Sixteenth Fiscal Period
May 1, 2011▲

Semi-Annual Report

October 31, 2011

Profile
Nomura Real Estate Office Fund, Inc. (referred to as “Nomura Office Fund” or
the “Company” hereafter) was listed on the Tokyo Stock Exchange on
December 4, 2003 as a real estate investment corporation formed to own andinvest in office properties, subject to the Law Concerning Investment Trusts
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 in accordance with the basic investment policy as described above. Through coordination with Nomura Real Estate Holdings, Inc. and other group companies,
NREAM aims to achieve these goals and more.

Contents
To Our Investors........................................................................................................2
Highlights of the Sixteenth Fiscal Period................................................................3
Management Strategies...........................................................................................4
Portfolio Highlights...................................................................................................8
Financial Status.......................................................................................................10
Summary of Portfolio Properties...........................................................................12
Major Properties.....................................................................................................14
Profile of the Asset Management Company.........................................................16
Performance Report................................................................................................17
Financial Section.....................................................................................................35
Business Structure/Corporate Data.......................................................................52
Website.....................................................................................................Back Cover

Investor Oriented

Highlights of the Sixteenth Fiscal Period

To Our Investors
Dear Investors,
We are delighted to be able to present to you the financial results for the sixteenth fiscal period(ended October 31, 2011) and report on our activities during the period herein.
This period, we booked operating revenues of ¥13,637 million, current profits of ¥4,628 million,
and net income of ¥4,627 million. Cash distribution per unit was ¥14,837.
The Japanese economy has shown signs of recovery, although uncertainty in the future outlook
has not been sufficiently reduced due, among others, to the downside risks in overseas economies
and the pace of recovery continues to be slow.
In the office leasing market, occupancy rates continue to improve albeit slightly and asking rents
appear to have hit bottom. However, full-fledged recovery is not expected to start for some time.
In the real estate sales market, for some time after the Great East Japan Earthquake, thetransaction volume was subdued with cases of postponed or cancelled transactions. However, thetransaction volume has started to recover as a result of price adjustments and improved availability ofdebt financing for real estate transactions, although opportunities for acquiring large prime properties
were very limited with few actual transactions of such properties.
Under these circumstances, we actively engaged in tenant leasing activities during this fiscal
period in order to improve the portfolio occupancy rate. As a result, we completed leasing out of NRE
Tennozu Building whose occupancy rate had been declining, thereby improving the portfolio
occupancy rate to 96.4% as of the end of this fiscal period. Also during this fiscal period, as part of ourproperty replacement strategy, we transferred NOF Toyo-cho Building, Central Kyobashi Building andSunworld Yotsuya Building and decided to acquire PMO Hatchobori and PMO Higashi-nihonbashi,
which are office properties developed by Nomura Real Estate Development Co., Ltd.
In terms of financing, the Company continues to maintain close relationships with financial
institutions to secure as stable financing as before, ensuring healthy financial conditions on an ongoingbasis.
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.

Sixteenth period results
Cash distribution per unit

Operating revenues¥¥

Portfolio

14,83748properties

Number of properties

13,637million

Total leasable
floor space

399,625.36m²

Operating profits¥

6,219million

Total number of tenants

Net income¥

4,627million

Total acquisition
price

¥

753

367,729million

4.4%

Average occupancy rate

96.4%

Ratio of long-term debts

71.9%

Average remaining duration of
long-term fixed debts

3.9 years

Ratio of fixed-rate debts

89.0%

Weighted average of interest
rate of all the debts

1.61%

NOI return of portfolio

Finance

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

Market Capitalization (¥ mln)

1,600,000

900,000

1,400,000

750,000
Market capitalization (as of Oct. 31, 2011)....¥128,456 mln

1,200,000

600,000

1,000,000

450,000

800,000

300,000

600,000

2nd public offering¥588,000

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

2

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

3rd public offering¥740,782

4th public offering¥926,100

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. 292010

Apr. 282011

Oct. 312011

3

Management Strategies• Basic policies and three management policies for growth• Management Strategies in and after 17th Period

Basic policies: “Secure stable mid- to long-term income” and “Steady portfolio growth”
Specific Management Strategies

Objective/Activities

Promote asset size expansion
through new acquisitions

Promote risk diversification of the portfolio and expansion of
earnings basis

Asset management withmid- to long-term vision

Increase and stabilize profitability of the portfolio

Maintain conservative
financial strategy

Correspond to interest-rate hikes, maintain and diversify fundraising capacity

The Company strives to restore the level of cash distributions, expand its asset size, and be back on a
growth track by implementing measures based on strategies mentioned below.

Replacement of Properties

Internal Growth

Finance/Capital Strategies• Improvement in portfolio quality· Investment focused on
newly built properties
located in Central Tokyo· Improvement in profitability• Maintain high occupancy rates· Strengthen relationship withexisting tenants· Minimize downtime and FR
period*• Keep stable financial operations· Steady refinancing· Consideration of issuance ofbonds· Reduction in financing costs• Strengthening the sourcing activity· Acquisition of properties• Pursuit of cost reduction· Optimize property
management costs· Implementation of wellplanned renovations• Establish a considerable reputation· Active Investor Relations• Activity summary for this period
Recognizing the significance of this fiscal period and the 17th fiscal period as the final stage towardearnings stabilization, the Company has taken various measures to address significant challenges it
is facing.
Property acquisition with available capacity

Further improvement in occupancy

Strengthened portfolio by promotion of property replacement(Transferred 3 properties, determined acquisition of 2 properties)

Continued active leasing activities
Occupancy rate: 93.8% (15th period) → 96.4% (16th period)

Leasing out of NRE Tennozu Building

Stable financial operations

Completed leasing by obtaining a major tenant
Occupancy rate: 62.9% (15th period) → 100.0% (16th period)

Average interest-rate: 1.65% (15th period) → 1.61% (16th period)
Interests paid: ¥1,135 million (15th period) → ¥1,097 million (16th period)¥14,51215th Period(April 2011)

We will strive to achieve early recovery of cash distribution levels by continuing cost reduction efforts
targeted at interest expense, outsourcing expense, etc., in addition to the contribution to earnings
through obtaining a large tenant for NRE Tennozu Building and the full-term operation of the newly
acquired properties, thereby aiming at expansion of asset size and recovery to our asset growth.

Expansion of asset size/back on a growth track-¥1,576-¥522(Capital gainfrom transfer)
15th period-¥891
16th period+¥3,314• Early recovery of cash distributions

Early restoration of the level of cash distribution• Change in Cash Distributions+¥2,423

Cooperation with(NOI)
NRE Tennozu
Building-¥886
Properties
transferred in16th period-¥690

Aimed at the ¥14,000 level¥14,837(Others)
Repairs andmaintenances
increased-¥588
Reserve-¥328
Others+¥394-¥3,314+¥367(Capital gainfrom Transfer)
16th Period-¥3,31416th Period(October 2011)(NOI)
Properties
transferredin 16th Period-¥157
Properties
acquiredin 17th Period
+¥524

+¥510

¥12,400
Decrease ininterest
payment(Others)
Repairs andmaintenances
decreased+¥249
Decrease ininterest paid+¥160
Others+¥101

Decrease in
FR period *Replacementof properties

Reduction ofproperty
management
costs

NRE Tennozu Building tenant contributes to revenues

17th Period(April 2012) (Forecast)*

An image of mid-term changes in the distribution level* FR (free rent) means the practice of relieving a tenant from its obligation to pay rent for a certain period.
* The amount of expected cash distributions for the 17th fiscal period was calculated as of December 15, 2011 based on certain assumptions.

45

Management Strategies• Promotion of property replacement• Completion of the leasing out of NRE Tennozu Building

During this fiscal period, we promoted property replacement toward further strengthening thequality of our portfolio by selling properties whose operating efficiency had been declining andacquiring properties with higher competitiveness. As a result, we transferred three properties (totaltransfer price: ¥9.1 billion) and decided to acquire two properties (total acquisition price: ¥3.9 billion).
We will further promote such replacement in and after the 17th fiscal period.

Since April 2011, the occupancy rate of NRE Tennozu Building had declined to 62.9% due to partial
evacuation of Japan Airlines Co., Ltd. However, it has recovered to 100% since the end of Octoberas a result of the lease agreement entered with a large tenant on July 27 after completing necessaryrenovation for accepting multiple tenants as well as retail space renovation.
· Approximately 60 corporations have been to the property tour by
utilizing the wide network of Nomura Real Estate Development Co., Ltd.
· Executed the lease agreement with 5 companies

Transfer: ¥9,135 million
Building age

Transfer priceTransfer date

NOF Toyo-cho Building
Central Kyobashi Building

22.0 years
13.1 years¥5,805 million¥2,650 million

May 10, 2011
August 30, 2011

Sunworld Yotsuya Building

20.0 years¥680 million

July 22, 2011

Average Building age 19.1 years

The occupancy rate recovered to 100% since October 31, 2011
Summary of the tenant

Decline in management efficiency

Tenant Name: Canon Marketing Japan Inc.
Leased Floor Space: 17,777m2 (5,378 tsubo) *Start of the lease period: October 31, 2011

Acquisition: ¥3,910 million• PMO Hatchobori
Location		Chuo-ku, Tokyo

Building Age

2.4 years

Acquisition Price¥2,430 million

Date of Agreement

Aug. 30, 2011

Acquisition Date

Nov. 1, 2011 (17th Period)* The leased space of the entire building• Enhancement of property competitiveness through renovation (Shinjuku Nomura Building)
We strive to maintain and improve occupancy rates by strategically conducting renovation works
for the purpose of, among others, strengthening our tenant leasing capabilit y throughdifferentiation from competing properties in the neighborhood and enhancing tenant satisfaction.

beforeafter• PMO Higashi-nihonbashi
Location		Chuo-ku, Tokyo

Building Age

2.0 years

Acquisition Price¥1,480 million

Date of Agreement

Aug. 30, 2011

Acquisition Date

Nov. 1, 2011 (17th Period)after• Improvement of the portfolio occupancy rate
We focused on filling the vacancy at the earliest opportunity and enhancing tenant satisfaction as
we regarded the maintenance and improvement of occupancy rates as the highest priority. As aresult, the portfolio occupancy rate improved to 96.4%.
(%)
100

95

Average Building age 2.3 years

beforeLocated in Central Tokyo with quality specifications

NOF

98.2%

95.3%

98.5%

96.4%

97.9%

96.6%

97.6%

96.1%

97.3%

96.4%

95.4%

Average in the market *

96.4%
95.0%

94.5%

93.8%

90.3%

90.6%

90.3%

Oct. 2010

Apr. 2011

Oct. 2011

94.9%
93.6%
92.4%
91.3%

90

Prompt acquisition of properties / Continuing consideration of property replacement* Building age is calculated using the last day of this fiscal period (October 31, 2011) as the base date and the average building age is calculated as an acquisition
price-weighted average.
* Regarding NOF Toyo-cho Building, the Company transferred 33% of the quasi-co-ownership interest in each of the two beneficial interests in the 15th period(December 8, 2010) and 67% in the 16th period (May 10, 2011).

685
Oct. 2006

Apr. 2007

Oct. 2007

Apr. 2008

Oct. 2008

Apr. 2009

Oct. 2009

Apr. 2010*Calculated by NREAM based on the Office Market Report published by CBRE K. K.

7

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 sixteenth fiscal period: 96.4%.

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

100.0
90.0

Total leasable space (000m2)

93.8

93.9

93.7

93.7

93.6

93.6

415

403

403

401

399

399

96.4

500
450

399

400

80.0

350

70.0

300

60.0
Apr. 30,
2011(End of 15th Period)

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

Jun. 30,
2011

Jul. 31,2011

Aug. 31,2011

Sep. 30,
2011

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

MAJOR TENANTS(¥bln)

500

Top 10 tenants in the leased space as of the end of the sixteenth fiscal period are as follows.
362.2

400

259.1

300

374.5

378.6

367.7
Tenant292.4

1 OMRON Corporation
2 Japan Airlines Co., Ltd.

210.1
151.5

200

104.2
12 bldgs

18 bldgs

23 bldgs

30 bldgs

34 bldgs

46 bldgs

50 bldgs

51 bldgs

48 bldgs

Initial Listing
Dec. 2003

2nd Period
Oct. 31, 2004

4th Period
Oct. 31, 2005

6th Period
Oct. 31, 2006

8th Period
Oct. 31, 2007

10th Period
Oct. 31, 2008

12th Period
Oct. 31, 2009

14th Period
Oct. 31, 2010

16th Period
Oct. 31, 2011

The area and property diversification as of the end of the sixteenth fiscal period are as follows.
Area Diversification

Property Diversification (Top 10 Properties and other)

Other Cities
28.3%

Central Tokyo
58.7%

Other 38 Bldg.
46.7%

Suburban Tokyo
12.9%
Note: Central Tokyo---	Six central wards consisting of Chiyoda, Chuo, Minato, Shinjuku,
Shinagawa and Shibuya
Suburban Tokyo ---	Other areas of Tokyo and the Surrounding three prefectures including
Kanagawa, Saitama and Chiba
Other Cities--- Major regional cities in other areas
Note: Based on the acquisition priceNOF Shiba Bldg.
2.7%
Secom Medical Bldg.
3.1%
NOF Shibuya Koen-dori Bldg.
3.3%

Shinjuku Nomura Bldg.
10.5%
NRE Tennozu Bldg.
9.0%
Omron Kyoto
Center Bldg.
6.4%
NOF Nihonbashi
Honcho Bldg.
5.6%
SORA Shin-Osaka 21
5.2%
Tennozu Park Side Bldg.
4.0%
NOF Shinjuku Minamiguchi Bldg.
3.3%

Property

Expiry ofcontract

Leasedspace(m²)

Weight in
portfolio(%)

Weight fromprevious
period (%)

Electronic Devices
AirlineMar. 29, 2021
Mar. 31, 2015
Feb. 28, 2025
Dec. 31, 2012
Feb. 07, 201834,616.84
15,082.43
8,821.24
755.699,062.04

9.0
3.9
2.3
0.2
2.4

(8.9)
(3.9)
(2.3)
(0.2)
(2.3)

3

SECOM Co., Ltd.

