NOMURA REAL ESTATE OFFICE FUND, INC.
Eighth Fiscal Period Semi-Annual Report

Eighth Fiscal Period

Semi-Annual Report
May 1, 2007

http://www.nre-of.co.jp/english/

October 31, 2007

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 and invest in officeproperties, 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. is incharge of asset management on behalf of Nomura Office Fund in accordancewith the basic investment policy as described above. Through coordination with
Nomura Real Estate Holdings, Inc. and other group companies, NREAM aims toachieve these goals and more.

Strength of Nomura Office FundJ-REIT with a large-capitalization specialized in office buildings
Portfolio of 34 properties at a total acquisition price of¥292.4 billion (as of October 31, 2007)
Market capitalization of ¥308.4 billion (as of October 31, 2007)
Constituent of MSCI Standard Index

Track records of stable managements
Eight consecutive fiscal periods of growth in operating revenues and net
incomeSteady growth in DPU

Collaboration with Nomura Real Estate Group
NREAM, in charge of the Company’s asset management,
belongs to Nomura Real Estate Group
Supported by the group companies through provision of sales informationand management expertise

Rated A or more by domestic and foreign rating agencies
Long-term rating: A
Short-term rating: A-1

Standard & Poor’s Ratings Services
Moody’s Investors Service, Inc.

Issuer rating: A2

Rating and Investment Information, Inc.

Issuer rating: AA-

Holding to conservative financial strategies

Unit Price (¥)

Operating Revenues (Lth)Market Capitalization (¥ mln)

Net Income (Lth)(¥ mln)1,600,000

900,000

15,00015,1501,400,000

750,000

12,500

14,114

15,638Cash Distribution per Unit (Rth)(¥)
16,91816,75017,00015,905

14,52011,968
10,7391,200,000

600,000

9,810

10,00015,00011,09013,0008,641
1,000,000

450,000

800,000

300,000

7,500 10,273
5,000

6,656

7,106

11,000

4,531
3,484

600,000

400,000
Dec. 4 Apr. 30
2003
2004

150,000

0Oct. 29
2004

Apr. 282005

Oct. 312005

Apr. 28
2006

Oct. 312006

Apr. 272007

Oct. 31
2007

2,500

2,606

2,681

2nd
Period3rd
Period

3,596

4,229

4,466

4,486

9,000

7,000

1,526

0

5,000
1st
Period4th
Period5th
Period6th
Period7th
Period8th
PeriodContents
To Our Investors .............................................................................2

Property Details ............................................................................10

Financial Highlights ........................................................................3

Performance Report .....................................................................17

Portfolio Highlights .......................................................................4

Financial Section ..........................................................................35

Financial Status of the Eighth Fiscal Period ................................5Business Structure .......................................................................47

Management Summary of the Eighth Fiscal Period ...................6

Profile of the Asset Management Company ..............................48

Summary of Portfolio Properties .................................................8

Corporate Data...............................................................Back CoverPortfolio Map ..................................................................................9

To Our Investors

Financial Highlights

Dear Investors,

FINANCIAL SUMMARY

We are delighted to be able to present to you the financial results for the eighth fiscal period (ended October 31, 2007)
and report on our activities during the period herein.
We booked operating revenues for this period of ¥11,968 million, current profits of ¥4,486 million, andnet income of ¥4,486 million. Cash distribution per unit was ¥16,918.
Some of the major developments during the eighth period included new investments in “Hatchobori NF
Building”, “Yokohama Odori Koen Building” and“Kita-Sanjo Building.” As a result of these investments,
the number of properties in the portfolio now totals 34, with total acquisition price of ¥292.4 billion, promoting further
diversification of the portfolio.
Concerning property management, we focused on raising of rents reflecting the office leasing market conditions

8th Period

7th Period

6th Period

5th Period

4th Period

from May 1, 2007
to Oct. 31, 2007

from Nov. 1, 2006
to Apr. 30, 2007

from May 1, 2006
to Oct. 31, 2006

from Nov. 1, 2005
to Apr. 30, 2006

from May 1, 2005
to Oct. 31, 2005

Operating Revenues¥ mln

11,968

11,09010,739

9,810

8,641

Net Operating Income (NOI) (Note 1)

¥ mln

8,286

7,763

7,591

6,952

6,125

Income before Income Taxes

¥ mln

4,486

4,466

4,230

3,597

3,485

Net Income

¥ mln

4,486

4,466

4,229

3,596

3,484

Total Assets¥ mln

326,711315,402

288,060

268,559

239,067

Unitholders’ Capital¥ mln

156,767

156,767

156,767

124,610

124,610

Number of Units Issued

unit

265,903

265,903

265,903229,970229,970

Net Assets per Unit¥

606,510606,315

605,499

557,492

557,004

that continue to be favorable. The average occupancy rate remained stable throughout this period, reaching 97.9% atTotal Cash Distribution

¥ mln

4,498

4,453

4,229

3,596

3,484

the end of the period.

Cash Distribution per Unit¥

16,91816,75015,905

15,63815,150Funds from Operation (FFO) per Unit (Note 2)¥

22,71422,50921,58521,88920,559We will continue adhering to the conservative investment policies in future.
Lastly, we would like to thank you again for your patronage in the past periods, and would like to ask for yourcontinued support for the years to come.

Note 1: NOI (Net Operating Income) = Real Estate Rental Revenues – Real Estate Rental Expenses + Depreciation
Note 2: FFO per Unit = (Net Income + Depreciation + Amortization of Investment Corporation Bonds Issuance Costs – Real Estate Sale Profit/Loss) / Number of Units Issued

CHANGES IN KEY FIGURES
Operating Revenues (¥ mln)

Total Assets (¥ mln)

Cash Distribution per Unit (¥)

11,96812,00010,73917,000400,000

11,0909,810

10,000300,000

8,641

239,067

8,000

268,559

288,060

315,402326,711

15,15016,75016,9187th
Period8th
Period15,905

15,63815,000200,000

13,000100,000

11,000

6,000
4,000
2,000

9,000

0
4th
Period5th
Period6th
Period7th
Period4th
Period8th
Period5th
Period6th
Period7th
Period4th
Period8th
Period5th
Period6th
PeriodCHANGES IN UNIT PRICE AND MARKET CAPITALIZATION
Unit Price (¥)

Market Capitalization (¥ mln)
900,000

1,600,000

750,000

1,400,000
Market capitalization (as of Oct. 31, 2007) .......................¥ 308,447 mln
All-time high price ............................................................¥1,560,000 per unit
All-time low price .............................................................¥ 505,000 per unit

Mitsuharu Sato
Executive Director
Nomura Real Estate Office Fund, Inc.

1,200,000

600,000

1,000,000

450,000

800,000

300,000
4th public offering¥926,100

600,000

400,000
Dec. 42003

2

150,000

3rd public offering¥740,782

2nd public offering¥588,000
Initial public offering¥500,000
Apr. 302004

0Oct. 29
2004

Apr. 282005

Oct. 312005

Apr. 28
2006

Oct. 312006

Apr. 272007

Oct. 312007

3

Portfolio Highlights

Financial Status of the Eighth Fiscal Period

CHANGES IN OCCUPANCY RATE (Average)

TURNING OF SHORT-TERM FLOATING-RATE DEBTS TO LONG-TERM FIXED-RATE DEBTS

The average occupancy rate maintained stable and high level throughout the eighth fiscal period.

The Company has secured financial stability through promotion of long-term, fixed-rate interest-bearing debt including issuance ofinvestment corporation bonds, to prepare for the future interest rate hikes. As of the end of the eighth fiscal period, the ratio of
long- and short-term debt and fixed and floating debt are as follows:
Total leasable space (m2)

Average occupancy rate (%)

98.5

100.0

350,712.00

98.2

98.3

98.2

98.1

98.0

97.9

350,701.38

350,698.36

350,701.66

353,560.13

362,859.72

362,773.62

450,000

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

12.5%

87.5%

26.1%

73.9%

Floating-rate:¥17.5 billion

Fixed-rate:¥122.5 billion

Short-term:¥36.5 billion

Long-term:¥103.5 billion

350,000

90.0

Ratio of fixed and floating interest-bearing debts

250,000

80.0

70.0

150,000
Apr. 30,
2007(End of 7th Period)

May 31,
2007

Jun. 30,
2007

Jul. 31,2007

Aug. 31,2007

Sep. 30,
2007

Oct. 31,2007(End of 8th Period)

Note: “Short-term” includes long-term debts
payable within one year.

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

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

DIVERSITY OF REPAYMENT DATES
We have diversified the repayment dates of interest-bearing debts to avoid concentration on any specific period or timing, thus reducing
the refinance risk and stabilizing the cash flow.

34 bldgs
31 bldgs
30 bldgs(¥ bln)300

28 bldgs
23 bldgs
19 bldgs

250
200

12 bldgs

150

292.4

240.8

18 bldgs
15 bldgs

282.8
259.1

(¥ bln)

210.1

35

184.6
151.5

Borrowings

Investment Corporation Bonds

32.5

30

127.2
104.2

100

25

50
20

17.5

0
Initial Listing
Dec. 2003

1st Period
Apr. 30, 2004

2nd Period
Oct. 31, 2004

3rd Period
Apr. 30, 2005

4th Period
Oct. 31, 2005

5th Period
Apr. 30, 2006

6th Period
Oct. 31, 200616

15

7th Period
8th Period
Apr. 30, 2007 Oct. 31, 2007

15
10
10
6.5
5

ALLOCATION BY AREA AND PROPERTY (as of Oct. 31, 2007)

0

6
4

4
2

4

5

5

5

4.5

3

9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 29th 30th 31st 32nd 33rd 34th 35th 36th 37th 38th 39th 40th 41st 42nd 43rd 44th 45th 46th 47th 48th 49th

(period)

Diversification by Location

Diversification by Property (Main Top 10 Properties)

Other Regional Cities

Other 24 Buildings
Central Tokyo

25.4%

60.2%

36.1%
NOF Kawasaki
Higashiguchi Bldg.

Shinjuku Nomura Bldg.
13.2%
JAL Bldg.

3.2%
NOF Shiba Bldg.

11.3%
Omron Kyoto
Center Bldg.

3.4%
Secom Medical Bldg.
Suburban Tokyo
14.4%

8.1%
NOF Nihonbashi
Honcho Bldg.

3.9%
NOF Shibuya
Koen-dori Bldg.
4.1%
NOF Midosuji Bldg.

7.0%

We have obtained ratings from three domestic and foreign rating companies for the purpose of diversifying funding methods such as
issuance of investment corporation bonds, and improving creditworthiness in the capital market.

Rating Company

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 Regional Cities ......Major regional cities in other areas

5.1%

RatingOutlookA:Long-term corporate credit rating

A-1:

Short-term corporate credit rating

Moody’s Investors Service, Inc.

A2:

Issuer rating

StableRating and Investment Information, Inc.

AA–:

Issuer rating

StableStandard & Poor’s Ratings Services

Tennozu Park Side Bldg.

4.4%

4

CREDIT RATINGS

Stable5Management Summary of the Eighth Fiscal Period

Kita-Sanjo Building

New Investment
In the eighth fiscal period, we made new investments in “Hatchobori NF
Building”, “Yokohama Odori Koen Building” and“Kita-Sanjo Building.”(Total acquisition price: ¥9.5 billion).

Location

Chuo-ku, Sapporo-city

Date Acquired

September 28, 2007

Acquisition Price¥3,430 million

Property Profileo Stn.

Sappor

JR Tower

JR LineSapporo Stn.

Ekimae Dori, which is the center of office area

Loft Tokyu
Dept. Store
Seibu
Dept. Storein Sapporo City, and is within walking distanceto Sapporo Station on JR Line and several

Kita-Sanjo Building

Subway. In addition, it enjoys a prime location

Tokyo Dome

Shinjuku

Property Profile
The property is located in “Hatchobori area”, a concentrated officearea adjacent to Yaesu, Kyobashi and Nihonbashi, with excellent

Tokyo
Stn.

Imperial PalaceTokyo
Roppongi Hills

ShibuyaTokyo International Forum

Tokyo Tower

KyobashiStn.

Takaracho Stn.

accessibility to Hatchobori Station on Tokyo Metro Hibiya Line andthe exit from the underground passage directly

Takashimaya
Dept. Storeis readily recognizable and the building facilities meet the standard

Yamanote Line

Chuo
PoliceStationAsahikawa
Otaru

SapporoKushiroTomakomai

Hatchobori Stn.

Shinagawa

Ginza-itchomeStn.

rk
Odori Pae
Tozai Lin
Subwayapproximately 100m from the property.

Kayabacho Stn.

Hatchobori
NF Building

Chuo
Hatchobori
Post Officeconnected to Sapporo Station locatedTokyo Stock
Exchange

JR Keiyo Line

JR Keiyo Line. The exterior glass curtain wall facing the main street

Sapporo
City Office
The Hokkaido
Shimbun Press

Bank of Japan

Daimaru
Dept. Store

Ueno

Chuo
Police Station

Sapporo North Plaza

Tok
yo M
etro
Hibiy
a Lin
e

UenoPark

Nihonbashi Stn.

Stn.

¥3,160 million

Sunshine City

onb
ash
i

Acquisition Price

Ikebukuro

Me
Inne tropolir Cir tancula Exprr Ro essw
ute ay To
ei A
sak
usa
Line Nih

August 10, 2007

Tok
yo M
etro
Gin
za L
ine

Date Acquired

Toky
o Me
toro
Tokyo Stn. Tozai Line

Soto
bori
Dori

Chuo-ku, Tokyo

Hokkaido Pref.
Police Headquarters

within the area, with excellent accessibility to

Sakuragawa
Parkto satisfy a wide range of tenants.
Hakodate

Yokohama Odori Koen Building
LocationNaka-ku, Yokohama-city

Date Acquired

September 28, 2007

Acquisition Price¥2,993 million

Property Profile
The property is located in “Kannai area,” themain concentrated office area in Yokohama, andenjoys excellent accessibility to Kannai Station
on JR Line. As it is also close to Yokohama City
Hall, stable tenant demand is expected for midto long-term.
Tokyo
ine
hi L
gis
Ne
ine
e/
Lin
ne L
ku
oha
oho
Yok
in T
No.1
Keih
ute
JR
a ro
gaw
ana
ay K
ighw
to H
Shu

Yok
oha
ma

Shinagawa
MachidaKawasakiShin-Yokohama

TOKYO
GAS

ute

k

ar

iP
or

NTT

Yokohama
City Hall
Yokohama
Stadium

16

Ro

Yokosuka.

