[For Translation Purposes Only]
July 28, 2016

For Immediate Release
To Whom It May Concern
Nomura Real Estate Master Fund, Inc.
Securities Code: 3462
Satoshi Yanagita, Executive Director
Asset Management Company:
Nomura Real Estate Asset Management Co., Ltd.
Norio Ambe, President & Chief Executive OfficerInquiries:
Ken OkadaHead of NMF Investment Management Group
TEL. +81-3-3365-8767 nmf3462@nomura-re.co.jp

Notice Concerning Revision to Forecasts of Financial Results
for the Fiscal Period Ending August 31, 2016 (Second Fiscal Period)
As described in “Notice Concerning Execution of Merger Agreement by and between Nomura Real Estate Master
Fund, Inc. and Top REIT, Inc.” announced on May 26, 2016, Nomura Real Estate Master Fund, Inc. (“NMF”) plans toimplement an absorption-type merger, with NMF as the surviving corporation and Top REIT, Inc. (“TOP”) as theabsorbed corporation (the “Merger”) with the effective date being September 1, 2016. Accordingly, NMF announced its
decision to revise the forecasts of the financial results and distributions for the fiscal period ending August 31, 2016
(March 1, 2016 to August 31, 2016), which was announced in “Summary of Financial Results (REIT) for the 1st Fiscal
Period Ended February 29, 2016” dated April 14, 2016. The details are as follows.

1. Revised Forecasts of Financial Results for the Fiscal Period Ending August 31, 2016

Previous
Forecast (A)Revised
Forecast (B)

Total
Distributions
Per Unit(Including
Distribution in
Excess of Net
Income)(Yen)

OperatingRevenues(Millions ofYen)

Operating Profit(Millions ofYen)

Ordinary
Income(Millions ofYen)

Net Income(Millions ofYen)

Distribution Per
Unit (Excluding
Distribution in
Excess of Net
Income)(Yen)

30,062

10,715

8,330

8,329

2,2375232,760

30,624

11,249

8,913

8,912

2,394

523

2,917

562

534

583

583

157

－157

1.9%

5.0%

7.0%

7.0%

7.0%

－

5.7%

Distribution in
Excess of Net
Income Per Unit
(Yen)

Amount of
Increase/
Decrease(B－A)
Ratio of
Increase/
Decrease1

(Reference)
Anticipated total number of investment units as of the end of the fiscal period: 3,722,010 units
Anticipated net income per unit: 2,394 yen[Notes]
1.

2.
3.

4.
5.

The forecasts presented in this document are calculated as of today, based on the assumptions set forth in the attached “Assumptions
for Forecasts of the Financial Results for the Fiscal Period Ending August 31, 2016 (Second Fiscal Period)” as an exhibit. The actual
operating revenues, operating profit, ordinary income, net income, distributions per unit or other items may differ due to futureacquisition or disposition of properties, changes in the real estate market, progress of procedures of the Merger and other factors
affecting NMF. NMF does not guarantee the amount of cash distribution stated above.
The distributions for the fiscal period ending August 31, 2016 (March 1, 2016 to August 31, 2016) is scheduled to be paid out to theunitholders or registered pledgees listed or recorded as such on the final unitholders’ register as of August 31, 2016. However, theactual payment is expected to be made on or after the effective date of the Merger.
Distribution in excess of net income per unit consists of distribution of the reserve for temporary difference adjustments anddistribution other than that (the “Other Distribution in Excess of Net Income”). In the forecasts, the entire amount of 523 yen of
distribution in excess of net income per unit for the fiscal period ending August 31, 2016 (Second Fiscal Period) is the OtherDistribution in Excess of Net Income, and distribution of the reserve for temporary difference adjustments is not expected. For yourreference, the reserve for temporary difference adjustments is treated as dividends for tax purposes and is subject to withholding. Inaddition, the Other Distribution in Excess of Net Income falls under a return of capital for tax purpose, and in principle, the largepart of such amount is treated as the amount of income generated from transfer of investment units (some part may be treated as
deemed dividend).
The forecasts may be revised if a certain variance from the forecasts mentioned above is expected.
Amounts less than the stated units are rounded down.

2. Reason for Revision
In line with the resolutions made for approval of both the consolidation-type merger agreement and the termination of
the asset management agreement at the general meeting of unitholders of TOP held today, NMF reflected on the cost of
the Merger estimated at this stage, together with affect of asset acquisition and disposition (changes in real estate rental
profits and gains and losses from property disposition) stated in the press release “Notice Concerning Property
Acquisition and Disposition” announced on May 9, 2016, and revised financial results for the fiscal period ending August31, 2016 (March 1, 2016 to August 31, 2016), thus is revising the forecasts.
As for the forecasts of the financial results and cash distribution per unit for the fiscal period ending February 2017 after
the Merger, there is no change from “Notice Concerning Forecasts of Financial Results for the Fiscal Period EndingFebruary 28, 2017 following the Merger between Nomura Real Estate Master Fund, Inc., and Top REIT, Inc.” announcedon May 26, 2016.

