October,24, 2005 To All Concerned Parties Name of REIT Issuer: Nippon Building Fund, Inc. Sadafumi Abe, Executive Director Code Number: 8951 Person to Contact: Asset Management Company Nippon Building Fund Management, Ltd. Satoru Yamanaka, Chief Operating Officer TEL. 03-3281-8810 Notice of Acquisition of Assets (Additional Acquisition of Condominium Interests etc. in Nakameguro GT Tower) Nippon Building Fund, Inc. ( NBF ) hereby provides notice of its decision on September 27, 2005 to acquire assets as follows: Description 1 Outline of the AcquisitionAnticipated 1) Acquired Assets: Real Estate 2) Name of Acquired Assets: Nakameguro GT Tower ( the Property ) 3) Acquisition Price: (i) 5,600,000,000 (ii) 4,200,000,000 (provided, however, that miscellaneous acquisition costs, fixed assets tax, city-planning tax and consumption tax are not included in this amount) 4) Date of Acquisition Contract: September 27, 2005 5) Date of Transfer: September 27, 2005 6) Acquired From: (i) Shoutengaisaikaihatsu Co., Ltd. (ii) Joto Tochi Co., Ltd. (please refer to Section 4 hereinbelow for a description of the sellers) 7) Broker: Mitsui Fudosan Co., Ltd. 8) Acquisition Funds: Existing capital plus loans (anticipated) In connection with a part of the current acquisition, NBF will acquire certain co-ownership interests in the Property, then such interests will simultaneously be invested in Nakameguro GT Tower Co-owned Floors Kumiai and NBF will acquire the corresponding equity interests in such Kumiai. For more information, please refer to 3 Outline of Assets to be Acquired 10) Co-owned Floors Kumiai below.
2 Reason for Acquisition The acquisition is being undertaken with the intention of enhancing NBF s portfolio in the Tokyo central business districts (CBDs) in accordance with the asset management objectives and policies set forth in NBF s Articles of Incorporation. In deciding to acquire the Property, the following points were especially attractive. 1) Additional Acquisition As NBF already owns certain condominium interests in the Property (ratio of right to use land: 478,516/1,000,000; ratio of the registered exclusively owned area to the office building of the Property (= condominium interests): approx. 60.50%), the current additional acquisition will result in possession by NBF of condominium interests in the Property representing the ratio of right to use land of 720,886/1,000,000 and the ratio of the registered exclusively owned area to the office building of the Property (= condominium interests) of approximately 93.12%. Such acquisition is considered to be in line with NBF s policy of increasing the asset value and liquidity of the Property. 2) Location The Naka-Meguro district, where the Property is located, lies within the western part of the Tokyo central business districts (consisting of Shinjuku, Shibuya, Ebisu, Meguro, etc.), an area which has seen remarkable growth especially with respect to the demand for office space for use by service, IT-related, and foreign capital companies and is surrounded by the residential area known as uptown Tokyo (Yamanote). Small to mid-size office buildings have previously been built along Yamate Street, but following the construction of the Property as a landmark directly in front of the train station, the area has become even more dynamic and exciting. One of the most notable features of the Naka-Meguro district is its pedestrian-friendly nature, made possible by ground-level access from the intersection of Yamate and Komazawa Streets, and direct underground access via private railway and subway lines to Shibuya, Roppongi, Kasumigaseki and Hibiya. The Property is situated next to Naka-Meguro Station, which offers inter-connected use of the Hibiya line of the Tokyo Metro system and the Toyoko line of the Tokyu rail system. This excellent pedestrian network is highly appreciated by the tenants of the Property from a business standpoint. 3) Building and Facilities The Property is located on a 1.2 hectare sector, the development of which was completed in March, 2002 as a part of the Kami-Meguro 2-chome Class One Urban Redevelopment Project. The Property, a high-rise, very intelligent office building, is the centerpiece of this sector and draws together various urban residential buildings, commercial and cultural facilities as well as public facilities to create a multi-functional development. The building
