[For Translation Purposes Only]
December 19, 2017
For Immediate Release
To Whom It May Concern

Nomura Real Estate Master Fund, Inc.
Securities Code: 3462
Shuhei Yoshida, Executive Director
Asset Management Company:
Nomura Real Estate Asset Management Co., Ltd.
Norio Ambe, President & Chief Executive Officer
Inquiries:
Ken Okada
Director and Managing Executive Officer
TEL +81-3-3365-8767 nmf3462@nomura-re.co.jp

Notice Concerning Property Acquisition
and Commencement of Asset Management in New Sector
Nomura Real Estate Master Fund, Inc. (“Nomura Master Fund” or the “Fund”) announced the decision made today
by Nomura Real Estate Asset Management Co., Ltd. (the “ Asset Management Company”), a licensed investment trust
management company retained by the Fund to provide asset management services, that it will acquire asset (the“Acquisition”) and commence the asset management of hotels, as described below.

1．Overview of the Acquisition
Property Name

Use

(Scheduled)
Date ofAgreement(Scheduled)
Date of
Acquisition

Seller(Scheduled)
Acquisition Price(¥million)(Note 1)

Watermark Hotel
SapporoHotels

December 20,
2017

March 5,
2018

Watermark
Hotel
Japan
Co., Ltd.

3,600(Note 1) The amount excluding acquisition related costs, property tax, city planning tax, consumption tax and local consumption tax isstated.
(Note 2) The asset to be acquired is an actual real estate.
(Note 3) The asset to be acquired is scheduled to be acquired using cash on hand.

2．Reasons for the Acquisition
The Fund determined that acquiring the property would help secure stable earnings and steady growth of
the Fund’s investment assets over the medium to long term, in line with the asset management objectives andpolicies specified in the Fund’s Articles of Incorporation. As such, t he Fund decided to acquire the property.
In conjunction with the acquisition of the property, the Fund revised a portion of its asset management
guidelines because said acquisition will position the Fund to commence investment in hotels. For more details,
please also see a press release issued by the Fund on December 19, 2017, under the title “Notice Concerning thePartial Revision of Asset Management Guidelines.”
The main strengths of the property to be acquired are as follows:－ １ －・ Easily accessible, a four-minute walk from Susukino station on the Sapporo Municipal Subway Nanboku Lineor a seven-minute walk from Odori Station on the Sapporo Municipal Subway Nanboku, Toho and Tozai lines.
Also, it is near the Susukino area, the city’s busiest entertainment district, while as well as being very close to
the Odori area, which serves as the city’s business hub. Therefore, the property is thus well-positioned towelcome businesspeople in need of accommodation while also attracting sightseers from elsewhere in Japanand overseas. Moreover, the property is located on the Tanukikoji Shopping Street, an extensive arcadeaffording easy access to shops in all seasons.
・ The property’s guest rooms comprise 72 large 15 m2 single rooms, as well as 81 double/twin rooms (including
a number of universal access rooms) with floor space ranging from 17 m 2 to 21 m2. Unlike typical domestic
hotels targeting businesspeople, in which the bathtub, toilet and washbasin are crammed into a single spacesaving modular bathroom, each guest room boasts a well-appointed bathroom with discrete fittings. The hotel’s
rooms thus boast superior functionality while providing guests with a feeling of luxury. Compared with similar
accommodation facilities in the city, the property is positioned to secure greater commercial opportunities
thanks to these competitive advantages.
・ Only Tokyo’s 23 wards have higher net immigration(Note) figures than Sapporo, and the city’s population issteadily rising. Accordingly, Sapporo is one of Japan’s few regional municipal bodies boasting significant growthpotential as well as stable business opportunities. In addition, New Chitose Airport has recently completed therenovation of its terminal buildings and increased the number of domestic and international flights it handles.
Reflecting the increasing number of tourists visiting Sapporo, sightseeing-related demand, including inboundmarketing demand, is expected to grow.
・ As of the issuance date of this press release, Watermark Hotel Japan Co., Ltd. is serving as the hotel operator
for the property. However, plans call for replacing the operator, commissioning Vista Hotel Management Co.,
Ltd. to take over. Vista Hotel Management, a company that maintains a network of 10 Vista brand hotels inregions nationwide, boasts a wealth of expertise in hotel operations as well as familiarity with local market
conditions in Sapporo. Once Vista Hotel Management takes over, the Fund expects it to execute robust
rebranding. In addition, the Fund intends to lease the property to Vista Hotel Management under a leasing
scheme that combines fixed and variable rents, with the aim of securing stable revenues while pursuing upside
potential.
(Note) Based on the Report on Internal Migration in Japan Derived from the Basic Resident Registration, compiled by Statistics Bureau, Ministry ofInternal Affairs and Communications, to determine the number of people (by gender) who have recently immigrated or emigrated
within or beyond prefectural boundaries; 2016 reporting data includes nationwide totals, figures broken down by prefecture andfigures for the nation’s 21 major cities.

