11th
Fiscal Period

Semi-Annual Report
September 1, 2020 to February 28, 2021
Securities Code: 3462

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

CONTENTS

Message from the Managementp. 3

To Our Unitholders / Performance Highlights

Management Strategy

Driving theMarket as One
of Japan’s
Largest REITs

p. 5

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

ESG Measures

p. 15

ESG Measures

Financing Statusp. 17

Financing Status / Financial Statements Highlights

Market Review

p. 19

Market Review

Portfolio

p. 21

Portfolio Analysis / Portfolio Gallery

Investor Information

p. 27

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 Reportp. 31

Message from the Management

Management Strategy

ESG Measures

Financing Status

Market Review

Portfolio

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.

11th Fiscal Period

12th Fiscal Period (forecast)*

13th Fiscal Period (forecast)*¥3,330¥3,288¥3,180Operating Revenues¥38,064¥37,627¥37,450

Operating Expense¥22,693¥22,830¥22,850Net Income¥13,016¥12,488¥12,372

Total Assets¥1,196,357¥1,194,826¥1,190,234

Cash Distribution
per Unit(including distribution in excess
of net income)Shuhei Yoshida Executive Director

million(From left)

Koichi Owada Supervisory Director
Mineo Uchiyama Supervisory Director
Mika Okada (Note) Supervisory Director
Nomura Real Estate Master Fund, Inc.

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

millionmillionIn reaching the end of our 11th fiscal period, we would also like toextend our sincere gratitude to all unitholders for your continued
support for Nomura Real Estate Master Fund, Inc.
During the 11th fiscal period, we achieved improvement of portfolio
quality as well as steady external growth through acquisition of
Landport Ome II (¥14.6 billion), a sponsor-developed logistics facility
that is expected to generate stable earnings even amid the
COVID-19 crisis.
This acquisition expanded our portfolio holdings in the logistics
sector to 18.9%, second only to offices.
Amid the ongoing impacts of another wave of COVID-19 infections
and requests to shorten operating hours following declaration of thesecond state of emergency, we offered rent reduction/exemption
and other forms of relief again this fiscal period to support some ofour retail tenants. Nevertheless, the impact of this on the revenue of
our overall portfolio was limited.
Furthermore, in the office sector and rental apartment sector, market
changes, such as rising vacancy rates and decreasing advertised
rents, were also observed. The properties held by NMF were also
affected by an increase in the number of contract terminations and alonger period of tenant recruitment. However, through appropriate
and flexible leasing activities based on market trends, as well as rent
increases upon tenant change or contract renewal, we were able tocontinue promoting internal growth.

3

NOMURA REAL ESTATE MASTER FUND, INC.

As a result, at the end of the eleventh fiscal period, our portfolio
consisted of 299 properties with a total acquisition price of ¥1,066.2
billion. Operating revenues totaled ¥38,064 million, operating profit
reached ¥15,370 million, and net income came to ¥13,016 million.
As for rent reduction/exemption and other factors that led totemporary decrease in revenue due to COVID-19, partial reversal ofinternal reserves was made in the amount of ¥62 million for the
purpose of leveling the amount of distribution. Accordingly, theper-unit distribution for the eleventh fiscal period came to ¥3,330,
the same as the initial forecast.
In addition, in the area of ESG (environmental, social and governance)
activities, which we have been promoting for some time, we disclosed
on our official website the climate change awareness, policies andinitiatives of NMF and Nomura Real Estate Asset Management Co.,
Ltd. (NREAM)—our asset management company—based on the Task
Force on Climate-related Financial Disclosure (TCFD)
recommendations which NREAM endorsed in July 2020, according toeach of the four disclosure items recommended by the TCFD—
Governance, Strategy, Risk Management, and Metrics and Targets.

millionmillionmillionTo Our Unitholders
First, we would like to express our deepest condolences to those whohave lost their lives due to COVID-19 and their families, as well as our
sympathies to those fighting the disease.

millionmillionmillionmillionmillionmillion*T he above forecast distribution is calculated based on certain assumptions as disclosed in “SUMMARY OF FINANCIAL RESULTS (REIT) For the 11th
Fiscal Period Ended February 28, 2021,” published April 14, 2021. 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

Per-Unit Distribution(Yen)

40,000

3,500

3,279

30,000

3,209

3,317

3,330

3,288
3,180

3,128
3,084
20,000Note that in analyzing and verifying the financial impact under Strategy,
after first assessing the risks and opportunities that climate change risks
bring to NMF, three possible scenarios—the 4℃, 2℃ and 1.5℃
scenarios—were set for the first time among J-REITs, and the financial
impact of each identified risk and opportunity were analyzed and verified.

10,000With 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 to live up to the expectations and trust of ourunitholders. We ask for your continued support and encouragement.

0

3,000

0

6th FP 7th FP 8th FP 9th FP 10th FP 11th FP 12th FP13th FP

6th FP 7th FP 8th FP 9th FP 10th FP 11th FP 12th FP 13th FP(Forecast) (Forecast)(Forecast) (Forecast)

NOMURA REAL ESTATE MASTER FUND, INC.

4

Management Strategy

Message from the Management

ESG Measures

Financing Status

Market Review

Portfolio

Information

Financial Section

Track Record of Growth since Incorporation
Improved portfolio quality through property replacement taking advantage of the Sponsor’s support and achieved steady increase in
distributions.
Incorporation

Feb. 2021 FP

257

Ratio of top 10 Properties

26.8%

22.0%

Greater Tokyo area ratio

79.8%

83.0%

Average building age

19.3 yrs

DPU¥2,656 (Note 1)

Acquisition of high-quality properties

Disposition of less competitive

mainly developed by the Sponsor

932.8

927.3

922.5

955.9

792.6

1,051.6

1,066.2

371.3

385.9

The 3rd PO

The 2nd PO
12 Properties¥57.4 bln

10 Properties

784.6(24.7 years without SPR) (Note 2)¥3,330(+25.4%)

1,031.0

960.3

The 1st PO

19.3 yrs

properties due to building age, etc.

1,011.2

783.6

299

Number of Properties

9 Properties¥40.4 bln

¥33.4 bln

Merger with TOP REIT
19 Properties¥137.4 bln

PMO Tamachi
HigashiGEMS
Shinbashi

GEMS Namba

PMO Akihabara
Kita

Hotel VistaPMO Nihonbashi
Mitsukoshi-mae Sapporo Odori

NEC Head
Office Bldg.

Summit Store
Honamanuma

Harumi Triton
Y&Z

PF Sangen Jaya II

220.9

237.4

270.8

PROUD FLAT Shibuya
Tomigaya

Serenite Shinsaibashi
Grande

330.9

350.6

Total Acquisition Price

279.9

76 properties¥385.9 bln

181.9

9.0

■ Asset Size (¥bln)■ Total Acquisition Price (¥bln)■ Total Disposition Price (¥bln)

Incorporation(Oct. 2015)

Feb. 2016 FP

33.6

-34.1

Total Disposition Price

-34.1
-81.5

Aug. 2016 FP

Feb. 2017 FP

Aug. 2017 FP-105.0-105.0-110.3-110.3-110.3-110.3-110.4

Feb. 2018 FP

Aug. 2018 FP

Feb. 2019 FP

Aug. 2019 FP

Feb. 2020 FP

Aug. 2020 FP

Feb. 2021 FP

36 properties¥110.4 bln(Note 1) Distributions for February 2016 (the 1st) FP are calculated on a six-month basis for 152 operating days.
(Note 2) Average building age without taking into account the effect of property acquisition and disposition from the original portfolio at incorporation until February 28, 2021.

5

NOMURA REAL ESTATE MASTER FUND, INC.

NOMURA REAL ESTATE MASTER FUND, INC.

6

Management Strategy

Message from the Management

ESG Measures

Financing Status

Impact of COVID-19

Market Review

Portfolio

Information

Financial Section

External Growth(1) Impact on Each Sector

Acquisition of Landport Ome II

The COVID-19 crisis had an impact on the entire 11th fiscal period, and as a result, in addition to hotels and retail facilities near stations
that were deeply affected by requests to stay at home and requests to shorten operating hours, offices and residential facilities were also
affected more than during the tenth fiscal period. As for the office sector, although the number of contract terminations increased on theback of lower cost requirements, and negotiations for rent revision and recruitment of new tenants have tended to take longer, rent
increases have continued backed by rent gaps (Note). With regard to residential facilities, while occupancy rates declined, especially forhigh-priced residences in central Tokyo, as a result of switching to a leasing strategy focused on occupancy rates, occupancy rates
recovered significantly during the period, and rent increases have continued. Along with retail facilities in residential areas, logistic facilities
have been stable due in part to steadily capturing stay-at-home demand. As for hotels and retail facilities near stations, given the relatively
large impact of COVID-19 on the business results of tenants, we changed hotel operators following the departure of tenants, and weoffered partial reductions/exemptions to some tenants at retail facilities near stations who were under requests to operate for shortened
hours, to support them in staying in business.

Acquired a logistics facility from which stable income can be expected even amid the COVID-19 crisis, expanding 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 yrs(Note) “Rent gap” refers to the difference between the level of rent for a tenant occupying an office property held by NMF and the level of rent
advertised in the leasing market. A positive gap means the level of rent advertised in the leasing market is higher. NMF’s rent gap as of February
28, 2021 is +8.1%.

SectorRatio (Note)

Operating status including the impact of COVID-19

Office44.4%• Increase in cancellation against the backdrop of cost reduction, introduction of remote work, etc. due to poor
business performance; and prolonged downtime for new leases and rent revision negotiations.
• Rent increase upon tenant replacement and rent revision against the backdrop of rent gap has continued.

18.9%

Residential

Logistics

Retail Facilities(Near stations)
Retail Facilities(Residential
Areas)

18.9%• No impact is seen at present, and logistics companies handling mail-order items and daily necessities suchas food performed strongly.
• Rent increase upon tenant replacement and contract renewal has continued.

11.2%• Cancellations by some tenants due to the continuation of the decrease in sales brought about by theissuance of second state of emergency declaration, etc.
• Supported some tenants that were requested to shorten operating hours through temporary rent reduction/
exemption.

5.5%• Food supermarket tenants and specialized stores (electronics store, etc.) continued to perform well in sales
due to special demand attributable to COVID-19.

0.6%

Hotels• Despite an increase in the vacancy rate centering on residences for singles in central Tokyo, the occupancy
rate has seen a significant recovery due to the shift to a leasing strategy focused on occupancy rates.
• Rent increase upon tenant replacement and contract renewal has continued.

Good location allowing for wide area delivery to the entire Tokyo metropolitan area
Located 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.

Acquisition price¥14,620 million

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 tomaintain a favorable employment environment.

Appraisal value¥15,100 million

Acquisition date

October 1, 2020

Location

Ome, Tokyo

Total floor space

63,879.98 m2

Completion

February 2020

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

Logistics portfolio status
End ofAug. 2020 FP

HotelsProperties acquired in 11th FP

0.6%

Landport Ome II

Residential

19.2%

HotelsResidential

18.9%

Office• Changed the operator for Comfort Inn Naha Tomari Port (former Red Planet Naha Okinawa).

17.7%(Note) Calculated based on acquisition price at the end of the 11th FP (Feb. 2021 FP).

Office45.0%

Logistics

Logistics

Retail(Near stations)

Retail(Near stations)
Retail(Residential area) 11.2%

11.4%

5.6%

Despite temporary rent reductions/exemptions, a decrease in revenue from properties owned and other factors attributable to the spreadof COVID-19, there were also factors leading to an increase in revenue, such as the external growth effect of Landport Ome II, which was
acquired during the 11th fiscal period. In addition, by allocating internal reserves to cover the difference with the earnings forecast, wesecured per-unit distribution of ¥3,330, the same as the earnings forecast.

44.4%

18.9%

Retail (Residential area)(2) Impact on Distribution for the Fiscal Period Ended February 2021 (11th Fiscal Period)

End ofFeb. 2021 FP

0.6%

5.5%

External Growth Policy Going Forward

Selective investment upon careful assessment of the impact of COVID-19. Continue to consider growth strategies including property replacement.

Investment Policy
Factors for the increase/decrease of per-unit distribution

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

Absence of reversal ofinternal reserves in 10thFP

-46(-¥218 mln)
+51(+¥241 mln)

3,271

-33
(-¥159 mln)

-25(-¥118 mln)

+48(+¥229 mln)

+5(+¥25 mln)

Growth Strategies+13(+¥62 mln)

Given the status of the real estate market and the investment unit price level, implement the most effective measures formaintaining/improving the investment unit price and distributions.
3,330(+¥13)

3,317• Replacement of properties

Consider property replacements of properties deemed to be difficult to maintain competitiveness over the medium to long term in terms of location,
specifications, building age and profitability by sale in combination with acquisition of prime new assets• Utilization of borrowing capacity and free cash flow

Borrowing capacity up to target maximum LTV on normalized basis (45%)

Aug. 2020 FP(Result)

7

Absence of reversalof internal reservesin 10th FP

Temporary rent
reduction/
exemption

NOMURA REAL ESTATE MASTER FUND, INC.

Management
gains/losses of
portfolio properties

External growth

Reduction offinancial cost,etc.

Reversal of internal
reserves (Difference
from earnings forecast)

Feb. 2021 FP DPU(Result)• Capital increase

Comprehensively verify the investment unit price level, profitability of acquired properties, enhancement of portfolio

NOMURA REAL ESTATE MASTER FUND, INC.

8

Management Strategy

Message from the Management

ESG Measures

Financing Status

Market Review

Portfolio

Information

Financial Section

Internal Growth—Management Status
OfficeStrong trend of rent increase backed by rent gaps continued despite a downward trend in the occupancy rate

Change in floor area from move-ins and move-outs (tsubo)■ Floor area subject to move-out (move-out rate) (note 1) ■ Floor area subject to move-in (move-in rate) (note 1)

Asset Management Topics for Feb. 2020 FP

Period-average occupancy rate (note 2)

5,502

The rate of rent increase upon tenant replacement: +15.9%

99.3

The rate of rent increase upon rent revision: +3.0%

3,666(The rate of rent increase within tenant replacement with rent increase: +19.6%)(The rate of rent increase within rent revision with rent increase: +5.5%)(3.9%)

99.5

97.9
2,740

(contract renewal included)

2,255(1.9%)The rent gap (Note 1) as of Feb. 28, 2021: +8.1%

2,052(1.5%)

Rent revision in PMO+8.1% at the end of Feb. 2021 FP(¥/tsubo)

19,00018,50018,301

18,510

+6.4%

Flat

Up

18,603

1 case-2,20411 cases-2,272(1.5%)-1,809
(1.2%)(1.6%)-3,130(2.1%)-3,662

17,723

17,548

Applied: 808
Contracted: 980

0

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

18,06017,500(2.6%)-5,456

Rent revisionin PMO

17,00016,500(3.8%)-6,811(4.6%)

Aug. 2018 FP

Feb. 2019 FP

Aug. 2019 FP

Feb. 2020 FP

Aug. 2020 FP

Feb. 2021 FP

16,00015,500Aug. 2018 FP

Feb. 2019 FP

Amount and rate of change
in monthly rent upontenant replacement (Note 2)Aug. 2019 FP

Feb. 2020 FP

Aug. 2020 FP

10

17.6%
8

(%)

30

15.9% 16

25

7

7.5%

12

(%)

4

4

20

3.3%
2.4%
10

4

5
0

-1

-4

5

4.6%

8

0

-2

0
-5

10

15

3.4%
17

17

3.0% 3
2

8

8

0.6%
-7

0

-2

6,811

tsubo

PMO properties
COVID-19-related

3,384 tsubo(Cost reduction 2,273 tsubo)(Remote work 1,110 tsubo)

Floor area subject tomove-out (scheduled):

1,358

COVID-19-related

1,178 tsubo

tsubo(Cost reduction 640 tsubo)(Remote work 537 tsubo)

Floor area subject tomove-in (scheduled):

1,789

tsubo

(Breakdown) Contracted: 980 tsubo
Applied: 808 tsubo (Note 3)

The rate of rent increase+4.9%(Increase +15.2% (10 cases))(Decrease -17.5% (3 cases))

Floor area subject tomove-in (scheduled):

659

The rate of rent increasetsubo(Breakdown) Contracted: 437 tsubo
Applied: 222 tsubo (Note 3)+10.8%

Future outlook
Cost reduction

Expect fewer cancellations aiming for cost reduction as business performance in general moves towards recovery from the latter half of this year.

Remote work

Although the trend of seeking new work styles and their impact is assumed to continue, the impact on the market as a whole is expected to be limited.

