Fourteenth Fiscal Period
May 1, 2010

October 31, 2010▲

Semi-Annual ReportWebsite
ProfileNomura Office Fund’s Website

Nomura Real Estate Office Fund, Inc. (referred to as “Nomura Office Fund” or
the “ Company” hereafter) was listed on the Tok yo 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
and Investment Corporations of Japan. The Company’s basic investment
policy is to assure stable rent revenues and steady portfolio growth over the
medium- to long-term.
Nomura Real Estate Asset Management Co., Ltd. (referred to as“NREAM”
hereafter), a wholly owned subsidiary of Nomura Real Estate Holdings, Inc. isin charge of asset management on behalf of Nomura Office Fund inaccordance with the basic investment policy as described above. Throughcoordination with Nomura Real Estate Holdings, Inc. and other groupcompanies, NREAM aims to achieve these goals and more.

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

Investor Oriented

We continue to provide information timely and strive to enhance the contents of the website.
(URL) http://www.nre-of.co.jp/english/

Posting the news by year andsubject

Contents
To Our Investors ......................................................................................................2
Highlights of the Fourteenth Fiscal Period ............................................................3
Management Summary of the Fourteenth Fiscal Period ....................................4
Portfolio Highlights .................................................................................................6
Financial Status .......................................................................................................8
Posting the latest information on the top page
*RSS compatible

Summary of Portfolio Properties .........................................................................10
Major Properties ....................................................................................................12
Profile of the Asset Management Company .......................................................14
Performance Report ..............................................................................................15

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

Posting the latest fund data

Financial Section ...................................................................................................33
Business Structure/Corporate Data .....................................................................50

Disclaimer

Website....................................................................................................Back CoverThis semiannual report includes translations of certain Japanese documents originally filed under the Securities and Exchange Law ofJapan. This report was prepared in English solely for the convenience of and reference by readers outside Japan and should not be
considered as a disclosure statement. The original Japanese documents always govern 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
from generally accepted accounting principles applied in certain other countries. Potential investors should consult their own
professional advisors for an understanding of the differences between Japanese GAAP and generally accepted accounting principles
in the United States (”U.S. GAAP”) or other jurisdictions and how 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.

Printed in Japan

Highlights of the Fourteenth Fiscal Period

To Our Investors

Fourteenth period results

Dear Investors,
We are delighted to be able to present to you the financial results for the fourteenth fiscal period(ended October 31, 2010) and report on our activities during the period herein.
We booked operating revenues for this period of ¥13,364 million, current profits of ¥4,480 million,
and net income of ¥4,479 million. Cash distribution per unit was ¥14,681.
In this fiscal period, the Japanese economy buoyed by rising exports, recovering personal
consumption and an upturn in corporate earnings raised hopes of a recovery, but with the risk of adownturn in overseas economies and concerns regarding continued yen appreciation, its futurecontinues to be plagued by uncertainty.
Amid ongoing weakness in the office leasing market, we actively engaged in tenant leasing
activities in order to maintain the occupancy rate of our portfolio.
As a result, we are successful in continuing stable fund management, with a portfolio occupancy
rate of 94.5% as of the end of the fourteenth fiscal period.
Regarding the NRE Tennozu Building (formerly the JAL Building), currently the home of Japan
Airlines International Co., Ltd., which is undergoing reorganization proceedings, future management,
leasing measures and other matters are discussed on page 5 of this report. Please take time to review
them.
The Company continues to maintain close relationships with financial institutions, which allow the
Company continued access to stable financing sources, ensuring healthy financial conditions.
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 forhigh-quality wealth creation.
Lastly, we would like to thank you again for your patronage in the past periods, and would like to
ask for your continued support for the years to come.

Cash distribution per unit

Operating revenues¥¥

Portfolio

14,68151properties

Number of properties

13,364million

438,918.56m²

Total leasable
floor space

Operating profits¥

6,223million

Total number of tenants

Net income¥

4,479million

Total acquisition
price

¥

704

378,607million

4.9%

Average occupancy rate

94.5%

Ratio of long-term debts

73.9%

Average remaining duration of
long-term fixed debts

3.8 years

Ratio of fixed- rate debts

91.2%

Weighted average of interest
rate of all the debts

1.67%

NOI return of portfolio

Finance

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

Market Capitalization (¥ mln)
900,000

1,600,000

750,000

1,400,000
Market capitalization (as of Oct. 29, 2010)................¥ 150,883 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

600,000

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

2

2nd public offering¥588,000

Initial public offering¥500,000
400,000
Dec. 4 Apr. 30
Oct. 29
2003 2004
2004

4th public offering¥926,100

3rd public offering¥740,782

150,000
5th public offering¥756,560
0Apr. 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. 29
2010

3

Management Summary of the Fourteenth Fiscal Period• Activity summary for this period and management strategy for the future• NRE Tennozu Building (formerly the JAL Building)This 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-term

On June 30, 2010, a lease agreement outlining rent (beginning July 2010) and space (withdrawal fromapproximately 40% of exclusive area and all common space by March 31, 2011) reductions wasentered into with Japan Airlines International Co., Ltd. (currently undergoing reorganization
proceedings) for its space in NRE Tennozu Building (formerly the JAL Building). Nomura Real Estate
Development Co., Ltd., our sponsor, will sublease the Tennozu Building beginning in April 2011 andstart to manage it as a multi-tenant building. In that connection, the name of the building waschanged to “NRE Tennozu Building.”

Management Strategy” below.

Basic Policies
Secure stable mid- to long-term income

Steady portfolio growth

Until March 31, 2011: Single-tenant building

From April 1, 2011: Multi-tenant building

Sublessee: Only Japan Airlines International

Sublessee: Japan Airlines International and other companies

Overview

Mid- to long-term management strategy
Asset management withmid- to long-term vision• Changes in the lease agreement with Japan Airlines International

Promote diversification ofassets through assets size
expansion

Maintain conservative
financial strategy

Whole building (including common space)
Approx. 80,000m 2

Japan Airlines International■ Leased area
Whole building: Approx. 80,000m2(Exclusive area: Approx. 50,000m2)+ Common space: Approx. 30,000m2■ Lease type

Until June 2010: Ordinary lease agreement
From July 2010: Fixed term lease agreement■(Lease ends: March 31, 2015)

Activity summary for this period■ RentAcquisition

Asset Management- Monitored and analyzed market developments by gathering
information on properties- Maintained and secured the pipeline of promising properties- Considered replacement of properties to strengthen theportfolio- Maintained the occupancy rate at high levels (94.5% as of theend of the fourteenth fiscal period) by pursuing efforts to fully
lease properties- Reduced cancellation notices through stronger relationships
with tenants- Continued efforts to reduce rental business expenses

Financial Activities

IR- Completed refinance totaling ¥10.3 billion- Maintained good relationships with financial institutions- Credit Rating: AA- (Rating and Investment Information, Inc.)■- Participated in events targeted at individual investors(J-REIT Fair, etc.)- Conducted IR activities targeted at domestic and foreign
institutional investors

Management strategy for the future

From July 2010: Approx. ¥43 million reduction
from monthly rent paid through June 2010

Overview Leasable space (exclusive area)

Approx. 50,000m 2

Common space
Approx. 30,000m 2

Japan Airlines International■ Leased space

Fees to cover common area
charges will be received
from each tenant

Approx. 30,000m2 (Exclusive area only)■ Lease type

Limited-term lease agreement (no change)■ Rent· Rent reduction commensurate with reduction inleased space· Fee (calculated based on proportion of leased
space) to cover common service charges

Newly leasable of fice space■ Leasable space

Approx. 20,000m2 (Currently up for lease)*This image addresses the leasing of the entire property. Rents are amounts paid to the sublessee by the tenants.

• Leasing activities
Joint effort with building sponsor▸ Changed building name to “NRE Tennozu Building”▸ Managing the building together with Nomura Real
Estate Development Co., Ltd.
• Leasing initiatives-Efforts to fully lease properties by a speciallyformed team
-Changed the master lessee to Nomura Real Estate
Development Co., Ltd.
• Changed to multi-tenant building-Outsourced work related to multi-tenant transition

NRE Tennozu Building strengths▸ Outstanding property competitiveness-Standard floors ideal for efficient consolidation(Approx. 2,000m²/floor)-High-spec office building▸ Highly attractive commuting convenience-Internationalization of Haneda Airport-Nationwide access via bullet train (Shinagawa
Station)Profitability Stabilization Measures
1. Portfolio adjustment: Sale of the NOF Toyo-cho Building and sourcing activities for acquiring new properties
2. Leasing of the NRE Tennozu Building: Utilize the Group network and complete transition to a multi-tenantbuilding
3. Strengthening of leasing efforts mainly for properties outside of Tokyo: Pursue various leasing measures,
including flexibility in setting rents and property previews
4. Strict cost management: Reduce property management and financing costs

Measures targeting specific issues in NOF, and maintenance and stabilization of
cash distributions and occupancy rates

Return to growth track and grow assets under management (Mid-to-long term goal: ¥500 billion)

4▸ Leasing status• Target tenant- Companies with facilities or customers inside and outside Japan: Foreign companies, manufacturing-relatedcompanies, carriers, etc.
- Companies in industries highly compatible with the Tennozu area
- Companies planning to cut costs by consolidating operations: IT companies, systems companies, softwaredevelopment companies, etc.

·Approximately 30 companies have come to examine leasable areas·Leasing negotiations are underway with multiple companies

Aiming success in rapidly leasing out all newly available office space

5

Portfolio Highlights

Well Diversified Portfolio

CHANGES IN OCCUPANCY RATE (AVERAGE)

Nomura Office Fund has invested in properties focusing on the geographic diversificationand diversification within each property in order to reduce risk of income fluctuation.
The average occupancy rate at the end of the fourteenth fiscal period: 94.5%.

The average occupancy rate maintained stable and high level throughout the fourteenth fiscal period.
Average occupancy rate (%)

100.0

Total leasable space (000m2)

95.0

94.3

94.8

94.1

94.1

93.9

94.5

500

439

439

439

439

439

438

438

450

90.0

400

80.0

350

70.0
Apr. 30,
2010(End of 13th Period)

CHANGES IN SIZE OF PORTFOLIO
As indicated below, diversification of the portfolio, which has steadily increased since listing.
(¥bln)

500

400
19 bldgs

300
12 bldgs

200

104.2

15 bldgs

18 bldgs

127.2

151.5

184.6

23 bldgs

210.1

28 bldgs

30 bldgs

240.8 259.1

31 bldgs

282.8

34 bldgs

292.4

37 bldgs

317.4

46 bldgs

50 bldgs

50 bldgs

51 bldgs

51 bldgs

The area and property diversification as of the end of the fourteenth period are as follows.
Property Diversification (Top 10 Properties and other)

Other Cities
Central Tokyo
Other 41 Bldg.
48.3%

Suburban Tokyo
14.6%
Note: Central Tokyo--- Six central wards consisting of Chiyoda, Chuo, Minato, Shinjuku,
Shinagawa and Shibuya
Suburban Tokyo --- Other areas of Tokyo, Kanagawa, Saitama and Chiba
Other Cities--- Major regional cities in other areas
Note: Based on the acquisition price6

NOF Shiba Bldg.
2.6%
Secom Medical Bldg.
3.0%
NOF Shibuya Koen-dori Bldg.
3.2%

Sep. 30,
2010

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

Shinjuku Nomura Bldg.
10.2%
NRE Tennozu Bldg.
8.7%
Omron Kyoto
Center Bldg.
6.3%
NOF Nihonbashi
Honcho Bldg.
5.4%
SORA Shin-Osaka 21
5.1%
Tennozu Park Side Bldg.
3.9%
NOF Shinjuku Minamiguchi Bldg.
3.2%

Property

Expiry ofcontract

Leasedspace(m²)

Weight in
portfolio (%)

Real Estate

NRE Tennozu Bldg.

Mar. 31, 2015

42,084.11

10.2

Electronic Devices

Omron Kyoto Center Bldg.

Mar. 29, 2021

34,616.84

8.4

Real Estate

NOF Toyo-cho Bldg.

Nov. 30, 2014

18,218.17

4.4

Secom Medical Bldg.
NOF Sendai Aoba-dori Bldg.
JCB Sapporo Higashi Bldg.
Shinjuku Nomura Bldg.
NOF Utsunomiya Bldg.
NRE Yotsubashi Bldg.
NRE Hiroshima Bldg.
Shinjuku Nomura Bldg.
NRE Yotsubashi Bldg.
NOF Technoport Kamata Center Bldg.
Faret Tachikawa Center Square
NOF Shin-Yokohama Bldg.
NOF Surugadai Plaza Bldg.
Shinjuku Nomura Bldg.
NRE Hiroshima Bldg.

Feb. 28, 2025
Dec. 31, 2010
Feb. 7, 2018
May 31, 2011
Dec. 31, 2011
Nov. 30, 2011
Oct. 31, 2011
Nov. 30, 2013
Nov. 30, 2013
Apr. 30, 2012
Dec. 31, 2011
Sep. 30, 2012
Mar. 31, 2013
May.31, 2011
Feb. 28, 2012

8,821.24
755.699,062.04
574.111,140.85
1,847.63
2,834.48
4,539.05
1,266.19
3,813.62
255.15
1,293.78
4,160.94
3,853.23
283.02
139,420.14

2.1
0.2
2.2
0.1
0.3
0.5
0.7
1.1
0.3
0.9
0.1
0.3
1.0
0.9
0.1
33.6

TenantIndustry3

Flagship Properties
Private Company
OMRON Corporation
XYMAX AXISCORPORATION

4SECOM 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

FUJITSU LIMITEDElectronic Devices

9

KYORIN Holdings, Inc.

Wholesale10

SOMPO JAPAN
INSURANCE INC.

Insurance

1

DIVERSIFICATION BY AREA AND PROPERTY

57.9%

Aug. 31,2010

Top 10 tenants in the leased space as of the end of the fourteenth period are as follows.

