55

ththFiscal
FiscalPeriod
PeriodSemi-AnnualSemi-AnnualReport
Report
March
March
1, 1,
2015
2015
toto
AugustAugust31,31,
2015
2015
NOMURANOMURAREALREALESTATEESTATEMASTERMASTER
FUND,
FUND,
INC.
INC.
8-5-1,
8-5-1,
Nishi-Shinjuku,
Nishi-Shinjuku,
Shinjuku
Shinjuku
Ward,
Ward,
Tokyo
Tokyo

Executing Our Strategy
We at Nomura Real Estate Asset Management Co., Ltd. (NREAM) have remainedcommitted to executing the strategy of Nomura Real Estate Master Fund, Inc. (NMF)
during its five fiscal periods. This Semi-Annual Report reports on the Fifth Fiscal Period.
It is the last report for NMF as a REIT specializing in retail and logistics real estate.
However, NMF is the successor entity of the October 1, 2015 merger between Nomura
Real Estate Office Fund, Inc. (NOF), Nomura Real Estate Residential Fund, Inc. (NRF)
and NMF. This Report will discuss primarily the Fifth Fiscal Period of NMF but it also
covers and explains the strategy of the merger. We ask our investors to understandthat we remain dedicated to creating a robust diversified REIT that is proven throughexecution and reinforced by the Nomura Value Chain.

Highlights of the Fifth Fiscal Period
NMF concluded

NMF is paying out

the contract for sellinga dividend per unit of¥2,217

NMF acquired asilent partnership equity
interest in GK Osaka Hirakata

the Mitsubishi Motors Ibaraki
Maintenance Center (ownershiptransferred on September 1,
2015)
NMF continued proactive andProject for ¥100 million
and finished acquisition of the
Kawaguchi Ryoke Logistics Center

successful leasing oflogistics facilities

for a price of ¥10,790

millionIs provided through a balanced portfolio of
Is delivered through alogistics (49.9% of portfolio) andTokyo-centric portfolio (80.4%)
retail properties (50.1%)
Is achieved by incorporating
Is delivered through long-term
established Nomura brands
contracts often 10 years or
Landport (logistics) andmore in length (67.1%)
GEMS (retail)Stability
Masato Yamauchi

Motomi Uki

Noriaki Ido

Director and Managing Executive Officer
Head of Finance Division
Nomura Real Estate Asset Management Co., Ltd.

Director and Managing Executive Officer
Head of NMF Investment Management Division
Nomura Real Estate Asset Management Co., Ltd.

Executive Officer
Head of Acquisitions Division
Nomura Real Estate Asset Management Co., Ltd.

Note: Motomi Uki assumed office as Head of NMF Investment Management Group, General Manager, Fund Management Department, NMF Investment Management Group on October 1, 2015.

Disclaimer
This document has been prepared for the purpose of provision of information only, and should not be construed as an offer, solicitation or commercial conduct of any nature associated withany specific products. Investors wishing to purchase the investment units of Nomura Real Estate Master Fund, Inc. (NMF) should contact their own securities brokers or dealers. A fee may becharged by your financial instruments business operator in relation to the sale or purchase of investment units.
For management fees that NMF pays to Nomura Real Estate Asset Management Co., Ltd., please refer to the terms and conditions of NMF, asset management reports, etc.
The forward-looking statements with respect to the future financial results contained in this document are based on the current facts about the investment policy of NMF, applicable laws andregulations, the market environment, business practice, etc., as of the preparation date of this document and do not reflect or consider any changes in the circumstances after the preparation
date. These forward-looking statements inherently reflect uncertainty about known risks as well as unknown risks and other factors and may deviate from the actual operating and management
results, financial conditions, etc., of NMF.
Investment in real estate investment securities may result in a loss due to a decline in the transaction price caused by, for example, changes in the price or the revenue-generating capability of
the underlying properties or deterioration of the financial conditions of the issuer.
Although the information contained in this document is intended to be complete and thorough, there is no assurance of its accuracy and reliability. Please note that the contents of thisdocument are subject to change or deletion without prior notice.
The duplication, reproduction, distribution or use of any information, in whole or in part, contained in this document without the express prior written consent of NMF is strictly prohibited.

Is evidenced through a stablefinancial base with an averageborrowing period of more than
4.0 years and an LTV of
only 38.3%

Is evidenced througha high long-term issuer
rating of AA- (Note 2)

Is delivered through 99.3%
occupancy primarily tied up in
long-term contracts

Note 1: The above figures are based on data as of August 31, 2015.
Note 2:	Although the designation to credit monitor (outlook: positive) was announced in a press release dated May 27, 2015, it was announced that “AA (stable)” has been assigned for the longterm issuer rating of the new NMF after the merger as of October 1, 2015.

Contents
Top Message: Success through Execution
Our Long-Term Message
Going Forward: Delivering Results
While Adapting to the Times
Overview of Merger
Sponsor Support:
Essential Element of Success for New NMF
Evidence of Concrete Sponsor Support
Portfolio Management: Internal Growth

2
3
4-5
6
7
8-9

Finance Strategy

10-11

Portfolio Management: External Growth

12-13

Portfolio Gallery

14-17
18

Structure and Organization
Financial Section

19-33

Independent Auditor’s Report

34

Investor Information

35
Nomura Real Estate Master Fund

1

Top Message

Success through Execution
Our Long-Term Message

Satoshi Yanagita
Executive Director
Nomura Real Estate Master Fund, Inc.
Yanagita was born on October 20, 1957 and joined Nomura Real Estate
Development Co., Ltd. in April 1981. Between April 2001 and March 2011,
he served as general manager consecutively for the Planning Section of the
Residential Company, General Affairs Department and concurrently for
the General Affairs Department and General Affairs Trial Department. He
became Executive Officer of Nomura Living Support Co., Ltd. in April 2011
and also served as Director from April 2012. He currently serves as an Audit& Supervisory Board Member of Nomura Real Estate Partners Co., Ltd. andassumed the post of Executive Director of Nomura Real Estate Master Fund,
Inc. as of December 1, 2014.