-1-4 (3,666 tsubo) (5,502 tsubo) (2,740 tsubo) (2,255 tsubo) (1,109 tsubo) (2,052 tsubo) -8-10 (29,427 tsubo) (21,007 tsubo) (24,914 tsubo) (22,830 tsubo) (22,254 tsubo) (16,384 tsubo) -2

Aug. 2018 FP Feb. 2019 FP Aug. 2019 FP Feb. 2020 FP Aug. 2020 FP Feb. 2021 FP

Aug. 2018 FP Feb. 2019 FP Aug. 2019 FP Feb. 2020 FP Aug. 2020 FP Feb. 2021 FP

NOMURA REAL ESTATE MASTER FUND, INC.

Floor area subject tomove-out (scheduled):1(Note 1) It is calculated for owned properties excluding the properties for which the entire building is leased to one tenant.
(Note 2) Figures 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.

9(As of March 31, 2021)

Monthly rent change rate

6

15

5

4
5.9%

7

+5.5%

(Millions of yen)

20

8
11.4%

Average rate of rent
increase within rent
revision with rent increase■ Monthly rent decrease ■ Monthly rent increase

Monthly rent change rate

20.7%

6

Amount and rate of change
in monthly rent upon rent
revision (Note 2)+19.6%(Millions of yen)

All office properties

Feb. 2021 FP

Average rate of rent increase within
tenant replacementwith rent increase■ Monthly rent decrease ■ Monthly rent increase2

Aug. 2021 FP<Aug. 2021 FP> Progress on tenant replacement (As of March 31, 2021)

04(1.2%)(0.9%)

Rent gaps:

18,0001,789(1.4%)

1,351(Down 1.9pt from previous FP)

Average rent

99.2

98.8

(2.6%)The rate of rent increase upon rent revision only at PMOs: +6.4%

99.7

99.3

➾ For either needs, highly competitive properties are expected to demonstrate superiority.
(Note 1) Calculated by dividing the total floor area leased to tenants (occupying or moved out) for each period by average value of total leasable area.
(Note 2) Period-average occupancy rate is calculated based on the floor area subject to move-ins and move-outs assumed in the earning forecast.
(Note 3) The figure shows floor area for which NMF received applications for occupancy.

NOMURA REAL ESTATE MASTER FUND, INC.

10

Management Strategy

Message from the Management

ESG Measures

Financing Status

Market Review

Portfolio

Information

Financial Section

Internal Growth—Management Status
Residential

Logistics

By seizing the trend of the market and shifting to a leasing strategy focused on the occupancy rate, raised the occupancy rate significantly in ashort period of time.

With no impact of the COVID-19 crisis seen, continued to achieve upside potential while generating stable income.

Assets Management Topics in Feb. 2021 FP

Assets Management Topics for Feb. 2021 FP

Shift of a leasing strategy

Shifted to a leasing strategy focused on the occupancy rate during
the period. (Occupancy rate at the end of February: 96.5%)
Year 2019-2020

1) Change in monthly rent due to move-ins and move-outs
660 out of 1,110 units (59.5%) replaced with increased rent
Change in monthly rent +2.0% (+ ¥2.426 thousand/mo)Year 2020-2021

99 (%)

2) Change in monthly rent due to contract renewals

97

225 out of 1,431 units (15.7%) renewed contract with increased rent
Change in monthly rent +0.4% (+ ¥681 thousand/mo)

+1.3%

95
Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Amount of change in monthly rent at move-ins and move-outs■ Amount of change in monthly rent

2.2

4.5
2.8

5(%)

4.3

Requested by the tenant,re-contracted for a long-termlease (7 years) more than a year
prior to the expiration of the
fixed-term contract(Rent increase rate: +6.8%)• Landport Kawagoe

Re-contracted with one existing tenant for a 5-year lease
for the entire building

Landport Kashiwa Shonan I: Contract renewal for leasing the entire building (10 years)
Landport Kawagoe: Contract renewal for leasing the entire building (5 years)

7.8

3.3

7.0

15.7

15.9

Atsugi Minami LC B Tower: Contract renewal (7 years)

50

94.1

92.9

96.7

92.2

84.1

84.3

0.1

0.1

0.0

0.0

0.0

0.0

1.6%

7.9%

8.2%

6.2%

3.3%
0

0

Aug. 2018 FP Feb. 2019 FP Aug. 2019 FP Feb. 2020 FP Aug. 2020 FP Feb. 2021 FP

Aug. 2018 FP Feb. 2019 FP Aug. 2019 FP Feb. 2020 FP Aug. 2020 FP Feb. 2021 FP

Occupancy rate (Entire portfolio / Tokyo Central Five Wards (single type))
Entire portfolio (year 20-21)

Tokyo Cent. 5 Wards single (year 19-20)

Tokyo Cent. 5 Wards single (year 20-21)

Feb-2021

Aug-2021

Feb-2022

Aug-2022

9.4%

Aug-2023

Feb-2024

Aug-2024

Feb-2025

Feb-2026

Aug-2026

1.9%
Aug-2025

HotelsComfort Inn Naha Tomari Port (Ex-Red Planet Naha Okinawa)

100 (%)
99
98
97
96

+1.3%

95
1

94

96.5%
95.8%
+1.8% 2

93

Mar

Apr

May

Jun

Jul

Aug

Main factors for falling occupancy at single-type
properties in central Tokyo

Decrease in demand from companies due to sluggish businessperformance, etc.
Decrease in individual budgets due to concerns over future
income environment
Lower priority for choosing highly convenient location because
of self-imposed restrictions on outings

Sep

Oct

Nov

Dec

Jan

Feb

2 Background to the recovery of occupancy
The number of new contracts increased centering on individual customers as a resultof the shift of leasing strategy from the one focusing on the balance between rent
increase and occupancy rate to the one focusing on the occupancy rate.

Five Wards: +1.8% (January 2021 ➔ February 2021)
Potential demand for properties in central Tokyo is solid.

■ Change of the operator / Overview of rebranding(Contract outline)• Terminated the agreement with the previous operator byconsent on January 31, 2021, in light of the operation statusunder the COVID-19 crisis, feasibility of continued operation
going forward, etc.
•C
 oncluded an agreement with GREENS Co., LTD. among
several operator candidates based on the presented terms,
their track record in hotel operation and financing status.
•C onducting renovation from March to June 2021 andscheduled to reopen in July.

New hotel name

Comfort Inn Naha Tomari Port

Operator

GREENS Co., LTD.

Date of reopen

July 2021 (scheduled)

Contract period

10 years (fixed-term)Monthly rent

First 1-2 years: fixed rent
From 3rd year: fixed rent + variable rent (GOP-linked)■ Review of rent revenue

The rent level of the new operator is expected to be the sameas or above the level of the previous operator after the end of
the COVID-19 crisis.

Future outlook
The downward trend of occupancy for properties in central Tokyo is expected to halt along with the recovery of business performance, easing of self-imposed
restrictions on outings, etc.

➾ Seek to maintain high occupancy through the agile and flexible leasing strategy for the time being.

(Note) "Tokyo Central Five Wards (single type)" refers to properties that are located in the Tokyo Central Five Wards and have an average dwelling unit area of less than 30 m2.

11

Feb-2023

9.3%
6.3%

2.426

0

1

(Rent increase rate: +2.9%)(Rent increase rate: +2.2%)

100 (%)

5,010

3,235

Entire portfolio (year 19-20)

Re-contracted with one existing tenant for a 10-yearlease for the entire building

13.8%
2.5

2.0
2,844

• Atsugi Minami LC B Tower

Lease Maturities (rent basis)

Rate of change in monthly rent at contract renewals

5.9

2.6
4,617

2,863

• Landport Kashiwa Shonan I■ Down ■ Flat ■ UpRate of change in monthly rent

6,000 (¥thousand)

3,000

Re-contracted with increased rents with tenants of which fixed-term lease had expired

Change in monthly rent due to move-ins andmove-outs or contract renewals

NOMURA REAL ESTATE MASTER FUND, INC.

● About GREENS Co., LTD.
Company nameGREENS Co., LTD. (listed on the First Section of the Tokyo Stock Exchange)

Establishment

January 8, 1964

Capital¥1,948 million (as of June 30, 2020)

Operating hotels

98 hotels (as of January 31, 2021)

Major operating
brands• “ Comfort” brand (Business specializing in providing
accommodation)•O riginal brands such as “Hotel Econo” and “Hotel GreenPark” (Community-based business)

Hotel Vista Sapporo Odori■ Overview of the civil rehabilitation• Filed a petition for commencement of pre-packaged civil rehabilitation (Note) proceedingson March 11, 2021.
• The company intends to seek to reconstruct the business with the financial support of
the new sponsor, etc., and to continue the operations of the hotel.
(Note) Civil rehabilitation proceedings for which a sponsor candidate has been selected in advance.

Holding talks on economic conditions
with an assumption that the contract
will be continued.
NOMURA REAL ESTATE MASTER FUND, INC.

12

Management Strategy

Message from the Management

ESG Measures

Financing Status

Market Review

Portfolio

Information

Internal Growth—Management Status

GEMS

Policy going forward

Management status

RetailSales (change from same month of previous year) (Note 1)

Continued to support restaurants experiencing prolonged sluggish sales. Sales of retail facilities located in residential areas continued to be strong.
Assets Management Topics for Feb. 2021 FP

Support for recovery in sales through additionalsales promotions

Although sales showed a recovery trend last fall due tothe impact of the Go To campaign, etc., sales slowed
down centering on facilities located in business districts
due to the second state of emergency declaration.

Consider and implement effective measures to boost
sales by further raising sales promotion budget, also
for the purpose of strengthening tenant relations.

Retail properties in residential areas

Food supermarket tenants and specialized stores (electronics store, etc.) continued to perform well in sales due to special
demand attributable to COVID-19.

Year 2020
Properties*For tenants of which sales for September 2020 to February 2021 could be grasped

Retail properties in station areas

Impact differed for each facility depending on the tenant composition.

Sales (change from same month of previous year)
Year 2020

Entire GEMS

62%

Universal CityWalk OsakanORBESA

Nov

Dec

77%

72%

49%

25%

40%

restaurant

39%

52%

74%

35%

22%

27%

restaurant/retail

86%

78%

38%

41%

39%

35%

restaurant/retail

Recipe SHIMOKITA

79%

103%

102%

99%

100%

91%

retail/services

covirna machida

126%

141%

121%

84%

80%

86%

retail/services

Jan

Feb

40 (%)

68.9%

63.3%

45.0%

18.9%

31.3%

“Residential area”
GEMS (3 properties)

79.9%

96.7%

91.0%

58.2%

38.9%

59.3%

19.7

0

3,355

Aug-2018

Feb-2019

Aug-2019

Feb-2020

20

0

12.9

Sales (change from same month of previous year)
Year 2020

273

343

1.1

1.6

729

0.0

0

1.5

870

0.0

Aug-2020

Feb-20210Aug-2018

Feb-2019

Aug-2019

Feb-2020

Aug-2020

Feb-2021

Rate of sales-linked rent

3.0
2.5

4,000

1.0

0.8
0

0

13

NOMURA REAL ESTATE MASTER FUND, INC.

Feb-2020

Nov

Dec

Go To Event

39.0%

51.8%

74.0%

35.1%

Jan

Feb

State of Emergency Declaration

22.4%

27.0%

Aug-2020

March 18, 2021
Opening of world’s first Super Nintendo World➾ Sales for March 18 to 31, 2021 recovered to 60.1% of that for the same
period of year 2019

Plan to implement joint sales promotion with USJ intended toincrease the number of facility users and average sales per
customer in line with the pickup in the number of USJ visitors

Feb-2021

Occupancy Rate and Average Rent

-20

3.8

Aug-2019

Oct

Year 2021

Occupancy Rate (%)-9,165-10,000

5.0 (%)

Feb-2019

Roll out leasing activities targeting not only restaurant
tenants but also new tenant groups that will createsynergy with restaurant tenants.

(Note 1) B usiness district GEMS refers to GEMS Shinbashi, Kanda, Kayabacho, Ichigaya, Daimon, and Shibuya; and residential area GEMS refers to GEMS Sangenjaya, Shin-Yokohama, and Namba.
The sales are tallied for only restaurants for which comparison of sales with previous year was possible.
(Note 2) Reflecting sections for which cancellations have been agreed and new contracts have been concluded.

5.0

8,000 (¥ mln)

Aug-2018

Expand the target business category when leasing

20 (%)-14.3■ Residential areas (fixed-rent) ■ Station areas (fixed-rent) ■ Sales-linked rent

3.7

Delivering food from restaurants in the same
GEMS on the same truck

Policy going forward

Management status

Rent revenue breakdown (overall retail)3.8• “GEMS Hopping Delivery”

Universal CityWalk Osaka

1,801

2,498

1,531

Selling food from restaurants in GEMS atcondominiums/apartments, etc.

GEMS Food Truck (image only)Rate of change in monthly rent

2,000 (¥thousand)No replacements

10.9• Discount coupons at owners’ expense• “GEMS Food Truck”

State of Emergency Declaration

54.0%(usually ¥2,500 thousand/property)

Major Tenants

Amount of change in monthly rent and rate of change in monthly
rent upon rent revision (retail properties in station areas)■ Amount of change in monthly rent

Rate of change in monthly rent

4,000 (¥thousand)

16.7(Sales promotion examples)

Feb

State of Emergency Declaration

Amount of change in monthly rent and rate of change in monthly
rent upon tenant replacement (retail properties in station areas)

2,000

Jan

“Business district”
GEMS (6 properties)

Sep■ Amount of change in monthly rent

Dec

Occupancy rate for the entire GEMS: 91.5%(Note 2)

Year 2021

Go To campaign

Nov

Sales promotion expenses: ¥5,480 thousand/property

Cancellations were seen mainly among tenants which
had sluggish sales even before the COVID-19 crisis, but
the spread of the impact has been mitigated by various
support measures.

➾ Continued to provide financial support and sales support through sales promotion to restaurants.

Oct

Oct

Year 2021

Occupancy status• Impact on sales of retail/services tenants was limited.
• Sales of restaurants stagnated due to the prolonged request for shortened operating hours, etc.

Sep

Sep

Go To campaign<February 2021 FP> Sales status (compared with the previous year): 107%

Properties

Financial Section

Aug-2018

Feb-2019

Aug-2019

Feb-2020

Aug-2020

Office

99.4

99.4

99.8

99.8

99.4

Feb-2021
98.9

Logistics

99.6

99.6

99.1

99.2

99.5

98.8

Retail

100.0

100.0

100.0

98.5

100.0

100.0

Residential

97.0

97.2

96.8

97.3

95.9

96.5

Hotels

100.0

100.0

100.0

100.0

100.0

56.9

Others

100.0

100.0

100.0

100.0

100.0

100.0

Total

99.3

99.3

99.3

98.8

99.1

98.8

Average Rent (¥/tsubo)Aug-2018

Feb-2019

Aug-2019

Feb-2020

Aug-2020

Feb-2021

Office17,54817,72318,06018,301

18,51018,604

Logistics

8,461

8,255

8,642

8,696

8,727

8,566

Retail

3,922

3,936

3,983

3,999

4,003

3,975

Residential

11,234

11,327

11,358

11,52011,602

11,606

NOMURA REAL ESTATE MASTER FUND, INC.

14

Message from the Management

ESG
ESG Measures
MeasuresManagement Strategy

Financing Status

Market Review

Portfolio

Information

Financial Section

ESG Measures
Specific Measures to Reduce Environmental Impact

Disclosed Climate-related financial information based on the TCFD Recommendations

Implemented a variety of capital investments in owned properties to reduce their environmental impact(The examples below are from the 11th FP)

Disclosures based on the Task Force on Climate-related Financial Disclosures
Based on Disclosure Items Recommended by the TCFD, which we
expressed its support in July 2020, we disclosed information on financial
impact based on multiple scenario analyses as first time in J-REITs in
addition to an overview of climate change risks and opportunities.

