10th Fiscal Period
Semi-Annual Report
March 1, 2020 to August 31, 2020
Securities Code: 3462

Nomura Real Estate Master Fund, Inc.
8-5-1 Nishi-Shinjuku, Shinjuku Ward, Tokyo
https://www.nre-mf.co.jp/en/

R esi denti al
O ffic e

Driving the Market as
One of Japan’s Largest REITs

CONTENTS
Message from the Management

P.03

To Our Unitholders / Performance Highlights

Management Strategy

P.05

Track Record of Growth since Establishment / External
Growth / Impact of COVID-19 / Internal Growth

ESG Measures

P.15

ESG Measures

Financing Status

P.17

Financing Status / Balance Sheet Highlights / Market Review

L o gi sti cs

Portfolio

P.21

Portfolio Analysis / Portfolio Gallery

Investor Information

P.29

Distribution Policy / Structure and Organization
Investor Information

Financial Section
Balance Sheet
Statement Of Income And Retained Earnings
Statement Of Changes In Net Assets
Statement Of Cash Flows
Notes To Financial Statements
Independent Auditor’s Report

P.31

R eta i l

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

Message from the Management
PERFORMANCE HIGHLIGHTS

NMF will strive to increase unitholder value by securing stable income
over the medium to long term and ensuring the steady growth of assets
under management.

10th Fiscal Period

Cash Distribution
per Unit

Executive
Director

12th Fiscal Period(forecast)*(forecast)*¥3,317¥3,330¥3,288Operating Revenues¥37,577¥38,347¥38,390

Operating Expenses¥22,364¥22,933¥23,193

Net Income¥12,799¥13,084¥12,881

Total Assets¥1,197,766¥1,195,065¥1,193,597(including distribution inexcess of earnings)

Nomura Real Estate Master Fund, Inc.

11th Fiscal Period

Shuhei Yoshidamillionmillionmillion(From left)

Supervisory
Director

Koichi Owada
Mineo Uchiyama
Supervisory
Mika Okada (Note)
Director
Supervisory
Director

millionmillionmillion(Note) Mika Okada is her maiden name and the name she uses professionally. The name recorded on her family register is Mika Furusawa.

millionmillionmillionTo Our Unitholders
First, we would like to express our deepest condolences to those who have lost their lives due to
COVID-19 and their families, as well as our sympathies
to those fighting the disease.
In the tenth fiscal period, we achieved improvement of
portfolio quality as well as steady external growththrough acquisition of four properties with a totalacquisition price of ¥20.6 billion, all of which wererelatively new and highly value-added properties developed by the Sponsor, with the funds procured throughcapital increase under the third public offering conducted in December 2019.
During the tenth fiscal period, not only the J-REIT
industry but also overall economic conditions werelargely impacted by the COVID-19 pandemic, and wewere no exemption.
In consideration of the impact of self-restraint fromgoing out and the request for business closure due tothe declaration of a state of emergency issued on April
7, NMF offered rent reduction/exemption and deferment of rent payment as measures to support some of
its retail tenants in order to fulfill our social responsibility and achieve improvement of unitholder value overthe medium to long term.
On the other hand, even under such a situation, wewere able to promote continuous internal growththrough increase in newly advertised rents at tenant
turnover and successful rent increases upon contract
renewal mainly in the office sector and the rental
apartment sector.
3

Nomura Real Estate Master Fund, Inc.

As a result, at the end of the tenth fiscal period, ourportfolio consisted of 298 properties with a total acquisition price of ¥1,051.6 billion. Operating revenues
totaled ¥37,577 million, operating profit reached¥15,212 million, and net income came to ¥12,799
million. As for rent reduction/exemption and otherfactors that led to temporary decrease in revenue due
to COVID-19, partial reversal of internal reserves wasmade in the amount of ¥218 million for the purpose ofleveling the amount of distribution. Accordingly, perunit distribution for the tenth fiscal period came to¥3,317, the same as the initial forecast.
In our activities for ESG (Environmental, Social, andGovernance) issues, Nomura Real Estate AssetManagement Co., Ltd., to which NMF entrusts the
management of its assets, announced its support for
the recommendations of the Task Force on Climaterelated Financial Disclosures (TCFD) in July 2020.
Furthermore, NMF has been upgraded to AA, thehighest ranking among J-REITs as of present, at MSCIESG Ratings. As such, we continue to act aggressively
in this field.
With a careful eye on the impact of COVID-19, we
remain strongly committed to enhancing fund performance and managing the fund’s assets in an aim tolive up to the expectations and trust of our unitholders.
We ask for your continued support and encouragement.

millionmillionmillion*The above forecast distribution is calculated based on certain assumptions as disclosed in “SUMMARY OF FINANCIAL RESULTS (REIT) For the 10th Fiscal Period
Ended August 31, 2020,” published October 14, 2020. As such, the actual distribution may differ from this forecast due to future property acquisitions or sales, changes
in the real estate market, tenant changes or other changes in the circumstances surrounding NMF. The distribution forecast is not a guarantee of distributions.

Operating Revenues and Net Income(Millions of yen)

Operating Revenues

Net Income

Cash Distribution per Unit
(Yen)
3,500

40,0003,279

3,317 3,330

3,288

3,209
30,000
3,000

3,047

3,084

3,128

20,0002,500
10,0000

0

5th FP 6th FP 7th FP 8th FP 9th FP 10th FP 11th FP 12th FP(Forecast) (Forecast)

5th FP 6th FP 7th FP 8th FP 9th FP 10th FP 11th FP 12th FP(Forecast) (Forecast)

Nomura Real Estate Master Fund, Inc.

4

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

Track Record of Growth since Establishment
Improved portfolio quality through strategic property replacement supported by the Sponsor and achieved 		

steady increase in distributions.

Incorporation

Aug. 2020 FP

After acquiring
Landport Ome II (Note 2)

298

299

Number ofproperties

257

Ratio oftop 10 properties

26.8%

22.3%

22.0%

Ratio ofGreater Tokyo area

79.8%

82.7%

83.0%

Average buildingage

19.3 years

19.1 years

18.9 years

DPU (Note 1)¥2,656¥3,317(24.3 years without SPR) (Note 3)(Billions of yen)

Asset Size

Acquisition of high-quality properties

Disposition of less competitive properties

due to building age, etc.

(+24.9%)

Accumulated Acquisition Price

Accumulated Disposition Price

1,011.2

1,000

800

mainly developed by the Sponsor

932.8
783.6

792.6

927.3

955.9

922.5

10 properties ¥33.4 bln

Absorption type merger
with TOP REIT, Inc.
PMO Nihonbashi
Mitsukoshi-mae

600

NEC Head
Office Bldg.

400

9.0

０

220.9

270.8

PMO
Akihabara Kita

PROUD FLAT
Shibuya
Tomigaya

Serenite
Shinsaibashi Grande

330.9

350.6

371.3

385.9

279.9
Accumulated
Acquisition Price

76 properties¥385.9 bln
Accumulated
Disposition Price

-34.1
-81.5

Feb. 2016 FP

237.4

1,066.3

33.6
-34.1

Incorporation(Oct. 2015)

GEMS Shinbashi GEMS Namba

Summit Store
Honamanuma
PROUD FLAT Sangenjaya II

200

The 3rd PO

9 properties ¥40.4 bln

Hotel Vista
Sapporo Odori

Harumi Triton
Y&Z

181.9

The 2nd PO

12 properties ¥57.4 bln

PMO Tamachi
Higashi

19 properties ¥137.4 bln

1,051.6

960.3

The 1st PO

784.6

1,031.0

Aug. 2016 FP

Feb. 2017 FP

Aug. 2017 FP-105.0-105.0-110.3-110.3-110.3-110.3-110.3Feb. 2018 FP

Aug. 2018 FP

Feb. 2019 FP

Aug. 2019 FP

Feb. 2020 FP

Aug. 2020 FP

After acquisitionof LP Ome II

35 properties¥110.3 bln(Note 1) Distributions for February 2016 (the 1st) FP are calculated on a six-month basis for 152 operating days. (Note 2) As of October 1st, 2020.
(Note 3)	It is an average building age without taking into account the effect of property acquisition and disposition from the original portfolio at incorporation until October 31st, 2020.
5

Nomura Real Estate Master Fund, Inc.

Nomura Real Estate Master Fund, Inc.

6

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

External Growth
Properties Acquired in February 2021 (11th) FP (Landport Ome II)

Acquisition Track Records of Sponsor-developed Properties（Billions of yen）

Total acquisition price for 4 brands at incorporation (left axis)

Acquired a logistics facility from which stable revenues can be expected even amid the COVID-19 crisis, expanding

Total acquisition price for 4 brands since incorporation (left axis)(%)

4 Brands Ratio (PMO, GEMS, Landport, PROUD FLAT)

35

350

314.6

300

29.5%

250

logistics to occupy the second-largest portfolio share after office.

Landport Ome II

Acquisition price ¥14.6 bln

NOI yield 4.6%

Building
age 0.6
To Tsurugashima
JCT yrs

30
Sayama Golf Club

25

15

100

10

50

5

-O

Ken

Iw

ak

ur

a

Ka

id

0

0

Residential

PMO Hamamatsucho

24 hours a day, 365 days a year operation with favorable employment environment

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 tenants to maintain a favorable
employment environment.

A “category-wide multi-function” logistic facility

PROUD FLAT Togoshi-Koen
Good location a 1-minute walkfrom station in the Hamamatsucho
area where redevelopment isunderway

Good location a 2-minute walkfrom station in Togoshi-koen, ahistoric town in the Jonan area.
Received GOOD DESIGN AWARDFY2019aid

HamuraSta.

End of Feb. 2020 FP

Hotel

Location

Ome, Tokyo

Total floor

63,879.98 m2

Acquisition date October 1, 2020

Completion

February 2020

Appraisal value

Hotel

Properties acquired in 10th and 11th FP

0.6%

After acquisitions

0.6%

LP Higashi-Narashino

Residential

18.9%¥4,380 million

Acquisition price¥2,580 million

Appraisal value¥4,830 million

Appraisal value¥2,630 million

Appraisal NOI yield

3.7%

Appraisal NOI yield

4.3%

Completion

November 2018

Completion

November 2018

18.9%

Retail(Near stations)

Retail(Residential area)

44.4%

Logistics

LP Ome II

Retail(Near stations)

１１.4%

Retail(Residential area)

5.7%

１１.2%

5.5%

External Growth Policy Going Forward
Selective investment upon careful assessment of the impact of COVID-19. Continue to promote property replacement and other growthstrategies not involving capital increase.

RetailLogistics

GEMS Sangenjaya

Landport Higashi-Narashino
Located in Sangenjaya wherestable demand for restaurants
can be expected on both weekdays and weekends

Office

45.5%

16.9%
Acquisition price

Yokota Airbase¥15,100 million

OfficeMarch 10, 2020

Hakonegasaki
Sta.

Logistics portfolio status

Logistics

Acquisition dateetHamuraCity OfficeAcquisition price ¥14,620 million

19.3%

March 25, 2020

tre

To Hachioji JCT

A logistics facility that pursues optimization and efficiency by adopting a category-wide multi-function that adds functions specific to the target tenant’s
industry needs.

Residential

Acquisition date

oS

16

iv.

OfficeLocated in approximately 2.4 km from the Ome Interchange on the Ken-O
Expressway and close to National Route 16, allowing for wide-area delivery to
the entire Tokyo metropolitan area.

aR

August 2020 FP.

Favorable location allowing for wide area delivery to the entire
Tokyo metropolitan area

LP Ome I

ine
eL

Of the properties acquired through the third public offering (9 properties), acquired 4 properties for ¥20.6 billion in

eK

et

m
Ta

Properties Acquired in August 2020 (10th) FP

Om

Ozaku
Sta.

St

re

LP Ome II

Om

Incorporation Feb. 2016 FP Aug. 2016 FP Feb. 2017 FP Aug. 2017 FP Feb. 2018 FP Aug. 2018 FP Feb. 2019 FP Aug. 2019 FP Feb. 2020 FP Aug. 2020 FP
After(Oct. 2015)
acquisition of
LP Ome II

o

ine
oL

150

Ome IC

way

ess
Expr

hik

20

Hac

200

Investment Policy

High-performance logistics facility satisfying every need of “logistics function, location, security, and employment environment”

Selective investment in prime properties upon taking into account also the medium- to long-term outlook for the
impact of COVID-19
Analyze and examine with particular care in the case of the sectors (retail and hotel) that have been significantly affected even in the short term

Growth Strategies
Given the current investment unit price level, promote growth strategies not involving capital increase

Replacement of properties
Consider property replacements of properties deemed to be difficult to maintain competitiveness over the medium to long term in termsof location, specifications, building age and profitability by sale in combination with acquisition of prime new assets

Utilization of borrowing capacity

7

Nomura Real Estate Master Fund, Inc.

Borrowing capacity up to target maximum LTV on normalized basis (45%): Approx. ¥38.0 billion

Acquisition date

March 25, 2020

Acquisition price¥1,815 million

Appraisal value¥1,840 million

Acquisition date

Appraisal NOI yield

4.0%

Acquisition priceCompletion

April 2018

Appraisal value

Utilization of free cash flow (including reinvestment of security deposits)
March 2, 2020

Appraisal NOI yield

5.7%¥11,872 million

Type

Multi-tenant¥15,700 million

Completion

July 2019

Implement the most effective measure upon verifying the impact on distributions, investment
unit valuation, etc. based on real estate market
conditions, investment unit price level, etc.

(Options) (1) Acquisition of prime assets

Acquisition of Landport Ome II(2)	Purchase or retirement of
own investment units(3)	Repayment of existing borrowings

Nomura Real Estate Master Fund, Inc.

8

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

Impact of COVID-19(1) Impact on Each Sector(3) Responses to Retail Tenants

Concerning the impact on operating status of each sector, although the office and residential sectors had limited impact, tempo-

Retail tenants were greatly affected by the COVID-19 crisis as a result of municipalities requesting specified businesses to close

rary rent reductions and other impacts have been seen among retail tenants. As for the office sector, while downtime for newor shorten operating hours in addition to their request for self-imposed stay-at-home. Approximately 70% of tenants in the retailleases and rent revision negotiations have prolonged, and cancellation has occurred centering on small-size sections due to thesector were subject to the request for closure, etc., most of them being tenants operating restaurants/service businesses in

impact of COVID-19, rent increase upon tenant replacement and rent revision against the backdrop of the gap between the rent

retail facilities near stations. The following are our policies for responding to tenants based on this situation.

of owned properties and the market rent has continued. For retail tenants and hotels, we took measures such as deferment of▶ Fulfill our social responsibility as the owner of the facilities to prevent the spread of COVID-19

rent payments to support the tenants. Responses to retail tenants are detailed in (3) below. As for the residential sector,
although the occupancy rate was slightly lower compared to the usual year with fewer new applications received mainly during
the state of emergency, rent increase upon tenant replacement and contract renewal has continued as is the case with theoffice sector. Concerning the logistics sector, there was no impact on its operating status and rent increase upon tenant
replacement and contract renewal has continued. It sufficiently demonstrated a role as a stable sector even under the COVID-▶ Avoid tenant move-outs and replacements in the COVID-19 crisis by strengthening relationship with tenants
Based on the belief that these measures will result in stable management over the medium to long term and lead to securement of unitholder value, we allowed for temporary deferment of rent payments and partial rent reductions/exemptions during
the requested period for closure/shortened hours, as economic support for tenants subject to such requests.

19 crisis along with retail facilities in residential areas and residential properties.

SectorRevenueratio(Note)

Operating status including the impact of COVID-19•	
Prolonged downtime for new leases and rent revision negotiations, as well as cancellation against

46.9%

OfficeRetail Facilities

11.4%(Near stations)

Retail Facilities

6.6%

HotelsStableLogistics•	
Supported some tenants who were requested by the government to close or shorten operating

hours through temporary deferment of rent payment or rent reduction/exemption.
• Decrease in sales-linked rent and cancellations by some tenants due to a drop in sales.

Policy on tenant response

Details of tenant response

Sales deteriorated significantly
centering on tenants in restaurant/
service businesses as a result of
direct requests from municipalities toclose or shorten operating hours in
addition to their request for self-imposed stay-at-home.

(1) Fulfill social responsibility toprevent the spread of infection (Avoid onset of infection
at owned properties)(1) R equested the subject tenants tofollow the request for closure/shorter
operating hours.

<Requested period for closure/shortened hours>
Apr. May Jun. Jul. Aug. Sep.

(Residential Areas)

Residential

the background of poor business performance, introduction of remote work, etc. at some ofcompanies with little leased area.
•	
Rent increase upon tenant replacement and rent revision against the background of rent gap has
continued.

Status of tenants• No impact at present.

Tokyo

•	
The number of new contracts decreased for both individuals and corporations in April and May.

18.3%

16.1%

0.4%

Although the number recovered to the level of the usual year in July and after, occupancy rates
were lower than the usual year.
• Rent increase upon tenant replacement and contract renewal has continued.
• No impact at present.
• Rent increase upon tenant replacement and contract renewal has continued.

•	
Decrease in sales-liked rent due to a plunge in accommodation demand in line with the interna-(2) P rovided economic support keeping
in mind tenant attributes (status ofsales, size of business), difficulty of
replacement, etc.

(2) Through the reinforcement ofrelationships with tenants,
avoid tenant replacement
under the COVID-19 crisis(Avoid prolonged downtime
and decrease of rent)

Temporary defermentof rent payment:

83 tenants

Verified the feasibility of collection keeping
in mind security deposits received, etc.

Temporary partial rent
reduction/exemption

Kanagawa

178 tenants

Subject tenants:
A portion of tenants who are subject to therequest for closure/shortened hours

Osaka
Total number of tenants(or the number of sections)
Of which, the number oftenants/sections subject tothe closure/shortened-hour

300
215

Subject period:
Requested period for closure/shortened hours

Stable management
and securement ofunitholders’ interest overthe medium to long term

Status of temporary rent reduction/
exemption implemented

tional travel restrictions, self-imposed stay-at-home, etc.
• Supported tenants through temporary deferment of rent payment.

Aug. 2020 FP

Feb. 2021 FP¥214 million¥11 million*In addition to the above, temporary rent
reduction/exemption of ¥26 million in theAug. 2020 FP and ¥1 million in the Feb. 2021
FP has been implemented for retail tenants inoffice and residential properties.

(Note) Calculated based on rental revenues for the 9th FP (Feb. 2020 FP).

(2) Impact on Distribution for the Fiscal Period Ended August 2020 (10th Fiscal Period)
As a direct impact of COVID-19, revenue decreased by a total of ¥412 million due to the temporary rent reduction/exemption,
decrease in sales-linked rent, etc. At the same time, we reduced the impact of COVID-19 with external growth of properties

Tenant Categories (Note)acquired through the third public offering in December 2019, internal growth centering on the office sector and cost reductions
and such, and secured per-unit distribution of ¥3,317 as stated in the earnings forecasts by allocating internal reserves to cover

11.4%

the difference from the forecasts.

Retail Facilities (Near Stations)：

Direct Impact of COVID-19 on Per-unit Distribution

3,279

-51
(-¥241 mln)

-26(-¥125 mln)

(Breakdown by business category)

Residential-9(-¥46 mln)

+79

+46
(+¥218 mln)

3,317

18.3%

(+¥38)(+¥373 mln)

Retail Facilities(Residential
Areas)

6.6%

Direct impact of COVID-19-¥87/unit (¥412 mln)

9

Rent reduction/
exemption

Nomura Real Estate Master Fund, Inc.

Decrease insales-linked rent

Other revenues(Revenue fromthe Ferris wheel
at nORBESA, etc.)

GEMS
Office46.9%
External/internal
growth cost
reduction, etc.

3.5%

1.9%

Retail stores

SC

3.6%

2.1%

Logistics

16.1%

Feb. 2020 FP(Result)

Restaurants Services

Reversal of internal
reserves(Difference from
earnings forecast)

1.5%(Note) Calculated based on rental revenues for the 9th FP (Feb. 2020 FP).