On behalf of NMF and as its Executive Director, I would
like to extend our gratitude to you, our unitholders, foryour steady and robust support.
I would like to use this space to report on the results of theFifth Fiscal Period. I am pleased to report operating profitsof 4,328 million yen, net income of 3,692 million yen anddividend per unit of 2,217 yen.

NMF delivered these results through proactive portfolio
management in a competitive market. Sales-linked rents
at Universal CityWalk Osaka™ exceeded forecasts madein the Summary of Financial Results for the Fourth Fiscal
Period announced on April 14 by 46 million yen and theearly leasing up of Landport Hachioji had a positive impactof 22 million yen. Net income was positively impacted by areduction of interest expenses and loan arrangement feesthat totaled 19 million yen. Forecasts were not met due to an
additional booking of merger related expenses of 602 million
yen (total merger-related expenses were 659 million yen).
NMF also acquired the Kawaguchi Ryoke Logistics Centerand a silent partnership equity interest in Godo Kaisha
Osaka Hirakata Project along with selling the Mitsubishi
Motors Ibaraki Maintenance Center at a healthy profit.
The Fifth Fiscal Period also saw unrealized gain rise to 31.6
billion yen. These numbers prove that proactive portfolio
management and utilization of the Nomura Value Chain
deliver strong results.
With the merger of the three J-REITs managed by NREAM
on October 1, 2015, not much will change, that is, NMF, as
the successor REIT, will continue to execute its strategy ofbuilding a robust portfolio but now over a broad diversified
portfolio. Moreover, NMF will continue to prove that the
Nomura Value Chain is valuable for our investors and key
to our demonstration that proactive management with
the Nomura Real Estate Group sets us apart from thecompetition.
Thank you again for your support.

Nomura Value ChainFirst Look Support of the Robust Pipeline
Nomura Real Estate Development, one of the leading developers in Japan and
NMF’s sponsor, develops a wide variety of real estate from residential and officeInformation provision agreement
to logistics, retail and others. NREAM, the asset manager of NMF, enjoys therobust support of its sponsor through an information provision agreement
that, in essence, provides the asset manager with first looks when Nomura
Real Estate Development is selling any property that generally meets the asset manager’s property selection criteria. Property
acquisitions that form the nucleus of this pipeline will be the core assets of NMF’s future growth, enabling it to execute its
strategy and deliver steady asset growth and stable income over the medium to long term.

Diversified Management Support from the Nomura Real Estate GroupAs a member of the Nomura Real Estate Group, a diversified real estate group, NMF possesses the inherent advantage of being
able to utilize the Group’s extensive capabilities in leasing, administration and property management. By applying this expertise,
NMF ensures it will be able to continuously improve tenant satisfaction by
maintaining and increasing the value of the assets it manages, and in turn deliver
this stability and quality to its investors.

Going Forward

Delivering Results
While Adapting to the Times
We will be able to pursue both stable income and growththrough diversification of asset types. New NMF willachieve the middle risk, middle return characteristic of
J-REITs by combining assets that can deliver stable income
and assets that possess inherent opportunities for an
upside.

Motomi Uki
Director and Managing Executive Officer
Head of NMF Investment Management Division
Nomura Real Estate Asset Management Co., Ltd.
Joined Nomura Real Estate Development Co., Ltd. in 1991. Involved in
the asset management business from 2006. After working in real estate
investment, project planning, fund management, client relations andmarketing, he was appointed Director and Managing Executive Officer at
NREAM. Presently serves as Director, Executive Officer and Head of the
NMF Investment Management Division at NREAM.

Are you satisfied with the results of theFifth Fiscal Period?
Yes and no. Yes, we continued to demonstrate the positive
impact of proactive portfolio management in leasing
performance, external growth and prudent financial
management. However, external growth was at a slower
than preferred pace and even though LTV was carefully
managed it trickled upwards.

What lies behind the shift in the policyof NMF after the merger of the three
REITs to one diversified REIT?
There are probably three developments that particularly
weighed on our decision. First, the competition to acquire
properties has become very intense. Yes, we have grown,
but it has been a challenge. Prices often times defy
rationality in our mind and prevent us from obtaining key
properties. Second, there is a clear polarization between
large REITs and small and medium-sized REITs with the
top ten J-REITs owning more than 40% of all assets. Third,
tax reform in 2015 enables the inclusion in expenses ofthe distribution in excess of net income equivalent to theamortization costs of goodwill.

What operational strategies does themerger have?
The strategic shift from a specialized REIT to a diversified
REIT enables NMF to secure steady earnings. This
conversion to a diversified REIT gains the following features
for the New NMF that allow it to pursue sustainable growth.

New NMF will realize continuous and stable growththrough selective investment in prime properties from awide range of asset types. Diversified portfolios enable a
REIT to capture optimal growth opportunities of assetsthat differ by time.
Diversification of asset types also expands acquisition
opportunities in response to diversification of asset types
which REITs invest in, such as complex facilities, hotels,
factories and health care facilities.
Additionally, a larger portfolio – in fact, the largest
diversified REIT – enables us to diversify our properties
and tenants and promote replacing old properties withnew more efficient properties. Finally, the strength of oursponsor support enables us to make focused investments
into highly competitive brand platforms developed by the
Nomura Real Estate Group.

