(1) Investment Target

Nomura Office Fund (NOF) aims to mainly invest in the following assets:

Property Use

NOF will invest in real estate-related assets that comprises of real estate or real estate backed securities with underlying properties that are used primarily as office buildings.

Given the size of the secondary market and the absolute number of investment opportunities, buildings that are primarily used as offices ("office buildings") may be considered the core real estate investment targets. Unless used as specific corporate headquarters or for special purposes, office buildings generally can be expected to (1) provide steady revenue stream through reduction of risks related to income instability by attracting diverse tenants; and (2) achieve better investment efficiency by reducing the ratio of acquisition and management cost per investment, due to the relatively high property value per asset compared to other types of real estate (e.g., residential properties).

For these reasons stated above, NOF considers office buildings to match its investment objective of securing stable medium- to long-term earnings and ensuring steady portfolio growth.

Investment Area

NOF will invest in properties located in the following three major metropolitan areas and government-designated cities to achieve steady portfolio growth:

Metropolitan Area:	Tokyo, Kanagawa, Saitama, Chiba, Gunma, Tochigi, Ibaraki
Chubu Area:	Aichi, Shizuoka
Kinki Area:	Osaka, Kyoto, Hyogo
Other:	Government-designated and equivalent large cities.

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(2) Portfolio Construction Policy

Diversified Investment

Minimizing fluctuation of income caused by changes in regional economy, earthquakes or other events that significantly affect certain areas is deemed critical in securing stable income for a portfolio.

For this purpose, NOF will diligently seek geographic diversification in our portfolio taking into consideration the economic conditions of each major city, as well as the size and trend of the office building markets (stock volume, market capitalization, supply and demand for sales and rentals, and future potentials).

Following general criteria is applied to the geographic composition of the portfolio:

Central Tokyo:	6 central wards: Chiyoda, Chuo, Minato, Shinjuku, Shinagawa, Shibuya	60-80%
Suburban Tokyo:	Tokyo and 3 Surrounding Prefectures: Tokyo excluding the six central wards, Kanagawa, Saitama, Chiba	10-20%
Other regional cities:		10-20%

(Note)

Above figures are mid- to long-term targets, achievement of which is not guaranteed.

In addition to the geographic diversification, diversification within each investment property is also important for minimizing fluctuation in portfolio income caused by risks related to individual property, such as micro-level rental office market fluctuation and loss of a major tenant.

For these purposes, NOF will consider diversification within each investment property when constructing a portfolio.

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(3) Investment Criteria

Property Selection Criteria

Following items will be considered upon selection of an investment property:

Item	Criteria
Investment Target	Primarily used as office
Area	Located in the three major metropolitan areas and other large cities including government-designated cities
Size	Total floor space more than 1,000 tsubo (Note 1) per building (Note 2)
Earthquake Resistance	Conform to the new earthquake resistance standards or equivalent standards, with the probable maximum loss (PML) of less than 20% (Note 3)
Profitability	Prospect of stable earnings based on historic occupancy rates, rental income and other factors.
Tenant Composition	Acceptable purposes of use by tenants and acceptable tenant credit standings

(Note 1)

Determined based on the description in the real estate registry as well as considering the total floor space as prescribed under the Building Standards Law of Japan.

(Note 2)

However, investment in properties with total floor space of less than 1,000 tsubo may be permitted, where synergetic effect with existing assets, acquisition opportunity for or contribution to expansion of other properties, or other advantages, can be expected by acquisition of such property (including following cases):

• A property adjacent to an existing asset which can be expected to provide added value through expansion of the existing asset or through joint redevelopment.
• A property included in a bulk transaction
• A property developed by a provider expected to engage in ongoing transactions.

(Note 3)

NOF may invest in properties which could meet above criteria by implementation of anti-earthquake work and the cost of the work has a small impact on cash flow.

In addition to the above, NOF adopts the following investment criteria in determining the acquisition of properties under co-ownership or compartmentalized ownership:

(i)

Measures to protect the security deposits and repair reserves (including those belonging to other co-owner(s) or unit owner(s));

(ii)

In the case of co-ownership, restrictions on division of the co-owned property and on sale of the co-ownership title;

(iii)

Collateral rights on the other co-owners' title or the other unit owners' units and the dates of establishment of such collateral rights; and

(iv)

Attributes of other co-owners or unit owners.

In addition, estimated future capital expenditure for deterioration due to aging will be calculated to smooth the capital expenditure for the entire portfolio.

In case NOF is to invest only in land of an office building or rights of land, surface, or leasehold of the land, NOF shall examine an owner's credibility, attributes, and terms and conditions of contracts for surface and leasehold rights with such owner, in addition to the above criteria.

In case NOF is to invest in a non-office building intended for conversion into an office building, NOF shall consider current and post-conversion conditions of the profitability and tenant composition. NOF shall also examine whether or not such conversion is feasible, in light of the costs of renovation and for changes of tenants.

In case NOF is to invest in retail stores, other commercial facilities, or a residential building attached to an office building, NOF shall apply the same listed criteria for non-office buildings.

NOF intends to secure mid- to long-term income stability by investing in properties that satisfy the above strict criteria.

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(4) External Growth Strategy

Collaboration with Nomura Real Estate Group

By increasing the portfolio size, NOF aims to improve liquidity of investment units, reduce the income volatility risk through diversification of investment, and reduce management cost through economy of scale.

For this purpose, the Asset Management Company shall (1) gather extensive real estate sales information, and (2) continue to acquire real estate and other assets utilizing the real estate transaction information obtained from Nomura Real Estate Group (Information concerning real estate held, developed or brokered by Nomura Real Estate Group, and other prospective targets according to information gathered by Nomura Real Estate Group).

Nomura Real Estate Asset Management (NREAM), the Asset Management Company of NOF, has executed "memorandum regarding the handling of real estate sales information" with group companies indicated in the below diagram. Based on this memorandum, NREAM can utilize the extensive group information network, providing access to information related to properties held, developed, brokered by, or otherwise sold by the Nomura Real Estate Group.

Investing in Properties under Development

NOF will generally invest in real estate that is leased and producing income at the time of acquisition. Investment in non-operating real estate (under development) will be determined carefully, considering the effects of the risks of completion and delivery of the building and the prospective income after commencement of operation based on the timing of operation and securing tenants, etc., on the entire portfolio.

With respect to a forward commitment (a postponed sales agreement where the conclusion and delivery of the property is scheduled over one month ahead of the contract date and other similar agreements), following points must be noted:

(a)Points of notice related to establishment of cancellation penalties
	Careful investment decision should be made with respect to cancellation penalties for breach of contract, performing sufficient review on the effect of such penalty including its impact on the revenues and expenditures of the entire portfolio and dividend payment (also the criteria for delisting prescribed by the Tokyo Stock Exchange).
(b)Maximum delivery period and funding methods
	Maximum period between execution of the sales agreement and delivery of the property shall be the appropriate period determined on a case-by-case basis in light of the progress of the property development, and careful review shall be performed with full acknowledgement of risks such as changes in the financial environment and real estate market during such period. With respect to the funding for the acquisition, consider the methods and viability of funding such as use of credit including commitment lines corresponding to the acquisition price at the time of the decision to acquire the property. At the time of settlement, select the optimal funding method in light of the financial market environment, the relationship with financial institutions, and changes in the funding environment such as condition of the investment corporation bonds (including short-term investment corporation bonds) market.