First Fiscal Period Financial Results(ended May 2007)

Contents

Highlights of the First Fiscal Period

Fund Management Results

 Highlights of the First Fiscal Period2

 Results of Investment
 [Reference] Investment after the end of the 1st FP
 Results of Asset Management

Nomura Real Estate Residential Fund Management Policies

 Results of Financing
 Basic Principle

41
42-43
44

4

 Investment Strategy

5-13

 Management Strategy

14-15

 [Reference]
Example of Management by the Private Fund

16-21

 Key Investment and Management Strategies

22 Financial Strategy

23

 Focus on Compliance24 Fund’s Strategies (Overview I, II)

32-40

APPENDIX

25-26
 Portfolio (as of the end of the 1st FP)

Overview of the Financial Results

46-48

 Scheduled Acquisitions after the 2nd FP

49

 Interest-bearing Debts (end of the 1st FP)

50

 Income Statement28

 Unitholders (end of the 1st Fiscal Period)51

 Balance Sheet29 Overview of the Fund and NREAM

52

 Second Fiscal Period (November 2007) Forecast

30

Highlights of the First Fiscal Period

1Highlights of the First Fiscal Period

Notable Activities
End-of-Period Portfolio Total:
89 properties, ¥67 billion

Listing on the Tokyo Stock Exchange Incorporated in August 2006
 Private offering (¥10.7 billion) and commencing
of asset management in September 2006
 Public offering in February 2007 (¥28.8 billion),and listed on the Tokyo Stock Exchange (TSE)on February 14, 2007 (securities code: 3240)
 With the third party allotment in March 2007(¥1.4 billion), capital at the end of the First
Fiscal Period reached ¥41.2 billion

End-of-Period Occupancy Rate: 95.4%

 Acquired 57 properties (¥38.4 bill) in Sep/Octof 2006 with funds raised by private offerings,etc.

 Smooth turnover of tenants achieved byaccurate understanding of tenant
intentions for the fiscal year-end

 After listing on the TSE, acquired the 29
properties (¥26.8 billion) scheduled for
acquisition during the First Fiscal Period New properties achieved early 100%lease-up through collaboration with theproperty management companies, etc.

 Through aggressive efforts after the listing,acquired 3 additional properties (¥1.7 billion) Purchase agreements executed for additional
10 properties (¥7.61 billion) (acquisitionscheduled for the 3rd FP onwards)

 As a result of the above, the occupancy
rate for the First Fiscal Period was 95.4%

Financial Overview
First Fiscal Period(ended May 2007)

Comparison with Forecasts(released February 14, 2007)

Number of Business Days

247 Days－－

Operating Revenues¥2,304 million+ ¥49 million+ 2.2 ％

Current Profits¥553 million+ ¥64 million+ 13.1 ％Net income¥551 million+ ¥64 million+ 13.3 ％+ ¥950+ 13.3 ％Cash Distribution Per Unit

¥8,102

2

Nomura Real Estate Residential FundManagement Policies

3Basic Principle

The Fund will adhere to the following basic principles in order to execute fund management in accordance withsolid investment policies for investment in residential properties:

Strategy

The Fund will aim to secure stable mid to long term earnings through the strategic selection of investment
properties and expert asset management based on sufficient understanding of “tenancy demands”
reflecting the characteristics of residential rental property investments and trends in residential property
markets.

Acquisition

The Fund will create stable portfolio with consideration to rental levels, investment area, building age andtypes of properties, through continuous acquisition of “Proud Flat” from Nomura Real Estate group and“Prime Urban” and “Urban Stage” properties from other sources, utilizing our sourcing expertise.

Asset Management

To maximize long-term profitability and asset value of investment properties, the Fund will select the“optimal property management company corresponding to the characteristics of the property,” and at thesame time, implement flexible and organized leasing and renewal strategies corresponding to tenant
turnovers, aging of the portfolio, and expansion of portfolio assets.

Finance

The Fund will establish a strong financial base such as “conservative LTV ratio,” ”appropriate control ofduration and fixed interest rates,” and “diversification of financial institutions,” in order to manage the Fundin a stable manner, with minimum impact from the financial market conditions.

Compliance

The Fund will implement fair and transparent management through prevention of conflict of interests andenforcement of compliance, to maintain our position as a “REIT committed to meeting the trust andexpectations of the investors.”

4

Investment Strategy (1) Investment in Residential Properties

Characteristics of investment in rental
housings

Status and outlook for the rental housing
marketRelative Stability of Rent

Increase in Households in Greater Tokyo Area

Relative Stability of Average Land Value

Increase in Single and DINKS Households

Rental income and asset value of rental
housings have remained stable compared to
office buildings, etc.

 Increase of single and DINKS households centeredaround the metropolitan areas Implement location selection/property management
reflecting the above

5

Investment Strategy (2) Tenant Class with Stable Demands

Main target tenant classes

TargetFocus Tenant Class
Middle class tenants, centering onUpper middle class tenants, such as
students and coporate employees inforeign company employees.
their 20s and 30s.

Priority on certain level of convenience Priority on location, floor plan, andfor commuting and rent.
specifications/equipments.
Features

Annual income (disposable) is stable.
Less likely to be affected by economic
trends.

Significantly affected by seasonal
factors, such as the concentration oftermination and execution of rental
Turn-Overagreements in March, when corporate
emplayees enter/get transferred andstudents enter/ graduate.
(Generally)
Rent
less than ￥100,000/month

Other Tenant Classes
Upper class tenants, such ascompanies with rent
subsidization systems,
business owners, managementclass emplayees of foreign
Priority on prime metropolitan
location, property grade andvalue-added services.

Annual income (disposable) is relatively
Annual income (disposable) is
stable. Relatively less likely to be
likely to be affected byaffected by economic trends.
economic trends.
Effect of seasonal factors is relatively
small compared to the middle class.

Demand is limited, andvacancy tends to be longer.

(Generally)￥100,000-￥150,000/month(Generally)
over ￥150,000/month

Select properties mainly
targeting tenant classes wherestable demand is expected:
 Monthly rent: less than ¥100,000
 Monthly rent: ¥100,000 - ¥150,000(Note) The section circled in the left graph indicates the Fund’s main target tenant class.
The Fund will consider investment in properties targeting other tenant classes, if
it is deemed to have stable demands from the market characteristics andlocation viewpoints.

6

Investment Strategy (3) Distribution of Target Properties

Distribution Based on Rent Levels in the Vicinity of Tokyo

Demand for rental housing is widespread,centering on central Tokyo area

Selection of properties with “depth in demands”
based on the following investment criteria■ Key Considerations for Property Selection ■Rent Level

Rent level matching target tenants×AccessMonthly Rent
¥100,000-150,000
Less than ¥100,000

Popular area; direct access tomajor transfer stations

×
Commuting Time

Commuting time for the base oftarget tenants7≪ Distribution of Portfolio Properties ≫Vicinity of Tokyo
PROUD FLAT Yoyogi Uehara