In closing, what are your new goals?
With the merger, our medium-term goal for assets undermanagement has grown to 1 trillion yen or more. By
March 2016, the portfolio will increase by 23.1 billion yen
as we plan to acquire four properties in the First Fiscal
Period and three properties in the Second Fiscal Period.
We will continue to march toward our goal by acquiringproperties developed by Nomura Real Estate Development
such as PMO, PROUD FLAT, GEMS and Landport. We will
also invest in other sectors and acquire properties fromcompanies outside of the Nomura Real Estate Group.
We would also like to begin delivering a dividend per unitof at least 2,700 yen from the Second Fiscal Period. It is
our intent to deliver operating income of 6,273 million
yen, net income of 3,635 million yen and a dividend perunit of 2,100 yen in the First Fiscal Period, a shortened fivemonth period. In the Second Fiscal Period, we see operating
income increasing to 10,801 million yen, net profit to 8,177
million and the dividend per unit to 2,710 yen.
Thank you for your support to date and we humbly ask foryour continued support going forward.

Nomura Real Estate Development has assumed responsibility for executing theplanning, development and leasing of logistics and retail facilities in NMF’s portfolio.
2

Nomura Real Estate Master Fund

Nomura Real Estate Master Fund

3

Overview of Merger
Simple Overview of REIT Merger:

The Merger in Numbers

Why Merge the Three Nomura REITs?

The successor to the merger of the three Nomura REITs on October 1, 2015 is the New NMF (Securities Code: 3462; New used todifferentiate from former NMF). The new diversified REIT has 257 properties, which is the most assets under management of any
J-REIT (Note 1), and a total value of 784,988 million yen (Note 2).

The reasons for the merger from our position can be summarized into three reasons.

Office REIT

Proactive growth path for the medium to long term

NOF

Logistics and Retail REIT

Former NMF

The merger enabled proactive growth to 784,988 million yen while keeping to Nomura standards

Present issues we face
Risk tolerance: Risk of large tenants moving out and need for a larger portfolio to improve risk tolerance
External growth:	Limited opportunity to acquire blue chip properties due to an overheated real estate acquisition market
Internal growth:	Limited properties where rent growth can be expected means limited dividend upside from internal growth55
Total acquisition price:
356,868 PMO Nihonbashi Kayabacho(million yen)
Office properties:(Note 2)

Landport Kawagoe

19
Total acquisition price:
132,810(million yen)
Logistic properties:(Note 2)External environment surrounding J-REITs

Residential REIT

Intensified acquisition competition in real estate market

NRF

 Polarization of J-REIT market into large and small-to-medium REITs
 Diversification of asset types in which J-REITs can invest
Tax reform in 2015 enables inclusion in expenses of the distribution in excess of net income equivalent to the amortization costs of goodwill
Universal CityWalk Osaka™

Significance of the Merger:

146
Total acquisition price:
162,547(million yen)
Residential properties:

A Strategic Shift to Building a Large Diversified REIT
Diversified REIT Strategy

Strategy to Build Large REIT

Pursue sustainable growth
by transforming from a Specialized REIT

Strengthen stability andenhance growth strategy

into a Diversified REIT

through benefit of a large scale REIT

(Note 2)

Leasing Business Value Chain
Accelerate mutual growth37
Total acquisition price:
132,763(million yen)
Retail properties:

PROUD FLAT Kamioooka(Note 2)

Note 1: Rank as of October 31, 2015 with scheduled acquisitions not included.
Note 2: Acquisition price uses acquisition price for NMF and the appraisal values for the most recent fiscal period for NOF and NRF. No future acquisitions are included.

with Nomura Real Estate Groupby establishing the Leasing Business
Value Chain

Creation of a “Master” REIT
These combined merits give the investor an opportunity to invest in stability, a “property advantage”

Characteristics of the New NMF

Stability of dividends

One ofLargest REITs
in Japan elative stability ofR
investor unit priceAiming to become

the No. 1 REIT
in Japan

Strategy
Portfolio Size

4

Nomura Real Estate Master Fund

Portfolio Quality

Financial Soundness

Investor Merits

Diversified

Credibility

Support of amajor diversified
real estate group

All in one strategy for
J-REIT investment

Performance

Nomura Real Estate Master Fund

5

Sponsor Support

Essential Element of Success for New NMF

Evidence of Concrete Sponsor Support

Value chain of the Nomura Real Estate GroupThe New NMF has successfully contracted to acquire 7 properties developed recently by Nomura Real Estate Development,
showing the proof is in the pudding. All of the properties are competitive and on premium sites less than five minutes fromstations in Tokyo. The acquisitions on a combined basis total 23,110 million yen will raise dividends by about 50 yen.

The New NMF will establish the Leasing Business Value Chain and strive to improve the brand recognition and improve the asset
value of properties developed by the Nomura Real Estate Group.

Property Overview
NRE Kichijoji Building

Name
Use

Brands of Nomura

ment Pipel
nage
ine
Ma

quisition P
ipe
ty Ac
r
e
lin
op
r
e
P

Provide property
information

GEMS Ichigaya

PROUD FLAT
Hatchobori

RetailPROUD FLAT
Itabashi Honcho
Residential

Photo(July 2014)

years(October 2014)

1.1

1.5 years

1.3 years

Appraised NOI

4.4%

4.2%

4.6%

4.9%

Acquisition Date

October 30, 2015

October 30, 2015

October 30, 2015

October 30, 2015

Acquisition Pricebillion yen(quasi co-ownership 51%)(Note 3)

2.08 billion yen

920 million yen

720 million yen

Core Brands bearing Leasing Value Chain

Name

PMO
TamachiPMO
Ginza Hatchome

PMO
Shibakoen

NMF will focus investment on four brands developed by the Group and create a very competitive portfolio.