Services

4

JCB Co., Ltd.
Canon Marketing
Japan Inc.

Financing5

Wholesale

NRE Tennozu Bldg.

(Note 1)

9,047.93

2.4

-

6

Nomura Facilities Co.,Ltd.

Real Estate

7

Nomura Real Estate
Development Co., Ltd.

Real Estate

8

KYORIN Holdings, Inc.

Wholesale

9

DAIDO Life Insurance
Company

Insurance

10

SOMPO JAPAN
INSURANCE INC.

Insurance

Shinjuku Nomura Bldg.
NOF Utsunomiya Bldg.
NRE Yotsubashi Bldg.
NRE Hiroshima Bldg.
Shinjuku Nomura Bldg.
NRE Yotsubashi Bldg.
NOF Surugadai Plaza Bldg.
NOF Nihonbashi Honcho Bldg.
NRE Ueno Bldg.
Shinjuku Nomura Bldg.
NRE Hiroshima Bldg.

May 31, 2014
Dec. 31, 2011
Nov. 30, 2011
Oct. 31, 2011
Nov. 30, 2013
Nov. 30, 2013
Mar. 31, 2013
Nov. 30, 2012
Mar. 31, 2012
May 31, 2013
Apr. 30, 2013574.111,140.85
1,847.63
2,834.48
4,474.05
1,266.19
4,160.94
3,172.50
807.64
3,636.96
283.02
101,584.54

0.2
0.3
0.5
0.7
1.2
0.3
1.1
0.8
0.2
1.0
0.1
26.4

(0.2)
(0.3)
(0.5)
(0.7)
(1.2)
(0.3)
(1.1)
(0.8)
(0.2)
(1.2)
(0.1)

0

DIVERSIFICATION BY AREA AND PROPERTY

Industry

OMRON Kyoto Center Bldg.
NRE Tennozu Bldg.
Secom Medical Bldg.
NOF Sendai Aoba-dori Bldg.
JCB Sapporo Higashi Bldg.

100

8

May 31,
2011

Total
Note 1: Not disclosed due to compelling reasons.
Note 2: “Industry” stated in the above table is each end tenant’s industry.

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

Total
753
Tenants

1. Services

22.3%

7. Retail4.3%

2. Electronics

13.6%

8. Real Estate

3.8%

3. Wholesale

12.8%

9. Financing

3.6%

4. IT

11.8%

10. Construction

2.4%

5. Insurance

4.7%

11. Other Businesses

16.4%

6. Airline

4.3%

9

Financial Status

Carried Out Steady Refinancing

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

Nomura Office Fund has the basic financial policy for the purpose of securing financial
stability and avoiding future interest rate risks. Outstanding interest-bearing debt as of theend of the sixteenth fiscal period is ¥184.6 billion.

(¥ bln)

35

Debts

30.65

30
25

21.25

23.6

22.25

20

17.25

15
10

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

5.0

17th

19th

21st

(Apr. 2014)

11.0%
Fixed-rate¥162.4 billion

Average remaining duration of debts

71.9%

89.0%

(year)

6.0

7

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

5
4

2

LIST OF LENDERSThe number of lenders as of the end of the sixteenth fiscal period is 32 financial institutions.
LenderTotal Amountof Debt
Remaining

Lender

31st

33rd(Apr. 2020)

35th

37th

(Apr. 2022)

39th

41st

(Apr. 2024)

43rd

45th

(Apr. 2026)

47th

49th

(Apr. 2028)

5.1
3.8

4.4
3.3

3.9

1.00 1.10 1.10 1.10

3.5

5.5

5.4

4.6

1.30 1.40

4.9

3.0

4.5

4.1

4.0

3.8

3.8

3.9

1.65 1.63 1.56 1.68 1.68 1.70 1.67 1.67 1.65 1.61

Total Amountof Debt
Remaining

2.0
1.5

0.5

1
(¥mln)

2.5

1.0

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 Apr. 2011 Oct. 2011(End of 16th Period)

Bank of Tokyo-Mitsubishi UFJ

21,400Bank of Fukuoka

3,500

Hyakujushi Bank

1,500

Sumitomo Mitsui Banking

19,900Norinchukin Bank

3,000

Yamanashi Chuo Bank

1,000

Development Bank of Japan

15,000

Taiyo Life Insurance

3,000

Chiba Bank

1,000

Mitsubishi UFJ Trust and Banking

11,050Chuo Mitsui Trust and Banking

2,000

Keiyo Bank

1,000

Rating and Investment Information, Inc.

AA-: Issuer rating

StableSumitomo Trust & Banking

9,900

Hachijuni Bank

2,000

Mitsui Life Insurance

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

A- : Long-term corporate credit rating

StableMizuho Corporate Bank

6,400

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

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

Resona Bank

1,000

Chugoku Bank

4,000

Nishi-Nippon City Bank

2,000

Aozora Bank

500

Iyo Bank

3,500

Hiroshima Bank

1,500

Total borrowings

140,150

Investment Corporation Bonds

44,500(Reference)

10

29th

(Apr. 2018)

Average debt rates

3

Total Amountof Debt
Remaining

27th

4.5

(%)

6

Lender25th(Apr. 2016)

5.0

5.0

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

Long-term¥132.7 billion

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

23rd

3.9

(period)

Floating-rate¥20.4 billion

28.1%

5.75

(Apr. 2012)

Ratio of fixed and floating interest-bearing debts

Short-term¥51.9 billion

10.25 9.75

50Ratio of long-term and short-term interest-bearing debts

11.25
9.25

PROMOTION OF LONG-TERM FIXED-RATE INTEREST-BEARING DEBT
(as of the end of the sixteenth fiscal period)

Investment Corporation Bonds

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

RatingOutlook11

Summary of Portfolio Properties

JR Chuo Line
Shinjuku-ku

01
09

Shinjuku

20

05

07

Shibuya-ku

06
10

ShibuyaLine

12

Chiyoda-ku

15

Tokyo

11

34
33 35

18JR Sobu

14

21

JR Y
am

08

ano
in
te L
e

Shinagawa

13 04
02

36

Shinagawa-ku

Sendai37 Utsunomiya
Tokyo

Hiroshima

48

47

46

41 40
Kyoto

45
44

3938
NagoyaSaitama24

Shin-Yokohama

28

43
42

27 Kichijoji

Tachikawa
Hachioji

Kanagawa

Name of Property

26

Location

Leasable Floor
Space (m2)

Chiba

Acquisition Price(¥mln)

Ratio(%)

2,465.86

Jun. 25, 2008

1,750

0.5

215,88058.7

172,946.38

Taito-ku, Tokyo

4,869.81

Jan. 14, 2009

7,830

2.1

NOF Technoport Kamata Center Building

Ota-ku, Tokyo

13,652.45

Dec. 5, 2003

6,416

1.7

24

Toho Edogawabashi Building

Bunkyo-ku, Tokyo

2,058.97

Mar. 28, 2008

2,080

0.6

25

Toshin Meguro Building

Meguro-ku, Tokyo

1,610.07

Jun. 25, 2008

1,340

0.4

26

Crystal Park Building

Musashino City, Tokyo

3,900.85

Feb. 28, 2006

3,700

1.0

27

NOF Kichijoji Honcho Building

Musashino City, Tokyo

1,936.40

Jan. 14, 2009

1,800

0.5

28

Faret Tachikawa Center Square

Tachikawa City, Tokyo

6,851.48

Dec. 5, 2003

3,290

0.9

29

NOF Kawasaki Higashiguchi Building

Kawasaki City, Kanagawa

8,266.67

Jun. 30, 2005

9,500

2.6

30

NOF Yokohama Nishiguchi Building

Yokohama City, Kanagawa

6,817.76

May 12, 2005

5,050

1.4

31

NOF Shin-Yokohama Building

Yokohama City, Kanagawa

8,074.83

Dec. 5, 2003

3,600

1.0

32

Yokohama Odori Koen Building

Yokohama City, Kanagawa

4,234.19

Sep. 28, 2007

62,273.48

2,993

0.8

47,599

12.9

6,820

1.9

Other Cities

25

30
32

NRE Ueno Building

23

Total Suburban Tokyo (11 Properties)

33

Sapporo North Plaza

Sapporo City, Hokkaido

13,601.62

Jun. 1, 200634

NRE Sapporo Building

Sapporo City, Hokkaido

6,559.34

Nov. 5, 2008

5,300

1.4

29

35

JCB Sapporo Higashi Building

Sapporo City, Hokkaido

9,062.04

Feb. 8, 2008

3,700

1.0

Yokohama

36

NOF Sendai Aoba-dori Building

Sendai City, Miyagi

6,043.28

Nov. 30, 2005

3,200

0.9

37

NOF Utsunomiya Building

Utsunomiya City, Tochigi

5,887.39

Dec. 5, 2003

2,970

0.8

38

NOF Nagoya Fushimi Building

Nagoya City, Aichi

3,282.90

Dec. 25, 2009

4,050

1.1

39

NOF Nagoya Yanagibashi Building

Nagoya City, Aichi

4,655.74

Sep. 29, 2005

3,550

1.0

40

Omron Kyoto Center Building

Kyoto City, Kyoto

34,616.84

Mar. 20, 2007

23,700

6.4

41

SORA Shin-Osaka 21

Osaka City, Osaka

21,298.26

Apr. 25, 2008

19,251

5.2

16,977.79

Dec. 5, 2003

6,410

1.7

23
Kawasaki

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

C e n t r a l To k y o

12Chuo-ku, Tokyo

Date Acquired

22

22

Tokyo

31

MAP
No.

Central Shintomicho Building

Leasable Floor
Space (m2)

S u b u r b a n To k y o

Chuo-ku

Fukuoka

21

Location

Total Central Tokyo (21 Properties)

03 16
17

Shin-Osaka

Name of Property

SapporoMinato-ku

19

MAP
No.

01

Shinjuku Nomura Building

Shinjuku-ku, Tokyo

31,500.89

Dec. 8, 2003

38,73010.5

42

NRE Osaka Building

Osaka City, Osaka

02

NRE Tennozu Building

Shinagawa-ku, Tokyo

25,127.12

Mar. 18, 2005

33,0809.0

43

NRE Nishi-Umeda Building

Osaka City, Osaka

5,213.02

Sep. 26, 2008

5,660

1.5

03

NOF Nihonbashi Honcho Building

Chuo-ku, Tokyo

19,157.05

Dec. 5, 2003

20,6005.6

44

NRE Yotsubashi Building

Osaka City, Osaka

11,558.68

Dec. 5, 2003

3,940

1.1

04

Tennozu Park Side Building

Shinagawa-ku,Tokyo

18,051.60

Feb. 27, 2004

14,800

4.0

45

NOF Kobe Kaigan Building

Kobe City, Hyogo

6,425.16

Dec. 5, 2003

3,280

0.9

05

NOF Shinjuku Minamiguchi Building

Shibuya-ku, Tokyo

6,706.46

Jun. 25, 2008

12,3003.3

46

NRE Hiroshima Building

Hiroshima City, Hiroshima

7,901.40

Dec. 5, 2003

1,930

0.5

06

NOF Shibuya Koen-dori Building

Shibuya-ku, Tokyo

3,420.16

Sep. 28, 2004

12,000

3.3

47

NOF Hakata Ekimae Building

Fukuoka City, Fukuoka

7,504.28

Jun. 27, 2008

6,750

1.8

07

Secom Medical Building

Chiyoda-ku, Tokyo

8,821.24

Sep. 1, 2006

11,500

3.1

48

NOF Tenjin-Minami Building

Fukuoka City, Fukuoka

3,817.76

Mar. 27, 2009

3,739

1.0

08

NOF Shiba Building

Minato-ku, Tokyo

8,165.10

May 25, 2004

10,0002.7

09Nishi-Shinjuku Showa Building

Shinjuku-ku, Tokyo

5,670.84

Nov. 30, 2005

8,800

2.4

10

NRE Shibuya Dogenzaka Building

Shibuya-ku, Tokyo

3,436.67

Sep. 26, 2008

7,660

2.1

11

NOF Tameike Building

Minato-ku, Tokyo

4,715.20

Sep. 29, 2005

7,400

2.0

12

Iwamoto-cho Toyo Building

Chiyoda-ku, Tokyo

4,117.26

Jun. 25, 2008

6,020

1.6

13

NOF Shinagawa Konan Building

Shinagawa-ku, Tokyo

7,667.55

Dec. 8, 2003

5,500

1.5

14

NOF Surugadai Plaza Building

Chiyoda-ku, Tokyo

4,160.94

Feb. 27, 2004

5,150

1.4

15

PMO Nihonbashi Honcho

Chuo-ku, Tokyo

2,450.06

Nov. 5, 2008

5,000

1.4

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

0.9

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

NOF Minami Shinjuku Building

Shibuya-ku, Tokyo

2,464.71

Jun. 25, 2004

2,280

0.6

Total Other Cities (16 Properties)

164,405.50

104,250

28.3

Grand Total (48 Properties)

399,625.36

367,729100.0

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 48 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: The leasable floor space of NRE Tennozu Building is the leasable floor space of the entire building multiplied by the percentage of the common area held through theco-ownership of beneficial interest.

