Semi-Annual Report
Seventeenth Fiscal Period
November 1, 2011 >>> April 30, 20120

Profile
Nomura Real Estate Office Fund, Inc. (referred to as “Nomura OfficeFund” or the “Company” hereafter) was listed on the Tokyo Stock
Exchange on December 4, 2003 as a real estate investment corporation
formed to own and invest in office properties, subject to the Act on
Investment Trusts and Investment Corporations of Japan. The
Company’s basic investment policy is to assure stable rent revenues andsteady 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, Inc. is in charge of asset management on behalf of Nomura
Office Fund in accordance with the basic investment policy as describedabove. Through coordination with Nomura Real Estate Holdings, Inc.
and other group companies, NREAM aims to achieve these goals andmore.

Contents
To Our Investors
Summary of Portfolio Properties
Profile of the Asset Management Company
Performance Report
Financial Section
Business Structure/Corporate Data
Website

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To Our Investors
Dear Investors,
We are delighted to be able to present you the financial results for the seventeenth fiscal period (ended April 30,2012) and report on our activities during the period herein.
We booked operating revenues for this period of ¥12,441 million, ordinary income of ¥3,903 million, and net
income of ¥3,902 million. Cash distribution per unit was ¥12,790.

The Japanese economy has stayed on a moderate recovery path since the second half of 2011 supported by therecovery in the economic activity on the back of reconstruction demand following the Great East Japan Earthquake andresilient personal consumption. However, the economic outlook remains uncertain due to lingering concerns about
economic downturn such as recent oil prices stuck at high levels and restrictions on electric power supply in addition to
the effect of the European debt crisis.
In the office leasing market, office space demand is recovering, supported by the economic recovery following theGreat East Japan Earthquake, although vacancy rates have experienced ups and downs as they were affected by theEuropean debt crisis, the slow pace of economic recovery due to the strong yen, and new supply of large officebuildings in central Tokyo.
The real estate sales market has stayed on a recovery path since the Earthquake on the back of strong appetite forproperty acquisition by high net worth individuals and business corporations. However, sales information of prime
properties was scarce and there was a large perception gap between potential sellers and buyers with regard to theappropriate transaction price on the back of the favorable financing environment for sellers. Accordingly, the number ofsales transactions excluding those between REITs and their sponsor companies was limited.
Under these circumstances, we were successful in continuing stable portfolio management, with a portfolio
occupancy rate of 97.1% as of the end of this fiscal period. Also during this period, as part of our property replacement
strategy, we completed acquisition of PMO Akihabara, PMO Hatchobori and PMO Higashi-nihonbashi, which are
office properties developed by Nomura Real Estate Development Co., Ltd. In terms of financing, the Company
continues to maintain close relationships with financial institutions to secure stable financing as before, ensuring
healthy financial conditions on an ongoing basis.

The Company will continue to strive for stable asset management in the next fiscal period and thereafter from the
mid-to-long-term perspectives so as to respond to the needs of our investors for high-quality wealth creation.
Lastly, we would like to thank you again for your patronage in the past periods, and would like to ask for yourcontinued support.

Yuichi Maruko
Executive Director
Nomura Real Estate Office Fund, Inc.

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Summary of Portfolio Properties
Completed

Acquired

SRC・RC・S B5/50F

31,500.89

May 1978Dec. 8, 2003

38,730

10.3

Shinagawa-ku, Tokyo

SRC・RC B2/26F

25,127.12

Jun. 1996

Mar. 18, 2005

33,0808.8

Chuo-ku, Tokyo

SRC B3/8F

19,157.05

Apr. 1961

Dec. 5, 2003

20,600

5.5

Shinagawa-ku, Tokyo

S・RC・SRC B2/21F

18,051.60

Jan. 1995

Feb. 27, 2004

14,8003.9

NOF Shinjuku Minamiguchi Bldg.

Shibuya-ku,Tokyo

SRC B2/8F

6,712.84

Apr. 1974

Jun. 25, 2008

12,3003.3

NOF Shibuya Koen-dori Bldg.

Shibuya-ku, Tokyo

SRC・RC B2/8F

3,420.16

Sep. 1987

Sep. 28, 2004

12,000

3.2

Secom Medical Bldg.

Chiyoda-ku, Tokyo

S・SRC B1/7F

8,821.24

Feb. 2005

Sep. 1, 2006

11,500

3.1

NOF Shiba Bldg.

Minato-ku, Tokyo

SRC・S B1/7F

8,165.10

Mar. 1991

May 25, 2004

10,000

2.7

Nishi-Shinjuku Showa Bldg.

Shinjuku-ku, TokyoRC B2/11F

5,686.89

Apr. 1982

Nov. 30, 2005

8,800

2.3

NRE Shibuya Dogenzaka Bldg.

Shibuya-ku, Tokyo

SRC・RC B2/9F

3,436.67

Mar. 1999

Sep. 26, 2008

7,660

2.0

NOF Tameike Bldg.

Minato-ku, Tokyo

SRC B1/9F

4,715.20

Aug. 1959

Sep. 29, 2005

7,400

2.0

Iwamoto-cho Toyo Bldg.

Chiyoda-ku, Tokyo

RC・S B1/9F

4,117.26

Jun. 1993

Jun. 25, 2008

6,020

1.6

NOF Shinagawa Konan Bldg.

Shinagawa-ku, Tokyo

SRC B1/8F

7,667.55

Nov. 1987

Dec. 8, 2003

5,500

1.5

NOF Surugadai Plaza Bldg.

Chiyoda-ku, Tokyo

S・RC B1/8F

4,160.94

Apr. 1997

Feb. 27, 2004

5,150

1.4

PMO Nihonbashi Honcho

Chuo-ku, Tokyo

S・SRC B1/9F

2,450.06

Jun. 2008

Nov. 5, 2008

5,000

1.3

NRE Higashi-nihonbashi Bldg.

Chuo-ku, Tokyo

S・SRC B1/9F

4,554.98

Sep. 1990

Jan. 14, 2009

4,060

1.1

PMO Akihabara

Chiyoda-ku, TokyoS 8F

3,037.37

Jan. 2010

Jan. 13, 2012

3,790

1.0

Hatchobori NF Bldg.

Chuo-ku, Tokyo

SRC B1/9F

2,854.83

Oct. 1990

Aug. 10, 2007

3,160

0.8

NOF Kanda Iwamoto-cho Bldg.

Chiyoda-ku, Tokyo

SRC 9F

4,076.38

Jul. 1988

Feb. 26, 2004

3,080

0.8

NOF Takanawa Bldg.

Shinagawa-ku, TokyoS 8F

3,361.48

Apr. 1993

Feb. 27, 2009

3,010

0.8

PMO Hatchobori

Chuo-ku, Tokyo

S・SRC B1/9F

2,074.66

May 2009

Nov. 1, 2011

2,430

0.6

NOF Minami Shinjuku Bldg.

Shibuya-ku, Tokyo

SRC B1/8F

2,464.71

Mar. 1986

Jun. 25, 2004

2,280

0.6

Central Shintomicho Bldg.

Chuo-ku, TokyoS 8F

2,465.86

Mar. 1990

Jun. 25, 2008

1,750

0.5

PMO Higashi-nihonbashi

Chuo-ku, TokyoS 9F

1,859.43

Oct. 2009

Nov. 1, 2011

1,480

0.4

-

179,940.27--

223,580

59.6

Name

Location

Type of Structure

Shinjuku Nomura Bldg.

Shinjuku-ku, Tokyo

NRE Tennozu Bldg.
NOF Nihonbashi Honcho Bldg.
Tennozu Park Side Bldg.

CentralTokyo

Subtotal （24 properties）% of Total

NRE Ueno Bldg.

Taito-ku, Tokyo

SRC・S B1/10F

4,869.81

Mar. 1990

Jan. 14, 2009

7,830

2.1

NOF Technoport Kamata Center Bldg.

Ota-ku, Tokyo

S・SRC B1/11F

13,652.45

Sep. 1990

Dec. 5, 2003

6,416

1.7

Toho Edogawabashi Bldg.

Bunkyo-ku, Tokyo

SRC B1/9F

2,058.97

Mar. 1993

Mar. 2008

2,080

0.6

Toshin Meguro Bldg.

Meguro-ku, Tokyo

SRC 9F

1,610.07

Sep. 1989

Jun. 25, 2008

1,340

0.4

Crystal Park Bldg.

Musashino City, Tokyo

SRC・S B2/11F

3,900.85

Oct. 1991

Feb. 28, 2006

3,700

1.0

Musashino City, Tokyo

SRC 8F

1,936.40

Oct. 1987

Jan. 14, 2009

1,800

0.5

Tachikawa City, Tokyo

S・SRC・RC B2/12F

6,851.48

Dec. 1994

Dec. 5, 2003

3,290

0.9

NOF Kawasaki Higashiguchi Bldg.

Kawasaki-ku, Kawasaki City

S･SRC B1/12F

8,266.67

Mar. 1988

Jun. 30, 2005

9,500

2.5

NOF Yokohama Nishiguchi Bldg.

Nishi-ku, Yokohama City

SRC B1/9F

6,866.60

Oct. 1985

May 12, 2005

5,050

1.3

NOF Shin-Yokohama Bldg.

Kohoku-ku, Yokohama City

SRC B1/9F

8,074.83

Oct. 1990

Dec. 5, 2003

3,600

1.0

Yokohama Odori Koen Bldg.

Naka-ku,Yokohama City

S・RC B1/11F

4,234.19

Mar. 1989

Sep. 28, 2007

2,993

0.8

-

62,322.32--

47,59912.7

Suburban
NOF Kichijoji Honcho Bldg.
Tokyo
Faret Tachikawa Center Square

Subtotal （11 properties）
Sapporo North Plaza

Chuo-ku, Sapporo City

SRC B2/12F

13,601.62

Aug. 1981

Jun. 1, 2006

6,820

1.8

NRE Sapporo Bldg.

Kita-ku, Sapporo CityS B1/10F

6,559.34

Jul. 2008

Nov. 5, 2008

5,300

1.4

JCB Sapporo Higashi Bldg.

Chuo-ku, Sapporo City

SRC B1/7F

9,062.04

Oct. 1966

Feb. 8, 2008

3,700

1.0

NOF Sendai Aoba-dori Bldg.

Aoba-ku, Sendai City

SRC B2/11F

6,043.28

Jul. 1968

Nov. 30, 2005

3,200

0.9

Baba-dori, Utsunomiya City

S・SRC B2/10F

5,887.40

Dec. 1999

Dec. 5, 2003

2,970

0.8

Naka-ku, Nagoya City

S・RC B1/11F

3,282.90

Aug. 2009

Dec. 25, 2009

4,050

1.1

Nakamura-ku, Nagoya CityS B2/12F

4,655.74

Mar. 1991

Sep. 29, 2005

3,550

0.9

Omron Kyoto Center Bldg.

Simogyo-ku, Kyoto City

S・RC B2/11F

34,616.84

Jul. 2000

Mar. 20, 2007

23,700

6.3

SORA Shin-Osaka 21

Yodogawa-ku, Osaka City

SRC B2/21F

21,298.26

Jul. 1994

Apr. 25, 2008

19,251

5.1

NRE Osaka Bldg.

Chuo-ku, Osaka City

SRC B2/12F

16,977.79

Dec. 1983

Dec. 5, 2003

6,410

1.7

NRE Nishi-Umeda Bldg.

Kita-ku, Osaka City

S・SRC B2/12F

5,213.02

Jun. 1993

Sep. 26, 2008

5,660

1.5

NRE Yotsubashi Bldg.

Nishi-ku, Osaka City

S・SRC B2/15F

11,558.68

Nov. 1991

Dec. 5, 2003

3,940

1.0

NOF Kobe Kaigan Bldg.

Chuo-ku, Kobe City

S・SRC B1/16F

6,425.16

Feb. 1998

Dec. 5, 2003

3,280

0.9

NRE Hiroshima Bldg.

Naka-ku, Hiroshima City

SRC B2/9F

7,873.79

Jul. 1976

Dec. 5, 2003

1,930

0.5

NOF Hakata Ekimae Bldg.

Hakata-ku, Fukuoka City

SRC B2/11F

7,504.28

Jul. 1983

Jun. 27, 2008

6,750

1.8

NOF Tenjin-Minami Bldg.

Chuo-ku, Fukuoka City

S 10F

3,817.76

Feb. 2008

Mar. 27, 2009

3,739

1.0

Subtotal （16 properties）-

164,377.90--

104,250

27.8

Total (51 properties)-

406,640.49--

375,429

100.0

NOF Utsunomiya Bldg.
NOF Nagoya Fushimi Bldg.
NOF Nagoya Yanagibashi Bldg.
Other
CitiesAcquisition Price(Millions of Yen)

Leasable Floor Space（㎡）

RegionNote:

NOF has acquired all investment properties identified in the table above in the form of trust beneficial interests, except Secom Medical Building, NRE Shibuya Dogenzaka Building, PMO Nihonbashi
Honcho, NRE Higashi-nihonbashi Building, PMO Akihabara, PMO Hatchobori, NOF Takanawa Building, PMO Higashi-nihonbashi, NRE Ueno Building, Toho Edogawabashi Building, Crystal Park
Building, Yokohama Odori Koen Building, NRE Sapporo Building, JCB Sapporo Higashi Building, NOF Nagoya Fushimi Building, SORA Shin-Osaka 21 and NRE Nishi-Umeda Building in the form of
real estates.
Note: "Abbreviations under ""Type of Structure"" indicate: S: Steel-frame, RC: Reinforced Concrete and SRC: Steel-frame Reinforced Concrete.
According to the notice of confirmation issued in accordance with the Building Standards Act, the floor of NOF Sendai Aoba-dori Building is described as 8 floors above the ground and 3 floors ofpenthouse with 2 floors below ground."Note: "Leasable Floor Space" includes office and retail floor space for investment properties as of a specified date. In principle, exclusive and designated areas acquired under strata (unit) title have been
included. Leased common areas are also included. Leasable floor space for the Shinjuku Nomura Building is the space multiplied by NOF's share of trust beneficial interests acquired. According to themaster lease agreement, the rent of NRE Tennozu Building is the rent of the entire building multiplied by percentage of the share of common area. Thus, its leasable floor space is the floor space of theentire building multiplied by the said percentage. Each Leasable Floor Space indicates as of November 30, 2011.
Note: "Completed" is a completed date of a building written on the title registration form. As for NOF Tameike Building, the date of completion is a date stated on the Certificate of Inspection in accordancewith the provisions of article 7(3) of the Building Standards Act as there is no date stated on the title registration form.
Note: "% of Total" is the percentage of the total portfolio. The figures in the table above have been rounded to the nearest first decimal place. Accordingly, the total may not equal 100.0%
Note: NOF has acquired a trust beneficial interest in the Shinjuku Nomura Building. The acquisition price represents the cost of purchasing 50.1% of the trust beneficial interest.
Note: NOF transferred a part of the land of NOF Technoport Kamata Center Building (co-owned area) on August 31, 2007. The acquisition price on the list is the amount subtracting a book price of the asset
to be transferred (13 million yen) from the acquisition price before the transfer (6,430 million yen). The number of amount below unit is truncated.

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Profile of the Asset Management Company
As of October 1, 2011, Nomura Real Estate Asset Management Co., Ltd. (NREAM) was merged with Nomura Real Estate
Investment Management Co., Ltd. (NREIM) and Nomura Real Estate Capital Management Co., Ltd. (NRECM), with achange of its Japanese trade name from Nomura Fudosan Toshin to Nomura Fudosan Toshi Komon. We believe that theCompany can benefit from various synergy effects from this merger including the ability to quickly respond to changes in thereal estate and financial markets, the enhancement of expertise and experience necessary for real estate investment, and theability to provide asset management services through one of the largest real estate asset management companies in Japan.