has 25 above-ground floors, each with standard rental space of approximately 962 featuring horizontally flowing windows on three sides of each floor creating a very bright and spacious environment. The office space has a ceiling height of 2,650mm with a 100mm sub-floor cavity for connection of OA equipment. Each floor can be divided into a maximum of four zones, and air conditioning can be set and adjusted for each zone outside normal business hours. Electrical capacity is 50VA/. 3 Outline of Assets to be Acquired 1) Location 1-1, Kamimeguro 2-chome, Meguro-ku, Tokyo 2) Use Office 3) Type of Ownership and Equity (i) Land: ownership (ratio of right to use land (i) 138,415/1,000,000, (ii)103,955/1,000,000) (ii) Building: ownership The Property site includes an office building, residential building and building for shops, residences and public facilities. NBF will acquire (i) 100% interests in 4th, 11th, 12th & 13th floors, 680,181/1,000,000 of co-ownership interests in 5th floor and 16,241/1,000,000 of co-ownership interests in 6th & 7th floors, and (ii) 100% interests in 8th, 9th and 10th floors, 319,819/1,000,000 of co-ownership interests in 5th floor and 7,638/1,000,000 of co-ownership interests in 6th & 7th floors of the office building. 4) Square meters (i) Land: Total site area of the entire building: 6,971.15 (ii) Building: Total floor space of the entire building (including common areas): 56,171.33 5) Structure Above ground: 25 floors, below ground: 3 floors 6) Completion of Construction March 25, 2002 7) Valuation Valuation prepared by Tanizawa Sogo Appraisal Co., Ltd. Appraisal Value: (i) 4,610,000,000 (ii) 3,460,000,000 Date of Valuation: September 1, 2005 8) Earthquake PML 3.7% (obtained from the building condition investigation report prepared by Engineering & Risk Services Corporation)
9) Existence of Secured Interests (Liens) The existing secured interests will be entirely extinguished prior to the date of sale and purchase. 10) Co-owned Floors Kumiai The owners of co-ownership interests in the 6th and 7th floors of the Property have entered into a partnership agreement pursuant to which a partnership (kumiai) as defined in Article 667 of the Civil Code ( Nakameguro GT Tower Co-owned Floors Kumai, hereinafter referred to as the Co-owned Floors Kumiai ) was established for the purpose of integral management and operation of, and distribution of profits and expenses from, such co-owned floors. NBF will, in accordance with the rules of the Co-owned Floors Kumiai, invest such interests in the Co-owned Floors Kumiai after acquisition of co-ownership interests in the 6th and 7th floors of the Property as a part of the current acquisition. 11) Description of Tenants The tenant of the Property consists of a sole company: Mitsui Fudosan, Co., Ltd.; provided, however, that subject to the Unitary Management Agreement referred to in 12) below, the Property has been leased by NBF and the other owners of condominium interests to Mitsui Fudosan, Co., Ltd., which has sub-leased the same to its sub-lessees. The situation concerning such sub-lessees of the unitary management portion is as follows (as of September 27, 2005, based on materials received from Mitsui Fudosan, Co., Ltd.) (i) Total number of sub-lessees: Thirteen (13) (ii) Total Rentable Square Meters: 20,924.74 (of which NBF's current acquisition represents (i) 4,231.74 and (ii) 3,178.15 ) (iii) Total leased square meters: 20,924.74 (of which NBF's current acquisition represents (i) 4,231.74, (ii) 3,178.15 ) (iv) Occupancy Rate: 100 In addition to the abovesaid unitary management portion, NBF has leased a portion of stores in the 1st and 2nd below ground floors (leased square meters:, a part of whose equity is already owned by NBF, to Mitsui Fudosan, Co., Ltd., which has sub-leased the same to a sub-lessee. 12) Unitary Management Agreement For the management of a portion of the 4th through 25th floors of the Property (hereinafter, the Unitary Management Portion ), a Memorandum for Unitary Management has been entered into among the owners of condominium interests for the purposes of maintaining the Property in good condition as an asset and realizing mutual interests on a long-term basis. In accordance with the said Memorandum, rental
