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

Contents
To Our Investors........................................................................................................2
Highlights of the Fifteenth Fiscal Period . ...............................................................3
Management Summary of the Fifteenth Fiscal Period . ........................................4
Portfolio Highlights....................................................................................................6
Financial Status..........................................................................................................8
Summary of Portfolio Properties...........................................................................10
Major Properties......................................................................................................12
Profile of the Asset Management Company.........................................................14
Performance Report................................................................................................15
Financial Section......................................................................................................33
Business Structure/Corporate Data........................................................................50
Website...................................................................................................... Back Cover

I nves t or O r i e n t e d

To Our Investors

Highlights of the Fifteenth Fiscal Period

Dear Investors,

Fifteenth period results

We are delighted to be able to present to you the financial results for the fifteenth fiscal period (endedApril 30, 2011) and report on our activities during the period herein.
We booked operating revenues for this period of ¥13,117 million, current profits of ¥4,503 million, andnet income of ¥4,428 million. Cash distribution per unit was ¥14,512.
In terms of property management, although vacancy rates in ceartain areas have been showing signsof bottoming out in the office leasing market, it continued to experience strong downward pressure on
rents due to heightened cost-consciousness among tenants. Under these circumstances, we actively
engaged in tenant leasing activities and the occupancy rate as of the end of the fifteenth period was
93.8% as continuing stable fund management.
In terms of financing, while the Company continues to maintain close relationships with financial
institutions, it issued ¥10 billion of investment corporation bonds and promoted elongation of repayment
dates/fixation of interest-rates of borrowings, ongoingly ensuring healthy financial conditions.
In this fiscal period, the Company executed the agreement for the sale and purchase of NOF Toyo-cho
Building, divided transfer over two fiscal periods, 15th/16th period, pursuant to the property replacement
strategy. As a result, the transaction enabled to create capacity to acquire new properties and promoted
stable distributions of 15th/16th period by the gain on sale.
The Company will continue to strive for stable asset management in the next fiscal period andthereafter from the mid- to long-term perspectives so as to respond to the needs of our investors for highquality wealth creation.
Lastly, we would like to thank you again for your patronage in the past periods, and would like to ask foryour continued support for the years to come.

Cash distribution per unit

Operating revenues¥¥

Portfolio

14,51251 properties

Number of properties

13,117 million

415,936.86

Total leasable
floor space

Operating profits¥

6,144 million

Total number of tenants

Net income¥

4,428 million

Total acquisition
price

¥

746

376,115 million

4.8 %Average occupancy rate

93.8%

Ratio of long-term debts

75.9%

Average remaining duration of
long-term fixed-rate debts

3.8 years

Ratio of fixed-rate debts

89.2%

Weighted average of interest
rate of the debts

1.65 %NOI return of portfolio

Finance

CHANGES IN UNIT PRICE AND MARKET CAPITALIZATION
Unit Price (¥)

Market Capitalization (¥ mln)

900,000

1,600,000

1,400,000

Market capitalization (as of Apr. 28, 2011) ....¥ 178,191 mln
All-time high price..........................................¥ 1,560,000 per unit
All-time low price...........................................¥ 407,000 per unit

1,200,000

600,000

1,000,000

450,000

800,000

300,000

2nd public offering¥588,000

600,000

Yuichi Maruko
Executive Director
Nomura Real Estate Office Fund, Inc.
2

750,000

400,000

Dec. 42003

3rd public offering¥740,782

4th public offering¥926,100

Apr. 30
2004

Oct. 292004

150,000

5th public offering¥756,560

Initial public offering¥500,000

0

Apr. 282005

Oct. 312005

Apr. 28
2006

Oct. 312006

Apr. 272007

Oct. 312007

Apr. 30
2008

Oct. 312008

Apr. 30
2009

Oct. 30
2009

Apr. 30
2010

Oct. 292010

Apr. 28
2011

3

Management Summary of the Fifteenth Fiscal Period
Activity summary for this period and management strategy for the futureThis section describes the activities of the Company during this period and the management strategy
to be implemented in future periods based on our “Basic Management Policy” and “Mid- to Long-termManagement Strategy” below.
Basic Policies
Secure stable mid- to long-term income

Steady portfolio growth

NRE Tennozu Building
Following the reduction of space leased (withdrew from about 20,000 m2 of exclusive area and the commonarea) by Japan Airlines Co., Ltd., management of this property as a multi-tenant building began in April 2011.
Refurbishment of multi-tenant transition
Following the reduction of space leased by the tenant, the building was refurbished for multi-tenant use.
Standard floors and retail spaces were renovated, and new signage was installed.
[Standard floor renovation][Retail space renovation]
Retail space expanded
into former office space

Mid- to long-term management strategy
Asset management withmid- to long-term vision

Promote diversification of assets
through asset size expansion

Maintain conservative
financial strategy

n Activity summary for this period

Acquisition

Asset Management- Monitored and analyzed market developments by gathering
information on properties- Stabilized distributions by transfer of NOF Toyo-cho Building- Considered replacement of properties to strengthen the portfolio- Improved the occupancy rate of regional cities from 91.6%
to 94.3%- Increased move-in areas by promotion of leasing measures

Financial Activities

IR- Completed refinance totaling ¥22.5 billion- Promoted stabilization of financial conditions by issuinginvestment corporation bonds (¥10 billion)- Credit Rating: AA- (Rating and Investment Information, Inc.)- Participated in events targeted at individual investors(the J-REIT Fair in Osaka, etc.)- Conducted IR activities targeted at domestic and foreign
institutional investors

Elevator hallway

BeforeExclusive area

Leasing status (as of June 30, 2011)
To lease up newly available space, the Company has established a property management system together
with Nomura Real Estate Development Co., Ltd., the sponsor, and is pursuing a leasing strategy making
the most of the building’s competitive strengths.
Tenant target

Leasing strategy
Priority on using the large spaces
available to gain core tenants

 ompanies with facilities or customersC
inside and outside Japan oreign companies, manufacturing-relatedF
companies, carriers, etc.

Profitability Stabilization Measures
1. Utilization of gain on sale of the NOF Toyo-cho Building – Apply funds from the sale toward stabilization of distributions and theacquisition of new properties.
2. Leasing of the NRE Tennozu Building – Use large floor areas as sales point to lease up and relive earnings concerns.
3. Maintenance or improvement of earnings performance for leasing operations – Maintain high occupancy rates and strive to reducebuilding management costs.
4. Maintenance of conservative financial profile – Use maturity diversification and financial strength to manage interest rates.

Impact of the Great East Japan Earthquake
For the Company, the Great East Japan Earthquake of March 11, 2011 resulted in no major harm to either
people or property – including one building located in Sendai. Some damage to facilities and cracks,
however, did result and are being addressed as described below.
- Damage to a chimney and a

NOF Sendai Aoba-dori Bldg. multistoried parking facility(Aoba-ku, Sendai city)- Estimated repair cost: ¥49 million

18 other properties- Cracks, tile damage, etc.
- Estimated repair cost: ¥35 million

 ocus on most attractive tenantFcandidates
H old tours using floors alreadyrenovated for multi-tenant use
D irect sales approaches totargeted companies

 ompanies in industries highly compatibleCwith the Tennozu arean Management strategy for the future

Estimated total portfolio disaster cost:¥85 million (Percent of total acquisition cost: 0.02%)
Excluding ¥10 million in capital expenditures,
extraordinary losses of ¥74 million were recorded forthe 15th periodAfter ompanies planning to cut costs byCconsolidating operations
I T companies, systems companies, softwaredevelopment companies, etc.

• 1,798 m2 lease• Negotiations
underway withmultiple large
tenant candidates

Transfer of the NOF Toyo-cho Building
Pursuant to the property replacement strategy, the Company executed the agreement for the sale andpurchase of NOF Toyo-cho Building in December 2010, divided transfer over two fiscal periods, 15th
(December 8, 2010)/16th (May 10, 2011) period.
Transfer in two fiscal periods(December 8, 2010)

Transfer of 33%(May 10, 2011)

Transfer of 67%

Gain on sale15th Period¥271 million

16th Period¥1,006 million(assumed)• Creation of capacity to acquire newproperties• Gain on sale promoting stable
distributions*The Property is composed of two beneficial interests, in each of which 50% co-ownership interest in the land and building. 33% of the quasi-co-ownership interest in each of
the two beneficial interests transferred on December 8, 2010, and 67% of the quasi-co-ownership interest in each of the two beneficial interests transferred on May 10, 2011.

4

5

Portfolio Highlights

Well Diversified Portfolio

CHANGES IN OCCUPANCY RATE (AVERAGE)
The average occupancy rate maintained stable and high level throughout the fifteenth fiscal period.

Nomura Office Fund has invested in properties focusing on the geographic diversification and

Average occupancy rate (%)

diversification within each property in order to reduce risk of income fluctuation.

100.0

The average occupancy rate at the end of the fifteenth fiscal period: 93.8%.

Total leasable space (000 m2)

94.5

94.2

94.4

94.0

94.6

95.2

438

438

432

432

432

432

90.0

500

93.8

450

415

400

80.0

CHANGES IN SIZE OF PORTFOLIO

500

300

200

46bldgs

50bldgs

50bldgs

51bldgs

51bldgs

37bldgs
376.1
34bldgs
374.5 374.5 387.6 387.6
31bldgs
362.2
30bldgs
28bldgs
317.4
23bldgs
19bldgs
282.8 292.4
18bldgs
259.1
15bldgs
240.8
12bldgs

104.2

127.2

151.5

184.6

210.1

Initial Listing 1st Period 2nd Period 3rd Period 4th Period 5th Period 6th Period 7th Period 8th Period 9th Period 10th Period 11th Period 12th Period 13th Period 14th Period 15th Period
Dec. 2003 Apr. 30, 2004 Oct. 31, 2004 Apr. 30, 2005 Oct. 31, 2005 Apr. 30, 2006 Oct. 31, 2006 Apr. 30, 2007 Oct. 31, 2007 Apr. 30, 2008 Oct. 31, 2008 Apr. 30, 2009 Oct. 31, 2009 Apr. 31, 2010 Oct. 31, 2010 Apr. 30, 2011

DIVERSIFICATION BY AREA AND PROPERTY
The area and property diversification as of the end of the fifteenth fiscal period are as follows.
Area Diversification

Property Diversification (Top 10 Properties and other)

Other Cities
27.7%
Central Tokyo
58.3%
Suburban Tokyo

Other 41 Bldg.
47.9%

14.0%

Note: Central Tokyo— Six central wards consisting of Chiyoda, Chuo, Minato, Shinjuku,
Shinagawa and Shibuya
Suburban Tokyo — Other areas of Tokyo and the Surrounding three prefectures
including Kanagawa, Saitama and Chiba
Other Cities— Major regional cities in other areas
Note: Based on the acquisition price6

NOF Shiba Bldg.
2.7%
Secom Medical Bldg.
3.1%
NOF Shibuya Koen-dori Bldg.
3.2%

Shinjuku Nomura Bldg.
10.3%
NRE Tennozu Bldg.
8.8%
Omron Kyoto
Center Bldg.
6.3%
NOF Nihonbashi
Honcho Bldg.
5.5%
SORA Shin-Osaka 21
5.1%
Tennozu Park Side Bldg.
3.9%
NOF Shinjuku Minamiguchi Bldg.
3.3%

Nov. 30,
2010

Dec. 31,2010

Jan. 31,2011

Feb. 28,
2011

Mar. 31,2011

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

MAJOR TENANTS
Top 10 tenants in the leased space as of the end of the fifteenth fiscal period are as follows.

1
2
3

100

0

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

51bldgs(¥bln)

300

60.0

As indicated below, diversification of the portfolio which has steadily increased since listing.

400

350

70.0

TenantIndustry

Property

Expiry ofcontract

Leasedspace (m2)Weight in
portfolio(%)

Weight fromprevious
Period (%)

OMRON Corporation
Japan Airlines Co., Ltd.
XYMAX AXISCORPORATIONElectronic Devices
AirlineOmron Kyoto Center Bldg.
NRE Tennozu Bldg.

Mar. 29, 2021
Mar. 31, 2015

34,616.84
15,082.43

8.9
3.9

8.4
10.2

NOF Toyo-cho Bldg.

Nov. 30, 201412,206.17

3.1

4.4

Secom Medical Bldg.
Feb. 28, 2025
NOF Sendai Aoba-dori Bldg. Dec. 31, 2012
JCB Sapporo Higashi Bldg.
Feb. 7, 2018
Shinjuku Nomura Bldg.
May 31, 2011
NOF Utsunomiya Bldg.
Dec. 31, 2011
NRE Yotsubashi Bldg.
Nov. 30, 2011
NRE Hiroshima Bldg.
Oct. 31, 2011
Shinjuku Nomura Bldg.
Nov. 30, 2013
NRE Yotsubashi Bldg.
Nov. 30, 2013
Shinjuku Nomura Bldg.
May 31, 2011
NRE Hiroshima Bldg.
Feb. 28, 2012
NOF Surugadai Plaza Bldg.
Mar. 31, 2013
NOF Technoport Kamata
Apr. 30, 2012
Center Bldg.
Faret Tachikawa Center Square Dec. 31, 2011

8,821.24
755.699,062.04
574.111,140.85
1,847.63
2,834.48
4,611.02
1,266.19
4,834.77
283.02
4,160.94

2.3
0.2
2.3
0.2
0.3
0.5
0.7
1.2
0.3
1.2
0.1
1.1

2.1
0.2
2.2
0.1
0.3
0.5
0.7
1.1
0.3
0.9
0.1
1.0

3,813.62

1.0

0.9

255.150.1

0.1

106,166.19

27.2

Real Estate

4

SECOM Co., Ltd.

Services

5

JCB Co., Ltd.

Financing

6

Nomura Facilities Co.,Ltd.

Real Estate

7

Nomura Real Estate
Development Co., Ltd.

Real Estate

8

SOMPO JAPAN
INSURANCE INC.

Insurance

9

KYORIN Holdings, Inc.

Wholesale

10

FUJITSU LIMITEDElectronic Devices

Total

DIVERSIFICATION IN TENANTS’ BUSINESSThe ratio of diversification in tenants’ business by space as of the end of the fifteenth fiscal period is as follows.

Total
746
Tenants

1. Services

22.0%

7. Retail4.4%

2. Electronics

13.1%

8. Airline

4.3%

3. Wholesale

10.1%

9. Financing

3.6%

4. IT

14.5%

10. Construction

2.4%

5. Insurance

4.8%

11. Other 18 Businesses

16.4%

6. Real Estate

4.4%

7

Financial Status

Carried Out Steady Refinancing

DIVERSITY OF REPAYMENT DATES (as of the end of the fifteenth fiscal period)(¥ bln)Nomura Office Fund has the basic financial policy for the purpose of securing financial stability
and avoiding future interest rate risks. In this period, the Company completed the refinancing of¥22.5 billion and outstanding interest-bearing debt as of the end of the fifteenth fiscal period is

30

27.75
24.05

25

Investment Corporation Bonds

23.6

21.25

¥187.9 billion.

