2007, respectively.

hDerivatives and hedge accounting

As of August 31, 2007
¥4,245,687
4,076,730(311,784)(1,474,871)¥6,535,761(Thousands of yen)Land
Land in trust
Land including trust accounts
Buildings
Buildings in trust
Buildings including trust accounts
Structures
Machinery and equipment
Tools, furniture and ﬁxtures
Structures in trust
Machinery and equipment in trust
Tools, furniture and ﬁxtures in trust
Other tangible assets including
trust accounts total
Total

As of February 29, 2008
Acquisition
Accumulated
Book
Costs
Depreciation
Value¥34,766,934¥–¥34,766,934
84,638,448–
84,638,448
119,405,383–
119,405,383
24,635,831(626,025)
24,009,806
49,859,488(3,034,889)
46,824,599
74,495,320(3,660,914)
70,834,405
230,983(4,219)226,764
451,058(17,117)433,940
782,835(53,432)
729,402491,972(20,776)
471,196605,360(49,928)
555,432
428,354(84,371)
343,982

As of August 31, 2007
Acquisition
Accumulated
Book
Costs
Depreciation
Value¥26,135,278¥–¥26,135,278
88,970,691–
88,970,691
115,105,970–
115,105,970
19,514,342(358,582)
19,155,759
51,493,465(2,552,931)
48,940,534
71,007,807(2,911,513)
68,096,294
174,700(2,270)172,430
409,816(10,450)
399,366
622,434(33,461)
588,973
500,751(16,913)483,837
605,360(40,464)
564,896
413,500(66,626)
346,8732,990,565(229,846)

2,760,718

2,726,564(170,186)

2,556,377¥196,891,268¥(3,890,760)¥193,000,508¥188,840,342¥(3,081,700)¥185,758,642

The derivative transactions utilized by NCRI are interest rate swaps. Pursuant to NCRI’s policy on interest rate swap transactions, NCRI
enters into derivative transactions solely for the purpose of hedging the risks of interest rate ﬂuctuations, which is deﬁned in the Articles ofIncorporation. NCRI does not enter into such transactions for speculative or trading purposes.
Derivative transactions, except as discussed below, are measured at fair value. Gains and losses on derivatives are deferred until thematurity of the hedged transactions and are recognized as either an asset or liability (known as “deferred hedge treatment”).
Interest rate swaps which qualify for hedge accounting and meet speciﬁc matching criteria are not measured at fair value. The net amountto be paid or received under the swap agreements is recognized in interest expense or income as incurred.
NCRI evaluates the effectiveness of hedging instruments by comparing the cumulative ﬂuctuations in cash ﬂows of the hedged items withthat of the hedging instruments. However, hedge effectiveness is not evaluated for interest rate swap transactions that meet the criteria
for the simpliﬁed method.

hAccounting method for beneﬁciary interests in trust assets including real estate
Regarding trust beneﬁciary rights in trust assets, including real estate, all asset and liability accounts within the trust assets and all income
and expense accounts generated by or incurred from the trust assets are recorded in the relevant account items of the balance sheets andthe statement of income and retained earnings.

hAccounting for consumption taxes
Consumption taxes are excluded from transaction amounts. However, non-deductible consumption taxes on ﬁxed assets are included in
the acquisition costs of the respective assets.

28

29

5. Pledged Assets and Secured Loans

7. Short-Term Loans and Long-Term Loans

As of February 29, 2008 and August 31, 2007, the following assets were pledged as collateral for the following loans:

Short-term loans and long-term loans as of February 29, 2008 and August 31, 2007 consisted of the following:
As of February 29, 2008
As of August 31, 2007
Interest rate
AmountAmountInterest rate(%)
(Thousands of yen)(Thousands of yen)(%)
Short-term loan payable
Unsecured loan due on November 30, 2007 with ﬂoating rate
2,099,610
1.11%––
Unsecured loan due on December 13, 2007 with ﬂoating rate
688,940
1.11%––
Unsecured loans due on December 21, 2007 with ﬂoating rate
5,511,450
1.11%––
Unsecured loans due on March 31, 2008 with ﬂoating rate
4,400,000
1.17%
4,400,000
1.30%
Unsecured loans due on March 31, 2008 with ﬂoating rate
1,800,000
1.17%
1,800,000
1.30%
Unsecured loan due on March 31, 2008 with ﬂoating rate
2,250,000
1.17%
2,250,000
1.30%
Unsecured loan due on March 31, 2008 with ﬂoating rate
750,000
1.17%
750,000
1.30%
Unsecured loans due on October 17, 2008 with ﬂoating rate
4,500,000
1.30%––
Unsecured loan due on March 31, 2008 with ﬂoating rate
2,100,000
1.27%––
Unsecured loan due on March 31, 2008 with ﬂoating rate
700,000
1.30%––
Unsecured loan due on March 31, 2008 with ﬂoating rate
1,400,000
1.34%––
Unsecured loan due on March 31, 2008 with ﬂoating rate
4,100,000
1.34%––
Unsecured loans due on January 30, 2009 with ﬂoating rate
3,700,000
1.18%––
Unsecured loans due on April 24, 2008 with ﬂoating rate
1,400,000
1.21%––
Sub total
27,100,000
17,500,000
Long-term loan payable due within one year
Secured loans due on December 17, 2007
–
–
0.90%
12,200,000
Secured loans due on September 21, 2008
17,995,000
1.27%
–
–
Unsecured loan due on December 18, 2008
4,000,000
1.19%––
Sub total
21,995,000
12,200,000
Long-term loan payable
Secured loans due on September 21, 2008
–
–
1.22%
19,550,000
Unsecured loan due on December 18, 2008
1.03%
–
–
4,000,000
Unsecured loans due on December 18, 2009
1.12%
5,700,000
5,700,000
1.28%
Unsecured loans due on December 17, 2010
1.80%
8,000,000
8,000,000
1.80%
Unsecured loans due on March 26, 2012
1.50%
6,400,000
6,400,000
1.95%
Unsecured loans due on December 17, 2012
11,000,000
1.75%
–
–
31,100,000
43,650,000
Sub total
80,195,000
73,350,000
Total

Pledged assets:
Cash and bank deposits in trust
Buildings in trust
Structures in trust
Machinery and equipment in trust
Tools, furniture and ﬁxtures in trust
Land in trust
Total(Thousands of yen)

As of February 29, 2008
¥1,170,140
15,111,578
199,862
46,208110,529
23,597,120¥40,235,439

As of August 31, 2007
¥2,147,202
26,659,739
277,819
71,892
135,141
46,556,988¥75,848,783

As of February 29, 2008
¥17,995,000–¥17,995,000

As of August 31, 2007
¥12,200,000
19,550,000¥31,750,000

Loans secured by the pledged assets:Long-term loan payable due within one year
Long-term loan payable
Total(Thousands of yen)

6. Unitholders’ Equity (stipulated in Paragraph 4, Article 67 of the ITL)NCRI issues only non-par value investment units in accordance with the Investment Trust Law of Japan. The entire amount of the issue
price of the new units is designated as state capital. The Company is required to maintain net assets of at least 50,000 thousand yen as
required by the Investment Trust Law of Japan.

NCRI had commitment lines of credit of 7,000 million yen with certain ﬁnancial institutions as of February 29, 2008 and August 31, 2007.
The unused amount of such commitment lines of credit was 5,600 million yen and 7,000 million yen as of February 29, 2008 and August
31, 2007, respectively.
The anticipated maturities of long-term loans for the following four years ended February 28 starting in 2010 were as follows:(Thousands of yen)

2010
2011
2012
2013

30

¥5,700,000¥8,000,000–¥17,400,000

31

8. Investment Corporation Bonds

10. Breakdown of Gain on Sale of Properties

Details of total investment corporation bonds outstanding are summarized as follows:(Thousands of yen)

As of February 29, 2008
AmountInterest rate

As of August 31, 2007
AmountInterest rate

First series of unsecured investment corporation bonds due on February 24, 2011

14,000,000

1.61%

14,000,000

1.61%

Second series of unsecured investment corporation bonds due on April 12, 2012

12,000,000

1.79%

12,000,000

1.79%

Third series of unsecured investment corporation bonds due on April 11, 2014

5,000,000

2.15%

5,000,000

2.15%

The anticipated maturities of these bonds for the following four years ended February 28 starting in 2010 were as follows:(Thousands of yen)

2010
2011
2012
2013

–
¥14,000,000–¥12,000,000

Gains on sales of properties for the six months ended February 29, 2008 and August 31, 2007 were as follows:
C-6 New City Residence Shinjyuku Ichibankan
Proceeds from sale of properties
Cost of properties sold
Other sales expenses
Gain on sale of property
C-7 New City Residence Shinjyuku Nibankan
Proceeds from sale of properties
Cost of properties sold
Other sales expenses
Gain on sale of property
C-26 New City Residence Sasazuka
Proceeds from sale of properties
Cost of properties sold
Other sales expenses
Gain on sale of property
C-21 New City Residence Jinbocho
Proceeds from sale of properties
Cost of properties sold
Other sales expenses
Gain on sale of property(Thousands of yen)February 29, 2008