Yokohama Odori
Koen Building

Chigasaki
Kamakuratn.

tn

Kisarazu

iS

S
ai
nn
Ka

Yokohama

Mu
nic
ipa
Ka l Subnn waya

Yokohama
Education & Culture
CenterOd
Yokohama Skill &Culture Center

.
i Stn
ach
ojam Hinodegawa Park
i-ch
k
a
Isez

Odori Stn.

Line

Location

Botanic Garden of
Hokkaido University Hokkaido Pref.
Government OfficeTono
Subwaystations on different lines of Sapporo Municipalu LineNambokSubwayHatchobori NF Building

erSosei Riv

The property is located close to the Sapporo

TV TowerSummary of Portfolio Properties
Name of Property

Location

Portfolio Map
Leasable Floor
Space (m2)Date Acquired

Acquisition Price(¥ mln)

Ratio
(%)

01

Central Tokyo
Shinjuku Nomura Bldg.

Shinjuku-ku, Tokyo

31,589.26

Dec. 8, 2003

38,73013.2

JAL Bldg.

Shinagawa-ku, Tokyo

42,084.11

Mar. 18, 2005

33,080

11.3

NOF Nihonbashi Honcho Bldg.

Chuo-ku, Tokyo

19,233.28

Dec. 5, 2003

20,600

7.0

Tennozu Park Side Bldg.

Shinagawa-ku, Tokyo

18,051.61

Feb. 27, 2004

14,8005.1

NOF Shibuya Koen-dori Bldg.

Shibuya-ku, Tokyo

3,420.16

Sep. 28, 2004

12,000

4.1

Secom Medical Bldg.

Chiyoda-ku, Tokyo

8,821.24

Sep. 1, 2006

11,5003.9

NOF Shiba Bldg.

Minato-ku, Tokyo

8,165.10

May 25, 2004

10,000

3.4

Nishi-Shinjuku Showa Bldg.

Shinjuku-ku, Tokyo

5,663.85

Nov. 30, 2005

8,800

3.0

NOF Tameike Bldg.

Minato-ku, Tokyo

4,715.20

Sep. 29, 2005

7,400

2.5

NOF Shinagawa Konan Bldg.

Shinagawa-ku, Tokyo

7,850.99

Dec. 8, 2003

5,500

1.9

NOF Surugadai Plaza Bldg.

Chiyoda-ku, Tokyo

4,160.94

Feb. 27, 2004

5,150

1.8

Hatchobori NF Bldg.

Chuo-ku, Tokyo

2,854.83

Aug. 10,2007

3,160

1.1

11

14

06

05

Minato-ku

1004
Shinagawa-ku
02

4,076.38

Feb. 26, 2004

3,080

1.1

2,464.71

Jun. 25, 2004

2,280

0.8

Central Tokyo

176,08060.2

01 Shinjuku Nomura Building
02 JAL Building
03 NOF Nihonbashi Honcho Building
04 Tennozu Park Side Building
05 NOF Shibuya Koen-dori Building
06 Secom Medical Building
07 NOF Shiba Building

Koto-ku, Tokyo

18,218.17

Dec. 5, 2003

7,550

2.6

NOF Technoport Kamata Center Bldg.

Ota-ku, Tokyo

13,683.46

Dec. 5, 2003

6,416

2.2

Crystal Park Bldg.

Musashino City, Tokyo

3,900.85

Feb. 28, 2006

3,700

1.3

Faret Tachikawa Center Square

Tachikawa City, Tokyo

6,853.38

Dec. 5, 2003

3,290

1.1

NOF Kawasaki Higashiguchi Bldg.

Kawasaki City, Kanagawa

8,253.41

Jun. 30, 2005

9,500

3.2

NOF Yokohama Nishiguchi Bldg.

Yokohama City, Kanagawa

6,817.76

May 12, 2005

5,050

1.7

NOF Shin-Yokohama Bldg.

Yokohama City, Kanagawa

8,074.83

Dec. 5, 2003

3,600

1.2

Yokohama Odori Koen Bldg.

Yokohama City, Kanagawa

4,236.47

Sep. 28, 2007

Total Suburban Tokyo (8 Properties)

70,038.33

2,993

1.0

42,099

14.4

Other Regional Cities
Sapporo North Plaza

Sapporo City, Hokkaido

13,658.14

Jun. 1, 2006

6,820

2.3

Kita-Sanjo Bldg.

Sapporo City, Hokkaido

5,060.45

Sep. 28, 2007

3,430

1.2

NOF Sendai Aoba-dori Bldg.

Sendai City, Miyagi

6,161.05

Nov. 30, 2005

3,200

1.1

NOF Utsunomiya Bldg.

Utsunomiya City, Tochigi

5,887.40

Dec. 5, 2003

2,970

1.0

NOF Nagoya Yanagibashi Bldg.

Nagoya City, Aichi

4,655.74

Sep. 29, 2005

3,550

1.2

Omron Kyoto Center Bldg.

Kyoto City, Kyoto

34,616.84

Mar. 20, 2007

23,700

8.1

NOF Midosuji Bldg.

Osaka City, Osaka

12,240.88

Nov. 30, 2005

12,9004.4

Nomura Osaka Bldg.

Osaka City, Osaka

16,977.79

Dec. 5, 2003

6,410

2.2

Nomura Yotsubashi Bldg.

Osaka City, Osaka

11,558.68

Dec. 5, 2003

3,940

1.3

NOF Kobe Kaigan Bldg.

Kobe City, Hyogo

6,425.16

Dec. 5, 2003

3,280

1.1

Hiroshima Tatemachi NOF Bldg.

Hiroshima City, Hiroshima

4,434.58

Nov. 30, 2005

2,100

0.7

Nomura Hiroshima Bldg.

Hiroshima City, Hiroshima

7,906.92

Dec. 5, 2003

1,930

0.7

Total Other Regional Cities (12 Properties)

129,583.63

74,23025.4

Grand Total (34 Properties)

362,773.62

292,409

100.0

Note : The Company owns “Secom Medical Bldg.”,”Crystal Park Bldg.”,”Yokohama Odori Koen Bldg.” and “Kita-Sanjo Bldg.” as real estate, and other properties in the form ofbeneficial interest in real estate trusts.
Note : “Ratio” refers to the ratio of each asset based on acquisition price to the entire portfolio (total of 34 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 Bldg. 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.

24

23

07

Chiyoda-ku, TokyoNOF Toyo-cho Bldg.

1209

Shibuya-ku, Tokyo

Suburban Tokyo03
Chuo-ku

Shibuya-ku

NOF Minami Shinjuku Bldg.

163,151.66

13

Chiyoda-ku

NOF Kanda Iwamoto-cho Bldg.

Total Central Tokyo (14 Properties)

8

Shinjuku-ku

08

33
34

08 Nishi-Shinjuku Showa Building
09 NOF Tameike Building
10 NOF Shinagawa Konan Building
11 NOF Surugadai Plaza Building
12 Hatchobori NF Building
13 NOF Kanda Iwamoto-cho Building
14 NOF Minami Shinjuku Building

28

32

25

26

27

29
30
31

Saitama

18

15

Chiba

16
19
21

Other Regional Cities

23 Sapporo North Plaza
24 Kita-Sanjo Building
25 NOF Sendai Aoba-dori Building
26 NOF Utsunomiya Building
27 NOF Nagoya Yanagibashi Building
28 Omron Kyoto Center Building
29 NOF Midosuji Building
30 Nomura Osaka Building
31 Nomura Yotsubashi Building
32 NOF Kobe Kaigan Building
33 Hiroshima Tatemachi NOF Building
34 Nomura Hiroshima Building

17 Tokyo

Kanagawa

20
22

Suburban Tokyo

15 NOF Toyo-cho Building
16 NOF Technoport Kamata Center Building
17 Crystal Park Building
18 Faret Tachikawa Center Square
19 NOF Kawasaki Higashiguchi Building
20 NOF Yokohama Nishiguchi Building
21 NOF Shin-Yokohama Building
22 Yokohama Odori Koen Building
9

Property Details

01

Shinjuku Nomura Building

Location:
Completion:
Area:
Stories:
Property Managed by:*Type of Ownership:

1-26-2 Nishi-Shinjuku Shinjuku-ku, Tokyo
May 1978Land
9,298.21 m2 (Entire area)
Floor
117,258.88 m2 (Entire area)
B5 / 50F
Nomura Real Estate Development Co., Ltd.
Land
Quasi co-ownership of 50.1%
Building Quasi co-ownership of 50.1%

05

NOF Shibuya Koen-dori Building

Location:
Completion:
Area:
Stories:
Property Managed by:

20-17 Udagawa-cho Shibuya-ku, Tokyo
September 1987
Land
637.08 m2
Floor
5,358.55 m2
B2 / 8F
Nomura Real Estate Development Co., Ltd.

Note: The property consists of the front building and adjacent compound area shown in the picture.

06
02

Location:
Completion:
Area:

JAL Building

Location:
Completion:
Area:
Stories:
Property Managed by:*Type of Ownership:

Secom Medical Building

2-4-11 Higashi-Shinagawa Shinagawa-ku, Tokyo
June 1996
Land
11,670.40 m2 (Entire area)
Floor
25,260.48 m2 (Exclusively owned area)
B2 / 26F
Nomura Real Estate Development Co., Ltd.
Land
Co-ownership of 50.89619%
Building Compartmentalized ownership

Stories:
Property Managed by:07

NOF Shiba Building

Location:
Completion:
Area:

03

NOF Nihonbashi Honcho Building

Location:
Completion:
Area:
Stories:
Property Managed by:

2-7-1 Nihonbashi Honcho Chuo-ku, Tokyo
April 1961 (Extension April 1968)
Land
3,196.31 m2
Floor
29,430.67 m2
B3 / 8F
ITOCHU Urban Community Co., Ltd.

Stories:
Property Managed by:

08
Location:
Completion:Area:

1-13-12 Nishi-Shinjuku Shinjuku-ku, Tokyo
April 1982
Land
1,101.49 m2 (Entire area)
Floor
5,858.26 m2 (Exclusively owned area)
B2 / 11F
Nomura Real Estate Development Co., Ltd.
Land
Co-ownership of 84.25%
Building Compartmentalized ownership

Tennozu Park Side Building

Location:
Completion:
Area:
Stories:
Property Managed by:*Type of Ownership:

104-2-3 Shiba Minato-ku, Tokyo
March 1991
Land
2,074.65 m2
Floor
11,425.20 m2
B1 / 7F
CB Richard Ellis Asset Services K.K.

Nishi-Shinjuku Showa Building

Stories:
Property Managed by:*Type of Ownership:04

7-7 Niban-cho Chiyoda-ku, Tokyo
February 2005
Land
1,844.44 m2
Floor
8,683.73 m2
B1 / 7F
Nomura Real Estate Development Co., Ltd.

2-5-8 Higashi-Shinagawa Shinagawa-ku, Tokyo
January 1995
Land
5,816.26 m2 (Entire area)
Floor
17,587.30 m2 (Exclusively owned area)
B2 / 21F
Nomura Real Estate Development Co., Ltd.
Land
Co-ownership of 68.98%
Building Compartmentalized ownership09

NOF Tameike Building

Location:
Completion:
Area:
Stories:
Property Managed by:

1-1-14 Akasaka Minato-ku, Tokyo
August 1959
Land
690.67 m2
Floor
6,478.50 m2
B1 / 9F
Nomura Real Estate Development Co., Ltd.

11

Property Details

10

NOF Shinagawa Konan Building

Location:
Completion:
Area:
Stories:
Property Managed by:

11

NOF Surugadai Plaza Building

Location:
Completion:
Area:
Stories:
Property Managed by:

12

Stories:
Property Managed by:*Type of Ownership:

Stories:
Property Managed by:

3-8-16 Iwamoto-cho Chiyoda-ku, Tokyo
July 1988
Land
773.32 m2
Floor
4,698.97 m2
9F
ITOCHU Urban Community Co., Ltd.

NOF Minami Shinjuku Building

Location:
Completion:
Area:
Stories:
Property Managed by:

122-21-6 Hatchobori Chuo-ku, Tokyo
October 1990
Land(a) 85.11 m2(b) 420.24 m2
Floor
3,036.14 m2 (Exclusively owned area)
B1 / 9F
Nomura Real Estate Development Co., Ltd.
Land(a) Exclusively owned area(b) Co-owned area of 39,364/42,024
Building Compartmentalized ownership

NOF Kanda Iwamoto-cho Building

Location:
Completion:
Area:

14

2-5-12 Kanda Surugadai Chiyoda-ku, Tokyo
April 1997
Land
1,056.92 m2
Floor
5,782.27 m2
B1 / 8F
Nomura Real Estate Development Co., Ltd.

Hatchobori NF Building

Location:
Completion:
Area:

13

1-2-5 Higashi-Shinagawa Shinagawa-ku, Tokyo
November 1987
Land
3,240.30 m2
Floor
10,077.02 m2
B1 / 8F
Nomura Real Estate Development Co., Ltd.

5-32-7 Sendagaya Shibuya-ku, Tokyo
March 1986
Land
545.87 m2
Floor
3,160.05 m2
B1 / 8F
Nomura Real Estate Development Co., Ltd.