Debts

22.25

20

17.25

15
10.25
9.25

THE RATIO OF LONG- AND SHORT-TERM DEBT AND FIXED- AND
FLOATING-RATE DEBT (as of the end of the fifteenth fiscal period)

10

5

4.5

0.25

0

16th
18th
20th
22nd
24th
26th
28th
30th
32nd
34th
36th
38th
40th
42nd
44th
46th
(Oct. 2011)(Oct. 2013)(Oct. 2015)(Oct. 2017)(Oct. 2019)(Oct. 2021)(Oct. 2023)(Oct. 2025)

49th(Apr. 2028)

Ratio of fixed and floating interest-bearing debts(period)

Floating-rate¥20.3 billion

Short-term¥45.3 billion

CHANGES IN AVERAGE DURATION OF LONG-TERM FIXED-RATE DEBTS AND
WEIGHTED AVERAGE OF INTEREST RATE OF THE DEBTS

10.8%

24.1%

Fixed-rate¥167.6 billion

Long-term¥142.6 billion

89.2%

75.9%

Average remaining duration of debts

Average debt rates(year)
Note: “Fixed” includes floating-rate debts
with fixed-rates through interest-rate
swap transactions.

Note: “Short-term” includes current portion of
long-term borrowings.

5.1

6
5

3.8

4.4

3

(¥ mln)Total Amountof Debt
Remaining

LenderTotal Amountof Debt
Remaining

LenderTotal Amountof Debt
Remaining

2

1.00

(%)
3.5

5.5

5.4

4.6

4.9

3.9

3.0

4.5

4.1

4.0

3.3

4

The number of lenders as of the end of the fifteenth fiscal period is 31 financial institutions.
Lender

6.0

7

LIST OF LENDERS

1.10

1.10

1.10

1.30

1.40

1.65

1.63

1.56

1.68

1.68

1.70

1.67

3.8

3.8

1.67

1.65

2.0
1.5
1.0
0.5

1
0

2.5

0.0

Bank of Tokyo-Mitsubishi UFJ

22,400Bank of Fukuoka

3,500

Yamanashi Chuo Bank

1,500

Sumitomo Mitsui Banking Corp.

20,900Norinchukin Bank

3,000

Hyakujushi Bank

1,500

Development Bank of Japan

15,250

Taiyo Life Insurance

3,000

Chiba Bank

1,000

Mitsubishi UFJ Trust and Banking Corp.

11,050Chuo Mitsui Trust and Banking

3,000

Keiyo Bank

1,000

Sumitomo Trust & Banking Corp.

9,900

Hachijuni Bank

2,000

Mitsui Life Insurance

1,000

Mizuho Corporate Bank

6,900

Daido Life Insurance

2,000

Mitsui Sumitomo Insurance

1,000

The Dai-ichi Life Insurance Company

5,000

Zenkyoren

2,000

Sompo Japan Insurance Inc.

1,000

Rating and Investment Information, Inc.

AA-: Issuer rating

StableSumitomo Life Insurance Company

5,000

Mizuho Trust & Banking

2,000

The 77 Bank

1,000

Standard & Poor’s Ratings Japan K.K.

A:

Long-term corporate credit rating

Negative

Nomura Trust and Banking

4,000

Shinkin Central Bank

2,000

Aozora Bank

500

Moody's Japan K.K.

A2:

Issuer rating

Negative

Chugoku Bank

4,000

Nishi-Nippon City Bank

2,000

Iyo Bank

3,500

Hiroshima Bank

1,500
(Reference)

8

5

5

5

The Company has secured financial stability through promotion of long-term, fixed-rate interest-bearing
debt to prepare for the future interest rate hikes.
Ratio of long-term and short-term interest-bearing debts

6.75

5.75

Total borrowings

143,400

Investment Corporation Bonds

44,500

Apr.
2004

Oct.
2004

Apr.
2005

Oct.
2005

Apr.
2006

Oct.
2006

Apr.
2007

Oct.
2007

Apr.
2008

Oct.
2008

Apr.
2009

Oct.
2009

Apr.
2010

Oct.
Apr.
2010 2011(End of 15th Period)

CREDIT RATINGS (as of the end of the fifteenth fiscal period)
Rating Company

RatingOutlook9

Summary of Portfolio Properties
MAP
No.

JR Chuo Line

18JR
Shinjuku-ku
Sobu Line
14
01 Shinjuku 23
1221
09
Chiyoda-ku
15 03 1607 Tokyo05
20 17
Shibuya-ku
Chuo-ku
11
22
06
10 Shibuya Minato-ku
08

22
23

37
36 38

JR

ano
Yam

ine
te L

39

Sendai40 Utsunomiya
Tokyo

Fukuoka

51

50

49

44 43
Kyoto

48
47

42 41
Nagoya46
45

Saitama27

Shin-Yokohama

31
Hachioji

30 Kichijoji

Tachikawa

Kanagawa

Name of Property

29

Location

Chiba

Shinjuku-ku, Tokyo

Ratio
(%)

2,465.86

Jun. 25, 2008

1,750

0.5

2,367.51

Jun. 25, 2008

177,033.95

778

0.2

219,208

58.3

Date Acquired

NRE Ueno Building

Taito-ku, Tokyo

4,869.81

Jan. 14, 2009

7,830

2.1

NOF Toyo-cho Building

Koto-ku, Tokyo

12,206.17

Dec. 5, 2003

5,058

1.3

26

NOF Technoport Kamata Center Building

Ota-ku, Tokyo

13,652.45

Dec. 5, 2003

6,416

1.7

27

Toho Edogawabashi Building

Bunkyo-ku, Tokyo

2,058.97

Mar. 28, 2008

2,080

0.6

28

Toshin Meguro Building

Meguro-ku, Tokyo

1,610.07

Jun. 25, 2008

1,340

0.4

29

Crystal Park Building

Musashino City, Tokyo

3,900.85

Feb. 28, 2006

3,700

1.0

30

NOF Kichijoji Honcho Building

Musashino City, Tokyo

1,936.40

Jan. 14, 2009

1,800

0.5

31

Faret Tachikawa Center Square

Tachikawa City, Tokyo

6,851.48

Dec. 5, 2003

3,290

0.9

32

NOF Kawasaki Higashiguchi Building

Kawasaki City, Kanagawa

8,266.67

Jun. 30, 2005

9,500

2.5

33

NOF Yokohama Nishiguchi Building

Yokohama City, Kanagawa

6,817.76

May 12, 2005

5,050

1.3

34

NOF Shin-Yokohama Building

Yokohama City, Kanagawa

8,074.83

Dec. 5, 2003

3,600

1.0

Yokohama Odori Koen Building

Yokohama City, Kanagawa

4,234.19

Sep. 28, 2007

35

28

74,479.65

2,993

0.8

52,657

14.0

6,820

1.8

Other Cities

25

36

Shinkiba

Sapporo North Plaza

Sapporo City, Hokkaido

13,618.78

Jun. 1, 2006

26

37

NRE Sapporo Building

Sapporo City, Hokkaido

6,559.34

Nov. 5, 2008

5,300

1.4

Kawasaki38

JCB Sappro Higashi Building

Sapporo City, Hokkaido

9,062.04

Feb. 8, 2008

3,700

1.0

32
33 Yokohama
35

Leasable Floor
Space (m2)24

Total Suburban Tokyo (12 Properties)

Acquisition Price(¥ mln)Ratio(%)

Central Tokyo

10

Sunworld Yotsuya Building

Acquisition Price(¥ mln)

25

24

Tokyo

34

MAP
No.

Chuo-ku, Tokyo

Date Acquired

Suburban Tokyo

Shinagawa-ku

HiroshimaCentral Shintomicho Building

Leasable Floor
Space (m2)

SapporoShinagawaShin-Osaka

Location

Total Central Tokyo (23 Properties)

13 04
02

19

Name of Property

01

Shinjuku Nomura Building

Shinjuku-ku, Tokyo

31,500.89

Dec. 8, 2003

38,730

10.3

02

NRE Tennozu Building

Shinagawa-ku, Tokyo

25,127.13

Mar. 18, 2005

33,0808.8

03

NOF Nihonbashi Honcho Building

Chuo-ku, Tokyo

19,157.05

Dec. 5, 2003

20,6005.5

04

Tennozu Park Side Building

Shinagawa-ku,Tokyo

18,051.60

Feb. 27, 2004

14,800

3.9

05

NOF Shinjuku Minamiguchi Building

Shibuya-ku, Tokyo

6,706.46

Jun. 25, 2008

12,300

3.3

06

NOF Shibuya Koen-dori Building

Shibuya-ku, Tokyo

3,420.16

Sep. 28, 2004

12,0003.2

07

Secom Medical Building

Chiyoda-ku, Tokyo

8,821.24

Sep. 1, 2006

11,500

3.1

08

NOF Shiba Building

Minato-ku, Tokyo

8,165.10

May 25, 2004

10,0002.7

09Nishi-Shinjuku Showa Building

Shinjuku-ku, Tokyo

5,670.84

Nov. 30, 2005

8,800

2.3

10

NRE Shibuya Dogenzaka Building

Shibuya-ku, Tokyo

3,436.67

Sep. 26, 2008

7,660

2.0

11

NOF Tameike Building

Minato-ku, Tokyo

4,715.20

Sep. 29, 2005

7,400

2.0

12

Iwamoto-cho Toyo Building

Chiyoda-ku, Tokyo

4,117.26

Jun. 25, 2008

6,020

1.6

13

NOF Shinagawa Konan Building

Shinagawa-ku, Tokyo

7,667.55

Dec. 8, 2003

5,500

1.5

14

NOF Surugadai Plaza Building

Chiyoda-ku, Tokyo

4,160.94

Feb. 27, 2004

5,150

1.4

15

PMO Nihonbashi Honcho

Chuo-ku, Tokyo

2,450.06

Nov. 5, 2008

5,000

1.3

16

NRE Higashi-nihonbashi Building

Chuo-ku, Tokyo

4,554.98

Jan. 14, 2009

4,060

1.1

17

Hatchobori NF Building

Chuo-ku, Tokyo

2,854.83

Aug. 10,2007

3,160

0.8

18

NOF Kanda Iwamoto-cho Building

Chiyoda-ku, Tokyo

4,076.38

Feb. 26, 2004

3,080

0.8

19

NOF Takanawa Building

Shinagawa-ku, Tokyo

3,361.48

Feb. 27, 2009

3,010

0.8

20

Central Kyobashi Building

Chuo-ku, Tokyo

1,720.05

Jun. 25, 2008

2,550

0.7

21

NOF Minami Shinjuku Building

Shibuya-ku, Tokyo

2,464.71

Jun. 25, 2004

2,280

0.6

39

NOF Sendai Aoba-dori Building

Sendai City, Miyagi

6,043.28

Nov. 30, 2005

3,200

0.9

40

NOF Utsunomiya Building

Utsunomiya City, Tochigi

5,887.39

Dec. 5, 2003

2,970

0.8

41

NOF Nagoya Fushimi Building

Nagoya City, Aichi

3,282.90

Dec. 25, 2009

4,050

1.1

42

NOF Nagoya Yanagibashi Building

Nagoya City, Aichi

4,655.74

Sep. 29, 2005

3,550

0.9

43

Omron Kyoto Center Building

Kyoto City, Kyoto

34,616.84

Mar. 20, 2007

23,700

6.3

44

SORA Shin-Osaka 21

Osaka City, Osaka

21,298.26

Apr. 25, 2008

19,251

5.1

45

NRE Osaka Building

Osaka City, Osaka

16,977.79

Dec. 5, 2003

6,410

1.7

46

NRE Nishi-Umeda Building

Osaka City, Osaka

5,213.02

Sep. 26, 2008

5,660

1.5

47

NRE Yotsubashi Building

Osaka City, Osaka

11,558.68

Dec. 5, 2003

3,940

1.0

48

NOF Kobe Kaigan Building

Kobe City, Hyogo

6,425.16

Dec. 5, 2003

3,280

0.9

49

NRE Hiroshima Building

Hiroshima City, Hiroshima

7,902.00

Dec. 5, 2003

1,930

0.5

50

NOF Hakata Ekimae Building

Fukuoka City, Fukuoka

7,504.28

Jun. 27, 2008

6,750

1.8

51

NOF Tenjin-Minami Building

Fukuoka City, Fukuoka

3,817.76

Mar. 27, 2009

3,739

1.0

Total Other Cities (16 Properties)

164,423.26

104,250

27.7

Grand Total (51 Properties)

415,936.86

376,115100.0

Note: The Company owns “Secom Medical Building”, “NRE Shibuya Dogenzaka Building”, “PMO Nihonbashi Honcho”, “NRE Higashi-nihonbashi Building”, “NOF Takanawa
Building”, “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” as real estate, and other properties in the form ofbeneficial interest in real estate trusts.
Note: “Ratio” refers to the ratio of each asset based on acquisition price to the entire portfolio (total of 51 properties). As the figures in the above table have been rounded
to the first decimal place, the total may not be 100.0%.
Note: Shinjuku Nomura Building is held through the quasi co-ownership of beneficial interest in real estate trust. The Company holds 50.1% of the quasi co-ownership.
Total leasable floor space and acquisition price in the above table indicates the figures related to the quasi co-ownership.
Note: The Company 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 theamount 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 ofamount below unit is truncated.
Note: The leasable floor space of NRE Tennozu Building is the leasable floor space of the entire building multiplied by the percentage of the common area held through theco-ownership of beneficial interest.
Note: Regarding NOF Toyo-cho Building, the Company transferred 33% of the quasi-co-ownership interest in each of the two beneficial interests on December 8, 2010, and
67% on May 10, 2011, respectively. The leasable floor space and acquisition price in the above table indicates the figures related to the quasi-co-ownership held by
the Company as of the end of the 15th fiscal period (67%).

