Second Fiscal Period

Financial Results of the Second Fiscal Period (October 2004)

- Contents 3. Portfolio Status

1. Highlights of the Second Fiscal
Period4.Future Asset Management Policy- 2nd Fiscal Period Property Acquisition 17- Management Performance of2- Portfolio List

20

- Acquisition of Additional Assets

3- Portfolio Diversity

21- Basic Asset Management Policy- Portfolio Management

4- Tenant Data

22

- Expansion in Asset Size

- Financial Activities

5- Move-Ins/Outs (2nd Fiscal Period)

23

Market Conditions

30- Shareholder Status

6- Income and Expenditures

Portfolio Development Policy

31- Activities and Performance- Status after Settlement7

2. Results of the Second Fiscal
Periodper Property

the 3rd Period (to date)

28
29

24

Enhancement of Property- Period-End Value

25

Acquisition Performance32- Portfolio Map

26

Portfolio Acquisition Channels

33

Asset Growth Targets

34- Mid- to Long-Term Property Management- Earnings Statement

9

Market Conditions

35- Balance Sheet

10

Leasing Policy

36- Cash Distribution

11

Efficient Management

37- Financial Indicators

12

Renewal Policy

38- Cash Flow Statement (Reference)

13- Debt Financing

14

Market Conditions / Basic Policy

39- Third Fiscal Period Forecasts

15

Financial Status

40- Conservative Financial Strategy

Appendix- Overview of the Management Company

42- Transition of Stock Price

432

1. Highlights of
the Second Fiscal Period31

Activities and Performance
Key Activities (May 1 - October 31)

Second Fiscal Period Results (Actual Operation: 184 Days)

Investment in New Properties
3 properties, approx. 24.2 billion yen (acquisition base price)→ End of second fiscal period: 18 properties /
approx.151.5 billion yen (acquisition price base)

Operating Revenue

Portfolio Occupancy Rate

Net Income

End of Second Fiscal Period: 94.4%(end of first fiscal period (93.3%) → + 1.1%)
Cash Distribution *2

Public Offering for the first time after Listing(public offering / third party allocation)
No. of new issuances: 36,050
Total amount: Approx. 20.4 billion yen

6,656 mil yen(56 mil yen / +0.9%) *1

2,606 mil yen(224 mil yen / +9.4%) *1

14,114 yen / unit
(1,214 yen / +9.4%) * 1*1 Values in parentheses are the differences from the forecast (June 2004)*2 Number of investment units issued at the end of the fiscal period: 184,650

Obtaining Ratings
Standard＆Poor’s

Long-term Corporate Credit RatingA

Short-term Corporate Credit Rating A-1
Moody's

Issuer Rating

A3(Reference)
Period-end LTV(Total asset base)

ROE (Annualized)

37.2%
5.6%

42

Acquisition of Additional Assets
Investment in Properties that Contribute to Portfolio Stability
New investments of approx. 24.2 billion yen (acquisition price base) for 3 properties
during the second fiscal period. (All 3 properties are located in Metropolitan Tokyo)→ Portfolio at the end of the second fiscal period : 18 properties / approx.151.5 billion
yen (acquisition price base)(10 billion yen )

1,515
151

150

1,372
137

1,515
151

1,395
139

1,272
127

125

Approx. 1.5 times
compared tothat at listing

1,042
104
100

75

50
End of December 2003
(at listing)

Beginning of theSecond Fiscal Period

May 2004

Acquisition of
Isuzu Shiba Bldg.
10.0 billion yen

June 2004

Acquisition of
Seiwa Shinjuku Bldg.
2.28 billion yen

September 2004

End of theSecond Fiscal Period

Acquisition of
Seibu Shinkin Bank Shibuya Bldg.
12.0 billion yen

53

Portfolio Management
Portfolio Profitability (NOI Return)Transition of Portfolio Occupancy Rate

New investment in 3 properties in Metropolitan Tokyo→ More investment in Metropolitan Tokyo for stable
operation(End of first fiscal period: 69.0% → End of second fiscal
period: 74.0%)

End of first fiscal period (end of April 2004): 93.3%→ End of the second fiscal period (end of October 2004): 94.4%(Reference) Starting 15 property base
End of the first fiscal period (end of April 2004): 93.3%→ End of the second fiscal period (end of October 2004): 95.0%→ Lower NOI level compared to that of the first fiscal
period due to reduction of profit fluctuation risk

BudgetResults of Second
Fiscal Period

6.4%

6.4%

100.0%
95.0%

17 property base

90.0%

18 property base

-

6.2%

93.3%

94.0%

94.6%

94.6%

94.4%

94.4%

85.0%
Acquisition of
Isuzu Shiba Bldg.

Note: NOI Return = (Rental Revenues- Rental Expenses+ Amortization ofSecond fiscal Period) / Total Acquisition Price(annualized rate)

94.6%

Acquisition of Seiwa
Shinjuku Bldg.

Acquisition of Seibu Shinkin
Bank Shibuya Bldg.

80.0%
75.0%
70.0%

End of

End of

End of

End of

End of

End of

End ofApril 2004

May

June

July

AugustSeptember

October 2004

(End of the First Fiscal Period)(End of the Second Fiscal Period)

64

Financial Activities
Public Offering (Public Offering / Third Party Allotment)
First PO approx. 5 months after listing

Debt Status (End of Second Fiscal Period)
Debt Balance

No. of new investment units issued:36,050
Total amount: 20,461 mil yen

64.5 billion yen(3.5 billion yen to the End of first fiscal period)

Number of Lenders(Status after PO)

19 institutions

LTV

Total number of investment units issued: 184,650
Total amount of investment: 92,168 mil yen

37.2%(Total assets at the end of second fiscal period: 173.5 billion yen base)(debt / total assets)→ Securing financial capacity for property acquisition andimprovement of liquidity of units
Leverage control for conservative LTV level

Average remaining borrowing period

2.4 years* Long-term liabilities

3.0 years

Weighted average interest rate

1.07%

Obtaining Ratings (Single As)
Obtained “Single A” rating from two overseas ratingcompanies
Standard＆Poor’s

Long-term Corporate Credit Rating
Short-term Corporate Credit Rating

A
A-1

Moody's

Issuer Rating

A3

Short-term / long-term ratio
Long-term liabilities Short-term debt
50.5 billion yen
14.0 billion yen(78.3%)(21.7%)

Variable / fixed ratio
Fixed interest* Variable interest
43.0 billion yen 21.5 billion yen(66.7%)(33.3%)(Both have stable outlooks)→ Establishment of a highly flexible funding environment with
optional issuance of corporate bonds* Including fixed rates by interest rate swap.

75

Shareholder Status
Number of Shareholders per Owner

Top 10 Investors
Name of Investor

End of April 2004
(End of first

Individuals:
14,152 (96.5%)

Financial institutions (incl. brokerages): 183 (1.2%)
Other domestic corporations: 294 (2.0%)
Overseas corporations: 29 (0.2%)

fiscal period)
Total investors:
14,658

No. of Shares
Owned

Ratio

1

Nomura Real Estate Development Co., Ltd.

10,414

5.6%

2

The Bank of Ikeda., Ltd. Individuals:

8,707

4.7%

30.8%
End ofOctober 2004
(End of second

Individuals:
14,968 (96.4%)

Financial institutions (incl. brokerages): 192 (1.2%)
Other domestic corporations: 313 (2.0%)
Overseas corporations: 49 (0.3%)

fiscal period)
Total investors:
15,522

Number of Investment Units per Owner

End of April 2004
(End of first

Individuals:
45,808(30.8%)

Financial institutions(incl. brokerage):
71,667(48.2%)

Other domestic
corporations:
26,776(18.0%)

Overseas
corporations:
4,349(2.9%)

fiscal period)
Total shares:
148,600
End ofOctober 2004
(End of second
fiscal period)
Total shares:
184,650

Individuals:
43,771(23.7%)

Financial institutions(incl. brokerage):
102,532(55.5%)

Other domestic
corporations: Overseas
corporations:25,51012,837(13.8%)(7.0%)

3

Japan Trustee Services Bank, Ltd.
(Trust Department)

8,186

4.4%

4

Trust & Custody Services Bank, Ltd.
(Security Investment Trust Department)

5,629

3.0%

5

Kawasaki Gakuen

5,000

2.7%

6

The Chugoku Bank, Ltd.

4,919

2.7%

7

American Life Insurance Company GAL(Standing proxy: Citibank, N. A., Tokyo
Branch)

4,698

2.5%

8

North Pacific Bank., Ltd.