15

NOF Toyo-cho Building

Location:
Completion:
Area:
Stories:
Property Managed by:

16

NOF Technoport Kamata Center Building

Location:
Completion:
Area:
Stories:
Property Managed by:*Type of Ownership:

17

Stories:
Property Managed by:*Type of Ownership:

1-1-3 Gotenyama Musashino City, Tokyo
October 1991
Land
1,057.14 m2 (Entire area)
Floor
3,868.36 m2 (Exclusively owned area)
B2 / 11F
The Dai-Ichi Building Co., Ltd.
Land
Co-ownership of 3,970,795 / 4,435,360
Building Compartmentalized ownership

Faret Tachikawa Center Square

Location:
Completion:
Area:
Stories:
Property Managed by:*Type of Ownership:

19

2-16-1 Minami-Kamata Ota-ku, Tokyo
September 1990
Land(a) 9,429.59 m2(b) 3,329.47 m2
Floor
21,516.54 m2 (Exclusively owned area)
B1 / 11F
Nomura Real Estate Development Co., Ltd.
Land(a) Exclusively owned area, (b) Co-owned area of 30%
Building Compartmentalized ownership

Crystal Park Building

Location:
Completion:
Area:

18

1-6-35 Shinsuna Koto-ku, Tokyo
November 1989
Land
8,926 m2
Floor
18,051.08 m2
7F
Nomura Building Management Co., Ltd.

2-36-2 Akebono-cho Tachikawa City, Tokyo
December 1994
Land
4,454.59 m2 (Entire area)
Floor
6,865.80 m2 (Exclusively owned area)
B2 / 12F
Nomura Real Estate Development Co., Ltd.
Land
Co-ownership of 45.698%
Building Compartmentalized ownership

NOF Kawasaki Higashiguchi Building

Location:
Completion:
Area:
Stories:
Property Managed by:

3-1 Ekimae-Honcho Kawasaki-ku Kawasaki City, Kanagawa
March 1988
Land
1,275.70 m2
Floor
10,932.69 m2
B1 / 12F
Nomura Building Management Co., Ltd.

13

Property Details

20

NOF Yokohama Nishiguchi Building

Location:
Completion:
Area:
Stories:
Property Managed by:

1-11-11 Kita-Saiwai Nishi-ku Yokohama City, Kanagawa
October 1985
Land
1,502.94 m2
Floor
10,055.13 m2
B1 / 9F
Nomura Real Estate Development Co., Ltd.

25
Location:
Completion:
Area:

Stories:
Property Managed by:*Note:21

NOF Shin-Yokohama Building

Location:
Completion:
Area:
Stories:
Property Managed by:

22

Yokohama Odori Koen Building

Location:
Completion:
Area:
Stories:
Property Managed by:

23

Stories:
Property Managed by:

4-2-2 Kitaichijo-Nishi Chuo-ku, Sapporo City, Hokkaido
August 1981
Land
2,363.79 m2
Floor
18,842.51 m2
B2 / 12F
The Dai-Ichi Building Co., Ltd.

Kita-Sanjo Building

Location:
Completion:
Area:
Stories:
Property Managed by:

14

2-4-1 Horai-cho, Naka-ku, Yokohama City, Kanagawa
March 1989
Land
806.01 m2
Floor
6,445.72 m2
B1 / 11FXYMAX AXIS CORPORATION

Sapporo North Plaza

Location:
Completion:
Area:

24

2-15-16 Shin-Yokohama Kohoku-ku Yokohama City, Kanagawa
October 1990
Land
1,320 m2
Floor
11,149.99 m2
B1 / 9F
Nomura Real Estate Development Co., Ltd.

3-1-25 Kitasanjo-Nishi Chuo-Ku, Sapporo City, Hokkaido
March 1988
Land
1,290.33 m2
Floor
7,461.25 m2
B1 / 9F
The Dai-Ichi Building Co., Ltd.

NOF Sendai Aoba-dori Building
2-1-2 Ichiban-cho Aoba-ku Sendai City, Miyagi
July 1968
Land
2,318.17 m2
Floor
12,977.45 m2
B2 / 11F*
The Dai-Ichi Building Co., Ltd.

The Notice of Confirmation issued in accordance with the Building Standard Law describes it as "8 stories above theground and 3 stories of penthouse with 2 stories below ground."26

NOF Utsunomiya Building

Location:
Completion:
Area:
Stories:
Property Managed by:

27

NOF Nagoya Yanagibashi Building

Location:
Completion:
Area:
Stories:
Property Managed by:

28

1-16-28 Meieki-Minami Nakamura-ku Nagoya City, Aichi
March 1991
Land
934.20 m2
Floor
7,363.25 m2
B2 / 12F
Nomura Building Management Co., Ltd.

Omron Kyoto Center Building

Location:
Completion:
Area:
Stories:
Property Managed by:

29

2-1-1 Baba-dori Utsunomiya City, Tochigi
December 1999
Land
1,545.13 m2
Floor
10,479.63 m2
B2 / 10F
Nomura Building Management Co., Ltd.

801 Minami Fudodo-cho, Horikawa Higashi-iru, Shiokoji-dori,Shimogyo-ku Kyoto City, Kyoto
July 2000
Land
4,763.14 m2
Floor
34,616.84 m2
B2 / 11F
Nomura Real Estate Development Co., Ltd.

NOF Midosuji Building

Location:
Completion:
Area:
Stories:
Property Managed by:

3-5-7 Kawaramachi Chuo-ku Osaka City, Osaka
April 1974
Land
2,366.99 m2
Floor
21,007.98 m2
B2 / 10F
Nomura Real Estate Development Co., Ltd.

15

Property Details

Performance Report

30

Nomura Osaka Building

Location:
Completion:
Area:
Stories:
Property Managed by:

31

Nomura Yotsubashi Building

Location:
Completion:
Area:
Stories:
Property Managed by:

32

Stories:
Property Managed by:

3 Kaigan-dori Chuo-ku Kobe City, Hyogo
February 1998
Land
1,451.31 m2
Floor
10,292.93 m2
B1 / 16F
The Dai-Ichi Building Co., Ltd.

Hiroshima Tatemachi NOF Building

Location:
Completion:
Area:
Stories:
Property Managed by:*Note:

1-4-4 Awaza Nishi-ku Osaka City, Osaka
November 1991
Land
1,865.34 m2
Floor
16,845.87 m2
B2 / 15F
Nomura Real Estate Development Co., Ltd.

NOF Kobe Kaigan Building

Location:
Completion:
Area:

33

1-8-15 Azuchi-cho Chuo-ku Osaka City, Osaka
December 1983
Land
3,136.56 m2
Floor
23,522.82 m2
B2 / 12F
Nomura Real Estate Development Co., Ltd.

1-20 Tatemachi Naka-ku Hiroshima City, Hiroshima
November 1966
Land
925.55 m2
Floor
8,206.91 m2
B2 / 12F*
Nomura Real Estate Development Co., Ltd.

Omron Kyoto Center Building

The Notice of Confirmation issued in accordance with the Building Standard Law describes it as "9 stories above theground and 3 stories of penthouse with 2 stories below ground."34

Nomura Hiroshima Building

Contents

Asset Management Report ..........................................18
Profile of the Company.................................................23

Location:
Completion:
Area:
Stories:
Property Managed by:

2-23 Tatemachi Naka-ku Hiroshima City, Hiroshima
July 1976
Land
1,319.15 m2
Floor
11,950.37 m2
B2 / 9F
Nomura Real Estate Development Co., Ltd.

Status of Investment Assets of the Company .............25
Capital Expenditures.....................................................28
Expenses and Liabilities ...............................................29
Trading during the Eighth Fiscal Period ........................32
Other Information ........................................................34

16

17

Asset Management Report
1. CHANGES IN KEY INDICATORS

2. OUTLINE OF INVESTMENTS IN THE EIGHTH FISCAL PERIOD
8th Period
7th Period
6th Period (Note 10)
5th Period
4th Period
from May 1, 2007 from Nov.1, 2006 from May 1, 2006 from Nov. 1, 2005 from May 1, 2005
to Oct. 31, 2007 to Apr. 30, 2007
to Oct. 31, 2006
to Apr. 30, 2006 to Oct. 31, 2005

Operating Revenues¥ mln

11,968

11,09010,7399,810

of which Real Estate Rental Revenues¥ mln

11,958

11,09010,739

9,810

8,641
8,641

Operating Expenses

¥ mln

6,243

5,953

5,556

5,251

4,530

of which Real Estate Rental Expenses

¥ mln

5,190

4,805

4,619

4,257

3,745

Operating Income

¥ mln

5,725

5,137

5,182

4,558

4,111

Current Profits

¥ mln

4,486

4,466

4,230

3,597

3,485

Net Income

¥ mln

4,486

4,466

4,229

3,596

3,484

Total Assets¥ mln

326,711315,402

288,060

268,559

239,067%(+3.6)(+9.5)(+7.3)(+12.3)(+14.9)Interest-Bearing Debts¥ mln

140,000

130,000

106,000

120,000

93,000Net Assets¥ mln

161,272

161,221161,004

128,206

128,094(Changes from Previous Period)%(+0.0)(+0.1)(+25.6)(+0.1)(+35.0)Unitholders’ Capital¥ mln

156,767

156,767

156,767

124,610

124,610

Number of Units Issued

units

265,903

265,903

265,903229,970229,970557,004(Changes from Previous Period)¥

606,510606,315

605,499

557,492

¥ mln

4,498

4,453

4,229

3,596

3,484

Cash Distribution per Unit¥

16,91816,75015,905

15,63815,150of which Cash Distribution of Profits¥

16,91816,75015,905

15,63815,150Net Assets per Unit
Total Cash Distributionof which Cash Distribution in excess of Profits

¥

–

–

–

–

–

ROA (Return on Assets) (Note 1)

%

1.4

1.5

1.5

1.4

1.5

Annualized ROA (Note 2)

%

2.8

3.0

3.0

2.9

3.1

ROE (Return on Equity) (Note 3)

%

2.8

2.8

2.7

2.8

2.7

Annualized ROE (Note 2)

%

5.5

5.6

5.4

5.7

5.4

Capital Adequacy Ratio (Note 4)

%

49.4

51.1

55.9

47.7

53.6

(Changes from Previous Period)%(1.7)(4.8)(+8.2)(5.9)(+8.0)
38.9

LTV (Loan-to-Value) (Note 5)

%

42.9

41.2

36.8

44.7

Number of Operating Days

days

184

181

184

181

184

Payout Ratio (Note 6)

%

100.2

99.7

99.9

100.0

99.9

Number of Properties Held

bldgs

34

31

30

28

23

Total Leasable Floor Spacem

261,428.50

362,773.62

350,712.00

316,132.49

293,464.10

tenants

533

517

512

467

357

%

97.9

98.5

98.2

98.4

97.3

Depreciation

¥ mln

1,518

1,478

1,471

1,399

1,229

Capital Expenditures

¥ mln

1,252

757

588

934

1,016

NOI (Net Operating Income) (Note 7)

¥ mln

8,286

7,763

7,591

6,952

6,125

FFO (Funds from Operation) (Note 8)

¥ mln

6,039

5,985

5,739

5,034

4,727

¥

22,71422,50921,58521,88920,559Number of Tenants
Occupancy Rate

FFO per Unit (Note 9)2

Note 1: “ROA (Return on Assets)” = Current Profits / {(Total Assets at the beginning of the period + Total Assets at the end of the period) / 2} x 100
As for the 4th and 6th periods, the Total Assets were time-adjusted due to the additional issuance of investment units.
Note 2: “ROA” and “ROE” are annualized using the following number of operating days. 4th period: 184 days, 5th period: 181 days, 6th period: 184 days, 7th period: 181 days,and 8th period: 184 days.
Note 3: “ROE (Return on Equity)” = Net Income / {(Net Assets at the beginning of the period + Net Assets at the end of the period) / 2} x 100
As for the 4th and 6th periods, Net Assets is time-adjusted due to the additional issuance of investment units.
Note 4: “Capital Adequacy Ratio” = Net Assets / Total Assets x 100
Note 5: “LTV (Loan-to-Value)” = Interest-Bearing Debts / Total Assets x 100
Note 6: Rounded off to the first decimal place.
Note 7: “NOI (Net Operating Income)” = Real Estate Rental Revenues – Real Estate Rental Expenses + Depreciation
Note 8: “FFO (Funds from Operation) = Net Income + Depreciation + Amortization of Investment Corporation Bonds Issuance Costs – Real Estate Sale Profit / Loss
Note 9: “FFO per Unit” = FFO / Number of Units Issued
Note 10: “Accounting Standard for Presentation of Net Assets in the Balance Sheet” (Statement No.5 issued by the Accounting Standards Board of Japan on December 9, 2005)
and the “Financial Accounting Standard Implementation Guidance” (Statement No. 8 issued by the Accounting Standards Board of Japan on December 9, 2005) havebeen implemented from the 6th period.

18

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(a) Office Leasing Market
During the eighth fiscal period, Japanese economy remained solid despite concerns for financial market turbulence caused by
the subprime loan problems, with robust corporate earnings and improvement in employment conditions.
As a result, the office leasing market, which is the business base for the Company, has continued to see aggressive
business expansion and increased employment by corporations, creating a solid demand for office space.
In Tokyo and other metropolitan areas that lead the economic recovery, most of the large buildings providing superior
convenience continue to be fully leased, and some landlords are unable to respond to the expansion needs of existing tenants.
Under these circumstances, overall level of rents for office buildings continues to rise, with the new asking rate for officebuildings continuing to surge, and rents increase for existing tenants expanding smoothly, filling the gap between the market
rate and existing rents.
On the other hand, in some of the regional cities experiencing slower economic recovery, although the level of rents has
yet to bottom out except for certain prime properties, stability in the office leasing market seem to be increasing, with gradualimprovement in occupancy rates.
(b) Real Estate Sales Market
In the capital market, against the backdrop of global excess capital, domestic and international capital is being invested
aggressively in profitable real estate by institutional investors and real estate funds, etc.
Against this strong investment demand, environment for acquisition remains difficult especially for large properties incentral Tokyo, with limited supply to the market through sale of existing properties and new properties under development.
However, there is a sign of change in supply and demand in the real estate market, with some real estate funds moving
to sell parts of their assets, with the implementation of the Financial Instruments and Exchange Law (Law No.25 of 1948) andstricter lending practices by financial institutions.
(2) Status of Managements for the Eighth Fiscal Period
To comply with the basic policy of acquiring only such properties that would generate stable cash flow over the mid- to long-term, theCompany continues to invest in properties with strong competitiveness both in terms of locations and basic building features.
During the eighth fiscal period, we have proactively collected information in accordance with the above-mentioned basic policy.
As a result of careful investigation of a number of investment opportunities which obtained through collaboration with Nomura Real
Estate Group and the utilization of an Asset Management Company’s own information pipeline, we made new investments on
Hatchobori NF Building (Chuo-ku, Tokyo, at the acquisition price of ¥3.16 billion, beneficial interest in real estate trust) in August, 2007,
Yokohama Odori Koen Building (Naka-ku, Yokohama City, ¥2.99 billion, real estate) in September, 2007, Kita-Sanjo Building (Chuo-ku,
Sapporo City, ¥3.43 billion, real estate), accumulating prime assets in central Tokyo, suburban Tokyo and regional cities.
As a result of the above acquisition, the Company’s total assets under management (“portfolio”) as of the end of the eighth fiscal
period (October 31, 2007) has reached 34 properties totaling ¥292.4 billion (total acquisition price). We have steadily increased the sizeof the portfolio, while seeking diversification of the assets.
In property management, we continued to focus on the growth of portfolio revenue (or internal growth of portfolio), improved thelevel of satisfaction of the existing tenants through conducting the spot-on property management, and held proactive rent negotiationreflecting the favorable rental market for property owners. For prospective tenants, we implemented strategic marketing especially forproperties in regional cities with room for improvement of occupancy. As a result, the average occupancy rate stayed stably around
98% throughout this period, reaching 97.9% at the end of the period.
Furthermore, approximately 50% of leases renewed with existing tenants during this period agreed to upward revision ofrent, continuing the favorable performance from the previous period (54%).