PRIME URBAN Gyotoku Ekimae

PROUD FLAT Hatsudai

PRIME URBAN Nishi Funabashi

PROUD FLAT Gakugei Daigaku

URBAN STAGE Azabu Juban

PROUD FLAT Meguro Gyouninzaka

URBAN STAGE Hatagaya

PROUD FLAT Kagurazaka

URBAN STAGE Toritsu Daigaku

PROUD FLAT Sangen Jaya

URBAN STAGE Kachidoki

PROUD FLAT Kamata

URBAN STAGE Naka Ochiai

PROUD FLAT Kiyosumi Shirakawa

URBAN STAGE Ochiai

PRIME URBAN Akasaka

URBAN STAGE Roka Koen

PRIME URBAN Tamachi

URBAN STAGE Kamiuma

PRIME URBAN Ebisu Minami

URBAN STAGE Sangen Jaya

PRIME URBAN Yoyogi

URBAN STAGE Chitose Karasuyama

PRIME URBAN Bancho

URBAN STAGE Sangen Jaya II

PRIME URBAN Chiyoda Fujimi

URBAN STAGE Komazawa

PRIME URBAN Iidabashi

URBAN STAGE Karasuyama

PRIME URBAN Ebisu

URBAN STAGE Oimachi

PRIME URBAN Nakameguro

URBAN STAGE Oimachi II

PRIME URBAN Gakugei Daigaku

URBAN STAGE Yukigaya

PRIME URBAN Senzoku

URBAN STAGE Ikegami

PRIME URBAN Nishi Shinjuku I

URBAN STAGE Nakano

PRIME URBAN Nishi Shinjuku II

URBAN STAGE Takaido

PRIME URBAN Shinjuku Naitomachi

URBAN STAGE Komagome

PRIME URBAN Sangen Jaya

URBAN STAGE Mukojima

PRIME URBAN Shinagawa Nishi

URBAN STAGE Ekoda

PRIME URBAN Osaki

URBAN STAGE Takinokawa

PRIME URBAN Omori

URBAN STAGE Asakusa

PRIME URBAN Kita Senzoku

URBAN STAGE Machiya

PRIME URBAN Nishi Ogikubo

URBAN STAGE Koganei

PRIME URBAN Otsuka

URBAN STAGE Hino

PRIME URBAN Monzen Nakacho

URBAN STAGE Tsurumi Teraya

PRIME URBAN Kameido

URBAN STAGE Tennocho

PRIME URBAN Sumiyoshi

URBAN STAGE Urayasu

PRIME URBAN Kinshi Koen

URBAN STAGE Minami Gyotoku I

PRIME URBAN Kinshicho

URBAN STAGE Minami Gyotoku II

PRIME URBAN Hirai

URBAN STAGE Minami Gyotoku III

PRIME URBAN Kasai

URBAN STAGE Minami Gyotoku IV

PRIME URBAN Kasai II

URBAN STAGE Minami Urawa

PRIME URBAN Urayasu

URBAN STAGE Yono Honmachi

PRIME URBAN Gyotoku I

Cosmo Gracia Yotsuya Gaien Higashi

PRIME URBAN Gyotoku II

Other Areas
PROUD FLAT Itsutsubashi

Presence N14

PRIME URBAN Aoi

Classe Odori Koen

PRIME URBAN Esaka I

Presence S1

PRIME URBAN Esaka II

Benefis Hakata Grand Sweet

Presence S17

Benefis Yakuin Minami

8

Investment Strategy (5) Create Balanced Portfolio

Diversification Within Assets

Top 5 Properties¥99.2 billion

Building Age

Under 1 Year
Over 10 Years

Improve portfolio stability
through promotion ofdiversification

Top 10 Properties¥168.8 billion

Other 79 Properties¥501.5 billion

Investment Area

Other Area

ポートフォリオ全体
Total Portfolio
89物件 ・ 670億円
89 Properties/¥670 billion

Vicinity of Tokyo

Consider the combination ofvarious building age to avoid
concentration of large-scale
repair expenses in the future

5-10 Years

3-5 Years

Floor Area per Unit

Over 70 sq meters

1-3 Years

Retail & Office50-70 sq meters
Others (Kanagawa,Chiba, Saitama)

For the time being,
invest in properties targeting
single/DINKS/young
family households

Vicinity of Tokyo: 70% or more
Others: 30% or lessTokyo
(excluding the 23 wards)

Nearest Station on FootOver 10 min.

Under 30 sq meters30-50 sq meters

Tokyo (23 wards)

Within 5 min.

Units per Property

Over 100 Units

Under 30 Units

Invest in properties with up to
approximately 100 units,
allowing for 100% lease-up
within a short time-frame

Property selection focusing
on accessibility to nearest
railway station

30-50 Units(Note) excluding sub-lease properties, etc.
5 - 10 min.

50-100 Units(Note) The graphs above indicate end-of-period conditions (“Floor area per unit” and “Units per property” are based on units; others are based on acquisition price)9

Investment Strategy (6)Strategic Collaboration with Nomura Real Estate Group: “PROUD FLAT” Series
Mutual growth through acquisition anddevelopment of the “PROUD FLAT” series
The PROUD brand signifies a home that its residents,
creators, and even the local community can be PROUD of.

PROUD FLAT Kiyosumi Shirakawa
Large-scale
Condominiums

Super High-rise
Condominiums

Compact
Condominiums

Large-scale
Housing

Urban
Housing

Examples of the PROUD series

PROUD Minami Aoyama

PROUD FLAT Gakugei Daigaku

PROUD TOWERPROUD CITY Oizumi Gakuen
Futako Tamagawa(Note) The photos show examples of the PROUD series, but are not acquisition targets of the Fund.

PROUD FLAT Meguro Gyoninzaka

Collaboration through development and acquisition of
the PROUD FLAT rental condominiums,
utilizing the housing related expertise such as
land acquisition, product planning, and asset management

PROUD FLAT Yokohama (tentative name)

Ratio within the current portfolio: 18.8% (12 buildings; ¥14,981 million)(Including properties scheduled to be acquired)

Considered to be
the “external growth driver”
and will aim for continuous acquisition

10

Investment Strategy (7)Utilization of Nomura Real Estate Group Information Network
Properties held/developed by
Nomura Real Estate Group

PROUD FLAT Yokohama (tentative name)(Scheduled to be acquired during the 3rd FP)

Properties brokered by
Nomura Real Estate Group

Benefis Hakata Grand Sweet(Acquired during the 1st FP)

Benefis Yakuin Minami(Acquired during the 1st FP)

 Acquisition through collaboration with two Nomura Real EstateGroup companies

 Acquisition through direct sale brokered by Nomura Real Estate
Urban Net

(Joint development by Nomura Real Estate and Nomura Real
Estate Urban Net) Create a network of providers/property management companies in
new investment areas

Maximum utilization of the “developer function” and “brokerage function” of Nomura Real Estate (Residential
Development Company/Corporate Real Estate Service Company) and Nomura Real Estate Urban Net

11

Investment Strategy (8) Utilization of the Provider Network“PRIME URBAN” and “URBAN STAGE” series
Acquisition of ¥10 to 15 billion per annum through a private fundtargeting “residential properties” within Nomura Real Estate GroupPRIME URBAN Gakugei Daigaku
PRIME URBAN Kasai II(Note) Investment for the above series are limited to the Vicinity of Tokyo,
and does not include PROUD FLAT series.

Members with property acquisition experience at the private fund have beentransferred to provide their management know-how

Asset Management Company
PRIME URBAN Nishi Shinjuku I

PRIME URBAN Iidabashi

Strong resourcing abilities enabling acquisition from parties other than the sponsor,
utilizing the “provider network” established through management of the private fund12

Investment Strategy (9) Medium-term Asset Size Target

Expansion of portfolio through stable acquisition of prime properties■

Illustration of Expansion of Asset Size

(Billions of yen)
Acquired Properties

Scheduled Acquisition■

Total assets¥300 billion

300

Steady acquisition of prime properties
250
200
150
100
50
0
February
2007

May
2007

March
2013

Seek “external growth” through continuous acquisition of prime properties and “improved liquidity”
through increased total market capitalization

13

Management Strategy (1)Utilization of Know-how Gained from Private Fund Management(Reference)
Past residential housing holding structureOver 5 years of proven stable management for a private fundtargeting “residential properties” within Nomura Real Estate Group

Individual owners andcorporations, etc.
Purpose:Expertise from private fund management“Tax savings” “small investment in studioapartments (compartmentalized ownership)”Management: Weak sense of “management” to improve
competitiveness and profitability

Property
Management
Companies

Compartmentalized ownership lead todifficulty in functioning management organization

Properties financed and developed during the bubble era has
miscalculated interest rate payment and expected rental
income, making them “cautious to additional investments”

RentalApartments

Structurally prone to experience decline in rental
income and long-term vacancy due to deterioratingcompetitiveness from aging

Members with property acquisition experience at the private fund have beentransferred to provide their management know-how
Asset Management Company

Strategic management by asset management professionals, a structure departing from the past

14

Management Strategy (2)Selection of Optimal Property Management Company for Each Property
Properties with Various Characteristics(Location, access, environment, rental range, size, target tenants, etc.)

The asset management company selects the optimal property management company for each property

PMC withstrength incorporate
demands

PMC withstrength inspecific
areas

Generalproperty
PMC

PMC withstrength in
the student
market

PMC withstrength inregional
areas

Maximize performance by “integrated management” with “optimal property management company”
that matches the characteristics of the properties

15

[Reference] Example of Management by the Private Fund
(1) URBAN STAGE Kachidoki
URBAN STAGE Kachidoki
Property Summary Location: 6-5-6 Kachidoki, Chuo-ku, Tokyo

 Units: 144

 Access: 9 min. walk from Kachidoki Station, Toei
Subway Oedo Line Completed: February 1987

Market Analysis (at time of investment)
 Within 3 km from the center of Tokyo, allowing short commute, with popular waterfront
location Large scale development continues since full opening of Toei Subway Oedo Line in 2000
(e.g. “Triton Square” (2001), “Kachidoki 6-chome redevelopment project (THE TOKYOTOWERS)” (2008))
 Development of neighboring area expected (Development of large commercial andresidential complex in Toyosu area, etc.)
Management Policy With supermarkets and other convenience facilities scheduled to open in the adjacenthigh-rise apartment, leasing activity focus is on improved images from neighborhood
development and convenience.
 1K type: As few properties targeting single households exist in the area, we seek tomaintain current management policy to continue stable occupancy.
 2DK type: Review target tenants (Former: Local elderly population → New: YoungDINKS such as (1) commuters to Shiodome/Shinbashi area, and (2) workers in multiple
hospitals in the area). Seek higher occupancy rate and new rental prices throughexpansion of leasing activity area and incorporation of corporate demand.