4,526

2.5%

9

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

4,459

2.4%

10 Fuji Fire and Marine Insurance Co., Ltd.

3,796

2.1%

60,334

32.7%

Total

(Reference) Ratio owned by the top 10 investors at the end of the first fiscal period: 29.4%

86

Status after Settlement
Scheduled Acquisition Property in Third Fiscal Period
Overview of the Property
Name of Property: JAL Building
Location: Higashi-Shinagawa Shinagawa-ku, Tokyo
Total Building Area: 25,260.48 m2 (7,641.29 tsubo)(Exclusive area owned via trustees)

Ownership ratio: Approx.51% (ratio of exclusive area)
Date of Acquisition: March 18, 2005
Acquisition Price: 33,080 mil yen
Completion: June 1996 (8 years and 9 months old)
Characteristics of Site Location- Tennoz area, easy access to Metropolitan Tokyo and
Haneda Airport.
- Improved convenience by development of Shinagawa
Station East Exit area
Characteristics of the Building- The building is the head-office for the JAL Group- Damping structure, average floor area: approx. 670 tsubo,
ceiling height: 2,700ｍｍ- Individually-controlled air conditioning system, electric
capacity: 50VA / m2
Lease Terms- Long-term stable contract (10 years) with the end tenant(Japan Airlines International Co., Ltd.)97

2. Results of
the Second Fiscal Period

810Earnings Statement
First Fiscal Period
Item

Non-Operating Revenues
and Expenses

Recurring Profit and Loss
Operating Revenues and Expenses
Rental Expenses
Rental Revenues

Rental Revenues
Rental revenues
Common-area charges
Non-rental Revenues
Monthly parking revenues
Incidental revenues
Other rental revenues
Miscellaneous
Total Rental Revenues
Property Management Fees
Property and other taxes
Utility expenses
Insurance expenses
Repairs and maintenance
Other expenses
depreciation allowance
Total Rental Expenses
Rental Profits
Asset Management Fees
Selling and Administrative Expenses
Operating Profits
Non-Operating Revenues
Non-Operating Expenses
Interest expense
Financing fees
New unit issuance expense

Listing related expenses
Initial expenses
Other non-operating expenses

Non-Operating Revenues and Expenses

Current Profits
Net Income Before Taxes
Corporate Tax, Residence Tax, and Enterprise Tax

Adjusted Corporate Tax
Net Income
Retained Earnings carried over from previous period

Retained Earnings

Second Fiscal Period

Aug. 7, 2003 - Apr. 30, 2004
May 1, 2004 - Oct. 31, 2004
Amount (1,000 yen) Percentage (%) Amount (1,000 yen) Percentage (%)

4,072,606
3,120,372
952,234
458,457
83,998349,753
22,5102,195
4,531,064
592,153
76,105
410,430
13,841
37,124
51,224
666,358
1,847,238
2,683,826
276,803
93,7742,313,247
19,107804,319
209,821232,833
87,010156,746
100,000
17,907-785,212
1,528,035
1,528,035

89.9
68.9
21.0
10.1
1.9
7.7
0.5
0.0
100.0
13.1
1.7
9.1
0.3
0.8
1.1
14.7
40.8
59.2
6.1
2.1
51.1
0.4
17.8
4.6
5.1
1.9
3.5
2.2
0.4
-17.3
33.7
33.7

5,849,377
4,458,746
1,390,630
807,083
129,459
609,820
67,542261
6,656,460
789,201
485,569
670,998
21,877127,002110,185
949,432
3,154,267
3,502,193
459,359
112,2822,930,551
167,073490,537
353,647
47,367
40,12049,401-323,464
2,607,087
2,607,087

1,414
-30
1,526,651
1,526,651

0.0
0.0
33.7
33.7

961
12
2,606,113
83
2,606,196

87.9
67.0
20.9
12.1
1.9
9.2
1.0
0.0
100.0
11.9
7.3
10.1
0.3
1.9
1.7
14.3
47.4
52.6
6.9
1.7
44.0
2.5
7.4
5.3
0.7
0.6
0.7
-4.9
39.2
39.2
0.0
0.0
39.2
0.0
39.2

Rental Revenues
The Second Fiscal Period started operation with fifteen properties in theportfolio. Isuzu Shiba Bldg. (acquired May 25, 2004), Seiwa Shinjuku Bldg.
(acquired June 25, 2004), and Seibu Shinkin Bank Shibuya Bldg. (acquired
September 28, 2004) were added, increasing the total number of properties
in the portfolio to eighteen at the end of the fiscal period.
Occupancy rate was 93.3% at the end of April 2004, and 94.4% (+1.1%) at
the end of the second fiscal period (end of October 2004).

Property and Other Taxes
As for property and urban planning taxes during the second fiscal period, theamount that corresponds to the period is recorded as expenses for twelve
properties acquired at the beginning of the management.

Repairs and MaintenanceIncludes a 511 million yen capital expenditure in addition to 127 million yen
in repairs and maintenance fees.

911

Balance Sheet
AssetsItemFirst Fiscal Period
As of Apr. 30, 2004
Amount (1,000 yen) Percentage (%)

Current Assets
Cash and Cash equivalents
Entrusted Cash and Cash equivalents

Other current assets
Fixed Assets
Tangible Assets
Properties in trust
Buildings
Land
Other tangible assets
Other tangible assets
Intangible Assets
Intangible assets in trust and others

Investments and Others
Rental deposits
Loss on deferred hedge
Total Assets

20,659,351
5,006,510
13,289,638
2,363,202
127,286,859
127,089,952
127,089,828
44,684,129
82,405,699
123
123
1,463
1,463
195,443
10,780184,663
147,946,210

14.0%
3.4%
9.0%
1.6%
86.0%
85.9%
85.9%
30.2%
55.7%
0.0%
0.0%
0.0%
0.0%
0.1%
0.0%
0.1%
100.0%

Second Fiscal Period
As of Oct. 31, 2004
Amount (1,000 yen) Percentage (%)

21,418,565
7,303,972
13,913,477
201,116
152,126,996
151,815,262
151,815,165
48,756,814
103,058,350
96
96
1,762
1,762
309,972
10,780299,192
173,545,562

12.3%
4.2%
8.0%
0.1%
87.7%
87.5%
87.5%
28.1%
59.4%
0.0%
0.0%
0.0%
0.0%
0.2%
0.0%
0.2%
100.0%First Fiscal Period

Liabilities
Unitholders'EquityAmount (million yen)

Deposits in Fund’s AccountRental deposits
Capital Expenditure reserved
Other

7,303
1,733
2,810
2,760

Deposits in the Name of the Trust Banks’ AccountRental deposits
Capital Expenditure reserved
Other

13,913
10,096212
3,604

Tangible Assets

Amount (million yen)
Acquisition Price(Depreciation and Amortization of this period)
Depreciation and Amortization
Book Value at Term-End

Liabilities
Item

Cash and Cash Equivalents

Second Fiscal Period

As of Apr. 30, 2004

As of Oct. 31, 2004

Amount (1,000 yen) Percentage(%)

Amount (1,000 yen) Percentage(%)

Current Liabilities
Trade accounts payable
Short-term borrowings
Accounts Payable
Rent received in advance
Other current liabilities
Fixed Liabilities
Long-term liabilities
Deposits from tenants
Derivative liabilities
Total Liabilities
Shareholders’ capital
Retained earnings
Total Unit Holder Equity

12,428,912
239,578
10,500,000
565,787
986,168
137,377
62,284,147
50,500,000
11,599,483
184,663
74,713,059
71,706,500
1,526,651
73,233,151

8.4%
0.2%
7.1%
0.4%
0.7%
0.1%
42.1%
34.1%
7.8%
0.1%
50.5%
48.5%
1.0%
49.5%

16,120,570
322,474
14,000,000
755,379
1,041,675
1,040
62,650,315
50,500,000
11,851,123
299,192
78,770,886
92,168,480
2,606,196
94,774,676

9.3%
0.2%
8.1%
0.4%
0.6%
0.0%
36.1%
29.1%
6.8%
0.2%
45.4%
53.1%
1.5%
54.6%

Total Liabilities and Unit Holder Equity

147,946,210

100.0%

173,545,562

100.0%

Properties in Trust
Buildings
Land

153,430
50,372103,058

1,615
1,615
-

(949)
(949)

151,815
48,756103,058

Debt Financing
Interest bearing debt (million yen)

Asset to interest bearing debt ratio

Long-term interest bearing debt ratio

64,500debt + corporate bonds
total asset
long-term liabilities
long-term liabilities + short-term borrowings

37.2%

78.3%

10
12

Cash Distribution
Cash Distribution
First Fiscal Period
Item

Second Fiscal Period

Aug. 7, 2003 Apr. 30, 2004

Retained earnings(1,000 yen)

Cash distribution(1,000 yen)

Cash distribution per unit (yen)Retained earnings carried forward(1,000 yen)

For the second fiscal period, substantially all of the retained earnings were
distributed to the 184,650 issued and outstanding investment units. Dividend
per unit was 14,114 yen.

