NOMURA REAL ESTATE OFFICE FUND, INC.
Fifth Fiscal Period Semi-Annual Report

Fifth Fiscal Period

Semi-Annual Report
November 1, 2005

http://www.nre-of.co.jp/english/

April 30, 2006

Corporate Data

ProfileNomura Real Estate Office Fund, Inc. (referred to as “Nomura Office Fund” or the “Company” hereafter) was listed on theTokyo Stock Exchange on December 4, 2003 as a real estate investment corporation formed to own and invest in officeproperties, subject to the Law concerning Investment Trusts and Investment Corporations of Japan (referred to as the“Investment Trust Law” hereafter). The Company’s basic investment policy is to assure stable rent revenues and steady
portfolio growth over the medium- to long-term.
Nomura Real Estate Asset Management Co., Ltd. (referred to as “NREAM” hereafter), a wholly owned subsidiary of
Nomura Real Estate Holdings Co., Ltd. is in charge of asset management on behalf of Nomura Office Fund in accordancewith the basic investment policy as described above. Through coordination with Nomura Real Estate Holdings Co., Ltd. andother group companies, NREAM aims to achieve these goals and more.

Corporate Name
Nomura Real Estate Office Fund, Inc.
Corporate Office8-5-1 Nishi Shinjuku Shinjuku-ku, Tokyo
160-0023, Japan
http://www.nre-of.co.jp/english/
Date of Incorporation
August 7, 2003

Strength of Nomura Office Fund

Stock Listing
Tokyo Stock Exchange (Securities Code: 8959)

J-REIT with large-capitalization specialized in office buildings

Unit Price (¥)

Market Value (¥ mln)

1,000,000

Portfolio of 28 properties at a total acquisition price of ¥240.8 billion(as of April 30, 2006)
Aggregate market value of ¥229.5 billion (as of April 30, 2006)
Constituent of MSCI Standard Index

600,000

900,000

500,000

800,000

400,000

700,000

300,000

600,000

200,000

500,000

100,000

Track record of stable management
Five consecutive fiscal periods of growth in revenues and earnings
Steady growth in cash distribution per unit

400,000
Dec. 4
2003

Collaboration with Nomura Real Estate Group
NREAM, in charge of the Company’s asset management, belongs to
Nomura Real Estate Group
Supported by the group companies through provision of sales
information and management expertise

Apr. 30
2004

Oct. 29
2004

Operating Revenues (Lth)Apr. 28
2005

Net Income (Lth)(¥ mln)12,000(¥)
16,00014,5209,810

10,000

Number of Unitholders
13,129 (as of April 30, 2006)

Disclaimer

8,641

10,273Long-term rating: A
Short-term rating: A-1

6,000

Moody’s Investors Service, Inc.

Issuer rating: A3

4,000

Rating and Investment Information, Inc.

Issuer rating: A+

12,000

7,106

6,656

10,000

3,484
2,606

2,000

This semiannual report includes translations of certain Japanese documents originally filed under the Securities andExchange Law of Japan. This report was prepared in English solely for the convenience of and reference by readers
outside Japan and should not be considered as a disclosure statement. The original Japanese documents always govern

4,531

Holding to conservative financial strategies
Promoting long-term fixed-rate arrangements for interest-bearing debts

Investor Relations
For further information, please contact the Asset Management
Company:
Nomura Real Estate Asset Management Co., Ltd.
8-5-1 Nishi Shinjuku, Shinjuku-ku, Tokyo 160-0023, Japan
Tel: +81-3-3365-0507

14,0008,000

Standard & Poor’s Ratings Services

Number of Units Issued
229,970 (as of April 30, 2006)

Independent Auditors
Ernst & Young ShinNihon
Hibiya Kokusai Bldg. 2-2-3 Uchisaiwai-cho Chiyoda-ku,
Tokyo 100-0011, Japan

Cash Distribution per Unit (Rth)15,638Rated A by three domestic and foreign rating agencies

Paid-in Capital¥124,610,212,840 (as of April 30, 2006)

Business Office of the Transfer Agent
Corporate Agency Department
Mitsubishi UFJ Trust and Banking Corporation
7-10-11 Higashisuna Koto-ku, Tokyo 137-8081, Japan
Tel: +81-3-5683-5111

0Apr. 28
2006

Oct. 31
2005

15,150
14,114

Fiscal Period
Six months ending on April 30 and October 31

Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation
1-4-5 Marunouchi Chiyoda-ku, Tokyo 100-8212, Japan

3,596

8,000

1,526

6,000

0

4,000
1st FP

2nd FP

the meaning and interpretation.

2,681

3rd FP

4th FP

5th FPIn general, accounting principles and practices used by real estate investment corporations in Japan (“J-REITs”) in
preparing its financial statements conform with accounting principles generally accepted in Japan (“Japanese GAAP”).
However, they may differ from generally accepted accounting principles applied in certain other countries. Potential
investors should consult their own professional advisors for an understanding of the differences between Japanese GAAP
and generally accepted accounting principles in the United States (“U.S. GAAP”) or other jurisdictions and how thosedifferences might affect the financial information contained herein.
Estimates for Nomura Office Fund’s future operating results contained in this semiannual report are forward-looking
statements and are based on information currently available to Nomura Office Fund and its asset management company

Contents
To Our Investors ....................................................................................1

Property Details ...................................................................................10

Financial Highlights ...............................................................................2

Performance Report ............................................................................17

Portfolio Highlights ...............................................................................3

Financial Section..................................................................................35

Management Summary of the Fifth Fiscal Period ..............................4

Business Structure...............................................................................47

Financial Status of the Fifth Fiscal Period ...........................................7

Profile of the Asset Management Company......................................48

Summary of Portfolio Properties .........................................................8

Corporate Data ......................................................................Back Coverand are subject to risks and uncertainties. Consequently, these projections should not be relied upon as the sole basis forevaluating Nomura Office Fund. Actual results may differ substantially from the projections depending on a number offactors.

Portfolio Map .........................................................................................9

Printed in JapanTo Our Investors
Dear Investors,
We are delighted to be able to present to you the financial results for the fifth fiscal period (ending April 30, 2006) andreport on our activities during the period herein.
We booked operating revenues for this period of ¥9,810 million, current profits of ¥3,597 million, and net incomeof ¥3,596 million. Cash distribution per unit was ¥15,638.
Some of the major developments during the fifth period included new investments in five properties, located in
Shinjuku-ku and Musashino City in Tokyo, Cities of Sendai, Osaka and Hiroshima respectively. As a result of theseinvestments, the number of properties in the portfolio now totals 28 with a total value of ¥240.8 billion on an
acquisition cost basis. Also further diversification of the portfolio has been promoted in terms of both properties andgeographical location.
Turning your eyes to property leasing operation, you will note that the occupancy rate of 98.4% has gone up 1.1
point from the previous period, due to the continuous successful property management. Please also note that various
refurbishment and renovation works have been conducted to keep up and further enhance the competitiveness ofthe properties, with a view to increase rent revenues over the mid-to long-term.
On the financial aspects, we have made a public issuance of investment corporation bonds in the total sum of¥20 billion for the first time ever. This has contributed to diversifying the method of funding as well as promoting thelong-term fixed-rate debts, which in turn helped to build a more stable financial base. In compliance with our policy toseek mid-to long-term optimization, we will continue adhering to the conservative investment policies in future.
Lastly, we would like to thank you again for your patronage in the past periods, and would like to ask for yourcontinued support for the years to come.

Isamu Okada
Executive Director
Nomura Real Estate Office Fund, Inc.

1

Financial Highlights
FINANCIAL SUMMARY
5th FP

4th FP

3rd FP

2nd FP

from Nov. 1, 2005
to Apr. 30, 2006

from May. 1, 2005
to Oct. 31, 2005

from Nov. 1, 2004
to Apr. 30, 2005

from May. 1, 2004
to Oct. 31, 2004

1st FP
from Aug. 7, 2003
to Apr. 30, 2004

Operating Revenues

¥ mln

9,810

8,641

7,106

6,656

4,531

Net Operating Income (NOI) (Note 1)

¥ mln

6,952

6,125

4,970

4,451

3,350

Income before Income Taxes

¥ mln

3,597

3,485

2,682

2,607

1,528

Net Income

¥ mln

3,596

3,484

2,681

2,606

1,526

Total Assets¥ mln

268,559

239,067

208,003

173,545

147,946

Unitholders’ Capital¥ mln

124,610

124,610

92,16892,16871,706

Number of Units Issued

unit

229,970229,970

184,650

184,650

148,600

Net Assets per Unit¥

557,492

557,004

513,672

513,266

492,820

Total Cash Distribution

¥ mln

3,596

3,484

2,681

2,606

1,526

Cash Distribution per Unit¥

15,63815,15014,520

14,114

10,273Funds from Operation (FFO) per Unit (Note 2)¥

21,88920,55920,142

19,255

14,757Note 1: NOI (Net Operating Income) = Real Estate Rental Revenues - Real Estate Rental Expenses + Depreciation
Note 2: FFO per Unit = (Net Income + Depreciation + Amortization of Investment Corporation Bonds Issuance Costs) / Number of Units Issued

CHANGES IN KEY FIGURES
Operating Revenues (¥ mln)

Total Assets (¥ mln)
9,810

10,000Cash Distribution per Unit (¥)

300,000

268,559

8,641

6,656

14,114200,000

6,000

150,000
4,531

14,52014,000208,003

7,106

15,150239,067

250,000
8,000

15,63816,000173,545
147,946

12,00010,273100,000
10,0004,000
50,000
2,000

8,000

0
1st FP

2nd FP

3rd FP

4th FP

5th FP

1st FP

2nd FP

3rd FP

4th FP

5th FP

1st FP

2nd FP

3rd FP

4th FP

5th FPCHANGES IN UNIT PRICE AND AGGREGATE MARKET VALUE
Unit Price (¥)

Market Value (¥ mln)
600,000

1,000,000
Aggregate market value (as of Apr. 28, 2006)..... ¥ 229,510 mln
All-time high price ...............................................¥1,030,000 per unit
All-time low price ................................................¥ 505,000 per unit

900,000

500,000

800,000

400,000

700,000
2nd public offering¥588,000

300,000

3rd public offering¥740,782

600,000

200,000

100,000

500,000
Initial public offering¥500,0000400,000
Dec. 4
2003

2

Apr. 30
2004

Oct. 29
2004

Apr. 282005

Oct. 312005

Apr. 28
2006

Portfolio Highlights
CHANGES IN OCCUPANCY RATE (Average)
The average occupancy rate at the end of the fifth fiscal period was 98.4%, 1.1 point up from the previous period.

Total leasable space (m2)

Average occupancy rate (%)

100.0

97.3

90.0

96.9

97.1

97.3

97.6

98.4

98.4

289,783.37

289,767.43

289,767.43

293,567.17

293,463.78

293,464.10

350,000

300,000

261,428.50
80.0

250,000

70.0

200,000

60.0

150,000
Oct. 31,2005

Nov. 30,
2005

Dec. 31,
2005

Jan. 31,2006

Feb. 28,
2006

Mar. 31,2006(4th FP)

Apr. 30,
2006(5th FP)CHANGES IN SIZE OF PORTFOLIO
Diversification of the portfolio, which has steadily increased since the initial listing, has also been promoted.

28 bldgs(¥ bln)300

23 bldgs
19 bldgs

240.8

18 bldgs

250

210.1

15 bldgs

200

184.6

12 bldgs
150

151.5
127.2

104.2
100
50
0
Initial Listing
Dec. 2003

1st FP
Apr. 30, 2004

2nd FP
Oct. 31, 2004

3rd FP
Apr. 30, 2005

4th FP
Oct. 31, 2005

5th FP
Apr. 30, 2006

DIVERSITY IN LOCATION
4th Fiscal Period(as of Oct. 31, 2005)

5th Fiscal Period(as of Apr. 30, 2006)
Other Cities

Other Cities

16.7%

10.5%

67.0%

Vicinity of Tokyo
16.9%

Tokyo Central Area

Tokyo Central Area
72.6%

Vicinity of Tokyo
16.2%

Note: Tokyo Central Area .....Six central wards consisting of Chiyoda, Chuo, Minato, Shinjuku, Shinagawa and Shibuya
Vicinity of Tokyo ..........Other areas of metropolitan Tokyo and the surrounding three prefectures including Kanagawa, Saitama and Chiba
Other Cities .................Major regional cities in other areas3Management Summary of the Fifth Fiscal Period
New Investments
New investments were made to acquire "Nishi-Shinjuku Showa Building", "NOF
Sendai Aoba-dori Building", "NOF Midosuji Building", "Hiroshima Chowa Building"and "Crystal Park Building" with the total acquisition price of ¥30.7 billion.

Nishi-Shinjuku Showa Building
Location
Date acquired
Acquisition price

Nishi-Shinjuku Shinjuku-ku, Tokyo
November 30, 2005
¥8.8 billion

Property Profile
The Shinjuku West Exit area, represented by the super high-rises
clustering in Nishi Shinjuku, features high convenience while being acustomer magnet and enjoying high name recognition. Situated on acorner plot within 3 minutes' walking distance from Shinjuku Station
West Exit, stable demand for tenants can therefore be expectedfrom corporate sales offices and businesses frequented by visitors
coming from Shinjuku Station. Renewal work on air conditioning andcommon-use facilities has been completed.
Shinjuku-nishiguchi Stn.
Tokyo Medical
University Hospital
OdakyuShinjuku Nomura
HALC
Building
Hilton Tokyo
Tokyo Metro
Marunouchi Line
Shinjuku Stn.

Shinjuku Center Bldg.

Toei Oedo Lineae Stn.
Tochom

JR Shinjuku Stn.
Kogakuin University Keio
Shinjuku Stn.

Shinjuku Post Office
Tokyo Metropolitan Keio Plaza Hotel
Government Office

Yodobashi
CameraNishi-Shinjuku Showa Building

OdakyuShinjuku Stn.

.
Stn
juku
Shin

NOF Midosuji Building
Hiroshima Chowa Building

NOF Midosuji Building
Location
Date acquired
Acquisition price

Kawaramachi Chuo-ku, Osaka City, Osaka
November 30, 2005
¥12.9 billion

Note: Osaka Chowa Building changed its name to NOF Midosuji
Building on August 1, 2006

Property Profile
The Midosuji area is a location where many financial institutions have theirbranch offices, and is also Osaka's foremost office district. The property is
located within 2 minutes' walking distance from Honmachi Station on a cornerplot facing the Midosuji Boulevard,
Subway Sakaisuji Line
Hanshin Highway
Route 1making this property a rarity in
NOF Midosuji Building
Sompo Japan
Osaka Bldg.
terms of traffic convenience and
Subway Midosuji Line
SubwayYotsubashi Linelocation. Although the building is 32
Nishi Hongwanji
Resona Bank
Viale Osaka
years old, main facilities are up-toTsumura Betsuin
Head Office(Kitamido)
Marubenidate, and earthquake proofing has
been confirmed on a par with the
Honmachi DoriToshiba Bldg.
Honmachi Stn.
New Earthquake Proofing Standard
Hanshin Highway
HigashiOsaka Line 13
according to the earthquake
Subway Chuo Line
proofing examination.
ITOCHU Bldg.

4

Sakaisuji Honmachi Stn.

NOF Sendai Aoba-dori Building
Location
Date acquired
Acquisition price

Ichiban-cho Aoba-ku, Sendai City, Miyagi
November 30, 2005
¥3.2 billion

Note: Sendai Chowa Building changed its name to NOF Sendai Aoba-dori
Building on June 1, 2006

Property Profile

te 4
Rou

This property is a large office building in Sendai City, the heart of the
Tohoku regional economy, situated in the city's central office district
on a corner plot at the intersection of two main streets. The building
features an appealing interior and exterior, with updated principal
facilities renovated. In
AER Bldg.
addition to wide-ranging SENDAI FORUS
Hirose-dori Stn.
Sakurano
JR Senseki Linedemand for office space
Denryoku Bldg.
Dept. Store
Daiei Dept. Storein light of the superior
SendaiAoba-dori Stn.
location, for the first-floor Fujisaki Dept. Store
Hotel
Sendai Bank
Sendai Stn.
77 Banksection demand for
Head Office
Head OfficeSendai Stn.
commercial and shop
SubwayNTT
Namboku Linetenants can also be
NOF Sendai Aoba-dori Building
Tohoku Shinkansen
expected, with
Sendai Kokusai Hotel
SS30
Bldg.
prospects for stable
Tohoku University
JR Sendai Hospital
operations.

NOF Sendai Aoba-dori Building

Hiroshima Chowa Building
Location
Date acquired
Acquisition priceTatemachi Naka-ku, Hiroshima City, Hiroshima
November 30, 2005
¥2.1 billion

Property Profile
This property is situated in the Hatchobori area,
the business and commercial center ofHiroshima, home to a multitude of department
stores and other commercial facilities. The
property comprises a highly visible building on acorner plot facing Aioi-dori, one of Hiroshima's
main streets. While large-scale renovation
works are already completed, construction
work for earthquake proofing is slated to begin
soon, so that a diversity of tenant requirements
regarding facilities can be accommodated.

