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Nippon Commercial Investment Corporation

Nippon Commercial Investment Corporation

Pacific Commercial Investment Corporation

NIPPON COMMERCIAL INVESTMENT CORPORATION（Listed on the Tokyo Stock Exchange under securities code 3229）

October, 2007

1（This is a free translation edition. The original edition is written in Japanese.）Nippon Commercial Investment Corporation Pacific Commercial Investment Corporation

Table of ContentsTable of Contents

Table of Contents ････････････････････････････････････1

Investment Highlight･･････････････････････････････････2

Growth Strategy･･･････････････････・･･･････ 5

Financial Strategy ････････････････････････22

･･････････････････････････････････････････ 25

Disclaimer ･･････････････････････････････････････････ 36

Section 1

Section 2

Appendix


Investment HighlightInvestment Highlight

Achieved stable internal growth by improving rental income supported by favorite market condition and introducing cost controlAchieved 12,530 yen of dividend per unit

630 yen increase (+5.2%) from the initial forecast announced in the beginning of the term

Highlights of the 3rd Fiscal Period (ending Aug. 2007)

Internal growthOffice properties: Achieved stable improvement of NOI by promoting replacement of tenants and increasing rentsOffice properties: Introduced branding strategy (“Pacific Marks”). Promoted refurbishment of office propertiesRetail properties: Raised occupancy rate by attracting new tenants. Developed the extension plan of Mallage Kashiwa.

External growthAcquired two large scale core properties in urban areas of Tokyo and Osaka. To acquire two properties in urban area of Tokyo. Stay focus on

“large scale properties” and “Tokyo properties”. (Pacific Marks Esaka acquired at 14.5 billion yen, Kawasaki East One Building at 15.1 billion yen)

Financial StrategyIssued investment corporation bond of 27 billion yen, which is the largest transaction in the history of private offering of investment corporation

bonds in JapanRealized wider choices of financing methods by obtaining commitment line loansIncreased the number of lenders （12 financial institutions ⇒ 24 financial institutions)

Updates on Business Performance since Mar. 2007

Improve portfolio quality through active portfolio management

Realize capital gain from internal growth achieved in one year since IPO

Review the portfolio Office properties: Focus on scale and growth

Retail properties: Need to watch transition of commercial areas and promote replacement of properties within commercial areas

More focus on properties with good locations and large scale. Aim to replace existing properties with properties which have potentials of internal growth

Further investment in office properties and retail properties located in urban areas (“Retail-A type”)

Future Strategy


Market Recognition and Future StrategyMarket Recognition and Future Strategy

“Japanese economy is growing gradually” （from the opening remarks by the Governor of Bank of Japan at branch manager meeting, Oct. 2007）

＜Office buildings＞

In Tokyo, rent of mid-to-large scale properties is increasing driven by rent increase in large scale properties

Significant rent increase in specific areas in Osaka and Nagoya

Office building supply in Tokyo is limited. Further demand growth is expected.

＜Commercial facilities＞

Significant concentration of outlets from suburban area to metropolitan area

In suburban area, outlets are expanding their scale

Real Estate Market - Leasing

Credit crunch triggered by sub-prime loan crisisLarger attention on corporate governance to comply newly enforced Financial Instruments & Exchange Law

Financial institutions became cautious on lending

Financial Market

Quality properties in Tokyo are highly popular and they are traded at 3 –4% cap rateIncrease in cap rates of small scaled properties located in regional cities other than the three major metropolitan areas (price going down)

Real Estate Market - Sales

Improve operation and corporate governance level to cope with changing global financial market conditions

Promotion of Financial Strategy and Enhancement of Corporate Governance

Further invest in properties with potentials of internal growth

Develop and execute a strategy which ensures steady internal growth

Realize capital gain from internal growth

Improve portfolio quality through active portfolio management

Improvement of Portfolio Quality


DispositionRealization of

capital gain

Internal growth results in improved asset value

Improved portfolio quality by replacement of properties

Achieve further external growth

Active Portfolio ManagementActive Portfolio Management

PCI ensures appropriate executionPCI ensures appropriate executionof the strategy with itsof the strategy with itsexcellent management excellent management

capabilitycapability

Achieve external growth by Achieve external growth by following our investment policyfollowing our investment policy

Identify and acquire properties Identify and acquire properties with potentials of internal growth with potentials of internal growth

Focus investment in office and Focus investment in office and retail properties located in urban retail properties located in urban areasareas

Achieve external growth by following our investment policy ⇒ Internal growth ⇒Improve asset value ⇒ Realize capital gain ⇒ Improve portfolio quality through active replacement

of properties

Achieve external growth by following our investment policy ⇒ Internal growth ⇒Improve asset value ⇒ Realize capital gain ⇒ Improve portfolio quality through active replacement

of properties

Execute internal growth Execute internal growth strategies for office and retail strategies for office and retail propertiesproperties

Realize capital gain Realize capital gain obtained by improved obtained by improved asset valueasset value

Replace properties with Replace properties with potentials of internal potentials of internal growthgrowth

1 .Establish high quality portfolio supported by external growth

11 ..Establish high quality portfolio Establish high quality portfolio supported by external growthsupported by external growth

2. Execute the internal growth strategy

2.2. Execute the internal Execute the internal growth strategygrowth strategy

3. Realize capital gain and improve portfolio quality further

3.3. Realize capital gain and improve Realize capital gain and improve portfolio quality furtherportfolio quality further

Increase in Increase in appraisal valueappraisal value

Section 1Growth Strategy


191191..77Bn yenBn yen

300Bn yen300Bn yen

500Bn yen500Bn yen

External Growth StrategyExternal Growth Strategy

Achieve mid-long term increase of portfolio size up to 500 Bn yen while maintain high level of dividendsAim to achieve external growth with improving portfolio quality

Achieve mid-long term increase of portfolio size up to 500 Bn yen while maintain high level of dividendsAim to achieve external growth with improving portfolio quality

October, 2007*October, 2007* Mid-Long Term FutureMid-Long Term Future

224242..77Bn yenBn yen

September, 2006 Listed on TSE

September, 2006 Listed on TSE

* Total asset size (acquisition price base) as of October 31, 2007* Total asset size (acquisition price base) as of October 31, 2007

Aim to acquire newly developed Aim to acquire newly developed properties from both the sponsor properties from both the sponsor

and third partiesand third parties

Over JPY 50 Bn asset acquisition Over JPY 50 Bn asset acquisition in one year since IPOin one year since IPO


PMC私募ファンド運用残高

External Growth StrategyExternal Growth Strategy

Acquisition of newly developed properties from the sponsorAcquisition through PCI’s sourcing besides the sponsor’s support

Acquisition of newly developed properties from the sponsorAcquisition through PCI’s sourcing besides the sponsor’s support

Pacific Management Corporation

（PMC)

PreferentialPreferentialNegotiationNegotiation

rightsrights

Asset InfoAsset InfoAsset InfoAsset Info Asset InfoAsset Info

General Co.General Co.AgentAgent

Trust BankTrust Bank

*1. “Sponsor” includes PMC, 100% subsidiaries of PMC and other special purpose vehicles controlled by PMC

*2. Total anticipated acquisition price as of October 31, 2007

*3. As of August 31, 2007source : PMC

from third parties14 properties

about 137.4Bn yen56.6% *2

from third parties14 properties

about 137.4Bn yen56.6% *2

from the sponsor *1

28 propertiesabout 105.3Bn yen

43.4% *2

from the sponsor *1

28 propertiesabout 105.3Bn yen

43.4% *2

Real Estate Development by PMCReal Estate Development by PMC

* Currently, acquisition of the asset by NCI is not planned

AUM of all private funds managed by PMC

JPY150.5 Bn*3

AUM of all development projects by PMCJPY 176.1 Bn

（Office / Retail : 11properties JPY 63.8 Bn）* 3


Acquisition in the 3rd Period (2 properties)Acquisition in the 3rd Period (2 properties)