13

Major Properties
01

02

22

07

40

28

41

34

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

02 NRE Tennozu Building
2-4-11 Higashi-Shinagawa Shinagawa-ku Tokyo

14

22 NRE Ueno Building
1-14-4 Higashi-Ueno Taito-ku Tokyo

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

07 Secom Medical Building
7-7 Nibancho Chiyoda-ku Tokyo

28 Faret Tachikawa Center Square
2-36-2 Akebono-cho Tachikawa City Tokyo

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

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

15

Profile of the Asset Management Company

Performance Report

As of October 1, 2011, Nomura Real Estate Asset Management Co., Ltd. (NREAM) was merged with
Nomura Real Estate Investment Management Co., Ltd. (NREIM) and Nomura Real Estate CapitalManagement Co., Ltd. (NRECM), with a change of its Japanese trade name from Nomura Fudosan
Toshin to Nomura Fudosan Toshi Komon. We believe that the Company can benefit from various
synergy effects from this merger as well as the ability to quickly respond to changes in the realestate and financial markets, the enhancement of expertise and experience necessary for realestate investment, and the ability to provide asset management services through one of the largest
real estate asset management companies in Japan.
Company: Nomura Real Estate Asset Management Co., Ltd.
Capital: ¥300 million (as of October 31, 2011)
Shareholder: Nomura Real Estate Holdings, Inc. (100%)
Incorporation: January 24, 2003

Organization of the asset management company
General Meeting of Shareholders
Board of Statutory Auditors
Board of Directors
President & CEO
Compliance Committee

Investment Committee

Risk Management Committee

NPR Valuation Committee
Project Screening Committee

Fund
Management

Client Relations& Marketing

FundManagement

Chief Investment
Officer NOF

ClientRelations &Marketing

Chief Investment
Officer NRF

Investment
Management

Acquisitions

Chief Investment
Officer NPR

Finance &Accounting

AssetManagement

Finance

Chief Investment
Officer Private
Funds I

Accounting

Chief Investment
Officer Private
Funds II

Corporate
Planning

Legal &
Compliance

Chief Investment
Officer Private
Funds III

Internal
Audit

Chief Investment
Officer Private
Funds IV
SORA Shin-Osaka 21

Profile of Chief Investment Officer
NOF Chief Investment Officer Kenji Tsuga

Contents
Apr. 1990 Entered NRED
Dec. 1996 Distribution Sales Dept.
Mar. 2001 Distribution Business Dept.

Profile of the Company................................................. 23
Status of Investment Assets of the Company............. 25

Oct. 2001

East21 Branch Manager, Nomura Real Estate Urban Net Co., Ltd.

Capital Expenditures..................................................... 28

Oct. 2004

Corporate Planning Dept., Nomura Real Estate Holdings, Inc.

Oct. 2006

Public Relations/IR Dept.

Expenses and Liabilities............................................... 29

Apr. 2011 General Manager, Office Management Division, NREAM

Trading During the Sixteenth Fiscal Period................... 32

NOF Chief Investment Officer, NREAM (current position)

Other Information ........................................................ 34

Oct. 201116

Asset Management Report.......................................... 18

17

Asset Management Report
1. CHANGES IN KEY INDICATORS

2. OUTLINE OF INVESTMENTS IN THE SIXTEENTH FISCAL PERIOD
16th Period
15th Period
14th Period
13th Period
12th Period
from May 1, 2011 from Nov. 1, 2010 from May 1, 2010 from Nov. 1, 2009 from May 1, 2009
to Oct. 31, 2011 to Apr. 30, 2011 to Oct. 31, 2010 to Apr. 30, 2010 to Oct. 31, 2009

Operating Revenues(¥ mln)13,637

13,117

13,364

13,686

14,203of which Real Estate Rental Revenues(¥ mln)12,52012,846

13,364

13,686

14,203Operating Expenses(¥ mln)

7,417

6,973

7,141

6,938

7,065

of which Real Estate Rental Expenses(¥ mln)

6,110

5,741

5,883

5,667

5,761

Operating Profits(¥ mln)

6,219

6,144

6,223

6,747

7,138

Current Profits(¥ mln)

4,628

4,503

4,480

5,035

5,339

Net Income(¥ mln)

4,627

4,428

4,479

5,034

5,338

Total Assets(¥ mln)400,390404,069

407,703410,127

408,312(Changes from Previous Period)(%)(△0.9)(△0.9)(△0.6)(+0.4)(△0.3)

Interest-Bearing Debts(¥ mln)184,650

187,900

191,230

191,980

188,730

Net Assets(¥ mln)190,082

189,883

189,934

190,490

190,793(%)(+0.1)(△0.0)(△0.3)(△0.2)(△0.0)

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(¥)

622,970

622,318

622,486

624,306

625,301(Changes from Previous Period)

Net Assets per Unit(¥ mln)

4,527

4,427

4,479

5,034

5,338

Cash Distribution per Unit(¥)

14,837

14,512

14,681

16,50017,496

Total Cash Distributionof which Cash Distribution of Profits(¥)

14,837

14,512

14,681

16,50017,496of which Cash Distribution in excess of Profits

(¥)

–

–

–

–

–

ROA (Return on Assets) (Note 1)

(%)

1.2

1.1

1.1

1.2

1.3

Annualized ROA (Note 2)

(%)

2.3

2.2

2.2

2.5

2.6

ROE (Return on Equity) (Note 3)

(%)

2.4

2.3

2.4

2.6

2.8

Annualized ROE (Note 2)

(%)

4.8

4.7

4.7

5.3

5.5

Capital Adequacy Ratio (Note 4)

(%)

47.5

47.0

46.6

46.4

46.7

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

(%)

46.1

46.5

46.9

46.8

46.2

Number of Operating Days

(days)

184

181

184

181

184

Payout Ratio (Note 6)

(%)

97.8

99.9

100.0

99.9

99.9

Number of Properties Held(bldgs)

48

51

51

51

50

Total Leasable Floor Space(m2)

399,625.36

415,936.86

438,918.56

439,139.15

435,901.82(tenants)

753

746

704

686

666

(%)

96.4

93.8

94.5

95.0

95.4

Depreciation(¥ mln)

1,732

1,861

1,876

1,865

1,835

Capital Expenditures(¥ mln)

1,088

750

597

692

779

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

8,142

8,965

9,357

9,884

10,278FFO (Funds from Operation) (Note 8)(¥ mln)

5,362

6,029

6,363

6,908

7,180

(¥)

17,573

19,761

20,85522,64023,534

Number of Tenants
Occupancy Rate

FFO per Unit (Note 9)

Note 1: “ROA (Return on Assets)” = Current Profits / {(Total Assets at the beginning of the period + Total Assets at the end of the period) / 2} x 100
Note 2:	“ROA” and “ROE” are annualized using the following number of operating days. 12th Period: 184 days, 13th period: 181 days, 14th Period: 184 days, 15th Period: 181
days, and 16th 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
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

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
Since the Great East Japan Earthquake in March 2011, uncertainty in the future outlook of the Japanese economy has persisteddue, among others, to restrictions on power supply exemplified by the implementation of planned rolling blackouts following theaccidents at Fukushima Daiichi Nuclear Power Plant and the increased sense of insecurity arising from these accidents. However,consumer confidence has gradually started to improve as the supply chain continues to be restored, production recovered, anddemand fueled by restoration. Nevertheless, the pace of recovery continues to be slow due to the existence of downside risks
such as the concerns about slower-than-expected recovery in overseas economies and volatile exchange rates and stock prices.
(a) Office Leasing Market
In the office leasing market, occupancy rates continue to improve albeit slightly and asking rents appear to be hitting bottom.
However, downward pressure on rents from tenants continues to be strong. Meanwhile, corporate tenants are increasingly
focusing on such building specifications as earthquake resistance and the availability of emergency power supply whenselecting their office space since the Great East Japan Earthquake.
In central Tokyo, the supply-demand balance for large buildings capable of meeting the needs of corporate tenants foroffice consolidation is improving. In local cities except for Osaka where there is substantial new supply, the markets are
steadily improving toward recovery.
(b) Real Estate Sales Market
The volume of office building sales information temporarily dipped after the Great East Japan Earthquake, but has been
recovering since summer 2011. Since high net worth individuals and business corporations generally maintained strong
investment appetite, investment in small and medium size properties was relatively active, while the volume of sales
information on large prime properties was very limited, with a few actual transactions other than those between J-REITs andtheir sponsor entities.
(2) Status of Managements for the Sixteenth Fiscal Period
Abiding by its basic policy of acquiring only properties that would generate stable returns over the mid- to long-term, theCompany continues to invest in and manage properties that offer outstanding competitiveness in terms of both location and basic
building features, and stable cash flows.
The Company’s total assets under management (“portfolio”) as of the end of the 16th fiscal period (October 31, 2011) was
48 properties (total leasable floor space: 399,625.36 m2) totaling 367.7 billion yen (total acquisition price).
The property management environment remained difficult due to the market conditions described in “(1) Market
Environment (a) Office Leasing Market.” Seeking to maintain or increase occupancy rates, the Company took the initiative inattracting prospective tenants, while taking measures to enhance customer satisfaction of existing tenants. In renewing leases,
the Company negotiated terms focusing on minimizing declines in rent levels, while considering individual deviations from market
rents, sizes of leased areas, and leasing periods.
As a result, the average portfolio occupancy rate recovered to 96.4% at the end of the period, particularly owing to thesuccessful leasing out of NRE Tennozu Building, in which a substantial vacancy had occurred on March 31, 2011.
We also promoted the replacement of properties in the portfolio for the purpose of improving the overall quality of theportfolio. Specifically, we sold three properties while deciding to acquire two relatively new properties located in central Tokyo
during this fiscal period.
In addition, making the most of the Nomura Real Estate Group’s (Note) know-how, we also succeeded in keeping earnings
stable by management specifications on an individual property basis and taking other steps to reduce asset management
expenses.
Note:	“Nomura Real Estate Group” refers to a corporate group consisting of the consolidated subsidiaries of Nomura Real Estate Holdings, Inc. (referred to as Nomura Real
Estate Holdings hereinafter) including Nomura Real Estate Development Co., Ltd. (referred to as “NRED” hereinafter) but excluding Nomura Real Estate AssetManagement Co., Ltd. (referred to as the Asset Management Company hereinafter).

18

19

(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 raterisk. 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 yen of commitment line for the purpose of flexible funding at the time ofproperty acquisition and reduction of refinancing risks, from the perspective of securing stable funding base.
During the period under review, a total of 20.8 billion yen was borrowed as part of repayment funds for existing debts. As aresult, outstanding interest-bearing debt as of the end of the 16th fiscal period came to 184.6 billion yen (including investment
corporation bonds of 44.5 billion yen).

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

Type of Issue

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

Initial private placement (Note 1)
Public offering (Note 2)
Public offering (Note 3)
Third-party allotment (Note 4)
Public offering (Note 5)
Third-party allotment (Note 6)
Public offering (Note 7)
Third-party allotment (Note 8)
Public offering (Note 9)
Third-party allotment (Note 10)

Number of Units Issued (Unit)

Unitholders’ Capital (¥ mln)

ChangeBalance

Change400
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
27,064
1,623

Balance200
71,706
91,572
92,168
123,665
124,610
155,753
156,767
183,831
185,455

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

[Changes in Price at the Tokyo Stock Exchange]
Changes in prices of the Company’s investment units listed on the Tokyo Stock Exchange are as follows.
16th Period
15th Period
14th Period
13th Period
12th Period
from May 1, 2011 from Nov. 1, 2010 from May 1, 2010 from Nov. 1, 2009 from May 1, 2009
to Oct. 31, 2011
to Apr. 30, 2011
to Oct. 31, 2010
to Apr. 30, 2010
to Oct. 31, 2009

High
Low

(¥)
(¥)

595,000
418,000

604,000
433,000

536,000
412,000

588,000
465,000

683,000
495,000

4. CASH DISTRIBUTION
The Company decided to accumulate compression reserves utilizing Article 66-2 of the Special Taxation Measures Law within thelimit of taxable income in the period. In addition, in order to qualify for special tax treatment under Article 67-15 of the Special
Taxation Measures Law (Law No. 26 of 1957) to have maximum cash distribution amount treated as deductible dividends, theCompany 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 ¥14,837.