(Disclosure Items Recommended by the TCFD)
Disclosure Item

Disclosure Details

Governance

Organizational governance relating to climate-related risks and opportunities

Strategy

Actual and potential impacts from climate-related risks and opportunities on theorganization’s businesses, strategies, and financial planning

Risk management

The organization’s climate-related risk identification, assessment, and management
processes

Metrics and Targets Metrics and targets used to assess and manage climate-related risks and opportunities

Outline of Disclosure based on TCFD Recommendations(Verification of financial impact based on
scenario analysis)• Identify climate change-related risks and opportunities• Set three patterns of scenarios, 4°C scenario, 2°C scenario, and 1.5°C
scenario, mainly referring to future climate forecasts published by the IEA
and IPCC• Analyze and verify financial impact for each identified risk and opportunity

Category

Lower utility expenses as a result of

Investor(Investment)

Policy(Interest/repayment)

NMF(Real estate leasing)(Distributions)
ESG investment will become a main meansof investment and demands forinvestment targets to disclose ESG
information will grow

E

Transition Risks

Tenant(Rent)
Tenants that emphasizeenergy creation and energy
conservation will increase
substantially

The adoption of ZEB for newbuildings will advance as a resultof it being made mandatory andother means

2030
(Mid)

2050
(Long)

2030
(Mid)

2050
(Long)

2030
(Mid)

2050
(Long)<Saving energy by work in the 11th FP>-1,286 Mwh/year (approx. -52.8%)(2) Saving Energy by Upgrading Air-Conditioners• Nishi Shinjuku Showa Building• NRE Osaka Building• Hanyu Logistics Center• Izumiya Yao others

Plans future energy-saving works
based on the results of the checks

Landport Itabashi<Saving energy by work in the 11th FP>-525 Mwh/year (approx. -20.1%)

Percentage of checked areas(as of February 28, 2021)

64.2% (Total floor space basis)

Opportunity(3) Increased carbon tax burdens

Risk

Costs for purchase of renewable energy(4) credits will be incurred

Risk

Certification and other costs will be(5) incurred

Risk

Lower capital procurement costs as aMarkets(Financing)

Physical Risks(regulations)

Reputation

Restrictions on total building
emissions will be introduced
and building energy
conservation
standards will be tightened
Subsidies for improving energy
efficiency will be introduced
Restrictions on emissions will
be strengthened throughcarbon taxes and emissions
trading

Scope of Financial Impact Amount
4℃
2℃
1.5℃

Risk

(2) ZEB(6) result of green bonds, green loans, etc.

Opportunity

Higher occupancy rates at(7) energy-generating andenergy-conserving buildings

Opportunity

Lower occupancy rates at buildings with(8) high disaster risks

Loss of sales opportunities due to

Acute*

Bank Government

Type(1) Retrofitting expenses(World view of 2°C scenario)
The use by banks of screening
determination methods that take theenvironmental performance of buildings
into consideration will spread, and financing
amounts will increase substantially

Financial impacts* Pale red and blue indicate a minor impact,and deep red and blue indicate a major(1) Saving Energy with LED Lighting• Shinjuku Nomura Building• Kojimachi Millennium Garden• NMF Shiba Building• Sagamihara Tana Logistics Center• Landport Itabashi• Yokosuka More’s City• PRIME URBAN Hongo Ikizaka• PRIME URBAN Nishi Waseda others

Conducted energy-saving checks

S

Measures to Prevent the Spread of COVID-19

Risk(9) building flooding

Risk

Increase in repair costs and casualty(10) insurance premiums due to building
flooding

Risk

ESG Measures (S: Society)

Measures at owned properties

Measures of Asset Management Company• Installation of alcohol-based hand sanitizer
and thermometers• Ventilation by leaving entrances and exits
open at stores• Secure social distancing by installing
footprints• Take temperature of each tenant, and othermeasures• Installation of alcohol-based hand sanitizer• Installation of partitions in conference
rooms, etc.
• Encourage employees to work from homeand practice staggered commuting• Establish an online conference system• Take temperature of visitors, and othermeasures

New measures to increase customer satisfaction
Offered new services for residents at owned residential properties• Bicycle sharing --- Improves transportation convenience and addresses lack of
exercise from working from home.
• Mobile stores --- Provides quality foodstuff, meals, etc. close to home to help
residents enrich their time at home.

* The effects of chronic physical risks are likely to manifest after 2050, so they are excluded fromthe investigation of financial impact amounts.

ESG Measures (E: Environment)

Environmental Indicators[Target] Raise the ratio to 70% by FY2030 (total floor space basis)Target

80.0%

70.0%

70.0%
60.0%
50.0%
40.0%

44.7%
FY201748.8%
FY201850.1%
FY2019[Target] Reduce 40% by FY2030 (compared with 2016)

Green Certification (Total)

56.3%

FY2020GHG (Intensity)

Greenhouse Gas

Green Certification

Green Certification (With three stars or more or equivalent)G-10.0%-20.0%-25.1%FY2016FY2017FY2018Target-28.9%-40.0%FY2019FY2030[Target] Reduce 10% by FY2030 (compared with FY2016)
Water Use (Intensity)

Water Use

0.0%
-2.0%

-3.9%

-4.0%
-6.0%
-8.0%
-10.0%FY2016

-5.0%

-5.0%

FY2017FY2018Target-10.0%FY2019FY2030(Note) “Green Certification” refers to either DBJ Green Building Certification, BELS Certification or CASBEE for Real Estate. “Green Certification (With three stars or more 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.

ESG Measures (G: Governance)

Workable sustainability policies and systems-17.5%-30.0%-40.0%

FY2030

Energy Consumption (Intensity)

0.0%

The Asset Management Company has established the following
systems to promote measures based on the Sustainability Policy
in a continuous and systematic manner.
Board ofDirectors:

Meets once a year, in principle
Approval of policies and rules, etc., monitoring andsupervision of the status of sustainability promotion

Investment
Committee:

Meets twice a year (decisions on goals and measures), inprinciple
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

Chief
Sustainability
Officer:

Involved in decision-making at the Investment Committee
as the chief officer for sustainability and reports to theBoard of Directors at least once a year based on thesustainability promotion rules.

Sustainability:
Operating Officer

Responsible for the execution of sustainability promotion,
the Sustainability Operating Officer convenes theSustainability Promotion Committee, submits matters fordiscussion and reports to the Investment Committee.

Enhancement of sustainability policies and systems throughsustainability training session (once a year).
Training is conducted for the officers and employees at NREAM
and property management companies. (held online in line with
the implementation of remote work)<Details of the
training>•B ackground toand purpose of
the promotionof ESG•E
 xamples of ESG
initiatives anddisclosures byothercompanies, etc.

NOMURA REAL ESTATE MASTER FUND, INC.

16

Message from the Management

Management Strategy

Financing Status

ESG Measures

Market Review

Portfolio

Information

Financing Status

Financial Statements Highlights

Pursuing low interest rates and prolonged borrowing periods through refinancing.

Revenues decreased due to COVID-19, but distributions were achieved as forecast as a result of external growth, reversal of internal reserves, etc.
DPU for Feb. 2021 FP is ¥3,330, up ¥13 (+0.4%) from the Aug. 2020 FP results

Status of Interest-bearing Debt (as of end of fiscal period)
Aug. 2017 FP(4th FP)

Feb. 2018 FP(5th FP)

Aug. 2018 FP(6th FP)

Aug. 2019(8th FP)

Feb. 2019(7th FP)

Feb. 2020(9th FP)

Aug. 2020(10th FP)

(10th FP)

Feb. 2021 FP(11th FP)

Average remaining
duration

4.54 years

4.52 years

4.61 years

4.52 years

4.64 years

4.82 years

4.97 years

4.97 years

Average interest rate

0.92%

0.91%

0.88%

0.87%

0.83%

0.82%

0.76%

0.74%

Ratio of long-term
debt

88.0%

88.0%

87.2%

86.9%

86.0%

87.1%

88.2%

88.7%

Ratio of fixed-rate debt

94.9%

95.4%

95.4%

95.4%

94.1%

95.6%

95.7%

95.7%

LTV

44.6%

44.6%

44.4%

44.5%

43.9%

42.8%

43.2%

43.3%

Operating Revenue
Rental revenues
Other rental revenues
Operating Expenses
Rental Business Expenses
Repair Expenses
Tax and Public Dues
Depreciation and amortization
OthersLoss on sales of real estate
Asset management fees
Amortization of goodwill
Other operating expenses
Operating profit
Non-operating revenues
Non-operating expenses
Interest Expenses and other financial costs
Other non-operating expenses
Ordinary income
Extraordinary gain and loss
Net income

Diversification of Repayment Dates (as of end of fiscal period)(Millions of yen)

60,00050,000

1.19%

0.92%
1.02%

40,000

1.06%
0.70%

0.99%

0.75%

0.54%

0.67% 0.64%
0.67% 0.63% 0.67% 0.59%
0.58%

1.03%

0.91%

0.90%

0.58% 0.51% 0.61% 0.54%

Distribution of Earnings
Distribution in excess of
net earnings
Total distributions

Debt
Investment Corporation Bond
Average Interest Rate

30,000(Millions of yen)

EndedAug. 31, 2020

Total Interest-bearing¥488,741 million ¥486,198 million ¥497,155 million ¥497,112 million ¥510,770 million ¥510,727 million ¥517,884 million ¥517,841 million
debt

Result (A)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—
12,799ab
a+bInternal reserves(Total Internal Reserves)

20,000DPU
Distributions of earnings per unit
Distributions in excess of retained earnings
per unit [allowance for adjustment of
temporary differences]
Other distributions in excess of earnings

10,000

0
21/8

22/2

22/8

23/2

23/8

24/2

24/8

25/2

25/8

26/2

26/8

27/2

27/8

28/2

28/8

29/2

29/8

30/2

30/8

31/2

38/8

41/2

(Fiscal period)(11th FP)

(B)-(A)

Result (B)38,06435,172
2,892
22,693
15,973
1,510
3,110
5,482
5,869
6
3,441
2,622
649
15,370
2
2,324
2,312
12
13,048-31
13,016

487
288
198
329
295
92
-14
113
104
6
21
—
6
157
-1
-88
-90
1
245
-31
217

12,797
2,843
15,64013,0182,682
15,701

221
-160
61

-218
(3,201)-62(3,138)

155
(-62)

3,317
2,714

3,330
2,761

13
47

377

374

-3

226

195

-31



Refinancing during February 2021 FP
Repayment Overview (Note 1)
Total amount ofrefinancing
Average interest rate
Average remaining
duration

32,400 mln
0.70%
5.6 years(Note 1) A verage remaining duration is it at the time ofborrowing and average interest rate is weighted
average interest rate at the time of repayment.
Excluding ¥42.8 million in contractual repayment.

Scheduled repayment during August 2021 FP
Refinancing Overview (Note 2)
Total amount ofrefinancing
Average interest rate
Average remaining
duration

Scheduled Repayment (Note 3)
Total amount ofrefinancing

32,400 mln
0.48%

28,650 mln

Average interest rate
Average remaining
duration

7.9 years(Note 2) A verage interest rate and Average remaining duration
are those at the time of refinancing.

1.19%(¥ mln)Decrease in rent revenues and common area charges(of which, absence of temporary rent reduction/exemption)
Office+5
Logistics+6
Residential-10
Retail-8
Hotels-2
Increase in utility expenses received
Seasonal changes for residential properties
Increase in cancellation penalty fee, etc.

(¥)

Ratings

Long-term issuer rating:Rating and Investment Information, Inc. (R&I)

Issuer rating:

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

NOMURA REAL ESTATE MASTER FUND, INC.

Long-term Issuer credit rating:Rental revenues

288

Rent and common area charges of portfolio properties

198

Other rental revenues
Increase in utility expenses received

70

Seasonal changes for residential facilities, etc.
(key money, renewal fee)-67

Increase in cancellation penalty fee, etc.

196

329

Operating Expense

295

Rental Business Expenses
Decrease in utility expenses paid

-43

Increase in depreciation

113

Increase in repair expenses

92

Increase in maintenance cost63

Increase in other expenses

70

Asset management fees / Other operating
expenses34

Non-operating expenses-88Interest expenses and other financial costs-90

Other non-operating expenses

1

Extraordinary gain and loss

-31

Extraordinary loss on natural disasters-31

Net income

217

Absence of 10th FP’s reversal of internal reserve-218

11th FP’s reversal of internal reserves

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

DPU
Increase factors
Increase in asset management fees
Decrease in interest expenses and other financial costs
Extraordinary loss
Absence of reversal of internal reserves
Reversal of internal reserves
Others

+14
-15
+40

Aug. 2020
FP DPT Results

Rent revenues(Portfolio properties)

Decrease factors-27
Increase in repair expenses
Increase in depreciation
Decrease in leasing fees
Decrease in utility expenses paid
Increase in other expenses

3,317

-4
+19
-6
-46
+13
-3

48

29

AA

A/Short-term Issuer credit rating: A-1

337

Impact of acquisition

3,300

AA-

-48

(of which, absence of temporary rent reduction/exemption +81)

-10
(+17)

-37

Rating Description

Japan Credit Rating Agency, Ltd. (JCR)-1,408
14,583-42
0.0%
111,278
304
369

487

Feb. 2021 FP Results

3,600

Credit Rating Agency

1,196,357
1,066,269
517,84143.3%
752,074
27,573
21,167

Operating Revenue

Main Factors in Change of DPU (¥/unit)

6.7 years(Note 3) Average remaining duration is it at the time ofborrowing and average interest rate is weighted
average interest rate as of the end of February 2021.
Excluding ¥42.8 million in contractual repayment.

1,197,766
1,051,686
517,88443.2%
640,795
27,26820,798

Total assets
Acquisition priceInterest-bearing debt
LTV
Market Capitalization
NOI
FFO

Main factors accounting for differences between the10th esults and the 11th results (¥ mln)

Ended
Feb. 28, 2021 Differences

(¥)

17

Financial Section

-17
-12
-7
+9
-10

Rental business expenses(Portfolio properties)

3,330

Rental business gain/loss(Acquisition)

OthersFeb. 2021
FP DPU Results

NOMURA REAL ESTATE MASTER FUND, INC.

18

Message from the Management

Management Strategy

ESG Measures

Market Review

Financing Status

Portfolio

Information

Financial Section

Market Review
RetailOfficeVacancy Rate (Tokyo Central Five Wards)

Average Monthly Rent (Tokyo Central Five Wards)(%)

Retail and Restaurant Sales Volume by Store Type Year-on-Year Change(¥/tsubo)

10.00

20

23,0008.00

22,9010

22,00021,000

6.00

Feb. 2021
5.24

4.00

Feb. 2021
21,66220,000-40-60

17,000-80

16,0002.49-20

19,00018,0002.00■ Apr. 2020 ■ May ■ June ■ July ■ August ■ September ■ October ■ November ■ December ■ January 2021(%)

24,0009.43-100

16,207

15,0000Supermarkets

14,000’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21

General merchandise
stores (GMS)

Drugstores

Convenience stores

Restaurants total

Department stores

Pubs/izakaya

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.

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

Supply of Office Buildings (Tokyo Central Five Wards)(Thousands of tsubo)

700

Logistics

Rent and Vacancy Rate Matrix (Tokyo Central Five Wards)■ New supply

Previous peak

Rent (¥)

Forecast

Large-Scale Rental Logistics Facility Supply and Demand in theTokyo Metropolitan Area as of December 31, 2020

Q2 ‘083.49

23,000(tsubo)22,000600

Q4 ‘204.49

21,000500

1,000,000
900,000
800,000

20,000400

Q3 ‘01
3.24

19,000Previous
bottom

18,000200

Q2 ‘129.43

17,000100

16,0000Vacancy Rate (%)

15,000

’14

’15

’16

’17

’18

’19

’20

’21

’22

’23

1

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

2

3

4

5

6

7

8

9

35

14

600,000

12
10

400,000

8

300,000

6

200,000

4

100,000

2
0

’15

’16

’17

’18

’19

’20

Tokyo

(People)Osaka (right axis)
Aichi (right axis)

09Q1=100

1,200
125

10,000

1,000

8,000

800

6,000

600

4,000

400

2,000

200

0

-0

100

-2,000

-200

95

2

(Mln)

3.0

’18

’19

’20

’21

Source: P repared by NREAM based on data from Ministry of Internal Affairs andCommunications

19

NOMURA REAL ESTATE MASTER FUND, INC.

