Semi-Annual Report
Second Half of 2022
(43rd Period – July to December 2022)

Nippon Building Fund Inc.

Contents

Performance Results ............................................................................................................................ 1
Overview of Performance and Distribution ............................................................................................. 1
Summary of Selected Financial Date ............................................................................................. 2
Management’s Discussion and Analysis ................................................................................................. 4
Finacial Statements............................................................................................................................................. 18
Notes to Finacial Statements ............................................................................................................... 22
Independent Auditor’s Report ............................................................................................................. 41

Performance Results:
NBF has conducted asset management in accordance with its basic policy of “aim to achieve steady growth ofassets under management and secure stable profits on a mid- to long-term basis.”
Even under this challenging environment, NBF enhanced its portfolio by acquiring " Toyosu Bayside Cross
Tower " (real property; acquisition price: 14.7 billion yen), in November 2022, and disposed " Toyocho Center
Bldg" (trust beneficiary interest, disposition price: 9.6billion yen), and " NBF Niigata Telecom Bldg." (trust
beneficiary interest, disposition price: 3.9 billion yen), and " NBF Hiroshima Tatemachi Bldg" (trust beneficiaryinterest, disposition price: 3.5 billion yen) in July 2022.
Regarding the existing portfolio, NBF executes market-appropriate, flexible, and timely leasing activities
carefully factoring in market trends in order to maximize the level of occupancy rates, which is still in an
adjustment phase. With existing tenants, NBF strives to retain and improve rent levels, prevent cancellations basedon the fundamental policy of maintaining favorable relationships and enhancing tenant satisfaction．As a result of
these activities, occupancy rates and rental revenues remains stable.
In addition, NBF’s pursuit to enhance competitiveness of its properties by implementing continuous cost
reduction measures through timely renovations will continue.

Overview of Performance and Distribution:
As the result of above operations, NBF's performance results during the period under review consisted ofoperating revenues of ¥47,366 million (a decrease of ¥4,848million, or 9.3%, compared with the previous period),
operating income from leasing activities of ¥21,500 million (a decrease of ¥527million, or2.4%, compared withthe previous period), operating income after asset management, custody and agent fees, etc. of ¥21,596 million (adecrease of ¥5,209 million, or 19.4% compared with the previous period), ordinary income of ¥20,289 million (adecrease of ¥5,151million, or 20.2%, compared with the previous period), and net income of ¥20,288 (a decreaseof ¥5,151million, or 20.2%, compared with the previous period). In accordance with the distribution policy
prescribed in its Articles of Incorporation, NBF decided to distribute ¥19,561million, the entire amount arrived atby deducting provision of reserve for advanced depreciation (¥1,639 million) from the sum of retained earnings(¥20,288 million) and reversal of reserve for advanced depreciation (¥911 million), so that it will be able to deduct
the maximum amount of cash distribution of profit from its taxable income through the application of preferential
tax measures to investment corporations (Article 67-15 of the Act on Special Measures Concerning Taxation).
As a result, the distribution per unit was ¥11,500 (a decrease of ¥1,976, or 14.7% compared with the previous
period). *Net provision of reserve for advanced depreciation is ¥727million.

1

Summary of Selected Financial Data
43rd Period
from July 1, 2022
to December 31,
2022

42nd Period
from January 1,
2022 to June 30,
2022

41st Period
from July 1, 2021
to December 31,
2021

43rd Period
from July 1, 2022
to December 31,
2022

Yen in millions, except per unit data or where otherwise indicatedthousands except(Note 1)

per unit data

U.S. dollars in(Note 1, 2)
47,366¥ 52,215¥ 50,334$359,358

45,17245,22744,333342,711

2,194

6,988

6,000

16,646

Operating expenses

25,77025,40827,330195,508

Rental expenses

23,672

23,20021,896

179,595

Operating revenues

Note 3

Revenues from property leasing
Gains on sales of real estate
properties

¥

－

－

3,273

－

20,28925,44021,728

153,932

Loss on sale of real estate property

Ordinary income
Net income
Funds from operations
Net operating income from property
leasing activities
Total amount of cash distribution(a)20,28825,43921,727

153,925

Note 426,012

26,18026,425

197,349

Note 4

29,41829,75629,862

223,186(b)

19,561

22,922

19,578148,406

7,917

7,728

7,424

60,070Depreciation and amortization

3,650

8,820

5,664

27,692

1,368,739

1,367,719

1,306,855

10,384,185

577,500

574,500

550,500

4,381,306(d)706,521709,154672,290

5,360,147

Capital expenditures
Total assets(c)Interest-bearing debt
Net assets(e)

1,700,991

1,700,991

1,652,500

Net assets per unit (Yen/$)(d) / (e)415,358

416,906

406,832

3,151

Distribution per unit (Yen/$)(b) / (e)11,50013,476

11,84887

Note 4

15,292

15,435

15,991

116

Note 4

1.5%

1.9%

1.7%

(3.0%)(3.8%)(3.3%)

2.9%

3.7%

3.2%

Total number of units issued (Units)

Funds from operations per unit
(Yen/$)
ROA(Annual rate)
ROE

Note 4(5.7%)(7.4%)(6.5%)

Note 4

42.2%

42.0%

42.1%

(d) / (c)

51.6%

51.8%

51.4%

96.4%

90.1%

90.1%

184

181

184

(Annual rate)
Loan to value (LTV)
Capital ratio
Payout ratio(b) / (a),Note 5

Number of days
Number of real estate properties

Note 671

73

73

Number of tenants

Note 6

1,547

1,601

1,567

1,219,233

1,237,167

1,197,970

95.9%

96.3%

96.4%

Total rentable area (m2)Occupancy rate (Average)

Notes:

Note 6

1. The amounts of yen in the annual report are rounded down to the nearest million yen. The amounts of U.S. dollar are
rounded after the decimal.

22. U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥131.81 = U.S. $1.00, the approximate
exchange rate on December 31, 2022.
3. Operating revenues do not include consumption tax.
4. All valuations are calculated through the following formulas. The figures in parentheses after ROA and ROE are
annualized based on the six-month figures for the period.
Funds from operations: Net income (excluding Gains and Losses on sales of real estate properties) + Depreciation andamortization
Net operating income from property leasing activities: (Revenue from property leasing – Rental expenses) + Depreciation
and amortization
Funds from operations per unit: (Net income (excluding Gains and Losses on Sales of real estate Properties) +Depreciation and amortization) / Weighted average number of units issued and outstanding during the period
ROA: Ordinary income / (Initial total assets + Total assets at end of period) ÷ 2
ROE: Net income / (Initial net assets + Net assets at end of period) ÷ 2
LTV: Interest-bearing debt / Total assets
5. Payout ratio figures are calculated to one decimal place only.
6. Number of real estate properties means units generally perceived to be one office building. Number of tenants meansgross number of tenants by building. Occupancy rate, end-tenant basis, is the weighted average of month-end occupancy
rate on a floor space basis.

3

Management’s Discussion and Analysis
1. Distribution for the Current Period
Distribution per unit for the current period was ¥11,500. NBF expects to distribute almost all retained
earnings at the current period end remaining after deducting the amount appropriated to the reserve for advanced
depreciation of replacing specified assets as stipulated in Article 65-7 of the Act on Special Measures
Concerning Taxation to be eligible for special tax treatment (Article 67-15 of the Act on Special Measures
Concerning Taxation) that allows NBF to deduct its cash dividends of profits from taxable income.
For the six months
ended December 31,
2022

For the six months
ended June 30,
2022

For the six months
ended December 31,
2021(Yen in thousands, except per unit amounts)¥20,288,900—
1,639,062
911,559
19,561,396
11,50019,561,396
11,500——Retained earnings
Undistributed earnings
Transfer to reserve for reduction entry
Reversal of reserve for reduction entry
Total cash distribution（Cash distribution per unit）
Distribution of accumulated earnings（Distribution of accumulated earnings per unit）
Cash distribution in excess of accumulated earnings（Per unit）¥25,439,937—
2,517,382—
22,922,554
13,47622,922,554
13,476——¥21,727,769—
4,170,541
2,021,592
19,578,820
11,84819,578,820
11,848——Notes:
1. Above cash distributions were paid after the period end.

2. Changes in Assets, Liabilities and Net Assets
Assets
As of December 31, 2022, total assets increased by ¥1,019 million to ¥1,368,739 million compared with June30, 2022. Return on average total assets (ROA) for the six months ended December 31, 2022 decreased to 1.5
percent from 1.9 percent for the previous six-month period.
Current assets increased by ¥4,348 million to ¥17,169 million compared with June 30, 2022. Real estate
properties decreased by ¥3,935 million to ¥1,309,095 million compared with June 30, 2022. Intangible assets
decreased by ¥35 million to ¥35,711 million compared with June 30, 2022.
Liabilities
Current liabilities decreased by ¥16,324 million to ¥74,160 million compared with June 30, 2022, primarily
because of a decrease in Long-term debt due within one year compared with June 30, 2022.
Long-term debt increased by ¥20,000 million to ¥517,500 million compared with June 30, 2022.
As a result, total interest-bearing liabilities increased by ¥3,000 million to ¥577,500 million compared with June4

30,2022. The ratio of long-term debt (for which the redemption period at the time of contract or issuance is morethan one year) to total interest-bearing liabilities was 100 percent same as for the previous six-month period.
The loan-to-value ratio, calculated as the ratio of interest-bearing liabilities to total assets, increased to 42.2
percent as of December 31, 2022 from 42.0 percent as of June 30, 2022.
Notes:
1. Interest-bearing liabilities mean "Short-term loans", "Long-term debt due within one year" and "Long-term Debt".

Net assets
Net assets decreased by ¥2,633 million to ¥706,521 million compared with June 30, 2022.

3. Funding
Balance of Paid-in Capital
NBF was established on March 16, 2001 with initial paid-in capital of ¥100 million. NBF began investing
activities in May 2001 after ¥98,800 million was raised through private placements. As of December 31, 2022,
NBF had issued 1,700,991 units out of 4,000,000 total authorized units. NBF’s units were listed on the J-REIT
section of the Tokyo Stock Exchange in September 2001 upon the completion of a public offering. As theInvestment Trust Law of Japan does not contain any provision for the issue of more than one class of units, NBF’sunits comprise the sole class of units authorized and issued by NBF.

