To unitholders in the United States:

This exchange offer or business combination is made for the securities of a foreign
investment corporation. The offer is subject to disclosure requirements of a foreign country
that are different from those of the United States. Financial statements included in the
document, if any, have been prepared in accordance with foreign accounting standards that
may not be comparable to the financial statements of United States companies.

It may be difficult for you to enforce your rights and any claim you may have arising under
the federal securities laws, since the issuer is located in a foreign country, and some or all of
its officers may be residents of a foreign country. You may not be able to sue a foreign
investment corporation or its officers in a foreign court for violations of the U.S. securities
laws. It may be difficult to compel a foreign investment corporation and its affiliates tosubject themselves to a U.S. court’s judgment.

You should be aware that the issuer may purchase securities otherwise than under theexchange offer, such as in open market or privately negotiated purchases.

1[For Translation Purposes Only]
May 27, 2015

For Immediate Release
To Whom It May Concern
Nomura Real Estate Master Fund, Inc.
Securities Code: 3285
Satoshi Yanagita, Executive Director
Nomura Real Estate Office Fund, Inc.
Securities Code: 8959
Yoshiyuki Ito, Executive Director
Nomura Real Estate Residential Fund, Inc.
Securities Code: 3240
Shozo Matsumura, Executive Director
Asset Management Company:
Nomura Real Estate Asset Management Co., Ltd.
Norio Ambe, President & Chief Executive Officer
Inquiries:
Motomi Uki
General Manager, NMF Investment Management
Director
TEL. +81-3-3365-8767 nmf3285@nomura-re.co.jp
Shoji Yoshihara
General Manager, NOF Investment Management
Director
TEL. +81-3-3365-0507 nreof8959@nomura-re.co.jp
Tetsuya Ohira
General Manager, NRF Investment Management
TEL. +81-3-3365-7729 nrf3240@nomura-re.co.jp

Notice Concerning Execution of Merger Agreementby and among Nomura Real Estate Master Fund, Inc., Nomura Real Estate Office Fund, Inc.
and Nomura Real Estate Residential Fund, Inc.
We hereby announce that Nomura Real Estate Master Fund, Inc. (“NMF”), Nomura Real Estate Office Fund, Inc.
(“NOF”) and Nomura Real Estate Residential Fund, Inc. (“NRF”; and NMF, NOF and NRF are individually referred
to as the “Consolidated Investment Corporation” hereinafter) respectively have determined at each of the board of
directors meetings held today, to implement a consolidation-type merger (the “Merger”) as mentioned below,
whereby October 1, 2015 is set as the date of incorporation of investment corporation (the “New Investment
Corporation) incorporated through the consolidation-type merger, and that we have entered into a merger agreement(the “Merger Agreement”) dated today.