Use

Strengthen thebrands andimprove the valueof the properties
held by the REIT

Officebuildings
PMO (Premium Midsize Office) are a new categoryof office buildings that accommodate businesses
styles that are diversifying with time, as well asfeaturing the same functions and design standards
as large-scale buildings despite being mediumscaled.
PMO
Nihonbashi Honcho

Landport Kawagoe

Landport Urayasu

6

Nomura Real Estate Master Fund

1.3 years

5.31(May 2014)(July 2014)

OfficeResidential
facilities
PROUD FLAT are rental apartments that stand on
location selected utilizing the information network/
know-how of the development and sales businessof Nomura Real Estate Group to suit urban rental
apartments, and are controlled excellently andoperated/managed appropriately through Nomura
Real Estate’s unique “design standard for housing
PROUD FLAT
complexes (rental apartments),” “outline for quality
Shirokane Takanawa
control inspection,” etc.

Photo

1.7

1.6 years

1.3 years

4.1%

4.0%

4.2%

Acquisition Date(scheduled)

March 1, 2016

March 1, 2016

March 1, 2016

Acquisition Price

6.21 billion yen

3.97 billion yen

3.90 billion yen

Age(Note 1)(completion date)(Note 2)

Logistics
facilities
Landport are logistic facilities withadvanced high functions realized throughdesigns for optimization and efficiency,
responding to recent changes in thelogistics environment and various tenantneeds.

Age(Note 1)(completion date)

Retailfacilities
GEMS are commercial facilities developed centering
on urban areas. They are mainly comprised ofvarious restaurants with original tastes that brighten
and enrich the lives of office workers and residents
in the area as well as presenting them with ideas
for new lifestyles.

Appraised NOI

years(February 2014)(April 2014)(July 2014)

Expect to push up the DPU by approx. 50 yen(Note 4)
GEMS Shibuya

Note 1: Age are calculated by setting October 30, 2015, when the first acquisition among the properties mentioned above will be made, as the basis date.
Note 2: Appraisal NOI are based on the annual NOI described in the real estate appraisal report with May 1, 2015 as the appraisal date.
Note 3: Nomura Real Estate Development Co., Ltd. will quasi co-own the trust beneficiary interest for the remaining 49.0%.
Note 4: This is only the estimated amount and there is no guarantee to achieve such effects.

Nomura Real Estate Master Fund

7

Portfolio Management

Internal GrowthInternal Growth

Successful internal growth of a REIT is dependent on its leasing team attracting new tenants and securing renewals
with existing tenants. An open unrented space is lost income. Therefore, NREAM is quick to initiate leasing activities
and this has borne fruit as shown in the figures below. The leasing team successfully leased up the 5.7% of space that
had been opening up in the Fifth Fiscal Period. Furthermore, leasing up has been completed for 83% of spaces thatare scheduled for contract renewal in the next year.

Logistics Report
Leasing of Areas Maturing in the Fifth Fiscal Period
Leased up: 5.7% (1,257 tsubos)

Already leased for at least five years: 100.0%

Renewals:Remainedthe same:
21.0%

Rents raised:

51.0%(time to renew normal rent)

Contracted: 83.6%

Renewals: 100.0%

New tenants: 79.0%

21.0%

Leasing of Areas Maturing
between September 2015 and August 2016
Negotiating:16.4% (3,631 tsubos) in Kawaguchi Logistics Center A Tower

Rents lowered:

28.0%

Remained the same:
34.3%

Rents raised: 65.7%

Retail Report
Internally and externally there weresignificant developments at Universal
CityWalk Osaka™.
First, externally a new hotel openedon August 1, 2015 – The Park Front
Hotel at Universal Studios Japan® - andthe new hotel connected to Universal
CityWalk Osaka™ by pedestrian deck.
This has created even greater energy inthe area by further integrating the area
together.

BeforeAfter

Leasing progress was also gainedinternally when five new restaurants
opened during July and August incorrelation with the opening of the
new hotel. This has contributed toraising the occupancy of Universal
CityWalk Osaka™ to over 90% andraised profitability of the facility.
RED LOBSTER opened on July 18

t a
1s sakO
int
1s apanJ
inSpecific Cases for Logistics Properties

Funabashi Logistics Center
Finished leasing with continuance ofexisting tenant.

TenantDiversification
Our diverse tenant base andlease terms insulate us fromindividual market upheavals
and strengthen our portfolio.

Hanyu Logistics Center

Chiyodamachi Logistics Center

Landport Hachioji

Existing tenant only renewed for a shortterm contract but rents were raised.

Successful renewal of normal rent withsame terms and length.

Finished leasing due to lease spaces thatsatisfied needs of the surrounding area.

Fukuyama Transporting 9.8%
Izumiya 7.4%
Nippon Express 7.1%
Amazon Japan Logistics 5.9%
Neovia Logistics Services 5.3%
Yokohama Okadaya 5.1%

PIZZA NAPOLETANO opened on July 27
TM& © Universal Studios. All rights reserved.

nolboo opened on July 17

Diversification of Lease Maturities (based on rent)
(%)
15.0

Logistics

10.0

5.0

947,538.68m

2

Total number of tenants

296

Otsuka Warehouse 3.7%
Undisclosed 3.7%
ASKUL 3.9%
Mitsui-Soko Logistics 4.5%

1.0
1.9

2.2
3.7

0.0

Retail0.2

2.9

Other 43.5%

Gottie’s BEEF opened on August 13®Universal Studios. CR15-3770

11.7

Total leased floor space

551 HORAI opened on July 17

1.1

1.6

4.2

2.2

9.1
3.3
3.2

1.4

6.0
2.9

1.0
1.2

0.2
0.2

2.5

0.4

1.6

4.2
0.3

3.7

4.5

0.1
1.4

0.6

0.2
1.3

6th FP 7th FP 8th FP 9th FP 10th FP 11th FP 12th FP 13th FP 14th FP 15th FP 16th FP 17th FP 18th FP 19th FP 20th FP 21st FP 22nd FP 23rd FP 24th FP 25th FP
Feb. Aug.
Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb.
Aug. Feb. Aug. Feb.
Aug.
2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 2021 2021 2022 2022 2023 2023 2024 2024 2025 2025

(Reference: New NMF)

(1st FP) (2nd FP) (3rd FP) (4th FP) (5th FP) (6th FP) (7th FP) (8th FP) (9th FP) (10th FP) (11th FP) (12th FP) (13th FP) (14th FP) (15th FP) (16th FP) (17th FP) (18th FP) (19th FP) (20th FP)(from October 1, 2015)

Note: The above figures are based on data as of August 31, 2015.