Company:
Capital:Shareholder :Incorporation :Nomura Real Estate Asset Management Co., Ltd.
¥300 million (as of April 30, 2012)
Nomura Real Estate Holdings, Inc. (100%)January 24, 2003

・Organization of the asset management company

Profile of Chief Investment Officer
Chief Investment Officer, NOF

Kenji Tsuga

Apr. 1990
Dec. 1996
Mar. 2001
Oct. 2001
Oct. 2004
Oct. 2006
Apr. 2011
Oct. 2011

44Entered NREDBrokerage Sales Dept.
Brokerage Division.
East21 Branch Manager, Nomura Real Estate Urban Net Co., Ltd.
Corporate Planning Dept., Nomura Real Estate Holdings, Inc.
Public Relations/IR Dept.
General Manager, Office Management Division, NREAMNOF Chief Investment Officer, NREAM (current position)

Performance Report

Contents
Asset Management Report……………………..……...
Profile of the Company………………………………..…
Status of Investment Assets of the Company……......
Capital Expenditures………….…………………….......
Expenses and Liabilities……..……………………........
Trading during the Seventeenth Fiscal Period………
Other Information………………………………………..

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Asset Management Report
1. CHANGES IN KEY INDICATORS
17th Period

16th Period

15th Period

14th Period

13th Period

from Nov 1, 2011
to Apr. 30, 2012

from May 1, 2011
to Oct. 31, 2011

from Nov 1, 2010
to Apr. 30, 2011

from May 1, 2010
to Oct. 31, 2010

from Nov. 1, 2009
to Apr. 30, 2010

Operating Revenues(¥mln)

12,441

13,637

13,117

13,364

13,686of which Real Estate Rental Revenues(¥mln)

12,441

12,52012,846

13,364

13,686

Operating Expenses(¥mln)

6,912

7,417

6,973

7,141

6,938

(¥mln)

5,726

6,110

5,741

5,883

5,667

Operating Profits(¥mln)

5,529

6,219

6,144

6,223

6,747

Ordinary Income(¥mln)

3,903

4,628

4,503

4,480

5,035

Net Income(¥mln)

3,902

4,627

4,428

4,479

5,034

Total Assets(¥mln)

397,667

400,390404,069

407,703410,127of which Real Estate Rental Expenses(%)(△0.7)(△0.9)(△0.9)(△0.6)(+0.4)

Interest-Bearing Debts(Changes from Previous Period)(¥mln)

183,400

184,650

187,900

191,230

191,980

Net Assets(¥mln)

189,458

190,082

189,883

189,934

190,490(%)(△0.3)(+0.1)(△0.0)(△0.3)(△0.2)

Unitholders’ Capital(¥mln)

185,455

185,455

185,455

185,455

185,455

Number of Units Issued(Units)

305,123

305,123

305,123

305,123

305,123(¥)

620,923

622,970

622,318

622,486

624,306

Total Cash Distribution(¥mln)

3,902

4,527

4,427

4,479

5,034

Cash Distribution per Unit(¥)

12,79014,837

14,512

14,681

16,500of which Cash Distribution of Profits(¥)

12,79014,837

14,512

14,681

16,500of which Cash Distribution in excess of Profits

(¥)

-

-

-

-

-

ROA (Return on Assets) (Note 1)

(%)

1.0

1.2

1.1

1.1

1.2

Annualized ROA (Note2)

(%)

2.0

2.3

2.2

2.2

2.5

ROE (Return on Equity)

(%)

2.1

2.4

2.3

2.4

2.6

Annualized ROE (Note 2)

(%)

4.1

4.8

4.7

4.7

5.3

Capital Adequacy Ratio (Note 4)

(%)

47.6

47.5

47.0

46.6

46.4

(Changes from Previous Period)

Net Assets per Unit(%)(+0.1)(+0.5)(+0.4)(+0.2)(△0.3)LTV (Loan-to-Value) (Note 5)(Changes from Previous Period)

(%)

46.1

46.1

46.5

46.9

46.8

Number of Operating Days

(days)

182

184

181

184

181

(%)

100.0

97.8

99.9

100.0

99.9

Payout Ratio (Note 6)
Number of Properties Held(bldgs)

51

48

51

51

51

Total Leasable Floor Space(㎡)

406,640.49

399,625.36

415,936.86

438,918.56

439,139.15

Number of Tenants(tenants)

784

753

746

704

686

(%)

97.1

96.4

93.8

94.5

95.0

Depreciation(¥mln)

1,717

1,732

1,861

1,876

1,865

Capital Expenditures(¥mln)

1,022

1,088

750

597

692

NOI (Net Operating Income) (Note 7)(¥mln)

8,432

8,142

8,965

9,357

9,884

FFO (Funds from Operation) (Note 8)(¥mln)

5,632

5,362

6,029

6,363

6,908

(¥)

18,46017,573

19,761

20,85522,640Occupancy Rate

FFO per Unit (Note 9)

Note 1:
Note 2:
Note 3:Note 4:Note 5:Note 6:Note 7:Note 8:Note 9:“ROA (Return on Assets)” = Ordinary Income / {(Total Assets at the beginning of the period + Total Assets at the end of the period) / 2} x 100“ROA” and “ROE” are annualized using the following number of operating days. 13th period: 181 days, 14th Period: 184 days, 15th Period:181
days, 16th Period: 184 days, and 17th Period: 182 days
“ROE (Return on Equity)” = Net Income / {(Net Assets at the beginning of the period + Net Assets at the end of the period) / 2} x 100“Capital Adequacy Ratio” = Net Assets / Total Assets x 100“LTV (Loan-to-Value)” = Interest-Bearing Debts / Total Assets x 100
Rounded off to the first decimal place.
“NOI (Net Operating Income)” = Real Estate Rental Revenues – Real Estate Rental Expenses + Depreciation“FFO (Funds from Operation) = Net Income + Depreciation + Amortization of Investment Corporation Bonds Issuance Costs – Real Estate Sale
Profit/Loss“FFO per Unit” = FFO / Number of Units Issued

62. OUTLINE OF INVESTMENTS IN THE SEVENTEENTH FISCAL PERIOD
Nomura Real Estate Office Fund, Inc., incorporated on August 7, 2003 under the Act on Investment Trusts and Investment
Corporations of Japan, listed the unit certificates in the Real Estate Investment Trust (REIT) Market of the Tokyo Stock Exchange
on December 4, 2003 (TSE code 8959). The Company’s basic investment policy is to assure stable income from, and steady
growth of, investment assets over the mid-to-long-term. In accordance with this policy, we invest in properties mostly for officeuse in three largest conurbations and other major cities, or in property-backed securities that are backed by such properties.
Note:
The Act on Investment Trusts and Investment Corporations of Japan (Act No. 198 of 1951) is referred to as the "Investment Trust Act" hereinafter.
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
The Japanese economy has stayed on a moderate recovery path since the second half of 2011 supported by the recovery in theeconomic activity on the back of reconstruction demand following the Great East Japan Earthquake and resilient personal
consumption. However, the economic outlook remains uncertain due to lingering concerns about economic downturn such as
recent oil prices stuck at high levels and restrictions on electric power supply in addition to the effect of the European debt
crisis.
In the J-REIT market, an IPO was completed for the first time in the past 4 and half years in addition to capital increases
through public stock offering by existing listed REITs. Tokyo Stock Exchange REIT Index, which had remain weak under theeffect of risk aversion by investors due, among others, to the effect of European debt crisis, rallied toward the end of the fiscal
year under review since the announcement of additional monetary easing by the Bank of Japan in February.
(a) Office Leasing Market
In the office leasing market, office space demand is recovering supported by the economic recovery following the Great
East Japan Earthquake, although vacancy rates have experienced ups and downs as they were affected by the European
debt crisis, the slow pace of economic recovery due to the strong yen, and new supply of large office buildings in central
Tokyo. Under these circumstances, the number of tenants seeking relocation for office consolidation or higher building
specifications and larger leasing area within the same building is increasing driven by the need to address their business
continuity plans and recent rents that offer good value.
In central Tokyo, vacancy rates are predicted to rise temporarily as large supply will continue until summer 2012.
However, occupancy rate is expected to improve gradually thereafter. The pace of decline in asking rents and the pressure
from tenants for rent reduction will be moderating, but it will take some time for rents to start rising. In local cities,
vacancy rates are stuck at high levels despite some signs of peaking out and recovery in rents is yet to be seen.
(b) Real Estate Sales Market
The real estate sales market has stayed on a recovery path since the Earthquake on the back of strong appetite for property
acquisition by high net worth individuals and business corporations. However, sales information of prime properties was
scarce and there was a large perception gap between potential sellers and buyers with regard to the appropriate transaction
price on the back of the favorable financing environment for sellers. Accordingly, the number of sales transactions
excluding those between REITs and their sponsor companies was limited.
(2) Status of Managements for the Seventeenth Fiscal Period
Abiding by its basic policy of acquiring only properties that would generate stable returns over the mid-to-long-term, theCompany continues to invest in and manage properties that offer outstanding competitiveness in terms of both location andbasic building features, and stable cash flows.
Seeking to maintain or increase occupancy rates, the Company took the initiative in attracting prospective tenants, while taking
measures to enhance customer satisfaction of existing tenants. In renewing leases, the Company negotiated terms focusing on
minimizing declines in rent levels, while considering individual deviations from market rents, sizes of leased areas, and leasing
periods.
As a result, the average portfolio occupancy rate as of the end of the fiscal period under review recovered to 97.1% as the
move-out area remained at low levels and the number of leasing area expansions within the same building increased.
We also promoted the replacement of properties in the portfolio for the purpose of improving the overall quality of the portfolio.
Specifically, we acquired three relatively new properties in central Tokyo during this fiscal period.
Note: “Nomura Real Estate Group” refers to a corporate group consisting of the consolidated subsidiaries of Nomura Real Estate Holdings, Inc. (referred to as
Nomura Real Estate Holdings hereinafter) including Nomura Real Estate Development Co., Ltd. (referred to as “NRED” hereinafter) but excluding Nomura
Real Estate Asset Management Co., Ltd. (referred to as the Asset Management Company hereinafter).

(3) Status of Funding
Concerning funding through interest-bearing debts, the Company has the basic financial policy of funding through promotionof long-term, diversified and fixed interest rate debts, for the purpose of securing financial stability and avoiding future interest
rate risk. Based on this policy, the Company has implemented funding through long-term debts and issuance of investment
corporation bonds, while establishing a commitment line for the purpose of flexible funding at the time of property acquisition
and reduction of refinancing risks, from the perspective of securing stable funding base.
During the period under review, a total of 20.0 billion yen was borrowed as part of repayment funds for existing debts. As
a result, outstanding interest-bearing debt as of the end of the seventeenth fiscal period came to 183.4 billion yen (including
investment corporation bonds of 39.5 billion yen).

7

3. STATUS OF CAPITALNo changes in the number of units issued have been made during the seventeenth fiscal period. Changes in the number of units
issued and unitholders’ capital until the seventeenth fiscal period are as follows.
Date

Type of Issue

Aug. 7, 2003
Dec. 4, 2003
May 19, 2004
Jun. 16, 2004
May 1, 2005
May 24, 2005
May 25, 2006
Jun. 23, 2006
May 27, 2008
Jun. 24, 2008

Initial private placement (Note1)
Public offering (Note2)
Public offering (Note3)
Third-party allotment (Note4)
Public offering (Note5)
Third-party allotment (Note6)
Public offering (Note7)
Third-party allotment (Note8)
Public offering (Note9)
Third-party allotment (Note10)

Number of Units Issued (Unit)
ChangeBalance400
400
148,200
148,600
35,000183,600
1,050
184,650
44,000228,650
1,320
229,970
34,800264,770
1,133
265,903
37,000302,9032,220
305,123

Unitholders’ Capital (¥ mln)
ChangeBalance200
200
71,506
71,706
19,866
91,572595
92,16831,496123,665944
124,610
31,143
155,753
1,013
156,767
27,064
183,831
1,623
185,455

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.
Note 7: Public offering at the offer price of ¥926,100 (issue price of ¥894,915) to finance acquisition of new properties and to repay borrowings.
Note 8: Third-party allotment to Nomura Securities Co., Ltd. at the offer price of ¥894,915 following the public offering on May 25, 2006.
Note 9: Public offering at the offer price of ¥756,560 (issue price of ¥731,470) to redeem the short-term investment corporation bonds and to repay short-term borrowings.
Note 10: Third-party allotment to Nomura Securities Co., Ltd. at the offer price of ¥731,470 following the public offering on May 27, 2008.

[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.
17th Period

16th Period

15th Period

14th Period

13th Period

from Nov. 1, 2011
to Apr. 30, 2012

from May 1, 2011
to Oct. 31, 2011

from Nov 1, 2010
to Apr. 30, 2011

from May 1, 2010
to Oct. 31, 2010

from Nov.1, 2009
to Apr. 30, 2010

High

(¥)

500,000

595,000

604,000

536,000

588,000

Low(¥)

370,500

418,000

433,000

412,000

465,000

4. CASH DISTRIBUTION
In order to qualify for special tax treatment under Article 67-15 of the Act on Special Measures Concerning Taxation (Act No. 26 of
1957) to have maximum cash distribution amount treated as deductible dividends, the Company distributed the entire unappropriatedretained earnings except for fractional amounts smaller than one yen per each investment unit. As a result, the amount of cash
distribution per unit for this fiscal period was ¥12,790.
17th Period

16th Period

15th Period

14th Period

13th Period

from Nov. 1, 2011
to Apr. 30, 2012

from May 1, 2011
to Oct. 31, 2011

from Nov. 1, 2010
to Apr. 30, 2011

from May 1, 2010
to Oct. 31, 2010

from Nov. 1, 2009
to Apr. 30, 2010

Retained Earnings(¥000)

3,902,570

4,627,269

4,428,126

4,479,515

5,034,679

Accumulated earnings(¥000)(¥000)

46
3,902,523

100,159
4,527,109

181
4,427,944

4
4,479,510

149
5,034,529

of which distribution of profits(¥)(¥000)(12,790)3,902,523(14,837)
4,527,109(14,512)
4,427,944(14,681)4,479,510(16,500)
5,034,529(Distribution of profits per unit)of which refund of capital(¥)(¥000)(12,790)-(14,837)-(14,512)-(14,681)-(16,500)
-

(¥)

(-)

(-)

(-)

(-)

(-)

Total cash distribution(Cash distribution per unit)(Refund of capital per unit)8

5. INVESTMENT POLICY AND FUTURE ISSUES(1) Investment Environments
As mentioned in “2. OUTLINE OF INVESTMENTS IN THE SEVENTEENTH FISCAL PERIOD (1) Market Environments,” thefuture outlook of the Japanese economy is still uncertain over the mid-to-long-term despite some positive factors due to downside
risks in the global economy, risk of further appreciation of yen and persistent deflation concerns as well as lingering concerns about
economic downturn such as recent oil prices stuck at high levels and restrictions on electric power supply, in addition to the effect ofEuropean debt crisis.
Under these circumstances, we believe that it is important to continue to focus on flexible property management based on
accurate understanding of tenant needs that minimizes the decrease in portfolio profitability and the maintenance andimprovement of funding capacities through the adherence to conservative financial management, while paying close attention to
movements in expected yield and liquidity in the real estate sales market.
(2) Asset Management Policy and Future Issues
With such environments in mind, the Company will employ the following asset management policies to ensure stable income
from, and steady growth of the portfolio over the mid-to-long-term.
(a) Property Management in a Mid-to-Long-Term View
In addition to enhancement of property management to satisfy the requirements of existing tenants, proper recognition of theproperty features and leasing market environments will help us market the potential tenants more organically. We will maintainand uplift the occupancy rate and level of rents in pursuit of sustainable and improved profitability of portfolio, namely internal
growth of portfolio, over the mid-to-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 effective way, which in turn will ensure stable inflow of revenues.
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 their competitiveness.
(b) Enlargement of Portfolio by Acquisition of New Properties
The Company has set in motion several strategic measures; that is, targeting the expansion of asset size up to ¥500 billion in themedium term in order to achieve higher revenue (i.e. external growth); replacing our property portfolio to enhance its quality;
ensuring the portfolio is well-balanced and diversified to minimize fluctuation risks in revenue; and maximizing the advantage ofscale to reduce operational and administration costs.
In order to make right investments in properties of good value, we will ensure to collect information on properties for sale inan early stage, and conduct an in-depth due diligence to assess the potential risks involved in such investments. As part of ourefforts to carry out this investment policy, we will work to find investment opportunities through further expansion of our own
sourcing network as well as cooperation with other companies of Nomura Real Estate Group, and to make appropriate
investment decisions based on our market research capabilities and technical expertise.
In making an investment decision, we adhere to strict criteria to select best properties that can bring stable revenues to theentire portfolio in light of mid- and long-term perspectives.