16

[Reference] Example of Management by the Private Fund
(1) URBAN STAGE Kachidoki[Occupancy Rate][Rents for New Tenants]
1K Type Units

100%(unit: yen)

95%

10/05

90%
85%
80%
75%
70%

Renewalof
Exclusive
Area

After renewal:
95.0％(12/31/05)

Completion oflarge-scale repairs
for common area
(07/06)

Completion ofcommon area renewal(entrance etc)
(08/06)55%

As of acquisition:
83.8％（08/31/05)

75,0003F/Unit B (19.72㎡)

76,0005F/Unit C (19.72㎡)

05/06

02/07

03/07

75,00076,00078,00078,000

Remained flat
2DK Type Units (Converted to 1LDK)

65%
60%

2F/Unit A (19.72㎡)

11/05

10/05

Stable occupancy over 95%
2F/Unit D (42.39㎡)

50%

11/05

07/06

(unit: yen)
08/06

122,000

4F/Unit E （42.39㎡）

126,000

4F/Unit F (42.39㎡)

125,000

12/06

02/07

126,000
128,000
129,000

129,000

Upward trend

Exclusive area renewal

Common area renewal

 Improved occupancy rate to 95% level by strategic
renewals and review of leasing methods in an agedbuilding experiencing sluggish occupancy rate Rents for the 2DK type units increased while maintaining
stable occupancy
Renovated to timber flooring
1LDK with adjustable partitions(Formerly 2DK including a
Japanese room)

Sophisticated impression achievedby complete overhaul of theentrance and entrance hall

17

[Reference] Example of Management by the Private Fund
(2) URBAN STAGE Minami Gyotoku IV
URBAN STAGE Minami Gyotoku IV
Property Summary Location: 1-5-18 Hiroo, Ichikawa-shi, Chiba

 Units: 32

 Access: 17 min. walk from Minami Gyotoku Station,
Tokyo Metro Tozai Line Completion: April 1994

Market Analysis (at time of investment)
 Area between Gyotoku, Minami-Gyotoku and Urayasu Stations on the Tokyo Metro
Tozai Line enjoys strong demands for corporate housing and dormitories, as the rent
level is deemed low compared to Tokyo, even though commuting to Otemachi takes lessthan 30 minutes.
Management Policy Dainichi Corporation, with strong client base in the area as well as various corporateclient demands, was selected as the property management company, to promote
integrated management.
 Implement leasing strategy with emphasis on smooth move-in at tenant turnover, totarget corporate housing contracts involving multiple units.

18

[Reference] Example of Management by the Private Fund
(2) URBAN STAGE Minami Gyotoku IV[Occupancy Rate]

Early lease-up⇒ 100% occupancy

Early lease-up⇒ 100% occupancy

Early lease-up⇒ 96.9% occupancy

2F/Unit A（16.50㎡）

90%
80%

60%

(Unit: Yen)
03/04

100%

70%

[Rents for New Tenants]

Company A
lease termination(15 units, etc.)

Company B
lease termination(3 units)

Company Clease termination(13 units, etc.)

04/05

03/06

61,0002F/Unit B（16.50㎡）

61,0003F/Unit C（16.50㎡）

62,0004F/Unit D（18.48㎡）

63,00063,0004F/Unit E（18.48㎡）

64,00064,0004F/Unit F（19.60㎡）

64,00064,000

04/06

02/07

65,00061,00061,00062,000

Remained Flat

50%
40%

Early comprehension of lease termination bycorporate tenants ⇒ Earlier leasing activities

30%

 Stable high occupancy achieved by incorporating
corporate demands
 Early lease-up at turnover shortened vacancy

19[Reference] Example of Management by the Private Fund
(3) URBAN STAGE Hino
URBAN STAGE Hino
Property Summary Location: 536-2 Hino, Hino-shi, Tokyo

 Units: 54

 Access: 15 min. walk from Hino Station, JR Chuo Line  Completed: March 1992
Market Analysis (at time of investment)
 Hino/Hachioji area promises stable student demand from the presence of numerous
universities (Jissen Women’s Educational Institute, Chuo University, Hosei University,
Teikyo University, Meisei University, etc.)

Management Policy
 Students will be the main target tenants instead of workers commuting to central Tokyo,
considering the number of universities in the area.
 Mainichi Comnet Co. Ltd., which specializes in rental properties for students, having
pipelines with universities and regional high schools, was selected as the property
management company.
 By aiming mainly at students, seek smooth turnover at end/beginning of school year
(March/April) by estimating the number and timing of lease termination early on.

20

[Reference] Example of Management by the Private Fund
(3) URBAN STAGE Hino

[Occupancy Rate]

100%

Early
lease-up

Earlylease-up

Earlylease-up

Earlylease-up

1F/Unit A（18.42㎡）

04/03

85%

80%
75%

Large number of lease termination by students (graduation)

53,0002F/Unit D（18.42㎡）

53,0003F/Unit E（18.42㎡）

53,0004F/Unit F（18.42㎡）

54,000

03/06

03/07

49,00049,0002F/Unit C（18.42㎡）

5F/Unit G（18.42㎡）

05/03

54,0001F/Unit B（18.42㎡）

90%

49,00053,00053,00053,00054,00054,00054,000

Remained mostly flat

65%
60%

(Unit: Yen)
03/03

95%

70%

[Rents for New Tenants]

Leasing activity on point with turnover⇒ Early recovery of high occupancy rate

55%
50%

 Early lease-up achieved through taking in freshman demands (April) after the lowering of occupancy ratearound graduation (March) Maintain stable high occupancy rate by focusing on students

21

Key Investment and Management Strategies

Asset Management Company

Property selection targeting “tenant class with high rental demand”

Property selection focusing on depth of rental demand = “rent level” × “access” × “commuting time”“Integrated management” with optimal property management company for each property

Maintain and improve competitiveness by “appropriate repairs and renewal works”

Implementation of investment and management leveraging on the “high management abilities” ofthe members of the asset management company

22

Financial Strategy

Funding with consideration to stability of financial conditions

Utilization of management know-how gained from listed REITs

Conservative LTV level Secure room for growth, establish stable incomebaseLong-term loans, fixed interest rates
 Prepare for interest rate hikes, appropriate cost
control

Diversification of maturity
 Lower refinancing risks

Diversification of lenders
 Respond to changes in financing attitudes,
expand funding routes

Unsecured/unguaranteed funding Secure flexibility in funding

Diversification of funding methods
 Selection of optimal funding including revolving
loans and investment corporation bonds“Establish strong financial structure” that is not affected by changes in financial environment
such as interest rate hikes, etc.

23

Focus on ComplianceDecision making process proven through the listed REIT
 All projects require prior approval by the compliance officer before making proposal

Proposal toInvestment
Committee

 Transactions with related parties require approval by the Compliance Committee, including two external members(attorney/expert)

Resolution by theInvestment
Committee

 Unanimous vote by all members with voting rights (drafter and the compliance officer does not have voting rights)⇒ Heads of each division performs multifaceted reviews and analysis, and approves only if unanimous vote isreachedMain Items Examined

Main Items Examined■Deliberating the contents of the transaction withrelated parties.

■Selection of the Fund’s target acquisition proposals.

■Checking whether there are compliance related
issues through the process of examination or
investment decisions made by the Investment
Committee.
When there are no compliance related issues■The Fund’s asset management policy concerning
portfolio assets.
■The Fund’s policy concerning important items such as
financing, etc.

Committee■The Fund’s basic policy concerning investing andmanaging assets.

Compliance■Checking the state of compliance with laws,
regulations and rules related to the proposals.