Aug. 2020 FP(Result)

Nomura Real Estate Master Fund, Inc.

10

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

Internal Growth -Management StatusOfficeStrong trend of rent increase backed by rent gaps continued even amid the COVID-19 crisis.

Asset Management Topics in August 2020 FP

Recognition of Leasing Market Environment (comparison with 2008 global financial crisis, etc.)

The rate of rent increase upon tenant replacement:
The rate of rent increase upon rent revision:
The rent gap (Note 1) as of August 31, 2020:(1) Economic trends:(The rate of rent increase within tenant+20.7% replacement with rent increase: +24.2%)(The rate of rent increase within rent revision with

+4.6% rent increase: +6.8%)

Background to the economic downturn, support through fiscal and monetary policies, etc.
differ considerably from those of the 2008 global financial crisis, and recovery is assumed tobe relatively speedy.

(2) Supply-demand environment: No movements of excessive rent rise like those seen prior to the 2008 global financial crisis,and volume of office supply ahead also limited.

+10.1% (Increased by +0.2% from previous FP)(3) Increase in remote work:

Certain degree of impact likely, but the thinking of “offices are unnecessary” is fading.

<Feb. 2021 FP> Progress on
tenant replacement

Change in Floor Area from Move-ins and Move-outs (tsubo)
Average Rent

The rate of rent increase upon rent
revision only at PMOs
(contract renewal included)(Note 1)

Rent gaps at the end of 10th fiscal period ended Aug. 2020 (Note 2)(Increased by +0.2% from previous FP)(Yen/tsubo)+10.1%

19,000

Impact by acquisitionand disposition ofreal estate

18,50044

18,301

17,50017,54817,41917,723

2,740

2,255

1,351

-3,662-5,456

Aug. 2018 FP

Feb. 2019 FP-2,204-2,272

Aug. 2019 FP

Feb. 2020 FP

Floor area subject tomove-in (scheduled):

1,105 (Applied)

296(Contracted) 808

1,105 tsubo

Contracted: 808 tsubo
Applied: 296 tsubo (Note 2)(Breakdown)

The rate of rent increase-1,809+22.1%-3,018Aug. 2020 FP(Greater Tokyo: +11.9%)(Regional areas: +69.9%)

Feb. 2021 FP (Note)

Logistics

All increased

18

15,500With no impact of the COVID-19 crisis seen, continued to achieve upside potential while generating stable revenues
backed by long-term fixed agreements.

0Feb. 2018 FP

Aug. 2018 FP

Feb. 2019 FP

Aug. 2019 FP

Feb. 2020 FP

Amount and Rate of Change in Monthly Rent
upon Tenant Replacement (Note 2)Monthly rent decrease
Monthly rent increase
Monthly rent change rate

Average rate of rent increase
within tenant replacementwith rent increase

Amount and Rate of Change in Monthly Rent
upon Rent Revision (Note 2)Monthly rent decrease+24.2 %

Monthly rent increase
Monthly rent change rate(%)

(Millions of yen)

10

25

30

20

25

20.7%
17.6%

15

6

11.4%
7.4%

2

3

-2

5.9%
4

10

7.5%

5

8

5

7

4

-1
(2,326 tsubo)(3,666 tsubo)020(2,740 tsubo)(2,255 tsubo)(1,109 tsubo)

Feb. 2018 FP Aug. 2018 FP Feb. 2019 FP Aug. 2019 FP Feb. 2020 FP Aug. 2020 FP

Average rate of rent increase
within rent revision with rent
increase+6.8 %
(%)

6

4.6%
3.7%

3.3%

15

4

3.4%

3

2.4%

2

5

1

0

-10

0.6%
23

10
-7

8

15

17

17

Landport Iwatsuki: Extended contract period

Landport Hachioji: Contracted with each tenant

For the half of the sections (3,580
tsubo) under short-term agreement(6 months),
re-contracted with contract period
extended to 3 years with sametenant❶ Conclusion of green lease agreement
in line with LED installment work
Achieved rent increase throughgreen lease agreement with 3
tenants (3,781 tsubo)(+6.5% compared with previous tenant)Contracted rent:+5.6% compared with previous tenant❷ Re-contracted with large tenant
Re-contracted for long term of 5 years with large tenant (4,652
tsubo) whose fixed-term lease was due to mature in February
2021 FP510-5(5,502 tsubo)

Asset Management Topics in August 2020 FP

Aug. 2020 FP(Millions of yen)

8

Lease Maturities (rent basis)
Landport Hachioji：Contract renewal (five years)
Landport Iwatsuki：Contract renewal (three years)

0

-2

11.3%

11.0%
8.8%

(33,304 tsubo) (29,427 tsubo) (21,007 tsubo) (24,914 tsubo) (22,830 tsubo) (22,254 tsubo)

8.5%

6.6%

Feb. 2018 FP Aug. 2018 FP Feb. 2019 FP Aug. 2019 FP Feb. 2020 FP Aug. 2020 FP

6.8%

6.6%

3.6%
(Note 1) It is calculated for the properties held by NMF excluding the properties for which the entire building is leased to one tenant.
(Note 2) F igures in parentheses are the floor area upon tenant replacement and the floor area (Tsubo) subject to rent revision. The change in monthly rent is calculated
as the weighted average of all subjected area. The same applies to the following investment sectors.

11

3,018 tsubo

18,51016,000-4

3,666(Note 1) As of September 30, 2020.
(Note 2) The figure shows floor area for which NMF received applications for occupancy.

16,5000Floor area subject tomove-out (scheduled):

5,502

Rent revision in PMO

17,0004

Move-in

018,46518,06018,000+ 6.7 %

Move-out

Nomura Real Estate Master Fund, Inc.

Feb. 2021 FP

Aug. 2021 FP

Feb. 2022 FP

Aug. 2022 FP

Feb. 2023 FP

Aug. 2023 FP

Feb. 2024 FP

Aug. 2024 FP

Feb. 2025 FP

2.0%

2.1%

Aug. 2025 FP

Feb. 2026 FP

Nomura Real Estate Master Fund, Inc.

12

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

Internal Growth -Management StatusGEMS

RetailUniversal City Walk Osaka

Temporary rent decrease, decrease in sales-linked rent, and other impact on retail properties in station areas. Stable

Management status

Management statusrevenues underpinning retail properties in residential areas.

Sales (change from same month of previous year)

Sales (change from same month of previous year)

2020

Asset Management Topics in August 2020 FP

Mar.

Retail properties in station areas

9 GEMSs

Sales fell mainly at restaurant tenants due to self-restraint from going out, etc.

Apr.

May

Jun.

Jul.

Aug.

60.5%

9.5%

15.5%

42.1%

47.5%

44.9%

—

UCW

2.8%

0.8%

0.7%

24.1%

27.2%

27.3%

39.0%

Food supermarket tenants and specialist stores (electronics store, etc.) performing well in sales due to special demand attributable
to COVID-19
Electronics store a50

Mar. 2020

Apr. 2020

May 2020

Jun. 2020

Jul. 2020

Amount of change in monthly rent
Rate of change in monthly rent

3,355

3,200

32

2,498

2,400

Sep.

0.8%

0.7% 24.1% 27.2% 27.3% 39.0%

Expanded area of phased ticket sales(nationwide from July 20)<Sales in first week of October>(Weekdays) 39.1% (Weekends) 52.5%

Policy going forward
Implement effective sales promotions in tandem with
USJ’s introduction of new content and holding of events
to restore customer count and boost sales<Upcoming USJ events>• STAND BY ME Doraemon 2 XR Ride (from August 2020)• Halloween and Christmas events• World’s first “SUPER NINTENDO WORLD” opening in
Spring 2021

24

Temporary decrease in applications due to COVID-19, but trend of rent increase continued through tenant replacement.
Asset Management Topics in August 2020 FP

（%）
6.0

(Thousands of yen)

2,000

Demand from both individuals and corporations now trending toward recovery.

Amount of change in monthly rent
Rate of change in monthly rent

1,801
5.0%

1,600

4.8

1,200

16.7%

1,531

3.6

10.9%

800

8

400

0

0

870

No
replacements

587

16

0.0%

0

Feb. 2018 FP Aug. 2018 FP Feb. 2019 FP Aug. 2019 FP Feb. 2020 FP Aug. 2020 FP

1.6%
1.1%

0.8%

1.5%
0.0%
0

273

317

0

Feb. 2018 FP Aug. 2018 FP Feb. 2019 FP Aug. 2019 FP Feb. 2020 FP Aug. 2020 FP❶ Change in monthly rent due to move-ins and move-outs

Strategic leasing to corporate customers in the Tozai Line area (10 properties)
resulted in rent increase.
Monthly rent +9.0% (+¥596 thousand/month)

330 out of 2,082 units (15.9%) renewed contract withincreased rent
Change in monthly rent +0.4% (+¥832 thousand/month)

1.2

343

Achieved internal growth through strategic leasing capturing area characteristics❷ Change in monthly rent due to contract renewals

2.4

729

12.9%

Change in monthly rent due to move-ins andmove-outs or contract renewal
865 out of 1,149 units (75.3%) replaced with increased rent
Change in monthly rent +4.3% (+¥5,010 thousand/month)

19.7%

Amount of Change in Monthly Rent at Move-ins and Move-outs(Thousands of yen)

(%)

6,000

6.0

Rent Revenue Breakdown (overall retail)Amount of change in monthly rent

Residential areas (fixed-rent)

Station areas (fixed-rent)

3.8%

Sales-linked rent

Rate of sales-linked rent

3.7%

5

2

1.0%

2,000

1
0

0

Nomura Real Estate Master Fund, Inc.

Change in rent

¥245,000¥41,000¥157,000¥16,000

19.6%
15.1%
11.4%
11.0%

Rate of Change in Monthly Rent at Renewals
100%

Down

Aug. 2019 FP

Flat

Up

5.9

7.0

90.8

94.1

92.9

0.0

0.1

0.1

9.2

3.3

7.8

15.9

96.7

92.2

84.1

0.0

0.0

0.0

4.3%
4.0

4,000

Feb. 2020 FP

2.8%

3

4,000

Feb. 2019 FP

4.5%

3,000

3.0%

Aug. 2018 FP

Change in rent

18
4
19
2

4

3.8%

6,000

Feb. 2018 FP

Number of units moved-in/out

5.0

(%)

4.3%
8,000

Name of property

PRIME URBAN Gyotoku II
PRIME URBAN Gyotoku I
PRIME URBAN Gyotoku III
PRIME URBAN Urayasu

Rate of change in monthly rent

5,000

13

Aug.

Residential

Amount and Rate of Change in Monthly Rent upon Rent
Revision (retail properties in station area)（%）
40(Thousands of yen)

(Note) Compiled based on tenants for which March to August2020 sales data are available as of October 14, 2020.

Aug. 2020

Amount and Rate of Change in Monthly Rent upon Tenant
Replacement (retail properties in station areas)

10,000Jul.

• Negotiate extending contracts with existing tenants to maximize cash flows during period of postponement• Invite event tenants to small-scale roadside sections• Consider revising MD/concept for after COVID-19

75(Millions of yen)

2.8%

Temporary park closure

Jun.

Policy going forward

100

800

USJ

May

Given the leasing environment, etc. amid the COVID-19 crisis, postponed renewal period (was set to reopen in Spring 2021)

125

12.5%

UCW

Apr.

Renewal schedule

150

1,600

15.5% 42.1% 47.5% 44.9%

Mar.

Nakaza Cui-daore Building(Reference) 10th FP sales (change from same month of previous year) (Note)

4,000

Aug.

(Sales promotion examples)• Discount coupons at owners’ expense• Support introduction of takeaways/deliveries, etc.
Strengthening of leasing structure
Strengthen leasing and other management structure incollaboration with the Nomura Real Estate Group

Retail properties in residential areas

(%)

2020
Jul.

Sales promotion expenses: ¥4,370 thousand/property(usually ¥2,500 thousand/property)→ Business support through sales promotions, coupled with economic support, served to avoid move-outs and replacements

Food supermarket b

Jun.

Support for recovery in sales through additional sales promotions
Consider and implement effective measures to boost
sales by raising sales promotion budget, also for the purpose of strengthening tenant relations

Sep.

9 GEMSs

Food supermarket a

60.5% 9.5%

May

Policy going forward

Sales (change from same month of previous year)
Mar.

Apr.

Aug. 2020 FP

2,000

1.9%

3.0

2.6%

50%

2.2%
2.0

1.0

1,000

1,896

2,863

2,844

3,235

4,617

5,010
0.0

0
Feb. 2018 FP Aug. 2018 FP Feb. 2019 FP Aug. 2019 FP Feb. 2020 FP Aug. 2020 FP

0%

Feb. 2018 FP Aug. 2018 FP Feb. 2019 FP Aug. 2019 FP Feb. 2020 FP Aug. 2020 FP

Nomura Real Estate Master Fund, Inc.

14

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

ESG Measures
As a result of proactive promotion of ESG measures, NMF obtained the highest rating among J-REITs (AA) under the MSCI ESG Ratings
Obtained highest rating among J-REITs (AA) under the MSCI ESG Ratings
The rating was upgraded from A to AA (the highest among J-REITs), as promotion for acquiring green certification, diversity of NMF’s board of
directors (appointment of female Supervisory Director), etc. were recognized. Furthermore, NMF has been continuously included in the MSCIJapan ESG Select Leader’s Index.
What Is the MSCI Japan ESG Select Leaders Index?
The MSCI Japan ESG Select Leaders Index is an index consisting of stocks of companies
with relatively high ESG ratings selected from various industries among the top 700
Japanese stocks by market capitalization, excluding those having serious scandals.
The index has been selected by the Government Pension Investment Fund (“GPIF”) as
one of their ESG indices for making investment based on ESG measures.

AUM of GPIF: ¥1,306.1 billion (as of March 31, 2020) (Note)
Support for TCFD (Task Force on Climate-related Financial Disclosures) Recommendations
In July 2020, Nomura Real Estate Asset Management Co., Ltd., the asset management company of NMF, declared its support of the recommendations of the TCFD and decided to participate in the TCFD Consortium, a group of domestic companies that supports TCFD recommendations.
What Is TCFD?
TCFD refers to the “Task Force on Climate-related Financial Disclosures” launched by the Financial
Stability Board (“FSB”) for the purpose of discussing the disclosures of climate-related financial
information and the responses by financial institutions. TCFD identifies climate change as a serious risk to the global economy and encourages companies and organizations to understand anddisclose four core elements regarding climate-related risks and opportunities, “Governance,”“Strategy,” “Metrics and Targets,” and “Risk Management,” in its recommendations.

Number of institutions supporting TCFD:
1,433 (of which, 306 are Japanese institutions) (As of September 28, 2020)(Note) Reference: GPIF’s “FY2019 ESG Report.”

E

S

ESG Measures (S: Society)

Measures to Prevent the Spread of COVID-19
Measures at owned properties
Measures of Asset Management Company• Installation of alcohol-based hand sanitizer and• Installation of alcohol-based hand sanitizer
thermometers• Installation of partitions in conference rooms, etc.
• Encourage employees to work from home and• Ventilation by leaving entrances and exits open atpractice staggered commuting
stores• Establish an online conference system• Secure social distancing by installing footprints• Take temperature of each tenant, and other measures • Take temperature of visitors, and other measures
Improved tenant convenience by opening the Nomura Conference Plaza Shinjuku
Nomura Conference Plaza Shinjuku, which was operating on the 48th floor of Shinjuku Nomura Building, reopened on October 5, 2020, after
relocating to the 2nd floor of the same building to improve convenience.
<Key points of the renovation>• Direct access from the entrance hall
• Functional conference room that has the capacity to accommodate large numbers of people
and is also versatile• Installation of cutting-edge audio-visual equipment with simultaneous interpretation, etc.
Contributes to increased satisfaction of tenants and other users
In the event of a disaster, it can also be utilized as an emergency headquarters

G ESG Measures (G: Governance)
Workable sustainability promotion system
The Asset Management Company has established the following systems to promote measures based on the Sustainability Policy in acontinuous and systematic manner.

ESG Measures (E: Environment)M eets once a year, in principle
Approval of policies and rules, etc., monitoring and supervision of the status of sustainability promotion
Investment Committee:
Meets twice a year (decisions on goals and measures), in principle
Decision-making body for sustainability (goals, measures, etc.)
Sustainability Promotion Committee: Meets once a quarter, in principle
Formulates sustainability goals and measures and monitors achievement status
Board of Directors:[Target] Raise the ratio to 70% by FY2030 (total floor area basis)

Green Certification

Green Certification (With three stars or more or equivalent)Green Certification (Total)

Target70.0%

Realized reduction of both electricity consumption andCO2 by switching electric power companies
By fielding quotes from different electric power companies, “themost suitable electric power supplier” was selected to reduce bothelectricity consumption (costs) and CO2 emissions.
Target properties:
properties (42 offices, 16 retail, 7 logistics, 21 residential)
Reduction of electricity consumption costs (assumed): -¥114 million/year (-8.5%)
Reduction of CO2 emissions (assumed): -3,011 t/year (-4.5%)→ Gradual transition starting in 10th FP, with full switch by 13th FP

44.7%
FY2017FY2018

Board of Directors

86

50.1%

48.8%

FY2019FY2030

Sustainability Policies

Environmental policies

Regulation of Sustainability Promotion= Operating Procedure

Greenhouse Gas

FY2018FY2019(1) Saving Energy with LED Lighting
Shinjuku Nomura Building• Kojimachi Millennium Garden• NMF Shiba Building• Sagamihara Tana Logistics Center• Landport Itabashi• Universal CityWalk Osaka• PROUD FLAT Monzen Nakacho I• PRIME URBAN Shibaura LOFT, others•-28.9%
Target-40.0%FY2017

Chief Sustainability Officer

Implemented a variety of capital investments in owned
properties to reduce their environmental impact(The examples below are from the 10th FP)-17.5%FY2016

Committee Members

Committee Chair (Sustainability Officer)
Fund Management Department
Asset Management Department• Investment Management Planning Department
ESG & Engineering Service• Corporate Planning Department• Finance & Accounting Department•

Energy Consumption (Intensity)-25.1%= Sustainability Officer

Sustainability Promotion Committee
Reporting[Target] Reduce 40% by FY2030 (compared with 2016)
GHG (Intensity)

Assigned Fund (NMF)
Committee Chair (head of NMF Investment Management Group)

FY2030[Target] Reduce 10% by FY2030 (compared with 2016)
Water Use (Intensity)

Chief Strategy Officer (Director)

Investment Committee<Energy reduction by work in the 10th FP>-2,887 Mwh/year (approx.-61.6%)

Chair: President and Executive Officer
Members: Chief Strategy Officer, other Executive Officers,••

Discussion Agenda••

Formulation of annual and long-term goals and measures
Monitoring state of achievements

Compliance Officer, and any other person appointed
by the chair
Decision•

Assigned Fund (excluding NMF)

Determine sustainability targets and measures

Committee Chair (Head of the Fund)= Sustainability Officer

Water Use

Landport Itabashi
-3.9%
-5.0%

-5.0%

Target-１0.0%FY2016FY2017FY2018FY2019(2) Saving Energy by Upgrading
Air-Conditioners• Nishi Shinjuku Showa Building• NMF Yokohama Nishiguchi Building• Landport Atsugi• Atsugi Minami Logistics Center A Tower,
others<Energy reduction by work in the 10th FP>-443 Mwh/year (approx.-15.3%)

FY2030Third-party certification that evaluates the effectiveness of the sustainability promotion system[Scope of certification and registration]
Investment and management of office buildings and residential properties(Note) “Green Certification” refers to either DBJ Green Building Certification, BELS Certification or CASBEE for Real Estate. “Green Certification (With three stars ormore or equivalent)” refers to three stars or more for DBJ Green Building Certification, three stars or more for BELS Certification, or B+ or higher for CASBEE
for Real Estate.
15

Nomura Real Estate Master Fund, Inc.