3．Summary of Asset to Be Acquired
Property Name
Type of AssetRegistry
Location(Note 1)StreetAccessCompletion Date(Note 1)
Use (Note 1)
Structure (Note 1)
Architect
Builder
Building Inspection Agency
Land
Area(Note 1)
Floor Area
Land
Type ofOwnership
Building
Building Coverage Ratio
Floor Area Ratio
Collateral

Watermark Hotel Sapporo
Real estate
5-16 Minamisanjonishi , Chuou Ward, Sapporo City, and other 2 lots
5-16 Minamisanjonishi , Chuou Ward, Sapporo City
4 minutes’ walk from Susukino Station; 5 minutes’ walk from Odori Station
on Subway Nanboku Line
5 minutes’ walk from Odori Station on Subway Nanboku Line, Subway Toho
Line and Subway Tozai Line.
3 minutes’ walk from Tamukikoji Station on Sapporo Streetcar
March 25, 2008
HotelsRC 13F
Living Corporation Inc.
Toda Corporation Sapporo Branch
Building Official of Sapporo City
553.20 m2
4,348.23 m2
Ownership
Ownership
100% (Note 2)
800%
None

－ ２ －

Property Management Company(Note 3)JLL Japan Inc.

Master Leasing Company
Type of Master Leasing

0.09％
Seismic Risk (PML)(Based on a November 2017 Earthquake PML Appraisal Report by(Note 4)
SOMPO RISK MANAGEMENT & HEALTH CARE Inc.)
Notes
Acquisition Price (Scheduled)¥3,600 million¥3,850 million（Based on the capitalization approach as of November 1,
Appraisal Value and Method
2017）（Appraiser: Japan Valuers Co., Ltd.）
Appraisal NOI(Note 5)¥184 million
Leasing Status (As of scheduled acquisition date) (Note 6)
Total Number of Tenants
2
Name of Tenants
Vista Hotel Management Co., Ltd. etc.
Hotel Operator
Watermark Hotel Japan Co., Ltd. (Note 7)
Undisclosed
Fixed Hotel Rents
Undisclosed
Total Rental Income(Annual)
Variable Hotel Rents
Depends on GOP(Note 8)
Security Deposits
Undisclosed
Occupancy Rate
Total Leased Floor Space
4,425.36 m2
Total Leasable Floor Space
4,425.36 m2
August,August,August,August,August,
2013
2014
2015
2016
2017
Historical Occupancy Rates(Note 9)(Note 1) Location and Other Items
Location (registry), Completion Date, Use, Structure and Area are based on the information in the real estate registry.
(Note 2) Building Coverage Ratio
The Property is located in a commercial district where the building coverage ratio is 80% in principle. As the building is fire
resistant in a fire zone, however, an increased ratio of 100% applies.
(Note 3) Property Management Company
Refers to the property management company that is scheduled to be appointed after acquisition.
(Note 4) PML (Probable Maximum Loss)PML shows the probable losses caused by a major earthquake, as a percentage of the expected recovery cost to thereplacement cost. PML is calculated based on the statistical assumption that within next 475 years there is a 0.211% annual
chance (10% probability of once every 50 years, i.e., average life time of buildings) of major earthquake occurring.
(Note 5) Appraisal NOI“Appraisal NOI” is the annual NOI (operating income-operating expenses) described in the real estate appraisal report,with November 1, 2017 as the appraisal date.
(Note 6) Leasing Status“Total Number of Tenants” is presented based on a fixed-term lease contract that is expected to go into effect on the dateof acquisition.
“The Name of the Tenant” is presented based on a fixed-term lease contract that is expected to go into effect on the date ofacquisition.
“Rental Revenues,” are undisclosed as Nomura Master Fund has not received permission from the tenant to reveal such data.
