Nomura Real Estate Master Fund : Notice Concerning Property Acquisition

[For Translation Purposes Only]

September 23, 2020

For Immediate Release

To Whom It May Concern

Nomura Real Estate Master Fund, Inc.

Securities Code: 3462

Shuhei Yoshida, Executive Director

Asset Management Company:

Nomura Real Estate Asset Management Co., Ltd.

Koki Miura, President & Chief Executive Officer

Inquiries:

Hiroshi Ishigooka

Executive Officer

Head of NMF Investment Management Group

TEL [phone]

Notice Concerning Property Acquisition

Nomura Real Estate Master Fund, Inc. ("NMF" or the "Fund") announces the decision made today by Nomura Real Estate Asset Management Co., Ltd., a licensed asset management company retained by the Fund to provide asset management services, to acquire a property (the "Acquisition"), as described below.

1. Overview of the Acquisitions

					Anticipated
		Date of	Scheduled		Acquisition
Property Name	Use	Purchase and	Date of	Seller	Price
		Sale Agreement	Acquisition		(¥ million)
					(Note 1)
				Nomura Real
Landport Ome II	Logistics	September 23,	October 1,	Estate	14,620
2020	2020	Development,
				Co., Ltd.

(Note 1) The amounts stated exclude acquisition-related costs, property tax, city planning tax, consumption tax and local consumption tax.

(Note 2) There is no brokerage involved in the acquisition of the assets to be acquired.

The above property is referred to hereinafter as the "Asset to be Acquired."

2. Reasons for the Acquisition

The Fund determined that acquiring the Asset to be Acquired would help secure stable income and steady growth of the Fund's portfolio over the medium to long term, in line with the asset management objectives and policies specified in the Fund's Articles of Incorporation.

The main strengths of the Asset to be Acquired are as follows.

• The Asset to be Acquired is in a favorable location allowing for wide-area delivery to the entire Tokyo metropolitan area as it is located approximately 2.4 km from the Ome Interchange on the Ken-O Expressway and close to National Route 16.
• The Asset to be Acquired is located in the Nishi-Tokyo Industrial Park, which is a 10-minute walk from Ozaku Station on the JR Ome Line, the nearest station, so it can operate 24 hours a day, 365 days a year and allows
• • 1 -

tenants to maintain a favorable employment environment.

• The Asset to be Acquired is a three-storyslope facility where cars can park at two berths (Note1) on the north and south sides of the first floor and a berth on the second floor. The interior of the building is equipped with two freight elevators and five vertical conveyors. The building also offers improved rack storage efficiency (Note1) by adopting a 10.5 m × 10.5 m grid (Note1) and a beam effective height of 6.5 m, and is environmentally friendly by adopting LED lighting in the whole building. In addition to the versatile specifications that ensure high operational efficiency, the building is a logistics facility that pursues optimization and efficiency by adopting a category-widemulti-function(Note2) that adds functions specific to the target tenant's industry needs.

(Note 1) A "berth" is a space where cargo trucks can stop for loading and unloading, a "grid" is a lattice-shaped space formed by pillars and joints, and "rack storage efficiency" refers to the storage efficiency of a rack.

(Note 2) A "category-widemulti-function" refers to a logistics facility which identifies the industry (category) of the target tenant and adds functions specific to the category as standard specifications in the general specifications.

3. Summary of the Assets to be Acquired

Property Name	Landport Ome II
Type of Asset	Real estate
Location			Registry	2-9-13,Suehiro-cho, Ome City, Tokyo
(Note 1)
		Street	2-9-13,Suehiro-cho, Ome City, Tokyo(Note 2)
Access		2.4 km from the Ome Interchange on the Ken-O Expressway
	10-minute walk from Ozaku Station on the JR Ome Line
Completion Date (Note 1)	February 20, 2020
Use (Note 1)	Warehouse
Structure (Note 1)	RC, Alloy plating copper roofing 3F
Architect	The Zenitaka Corporation, Class 1 Architect Office
Builder		The Zenitaka Corporation
Building Inspection Agency	Japan Constructive Inspect Association
Area (Note 1)		Land	40,826.67 m2
Floor Area	63,879.98 m2
Type of		Land	Ownership
Ownership		Building	Ownership
Building Coverage Ratio	70% (Note 3)
Floor Area Ratio	200%
Collateral	None
Property Management	Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Partners Co., Ltd.
Company (Note 4)
Master Leasing Company	－
Type of Master Leasing	－
Seismic Risk (PML)(Note 5)	3.06% (Based on the Earthquake PML Appraisal Report as of August 2020 by
Sompo Risk Management Inc.)
				・The property management companies, Nomura Real Estate Development Co.,
				Ltd. and Nomura Real Estate Partners, Co., Ltd., are each considered a related
				party under the Act on Investment Trusts and Investment Corporations
Notes		("Investment Trust Act").
				・A part of the land of the Asset to be Acquired is the servient land for the easement
				of entering the land for the purpose of the installation and maintenance of electric
				cables.
Anticipated	¥14,620 million
Acquisition Price
Appraisal Value and Method	¥15,100 million (Based on the capitalization approach as of September 1, 2020)
(Appraiser: Japan Valuers Co., Ltd.)
Appraisal NOI (Note 6)	¥672 million
				- 2 -

