SEMI-ANNUAL REPORT FOR THE PERIODSEPTEMBER 1ST 2006 TO FEBRUARY 28TH 2007

Table of Contents
Financial Highlights

1

A Word From the Top

2

Investment Policy

3

New City Residence Investment

Diversification Highlights

4

Corporation (New City Residence) was

Growth Strategy

6

Trust section of the Tokyo Stock

Brand Strategy

8

Exchange on December 15,2004

Collaboration Network

9

Core Assets

10

Portfolio Map

12

Portfolio List

14

Overview of New City Residence

16high-end multifamily apartment brand.

Organizational Chart ofAsset Management Company

17

New City Residence aims to build a

Governance for Conflict of Interest

18of tenants, responds to diverse andSelective Financial Data

19changing lifestyle preferences, as well

Financial Statements

as environmental, demographic and

Auditors Report

generational trends.

Balance Sheets

21
22
23
24
25
26
27

listed on the Real Estate Investment(securities code: 8965).
Through the acquisition of leasing
properties featuring high-quality
residences,and the introduction of anarray of value-added services, "New City
Residence" has positioned itself as aportfolio that appeals to a broad range

Statements of Income
New City Residence delivers strong

Statements of Changes in Unitholders’ Equity

growth through a pipeline strategy

Statements of Cash Flowsand extensive outside information

Notes to Financial Statements

network, and continues to meet theneeds of its tenants through centralized
property management functions andstandardized services.
Given the importance inherent in thenature of residential properties, New
City Residence is confident that it is well
positioned for stable medium-to-long-term
earnings.

Principal Investment
Information

Inside Back CoverFinancial Highlights
Summary of 1st to 4th Period Results
Operating period
Operating revenues
Income before income taxes
Net income

1st Period(ended Aug 31, 2005)*
260 days
3,224 million yen
1,151 million yen
1,146 million yen

2nd Period(ended Feb 28, 2006)
181 days
3,346 million yen
1,435 million yen
1,433 million yen

3rd Period(ended Aug 31, 2006)
184 days
4,201 million yen
1,635 million yen
1,630 million yen

4th Period(ended Feb 28, 2007)
181 days
5,678 million yen
2,442 million yen
2,437 million yen

2,591 million yen
1,657 million yen
1,146 million yen

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

104,678 million yen
62,200 million yen
40,503 million yen
59.4%

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%

74,556 units
15,381 yen
543,268 yen
22,231 yen

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

NOI (Note 1)
FFO (Note 2)
Total cash distribution
Total assets
Total interest-bearing liabilities
Net assets
LTV (Note 3)
Outstanding investment units issued
Distribution per unit
Net asset 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*The 1st period was from December 15, 2004 to August 31, 2005

Operating revenues
and net income

Total assets
and net assets

Distribution per unit
and net asset per unit

JPY Million

JPY Million

JPY Million

6,000

200,000

17,500

5,678

3,224

2,437
1,146

1st
period

1,433

2nd
periodOperating revenues

88,242
66,5394th
periodNet income

1stperiod542,687

13,302

2nd
period3rd
period10,0004th
periodNet assets

1stperiod2nd
period537,843

3rd
periodDistribution per unit

Portfolio Growth535,000

Net asset per unit

120

77

200

50

0

4th
periodGOAL
300 Properties

JPY Billion
300

100

540,000

66,756
11,692

Total assets

545,000
14,85812,50040,503
0544,451

15,381
543,268

104,678

50,000

1,630

3rd
period15,000135,663
100,000

2,000
0

164,094

4,201
3,346

550,000

181,509

150,000

4,000

JPY Million

86
122.4

93

93

90

90

150.4 150.4 142.8 142.8

94

94

94

97

98

98

167.0 167.0 167.0 174.6 175.2 175.2

GOAL
200

80

96.8

40

61.0

Dec-04(Listing)

Aug-05(End of
1st
period)Feb-06(End of
2nd
period)Aug-06(End of
3rd
period)Sep-06

Oct-06

Nov-06

Dec-06

4th Period

Jan-07

Feb-07(End of4th
period)Mar-07

Apr-07

May-07

End-07End-10~12

0Number of owned properties
Assets under management

1

A Word from the Top
Reflections on a Robust Fiscal Period
New City Residence has completed a tremendously
productive, successful fourth fiscal period (through February2007), and I would like to express my deepest gratitude to
our various shareholders and the staff of CBRE Residential
Management for making this possible.
Reflecting on a robust period, we see that there weresignificant changes in the rental housing market. However,the demand for quality, conveniently located rental
housing remains high, and is further reinforced by young
professionals opting for rental housing over ownership as
well as the continued return to city centers.
Within this market that has also become extremelycompetitive due to the increase in average land priceand a vast inflow of overseas capital, New City Residence
has continued to proactively acquire optimally priced,
strategically positioned residential properties with potential
for growth. The Japanese economic recovery continues
to positively impact our portfolio, enabling us to raise therents for our “close, new and large” (kin-shin-dai) concept
properties. This is a trend that we believe will continue. The
following prove the soundness of our strategy and paint avery favorable picture for our future:• Number of households moving to or returning to Tokyo
has increased steadily since 1994
• 54% of our properties are “close, new and large ”
properties in the Tokyo 5 Central Wards (Minato,
Shibuya, Shinjuku, Chiyoda and Chuo Wards)• 50% of our 3,000m 2 or larger properties are in theTokyo 5 Central Wards• 9 of our 17 flagship properties – acquisition prices ofabout JPY 3 billion or higher – are located in the Tokyo 5Central Wards, and comprise 49% of our rental income• 73% of our interest-bearing debt is now fixed-rate and
79% is long-term as a result of aggressive actions taken
since the Bank of Japan lifted the zero interest policy
I would also like to share with you some of our key
milestones for this fiscal period:• Acquisition of 4 new properties and continued
expansion of our sponsor pipeline have helped us reacha portfolio size closing in on JPY 200 billion• Occupancy rates are consistently above 90%, and once
on track are maintained at 95% or better2• Continued efforts to implement and cultivate ourdistinctive brand strategy differentiates ourselves fromthe competition• Issuance of new investment units through afollow-on offering and a third-party allotment reinforced
our financial position and lowered our LTV• Strategic disposal of select assets for a capital gain of
JPY 944 million enhanced the quality and lowered theage of our portfolio
We have also set ambitious goals for the future, and will
initiate proactive measures o:• Reduce building maintenance costs through a bid
system in which we have achieved a 10% discount forthe 67 properties we held bids on in the fourth fiscal
period• Align our strengths of superior quality and location toachieve greater profitability through aggressive settingof residential rent prices• Further strengthen the New City Residence Cardand other branding tools key to encouraging longcommitments from our tenants• Continue our detailed performance analyses using the
MRI system• Redouble our efforts to broaden our sponsor pipeline tofurther propel external growthThank you again for your support as we continue to map
ourselves as the top residential REIT in Japan.

Tetsuya Fujita
Executive Director,
New City Residence
Investment Corporation
President,
CBRE Residential
Management K.K.

Investment Policy
New City Residence basic investment policy observes a focus on securing steady growth and stable revenues
over the medium- to long-term through proactive investment and management of assets.
The number of households in Japan is maintaining its present level due to the rapid expansion in singles anddouble-income no kids (DINKs) households. This, combined with the perpetual need for housing regardless ofbusiness environment, ensures robust housing demand into the future. New City Residence further attempts tocater to the demands of as many family structures as possible, and intends to selectively invest in demand areas
with high growth potential and the promise of medium- to long-term income stability.

Target Portfolio - Allocation by Unit Type
Target Allocation

Type

Targeted Tenant Profile

Single (S)20~40%

Single residents

Urban family(UF)20~50%

Family comprised of 1-3 people, DINKs (Note 1), single parent and child, persons managing SOHOs (Note 2) who
prefer urban living and place importance on convenience

Family (F)20~50%

Typical family comprised of 2-4 members

Premium (P)

5~20%

Business entrepreneurs and professionals with families comprised of 1-4 members

Type

Area

~30m≤

~40m≤

~50m≤

~60m≤

~70m2

1R or 1K

S

S

S

S

1DK or 1K + S

S

UF

UF

UF

UF

1LDK or LDK + S

UF

UF

UF

UF

2DK or 1DK + S

UF

UF/F*

UF/F*

F

2LDK or 1LDK + S

UF

UF/F*

UF/F*

F

F

F

F

F

F

3DK or 2DK + S
3LDK or 2LDK + S
4LDK or 3LDK + S

R = Room

~80m≤

~90m2

~100m2>100m2

P

P

P

P

F

P

P

P

F

F

P

P

F

F

D = Dining room

K = KitchenF
S = Service roomP
L = Living room

Note 1: DINKS (Double Income, No Kids) represents households without children where both partners work and have income.
Note 2: SOHO (Small Office Home Office) represents small-scale operators and sole proprietorships that use their home as office.
*A property located in the Tokyo 23 Wards is classified as urban family type. When located outside the Tokyo 23 Wards, it is classified as family type.

Target Portfolio - Allocation by Region
Greater Tokyo (Tokyo, Kanagawa, Saitama & Chiba)

70% or more

(Tokyo 5 Central Wards)(30~70%)(Tokyo 23 Wards excl. 5 Central Wards)(10~60%)(Greater Tokyo excl. Tokyo 23 Wards)(10~50%)Regional cities

30% or lessNote: Tokyo 5 Central Wards are Minato, Shibuya, Shinjuku, Chiyoda and Chuo Wards. Tokyo 23 Wards excl. 5 Central Wards are Tokyo 23 Wards excluding the Tokyo 5Central Wards (Minato, Shibuya, Shinjuku, Chiyoda and Chuo Wards). Greater Tokyo excl. Tokyo 23 Wards are Tokyo Metropolitan excluding Tokyo 23 Wards,
Kanagawa, Chiba and Saitama Prefectures.