11

Major Properties
48

51

04

15

01

48

NOF Kobe Kaigan Building

15

3 Kaigan-dori Chuo-ku Kobe City, Hyogo

51

NOF Tenjin-Minami Building
3-6-15 Watanabe Dori, Chuo-ku, Fukuoka City, Fukuoka

12

PMO Nihonbashi Honcho

37

04

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

01

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

Tennozu Park Side Building

43

43

2-5-8 Higashi-Shinagawa Shinagawa-ku, Tokyo37

NRE Sapporo Building
2-15-1, Kitashichijyo-Nishi, Kita-ku, Sapporo City, Hokkaido

41

Omron Kyoto Center Building
801 Minami Fudodo-cho, Horikawa Higashi-iru, Shiokoji-dori,Shimogyo-ku, Kyoto City, Kyoto

41

NOF Nagoya Fushimi Building
2-9-27 Nishiki, Naka-ku, Nagoya City, Aichi

13

Profile of the Asset Management Company
Performance Report
The Company has appointed the asset management company, Nomura Real Estate AssetManagement, to provide full range of professional asset management services to the Company.
Company: Nomura Real Estate Asset Management Co., Ltd.
Capital: ¥300 million (as of April 30, 2011)
Shareholder: Nomura Real Estate Holdings, Inc. (100%)
Incorporation: January 24, 2003

Organization of the asset management company
Shareholders'Meeting
Auditors
Board of Directors

President & CEO
Internal Audit

Compliance
Committee

Compliance & Risk
Management Group

Property
Information Meeting
Valuation
Commitee

Office Management
Division
Investment
Committee

Acquisition
Group

Asset
Management
Group

Private REITManagement Division

ResidenceManagement Division
Investment
Committee

FundManagement
Group

Financial &ControlGroup

AcquisitionGroup

Investment
Committee
AssetManagement
Group

Fund
Management
Group

Financial &ControlGroup

Investrnent
Management
Group

Financial
Planning
Group

MarketingGroup• Specialized in investment andmanagement of office buildings• Started operation in 2003

Profile of the President and General Manager
President & CEO Atsushi Ogata

NRE Ueno Building

General Manager Kenji Tsuga

Contents

Asset Management Report ................................................16
Profile of the Company . .....................................................21
Status of Investment Assets of the Company ...................23
Capital Expenditures . .........................................................26
Expenses and Liabilities .....................................................27
Trading during the Fifteenth Fiscal Period ..........................30
Other Information ...............................................................32

Apr. 1987 Entered NRED
Nov. 1987 International Business Dept.
Dec. 1989 Overseas Project Dept.
Apr. 1992 Corporate Sales DivisionJun. 1995 Entrusted Sales Division
Apr. 2001 External assignment, Nomura Real Estate Urban Net Co., Ltd.
Jan. 2003 Asset Management Division
Apr. 2003 External Assignment, NREAM
Jun. 2005 Director, NREAM (current position)
Apr. 2006 General Manager, Office Management Division, NREAM
Apr. 2010 President and Chief Executive Officer, NREAM (current position)

14

Apr. 1990 Entered NRED
Dec. 1996 Distribution Sales Dept.
Mar. 2001 Distribution Business Dept.
Oct. 2001 East21 Branch Manager, Nomura Real Estate Urban Net Co., Ltd.
Oct. 2004 Corporate Planning Dept., Nomura Real Estate Holdings, Inc.
Oct. 2006 Public Relations/IR Dept.
Apr. 2011 General Manager, Office Management Division, NREAM (current position)

15

Asset Management Report
1. CHANGES IN KEY INDICATORS

2. OUTLINE OF INVESTMENTS IN THE FIFTEENTH FISCAL PERIOD
15th Period from 14th Period from 13th Period from 12th Period from 11th Period from
Nov. 1, 2010 to
May 1, 2010 to
Nov. 1, 2008 to
May 1, 2009 to
Nov. 1, 2008 to
Apr. 30, 2011
Oct. 31, 2010
Apr. 30, 2009
Oct. 31, 2009
Apr. 30, 2009

Operating Revenues¥ mln

13,117

13,364

13,686

14,203

15,409of which Real Estate Rental Revenues¥ mln

12,846

13,364

13,686

14,203

14,281

Operating Expenses

¥ mln

6,973

7,141

6,938

7,065

8,331

of which Real Estate Rental Expenses

¥ mln

5,741

5,883

5,667

5,761

5,917

Operating Profits

¥ mln

6,144

6,223

6,747

7,138

7,078

Current Profits

¥ mln

4,503

4,480

5,035

5,339

5,393

Net Income

¥ mln

4,428

4,479

5,034

5,338

5,392

Total Assets¥ mln

404,069

407,703410,127

408,312409,353%(0.9)(0.6)(+0.4)(0.3)(+1.9)

Interest-Bearing Debts¥ mln

187,900

191,230

191,980

188,730

188,730

Net Assets¥ mln

189,883

189,934

190,490

190,793

190,847(Changes from Previous Period)%(0.0)(0.3)(0.2)(0.0)(+0.1)

Unitholders’ Capital¥ mln

185,455

185,455

185,455

185,455

185,455

Number of Units Issued

Units305,123

305,123

305,123

305,123

305,123¥

622,318

622,486

624,306

625,301

625,478

¥ mln

4,427

4,479

5,034

5,338

5,392

Cash Distribution per Unit¥

14,512

14,681

16,50017,496

17,673of which Cash Distribution of Profits¥

14,512

14,681

16,50017,496

17,673of which Cash Distribution in excess of Profits

¥

–

–

–

–

–

ROA (Return on Assets) (Note 1)

%

1.1

1.1

1.2

1.3

1.3

Annualized ROA (Note 2)

%

2.2

2.2

2.5

2.6

2.7

ROE (Return on Equity) (Note 3)

%

2.3

2.4

2.6

2.8

2.8

Annualized ROE (Note 2)

%

4.7

4.7

5.3

5.5

5.7

Capital Adequacy Ratio (Note 4)

%

47.0

46.6

46.4

46.7

46.6

(Changes from Previous Period)%(+0.4)(+0.2)(0.3)(+0.1)(0.9)LTV (Loan-to-Value) (Note 5)

%

46.5

46.9

46.8

46.2

46.1

Number of Operating Days

days

181

184

181

184

181

Payout Ratio (Note 6)

%

99.9

100.0

99.9

99.9

100.0

Number of Properties Held

bldgs

51

51

51

50

50

Total Leasable Floor Spacem2

415,936.86

438,918.56

439,139.15

435,901.82

436,094.41

746

704

686

666

661

(Changes from Previous Period)

Net Assets per Unit
Total Cash Distribution

Number of Tenants

tenants
%

93.8

94.5

95.0

95.4

96.4

Depreciation

¥ mln

1,861

1,876

1,865

1,835

1,862

Capital Expenditures

¥ mln

750

597

692

779

1,376

NOI (Net Operating Income) (Note 7)

¥ mln

8,965

9,357

9,884

10,278

10,226

FFO (Funds from Operation) (Note 8)

¥ mln

6,029

6,363

6,908

7,180

7,167

¥

19,761

20,85522,64023,53423,488

Occupancy Rate

FFO per Unit (Note 9)

Note 1: “ROA (Return on Assets)” = Current Profits / {(Total Assets at the beginning of the period + Total Assets at the end of the period) / 2} x 100
Note 2: “ROA” and “ROE” are annualized using the following number of operating days. 11th Period: 181 days, 12th Period: 184 days, 13th period: 181 days, 14th Period: 184 days, and15th Period: 181 days.
Note 3: “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
Note 4: “Capital Adequacy Ratio” = Net Assets / Total Assets x 100
Note 5: “LTV (Loan-to-Value)” = Interest-Bearing Debts / Total Assets x 100
Note 6: Rounded off to the first decimal place.
Note 7: “NOI (Net Operating Income)” = Real Estate Rental Revenues – Real Estate Rental Expenses + Depreciation
Note 8: “FFO (Funds from Operation) = Net Income + Depreciation + Amortization of Investment Corporation Bonds Issuance Costs – Real Estate Sale Profit/Loss
Note 9: “FFO per Unit” = FFO / Number of Units Issued

16

Nomura Real Estate Office Fund, Inc., incorporated on August 7, 2003 under the Law Concerning 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 office use in three largest
conurbations and other major cities, or in property-backed securities that are backed by such properties.
Note: The Law Concerning Investment Trusts and Investment Corporations of Japan (Law No. 198 of 1951) is referred to as the "Investment Trust Law" 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
From last year, exports rose in response to a global economic recovery and improvement was seen in corporate earnings. The Japanese
economy, however, was dealt a severe blow when the Great East Japan Earthquake struck in March 2011, dragging down production
activity by damaging production facilities and supply chains, and resulting in lower exports and personal consumption. With concernsthat these impacts could persist, conditions going forward will bear close monitoring.
(a) Office Leasing Market
The office leasing market continued to experience strong downward pressure on rents due to heightened cost-consciousness among
tenants. Asking rents and occupancy rates in central Tokyo, however, are thought to have bottomed out. That feeling in turn has led
to an increasing number of tenants to view the future more positively, as indicated by moves to expand office space and upgrade
locations. Meanwhile, in Sapporo, Nagoya, and Fukuoka, declining supplies of new properties are giving rise to hopes of recoveries inthose markets.
(b) Real Estate Sales Market
During the period, information on prime properties for sale remained limited. On the other hand, with an abundance of purchasedesire among potential buyers amid an improving financing environment, conditions were ripe for completing transactions, even if
the number of deals was small. Higher transaction activity was noted especially in connection with public offerings by J-REITs. In thewake of the Great East Japan Earthquake, however, it was noted that some sales were postponed or suspended. With sellers now
waiting to see how conditions change, the volume of property information has dwindled.
(2) Status of Managements for the Fifteenth Fiscal Period
Abiding by its basic policy of acquiring only properties that would generate stable returns over the mid- to long-term, the Company
continues to invest in and manage properties that offer outstanding competitiveness in terms of both location and basic building
features, and stable cash flows.
The Company’s total assets under management (“portfolio”) as of the end of the fifteenth fiscal period (April 30, 2011) was
51 properties (total leasable floor space: 415,936.86m2) totaling ¥376.1 billion (total acquisition price) as there were no changes in theportfolio.
The property management environment remained difficult due to the market conditions described in “(1) Market Environments(a) Office Leasing Market.” Seeking to maintain or increase occupancy rates, the Company took the initiative in contacting prospective
tenants, while remaining in close communication with existing tenants. In renewing leases, the Company exercised flexibility in actively
negotiating terms, while considering individual deviations from market rents, sizes of leased areas, and leasing periods, to minimize
declines in rent levels. As a result, the average rent for 50 properties declined by only 2.9% compared to the end of the previous fiscal
period (Note 1) and the occupancy rate remained at a high 93.8% at the end of the period.
Making the most of the Nomura Real Estate group’s (Note 2) know-how, we also succeeded in keeping earnings stable byreviewing management specifications on an individual property basis and taking other steps to reduce asset management expenses.
Note 1: This statistic excludes 33% quasi co-ownership of beneficiary interests in the NOF Toyo-cho Building sold during the period, and the NRE Tennozu Building, which experienced achange in leasable floor space due to its conversion to multi-tenant building.
Note 2: “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).

17

(3) Status of Funding
Concerning funding through interest-bearing debts, the Company has the basic financial policy of funding through promotion of longterm, diversified and fixed interest rate debts, for the purpose of securing financial stability and avoiding future interest rate risks. Basedon this policy, the Company has implemented funding through long-term debts and issuance of investment corporation bonds, while
establishing a total of ¥40 billion of commitment line for the purpose of flexible funding at the time of property acquisition and reductionof refinancing risks, from the perspective of securing stable funding base.
During the period under review, a total of ¥12.5 billion was borrowed as a part of repayment funds for existing debts and unsecured
investment corporation bonds (eighth series totaling ¥6.0 billion (4-year bonds) and ninth series totaling ¥4.0 billion (7-year bonds))
were issued through public offerings to secure funding for redemption of the third series unsecured investment corporation bonds.
As a result, outstanding interest-bearing debt as of the end of the fifteenth fiscal period came to ¥187.9 billion (including investment
corporation bonds of ¥44.5 billion.)
Note: The third series unsecured investment corporation bonds are the Nomura Real Estate Office Fund, Inc. Third Series Unsecured Investment Corporation Bonds (ranking pari passu
among the specified investment corporation bonds). The “eighth series” refers to the Nomura Real Estate Office Fund, Inc. Eighth Series Unsecured Investment Corporation Bonds(ranking pari passu among the specified investment corporation bonds). The “ninth series” refers to the Nomura Real Estate Office Fund, Inc. Ninth Series Unsecured Investment
Corporation Bonds (ranking pari passu among the specified investment corporation bonds).

3. STATUS OF CAPITAL[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.

Type of Issue

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

13th Period
from Nov.1, 2009
to Apr. 30, 2010

12th Period
from May 1, 2009
to Oct. 31, 2009

11th Period
from Nov.1, 2008
to Apr. 30, 2009

High

(¥)

604,000

536,000

588,000

683,000

645,000

Low(¥)

433,000

412,000

465,000

495,000

431,000

4. CASH DISTRIBUTION
In order to qualify for special tax treatment under Article 67-15 of the Special Taxation Measures Law (Law No. 26 of 1957) to havemaximum cash distribution amount treated as deductible dividends, the Company distributed the entire unappropriated retained earnings
except for fractional amounts smaller than one yen per each investment unit. As a result, the amount of cash distribution per unit for thisfiscal period was ¥14,512. In addition, the Company posted ¥74 million as extraordinary loss in the fifteenth fiscal period, and scheduled topost ¥10 million as capital expenditures in the sixteenth fiscal period for the expenses associated with the Great East Japan Earthquake.

No changes in the number of units issued have been made during the fifteenth fiscal period. Changes in the number of units issued andunitholders’ capital until the fifteenth fiscal period are as follows.
Date

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

15th Period
from Nov. 1, 2009
to Apr. 30, 2010

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

13th Period
from Nov. 1, 2009
to Apr. 30, 2010

12th Period
from May 1, 2009
to Oct. 31, 2009

11th Period
from Nov. 1, 2008
to Apr. 30, 2009

Number of Units Issued (Unit)

Unitholders’ Capital (¥ mln)

Retained Earnings(¥000)

4,428,126

4,479,515

5,034,679

5,338,534

5,392,502

ChangeChangeBalanceAccumulated earnings(¥000)

181

4

149

102

64

Total cash distribution(¥000)

4,427,944

4,479,510

5,034,529

5,338,432

5,392,438(¥)(14,512)(14,681)(16,500)(17,496)(17,673)

BalanceAug. 7, 2003

Initial private placement (Note 1)

400

400

200

200

Dec. 4, 2003

Public offering (Note 2)

148,200

148,600

71,506

71,706(Cash distribution per unit)

May 19, 2004

Public offering (Note 3)

35,000183,600

19,866

91,572of which distribution of profits(¥000)

4,427,944

4,479,510

5,034,529

5,338,432

5,392,438

Jun. 16, 2004

Third-party allotment (Note 4)

1,050

184,650595

92,168(Distribution of profits per unit)(¥)(14,512)(14,681)(16,500)(17,496)(17,673)

May 1, 2005

Public offering (Note 5)

44,000228,650

31,496123,665of which refund of capital(¥000)

–

–

–

–

–

May 24, 2005

Third-party allotment (Note 6)

1,320

229,970944

124,610(Refund of capital per unit)

(¥)

(–)

(–)

(–)

(–)

(–)

May 25, 2006

Public offering (Note 7)

34,800264,770

31,143

155,753

Jun. 23, 2006

Third-party allotment (Note 8)

1,133

265,903

1,013

156,767

May 27, 2008

Public offering (Note 9)

37,000302,903

27,064

183,831

Jun. 24, 2008

Third-party allotment (Note 10)2,220

305,123

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.