Leasing Status (As of September 23, 2020) (Note 7)

Total Number of Tenants

1

Name of Tenants

Not disclosed

Total Rental

Not disclosed

Income(Annual)

Security Deposits

Not disclosed

Occupancy Rate

100.0%

Total Leased Floor Space

63,748.85 m2

Total Leasable Floor Space

63,748.85 m2

Historical Occupancy Rates

August

August

August

August

August

2016

2017

2018

2019

2020

(Note 8)

-

-

-

-

100.0%

(Note 1) Location and Other Items

Location (registry), Completion Date, Use, Structure and Area are based on the information in the real estate registry.

(Note 2)

Street Address

As the Street Address is not indicated officially, the building location in the real estate registry is noted.

(Note 3) Building Coverage Ratio

The Asset to be Acquired is located in an industrial zone where the building coverage ratio is 60% in principle. Because

the Asset to be Acquired is in a corner lot, however, the applied coverage ratio is 70%.

(Note 4) Property Management Company

Refers to the property management company that is scheduled to be appointed after acquisition.

(Note 5) PML (Probable Maximum Loss)

PML shows the probable losses which would be caused by a maximum size earthquake (a great earthquake which is

expected to occur once every 475 years, or with 10% probability of once every 50 years) during the anticipated period

of use (i.e. 50 years as expected life time of a standard building), as a percentage of the expected recovery cost to the

replacement cost.

(Note 6)

Appraisal NOI

"Appraisal NOI" is the annual NOI (operating income - operating expenses) described in the real estate appraisal report

with September 1, 2020 as the appraisal date.

(Note 7)

Leasing Status

"Total Number of Tenants" is the total number of end tenant actually leasing space in the building of the Asset to be

Acquired as of today.

"Name of Tenants", "Total Rental Income (annual)" and "Security Deposits" are not disclosed because consent of the

end tenant to such disclosure has not been obtained.

"Occupancy Rate" is calculated by dividing Total Leased Floor Space as of today by Total Leasable Floor Space.

"Total Leased Floor Space" indicates the total floor space leased to end tenants as of today.

"Total Leasable Floor Space" is the total floor space of

offices, retail facilities, logistics facilities, residential facilities,

hotels, etc. within the Asset to be Acquired that can be leased as of today (If the common area, etc. is leased, the floor

space thereof is included).

(Note 8) Historical Occupancy Rates

There are no applicable occupancy rates for the end of August 2020 and before because the building was not yet

completed. The historical occupancy rates are based on the information from the seller.

4. Profile of Seller of the Assets to be Acquired

Company Name

Nomura Real Estate Development Co., Ltd.

Head Office

1-26-2Nishi-Shinjuku,Shinjuku-ku, Tokyo

Representative

Seiichi Miyajima, President & CEO

Principal Business

Real Estate

Capital

¥2,000 million (as of April 1, 2020)

Established

April 15, 1957

Net Assets

¥184.5 billion (as of March 31, 2020)

Total Assets

¥1,298.0 billion (as of March 31, 2020)

Major Shareholder

Nomura Real Estate Holdings, Inc. (100.0%) (as of March 31, 2020)

(Shareholding Ratio)