May 1, 2004Oct. 31, 2004

1,526,651
1,526,567
10,27383

Cash Distribution

2,606,196
2,606,150
14,11446

Comparison with the Forecast
Forecast
Item
Operating revenue(mil yen)

Current Profits(mil yen)

Net Income(mil yen)

Cash distribution per unit (yen)ActualDifference
between Actual and Forecasts
実績とForecastsとのDifference

Amount announced Results of the Second Difference

Difference

on June 28, 2004

(%)

6,600
2,383
2,382
12,900Fiscal Period

6,656
2,607
2,606
14,114

56
224
224
1,214

0.9
9.4
9.4
9.4

Operating Revenues
Seibu Shinkin Bank Shibuya Bldg., a newly acquired property in thesecond fiscal period, contributed to the profit (39 mil yen increase)
Increase in operation by 17 properties (17 mil yen increase)
Operating Expenses
Expenses due to accelerated repair plan (45 mil yen increase)
Reduction of expenditures (60 mil yen reduction)
Non-Operating Expenses
Expenditures incurred for restorations to original states (119 mil yen)

11
13

Financial Indicators

Financial Indicators

First Fiscal Period

Second Fiscal Period

(%)

1.1

1.6

(%)

2.8

3.1

(%)

2.1

2.8

(%)

5.2

5.6

Capital Adequacy Ratio (Term End)

(%)

49.5

54.6

Loan to Value Ratio (LTV1)

(%)

41.2

37.2

Loan to Value Ratio (LTV2)

(%)

47.9

42.6

Debt Service Coverage Ratio (DSCR)

(x)

11.45

11.05

Net Operating Income (NOI)(mil yen)

3,350

4,451

Funds from Operation (FFO)(mil yen)

2,193

3,555

Return on Assets (ROA)(Annualized)
Return on Equity (ROE)(Annualized)

ROA = Recurring Profit/Average of Total Assets during the period（Annualized actual days under management：148 for firstfiscal period, 184 days for second fiscal period）
ROE = Net Income for the Term/Average Balance ofStockholders‘ Equity for the Term
（ Annualized actual days under management：148 for the first fiscal
period, 184 days for second fiscal period ）Capital Adequacy Ratio = Term-end Stockholder Equity /Term-end Total Assets
LTV1 = Term-end Interest Bearing Debt/Term-end Total Assets
LTV2 = Term-end Interest Bearing Debt/Total Acquisition Prices
DSCR = Net Income before Interest/Interest Expenses
NOI = Rental Income－Rental Expenses＋Amortization
for the Term
FFO = Net Income＋Amortization

12
14

Cash Flow Statement (Reference)
Item

First Fiscal Period
Aug. 7, 2003 -Apr. 30, 2004

Amount (1,000 yen)
I. Cash Flow from Operating Activities
Income before income taxes
Depreciation and amortization
Interest income
Interest expense
Rental receivables
Consumption tax refundable
Trade accounts payable
Other payables
Consumption tax refundable
Increase/decrease in prepayments received
Increase/decrease in deposits received

Other
SubtotalInterest received
Interest paid
Corporate tax paid
Cash Flow from Operating Activities
II. Cash Flow from Investing Activities
Payments for purchases of properties
Payments for purchases of entrusted tangible fixed assets

Purchases of intangible assets
Payments for lease deposits received
Proceeds from lease deposits received
Payment for rental deposits received
Cash Flow from Investment Activities
III. Cash Flow from Financing Activities
Proceeds from short-term borrowings
Proceeds from long-term borrowings
Proceeds from investment unit issuance

Payments of dividends
Net Cash provided by Financing Activities
IV. Net Increase in Cash and Cash Equivalents
V. Cash and Cash Equivalents at beginning of Period
VI. Cash and Cash Equivalents at end of Period

Second Fiscal Period
May 1, 2004-Oct. 31, 2004

Amount (1,000 yen)

1,528,035
666,358-41
209,821-106,869-2,145,478
239,578354,559
986,168
137,377-110,765
1,758,744
41
1,758,786

2,607,087
949,432-116
353,647-22,097
2,145,478
82,89672,856
18,59955,507-136,337
38,625
6,165,580
116-332,799-1,4295,831,467-165-127,756,112-1,495-467,541
12,066,957-10,780-116,169,137-25,610,057-351-895,966
1,147,673-25,358,701

10,500,000
50,500,000
71,706,500
132,706,500
18,296,148
18,296,148

3,500,000
20,461,980-1,513,445
22,448,534
2,921,300
18,296,148
21,217,449

13
15

Debt Financing
As of the end of the second fiscal period (end of Oct., 2004)
Lender
6 Financial

AmountInterest Rate

Interest RateType

Maturity

3.5 bn yen

Floating

0.47917% p.a. (Sep. 27, 2004 - Nov. 27, 2004)

Nov. 29, 2004

8.5 bn yen

Floating

0.49750 % p.a. (Jun. 9, 2004 – Dec. 8, 2004)

Dec. 8, 2004

2.0 bn yen

Floating

0.50000% p.a. (Aug. 27, 2004 – Feb. 28, 2005)

Feb. 26, 2005

14.0 bn yen-

7.5 bn yen

Floating

12.5 bn yen

Adjusted (Note 1)

7.5 bn yen

1.22500% p.a.
Adjusted (Note 2) (Weighted average interest rate adjusted with effects of interest rate swap (adjustment of interest rate))Feb. 26, 2008

8.0 bn yen

1.66750% p.a.
Adjusted (Note 1) (Weighted average interest rate adjusted with effects of interest rate swap (adjustment of interest rate))

Dec. 8, 2008

3.0 bn yen

1.77500% p.a.
Adjusted (Note 2) (Weighted average interest rate adjusted with effects of interest rate swap (adjustment of interest rate))Feb. 26, 2010

Remarks

Institutions

Short-term debt

7 Financial
Institutions
1 Financial
Institutions

Subtotal

10 Financial
Institutions
5 Financial
Institutions
9 Financial
Institutions
6 Financial
Institutions
5 Financial
Institutions

Long-term debt

1 Financial
Institutions
2 Financial
Institutions
1 Financial
Institutions
4 Financial
Institutions
1 Financial
Institutions

Subtotal

18 Financial
Institutions

0.60000% p.a. (Aug. 27, 2004 – Feb. 28, 2005)-

Unsecured
Unguaranteed-

Feb. 26, 2006

1.14500% p.a.
(Weighted average interest rate adjusted with effects of interest rate swap (adjustment of interest rate))

Dec. 8, 2006

Unsecured
Unguaranteed

3.0 bn yen

Fixed1.04500% p.a.

Dec. 8, 2006

3.0 bn yen

Fixed

1.05250% p.a.

Feb. 26, 2008

5.0 bn yen

Fixed

1.51625% p.a.

Dec. 8, 2008

1.0 bn yen

Fixed

1.50625% p.a.

Feb. 26, 201050.5 bn yen

-

-

-

-

64.5 bn yen

-

-

-

-

19 Financial

Total

Institutions

Note 1: Interest rate swap agreement effective as of Dec. 8, 2003.
Note 2: Interest rate swap agreement effective as of May 27, 2004.

14
16

Third Fiscal Period Forecasts

Item
Rental revenues
Other rental revenues
Total Rental Revenues
Outsourcing expenses
Property and other taxes
Utility expenses
Insurance expenses
Repairs and Maintenance
Other expenses
Depreciation
Total Rental Expenses
Rental Profits
Asset Management Revenues
Selling and Administrative Expenses
Operating Revenues and Expenses

Non-Operating Revenues
Non-Operating Expenses
Non-Operating Rev enues and Expenses

Current Profits
Net Income Before Taxes
Corporate Tax, Residence Tax, and Enterprise Tax

Net Income
Retained Earnings
Issued and outstanding units at end of fiscal period (units)

Cash distribution per unit

Second Fiscal Period

Third Fiscal Period Forecast(mil yen)(mil yen)
5,849
807
6,656
789
485
670
21
127
110
949
3,154
3,502
459
112
2,930
167
490
-323
2,607
2,607
0
2,606
2,606

6,300
715
7,015
860
481
596
21
137
74
1,034
3,206
3,808
525
142
3,140
554
-554
2,586
2,586
1
2,585
2,585

184,650

184,650

14,114 yen

14,000 yen

Rental Revenues
The third fiscal period will commence with 18 properties undermanagement. The forecast assumes the JAL Building (March 18,2005) to be the sole acquisition for the period.