8

Nomura Real Estate Master Fund

Nomura Real Estate Master Fund

9

Finance Strategy

Finance Strategy

Prudence Delivering Stability

Diversification of Maturities
NMF has clearly spread out maturities enabling refinancing even in potentially serious conditions.

NMF followed a prudent LTV strategy during the Fifth Fiscal Period that served as the foundation of stability.
The average remaining years to maturity of loans remained long at 4.0 years. LTV was also kept in the thirties at
38.3%, with the average interest rate lowered to an outstanding 0.95%.

(billions of yen; rounded)
16.0

NMF remains committed to a prudent financial strategy following the merger of the three REITs as it has proven thatprudence can deliver growth.

14.0

Debt
13.0

12.2

12.0

10.0

10.0
8.0
6.0

6.0
4.0

4.0

Investment corporation bonds

10.8
9.6

9.0

6.7
5.5

4.1

4.0

5.0
3.6

3.0

2.0

2.0

0.9

0.0
6th FP 7th FP 8th FP 9th FP 10th FP 11th FP 12th FP 13th FP 14th FP 15th FP 16th FP 17th FP 18th FP 19th FP 20th FP 21st FP 22nd FP 23rd FP 24th FP 25th FP
Feb.
Aug.
Feb.
Aug.
Feb.
Aug.
Feb.
Aug.
Feb.
Aug.
Feb.
Aug.
Feb.
Aug.
Feb.
Aug.
Feb.
Aug.
Feb.
Aug.
2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 2021 2021 2022 2022 2023 2023 2024 2024 2025 2025

Key Debt Markers
These key markers prove a prudent, well-executed strategy.

Total amount ofinterest-bearing debt

110.3

*Has increased in line with growth in portfolio

92.6%

billion yen

Long-term debt ratio*Continues to hold strong above 90%

Average remaining years
to maturity*A long period that enables careful strategy construction

Note: The figures are based on data as of August 31, 2015.

4.0
years

0.95%

Average interest rate
*Now below 1%

Ratio of fixed interest rate
*Remains strong

38.3%

87.2%

LTV
(ratio of interest-bearing liabilities to total assets)*Continues to hold steady at sub-40%

Bank Formation

Credit Ratings

NMF boasts an excellent bank formation of Japanese financing
leaders and an amazing average interest rate of less than 1.0%.

The credit rating is at a level that allows the Bank of Japan toinvest in NMF’s investment units.

Financial Institution(billions of yen)

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

20.5

Sumitomo Mitsui Banking Corporation

20.5

Mizuho Bank, Ltd.

14.4

Mitsubishi UFJ Trust and Banking Corporation

9.1

Sumitomo Mitsui Trust Bank, Ltd.

9.1

The Norinchukin Bank

9.1

Development Bank of Japan Inc.

8.8

Mizuho Trust & Banking Co., Ltd.

8.0

Resona Bank, Ltd.

2.6

Nippon Life Insurance Company

2.5

The Bank of Fukuoka

2.5
Total

107.3

Note 1: The figures are based on data as of August 31, 2015.
Note 2: The total may differ from the sum of the figures due to rounding.
Note 3:	Although the designation to credit monitor (outlook: positive) was announced in a press
release dated May 27, 2015, it was announced that “AA (stable)” has been assigned
for the long-term issuer rating of the new NMF after the merger as of October 1, 2015.

10

Nomura Real Estate Master Fund

Credit Rating
AgencyJapan Credit Rating Agency, Ltd. (JCR)

Long-Term
Issuer Rating

AA-

Outlook(Note 3)

Commitment Line
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation

Commitment Line
Agreement

10billion yen
Mizuho Bank, Ltd.

(Commitment period:
1 year)

Nomura Real Estate Master Fund

11

Portfolio Management

External Growth

External Growth

Portfolio Distribution

Portfolio Table (as of the end of the 5th Fiscal Period)

The distribution of the portfolio demonstrates NREAM knows the mission of NMF and executes it.

NMF constructed and delivered a balanced portfolio. The Mitsubishi Motors Ibaraki Maintenance Center was sold on September 1,
2015 for 1,133 million yen, more than 300 million yen above the book value.
Use Area No.

Geographical Diversification
Other Areas
14.8%

80.4%

Logistics

Portfolio Composition by
Property TypeTokyo Area
investment ratio

Tokyo

4.8%

Kinki Area

Residential
facility type

Retail

50.1%

Logistics

49.9%

32.3%

Other

17.8%

Distribution of Portfolio Age
10 years or more

Less than 5 years
5.1%

53.4%

Station-front type

41.4%

(by leased area)
Less than 2 years

5 to 10 years

2 to 5 years

10 years or more
Kinki

Remaining Lease Term(by leased area)

12.4 years
67.1%

Other

Averagelease termLess than 2 years

10 years or more

22.8%

17.4%

Averageremaininglease term 27.1%

5.7 yearsTokyo

5 to 10 years

3.6%

Retail (land only)

8.5%

20.8%

Retail Properties

14.8 years

Lease Term

Tokyo

Averageproperty age

32.7%
5 to 10 years
Other

2 to 5 years

Name

Location

12

Nomura Real Estate Master Fund(%)