Relationships with the Fund and/or the Asset Management Company and the Seller

Capital

Nomura Real Estate Development Co., Ltd. holds 4.47% of the Fund's investment

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		units (as of February 29, 2020). As a wholly owned subsidiary of Nomura Real
		Estate Holdings, Inc., which also holds 100% interests in the shares of the Asset
		Management Company, Nomura Real Estate Development Co., Ltd. is a related party
		of the Asset Management Company as defined in the Investment Trust Act.
	Personal	The Asset Management Company's employees and officers are seconded from
	Nomura Real Estate Development Co., Ltd.
		Nomura Real Estate Development Co., Ltd. is a property management company of
	Transactions	the Fund and a lessee of real estate properties owned by the Fund. Moreover, the
	Asset Management Company has entered into an agreement on provision of
		information and a basic agreement on the leasing value chain with the said company.
		Nomura Real Estate Development Co., Ltd. does not fall under the definition of a
	Related Party	related party of the Fund for the accounting purpose. However, the said company is
	Status	a related party of the Asset Management Company as it is a subsidiary of a common
		parent company, as stated above.

5. Status of Owner of the Assets to be Acquired

	Status of Owner	Current Owner and/or Trustee	Previous Owner and/or Trustee
	Company Name	Nomura Real Estate Development	-
		Co., Ltd.
	Relationship with Parties	Please refer to "4. Profile of Seller
	with Special Interest	of the Assets to be Acquired"	-
		above
	Background/Reasons for	For development for later sale	-
	Acquisition, etc.
	Acquisition Price
	(Including Other Related	- (Note)	-
	Expenses)
	Acquisition Date	-	-

(Note) Omitted because, for the land, the current owner owned for more than one year, and, for the building, there is no previous owner.

6. Transactions with Related Parties

1. Transactions related to the acquisition of the Assets to be Acquired
   The acquisition of the Assets to be Acquired is considered to fall under transactions with a related party under the Investment Trust Act as stated above. Accordingly, the acquisitions of each property, the acquisition prices, and other relevant terms have been duly examined and authorized by the Asset Management Company's compliance committee and investment committee pursuant to its investment committee rules, rules of compliance, compliance manual, rules concerning transactions with related parties, and other relevant internal rules and guidelines.
2. The property management of Landport Ome II
   The property management companies of Landport Ome II, Nomura Real Estate Development Co., Ltd. and Nomura Real Estate Partners Co., Ltd., are each considered to fall under a related party under the Investment Trust Act as stated above. Accordingly, the fees and other terms of the consignment of property management related to Landport Ome II have been duly examined and authorized by the Asset Management Company's compliance committee and investment committee pursuant to its investment committee rules, rules of compliance, compliance manual, rules concerning transactions with related parties, and other relevant internal rules and guidelines.

Since none of the transactions described in (1) and (2) above falls under the category of transactions

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between the Fund and a related party of an asset management company as set forth in Article 201-2, Paragraph 1 of the Investment Trust Act, the approval of the Board of Directors of the Fund has not been obtained.

7. Form of Payment, etc.

The Fund will complete settlement by a lump-sum payment on the date of acquisition by paying the agreed price for the property in full to the seller using cash on hand.

8. Schedule for the Acquisition

September 23, 2020 Conclusion of purchase and sale agreements for the Asset to be Acquired

October 1, 2020

Acquisition of Landport Ome II (delivery of real estate)

9. Outlook

The impact of the Acquisition on the NMF's forecast of the financial results for the fiscal period ending February 28, 2021 (September 1, 2020 to February 28, 2021) is assumed to be insignificant. Therefore, NMF will announce the forecasts of financial results for the fiscal period ending February 28, 2021 (September 1, 2020 to February 28, 2021) in which the impact of the Acquisition incorporated, taking the operating status of the entire portfolio into consideration, at the time of the announcement of the summary of financial results for the 10th fiscal period ended August 31, 2020 scheduled for October 14, 2020.