Property and other taxes
Property tax and urban planning tax for the 12 initial portfolio
properties have been listed as expenses for the third fiscal period.
Property and other taxes are not listed as expenses for Kanda
Iwamoto-cho Tosei Building, Surugadai Plaza Building, Tennozu
Park Side Building, Isuzu Shiba Building, Seiwa Shinjuku Building,and Seibu Shinkin Bank Shibuya Bldg., which were acquired in 2004,
and the JAL Building, which is to be acquired on March 18, 2005, as
the amount was settled with the previous owner and included in theacquisition price.

15
17

3. Portfolio Status

16
18

Second Fiscal Period Property Acquisition (Isuzu Shiba Bldg.)
Isuzu Shiba Bldg.
Overview of the Property
Location: Shiba Minato-ku, Tokyo
Total Site Area: 11,425.20m2 (3,456.12 tsubo)(Area recorded in registry book)Acquisition Date: May 25, 2004
Acquisition Price: 10,000 mil yen
Characteristics of Site Location- Located midway between Shinagawa andOtemachi- Easy access to Haneda Airport, Shinkansen
lines, and highways
Characteristics of the Building- A large property: Average floor area: 381 tsubo,
ceiling height: 2,600mm- Floor plan enables flexible office layout.
- Individually-controlled air conditioning system,
electric capacity: 40VA / m2

17
19

Second Fiscal Property Acquisition (Seiwa Shinjuku Bldg.)
Seiwa Shinjuku Bldg.
Overview of the Property
Location: Sendagaya Shibuya-ku, Tokyo
Total Site Area: 3,160.05m2 (955.91 tsubo)(Area recorded in registry book)Acquisition Date: June 25, 2004
Acquisition Price: 2,280 mil yen
Characteristics of Site Location- Located in rapidly developing Shinjuku Station
South Exit area
- 4-minute walk to Shinjuku Station, Tokyo Metro
13th Line will commence operation in the future.
Characteristics of the Building- Average floor area: 99 tsubo, ceiling height:
2,500mm- Individually-controlled air conditioning system oneach floor, electric capacity: 28VA / m2
- Suitable for one floor use contracts

18
20

Second Fiscal Period Property Acquisition(Seibu Shinkin Bank Shibuya Bldg.)
Seibu Shinkin Bank Shibuya Bldg.
Overview of the Property
Location: Udagawa-cho Shibuya-ku, Tokyo
Total Site Area: 5,358.55m2(1,620.96 tsubo)(Area recorded in registry book)Acquisition Date: September 28, 2004
Acquisition Price: 12,000 mil yen
Characteristics of Site Location- Located in the center of “Shibuya”, one of thelargest commercial areas in Japan- 3-minute walk to “Shibuya” station, access to 7lines including the JR lines, Tokyu-Toyoko line,
and Tokyo Metro Ginza line
- High visibility location on a corner facing “Park
Street” with many department stores and shops
Characteristics of the Building- Ground floor to the 3rd floor can be used forcommercial use- Symbolic appearance with glass curtain wall
- Exclusive entrance for office areas

19
21

Portfolio List
As of End of Second Fiscal Period (end of October 2004)

Other Cities

Vicinity of Tokyo

Metropolitan Tokyo

Property

Location

Completion

Shinjyuku Nomura Bldg.

Nishi-Shinjyuku Shinjyuku-ku

May 1978

Itopia Nihonbashi Bldg.

Honcho Nihonbashi Chuo-ku

Tennozu Park Side Building

No. of Floors

Total Site Area(m 2) (Note1)(aboveground)

Average Floor Air Conditioning

PML

Acquisition

Acquisition(Note 2)

Date

Price (mil yen)5%

Dec. 2003

38,7302,650

14%Dec. 2003

20,600Each ¼ of floor

2,650

6%

Feb. 2004

14,800Ceiling

Rentable Area

Leased Floor Space

Occupancy

Total No. of

(m 2)

(m 2)

Rate

Tenants

Area (m2)

31,804.43

30,705.42

96.5%

87

1,262.37

Each ¼ of floor

2,600

19,233.28

18,903.62

98.3%

12

2,615.23

Each span

18,051.60

17,832.58

98.8%

14

1,331.14

System (Coverage) Height (mil)

50 floors

117,258.88

Extended in 1968.4

8 floors

29,430.67

Higashi-Shinagawa
Shinagawa-ku

Jan. 1995

21 floors

Seibu Shinkin Bank Shibuya Bldg.

Udagawa-cho Shibuya-ku

Sep. 1987

8 floors

5,358.55

3,273.80

2,628.3880.3%

2442.38Each span

2,500

12%

Sep. 2004

12,000Isuzu Shiba Bldg.

Shiba Minato-ku

Mar. 1991

7 floors

11,425.20

8,165.08

6,904.67

84.6%

91,260.41

Each span

2,600

14%

May 2004

10,000Shinagawa NF Bldg.

Higashi-Shinagawa
Shinagawa-ku

Nov. 1987

8 floors

10,077.02

7,850.99

7,850.99

100.0%

5928.29Each floor

2,600

11%

Dec. 2003

5,500

Surugadai Plaza Building

Surugadai Kanda Chiyoda-ku

Apr. 1997

8 floors

5,782.27

4,160.94

4,160.94

100.0%

1

626.33

Each ½ of floor

2,700

6%

Feb. 2004

5,150

Kanda Iwamoto-cho Tosei Building

Iwamoto-cho Chiyoda-ku

Jul. 1988

9 floors

4,698.97

4,076.38

3,596.3188.2%

7480.07

Each floor

2,550

14%

Feb. 2004

3,080

Seiwa Shinjuku Bldg.

Sendagaya Shibuya-ku

Mar. 1986

8 floors

3,160.05

2,464.71

2,464.71

100.0%

5

327.66

Each floor

2,500

12%

Jun. 2004

2,280

T.T. Landic Toyo-Cho Bldg.

Shinsuna Koto-ku

Nov. 1989

7 floors

18,051.08

18,218.17

18,218.17

100.0%

1

1,986.46

Each span

2,550

14%

Dec. 2003

7,550

Technoport Kamata B

Minami-Kabata Ota-ku

Sep. 1990

11 floors

13,683.46

11,669.20

85.3%

11

1,148.45

Each span

2,650

10%

Dec. 2003

6,430

Faret Tachikawa Center Square

Akebono-cho Tachikawa-shi

Dec. 1994

12 floors

6,853.38

6,853.38

100.0%

16

1,099.32

Each ¼ of floor

2,600

10%

Dec. 2003

3,290

Apr. 1961(Entire building)

17,587.30(Exclusive area owned)

21,516.54(Exclusive area owned)

6,865.80(Exclusive area owned)

Shin-Yokohama Nikko Bldg.

Kita-ku Yokohama-shi

Oct. 1990

9 floors

11,149.99

8,074.83

8,074.83

100.0%

3

940.84Each span

2,500

17%

Dec. 2003

3,600

Utsunomiya NF Bldg.

Baba st. Utsunomiya-shi

Dec. 1999

10 floors

10,479.63

5,887.40

5,657.58

96.1%

26

664.68Each span

2,700

5%

Dec. 2003

2,970

Nomura Osaka Bldg.

Chuo-ku Osaka-shi

Dec. 1983

12 floors

23,522.82

16,977.79

14,588.63

85.9%

23

1,336.52

Each span
Auxiliary AC

2,500

19%

Dec. 2003

6,410

Nomura Yotsubashi Bldg.

Nishi-ku Osaka-shi

Nov. 1991

15 floors

16,845.87

11,558.68

11,008.35

95.2%

16

797.35

Each span
Auxiliary AC

2,650

13%

Dec. 2003

3,940

Kobe Kaigan Bldg.

Chuo-ku Osaka-shi

Feb. 1998

16 floors

10,292.93

6,427.01

5,378.77

83.7%

24

528.43

Each span

2,600

7%

Dec. 2003

3,280

1,047.54

Each span
Auxiliary AC

2,450

16%

Dec. 2003

1,930

Nomura Hiroshima Bldg.

