Nomura Real Estate Master Fund : (Reference) SUMMARY OF FINANCIAL RESULTS (REIT)

(Reference) SUMMARY OF FINANCIAL RESULTS (REIT)

For the 13th Fiscal Period Ended February 28, 2022

April 19, 2022

REIT securities issuer:	Nomura Real Estate Master Fund, Inc. ("NMF")	Tokyo Stock Exchange
Securities code:	3462
Representative:	Shuhei Yoshida, Executive Director
Asset Management Company:	Nomura Real Estate Asset Management Co., Ltd.
Representative:	Koki Miura, President and Chief Executive Officer
Inquiries:

Stock exchange listing:

URL:https://www.nre-mf.co.jp/en/Hiroshi Ishigooka, Head of NMF Investment Management GroupTEL: [phone]

Scheduled date of filing of securities report:	May 27, 2022
Scheduled date of commencement of distribution payout:	May 24, 2022
Preparation of supplementary materials on financial results:	Yes
Holding of briefing session on financial results:	Yes

[Amounts less than one million yen are truncated]

1. Financial Results for the 13th Fiscal Period (from September 1, 2021 to February 28, 2022)

(1) Operating Results

[figures are the rate of increase (decrease) compared with the previous period]

Operating revenues	Operating profit	Ordinary income	Net income
Period ended February 28, 2022 August 31, 2021	million yen 37,520 37,519	% 0.0 (1.4)	million yen 14,593 14,741	% (1.0) (4.1)	million yen 12,380 12,435	% (0.4) (4.7)	million yen 12,377 12,434	% (0.5) (4.5)

Net income per unit	Return on unitholders' equity	Ratio of ordinary income to total assets	Ratio of ordinary income to operating revenues
Period ended February 28, 2022 August 31, 2021	yen 2,625 2,637	% 2.0 2.0	% 1.0 1.0	% 33.0 33.1

(2) Distributions

Distribution per unit (excluding distribution in excess of net income)	Total distributions (excluding distribution in excess of net income)	Distribution in excess of net income per unit	Total distributions in excess of net income	Distribution per unit (including distribution in excess of net income)	Total distributions (including distribution in excess of net income)	Distribution payout ratio	Ratio of distributions to net assets
Period ended February 28, 2022 August 31, 2021	yen 2,625 2,637	million yen 12,377 12,433	yen 619 651	million yen 2,918 3,069	yen 3,244 3,288	million yen 15,296 15,503	% 99.9 99.9	% 2.0 2.0

(Note 1) Of the ¥651 distribution in excess of net income per unit in the fiscal period ended August 31, 2021, ¥387 is a distribution of the allowance for temporary difference adjustments and ¥264 is other distributions in excess of net income.Furthermore, the ratio of decreasing surplus is 0.003. Of the ¥619 distribution in excess of net income per unit in the fiscal period ended February 28, 2022, ¥444 is a distribution of the allowance for temporary difference adjustments and ¥175 is other distributions in excess of net income. Furthermore, the ratio of decreasing surplus is 0.002. (Note 2) Distribution Payout Ratio is calculated using the below formula and truncated at the first decimal place.

Distribution Payout Ratio = Total Distributions (excluding distribution in excess of Net Income) / Net Income × 100 (Note 3) Ratio of Distributions to Net Assets is calculated using the below formula and truncated at the first decimal place.

Ratio of Distributions to Net Assets = Distribution Per Unit (excluding distribution in excess of Net Income) / {(Net Assets per Unit at the beginning of the fiscal period + Net Assets per Unit at the end of the fiscal period) / 2} × 100

(3) Financial Position

Total assets	Net assets	Net assets to total assets	Net assets per unit
Period ended February 28, 2022 August 31, 2021	million yen 1,187,420 1,192,507	million yen 616,878 619,901	% 52.0 52.0	yen 130,827 131,468