19

Reflecting these results, the appraisal value of portfolio at the end of the period was ¥366.9 billion, up 5% from the previous
period. (Appraisal value at the end of the seventh period was used for the 31 properties held at the end of the seventh period, andappraisal price at the time of acquisition was used for the other properties acquired during the eighth period.)
Note 1: “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. but excluding Nomura Real Estate Asset Management Co., Ltd. (referred to as theAsset Management Company hereinafter).
Note 2: The “trust beneficial interest in real estate” refers to a beneficial interest arising from a trust in which real estates are the primary underlying assets.

(3) Status of Funding
Concerning funding through interest-bearing debts, the Company has the basic financial policy of funding through promotion of
long-term, diversified and fixed interest rate debts, for the purpose of securing financial stability and avoiding future interest raterisks. Based on this policy, the Company has implemented funding through long-term debts and issuance of investment
corporation bonds, while establishing a total of ¥40 billion of commitment line for the purpose of flexible funding at the time ofproperty acquisition and reduction of refinancing risks, from the perspective of securing stable funding base.
During the eighth fiscal period, the Company secured short-term borrowing of ¥10 billion based on the commitment line forinvestment in the above three properties. As a result, total amount of interest-bearing debts outstanding as of the end of eighthfiscal period was ¥140 billion.

3. STATUS OF CAPITALType of Issue

ChangeBalance

ChangeBalance

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

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

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

400
148,600
183,600
184,650
228,650
229,970
264,770
265,903200
71,506
19,866595
31,496944
31,1431,013

200
71,706
91,572
92,168
123,665
124,610
155,753
156,767(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)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.

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

High
Low

(¥)
(¥)

1,540,000
935,000

1,560,000
956,000

8th Period
7th Period
6th Period
5th Period
4th Period
from May 1, 2007 from Nov 1, 2006 from May 1, 2006 from Nov. 1, 2005 from May 1, 2005
to Oct. 31, 2007
to Apr. 30, 2007
to Oct. 31, 2006
to Apr. 30, 2006
to Oct. 31, 2005

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

4,498,622
76
4,498,546(16,918)
4,498,546(16,918)–(–)

4,466,301
12,426
4,453,875(16,750)
4,453,875(16,750)–(–)

4,229,293
106
4,229,187(15,905)
4,229,187(15,905)–(–)

3,596,294
23
3,596,270(15,638)
3,596,270(15,638)–(–)

3,484,171
126
3,484,045(15,150)
3,484,045(15,150)–(–)

Unitholders’ Capital (¥ mln)

Date

8th Period
7th Period
from May 1, 2007 from Nov 1, 2006
to Oct. 31, 2007
to Apr. 30, 2007

In order to qualify for special tax treatment under Article 67-15 of the Special Taxation Measures Law (Law No. 26 of 1957) to havemaximum cash distribution amount treated as deductible dividends, the Company distributed the entire unappropriated retained
earnings except for fractional amounts smaller than one yen per each investment unit. As a result, the amount of cash distribution
per unit for this fiscal period was ¥16,918.

5. INVESTMENT POLICY AND FUTURE ISSUES

Changes in the number of units issued and unitholders’ capital for the last five years are as follows.
Number of Units Issued (Unit)

4. CASH DISTRIBUTION

6th Period
5th Period
4th Period
from May 1, 2006 from Nov. 1, 2005 from May 1, 2005
to Oct. 31, 2006
to Apr. 30, 2006
to Oct. 31, 2005

1,040,000
803,000

1,030,000
778,000

850,000
748,000(1) Investment Environments
For the time being, the effect on Japanese economy by the possible slowing of US economy caused by the subprime loan
problems, as well as by the stronger yen and surging oil prices needs to be determined, however, stable economic expansion
should continue in the mid-term.
Office leasing market in metropolitan Tokyo and other large cities are expected to see improvement in occupancy rate andrent levels against the backdrop of growing demands for expansion of space and establishment of new offices by corporations
supported by strong business performance. Other regional cities are likely to experience gradual improvement of occupancy rate,and certain prime properties may see bottoming-out of the rent level.
In the real estate sales market, the supply of income properties is expected to remain tight. On the other hand, as theeffects of implementation of the Financial Instruments and Exchange Law, the changes in lending practices by the financial
institutions, and the changes in capital market environment such as interest rate hikes may affect the cap rates and property
liquidity, such change in the environment continues to demand attention.
(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 market environments will help us market the potential tenants more organically. We will maintain anduplift the occupancy rate and level of rents in pursuit of sustainable and improved profitability of portfolio, namely internal
growth of portfolio, over the mid- to long-term.
By putting the know-how of Nomura Real Estate Group together, we seek to design the most suitable specifications of
how 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) 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 and issuance of investment corporation bonds (both by way of public
offering and private placement) from a wide range of available sources of funding to ensure a well-balanced structure ofinterest-bearing debts.
Note: “LTV (Loan-to-Value)” refers to ratio of interest-bearing debts over the total assets.

20

21

Profile of the Company(c) Enlargement of Portfolio by Acquisition of New Properties
We will aim to increase the revenue by enlarging the size of the portfolio up to ¥500 billion in the medium term. The larger the
scale of the portfolio, the easier it will be to promote further diversity of investment, which in turn will decrease the potential
fluctuations in revenue, and enable us to control the cost of management and/or administration more effectively.
We do not think it is wise to engage in overly heated competition in acquiring investment properties. In order for us tomake right investments in properties of good value, we need to collect information earlier about the investment properties
offered in the market, and conduct an in-depth due diligence to assess the potential risks involved in such investments. To
make this protocol function and increase the trading opportunities for us, we will improve our own information-collecting
capacity in cooperation with other companies of Nomura Real Estate Group. By combining the professional know-how such as
market research and engineering organically, we believe we can strengthen our ability to appraise the properties and establish
further creditworthiness in the market.
In making an investment decision, we will adhere to strict rules to ensure that the new property will bring stable revenues
to the entire portfolio in the light of mid- to long-term perspective.

1. STATUS OF UNITHOLDERS’ CAPITAL
8th Period
7th Period
6th Period
5th Period
4th Period(as of Oct. 31, 2007) (as of Apr. 30, 2007) (as of Oct. 31, 2006) (as of Apr. 30, 2006) (as of Oct. 31, 2005)

Maximum number of units allowed to issue
Number of units issued
Amount of unitholders’ capital
Number of unitholders

Unit
Unit
¥ mln

2,000,000
265,903
156,767
11,4922,000,000
265,903
156,767
12,5002,000,000
265,903
156,767
15,2052,000,000
229,970
124,610
15,884

Number ofUnits Held
(Unit)

Portion in
the Total
Units Issued (%)

2. MATTERS CONCERNING THE INVESTMENT UNITS
The 10 largest unitholders as of October 31, 2007 were as follows.

6. IMPORTANT EVENTS SUBSEQUENT TO THE EIGHTH FISCAL PERIOD
Name

There is no relevant matter under this subject.

2,000,000
229,970
124,610
13,129Japan Trustee Service Bank, Ltd. (Trust Accounts)

21,557

8.11

NikkoCiti Trust and Banking Corp. (Trust Accounts)

19,122

7.19

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

16,448

6.19

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

15,383

5.79

Nomura Real Estate Development Co., Ltd.

13,326

5.01

Kawasaki Gakuen

7,000

2.63

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

6,954

2.62

The Bank of Ikeda, Ltd.

5,387

2.03

The State Street Bank and Trust Company

5,168

1.94

The Bank of New York, Treaty JASDEC Account
Total

4,850

1.82

115,195

43.32

3. BREAKDOWN OF UNITHOLDERS
The breakdown of unitholders as of October 31, 2007 was as follows.
Number ofPrivate and other investors
Financial institutions(Including securities companies)

Portion (%)

per Unitholders

Portion (%)

10,884

94.7

26,480

10.0

164

1.4

143,315

53.9

Other domestic corporate investors

185

1.6

25,734

9.7

Foreign corporate investors, etc.

259

2.3

70,374

26.5

11,492100.0

265,903

100.0

Total

22

Number of Units

Unitholders

23

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

1. COMPOSITION OF ASSETSName of directors and an auditor in the eighth fiscal period are as follows (Note1).
Title

Name

Other Major Title(s)8th Period (as of Oct. 31, 2007)
Total Amount of Fees
Paid during 8th Period (¥000)

Isamu Okada (Note 2)

President and Representative Director, Yokohama
Business Park Heating and Cooling Supply Co., Ltd.

Executive Director

Mitsuharu Sato (Note 3)

Corporate Auditor, Nomura Real Estate Holdings, Inc.
Corporate Auditor, Nomura Real Estate Development Co., Ltd.

1,200

Supervisory Director

Yoshiharu Hayakawa (Note 2) Representative, Kasumi Empowerment Research Institute

1,200Supervisory Director

Shuhei Yoshida (Note 3)

Representative Lawyer, Yoshida Shuhei Law Office

2,400Supervisory Director

Eitoku Aikawa (Note 3)Counsellor, Fair Appraisers, K.K.

2,400

Supervisory Director

Saneaki Ichijo (Note 3)Partner, Anderson Mori & Tomotsune Law Firm

1,200

Motoharu Yokose (Note 3)

Advisor, Asahi Tax Partners
Representative Director, BOS Inc. (Note 4)

1,200

Executive Director

Supervisory Director
Accounting Auditor

Earnst & Young ShinNihon–

Type of Assets

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)

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., Nikko Citigroup Limited, Mizuho Securities Co., Ltd.

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.

Total Amount (¥ mln)
(Note 2)

Portion (%)(Note 3)

3.5

11,5103.6

Suburban Tokyo

6,690

2.0

3,698

1.2

Other Regional Cities

3,446

1.1

–

–

Central Tokyo

165,066

50.5

162,301

51.5

Suburban Tokyo

34,37910.5

34,568

11.0

Other Regional Cities

70,804

21.7

70,051

22.2

Subtotal

291,853

89.3

282,130

89.5

Cash, deposits and other assets

34,858

10.7

33,272

10.5

326,711100.0

315,402

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, 2007 are as follows.

5. ASSET MANAGEMENT COMPANY, CUSTODIANS AND ADMINISTRATORS
Asset Management Company, custodians and administrators as of October 31, 2007 are as follows:

7th Period (as of Apr. 30, 2007)

Portion (%)(Note 3)

11,465

Real estate

12,000Total Amount (¥ mln)
(Note 2)Central Tokyo

1,200

Note 1: No Executive Directors or Supervisory Directors are in possession of the Company’s investment units either under their own or other person’s name. Supervisory Directors
might serve as directors of other companies, but there are no mutual business interests whatsoever between such companies and the Company.
Note 2: Resigned on August 7, 2007, at expiry of the term as a director of the Company.
Note 3: Appointed as directors of the Company on August 8, 2007, based on the resolution of the third General Unitholders’ Meeting held on July 23, 2007 (Supervisory Directors
Mr. Yoshida and Mr. Aikawa are reappointed, Executive Director Mr. Sato, Supervisory Directors Mr. Ichijo and Yokose are newly appointed).
Note 4: Supervisory Director Mr. Yokose has resigned as a Representative Director of BOS Inc. as of September 30, 2007.
Note 5: At the third General Unitholders’ Meeting held on July 23, 2007, Mr. Atsushi Ogata, Director of the Asset Management Company, Nomura Real Estate Asset Management
Co., Ltd, has been appointed as substitute Executive Director.

Area(Note 1)Name of Property

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

Leased Space(m2)

Occupancy Rate(%)

Portionof Rental
Revenues (%)

Primary Use

Shinjuku Nomura Bldg.

39,031

31,589.26

30,117.06

95.3

16.2

OfficeJAL Bldg.

33,53042,084.11

42,084.11

100.0(Note 1)

OfficeOmron Kyoto Center Bldg.

23,507

34,616.84

34,616.84

100.0(Note 1)

OfficeNOF Nihonbashi-Honcho Bldg.

20,571

19,233.28

18,708.05

97.3

7.0

OfficeTennozu Park Side Bldg.

13,767

18,051.61

18,051.61

100.0

6.8

OfficeNOF Midosuji Bldg.

12,914

12,240.88

12,240.88

100.0

4.1

OfficeNOF Shibuya Koen-dori Bldg.

12,5393,420.16

3,420.16

100.0

3.1

OfficeSecom Medical Bldg.

11,4658,821.24

8,821.24

100.0(Note 1)

Medical Office(Note 2)NOF Shiba Bldg.

10,0728,165.10

8,165.10

100.0

2.8

OfficeOfficeNOF Kawasaki Higashiguchi Bldg.
Total

9,576

8,253.41

7,899.62

95.7

2.7

186,976

186,475.89

184,124.67

98.7

57.3 (Note 3)

Note 1: Not disclosed due to compelling reasons.
Note 2: Although this property is currently registered as “clinic/car park” 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 3: “Total” for “Portion of Rental Revenues” column include rental revenues for properties which do not disclose “Portion of Rental Revenues” due to unavoidable reasons.