Astram Line

Hiroshima
CastleHakushima Stn.

Kencho-mae Stn.
Joint Government Bldg.
City Baseball
Stadium SOGO
Hiroshima
Dept. Store Prefectural Government

JR Sanyo
Shinkansen

Hiroshima Stn.

A-Bomb
Chuo Police Station
Dome
Hacchobori Stn.
Kamiyacho-nishi Stn.
Hiroshima Dentetsu Line
Peace Hondori Stn.
Memorial
Park
Tatemachi Stn. Hiroshima Chowa Bulding

Heiw
a Do
ri

Nishi-Shinjuku Showa Building

Crystal Park Building
Location
Date acquired
Acquisition priceGotenyama Musashino City,Tokyo
February 28, 2006
¥3.7 billion

Property Profile

Fujimura Girls' Junior andSenior High School
Tokyu Dept. Store

Crystal Park Building
Bank ofTokyo-Mitsubishi UFJ

SEIYU

LOFT

Isetan Dept. StorePARCO

Kichijoji Library

Kich
ijoji
Odo
ri

This property is located in front ofKichijoji Station, a well-known terminal
station west of Shinjuku, with access to
three different train lines connecting to
Shinjuku, Shibuya, and Otemachi.
Kichijoji is a location of outstanding
convenience, with a sizeable hinterland
population and a concentration ofcommercial facilities, including
department stores, hotels, andcinemas. In addition to demand forcorporate sales offices, stable longterm tenant demand can therefore be
expected from businesses frequented
by visitors.

Kich
ijoji
Dor
i

Crystal Park Building

Mitsukoshi
Dept. StoreJR Chuo Line
Kichijoji Stn.
Inok
ash Yuzawaya
Kichijoji
Cinema Bldg.
ira D
ori
Kichijoji Stn.
Mujirushi Ryohin
Marui Dept. Store
ori
nD
Musashino Public Hall
Keio Inokashira
Koe
Kichijoji Tokyu Inn Line
Inokashira Park

Catholic
Kichijoji Church

5Management Summary of the Fifth Fiscal Period
STABLE PORTFOLIO MANAGEMENT
To maximize a stable income flow generated from the portfolio properties, we stand on a mid-to long-term perspective in managing theproperties.
A carefully drawn up stratagem to manage the properties in the fifth fiscal period has contributed to improving the occupancy rates asshown in the following table. A large-scale renovation at the underground shopping floor of Shinjuku Nomura Building has enhanced thevalue of the property and the differentiation from the surrounding buildings.
Changes in occupancy rates

5th FP

4th FP(as of Apr. 30, 2006)(as of Oct. 31, 2005)

Tokyo Central Area

99.4%

98.0%

Vicinity of Tokyo

99.2%

98.8%

Other Cities

95.7%

93.6%

Average

98.4%

97.3%

Renovation at the underground shopping floor of Shinjuku Nomura Building

The area previously used by a bank has been
completely refurbished, where newly invited various
food shops are in operation now.

Stairways / escalators were installed to enable directaccess to the basement shopping floor from thecrossing busy streets.

CONSERVATIVE FINANCIAL STRATEGIESWith a view to diversify the method of funding and also to turn the interest-bearing debts from a short-term floating-rate to a long-term
fixed-rate basis, we issued investment corporation bonds in November 2005 for the total amount of 20 billion yen by means of public
offering for the first time.
Name of Investment Corporation Bonds

Third Series Uninsured Investment
Corporation Bonds

Fourth Series Uninsured Investment
Corporation Bonds

Date of Issue

Nov. 28, 2005

Nov. 28, 2005

Redemption Date

Nov. 29, 2010 (5-year bonds)

Nov. 30, 2015 (10-year bonds)

Total Amount Issued¥10 billion¥10 billion

Interest Rate

1.19% p.a.

2.05% p.a.

Security / Guarantee

None

None

Rating (Third Series and Fourth Series)

Rating Company

6

RatingStandard & Poor’s Ratings Services

A

Moody’s Investors Service, Inc.

A3

Rating and Investment Information, Inc.

A+

Financial Status of the Fifth Fiscal Period
TURNING OF SHORT-TERM FLOATING-RATE DEBTS TO LONG-TERM FIXED-RATE DEBTS
In anticipation of potential increase in interest rates in the future, we have turned interest-bearing debts to long-term fixed-rate debts
where possible, thus securing a more stable financial base. The following pie charts illustrate the breakdown of interest-bearing debts.

By the length of loan period

Long-term:¥88.5 billion

By the type of interest rate

Short-term:¥31.5 billion

73.8%

Fixed-rate:¥98.0 billion

26.3%

Floating-rate:¥22.0 billion

81.7%

Note: “Short-term” debts include long-term debts

18.3%

Note: “Fixed-rate” debts include floating-rate debts

due for repayment within one year.

swapped into fixed-rate debts.

DIVERSITY OF REPAYMENT DATES
We have diversified the repayment dates of interest-bearing debts to avoid concentration on any specific period or timing, thus reducing therefinance risk and stabilizing the cash flow.

(¥ bln)Debts

20

Investment Corporation Bonds

19
17.5
16

15.5

15

15

10

10

6
5

5

4
2

0

6th
FP

7th
FP

8th
FP

5

4
1

9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 29th 30th 31st 32nd 33rd
FP FP FP FP FP FP FP FP FP FP FP FP FP FP FP FP FP FP FP FP FP FP FP FP FP

CREDIT RATINGS
To diversify the method of funding, including issuance of investment corporation bonds, we have obtained credit ratings from three credit
rating companies.

Rating Company

RatingOutlookA:Long-term corporate credit rating

A-1:

Short-term corporate credit rating

Moody’s Investors Service, Inc.

A3:

Issuer rating

StableRating and Investment Information, Inc.

A+:

Issuer rating

Positive

Standard & Poor’s Ratings Services

Stable7

Summary of Portfolio Properties
Name of Property

Acquisition Price(¥ mln)Portion(%)(Note 1)

Location

Leasable Space (m2)Date Acquired

Shinjuku-ku, Tokyo

31,589.26

Dec. 8, 2003

38,730

16.1
13.7

Tokyo Central Area
Shinjuku Nomura Bldg. (Note 2)
JAL Bldg.

Shinagawa-ku, Tokyo

42,084.11

Mar. 18, 2005

33,080NOF Nihonbashi Honcho Bldg. (Note 4)

Chuo-ku, Tokyo

19,233.28

Dec. 5, 2003

20,600

8.6

Tennozu Park Side Bldg.

Shinagawa-ku, Tokyo

18,051.61

Feb. 27, 2004

14,800

6.1

NOF Shibuya Koen-dori Bldg.

Shibuya-ku, Tokyo

3,420.16

Sep. 28, 2004

12,000

5.0

NOF Shiba Bldg. (Note 4)

Minato-ku, Tokyo

8,165.10

May 25, 2004

10,000

4.2

Nishi-Shinjuku Showa Bldg.

Shinjuku-ku, Tokyo

5,659.96

Nov. 30, 2005

8,800

3.7

Toshin Tameike Bldg.

Minato-ku, Tokyo

4,715.20

Sep. 29, 2005

7,400

3.1

Shinagawa NF Bldg.

Shinagawa-ku, Tokyo

7,850.99

Dec. 8, 2003

5,500

2.3

Surugadai Plaza Bldg.

Chiyoda-ku, Tokyo

4,160.94

Feb. 27, 2004

5,150

2.1

NOF Kanda Iwamoto-cho Bldg. (Note 4)

Chiyoda-ku, Tokyo

4,076.38

Feb. 26, 2004

3,080

1.3

NOF Minami Shinjuku Bldg. (Note 4)

Shibuya-ku, Tokyo

2,464.71

Jun. 25, 2004

2,280

0.9

161,420

67.0

3.1

Total Tokyo Central Area (12 Properties)

151,471.70

Vicinity of TokyoNOF Toyo-cho Bldg. (Note 4)

Koto-ku, Tokyo

18,218.17

Dec. 5, 2003

7,550

Technoport Kamata B Ridge

Ota-ku, Tokyo

13,683.46

Dec. 5, 2003

6,430

2.7

Crystal Park Bldg. (Note 3)

Musashino City, Tokyo

3,900.85

Feb. 28, 2006

3,700

1.5

Faret Tachikawa Center Square

Tachikawa City, Tokyo

6,853.38

Dec. 5, 2003

3,290

1.4

NOF Kawasaki Higashiguchi Bldg. (Note 4)

Kawasaki City, Kanagawa

8,284.03

Jun. 30, 2005

9,500

3.9

NOF Yokohama Nishiguchi Bldg. (Note 4)

Yokohama City, Kanagawa

6,817.76

May 12, 2005

5,050

2.1

NOF Shin-Yokohama Bldg. (Note 4)

Yokohama City, Kanagawa

8,074.83

Dec. 5, 2003

3,600

1.5

39,120

16.2

3,200

1.3

Total Vicinity of Tokyo (7 Properties)

65,832.48

Other Cities
NOF Sendai Aoba-dori Bldg. (Note 4)

Sendai City, Miyagi

6,165.70

Nov. 30, 2005

NOF Utsunomiya Bldg. (Note 4)

Utsunomiya City, Tochigi

5,887.40

Dec. 5, 2003

2,970

1.2

NOF Nagoya Yanagibashi Bldg. (Note 4)

Nagoya City, Aichi

4,655.74

Sep. 29, 2005

3,550

1.5

NOF Midosuji Bldg. (Note 4)

Osaka City, Osaka

12,240.88

Nov. 30, 2005

12,9005.4

Nomura Osaka Bldg.

Osaka City, Osaka

16,977.79

Dec. 5, 2003

6,410

2.7

Nomura Yotsubashi Bldg.

Osaka City, Osaka

11,558.68

Dec. 5, 2003

3,940

1.6

NOF Kobe Kaigan Bldg. (Note 4)

Kobe City, Hyogo

6,427.01

Dec. 5, 2003

3,280

1.4

Hiroshima Chowa Bldg.

Hiroshima City, Hiroshima

4,334.75

Nov. 30, 2005

2,100

0.9

Nomura Hiroshima Bldg.

Hiroshima City, Hiroshima

7,911.97

Dec. 5, 2003

1,930

0.8

Total Other Cities (9 Properties)

76,159.92

40,280

16.7

Grand Total (28 Properties)

293,464.10

240,820100.0Note 1: “Portion” reflects the percentage of each property’s leasable space in the total portfolio (28 properties). The sum of the figure in each column may not necessarily add up
to 100.0 due to rounding.
Note 2: Shinjuku Nomura Building is held through the quasi co-ownership of trust beneficial interest. Therefore, “Acquisition Price” and “Leasable Space” of the building reflect the
portion of the quasi co-ownership which is 50.1 percent.
Note 3: Crystal Park Building is directly held as real estate, while all the other properties are held in the form of trust beneficial interests.
Note 4: The name of the property has been changed as shown in the following table.
New Name

NOF Nihonbashi Honcho Bldg.
NOF Shiba Bldg.
NOF Kanda Iwamoto-cho Bldg.
NOF Minami Shinjuku Bldg.
NOF Toyo-cho Bldg.
NOF Kawasaki Higashiguchi Bldg.
NOF Shin-Yokohama Bldg.
NOF Sendai Aoba-dori Bldg.
NOF Utsunomiya Bldg.
NOF Kobe Kaigan Bldg.
NOF Yokohama Nishiguchi Bldg.
NOF Nagoya Yanagibashi Bldg.
NOF Midosuji Bldg.

8

Previous Name

Itopia Nihonbashi Honcho Bldg.
Isuzu Shiba Bldg.
Kanda Iwamoto-cho Tosei Bldg.
Seiwa Shinjuku Bldg.
TT Landic Toyo-cho Bldg.
Kawasaki Higashiguchi Sanshin Bldg.
Shin-Yokohama Nikko Bldg.
Sendai Chowa Bldg.
Utsunomiya NF Bldg.
Kobe Kaigan Bldg.
Asahi Seimei Yokohama Nishiguchi Bldg.
Yanagibashi Sanshin Bldg.
Osaka Chowa Bldg.

Date Changed

Jun. 1, 2006

Aug. 1, 2006

Portfolio Map

01

Shinjuku-ku

10

07

11

Chiyoda-ku

1203

Chuo-ku

Shibuya-ku

08

05

06
Minato-ku

09
04
Shinagawa-ku
02
Tokyo Central Area

01 Shinjuku Nomura Building

07 Nishi-Shinjuku Showa Building

02 JAL Building

08 Toshin Tameike Building

20

03 NOF Nihonbashi Honcho Building 09 Shinagawa NF Building
04 Tennozu Park Side Building

10 Surugadai Plaza Building

05 NOF Shibuya Koen-dori Building

11 NOF Kanda Iwamoto-cho Building

06 NOF Shiba Building

12 NOF Minami Shinjuku Building

27
28

26

21

22
23
24
25

Saitama16

15 Tokyo

19
Other Cities

Kanagawa

13

Chiba

14
17

18

20 NOF Sendai Aoba-dori Building
21 NOF Utsunomiya Building

Vicinity of Tokyo

22 NOF Nagoya Yanagibashi Building

13 NOF Toyo-cho Building

23 NOF Midosuji Building

14 Technoport Kamata B Ridge

24 Nomura Osaka Building

15 Crystal Park Building

25 Nomura Yotsubashi Building

16 Faret Tachikawa Center Square

26 NOF Kobe Kaigan Building

17 NOF Kawasaki Higashiguchi Building

27 Hiroshima Chowa Building

18 NOF Yokohama Nishiguchi Building

28 Nomura Hiroshima Building

19 NOF Shin-Yokohama Building
9

Property Details

01

Shinjuku Nomura Building

Location:
Completion:
Area:
Stories:
Property Managed by:Type of Ownership:

1-26-2 Nishi-Shinjuku Shinjuku-ku, Tokyo
May 1978Land
9,298.21 m2 (Entire area)
Floor
117,258.88 m2 (Entire area)
B5 / 50F
Nomura Real Estate Development Co., Ltd.
Land
Quasi co-ownership of 50.1%
Building Quasi co-ownership of 50.1%

Note: The portfolio consists of the front building and adjacent compound area shown in the picture.

02

JAL Building

Location:
Completion:
Area:
Stories:
Property Managed by:Type of Ownership:03

NOF Nihonbashi Honcho Building

Location:
Completion:
Area:
Stories:
Property Managed by:

04

2-7-1 Nihonbashi Honcho Chuo-ku, Tokyo
April 1961 (Extension April 1968)
Land
3,196.31 m2
Floor
29,430.67 m2
B3 / 8F
ITOCHU Urban Community Co., Ltd.

Tennozu Park Side Building

Location:
Completion:
Area:
Stories:
Property Managed by:Type of Ownership:

102-4-11 Higashi-Shinagawa Shinagawa-ku, Tokyo
June 1996
Land
11,670.40 m2 (Entire area)
Floor
25,260.48 m2 (Exclusively owned area)
B2 / 26F
Nomura Real Estate Development Co., Ltd.
Land
Co-ownership of 50.89619%
Building Compartmentalized ownership

2-5-8 Higashi-Shinagawa Shinagawa-ku, Tokyo
January 1995
Land
5,816.26 m2 (Entire area)
Floor
17,587.30 m2 (Exclusively owned area)
B2 / 21F
Nomura Real Estate Development Co., Ltd.
Land
Co-ownership of 68.98%
Building Compartmentalized ownership

05

NOF Shibuya Koen-dori Building

Location:
Completion:
Area:
Stories:
Property Managed by:

06

NOF Shiba Building

Location:
Completion:
Area:
Stories:
Property Managed by:

07

4-2-3 Shiba Minato-ku, Tokyo
March 1991
Land
2,074.65 m2
Floor
11,425.20 m2
B1 / 7F
Ikoma TBM K.K.

Nishi-Shinjuku Showa Building

Location:
Completion:
Area:
Stories:
Property Managed by:Type of Ownership:08

20-17 Udagawa-cho Shibuya-ku, Tokyo
September 1987
Land
637.08 m2
Floor
5,358.55 m2
B2 / 8F
Nomura Real Estate Development Co., Ltd.

1-13-12 Nishi-Shinjuku Shinjuku-ku, Tokyo
April 1982
Land
1,101.49 m2 (Entire area)
Floor
5,858.26 m2 (Exclusively owned area)
B2 / 11F
Nomura Real Estate Development Co., Ltd.
Land
Co-ownership of 84.25%
Building Compartmentalized ownership

Toshin Tameike Building

Location:
Completion:
Area:
Stories:
Property Managed by:

1-1-14 Akasaka Minato-ku, Tokyo
August 1959
Land
690.67 m2
Floor
6,478.50 m2
B1 / 9F
Nomura Real Estate Development Co., Ltd.

11

Property Details

09

Shinagawa NF Building

Location:
Completion:
Area:
Stories:
Property Managed by:

10

Surugadai Plaza Building

Location:
Completion:
Area:
Stories:
Property Managed by:

11

Stories:
Property Managed by:

3-8-16 Iwamoto-cho Chiyoda-ku, Tokyo
July 1988
Land
773.32 m2
Floor
4,698.97 m2
9F
ITOCHU Urban Community Co., Ltd.