“Security Deposits” are undisclosed, as Nomura Master Fund has not received permission from the tenant to reveal suchdata.
“Total Leased Floor Space” indicates the total floor space presented in a fixed-term lease contract that is expected to go into
effect on the date of acquisition.
(Note 7) Hotel Operator
As of the issuance date of this press release, Watermark Hotel Japan Co., Ltd. is serving as the hotel operator. Vista HotelManagement Co., Ltd. is scheduled to be a tenant of the property as of the acquisition date. However, Watermark Hotel
Japan Co., Ltd. will be remained as the hotel operator entrusted by Vista Hotel Management Co., Ltd. which will take over
the operation in the future.
(Note 8) GOP
GOP is the sum of revenues from hotel operations (revenues from guest room operation and other departments) less cost
items, which consist of the cost of sales (accommodation and other costs), personnel expenses (associated with guest room
staff and part-time employees), operational expenses (operational fees and commissions, outsourcing expenses associatedwith facility cleaning and other tasks, and the cost of linens and expendables used by guests) and other expenses (expenses
associated with advertising and utilities in addition to facility management, repair and maintenance expenses borne by thetenant). Although the amount of “Variable Hotel Rents” depends on the GOP figure recorded by the property’s hotel, nofurther detail can be disclosed as Nomura Master Fund has not received permission from the tenant to reveal such data.
(Note 9) Historical Occupancy Rates
As of today, both the occupancy rate and the historical occupancy rate are not applicable as the property is single used by
the Seller as business real estate and is not rented to any third parties.

－ ３ －4. Seller Profile
Company Name
Watermark Hotel Japan Co.,Ltd.
Head Office
6-8-1 Nishi-Shinjuku, Shinjuku Ward, Tokyo
Representative
Representative Director, Jun Yamamoto
Principal Business
Hotel Management and Operation
Capital¥ 90 million (as of October 31, 2017）
Established
June 8, 2006
Net Assets¥ 851.71 million（as of July 31, 2017）
Total Assets¥ 1,158.89 million（as of July 31, 2017）
Major Shareholder
H.I.S. Hotel Holdings Co., Ltd.（100.0％）(Stockholding Ratio)（as of October 31, 2017）
Relationships with the Fund and/or the Asset Management Company
There is no capital involvement between the said company and the Fund or asset
management company. There is also no capital involvement between related
Capitalparties of the said company and related parties of the Fund or asset managementcompany.
There is no personnel involvement between the said company and the Fund or
asset management company. There is also no personnel involvement between
Personnel
related parties of the said company and related parties of the Fund or asset
management company.
There is no transaction between the said company and the Fund or asset
Transactions
management company. There is also no transaction between related parties ofthe said company and related parties of the Fund or asset management company.
The said company is not considered a directly associating party of the Fund.
Related Party
Also, the said company is not considered a Related Party, etc., of the asset
Statusmanagement company under the Investment Trusts Act.

5．Status of Owners
There is no special relationship of interest between the seller and the Fund or the Asset Management Company
for the acquisition of the property.