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
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. 30, 2010 Oct. 31, 2010

27.5%

Jul. 31,2010

MAJOR TENANTS

2Area Diversification

Jun. 30,2010

378.6 378.6
362.2 374.5 374.5

100

0May. 31,
2010

Total

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

Total
704
Tenants

1. Services

20.3%

7. Real Estate

4.1%

2. IT

14.9%

8. Retail

4.0%

3. Electronics

12.5%

9. Financing

3.3%

4. Airline

10.7%

10. Construction

2.2%

5. Wholesale

8.9%

11. Other 18 Businesses

14.9%

6. Insurance

4.2%

7

Financial Status

Carried Out Steady Refinancing

DIVERSITY OF REPAYMENT DATES (as of the end of the Fourteenth fiscal period)

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 therefinancing of ¥10.3 billion and outstanding interest-bearing debt as of the end of the
fourteenth fiscal period is ¥191.23 billion.

(¥ bln)

30

27.75

Debts

24.05

25

22.25

20

17.6

16.25

15

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

11.75

10.25
9.25

10

6.75

0.25

15th

(Apr. 2011)

Ratio of fixed and floating interest-bearing debts

Short-term¥49.8 billion
26.1%

73.9%

91.2%

19th

(Apr. 2013)

23rd(Apr. 2015)

29th

31st

33rd

(Apr. 2020)

35th

37th

39th

41st

43rd

45th

47th

(%)

6.0

7

5

5.1
3.8

4

2

LIST OF LENDERSThe number of lenders as of the end of the fourteenth period is 31 financial institutions.
Total Amountof Debt
Remaining

Lender

4.4
3.3

3.9

1.00

1.10

1.10

1.10

1.30

3.5

5.5

5.4

4.6

1.40

1.65

1.63

1.56

3.0

4.9

1.68

4.5

1.68

4.1
1.70

2.5

4.0

3.8

1.67

1.67

Total Amountof Debt
Remaining

0.0

0
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. 2010(End of 14th Period)

23,400Bank 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

15,500

Taiyo Life Insurance

3,000

Chiba Bank

1,000

Mitsubishi UFJ Trust and Banking Corp.

11,550Chuo Mitsui Trust and Banking

3,000

Keiyo Bank

1,000

Rating and Investment Information, Inc.

AA-: Issuer rating

StableSumitomo Trust & Banking Corp.

10,480Hachijuni Bank

2,000

Mitsui Life Insurance

1,000Standard & Poor’s Ratings Japan K.K.

A : Long-term corporate credit rating

Negative

Mizuho Corporate Bank

7,400

Daido Life Insurance

2,000

Mitsui Sumitomo Insurance

1,000

Moody’s Japan K.K.

A2 : Issuer rating

Negative

The Dai-Ichi Life Insurance Company

5,000

Zenkyoren

2,000

Sompo Japan Insurance Inc.

1,000

Sumitomo Life Insurance Company

5,000

Mizuho Trust & Banking

2,000

The 77 Bank

1,000

Nomura Trust and Banking

4,000

Shinkin Central Bank

2,000

Aozora Bank

1,000

Chugoku Bank

4,000

Nishi-Nippon City Bank

2,000

Iyo Bank

3,500

Hiroshima Bank

1,500

Total borrowings

146,730

Investment Corporation Bonds

44,500Total

191,230

1.5

0.5

1
(¥mln)

2.0

1.0

Bank of Tokyo-Mitsubishi UFJ(Reference)

49th(Apr. 2028)

Average remaining duration of debts

3

8

27th

(Apr. 2017)(year)

Note:“Fixed" includes floating-rate debts
with fixed-rates through interest-rate
swap transactions.

Lender

25th

Average debt rates

6Note:“Short-term” includes long-term debts
to be repaid within one year.

21st

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

8.8%
Fixed-rate¥174.3 billion

17th(period)

Floating-rate¥16.8 billion

Long-term¥141.3 billion

Total Amountof Debt
Remaining

4.5

5
0

Ratio of long-term and short-term interest-bearing debts

Lender

5.0

5.0

4.75

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

Investment Corporation Bonds

25.83

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

RatingOutlook9

Summary of Portfolio Properties

JR Chuo Line
Shinjuku-ku

01
09

Shinjuku

21

05

23
07

Shibuya-ku

06
10

ShibuyaLine

12

Chiyoda-ku
Tokyo

11

37
36 38

18JR Sobu

14

Sapporo15 03 16
20 17

JR Y
am

21

NOF Minami Shinjuku Building

2,464.71

Jun. 25, 2004

2,280

0.6

22
23

Central Shintomicho Building

Chuo-ku, Tokyo

2,465.86

Jun. 25, 2008

1,750

0.5

Sunworld Yotsuya Building

Shinjuku-ku, Tokyo

2,367.51

Jun. 25, 2008

778

0.2

219,20857.9

193,969.99

Taito-ku, Tokyo

4,869.81

Jan. 14, 2009

7,830

2.1

Koto-ku, Tokyo

18,218.17

Dec. 5, 2003

7,550

2.0

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

0.5

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

24

33

NOF Yokohama Nishiguchi Building

Yokohama City, Kanagawa

6,817.76

May 12, 2005

5,050

1.3

25

34

NOF Shin-Yokohama Building

Yokohama City, Kanagawa

8,074.83

Dec. 5, 2003

3,600

1.0

35

Yokohama Odori Koen Building

Yokohama City, Kanagawa

4,234.19

Sep. 28, 2007

2,993

0.8

55,149

14.6

in
te L
e

Sendai

42 41

44 43
Kyoto

Nagoya47

27

Shin-Yokohama

31

46

48

SaitamaTokyo

30 Kichijoji

Tachikawa

45

Hachioji

29

28
34

Kanagawa

Name of Property

Shibuya-ku, TokyoNOF Toyo-cho Building

40 Utsunomiya

Shin-Osaka

49

Ratio
(%)

NRE Ueno Building

ano

39

Tokyo

50

Acquisition Price(¥mln)

25

Shinagawa

13 04
02

Hiroshima

Date Acquired

24

08

Fukuoka

Leasable Floor
Space (m2)

S u b u r b a n To k y oShinagawa-ku

Location

Leasable Floor
Space (m2)

33
35

Chiba

Shinkiba

Total Suburban Tokyo (12 Properties)

26

80,491.65

Kawasaki

Other Cities

32
Yokohama

Acquisition Price
Date Acquired(¥mln)Ratio(%)

C e n t r a l To k y o

10Location

Total Central Tokyo (23 Properties)

22

19

MAP
No.

Name of Property

Chuo-ku

Minato-ku

51

MAP
No.

36

Sapporo North Plaza

Sapporo City, Hokkaido

13,601.04

Jun. 1, 2006

6,820

1.8

37

NRE Sapporo Building

Sapporo City, Hokkaido

6,559.34

Nov. 5, 2008

5,300

1.4

38

JCB Sapporo Higashi Building

Sapporo City, Hokkaido

9,062.04

Feb. 8, 2008

3,700

1.0

39

NOF Sendai Aoba-dori Building

Sendai City, Miyagi

6,098.91

Nov. 30, 2005

3,200

0.8

40

NOF Utsunomiya Building

Utsunomiya City, Tochigi

5,887.35

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

01

Shinjuku Nomura Building

Shinjuku-ku, Tokyo

31,500.89

Dec. 8, 2003

38,730

10.2

42

NOF Nagoya Yanagibashi Building

Nagoya City, Aichi

4,655.74

Sep. 29, 2005

3,550

0.9

02

NRE Tennozu Building

Shinagawa-ku, Tokyo

42,084.11

Mar. 18, 2005

33,0808.7

43Omron Kyoto Center Building

Kyoto City, Kyoto

34,616.84

Mar. 20, 2007

23,700

6.3

03

NOF Nihonbashi Honcho Building

Chuo-ku, Tokyo

19,157.05

Dec. 5, 2003

20,600

5.4

44

SORA Shin-Osaka 21

Osaka City, Osaka

21,277.48

Apr. 25, 2008

19,251

5.1

04

Tennozu Park Side Building

Shinagawa-ku,Tokyo

18,051.60

Feb. 27, 2004

14,8003.9

45

NRE Osaka Building

Osaka City, Osaka

16,977.79

Dec. 5, 2003

6,410

1.7

05

NOF Shinjuku Minamiguchi Building

Shibuya-ku, Tokyo

6,685.52

Jun. 25, 2008

12,3003.2

46

NRE Nishi-Umeda Building

Osaka City, Osaka

5,213.02

Sep. 26, 2008

5,660

1.5

06

NOF Shibuya Koen-dori Building

Shibuya-ku, Tokyo

3,420.16

Sep. 28, 2004

12,000

3.2

47

NRE Yotsubashi Building

Osaka City, Osaka

11,558.68

Dec. 5, 2003

3,940

1.0

07

Secom Medical Building

Chiyoda-ku, Tokyo

8,821.24

Sep. 1, 2006

11,500

3.0

48

NOF Kobe Kaigan Building

Kobe City, Hyogo

6,425.16

Dec. 5, 2003

3,280

0.9

08

NOF Shiba Building

Minato-ku, Tokyo

8,165.10

May 25, 2004

10,0002.6

49

NRE Hiroshima Building

Hiroshima City, Hiroshima

7,902.00

Dec. 5, 2003

1,930

0.5

09

Nishi-Shinjuku Showa Building

Shinjuku-ku, Tokyo

5,670.84

Nov. 30, 2005

8,800

2.3

50

NOF Hakata Ekimae Building

Fukuoka City, Fukuoka

7,504.28

Jun. 27, 2008

6,750

1.8

10

NRE Shibuya Dogenzaka Building

Shibuya-ku, Tokyo

3,436.67

Sep. 26, 2008

7,660

2.0

51

NOF Tenjin-Minami Building

Fukuoka City, Fukuoka

3,834.35

Mar. 27, 200911

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

3,739

1.0

Total Other Cities (16 Properties)

164,456.92

104,250

27.5

Grand Total (51 Properties)

438,918.56

378,607100.0

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 of beneficial 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 thefirst 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 the amount
subtracting a book price of the asset to be transferred (13 million yen) from the acquisition price before the transfer (6,430 million yen). The number of amount below unit istruncated.
Note : Names of following properties have been changed as listed. The same shall apply hereinafter.
New name

Previous nameDate changed

NRE Tennozu Building

JAL Building

October 1, 201011

Major Properties
01

27

34

17

16

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

16 NRE Higashi-nihonbashi Building
1-1-7 Higashi-nihonbashi, Chuo-ku, Tokyo

12

44

44 SORA Shin-Osaka 21
2-1-3 Nishi-Miyahara, Yodogawa-ku, Osaka City, Osaka

46 NRE Nishi-Umeda Building
2-1-22, Umeda, Kita-ku, Osaka City, Osaka

46

51

27 Toho Edogawabashi Building
1-24-8 Sekiguchi Bunkyo-ku, Tokyo

17 Hatchobori NF Building
2-21-6 Hatchobori Chuo-ku, Tokyo

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

34 NOF Shin-Yokohama Building
2-15-16 Shin-Yokohama Kohoku-ku, Yokohama City, Kanagawa

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 October 31, 2010)
Shareholder: Nomura Real Estate Holdings, Inc. (100%)
Incorporation: January 24, 2003

Organization of the asset management company
Shareholders'Meeting
Auditors
Boand of Directors
President & CEO
Internal Audit

Compliance
Committee

Compliance & Risk
Management Group

Property
Information Meeting
Valuation
Committee

Office Management
Division
Investment
Committee

ResidenceManagement Division

Private Reit
Management Division

Investment
Committee

Financial &
Asset
Fund
Acquisition
ControlManagement Management
Group
Group
Group
Group

Investment
Committee

Financial &
Asset
Fund
Acquisition
ControlManagement Management
Group
Group
Group
Group

Investment Financial &Management Planning
Group
Group

●Specialized in investment andmanagement of office buildings●Started operation in 2003

Profile of the President and General Manager
President & CEO

Atsushi Ogata

General Manager

Secom Medical Building

Hirotaka Furugori

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 Fourteenth Fiscal Period ............... 30

Apr. 1987
Nov. 1987
Dec. 1989
Apr. 1992
Jun. 1995
Apr. 2001
Jan. 2003
Apr. 2003
Jun. 2005
Apr. 2006
Apr. 201014

Entered NREDInternational Business Dept.
Overseas Project Dept.
Corporate Sales Division
Entrusted Sales Division
External assignment, Nomura Real Estate Urban Net Co., Ltd.
Asset Management Division
External Assignment, NREAM
Director, NREAM (current position)
General Manager, Office Management Division, NREAM
President and Chief Executive Officer, NREAM (current position)

Apr. 1988
Jun. 1988
Jan. 1991
Jun. 1994
Oct. 1995
Apr. 1997
Apr. 2005
Jun. 2005
Oct. 2007
Apr. 2010

Entered NRED
Mid-to-high-rise Residence Development Dept.
Residential Sales Dept.
Customer Relations Dept.
Meidaimae Branch
Human Resource Dept.
Corporate Planning Dept., NRED and external assignment,
Nomura Real Estate Holdings, Inc.
Head of Investment Management & Advisory Company, NRED andExternal Assignment, Nomura Real Estate Investment Management
Head of Investment Management & Advisory Company, NRED
External Assignment, General Manager, Office Management Division,
NREAM (current position)

Other Information ....................................................... 32

15

Asset Management Report
1. CHANGES IN KEY INDICATORS

2. OUTLINE OF INVESTMENTS IN THE FOURTEENTH FISCAL PERIOD
14th Period
13th Period
12th Period
11th Period
10th Period
from May 1, 2010 from Nov. 1, 2009 from May 1, 2009 from Nov. 1, 2008 from May 1, 2008
to Oct. 31, 2010 to Apr. 30, 2010 to Oct. 31, 2009 to Apr. 30, 2009 to Oct. 31, 2008

Operating Revenues(¥ mln)13,364

13,686

14,203

15,40913,925of which Real Estate Rental Revenues(¥ mln)13,364

13,686

14,203

14,281

13,925

Operating Expenses(¥ mln)

7,141

6,938

7,065

8,331

6,993

of which Real Estate Rental Expenses(¥ mln)

5,883

5,667

5,761

5,917

5,790

Operating Profits(¥ mln)

6,223

6,747

7,138

7,078

6,932

Current Profits(¥ mln)

4,480

5,035

5,339

5,393

5,256

Net Income(¥ mln)

4,479

5,034

5,338

5,392

5,255

Total Assets(¥ mln)407,703410,127

408,312409,353

401,684(Changes from Previous Period)(%)(△0.6)(+0.4)(△0.3)(+1.9)(+13.6)