Report on all deliberation minutes andinvestment decisions on the agenda

Residence Management Division Investment Committee

Decision Making

Checking the state of compliancewith laws, regulations and rules andwhether there are any transactions
with related parties

Compliance Officer

Proposal

Submission of proposal

Compliance Committee

Rules for transaction with related parties

Property Acquisition

 Acquisition price must meet or be lower than the appraisal value* by an independent real estate appraiser that is not a
related party*(Note) For uncompleted properties, appraisal value calculated by the real estate appraiser using appraisal methods

24

The Fund’s Strategies (Overview I)“Formulation of Investment Strategies for Residential Properties”

Target “Students/Workers/DINKS,” aclass with perpetual demand for rental
properties

Acquisition of properties assuming
long-term holding, appropriate forstanding listed REITs• “Annual income approach” for above
target tenants (approx. ¥4-9 million)• Prevent concentration of large-scale
repairs• Property selection centering on
properties with monthly rental of “lessthan ¥100,000” and “¥100,000150,000”• Sale of property for restructuring of
portfolio is largely affected by the realestate market• Expensive/large properties have
limited demand, is prone to beaffected by economy, and maycompete with sold properties• “Capital gain/loss risk” will not betolerated• Leveling of repair expenses by“diversification of property age”

• Focus on single and compact typeproperties• Number of units per building up to
approximately 100 units• Application of “access strategy”• Investment in properties along “JRand popular private railways”

Maintain stable occupancy rate
Early lease-up of development projects• Size of property appropriate for earlylease-up

25

The Fund’s Strategies (Overview II)“Maximum Leverage on Investment Characteristics of Residential Properties”

Rent and land price levels less prone tobe affected by economy

Demand spread to wider area

• Basically “defensive” assets• Clients are general individuals (retail)• Fund revenue is unstable wheninterest rate rises• Utilization of property managementcompanies optimal for target clients(tenant) and locale is most effective
for achieving management efficiency• Smaller revenue downside wheninterest rate falls (economic
recession)

Financial strategy should be moreconservative compared to officeproperties, as internal growth potential
is limited

Respond to growth in asset size by
utilizing various property managementcompanies

Smaller investment amount allows
diversification of risks• Strongest point for the residential fundis its capacity to create a highly
diversified portfolio• Focus should be on stability of revenue
as a portfolio, not each property

Top 5 properties constitute only 14.8%of the entire portfolio

26

Overview of the Financial Results

27Income Statement

Classification

First Fiscal Period
From August 3, 2006
To May 31, 2007
Amount (\000)

Ratio (%)

Real Estate Rental Business Revenues

2,304,704

100.0% *1*1 Real Estate Rental Business Revenues

Rental Business Revenues

2,101,518

91.2%

As of end of 1st fiscal period, the portfolio comprises of 89 properties,
worth ¥67 billion (total acquisition price).

Other Rental Business Revenues

203,185

8.8%

The occupancy rate as of end of 1st fiscal period was 95.4%.

Real Estate Rental Business Expenses

963,34241.8%

559,993

24.3%*2 Tax and Public Dues

0.2% *2

Within 89 properties in the portfolio, 14 properties have reported
property taxes and urban planning taxes of 2007 as expenses.

Real Estate Rental Business Expenses

Tax and Public Dues

5,176

Depreciation and Amortization

398,173

17.3%

Real Estate Rental Business Profits and Losses

1,341,361

58.2%

Asset Management Fees

141,031

6.1% *3

Other Operating Expenses

122,100

5.3%

1,078,229

46.8%

Non-Operating Revenues

1,003

0.0%

Non-Operating Expenses

525,94222.8%

Current Profits

553,291

24.0%

Net Income before Tax553,291

24.0%

Corporate Income Tax, etc.

1,515

0.1%

Net Income

551,775

23.9%

Retained Earnings

551,775

23.9%

Operating Income

Property taxes and urban planning taxes adjusted with the sellers at
acquisition (¥37.5 million) has been included in the acquisition price.

*3 Asset Management Fees
Break down of asset management fees for the 1st fiscal period are as
follows:
Asset Management Fee I: ¥80 million
Asset Management Fee II: ¥60 million

28

Balance Sheet
AssetsLiabilities and net assets
1st Fiscal Period
as of May 31, 2007
Amount (\000)
Ratio (%)
6,941,125
9.2
5,064,215
6.7
1,788,634
2.4
88,2740.1
68,372,764
90.8
68,359,040
90.8 *1
9,676,898
12.8
3,871,120
5.1
5,805,777
7.7
58,651,995
77.9
20,642,397
27.4
38,009,597
50.5
30,147
0.0
1,774
0.0
1,774
0.0
11,9490.0
10,298
0.0
1,651
0.0
75,313,889
100.0

Items
Current Assets
Cash and cash equivalents
Cash and cash equivalent in trust
Other current assets
Fixed Assets
Tangible fixed assets
Real estate
Building
Land
Real estate in trust
Building in trust
Land in trust
Construction in progress
Intangible fixed assets
Other intangible fixed assets
Investment and other assets
Deposits received
Long-term prepaid expenses
Total Assets*1 Tangible fixed assets

Real Estate
Building
Land
Building in trust
Land in trust(Unit:millions of yen)

Acquisition Price

Accumulated
depreciation(Depreciation
for current FP)

Book value
at end of FP

68,7273,886
5,805
21,02538,009

398
15
－
383
－

(398)
(15)
－
(383)
－

68,328
3,871
5,805
20,64238,009

Items
Current Liabilities
Trade accounts payable
Short-term loans
Other accounts payable
Taxes payable
Accrued expenses
Rent received in advance
Deposits payable
Fixed Liabilities
Long-term loans
Security deposits
Security deposits in trust
Total Liabilities
Unitholders Equity
Unitholders capital
Retained earnings
Total Net Assets
Total Liabilities and Net Assets

1st Fiscal Period
as of May 31, 2007
Amount (\000)
Ratio (%)
1,245,843
1.7
186,1310.2
440,000
0.6 *2
235,048
0.3
1,346
0.0
101,795
0.1
278,047
0.4
3,473
0.0
32,260,599
42.8
31,500,000
41.8 *2
63,971
0.1
696,6280.9
33,506,442
44.5
41,807,447
55.5
41,255,671
54.8
551,775
0.7
41,807,447
55.5
75,313,889
100.0*2 Loans
Balance of interest-bearing debts (millions of yen)

31,940

short-term + long-term loans
Total asset
interest-bearing debt ratio

total assets

Long-term interest-bearing
debt ratio

long-term + short-term loans

42.4%

long-term loans
98.6%

29

Second Fiscal Period (November 2007) Forecast

2nd Fiscal Period Forecasts

Assumption(June 1, 2007-November 31, 2007)
Rental Business Revenues

2,403 million yen

Rental Business Expenses

872 million yen

Asset Management Fees

180 million yen

Other Operating Expenses

137 million yen[Managing Assets]
Calculation based on 91 properties, adding 2 properties
acquired on June 1, 2007, to the 89 properties held as of
May 31, 2007 (end of 1st fiscal period).

[Depreciation]¥ 394 million expected.
[Loans]Operating Income

1,213 million yen

Non-Operating Profit/Loss

295 million yen

Current Profits

918 million yen

Net Income

916 million yen

Outstanding Investment
Units at End-of-Fiscal Period

68,100 units

Cash Distribution per Unit

13,463 yen

Assumed that the outstanding loans (¥31,940 million) will
not change until the end of the 2nd fiscal period.
[Investment Units]

Assumed that the outstanding units (68,100) will notchange until the end of the 2nd fiscal period.

30

Fund Management Results

31

Results of Investment (1) Acquisition from Nomura Real Estate
PROUD FLAT Yokohama (tentative name)Main Railway Access:7 min. walk to Yokohama Station on 3 JR Lines including
Tokaido Line, Tokyu Toyoko Line, Minatomirai Line, Keikyu
Main Line, Sotetsu Main Line, and Yokohama Municipal
SubwayLeasable Units:

113

Scheduled Acquisition Price: ¥ 2,340 million
Scheduled Acquisition Date: March 14, 2008 (3rd fiscal period)(Joint development by Nomura Real Estate and Nomura Real Estate Urban Net)

Rent Level

AccessCommuting TimeIn ¥90,000s for 1K Units
In ¥13,000s and ¥140,000s for 1LDK Units
9 railway lines including JR and Tokyu Toyoko Line.
(Walking distance to Yokohama Station, one of themain terminal stations within metropolitan area)
Walking distance to Yokohama Station area
30-40 min. to Shinagawa/Tokyo area32

Results of Investment (2) Acquisition from External Providers
PRIME URBAN Senzoku

Main Railway Access: 2 min. walk to Senzoku Station on Tokyu Meguro
Line
Leasable Units:

22

Acquisition Price:¥536 million

Acquisition Date:

March 30, 2007 (1st fiscal period)

Acquisition Route:

Existing provider

Rent Level

AccessCommuting TimeIn ¥90,000s for 1K units
In ¥140,000s for 1LDK units
Tokyu Meguro Line (direct connection with Toei
Subway Mita Line and Tokyo Metro Namboku Line)
Approx. 30 min. to Otemachi/Hibiya area
Approx. 30 min. to Roppongi/Tameike area