2425

3. DETAILS OF PORTFOLIO PROPERTIESName of Property

Location(Postal Address)

Type ofOwnership

Appraisal Valueas of Oct. 31, Book Value
2007 (¥ mln)(¥ mln)(Note 1)
(Note 2)Central Tokyo
Shinjuku Nomura Bldg. (Note 3)

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

JAL 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 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, TokyoNOF Tameike Bldg.

1-1-14 Akasaka, Minato-ku, TokyoNOF Shinagawa Kounan Bldg.

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

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

Hatchobori NF Bldg.

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

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

NOF Minami-Shinjuku Bldg.

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

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

70,90039,031

32,90033,53026,70020,571

22,00013,767

13,90012,53911,60011,465

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

10,80010,072

10,200

8,771

8,310

7,652

6,780

5,492

7,040

5,117

3,160

3,179

3,790

3,076

Subtotal

2,870

2,263

230,950

176,531

8,830

7,135

7,660

6,180

4,100

3,689

Suburban TokyoNOF Toyo-cho Bldg.

1-6-35 Shinsuna, Koto-ku, TokyoNOF Technoport Kamata Center
Bldg.
Crystal Park Bldg.

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

Faret Tachikawa Center Square

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

1-1-3 Gotenyama, Musashino City, TokyoNOF Kawasaki Higashiguchi Bldg. 3-1 Ekimae Honcho, Kawasaki-ku, Kawasaki City,NOF Yokohama Nishiguchi Bldg.
NOF Shin-Yokohama Bldg.
Yokohama Odori Koen Bldg.

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

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

Subtotal

5,580

3,075

10,100

9,576

7,800

5,033

4,420

3,379

2,860

3,001

51,35041,070

Other Regional Cities
Sapporo North Plaza
Kita-Sanjo Bldg.
NOF Sendai Aoba-dori Bldg.
NOF Utsunomiya Bldg.
NOF Nagoya Yanagibashi Bldg.
Omron Kyoto Center Bldg.
NOF Midosuji Bldg.
Nomura Osaka Bldg.
Nomura Yotsubashi Bldg.
NOF Kobe Kaigan Bldg.
Hiroshima Tatemachi NOF Bldg.
Nomura Hiroshima Bldg.
Subtotal
Grand total

26

4-2-2 Kitaichijo-nishi, Chuo-ku, Sapporo City, Hokkaido Beneficial Interest in(Note 4)
Real Estate Trust
3-1-25 Kitasanjo-nishi, Chuo-ku, Sapporo City,
Real Estate
Hokkaido (Note 4)
2-1-2 Ichiban-cho, Aoba-ku, Sendai City, Miyagi
Beneficial Interest in
Real Estate Trust
2-1-1 Baba-dori, Utsunomiya City, Tochigi
Beneficial Interest in
Real Estate Trust
1-16-28 Meieki-Minami, Nakamura-ku, Nagoya City,
Beneficial Interest in
Aichi
Real Estate Trust
801 Minami Fudodo-cho, Horikawa Higashi-iru,
Beneficial Interest in
Shiokoji-dori, Shimogyo-ku, Kyoto City, Kyoto (Note 4) Real Estate Trust
3-5-7 Kawaramachi, Chuo-ku, Osaka City, Osaka
Beneficial Interest in
Real Estate Trust
1-8-15 Azuchi-cho, Chuo-ku, Osaka City, Osaka
Beneficial Interest in
Real Estate Trust
1-4-4 Awaza, Nishi-ku, Osaka City, Osaka
Beneficial Interest in
Real Estate Trust
3 Kaigan-dori, Chuo-ku, Kobe City, Hyogo (Note 4)
Beneficial Interest in
Real Estate Trust
1-20 Tatemachi, Naka-ku, Hiroshima City, Hiroshima
Beneficial Interest in
Real Estate Trust
2-23 Tatemachi, Naka-ku, Hiroshima City, Hiroshima
Beneficial Interest in
Real Estate Trust

6,928

7,044

3,020

3,446

3,430

3,182

3,570

2,693

3,790

3,656

24,20023,507

14,00012,914

11,000

6,395

6,610

3,717

3,460

3,028

2,060
2,570
84,638366,938

2,335
2,327
74,251
291,853

Note 1: “Appraisal Value as of Oct. 31, 2007” 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 Tanizawa Sogo
Appraisal Co., Ltd., Appraisal Firm A-Square Co., Ltd., HIRO & REAS Network, Inc., Daiwa Real Estate Appraisal, Co., Ltd., Morii Appraisal & Investment Consulting Inc.,
Chuo Real Estate Appraisal Co., Ltd., or Japan Real Estate Agency (judicial foundation) using the capitalization approach, with the end of the eighth fiscal period, i.e.
October 31, 2007, 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, and construction in progress, 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 Oct. 31, 2007 accounted solely for the quasi coownership.
Note 4: Residential indication of the property is not available yet.

Name of Property

Central Tokyo
Shinjuku Nomura Bldg.
JAL Bldg.
NOF Nihonbashi-Honcho Bldg.
Tennozu Park Side Bldg.
NOF Shibuya Koen-dori Bldg.
Secom Medical Bldg.
NOF Shiba Bldg.
Nishi-Shinjuku Showa Bldg.
NOF Tameike Bldg.
NOF Shinagawa Kounan Bldg.
NOF Surugadai Plaza Bldg.
Hatchobori NF Bldg.
NOF Kanda Iwamoto-cho Bldg.
NOF Minami-Shinjuku Bldg.
Subtotal
Suburban TokyoNOF Toyo-cho Bldg.
Technoport Kamata Center Bldg.
Crystal Park Bldg.
Faret Tachikawa Center Square
NOF Kawasaki Higashiguchi Bldg.
NOF Yokohama Nishiguchi Bldg.
NOF Shin-Yokohama Bldg.
Yokohama Odori Koen Bldg. (Note 4)
Subtotal
Other Regional Cities
Sapporo North Plaza
Kita-Sanjo Bldg. (Note 5)
NOF Sendai Aoba-dori Bldg.
NOF Utsunomiya Bldg.
NOF Nagoya Yanagibashi Bldg.
Omron Kyoto Center Bldg.
NOF Midosuji Bldg.
Nomura Osaka Bldg.
Nomura Yotsubashi Bldg.
NOF Kobe Kaigan Bldg.
Hiroshima Tatemachi NOF Bldg.
Nomura Hiroshima Bldg.
Subtotal
Grand Total

8th Period (from May 1, 2007 to Oct. 31, 2007)

7th Period (from Nov. 1, 2006 to Apr. 30, 2007)

at Period End
RentalNumber of
Revenues
PortionTenants
Occupancy during theof Rental(Note 1)
Rate (%) Period (¥ mln) Revenues (%)

at Period End
Number of
Tenants
Occupancy(Note 1)
Rate (%)

RentalRevenues
Portionduring theof Rental
Period (¥ mln) Revenues (%)

82
1
11
14
3
1
9
20
13
5
1
8
8
5
181

95.3
100.0
97.3
100.0
100.0
100.0
100.0
93.9
100.0
100.0
100.0
100.0
100.0
100.0
98.6

1,935
(Note 2)
837
818
365
(Note 2)
339
313
225
263
(Note 2)47
153
106
(Note 3)

16.2
(Note 2)
7.0
6.8
3.1
(Note 2)
2.8
2.6
1.9
2.2
(Note 2)
0.4
1.3
0.9
(Note 3)

85
1
13
14
3
1
9
20
13
5
1
–
8
5
178

99.4
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
–
100.0
100.0
99.9

1,808
(Note 2)
850
774
364
(Note 2)
332
300
204
257
(Note 2)–
150101
(Note 3)

16.3
(Note 2)
7.7
7.0
3.3
(Note 2)
3.0
2.7
1.8
2.3
(Note 2)–1.4
0.9
(Note 3)

1
14
11
17
26
31
3
1
104

100.0
100.0
100.0
100.0
95.7
100.0
100.0
94.0
99.1

(Note 2)
455
131
242
322
253
(Note 2)21
(Note 3)(Note 2)
3.8
1.1
2.0
2.7
2.1
(Note 2)0.2
(Note 3)

1
14
11
17
26
30
3
–
102

100.0
100.0
100.0
100.0
97.2
98.6
100.0
–
99.5

(Note 2)
421
125
234
328
245
(Note 2)–
(Note 3)(Note 2)
3.8
1.1
2.1
3.0
2.2
(Note 2)–
(Note 3)

44
10
28
24
11
1
16
28
18
29
24
15
248

91.6
96.7
95.6
97.3
91.3
100.0
100.0
100.0
100.0
87.5
77.6
92.4
96.5

2.9
0.2
1.4
1.5
1.2
(Note 2)
4.1
4.6
2.7
1.4
0.8
1.7
(Note 3)

44
–
28
25
12
1
16
28
17
28
23
15
237

88.4
–
95.2
100.0
100.0
100.0
100.0
100.0
100.0
80.0
72.0
94.1
96.1

97.9

100.0

517

98.5

338
–
168
174
133
(Note 2)
488
534
324
160
101
209
(Note 3)
10,090(Note 6)

3.0
–
1.5
1.6
1.2
(Note 2)
4.4
4.8
2.9
1.4
0.9
1.9
(Note 3)

533

345
21
163
176
143
(Note 2)
494
547
328
169
100
207
(Note 3)
11,958(Note 6)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. 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 foreach building as if they are leased by different tenants. As for Shinjuku Nomura Building, the number of tenants in the entire building is taken into account.
Note 2: Not disclosed due to compelling reasons.
Note 3: Subtotal of “Rental Revenues” and “Portion of Rental Revenues” for each area is not disclosed due to compelling reasons.
Note 4: Former owner of the property had temporarily leased this property (building) entirely for the purpose of subleasing to the end-tenant by November 30, 2007. Considering
the foregoing, the occupancy rate as of end of eighth fiscal period in the above table indicates the occupancy rate based on leasing conditions with the end-tenant. Total
number of end-tenants as of end of eighth fiscal period is 14.
Note 5: Former owner of the property had temporarily leased part of this property (building) for the purpose of subleasing to the end-tenant by November 30, 2007. Considering the foregoing,
the occupancy rate as of end of eighth fiscal period in the above table indicates the occupancy rate based on leasing conditions with the tenants the Company is directly leasing to andend-tenants of according to the sublease by the former owners. Total number of end-tenants as of end of eighth fiscal period (including direct tenants of the Company) is 17.
Note 6: Grand Total includes those not disclosed due to compelling reasons.

4. OUTSTANDING AMOUNT AND CURRENT PRICE OF SPECIFIED TRANSACTIONS
The outstanding amount and current price of the specified transactions as of October 31, 2007 are as follows.
Contract Amount (¥ mln) (Note 1)
Segment

Longer than a Year

Type of Transaction

Transaction other than market transaction Interest rate swap

(Receiving floating-rate, paying fixed-rate)

Total

Current
Price (¥ mln)
(Note 2)51,50035,500147

51,50035,500147

Note 1: Presented based on notional principal of contract.
Note 2: Evaluated at the price provided by the counterparty based on the prevailing market rate.

5. STATUS OF THE OTHER ASSETS
Other than the Trust Beneficial Interest and Real Estate listed in the table under the title “3. Details of Portfolio Properties”,
the Company had no other assets to integrate into the portfolio as at of October 31, 2007.

27

Capital Expenditures
1. PLAN OF CAPITAL EXPENDITURES

3. FUNDS RESERVED FOR THE LONG-TERM REPAIR PLANS

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, 2007. The estimated cost of works includes the amount to be charged as“expenses” for accounting purposes.

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.

Estimated Cost (¥ mln) (Note 1)
Paid during
Paid before
Total
8th Period
8th Period

Description of Works (Purpose)

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

Renewal of exclusively owned
area (To increase revenues)

From: Jan. 2008
To:
Mar. 2008250

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

Renewal of elevators(To increase quality)

From: Dec. 2007
To:
Oct. 2008

196

–

–

Sapporo North Plaza(Chuo-ku, Sapporo City)

Aseismic retrofitting(To increase quality)(Note 2)

From: Nov. 2007
To:
May 2008

299

20

20

Sapporo North Plaza(Chuo-ku, Sapporo City)

Renewal of air-conditioning
system (To increase quality)(Note 3)

From: Nov. 2007
To:
Dec. 2007

118

–

–

NOF Nagoya Yanagibashi Bldg.
(Nakamura-ku, Nagoya City)

Renewal of air-conditioning
system (To increase quality)(Note 2)

From: Nov. 2007
To:
Oct. 2008

155

–

–

NOF Midosuji Bldg.
(Chuo-ku, Osaka City)

Renewal of air-conditioning
system and AHU (To increase
quality) (Note 2)

From: Nov. 2007
To:
Apr. 2008

50

–

–

Hiroshima Tatemachi NOF Bldg.
(Naka-ku, Hiroshima City)

Renewal of entrance hall
(To increase revenues)(Note 2)

From: Nov. 2007
To:
Dec. 2007

43

–

–

Nomura Hiroshima Bldg.
(Naka-ku, Hiroshima City)

Renewal of air-conditioning
system (To increase quality)(Note 2)

From: Nov. 2007
To:
Apr. 2008

269

–

–

Name of Property (Location)–

6th Period
5th Period
4th Period
8th Period
7th Period
from May 1, 2007 from Nov. 1, 2006 from May 1, 2006 from Nov. 1, 2005 from May 1, 2005
to Oct. 31, 2007 to Apr. 30, 2007
to Oct. 31, 2006
to Apr. 30, 2006
to Oct. 31, 2005
¥mln
¥mln
¥mln
¥mln
¥mln

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

938
718
1,060
596

935
693
690
938

761
671
497
935

1,054
600
893
761

833
528
307
1,054

Expenses and Liabilities
1. EXPENSES RELATED TO ASSET MANAGEMENT

Note 1: 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.
Note 2: These works have already been implemented as of the date of this report.
Note 3: Completed as of the date of this report.