Nomura Real Estate Master Fund, Inc.

16

Message from the Management

Management Strategy

ESG Measures

Financing Status

Financing Status

Portfolio

Investor Information

Balance Sheet Highlights
Revenues decreased due to COVID-19, but distributions were achieved as forecast as a result of external and internal
growth, reversal of internal reserves, etc. DPU for Aug. 2020 FP is ¥3,317, up ¥38 (+1.2%) from the Feb. 2020 FP results.

Pursuing low interest rates and prolonged borrowing periods through refinancing.

Status of Interest-bearing Debt (as of end of fiscal period)
Feb. 2019(7th FP)(Millions of yen)Aug. 2019(8th FP)

Feb. 2020(9th FP)¥497,112 million

Average remaining
duration

4.52 years

4.64 years

4.82 years

4.97 years

Average interest rate

0.87%

0.83%

0.82%

0.76%

Ratio of long-term debt

86.9%

86.0%

87.1%

88.2%

Ratio of fixed-rate debt

95.4%

94.1%

95.6%

95.7%

LTV

44.5%

43.9%

42.8%

43.2%

¥510,770 million

Ended Feb. 29, 2020 Ended Aug. 31, 2020
Differences(9th FP)(10th FP)

Aug. 2020(10th FP)

Total Interest-bearing
debt¥510,727 million¥517,884 million

Diversification of Repayment Dates (as of end of fiscal period)
Investment corporation bonds (left axis)

Debt (left axis)

Average interest rate (%)(Millions of yen)

1.92

60,00050,0001.18

40,000

0.70

1.01

0.92

0.99
0.70

30,0000.88

1.09
0.67 0.63 0.67 0.60
0.67 0.69
0.58
0.54

1.03

0.90

0.59 0.52 0.63 0.54

20,00010,0000Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb.
2021 2021 2022 2022 2023 2023 2024 2024 2025 2025 2026 2026 2027 2027 2028 2028 2029 2029 2030 2030 2031

New borrowing during
August 2020 FP
New Borrowing Overview(Note 1)

Repayment Overview

Feb.
2041

Scheduled repayment
during February 2021 FP

Refinancing during August 2020 FP(Note 2)

Aug.
2038

Refinancing Overview(Note 3)

Scheduled Repayment(Note 4)

Total amount of
new borrowing¥7,200 mln

Total amount of
repayment¥33,400 mln

Total amount ofrefinancing¥33,400 mln

Total amount of
repayment¥32,400 mln

Average interest rate

0.51%

Average interest rate

1.33%

Average interest rate

0.46%

Average interest rate

0.70%

Average remaining
duration

9.6 years

Average remaining
duration

7.8 years

Average remaining
duration

8.9 years

Average remaining
duration

5.6 years(Note 1) T he ¥4,500 million procured under a commitment line agreement on March 25 is the content after extending the borrowing period and fixing the interest rate
through the issuance of investment corporation bonds on August 14. Average interest rate and average remaining duration are those at the time of borrowing.
(Note 2) A verage remaining duration is it at the time of borrowing and average interest rate is weighted average interest rate at the time of repayment. Excluding ¥42.8
million in contractual repayment.
(Note 3) Averageinterest rate and Average remaining duration are those at the time of refinancing.
(Note 4) A verage remaining duration is it at the time of borrowing and average interest rate is weighted average interest rate as of the end of August 2020. Excluding¥42.8 million in contractual repayment.

Issuance of Green Bonds

Credit Ratings

Result (A)36,92733,877
3,049
22,253
15,720
1,658
2,976
5,151
5,934
3,291
2,622
619
14,673
8
2,506
2,439
55
10
12,17516
12,188Result (B)37,57734,884
2,693
22,364
15,678
1,418
3,124
5,369
5,765
3,420
2,622
643
15,212
4
2,413
2,402
—
11
12,803—
12,799(B) - (A)
650
1,006
-356
110
-42
-239
148
218
-169
129
—
23
539
-4
-92
-37
-55
0
627
-16
610

Distribution of Earnings aDistribution in Excess of Earnings b
Total Distributions a+b

12,1883,272
15,461

12,797
2,843
15,640

608
-429
179

Internal Reserves(Total Internal Reserves)-654(3,420)-218(3,201)436(-218)

3,279
2,585

3,317
2,714

(Yen)
38
129

368

377

9

326

226

-100

Operating Revenue
Rental revenues
Other rental revenues
Operating Expenses
Rental business expenses
Repair expenses
Tax and public dues
Depreciation and amortization
OthersAsset management fees
Amortization of goodwill
Other operating expenses
Operating Income
Non-operating Revenues
Non-operating Expenses
Interest Expenses and other financial costs
Investment units issuance costs
Other non-operating expenses
Ordinary Income
Extraordinary LossNet Income

DPU
Distributions of earnings per unit
Distributions in excess of retained earnings
per unit [allowance for adjustment of
temporary differences]
Distributions in excess of retained earnings
per unit [other distributions in excess ofearnings]
Total Assets
Acquisition Price
Interest-bearing debt
LTV
Market capitalization
NOI
FFO

6th Unsecured Investment Corporation Bond (Green Bond)

Total amount of Issuance¥7,000 million

Interest rate

0.54%

Payment dateAugust 14, 2020

Redemption dateAugust 14, 2030

Nomura Real Estate Master Fund, Inc.

Credit Rating Agency

DPU
(Yen)

3,600
3,500

Rating Description

Japan Credit Rating Agency, Ltd.
(JCR)

Long-term issuer rating: AA

Rating and Investment
Information, Inc. (R&I)

Issuer rating: AA-

S&P Global Ratings Japan Inc.
(S&P)

Long-term Issuer credit rating: A

Short-term Issuer credit rating: A-1

1,193,471
1,031,039
510,72742.8%
807,713
26,357
19,953(Millions of yen)
1,197,766
4,294
1,051,686
20,647
517,884
7,157
43.2%
0.4%
640,795 -166,918
27,268910
20,798844

Main Factors Accounting for Differences
Between the 9th Results and the 10th Results(Millions of yen)

Operating Revenue

650

Rental revenues

1,006

Rent and common area charges of portfo382
lio properties (excluding impact of COVID-19)
Direct impact of COVID-19(of which, temporary rent reduction/exemption:−241; decrease in sales-linked rent: −125)-366

Impact of acquisition

990

Other rental revenues-356

Decrease in utility expenses received-245

Direct impact of COVID-19(revenue from the Ferris wheel at nORBESA, etc.)-46

Absence of cancellation penalty fee, etc.

-65

Operating Expense

110

Rental Business Expenses-42

Decrease in utility expenses paid

-223

Rental business expenses of portfolio
properties(excluding utility expenses paid)-65

Impact of acquisition(excluding utility expenses paid)

246

Asset management fees/Other operating
expenses152

Non-operating Expenses-92

Interest Expenses and other financial costs-37

Investment units issuance costs-55

Extraordinary gain and loss

-16

Absence of extraordinary gain on natural
disasters-16

Net Income

610

Absence of 9th FP’s reversal of internal
reserves-654

10th FP’s reversal of internal reserves

218(cover part of temporary decrease in revenues
attributable to COVID-19)

Main Factors in Change of DPU (yen/unit)

3,400

17

Financial Section

3,300

Increase factors

-81

3,200
3,100
3,000

Decrease factors

Increase in rent revenues and common area charges +3(of which, impact of COVID-19)(-77)
Office+39
Retail-67
Logistics+30
Residential+0
Utility expenses received-55
Impact of COVID-19 (other revenues)-9
Absence of cancellation penalty fee, etc.
-19

3,279

162
65

Decrease in repair expenses
Decrease in utility expenses paid
Increase in property and other taxes
Increase in other expenses

+51
+51
-31
-6

-108

Increase in asset management fees
-27
Decrease in interest expenses and other financial costs +8
Absence of reversal of internal reserves-138
Reversal of internal reserves+46
Others
+3

3,317

2,900
0
Feb. 2020 FP
DPU(Result)

Rental revenues(Portfolio properties)

Rental business
expenses(Portfolio properties)

Rental businessgain/loss(Acquisition)

OthersAug. 2020 FP
DPU(Result)

Nomura Real Estate Master Fund, Inc.

18

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

Market Review
OfficeRetailVacancy Rate (Tokyo Central Five Wards)

Average Monthly Rent (Tokyo Central Five Wards)(%)(Yen/tsubo)

10.0

24,000Retail and Restaurant Sales Volume by Store Type Year-on-Year Change (2019 to 2020)
April

May

June

July

20%
9.43

Aug.2020
22,822

22,9018.0

22,000

6.0

20,0004.0

18,000

0%
-20%
-40%
-60%
-80%

Aug.2020
3.07
2.49

2.0

16,000-100%

16,207

Supermarkets
0.0

Drugstores

General merchandise stores(GMS)

14,000’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20

Source: Prepared by NREAM based on data from Miki Shoji Co., Ltd.

Source: Prepared by NREAM based on data from Miki Shoji Co., Ltd.

Supply of Office Buildings (Tokyo Central Five Wards)

Rent and Vacancy Rate Matrix (Tokyo Central Five Wards)(Thousands of tsubo)

Rent
(Yen)

New supply

700

23,000
Forecast

600

17,000100

Previous
bottomQ2 ‘129.43％

16,0000

15,000
’14

’15

’16

’17

’18

’19

’20

’21

’22

’23

1

2

3

4

5

6

7

8

9

10

Vacancy Rate(%)

Source: Prepared by NREAM based on results of surveys by brokers, etc.

16

Vacancy rate (overall) (right axis)

14

Vacancy rate
(a year or more after completion) (right axis)

10400,000

8

300,000

6

200,000

4

100,000

2
0.6%
0.4%

0

Source: Prepared by NREAM based on data from Miki Shoji Co., Ltd.

’14

’15

’16

’17

’18

’19

0

(People)Rental Condominium Rent Index (Tokyo’s 23 Wards)(People)Tokyo

Osaka (right axis)

09Q1=100

Aichi (right axis)

14,0001,400

12,000

1,200

116

1,000

8,000

800

6,000

600

4,000

400

2,000

200

-200

-2,000

’14

’15

’16

’17

’18

’19

’20

Source: Prepared by NREAM based on data from Ministry of Internal Affairs andCommunications
19

Nomura Real Estate Master Fund, Inc.

18.1

’17

’18

19.5

5
0
’16

’19

’20

’21

’22

’23

’24

(Millions of people)

2019
0

2020

60

-1.1%

114
3.2

-20

2.4

-40

50

110
40

108
106

30

104
-58.3%

1.6

102

-60
20

100
98

0

0

15.4

17.6

23.4

10

YoY change (right axis)

4.0

112
10,000

15

16.6

22.1

26.3

延べ宿泊者数の19-20年比較(全国・外国人含む)of 2019 and 2020 (Nationwide, including
foreign visitors)

（%）

2020

20

20.8

24.9

Total Number of Overnight Guests Year-on-Year Comparison

Foreign Visitor Arrivals Year-on-Year Comparison
2019

25

’15

人口流入超過数（12ヶ月移動平均）
年間訪日外国人数の19-20年比較of2019 and 2020
(Millions of people)

Single Type 18 m2 – 30 m2
Compact Type 30 m2 – 60 m2

Forecast

Source:Prepared by NREAM based on data from “IT Navigator 2020” publishedby Nomura Research Institute, Ltd.
*”Years” show fiscal years

HotelsNet Population Inflow (12-month moving average)

Online retail sales revenue

30

’20

Source: Prepared by NREAM based on data from CBRE

Residential

Japanese Ecommerce (B2C) Market(Trillions of yen)

12

500,000

Q2 ‘038.57%

18,000200

Forecast

New demand (left axis)

600,000

Q3 ‘01
3.24%

19,000300

New supply (left axis)

700,000

20,000400（%）

800,000

21,000500

Pubs/izakaya

Department stores

Logistics(Tsubo)22,000

Restaurants total

Source: Prepared by NREAM based on data from the Ministry of Economy, Trade and Industry and various organizations in the respective industries
Note: The figures represent year-on-year change in nationwide sales, partially including preliminary figures. Drugstores, restaurants total, and pubs/izakaya are on an
all-ops basis. All others are on an existing-shop basis.

Large-Scale Rental Logistics Facility Supply and Demandin the Tokyo Metropolitan Area as of June 30, 2020

Previous peakQ2 ‘08
3.49%

Q2 ‘201.97%

Convenience stores

0.8

-80

96

10

-93.0%

94-99.0%

0

’14

’15

’16

’17

’18

’19

’20

Source: Prepared by NREAM based on data from At Home Co., Ltd. and
Sumitomo Mitsui Trust Research Institute Co., Ltd.

Jan.

Feb.

Mar.

Apr.

May

-100

Jun.

Jul.

Source: Prepared by NREAM
based on datafrom JNTO
出所：日本政府観光局（JNTO)よりNREAM作成
注釈：速報値を含む
Note: Preliminary figures are included.

0

Jan.

Feb.

Mar.

Apr.

May

Jun.

Source: Prepared by NREAM based on data
fromthe Japan Tourism注釈
Agency出所：
観光庁よりNREAM作成：速報値含む
Note: Preliminary figures are included.
Nomura Real Estate Master Fund, Inc.

20

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

Portfolio Analysis (as of Aug. 31, 2020)
NUMBER OF PROPERTIES

298

propertiesASSET SIZE

¥1,051,686

millionHotels0.6%

Other Area

17.3%

Portfolio Distribution (property locations in Japan, millions of yen)

OCCUPANCY RATE

99.1

%

Other

0.5%

1 Property 12 Properties
8,500 10,267

Residential
Facilities

2 Properties
10,39019.2%

Diversification by
location

Logistics
Facilities(based on acquisition price)

1 Property
3,600

Office Buildings

Retail Facilities

Retail Facilities(Residential areas)(near stations)

5.6%

11.4%

22.3%

3 Properties
7,400
5 Properties
1 Property
3,942
2,030

26.8%
Diversification bytenant(based on acquisition price)

54 Properties
40 Properties■ Retail
20 Properties■ Logistics
■ Residential 125 Properties
1 Property■ Other
240 Properties

Total

77.7%

288 Properties■ Hotels

14 Properties
11 Properties
1 Property
30 Properties
2 Properties

Total

58 Properties■ Office■ Retail■ Logistics
■ Residential(based on leased area)

7 Properties
48,310

Other

Other

OthersOther Areas■ Office

Top Ten Tenants
as a Percentage
of Portfolio

Diversification byproperty type

HotelsTokyo Area

Tokyo Area

Top Ten Properties
as a Percentage
of Portfolio

Retail(based on acquisition price)

17.7%
82.7%

Residential

Logistics

45.0%

Diversification byuse

Office

Other

73.2%

4 Properties
46,83051 Properties
385,745

26 Properties
108 Properties
68,756
149,036

1 Property
18,3002 Properties
4,520

1 Property
2,280

5 Properties
7,645

5 Properties
44,236
1 Property
3,460
4 Properties
25,6503 Properties
8,997

2 Properties
6,580

1 Property
2,320

2 Properties
6,440 5 Properties
2,477

4 Properties
5,830

4 Properties
49,972
1 Property
1,580

5 Properties
9 Properties 37,990
33,9603 Properties
15,9109 Properties
13,471

1 Property
3,080

7 Properties
4,632
1 Property
4,900
Others1 Property
2,650

For a detailed list of properties in our portfolio, visit the website below.
https://www.nre-mf.co.jp/en/portfolio/index.html(Note) In the diversification by tenant, the leased areas of properties under pass-through master lease agreements are calculated based on the leased areas of end tenants.

21

Nomura Real Estate Master Fund, Inc.

Nomura Real Estate Master Fund, Inc.

22

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

Portfolio Gallery
OfficeRetailTOP 3 Properties (acquisition price)

TOP 3 Properties (acquisition price)1

NEC Head Office Building
Location: Minato Ward, Tokyo
Acquisition price: ¥44,100 million
Total floor area: 144,476.05 m2

PMO
Hamamatsucho

23

2

Shinjuku Nomura Building
Location: Shinjuku Ward, Tokyo
Acquisition price: ¥43,900 million
Total floor area: 117,258.88 m2

3

Kojimachi Millennium
GardenLocation: Chiyoda Ward, Tokyo
Acquisition price: ¥26,700 million
Total floor area: 16,050.53 m2

1

Universal CityWalk Osaka
Location: Osaka City, Osaka
Acquisition price: ¥15,500 million
Total floor area: 86,888.64 m2

2

Yokosuka More’s City
Location: Yokosuka City, Kanagawa
Acquisition price: ¥13,640 million
Total floor area: 43,890.82 m2

3

Nakaza Cui-daore Building
Location: Osaka City, Osaka
Acquisition price: ¥11,600 million
Total floor area: 8,280.08 m2

PMO Tamachi

NMF Aoyama 1-chome
Building

GEMS Sangenjaya

EQUINIA Shinjuku

GEMS Daimon

Location: Minato Ward, Tokyo
Total floor area: 2,872.41 m2

Location: Minato Ward, Tokyo
Total floor area: 5,171.17 m2

Location: Minato Ward, Tokyo
Total floor area: 10,063.05 m2

Location: Setagaya Ward, Tokyo
Total floor area: 1,176.76 m2

Location: Shinjuku Ward, Tokyo
Total floor area: 5,221.88 m2

Location: Minato Ward, Tokyo
Total floor area: 1,387.89 m2

Harumi Island Triton
Square Office Tower Z

NMF Kawasaki
Higashiguchi Building

NRE Osaka Building

Musashiurawa Shopping
SquareIzumiya Senrioka

NMF Kobe Myodani Building

Location: Chuo Ward, Tokyo
Total floor area: 10,759.81 m2

Location: Kawasaki City, Kanagawa
Total floor area: 10,932.69 m2

Location: Osaka City, Osaka
Total floor area: 23,522.82 m2

Location: Suita City, Osaka
Total floor area: 24,399.12 m2

Location: Kobe City, Hyogo
Total floor area: 14,619.46 m2

Nomura Real Estate Master Fund, Inc.

NEW

Location: Saitama City, Saitama
Total floor area: 28,930.36 m2

NEW

Nomura Real Estate Master Fund, Inc.

24

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

Portfolio Gallery
Logistics

Residential

TOP 3 Properties (acquisition price)

TOP 3 Properties (acquisition price)1

Landport Urayasu
Location: Urayasu City, Chiba
Acquisition price: ¥17,400 million
Total floor area: 71,570.64 m2

Landport Itabashi
Location: Itabashi Ward, Tokyo
Acquisition price: ¥15,710 million
Total floor area: 53,561.44 m2

3

Landport Kawagoe
Location: Kawagoe City, Saitama
Acquisition price: ¥13,700 million
Total floor area: 72,352.88 m2

1

Fukasawa House Towers H&I
Location: Setagaya Ward, Tokyo
Acquisition price: ¥7,140 million
Total floor area: 12,135.36 m2

2

Serenite Shinsaibashi
GrandeLocation: Osaka City, Osaka
Acquisition price: ¥5,567 million
Total floor area: 7,794.23 m2

3

PRIME URBAN Toyosu
Location: Koto Ward, Tokyo
Acquisition price: ¥5,290 million
Total floor area: 9,630.96 m2

Landport Hachioji II

Sagamihara Onodai Logistics Center

PROUD FLAT Togoshi-Koen NEW

PRIME URBAN Kamimaezu

PRIME URBAN Kachidoki

Location: Narashino City, Chiba
Total floor area: 61,573.49 m2

Location: Hachioji City, Tokyo
Total floor area: 33,028.63 m2

Location: Sagamihara City, Kanagawa
Total floor area: 49,927.89 m2

Location: Shinagawa Ward, Tokyo
Total floor area: 3,354.13 m2

Location: Nagoya City, Aichi
Total floor area: 3,824.15 m2

Location: Chuo Ward, Tokyo
Total floor area: 5,451.41 m2

Atsugi Minami Logistics Center B Tower

Landport KasukabeLandport Iwatsuki

PROUD FLAT Kamata

PROUD FLAT Kamioooka

PROUD FLAT Tsurumi II

Location: Atsugi City, Kanagawa
Total floor area: 24,929.27 m2

Location: Kasukabe City, Saitama
Total floor area: 29,553.64 m2

Location: Saitama City, Saitama
Total floor area: 24,177.15 m2

Location: Ota Ward, Tokyo
Total floor area: 1,625.18 m2

Location: Yokohama City, Kanagawa
Total floor area: 5,609.86 m2

Location: Yokohama City, Kanagawa
Total floor area: 2,793.02 m2

Landport Higashi-Narashino

25

2

Nomura Real Estate Master Fund, Inc.