Issue date

March 16, 2001
May 23, 2001
September 8, 2001
July 14, 2004
August 11, 2004
August 10, 2005
March 16, 2006
March 29, 2006
February 4, 2008
March 4, 2008
January 26, 2011
February 22, 2011
January 25, 2012
February 21, 2012
January 23, 2013
January 31, 2013
January 1, 2014

Remarks
Initial capital(private)
Privateplacement
Public offering
Public offering
Third party
allocation
Public offering
Public offering
Third party
allocation
Public offering
Third party
allocation
Public offering
Third party
allocation
Public offering
Third party
allocation
Public offering
Third party
allocation
Unit split

Units issued andoutstanding
Increase
Balance(units)200

200

197,600

197,800

82,90080,000Paid-in capital
Increase
Balance(Yen in millions)100

Note 1

98,80098,900Note 2

280,700
360,700

49,99958,838148,899
207,737

Note 3Note 44,000
58,00080,0005,300

364,700
422,700
502,700
508,000

2,941
51,491
79,0405,236

210,678
262,170
341,210
346,446

Note 5Note 6Note 7Note 831,800539,800

37,158383,605

Note 92,200

542,000

2,570

386,175

Note 1034,000576,000

26,957413,132

Note 112,500

578,500

1,982

415,114

Note 1230,000608,500

18,172433,287

Note 134,500

613,000

2,725

436,013

Note 1474,000687,000

63,973499,986

Note 155,000

692,000

4,322

504,308Note 16

692,000

1,384,000―

504,308Note 17

5

¥

100

¥

Notes

March 19, 2014
March 28, 2014
October 26, 2020
November 6, 2020
January 19, 2022
January 28, 2022

Public offering
Third party
allocation
Public offering
Third party
allocation
Public offering
Third party
allocation

26,5001,410,500

14,022

518,331

Note 18

1,500

1,412,000

793

519,124Note 19

229,000

1,641,000

117,041

636,166

Note 20

11,5001,652,500

5,877

642,044

Note 2147,5001,700,000

30,369672,413

Note 22991

1,700,991

633

673,047

Note 23

Notes: 1. NBF was established with initial capital of ¥500,000 per unit.
2. Follow-on private offering at ¥500,000 per unit to raise funds for acquisition of 22 properties.
3. Public offering of new units for ¥625,000 per unit (excluding underwriting fee: ¥603,125) to repay debt and to fundproperty acquisition.
4. Public offering of new units for ¥759,500 per unit (excluding underwriting fee: ¥735,475) to repay debt, etc.
5. Additional issue of new units (third party allocation) for ¥735,475 per unit undertaken pursuant to the public offering in
Note 4.
6. Public offering of new units for ¥916,300 per unit (excluding underwriting fee: ¥887,782) to repay debt and to fundproperty acquisition.
7. Public offering of new units for ¥1,019,200 per unit (excluding underwriting fee: ¥988,000) to repay debt and to fundproperty acquisition.
8. Additional issue of new units (third party allocation) for ¥988,000 per unit undertaken pursuant to the public offering in
Note 7.
9. Public offering of new units for ¥1,205,400 per unit (excluding underwriting fee: ¥1,168,500) to repay debt and to fundproperty acquisition.
10. Additional issue of new units (third party allocation) for ¥1,168,500 per unit undertaken pursuant to the public offering in
Note 9.
11. Public offering of new units for ¥818,025 per unit (excluding underwriting fee: ¥792,855) to repay debt and to fundproperty acquisition.
12. Additional issue of new units (third party allocation) for ¥792,855 per unit undertaken pursuant to the public offering in
Note 11.
13. Public offering of new units for ¥624,975 per unit (excluding underwriting fee: ¥605,745) to repay debt and to fundproperty acquisition.
14. Additional issue of new units (third party allocation) for ¥605,745 per unit undertaken pursuant to the public offering in
Note 13.
15. Public offering of new units for ¥891,800 per unit (excluding underwriting fee: ¥864,500) to repay debt and to fundproperty acquisition.
16. Additional issue of new units (third party allocation) for ¥864,500 per unit undertaken pursuant to the public offering in
Note 15.
17．Effective January 1, 2014, NBF implemented a 2-for-1 unit split of its investment units.
18．Public offering of new units for ¥545,860 per unit (excluding underwriting fee: ¥529,150) to repay debt and to fundproperty acquisition.
19．Additional issue of new units (third party allocation) for ¥529,150 per unit undertaken pursuant to the public offering in
Note 18.
20．Public offering of new units for ¥527,240 per unit (excluding underwriting fee: ¥511,100) to fund property acquisition.
21．Additional issue of new units (third party allocation) for ¥511,100 per unit undertaken pursuant to the public offering in
Note 20.
22．Public offering of new units for ¥659,540 per unit (excluding underwriting fee: ¥639,350) to fund property acquisition.
23．Additional issue of new units (third party allocation) for ¥639,350 per unit undertaken pursuant to the public offering in
Note 22.

6

Market Price of Units
High/Low (closing price) of units on the TSE:
For the six months ended
December 31, 2022

High
Low

For the six months ended
June 30, 2022

For the six months ended
December 31, 2021

(Yen)
¥723,000
627,000¥708,000
580,000¥746,000
670,000

Borrowings
Borrowings from financial institutions as of December 31, 2022 are shown below.

Short-term loans
LenderInterest

rate (%)

Balance（Note 2）Due on(Note 1)

Repayment
methodUse of
funds

Notes

Bulletpayment（Note 3）

Unsecured/unguaranteed/pari passu,
See (Note 4)

Repayment
methodUse of
funds

Notes

(Yen in millions)Mizuho Bank, Ltd.

¥8,000Total short-term loans

0.108% January 31, 2023

¥8,000Long-term loans
Interest

LenderDevelopment Bank of Japan Inc.

MUFG Bank, Ltd.

Sumitomo Mitsui Banking Corporation

Balancerate (%)（Note 2）

(Yen in millions)¥10,000
13,00010,00010,0005,000
5,000
10,000
6,000
2,500
5,000
3,000
7,000
4,000
3,000
3,000
5,000
8,000
2,000
7,000
6,000
4,000
5,000
5,000
5,000
6,000
4,000
3,000
2,000
10,0005,000
11,0006,000
20,0007

Due on(Note 1)1.263% July 2, 2023
0.747% September 10, 2027
0.357% February 15, 2028
0.256% April 8, 2026
0.250% June 1, 2026
0.387% September 14, 2028
0.491% September 27, 2029
0.230% May 30, 2024
0.417% May 23, 2029
0.400% August 3, 2029
0.450% January 7, 2031
0.358% June 1, 2028
0.180% March 1, 2027
0.104% February 28, 2025
0.138% February 27, 2026
0.400% July 2, 2029
0.400% February 28, 2030
0.270% February 26, 2027
0.270% May 31, 2027
0.150% July 31, 2024
0.400% July 31, 2030
0.320% January 7, 2028
0.400% January 7, 2030
0.450% January 7, 2031
0.450% February 28, 2031
0.180% February 27, 2026
0.400% June 28, 2030
0.335% January 31, 2029
0.982% February 28, 2023
0.958% April 28, 2023
0.188%
June 1, 2029
(Note 5)0.150% April 26, 2024
0.450% January 7, 2031

Bulletpayment（Note 3）

Unsecured/unguaranteed/pari passu,
See (Note 4)

Sumitomo Mitsui Trust Bank, Limited

10,000
1,000
4,000
6,000
4,000

Sumitomo Life Insurance Company

Shinkin Central Bank

Mizuho Bank, Ltd.

5,000
3,000
10,0003,000
10,000
5,000
3,000
3,000
5,000
5,000
5,000
2,000
2,000
3,000
5,000
5,000
5,000
1,000
5,000
3,000
3,000
4,000
4,000
3,000
2,000
6,000
5,000
7,000
10,0005,000
10,000

The Norinchukin Bank

Nippon Life Insurance Company

Mizuho Trust & Banking Co., Ltd.

3,000
2,000
2,000
5,000
5,000
1,000
2,000
2,000
2,000
5,000
5,000
10,0004,000

TAIJU LIFE INSURANCE COMPANY
LIMITED

THE BANK OF FUKUOKA, Ltd.

Daishi Hokuetsu Bank, Ltd.

The Yamaguchi Bank, Ltd.

2,000
2,000
1,000
1,000
1,000
2,000
2,000
2,000
2,000
2,000
2,000
2,000
1,000
2,000
2,000
2,000
2,000
1,000
8

0.320% January 7, 2028
0.350% June 29, 2029
0.383% December 30, 2026
0.223% May 31, 2024
0.116%
May 31, 2024
(Note 5)0.090% January 25, 2024
0.270% September 11, 2026
0.210% December 30, 2025
0.270% January 27, 2027
0.400% January 7, 2030
0.450% March 30, 2032
0.815% December 29, 2028
0.300% February 3, 2026
0.250% May 22, 2026
0.655% July 16, 2032
0.646% April 28, 2033
0.403% April 28, 2028
0.364% March 31, 2032
0.650% May 23, 2034
0.500% January 7, 2032
0.700% January 7, 2036
0.700% July 16, 2036
0.931% October 31, 2034
0.250% September 14, 2026
0.381% December 30, 2026
0.356% June 1, 2027
0.433% July 12, 2027
0.219% March 29, 2024
0.100% December 30, 2025
0.188% April 28, 2028
0.307% June 22, 2029
0.450% January 7, 2031
0.123%
November 30, 2025
(Note 5)0.450% January 7, 2031
0.425% July 7, 2030
0.168%
May 27, 2032
(Note 5)0.300% June 21, 2027
0.270% June 19, 2026
0.300% March 24, 2028
0.270% September 30, 2027
0.320% January 7, 2028
0.616% October 31, 2030
0.400% May 23, 2029
0.200% May 29, 2026
0.450% December 27, 2030
0.425% January 30, 2032
0.712% April 30, 2032
0.982% February 28, 2023
0.168%
October 31, 2032
(Note 5)1.486% May 30, 2025
1.047% December 13, 2023
0.084% March 31, 2025
0.416% January 31, 2030
0.400% February 13, 2030
0.491% January 30, 2032
1.008% November 1, 2034
0.548% June 30, 2023
0.238% May 31, 2024
0.300% May 21, 2027
0.400% January 7, 2030
0.710% June 30, 2032
0.767% October 29, 2032
0.257% March 1, 2024
0.245% June 28, 2024
0.400% January 7, 2030
0.320% April 27, 2029
0.477% January 10, 2029

Bulletpayment（Note 3）

Unsecured/unguaranteed/pari passu,
See (Note 4)

Resona Bank, Limited.

1,000

Mitsui Sumitomo Insurance Company,
LimitedMomiji Bank,Ltd.
Kiraboshi Bank, Ltd.
Kansai Mirai Bank, Limited

1,000

0.400% May 23, 2029
0.500% August 31, 2032
0.500% January 7, 2032
0.855% October 31, 2033
0.270% June 26, 2027
0.270% December 2, 2027
0.320% January 7, 2028
0.767% October 31, 2032
0.417% September 11, 2023
0.302% March 7, 2029
0.400% October 2, 2030
0.716% June 30, 2034
0.650% May 31, 2035
0.350% July 9, 2029
0.500% July 9, 2032
0.019%
June 30, 2023
(Note 5)0.400% May 23, 2029
0.400% March 25, 2030
0.272% October 11, 2024
0.275% May 14, 2025
0.322% March 28, 2031
0.767% October 29, 2032
0.039%
June 30, 2025
(Note 5)0.320% April 28, 2028
0.320% January 26, 2029
0.168%
October 29, 2032
(Note 5)0.270% May 19, 2027
0.320% May 26, 2028
0.386% March 3, 2027
0.300% February 28, 2028
0.616% October 31, 2030
1.533% May 30, 2025
0.450% January 31, 2031
0.258% June 27, 2025
0.270% May 22, 2026
0.320% January 7, 2028
0.539% October 31, 2029
0.450% April 27, 2032
0.616% October 31, 2030
0.616% October 31, 2030
0.767% October 29, 2032
0.148%
June 1, 2027
(Note 5)0.320% January 7, 2028

1,000
1,000
1,000

0.724% September 30, 2031
0.792% September 30, 2032
0.767% October 31, 2032

The Hachijuni Bank, Limited

DAIDO LIFE INSURANCECOMPANYTAIYO LIFE INSURANCE COMPANY
The 77 Bank, Ltd.

The Yamanashi Chuo Bank, Ltd.

The Iyo Bank, LTD.

