FAQ

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Investment unit

What is the securities (ticker) code?
3240.
How much is the cash distribution per unit for the next fiscal period?
Refer to “cash distribution.”
Cash Distributions
When are the financial results and cash distribution scheduled to be announced?
Nomura Real Estate Residential Fund’s (NRF) fiscal period end is on May 31 and November 30, every year. Financial results for the period ending May 31 (from December 1 to May 31 of the following year) and the period ending November 30 (from June 1 to November 30) are announced in the middle of July and December, respectively. The announcement will be made 45 days after the fiscal period end. Also, NRF plans to pay cash distributions in August and February of the following year to the unitholders who are registered by the end of May and November, respectively.
When is the general unitholders meeting?
In accordance to NRF’s “Articles of Incorporation,” the meetings are held at least once every two years. The next meeting is scheduled to be held on July 30, 2010.

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Investment Policy

How do you see the future of the residential market?
While high vacancy ratio and rental decline are seen in a part of the luxury residential market of central Tokyo due to recession, the vacancy ratio seems to have bottomed out in the second half of year 2009. Also, because the number of single and small households in major cities including the Greater Tokyo Area, continues to increase due to factors such as population inflow, late marriages, and low birth rates, and the residential market for single and small households has continuous stable demand. Therefore, regarding the properties which target these demands, especially the properties which are competitive in location and building character, we believe the occupancy ratio will continue to be stable.
What are the characteristics of the Investment Policy?
NRF strives to manage the operating properties according to each characteristic through planning and flexibility in order to realize stable mid-to-long term revenue and steady asset growth.
What are the advantages of a residential fund?
Generally, investment in residential properties is thought to be less risky than that of properties for other purposes because it is easy to disperse the risk due to the low volatility of revenue, diversified tenants, and small size of each property.

Also, NRF targets “middle class tenants, mainly corporate employees in their 20’s and 30’s and college students” and “upper middle class tenants, such as foreign company employees”, in which most monthly rent is set at approximately 150,000 yen or less. Because these tenants are less affected by economic trends and stable demand for rent can be expected, the risk of rent decline is thought to be low.
What factors do you focus on when acquiring properties?
NRF, taking into consideration the current rental market and future outlook, to pursue the character of residential investment, and to stabilize revenue, in light of the location and market conditions, will select investment properties targeting tenant class with most stable rental needs.
What is the approximate target asset size?
NRF’s target asset size for the future is a total of 300 billion yen. NRF continues to strive to make selective investments with consideration to the financial position, utilizing the strong sourcing route of each property brand, and to acquire information about quality property early on. Through this process, NRF plans to further diversify the portfolio and to seek stable mid-to-long term revenues by balancing factors such as rent, investment, area, building age and property type.
How frequently do you update the appraisal value?
Basically, NRF updates the appraisal value at each fiscal period end and discloses the information in several published reports.

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Asset Management Company

What can you tell me about the asset management company.
NRF is managed by Nomura Real Estate Asset Management (NREAM). NREAM was established in January 2003 and is wholly owned by Nomura Real Estate Group.

Refer to NREAM site.
Nomura Real Estate Asset Management (NREAM)
How do you deal with earthquake risk?
NRF has a property selection criterion. As a rule, NRF invests only in property which complies with the new earthquake resistance standard of Japan or property with the same level of earthquake resistance or more.” NRF acquires only properties with reports which a third party research institute certifies that “the structural calculation sheet is concluded to have earthquake resistance conforming to the Building Standard Law.” Also, NRF has a policy to insure a property with 15% or more of PML with fire and profit insurance policy containing earthquake insurance. However, NRF currently does not provide earthquake insurance because all properties owned by NRF comply with new earthquake resistance standard of Japan and none of the PML is over 15%.
Note 1: The New Earthquake Resistance Standard has been applied since June 1981. The standard aims to minimize the damage so that in case of a medium scale earthquake (seism intensity of 5 or a little more on the Japanese scale) there is almost no damage to the buildings, and in case of a large scale (6 or a little more-7 seism intensity), which is extremely rare, there is no damage to buildings which may harm life.
Note 2: PML(Probable Maximum Loss) describe the ratio of expected maximum loss to replacement cost caused by earthquakes during the expected duration of service (50 years=useful life of ordinary buildings). The earthquake, in this case, is assumed one of the biggest which occurs once in 475 years (10% chance of a big earthquake occurring once every 50 years).

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