NEW

Nomura Real Estate Master Fund, Inc.

26

Message from the Management

Management Strategy

ESG Measures

Distribution Policy

Portfolio

Distribution Policy for Periods with Gain on Sales

Net income + amortization of goodwill

Distributions in excess of earnings may be adjusted to retain cash of anamount equivalent to gain on sale of real estate to promote stablemedium- to long-term management. (Note 1)

Gain on
売却益
sales

Internal reserves
equivalent to gain
売却益相当額の留保
on sale1010

Investment Corporation

Distribution in

Sumitomo Mitsui Trust Bank, Ltd.

Nomura Real Estate Development Co., Ltd.
Asset Custody Agreement

10
10

10
10

Amortization
のれんof goodwill
20
償却費
20

Distributions in

利益超過分配excess of earnings

Asset
Management
Agreement

Information Provision
Agreement

10 Gain on sales is distributed,
a corresponding
10 and 売却益は分配し、利益超過分配にて調整
amountis deducted from
distributions in excess ofearnings

Gain on
sales
売却益

10
10

Nomura Real Estate
Asset Management Co., Ltd.

Information Provider
Nomura Real Estate Development Co., Ltd.
Basic Agreement with respect toLeasing Value Chain

Net
income
売却益を
excl.
除く
gain on当sales
期利益

Distribution of
earnings
利益分配

80
80

Net
income
売却益を
excl.
除く
gain on当sales
期利益

80
80

Net income

Net income

Total
分配総額
distribution

Total

Unitholders' Meeting
Board of Directors

Mitsubishi UFJ Trust and Banking Corporation

Executive Director

Transfer Agency Agreement, General Administration Agreement
Agreement on Special Account Management

Shuhei Yoshida
Supervisory Directors
Mineo Uchiyama

80
80

Leasing Value Chain

Mika Okada

Nomura Real Estate
Development Co., Ltd.

AuditorGEO AKAMATSU CO., LTD. (Note)
当期利益（損益計算書）General Administrator(Institutional Administration /Accounting)Transfer Agent andSpecial Account Administrator

Koichi Owada

Net
income
売却益を
excl.
除く
gain on
当期
sales
利益

Nomura Real Estate Partners Co., Ltd.

(Statement of income)Custodian

Asset Management Company
excess of earnings
利益超過分配Gain onsales
売却益

Specified Related Party
Parent Company of the Asset Management Company

Nomura Real Estate Holdings, Inc.

留保

Net
当期
income利益

Financial Section

Structure of NMF

ReserveNet
当期
income利益

Investor Information

Structure and Organization

Basic Distribution Policy

Amortization
のれんof goodwill
償却費

Financing Status

Breakdown of

当期利益
分配方針
分配金の内訳
distribution
distributions(Statementof income)（損益計算書）*Figures
shown
above
are
for
illustrative
purposes
only※記載の数値は、イメージを示すために例示したものです。

General Administrator (Financial Agent)

Ernst & Young Shin Nihon LLC

Financial
Agent
Agreement

MUFG Bank, Ltd.
Sumitomo Mitsui Banking Corporation(Note) GEO-AKAMATSU Co., Ltd. changed its name to Nomura Real Estate Retail Properties Co., Ltd. on October 1, 2020. The same shall apply hereinafter.

Organization of NREAM
Distributions in Excess of Earnings in the 10th Fiscal Period
General Meeting of Shareholders

About distribution in excess of earnings

Reversal of internal reserves

Compensation for some of the decline in sales caused by COVID-19 infection(Temporary reduction or exemption of rent, decrease of sales-linked rent, etc.)

Distribution of allowance for temporary difference
adjustments

Investment Committee
Statutory Auditors

Board of Directors

Compliance Committee

Other distributions in excess of earnings(Millions of yen)

218
1,065

Amortizationof goodwill

2,622

2,622

2,843

Total distribution¥15,640 million(¥3,317/unit)

Distributions
in excess ofearnings¥2,843 million(¥603/unit)

President & CEO

Other distributions
in excess of earnings(Income tax notwithheld)¥1,065 million(¥226/unit)

2,843

NPR Valuation Committee
Project Screening Committee
Corporate Planning

1,780（Note 2）

1,777

International Business Planning(fractional
adjustment)

Legal & Compliance
Distributions ofearnings, etc.
(Income tax withheld)¥14,574 million(¥3,091/unit)Net
income12,79912,79912,79912,797

Distributionsof earnings¥12,797 million(¥2,714/unit)

12,797

Risk Management Committee

Chief Strategy Officer
Private Fund Management
NMF Investment Management GroupInternal Audit

Fund Management

Finance & Accounting

Asset Management I

Client Relations & Marketing

Asset Management II

Acquisitions

NPR Investment Management

Investment Management Planning
Net income(Statement ofincome)Distribution
policyTotal distribution(Before adjustmentof fractions lessthan one unit)

Total distribution(After adjustmentof fractions lessthan one unit)

Allowance fortemporarydifference
adjustments

Distributions inexcess of
earnings(breakdown)(Note 1)	When there is a gain on sales, NMF’s policy is, in principle, to set aside an amount equivalent to the gain that is not more than the amount of amortization of
goodwill as retained earnings within the scope that will not be subject to income tax.
(Note 2) The amount is obtained by deducting underdepreciation, etc. (provision deduction items) attributable to the difference between depreciation in tax andaccounting treatments from amortization of goodwill, etc. (provision addition items).
27

Nomura Real Estate Master Fund, Inc.

Nomura Real Estate Master Fund, Inc.

28

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

Investor Information
Composition of Unitholders

IR ACTIVITIESForeign Corporations

569 1.8%

Financial Institutions(including financial
instrument businesses)

Individuals and Others

Other Domestic
Corporations

534 1.7%

Financial Institutions(including financial
instrument businesses)

Other Domestic
Corporations

228 0.7%

344,052 7.3%

323,057 6.9%

Unitholder
composition
Total

2,935,888 62.3%

Nomura Real Estate Master Fund, Inc. - IR Activities
Official Website

Number ofinvestment units
Total

31,994

4,715,200

Foreign
Corporations

1,112,203 23.6%

Individuals
and Others

30,663 95.9%

IR Calendar
Fiscal period

Announcement of financial results

End of February
January

February

Fiscal period

Mid-April
March

April

Announcement of financial results

End of August
May

June

July

AugustMid-October
September

OctoberNovember December

Mid-May

Mid-November

Commencement of payment of distributions
Release of Asset Management Report

Commencement of payment of distributions
Release of Asset Management Report

ESG Annual Report
NMF publishes ESG reports on ESG-related activities and topics during the year.
The second edition was released in July 2020.

Unitholder Information～ &RQWHQWV ～＞ 3ROLFLHV DQG 0DQDJHPHQW 6WUXFWXUHV ・・・・・・・・・・・・・・

Ｐ．

・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Ｐ．

・・・・・・・・・・・・・・・・・・・・・・・

Ｐ．

To change your address, name, seal, or other information, please contact the securities firm where your account was・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Ｐ．

＞ ,QWHUQDWLRQDO,QLWLDWLYHVDQG&HUWLILFDWLRQV ・・・・・・・・

Ｐ．

established.

＞ (QYLURQPHQWDO 0HDVXUHV（Ｅ）・・・・・・・・・・・・・・・・・・・・・

Ｐ．

＞ 6RFLDO 5HVSRQVLELOLW\（Ｓ）・・・・・・・・・・・・・・・・・・・・・・・・・

Ｐ．

＞ *RYHUQDQFH（Ｇ） ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Ｐ．

・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Ｐ．

＞ (6* 'LVFORVXUH3ROLF\DQG5HSRUWLQJ)UDPHZRUN ・・・

Ｐ．

＞ 0DWHULDOLW\The process for changing your address and other information＞ 6WDNHKROGHU(QJDJHPHQW＞ *5, 6WDQGDUGV(6* $QQXDO5HSRUW

2020.7

1RPXUD5HDO(VWDWH0DVWHU)XQG,QF

Distributions

NMF’s principal LQLWLDWLYHVDQGDFKLHYHPHQWVIURP-XO\WR-XQH

Stockholders can collect distributions at a Japan Post Bank or post office. If the receipt date has passed, please refer to instruc-

NMF made addition of “Countering water resources” to (6*PDWHULDOLW\ LVVXHV

tions on the back of the distribution receipt and either send it to the Corporate Agency Division of Mitsubishi UFJ Trust andBanking Corporation or present it at the counter of one of the bank’s branches. In addition, regarding distributions going forward, if you wish distributions to be paid in the form of bank deposits or other, please contact your securities firm.
Important Reminders for Unitholders
Closing dates

The last days of February and August of every year

General meeting of unitholders

At least once every two years in principle

Unitholder record date for voting
eligibility

The last day of February 2017, and then the last day of February every second year or a dateannounced in advanceDistribution payment record dates

The last days of February and August of every year

Stock exchange listings

Tokyo Securities Exchange (securities code: 3462)

Newspaper for announcements

Nihon Keizai Shimbun

Share transfer agent

Mitsubishi UFJ Trust and Banking Corporation

Contact information
for the share transfer agent

Corporate Agency Division, Mitsubishi UFJ Trust and Banking Corporation
1-1, Nikko-cho, Fuchu, Tokyo, Japan
TEL. 0120-232-711 (toll free) in Japan only

＞ *UHHQ)LQDQFH

3DJH10)IRUPXODWHGQHZ.3,WR (6*PDWHULDOLW\LVVXHVDQGUHYLVHGH[LVWLQJ.3,XSZDUG

15($0H[SUHVVHGLWVVXSSRUWIRUWKHUHFRPPHQGDWLRQVRIWKH7DVN)RUFHRQ&OLPDWHUHODWHG)LQDQFLDO'LVFORVXUHV 7&)' 

15($0EHFDPHDVLJQDWRU\ WRWKH3ULQFLSOHVIRU)LQDQFLDO$FWLRQIRUWKHVW&HQWXU\3)$ 15($0UHFHLYHG0LQLVWHURIWKH(QYLURQPHQW$ZDUGLQWKHJHQHUDOGHSDUWPHQWDVWKH
PRVWH[FHOOHQWHIIRUWVLQILVFDO\HDUIURP3)$10)UHFHLYHG VWDUV at GRESB Real Estate Rating 2019 and “A” DW *5(6%3XEOLF
'LVFORVXUH 5DWLQJIRUDWKLUGFRQVHFXWLYH\HDU 10)KDVEHHQ XSJUDGHGWR$$IURP$DW06&, (6*5DWLQJ10)DFTXLUHGFHUWLILFDWLRQDQGUHJLVWUDWLRQIRU(FR$FWLRQ 3URJUDP(QYLURQPHQWDO
0DQDJHPHQW6\VWHP (06 LQ-DSDQ10)DFTXLUHGFHUWLILFDWLRQIRU&$6%((IRU:HOOQHVV2IILFH(YDOXDWLRQ10)PDGHVWHDG\ SURJUHVVWRZDUGDFKLHYLQJ.3, DFWXDOUHVXOWV 10)LVVXHG JUHHQERQGV

7KLVUHSRUWZDVSUHSDUHGEDVHGRQLQIRUPDWLRQRQ10)RIILFLDOZHEVLWHDVRI-XO\
For the more updated information on NMF’s ESG activities, please refer to its official website.

2

IR Activities■ IR tour of the financial results on February 2020 period for domestic institutional investors(Conducted by telephone conference)■ One-on-one IR meetings with overseas investors in Europe and in Asia
(Conducted by telephone conference)■ ESG engagement with institutional investors

Mailing address: P.O. Box #29 Shin-Tokyo Post Office, Tokyo, Japan 137-8081
Corporate Agency Division, Mitsubishi UFJ Trust and Banking Corporation

29

Nomura Real Estate Master Fund, Inc.

Nomura Real Estate Master Fund, Inc.

30

Message from the Management

Management Strategy

ESG Measures

Financing Status

Thousands of YenPortfolio

Investor Information

Financial Section

BALANCE SHEETAs of February 29, 2020

As of August 31, 2020

Thousands of Yen

As of February 29, 2020

As of August 31, 2020

ASSETSLIABILITIESCurrent Assets:
Cash and bank deposits
Rental receivables
Other current assets
Total current assets

Current Liabilities:
Trade accounts payable
Current portion of investment corporation bonds
Current portion of long-term debt
Lease obligations
Other accounts payable
Accrued expenses
Accrued income taxes
Accrued consumption taxes
Rent received in advance
Unearned revenue
Provision for loss on disaster
Derivatives liabilities
Other current liabilities
Total current liabilities

2,559,513
5,000,000
60,885,600871
2,827,990
364,346
2,998
1,158,419
5,380,495
132,539
20,24439,952
10,171
78,383,142

2,536,859—
61,135,600871
2,883,286
337,398
3,774
134,705
5,584,162
112,213
3,811
64,132
36,74072,833,555

Long-term Liabilities:
Investment corporation bonds
Long-term debt
Lease obligations
Long-term advanced received
Security deposits from tenants
Derivatives liabilities
Total long-term liabilities

25,000,000
419,841,600
3,775
129,354
41,500,327
745,604
487,220,660

32,000,000
424,748,800
3,339
75,08842,177,982
421,674
499,426,885

Total Liabilities

565,603,803

572,260,441

244,185,429

244,307,911

394,012,959(11,903,126)(10,738,678)(22,641,804)
371,371,154
13,094,910
384,466,064
628,651,494

394,012,959(13,515,837)(12,398,315)(25,914,153)
368,098,805
13,583,176
381,681,981
625,989,893(783,330)(783,330)(484,242)(484,242)

627,868,163

625,505,650

1,193,471,967

1,197,766,091

Property and Equipment:
Land
Buildings and structures
Machinery and equipment
Tools, furniture and fixtures
Leased assets
Construction in progress		Subtotal
Less accumulated depreciation
Net property and equipment
Investments and Other Assets:
Goodwill
Leasehold rights
Intangible assets
Long-term prepaid expenses
Long-term deposits
Security deposits
Deferred investment corporation bond issuance costs
Total investments and other assets
Total Assets
The accompanying notes to financial statements are an integral part of these statements.

87,599,067
593,233
1,606,233
89,798,534

75,166,359
1,067,208
1,477,045
77,710,612

711,394,696
340,477,012
1,516,277
1,259,197
4,752
24,761
1,054,676,697(46,604,324)
1,008,072,373

724,484,881
351,355,493
1,702,406
1,388,724
4,752
16,224
1,078,952,483(51,964,605)
1,026,987,877

82,964,737
8,958,534
32,7852,065,881
519,577
936,452
123,090
95,601,059
1,193,471,967

80,342,494
8,958,147
47,5102,090,012
527,473
936,452
165,509
93,067,601
1,197,766,091

NET ASSETS
Unitholders’ Equity:
Unitholders’ capital
Surplus		Capital surplus
		 Allowance for temporary difference adjustment
		 Other deductions from capital surplus
		 Total deductions from capital surplus
		 Net capital surplus
		Retained earnings
		Total surplus
Total unitholders’ equity
Valuation and Translation Adjustments:
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total Net Assets
Total Liabilities and Net Assets
The accompanying notes to financial statements are an integral part of these statements.

31

Nomura Real Estate Master Fund, Inc.

Nomura Real Estate Master Fund, Inc.

32

Message from the Management

Management Strategy

ESG Measures

STATEMENT OF INCOME AND RETAINED EARNINGS

Portfolio

Investor Information

For the period from September 1, 2019 to February 29, 2020
Thousands of Yen

For the period
from March 1, 2020
to August 31, 2020

Unitholders’ Equity

OPERATING REVENUES AND EXPENSES
Operating Revenues:
Real estate rental revenues
Operating Expenses:
Real estate rental expenses
Asset management fees
Asset custody fees
Administrative service fees
Amortization of goodwill
Other operating expenses
Operating Income

36,927,357
36,927,357

37,577,424
37,577,424

15,720,670
3,291,289
59,207
169,605
2,622,242
390,886
22,253,901
14,673,456

15,678,281
3,420,656
56,792
170,478
2,622,242
416,003
22,364,455
15,212,969

NON-OPERATING REVENUES AND EXPENSES
Non-Operating Revenues:
Interest income
Reversal of dividends payable
Interest on refund
Other non-operating revenues
Non-Operating Expenses:
Interest expense
Interest expenses on investment corporation bonds
Amortization of investment corporation bonds issuance costs
Loan arrangement fees
Investment units issuance expenses
Other non-operating expenses

Ordinary Income
Extraordinary Income:Insurance income
Extraordinary Losses:
Loss on disaster		 Income before Income Taxes
Income Taxes:
		Current

415
4,123
3,379
176
8,095

496
3,561
—
15
4,073

1,813,077
210,186
5,584
416,21055,7275,255
2,506,040

1,809,934
160,997
5,984
431,408—
5,346
2,413,671

12,175,510

12,803,370

28,611
28,611——

12,344
12,344
12,191,777——
12,803,370

3,057
3,057
12,188,719

3,830
3,830
12,799,540

		 Retained earnings brought forward

906,191

783,636		 Retained Earnings at End of Period

13,094,910

13,583,176

		Net Income

The accompanying notes to financial statements are an integral part of these statements.

Financial Section

STATEMENT OF CHANGES IN NET ASSETS
Thousands of Yen

For the period
from September 1, 2019
to February 29, 2020

Financing Status

Balance as of September 1, 2019
Issuance of new investment units
Distributions of retained earnings
Reversal of allowance for temporary difference
adjustments
Distributions in excess of net earnings fromallowance for temporary difference adjustments
Other distributions in excess of net earnings
Net income
Net changes of items other than unitholders' equity
Total changes of items during the period
Balance as of February 29, 2020

SurplusCapital surplus
Deductions from capital surplus
Allowance fortemporary
Other
Total
difference
deductions from deductions fromadjustment
capital surplus capital surplus(10,439,617)(9,301,010)(19,740,627)
—
—
—
—
—
—

Units
4,547,300
167,900—

Unitholders’capital214,855,487
29,238,273—

Capitalsurplus394,012,959———

91,667—

91,667(91,667)

—

—

—
—
—
—
167,900
4, 715,200————
29,329,941
244,185,429

—
—
—
—
—
394,012,959(1,555,176)———(1,463,508)(11,903,126)—(1,346,000)——(1,437,668)(10,738,678)(1,555,176)(1,346,000)——(2,901,177)(22,641,804)(1,555,176)(1,346,000)——(2,901,177)
371,371,154

Thousands of Yen

Unitholders’ Equity
Surplus
Balance as of September 1, 2019
Issuance of new investment units
Distributions of retained earnings
Reversal of allowance for temporary difference
adjustments
Distributions in excess of net earnings fromallowance for temporary difference adjustments
Other distributions in excess of net earnings
Net income
Net changes of items other than unitholders' equity
Total changes of items during the period
Balance as of February 29, 2020

Net capitalsurplus374,272,331——

Valuation and Translation Adjustments
Total valuation andDeferred gains ortranslation
losses on hedges
adjustments
Total net assets(905,812)(905,812)
600,910,974——
29,238,273——(11,691,108)

Retained earnings
12,688,967—(11,691,108)

Total surplus
386,961,298—(11,691,108)

Total
unitholders’equity601,816,786
29,238,273(11,691,108)(91,667)(91,667)

—

—

—

—

—
—
12,188,719—
405,943
13,094,910(1,555,176)(1,346,000)
12,188,719—(2,495,234)
384,466,064(1,555,176)(1,346,000)
12,188,719—
26,834,707
628,651,494———
122,481
122,481(783,330)———
122,481
122,481(783,330)(1,555,176)(1,346,000)
12,188,719
122,481
26,957,189
627,868,163

The accompanying notes to financial statements are an integral part of these statements.