1. Purpose of Merger

2The Japanese economy has been exhibiting a continuous period of modest recovery following the bottoming outof domestic demand that had been weak since the increase in the consumption tax rate in April 2014. In
addition, we observe improvement in business results by corporations and increase in capital expenditure, due
to devalued yen and higher stock price as the result of additional monetary easing implemented by the Bank ofJapan, as well as extension of another increase in the consumption tax rate and price decline prompted bydecrease in oil price. The overall Japanese economy is expected to continuously show the recovery trend as thelabor and income environments are improving steadily and the anticipated underling support by personal
consumption.
Under these circumstances, J-REIT market has been growing due to various factors such as the decision by the
Bank of Japan to launch additional monetary easing in October 2014 and purchase more J-REIT units, inflow of
the funds to J-REIT market as the Government Pension Investment Fund, the largest pension management
operator in Japan, reformed its investment policies, and the increase in number of investment trusts investing in
J-REIT and expansion of the private investment, stimulated by prolonged low interest rate policies andintroduction of NISA (tax exemption scheme for small investment).
Established 13 years ago, the J-REIT market has market size that reached over JPY 10 trillion based on theaggregate market price with 51 listed J-REITs. The asset types which J-REITs invest in have expanded anddiversified from their initial focus on office buildings, to retail facilities, residential facilities, logistics facilities,
hotels, factories, infrastructure facilities and health care facilities. We expect that J-REIT market will further
develop and contribute more to the Japanese society.
NMF, NOF and NRF each entrusts its asset management to Nomura Real Estate Asset Management Co., Ltd.
(“NREAM”) and is provided support by Nomura Real Estate Holdings, Inc. and its group companies (the“Nomura Real Estate Group”) and have established stable track records.
NMF is a complex type J-REIT, investing in logistics facilities and retail facilities. NMF investment units werelisted on the REIT section of the Tokyo Stock Exchange, Inc. (“TSE”) in June 2013 with its initial portfolio of
54 properties (the total acquisition price of JPY 227.6 billion) and it has a track record of four fiscal periods.
NMF invests in properties that are primarily located in Greater Tokyo, which is supported by solid demand,
establishing a well-balanced portfolio consisting of logistics facilities and retail properties which form an
essential part of the economic and industrial activities. During the approximately two-year period after its
listing, NMF expanded its portfolio to 56 properties, with the total (anticipated) acquisition price of JPY 265.5
billion (including an anticipated acquisition scheduled on July 1, 2015 and excluding an anticipated dispositionscheduled in September 1, 2015).
NOF is a specialized type J-REIT, investing in office buildings. NOF investment units were listed on the REIT
section of the TSE in December 2003 with its initial portfolio of 12 properties (the total acquisition price of JPY
104.2 billion) and it has a track record of 22 fiscal periods. To secure stable mid- to long-term income, NOF
invests in competitive properties with favorable location and high basic building functionality. After its listing,
NOF expanded its portfolio to 55 properties (the total acquisition price of JPY 414.4 billion) through property
acquisitions with five times public offerings and other funding methods.
NRF is a specialized type J-REIT, investing in residential facilities. NRF investment units were listed on the
REIT section of the TSE in February 2007 with its initial portfolio of 89 properties (the total acquisition price of
JPY 69.5 billion) and it has a track record of 16 fiscal periods. NRF has established stable portfolio over themid- to long-term by selective acquisitions of properties targeted to those with strong demand from tenants, andexecution of portfolio replacement strategy to improve the portfolio quality. During more than eight-year period
after its listing, NRF expanded its portfolio to 146 properties (the total acquisition price of JPY 162.2 billion)(excluding anticipated dispositions scheduled on May 29, 2015 and June 1, 2015) through property acquisitions
with four times public offerings and other funding methods.
As mentioned above, NMF, NOF and NRF managed their respective portfolio, each leveraging its own
characteristics, to secure stable mid- to long-term income and steadily increase the portfolio size; however, in
recent years, we are facing change in business environment such as intensified acquisition competitions causedby emerging new players to real estate market, polarization of size in J-REITs, and diversification of investment
asset types of J-REITs.
Confronting such change in business environment, NMF, NOF and NRF have respectively considered measures
to maximize sustainable growth of unitholders’ value and have shared a common view that we will need to3expand our asset size, diversify portfolio and strengthen the stability of financing basis in order to strengthen
capacity for future growth. With such mutual recognition, NMF proposed a merger to NOF and NRF in
February 17, 2015 as a measure to improve NMF, NOF and NRF’s unitholder value and have discussed andconsidered the merger. NMF, NOF and NRF have reached a common view that the Merger is the best way to
improve our respective unitholders’ value, through becoming a top-class domestic diversified type J-REIT withthe asset size of more than JPY 900 billion, with increased asset size and diversified investment types of assetsthat will contribute to expand acquisition opportunities, stabilize of portfolio, enhance of risk tolerance, gain
competitive strength for asset acquisitions and stabilize finance basis. In addition, NMF, NOF and NRF believethat we can achieve both growth and stability in managing the portfolio by making the best use of NREAM’s
abundant and professional expertise accumulated through management of NMF, NOF and NRF and effectively
leveraging wide-range know-hows and brands held by Nomura Real Estate Group, one of the major
comprehensive real estate developers in Japan. Therefore, NMF, NOF and NRF entered into the Merger
Agreement today.
In particular, the following demonstrates our concept of the Merger:i) Pursue sustainable growth by transforming from “Specialized type J-REIT” to “Diversified type J-REIT”
By transformation into a diversified type J-REIT as a result of the Merger, it will be possible for us not only to
pursue both stable profitability and growth at the same time through diversification of asset types and aim toachieve a J-REIT of middle-risk and middle-return, but also to bring us continuous and stable growth of
portfolio by captivating optimal timing of investment opportunities which differ according to asset types andexpand acquisitions opportunities through diversification of investment asset types.
ii) Strengthen stability and enhance growth strategy through benefit of a large scale REIT
We believe changing into a large scale REIT as a result of the Merger will dramatically enhance the portfolio
stability through expansion of asset size, and we can actively implement measures to improve our portfolio
value such as disposition and reconstruction of our existing properties, as well as enhance the stability of our
finance basis.
iii) Accelerating mutual growth with Nomura Real Estate Group by establishing “Leasing Business Value Chain”
To fully leverage enhancement of future growth capability of the New Investment Corporation throughtransformation into a “diversified type J-REIT” and becoming a “large scale J-REIT”, NREAM entered into abasic agreement with respect to leasing value chain with Nomura Real Estate Development Co., Ltd. (“NRE”),
Nomura Real Estate Partners Co., Ltd. and GEO-AKAMATSU Co., LTD. today. Pursuant to such agreement,in addition to the existing support for external growth through “property pipeline” by way of provision of realestate related information from Nomura Real Estate Group companies, the parties above will establish aninteractive “management pipeline” among Nomura Real Estate Group companies. Through such “management
pipeline”, we can mutually share information and know-hows on leasing properties, collaborate in addressing
and implementing necessary measures to create and promote value such as enhancement of brand value andprofitability of managing assets both in hardware and software aspects, aiming to strengthen the brands forsponsor developed properties such as “PMO”, “PROUD FLAT”, “GEMS” and “Landport” and improve thevalue of properties owned by the New Investment Corporation. We believe these measures will create anamicable cycle of mutual growth between the New Investment Corporation and Nomura Real Estate Group
companies and thereby contribute to the growth of unitholders’ value.
After the Merger, the New Investment Corporation, with the above-mentioned concepts of the Merger in mind,
aims to secure stable mid- to long-term income and maximize unitholders’ value through steadily increasing theportfolio size. In addition, we expect, as a positive effect of the Merger, market price of investment units could
be more stabilized due to increase in cash distribution through external and internal growth and improved
liquidity of investment units.
As described in the press release “Notice concerning acquisition of assets” announced today, as the firstmeasure of the “Leasing Business Value Chain”, the New Investment Corporation will acquire seven properties
consisting of retail facilities, office buildings and residential facilities from NRE subject to the Merger coming
into effect and other relevant conditions, through which we intend to improve the portfolio quality andmaximize unitholders’ value.
Due to transformation into a diversified type J-REIT as a result of the Merger, the Articles of Incorporation of4the New Investment Corporation will provide that main uses of real estate (including surface rights andleaseholds of real estate) or underlying real estate it invests in shall not be limited, and will include uses oflogistics facilities, retail facilities, office building, residential facilities and other various uses.
In addition, it is expected that goodwill will be generated as a result of the Merger, but the issue in relation with
the imposition of the corporation and other taxes due to discrepancy in accounting and tax treatments inconnection with amortization costs of goodwill was resolved by the tax reform in tax year 2015, and it is also
one of the factors that led to execution of the Merger Agreement.
2.