Naka-ku Hiroshima-shi

Jul. 1976

9 floors

Total

11,950.37

7,911.73

7,234.46

91.4%

15

194,673.65

183,730.99

94.4%

277

7.7%

151,540

Note 1: Total site area is based on the information in registry book
Note 2: PML ratings are based on an assessment by Shimizu Corporation for all properties.

20
22

Portfolio Diversity
Location Diversity (based on acquisition price)
Other Regional Cities
14.6%

End of Second Fiscal Period

End of First Fiscal Period(end of Apr. 2004)

Other Regional Cities(end of October 2004)

12.2%

Tokyo Suburbs
13.8%

Tokyo Suburbs
16.4%

Metropolitan Tokyo
69.0%

Metropolitan Tokyo
74.0%

Portfolio Diversity (based on acquisition price)
End of First Fiscal Period(end of Apr. 2004)
Other 9 properties
25.7%

Shinjuku Nomura Bldg.
30.4%

End of Second Fiscal Period(end of October 2004)
Other 10 properties
23.1%

Shinjuku
Nomura Bldg.
25.6%

Nomura Osaka Bldg.
4.2%
Nomura Osaka Bldg.
5.0%
Technoport
Kamata B 5.1%
T.T. Landic
Toyo-Cho Bldg. Tennozu Park
5.9%
Side Bldg.
11.6%

ItopiaNihonbashi Bldg.
16.2%

Technoport 4.2%
Kamata B
ItopiaT.T. Landic 5.0%
Nihonbashi Bldg.
Toyo-Cho Bldg.
13.6%
6.6%
Tennozu
Isuzu Shiba Bldg. Seibu Shinkin Bank
Shibuya Bldg. Park Side Bldg.
9.8%
7.9%

21
23

Tenant Data (Top 10 Tenants, Industry Breakdown, Stability)
Top 10 TenantsIndustry Breakdown

End of the second fiscal period (end of October 2004) * Based on leased floor space
Tenant1

XYMAX Corporation

Industry

Property

Real Estate

T.T. Landic
Toyo-Cho Bldg.

3

FUJITSU LIMITED

Nomura Real Estate
Development Co., Ltd.

5

FUJI XEROXOFFICE SUPPLY

6

Ito-Yokado Co., Ltd.

7

Corporate
Software
Limited Co., Ltd.

8

Venture Link Co., Ltd.

9DAIKEN CORPORATION1
02,296.90

1.3

1.4

501.350.3

0.3

Shin-Yokohama Nikko
Building

6,547.74

3.6

2.6

Shinjuku Nomura Bldg.

3,601.65

2.0

2.1

206.650.1

0.1

1,266.19

0.7

0.8

574.110.3

0.3

1,072.69

0.6

0.6

NomuraHiroshima Bldg.

2,834.48

1.5

1.7

Wholesale

Surugadai
Plaza Bldg.

4,160.94

2.3

2.5

RetailTechnoport
Kamata B

3,652.38

2.0

2.2

3,598.83

2.0

1.9

3,352.29

1.8

2.0

3,221.93

1.8

1.9

2,514.81

1.4

1.4

57,621.11

31.4

32.6

Faret Tachikawa
Electronics
Center Square

NomuraReal Estate
Osaka Bldg.

Real Estate Utsunomiya NF Bldg.

IT/

Tennozu Park

Communication Side Bldg.

Service
Other
Manufacturing

Hitachi Software
Engineering Co., Ltd.

First Fiscal Period

Portfolio (%)

10.8

Shinjuku Nomura Bldg.
Nomura Facilities, Inc.

(Reference)
As of the End ofSpace (m 2)

9.9

NomuraYotsubashi Bldg.

4

Leased Floor Percentage in

18,218.17

Technoport
Kamata B

2

End of the second fiscal period (end of October 2004) * Per leased floor spaceIT/
Communication

Total

ItopiaNihonbashi Bldg.
ItopiaNihonbashi Bldg.
NomuraOsaka Bldg.

Other 12 Industries
9.3%

Coal / Oil
1.5%
Precisions
1.6%
Other Financial
1.7%
Warehouse / Transport
2.0%
Chemicals
2.3%

IT/Communication
24.8%

Other Manufacturing
2.4%
Investment Banking
2.8%
Medical3.0%
Construction
3.1%

Services
11.4%

Insurance
3.9%
Real Estate
5.1%
Retail5.3%

Wholesale
11.2%
Electronics
8.8%

Note: Breakdown based on sub-lessee's industry in case the space is sublet.

Tenant Stability
Percentage of stable contracts (remaining lease term of
three years or longer) at the end of the second fiscal period(end of October 2004): 16.6% (per leased floor space)22
24

Move-Ins / Outs (Second Fiscal Period )Portfolio Occupancy Rate (End of Second Fiscal Period)

Breakdown of Move-Ins / Outs area

15 properties at the beginning of the period (95.0%, +1.7%)

Move-outs area: 2,019 tsubo: 3.5% of weighted average floor
space during the period

18 properties at the end of the period (94.4%, +1.1%)

Move-ins area: 3,088 tsubo: 5.3% of weighted average floor
space during the period

Both increased compared to the end of the first fiscal period→ Area that corresponds to move-ins / outs during the period
move-ins exceeds move-outs by 3,533m2 (1,068 tsubo)→ Managed within the extent of normal tenant circulation

3,000

2,000

Move-ins

Nomura Hiroshima Bldg.

Kobe Kaigan Bldg.

Nomura Yotsubashi Bldg.

Nomura Osaka Bldg.

Utsunomiya NF Bldg.

Shin-Yokohama Nikko Bldg.

Faret Tachikawa Center SquareTechnoport Kamata B

T.T. Landic Toyo-Cho Bldg.

Seiwa Shinjuku Bldg.

Kanda Iwamoto-cho Tosei Building

Surugadai Plaza Building

Shinagawa NF Bldg.

Isuzu Shiba Bldg.

Seibu Shinkin Bank Shibuya Bldg.

-2,000Tennozu Park Side Building-1,000Itopia Nihonbashi Bldg.

0

Shinjuku Nomura Bldg.

1,000

Move-outs-3,000

23
25

Income and Expenditure per Property(1,000 yen)
Shinjuku

Itopia Nihonbashi

Tennozu

Seibu Shinkin

Isuzu

Shinagawa

Nomura Bldg.

Bldg.

Park Side Bldg.

Bank Shibuya Bldg.

Shiba Bldg.

Number of Days in Operation

184 days

184 days

184 days

160 days

Rental Revenues

1,727,421

797,738

737,865

39,850250,538

258,895-

125,357

62,753-

1,520,103

756,524

611,001

32,765

217,140

221,661-

113,930

51,087-

Other revenues

207,317

41,213

126,864

7,085

33,39837,233-

11,427

11,665-

Rental Expenses

857,976

281,703367,466

8,280

89,641

107,735-

34,28023,194-

Property Management Fees

196,571

68,985

146,935

804

13,902

20,687

-

9,796

5,562

-

Property and other taxes

189,635

42,305116-

516,911

-

7

470

-

Utility expenses

223,978

58,00336,664-

19,61824,683

-

7,553

6,936

-

Insurance expenses

3,983

1,664

5,983

62

587

645

-

288

146

-

Repairs and Maintenance

28,574

1,384

7,962

-

6,289

12,094

-

672

2,075

-

Other expenses

41,95015,238

9,689

223

3,362

994

-

511

1,267

-

Depreciation

173,282

94,121

160,1147,190

45,87431,719-15,451

6,736-

869,444516,035

370,399

31,569160,897

151,159-

91,07639,558-1,042,727

610,156

530,514

38,760206,772

182,878-

106,528

46,294-Item

Rental revenues (incl. common area charges)

Rental Profits
Net operating income (NOI)

Item
Number of Days in Operation
Rental Revenues

34 daysNF Bldg.

Surugadai
Plaza Bldg. *Kanda Iwamoto-cho
Tosei Building

184 days

184 days

184 days

Technoport

Faret Tachikawa

Shin-Yokohama

Utsunomiya

NomuraNomuraKobe Kaigan

NomuraKamata B

Center Square

Nikko Bldg. *NF Bldg.

Osaka Bldg.

Yotsubashi Bldg.

Bldg.

Hiroshima Bldg.

184 days

184 days

184 days

184 days

184 days

184 days

184 days

Seiwa Shinjuku

T.T. Landic

Bldg.