Acquired 2 properties over JPY 10 Bn in Urban areas of Tokyo and OsakaAcquired 2 properties over JPY 10 Bn in Urban areas of Tokyo and Osaka

Shin-Osaka Zone Tokaido Line Zone

(注)

9-1, Toyotsu-cho, Suita-shi,Osaka 3,929.31sqm33,316.53sqmSteel Reinforced ConcreteB2F/20F

LocationLocation

Land SizeLand SizeTotal Floor AreaTotal Floor Area

Structure/ScaleStructure/Scale

March 31, 1975 JPY14.5 BnJPY14.5 BnTakebashi Holding TMKApril 17, 2007

CompletionCompletionAcquisition PriceAcquisition Price

Appraisal ValueAppraisal Value

SellerSellerAcquisition DateAcquisition Date

Overview（Pacific Marks Esaka）Overview（Pacific Marks Esaka）

(*) Property name was changed on 10/1/2007

Office B-4Office B-4 Pacific Marks Esaka(*)Pacific Marks Esaka(*) Office A-25Office A-25 Kawasaki East One BuildingKawasaki East One Building

11-1 Ekimae Honmatchi, Kawasaki-ku, Kawasaki-shi, Kanagawa

1,183.52sqm10,494.86sqmSteel/Steel Reinforced Concrete B1F/13F

LocationLocation

Land SizeLand SizeTotal Floor AreaTotal Floor Area


Aug. 18, 2004 JPY15.1 BnJPY14.3 BnDaisyo K.K.May 30, 2007

CompletionCompletionAcquisition PriceAcquisition Price


SellerSellerAcquisition DateAcquisition Date

Overview（Kawasaki East One Building ）Overview（Kawasaki East One Building ）


LocationLocation

ZoneZone

Land SizeLand Size

Total Floor AreaTotal Floor Area


CompletionCompletion

Acquisition PriceAcquisition Price


SellerSeller

Acquisition DateAcquisition Date

Acquisition in the 4th Period (2 properties)Acquisition in the 4th Period (2 properties)

（*）Land area and floor area are numbers of the entire property, which are different from NCIC’sportion

3-4-10 Mita, Minato-ku, Tokyo

Tokaido Line Zone

1,474.05sqm (*)

6,598.52sqm (*)

Steel Reinforced Concrete B1F/7F

November 20, 1991

JPY 4.3Bn

JPY 4.33Bn

Falco Credit Management

October 30, 2007

LocationLocation

ZoneZone

Land SizeLand Size

Total Floor AreaTotal Floor Area


CompletionCompletion

Acquisition PriceAcquisition Price


SellerSeller

Acquisition DateAcquisition Date

Overview（Lila Hijirizaka）Overview（Lila Hijirizaka）

2-6-2, Hamamatsu-cho, Minato-ku, TokyoTokaido Line Zone

1,401.61sqm (*)

8,331.90sqm (*)

Steel/Reinforced Concrete B2F/8F

February 26, 1993

JPY 7Bn

JPY 7Bn

Falco Credit Management

October 30, 2007

Overview（Towa Hamamatsucho Building）Overview（Towa Hamamatsucho Building）

Office A-27Office A-27 Lila HijirizakaLila HijirizakaOffice A-26Office A-26 Towa Hamamatsucho BuildingTowa Hamamatsucho Building

Acquisition was decided based on property information provided by sponsors under Support AgreementConsidering some of the tenants pay lower rent than market average, both properties have potential for internal growthBoth properties stand in good locations in Tokaido Line Zone. Tenant demand is high in these areas

Acquisition was decided based on property information provided by sponsors under Support AgreementConsidering some of the tenants pay lower rent than market average, both properties have potential for internal growthBoth properties stand in good locations in Tokaido Line Zone. Tenant demand is high in these areas


Retai lPropertieslocated in

Central Area18.2%

Suburban Multi-Tenant Retail

Properties7.5%

Suburban Single-Tenant Retail

Properties3.2%

Office71.1%

Diversified Portfolio (1): Area and Type DiversificationDiversified Portfolio (1): Area and Type Diversification

ＯｆｆｉｃｅＯｆｆｉｃｅＲｅｔａｉｌＡ

ＲｅｔａｉｌＡ＋

Area DiversificationArea Diversification Type DiversificationType Diversification

Building Age DiversificationBuilding Age Diversification Geographical Diversification （Office）Geographical Diversification （Office）

86.4%（At IPO）

89.2%

ＲｅｔａｉｌＡ

ＲｅｔａｉｌＢ

Further investment in office properties and retail properties located in urban areas (retail-A type)More focus on office properties in urban area of Tokyo

Further investment in office properties and retail properties located in urban areas (retail-A type)More focus on office properties in urban area of Tokyo

14.8 Yrs

Weighted Average Building Age

* As of 10/31/2007Acquisition price base* Starting date assumed to be 10/31/2007

ＲｅｔａｉｌＣ

5 years or moreto less than 10

years9.2%

10 years ormore to less

than 20 years56.0%

20 years ormore20.7%

Less than5 years14.1%

Othermetropolitan

areas2.0%

Urban areasof Osaka and

Nagoya19.8%

Urban Areaof Tokyo

78.2%

CentralArea89.2%

Suburban Area10.8%


21,161

19,310

17,954 19,40619,998

19,75419,844

20,858

21,61621,789

23,612

17,577

17,844

2.59

2.894.22

6.10

8.127.36

3.17

4.035.045.17

3.774.11

6.14

15,000

16,000

17,000

18,000

19,000

20,000

21,000

22,000

23,000

24,000

25,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20070.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0Av erage monthly rental rates f or new tenants (y en/tsubo)

Vacancy rate (%)

Av erage monthly rental rates f ornew tenants (y en/tsubo) Vacancy rate (%)

Urban areaof Tokyo

76.6%

Urban areasof Osaka and

Nagoya21.2%

Othermetropolitan

areas2.2%

Geographical Diversification （Office）

Internal Growth Strategy <Achieved Rent Growth for Office Properties (1)>Internal Growth Strategy <Achieved Rent Growth for Office Properties (1)>

Geographical Diversification （Office）

3rd Period （31properties）3rd Period （31properties）

Favorite environment of office market in Tokyo continuesRealized approximately 3.8% rent increase in overall office portfolio in urban area of Tokyo in one year after IPO

Favorite environment of office market in Tokyo continuesRealized approximately 3.8% rent increase in overall office portfolio in urban area of Tokyo in one year after IPO

Performance of Avg. Rent and occupancy rate for the Office Portfolio(100=As of Sep.30, 2006)

Performance of Avg. Rent and occupancy rate for the Office Portfolio(100=As of Sep.30, 2006)

* For the assets acquired after IPO (Pacific Marks Shinkawa, Pacific Marks Uchikanda, Pacific Marks Mejiro and Kawasaki East One Bldg), the average rent for Sep.-06 is not included in the calculation.

100.0

103.8

96.6%

98.9%

90.0%

91.0%

92.0%

93.0%

94.0%

95.0%

96.0%

97.0%

98.0%

99.0%

100.0%

Sep-06 Aug-0780.0

85.0

90.0

95.0

100.0

105.0

Average rent

Occupancy Rate

* As of 8/31/2007Acquisition price base

(Source) Based on information included in the ‘‘Office Building Market Research Report (October 2007)’’ of Miki Shoji. Miki Shoji was established in December 1965 and provides brokerage and consulting services for office buildings, warehouses and retail premises located in major cities throughout Japan.

(Note 1) Tokyo business district: Chiyoda ward, Chuo ward, Minato ward, Shinjuku ward, and Shibuya ward

(Note 2) Numerical data provided through 2006 are based on information as of December 31, 2007 are based on information as of the end of September 2007.