5. INVESTMENT POLICY AND FUTURE ISSUES(1) Investment Environments
With production and consumption activity undercut by the recent earthquake and tsunami, and still no clear picture of what will happen
with regard to electricity supply limitations and resolution of the disaster at the Fukushima nuclear plant, there are concerns that theJapanese economy will continue to labor under difficult conditions for the foreseeable future.
Under these circumstances, we believe that it is important to continue to focus on the maintenance of funding capacities throughconservative financial management, and flexible property management that minimizes the decrease in portfolio profitability under thecurrent office leasing market, while paying close attention to movements in expected yield and property liquidity in the real estate
investment market.
(2) Investment Policy and Future Issues
With such environments in mind, the Company will employ the following investment 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 maintain anduplift 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 tomanage 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 tomaintain and/or improve features of the properties, establishing their uniqueness and increasing their competitiveness.

18

19

Profile of the Company(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 of scale toreduce operational and administration costs.
In order for us to make right investments in properties of good value, we will ensure to collect information on properties forsale in an early stage, and conduct an in-depth due diligence to assess the potential risks involved in such investments. As part ofour efforts 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.

1. STATUS OF UNITHOLDERS’ CAPITAL
15th Period
14th Period
13th Period
12th Period
11th Period(as of Apr. 30, 2011) (as of Oct. 31, 2010) (as of Apr. 30, 2010) (as of Oct. 31, 2009) (as of Apr. 30, 2009)(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

12,185

13,10012,97012,565

12,503

Portion in
the Total
Units Issued (%)

Maximum number of units allowed to issue

Number of unitholders

2. MATTERS CONCERNING THE INVESTMENT UNITS
The 10 largest unitholders as of April 30, 2011 were as follows.
Name

Number ofUnits Held
(Unit)

Japan Trustee Services Bank, Ltd. (Trust Accounts)

48,194

15.79

The Nomura Trust and Banking Co., Ltd. (Trust Accounts)

25,825

8.46

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

19,824

6.50

Nomura Real Estate Development Co., Ltd.

15,287

5.01

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

10,132

3.32

6. IMPORTANT EVENTS SUBSEQUENT TO THE FIFTEENTH FISCAL PERIOD

Nomura Bank (Luxembourg) S.A.

9,585

3.14

The Senshu Ikeda Bank, Ltd.

7,606

2.49

The significant post-balance sheet events that took place after the end of the fifteenth fiscal period are as follows:
Transfer of a Property
The Company completed the transfer of 67% of the quasi-co-ownership interest in each of the two real estate trust beneficial
interests of NOF Toyo-cho Building on May 10, 2011. Consumption taxes and adjustments of property taxes are excluded from thetransfer price.

Kawasaki Gakuen

7,000

2.29

American Life Insurance Company

3,700

1.21

The Hachijuni Bank, Ltd.

3,680

1.21

150,833

49.43(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 at fixed-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.

NOF Toyo-cho Building
Type of Asset (Note 1) : Trust Beneficial Interest
Date of Agreement: December 8, 2010
Transfer Date
: May 10, 2011
Transfer Price: ¥5,805,000,000
Transferee: Japanese General Operating Company
Impact on Revenues : Scheduled to be reported ¥1,006 million of gain on sales of real estate (miscellaneous expenses excluded)
as operating revenues on sixteenth fiscal period (from May 1, 2011 to October 31, 2011)
Note 1: The Property is composed of two beneficial interests, in each of which 50% co-ownership interest in the land and building is mainly entrusted.

Total

3. BREAKDOWN OF UNITHOLDERS
The breakdown of unitholders as of April 30, 2011 was as follows.
Number ofUnitholders

Portion (%)

11,57295.0

31,747

10.4

139

1.1

169,761

55.6

Other domestic corporate investors

199

1.6

30,39310.0

Foreign corporate investors, etc.

275

2.3

73,22224.0

12,185100.0

305,123

100.0

Private and other investors
Financial institutions(Including sales agents for financial instruments firm)

Total

20

Number of Units
per Unitholder

Portion (%)

21

Status of Investment Assets of the Company
4. DIRECTORS AND AUDITOR

1. COMPOSITION OF ASSETS
14th Period (as of Oct. 31, 2010)

15th Period (as of Apr. 30, 2011)(1) Name of directors and an auditor in the fifteenth fiscal period are as follows (Note 1).
Title

Name

Other Major Title(s)Total Amount of Fees Paid
during the 15th Period (¥000)

Executive Director

Yuichi Maruko

Corporate Auditor, MEGALOS, Co., Ltd.

2,400

Supervisory Director

Shuhei Yoshida

Representative Lawyer, Yoshida Shuhei Law Office
Supervisory Director, Nomura Real Estate Residential Fund, Inc.

2,400

Supervisory Director

Eitoku Aikawa

Director, Fair Appraisers, K.K.
Supervisory Director, Nomura Real Estate Residential Fund, Inc.

2,400

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

Ernst & Young ShinNihon
LLC–

14,500(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 Law becomes applicable to the accounting auditor, and theBoard of Directors determines that there is no likelihood of improvement, the Board of Directors shall dismiss the accounting auditor byunanimous vote of all board members.
In addition, if the Board of Directors determines that the accounting auditor is inappropriate for the position having given thoroughconsideration to its business execution and other various reasons, the Board of Directors shall dismiss or deny reappointment of theaccounting 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, 2011 are as follows:
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.

22Type of Assets

Real estate

Total Amount (¥ mln)
(Note 2)

Portion (%)(Note 3)

Total Amount (¥ mln)
(Note 2)

Portion (%)(Note 3)Central Tokyo

30,7187.6

30,813

7.6

Suburban Tokyo

16,3484.0

16,379

4.0

Other Regional Cities

37,467

9.3

37,715

9.3

Central Tokyo

186,53346.2

186,88645.8

Suburban Tokyo

35,0298.7

37,408

9.2

Other Regional Cities

65,03816.1

65,36516.0

Subtotal

371,13691.8

374,569

91.9

Cash, deposits and other assets

32,9328.2

33,1338.1

404,069

100.0

407,703

100.0

Real estate in trust

Grand Total

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 other than Mr. Yuichi
Maruko possesses two units of the Company’s investment units as of April 30, 2011. Executive Directors and Supervisory Directors might serve as directors of other companies,
but there are no mutual business interests whatsoever between such companies and the Company.
Note 2: At the fourth General Unitholders’ Meeting held on July 27, 2009, Mr. Atsushi Ogata, the President and Chief Executive 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. The term will expire at the beginning of the fifth General Unitholders’ Meeting scheduled to be held on July 28, 2011.

Business

Area(Note 1)

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 Apr. 30, 2011 are as follows.

Name of Property

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

Leased Space(m2) (Note 2)

Shinjuku Nomura Bldg.

39,44231,500.89

30,129.58

NRE Tennozu Bldg.

32,61625,127.13

Omron Kyoto Center Bldg.

22,451

34,616.84

NOF Nihonbashi Honcho Bldg.

20,617

SORA Shin-Osaka 21
Tennozu Park Side Bldg.

Occupancy Rate(%)

Portionof Rental
Revenues (%)

Primary Use

95.6

13.3

Office15,814.19

62.9(Note 3)

Office34,616.84

100.0(Note 3)

Office19,157.05

18,882.36

98.6

5.9

Office18,885

21,298.26

20,338.22

95.5

4.0

Office12,73018,051.60

16,086.72

89.1

5.0

OfficeNOF Shibuya Koen-dori Bldg.

12,5913,420.16

3,420.16

100.0

2.5

OfficeNOF Shinjuku Minamiguchi Bldg.

12,384

6,706.46

6,706.46

100.0

2.3

OfficeSecom Medical Bldg.

11,1508,821.24

8,821.24

100.0(Note 3)

Medical Office(Note 4)
OfficeNOF Shiba Bldg.
Total

10,053

8,165.10

8,165.10

100.0

2.4

192,922

176,864.73

162,980.87

92.2

47.7 (Note 5)

Note 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 by multiplying the overall leasable floor spaceby 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 theoverall 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 completiondrawing, 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 officeand shop spaces (where the entire leased floor space is being leased as a whole, the total area of the leased floor space.), and does not include leased parking spaces. For
Shinjuku Nomura Building and NOF Toyo-cho Building, the area calculated by multiplying the overall leased space by the quasi co-ownership ratio of the beneficial interest in realestate trust owned by the Company as of the end of the 15th fiscal period. For NRE Tennozu Building., includes the area calculated by multiplying the overall common 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 to unavoidable reasons.

23

3. DETAILS OF PORTFOLIO PROPERTIESName of Property
Central Tokyo

Location (Postal Address)

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

Secom Medical Bldg.

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

NOF Shiba Bldg.

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

Nishi-Shinjuku Showa Bldg.

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

NRE Shibuya Dogenzaka Bldg.

2-16-4 Dogenzaka, Shibuya-ku, TokyoNOF Tameike Bldg.

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

Iwamoto-cho Toyo Bldg.

3-1-2 Iwamoto-cho, Chiyoda-ku, TokyoNOF Shinagawa Kounan Bldg.

1-2-5 Higashi-Shinagawa, Shinagawa-ku, TokyoNOF Surugadai Plaza Bldg.

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

PMO Nihonbashi Honcho

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

NRE Higashi-nihonbashi Bldg.

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

Hatchobori NF Bldg.

2-21-6 Hatchobori, Chuo-ku, TokyoNOF Kanda Iwamoto-cho Bldg.

3-8-16 Iwamoto-cho, Chiyoda-ku, TokyoNOF Takanawa Bldg.

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

Central Kyobashi Bldg.

1-4-13 Kyobashi, Chuo-ku, Tokyo

NOF Minami-Shinjuku Bldg.

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

Central Shintomocho Bldg.

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

Sunworld Yotsuya Bldg.

13-9 Araki-cho, Shinjuku-ku, Tokyo

Type ofOwnership

Appraisal Valueas of Apr.30, Book Value2011 (¥ mln)(¥ mln)(Note 1)
(Note 2)

1-14-4, Higashi-Ueno, Taito-Ku, Tokyo
1-6-35 Shinsuna, Koto-ku, TokyoNOF Technoport Kamata Center Bldg.

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

Toho Edogawabashi Bldg.

1-24-8 Sekiguchi Bunkyo-ku, Tokyo

Toshin Meguro Bldg.

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

Crystal Park Bldg.

1-1-3 Gotenyama, Musashino City, TokyoNOF Kichijoji Honcho Bldg.

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

Faret Tachikawa Center Square

2-36-2 Akebono-cho, Tachikawa City, TokyoNOF Kawasaki Higashiguchi Bldg.

3-1 Ekimae Honcho, Kawasaki-ku, Kawasaki City, Kanagawa (Note 4)

NOF Yokohama Nishiguchi Bldg.

1-11-11 Kita-Saiwai, Nishi-ku, Yokohama City, Kanagawa

NOF Shin-Yokohama Bldg.

2-15-16 Shin-Yokohama, Kohoku-ku, Yokohama City, Kanagawa

Yokohama Odori Koen Bldg.

2-4-1 Horai-cho, Naka-ku, Yokohama City, Kanagawa (Note 4)

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

JCB Sapporo Higashi Bldg.

1-1 Minamiichijo-Nishi Chuo-ku, Sapporo City (Note 4)

NOF Sendai Aoba-dori Bldg.

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

NOF Utsunomiya Bldg.

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

NOF Nagoya Fushimi Bldg.

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

NOF Nagoya Yanagibashi Bldg.

SORA Shin-Osaka 21

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

NRE Osaka Bldg.

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

Omron Kyoto Center Bldg.

24

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

NRE Hiroshima Bldg.

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

3,560

5,679

4,350

3,679

2,530

2,828

2,540

2,599

4,420

6,619

2,310

3,694

NOF Hakata Ekimae Bldg.

1-15-20 Hakata Ekimae, Hakata-ku, Fukuoka City, Fukuoka

23,30032,616

NOF Tenjin-Minami Bldg.

3-6-15 Watanabe Dori, Chuo-ku,Fukuoka City, Fukuoka

22,90020,617

Subtotal

81,990102,506

16,70012,730Grand Total

341,450

371,136

9,720

12,384

11,60012,591

10,400

11,1508,980

10,053

8,190

8,699

5,960

7,607

6,710

7,557

4,190

5,900

5,460

5,381

6,390

4,940

4,300

4,895

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

3,350

4,067

2,590

3,160

3,750

3,081

2,530

2,997

2,340

2,539

2,300

2,298

1,390

1,754

680

783

210,630

217,251

6,520

7,805

5,620

4,785

6,680

6,528

1,400

2,063

1,170

1,330

3,270

3,594

1,600

1,778

4,120

2,904

8,360

9,394

5,150

4,989

2,990

3,318

1,950

2,885

48,83051,378Beneficial Interest in
Real Estate Trust
Real Estate

5,650

7,639

4,580

5,101

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

3,220

3,636

2,080

3,145

2,460

2,429

2,250

4,164

2,600

3,640

19,20022,451

13,10018,885

7,140

6,309

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

Subtotal

NRE Sapporo Bldg.

NOF Kobe Kaigan Bldg.

Real Estate
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

39,442Other Cities
Sapporo North Plaza

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

46,900Suburban TokyoNOF Toyo-cho Bldg. (Note 5)

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

NRE Yotsubashi Bldg.

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

Subtotal

NRE Ueno Bldg.

NRE Nishi-Umeda Bldg.

Note 1: “ Appraisal Value as of Apr. 30, 2011” stands for the prices appraised by the estate surveyors in accordance with the provisions of the Company’s Articles of Incorporation andthe “Rules Concerning Calculations of Investment Corporations” (Cabinet Office Regulation No. 47 of 2006). The appraisal prices are calculated 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 fifteenth fiscal period, i.e. April 30, 2011, 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, andleaseholds 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, 2011 accounted solely for the quasi co-ownership.
Note 4: Residential indication of the property is not available yet.
Note 5: Regarding NOF Toyo-cho Building, the Company transferred 33% of the quasi-co-ownership interest in each of the two beneficial interests on December 8, 2010. The appraisal
value and book value in the above table indicates the figures related to the quasi-co-ownership held by the Company as of the end of the 15th fiscal period (67%).