Interest-Bearing Debts(¥ mln)191,230

191,980

188,730

188,730

182,100

Net Assets(¥ mln)189,934

190,490

190,793

190,847

190,711(%)(△0.3)(△0.2)(△0.0)(+0.1)(+18.3)Unitholders’ Capital(¥ mln)185,455

185,455

185,455

185,455

185,455

Number of Units Issued(Units)

305,123

305,123

305,123

305,123

305,123(¥)

622,486

624,306

625,301

625,478625,031(Changes from Previous Period)

Net Assets per Unit(¥ mln)

4,479

5,034

5,338

5,392

5,255

Cash Distribution per Unit(¥)

14,681

16,50017,496

17,673

17,225

Total Cash Distributionof which Cash Distribution of Profits(¥)

14,681

16,50017,496

17,673

17,225of which Cash Distribution in excess of Profits

(¥)

–

–

–

–

-

ROA (Return on Assets) (Note 1)

(%)

1.1

1.2

1.3

1.3

1.4

Annualized ROA (Note 2)

(%)

2.2

2.5

2.6

2.7

2.7

ROE (Return on Equity) (Note 3)

(%)

2.4

2.6

2.8

2.8

2.8

Annualized ROE (Note 2)

(%)

4.7

5.3

5.5

5.7

5.6

Capital Adequacy Ratio (Note 4)

(%)

46.6

46.4

46.7

46.6

47.5

(Changes from Previous Period)(%)(+0.2)(△0.3)(+0.1)(△0.9)(+1.9)LTV (Loan-to-Value) (Note 5)

(%)

46.9

46.8

46.2

46.1

45.3

Number of Operating Days

(days)

184

181

184

181

184

Payout Ratio (Note 6)

(%)

100.0

99.9

99.9

100.0

99.9

Number of Properties Held(bldgs)

51

51

50

50

46

Total Leasable Floor Space(m2)

438,918.56

439,139.15

435,901.82

436,094.41

430,487.81

704

686

666

661

676

Number of Tenants(tenants)
(%)

94.5

95.0

95.4

96.4

97.3

Depreciation(¥ mln)

1,876

1,865

1,835

1,862

1,793

Capital Expenditures(¥ mln)

597

692

779

1,376

1,552

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

9,357

9,884

10,278

10,2269,927

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

6,363

6,908

7,180

7,167

7,087

(¥)

20,85522,64023,53423,48823,228

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
As for the 10th period, the Total Assets were time-adjusted due to the additional issuance of investment units.
Note 2: “ROA” and “ROE” are annualized using the following number of operating days. 10th Period: 184 days, 11th Period: 181 days, 12th Period: 184 days, 13th period: 181 days,
and 14th Period: 184 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
As for the 10th period, Net Assets is time-adjusted due to the additional issuance of investment units.
Note 4: “Capital Adequacy Ratio” = Net Assets / Total Assets x 100
Note 5: “LTV (Loan-to-Value)” = 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 threelargest 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
During this fiscal period, the Japanese economy, against the backdrop of an ongoing recovery in the world economy which was
driven by Asian nations, and with the help of various stimulus measures by the government, benefited from rising exports andrecovering personal consumption. In addition, according to the Bank of Japan’s Short-term Economic Survey of Enterprises(Tankan), business conditions as seen by companies and financial position continued to improve. This, combined with signs of an
upturn in corporate earnings and other factors, supports expectations for improving economic conditions. Nevertheless, with therisk of a downturn in overseas economies, concerns regarding continued yen appreciation and the prolongation of deflation, theCabinet Office in its monthly economic report for October revised its basic assessment downward for the first time in 20 months,
indicating that uncertainty continues about the economic outlook.
(a) Office Leasing Market
The office leasing market continues to experience a strong downward pressure on rents from tenants due to their persisting
cost-consciousness. Occupancy rates and new asking rents, however, appear to have bottomed out. With corporate earnings
recovering, relocating to consolidate offices as a part of rationalization efforts has subsided and some tenants, sensing that
rents have bottomed out, are actively moving to expand their office space or upgrade locations. As for areas outside of Tokyo,
difficult conditions continue in Sendai and Osaka, while declines in new properties entering the market and other factors havegiven rise to signs of recovery in Sapporo, Nagoya and Fukuoka.
(b) Real Estate Sales Market
During this period, the volume of information on properties offered for sale continued to increase (vs. the previous fiscal period) as private funds contemplated sales and merged REITs moved to restructure portfolios. Information on prime properties
for sale has been constrained within a limited range, but, with the cap rate already stabilizing and the pricing gap between
potential sellers and buyers narrowing, conditions have become favorable for the completion of transactions, even if the number completed is small.
Among some J-REITs, the number of transactions for acquiring new properties and adjusting portfolios has begun to rise.
(2) Status of Managements for the Fourteenth Fiscal Period
To comply with the basic policy of acquiring only such properties that would generate stable cash flow over the mid- to long-term,
the Company continues to invest in properties with strong competitiveness both in terms of locations and basic building features.
The Company’s total assets under management (“portfolio”) as of the end of the fourteenth fiscal period (October 31, 2010)
was 51 properties (total leasable floor space: 438,918.56m2) totaling ¥378.6 billion (total acquisition price) as there were no changes in the portfolio.
In property management, market conditions remained difficult, against the backdrop of the environment described in “(1)Market Environments (a) Office Leasing Market,” but the number of cancellation notices from tenants is trending downward. The
Company concentrated on the maintenance and improvement of the occupancy rate through aggressively approaching prospective tenants and maintaining close communications with existing tenants. Upon renewal of lease contracts, the Company
engaged in active negotiation with its tenants to minimize declines in rent levels, while responding flexibly to the needs of eachtenant, considering the deviation from the market asking-rent, the size of leasing space and the leasing period. As a result, theaverage rent for the 51 properties declined by only 3.0% compared to the previous fiscal period and the occupancy rate remained
high at 94.5% at the end of the period.
In addition, we have maintained stable profits, through securing profits by utilizing the know-how of the Nomura Real EstateGroup (Note) to reduce asset management expenses, such as reviewing property management specifications for each building.
Note :	“Nomura Real Estate Group” refers to a corporate group consisting of the consolidated subsidiaries of Nomura Real Estate Holdings, Inc. 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
long-term, diversified and fixed interest rate debts, for the purpose of securing financial stability and avoiding future interest raterisks. Based on 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 reduction of refinancing risks, from the perspective of securing stable funding base.
As to debts, a total of ¥10.3 billion was borrowed as a part of repayment funds for existing debts. As a result, outstanding
interest-bearing debt as of the end of fourteenth fiscal period was ¥191.2 billion.

3. STATUS OF CAPITALNo changes in the number of units issued have been made during the fourteenth fiscal period. Changes in the number of units
issued and unitholders’ capital until the fourteenth fiscal period are as follows.
Number of Units Issued (Unit)
Type of Issue

ChangeBalance

ChangeBalance

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

Initial private placement
Public offering
Public offering
Third-party allotment
Public offering
Third-party allotment
Public offering
Third-party allotment
Public offering
Third-party allotment

400
148,200
35,0001,050
44,0001,320
34,8001,133
37,0002,220

400
148,600
183,600
184,650
228,650
229,970
264,770
265,903
302,903
305,123200
71,506
19,866595
31,496944
31,143
1,013
27,0641,623

200
71,706
91,572
92,168
123,665
124,610
155,753
156,767
183,831
185,455(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)(Note 10)Note 1: Initial private placement at the offer price of ¥500,000 per unit to incorporate the Company.
Note 2: Public offering at the offer price of ¥500,000 (issue price of ¥482,500) to finance acquisition of new properties.
Note 3: Public offering at the offer price of ¥588,000 (issue price of ¥567,600) to finance acquisition of new properties and to repay borrowings.
Note 4: Third-party allotment to Nomura Securities Co., Ltd. at the offer price of ¥567,600 following the public offering on May 19, 2004.
Note 5: Public offering at the offer price of ¥740,782 (issue price of ¥715,837) to finance acquisition of new properties and to repay borrowings.
Note 6: Third-party allotment to Nomura Securities Co., Ltd. at the offer price of ¥715,837 following the public offering on May 1, 2005.
Note 7: Public offering at the offer price of ¥926,100 (issue price of ¥894,915) to finance acquisition of new properties and to repay borrowings.
Note 8: Third-party allotment to Nomura Securities Co., Ltd. at the offer price of ¥894,915 following the public offering on May 25, 2006.
Note 9: Public offering at the offer price of ¥756,560 (issue price of ¥731,470) to redeem the short-term investment corporation bonds and to repay short-term borrowings.
Note 10: Third-party allotment to Nomura Securities Co., Ltd. at the offer price of ¥731,470 following the public offering on May 27, 2008.

[Changes in Price at the Tokyo Stock Exchange]
Changes in prices of the Company’s investment units listed on the Tokyo Stock Exchange are as follows.

High
Low

(¥)
(¥)

536,000
412,000

588,000
465,000(1) Investment Environments
Although there are increasing signs of recovery in the real economy, with lingering uncertainty about future outlook against the
backdrop of the strong yen, the Japanese economy is expected to search for the timing of bottoming out and recovery.
Under these circumstances, we believe that it is important to continue to focus on the maintenance of funding capacities
through conservative financial management, and flexible property management that minimizes the decrease in portfolio profitability under the current weak 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, andsteady growth of the portfolio over the mid- to long-term.

Unitholders’ Capital (¥ mln)

Date

14th Period
13th Period
from May 1, 2010 from Nov.1, 2009
to Oct. 31, 2010
to Apr. 30, 2010

5. INVESTMENT POLICY AND FUTURE ISSUES

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

683,000
495,000

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

645,000
431,000

10th Period
from May 1, 2008
to Oct. 31, 2008

874,000
407,000

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 this fiscal period was ¥14,681.

(a) Property Management in a Mid- to Long-Term View
In addition to enhancement of property management to satisfy the requirements of existing tenants, proper recognition of theproperty features and leasing market environments will help us market the potential tenants more organically. We will maintainand uplift the occupancy rate and level of rents in pursuit of sustainable and improved profitability of portfolio, namely internal
growth of portfolio, over the mid-to long-term. Regarding the NRE Tennozu Building, from which Japan Airlines International
Co., Ltd. is scheduled to partially withdraw (20,483.83m2) on March 31, 2011, we are working closely with Nomura Real Estate
Development Co., Ltd., the property management company, to strengthen leasing activities and restore the occupancy rate assoon as possible.
By putting the know-how of Nomura Real Estate Group together, we seek to design the most suitable specifications of
how to manage and maintain each property in the most effective way, which in turn will ensure stable inflow of revenues.
In order to ensure stable revenues over the mid- to long-term, we will carry out strategic refurbishment and renovation
works to maintain and/or improve features of the properties, establishing their uniqueness and increasing their competitiveness.
(b) Enlargement of Portfolio by Acquisition of New Properties
The Company has set in motion several strategic measures; that is, targeting the expansion of asset size up to ¥500 billion in
the medium 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 to reduce 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
for sale in an early stage , and conduct an in-depth due diligence to assess the potential risks involved in such investments. As
part of our efforts to carry out this investment policy, we will work to find investment opportunities through further expansionof 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 tothe entire portfolio in light of mid- and long-term perspectives.
(c) Continuation of Conservative Financial Policy
In order to assure stable financing capability and increase creditworthiness in the market over the mid- to long-term, we will
pay particular attention to debt finance. We will seek to continuously keep the LTV low by using more long-term funding atfixed-rates, diversifying the repayment dates, and increasing the number of institutions we bank with.
We will closely monitor the conditions of financial markets, and carefully deliberate and choose the best means of funding, including the usage of commitment lines, issuance of investment corporation bonds and short-term investment corporation bonds from a wide range of available sources of funding to ensure a well-balanced structure of interest-bearing debts.

14th Period
13th Period
12th Period
11th Period
10th Period
from May 1, 2010 from Nov. 1, 2009 from May 1, 2009 from Nov. 1, 2008 from May 1, 2008
to Oct. 31, 2010
to Apr. 30, 2010
to Oct. 31, 2009
to Apr. 30, 2009
to Oct. 31, 2008

Retained Earnings
Accumulated earnings
Total cash distribution(Cash distribution per unit)of which distribution of profits(Distribution of profits per unit)of which refund of capital(Refund of capital per unit)

18(¥000)(¥000)(¥000)(¥)(¥000)(¥)(¥000)(¥)

4,479,515
4
4,479,510(14,681)4,479,510(14,681)–(–)

5,034,679
149
5,034,529(16,500)
5,034,529(16,500)–(–)

5,338,534
102
5,338,432(17,496)
5,338,432(17,496)–(–)

5,392,502
64
5,392,438(17,673)
5,392,438(17,673)–(–)

5,255,922
178
5,255,743(17,225)
5,255,743(17,225)–(–)

19

Profile of the Company
6. IMPORTANT EVENTS SUBSEQUENT TO THE FOURTEENTH FISCAL PERIOD

1. STATUS OF UNITHOLDERS’ CAPITAL

The significant post-balance sheet events that took place after the end of the fourteenth fiscal period are as follows:(1) Issuance of Investment Corporation Bonds
In accordance with the resolution at the Board of Directors’ meeting held on October 20, 2010, the Company issued investment
corporation bonds on November 26, 2010, as briefly explained below. The issuance is based on the Shelf Registration Statementof the Investment Corporation Bonds filed on November 18, 2009.

14th Period
13th Period
12th Period
11th Period
10th Period(as of Oct. 31, 2010) (as of Apr. 30, 2010) (as of Oct. 31, 2009) (as of Apr. 30, 2009) (as of Oct. 31, 2008)

Maximum number of units allowed to issue(Unit)

2,000,000

2,000,000

2,000,000

2,000,000

2,000,000

Number of units issued(Unit)

305,123

305,123

305,123

305,123

305,123

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

185,455

185,455

185,455

185,455

13,10012,97012,565

12,503

12,406

Number ofUnits Held
(Unit)

Portion in
the Total
Units Issued (%)

Number of unitholders

Name of the Investment
Corporation Bonds

Nomura Real Estate Office Fund, Inc. Eighth Series Unsecured Investment Corporation Bonds

2. MATTERS CONCERNING THE INVESTMENT UNITS

Aggregate Amount of theInvestment Corporation Bonds¥6,000,000,000

The 10 largest unitholders as of October 31, 2010 were as follows.