NOF Minami Shinjuku Building

Location:
Completion:
Area:
Stories:
Property Managed by:

122-5-12 Kanda Surugadai Chiyoda-ku, Tokyo
April 1997
Land
1,056.92 m2
Floor
5,782.27 m2
B1 / 8F
Nomura Real Estate Development Co., Ltd.

NOF Kanda Iwamoto-cho Building

Location:
Completion:
Area:

12

1-2-5 Higashi-Shinagawa Shinagawa-ku, Tokyo
November 1987
Land
3,240.30 m2
Floor
10,077.02 m2
B1 / 8F
Nomura Real Estate Development Co., Ltd.

5-32-7 Sendagaya Shibuya-ku, Tokyo
March 1986
Land
545.87 m2
Floor
3,160.05 m2
B1 / 8F
Nomura Real Estate Development Co., Ltd.

13

NOF Toyo-cho Building

Location:
Completion:
Area:
Stories:
Property Managed by:

14

Technoport Kamata B Ridge

Location:
Completion:
Area:

Stories:
Property Managed by:Type of Ownership:15

2-16-1 Minami-Kamata Ota-ku, Tokyo
September 1990
Land(a) 9,429.59 m2(b) 3,483.90 m2
Floor
21,516.54 m2 (Exclusively owned area)
B1 / 11F
Nomura Real Estate Development Co., Ltd.
Land(a) Exclusively owned area, (b) Co-owned area of 30%
Building Compartmentalized ownership

Crystal Park Building

Location:
Completion:
Area:
Stories:
Property Managed by:Type of Ownership:

16

1-6-35 Shinsuna Koto-ku, Tokyo
November 1989
Land
8,926 m2
Floor
18,051.08 m2
7F
Nomura Building Management Co., Ltd.

1-1-3 Gotenyama Musashino City, Tokyo
October 1991
Land
1,057.14 m2 (Entire area)
Floor
3,868.36 m2 (Exclusively owned area)
B2 / 11F
The Dai-Ichi Building Co., Ltd.
Land
Co-ownership of 3,970,795 / 4,435,360
Building Compartmentalized ownership

Faret Tachikawa Center Square

Location:
Completion:
Area:
Stories:
Property Managed by:Type of Ownership:

2-36-2 Akebono-cho Tachikawa City, Tokyo
December 1994
Land
4,454.59 m2 (Entire area)
Floor
6,865.80 m2 (Exclusively owned area)
B2 / 12F
Nomura Real Estate Development Co., Ltd.
Land
Co-ownership of 45.698%
Building Compartmentalized ownership

13

Property Details

17

NOF Kawasaki Higashiguchi Building

Location:
Completion:
Area:
Stories:
Property Managed by:18

NOF Yokohama Nishiguchi Building

Location:
Completion:
Area:
Stories:
Property Managed by:

19

Stories:
Property Managed by:

Stories:
Property Managed by:

142-15-16 Shin-Yokohama Kohoku-ku Yokohama City, Kanagawa
October 1990
Land
1,320 m2
Floor
11,149.99 m2
B1 / 9F
Nomura Real Estate Development Co., Ltd.

NOF Sendai Aoba-dori Building

Location:
Completion:
Area:*Note:

1-11-11 Kita-Saiwai Nishi-ku Yokohama City, Kanagawa
October 1985
Land
1,502.94 m2
Floor
10,055.13 m2
B1 / 9F
Nomura Real Estate Development Co., Ltd.

NOF Shin-Yokohama Building

Location:
Completion:
Area:

20

3-1 Ekimae Honcho Kawasaki-ku Kawasaki City, Kanagawa
March 1988
Land
1,275.70 m2
Floor
10,932.69 m2
B1 / 12F
Nomura Building Management Co., Ltd.

2-1-2 Ichiban-cho Aoba-ku Sendai City, Miyagi
July 1968
Land
2,321.61 m2
Floor
12,977.45 m2
B2 / 11F*
The Dai-Ichi Building Co., Ltd.

The Notice of Confirmation issued in accordance with the Building Standard Law describes it as "8 stories above theground and 3 stories of penthouse with 2 stories below ground".

21

NOF Utsunomiya Building

Location:
Completion:
Area:
Stories:
Property Managed by:

22

NOF Nagoya Yanagibashi Building

Location:
Completion:
Area:
Stories:
Property Managed by:

23

1-16-28 Meieki-Minami Nakamura-ku Nagoya City, Aichi
March 1991
Land
934.20 m2
Floor
7,363.25 m2
B2 / 12F
Nomura Building Management Co., Ltd.

NOF Midosuji Building

Location:
Completion:
Area:
Stories:
Property Managed by:

24

2-1-1 Baba-dori Utsunomiya City, Tochigi
December 1999
Land
1,545.13 m2
Floor
10,479.63 m2
B2 / 10F
Nomura Building Management Co., Ltd.

3-5-7 Kawaramachi Chuo-ku Osaka City, Osaka
April 1974
Land
2,366.99 m2
Floor
21,007.98 m2
B2 / 10F
Nomura Real Estate Development Co., Ltd.

Nomura Osaka Building

Location:
Completion:
Area:
Stories:
Property Managed by:

1-8-15 Azuchi-cho Chuo-ku Osaka City, Osaka
December 1983
Land
3,136.56 m2
Floor
23,522.82 m2
B2 / 12F
Nomura Real Estate Development Co., Ltd.

15

Property Details

25

Nomura Yotsubashi Building

Location:
Completion:
Area:
Stories:
Property Managed by:

26

NOF Kobe Kaigan Building

Location:
Completion:
Area:
Stories:
Property Managed by:

27

Stories:
Property Managed by:

1-20 Tatemachi Naka-ku Hiroshima City, Hiroshima
November 1966
Land
925.55 m2
Floor
8,206.91 m2
B2 / 12F*
Nomura Real Estate Development Co., Ltd.

The Notice of Confirmation issued in accordance with the Building Standard Law describes it as "9 stories above theground and 3 stories of penthouse with 2 stories below ground".

28

Nomura Hiroshima Building

Location:
Completion:
Area:
Stories:
Property Managed by:

16

3 Kaigan-dori Chuo-ku Kobe City, Hyogo
February 1998
Land
1,451.31 m2
Floor
10,292.93 m2
B1 / 16F
The Dai-Ichi Building Co., Ltd.

Hiroshima Chowa Building

Location:
Completion:
Area:*Note:

1-4-4 Awaza Nishi-ku Osaka City, Osaka
November 1991
Land
1,865.34 m2
Floor
16,845.87 m2
B2 / 15F
Nomura Real Estate Development Co., Ltd.

2-23 Tatemachi Naka-ku Hiroshima City, Hiroshima
July 1976
Land
1,319.15 m2
Floor
11,950.37 m2
B2 / 9F
Nomura Real Estate Development Co., Ltd.

Performance Report

Contents

Asset Management Report ..........................................18
Profile of the Company.................................................23
Status of Investment Assets of the Company .............25
Capital Expenditures.....................................................28
Expenses and Liabilities ...............................................29
Trading during the Fifth Fiscal Period ...........................32
Other Information ........................................................34

17

Asset Management Report
1. CHANGES IN KEY INDICATORS
5th FP
4th FP
3rd FP
2nd FP
1st FP
from Nov. 1, 2005 from May 1, 2005 from Nov. 1, 2004 from May 1, 2004 from Aug. 7, 2003
to Apr. 30, 2006 to Oct. 31, 2005 to Apr. 30, 2005 to Oct. 31, 2004 to Apr. 30, 2004

Operating Revenues

¥ mln

9,810

8,641

7,106

6,656

4,531

of which Real Estate Rental Revenues

¥ mln

9,810

8,641

7,106

6,656

4,531

Operating Expenses

¥ mln

5,251

4,530

3,877

3,725

2,217

of which Real Estate Rental Expenses

¥ mln

4,257

3,745

3,159

3,154

1,847

Operating Income

¥ mln

4,558

4,111

3,228

2,930

2,313

Current Profits

¥ mln

3,597

3,485

2,682

2,607

1,528

Net Income

¥ mln

3,596

3,484

2,681

2,606

1,526
147,946

Total Assets¥ mln

268,559

239,067

208,003

173,545

Interest-Bearing Debts¥ mln

120,000

93,00096,50064,50061,000Net Assets¥ mln

128,206

128,094

94,84994,77473,233Unitholders’ Capital¥ mln

124,610

124,610

92,16892,16871,706

Number of Units Issued

units

229,970229,970

184,650

184,650

148,600¥

557,492

557,004

513,672

513,266

492,820

¥ mln

3,596

3,484

2,681

2,606

1,526

Cash Distribution per Unit¥

15,63815,15014,520

14,114

10,273of which Cash Distribution of Profits¥

15,63815,15014,520

14,114

10,273of which Cash Distribution in excess of Profits

¥

–

–

–

–

–

ROA (Return on Assets) (Note 1)

%

1.4

1.5

1.4

1.6

1.1

Net Assets per Unit
Total Cash Distribution

Annualized ROA (Note 2)

%

2.9

3.1

2.8

3.1

2.8

ROE (Return on Equity) (Note 3)

%

2.8

2.7

2.8

2.8

2.1

Annualized ROE (Note 2)

%

5.7

5.4

5.7

5.6

5.2

Capital Adequacy Ratio (Note 4)

%

47.7

53.6

45.6

54.6

49.5

LTV (Loan-to-Value) Ratio (Note 5)

%

44.7

38.9

46.4

37.2

41.2

Number of Business Days

days

181

184

181

184

268

Payout Ratio (Note 6)

%

100.0

99.9

99.9

100.0

99.9

Number of Properties Held

bldgs

28

23

19

18

15

Total Leasable Floor Spacem2

293,464.10

261,428.50

236,904.67

194,673.65

180,793.50

tenants

467

357

287

277

264

%

98.4

97.3

98.1

94.4

93.3

Depreciation

¥ mln

1,399

1,229

1,023

949

666

Capital Expenditures

¥ mln

934

1,016

484

511

22

NOI (Net Operating Income) (Note 7)

¥ mln

6,952

6,125

4,970

4,451

3,350

FFO (Funds from Operation) (Note 8)

¥ mln

5,034

4,727

3,719

3,555

2,193

¥

21,88920,55920,142

19,255

14,757

Number of Tenants
Occupancy Rate

FFO per Unit (Note 9)

Note 1: “ROA (Return on Assets)” = Current Profits / {(Total Assets at the beginning of term + Total Assets at the end of term) / 2} x 100
The Total Assets at the beginning of the first fiscal period is an aggregated amount of the Total Assets as of December 5, 2003, effectively the first day when the investment was commenced, and the funds borrowed on December 8, 2003.
As for the second and fourth fiscal periods, the Total Assets were time-adjusted due to the additional issuance of investment units.
Note 2: “ROA” and “ROE” are annualised using the following number of business days. 1st FP: 148 days, 2nd FP: 184 days, 3rd FP: 181 days, 4th FP: 184 days, and 5th FP: 181
days.
Note 3: “ROE (Return on Equity)” = Net Income / {(Unitholders’ Equity at the beginning of term + Unitholders’ Equity at the end of term) / 2} x 100
The Unitholders’ Equity at the beginning of the first fiscal period was an aggregated amount of Unitholders’ Equity as of December 5, 2003, effectively the first day when
the investment was commenced.
As for the second and fourth fiscal periods, Unitholders’ Equity is time-adjusted due to the additional issuance of investment units.
Note 4: “Capital Adequacy Ratio” = Net Assets / Total Assets x 100
Note 5: “LTV (Loan-to-Value) Ratio” = Interest-Bearing Debts / Total Assets x 100
Note 6: Rounded off to the first decimal place.
Note 7: “NOI (Net Operating Income)” = Real Estate Rental Revenues – Real Estate Rental Expenses + Depreciation
Note 8: “FFO (Funds from Operation) = Net Income + Depreciation + Amortization of Investment Corporation Bonds Issuance Costs
Note 9: ”FFO per Unit” = FFO / Number of Units Issued

182. OUTLINE OF INVESTMENTS IN THE FIFTH FISCAL PERIOD
Nomura Real Estate Office Fund, Inc., incorporated on August 7, 2003 under the Investment Trust and Investment Corporation Law,listed the unit certificates in the Real Estate Investment Trust (REIT) Market of the Tokyo Stock Exchange on December 4, 2003 (TSEcode 8959). The Company’s basic investment policy is to assure stable income from, and steady growth of, investment assets overthe mid-to long-term. In accordance with this policy, we are investing in properties mostly for office use in three largest conurbations
and other major cities, or in property-backed securities that are backed by such properties.
Note: The term “unit certificates” are the securities issued by the Company and may be referred to as “investment units” or “units” hereinafter.
The term “investment assets” refers to those assets that belong to the Company.
Unless otherwise stated, for the purpose of this report, the concept of “property (ies)” is construed to include leasehold and superficies.
The term “property (ies)” refers to those assets defined in Section 27, Paragraph 1, Article (1) and (2), and “property-backed securities” refers to those assets defined in
Section 27, Paragraph 1, Article (3) respectively of The Articles of Incorporation of the Company.
The terms “property (ies)” and “property-backed securities” are collectively referred to as “property-related assets” hereinafter.
The properties and underlying properties of the property-related assets are collectively referred to as the “investment properties”.

(1) Market Environments(a) Office Leasing Market
Reflecting the continued recovery in the domestic economy, the office leasing market also continues to see improvement. In
the Tokyo Central Area and some other cities, increased demands for office were seen among companies expanding theirbusinesses or embarking upon new businesses. Consequently, improvement in the occupancy rate and level of rent has
become more obvious regarding those properties with convenient location and attractive features.
In the Vicinity of Tokyo and Other Cities, the occupancy rate has also shown some improvement, and the level of rent isshowing a sign of gradual improvement as well.
However, the general market environments have remained tough in no regard of the area for the buildings that are lesscompetitive in terms of location, floor space and basic features. The trend towards bipolarization of the level of rent andoccupancy rate has continued.
Note: “Tokyo Central Area”, “Vicinity of Tokyo” and “Other Cities” refers to six central districts consisting of Chiyoda-ku, Chuo-ku, Minato-ku, Shinjuku-ku, Shinagawa-ku
and Shibuya-ku, other areas of metropolitan Tokyo and the surrounding three prefectures including Kanagawa, Saitama and Chiba, and major regional cities in otherareas, respectively.

(b) Real Estate Trading Market
The number of properties put on the trading market has been gradually decreasing as the activities of general corporations,which used to be disposing of properties for the purpose of restoring financial soundness and preparing themselves for theasset-impairment accounting, have now calmed down. There were sporadic sales by private funds* to lock in the profits, but
prime properties of relatively large-scale tended to be held continuously. This was one of the causes that made the supply of
attractive properties insignificant in the property market.
Demand also remained high, as keen-eyed investors such as pension funds, private funds and J-REITs continued to be inan aggressive pursuit of better investment opportunities. This in turn made it hard to find attractive properties particularly incentral Tokyo and the downtown area of large cities.
*Note: The “private funds” herewith refers to an accumulation of money of a limited number of private investors, or other form of assets acquired by such accumulatedmoney.

(2) Status of Investments for the Fifth Fiscal Period
To comply with the basic policy of acquiring only such properties that would generate stable cash flow over the mid-to long-term, theCompany continues to invest in properties with strong competitiveness both in terms of locations and basic features.
Having proactively collected information and carefully investigated a number of opportunities brought to us, we had thus decided
to acquire the following five properties during the fifth fiscal period. In November 2005, we acquired Nishi-Shinjuku Showa Building(Shinjuku-ku, Tokyo, at the acquisition price of ¥8.8 billion), Sendai Chowa Building, which changed its name to NOF Sendai Aoba-dori
Building later on, (Aoba-ku, Sendai City, at the acquisition price of ¥3.2 billion), Osaka Chowa Building, which also changed its name to
NOF Midosuji Building (Chuo-ku, Osaka City, at the acquisition price of ¥12.9 billion), and Hiroshima Chowa Building (Naka-ku,
Hiroshima City, at the acquisition price of ¥2.1 billion), all as trust beneficial interest (Note 1). In February 2006, we also acquired
Crystal Park Building (Musashino City, Tokyo, at the acquisition price of ¥3.7 billion) as Real Estate. As a result of the above fiveacquisitions totalling ¥30.7 billion at cost, the Company’s portfolio has steadily increased and diversified. The entirety of the portfolio at
the end of the fifth fiscal period included 28 properties totalling ¥240.8 billion on the basis of acquisition price.
The fifth fiscal period provided us with good opportunities to increase revenues. We improved the level of satisfaction of theexisting tenants by the spot-on property management, which in turn enabled us to negotiate with them in confidence to pursue an upward revision of the rent. As for the prospect customers, based on and reflecting the general market conditions, we strategicallyplayed out an individual marketing for each of the properties we have to invite the new move-ins. As a result, the average occupancy
rate improved to 98.4%, up 1.1% from the previous period.