20.0

20

■ 2019 ■ 2020

22.2

23.5

24.9

27.9

29.4

15
10
5
0

’19

’20

’21

’22

’23

’24

’25

Total Number of Overnight Guests(Year-on-Year Comparison of ’19 and ’20)(%)

YoY change (right axis)

0

(Mln)

70

■ 2019 ■ 2020

60

115

’17

25

26.4

Source: Prepared by NREAM based on data from “IT Navigator 2021” published by
Nomura Research Institute, Ltd.
* ”Years” show fiscal years

120

’16

30

Foreign Visitor Arrivals(Year-on-Year Comparison of Sep. ’20–Jan. ’21)

Single Type 18 m –30 m
Compact Type 30 m2–60 m2
Family Type 60 m2–100 m2
2

Forecast’21

Source: Prepared by NREAM based on data from CBRE

Rental Condominium Rent Index (Tokyo’s 23 Wards)■ Online retail sales revenue

16

HotelsNet Population Inflow (12-month moving average)(People)(Trillions of yen)

18

0

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

(%)

20

500,000

10

Residential

12,000

Forecast

700,000

Q2 ‘03
8.57

300■ New supply■ New demand
Vacancy Rate (right axis)
Vacancy rate (a year or more after completion)(right axis)

Japanese Ecommerce (B2C) Market

50

2.0

40

110

-50
30

105

1.0

20

-99.4
’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.

’21

-98.9

-97.7

-97.7

-98.3

0

10
-100

Sep.

Oct.

Nov.

Source: Prepared by NREAM based on data from JNTO
Note: Preliminary figures are included.

Dec.

Jan. 2021

0

June

July

AugustSeptember

OctoberNovember December

Source: Prepared by NREAM based on data from CBRE
Note: Preliminary figures are included.

NOMURA REAL ESTATE MASTER FUND, INC.

20

Message from the Management

Management Strategy

ESG Measures

Financing Status

PortfolioMarket Review

Information

Financial Section

Portfolio Analysis (as of Feb. 28, 2021)
NUMBER OF PROPERTIES

299

propertiesASSET SIZE

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

OCCUPANCY RATE

¥1,066,269

million

98.8%
1 Property1 1Property
Property1 Property

Hotels

Other

0.6%
Other

17.0%

Tokyo Area

Diversification by
location

83.0%(based on acquisition price)

Logistics Facilities

3,600
8,500

10,390 10,267
10,390 10,267

Diversification by
use

44.4%

5.5%

Diversification byproperty type

22.0%

(based on acquisition price)

Other

11.2%

Diversification bytenant(based on leased area)

Other Areas

54 Properties■ Retail
40 Properties■ Logistics
21 Properties■ Residential 125 Properties■ Other
1 Property(near stations)

Other

70.6%

OthersTokyo Area
■ Office

RetailFacilities(Residential areas)

78.0%

Hotels

Logistics

SapporoSapporo(based on acquisition price)

Retail Facilities

Top Ten Properties
as a Percentage ofPortfolio

RetailOfficeBuildings

18.9%

Other
289 Properties

3,600

Residential

2 Properties
2 Properties
12 Properties
12 Properties

0.5%

Residential Facilities

18.9%

8,500

OfficeTop Ten
Tenants as a
Percentage ofPortfolio

3 Properties
3 Properties

7,400

7,400

5 Properties
5 Properties

3,942

1 Property1 Property

2,030

29.4%

Total

58 Properties■ Retail■ Logistics
■ Residential

241 Properties

Total■ Other

14 Properties
11 Properties
1 Property
30 Properties
2 Properties■ Office

3,942

2,030

Sendai Sendai

51 Properties
51 Properties

5 Properties
5 Properties
1 Property1 Property
385,745 385,745
61,450 61,450 2,320 2,320

108 Properties
108 Properties
7 Properties
7 Properties
26149,036
Properties 149,036
48,310 48,310 26 Properties

68,718 68,718

Tochigi Tochigi

Kyoto Kyoto

1 Property1 Property

4 Properties
4 Properties
1 Property 1 Property
5,830 5,830

18,300 18,300

5 Properties
5 Properties

7,645

1 Property1 Property

2,280

2,280

3,460
25,650 25,650

2,650

2,650

Naha

Naha

3,460

3 Properties3 Properties

Hyogo Hyogo
1 Property 1 Property

8,997

2 Properties
2 Properties
Hiroshima
Hiroshima
Properties
5 Properties
6,440 56,440

2,477

2,477

7,645

5 Properties
5 Properties
2 Properties
2 Properties
44,236 44,236
2 Properties
2 Properties
6,580 6,580
1 Property1 Property
4,520 4,520
4 Properties
4 Properties

8,997

Nagoya Nagoya

1,580

1,580

4 Properties
4 Properties

49,972 49,972

SaitamaSaitama

5 Properties5 Properties
9 Properties
9 Properties
37,990 37,990

7 Properties
7 Properties

33,960 33,960

3 Properties
3 Properties 9 Properties
9 Properties

4,632

4,632

1 Property1 Property1 Property1 Property

3,080Tokyo Tokyo
15,910 15,910 13,471 13,471

3,0804,900
OthersOthersChiba Chiba

Osaka Osaka

FukuokaFukuoka

4,900

Kanagawa
Kanagawa

For a detailed list of properties in our portfolio, visit the website below.
(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.

https://www.nre-mf.co.jp/en/portfolio/index.html

NOMURA REAL ESTATE MASTER FUND, INC.

22

Message from the Management

Management Strategy

ESG Measures

Financing Status

Market Review

Portfolio

Information

Financial Section

Portfolio Gallery
OfficeRetailTOP 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

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

3

Kojimachi Millennium Garden
Location: 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: 17,769.42 m2

2

Yokosuka More’s City

Location: Yokosuka City, Kanagawa
Acquisition price: ¥13,640 million
Total floor area: 40,030.08 m2

3

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

Omron Kyoto Center Building

NMF Shibuya Koen-dori Building

SORA Shin-Osaka 21

EQUINA Ikebukuro

Konami Sports Club Fuchu

NRE Kichijoji Building

PMO Akihabara Kita

PMO Nihonbashi Kayabacho

NRE Ueno Building

GEMS Shibuya

Summit Store Mukodaicho

Izumiya Yao

Location: Kyoto City, Kyoto
Total floor area: 34,616.84 m2

Location: Taito Ward, Tokyo
Total floor area: 6,367.04 m2

23

2

Shinjuku Nomura Building

TOP 3 Properties (acquisition price)

NOMURA REAL ESTATE MASTER FUND, INC.

Location: Shibuya Ward, Tokyo
Total floor area: 5,358.55 m2

Location: Chuo Ward, Tokyo
Total floor area: 4,067.34 m2

Location: Osaka City, Osaka
Total floor area: 38,252.92 m2

Location: Taito Ward, Tokyo
Total floor area: 7,117.78 m2

Location: Toshima Ward, Tokyo
Total floor area: 3,476.36 m2

Location: Shibuya Ward, Tokyo
Total floor area: 2,000.70 m2

Location: Fuchu City, Tokyo
Total floor area: 12,214.97 m2

Location: Nishitokyo City, Tokyo
Total floor area: 10,659.55 m2

Location: Musashino City, Tokyo
Total floor area: 5,550.35 m2

Location: Yao City, Osaka
Total floor area: 34,198.01 m2

NOMURA REAL ESTATE MASTER FUND, INC.

24

Message from the Management

Management Strategy

ESG Measures

Financing Status

Market Review

Portfolio

Information

Financial Section

Portfolio Gallery
Logistics

Residential

TOP 3 Properties (acquisition price)1

Landport Urayasu

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

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

3

Landport Ome II

NEW

Location: Ome City, Tokyo
Acquisition price: ¥14,620 million
Total floor area: 63,879.98 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 Grande
Location: 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 Kawagoe

Landport Atsugi

Landport Kashiwa Shonan I

RIME URBAN Sapporo Riverfront

PROUD FLAT Kamata II
Location: Ota Ward, Tokyo
Total floor area: 5,315.83 m2

Location: Setagaya Ward, Tokyo
Total floor area: 3,522.92 m2

Sagamihara Tana Logistics Center

Kawaguchi Ryoke Logistics Center

Landport Higashi-Narashino

PRIME URBAN Musashi
Kosugi comodo

PROUD FLAT Shin Osaka

PRIME URBAN Mejiro

Location: Kawagoe City, Saitama
Total floor area: 72,352.88 m2

Location: Sagamihara City, Kanagawa
Total floor area: 51,474.82 m2

25

2

Landport Itabashi

TOP 3 Properties (acquisition price)

NOMURA REAL ESTATE MASTER FUND, INC.

Location: Atsugi City, Kanagawa
Total floor area: 49,504.38 m2

Location: Kawaguchi City, Saitama
Total floor area: 41,867.82 m2

Location: Kashiwa City, Chiba
Total floor area: 49,394.87 m2

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

Location: Sapporo City, Hokkaido
Total floor area: 21,239.84 m2

Location: Kawasaki City, Kanagawa
Total floor area: 4,233.62 m2

Location: Osaka City, Osaka
Total floor area: 3,201.17 m2

PROUD FLAT Sangenjaya II

Location: Shinjuku Ward, Tokyo
Total floor area: 2,190.05 m2

NOMURA REAL ESTATE MASTER FUND, INC.

26

Message from the Management

Management Strategy

ESG Measures

Financing Status

Market Review

Distribution Policy
Basic Distribution Policy

Distribution policy if gain on sales of real estate occurs

Structure of NMF

Internal reserves
equivalent to gain on
sale

10

Total
Distributions

Net earnings(Statement of income)Distribution
PolicyGain on sales

20

10

80

Investment Corporation

Custodian

Nomura Real Estate Holdings, Inc.
(Parent Company of the AssetManagement Company)

Nomura Real Estate Master Fund,Inc.

Sumitomo Mitsui Trust Bank, Ltd.

Unitholders' Meeting

Asset Management
Agreement

Distribution inexcess of net
earnings

Net earnings excl. gain on sales

80

Amortization of goodwill

Gain on sales
Net earnings excl. gain onsales

Distributionof earnings

10

Net earnings excl. gain on sales

Amortization of goodwill
Net earnings

Net earnings

Distribution
in excessof earnings

Asset Custody Agreement

Specified Related Party

Nomura Real Estate Development Co., Ltd.

10

10

Gain on sales is distributed,
and a corresponding
amount is deducted from
distributions in excess of
net earnings

Basic Agreement with respect to Leasing Value Chain

Gain on sales

Distributions in excess of net earnings may be adjusted to retain cash of an amountequivalent to gain on sale of real estate to promote stable medium- to long-term
management. (Note 1)

Reserve

Net earnings

Financial Section

Structure and Organization

Distribute net earnings + amortization of goodwill(Statement of income)Information

Portfolio

Asset Management Company

Board of Directors
Executive Director: Shuhei Yoshida

Nomura Real Estate Asset Management
Co., Ltd.

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

General Administrator(Institutional Administration / Accounting)Transfer Agent and Special Account
Administrator

Supervisory Directors: Mineo Uchiyama

Mitsubishi UFJ Trust and Banking
Corporation

Supervisory Directors: Koichi Owada
Supervisory Directors: Mika Okada

Financial Agent Agreement

Financial Agent Agreement

Information Provider
Nomura Real Estate Development Co., Ltd.

Auditor

General Administrator (Financial Agent)

Ernst & Young Shin Nihon LLC

MUFG Bank, Ltd.
Sumitomo Mitsui Banking Corporation

Basic Agreement with respect to Leasing
Value Chain
Nomura Real Estate Development Co., Ltd.

80

Nomura Real Estate Partners Co., Ltd.
Nomura Real Estate Retail Properties
Co., Ltd. (Note)

Breakdown ofdistributions(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.

(Note) Figures shown above are for illustrative purposes only

Distributions in excess of net earnings in the 11th Fiscal Period

62
Amortization of
goodwill

2,622

2,622

Corporate Planning

Distribution of allowance for temporary
difference adjustments
Other distributions in excess of net earnings
Distributions inexcess of net
earnings¥2,682 million

2,682

Organization of NREAM[About distribution in excess of net earnings]<Reversal of internal reserves>
Compensation for some of the decline in sales caused by
COVID-19 infection(¥569/unit)

919
2,682

1,763
(*2)

1,763

(fractional
adjustment)International Business Planning

Other
distributions inexcess of net
earnings (Income
tax not withheld)¥919 million

Legal & Compliance

Statutory Auditors(After adjustment of
fractions less than one
unit)

Allowance fortemporary difference
adjustments(¥3,135/unit)

Distributions inexcess of net
earnings(breakdown)(*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.
(*2) The amount is obtained by deducting under depreciation, etc. (provision deduction items) attributable to the difference between depreciation in tax and accounting treatments fromamortization of goodwill, etc. (provision addition items).

27

NOMURA REAL ESTATE MASTER FUND, INC.
分配総額
分配方針
当期利益
（損益計算書）（1口未満の端数調整前）

分配総額（1口未満の端数調整後）

Acquisitions
Investment Management Planning
Private Fund Management
NMF Investment
Management Group(Before adjustmentof fractions less than
one unit)

Total distribution

13,018(¥2,761/unit)

Chief Strategy Officer

Total
distribution

Distributions of
net earnings¥13,018 million

Client Relations & Marketing

Project Screening Committee

Distribution
Policy13,018President & CEO

NPR Valuation Committee(Statement ofincome)13,016

Board of Directors

Risk Management Committee

Net earnings

13,016

Distributions of
net earnings etc.
(lncome tax
withheld)¥14,782 million

Finance & Accounting

Compliance Committee

13,016(¥3,330/unit)

Internal Audit

Investment Committee

Total Distribution¥15,701 million

Netearning

General Meeting of Shareholders(¥195/unit)

Fund Management
Asset Management I
Asset Management II
NPR Investment Management

NOMURA REAL ESTATE MASTER FUND, INC.

28

Message from the Management

Management Strategy

ESG Measures

Financing Status

Market Review

Information

Portfolio

Financial Section

Investor Information
Composition of Unitholders

IR ACTIVITIESForeign Corporations

Financial Institutions(including financial
instrument businesses)

617 1.9%

Other Domestic
Corporations

228 0.7%

543 1.7%

We are committed to SDGs in addition to its operational status and strive to make disclosures easy for investors to understand.

Individuals and Others

Financial Institutions(including financial
instrument businesses)

320,859 6.8%

Other Domestic Corporations

Official Website

2,913,541 61.8%

324,650 6.9%

Unitholder composition

Number of investment units

Total

Total

32,237

4,715,200
ESG Annual Report

Individuals andOthersForeign Corporations

30,849 95.7%

1,156,150 24.5%

IR Calendar
End of February Fiscal period Mid-April Announcement offinancial results
January

February

March

April

Unitholder Information

May

June

End of August Fiscal period Mid-October Announcement offinancial results
July

AugustSeptember

OctoberNovember

December

Mid-May

Mid-November

Commencement of
payment of distributions
Release of AssetManagement Report

Commencement of
payment of distributions
Release of AssetManagement Report

The process for changing your address and other information
To change your address, name, seal, or other information, please contact the securities firm where your account was established.
Distributions
Stockholders can collect distributions at a Japan Post Bank or post office. If the receipt date has passed, please refer to instructions
on the back of the distribution receipt and either send it to the Corporate Agency Division of Mitsubishi UFJ Trust and Banking
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.

IR Activities■ IR tour of the financial results on Aug. 2020 period for domestic institutional investors (Conducted by telephone conference)■ One-on-one IR meetings with overseas investors in North America, Europe and in Asia (Conducted by telephone conference)

Important Reminders for Unitholders

29

Closing dates

The last days of February and August of every year

General meeting ofunitholders

At least once every two years in principle

Unitholder record date forvoting 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 Stock Exchange (securities code: 3462)

Newspaper forannouncements

Nihon Keizai Shimbun

Share transfer agent

Mitsubishi UFJ Trust and Banking Corporation

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

NOMURA REAL ESTATE MASTER FUND, INC.

NOMURA REAL ESTATE MASTER FUND, INC.