August 31, 2007

¥2,181,844(1,990,630)(14,458)¥176,754–¥979,423(896,934)(13,284)¥69,204–¥3,507,258(3,133,694)(13,935)¥359,628––¥3,275,000(2,845,467)(27,639)¥401,893

–
–
–

–
–
–

–
–
–

–
–
–

9. Rental Revenues and Expenses
11. Other Non-Operating Income
Rental revenues and expenses for the six months ended February 29, 2008 and August 31, 2007 were as follows:
A. Real estate rental revenues
Rent
Parking lot income
Incidental income
Other rental revenues
Subtotal
B. Property operating expenses
Repairs and maintenanceUtilities
Property management fee
Property related taxes
Insurance
Broker fee, advertising fee and others
Trust fee
Depreciation and amortization
Allowance for doubtful accounts
Other rental expenses
Subtotal
C. Real estate rental business proﬁt (A-B)

32(Thousands of yen)

As of February 29, 2008

As of August 31, 2007

¥5,231,568
166,643
15,053233,906
5,647,172¥4,907,248
160,198
13,437247,330
5,328,215

342,708
80,820153,692
169,430
12,152413,971
45,377920,186
1,013
100,286¥2,239,639¥3,407,532

315,332
67,954
144,697
164,699
11,559365,558
47,563846,941
2,772
86,001¥2,053,080¥3,275,134

Other non-operating income for the six months ended February 29, 2008 included 154,224 thousand yen in consumption tax refunds.

12. Per Unit Information
The following table summarizes the net income per unit for the six months ended February 29, 2008 and August 31, 2007 and theunitholders’ equity per unit as of February 29, 2008 and August 31, 2007.

Net income per unit
Weighted-average number of units

For the six months ended
February 29, 2008
¥14,953
164,068 units

For the six months ended
August 31, 2007
¥13,393
164,068 units

Unitholders’ equity per unit

As of February 29, 2008
¥537,859

As of August 31, 2007
¥536,404

Net income per unit is calculated by dividing net income by the weighted daily average number of units.
Diluted net income per unit is not presented since no warrants and convertible bonds were outstanding during the six months ended
February 29, 2008 and August 31, 2007.

33

13. Income Taxes

15. Derivatives

Income taxes in Japan applicable to NCRI consist of corporate income tax, enterprise tax and inhabitant tax. The following is areconciliation between the statutory income tax rate in Japan and the effective tax rate reﬂected in the accompanying ﬁnancial statements
for the six months ended February 29, 2008 and August 31, 2007:

NCRI had the following derivatives contracts outstanding as of February 29, 2008 and as of August 31, 2007:(Thousands of yen)February 29, 2008
Notional amount
Fair value(%)

Statutory income tax rate
Deductible dividend payments
Other
Effective tax rate

As of February 29, 2008
39.39%(39.34)0.08
0.13%

As of August 31, 2007
39.39%(39.36)0.05
0.08%

Under NCRI’s distribution policy, cash distributions are made in excess of 90% of distributable income as deﬁned in the Special Taxation
Measures Law of Japan for the ﬁscal period to qualify for conditions as set forth in the Special Taxation Measures Law to achieve a
deduction of cash distributions for income tax purposes. Based on such policy, NCRI treated the cash distributions as taxable distributions
as deﬁned in the Special Taxation Measures Law.

Interest rate swap:
Fixed rate payable and ﬂoating rate receivable¥40,400,000

August 31, 2007
Notional amount¥(306,250)

Fair value¥39,600,000¥(51,430)Interest rate swap transactions are exposed to interest rate ﬂuctuation risks. Credit risk is recognized as immaterial because transactions
are only entered into with ﬁnancial institutions that have high credit ratings. Risk management for the periods is conducted based on theasset management procedures of the asset management company.

16. Related Party Transactions
The tax effects of signiﬁcant temporary differences that resulted in net deferred tax assets or liabilities as of February 29, 2008 and August
31, 2007 were as follows:(Thousands of yen)February 29, 2008
Current liabilities
Deferred tax assets
Enterprise taxes
Bad-debt loss
Allowance for doubtful accounts
Gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Unrealized gain from deferred hedge transactions
Total deferred tax liabilities(Net deferred tax liabilities)
Long-term liabilities
Deferred tax liabilities
Unrealized gain from deferred hedge transactions
Total deferred tax liabilities(Net deferred tax liabilities)

August 31, 2007

179
3,920
868
4,967
(4,788)
179

45
1,897
1,936
3,880
(3,834)
45

955
955
776

7,320
7,320
7,274

–
–
–

4,770
4,770
4,770

Impact of Possible Corporation Tax Rate Change after Settlement Date
Due to the Provisional Measures Law Concerning Special Local Corporation Tax (Law No. 25 of 2008) announced on April 30, 2008, thestandard tax rate on business taxes based on income has been reduced and new special local corporation tax is levied. In accordance with
this, the effective statutory tax rate for the deferred tax assets and liabilities related to temporary differences which are expected to bedissolved on and after March 1, 2009 will be charged. However, the change to the effective statutory tax rate will have minimal impact on
NCRI’s deferred tax assets and liabilities.