19

Furthermore, a certain proportion of the tenants, representing about 20% of all the contracts renewed during the fifth fiscal
period, agreed to an up-ward revision of rent. This has led to an increased average rent of the portfolio (Note 2) in the comparison of
the 23 properties that had been held since the previous period.
Note 1: The “trust beneficial interest” refers to a beneficial interest arising from a trust in which real estates are the primary underlying assets.
Note 2: The “average rent of the portfolio” is obtained by dividing the “aggregate of all rents” in association with the total investment properties by the “total leased space”,
where the “aggregate of all rents” refers to the aggregate amount of monthly rents and common service charges that are effective and described in the lease contractof each property at a certain given time, and the “total leased space” refers to the aggregate amount of space of each property, which is actually contracted andleased at a certain given time, of all the space leasable only as office and shop.

(3) Status of Funding
To avert the risk of interest rates going up in the future, we have carefully conducted the funding and financial operations with careduring the fifth fiscal period. We have turned short-term borrowings into long-term borrowings making the maturity dates more spreadover time, and floating-rate borrowings into fixed-rate borrowings where possible. This has contributed to further securing the financial
stability of the Company.
In addition to the above, based on the shelf registration scheme filed in September 2005, the Company publicly issued
investment corporation bonds for ¥20 billion (Third Series Bonds (Note 1) for ¥10 billion, and Fourth Series Bonds (Note 2) for ¥10billion) in November 2005.
With regard to the borrowings, after a careful analysis of components of the interest-bearing debts, we have executedborrowings of ¥21 billion on a Term Loan Agreement basis, and ¥2 billion on a Commitment Line Agreement basis to finance theacquisition of the aforementioned five properties. We have also made a prepayment of ¥16 billion loans before the maturity date. As aresult, the outstanding interest-bearing debts as at the end of the fifth fiscal period were ¥120 billion.
In order to make more effective use of the security deposits received, we started utilizing a part of them as investment funds
from the fifth fiscal period.
Note 1: Nomura Real Estate Office Fund, Inc. Third Series Uninsured Investment Corporation Bonds, ranking Pari Passu among the Specified Investment Corporation Bonds
Note 2: Nomura Real Estate Office Fund, Inc. Fourth Series Uninsured Investment Corporation Bonds, ranking Pari Passu among the Specified Investment Corporation Bonds

3. STATUS OF CAPITAL
Changes in the number of units issued and unitholders’ capital until the end of the fifth fiscal period are as follows.
Number of Units Issued (Unit)

Unitholders’ Capital (¥ mln)

Date

Type of Issue

New Issue

Balance

New Issue

Balance

NoteAug. 7, 2003
Dec. 4, 2003
May 19, 2004
Jun. 16, 2004
May 1, 2005
May 24, 2005

Initial Private Placement
Public Offering
Public Offering
Third-party Allotment
Public Offering
Third-party Allotment

400
148,200
35,0001,050
44,0001,320

400
148,600
183,600
184,650
228,650
229,970200
71,506
19,866595
31,496944

200
71,706
91,572
92,168
123,665
124,610(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)Note 1: Initial private placement at the offer price of ¥500,000 per unit to incorporate the Company.
Note 2: Public offering at the offer price of ¥500,000 (issue price of ¥482,500) to finance acquisition of new properties.
Note 3: Public offering at the offer price of ¥588,000 (issue price of ¥567,600) to finance acquisition of new properties and to repay borrowings.
Note 4: Third-party allotment to Nomura Securities Co., Ltd. at the offer price of ¥567,600 following the public offering on May 19, 2004.
Note 5: Public offering at the offer price of ¥740,782 (issue price of ¥715,837) to finance acquisition of new properties and to repay borrowings.
Note 6: Third-party allotment to Nomura Securities Co., Ltd. at the offer price of ¥715,837 following the public offering on May 1, 2005.

The details of capitalization up to the end of the fifth fiscal period is as shown in the above table. However, based on the
resolutions adopted by the board meetings held on May 8, 2006 and May 17, 2006, the Company issued 34,800 units by public
offering on May 25, 2006, and 1,133 units by third-party allotment on June 23, 2006. As a result, the total units outstanding are
265,903 units, and the unitholders’ capital is ¥156,767 million as of June 30, 2006. This is set forth in “6. Important Events
Subsequent to the Fiscal Period” in more detail.
[Changes in price at the Tokyo Stock Exchange]
Changes in prices of the Company’s investment units listed on the Tokyo Stock Exchange are as follows.
5th FP
4th FP
3rd FP
2nd FP
1st FP
from Nov. 1, 2005 from May 1, 2005 from Nov. 1, 2004 from May 1, 2004 from Aug. 7, 2003
to Apr. 30, 2006
to Oct. 31, 2005
to Apr. 30, 2005
to Oct. 31, 2004
to Apr. 30, 2004

High
Low

20

(¥)
(¥)

1,030,000
778,000

850,000
748,000

798,000
678,000

779,000
591,000

715,000
505,000

4. RECORDS OF CASH DISTRIBUTION
In order for the maximum amount of cash distribution to be treated as deduction, subject to the provisions set forth in Article 67-15
of the Special Taxation Measures Law, the Company have decided to distribute almost the entire amount of the Retained Earnings
as at the end of this period. The amount of cash distribution per unit was ¥15,638 rounding off the fraction to unit.
5th FP
4th FP
3rd FP
2nd FP
1st FP
from Nov. 1, 2005 from May 1, 2005 from Nov. 1, 2004 from May 1, 2004 from Aug. 7, 2003
to Apr. 30, 2006 to Oct. 31, 2005
to Apr. 30, 2005
to Oct. 31, 2004
to Apr. 30, 2004

Retained Earnings
Accumulated Earnings
Total Cash Distribution(Cash Distribution per Unit)of which Distribution of Profits(Distribution of Profits per Unit)of which Refund of Capital(Refund of Capital per Unit)(¥000)(¥000)(¥000)(¥)(¥000)(¥)(¥000)(¥)

3,596,294
23
3,596,270(15,638)
3,596,270(15,638)–(–)

3,484,171
126
3,484,045(15,150)
3,484,045(15,150)–(–)

2,681,225
107
2,681,118(14,520)
2,681,118(14,520)–(–)

2,606,196
46
2,606,150(14,114)2,606,150(14,114)–(–)

1,526,651
83
1,526,567(10,273)
1,526,567(10,273)–(–)

5. INVESTMENT POLICY AND FUTURE ISSUES(1) Investment Environments
Reflecting the needs for new offices and the expansion of offices, which have become obvious along with the recovery in economy,
the office leasing market in the Tokyo Central Area and the downtown area of other large cities continued to improve, leading tofurther expectation of higher rent level and occupancy rate.
However, the tendency towards bipolarization will intensify further, as the tenants have become more selective of the properties
in good location and with the more up-to-date features.
As for the demand-supply conditions in the real estate trading market, we expect to see the supply coming continuously fromgeneral corporations and private funds disposing of their holdings, and also from the development projects that are based on apremise to be sold to the investment funds. On the other hand, due to improvement in the lease market and expectation of higher
rent level, inflow of funds to the real estate market has been accelerated. For this reason, acquisition of attractive properties in large
cities will continue to be highly competitive as private funds and J-REITs will aggressively be seeking such properties.
(2) Investment Policy and Future Issues
With such environments in mind, the Company will employ the following investment policies to ensure stable income from, andsteady growth of the portfolio over the mid-to long-term.
(a) Enlargement of Portfolio by Acquisition of New Properties
We will aim to increase the revenue by enlarging the size of the portfolio up to ¥500 billion in the medium term. The larger the
scale of the portfolio, the easier it will be to promote further diversity of investment, which in turn will decrease the potential
fluctuations in revenue, and enable us to control the cost of management and/or administration more effectively.
We do not think it wise to engage in overly heated competition in acquiring investment properties. In order for us to makeright investments in properties of good value, we need to collect information earlier about the investment properties offered in
the market, and conduct an in-depth due diligence to assess the potential risks involved in such investments. To make thisprotocol function and increase the trading opportunities for us, we will improve our own information-collecting capacity incooperation with other companies of Nomura Real Estate Group (Note 1). By combining the professional know-how such as
market research and engineering organically, we believe we can strengthen our ability to appraise the properties and establish
further creditworthiness in the market.
In making an investment decision, we will adhere to strict rules to ensure that the new property will bring stable revenues
to the entire portfolio in the light of mid-to long-term perspective.
Note: “Nomura Real Estate Group” includes Nomura Real Estate Development Co., Ltd., Nomura Real Estate Holdings Co., Ltd. and its consolidated subsidiaries, but
excludes Nomura Real Estate Asset Management Co., Ltd., which is an asset management company.

(b) Property Management in a Mid-to Long-Term View
We will make it one of our priorities to satisfy the requirements of existing tenants. We will make full use of our information
resources organically to market potential tenants, and proactively introduce them to most suitable properties we have to offer.
We believe that this in turn will contribute to maintaining and sustaining stable occupancy rate and level of rents over the midto long-term.
By putting the know-how of Nomura Real Estate Group together, we seek to design the most suitable specifications of
how to manage and maintain each property in the most cost-effective way, which in turn will ensure stable inflow of revenues.

21In order to ensure stable revenues over the mid-to long-term, we will carry out strategic refurbishment and renovation
works to maintain and/or improve features of the properties, establishing their uniqueness and increasing theircompetitiveness.
(c) Continuation of Conservative Financial Policy
In order to assure stable financing capability and increase creditworthiness in the market over the mid-to long-term, we will
pay particular attention to debt finance. We will seek to continuously keep the LTV rate low by using more long-term funding atfixed rates, diversifying the repayment dates, and increasing the number of institutions we bank with.
We will closely monitor the conditions of financial markets, and carefully deliberate and choose the best means offunding, including the usage of commitment lines and issuance of investment corporation bonds (both by way of public
offering and private placement) from a wide range of available sources of funding to ensure a well-balanced structure ofinterest-bearing debts.
Note: “LTV (Loan-to-Value)” refers to ratio of interest-bearing debts over the total assets.

6. IMPORTANT EVENTS SUBSEQUENT TO THE FISCAL PERIOD
The significant post-balance sheet events that took place after the end of the fifth fiscal period are as follows.
(1) Additional Issuances of Investment Units
The Company issued 34,800 units by public offering on May 25, 2006, and 1,133 units by third party allotment on June 23, 2006 toraise a total sum of approximately ¥32.1 billion. The details of these issuances are as follows.
(a) Primary offering of new investment units
Number of units issued
34,800 units
Total offering price¥32,228,280,000 (¥926,100 per unit)
Total issue price¥31,143,042,000 (¥894,915 per unit)
Payment date
May 25, 2006(b) Third-party allotment
Number of units issued
Total issue price
Payment date
Third-party allottee

1,133 units¥1,013,938,695 (¥894,915 per unit)
June 23, 2006
Nomura Securities Co., Ltd.

(2) Acquisition of a New Property
The Company acquired a new property, Sapporo North Plaza, on June 1, 2006. The details are as follows.
Type of Specified Asset
Name of Property
Location (Lot Number) (Note 1)
Location (Postal Address) (Note 1)
Structure (Note 1)
Space of Land (Note 1)
Space of Floor (Note 1)
Type of Ownership
Date of Completion (Note 1)
Property Management Company
Number of Tenants
Total Leasable Space
Occupancy Rate
Acquisition Price
Date of Contract
Date of Acquisition
Previous Owner
Source of Funds

Trust beneficial interest
Sapporo North Plaza
4-2-2 Kita-Ichijo-Nishi, Chuo-ku, Sapporo, Hokkaido, and two other lots
4-2-2 Kita-Ichijo-Nishi, Chuo-ku, Sapporo, Hokkaido (Note 3)
SRC, Flat roof, B2 / 12 F
2,363.79 m2
18,842.51 m2 (Note 2)
Land: Ownership, Building: Ownership
August 17, 1981
The Dai-Ichi Building Co., Ltd.
44
13,779.43 m2
87.2 %¥6,820 million
May 8, 2006 (Purchase agreement of the beneficiary interest was signed.)
June 1, 2006 (The beneficiary interest was transferred.)
JOFI Sapporo Chuo, Ltd.
Proceeds of issuance of investment units on May 25, 2006

Note 1: As per the information in the registry book.
Note 2: Including 110.55 m2 of an annex building (garage).
Note 3: Postal address has not been officially allocated.

22

Profile of the Company
1. STATUS OF UNITHOLDERS’ CAPITAL
5th FP(Apr. 30, 2006)

4th FP(Oct. 31, 2005)

3rd FP(Apr. 30, 2005)

2nd FP(Oct. 31, 2004)

1st FP(Apr. 30, 2004)

2,000,000
229,970
124,610
13,1292,000,000
229,970
124,610
15,8842,000,000
184,650
92,168
13,9542,000,000
184,650
92,16815,5222,000,000
148,600
71,706
14,658

Number ofUnits Held
(Units)Portion in
the Total
Units Issued (%)

Maximum Number of Units Allowed to Issue Unit
Number of Units Issued
Unit
Amount of Unitholders’ Capital¥ mln
Number of Unitholders

2. MAJOR UNITHOLDERS
The major unitholders as of April 30, 2006 are as follows.

Name

Address

Japan Trustee Service Bank, Ltd. (Trust Accounts) 1-8-11 Harumi, Chuo-ku, Tokyo

22,621

9.84

NikkoCiti Trust and Banking Corp.
(Trust Accounts)

2-3-14 Higashi-Shinagawa, Shinagawa-ku, Tokyo

14,348

6.24

Nomura Real Estate Development Co., Ltd.

1-26-2 Nishi-Shinjuku, Shinjuku-ku, Tokyo

11,500

5.00

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

2-11-3 Hamamatsu-cho, Minato-ku, Tokyo

10,199

4.43

Trust & Custody Services Bank, Ltd.
(Securities Trust Accounts)

1-8-12 Harumi, Chuo-ku, Tokyo

8,546

3.72

Kawasaki Gakuen

577 Matsushima, Kurashiki City, Okayama

6,000

2.61

The Gibraltar Life Insurance Co., Ltd.
(Ordinary Accounts and others)

1-8-11 Harumi, Chuo-ku, Tokyo

5,011

2.18

American Life Insurance Company GAL

2-3-14 Higashi-Shinagawa, Shinagawa-ku, Tokyo

4,138

1.80

National Mutual Insurance Federation ofAgricultural Cooperatives (Zen-Kyo-Ren)

2-7-9 Hirakawa-cho, Chiyoda-ku, Tokyo

3,993

1.74

The Senshu Bank, Ltd.

26-15 Miyamoto-cho, Kishiwada City, Osaka

Total

3,900

1.70

90,256

39.25

3. BREAKDOWN OF UNITHOLDERS
The breakdown of unitholders as of April 30, 2006 is as follows.
Number of

Number of Units

Unitholders

Portion (%)

per Unitholders

12,57795.8

33,226

14.4

Financial Institutions(Including Securities Companies)

178

1.4

144,327

62.8

Other Domestic Corporate Investors

215

1.6

24,146

10.5

Private and Other Investors

Foreign Corporate Investors, etc.
Total

Portion (%)

159

1.2

28,271

12.3

13,129100.0

229,970

100.0

23

4. EXECUTIVE DIRECTORS AND SUPERVISORY DIRECTORS
Title

Name

Executive Director

Other Major Title(s)President and Representative Director,
Yokohama Business Park Heating and Cooling Supply Co., Ltd.

Isamu Okada

Supervisory Director

Yutaka Hori

Representative Lawyer, Hori Yutaka Law Office

Supervisory Director

Yoshiharu Hayakawa

Representative, Kasumi Empowerment Research InstituteSupervisory Director

Shuhei Yoshida

Representative Lawyer, Yoshida Shuhei Law Office

Supervisory Director

Eitoku Aikawa

Counsellor, Fair Appraisers, K.K.

Note: No Executive Directors or Supervisory Directors are in possession of the Company’s investment units either under their own or other person’s name. Supervisory Directors
might serve as directors of other companies, but there are no mutual business interests whatsoever between such companies and the Company.

5. TRUSTEES, CUSTODIAN AND ADMINISTRATORSBusiness

Company Name(s)Investment Trust Manager(Asset Management Company)

Nomura Real Estate Asset Management Co., Ltd.

Custodian of Assets

Mitsubishi UFJ Trust and Banking Corporation

Administrative Agent (Underwriter)(Note 1)

Administrative Agent (Transfer Agent)

Mitsubishi UFJ Trust and Banking Corporation

Administrative Agent (Accounting etc.)

Mitsubishi UFJ Trust and Banking Corporation

Administrative Agent(Investment Corporation Bonds)

The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Banking Corporation,
Nomura Securities Co., Ltd., Nikko Citigroup Limited, Mizuho Securities Co., Ltd. (Note 2)

Note 1: In association with the additional issuance of the investment units, the Company entered into underwriting agreements on May 17, 2006 with Nomura Securities Co., Ltd.
(the lead manager), Merrill Lynch Japan Securities Co., Ltd., Nikko Citigroup Limited, Mizuho Securities Co., Ltd., Daiwa Securities SMBC Co., Ltd., Mitsubishi UFJ
Securities Co., Ltd., UBS Securities Japan Ltd. and Takagi Securities Co., Ltd. The underwriting agreement was terminated in its entirety upon completion of the pay-in on
May 25, 2006.
Note 2: In association with the issue of Third and Fourth Series investment corporation bonds, the Company entered into general administrative agreements on November 11,
2005 with Sumitomo Mitsui Banking Corporation, Nomura Securities Co., Ltd., Nikko Citigroup Limited and Mizuho Securities Co., Ltd. A particular section of the agreement relating to the administration of these issuances has been invalidated upon completion of the pay-in on November 28, 2005.