Benefis Hakata Grand Sweet

Main Railway Access: 18 min. walk to Hakata Station on JR Kagoshima
Main Line and Fukuoka City Subway Kuko Line,and Nishitetsu Hirao Station on Nishitetsu Tenjin
Omuta Line
Leasable Units:
67
Acquisition Price:¥830 million
Acquisition Date:
May 16, 2007 (1st fiscal period)
Acquisition Route:
New provider (broker: Nomura Real Estate Urban
Net)

Rent Level

In ¥60,000s for 1K units

Access

JR Line, Fukuoka City Subway Kuko Line, and Nishitetsu
Tenjin Omuta Line

Commuting Time

Walking distance to Hakata Station area (numerous bus
services)
Approx. 30 min. to Tenjin area

33

Results of Investment (2) Acquisition from External Providers
Benefis Yakuin Minami

Portfolio as of the end of the 1st FP

Number of Units: 89
Total Acquisition Price: ¥67,035 million
Main Railway Access: 6 min. walk from Yakuin Station, Nishitetsu Tenjin
Omuta Line, Fukuoka City Subway Nanakuma Line
Leasable Units:

34

Acquisition Price:¥351 million

Acquisition Date:

May 16, 2007 (1st fiscal period)

Acquisition Route:

New provider (broker: Nomura Real Estate Urban Net)

Rent Level

AccessCommuting TimeIn ¥50,000s for 1K units
Nishitetsu Tenjin Omuta Line and Fukuoka City Subway
Nanakuma Line (1 Station, approx. 3 min. ride to Nishitetsu
Fukuoka Tenjin (Tenjin) Station on Nishitetsu Line)
Approx. 10 min. to Tenjin area(accessible by bicycle)

34

Results of Investment (2) Acquisition from External Providers
PRIME URBAN Hokudaimae (temporary name) and 6 other properties
Toho Subway Line

Nanboku Subway Line

Miyanosawa

Nishi-ku
Kotoni and Miyanosawa Area

Kita-ku Area

Tozai Subway Line
Kita
NijuyoJo

N14

Chuo-kuMaruyama Area

HokudaimaeChuo-ku
Higashi Area
Maruyama

Chiji
Koukan
Odori
Higashi
Class
e

S1

Odori
MinamiToyohira-ku & Shiraishi-ku Area

Chuo-ku
Odori Minami Area
S17

35

Results of Investment (2) Acquisition from External Providers
PRIME URBAN Hokudaimae (tentative name)Main Railway Access:4 min. walk to Kita Jusanjo Higashi Station on
Sapporo Municipal Subway Toho Line, 7 min. Walk
from Kita Junijo Station on Sapporo Minicipal
Subway Namboku Line, and 9 min. walk from JR
Sapporo Station
Leasable Units:
60
Scheduled Acquisition Price: ¥600 million
Scheduled Acquisition Date: February 29, 2008 (3rd fiscal period)
Acquisition Route:
Existing provider

Rent Level

AccessCommuting TimeIn ¥60,000s for 1DK units
Subway Toho and Namboku Lines, and 3 JR Lines(approx. 4 min., 2 stations to Odori Station by subway)
Approx. 10 min. walk to Sapporo Station area
8 min. walk to Hokkaido University

PRIME URBAN Miyanosawa (tentative name)Main Railway Access:2 min. walk from Miyanosawa Station on
Sapporo Municipal Subway Tozai Line

Leasable Units:

54

Scheduled Acquisition Price: ¥576 million
Scheduled Acquisition Date: February 29, 2008 (3rd fiscal period)
Acquisition Route:

Rent Level

AccessExisting provider

In ¥50,000s for 1LDK units
In ¥70,000s for 2LDK units

Sapporo Municipal Subway Tozai Line(buses to Sapporo Station and New Chitose Airport,
etc., also available)

Commuting Time Approx. 20 min. to Odori Station area36

Results of Investment (2) Acquisition from External Providers
PRIME URBAN Kita Nijuyo Jo (tentative name)PRIME URBAN Odori Higashi (tentative name)Main Railway Access:6 min. walk to Kita Nijuyo Jo Station on
Sapporo Municipal Subway Namboku Line

Main Railway Access:5 min. walk to Bus Center Station on Sapporo
Municipal Subway Tozai Line

Leasable Units:

36

Leasable Units:

36

Scheduled Acquisition Price: ¥503.7 million

Scheduled Acquisition Price: ¥424 million

Scheduled Acquisition Date: February 29, 2008 (3rd fiscal period)

Scheduled Acquisition Date: February 29, 2008 (3rd fiscal period)

Acquisition Route:Acquisition Route:

Rent Level

AccessCommuting Time

New provider

In ¥80,000s for 2LDK units
Sapporo Municipal Subway Namboku Line. (approx. 5min. to Sapporo Station, approx. 7 min. to Odori
Station)Approx. 15 min. to Sapporo Station area
Approx. 15 min. to Odori Station area

Rent Level

AccessCommuting Time

Existing provider

In ¥60,000s for 1LDK units
In ¥80,000s for 2LDK units
Sapporo Municipal Subway Tozai Line(approx. 2 min., 1 station ride to Odori Station)
Approx. 10 min. to Odori Station area
(walking access through underground path available)37

Results of Investment (2) Acquisition from External Providers
PRIME URBAN Chiji Koukan (tentative name)Main Railway Access:9 min. walk to Nishi Juhatchome Station on
Sapporo Municipal Subway Tozai Line

Leasable Units:

42

Scheduled Acquisition Price: ¥337.9 million
Scheduled Acquisition Date: February 29, 2008 (3rd fiscal period)
Acquisition Route:

Existing provider

PRIME URBAN Maruyama (tentative name)Main Railway Access:10 min. walk from Nishi Nijuhatchome Station, 12
min. walk from Nishi Juhatchome Station. And 13
min. walk from Mauyama Koen Station on Sapporo
Municipal Subway Tozai Line

Leasable Units:

27

Scheduled Acquisition Price: ¥283.2 million
Scheduled Acquisition Date: February 29, 2008 (3rd fiscal period)
Acquisition Route:

Rent Level

AccessCommuting TimeIn ¥50,000s for 1K units
Subway Tozai Line(approx. 4 min. to Odori Station)
Approx. 15 min. to Odori Station area
Walking/bicycle access to universities, etc.

Rent Level

AccessExisting provider

In ¥60,000s for 1LDK units
Subway Tozai Line(approx. 4 min., 2 stations from Nishi Juhatchome Station to
Odori Station)

Commuting Time Approx. 20 min. to Odori Station area38

Results of Investment (2) Acquisition from External Providers
PRIME URBAN Odori Minami (tentative name)(List of the Seven New Acquisitions)
Main Railway Access:11 min. walk from Nishi Juitchome Station on
Sapporo Municipal Subway Tozai Line, 6 min. walkfrom Nishisen Rokujo Station on Sapporo Streetcar

Leasable Units:
58
Scheduled Acquisition Price: ¥731.6 million
Scheduled Acquisition Date: March 31, 2008 (3rd fiscal period)
Acquisition Route:
Existing provider

Rent Level

AccessIn ¥60,000s for 1LDK units
In ¥90,000s for 3LDK units
Subway Tozai Line and Sapporo Streetcar(approx. 2 min. to Odori Station on Tozai Line)
Approx. 15 min. to Odori Station area

Commuting Time 10. min walk to major medical facilities in the neighborhoodName of Property

Location

Acquisition Price(thousands of yen)

Leasable Units(units)PRIME URBAN Hokudaimae(tentative name)

Higashi-ku, Sapporo

600,000

60

PRIME URBAN Miyanosawa(tentative name)Nishi-ku, Sapporo

576,200

54

PRIME URBAN Kita Nijuyo Jo(tentative name)

Higashi-ku, Sapporo

503,700

36

PRIME URBAN Odori Higashi(tentative name)Chuo-ku, Sapporo

424,000

36

PRIME URBAN Chiji Koukan(tetative name)Chuo-ku, Sapporo

337,900

42

PRIME URBAN Maruyama(tetative name)Chuo-ku, Sapporo

283,200

27

PRIME URBAN Odori Minami(tetative name)Chuo-ku, Sapporo

731,600

58

3,456,600

313

Total (7 properties)

39

Results of Investment (2) Acquisition from External Providers
PRIME URBAN Kanayama (tentative name)Main Railway Access:7 min. walk to Kanayama Station on JR Tokaido
and Chuo Main Lines, Meitetsu Nagoya Main
Line, Subway Meijo and Meiko Lines
Leasable Units:
58
Scheduled Acquisition Price: ¥632 million
Scheduled Acquisition Date: February 29, 2008 (3rd Fiscal Period)
Acquisition Route:
New provider