Appraisal
Value(millions of yen)

Leasable
Floor Space
2

Urayasu City, Chiba
Itabashi Ward, Tokyo
Kawagoe City, Saitama
Atsugi City, Kanagawa
Kawaguchi City, Saitama
Sagamihara City, Kanagawa
Sagamihara City, Kanagawa
Hachioji City, Tokyo
Kasukabe City, Saitama
Funabashi City, Chiba
Atsugi City, Kanagawa
Hanyu City, Saitama
Kawaguchi City, Saitama
Kawaguchi City, Saitama
Atsugi City, Kanagawa
Ota City, Gunma
Ota City, Gunma
Ota City, Gunma
Oura-Gun, Gunma
Narashino City, Chiba
Yokosuka City, Kanagawa
Setagaya Ward, Tokyo
Kawasaki City, Kanagawa
Shinjuku Ward, Tokyo
Toshima Ward, Tokyo
Machida City, Tokyo
Chiba City, Chiba
Fuchu City, Tokyo
Saitama City, Saitama
Shibuya Ward, Tokyo
Yokohama City, Kanagawa
Yokohama City, Kanagawa
Yokohama City, Kanagawa
Osaka City, Osaka
Suita City, Osaka

17,40015,71013,70011,41010,79010,600
8,700
8,250
7,340
4,660
4,590
3,810
3,750
2,830
2,690
3,430
2,170
650
330
16,60013,64010,407
6,080
4,260
3,990
3,440
3,080
2,730
2,600
2,490
1,700
1,560
1,000
15,500
8,930

6.5
5.9
5.1
4.3
4.1
4.0
3.3
3.1
2.8
1.7
1.7
1.4
1.4
1.1
1.0
1.3
0.8
0.2
0.1
6.2
5.1
3.9
2.3
1.6
1.5
1.3
1.2
1.0
1.0
0.9
0.6
0.6
0.4
5.8
3.4

19,80017,80015,50012,10011,60011,700
9,930
9,150
8,370
5,320
5,130
4,310
4,320
3,270
3,160
3,760
2,420
715
361
17,40015,10010,700
7,240
4,560
4,320
4,250
3,490
3,230
2,960
2,640
1,920
1,810
1,320
16,60010,50017 Merad Owada

Osaka City, Osaka

6,640

2.5

(Retail)
7,280 (Logistics)

18 Izumiya Yao
19 Izumiya Obayashi
20 Ichibancho stear
21 EQUINIA Aobadori
1 Mitsubishi Motors Meguro
2 Mitsubishi Motors Chofu
3 Mitsubishi Motors Shibuya
4 Mitsubishi Motors Nerima
5 Mitsubishi Motors Kawasaki
6 Mitsubishi Motors Takaido
7 Mitsubishi Motors Katsushika
8 Mitsubishi Motors Higashikurume
9 Mitsubishi Motors Setagaya
10 Mitsubishi Motors Suginami
11 Mitsubishi Motors Sekimachi
12 Mitsubishi Motors Higashiyamato
13 Mitsubishi Motors Motosumiyoshi
14 Mitsubishi Motors Kawagoe
15 Mitsubishi Motors Edogawa
16 Mitsubishi Motors Sayama
Motors17 Mitsubishi
Ibaraki Maintenance Center

Yao City, Osaka
Takarazuka City, Hyogo
Sendai City, Miyagi
Sendai City, Miyagi
Meguro Ward, Tokyo
Chofu City, Tokyo
Shibuya Ward, Tokyo
Nerima Ward, Tokyo
Kawasaki City, Kanagawa
Suginami Ward, Tokyo
Katsushika Ward, Tokyo
Higashikurume City, Tokyo
Setagaya Ward, Tokyo
Suginami Ward, Tokyo
Nerima Ward, Tokyo
Higashiyamato City, Tokyo
Kawasaki City, Kanagawa
Kawagoe City, Saitama
Edogawa Ward, Tokyo
Sayama City, Saitama

4,406
3,020
4,700
1,640
2,740
1,760
1,570
1,240
950
850
800
800
770
740
600
450
370
350
200
160

1.7
1.1
1.8
0.6
1.0
0.7
0.6
0.5
0.4
0.3
0.3
0.3
0.3
0.3
0.2
0.2
0.1
0.1
0.1
0.1

820

Ibaraki City, Osaka

Hirakata City,
Osaka
Total

PML
(%)

(m )

1 Landport Urayasu
2 Landport Itabashi
3 Landport Kawagoe
4 Landport Atsugi
5 Kawaguchi Ryoke Logistics Center
6 Sagamihara Tana Logistics Center
7 Sagamihara Onodai Logistics Center
8 Landport Hachioji
9 Landport Kasukabe
10 Funabashi Logistics Center
11 Atsugi Minami Logistics Center B Tower
12 Hanyu Logistics Center
13 Kawaguchi Logistics Center B Tower
14 Kawaguchi Logistics Center A Tower
15 Atsugi Minami Logistics Center A Tower
16 Ota Nitta Logistics Center
17 Ota Higashishinmachi Logistics Center
18 Ota Kiyohara Logistics Center
19 Chiyodamachi Logistics Center
1 Morisia Tsudanuma
2 Yokosuka More's City
3 Recipe SHIMOKITA
4 Kawasaki More's
5 EQUINIA Shinjuku
6 EQUINIA Ikebukuro
7 covirna machida
8 Nitori Makuhari
9 Konami Sports Club Fuchu
10 FESTA SQUARE
11 GEMS Shibuya
12 Sundai Azamino
13 EQUINIA Aobadai
14 Megalos Kanagawa
15 Universal CityWalk Osaka™
16 Izumiya Senrioka

Investment Securities
Kaisha Osaka Hirakata Project1 GodoSilent Partnership Equity Interest
Kinki

Investment
Ratio(millions of yen)

Total

Note: The above figures are based on data as of August 31, 2015.