Payment Price¥100 per par value of ¥100

Redemption Price¥100 per par value of ¥100

Interest Rate

0.94% per annum

Pledge and Guarantee

Unsecured/unguaranteed

Maturity and Method of
Redemption

November 26, 2014 (4-year bonds)
The Company may, at any time on and after the date following the due date of payment, purchase and cancel any such Bond except as otherwise specifically provided by Japan Securities
Depository Center, Inc., the custody of a transfer agency.

Name

Japan Trustee Service Bank, Ltd. (Trust Accounts)

37,974

12.45

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

31,615

10.36

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

20,296

6.65

Nomura Real Estate Development Co., Ltd.

15,2875.01

12,642

4.14

Interest Payment Date

May 26 and November 26, every year

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

Purpose of the Issuance

To be used for a part of the redemption of the Third Series Unsecured Investment Corporation
Bonds (¥10,000,000,000) which will mature on November 29, 2010.

The Senshu Ikeda Bank, Ltd.

7,606

2.49

Kawasaki Gakuen

7,000

2.29

Name of the Investment
Corporation Bonds

AIG EDISON-GA NON DIMA

5,280

1.73

Nomura Real Estate Office Fund, Inc. Ninth Series Unsecured Investment Corporation Bonds

Momiji Bank, Ltd.

5,116

1.68

Zenkyoren

3,996

1.31

Total

146,81248.12

Aggregate Amount of theInvestment Corporation Bonds¥4,000,000,000

Payment Price¥100 per par value of ¥100

Redemption Price¥100 per par value of ¥100

Interest Rate

1.52% per annum

Pledge and Guarantee

Unsecured/unguaranteed

Maturity and Method of
Redemption

November 26, 2017 (7-year bonds)
The Company may, at any time on and after the date following the due date of payment, purchase and cancel any such Bond except as otherwise specifically provided by Japan Securities
Depository Center, Inc., the custody of a transfer agency.

Interest Payment Date

May 26 and November 26, every year

Private and other investors

Purpose of the Issuance

To be used for a part of the redemption of the Third Series Unsecured Investment Corporation
Bonds (¥10,000,000,000) which will mature on November 29, 2010.

Financial institutions(Including sales agents for financial instruments firm)(2) Transfer of a Property
On December 8, 2010, the Company entered into a sale and purchase agreement regarding the transfer of NOF Toyo-cho
Building and completed the transfer of 33% of the quasi-co-ownership interest in each of the two real estate trust beneficial
interests. Consumption taxes and adjustments of property taxes are excluded from the sales prices.

3. BREAKDOWN OF UNITHOLDERS
The breakdown of unitholders as of October 31, 2010 was as follows.
Number ofUnitholders

Portion (%)

12,47895.3

34,271

11.2

133

1.0

174,254

57.1

Other domestic corporate investors

222

1.7

31,156

10.2

Foreign corporate investors, etc.

267

2.0

65,442

21.4

13,100100.0305,123

100.0

Total

Number of Units
per Unitholder

Portion (%)

NOF Toyo-cho Building
Type of Asset			
Date of Agreement		
Scheduled Transfer Date (Note 1): Trust Beneficial Interest: December 8, 2010
: (i) December 8, 2010 (33% of the quasi-co-ownership interest in each of the two real estate
trust beneficial interests)
		 (ii) May 10, 2011 (67% of the quasi-co-ownership interest in each of the two real estate
trust beneficial interests)
Transfer Price			: (i) ¥2,859,000,000					(ii) ¥5,805,000,000					Total ¥8,664,000,000
Book Value (Note 2)		: (i) ¥2,326,147,531
				(ii) ¥4,722,784,381
				Total ¥7,048,931,912
Transferee			: Japanese General Operating Company

20

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. 33% of the quasi-coownership interest in each of the two beneficial interests will be transferred on December 8, 2010, and 67% of the quasi-co-ownership interest in each of the two beneficial interests will be transferred on May 10, 2011.
Note 2: The book value is calculated by multiplying the book value as of October 31, 2010 with the quasi-co-ownership interest in the real estate trust beneficial interests to betransferred (33% on December 8, 2010, and 67% on May 10, 2011 (The amount has been rounded to the nearest first decimal place)). The book value is a reference
amount as of October 31, 2010.

21

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

1. COMPOSITION OF ASSETS(1) Name of directors and an auditor in the fourteenth fiscal period are as follows (Note 1).

Title

Name

Executive Director
Supervisory Director
Supervisory Director
Supervisory Director
Supervisory Director
Accounting Auditor

Other Major Title (s)Yuichi Maruko

Corporate Auditor, MEGALOS, Co., Ltd.

2,400

Shuhei Yoshida

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

2,400

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

2,400

Partner, Anderson Mori & Tomotsune Law Firm

2,400

Eitoku Aikawa
Saneaki Ichijo
Naohito Miya

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

Earnst & Young ShinNihon LLC –2,400
14,500Note 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 October 31, 2010. Executive Directors and Supervisory Directors might serve as directors of othercompanies, 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 orlack of statutory quorum.

(2) Policy on Determination of Dismissal and Denial of Reappointment of Accounting Auditors
In case an item listed under Article 105, Paragraph 1 of the Investment Trust Law becomes applicable to the accounting auditor,
and the Board of Directors determines that there is no likelihood of improvement, the Board of Directors shall dismiss theaccounting auditor by unanimous vote of all board members.
In addition, if the Board of Directors determines that the accounting auditor is inappropriate for the position having given
thorough consideration to its business execution and other various reasons, the Board of Directors shall dismiss or denyreappointment of the accounting auditor, and present an agenda for appointment of a new accounting auditor at the General
Unitholders’ Meeting.

5. ASSET MANAGEMENT COMPANY, CUSTODIANS AND ADMINISTRATORS
Asset Management Company, custodians and administrators as of October 31, 2010 are as follows:Business

Company Name (s)Asset Management Company

Nomura Real Estate Asset Management Co., Ltd.

Custodian of assets

Mitsubishi UFJ Trust and Banking Corporation

Custodian of unitholders’ register

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

Manager of special accounts

Mitsubishi UFJ Trust and Banking Corporation

Administrative agent (accounting, etc.)

Mitsubishi UFJ Trust and Banking Corporation

Administrative agent(investment corporation bonds)

The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Banking Corporation,
Nomura Securities Co., Ltd., Citigroup Global Markets Japan Inc.,
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

Total Amount of Fees Paid
during the 14th Period (¥000)

Real estate

Area(Note 1)14th Period (as of Oct. 31, 2010)
Total AmountPortion (%)(¥ mln) (Note 2)(Note 3)13th Period (as of Apr. 30, 2010)
Total AmountPortion (%)(¥ mln) (Note 2)(Note 3)Central Tokyo

30,8137.6

30,9097.5

Suburban Tokyo

16,3794.0

16,431

4.0

Other Regional Cities

37,715

9.3

37,9489.3

Central Tokyo

186,88645.8

187,41145.7

Suburban Tokyo

37,4089.2

37,501

9.1

Other Regional Cities

65,36516.0

65,64816.0

Subtotal

374,569

91.9

375,851

91.6

Cash, deposits and other assets

33,133

8.1

34,275

8.4

407,703

100.0

410,127

100.0

Real estate in trust

Grand Total

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 Oct. 31, 2010 are as follows.

Name of Property

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

Leased Space(m2) (Note 2)

Occupancy Rate(%)

Portionof Rental
Revenues (%)

Primary Use

Shinjuku Nomura Bldg.

39,36931,500.89

29,623.17

94.0

12.9

OfficeNRE Tennozu Bldg.

32,71642,084.11

42,084.11

100.0(Note 3)

OfficeOmron Kyoto Center Bldg.

22,601

34,616.84

34,616.84

100.0(Note 3)

OfficeNOF Nihonbashi Honcho Bldg.

20,692

19,157.05

18,882.36

98.6

5.0

OfficeSORA Shin-Osaka 21

19,00821,277.48

19,228.84

90.4

4.0

OfficeTennozu Park Side Bldg.

12,87818,051.60

15,751.71

87.3

5.2

OfficeNOF Shibuya Koen-dori Bldg.

12,6063,420.16

3,420.16

100.0

2.4

OfficeNOF Shinjuku Minamiguchi Bldg.

12,318

6,685.52

6,685.52

100.0

2.5

OfficeSecom Medical Bldg.

11,1958,821.24

8,821.24

100.0(Note 3)

Medical Office(Note 4)

NOF Shiba Bldg.

10,0798,165.10

8,165.10

100.0

2.4

Office193,467

193,779.99

187,279.05

96.6

46.8 (Note 5)

Total

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 space by the quasi co-ownership ratio of the beneficial interest in real estate trust owned by the Company. For NRE Tennozu Bldg., includes the area calculated by multiplying the overall common space by the co-ownership ratio for the common spaces prescribed in the terms of management of the building owned by the Company
through the trustee.), at a certain time. Leasable floor space is calculated not based on the total floor space stated on the registry book, but based on the area stated on thebuilding completion drawing, etc. included in the lease agreement. As such, it may differ from and exceed the total floor space stated on the registry book.
Note 2:	“Leased Space” refers to the area included in the leasable floor space of each asset and is actually leased based on a lease agreement (provided, however, it is limited to
office and shop spaces (where the entire leased floor space is being leased as a whole, the total area of the leased floor space.), and does not include leased parking spaces. For Shinjuku Nomura Building, the area calculated by multiplying the overall leased space by the quasi co-ownership ratio of the beneficial interest in real estate trust
owned by the Company. For NRE Tennozu Bldg., 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 ofIncorporation 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

Location(Postal Address)

Type ofOwnership

Appraisal Valueas of Oct. 31, Book Value2010 (¥ mln)(¥ mln)(Note 1)
(Note 2)Central Tokyo
Shinjuku Nomura Bldg. (Note 3)

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

NRE Tennozu Bldg.

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

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

Tennozu Park Side Bldg.

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

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

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

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
NRE Higashi-nihonbashi 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

48,40039,36923,70032,71622,90020,69219,80012,878Beneficial Interest in
Real Estate Trust
Beneficial Interest in
Real Estate Trust
Real Estate

9,860

12,318

11,60012,606

10,40011,195

9,590

10,079

8,380

8,709

6,210

7,626

6,790

7,569

4,580

5,926

5,790

5,394

6,640

4,967

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

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

4,310

4,921

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

Real Estate

3,360

4,064

Hatchobori NF Bldg.

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

2,670

3,169

NOF Kanda Iwamoto-cho Bldg.

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

3,350

3,091

NOF Takanawa Bldg.

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

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

2,530

3,006

Central Kyobashi Bldg.

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

2,330

2,544

NOF Minami-Shinjuku Bldg.

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

2,330

2,303

Central Shintomicho Bldg.

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

1,390

1,761

Sunworld Yotsuya Bldg.

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

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

Subtotal

658

785

217,568

217,700

Suburban Tokyo
NRE Ueno Bldg.

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

Real Estate

6,520

7,830

NOF Toyo-cho Bldg.

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

8,510

7,048

NOF Technoport Kamata Center Bldg.

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

6,800

6,565

Toho Edogawabashi Bldg.

1-24-8 Sekiguchi Bunkyo-ku, Tokyo

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

1,400

2,076

Toshin Meguro Bldg.

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

1,130

1,335

Crystal Park Bldg.

1-1-3 Gotenyama, Musashino City, Tokyo

Beneficial Interest in
Real Estate Trust
Real Estate

3,310

3,601

NOF Kichijoji Honcho Bldg.

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

1,600

1,786

Faret Tachikawa Center Square

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

4,110

2,918

NOF Kawasaki Higashiguchi Bldg.

3-1 Ekimae Honcho, Kawasaki-ku, Kawasaki City, Kanagawa(Note 4)
1-11-11 Kita-Saiwai, Nishi-ku, Yokohama City, Kanagawa

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

8,440

9,413

5,527

5,002

3,070

3,338

2,010

2,871

52,42753,788NOF Yokohama Nishiguchi Bldg.
NOF Shin-Yokohama Bldg.
Yokohama Odori Koen Bldg.

2-15-16 Shin-Yokohama, Kohoku-ku, Yokohama City,
Kanagawa
2-4-1 Horai-cho, Naka-ku, Yokohama City, Kanagawa (Note 4)

Subtotal

Other Cities
Beneficial Interest in
Real Estate Trust
Real Estate

5,498

7,619

4,630

5,149

JCB Sapporo Higashi Bldg.

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

Real Estate

3,220

3,668

NOF Sendai Aoba-dori Bldg.

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

2,230

3,153

NOF Utsunomiya Bldg.

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

2,530

2,468

NOF Nagoya Fushimi Bldg.

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

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

2,250

4,190

NOF Nagoya Yanagibashi Bldg.

1-16-28 Meieki-Minami, Nakamura-ku, Nagoya City, Aichi

2,700

3,658

Omron Kyoto Center Bldg.

19,40022,601SORA Shin-Osaka 21

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

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

13,20019,008NRE Osaka Bldg.

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

7,550

6,340

NRE Nishi-Umeda Bldg.

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

Beneficial Interest in
Real Estate Trust
Real Estate

3,750

5,698

NRE Yotsubashi Bldg.

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

Beneficial Interest in
Real Estate Trust

4,480

3,683

Sapporo North PlazaNRE Sapporo Bldg.

24

NOF Kobe Kaigan Bldg.

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

NRE Hiroshima Bldg.

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

NOF Hakata Ekimae Bldg.

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

NOF Tenjin-Minami Bldg.

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

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

Subtotal
Grand total

2,610

2,862

2,600

2,616

4,420

6,652

2,300

3,710

83,368353,363

103,081374,569

Note 1:	“Appraisal Value as of Oct. 31, 2010” stands for the prices appraised by the estate surveyors in accordance with the provisions of the Company’s Articles of Incorporationand the “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., Chuo Real Estate Appraisal
Co., Ltd., or Morii Appraisal & Investment Consulting Inc. using the capitalization approach, with the end of the fourteenth fiscal period, i.e. October 31, 2010, being taken
as the point of evaluation.
Note 2:	“Book Value” stands for the aggregate purchase price of lands, buildings, structures, machinery and equipments, tools and fixtures, leased assets, construction in progress,
and leaseholds owned directly or held in trust, less depreciation including expenses associated with these purchases.
Note 3:	The Company’s stake in this property is quasi co-ownership of 50.1% of entirety. The appraisal value and book value as of October 31, 2010 accounted solely for the quasi
co-ownership.
Note 4: Residential indication of the property is not available yet.