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

The Chugoku Bank, Limited
The Joyo Bank, Ltd.
SBI Shinsei Bank, Limited
The Chiba Bank, Ltd.
The Gunma Bank, Ltd.
The Keiyo Bank,Ltd.
THE SHIGA BANK，LTD．

Total long-term loans (Note 6)
Total borrowings

1,000
2,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000

Bulletpayment（Note 3）

Unsecured/unguaranteed/pari passu,
See (Note 4)¥512,500¥520,500

Notes:
1.
2.
3.
4.
5.
6.

With respect to the date of repayment in case of more than one short-term loan from the same lender, the earliest date of
repayment for all such loans coming due is given.
Interest Rate is rounded down to the 3rd decimal point.
Use of funds for the above includes acquisition of real estate or beneficiary interests, repayment of borrowings and working
capital, etc.
A special agreement attached to “Loan Agreement” entered into between NBF and each financial institution provides that theabove borrowings from all financial institutions rank pari passu to each other.
This loan is a floating rate loan. Other long-term loans are all fixed rate loans.
The total amount of long-term loans (i.e. excluding those expected to be repaid within one year) repayable within 5 years of thedate of the balance sheet and expected to be repaid by specific year(s) is as follows:9(Yen in millions)
1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years¥44,000¥30,000¥50,000¥52,000

Issue date

Balance as ofDecember 31,
2022(Yen in millions)

Coupon(Note 1)

No. 13 Unsecured Bonds

June 26, 2013

No. 14 Unsecured Bonds

Long-term loans

NBF Bonds

Maturity date

Redemption

Use offunds¥10,000

1.168% June 26, 2023

Bullet payment

Note 2June 9, 2016

5,000

1.000% June 8, 2046

Bullet payment

Note 2

No. 15 Unsecured Bonds

May 22, 2017

5,000

0.914% May 22, 2037

Bullet payment

Note 2Notes
3 and 4

No. 16 Unsecured Bonds

May 23, 2018

5,000

0.220% May 23, 2025

Bullet payment

Note 2Notes
3 and 4

No. 17 Unsecured Bonds

May 23, 2018

5,000

0.888% May 21, 2038

Bullet payment

Note 2Notes
3 and 4

No. 18 Unsecured Bonds

December 19, 2018

7,000

0.200% January 10, 2024 Bullet payment

Note 2Notes
3 and 4

No. 19 Unsecured Bonds

August 14, 2020

15,0000.180% August 14, 2025 Bullet payment

Note 2Notes
3 and 4

No. 20 Unsecured Bonds(Green Bonds)

March 22, 2021

5,000

0.150% March 19, 2026 Bullet payment

Note 2Notes
3 and 4

Issue

Total (Note 5)¥57,000

Notes:
1. Interest Rate is rounded down to the 3rd decimal point.
2. Use of funds includes repayment of borrowings and investment corporation bonds, etc.
3. Rank pari passu with all other publicly and privately issued bonds.
4. Subject to provision of collateral restrictions.
5. The total amount of bonds repayable within 5 years of the date of the balance sheet and expected to be repaid by specific year(s)is as follows:(Yen in millions)

Investment
corporation bonds

Within 1 year

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years¥10,000¥7,000¥20,000¥5,000―

Others
NBF has security deposits totaling ¥70,408 million as of December 31, 2022.

10

Notes
Notes
3 and 4Notes
3 and 4

■ Capital Expenditures
1. Planning
As of December 31, 2022, NBF is planning the following capital expenditures for the renovation of its
properties. The amounts below include repairs and maintenance costs that will be expensed as incurred.
Moreover, in addition to a steady program of expenditures for construction, repair and renovation of facilities, a
program of renewal construction is being implemented in order to increase competitive power in the market aswell as to increase the level of tenant satisfaction based on the results of tenant satisfaction surveys andneighboring competitive building specification surveys, etc.
Estimated amounts
Name of property

Objective

Estimated
duration

Totalamounts

Payment for thecurrent period(from July 1, 2022 to
December 31, 2022)(Yen in millions)
For the six months ending June 30, 2023 (the 44th fiscal period from January 1, 2023 to June 30, 2023)
Renovation of
From April 2022
Shinjuku Mitsui Bldg.
¥278¥－
automatic fireto June 2023
information facilities
Renovation of
From January 2023
River City M-SQUARE
249－
emergency power
to June 2023
equipment
Renovation of
From February 2022
Shiba NBF Tower
243－
emergency power
to June 2023
equipment
Renovation of lighting From September 2022
Shiba NBF Tower
225－
to June 2023
equipment
From January 2023
Renovation of
Shinjuku Mitsui Bldg.
218－
to June 2023
security system
From October 2022
Leasehold
NBF ALLIANCE
181－
to March 2023
improvement
From December 2022
Renovation of
NBF Ikebukuro Tower
157－
to June 2023
restroom
From April 2022
Renovation of air
Gate City Ohsaki
154－
to March 2023
conditioning
From December 2022
Renovation of
Ryukakusan Bldg.
142－
to June 2023
restroom
NBF COMODIO
Renovation of lighting From March 2023
140－
Shiodometo June 2023
equipment
Renovation of
From July 2022
Gate City Ohsaki
126－
automatic fireto February 2023
information facilities
From January 2023
Renovation of air
Roppongi T-CUBE
100－
to June 2023
conditioning
Renovation of lighting From February 2023
Chofu South Gate Bldg.
100－
to June 2023
equipment
From January 2023
Renovation of
NBF Takanawa Bldg.
90－
to June 2023
lighting equipment
Renovation of exterior From February 2023
NBF Ikebukuro City Bldg.
78－
to May 2023
wall
Renovation of lighting From November 2022
NBF Ikebukuro City Bldg.
62－
to June 2023
equipment
11

Cumulative
amount paid

¥－

4

－
－
－
－
－
－
－
－
－
－
－
－
－
－

From March 2023
Renovation of54－
to June 2023
elevator
Hiroshima Fukuromachi
From January 2023
Renovation of air
46
－
Bldg.
to June 2023
conditioning
Renovation of exterior From January 2023
NBF Higashi-Ginza Square45－
to June 2023
wall
From July 2022
Renovation of
Ryukakusan Bldg.
41－
to June 2023
security system
NBF Sapporo Minami Nijo
Renovation of parking From January 2023
33
－
Bldg.
to May 2023
facilities
For the six months ending December 31, 2023 (the 45th fiscal period from July 1, 2023 to December 31, 2023)
Renovation of lighting From July 2023
Shiba NBF Tower¥263¥－
to December 2023
equipment
Renovation of water
From July 2023
Shiba NBF Tower
241－
supply and drainage
to December 2023
equipment
Renovation of lighting From July 2023
NBF Platinum Tower
221－
to December 2023
equipment
Renovation of lighting From July 2023
Hakata Gion M-SQUARE
204－
to December 2023
equipment
From July 2023
Renovation of
NBF Platinum Tower
200－
to December 2023
security system
Renovation of
From July 2023
River City M-SQUARE
191－
emergency power
to September 2023
equipment
From July 2023
Renovation of air
Yotsuya Medical Bldg.
170－
to December 2023
conditioning
From December 2022
Renovation of
Ryukakusan Bldg.
158－
to December 2023
restroom
NBF COMODIO
Renovation of lighting From July 2023
153－
Shiodometo October 2023
equipment
From July 2023
Renovation of
NBF Ikebukuro Tower
134－
to December 2023
restroom
Renovation of lighting From July 2023
S-ino Omiya North Wing
132－
to December 2023
equipment
Kowa Nishi-Shinbashi
From July 2023
Renovation of air
124－
Bldg. Bto December 2023
conditioning
From July 2023
Renovation of
NBF Ikebukuro City Bldg.
115－
to December 2023
restroom
Renovation of lighting From July 2023
NBF Takanawa Bldg.
107－
to December 2023
equipment
From February 2023
Renovation of air
Nagoya Mitsui Main Bldg.
105－
to December 2023
conditioning
Renovation of lighting From July 2023
Aqua Dojima NBF Tower
102－
to December 2023
equipment
From November 2023
Renovation of air
Roppongi T-CUBE
100－
to December 2023
conditioning
From November 2022
Renovation of
Ryukakusan Bldg.
97－
to December 2023
elevator
From July 2023
NBF Kumamoto Bldg.
91－
Renovation of exterior
to December 2023
Renovation of lighting From July 2023
Chofu South Gate Bldg.
90－
to December 2023
equipment
NBF Matsuyama NichiginRenovation of lighting From February 2023
85－
mae Bldg.
to December 2023
equipment
From July 2023
Renovation of
NBF Hatchobori Terrace85－
to July 2023
substation equipment
Sumitomo Densetsu Bldg.

12

－
－
－
－
－

¥－
－
－
－
－
4
－
－
－
－
－
－
－
－
－
－
－
－
－
－
－
－

Renovation of water
From July 2023
75－
supply and drainage
to December 2023
equipment
From June 2023
Renovation of
Sumitomo Densetsu Bldg.
64－
to November 2023
elevator
From July 2023
Renovation of
Sapporo L-Plaza
43－
to December 2023
security system
From July 2023
Renovation of
NBF Matsudo Bldg.
38－
to December 2023
elevator
Hiroshima Fukuromachi
Renovation of lighting From July 2023
21
－
Bldg.
to December 2023
equipment
For the six months ending June 30, 2024 (the 46th fiscal period from January 1, 2024 to June 30, 2024)
Renovation of water
From January 2024
Shiba NBF Tower¥434¥－
supply and drainage
to June 2024
equipment
Renovation of lighting From January 2024
NBF Platinum Tower
224－
to June 2024
equipment
Kowa Nishi-Shinbashi
From January 2024
Renovation of air
200－
Bldg. Bto June 2024
conditioning
Renovation of lighting From January 2024
Hakata Gion M-SQUARE
140－
to June 2024
equipment
Renovation of lighting From January 2024
S-ino Omiya North Wing
133－
to June 2024
equipment
NBF COMODIO
Renovation of lighting From November 2023
131－
Shiodome
to February 2024
equipment
From January 2024
Renovation of
NBF Ikebukuro City Bldg.
115－
to June 2024
restroom
From September 2023
Renovation of air
Nagoya Mitsui Main Bldg.
105－
to May 2024
conditioning
Renovation of lighting From January 2024
Aqua Dojima NBF Tower
102－
to June 2024
equipment
For the six months ending December 31, 2024 (the 47th fiscal period from July 1, 2024 to December 31, 2024)
From June 2022
Renovation of air
Nakanoshima Mitsui Bldg.
¥751¥－
to July 2024
conditioning
Renovation of water
From July 2024
Shiba NBF Tower
358－
supply and drainage
to December 2024
equipment
Renovation of lighting From July 2024
NBF Platinum Tower
224－
to December 2024
equipment
Kowa Nishi-Shinbashi
From July 2024
Renovation of air
150－
Bldg. Bto December 2024
conditioning
Renovation of lighting From July 2024
S-ino Omiya North Wing
133－
to December 2024
equipment
Renovation of lighting From July 2024
Aqua Dojima NBF Tower
125－
to December 2024
equipment
From March 2024
Renovation of air
Nagoya Mitsui Main Bldg.
105－
to November 2024
conditioning
For the six months ending June 30, 2025 (the 48th fiscal period from January 1, 2025 to June 30, 2025)
Renovation of water
From January 2025
Shiba NBF Tower¥434¥－
supply and drainage
to June 2025
equipment
Kowa Nishi-Shinbashi
From January 2025
Renovation of air
185－
Bldg. Bto June 2025
conditioning
Renovation of lighting From January 2025
S-ino Omiya North Wing
133－
to June 2025
equipment
For the six months ending December 31, 2025 (the 49th fiscal period from July 1, 2025 to December 31, 2025)
Sumitomo Densetsu Bldg.