(4) Status of Cash Flows

Net cash

provided by (used in)

operating activitiesNet cash provided by (used in) investing activities

Cash and cash equivalents at end of period

February 28, 2022 August 31, 2021

million yen 22,510 21,261

million yen (19,837)

million yen (15,547)

(6,251)

(15,739)

million yen 50,237 63,111

2. Earnings Forecasts for the 14th Fiscal Period (from March 1, 2022 to August 31, 2022) and the 15th Fiscal Period

(from September 1, 2022 to February 28, 2023)

[figures are the ratio of increase (decrease) compared with the previous period]Distribution per unit

Operating revenues

Operating profitOrdinary incomeNet income

(excluding distribution in excess of net income)

Distribution in excess of net income per unitDistribution per unit

(including distribution in excess of net income)

Period ending

496	3,296
557	3,289
*Other
(1) Changes in Accounting Policies, Changes in Accounting Estimates and Retrospective Restatements
① Changes in accounting policies accompanying amendments to accounting standards, etc.:	Yes
② Changes in accounting policies other than those in ① :	None
③ Changes in accounting estimates:	None
④ Retrospective restatements:	None

August 31, 2022 February 28, 2023

million yen 38,762 38,243

% 3.3 (1.3)mllion yen 15,467 15,069

% 6.0 (2.6)million yen 13,271 12,889

% 7.2 (2.9)million yen 13,220 12,888 (2.5)

% 6.8

yen 2,800 2,732

yen

yen

(Reference) Forecasted net income per unit

For the fiscal period ending August 31, 2022: ¥2,803

For the fiscal period ending February 28, 2023: ¥2,733

(Note) For details of ① , please refer to "Notes Concerning Changes in Accounting Policies" on page 23.

(2) Number of Investment Units Issued and Treasury Investment Units ① Number of investment units issued (including treasury investment units)

As of February 28, 2022:	4,715,200 units
As of August 31, 2021:	4,715,200 units
② Number of treasury investment units
As of February 28, 2022:	- units
As of August 31, 2021:	- units

(Note) For the number of investment units used as the basis for calculation of net income per unit, please refer to

"Notes on Per Unit Information" on page 32.

* This summary of financial results is not subject to audit procedures by a certified public accountant or an audit firm.

* Forward-looking statements

The earnings forecasts and other forward-looking statements contained in this document are based on information currently available to and certain assumptions deemed reasonable by NMF. Accordingly, actual earnings performance and other results may differ materially due to a variety of factors. Furthermore, such forward-looking statements do not constitute a guarantee of future distributions. For more information on the assumptions underlying forward-looking statements and the use of such statements, please refer to "Assumptions Underlying Earnings Forecasts for the Fiscal Period Ending August 31, 2022 (14th fiscal period: March 1, 2022 to August 31 2022) and the Fiscal Period Ending February 28, 2023 (15th fiscal period: September 1, 2022 to February 28 2023) " on page 8.

This is an English language translation of the original Japanese announcement of the financial statements ("Kessan Tanshin"). This translation is provided for information purpose only. Should there be any discrepancy between this translation and the Japanese original, the Japanese original shall prevail.

Attachment

Table of Contents

• 1. Management Status....................................................................... 2

  (1) Management Status...................................................................... 2

• 2. Financial Statements ..................................................................... 11

(1) Balance Sheet .......................................................................... 11

(2) Statement of Income and Retained Earnings .................................................. 14

(3) Statement of Changes in Net Assets ......................................................... 15

(4) Statement of Cash Distributions ............................................................ 19

(5) Statement of Cash Flows ................................................................. 21

(6) Notes Concerning the Going Concern Assumption ............................................. 22

(7) Notes Concerning Significant Accounting Policies .............................................. 22

(8) Notes Concerning Changes in Accounting Policies .............................................. 23

(9) Notes to Financial Statements ............................................................. 25

(10) Increase (Decrease) in Total Number of Investment Units Issued and Outstanding .................... 34

3. Reference Information ...................................................................... 36

(1) Investment Status ....................................................................... 36