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

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.
NOF Hakata Ekimae Bldg.
NOF Tenjin-Minami Bldg.
Subtotal
Grand Total

at Period End
RentalPortionRevenues
of Rental
Number of
Revenues
Occupancy during the
Tenants(%)(Note 1)
Rate (%) Period (¥ mln)

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

at Period End
Number ofOccupancy
Tenants(Note 1)
Rate (%)

RentalRevenues
during the
Period (¥ mln)

Portionof Rental
Revenues
(%)

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

86
1
12
13
15
3
1
9
21
6
12
7
5
1
7
6
7
8
14
8
4
6
1
253

94.1
100.0
86.4
89.1
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
96.7

1,782
(Note 2)
699
719
324
352
(Note 2)
347
296
187
199
168
251
(Note 2)
128
152
106
132
109
84
94
56
(Note 2)
7,616

13.0
(Note 2)
5.1
5.3
2.4
2.6
(Note 2)
2.5
2.2
1.4
1.5
1.2
1.8
(Note 2)
0.9
1.1
0.8
1.0
0.8
0.6
0.7
0.4
(Note 2)
55.6

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

9
1
14
7
1
9
6
16
24
27
9
16
139

100.0
100.0
97.2
100.0
100.0
92.7
100.0
94.2
89.1
80.0
100.0
92.4
95.5

220
(Note 2)408
67
(Note 2)
125
76
218
302
218
161
105
2,241

1.6
(Note 2)3.0
0.5
(Note 2)
0.9
0.6
1.6
2.2
1.6
1.2
0.8
16.4

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

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

39
6
1
24
22
5
10
1
30
24
12
17
32
13
40
18
294

91.8
100.0
100.0
70.7
84.2
38.8
70.6
100.0
94.0
94.4
100.0
96.8
93.2
92.6
87.7
95.6
92.8

94.5

100.0

686

95.0

326
203
(Note 2)
130
152
3
115
(Note 2)
564
490
183
310
180
191
161
72
3,828
13,686(Note 3)2.4
1.5
(Note 2)
1.0
1.1
0.0
0.8
(Note 2)
4.1
3.6
1.3
2.3
1.3
1.4
1.2
0.5
28.0

704

308
204
(Note 2)
111
146
18
104
(Note 2)
538
473
180
313
182
179
173
83
3,758
13,364(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 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 number of 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 sametenant 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, 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 FOURTEENTH FISCAL PERIODThe outstanding amount and current price of the specified transactions as of October 31, 2010 are as follows.

The table below lists capital expenditures during the fourteenth fiscal period in conjunction with the major works of renovation.
During the period, we have conducted engineering works totalling ¥785 million: capital expenditures of ¥597 million and repair
expenses of ¥187 million combined all together.

Contract Amount (¥ mln) (Note 1)
Segment

Longer than a Year

Current
Price (¥ mln)
(Note 2)

95,35068,850△1,087

95,35068,850△1,087

Type of Transaction

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

Name of Property (Location)

Description of Works (Purpose)

Cost of Works(¥ mln)Period of Works

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.

NRE Higashi-nihonbashi Bldg.
(Chuo-ku, Tokyo)

Renewal of air-conditioning system(To increase quality)

From:  Jun. 2010
To: Jul. 201018

5. STATUS OF THE OTHER ASSETS

Sapporo North Plaza(Chuo-ku, Sapporo City)

Renovation of multistoried parking facility(To increase quality)

From:  Aug. 2010
To: Oct. 2010

69

Sapporo North Plaza(Chuo-ku, Sapporo City)

Refurbishment of the common floor area
(To increase revenues)

From:  Sep. 2010
To: Oct. 201133

Other Properties

Improvement of features

From:  May 2010
To: Oct. 2010

477

Other than the Trust Beneficial Interest and Real Estate listed in the table under the title “3. Details of Portfolio Properties”, theCompany had no other assets to integrate into the portfolio as of October 31, 2010.

6. STATUS OF ASSETS BY COUNTRY AND REGION

Total

As of the end of the fourteenth fiscal period, the real estate and beneficial interest in real estate trust held by the Company bycountry and region are as follows.
Appraisal Value as of Oct. 31, 2010 (Note 2)

Number of
Properties

Country

Total Portfolio Amount (Note 1)Japan¥374,569 million¥353,363 million

100.0%

51

Total¥374,569 million¥353,363 million

100.0%

51

Portion of Total Portfolio

597

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
from the operating cash flow to prepare for large-scale engineering works to be carried out in the future.
14th Period
13th Period
12th Period
11th Period
10th Period
from May 1, 2010 from Nov. 1, 2009 from May 1, 2009 from Nov. 1, 2008 from May 1, 2008
to Oct. 31, 2010 to Apr. 30, 2010 to Oct. 31, 2009 to Apr. 30, 2009 to Oct. 31, 2008

Note 1: Total portfolio amount stands for the book value after depreciation and amortization.
Note 2: Appraisal value as of Oct. 31, 2010 stands for the value appraised by the real estate appraisers.

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

Capital Expenditures

¥ mln

¥ mln

¥ mln

¥ mln

¥ mln

397
900
859
438

436
975
1,013
397

368
1,570
1,502
436

238
1,894
1,764
368

290
1,716
1,768
238

1. PLAN OF CAPITAL EXPENDITURES
The table below lists major capital expenditures in conjunction with the refurbishment and/or renewal works scheduled for the future(finished in part) on the properties held as of October 31, 2010. The estimated cost of works includes the amount to be charged as“expenses” for accounting purposes.

Name of Property (Location)

Description of Works (Purpose)

Estimated
PeriodTotal

Estimated Cost (¥ mln)
Paid during
Paid before
14th Period
14th Period

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

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

From: May 2010
To:  Oct. 2011354
(Note 2)––

NRE Tennozu Bldg.
(Shinagawa-ku, Tokyo)

Refurbishment for multi-tenantbuilding (To increase revenues)

From: Feb. 2011
To:  Apr. 2011

152

–

–

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

Aseismic retrofitting(To increase quality)

From: Dec. 2010
To:  Apr. 2011

166

–

–

Sapporo North Plaza(Chuo-ku, Sapporo City)

Refurbishment of exclusively
owned area for connection of thepedestrian subway(To increase revenues) (Note 1)

From:  Jul. 2010
To:  Mar. 2011

59

–

–

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.

Expenses and Liabilities
1. EXPENSES RELATED TO ASSET MANAGEMENT

Asset management fees (Note)of which Management Fee I
of which Management Fee IIof which Management Fee III
Custodian fees
General administrative fees
Directors’ compensation
Other expenses
Total

14th Period
from May 1, 2010
to Oct. 31, 2010¥000

13th Period
from Nov. 1, 2009
to Apr. 30, 2010
¥000

1,058,582
723,621334,960–
29,12964,651
12,00093,461
1,257,824

1,075,895
712,258
363,637–
29,06164,95912,00089,953
1,271,869

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
Asset Management Company by the Company on acquisition of a new property, and such fees are non-existent.

26

27

2. STATUS OF BORROWINGS
Financial Institutions

The status of borrowings from the financial institutions as of Oct. 31, 2010 is as follows.

Financial Institutions

Short-term Borrowings
The Mizuho Corporate Bank, Ltd.
Sumitomo Trust and Banking Co., Ltd.
The Mizuho Corporate Bank, Ltd.
Sumitomo Trust and Banking Co., Ltd.
The Chugoku Bank, Ltd.
Aozora Bank, Ltd.
The Chiba Bank, Ltd.
The Hiroshima Bank, Ltd.
Shinkin Central Bank
The Mizuho Corporate Bank, Ltd.
Sumitomo Trust and Banking Co., Ltd.
The Chugoku Bank, Ltd.
The Yamanashi Chuo Bank, Ltd.
Aozora Bank, Ltd.
Subtotal
Current Portion of Long-term Borrowings
Nippon Life Insurance Company
Sompo Japan Insurance Inc.
Sumitomo Mitsui Banking Corp.
The Yamanashi Chuo Bank, Ltd.
The Chugoku Bank, Ltd.
The Bank of Fukuoka, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
Mitsui Sumitomo Insurance Co., Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Mizuho Corporate Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Nomura Trust & Banking Co., Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
The Chiba Bank, Ltd.
The Hachijuni Bank, Ltd.
The Hiroshima Bank, Ltd.
The Keiyo Bank, Ltd.
The Mizuho Corporate Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Hachijuni Bank, Ltd.
The Yamanashi Chuo Bank, Ltd.
The Mizuho Corporate Bank, Ltd.
The Chuo Mitsui Trust & Banking Co., Ltd.
The Iyo Bank, Ltd.
The 77 Bank, Ltd.
The Hyakujushi Bank, Ltd.
Development Bank of Japan, Inc.
Subtotal
Total Short-term Borrowings

Date
Borrowed

Jun. 24, 2009

Dec. 24, 2009

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

Nov. 30, 2006

Aug. 26, 2008

Dec. 8, 2008

Feb. 27, 2006

Dec. 10, 2007

Apr. 25, 2008

Mar. 19, 2007
Sep. 25, 2008
Jun. 25, 2009

Outstanding as of Outstanding as of
Average
Oct. 31, 2010
Apr. 30, 2010
Interest Rate(¥000)(¥000)(%) (Note 1)––
500,000
580,000
1,000,000
500,000
500,000
500,000
2,000,000
1,400,000
900,000
1,000,000
1,000,000
500,000
10,380,000

1,400,000
1,400,000
500,000
580,000
1,000,000
500,000
500,000
500,000
2,000,000–––––
8,380,000

–
–
–
–
–
–
1,000,000
500,000
1,000,000
1,000,000
1,000,000
500,000
3,000,000
2,000,000
4,000,000
1,000,000
500,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
500,000
2,000,000
1,000,000
1,000,000
1,000,000
1,000,000
500,000
29,500,000
39,880,000

1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
500,000
1,000,000
1,000,000
1,000,000
500,000
3,000,000
2,000,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
500,000
16,500,000
24,880,000

Date of
Repayment

1.12727

Jun. 24, 2010

1.05000

Dec. 24, 2010

1.04000

Feb. 26, 2011

1.04000

Feb. 28, 2011

1.05000

Jun. 24, 2011

0.94000

Aug. 26, 2011

1.65500

Aug. 26, 2010

0.90727

Aug. 26, 2010

0.94000

Dec. 8, 2010

1.68000

Use of
Method of
Repayment Borrowings

Balloonpayment

1.44800

Unsecured/
UninsuredFeb. 26, 2011

Balloonpayment
1.43200(Note 2)

Note

Jun. 10, 2011

Aug. 25, 2011

1.63825

Aug. 26, 2011

1.43950

Sep. 25, 2011

1.97000(Note 3)(Note 3)(Note 2)

Unsecured/
UninsuredLong-term Borrowings
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
The Chiba Bank, Ltd.
The Hachijuni Bank, Ltd.
The Hiroshima Bank, Ltd.
The Keiyo Bank, Ltd.
The Mizuho Corporate Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Hachijuni Bank, Ltd.
The Yamanashi Chuo Bank, Ltd.
The Mizuho Corporate Bank, Ltd.
The Chuo Mitsui Trust & Banking Co., Ltd.
The Iyo Bank, Ltd.
The 77 Bank, Ltd.
The Hyakujushi Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Chuo Mitsui Trust & Banking Co., Ltd.
The Nomura Trust & Banking Co., Ltd.
The Iyo Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
The Hyakujushi Bank, Ltd.
Mitsui Life Insurance Co., Ltd.
Taiyo Life Insurance Company
Daido Life Insurance Company
Zenkyoren
Development Bank of Japan
Zenkyoren
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
The Chuo Mitsui Trust & Banking Co., Ltd.
The Iyo Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
The Mizuho Corporate Bank, Ltd.
Development Bank of JapanThe Dai-ichi Life Insurance Company, Limited.
Mizuho Trust & Banking Co., Ltd.
THE NISHI-NIPPON CITY BANK, LTD.
The Chugoku Bank, Ltd.
The Bank of Fukuoka, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
The Iyo Bank, Ltd.
Taiyo Life Insurance Company
Daido Life Insurance Company
Sumitomo Life Insurance Company
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
The Mizuho Corporate Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
The Bank of Fukuoka, Ltd.
The Dai-ichi Life Insurance Company, Limited.
The Norinchukin Bank, Ltd.
Taiyo Life Insurance Company
Sumitomo Life Insurance Company
Development Bank of Japan, Inc.
Sompo Japan Insurance Inc.
Development Bank of Japan, Inc.
Subtotal
Total

Date
Borrowed

Dec. 10, 2007

Apr. 25, 2008

Mar. 19, 2007
Sep. 25, 2008

Dec. 8, 2006

Jun. 24, 2009

Nov. 29, 2005
Dec. 9, 2005
Feb. 26, 2008

Sep. 25, 2008
Nov. 4, 2008

Jun. 27, 2008
Mar. 17, 2005
Dec. 8, 2006
Mar. 26, 2010
Jun. 24, 2010
Aug. 26, 2010
Dec. 8, 2008

Mar. 19, 2007

Dec. 24, 2009
Feb. 26, 2008
Feb. 26, 2010
Jun. 24, 2008
Aug. 26, 2010
Jun. 25, 2009

Outstanding as of Outstanding as of
Average
Oct. 31, 2010
Apr. 30, 2010
Interest Rate(¥000)(¥000)(%) (Note 1)

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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

4,000,000
1,000,000
500,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
500,000
2,000,000
1,000,000
1,000,000
1,000,000
1,000,000
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––
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–
1,000,000
3,000,000
4,000,000–
9,250,000
120,600,000
145,480,000

Date of
Repayment

1.43200

Jun. 10, 2011

1.44800

Aug. 25, 2011

1.63825

Aug. 26, 2011

1.43950

Sep. 25, 2011

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

1.19000

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

1.31125
1.97000

Aug. 26, 2015
(Note 3)Use of
Method of
Repayment 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,
which were hedged by interest-rate swaps for the purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used to calculate the weighted averageof interest.
Note 2:	The use of borrowings is to purchase property-related assets, the related miscellaneous expenses and the repayment of borrowings.
Note 3:	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.