(Note 3) One tsubo, a measurement unit used in Japan, equals approximately 3.3 sqm.

Tokyo Business District: Vacancy Rates and Average Monthly Rental Rates for New Tenants



1.7%

28.5%

28.1%

12.1%

12.3%

9.8%

7.5%

Increase(30%～）

Increase(10～30%）

Increase(0～10%）

Agreed on Increase

Under negotiation

No change

Decrease

8.9%

22.7%

27.2%

6.0%

5.2%

27.7%

2.3%

Internal Growth Strategy <Achieved Rent Growth for Office Properties (2)>Internal Growth Strategy <Achieved Rent Growth for Office Properties (2)>

Approx. 4,300tsubo

Approx. 2,500tsuboApprox.

JPY7.5MM/month

In the 3rd fiscal period, rent increase was achieved for more than 70% of all tenants under the new lease contracts or renewal contracts

Expand the rising trend continued from 2nd fiscal period

In the 3rd fiscal period, rent increase was achieved for more than 70% of all tenants under the new lease contracts or renewal contracts

Expand the rising trend continued from 2nd fiscal period

Total area rented under the contract *1

Total area for which the rent increased *2

Total amount of actual rent Increase*3

Approx. 8,700tsubo

Approx. 6,100tsuboApprox.

JPY9.4MM/month

Total area rented under the contract*1

Total area for which the rent increased*2

Total amount of actual rent Increase*3

Condition of rent negotiation with the new/renewing tenants in urban area of Tokyo(Shown in leased area)

Condition of rent negotiation with the new/renewing tenants in urban area of Tokyo(Shown in leased area)

2nd Fiscal Period （24properties）2nd Fiscal Period （24properties） 3rd Fiscal Period （25properties）3rd Fiscal Period （25properties）

Approx. 35,000tsuboTotal leasable areaApprox. 33,000tsuboTotal leasable area

64.8%Increase

70.4%Increase

New lease contracts (rent increase)In 3rd Fiscal Period

New lease contracts (rent increase)In 3rd Fiscal Period

Approx. 1,200tsubo

Approx. JPY3.6MM

/month

21.2 %

Total area rented under the contract

Total area for which the

rent increased

Average increase rate

Renewal contracts (rent increase)In 3rd Fiscal Period

Renewal contracts (rent increase)In 3rd Fiscal Period

Approx. 4,900tsubo

Approx. JPY5.8MM

/month

6.8%

Total area rented under the contract

Total area for which the

rent increased

Average increase rate

*1 Based on the existing contracts as of Feb. 2007(2nd Fiscal Period) / as of Aug. 2007(3rd Fiscal Period)*2 Area for which the tenancy contract changed as a result of renewal of contracts or new tenancy *3 Sum of area (out of the total area rented) that showed increase in rent during the 2nd / 3rd period. This rent increase is reflecting the difference between previous tenants and the newly signed tenants as well as the difference between the previously agreed/signed rents of a tenant and his/her new rent level under the new contract.


0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

4th Period 5th Period 6th Period 7th Period After 8th Period

（tsubo）

Internal Growth Strategy : Office PropertiesInternal Growth Strategy : Office Properties

Realize external growth in large portfolioRealize external growth in large portfolio

*. Based on contract terms of 40 properties owned by Nippon Commercial Investment Corp. (as of Aug. 31, 2007)

Number of properties and Net Rentable AreaNumber of properties and Net Rentable Area

Properties NRA（tsubo）

NRA : approx. 50,800 tsuboAbout 90% of lease contracts matures by the 7th

term because the majority is two years contracts

NRA : approx. 50,800 tsuboAbout 90% of lease contracts matures by the 7th

term because the majority is two years contracts

Tenant replacementApprox. 10% of turnover

Tenant replacementApprox. 10% of turnover

Maximize opportunities of internal growth under steady office rent market

Aim to achieve continuous rent increase

Rent revision of large tenantsRevised : Pacific Marks TsukijiUnder negotiation : Hitachi High-tech Building, Shinsaibashi OPA Honkan/Kireikan

Cost reductionChanged the power supplierReduce management costs of properties recently acquired (Pacific Marks Esaka, Kawasaki East One Building Approx.

JPY 2MM per month)

Rent revision of large tenantsRevised : Pacific Marks TsukijiUnder negotiation : Hitachi High-tech Building, Shinsaibashi OPA Honkan/Kireikan

Cost reductionChanged the power supplierReduce management costs of properties recently acquired (Pacific Marks Esaka, Kawasaki East One Building Approx.

JPY 2MM per month)

Other elements of internal growthOther elements of internal growth

Lease contract to be matured (total area)Lease contract to be matured (total area)

25

26

27

28

29

30

31

32

Sep-06 Feb-07 Aug-0730,000

35,000

40,000

45,000

50,000

55,000

NRA (tsubo)

No. of Properties


14,000

14,500

15,000

15,500

16,000

16,500

17,000

17,500

End of Apr-06 End of Feb-07 End of Aug-07

Internal Growth Case Study (1) : Rent IncreaseInternal Growth Case Study (1) : Rent Increase

Office A-2：Pacific Marks Shinjuku ParkSideOffice A-2：Pacific Marks Shinjuku ParkSide

Performance of Avg. Rent and occupancy rate (100=As of Sep.30, 2006)Performance of Avg. Rent and occupancy rate (100=As of Sep.30, 2006)

Shinjuku・Ikebukuro ZoneShinjuku・Ikebukuro Zone

（JPY MM）

Change of Appraisal ValueChange of Appraisal Value

With substantial rise in occupancy rate and the rent, appraisal value increasedProperty name was changed from10/1/2007Renovation works（from Oct. – Nov. 2007）

With substantial rise in occupancy rate and the rent, appraisal value increasedProperty name was changed from10/1/2007Renovation works（from Oct. – Nov. 2007）

Acquisition price JPY 15.1Bn


Appraisal value as of the end of 3rd fiscal period

JPY 17.08Bn

Appraisal value as of the end of 3rd fiscal period

JPY 17.08Bn

(*) Property name was changed on 10/1/2007

Achieved appreciation in asset value by improvement of NOIAchieved appreciation in asset value by improvement of NOI

100.0

103.6

105.3

81.7%

100.0% 100.0%

75.0%

80.0%

85.0%

90.0%

95.0%

100.0%

Sep-06 Feb-07 Aug-0797.0

98.0

99.0

100.0

101.0

102.0

103.0

104.0

105.0

106.0

Average rent (tsubo)Occupancy Rate


5,000

5,500

6,000

6,500

7,000

7,500

8,000

8,500

9,000

9,500


Internal Growth Case Study (2) : Renovation EffortInternal Growth Case Study (2) : Renovation Effort

Before RenovationBefore Renovation

Elevator Hall

Renovation work was carried out on March 2007 at the same timing of the change of property name to “Pacific Marks Yokohama East”

Introduced hotel-like design advised by professional designer→Achieved high occupancy rate and rent increase with achieving the satisfaction of tenants by improving office environment.

Renovation work was carried out on March 2007 at the same timing of the change of property name to “Pacific Marks Yokohama East”

Introduced hotel-like design advised by professional designer→Achieved high occupancy rate and rent increase with achieving the satisfaction of tenants by improving office environment.