30

Message from the Management

Management Strategy

ESG Measures

Financing Status

Market Review

Portfolio

Financial Section

Information

BALANCE SHEET
Thousands of Yen

As of August 31, 2020

Thousands of Yen

As of February 28, 2021

ASSETSAs of August 31, 2020
LIABILITIESCurrent Assets:

Current Liabilities:

Cash and bank deposits

75,166,359

63,840,679

Rental receivables

1,067,208

848,941

Other current assets

1,477,045

1,368,039

Lease obligations

77,710,612

66,057,659

Other accounts payable

Total current assets

As of February 28, 2021

Trade accounts payable

2,536,859

2,482,387

Current portion of long-term debt

61,135,600

58,760,600

871

871

2,883,286

3,432,497

337,398

314,504

Accrued expenses
Property and Equipment:

3,774

1,028

Accrued consumption taxes

134,705

552,992

Rent received in advance

5,584,162

5,641,129

112,213

94,952

Accrued income taxes

Land

724,484,881

733,890,292

Buildings and structures

351,355,493

360,001,455

Machinery and equipment

1,702,406

1,868,183

Unearned revenue

Tools, furniture and fixtures

1,388,724

1,573,678

Provision for loss on disaster

3,811

31,000

4,752

4,752

Derivatives liabilities

64,132

106,143

Leased assets
Construction in progress
SubtotalLess accumulated depreciation
Net property and equipment

16,22456,913

1,078,952,483

1,097,395,275(51,964,605)(57,435,192)

1,026,987,877

1,039,960,082

Investments and Other Assets:

Other current liabilities
Total current liabilities

36,74018,807

72,833,555

71,436,916

Long-term Liabilities:
Investment corporation bonds

32,000,000

32,000,000

Long-term debt

424,748,800

427,081,000

Goodwill

80,342,494

77,720,251

Lease obligations

3,339

2,904

Leasehold rights

8,958,147

8,957,761

Long-term advances received

75,08834,401

Security deposits from tenants

42,177,982

42,542,701

47,51060,6322,090,012

1,976,031

Derivatives liabilities

Long-term deposits

527,473542,235

Security deposits

936,452

925,784

Intangible assets
Long-term prepaid expenses

Deferred investment corporation bond issuance costs
Total investments and other assets
Total Assets

165,509

157,524

93,067,601

90,340,222

1,197,766,091

1,196,357,965

421,674

245,210

Total long-term liabilities

499,426,885

501,906,216

Total Liabilities

572,260,441

573,343,133

244,307,911

244,606,999

NET ASSETS

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

Unitholders’ Equity:
Unitholders’ capital
SurplusCapital surplus

394,012,959

394,012,959

Allowance for temporary difference adjustment(13,515,837)(14,994,380)

Other deductions from capital surplus(12,398,315)(13,763,038)

Total deductions from capital surplus(25,914,153)(28,757,419)

Net capital surplus

368,098,805

365,255,539

Retained earnings

13,583,176

13,503,646

Total surplus

381,681,981

378,759,186

Total unitholders’ equity

625,989,893

623,366,185

Deferred gains or losses on hedges(484,242)(351,354)

Total valuation and translation adjustments(484,242)(351,354)

625,505,650

623,014,831

1,197,766,091

1,196,357,965

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 EARNINGSFor the period fromMarch 1, 2020 toAugust 31, 2020

Financing Status

Thousands of Yen

For the period from
September 1, 2020 toFebruary 28, 2021

Market Review

Portfolio

Financial Section

Information

STATEMENT OF CHANGES IN NET ASSETSFor the period from March 1, 2020 to August 31, 2020

Thousands of Yen
Unitholders’ Equity

SurplusCapital surplus
Deductions from capital surplus

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

37,577,424
37,577,424

38,064,606
38,064,606

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

15,973,489
3,441,901
6,245
57,100173,2432,622,242
419,470
22,693,693
15,370,912

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
Other non-operating expenses

Ordinary Income
Extraordinary Losses:
Loss on disaster
Income before Income Taxes
Income Taxes:
Current
Net Income

496
3,561
—
15
4,073

326
2,170
230
4
2,732

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

1,716,238
170,8027,984
425,105
4,824
2,324,955

12,803,370

13,048,689——
12,803,370

31,00031,00013,017,689

3,830
3,830
12,799,540

1,078
1,078
13,016,610

Retained earnings brought forward

783,636

487,036

Retained Earnings at End of Period

13,583,176

13,503,646

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

Balance as of March 1, 2020
Distributions of retained earnings
Reversal of allowance for temporary difference
adjustments
Distributions in excess of net earnings from allowancefor 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

Allowance fortemporary
Other deductions Total deductions
difference
from capitalfrom capitaladjustment
surplussurplus(11,903,126)(10,738,678)(22,641,804)
—
—
—

Units
4, 715,200—

Unitholders’capital244,185,429—

Capitalsurplus394,012,959——

122,481—

122,481

—

—

—

—
—
—
—
4, 715,200———
122,481244,307,911————
394,012,959

Net capitalsurplus371,371,154—(122,481)——(1,735,193)—(1,735,193)(1,735,193)———(1,612,711)(13,515,837)(1,537,155)——(1,659,637)(12,398,315)(1,537,155)——(3,272,348)(25,914,153)(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 from allowancefor 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

Valuation and Translation Adjustments

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

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

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

Deferred gains orlosses on hedges(783,330)—

Total valuationand translation
adjustments(783,330)—

Total net assets
627,868,163(12,188,792)(122,481)(122,481)

—

—

—

—

—

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

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

For the period from September 1, 2020 to February 28, 2021
Thousands of Yen

Unitholders’ Equity

SurplusCapital surplus
Deductions from capital surplus

Balance as of September 1, 2020
Distributions of retained earnings
Reversal of allowance for temporary difference
adjustments
Distributions in excess of net earnings from allowancefor 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 28, 2021

Units
4, 715,200—

Unitholders’capital244,307,911—

Allowance fortemporarydifference
adjustment(13,515,837)
—

Other
Total
deductions
deductions
from capital from capitalsurplussurplus(12,398,315) (25,914,153)——

Net capitalsurplus368,098,805——

299,087—

299,087(299,087)

—

—

—

—

—

(1,777,630)—(1,777,630)(1,777,630)————
4, 715,200———
299,087244,606,999————
394,012,959———(1,478,542)(14,994,380)(1,065,635) (1,065,635)————(1,364,723) (2,843,265)(13,763,038) (28,757,419)(1,065,635)——(2,843,265)
365,255,539

Unitholders’ Equity
Surplus
Balance as of September 1, 2020
Distributions of retained earnings
Reversal of allowance for temporary difference
adjustments
Distributions in excess of net earnings from allowancefor 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 28, 2021

Capitalsurplus394,012,959—

Thousands of Yen

Valuation and Translation Adjustments
Total valuation
Total unitholders’Deferred gains or
and translation
equitylosses on hedges
adjustments
625,989,893(484,242)(484,242)(12,797,052)——

Total net assets
625,505,650(12,797,052)

Retained earnings
13,583,176(12,797,052)

Total surplus
381,681,981(12,797,052)(299,087)(299,087)

—

—

—

—

—

(1,777,630)(1,777,630)——(1,777,630)—
13,016,610—(79,529)
13,503,646(1,065,635)
13,016,610—(2,922,795)
378,759,186(1,065,635)
13,016,610—(2,623,707)
623,366,185——
132,888
132,888(351,354)——
132,888
132,888(351,354)(1,065,635)
13,016,610
132,888(2,490,819)
623,014,831

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

33

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Message from the Management

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ESG Measures

STATEMENT OF CASH FLOWSCASH FLOWS

Financing Status

Thousands of Yen

For the period fromMarch 1, 2020 toAugust 31, 2020

For the period from
September 1, 2020 toFebruary 28, 2021

Cash Flows from Operating Activities
Income before income taxes
Depreciation
Amortization of goodwill
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
Increase (Decrease) in accrued consumption taxes
Increase (Decrease) in accrued expenses
Increase (Decrease) in rent received in advance
Decrease in property and equipment in trust due to sales
Other
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities

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

13,017,689
5,483,396
2,622,242
7,984
27,189(326)
1,887,041
8,416
210,746
113,980(14,761)(54,472)
74,558418,287—
56,967
37,695
131,32124,027,957
326(1,967,252)(3,824)22,057,206

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
Payments from security deposits
Proceeds from security deposits
Net cash provided by (used in) investing activities(24,292,996)(13,553)(595,776)
1,275,513——(23,626,812)(18,027,237)(12,390)(980,430)
1,307,669(52)
10,720(17,701,720)

7,000,000(7,000,000)
33,600,000(28,442,800)
7,000,000(5,000,000)(44,199)(12,188,068)(1,735,356)——
32,400,000(32,442,800)———(12,795,769)(1,777,350)(1,537,147)(8,347,572)(1,065,245)(15,681,165)(12,432,707)
87,599,067
75,166,359(11,325,679)
75,166,359
63,840,679

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
Distributions to unitholders
Distributions in excess of net earnings from allowance for temporary
difference adjustments
Other distributions in excess of net earnings
Net cash provided by (used in) financing activities
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period
Cash and Cash Equivalents at End of Period
The accompanying notes to financial statements are an integral part of these statements.

Market Review

Portfolio

Information

Financial Section

NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Nomura Real Estate Master Fund, Inc. (NMF) is a real estate investment corporation formed to own and invest primarily in officebuildings, retail facilities, logistics and residential facilities. NMF is externally managed by a licensed asset management company,
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 the effects 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 of Japan,
the Financial Instruments and Exchange Act of Japan and related regulations, which are different in certain respects as to theapplication 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, thenotes 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 andthe notes thereto, whereas amounts were truncated in the Japanese financial statements prepared in accordance with 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 or less whenpurchased.
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
3–45 years
5–17 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.

35

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Management Strategy

ESG Measures

Financing Status

Market Review

Portfolio

Financial Section

Information

NOTES TO FINANCIAL STATEMENTS
Long-term prepaid expenses(Accounting standards issued but not yet applied)Long-term prepaid expenses are amortized by the straight-line method.

“Accounting Standard for Revenue Recognition” (the Accounting Standards Board of Japan (ASBJ) Statement No. 29, issued by ASBJ
on March 31, 2020)

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 estimatedfuture cash flows. If a fixed asset is determined to be impaired, it is written down to its recoverable amount and the write-down isrecorded 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 thebonds.
Investment units issuance expenses
The entire amount is expensed as incurred.
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 acase-by-case examination for doubtful and other specific receivables.
(2) Provision for loss on disaster
The amount that is reasonably estimated at the end of the fiscal period under review is recorded to cover expenditures forrestoration etc. following Typhoon Faxai and Hagibis in 2019. In addition, the amount that is reasonably estimated at the end of
the fiscal period under review is recorded to cover expenditures for restoration, etc. following the 2021 Fukushima Earthquake.
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.
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 recognizedon an accrual basis over the life of each lease. Utility charge reimbursements are recognized when earned and their amounts arereasonably estimated.
Property related taxes(1) Overview
Comprehensive accounting standards on revenue recognition were developed jointly by the International Accounting Standards
Board (IASB) and the US Financial Accounting Standards Board (FASB), and were released publicly in May 2014 as “Revenue fromContracts 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.
(2) Scheduled date of application
These accounting standard and guidance will be applied from the beginning of the fiscal period ending February 28, 2022.
(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 Standard for Fair Value Measurement” (ASBJ Statement No. 30, issued by ASBJ on July 4, 2019)“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 the provisions ofthese international accounting standards, the ASBJ gave extensive consideration primarily regarding guidance and 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 Japan andoverseas 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.

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 the assessment madeby the local government. The amount applicable to the buyer of a property is usually settled between each party and capitalized aspart of the acquisition cost of the property. The capitalized property related taxes amounted to ¥108,493 thousand for the fiscal
period ended August 31, 2020 and ¥4,533 thousand for the fiscal period ended February 28, 2021.

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

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

(1) Overview
Requests have been made to consider requiring the disclosure of the “sources of estimation uncertainty,” which is required to bedisclosed in Paragraph 125 of the International Accounting Standard (IAS) 1 “Presentation of Financial Statements” (hereinafter“IAS 1”) issued by the IASB in 2003, under Japanese standards as highly useful information for the users of financial statements,
and the accounting standard for the disclosure of accounting estimates (hereinafter the “Accounting Standard”) was developedand issued by the ASBJ.

Consumption taxes
Consumption taxes received and paid are not included in the accompanying statement of income and retained earnings.
Derivative financial instruments
NMF utilizes interest-rate swap contracts as derivative financial instruments only for the purpose of hedging its exposure to changes
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 at fair value;
instead, the net amount paid or received under the interest rate swap contract is recognized and included in interest expense or
income.
37“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, issued by ASBJ on March 31,
2020)

NOMURA REAL ESTATE MASTER FUND, INC.

(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.

As a basic policy upon the development of the Accounting Standard by the ASBJ, it will not enhance the content of each note 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 1 will be used as a reference.
(2) Scheduled date of application
The accounting standard will be applied from the end of the fiscal period ending August 31, 2021.

NOMURA REAL ESTATE MASTER FUND, INC.

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Message from the Management

Management Strategy

ESG Measures

Financing Status“Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections” (ASBJ Statement No. 24(Revised 2020), issued by ASBJ on March 31, 2020)(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 was issued
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 effective to avoid any impact on actual business practices until now when the provision of therelated accounting standards are clear.
(2) Scheduled date of application
The accounting standard will be applied from the end of the fiscal period ending August 31, 2021.

Market Review

Portfolio

Financial Section

Information

4. CASH AND CASH EQUIVALENTS
Cash and cash equivalents as of August 31, 2020 and February 28, 2021 consist of the following:Thousands of Yen

As of August 31, 2020

As of February 28, 2021

Cash and bank deposits

75,166,359

63,840,679

Cash and cash equivalents

75,166,359

63,840,679

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

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

As of August 31, 2020
Buildings in trust
Land in trust
Structures in trust
Tools, furniture and fixtures in trust
Total

As of February 28, 2021

3,298,689
6,096,368
4,530
733

3,274,450
6,096,368
4,438
4,095

9,400,322

9,379,352

The secured liabilities are as follows:
Thousands of Yen

As of August 31, 2020
Tenant leasehold and security deposits in trust
Total

As of February 28, 2021

726,648

726,648

726,648

726,648

6. SCHEDULE OF PROPERTY AND EQUIPMENT
Property and equipment as of August 31, 2020 and February 28, 2021 consist of the following:Thousands of Yen

As of August 31, 2020
Acquisition costs
Land

301,575,945

Buildings and structures

153,244,413

Accumulated depreciation
Machinery and equipment

301,575,945

Acquisition costs
311,019,052

Book value
311,019,052

159,563,452
134,447,407(21,135,533)

345,227(563,469)

880,429

138,427,919

986,902(535,202)

Tools, furniture and fixtures

458,386

Accumulated depreciation(169,698)

288,687(210,485)

300,833

422,908,935

422,871,240

422,871,240

Land in trust

422,908,935

Buildings and structures in trust

198,111,079

Accumulated depreciation(31,901,067)

Machinery and equipment in trust

821,977

Accumulated depreciation(174,637)

Accumulated depreciation
Lease assets in trust
Accumulated depreciation
Construction in progress
Total

NOMURA REAL ESTATE MASTER FUND, INC.

Book value

Accumulated depreciation

Tools, furniture and fixtures in trust

39(18,797,006)

As of February 28, 2021

200,438,003
166,210,012(34,844,012)

165,593,990

881,280
647,339

930,338(386,069)

423,433

511,319(217,496)

663,784

1,062,358
544,269

4,752(462,875)

599,483

4,752

(924)

3,828

(1,320)3,432

16,224

16,22456,91356,913

1,026,987,877

1,026,987,877

1,039,960,082

1,039,960,082

NOMURA REAL ESTATE MASTER FUND, INC.