Name of Property
Central Tokyo
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.
Hatchobori NF Bldg.
NOF Kanda Iwamoto-cho Bldg.
NOF Takanawa Bldg.
Central Kyobashi Bldg.
NOF Minami-Shinjuku Bldg.
Central Shintomicho Bldg.
Sunworld Yotsuya Bldg.
Subtotal
Suburban Tokyo
NRE Ueno Bldg.
NOF Toyo-cho Bldg.
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
Other Cities
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
Grand Total

15th Period (from Nov. 1, 2010 to Apr. 30, 2011)
at Period End
RentalRevenues
PortionNumber ofOccupancy
during theof Rental
Tenants
Rate
PeriodRevenues(Note 1)(%)(¥ mln)(%)

14th Period (from May 1, 2010 to Oct. 31, 2010)
at Period End
RentalRevenues
PortionNumber ofOccupancy
during theof Rental
Tenants
Rate
PeriodRevenues(Note 1)(%)(¥ mln)
(%)

92
2
14
14
14
3
1
9
20
7
12
6
5
1
7
6
6
8
16
8
4
6
1
262

95.6
62.9
98.6
89.1
100.0
100.0
100.0
100.0
100.0
100.0
100.0
88.3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
92.4

1,705
(Note 2)
752
636
297
325
(Note 2)
304
296
176
207
139
217
(Note 2)
133
118
101
135
108
83
92
56
(Note 2)
7,174

13.3
(Note 2)
5.9
5.0
2.3
2.5
(Note 2)
2.4
2.3
1.4
1.6
1.1
1.7
(Note 2)
1.0
0.9
0.8
1.1
0.8
0.6
0.7
0.4
(Note 2)
55.9

91
1
14
13
15
3
1
9
20
6
12
6
4
1
7
6
7
8
14
8
4
6
1
257

94.0
100.0
98.6
87.3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
88.3
87.9
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
97.0

1,727
(Note 2)
663
696
339
326
(Note 2)
318
312
191
215
168
243
(Note 2)
135
127
109
133
110
85
95
60
(Note 2)
7,396

12.9
(Note 2)
5.0
5.2
2.5
2.4
(Note 2)
2.4
2.3
1.4
1.6
1.3
1.8
(Note 2)
1.0
1.0
0.8
1.0
0.8
0.6
0.7
0.5
(Note 2)
55.3

10
1
13
7
1
10
6
18
28
32
9
16
151

100.0
100.0
94.3
100.0
100.0
75.0
90.2
100.0
97.3
100.0
95.6
92.4
96.2

214
(Note 2)
348
58
(Note 2)
101
69
220
309
213
168
92
2,054

1.7
(Note 2)2.7
0.5
(Note 2)
0.8
0.5
1.7
2.4
1.7
1.3
0.7
16.0

9
1
13
6
1
8
6
17
25
30
9
15
140

96.7
100.0
91.4
88.7
100.0
75.8
90.2
95.3
92.2
95.9
100.0
88.2
94.5

222
(Note 2)378
68
(Note 2)
107
77
222
309
209
175
102
2,209

1.7
(Note 2)2.8
0.5
(Note 2)
0.8
0.6
1.7
2.3
1.6
1.3
0.8
16.5

41
6
1
28
24
14
14
1
33
22
12
20
34
16
45
22
333

94.3
100.0
100.0
83.6
97.0
83.2
92.6
100.0
95.5
88.7
88.1
97.5
87.5
86.5
90.4
96.9
94.3

2.5
1.6
(Note 2)
0.9
1.1
0.3
0.8
(Note 2)
4.0
3.1
1.2
2.3
1.4
1.4
1.3
0.6
28.2

37
6
1
24
23
13
12
1
30
21
11
17
34
15
43
19
307

87.8
100.0
100.0
72.3
88.6
79.8
78.4
100.0
90.4
83.9
95.2
99.0
94.4
84.2
90.8
82.0
91.6

93.8

100.0

704

94.5

308
204
(Note 2)
111
146
18
104
(Note 2)
538
473
180
313
182
179
173
83
3,758
13,364(Note 3)2.3
1.5
(Note 2)
0.8
1.1
0.1
0.8
(Note 2)
4.0
3.5
1.3
2.3
1.4
1.3
1.3
0.6
28.1

746

314
203
(Note 2)
114
146
38
106
(Note 2)
515
392
154
299
173
174
168
76
3,616
12,846(Note 3)100.0

Note 1: In the case a master lease agreement is in place, in which the master tenant of the said lease agreement subleases a part or whole of the leased floor spaces to the end
tenants, only the master tenant is counted as the number of tenants. For NRE Tennozu Building and PMO Nihonbashi Honcho, 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 numberof end tenants is shown. In the case more than one space within the same building are leased by the same tenant, such spaces are combined to count for just one tenant.
However, when the same tenant leased floor spaces in more than one building, such spaces are counted separately for each building as if they are leased by different tenants.
As for Shinjuku Nomura Building and NOF Toyo-cho Building, the number of tenants in the entire building is taken into account.
Note 2: Not disclosed due to compelling reasons.
Note 3: Subtotal of “Rental Revenues” and "Portion of Rental Revenues” for each area is not disclosed due to compelling reasons.

25

4. OUTSTANDING AMOUNT AND CURRENT PRICE OF SPECIFIED TRANSACTIONS

2. CAPITAL EXPENDITURES DURING THE FIFTEENTH FISCAL PERIODThe outstanding amount and current price of the specified transactions as of April 30, 2011 are as follows.
Contract Amount (¥ mln) (Note 1)
Segment

Longer than a Year

Current
Price (¥ mln)
(Note 2)

88,85058,850g760

88,85058,850g760

Type of Transaction

Transaction other than market transaction

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

Total
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”, the Company had noother assets to integrate into the portfolio as of April 30, 2011.

As of the end of the fifteenth fiscal period, the real estate and beneficial interest in real estate trust held by the Company by country and region
are as follows.
Appraisal Value as of Apr. 30, 2011 (Note 2)
Total Portfolio Amount (Note 1)

Portion of Total
Portfolio

Number of
PropertiesJapan¥371,136 million¥341,450 million

100.0%

51

Total¥371,136 million¥341,450 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, 2011 stands for the value appraised by the real estate appraisers.

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 (finishedin part) on the properties held as of April 30, 2011. The estimated cost of works includes the amount to be charged as “expenses” foraccounting purposes.
Estimated Cost (¥ mln)
Name of Property (Location)

Description of Works (Purpose)

Estimated
PeriodTotal

Paid during
15th Period

Paid before
15th Period

177

177

Renovation of passenger elevator control system(Low/middle level (4 units for each))(To increase quality) (Note 1)

From: May 2010354
To:
Oct. 2011 (Note 2)

Renovation of passenger elevator control system(middle level (4 units))(To increase quality) (Note 1)

From: Jan. 2011
204
To:
Jul. 2012 (Note 2)

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Renovation of extra-high substation equipment(To increase quality) (Note 1)

From: Feb. 2011
460
To:
Mar. 2017 (Note 2)–

NRE Tennozu Bldg.
(Shinagawa-ku, Tokyo)

Refurbishment for multi-tenant building(To increase revenues) (Note 1)

From: Mar. 2011
To:
May 2011–

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)
Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Sapporo North Plaza(Chuo-ku, Sapporo City)

Refurbishment of common area
(To increase revenues) (Note 1)

From: Mar. 2011
To:
May 2011

132
41

–

–

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 the entire building.

26

Name of Property (Location)

Description of Works (Purpose)

Cost of Works(¥ mln)Period of Works

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

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

From:
To:

May 2010
Apr. 2011169

NOF Shinjuku Minamiguchi Bldg.
(Shibuya-ku, Tokyo)

Aseismic retrofitting(To increase quality)

From:
To:

Dec. 2010
Apr. 2011

66

Sapporo North Plaza(Chuo-ku, Sapporo City)

Refurbishment of the common area for connectionof the pedestrian subway(To increase revenues)

From:
To:

Jul. 2010
Mar. 2011

58

Other Properties

Improvement of features

From:
To:

Nov. 2010
Apr. 2011

455

Total

6. STATUS OF ASSETS BY COUNTRY AND REGIONCountry

The table below lists capital expenditures during the fifteenth fiscal period in conjunction with the major works of renovation. During theperiod, we have conducted engineering works totalling ¥992 million: capital expenditures of ¥750 million and repair expenses of ¥242
million combined all together.

–

–
–
–

750

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.
15th Period
14th Period
13th Period
12th Period
11th Period
from Nov. 1, 2010 from May 1, 2010 from Nov. 1, 2009 from May 1, 2009 from Nov. 1, 2008
to Apr. 30, 2011 to Oct. 31, 2010 to Apr. 30, 2010 to Oct. 31, 2009 to Apr. 30, 2009
¥ mln

¥ mln

¥ mln

¥ mln

¥ mln

Balance brought forward from the previous period

438

397

436

368

238

Amount reserved during the period

890

900

975

1,570

1,894

Amount used during the period

708

859

1,013

1,502

1,764

Balance brought forward to the next period

620

438

397

436

368

Expenses and Liabilities
1. EXPENSES RELATED TO ASSET MANAGEMENT
15th Period
from Nov. 1, 2010
to Apr. 30, 2011

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

¥000

¥000

Asset management fees (Note)

1,023,046

1,058,582

of which Management Fee I

705,633

723,621of which Management Fee II

317,413334,960of which Management Fee III––

Custodian fees

29,03829,129General administrative fees

65,00164,651

Directors’ compensation

12,00012,000

Other expenses

102,859

93,461

1,231,946

1,257,824

Total

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

27

2. STATUS OF BORROWINGSThe status of borrowings from the financial institutions as of Apr. 30, 2011 is as follows.
Date
Borrowed

Financial Institutions

Outstanding as of Outstanding as ofApr. 30, 2011
Oct. 31, 2010(¥000)(¥000)

Average
Interest Rate(%) (Note 1)

Date of
Repayment

Method of
Use ofRepayment Borrowings

Note

Short-term Borrowings–

The Mizuho Corporate Bank, Ltd.

500,000–

580,000–

1,000,000

Aozora Bank, Ltd.

–

500,000

The Chiba Bank, Ltd.

–

500,000

Sumitomo Trust and Banking Co., Ltd.
The Chugoku Bank, Ltd.

The Hiroshima Bank, Ltd.
Shinkin Central Bank
The Mizuho Corporate Bank, Ltd.
Sumitomo Trust and Banking Co., Ltd.

Dec. 24, 2009

Feb. 26, 2010
Mar. 15, 2010
Jun. 24, 2009

1,400,000

1,400,000

900,000

900,000

1,000,000

1,000,000
1,000,000

500,000

500,000

Dec. 24, 2010

1,000,000–

3,000,000–

Sumitomo Trust and Banking Co., Ltd.
The Chiba Bank, Ltd.

2,000,000

1,000,000

Aozora Bank, Ltd.
The Chugoku Bank, Ltd.

500,000–

Aug. 26, 2010

The Chugoku Bank, Ltd.
The Yamanashi Chuo Bank, Ltd.

–

Feb. 28, 2011

The Hiroshima Bank, Ltd.
Subtotal

500,000–

500,000–

9,800,000

10,380,000–

1,000,000

1.05000

Dec. 24, 2010

1.04000

Feb. 26, 2011

1.04000

Feb. 28, 2011

1.00077

Jun. 24, 20110.90000

Aug. 26, 2011

0.74000

Dec. 24, 2011

0.79000

Feb. 26, 2012

Balloonpayment(Note 2)

Unsecured/
Uninsured

Current Portion of Long-term Borrowings
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Dec. 8, 2008–

500,000

Mitsui Sumitomo Insurance Co., Ltd.

–

1,000,000

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

–

1,000,000–

1,000,000–

500,000

Sumitomo Trust and Banking Co., Ltd.

–

3,000,000

The Nomura Trust and Banking Co., Ltd.

–2,000,000

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

4,000,000

4,000,000

Sumitomo Mitsui Banking Corp.

1,000,000

1,000,000

Mitsubishi UFJ Trust and Banking Corp.

The Mizuho Corporate Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.

The Chiba Bank, Ltd.
The Hachijuni Bank, Ltd.

Feb. 27, 2006

Dec. 10, 2007

500,000

1,000,000

1,000,000

The Hiroshima Bank, Ltd.

1,000,000

1,000,000

The Keiyo Bank, Ltd.

1,000,000

1,000,000

The Mizuho Corporate Bank, Ltd.

1,000,000

1,000,000

Mitsubishi UFJ Trust and Banking Corp.

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

Sumitomo Trust and Banking Co., Ltd.

Apr. 25, 2008

The Hachijuni Bank, Ltd.
The Yamanashi Chuo Bank, Ltd.

500,000

500,000

The Mizuho Corporate Bank, Ltd.

2,000,000

2,000,000

The Chuo Mitsui Trust & Banking Co., Ltd. Mar. 19, 2007

1,000,000

1,000,000

The Iyo Bank, Ltd.

1,000,000

1,000,000

The 77 Bank, Ltd.

1,000,000

1,000,000

1,000,000

1,000,000

2,000,000–

Sumitomo Mitsui Banking Corp.

2,000,000–

Mitsubishi UFJ Trust and Banking Corp.

1,000,000–

2,000,000–

The Hyakujushi Bank, Ltd.

Sep. 25, 2008

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Sumitomo Trust and Banking Co., Ltd.

Dec. 8, 2006

The Chuo Mitsui Trust & Banking Co., Ltd.

1,000,000–

The Nomura Trust and Banking Co., Ltd.

2,000,000–

The Iyo Bank, Ltd.

1,000,000–

500,000

500,000

Subtotal

30,500,000

29,500,000

Total Short-term Borrowings

40,300,000

39,880,000

Development Bank of Japan, Inc.