5. INVESTMENT POLICY AND FUTURE ISSUES(1) Investment Environments
As mentioned in “2. Outline of Investments in the 16th Fiscal Period (1) Market Environments,” the future outlook of theJapanese economy is still uncertain over the mid- to long-term despite some positive factors due to downside risks in the global
economy, risk of further appreciation of yen and persistent deflation concerns, in addition to the effect of the Great East Japan
Earthquake that occurred in March 2011.
Under these circumstances, we believe that it is important to continue to focus on maintenance of funding capacities
through conservative financial management, and flexible property management that minimizes the decrease in portfolio
profitability under the current 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.
(a) Property Management in a Mid- to Long-Term View
In addition to enhancement of property management to satisfy the requirements of existing tenants, proper recognition of theproperty features and leasing market environments will help us market the potential tenants more organically. We will maintainand uplift the occupancy rate and level of rents in pursuit of sustainable and improved profitability of portfolio, namely internal
growth of portfolio, over the mid-to long-term.
By putting the know-how of Nomura Real Estate Group together, we seek to design the most suitable specifications of
how to manage and maintain each property in the most effective way, which in turn will ensure stable inflow of revenues.
In order to ensure stable revenues over the mid- to long-term, we will carry out strategic refurbishment and renovation
works to maintain and/or improve features of the properties, establishing their uniqueness and increasing theircompetitiveness.
(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 theadvantage of scale to reduce operational 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 makeappropriate investment decisions based on our market research capabilities and technical expertise.
In making an investment decision, we adhere to strict criteria to select the best properties that can bring stable revenues
to the 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 offunding, 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.

16th Period
15th Period
14th Period
13th Period
12th Period
from May 1, 2011 from Nov. 1, 2010 from May 1, 2010 from Nov. 1, 2009 from May 1, 2009
to Oct. 31, 2011
to Apr. 30, 2011
to Oct. 31, 2010
to Apr. 30, 2010
to Oct. 31, 2009

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)
20(¥000)(¥000)(¥000)(¥)(¥000)(¥)(¥000)(¥)

4,627,269
100,159
4,527,109(14,837)
4,527,109(14,837)–(–)

4,428,126
181
4,427,944(14,512)
4,427,944(14,512)–(–)

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)–(–)
21

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

1. STATUS OF UNITHOLDERS’ CAPITAL

There is no relevant matter under this subject.

16th Period
15th Period
14th Period
13th Period
12th Period(as of Oct. 31, 2011) (as of Apr. 30, 2011) (as of Oct. 31, 2010) (as of Apr. 30, 2010) (as of Oct. 31, 2009)(Reference)
The Company has acquired “PMO Hatchobori” and “PMO Higashi-nihonbashi” on November 1, 2011.
Type of Asset

Real Estate

Real Estate

Property NamePMO Hatchobori

PMO Higashi-nihonbashi

Location (Note 1)(Registry)
3-1-8 Hatchobori, Chuo-ku, Tokyo(Street)3-22-13 Hatchobori, Chuo-ku, Tokyo(Registry)
2-30-5, Higashi Nihonbashi, Chuo-ku, Tokyo(Street)2-15-4, Higashi Nihonbashi, Chuo-ku, Tokyo

Structure (Note 1)

S/SRC, B1/9F

S, 9F

Area (Land) (Note 1)

386.70 m2

343.16 m2

Area (Building) (Note 1)

2,930.15 m2

2,376.40 m2

Type of Ownership(Land) Ownership (Building) Ownership(Land) Ownership (Building) Ownership

Maximum number of units allowed to issue(Unit)

2,000,000

2,000,000

2,000,000

2,000,000

2,000,000

Number of units issued(Unit)

305,123

305,123

305,123

305,123

305,123

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

185,455

185,455

185,455

185,455

12,864

12,185

13,10012,97012,565

Number ofUnits Held
(Unit)

Portion in
the Total
Units Issued (%)

Number of unitholders

2. MATTERS CONCERNING THE INVESTMENT UNITS
The 10 largest unitholders as of October 31, 2011 were as follows.

NameJapan Trustee Services Bank, Ltd. (Trust Accounts)

58,112

19.05

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

23,038

7.55

17,9095.87

Completion Date (Note 1)

May 22, 2009

October 14, 2009

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

Acquisition Price (Note 2)¥2,430 million¥1,480 million

Nomura Real Estate Development Co., Ltd.

15,287

5.01

August 30, 2011
(date of agreement on purchase and sale of realestate)August 30, 2011
(date of agreement on purchase and sale of realestate)The Master Trust Bank of Japan, Ltd. (Trust Accounts)

9,249

3.03

Nomura Bank (Luxembourg) S.A.

8,118

2.66

The Senshu Ikeda Bank, Ltd.

7,606

2.49

Date of Acquisition

November 1, 2011
(date of delivery of real estate)

November 1, 2011
(date of delivery of real estate)

Kawasaki Gakuen

7,000

2.29

Seller

Nomura Real Estate Development Co., Ltd.

Nomura Real Estate Development Co., Ltd.

Financing

Fund on hand

Fund on hand

Date of Agreement

In addition, the Company executed the agreement on purchase and sale of real estate regarding “PMO Akihabara” on December 2,
2011.
Type of Asset

Real Estate

Property NamePMO Akihabara

Location (Note 1)(Registry)
3-13-5 Iwamoto-cho, Chiyoda-ku, Tokyo(Street)3-11-6 Iwamoto-cho, Chiyoda-ku, Tokyo

American Life Insurance Company

3,700

1.21

The Hachijuni Bank, Ltd.

3,680

1.21

153,699

50.37

Total

3. BREAKDOWN OF UNITHOLDERS
The breakdown of unitholders as of October 31, 2011 was as follows.

Private and other investors

Number ofUnitholders

Portion (%)

Number of Units
per Unitholder

Portion (%)

12,22795.0

36,458

11.9

Financial institutions(Including sales agents for financial instruments firm)

148

1.2

173,72856.9

Structure (Note 1)

S, 8F

Area (Land) (Note 1)

730.46 m2

Other domestic corporate investors

207

1.6

30,654

10.0

Area (Building) (Note 1)

3,896.26 m2

Foreign corporate investors, etc.

282

2.2

64,28321.1

Type of Ownership(Land) Ownership (Building) Ownership

12,864100.0

305,123

100.0

Completion Date (Note 1)

January 29, 2010

Scheduled Acquisition Price(Note 2)

¥3,790 million

Date of Agreement

December 2, 2011
(date of agreement on purchase and sale of realestate)Date of Acquisition

January 13, 2012
(date of delivery of real estate)

Seller

Nomura Real Estate Development Co., Ltd.

Financing

Fund on hand

Total

Note 1: “Location (Registry)”, “Structure”, “Area (Land)”, “Area (Building)”, and “Completion Date” are based on the information in the real estate registry.
Note 2: Miscellaneous expenses regarding the acquision (intermediary commissions, taxes and duties, etc.) are not included.

22

23

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

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

Title

Name

Executive Director
Supervisory Director
Supervisory Director
Supervisory Director

Other Major Title (s)Yuichi Maruko (Note 2)

Corporate Auditor, MEGALOS Co., Ltd.

2,400

Shuhei Yoshida (Note 2)

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

2,400

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

2,400

Partner, Anderson Mori & Tomotsune Law Firm

2,400

Eitoku Aikawa (Note 2)
Saneaki Ichijo (Note 2)

Manager of Miya Naohito Certified Tax Accountant Firm
Senior Representative Partner, Futaba Audit Corporation

Supervisory Director

Naohito Miya (Note 2)

Accounting Auditor

Earnst & Young ShinNihon LLC –Type of Assets

Total Amount of Fees Paid
during the 16th Period (¥000)

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, who possesses two units of the Company’s investment units as of October 31, 2011. Executive Directors and Supervisory Directors might serve as directors ofother companies, but there are no mutual business interests whatsoever between such companies and the Company.
Note 2: Reappointed as directors of the Company as of August 8, 2011, based on the resolution of the Fifth General Unitholders’ Meeting held on July 28, 2011.
Note 3:	At the Fifth General Unitholders’ Meeting held on July 28, 2011, Mr. Kenji Tsuga, NOF Chief Investment Officer of the Asset Management Company, Nomura Real Estate
Asset Management Co., Ltd., has been appointed as substitute Executive Director, to provide against vacancy of the Executive Director’s position or lack of statutory
quorum.

Real estate

Area(Note 1)

16th Period (as of Oct. 31, 2011)
Total AmountPortion (%)(¥ mln) (Note 2)(Note 3)15th Period (as of Apr. 30, 2011)
Total AmountPortion (%)(¥ mln) (Note 2)(Note 3)Central Tokyo

30,646

7.7

30,718

7.6

Suburban Tokyo

16,3594.1

16,348

4.0

Other Regional Cities

37,2509.3

37,467

9.3

Central Tokyo

183,14745.7

186,533

46.2

Suburban Tokyo

30,1807.5

35,029

8.7

Other Regional Cities

64,80616.2

65,03816.1

Subtotal

362,39090.5

371,136

91.8

Cash, deposits and other assets

38,0009.5

32,9328.2

400,390100.0

404,069

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 October 31, 2011 are as follows.

(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, 2011 are as follows:Business

Company Name (s)Asset Management Company

Nomura Real Estate Asset Management Co., Ltd.

Custodian of assets

Mitsubishi UFJ Trust and Banking Corporation

Custodian of unitholders’ register

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

Manager of special accounts

Mitsubishi UFJ Trust and Banking Corporation

Administrative agent (accounting, etc.)

Mitsubishi UFJ Trust and Banking Corporation

Administrative agent(investment corporation bonds)

The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Banking Corporation,
Nomura Securities Co., Ltd., Mizuho Securities Co., Ltd.

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

24

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.

39,60531,500.89

29,840.44

94.7

13.0

OfficeNRE Tennozu Bldg.

32,61025,127.12

25,127.12

100.0(Note 3)

OfficeOmron Kyoto Center Bldg.

22,30934,616.84

34,616.84

100.0(Note 3)

OfficeNOF Nihonbashi Honcho Bldg.

20,577

19,157.05

18,498.25

96.6

6.0

OfficeSORA Shin-Osaka 21

18,75921,298.26

20,166.23

94.7

4.5

OfficeTennozu Park Side Bldg.

12,647

18,051.60

17,553.47

97.2

5.0

OfficeNOF Shibuya Koen-dori Bldg.

12,5753,420.16

3,420.16

100.0

2.7

OfficeNOF Shinjuku Minamiguchi Bldg.

12,373

6,706.46

6,706.46

100.0

2.4

OfficeSecom Medical Bldg.

11,104

8,821.24

8,821.24

100.0(Note 3)

Medical Office(Note 4)
OfficeNOF Shiba Bldg.
Total

10,027

8,165.10

6,904.69

84.6

2.3

192,592

176,864.72

171,654.90

97.1

48.2 (Note 5)

Note 1:	“Leasable Floor Space” refers to the total leasable space for each asset including offices and shops (for properties owned in compartments, this generally refers to
exclusively owned area; however, common spaces will be included if they are being leased. For Shinjuku Nomura Building, the area calculated by multiplying the overall
leasable floor space by the quasi co-ownership ratio of the beneficial interest in real estate trust owned by the Company, as of October 31, 2011. For NRE Tennozu Building,includes the area calculated by multiplying the overall common space by the co-ownership ratio for the common spaces prescribed in the terms of management of thebuilding owned by the Company through the trustee.), at a certain time. Leasable floor space is calculated not based on the total floor space stated on the registry book,but based on the area stated on the building completion drawing, etc. included in the lease agreement. As such, it may differ from and exceed the total floor space statedon 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, as of October 31, 2011. For NRE Tennozu Building includes the area calculated by multiplying the overall common space by the co-ownership
ratio for the common spaces (as prescribed in the terms of management of the building) owned by the Company through the trustee.).
Note 3: Not disclosed due to compelling reasons.
Note 4:	Although this property is currently registered as “clinic/parking” on the registry book, it was originally designed to be used as offices. The Company’s Articles 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.

25

3. DETAILS OF PORTFOLIO PROPERTIESNOF Tenjin-Minami Bldg.

Location(Postal Address)

Name of Property
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.

Type ofOwnership

12,37316th Period (from May 1, 2011 to Oct. 31, 2011)

11,80012,575

10,700

11,104

8,560

10,027

8,050

8,699

5,960

7,592

6,580

7,545

4,250

5,915

5,270

5,367

6,350

4,910

4,260

4,870

3,480

4,048

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

2,590

3,159

3,960

3,072

2,590

3,030

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

2,220

2,293

39,60522,20032,61021,90020,577

16,200Beneficial Interest in
Real Estate Trust
Beneficial Interest in
Real Estate Trust
Real Estate

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

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

Real Estate

Hatchobori NF Bldg.

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

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

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

NOF Minami-Shinjuku Bldg.

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

Central Shintomicho Bldg.

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

1,430

1,763

203,410

213,793

Suburban Tokyo
NRE Ueno Bldg.

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

Real Estate

6,510

7,798

NOF Technoport Kamata Center Bldg.

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

6,430

6,485

Toho Edogawabashi Bldg.

1-24-8 Sekiguchi Bunkyo-ku, Tokyo

Beneficial Interest in
Real Estate Trust
Real Estate

1,430

2,057

Toshin Meguro Bldg.

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

1,210

1,328

Crystal Park Bldg.

1-1-3 Gotenyama, Musashino City, Tokyo

Beneficial Interest in
Real Estate Trust
Real Estate

3,190

3,585

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

1,640

1,802

3,960

2,896

8,360

9,368

4,970

4,990

2,830

3,309

1,930

2,917

42,46046,5391-10-31, Kichijoji Honcho, Musashino City, Tokyo
2-36-2 Akebono-cho, Tachikawa City, TokyoNOF Kawasaki Higashiguchi Bldg.