3

Diversification Highlights
3rd Period (as of August 31, 2006)

4th Period (as of February 28, 2007)

No. of Properties

93

94

Portfolio Size

JPY 150.4 Billion

JPY 167.0 Billion

No. of Leasable Units

5,409

5,779

PML(%) (Note)

4.6

3.1

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

Building Age

6.4%

8.7%

6.0%

5.1%

Less than 2 years
10.9%

13.2%

2 to 4 years

41.2%

44.1%

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

Average building
age: 3.4 years

30.3%

Geographic
SpreadAverage building
age: 3.3 years

34.1%

13.7%

15.7%

10.7%
11.9%

Tokyo 5 Central Wards

53.9%

45.8%

Tokyo 23 Wards(excluding 5 central wards)
Greater Tokyo (excluding 23 wards)

21.7%

Regional

26.5%

Unit Type

5.1% 1.9%

5.5% 0.5%
28.9%

Single

33.7%

31.9%

Urban Family

26.6%

FamilyPremium
Other
32.2%

Note 1:
Note 2:
Note 3:

4Note 4:

33.6%

Ratio of building age and geographic spread are based upon acquisition price. Unit type is based upon net leasable area.
“Other” unit type includes non-residential use areas such as retail, of ces, etc.
The Tokyo 5 Central Wards are the Minato, Shibuya, Shinjuku, Chiyoda and Chuo Wards.
Tokyo 23 Wards represents the other 18 wards after excluding the Tokyo 5 Central Wards.
Greater Tokyo represents Tokyo (excluding Tokyo 23 Wards), Kanagawa, Chiba and Saitama Prefectures.
Figures are rounded to the tenth place. Thus, the sum totals of the above may not necessarily be 100%.

Tokyo 5 Central Wards Share Of Entire Portfolio
And Ratio of Total Investment
JPY Billion

60

25.9%

40

Accounts for 53.9% ofentire portfolio
investment

43.2

30%

The highest concentration of the coreproperties in the New City Residence

20%

14.3%
20

0

4.6%

portfolio is in Minato Ward, highlighted by

23.8

7.7
ChiyodaChuo

Catherina Mita Towersuite (New City

10%

Minato

4.5%

4.7%

7.5

7.8

Shibuya

Shinjuku

Residence) and NCR Takanawa, followed
0%

by Chuo Ward, which includes NCR Ginza.

Percentage of entire portfolio (end of 4th fiscal period)

Chiyoda, Shibuya and Shinjuku Wards allcomprise approximately the same portion of the entire New City Residence portfolio. Shinagawa Ward, withthe acquisition of the NCR Shinagawa Seaside Tower, is also becoming more prominent in the portfolio.
During the period between

Location of Core Assets

2003 and 2005, there wasrelatively little variation in(Changes of Year-on-Year Rates for Residential Land)

land prices among the

Shinjuku Ward

Tokyo 5 Central Wards. In(%)

ChiyodaWard

2006, however, prices rose

ShibuyaWardnoticeably, with the mostsignificant climb coming

30

Chuo
Ward

and, while Chuo Ward

10

2006

5

2005

0

2004

Shinagawa Wardand Shibuya Ward have

NCR Shinagawa Seaside Tower
NCR Takanawa
Catherina Mita Towersuite(NCR)
NCR Ginza
NCR Minami Aoyama

gained ground, residential
land is still most expensive
in Minato Ward.

Variation in Average
Building Age
Properties

Years

4.2
93

-5

Chuo
Ward

MinatoWard

JPY Billion

8

6

6.06

4

3.7
3.5

4.00

3.4
3.4

2

1.26

3.3
0

3.0
2nd Period

Average building age

3rd Period

Shinjuku
Ward(Source: Ministry of Land, Infrastructure and Transport)

3.8

25

Shibuya
Ward

94

77

1st Period

ChiyodaWard

Variation in Average Price
Per Acquisition

100

50

2007

15

continued to rise in 2007

75

25
20

MinatoWardin Minato Ward. Prices

86

Land Prices inTokyo 5 Central Wards

4th Period

Properties held at end of period

2.84

1.26

1.42

1st Period

2nd Period

1.62

1.78

3rd Period

4th Period

0
Average price per aquisitionin portfolio

Average price per aquisition
during period5Growth Strategy

External GrowthWith the goal of realizing stable external growth, New City Residence employs specific strategies including asolid pipeline strategy, diversified acquisition methods, growing profit through a select portfolio and conducting
due diligence. New City Residence has put in place and is committed to its external growth strategies that are
multifaceted and include collaborating with its sponsor New City Corporation as well as major brokerage firms
and trust banks, robust sourcing channels, promoting the acquisition of properties under development as well
as clearly defined guidelines for maintaining a select portfolio and conducting due diligence.

Pipeline Strategy♦ Collaboration with sponsor New City
Corporation(As per memorandum on rovision f Real
Estate Information and Operational Support)♦ Alliances with major brokerage firms(As per memorandum on Provision of Real
Estate Brokerage Information, etc.)• The Chuo Mitsui Trust and Banking• Sumitomo Real Estate Sales• Tokyu Livable• Mitsui Real Estate Sales

Growing Profit through a SelectPortfolio♦ Construct portfolio with high potential to raiserents• Investment focuses on Tokyo 5 Central Wards*• Acquisition of “Close,”“New”and“Large” core assets♦ Selective investment in high-yield properties
in the heart of key regional cities♦ Stabilization of cash flows from new properties withlow occupancies through master leases from seller*Minato, Shibuya, Shinjuku, Chiyoda and Chuo wards

Acquisition Method Diversification♦ Develop robust sourcing channels♦ Promote acquisition of properties still underdevelopment• Avoid excessive property competition• Apply New City Residence specifications forbuilding design

Due Diligence♦ Construct system for double checking
engineering reports and appraisal reports
internally♦ Periodic inspections of properties during
construction♦ Obtaining Reps & Warranties from sellers forlegal compliances and liabilities for latent
defects

6

Internal Growth
New City Residence puts to work various strategies to ensure internal growth. In an effort to establish “NewCity Residence” as a high-end brand, New City Residence acquires high-quality rental condominiums andoffers innovative value-added services to maximize satisfaction, occupancy and rent growth. Through effective
property management, cost efficiency and standardization of specifications, the improvement of management
is sought. The application of strategic asset management through maintenance of property performance andtenant data improves profitability of existing assets and serves as a valuable information database for use in
future acquisitions and growth.

Spreading of the “New City Residence”
Brand

Achievement of High Occupancy andHigher Rent

♦ High-quality rental condominiums♦ Accumulated leasing know-how insures
maintenance of high occupancy♦ New additions to tenant services*♦ Higher rents for renewals and new leases♦ New City Residence credit card*♦ Monitoring survey and new initiatives based on
results*♦ Strengthen collaborative relationship withleading rental agents*Provided through New City Property Services K.K.

Cost Reduction and Improvement ofManagement Specifications

Strategic Asset Management♦ Effective property management in each andevery area

♦ Greater efficiency in property performance andtenant data management♦ Cost reduction through building managementbids and stricter management specifications♦ Reinforce depth of performance records andbuild a track record database utilizing the MRI
system*♦ Standardization of management specifications
nationally*MRI stands for “Management Reports International,” an asset
management system.

7

Brand Strategy
Implementing a strong, integrated brand strategy is central to our overall growth strategy. It aims to establish
and propagate the New City Residence brand to enhance the attractiveness of our properties, increase thesatisfaction of people who live there, and thus ensure stable and larger revenues from the entire portfolio. We
are committed to continuously implement various measures in line with this strategy, such as those outlined
below. The tenant service program is provided through New City Property Services K.K., which is a property
management company used by New City Residence.

New City Residence Card

New City 24

All tenants are eligible to join the New City Residence Credit

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

Card program, which carries benefits such as bonus andcenter staffed by dedicated maintenance personnel

mileage points tied to rent payments and automatic rent

ready to assist tenants with everything from water leaks

deductions.

and air conditioning
problems to questions
from new tenants
before moving in.

Living Option

Living Handbook

Through our Living Option program,

Details on all services, along with information on property

tenants can contact a variety ofmanagement, the surrounding area and emergency

service providers to take care ofcontacts as well as the Living Option program are found

food delivery, dry cleaning andin New City Residence's Living

home appliance rental, andHandbook.

request housecleaning or regularhousekeeping.

Exclusive Site for Tenants

New City Patrol

Useful information can be obtained through the exclusive

New City Patrol comprises a team oftenant homepage, which also serves as a communicationbuilding and security professionals that

conduit between tenants

make monthly inspections of New Cityand property management.

Residence properties from the perspectiveof the tenant, confirming the proper
upkeep of the exterior, cleaning, building
management, and security features.

New City Reform
Unit renovations are provided under a central structure handling everything from orders to construction via New
City Residence's property manager, New City Property Services K.K., and a partner company (within Tokyo

8

Metropolitan Area and Osaka Area)

Collaboration Network
Our clearly defined collaboration network provides the backbone to our growth and includes: strategic
pipelines as sources to excellent properties; an integrated property management services provided by New City
Property Services K.K. for standardized, high-quality and economical management services; and businessalliances with major real estate agents to maintain high occupancy rates.