28

500,000

Jun. 25, 2009

0.94000

1.68000

1.43200

Dec. 8, 2010

Feb. 26, 2011

Jun. 10, 2011

1.44800

Aug. 25, 2011

1.63825

Aug. 26, 2011

1.43950

Sep. 25, 2011

1.89764

Feb. 26, 2012

1.97000(Note 3)

Balloonpayment(Note 3)(Note 2)

Unsecured/
Uninsured

Date
Financial Institutions
Borrowed
Long-term Borrowings
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
Dec. 8, 2006
The Chuo Mitsui Trust & Banking Co., Ltd.
The Nomura Trust and Banking Co., Ltd.
The Iyo Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Jun. 24, 2009
Mitsubishi UFJ Trust and Banking Corp.
The Hyakujushi Bank, Ltd.
Mitsui Life Insurance Co., Ltd.
Taiyo Life Insurance Company
Daido Life Insurance Company
Nov. 29, 2005
Zenkyoren
Development Bank of Japan
Zenkyoren
Dec. 9, 2005
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Feb. 26, 2008
The Chuo Mitsui Trust & Banking Co., Ltd.
The Iyo Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
Sep. 25, 2008
Sumitomo Trust and Banking Co., Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Nov. 4, 2008
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Jun. 27, 2008
The Mizuho Corporate Bank, Ltd.
Development Bank of Japan
Mar. 17, 2005
The Dai-ichi Life Insurance Company, Limited. Dec. 8, 2006
Mizuho Trust & Banking Co., Ltd.
Mar. 26, 2010
THE NISHI-NIPPON CITY BANK, LTD.
The Chugoku Bank, Ltd.
Jun. 24, 2010
The Bank of Fukuoka, Ltd.
Aug. 26, 2010
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Dec. 8, 2008
Mitsubishi UFJ Trust and Banking Corp.
The Iyo Bank, Ltd.
Taiyo Life Insurance Company
Daido Life Insurance Company
Mar. 19, 2007
Sumitomo Life Insurance Company
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
The Mizuho Corporate Bank, Ltd.
Dec. 24, 2009
Mitsubishi UFJ Trust and Banking Corp.
The Bank of Fukuoka, Ltd.
The Dai-ichi Life Insurance Company, Limited. Feb. 26, 2008
The Norinchukin Bank, Ltd.
Feb. 26, 2010
Taiyo Life Insurance Company
Sumitomo Life Insurance Company
Jun. 24, 2008
Development Bank of Japan, Inc.
Sompo Japan Insurance Inc.
Aug. 26, 2010
Mitsui Sumitomo Insurance Co., Ltd.
Dec. 8, 2010
Mitsubishi UFJ Trust and Banking Corp.
The Nomura Trust and Banking Co., Ltd.
Feb. 28, 2011
The Mizuho Corporate Bank, Ltd.
Shinkin Central Bank
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Feb. 28, 2011
Development Bank of Japan, Inc.
Jun. 25, 2009
Subtotal
Total

Outstanding as of Outstanding as ofApr. 30, 2011
Oct. 31, 2010(¥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
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
2,000,000
2,500,000
1,000,000
4,500,000
1,000,000
1,000,000
1,000,000
1,000,000
2,000,000
1,800,000
2,400,000
500,000
650,000
1,000,000
3,000,000
3,000,000
1,000,000
3,000,000
4,000,000
1,000,000
1,000,000
500,000
2,000,000
1,000,000
2,000,000
1,000,000
8,750,000
103,100,000
143,400,000

2,000,000
2,000,000
1,000,000
2,000,000
1,000,000
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
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
2,000,000
2,500,000
1,000,000
4,500,000
1,000,000
1,000,000
1,000,000
1,000,000
2,000,000
1,800,000
2,400,000
500,000
650,000
1,000,000
3,000,000
3,000,000
1,000,000
3,000,000
4,000,000
1,000,000––––––9,000,000
106,850,000
146,730,000

Average
Interest Rate(%) (Note 1)

Date of
Repayment

1.89764

Feb. 26, 2012

1.39575

Jun. 24, 2012

1.43750

Aug. 26, 2012

1.53625

Aug. 26, 2012

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

1.15000

Feb. 26, 2013

1.14050
0.98550

Jun. 24, 2013
Aug. 26, 2013

1.68680

Dec. 8, 2013

1.98000

Mar. 19, 2014

1.55800

Dec. 24, 2014

1.91875
1.69300

Feb. 26, 2015
Feb. 26, 2015

2.31750

Jun. 24, 2015

1.311250.89000

Aug. 26, 2015
June 24, 2013

1.00000

Feb. 26, 2014

1.84650
1.97000

Feb. 26, 2018
(Note 3)

Method of
Use ofRepayment Borrowings

Balloonpayment(Note 2)

Note

Unsecured/
Uninsured(Note 3)Note 1: 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, whichwere 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: The use of borrowings is to purchase property-related assets, the related miscellaneous expenses and the repayment of borrowings.
Note 3: Installments 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 June25, 2016.

29

3. STATUS OF INVESTMENT CORPORATION BONDS

3. PRICE INVESTIGATIONThe status of investment corporation bonds issued as of April 30, 2011 is as follows.

(1) Real Estates

Name of Bonds

Issue Date

Balance as of Balance as ofApr. 30, 2011 Oct. 31, 2010(¥ mln)(¥ mln)Acquisition/Transfer
Interest
Rate (%)

Maturity DateFirst Series Unsecured Investment Mar. 16,
Corporation Bonds
2005

5,000

5,000

1.85

Mar. 16,
2015

Second Series Unsecured
Investment Corporation Bonds

Mar. 16,
2005

5,000

5,000

2.47

Mar. 16,
2020

Third Series Unsecured
Investment Corporation Bonds

Nov. 28,
2005–

10,0001.19

Nov. 29,2010

Fourth Series Unsecured
Investment Corporation Bonds

Nov. 28,
2005

10,00010,0002.05

Nov. 30,
2015

Fifth Series Unsecured Investment
Corporation Bonds

Mar. 19,
2007

5,000

5,000

1.61

Mar. 19,2012

Sixth Series Unsecured
Investment Corporation Bonds

Mar. 19,
2007

5,000

5,000

2.21

Mar. 17,2017

Seventh Series Unsecured
Investment Corporation Bonds

Mar. 19,
2007

4,500

4,500

2.90

Mar. 17,2028

Eighth Series Unsecured
Investment Corporation Bonds

Nov. 26,
2010

6,000

–

0.94

Nov. 26,
2014

Ninth Series Unsecured
Investment Corporation Bonds

Nov. 26,
2010

4,000

–

1.52

Nov. 24,2017

44,50044,500Total

Method of
Repayment

Use ofProceeds

Note(Note 2)

Balloonpayment(Note 1)

(Note 3)Acquisition/Transfer

Type of Asset

Name of Property

Date

Price (¥ mln)

Appraisal Value(¥ mln)Transfer

Beneficial Interest in
Real Estate TrustNOF Toyo-cho Bldg.

Dec. 8, 2010

2,859

2,808

Note: The price investigation procedures were conducted by Ernst & Young ShinNihon LLC at the time of acquisition or transfer in accordance with the guidance under “Price Investigationof 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 location and lot number to identify these properties.
Note: “Acquisition price” and “Transfer price” do not include various costs (intermediary fees, taxes and duties, etc.) required for acquisition or disposition of the property (the purchaseand sale price of the real estate, etc., as indicated in the Transfer Agreement of Trust Beneficial Interest or Real Estate).
Note: “Appraisal Value” is appraisal value of the entire building multiplied by 33%, the ratio of the quasi-co-ownership interest held by the Company.

(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 Law.
For the fifteenth fiscal period (from November 1, 2010 to April 30, 2011), one OTC derivatives transaction was 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.

4. TRANSACTIONS WITH RELATED PARTIES AND MAJOR SHAREHOLDERS(1) Transactions
Not applicable.
(2) Fees Paid to Related Parties and Major Shareholders
Table of fees paid to related parties and major shareholders during the fifteenth fiscal period is as follows.

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.

Name of Related Party and Major Shareholders

4. STATUS OF SHORT-TERM INVESTMENT CORPORATION BONDS
Contract-out fees

There are no outstanding short-term investment corporation bonds as of the end of the fifteenth fiscal period.

Property management fees

Trading during the Fifteenth Fiscal Period

Other expenses

1. STATUS OF REAL ESTATES AND ASSET-BACKED SECURITIES TRADING
Acquisition

Transfer

Type of Asset

Name of Property

Date

Price
(¥ mln) (Note 1)

Beneficial Interest in
Real Estate TrustNOF Toyo-cho Bldg.
(Note 3)

–

–

Total

–

Date

Price (¥ mln)
(Note 1)

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

Dec. 8, 2010

2,859

2,322

271

2,859

2,322

271

Note 1: “Acquisition price” and “Disposition price” do not include various costs (intermediary fees, taxes and duties, etc.) required for acquisition or disposition of the property (thepurchase 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.
Note 3: For NOF Toyo-cho Building, The Company transferred 33% of the quasi-co-ownership interest in each of the two beneficial interests on December 8, 2010.

Nomura Building Management Co., Ltd. (Note 2)
Flagship Properties, Inc. (Note 3)

Amount Paid (A)(¥000)

663,823
763

Nomura Real Estate Development Co., Ltd.

178,381

Nomura Building Management Co., Ltd.

26,467

Nomura Real Estate Development Co., Ltd.

36,154

Nomura Building Management Co., Ltd.

25,530Total Amount Paid (B)(¥000)

1,089,966
263,253
89,502

Portion(A) / (B)
(%)

60.9
0.1
67.8
10.1
40.4
28.5

Note 1: 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 andInvestment 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 2of 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 and equipments,
the cost of which is included in “Contract-out Fees”.
Note 3: The Company has entrusted certain jobs such as receipt of rents, payment of disbursements and notification of repairs in conjunction with the sublease of NRE Tennozu Building
to Flagship Properties. The Contract-out fees paid to Flagship Properties include remuneration for these services. The contract was terminated as of March 31, 2011.
Note 4: Besides the above, the Company has made the following payments for repair works during the fifteenth fiscal period.
Name of Related Party
Nomura Real Estate Development Co., Ltd.
Nomura Building Management Co., Ltd.

Amount Paid (¥000)
12,336605,247

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.

30

31

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

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.
Hatchobori NF Bldg.
NOF Minami-Shinjuku Bldg.
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 Kyobashi Bldg.
Central Shintomicho Bldg.
Sunworld Yotsuya Bldg.
NOF Toyo-cho Bldg.
Toshin Meguro Bldg.
NOF Kawasaki Higashiguchi Bldg.
NOF Utsunomiya Bldg.
NOF Nagoya Yanagibashi Bldg.
NRE Hiroshima Bldg.

Property Management Company

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

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

35,98920,37812,335
5,267
3,866
6,426
3,552
4,351
4,586
5,191
3,337
2,620
2,091
1,899
4,324
7,081
1,440
4,460
4,598
3,398
4,061
14,735
10,874
3,252
8,258
4,813
2,173
1,488
1,008
689
1,769
600
5,333
3,764
2,025
2,800

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

NRE Sapporo Building

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.

Other Information
1. NOTICE
Not applicable.

2. STATUS OF BENEFICIAL INTEREST IN INVESTMENT TRUSTS ESTABLISHED BY THE COMPANY

Contents

Balance Sheets....................................................................34
Statements of Income and Retained Earnings ...................36
Statements of Changes in Net Assets ...............................37
Statements of Cash Flows ................................................38
Notes to Financial Statements ...........................................39

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.

32

33

Balance Sheets
Thousands of Yen
As of April 30, 2011ASSETS

Rental receivables
Income taxes refundable
Other current assets
Total current assets

As of April 30, 2011

As of October 31, 2010

LIABILITIESCurrent Assets:
Cash and bank deposits

Thousands of Yen

As of October 31, 2010

Current Liabilities:¥   31,709,202¥ 32,053,477

Trade accounts payable¥       618,270

179,547

231,407

Other accounts payable

1,849,825

869,252–

410

Short-term debt

9,800,000

10,380,000

435,536

351,506

Current portion of investment corporation bonds

5,000,000

10,000,000

32,324,285

32,636,800

Current portion of long-term debt

30,500,000

29,500,000

830,412880,019

Accrued expenses
Property and Equipment, at Cost:¥

708,071

371

–

Land

264,672,031

265,986,741

Accrued consumption taxes

166,366

161,491

Buildings and structures

124,269,002

124,771,281

Rent received in advance

1,929,481

2,085,652

Machinery and equipment

1,531,293

1,500,266

48,336–

Tools, furniture and fixtures

264,838

236,323

Leased assets

30,94730,946

Construction in progress

48,467

104,631

SubtotalLess accumulated depreciation
Net property and equipment

Accrued income taxes

85,19454,669,679

392,630,188(19,961,210)

Investment corporation bonds

39,500,000

34,500,000

369,235,671

372,668,978Long-term debt

103,100,000

106,850,000

Security deposits from tenants

20,746,988

21,740,307

5,224

8,677

Total long-term liabilities

163,352,212

163,098,984

Total Liabilities

214,185,617

217,768,663

185,455,447

185,455,447

Long-term Liabilities:

Other long-term liabilities
1,900,905

1,900,905

Intangible assets

2,093

2,357

Long-term prepaid expenses

64,259

6,842

Security deposits

410,850

410,850

Deferred investment corporation bond issuance costs

131,128

76,8932,509,235

2,397,847¥   404,069,191¥ 407,703,625

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

90,34450,833,405

390,816,578

Leasehold rights

Total Assets

Other current liabilities
Total current liabilities(21,580,907)

Investments and Other Assets:

Total investments and other assets

Provision for loss on disaster

NET ASSETS
Unitholders’ Equity:
Unitholders’ capital
Retained earnings

4,428,127

4,479,515

Total unitholders’ equity

189,883,574

189,934,962

Total Net Assets

189,883,574

189,934,962¥  404,069,191¥ 407,703,625

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

34

35

Statements of Income and Retained Earnings

Statements of Changes in Net Assets
Thousands of Yen

For the period
from November 1, 2010
to April 30, 2011

¥   12,846,039¥ 13,364,441

271,900–

13,117,939

13,364,441

Real estate rental expenses

5,741,473

5,883,558

Asset management fees

1,023,047

1,058,582

94,04093,781

Operating Expenses:

Administrative service and custodian fees
Bad debts expenses
Other operating expenses

Operating Profit

Units

Unitholders’CapitalRetained
Earnings

Total
Unitholders’Equity305,123¥185,455,447¥4,479,515¥189,934,962––¥189,934,962

Cash distribution paid––

(4,479,510)(4,479,510)––(4,479,510)

Net income––

4,428,122

4,428,122––

4,428,122

305,123¥185,455,447¥4,428,127¥189,883,574––¥189,883,574

DeferredHedge Gains(Losses)

Total Valuation
and Translation
Adjustments

Total
Net Assets

Balance as of October 31, 2010

Operating Revenues:
Gain on sales of real estate

Thousands of Yen

For the period
from May 1, 2010
to October 31, 2010

Operating Revenues and Expenses

Real estate rental revenues

For the period from November 1, 2010 to April 30, 2011

2,325

–

112,534

105,462

6,973,419

7,141,383

6,144,520

6,223,058

Balance as of April 30, 2011

DeferredHedge Gains(Losses)