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10. Appraisal Summary

	Property Name					Landport Ome II
	Appraisal Value					¥15,100,000,000
	Appraiser						Japan Valuers Co., ltd.
	Appraisal Date					September 1, 2020
										(Yen)
				Item				Amount or	Grounds
							Percentage
										Calculated taking into account income-based values
Capitalization Approach Price			15,100,000,000	determined using both the direct capitalization
										approach and the discounted cash flow approach.
	Price Calculated by the Direct		Calculated by reducing the expected level of stable net
	Capitalization Approach				15,700,000,000	revenue over the medium to long term by the
										capitalization rate.
		(1) Operating Income (a)-(b)		Undisclosed
				(a) Gross Rental Income	Undisclosed
				(b)	Losses	due	to	Undisclosed
				Vacancies, etc.
		(2) Operating Expenses		Undisclosed
				Maintenance Costs		Undisclosed
				Utilities Costs			Undisclosed
				Repair Costs			Undisclosed
										(Note)
				Property	Management	Undisclosed
				Fees
				Advertisement	for	Undisclosed
				Leasing Costs, etc.
				Taxes				Undisclosed
				Insurance Premium		Undisclosed
				Other Expenses		Undisclosed
		(3)	Net	Operating	Income
		from	Leasing		Business	672,951,600
		(NOI=(1)-(2))
		(4) Profit through Management	Undisclosed
		of Temporary Deposits, etc.
				(Note)
		(5)		Capital	Expenditure	Undisclosed
		Reserve
		(6) Net Cash Flow (NCF	=	675,797,307
		(3)+(4)-(5))
										Calculated by considering the yield of surrounding
		(7) Capitalization Rate			4.3%	property transactions, with reference to the
				characteristics of the area surrounding the property
										and the property's particular characteristics.
	Price Calculated by the Discounted	14,900,000,000
	Cash Flow Approach
		Discount Rate				4.1%	Calculated based on a comprehensive consideration
									of such factors as the yield on investment in similar
										properties and the property's specific characteristics.

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		Terminal Capitalization Rate			Calculated based on a comprehensive consideration of
								such factors as the yield on investment in similar
							4.5%	buildings, the probable future movement of the yield
							on investment, risks of the property as an investment,
								general forecasts of the economic growth rate and
								price trends in real estate and rents.
Cost Approach Price			17,100,000,000
		Ratio of Land			63.9%
		Ratio of Building		36.1%
					The neighborhood area is an industrial area with large-scale factories for metals, machinery
					and other products, as well as large-scale logistics facilities. Its local characteristics of
Matters	Noted	in		having excellent connection and accessibility to the central Tokyo and the Saitama and
Reconciliation	of		Chiba areas constitute factors that greatly contribute to demonstrating the utility of using
	land as an industrial park.
Indicated	Value	and
	Under such locational conditions, the Building is a recently constructed logistics facility with
Determination	of		high versatility and functionality. This facility is capable of meeting the locational needs of
	logistics bases in a	variety of industries, and can be judged as being capable of stable
Appraisal Value
		operation over the medium to long term. In consideration of the above, the appraisal value
					was determined with an emphasis on the value indicated by income capitalization, which
					appropriately reflects the profit value of investment.

(Note) These items contain information for which the Fund owes a duty of confidentiality to the lessees or information that could be used to calculate such information. The disclosure of these items could result in a breach of said duty of confidentiality, which could negatively impact the Fund and thus the interests of its unitholders. Accordingly, these items are undisclosed.

Exhibits

Exhibit 1 Overview of the Portfolio after the Acquisition

Exhibit 2 Photos and Maps of the Asset to be Acquired

*Nomura Real Estate Master Fund, Inc.'s website: https://www.nre-mf.co.jp/en/

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				Exhibit 1
	Overview of the Portfolio after the Acquisitions
				(¥ million)
Area	Greater Tokyo		(Anticipated) Total	Investment Ratio
Other Areas	Acquisition Price
Sector	Area (Note 1)	(%) (Note 2)
	(by Sector)
Office	401,655	71,930	473,585	44.4
Retail	111,626	66,716	178,342	16.7
Logistics	197,722	3,460	201,182	18.9
Residential	168,719	33,328	202,047	18.9
Hotels	―	6,250	6,250	0.6
Others	4,900	―	4,900	0.5
(Anticipated)
Total Acquisition Price	884,622	181,684	1,066,306	100.0
(by Area)

Investment Ratio (%)	83.0	17.0	100.0
(Note 2)

(Note 1) "Greater Tokyo Area" refers to Tokyo Prefecture, Kanagawa Prefecture, Chiba Prefecture and Saitama Prefecture. "Other Areas" refers to cabinet-order designated cities, prefectural capitals, and cities having a population of at least 100,000 and their peripheral areas, excluding those in Greater Tokyo Area.

(Note 2) "Investment Ratio" indicates the ratio of the (anticipated) total acquisition price of properties for each use or in each area to the (anticipated) total acquisition price of the entire portfolio. As the figures are rounded to the first decimal place, they may not add up to exactly 100%.

Exhibit 2

Photos and Access Map of the Assets to be Acquired

Landport Ome II