For the period from March 1, 2020 to August 31, 2020
Thousands of Yen

Unitholders’ Equity

Balance as of March 1, 2020
Distributions of retained earnings
Reversal of allowance for temporary difference
adjustments
Distributions in excess of net earnings fromallowance for temporary difference adjustments
Other distributions in excess of net earnings
Net income
Net changes of items other than unitholders’ equity
Total changes of items during the period
Balance as of August 31, 2020

SurplusCapital surplus
Deductions from capital surplus
Allowance fortemporary
Other
Total
difference
deductions from deductions fromadjustment
capital surplus capital surplus(11,903,126)(10,738,678)(22,641,804)
—
—
—

Units
4,715,200—

Unitholders’capital244,185,429—

Capitalsurplus394,012,959——

122,481—

122,481(122,481)

—

—

—
—
—
—
—
4, 715,200————
122.481244,307,911

—
—
—
—
—
394,012,959(1,735,193)———(1,612,711)(13,515,837)—(1,537,155)——(1,659,637)(12,398,315)(1,735,193)(1,537,155)——(3,272,348)(25,914,153)(1,735,193)(1,537,155)——(3,272,348)
368,098,805

Thousands of Yen

Unitholders’ Equity
Surplus
Balance as of March 1, 2020
Distributions of retained earnings
Reversal of allowance for temporary difference
adjustments
Distributions in excess of net earnings fromallowance for temporary difference adjustments
Other distributions in excess of net earnings
Net income
Net changes of items other than unitholders’ equity
Total changes of items during the period
Balance as of August 31, 2020

Net capitalsurplus371,371,154—

Valuation and Translation Adjustments
Total valuation andDeferred gains ortranslation
losses on hedges
adjustments
Total net assets(783,330)(783,330)
627,868,163––(12,188,792)

Retained earnings
13,094,910(12,188,792)

Total surplus
384,466,064(12,188,792)

Total
unitholders’equity628,651,494(12,188,792)(122,481)(122,481)

–

–

–

–

–
–
12,799,540–
488,266
13,583,176(1,735,193)(1,537,155)
12,799,540–(2,784,082)
381,681,981(1,735,193)(1,537,155)
12,799,540–(2,661,600)
625,989,893–––
299,087
299,087(484,242)–––
299,087
299,087(484,242)(1,735,193)(1,537,155)
12,799,540
299,087(2,362,512)
625,505,650

The accompanying notes to financial statements are an integral part of these statements.

33

Nomura Real Estate Master Fund, Inc.

Nomura Real Estate Master Fund, Inc.

34

Message from the Management

Management Strategy

ESG Measures

STATEMENT OF CASH FLOWS
Thousands of Yen

For the period from
September 1, 2019
to February 29, 2020

For the period
from March 1, 2020
to August 31, 2020

CASH FLOWSCash Flows from Operating Activities
Income before income taxes
Depreciation
Amortization of goodwill
Investment units issuance expenses
Amortization of investment corporation bonds issuance costs
Increase (Decrease) in provision for loss on disaster
Interest income
Interest expense
Loss on disposal of property and equipment
Decrease (Increase) in rental receivables
Decrease (Increase) in long-term prepaid expenses
Decrease (Increase) in long-term deposits
Increase (Decrease) in trade accounts payable
Increase (Decrease) in other accounts payable
Decrease (Increase) in consumption taxes receivables
Increase (Decrease) in accrued consumption taxes
Increase (Decrease) in accrued expenses
Increase (Decrease) in rent received in advance
Other		Subtotal
Interest received
Interest paid
Income taxes paid
		Net cash provided by (used in) operating activities

12,191,777
5,153,337
2,622,242
55,727
5,584
20,244(415)
2,023,263
4,042
102,448
66,061(10,628)(260,939)
16,901
657,804
1,158,419
53,619119,954
69,17524,048,621
415(2,088,004)(2,059)21,958,973

12,803,370
5,370,699
2,622,242—
5,984(16,433)(496)
1,970,931
5,711(476,056)(24,131)(7,896)(22,653)
11,576—(1,023,713)
38,989203,667
154,529
21,616,320
496(2,072,086)(3,053)
19,541,676

Cash Flows from Investing Activities
Payments for purchases of property and equipment
Payments for purchases of leasehold rights and intangible assets
Reimbursement of security deposits to tenants
Proceeds from security deposits from tenants
Proceeds from security deposits
		Net cash provided by (used in) investing activities(22,909,351)(4,620)(865,829)
1,513,961
10,000(22,255,840)(24,292,996)(13,553)(595,776)
1,275,513—(23,626,812)—(8,000,000)
29,900,000(29,942,800)
8,000,000—(71,836)
29,238,273(55,727)(11,691,370)

7,000,000(7,000,000)
33,600,000(28,442,800)
7,000,000(5,000,000)(44,199)——(12,188,068)(1,554,693)(1,346,666)
14,475,179(1,735,356)(1,537,147)(8,347,572)

14,178,313
73,420,753
87,599,067(12,432,707)
87,599,067
75,166,359

Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period
Cash and Cash Equivalents at End of Period

Portfolio

Investor Information

Financial Section

NOTES TO FINANCIAL STATEMENTSCash Flows from Financing Activities
Proceeds from short-term debt
Repayments of short-term debt
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from issuance of investment corporation bonds
Repayment of investment corporation bonds
Payments of investment corporation bonds issuance costs
Proceeds from issuance of investment units
Payments of investment units issuance expenses
Distributions to unitholders
Distributions in excess of net earnings from allowance fortemporary difference adjustments
Other distributions in excess of net earnings
		Net cash provided by (used in) financing activities

Financing Status

1. ORGANIZATION
Nomura Real Estate Master Fund, Inc. (NMF) is a real estate investment corporation formed to own and invest primarily in
office buildings, retail facilities, logistics and residential facilities. NMF is externally managed by a licensed asset managementcompany, Nomura Real Estate Asset Management Co., Ltd. (“NREAM”). NREAM is a wholly-owned subsidiary of Nomura Real
Estate Holdings, Inc. NMF was established on October 1, 2015 through the consolidation type merger involving the former
Nomura Real Estate Master Fund, Inc. (hereinafter the “former NMF”), Nomura Real Estate Office Fund, Inc. (hereinafter“NOF”) and Nomura Real Estate Residential Fund, Inc. (hereinafter “NRF”), and listed its investment securities (TSE code:3462) on the Real Estate Investment Trust Section of the Tokyo Stock Exchange on October 2 of the same year.
NMF adopts the basic policy of investing primarily in real estate and other assets to secure stable income and steady growth ofassets under management over the medium to long term. 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 has strong tenant
demand, while also considering regional diversification through the three major metropolitan areas and cabinet-order designated cities, etc. By combining the “diversified type strategy” in which investments are made in facilities of a variety of sectors
such as office buildings, retail facilities, logistics and residential facilities with the “large-scale REIT strategy,” which pursues theeffects of diversifying properties and tenants, to make the portfolio more stable as well as with the utilization of the “leasing
value chain” with the Nomura Real Estate Group, the sponsor, NMF will aim to increase unitholder value by securing stable
income and steady growth of assets under management over the medium to long term.

2. BASIS OF PRESENTATION
NMF maintains its accounting records and prepares its financial statements in accordance with accounting principles generally
accepted in Japan (“Japanese GAAP”), including provisions set forth in the Investment Trust Act of Japan, the Companies Act ofJapan, the Financial Instruments and Exchange Act of Japan and related regulations, which are different in certain respects as tothe application and disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of NMF, which were prepared inaccordance with Japanese GAAP and were presented in NMF’s Securities Report filed with the Kanto Local Finance Bureau. In
preparing the accompanying financial statements, certain reclassifications and modifications have been made to the financial
statements issued domestically in order to present them in a format that is more familiar to readers outside Japan. In addition,
the notes to financial statements include certain information that might not be required under Japanese GAAP but is presented
herein as additional information. Amounts have been rounded to the nearest thousand yen in the accompanying financial statements and the notes thereto, whereas amounts were truncated in the Japanese financial statements prepared in accordancewith Japanese GAAP.
NMF’s fiscal period is a six-month period which ends at the end of February or August. NMF does not prepare consolidated
financial statements because it has no subsidiaries.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESCash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments that are highly
liquid, readily convertible to cash, with an insignificant risk of market value fluctuation, and with a maturity of three months orless when purchased.
Property and equipment
Property and equipment are stated at cost, which includes the purchase price and related costs for acquisition, less accumulated depreciation.
Depreciation is calculated by the straight-line method over the estimated useful lives of the fixed assets outlined below:
Buildings 		
Structures		
Machinery and equipment
Tools, furniture and fixtures

4 - 70 years
2 - 45 years
4 - 15 years
3 - 20 years

Intangible assets
Intangible assets are amortized by the straight-line method.
Goodwill is amortized using the straight-line method over 20 years.

The accompanying notes to financial statements are an integral part of these statements.

35

Nomura Real Estate Master Fund, Inc.

Nomura Real Estate Master Fund, Inc.

36

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

NOTES TO FINANCIAL STATEMENTS
Long-term prepaid expenses
Long-term prepaid expenses are amortized by the straight-line method.
Impairment of fixed assets
NMF reviews fixed assets for impairment whenever events or changes in circumstances indicate that the carrying value of its
fixed assets may not be recoverable. An impairment loss is recognized if the carrying value of an asset exceeds the aggregate
estimated future cash flows. If a fixed asset is determined to be impaired, it is written down to its recoverable amount and thewrite-down is recorded as an impairment loss during the period in which it occurs.
Deferred investment corporation bond issuance costs
Deferred investment corporation bond issuance costs are amortized by the straight-line method over the respective terms of
the bonds.
Investment units issuance expenses
The entire amount is expensed as incurred.

“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, issued by ASBJ on
March 31, 2020)(1) Overview
Comprehensive accounting standards on revenue recognition were developed jointly by the International AccountingStandards Board (IASB) and the US Financial Accounting Standards Board (FASB), and were released publicly in May 2014 as“Revenue from Contracts with Customers” (IFRS 15 by the IASB, and Topic 606 by the FASB). In light of this, the ASBJ
developed a comprehensive accounting standard on revenue recognition, and issued it together with implementation
guidance.
The basic policy adopted by the ASBJ in developing the accounting standard was to start by incorporating the basic principles of IFRS 15 from the perspective of comparability between financial statements, which is one of the benefits of maintaining consistency with IFRS 15. Then, where consideration should be given to practices used up to that time in Japan, the
ASBJ added alternative treatments, to the extent they do not impair comparability.

Allowances and provisions(1) Allowance for doubtful accounts
For allowance for doubtful accounts against possible losses arising from default on receivables, the uncollectable amount isestimated and recorded by investigating collectability based on historical loan loss ratios for general receivables and on a caseby-case examination for doubtful and other specific receivables.

(2) Scheduled date of application
These accounting standard and guidance will be applied from the beginning of the fiscal period ending February 28, 2022.

(2) Provision for loss on disaster
The amount that is reasonably estimated at the end of the previous fiscal period under review is recorded to cover expenditures
for restoration etc. following Typhoon Faxai and Hagibis in 2019.

(3) Impact of applying the new accounting standard.
The impact of applying the accounting standard and implementation guidance on the financial statements is currently underevaluation.

Accounting treatment of beneficial interests in real estate
All assets and liabilities held in trust, for which the real estate in possession of NMF was entrusted, and all related earnings andexpenses incurred are reflected in the accompanying balance sheet and statement of income and retained earnings,
respectively.

“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, issued by ASBJ on July 4, 2019)

Revenue recognition
Operating revenues consist of rental revenues including base rents and common area charges, and other operating revenues
including utility charge reimbursements, parking space rental revenues and other income. Rental revenues are generally recognized on an accrual basis over the life of each lease. Utility charge reimbursements are recognized when earned and theiramounts are reasonably estimated.
Property related taxes
Property in Japan is subject to property taxes, urban planning taxes and depreciable property taxes on a calendar year basis. The
taxes related to property are generally imposed based on the value of the relevant property and incurred for the fiscal period.
The seller of a property is liable for property related taxes for the period from the purchase date through the end of that calendar year because taxes are imposed on the owner registered in the record as of January 1 for the entire year based on theassessment made by the local government. The amount applicable to the buyer of a property is usually settled between eachparty and capitalized as part of the acquisition cost of the property. The capitalized property related taxes amounted to ¥67,984
thousand for the fiscal period ended February 29, 2020 and ¥108,493 thousand for the fiscal period ended August 31, 2020.

“Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31, issued by ASBJ on
July 4, 2019)(1) Overview
The IASB and the FASB have established detailed guidance on measuring fair value (IFRS 13 “Fair Value Measurement”
issued by the IASB, and Topic 820 “Fair Value Measurement” issued by the FASB). In order to improve comparability with theprovisions of these international accounting standards, the ASBJ gave extensive consideration primarily regarding guidanceand disclosure concerning the fair value of financial instruments, following which it issued the Accounting Standard for Fair
Value Measurement and the Implementation Guidance on Accounting Standard for Fair Value Measurement.
The basic policy adopted by the ASBJ in developing the accounting standard was to fundamentally incorporate all of theprovisions of IFRS 13 from the perspective of improving comparability of financial statements between companies in Japanand overseas by using uniform methods of calculation. Then, taking account of practices used up to that time in Japan, the
ASBJ established other treatment for individual items, to the extent it does not significantly impair comparability between
financial statements.
(2) Scheduled date of application
These accounting standard and guidance will be applied from the beginning of the fiscal period ending February 28, 2022.

Income taxes
Deferred tax assets and liabilities are computed based on the differences between the financial statements and income tax
bases of assets and liabilities using the applicable statutory tax rates.

(3) Impact of applying the new accounting standard.
The impact of applying the accounting standard and implementation guidance on the financial statements is currently underevaluation.

Consumption taxes
Consumption taxes received and paid are not included in the accompanying statement of income and retained earnings.

“Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No. 31, issued by ASBJ on March 31, 2020)

Derivative financial instruments
NMF utilizes interest-rate swap contracts as derivative financial instruments only for the purpose of hedging its exposure tochanges in interest rates. NMF defers recognition of gains or losses resulting from changes in the fair value of interest rate
swap contracts which meet the criteria for deferral hedge accounting.
Although deferral hedge accounting is generally applied, NMF applies the special treatment to those interest-rate swap contracts that meet the criteria for such special treatment. Under the special treatment, interest-rate swaps are not remeasured atfair value; instead, the net amount paid or received under the interest rate swap contract is recognized and included in interest
expense or income.

37(Accounting standards issued but not yet applied)“Accounting Standard for Revenue Recognition” (the Accounting Standards Board of Japan (ASBJ) Statement No. 29, issued by
ASBJ on March 31, 2020)

Nomura Real Estate Master Fund, Inc.

(1) Overview
Requests have been made to consider requiring the disclosure of the “sources of estimation uncertainty,” which is required
to be disclosed in Paragraph 125 of the International Accounting Standards (IAS) No. 1 “Presentation of Financial
Statements” (hereinafter “IAS No. 1”) announced by the IASB in 2003, as information on notes even in the Japanese standards as highly useful information for the users of financial statements, and the accounting standard for the disclosure ofaccounting estimates (hereinafter the “Accounting Standard”) was developed and announced by the ASBJ.
As a basic policy upon the development of the Accounting Standard by the ASBJ, it will not enhance the content of eachnote but describe the principle (purpose of disclosure), and the specific content of disclosure shall be judged by companies
in reference to the purpose of disclosure. Upon the development, the provision of Paragraph 125 of IAS No. 1 will be used asa reference.

Nomura Real Estate Master Fund, Inc.

38

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

NOTES TO FINANCIAL STATEMENTS(2) Scheduled date of application
These accounting standard and guidance will be applied from the end of the fiscal period ending August 31, 2021.

6. SCHEDULE OF PROPERTY AND EQUIPMENT“Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections” (ASBJ Statement No. 24(Revised 2020), issued by ASBJ on March 31, 2020)

Property and equipment as of February 29, 2020 and August 31, 2020 consist of the following:(1) Overview
Due to the proposal for the consideration on the enrichment of the information on notes regarding the “principles andprocedures of accounting adopted when the provision of related accounting standards are not clear,” such standard wasannounced as an accounting standard for accounting policy disclosures, accounting changes and error corrections after
making necessary amendments by the ASBJ.
Moreover, upon the enrichment of the information on notes regarding the “principles and procedures of accounting adopted
when the provision of related accounting standards are not clear,” the provision of the annotations on the corporate accounting principles (Notes 1-2) shall be succeeded to avoid any impact on actual business practices until now when the provisionof the related accounting standards are clear.
(2) Scheduled date of application
These accounting standard and guidance will be applied from the end of the fiscal period ending August 31, 2021.

4. CASH AND CASH EQUIVALENTS
Cash and cash equivalents as of February 29, 2020 and August 31, 2020 consist of the following:

Cash and bank deposits
Cash and cash equivalents

Thousands of Yen

As of February 29, 2020

As of August 31, 2020

87,599,067
87,599,067

75,166,359
75,166,359

Thousands of Yen

As of February 29, 2020
Land
Buildings and structures
Accumulated depreciation
Machinery and equipment
Accumulated depreciation
Tools, furniture and fixtures
Accumulated depreciation
Land in trust
Buildings and structures in trust
Accumulated depreciation
Machinery and equipment in trust
Accumulated depreciation
Tools, furniture and fixtures in trust
Accumulated depreciation
Lease assets in trust
Accumulated depreciation
Construction in progress
Total

Acquisition costs
294,597,869
150,505,558(16,519,965)
834,291(500,882)
398,249(134,487)
416,796,827
189,971,453(28,994,937)
681,985(138,124)
860,947(315,398)
4,752
(528)
24,761
1,008,072,373

Book value
294,597,869
133,985,593
333,409263,761
416,796,827
160,976,516
543,861545,548
4,224
24,761
1,008,072,373

As of August 31, 2020
Acquisition costs
301,575,945
153,244,413(18,797,006)
880,429(535,202)
458,386(169,698)
422,908,935
198,111,079(31,901,067)
821,977(174,637)
930,338(386,069)
4,752
(924)
16,224
1,026,987,877

Book value
301,575,945
134,447,407
345,227
288,687
422,908,935
166,210,012
647,339544,269
3,828
16,224
1,026,987,877

Important contents of the non-cash transactions:Not applicable.

5. ASSETS PLEDGED AS COLLATERAL AND SECURED LIABILITIESThe assets pledged as collateral are as follows:

Buildings in trust
Land in trust
Structures in trust
Tools, furniture and fixtures in trust
Total

Thousands of Yen

As of February 29, 2020

As of August 31, 2020

3,323,304
6,096,368
2,528
122
9,422,323

3,298,689
6,096,368
4,530
733
9,400,322

The secured liabilities are as follows:

Tenant leasehold and security deposits in trust
Total

39

Nomura Real Estate Master Fund, Inc.

Thousands of Yen

As of February 29, 2020

As of August 31, 2020

726,648
726,648

726,648
726,648

Nomura Real Estate Master Fund, Inc.