Outline of the Merger(1)

Schedule of the Merger
Board of directors meeting for approval of the Merger Agreement

May 27, 2015

Execution date of the Merger Agreement

May 27, 2015

Date of public notice of record date for general meeting ofunitholders (NMF/NRF)

May 28, 2015 (planned) (Note 1)

Record date for general meeting of unitholders (NMF/NRF)

June 12, 2015 (planned) (Note 1)

Date of holding of general meeting of unitholders (NMF/NOF)

July 30, 2015 (planned)

Date of holding of general meeting of unitholders (NRF)

July 31, 2015 (planned)

Date of delisting

September 28, 2015 (planned) (Note 2)

Date of incorporation of the New Investment Corporation

October 1, 2015 (planned)

Date of commercial registration of the New Investment Corporation October 1, 2015 (planned)
Date of registration of the New Investment Corporation

October 1, 2015 (planned)

Date of listing of the New Investment Corporation

October 2, 2015 (planned) (Note 2)(Note 1) As announced by the public notice as of April 13, 2015 by NOF concerning the holding of the general meetingof unitholders and establishment of the record date, the record date to determine the unitholders who are
qualified to exercise their voting rights at the general meeting of the unitholders scheduled to be held on July 30,
2015 was established to be April 30, 2015, for NOF, and NOF plans to submit the proposal of the Merger
Agreement for approval at the above-mentioned general meeting of unitholders in addition to the proposal
regarding the appointment of directors and others thereat.
(Note 2) Investment units of each of the Consolidated Investment Corporation are scheduled to be delisted as of
September 28, 2015. Investment units of the New Investment Corporation are scheduled to be listed a s o f
October 2, 2015, after listing on the T S E is approved as technical listing, and thus expected to ensureongoing trading opportunities. The schedule above is based on the assumption that the registration of the New
Investment Corporation is completed on October 1, 2015. If the date of registration is changed, the date of listing will
be changed accordingly.

(2)Format of the Merger
The Merger will be implemented through a “consolidation-type merger” (shinsetsu gappei) method underwhich each Consolidated Investment Corporation is set as a corporation consolidated through theconsolidation-type merger and each Consolidated Investment Corporation is to be dissolved through the
Merger.

(3)

Ratio of Allotment under the Merger(i)Allotment of Investment Units

5

Ratio of
Allotment

New Investment

NMF

NOF

NRF

Corporation(corporation
incorporated throughthe consolidationtype merger)(corporation
consolidated throughthe consolidationtype merger)(corporation
consolidated throughthe consolidationtype merger)(corporation
consolidated
through theconsolidation-typemerger)

1

1

3.60

4.45

(*1) Number of investment units of the New Investment Corporation to be issued as a result of merger: 3,722,010
units (planned)(*2) 3.60 New Investment Corporation units will be allotted to NOF unitholders per one NOF unit and 4.45 New Investment
Corporation units will be allotted to NRF unitholders per one NRF unit. Therefore there will be fraction of one
investment unit to be attributed to unitholders. We will, pursuant to the relevant laws, dispose of such fraction throughmarket transactions and distribute the proceeds from the unit sales to holders such fraction will be attribute in proportion
to the total number of fraction of investment units each unitholder has.

(ii)

Cash Distribution on Merger
Instead of cash distributions for each Consolidated Investment Corporation’s final fiscal period ending on
September 30, 2015 (in the case of NMF; the period from September 1, 2015 to September 30, 2015; in thecase of NOF, the period from May 1, 2015 to September 30, 2015; and in the case of NRF, the period from
June 1, 2015 to September 30, 2015), the New Investment Corporation will make a cash distribution on
merger to the unitholders listed or recorded on the final unitholders register of each of the Consolidated
Investment Corporations as of the day immediately prior to the date of incorporation of the New Investment
Corporation (excluding each Consolidated Investment Corporation and the dissenting unitholders of each
Consolidated Investment Corporation who demand for repurchase of investment units pursuant to Article 1493 of the Act on Investment Trusts and Investment Corporations (Law No. 198 of 1951, as amended; the“Investment Trust Act”) (the “Allotted Investors”), in an amount equivalent to the cash distributions for the
final fiscal period based on each Consolidated Investment Corporation’s distributable profit (the payment on
merger will be (i) the amount of distributable profit of each Consolidated Investment Corporation as of the day
immediately prior to the date of incorporation of the New Investment Corporation divided by (ii) the numberof investment units that is obtained by deducting (a) the number of investment units held by the unitholders
other than the Allotted Investors of each Consolidated Investment Corporation from (b) the number ofinvestment units issued and outstanding of each of such Consolidated Investment Corporation, as of the day
immediately prior to the date of incorporation of the New Investment Corporation (amounts less than one yen
are rounded down)). The details will be announced once they are determined.
Concerning the distribution of NMF for the fiscal period ending on August 31, 2015 (the period from March 1,
2015to August 31, 2015), the distribution is scheduled to be made to the investors and the registered pledgeesof investment units listed or recorded on the final unitholders register of NMF as of August 31, 2015, after theapproval on the statements for such cash distribution for the fiscal period that is scheduled to be obtained at
NMF by the date of incorporation of the New Investment Corporation. The payment of such distribution will
be made after the incorporation of the New Investment Corporation through the Merger.

(4)

Major Conditions Precedent for the Merger
The Merger will be implemented on the basis that all of the following conditions as well as the otherconditions set forth in the Merger Agreement are fully fulfilled as of the date of incorporation of the New
Investment Corporation and if any of such conditions are unfulfilled or if it is proven that any of suchconditions will not be fulfilled, each Consolidated Investment Corporation may terminate the Merger
Agreement prior to the date of incorporation by giving a written notice to the other parties thereunder.
● It is confirmed in terms and manner reasonably satisfactory to each Consolidated Investment Corporationthat the filing of a registration statement on Form F-4 is not required under the U.S. securities laws.
● Approvals at the general meeting of unitholders of each Consolidated Investment Corporation as well asother procedures pursuant to applicable laws and regulations and the internal rules of such Consolidated
Investment Corporation, and the acquisition of permits and approvals that are required in relation to theMerger or in order to implement the matter contemplated in connection with the Merger, have been
completed.
● Prior consent has been obtained from all of the financial institutions that have been providing loans to6each Consolidated Investment Corporation, regarding the implementation of the Merger and the terms andconditions for the lending on and after the date of incorporation of the New Investment Corporation(including the countermeasures for the prevention of the occurrence of breaches of financial covenants,
breaches of provisions and events of default under the loan agreements), and such consent has not been
withdrawn by any of such financial institutions.

3.