(2) Investment Assets ...................................................................... 37

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Nomura Real Estate Master Fund, Inc. (3462)

Financial Results for the 13th Fiscal Period Ended February 28, 2022

1. Management Status

(1) Management Status ① Outline of Fiscal Period under Review

NMF's basic policy is to manage its assets mainly as investments in real estate, etc. (meaning the assets specified in the Ordinance for Enforcement of the Act on Investment Trusts and Investment Corporations (Prime Minister's Office Ordinance No. 129 of 2000, including subsequent amendments)), specifically real estate, leaseholds of real estate, surface rights, and the beneficial interests of trusts formed by entrustment of only these assets, to secure stable income over the medium to long term and steady growth of assets under management (Note). In order to realize this basic policy, NMF adopts an investment strategy that centers on the Greater Tokyo area (Tokyo, Kanagawa, Chiba and Saitama prefectures), which offers strong tenant demand, while also considering regional diversification through investment in all of Japan's three major metropolitan areas and other major cities. By combining the "diversified type strategy" which enables sustainable growth by investing in a variety of facilities, such as offices, retail facilities, logistics facilities, residential facilities and other facilities, the "large-scale REIT strategy" which increases portfolio stability through property and tenant diversification, the "portfolio centered on the Greater Tokyo area" which is expected to improve cash flow stability through investment area diversification, and a strong property supply and operation support system based on the "leasing value chain" with the Sponsor, Nomura Real Estate Development Co. Ltd. which is one of the group company of the Nomura Real Estate Group (Nomura Real Estate Holdings, Inc. and its consolidated subsidiaries etc. The same shall apply hereinafter.), NMF aims to increase unitholder value by securing stable income over the medium to long term and the steady growth of assets under management.

(Note)Throughout this document, "assets under management" refers to assets that belong to NMF.

Furthermore, "Real estate, etc." refers to assets defined in Article 29, Paragraph 1 (1) or (2) of NMF's Articles of Incorporation, and "real estate backed securities" refers to assets defined in Article 29, Paragraph 1 (3) of NMF's Articles of Incorporation ("Real estate, etc." and "real estate-backed securities" are hereinafter collectively referred to as "real estate-related assets"). Real estate and the underlying real estate of real estate-related assets are together referred to as the "real estate under management" or "properties."

A. Investment Environment

(Japanese Economy)

The Japanese economy during the fiscal period under review continued to recover, especially in manufacturing industries. However, downward pressure increased again for spending on some services such as restaurants and hotels while the difficult situation due to COVID-19 continued. Varied conditions were seen, depending on the industries.

(Real Estate Leasing Market)

As was the case in the previous fiscal period, the situation in the real estate leasing market during the fiscal period under review varied according to the sector.

Although the office sector had seen a rising vacancy rate in Tokyo since the second half of 2020 as office demand decreased due to the economic downturn and expansion of teleworking associated with COVID-19, the current vacancy rate has declined slightly. Meanwhile, new demand shows signs of recovery but remains limited compared to the pre-COVID-19 level, which has resulted in a continued decline in advertised rents. The vacancy rate increased in some regional cities but increases in vacancy rates and declines in advertised rents were generally moderate, due in part to low teleworking rates compared to Tokyo.

In the retail facility sector, business continued to be robust at retailers, especially supermarkets and drug stores. Meanwhile, sales remained weak particularly in the restaurant industry due to the spread of COVID-19 and the subsequent declaration of a state of emergency.

In the logistics sector, demand from providers of third-party logistics (3PL) (Note), NMF's main logistics tenants, and e-commerce-related operators continues to be robust. In the Greater Tokyo area, the vacancy rate rose slightly, despite strong demand, due to a large supply of logistics facilities. Meanwhile, the vacancy rate in the Kinki area remained low due to low supply.

(Note) Third-party logistics (3PL) refers to logistics services outsourced by shippers for part or all of their logistics functions.