40

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

NOTES TO FINANCIAL STATEMENTS
7. SHORT-TERM DEBT AND CURRENT PORTION OF LONG-TERM DEBT
Short-term debt and current portion of long-term debt as of February 29, 2020 and August 31, 2020 consist of the following:
As of February 29, 2020
Amount(Thousands of Yen)

Unsecured loans from banks due on May 26, 2020
Unsecured loans from a bank due on May 26, 2020
Unsecured loans from a bank due on May 27, 2020
Unsecured loans from banks due on May 29, 2020
Unsecured loans from a bank due on August 26, 2020
Unsecured loans from a bank due on August 26, 2020
Unsecured loans from banks due on August 26, 2020
Unsecured loans from a bank due on August 26, 2020
Unsecured loans from banks due on August 26, 2020
Unsecured loans from a bank due on August 26, 2020
Unsecured loans from banks due on September 28, 2020
Unsecured loans from banks due on November 26, 2020
Unsecured loans from banks due on November 26, 2020
Unsecured loans from a bank due on November 26, 2020
Unsecured loans from banks due on November 26, 2020
Unsecured loans from banks due on February 26, 2021
Unsecured loans from a bank due on February 26, 2021
Unsecured loans from banks due on February 26, 2021
Unsecured loans from banks due on February 26, 2021
Unsecured loans from a bank due on February 26, 2021
Unsecured loans from banks due on February 26, 2021
Unsecured loans from a bank due on February 26, 2021
Unsecured loans from a bank due on February 26, 2021
Unsecured loans from banks due on February 26, 2021
Unsecured loans from a bank due on February 26, 2021
Unsecured loans from banks due on March 26, 2021
Unsecured loans from banks due on May 26, 2021
Unsecured loans from a bank due on May 26, 2021
Unsecured loans from a bank due on May 27, 2021
Unsecured loans from a bank due on May 27, 2021
Unsecured loans from banks due on July 26, 2021
Unsecured loans from a bank due on August 26, 2021
Unsecured loans from banks due on August 26, 2021
Unsecured loans from a bank due on May 26, 2025 (Note 2)
Unsecured loans from a bank due on May 26, 2025 (Note 2)
Total

10,000,000
800,000
1,000,000
4,000,000
1,100,000
800,000
4,700,000
500,000
4,500,000
1,000,000
3,000,000
3,500,000
2,350,000
500,000
1,230,000
5,000,000
2,000,000
2,000,000
2,000,000
3,000,000
2,120,000
500,000
2,000,000
2,800,000
400,000
—
—
—
—
—
—
—
—
42,80042,80060,885,600

Weightedaverage interest
rate (Note 1)
1.33750%
1.25875%
1.48625%0.43000%
1.53674%
1.28277%
1.18000%
1.15566%
1.08100%
0.72000%
0.23909%0.46075%
0.46190%0.47375%
0.20909%1.35250%
1.17750%
1.19211%0.80832%
0.86350%0.85050%0.46725%0.22560%
0.14700%
0.21810%
—
—
—
—
—
—
—
—
2.17000%
2.21812%

As of August 31, 2020
Amount(Thousands of Yen)

—
—
—
—
—
—
—
—
—
—
3,000,000
3,500,000
2,350,000
500,000
1,230,000
5,000,000
2,000,000
2,000,000
2,000,000
3,000,000
2,120,000
500,000
2,000,000
2,800,000
400,000
4,670,000
8,000,000
1,000,000
1,000,000
3,500,000
4,180,000
2,700,000
3,600,000
42,80042,80061,135,600

Weightedaverage interest
rate (Note 1)
—
—
—
—
—
—
—
—
—
—
0.22000%
0.46075%
0.46190%0.47375%
0.19000%
1.35250%
1.17750%
1.19211%0.80832%
0.86350%0.85050%0.46725%0.22560%
0.14700%
0.21810%0.22000%
1.56250%
1.46375%
1.68200%
1.62500%
1.23920%
1.24100%
0.81585%
2.17000%
2.21812%Note 1: The weighted-average interest rate is weighted by the balance of each borrowing at the end of the period and rounded to the nearest fifth decimal place. As forthe borrowings, which were hedged by interest-rate swaps for the purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used to
calculate the weighted average of interest.
Note 2: Installments of ¥10.7 million will be made on the 26th day of every third month starting on August 26, 2013, with the remaining payment of ¥497.1 million to be
repaid on May 26, 2025.

(1) The Company entered into ¥10,000 million of credit facilities in the form of commitment lines with two financial institutions
for the fiscal period ended February 29, 2020. The total unused amount of such credit facilities was ¥10,000 million as ofFebruary 29, 2020.

(2) The Company entered into ¥40,000 million of credit facilities in the form of commitment lines with four financial institutions
for the fiscal period ended February 29, 2020. The total unused amount of such credit facilities was ¥40,000 million as ofFebruary 29, 2020.

41

Nomura Real Estate Master Fund, Inc.

(3) T he Company entered into ¥10,000 million of credit facilities in the form of commitment lines with two financial institutions
for the fiscal period ended August 31, 2020. The total unused amount of such credit facilities was ¥10,000 million as ofAugust 31, 2020.
(4) T he Company entered into ¥40,000 million of credit facilities in the form of commitment lines with four financial institutions
for the fiscal period ended August 31, 2020. The total unused amount of such credit facilities was ¥40,000 million as ofAugust 31, 2020.

8. LONG-TERM DEBT
Long-term debts as of February 29, 2020 and August 31, 2020 consist of the following:
As of February 29, 2020

Unsecured loans from banks due on March 26, 2021
Unsecured loans from banks due on May 26, 2021
Unsecured loans from a bank due on May 26, 2021
Unsecured loans from a bank due on May 27, 2021
Unsecured loans from a bank due on May 27, 2021
Unsecured loans from banks due on July 26, 2021
Unsecured loans from a bank due on August 26, 2021
Unsecured loans from banks due on August 26, 2021
Unsecured loans from a bank due on November 26, 2021
Unsecured loans from banks due on November 26, 2021
Unsecured loans from banks due on November 26, 2021
Unsecured loans from banks due on December 27, 2021
Unsecured loans from a bank due on January 26, 2022
Unsecured loans from banks due on February 28, 2022
Unsecured loans from a bank due on February 28, 2022
Unsecured loans from banks due on February 28, 2022
Unsecured loans from banks due on May 26, 2022
Unsecured loans from banks due on May 31, 2022
Unsecured loans from banks due on June 27, 2022
Unsecured loans from banks due on August 26, 2022
Unsecured loans from a bank due on August 26, 2022
Unsecured loans from banks due on August 26, 2022
Unsecured loans from a bank due on August 26, 2022
Unsecured loans from banks due on September 30, 2022
Unsecured loans from banks due on October 26, 2022

4,670,000
8,000,000
1,000,000
1,000,000
3,500,000
4,180,000
2,700,000
3,600,000
2,000,000
2,000,000
4,900,000
6,375,000
3,500,000
4,500,000
2,750,000
4,000,000
5,500,000
4,500,000
4,000,000
2,980,000
3,000,000
4,000,000
1,000,000
4,000,000
3,000,000

Weightedaverage interest
rate (Note 1)
0.23909%
1.56250%
1.46375%
1.68200%
1.62500%
1.23920%
1.24100%
0.81585%
1.30289%
1.11662%0.97410%0.23909%
1.48300%
1.31850%
1.29600%
1.16000%
1.25900%
0.82500%
0.20909%
1.19700%
1.09133%
1.08034%
0.32886%
0.76250%
0.23909%

Unsecured loans from banks due on November 28, 2022

2,100,000

Unsecured loans from banks due on November 28, 2022
Unsecured loans from a bank due on November 28, 2022
Unsecured loans from banks due on November 28, 2022
Unsecured loans from a bank due on November 28, 2022
Unsecured loans from banks due on November 28, 2022
Unsecured loans from a bank due on February 27, 2023
Unsecured loans from banks due on February 27, 2023
Unsecured loans from banks due on February 28, 2023
Unsecured loans from a bank due on May 26, 2023
Unsecured loans from a bank due on May 26, 2023
Unsecured loans from a bank due on May 26, 2023
Unsecured loans from a bank due on May 26, 2023
Unsecured loans from a bank due on May 26, 2023
Unsecured loans from a bank due on August 28, 2023

4,550,000
1,800,000
1,500,000
1,000,000
1,500,000
1,300,000
2,800,000
10,000,000
2,000,000
2,000,000
1,000,000
1,000,000
2,500,000
1,000,000

Amount(Thousands of Yen)

As of August 31, 2020

—
—
—
—
—
—
—
—
2,000,000
2,000,000
4,900,000
6,375,000
3,500,000
4,500,000
2,750,000
4,000,000
5,500,000
4,500,000
4,000,000
2,980,000
3,000,000
4,000,000
1,000,000
4,000,000
3,000,000

Weightedaverage interest
rate (Note 1)
—
—
—
—
—
—
—
—
1.30289%
1.11662%0.97410%0.22000%
1.48300%
1.31850%
1.29600%
1.16000%
1.25900%
0.82500%
0.19000%
1.19700%
1.09133%
1.08034%
0.32886%
0.76250%0.22000%

0.92280%

2,100,000

0.92280%

1.11000%
1.05000%
0.98624%0.71221%0.69250%
1.13250%0.40740%0.48700%
1.86500%
1.89500%
1.83875%
0.41250%0.43408%
1.14850%

4,550,000
1,800,000
1,500,000
1,000,000
1,500,000
1,300,000
2,800,000
10,000,000
2,000,000
2,000,000
1,000,000
1,000,000
2,500,000
1,000,000

1.11000%
1.05000%
0.98624%0.71221%0.69250%
1.13250%0.40740%0.48700%
1.86500%
1.89500%
1.83875%
0.41250%0.43408%
1.14850%

Amount(Thousands of Yen)

Nomura Real Estate Master Fund, Inc.

42

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

NOTES TO FINANCIAL STATEMENTS
As of February 29, 2020
Amount(Thousands of Yen)

Unsecured loans from a bank due on August 28, 2023
Unsecured loans from a bank due on August 28, 2023
Unsecured loans from a bank due on August 28, 2023
Unsecured loans from banks due on August 28, 2023
Unsecured loans from a bank due on August 28, 2023
Unsecured loans from a bank due on August 28, 2023
Unsecured loans from a bank due on August 28, 2023
Unsecured loans from banks due on August 31, 2023
Unsecured loans from banks due on November 27, 2023
Unsecured loans from banks due on November 27, 2023
Unsecured loans from banks due on November 27, 2023
Unsecured loans from banks due on November 27, 2023
Unsecured loans from a bank due on February 26, 2024
Unsecured loans from banks due on February 26, 2024
Unsecured loans from a bank due on February 26, 2024
Unsecured loans from a bank due on February 26, 2024
Unsecured loans from banks due on May 27, 2024
Unsecured loans from a bank due on May 27, 2024
Unsecured loans from a bank due on May 27, 2024
Unsecured loans from a bank due on June 26, 2024
Unsecured loans from a bank due on June 26, 2024
Unsecured loans from a bank due on August 26, 2024
Unsecured loans from a bank due on August 26, 2024
Unsecured loans from banks due on August 26, 2024
Unsecured loans from a bank due on August 26, 2024
Unsecured loans from a bank due on November 26, 2024
Unsecured loans from banks due on November 26, 2024
Unsecured loans from a bank due on November 26, 2024
Unsecured loans from a bank due on November 26, 2024
Unsecured loans from banks due on November 26, 2024
Unsecured loans from a bank due on November 26, 2024
Unsecured loans from banks due on February 26, 2025
Unsecured loans from a bank due on February 26, 2025
Unsecured loans from banks due on February 26, 2025
Unsecured loans from banks due on February 26, 2025
Unsecured loans from banks due on February 26, 2025
Unsecured loans from a bank due on May 26, 2025
Unsecured loans from a bank due on May 26, 2025
Unsecured loans from banks due on May 26, 2025
Unsecured loans from a bank due on May 26, 2025
Unsecured loans from a bank due on May 26, 2025
Unsecured loans from banks due on May 26, 2025
Unsecured loans from a bank due on May 26, 2025
Unsecured loans from banks due on August 26, 2025
Unsecured loans from banks due on August 26, 2025
Unsecured loans from banks due on August 26, 2025
Unsecured loans from banks due on August 26, 2025
Unsecured loans from banks due on August 26, 2025
Unsecured loans from a bank due on November 26, 2025
Unsecured loans from a bank due on November 26, 2025

43

Nomura Real Estate Master Fund, Inc.

1,000,000
1,000,000
4,000,000
6,100,000
1,000,000
1,000,000
500,000
6,700,000
2,000,000
2,600,000
4,000,000
1,500,000
2,750,000
1,300,000
500,000—
1,100,000
2,700,000
2,000,000
2,700,000
2,700,000
3,000,000
2,430,000
5,670,000
1,000,000
2,250,000
3,000,000
1,800,000
500,000
2,000,000
800,000
4,200,000
1,000,000
3,000,000
1,500,000
1,000,000
2,000,000
2,000,000
2,800,000
1,000,000
1,000,000
2,000,000—
3,000,000
4,050,000
1,850,000
2,600,000
3,000,000
1,100,000
1,100,000

Weightedaverage interest
rate (Note 1)
1.15850%
1.18032%
1.20772%
1.08510%0.43466%
0.41000%
0.41435%
0.55700%
1.75900%
0.82800%
0.49380%0.47483%
1.59400%
0.53630%0.24000%—
0.51000%
0.46376%
0.53676%
0.85925%
0.49533%
0.58175%
0.49971%0.49485%0.28624%
0.50825%0.58000%
0.55979%
0.52384%
0.42630%
0.21380%0.62675%
0.52140%0.53936%0.53880%
0.50604%
0.60286%
0.60286%
0.60286%
0.61434%
0.50506%
0.46301%—
0.56380%0.58727%
0.67915%0.60489%
0.58380%
1.09830%
1.06250%

As of August 31, 2020
Amount(Thousands of Yen)

1,000,000
1,000,000
4,000,000
6,100,000
1,000,000
1,000,000
500,000
6,700,000
2,000,000
2,600,000
4,000,000
1,500,000
2,750,000
1,300,000
500,000
1,000,000
1,100,000
2,700,000
2,000,000
2,700,000
2,700,000
3,000,000
2,430,000
5,670,000
1,000,000
2,250,000
3,000,000
1,800,000
500,000
2,000,000
800,000
4,200,000
1,000,000
3,000,000
1,500,000
1,000,000
2,000,000
2,000,000
2,800,000
1,000,000
1,000,000
2,000,000
1,000,000
3,000,000
4,050,000
1,850,000
2,600,000
3,000,000
1,100,000
1,100,000

Weightedaverage interest
rate (Note 1)
1.15850%
1.18032%
1.20772%
1.08510%0.43466%
0.41000%
0.41435%
0.55700%
1.75900%
0.82800%
0.49380%0.47483%
1.59400%
0.53630%0.24000%
0.18500%
0.51000%
0.46376%
0.53676%
0.85925%
0.49533%
0.58175%
0.49971%0.49485%0.28624%
0.50825%0.58000%
0.55979%
0.52384%
0.42630%
0.21380%0.62675%
0.52140%0.53936%0.53880%
0.50604%
0.60286%
0.60286%
0.60286%
0.61434%
0.50506%
0.46301%
0.19750%
0.56380%0.58727%
0.67915%0.60489%
0.58380%
1.09830%
1.06250%

As of February 29, 2020

2,000,000
2,000,000
2,000,000
4,200,000
900,000
1,300,000
1,000,000

Weightedaverage interest
rate (Note 1)
1.03955%
0.59639%0.60448%0.64616%0.65123%
0.64278%0.59499%

Unsecured loans from a bank due on November 26, 2025

500,000

Unsecured loans from banks due on February 26, 2026
Unsecured loans from banks due on February 26, 2026
Unsecured loans from banks due on February 26, 2026
Unsecured loans from a bank due on February 26, 2026
Unsecured loans from banks due on February 26, 2026
Unsecured loans from a bank due on May 26, 2026
Unsecured loans from a bank due on May 26, 2026
Unsecured loans from banks due on May 26, 2026
Unsecured loans from a bank due on May 26, 2026
Unsecured loans from a bank due on May 26, 2026
Unsecured loans from a bank due on May 26, 2026
Unsecured loans from a bank due on August 26, 2026
Unsecured loans from a bank due on August 26, 2026
Unsecured loans from banks due on August 26, 2026
Unsecured loans from a bank due on August 26, 2026
Unsecured loans from banks due on August 26, 2026
Unsecured loans from a bank due on August 26, 2026
Unsecured loans from a bank due on August 26, 2026
Unsecured loans from a bank due on August 26, 2026
Unsecured loans from banks due on August 26, 2026
Unsecured loans from a bank due on November 26, 2026
Unsecured loans from a bank due on November 26, 2026
Unsecured loans from banks due on November 26, 2026
Unsecured loans from banks due on November 26, 2026
Unsecured loans from banks due on November 26, 2026
Unsecured loans from banks due on November 26, 2026
Unsecured loans from banks due on November 26, 2026
Unsecured loans from banks due on November 26, 2026
Unsecured loans from banks due on February 26, 2027
Unsecured loans from banks due on February 26, 2027
Unsecured loans from a bank due on February 26, 2027
Unsecured loans from banks due on February 26, 2027
Unsecured loans from a bank due on February 26, 2027
Unsecured loans from a bank due on February 26, 2027
Unsecured loans from a bank due on February 26, 2027
Unsecured loans from a bank due on February 26, 2027
Unsecured loans from a bank due on February 26, 2027
Unsecured loans from banks due on March 26, 2027
Unsecured loans from banks due on May 26, 2027
Unsecured loans from banks due on May 26, 2027
Unsecured loans from a bank due on May 26, 2027

4,000,000
2,500,000
800,000
500,000
1,500,000
2,500,000
1,100,000
3,600,000
1,000,000
1,100,000—
2,700,000
2,700,000
3,000,000
1,000,000
3,000,000
1,000,000
1,000,000
500,000
1,500,000
2,000,000
2,000,000
4,165,000
4,000,000
1,500,000
2,000,000
1,000,000
1,200,000
2,320,000
1,500,000
500,000
1,000,000
1,500,000
1,000,000———
1,500,000
3,060,000
2,300,000
1,800,000

Amount(Thousands of Yen)

Unsecured loans from a bank due on November 26, 2025
Unsecured loans from a bank due on November 26, 2025
Unsecured loans from a bank due on November 26, 2025
Unsecured loans from banks due on November 26, 2025
Unsecured loans from a bank due on November 26, 2025
Unsecured loans from a bank due on November 26, 2025
Unsecured loans from a bank due on November 26, 2025

As of August 31, 2020

2,000,000
2,000,000
2,000,000
4,200,000
900,000
1,300,000
1,000,000

Weightedaverage interest
rate (Note 1)
1.03955%
0.59639%0.60448%0.64616%0.65123%
0.64278%0.59499%

0.56311%500,000

0.56311%0.74080%0.59592%
0.37630%
0.39196%0.17136%0.63995%
0.65267%
0.60880%0.59614%0.37000%—
0.67591%
0.67591%
0.77669%
0.70414%0.67483%0.64500%
0.42118%
0.43627%
0.20880%0.76000%
0.74229%0.73506%
0.69956%
0.64999%0.60750%0.28000%
0.30000%
0.71500%
0.46630%
0.44859%
0.48144%0.28500%
0.28500%———
0.69068%
0.78177%
0.74736%0.70250%

4,000,000
2,500,000
800,000
500,000
1,500,000
2,500,000
1,100,000
3,600,000
1,000,000
1,100,000
1,500,000
2,700,000
2,700,000
3,000,000
1,000,000
3,000,000
1,000,000
1,000,000
500,000
1,500,000
2,000,000
2,000,000
4,165,000
4,000,000
1,500,000
2,000,000
1,000,000
1,200,000
2,320,000
1,500,000
500,000
1,000,000
1,500,000
1,000,000
300,000
500,000
500,000
1,500,000
3,060,000
2,300,000
1,800,000

0.74080%0.59592%
0.37630%
0.39196%0.17136%0.63995%
0.65267%
0.60880%0.59614%0.37000%
0.25873%
0.67591%
0.67591%
0.77669%
0.70414%0.67483%0.64500%
0.42118%
0.43627%
0.20880%0.76000%
0.74229%0.73506%
0.69956%
0.64999%0.60750%0.28000%
0.30000%
0.71500%
0.46630%
0.44859%
0.48144%0.28500%
0.28500%
0.16205%
0.10094%
0.35139%0.69068%
0.78177%
0.74736%0.70250%

Amount(Thousands of Yen)

Nomura Real Estate Master Fund, Inc.