13

－
－
－
－
－

¥－
－
－
－
－
－
－
－
－

¥－
－
－
－
－
－
－

¥－
－
－

Shiba NBF Tower
S-ino Omiya North Wing

Renovation of watersupply and drainage
equipment
Renovation of lighting
equipment

From July 2025
to December 2025

¥154

¥－

¥－

From July 2025
to December 2025

121

－

－

2. Capital Expenditures for the Current Period
The following table sets forth the capital expenditures for the current period. NBF posted ¥4,630 million incapital expenditures together with ¥979 million for repairs and maintenance expenses.

Name of property

Objective

PeriodExpenditure(Yen in millions)Shinjuku Mitsui Bldg.

Renovation of air conditioning, renovationof security system, etc.

¥685

River City M-SQUARE

Renovation of emergency power equipment,
renovation of lighting equipment, renovationof security system, etc.

278

NBF COMODIO Shiodome

Renovation of air conditioning, earthquake
resistance improvement of specific ceiling,
renovation of parking facilities, etc.

268

Sumitomo Mitsui Banking
Nagoya Bldg.

Renovation of lighting equipment,
renovation of air conditioning, etc.

214

Shin-Kawasaki Mitsui Bldg.

Renovation of elevator and escalator,
renovation of central monitoring facilities,
renovation of air conditioning, etc.

203
From July 2022
to December 2022

Shiba NBF Tower

Renovation of elevator, construction of flood
control, renovation of emergency power
equipment, etc.

Kowa Nishi-Shinbashi Bldg. B

Renovation of air conditioning, renovationof security system, renovation of housing
facilities, etc.

178

Yokohama ST Bldg.

Renovation of substation equipment,
renovation of security system, renovation oflighting equipment, etc.

131

Roppongi T-CUBE

Renovation of air conditioning, renovationof restroom, renovation of housing facilities,
etc.

130

Tsukuba Mitsui Bldg.

Earthquake resistance improvement ofspecific ceiling, renovation of gondola,renovation of firefighting facilities, etc.

126

14

186

Celestine Shiba Mitsui Bldg.

Renovation of lighting equipment,
renovation of water supply and drainage
equipment, renovation of emergency power
equipment, etc.

104

Hiroshima Fukuromachi Bldg.

Renovation of air conditioning, renovationof central monitoring facilities, etc.

98

NBF Sapporo Minami Nijo Bldg.

Renovation of elevator, renovation of air
conditioning, renovation of substationequipment, etc.

47
From July 2022
to December 2022

NBF Matsuyama Nichigin-mae
Bldg.

Renovation of air conditioning, constructionof ceiling leakage countermeasure,renovation of rooftop facilities, etc.

NBF Urawa Bldg.

Renovation of water receiving tank,leasehold improvement, renovation of
exterior tiles, etc.

31

Other buildings

Asset preservation construction and otherrenewal construction to improve tenantsatisfaction, etc.

930

35

Total

¥3,650■ Expenses regarding Entrustment, etc.
The following table sets forth the breakdown of entrustment fees, etc. paid by NBF.
For the six months
ended December 31,
2022

Item
Asset management fees
Asset custody fees
Agent fees (stock transfer, accounting
and administrative)
Directors’ remuneration
Auditor’s fees
Other expenses
Total

For the six months
ended June 30,
2022

For the six months
ended December 31,
2021¥1,756
64(Yen in millions)¥1,91760¥1,780
61

48
12
15
200
¥2,097

48
12
15
154
¥2,208

49
12
15
242
¥2,16115

■ Trading Activities during the Current Period
1. Trading of Real Estate and Real Estate Held in Trust
The following table shows a summary of real estate and real estate held in trust, acquired or sold by NBF in
the current period.
(Yen in millions)
Acquisition
Name of building

Acquisition price(Note 1)

Date

Toyosu Beyside Cross Tower

November 1, 2022

¥14,700¥14,700

Total(Yen in millions)
Sale
Name of building

DateToyo-cho Center Bldg.
NBF Niigata Telecom Bldg.
NBF Hiroshima Tatemachi Bldg.

Sale price

July 1, 2022
July 1, 2022
July 1, 2022

¥9,600¥3,900¥3,520¥17,020

Total

Notes: 1. “Acquisition price” does not include national consumption tax, local consumption tax and miscellaneous costs of acquisition.

2. Trading of Other Assets Including Total Amount and Transactions
Other major assets besides real estate and real estate held in trust stated above consist mostly of bank deposits
or bank deposits included in assets held in trust.

3. Transactions with Related Parties of Asset Management Company(1) Ongoing Transactions
Category

Amount of purchase price, etc. (Note 2)(Note 3)
Purchase price, etc.（Yen in millions）

Sale price, etc.（Yen in millions）¥14,700 (100%)
Total amount¥17,020 (100%)

Amount of purchases from related

Amount of sales from related parties,

parties, etc.

etc.
14,700 (100.0%)― (―)

Mitsui Fudosan Co., Ltd.

14,700 (100.0%)

― (―)

Total

¥14,700 (100.0%)― (―)

Breakdown of transactions with related parties, etc.

16

(2) Fees Paid for the Period from July 1, 2022 to December 31, 2022
Description of transactions with related parties (Note 1)

Category

Total fees paid(A)

Amount ofpayment (B)Paid to(Yen in millions)(Yen in millions)

Office management fees,
etc.

¥1,314(Note 4)

Property maintenance fees

5,002

Leasing related service fees

82

B/A

Mitsui Fudosan Co., Ltd.

¥1,25095.1%

NBF Office Management Co., Ltd.
Mitsui Fudosan Co., Ltd.
Mitsui Fudosan Facilities Co., Ltd.
Mitsui Fudosan Building Management Co.,Ltd.
Mitsui Fudosan Facilities West Co., Ltd.
Mitsui Fudosan Residential Lease Co., Ltd.

64
1,627
538

4.9%
32.5%
10.8%

347

6.9%

213
1

4.3%
0.0%

69
2

84.7%
3.4%

Mitsui Fudosan Co., Ltd.
NBF Office Management Co., Ltd.

Notes:
1. “Related parties” are defined as related parties of asset management companies under asset management agreementwith NBF as defined in Article 123 of Order for Enforcement of the Law Concerning Investment Trusts andInvestment Corporations, and Article 26, Section 27 of the Regulations regarding management report of theInvestment trusts and Investment corporations set by the Investment Trusts Association, Japan. During the period from
July 1, 2022 to December 30, 2022, transactions with and fees paid to, Mitsui Fudosan Co., Ltd., NBF Office
Management Co., Ltd., Mitsui Fudosan Facilities Co., Ltd., Mitsui Fudosan Facilities West Co., Ltd., Mitsui Fudosan
Building Management Co., Ltd. and Mitsui Fudosan Residential Lease Co., Ltd. which meet either of the said
definitions, are as described above.
2. Figures indicate contractual sales prices.
3. Figures indicate percentages of total prices.
4. In terms of properties for which NBF has not entrusted office management businesses to Mitsui Fudosan Co., Ltd. due
to its master leasing (21 properties: Shinjuku Mitsui Bldg., IIDABASHI GRAND BLOOM, Roppongi T-CUBE,
Nishi-Shinjuku Mitsui Bldg., Celestine Shiba Mitsui Bldg., Toranomon Kotohira Tower, Yotsuya Medical Bldg.,
NBF Ogawamachi Bldg., Panasonic Tokyo Shiodome Bldg., Gate City Ohsaki, Osaki Bright Core – Bright Plaza,
Nakameguro GT Tower, Toyosu Bayside Cross Tower, OSAKI BRIGHT TOWER, Higashi Gotanda Square, ShinKawasaki Mitsui Bldg., Parale Mitsui Bldg., Nagoya Mitsui New Bldg., Nagoya Mitsui Main Bldg., Nakanoshima
Mitsui Bldg., and Shinanobashi Mitsui Bldg.), NBF has entrusted them to NBF Office Management Co., Ltd. as
business representative of the property owners or lessors.
5. In addition to the above fees paid, the following have been paid to related parties for repair and maintenance work, etc.
(Yen in millions)¥1,709Mitsui Fudosan Co., Ltd.
Mitsui Fudosan Building Management Co., Ltd.

286

Mitsui Fudosan Facilities West Co., Ltd.

79

MITSUI Designtec Co., Ltd.

31

Mitsui Fudosan Facilities Co., Ltd.

25

Mitsui Fudosan Realty Co., Ltd.

15

Harajuku-no-mori Co., Ltd.

4

Mitsui Fudosan Residential Lease Co., Ltd.

0

17

Financial Statements
NIPPON BUILDING FUND INC.
BALANCE SHEETSAs of December 31, 2022 and June 30, 2022

As ofDecember 31, 2022

As ofJune 30, 2022

(Yen in millions)
AssetsCurrent Assets:
Cash and cash equivalents
Tenant receivables
Prepaid expenses
Other current assets
Total current assets
Real Estate Properties:
Land including trust accounts（Notes 4,13）
Buildings and improvements including trust accounts（Notes 4,13）
Other tangible assets（Notes 4,13）
Less: accumulated depreciation（Notes 4,13）
Total real estate properties, net
Intangible assets:
Superficies（Note 13）
Leasehold rights in trust accounts（Note 13）
Other intangible assets（Note 13）
Total intangible assets
Long-term Prepaid Expenses（Note 13）
Other Assets
Total Assets
Liabilities
Current Liabilities:
Short-term loans（Note 6）Long-term debt due within one year（Notes 3,6）
Accounts payable
Rents received in advanceAccrued expenses and other liabilities
Total current liabilities
Long-term debt（Notes 3,6）
Tenant Security Deposits Including Trust Accounts（Note 3）
Other Liabilities
Total Liabilities
Net Assets（Note 5）
Unitholders' Equity
Unitholders' capital
Units authorized: 4,000,000 units
Units issued and outstanding: 1,700,991 units
Reserve for reduction entry
Retained earnings
Total Net Assets
Total Liabilities and Net Assets
The accompanying notes to financial statements are an integral part of these statements.
18¥ 16,058
314
580
217
17,169¥ 11,430
323
524
542
12,821

1,009,029
478,864
16,666(195,464)
1,309,095

1,008,351
478,907
16,526(190,754)
1,313,030

11,882
23,726101
35,7115
6,757¥1,368,739

11,882
23,726
137
35,747
5
6,114¥1,367,719¥ 8,000
52,000
6,884
4,427
2,848
74,160517,500
70,408149
662,218¥ 14,000
63,000
8,286
4,325
873
90,484
497,500
70,417
162
658,565

673,047

673,047

13,18520,288706,521¥1,368,739

10,66725,439709,154¥1,367,719

NIPPON BUILDING FUND INC.
STATEMENTS OF INCOME
For the six months ended December 31, 2022, June 30, 2022 and December 31, 2021

For the six months
ended December
31, 2022

For the six months
ended June30, 2022

For the six months
ended December
31, 2021(Yen in millions)Operating Revenues and Expenses
Operating Revenues:
Rental revenue（Note 7）¥41,508¥41,113¥40,880

Other revenues related to property leasing（Note 7）

3,664

4,114

3,453

Gains on sales of real estate properties（Note 8）

2,194

6,988

6,000

47,36652,21550,334

Property management fees（Note 7）

6,258

5,971

6,385

Real estate taxes（Note 7）

4,191

4,285

3,443

Repairs and maintenance（Note 7）

979

1,693

1,184

Insurance（Note 7）

42

38

39

Other rental expenses（Note 7）

4,282

3,481

3,418

Depreciation and amortization（Note 7）

7,917

7,728

7,424

—

—

3,273

Asset management fees

1,756

1,917

1,780

Other operating expenses

340

291

381

Total Operating Expenses

25,77025,40827,330Operating Income

21,59626,80623,004

Interest income

0

0

0

Property tax refund and interest on tax refund

1

0

0

Other non-operating revenues

3

5

63

(1,253)(1,264)(1,294)

Amortization of bond issuance costs

(20)

(20)

(20)

New investment units issuance costs

—

(50)

—

Other non-operating expenses

(38)

(37)

(25)

Ordinary Income

20,28925,44021,728

Income before Income Taxes

20,28925,44021,728

(0)

(0)

(0)

Total Operating Revenues
Operating Expenses:

Loss on sale of real estate property（Note 8）

Non-Operating Revenues and Expenses
Non-Operating Revenues:

Non-Operating Expenses:
Interest expense

Current and deferred income taxes（Note 9）
Net Income¥

20,288The accompanying notes to financial statements are an integral part of these statements.