(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 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 of funding,including the usage of commitment lines, issuance of investment corporation bonds and short-term investment corporation bonds
from a wide range of available sources of funding to ensure a well-balanced structure of interest-bearing debts.

6. IMPORTANT EVENTS SUBSEQUENT TO THE SEVENTEENTH FISCAL PERIOD
There is no relevant matter under this subject.

9

Profile of the Company
1. STATUS OF UNITHOLDERS’ CAPITAL
17th Period(as of Apr. 30, 2012)

16th Period(as of Oct. 31, 2011)

15th Period(as of Apr. 30, 2011)

14th Period(as of Oct. 31, 2010)

13th Period(as of Apr. 30, 2010)

Maximum number of units allowed to
issue(Unit)

2,000,000

2,000,000

2,000,000

2,000,000

2,000,000

Number of units issued(Unit)

305,123

305,123

305,123

305,123

305,123

Amount of unitholders’ capital(¥ mln)185,455

185,455

185,455

185,455

185,455

12,713

12,864

12,185

13,10012,970

Number of unitholders

2. MATTERS CONCERNING THE INVESTMENT UNITS
The 10 largest unitholders as of April 30, 2012 were as follows.
Number of Units Held
(Unit)Name

Japan Trustee Services Bank, Ltd.
The Nomura Trust and Banking Co., Ltd.
Trust & Custody Services Bank, Ltd.
Nomura Real Estate Development Co., Ltd.
The Master Trust Bank of Japan, Ltd.
Nomura Bank (Luxembourg) S.A.
Kawasaki Gakuen
The Senshu Ikeda Bank, Ltd.
State Street Bank West Pension Fund Clients Exempt
American Life Insurance Company

Portion in the Total Units Issued(%)

60,293
19,171
16,70015,287
9,757
8,620
7,000
6,235
3,730
3,700
150,493

Total

19.76
6.28
5.47
5.01
3.20
2.83
2.29
2.04
1.22
1.21
49.32

3. BREAKDOWN OF UNITHOLDERS
The breakdown of unitholders as of April 30, 2012 was as follows.
Number ofUnitholders

Private and other investors

Number of Units
per Unitholder

Portion (%)

Portion (%)

12,10095.2

35,570

11.7

Financial institutions(Including sales agents for financial instruments firm)

133

1.0

168,747

55.3

Other domestic corporate investors

210

1.7

31,68910.4

Foreign corporate investors, etc.

270

2.1

69,11722.7

12,713100.0

305,123

100.0

Total

10

4. DIRECTORS AND AUDITOR(1) Name of directors and an auditor in the seventeenth fiscal period are as follows (Note 1)
Title

Other Major Title (s)Name

Executive Director

Yuichi Maruko

Corporate Auditor, MEGALOS, Co., Ltd.
Representative Lawyer, Yoshida Shuhei Law Office
Supervisory Director, Nomura Real Estate Residential Fund, Inc.
Director, Fair Appraisers, K.K.
Supervisory Director, Nomura Real Estate Residential Fund, Inc.

Total Amount of Fees Paid
during the 17th Period (¥000)

2,400Supervisory Director

Shuhei Yoshida

2,400Supervisory Director

Eitoku Aikawa

Supervisory Director

Saneaki IchijoPartner, Anderson Mori & Tomotsune Law Firm

2,400

Supervisory Director

Naohito Miya

Manager of Miya Naohito CPA Firm
Senior Representative partner, Futaba Audit Corporation

2,400

Accounting Auditor

Earnst & Young ShinNihon LLC––

14,5002,400

Note 1: No Executive Directors or Supervisory Directors are in possession of the Company’s investment units either under their own or other person’s name otherthan Mr. Yuichi Maruko possesses two units of the Company’s investment units as of April 30, 2012. Executive Directors and Supervisory Directors mightserve as directors of other companies, but there are no mutual business interests whatsoever between such companies and the Company.
Note 2: At the Fifth General Unitholders’ Meeting held on July 28, 2011, Mr. Kenji Tsuga, NOF Chief Investment Officer of the Asset Management Company,
Nomura Real Estate Asset Management Co., Ltd., has been appointed as substitute Executive Director, to provide against vacancy of the Executive
Director’s position or lack of statutory quorum.

(2) Policy on Determination of Dismissal and Denial of Reappointment of Accounting Auditors
In case an item listed under Article 105, Paragraph 1 of the Investment Trust Act becomes applicable to the accounting auditor, andthe Board of Directors determines that there is no likelihood of improvement, the Board of Directors shall dismiss the accounting
auditor by unanimous vote of all board members.
In addition, if the Board of Directors determines that the accounting auditor is inappropriate for the position having given
thorough consideration to its business execution and other various reasons, the Board of Directors shall dismiss or denyreappointment of the accounting auditor, and present an agenda for appointment of a new accounting auditor at the General
Unitholders’ Meeting.
5. ASSET MANAGEMENT COMPANY, CUSTODIANS AND ADMINISTRATORS
Asset Management Company, custodians and administrators as of April 30, 2012 are as follows:Business

Company Name(s)Asset Management Company

Nomura Real Estate Asset Management Co., Ltd.

Custodian of assets

Mitsubishi UFJ Trust and Banking Corporation

Custodian of unitholders’ register

Mitsubishi UFJ Trust and Banking Corporation(Note 1), The Bank of Tokyo-Mitsubishi UFJ, Ltd.(Note 2),
Sumitomo Mitsui Banking Corporation(Note 2)

Manager of special accounts

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.,
Mizuho Securities Co., Ltd.

Administrative agent
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
(short-term investment corporation bonds)
Note 1: Administrates preparation, retention and other tasks related to the Unitholders’ Register.
Note 2: Administrates preparation, retention and other tasks related to the Investment Company Bond Register.

11

Status of Investment Assets of the Company
1. COMPOSITION OF ASSETS
17th Period (as of Apr. 30, 2012)
Total AmountPortion(¥ mln) (Note 2)(%) (Note 3)
38,319
9.6

Area(Note 1)

Type of Assets

Central Tokyo
Real estate

16th Period (as of Oct. 31, 2011)
Total AmountPortion(¥ mln) (Note 2)(%) (Note 3)
30,646
7.7

Suburban Tokyo

16,3194.1

16,359Other Regional Cities

37,051

9.3

37,250

9.3

Central Tokyo

183,003

46.0

183,147

45.7

Suburban Tokyo

30,216

7.6

30,180

7.5

Other Regional Cities

64,57716.2

64,806

16.2

Subtotal

369,48892.9

362,390

90.5

Cash, deposits and other assets

28,1797.1

38,000

9.5

Real estate in trust

4.1

Grand Total
400,390100.0
397,667
100.0
Note 1: “Central Tokyo” refers to Chiyoda, Chuo, Minato, Shinjuku, Shinagawa and Shibuya Wards; “Suburban Tokyo” refers to Tokyo excluding the Central
Tokyo area, Kanagawa, Saitama and Chiba: “Other Regional Cities” refers to areas other than Central Tokyo and Suburban Tokyo. The same applies
hereafter.
Note 2: Total amount is taken from the balance sheet. (Real Estate and Real Estate in Trust represent the total book value after depreciation.)
Note 3: 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 10 largest properties by book value) as of April 30, 2012 are as follows.
Name of Property

Book Value(¥ mln)Leasable Floor
Space(m2)(Note 1)

Leased Space(m2) (Note 2)

Occupancy Rate(%)

Portion of
Rental Revenues(%)

Primary Use

Shinjuku Nomura Bldg.

39,591

31,500.89

30,847.59

97.9

13.1

OfficeNRE Tennozu Bldg.

32,59325,127.12

25,127.12

100.0(Note 3)

OfficeOmron Kyoto Center Bldg.

22,197

34,616.84

34,616.84

100.0(Note 3)

OfficeNOF Nihonbashi Honcho Bldg.

20,544

19,157.05

18,882.36

98.6

6.0

OfficeSORA Shin-Osaka 21

18,637

21,298.26

21,142.62

99.3

4.2

OfficeTennozu Park Side Bldg.

12,616

18,051.60

17,553.47

97.2

5.2

OfficeNOF Shibuya Koen-dori Bldg.

12,5603,420.16

3,420.16

100.0

2.7

OfficeNOF Shinjuku Minamiguchi Bldg.

12,366

6,712.84

6,712.84

100.0

1.9

Secom Medical Bldg.

11,0598,821.24

8,821.24

100.0(Note 3)

OfficeMedical Office(Note 4)

NOF Shiba Bldg.

10,0208,165.10

8,165.10

100.0

Total

192,187

176,871.10

175,289.34

99.1

1.9
47.5
(Note 5)

OfficeNote 1: “Leasable Floor Space” refers to the total leasable space for each asset including offices and shops (for properties owned in compartments, this generally
refers to exclusively owned area; however, common spaces will be included if they are being leased. For Shinjuku Nomura Building, the area calculated bymultiplying the overall leasable floor space by the quasi co-ownership ratio of the beneficial interest in real estate trust owned by the Company. For NRE
Tennozu Building, includes the area calculated by multiplying the overall common space by the co-ownership ratio for the common spaces prescribed in
the terms of management of the building owned by the Company through the trustee.), at a certain time. Leasable floor space is calculated not based on the
total floor space stated on the registry book, but based on the area stated on the building completion drawing, etc. included in the lease agreement. As such,it may differ from and exceed the total floor space stated on the registry book.
Note 2: “Leased Space” refers to the area included in the leasable floor space of each asset and is actually leased based on a lease agreement (provided, however, it
is limited to office and shop spaces (where the entire leased floor space is being leased as a whole, the total area of the leased floor space.), and does notinclude leased parking spaces. For Shinjuku Nomura Building, the area calculated by multiplying the overall leased space by the quasi co-ownership ratioof the beneficial interest in real estate trust owned by the Company. For NRE Tennozu Building., includes the area calculated by multiplying the overallcommon space by the co-ownership ratio for the common spaces (as prescribed in the terms of management of the building) owned by the Company
through the trustee.).
Note 3: Not disclosed due to compelling reasons.
Note 4: Although this property is currently registered as “clinic/parking” on the registry book, it was originally designed to be used as offices. The Company’s
Articles of Incorporation allows us to invest in the non-office properties given that they can easily be converted into offices.
Note 5: “Total” for “Portion of Rental Revenues” column include rental revenues for properties which do not disclose “Portion of Rental Revenues” due tounavoidable reasons.

123. DETAILS OF PORTFOLIO PROPERTIES
Area

Name of Property

Location(Postal Address)

Type ofOwnership

Appraisal Valueas of Apr. 30,
2012 (¥ mln)
(Note 1)

Book Value(¥ mln)(Note 2)45,50039,591

22,30032,593

21,90020,544

16,20012,6169,530

12,366

11,80012,560Central Tokyo

Shinjuku Nomura Bldg. (Note 3)

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

NRE Tennozu Bldg.

2-4-11 Higashi-Shinagawa, Shinagawa-ku, TokyoNOF Nihonbashi Honcho Bldg.

2-7-1 Nihonbashi-Honcho, Chuo-ku, Tokyo

Tennozu Park Side Bldg.

2-5-8 Higashi-Shinagawa, Shinagawa-ku, TokyoNOF Shinjuku Minamiguchi Bldg.

2-4-9 Yoyogi, Shibuya-ku, TokyoNOF Shibuya Koen-dori Bldg.

20-17 Udagawa-cho, Shibuya-ku, Tokyo

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust

Secom Medical Bldg.

7-7 Niban-cho, Chiyoda-ku, Tokyo (Note 4)

Real Estate

10,70011,059NOF Shiba Bldg.

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

8,250

10,020

Nishi-Shinjuku Showa Bldg.

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

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust

8,020

8,693

NRE Shibuya Dogenzaka Bldg.

2-16-4 Dogenzaka, Shibuya-ku, Tokyo

Real Estate

5,820

7,572

NOF Tameike Bldg.

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

6,560

7,537

Iwamoto-cho Toyo Bldg.

3-1-2 Iwamoto-cho, Chiyoda-ku, Tokyo

4,250

5,970

NOF Shinagawa Kounan Bldg.

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

5,120

5,360

NOF Surugadai Plaza Bldg.

2-5-12 Kanda Surugadai, Chiyoda-ku, Tokyo

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust

6,350

4,879

PMO Nihonbashi Honcho

4-12-20 Nihonbashi Honcho, Chuo-ku, Tokyo

Real Estate

4,160

4,844

NRE Higashi-nihonbashi Bldg.

1-1-7 Higashi-nihonbashi, Chuo-ku, Tokyo

Real Estate

3,510

4,031

PMO Akihabara

3-11-6 Iwamoto-cho, Chiyoda-ku, Tokyo

Real Estate

3,800

3,819

Hatchobori NF Bldg.

2-21-6 Hatchobori, Chuo-ku, Tokyo

2,620

3,160

NOF Kanda Iwamoto-cho Bldg.

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

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust

3,960

3,059

NOF Takanawa Bldg.

2-20-4 Higashi Gotanda, Shinagawa-ku, Tokyo

Real Estate

2,600

3,058

PMO Hatchobori

3-22-13 Hatchobori, Chuo-ku, Tokyo

Real Estate

2,500

2,441

NOF Minami-Shinjuku Bldg.

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

2,210

2,289

Central Shintomocho Bldg.

3-5-10 Minato, Chuo-ku, Tokyo

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust

1,440

1,758

PMO Higashi-nihonbashi

2-15-4, Nihonbashi, Chuo-ku, Tokyo

Real Estate

Subtotal

1,530

1,490

210,630

221,323

1-14-4, Higashi-Ueno, Taito-Ku, Tokyo

Real Estate

6,530

7,779

NOF Technoport Kamata Center Bldg.

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

Beneficial Interest
in Real Estate Trust

6,470

6,497

Toho Edogawabashi Bldg.

1-24-8 Sekiguchi Bunkyo-ku, Tokyo

Real Estate

1,370

2,052

Toshin Meguro Bldg.

2-20-28 Shimo Meguro, Meguro-ku, Tokyo

Beneficial Interest
in Real Estate Trust

1,210

1,325

Crystal Park Bldg.

1-1-3 Gotenyama, Musashino City, Tokyo

Real Estate

3,180

3,576

NOF Kichijoji Honcho Bldg.

1-10-31, Kichijoji Honcho, Musashino City, Tokyo

1,640

1,827

Faret Tachikawa Center Square

2-36-2 Akebono-cho, Tachikawa City, Tokyo

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust

3,890

2,941

8,260

9,348

4,850

4,986

2,730

3,289

Real Estate

1,920

2,910

NRE Ueno Bldg.

Suburban TokyoNOF Kawasaki Higashiguchi Bldg.
NOF Yokohama Nishiguchi Bldg.
NOF Shin-Yokohama Bldg.
Yokohama Odori Koen Bldg.

3-1 Ekimae Honcho, Kawasaki-ku, Kawasaki City,
Kanagawa (Note 4)
1-11-11 Kita-Saiwai, Nishi-ku, Yokohama City,
Kanagawa
2-15-16 Shin-Yokohama, Kohoku-ku, Yokohama
City, Kanagawa
2-4-1 Horai-cho, Naka-ku, Yokohama City,
Kanagawa(Note 4)

Subtotal

42,05046,5354-2-2 Kitaichijo-nishi, Chuo-ku, Sapporo City,
Hokkaido (Note 4)
2-15-1, Kitashichijyo-Nishi, Kita-ku, Sapporo City,
Hokkaido
1-1 Minamiichijo-Nishi Chuo-ku, Sapporo City
(Note 4)

Beneficial Interest
in Real Estate Trust

5,690

7,634

Real Estate

4,620

5,004

Real Estate

3,220

3,596

NOF Sendai Aoba-dori Bldg.