revenues accrued and rental expenses incurred will be shared by the owners of condominium interests in proportion to their respective operating rights in such unitary management. The portion of the Property to be acquired by NBF is included in the Unitary Management Portion, and NBF s operating rights in such unitary management are expected to be approximately (i) 20.22% and (ii) 15.19% corresponding to each equity acquired by NBF. 13) PCB (Polychlorinated Biphenyl) The Property stores PCB in its building in accordance with the Law concerning Special Measures for Proper Management of PCB Waste. Nakameguro GT Co., Ltd. is responsible for management of such PCB, not NBF. 4 Outline of Sellers 1) Shoutengaisaikaihatsu Co., Ltd. (i) Address: 8-10, Sendagaya 5-chome, Shibuya-ku, Tokyo (ii) Representative: Takuzo Hashimoto, Representative director (iii) Capital: 50,000,000 (as March 31, 2005) (iv) Principal Business: Real estate business (v) Relationship with NBF: None 2) Joto Tochi Co., Ltd. (i) Address: 8-10, Sendagaya 5-chome, Shibuya-ku, Tokyo (ii) Representative: Takuzo Hashimoto, Representative director (iii) Capital: 30,000,000 (as March 31, 2005) (iv) Principal Business: Real estate business (v) Relationship with NBF: None 5 Transactions with Interested Parties etc. 1) Building Lease Agreement A building lease agreement for the Property is expected to be entered into with Mitsui Fudosan, Co., Ltd. which is an interested party etc. of Nippon Building Fund Management Ltd. The term of such agreement will be until March 31, 2012, and termination will be prohibited prior to March 24, 2007. The rent received by NBF from Mitsui Fudosan Co., Ltd. under the said agreement will be in an amount equivalent to a certain percentage of sub-lease rents received by Mitsui Fudosan Co., Ltd. from such sub-lessees. Further, while Mitsui Fudosan, Co., Ltd. will retain custody of the advance deposits received from its sub-lessees and NBF will hold no deposits received from Mitsui Fudosan Co., Ltd., an amount equivalent to the income arising from the management of said deposits will be received by NBF once each year.
2) Entrustment Agreement of Administrative Services NBF will entrust to NBF Office Management Co., Ltd., which falls under the category of Interested Parties etc. of Nippon Building Fund Management Ltd., the administrative services respectively as an owner of the Property and as lessor to Mitsui Fudosan Co., Ltd. of the Property under the building lease agreement. Said entrustment agreement will remain in effect until the expiration of the building lease agreement. (No office management agreement for the Property is to be entered into between NBF and Mitsui Fudosan Co., Ltd.) 6 Acquisition Schedule September 27, 2005: Determination to make acquisition September 27, 2005: Execution of Sale and Purchase Agreement of Real Property September 27, 2005: Anticipated date of transfer 7 Forecasted Management Situation as at the close of December, 2005 There will be no change to the forecasted management situation during the period ending December 31, 2005 published as of September 22, 2005 as this acquisition will have little impact upon the management situation of NBF during such period. This English language notice is a translation of the Japanese language notice dated September 27, 2005 and was prepared solely for the convenience of, and reference by, overseas investors. NBF makes no warranties as to its accuracy or completeness. <Attached Materials> Reference Material 1 Estimated Revenues and Expenses from the Property Reference Material 2 Photo of the Exterior of the Property Reference Material 3 Summary of Portfolio after Acquisition of the Property
<Reference Material 1> Estimated Revenues and Expenses from the Property (in million yen) Revenues (including ancillary revenues) 651 Expenses (excluding depreciation) 188 public imposts and taxes 64 miscellaneous 124 expenses management entrustment 122 fees, costs of repair etc. insurance premiums 2 Property NOI (Net Operating Income) 463 Premises upon which Estimated Revenues and Expenses are based The above figures represent annualized revenues and expenses after exclusion of extraordinary factors for the year of acquisition (not the forecasted figures for the coming period), corresponding to the equity (total of (i) and (ii)) acquired by NBF. Revenues are premised on a basic annual occupancy rate of 100%.