Toyo-Cho Bldg. *129 days

184 days

Total of 18 Properties

184 days

399,099

232,858-

170,473475,013315,613

191,345

207,025

6,656,460

Rental revenues (incl. common area charges)

339,420

207,095-

137,294

405,651

276,893

154,753

182,529

5,849,377

Other revenues

59,67925,763-33,17869,362

38,71936,592

24,495807,083

228,505

129,478-

107,346

236,902164,388

112,105

96,403

3,154,188

Property Management Fees

51,74735,101-

27,63564,68644,49725,87428,474789,201

Property and other taxes

38,261

14,514-

17,27345,74732,964

18,23020,006

485,569

Utility expenses

51,29742,064-18,30854,937

37,127

26,98022,020670,998

Insurance expenses

1,224

620

-

715

1,421

985

855

680

21,877

Repairs and Maintenance

16,36470-

732

17,679

4,238

2,041

8,523

127,002110,185

Rental Expenses

Other expenses

3,849

5,205

-

3,971

4,357

2,670

3,784

6,410

Depreciation

65,76031,901-

38,70848,072

41,90334,338

10,288949,432

Rental Profits

170,593

103,380-

63,126238,111

151,224

79,240110,6213,502,193

Net operating income (NOI)

236,353

135,281-

101,834

286,184

193,128

113,578

120,910

4,451,625* Rental operating revenues and expenses are not disclosed for these properties as a result of unavoidable circumstances.

24
26

Period-End Value

Metropolitan Tokyo

Property

Amount at the End ofFirst Fiscal Period or

the Second Fiscal Period

Period (mil yen)

Current Amount (mil yen)(mil yen)

38,65038,30038,400

Increase / Decrease

Acquisition Price(%)(mil yen)

0.3%

38,730Itopia Nihonbashi Bldg.

20,555

20,40020,4000.0%

20,600Tennozu Park Side Building

14,687

14,80014,700-0.7%

14,800

Seibu Shinkin Bank Shibuya Bldg.

12,38812,00012,0000.0%

12,000Isuzu Shiba Bldg.

10,33910,00010,0000.0%

10,000Shinagawa NF Bldg.

5,458

5,360

5,390

0.6%

5,500

Surugadai Plaza Building

5,299

5,220

5,220

0.0%

5,150

Kanda Iwamoto-cho Tosei Building

3,100

3,180

3,150

-0.9%

3,080

2,286

2,280

2,300

0.9%

2,280

112,766

111,540

111,560

0.1%

112,140

T.T. Landic Toyo-Cho Bldg.

7,429

7,610

7,610

0.0%

7,550

Technoport Kamata B

6,487

6,520

6,530

0.2%

6,430

Faret Tachikawa Center Square

3,247

3,350

3,450

3.0%

3,290

Metropolitan Tokyo Total
Vicinity of Tokyo

Amount at the End of thethe End of the Second Fiscal

Shinjuku Nomura Bldg.

Seiwa Shinjuku Bldg.

Other Cities

Amount on Balance Sheet atShin-Yokohama Nikko Bldg.

3,555

3,630

3,470

-4.4%

3,600

Vicinity of Tokyo Total

20,72021,11021,060-1.3%

20,870

Utsunomiya NF Bldg.

2,905

2,970

3,080

3.7%

2,970

Nomura Osaka Bldg.

6,366

6,540

6,560

0.3%

6,410

Nomura Yotsubashi Bldg.

3,900

4,030

4,130

2.5%

3,940

Kobe Kaigan Bldg.

3,224

3,230

3,200

-0.9%

3,280

Nomura Hiroshima Bldg.

1,930

1,980

1,910

-3.5%

1,930

Other Cities Total

18,32718,75018,8802.0%

18,530

Total

151,815

151,400

151,500

0.8%

151,540

25
27

Portfolio Map
01

02

06

04

07

10

14

03

15

09

08

11

12

16

05

13

17

18

26
28

4. Future Asset Management Policies

27
29

Asset Management Performance of the Third Fiscal Period(to Date) (Result of JAL Building Acquisition)
Note: All values are based on no additional asset before acquisition of JAL Building (March
2005)

Improvement of Portfolio Stability

Development of Portfolio Diversity

Securement of long-term stable income from prime tenants

Development of Further Portfolio Diversity
Shinjuku Nomura Bldg.

End tenant:Japan Airlines International Co., Ltd.
(To be used as the head-office building of JAL Group)
Contract detail:Long-term stable contract

End of second fiscal period: 25.6% → After acquisition of JAL Building: 21.0%(No termination allowed for 10 years during the contract period.)

End of second fiscal period(end of October 2004)▲18%

Shinjuku Nomura Bldg. Other11 properties
22.4%
25.6%

Other 11 properties
27.3%

Ratio of stable contracts

After acquisition of JAL Building(remaining lease term of three years or longer)

Shinjuku Nomura Bldg.
21.0%

Technoport
Kamata B3.5%

End of second fiscal period(end of October 2004)

After acquisition of JAL
Building

16.6%

23.8%

T.T. Landic
Toyo-Cho Bldg.4.1%

Technoport
Kamata B4.2%
T.T. Landic
Toyo-Cho Bldg.5.0%(incl. 10.4% for JAL Building)JAL
Building
17.9%

ItopiaNihonbashi Bldg. Isuzu Shiba Bldg.
5.4%
13.6%

Isuzu Shiba Bldg.
6.6%
Tennozu Park Side Building
Seibu Shinkin Bank 9.8%
Shibuya Bldg.
7.9%

Seibu Shinkin Bank
Shibuya Bldg.6.5%

Tennozu
Park Side Bldg.
8.0%

ItopiaNihonbashi Bldg.
11.2%

Note: Per leased floor space

Increase of Reserve Cash- Flow Capacity for Capital Expenditures
Ratio of capital expenditure (CAPEX) in depreciation:
Properties at the end of
second fiscal period(18 properties)
53%

After acquisition of JAL
Building (19 properties)
48%

Note: CAPEX is the annualized average based on capital expenditure in Engineering
Report for 12 years.

(Reference) Transition of average year-old
Properties at the end of
second fiscal period(18 properties)

After acquisition of JAL Building(19 properties)

22.0 years

19.6 years

2830Basic Asset Management Policy

Basic Policy

Expansion
Expansioninin
Asset
AssetSize
Size

Mid
-term
Long
MidtotoLongLong-term
Property
PropertyManagement
Management

Conservative
Conservative
Financial
FinancialStrategy
Strategy:

Securement of mid andSteady growth of

longlong -term stable income

in asset size

Diversity of risks
Development of investment diversity in portfolio
Development of investment diversity in portfolio
Move efficient and aggressive management based on merits of scale Increase of profits
Move efficient and aggressive management based on merits of scale

Maintenance and improvement of tenant satisfaction
Maintenance and improvement of tenant satisfaction
by good relationships
by good relationships
Reinforcement of property advantages by renewal etc.
Reinforcement of property advantages by renewal etc.
Efficient management, reduction of management expenses
Efficient management, reduction of management expenses

Securing the ability to respond to changes in
Securing the ability to respond to changes in
the financial environment
the financial environment

Increase of profits
Improvement of asset
value

Stable funding

29
31

Expansion in Asset Size (Market Conditions)
Expansion in Asset Size

Market Conditions
Increasingly Severe Acquisition Environment- Capital influx to real estate market is increasing.

Expansion of Assets
Expansion of Assets(Influx of capitals from new investors such as pension funds)- Market players are increasing.
(Participation of new players (private funds, etc.))

Prime Properties Supplied to the Market Remains the Same
Information on properties for sale increased greatly compared to the previous period.

Reduction of
Reduction ofProfit Fluctuation
Profit Fluctuation
Unqualified properties as investment targets increased.

Mid and LongLong-Term
Mid and Long-Term
Property Management
Property Management

Conservative
Conservative
Financial Strategy
Financial Strategy- Disconformities of risks and returns- Unqualified site condition- Excessive additional investment required

Second Fiscal Period

Development
Developmentofofrisk
riskdiversity
diversity
Efficient
Efficientmanagement
management(merits(meritsofofscale)scale)(Reference) No. of information on properties for sales (May 2004 – Oct. 2004)

May

June

July

Aug.

Sept.

Oct.

Total ofsecondfiscalperiodNo. of Info.

186

249

213

117

165

283

1,213

Properties rev iewed

203

Properties in review

12

2004

Month

(Reference)
Results offirst fiscal
period636

30
32

Expansion in Asset Size (Portfolio Development Policy)
Investment Area / Area Allocation

Important Points when Selecting a Property- Investment area
(three major metropolitan areas, government-designated cities, etc.)