Rest RoomRefresh Corner

After RenovationAfter Renovation

Entrance

リニューアル工事の実施（JPY MM）



Appraisal value as of the end of 3rd fiscal

periodJPY 8.97Bn


periodJPY 8.97BnAppraisal value

as of acquisitionJPY 7.34Bn

Appraisal value as of acquisition

JPY 7.34Bn

85.0%

87.0%

89.0%

91.0%93.0%

95.0%

97.0%

99.0%

Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-0798.599.099.5100.0100.5101.0101.5102.0102.5103.0103.5

Average rent (tsubo)Occupancy Rate

Change of Appraisal ValueChange of Appraisal ValuePerformance of Avg. Rent and occupancy rate (100=As of Sep.30, 2006)Performance of Avg. Rent and occupancy rate (100=As of Sep.30, 2006)


Branding Strategy: Re-branding of Office Properties under the Name of “Pacific Marks”Branding Strategy: Re-branding of Office Properties under the Name of “Pacific Marks”

Change to Pacific Marks BrandChange to Pacific Marks BrandChange to Pacific Marks Brand

Solidifies Competitiveness through Our Brand

“Pacific Marks”

Solidifies Competitiveness Solidifies Competitiveness through Our Brandthrough Our Brand

““Pacific MarksPacific Marks””

Changes 5 properties on April 2007,

8 properties on October 2007to “Pacific Marks”

Changes Changes 5 properties on April 2007,5 properties on April 2007,

8 properties on October 20078 properties on October 2007to to ““Pacific MarksPacific Marks””

Time

New Property Name Old Property Name

Office A-6 Pacific Marks Yokohama East Yokohama Twin Building

Office A-12 Pacific Marks Akasaka-mitsuke Nichijukin Akasaka Building

Office A-16 Pacific Marks Shin-Yokohama Shin-Yokohama Benex S-1

Office B-2 Pacific Marks Higobashi Higobashi TS Building

Office C-1 Pacific Marks Sapporo Kita-ichijo Sapporo Excellent Building

Office A-2 Pacific Marks Shinjuku ParkSide Korakuen Shinjuku Building

Office A-3 Pacific Marks Tsukiji Dai-ichi Tsukiji Building

Office A-10 Pacific Marks Shibuya-Koendoori Jinnan Flag Tower

Office A-11 Pacific Marks Nihonbashi-Tomizawacho Nissin Nihonbashi Building

Office A-22 Pacific Marks Shinkawa Shinkawa M Building

Office A-23 Pacific Marks Uchikanda Uchikanda Central Building

Office A-24 Pacific Marks Mejiro Mejiro Toyo Building

Office B-4 Pacific Marks Esaka Esaka Toyo Building

Changes to Pacific Marks BrandProperty NameProperty No.

2007/10/1

2007/4/1


Retail PortfolioDisposition

Acquisition

Internal growth lead to higher asset value

Internal Growth Strategy : Retail PortfolioInternal Growth Strategy : Retail Portfolio

By taking necessary measures to increase attraction of retail properties (e.g. introducing core tenants, event planning, effective MD investment), achieve internal growth which leads to higher rental incomeBy taking necessary measures to increase attraction of retail properties (e.g. introducing core tenants, event planning, effective MD investment), achieve internal growth which leads to higher rental income

Planning and organizing Planning and organizing eventsevents

Investment to increase Investment to increase attraction of retail propertiesattraction of retail properties

Core Tenant

Find and keep core tenantsFind and keep core tenants

Core Tenant

Sub Tenant

Mixture of tenantsMixture of tenants

MerchandizingMerchandizing

Sales of tenants increaseSales of tenants increaseSales of tenants increase

Rental income increasesRental income increasesRental income increases

More customersMore customersMore customers

Internal Growth of Retail Properties

Replacement

Improve portfolio quality


70.0%

80.0%

90.0%

100.0%

110.0%

Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07

Core Tenants

Total

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

160.0%

Sep-

06

Oct-

06

Nov-

06

Dec-

06

Jan-

07

Feb-

07

Mar-

07

Apr-

07

May-

07

Jun-

07

Jul-

07

Aug-

07

No. of Passengers (Y-o-Y)

94

96

98

100

102

104

106

108

110

112

Apr-Aug 2006 Apr-Aug 2007

Retail Property Example <Improving Performance of Mallage Kashiwa>Retail Property Example <Improving Performance of Mallage Kashiwa>

The total sales has been growing supported by increasing sales in core tenants. Tenant mixture change and efforts to expand market also contributed to the growth.The total sales has been growing supported by increasing sales iThe total sales has been growing supported by increasing sales in core tenants. n core tenants.

Tenant mixture change and efforts to expand market also contribuTenant mixture change and efforts to expand market also contributed to the growth.ted to the growth.

Suburban Multi-Tenant Retail PropertiesSuburban Multi-Tenant Retail PropertiesRetail B-2Retail B-2 Mallage KashiwaMallage Kashiwa Sales Comparison （3rd period/Y-o-Y）Sales Comparison Sales Comparison （（33rdrd period/Yperiod/Y--oo--YY））

Expansion of MarketExpansion of Market

Increasing customers from eastern areasIncreasing customers from eastern areas

Number of shuttle bus passengers to AbikoNumber of shuttle bus passengers to AbikoSales change in a section where tenants are replacedSales change in a section where tenants are replaced

Change of Tenant MixtureChange of Tenant Mixture

Effort to attract families customersEffort to attract families customers

Approx. 11% of sales increase in 3 section where tenants are replaced, compared to the sales of the previous year

Increased family customers（*）Apr-Aug 2006＝100


290,000

300,000

310,000

320,000

330,000

340,000

350,000

360,000

370,000

380,000

390,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 The extension aims at winning competition with new suburban shopping centers/malls and providing various types of shops which fulfill changing customer needs

Application of the building extension was made in August 2007 to comply with Large-Scale Retail Stores Location Law *

Total Floor Area （Before extension） 24,059.42sqm（After extension） 29,759.42sqmExtended 5,700sqm（+23.7%）

Retail Property Example <Extension Plan of Mallage Kashiwa>Retail Property Example <Extension Plan of Mallage Kashiwa>

The extension is designed to meet customer demands and increasecompetitiveness in Kashiwa city,

where retail business is expanding

The extension is designed to meet customer demands and increaseThe extension is designed to meet customer demands and increasecompetitiveness in Kashiwa city,competitiveness in Kashiwa city,

where retail business is expandingwhere retail business is expanding

Note: This image was drawn based on the design document. Actual building may not be exactly the same.

* Large-Scale Retail Stores Location Law requires making an application before construction. However, this application does not define any duty of building extension. This application was made under the name of the trustees, but actual construction will be made by another entity and the register’s name will be changed. The “total floor” is calculated following the definition of the Large-Scale Retail Stores Location Law.

Tsukuba Express opened(Aug. 2005)

Population in Kashiwa city has been growing. Especially in 2005, when Tsukuba Express started its operation, the population rose dramatically. （The population grew at the rate of 14.2% from 2004 to 2005.) Kashiwa area has high potential in retail business.

Population of Kashiwa city

Source: Kashiwa city data, census


Internal Growth Strategy : Major PropertiesInternal Growth Strategy : Major Properties

Office A-1：Hitachi High-Tech BuildingOffice A-1：Hitachi High-Tech Building Office A-3：Pacific Marks Tsukiji(*)Office A-3：Pacific Marks Tsukiji(*)

Retail A-1：Shinsaibashi OPA HonkanRetail A-1：Shinsaibashi OPA Honkan Retail A-2：Shinsaibashi OPA KireikanRetail A-2：Shinsaibashi OPA Kireikan

A/C system is being renovated tillMarch 2008Rent increase is being negotiated with tenants

A/C system is being renovated tillMarch 2008Rent increase is being negotiated with tenants

Tenant agreed to increase the rentRent revision contributed betterresult in the 4th period

Tenant agreed to increase the rentRent revision contributed betterresult in the 4th period

Proposed rent increase of OPA buildings uponcontract renewal of OPA Kireikan in August2007Rent increase is being negotiated with tenants

Proposed rent increase of OPA buildings uponcontract renewal of OPA Kireikan in August2007Rent increase is being negotiated with tenants

Office A-5：Pacific City Nishi-ShinjukuOffice A-5：Pacific City Nishi-ShinjukuOffice A-4：Pacific Square TsukishimaOffice A-4：Pacific Square Tsukishima