40

Message from the Management

Management Strategy

ESG Measures

Financing Status

Market Review

Portfolio

Financial Section

Information

NOTES TO FINANCIAL STATEMENTS
7. SHORT-TERM DEBT AND CURRENT PORTION OF LONG-TERM DEBT

8. LONG-TERM DEBT

Short-term debt and current portion of long-term debt as of August 31, 2020 and February 28, 2021 consist of the following:

Long-term debts as of August 31, 2020 and February 28, 2021 consist of the following:

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

As of February 28, 2021

Weighted-averageinterest rate (Note 1)

Amount(Thousands of Yen)

As of August 31, 2020

Weighted-averageinterest rate (Note 1)

Amount(Thousands of Yen)

Amount(Thousands of Yen)

Weighted-averageinterest rate (Note 1)

Unsecured loans from banks due on September 28, 2020

3,000,000

0.22000%——

Unsecured loans from a bank due on November 26, 2021

2,000,000

1.30289%——

Unsecured loans from banks due on November 26, 2020

3,500,000

0.46075%——

Unsecured loans from banks due on November 26, 2021

2,000,000

1.11662%——

Unsecured loans from banks due on November 26, 2020

2,350,000

0.46190%——

Unsecured loans from banks due on November 26, 2021

4,900,000

0.97410%——

Unsecured loans from a bank due on November 26, 2020

500,000

0.47375%——

Unsecured loans from banks due on December 27, 2021

6,375,000

0.22000%——

Unsecured loans from banks due on November 26, 2020

1,230,000

0.19000%——

Unsecured loans from a bank due on January 26, 2022

3,500,000

1.48300%——

Unsecured loans from banks due on February 26, 2021

5,000,000

1.35250%——

Unsecured loans from banks due on February 28, 2022

4,500,000

1.31850%——

Unsecured loans from a bank due on February 26, 2021

2,000,000

1.17750%——

Unsecured loans from a bank due on February 28, 2022

2,750,000

1.29600%——

Unsecured loans from banks due on February 26, 2021

2,000,000

1.19211%——

Unsecured loans from banks due on February 28, 2022

4,000,000

1.16000%——

Unsecured loans from banks due on February 26, 2021

2,000,000

0.80832%——

Unsecured loans from banks due on May 26, 2022

5,500,000

1.25900%

5,500,000

1.25900%

Unsecured loans from a bank due on February 26, 2021

3,000,000

0.86350%——

Unsecured loans from banks due on May 31, 2022

4,500,000

0.82500%

4,500,000

0.82500%

Unsecured loans from banks due on February 26, 2021

2,120,000

0.85050%——

Unsecured loans from banks due on June 27, 2022

4,000,000

0.19000%

4,000,000

0.21818%

Unsecured loans from a bank due on February 26, 2021

500,000

0.46725%——

Unsecured loans from banks due on August 26, 2022

2,980,000

1.19700%

2,980,000

1.19700%

Unsecured loans from a bank due on February 26, 2021

2,000,000

0.22560%——

Unsecured loans from a bank due on August 26, 2022

3,000,000

1.09133%

3,000,000

1.09133%

Unsecured loans from banks due on February 26, 2021

2,800,000

0.14700%——

Unsecured loans from banks due on August 26, 2022

4,000,000

1.08034%

4,000,000

1.08034%

Unsecured loans from a bank due on February 26, 2021

400,000

0.21810%——

Unsecured loans from a bank due on August 26, 2022

1,000,000

0.32886%

1,000,000

0.32886%

Unsecured loans from banks due on March 26, 2021

4,670,000

0.22000%

4,670,000

0.24818%

Unsecured loans from banks due on September 30, 2022

4,000,000

0.76250%

4,000,000

0.76250%

Unsecured loans from banks due on May 26, 2021

8,000,000

1.56250%

8,000,000

1.56250%

Unsecured loans from banks due on October 26, 2022

3,000,000

0.22000%

3,000,000

0.24818%

Unsecured loans from a bank due on May 26, 2021

1,000,000

1.46375%

1,000,000

1.46375%

Unsecured loans from banks due on November 28, 2022

2,100,000

0.92280%

2,100,000

0.92280%

Unsecured loans from a bank due on May 27, 2021

1,000,000

1.68200%

1,000,000

1.68200%

Unsecured loans from banks due on November 28, 2022

4,550,000

1.11000%

4,550,000

1.11000%

Unsecured loans from a bank due on May 27, 2021

3,500,000

1.62500%

3,500,000

1.62500%

Unsecured loans from a bank due on November 28, 2022

1,800,000

1.05000%

1,800,000

1.05000%

Unsecured loans from banks due on July 26, 2021

4,180,000

1.23920%

4,180,000

1.23920%

Unsecured loans from banks due on November 28, 2022

1,500,000

0.98624%

1,500,000

0.98624%

Unsecured loans from a bank due on August 26, 2021

2,700,000

1.24100%

2,700,000

1.24100%

Unsecured loans from a bank due on November 28, 2022

1,000,000

0.71221%1,000,000

0.71221%

Unsecured loans from banks due on August 26, 2021

3,600,000

0.81585%

3,600,000

0.81585%

Unsecured loans from banks due on November 28, 2022

1,500,000

0.69250%

1,500,000

0.69250%

Unsecured loans from a bank due on November 26, 2021——

2,000,000

1.30289%

Unsecured loans from a bank due on February 27, 2023

1,300,000

1.13250%

1,300,000

1.13250%

Unsecured loans from banks due on November 26, 2021——

2,000,000

1.11662%

Unsecured loans from banks due on February 27, 2023

2,800,000

0.40740%2,800,000

0.40740%

Unsecured loans from banks due on November 26, 2021——

4,900,000

0.97410%

Unsecured loans from banks due on February 28, 2023

10,000,000

0.48700%

10,000,000

0.48700%

Unsecured loans from banks due on December 27, 2021——

6,375,000

0.24818%

Unsecured loans from a bank due on May 26, 2023

2,000,000

1.86500%

2,000,000

1.86500%

Unsecured loans from a bank due on January 26, 2022——

3,500,000

1.48300%

Unsecured loans from a bank due on May 26, 2023

2,000,000

1.89500%

2,000,000

1.89500%

Unsecured loans from banks due on February 28, 2022——

4,500,000

1.31850%

Unsecured loans from a bank due on May 26, 2023

1,000,000

1.83875%

1,000,000

1.83875%

Unsecured loans from a bank due on February 28, 2022——

2,750,000

1.29600%

Unsecured loans from a bank due on May 26, 2023

1,000,000

0.41250%

1,000,000

0.41250%

Unsecured loans from banks due on February 28, 2022——

4,000,000

1.16000%

Unsecured loans from a bank due on May 26, 2023

2,500,000

0.43408%2,500,000

0.43408%

Unsecured loans from a bank due on May 26, 2025 (Note 2)

42,8002.17000%

42,8002.17000%

Unsecured loans from a bank due on August 28, 2023

1,000,000

1.14850%

1,000,000

1.14850%

Unsecured loans from a bank due on May 26, 2025 (Note 2)

42,8002.21812%42,8002.21812%

Unsecured loans from a bank due on August 28, 2023

1,000,000

1.15850%

1,000,000

1.15850%

Unsecured loans from a bank due on August 28, 2023

1,000,000

1.18032%

1,000,000

1.18032%

Unsecured loans from a bank due on August 28, 2023

4,000,000

1.20772%

4,000,000

1.20772%

Unsecured loans from banks due on August 28, 2023

6,100,000

1.08510%

6,100,000

1.08510%

Unsecured loans from a bank due on August 28, 2023

1,000,000

0.43466%

1,000,000

0.43466%

Unsecured loans from a bank due on August 28, 2023

1,000,000

0.41000%

1,000,000

0.41000%

Unsecured loans from a bank due on August 28, 2023

500,000

0.41435%

500,000

0.41435%

Unsecured loans from banks due on August 31, 2023

6,700,000

0.55700%

6,700,000

0.55700%

Unsecured loans from banks due on September 26, 2023——

3,000,000

0.24818%

Unsecured loans from banks due on November 27, 2023

2,000,000

1.75900%

2,000,000

1.75900%

Unsecured loans from banks due on November 27, 2023

2,600,000

0.82800%

2,600,000

0.82800%

Unsecured loans from banks due on November 27, 2023

4,000,000

0.49380%

4,000,000

0.49380%

Unsecured loans from banks due on November 27, 2023

1,500,000

0.47483%

1,500,000

0.47483%

Unsecured loans from banks due on November 27, 2023——

1,230,000

0.24818%

Unsecured loans from a bank due on February 26, 2024

2,750,000

1.59400%

2,750,000

1.59400%

Unsecured loans from banks due on February 26, 2024

1,300,000

0.53630%

1,300,000

0.53630%

Unsecured loans from a bank due on February 26, 2024

500,0000.24000%

500,0000.24000%

Unsecured loans from a bank due on February 26, 2024

1,000,000

0.18500%

1,000,000

0.18500%

Unsecured loans from banks due on May 27, 2024

1,100,000

0.51000%

1,100,000

0.51000%

Unsecured loans from a bank due on May 27, 2024

2,700,000

0.46376%

2,700,000

0.46376%

Total

61,135,600

58,760,600

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 for the 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 ofinterest.
Note 2: Installments 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 forthe fiscal period ended August 31, 2020. The total unused amount of such credit facilities was ¥10,000 million as of August 31,
2020.

(2) The Company entered into ¥40,000 million of credit facilities in the form of commitment lines with four financial institutions forthe fiscal period ended August 31, 2020. The total unused amount of such credit facilities was ¥40,000 million as of August 31,
2020.
(3) The Company entered into ¥10,000 million of credit facilities in the form of commitment lines with two financial institutions forthe fiscal period ended February 28, 2021. The total unused amount of such credit facilities was ¥10,000 million as of February
28, 2021.
(4) The Company entered into ¥40,000 million of credit facilities in the form of commitment lines with four financial institutions forthe fiscal period ended February 28, 2021. The total unused amount of such credit facilities was ¥40,000 million as of February
28, 2021.

41

As of February 28, 2021

Weighted-averageinterest rate (Note 1)

NOMURA REAL ESTATE MASTER FUND, INC.

NOMURA REAL ESTATE MASTER FUND, INC.

42

Message from the Management

Management Strategy

ESG Measures

Financing Status

Market Review

Portfolio

Financial Section

Information

NOTES TO FINANCIAL STATEMENTS
As of August 31, 2020
Amount(Thousands of Yen)

43

As of February 28, 2021

Weighted-averageinterest rate (Note 1)

Amount(Thousands of Yen)

As of August 31, 2020

Weighted-averageinterest rate (Note 1)

Amount(Thousands of Yen)

As of February 28, 2021
Amount(Thousands of Yen)

Weighted-averageinterest rate (Note 1)

Weighted-averageinterest rate (Note 1)