Rent Level

AccessIn ¥60,000s for 1K units
5 lines including JR, Meitetsu and subway(walking distance to major terminal station Kanayama
Station)Approx. 15 min. to Sakae Station area

Commuting Time Approx. 15 min. to Nagoya Station area

PRIME URBAN Tsurumai (tentative name)Main Railway Access:5 min. walk to Tsurumai Station on JR Chuo Main
Line, 7 min. walk to Tsurumai Station on Nagoya
Municipal Subway Tsurumai Line
Leasable Units:
104
Scheduled Acquisition Price: ¥1,189.096 million
Scheduled Acquisition Date: March 5, 2009 (5th Fiscal Period)
Acquisition Route:
New provider

Rent Level

AccessCommuting TimeIn ¥60,000s for 1K units
JR Chuo Main Line and Subway Tsurumai Line(approx. 8 min. to Nagoya Station, approx. 5 min. to Fushimi
Station)Approx. 15 min. to Nagoya and Fushimi area
Walking distance to neighborhood universities

40

(Reference) Investment after the end of the 1st FP

Name of Property
PRIME URBAN Denenchofu Minami (tentative name)PRIME URBAN Meguro Ohashi Hills (tentative name)Benefis Kashii (tentative name)Benefis Yoshizuka Grand Sweet (tentative name)Benefis Chihaya (tentative name)
Total

Location
Ota-ku, Tokyo
Meguro-ku, Tokyo
Fukuoka-shi, Fukuoka
Fukuoka-shi, Fukuoka
Fukuoka-shi, Fukuoka

PRIME URBAN Denenchofu Minami(tentative name)Benefis Yoshizuka Grand Sweet(tentative name)

Scheduled
Acquisition Price(Thousands of Yen)
900,000
3,580,000
396,000
693,000
545,000
6,114,000

Leasable
Space (㎡)

Leasable
Units (Units)

1,100.17
2,955.74
1,231.79
1,856.92
1,738.87
8,883

44
99
39
65
48
295

Scheduled
Acquisition Date
March 21, 2008
March 21, 2008
March 5, 2008
March 19, 2008
March 28, 2008

PRIME URBAN Meguro Ohashi Hills(tentative name)Benefis Kashii (tentative name)Benefis Chihaya (tentative name)41

Result of Management (1) Portfolio Occupancy Rate

Occupancy rate based on property type(existing/newly developed)

Stable occupancy rate
Occupancy Rate （%）

Leasable Floor Space(㎡）Occupancy Rate（%）

100.0

150,000

100.0

80.0

120,000

80.0

60.0

90,00060.0

40.0

60,00040.0

20.0

30,000

20.0

0

0.0

0.0
2006
Sep

Oct

Nov

Dec

Leasable Floor Space （㎡）

2007
Jan
Tokyo Area

Feb

Mar
Other

Apr

May

Total

2006
Sep

Oct

Nov

Dec

2007
Jan

Feb

Existing Properties

Mar

Apr

May

New Developments

Existing Properties (1 yr or older at acquisition)

 Maintained high occupancy rate even withadditional acquisition of newly developed
properties
 Occupancy rate as of the end of the 1st FP(May 31, 2007): 95.4%

Planned and active leasing taking into consideration the property
characteristics and target tenant movement around fiscal year-end,
when tenant movements concentrate.
⇒ Achieved smooth tenant turnover after lease termination
Newly Developed Properties (Less than 1 yr old at acquisition)
Strategic leasing through effective advertising tools and utilization ofleasing agents.
⇒ Achieved early lease-up with short vacancy

42

Result of Management (2) Renewal Works

URBAN STAGE Kachidoki

Strategic renewal resulting from change of target tenants
 Renewal of exclusive area
⇒ Change from Japanese-room type 2DK to adjustable 1LDK unit

URBAN STAGE Toritsu Daigaku

Renewal to maintain and improve competitiveness Renewal of exclusive area
⇒ Timber flooring, prefabricated bath, and the kitchen were renewed⇒ Timber flooring, prefabricated bath, and the kitchen were renewed43

Results of Financing – Establishment of Stable Financial Base –Long-term interest-bearing debt ratio and fixedinterest-rate debt ratio

Diversification of maturity(millions of yen)

15,000
Short-term¥4.4 billion

Floating Interest Rate
¥49.4 billion

11,00010,000

4,500

5,000
Long-term¥315 billion

5,000
4,000

3,500

Fixed Interest Rate
¥270 billion

2,200

1,300

440
(Note) “Fixed interest rate” includes floatinginterest rate borrowings which have been fixed
through interest rate swaps.

0
1st
FP

2nd
FP

3rd
FP

4th
FP

5th
FP

6th
FP

7th
FP

8th
FP

9th
FP

10th 11th 12th 13th 14th 15th 16th 17th
FP FP
FP
FP
FP
FP
FP
FP

Diversification of lenders

Loan to value ratio and duration

 LTV ratio as of end of 1st fiscal period(May 31, 2007)

42.4%

 Average outstanding duration as ofend of 1st fiscal period (May 31, 2007)

4.38 years

Commercial Banks (3)Trust Banks (3)Bank of Tokyo Mitsubishi UFJ

Mitsubishi UFJ Trust & Banking

Regional Banks (2)Chiba Bank

Sumitomo Mitsui Banking Corp

Sumitomo Trust & Banking

Iyo Bank

Mizuho Corporate Bank

Nomura Trust & Banking

Insurance Companies (3)Government Affiliated (1)Taiyo Life Insurance

Development Bank of Japan

Daido Life Insurance
Mitsui Sumitomo Insurance

44

APPENDIX

45

Portfolio 1 (as of the end of the 1st FP)#

Name of Property

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

PROUD FLAT Yoyogi Uehara
PROUD FLAT Hatsudai
PROUD FLAT Gakugei Daigaku
PROUD FLAT Meguro Gyoninzaka
PROUD FLAT Kagurazaka
PROUD FLAT Sangen Jaya
PROUD FLAT Kamata
PROUD FLAT Kiyosumi Shirakawa
PRIME URBAN Akasaka
PRIME URBAN Tamachi
PRIME URBAN Ebisu Minami
PRIME URBAN Yoyogi
PRIME URBAN Bancho
PRIME URBAN Chiyoda Fujimi
PRIME URBAN Iidabashi
PRIME URBAN Ebisu
PRIME URBAN Nakameguro
PRIME URBAN Gakugei Daigaku
PRIME URBAN Senzoku
PRIME URBAN Nishi Shinjuku I
PRIME URBAN Nishi Shinjuku II
PRIME URBAN Shinjuku Naitomachi
PRIME URBAN Sangen Jaya
PRIME URBAN Shinagawa Nishi
PRIME URBAN Osaki
PRIME URBAN Omori
PRIME URBAN Kita Senzoku
PRIME URBAN Nishi Ogikubo
PRIME URBAN Otsuka
PRIME URBAN Monzen Nakacho
PRIME URBAN Kameido

Location
Shibuya-ku, Tokyo
Shibuya-ku, Tokyo
Meguro-ku, Tokyo
Meguro-ku, Tokyo
Shinjuku-ku, Tokyo
Setagaya-ku, Tokyo
Ota-ku, Tokyo
Koto-ku, Tokyo
Minato-ku, Tokyo
Minato-ku, Tokyo
Shibuya-ku, Tokyo
Shibuya-ku, Tokyo
Chiyoda-ku, Tokyo
Chiyoda-ku, Tokyo
Chiyoda-ku, Tokyo
Meguro-ku, Tokyo
Meguro-ku, Tokyo
Meguro-ku, Tokyo
Meguro-ku, Tokyo
Shinjuku-ku, Tokyo
Shinjuku-ku, Tokyo
Shinjuku-ku, Tokyo
Setagaya-ku, Tokyo
Shinagawa-ku, Tokyo
Shinagawa-ku, Tokyo
Ota-ku, Tokyo
Ota-ku, Tokyo
Suginami-ku, Tokyo
Toshima-ku, Tokyo
Koto-ku, Tokyo
Koto-ku, Tokyo

Acquisition Price Percent of(Thousands of Yen) Total (%)
1,100,000
1.6
865,000
1.3
812,000
1.2
882,000
1.3
1,540,000
2.3
1,350,000
2.0
1,140,000
1.7
900,000
1.3
956,000
1.4
941,000
1.4
947,000
1.4
408,000
0.6
1,170,000
1.7
707,000
1.1
2,030,000
3.0
1,200,000
1.8
1,320,000
2.0
886,000
1.3
536,000
0.8
1,290,000
1.9
1,000,000
1.5
512,000
0.8
835,000
1.2
624,000
0.9
1,700,000
2.5
824,000
1.2
576,000
0.9
435,000
0.6
794,000
1.2
2,200,000
3.3
705,000
1.1