Asset management fees (Note 1)of which Management Fee I
of which Management Fee IIof which Management Fee III
Custodian fees
General administrative fees
Directors’ compensation
Other expenses
Total

8th Period
from May 1, 2007
to Oct. 31, 2007¥000

7th Period
from Nov. 1, 2006
to Apr. 30, 2007
¥000

874,405
556,491
317,914–
25,57759,671
10,80081,9481,052,401

976,483
499,962
323,121
153,399
24,462
57,405
10,00079,2581,147,609

Note 1: 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.

2. CAPITAL EXPENDITURES DURING THE EIGHTH FISCAL PERIOD
The table below lists capital expenditures during the eighth fiscal period in conjunction with the major works of renovation. During
the period, we have conducted engineering works totalling ¥1,614 million: capital expenditures of ¥1,252 million and repair expensesof ¥362 million combined all together.

Name of Property (Location)

Period of Works

Cost of
Works (¥mln)

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Renewal of sanitary piping(To increase quality)

From: May 2007
To:
Oct. 200747

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

Renewal of heat pipes(To increase quality)

From: May 2007
To:
Oct. 200740

NOF Shinagawa Kounan Bldg.
(Shinagawa-ku, Tokyo)

Renewal of air-conditioning system(To increase quality)

From: May 2007
To:
May 2007

46

Sapporo North Plaza(Chuo-ku, Sapporo City)

Renewal of air-conditioning system(To increase quality)

From: May 2007
To:
Oct. 2007

91

NOF Midosuji Bldg.
(Chuo-ku, Osaka City)

Renewal of air-conditioning system and AHU(To increase quality)

From: May 2007
To:
Oct. 2007

43

Hiroshima Tatemachi NOF Bldg.
(Naka-ku, Hiroshima City)

Aseismic retrofitting(To increase quality)

From: May 2007
To:
Oct. 2007

211

Nomura Hiroshima Bldg.
(Naka-ku, Hiroshima City)

Renewal of power receiving and electric transformationequipments(To increase revenues)

From: May 2007
To:
Oct. 2007

155

Other Properties

Improvement of features

From: May 2007
To:
Oct. 2007

615

Total

28

Description of Works (Purpose)

1,252

29

2. STATUS OF BORROWINGSThe status of borrowings from the financial institutions as of October 31, 2007 is as follows.

Financial Institutions

Short-term Borrowing
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Mizuho Corporate 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 Mizuho Corporate Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, 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 Mizuho Corporate Bank, Ltd.
Subtotal

Date
Borrowed

Mar. 19, 2007

Aug. 9, 2007

Aug. 27, 2007

Sep. 27, 2007

Long-term Borrowing Due Within a Year
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Feb. 28, 2005
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
The Chiba Bank, Ltd.
Dec. 8, 2004
The Hachijuni Bank, Ltd.
The Hiroshima Bank, Ltd.
The Keiyo Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Feb. 26, 2004
Mitsubishi UFJ Trust and Banking Corp.
The Chuo Mitsui Trust & Banking Co., Ltd.
The Iyo Bank, Ltd.
The Dai-Ichi Mutual Life Insurance Company Feb. 26, 2004
The Yamanashi Chuo Bank, Ltd.
The Chugoku Bank, Ltd.
Dec. 9, 2005
The Bank of Fukuoka, Ltd.
The Aozora Bank, Ltd.
Subtotal
Total Short-term Borrowing

Outstanding as of Outstanding as of
Average
Oct. 31, 2007
Apr. 30, 2007
Interest Rate(¥000)(¥000)(%) (Note 1)

–
–
–
–
–
1,440,000
800,000
320,000
320,000
320,000
3,500,000
3,060,000
1,700,000
680,000
680,000
680,000
13,500,000

675,000
375,000
150,000
150,000
150,000
–
–
–
–
–
–
–
–
–
–
–
1,500,000–
4,000,000
1,000,000
500,000
1,000,000
1,000,000
1,000,000
2,000,000
1,500,000
2,500,000
1,000,000
500,000
3,000,000
1,000,000
1,000,000
1,000,000
1,000,000
23,000,000
36,500,000

2,000,000
4,000,000
1,000,000
500,000
1,000,000
1,000,000
1,000,000
2,000,000
1,500,000
2,500,000
1,000,000
500,000
3,000,000––––
21,000,000
22,500,000

Date of
Repayment

1.10727

Aug. 27, 2007

1.22083

Dec. 27, 2007

1.13833

Dec. 27, 2007

1.24667

Dec. 27, 2007

1.24636

1.00625

Use of
Method of
Repayment Borrowings

Balloonpayment

Note

Unsecured/(Note 2)
UninsuredAug. 28, 2007

Dec. 8, 2007

Balloonpayment
1.22500

Feb. 26, 2008

1.05250

Feb. 26, 2008

1.29000

Aug. 26, 2008

(Note 2)

Unsecured/
UninsuredFinancial Institutions

Long-term Borrowing
The Yamanashi Chuo Bank, Ltd.
The Chugoku Bank, Ltd.
The Bank of Fukuoka, Ltd.
The Aozora Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
The Iyo Bank, Ltd.
The Norinchukin Bank, Ltd.
Mitsui Life Insurance Company
Taiyo Life Insurance Company
Daido Life Insurance Company
Mitsui Sumitomo Insurance Company
The Chiba Bank, Ltd.
The Hachijuni Bank, Ltd.
The Norinchukin Bank
Mitsui Life Insurance Company
The Chiba Bank, Ltd.
The Hiroshima Bank, Ltd.
Tokio Marine & Nichido Fire Insurance Co. Ltd.
Nippon Life Insurance Company
Sompo Japan Insurance Inc.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Mizuho Corporate Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Nomura Trust & Banking Co., Ltd.
The Mizuho Corporate Bank, Ltd.
The Chuo Mitsui Trust & Banking Co., Ltd.
The Iyo Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Trust and Banking Co., Ltd.
The Chuo Mitsui Trust & Banking Co., Ltd.
The Nomura Trust & Banking Co., Ltd.
The Iyo Bank, Ltd.
Mitsui Life Insurance Company
Taiyo Life Insurance Company
Daido Life Insurance Company.
National Mutual Insurance Federation ofAgricultural Cooperatives
Development Bank of Japan
National Mutual Insurance Federation ofAgricultural Cooperatives
Development Bank of JapanThe Daiichi Mutual Life Insurance Company
Taiyo Life Insurance Company
Daido Life Insurance Company
Sumitomo Life Insurance Company
Subtotal
Total

Date
Borrowed

Dec. 9, 2005

Dec. 8, 2003

Dec. 8, 2003

Feb. 27, 2006
Feb. 26, 2004
Feb. 26, 2004
Dec. 8, 2006

Nov. 30, 2006

Feb. 27, 2006

Mar. 19, 2007

Dec. 8, 2006

Nov. 29, 2005

Outstanding as of Outstanding as of
Average
Oct. 31, 2007
Apr. 30, 2007
Interest Rate(¥000)(¥000)(%) (Note 1)––––
2,000,000
2,000,000
1,000,000
1,000,000
2,000,000
2,000,000
1,000,000
1,000,000
1,000,000
1,500,000
500,000
3,000,000
1,000,000
1,000,000
500,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
500,000
3,000,000
2,000,000
2,000,000
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
1,000,000
1,000,000

1,000,000
1,000,000
1,000,000
1,000,000
2,000,000
2,000,000
1,000,000
1,000,000
2,000,000
2,000,000
1,000,000
1,000,000
1,000,000
1,500,000
500,000
3,000,000
1,000,000
1,000,000
500,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
500,000
3,000,000
2,000,000
2,000,000
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
1,000,000
1,000,000

Date of
Repayment

1.08818

Aug. 26, 2008

1.66750

Dec. 8, 2008

1.51625

Dec. 8, 2008

1.19000

Feb. 26, 2009

1.77500
1.50625

Feb. 26, 2010
Feb. 26, 2010

1.48375

Feb. 26, 2010

1.65500

Aug. 26, 2010

1.68000

Feb. 26, 2011

1.63825

Aug. 26, 2011

1.89764

Feb. 26, 2012

1.43750

Aug. 26, 2012

1,000,000

1,000,000

1,000,000
1,000,000

1,000,000
1,000,000

Dec. 9, 2005

1,000,000

1,000,000

1.53625

Aug. 26, 2012

Mar. 17, 2005
Dec. 8, 2006

1,000,000
2,000,000
1,000,000
1,000,000
2,000,000
59,000,000
95,500,000

1,000,000
2,000,000
1,000,000
1,000,000
2,000,000
63,000,000
85,500,000

1.75250
1.99250

Feb. 26, 2013
Feb. 26, 2013

1.98000

Mar. 19, 2014

Mar. 19, 2007

Use of
Method of
Repayment Borrowings

Balloonpayment(Note 2)

Note

Unsecured/
Uninsured

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.

30

31

3. STATUS OF INVESTMENT CORPORATION BONDS

3. PRICE INVESTIGATIONThe status of investment corporation bonds issued as of October 31, 2007 is as follows.

(1) Real Estates

Balance as ofOct. 31, 2007(¥ mln)Balance as ofApr. 30, 2007(¥ mln)Interest
Rate(%)

Maturity Date

Method of
Repayment

1.85

Mar. 16,
2015

Balloonpayment (Note 1)

2.47

Mar. 16,
2020

Balloonpayment (Note 1)(Note 2)

1.19

Nov. 29,2010

Balloonpayment (Note 1)(Note 3)

Balloonpayment (Note 1)(Note 3)Use ofProceeds

Name of Bonds

Issue DateFirst Series Unsecured
Investment Corporation Bonds

Mar. 16,
2005

Second Series Unsecured
Investment Corporation Bonds

Mar. 16,
2005

Third Series Unsecured
Investment Corporation Bonds

Nov. 28,
2005

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

Balloonpayment (Note 1)(Note 3)

Sixth Series Unsecured
Investment Corporation Bonds

Mar. 19,
2007

5,000

5,000

2.21

Mar. 17,2017

Balloonpayment (Note 1)(Note 3)Seventh Series Unsecured
Investment Corporation Bonds

Mar. 19,
2007

2.90

Mar. 17,
2028

Balloonpayment (Note 1)(Note 3)

Total

5,000
5,000
10,0005,000
5,000
10,000

4,500

4,500

44,50044,500Note

Acquisition/Disposition

Acquisition/
Disposition

Price (¥ mln)

Appraisal
Value (¥ mln)

Aug. 10, 2007

3,160

3,160

NOF Technoport Kamata Center Bldg.
(A part of the land)Aug. 31, 200725

21

Yokohama Odori Koen Bldg.

Sep. 28, 2007

2,993

2,860

Kita-Sanjo Bldg.

Sep. 28, 2007

3,430

3,020

Type of Asset

Name of Property

Date

Acquisition

Trust beneficial interestin real estate

Hatchobori NF Bldg.

Disposition

Real Estate(Note 2)Acquisition
Acquisition

Trust beneficial interestin real estate
Trust beneficial interestin real estate

Note 1: The price investigation procedures were conducted by Ernst & Young ShinNihon at the time of acquisition or disposition 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 2: “Acquisition price” and “Disposition price” do not include various costs (intermediary fees, taxes and duties, etc.) required for acquisition or disposition of the property (thepurchase and sale price of the real estate, etc., as indicated in the Transfer Agreement of Trust Beneficial Interest or Real Estate).

(2) Others
There is no transactions subjected to investigation during the period from May 1, 2007 to October 31, 2007.

4. TRANSACTIONS WITH RELATED PARTIES AND MAJOR SHAREHOLDERS

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.

(1) Transactions
Table of transactions in respect of specified assets entered into with related parties and major shareholders during the eighthfiscal period is as follows.

4. STATUS OF SHORT-TERM INVESTMENT CORPORATION BONDS

Purchase (¥000)

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

(%)

Sale (¥000)––

9,583,000
Total amount

Trading during the Eighth Fiscal Period

Amount purchased from related parties andmajor shareholders
3,160,000(33.0%)

Amount sold to related parties andmajor shareholders
–

(%)

–
( –%)

Details of transaction with related parties and major shareholders

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

Acquisition
Price (¥ mln)
(Note1)

Type of Asset

Name of Property

Date

Beneficial interestin real estate trust

Hatchobori NF Bldg.

Aug. 10, 2007

3,160

Real estate

NOF Technoport Kamata Center Bldg.
(A part of the land)––

Beneficial interest inreal estate trust (Note3)
Beneficial interest inreal estate trust (Note3)
Total

Yokohama Odori Koen Bldg.
Kita-Sanjo Bldg.

Sep. 28, 2007
Sep. 28, 2007

2,993
3,430
9,583

Date

Gain (Loss)
Price (¥ mln) Book Value (¥ mln)
(Note1)(¥ mln)(Note2)

–

–

–

–

Aug. 31, 2007

25

13

9

–
–

–

–

3,160,000(100.0%)

–

( –%)

Total

3,160,000(100.0%)–( –%)Note 1: Related parties and major shareholders refer to those bodies that have business interest and major stake in the Asset Management Company defined by Article 29-4,
Paragraph 2 of Financial Instruments and Exchange Law, with which the Company, stipulated by article 123 of Enforcement Order of Investment Trust Law, has an AssetManagement Agreement.

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

Name of Related Party and Major Shareholders

–

–

–

–

25

13

9

Note 1: ”Acquisition price” and “Disposition price” do not include various costs (intermediary fees, taxes and duties, etc.) required for acquisition or disposition of the property (thepurchase and sale price of the real estate, etc., as indicated in the Transfer Agreement of Trust Beneficial Interest or Real Estate).
Note 2: For dispositions, other sales costs of ¥1million in addition to the above have been incurred, and “Gain (Loss)” was calculated by deducting such sales costs.
Note 3: The Company acquired the properties as beneficial interest in real estate trusts. However, as the trusts have been dissolved as of the above acquisition date, and the realestates were delivered to the Company by each of the trustees, the properties have been held as real estate thereafter.

2. STATUS OF OTHER ASSETS
Other than the above-mentioned properties and asset-backed securities, the Company’s assets are mostly comprised of direct bankdeposits and bank deposits in trust.