*Nomura Real Estate Master Fund, Inc. URL: http://www.nre-mf.co.jp/english/

2[Exhibit]

Assumptions for Forecasts of the Financial Results for the Fiscal PeriodEnding August 31, 2016 (Second Fiscal Period)
Item
Calculation period

Assumption
 Second Fiscal Period: March 1, 2016 to August 31, 2016

 With respect to 252 properties held by NMF as of today, it is assumed that there
will be no changes in assets under management (new property acquisitions or sales
Assets under managementof portfolio properties) through August 31, 2016.
 The forecasts may be revised due to actual changes in the portfolio or otherreasons.
 Rental revenues are estimated based on the tenant trends, competitive properties
located in adjacent areas, and the real estate market conditions, among other
Operating revenues
factors, and assume that there are no arrears and nonpayment cases.
 ¥1,128 million is estimated for gain on sales of real estate (after deducting
expenses related to disposition).
 In general, the fixed asset taxes and urban planning taxes of the Asset to beAcquired are divided between the seller and the purchaser on a pro-rata basis basedon holding period and settled at the time of acquisition, and such taxes are deemed
as acquisition costs and are not included in the expenses.
 The tax amount is estimated to be ¥2,272 million for the second fiscal period(ending August 31, 2016). These amounts are included in the leasing expenses.
 Outsourcing expenses are estimated to be ¥2,873 million.
 Expenses for repairs and maintenance required for each fiscal period are calculated
Operating expenses
as expenses, based on the mid-to-long term repair plans the Asset Management(excluding amortization ofCompany has established. However, the actual expenses for repairs andgoodwill)
maintenance for each fiscal period may differ significantly from the estimates due
to expenses for urgent repair on damages to a building caused by events difficult toforesee, and the tendency for significant fluctuation in amounts year by year or
expenses for certain types of repair not required periodically.
 Depreciation and amortization are estimated to be ¥4,194 million.
 Leasing expenses are estimated to be ¥13,794 million Other operating expenses (including asset management fees, asset custody fees,
general administration fees and professional fees) are estimated at ¥3,633 million.
 Goodwill is accounted as assets and amortized using the straight-line method over
20 years on a regular basis pursuant to the Accounting Standard for Business
Combinations (Corporate Account Standards Statement No. 21, as amended on
September 13, 2013.) The amount of goodwill recorded as of the end of the fiscal
period ended February 29, 2016 (First Fiscal Period) is ¥76,252 million. The
goodwill amortization is estimated to be ¥1,946million for the fiscal period ending
Amortization of goodwill
August 31, 2016 (Second Fiscal Period).
 Amortization of goodwill is an item that causes a difference between accounting
and tax treatment and may result in the imposition of corporation tax or other tax.
NMF intends to make distributions in excess of net income for the purpose of tax
relief during the goodwill amortization period, and it is expected that NMF will beable to avoid such taxation.
 Interest expenses and other borrowing related expenses are estimated to be ¥2,327
Non-operating expenses
million.
 As of today, the outstanding interest-bearing liabilities of NMF are ¥399,043
million, consisting of the amount of ¥366,543 million of outstanding borrowings
Interest-bearing liabilities
and the amount of ¥32,500 million of investment corporation bonds.
 Of the portions of the borrowings (¥6,151 million) that will become due andpayable by the end of the fiscal period ending August 31, 2016 (Second Fiscal3

Item

Assumption
Investment unitsDistributions per unitDistribution in excess ofnet income per unit
OthersPeriod), it is assumed that NMF will repay ¥71 million by using cash on hand, andrefinance the entire remaining amount through borrowings. No investment
corporation bonds will reach maturity by the end of the fiscal period ending
August 31, 2016 (Second Fiscal Period).
The Fund assumes that there will be no changes in the amount of the outstanding
borrowings and investment corporation bonds (including the short term
investment corporation bonds) other than the change in the amount stated above
The Fund assumes that there will be no changes in the number of investment units
issued and outstanding as of the date of this report of 3,722,010 units and there
will be no additional issuance of new investment units by the end of the fiscal
period ending August 31, 2016 (Second Fiscal Period).
Distribution per unit is calculated according to the NMF’s distribution policy
outlined in its Articles of Incorporation
NMF expects that it will record the deferred loss on hedge of the interest rate
swap in respect of its transactions in the amount of ¥2,867 million as the valuationand conversion adjustments, etc., for the fiscal period ending August 31 2016
(Second Fiscal Period), the same amount as the first fiscal period. It is calculated
assuming there is no impact of fluctuation in fair value of interest rate swap on
distribution per unit.
Distribution per unit may vary due to various factors, including changes in theinvestment portfolio, changes in rent income caused by tenant replacements, andunforeseen repairs.
The amount of distribution in excess of net income is estimated on theassumption that, for the purpose of tax relief, NMF will distribute the amountequivalent to the total amount available for distribution that will cause a differencebetween accounting and tax treatment and may result in the imposition ofcorporation tax or other tax. In order to alleviate the impact of expenses related tothe merger for newly establishing NMF, such as the goodwill amortization, andvaluation and conversion adjustments, etc. deducted from the distributable amount(the “New Establishment Merger Expenses, etc.”) on cash distribution, the above
estimate is based on the assumption that, if the total amount of the difference
between accounting and tax treatment for each fiscal period is less than the New
Establishment Merger Expenses, etc., NMF will make distribution in excess of net
income by adding such amount up to the amount of New Establishment Merger
Expenses, within the limit as prescribed by the regulations of the Investment
Trusts Association, Japan (meaning the entire amount equivalent to the increase in
the reserve for temporary difference adjustments plus the amount equivalent to60/100 of the difference between the cumulative amount of depreciation andamortization recorded as of the end of the relevant calculation period and that ofthe end of the prior calculation period with respect to the Other Distribution in
Excess of Net Income (ordinary distribution in excess of net income)).
In the current forecasts, the entire amount of ¥523 yen of distribution in excessof net income per unit is the other distribution in excess of net income, anddistribution of the reserve for temporary difference adjustments is not expected.
It is assumed that there will be no amendments in legislation, taxation, accounting
principles, listing requirements, the Investment Trusts Association Japan
Regulations or other laws or regulations that would affect the above forecasts.
It is assumed that there will be no material changes in general economic conditionsand real estate markets.

4