6．Broker Profile
Company Name
Mitsubishi Real Estate Services Co.,Ltd.
Head Office2-2-1 Otemachi, Chiyoda Ward, Tokyo
Principal BusinessPresident & CEO Yutaka Tajima
Representative
Real State Agency and Brokerage Business
Capital¥ 2.4 billion（as of April 1, 2017）
Established
December 20, 1972
Relationships with the Fund and/or the Asset Management Company
There is no capital involvement between the said company and the Fund or asset
management company. There is also no capital involvement between related
Capitalparties of the said company and related parties of the Fund or asset managementcompany.
There is no personnel involvement between the said company and the Fund or
asset management company. There is also no personnel involvement between
Personnel
related parties of the said company and related parties of the Fund or asset
management company.
There is no transaction between the said company and the Fund or asset
management company. There is also no transaction between related parties ofTransactions
the said company and related parties of the Fund or asset management company.
The said company is not considered a directly associating party of the Fund.
Related Party
Also, the said company is not considered a Related Party, etc., of the asset
Statusmanagement company under the Investment Trusts Act.
The brokerage fee is not disclosed due to the fact that the broker’s consent toBrokerage Fee
disclosure has not been obtained.

－ ４ －7．Transaction with Related Parties
There is no special relation between the said company and the Fund or the Asset Management Company forthis transaction.

8. Form of Payment, etc.
(1) Settlement Method
The Fund will complete settlement on the date of acquisition by paying the agreed price for the property in full tothe seller using cash on hand.
(2) Impact on the Financial Standing of the Fund of a Possible Failure to Fulfill Our Forward Commitment
A real estate transfer contract to be executed in connection with the acquisition of the property is considered aforward commitment(Note) as stipulated in the Financial Services Agency’s Comprehensive Guidelines for Supervisionof Financial Instruments Business Operators, etc. Provisions contained in said transfer contract will include thefollowing cancelation clauses.
(Note)

Property transfers and other forward-dated contracts. In general, the date of settlements and transfers of ownership stipulated ina forward commitment is one month after the signing of the contract or later.

① Whenever a seller or buyer is found to be in significant violation of the provisions of the transfer contract(hereinafter such seller or buyer shall be referred to as the “violating party”), the other party may cancel thetransfer contract if such violation is not remedied after the passage of a prescribed period following the date of
the non-violating party issuance of a notification requiring the violating party to fulfill its obligation or if such
violation is deemed impossible to remedy.
② If the transfer contract is cancelled in accordance with clause ① above, the non-violating party may
require the violating party to pay a penalty charge that is equivalent to 20% of the acquisition price. A nonviolating party intending to cancel a contract may not increase or decrease the amount of the penalty charge
even if monetary damage it has suffered due to the violation is in excess of or falls short of 20% of theacquisition price.
③ The buyer may consult with the seller to change the acquisition price if (i) it is facing a radical fluctuation insuch external conditions as the financial, currency exchange, political or economic environments at home or abroador has recognized a precursor to such fluctuation prior to the date of acquisition or (ii) the appraisal value of theproperty to be acquired as presented in an appraisal report commissioned by the buyer prior to the date ofacquisition falls short of the acquisition price. In such cases, the buyer may cancel the transfer contract without
any indemnification or compensation, provided that the parties to the contract have failed to agree on theacquisition price by the date of acquisition.

9．Schedule for Acquisition
December 20, 2017Conclusion of agreement on purchase and sale for the acquisition of the asset

March 5, 2018

Delivery of real estate of Watermark Hotel Sapporo

10．Forecasts of Financial Results
There is no impact of this acquisition on operations in the fiscal period ending February 28, 2018
(September 1, 2017 to February 28, 2018) as the acquisition is scheduled to be executed in the fiscal period
ending August 31, 2018 (March 1, 2018 to August 31, 2018).

－ ５ －11．Appraisal Summary
Property Name

Watermark Hotel Sapporo

Appraisal Value
Appraiser
Appraisal Date

¥ 3,850,000,000
Japan Valuers Co., Ltd.
November 1, 2017
Amount orpercentage

Item
Capitalization Approach Price
Price Calculated by the Direct
Capitalization Approach(1) Operating Income (a)-(b)(a) Gross Rental Income(b) Losses due to Vacancies, etc.
(2) Operating Expenses
MaintenanceUtilities Costs
Repair Costs
Property Management Fees
Advertisement for Leasing, etc.
Taxes
Insurance Premium
Other Expenses(3) Net operating income fromleasing business (NOI=(1)-(2))(4) Profit through management of
temporary deposits, etc.
(5) Capital Expenditure Reserve(6) Net Cash Flow
(NCF = (3)+(4)-(5))(7) Capitalization rate
Price Calculated by the Discounted
Cash Flow Approach
Discount Rate