24

Status of Investment Assets of the Company
1. COMPOSITION OF ASSETS
5th FP (as of Apr. 30, 2006)
Type of Assets

Area

Total Amount (¥ mln)
(Note 1)

Real Estate

Vicinity of Tokyo

3,741

Tokyo Central Area
Real Estate in Trust

Vicinity of Tokyo
Other Cities

4th FP (as of Oct. 31, 2005)

Portion (%)(Note 2)

Total Amount (¥ mln)
(Note 1)

Portion (%)(Note 2)

1.4

–

–

163,104

60.7

154,301

64.5

35,03313.0

35,245

14.7

40,02114.9

22,0199.2

Subtotal

241,901

90.1

211,566

88.5

Cash, Deposits and Other Assets

26,6589.9

27,500

11.5

Grand Total

268,559

100.0

239,067

100.0

Note 1: Total amount is taken from the balance sheet. (Real Estate and Real Estate in Trust represent the total book value after depreciation.)
Note 2: The percentage figures may not necessarily add up to 100.0 due to rounding to the nearest first decimal place.

2. BRIEF OF MAJOR PROPERTIES OWNED
The major components of assets (the largest eleven properties by book value at the end of the fifth fiscal period) are as follows.

Name of Property

Book Value(¥ mln)Leasable Space(m2)

Leased Space(m2)

Occupancy
Rate (%)

Portionof Rental
Revenues (%)

Primary Use

Shinjuku Nomura Bldg.

39,201

31,589.26

31,347.29

99.2

17.8

OfficeJAL Bldg.

33,94542,084.11

42,084.11

100.0(Note 1)

OfficeNOF Nihonbashi-Honcho Bldg. (Note 2)

20,55819,233.28

19,233.28

100.0

8.0

OfficeTennozu Park Side Bldg.

14,22318,051.61

18,051.61

100.0

7.9

OfficeNOF Midosuji Bldg. (Note 2)

12,86012,240.88

12,100.35

98.9

4.1

OfficeNOF Shibuya Koen-dori Bldg.

12,5953,420.16

3,420.16

100.0

3.7

OfficeNOF Shiba Bldg. (Note 2)

10,211

8,165.10

8,165.10

100.0

3.3

OfficeNOF Kawasaki Higashiguchi Bldg. (Note 2)

9,726

8,284.03

8,284.03

100.0

3.2

OfficeNishi-Shinjuku Showa Bldg.

8,803

5,659.96

5,466.42

96.6

2.5

OfficeToshin Tameike Bldg.

7,635

4,715.20

4,275.52

90.7

1.8

OfficeNOF Toyo-cho Bldg. (Note 2)

7,245

18,218.17

18,218.17

100.0(Note 1)

Office177,006

171,661.76

170,646.04

99.4

64.2 (Note 3)

Total

Note 1: Not disclosed due to compelling reasons.
Note 2: The name of the property has been changed as illustrated in the table on page 8.
Note 3: Despite the above restrictions, the total includes the proportions of JAL Bldg. and NOF Toyo-cho Bldg.

25

3. DETAILS OF PORTFOLIO PROPERTIESName of Property

Location(Postal Address)

Tokyo Central Area
Shinjuku Nomura Bldg. (Note 3)

1-26-2 Nishi-Shinjuku, Shinjuku-ku, Tokyo

JAL Bldg.

2-4-11 Higashi-Shinagawa, Shinagawa-ku, TokyoNOF Nihonbashi-Honcho Bldg.
(Note 4)
Tennozu Park Side Bldg.

2-7-1 Nihonbashi-Honcho, Chuo-ku, TokyoNOF Shibuya Koen-dori Bldg.

20-17 Udagawa-cho, Shibuya-ku, TokyoNOF Shiba Bldg. (Note 4)

4-2-3 Shiba, Minato-ku, Tokyo

Nishi-Shinjuku Showa Bldg.

1-13-12 Nishi-Shinjuku, Shinjuku-ku, Tokyo

Toshin Tameike Bldg.

1-1-14 Akasaka, Minato-ku, Tokyo

Shinagawa NF Bldg.

1-2-5 Higashi-Shinagawa, Shinagawa-ku, Tokyo

Surugadai Plaza Bldg.

2-5-12 Kanda Surugadai, Chiyoda-ku, TokyoNOF Kanda Iwamoto-cho Bldg.
(Note 4)
NOF Minami-Shinjuku Bldg.
(Note 4)
Subtotal

3-8-16 Iwamoto-cho, Chiyoda-ku, Tokyo

2-5-8 Higashi-Shinagawa, Shinagawa-ku, Tokyo

5-32-7 Sendagaya, Shibuya-ku, Tokyo

Vicinity of TokyoNOF Toyo-cho Bldg. (Note 4)

1-6-35 Shinsuna, Koto-ku, Tokyo

Technoport Kamata B Ridge

2-16-1 Minami-Kamata, Ota-ku, Tokyo

Crystal Park Bldg.

1-1-3 Gotenyama, Musashino City, Tokyo

Faret Tachikawa Center Square

2-36-2 Akebono-cho, Tachikawa City, TokyoNOF Kawasaki Higashiguchi Bldg. 3-1 Ekimae Honcho, Kawasaki-ku, Kawasaki City,(Note 4)
Kanagawa (Note 5)
NOF Yokohama Nishiguchi Bldg. 1-11-11 Kita-Saiwai, Nishi-ku, Yokohama City,(Note 4)
Kanagawa
NOF Shin-Yokohama Bldg.
2-15-16 Shin-Yokohama, Kohoku-ku, Yokohama City,(Note 4)
Kanagawa
Subtotal
Other Cities
NOF Sendai Aoba-dori Bldg.
(Note 4)
NOF Utsunomiya Bldg. (Note 4)

2-1-2 Ichiban-cho, Aoba-ku, Sendai City, Miyagi

NOF Nagoya Yanagibashi Bldg.
(Note 4)
NOF Midosuji Bldg. (Note 4)

1-16-28 Meieki-Minami, Nakamura-ku, Nagoya City,
Aichi
3-5-7 Kawaramachi, Chuo-ku, Osaka City, Osaka

Nomura Osaka Bldg.

1-8-15 Azuchi-cho, Chuo-ku, Osaka City, Osaka

Nomura Yotsubashi Bldg.

1-4-4 Awaza, Nishi-ku, Osaka City, Osaka

NOF Kobe Kaigan Bldg. (Note 4)

3 Kaigan-dori, Chuo-ku, Kobe City, Hyogo (Note 5)

Hiroshima Chowa Bldg.

1-20 Tatemachi, Naka-ku, Hiroshima City, Hiroshima

Nomura Hiroshima Bldg.

2-23 Tatemachi, Naka-ku, Hiroshima City, Hiroshima

Subtotal
Grand total

26

2-1-1 Baba-dori, Utsunomiya City, Tochigi

Type ofOwnership

Appraisal Valueat the End of Book Value
Period (¥ mln)(¥ mln)(Note 1)
(Note 2)48,00039,20130,94033,94522,20020,55816,90014,223

13,90012,595

10,30010,211

9,110

8,803

7,510

7,635

5,960

5,375

5,430

5,208

3,430

3,061

2,460

2,285

176,140

163,104

Trust Beneficial
Interest
Trust Beneficial
Interest
Real Estate

7,950

7,245

6,870

6,322

3,800

3,741

Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest

4,050

3,152

9,680

9,726

5,580

5,095

3,790

3,491

41,72038,774

3,220

3,184

3,210

2,807

3,580

3,638

13,10012,860

7,700

6,378

4,950

3,799

3,320

3,129

2,100

2,088

2,080

2,134

43,260261,12040,021
241,901

Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest

Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest
Trust Beneficial
Interest

Note 1: ”Appraisal Value at the End of the Fiscal Period” stands for the prices appraised by the estate surveyors in accordance with the provisions of the Company’s “Articles Of
Incorporation” and the “Rules Concerning Balance Sheet, Income Statement, Asset Management Report, Calculation of Cash Distribution and Annexed Statement For
Investment Corporations” (Decree No. 134 issued by the General Administrative Agency of the Cabinet in 2000). The appraisal prices are calculated by Tanizawa Sogo
Appraisal Co., Ltd., Appraisal Firm A-Square Co., Ltd., Daiwa Real Estate Appraisal, Co., Ltd., HIRO & REAS Network, Inc., Morii Appraisal & Investment Consulting Inc., or
Chuo Real Estate Appraisal Co., Ltd. using the capitalization approach, with the end of the fifth fiscal period, i.e. April 30, 2006, being taken as the point of evaluation.
Note 2: “Book Value” stands for the aggregate purchase price of lands, buildings, structures, machinery and equipments, tools and fixtures, and construction in progress, owned
directly or held in trust, less depreciation including expenses associated with these purchases.
Note 3: The Company’s stake in this property is quasi co-ownership of 50.1% of entirety. The appraisal value and book value at the end of the fiscal period accounted solely for thequasi co-ownership.
Note 4: The name of the property has been changed as illustrated in the table on page 8.
Note 5: The number appearing in the address of the properties is the lot number for registration purpose, as the postal address has not been allocated yet.

5th FP (Nov 1, 2005 – April 30, 2006)
as at the End of Period
Number of
Tenants
Occupancy(Note 1)
Rate (%)

Name of Property

Tokyo Central Area
Shinjuku Nomura Bldg.
JAL Bldg.
NOF Nihonbashi-Honcho Bldg.
Tennozu Park Side Bldg.
NOF Shibuya Koen-dori Bldg.
NOF Shiba Bldg.
Nishi-Shinjuku Showa Bldg.
Toshin Tameike Bldg.
Shinagawa NF Bldg.
Surugadai Plaza Bldg.
NOF Kanda Iwamoto-cho Bldg.
NOF Minami-Shinjuku Bldg.
SubtotalVicinity of TokyoNOF Toyo-cho Bldg.
Technoport Kamata B Ridge
Crystal Park Bldg.
Faret Tachikawa Center Square
NOF Kawasaki Higashiguchi Bldg.
NOF Yokohama Nishiguchi Bldg.
NOF Shin-Yokohama Bldg.
Subtotal
Other Cities
NOF Sendai Aoba-dori Bldg.
NOF Utsunomiya Bldg.
NOF Nagoya Yanagibashi Bldg.
NOF Midosuji Bldg.
Nomura Osaka Bldg.
Nomura Yotsubashi Bldg.
NOF Kobe Kaigan Bldg.
Hiroshima Chowa Bldg.
Nomura Hiroshima Bldg.
Subtotal
Grand Total

4th FP (May 1, 2005 – October 31, 2005)

RentalRevenues
Portionduring theof Rental
Period (¥ mln) Revenues (%)

as at the End of Period
Number of
Tenants
Occupancy(Note 1)
Rate (%)

RentalRevenues
Portionduring theof Rental
Period (¥ mln) Revenues (%)

86
1
13
14
3
10
18
12
5
1
8
5

99.2
100.0
100.0
100.0
100.0
100.0
96.6
90.7
100.0
100.0
100.0
100.0

1,745
(Note 2)
784
774
366
326
240
180
257
(Note 2)
148
102

17.8
(Note 2)
8.0
7.9
3.7
3.3
2.5
1.8
2.6
(Note 2)
1.5
1.0

85
1
12
14
3
10
12
5
1
8
5

97.4
100.0
92.0
100.0
100.0
94.0
100.0
100.0
100.0
100.0
100.0

1,740
(Note 2)
824
792
367
327
40
259
(Note 2)
149
103

20.1
(Note 2)
9.5
9.2
4.3
3.8
0.5
3.0
(Note 2)
1.7
1.2

176

99.4

6,002
(Note 3)

61.2

156

98.0

5,682
(Note 3)

65.8

1
13
11
15
27
29
3

100.0
97.7
100.0
96.7
100.0
100.0
100.0

(Note 2)
438
41
224
315
228
(Note 2)

(Note 2)
4.5
0.4
2.3
3.2
2.3
(Note 2)

1
13
16
24
27
3

100.0
99.9
95.3
97.1
97.3
100.0

(Note 2)
422
225
214
225
(Note 2)

(Note 2)
4.9
2.6
2.5
2.6
(Note 2)

99

99.2

1,735
(Note 3)

17.7

84

98.8

1,576
(Note 3)

18.2

27
26
9
16
29
18
28
23
16

94.7
98.8
76.3
98.9
100.0
100.0
88.9
81.5
98.2

139
172
108
400
456
313
184
87
209

1.4
1.8
1.1
4.1
4.6
3.2
1.9
0.9
2.1

–
26
6
–
25
16
28
–
16

–
98.8
87.1
–
93.4
95.3
87.5
–
96.4

–
169
21
–
483
307
192
–
207

–
2.0
0.2
–
5.6
3.6
2.2
–
2.4

192

95.7

2,073

21.1

117

93.6

1,381

16.0

98.4

9,810
(Note 3)

97.3

8,641
(Note 3)

100.0

467

100.0

357

Note 1: In the case a master lease agreement is in place, in which the master tenant of the said lease agreement subleases a part or whole of the leased floor spaces to the end
tenants, only the master tenant is counted as the number of tenants. In the case more than one space within the same building are leased by the same tenant, such
spaces are combined to count for just one tenant. However, when the same tenant leased floor spaces in more than one building, such spaces are counted separately foreach building as if they are leased by different tenants. As for Shinjuku Nomura Building, the number of tenants in the entire building is taken into account.
Note 2: Not disclosed due to compelling reasons.
Note 3: Despite above Note 2, Subtotals and Grand Total include those not disclosed due to compelling reasons.

4. OUTSTANDING AMOUNT AND CURRENT PRICE OF SPECIFIED TRANSACTIONS
The outstanding amount and current price of the specified transactions as at the end of the fifth fiscal period are as follows.
Contract Amount (¥ mln) (Note 1)
Segment

Longer than a Year

Type of Transaction

Interest rate swap
Transaction other than market transaction (Receiving
variable rate, paying fixed rate)
Total

Current
Price (¥ mln)
(Note 2)49,00036,500139

49,00036,500139

Note 1: Presented based on notional principal of contract.
Note 2: Evaluated at the price provided by the counterparty based on the prevailing market rate.

5. STATUS OF THE OTHER ASSETS
Other than the Trust Beneficial Interest and Real Estate listed in the table under the title “3. Details of Portfolio Properties” theCompany had no other assets to integrate into the portfolio as at the end of the fifth fiscal period.

27

Capital Expenditures
1. PLAN OF CAPITAL EXPENDITURES
The table below lists major capital expenditures in conjunction with the refurbishment and/or renewal works scheduled for the future(finished in part) on the properties held as at the end of the fifth fiscal period. The estimated cost of works includes the amount to be
charged as “expenses” for accounting purposes.
Name of Property (Location)

Description of Works (Purpose)

Estimated
PeriodEstimated Cost (¥ mln) (Note 1)
Paid during
Paid before
Total
5th FP
5th FP

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Refurbishment of thecommon space on thestandard floor (To increase
revenues) (Note 2)

From: May 2006
To:
Sep. 2006

103

–

–

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Renewal of sanitary piping(To increase quality)

From: Nov. 2006
To:
Mar. 2009

160

–

2

NOF Nihonbashi-Honcho Bldg.
(Chuo-ku, Tokyo)

Renewal of heat pipes andAHU (To increase quality)(Note 2)

From: May 2006
To:
Apr. 2009

289

–

–

NOF Shibuya Koen-dori Bldg.
(Shibuya-ku, Tokyo)

Refurbishment of the main
entrance (To increase
revenues)

From: Sep. 2006
To:
Oct. 2006

25

–

–

Toshin Tameike Bldg.
(Minato-ku, Tokyo)

Renewal of outside wallsof lower floors (To increase
revenues) (Note 2)

From: Jun. 2006
To:
Aug. 2006

40

1

1

Shinagawa NF Bldg.
(Shinagawa-ku, Tokyo)

Renewal of air-conditioning
system (To increase
quality) (Note 2)

From: Jun. 2006
To:
May 2007

195

–

–

NOF Kawasaki Higashiguchi Bldg.
(Kawasaki-ku, Kawasaki City)

Refurbishment of theentrance and other areas(To increase revenues)

From: Jul. 2006
To:
Sep. 2006

19

1

1

NOF Nagoya Yanagibashi Bldg.
(Nakamura-ku, Nagoya City)

Refurbishment of thecommon space on thestandard floor (To increase
revenues) (Note 2)

From: Jun. 2006
To:
Aug. 2006

24

1

1

Nomura Osaka Bldg.
(Chuo-ku, Osaka City)

Renewal of the central
monitoring system (Toincrease quality)

From: Nov. 2006
To:
Apr. 2007

60

–

–

Nomura Yotsubashi Bldg.
(Nishi-ku, Osaka City)

Renewal of the central
monitoring system (Toincrease quality) (Note 2)

From: May 2006
To:
Sep. 2006

40

–

–

Hiroshima Chowa Bldg.
(Naka-ku, Hiroshima City)

Aseismic retrofitting(To increase quality)

From: Jul. 2006
To:
Mar. 2007

118

–

–

Nomura Hiroshima Bldg.
(Naka-ku, Hiroshima City)

Refurbishment of theentrance (To increase
revenues)

From: Jul. 2006
To:
Sep. 2006

30

–

–

Note 1: As for Nomura Shinjuku Building, the posted amount of cost represents 50.1%, our proportion of quasi co-ownership, of the total cost of refurbishment of the entire building.
Note 2: These works have already been implemented as of the date of this report.