<Reference Material 2> Photo of the Exterior of the Pr
<Reference Material 3> Summary of Portfolio after Acquisition of the Property Area Name of Building Book ValueYen in thousands Percentage JFE Bldg. Yamato Seimei Bldg.(Note 1) NBF Platinum Tower (Note 2) Shiba NBF Tower Nihonbashi Muromachi Center Bldg. Nakameguro GT Tower (Note 3) Shinjuku Mitsui Bldg. No.2 GSK Bldg. NBF Toranomon Bldg. Kowa Nishi-Shinbashi Bldg. B Nippon Steel Bldg. No.2 NBF Alliance Yotsuya Medical Bldg. Shibuya Garden Front NBF Shiba Koen Bldg. NBF Takanawa Bldg. Akasaka Sanno Square Toranomon Kotohira Tower Sumitomo Densetsu Bldg. NBF Higashi-Ginza Square NBF Ogawamachi Bldg.(Note 4) NBF Ikebukuro Tower NBF Ikebukuro City Bldg. NBF Sudacho Verde Bldg. Nishi-Shinjuku Mitsui Bldg. NBF Ebisu Minami Bldg. IST Bldg. Nakanosakaue Sunbright Twin Yokohama ST Bldg. NBF Atsugi Bldg. Tsukuba Mitsui Bldg. NBF Utsunomiya Bldg. S-ino Omiya North Wing Daido Life Omiya Bldg. NBF Urawa Bldg.(Note 4) NBF Matsudo Bldg. Sapporo L-Plaza (Note 5) NBF Sapporo Minami Nijo Bldg. NBF Sendai Honcho Bldg. NBF Unix Bldg. NBF Niigata Telecom Bldg. NBF Nagoya Hirokoji Bldg. Aqua Dojima NBF Tower Sun Mullion NBF Tower Sakaisuji-Honmachi Center Bldg. NBF Sakai-Higashi Bldg. NBF Tanimachi Bldg. Aqua Dojima East Otemae Center Bldg. NBF Shijo Karasuma Bldg. NBF Hiroshima Tatemachi Bldg. Hiroshima Fukuromachi Bldg. NBF Hakata Gion Bldg. Percenta ge of each area The Book Value figures in the above table are in principle the appraisal value disclosed as of the end of June 2005 (the appraisal value of real estate with date of valuation being June, 2005); provided, however, that for properties acquired (or to be acquired) after July 2005, prices are acquisition prices (excluding miscellaneous acquisition costs, fixed assets tax, city-planning tax and consumption tax) as stated in respective sale and purchase contracts as of the dates of the decision to acquire such properties. (Note 1) Expected to be acquired on October 20, 2005. (Note 2) Expected to be acquired on March 31, 2006; provided, however, that in the event that profitability is improved as the result of tenants attracted by the seller, the price may be increased to a maximum of 31,000,000,000 by the transfer date in accordance with certain rules. (Note 3) The book value of Nakameguro TG Tower represents the total price of the already owned portion ( 14,800,000,000) and the current additional acquisition ( 9,800,000,000). (Note 4) Expected to be acquired on September 30, 2005. (Note 5) Expected to be acquired on October 5, 2005; provided, however, that the book value of Sapporo L-Plaza represents the total price of the already owned portion ( 3,560,000,000) and the additional acquisition ( 970,000,000) published concurrently with the current additional acquisition of Nakameguro GT Tower.