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

NOF Yokohama Nishiguchi Bldg.
NOF Shin-Yokohama Bldg.
Yokohama Odori Koen Bldg.
Subtotal
Other Cities
Sapporo North Plaza

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

Beneficial Interest in
Real Estate Trust
Real Estate

5,590

7,652

NRE Sapporo Bldg.

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

4,680

5,053

JCB Sapporo Higashi Bldg.

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

Real Estate

3,220

3,616

NOF Sendai Aoba-dori Bldg.

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

2,070

3,147

NOF Utsunomiya Bldg.

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

2,500

2,394

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

2,300

4,138

NOF Nagoya Yanagibashi Bldg.

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

Omron Kyoto Center Bldg.
SORA 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

NRE Osaka Bldg.

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

NRE Nishi-Umeda Bldg.

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

NRE Yotsubashi Bldg.

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

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

3,677
102,057
362,390

12,64745,500

Faret Tachikawa Center Square

Grand Total

2,260
80,820326,690

9,560

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

NOF Kichijoji Honcho Bldg.

Beneficial Interest in
Real Estate Trust

Note 1:	“Appraisal Value as of Oct. 31, 2011” 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., or Morii Appraisal &Investment Consulting Inc., using the capitalization approach, with the end of the sixteenth fiscal period, i.e. October 31, 2011, being taken as the point of evaluation.
Note 2:	“Book Value” stands for the aggregate purchase price of lands, buildings, structures, machinery and equipments, tools and fixtures, leased assets, construction inprogress, 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, 2011 accounted solely for the quasi
co-ownership.
Note 4: Residential indication of the property is not available yet.
Note 5:	The Company has acquired “PMO Hatchobori” and “PMO Higashi-nihonbashi” on November 1, 2011. Appraisal values of the properties as of October 31, 2011 are ¥2,490
million and ¥1,520 million, respectively.

Subtotal

26

Appraisal Valueas of Oct. 31, Book Value2011 (¥ mln)(¥ mln)(Note 1)
(Note 2)

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

Subtotal

2,420

3,628

19,10022,30913,00018,759Beneficial Interest in
Real Estate Trust
Real Estate

7,050

6,290

3,240

5,682

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

4,240

3,715

2,430

2,806

2,340

2,582

4,380

6,602

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

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. (Note 3)
NOF Minami-Shinjuku Bldg.
Central Shintomicho Bldg.
Sunworld Yotsuya Bldg. (Note 3)
Subtotal
Suburban Tokyo
NRE Ueno Bldg.
NOF Toyo-cho Bldg. (Note 3)
Technoport Kamata Center Bldg.
Toho Edogawabashi Bldg.
Toshin Meguro Bldg.
Crystal Park Bldg.
NOF Kichijoji Honcho Bldg.
Faret Tachikawa Center Square
NOF Kawasaki Higashiguchi Bldg.
NOF Yokohama Nishiguchi Bldg.
NOF Shin-Yokohama Bldg.
Yokohama Odori Koen Bldg.
Subtotal
Other Cities
Sapporo North PlazaNRE Sapporo Bldg.
JCB Sapporo Higashi Bldg.
NOF Sendai Aoba-dori Bldg.
NOF Utsunomiya Bldg.
NOF Nagoya Fushimi Bldg.
NOF Nagoya Yanagibashi Bldg.
Omron Kyoto Center Bldg.
SORA Shin-Osaka 21
NRE Osaka Bldg.
NRE Nishi-Umeda Bldg.
NRE Yotsubashi Bldg.
NOF Kobe Kaigan Bldg.
NRE Hiroshima Bldg.
EME Hakata Ekimae Bldg.
NOF Tenjin-Minami Bldg.
Subtotal
Grand Total

at Period End
RentalPortion of
Revenues
RentalNumber of
Revenues
Occupancy during the
Tenants(%)
Rate (%) Period (¥ mln)
(Note 1)

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

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

RentalRevenues
during the
Period (¥ mln)

Portionof Rental
Revenues
(%)

95
6
14
15
14
3
1
7
19
7
11
7
5
1
7
6
7
8
16
–
4
6
–
259

94.7
100.0
96.6
97.2
100.0
100.0
100.0
84.6
97.1
88.4
95.6
100.0
94.0
100.0
100.0
100.0
100.0
100.0
100.0
–
100.0
100.0
–
96.9

1,624
(Note 2)
749
629
304
332
(Note 2)
286
287
162
204
122
216
(Note 2)
115
143
89
140
111
53
93
54
(Note 2)
6,938

13.0
(Note 2)
6.0
5.0
2.4
2.7
(Note 2)
2.3
2.3
1.3
1.6
1.0
1.7
(Note 2)
0.9
1.1
0.7
1.1
0.9
0.4
0.7
0.4
(Note 2)
55.4

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

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

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

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

10
–
12
7
1
12
6
17
29
32
10
16
152

100.0
–
92.7
100.0
100.0
98.6
90.2
97.3
98.6
100.0
100.0
92.4
97.0

224
(Note 2)345
62
(Note 2)
102
70
218
310
228
164
92
1,872

1.8
(Note 2)2.8
0.5
(Note 2)
0.8
0.6
1.7
2.5
1.8
1.3
0.7
15.0

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

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

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

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

43
6
1
28
23
16
14
1
32
24
15
20
34
17
46
22
342

96.5
100.0
100.0
83.6
88.6
89.9
92.6
100.0
94.7
99.2
95.4
97.5
86.4
86.1
93.0
96.9
95.6

2.6
1.6
(Note 2)
1.0
1.2
0.5
0.9
(Note 2)
4.5
3.1
1.1
2.3
1.3
1.4
1.4
0.6
29.6

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

94.3
100.0
100.0
83.6
97.0
93.2
92.6
100.0
95.5
88.7
88.1
97.5
87.5
86.5
90.4
96.9
94.3

96.4

100.0

746

93.8

314
203
(Note 2)
114
146
38
106
(Note 2)
515
392
154
299
173
174
168
76
3,616
12,846(Note 4)2.5
1.6
(Note 2)
0.9
1.1
0.3
0.8
(Note 2)
4.0
3.1
1.2
2.3
1.4
1.4
1.3
0.6
28.2

753

325
204
(Note 2)
123
155
65
112
(Note 2)
565
390
141
291
158
176
178
80
3,709
12,520(Note 4)100.0

Note 1:	In the case a master lease agreement is in place, in which the master tenant of the said lease agreement subleases a part or whole of the leased floor spaces to the end
tenants, only the master tenant is counted as the number of tenants. For NRE Tennozu Building and PMO Nihonbashi Honcho, which involves a “pass-through type”
master lease agreement where the amount of rent received from the master tenant is the same as the rent received by said master tenant from the end tenant, the total
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 same tenant leased floor spaces in more than one building, such spaces are counted separately for each building as if they are leased bydifferent tenants. As for Shinjuku Nomura Building and NOF Toyo-cho Building, the number of tenants in the entire building is taken into account.
Note 2: Not disclosed due to compelling reasons.
Note 3:	The amount mentioned in “Rental Revenues during the Period” of the 16th period is the amount before each transfer date: NOF Toyo-cho Building (May 10, 2011),
Sunworld Yotsuya Building (July 22, 2011), Central Kyobashi Building (August 30, 2011)
Note 4: Subtotal of “Rental Revenues” and "Portion of Rental Revenues” for each area is not disclosed due to compelling reasons.

27

4. OUTSTANDING AMOUNT AND CURRENT PRICE OF SPECIFIED TRANSACTIONS

2. CAPITAL EXPENDITURES DURING THE SIXTEENTH FISCAL PERIODThe outstanding amount and current price of the specified transactions as of October 31, 2011 are as follows.

The table below lists capital expenditures during the sixteenth fiscal period in conjunction with the major works of renovation. During
the period, we have conducted engineering works totalling ¥1,520 million: capital expenditures of ¥1,088 million and repair expensesof ¥431 million combined. There are no capital expenditures due to disasters during the sixteenth period.

Contract Amount (¥ mln) (Note 1)
Segment

Longer than a Year

Current
Price (¥ mln)
(Note 2)85,75053,250△564

85,75053,250△564

Type of Transaction

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

From:  May 2011
Oct. 2011
To: 

191

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

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

From:  Jan. 2011
Sep. 2011
To: 

62

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

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

From:  Feb. 2011
To:  Aug. 201113

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Renewal of basement common area
(To increase revenues)

From:  Sep. 2011
Oct. 2011
To: 

26

NRE Tennozu Bldg.
(Shinagawa-ku, Tokyo)

Refurbishment for multi-tenant building(To increase revenues)

From:  Mar. 2011
May 2011
To: 

128

Number of
Properties

Sapporo North Plaza.
(Chuo-ku, Sapporo City)

Refurbishment of the common floor area
(To increase revenues)

From:  Mar. 2011
May 2011
To: 

40

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

Renewal of through the wall air-conditioning system(To increase revenues)

From:  Oct. 2011
Oct. 2011
To: 

57

Other Properties

Improvement of features

From:  May 2011
Oct. 2011
To: 

568

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, 2011.

6. STATUS OF ASSETS BY COUNTRY AND REGION
As of the end of the sixteenth fiscal period, the real estate and beneficial interest in real estate trust held by the Company by country
and region are as follows.
Appraisal Value as of Oct. 31, 2011 (Note 2)
Portion of Total PortfolioJapan¥362,390 million¥326,690 million

100.0%

48

Total¥362,390 million¥326,690 million

100.0%

48

Note 1: Total portfolio amount stands for the book value after depreciation and amortization.
Note 2: Appraisal value as of Oct. 31, 2011 stands for the value appraised by the real estate appraisers.

Total

Capital Expenditures

1,088

3. FUNDS RESERVED FOR THE LONG-TERM REPAIR PLANS
Subject to the long-term schedule for repairs and maintenance set down for each building, the Company has accounted for reserves fromthe operating cash flow to prepare for large-scale engineering works to be carried out in the future.

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, 2011. The estimated cost of works includes the amount to be charged as“expenses” for accounting purposes.

Name of Property (Location)

Cost of Works(¥ mln)Period of Works

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

5. STATUS OF THE OTHER ASSETS

Total Portfolio Amount (Note 1)

Description of Works (Purpose)

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

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.

Country

Name of Property (Location)

Description of Works (Purpose)

Estimated
PeriodTotal

Estimated Cost (¥ mln)
Paid during
Paid before
16th Period
16th Period

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

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

From:  Jan. 2011
Jul. 2012
To: 

204
(Note 2)––

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

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

From: Feb. 2011
To:  Mar. 2017

460
(Note 2)14

14

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

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

146(Note 2)––

From: Sep. 2011
To:  Jan. 2013

16th Period
15th Period
14th Period
13th Period
12th Period
from May 1, 2011 from Nov. 1, 2010 from May 1, 2010 from Nov. 1, 2009 from May 1, 2009
to Oct. 31, 2011 to Apr. 30, 2011 to Oct. 31, 2010 to Apr. 30, 2010 to Oct. 31, 2009

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

¥ mln

¥ mln

¥ mln

¥ mln

¥ mln

620
1,437
970
1,087

438
890
708
620

397
900
859
438

436
975
1,013
397

368
1,570
1,502
436

Expenses and Liabilities
1. EXPENSES RELATED TO ASSET MANAGEMENT

NRE Tennozu Bldg.
(Shinagawa-ku, Tokyo)

Refurbishment for office spaceon the 11th floor(To increase revenues) (Note 1)

From: Aug. 2011
To:  Nov. 2011

147

–

–

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

Renewal of through the wall airconditioning system(To increase revenues) (Note 1)

From: Oct. 2011
To:  Feb. 2012

146

–

–

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.

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

16th Period
from May 1, 2011
to Oct. 31, 2011¥000

15th Period
from Nov. 1, 2010
to Apr. 30, 2011
¥000

990,285
708,019282,265–
28,90264,912
12,000105,415
1,201,515

1,023,046
705,633
317,413–
29,03865,001
12,000102,859
1,231,946

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.

28

29

2. STATUS OF BORROWINGS
Financial Institutions

The status of borrowings from the financial institutions as of October 31, 2011 is as follows.