44

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

NOTES TO FINANCIAL STATEMENTS
As of February 29, 2020
Amount(Thousands of Yen)

Unsecured loans from a bank due on May 26, 2027
Unsecured loans from banks due on August 26, 2027
Unsecured loans from banks due on August 26, 2027
Unsecured loans from a bank due on August 26, 2027
Unsecured loans from a bank due on August 26, 2027
Unsecured loans from banks due on August 26, 2027
Unsecured loans from a bank due on August 26, 2027
Unsecured loans from a bank due on November 26, 2027
Unsecured loans from banks due on November 26, 2027
Unsecured loans from a bank due on November 26, 2027
Unsecured loans from banks due on November 26, 2027
Unsecured loans from banks due on November 26, 2027
Unsecured loans from a bank due on February 28, 2028
Unsecured loans from a bank due on February 28, 2028
Unsecured loans from banks due on February 28, 2028
Unsecured loans from a bank due on February 28, 2028
Unsecured loans from a bank due on February 28, 2028
Unsecured loans from banks due on February 28, 2028
Unsecured loans from banks due on February 28, 2028
Unsecured loans from banks due on May 26, 2028
Unsecured loans from a bank due on May 26, 2028
Unsecured loans from a bank due on May 26, 2028
Unsecured loans from a bank due on May 26, 2028
Unsecured loans from banks due on May 26, 2028
Unsecured loans from a bank due on May 26, 2028
Unsecured loans from banks due on August 28, 2028
Unsecured loans from a bank due on August 28, 2028
Unsecured loans from banks due on August 28, 2028
Unsecured loans from a bank due on August 28, 2028
Unsecured loans from a bank due on August 28, 2028
Unsecured loans from a bank due on August 28, 2028
Unsecured loans from banks due on November 27, 2028
Unsecured loans from banks due on November 27, 2028
Unsecured loans from a bank due on November 27, 2028
Unsecured loans from banks due on February 26, 2029
Unsecured loans from banks due on February 26, 2029
Unsecured loans from a bank due on February 26, 2029
Unsecured loans from a bank due on February 26, 2029
Unsecured loans from a bank due on February 26, 2029
Unsecured loans from a bank due on February 26, 2029
Unsecured loans from banks due on May 28, 2029
Unsecured loans from a bank due on May 28, 2029
Unsecured loans from a bank due on May 28, 2029
Unsecured loans from a bank due on May 28, 2029
Unsecured loans from a bank due on May 28, 2029
Unsecured loans from banks due on August 27, 2029
Unsecured loans from banks due on August 27, 2029
Unsecured loans from banks due on August 27, 2029
Unsecured loans from banks due on August 27, 2029
Unsecured loans from a bank due on August 27, 2029
Unsecured loans from a bank due on August 27, 2029

45

Nomura Real Estate Master Fund, Inc.

1,400,000
4,000,000
2,600,000
1,000,000
1,000,000
1,500,000—
2,000,000
5,000,000
1,800,000
1,700,000
2,500,000
1,000,000
2,355,000
1,500,000
1,800,000
2,650,000
1,500,000—
5,000,000
2,000,000
1,550,000
500,000
2,000,000
1,400,000
3,600,000
500,000
1,000,000
500,000
500,000—
2,000,000
3,000,000
1,800,000
2,500,000
1,400,000
2,300,000
500,000
3,500,000—
5,000,000
800,000———
2,000,000
3,900,000
2,800,000———

Weightedaverage interest
rate (Note 1)
0.32000%
0.76843%0.76290%0.74500%
0.51356%0.29000%—
0.89209%
0.79571%0.75050%0.70750%
0.52234%
0.82130%
0.76241%0.78296%
0.79642%0.54205%
0.57365%—
0.79880%0.75922%0.55038%0.54010%0.54750%
0.40500%
0.84750%0.61005%
0.62163%
0.62025%
0.37500%—
0.81130%
0.59375%
0.50880%0.65880%0.67098%
0.63692%
0.63692%
0.41815%—0.64000%
0.55190%———0.46130%
0.46130%
0.55845%———

As of August 31, 2020
Amount(Thousands of Yen)

1,400,000
4,000,000
2,600,000
1,000,000
1,000,000
1,500,000
600,000
2,000,000
5,000,000
1,800,000
1,700,000
2,500,000
1,000,000
2,355,000
1,500,000
1,800,000
2,650,000
1,500,000
1,000,000
5,000,000
2,000,000
1,550,000
500,000
2,000,000
1,400,000
3,600,000
500,000
1,000,000
500,000
500,000
1,000,000
2,000,000
3,000,000
1,800,000
2,500,000
1,400,000
2,300,000
500,000
3,500,000
500,000
5,000,000
800,000
500,000
1,000,000
1,000,000
2,000,000
3,900,000
2,800,000
1,600,000
1,500,000
500,000

Weightedaverage interest
rate (Note 1)
0.32000%
0.76843%0.76290%0.74500%
0.51356%0.29000%
0.32630%
0.89209%
0.79571%0.75050%0.70750%
0.52234%
0.82130%
0.76241%0.78296%
0.79642%0.54205%
0.57365%0.17813%0.79880%0.75922%0.55038%0.54010%0.54750%
0.40500%
0.84750%0.61005%
0.62163%
0.62025%
0.37500%
0.40380%
0.81130%
0.59375%
0.50880%0.65880%0.67098%
0.63692%
0.63692%
0.41815%0.37000%
0.64000%
0.55190%0.26451%0.45875%
0.44880%
0.46130%
0.46130%
0.55845%
0.48380%
0.48380%
0.46380%

As of February 29, 2020
Amount(Thousands of Yen)

Unsecured loans from a bank due on November 26, 2029
Unsecured loans from a bank due on November 26, 2029
Unsecured loans from a bank due on November 26, 2029
Unsecured loans from a bank due on November 26, 2029
Unsecured loans from a bank due on November 26, 2029
Unsecured loans from a bank due on November 26, 2029
Unsecured loans from a bank due on November 26, 2029
Unsecured loans from banks due on February 26, 2030
Unsecured loans from a bank due on February 26, 2030
Unsecured loans from a bank due on February 26, 2030
Unsecured loans from a bank due on February 26, 2030
Unsecured loans from banks due on February 26, 2030
Unsecured loans from a bank due on February 26, 2030
Unsecured loans from banks due on May 27, 2030
Unsecured loans from a bank due on May 27, 2030
Unsecured loans from a bank due on May 27, 2030
Unsecured loans from a bank due on May 27, 2030
Unsecured loans from a bank due on May 27, 2030
Unsecured loans from banks due on August 26, 2030
Unsecured loans from a bank due on August 26, 2030
Unsecured loans from a bank due on August 26, 2030
Unsecured loans from a bank due on October 28, 2030
Unsecured loans from a bank due on October 28, 2030
Unsecured loans from a bank due on May 26, 2025 (Note 2)
Unsecured loans from a bank due on May 26, 2025 (Note 2)
Total

2,000,000
2,000,000
1,200,000
1,000,000
750,000
500,000—
4,250,000
1,500,000
—
—
—
—
—
—
—
—
—
—
—
—
1,100,000
1,100,000
668,300
668,300
419,841,600

As of August 31, 2020

Weightedaverage interest
rate (Note 1)
1.12506%
1.12506%
0.59500%
0.59500%
0.48000%
0.59500%—
0.52000%
0.48000%
—
—
—
—
—
—
—
—
—
—
—
—
1.92250%
1.91700%
2.17000%
2.21812%Amount(Thousands of Yen)

2,000,000
2,000,000
1,200,000
1,000,000
750,000
500,000
2,000,000
4,250,000
1,500,000
600,000
500,000
1,300,000
1,500,000
7,000,000
800,000
1,000,000
1,000,000
500,000
2,000,000
1,100,000
300,000
1,100,000
1,100,000
646,900
646,900
424,748,800

Weightedaverage interest
rate (Note 1)
1.12506%
1.12506%
0.59500%
0.59500%
0.48000%
0.59500%
0.50630%0.52000%
0.48000%
0.40915%0.34054%0.59482%
0.52446%
0.54630%
0.52630%
0.53250%
0.55988%0.50485%
0.56500%
0.54500%
0.54500%
1.92250%
1.91700%
2.17000%
2.21812%Note 1: The weighted-average interest rate is weighted by the balance of each borrowing at the end of the period and rounded to the nearest fifth decimal place. As forthe borrowings, hedged by interest-rate swaps for the purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used to calculate theweighted-average interest rate.
Note 2: Installments of ¥10.7 million will be made on the 26th day of every third month starting on August 26, 2013, with the remaining payment of ¥497.1 million to be
repaid on May 26, 2025.

The scheduled repayment amounts of long-term debt for each of the five years after the balance sheet date (excluding thecurrent portion of long-term debt) are as follows.


Thousands of Yen

As of February 29, 2020
As of August 31, 2020

1-2 years
58,760,600
55,090,600

2-3 years
58,615,600
64,435,600

3-4 years
45,535,600
39,035,600

4-5 years
44,435,600
48,387,000

Nomura Real Estate Master Fund, Inc.

46

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

NOTES TO FINANCIAL STATEMENTS
9. INVESTMENT CORPORATION BONDS

11. ALLOWANCE FOR TEMPORARY DIFFERENCE ADJUSTMENTS

Details of investment corporation bonds outstanding are summarized as follows.

The movement in the allowance for temporary difference adjustments on the Balance Sheet was as follows:

As of February 29, 2020
Interest rate

Amount(Thousands of Yen)

NOF’s 2nd series of unsecured investment corporation
bonds due on March 16, 2020
NOF’s 7th series of unsecured investment corporation
bonds due on March 17, 2028
Former NMF’s 1st series of unsecured investment
corporation bonds due on October 30, 2024
NOF’s 10th series of unsecured investment corporation
bonds due on November 25, 2024
NMF’s 2nd series of unsecured investment corporation
bonds due on November 16, 2027
NMF’s 3rd series of unsecured investment corporation
bonds due on May 21, 2038
NMF's 4th series of unsecured investment corporation
bonds due on September 20, 2029 (green bonds)
NMF's 5th series of unsecured investment corporation
bonds due on September 20, 2039
NMF's 6th series of unsecured investment corporation
bonds due on August 14, 2030 (green bonds)
Total

For the period from September 1, 2019 to February 29, 2020

As of August 31, 2020

(Note 1)

Interest rate

Amount(Thousands of Yen)

(Note 1)

5,000,000

2.47%

—

—

4,500,000

2.90%

4,500,000

2.90%

3,000,000

0.87%

3,000,000

0.87%

6,000,000

1.02%

6,000,000

1.02%

2,000,000

0.59%

2,000,000

0.59%

1,500,000

1.03%

1,500,000

1.03%

3,000,000

0.53%

3,000,000

0.53%

5,000,000

0.90%

5,000,000

0.90%

—

—

7,000,000

0.54%

30,000,000

1. Reason, related assets and amounts

32,000,000

Related assets, etc.

Amortization of
goodwill
Land, buildings, etc. Merger expenses
Loss oninterest-rate
Deferred gains or
swaps recognized
losses on hedges
at the end of the
fiscal period
Increase - subtotal
Total

Goodwill

Item
Buildings, etc.
Land
Buildings in trust, etc.
Land in trust
Leasehold rights
Leasehold rights in trustThousands of Yen

Within a year
5,000,000—

1-2 years——

2-3 years——

3-4 years——

Balance atAllowance
the end of
set aside
previous
during period
periodReversalduringperiodBalance atthe end ofcurrent
periodReason forreversal

14,733,612

8,108,244

1,560,840—

9,669,084—

4,029,135

1,333,892(5,663)—

1,328,228—

2,867,594

997,480—(91,667)— 10,439,617— 10,439,617

1,555,176
1,555,176

Changes in fair
905,812 value of derivative transactions(91,667) 11,903,126(91,667) 11,903,126——

2. Method of reversal(1) Amortization of goodwill
In principle, amortization of goodwill is not reversed.

The scheduled redemption amounts of investment corporation bonds for each of the five years after the balance sheet date areas follows.

As of February 29, 2020
As of August 31, 2020

ReasonInitialamount(2) Merger expenses

Note 1: The interest rate is rounded to the nearest second decimal place.



Thousands of Yen

4-5 years
9,000,000
9,000,000

10. UNITHOLDERS’ EQUITY
NMF issues only non-par value investment units in accordance with the Investment Trust Act. The entire amount of the issue
price of new units is designated as stated capital. NMF is required to maintain net assets of at least ¥50,000 thousand as set
forth in the Investment Trust Act.

Method of reversal
Upon depreciation and sale, etc., the corresponding amount is scheduled to be reversed.
Upon sale, etc., the corresponding amount is scheduled to be reversed.
Upon depreciation or sale, etc., the corresponding amount is scheduled to be reversed.
Upon sale, etc., the corresponding amount is scheduled to be reversed.

(3) Deferred gains or losses on hedges
Based on changes in the fair value of derivatives used as hedging instruments, the corresponding amount is scheduled to bereversed.
For the period from March 1, 2020 to August 31, 2020
1. Reason, related assets and amountsThousands of Yen

Related assets, etc.

ReasonAmortization of
goodwill
Land, buildings, etc. Merger expenses
Loss oninterest-rate
Deferred gains or
swaps recognized
losses on hedges
at the end of the
fiscal period
Increase - subtotal
Total
Goodwill

47

Nomura Real Estate Master Fund, Inc.

InitialamountBalance atAllowance
the end of
set aside
previous
during period
period17,355,854

9,669,084

1,740,727

4,029,135

1,328,228

2,867,594

ReversalduringperiodBalance atthe end ofcurrent
periodReason forreversal— 11,409,812—(5,534)—

1,322,694—

905,812—(122,481)

783,330

Changes in fairvalue of derivative transactions— 11,903,126— 11,903,126

1,735,193
1,735,193(122,481) 13,515,837(122,481) 13,515,837——

Nomura Real Estate Master Fund, Inc.

48

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

NOTES TO FINANCIAL STATEMENTS
14. INCOME TAXES

2. Method of reversal(1) Amortization of goodwill
In principle, amortization of goodwill is not reversed.
(2) Merger expenses
Item
Buildings, etc.
Land
Buildings in trust, etc.
Land in trust
Leasehold rights
Leasehold rights in trust

Method of reversal
Upon depreciation and sale, etc., the corresponding amount is scheduled to be reversed.
Upon sale, etc., the corresponding amount is scheduled to be reversed.
Upon depreciation or sale, etc., the corresponding amount is scheduled to be reversed.

Since the Company distributed in excess of 90% of its distributable income in the form of cash distributions totaling¥15,640,318 thousand for the fiscal period ended August 31, 2020, such distributions were treated as deductible distributions
for purposes of corporate income taxes.

Upon sale, etc., the corresponding amount is scheduled to be reversed.

(3) Deferred gains or losses on hedges
Based on changes in the fair value of derivatives used as hedging instruments, the corresponding amount is scheduled to bereversed.

12. PER UNIT INFORMATIONThe net asset values per unit and the net income per unit as of February 29, 2020 and August 31, 2020 were as follows:
For the period
from September 1, 2019
to February 29, 2020
Net assets per unit
Net income per unit

For the period
from March 1, 2020
to August 31, 2020

133,158
2,642

132,657
2,714

Note 1: The net income per unit is calculated by dividing net income by the weighted-average number of units outstanding.
Note 2: The basis for calculating net income per unit is as follows.

For the period
from September 1, 2019
to February 29, 2020
Net income (Thousands of Yen)
Amount not available to ordinary unitholders (Thousands of Yen)
Net income available to ordinary unitholders (Thousands of Yen)
Average number of units during the period (Units)

For the period
from March 1, 2020
to August 31, 2020

12,188,719—
12,188,719
4,612,315

For the periods from September 1, 2019 to February 29, 2020 and from March 1, 2020 to August 31, 2020

Subsidiaries and affiliates
Not applicable
Fellow subsidiary companies
Not applicable
Directors and major individual unitholders
Not applicable

The following summarizes breakdown of deferred tax assets and liabilities:

Thousands of Yen

For the period
from September 1, 2019
to February 29, 2020
Deferred tax asset:
Valuation difference on other assets acquired by merger
Deferred gains or losses on hedges
Unearned revenue
Write-offs for long-term prepaid expenses
Depreciation costs of trust leasehold rights
Non-deductible accrued enterprise tax
		Subtotal		Valuation allowance

13. RELATED PARTY TRANSACTIONSParent Company and major corporate unitholders
Not applicable

The Company, as an investment corporation, is subject to corporate income taxes at a statutory tax rate of approximately
31.46% for the fiscal period ended August 31, 2020. However, the Company may deduct dividend distributions paid to its
unitholders from its taxable income amounts, provided such distributions meet the requirements under the Act on Special
Measures Concerning Taxation of Japan. Under this act, an investment corporation must meet a number of tax requirements,
including a requirement to distribute in excess of 90% of its distributable income for the fiscal period, in order to deduct suchamounts. If the investment corporation does not satisfy all of the requirements, the entire taxable income of the investment
corporation will be subject to regular corporate income taxes.

12,799,540—
12,799,540
4,715,200

		 Total non-current deferred tax assets
Total deferred tax assets
Net deferred tax assets

For the period
from March 1, 2020
to August 31, 2020

20,204,388
246,437
82,144
9,300
1,459
170
20,543,900

19,965,899
152,343
58,798
6,268
1,581
233
20,185,125(20,185,125)(20,543,900)
—
—
—

—
—
—

The following summarizes the significant differences between the statutory tax rate and the effective tax rate.
For the period
from September 1, 2019
to February 29, 2020
Statutory tax rate
Deductible cash distributions
Valuation of allowance
Amortization of goodwill
Other
Effective tax rate

31.51%(35.99%)(2.28%)
6.78%
0.00%
0.02%

For the period
from March 1, 2020
to August 31, 2020
31.46%(35.81%)(2.07%)
6.44%
0.00%
0.03%

15. FINANCIAL INSTRUMENTS
Overview(1) Policy for Financial Instruments
Upon acquisition of property-related assets, the Company may raise funds through certain financing methods including
borrowings, issuance of investment corporation bonds and issuance of investment units. In financing through interest-bearing debt, to secure stable financing capability and reduce future risks of rising interest rates, the Company’s investment
policy is to secure longer-term, fixed-rate borrowings with well-diversified maturities.
The Company enters into derivative transactions only for the purpose of reducing risk of future interest rate fluctuations anddoes not engage in speculative transactions.
(2) Type and Risk of Financial Instruments and Related Risk Management
Borrowings and investment corporation bonds are primarily used to fund the acquisition of property-related assets as well as
the repayment of debts and redemption of investment corporation bonds. The Company is exposed to liquidity risk of being

49

Nomura Real Estate Master Fund, Inc.

Nomura Real Estate Master Fund, Inc.

50

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

NOTES TO FINANCIAL STATEMENTS
unable to meet its obligations on scheduled due dates. The Company controls and limits such risk by diversifying not only thefinancial institutions, but also the type of financing to include the effective use of surplus funds and direct financing from thecapital markets such as issuance of investment units. In addition, the Company is exposed to the market risk arising fromfluctuations in interest rates on its floating-rate debt. However, the effect of such risk on the operation of the Company islimited by maintaining the LTV ratio at low levels and the ratio of long-term fixed-rate debt to total debt at high levels.
Furthermore, the Company may utilize derivative transactions (interest-rate swap transactions) as a hedging instrument to
reduce the market risk under floating-rate debt by swapping such floating-rate interest payments for fixed-rate interest
payments.