Total Valuation
and Translation
Adjustments

Total
Net Assets

For the period from May 1, 2010 to October 31, 2010
Thousands of Yen

Balance as of April 30, 2010

Units

Unitholders’CapitalRetained
Earnings

Total
Unitholders’Equity305,123¥185,455,447¥5,034,679¥190,490,126––¥190,490,126

Cash distribution paid––

(5,034,530)(5,034,530)––(5,034,530)

Net income––

4,479,366

4,479,366––

4,479,366¥185,455,447¥4,479,515¥189,934,962––¥189,934,962

Balance as of October 31, 2010

305,123

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

Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income

3,500

6,795

Other non-operating revenues

65,77439,98569,27446,7801,135,712

1,181,508

91,621

129,946

Non-Operating Expenses:
Interest expense
Loan arrangement fees

–

1,182

Interest expense on investment corporation bonds

429,882

433,413

Amortization of investment corporation bond issuance costs

12,127

6,921

Other non-operating expenses

40,75036,6001,710,092

1,789,570

4,503,702

4,480,268

74,468–74,468–4,429,234

4,480,268

Current

1,123

896

Deferred(11)

6

4,428,122

4,479,366

5

149Interest expense on short-term investment corporation bonds

Ordinary Income
Extraordinary Loss
Loss on disaster

Income before Income Taxes
Income Taxes:

Net Income
Retained earnings brought forward
Retained Earnings at End of Period¥    4,428,127¥

4,479,515

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

36

37

Statements of Cash Flows

Notes to Financial Statements
Thousands of Yen
For the period
from November 1, 2010
to April 30, 2011

For the period
from May 1, 2010
to October 31, 2010

Cash Flows
Cash Flows from Operating Activities
Income before income taxes
Depreciation
Amortization of long-term prepaid expenses
Amortization of investment corporation bonds issuance costs
Increase in provision for loss on disaster
Interest income
Interest expense
Loss on disposal of property and equipment
Decrease (Increase) in rental receivables(Decrease) Increase in trade accounts payable
Increase (Decrease) in other accounts payable
Increase (Decrease) in accrued consumption taxes(Decrease) in rent received in advance
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
Cash Flows from Investing Activities
Payments into time deposits
Proceeds from time deposits
Payments for purchases of property and equipment
Reimbursement of security deposits to tenants
Proceeds from security deposits from tenants
Net cash used in investing activities
Cash Flows from Financing Activities
Proceeds from short-term debt
Repayment of short-term debt
Redemption of short-term investment corporation bonds
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from investment corporation bonds
Redemption of investment corporation bonds
Payment of investment corporation bonds issuance costs
Distributions to unitholders
Net cash used in financing activities
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period
Cash and Cash Equivalents at End of Period
The accompanying notes to financial statements are an integral part of these statements.

38¥    4,429,234
1,861,399
7,003
12,127
48,336(3,500)1,565,085
148
51,860(89,801)
740,899
4,876(156,171)2,322,399(143,618)
10,650,276
3,500(1,614,363)(342)
9,039,071¥–
1,300,000(515,119)(1,838,544)
845,225(208,438)

4,480,268
1,877,066
7,740
6,921
–
(6,795)
1,616,103
2,107(51,476)
161,111(228,613)(42,939)(78,881)–(22,170)
7,720,442
6,535(1,594,392)(961)
6,131,624(1,300,000)–(707,316)(1,400,604)
593,693(2,814,227)

5,000,000(5,580,000)–
7,500,000(10,250,000)
10,000,000(10,000,000)(66,362)(4,478,546)(7,874,908)

4,800,000(2,800,000)(2,000,000)
5,500,000(6,250,000)–––(5,030,273)(5,780,273)

955,72530,753,477¥    31,709,202(2,462,876)
33,216,353
30,753,477¥

1. ORGANIZATION
Nomura Real Estate Office Fund, Inc. (the “Company”) is a real estate investment corporation formed to own and invest primarily in officeproperties. The Company is externally managed by a licensed asset management company, Nomura Real Estate Asset Management 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 Law Concerning Investment Trusts and Investment Corporations (the“Investment Trust Law”) of Japan. On December 4, 2003, the Company was listed on the Tokyo Stock Exchange as the 9th J-REIT
and started operations on the following day. As of April 30, 2011, the Company owned a portfolio of 51 office properties containing an
aggregate of approximately 415,936.86 square meters of leasable area and leased office space to 746 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 Investment Trust Law of Japan, the Corporation Law of Japan,
the Financial Instruments and Exchange Law of Japan and related regulations, which are different in certain respects as to the applicationand disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which were prepared inaccordance 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 is presented 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 in accordance 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
3 - 70 years
Structures
2 - 45 years
Machinery and equipment
3 - 15 years
Tools, furniture and fixtures
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 isdeemed 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 the write-down
is recorded as an impairment loss during the period in which it occurs. No impairment losses have been recognized to date.
Deferred investment corporation bond issuance costs
Deferred investment corporation bond issuance costs are amortized by the straight-line method over the respective terms of the bonds.
Provision for loss on disaster
Provision for loss on disaster is recorded at the amount estimated as of April 30, 2011 to provide for possible repair and recovery costs
arising from the Great 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 sheets and statements of income and retained earnings,
respectively.

39

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 accrualbasis over the life of each lease. Utility charge reimbursements are recognized when earned and their amounts are reasonably estimated.
Property related taxes
Property and equipment is subject to property related taxes, urban planning taxes and depreciable property taxes on a calendar year basis.
These taxes are generally charged to income during the period. The sellers of the properties were liable for property related taxes for thecalendar year including the period from the date of purchase by the Company through the end of the year since the taxes are imposedon the owner registered in the record as of January 1st based on the assessment made by the local government. No such taxes were
imposed for the six-month period ended April 30, 2011 and October 31, 2010 as the Company did not acquire any properties.
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 statements 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 of interest-rate
swap contracts which meet the criteria for deferral 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 fair value;
instead, the net amount paid or received under the interest rate swap contract is recognized and included in interest expense or income.

Short-term debt as of April 30, 2011 and October 31, 2010 consist of the following:
As of April 30, 2011
Amount(Thousandsof Yen)Unsecured loans principally from banks due on December 8, 2010
Unsecured loans from banks due on December 24, 2010
Unsecured loans from banks due on February 26, 2011
Unsecured loans from banks due on February 26, 2011
Unsecured loans from a financial institution due on February 28, 2011
Unsecured loans from banks due on June 10, 2011
Unsecured loans from banks due on June 24, 2011
Unsecured loans from banks due on August 25, 2011
Unsecured loans from banks due on August 26, 2011
Unsecured loans from banks due on August 26, 2011
Unsecured loans from banks due on September 25, 2011
Unsecured loans from a bank due on December 24, 2011
Unsecured loans from banks due on February 26, 2012
Unsecured loans from banks due on February 26, 2012
Unsecured loans from a bank due on June 25, 2016 (Note 2)
Total

–
–
–
–
–
¥ 8,500,000
2,300,000
4,500,000
4,000,000
2,500,000
2,000,000
1,000,000
4,000,000
11,000,000
500,000¥40,300,000

Weighted-averageinterest rate
(Note1)–––––1.43200%
1.00077%
1.44800%
1.63825%0.90000%
1.43950%0.74000%
0.79000%
1.89764%1.97000%

As of October 31, 2010
Amount(Thousandsof Yen)¥ 2,500,000
2,580,000
1,000,000
7,500,000
2,000,000
8,500,000
2,300,000
4,500,000
4,000,000
2,500,000
2,000,000–––
500,000¥39,880,000

Weighted-averageinterest rate
(Note1)0.94000%
1.05000%
1.04000%
1.68000%
1.04000%
1.43200%
1.05000%
1.44800%
1.63825%0.94000%
1.43950%–––
1.97000%

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, whichwere 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 day of every sixth month starting on December 25, 2009, with the remaining payment of ¥6,750 million to be repaid on June 25,
2016.

4. CASH AND CASH EQUIVALENTS

The Company entered into ¥40,000 million credit facilities in the form of commitment lines with five financial institutions for the sixmonth periods ended April 30, 2011 and October 31, 2010. The total unused amounts of such credit facilities were ¥40,000 million as ofApril 30, 2011 and October 31, 2010.

Cash and cash equivalents as of April 30, 2011 and October 31, 2010 consist of the following:

7. LONG-TERM DEBT
Thousands of Yen

Cash and bank deposits
Bank deposits with original maturities of more than three months
Cash and cash equivalents

As of April 30, 2011

As of October 31, 2010

¥31,709,202–¥31,709,202¥32,053,477(1,300,000)¥30,753,477

5. SCHEDULE OF PROPERTY AND EQUIPMENT
Property and equipment as of April 30, 2011 and October 31, 2010 consist of the following:Thousands of Yen
As of April 30, 2011
Acquisition Costs

Land
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

40

6. SHORT-TERM DEBT

Book Value

As of October 31, 2010
Acquisition Costs

Book Value¥ 57,405,168 ¥ 57,405,168 ¥ 57,405,168 ¥ 57,405,168
27,450,413
27,381,012(2,703,599)
24,746,814(2,280,863)
25,100,149
605,286
597,530(135,033)
470,253(111,197)
486,333
14,332
12,463(2,794)
11,538(1,848)
10,615
–
–
6,210
6,210
207,266,863 207,266,863 208,581,573 208,581,573
96,818,589
97,390,269(18,117,121)
78,701,468 (16,999,662)
80,390,607
926,007902,736(483,947)
442,060(447,523)
455,213
250,506
223,860(118,911)
131,595(104,005)
119,855
30,94730,946(19,502)
11,445(16,112)
14,834
48,46748,46798,421
98,421¥369,235,671 ¥369,235,671 ¥372,668,978 ¥372,668,978Long-term debt as of April 30, 2011 and October 31, 2010 consist of the following:
As of April 30, 2011
Amount(Thousandsof Yen)Unsecured loans from banks due on February 26, 2012–
Unsecured loans from banks due on June 24, 2012
¥12,000,000
Unsecured loans principally from insurance companies due on August
5,000,000
26, 2012
Unsecured loans from a financial institution due on August 26, 2012
1,000,000
Unsecured loans from banks due on August 26, 2012
7,500,000
Unsecured loans from banks due on September 25, 2012
2,000,000
Unsecured loans from banks due on November 4, 2012
10,000,000
Unsecured loans from banks due on December 27, 2012
5,000,000
Unsecured loans from a bank due on February 26, 2013
1,000,000
Unsecured loans from an insurance company due on February 26,
2,000,000
2013
Unsecured loans from banks due on February 26, 2013
4,000,000
Unsecured loans from a bank due on June 24, 2013
2,000,000
Unsecured loans from an insurance company due on June 24, 2013
1,000,000
Unsecured loans from a bank due on August 26, 2013
2,500,000
Unsecured loans from banks due on December 8, 2013
7,500,000
Unsecured loans principally from banks due on February 26, 2014
5,500,000
Unsecured loans from insurance companies due on March 19, 2014
4,000,000
Unsecured loans from banks due on December 24, 2014
6,350,000
Unsecured loans from an insurance company due on February 26,
3,000,000
2015
Unsecured loans from a financial institution due on February 26, 2015
3,000,000
Unsecured loans principally from insurance companies due on June
8,000,000
24, 2015
Unsecured loans from an insurance company due on August 26, 2015
1,000,000
Unsecured loans from a bank due on February 26, 2018
1,000,000
Unsecured loans from a bank due on June 25, 2016 (Note 2)
8,750,000
Total¥103,100,000

Weighted-averageinterest rate
(Note 1)

As of October 31, 2010
Amount(Thousandsof Yen)Weighted-averageinterest rate
(Note 1)

– ¥ 11,000,000
1.39575%
12,000,000

1.89764%
1.39575%

1.43750%

5,000,000

1.43750%

1.53625%
1.46000%
1.61150%
1.51175%
1.87200%
1.75250%

1,000,000
7,500,000
2,000,000
10,000,000
5,000,000
1,000,000

1.53625%
1.46000%
1.61150%
1.51175%
1.87200%
1.75250%

1.99250%

2,000,000

1.99250%

1.15000%
1.14050%0.89000%
0.98550%
1.68680%
1.00000%
1.98000%
1.55800%

4,000,000
2,000,000–
2,500,000
7,500,000–
4,000,000
6,350,000

1.19000%
1.14050%–
0.98550%
1.68680%–1.98000%
1.55800%

1.91875%

3,000,000

1.91875%

1.69300%

3,000,000

1.69300%

2.31750%

8,000,000

2.31750%

1.31125%
1.84650%
1.97000%

1,000,000–
9,000,000¥106,850,000

1.31125%–
1.97000%

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, whichwere 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 payment of ¥6,750 million to be repaid on June 25,
2016.

41

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

50,000,000

23,000,000

12,850,000

For the period
from November 1, 2010
to April 30, 2011

9,500,000

For the period
from May 1, 2010
to October 31, 2010

Net asset values per unit

¥622,318¥622,486

Net income per unit

¥ 14,512¥ 14,680

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.

Investment Corporation Bonds
Details of investment corporation bonds outstanding are summarized as follows:

Note: The basis for calculating net income per unit is as follows.