19¥

25,439¥21,727

NIPPON BUILDING FUND INC.
STATEMENTS OF CHANGES IN NET ASSETSFor the six months ended December 31, 2022, June 30, 2022 and December 31, 2021

(Yen in millions)
Reserve for
Number of Unitholders’ reduction
Retained
Units
Capitalentry
Earnings
Balance as of June 30, 2021 . . . . . . . . . . . . . . . . 1,652,500

Total¥ 642,044¥ 6,398¥ 21,427¥ 669,870

Transfer to reserve for reduction entry . . . . . . . .

—

—

2,119

(2,119)—Cash dividends declared . . . . . . . . . . . . . . . . . . . . .

—

—

—

(19,307)(19,307)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

—

—

21,727

21,727

Balance as of December 31, 2021. . . . . . . . . . . . 1,652,500
Issuance of new units through public offering asof January 19, 2022. . . . . . . . . . . . . . . . . . . . . . . .
47,500Issuance of new units through allocation to athird party as of January 28, 2022 . . . . . . . . . . . .
991

642,0448,518

21,727672,290

30,369——30,369

633

—

—

633

Transfer to reserve for reduction entry . . . . . . . .

—

—

4,170

(4,170)—

Reversal of reserve for reduction entry . . . . . . . . .

——(2,021)

2,021—

Cash dividends declared . . . . . . . . . . . . . . . . . . . . .

—

—

—

(19,578)(19,578)

Net income

—

—

—

25,43925,439Balance as of June 30, 2022. . . . . . . . . . . . . .. . . 1,700,991

673,047

10,66725,439709,154...........................

Transfer to reserve for reduction entry . . . . . . . .

—

—

2,517

(2,517)—

Cash dividends declared . . . . . . . . . . . . . . . . . . . . .

—

—

—

(22,922)(22,922)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

—

—

20,28820,288

Balance as of December 31, 2022. . . . . . . . . . . . . 1,700,991¥ 673,047¥ 13,185¥ 20,288¥ 706,521

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

20

NIPPON BUILDING FUND INC.
STATEMENTS OF CASH FLOWSFor the six months ended December 31, 2022, June 30, 2022 and December 31, 2021

For the six
months ended
December 31,
2022

For the six
months ended
June 30,2022

For the six
months ended
December 31,
2021(Yen in millions)
Cash Flows from Operating Activities:
Income before income taxes
Depreciation and amortization
Amortization of bond issuance costs
Interest expense(Increase) Decrease in tenant receivables
Increase (Decrease) in accounts payable
Increase (Decrease) in rents received in advance
Decrease in real estate properties due to sales
Cash payments of interest expense(Increase) Decrease in consumption tax refund
receivable
Others, net
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Payments for purchases of real estate properties
Proceeds from tenant security deposits
Payments for tenant security deposits
Payments for security deposits paid to lessors
Refunds from security deposits paid to lessors
Others, net
Net Cash Used in Investing Activities
Cash Flows from Financing Activities:
Net proceeds from (repayment of) short-term loans
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of new units
Payment of dividends
Net Cash Provided by (Used in) Financing Activities
Net Change in Cash and Cash Equivalents
Cash and Cash Equivalents at the Beginning of Period
Cash and Cash Equivalents at the End of Period¥ 20,289
7,917
20
1,253
9
(1,312)
102
14,697(1,352)¥ 25,440
7,728
20
1,264
(14)
(283)
(236)
7,313
(1,218)¥ 21,728
7,424
20
1,294
36
856
(345)
57,880(1,363)

430

(430)

—

1,976
44,032(768)
38,814224
87,756(18,791)
2,276(2,286)(0)
3(686)(19,486)(89,347)
6,018(4,750)(7)
3(654)(88,739)(88,849)
6,018(6,151)
(51)
218
2,273
(86,541)(6,000)33,000(24,000)—(22,919)(19,919)
4,627
11,430¥ 16,058

14,00027,000(17,000)
30,951(19,577)
35,374(14,551)
25,981¥ 11,430—
8,000(8,000)—(19,308)(19,308)(18,094)
44,075¥ 25,981

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

21

NIPPON BUILDING FUND INC.
Notes To Financial Statements
For the six months ended December 31, 2022, June 30, 2022 and December 31, 2021
Note 1 – Organization and Basis of Presentation
Organization
Nippon Building Fund Inc. (hereinafter "NBF") was formed on March 16, 2001 as an investment corporation
under the Law Concerning Investment Trusts and Investment Corporations of Japan (hereinafter the Investment
Trust Law of Japan) with Mitsui Fudosan Co., Ltd., Sumitomo Mitsui Trust Bank, Limited., and Nippon
Building Fund Management Ltd. (hereinafter "NBFM") acting as sponsors. Registration with the Kanto Local
Finance Bureau of the Ministry of Finance was completed on May 10, 2001 and NBF started acquisition of
office properties on May 23, 2001.
NBF is an externally managed real estate fund, formed as an investment corporation. NBFM, as NBF’s asset
management company, is engaged in acquiring, managing, leasing, and renovating office properties. Mitsui
Fudosan Co., Ltd. currently owns 46% of NBFM while Sumitomo Life Insurance Company owns 35% and theremaining 19% is mainly owned by financial institutions.
On September 10, 2001, NBF had raised approximately ¥50,000 million through an initial public offering ofunits. Those units are listed on the J-REIT section of the Tokyo Stock Exchange.
As of December 31, 2022, NBF had ownership or beneficiary interests in 71 office properties containing
approximately 1,219,233 square meters of rentable office space. As of December 31, 2022, NBF had leased
office space to 1,547 tenants engaged in a variety of businesses. The occupancy rate for the office properties wasapproximately 96.1%.

Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in theInvestment Trust Law of Japan and the Japanese Financial Instruments and Exchange Law and their related
accounting regulations, and in conformity with accounting principles generally accepted in Japan (hereinafter“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements ofInternational Financial Reporting Standards.
The accompanying financial statements have been restructured and translated into English from the financial
statements of NBF prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. Some
supplementary information included in the statutory Japanese language financial statements, but not required forfair presentation, is not presented in the accompanying financial statements. NBF does not prepare consolidated
financial statements, as NBF has no subsidiaries.

22

Note 2 – Summary of Significant Accounting Policies
Cash and Cash Equivalents
NBF considers all highly liquid investments with original maturity of three months or less to be cash and cash
equivalents.

Real Estate Properties
Real estate properties are recorded at cost, which includes the allocated purchase price, related costs andexpenses for acquisition of the office properties and the beneficiary interests of properties in trust. Property andequipment balances are depreciated using the straight-line method over the estimated useful lives. The estimateduseful lives of the principal tangible fixed assets (including assets held in trust) are as follows:
Buildings and improvements including trust accounts
Buildings and improvements
2-50 years
Other tangible assets
Structures
2-50 years
Machinery and equipment
2-17 years
Tools, furniture and fixtures
2-20 years
Costs related to the renovation, construction and improvement of properties are capitalized. Expenditures forrepairs and maintenance which do not add to the value or prolong the useful life of a property, are expensed
when incurred.

Investment Corporation Bond Issuance Costs
Deferred investment corporation bond issuance costs are amortized using the straight-line method over therespective terms of the bonds.

New Investment Units Issuance Costs
The issuance costs of new investment units are expensed when incurred.

Income Taxes
Income taxes are accounted for on the basis of income for financial statement purposes. The tax effect of
temporary differences between the amounts of assets and liabilities for financial statements and for income tax
purposes is recognized as deferred taxes.

Revenue Recognition
The main performance obligations related to revenue arising from contracts with customers of NBF and thenormal time for satisfying such performance obligations (the normal time for recognizing revenue) are as
follows:(1) Sales of real estate properties
NBF recognizes revenue from the sale of real estate properties when the purchaser, as the customer, obtains
control of the real estate property by fulfilling the delivery obligations stipulated in the contract for the sale ofreal estate property. In the statements of income, “Gains on sales of real estate properties” or “Losses on sales ofreal estate properties” is presented as the amount obtained by deducting “Cost of sale of real estate property”
which is the book value of the real estate sold, and “Other related sale expenses” which are various costs directly
incurred in the sale, from “Proceeds from sale of real estate property” which is the proceeds from the sale of realestate.
(2) Utilities income
NBF recognizes utilities income based on the supply of electricity, water, etc. to the lessee as the customer inaccordance with the terms of the real estate lease contract and related agreements. In the income statement, it ispresented as “Other revenues related to property leasing”, and it is presented as “Incidental income” in the notes
to the statements of income.
23Real Estate Taxes
Real estate taxes are imposed on properties on a calendar year basis and expensed when incurred. In terms of
newly purchased properties, NBF capitalizes a portion of the real estate taxes that relate to a period from thepurchase date of each property until the end of the calendar year as part of the acquisition cost of the relevant
property. Capitalized real estate taxes amounted to ¥9 million for the period ended December 31, 2022, ¥277
million for the period ended June 30, 2022 and ¥55 million for the period ended December 31, 2021.

Accounting Treatment of Beneficiary Interests in Trust Assets including Real Estate
For trust beneficiary interests in real estate, all accounts of assets and liabilities within assets in trust as well
as all income generated and expenses incurred from assets in trust are recorded in the relevant balance sheet
and income statement accounts.