Basis of Determination for the Merger Ratio and Related Items(1)

Basis of Determination
For the purpose of determining the merger ratio to be adopted in the Merger, in view of ensuring fairness, each
Consolidated Investment Corporation appointed a financial advisor for the Merger and requested eachfinancial advisor to perform a financial analysis of the merger ratio. NMF appointed Nomura Securities Co.,
Ltd. (hereafter, “Nomura Securities”), NOF appointed Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
(hereafter, “Mitsubishi UFJ Morgan Stanley Securities”) and NRF appointed SMBC Nikko Securities Inc.
(hereafter, “SMBC Nikko Securities”).
Nomura Securities performed a financial analysis of the merger ratio for each of NMF, NOF and NRF,
adopting (i) the average market investment unit price analysis, as investment units of each Consolidated
Investment Corporation are respectively listed on the TSE and market investment unit price is available, (ii)the comparable similar investment corporation analysis, as each Consolidated Investment Corporation has
several comparable listed investment corporations and the investment unit value may be analogically inferredby the comparable similar investment corporation analysis, (iii) the discounted cash flow analysis (hereafter“DCF Analysis”) in order to reflect the future performance of business activity in the financial analysis, and(iv) the adjusted net asset value approach in order to reflect the effect on the market value andexchangeability into cash. A summary of the financial analysis performed by Nomura Securities is asfollows. Each of the following ranges for the merger ratio shows the range in the number of investment unitsof the New Investment Corporation allotted for one investment unit of NOF or NRF, as the case may be,where one investment unit of the New Investment Corporation is allotted for one investment unit of NMF.
Financial Analysis Approach

NOF

NRF

Average market unit price analysis

3.68～3.86

4.46～4.57

Comparable similar investment
corporation analysis

3.28～4.11

3.76～4.91

DCF Analysis

3.46～4.94

4.40～4.56

Adjusted net asset value approach

3.79

4.11

Concerning the average market unit price analysis, the financial analysis date is set as of May 26, 2015 andclosing prices for the financial analysis date, and the averages of closing prices for the one-week, onemonth, three-month and six-month periods up to the financial analysis date were employed. Please refer to(Note 1) at the end of this press release for more detailed information regarding the assumptions anddisclaimers for the analysis of Nomura Securities. In the future profit plan of each Consolidated Investment
Corporation which Nomura Securities referred to as the basis for the DCF Analysis, there is no fiscal period
in which a considerable increase or decrease in profits is expected.
Mitsubishi UFJ Morgan Stanley Securities conducted its analysis of the merger ratio for each of NMF, NOF
and NRF, comprehensively taking into consideration the analysis results based on (i) the investment unit
price analysis as a method of analysis based on the investment unit price formed in the securities market, as
investment units of each Consolidated Investment Corporation are listed on the TSE, (ii) the comparable
similar investment corporation analysis as a method of analysis based on the investment unit value of otherlisted investment corporations conducting similar business with each Consolidated Investment Corporation,(iii) the dividend discount model as a method of analysis of investment unit value based on dividends whichunitholders of each Consolidated Investment Corporation are expected to receive in the future, (iv) the DCF

7

Analysis as a primary method of analysis of investment unit value based on mid-to-long term future businessactivities of each Consolidated Investment Corporation, and (v) the adjusted net asset value approach as amethod of static analysis of investment unit value, which reflects the market value of assets held by each
Consolidated Investment Corporation. A summary of the analysis performed by Mitsubishi UFJ Morgan
Stanley Securities is as follows. Each of the following ranges for the merger ratio shows the range in thenumber of investment units of the New Investment Corporation allotted for one investment unit of NOF or
NRF, as the case may be, where one investment unit of the New Investment Corporation is allotted for one
investment unit of NMF.
Financial Analysis Approach

NOF

NRF

Investment unit price analysis

3.15～4.25

4.09～5.22

Comparable similar investment
corporation analysis

3.49～4.29

4.09～5.00

Dividend discount model

4.07～4.26

4.75～4.79

DCF Analysis

3.46～3.92

4.48～4.76

Net asset value approach
3.78
4.09
Concerning the investment unit price analysis, taking into account the recent market trading trends of theinvestment units of each Consolidated Investment Corporation, the financial analysis date is set as of May 26,
2015 and merger ratio is analyzed based on the closing prices for one-month, three-month, six-month andtwelve-month periods up to the financial analysis date. Please refer to (Note 2) at the end of this press releasefor more detailed information regarding the assumptions and disclaimers for the analyses of Mitsubishi UFJ
Morgan Stanley Securities. In the future earnings plan of each Consolidated Investment Corporation which
Mitsubishi UFJ Morgan Stanley Securities referred to as the basis for the DCF Analysis, there is no fiscal
period in which a considerable increase or decrease in profits is expected.
SMBC Nikko Securities conducted its analysis of the merger ratio for each of NMF, NOF and NRF, in order tomultilaterally analyze investment units of each Consolidated Investment Corporation, by adopting (i) theinvestment unit price analysis for the purpose of reflecting the securities market prices into the financial
analysis, as investment units of each Consolidated Investment Corporation are listed on the TSE, (ii) the
dividend discount model analysis (“DDM Analysis”) for the purpose of reflecting theoretical dividends whichunitholders of each Consolidated Investment Corporation would receive in the future, and (iii) the adjusted net
asset value approach for the purpose of reflecting unrealized gains and losses of real estate held by each
Consolidated Investment Corporation into the financial analysis. A summary of the analysis performed by
SMBC Nikko Securities is as follows. Each of the following ranges for the merger ratio shows the range in thenumber of investment units of the New Investment Corporation allotted for one investment unit of NOF or NRF,
as the case may be, where one investment unit of the New Investment Corporation is allotted for one investment
unit of NMF.
Financial Analysis Approach

NOF

NRF

Market investment unit price analysis

3.68～3.86

4.52～4.57

DDM Analysis

2.65～4.28

3.06～4.89

Adjusted net asset value approach

3.92

4.21

Taking into account the recent market trading trends of the investment units of each Consolidated Investment
Corporation, the financial analysis date is set as of May 26, 2015 and the averages of closing prices forone-month and three-month periods up to the financial analysis date were employed.
Analysis of the merger ratio by SMBC Nikko Securities is based on certain other assumptions other than theabove. Please refer to (Note 3) at the end of this press release for more detailed information regarding theassumptions and disclaimers for the analysis. In the future distribution plan of each Consolidated Investment
Corporation which SMBC Nikko Securities referred to as the basis for the DDM Analysis, there is no fiscal
period in which a considerable increase or decrease is expected.