28

29

3. Status of Investment Corporation Bonds

4. TRANSACTIONS WITH RELATED PARTIES AND MAJOR SHAREHOLDERS

The status of investment corporation bonds issued as of October 31, 2010 is as follows.

(1) Transactions
Not applicable.

Name of Bonds

Issue DateFirst Series Unsecured Investment
Corporation Bonds

Mar. 16,
2005

Balance as ofOct. 30, 2010(¥ mln)5,000

Balance as ofApr. 30, 2010(¥ mln)Interest
Rate
(%)

5,000

1.85

Maturity Date

Method of
Repayment

Use ofProceeds

Mar. 16,
2015

Balloon(Note 1) (Note 2)
payment

NoteMar. 16,
2005

5,000

5,000

2.47

Mar. 16,
2020

Balloon(Note 1) (Note 2)
payment

Third Series Unsecured Investment Nov. 28,
Corporation Bonds
2005

10,00010,0001.19

Nov. 29,2010

Balloon(Note 1) (Note 3)
payment

Fourth Series Unsecured
Investment Corporation Bonds

Nov. 28,
2005

10,00010,0002.05

Nov. 30,
2015

Balloon(Note 1) (Note 3)
payment

Fifth Series Unsecured Investment
Corporation Bonds

Mar. 19,
2007

5,000

5,000

1.61

Mar. 19,2012

Balloon(Note 1) (Note 3)
payment

Sixth Series Unsecured Investment Mar. 19,
Corporation Bonds
2007

5,000

5,000

2.21

Mar. 17,2017

Balloon(Note 1) (Note 3)
payment

4,500

4,500

2.90

Mar. 17,
2028

Balloon(Note 1) (Note 3)
payment

44,50044,500

Second Series Unsecured
Investment Corporation Bonds

Seventh Series Unsecured
Investment Corporation Bonds
Total

Mar. 19,2007

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

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

Trading during the Fourteenth Fiscal Period
1. STATUS OF REAL ESTATES AND ASSET-BACKED SECURITIES TRADING
Not applicable.

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

3. PRICE INVESTIGATION(1) Real Estates
Not applicable.
(2) Others
With regard to the properties the Company has traded but not included in the above table “(1) Real Estates,” the priceinvestigation procedures were conducted by Ernst & Young ShinNihon LLC subject to the requirement by Article 201 of theInvestment Trust Law.
For the fourteenth fiscal period (from May 1, 2010 to October 31, 2010), two OTC derivatives transactions were subject toinvestigation. Ernst & Young ShinNihon LLC was requested to investigate the details of three transactions including the name ofcounterparty, issues, the number of execution, financial instruments/monetary indicators, put/call options, exercise prices, theperiod of execution of right, the trading period, etc. The investigation report has been received.

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

Contract-out fees
Property management fees
Other expenses

Amount Paid (A)(¥000)

Nomura Building Management Co., Ltd. (Note 2)
Flagship Properties, Inc. (Note 3)
Nomura Real Estate Development Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Building Management Co., Ltd.
Geo-Akamatsu Co., Ltd.

649,514916
151,157
26,362
14,92325,422
798

Portion(A) / (B)(%)

Total Amount Paid (B)(¥000)

60.2
0.1
65.0
11.3
15.8
27.0
0.8

1,078,936
232,465
94,276Note 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
and Investment Corporations and by Article 26, Paragraph 1, Item 27 of the Regulations Concerning Investment Reports of Investment Trusts and Investment Corporations,issued by the Investment Trusts Association, Japan. The term “major shareholders” refers to major shareholders of Asset Management Companies as defined by Article
29-4, Paragraph 2 of the Financial Instruments and Exchange Act.
Note 2:	In addition to the Property Management Agreement, the Company has entrusted Nomura Building Management Co., Ltd. with daily maintenance of building 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.
Note 4:	Besides the above, the Company has made the following payments for repair works during the fourteenth fiscal period.
Name of Related Party
Nomura Real Estate Development Co., Ltd.
Nomura Building Management Co., Ltd.

Amount Paid (¥000)
37,026446,672

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.

32,044
2,691
13,096
5,368
3,789
6,621
3,852
4,523
4,745
5,237
3,378
2,529
2,382
2,116
4,310
7,842
1,507
4,427
4,371
3,530
4,106
5,110
11,864
3,794
7,914
4,205
2,174
1,542
1,113
689
1,929
600
5,517
3,728
1,998
2,862

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.

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

30

31

Other Information
Financial Section

1. NOTICE
Not applicable.

2. STATUS OF BENEFICIAL INTEREST IN INVESTMENT TRUSTS ESTABLISHED BY THE COMPANY
Not applicable.

3. OTHER MATTERS
For the purpose of this report, the numbers of amount below unit are truncated and the numbers in percentage are rounded to unit
unless otherwise mentioned specifically.

Omron Kyoto Center Building

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

32

33

Balance Sheets

As of October 31, 2010

Thousands of Yen
As of April 30, 2010ASSETS
Current Assets:
Cash and bank deposits
Rental receivables
Corporate taxes refundable
Other current assets
Total current assets¥ 33,216,353
179,932346
367,01233,763,643

Property and Equipment, at Cost:Land
Buildings and structures
Machinery and equipment
Tools, furniture and fixtures
Leased assets
Construction in progress

265,986,741
124,771,281
1,500,266
236,323
30,946
104,631265,986,741
124,291,975
1,415,304
228,961
30,946
81,166

SubtotalLess accumulated depreciation
Net property and equipment

392,630,188(19,961,210)
372,668,978392,035,093(18,084,506)
373,950,587

1,900,905
2,357
6,842
410,850
76,893
2,397,847

1,900,905
2,621
14,582
410,850
83,814
2,412,772¥ 407,703,625¥ 410,127,002

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

As of April 30, 2010

LIABILITIES¥ 32,053,477
231,407410
351,506
32,636,800

Investments and Other Assets:
Leasehold rights
Intangible assets
Long-term prepaid expenses
Security deposits
Deferred investment corporation bond issuance costs
Total investments and other assets

Thousands of Yen
As of October 31, 2010

Current Liabilities:
Trade accounts payable
Other accounts payable
Short-term investment corporation bonds
Short-term debt
Current portion of investment corporation bonds
Current portion of long-term debt
Accrued expenses
Accrued consumption taxes
Rent received in advance
Other current liabilities
Total current liabilities¥

708,071869,252–
10,380,000
10,000,000
29,500,000
880,019
161,491
2,085,652
85,19454,669,679¥546,960
1,200,171
1,998,818
8,380,000
10,000,000
16,500,000
857,801
204,430
2,164,533
124,814
41,977,527

Long-term Liabilities:
Investment corporation bonds
Long-term debt
Security deposits from tenants
Other long-term liabilities
Total long-term liabilities

34,500,000
106,850,000
21,740,307
8,677
163,098,984

34,500,000
120,600,000
22,547,218
12,131
177,659,349

Total Liabilities

217,768,663

219,636,876

Unitholders’ Equity:
Unitholders’ capital
Retained earnings
Total unitholders’ equity

185,455,447
4,479,515
189,934,962

185,455,447
5,034,679
190,490,126

Total Net Assets

189,934,962

190,490,126¥ 407,703,625¥ 410,127,002

NET ASSETS

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

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

Thousands of Yen
For the period
from November 1, 2009
to April 30, 2010

For the period from May 1, 2010 to October 31, 2010
Unitholders’CapitalRetained
Earnings

305,123¥185,455,447¥5,034,679¥190,490,126––¥190,490,126

–
–

–
–

(5,034,530)
4,479,366(5,034,530)
4,479,366

–
–

–
–

(5,034,530)
4,479,366

305,123¥185,455,447¥4,479,515¥189,934,962––¥189,934,962

Unitholders’CapitalRetained
Earnings

Total
Unitholders’Equity305,123¥185,455,447¥5,338,534¥190,793,981––¥190,793,981

–
–

–
–

(5,338,432)
5,034,577(5,338,432)
5,034,577

–
–

–
–

(5,338,432)
5,034,577

305,123¥185,455,447¥5,034,679¥190,490,126––¥190,490,126

Units

Operating Revenues and Expenses
Balance as of April 30, 2010
Operating Revenues:
Real estate rental revenues¥ 13,364,441¥ 13,686,232

13,364,441

13,686,232

5,883,558
1,058,582
93,781
105,462

5,667,025
1,075,895
94,021
101,953

7,141,383

6,938,894

6,223,058

6,747,338

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

Cash distribution paid
Net income
Balance as of October 31, 2010

Units

Cash distribution paid
Net income
Balance as of April 30, 2010

Non-Operating Revenues and Expenses

Thousands of Yen
Deferred
Total Valuation
Total
Hedge Gains and Translation(Losses)
Adjustments Net Assets

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

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

6,795
39,985

6,867
35,73946,78042,606

1,181,508
129,946
1,182
433,4136,921
36,6001,160,559
103,1815,708
428,087
8,089
48,716

1,789,570

1,754,340

4,480,268

5,035,604

Income Taxes:
Current
Deferred

896
6

1,027
-

Net Income

4,479,366

5,034,577

149

102

Non-Operating Expenses:
Interest expense
Loan arrangement fees
Interest expense on short-term investment corporation bonds
Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance costs
Other non-operating expenses

Income before Income Taxes

Retained earnings brought forward
Retained Earnings at End of Period

Deferred
Total Valuation
Total
Hedge Gains and Translation(Losses)
Adjustments Net Assets

For the period from November 1, 2009 to April 30, 2010

Balance as of October 31, 2009
Operating Profit

Thousands of Yen
Total
Unitholders’Equity¥

4,479,515¥

5,034,679

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

36

37

Statements of Cash Flows

Notes to Financial Statements

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

Thousands of Yen
For the period
from November 1, 2009
to April 30, 2010

Cash Flows
Cash Flows from Operating Activities
Income before income taxes
Depreciation
Amortization of long-term prepaid expenses
Amortization of investment corporation bond issuance costs
Interest income
Interest expense
Loss on disposal of property and equipment(Increase) Decrease in rental receivables
Increase (Decrease) in trade accounts payable(Decrease) in other accounts payable(Decrease) in accrued consumption taxes(Decrease) in rent received in advance
Changes in other current assets/liabilities¥

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)¥

5,035,604
1,865,416
15,711
8,089(6,867)
1,594,355
10,31953,818(181,775)(141,237)(6,393)(106,289)(93,776)

SubtotalInterest received
Interest paid
Income taxes (paid) refund
Net cash provided by operating activities

7,720,442
6,535(1,594,392)(961)
6,131,624

8,046,975
6,867(1,656,483)
720
6,398,079

Cash Flows from Investing Activities
Payments into 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(1,300,000)(707,316)(1,400,604)
593,693(2,814,227)–(4,999,910)(1,173,235)
659,330(5,513,815)

Cash Flows from Financing Activities
Proceeds from short-term debt
Repayment of short-term debt
Proceeds from short-term investment corporation bonds
Redemption of short-term investment corporation bonds
Proceeds from long-term debt
Repayment of long-term debt
Distributions to unitholders
Net cash used in financing activities
Net 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.

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

7,580,000(12,930,000)
5,991,530(4,000,000)
13,350,000(6,750,000)(5,332,352)(2,090,822)(2,462,876)
33,216,353¥ 30,753,477(1,206,558)
34,422,911¥ 33,216,353

1. Organization
Nomura Real Estate Office Fund, Inc. (the “Company”) is a real estate investment corporation formed to own and invest primarily in
office properties. The Company is externally managed by a licensed asset management company, Nomura Real Estate AssetManagement Co., Ltd. (“NREAM”). NREAM is a wholly-owned subsidiary of Nomura Real Estate Holdings, Inc.
On August 7, 2003, the Company was incorporated under the 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 October 31, 2010, the Company owned a portfolio of 51 office properties
containing an aggregate of approximately 438,918.56 square meters of leasable area and leased office space to 704 tenants.

2. Basis of Presentation
The Company maintains its accounting records and prepares its financial statements in accordance with accounting principles
generally accepted in Japan (“Japanese GAAP”), including provisions set forth in the Investment Trust Law of Japan, the Corporation
Law of Japan, the Financial Instruments and Exchange Law of Japan and related regulations, which are different in certain respects
as to the application and disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which wereprepared in accordance with Japanese GAAP and were presented in the Securities Report of the Company filed with the Kanto Local
Finance Bureau. In preparing the accompanying financial statements, certain reclassifications and modifications have been made to
the financial statements issued domestically in order to present them in a format that is more familiar to readers outside Japan. In
addition, the notes to financial statements include certain information that might not be required under Japanese GAAP but ispresented herein as additional information. Amounts have been rounded to the nearest thousand of yen in the accompanying
financial statements and the notes thereto, whereas amounts were truncated in the Japanese financial statements prepared inaccordance with Japanese GAAP.
The Company’s fiscal period is a six-month period which ends at the end of April or October. The Company does not prepare
consolidated financial statements because it has no subsidiaries.

3. Summary of Significant Accounting Policies
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments that are highly
liquid, readily convertible to cash, with an insignificant risk of market value fluctuation, and with a maturity of three months orless when purchased.
Property and equipment (Except for leased assets)
Property and equipment are stated at cost, which includes the purchase price and related costs for acquisition, lessaccumulated 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 theaggregate 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 havebeen 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.
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.
Revenue recognition
Operating revenues consist of rental revenues including base rents and common area charges, and other operating revenues
including utility charge reimbursements, parking space rental revenues and other income. Rental revenues are generally
recognized on an accrual basis over the life of each lease. Utility charge reimbursements are recognized when earned and theiramounts are reasonably estimated.

38

39

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 the calendar year including the period from the date of purchase by the Company through the end of the year
since the taxes are imposed on 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 October 31, 2010 as the Company did notacquire any properties. The capitalized property related taxes amounted to ¥11,876 thousand for the six-month period endedApril 30, 2010.