Pipeline strategies
Collaboration withSponsor

Acquisition of
Development Projects

Investment Corporation♦Real estatecompanies♦Developers

New City Corporation K.K.
• Supplying real estate
information from third parties• Developing properties for New
City Residence

Memorandum on
provision of realestateinformation andoperational
support

Provision ofdevelopment
projects
New City Residence
Investment Corporation• Developing portfolio thatsatisfies "New City Residence"standards• Early commitment to avoid
increased competition overacquisitions

Property Information
Providers

Asset Management
Company

The Chuo Mitsui Trust andBanking Company

Sumitomo Real Estate Sales
Tokyu Livable

Memorandum on
provision of realestatebrokerage
information, etc.

CBRE Residential
Management K.K.

Mitsui Real Estate Sales
Basic agreement concerning consigned
property management work

Intensification of property management businessand standardization of high-quality services• Property management from a medium- to long-term perspective• Integration of tenant-oriented service program

New City Property Services K.K.

• Reduction of management costs

Outsourcing contracts for leasing operations

Enhance leasing networks throughbusiness alliances with major realestate agents

Able

Taisei Housy

Town Housing

Minimini

Relo Estate

Resident First

Tokyu Livable• Distribute "New City Residence" information to allbranches through head offices of major leasing agents• Utilize the website, branch and marketing network ofeach agent

9New City Residence Portfolio

Core Assets
C-38

Catherina Mita Towersuite (New City Residence)
The largest property in our portfolio, this newly-built for-salecondominium consists of a 36-story tower and a 28-story tower. Of
the combined 759 units from the two towers, New City Residence
has acquired 264 units, or 34.5% of the total. The landmark
property represents our strategy of investing in new and large-scalecondominiums located in the center of major cities. It features goodaccess to CBDs and principal commercial areas in Tokyo.

Features
Sky Garden(West Ark)
Library Lounge
Owner's Studio
City View Lounge(East Ark, 29F)
Sky View Lounge(West Ark, 26F)
Guest Room
Parking facilities for249 vehicles
Concierge service
Housemaid service(fee)
Security systems anddevices
Various amenities
including:
24-hour air
ventilation,

Acquisition price

JPY 16,200 million

Acquisition date

December 2006

floor heating inliving and dining
rooms,

Location

4-16-1, 16-2 Shiba, Minato Ward, Tokyo (2-minute walk from Mita Station on the Toei Subway Line)

Floors36/B2 (East Ark)

built-in water
purifier,

Net rentable area

17,553.76m

Number of units

264 (East Ark 116, West Ark 148)

28/B2 (West Ark)

Sectional ownership (percentage held: 34.5%)

dishwasher,
keyless security box

2Completion dateAugust 2006

Appraisal value *JPY 16,300 million (CR 4.7%)*Based on appraisal report as of date of acquisition. Cap rate is based on net cash flow.

10

C-36

New City Residence Takanawa
A large-scale community housing with 169 units
centering on urban family type, NCR Takanawa
features high quality and superb specifications

FeaturesConcierge service

comparable to those of for-sale condominiums. It

Parking facilities for
96 vehicles

is located in Takanawa, a highly popular residential

Surveillance systemarea in downtown Tokyo, and about one minute

Modern personal
security systems anddevices

walk from Sengakuji subway station.

Broadband service
Acquisition price

JPY 10,995 million

Acquisition date

January 2006

Location

2-17-12 Takanawa, Minato Ward,

Various amenities
including:
24-hour air
ventilation,

Tokyo (1-minute walk from Sengakuji
Station on the Toei Subway Line)
Floorsfloor heating inliving and dining
rooms,

12
2

Net rentable area

10,408.26m

Number of units

169 (entire building)Completion dateAugust 2005

Appraisal value*

JPY 11,000 million (CR 4.7%)

temperaturecontrolled bath,auto sensor entrance
lighting*Based on appraisal report as of date of acquisition. Cap rate is basedon net cash flow.

M-23 New City Residence Shinagawa Seaside Tower
A 25-story tower condominium, Shinagawa Seaside

FeaturesTower features good access to JR Shinagawa station,

Concierge service

where Shinkansen bullet trains stop, and Haneda
Airport, which is a gateway to Tokyo. Located in the

Parking facilities
for 208 vehicles

redevelopment area along the Tokyo Bay, it is surrounded by

Surveillance systemcommercial facilities
and sports clubs as wellModern personal
security systems anddevices

as office buildings andBroadband service

condominiums.

Various amenities
including:Acquisition price

JPY 9,350 million

Acquisition dateJune 2006

Location

4-10-18, Higashi-Shinagawa, ShinagawaWard.
Tokyo (5-minute walk from ShinagawaSeaside
Station on the Rinkai Line)

Floors25
2

Net rentable area

12,732.35m

Number of units

208 (entire building)Completion dateNovember 2005

Appraisal value*

JPY 9,350 million (CR 5.0%)24-hour air
ventilation,
floor heating inliving and dining
rooms,
auto sensor entrance
lighting*Based on appraisal report as of date of acquisition. Cap rate is based on net cash flow.

11

Portfolio Map
Tokyo 5 Central Wards

Shinjuku

ChiyodaShibuyaChuo

MinatoChiyodaC-34

NCR Ginza

ShibuyaC-4

NCR Ochanomizu

C-35

NCR Nihonbashi Suitengu

C-5

NCR Sangubashi

C-20

NCR Shin-Ochanomizu

C-37

NCR Higashi Nihonbashi

C-12

NCR Harajuku

C-21

NCR Jinbocho

C-14

NCR Yoyogi Uehara

C-23

NCR Jinbocho II

MinatoC-15

NCR Sendagaya

C-1

NCR Minami Aoyama

C-26

NCR Sasazuka

C-2

NCR Nishi Azabu Twin Tower

Chuo

12

C-8

NCR Nihonbashi EastC-3

NCR Nishi Azabu

Shinjuku

C-9

NCR Nihonbashi West

C-13

NCR Mita

C-6

NCR Shinjuku Ichibankan

C-10

NCR Ginza Twin I

C-27

NCR Takanawadai

C-7

NCR Shinjuku Nibankan

C-11

NCR Ginza Twin II

C-31

NCR Takanawadai II

C-16

NCR Shinjuku 7-chome

C-18

NCR Nihonbashi Ningyocho I

C-32

NCR Minami Azabu

C-17

NCR Ichigaya Sanaicho

C-19

NCR Nihonbashi Ningyocho II

C-33

NCR Minami Azabu East

C-25

NCR Shinjuku Gyoen I

C-22

NCR Nihonbashi Ningyocho III

C-36

NCR Takanawa

C-29

NCR Shinjuku Gyoen II

C-24

NCR Ginza East III

C-38

C-28

NCR Nihonbashi Ningyocho IV

Catherina Mita Towersuite(New City Residence)

C-30

NCR Ginza East IV

New City Residence places high priority not only on value, location and age, but
gives equal weight to the design, construction and livability of residential properties
when considering acquisition. New City Residence properties offer extreme comfort
and security. Focusing on the five central wards of Tokyo and high potential
growth properties in the other 18 wards has enabled us to construct astrong portfolio full of profit-generating properties.