28

2. CAPITAL EXPENDITURES DURING THE FIFTH FISCAL PERIOD
The table below lists capital expenditures during the fifth fiscal period in conjunction with the major works of renovation. During thefifth fiscal period, we have conducted engineering works totalling ¥1,237 million: capital expenditures of ¥934 million and repair
expenses of ¥302 million combined all together.

Name of Property (Location)

Period of Works

Description of Works (Purpose)

Cost of
Works (¥mln)

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Refurbishment of the shopping area andcommon space on the basement floor(To increase revenues)

From: Aug. 2005
To:
Mar. 2006

321

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Refurbishment of the common space on
the standard floor (To increase revenues)

From: May 2005
To:
Feb. 2006

163

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Renewal of sanitary piping(To increase quality)

From: Nov. 2005
To:
Mar. 200650

NOF Nihonbashi-Honcho Bldg.
(Chuo-ku, Tokyo)

Renewal of heat pipes and AHU(To increase quality)

From: Jun. 2005
To:
Apr. 2006

59

NOF Shin-Yokohama Bldg.
(Kohoku-ku, Yokohama City)

Renewal of accumulator of air-conditioning
system (To increase quality)

From: Mar. 2006
To:
Apr. 2006

29

Nomura Osaka Bldg.
(Chuo-ku, Osaka City)

Barrier-free retrofitting on the common space(To increase revenues)

From: Feb. 2006
To:
Mar. 2006

22

Other Properties

Improvement of features

From: Nov. 2005
To:
Apr. 2006

286

Total

934

3. FUNDS RESERVED FOR THE LONG-TERM REPAIR PLANS
Subject to the long-term schedule for repairs and maintenance set down for each building, the Company has accounted for reserves fromthe operating cash flow to prepare for large-scale engineering works to be carried out in the future.
4th FP
3rd FP
2nd FP
5th FP
1st FP
from Nov. 1, 2005 from May 1, 2005 from Nov. 1, 2004 from May 1, 2004 from Aug. 7, 2003
to Apr. 30, 2006 to Oct. 31, 2005
to Apr. 30, 2005
to Oct. 31, 2004
to Apr. 30, 2004
¥mln
¥mln
¥mln
¥mln
¥mln

Balance Brought forward from the Previous Period
Amount Reserved during the Period
Amount Used during the Period
Balance Brought forward to the Next Period

1,054
600
893
761

833
528
307
1,054

548
524
239
833

184
487
124
548

–
218
33
184

Expenses and Liabilities
1. EXPENSES RELATED TO ASSET MANAGEMENT

Asset Management Fees (Note 1)of which Management Fee I
of which Management Fee IIof which Management Fee III
Custodian Fees
General Administrative Fees
Directors’ Compensation
Other Expenses
Total

5th FP
from Nov. 1, 2005
to Apr. 30, 2006¥000

4th FP
from May 1, 2005
to Oct. 31, 2005
¥000

851,350
437,984
272,416
140,948
25,19451,40512,00054,383994,333

629,689
380,141
248,927620
23,33055,3238,400
68,129784,872

Note 1: In the Asset Management Agreement between the Company and the Asset Management Company, there is no provision for the acquisition fees, which are payable to the
Asset Management Company by the Company on acquisition of a new property, and such fees are non-existent.

29

2. STATUS OF BORROWINGThe status of borrowing from the financial institutions as at the end of the fifth fiscal period is as follows.

Financial Institutions
Short-term Borrowing
The Bank of Tokyo-Mitsubishi UFJ, Ltd. (Note 2)
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Norinchukin BankThe Yamanashi Chuo Bank, Ltd.
The Chugoku Bank, Ltd.
The Bank of Fukuoka, Ltd.
National Mutual Insurance Federation of Agricultural Cooperatives
The Aozora Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd. (Note 2)
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Norinchukin Bank
The Mizuho Corporate Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
The Mizuho Corporate Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co.
The Chuo Mitsui Trust & Banking Co.
The Nomura Trust & Banking Co.
The Hachijuni Bank, Ltd.
The Yamanashi Chuo Bank, Ltd.
The Chugoku Bank, Ltd.
The Hiroshima Bank, Ltd.
The Iyo Bank, Ltd.
The Bank of Fukuoka, Ltd.
The Aozora Bank, Ltd.
SubtotalLong-term Borrowing Due Within a Year
The Bank of Tokyo-Mitsubishi UFJ, Ltd. (Note 4)
Sumitomo Trust and Banking Co.
The Nomura Trust & Banking Co.
The Chiba Bank, Ltd.
The Hachijuni Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd. (Note 5)
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Chuo Mitsui Trust & Banking Co., Ltd.
The Nomura Trust & Banking Co., Ltd.
The Chiba Bank, Ltd.
The Hiroshima Bank, Ltd.
The Iyo Bank, Ltd.
The Dai-Ichi Mutual Life Insurance Company
Meiji Yasuda Life Insurance Company
Subtotal
Total Short-term Borrowing

30

Date
Borrowed

Jun. 29,2005

Jun. 29,2005

Sep. 28,
2005

Mar. 17,2005

Nov. 29,2005

Feb. 26,
2004

Dec. 8,2003

Dec. 82003

Outstanding as atthe End of 5th FP(¥000)

Outstanding as atthe End of 4th FP(¥000)

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,000,000
1,000,000
1,000,000
1,000,000
1,000,000
2,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
16,000,000

1,350,000
750,000
300,000
300,000
300,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
4,950,000
2,750,000
1,100,000
1,100,000
1,100,000
1,000,000
500,000
500,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21,000,000

–
–
–
–
–
2,000,000
2,000,000
1,000,000
2,000,000
1,000,000
2,000,000
1,000,000
500,000
1,000,000
2,000,000
1,000,000
15,500,000
31,500,000

1,000,000
2,500,000
2,000,000
1,500,000
500,000
–
–
–
–
–
–
–
–
–
–
–
7,500,000
28,500,000

Average
Interest Rate(%) (Note 1)

Date of
Repayment

0.49083

Nov. 29,2005

0.36583

Dec. 9,2005

0.49000

Method of
Use ofRepayment Borrowings

Note

Dec. 28,2005

0.47000

Feb. 26,2006

0.39000

May 29,2006

0.60000

Feb. 26,2006

1.14500

Dec. 82006

1.04500

Dec. 8,
2006

Balloonpayment(Note 3)

Unsecured/
Uninsured

Balloonpayment(Note 3)

Unsecured/
UninsuredFinancial Institutions
Long-term Borrowing
The Bank of Tokyo-Mitsubishi UFJ, Ltd. (Note 5)
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Chuo Mitsui Trust & Banking Co., Ltd.
The Nomura Trust & Banking Co., Ltd.
The Chiba Bank, Ltd.
The Hiroshima Bank, Ltd.
The Iyo Bank, Ltd.
The Dai-Ichi Mutual Life Insurance Company
Meiji Yasuda Life Insurance Company
The Bank of Tokyo-Mitsubishi UFJ, Ltd. (Note 4)
The Bank of Tokyo-Mitsubishi UFJ, Ltd. (Note 2)
Sumitomo Mitsui Banking Corp.
The Chiba Bank, Ltd.
The Hachijuni Bank, Ltd.
The Hiroshima Bank, Ltd.
The Keiyo Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd. (Note 2)
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
The Chuo Mitsui Trust & Banking Co., Ltd.
The Iyo Bank, Ltd.
The Dai-Ichi Mutual Life Insurance Company
The Yamanashi Chuo Bank, Ltd.
The Chugoku Bank, Ltd.
The Bank of Fukuoka, Ltd.
The Aozora Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd. (Note 5)
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
The Iyo Bank, Ltd.
The Norinchukin Bank, Ltd.
Mitsui Life Insurance Company
Taiyo Life Insurance Company
Daido Life Insurance Company
Mitsui Sumitomo Insurance Company
The Chiba Bank, Ltd.
The Hachijuni Bank, Ltd.
The Norinchukin Bank
Mitsui Life Insurance Company
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Mizuho Corporate Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Nomura Trust & Banking Co., Ltd.
Mitsui Life Insurance Company
Taiyo Life Insurance Company
Daido Life Insurance Company.
National Mutual Insurance Federation of Agricultural Cooperatives
Development Bank of Japan
National Mutual Insurance Federation of Agricultural Cooperatives
Development Bank of Japan
Subtotal
Total

Date
Borrowed

Dec. 8,2003

Dec. 8,2003
Feb. 28,2005

Dec. 8,2004

Feb. 26,
2004
Feb. 26, 2004
Dec. 9,2005

Dec. 8,2003

Dec. 8,2003
Feb. 27,
2006
Feb. 26, 2004
Feb. 26, 2004
Feb. 27,
2006

Nov. 29,2005
Dec. 9, 2005
Mar. 17, 2005

Outstanding as atthe End of 5th FP(¥000)

Outstanding as atthe End of 4th FP(¥000)

–
–
–
–
–
–
–
–
–
–
–
2,000,000
4,000,000
1,000,000
500,000
1,000,000
1,000,000
1,000,000
2,000,000
1,500,000
2,500,000
1,000,000
500,000
3,000,000
1,000,000
1,000,000
1,000,000
1,000,000
2,000,000
2,000,000
1,000,000
1,000,000
2,000,000
2,000,000
1,000,000
1,000,000
1,000,000
1,500,000
500,000
3,000,000
1,000,000
1,000,000
1,000,000
500,000
3,000,000
2,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
58,500,000
90,000,000

2,000,000
2,000,000
1,000,000
2,000,000
1,000,000
2,000,000
1,000,000
500,000
1,000,000
2,000,000
1,000,000
2,000,000
4,000,000
1,000,000
500,000
1,000,000
1,000,000
1,000,000
2,000,000
1,500,000
2,500,000
1,000,000
500,000
3,000,000––––
2,000,000
2,000,000
1,000,000
1,000,000
2,000,000
2,000,000
1,000,000
1,000,000
1,000,000––
3,000,000
1,000,000
–
–
–
–
–
–
–
–
–
–
–
1,000,000
54,500,000
83,000,000

Average
Interest Rate(%) (Note 1)

1.14500

1.04500
0.66455

Date of
Repayment

Dec. 8,
2006
Aug. 28,2007

Dec. 8,2007

1.22500

Feb. 26,
2008

1.05250

Feb. 26, 2008

0.51455

Aug. 26,
2008

1.66750

Dec. 8,2008

1.51625

Dec. 8,2008

1.77500
1.50625

Note

Dec. 8,2006

1.00625

1.19000

Method of
Use ofRepayment Borrowings

Balloonpayment(Note 3)

Unsecured/
UninsuredFeb. 26,
2009
Feb. 26, 2010
Feb. 26, 2010

1.68000

Feb. 26,2011

1.43750

Aug. 26,2012

1.53625
1.75250

Aug. 26, 2012
Feb. 26, 2013

Note 1 : The average interest rate is weighted by the balance of each borrowing as at the end of the term and rounded to the nearest fifth decimal place. As for the borrowings,
which were hedged by interest rate swaps for the purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used to calculate the weighted averageof interest.
Note 2 : The Bank of Tokyo-Mitsubishi, Ltd. and The UFJ Bank Limited merged effective January 1, 2006 to be The Bank of Tokyo-Mitsubishi UFJ, Ltd. The balance represents
aggregated amount of borrowings from former Bank of Tokyo-Mitsubishi, Ltd and UFJ Bank Limited.
Note 3 : The use of borrowings is to purchase property-related assets.
Note 4 : The balance represents the borrowing from former Bank of Tokyo-Mitsubishi, Ltd.
Note 5 : The balance represents the borrowing from former UFJ Bank Limited.

31

3. STATUS OF INVESTMENT CORPORATION BONDS
The status of investment corporation bonds issued as at the end of the fifth fiscal period is as follows.
Balance as at the Balance as at theEnd of 5th FP
End of 4th FP
Issue Date(¥ mln)(¥ mln)Name of Bonds

First Series Unsecured
Investment Corporation Bonds

Mar. 16,
2005

5,000

5,000

Second Series Unsecured
Investment Corporation Bonds

Mar. 16,
2005

5,000

Third Series Unsecured
Investment Corporation Bonds

Nov. 28,
2005

Fourth Series Unsecured
Investment Corporation Bonds

Nov. 28,
2005

Total

Interest
Rate(%)

Method ofMaturity Date Repayment

Use ofProceeds

Note

1.85

Mar. 16,
2015

Balloonpayment (Note 1) (Note 2)

5,000

2.47

Mar. 16,
2020

Balloonpayment (Note 1) (Note 2)

10,000–1.19

Nov. 29,2010

Balloonpayment (Note 1) (Note 3)

10,000–2.05

Nov. 30,
2015

Balloonpayment (Note 1) (Note 3)

30,00010,000Note 1: The uses of proceeds are to purchase the property-related assets, pay for the costs, and to repay borrowings.
Note 2: Ranking Pari Passu among the investment corporation bonds for qualified institutional investors only.
Note 3: Ranking Pari Passu among the specified investment corporation bonds

Trading during the Fifth Fiscal Period
1. STATUS OF REAL ESTATES AND ASSET-BACKED SECURITIES TRADING
Disposition

Acquisition
Date

Price (Note1)(¥ mln)

Date

Price
(¥ mln)Nishi-Shinjuku Showa Bldg.
NOF Sendai Aoba-dori Bldg. (Note 2)
NOF Midosuji Bldg. (Note 2)
Hiroshima Chowa Bldg.

Nov. 30, 2005
Nov. 30, 2005
Nov. 30, 2005
Nov. 30, 2005

8,800
3,200
12,900
2,100

–
–
–
–

–
–
–
–

Crystal Park Bldg.

Feb. 28, 2006

Type of Asset

Beneficial
Interest in Real
Estate Trust
Real Estate

Name of Property

TotalBook Value Gain (Loss)(¥ mln)(¥ mln)

–
–
–
–

–
–
–
–

3,700

–

–

–

–

30,700––––Note 1: The “Price” refers to the acquisition price of a given property, which is described in the Transfer Agreement of Trust Beneficial Interest or Real Estate, and does not include
other expenses relevant to acquisition of the properties such as intermediary fees, taxes and duties.
Note 2: The name of the property has been changed as illustrated in the table on page 8.

2. STATUS OF OTHER ASSETS
Other than the above-mentioned properties and asset-backed securities, the Company’s assets are mostly comprised of direct bankdeposits and bank deposits in trust.

3. PRICE INVESTIGATION(1) Real Estates

Type of Asset

Beneficial
Interest in Real
Estate Trust
Real Estate
Total

Name of Property

Acquisition
Date

Nishi-Shinjuku Showa Bldg.
NOF Sendai Aoba-dori Bldg. (Note 3)
NOF Midosuji Bldg. (Note 3)
Hiroshima Chowa Bldg.

Nov. 30, 2005
Nov. 30, 2005
Nov. 30, 2005
Nov. 30, 2005

Crystal Park Bldg.

Feb. 28, 2006

Acquisition
Price (¥ mln)
(Note 1)

Appraisal
Value (¥ mln)
(Note 2)

8,800
3,200
12,900
2,100

8,800
3,200
12,900
2,100

3,700

3,770

30,70030,770Note 1: “Price” refers to the price described in the Transfer Agreement of Trust Beneficial Interest or Real Estate, and does not include other expenses relevant to acquisition of
the properties such as intermediary fees, taxes and duties.
Note 2: The price investigation procedures were conducted by Ernst & Young ShinNihon at the time of acquisition in accordance with the guidance under “Price Investigation ofSpecified Assets Held by Investment Trusts and Investment Corporations”, Industry Audit Committee Report No. 23 issued by The Japanese Institute of Certified Public
Accountants. The Company has received detailed reports including but not limited to the location and lot number to identify these properties.
Note 3: The name of the property has been changed as illustrated in the table on page 8.

32

(2) Other Assets
With regard to the properties the Company has traded but not included in the above table “(1) Real Estates,” the priceinvestigation procedures were conducted by Ernst & Young ShinNihon subject to the requirement by Article 34-4 of theInvestment Trust Law.
For the fifth fiscal period (from November 1, 2005 to April 30, 2006), two interest swap transactions were subject to investigation.
Ernst & Young ShinNihon was requested to investigate the details of these transactions including the name of counterparty,
currency, interest rate, period of transaction, etc. This investigation report has been received.