Jun Arai, who holds no voting rights of New City Residence Investment Corporation, is the Executive Director of NCRI and President of
CBRE Residential Management K.K.
CBRE Residential Management K.K. has entered into an asset management agreement subject to the conditions set forth in the Articles ofIncorporation of New City Residence Investment Corporation. Management fees payable and incurred as of February 29, 2008 and August
31, 2007 and for the periods then ended were as follows:(Thousands of yen)Management fees payable
Asset management fees for the period

February 29, 2008
¥326,800
674,865

132,552 thousand yen and 177,143 thousand yen relating to the acquisition of properties for the six months ended February 29, 2008
and August 31, 2007, respectively, were included in asset management fees in the table above and were capitalized as acquisition costs of
the respective property.

17. Distribution Information
Pursuant to the distribution policy set forth in Article 35, Paragraph 1 of NCRI’s Articles of Incorporation, the maximum distribution
amount cannot exceed unappropriated income, and this amount must exceed 90% of the “distributable income” which is deﬁned in
Article 67-15 of the Special Taxation Measures Law of Japan. No cash distributions exceeding unappropriated income as set forth in Article
35, Paragraph 1 (2) of NCRI’s Articles of Incorporation were made.
Based on this policy, the board of directors of NCRI resolved on April 22, 2008 and October 24, 2007 to make cash distributions of
2,453,472,872 yen and 2,197,362,724 yen for 164,068 units to unitholders of record on February 29, 2008 and August 31, 2007,
respectively.
Income carried forward after distributions for the six months ended February 29, 2008 and August 31, 2007 were as follows:

14. Leases

February 29, 2008
NCRI operates its properties that are rented to tenants on lease terms of two years generally, with monthly payments due in advance.
As of February 29, 2008 and August 31, 2007, the future lease revenue under non-cancelable operating leases was as follows:(Thousands of yen)

Due within 1 year
Due after 1 year
Total

34

August 31, 2007
¥395,713
686,096

For the six months ended
February 29, 2008
¥174,975
361,210¥536,185

For the six months ended
August 31, 2007
¥253,571
448,698¥702,269

August 31, 2007
(Thousands of yen)

Unappropriated income
Cash distribution declared
Income carried forward
Cash distribution declared per unit

¥2,453,542
2,453,472
69¥14,954¥2,197,443
2,197,362
81(yen)¥13,39335

Principal Investment Information
Composition of Unitholders

18. Subsequent Events

Investment Unit Performance

Note : Unit prices are closing basis.

(as of February 29, 2008)

Number of units owned - 164,068

Transfer of assets(i) NCRI transferred its trust beneﬁciary rights in New City Residence Mita to Y.K. M C Okinawa for 1,060 million yen on March 25, 2008.
The resulting gain on the sale of the property is approximately 54 million yen, which will be included in operating revenues. The
transfer price excluded real estate tax, city-planning tax, and consumption tax.
(ii) NCRI transferred its trust beneﬁciary rights in New City Residence Gakugeidaigaku for 1,350 million yen on May 13, 2008. The
resulting gain on its sale of the property is approximately 82 million yen, which will be included in operating revenues. The transfer
price excluded real estate tax, city-planning tax, and consumption tax. NCRI has been unable to obtain the approval of the buyer todisclose the buyer’s information. Therefore, NCRI has not disclosed the buyer.

Financial institutions(including ﬁnancial instruments ﬁrms)

71,344 units

42.3%
43.5%

Other domestic corporations

6,420 units

3.9%

Individuals & others

16,870 units

10.3%

Number of units owned - 6,737
Financial institutions

Unit price (yen)700000

Unit price

6000

Trading volume
5000

6000004000

5000003000

4000002000

300000200000

112

1.7%

1000

Other domestic corporations

111

1.6%

0

Overseas investors

144

2.1%

Individuals & others

6,370

94.6%

(including ﬁnancial instruments ﬁrms)(iii) NCRI transferred its trust beneﬁciary rights in New City Residence Senzokukoen for 860 million yen on May 13, 2008. The resulting
loss on the sale of the property is approximately 74 million yen, which will be included in operating revenues. The transfer priceexcluded real estate tax, city-planning tax, and consumption tax. NCRI has been unable to obtain the approval of the buyer to disclose
the buyer’s information. Therefore, NCRI has not disclosed the buyer.