Tokyo
23 Wards
G-1

NCR Yokohama EastR-1

NCR Odori-koen

M-6

NCR Senzokukoen

G-2

NCR Funabashi Honcho

R-2

Goshikiyama Heights

M-8

NCR Monzennakacho

G-3

SH Motosumiyoshi

R-3

NCR Nishikoen

M-9

NCR Denenchofu

G-4

NCR Toyoda

R-4

NCR Nishi Ohori

M-10 NCR Negishi

G-5

NCR Nishi Funabashi

R-5

NCR Kakogawa

M-11 NCR Kamiikedai

G-6

NCR Maihama

R-6

LM Maebashi Nishikatakai

M-12 NCR Otsuka

G-7

NCR Ichikawamyoden

R-7

Aprile Tarumi

M-13 NCR Morishita

G-8

NCR Kumegawa

R-9

Crest Kusatsu

M-14 NCR Wakabayashi koen

G-9

NCR Urayasu

R-10

NCR Honmachi East

M-15 NCR Asakusabashi

G-10

NCR Minamigyotoku I

R-11

NCR Shin-Umeda

M-16 NCR Gakugeidaigaku

G-11

NCR Minamigyotoku II

R-12

NCR Shizuoka Takajo

M-17 NCR Jiyugaoka

G-12

NCR Nogeyama

R-13

NCR Abeno

M-18 NCR Mejiro East

G-13

NCR Minamirinkan

R-14

NCR Otedori

M-19 NCR Iriya

G-14

NCR Shonan

R-16

NCR Nipponbashi Kouzu

M-20 NCR Ikebukuro

G-15

LM Fuchinobe Honcho

G-16

LM Higashi Oume Daisan

M-2

NCR Todoroki

M-21 NCR Kaname-cho
M-22 NCR Ueno Tower

G-17

Park Terrace Ichikawa

M-3

NCR Honjo Azumabashi

M-23 NCR Shinagawa Seaside Tower

G-18

Park Terrace Shioyaki

M-4

NCR Kitazawa

M-24 NCR Yakumo

G-19

Park Terrace Horie

M-5

NCR Meguro

M-26 NCR Togoshiginza

13

Portfolio List
As of end of 4th period (February 28, 2007)
Acquisition Price No. of Leasable
Property Name(million yen)
Units (units)
No.
(Note 2)
(Note 3)(Note 4)
Tokyo Central 5 Wards (Note 1)
NCR Minami Aoyama
62
C-1
3,783
NCR Nishi Azabu Twin Tower
60
C-2
3,315
NCR Nishi Azabu
37
C-3
3,143
NCR Ochanomizu
44
C-4
2,300
NCR Sangubashi
26
C-5
1,734
NCR Shinjyuku Ichibankan
105
C-6
1,978
NCR Shinjyuku Nibankan
41
C-7
889
NCR Nihonbashi East
62
C-8
1,622
55
NCR Nihonbashi West
C-9
1,480
40
NCR Ginza Twin I
C-10
1,133
33
NCR Ginza Twin II
C-11
968
21
NCR Harajyuku
C-12
1,220
30
NCR Mita
C-13
986
25
NCR Yoyogi Uehara
C-14
765
21
NCR Sendagaya
C-15
695
23
C-16
NCR Shinjyuku 7 Chome
626
21
C-17
NCR Ichigaya Sanaicho
577
32
C-18
NCR Nihonbashi Ningyocho I
1,230
38
C-19
NCR Nihonbashi Ningyocho II
1,290
32
C-20
NCR Shin-Ochanomizu
1,160
65
C-21
NCR Jinbocho
2,803
63
C-22
NCR Nihonbashi Ningyocho III
1,662
60
C-23
NCR Jinbocho II
1,470
41
C-24
841
NCR Ginza East III
108
C-25
3,140
NCR Shinjuku Gyoen I
90
C-26
3,050
NCR Sasazuka
32
C-27
1,180
NCR Takanawadai
48
C-28
842
NCR Nihonbashi Ningyocho IV
27
C-29
580
NCR Shinjuku Gyoen II
20
C-30
510
NCR Ginza East IV
40
C-31
1,530
NCR Takanawadai II
24
C-32
840
NCR Minami Azabu
40
C-33
1,260
NCR Minami Azabu East
96
C-34
4,000
NCR Ginza
88
C-35
3,332
NCR Nihonbashi Suitengu
169
C-36
10,995
NCR Takanawa
103
C-37
4,930
NCR Higashi Nihonbashi
264
C-38
16,200Catherina Mita Towersuite(New City Residence)
2,186
90,059SUBTOTAL

14

Tokyo 23 Wards excluding Central 5 Wards (Note 1)
NCR Meguro Mita (Note 8)
M-1
6,066
NCR Todoroki
M-2
1,850
NCR Honjo Azumabashi
M-3
1,122
NCR Kitazawa
M-4
1,070
NCR Meguro
M-5
1,050
NCR Senzokukoen
M-6
921
NCR Kyodo (Note 8)
M-7
715
NCR Monzennakacho
M-8
524
M-9
NCR Denenchofu
511
M-10
NCR Negishi
356
M-11
NCR Kamiikedai238
M-12
NCR Otsuka
1,290
M-13
985
NCR Morishita
M-14
970
NCR Wakabayashi koen
M-15
870
NCR Asakusabashi
M-16
1,210
NCR Gakugeidaigaku
M-17
1,470
NCR Jiyugaoka
M-18
1,080
NCR Mejiro East
M-19
675
NCR Iriya
M-20
3,227
NCR Ikebukuro

41
22
35
15
26
19
24
31
17
12
12
54
38
23
32
38
40
29
22
87

Structure,
Completed Floor
Aug. 2002
Mar. 2003
Mar. 2002
Aug. 2002
Oct. 1998
May 2002
Apr. 2002
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
Sep. 2004
Dec. 2004
May 2004
Jun. 2004
Sep. 2003
Sep. 2004
Feb. 2004
Apr. 2003
Mar. 2004
Dec. 2003
Sep. 2004
Jul. 2004
Sep. 2005
Oct. 2005
Jul. 2005
Aug. 2005
Feb. 2006
Aug. 2006

Sep. 2002
Mar. 1993
Sep. 2003
Jan. 2002
Apr. 2000
Apr. 1995
May 1989
Sep. 2000
Jul. 1995
Jul. 2000
Mar. 2002
Sep. 2004
Sep. 2004
Feb. 2004
Jan. 2005
Apr. 2005
Apr. 2004
Apr. 2005
Jun. 2005
Jan. 2005

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

Occupancy Rate Rental
at end of period Revenue(%) (Note 5) (thousand yen)

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

98.2
95.5
95.4
93.8
92.5
98.1
97.5
96.5
97.7
98.4
100.0
100.0
100.0
100.0
95.8
90.9
90.0
96.8
100.0
97.3
92.9
90.4
98.4
95.3
100.0
98.8
96.9
100.0
100.0
95.0
92.8
86.4
92.5
99.1
96.0
95.7
99.2
65.4

111,788
90,17392,56861,51450,03664,44429,44947,29944,202
34,021
30,69933,37531,34623,92821,20518,752
16,416
40,837
41,79035,481
90,122
51,13645,316
26,26090,004
97,60630,77827,83317,01017,613
41,991
22,46938,841
96,70896,385
279,601
60,148103,027

2.4
1.9
2.0
1.3
1.1
1.4
0.6
1.0
0.9
0.7
0.6
0.7
0.7
0.5
0.4
0.4
0.3
0.9
0.9
0.7
1.9
1.1
1.0
0.6
1.9
2.1
0.7
0.6
0.4
0.4
0.9
0.5
0.8
2.0
2.0
5.9
1.3
2.2

91.1

2,152,191

45.4

94.9
100.0
80.0
100.0
100.0
100.0
100.0
92.1
100.0
92.8
100.0
100.0
96.4
92.1
95.5
100.0
100.0
96.0

68,021
57,35637,141
26,42028,25930,2509,422
20,90919,310
11,541
8,477
44,04934,60030,14331,54339,49543,22034,96823,526
93,652

1.4
1.2
0.8
0.6
0.6
0.6
0.2
0.4
0.4
0.2
0.2
0.9
0.7
0.6
0.7
0.8
0.9
0.7
0.5
2.0

Acquisition Price No. of Leasable
Property Name(million yen)
Units (units)(Note 2)
No.
(Note 3)(Note 4)73
NCR Kaname-cho
1,360
M-21
102
NCR Ueno Tower
2,990
M-22
208
9,350
M-23
NCR Shinagawa Seaside Tower
18
1,160
M-24
NCR Yakumo
80
1,960
M-26
NCR Togoshiginza
1,098
43,020SUBTOTAL

Percentage of Total
Occupancy Rate Rental
Rental Revenue
at end of period Revenue(%) (Note 5) (thousand yen) (%) (Note 6)
0.8
39,711100.0
2.1
98,33697.0
4.9
231,598
95.3
0.3
14,26594.5
0.4
17,297100.0
23.1
1,093,522
96.6

CompletedAug. 2005
Feb. 2005
Nov. 2005
Nov. 2005
May 2006

Structure,
Floor
RC, 13F
SRC, 14F/B1F
RC, 25F/B2F
RC, 3F/B1F
RC, 10F

Greater Tokyo excluding Tokyo 23 Wards (Note 1)
NCR Yokohama East
228
G-1
6,753
NCR Funabashi Honcho
86
G-2
1,083
SH Motosumiyoshi
G-3
1,058 57 (73) (Note 7)
NCR Toyoda
G-4
1,053
67
NCR Nishi Funabashi
G-5
997
81
NCR Maihama
G-6
844
61
NCR Ichikawamyoden
G-7
769
58
G-8
NCR Kumegawa
715
31
G-9
NCR Urayasu
653
51
G-10
NCR Minamigyotoku I
648
49
G-11
NCR Minamigyotoku II
447
35
G-12
469
NCR Nogeyama
30
G-13
456
NCR Minamirinkan
29
G-14
445
NCR Shonan
19
G-15
222 15 (26) (Note 7)
LM Fuchinobe Honcho
G-16
175 33 (61) (Note 7)
LM Higashi Oume Daisan
G-17
620
PT Ichikawa
40
G-18
310
PT Shioyaki
36
G-19
193
PT Horie
22
17,910
1,028
SUBTOTAL

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

98.8
100.0
91.4
98.4
97.5
94.9
100.0
93.8
100.0
93.9
82.9
100.0
96.5
94.7
79.5
79.5
100.0
88.9
85.6
96.0

227,883
44,37655,781
44,38135,22331,40926,886
23,70822,94821,06014,801
16,102
16,667
16,0637,450
5,690
19,852
14,478
7,967
652,731

4.8
0.9
1.2
0.9
0.7
0.7
0.6
0.5
0.5
0.4
0.3
0.3
0.4
0.3
0.2
0.1
0.4
0.3
0.2
13.8

Regional Cities (Note 1)
NCR Ohdori-koen
R-1
Goshikiyama Heights
R-2
NCR Nishikoen
R-3
NCR Nishi Ohori
R-4
NCR Kakogawa
R-5
R-6
LM Maebashi Nishikatakai
R-7
Aprile Tarumi
R-8
NCR Uehonmachi (Note 8)
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-16
NCR Nipponbashi Kouzu
SUBTOTAL

726
720
379
258
274
202
1,710
855
3,830
1,740
1,640
770
5,400
382
4,780
23,66623 (40) (Note 7)
99
30
540
117
108
45
153
31
262
1,562

Oct. 2000
Aug. 1993
Oct. 2000
May 2000
Sep. 2000
Feb. 1992
Jan. 2003
Jul. 2004
Feb. 1999
Feb. 2005
Feb. 2005
Feb. 2006
Jan. 2006
Jan. 2006
Jan. 2006