Note 3 – Financial Instruments
Status of Financial Instruments
Policy for Financial Instruments
NBF procures funds for acquisition of assets and repayment of debt, which includes repayment of tenantsecurity deposits, loans and investment corporation bonds, through issuance of new investment units, bank loans
and issuance of investment corporation bonds, with the aim of ensuring steady asset growth and stable earnings
from a mid- and long-term angle.
As a general rule NBF invests surplus funds in deposits considering safety of the investments.
NBF may enter into derivative transactions solely for the purpose of reducing interest rate risks and otherrisks arising from liabilities. NBF does not engage in speculative transactions. Currently NBF is not engaged inany derivative transactions.
Financial Instruments, Their Risks and Risk Management System
Deposits are used for investment of NBF’s surplus funds. These deposits are exposed to credit risks such as
bankruptcy of the depository financial institutions. NBF limits credit risk by using only short-term deposits infinancial institutions with high credit ratings.
Proceeds from loans and investment corporation bonds are used mainly to acquire real estate properties andrepay outstanding loans and bonds. While these loans and bonds are exposed to liquidity risk, such risk ismanaged in the following ways such as diversifying the means of funding and lending institutions, dispersing
repayment dates, establishing committed credit line, keeping sufficient liquidity in hand, and monitoring cash
flows projected monthly.
Floating rate loans are exposed to interest-rate fluctuation. NBF limits the impact of such risks by maintaining
the ratio of interest-bearing liabilities to total assets low and the level of long-term fixed-rate debt high.
Tenant security deposits are exposed to liquidity risk arising from vacating of properties by tenants due to thetermination of contract. NBF manages this risk by monitoring forecasted cash flows on a monthly basis toensure it has sufficient funds.
Supplemental Explanation regarding Fair Values of Financial Instruments
Since the fair value of financial instruments is calculated based on certain assumptions, different assumptions
and factors could result in a different value.

24

Estimated Fair Value of Financial Instruments
Book value, fair value and difference between the two as of December 31, 2022 are as follows.
Since “Cash and cash equivalents” and “Short-term loans” are cash and due to be settled in a short period, andtheir fair values approximate their book values, the notes are omitted.
(Yen in millions)(For the six months ended December 31, 2022)

Book value
(1)
(2)
(3)

Long-term debt due within
one yearLong-term debt
Tenant security deposits
including trust accounts

Fair value

Difference¥ 52,000
517,500¥ 52,161
508,459¥ 161(9,040)70,40869,552(855)

Notes:
1. Methods to Estimate Fair Value of Financial Instruments(1) Long-term debt due within one year
Long-term debt due within one year which includes Investment corporation bonds and Long-term loans are as follows:(Yen in millions)(For the six months ended December 31, 2022)

(1)
(2)

Investment corporation bonds
Long-term loans
Total

Book value¥10,000
42,000¥52,000

Fair value¥10,045
42,116¥52,161

Difference
¥45
116
¥161

(1) Investment corporation bonds
Fair values of investment corporation bonds are based on observable market value, if available. When there is noobservable market value available, fair values are calculated based on the present value of principal and interest cash
flows discounted at the current interest rate that is estimated by taking into consideration the remaining term of theinvestment corporation bonds and their credit risk.
(2) Long-term loans
Fair values of floating rate long-term loans are based on the book values because the market interest rates arereflected within a short term period and the book values are considered to approximate fair values. Fair values of fixed
rate long-term loans are based on the present value of principal and interest cash flows discounted at the current interest
rate estimated to be applied if similar new loans were entered into.
(2) Long-term debt
Long-term debt which includes Investment corporation bonds and Long-term loans are as follows:(Yen in millions)(For the six months ended December 31, 2022)

(1)
(2)

Investment corporation bonds
Long-term loans
Total

Book value¥47,000
470,500¥517,500

Fair value¥44,680
463,778¥508,459

Difference¥ (2,319)(6,721)¥(9,040)(1) Investment corporation bonds
Fair values of investment corporation bonds are based on observable market value, if available. When there is noobservable market value available, fair values are calculated based on the present value of principal and interest cash
flows discounted at the current interest rate that is estimated by taking into consideration the remaining term of theinvestment corporation bonds and their credit risk.
(2) Long-term loans
25Fair values of floating rate long-term loans are based on the book values because the market interest rates arereflected within a short term period and the book values are considered to approximate fair values. Fair values of fixed
rate long-term loans are based on the present value of principal and interest cash flows discounted at the current interest
rate estimated to be applied if similar new loans were entered into.
(3) Tenant security deposits including trust accounts
Fair values of tenant security deposits including trust accounts are based on the present value of the total of cash flow
discounted by an interest rate determined taking into account the remaining period of each item and current credit risk.

Book value, fair value and difference between the two as of June 30, 2022 are as follows.
Since “Cash and cash equivalents” and “Short-term loans” are cash and due to be settled in a short period, andtheir fair values approximate their book values, the notes are omitted.
(Yen in millions)(For the six months ended June 30, 2022)

Book value
(1)
(2)
(3)

Long-term debt due within
one yearLong-term debt
Tenant security deposits
including trust accounts

Fair value

Difference¥ 63,000
497,500¥ 63,283
490,329¥ 283(7,170)70,417

69,216(1,201)

Notes:
1. Methods to Estimate Fair Value of Financial Instruments(1) Long-term debt due within one year
Long-term debt due within one year which includes Investment corporation bonds and Long-term loans are as follows:(Yen in millions)(For the six months ended June 30, 2022)

(1)
(2)

Investment corporation bonds
Long-term loans
Total

Book value¥10,000
53,000¥63,000

Fair value¥10,095
53,188¥63,283

Difference
¥95
188
¥283

(1) Investment corporation bonds
Fair values of investment corporation bonds are based on observable market value, if available. When there is noobservable market value available, fair values are calculated based on the present value of principal and interest cash
flows discounted at the current interest rate that is estimated by taking into consideration the remaining term of theinvestment corporation bonds and their credit risk.
(2) Long-term loans
Fair values of floating rate long-term loans are based on the book values because the market interest rates arereflected within a short term period and the book values are considered to approximate fair values. Fair values of fixed
rate long-term loans are based on the present value of principal and interest cash flows discounted at the current interest
rate estimated to be applied if similar new loans were entered into.
(2) Long-term debt
Long-term debt which includes Investment corporation bonds and Long-term loans are as follows:(Yen in millions)(For the six months ended June 30, 2022)

(1)
(2)

Investment corporation bonds
Long-term loans
Total

Book value¥47,000
450,500¥497,500
26

Fair value¥45,536444,793¥490,329

Difference¥ (1,463)(5,706)¥(7,170)

(1)Investment corporation bonds
Fair values of investment corporation bonds are based on observable market value, if available. When there is noobservable market value available, fair values are calculated based on the present value of principal and interest cash
flows discounted at the current interest rate that is estimated by taking into consideration the remaining term of theinvestment corporation bonds and their credit risk.
(2)Long-term loans
Fair values of floating rate long-term loans are based on the book values because the market interest rates arereflected within a short term period and the book values are considered to approximate fair values. Fair values of fixed
rate long-term loans are based on the present value of principal and interest cash flows discounted at the current interest
rate estimated to be applied if similar new loans were entered into.
(3) Tenant security deposits including trust accounts
Fair values of tenant security deposits including trust accounts are based on the present value of the total of cash flow
discounted by an interest rate determined taking into account the remaining period of each item and current credit risk.
2. Repayment Schedule for Loans and Investment Corporation Bonds as of December 31, 2022

Investment
corporationbonds
Long-term
loans
Total

(Yen in millions)Due after
Due after
four to five
five years
years

Due within
one year

Due after
one to twoyears

Due after
two to threeyears

Due after
three to four
years

¥10,000¥7,000¥20,000¥5,000¥－¥15,000

42,00044,00030,00050,00052,000294,500¥52,000¥51,000¥50,000¥55,000¥52,000¥309,500

Repayment Schedule for Loans and Investment Corporation Bonds as of June 30, 2022

Investment
corporationbonds
Long-term
loans
Total

(Yen in millions)Due after
Due after
four to five
five years
years

Due within
one year

Due after
one to twoyears

Due after
two to threeyears

Due after
three to four
years

¥10,000¥7,000¥5,000¥20,000¥－¥15,000

53,00050,00017,00055,00040,000288,500¥63,000¥57,000¥22,000¥75,000¥40,000¥303,50027

Note 4 – Tangible Assets of Real Estate Properties
Tangible assets as of December 31, 2022 and June 30, 2022 consisted of the following:
As of December 31, 2022

As of June 30, 2022

(Yen in millions)¥671,283
337,745
1,009,029
281,021

Accumulated
depreciation¥———(95,251)

197,842(89,733)

108,108

198,925(88,135)

110,789

478,864
3,796
2,274
3,261
2,866

(184,984)(2,304)(1,608)(1,715)(1,846)

293,879
1,491
665
1,545
1,020

478,907
3,690
2,232
3,125
2,862

(180,551)(2,249)(1,579)(1,581)(1,809)298,355
1,440
653
1,544
1,053

1,993

(1,509)

483

2,055

(1,538)

517

2,474
—
16,666¥1,504,559(1,494)—(10,479)¥(195,464)

980
—
6,186
¥1,309,095

2,447
112
16,526¥1,503,785(1,446)—(10,202)¥(190,754)

1,001
112
6,323
¥1,313,030

Acquisition costs
Land
Land in trust
Land including trust total
Buildings and improvements
Buildings and improvements
in trust
Buildings and improvements
including those in trust total
Structures
Machinery and equipment
Tools, furniture and fixtures
Structures in trust
Machinery and equipment in
trust
Tools, furniture and fixtures intrust
Construction in process
Other tangible assets total
Total

Book value

Acquisition costs¥671,283
337,745
1,009,029
185,770¥668,616
339,734
1,008,351
279,981

Accumulated
depreciation¥———(92,416)

Book value¥668,616
339,734
1,008,351
187,565

Note 5 – Net Assets
NBF issues only non-par value units in accordance with the Investment Trust Law of Japan and all of the issue
prices of new units are designated as stated capital. NBF maintains at least ¥50 million as the minimum net assets
as required by the Investment Trust Law of Japan.

28

Note 6 – Short-Term Loans and Long-Term debt
Short-term loans consist of short-term notes and short-term borrowings under loan agreements. The annualinterest rates on short-term loans outstanding are floating rates and on December 31, 2022 was at 0.108%. Longterm debt as of December 31, 2022 and June 30, 2022 consisted of the following:
As of
December 31,
2022

As of
June 30, 2022

(Yen in millions)
Unsecured loans due 2023 to 2036 principally from banks andinsurance companies with interest rates mainly ranging from0.019% to 1.533% ............................................................................
1.168% unsecured bonds due 2023
0.200% unsecured bonds due 2024
0.180% unsecured bonds due 2025
0.220% unsecured bonds due 2025
0.150% unsecured bonds due 2026
0.914% unsecured bonds due 2037
0.888% unsecured bonds due 2038
1.000% unsecured bonds due 2046

(Note 1) ....................................
(Note 1) ....................................
(Note 1) ....................................
(Note 1) ....................................
(Note 1) ....................................
(Note 1) ....................................
(Note 1) ....................................
(Note 1) ....................................

Less: amount due within one year........................................................

¥512,500
10,0007,000
15,000
5,000
5,000
5,000
5,000
5,000
569,500
52,000¥517,500¥503,500
10,0007,000
15,000
5,000
5,000
5,000
5,000
5,000
560,500
63,000¥497,500

Notes: 1. Subject to provision of collateral restrictions.

The annual maturities of long-term debt as of December 31, 2022 were as follows:(Yen in millions)Due after one to two years
Due after two to three years
Due after three to four years
Due after four to five years
Due after five years……………………………………
……………………………………
……………………………………
……………………………………
……………………………………

¥ 51,000
50,00055,00052,000309,500

During the period ended December 31, 2022, NBF had commitment credit line contracts of ¥60 billion withseveral financial institutions to reduce refinancing risk. The unused amount of such committed credit lines was ¥60
billion as of December 31, 2022.