Trading volume (units)

69,434 units

Overseas investors

Sep.
2007
(End of 5th
ﬁscal period)

Oct.

Nov.

Dec.

Jan.
2008

Feb.

100000(End of 6th
ﬁscal period)

Principal Unitholders
Issuance of new investment units
At the Board of Directors meeting held on April 22, 2008, NCRI resolved to issue new investment units through a third-party allocation forthe purpose of repaying loans and acquiring new properties. NCRI completed the third-party allocation of 18,000 units on May 14, 2008,
the payment due date, at an issue price of 285,579 yen per unit. The total proceeds from this third-party allocation were 5,140,422
thousand yen. As a result of the issuance of new investment units, the unitholders’ capital was 90,931,601,400 yen with 182,068 units
outstanding as of May 14, 2008. The outline of the issuance of new investment units was as follows:

Number of new investment units issued
Issue price per unit
Total issue price
Payment due date
Dividend starting date
Allottee

Investment Units Held

Name

18,000 units¥ 285,579 per unit
¥ 5,140,422,000
May 14, 2008
March 1, 2008
Funds managed by Fidelity Investments Japan Limited
Funds managed by Fidelity Investments Management (Hong Kong) Limited

Percentage ShareJapan Trustee Services Bank,Ltd. (Trust Account)

12,149 units

7.40%

NikkoCiti Trust and Banking Corporation (Investment Trust Account)

12,019 units

7.32%

CGML-IPB Customer Collateral Account7,052 units

4.29%

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

6,845 units

4.17%

Goldman Sachs International

5,281 units

3.21%

North Paciﬁc Bank, Ltd.

5,090 units

3.10%

Trust & Custody Services Bank, Ltd. (Investment Trust Account)

5,033 units

3.06%

The Bank of New York, Treaty JASDEQ Account4,517 units

2.75%

Morgan Stanley & Co. International plc.

4,325 units

2.63%

The Nomura Trust and Banking Co., Ltd. (Investment Trust Account)

3,808 units

2.32%

66,119 units

40.30%

Total

Note: Percentage Share shall indicate the number of investment units held as a percentage of the total number of investment units issued and outstanding

Corporate Data (as of February 29, 2008)
Corporate Ofﬁce:

1-10-6, Roppongi, Minato-ku, Tokyo 106-0032, Japan

Date of Incorporation: September 27,2004
Capital:¥85,791,179,400 (164,068 units)

Stock Listing:Tokyo Stock Exchange

Security Code:8965

Contact: For further information, please contact our asset
management company or visit our website.
(http://www.ncrinv.co.jp/eng/)
CBRE Residential Management K.K.
1-10-6, Roppongi, Minato-ku, Tokyo 106-0032, Japan
Phone: +81-3-6229-3860
Fax:+81-3-6229-3867

Disclaimer
The contents of this document, including summary notes, quotes, data and other information, are provided by New City Residence Investment Corporation ("NCRI") / CBRE Residential Management
K.K.("CBRERM") solely for information purposes and are not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any securities of NCRI. Please note that thisdocument and the information included in it have not been prepared or distributed as a disclosure document or management report that are based on the requests of the Financial Instruments and Exchange Law,
the Investment Trust and Investment Corporation Law and the Cabinet Ofﬁce regulations and rules attached to the Law, the listing regulations of the Tokyo Stock Exchange and other related rules.
This documents includes forward-looking statements such as ﬁnancial forecasts. To the extent that statements in this document do not relate to historical or current facts, they constitute forward-looking
statements. These forward-looking statements are based on current assumptions and beliefs of NCRI and CBRERM in light of the information currently available to it, and involve known and unknown risks,
uncertainties and other factors. Such risks, uncertainties and other factors may cause NCRI's actual results, performance, achievements or ﬁnancial position to be materially different from any future results,
performance, achievements or ﬁnancial position expressed or implied by those forward-looking statements. NCRI and CBRERM undertakes no obligation to publicly update them after the date of this documents.
Although we have made every effort to assure the accuracy of the content, etc. provided in this document, we do not guarantee the accuracy/reliability of the content. Furthermore, please note that the content issubject to change without notice. The reproduction or alteration of the content described in this document without proper prior approval is strictly prohibited.

36