Unsecured loans from a bank due on May 27, 2024

2,000,000

0.53676%

2,000,000

0.53676%

Unsecured loans from a bank due on August 26, 2026

2,700,000

0.67591%2,700,000

0.67591%

Unsecured loans from a bank due on June 26, 2024

2,700,000

0.85925%2,700,000

0.85925%

Unsecured loans from banks due on August 26, 2026

3,000,000

0.77669%

3,000,000

0.77669%

Unsecured loans from a bank due on June 26, 2024

2,700,000

0.49533%

2,700,000

0.49533%

Unsecured loans from a bank due on August 26, 2026

1,000,000

0.70414%1,000,000

0.70414%

Unsecured loans from a bank due on August 26, 2024

3,000,000

0.58175%

3,000,000

0.58175%

Unsecured loans from banks due on August 26, 2026

3,000,000

0.67483%

3,000,000

0.67483%

Unsecured loans from a bank due on August 26, 2024

2,430,000

0.49971%2,430,000

0.49971%

Unsecured loans from a bank due on August 26, 2026

1,000,000

0.64500%

1,000,000

0.64500%

Unsecured loans from banks due on August 26, 2024

5,670,000

0.49485%

5,670,000

0.49485%

Unsecured loans from a bank due on August 26, 2026

1,000,000

0.42118%

1,000,000

0.42118%

Unsecured loans from a bank due on August 26, 2024

1,000,000

0.28624%

1,000,000

0.28624%

Unsecured loans from a bank due on August 26, 2026

500,000

0.43627%

500,000

0.43627%

Unsecured loans from a bank due on November 26, 2024

2,250,000

0.50825%

2,250,000

0.50825%

Unsecured loans from banks due on August 26, 2026

1,500,000

0.20880%

1,500,000

0.20880%

Unsecured loans from banks due on November 26, 2024

3,000,000

0.58000%

3,000,000

0.58000%

Unsecured loans from a bank due on August 26, 2026——

1,000,000

0.30116%

Unsecured loans from a bank due on November 26, 2024

1,800,000

0.55979%

1,800,000

0.55979%

Unsecured loans from a bank due on November 26, 2026

2,000,000

0.76000%

2,000,000

0.76000%

Unsecured loans from a bank due on November 26, 2024

500,000

0.52384%

500,000

0.52384%

Unsecured loans from a bank due on November 26, 2026

2,000,000

0.74229%2,000,000

0.74229%

Unsecured loans from banks due on November 26, 2024

2,000,000

0.42630%

2,000,000

0.42630%

Unsecured loans from banks due on November 26, 2026

4,165,000

0.73506%

4,165,000

0.73506%

Unsecured loans from a bank due on November 26, 2024

800,000

0.21380%

800,000

0.21380%

Unsecured loans from banks due on November 26, 2026

4,000,000

0.69956%

4,000,000

0.69956%

Unsecured loans from banks due on February 26, 2025

4,200,000

0.62675%

4,200,000

0.62675%

Unsecured loans from banks due on November 26, 2026

1,500,000

0.64999%

1,500,000

0.64999%

Unsecured loans from a bank due on February 26, 2025

1,000,000

0.52140%

1,000,000

0.52140%

Unsecured loans from banks due on November 26, 2026

2,000,000

0.60750%

2,000,000

0.60750%

Unsecured loans from banks due on February 26, 2025

3,000,000

0.53936%3,000,000

0.53936%

Unsecured loans from banks due on November 26, 2026

1,000,000

0.28000%

1,000,000

0.28000%

Unsecured loans from banks due on February 26, 2025

1,500,000

0.53880%

1,500,000

0.53880%

Unsecured loans from banks due on November 26, 2026

1,200,000

0.30000%

1,200,000

0.30000%

Unsecured loans from banks due on February 26, 2025

1,000,000

0.50604%

1,000,000

0.50604%

Unsecured loans from banks due on February 26, 2027

2,320,000

0.71500%

2,320,000

0.71500%

Unsecured loans from a bank due on May 26, 2025

2,000,000

0.60286%2,000,000

0.60286%

Unsecured loans from banks due on February 26, 2027

1,500,000

0.46630%

1,500,000

0.46630%

Unsecured loans from a bank due on May 26, 2025

2,000,000

0.60286%2,000,000

0.60286%

Unsecured loans from a bank due on February 26, 2027

500,000

0.44859%

500,000

0.44859%

Unsecured loans from banks due on May 26, 2025

2,800,000

0.60286%

2,800,000

0.60286%

Unsecured loans from banks due on February 26, 2027

1,000,000

0.48144%

1,000,000

0.48144%

Unsecured loans from a bank due on May 26, 2025

1,000,000

0.61434%

1,000,000

0.61434%

Unsecured loans from a bank due on February 26, 2027

1,500,000

0.28500%

1,500,000

0.28500%

Unsecured loans from a bank due on May 26, 2025

1,000,000

0.50506%

1,000,000

0.50506%

Unsecured loans from a bank due on February 26, 2027

1,000,000

0.28500%

1,000,000

0.28500%

Unsecured loans from banks due on May 26, 2025

2,000,000

0.46301%2,000,000

0.46301%

Unsecured loans from a bank due on February 26, 2027

300,000

0.16205%

300,000

0.16205%

Unsecured loans from a bank due on May 26, 2025

1,000,000

0.19750%

1,000,000

0.19750%

Unsecured loans from a bank due on February 26, 2027

500,000

0.10094%

500,000

0.10094%

Unsecured loans from banks due on August 26, 2025

3,000,000

0.56380%

3,000,000

0.56380%

Unsecured loans from a bank due on February 26, 2027

500,000

0.35139%

500,000

0.35139%

Unsecured loans from banks due on August 26, 2025

4,050,000

0.58727%

4,050,000

0.58727%

Unsecured loans from banks due on March 26, 2027

1,500,000

0.69068%

1,500,000

0.69068%

Unsecured loans from banks due on August 26, 2025

1,850,000

0.67915%1,850,000

0.67915%

Unsecured loans from banks due on May 26, 2027

3,060,000

0.78177%

3,060,000

0.78177%

Unsecured loans from banks due on August 26, 2025

2,600,000

0.60489%

2,600,000

0.60489%

Unsecured loans from banks due on May 26, 2027

2,300,000

0.74736%2,300,000

0.74736%

Unsecured loans from banks due on August 26, 2025

3,000,000

0.58380%

3,000,000

0.58380%

Unsecured loans from a bank due on May 26, 2027

1,800,000

0.70250%

1,800,000

0.70250%

Unsecured loans from a bank due on November 26, 2025

1,100,000

1.09830%

1,100,000

1.09830%

Unsecured loans from a bank due on May 26, 2027

1,400,000

0.32000%

1,400,000

0.32000%

Unsecured loans from a bank due on November 26, 2025

1,100,000

1.06250%

1,100,000

1.06250%

Unsecured loans from banks due on August 26, 2027

4,000,000

0.76843%

4,000,000

0.76843%

Unsecured loans from a bank due on November 26, 2025

2,000,000

1.03955%

2,000,000

1.03955%

Unsecured loans from banks due on August 26, 2027

2,600,000

0.76290%

2,600,000

0.76290%

Unsecured loans from a bank due on November 26, 2025

2,000,000

0.59639%2,000,000

0.59639%

Unsecured loans from a bank due on August 26, 2027

1,000,000

0.74500%

1,000,000

0.74500%

Unsecured loans from a bank due on November 26, 2025

2,000,000

0.60448%2,000,000

0.60448%

Unsecured loans from a bank due on August 26, 2027

1,000,000

0.51356%

1,000,000

0.51356%

Unsecured loans from banks due on November 26, 2025

4,200,000

0.64616%

4,200,000

0.64616%

Unsecured loans from banks due on August 26, 2027

1,500,000

0.29000%

1,500,000

0.29000%

Unsecured loans from a bank due on November 26, 2025

900,000

0.65123%900,000

0.65123%

Unsecured loans from a bank due on August 26, 2027

600,000

0.32630%

600,000

0.32630%

Unsecured loans from a bank due on November 26, 2025

1,300,000

0.64278%

1,300,000

0.64278%

Unsecured loans from a bank due on November 26, 2027

2,000,000

0.89209%2,000,000

0.89209%

Unsecured loans from a bank due on November 26, 2025

1,000,000

0.59499%

1,000,000

0.59499%

Unsecured loans from banks due on November 26, 2027

5,000,000

0.79571%

5,000,000

0.79571%

Unsecured loans from a bank due on November 26, 2025

500,000

0.56311%500,000

0.56311%

Unsecured loans from a bank due on November 26, 2027

1,800,000

0.75050%

1,800,000

0.75050%

Unsecured loans from banks due on February 26, 2026

4,000,000

0.74080%

4,000,000

0.74080%

Unsecured loans from banks due on November 26, 2027

1,700,000

0.70750%

1,700,000

0.70750%

Unsecured loans from banks due on February 26, 2026

2,500,000

0.59592%

2,500,000

0.59592%

Unsecured loans from banks due on November 26, 2027

2,500,000

0.52234%

2,500,000

0.52234%

Unsecured loans from banks due on February 26, 2026

800,000

0.37630%

800,000

0.37630%

Unsecured loans from banks due on November 26, 2027——

1,000,000

0.31630%

Unsecured loans from a bank due on February 26, 2026

500,000

0.39196%

500,000

0.39196%

Unsecured loans from a bank due on November 26, 2027——

750,000

0.29630%

Unsecured loans from banks due on February 26, 2026

1,500,000

0.17136%

1,500,000

0.17136%

Unsecured loans from a bank due on February 28, 2028

1,000,000

0.82130%

1,000,000

0.82130%

Unsecured loans from a bank due on May 26, 2026

2,500,000

0.63995%

2,500,000

0.63995%

Unsecured loans from a bank due on February 28, 2028

2,355,000

0.76241%

2,355,000

0.76241%

Unsecured loans from a bank due on May 26, 2026

1,100,000

0.65267%

1,100,000

0.65267%

Unsecured loans from banks due on February 28, 2028

1,500,000

0.78296%

1,500,000

0.78296%

Unsecured loans from banks due on May 26, 2026

3,600,000

0.60880%

3,600,000

0.60880%

Unsecured loans from a bank due on February 28, 2028

1,800,000

0.79642%1,800,000

0.79642%

Unsecured loans from a bank due on May 26, 2026

1,000,000

0.59614%1,000,000

0.59614%

Unsecured loans from a bank due on February 28, 2028

2,650,000

0.54205%2,650,000

0.54205%

Unsecured loans from a bank due on May 26, 2026

1,100,000

0.37000%

1,100,000

0.37000%

Unsecured loans from banks due on February 28, 2028

1,500,000

0.57365%

1,500,000

0.57365%

Unsecured loans from a bank due on May 26, 2026

1,500,000

0.25873%

1,500,000

0.25873%

Unsecured loans from banks due on February 28, 2028

1,000,000

0.17813%1,000,000

0.17813%

Unsecured loans from a bank due on August 26, 2026

2,700,000

0.67591%2,700,000

0.67591%

Unsecured loans from a bank due on February 28, 2028——

1,000,000

0.41000%

Unsecured loans from a bank due on February 28, 2028——

1,000,000

0.41000%

NOMURA REAL ESTATE MASTER FUND, INC.

NOMURA REAL ESTATE MASTER FUND, INC.

44

Message from the Management

Management Strategy

ESG Measures

Financing Status

Market Review

Portfolio

Financial Section

Information

NOTES TO FINANCIAL STATEMENTS
As of August 31, 2020
Amount(Thousands of Yen)

As of August 31, 2020

Weighted-averageinterest rate (Note 1)

Amount(Thousands of Yen)

As of February 28, 2021
Amount(Thousands of Yen)

Weighted-averageinterest rate (Note 1)

Weighted-averageinterest rate (Note 1)

Unsecured loans from a bank due on February 28, 2028——

500,000

0.39000%

Unsecured loans from a bank due on February 26, 2030

1,500,000

0.52446%

1,500,000

0.52446%

Unsecured loans from a bank due on February 28, 2028——

920,000

0.30000%

Unsecured loans from a bank due on February 26, 2030——

1,400,000

0.58630%

Unsecured loans from banks due on May 26, 2028

5,000,000

0.79880%

5,000,000

0.79880%

Unsecured loans from a bank due on February 26, 2030——

1,000,000

0.58630%

Unsecured loans from a bank due on May 26, 2028

2,000,000

0.75922%2,000,000

0.75922%

Unsecured loans from banks due on May 27, 2030

7,000,000

0.54630%

7,000,000

0.54630%

Unsecured loans from a bank due on May 26, 2028

1,550,000

0.55038%

1,550,000

0.55038%

Unsecured loans from a bank due on May 27, 2030

800,000

0.52630%

800,000

0.52630%

Unsecured loans from a bank due on May 26, 2028

500,000

0.54010%500,000

0.54010%

Unsecured loans from a bank due on May 27, 2030

1,000,000

0.53250%

1,000,000

0.53250%

Unsecured loans from banks due on May 26, 2028

2,000,000

0.54750%

2,000,000

0.54750%

Unsecured loans from a bank due on May 27, 2030

1,000,000

0.55988%

1,000,000

0.55988%

Unsecured loans from a bank due on May 26, 2028

1,400,000

0.40500%

1,400,000

0.40500%

Unsecured loans from a bank due on May 27, 2030

500,000

0.50485%

500,000

0.50485%

Unsecured loans from banks due on August 28, 2028

3,600,000

0.84750%

3,600,000

0.84750%

Unsecured loans from a bank due on May 27, 2030——

720,000

0.59399%

Unsecured loans from a bank due on August 28, 2028

500,000

0.61005%

500,000

0.61005%

Unsecured loans from banks due on August 26, 2030

2,000,000

0.56500%

2,000,000

0.56500%

Unsecured loans from banks due on August 28, 2028

1,000,000

0.62163%

1,000,000

0.62163%

Unsecured loans from a bank due on August 26, 2030

1,100,000

0.54500%

1,100,000

0.54500%

Unsecured loans from a bank due on August 28, 2028

500,000

0.62025%500,000

0.62025%

Unsecured loans from a bank due on August 26, 2030

300,000

0.54500%

300,000

0.54500%

Unsecured loans from a bank due on August 28, 2028

500,000

0.37500%

500,000

0.37500%

Unsecured loans from banks due on August 26, 2030——

500,000

0.52063%

Unsecured loans from a bank due on August 28, 2028

1,000,000

0.40380%

1,000,000

0.40380%

Unsecured loans from a bank due on August 26, 2030——

1,000,000

0.46000%

Unsecured loans from a bank due on August 28, 2028——

1,260,000

0.45375%

Unsecured loans from a bank due on October 28, 2030

1,100,000

1.92250%

1,100,000

1.92250%

Unsecured loans from banks due on November 27, 2028

2,000,000

0.81130%

2,000,000

0.81130%

Unsecured loans from a bank due on October 28, 2030

1,100,000

1.91700%

1,100,000

1.91700%

Unsecured loans from banks due on November 27, 2028

3,000,000

0.59375%

3,000,000

0.59375%

Unsecured loans from a bank due on November 26, 2030——

350,000

0.42630%

Unsecured loans from a bank due on November 27, 2028

1,800,000

0.50880%

1,800,000

0.50880%

Unsecured loans from a bank due on November 26, 2030——

500,000

0.53630%

Unsecured loans from a bank due on November 27, 2028

45

As of February 28, 2021
Amount(Thousands of Yen)

Weighted-averageinterest rate (Note 1)——

500,000

0.39380%

Unsecured loans from a bank due on February 26, 2031——

700,000

0.67750%

Unsecured loans from banks due on February 26, 2029

2,500,000

0.65880%

2,500,000

0.65880%

Unsecured loans from a bank due on February 26, 2031——

2,000,000

0.67750%

Unsecured loans from banks due on February 26, 2029

1,400,000

0.67098%

1,400,000

0.67098%

Unsecured loans from banks due on February 26, 2031——

4,000,000

0.67750%

Unsecured loans from a bank due on February 26, 2029

2,300,000

0.63692%

2,300,000

0.63692%

Unsecured loans from a bank due on February 26, 2031——

400,000

0.50000%

Unsecured loans from a bank due on February 26, 2029

500,000

0.63692%

500,000

0.63692%

Unsecured loans from a bank due on February 26, 2031——

420,000

0.65750%

Unsecured loans from a bank due on February 26, 2029

3,500,000

0.41815%3,500,000

0.41815%

Unsecured loans from a bank due on May 26, 2025 (Note 2)

646,900

2.17000%

625,500

2.17000%

Unsecured loans from a bank due on February 26, 2029

500,000

0.37000%

500,000

0.37000%

Unsecured loans from a bank due on May 26, 2025 (Note 2)

646,900

2.21812%625,500

2.21812%

Unsecured loans from a bank due on February 26, 2029——

500,000

0.49750%

Unsecured loans from banks due on May 28, 2029

5,000,000

0.64000%

5,000,000

0.64000%

Unsecured loans from a bank due on May 28, 2029

800,000

0.55190%

800,000

0.55190%

Unsecured loans from a bank due on May 28, 2029

500,000

0.26451%

500,000

0.26451%

Unsecured loans from a bank due on May 28, 2029

1,000,000

0.45875%

1,000,000

0.45875%

Unsecured loans from a bank due on May 28, 2029

1,000,000

0.44880%

1,000,000

0.44880%

Unsecured loans from banks due on May 28, 2029——

1,000,000

0.38500%

Unsecured loans from banks due on August 27, 2029

2,000,000

0.46130%

2,000,000

0.46130%

Unsecured loans from banks due on August 27, 2029

3,900,000

0.46130%

3,900,000

0.46130%

Unsecured loans from banks due on August 27, 2029

2,800,000

0.55845%2,800,000

0.55845%

Unsecured loans from banks due on August 27, 2029

1,600,000

0.48380%

1,600,000

0.48380%

Unsecured loans from a bank due on August 27, 2029

1,500,000

0.48380%

1,500,000

0.48380%

Unsecured loans from a bank due on August 27, 2029

500,000

0.46380%

500,000

0.46380%

Unsecured loans from banks due on August 27, 2029——

1,000,000

0.43880%

Unsecured loans from a bank due on November 26, 2029

2,000,000

1.12506%

2,000,000

1.12506%

Unsecured loans from a bank due on November 26, 2029

2,000,000

1.12506%

2,000,000

1.12506%

Unsecured loans from a bank due on November 26, 2029

1,200,000

0.59500%

1,200,000

0.59500%

Unsecured loans from a bank due on November 26, 2029

1,000,000

0.59500%

1,000,000

0.59500%

Unsecured loans from a bank due on November 26, 2029

750,000

0.48000%

750,000

0.48000%

Unsecured loans from a bank due on November 26, 2029

500,000

0.59500%

500,000

0.59500%

Unsecured loans from a bank due on November 26, 2029

2,000,000

0.50630%

2,000,000

0.50630%

Unsecured loans from a bank due on November 26, 2029——

750,000

0.47380%

Unsecured loans from banks due on November 26, 2029——

4,000,000

0.54904%

Unsecured loans from banks due on February 26, 2030

4,250,000

0.52000%

4,250,000

0.52000%

Unsecured loans from a bank due on February 26, 2030

1,500,000

0.48000%

1,500,000

0.48000%

Unsecured loans from a bank due on February 26, 2030

600,000

0.40915%600,000

0.40915%

Unsecured loans from a bank due on February 26, 2030

500,000

0.34054%500,000

0.34054%

Unsecured loans from banks due on February 26, 2030

1,300,000

0.59482%

1,300,000

0.59482%

NOMURA REAL ESTATE MASTER FUND, INC.

Total

424,748,800

427,081,000

Note 1: T he 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 for the borrowings,
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 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.

NOMURA REAL ESTATE MASTER FUND, INC.

46

Message from the Management

Management Strategy

ESG Measures

Financing Status

Market Review

Portfolio

Financial Section

Information

NOTES TO FINANCIAL STATEMENTS
The scheduled repayment amounts of long-term debt for each of the five years after the balance sheet date (excluding the current
portion of long-term debt) are as follows.
1-2 years
55,090,600
58,615,600

As of August 31, 2020
As of February 28, 2021

2-3 years
64,435,600
50,765,600

Thousands of Yen
4-5 years
48,387,000
52,694,200

3-4 years
39,035,600
44,435,600

9. INVESTMENT CORPORATION BONDS

The movement in the allowance for temporary difference adjustments on the Balance Sheet was as follows:
For the period from March 1, 2020 to August 31, 2020
1. Reason, related assets and amounts
Thousands of Yen

Related assets, etc.

Details of investment corporation bonds outstanding are summarized as follows.
As of August 31, 2020
Amount(Thousands of Yen)

11. ALLOWANCE FOR TEMPORARY DIFFERENCE ADJUSTMENTS

As of February 28, 2021

Interest rate (Note 1)

Amount(Thousands of Yen)

Interest rate (Note 1)

ReasonAllowance set
aside during
period17,355,854

9,669,084

1,740,727—

11,409,812—

Land, buildings,
etc.

Merger expenses

4,029,135

1,328,228(5,534)—

1,322,694—

Deferred gains orlosses on hedges

Loss on interestrate swaps
recognized at theend of the fiscal
period0.87%

3,000,000

0.87%

NOF’s 10th series of unsecured investment corporation bonds dueon November 25, 2024

6,000,000

1.02%

6,000,000

1.02%

NMF’s 2nd series of unsecured investment corporation bonds dueon November 16, 2027

2,000,000

0.59%

2,000,000

0.59%

NOF’s 7th series of unsecured investment corporation bonds due
on March 17, 2028

4,500,000

2.90%

4,500,000

2.90%

NMF’s 4th series of unsecured investment corporation bonds due
on September 20, 2029(green bonds)

3,000,000

0.53%

3,000,000

0.53%

NMF’s 6th series of unsecured investment corporation bonds due
on August 14, 2030(green bonds)

7,000,000

0.54%

7,000,000

0.54%

NMF’s 3rd series of unsecured investment corporation bonds due
on May 21, 2038

1,500,000

1.03%

1,500,000

1.03%(1) Amortization of goodwill
In principle, amortization of goodwill is not reversed.

5,000,000

0.90%

5,000,000

0.90%(2) Merger expenses

32,000,000

Increase - subtotal
Total

Thousands of Yen
1-2 years

2-3 years

As of August 31, 2020——

As of February 28, 2021——

3-4 years

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 theInvestment Trust Act.

—

(122,481)

783,330—

11,903,126

1,735,193(122,481)

13,515,837——

11,903,126

1,735,193(122,481)

13,515,837—

Method of reversal

Buildings, etc.

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

Land

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

Buildings in trust, etc.

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

Land in trust
Leasehold rights
Leasehold rights in trust

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 September 1, 2020 to February 28, 2021
1. Reason, related assets and amounts
Thousands of Yen

Related assets, etc.
Goodwill

ReasonAmortization of
goodwill

Land, buildings, etc. Merger expenses

Deferred gains orlosses on hedges
Increase - subtotal
Total

NOMURA REAL ESTATE MASTER FUND, INC.

905,812Item

The scheduled redemption amounts of investment corporation bonds for each of the five years after the balance sheet date are as
follows.
Within a year

2,867,594

Changes infair value ofderivativetransactions

2. Method of reversal

32,000,000

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

Reason forreversalAmortization of
goodwill

3,000,000

Total

Balance at theReversalend of current
during period
periodGoodwill

Former NMF’s 1st series of unsecured investment corporation
bonds due on October 30, 2024

NMF’s 5th series of unsecured investment corporation bonds due
on September 20, 2039

47

Initial amount

Balance at theend of previous
periodLoss on interestrate swaps
recognized at theend of the fiscal
periodInitial amount

Balance at theend of previous
periodAllowance set
Balance at theReversalaside during
end of current
during period
periodperiod19,978,097

11,409,812

1,783,145—

13,192,958—

4,029,135

1,322,694(5,515)—

1,317,179—

Reason forreversal

2,867,594

783,330—(299,087)

484,242

Changes infair value ofderivativetransactions—

13,515,837

1,777,630(299,087)

14,994,380——

13,515,837

1,777,630(299,087)

14,994,380—

NOMURA REAL ESTATE MASTER FUND, INC.