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

74.7
100.0
100.0
100.0
85.3
96.0
100.0
100.0
93.1
92.3
93.3
97.4
84.3
97.5
96.1

23,93928,25818,164
11,084
15,761
9,116
62,148
11,325
158,898
64,06760,70532,463
169,766
13,798156,805
836,302

0.5
0.6
0.4
0.2
0.3
0.2
1.3
0.2
3.4
1.4
1.3
0.7
3.6
0.3
3.3
17.7

TOTAL

174,655

5,874

94.2

4,734,746

100.0

40
33
30
17
34

Note 1: "Tokyo Central Five Wards" comprises Minato Ward, Shibuya Ward, Shinjuku Ward, Chiyoda Ward and Chuo Ward. The "Tokyo 23 Wards excluding Central
Five Wards" comprises all 23 wards of Tokyo excluding the aforementioned five wards. The "Greater Tokyo excluding Tokyo 23 Wards" comprises Tokyo
Prefecture excluding the 23 Wards of Tokyo, and Kanagawa, Chiba, and Saitama Prefectures. "Regional Cities" comprises all other areas excluding the
aforementioned.
Note 2: Under "Property Name," "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 Apartments column indicates the leasable apartments of individual real estate and trust real estate as of February 28, 2007. The numberof units included in the portfolio after the public offering is indicated for the compartmentalized ownership properties.
Note 5: The Occupancy column indicates the ratio that the leased floor space of individual real estate and trust real estate comprises of their total leasable floor
spaces and the data as of February, 2007.
Note 6: The Percentage of Total Rental Revenue figures rounded to the first decimal place.
Note 7: The No. of Leasable Apartments column for the following compartmentalized ownership buildings has the number of apartments included in acquired assets
and planned acquisition assets entered with the number of apartments for the entire building entered in the parentheses. SH Motosumiyoshi, LM Fuchinobe
Honcho, LM Higashi Oume Daisan and LM Maebashi Nishikatakai.
Note 9: M-1 (NCR Meguro Mita), M-7 (NCR Kyodo) and R-8 (NCR Uehonmachi) were sold on October 31, 2006. Figures entered in the above Rental Revenue andPercentage of Total Rental Revenue columns are for the two months from September 1 to October 31, 2006.
Note 10: 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.

15

Overview of
New City Residence
Investment Corporation Structure
Property Information Providers
The Chuo Mitsui Trust

New City Residence
Investment Corporation

and Banking Company, Limited
Sumitomo Real
Estate Sales Co., Ltd.

Accounting Auditor(Temporary Accounting Auditor)
PricewaterhouseCoopers Aarata

Tokyu Livable, Inc.
Mitsui Real Estate Sales Co., Ltd.

Information and Property Provider

General Meeting ofUnitholders

Transfer Agent

Board of Directors

Mitsubishi UFJ Trustand Banking Corporation

New City Corporation K.K.
Executive Director
Tetsuya Fujita
Supervisory Director
Koichi Shimada

Property Management Company
New City Property Services K.K.
and others

Supervisory Director
Rika Nakamura

Administrative Agent/Asset Custodian
Mizuho Trust & Banking Co., Ltd.

Asset Management
Company

Information Provider

CBRE Residential
Management K.K.

Investment Corporation BondManagement Company, Paying Agent

CB Richard Ellis Investors, LLC
CB Richard Ellis Investors K.K.

The Chuo Mitsui Trustand Banking Co., Ltd

Notes to the Investment Corporation Structure
ASSET MANAGEMENT COMPANY: CBRE Residential
Management K.K. provides services including
matters relating to the management of investment
assets and the 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 issue of investment
units, administration of accounting matters and tax
payments, preparation of accounting records andfinancial statements and other services.
TRANSFER AGENT: Mitsubishi UFJ Trust and Banking
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 other16

services concerning unitholders.
INVESTMENT CORPORATION BOND MANAGEMENTCOMPANY AND PAYING AGENT: The Chuo Mitsui
Trust and Banking Co., Ltd. receives payments,
preserves debt, conducts management functions
related to investment corporation bonds, and to
repayment of principal to the investment corporationcreditor of the investment corporation bonds and thepayment of interest on these bonds.
INFORMATION AND PROPERTY PROVIDER: New City
Corporation K.K. provides New City Residence withreal estate information concerning properties foracquisition, in addition to other business support.
INFORMATION PROVIDER: CB Richard Ellis Investors
LLC and CB Richard Ellis Investors 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 andinspection on a limited basis, the purchase andsupervision of installation and related work
regarding equipment, fixtures, materials andconsumables; leasing management service
administration; lease execution and maintenance,and collection of lease payments and overdue rent.
PROPERTY INFORMATION PROVIDER: The Chuo
Mitsui Trust and Banking Company, Limited,
Sumitomo Real Estate Sales Co., Ltd., Tokyu Livable,
Inc. and Mitsui Real Estate Sales Co., Ltd. provide
information relating to real estate held by, or to be
developed and held by third parties.

Organizational Chart ofAsset Management Company

General Meeting ofUnitholders
Statutory Auditor
Board of Directors
Outside Directors (3)Compliance & Risk
Management Committee

Investment Committee
Outside Specialist (1)Compliance & Risk
Management OfficeInternal Audit Office

President Tetsuya Fujita

Investment & AssetManagement Division

Finance Division

Administration Division

Research & IR
Department

Finance
Department

Planning
Department

Acquisition
Department

Accounting
Department

Administration
Department

Asset Management
Department
Operation Planning
Department

17

Governance for
Conflicts of Interest
A three-layer check system, including outside personnel, has been established to monitor transactions
between interested parties. Interested parties are defined in Article 15-2 of the Investment Trust Law of Japanas shareholders with a 10% or more share of the asset management company, or those who have establishedspecial-purpose vehicles on behalf of asset management affiliates.

Drafting Department
Compliance Officer
Chief Investment Officer
Chief Financial Officer
Investment Committee
Compliance &Risk Management Committee[ Members ]Compliance Officer, President,
three outside directors,
Chief Administration Officer,
Chief Financial Officer andChief Investment Officer

Investment Committee
Compliance &Risk Management Committee[ Members ]Chief Investment Officer, President,
three outside directors,
Chief Financial Officer andoutside specialist

Board of Directors

Board of Directors[ Members ]All directors including
three outside directors

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

18

Selective Financial
Data
Operating Results and Asset Status
Operating revenues(Real estate rental revenues)
Operating expenses

Unit

4th Fiscal
Period

3rd Fiscal
Period

2nd Fiscal
Period

1st Fiscal
PeriodAug. 2005

Feb. 2007

Aug. 2006

Feb. 2006

Millions of yen

5,678

4,201

3,346

3,224

Millions of yen(4,734)(4,201)(3,346)(3,224)

Millions of yen

2,527

2,125

1,607

1,485

Millions of yen(1,856)(1,559)(1,209)(1,143)Operating income

Millions of yen

3,151

2,075

1,739

1,738

Ordinary income

Millions of yen

2,442

1,635

1,435

1,151

Net income (a)Millions of yen

2,437

1,630

1,433

1,146

Total assets (b)Millions of yen

181,509

164,094

135,663

104,678

Total unitholders’ equity (c)Millions of yen

88,242

66,756

66,53940,503Unitholders’ capitalMillions of yen

85,791

65,106

65,10639,357

Unit

164,068

122,612

122,61274,556543,268(Property operating expenses)

Investment units outstanding (d)Total unitholders’ equity per unit

JPY537,843

544,451542,687

Millions of yen

2,437

1,630

1,433

1,146

Distribution per unit (e)/(d)JPY

14,85813,302

11,692

15,381(Portion of distribution of earnings per unit)

JPY(14,858)(13,302)(11,692)(15,381)(Portion of distribution in excess of earnings per unit)

JPY

(-)

(-)

(-)

(-)

Ordinary income to total assets (Note 2)%

1.4 (2.9)

1.1 (2.2)

1.2 (2.4)

1.6 (2.2)

Return on total unitholders' equity (Note 2)%

3.1 (6.3)

2.4 (4.9)

2.7 (5.4)

2.9 (4.1)

Equity ratio (c)/(b)

%

48.6

40.7

49.0

38.7

Payout ratio (e)/(a)

%

99.9

100.0

99.9

99.9

Total distributions (e)[Other reference information]
No. of properties

Property

94

93

86

77

m2

246,553.52

227,310.83

183,722.52

153,429.01

End-of-period occupancy rate

%

94.2

92.3

94.6

91.7

Depreciation and amortization

Millions of yen

737

651

500

510

Capital expenditure

Millions of yen

29

65

46

40

NOI from leasing (Note 2)

Millions of yen

3,615

3,293

2,637

2,591

Gross leasable floor space

Debt service coverage ratio (DSCR) (Note 2)

Times

7.6

7.4

12.7

9.3

Funds from operation (FFO) per unit (Note 2)

JPY

19,351

18,616

15,774

22,231

Funds from operation (FFO) (multiple) (Note 2)

Times

15.5

13.6

16.9

18.3

Millions of yen

90,30094,60066,90062,200End-of-period ratio of interest-bearing liabilities to total assets (Note 2)

%

49.7

57.6

49.3

59.4

Management period

Days

181

184

181

260

Total interest-bearing liabilities

Note 1

Monetary figures are rounded down to the digit indicated. Figures for each comparison, etc. are rounded to the tenth place. The payout ratio is also rounded
down to the tenth place.