Financial Institutions

Short-term Borrowings
The Mizuho Corporate Bank, Ltd.
Sumitomo Trust and Banking Co., Ltd.
The Chugoku Bank, Ltd.
The Yamanashi Chuo Bank, Ltd.
Aozora Bank, Ltd.
The Chugoku Bank, Ltd.
Sumitomo Trust and Banking Co., Ltd.
The Chiba Bank, Ltd.
The Hiroshima Bank, Ltd.
Sumitomo Trust and Banking Co., Ltd.
The Chiba Bank, Ltd.
The Yamanashi Chuo Bank, Ltd.
Aozora Bank, Ltd.
Subtotal
Current Portion of Long-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 and Banking Co., Ltd.
The Iyo Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
The Hyakujushi Bank, Ltd.
Mitsui Life Insurance Co., Ltd.
Taiyo Life Insurance Company
Daido Life Insurance Company
Zenkyoren
Development Bank of Japan, Inc.
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.
Development Bank of Japan, Inc.
Subtotal
Total Short-term Borrowings

30

Date
Borrowed

Jun. 24, 2010
Aug. 26, 2010
Dec. 24, 2010
Feb. 28, 2011
Jun. 24, 2011
Aug. 26, 2011

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
Jun. 25, 2009

Outstanding as of Outstanding as of
Average
Oct. 31, 2011
May 1, 2011
Interest Rate(¥000)(¥000)(%) (Note 1)

–
–
–
–
–
1,000,000
3,000,000
500,000
500,000
900,000
500,000
1,000,000
500,000
7,900,000

1,400,000
900,000
1,000,000
1,000,000
500,000
1,000,000
3,000,000
500,000
500,000––––
9,800,000

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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
500,000
39,000,000
46,900,000

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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
500,000
30,500,000
40,300,000

Date of
Repayment

1.00077

Jun. 24, 20110.90000

Aug. 26, 2011

0.73643

Dec. 24, 2011

0.78643

Feb. 26, 2012

0.73643

Jun. 24, 2012

0.73643

Aug. 26, 2012

1.43200

1.44800(Note 2)

Unsecured/
UninsuredAug. 25, 2011

Aug. 26, 2011

1.43950

Sep. 25, 2011

1.39575

Balloonpayment

Note

Jun. 10, 2011

1.63825

1.89764

Method of
Use ofRepayment Borrowings

Feb. 26, 2012

Balloonpayment

Jun. 24, 2012

1.43750

Aug. 26, 2012

1.53625

Aug. 26, 2012

1.46000

Aug. 26, 2012

1.61150

Sep. 25, 2012

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

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

Date
Borrowed

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
Dec. 8, 2010
Aug. 26, 2010
Dec. 8, 2008

Feb. 28, 2011

Mar. 19, 2007
Jun. 10, 2011

Aug. 26, 2011
Sep. 26, 2011

Dec. 24, 2009
Feb. 26, 2008
Feb. 26, 2010
Jun. 24, 2008
Aug. 26, 2010
Aug. 26, 2011
Jun. 10, 2011
Feb. 28, 2011
Jun. 25, 2009

Outstanding as of Outstanding as of
Average
Oct. 31, 2011
May 1, 2011
Interest Rate(¥000)(¥000)(%) (Note 1)

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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
1,000,000
2,500,000
1,000,000
4,500,000
1,000,000
1,000,000
500,000
2,000,000
1,000,000
2,000,000
1,000,000
1,000,000
2,000,000
1,000,000
1,000,000
1,000,000
1,000,000
3,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,800,000
2,400,000
500,000
650,000
1,000,000
3,000,000
3,000,000
1,000,000
3,000,000
4,000,000
1,000,000
1,000,000
1,000,000
1,000,000
3,000,000
900,000
1,000,000
8,500,000
93,250,000
140,150,000

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
1,000,000
2,500,000
1,000,000
4,500,000
1,000,000
1,000,000
500,000
2,000,000
1,000,000
2,000,000
1,000,000
1,000,000
2,000,000
–
–
–
–
–
–
–
–
–
1,800,000
2,400,000
500,000
650,000
1,000,000
3,000,000
3,000,000
1,000,000
3,000,000
4,000,000
1,000,000–––––
1,000,000
8,750,000
103,100,000
143,400,000

Date of
Repayment

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

1.14071

Feb. 26, 2013

1.14050
0.886430.98550

Jun. 24, 2013
Jun. 24, 2013
Aug. 26, 2013

1.68680

Dec. 8, 2013

0.99071

Feb. 26, 2014

1.98000

Mar. 19, 2014

0.91900

Jun. 10, 2014

0.83875

Aug. 26, 2014

0.83643

Aug. 26, 2014

1.55800

Dec. 24, 2014

1.91875
1.69300

Feb. 26, 2015
Feb. 26, 2015

2.31750

Jun. 24, 2015

1.31125

Aug. 26, 2015

1.10100

Aug. 26, 2016

1.43500

Jun. 10, 20171.84650
1.97000

Feb. 26, 2018
(Note 3)

Method of
Use ofRepayment Borrowings

Balloonpayment(Note 2)

Note

Unsecured/
Uninsured(Note 3)Note 1:	The average interest rate is weighted by the balance of each borrowing as at the end of the period and rounded to the nearest fifth decimal place. As for the borrowings,
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.

31

3. Status of Investment Corporation Bonds

3. PRICE INVESTIGATIONThe status of investment corporation bonds issued as of October 31, 2011 is as follows.

(1) Real Estates
Acquisition/Transfer

Balance as ofOct. 30, 2011(¥ mln)Balance as of
May 1, 2011(¥ mln)InterestRate(%)

Name of Bonds

Issue DateFirst Series Unsecured Investment
Corporation Bonds

Mar. 16,
2005

Second Series Unsecured
Investment Corporation Bonds

Mar. 16,
2005

5,000

5,000

2.47

Mar. 16,
2020

Fourth Series Unsecured
Investment Corporation Bonds

Nov. 28,
2005

10,00010,0002.05

Nov. 30,
2015

Fifth Series Unsecured Investment
Corporation Bonds

Mar. 19,
2007

5,000

5,000

1.61

Mar. 19,
2012

5,000

5,000

Maturity Date

1.85

Use ofProceeds

Mar. 16,2015

Sixth Series Unsecured Investment Mar. 19,
Corporation Bonds
2007

5,000

5,000

2.21

Mar. 17,2017

Seventh Series Unsecured
Investment Corporation Bonds

Mar. 19,
2007

4,500

4,500

2.90

Mar. 17,2028

Eighth Series Unsecured
Investment Corporation Bonds

Nov. 26,
2010

6,000

6,000

0.94

Nov. 26,
2014

4,000

4,000

1.52

Nov. 24,2017

44,50044,500Ninth Series Unsecured Investment Nov. 26,
Corporation Bonds
2010
Total

Method of
Repayment

Note(Note 2)Acquisition/Transfer

Type of Asset

Name of Property

Date

Price (¥ mln)

Appraisal Value(¥ mln)Transfer

Beneficial Interest in
Real Estate TrustNOF Toyo-cho Bldg.

May 10, 2011

5,805

5,620

Transfer

Beneficial Interest in
Real Estate Trust

Sunworld Yotsuya Bldg.

Jul. 22, 2011

680

680

Transfer

Beneficial Interest in
Real Estate TrustCentral Kyobashi Bldg.

Aug. 30, 2011

2,650

2,340

Note:	The price investigation procedures were conducted by Ernst & Young ShinNihon LLC at the time of acquisition or transfer in accordance with the guidance under “Price
Investigation of Specified Assets Held by Investment Trusts and Investment Corporations”, Industry Audit Committee Report No. 23 issued by The Japanese Institute ofCertified Public Accountants. The Company has received detailed reports including the location and lot number to identify these properties.
Note:	“Acquisition price” and “Transfer price” do not include various costs (intermediary fees, taxes and duties, etc.) required for acquisition or transfer of the property (thepurchase and sale price of the real estate, etc., as indicated in the Transfer Agreement of Trust Beneficial Interest or Real Estate).
Note:	Regarding NOF Toyo-cho Bldg, “Appraisal Value” is appraisal value of the entire building multiplied by 67%, the ratio of the quasi-co-ownership interest held by the Company.

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

(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 sixteenth fiscal period (from May 1, 2011 to October 31, 2011), four OTC derivatives transactions were subject toinvestigation. Ernst & Young ShinNihon LLC was requested to investigate the details of three transactions including the name ofcounterparty, issues, the number of execution, financial instruments/monetary indicators, put/call options, exercise prices, theperiod of execution of right, the trading period, etc. The investigation report has been received.

4. TRANSACTIONS WITH RELATED PARTIES AND MAJOR SHAREHOLDERS

4. STATUS OF SHORT-TERM INVESTMENT CORPORATION BONDS(1) Transactions
Not applicable.

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

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

Trading During the Sixteenth Fiscal Period

Name of Related Party and Major Shareholders

Contract-out fees

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

Property management fees

Acquisition

Transfer

Type of Asset

Name of Property

Date

Price
(¥ mln) (Note 1)

Beneficial Interest in
Real Estate TrustNOF Toyo-cho Bldg.

––

May 10, 2011

5,805

4,781

1,008

Beneficial Interest in
Real Estate Trust

Sunworld Yotsuya
Bldg.

–

–

Jul. 22, 2011

680

783

(105)

–

–

Aug. 30, 2011

2,650

2,535

108

9,135

8,101

1,011

Beneficial Interest inCentral Kyobashi Bldg.
Real Estate Trust
Total

–

Date

Price (¥ mln)
(Note 1)

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

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

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.

32

Other expenses

Amount Paid (A)(¥000)

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

738,227
162,469
24,051
62,481
310
24,049Portion(A) / (B)(%)

Total Amount Paid (B)(¥000)

1,157,386

63.8
66.7
9.9
51.6
0.3
19.9

243,759
121,012Note 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 andequipments, the cost of which is included in “Contract-out Fees”.
Note 3: Besides the above, the Company has made the following payments for repair works during the sixteenth fiscal period.
Name of Related Party
Nomura Real Estate Development Co., Ltd.
Nomura Building Management Co., Ltd.

Amount Paid (¥000)
40,294562,072

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.

Property Management Company

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.

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

31,697
15,663
12,573
5,607
3,982
5,889
3,574
5,156
4,448
5,452
3,046
3,044
1,873

33

Financial Section
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. (Note 3)
Central Shintomicho Bldg.
Sunworld Yotsuya Bldg. (Note 4)
NOF Toyo-cho Bldg. (Note 5)
Toshin Meguro Bldg.
NOF Kawasaki Higashiguchi Bldg.
NOF Utsunomiya Bldg.
NOF Nagoya Yanagibashi Bldg.
NRE Hiroshima Bldg.

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

2,059
4,855
7,494
1,398
4,372
4,978
3,919
4,119
5,066
10,759
3,088
8,165
3,847
2,234
961
974
229
56
600
6,345
3,840
2,136
2,824

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.
Note 3: Transferred on August 30, 2011.
Note 4: Transferred on July 22, 2011.
Note 5: Transferred on May 10, 2011.

5. STATUS OF BUSINESS WITH THE ASSET MANAGEMENT COMPANY OVER ITS SUBSIDIARY BUSINESS
Although Nomura Real Estate Asset Management Co., Ltd., the asset management company of the Company, conducts subsidiarybusiness of Type II Financial Instruments Business, there is no relevant matter under this subject as of October 31, 2011.

Other Information
1. NOTICE
The Fifth General Unitholders’ Meeting was held on July 28, 2011. Summary of main items approved at the General Unitholders’Meeting are as follows:
AgendaSummary

The Articles of Incorporation were changed for the following reasons:• To make required amendments in conjunction with the enforcement of the Law concerning the partial
amendments of Special Taxation Measures Law (Law No. 26 of 1957) and Order for enforcement ofPartial Amendment of theSpecial Taxation Measures Law (Law No. 43 of 1957).
Articles of Incorporation• To make required amendments in conjunction with Act on Promotion of Global WarmingCountermeasures (Act No.117 of 1998).
• Other, including deletion of provisions which are already unnecessary and revision of expressions, etc.
Appointment of an
Mr. Yuichi Maruko was appointed as the Executive Director. The term shall be two years from August 8,
Executive Director
2011.
Appointment of a
Substitute Executive
Mr. Kenji Tsuga was appointed as the Substitute Executive Director.
Director
Appointment of four
Mr. Shuhei Yoshida, Mr. Eitoku Aikawa, Mr. Saneaki Ichijo, and Mr. Naohito Miya were appointed as
Supervisory Directors
Supervisory Directors. The terms shall be two years from August 8, 2011.

PMO Hatchobori

Contents

Balance Sheets............................................................. 36

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

Statements of Income and Retained Earnings............. 38

Not applicable.

Statements of Changes in Net Assets......................... 39
Statements of Cash Flows........................................... 40

3. OTHER MATTERS

Notes to Financial Statements..................................... 41

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.