Acquisition
Price

4.16
6.42
3.73
6.15
3.91
4.32
7.30
5.79
5.90
3.40
6.15
2.72
2.92
2.92
5.36
1.40
1.35
1.03
3.76
4.70
6.89
4.38
7.39
5.81
8.36
10.85
3.90
2.76
5.40
4.18
4.89
9.33
9.06
4.42
5.43

5,010
3,590
5,450
1,860
2,880
1,840
1,740
1,310
1,040
898
837
828
810
827
627
496
377
369
211
169

70,045.85
52,794.55
71,569.89
47,995.23
42,840.91
50,450.00
57,448.03
34,837.65
29,630.48
30,641.98
24,931.11
24,850.80
13,648.70
12,003.57
9,825.52
42,328.00
23,584.72
9,397.38
4,592.00
39,736.87
29,383.65
6,295.22
18,810.31
3,611.59
2,693.93
2,891.32
14,367.98
12,385.18
7,480.63
1,791.34
2,286.47
2,457.36
6,217.85
9,733.28
24,399.12
14,941.54
5,856.50
34,198.01
11,714.36
4,611.68
4,030.37
3,381.19
4,183.63
1,421.31
1,725.61
3,057.02
1,923.64
1,930.05
4,105.00
1,305.78
1,831.00
989.772,783.79
1,646.97
2,462.40
892.56
1,793.00

0.3

908

5,704.24–

266,393

100.0

296,113954,447.89

2.56

100

–

–

–

–

100

–

–

–

–

Nomura Real Estate Master Fund

3.33
3.97
3.89
2.42
1.57
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

13

Portfolio Gallery

Portfolio Gallery

Logistics/Tokyo Area
Landport Kawagoe

Atsugi Minami Logistics Center A Tower

Funabashi Logistics Center

Kawaguchi Logistics Center A Tower

Landport KasukabeLandport Hachioji

Landport Itabashi

Sagamihara Onodai Logistics Center

Sagamihara Tana Logistics Center

Kawaguchi Ryoke Logistics Center

Landport Urayasu

Logistics/Other

Landport Atsugi

Ota Kiyohara Logistics Center

Kawaguchi Logistics Center B Tower

14

Nomura Real Estate Master Fund

Hanyu Logistics Center

Atsugi Minami Logistics Center B Tower

Chiyodamachi Logistics Center

Ota Higashishinmachi Logistics Center

Ota Nitta Logistics Center

Nomura Real Estate Master Fund

15

Portfolio Gallery

Portfolio Gallery

Retail/Tokyo

Retail/Kinki

Station-front type

Station-front type

Residential facility type

Residential facility type
Recipe SHIMOKITAGEMS Shibuya

Universal CityWalk Osaka™

Izumiya Senrioka
Morisia Tsudanuma

Kawasaki More’s

Konami Sports Club Fuchu

EQUINIA Ikebukuro

Sundai Azamino

EQUINIA Shinjuku

Merad Owada

Izumiya Obayashi

EQUINIA Aobadori

Ichibancho stear

Izumiya Yao

Retail/Other
Station-front type
Nitori Makuhari

EQUINIA Aobadai

covirna machida

Residential facility type

Retail (land only)/Tokyo

Megalos Kanagawa

16

Nomura Real Estate Master Fund

FESTA SQUARE

Yokosuka More’s City

Mitsubishi Motors Meguro
Mitsubishi Motors Chofu
Mitsubishi Motors Shibuya
Mitsubishi Motors Nerima
Mitsubishi Motors Kawasaki
Mitsubishi Motors Takaido
Mitsubishi Motors Katsushika
Mitsubishi Motors Higashikurume

Retail (land only)/Kinki
Mitsubishi Motors Setagaya
Mitsubishi Motors Suginami
Mitsubishi Motors Sekimachi
Mitsubishi Motors Higashiyamato
Mitsubishi Motors Motosumiyoshi
Mitsubishi Motors Kawagoe
Mitsubishi Motors Edogawa
Mitsubishi Motors Sayama

Mitsubishi Motors
Ibaraki Maintenance Center
Note:	The Mitsubishi Motors Ibaraki Maintenance Center was
sold on September 1, 2015 for 1,133 million yen.

Nomura Real Estate Master Fund

17

Structure and Organization
Structure of the New REIT
The New REIT has adopted the following structure with regards to legal entities it has concluded agreements with for various
services, and its asset management company.
Specified Related Party
Parent Company of the Asset Management Company

Asset Custodian
Sumitomo Mitsui Trust Bank, Limited

Nomura Real Estate Master Fund, Inc.

Nomura Real Estate Holdings, Inc.
Asset Custody Agreement

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

Information Provision
Agreement

AssetManagement
Agreement

Information Provider
Nomura Real Estate Development Co., Ltd.

Basic Agreement Concerning “Leasing Value Chain”
Leasing Value Chain
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Partners Co., Ltd.
GEO AKAMATSU CO., LTD.