29

Note 7 – Rental Revenues and Expenses
Rental revenues and expenses for the periods ended December 31, 2022, June 30, 2022 and December 31, 2021
were as follows:
For the six
months ended
December 31,
2022

For the six
months ended
June 30, 2022

For the six
months ended
December 31,
2021(Yen in millions)

Revenues from Property Leasing:
Rental revenue:
Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
Common area charges . . . . . . . . . . . . . . . . . . . . . . ..
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenues related to property leasing:
Parking lots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .
Facility charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Incidental income . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cancellation fees . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous income . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal...........................
Total revenues from property leasing. . . . . . . . . . . .
Rental Expenses:
Property management fees . . . . . . . . . . . . . . . . . . .
Real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repairs and maintenance . . . . . . . . . . . . . . . . . . . . .
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other rental expenses . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . .
Total rental expenses . . . . . . . . . . . . . . . . . .. . . . . . . . .
Operating Income from Property Leasing Activities. . .

¥39,2692,032
207
41,508¥38,769
2,168
174
41,113¥38,559
2,138
182
40,880

653
312
2,417
240
39
3,664
45,172

659
302
1,940
1,153
58
4,114
45,227

708
301
2,094
311
38
3,453
44,333

6,258
4,191
979
42
4,282
7,917
23,672¥21,500

5,971
4,285
1,693
38
3,481
7,728
23,200¥22,027

6,385
3,443
1,184
39
3,418
7,424
21,896¥22,437

Note 8 – Gains and Losses on Sales of Real Estate Properties
Gains and losses on sales of real estate properties for the periods ended December 31,2022, June 30, 2022 andDecember 31, 2021 were as follows:
For the six months ended December 31, 2022
Toyo-cho Center Bldg.
Proceeds from sale of real estate property
Cost of sale of real estate property
Other related sale expenses
Gain on sale of real estate property(Yen in millions)¥9,600
9,034
56
¥ 508

NBF Niigata Telecom Bldg.
Proceeds from sale of real estate property
Cost of sale of real estate property
Other related sale expenses
Gain on sale of real estate property(Yen in millions)¥3,900
3,196
28
¥ 674
30

NBF Hiroshima Tatemachi Bldg.
Proceeds from sale of real estate property
Cost of sale of real estate property
Other related sale expenses
Gain on sale of real estate property(Yen in millions)¥3,5202,482
26¥ 1,011For the six months ended June 30, 2022
Sun Mullion NBF Tower
Proceeds from sale of real estate property
Cost of sale of real estate property
Other related sale expenses
Gain on sale of real estate property(Yen in millions)¥14,400
7,313
98¥ 6,988

For the six months ended December 31, 2021
NBF Ochanomizu Bldg.
Proceeds from sale of real estate property
Cost of sale of real estate property
Other related sale expenses
Loss on sale of real estate property(Yen in millions)¥16,100
19,30270¥ 3,273

Nakanosakaue Sunbright Twin
Proceeds from sale of real estate property
Cost of sale of real estate property
Other related sale expenses
Gain on sale of real estate property(Yen in millions)¥40,000
35,894120¥ 3,985

NBF Unix Bldg.
Proceeds from sale of real estate property
Cost of sale of real estate property
Other related sale expenses
Gain on sale of real estate property(Yen in millions)¥4,9002,683
201¥ 2,01531

Note 9 – Income Taxes
NBF is subject to income taxes in Japan. The effective tax rate on NBF's income was 0.00% for the periods
ended December 31, 2022 and June 30, 2022, and December 31, 2021. The following table summarizes thesignificant differences between the statutory tax rates and NBF's effective tax rates for financial statement
purposes.
For the six months
ended December 31,
2022

Statutory tax rate . . . . . . . . . . . . . . . . . . . . . .
Deductible dividends . . . . . . . . . . . . . . . . . . . . .
Transfer to reserve for reduction
entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversal of reserve for
reduction entry . . . . . . . . . . . . . . . . . . . . . . . .
Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective tax rate. . . . . . . . . . . . . . . . . . . . . . . . . .

For the six months
ended June 30,
2022

For the six months
ended December 31,
2021

31.46%(30.33)(2.54)

31.46%(28.35)(3.11)

31.46%(28.35)(6.04)

1.41
0.00
0.00%

—
0.00
0.00%

2.93
0.00
0.00%

NBF was established as an investment corporation under the Investment Trust Law of Japan, and as long as aninvestment corporation distributes to its unitholders at least 90% of earnings available for dividends for a period
and other requirements prescribed in Japanese tax regulations are met, the investment corporation is allowed todeduct total amount of dividends in calculating its taxable income under Japanese tax regulations.

32

Note 10 – Per Unit Information
Information about earnings per unit for the periods ended December 31, 2022, June 30, 2022 and December
31, 2021 and net assets per unit as of December 31, 2022, June 30, 2022 and December 31, 2021 were as
follows.
The computation of earnings per unit is based on the weighted average number of units outstanding during theperiod. The computation of net assets per unit is based on the number of units outstanding at each period end.
For the six months
ended December 31,
2022

For the six months
ended June 30, 2022

For the six months
ended December 31,
2021

Net income per unit (Yen)¥11,927¥14,998¥13,148

Weighted average number ofunits outstanding

1,700,991

1,696,119

1,652,500

As ofDecember 31, 2022

As ofJune 30, 2022

As ofDecember 31, 2021

¥415,358¥416,906¥406,832

Earnings per Unit:

Net Assets per Unit (Yen)

Note 11 – Leases
As Lessor
NBF leases some of its real estate properties to outside parties under non-cancelable operating leases. As of
December31, 2022 and June 30, 2022, future minimum rental revenues under the non-cancelable operating leases
are as follows:

Due within one year.....................
Due after one year........................
Total .........................................

As of December 31, 2022
As of June 30, 2022
(Yen in millions)¥ 22,422¥ 21,945
26,26029,890¥ 48,682¥ 51,836

As Lessee
Not applicable.

Note 12 – Transactions with Related Parties(1) Parent Company and Major Corporate Unitholders(For the six months ended December 31, 2022)
Not applicable.
(For the six months ended June 30, 2022)
Not applicable.
(For the six months ended December 31, 2021)
Not applicable.
(2) Affiliates(For the six months ended December 31, 2022)
33

Not applicable.
(For the six months ended June 30, 2022)
Not applicable.
(For the six months ended December 31, 2021)
Not applicable.
(3) Sister Companies(For the six months ended December 31, 2022)
Not applicable.
(For the six months ended June 30, 2022)
Not applicable.
(For the six months ended December 31, 2021)
Not applicable.
(4) Directors and Major Individual Unitholders(For the six months ended December 31, 2022)
Not applicable.
(For the six months ended June 30, 2022)
Not applicable.
(For the six months ended December 31, 2021)
Not applicable.

Note 13 – Investment and Rental Properties
NBF owns office buildings (including land) for rent in Tokyo and other areas. The carrying amounts, net changes
in the carrying amounts and the fair value of the investment and rental properties are as follows:(Yen in millions)
For the six months ended
For the six months ended
December 31, 2022
June 30, 2022
Carrying amount(Note 1)
Balance at beginning¥ 1,348,671¥ 1,273,838
of the Fiscal Period
Amount of increase(decrease) during(3,859)74,832current period(Note 2)
Balance at end of the
1,344,812
1,348,671
Fiscal Period
Fair value at end of theperiod¥ 1,683,890¥ 1,682,280(Note 3)
Notes:
1. Carrying amounts represent acquisition cost less accumulated depreciation.
2. The major increase in the fiscal period ended December 31, 2022 was mainly due to the acquisitionsof a property (Toyosu Bayside Cross Tower, ¥14,815 million) and the major decrease was mainly due
to sale of 3 properties (Toyo-cho Center Bldg., NBF Niigata Telecom Bldg. and NBF Hiroshima
Tatemachi Bldg., ¥14,714 million) and recognition of depreciation costs.
The major increase in the fiscal period ended June 30, 2022 was mainly due to the acquisitions of 2
properties (IIDABASHI GRAND BLOOM (additional acquisition) and Nakanoshima Mitsui Bldg.,¥80,954 million) and the major decrease was mainly due to sale of a property (Sun Mullion NBF
Tower, ¥7,313 million) and recognition of depreciation costs.
34

3. Fair value at end of the period is based on appraisals provided by independent real estate appraisers
Information about profit and loss from investment and rental properties is disclosed in Note 7 (Rental Revenues
and Expenses) and Note 8 (Gains and Losses on Sales of Real Estate Properties).

Note 14 – Segment Information
Segment Information
Segment information has been omitted as NBF has only one segment, which is real estate leasing business.

Related Information(For the six months ended December 31, 2022)
1. Information by Products and Services
Disclosure of this information has been omitted as NBF has a single product/service line that accounts for morethan 90% of total operating revenues.

2. Information by Geographic Areas(1) Operating revenues
Disclosure of this information has been omitted as total domestic revenues account for more than 90% of
total operating revenues.
(2) Real estate properties
Disclosure of this information has been omitted as total domestic real estate properties account for more than
90% of the book value of total real estate properties.

3. Information on Major Tenants(Yen in millions)
TenantOperating revenues
Related segment
Mitsui Fudosan
Real estateCo., Ltd.
¥21,461
leasing businessNote: NBF leases properties to Mitsui Fudosan Co., Ltd. under a master lease agreement, and Mitsui
Fudosan Co., Ltd. subleases such properties to subtenants. NBF leases other properties to
Mitsui Fudosan Co., Ltd.

(For the six months ended June 30, 2022)
1. Information by Products and Services
Disclosure of this information has been omitted as NBF has a single product/service line that accounts for morethan 90% of total operating revenues.

2. Information by Geographic Areas(1) Operating revenues
Disclosure of this information has been omitted as total domestic revenues account for more than 90% of
total operating revenues.
(2) Real estate properties
Disclosure of this information has been omitted as total domestic real estate properties account for more than
90% of the book value of total real estate properties.

35

3. Information on Major Tenants(Yen in millions)
TenantOperating revenues
Related segment
Mitsui Fudosan
Real estateCo., Ltd.
¥20,291
leasing businessNote: NBF leases properties to Mitsui Fudosan Co., Ltd. Under a master lease agreement, and Mitsui
Fudosan Co., Ltd. Subleases such properties to subtenants. NBF leases other properties to
Mitsui Fudosan Co., Ltd.

(For the six months ended December 31, 2021)
1. Information by Products and Services
Disclosure of this information has been omitted as NBF has a single product/service line that accounts for morethan 90% of total operating revenues.

2. Information by Geographic Areas(1) Operating revenues
Disclosure of this information has been omitted as total domestic revenues account for more than 90% of
total operating revenues.
(2) Real estate properties
Disclosure of this information has been omitted as total domestic real estate properties account for more than
90% of the book value of total real estate properties.

3. Information on Major Tenants(Yen in millions)
TenantOperating revenues
Related segment
Mitsui Fudosan
Real estateCo., Ltd.
¥18,185
leasing businessNote: NBF leases properties to Mitsui Fudosan Co., Ltd. under a master lease agreement, and Mitsui
Fudosan Co., Ltd. subleases such properties to subtenants. NBF leases other properties to
Mitsui Fudosan Co., Ltd.

Note 15 – Asset Retirement Obligations
NBF owns real estate properties containing asbestos material and is obligated to remove those materials upon
disposition of the properties. However, since sufficient information is not available to reasonably estimate theobligation amount due to uncertainty about the method and timing of settlement, asset retirement obligation is notrecognized for the obligations to remove asbestos materials.