Replacement of tenants resulted in JPN 1.09 Bn of increasedappraisal value in the end of 3rd

period100% of occupancy in the end of 3rd period

Replacement of tenants resulted in JPN 1.09 Bn of increasedappraisal value in the end of 3rd


Office A-7：Business Court Shin-UrayasuOffice A-7：Business Court Shin-Urayasu Office B-1：Snow Crystal BuildingOffice B-1：Snow Crystal Building

Internal growth by tenant changeresulted in JPN 0.74 Bn of increasedappraisal value in the end of 3rd period100% of occupancy in the end of 3rd

period

Internal growth by tenant changeresulted in JPN 0.74 Bn of increasedappraisal value in the end of 3rd period100% of occupancy in the end of 3rd

period

Steady internal growth resulted in JPN 1.5 Bn of increased appraisal value inthe end of 3rd period100% of occupancy in the end of 3rd

period

Steady internal growth resulted in JPN 1.5 Bn of increased appraisal value inthe end of 3rd period100% of occupancy in the end of 3rd

period

(*) The property name was changed on 10/1/2007

Steady internal growth resultedin JPN 2.1 Bn of increasedappraisal value in the end of 3rd


Steady internal growth resultedin JPN 2.1 Bn of increasedappraisal value in the end of 3rd



185,000

190,000

195,000

200,000

205,000

210,000



periodJPY 207,871MM


periodJPY 207,871MM

Approx.JPY 16Bn

（JPY MM）

High Quality Portfolio


JPY 194,230MM


JPY 194,230MM

Appraisal value as of the end of 2nd fiscal

periodJPY 199,582MM

Appraisal value as of the end of 2nd fiscal

periodJPY 199,582MM

Approx.JPY 8Bn

Achieved JPY 16 Bn of increase in appraisal value of the initial portfolio since IPO

Achieved JPY 16 Bn of increase in appraisal value of the initialAchieved JPY 16 Bn of increase in appraisal value of the initial portfolio portfolio since IPO since IPO

The appraisal value of the properties has increased backed by recovering real estate market, especially in the three metropolitan areas, increasing land prices, good location of the properties and stable internal growth.Achieved JPY 16 Bn of increase in appraisal value (approx. 7% growth) of the initial 34 properties since IPO

Acquisition price upon listing JPY191,703 MMAcquisition price upon

listing JPY191,703 MM

Increase of appraisal value of the 34 initial propertiesIncrease of appraisal value of the 34 initial propertiesIncrease of appraisal value of the 34 initial properties

Result of Internal Growth ＜Portfolio Appraisal Value Increased＞Result of Internal Growth ＜Portfolio Appraisal Value Increased＞

Section 2Financial Strategy


Finance StrategyFinance Strategy

as of end of 2nd Period as of end of 3rd Period As of Sep. 30 , 2007

Syndication(Hedge against refinance risk and financing source diversification)

12 institutions3 Megabanks3 Trust banks1 Non-life insurance1 Regional bank3 Other banks1 Agricultural Bank

17 institutions3 Megabanks3 Trust banks2 Non-life insurance1 Major Life-insurance 4 Regional bank3 Other banks1 Agricultural Bank

74.9%

74.9%

R&I: ”A”Moody’s: “A3”

JPY 27Bn

24 institutions3 Megabanks3 Trust Banks3 Non-life Insurance1 Major Life-insurance 7 Regional Bank5 Other Banks2 Agricultural Bank

Long term ratio (1)(Hedge against refinance risk)

62.8% 86.2%

Fixed rate ratio (2)(Hedge against interest rate risk)

62.8% 86.6%

Issuers rating（Credit improvement）



Corporate bond（Diversified financing methods）

－ JPY 27Bn

* 1 Long term ratio = Long term debt / Total debt* 2 Fixed rate ratio = Fixed interest rate debt / Total debt

Increased Long term ratio and Fixed term ratio through refinancingIncreased Long term ratio and Fixed term ratio through refinancing


Promoting Long-term loan

Debt-bearing InterestDebt-bearing Interest2nd Period （End of Feb.）2nd Period （End of Feb.）

Latest date recorded (9/30/2007)Latest date recorded (9/30/2007)

Shift to fixed interest rate Increased number of lendersDecreased Spreads

*1 Interest-bearing debt ratio=(Total debt-deposits, guarantees, secured with retained earnings, etc.)÷(Total assets±[Difference between appraisal value and acquisition price] - Deposits,guarantees secured with retained earnings, etc.)*100

*2 Loan taken for interest rate cap purchase is also included in fixed liability*3 Interest-bearing Debt ratio is based on our firm's calculation while it is not officially authorized by tax auditor. *4 Concerning the term loan J, we contracts two interest rate swap transaction. Applied interest rate indicates weighted average interest rate after interest rate swap transaction.

Interest Payment due date

Spread Applied interest Risk hedge Duration ntil the payment due date

36,000 (37.2%) Floating 3M Tibor＋30bp 0.8364% － 2007/9/27 Short-term 0.58yr Total asset size （JPYMM） 201,83617,000 (17.6%) Floating 3M Tibor＋35bp 0.8864% Interest rate cap purchase 2008/9/29 Long-term 1.59yr Interest-bearing Debt Ratio (*1) 43.5%38,000 (39.3%) Floating 3M Tibor＋40bp 0.9364% Interest rate cap purchase 2009/9/28 Long-term 2.58yr D/E Ratio 62.8%

3,500 (3.6%) Floating 3M Tibor＋40bp 0.9364% Interest rate cap purchase 2009/9/28 Long-term 2.58yr Fixed liability to net worth ratio (*2 62.8%2,200 (2.3%) Floating 3M Tibor＋40bp 0.9682% Interest rate cap purchase 2009/9/28 Long-term 2.58yr Number of Lenders 12

96,700 0.8911% 1.66yr

Term Loan ATerm Loan BTerm Loan CTerm Loan DTerm Loan E

Loan Outstanding Loan（JPYMM）

Interest Payment due date

Spread Applied interest Risk hedge DurationTime until thepayment due

date17,000 (13.1%) Floating 3M Tibor＋35bp 1.1967% Interest rate cap purchase 2008/9/29 Long-term 1.00yr Total asset size （JPYMM） 231,43638,000 (29.2%) Floating 3M Tibor＋40bp 1.2467% Interest rate cap purchase 2009/9/28 Long-term 2.00yr Interest-bearing Debt Ratio (*1) 51.3%

3,500 (2.7%) Floating 3M Tibor＋40bp 1.2467% Interest rate cap purchase 2009/9/28 Long-term 2.00yr Long Term Debt Ratio 86.2%2,200 (1.7%) Floating 3M Tibor＋40bp 1.2467% Interest rate cap purchase 2009/9/28 Long-term 2.00yr Fixed liability to net worth ratio (*2 86.6%

Term Loan F-a 5,000 (3.8%) Floating 3M Tibor＋50bp 2.1900% Interest rate swap transaction 2012/3/30 Long-term 4.50yr Number of Lenders 24Term Loan F-b 2,000 (1.5%) Fixed 5Y Swap＋50bp 1.8700% － 2012/3/30 Long-term 4.50yrTerm Loan G 2,000 (1.5%) Fixed 5Y Swap＋55bp 2.2575% － 2012/6/26 Long-term 4.74yrTerm Loan H 1,000 (0.8%) Floating 3M Tibor＋30bp 1.1467% － 2008/9/27 Short-term 0.99yrTerm Loan I 16,500 (12.7%) Floating 3M Tibor＋32.5bp 1.1717% － 2009/3/27 Long-term 1.49yrTerm Loan J 13,000 (10.0%) Floating 3M Tibor＋40bp 1.6192% Interest rate swap transaction(*4) 2010/9/27 Long-term 2.99yrTerm Loan K 2,000 (1.5%) Fixed 4Y Swap＋49bp 1.8313% － 2011/9/27 Long-term 3.99yrTerm Loan L 1,000 (0.8%) Fixed 4Y Swap＋47bp 1.8175% － 2011/9/27 Long-term 3.99yr