Criteria: Prime site and basic characteristics of the building+ availability of risk management- Area allocation (diversified investment)
Site (convenience): Easy access to transportation means, office accumulations, etc.

Maintain the current policy
Priority

Building (basic characteristics): Average floor area, basic structure, etc.
Specification (comfort): Air conditioning system, IT environment, external design, etc.

Allocation of Each Area

Area

End of Second
Fiscal Period(End of
October 2004)

After
Acquisition of
JAL Building

Allocation
TargetMetropolitan
Tokyo

74.0%

78.7%

60-80%

Tokyo Suburbs

13.8%

11.3%

10-20%

Other Regional
Cities

12.2%

10.0%

10-20%As the result of priority on investing in properties in Metropolitan Tokyo.
(Second fiscal period: 24.2 billion yen , third fiscal period:
33.0 billion yen expected)→ Stable portfolio profit / increase of ratio of Metropolitan Tokyo

Important Points for Building Portfolio
Checkpoints when adding a property to portfolio
Investment diversity (area, investment amount per property, tenant
Investment diversity (area, investment amount per property, tenantindustry)industry)

Portfolio NOI (NOI level, balance of stability and risks)
Portfolio NOI (NOI level, balance of stability and risks)
Ratio of long-term stable contract (balance of stability and
Ratio of long-term stable contract (balance of stability andaggressive management)
aggressive management)Internal reserve (balance of capital expenditure and depreciation etc.)
Internal reserve (balance of capital expenditure and depreciation etc.)
Consideration of an appropriate allocation balance

31
33

Expansion in Asset Size
(Enhancements of Property Acquisition Performance)
Enhancements of Property Acquisition Performance
Track Record in Acquisition: Investment for 6 properties (47.3 billion yen) in approx. 1 year after listing
Reinforcement of acquirement performance in order to continue investment for prime properties.
- Reinforcement of “advantages” of the Fund
- Additional acquisition methods

Trust / Network
Trust / Network

Early obtainment of information of properties for sale
Early obtainment of information of properties for saleFace to face negotiation
Face to face negotiation
Participation in closed bidding
Participation in closed bidding

Due Diligence
Due Diligence

Removal of ambiguity, identification of risk levels
Removal of ambiguity, identification of risk levels
Management strategies that enable risk control
Management strategies that enable risk control
Appropriate pricing
Appropriate pricing

Collective Strength ofCollective Strength ofPortfolio
Portfolio

Portfolio profitability (identification of acceptable risk level)
Portfolio profitability (identification of acceptable risk level)
Profit viability (planning of operational management andProfit viability (planning of operational management andpower to practice)
power to practice)
Funding capacity (low cost, maneuverability, reliability)
Funding capacity (low cost, maneuverability, reliability)

Additional
Additional
Acquisition Methods
Acquisition Methods

Expansion of investment opportunities (investment in
Expansion of investment opportunities (investment inproperties under construction, etc.)
properties under construction, etc.)

Collaboration
Collaborationwith
withNomuraNomuraReal
RealEstate
EstateGroup
Group

32
34

Expansion in Asset Size (Portfolio Acquisition Channels)
Major Properties

Acquisition Channel

Properties owned by ordeveloped by
Nomura Real Estate
Shinjuku Nomura
Bldg.

NomuraOsaka Bldg.

NomuraYotsubashi Bldg.

Faret Tachikawa
Center Square

Tennozu
Park Side Bldg.

1 other property

Properties for which information
received from and properties
brokered by Nomura Real
Estate Group
ItopiaNihonbashi Bldg.

T.T. Landic
Toyo-Cho
Bldg.

Kanda Iwamoto-cho
Tosei Bldg.

Seiwa Shinjuku Bldg.

JAL Building

5 other properties

Properties acquired in the first fiscal period(after listing)

Properties for which information
was received from externalsources

Properties acquired in the second fiscal
periodSurugadai Plaza
Building

Isuzu Shiba Bldg.

Seibu Shinkin Bank
Shibuya Bldg.

Properties to be acquired in the third
fiscal period

33
35

Expansion in Asset Size (Target Asset Size)
Achievement of Target

New Targets

Target at listing (Dec. 2003):
Total assets of 200 billion yen by March 2006

1. Development of investment diversity in the portfolio- Improvement of stability of portfolio profits

End of October 2004 (end of second fiscal period):
Total assets: Approx.173.5 billion yen→ Less than 10% for the core properties of “Shinjuku Nomura Bldg.”

March 2005 (third fiscal period):
JAL Building to be acquired.
(Acquisition price: 33.08 billion yen )2. To become a favorite choice for investors

Target will be achieved one year earlier than planned (forecast).

→ To 300 billion yen scale (market capitalization)(10 Billion yen )First Fiscal Period
3 properties
23.03 billion yen

Second Fiscal Period
3 properties
24.28 billion yen

class- Improvement of liquidity- Improvement of stability and recognition- Expansion of investor types

JAL Building
33.08 billion yen

200

150

Asset Size Target: Total assets of 500 billion yen
100(The outline target of the Fund)

50
End of December 2003
(at listing)End of Apr. 2004
(End of First
Fiscal Period)

End of Oct. 2004
(End of Second
Fiscal Period)

March 2005
(Forecast)

Note: Amounts in the balloons are based on acquisition price.

34
36

Mid- to Long-Term Property Management (Market Conditions)Mid- to Long-Term Property Management

Market Conditions
Significant decrease of rent reduction

Expansion of Assets
Expansion of Assets

Ratio of reduction at the time of contract amendment during the period.
(entire portfolio)

56.0%

Amountincreased ordeferred
76.1%

Reduction of
Reduction ofProfit Fluctuation
Profit Fluctuation
Mid and LongLong-Term
Mid and Long-Term
Property Management
Property Management

44.0%

Conservative
Conservative
Financial Strategy
Financial Strategy

23.9%

First Fiscal Period

No. of amendments:- Leasing based on characteristics of each property- Securing competitiveness of the property- Reinforcement of efficient management- Improvement of tenant satisfaction

Reinforcement of profitability
Improvement of asset value

Amountreduced50

Second Fiscal Period46

New contract rent increased in the second fiscal period- Increase of new contract rent for Shinjuku Nomura Bldg.
(weighted average rent)
First fiscal period: + 4.7%
(No. of newly contracted rents: 5 in the first fiscal period, 7 in the second fiscal period)- No. of all other new contracts: 3 in the first fiscal period, increased to 15 in the second
fiscal period

3537

Mid- to Long-Term Property Management (Leasing Policy)
Leasing Policy

Portfolio Occupancy Rate
Forecast for the third fiscal period (Nov. 2004 – Apr. 2005)

Basic policy: Mid- to long-term maximization of performance(Based on 18 properties at the beginning of the third fiscal period)
100%

Property

OperatingRate atthe End ofNov.

Leasing Policy

Seibu Shinkin Bank
Shibuya Bldg.

80.3 %

Renewal work for lower floors (B1 /1F) are scheduled (third fiscal
period)→ Attract tenants to maximize
performance

Technoport Kamata B

84.9 %

Renewal work done to correspondwith the special needs of the backoffice→ Aggressive attraction of new
tenants

Nomura Osaka Bldg.

85.3 %

Vacancies and rent level ofneighborhood buildings (of thesame scale) are recovering.
→ Start attracting new tenantsIsuzu Shiba Bldg.

88.2 %

Average floor area: 381 tsubo (anadvantage of this building)→ Place priority on attracting large
tenants

Kanda Iwamoto-cho Tosei
Building

88.2 %(Early lease up)

95%

94.4%

94.9%

95.7%

95.6%

95.6%

95.6%

95.8%

90%

85%

80%

75%

70%
End of Oct. 2004

End of Dec. 2004
End of Feb. 2005
End of Apr. 2005
End of Nov. 2004
End of Mar. 2005
End of Jan. 2005

(End of Second Fiscal Period)

Actual(End of Third Fiscal Period)

Forecasts
Transition at approx. 95% level is expected.

Note: The above values are forecasts based on conclusion or notification for
termination of current contracts as of Dec. 22, 2004 and do not guarantee futureoccupancy rates.

* The above 5 properties have the lowest occupancy rate.