Leasable
Leasable Occupation Rate
Space (㎡) Units (Units) (end of 1st FP)
1,151.34
44
97.9
958.983164.3
934.3941100.0855.2340
100.0
1,793.4370
100.0
1,277.82
48
79.8
1,541.64
67
100.0
1,209.56
55
100.0
1,062.05
25
96.7
1,107.36
48
89.3
881.892190.7
439.5619
93.6
1,277.04
52
97.9
793.8732
90.3
2,087.7090
100.0
1,444.40
29
86.8
1,302.42
49
100.0
1,008.39
32
93.4
655.2722
96.9
1,459.86
60
98.4
1,162.55
46
55.4
578.181471.7
874.1533
97.1
961.2546
100.0
2,106.16
99
98.0
1,190.70
54
100.0
834.9046
97.8
543.0924
95.1
944.9946
100.0
3,127.94
117
97.5
1,117.34
52
100.0

46

Portfolio 2 (as of the end of the 1st FP)#

Name of Property

32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62

PRIME URBAN Sumiyoshi
PRIME URBAN Kinshi Koen
PRIME URBAN Kinshicho
PRIME URBAN Hirai
PRIME URBAN Kasai
PRIME URBAN Kasai II
PRIME URBAN Urayasu
PRIME URBAN Gyotoku I
PRIME URBAN Gyotoku II
PRIME URBAN Gyotoku Ekimae
PRIME URBAN Nishi Funabashi
URBAN STAGE Azabu Juban
URBAN STAGE Hatagaya
URBAN STAGE Toritsu Daigaku
URBAN STAGE Kachidoki
URBAN STAGE Naka Ochiai
URBAN STAGE Ochiai
URBAN STAGE Roka Koen
URBAN STAGE Kamiuma
URBAN STAGE Sangen Jaya
URBAN STAGE Chitose Karasuyama
URBAN STAGE Sangen Jaya II
URBAN STAGE Komazawa
URBAN STAGE Karasuyama
URBAN STAGE Oimachi
URBAN STAGE Oimachi II
URBAN STAGE Yukigaya
URBAN STAGE Ikegami
URBAN STAGE Nakano
URBAN STAGE Takaido
URBAN STAGE Komagome

Location
Koto-ku, Tokyo
Sumida-ku, Tokyo
Sumida-ku, Tokyo
Edogawa-ku, Tokyo
Edogawa-ku, Tokyo
Edogawa-ku, Tokyo
Urayasu-shi, Chiba
Ichikawa-shi, Chiba
Ichikawa-shi, Chiba
Ichikawa-shi, Chiba
Funabashi-shi, Chiba
Minato-ku, Tokyo
Shibuya-ku, Tokyo
Meguro-ku, Tokyo
Chuo-ku, Tokyo
Shinjuku-ku, Tokyo
Shinjuku-ku, Tokyo
Setagaya-ku, Tokyo
Setagaya-ku, Tokyo
Setagaya-ku, Tokyo
Setagaya-ku, Tokyo
Setagaya-ku, Tokyo
Setagaya-ku, Tokyo
Setagaya-ku, Tokyo
Shinagawa-ku, Tokyo
Shinagawa-ku, Tokyo
Ota-ku, Tokyo
Ota-ku, Tokyo
Nakano-ku, Tokyo
Suginami-ku, Tokyo
Toshima-ku, Tokyo

Acquisition Price Percent of(Thousands of Yen) Total (%)
552,000
0.8
1,180,000
1.8
668,000
1.0
700,000
1.0
637,000
1.0
958,000
1.4
840,000
1.3
635,000
0.9
741,000
1.1
476,000
0.7
772,000
1.2
991,000
1.5
452,000
0.7
524,000
0.8
2,290,000
3.4
655,000
1.0
324,000
0.5
362,000
0.5
900,000
1.3
755,000
1.1
730,000
1.1
539,000
0.8
396,000
0.6
344,000
0.5
530,000
0.8
1,100,000
1.6
970,000
1.4
1,460,000
2.2
472,000
0.7
1,080,000
1.6
412,000
0.6

Leasable
Leasable Occupation Rate
Space (㎡) Units (Units) (end of 1st FP)
813.5240
100.0
1,886.50
77
98.7
991.6249
100.0
1,095.91
53
100.0
905.8145
100.0
1,437.84
68
100.0
1,264.8460
100.0
1,151.36
52
96.2
1,244.00
58
100.0
778.1937
97.3
1,237.80
60
98.3
1,222.1340
92.1
650.6038
100.0
996.81
16
87.2
4,481.82
144
94.6
1,237.98
18
88.9
517.5332
100.0
567.2034
100.0
1,739.86
37
97.4
1,018.72
47
95.2
1,774.01
27
96.2
810.9817
95.5
572.4126
96.0
507.5228
89.8
722.7045
100.0
1,719.82
92
95.8
1,536.59
94
96.7
2,456.48
95
84.9
801.3051
98.2
1,746.20
107
97.2
990.18
19
100.0

47

Portfolio 3 (as of the end of the 1st FP)

#
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89

Name of Property

Location

URBAN STAGE Mukojima
Sumida-ku, TokyoURBAN STAGE Ekoda
Nerima-ku, TokyoURBAN STAGE Takinogawa
Kita-ku, TokyoURBAN STAGE Asakusa
Taito-ku, TokyoURBAN STAGE Machiya
Arakawa-ku, TokyoURBAN STAGE Koganei
Koganei-shi, TokyoURBAN STAGE Hino
Hino-shi, TokyoURBAN STAGE Tsurumi Teraya
Yokohama-shi, Kanagawa
URBAN STAGE Tennocho
Yokohama-shi, Kanagawa
URBAN STAGE Urayasu
Urayasu-shi, Chiba
URBAN STAGE Minami Gyotoku I
Ichikawa-shi, Chiba
URBAN STAGE Minami Gyotoku II
Ichikawa-shi, Chiba
URBAN STAGE Minami Gyotoku III
Ichikawa-shi, Chiba
URBAN STAGE Minami Gyotoku IV
Ichikawa-shi, Chiba
URBAN STAGE Minami Urawa
Saitama-shi, Saitama
URBAN STAGE Yono Hommachi
Saitama-shi, Saitama
Cosmo Gracia Yotsuya Gaien Higashi Shinjuku-ku, Tokyo
Vicinity of Tokyo Sub Total
PROUD FLAT Itsutsubashi
Sendai-shi, Miyagi
PRIME URBAN Aoi
Nagoya-shi, Aichi
PRIME URBAN Esaka I
Suita-shi, Osaka
PRIME URBAN Esaka II
Suita-shi, Osaka
Presence S17
Sapporo-shi, Hokkaido
Presence N14
Sapporo-shi, Hokkaido
Classe Odori Koen
Sapporo-shi, Hokkaido
Presence S1
Sapporo-shi, Hokkaido
Benefis Hakata Grand Sweet
Fukuoka-shi, Fukuoka
Benefis Yakuin Minami
Fukuoka-shi, Fukuoka
Other Areas
Sub Total
Total

Acquisition Price Percent of(Thousands of Yen) Total (%)
487,000
0.7
385,000
0.6
287,000
0.4
350,000
0.5
210,000
0.3
229,000
0.3
319,000
0.5
457,000
0.7
136,000
0.2
277,000
0.4
357,000
0.5
285,000
0.4
263,000
0.4
256,000
0.4
274,000
0.4
519,000
0.8
1,700,000
2.5
61,421,000
91.6
682,000
1.0
724,000
1.1
672,000
1.0
790,000
1.2
377,000
0.6
336,000
0.5
530,000
0.8
322,000
0.5
830,000
1.2
351,000
0.5
5,614,000
8.4
67,035,000
100.0

Leasable
Leasable Occupation Rate
Space (㎡) Units (Units) (end of 1st FP)
1,108.91
55
100.0
872.4935
97.4
554.3929
93.5
876.7022
94.9
455.1926
92.2
682.4327
89.5
994.685496.3
952.0650
96.1
332.482095.0
437.9427
100.0
682.0541
100.0
611.6137
100.0
543.8433
97.1
535.0832
96.9
694.0532
94.0
1,372.7470
98.6
1,759.61
51
98.5
89,027.93
3,699
95.4
1,861.5660
92.0
1,571.04
46
100.0
1,189.1248
100.0
1,392.00
57
100.0
1,518.58
33
77.1
1,155.6036
96.8
1,850.20
53
100.0
1,148.72
36
100.0
2,176.23
67
95.4
897.8434
100.0
14,760.89
470
95.7
103,788.82
4,169
95.4

48

Scheduled Acquisitions After the 2nd FP
Scheduled Acquisitions Determined During the 1st FP
Name of Property
PROUD FLAT Sumida Riverside (Note)
PROUD FLAT Waseda (Note)
PROUD FLAT Yokohama (tentative name)PRIME URBAN Hakusan
Vicinity of Tokyo Sub Total
PRIME URBAN Hokudaimae (tentative name)PRIME URBAN Miyanosawa (tentative name)PRIME URBAN Kita Nijuyo Jo (tentative name)PRIME URBAN Odori Higashi (tentative name)PRIME URBAN Chiji Koukan (tentative name)PRIME URBAN Maruyama (tentative name)PRIME URBAN Odori Minami (tentative name)PRIME URBAN Kanayama (tentative name)PRIME URBAN Tsurumai (tentative name)
Other Areas
Sub Total
Total(Note) Has been acquired on June 1, 2007.