As of Oct. 31, 2010

As of April 30, 2011

For the period
from November 1, 2010
to April 30, 2011

Amount(Thousandsof Yen)Weightedaverageinterest rate

Amount(Thousandsof Yen)Weightedaverageinterest rate

First Series of Unsecured Investment Corporation Bonds
Due on March 16, 2015

¥ 5,000,000

1.85000%¥ 5,000,000

1.85000%

Second Series of Unsecured Investment Corporation Bonds
Due on March 16, 2020

5,000,000

2.47000%

5,000,000

2.47000%

Third Series of Unsecured Investment Corporation Bonds
Due on November 29, 2010––

10,000,000

1.19000%

Fourth Series of Unsecured Investment Corporation Bonds
Due on November 30, 2015

10,000,000

2.05000%

10,000,000

2.05000%

Fifth Series of Unsecured Investment Corporation Bonds
Due on March 19, 2012

5,000,000

1.61000%

5,000,000

1.61000%

Sixth Series of Unsecured Investment Corporation Bonds
Due on March 17, 2017

5,000,000

2.21000%

5,000,000

2.21000%

Seventh Series of Unsecured Investment Corporation Bonds
Due on March 17, 2028

4,500,000

2.90000%

4,500,000

2.90000%

Eighth Series of Unsecured Investment Corporation Bonds
Due on November 26, 2014

6,000,000

0.94000%––

Ninth Series of Unsecured Investment Corporation Bonds
Due on November 24, 2017

4,000,000

1.52000%––

For the period
from May 1, 2010
to October 31, 2010

¥4,428,122¥4,479,366

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

Net income available to ordinary unitholders (Thousands of Yen)

¥4,428,122¥4,479,366

305,123

305,123

Net income (Thousands of Yen)

Average number of units during the period

11. RELATED PARTY TRANSACTIONSParent Company, corporate shareholders and otherNot applicable

Directors, individual shareholders and other¥44,500,000

Total¥44,500,000

Thousands of Yen
Within a year

5,000,000

1-2 years

2-3 years––

Not applicable

Subsidiary companies and otherNot applicable

Fellow subsidiary companies and otherNot applicable

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

3-4 years

4-5 years

11,000,000

10,000,000

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

42

The net asset values per unit and the net income per unit as of April 30, 2011 and October 31, 2010 were as follows:

4-5 years

8. INVESTMENT CORPORATION BONDS

Investment Corporation Bonds

10. PER UNIT INFORMATIONThe Company, as an investment corporation, is subject to corporate income taxes at a statutory tax rate of approximately 40% for the sixmonth periods ended April 30, 2011 and October 31, 2010. However, the Company may deduct dividend distributions paid to its unitholders
from its taxable income amounts, provided such distributions meet the requirements under the Special Taxation Measures Law of Japan.
Under this law, 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 such amounts. If the investment corporation does not satisfy all of therequirements, the entire taxable income of the investment corporation will be subject to regular corporate income taxes.
Since the Company distributed approximately 100% of its distributable income in the form of cash distributions totaling ¥4,427,945
thousand and ¥4,479,510 thousand for the six-month periods ended April 30, 2011 and October 31, 2010, respectively, such distributions
were treated as deductible distributions for purposes of corporate income taxes. The following summarizes the significant differences
between the statutory tax rate and the effective tax rate:
For the period
from November 1, 2010
to April 30, 2011

For the period
from May 1, 2010
to October 31, 2010

Statutory tax rate

39.33%

39.33%

Deductible cash distributions(39.32)(39.32)

Other

0.01

0.01

Effective tax rate

0.02%

0.02%

43

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”), and issuance of investment units. In financing through interest-bearing debt, to secure stable financing capability and reduce future risk of risinginterest 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 thetype 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 derivative transactions (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 rental 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 price available,
fair value is reasonably estimated. Certain assumptions are used for the estimation of fair value. Accordingly, the result of 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.

Thousands of Yen

Due within
one year

After one year,
After two years, After three years, After four years,
within two years within three years within four years within five years

After fiveyears

Cash and bank deposits

13,912,852

–

–

–

–

–

Cash and bank deposits in trust

17,796,350

–

–

–

–

–

31,709,202

–

–

–

–

–

Total

Note 5: Redemption schedule for investment corporation bonds and debt

Thousands of Yen
Due within
one year

Short-term debt

After one year,
After two years, After three years, After four years,
within two years within three years within four years within five years

9,800,000–

After five
years

–

–

–

–

Investment corporation bonds

5,000,000––

11,000,000

10,000,000

18,500,000

Long-term debt

30,500,000

50,000,000

23,000,000

12,850,000

9,500,000

7,750,000

45,300,000

50,000,000

23,000,000

23,850,000

19,500,000

26,250,000

Total

For the period from May 1, 2010 to October 31, 2010
The following table summarizes the carrying value and the estimated fair values of financial instruments as of October 31, 2010. The
following table does not include financial instruments whose fair value is extremely difficult to estimate (see Note 3).
Thousands of Yen
Carrying Value(Note 1)

Fair Value(Note 1)

Difference(i)Cash and bank deposits

14,007,165

14,007,165

–

(ii)

Cash and bank deposits in trust

18,046,312

18,046,312–(iii) Short-term debt

(10,380,000)(10,380,000)–(iv) Current portion of investment corporation bonds(10,000,000)(10,004,690)

4,690

Fair Value of Financial Institutions(v) Current portion of long-term debt

(29,500,000)(29,713,579)

213,579

For the period from November 1, 2010 to April 30, 2011
The following table summarizes the carrying value and the estimated fair values of financial instruments as of April 30, 2011. The
following table does not include financial instruments whose fair value is extremely difficult to estimate (see Note 3).

(vi) Investment corporation bonds(34,500,000)(35,367,286)

867,286(vii) Long-term debt

(106,850,000)(109,269,968)

2,419,968–––(viii) Derivative transactions

Thousands of Yen
Carrying Value (Note 1)

Fair Value (Note 1)

Difference(i)Cash and bank deposits

13,912,852

13,912,852

–

(ii)

Cash and bank deposits in trust

17,796,350

17,796,350–(9,800,000)(9,800,000)–(iii) Short-term debt(iv) Current portion of investment corporation bonds(5,000,000)(5,036,435)

36,435(v) Current portion of long-term debt

(30,500,000)(30,745,349)

245,349(vi) Investment corporation bonds(39,500,000)(39,795,289)

295,289(vii) Long-term debt

(103,100,000)(105,054,319)

1,954,319–––(viii) Derivative transactions

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

44

Note 3: The fair value of security deposits (with a carrying value of ¥3,881,015 thousand) and security deposits in trust (with a carrying value of ¥16,865,973 thousand) that have been
deposited from tenants under lease contracts are not disclosed because they do not have any market price and their effective deposit period from the lease inception to tenant’s
termination of the rental 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

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. Therefore, for these items, the Carrying Value is reported as the
Fair Value.
(iii) Short-term debt
As these items are settled within a short-term period, their fair value is nearly equal to the carrying value. Therefore, for these items, the Carrying Value is reported as the
Fair Value.
(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 for the 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 ¥3,856,470 thousand) and security deposits in trust (with a carrying value of ¥17,883,837 thousand) that have been
deposited from tenants under lease contracts are not disclosed because they do not have any market price and their effective deposit period from the lease inception to tenant’s
termination of the rental 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 trustThousands of Yen

Due within
one year

After one year,
After two years, After three years, After four years,
within two years within three years within four years within five years

After fiveyears

Cash and bank deposits

14,007,165

–

–

–

–

–

Cash and bank deposits in trust

18,046,312

–

–

–

–

–

32,053,477

–

–

–

–

–

Total

45

Note 5: Redemption schedule for investment corporation bonds and debt

Thousands of Yen
Due within
one year

After one year,
After two years, After three years, After four years,
within two years within three years within four years within five years

After fiveyears

Short-term debt

10,380,000

–

–

–

–

–

Investment corporation bonds

10,000,000

5,000,000––

5,000,000

24,500,000

Long-term debt

29,500,000

39,000,000

27,000,000

12,000,000

21,850,000

7,000,000

49,880,000

44,000,000

27,000,000

12,000,000

26,850,000

31,500,000

Total

14. INVESTMENT AND RENTAL PROPERTIES

Thousands of Yen
Carrying Value

371,136,575

Change during the period(3,433,307)¥12,846,039¥13,364,441

As of October 31, 2010

374,569,882

Carrying Value

375,851,491

12,020,206

9,475,685

9,779,004

Common area charges

2,248,378

2,241,202
1,344,235

As of April 30, 2011

258,602259,448

Incidental income

792,174

1,015,971

Other miscellaneous revenues

71,20068,816

5,741,473

5,883,558

1,089,967

1,078,936

341,635,000

Fair value
As of April 30, 2010

11,724,063

Rental revenues

Rental revenues

1,121,976

Thousands of Yen(1,281,609)

For the period
from May 1, 2010
to October 31, 2010

Parking revenues

For the period from May 1, 2010 to October 31, 2010
The Company owns in its portfolio certain office buildings (including land) for lease located in Tokyo and other areas. The following tablesummarizes the carrying value and the estimated fair value of these properties as of October 31, 2010.

374,569,882

Thousands of Yen
For the period
from November 1, 2010
to April 30, 2011

Other rental revenues

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

Change during the period

Real estate rental revenues and expenses for the six-month period ended April 30, 2011 and October 31, 2010 consist of the following:

Fair value

Note 1: The Carrying Value represents the acquisition cost less accumulated depreciation.
Note 2: The fair value as of April 30, 2011 represents the sum of the appraisal values estimated by external real estate appraisers. However, for NOF Toyo-cho Building, 67% of the quasico-ownership held by the Company as of April 30, 2011, the price on the agreement of sale and purchase on December 8, 2010, is used as the fair value.

As of October 31, 2010

16. BREAKDOWN OF REAL ESTATE RENTAL REVENUES AND EXPENSES

Real estate rental revenues

For the period from November 1, 2010 to April 30, 2011
The Company owns in its portfolio certain office buildings (including land) for lease located in Tokyo and other areas. The following tablesummarizes the carrying value and the estimated fair value of these properties as of April 30, 2011.

As of April 30, 2011

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.

As of October 31, 2010

353,363,000

Note 1: The Carrying Value represents the acquisition cost less accumulated depreciation.
Note 2: The fair value as of October 31, 2010 represents the sum of the appraisal values estimated by external real estate appraisers.

The real estate rental revenues and expenses for the six-month period ended October 31, 2010 is presented in “16. Breakdown of Real
Estate Rental Revenues and Expenses.”

Real estate rental expenses
Property management costs
Property management fees

263,254

232,466

Property and other taxes

1,211,199

1,218,289

Utility expenses

826,025

1,028,750

Casualty insurance

23,66926,275

Repairs and maintenance
Depreciation
Other rental expenses
Real estate rental profits

242,160

187,697

1,861,135

1,876,802

224,064

234,343¥  7,104,566¥ 7,480,883

17. BREAKDOWN OF GAIN AND LOSS ON SALES OF REAL ESTATE
Gain on sales of real estate for the six-month period ended April 30, 2011 and October 31, 2010 consist of the following:Thousands of Yen

15. SEGMENT INFORMATION

For the period
from November 1, 2010
to April 30, 2011

For the period from November 1, 2010 to April 30, 2011 and from May 1, 2010 to October 31, 2010

Segment Information

For the period
from May 1, 2010
to October 31, 2010

Gain on sales of real estate
Proceeds from sales of real estate¥2,859,000–

Cost of sales of real estate

2,322,399–

Related Information

Other related sales expenses

264,701–

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.

Gain on sales of real estate¥   271,900–

Since the Company has been engaged in the real estate leasing business as a single segment, segment information has been omitted.

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, geographical breakdownof property and equipment has been omitted.

46

47

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 theownership of the leased assets is deemed to be transferred to the lessee are calculated by the straight-line method, over the lease periodwith 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 of generally two years for offices. The future minimum rental revenues under existing non-cancelable operating lease agreements as of April 30,
2011 and October 31, 2010 are summarized as follows:
Thousands of Yen
As of April 30, 2011

As of October 31, 2010

¥  4,229,219¥ 4,597,339

Due within one year
Due after one year
Total

20,524,275

23,376,402¥24,753,494¥27,973,741

19. DERIVATIVES AND HEDGE ACCOUNTING
Derivative transactions as of April 30, 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
Hedge accounting
methodType of derivative
instruments

Main hedged item

Special treatment ofinterest-rate swaps

Interest-rate swaps:
Received/floating andpaid/fixedLong-term debt

Notional amountDue after one year

88,850,000

Fair value

58,850,000

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-termdebt” above).

Derivative transactions as of October 31, 2010
(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
Hedge accounting
methodType of derivative
instruments

Main hedged item

Special treatment ofinterest-rate swaps

Interest-rate swaps:
Received/floating andpaid/fixedLong-term debt

Notional amountDue after one year

95,350,000

Fair value

68,850,000

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-termdebt” above).

20. SIGNIFICANT SUBSEQUENT EVENTSTransfer of a Property
The Company completed the transfer of 67% of the quasi-co-ownership interest in each of the two real estate trust beneficial interests of
NOF Toyo-cho Building on May 10, 2011. Consumption taxes and adjustments of property taxes are excluded from the transfer price.

NOF Toyo-cho Building
Type of Asset (Note 1) : Trust Beneficial Interest
Date of Agreement: December 8, 2010
Transfer Date
: May 10, 2011
Transfer Price: ¥5,805,000,000
Transferee: Japanese General Operating Company
Impact on Revenues : Gain on sales of real estate of ¥1,006 million (miscellaneous expenses excluded), as part of operating revenues forthe sixteenth fiscal period (from May 1, 2011 to October 31, 2011) is scheduled to be reported.
Note 1: The Property is composed of two beneficial interests, in each of which 50% co-ownership interest in the land and building is mainly entrusted.

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Business Structure
Asset Custodian
Administrator ofUnitholders Register
General Administration(Accounting, etc.)
Manager of Special Accounts
Mitsubishi UFJ Trust andBanking Corporation

WebsiteNomura Real Estate
Office Fund, Inc.

Asset Custody
Agreement

Debt Financing /Issue of Investment
Corporation Bonds

Administration
Agreement, etc.

Financial Instituions, etc. /Investors of Investment
Corporation Bonds

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 Tenents• News, Latest Data, Performance, Distributions, Calendar
We continue to provide information timely and strive to enhance the contents of the website.
(URL) http://www.nre-of.co.jp/english/

Unitholders’ Meeting

AuditorBoard of Directors’Meeting

Ernst & Young
ShinNihon LLC

Liabilities
Capital Investment

Asset

Rents, etc.

Unitholders

EquityProperty
Management
Agreement

Property
Management

Unitholders

Trading

Investment
Office Buildings(Real Estate
Related Assets)

RepaymentofPrincipal &Interest

Property Management
Companies

Instructions forRents andManagement

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

RentalStrategies,
Plans ofRepairs, etc.

Asset Management
Services Agreement

Posting the news by year andsubject

Distribution
Information andResearch-related
Service Providers

Asset Management Company
Property
Information

Service
Agreement, etc.

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

Posting the latest information on the top page
*RSS compatible

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, 2011)
Number of Units Issued
305,123 (as of April 30, 2011)
Number of Unitholders
12,185 (as of April 30, 2011)

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

Posting summaries, maps, occupancy rates, etc.,of the portfolio

Posting the latest fund data

Disclaimer
This semiannual report includes translations of certain Japanese documents originally filed under the Securities and Exchange Law

Independent Auditors
Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg. 2-2-3 Uchisaiwai-cho Chiyoda-ku,
Tokyo 100-0011, Japanof Japan. This report was prepared in English solely for the convenience of and reference by readers outside Japan and should not be

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

generally accepted accounting principles applied in certain other countries. Potential investors should consult their own professional

considered as a disclosure statement. The original Japanese documents always govern the meaning and interpretation.
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 fromadvisors for an understanding of the differences between Japanese GAAP and generally accepted accounting principles in the UnitedStates (“U.S. GAAP”) or other jurisdictions and how those differences might affect the financial information contained herein.
Estimates for Nomura Office Fund’s future operating results contained in this semiannual report are forward-looking statements andare based on information currently available to Nomura Office Fund and its asset management company and are subject to risks anduncertainties. Consequently, these projections should not be relied upon as the sole basis for evaluating Nomura Office Fund. Actual
results may differ substantially from the projections depending on a number of factors.

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Printed in Japan