Note 2

Denoted indicators are calculated utilizing the methods described below. In addition, annualized figures from the management period are indicated in parentheses.
The actual management of the first fiscal period started on December 15, 2004 and ordinary income to total assets and return on total unitholders’ equity
are calculated with December 15, 2004 as the start of the period.
Ordinary income to total assets

Operating income/Average assets
Average assets = (Total assets at start of period + Total assets at end of period) /2

Return on total unitholders’ equity

Net income/Average unitholders’ equity
Average unitholders’ equity = (Unitholders’ equity at start of period + Unitholders’ equity at end of period) /2

NOI from leasing

Rental business income (Rental revenues - Property operating expenses) + Depreciation and amortization

DSCR

Net income before interest, depreciation and amortization / Interest payments

FFO per unit

(Net income + Depreciation and amortization) / Investment units outstanding

FFO multiple

Investment unit price at end of period / Annualized FFO per unit

End-of-period ratio of interest-bearing
liabilities to total assets

Interest-bearing liabilities at end of period / Total assets at end of period

19

20

Financial Statements
Auditors Report

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

Auditors Report22Balance Sheets
Item
AssetsCurrent assets:
Cash and bank deposits
Cash and bank deposits in trust (Note 5)
Rental receivables
Prepaid expenses
Advanced money
Consumption tax refundable
Other current assets
Allowance for doubtful receivables
Total current assets

As of February 28, 2007

As of August 31, 2006

Thousands of yen

Thousands of yen¥

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
Intangible assets:
Leasehold interests in trust
Other intangible assets
Total intangible assets
Investments and other assets
Deposits
Long-term prepaid expenses
Reserve for repairs and maintenanceDerivative assets
Total investments and other assets
Total fixed assets
Deferred assets
Bond issuance costs
Total deferred assets
Total assets
Liabilities and Unitholders' Equity
Liabilities
Current liabilities:
Trade payables
Short-term loan payable (Note 7)Long-term loan payable due within one year (Note 7)
Other payables
Accrued expenses
Consumption taxes payable
Accrued income taxes
Rents received in advance
Deferred tax liabilities
Other current liabilities
Total current liabilities
Long-term liabilities
Investment corporation bonds (Note 8)Long-term loan payable (Note 7)
Deferred tax liabilities
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 and 122,612 units
as of February 28, 2007 and August 31, 2006, respectively
Unappropriated income
Unrealized gain
Unrealized gain from deferred hedge transactions
Total unitholders' equity
Total liabilities and unitholders' equity
The accompanying notes are an integral part of these financial statements.

¥

¥

¥

4,713,872
3,885,406
136,718
47,387700,000
24,134(3,616)
9,503,902¥

3,624,190
3,835,147
125,735
58,4391,218,000
46,44917,456(2,075)
8,923,342

107,527,140
63,284,072
2,182,453(2,280,442)
170,713,224

96,910,550
56,817,484
1,935,503(1,662,973)
154,000,564

913,996
5,252
919,248

913,996
5,429
919,425

10,274
116,156
181,632
28,871
336,934
171,969,407

10,274
95,64265,43531,348
202,701
155,122,691

36,60436,604
181,509,914

48,80648,806
164,094,839

255,079
25,300,000
12,200,000
382,161
155,21332,675
4,983
436,150
11,03813,38138,790,684¥¥

162,516
33,500,000
10,200,000
327,937
120,506
605
383,743
48,67844,743,987

14,000,000
38,800,000
217,062
1,455,701
3,592
54,476,356
93,267,040

14,000,000
36,900,000
12,348
127,520
1,554,656
52,594,525
97,338,513

85,791,179

65,106,293

2,437,788

1,631,032

13,90688,242,874
181,509,914

19,00066,756,326
164,094,839¥

23

Statements of Income
For the six months ended
Item

For the six months ended

February 28, 2007

August 31, 2006

Thousands of yen

Thousands of yen

Operating Revenues:
Rental revenues (Note 9)¥

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

4,734,746¥

4,201,057

944,147-

5,678,893

4,201,057

Operating Expenses:
1,856,401

1,559,231

Asset management fees

462,192

398,530

Custodian fees

10,704

7,561

Administrative service fees

27,212

22,939Property operating expenses (Note 9)

4,200

4,200

166,782

132,940

Total operating expenses

2,527,493

2,125,403

Operating income

3,151,400

2,075,654

Officers' salaries
Other operating expenses

Non-Operating Income
805

197

1,907

1,886

Interest expense on loans

371,280

240,258

Financing related expenses

123,257

73,871

Interest expense on bonds

110,903

113,899

Unit issuance costs

88,544-

Amortization of bond issue costs

12,201

12,201Other non-operating expenses

5,505

2,369

Ordinary income

2,442,420

1,635,136

Income before income taxes

2,442,420

1,635,136

Current

5,012

4,128

Deferred

(333)

42

Net income

2,437,740

1,630,965

Interest income
Other non-operating income
Non-Operating Expenses

Income taxes: (Note 12)

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

24

67

47

Income carried forward¥

2,437,788¥

1,631,032

Statements of Changes
in Unitholders' Equity
For the six months ended August 31, 2006 and February 28, 2007

Balance as of February 28, 2006

Unrealized gain from

UnappropriatedUnitholders' capitaltransactions

Thousands of yen

Thousands of yen

Thousands of yen

¥

¥

¥

65,106,293

Total

deferred hedge

income1,433,646

Thousands of yen-¥

66,539,940

Cash dividends paid-

(1,433,579)-(1,433,579)

Net income-

1,630,965-

1,630,965

Changes in unrealized gain on interest-rate swap--

19,00019,00065,106,293

1,631,032

19,00066,756,326

New unit issuance

20,684,885--

20,684,885

Cash dividends paid-

(1,630,984)-(1,630,984)

Net income-

2,437,740-

2,437,740

Changes in unrealized gain on interest-rate swap--

(5,093)

Balance as of August 31, 2006

Balance as of February 28, 2007¥

85,791,179¥

2,437,788¥

13,906(5,093)¥88,242,874

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

25

Statements of Cash Flows
For the six months ended
Item

For the six months ended

February 28, 2007

August 31, 2006

Thousands of yen

Thousands of yen

Cash Flows from Operating Activities
Income before income taxes¥

2,442,420¥

1,635,136

Depreciation

737,301

651,652

Amortization of long-term prepaid expenses

39,55235,503

Amortization of bond issuance costs

12,201

12,201

Interest income

(805)

(197)

Interest expense

482,183

354,158

Unit issuance costs

88,544-(Increase) Decrease of rental receivables(9,798)(23,560)(Increase) Decrease of consumption tax refundable

46,449(15,323)

Increase (Decrease) of trade payables

92,562(12,649)

Increase (Decrease) of other payables

61,057

111,527

Increase (Decrease) of consumption tax payable

32,675-

Increase (Decrease) of rents received in advance

52,406

118,133(60,066)-

Long-term prepaid expenses
Decrease of property and equipment due to sale (including trust accounts)
Others, net
SubtotalInterest income received
Interest expense paid
Income taxes paid
Net cash provided by operating activities

7,706,296-(86,059)(27,891)

11,636,922

2,838,689

805

190

(447,477)(290,636)(634)(4,962)

11,189,615

2,543,281

Cash Flows from Investing Activities
Purchases of property and equipment in trust(16,661,391)(9,894,496)

Purchases of property and equipment(7,294,971)(17,912,409)

Payments for advanced money(700,000)(1,218,000)

Purchases of intangible assets(245)(2,308)

Payments for deposits

-

(100)

Proceeds from leasehold and security deposits in trust

277,060

264,210

Payments for leasehold and security deposits in trust(313,338)(132,931)

Payments for restricted bank deposits in trust(283,119)(288,485)

Proceeds from restricted bank deposits in trust

423,981

136,855

Proceeds from leasehold and security deposits

103,286

149,511

Payments for leasehold and security deposits(3,692)(3,276)(132,678)(151,297)

Payments for restricted bank deposits
Proceeds from restricted bank deposits

16,3803,278(121,738)(3,435)(24,690,468)(29,052,885)

Proceeds from short-term loan payable

25,300,000

27,700,000

Repayment of short-term loan payable(33,500,000)-

Proceeds from long-term loan payable

17,700,000-

Repayment of long-term loan payable(13,800,000)-

Proceeds from issuance of units

20,684,885-

Payments of unit issuance costs(88,544)-(1,630,984)(1,433,579)

Net cash provided by investing activities

14,665,356

26,266,420

Net change in cash and cash equivalents

1,164,504(243,183)

Cash and cash equivalents at the beginning of period

5,673,658

5,916,841

Payments for reserve for repairs and maintenanceNet cash used in investing activities
Cash Flows from Financing Activities

Payment of dividends

26

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

¥

6,838,162¥

5,673,658

Notes to
Financial Statements
1. Organization and Basis of Presentation♦Organization
New City Residence Investment Corporation (“NCRI”) was established on September 27, 2004 and is based on the Investment
Trust and Investment Corporation Law (Law No. 198 in 1951, including amendments thereafter; hereafter, “ITL”). On December
15, 2004, NCRI listed in the Real Estate Investment Trust section of the Tokyo Stock Exchange (TSE), Securities Code: 8965. NCRI isdedicated to the management of residential properties.
Asset management services are provided by CBRE Residential Management K.K. (the “Asset Manager”). The Asset Manager iscomposed of the following shareholders: CB Richard Ellis Investors K.K. (42.5%), New City Corporation K.K. (42.5%), CSK
Holdings Corporation (10.0%), Mizuho Trust and 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 2007, NCRI owns a total of 94 properties
worth 167 billion yen (approximately 2.7 times its IPO level).
NCRI posted the following performance in the fiscal period audited: 5,678 million yen in operating revenues, 3,151 million yen in
operating income, 2,442 million yen in ordinary income, and 2,437 million yen in net income. As a result, the dividend per unit has
been set at 14,858 yen.