Scheduled
Acquisition Price(Thousands of Yen)
Chuo-ku, Tokyo
2,260,000
Shinjuku-ku, Tokyo
1,110,000
Yokohama-shi, Kanagawa
2,340,000
Bunkyo-ku, Tokyo
893,000
6,603,000
Sapporo-shi, Hokkaido
600,000
Sapporo-shi, Hokkaido
576,200
Sapporo-shi, Hokkaido
503,700
Sapporo-shi, Hokkaido
424,000
Sapporo-shi, Hokkaido
337,900
Sapporo-shi, Hokkaido
283,200
Sapporo-shi, Hokkaido
731,600
Nagoya-shi, Aichi
632,000
Nagoya-shi, Aichi
1,189,096
5,277,696
11,880,696
Location

Leasable
Space (㎡)

Leasable
Units (Units)

3,055.21
1,450.91
3,118.12
1,069.32
8,693.56
1,851.39
2,114.53
1,773.90
1,494.36
1,007.30
911.072,439.90
1,391.02
2,502.11
15,485.58
24,179.14

110
60
113
42
325
60
54
36
36
42
27
58
58
104
475
800

Leasable
Space (㎡)

Leasable
Units (Units)

1,100.17
2,955.74
1,231.79
1,856.92
1,738.87
8,883

44
99
39
65
48
295

Leasable
Space (㎡)

Leasable
Units (Units)

136,851.45

5,264

Scheduled
Acquisition Date
June 1, 2007
June 1, 2007
March 14, 2008
February 29, 2008
February 29, 2008
February 29, 2008
February 29, 2008
February 29, 2008
February 29, 2008
February 29, 2008
March 31, 2008
February 29, 2008
March 5, 2009

Scheduled Acquisitions Determined After the 1st FP
Name of Property
PRIME URBAN Denenchofu Minami (tentative name)PRIME URBAN Meguro Ohashi Hills (tentative name)Benefis Kashii (tentative name)Benefis Yoshizuka Grand Sweet (tentative name)Benefis Chihaya (tentative name)
Total

Location
Ota-ku, Tokyo
Meguro-ku, Tokyo
Fukuoka-shi, Fukuoka
Fukuoka-shi, Fukuoka
Fukuoka-shi, Fukuoka

Scheduled
Acquisition Price(Thousands of Yen)
900,000
3,580,000
396,000
693,000
545,000
6,114,000

Scheduled
Acquisition Date
March 21, 2008
March 21, 2008
March 5, 2008
March 19, 2008
March 28, 2008

Total of All the Mentioned Properties
Name of Property
Total Acquired Properties/Scheduled Acquisitions (107 Properties)(Scheduled)
Acquisition Price(Thousands of Yen)
85,029,696

49

Interest-bearing Debts (end of the 1st FP)

LenderAmount(Millions of Yen)

Type of Interest

Short-term Loan

2 Financial Institutions

440 Floating Rate

Short-ter Loan Sub Total

2 Financial Institutions

440

Interest Rate

Date of
Repayment

0.90727% September 28, 2007

5 Finacial Institutions

4,500 Floating Rate

0.94917%

August 27, 2009

6 Financial Institutions

5,000 Fixed Rate (Note 1)

1.46045%

February 27, 2010

6 Financial Institutions

3,500 Fixed Rate (Note 2)

1.84464% September 30, 2011

7 Financial Institutions

11,000 Fixed Rate (Note 1)

1.79300%

February 27, 2012

2 Financial Institutions

2,200 Fixed Rate

1.81375%

August 27, 2012

2 Financial Institutions

2,000 Fixed Rate (Note 1)

2.14360%

February 27, 2014

1 Finacial Institution

2,000 Fixed Rate

2.13625%

February 27, 2014

1 Finacial Institution

1,300 Fixed Rate

2.23500%

February 27, 2015

Long-term Loan

Long-term Loan Sub Total 12 Financial Institutions

31,500Total

31,94012 Financial Institutions

Collateral
Unsecured
Unguaranteed

Unsecured
Unguaranteed(Note 1) This loan has started the Interest Rate Swap transaction on February 27, 2007.
(Note 2) This loan has started the Interest Rate Swap transaction on May 31, 2007.

50

Unitholders (end of the 1st FP)

Number of Unitholders and Investment Units(159)(11,631 units)(64)

Other Domestic
Corporations(6,161 units)

Foreign Corporations

Individuals
Foreign Corporations(139)(36,110 units)

Financial Institutions(Includes security companies)(14,198 units)(5,526)

Other Domestic Corporations

Individuals

Financial Institutions(Includes security companies)

Total Number of Investment Units：68,100

Total Number of Unitholders：5,888

Top 10 Unitholders
Unitholders
1 Nomura Real Estate Development Co., Ltd.
2 Tokio Marine & Nichido Fire Insurance Co., Ltd.
3 NikkoCiti Trust and Banking Corporation
4 The Master Trust Bank of Japan, Ltd.
5 Japan Trustee Services Bank, Ltd.
6 Fuji Fire and Marine Insurance Co., Ltd.
7 The Joyo Bank, Ltd.
8 Trust & Custody Services Bank, Ltd.
9 The Bank of Ikeda, Ltd.
10 The Nomura Trust and Banking Co., Ltd.
Total

Units
12,500
5,000
4,164
2,638
2,503
2,168
1,994
1,554
1,400
1,258
35,179Ratio
18.36%
7.34%
6.11%
3.87%
3.68%
3.18%
2.93%
2.28%
2.06%
1.85%
51.66%

51

Profile of the Fund and NREAM

History of the Fund
July 28, 2006
Notification of incorporation by the founder (Nomura Real
Estate Asset Management Co., Ltd.) under Article 69 of theInvestment Trust Law
August 3, 2006
Registration of incorporation under Article 166 of theInvestment Trust Law.
Incorporation of Nomura Real Estate Residential Fund.
August 4, 2006
Application for registration under Article 188 of theInvestment Trust Law.
August 24, 2006
Registered with the Prime Minister of Japan under Article
187 of the Investment Trust Law.
(Registration number 56, filed with the Director of the Kanto
Local Finance Bureau)
February 14, 2007
Listed on the Tokyo Stock Exchange

Corporate Data of NREAM
Corporate Name

Nomura Real Estate Asset Management Co., Ltd.

Capital¥300,000,000

Shareholder

Nomura Real Estate Holdings, Inc. (100%)

History

January 24, 2003
EstablishedFebruary 28, 2003
Licensed for real estate trading(Governor of Tokyo No. (1) 81679)
June 17, 2003
Licensed for discretionary proxy in realty trading(Minister of Land, Infrastructure and Transport No. 18)
July 23, 2003
Licensed as investment trust manager under theInvestment Trust Law(Prime Minister No. 28)
February 7, 2006
Licensed under the Article 10-2 of the Investment
Trust Law (for changes in business methods, etc.) (Note)(Note) With intent to establish a governance system for the
purpose of managing the assets of multiple REITs.

52

This document has been prepared solely for the purpose of provision of information andshould not be construed as an offer, solicitation or commercial conduct of any natureassociated with any specific products. Investors wishing to purchase the investment unitsof Nomura Real Estate Residential Fund, Inc. should contact their own securities brokers
or dealers.
The forward-looking statements with respect to the future financial results contained in thisdocument should not be construed as a guarantee of the actual performance in the future.
Although the information contained in this document is intended to be complete andthorough, there is no assurance of precision and safety. Please note that the contents ofthis document is subject to change or cancellation without prior notice.
It is prohibited to make duplication, reproduction, distribution or use of any part or whole ofthe information contained in this document without express prior written consent.