3,850,000,000
3,940,000,000
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed

Undisclosed
Undisclosed
177,185,979
4.50%(Note)

Calculated taking into account income-basedvalues determined using both the direct
capitalization approach and the discounted
cash flow approachCalculated by capitalization rate based on a net
revenue of the stable mid-to-long term

(Note)(Note)

Assumed based on conditions of the location,
the building, and the contract of the Property.

3,760,000,000
4.30%

4.70%

Matters Noted in
Reconciliation ofIndicated Value andDetermination of
Appraisal Value

Grounds

184,470,066

Terminal Capitalization Rate

Cost Approach Price
Ratio of Land
Ratio of Building(Yen)

Assumed based on the yield on investment ofsimilar buildings and the characteristics of theProperty
Assumed based on the yield on investment ofsimilar buildings, the future movement of theyield on investment, risks of the Property as apreferred investment, general forecasts ofeconomic growth rate, and price trends of realestate and rents

1,610,000,000
76.2%
23.8%
The property is located on Tanukikoji Shopping Street, a major shopping arcade in
Sapporo city. It is also located within walking distance of the Odori area, one of thecity’s commercial and business centers, and the Susukino area, an entertainment
district representative of the vast Hokkaido Prefecture. Accordingly, the property
boasts geographical advantages that enable it to serve as a hub for both sightseeing
and business activities. In addition to these strengths, the property boasts a
sophisticated facility design built to accommodate businesspeople. The appraiser
therefore believed that the market competitiveness of the property is higher thanthat of other properties of this kind. Taking these factors into account, the appraiser
has thus determined an appraisal value grounded in profitability-based pricing thatappropriately reflects the estimated value of return on investment.

These items contain information for which the Fund bears a duty of confidentiality to the lessees or information that could be
used to calculate such information. The disclosure of these items could result in a breach of said duty of confidentiality, which
could negatively impact the Fund and thus the interests of its unitholders. Accordingly, these items are undisclosed.

－ ６ －【Exhibits】
Exhibit 1

Portfolio Overview after Acquisition

Exhibit 2

Photo of the Property to Be Acquired

Exhibit 3

Map of the Property to Be Acquired*<Nomura Real Estate Master Fund, Inc.> URL: http://www.nre-mf.co.jp/en/－ ７ －Exhibit 1
Overview of the Portfolio after Acquisition(¥ million)
Area

Greater Tokyo
Area (Note 1)

Sector(Scheduled) Total
Other Areas

Acquisition Price(by Sector)

Percentage ofTotal (Note 2)

Office356,180

71,930428,110

46.2

Retail100,427

59,356

159,783

17.3

Logistics

142,270

3,460

145,730

15.7

Residential

151,518

32,527

184,045

19.9

Hotels

-

3,600

3,600

0.4

Others

4,900

-

4,900

0.5

(Scheduled) Total
Acquisition Price(by Area)

755,295

170,873926,168

100.0

Percentage of Total (Note 2)

81.6

18.4

100.0％(Note 1) “Greater Tokyo Area” refers to Tokyo Prefecture, Kanagawa Prefecture, Chiba Prefecture and Saitama Prefecture. “Other
Areas” refers to cabinet-order designated cities, prefectural capitals, and cities having a population of at least 100,000
and their peripheral areas, excluding Greater Tokyo.
(Note 2) “Percentage of Total” indicates the ratio of the (Scheduled) total acquisition price of properties for each use and in eacharea to the total acquisition price of the entire portfolio. As the figures are rounded to the first decimal place, they may
not add up to exactly 100%.
(Note 3) The figures are based on the assumption that the disposition of Funabashi Logistics Center on the press release “NoticeConcerning Property Disposition” dated on December 12, 2017 has been completed.

Exhibit 2
Photo of the Property to Be Acquired

Exhibit 3
Map of the Property to be Acquired