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

2,120

3,136

NOF Utsunomiya Bldg.

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

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust

2,390

2,359

Sapporo North Plaza
Other Cities

NRE Sapporo Bldg.
JCB Sapporo Higashi Bldg.

13

2-9-27 Nishiki, Naka-ku, Nagoya City, Aichi

Real Estate

2,310

4,112

1-16-28 Meieki-Minami, Nakamura-ku, Nagoya
City, Aichi
801 Minami Fudodo-cho, Horikawa Higashi-iru,
Shiokoji-dori, Shimogyo-ku, Kyoto City, Kyoto(Note 4)

Beneficial Interest
in Real Estate Trust

2,390

3,637

Beneficial Interest
in Real Estate Trust

19,20022,197

SORA Shin-Osaka 21

2-1-3 Nishi-Miyahara, Yodogawa-ku, Osaka City

Real Estate

12,90018,637

NRE Osaka Bldg.

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

Beneficial Interest
in Real Estate Trust

6,900

6,259

NRE Nishi-Umeda Bldg.

2-1-22, Umeda, Kita-Ku, Osaka City, Osaka

Real Estate

3,240

5,700

NRE Yotsubashi Bldg.

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

4,460

3,776

NOF Kobe Kaigan Bldg.

3 Kaigan-dori, Chuo-ku, Kobe City, Hyogo (Note 4)

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust

2,380

2,772

2,310

2,559

4,340

6,586

2,260

3,657

80,730101,629

333,410369,488

NOF Nagoya Fushimi Bldg.
NOF Nagoya Yanagibashi Bldg.
Omron Kyoto Center Bldg.

NRE Hiroshima Bldg.
NOF Hakata Ekimae Bldg.
NOF Tenjin-Minami Bldg.

2-23 Tatemachi, Naka-ku, Hiroshima City,
Hiroshima
1-15-20 Hakata Ekimae, Hakata-ku, Fukuoka City,
Fukuoka
3-6-15 Watanabe Dori, Chuo-ku,Fukuoka City,
Fukuoka

Subtotal
Grand Total

Note 1: “Appraisal Value as of Apr. 30, 2012” 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 Calculations of Investment Corporations” (Cabinet Office Regulation No. 47 of 2006). The appraisal prices arecalculated by Japan Real Estate Institution, Tanizawa Sogo Appraisal Co., Ltd., Daiwa Real Estate Appraisal, Co., Ltd., Japan Valuers Co., Ltd., Appraisal
Firm A-Square Co., Ltd., or Morii Appraisal & Investment Consulting Inc. using the capitalization approach, with the end of the Seventeenth Fiscal Period,
i.e. April 30, 2012, 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, leased assets,
construction in progress, and leaseholds 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 as of April 30, 2012 accounted solely
for the quasi co-ownership.
Note 4: Residential indication of the property is not available yet.

14

17th Period (from Nov. 1, 2011 to Apr. 30, 2012)
Area

at Period End

Name of Property
NumberofTenants(Note 1)

Occupancy
Rate (%)

RentalRevenues
during the
Period(¥ mln)16th Period (from May 1, 2011 to Oct. 31, 2011)
at Period End

Portion of
RentalRevenues(%)

NumberofTenants(Note 1)

Occupancy
Rate (%)

Central Tokyo
Suburban Tokyo
Other Cities

Shinjuku Nomura Bldg.
NRE Tennozu Bldg.
NOF Nihonbashi Honcho Bldg.
Tennozu Park Side Bldg.
NOF Shinjuku Minamiguchi Bldg.
NOF Shibuya Koen-dori Bldg.
Secom Medical Bldg.
NOF Shiba Bldg.
Nishi-Shinjuku Showa Bldg.
NRE Shibuya Dogenzaka Bldg.
NOF Tameike Bldg.
Iwamoto-cho Toyo Bldg.
NOF Shinagawa Kounan Bldg.
NOF Surugadai Plaza Bldg.
PMO Nihonbashi Honcho
NRE Higashi-nihonbashi Bldg.
PMO Akihabara
Hatchobori NF Bldg.
NOF Kanda Iwamoto-cho Bldg.
NOF Takanawa Bldg.
PMO Hatchobori
Central Kyobashi Bldg. (Note 3)
NOF Minami-Shinjuku Bldg.
Central Shintomicho Bldg.
PMO Higashi-nihonbashi
Sunworld Yotsuya Bldg. (Note 3)
Subtotal
NRE Ueno Bldg.
NOF Toyo-cho Bldg. (Note 3)
Technoport Kamata Center Bldg.
Toho Edogawabashi Bldg.
Toshin Meguro Bldg.
Crystal Park Bldg.
NOF Kichijoji Honcho Bldg.
Faret Tachikawa Center Square
NOF Kawasaki Higashiguchi Bldg.
NOF Yokohama Nishiguchi Bldg.
NOF Shin-Yokohama Bldg.
Yokohama Odori Koen Bldg.
Subtotal
Sapporo North PlazaNRE Sapporo Bldg.
JCB Sapporo Higashi Bldg.
NOF Sendai Aoba-dori Bldg.
NOF Utsunomiya Bldg.
NOF Nagoya Fushimi Bldg.
NOF Nagoya Yanagibashi Bldg.
Omron Kyoto Center Bldg.
SORA Shin-Osaka 21
NRE Osaka Bldg.
NRE Nishi-Umeda Bldg.
NRE Yotsubashi Bldg.
NOF Kobe Kaigan Bldg.
NRE Hiroshima Bldg.
EME Hakata Ekimae Bldg.
NOF Tenjin-Minami Bldg.
Subtotal

96

97.9

1,626

13.1

6
16
15
15
3
1
9
18
7
12
7
5
1
6
6
5
7
8
15
8
4
6
8
284
10
12
7
1
12
7
17
27
28
10
18
149
45
6
1
30
24
16
14
1
34
25
15
21
33
17
47
22
351

100.0
98.6
97.2
100.0
100.0
100.0
100.0
95.5
88.4
97.4
100.0
85.5
100.0
87.5
100.0
100.0
100.0
100.0
96.4
100.0
93.2
100.0
100.0
97.8
100.0
92.7
100.0
100.0
98.6
100.0
97.3
93.5
98.7
100.0
100.0
97.0
94.9
98.2
100.0
93.0
95.7
89.9
92.6
100.0
99.3
100.0
92.2
99.7
85.8
81.9
94.7
86.8
96.3

(Note 2)
6.0
5.2
1.9
2.7
(Note 2)
1.9
2.1
1.3
1.6
1.1
1.5
(Note 2)
0.9
1.2
0.5
0.8
1.0
0.9
0.6
0.7
0.4
0.4
(Note 4)
1.8
2.6
0.5
(Note 2)
1.0
0.6
1.7
2.5
1.8
1.3
0.8
(Note 4)2.7
1.6
(Note 2)
1.0
1.2
0.6
0.9
(Note 2)
4.2
3.3
1.2
2.3
1.2
1.3
1.4
0.6
(Note 4)

95
6
14
15
14
3
1
7
19
7
11
7
5
1
7
6
7
8
16
4
6
1
259
10
12
7
1
12
6
17
29
32
10
16
152
43
6
1
28
23
16
14
1
32
24
15
20
34
17
46
22
342

94.7
100.0
96.6
97.2
100.0
100.0
100.0
84.6
97.1
88.4
95.6
100.0
94.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
96.9
100.0
92.7
100.0
100.0
98.6
90.2
97.3
98.6
100.0
100.0
92.4
97.0
96.5
100.0
100.0
83.6
88.6
89.9
92.6
100.0
94.7
99.2
95.4
97.5
86.4
86.1
93.0
96.9
95.6

Grand Total

784

97.1

(Note 2)
743
644
235
331
(Note 2)
237
260
160
196
140
184
(Note 2)
116
143
59
99
129
106
79
90
55
54
(Note 4)222
324
58
(Note 2)
119
69
213
313
218
161
99
(Note 4)330
203
(Note 2)
130
150
73
111
(Note 2)
522
414
143
289
152
156
179
75
(Note 4)
12,441(Note 5)

100.0

753

96.4

Note 1:

RentalRevenues
during the
Period(¥ mln)1,624(Note 2)
749
629
304
332
(Note 2)
286
287
162
204
122
216
(Note 2)
115
143
89
140
111
53
93
54
(Note 2)
6,938
224
(Note 2)345
62
(Note 2)
102
70
218
310
228
164
92
1,872
325
204
(Note 2)
123
155
65
112
(Note 2)
565
390
141
291
158
176
178
80
3,709
12,520(Note 5)

Portion of
RentalRevenues(%)

13.0(Note 2)
6.0
5.0
2.4
2.7
(Note 2)
2.3
2.3
1.3
1.6
1.0
1.7
(Note 2)
0.9
1.1
0.7
1.1
0.9
0.4
0.7
0.4
(Note 2)55.4
1.8
(Note 2)2.8
0.5
(Note 2)
0.8
0.6
1.7
2.5
1.8
1.3
0.7
15.0
2.6
1.6
(Note 2)
1.0
1.2
0.5
0.9
(Note 2)
4.5
3.1
1.1
2.3
1.3
1.4
1.4
0.6
28.2
100.0

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. For NRE Tennozu Building and PMO Nihonbashi Honcho, PMO Akihabara, PMO Hatchobori,and PMO Higashi-nihonbashi, which involves a “pass-through type” master lease agreement where the amount of rent received from the master tenant is the same as
the rent received by said master tenant from the end tenant, the total number of end tenants is shown. In the case more than one space within the same building areleased 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 for each building as if they are leased by different tenants. As for Shinjuku Nomura Building and NOF Toyo-cho Building, the numberof tenants in the entire building is taken into account.
Note 2: Not disclosed due to compelling reasons.
Note 3: The amount mentioned in “Rental Revenues during the Period” of the 16th period is the amount before each transfer date: NOF Toyo-cho Building (May 10, 2011),
Sunworld Yotsuya Building (July 22, 2011), Central Kyobashi Building (August 30, 2011)
Note 4: Subtotals of “Rental Revenues” and "Portion of Rental Revenues” for each area of the 17th period is not disclosed due to compelling reasons.
Note 5: Grand total of “Rental Revenues” is including the amounts which are not disclosed due to compelling reasons.

15

4. OUTSTANDING AMOUNT AND CURRENT PRICE OF SPECIFIED TRANSACTIONS
The outstanding amount and current price of the specified transactions as of April 30, 2012 are as follows.
Segment

Contract AmountType of Transaction(¥ mln) (Note1)
Longer than a Year

Transaction other than market
transaction

Interest-rate swap
(Receiving floating-rate, paying fixed-rate)
Total

Current Price(¥ mln) (Note2)

93,25056,750△437

93,25056,750△437

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 of April 30, 2012.

6. STATUS OF ASSETS BY COUNTRY AND REGION
As of the end of the seventeenth fiscal period, the real estate and beneficial interest in real estate trust held by the Company by country
and region are as follows.

Country

Total Portfolio Amount(Note 1)

Appraisal Value as of Apr. 30, 2012 (Note2)
Number of Properties
Portion of Total PortfolioJapan¥369,488 million¥333,410 million

100.0%

51

Total¥369,488 million¥333,410 million

100.0%

51

Note 1: Total portfolio amount stands for the book value after depreciation and amortization.
Note 2: Appraisal value as of Apr. 30, 2012 stands for the value appraised by the real estate appraisers.

16

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 of April 30, 2012. The estimated cost of works includes the amount to be charged as “expenses”
for accounting purposes.
Name of Property (Location)

Description of Works (Purpose)

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)
Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)
Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)
Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)
Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)
NRE Tennozu Bldg.
(Shinagawa-ku, Tokyo)
NOF Nihonbashi Honcho Bldg.
(Chuo-ku, Tokyo)

Renovation of passenger elevator control system(middle level (4 units))(To increase quality) (Note 1)
Renovation of extra-high substation equipment(To increase quality) (Note 1)
Renovation of passenger elevator control system(Low level (4 units for each))(To increase quality) (Note 1)
Renovation of passenger elevator control system(High level (4 units for each))(To increase quality) (Note 1)
Renovation of passenger elevator control system(High level (4 units for each))(To increase quality) (Note 1)
Renewal of central monitoring and building
management systems(To increase quality) (Note 1)
Renewal of cooling water heat pump equipment(To increase quality) (Note 1)

Estimated Period

Estimated Cost (¥ mln)
Paid during
Paid before
Total
17th Period
17th Period

From:
To:

Jan. 2011
Jul. 2012204(Note 2)

102

102

From:
To:

Feb. 2011
Mar. 2017

460(Note 2)

-

14

From:
To:

Sep. 2011
Jan. 2014146(Note 2)

-

-

From:
To:

Jan. 2012
Sep. 2013

207(Note 2)

-

-

From:
To:

Jan. 2012
Nov. 2013

247(Note 2)

-

-

From:
To:

Mar. 2012
Oct. 2012

62

-

-

From:
To:

Mar. 2012
Apr. 2013

143

-

-

Iwamoto-cho Toyo Bldg.
Dividing construction of air conditioning system
From:
Mar. 2012
119(Chiyoda-ku, Tokyo)(To increase quality) (Note 1)
To:
Jul. 2012
Note 1: These works have already been implemented as of the date of this report.
Note 2: As for Shinjuku Nomura Building, the posted amount of cost represents 50.1%, our portion of quasi co-ownership, of the total cost of refurbishment of theentire building.

2. CAPITAL EXPENDITURES DURING THE SEVENTEENTH FISCAL PERIOD
The table below lists capital expenditures during the seventeenth fiscal period in conjunction with the major works of renovation. During
the period, we have conducted engineering works totalling ¥1,269 million: capital expenditures of ¥1,022 million and repair expenses of¥246 million combined all together.
Name of Property (Location)

Description of Works (Purpose)

Period of Works

Cost of Works(¥ mln)Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Renovation of passenger elevator control system(Middle level (2 units for each))(To increase quality)

From:
To:

Oct. 2011
Mar. 2012

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Renovation of passenger elevator control system(Low level (1 unit))(To increase quality)

NRE Tennozu Bldg.
(Shinagawa-ku, Tokyo)

Refurbishment for office space on the 11th floor(To increase revenues)

From:
To:
From:
To:

Sep. 2011
Apr. 2012
Aug. 2011
Nov. 2011

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

Renewal of Central Monitoring and Building Management System(To increase quality)

From:
To:

Mar. 2012
Apr. 201243

Iwamoto-cho Toyo Bldg.
(Chiyoda-ku, Tokyo)

Dividing construction of air conditioning system(To increase quality)

From:
To:

Mar. 2012
Apr. 201267

NOF Technoport Kamata Center
Bldg.(Ota-ku, Tokyo)
NRE Yotsubashi Bldg.
(Nishi-ku, Osaka City)

Renewal of total disaster prevention control panel and emergency warning
system (To increase quality)
Renewal of through the wall air-conditioning system(To increase quality)

From:
To:
From:
To:

Nov. 2012
Apr. 2012
Nov.2011
Feb. 2012

Other Properties

Improvement of features

From:
To:

Nov. 2011
Apr. 2012

Total

80
35
119

54
80
541
1,022

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.

Balance brought forwardfrom the previous period
Amount reserved during
the period
Amount used during theperiodBalance brought forward
to the next period

17th Period
from Nov. 1, 2011
to Apr. 30, 2012

16th Period
from May 1, 2011
to Oct. 31, 2011

15th Period
from Nov 1, 2010
to Apr. 30, 2011

14th Period
from May 1, 2010
to Oct. 31, 2010

13th Period
from Nov. 1, 2009
to Apr. 30, 2010(¥ mln)

1,087

620

438

397

436

(¥ mln)

1,988

1,437

890

900

975

(¥ mln)

1,825

970

708

859

1,013

(¥ mln)

1,250

1,087

620

438

397

17

Expenses and Liabilities
1. EXPENSES RELATED TO ASSET MANAGEMENT.