4. TRANSACTION WITH RELATED PARTIES(1) Transactions
There is no relevant matter under this subject.
(2) Fees paid to related parties
Table of fees paid to related parties during the fifth fiscal period is as follows.
Amount Paid (A)(¥000)Name of Related Party

Portion(A) / (B)(%)

Total Amount Paid (B)(¥000)

Nomura Building Management Co., Ltd.
Flagship Properties Inc.
Nomura Real Estate Development Co., Ltd.
Nomura Building Management Co., Ltd.

466,556916
173,889
15,368Investment Corporation Bonds
Underwriting Fees

Nomura Securities Co., Ltd.

85,00085,000100.0

Other Expenses

Nomura Building Management Co., Ltd.
Nomura Real Estate Development Co., Ltd.

26,531
25,002

72,391

36.7
34.5

Contract-out Fees
Property Management Fees

61.7
0.1
77.3
6.8

756,532
224,826

Note 1: “Related party (ies)” refers to those bodies that have business interests in the Company and/or the Asset Management Company, with which the Company has an AssetManagement Agreement under Article 20 of Enforcement Order of Investment Trust Law. Such bodies with which trades were conducted and/or to which payments weremade during the fifth fiscal period were Nomura Building Management Co., Ltd., Flagship Properties Inc., Nomura Real Estate Development Co., Ltd. and Nomura
Securities Co., Ltd.
Note 2: In addition to the Property Management Agreement, the Company has entrusted Nomura Building Management Co., Ltd. with daily maintenance of building and equipments, the cost of which was included in “Contract-out Fees”.
Note 3: Besides the above, the Company has made the following payments for repair works during the fifth fiscal period.
Name of Related Party
Nomura Real Estate Development Co,. Ltd.
Nomura Building Management Co,. Ltd.
Nomura Amenity Service Co,. Ltd.

Amount Paid (¥000)
89,322
626,369
190

The management fees paid to the property management companies, which are related parties, are broken down as follows.
Name of Property

Shinjuku Nomura Bldg.
JAL Bldg.
Tennozu Park Side Bldg.
NOF Shibuya Koen-dori Bldg.
Nishi-Shinjuku Showa Bldg.
Toshin Tameike Bldg.
Shinagawa NF Bldg.
Surugadai Plaza Bldg.
NOF Minami-Shinjuku Bldg.
Technoport Kamata B Ridge
Faret Tachikawa Center Square
NOF Yokohama Nishiguchi Bldg.
NOF Shin-Yokohama Bldg.
NOF Midosuji Bldg.
Nomura Osaka Bldg.
Nomura Yotsubashi Bldg.
Hiroshima Chowa Bldg.
Nomura Hiroshima Bldg.
NOF Toyo-cho Bldg.
NOF Kawasaki Higashiguchi Bldg.
NOF Utsunomiya Bldg.
NOF Nagoya Yanagibashi Bldg.

Property Management Company

Property Management Fees(¥000) (Note 1) (Note 2)

Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.

48,876
2,822
15,913
7,761
7,123
4,529
8,413
3,936
2,578
10,514
5,507
7,784
4,386
10,365
13,47911,510
2,314
6,070
1,988
6,340
5,086
1,952

Note 1: “Property Management Fees” are the aggregated sum of the basic fee and the incentive fee.
Note 2: Daily maintenance of building and equipments is entrusted to Nomura Building Management, but the fees associated with such works are not included here.

33

5. STATUS OF BUSINESS WITH THE ASSET MANAGEMENT COMPANY OVER ITS SUBSIDIARY BUSINESSThere is no relevant matter under this subject as Nomura Real Estate Asset Management Co., Ltd., the asset management companyof the Company, is not in any subsidiary business.

Other Information
1. NOTICE
There is no relevant matter under this subject.

2. OTHER MATTERS
For the purpose of this report, the numbers of amount below unit were truncated and the numbers of rate are rounded to unit unlessotherwise mentioned specifically.

34

Financial Section

Contents

Balance Sheets.............................................................36
Statements of Income and Retained Earnings .............38
Statements of Changes in Unitholders' Equity ............39
Statements of Cash Flows ...........................................40
Notes to Financial Statements .....................................41

35

Balance Sheets
As of April 30, 2006

Thousands of Yen
As of October 31, 2005

Current Assets:
Cash and bank deposits
Rental receivables
Consumption taxes refundable
Other current assets
Total current assets¥ 25,587,120
160,862
55,091
289,350
26,092,423¥ 26,716,571
138,049
3,741
124,995
26,983,356

Property and Equipment, at Cost:Land
Buildings and structures
Machinery and equipment
Tools, furniture and fixtures
Construction in progress
SubtotalLess accumulated depreciation
Net property and equipment

171,703,489
74,787,278
605,246
64,843
7,291
247,168,147(5,267,086)
241,901,061

147,100,441
67,546,391
506,894
31,528249,385
215,434,639(3,867,761)
211,566,878

2,001
8,160
211,230
181,746
162,437¥ 268,559,058

1,989
8,885
210,780
235,962
59,905¥ 239,067,755

ASSETS

Investments and Other Assets:
Intangible assets
Long-term prepaid expenses
Security deposits
Derivative assets
Deferred hedge Iosses
Deferred investment corporation bonds issuance costs
Total Assets
The accompanying notes to financial statements are an integral part of these statements.

Note: In the Asset Management Agreement between the Company and its asset management company,there is no provision for the so-called acquisition fees,which are payable to
the Asset Management Company by the Company on acquisition of a new property,and such fees are non-existent.

36

As of April 30, 2006

Thousands of Yen
As of October 31, 2005

LIABILITIESCurrent Liabilities:
Trade accounts payable
Other accounts payable
Short-term debt
Accrued expenses
Accrued income taxes
Rent received in advance
Other current liabilities
Total current liabilities¥

511,875
879,136
31,500,000
470,646899
1,643,280
61,58435,067,420¥

529,402625,125
28,500,000
291,070982
1,439,846
1,412
31,387,837

Long-term Liabilities:
Investment corporation bonds
Long-term debt
Security deposits from tenants
Derivative liabilities
Deferred hedge gains
Total long-term liabilities

30,000,000
58,500,000
16,603,384
181,747
105,285,131

10,000,000
54,500,000
14,849,571
235,962
79,585,533

Total Liabilities

140,352,551

110,973,370

124,610,213
3,596,294
128,206,507

124,610,213
3,484,172
128,094,385¥ 268,559,058¥ 239,067,755

UNITHOLDERS’ EQUITY
Unitholders’ capital
Retained earnings
Total unitholders’ equity
Total Liabilities and Unitholders’ Equity

Note:accompanying
The
In the Asset Management
notes to financial
Agreement
statements
betweenare anthe
integralCompany
part andof these
its asset
statements.
management company,there is no provision for the so-called acquisition fees,which are payable to
the Asset Management Company by the Company on acquisition of a new property,and such fees are non-existent.

37

Statements of Income and Retained Earnings
For the period
from November 1, 2005
to April 30, 2006

Thousands of Yen
For the period
from May 1, 2005
to October 31, 2005

Operating Revenues and Expenses
Operating Revenues:
Real estate rental revenues¥ 9,810,526
9,810,526¥ 8,641,349
8,641,349

4,257,492
851,350
76,59966,3835,251,824

3,745,324
629,690
78,65376,5294,530,196

4,558,702

4,111,153

138
9,651
9,789

131
9,321
9,452

482,884
101,660
244,722
38,429103,697
971,392

412,438
48,785108,000
14,85542,7708,683
635,5313,597,099

3,485,074

Income Taxes:
Current
Deferred

927
4

1,008
1

Net Income

3,596,168

3,484,065

126

107

¥ 3,596,294¥ 3,484,172

Operating Expenses:
Real estate rental expenses
Asset management fees
Administrative service and custodian fees
Other operating expenses

Operating Profits

Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Other non-operating revenues

Non-Operating Expenses:
Interest expenses
Loan arrangement fees
Interest expenses on investment corporation bonds
Amortization of investment corporation bonds issuance costs
New investment units issuance costs
Other non-operating expenses

Income before Income Taxes

Retained Earnings brought forward
Retained Earnings at end of period
The accompanying notes to financial statements are an integral part of these statements.

38

Statements of Changes in Unitholders' Equity
Units

Balance as of April 30, 2005
184,650
Cash distribution paid
Additional issuance of new investment units through public offering on May 1, 2005
44,000Additional issuance of new investment units through third-party allotment on May 24, 2005
1,320
Net income
Balance as of October 31, 2005
229,970
Cash distribution paid
Net income
Balance as of April 30, 2006
229,970

Thousands of Yen
Changes in Equity¥ 94,849,705(2,681,118)
31,496,828
944,905
3,484,065
128,094,385(3,484,046)
3,596,168¥ 128,206,507

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

39

Statements of Cash Flows
For the period
from November 1, 2005
to April 30, 2006

Thousands of Yen
For the period
from May 1, 2005
to October 31, 2005

Cash Flows from Operating Activities
Income before income taxes
Depreciation
Amortization of long-term prepaid expenses
Amortization of investment corporation bonds issuance costs
Interest income
Interest expenses
Increase in rental receivables
Decrease (Increase) in consumption taxes refundable
Increase (Decrease) in trade accounts payable
Increase in other accounts payable
Increase in rent received in advance
Changes in other current assets/liabilities
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by operating activities¥ 3,597,099
1,399,446
725
38,429(138)
727,606(22,812)(51,350)(17,526)
138,097
203,434(104,188)
5,908,822
138(548,030)(1,009)5,359,921¥ 3,485,074
1,229,070
725
14,855(131)
520,438(22,150)
395,662
211,017
15,543
157,602
15,181
6,022,886
131(514,602)(1,044)
5,507,371

Cash Flows from Investing Activities
Payments for purchases of property and equipment
Payments for purchases of intangible assets
Payments of security deposits from tenants
Proceeds from security deposits from tenants
Net cash used in investing activities(31,619,557)(105)(478,677)
2,229,343(29,868,996)(27,286,702)(761,173)
1,630,815(26,417,060)

Cash Flows from Financing Activities
Proceeds from short-term debt
Repayments of short-term debt
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from investment corporation bonds
Payments of investment corporation bonds issuance costs
Proceeds from issuance of new investment units
Distributions to unitholders
Net cash provided by financing activities

18,000,000(23,000,000)
19,500,000(7,500,000)
20,000,000(140,026)(3,480,350)
23,379,624

19,000,000(22,500,000)
32,441,732(2,683,024)
26,258,708

Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at beginning of period
Cash and Cash Equivalents at end of period(1,129,451)
26,716,571¥ 25,587,120

5,349,019
21,367,552¥ 26,716,571

The accompanying notes to financial statements are an integral part of these statements.
Note: In the Asset Management Agreement between the Company and its asset management company,there is no provision for the so-called acquisition fees,which are payable to
the Asset Management Company by the Company on acquisition of a new property,and such fees are non-existent.

40

Notes to Financial Statements
1. Organizations
Nomura Real Estate Office Fund (the “Company”) is a real estate investment corporation formed to own and invest primarily in
office properties. The Company is externally managed by a licensed asset management company, Nomura Real Estate AssetManagement Co., Ltd. (“NREAM”). NREAM is a wholly owned subsidiary of Nomura Real Estate Holdings Co., Ltd.
On August 7, 2003, the Company was incorporated under the Law Concerning Investment Trusts and Investment Corporations(the “Investment Trust Law”) of Japan. On December 4, 2003, the Company was listed on the Tokyo Stock Exchange as the 9th JREIT and started operations on the following day. As of the end of April 2006, the Company owned a portfolio of 28 office properties
containing an aggregate of approximately 293,464.10 square meters of leasable area and leased office space to 467 tenants.

2. Basis of presentation
The Company maintains its accounting records and prepares its financial statements in accordance with accounting principles
generally accepted in Japan (“Japanese GAAP”), including provisions set forth in the Investment Trust Law of Japan, the JapaneseCommercial Code, the Securities and Exchange Law of Japan and related regulations, which are different in certain respects as tothe application and disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which wereprepared in accordance with Japanese GAAP and were presented in the Securities Report of the Company filed with the Kanto Local
Finance Bureau. 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. In
addition, the notes to financial statements include information that might not be required under Japanese GAAP but is presented
herein as additional information. Amounts have been rounded to the nearest thousand of Yen in the accompanying financial
statements and their notes whereas amounts have been truncated in the Japanese financial statements prepared in accordance withJapanese GAAP.
The Company’s fiscal period is a six-month period which ends at the end of April and October of each year, respectively. The
Company does not prepare consolidated financial statements because it has no subsidiaries.

3. Summary of significant accounting policies
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments that are highly
liquid, readily convertible to cash, with insignificant risk of market value fluctuation, and with a maturity of three months or lesswhen purchased.
Property and equipment
Property and equipment are stated at cost, which includes the purchase price and related costs for acquisition, lessaccumulated depreciation. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as
below;
Buildings
3 - 65 years
Structures
2 - 45 years
Machinery and equipments
3 - 15 years
Tools, furniture and fixtures
3 - 15 years
Intangible assets
Intangible assets are amortized on a straight-line method.
Deferred charges
Deferred charges include new investment units issuance costs and investment corporation bonds issuance costs. The entire
costs associated with the issuance of new investment units are expensed as incurred. Investment corporation bonds issuancecosts are amortized over a period of three years, comprised of six fiscal periods, with an equal amount in each fiscal period.
Accounting treatment of beneficial interests in real estate
All the assets and liabilities held in trust, to which the real estates in possession of the Company were entrusted, and all theearnings and expenses incurred from the trust are properly reflected on the balance sheets and income statements,
respectively.

41

Revenue recognition
Operating revenues consist of rental revenues including base rents and common area charges, and other operating revenues
including utility charge reimbursements, parking space rental revenues and other income. Rental revenues are generally
recognized on an accrual basis over the life of each lease. Utility charge reimbursements are recognized when earned and theiramounts are to be reasonably estimated.
Property related taxes
Property related taxes including property taxes, urban planning taxes and depreciable property taxes imposed during the fiscal
period are charged as rental expenses.
On the other hand, the Company paid the amount equivalent to the property related taxes to the sellers applicable to theperiod since acquisition and capitalized as part of the costs to acquire such properties or beneficial interests in real estate. The
capitalized property related taxes amounted to ¥36,595 thousand for the period from November 1, 2005 to April 30, 2006.
Income taxes
Deferred tax assets and liabilities are computed based on the difference between the financial statements and income tax
bases of assets and liabilities using the statutory tax rates.
Consumption taxes
Consumption taxes received and paid are not included in the statements of income.
Derivative financial instruments
The Company utilizes interest rate swap contracts as derivative financial instruments only for the purpose of hedging its
exposure to changes in interest rates. The Company deferred recognition of gains or losses resulting from changes in fairvalue of interest rate swap contracts which meet the criteria for deferral hedging accounting.

4. Schedule of property and equipment
Property and equipment at April 30, 2006 and October 31, 2005 consist of the following:Thousands of Yen
As of April 30, 2006
Acquisition Costs

Land

2,607,267

Book Value¥

Acquisition Costs

Book Value

2,607,267--

Buildings and structures
Accumulated depreciation

1,136,277(10,376)

1,125,901-

Machinery and equipment
Accumulated depreciation

8,966
(672)

8,294

-

-

Land in trust

169,096,222

169,096,222¥ 147,100,441¥ 147,100,441

Buildings and structures in trust
Accumulated depreciation

73,651,001(5,124,260)

68,526,741

67,546,391(3,775,705)

63,770,686

Machinery and equipment in trust
Accumulated depreciation

596,280(125,923)

470,357

506,894(89,506)

417,388

Tools, furniture and fixtures in trust
Accumulated depreciation

64,843(5,855)58,98831,528(2,550)28,978Construction in progress in trust

7,291

7,291

249,385

249,385¥ 241,901,061¥ 241,901,061¥ 211,566,878¥ 211,566,878

Total

42

¥

As of October 31, 2005

5. Short-term debt
Short-term debt at April 30, 2006 and October 31, 2005 consists of the following:
As of April 30, 2006
Amount(thousandsof Yen)As of October 31, 2005

Weightedaverageinterest rate

Unsecured loans from banks due on November 29, 2005
Unsecured loans principally from banks due on December 9, 2005
Unsecured loans from banks due on December 28, 2005
Unsecured loans from banks due on February 26, 2006
Unsecured loans from banks due on February 26, 2006
Unsecured loans from banks due on May 29, 2006
¥ 16,000,000
Unsecured loans from banks due on December 8, 2006
12,500,000
Unsecured loans from insurance companies due on
3,000,000
December 8, 2006
Total
¥ 31,500,000

Amount(thousandsof Yen)Weightedaverageinterest rate

0.39000%
1.14500%¥ 3,000,000
5,000,000
11,000,000
2,000,000
7,500,000-

0.49083%
0.36583%
0.49000%
0.47000%
0.60000%-

1.04500%--¥ 28,500,000

The Company entered into ¥20,000 million credit facilities in the form of commitment lines with the certain financial institutions.
The unused amount of such credit facilities was ¥20,000 million and ¥6,000 million as of April 30, 2006 and October 31, 2005,
respectively.