36
38

Mid- to Long-Term Property Management(Efficient Management)
Realization of Moderate Operating Management Expenses
First Fiscal Period
Investigation period for cost reduction

Second Fiscal Period

Third Fiscal Period

Realization of the cost reduction plan
based on the investigation

Realization of the cost reduction plan/
Further challenge

Planning of management expense reduction
Discussion with parties concerned

Completion of discussions for cost reduction(to be implemented sequentially)

Identification of property characteristics
Reconsideration of optimum management
specifics of each property

Fourth Fiscal Period and Later
Pursuit of merits of scale as we expand
assets- Consideration of collective management system- Consideration of material procurement method

Reduction Targets (Negotiation Status to Date)
Target value (Contract details will be changed in the third fiscal period.)

Negotiation Status to Date (Decisions Made)

Maintenance expenses: 5%

Maintenance expenses: 4.0%

Utilities: 2%

Utilities: 1.7%

(Basic price excluding volume-dependent price)(Basic price excluding volume-dependent price)

2.5% reduction of rental
expenses including otherexpenses (excluding depreciation)

2.0% reduction of rental
expenses including otherexpenses. (excluding depreciation)

Note: Based on 15 properties at the time when the target
was set (end of first fiscal period)

37
39

Mid- to Long-Term Property Management for(Renewal Policy)
Concept of Renewals

Major Works to Be Commenced in Third Fiscal Period

Basic Policy : Mid- to long-term securement of competitiveness

PropertyWork Detail

Estimate

Renewal of commercial area and common area, renewal of

Shinjuku Nomura Bldg. common area on standard floors (third fiscal period)

Maintenance
Maintenanceofoffunctions
functions

ItopiaNihonbashi Bldg.

Installment of individually-controlled air conditioning
system in rooms for rent, and renewals of storm drain

Seibu Shinkin Bank
Shibuya Bldg.

Renewal of B1 and 1F

Seiwa Shinjuku Bldg.

Renewal of common area interior on the 1st floor

Nomura Osaka Bldg.

Improvement
Improvementofoffunctions
functionsShinjuku Nomura Bldg.
(Part of commercial areas)

Improvement of Comfort / Luxury FeelingSeiwa Shinjuku Bldg. (Entrance, etc.)
Nomura Osaka Bldg. (Entrance, etc.)

Nomura Hiroshima Bldg.

240 mil yen* 174 mil yen* 70 mil yen
20 mil yen* 280 mil yen

Renewal of common area interior* 18 mil yen
42 mil yen

Anti-seismic reinforcement

240 mil yen

Total

1,084 mil yen

Note: Including works to be completed in the fourth fiscal period.
Note: Amounts indicated with * are already reserved initial CAPEX.

Renewal Works of Second Fiscal Period (Isuzu Shiba Bldg.)
Standard
Floor
EV Hall

Entrance Hall

Before Renewal

After Renewal

Before Renewal

After Renewal

38
40

Conservative Financial Strategy(Market Conditions / Basic Policy)
Conservative Financial Strategy

Market Conditions
Transition of long-term interest rate (return of 10-year national security) (Jan. 2003 – Dec. 2004)
2.0%

Expansion of Assets
Expansion of Assets

1.5%

1.0%

0.5%

Reduction of
Reduction ofProfit Fluctuation
Profit Fluctuation
Mid and LongLong-Term
Mid and Long-Term
Property Management
Property Management

0.0%/1 /2 /3 /4 /5 /6 /7 /8 /9 10 12 /1 /2 /3 /4 /5 /6 /7 /8 /9 11 12
03 03 03 03 03 03 03 03 03 3/ 3/ 04 04 04 04 04 04 04 04 04 4/ 4/20 20 20 20 20 20 20 20 20 200 200 20 20 20 20 20 20 20 20 20 200 200

Conservative
Conservative
Financial Strategy
Financial Strategy

Transition at approx. 1.5% - 1.8% level is expected.

Basic Financial Policy
Conservative LTV level

Longer borrowing period / promotion of fixed interest rate

Securing stability and flexibility
Realization of continuous funding

Selection of the optimum procurement method from a wide range ofchoices including issuance of corporate bonds.

3941

Conservative Financial Strategy (Financial Status)
Securement of Stability and Flexibility
LTV level (ratio of interest-bearing debt, based on total assets)

Loans from Various Financial Institutions / Diversified Maturity Dates(end of Dec. 2004)

Results at the end of the second fiscal period: 37.2%- Numbers of Lenders: 19 financial institutions- Average remaining borrowing period: 2.6 years(▲4.1% compared to the end of the first fiscal period)
Continuation of conservative management(2.8 years only for long-term debt)

Diversity of Maturity
Ratio of long-term debt and fixed interest rate (end of Dec. 2004)

190

200
155

Short-term / long-term ratio

Long-term debt
59.0 billion yen(91.5%)

Short-term debt
5.5 billion yen(8.5%)

Variable / fixed ratio
Fixed interest
rate*
51.5 billion yen(79.8%)

Float interest
rate
13.0 billion
yen(20.2%)

150

130
110

100
40

50
20
0

0 3 Period* Including fixed rates by interest rate swap.

4 Period0
5 Period

6 Period0
7 Period- Weighted average interest rate

8 Period00

9 Period 10 Period 11 Period 12 Period 13 Period

1.14%

40
42

Appendix

41
43

Overview of the Management Company
Corporate Data

Organization Chart【Business Name】
Nomura Real Estate Asset Management Co., Ltd.

Shareholder’sMeeting【Address】
8-5-1 Nishi-shinjuku, Shinjuku-ku, Tokyo

Board ofDirectors【Incorporation】
January 24, 2003

Auditor【Paid-in Capital】
300 million yen

Executive Director【Shareholder】

Investment
Committee

Compliance
Committee

Nomura Real Estate Holdings Co., Ltd. （100％）【Number of Directors】
18 (excluding non-executive directors)

Investment
Management
Division【Directors】

Financial
Planning
Division

Executive Director

Yasutoshi Akiyama

Deputy Executive Director Yuichi Maruko

Real Estate
Investment Group

Asset Management
Group

Fund ManagementGroup- Gather information
for asset
acquisition- Acquisition ofassets- Due diligence forassets- Asset operation/
management/disposal- Making rental policies
and management
planning for assets
under management- Market research for
assets undermanagement- Portfolio management- Making financial
policies and plans- IR-related operation

Financial &Control Group- Market research
for financing- Accounting, tax
and fundadministration- Reporting related
to assets- Human resources,
Accounting andGeneral affairs

Compliance andRisk Management
Group- Compliance andrisk management- Internal audit- Information
management,complaints
handling

Director (External)

Taka Uematsu

Auditor (External)

Hiroyuki Kimura【Business Description】
Real Estate Investment Trust (REIT) asset management business◆REIT Asset Management License: Prime Minister’s Office Approval No. 28◆Discretionary Representative License: Land, Infrastructure and Transport
Minister’s Office License No.18◆Real Estate Broker’s License: Tokyo Governor’s Office License(1) No. 81679

42
44

Transition of Unit Price

Highest and lowest price in the second fiscal period (May – Oct. 2004)
Highest: 779,000 yen, lowest: 591,000 yen (May 6, 2004 – Oct. 29, 2004, based on transaction value)(口)(Units)( yen)
8,000

800,000

6,000

700,000

4,000

600,000

2,000

500,0000

400,000

4
4
3
/2
2/
/1
12
/1
/1
3
4
/
0
0
03
20
20
20

2
2/
4/
0
20

2
3
/2
/1
/2
/3
4
4
0
0
20
20

2
4/
4/
0
20

2
2
/2
/1
/4
/5
4
4
0
0
20
20

1
6/
4/
0
20

Turnover
売買高

1
1
1
0
/2
/1
/3
/2
/6
/7
/7
/8
4
4
4
4
0
0
0
0
20
20
20
20

9
9/
4/
0
20

9
9
/1
/2
10
/9
4
/
0
04
20
20

Closing
終 price値

4345The purpose of this document is to provide information only, and it is not intended as an offer to sell orsolicitation of offer to buy, or as a recommendation to purchase or sell any specific products.
Prospective investors should contact their own securities broker/dealers in case of purchase ofinvestment units in Nomura Real Estate Office Fund Investment Corporation.
The information contained in this document includes certain forward-looking statements with respect
to the financial results. However, such statements do not guarantee future performance.
While the information in this document is intended to be thorough, there is absolutely no assurance orwarranty with respect to its accuracy or safety of the same. Please note that the contents of thisdocument may be changed or cancelled without prior notice.
You are prohibited from duplication, reproduction, distribution or any commercial use of any of theinformation in this document without our prior written consent.

44
46