16th Period
from May 1, 2011
to Oct. 31, 2011
990,285(¥000)

17th Period
from Nov. 1, 2011
to Apr. 30, 2012
1,001,972

of which

Management Fee I(¥000)

705,465

705,633of which

Management Fee II(¥000)

296,507317,413of which

Management Fee III(¥000)--

Custodian fees(¥000)

28,76428,902

General administrative fees(¥000)

64,27864,912

Directors’ compensation(¥000)

12,00012,000

Other expenses(¥000)

78,973

105,415

Asset management fees (Note)

Total(¥000)
1,201,515
1,185,989
Note: In the Asset Management Agreement between the Company and the Asset Management Company, there is no provision for the acquisition fees, which arepayable to the Asset Management Company by the Company on acquisition of a new property, and such fees are non-existent.

18

2. STATUS OF BORROWINGSThe status of borrowings from the financial institutions as of April 30, 2012 is as follows.
Financial Institutions

Date Borrowed

Outstanding asof Apr. 30,
2012(¥000)

Outstanding
as of Oct. 31,
2011(¥000)

Average
Interest
Rate (%)(Note 1)

Date of
Repayment

900,000
500,000
1,000,000
500,000
1,000,000

1,000,000
3,000,000
500,000
500,000
900,000
500,000
1,000,000
500,000-

0.73643

Dec. 24, 2011

0.78643

Feb. 26, 2012

3,900,000

7,900,000

5,600,000
4,500,000
1,400,000
500,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
2,000,000
1,500,000
2,500,000
1,000,000
500,000
1,000,000
1,000,000
3,000,000
3,000,000
2,000,000
2,000,000
2,000,000
2,000,000
1,000,000
1,000,000
2,000,000
2,000,000
2,000,000
500,000
50,000,000

2,000,000
2,000,000
1,000,000
3,000,000
2,000,000
1,000,000
5,600,000
4,500,000
1,400,000
500,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
2,000,000
1,500,000
2,500,000
1,000,000
500,000
1,000,000
1,000,000
500,000
39,000,000

53,900,000

46,900,000

Outstanding asof Apr. 30,
2012(¥000)

Outstanding
as of Oct. 31,
2011(¥000)-

3,000,000
3,000,000-

2,000,000
2,000,000

Method of
Use ofRepayment Borrowings

Note

Balloonpayment(Note 2)

Unsec
ured/
Unins
ured

(Note 2)

Unsec
ured/
Uninsured

Short-term Borrowings
The Chugoku Bank, Ltd.
Sumitomo Trust and Banking Co., Ltd.(Note 3)
The Chiba Bank, Ltd.
The Hiroshima Bank, Ltd.
Sumitomo Trust and Banking Co., Ltd.(Note 3)
The Chiba Bank, Ltd.
The Yamanashi Chuo Bank, Ltd.
Aozora Bank, Ltd.
The Chugoku Bank, Ltd.

Dec. 24, 2010
Feb. 28, 2011

Jun. 24, 2011
Aug. 26, 2010
Dec. 26, 2011

Subtotal

0.73643

Jun. 24, 2012

0.73643

Aug. 26, 2012

0.63643

Dec. 26, 2012

1.89764

Feb. 26, 2012

1.39575

Jun. 24, 2012

1.43750

Aug. 26, 2012

1.53625

Aug. 26, 2012

Current Portion of Long-term Borrowings
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Mitsui Trust Bank, Ltd.(Note 4)
The Nomura Trust and Banking Co., Ltd.
The Iyo Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
The Hyakujushi Bank, Ltd.
Taiyo Life Insurance Company
Daido Life Insurance Company
Mitsui Life Insurance Co., Ltd.
Zenkyoren
Development Bank of Japan, Inc.
Zenkyoren
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Mitsui Trust Bank, Ltd.(Note 5)
The Iyo Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Mitsui Trust Bank, Ltd.(Note 3)
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Mitsui Trust Bank, Ltd.(Note 3)
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
The Mizuho Corporate Bank, Ltd.
Development Bank of Japan, Inc.
The Dai-ichi Life Insurance Company, Limited
Mizuho Trust & Banking Co., Ltd.
THE NISHI-NIPPON CITY BANK, LTD.
Development Bank of Japan, Inc.
Subtotal

Dec. 8, 2006

Jun. 24, 2009

Nov. 29, 2005

Dec. 9, 2005

Feb. 26, 2008

Sep. 25, 2008

Nov. 4, 2008

Jun. 27, 2008
Mar. 17, 2005
Dec. 8, 2006
Mar. 26, 2010
Jun. 25, 2009

Total Short-term Borrowings

Financial Institutions

Date Borrowed

Balloonpayment
1.46000

Aug. 26, 2012

1.61150

Sep. 25, 2012

1.51175

Nov. 4, 2012

1.87200

Dec. 27, 2012

1.75250
1.99250

Feb. 26, 2013
Feb. 26, 2013

1.14071

Feb. 26, 2013

1.97000(Note 6)(Note 6)

Average
Interest
Rate (%)(Note 1)

Date of
Repayment

Method of
Use ofRepayment Borrowings

1.51175

Nov. 4, 2012

1.87200

Dec. 27, 2012

Note

Long-term Borrowings
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.

Nov. 4, 2008

Sumitomo Mitsui Trust Bank, Ltd.(Note 3)
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
The Mizuho Corporate Bank, Ltd.

Jun. 27, 2008-

2,000,000
2,000,000

Development Bank of Japan, Inc.

Mar. 17, 2005-

1,000,000
1,000,000

The Dai-ichi Life Insurance Company, Limited.

Dec. 8, 2006

Mizuho Trust & Banking Co., Ltd.
THE NISHI-NIPPON CITY BANK, LTD.

Mar. 26, 2010-

2,000,000
2,000,000

Jun. 24, 2010

2,000,000

2,000,000
2,000,000

Dec. 8, 2010
Aug. 26, 2010

1,000,000
2,500,000

1,000,000
2,500,000

The Chugoku Bank, Ltd.
Mitsui Sumitomo Insurance Co., Ltd.
The Bank of Fukuoka, Ltd.

19

1.75250

Feb. 26, 2013

1.99250

Feb. 26, 2013

1.14071

Feb. 26, 2013

1.14050

Jun. 24, 2013

0.886430.98550

Jun. 24, 2013
Aug. 26, 2013

Balloonpayment(Note 2)

Unsec
ured/
UninsuredFinancial Institutions
The Chiba Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
The Iyo Bank, Ltd.

Outstanding asof Apr. 30,
2012(¥000)
500,000

Outstanding
as of Oct. 31,
2011(¥000)

1,000,000
4,500,000
1,000,000
1,000,000
1,000,000

1,000,000
4,500,000
1,000,000
1,000,000
1,000,000

500,000
2,000,000
2,000,000

500,000
2,000,000
2,000,000

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

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

1,000,000
1,000,000
1,000,000

1,000,000
1,000,000
1,000,000

Sep. 26, 2011

1,000,000
1,000,000

1,000,000
1,000,000

Dec. 24, 2009

1,800,000
2,400,000
500,000
650,000
1,000,000

1,800,000
2,400,000
500,000
650,000
1,000,000

1.55800

Dec. 24, 2014

Feb. 26, 2008
Feb. 26, 2010

3,000,000
3,000,000

3,000,000
3,000,000

1.91875
1.69300

Feb. 26, 2015
Feb. 26, 2015

Jun. 24, 2008

1,000,000
3,000,000
4,000,000

1,000,000
3,000,000
4,000,000

2.31750

Jun. 24, 2015

Date Borrowed
Feb. 27, 2012

Dec. 8, 2007

The Mizuho Corporate Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
The Nomura Trust and Banking Co., Ltd.
Shinkin Central Bank
Taiyo Life Insurance Company
Daido Life Insurance Company
Sumitomo Life Insurance Company
The Hachijuni Bank, Ltd.
The Hiroshima Bank, Ltd.
The Keiyo Bank, Ltd.

Feb. 28, 2011

Mar. 19, 2007

Jun. 10, 2011

The Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Trust Bank, Ltd.(Note 3)
The Iyo Bank, Ltd.
The Hachijuni Bank, Ltd.
The Hyakujushi Bank, Ltd.
The 77 Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
The Mizuho Corporate Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
The Bank of Fukuoka, Ltd.
The Dai-ichi Life Insurance Company, Limited.

Aug. 26, 2011-

Average
Interest
Rate (%)(Note 1)0.70643

Aug. 27, 2013

1.68680

Dec. 8, 2013

0.99071

Feb. 26, 2014

1.98000

Mar. 19, 2014

0.91900

Jun. 10, 2014

0.83875

Aug. 26, 2014

0.83643

Aug. 26, 2014

Date ofDate of
Repayment

Balloonpayment

The Norinchukin Bank, Ltd.
Taiyo Life Insurance Company
Sumitomo Life Insurance Company
Development Bank of Japan, Inc.
Sompo Japan Insurance Inc.

Aug. 26, 2010

1,000,000
3,000,000

1,000,000-

1.31125

Aug. 26, 2015

Sumitomo Mitsui Trust Bank, Ltd.(Note 3)
The Nomura Trust and Banking Co., Ltd.

Feb. 27, 2012

2,000,000-

0.90800

Feb. 27, 2016

500,000-

1,000,000
1,000,000

1,000,000
1,000,000

1.10100

Aug. 26, 2016

1,000,000
500,000

1,000,000-

500,000
3,000,000

3,000,000

1.07450

Feb. 26, 2017

900,000
2,000,000

900,000-

1.43500

Jun. 10, 2017

2,000,000
1,000,000-

1.12850

Aug. 27, 2017

3,000,000
1,000,000-

The Hiroshima Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
The Chugoku Bank, Ltd.
Resona Bank, Ltd.

Aug. 26, 2011

Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Mitsui Trust Bank, Ltd.(Note 3)

Mar. 16, 2012

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Mizuho Corporate Bank, Ltd.

Jun. 10, 2011

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Mitsui Trust Bank, Ltd.(Note 4)

Feb. 27, 2012

The Iyo Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Feb. 28, 2011

1,000,000
1,250,000

1,000,000-

1.84650

Feb. 26, 2018

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.

Mar. 16, 2012

1,250,000
500,000-

1.44450

Feb. 26, 2019

The Mizuho Corporate Bank, Ltd.
Development Bank of Japan, Inc.

Jun. 25, 2009

8,250,000
90,000,000

8,500,000
93,250,000

1.97000(Note 6)

Subtotal
Total

143,900,000

140,150,000

Note 1:

Method of
Use ofRepayment Borrowings(Note 2)

Note

Unsec
ured/
Uninsured(Note 6)

The average interest rate is weighted by the balance of each borrowing as at the end of the period 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 use of borrowings is to purchase property-related assets, the related miscellaneous expenses and the repayment of borrowings.
Note 3: Sumitomo Trust and Banking Co., Ltd., The Chuo Mitsui Trust & Banking Co., Ltd. and Chuo Mitsui Asset Trust and Banking Co., Ltd merged effective April 1, 2012
to be Sumitomo Mitsui Trust Bank, Ltd. The balance represents amount of borrowing from former Sumitomo Trust and Banking Co., Ltd.
Note 4: The balance represents amount of borrowing from former The Chuo Mitsui Trust & Banking Co., Ltd.
Note 5: The balance represents aggregated amount of borrowing from former Sumitomo Trust and Banking Co., Ltd., and The Chuo Mitsui Trust & Banking Co., Ltd.
Note 6: Instalments of ¥250 million will be made on the 25th of every sixth month starting on December 25, 2009, with the remaining payment of ¥6,750 million to be repaid on
June 25, 2016.

20

3. STATUS OF INVESTMENT CORPORATION BONDS
The status of investment corporation bonds issued as of April 30, 2012 is as follows.
Name of Bonds
First Series Unsecured
Investment Corporation Bonds
Second Series Unsecured
Investment Corporation Bonds
Fourth Series Unsecured
Investment Corporation Bonds
Fifth Series Unsecured
Investment Corporation Bonds
Sixth Series Unsecured
Investment Corporation Bonds
Seventh Series Unsecured
Investment Corporation Bonds
Eighth Series Unsecured
Investment Corporation Bonds
Ninth Series Unsecured
Investment Corporation Bonds
Total

Issue Date

Balance as ofApr. 30, 2012(¥ mln)Balance as ofOct. 30, 2011(¥ mln)Interest
Rate(%)

Maturity Date

Mar. 16, 2005

5,000

5,000

1.85

Mar. 16, 2015

Mar. 16, 2005

5,000

5,000

2.47

Mar. 16, 2020

Nov. 28, 2005

10,00010,0002.05

Nov. 30, 2015

Mar. 19, 2007

5,000

-

1.61

Mar. 19, 2012

Mar. 19, 2007

5,000

5,000

2.21

Mar. 17, 2017

Mar. 19, 2007

4,500

4,500

2.90

Mar. 17, 2028

Nov. 26, 2010

6,000

6,000

0.94

Nov. 26, 2014

Nov. 26, 2010

4,000

4,000

1.52

Nov. 24, 2017

44,50039,500

Method of
Repayment

Use ofProceeds

Note(Note 2)

Balloonpayment(Note 1)
(Note 3)Note 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.

4. STATUS OF SHORT-TERM INVESTMENT CORPORATION BONDS
There are no outstanding short-term investment corporation bonds as of the end of the seventeenth fiscal period.

21

Trading during the Seventeenth Fiscal Period
1. STATUS OF REAL ESTATES AND ASSET-BACKED SECURITIES TRADING
Acquisition
Type of Asset

Name of Property

TransferPrice(¥ mln)(Note 1)

Date

Price
(¥ mln)(Note 1)

Date

Book Value(¥ mln)Gain (Loss)(¥ mln)(Note 2)

Real Estate

PMO Hatchobori

Nov.1, 2011

2,430

-

-

-

-

Real Estate

PMO Higashi-nihonbashi

Nov. 1, 2011

1,480

-

-

-

-

-

-

-

Real Estate

PMO Akihabara

Jan. 13, 2012

3,790

-

Total
7,700
Note 1: “Acquisition price” and “Transfer price” do not include various costs (intermediary fees, taxes and duties, etc.) required for acquisition or transfer of theproperty (the purchase and sale price of the real estate, etc., as indicated in the Transfer Agreement of Trust Beneficial Interest or Real Estate).
Note 2: For transfer, other sales expenses in addition to the above have been incurred, and “Gain (Loss)” is inclusive of this amount.

2. STATUS OF OTHER ASSETS
Not applicable. In addition, the Company’s assets other than the above mentioned properties and asset-backed securities are mostly
comprised of direct bank deposits and bank deposits in trust.