34

35

Balance Sheets

As of October 31, 2011

Thousands of Yen
As of April 30, 2011ASSETS
Current Assets:
Cash and bank deposits
Rental receivables
Other current assets
Total current assets

As of April 30, 2011

¥1,028,306
1,516,994
7,900,000
5,000,000
39,000,000
790,967297
215,6431,864,744
1,540
126,419
57,444,910¥618,270
1,849,825
9,800,000
5,000,000
30,500,000
830,412371
166,366
1,929,481
48,336
90,34450,833,405

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

39,500,000
93,250,000
20,110,591
2,783
152,863,374

39,500,000
103,100,000
20,746,988
5,224
163,352,212

Total Liabilities

210,308,284

214,185,617

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

185,455,447
4,627,269
190,082,716

185,455,447
4,428,127
189,883,574

Total Net Assets

190,082,716

189,883,574¥400,391,000¥404,069,191

LIABILITIES¥36,317,667
542,060
438,335
37,298,062¥31,709,202
179,547
435,536
32,324,285

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

259,188,609
122,118,786
1,571,665
286,461
30,94740,395

264,672,031
124,269,002
1,531,293
264,838
30,94748,467

SubtotalLess accumulated depreciation
Net property and equipment

383,236,863(22,746,855)
360,490,008

390,816,578(21,580,907)
369,235,671

1,900,905
1,829
171,443
410,850
117,9032,602,930

1,900,905
2,093
64,259410,850
131,128
2,509,235¥400,391,000¥404,069,191

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, 2011

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

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

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

36

37

Statements of Income and Retained Earnings

Statements of Changes in Net Assets

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

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

For the period from May 1, 2011 to October 31, 2011
Unitholders’CapitalRetained
Earnings

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

–
–

–
–

(4,427,945)
4,627,087(4,427,945)
4,627,087

–
–

–
–

(4,427,945)
4,627,087

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

Unitholders’CapitalRetained
Earnings

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

–
–

–
–

(4,479,510)
4,428,122(4,479,510)
4,428,122

–
–

–
–

(4,479,510)
4,428,122

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

UnitsOperating Revenues and Expenses
Balance as of April 30, 2011
Operating Revenues:
Real estate rental revenues
Gain on sales of real estate¥12,520,177
1,116,900¥12,846,039
271,900

13,637,077

13,117,939

6,110,488
105,767
990,286
93,815–
117,415

5,741,473–
1,023,047
94,0402,325
112,534

7,417,771

6,973,419

6,219,306

6,144,520

3,370
131,5313,500
65,774

134,901

69,274

1,097,075
112,153
429,978
13,22573,707

1,135,712
91,621
429,882
12,12740,7501,726,138

1,710,092

Ordinary Income

4,628,069

4,503,702

Extraordinary Loss
Loss on disaster–

74,468–74,4684,628,069

4,429,234

Income Taxes:
Current
Deferred

974
8

1,123
(11)

Net Income

4,627,087

4,428,122

182

5¥4,627,269¥4,428,127

Operating Expenses:
Real estate rental expenses
Loss on sales of real estate
Asset management fees
Administrative service and custodian fees
Bad debts expenses
Other operating expenses

Cash distribution paid
Net income
Balance as of October 31, 2011

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

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

Balance as of October 31, 2010
Cash distribution paid
Net income
Balance as of April 30, 2011

Operating Profit

Thousands of Yen
Total
Unitholders’EquityThousands 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 and Expenses
Non-Operating Revenues:
Interest income
Other non-operating revenues

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

Income before Income Taxes

Retained earnings brought forward
Retained Earnings at End of Period
The accompanying notes to financial statements are an integral part of these statements.

38

39

Statements of Cash Flows

Notes to Financial Statements

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

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

Cash Flows
Cash Flows from Operating Activities
Income before income taxes
Depreciation
Amortization of long-term prepaid expenses
Amortization of investment corporation bonds issuance costs(Decrease) Increase in provision for loss on disaster
Interest income
Interest expense
Loss on disposal of property and equipment(Increase) Decrease in rental receivables
Increase (Decrease) in trade accounts payable(Decrease) Increase in other accounts payable
Increase in accrued consumption taxes(Decrease) in rent received in advance
Decrease in tangible fixed assets in trust due to sales
Changes in other current assets/liabilities¥4,628,069
1,732,902
7,186
13,225(46,796)(3,370)1,527,053
764(362,513)
410,036(558,231)
49,276(64,736)
8,101,016(80,087)¥4,429,234
1,861,399
7,003
12,127
48,336(3,500)1,565,085
148
51,860(89,801)
740,899
4,876(156,171)2,322,399(143,618)

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

15,353,794
3,370(1,566,498)(1,049)13,789,617

10,650,276
3,500(1,614,363)(342)
9,039,071

Cash Flows from Investing Activities
Proceeds from time deposits
Payments for purchases of property and equipment
Reimbursement of security deposits to tenants
Proceeds from security deposits from tenants
Net cash used in investing activities–(865,747)(1,419,701)
783,304(1,502,144)

1,300,000(515,119)(1,838,544)
845,225(208,438)

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

2,900,000(4,800,000)
17,900,000(19,250,000)–––(4,429,008)(7,679,008)

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

4,608,465
31,709,202¥36,317,667

955,72530,753,477¥31,709,202

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, 2011, the Company owned a portfolio of 48 office properties
containing an aggregate of approximately 399,625.36 square meters of leasable area and leased office space to 753 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:
3 - 70 years
Buildings
Structures
2 - 45 years
3 - 15 years
Machinery and equipment
2 - 18 years
Tools, furniture and fixtures
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.
Provision for loss on disaster
Provision for loss on disaster is recorded at the amount estimated as of October 31, 2011 to provide for possible repair andrecovery costs arising from the Great East Japan Earthquake.
Accounting treatment of beneficial interests in real estate
All assets and liabilities held in trust, for which the real estate in possession of the Company was entrusted, and all related
earnings and expenses incurred are reflected in the accompanying balance sheets and statements of income and retained
earnings, respectively.
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.

40

41

Property related taxes
Property in Japan is subject to property taxes, urban planning taxes and depreciable property taxes on a calendar year basis.
These property related taxes are generally charged to income during the period.
The seller of a property is liable for property related taxes for the period from the purchase date through the end of thatcalendar year because taxes are imposed on the owner registered in the record as of January 1 for the entire year based on
the assessment made by the local government. The amount applicable to the buyer of a property is usually settled between
each party and capitalized as part of the acquisition cost of the property. No capitalized property related taxes were incurred forthe six-month periods ended October 31, 2011 and April 30, 2011 as the Company did not acquire any properties.

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 10, 2011
Unsecured loans from banks due on June 24, 2011
Unsecured loans from banks due on August 25, 2011
Unsecured loans from banks due on August 26, 2011
Unsecured loans from banks due on August 26, 2011
Unsecured loans from banks due on September 25, 2011
Unsecured loans from a bank due on December 24, 2011
Unsecured loans from banks due on February 26, 2012
Unsecured loans from banks due on February 26, 2012
Unsecured loans from banks due on June 24, 2012
Unsecured loans from banks due on June 24, 2012
Unsecured loans from banks due on August 26, 2012
Unsecured loans from banks 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 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.
(Additional information)
The New Accounting Standard for Accounting Changes and Error Corrections
Effective for the six-month period ended October 31, 2011, the Company adopted the Accounting Standard for Accounting
Changes and Error Corrections (ASBJ Statement No.24 on December 4, 2009) and the Guidance on Accounting Changes andError Corrections (ASBJ Guidance No.24 on December 4, 2009).
This new accounting standard requires that accounting changes and corrections of prior period errors which are madeafter the beginning of the fiscal year beginning on or after April 1, 2011, should be adopted or corrected retrospectively.

4. Cash and Cash Equivalents
Thousands of Yen
As of October 31, 2011

As of April 30, 2011

¥36,317,667¥36,317,667¥31,709,202¥31,709,202

42

As of April 30, 2011

Acquisition Costs

Book Value

Acquisition Costs

Book Value¥57,405,168
27,583,735(3,109,853)
624,533(158,921)
14,634(3,893)–201,783,441
94,535,051(18,801,540)
947,132(516,690)
271,827(133,065)
30,947(22,893)
40,395¥360,490,008¥57,405,168¥57,405,168
27,450,413(2,703,599)
605,286(135,033)
14,332(2,794)–
207,266,863
96,818,589(18,117,121)
926,007(483,947)
250,506(118,911)
30,947(19,502)48,467¥369,235,671¥57,405,168

465,612
10,741–
201,783,441
75,733,511
430,442
138,762
8,054
40,395¥360,490,008

–
–
–
–
–
–
¥1,000,000
4,000,000
11,000,000
1,400,000
12,000,000
5,000,000
1,500,000

–
–
–
–
–
–
0.73643%0.78643%1.89764%0.73643%
1.39575%
1.43750%
0.73643%¥8,500,000
2,300,000
4,500,000
4,000,000
2,500,000
2,000,000
1,000,000
4,000,000
11,000,000––––

1.43200%
1.00077%
1.44800%
1.63825%0.90000%
1.43950%0.74000%
0.79000%
1.89764%––––

1,000,000

1.53625%––

7,500,000
2,000,000
500,000¥46,900,000

1.46000%
1.61150%
1.97000%––
500,000¥40,300,000––
1.97000%

7. Long-term Debt
Long-term debt as of October 31, 2011 and April 30, 2011 consist of the following:

24,746,814
470,253
11,538–207,266,863
78,701,468
442,060
131,595
11,44548,467¥369,235,671

As of April 30, 2011

As of October 31, 2011
Weightedaverageinterest rate
(Note 1)

Amount(Thousandsof Yen)Thousands of Yen

24,473,882

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, 2011 and April 30, 2011 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, 2011

As of April 30, 2011

As of October 31, 2011

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, 2011 and April 30, 2011. The total unused amounts of such credit facilities were ¥40,000
million as of October 31, 2011 and April 30, 2011.

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

Cash and bank deposits
Cash and cash equivalents

Short-term debt as of October 31, 2011 and April 30, 2011 consist of the following:

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 an insurance company due on June24, 2013
Unsecured loans from a bank due on August 26, 2013
Unsecured loans from banks due on December 8, 2013
Unsecured loans principally from banks due on February 26,
2014
Unsecured loans from insurance companies due on March
19, 2014
Unsecured loans from banks due on June 10, 2014
Unsecured loans from banks due on August 26, 2014
Unsecured loans from banks due on August 26, 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

Amount(Thousandsof Yen)Weightedaverageinterest rate
(Note 1)––

¥12,000,000

1.39575%––

5,000,000

1.43750%––

1,000,000

1.53625%––¥10,000,000
5,000,000
1,000,000––
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

1.14071%
1.14050%

4,000,000
2,000,000

1.15000%
1.14050%

1,000,000

0.88643%

1,000,000

0.89000%

2,500,000
7,500,000

0.98550%
1.68680%

2,500,000
7,500,000

0.98550%
1.68680%

5,500,000

0.99071%

5,500,000

1.00000%

4,000,000

1.98000%

4,000,000

1.98000%

3,000,000
6,000,000
2,000,000
6,350,000

0.91900%
0.83875%
0.83643%1.55800%–––
6,350,000–––
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%

43

Unsecured loans from an insurance company due on
August 26, 2015
Unsecured loans from banks due on August 26, 2016
Unsecured loans from banks due on June 10, 2017
Unsecured loans from a bank due on February 26, 2018
Unsecured loans from a bank due on June 25, 2016 (Note 2)
Total

1,000,000

1.31125%

1,000,000

1.31125%

3,000,000
3,900,000
1,000,000
8,500,000¥93,250,000

1.10100%
1.43500%
1.84650%
1.97000%––
1,000,000
8,750,000¥103,100,000––
1.84650%
1.97000%

Note 1: The weighted-average interest rate is weighted by the balance of each borrowing at the end of the period and rounded to the nearest fifth decimal place. As for the borrowings, 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.

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.

10. Per Unit Information
The net asset values per unit and the net income per unit as of October 31, 2011 and April 30, 2011 were as follows:

Net asset values per unit
Net income per unit

Long-term debt

2-3 years

3-4 years

4-5 years

28,000,000

28,500,000

21,850,000

10,000,000

8. Investment Corporation Bonds
Investment Corporation Bonds
Details of investment corporation bonds outstanding are summarized as follows:
As of April 30, 2011

As of October 31, 2011
Amount(Thousandsof Yen)First Series of Unsecured Investment Corporation Bonds
Due on March 16, 2015
Second Series of Unsecured Investment Corporation Bonds
Due on March 16, 2020
Fourth Series of Unsecured Investment Corporation Bonds
Due on November 30, 2015
Fifth Series of Unsecured Investment Corporation Bonds
Due on March 19, 2012
Sixth Series of Unsecured Investment Corporation Bonds
Due on March 17, 2017
Seventh Series of Unsecured Investment Corporation Bonds
Due on March 17, 2028
Eighth Series of Unsecured Investment Corporation Bonds
Due on November 26, 2014
Ninth Series of Unsecured Investment Corporation Bonds
Due on November 24, 2017
Total

Amount(Thousandsof Yen)Weightedaverageinterest rate

Weightedaverageinterest rate

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

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

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

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

¥4,627,087–¥4,627,087
305,123¥4,428,122–¥4,428,122
305,123

11. Related Party Transactions
Parent Company and major corporate unitholders
Not applicable¥5,000,000

1.85000%

5,000,000

2.47000%

5,000,000

2.47000%

10,000,000

2.05000%

10,000,000

2.05000%

Fellow subsidiary companies
Not applicable

5,000,000

1.61000%

5,000,000

1.61000%

Directors and major individual unitholders
Not applicable

5,000,000

2.21000%

5,000,000

2.21000%

12. Income Taxes

4,500,000

2.90000%

4,500,000

2.90000%

6,000,000

0.94000%

6,000,000

0.94000%

4,000,000

1.52000%

4,000,000

1.52000%

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, 2011 and April 30, 2011. However, the Company may deduct dividend distributions paid to
its unitholders from its taxable income amounts, provided such distributions meet the requirements under the 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 in excess of 90% of its distributable income in the form of cash distributions totaling ¥4,527,110
thousand and ¥4,427,945 thousand for the six-month periods ended October 31, 2011 and April 30, 2011, respectively, such
distributions were treated as deductible distributions for purposes of corporate income taxes. The following summarizes thesignificant differences between the statutory tax rate and the effective tax rate:¥44,500,000¥44,500,000

1-2 years

2-3 years––

3-4 years

4-5 years

11,000,000

10,000,000

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.