6. Investment corporation bonds
Details of investment corporation bonds outstanding are briefly as follows:
As of April 30, 2006
Amount(thousandsof Yen)Unsecured bonds due on March 16, 2015
Unsecured bonds due on March 16, 2020
Unsecured bonds due on November 29, 2010
Unsecured bonds due on November 30, 2015
Total

As of October 31, 2005

Weightedaverageinterest rate

¥ 5,000,000
5,000,000
10,000,000
10,000,000¥ 30,000,000

Amount(thousandsof Yen)1.85000%
2.47000%
1.19000%
2.05000%

Weightedaverageinterest rate

¥ 5,000,000
5,000,000¥ 10,000,000

1.85000%
2.47000%-

7. Long-term debt
Long-term debt at April 30, 2006 and October 31, 2005 consists of the following:
As of April 30, 2006
Amount(thousandsof Yen)Unsecured loans from banks due on December 8, 2006
Unsecured loans from insurance companies due on
December 8, 2006
Unsecured loans from a bank due on August 28, 2007
Unsecured loans from banks due on December 8, 2007
Unsecured loans from banks due on February 26, 2008
Unsecured loans from an insurance company due on
February 26, 2008
Unsecured loans from banks due on August 26, 2008
Unsecured loans from banks due on December 8, 2008
Unsecured loans from insurance companies due on
December 8, 2008
Unsecured loans from banks due on February 26, 2009
Unsecured loans from a bank due on February 26, 2010
Unsecured loans from an insurance company due on
February 26, 2010
Unsecured loans from banks due on February 26, 2011
Unsecured loans principally from insurance companies
due on August 26, 2012
Unsecured loans from another financial institution
due on August 26, 2012
Unsecured loans from a bank due on February 26, 2013
Total

As of October 31, 2005

Weightedaverageinterest rate

Amount(thousandsof Yen)Weightedaverageinterest rate--

¥ 12,500,000

1.14500%--

3,000,000

1.04500%¥ 2,000,000
8,500,000
7,500,000

0.66455%
1.00625%
1.22500%

2,000,000
8,500,000
7,500,000

0.65000%
1.00625%
1.22500%

3,000,000

1.05250%

3,000,000

1.05250%

4,000,000
8,000,000

0.51455%
1.66750%

8,000,000

1.66750%

5,000,000

1.51625%

5,000,000

1.51625%2,000,000
3,000,000

1.19000%
1.77500%

3,000,000

1.77500%

1,000,000

1.50625%

1,000,000

1.50625%

7,500,000

1.68000%--

5,000,000

1.43750%--

1,000,000

1.53625%-

1,000,000¥ 58,500,000

1.75250%

1,000,000¥ 54,500,000

1.75250%

43

8. Unitholders' equity
The Company issues only non-par value investment units in accordance with the Investment Trust Law of Japan. The entire amountof the issue price of new units is designated as stated capital. The Company is required to maintain net assets of at least ¥50,000
thousand as required by the Investment Trust Law of Japan.

9. Per unit information
The net asset value per unit as of April 30, 2006 and October 31, 2005 was ¥557,492 and ¥557,004, respectively. Net income perunit was ¥15,638 and ¥15,150 for the period ended April 30, 2006 and October 31, 2005, respectively.

10. Income taxes
The Company, as an investment corporation, is subject to corporate income taxes at a regular statutory rate of approximately 40%.
However, the Company may deduct dividend distributions paid to its unitholders from its taxable income amounts, provided therequirements are met under the Special Taxation Measure Law of Japan. Under this law, an investment corporation must meet anumber of tax requirements, including a requirement to distribute in excess of 90% of its distributable income for the fiscal period, inorder to deduct such amounts. If the investment corporation does not satisfy all of the requirements, the entire taxable income of
the investment corporation will be subject to regular corporate income taxes.
Since the Company distributed approximately 100% of its distributable income in the form of cash distributions totaling¥3,596,271 thousand and ¥3,484,046 thousand for the period ended April 30, 2006 and October 31, 2005, respectively, such
distributions were treated as deductible distributions for purposes of corporate income taxes. The effective tax rate on the
Company’s income was 0.03% for the periods ended April 30, 2006 and October 31, 2005. The following summarizes the significant
differences between the statutory tax rate and the effective tax rate:

Statutory tax rate
Deductible cash distributions
Other
Effective tax rate

For the period from
November 1, 2005
to April 30, 2006

For the period fromMay 1, 2005
to October 31, 2005

39.39%(39.38)0.02
0.03%

39.39%(39.38)0.02
0.03%

11. Breakdown of real estate rental revenues and expenses
Rental real estate revenues and expenses for the six month periods ended April 30, 2006 and October 31, 2005 consist of thefollowing:Thousands of Yen
For the period
from November 1, 2005
to April 30, 2006

Real estate rental revenues¥ 9,810,526¥ 8,641,349

8,815,222

7,709,467

Rental revenues

7,027,837

6,138,529

Common area charges

1,787,385

1,570,938

Rental revenues

Non-Rental revenues

995,304

931,882

Parking revenues

189,349

156,428

Incidental income

734,285

707,783

Other miscellaneous revenues

71,67067,671

4,257,492

3,745,324

Property management costs

756,532

649,670

Property management fees

224,826

183,772

Utilities expenses

726,302711,509

Property and other taxes

666,062

614,908

Real estate rental expenses

Casualty insurance

22,31821,809Repairs and maintenance

302,896

213,372

1,399,418

1,229,041

Depreciation
Other rental expenses
Profits

44

For the period
from May 1, 2005
to October 31, 2005

159,138

121,243¥ 5,553,034¥ 4,896,025

12. Leases
The Company, as lessor, has entered into leases whose fixed monthly rents are due in advance with lease term of generally two
years for office. The future minimum rental revenues under existing non-cancelable operating leases as of April 30, 2006 andOctober 31, 2005 are as follows:
Thousands of Yen
As of April 30, 2006

As of October 31, 2005

Due within one year

¥ 5,053,380¥ 5,205,813

Due after one year

16,797,113

18,492,717¥ 21,850,493¥ 23,698,530

Total

13. Derivatives and hedge accounting
The Company has entered into interest rate swap contracts with several Japanese financial institutions to hedge its variable rate
long-term debt obligations. The Company utilizes interest rate swap contracts, which are derivative financial instruments, only for the
purpose of mitigating future risks of fluctuations of interest rates, but does not enter into such transactions for speculative or trading
purposes. The Company entered into such derivative transactions to hedge risk in accordance with its Articles of Incorporation andthe established risk management policies of NREAM.
The following summarizes the notional amounts and the estimated fair value of the interest–related positions outstanding at
April 30, 2006 and October 31, 2005:
Thousands of Yen
Notional amount

Fair value

Unrealized gain (loss)

April 30, 2006
Interest rate swaps:
Receive/float and pay/fixed¥ 49,000,000¥ (139,816)¥ (139,816)

October 31, 2005
Interest rate swaps:
Receive/float and pay/fixed¥ 39,500,000¥ (235,962)¥ (235,962)

14. Significant subsequent events
Appropriation of retained earnings
On June 22, 2006, the Board of Directors resolved to effect the payment of a cash distribution of ¥15,638 per unit aggregating¥3,596,271 thousand to unitholders at the record date of April 30, 2006.
Offering of new investment units
On May 1, 2006, the Board of Directors resolved to issue new investment units as follows. The payments were completed on
May 25, 2006 and June 23, 2006. As a result, the total number of units increased from 229,970 to 265,903 and unitholders’equity increased from ¥124,610 million to ¥156,767 million.
(1) Primary offering of new investment units
Number of units issued
34,800 units
Offering price per unit
¥926,100 per unit
Total offering price¥32,228,280,000
Issue price per unit
¥894,915 per unit
Total issue price¥31,143,042,000
Payment date
May 25, 2006
(2)Third-party allotment
Number of units issued
Issue price per unit
Total issue price
Payment date
Third-party allottee

1,133 units¥894,915 per unit
¥1,013,938,695
June 23, 2006
Nomura Securities Co., Ltd.

45

46

Business Structure

Unitholders' Meeting

Asset
Custodian Agent
Mitsubishi UFJ Trust andBanking Corporation

GeneralAdministrative Agent
Mitsubishi UFJ Trust andBanking Corporation,
and Others

Auditor

Nomura Office Fund
Asset Custody
Agreement

Ernst & Young ShinNihon

Administrative
AgencyAgreement

Nomura Real Estate
Office Fund, Inc.
Board of Directors’Meeting
Debt Financing /Issue of Investment
Corporation Bonds

Liabilities
Repayment of
Principal & Interest

Financial Instituions, etc /Investors of Investment
Corporation Bonds

Investment

Unitholders

Asset
Capital Investment

Rent Income
and Others

Equitytrading
Distribution

Office Buildings(Real Estate
Related Assets)

Property
Management

Property Management
Companies
Nomura Real Estate
Development Co., Ltd.
Nomura Building Management
Co., Ltd.
The Dai-ichi Building Co., Ltd.
ITOCHU Urban Community Ltd.
IKOMA TBM K.K.

Unitholders

Property
Management
Agreement

Asset Management
Services Agreement

Market Research andOther Information Providers

Asset Management Company
Instructions forRents andManagement
RentalStrategies,
Plans ofRepairs, etc.

Property
Information

Nomura Real Estate
Asset Management Co.,Ltd.

Service
Agreement, etc.

Nomura Real Estate
Development Co., Ltd.
Nomura Real Estate Urban
Net Co., Ltd.
Nomura Real Estate
Investment Management
Co., Ltd.

47

Profile of the Asset Management Company
PROFILE AND HISTORY OF INCORPORATION
Company:
Paid-up capital:
Shareholder:
Incorporation:

Nomura Real Estate Asset Management Co., Ltd.
¥300 million (as of March 31, 2005)
Nomura Real Estate Holdings Co., Ltd. (100%)January 24, 2003

PROCESS OF DECISION-MAKING
We have ensured transparency in the decision-making process by placing all agenda through the Compliance Committee, in which two
external members with professional experience sit.
AGENDA
Proposal

COMPLIANCE OFFICER
When compliance is satisfied

COMPLIANCES COMMITTEE
Major objectives of the Compliance Committee are:to ensure compliance with the laws and regulations applicable tothe proposed agenda,
to deliberate the contents of trade with the related parties,
to check the legal matters for the Investment Committee inmaking investment decisions.

INVESTMENT COMMITTEE
Investment Committee deliberates on such subjects as:
Formulation and revision of investment guidelines,
Selection of properties for investment,
Formulation and revision of investment planning for the fiscal year,
Policy making on material articles such as funding.

DECISION MAKING
The entire process of deliberation and final decision is reported.

COMPLIANCE COMMITTEEUSE OF INFORMATION NETWORK OF NOMURA REAL ESTATE GROUP
In order to maximize opportunity to invest in better properties, we have collected as much information as possible not only from the AssetManagement Company but also from other companies of Nomura Real Estate group as listed below.

Nomura Real Estate Office Fund, Inc.
Nomura Real Estate Asset Management Co., Ltd.

Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Urban Net Co., Ltd.
Nomura Real Estate Investment Management Co., Ltd.

General Real Estate Market

48

Properties owned and developed by
Nomura Real Estate Urban Net andNomura Real Estate Development

Corporate Data

ProfileNomura Real Estate Office Fund, Inc. (referred to as “Nomura Office Fund” or the “Company” hereafter) was listed on theTokyo Stock Exchange on December 4, 2003 as a real estate investment corporation formed to own and invest in officeproperties, subject to the Law concerning Investment Trusts and Investment Corporations of Japan (referred to as the“Investment Trust Law” hereafter). The Company’s basic investment policy is to assure stable rent revenues and steady
portfolio growth over the medium- to long-term.
Nomura Real Estate Asset Management Co., Ltd. (referred to as “NREAM” hereafter), a wholly owned subsidiary of
Nomura Real Estate Holdings Co., Ltd. is in charge of asset management on behalf of Nomura Office Fund in accordancewith the basic investment policy as described above. Through coordination with Nomura Real Estate Holdings Co., Ltd. andother group companies, NREAM aims to achieve these goals and more.

Corporate Name
Nomura Real Estate Office Fund, Inc.
Corporate Office8-5-1 Nishi Shinjuku Shinjuku-ku, Tokyo
160-0023, Japan
http://www.nre-of.co.jp/english/
Date of Incorporation
August 7, 2003

Strength of Nomura Office Fund

Stock Listing
Tokyo Stock Exchange (Securities Code: 8959)

J-REIT with large-capitalization specialized in office buildings

Unit Price (¥)

Market Value (¥ mln)

1,000,000

Portfolio of 28 properties at a total acquisition price of ¥240.8 billion(as of April 30, 2006)
Aggregate market value of ¥229.5 billion (as of April 30, 2006)
Constituent of MSCI Standard Index

600,000

900,000

500,000

800,000

400,000

700,000

300,000

600,000

200,000

500,000

100,000

Track record of stable management
Five consecutive fiscal periods of growth in revenues and earnings
Steady growth in cash distribution per unit

400,000
Dec. 4
2003

Collaboration with Nomura Real Estate Group
NREAM, in charge of the Company’s asset management, belongs to
Nomura Real Estate Group
Supported by the group companies through provision of sales
information and management expertise

Apr. 30
2004

Oct. 29
2004

Operating Revenues (Lth)Apr. 28
2005

Net Income (Lth)(¥ mln)12,000(¥)
16,00014,5209,810

10,000

Number of Unitholders
13,129 (as of April 30, 2006)

Disclaimer

8,641

10,273Long-term rating: A
Short-term rating: A-1

6,000

Moody’s Investors Service, Inc.

Issuer rating: A3

4,000

Rating and Investment Information, Inc.

Issuer rating: A+

12,000

7,106

6,656

10,000

3,484
2,606

2,000

This semiannual report includes translations of certain Japanese documents originally filed under the Securities andExchange Law of Japan. This report was prepared in English solely for the convenience of and reference by readers
outside Japan and should not be considered as a disclosure statement. The original Japanese documents always govern

4,531

Holding to conservative financial strategies
Promoting long-term fixed-rate arrangements for interest-bearing debts

Investor Relations
For further information, please contact the Asset Management
Company:
Nomura Real Estate Asset Management Co., Ltd.
8-5-1 Nishi Shinjuku, Shinjuku-ku, Tokyo 160-0023, Japan
Tel: +81-3-3365-0507

14,0008,000

Standard & Poor’s Ratings Services

Number of Units Issued
229,970 (as of April 30, 2006)

Independent Auditors
Ernst & Young ShinNihon
Hibiya Kokusai Bldg. 2-2-3 Uchisaiwai-cho Chiyoda-ku,
Tokyo 100-0011, Japan

Cash Distribution per Unit (Rth)15,638Rated A by three domestic and foreign rating agencies

Paid-in Capital¥124,610,212,840 (as of April 30, 2006)

Business Office of the Transfer Agent
Corporate Agency Department
Mitsubishi UFJ Trust and Banking Corporation
7-10-11 Higashisuna Koto-ku, Tokyo 137-8081, Japan
Tel: +81-3-5683-5111

0Apr. 28
2006

Oct. 31
2005

15,150
14,114

Fiscal Period
Six months ending on April 30 and October 31

Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation
1-4-5 Marunouchi Chiyoda-ku, Tokyo 100-8212, Japan

3,596

8,000

1,526

6,000

0

4,000
1st FP

2nd FP

the meaning and interpretation.

2,681

3rd FP

4th FP

5th FPIn general, accounting principles and practices used by real estate investment corporations in Japan (“J-REITs”) in
preparing its financial statements conform with accounting principles generally accepted in Japan (“Japanese GAAP”).
However, they may differ from generally accepted accounting principles applied in certain other countries. Potential
investors should consult their own professional advisors for an understanding of the differences between Japanese GAAP
and generally accepted accounting principles in the United States (“U.S. GAAP”) or other jurisdictions and how thosedifferences might affect the financial information contained herein.
Estimates for Nomura Office Fund’s future operating results contained in this semiannual report are forward-looking
statements and are based on information currently available to Nomura Office Fund and its asset management company

Contents
To Our Investors ....................................................................................1

Property Details ...................................................................................10

Financial Highlights ...............................................................................2

Performance Report ............................................................................17

Portfolio Highlights ...............................................................................3

Financial Section..................................................................................35

Management Summary of the Fifth Fiscal Period ..............................4

Business Structure...............................................................................47

Financial Status of the Fifth Fiscal Period ...........................................7

Profile of the Asset Management Company......................................48

Summary of Portfolio Properties .........................................................8

Corporate Data ......................................................................Back Coverand are subject to risks and uncertainties. Consequently, these projections should not be relied upon as the sole basis forevaluating Nomura Office Fund. Actual results may differ substantially from the projections depending on a number offactors.

Portfolio Map .........................................................................................9

Printed in JapanNOMURA REAL ESTATE OFFICE FUND, INC.
Fifth Fiscal Period Semi-Annual Report

Fifth Fiscal Period

Semi-Annual Report
November 1, 2005

http://www.nre-of.co.jp/english/

April 30, 2006