32

CREO Investment

Amount Paid (A)(¥000)

Total Amount Paid (B)(¥000)

Portion(A) / (B)(%)

Contract-out fees

Nomura Building Management Co., Ltd. (Note 1)
Flagship Properties, Inc. (Note 2)

528,077916

890,48259.3
0.1

Property management fees

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

223,185
16,065306,559

72.8
5.2

Other expenses

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

23,587
20,678113,804

20.7
18.2

Note 1: In addition to the Property Management Agreement, the Company has entrusted Nomura Building Management Co., Ltd. with daily maintenance of building and equipments, the cost of which is included in “Contract-out Fees”.
Note 2: The Company has entrusted certain jobs such as receipt of rents, payment of disbursements and notification of repairs in conjunction with the sublease of JAL Building to
Flagship Properties. The Contract-out fees paid to Flagship Properties include remuneration for these services.
Note 3: Besides the above, the Company has made the following payments for repair works during the eighth period.
Name of Related Party
Nomura Real Estate Development Co., Ltd.
Nomura Building Management Co., Ltd.

Amount Paid (¥000)
33,654
284,61033

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

Shinjuku Nomura Bldg.
JAL Bldg.
Tennozu Park Side Bldg.
NOF Shibuya Koen-dori Bldg.
Secom Medical Bldg.
Nishi-Shinjuku Showa Bldg.
NOF Tameike Bldg.
NOF Shinagawa Konan Bldg.
NOF Surugadai Plaza Bldg.
Hatchobori NF Bldg.
NOF Minami-Shinjuku Bldg.
NOF Technoport Kamata Center Bldg.
Faret Tachikawa Center Square
NOF Yokohama Nishiguchi Bldg.
NOF Shin-Yokohama Bldg.
Omron Kyoto Center Bldg.
NOF Midosuji Bldg.
Nomura Osaka Bldg.
Nomura Yotsubashi Bldg.
Hiroshima Tatemachi NOF Bldg.
Nomura Hiroshima Bldg.
NOF Toyo-cho Bldg.
NOF Kawasaki Higashiguchi Bldg.
NOF Utsunomiya Bldg.
NOF Nagoya Yanagibashi Bldg.

Property Management Company

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

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

55,6082,943
37,061
5,910
3,789
9,409
5,548
6,012
7,172
945
3,800
12,184
6,152
8,074
4,522
5,578
14,76915,795
9,347
3,104
5,453
2,257
6,155
4,693
2,958

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

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

Other Information
1. NOTICE
The third General Unitholders’ Meeting was held on July 23, 2007. Summary of main items approved at the meeting are as follows:
AgendaSummary

Faret Tachikawa Center Square

Partial Amendment of the
Articles of Incorporation

The Articles of Incorporation were changed for the following reasons:•To make required amendments in conjunction with the establishment / revision of the Investment Trust
Law due to the implementation of the Law Concerning Adjustment and Coordination of Relevant Laws
in Association with the Enforcement of the Corporate Law.
•Establishment of indemnity clause for Accounting Auditors.
•Clarification of scope of assets eligible for investment, and clarification of positioning of securities
investment in conjunction with the Law Concerning Partial Amendment of the Securities Exchange Law.
•To make required amendments in conjunction with the tax reform, etc.
•To make required amendments to allow issuance of short-term investment corporation bonds in conjunction with the implementation of the Law Concerning Partial Amendment of the Securities Exchange Law.
•Other, including deletion of article and paragraph numbers of laws referred to, and addition of necessary clauses.
Appointment of an Executive Director Mr. Mitsuharu Sato was appointed as the Executive Director. The term shall be two years from August 8, 2007.
Appointment of a Substitute Executive Director Mr. Atsushi Ogata was appointed as the Substitute Executive Director.
Appointment of four
Mr. Shuhei Yoshida, Mr. Eitoku Aikawa, Mr. Saneaki Ichijo, and Mr. Motoharu Yokose were appointed as
Supervisory Directors
Supervisory Directors. The terms shall be two years from August 8, 2007.

Contents

Balance Sheets.............................................................36
Statements of Income and Retained Earnings .............38
Statements of Changes in Unitholders' Equity ............39
Statements of Cash Flows ...........................................40
Notes to Financial Statements .....................................41

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

34

35

Balance Sheets
As of October 31, 2007

Thousands of Yen
As of April 30, 2007ASSETS

Thousands of Yen
As of April 30, 2007

LIABILITIESCurrent Assets:
Cash and bank deposits
Rental receivables
Corporate taxes refundable
Consumption taxes refundable
Other current assets
Total current assets¥ 34,016,504
210,234
5,341
33,935
203,722
34,469,736¥ 32,050,815
168,4102,200
324,181271,183
32,816,789

Property and Equipment, at Cost:Land
Buildings and structures
Machinery and equipment
Tools, furniture and fixtures
Construction in progress
SubtotalLess accumulated depreciation
Net property and equipment

205,186,870
95,326,975
896,784
110,795
37,233
301,558,657(9,704,837)
291,853,820

198,661,209
90,782,946
797,595
87,921
17,698290,347,369(8,217,150)
282,130,219

1,827
11,394211,250–
163,860¥ 326,711,887

1,929
12,176211,230
21,290208,925¥ 315,402,558

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

As of October 31, 2007

Current Liabilities:
Trade accounts payable
Other accounts payable
Short-term debt
Accrued expenses
Rent received in advance
Other current liabilities
Total current liabilities¥

807,777
1,474,216
36,500,000
523,706
1,950,418
213,595
41,469,712¥

644,504
1,092,141
22,500,000
494,039
1,880,884
157,21226,768,780

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

44,500,000
59,000,000
20,469,198–
123,969,198

44,500,000
63,000,000
19,858,540
54,048
127,412,588

Total Liabilities

165,438,910

154,181,368

156,767,193
4,498,623
161,265,816

156,767,193
4,466,302
161,233,495

7,161
7,161

(12,305)(12,305)

161,272,977

161,221,190¥ 326,711,887¥ 315,402,558

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

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

Valuation and Translation Adjustments:
Deferred hedge gains (losses)
Total valuation and translation adjustments
Total Net Assets
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, 2007
to October 31, 2007

Thousands of Yen
For the period
from November 1, 2006
to April 30, 2007

For the period from May 1, 2007 to October 31, 2007

Operating Revenues and Expenses
Operating Revenues:
Real estate rental revenues
Gain on sale of real estate¥ 11,958,966
9,813
11,968,779¥ 11,090,988–
11,090,988

5,190,754
874,405
85,24992,7486,243,156

4,805,697
976,484
81,86889,258
5,953,307

5,725,623

5,137,681

29,751–
10,89428,45469,09914,028295,748–
94,420404,196

668,556
93,613
432,532
45,066
68,153
1,307,920

563,127
87,974
306,544
40,64176,7681,075,054

4,486,802

4,466,823

Income Taxes:
Current
Deferred

605
–

605
22

Net Income

4,486,197

4,466,196

12,426106¥ 4,498,623¥ 4,466,302

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

Operating Profit

Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Compensation for the establishment of superficies
Compensation for the transfer of structures
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

Balance as of April 30, 2007
Cash distribution paid
Net income
Interest-rate swaps
Balance as of October 31, 2007

Total
Unitholders’EquityDeferredHedge Gains(Losses)Thousands of Yen
Total Valuation
Total
and Translation
Net Assets
Adjustments

Units

Unitholders’CapitalRetained
Earnings

265,903–––
265,903¥156,767,193–––¥156,767,193¥4,466,302 ¥161,233,495(4,453,875)(4,453,875)
4,486,197
4,486,197––¥4,498,623 ¥161,265,816(¥12,305)––
19,466¥ 7,161(¥12,305) ¥161,221,190–(4,453,875)–
4,486,197
19,466
19,466¥ 7,161 ¥161,272,977

Total
Unitholders’EquityDeferredHedge Gains(Losses)Thousands of Yen
Total Valuation
Total
and Translation
Net Assets
Adjustments¥ 7,711––(20,016)(¥12,305)¥ 7,711 ¥161,004,197–(4,229,187)–
4,466,196(20,016)(20,016)(¥12,305) ¥161,221,190

For the period from November 1, 2006 to April 30, 2007

Balance as of October 31, 2006
Cash distribution paid
Net income
Interest-rate swaps
Balance as of April 30, 2007

Units

Unitholders’CapitalRetained
Earnings

265,903–––
265,903¥156,767,193–––¥156,767,193¥4,229,293 ¥160,996,486(4,229,187)(4,229,187)
4,466,196
4,466,196––¥4,466,302 ¥161,233,495

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

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, 2007
to October 31, 2007

Thousands of Yen
For the period
from November 1, 2006
to April 30, 2007

Cash Flows
Cash Flows from Operating Activities
Income before income taxes
Depreciation
Amortization of long-term prepaid expenses
Amortization of investment corporation bond issuance costs
Interest income
Interest expense
Compensation for the establishment of superficies
Compensation for the transfer of structures
Loss on disposal of property and equipment(Increase) Decrease in rental receivables
Decrease (Increase) in consumption taxes refundable
Increase in trade accounts payable(Decrease) Increase in other accounts payable
Increase in rent received in advance
Decrease in property and equipment due to sale
Changes in other current assets/liabilities
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by operating activities¥ 4,486,802
1,518,317
1,256
45,066(29,751)
1,101,088–(10,894)
1,607(41,823)
290,245
163,273(101,745)
69,534
13,906
108,5447,615,425
29,751(1,069,888)(3,746)
6,571,542¥ 4,466,823
1,478,443
1,228
40,641(14,028)
869,671(295,748)––
5,506(319,808)
91,104229,101
121,742–(14,366)
6,660,309
14,028(832,617)(3,280)5,838,440

Cash Flows from Investing Activities
Payments for purchases of property and equipment
Reimbursement of security deposits to tenants
Proceeds from security deposits from tenants
Payments of security deposits
Proceeds from compensation for the establishment of superficies
Proceeds from compensation for the transfer of structures
Net cash used in investing activities(10,773,722)(482,237)
1,092,895(20)–
10,894(10,152,190)(24,093,267)(854,930)
3,347,824–
295,748–(21,304,625)

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
Payments of investment corporation bond issuance costs
Distributions to unitholders
Net cash provided by financing activities

13,500,000(1,500,000)–(2,000,000)––(4,453,663)
5,546,337

1,500,000(2,000,000)
25,500,000(15,500,000)
14,500,000(124,542)(4,227,733)
19,647,725

1,965,689
32,050,815¥ 34,016,504

4,181,540
27,869,275¥ 32,050,815

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.

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 JREIT and started operations on the following day. As of October 31, 2007, the Company owned a portfolio of 34 office properties
containing an aggregate of approximately 362,773.62 square meters of leasable area and leased office space to 533 tenants.

2. BASIS OF PRESENTATIONThe Company maintains its accounting records and prepares its financial statements in accordance with accounting principles
generally accepted in Japan (“Japanese GAAP”), including provisions set forth in the Investment Trust Law of Japan, the Corporation
Law of Japan, the Financial Instruments and Exchange Law and related regulations, which are different in certain respects as to theapplication 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 information that might not be required under Japanese GAAP but is presented
herein as additional information. Amounts have been rounded to the nearest thousand of yen in the accompanying financial
statements and the notes whereas amounts were truncated in the Japanese financial statements prepared in accordance withJapanese GAAP.
The Company’s fiscal period is a six-month period which ends at the end of April or October. The Company does not prepare
consolidated financial statements because it has no subsidiaries.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESCash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments that are highly
liquid, readily convertible to cash, with an insignificant risk of market value fluctuation, and with a maturity of three months orless when purchased.
Property and equipment
Property and equipment are stated at cost, which includes the purchase price and related costs for acquisition, lessaccumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the fixed
assets outlined below:
Buildings
3 - 69 years
Structures
2 - 45 years
Machinery and equipments
3 - 15 years
Tools, furniture and fixtures
3 - 15 years
Intangible assets
Intangible assets are amortized by the straight-line method.
Impairment of fixed assets
The Company reviews fixed assets for impairment whenever events or changes in circumstances indicate that the carrying
amount of its fixed assets may not be recoverable. An impairment loss is recognized if the carrying amount of its fixed assets
exceeds the respective aggregate of the estimated future cash flows. If the fixed assets are determined to be impaired, it is
written down to its recoverable amount and the write-down is recorded as an impairment loss during the current period. No
impairment losses have been recognized to date.
Deferred investment corporation bond issuance costs
Deferred investment corporation bond issuance costs are amortized over the terms of the bonds by the straight-line method.
Deferred investment corporation bond issuance costs that were reported on the balance sheets at October 31, 2006 or prior to
the six-month period then ended were amortized over a period of three years, with an equal amount amortized in each fiscal
period based on the previous method of accounting.
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 theearnings and expenses incurred from such trust are properly reflected in the accompanying balance sheets and statements ofincome 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.
Property related taxes
Property related taxes including property taxes, urban planning taxes and depreciable property taxes imposed during the fiscal
period are charged as rental expenses.

40

41

6. INVESTMENT CORPORATION BONDS

On the other hand, the Company paid the amount equivalent to the property related taxes to the respective sellers ofproperties applicable to the period since acquisition and capitalized such amounts as part of the costs to acquire suchproperties or beneficial interests in real estate. The capitalized property related taxes amounted to ¥14,593 thousand for thesix-month period ended October 31, 2007, and ¥3,257 thousand for the six-month period ended April 30, 2007.

Details of investment corporation bonds outstanding are summarized as follows:
As of October 31, 2007

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.

Amount(Thousandsof Yen)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, effective September 1, 2006, the Company has applied
special treatment to those interest-rate swap contracts that meet the criteria for such special treatment based on the revised
Investment Trust Law (effective beginning on May 1, 2006) and partial Amendment of the Articles of Incorporation. Under the
special treatment, interest-rate swaps are not remeasured at fair value; instead, the net amount paid or received under theinterest rate swap contract is recognized and included in interest expense or income.