44¥622,318¥14,512

1.85000%

Thousands of Yen

Investment Corporation Bonds¥622,970¥15,164¥5,000,000

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
5,000,000

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

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

Thousands of Yen
1-2 years

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

Subsidiaries and affiliates
Not applicable

Statutory tax rate
Deductible cash distributions
Other
Effective tax rate

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

For the period
from November 1, 2010
to April 30, 201139.33%(38.47)(0.84)
0.02%

39.33%(39.32)
0.01
0.02%

45

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 risks 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 bymaintaining the LTV ratio at low levels and the ratio of long-term fixed-rate debts to total debt at high levels. Furthermore, theCompany may utilize derivative transactions (interest-rate swap transactions) as a hedging instrument to reduce the market risk
under floating-rate debts by swapping such floating-rate interest payments for fixed-rate interest payments.
Bank deposits are held as a means of investing surplus funds, and the Company is exposed to the credit risk that financial
institutions may default. However, the effect of such risk is limited by diversifying the financial institutions with which surplus
funds are deposited.
Security deposits represent funds deposited by tenants, and the Company is exposed to the risk of returning deposits in theevent that 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 “19. Derivatives and Hedge Accounting” below do not represent the market risk involved in these derivativetransactions.
Fair Value of Financial Institutions
For the period from May 1, 2011 to October 31, 2011
The following table summarizes the carrying value and the estimated fair values of financial instruments as of October 31, 2011.
The following table does not include financial instruments whose fair value is extremely difficult to estimate (see Note 3).
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

20,049,044
16,268,623(7,900,000)(5,000,000)(39,000,000)(39,500,000)(93,250,000)–

Fair Value (Note 1)

20,049,044
16,268,623(7,900,000)(5,019,520)(39,327,304)(40,438,969)(95,082,670)–

Difference–––
19,520327,304
938,969
1,832,670–

Note 1: The numbers in parenthesis indicate liabilities.
Note 2: Method for determining the fair value of financial instruments and derivative transactions(i) Cash and bank deposits and (ii) Cash and bank deposits in trust			As these items are settled within a short-term period, their fair value is nearly equal to the carrying value. Therefore, for these items, the Carrying Value is reported as
the Fair Value.
(iii) Short-term debt
			As these items are settled within a short-term period, their fair value is nearly equal to the carrying value. Therefore, for these items, the Carrying Value is reported as
the Fair Value.
(iv) Current portion of investment corporation bonds and (vi) Investment corporation bonds
			The fair value of investment corporation bonds issued by the Company is determined based on their market prices.
(v) Current portion of long-term debt and (vii) Long-term debt
			For floating-rate long-term debt, the carrying value is reported as it is considered to be approximately equal to the fair value because such debt reflects the market
interest rates within a short-term period. (However, the fair value of certain floating-rate long-term debt that qualifies for the special treatment of interest-rate swaps(see “19. Derivatives and Hedge Accounting”) is determined by discounting the sum of its principal and interest payments net of any cash flows from the interest-rate
swap at a rate reasonably estimated to be applicable to similar fixed-rate debt.) The fair value of fixed-rate long-term debt is determined by discounting the sum of its
principal and interest payments at a rate reasonably estimated to be applicable to similar fixed-rate debt.
(viii) Derivative transactions
			
Refer to “19. Derivatives and Hedge Accounting”.
Note 3: The fair value of security deposits (with a carrying value of ¥3,882,475 thousand) and security deposits in trust (with a carrying value of ¥16,228,116 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 deposits in trust46

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

20,049,044
16,268,623
36,317,667

–
–
–

–
–
–

–
–
–

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

7,900,000
5,000,000
39,000,000
51,900,000––
28,000,000
28,000,000––
28,500,000
28,500,000–
11,000,000
21,850,000
32,850,000–
10,000,000
10,000,000
20,000,000

After fiveyears–
18,500,000
4,900,000
23,400,000

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

Fair Value (Note 1)

13,912,852
17,796,350(9,800,000)(5,000,000)(30,500,000)(39,500,000)(103,100,000)–

Difference

13,912,852
17,796,350(9,800,000)(5,036,435)(30,745,349)(39,795,289)(105,054,319)––––
36,435245,349
295,289
1,954,319–

Note 1: The numbers in parenthesis indicate liabilities.
Note 2: Method for determining the fair value of financial instruments and derivative transactions(i) Cash and bank deposits and (ii) Cash and bank deposits in trust			As these items are settled within a short-term period, their fair value is nearly equal to the carrying value. Therefore, for these items, the Carrying Value is reported as
the Fair Value.
(iii) Short-term debt
			As these items are settled within a short-term period, their fair value is nearly equal to the carrying value. Therefore, for these items, the Carrying Value is reported as
the Fair Value.
(iv) Current portion of investment corporation bonds and (vi) Investment corporation bonds
			The fair value of investment corporation bonds issued by the Company is determined based on their market prices.
(v) Current portion of long-term debt and (vii) Long-term debt
			For floating-rate long-term debt, the carrying value is reported as it is considered to be approximately equal to the fair value because such debt reflects the market
interest rates within a short-term period. (However, the fair value of certain floating-rate long-term debt that qualifies for the special treatment of interest-rate swaps(see “19. Derivatives and Hedge Accounting”) is determined by discounting the sum of its principal and interest payments net of any cash flows from the interest-rate
swap at a rate reasonably estimated to be applicable to similar fixed-rate debt.) The fair value of fixed-rate long-term debt is determined by discounting the sum of its
principal and interest payments at a rate reasonably estimated to be applicable to similar fixed-rate debt.
(viii) Derivative transactions
			
Refer to “19. Derivatives and Hedge Accounting”.
Note 3: The fair value of security deposits (with a carrying value of ¥3,881,015 thousand) and security deposits in trust (with a carrying value of ¥16,865,973 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 deposits 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

13,912,852
17,796,350
31,709,202

–
–
–

–
–
–

–
–
–

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

9,800,000
5,000,000
30,500,000
45,300,000

After one year,
After two years, After three years, After four years,
within two years within three years within four years within five years––
50,000,000
50,000,000––
23,000,000
23,000,000–
11,000,000
12,850,000
23,850,000–
10,000,000
9,500,000
19,500,000

After fiveyears–
18,500,000
7,750,000
26,250,000

4714. Investment and Rental Properties

16. Breakdown of Real Estate Rental Revenues and Expenses

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

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

Thousands of Yen
Carrying Value
As of October 31, 2011

362,390,913

Change during the period(8,745,662)

Fair value
As of April 30, 2011

371,136,575

As of October 31, 2011

326,690,000

Note 1: The Carrying Value represents the acquisition cost less accumulated depreciation.
Note 2: The fair value as of October 31, 2011 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, 2011 is presented in “16. Breakdown
of Real Estate Rental Revenues and Expenses.”
For the period from November 1, 2010 to April 30, 2011
The Company owns in its portfolio certain office buildings (including land) for lease located in Tokyo and other areas. The following
table summarizes the carrying value and the estimated fair value of these properties as of April 30, 2011.
Thousands of Yen
Carrying Value
As of April 30, 2011

371,136,575

Change during the period(3,433,307)

Fair value
As of October 31, 2010

374,569,882

As of April 30, 2011

341,635,000

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

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

15. Segment Information
For the period from May 1, 2011 to October 31, 2011 and from November 1, 2010 to April 30, 2011
Segment Information
Since the Company has been engaged in the real estate leasing business as a single segment, segment information has been
omitted.
Related Information
1. Information about products and services
Since revenues from external customers of products and services within a single segment are more than 90 percent of total
operating revenues, information about products and services has been omitted.
2. Information about geographical areas(1) Revenues
Since more than 90 percent of the total operating revenues were generated from external customers in Japan, geographicalbreakdown of revenues has been omitted.
(2) Property and equipment
Since more than 90 percent of the total property and equipment on the balance sheet are located in Japan, geographicalbreakdown of property and equipment has been omitted.
3. Information about major clients
Since no single external client represents 10 percent or more of the Company’s total operating revenues, information about majorclients has been omitted.

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

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

For the period
from November 1, 2010
to April 30, 2011¥12,520,177
11,223,340
8,839,500
2,383,840
1,296,837
264,347
945,233
87,257
6,110,488
1,157,386
243,760
1,211,889
1,048,075
22,869431,742
1,732,638
262,129¥ 6,409,689¥12,846,039
11,724,063
9,475,685
2,248,378
1,121,976
258,602792,174
71,2005,741,473
1,089,967
263,254
1,211,199
826,025
23,669242,160
1,861,135
224,064¥7,104,566

17. Breakdown of Gain and loss on Sales of Real Estate
Gain and Loss on sales of real estate for the six-month period ended October 31, 2011 and April 30, 2011 consist of the following:Thousands of Yen

Gain on sales of real estate
Proceeds from sales of real estate
Cost of sales of real estate
Other related sales expenses
Gain on sales of real estate
Loss on sales of real estate
Proceeds from sales of real estate
Cost of sales of real estate
Other related sales expenses
Loss on sales of real estate

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

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

¥8,455,000
7,317,305
20,795¥1,116,900¥2,859,000
2,322,399
264,701¥ 271,900¥ 680,000
783,7112,056¥ 105,767

–
–
–
–

18. 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 a lessor, enters into lease agreements for which fixed monthly rents are due in advance with a lease term ofgenerally two years for offices. The future minimum rental revenues under existing non-cancelable operating lease agreements as of
October 31, 2011 and April 30, 2011 are summarized as follows:
Thousands of Yen

Due within one year
Due after one year
Total

48

As of October 31, 2011

As of April 30, 2011

¥4,291,036
18,689,202¥22,980,238¥4,229,219
20,524,275¥24,753,494

4919. Derivatives and Hedge Accounting
Derivative transactions as of October 31, 2011
(1) There were no derivative financial instruments not subject to hedge accounting.
(2) Derivative financial instruments subject to hedge accounting were as follows:
Thousands of Yen
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

85,750,000

53,250,000

Fair value

Method used for
determining fair value(*)* Since the derivative financial instruments qualifying for the special treatment of interest-rate swaps are accounted for as one
transaction together with their hedged item, long-term debt, the fair value of these derivatives is included in that of related long-term
debt (see “13. Financial Instruments (Note 2) (v) Current portion of long-term debt and (vii) Long-term debt” above).
Derivative transactions as of April 30, 2011
(1) There were no derivative financial instruments not subject to hedge accounting.
(2) Derivative financial instruments subject to hedge accounting were as follows:
Thousands of Yen
Hedge accounting
methodType of derivative
instruments

Main hedged
item

Special treatment ofinterest-rate swaps

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

Notional amountDue after one year

88,850,000

58,850,000

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).

50

51

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

WebsiteNomura Real Estate
Office Fund, Inc.

Asset Custody
Agreement

Debt Financing /Issue of Investment
Corporation Bonds

Administration
Agreement, etc.

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

The Company strives to provide accurate and timely disclosure of information by utilizing the website.
Strength of NOF, Asset Management Policies, Corporate Profile
Portfolio Summary, Portfolio Data, Occupancy Rates, Major Tenents
News, Latest Data, Performance, Distributions, Calendar
We continue to provide information timely and strive to enhance the contents of the website.

Unitholders’ Meeting
Board of Directors’Meeting

Ernst & Young
ShinNihon LLC(URL) http://www.nre-of.co.jp/english/
RepaymentofPrincipal &Interest

Unitholders

Trading

Investment
Office Buildings(Real Estate
Related Assets)

AuditorLiabilities
Capital Investment

Asset

Rents, etc.

Unitholders

EquityProperty
Management
Agreement

Property
Management

Property Management
Companies

Instructions forRents andManagement

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

RentalStrategies,
Plans ofRepairs, etc.

Asset Management
Services Agreement

Posting the news by year andsubject

Distribution

Asset Management Company
Property
Information

Information andResearch-related
Service Providers
Nomura Real Estate
Development Co., Ltd.
Nomura Real Estate
Urban Net Co., Ltd.

Posting the latest information on the top page
*RSS compatible

Corporate Data
Corporate Name
Nomura Real Estate Office Fund, Inc.
Corporate Office8-5-1 Nishi Shinjuku Shinjuku-ku, Tokyo
160-0023, Japan
http://www.nre-of.co.jp/english/
Date of Incorporation
August 7, 2003
Stock Listing
Tokyo Stock Exchange (Securities Code: 8959)
Fiscal Period
Six months ending on April 30 and October 31
Capital¥185,455,446,935 (as of October 31, 2011)
Number of Units Issued
305,123 (as of October 31, 2011)
Number of Unitholders
12,864 (as of October 31, 2011)52

Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation
1-4-5 Marunouchi Chiyoda-ku, Tokyo 100-8212, Japan
Business Office of the Transfer Agent
Corporate Agency Department
Mitsubishi UFJ Trust and Banking Corporation
7-10-11 Higashisuna Koto-ku, Tokyo 137-8081, Japan
Tel: +81-3-5683-5111
Independent Auditors
Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg. 2-2-3 Uchisaiwai-cho Chiyoda-ku,
Tokyo 100-0011, Japan
Investor Relations
For further information, please contact the Asset Management
Company:
Nomura Real Estate Asset Management Co., Ltd.
8-5-1 Nishi Shinjuku, Shinjuku-ku, Tokyo 160-0023, Japan
Tel: +81-3-3365-0507

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 fromgenerally 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 UnitedStates (“U.S. GAAP”) or other jurisdictions and how those differences might affect the financial information contained herein.
Estimates for Nomura Office Fund’s future operating results contained in this semiannual report are forward-looking statements andare based on information currently available to Nomura Office Fund and its asset management company and are subject to risks anduncertainties. Consequently, these projections should not be relied upon as the sole basis for evaluating Nomura Office Fund. Actual
results may differ substantially from the projections depending on a number of factors.

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