Note 3: Redemption schedule for cash and bank deposits as of February 29, 2020.



Due within one After one year,
year
within two years
Cash and bank deposits
Total

Total

(i) Cash and bank deposits(ii) Current portion of investment corporation bonds(iii) Current portion of long-term debt(iv) Investment corporation bonds(v) Long-term debt(vi) Derivative transactions

Fair value
87,599,067(5,003,760)(61,129,898)(26,141,290)(430,150,417)(785,528)

Difference

Thousands of Yen

Carrying value
75,166,359—(61,135,600)(32,000,000)(424,748,800)(487,237)(Note 1)

Fair value
75,166,359—(61,355,060)(32,359,594)(431,174,794)(487,237)(Note 1)

Difference——
219,460
359,594
6,425,994—

Note 1: The numbers in parenthesis indicate liabilities.
Note 2: Method for determining the fair value of financial instruments and derivative transactions(i)		 Cash and bank deposits		As these items are settled within a short-term period, their fair value is nearly equal to the carrying value. Therefore, for these items, the carrying value isreported as the fair value.
(ii) Current portion of investment corporation bonds and (iv) Investment corporation bonds
		 The fair value of investment corporation bonds issued by the Company is determined based on their market prices.
(iii) Current portion of long-term debt and (v) Long-term debt
		For floating-rate long-term debt, the carrying value is reported as it is considered to be approximately equal to the fair value because such debt reflects themarket interest rates within a short-term period. (However, the fair value of certain floating-rate long-term debt that qualifies for the special treatment ofinterest-rate swaps (see “23. Derivatives and Hedge Accounting”) is determined by discounting the sum of its principal and interest payments net of any
cash flows from the interest-rate swap at a rate reasonably estimated to be applicable to similar fixed-rate debt.) The fair value of fixed-rate long-term debt
is determined by discounting the sum of its principal and interest payments at a rate reasonably estimated to be applicable to similar fixed-rate debt.
(vi) Derivative transactions		
See “23. Derivatives and Hedge Accounting.”

Nomura Real Estate Master Fund, Inc.

—

—

—

After two years,
After three years, After four years,
within three
After five years
within four years within five years
years

75,166,359

—

—

—

—

—

75,166,359

—

—

—

—

—

Thousands of Yen

Due within
one year

After one year,
within two years

After two years,
After three years, After four years,
within three
After five years
within four years within five years
years

Investment corporation bonds

5,000,000———

9,000,000

16,000,000

Long-term debt

60,885,600

58,760,600

58,615,600

45,535,600

44,435,600

212,494,200

65,885,600

58,760,600

58,615,600

45,535,600

53,435,600

228,494,200

Total

Redemption schedule for debt as of August 31, 2020

Thousands of Yen

Due within
one yearInvestment corporation bonds
Long-term debt
Total

After one year,
within two years

After two years,
After three years, After four years,
within three
After five years
within four years within five years
years

—

—

—

—

9,000,000

23,000,000

61,135,600

55,090,600

64,435,600

39,035,600

48,387,000

217,800,000

61,135,600

55,090,600

64,435,600

39,035,600

57,387,000

240,800,000

16. INVESTMENT AND RENTAL PROPERTIESThe following table summarizes the carrying value and the estimated fair values of financial instruments as of August 31, 2020.

51

—

—



—
3,760
244,298
1,141,290
10,308,817—

For the period from March 1, 2020 to August 31, 2020(i) Cash and bank deposits(ii) Current portion of investment corporation bonds(iii) Current portion of long-term debt(iv) Investment corporation bonds(v) Long-term debt(vi) Derivative transactions——

Note 4: Redemption schedule for debt as of February 29, 2020

Thousands of Yen

Carrying value
87,599,067(5,000,000)(60,885,600)(25,000,000)(419,841,600)(785,528)—

Thousands of Yen

Cash and bank deposits

The following table summarizes the carrying value and the estimated fair values of financial instruments as of February 29, 2020.
(Note 1)——

Due within one After one year,
year
within two years

For the period from September 1, 2019 to February 29, 2020

(Note 1)87,599,067
87,599,067

Redemption schedule for cash and bank deposits as of August 31, 2020

Fair Value of Financial InstrumentsAfter two years,
After three years, After four years,
within three
After five years
within four years within five years
years



Bank deposits are held as a means of investing surplus funds, and the Company is exposed to the credit risk that financial
institutions may default. However, the effect of such risk is limited by diversifying the financial institutions with which surplus
funds are deposited.
(3) Supplementary Explanation on Estimated Fair Value of Financial Instruments
The fair value of financial instruments is based on the quoted market price, if applicable. When there is no quoted market
price available, fair value is reasonably estimated. Certain assumptions are used for the estimation of fair value. Accordingly,
the result of such estimation may change if different assumptions are used. Furthermore, the contractual amounts of derivative transactions stated in “23. Derivatives and Hedge Accounting” below do not represent the market risk involved in thesederivative transactions.

Thousands of Yen

The Company owns leasable office, leasable retail facilities, leasable logistics facilities, leasable residential (including land) inGreater Tokyo area and other areas for the purpose of earning revenue from leasing. The following table summarizes the carrying value and the estimated fair value of these properties.


Thousands of Yen

For the period
from September 1, 2019
to February 29, 2020
Carrying value
Balance at beginning of the period
Amount of increase (decrease) during the period
Balance at end of the period
Fair value at end of the period

999,049,393
17,969,957
1,017,019,350
1,158,232,000

For the period
from March 1, 2020
to August 31, 2020
1,017,019,350
18,926,674
1,035,946,025
1,185,682,000

Note 1: The carrying value represents the acquisition cost less accumulated depreciation.
Note 2: O f the change in investment and rental properties, the increase during the previous period is mainly attributable to the acquisition of PMO Akihabara Kita(¥8,547,300 thousand), PMO Higashi-Shinbashi (¥4,801,865 thousand), PROUD FLAT Shibuya Tomigaya (¥4,080,033 thousand), PROUD FLAT Miyazakidai(¥1,461,354 thousand) and PROUD FLAT Asakusabashi III (¥1,282,437 thousand). The decrease during the previous period is mainly attributable to depreciation
expenses (¥5,146,129 thousand).The increase during the current period is mainly attributable to the acquisition of PMO Hamamatsucho (¥4,445,043 thousand),
GEMS Sangenjaya (¥1,836,687 thousand), Landport Higashi-Narashino (¥12,025,405 thousand) and PROUD FLAT Togoshi-Koen (¥2,670,972 thousand). The
decrease during the current period is mainly attributable to depreciation expenses (¥5,363,528 thousand).
Note 3: Fair value at the end of the period is the appraisal value or survey price determined by an outside real estate appraiser.

The real estate rental revenues and expenses for the fiscal period ended August 31, 2020 are presented in “18. Breakdown ofReal Estate Rental Revenues and Expenses.”

Nomura Real Estate Master Fund, Inc.

52

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

NOTES TO FINANCIAL STATEMENTS
17. SEGMENT INFORMATION

19. BREAKDOWN OF GAIN AND LOSS ON SALES OF REAL ESTATE

For the periods from September 1, 2019 to February 29, 2020 and from March 1, 2020 to August 31, 2020
Segment Information

Not applicable.

Since the Company has been engaged in the real estate leasing business as a single segment, segment information has been omitted.
Related Information
1. Information about products and services
Since revenues from external customers for products and services within a single segment are more than 90 percent of
total operating revenues, information about products and services has been omitted.
2. Information about geographical areas(1) Revenues
Since more than 90 percent of the total operating revenues were generated from external customers in Japan, a geographical breakdown of revenues has been omitted.
(2) Property and equipment
Since more than 90 percent of the total property and equipment on the balance sheet are located in Japan, a geographicalbreakdown of property and equipment has been omitted.
3. Information about major clients

20. BREAKDOWN OF EXTRAORDINARY INCOME
For the period from September 1, 2019 to February 29, 2020
The insurance amount of ¥71,833 thousand related to the assets damaged by the Typhoons Faxai and Hagibis in 2019 wasoffset by the loss amount of ¥43,222 thousand. Therefore, the amount of ¥28,611 thousand is recorded as insurance income.
For the period from March 1, 2020 to August 31, 2020
Not applicable

21. BREAKDOWN OF EXTRAORDINARY LOSS
For the period from September 1, 2019 to February 29, 2020
The loss amount of ¥13,840 thousand related to the assets damaged by the Typhoons Faxai and Hagibis in 2019 was offset by
the insurance amount of ¥1,495 thousand. Therefore, the amount of ¥12,344 thousand is recorded as loss on disaster.
For the period from March 1, 2020 to August 31, 2020
Not applicable

For the period from September 1, 2019 to February 29, 2020
Customer name
Nomura Real Estate Partners Co., Ltd.

Revenues (Thousands of Yen)
5,190,268

Related segment nameRental real estate business

The future minimum rental revenues from tenants under non-cancelable operating lease of properties as of February 29, 2020
and August 31, 2020 are summarized as follows:

For the period from March 1, 2020 to August 31, 2020
Customer name
Nomura Real Estate Partners Co., Ltd.

22. LEASESRevenues (Thousands of Yen)
5,400,637

Related segment nameRental real estate businessThousands of Yen

As of February 29, 2020

As of August 31, 2020

34,932,268
76,918,092
111,850,360

36,427,540
75,591,563
112,019,104

Due within one year
Due after one year
Total

18. BREAKDOWN OF REAL ESTATE RENTAL REVENUES AND EXPENSES
Real estate rental revenues and expenses for the fiscal period ended February 29, 2020 and August 31, 2020 consist of the following:

Thousands of Yen

For the period
from September 1, 2019
to February 29, 2020
Real estate rental revenues
Rental revenues
		Rental revenues
		 Common area charges
Other rental revenues
		Parking revenues
		Incidental income
		 Other miscellaneous revenues
Real estate rental expenses
		 Property management costs
		 Property management fees
		 Property and other taxes
		Utility expenses
		Casualty insurance		 Repairs and maintenance		Land rents
		Depreciation
		 Other rental expenses
Real estate rental profits

53

Nomura Real Estate Master Fund, Inc.

36,927,357
33,877,972
31,441,906
2,436,066
3,049,384
609,2032,267,052
173,128
15,720,670
1,760,058
950,345
2,976,127
1,829,299
42,831
1,658,591
204,347
5,151,274
1,147,795
21,206,687

For the period
from March 1, 2020
to August 31, 2020
37,577,424
34,884,255
32,456,559
2,427,695
2,693,169
619,580
1,969,384
104,204
15,678,281
1,785,636
1,011,292
3,124,623
1,605,607
45,011
1,418,953
204,194
5,369,703
1,113,258
21,899,143

23. DERIVATIVES AND HEDGE ACCOUNTING
Derivative transactions as of February 29, 2020
(1) There were no derivative financial instruments not subject to hedge accounting.
(2) Derivative financial instruments subject to hedge accounting were as follows:

Thousands of Yen

Hedge accounting
methodPrincipal treatment
methodSpecial treatment ofinterest-rate swaps
Total

Type of derivative
instruments
Interest-rate swaps:
Received/floating andpaid/fixedInterest-rate swaps:
Received/floating andpaid/fixed

Main hedged
itemLong-term debt

Notional amountDue after one year

(Note 1)

91,330,000

70,210,000

Fair value (Note 2)(785,528)(Note 3)Long-term debt

61,661,100

42,868,300(959,582)(Note 4)

152,991,100

113,078,300(1,745,111)

Note 1: Contract amount is based on notional amount.
Note 2: Fair value is measured by swap counterparty, based on the actual market interest rate, etc.
Note 3: Out of the fair value, (¥2,198 thousand) is booked as “accrued expenses” on the Balance Sheet.
Note 4: Out of the fair value, (¥959,582 thousand) is not marked to market on the Balance Sheet, since adopting special treatment for interest-rate swaps.

Nomura Real Estate Master Fund, Inc.

54

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

NOTES TO FINANCIAL STATEMENTS
Derivative transactions as of August 31, 2020

25. INFORMATION ON ALLOWANCE FOR TEMPORARY DIFFERENCE ADJUSTMENTS(1) There were no derivative financial instruments not subject to hedge accounting.

For the period from September 1, 2019 to February 29, 2020

(2) Derivative financial instruments subject to hedge accounting were as follows:

Thousands of Yen

Hedge accounting
methodPrincipal treatment
methodSpecial treatment ofinterest-rate swaps

Type of derivative
instruments
Interest-rate swaps:
Received/floating andpaid/fixedInterest-rate swaps:
Received/floating andpaid/fixed

Main hedged
itemLong-term debt

Notional amountDue after one year

(Note 1)

78,130,000

58,730,000

Total

51,639,700

34,846,900(487,237)(647,406)(Note 4)

129,769,700

93,576,900

Fair value (Note 2)(Note 3)Long-term debt

1. Reason for provision, related assets and amounts(1,134,643)

Note 1: Contract amount is based on notional amount.
Note 2: Fair value is measured by swap counterparty, based on the actual market interest rate, etc.
Note 3: Out of the fair value, (¥2,994 thousand) is booked as “accrued expenses” on the Balance Sheet.
Note 4: Out of the fair value, (¥647,406 thousand) is not marked to market on the Balance Sheet, since adopting special treatment for interest-rate swaps.

Thousands of Yen

Related assets, etc.
Goodwill
Long-term deposits
Increase-subtotal
Buildings, facilities, etc.
Unearned revenue
OthersDecrease-subtotal
Total

Reason for provision
Amortization of goodwill
Shortfall of reserve for repairs
Depreciation deficiency equivalent
Write-down of loss on interest rate swap due to merger—

Provision of allowancefor temporary difference
adjustments
2,622,242
10,0972,632,339(797,086)(84,157)(15,902)(897,146)
1,735,193

2. Reason for reversal, related assets and amounts


24. CASH DISTRIBUTIONSYenFor the period
from September 1, 2019
to February 29, 2020

For the period
from March 1, 2020
to August 31, 2020

1. Retained earnings at end of period

13,094,910,659

13,583,176,757

2. Distributions in excess of retained earnings
		 Of which, allowance for temporary difference adjustment
		 Of which, other distributions in excess of net income

3,272,348,800
1,735,193,600
1,537,155,200

2,843,265,600
1,777,630,400
1,065,635,200

3. Incorporation into unitholders’ capital		 Of which, reversal of allowance for temporary difference adjustments

122,481,948
122,481,948

299,087,803
299,087,803

4. Distributions
		 [Distributions (per unit)]		 Of which, distributions of earnings
		 [Of which, distributions of earnings (per unit)]		 Of which, allowance for temporary difference adjustments		 [Of which, allowance for temporary difference adjustments (per unit)]		 Of which, other distributions in excess of net income
		 [Of which, other distributions in excess of net income (per unit)]

15,461,140,800(3,279)12,188,792,000(2,585)
1,735,193,600(368)
1,537,155,200(326)

15,640,318,400(3,317)
12,797,052,800(2,714)
1,777,630,400(377)
1,065,635,200(226)

783,636,711

487,036,154

Thousands of Yen

Related assets, etc.

Reason for reversal

Sale and depreciation of properties for which merger
expenses were recorded
Deferred gains or losses on hedges Changes in fair value of derivatives
Total
Land, buildings, etc.

Provision of allowancefor temporary difference
adjustments—(Note 1)

(122,481)(122,481)

Note 1: The amount of reversal during the current fiscal period (¥5,534 thousand) is included in “Depreciation deficiency equivalent” on “1. Reasons for provision,
related assets and amounts.”

3. Method of reversal(1) Amortization of goodwill
In principle, amortization of goodwill is not reversed.
(2) Merger expenses

5. Retained earnings carried forward
Calculation method of distribution amount

NMF calculates distributions in accordance with the cash distribution policies as specified in Article 36, Paragraphs 1 and 2 of
NMF’s Articles of Incorporation.

Item
Buildings, etc.
Land
Buildings in trust, etc.
Land in trust, etc.
Leasehold
Leasehold in trust

Method of reversal
Upon depreciation or sale, the corresponding amount is scheduled to be reversed.
Upon sale, the corresponding amount is scheduled to be reversed.
Upon depreciation or sale, the corresponding amount is scheduled to be reversed.
Upon sale, the corresponding amount is scheduled to be reversed.

(3) Long-term deposits
In principle, long-term deposits are not reserved.
(4) Deferred gains or losses on hedges
The amount corresponding to changes in the fair value of derivatives used as hedging instruments is scheduled to bereversed.

For the fiscal period under review, NMF decided to implement a total of ¥15,640,318,400 in distributions (¥3,317 per investmentunit). This figure was arrived at by adding to ¥12,799,540,046 in net income after taxes ¥2,622,242,820 in amortization of
goodwill, and by adding ¥218,535,534 in consideration of temporary decrease in operating revenues due to the impact of
COVID-19 pandemic on per-unit distribution.
Total distributions comprise distribution of earnings and distribution in excess of net income. Distribution of earnings as stipulated in Article 136, paragraph 1 of the Investment Trusts Act came to ¥12,797,052,800 (¥2,714 per investment unit). Distribution
in excess of net income comprises a distribution of ¥1,777,630,400 (¥377 per investment unit) as allowance for temporary
difference adjustment and ¥1,065,635,200 (¥226 per investment unit) in other distribution in excess of net income.

55

Nomura Real Estate Master Fund, Inc.

Nomura Real Estate Master Fund, Inc.

56

Message from the Management

Management Strategy

ESG Measures

NOTES TO FINANCIAL STATEMENTS

Financing Status

Portfolio

Investor Information

Financial Section

INDEPENDENT AUDITOR’S REPORTFor the period from March 1, 2020 to August 31, 2020
1. Reason for provision, related assets and amountsThousands of Yen

Related assets, etc.
Goodwill
Long-term deposits
Increase-subtotal
Buildings, facilities, etc.
Unearned revenue
OthersDecrease-subtotal
Total

Reason for provision
Amortization of goodwill
Shortfall of reserve for repairs
Depreciation deficiency equivalent
Write-down of loss on interest rate swap due to merger—

Provision of allowancefor temporary difference
adjustments
2,622,242
5,835
2,628,078(761,508)(74,207)(14,732)(850,448)
1,777,630

2. Reason for reversal, related assets and amountsThousands of Yen

Related assets, etc.

Reason for reversal

Sale and depreciation of properties for which merger
expenses were recorded
Deferred gains or losses on hedges Changes in fair value of derivatives
Total
Land, Buildings, etc.

Provision of allowancefor temporary difference
adjustments—(Note 1)

(299,087)(299,087)

Note 1: The amount of reversal during the current fiscal period (¥5,515 thousand) is included in “Depreciation deficiency equivalent” on “1. Reasons for provision,
related assets and amounts.”

3. Method of reversal(1) Amortization of goodwill
In principle, amortization of goodwill is not reversed.
(2) Merger expenses
Item
Buildings, etc.
Land
Buildings in trust, etc.
Land in trust, etc.
Leasehold
Leasehold in trust

Method of reversal
Upon depreciation or sale, the corresponding amount is scheduled to be reversed.
Upon sale, the corresponding amount is scheduled to be reversed.
Upon depreciation or sale, the corresponding amount is scheduled to be reversed.
Upon sale, the corresponding amount is scheduled to be reversed(3) Long-term deposits
In principle, long-term deposits are not reserved.
(4) Deferred gains or losses on hedges
The amount corresponding to changes in the fair value of derivatives used as hedging instruments is scheduled to be reversed.

26. SIGNIFICANT SUBSEQUENT EVENTS
Not applicable.

57

Nomura Real Estate Master Fund, Inc.

Nomura Real Estate Master Fund, Inc.

58

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

INDEPENDENT AUDITOR’S REPORT59

Nomura Real Estate Master Fund, Inc.

Nomura Real Estate Master Fund, Inc.

60