8

(2)

Factual Background to the Determination
After comprehensively taking into account the financial results, status of assets and liabilities, future prospectsof the business, synergies to be created by the Merger and the results of the financial analysis
conducted by the financial advisors for each Consolidated Investment Corporation and discussing andnegotiating meticulously, each Consolidated Investment Corporation executed the Merger Agreement, as they
determined the above mentioned merger ratio to be appropriate.

(3)

Relationship with the Financial Advisors
None of Nomura Securities, Mitsubishi UFJ Morgan Stanley Securities or SMBC Nikko Securities falls under
the definition of an “Affiliated Party” of NMF, NOF or NRF as set forth in Article 67, Paragraph 4 of theOrdinance Regarding Calculation of the Investment Corporation (Cabinet Ordinance No. 47 of 2006, as
amended) and has no significant interest to note in connection with the Merger.

(4)

Prospect of Delisting and Reasons Thereof
As outlined in 2. (2) above, it is expected that each Consolidated Investment Corporation will dissolve and theinvestment units issued by each Consolidated Investment Corporation will be delisted on September 28, 2015,
which is three business days prior to the date of incorporation of the New Investment Corporation, in
accordance with the Criteria for Delisting set forth by TSE. Upon the Merger, the unitholders of each
Consolidated Investment Corporation will be allotted new New Investment Corporation investment units inproportion to the number of investment units they hold and thereby own New Investment Corporation
investment units.

(5)

Measures to Secure Fairness(i) Measures to Secure Fairness in the Course of Considering Pros and Cons of Merger and Merger Ratio
Each Consolidated Investment Corporation entrusts its asset management business to NREAM as the asset
management company. NREAM appoints different persons responsible for asset management (NMF asset
management manager, NOF asset management manager and NRF asset management manager) andseparately organizes the department in charge of asset management (NMF asset management department,
NOF asset management department and NRF asset management department) for each Consolidated
Investment Corporation, and structures a thorough information-blocking system by establishing appropriate
information barriers between the asset management departments. In addition, in the course of considering
the Merger, NREM has established and implemented the flow of information such that, in the event that
information delivery is necessary between the asset management departments, such information shall bedelivered through the above financial advisors separately appointed by each Consolidated Investment
Corporation, for the purpose to prevent each asset management department from contacting the others
directly.
Each asset management department have, in the course of considering the Merger, timely reported thematters to be considered to the board of directors of each Consolidated Investment Corporation, which isconstituted by one executive director and two supervisory directors, whose independence from an asset
management company has been ensured under the Investment Trust Act. Further, important matters to beconsidered are deliberated and approved by the board of directors of each Consolidated Investment
Corporation.
Furthermore, as the executive director of each Consolidated Investment Corporation serves concurrently as an
officer or employee of NREAM or its affiliates, and has special interests in NREAM; therefore, the executive
director of each Consolidated Investment Corporation did not participate in the resolution of the approval of
the Merger Agreement at the meeting of board of directors of each Consolidated Investment Corporation.
NREAM will, in accordance with the Articles of Incorporation of the New Investment Corporation and theasset management agreement between NREAM and the New Investment Corporation, receive an acquisition
fee regarding assets to be succeeded from each Consolidated Investment Corporation by the Merger and amanagement fee concerning asset management after the incorporation of the New Investment Corporation;
however, neither amount of such fees will not be affected by the merger ratio of the Merger.
Furthermore, NMF, NOF and NRF have appointed Nagashima Ohno & Tsunematsu, City-Yuwa Partners
and Kataoka & Kobayashi, respectively, as legal advisors for the Merger, and have received advice on

9matters including the procedures for the Merger, the method and procedures for making decisions.
(ii) Measures to Secure Fairness in Determination of Merger Ratio
In addition to measure (i) above, as described in items (1) through (3) above, each Consolidated Investment
Corporation requested their respective financial advisors to conduct a financial analysis regarding the merger
ratio. In determining the appropriate merger ratio, each Consolidated Investment Corporation consideredvarious factors including the financial analyses conducted by their respective financial advisors.
In order to ensure the fairness of the Merger, NMF has retained Nomura Securities, which is an independent
third party financial advisor, for its unitholders, and obtained a report of merger ratio analysis, in whichanalyses of allotment of units in the Merger were conducted from a financial viewpoint under certain
assumptions. Given the above, the board of directors of NMF has determined that measures for ensuring thefairness of the Merger were adequately implemented.
In order to ensure the fairness of the Merger, NOF has retained Mitsubishi UFJ Morgan Stanley Securities,
which is an independent third party financial advisor, for its unitholders, and obtained a report of merger ratio
analysis, in which analyses of allotment of units in the Merger were conducted from a financial viewpoint
under certain assumptions. Given the above, the board of directors of NOF has determined that measures for
ensuring the fairness of the Merger were adequately implemented.
In order to ensure the fairness of the Merger, NRF has retained SMBC Nikko Securities, which is anindependent third party financial advisor, for its unitholders, and obtained a report of merger ratio analysis, inwhich analyses of allotment of units in the Merger were conducted from a financial viewpoint under certain
assumptions. Given the above, the board of directors of NRF has determined that measures for ensuring thefairness of the Merger were adequately implemented.
It is to be noted that none of the Consolidated Investment Corporations obtained a fairness opinion from therelevant financial advisor to the effect that the merger ratio is financially suitable for each unitholder of each
Consolidated Investment Corporation.
4.

Overview of Parties Involved in the Merger
Consolidated Investment Consolidated Investment
Corporation
Corporation
Nomura Real Estate
Nomura Real Estate Office
Master Fund, Inc.
Fund, Inc.
8-5-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo

Consolidated Investment
Corporation
Nomura Real Estate
Residential Fund, Inc.