6. Short-term Debt

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

Unsecured loans from banks due on June 24, 2010
Unsecured loans from insurance companies due on August
26, 2010
Unsecured loans from banks due on August 26, 2010
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 June 25, 2016 (Note 2)
Total

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 to changes in interest rates. The Company deferred recognition of gains or losses resulting from changes in the fairvalue 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 notremeasured at fair value; instead, the net amount paid or received under the interest rate swap contract is recognized andincluded in interest expense or income.
The New Accounting standard for Asset Retirement Obligations
From the 14th fiscal period ended October 31, 2010, the Company adopted the revised accounting standards, “AccountingStandard for Asset Retirement Obligations” (ASBJ Statement No. 18 on March 31 2008) and the “Guidance on AccountingStandard for Asset Retirement Obligations” (ASBJ Guidance No. 21 on March 31 2008). There was no impact on its financial
position or results of the operation as a result of such adoption.

4. Cash and Cash Equivalents
Cash and cash equivalents as of October 31, 2010 and April 30, 2010 consist of the following:Thousands of Yen
As of October 31, 2010

As of April 30, 2010¥ 32,053,477(1,300,000)¥ 30,753,477¥ 33,216,353–¥ 33,216,353

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

Short-term debt as of October 31, 2010 and April 30, 2010 consist of the following:Thousands of Yen

40

Acquisition Costs

Book Value

Acquisition Costs

Book Value¥ 57,405,168
27,381,012(2,280,863)
597,530(111,197)
12,463(1,848)6,210
208,581,573
97,390,269(16,999,662)
902,736(447,523)
223,860(104,005)
30,946(16,112)
98,421¥372,668,978¥ 57,405,168¥ 57,405,168
27,308,860(1,840,648)
590,835(87,515)
6,636(1,050)6,210
208,581,573
96,983,115(15,639,650)
824,469(414,206)
222,325(88,716)
30,946(12,721)74,956¥373,950,587¥ 57,405,168

25,100,149
486,333
10,615
6,210
208,581,573
80,390,607
455,213
119,855
14,834
98,421¥372,668,978––¥ 2,800,000

1.12727%––2,000,000

1.65500%––

4,000,000

0.90727%¥ 2,500,000

0.94000%

2,500,000

1.04000%

2,580,000
1,000,000
7,500,000

1.05000%
1.04000%
1.68000%

2,580,000
1,000,000
7,500,000

1.12727%
1.10727%1.68000%

2,000,000

1.04000%

2,000,000

1.10727%

8,500,000
2,300,000
4,500,000
4,000,000
2,500,000
2,000,000
500,000¥39,880,000

1.43200%
1.05000%
1.44800%
1.63825%0.94000%
1.43950%
1.97000%

–
–
–
–
–
–
500,000¥24,880,000

–
–
–
–

25,468,212
503,320
5,586
6,210
208,581,573
81,343,465
410,263
133,60918,22574,956¥373,950,587–
1.97000%

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

7. Long-term Debt
Long-term debt as of October 31, 2010 and April 30, 2010 consist of the following:
As of October 31, 2010
Amount(Thousandsof Yen)As of April 30, 2010

Weightedaverageinterest rate
(Note 1)

Amount(Thousandsof Yen)Note 1: The weighted-average interest rate is weighted by the balance of each borrowing at the end of the period and rounded to the nearest fifth decimal place. As for the borrowings, which were hedged by interest-rate swaps for the purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used to calculate the weighted
average of interest.
Note 2: Installments of ¥250 million will be made on the 25th 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.

Property and equipment as of October 31, 2010 and April 30, 2010 consist of the following:

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

Weightedaverageinterest rate
(Note 1)

Amount(Thousandsof Yen)5. Schedule of Property and Equipment

As of October 31, 2010

As of April 30, 2010

As of October 31, 2010

Unsecured loans from banks due on June 10, 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 September 25, 2011
Unsecured loans from banks due on February 26, 2012
Unsecured loans from banks due on June 24, 2012
Unsecured loans principally from insurance companies due
on August 26, 2012
Unsecured loans from a financial institution due on August
26, 2012
Unsecured loans from banks due on August 26, 2012
Unsecured loans from banks due on September 25, 2012
Unsecured loans from banks due on November 4, 2012
Unsecured loans from banks due on December 27, 2012
Unsecured loans from a bank due on February 26, 2013
Unsecured loans from an insurance company due on
February 26, 2013
Unsecured loans from banks due on February 26, 2013
Unsecured loans from a bank due on June 24, 2013
Unsecured loans from a bank due on August 26, 2013
Unsecured loans from banks due on December 8, 2013
Unsecured loans from insurance companies due on March 19, 2014
Unsecured loans from banks due on December 24, 2014
Unsecured loans from an insurance company due on
February 26, 2015
Unsecured loans from a financial institution due on February
26, 2015
Unsecured loans principally from insurance companies due
on June 24, 2015
Unsecured loans from an insurance company due on August
26, 2015
Unsecured loans from a bank due on June 25, 2016 (Note 2)
Total

Weighted–
averageinterest rate
(Note 1)

As of April 30, 2010
Weighted–
averageinterest rate
(Note 1)

Amount(Thousandsof Yen)––––¥ 11,000,000
12,000,000––––
1.89764%
1.39575%¥ 8,500,000
4,500,000
4,000,000
2,000,000
11,000,000
12,000,000

1.43200%
1.44800%
1.63825%
1.43950%
1.89764%
1.39575%

5,000,000

1.43750%

5,000,000

1.43750%

1,000,000

1.53625%

1,000,000

1.53625%

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

1.46000%
1.61150%
1.51175%
1.87200%
1.75250%

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

1.46000%
1.61150%
1.51175%
1.87200%
1.75250%

2,000,000

1.99250%

2,000,000

1.99250%

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%

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

1.22636%––
1.68680%1.98000%
1.55800%

3,000,000

1.91875%

3,000,000

1.91875%

3,000,000

1.69300%

3,000,000

1.69300%

8,000,000

2.31750%

8,000,000

2.31750%

1,000,000

1.31125%––

9,000,000¥106,850,000

1.97000%

9,250,000¥120,600,000

1.97000%

41

Note 1: The weighted-average interest rate is weighted by the balance of each borrowing at the end of the period and rounded to the nearest fifth decimal place. As for the borrowings, which were hedged by interest-rate swaps for the purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used to calculate the weighted
average of interest.
Note 2: Installments of ¥250 million will be made on the 25th of every sixth month starting on December 25, 2009, with the remaining payment of ¥6,750 million to be repaid on
June 25, 2016.

10. Per Unit Information
The net asset values per unit and the net income per unit as of October 31, 2010 and April 30, 2010 were as follows:

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

Long-term debt

1-2 years

2-3 years

3-4 years

4-5 years

39,000,000

27,000,000

12,000,000

21,850,000

8. Investment Corporation Bonds

Amount(Thousandsof Yen)Weighted–
averageinterest rate

Weighted–
averageinterest rate

1.85000%¥ 5,000,000

1.85000%

5,000,000

2.47000%

5,000,000

2.47000%

11. Related Party Transactions

10,000,000

1.19000%

10,000,000

1.19000%

10,000,000

2.05000%

10,000,000

2.05000%

Parent Company, corporate shareholders and otherNot applicable

5,000,000

1.61000%

5,000,000

1.61000%

5,000,000

2.21000%

5,000,000

2.21000%

Subsidiary companies and otherNot applicable

4,500,000

2.90000%

4,500,000

2.90000%

Fellow subsidiary companies and otherNot applicable¥44,500,000¥44,500,000

Thousands of Yen

Investment Corporation Bonds

1-2 years

2-3 years

5,000,000

3-4 years–

4-5 years–

5,000,000

Short-term Investment Corporation Bonds
Details of short-term investment corporation bonds outstanding are summarized as follows:
As of April 30, 2010

As of October 31, 2010
Redemption
price(Thousandsof Yen)Amount(Thousandsof Yen)Fourth Series of Short-term Investment Corporation Bonds
due on June 24, 2010
Total

Amount(Thousandsof Yen)Redemption
price(Thousandsof Yen)––¥1,999,818¥2,000,000––¥1,999,818¥2,000,000

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

42

Net income (Thousands of Yen)
Amount not available to ordinary unitholders (Thousands of Yen)
Net income available to ordinary unitholders (Thousands of Yen)
Average number of units during the period¥ 5,000,000

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

Within a year
10,000,000¥622,486¥ 14,680¥624,306¥ 16,500

The net income per unit is calculated by dividing net income by the weighted-average number of units outstanding for therespective six-month period.

As of April 30, 2010

As of October 31, 2010

First Series of Unsecured Investment Corporation Bonds
Due on March 16, 2015
Second Series of Unsecured Investment Corporation Bonds
Due on March 16, 2020
Third Series of Unsecured Investment Corporation Bonds
Due on November 29, 2010
Fourth Series of Unsecured Investment Corporation Bonds
Due on November 30, 2015
Fifth Series of Unsecured Investment Corporation Bonds
Due on March 19, 2012
Sixth Series of Unsecured Investment Corporation Bonds
Due on March 17, 2017
Seventh Series of Unsecured Investment Corporation Bonds
Due on March 17, 2028
Total

For the period
from November 1, 2009
to April 30, 2010

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

Investment Corporation Bonds
Details of investment corporation bonds outstanding are summarized as follows:
Amount(Thousandsof Yen)Net asset values per unit
Net income per unit

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

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

For the period
from November 1, 2009
to April 30, 2010

¥4,479,366–¥4,479,366
 305,123¥5,034,577–¥5,034,577
 305,123

Directors, individual shareholders and otherNot applicable

12. Income Taxes
The Company, as an investment corporation, is subject to corporate income taxes at a statutory tax rate of approximately 40% for
the six-month periods ended October 31, 2010 and April 30, 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 arequirement to distribute in excess of 90% of its distributable income for the fiscal period, in order to deduct such amounts. If theinvestment corporation does not satisfy all of the requirements, the entire taxable income of the investment corporation will be
subject to regular corporate income taxes.
Since the Company distributed approximately 100% of its distributable income in the form of cash distributions totaling¥4,479,511 thousand and ¥5,034,530 thousand for the six-month periods ended October 31, 2010 and April 30, 2010, respectively,
such distributions were treated as deductible distributions for purposes of corporate income taxes. The following summarizes thesignificant differences between the statutory tax rate and the effective tax rate:

Statutory tax rate
Deductible cash distributions
Other
Effective tax rate

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

For the period
from November 1, 2009
to April 30, 201039.33%(39.32)0.01
0.02%

39.33%(39.32)
0.01
0.02%

43

13. Financial Instruments

Thousands of Yen

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 rising interest rates, the Company’s investment policy is to secure longer-term, fixed-rateborrowings with well-diversified maturities.
The Company enters into derivative transactions only for the purpose of reducing risk of future interest rate fluctuations anddoes 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 therepayment of debts and redemption of investment corporation bonds. The Company is exposed to liquidity risk of being unable tomeet its obligations on scheduled due dates. The Company controls and limits such risk by diversifying not only the financial
institutions, but also the type of financing to include the effective use of surplus funds and direct financing from the capital
markets such as issuance of investment units. In addition, the Company is exposed to the market risk arising from fluctuations ininterest 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 floatingrate 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 theevent of 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 priceavailable, fair value is reasonably estimated. Certain assumptions are used for the estimation of fair value. Accordingly, the resultof such estimation may change if different assumptions are used. Furthermore, the contractual amounts of derivative transactions
stated in “16. Derivatives and Hedge Accounting” below do not represent the market risk involved in these derivativetransactions.
Fair Value of Financial Instruments
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)(i) Cash and bank deposits(ii) Cash and bank deposits in trust(iii) Short-term debt(iv) Current portion of investment corporation bonds(v) Current portion of long-term debt(vi) Investment corporation bonds(vii) Long-term debt
(viii) Derivative transactions

14,007,165
18,046,312(10,380,000)(10,000,000)(29,500,000)(34,500,000)(106,850,000)–

Fair Value (Note 1)

14,007,165
18,046,312(10,380,000)(10,004,690)(29,713,579)(35,367,286)(109,269,968)–

Difference

–
–
–
4,690
213,579
867,286
2,419,968–

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 in 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“18. 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 “18. 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 havebeen 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 isconsidered to be extremely difficult to estimate their fair value.
Note 4: Redemption schedule for cash and bank deposits and cash and bank deposit in trust

44

Due within
one year

Cash and bank deposits
Cash and bank deposits in trust
Total

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

14,007,165
18,046,312
32,053,477

–
–
–

–
–
–

–
–
–

After five
years

–
–
–

–
–
–

Note 5: Redemption schedule for investment corporation bonds and debt

Thousands of Yen
Due within
one year

Short-term debt
Investment corporation bonds
Long-term debt
Total

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

10,380,000
10,000,000
29,500,000
49,880,000–
5,000,000
39,000,000
44,000,000––
27,000,000
27,000,000––
12,000,000
12,000,000–
5,000,000
21,850,000
26,850,000

After fiveyears–
24,500,000
7,000,000
31,500,000

For the period from November 1, 2009 to April 30, 2010
The following table summarizes the carrying value and the estimated fair values of financial instruments as of April 30, 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)(i) Cash and bank deposits(ii) Cash and bank deposits in trust(iii) Short-term investment corporation bonds(iv) Short-term debt(v) Current portion of investment corporation bonds(vi) Current portion of long-term debt(vii) Investment corporation bonds(viii) Long-term debt(ix) Derivative transactions

Fair Value (Note 1)

14,358,510
18,857,843(1,998,818)(8,380,000)(10,000,000)(16,500,000)(34,500,000)(120,600,000)–

Difference

14,358,510
18,857,843(1,998,818)(8,380,000)(10,023,500)(16,548,447)(34,701,300)(121,777,774)
–

–
–
–
–
23,50048,447201,300
1,177,774–

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 investment corporation bonds and (iv) 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.
(v) Current portion of investment corporation bonds and (vii) Investment corporation bonds
			The fair value of investment corporation bonds issued by the Company is determined based on their market prices.
(vi) Current portion of long-term debt and (viii) 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 in 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“18. 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.
(ix) Derivative transactions
			
Refer to “18. Derivatives and Hedge Accounting”.
Note 3: The fair value of security deposits (with a carrying value of ¥4,030,824 thousand) and security deposits in trust (with a carrying value of ¥18,516,394 thousand) that havebeen 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 isconsidered to be extremely difficult to estimate their fair value.
Note 4: Redemption schedule for cash and bank deposits and cash and bank deposit in trustThousands of Yen
Due within
one year

Cash and bank deposits
Cash and bank deposits in trust
Total

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

14,358,510
18,857,843
33,216,353

–
–
–

–
–
–

–
–
–

After five
years

–
–
–

–
–
–

Note 5: Redemption schedule for investment corporation bonds and debt

Thousands of Yen
Due within
one year

Short-term investment corporation bonds
Short-term debt
Investment corporation bonds
Long-term debt
Total

2,000,000
8,380,000
10,000,000
16,500,000
36,880,000

After one year,
After two years, After three years, After four years,
within two years within three years within four years within five years––
5,000,000
30,500,000
35,500,000–––
50,000,000
50,000,000–––
12,000,000
12,000,000––
5,000,000
12,850,000
17,850,000

After five
years

–
–
24,500,000
15,250,000
39,750,0004514. Investment and Rental Properties

16. Breakdown of Real Estate Rental Revenues and Expenses

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
table summarizes the carrying value and the estimated fair value of these properties as of October 31, 2010.