Bond （First Round） 10,000 (7.7%) Fixed － 1.5200% － 2010/4/13 Long-term 2.54yrBond（Second Round） 17,000 (13.1%) Fixed － 1.9600% － 2012/4/13 Long-term 4.54yr

130,200 1.4559% 2.49yr

Term Loan E

Loan

Term Loan BTerm Loan CTerm Loan D

Outstanding Loan（JPYMM）

Appendix


Highlight of Third Period ResultsHighlight of Third Period Results

184 days

JPY7,674MM

JPY3,226MM

JPY3,225MM

JPY12,530

184 days

JPY7,511MM

JPY3,063MM

JPY3,063MM

JPY11,900

+ JPY163MM

+ JPY163MM

+ JPY162MM

+ JPY630

Actual 3rd Period(Mar.1, 2007–Aug.31, 2007)

Actual 3rd Period(Mar.1, 2007–Aug.31, 2007)

Forecastannounced onApr. 25, 2007


DifferenceDifference

Operating DaysOperating Days

Operating RevenueOperating Revenue

Ordinary IncomeOrdinary Income

Net IncomeNet Income

Dividend per UnitDividend per Unit

Increase rent and other operating revenue

Decrease repair cost

Decrease P-tax

Increase interest revenue

Major componentMajor component

Appendix


4th and 5th Period Estimate4th and 5th Period Estimate

Operating DaysOperating Days

Operating IncomeOperating Income

Ordinary IncomeOrdinary Income

Net IncomeNet Income

Dividend per UnitDividend per Unit

184 days182 days

JPY8,382MMJPY8,132MM



JPY11,700JPY11,000

Key factorsKey factors

▲JPY110MM

Increase interest expense with additional borrowing

4th Period：JPY680MM5th Period：JPY492MM

▲188MM

P-tax recorded as expensefor the period

4th Period（2007/9/1～2008/2/29）

4th Period（2007/9/1～2008/2/29）

5th Period（2008/3/1～2008/8/31）

5th Period（2008/3/1～2008/8/31）

▲JPY34MM

Increase depreciation with 2 new acquisition

182 days

JPY7,838MM

JPY2,703MM

JPY2,703MM

JPY10,500

+ JPY231MM

2 new acquisition


（2007/9/1～2008/2/29）


（2007/9/1～2008/2/29）

+JPY63MM

New lease / renewal contracts of properties owned as of end of 3rd period

+ JPY294MM

+ JPY128MM

+ JPY128MM

+ JPY500

DifferenceDifference

Above data covers the total of 42 assets that are currently in the portfolio as well as the assets that are officially decided to be acquired as of 2007/10/19Above data covers the total of 40 assets that were in the portfolio as well as the assets that were officially decided to be acquired as of 2007/4/25Future issuance of bonds is not taken into consideration （Total unit outstanding as of 8/31/2007 is 275,400)

AssumptionAssumption

Appendix


Breakdown of InvestorsBreakdown of Investors

Type of Investors, Number of Investment Units and Investors

Increased Foreign Investors

Foreign Corporations43.5%

Foreign Corporations49.9%

Banks6.1%

Banks4.1%

Trust Banks23.9%

Trust Banks23.2%

Insurance 1.5%

Insurance 3.3%Other FinancialInstitutions 2.9%

Other FinancialInstitutions 3.1%

OtherCorporations

7.9%

OtherCorporations

8.6%

Individuals11.7%

Individuals10.3%

0% 20% 40% 60% 80% 100%

3rd Period

2nd Period

Percentage Percentage Percentage Percentage

Foreign Corporations 128,482 49.9% 196 2.0% 111,938 43.5% 178 1.6%

Financial Institutions 80,132 31.1% 81 0.8% 90,852 35.3% 93 0.8%

Banks 10,615 4.1% 19 0.2% 15,668 6.1% 19 0.2%

Trust Banks 59,737 23.2% 7 0.1% 61,415 23.9% 8 0.1%

Insurance 3,764 1.5% 9 0.1% 8,451 3.3% 10 0.1%Other Financial Institution 6,016 2.3% 46 0.5% 5,318 2.1% 56 0.5%

Other Corporations 20,310 7.9% 210 2.2% 22,196 8.6% 255 2.2%

Securities Companies 1,980 0.8% 16 0.2% 2,188 0.9% 18 0.2%

Individuals 26,496 10.3% 9,189 94.8% 30,226 11.7% 10,825 95.2%

257,400 100.0% 9,692 100.0% 257,400 100.0% 11,369 100.0%Total

3rd Period 2nd Period

No. of Investment UnitsNo. of Investment Units No. of InvestorsNo. of Investors

Appendix


0Units

4,000Units

8,000Units

12,000Units

16,000Units

20,000Units

24,000Units

JPY400,000

JPY450,000

JPY500,000

JPY550,000

JPY600,000

JPY650,000

JPY700,000

Overview of IPO and investment unit price changes after IPOOverview of IPO and investment unit price changes after IPO

MA 5-day

IPO Price JPY470,000IPO Price JPY470,000

11/16/06Asset Acquisition of FLEG Jingumae (Retail A type)

11/29/06Asset Acquisitions of Pacific Marks Shinkawa (*1)Building (Office) and Pacific Marks Uchikanda (*1) (Office)

12/12/06,12/14/06Received Ratings

12/22/06Asset Acquisition of Pacific Marks Mejiro (*1) (Office)

4/13/07Issuing Corporate Bonds

4/17/07Asset Acquisition of Pacific Marks Esaka (*1) (Office)4/20/07Contract of acquisition of Kawasaki East One Building

（*) As of September 28, 2007

5/30/07Asset Acquisition of Kawasaki East One Building

Issue date Primary offering September 25, 2006Over-allotment October 24, 2006

Offering size Primary offering 245,000unitsOver-allotment 12,200units

Offer price JPY470,000Total offer amount JPY120,884MMNo. of investment units outstanding (*) 257,400unitsMarket capitalization (*) JPY128,443MM

26,407Units

(*1) Asset name were changed on 10/1/2007

Oct. 2006

Nov. 2006

Dec.2006

Apr. 2007

Feb. 2007

Mar. 2007

Sep.2006

May2007

Jun. 2007

Jan. 2007

Jul. 2007Aug.2007

Sep. 2007

Appendix


Area Asset Type Geographic Diversification Property No. Property Name LocationAcquisition

Price（JPY MM）

Allocation（％）

OfficeA-1 Hitachi High-Tech Building Tokyo-to Minato-ku 18,100 7.46%OfficeA-2 Pacific Marks Shinjuku ParkSide(*) Tokyo-to Shinjyuku-ku 15,100 6.22%OfficeA-3 Pacific Marks Tsukiji(*) Tokyo-to Chuo-ku 11,100 4.57%OfficeA-4 Pacific Square Tsukishima Tokyo-to Chuo-ku 8,080 3.33%OfficeA-5 Pacific City Nishi-Shinjuku Tokyo-to Shinjyuku-ku 7,680 3.16%OfficeA-6 Pacific Marks Yokohama East Kanagawa-ken Yokohama-shi 7,110 2.93%OfficeA-7 Business Court Shin-Urayasu Chiba-ken Urayasu-shi 4,700 1.94%OfficeA-8 Oomori City Building(*) Tokyo-to Ota-ku 3,920 1.61%OfficeA-9 Akasaka Hikawa Building Tokyo-to Minato-ku 3,385 1.39%