(1)

Name

(2)

Location(3)

Satoshi Yanagita

Yoshiyuki Ito

Shozo Matsumura(4)

Name of Executive
Director
Unitholders’ Capital

161,120 million yen

211,430 million yen

73,231 million yen(5)Date of Incorporation

January 31, 2013

August 7, 2003

August 3, 2006

(6)

Total Number of
Investment Units
Issued and Outstanding
End of Fiscal Periods

1,665,260 units

372,553 units

160,800 units

February and August

April and October

May and November(8)

Main Assets underManagement

Real estate, and real estate Real estate, and real estate
trust beneficiary interest trust beneficiary interest

Real estate, and real estate
trust beneficiary interest(9)Main Financing Banks

The Bank of TokyoThe Bank of TokyoMitsubishi UFJ, Ltd.
Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Sumitomo Mitsui Banking
Corporation
Corporation
Mizuho Bank, Ltd.
Development Bank of
Mitsubishi UFJ Trust andJapan Inc.
Banking Corporation
Mitsubishi UFJ Trust andSumitomo Mitsui Trust Banking Corporation
Bank, Ltd.
Sumitomo Mitsui Trust
Development Bank ofBank, Ltd.
Japan Inc.
Mizuho Bank, Ltd.

The Bank of TokyoMitsubishi UFJ, Ltd.
Sumitomo Mitsui
Banking Corporation
Mitsubishi UFJ Trust andBanking Corporation
Development Bank ofJapan Inc.
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Ltd.

(7)

10

(10)

Major Unitholders andJapan Trustee Services
their Unitholdings ratios Bank, Ltd.
(trust account) 20.23%

Japan Trustee Services Bank, Japan Trustee Services
Ltd.
Bank, Ltd.
(trust account) 21.40%(trust account) 29.23%

The Master Trust Bank of Trust & Custody Services
Japan, Ltd.
Bank, Ltd.
(trust account) 8.64%(securities investment trust
account) 5.60%
Trust & Custody Services
Bank, Ltd.
The Master Trust Bank of(securities investment trustJapan, Ltd.
account) 7.18%(trust account) 4.78%

Nomura Real Estate
Development Co., Ltd.
9.48%

Nomura Real Estate
Development Co., Ltd.
5.27%

The Nomura Trust andBanking Co., Ltd.
(investment trust account)
4.12%

The Nomura Trust andBanking Co., Ltd.
(investment trust account)
3.64%

4.10%

The Master Trust Bank ofJapan, Ltd.
(trust account) 3.54%

NOMURA BANK(LUXEMBOURG) S.A. Nomura Real Estate
4.65%
Development Co., Ltd.
(11)
(12)
(13)

(14)

Trust & Custody Services
Bank, Ltd.
(securities investment
trust account) 4.12%

Name of Asset
Nomura Real Estate Asset Management Co., Ltd.
Management Company
Location of Asset
8-5-1 Nishi-Shinjuku, Shinjuku-ku, TokyoManagement Company
Name and Post of
Norio Ambe
Representative of Asset President & CEO
Management Company
Relationship Among Parties Involved
Capital Ties

There are no capital ties requiring special mention between each Consolidated
Investment Corporation. The Asset Management Company of each Consolidated
Investment Corporation is NREAM.

Personnel Ties

There are no personnel ties requiring mention between each Consolidated
Investment Corporation. The Asset Management Company of each Consolidated
Investment Corporation is NREAM.

Business Ties

There are no business ties requiring mention between each Consolidated Investment
Corporation. The Asset Management Company of each Consolidated Investment
Corporation is NREAM.

Status of Classification as Each Consolidated Investment Corporation is not a related party of other
Related Party
Consolidated Investment Corporations; however, NREAM, which is the AssetManagement Company of each Consolidated Investment Corporation, is a related
party of other Consolidated Investment Corporations.
(15)

Management and Other Performance in Most Recent Three Fiscal Periods

I.

NMF (Unit: million yen, unless otherwise stated)
Fiscal Period Ended
Operating Revenue
Operating Income
Ordinary Income
Net Income
Net Income per Unit (yen)Dividend per Unit (yen)
Net Assets per Unit (yen)
Net Assets
Total Assets

February 2014
9,176
5,348
4,861
4,860
2,918
2,919
99,673
165,982
261,582

11

August 2014
9,468
4,638
4,081
4,079
2,450
2,450
99,204
165,201
257,040

February 2015
10,066
4,750
4,146
4,145
2,489
2,490
99,244
165,267
276,539

II.

NOF (Unit: million yen, unless otherwise stated)
Fiscal Period Ended
Operating Revenue
Operating Income
Ordinary Income
Net Income
Net Income per Unit (yen)Dividend per Unit (yen)
Net Assets per Unit (yen)
Net Assets
Total Assets

III.

October 2013
12,378
5,127
3,636
3,635
10,413
10,000578,188
215,405
404,207

April 201412,260
5,105
3,630
3,630
9,743
10,000577,931
215,310434,715

October 2014
13,105
5,441
3,942
3,941
10,57910,579578,510215,525435,644

May 2014

November 2014
5,480
2,423
1,878
1,877
11,674
11,600467,340
75,148164,852

NRF (Unit: million yen, unless otherwise stated)
Fiscal Period Ended
Operating Revenue
Operating Income
Ordinary Income
Net Income
Net Income per Unit (yen)Dividend per Unit (yen)
Net Assets per Unit (yen)
Net Assets
Total Assets

5.

November 2013
5,406
2,558
1,966
1,965
12,591
12,221
467,887
75,236
168,019

5,594
2,513
1,956
1,955
12,161
12,161
467,827
75,226167,940

Post-Merger Status(1)

Status of New Investment Corporation
New Investment Corporation

(1)

Name

Nomura Real Estate Master Fund, Inc.

(2)

Location

8-5-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo(3)

Name of Executive Director

Satoshi Yanagita(4)Unitholders’ Capital

TBD (yet to be determined at this stage)(5)

End of Fiscal Periods

February and August (Note)(6)

Net Assets

TBD (yet to be determined at this stage)(7)

Total Assets

TBD (yet to be determined at this stage)(8)

Name of Asset Management Company Nomura Real Estate Asset Management Co., Ltd.

