TEXT-S&P afms 'A/A-1' rtgs on Nomura Real Estate Residential Fund

(The following statement was released by the rating agency)

Sept 11 -

OVERVIEW

-- NRF is a Japanese REIT specializing in residential properties.

-- NRF's portfolio has sound occupancy rates and small fluctuations in rents, and generates stable cash flows.

-- We expect NRF to continue to generate steady cash flows, given its well-diversified real estate portfolio.

-- We have affirmed our 'A' long-term corporate credit and unsecured debt ratings and our 'A-1' short-term credit ratings on NRF. The outlook remains stable.

Standard & Poor's Ratings Services today said that it has affirmed its 'A' long-term corporate credit and unsecured debt ratings and its 'A-1' short-term credit ratings on Nomura Real Estate Residential Fund Inc.(NRF). The outlook on the long-term corporate credit ratings remains stable.

NRF is a Japanese REIT (J-REIT) that specializes in residential properties. The ratings on NRF reflect its relatively strong business position in the J-REIT market, supported by the real estate management and development capabilities and brand recognition of its sponsor, Nomura Real Estate Holdings Inc. (not rated). We also consider NRF's well-diversified real estate portfolio, which mainly comprises residential properties with small rent fluctuations and generates stable cash flows, as a positive factor for its credit quality. On the other hand, NRF's high debt-to-capital ratio, its somewhat low interest coverage ratios and profitability measures, and a degree of unrealized losses in its portfolio constrain the ratings.