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

Thousands of Yen
Carrying Value
As of October 31, 2010

374,569,882

Change during the period(1,281,609)

Fair value
As of April 30, 2010

As of October 31, 2010

375,851,491

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.”
For the period from November 1, 2009 to April 30, 2010
Effective the six-month period ended April 30, 2010, “Accounting Standard for Disclosures about Fair Value of Investment and Rental
Property” (ASBJ Statement No.20, November 28, 2008) and “Guidance on Accounting Standard for Disclosures about Fair Value ofInvestment and Rental Property” (ASBJ Guidance No.23, November 28, 2008) have been applied.
The Company owns in its portfolio certain office buildings (including land) for lease located in Tokyo and other areas. The
following table summarizes the carrying value and the estimated fair value of these properties as of April 30, 2010.
Thousands of Yen
Carrying Value
As of April 30, 2010

375,851,491

Change during the period

3,061,158

Fair value
As of October 31, 2009

372,790,333

As of April 30, 2010

367,066,000

Note 1: The Carrying Value represents the acquisition cost less accumulated depreciation.
Note 2: The components of net change included increases mainly due to the acquisition of NOF Nagoya Fushimi Building (¥4,228,600 thousand).
Note 3: The fair value as of April 30, 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 April 30, 2010 is presented in “16. Breakdown ofReal Estate Rental Revenues and Expenses.”

15. Segment Information
For the period from May 1, 2010 to October 31, 2010
Effective the six-month period ended October 31, 2010, “Accounting Standard for Disclosures about Segments of an Enterprise andRelated Information” (ASBJ Statement No. 17, March 27, 2009) and “Guidance on Accounting Standard for Disclosures about
Segments of an Enterprise and Related Information” (ASBJ Guidance No.20, March 21, 2008) have been applied.
Since the Company has been engaged in real estate leasing business using a sigle segment, segment information has been
omitted.
Information about products and services
Since revenues from external customers for single segment of similar products and services accounted for more than 90 percent
of total operating revenues, information about products and services has been omitted.

Real estate rental revenues
Rental revenues
Rental revenues
Common area charges
Other rental revenues
Parking revenues
Incidental income
Other miscellaneous revenues
Real estate rental expenses
Property management costs
Property management fees
Property and other taxes
Utility expenses
Casualty insurance
Repairs and maintenance
Depreciation
Other rental expenses
Profit

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

For the period
from November 1, 2009
to April 30, 2010

¥13,364,441
12,020,206
9,779,004
2,241,202
1,344,235
259,448
1,015,971
68,816
5,883,558
1,078,936
232,466
1,218,289
1,028,750
26,275
187,697
1,876,802
234,343¥ 7,480,883¥13,686,232
12,502,676
10,208,784
2,293,892
1,183,556
280,740
833,623
69,193
5,667,025
1,071,347
247,517
1,129,932
838,194
26,129246,706
1,865,203
241,997¥ 8,019,207

17. Leases
Finance lease agreements, excluding those in which the ownership of the leased assets is deemed to be transferred to the lessee,
are mainly for tools, furniture and fixtures in trust. Depreciation of leased assets under finance lease transactions excluding those inwhich the ownership of the leased assets is deemed to be transferred to the lessee are calculated by the straight-line method, overthe lease period with no residual value.
The Company, as lessor, enters into lease agreements for which fixed monthly rents are due in advance with a lease term ofgenerally two years for offices. The future minimum rental revenues under existing non-cancelable operating lease agreements as of
October 31, 2010 and April 30, 2010 are summarized as follows:
Thousands of Yen

Due within one year
Due after one year
Total

As of October 31, 2010

As of April 30, 2010

¥ 4,597,339
23,376,402¥27,973,741¥ 5,230,358
26,857,725¥32,088,083

Information about geographical areas(1) Revenues
Since more than 90 percent of the total operating revenues were generated from external customers within Japan, geographicalbreakdown of revenues has been omitted.

18. Derivatives and Hedge Accounting(2) Property and equipment
Since more than 90 percent of the total property and equipment on the balance sheet are located within Japan, geographicalbreakdown of such property and equipment has been omitted.

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:

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.

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

68,850,000

Fair value

Method used for
determining fair value(*)* Since the derivative financial instruments qualifying for the special treatment of interest-rate swaps are accounted for as one
transaction together with their hedged item, long-term debt, the fair value of these derivatives is included in that of related long-term
debt (see “13. Financial Instruments (Note 2) (v) Current portion of long-term debt and (vii) Long-term debt” above).
Derivative transactions as of April 30, 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

46

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

90,850,000

83,350,000

Fair value

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

47

19. Significant Subsequent Events
Issuance of Investment Corporation Bonds
In accordance with the resolution at the Board of Directors’ meeting held on October 20, 2010, the Company issued investment
corporation bonds on November 26, 2010, as briefly explained below. The issuance is based on the Shelf Registration Statement of
the Investment Corporation Bonds filed on November 18, 2009.
(1) Nomura Real Estate Office Fund, Inc. Eighth Series Unsecured Investment Corporation Bonds
Aggregate Amount of the Investment Corporation Bonds: ¥6,000,000,000
Payment Price: ¥100 per par value of ¥100
Redemption Price: ¥100 per par value of ¥100
Interest Rate
: 0.94% per annum
Pledge and Guarantee: Unsecured/unguaranteed
Maturity and Method of Redemption: November 26, 2014 (4-year bonds)
		The Company may, at any time on and after the date following the due
date of payment, purchase and cancel any such Bond except asotherwise specifically provided by Japan Securities Depository Center,
Inc., the custody of a transfer agency.
Interest Payment Date
: May 26 and November 26, every year
Purpose of the Issuance: To be used for a part of the redemption of the Third Series Unsecured
Investment Corporation Bonds (¥10,000,000,000) which will mature on
November 29, 2010.
(2) Nomura Real Estate Office Fund, Inc. Ninth Series Unsecured Investment Corporation Bonds
Aggregate Amount of the Investment Corporation Bonds: ¥4,000,000,000
Payment Price: ¥100 per par value of ¥100
Redemption Price: ¥100 per par value of ¥100
Interest Rate
: 1.52% per annum
Pledge and Guarantee: Unsecured/unguaranteed
Maturity and Method of Redemption: November 24, 2017 (7-year bonds)
		The Company may, at any time on and after the date following the due
date of payment, purchase and cancel any such Bond except asotherwise specifically provided by Japan Securities Depository Center,
Inc., the custody of a transfer agency.
Interest Payment Date
: May 26 and November 26, every year
Purpose of the Issuance: To be used for a part of the redemption of the Third Series Unsecured
Investment Corporation Bonds (¥10,000,000,000) which will mature on
November 29, 2010.
Transfer of a Property
On December 8, 2010, the Company entered into a sale and purchase agreement regarding the transfer of NOF Toyo-cho Building andcompleted the transfer of 33% of the quasi-co-ownership interest in each of the two real estate trust beneficial interests.
Consumption taxes and adjustments of property taxes are excluded from the sales prices.
NOF Toyo-cho Building
Type of Asset
Date of Agreement
Scheduled Transfer Date (Note 1): Trust Beneficial Interest: December 8, 2010
: (i) December 8, 2010 (33% of the quasi-co-ownership interest in each of
the two real estate trust beneficial interests)
		 (ii) May 10, 2011 (67% of the quasi-co-ownership interest in each of thetwo real estate trust beneficial interests)
Transfer Price: (i) ¥2,859,000,000
		 (ii) ¥5,805,000,000
		 Total ¥8,664,000,000
Book Value (Note 2): (i) ¥2,326,147,531
		 (ii) ¥4,722,784,381
		 Total ¥7,048,931,912
Transferee: Japanese General Operating Company
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. 33% of the quasi-coownership interest in each of the two beneficial interests will be transferred on December 8, 2010, and 67% of the quasi-co-ownership interest in each of the two beneficial interests will be transferred of on May 10, 2011.
Note 2: The book value is calculated by multiplying the book value as of October 31, 2010 with the quasi-co-ownership interest in the real estate trust beneficial interests to betransferred (33% on December 8, 2010, and 67% on May 10, 2011 (The amount has been rounded to the nearest first decimal place)). The book value is a reference
amount as of October 31, 2010.

48

49

WebsiteBusiness Structure
CustodianProfile Asset
Administrator of

Asset Custody
Agreement

Nomura Real Estate
Office Fund, Inc.

Register
Nomura Unitholders
Real Estate
Office Fund, Inc. (referred to as “Nomura Office Fund” orGeneral Administration
the “ Company”
hereafter)
was listed on the Tok yo Stock Exchange on(Accounting,etc.)
Administration
December 4, 2003 as a real estate
investment corporation formed to own and
Mitsubishi UFJ Trust andAgreement, etc.
invest inBanking
officeCorporation
properties, subject to the Law Concerning Investment Trusts
and Investment Corporations of Japan. The Company’s basic investment
policy is to assure stable rent revenues and steady portfolio growth over the
medium- to long-term.
Nomura Real Estate Asset Management Unitholders’Co., Ltd. Meeting(referred to as“NREAM”
Auditorhereafter), a wholly owned subsidiary of Nomura Real Estate Holdings, Inc. is
Ernst & Young
Board of Directors’in charge of asset management on behalfofNomura OfficeShinNihon
Fund LLC
in
Meeting
accordance with the basic investment policy as described above. Throughcoordination with NomuraInvestment
Real Estate Holdings, Inc. and other group
Liabilities
companies, NREAM aims to achieve these goals and more.
Office Buildings(Real Estate
Related Assets)

Contents Property
Management
Property Management
Companies

Instructions forRents andManagement

Asset Management
Services Agreement

Management Co., Ltd., etc.

Repairs, etc.

Portfolio Summary, Portfolio Data, Occupancy Rates, Major Tenents(URL) http://www.nre-of.co.jp/english/
RepaymentofPrincipal &Interest

Unitholders

Trading

Unitholders

NomuraBuilding
Plans ofManagement
Summaryof the Fourteenth
Fiscal Period ....................................4

Posting the news by year andsubject

Distribution
Information andResearch-related
Service Providers

Property
Information

Nomura Real
EstateFourteenth
Development Fiscal
Highlightsof thePeriod ............................................................3
RentalStrategies,

Strength of NOF, Asset Management Policies, Corporate Profile

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

Asset Management Company

To Our Investors ......................................................................................................2
Co., Ltd.

The Company strives to provide accurate and timely disclosure of information by utilizing the website.

News, Latest Data, Performance, Distributions, Calendar

EquityProperty
Management
Agreement

Nomura Office Fund’s Website
Financial Instituions,etc. / Investors ofInvestment
Corporation Bonds

Capital Investment

Asset

Rents, etc.

Debt Financing /Issue of Investment
Corporation Bonds

Service
Agreement, etc.

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

Portfolio Highlights .................................................................................................6
Financial Status .......................................................................................................8
Posting the latest information on the top page
*RSS compatible

Summary of Portfolio Properties .........................................................................10

Corporate Data

Major Properties ....................................................................................................12
Profile of the Asset Management Company .......................................................14
Corporate NameTransfer Agent
Performance
ReportNomura Real
Estate..............................................................................................15
Office Fund, Inc.
Mitsubishi UFJ Trust and Banking Corporation
1-4-5 Marunouchi Chiyoda-ku, Tokyo 100-8212, Japan
Financial
Section...................................................................................................33
Corporate
Office8-5-1 Nishi Shinjuku Shinjuku-ku, Tokyo
Business Office of the Transfer AgentBusiness
Structure/Corporate Data .....................................................................50
160-0023, Japan
Corporate Agency Department
http://www.nre-of.co.jp/english/
Mitsubishi UFJCover
Trust and Banking Corporation
Website....................................................................................................Back
7-10-11 Higashisuna Koto-ku, Tokyo 137-8081, Japan
Date of Incorporation
Tel: +81-3-5683-5111
August 7, 2003
Independent Auditors
Stock Listing
Ernst & Young ShinNihon LLC
Tokyo Stock Exchange (Securities Code: 8959)
Hibiya Kokusai Bldg. 2-2-3 Uchisaiwai-cho Chiyoda-ku,
Fiscal PeriodTokyo 100-0011, JapanSix months ending on April 30 and October 31
Investor Relations
CapitalFor further information, please contact the Asset Management¥185,455,446,935 (as of October 31, 2010)
Company:
Nomura Real Estate Asset Management Co., Ltd.
Number of Units Issued
8-5-1 Nishi Shinjuku, Shinjuku-ku, Tokyo 160-0023, Japan
305,123 (as of October 31, 2010)
Tel: +81-3-3365-0507
Number of Unitholders
13,100 (as of October 31, 2010)

50

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 ofJapan. This report was prepared in English solely for the convenience of and reference by readers outside Japan and should not be
considered as a disclosure statement. The original Japanese documents always govern 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
from generally accepted accounting principles applied in certain other countries. Potential investors should consult their own
professional advisors for an understanding of the differences between Japanese GAAP and generally accepted accounting principles
in the United States (”U.S. GAAP”) or other jurisdictions and how 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.

Printed in Japanhttp://www.nre-of.co.jp/english/