♦Basis of presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in the Japanese Securities
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 ofInternational Financial Reporting Standards.
The accompanying financial statements have been restructured and translated into English from the financial statements of NCRI
prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as
required by the Securities and Exchange Law. In preparing the accompanying financial statements, certain reclassifications andmodifications have been made to the financial statements issued domestically in order to present them in a format that is morefamiliar 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 not necessarily agree with the sum of the individual account balances .

2. Summary of Significant Accounting Policies♦Cash and cash equivalents
Cash and cash equivalents presented in statement 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 andcash equivalents are readily convertible and represent only minimal risk of value fluctuation.

♦Property and equipment (including assets held in trust)
Property and equipment are carried at cost, less accumulated depreciation. Depreciation of property and equipment, except forland, is computed 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
2–15 years♦Intangible assets
Other intangible assets are depreciated using the straight-line method.

27

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

♦New investment unit issuance costs
Costs related to the issuance of new investment units are treated as period expenses. Furthermore, the issuance of new
investment units through a public offering on November 22, 2006 was conducted under an underwriting agreement in which asecurity company underwrote the shares at an issue price and then sold the shares to general investors at an offer price different
from the issue price (known as the “spread method”).
In the spread method, the proceeds from the difference between the issue and offer price belong to the underwriter. Therefore,
NCRI does not pay the underwriter an underwriting commission. At the time of the public offering on November 22, 2006, thedifference between the issue price and offer price was 739,200 thousand yen. If the underwriting agreement had been such thatthe securities underwriter had conducted the underwriting at the issue price, and if the new investment units had been offered togeneral investors at an identical offer price (conventional method), this amount would have been treated as issuance costs.
Consequently, under the spread method, there are no issuance costs recorded on the Statements of Income and retained earningsof the financial statements, and as a result, issuance costs are 739,200 thousand yen lower, compared to the conventional
method. Ordinary income and income before income taxes increased by this amount, compared with the conventional method.

♦Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized over three years.

♦Allowances
To cover possible credit losses, an allowance for doubtful receivables is provided for any amount deemed uncollectible. The
allowance is calculated 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.

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

♦Property-related taxes
Property-related taxes including city planning taxes, depreciable property taxes, and other taxes are imposed on property on acalendar 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 thedate of disposal to the end of the calendar year in which the property is disposed. In accordance with Japanese business practice,
the seller, however, is reimbursed by the purchase of the property for the accrued property-related tax liabilities, and the amountof the settlement reflects this adjustment. NCRI is allocated the portion of the property-related taxes for the period from thepurchase date of each property through the end of the calendar year. Capitalized property-related taxes are 1,190 thousand yen
for the period ended February 28, 2007 and 13,040 thousand yen for the period ended August 31, 2006, respectively.

♦Derivatives and hedge accounting
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 Article of Incorporation of NCRI, and does not enter into such transactions for speculative or trading purposes.
Derivative transactions are measured at fair value. Gains and losses on derivatives are deferred until maturity of the hedgedtransactions and are recognized as either an asset or liability (known as “deferred hedge treatment”).

28

Although deferred hedge treatment has been adopted, NCRI has applied the “simplified method” since September 1, 2006 in
accordance with the amended ITL (effective beginning on May 1, 2006) to interest rate swaps that were executed after theeffective date of the amended ITL. Under the simplified method, interest rate swaps are not measured at fair value, but the net
amount to be paid or received under the swap agreements are recognized and included in interest expense or income as incurred.
Consequently, liabilities decreased by 43,881 thousand yen compared to those based on the former accounting method, andunitholders’ equity increased by this amount for the six months ended February 28, 2007. There is no impact to net income.
NCRI evaluates the effectiveness of hedging instruments by comparing the cumulative fluctuations in cash flows of the hedged
items with that of hedging instruments. However, hedge effectiveness is not evaluated for interest rate swap transactions thatmeet the criteria for the simplified method.

♦Accounting 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 allincome and expense accounts generated by or incurred from the trust assets are recorded in the relevant account items of thebalance sheets and the statement of income and retained earnings.

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

3. Cash and Cash Equivalents
Cash and cash equivalents as of February 28, 2007 and August 31, 2006 consisted of the following:(Thousands of yen)

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

As of February 28, 2007
¥4,713,872
3,885,406(264,317)(1,496,798)¥6,838,162

As of August 31, 2006
¥3,624,190
3,835,147(148,019)(1,637,659)¥5,673,658

4. Schedule of Tangible Assets of Property and Equipment
Tangible assets as of February 28, 2007 and August 31, 2006 consisted of the following:(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 28, 2007
Book
Acquisition Accumulated
Value
Costs
Depreciation¥16,600,462¥16,600,462¥–
90,926,678
90,926,678–
107,527,140
107,527,140–
10,721,854
10,896,689(174,835)
50,398,835
52,387,383(1,988,547)
61,120,689
63,284,072(2,163,382)
86,13687,157(1,021)
204,931
209,476(4,545)
340,813357,431(16,617)490,563
503,391(12,828)
583,701
615,229(31,528)
359,247
409,766(50,518)

As of August 31, 2006
Book
Acquisition Accumulated
Value
Depreciation
Costs¥11,074,399¥–¥11,074,399
85,836,151–
85,836,151
96,910,550–
96,910,550
8,032,952(67,282)
8,100,235
47,198,135(1,519,113)
48,717,249
55,231,087(1,586,396)
56,817,484
55,688(383)
56,072
159,480(1,696)
161,176
257,912(6,380)264,293454,800(9,581)
464,381558,631(23,585)
582,216
372,414(34,948)407,363

2,182,453(117,060)

2,065,393

1,935,503(76,577)

1,858,926¥172,993,667(¥2,280,442)¥170,713,224¥155,663,538(¥1,662,973)¥154,000,564

5. Pledged Assets and Secured Loans
As of February 28, 2007 and August 31, 2006, the following assets were pledged as collateral for the following loans:
Pledged assets:(Thousands of yen)

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
Leasehold interests in trust
Total

As of February 28, 2007
¥2,154,062
27,853,419
282,767
82,581
137,190
48,513,072–¥79,023,094

As of August 31, 2006
¥3,362,148
40,713,576
386,782
418,287
216,096
72,252,781
155,199¥117,504,872

29

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

As of February 28, 2007–
¥12,200,000
21,100,000¥33,300,000

As of August 31, 2006
¥5,800,000
10,200,000
36,900,000¥52,900,000

6. Unitholders’ Equity (stipulated in Paragraph 4, Article 67 of the ITL)NCRI issues only non-par value of 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.

7. Short-Term Loans and Long-Term Loans
Short-term loans and long-term loans as of February 28, 2007 and August 31, 2006 consisted of the following:
As of August 31, 2006
As of February 28, 2007
Interest rate
AmountInterest rate
Amount(%)(Thousands of yen)(%)(Thousands of yen)
Short-term loan payable
Secured loans due on December 26, 2006
1.07%
¥1,300,000
with floating rate
Secured loans due on January 11, 2007
1.07%
1,400,000
with floating rate
Secured loans due on February 1, 2007
1.07%
3,100,000
with floating rate
Unsecured loans due on April 27, 2007
0.69%
14,700,000
with floating rate
Unsecured loans due on June 29, 2007
0.80%
13,000,000
with floating rate
Unsecured loans due on November 30, 2007
0.96%
¥6,400,000
with floating rate
Unsecured loans due on December 13, 2007
0.98%
2,100,000
with floating rate
Unsecured loans due on December 21, 2007
1.01%
16,800,000
with floating rate
Sub total¥33,500,000¥25,300,000
Long-term loan payable due within one year
Secured loans due on December 18, 2006
0.55%
¥10,200,000
Secured loans due on December 17, 2007
0.86%
¥12,200,000
Sub total¥10,200,000¥12,200,000
Long-term loan payable
Secured loans due on December 17, 2007
0.79%
15,300,000
Secured loans due on September 21, 2008
0.61%
21,600,000
1.14%
21,100,000
Unsecured loans due on December 18, 2008
0.87%
4,000,000
Unsecured loans due on December 18, 2009
0.96%
5,700,000
Unsecured loans due on December 17, 2010
1.80%
8,000,000
Sub total¥36,900,000¥38,800,000
Total¥80,600,000¥76,300,000
For the period ended August 31, 2006, NCRI had committed lines of credit of 2,000 million yen with certain financial institutions.
The unused amount of such committed lines of credit was 2,000 million yen as of February 28, 2007.