4. SCHEDULE OF PROPERTY AND EQUIPMENT
Property and equipment as of October 31, 2007 and April 30, 2007 consist of the following:Thousands of Yen
As of October 31, 2007

Land
Buildings and structures
Accumulated depreciation
Machinery and equipment
Accumulated depreciation
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
Construction in progress in trust
Total

Acquisition Costs

Book Value¥ 14,817,807¥ 11,007,994
4,209,874(107,723)
106,498(7,506)
187,653,215
86,573,072(7,875,893)
691,097(207,873)
87,921(18,155)
17,698¥ 282,130,219¥ 11,007,994

79,247,386
512,353
85,037
37,233¥ 291,853,820

98,992
187,653,215
78,697,179
483,224
69,766
17,698¥ 282,130,219

Short-term debt as of October 31, 2007 and April 30, 2007 consists of the following:Amount(Thousandsof Yen)Unsecured loans from banks due on August 27, 2007
Unsecured loans from a bank due on August 28, 2007
Unsecured loans from banks due on December 8, 2007
Unsecured loans from banks due on December 27, 2007
Unsecured loans from a bank due on December 27, 2007
Unsecured loans from banks due on December 27, 2007
Unsecured loans from banks due on February 26, 2008
Unsecured loans from an insurance company due on
February 26, 2008
Unsecured loans from banks due on August 26, 2008
Total

–
–
¥ 8,500,000
3,200,000
3,500,000
6,800,000
7,500,000

Weightedaverageinterest rate––
1.00625%1.22083%
1.13833%
1.24667%
1.22500%¥ 5,000,000

1.85000%¥ 5,000,000

1.85000%

5,000,000

2.47000%

5,000,000

2.47000%

10,000,000

1.19000%

10,000,000

1.19000%

10,000,000

2.05000%

10,000,000

2.05000%

5,000,000

1.61000%

5,000,000

1.61000%

5,000,000

2.21000%

5,000,000

2.21000%

4,500,000

2.90000%

4,500,000

2.90000%¥ 44,500,000¥ 44,500,000

7. LONG-TERM DEBTAs of April 30, 2007
Amount(Thousandsof Yen)¥ 1,500,000
2,000,000
8,500,000–––
7,500,000

As of October 31, 2007
Amount(Thousandsof Yen)4,102,151

5. SHORT-TERM DEBTAs of October 31, 2007

Weightedaverageinterest rateLong-term debt as of October 31, 2007 and April 30, 2007 consists of the following:Book Value¥ 14,817,807
6,849,948(185,222)
133,529(13,314)
190,369,063
88,477,027(9,229,641)
763,255(250,902)
110,795(25,758)
37,233¥ 291,853,820

120,215
190,369,063

As of April 30, 2007
Amount(Thousandsof Yen)As of April 30, 2007

Acquisition Costs

6,664,726

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

Weightedaverageinterest rate

Weightedaverageinterest rate

1.10727%
1.24636%
1.00625%–––
1.22500%

3,000,000

1.05250%

3,000,000

1.05250%

4,000,000¥ 36,500,000

1.29000%–¥ 22,500,000–

Unsecured loans from banks due on August 26, 2008
Unsecured loans from banks due on December 8, 2008
Unsecured loans from insurance companies due on
December 8, 2008
Unsecured loans from banks due on February 26, 2009
Unsecured loans from a bank due on February 26, 2010
Unsecured loans from an insurance company due on
February 26, 2010
Unsecured loans principally from banks due on
February 26, 2010
Unsecured loans from insurance companies due on
August 26, 2010
Unsecured loans from banks due on February 26, 2011
Unsecured loans from banks due on August 26, 2011
Unsecured loans from banks due on February 26, 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 a bank due on February 26, 2013
Unsecured loans from an insurance company due on
February 26, 2013
Unsecured loans from insurance companies due on
March 19, 2014
Total

Weightedaverageinterest rate

As of April 30, 2007
Amount(Thousandsof Yen)Weightedaverageinterest rate–
¥ 8,000,000–
1.66750%¥ 4,000,000
8,000,000

1.08818%
1.66750%

5,000,000

1.51625%

5,000,000

1.51625%2,000,000
3,000,000

1.19000%
1.77500%

2,000,000
3,000,000

1.19000%
1.77500%

1,000,000

1.50625%

1,000,000

1.50625%2,500,000

1.48375%

2,500,000

1.48375%

2,000,000

1.65500%

2,000,000

1.65500%

7,500,000
4,000,000
11,000,000

1.68000%
1.63825%
1.89764%

7,500,000
4,000,000
11,000,000

1.68000%
1.63825%
1.89764%5,000,000

1.43750%

5,000,000

1.43750%

1,000,000

1.53625%

1,000,000

1.53625%

1,000,000

1.75250%

1,000,000

1.75250%

2,000,000

1.99250%

2,000,000

1.99250%

4,000,000

1.98000%

4,000,000

1.98000%¥ 59,000,000¥ 63,000,000

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, 2007 and April 30, 2007. The total unused amount of such credit facilities was ¥30,000 million
as of October 31, 2007 and ¥38,500 million as of April 30, 2007.

42

43

8. UNITHOLDERS’ EQUITY

12. BREAKDOWN OF GAIN ON SALE OF REAL ESTATEThe 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.

Gain on sale of real estate for the six-month period ended October 31, 2007 was as follows:

Thousands of Yen

9. PER UNIT INFORMATIONThe net asset values per unit as of October 31, 2007 and April 30, 2007 were ¥606,510 and ¥606,315, respectively. Net income perunit was ¥16,871 and ¥16,796 for the six-month periods ended October 31, 2007 and April 30, 2007, respectively.

10. INCOME TAXESThe 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, 2007 and April 30, 2007. However, the Company may deduct dividend distributions paid to
its unitholders from its taxable income amounts, provided such distributions meet the requirements under the Special Taxation
Measures Law of Japan. Under this law, an investment corporation must meet a number of tax requirements, including arequirement to distribute in excess of 90% of its distributable income for the fiscal period, in order to deduct such amounts. If theinvestment corporation does not satisfy all of the requirements, the entire taxable income of the investment corporation will be
subject to regular corporate income taxes.
Since the Company distributed approximately 100% of its distributable income in the form of cash distributions totaling¥4,498,546 thousand and ¥4,453,875 thousand for the six-month periods ended October 31, 2007 and April 30, 2007, respectively,
such distributions were treated as deductible distributions for purposes of corporate income taxes. The following summarizes thesignificant differences between the statutory tax rate and the effective tax rate:

Statutory tax rate
Deductible cash distributions
Special deductions resulting from expropriation
Other
Effective tax rate

For the period
from May 1, 2007
to October 31, 2007

For the period
from November 1, 2006
to April 30, 2007

39.39%(39.39)
–
0.01
0.01%

39.39%(38.95)(0.44)
0.01
0.01%

11. BREAKDOWN OF REAL ESTATE RENTAL REVENUES AND EXPENSES
Real estate rental revenues and expenses for the six-month periods ended October 31, 2007 and April 30, 2007 consist of thefollowing:Thousands of Yen

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

44

For the period
from May 1, 2007
to October 31, 2007

For the period
from November 1, 2006
to April 30, 2007

¥ 11,958,966
10,694,615
8,688,418
2,006,197
1,264,351
239,567
953,671
71,113
5,190,754
890,482306,560
937,406
939,419
23,272
362,145
1,518,289
213,181¥ 6,768,212¥ 11,090,988
9,981,094
8,038,231
1,942,863
1,109,894
238,824
798,947
72,1234,805,697
854,089
281,622784,755
857,744
22,713350,087
1,478,415
176,272¥ 6,285,291

For the period
from May 1, 2007
to October 31, 2007

Proceeds from sale of real estate
Cost of sale of real estate
Other related sale expenses
Gain on sale of real estate¥25,398
13,906
1,679¥ 9,813

13. LEASESThe Company, as lessor, has entered into lease agreements whose 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, 2007 and April 30, 2007 are summarized as follows:
Thousands of Yen

Due within one year
Due after one year
Total

As of October 31, 2007

As of April 30, 2007

¥ 4,429,671¥ 4,424,656

33,407,917

35,323,901¥ 37,837,589¥ 39,748,558

14. DERIVATIVES AND HEDGE ACCOUNTING
The Company has entered into interest-rate swap contracts with several Japanese financial institutions to hedge its variable rate
long-term debt obligations. The Company utilizes interest-rate swap contracts, which are derivative financial instruments, only for the
purpose of mitigating future risk of fluctuation of interest rates, but does not enter into such transactions for speculative or trading
purposes. The Company entered into such derivative transactions to hedge risk in accordance with its Articles of Incorporation andthe established risk management policies of NREAM.
Beginning the fiscal period ended October 31, 2007, the Company has applied the “special treatment” set forth in the amended
Investment Trust Law (effective beginning on May 1, 2006) and partial Amendment of the Articles of Incorporation.
Consequently, total net assets increased by ¥96,848 thousand over the amount which would have been recorded under theprevious method of accounting.
The following summarizes the notional amounts and the estimated fair value of the interest-rate related positions outstanding asof October 31, 2007 and April 30, 2007:
Thousands of Yen
Notional amount

Estimated fair value

Unrealized gain (loss)

As of October 31, 2007
Interest-rate swaps:
Received/floating and paid/fixed¥ 51,500,000(¥ 147,976)(¥ 147,976)

As of April 30, 2007
Interest-rate swaps:
Received/floating and paid/fixed¥ 51,500,000(¥ 20,303)(¥ 20,303)

45

Business Structure

Asset Custody
Asset Custodian
Agreement
Administrator ofUnitholders Register
Administration
General Administration Agreement, etc.
(Accounting, etc.)

Nomura Real Estate
Office Fund, Inc.

Financial Instituions,etc. / Investors ofInvestment
Corporation Bonds

Mitsubishi UFJ Trust andBanking Corporation
Debt Financing /Issue of Investment
Corporation Bonds

Unitholders' Meeting

AuditorBoard of Directors’Meeting

Ernst &
Young ShinNihon
RepaymentofPrincipal &Interest

Liabilities

Unitholders

Trading

Investment

Asset

Office Buildings(Real Estate
Related Assets)

Distribution

Property
Management
Agreement

Property Management
Companies

Nomura Building
Management Co., Ltd.
ITOCHU Urban
Community Ltd.
The Dai-ichi Building Co., Ltd.
CB Ricard Ellis Asset
Services K.K.

Unitholders

EquityProperty
Management

Nomura Real Estate
Development Co., Ltd.

Capital Investment

Rents, etc.

Asset Management
Services Agreement

Information andResearch-related
Service Providers

Asset Management Company

Instructions forRents andManagement
RentalStrategies,
Plans ofRepairs, etc.

Property
Information

Service
Agreement, etc.

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

XYMAX AXISCORPORATION

46

47

Profile of the Asset Management Company
PROFILE AND HISTORY OF INCORPORATION
Company:
Capital:Shareholder:
Incorporation:

Corporate Data
Corporate Name
Nomura Real Estate Office Fund, Inc.

Nomura Real Estate Asset Management Co., Ltd.
¥300 million (as of March 31, 2007)
Nomura Real Estate Holdings, Inc. (100%)January 24, 2003

Corporate Office8-5-1 Nishi Shinjuku Shinjuku-ku, Tokyo
160-0023, Japan
http://www.nre-of.co.jp/english/

PROCESS OF DECISION-MAKING
We have ensured transparency in the decision-making process by placing agenda through the Compliance Committee, in which two
external members with professional experience sit.
AGENDA
Proposal

COMPLIANCE OFFICER
When compliance is satisfied

COMPLIANCES COMMITTEE
Major objectives of the Compliance Committee are:to ensure compliance with the laws and regulations applicable tothe proposed agenda,
to deliberate the contents of trade with the related parties,
to check the legal matters for the Investment Committee inmaking investment decisions.

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¥156,767,193,535 (as of October 31, 2007)
Number of Units Issued
265,903 (as of October 31, 2007)

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
Hibiya Kokusai Bldg. 2-2-3 Uchisaiwai-cho Chiyoda-ku,
Tokyo 100-0011, Japan
Investor Relations
For further information, please contact the Asset Management
Company:
Nomura Real Estate Asset Management Co., Ltd.
8-5-1 Nishi Shinjuku Shinjuku-ku, Tokyo 160-0023, Japan
Tel: +81-3-3365-0507

Number of Unitholders
11,492 (as of October 31, 2007)
INVESTMENT COMMITTEE
Investment Committee deliberates on such subjects as:
Formulation and revision of investment guidelines,
Selection of properties for investment,
Formulation and revision of investment planning for the fiscal year,
Policy making on material articles such as funding.

Disclaimer
DECISION MAKING
The entire process of deliberation and final decision is reported.

COMPLIANCE COMMITTEEUSE OF INFORMATION NETWORK OF NOMURA REAL ESTATE GROUP
In order to maximize opportunity to invest in better properties, we have collected as much information as possible not only from the AssetManagement Company but also from other companies of Nomura Real Estate group as listed below.

Nomura Real Estate Office Fund, Inc.
Nomura Real Estate Asset Management Co., Ltd.

This semiannual report includes translations of certain Japanese documents originally filed under the Securities andExchange Law of Japan. This report was prepared in English solely for the convenience of and reference by readers
outside Japan and should not be considered as a disclosure statement. The original Japanese documents always govern
the meaning and interpretation.
In general, accounting principles and practices used by real estate investment corporations in Japan (“J-REITs”) in
preparing its financial statements conform with accounting principles generally accepted in Japan (“Japanese GAAP”).
However, they may differ from generally accepted accounting principles applied in certain other countries. Potential
investors should consult their own professional advisors for an understanding of the differences between Japanese GAAP
and generally accepted accounting principles in the United States (“U.S. GAAP”) or other jurisdictions and how thosedifferences might affect the financial information contained herein.
Estimates for Nomura Office Fund’s future operating results contained in this semiannual report are forward-looking

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

statements and are based on information currently available to Nomura Office Fund and its asset management company
and are subject to risks and uncertainties. Consequently, these projections should not be relied upon as the sole basis forevaluating Nomura Office Fund. Actual results may differ substantially from the projections depending on a number offactors.

General Real Estate Market

48

Properties owned and developed by
Nomura Real Estate Urban Net andNomura Real Estate Development

Printed in JapanNOMURA REAL ESTATE OFFICE FUND, INC.
Eighth Fiscal Period Semi-Annual Report

Eighth Fiscal Period

Semi-Annual Report
May 1, 2007

http://www.nre-of.co.jp/english/

October 31, 2007