3. PRICE INVESTIGATION(1) Real Estates
Acquisition/Transfer

Type of
Asset

Name of Property

Acquisition/Transfer
Price(¥ mln) (Note 1)

Appraisal Value(¥ mln) (Note 2)

Appraiser

Appraisal Date

Japan Real
Aug. 1, 2011
Estate InstituteJapan Real
Acquisition
Real Estate
PMO Higashi-nihonbashi
1,480
1,480
Aug. 1, 2011
Estate InstituteJapan Real
Acquisition
Real Estate
PMO Akihabara
3,790
3,790
Nov. 1, 2011
Estate Institute
Note 1: “Acquisition price” and “Transfer price” do not include various costs (intermediary fees, taxes and duties, etc.) required for acquisition or transfer of theproperty (the purchase and sale price of the real estate, etc., as indicated in the Transfer Agreement of Trust Beneficial Interest or Real Estate).
Note 2: The price investigation prior to revision of the Investment Trust Act on November 24, 2011, were conducted by Ernst & Young ShinNihon LLC at thetime of acquisition or transfer in accordance with the guidance under “Price Investigation of Specified 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 the appraisal value, location and lot number to identify these properties. Appraisal value of PMO Hatchobori is ¥ 2,430 million
and that of PMO Higashi-nihonbashi is ¥ 1,480 million.
Note3: As the Investment Trust Act has revised on November 24, 2011, the price investigations are no longer necessary as long as the price appraisals conductedin advance of acquisition or transfer. Therefore, the price investigation on acquisition of PMO Akihabara was not conducted.
Acquisition

Real Estate

PMO Hatchobori

2,430

2,430

(2) Others
With regard to the properties the Company has traded but not included in the above table “(1) Real Estates,” the price investigation
procedures were conducted by Ernst & Young ShinNihon LLC subject to the requirement by Article 201 of the Investment Trust Act.
For the seventeenth fiscal period (from November 1, 2011 to April 30, 2012), four OTC derivatives transactions were subject toinvestigation. Ernst & Young ShinNihon LLC was requested to investigate the details of three transactions including the name ofcounterparty, issues, the number of execution, financial instruments/monetary indicators, put/call options, exercise prices, the period of
execution of right, the trading period, etc. The investigation report has been received.

22

4. TRANSACTIONS WITH RELATED PARTIES AND MAJOR SHAREHOLDERS(1) Transactions
Table of transactions in respect of specified assets entered into with related parties and major shareholders during the seventeenth fiscal
period is as follows.
Purchase (¥000) (%)
7,700,000
Total amountAmount purchased from related parties andmajor shareholders
7,700,000(100.0%)Details of transaction with related parties and major shareholders
Nomura Real Estate
7,700,000 （100.0%）
Development Co., Ltd.
Total
Note:

7,700,000

Sale(¥000) (%)

Amount sold to related parties and major shareholders(100.0%)-( - %)

-

（- %）

-

(- %)

Related parties and major shareholders refer to those bodies that have business interest and major stake in the Asset Management Companies defined by Article 29-4,
Paragraph 2 of Financial Instruments and Exchange Act, with which the Company, stipulated by article 123 of Enforcement Order of Investment Trust Act, has an AssetManagement Agreement.

(2) Fees Paid to Related Parties and Major Shareholders
Table of fees paid to related parties and major shareholders during the seventeenth fiscal period is as follows.

Contract-out fees
Property management fees
Other expenses

Name of Related Party and Major Shareholders

Amount Paid (A)(¥000)

Total Amount Paid (B)(¥000)

Nomura Building Management Co., Ltd. (Note 2)
Nomura Real Estate Development Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Real Estate Development Co., Ltd.

749,629
160,589
22,384
27,3881,148,258

Nomura Building Management Co., Ltd.

23,389241,774
73,936

Portion(A) / (B)
(%)
65.3
66.4
9.3
37.0
31.6

The term “related parties” refers to related parties of Asset Management Companies as stipulated by Article 123 of the Enforcement Order of the Act on Investment
Trusts and Investment Corporations and by Article 26, Paragraph 1, Item 27 of the Regulations Concerning Investment Reports of Investment Trusts and Investment
Corporations, issued by the Investment Trusts Association, Japan. The term “major shareholders” refers to major shareholders of Asset Management Companies as
defined by Article 29-4, Paragraph 2 of the Financial Instruments and Exchange Act.
Note 2: In addition to the Property Management Agreement, the Company has entrusted Nomura Building Management Co., Ltd. with daily maintenance of building andequipments, the cost of which is included in “Contract-out Fees”.
Note 3: Besides the above, the Company has made the following payments for repair works during the seventeenth fiscal period.
Name of Related Party
Amount Paid (¥000)
Nomura Real Estate Development Co., Ltd.
21,791
Nomura Building Management Co., Ltd.
423,860
Note 1:

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

Note 1:
Note 2:Name of Property

Property Management Company

Shinjuku Nomura Bldg.
NRE Tennozu Bldg.
Tennozu Park Side Bldg.
NOF Shibuya Koen-dori Bldg.
Secom Medical Bldg.
Nishi-Shinjuku Showa Bldg.
NRE Shibuya Dogenzaka Bldg.
NOF Tameike Bldg.
NOF Shinagawa Konan Bldg.
NOF Surugadai Plaza Bldg.
PMO Nihonbashi Honcho
NRE Higashi-nihonbashi Bldg.
PMO Akihabara
Hatchobori NF Bldg.
PMO Hatchobori
NOF Minami-Shinjuku Bldg.
PMO Higashi-nihonbashi
NRE Ueno Bldg.
NOF Technoport Kamata Center Bldg.
NOF Kichijoji Honcho Bldg.
Faret Tachikawa Center Square
NOF Yokohama Nishiguchi Bldg.
NOF Shin-Yokohama Bldg.
NRE Sapporo Bldg.
Omron Kyoto Center Bldg.
NRE Osaka Bldg.
NRE Nishi-Umeda Bldg.
NRE Yotsubashi Bldg.
NOF Shinjuku Minamiguchi Bldg.
NOF Takanawa Bldg.
Central Shintomicho Bldg.
Toshin Meguro Bldg.
NOF Kawasaki Higashiguchi Bldg.
NOF Utsunomiya Bldg.
NOF Nagoya Yanagibashi Bldg.
NRE Hiroshima Bldg.

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 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.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.

Property Management Fees(¥000)(Note 1) (Note2)
32,151
14,78811,302
5,308
3,789
5,015
3,241
4,638
3,649
5,117
2,838
2,906
1,630
2,134
2,292
1,923
1,563
4,486
6,720
1,460
4,428
4,857
3,129
4,047
5,505
10,930
2,920
7,809
3,699
2,173
1,032
600
6,105
4,098
2,225
2,449

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

23

5. STATUS OF BUSINESS WITH THE ASSET MANAGEMENT COMPANY OVER ITS SUBSIDIARY BUSINESS
Although Nomura Real Estate Asset Management Co., Ltd., the asset management company of the Company, conducts subsidiarybusiness of Type II Financial Instruments Business, there is no relevant matter under this subject as of April 30, 2012.

Other Information
1. NOTICE
Not applicable.
2. STATUS OF BENEFICIAL INTEREST IN INVESTMENT TRUSTS ESTABLISHED BY THE COMPANY
Not applicable.
3. OTHER MATTERS
For the purpose of this report, the numbers of amount below unit are truncated and the numbers in percentage are rounded to unit unlessotherwise mentioned specifically.

24

Financial Section

Contents
Balance Sheet
Statement of Income and Retained Earnings
Statement of Changes in Net Assets
Statement of Cash Flows
Notes to Financial Statements

26
28
29
30
31

25

Balance Sheet
As of April 30, 2012

Thousands of Yen
As of October 31, 2011ASSETS
Current Assets:
Cash and bank deposits¥26,692,688¥36,317,667

Rental receivables

220,998

542,060

Consumption taxes receivable

157,795-

Other current assets

413,290438,335

27,484,771

37,298,062

Land

263,467,281

259,188,609

Buildings and structures

126,559,598

122,118,786

Machinery and equipment

1,643,355

1,571,665

Tools, furniture and fixtures

303,871

286,461

Leased assets

30,94730,947

Construction in progress

46,57540,395392,051,627

383,236,863(24,463,985)(22,746,855)

367,587,642

360,490,008

Leasehold rights

1,900,905

1,900,905

Intangible assets

1,565

1,829

Long-term prepaid expenses

176,609

171,443

Security deposits

410,850

410,850

Deferred investment corporation bond issuance costs

105,248

117,9032,595,177

2,602,930¥397,667,590¥400,391,000

Total current assets

Property and Equipment, at Cost:

SubtotalLess accumulated depreciation
Net property and equipment

Investments and Other Assets:

Total investments and other assets

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

26

Thousands of Yen
As of October 31, 2011

As of April 30, 2012

LIABILITIESCurrent Liabilities:
Trade accounts payable¥636,473¥1,028,306

Other accounts payable

998,833

1,516,994

3,900,000

7,900,000-

5,000,000

50,000,000

39,000,000

759,986

790,967

304

297

-

215,643

1,894,409

1,864,744

-

1,540

87,426

126,419

58,277,431

57,444,910

Investment corporation bonds

39,500,000

39,500,000

Long-term debt

90,000,000

93,250,000

Security deposits from tenants

20,431,037

20,110,591

1,105

2,783

Total long-term liabilities

149,932,142

152,863,374

Total Liabilities

208,209,573

210,308,284

185,455,447

185,455,447

100,000-

Retained earnings

3,902,570

4,627,269

Total surplus

4,002,570

4,627,269

Total unitholders’ equity

189,458,017

190,082,716

Total Net Assets

189,458,017

190,082,716

Total Liabilities and Net Assets¥397,667,590¥400,391,000

Short-term debt
Current portion of investment corporation bonds
Current portion of long-term debt
Accrued expenses
Accrued income taxes
Accrued consumption taxes
Rent received in advance
Provision for loss on disaster
Other current liabilities
Total current liabilities

Long-term Liabilities:

Other long-term liabilities

NET ASSETS
Unitholders’ Equity:
Unitholders’ capital
Surplus
Voluntary reserve
Reserve for reduction entry

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

27

Statement of Income and Retained Earnings
Thousands of Yen
For the period
from November 1, 2011
to April 30, 2012

For the period
from May 1, 2011
to October 31, 2011

Operating Revenues and Expenses
Operating Revenues:
Real estate rental revenues
Gain on sales of real estate
Operating Expenses:
Real estate rental expenses
Loss on sales of real estate
Asset management fees
Administrative service and custodian fees
Other operating expenses¥12,441,505¥12,520,177-

1,116,900

12,441,505

13,637,077

5,726,470

6,110,488-

105,767

1,001,973

990,286

93,043

93,81590,973

117,415

6,912,459

7,417,771

5,529,046

6,219,306

3,091

3,370

54,631

131,53157,722

134,901

1,044,038

1,097,075

121,780

112,153

419,020429,978

12,655

13,22585,93973,707

1,683,432

1,726,138

Ordinary Income

3,903,336

4,628,069

Income before Income Taxes

3,903,336

4,628,069

922

974

3

8

3,902,411

4,627,087

159

182

¥3,902,570¥4,627,269

Operating Profit

Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Other non-operating revenues
Non-Operating Expenses:
Interest expense
Loan arrangement fees
Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance costs
Other non-operating expenses

Income Taxes:
Current
Deferred
Net Income
Retained earnings brought forward
Retained Earnings at End of Period
The accompanying notes to financial statements are an integral part of these statements.

28

Statement of Changes in Net Assets
For the period from November 1, 2011 to April 30, 2012
Thousands of Yen

Unitholders’ Equity
Surplus

Balance as of October 31, 2011

Voluntary
Reserve

Unitholders’Capital

Units

Reserve for
Reduction
Entry

Retained
Earnings

Total Surplus

Total Unitholders’EquityTotal
Net Assets

305,123¥185,455,447- ¥4,627,269¥4,627,269¥190,082,716¥190,082,716

Cash distribution paid--

- (4,527,110)(4,527,110)(4,527,110)(4,527,110)

Provision of reserve for
reduction entry--

100,000(100,000)---

Net income

-

-

-

3,902,411

3,902,411

3,902,411

3,902,411

305,123¥185,455,447¥100,000 ¥3,902,570¥4,002,570¥189,458,017¥189,458,017

Balance as of April 30, 2012

For the period from May 1, 2011 to October 31, 2011
Thousands of Yen

Unitholders’ Equity
Surplus
Voluntary
Reserve

Unitholders’Capital

Units

Total Unitholders’EquityTotal
Net Assets

Retained
Earnings

Total Surplus- ¥4,428,127¥4,428,127¥189,883,574¥189,883,574

Reserve for
Reduction
Entry

Balance as of April 30, 2011

305,123¥185,455,447

Cash distribution paid--

- (4,427,945) (4,427,945)(4,427,945)(4,427,945)

Net income

-

-

-

305,123¥185,455,447

Balance as of October 31, 2011

4,627,087

4,627,087

4,627,087

4,627,087- ¥4,627,269¥4,627,269¥190,082,716¥190,082,716

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

29

Statement of Cash Flows
Thousands of Yen
For the period
from November 1, 2011
to April 30, 2012

For the period
from May 1, 2011
to October 31, 2011

Cash Flows
Cash Flows from Operating Activities
Income before income taxes¥3,903,336¥4,628,069

Depreciation

1,717,655

1,732,902

Amortization of long-term prepaid expenses

10,426

7,186

Amortization of investment corporation bonds issuance costs

12,655

13,225(Decrease) in provision for loss on disaster(1,540)(46,796)

Interest income(3,091)(3,370)Interest expense

1,463,058

1,527,053

Loss on disposal of property and equipment

2,707

764

Decrease (Increase) in rental receivables

321,062(362,513)(Increase) in consumption taxes receivable(157,795)-(Decrease) Increase in trade accounts payable(391,833)

410,036(Decrease) in other accounts payable(256,954)(558,231)(Decrease) Increase in accrued consumption taxes(215,643)

49,276

Increase (Decrease) in rent received in advance

29,664(64,736)

Decrease in tangible fixed assets in trust due to sales
Changes in other current assets/liabilities
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by operating activities-

8,101,016(27,767)(80,087)

6,405,940

15,353,794

3,091

3,370

(1,494,038)(1,566,498)(914)(1,049)4,914,079

13,789,617

Cash Flows from Investing Activities
Payments for purchases of property and equipment(9,085,648)(865,747)

Reimbursement of security deposits to tenants(734,341)(1,419,701)

Proceeds from security deposits from tenants

1,054,787

783,304

Net cash used in investing activities(8,765,202)(1,502,144)

Proceeds from short-term debt

1,000,000

2,900,000

Cash Flows from Financing Activities
Repayment of short-term debt

(5,000,000)(4,800,000)

Proceeds from long-term debt

19,000,000

17,900,000

Repayment of long-term debt

(11,250,000)(19,250,000)

Redemption of investment corporation bonds(5,000,000)-

Distributions to unitholders(4,523,856)(4,429,008)

Net cash used in financing activities(5,773,856)(7,679,008)

Net (Decrease) Increase in Cash and Cash Equivalents(9,624,979)

4,608,465

Cash and Cash Equivalents at Beginning of Period

36,317,667

31,709,202

Cash and Cash Equivalents at End of Period¥26,692,688¥36,317,667

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

30Notes to Financial Statements
1.

ORGANIZATION
Nomura Real Estate Office Fund, Inc. (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, Inc.
On August 7, 2003, the Company was incorporated under the Act on Investment Trusts and Investment Corporations (the“Investment Trust Act”) of Japan. On December 4, 2003, the Company was listed on the Tokyo Stock Exchange as the 9th J-REIT
and started operations on the following day. As of April 30, 2012, the Company owned a portfolio of 51 office properties containing
an aggregate of approximately 406,640.49 square meters of leasable area and leased office space to 784 tenants.

2.

BASIS OF PRESENTATIONThe 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 Financial Instruments and Exchange Act ofJapan, the Investment Trust Act of Japan and related regulations, which are different in certain respects as to the application anddisclosure 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 certain information that might not be required under Japanese GAAP but ispresented herein as additional information. Amounts have been rounded to the nearest thousand of yen in the accompanying
financial statements and the notes thereto, whereas amounts were truncated in the Japanese financial statements prepared inaccordance with Japanese GAAP.
The Company’s fiscal period is a six-month period which ends at the end of April or October. The Company does not prepare
consolidated financial statements because it has no subsidiaries.

3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESCash 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 an insignificant risk of market value fluctuation, and with a maturity of three months or less whenpurchased.

Property and equipment (Except for leased assets)
Property and equipment are stated at cost, which includes the purchase price and related costs for acquisition, less accumulated
depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the fixed assets outlined
below:
Buildings
Structures
Machinery and equipment
Tools, furniture and fixtures

3 - 70 years
2 - 45 years
3 - 15 years
2 - 18 years

Intangible assets (Except for leased assets)
Intangible assets are amortized by the straight-line method.