OfficeA-10 Pacific Marks Shibuya-Koendoori(*) Tokyo-to Shibuya-ku 3,050 1.26%OfficeA-11 Pacific Marks Nihonbashi-Tomizawacho(*) Tokyo-to Chuo-ku 2,550 1.05%OfficeA-12 Pacific Marks Akasaka-mitsuke Tokyo-to Minato-ku 2,450 1.01%OfficeA-13 Urban Square Yaesu Building Tokyo-to Chuo-ku 2,200 0.91%OfficeA-14 Pacific City Hamamatsucho Tokyo-to Minato-ku 1,730 0.71%OfficeA-15 Yokohama Aioicho Building Kanagawa-ken Yokohama-shi 1,710 0.70%OfficeA-16 Pacific Marks Shin-Yokohama Kanagawa-ken Yokohama-shi 1,700 0.70%OfficeA-17 Pearl Iidabashi Building Tokyo-to Chiyoda-ku 1,600 0.66%OfficeA-18 Gotanda Metallion Building Tokyo-to Shinagawa-ku 1,300 0.54%OfficeA-19 Iwamotocho 163 Building Tokyo-to Chiyoda-ku 1,130 0.47%OfficeA-20 Maruishi Shinbashi Building Tokyo-to Minato-ku 1,120 0.46%OfficeA-21 TS Hodogaya Building Kanagawa-ken Yokohama-shi 1,100 0.45%OfficeA-22 Pacific Marks Shinkawa(*) Tokyo-to Chuo-ku 3,540 1.46%OfficeA-2３ Pacific Marks Uchikanda(*) Tokyo-to Chiyoda-ku 2,060 0.85%OfficeA-24 Pacific Marks Mejiro(*) Tokyo-to Toyoshima-ku 2,008 0.83%OfficeA-25 Kawasaki East One Building Kanagawa-ken Kawasaki-shi 15,100 6.22%OfficeA-26 Towa Hamamatsucho Building Tokyo-to Minato-ku 7,000 2.88%OfficeA-27 Lila Hijirizaka Tokyo-to Minato-ku 4,300 1.77%OfficeB-1 Snow Crystal Building Osaka-fu Osaka-shi 8,950 3.69%OfficeB-2 Pacific Marks Higobashi Osaka-fu Osaka-shi 5,573 2.30%OfficeB-3 Nagoya-Nishiki City Building(*) Aichi-ken Nagoya-shi 5,180 2.13%OfficeB-4 Pacific Marks Esaka(*) Osaka-fu Suita-shi 14,500 5.97%OfficeC-1 Pacific Marks Sapporo Kita-ichijo Hokkaido Sapporo-shi 2,250 0.93%OfficeC-2 Shin-Sapporo Center Building Hokkaido Sapporo-shi 1,225 0.50%RetailA-1 Shinsaibashi OPA Honkan Osaka-fu Osaka-shi 31,800 13.10%RetailA-2 Shinsaibashi OPA Kireikan Osaka-fu Osaka-shi 3,500 1.44%RetailA-3 PACIFIQUE Tenjin Fukuoka-ken Fukuoka-shi 3,700 1.52%RetailA-4 Albore Tenjin Fukuoka-ken Fukuoka-shi 1,440 0.59%RetailA-5 Tenjin Yoshida Building Fukuoka-ken Fukuoka-shi 1,120 0.46%RetailA-6 FLEG Jingumae Tokyo-to Shibuya-ku 2,525 1.04%RetailB-1 Mallage Kashiwa Chiba-ken Kashiwa-shi 15,100 6.22%RetailB-2 Bellfa Uji Kyoto-fu Uji-shi 3,200 1.32%

Suburban Single-TenantRetail Properties RetailC-1 Ito-Yokado Owariasahi Aichi-ken Owari Asashi-shi 7,850 3.23%

－－ 242,736 100%

Osaka / Nagoya andSurrounding Areas

Retail Properties located inCentral Area

Central Area

Tokyo Metropolitan Area

Total

Other Major Cities

Suburban Multi-TenantRetail Properties

Office

Suburban Area

Retail

Portfolio List -As of October 31, 2007-Portfolio List -As of October 31, 2007-

(*) Asset names were changed on 10/1/2007

33 properties

Number of properties

9 properties

42 properties

OfficeOffice

RetailRetail

TotalTotal

Appendix


Less thanJPY3Bn

7.2%

JPY10Bnor above66.8%

JPY5Bn-JPY10Bn

11.2%

JPY3Bn-JPY5Bn14.8%

JPY3Bn-JPY5Bn13.3%

JPY5Bn-JPY10Bn

28.7%

Less thanJPY3Bn15.1%

JPY10Bnor above42.8%

10,000spm-30,000spm

45.3%

30,000spm-50,000spm

26.1%

50,000spmor above11.2%

Less than10,000spm

17.5%

3,000spm-10,000spm

33.0%

10,000spmor above57.6%

Less than3,000spm

9.4%

Diversified Portfolio (2): Size DiversificationDiversified Portfolio (2): Size Diversification

Most of the office and retail assets are over JPY50Bn

Competitive office/retail assets: Most of the office assets are over 3,000sqm while most

of the retail assets are over 10,000sqm

Most of the office and retail assets are over JPY50Bn

Competitive office/retail assets: Most of the office assets are over 3,000sqm while most

of the retail assets are over 10,000sqm

90.6%

3,000sqm or above

71.5% 78.0%

JPY5Bn or above

82.5%

10,000sqm or above

Size Diversification （Office）Size Diversification （Office） Size Diversification （Retail）Size Diversification （Retail）

Size Diversification （Office）＜GBA＞Size Diversification （Office）＜GBA＞ Size Diversification （Retail）＜GBA＞Size Diversification （Retail）＜GBA＞

JPY5Bn or above

* As of 10/31/2007Acquisition Price base

Appendix


Appraisal Value at the End of 3rd Period Appraisal Value at the End of 3rd Period

Change in appraisal value (End of 2nd Period → End of 3rd Period）


Set the acquisition price as the original (as of April 2006) appraisal valueAssets acquired at the time of IPO＝April 2006 Additionally acquired assets＝Within two months of the acquisition dateAppraisal is based on an independent Real Estate appraiser’s DCF evaluation

Set the acquisition price as the original (as of April 2006) appraisal valueAssets acquired at the time of IPO＝April 2006 Additionally acquired assets＝Within two months of the acquisition dateAppraisal is based on an independent Real Estate appraiser’s DCF evaluation

7,150

1,519

40

9,1898,709

480700

410

-6,000

-4,000

-2,000

0

2,000

4,000

6,000

8,000

10,000

Diff

eren

ce fr

om L

ast A

ppra

isal

Val

ue

Urb

an a

rea

of T

okyo

Urb

an a

reas

ofO

saka

/ N

agoy

a

Oth

er M

ajor

Citi

es

Offi

ce S

ub T

otal

Ret

ail P

rope

rties

loca

ted

in C

entra

l Are

a

Sub

urba

n M

ulti-

Tena

nt R

etai

l Pro

perti

es

Sub

urba

n Si

ngle

-Ten

ant R

etai

l Pro

perti

es

Ret

ail S

ub T

otal

Tota

l

(JPY MM)

5.5%

4.2%

1.1%

5.2%

3.8%

0.7%0.9%

0.0%

0.9%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

(C

hang

e in

App

rais

al V

alue

(End

of S

econ

d P

er.~

End

of T

hird

Per

.)

Urb

an a

rea

of T

okyo

Urb

an a

reas

ofO

saka

/ N

agoy

a

Oth

er M

ajor

Citi

es

Offi

ce S

ub T

otal

Ret

ail P

rope

rties

loca

ted

in C

entra

l Are

a

Sub

urba

n M

ulti-

Tena

nt R

etai

l Pro

perti

es

Sub

urba

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-Ten

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etai

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perti

es

Ret

ail S

ub T

otal

Tota

l



Appendix


Variation/ Fluctuation of Posted Land Price (Koji Land Price)Variation/ Fluctuation of Posted Land Price (Koji Land Price)

Large Increase of Posted Land Price for office buildings in metropolitan areasSame trend seen for the Commercial Properties in city centersLarge Increase of Posted Land Price for office buildings in metropolitan areasSame trend seen for the Commercial Properties in city centers

* The above charts were drawn based on the variation of posted land prices. Selection of appropriateland area was made on the basis that the properties were similar, in terms of location, to (1) thosewe possess or (2) those we are planning to obtain as of October 19, 2007.