In the rental apartment sector, the Tokyo metropolitan area maintains a high occupancy rate. However,

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Nomura Real Estate Master Fund, Inc. (3462)

Financial Results for the 13th Fiscal Period Ended February 28, 2022

demand for rental apartments, especially single type in the city center, continues to weaken, being impacted by more people moving out due to the expansion of teleworking and less people moving in due to changes in employment conditions. Meanwhile, with regard to demographic trends in Tokyo, an overall net outflow of people was recorded since July 2020, but a net inflow was recorded in January 2022, which has resulted in a recent modest recovery in demand for rental apartments.

The hotel sector was temporarily on a recovery trend as COVID-19 settled down but has been in a severe state again following the resurgence of infections.

(Real Estate Transaction Market)

The trading volume of commercial real estate in 2021 saw a slight increase year on year. Some companies sold properties as their financial performance deteriorated due to the COVID-19 pandemic or because they wanted to increase asset efficiency. Meanwhile, there continued to be large-scale acquisitions by overseas investors, real estate companies in Japan, J-REITs and private placement funds.

(J-REIT Market)

After having declined significantly due to the spread of COVID-19 in the first half of 2020, the TSE REIT

Index was on a recovery trend in line with the global monetary easing that was implemented and the economic recovery. However, overall downward pressure became strong with the rising U.S. interest rates and other factors in the fiscal period under review, which led to a decline in the index to 1,877.38 points as of February 28, 2022 from 2,142.91 points as of August 31, 2021.

B.

Management Performance

Under the circumstances described above in A. Investment Environment, during the fiscal period under review (13th fiscal period), NMF acquired 1 property (Landport Ome III) and disposed of 2 properties (NMF Utsunomiya Building and Sundai Azamino). As a result, at the end of the fiscal period under review (as of February 28, 2022), NMF held 298 properties (total acquisition price: ¥1,081,389 million), the ratio of investment in the Greater Tokyo area was 83.2%, the gross leasable area of the portfolio was 2,166,670.21m2 , and the portfolio remained highly diversified.

In terms of property and facility management, as described above in A. Investment Environment, the impact of the renewed spread of COVID-19 infections varies according to sector. Although NMF offered rent reduction/exemption (¥65 million) and other relief to support some of its retail tenants that closed or took other measures in response to the renewed spread of COVID-19 infections and the declaration of the second state of emergency, the impact on entire portfolio revenue was limited. Furthermore, the office sector and the rental apartment sector continued to see a rise in the vacancy rate and a decline in advertised rents in the market as a whole. In the meantime, NMF continued to manage the portfolio with an eye to securing stable revenues through internal growth with appropriate and flexible leasing activities based on market trends as well as rent increases upon renewal of contracts with tenants. As a result, the occupancy rate of the whole portfolio was 98.7% at the end of the fiscal period under review, up 0.6 points from the end of the previous fiscal period.

In February 2019, NMF set ESG materiality issues that are of high importance to be addressed by NMF in order to contribute to the realization of a sustainable society by resolving social issues through its business activities. Based on the policies, targets and key performance indicators (KPI) set for each materiality, NMF engages in investment in environmentally friendly properties while working to enhance the efficiency of its energy use by, for example, introducing eco-friendly and energy-saving countermeasures at its properties, striving for building a portfolio with low environmental impact. NMF promotes acquisition of Green certification (Note2) under such policy. As of the end of the fiscal period under review, NMF has acquired DBJ Green Building certification for a total of 75 properties and BELS certification for a total of 33 properties. As a result, the percentage of properties (Note3) with DBJ Green Building certification stood at 56.2 and that of BELS certification stood at 27.1.

Furthermore, as of the end of the fiscal period under review, the progress toward the newly established KPI, "Achieving 70 of green certification with three stars or more or equivalent up to fiscal year 2030", reached at 56.1(Note4).

In addition, based on the recommendations of the Task Force on Climate-related Financial Disclosure ("TCFD") for which Nomura Real Estate Asset Management Co., Ltd. ("NREAM"), the asset management

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