48

Message from the Management

Management Strategy

ESG Measures

Financing Status

Market Review

Portfolio

Financial Section

Information

NOTES TO FINANCIAL STATEMENTS
corporation does not satisfy all of the requirements, the entire taxable income of the investment corporation will be subject toregular corporate income taxes.

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

Since the Company distributed in excess of 90% of its distributable income in the form of cash distributions totaling ¥15,701,616
thousand for the fiscal period ended February 28, 2021, such distributions were treated as deductible distributions for purposes ofcorporate income taxes.

(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.

The following summarizes breakdown of deferred tax assets and liabilities:
Thousands of Yen

For the period fromMarch 1, 2020 toAugust 31, 2020

Upon sale, etc., the corresponding amount is scheduled to be reversed.
Deferred tax asset:
Valuation difference on other assets acquired by merger(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 INFORMATION
For the period fromMarch 1, 2020 toAugust 31, 2020

For the period from
September 1, 2020 toFebruary 28, 2021

Net assets per unit

132,657

132,129

Net income per unit

2,714

2,760

For the period fromMarch 1, 2020 toAugust 31, 2020

110,536

Unearned revenue

58,79840,685

Write-offs for long-term prepaid expenses

6,268

3,237

Depreciation costs of trust leasehold rights

1,581

1,702

233

22

Subtotal

20,185,125

19,873,932

Valuation allowance(20,185,125)(19,873,932)

—

—

—

—

—

—

Total deferred tax assets
Net deferred tax assets

The following summarizes the significant differences between the statutory tax rate and the effective tax rate.
For the period fromMarch 1, 2020 toAugust 31, 2020

For the period from
September 1, 2020 toFebruary 28, 2021

12,799,540

13,016,610

Amount not available to ordinary unitholders (Thousands of Yen)——

Net income available to ordinary unitholders (Thousands of Yen)

12,799,540

13,016,610

Average number of units during the period (Units)

4,715,200

4,715,200

13. RELATED PARTY TRANSACTIONS
For the periods from March 1, 2020 to August 31, 2020 and from September 1, 2020 to February 28, 2021
Parent Company and major corporate unitholders
Not applicable
Subsidiaries and affiliates
Not applicable
Fellow subsidiary companies
Not applicable
Directors and major individual unitholders
Not applicable

14. INCOME TAXESThe 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 February 28, 2021. 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 such amounts. If the investment
NOMURA REAL ESTATE MASTER FUND, INC.

19,717,747

152,343

Total non-current deferred tax assets

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.

49

19,965,899

Deferred gains or losses on hedges

Non-deductible accrued enterprise tax

The net asset values per unit and the net income per unit as of August 31, 2020 and February 28, 2021 were as follows:

Net income (Thousands of Yen)

For the period from
September 1, 2020 toFebruary 28, 2021

For the period from
September 1, 2020 toFebruary 28, 2021

Statutory tax rate

31.46%

31.46%

Deductible cash distributions(35.81%)(35.72%)

Valuation of allowance(2.07%)(2.07%)

Amortization of goodwill

6.44%

6.34%

Other

0.00%

0.00%

Effective tax rate

0.03%

0.01%

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 tosecure 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 therepayment of debts and redemption of investment corporation bonds. The Company is exposed to liquidity risk of being unable
to meet its obligations on scheduled due dates. The Company controls and limits such risk by diversifying not only the financial
institutions, but also the type of financing to include the effective use of surplus funds and direct financing from the capital
markets such as issuance of investment units. In addition, the Company is exposed to the market risk arising from fluctuations ininterest rates on its floating-rate debt. However, the effect of such risk on the operation of the Company is limited 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 floatingrate debt by swapping such floating-rate interest payments for fixed-rate interest payments.

NOMURA REAL ESTATE MASTER FUND, INC.

50

Message from the Management

Management Strategy

ESG Measures

Financing Status

Market Review

Portfolio

Financial Section

Information

NOTES TO FINANCIAL STATEMENTS
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.

Note 3: R edemption schedule for cash and bank deposits as of August 31, 2020

Thousands of Yen(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 priceavailable, fair value is reasonably estimated. Certain assumptions are used for the estimation of fair value. Accordingly, the resultof such estimation may change if different assumptions are used. Furthermore, the contractual amounts of derivativetransactions stated in “23. Derivatives and Hedge Accounting” below do not represent the market risk involved in these derivativetransactions.
Fair Value of Financial Instruments

Due within
one year
Cash and bank deposits
Total

Fair value (Note 1)

75,166,359—(ii) Current portion of long-term debt

(61,135,600)(61,355,060)

219,460(iii) Investment corporation bonds(32,000,000)(32,359,594)

359,594(iv) Long-term debt

(424,748,800)(431,174,794)

6,425,994(487,237)(487,237)—

For the period from September 1, 2020 to February 28, 2021
The following table summarizes the carrying value and the estimated fair values of financial instruments as of February 28, 2021.
Thousands of Yen
Fair value (Note 1)

Difference(i) Cash and bank deposits

63,840,679

63,840,679—(ii) Current portion of long-term debt

(58,760,600)(58,897,834)

137,234(iii) Investment corporation bonds(32,000,000)(32,076,827)

76,827(iv) Long-term debt

(427,081,000)(432,301,445)

5,220,445(352,590)(352,590)—(v) Derivative transactions

75,166,359

—

—

—

—

—

75,166,359

—

—

—

—

—

After three years,
within four years

After four years,
within five years

After one year,
within two years

After two years,
within three years

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 is reported as the fairvalue.
(ii) Current portion of long-term debt and (iv) 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 the market interest
rates within a short-term period. (However, the fair value of certain floating-rate long-term debt that qualifies for the special treatment of interest-rate swaps (see “22.
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.
(iii) Investment corporation bonds
The fair value of investment corporation bonds issued by the Company is determined based on their market prices.
(v) Derivative transactions
See “22. Derivatives and Hedge Accounting.”

After five years

63,840,679

—

—

—

—

—

63,840,679

—

—

—

—

—

After one year,
within two years

After two years,
within three years

After three years,
within four years

After four years,
within five years

Due within
one yearDifference

75,166,359

Carrying value (Note 1)

After five years

Note 4: Redemption schedule for debt as of August 31, 2020(i) Cash and bank deposits(v) Derivative transactions

After four years,
within five years

Thousands of Yen

Thousands of Yen
Carrying value (Note 1)

After three years,
within four years

Due within
one yearTotal

The following table summarizes the carrying value and the estimated fair values of financial instruments as of August 31, 2020.

After two years,
within three years

Redemption schedule for cash and bank deposits as of February 28, 2021

Cash and bank deposits

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

After one year,
within two years

Thousands of Yen
After five years

Investment corporation bonds

—

—

—

—

9,000,000

23,000,000

Long-term debt

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

After one year,
within two years

After two years,
within three years

After three years,
within four years

After four years,
within five years

Total

Redemption schedule for debt as of February 28, 2021

Thousands of Yen
Due within
one year

After five years

Investment corporation bonds

—

—

—

9,000,000—

23,000,000

Long-term debt

58,760,600

58,615,600

50,765,600

44,435,600

52,694,200

220,570,000

58,760,600

58,615,600

50,765,600

53,435,600

52,694,200

243,570,000

Total

16. INVESTMENT AND RENTAL PROPERTIESThe Company owns leasable office, leasable retail facilities, leasable logistics facilities, leasable residential (including land) in Greater
Tokyo area and other areas for the purpose of earning revenue from leasing. The following table summarizes the carrying value andthe estimated fair value of these properties.
Thousands of Yen

For the period fromMarch 1, 2020 toAugust 31, 2020

For the period from
September 1, 2020 toFebruary 28, 2021

Carrying value
Balance at beginning of the period
Amount of increase (decrease) during the period

1,017,019,350

1,035,946,025

18,926,674

12,971,818

Balance at end of the period

1,035,946,025

1,048,917,843

Fair value at end of the period

1,185,682,000

1,205,558,000

Note 1: T he 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 Hamamatsucho (¥4,445,043
thousand), GEMS Sangenjaya (¥1,836,687 thousand), Landport Higashi-Narashino (¥12,025,405 thousand), PROUD FLAT Togoshi-Koen (¥2,670,972 thousand). The decreaseduring the previous period is mainly attributable to depreciation expenses (¥5,363,528 thousand). The increase during the current period is mainly attributable to the acquisitionof Landport Ome II (¥14,888,784 thousand). The decrease during the current period is mainly attributable to the sale of Mitsubishi Motors Katsushika (a part of the land area)(¥37,695 thousand) as well as depreciation (¥5,474,834 thousand).
Note 3: F air 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 February 28, 2021 are presented in “18. Breakdown of Real
Estate Rental Revenues and Expenses.”

51

NOMURA REAL ESTATE MASTER FUND, INC.

NOMURA REAL ESTATE MASTER FUND, INC.

52

Message from the Management

Management Strategy

ESG Measures

Financing Status

Market Review

Portfolio

Financial Section

Information

NOTES TO FINANCIAL STATEMENTS
17. SEGMENT INFORMATION

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

For the periods from March 1, 2020 to August 31, 2020 and from September 1, 2020 to February 28, 2021

For the period 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.

For the period from September 1, 2020 to February 28, 2021

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.

Thousands of Yen

Mitsubishi Motors Katsushika (a part of the land area)
Proceeds from sales of real estate
Cost of sales of real estate
Other related sales expenses
Loss on sales of real estate

35,012
37,695
3,562

6,245

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 geographicalbreakdown of revenues has been omitted.
(2) Property and equipment

3. Information about major clients
For the period from March 1, 2020 to August 31, 2020
Customer name

Revenues (Thousands of Yen)

Related segment name

Nomura Real Estate Partners Co., Ltd.

5,400,637

Rental real estate business

Customer name

Revenues (Thousands of Yen)

Related segment name

Nomura Real Estate Partners Co., Ltd.

5,312,679

Rental real estate business

For the period from September 1, 2020 to February 28, 2021

Real estate rental revenues and expenses for the fiscal period ended August 31, 2020 and February 28, 2021 consist of thefollowing:Thousands of Yen

NOMURA REAL ESTATE MASTER FUND, INC.

For the period fromMarch 1, 2020 toAugust 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

For the period from September 1, 2020 to February 28, 2021
Losses related to assets damaged by the 2021 Fukushima Earthquake totaling ¥31,000 thousand are recorded as loss on disaster.

21. LEASESThe future minimum rental revenues from tenants under non-cancelable operating lease of properties as of August 31, 2020 and
February 28, 2021 are summarized as follows:
Thousands of Yen

As of August 31, 2020

For the period from
September 1, 2020 toFebruary 28, 2021
38,064,606
35,172,568
32,764,268
2,408,300
2,892,037
631,536
1,987,428
273,072
15,973,489
1,837,680
1,013,518
3,110,231
1,561,738
44,5761,510,977
206,564
5,482,712
1,205,488
22,091,116

As of February 28, 2021

Due within one year

36,427,540

Due after one year

75,591,563

76,658,145

112,019,104

112,781,654

Total

18. BREAKDOWN OF REAL ESTATE RENTAL REVENUES AND EXPENSES

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For the period from March 1, 2020 to August 31, 2020
Not applicable.

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.

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 maintenanceLand rents
Depreciation
Other rental expenses
Real estate rental profits

20. BREAKDOWN OF EXTRAORDINARY LOSS

36,123,509

22. DERIVATIVES AND HEDGE ACCOUNTING
Derivative transactions as of August 31, 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

Notional amount (Note 1)

Hedge accounting
methodType of derivative
instruments

Principal treatment
methodInterest-rate swaps:
Received/floating
and paid/fixedLong-term debt

78,130,000

58,730,000

Interest-rate swaps:
Special treatment ofReceived/floatinginterest-rate swaps
and paid/fixedLong-term debt

51,639,700

34,846,900

129,769,700

93,576,900

Total

Main hedged item

Due after one year

Fair value (Note 2)(487,237)(Note 3)(647,406)(Note 4)

(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.

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NOTES TO FINANCIAL STATEMENTS
Derivative transactions as of February 28, 2021

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

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

(2) Derivative financial instruments subject to hedge accounting were as follows:
Thousands of Yen

Hedge accounting
methodType of derivative
instruments

Principal treatment
methodInterest-rate swaps:
Received/floating
and paid/fixedLong-term debt

Interest-rate swaps:
Special treatment ofReceived/floatinginterest-rate swaps
and paid/fixedLong-term debt

Main hedged item

Total

Notional amount (Note 1)
Due after one year
70,210,000

41,830,000

42,868,300

34,825,500

113,078,300

76,655,500

1. Reason for provision, related assets and amounts
Thousands of Yen

Fair value (Note 2)(352,590)(Note 3)(518,329)(Note 4)(870,920)

Related assets, etc.

Reason for provision

Goodwill

Amortization of goodwill

Long-term deposits

Shortfall of reserve for repairs

Provision of allowancefor temporary difference adjustments
2,622,242
5,835

Increase-subtotal

2,628,078

Buildings, facilities, etc.

Depreciation deficiency equivalent(761,508)

Unearned revenue

Write-down of loss on interest rate swap due to merger(74,207)

Others—(14,732)

Decrease-subtotal

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, (¥1,236 thousand) is booked as “accrued expenses” on the Balance Sheet.
Note 4: Out of the fair value, (¥518,329 thousand) is not marked to market on the Balance Sheet, since adopting special treatment for interest-rate swaps.

(850,448)

Total

1,777,630

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

23. CASH DISTRIBUTIONS
For the period fromMarch 1, 2020 toAugust 31, 2020
1. Retained earnings at end of period
2. Distributions in excess of retained earnings

13,583,176,757

For the period from
September 1, 2020 toFebruary 28, 2021
13,503,646,955

2,843,265,600

2,682,948,800

Of which, allowance for temporary difference adjustment

1,777,630,400

1,763,484,800

Of which, other distributions in excess of net income

1,065,635,200

919,464,000

299,087,803

132,888,372

299,087,803

132,888,372

15,640,318,400

15,701,616,000(3,317)(3,330)12,797,052,800

13,018,667,200

3. Incorporation into unitholders’ capital
Of which, reversal of allowance for temporary difference adjustments
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)]
5. Retained earnings carried forward(2,714)(2,761)

1,777,630,400

1,763,484,800

(377)

(374)

1,065,635,200

919,464,000

(226)

(195)

487,036,154

352,091,383

Related assets, etc.

Reason for reversal

Land, Buildings, etc.

Sale and depreciation of properties for which merger
expenses were recorded

Deferred gains or losses on hedges

Changes in fair value of derivatives

Provision of allowancefor temporary difference adjustments—(Note 1)

(299,087)

Total(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 andamounts.”

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.

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.
For the fiscal period under review, NMF decided to implement a total of ¥15,701,616,000 in distributions (¥3,330 per investmentunit). This figure was arrived at by adding to ¥13,016,610,801 in net income after taxes ¥2,622,242,820 in amortization of goodwill,
and by adding ¥62,762,379 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 ¥13,018,667,200 (¥2,761 per investment unit). Distribution in excess
of net income comprises a distribution of ¥1,763,484,800 (¥374 per investment unit) as allowance for temporary difference
adjustment and ¥919,464,000 (¥195 per investment unit) in other distribution in excess of net income.

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NOTES TO FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORTFor the period from September 1, 2020 to February 28, 2021
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
Land
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
Cost of sales of land—

Provision of allowancefor temporary difference adjustments
2,622,242
6,013
2,628,256(792,086)(57,573)(134)(14,976)(864,771)
1,763,484

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

Related assets, etc.

Reason for reversal

Land, Buildings, etc.

Sale and depreciation of properties for whichmerger expenses were recorded

Deferred gains or losses on hedges

Changes in fair value of derivatives

Provision of allowancefor temporary difference adjustments—(Note 1)(132,888)

Total(132,888)

Note 1: The amount of reversal during the current fiscal period (¥5,533 thousand) is included in “Depreciation deficiency equivalent” on “1. Reasons for provision, related assets andamounts.”

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

Method of reversal

Buildings, etc.

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

Land

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

Buildings in trust, etc.

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

Land in trust, etc.
LeaseholdUpon sale, the corresponding amount is scheduled to be reversed.

Leasehold in trust(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.

25. SIGNIFICANT SUBSEQUENT EVENTS
Not applicable.

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INDEPENDENT AUDITOR’S REPORT59

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