30

The anticipated maturities of long-term loans for the following four years ended February 28 starting in 2009 were as follows:(Thousands of yen)

2009
2010
2011
2012

¥25,100,000¥5,700,000¥8,000,000-

8. Investment Corporation Bonds
Details of total investment corporation bonds outstanding are summarized as follows:(Thousands of yen)

As of February 28, 2007
AmountInterest rate
First series of unsecured investment corporation
bonds due on February 24, 2011

¥14,000,000

1.61%

As of August 31, 2006
AmountInterest rate
¥14,000,000

1.61%

The anticipated maturities of these bonds for the following four years ended February 28 starting in 2009 were as follows:(Thousands of yen)

2009
2010
2011
2012

¥14,000,000-

9. Rental Revenues and Expenses
Rental revenues and expenses for the six months ended February 28, 2007 and August 31, 2006 were as follows:(Thousands of yen)

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)

As of February 28, 2007

As of August 31, 2006

¥4,305,680
137,530
15,516
276,017¥4,734,746¥3,839,485
118,438
14,463
228,670¥4,201,057

283,269
74,617
135,677
123,485
10,488358,515
46,459737,301
3,053
83,533¥1,856,401¥2,878,345

199,279
55,650125,982
122,9179,400
293,329
46,457
651,652504
54,059¥1,559,231¥2,641,825

31

10. Breakdown of Gain on Sale of Properties
Gains on sales of properties for the six months ended February 28, 2007 and August 31, 2006 were as follows:(Thousands of yen)

M-1 New City Residence Meguro Mita
Proceeds from sale of properties
Cost of properties sold
Other sales expenses
Gains on sales of properties
M-7 New City Residence Kyodo
Proceeds from sale of properties
Cost of properties sold
Other sales expenses
Gains on sales of properties
R-8 New City Residence Uehonmachi
Proceeds from sale of properties
Cost of properties sold
Other sales expenses
Gains on sales of properties

February 28, 2007

August 31, 2006

¥7,070,000(6,086,246)(25,913)¥957,840-¥757,000(748,249)(4,975)¥3,775-¥859,000(871,805)(4,662)¥(17,468)-

11. Per Unit Information
The following table summarizes the net income per unit for the six months ended February 28, 2007 and August 31, 2006 andthe unitholders’ equity per unit as of February 28, 2007 and August 31, 2006.
For the six months ended
For the six months ended
February 28, 2007
August 31, 2006
¥16,804
Net income per unit
¥13,301
145,062 units
Weighted-average number of units
122,612 units
As of February 28, 2007
¥537,843
Unitholders’ equity per unit
Net income per unit is calculated by dividing net income by the weighted daily average number of units.

As of August 31, 2006
¥544,451

Diluted net income per unit is not presented since no warrants and convertible bonds were outstanding during the six months
ended February 28, 2007 and August 31, 2006.

12. Income Taxes
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 28, 2007 and August 31, 2006.
(%)

Statutory income tax rate
Deductible dividend payments
Other
Effective tax rate

As of February 28, 2007
39.39%(39.31)
0.11
0.19%

As of August 31, 2006
39.39%(39.21)0.08
0.26%

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 toachieve a deduction of cash distributions for income tax purposes. Based on such policy, NCRI treated the cash distributions astaxable distributions as defined in the Special Taxation Measures Law.

32

The tax effects of significant temporary differences that resulted in net deferred tax assets or liabilities as of February 28, 2007 andAugust 31, 2006 were as follows:(Thousands of yen)February 28, 2007

August 31, 2006

¥333
1,945
1,432
¥3,710(3,377)
¥333

¥663
817
¥1,479(1,479)¥-¥11,372
11,372¥12,348
12,348

11,03812,348Deferred 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)

13. Leases
NCRI operates its properties that are rented to tenants on lease terms of two years generally, with monthly payments due inadvance. As of February 28, 2007 and August 31, 2006, the future lease revenue under non-cancelable operating leases was asfollows:(Thousands of yen)

Due within 1 year
Due after 1 year
Total

For the six months ended
February 28, 2007
¥411,036
554,433¥956,469

For the six months ended
August 31, 2006
¥488,796
593,741¥1,082,537

14. Derivatives
NCRI had the following derivatives contracts outstanding as of February 28, 2007 and as of August 31, 2006:(Thousands of yen)February 28, 2007
Notional amountInterest rate swap:
Fixed rate payable and floating rate receivable¥33,200,000

Fair value(¥18,602)

August 31, 2006
Notional amount¥10,200,000

Fair value¥31,348

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 the asset management procedures of the asset management company.

15. Related Party Transactions
Tetsuya Fujita, 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 Articles
of Incorporation of New City Residence Investment Corporation. Management fees payable and incurred as of February 28, 2007
and August 31, 2006 and for the periods then ended were as follows:(Thousands of yen)Management fees payable
Asset management fees for the period

February 28, 2007
¥291,127704,692

August 31, 2006
¥247,740
678,670

242,500 thousand yen and 280,140 thousand yen relating to the acquisition of properties were included in asset management
fees in the table above and were capitalized as acquisition costs of the respective property.

33

16. Distribution Information
Pursuant to the distribution policy set forth in Article 35, Paragraph 1 of NCRI’s Article of Incorporation, the maximum distribution
amount cannot exceed unappropriated income, and this amount must exceed 90% of the “distributable income” which is definedin 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 the NCRI’s Article of Incorporation were made.
Based on this policy, the board of directors of NCRI resolved on April 24, 2007 and October 27, 2006 to make cash distributions of
2,437,722,344 yen and 1,630,984,824 yen for 164,068 units and 122,612 units to unitholders of record on February 28, 2007
and August 31, 2006, respectively.
Income carried forward after distributions for the six months ended February 28, 2007 and August 31, 2006 were as follows:
August 31, 2006
February 28, 2007
(Thousands of yen)

Unappropriated income
Cash distribution declared
Income carried forward¥2,437,788
2,437,722
65¥1,631,032
1,630,984
47¥14,858¥13,302(yen)

Cash distribution declared per unit

17. Subsequent Events(1) Transfer of assets
NCRI has concluded a transfer agreement for trust beneficiary rights in real estate on April 13, 2007. Under the transfer
agreement effective April 13, 2007, NCRI transferred the trust beneficiary rights in New City Residence Jinbocho to GE Real Estate
Corporation for 3,275 million yen on June 29,2007. The resulting gain on the sale of the property is approximately 400 million
yen, which will be recorded in operating revenues. The transfer price excludes real estate tax, city-planning tax, and consumptiontax.

(2) Issuance of investment corporation bonds
NCRI issued investment corporation bonds for the purpose of repaying borrowings based on a decision by the board of directors at
a meeting held on November 30, 2006. The proceeds from the issuance of the new bonds were completed on April 12, 2007 as
detailed below.
Second series of unsecured investment corporation bonds
Issue date:
April 12, 2007
Issue amount:
12,000 million yen
Interest rate:
1.79%
Maturity date:
April 12, 2012
Repayment method:
Repayment in full on maturity
Third series of unsecured investment corporation bonds
Issue date:
April 12, 2007
Issue amount:
5,000 million yen
Interest rate:
2.15%
Maturity date:
April 11, 2014
Repayment method:
Repayment in full on maturity34

(3) Repayment of borrowings
NCRI repaid the following unsecured and unguaranteed borrowings on April 17, 2007 prior to the maturity date.
(Millions of yen)

LenderSumitomo Mitsui Banking Corporation
The Chuo Mitsui Trust and Banking Company, Limited.
Shinsei Bank, LimitedAozora Bank, Ltd.
The Bank of Fukuoka, Ltd.
North Pacific Bank, Ltd.
The Sumitomo Trust and Banking Co., Ltd.
Resona Bank, Limited.
The Hyakugo Bank, Ltd.
Mitsui Sumitomo Insurance Co., Limited
The Yamaguchi Bank, Ltd.
The Chiba Bank, Ltd.
Total

Amount¥4,300
2,150
2,150
1,411
1,344
1,344
941
672
672
672
672
672
¥17,000

35

Principal Investment Information
Composition of Unitholders

Investment Unit Performance

Note 1 Unit prices are closing basis.

(as of February 28, 2007)

Number of units owned - 164,068

Trading volume (units)

Overseas investors

6,000

69,072 units 42.10%

Other domestic corporations 7,061 units 4.30%
Financial institutions
71,091 units 43.30%(including securities firms)
Individuals & others

Unit price (yen)700,000

650,000
Unit price

4,000

600,000

Trading volume

16,844 units 10.30%

Number of unitholders - 7,535

550,000

Overseas investors
115
Other domestic corporations 133

1.50%
1.80%

Financial institutions(including securities firms)

141

1.90%

Individuals & others

7,146

94.80%

2,000
500,0000(

450,000Aug.
2006
End of 3rd
scal period

Sep.

Oct.

Nov.

Dec.

Jan.
2007

)

(

Principal Unitholders

Feb.
2007
End of 4th
scal period)

As of February 28, 2007

Name

Investment Units Held Percentage Share (Note 1)

NikkoCiti Trust and Banking Corporation (Investment Trust Account)

10,798 units

6.58%

Morgan Stanley & Co. International Limited

9,162 units

5.58%

Japan Trustee Services Bank, Ltd. (Trust Account)

8,549 units

5.21%

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

7,388 units

4.50%

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

4,735 units

2.88%

State Street Bank & Trust Co 506155

4,627 units

2.82%

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

3,854 units

2.34%

State Street Bank and Trust Company

3,417 units

2.08%

Goldman Sachs International

3,343 units

2.03%

The Chase Manhattan Bank, N.A. London SL Omnibus Account3,249 units

1.98%

59,122 units

36.03%

Total

Note 1 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 28, 2007)
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 Securities 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 undertake no obligation to publicly update them after the date ofthis 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 is subject to change without notice. The reproduction or alteration of the content described in this document without proper prior approval is strictly prohibited.

New City Residence Investment Corporation
http://www.ncrinv.co.jp/eng/