Leased Assets
Depreciation of leased assets under finance lease transactions, excluding those in which the ownership of the leased assets is deemed
to be transferred to the lessee, is calculated by the straight-line method, over the lease term with no residual value.

Impairment of fixed assets
The Company reviews fixed assets for impairment whenever events or changes in circumstances indicate that the carrying value of
its fixed assets may not be recoverable. An impairment loss is recognized if the carrying value of an asset exceeds the aggregate
estimated future cash flows. If a fixed asset is determined to be impaired, it is written down to its recoverable amount and thewrite-down is recorded as an impairment loss during the period in which it occurs. No impairment losses have been recognized todate.

Deferred investment corporation bond issuance costs
Deferred investment corporation bond issuance costs are amortized by the straight-line method over the respective terms of thebonds.

31

Provision for loss on disaster
Provision for loss on disaster is recorded at the amount estimated to provide for possible repair and recovery costs arising from theGreat East Japan Earthquake.

Accounting treatment of beneficial interests in real estate
All assets and liabilities held in trust, for which the real estate in possession of the Company was entrusted, and all related earnings
and expenses incurred are reflected in the accompanying balance sheet and statement of income and retained earnings, respectively.

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 their amounts arereasonably estimated.

Property related taxes
Property in Japan is subject to property taxes, urban planning taxes and depreciable asset taxes on a calendar year basis. These
property related taxes are generally charged to income during the period.
The seller of a property is liable for property related taxes for the period from the purchase date through the end of that calendar year
because taxes are imposed on the owner registered in the record as of January 1 for the entire year based on the assessment made by
the local government. The amount applicable to the buyer of a property is usually settled between each party and capitalized as partof the acquisition cost of the property. The capitalized property related taxes amounted to ¥18,835 thousand for the six-month
period ended April 30, 2012.

Income taxes
Deferred tax assets and liabilities are computed based on the differences between the financial statements and income tax bases ofassets and liabilities using the applicable statutory tax rates.

Consumption taxes
Consumption taxes received and paid are not included in the accompanying statement of income and retained earnings.

Derivative financial instruments
The Company utilizes interest-rate swap contracts as derivative financial instruments only for the purpose of hedging its exposure tochanges in interest rates. The Company deferred recognition of gains or losses resulting from changes in the fair value ofinterest-rate swap contracts which meet the criteria for deferred hedge accounting.
Although the deferred hedge treatment is generally applied, the Company applies special treatment to those interest-rate swap
contracts that meet the criteria for such special treatment. Under the special treatment, interest-rate swaps are not remeasured at fairvalue; instead, the net amount paid or received under the interest rate swap contract is recognized and included in interest expense or
income.

4.

CASH AND CASH EQUIVALENTS
Cash and cash equivalents as of April 30, 2012 and October 31, 2011 consist of the following:Thousands of Yen
As of April 30, 2012

As of October 31, 2011

Cash and bank deposits¥26,692,668¥36,317,667

Cash and cash equivalents¥26,692,668¥36,317,667

32

5.

SCHEDULE OF PROPERTY AND EQUIPMENT
Property and equipment as of April 30, 2012 and October 31, 2011 consist of the following:Thousands of Yen
As of April 30, 2012Land
Buildings and structures
Accumulated depreciation
Machinery and equipment
Accumulated depreciation
Tools, furniture and fixtures
Accumulated depreciation
Construction in progress
Land in trust
Buildings and structures in trust
Accumulated depreciation
Machinery and equipment in trust
Accumulated depreciation
Tools, furniture and fixtures in trust
Accumulated depreciation
Leased assets in trust
Accumulated depreciation
Construction in progress in trust
Total

6.

Acquisition Costs¥ 61,683,840
31,128,337(3,545,375)
696,224(183,693)
15,727(5,045)201,783,441
95,431,261(20,009,206)
947,131(546,525)
288,144(147,857)
30,947(26,284)
46,575¥367,587,642

As of October 31, 2011

Book Value¥ 61,683,840
27,582,962
512,531
10,682201,783,441
75,422,055
400,606
140,287
4,663
46,575¥367,587,642

Acquisition Costs¥ 57,405,168
27,583,735(3,109,853)
624,533(158,921)
14,634(3,893)201,783,441
94,535,051(18,801,540)
947,132(516,690)
271,827(133,065)
30,947(22,893)
40,395¥360,490,008

Book Value¥ 57,405,168
24,473,882
465,612
10,741
201,783,441
75,733,511
430,442
138,762
8,054
40,395¥360,490,008

SHORT-TERM DEBT
Short-term debt as of April 30, 2012 and October 31, 2011 consist of the following:Thousands of Yen
As of April 30, 2012
Weighted-averageinterest rate
Amount(Note 1)-

Unsecured loans from a bank due on December 24, 2011

As of October 31, 2011
Weighted-averageinterest rate
Amount(Note 1)
¥1,000,000
0.73643%

Unsecured loans from banks due on February 26, 2012--

4,000,000

0.78643%

Unsecured loans from banks due on February 26, 2012--

11,000,000

1.89764%

Unsecured loans from banks due on June 24, 2012

¥1,400,000

0.73643%

1,400,000

0.73643%

Unsecured loans from banks due on June 24, 2012

12,000,000

1.39575%

12,000,000

1.39575%

Unsecured loans principally from insurance companies due on August 26,
2012
Unsecured loans from banks due on August 26, 2012

5,000,000

1.43750%

5,000,000

1.43750%

1,500,000

0.73643%

1,500,000

0.73643%

Unsecured loans from a financial institution due on August 26, 2012

1,000,000

1.53625%

1,000,000

1.53625%

Unsecured loans from banks due on August 26, 2012

7,500,000

1.46000%

7,500,000

1.46000%

Unsecured loans from banks due on September 25, 2012

2,000,000

1.61150%

2,000,000

1.61150%

Unsecured loans from banks due on November 4, 2012

10,000,000

1.51175%--

Unsecured loans from a bank due on December 26, 2012

1,000,000

0.63643%--

Unsecured loans from banks due on December 27, 2012

5,000,000

1.87200%--

Unsecured loans from a bank due on February 26, 2013

1,000,000

1.75250%--

Unsecured loans from an insurance company due on February 26, 2013

2,000,000

1.99250%--

Unsecured loans from banks due on February 26, 2013

4,000,000

1.14071%--

500,000

1.97000%

500,000

1.97000%

Unsecured loans from a bank due on June 25, 2016 (Note 2)
Total
Note 1:¥53,900,000¥46,900,000
The weighted-average interest rate is weighted by the balance of each borrowing at the end of the period 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, theswapped interest rates are used to calculate the weighted average of interest.
Note 2: Installments of ¥250 million will be made on the 25th day of every sixth month starting on December 25, 2009, with the remaining paymentof ¥6,750 million to be repaid on June 25, 2016.

The Company entered into ¥40,000 million credit facilities in the form of commitment lines with five financial institutions for thesix-month periods ended April 30, 2012 and October 31, 2011. The total unused amounts of such credit facilities were ¥40,000
million as of April 30, 2012 and October 31, 2011.

33

7.

LONG-TERM DEBT
Long-term debt as of April 30, 2012 and October 31, 2011 consist of the following:
As of October 31, 2011

As of April 30, 2012

AmountWeighted-averageAmountWeighted-average(Thousands of(Thousands ofinterest rateinterest rate
Yen)
Yen)
(Note 1)
(Note 1)
Unsecured loans from banks due on November 4, 2012--

¥10,000,000

1.51175%

Unsecured loans from banks due on December 27, 2012--

5,000,000

1.87200%

Unsecured loans from a bank due on February 26, 2013--

1,000,000

1.75250%

Unsecured loans from an insurance company due on February 26, 2013--

2,000,000

1.99250%

Unsecured loans from banks due on February 26, 2013--

4,000,000

1.14071%

Unsecured loans from a bank due on June 24, 2013

¥2,000,000

1.14050%

2,000,000

1.14050%

Unsecured loans from an insurance company due on June 24, 2013

1,000,000

0.88643%

1,000,000

0.88643%

Unsecured loans from a bank due on August 26, 2013

2,500,000

0.98550%

2,500,000

0.98550%

Unsecured loans from a bank due on August 27, 2013

500,000

0.70643%--

Unsecured loans from banks due on December 8, 2013

7,500,000

1.68680%

7,500,000

1.68680%

Unsecured loans principally from banks due on February 26, 2014

5,500,000

0.99071%

5,500,000

0.99071%

Unsecured loans from insurance companies due on March 19, 2014

4,000,000

1.98000%

4,000,000

1.98000%

Unsecured loans from banks due on June 10, 2014

3,000,000

0.91900%

3,000,000

0.91900%

Unsecured loans from banks due on August 26, 2014

6,000,000

0.83875%

6,000,000

0.83875%

Unsecured loans from banks due on August 26, 2014

2,000,000

0.83643%

2,000,000

0.83643%

Unsecured loans from banks due on December 24, 2014

6,350,000

1.55800%

6,350,000

1.55800%

Unsecured loans from an insurance company due on February 26, 2015

3,000,000

1.91875%

3,000,000

1.91875%

Unsecured loans from a financial institution due on February 26, 2015

3,000,000

1.69300%

3,000,000

1.69300%

Unsecured loans principally from insurance companies due on June 24, 2015

8,000,000

2.31750%

8,000,000

2.31750%

Unsecured loans from an insurance company due on August 26, 2015

1,000,000

1.31125%

1,000,000

1.31125%

Unsecured loans from banks due on February 27, 2016

5,500,000

0.90800%--

Unsecured loans from banks due on August 26, 2016

3,000,000

1.10100%

3,000,000

1.10100%

Unsecured loans from banks due on February 26, 2017

1,000,000

1.07450%--

Unsecured loans from banks due on June 10, 2017

3,900,000

1.43500%

3,900,000

1.43500%

Unsecured loans from banks due on August 27, 2017

9,000,000

1.12850%--

Unsecured loans from a bank due on February 26, 2018

1,000,000

1.84650%

1,000,000

1.84650%

Unsecured loans from banks due on February 26, 2019

3,000,000

1.44450%--

Unsecured loans from a bank due on June 25, 2016 (Note 2)

8,250,000

1.97000%

8,500,000

1.97000%

Total¥93,250,000¥90,000,000

Note 1:

The weighted-average interest rate is weighted by the balance of each borrowing at the end of the period 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 average of interest.
Note 2: Installments of ¥250 million will be made on the 25th of every sixth month starting on December 25, 2009, with the remaining paymentof ¥6,750 million to be repaid on June 25, 2016.

The scheduled repayment amounts of long-term debt for each of the five years after the balance sheet date (excluding the current
portion of long-term debt) are as follows.
Thousands of Yen

Long-term debt

1-2 years

2-3 years

3-4 years

4-5 years

23,500,000

23,850,000

15,000,000

10,750,000

34

8.

INVESTMENT CORPORATION BONDS
Investment Corporation Bonds
Details of investment corporation bonds outstanding are summarized as follows:
As of October 31, 2011
As of April 30, 2012
AmountWeighted- averageAmountWeighted- average(Thousands of Yen)
interest rate
(Thousands of Yen)
interest rate
First Series of Unsecured Investment Corporation Bonds
Due on March 16, 2015
Second Series of Unsecured Investment Corporation Bonds
Due on March 16, 2020
Fourth Series of Unsecured Investment Corporation Bonds
Due on November 30, 2015
Fifth Series of Unsecured Investment Corporation Bonds
Due on March 19, 2012
Sixth Series of Unsecured Investment Corporation Bonds
Due on March 17, 2017
Seventh Series of Unsecured Investment Corporation Bonds
Due on March 17, 2028
Eighth Series of Unsecured Investment Corporation Bonds
Due on November 26, 2014
Ninth Series of Unsecured Investment Corporation Bonds
Due on November 24, 2017
Total

¥5,000,000

1.85000%¥5,000,000

1.85000%

5,000,000

2.47000%

5,000,000

2.47000%

10,000,000

2.05000%

10,000,000

2.05000%--

5,000,000

1.61000%

5,000,000

2.21000%

5,000,000

2.21000%

4,500,000

2.90000%

4,500,000

2.90000%

6,000,000

0.94000%

6,000,000

0.94000%

4,000,000

1.52000%

4,000,000

1.52000%¥44,500,000¥39,500,000

The scheduled redemption amounts of investment corporation bonds for each of the five years after the balance sheet date are as follows.

Investment Corporation Bonds

9.

Within a year－

1-2 years－

2-3 years
11,000,000

3-4 years
10,000,000

Thousands of Yen
4-5 years
5,000,000

UNITHOLDERS’ EQUITYThe Company issues only non-par value investment units in accordance with the Investment Trust Act. The entire amount of theissue price of new units is designated as stated capital. The Company is required to maintain net assets of at least ¥50,000 thousandas set forth in the Investment Trust Act.

10. PER UNIT INFORMATIONThe net asset values per unit and the net income per unit as of April 30, 2012 and October 31, 2011 were as follows:

Net asset values per unit
Net income per unit

For the period
from November 1, 2011
to April 30, 2012
¥620,923

For the period
from May 1, 2011
to October 31, 2011
¥622,970¥12,789¥15,164

The net income per unit is calculated by dividing net income by the weighted-average number of units outstanding for the respective
six-month period.
Note: The basis for calculating net income per unit is as follows.
For the period
from November 1, 2011
to April 30, 2012
¥3,902,411

Net income (Thousands of Yen)

For the period
from May 1, 2011
to October 31, 2011
¥4,627,087

Amount not available to ordinary unitholders (Thousands of Yen)--

Net income available to ordinary unitholders (Thousands of Yen)

¥3,902,411¥4,627,087

305,123

305,123

Average number of units during the period

11. RELATED PARTY TRANSACTIONSParent Company and major corporate unitholders
Not applicable
Subsidiaries and affiliates
Not applicable
Fellow subsidiary companies
Not applicable
Directors and major individual unitholders
Not applicable35

12. INCOME TAXESThe Company, as an investment corporation, is subject to corporate income taxes at a statutory tax rate of approximately 40% for thesix-month periods ended April 30, 2012 and October 31, 2011. However, the Company may deduct dividend distributions paid to
its unitholders from its taxable income amounts, provided such distributions meet the requirements under the Act on Special
Measures Concerning Taxation of Japan. Under this act, an investment corporation must meet a number of tax requirements,
including a requirement to distribute in excess of 90% of its distributable income for the fiscal period, in order to deduct suchamounts. 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 in excess of 90% of its distributable income in the form of cash distributions totaling ¥3,902,523
thousand and ¥4,527,110 thousand for the six-month periods ended April 30, 2012 and October 31, 2011, respectively, such
distributions were treated as deductible distributions for purposes of corporate income taxes. The following summarizes thesignificant differences between the statutory tax rate and the effective tax rate:
For the period
from November 1, 2011
to April 30, 201239.33%(39.32)0.01
0.02%

Statutory tax rate
Deductible cash distributions
Other
Effective tax rate

For the period
from May 1, 2011
to October 31, 201139.33%(38.47)(0.84)
0.02%

13. FINANCIAL INSTRUMENTS
Overview(1) Policy for Financial Instruments
Upon acquisition of property-related assets, the Company may raise funds through certain financing methods including borrowings,
issuance of investment corporation bonds including short-term investment corporation bonds (“investment corporation bonds”), andissuance of investment units. In financing through interest-bearing debt, to secure stable financing capability and reduce futurerisks of rising interest rates, the Company’s investment policy is to secure longer-term, fixed-rate borrowings with well-diversified
maturities.
The Company enters into derivative transactions only for the purpose of reducing risk of future interest rate fluctuations and does
not engage in speculative transactions.
(2) Type and Risk of Financial Instruments and Related Risk Management
Debts and investment corporation bonds are primarily used to fund the acquisition of property-related assets as well as the repayment
of debts and redemption of investment corporation bonds. The Company is exposed to liquidity risk of being unable to meet its
obligations on scheduled due dates. The Company controls and limits such risk by diversifying not only the financial institutions,but also the type of financing to include the effective use of surplus funds and direct financing from the capital markets such as
issuance of investment units. In addition, the Company is exposed to the market risk arising from fluctuations in interest rates on
its floating-rate debts. However, the effect of such risk on the operation of the Company is limited by maintaining the LTV ratio at
low levels and the ratio of long-term fixed-rate debts to total debt at high levels. Furthermore, the Company may utilize derivativetransactions (interest-rate swap transactions) as a hedging instrument to reduce the market risk under floating-rate debts by swapping
such floating-rate interest payments for fixed-rate interest payments.
Bank deposits are held as a means of investing surplus funds, and the Company is exposed to the credit risk that financial
institutions may default. However, the effect of such risk is limited by diversifying the financial institutions with which surplus
funds are deposited.
Security deposits represent funds deposited by tenants, and the Company is exposed to the risk of returning deposits in the eventthat a tenant terminates the lease contract. However, the effect of such risk is limited by reserving sufficient funds to allow the
Company to meet the obligation to return such deposits.
(3) Supplementary Explanation on Estimated Fair Value of Financial Instruments
The fair value of financial instruments is based on the quoted market price, if applicable. When there is no quoted market priceavailable, fair value is reasonably estimated. Certain assumptions are used for the estimation of fair value. Accordingly, the resultof such estimation may change if different assumptions are used. Furthermore, the contractual amounts of derivative transactions
stated in “19. Derivatives and Hedge Accounting” below do not represent the market risk involved in these derivative transactions.