Office PropertiesOffice Properties

5.8% 6.6%

19.1

%

1.1%

20.0

%

31.2

% 37.0

%

17.0

%

6.2%

21.4

%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2005-2006 2006-2007

Post

ed L

and

Pric

e C

hang

es v

ersu

s Pr

evio

us Y

ear

Urban area of Tokyo

Urban area of Osaka

Urban area Of Nagoya

Other Urban Area

Average

Retail PropertiesRetail Properties

15.2

%

31.2

%

1.2%

-2.4

%

-1.7

%

9.5%

-0.8

%

20.9

%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2005-2006 2006-2007

Post

ed L

and

Pric

e C

hang

es v

ersu

s Pr

evio

us Y

ear

Central Areas SuburbanMulti-tenant

SuburbanSingle-tenant

Average

Appendix


Population Inflow into Three large metropolitan areasPopulation Inflow into Three large metropolitan areas

Population Change in Metropolitan areasPopulation Change in Metropolitan areas

(Souurce)2007: The Ministry of Internal Affairs and Communications Population Estimates 1967： The Ministry of Internal Affairs and Communications Population Census

* Kanto large metropolitan area includes Tokyo, Kanagawa, Chiba, Saitama prefectures, Kansai large metropolitan area includes Kyoto, Osaka, Hyogo, Nara prefectures, Chukyo large metropolitan area includes Aichi, Gifu, Mie prefectures.

The Ministry of Internal Affairs and Communications announced over half of the population in Japan concentrate in The Three Large Metropolitan Area. (August 2007)The Ministry of Internal Affairs and Communications announced over half of the population in Japan concentrate in The Three Large Metropolitan Area. (August 2007)The Three Large Metropolitan Area. (August 2007)

19671967 Population of Japan 100,196 thousandsPopulation of Japan 100,196 thousands20072007 Population of Japan 127,053 thousandsPopulation of Japan 127,053 thousands

Kanto large metropolitan areaKanto large metropolitan area 22.15%22.15%

Kansai large metropolitan areaKansai large metropolitan area 14.35%14.35% Kansai large metropolitan areaKansai large metropolitan area 14.42%14.42%Chukyo large metropolitan areaChukyo large metropolitan area 8.74%8.74% Chukyo large metropolitan areaChukyo large metropolitan area 8.21%8.21%

Other metropolitan areasOther metropolitan areas49.99%49.99%

Other metropolitan areasOther metropolitan areas55.22%55.22%

Three largest metropolitan areas total50.01%

For 40 years, 18.6MM of population inflow into three major metropolitan areas

Kanto large metropolitan area Kanto large metropolitan area 26.92%26.92%

Appendix


21,161

19,310

17,954 19,40619,998

19,75419,844

20,858

21,61621,789

23,612

17,577

17,844

2.59

2.894.22

6.10

8.127.36

3.174.03

5.045.17

3.774.11

6.14

15,000

16,000

17,000

18,000

19,000

20,000

21,000

22,000

23,000

24,000

25,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20070.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0Av erage monthly rental rates f or new tenants (y en/tsubo)

Vacancy rate (%)

Av erage monthly rental rates f ornew tenants (y en/tsubo) Vacancy rate (%)

Office Market RecoveryOffice Market Recovery

Historical Vacancy RateHistorical Vacancy Rate

8.12％

10.39％

8.70％

2.59％

4.41％

6.14％

▲5.53％

▲5.98％

▲2.56％

Area of Tokyo (Tokyo business district)Area of Tokyo (Tokyo business district)

Area of Osaka (Osaka business district)Area of Osaka (Osaka business district)

Area of Nagoya (Nagoya business district)Area of Nagoya (Nagoya business district)

20032003 Aug. 2007Aug. 2007 ChangeChange

(Source) Based on information included in the ‘‘Office Building Market Research Report (October 2007)’’ of Miki Shoji. Miki Shoji was established in December 1965 and provides brokerage and consulting services for office buildings,warehouses and retail premises located in major cities throughout Japan.

(Note 1) Tokyo business district: Chiyoda ward, Chuo ward, Minato ward, Shinjuku ward, and Shibuya ward(Note 2) Osaka business district: Umeda, Minami Morimachi, Yodoyabashi/Honmachi, Senba, Shinsaibashi/Nanba, and Shin-Osaka areas(Note 3) Nagoya business district: the Nagoya Station and the Fushimi, Sakae and Marunouchi areas(Note 4) Numerical data provided through 2006 are based on information as of December 31, 2007 are based on information as of the end of September 2007.(Note 5) One tsubo, a measurement unit used in Japan, equals approximately 3.3 sqm.

Osaka and Nagoya Business District:Vacancy Rates and Average Monthly Rental Rates for New Tenants

Osaka and Nagoya Business District:Vacancy Rates and Average Monthly Rental Rates for New Tenants

11,60311,277

10,91811,27211,607

11,63111,693

10,86111,05411,08211,37711,478

11,069

13,64914,064

14,52614,832

15,32515,72316,002

16,318

13,185 12,78812,584

12,611 12,791

8 . 20

9 . 48

4 . 41

6.14

6.988.38

8.708.27

6.89

6.80

6.69

5.13

3.914.69

6.57

5.515 . 77

6 . 07

7 . 80

10 . 3910 . 55

9 . 239 . 34

9 . 86

5 . 49

7 . 45

9,000

10,000

11,000

12,000

13,000

14,000

15,000

16,000

17,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20070.0

2.0

4.0

6.0

8.0

10.0

12.0

Nagoya: Average rental rates for new tenants (yen/tsubo)

Osaka: Average rental rates for new tenants (yen/tsubo)

Nagoya: Vacancy rate (%)

Osaka: Vacancy rate (%)

Av erage monthly rental rates f or newtenants (y en/tsubo)

Vacancy rate （%）

Rapid recovery of office rent market is seen especially in the 3 largest metropolitan areas

Rapid recovery of office rent market is seen especially in the 3 largest metropolitan areas



(Source) Based on information in the “Office Building Market Research Report (July 2007)” of Miki Shoji

Appendix


DisclaimerDisclaimer

These materials do not constitute or form a part of a disclosure document or operational report required by or based on the Financial Instruments and Exchange Law of Japan, the Investment Trusts and Investment Corporations Law of Japan or Cabinet Office ordinance or regulations thereunder, Tokyo Stock Exchange listing regulations or other related rules and regulations.

These materials contain forward-looking statements. These statements are based on certain assumptions and judgments made on the basis of currently available information. Such statements may involve unknown risks and uncertainties, and may be affected by such risks, uncertainties, assumptions and other factors. Accordingly, these statements are not guarantees of performance, results of operations, financial conditions, etc., of Nippon Commercial Investment Corporation. Actual results may vary materially from future performance, results of operation, financial conditions, etc. that are expressed or implied by such forward-looking statements.

While every reasonable effort is undertaken to ensure the accuracy and reliability of the information contained in these materials, Nippon Commercial Investment Corporation and Pacific Commercial Investment Corporation makes no warranties or representations as to the accuracy, certainty, validity or fairness with respect to such information and the information is subject to revision or retraction without prior notice.

No information presented in these materials may be reproduced, distributed or otherwise used in any way without prior consent.

These materials, including summary notes, quotes, data and other information, are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products including our investment units.

Asset Manager: Pacific Commercial Investment CorporationFinancial Instruments Dealer, Kanto Financial Bureau (Kin-sho) No. 377

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