(9)

Location of Asset Management
Company
Name and Post of Representative ofAsset Management Company(10)(Note)(2)

8-5-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo
Norio Ambe

The first fiscal period will be from October 1, 2015 to February 29, 2016.

Major Unitholders and their Unitholding Ratios Before and After Merger

NMF (as of February 28, 2015)
Japan Trustee Services Bank, Ltd.
(trust account)
20.23%

Before Merger
NOF (as of October 31, 2014)
Japan Trustee Services Bank, Ltd.
(trust account)
21.40%

12

NRF (as of November 30, 2014)
Japan Trustee Services Bank, Ltd.
(trust account)
29.23%

The Master Trust Bank of Japan,
Ltd. (trust account)
8.64%

Trust & Custody Services Bank,
Ltd. (securities investment trust
account)
5.60%

Nomura Real Estate Development
Co., Ltd.
9.48%

Trust & Custody Services Bank,
Ltd. (securities investment trust
account)
7.18%

The Master Trust Bank of Japan,
Ltd. (trust account)
4.78%

Trust & Custody Services Bank,
Ltd. (securities investment trust
account)
4.12%

Nomura Real Estate Development
Co., Ltd.
5.27%

4.65%

The Nomura Trust and Banking
Co., Ltd. (investment trust
account)
4.12%
Nomura Real Estate Development
Co., Ltd.
4.10%

The Nomura Trust and Banking
Co., Ltd. (investment trust
account)
3.64%
The Master Trust Bank of Japan,
Ltd. (trust account)
3.54%

The Nomura Trust and Banking
Co., Ltd. (investment trust
account)
4.14%

CBLDN - STICHTING PGGMDEPOSITARY - LISTED REALESTATE PF FUND
4.03%

Japan Trustee Services Bank, Ltd.,
standing proxy of THE FUJI FIRE
AND MARINE INSURANCECOMPANY, LIMITED 2.00%

NOMURA PB NOMINEESLIMITED OMNIBUS-MARGIN(CASHPB)
1.42%

Nomura Securities Co., Ltd.
2.20%

Trust & Custody Services Bank,
Ltd. (cash in trust taxable account)
1.87%

Mitsubishi UFJ Morgan Stanley
Securities Co., Ltd.
1.24%

Incorporated educational
institution Kawasaki Gakuen
1.88%

The Master Trust Bank of Japan,
Ltd., standing proxy of the Joyo
Bank, Ltd.
1.56%

STATE STREET BANK - WESTPENSION FUND CLIENTS EXEMPT
1.02%
THE BANK OF NEW YORKMELLON SA/NV 10
1.02%

State Street Bank and Trust
Company
1.64%

Trust & Custody Services Bank,
Ltd., standing proxy of the Fukui
Bank, Ltd.
1.19%
The Ashikaga Bank, Ltd.
1.06%

NOMURA BANK(LUXEMBOURG) S.A.

State Street Bank and Trust
Company 505223
1.36%

After Merger(simple sum after taking into account the merger ratio)
Japan Trustee Services Bank, Ltd.
(trust account)
22.38%The Master Trust Bank of Japan, Ltd.
(trust account)
6.27%
Trust & Custody Services Bank, Ltd.
(securities investment trust account)

6.01%

Nomura Real Estate Development Co., Ltd

5.66%

The Nomura Trust and Banking Co., Ltd.
(investment trust account)
NOMURA BANK (LUXEMBOURG) S.A.

4.03%
2.08%

CBLDN - STICHTING PGGM DEPOSITARY –LISTED REAL ESTATE PF FUND

1.45%

Nomura Securities Co., Ltd.

0.81%

Trust & Custody Services Bank, Ltd.0.79%(cash in trust taxable account)

0.79%

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

0.74%

(Note)The major unitholders and their unitholding ratios after t h e Merger are calculated based on the investment units
assuming it will be allotted in accordance with “2. Outline of the Merger; (3) Ratio of Allotment under the Merger”
above on the premise of the major unitholders’ unitholding ratios before the Merger above.

13

(3)

Asset Management Agreement
The New Investment Corporation is scheduled to succeed the asset management agreement currently enteredinto by and between NMF and NREAM and to keep it effective after making partial amendment thereof.
Consequently, the asset management agreements which NOF and NRF respectively have entered into with
NREAM are scheduled to be terminated on the date of incorporation of the New Investment Corporation on
the condition that the New Investment Corporation is incorporated as a result of the Merger, upon obtaining
approval of the general meeting of unitholders of NOF and NRF.

(4) Investment Policy
With the merger of NMF that invests in logistics facilities/retail facilities, NOF that invests in officebuildings and NRF that invests in residential facilities, a new investment policy as a diversified type REIT
is scheduled to be set based on NMF’s investment policy. Please refer to “1. Purpose of Merger” for theoutline.
(5) Agreement with Sponsors, Etc.
The basic letter of agreement for the provision of real estate and other information entered into by andbetween NREAM and NRE with respect to the property information that fall within NMF’s investment scope
will continue to be effective after the Merger, upon partial amendment in connection with the expansion of
investment scope, and the robust support structure by NRE will be maintained in the future. Accordingly, thebasic letter of agreement for the provision of real estate and other information which NREAM has enteredinto with NRE and Nomura Real Estate Urban Net Co., Ltd. with respect to the property information that fallwithin the investment scope of NOF and NRF is scheduled to be terminated on the date of incorporation of
the New Investment Corporation on the condition that the New Investment Corporation is incorporated as aresult of the Merger.
As of May 27, 2015, NRE, Nomura Real Estate Partners CO., LTD. and GEO AKAMATSU CO., LTD. haveentered into a basic agreement with respect to leasing value chain with NREAM. This Agreement allows
establishing an interactive “management pipeline” in addition to the current “property pipeline” between the
New Investment Corporation and Nomura Real Estate Group companies, therefore, it actively promotes thestrengthening of the branded properties such as “PMO,” “PROUD FLAT,” “GEMS” and “Landport,” and theimprovement of the value of properties owned by the New Investment Corporation. Please refer to “1.
Purpose of Merger” for the outline.
6.