Note 16 – Revenue recognition
Breakdown information on revenues from contracts with customers
For the breakdown information on revenues from contracts with customers, refer to Note 7 (Rental Revenues
and Expenses) and Note 8 (Gains and Losses on Sales of Real Estate Properties).
In addition, Notes to Statements of Income includes "Real estate rental revenues" and other revenues that are
subject to the "Accounting Standard for Lease Transactions" (ASBJ Statement No. 13) and therefore not subject
to the "Accounting Standard for Revenue Recognition". However, the main revenues from contracts withcustomers that are subject to the application are "Proceeds from sale of real estate property" and "utility expenses"("Incidental income" in "Other revenues related to property leasing").
36

Note 17 – Significant Subsequent Events
1. Conclusion sale and purchase agreements regarding acquisition
NBF concluded sale and purchase agreements regarding acquisition of the following asset on January 5, 2023,anddelivery is scheduled for March 31, 2023. An overview of the properties as of the date of the conclusion of theagreements is as follows.
In addition, NBF shall pay to the seller a penalty equivalent to 10% of the acquisition price in the event of thetermination of a contract due to a breach of its contractual obligations.
Name of property: IIDABASHI GRAND BLOOM (Additional Acquisition)
Category of asset: Real estate
Acquisition Price: ¥25,400 million
Seller: Mitsui Fudosan Co., Ltd
Acquisition date: March 31, 2023
Name of property: Toyosu Bayside Cross Tower (Additional Acquisition)
Category of asset: Real estate
Acquisition Price: ¥21,600 million
Seller: Mitsui Fudosan Co., Ltd
Acquisition date: March 31, 2023

2. Disposition of Property
NBF concluded sale and purchase agreements regarding disposition of the following asset on October 31, 2022
and disposed on January 11, 2023.
Name of property: Shin-Kawasaki Mitsui Bldg.
Category of asset: Real estate (Note 1)
Disposition Price: ¥24,000 million
Transferee: SMFL MIRAI Partners Company,Limited
Disposition date: January 11, 2023
Note:
1. Upon the disposition, the property was established as property in trust on the same date of disposition dateabove, and the beneficiary interests in trust was transferred.

3. Conclusion sale and purchase agreements regarding disposition
NBF concluded sale and purchase agreements regarding disposition of the following assets on March 15, 2023,
and delivery is scheduled for March 29, 2024. An overview of the properties as of the date of the conclusion of theagreements is as follows.
In addition, NBF shall pay to the buyer a penalty equivalent to 10% of the acquisition price in the event of thetermination of a contract due to a breach of its contractual obligations.
Name of property: Panasonic Tokyo Shiodome Bldg.
Category of asset: Trust beneficiary interest
Disposition Price: ¥6,700 million
Transferee: Panasonic Holdings Corporation
Disposition date: March 29, 2024

37

Ⅲ Appendix■

Major Interested Parties

Nippon Building Fund Management Ltd. (Asset Management Company and Administrative
Agent regarding the Management of Institutions, herein "NBFM")
NBFM, as Asset Management Company provided for in the Investment Trust Law of Japan, performs
management of NBF's assets and undertakes management of the institutions of NBF. As of December 31,
2022, NBFM has been entrusted as an asset management company only by NBF.

Operation- Undertakes asset management of NBF pursuant to an Asset Management Entrustment Agreement based on an
entrustment from NBF in accordance with the Articles of Incorporation of NBF and the Investment Objects
and Policies set forth therein.
- Undertakes management of the general affairs of the general meeting of unitholders and the Board of
Directors as Administrative Agent regarding the Management of Institutions based on an entrustment from
NBF and pursuant to an Agreement for General Administration Regarding the Management of Institutions.

Fees for the Asset Management Operation
Management Fee 1
The amount equivalent to 2.5% of the total amount of (i) rent, common area charges, parking lot charges,
incidental income, facility charges, facility installation fees, delay damages, lease contract cancellation
penalty or monies similar thereto and other leasing operating revenues arising from leasing operations, plus(ii) dividends, distributions or monies similar thereto and other proceeds attributable to Real Estate, etc.
recorded by NBF (provided, however, that revenues from the sale of Real Estate, etc. will be excluded;
hereinafter, “Leasing Revenues, etc.” in this Paragraph) as calculated on each closing date (rounded down to
the nearest yen) will be payable.
Management Fee 2
The amount equivalent to 3% of net income before income taxes (provided, however, that in the event aloss is carried forward, then the amount of income before income taxes remaining after the entire amount ofsuch loss has been covered) prior to deduction of Management Fee 2 as calculated on each closing date(rounded down to the nearest yen; provided, however, that in the event of a negative amount, then 0 yen) will
be payable.
Management Fee 3
In the event that Real Estate, etc. is newly acquired (in the event of merger by NBF, then succeeded bysaid merger) as Managed Assets, the amount of the acquisition price of said Real Estate, etc. (meaning theacquisition price of both land and buildings; in the event of the simultaneous acquisition of multiple units ofReal Estate, etc., then the acquisition price of each Real Estate, etc., in the event of equity investment, thenthe equity investment amount, and in the event of merger by NBF, then the appraised value of each Real
Estate, etc. succeeded by said merger at the time of the merger; provided, however, that national consumption
tax, regional consumption tax and miscellaneous costs of acquisition or succession are excluded) multipliedby the following percentage rates, in principle, in total amount (rounded down to the nearest yen) will bepayable; provided, however, that with the approval of the board of directors of NBF, compensation may be
calculated using different rates not exceeding the following rates.
・The portion up to and including ¥10,000 million ………………………………… 0.5%
・The portion exceeding ¥10,000 million up to and including ¥30,000 million …… 0.2%
・The portion exceeding ¥30,000 million up to and including ¥50,000 million …… 0.05%
・The portion exceeding ¥50,000 million …………………………………………. Nothing38

Management Fee 4
In the event of sale of Real Estate, etc. owned as Managed Assets, the amount of the sales price of said
Real Estate, etc. (in the event of the simultaneous sale of multiple units of Real Estate, etc., then the sales
price of each Real Estate, etc.; provided, however, that national consumption tax, regional consumption tax
and miscellaneous costs of sale are excluded) multiplied by the following percentage rates, in principle, in
total amount (rounded down to the nearest yen) will be payable; provided, however, that with the approval of
the board of directors of NBF, compensation may be calculated using different rates not exceeding thefollowing rates.
・The portion up to and including ¥10,000 million ………………………………… 0.5%
・The portion exceeding ¥10,000 million up to and including ¥30,000 million …… 0.2%
・The portion exceeding ¥30,000 million up to and including ¥50,000 million …… 0.05%
・The portion exceeding ¥50,000 million …………………………………………. nothing

History of NBFM
NBFM is an Asset Management Company which is a limited liability company duly established under thelaws of Japan. Major events in the history of NBFM are as follows:
September 19, 2000
November 17, 2000
January 29, 2001
February 15, 2001
March 7, 2001
March 22, 2001
May 23, 2001
June 16, 2001
September 30, 2007

EstablishedObtained license as a building lots and building transactions agent under the
Building Lots and Building Transactions Law
Obtained approval as a discretionary transaction agent under the Building Lots
and Building Transactions Law
Registered as a general real estate investment advisor under the Real Estate
Investment Advisor Registration Regulations
Obtained approval as an Asset Management Company under the Investment
Trust Law of Japan
Increased capital from ¥100 million to ¥198 million
Changed name (from “MF Asset Management Co., Ltd.” to " Nippon Building
Fund Management Ltd.")
Increased capital from ¥198 million to ¥495 million
Registered as a financial instruments firm with the Kanto Local Finance Bureau
Chief (Financial Instruments) No. 371

List of Shareholders (as of December 31, 2022)
Numberof Shares Owned
4,554
3,465
495
495
297
297
297
9,900

Name
Mitsui Fudosan Co., Ltd.
Sumitomo Life Insurance Company
Sumitomo Mitsui Trust Bank, Limited
Sumitomo Mitsui Banking Corporation
Daido Life Insurance Company
Mitsui Sumitomo Insurance Co., Ltd.
Britel Fund Trustees Limited
Total

39

Percent
46.0%
35.0
5.0
5.0
3.0
3.0
3.0
100.0%

Directors and Staff
As of December 31, 2022, the directors and corporate auditors of NBFM are as follows. The staff otherthan directors and auditors of NBFM is comprised of 34 persons.
Name of Directors and Auditors
Title
Eiichiro Onozawa
President & CEO (standing)
Hideki Shuto
Director, Head of Investment & Finance Group (standing)
Tetsuya Saito
Director, Head of Administration Group (standing)Masahiko Okamoto
Director
Yusuke Ogata
Director
Yasuki Nozue
Corporate Auditor
Takurou Kurumisawa
Corporate Auditor.

Outline of Financial Condition
An outline of the financial condition of NBFM is as follows.
Outline of principal assets and liabilities for the most recent fiscal year:
As of March 31, 2022
Total Assets
Total Liabilities
Total Net Assets(Yen in millions)¥4,004
621
3,383

40

41

42

43

Disclaimer
This document contains translations of selected information described in the Securities Report (Yuka shoken
hokokusho) filed on March 30, 2023 pursuant to the Securities Exchange Law of Japan, and the Financial Statements
and the Performance Information Report for the period from July 1, 2022 to December 31, 2022, of Nippon Building
Fund Inc. prepared pursuant to the Investment Trust Law of Japan.

This English-language document was prepared solely for the convenience of and reference by overseas investors. It
neither corresponds to the original Japanese documents nor is intended to constitute a disclosure document. The
Japanese-language Securities Report and the Financial Statements and the Performance Information Report for the
aforementioned period should always be referred to as originals of this document.

English terms for Japanese legal, accounting, tax and business concepts used herein may not be precisely identicalto the concept of the equivalent Japanese terms. With respect to any and all terms herein, including without
limitation, financial statements, if there exist any discrepancies in the meaning or interpretation thereof between theoriginal Japanese documents and English statements contained herein, the original Japanese documents will always
govern the meaning and interpretation. None of Nippon Building Fund Inc., Nippon Building Fund Management Ltd.
or any of their respective directors, officers, employees, partners, unitholders/shareholders, agents or affiliates will be
responsible or liable for the completeness, appropriateness or accuracy of English translations or the selection of the
portions of any documents translated into English. No person has been authorized to give any information or makeany representations other than as contained in this document in relation to the matters set out in this document, and if
given or made, such information or representation must not be relied upon as having been authorized by Nippon
Building Fund Inc., Nippon Building Fund Management Ltd. or any of their respective directors, officers, employees,
partners, unitholders/shareholders, agents or affiliates.

The financial statements of Nippon Building Fund Inc. have been prepared in accordance with generally accepted
accounting principles in Japan (Japanese GAAP), which may materially differ in certain respects from generally
accepted accounting principles in other jurisdictions.

Many provisions of this document contain forward-looking statements and information. We base these statementson our beliefs as well as our assumptions based solely on certain limited information currently available to us.
Because these statements reflect our current views concerning future events, these statements involve known andunknown risks, uncertainties and assumptions. Our future performance could materially differ from those set out inthese forward-looking statements. We do not undertake and will not undertake to release revisions of forward-looking
statements to reflect future events or circumstances or of any other statements or information contained herein.

44