36Fair Value of Financial Institutions
For the period from November 1, 2011 to April 30, 2012
The following table summarizes the carrying value and the estimated fair values of financial instruments As of April 30, 2012.
following table does not include financial instruments whose fair value is extremely difficult to estimate (see Note 3).
Carrying Value (Note 1)
10,226,773
16,465,915
26,692,688(3,900,000)(50,000,000)(39,500,000)(90,000,000)(183,400,000)
-

(i)
(ii)

Cash and bank deposits
Cash and bank deposits in trust
Total assets(iii) Short-term debt(iv) Current portion of investment corporation bonds(v)
Current portion of long-term debt(vi) Investment corporation bonds(vii) Long-term debt
Total liabilities(viii) Derivative transactions

Fair Value (Note 1)
10,226,773
16,465,915
26,692,688(3,900,000)(50,138,578)(40,546,695)(91,339,461)(185,924,734)-

The

Thousands of Yen
Difference
138,578
1,046,695
1,339,461
2,524,734-

For the period from May 1, 2011 to October 31, 2011
The following table summarizes the carrying value and the estimated fair values of financial instruments As of October 31, 2011.
The following table does not include financial instruments whose fair value is extremely difficult to estimate (see Note 3).
Carrying Value (Note 1)
20,049,044
16,268,623
36,317,667(7,900,000)(5,000,000)(39,000,000)(39,500,000)(93,250,000)(184,650,000)
-

(i)
(ii)

Cash and bank deposits
Cash and bank deposits in trust
Total assets(iii) Short-term debt(iv) Current portion of investment corporation bonds(v)
Current portion of long-term debt(vi) Investment corporation bonds(vii) Long-term debt
Total liabilities(viii) Derivative transactions

Fair Value (Note 1)
20,049,044
16,268,623
36,317,667(7,900,000)(5,019,520)(39,327,305)(40,438,969)(95,082,670)(187,768,464)-

Thousands of Yen
Difference
19,520327,305
938,969
1,832,670
3,118,464-

Note 1: The numbers in parenthesis indicate liabilities.
Note 2: Method for determining the fair value of financial instruments and derivative transactions(i) Cash and bank deposits and (ii) Cash and bank deposits in trust
As these items are settled within a short-term period, their fair value is nearly equal to the carrying value.
Carrying Value is reported as the Fair Value.

Therefore, for these items, the(iii) Short-term debt
As these items are settled within a short-term period, their fair value is nearly equal to the carrying value.
Carrying Value is reported as the Fair Value.

Therefore, for these items, the(iv) Current portion of investment corporation bonds and (vi) Investment corporation bonds
The fair value of investment corporation bonds issued by the Company is determined based on their market prices.
(v) Current portion of long-term debt and (vii) Long-term debt
For floating-rate long-term debt, the carrying value is reported as it is considered to be approximately equal to the fair value because such debt
reflects the market interest rates within a short-term period. (However, the fair value of certain floating-rate long-term debt that qualifies forthe special treatment of interest-rate swaps (see “19. Derivatives and Hedge Accounting”) is determined by discounting the sum of its
principal and interest payments net of any cash flows from the interest-rate swap at a rate reasonably estimated to be applicable to similar
fixed-rate debt.) The fair value of fixed-rate long-term debt is determined by discounting the sum of its principal and interest payments at a
rate reasonably estimated to be applicable to similar fixed-rate debt.
(viii) Derivative transactions
Refer to “19. Derivatives and Hedge Accounting.”
Note 3: The fair value of security deposits (with a carrying value of ¥4,217,187 thousand as of April 30, 2012 and ¥3,882,475 thousand as of October
31, 2011) and security deposits in trust (with a carrying value of ¥16,213,850 thousand as of April 30, 2012 and ¥16,228,116 thousand as of
October 31, 2011) that have been deposited from tenants under lease contracts are not disclosed because they do not have any market price andtheir effective deposit period from the lease inception to tenant’s termination of the lease contract cannot be reliably determined, thus making it
impossible to reasonably estimate their future cash flows, and therefore, it is considered to be extremely difficult to estimate their fair value.

Note 4: Redemption schedule for cash and bank deposits and cash and bank deposits in trust as of April 30, 2012
Thousands of Yen
Due within one
year

After one year,
within two years

After two years,
within three years

After three years,
within four years

After four years,
within five years

After five years

Cash and bank deposits

10,226,773

－

－

－

－

－

Cash and bank deposits in trust
Total

16,465,915
26,692,688

－
－

－
－

－
－

－
－

－
－

37

Redemption schedule for cash and bank deposits and cash and bank deposits in trust as of October 31, 2011
Thousands of Yen
Due within one
year

After one year,
within two years

After two years,
within three years

After three years,
within four years

After four years,
within five years

After five years

Cash and bank deposits

20,049,044

－

－

－

－

－

Cash and bank deposits in trust

16,268,623

－

－

－

－

－

Total

36,317,667

－

－

－

－

－

Note 5: Redemption schedule for investment corporation bonds and debt as of April 30, 2012
Thousands of Yen
Due within one
year

After one year,
within two years

After two years,
within three years

After three years,
within four years

After four years,
within five years

After five years

Short-term debt
Investment corporation bonds

3,900,000－－－－
11,000,000－
10,000,000－
5,000,000－
13,500,000

Long-term debt
Total

50,000,000
53,900,000

23,500,000
23,500,000

23,850,000
34,850,000

15,000,000
25,000,000

10,750,000
15,750,000

16,900,000
30,400,000

After three years,
within four years

After four years,
within five years

Redemption schedule for investment corporation bonds and debt as of October 31, 2011
Thousands of Yen
Due within one
year

After one year,
within two years

After two years,
within three years

After five years

Short-term debt

7,900,000

－

－

－

－

－

Investment corporation bonds
Long-term debt

5,000,000
39,000,000－
28,000,000－
28,500,000

11,000,000
21,850,000

10,000,000
10,000,000

18,500,000
4,900,000

Total

51,900,000

28,000,000

28,500,000

32,850,000

20,000,000

23,400,000

14.

14.

INVESTMENT AND RENTAL PROPERTIESThe Company owns in its portfolio certain office buildings (including land) for lease located in Tokyo and other areas.
table summarizes the carrying value and the estimated fair value of these properties.

For the period
from November 1, 2011
to April 30, 2012

The following

Thousands of Yen
For the period
from May 1, 2011
to October 31, 2011

Carrying Value
Balance at beginning of the period¥362,390,913¥371,136,575

Change during the period

7,097,634(8,745,662)

Balance at end of the period

369,488,547

362,390,913¥333,410,000¥326,690,000

Fair value

Note 1:The Carrying Value represents the acquisition cost less accumulated depreciation.

Note 2:The major increase in the Carrying Value during the period ended April 30, 2012 was mainly due to the acquisitions of PMO
Hatchobori (¥2,457,762 thousand), PMO Higashi-nihonbashi (¥1,502,783 thousand) and PMO Akihabara (¥3,834,381
thousand) .The major decrease in the Carrying Value during the period ended October 31,2011 was mainly due to the sale ofthe quasi-co-ownership of NOF Toyo-cho Building (¥4,781,689 thousand), Sunworld Yotsuya Building (¥783,711 thousand)and Central Kyobashi Building (¥2,535,615 thousand) .

Note 3:

The fair value as of April 30, 2012 and October 31,2011 represents the sum of the appraisal values estimated by external realestate appraisers.

The real estate rental revenues and expenses for the six-month period ended April 30, 2012 and October 31, 2011 are presented in “16.
Breakdown of Real Estate Rental Revenues and Expenses.”

15.

SEGMENT INFORMATION

For the period from November 1, 2011 to April 30, 2012 and from May 1, 2011 to October 31, 2011
Segment Information
Since the Company has been engaged in the real estate leasing business as a single segment, segment information has been omitted.

Related Information
1. Information about products and services
Since revenues from external customers of products and services within a single segment are more than 90 percent of total operating
revenues, information about products and services has been omitted.

38

2. Information about geographical areas(1) Revenues
Since more than 90 percent of the total operating revenues were generated from external customers in Japan, geographicalbreakdown of revenues has been omitted.
(2) Property and equipment
Since more than 90 percent of the total property and equipment on the balance sheet are located in Japan, geographicalbreakdown of property and equipment has been omitted.

3. Information about major clients
Since no single external client represents 10 percent or more of the Company’s total operating revenues, information about majorclients has been omitted.

16.

BREAKDOWN OF REAL ESTATE RENTAL REVENUES AND EXPENSES
Real estate rental revenues and expenses for the six-month period ended April 30, 2012 and October 31, 2011 consist of thefollowing:Thousands of Yen
For the period
from November 1, 2011
to April 30, 2012
Real estate rental revenues
Rental revenues
Rental revenues
Common area charges
Other rental revenues
Parking revenues
Incidental income
Other miscellaneous revenues
Real estate rental expenses
Property management costs
Property management fees
Property and other taxes
Utility expenses
Casualty insurance
Repairs and maintenance
Depreciation
Other rental expenses
Real estate rental profits

17.

For the period
from May 1, 2011
to October 31, 2011¥12,441,505¥12,520,177

11,245,514
8,899,648
2,345,866
1,195,991
272,242851,849
71,900

11,223,340
8,839,500
2,383,840
1,296,837
264,347
945,233
87,257

5,726,470

6,110,488

1,148,259
241,775
1,170,874
975,043
21,297
246,710
1,717,391
205,121

1,157,386
243,760
1,211,889
1,048,075
22,869431,742
1,732,638
262,129¥6,715,035¥6,409,689

BREAKDOWN OF GAIN AND LOSS ON SALES OF REAL ESTATE
Gain and Loss on sales of real estate for the six-month period ended April 30, 2012 and October 31, 2011 consist of the following:Thousands of Yen
For the period
from November 1, 2011
to April 30, 2012

For the period
from May 1, 2011
to October 31, 2011

Gain on sales of real estate
Proceeds from sales of real estate-¥8,455,000

Cost of sales of real estate-

7,317,305

Other related sales expenses-

20,795Gain on sales of real estate-¥1,116,900

Proceeds from sales of real estate-¥680,000Cost of sales of real estate-783,711

Other related sales expenses

-

2,056

Loss on sales of real estate-¥105,767

Loss on sales of real estate

39

18.

LEASES
Finance lease agreements, excluding those in which the ownership of the leased assets is deemed to be transferred to the lessee, aremainly for tools, furniture and fixtures in trust. Depreciation of leased assets under finance lease transactions excluding those in which
the ownership of the leased assets is deemed to be transferred to the lessee are calculated by the straight-line method, over the lease
period with no residual value.
The Company, as a lessor, enters into lease agreements for which fixed monthly rents are due in advance with a lease term ofgenerally two years for offices. The future minimum rental revenues under existing non-cancelable operating lease agreements as ofApril 30, 2012 and October 31, 2011 are summarized as follows:

Due within one year
Due after one year
Total

19.

Thousands of Yen
As of October 31, 2011
¥4,291,036
18,689,202¥22,980,238

As of April 30, 2012
¥4,200,301
16,953,403¥21,153,704

DERIVATIVES AND HEDGE ACCOUNTING

Derivative transactions As of April 30, 2012
(1) There were no derivative financial instruments not subject to hedge accounting.
(2) Derivative financial instruments subject to hedge accounting were as follows:
Thousands of Yen
Notional amount

Hedge accounting
methodType of derivative
instruments

Main hedged item

Special treatment ofinterest-rate swaps

Interest-rate swaps:
Received/floating
and paid/fixedLong-term debt

Due after one year
93,250,000

56,750,000

Fair value

Method used for
determining fair value(*)* Since the derivative financial instruments qualifying for the special treatment of interest-rate swaps are accounted for as one
transaction together with their hedged item, long-term debt, the fair value of these derivatives is included in that of related long-term
debt (see “13. Financial Instruments (Note 2) (v) Current portion of long-term debt and (vii) Long-term debt” above).

Derivative transactions As of October 31, 2011
(1) There were no derivative financial instruments not subject to hedge accounting.
(2) Derivative financial instruments subject to hedge accounting were as follows:
Thousands of Yen
Notional amount

Hedge accounting
methodType of derivative
instruments

Main hedged item

Special treatment ofinterest-rate swaps

Interest-rate swaps:
Received/floating
and paid/fixedLong-term debt

Due after one year
85,750,000

53,250,000

Fair value

Method used for
determining fair value(*)* Since the derivative financial instruments qualifying for the special treatment of interest-rate swaps are accounted for as one transaction
together with their hedged item, long-term debt, the fair value of these derivatives is included in that of related long-term debt (see “13.
Financial Instruments (Note 2) (v) Current portion of long-term debt and (vii) Long-term debt” above).

40Report of Independent Auditors

41

Business Structure

Corporate Data
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
Stock Listing
Tokyo Stock Exchange (Securities Code: 8959)
Fiscal Period
Six months ending on April 30 and October 31
Capital¥185,455,446,935 (as of April 30, 2012)
Number of Units Issued
305,123 (as of April 30, 2012)

Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation
1-4-5 Marunouchi Chiyoda-ku, Tokyo 100-8212, Japan
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
Independent Auditors
Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg. 2-2-3 Uchisaiwai-cho Chiyoda-ku,
Tokyo 100-0011, Japan
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

Number of Unitholders
12,713 (as of April 30, 2012)42

Nomura Office Fund’s Website
The Company strives to provide accurate and timely disclosure of information by utilizing the website.
・Strength of NOF, Asset Management Policies, Corporate Profile

・Portfolio Summary, Portfolio Data, Occupancy Rates, Major Tenants

・News, Latest Data, Performance, Distributions, Calendar

We continue to provide information timely and strive to enhance the contents of the website.

Disclaimer
This semiannual report includes translations of certain Japanese documents originally filed under the Financial Instruments andExchange Act of Japan. This report was prepared in English solely for the convenience of and reference by readers outside Japanand should not be considered as a disclosure statement. The original Japanese documents always govern the meaning andinterpretation.
In 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 theirown 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 those differences might affect the financial
information contained herein.
This document has been prepared for the purpose of provision of information only, and should not be construed as an offer,solicitation or commercial conduct of any nature associated with any specific products. Investors wishing to purchase theinvestment units of Nomura Real Estate Office Fund, Inc. should contact their own securities brokers or dealers. A fee may becharged by your financial instruments business operator in relation to the sale or purchase of investment units.
Although the information contained in this document is intended to be complete and thorough, there is no assurance of precisionand safety of the same. Please note that the contents of this document is subject to change or cancellation without prior notice.
It is prohibited to make duplication, reproduction, distribution or use of any part or whole of the information contained in thisdocument without express prior written consent.

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