Overview of Accounting
The Merger constitutes an acquisition as provided in the Accounting Standard for Business Combinations(Accounting Standards Board of Japan Statement No. 21; revised on September 13, 2013) and is premised on
the purchase method being applied, whereby NMF is the corporation acquiring, and NOF and NRF are thecorporations to be acquired. Furthermore, goodwill is expected to result from the Merger, and the amount isprovisionally estimated to be JPY 80,116 million yen at this stage.
In addition, goodwill will be recorded as assets and be regularly amortized through the fixed amount method fortwenty years. The amortization costs will vary for accounting and tax treatment (account and tax discrepancy)
and will be a cause for the imposition of taxation such as corporation tax; however, following the tax reform in
tax year 2015, the New Investment Corporation will avoid such taxation through the distribution of cash inexcess of profit for the purpose of tax reduction throughout the amortization period of goodwill.

7.

Future Outlook
For the forecasts of the management performance for the first fiscal period ending February 2016 (from October 1,
2015 to February 29, 2016) and the second fiscal period ending August 2016 (from March 1, 2016 to August 31,
2016) of the New Investment Corporation, please refer to the press release of today, “Notice concerning the forecastof the management performance for the fiscal period ending February 2016 and the fiscal period ending August
2016 of Nomura Real Estate Master Fund, Inc., Nomura Real Estate Office Fund, Inc. and Nomura Real Estate
Residential Fund, Inc. after the Merger.”
In addition, the impact of the execution of the Merger Agreement on the management performance for NMF’s
fiscal period ending August 2015 (from March 1, 2015 to August 31, 2015), NOF’s fiscal period ending
October 2015 (from May 1, 2014 to October 31, 2015) and NRF’s fiscal period ending May 2015 (from14

December 1, 2014 to May 31, 2015) is expected to be minimal. Thus, no changes have been made to suchmanagement performance forecasts.
The forecasts for management performance for the deemed calculation period of each Consolidated Investment
Corporation ending one day prior to the incorporation date of New Investment Corporation and the payments onmerger have not been decided at this stage, and will be announced upon determination.
(Note 1)
Nomura Securities has generally used information provided by each Consolidated Investment Corporation andpublicly available information, in order to conduct the merger ratio analysis. Nomura Securities has not conducted
any independent verification on the accuracy or completeness of the materials and information, but rather has assumed
that all such materials and information are accurate and complete. In addition, Nomura Securities has not made any
independent valuation, appraisal or assessment of the assets or liabilities (including the off-balance-sheet assets andliabilities, or any other contingent liabilities) of each Consolidated Investment Corporation. Nomura Securities has
not appointed any third-party institution for any such valuation or appraisal. Further, Nomura Securities has assumed
that the financial projections (including profit plan and other information) provided by each Consolidated Investment
Corporation have been prepared in a reasonable manner on the basis of the best estimates and judgment currently
available by the management of the respective Consolidated Investment Corporations.
(Note 2)In analyzing the above merger ratio, Mitsubishi UFJ Morgan Stanley relied on the information that was publicly
available or provided by each Consolidated Investment Corporation, assuming that such information was accurate andcomplete without independent verification of the accuracy or completeness of such information. Also, Mitsubishi UFJ
Morgan Stanley did not make any independent valuation or appraisal of the assets or liabilities (including off-balancesheet assets or liabilities, or any other contingent liabilities) of each Consolidated Investment Corporation, nor did
Mitsubishi UFJ Morgan Stanley request a third-party institution for any such valuation or appraisal. Furthermore,with respect to the financial forecasts of each Consolidated Investment Corporation, Mitsubishi UFJ Morgan Stanley
assumed that they have been reasonably prepared on bases reflecting the best currently available estimates andjudgments of the respective managements of each Consolidated Investment Corporation. The analysis of the above
merger ratio by Mitsubishi UFJ Morgan Stanley was based on the above information that was available as of May 26,
2015.
Mitsubishi UFJ Morgan Stanley has prepared its analysis solely for the board of NOF for the purpose of considerationof the Merger and should not be definitively relied upon or used for any other purpose or by any third party. In
addition, Mitsubishi UFJ Morgan Stanley will not provide any opinion or recommendation on voting by any of theunitholders of NMF, NOF or NRF with respect to the Merger or any other proposed transaction.

(Note 3)
SMBC Nikko Securities, in preparing its report of merger ratio analysis, has assumed that all of materials andinformation used as the basis for the report are accurate and complete, and did not independently verify theiraccurateness and completeness and shall not incur any obligation or responsibility thereof. In addition, SMBC Nikko
Securities has neither independently evaluated, examined or appraised assets or liabilities of NMF, NOF and NRF, normade a request for valuation, examination or appraisal to a third-party institution. In the case where there is any
problem in the accurateness and completeness of such materials and information, the financial analysis result may besubstantially different. Furthermore, SMBC Nikko Securities has assumed that there exist no claims or liabilities
incurred by undisclosed litigation, dispute, environment, taxation or other matters or any other incidental obligations
or off-balance-sheet liabilities, or other material facts that may have material effects on the its report of merger ratio
analysis, in connection with NMF, NOF and NRF. SMBC Nikko Securities has assumed that the business plans andfinancial forecasts provided by NMF, NOF and NRF were prepared in accordance with reasonable and adequate
procedures employed by NMF, NOF and NRF based on the best forecasts and judgment available as of the financial
analysis date. In addition, with respect to its report on merger ratio analysis, SMBC Nikko Securities conducted insome cases its analysis founded on certain assumptions based on materials and information provided to it; however, its
analysis was based on the premise that such materials and information provided and such assumptions were accurate
and reasonable. SMBC Nikko Securities did not independently verify the accurateness, validity or feasibility of suchassumptions and shall not incur any obligation or responsibility for such verification.
The financial analysis results of SMBC Nikko Securities have been provided by SMBC Nikko Securities to NRF in
response to the request of NRF, for the sole purpose of assisting the board of directors of NRF to determine the merger
ratio, and such financial analysis results are not for the purpose of expressing SMBC Nikko Securities’ opinion on themerger ratio.

15