General Administrator(Institutional Administration/Accounting)Transfer Agent and Special Account Administrator
Mitsubishi UFJ Trust and Banking Corporation
Transfer Agency Agreement
General Administration Agreement
Agreement Concerning Management of Special Account

Unitholders’ Meeting

Financial Section

Board of Directors' Meeting
Executive Director

Satoshi Yanagita

Supervisory Director

Sadahiko Yoshimura

Supervisory Director

Shuhei Yoshida

AuditorErnst & Young Shin Nihon LLC

General Administrator (Financial Agent)
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Financial Agent Agreement

Contents

Internal Organization of the Asset Management Company
NREAM, the asset management company for New NMF has adopted the following internal organization to service the new diversified REIT.
General Meeting of Shareholders

22Statement of Changes in Net Assets

23
24

Investment Committee

25

Independent Auditor’s Report

34

Board of Directors

Compliance Committee

Statutory Auditors

President & CEO

Risk Management Committee

Project Screening Committee
Chief Strategy Officer
Corporate Planning

Product Management

Legal & Compliance

Research & Analysis Section

Internal Audit

Acquisitions

Accounting

Investment Management Planning
NMF Investment Management Group

FinanceFund Management

Client Relations & Marketing

Asset Management I

Investment Management

Asset Management II
NPR Investment Management

Nomura Real Estate Master Fund

Statement of Income and Retained Earnings
Statement of Cash Flows

NPR Valuation Committee

18

20

Notes to Financial Statements

Board of Statutory Auditors

Discretionary Investment Management Section

Balance SheetBalance Sheet			Thousands of Yen

As of August 31, 2015

Thousands of Yen

As of February 28, 2015

As of August 31, 2015

ASSETSAs of February 28, 2015

LIABILITIESCurrent Assets:
Cash and bank deposits
Rental receivables
Income taxes receivable
Consumption taxes receivable
Other current assets
Total current assets¥21,120,799¥18,820,188

291,505

206,479

7,615

3,610

–

571,566

453,347

373,425

21,873,266

19,975,268

Current Liabilities:
Trade accounts payable¥439,286¥493,922

Short-term debt

8,100,000

4,000,000

Current portion of long-term debt

85,60085,600

Other accounts payable

333,449

235,326

Accrued expenses

37,291

26,211751

549

Accrued consumption taxes

103,578–

148,064,486

Rent received in advance

1,582,911

1,509,801

112,934,879

108,354,443

Other current liabilities

115,299956

55,194

20,397

10,798,165

6,352,365

Accrued income taxes
Property and Equipment, at Cost:
154,850,954

Land
Buildings and structures
Tools, furniture and fixtures

Total current liabilities

19,714

4,318

Subtotal

267,860,741

256,443,644

Less accumulated depreciation(7,174,302)(5,436,452)

Investment corporation bonds

3,000,000

3,000,000

251,007,192

Long-term debt

99,121,800

92,064,600

Construction in progress

Net property and equipment

260,686,439

Long-term Liabilities:

9,963,248

9,855,829

Total long-term liabilities

112,085,048

104,920,429

Total Liabilities

122,883,213

111,272,794

161,120,405

161,120,405

3,692,657

4,146,739

Total surplus

3,692,657

4,146,739

Total unitholders’ equity

164,813,062

165,267,144

Total Net Assets

164,813,062

165,267,144

Total Liabilities and Net Assets¥287,696,275¥276,539,938

Security deposits from tenants
Investments and Other Assets:
Leasehold rights

3,827,941

3,828,327

Intangible assets

15,924

15,559Investment securities

99,667463,151

Long-term prepaid expenses

532,582588,613Long-term deposits

89,20689,206

Security deposits
Deferred investment corporation bondissuance costs

546,095

546,095

25,155

26,527

5,136,570

5,557,478¥287,696,275¥276,539,938

Total investments and other assets
Total Assets
The accompanying notes to financial statements are an integral part of these statements.

NET ASSETS
Unitholders’ Equity:
Unitholders’ capital
SurplusRetained earnings

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

20

Nomura Real Estate Master Fund

Nomura Real Estate Master Fund

21

Statement of Income and Retained Earnings

Statement of Changes in Net Assets
Thousands of Yen

For the period
from March 1, 2015
to August 31, 2015

For the period from March 1, 2015 to August 31, 2015

For the period
from September 1, 2014
to February 28, 2015

Thousands of Yen

Unitholders’ Equity

Operating Revenues and Expenses
Operating Revenues:
Real estate rental revenues
Gain on investments in silent partnership
Operating Expenses:
Real estate rental expenses
Asset management fees
Asset custody fees
Administrative service fees
Merger expenses
Other operating expenses
Operating Profit¥10,379,978
26,816
10,406,794¥10,049,350
16,745
10,066,095

4,421,693
836,590
15,571
61,894
659,324
83,485
6,078,557
4,328,237

4,358,151
787,714
14,50963,681–
91,4885,315,543
4,750,552

Balance as ofMarch 1, 2015
Cash distribution paid

Surplus

Units

Unitholders’Capital1,665,260¥ 161,120,405

Retained
Earnings–

Total Surplus

Total
Unitholders’EquityTotal
Net Assets¥4,146,739¥4,146,739¥165,267,144¥165,267,144(4,146,497)(4,146,497)(4,146,497)(4,146,497)

Net income––

3,692,416

3,692,416

3,692,416

3,692,416

Balance as ofAugust 31, 2015

1,665,260¥161,120,405¥3,692,657¥3,692,657¥164,813,062¥164,813,062

For the period from September 1, 2014 to February 28, 2015
Thousands of Yen

Unitholders’ Equity
Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Interest on refund
Other non-operating revenues

Non-Operating Expenses:
Interest expense
Interest expenses on investment corporation bonds
Amortization of investment corporation bond issuance costs
Loan arrangement fees
Other non-operating expenses

1,888
2,237
52
4,177

1,790
–
36
1,826

Balance as of
September 1, 2014
Cash distribution paid
Net income
Balance as ofFebruary 28, 2015

498,180
13,074
1,372
125,500
522
638,648

474,075
8,700
1,143
121,433501
605,852

Ordinary Income

3,693,766

4,146,526

Income before Income Taxes

3,693,766

4,146,526

Income Taxes:
Current
Deferred

1,384
(34)

722
24

Net Income

3,692,416

4,145,780

Retained earnings brought forward

241

959

Retained Earnings at End of Period¥3,692,657¥4,146,739

Surplus

Units

Unitholders’Capital1,665,260¥161,120,405

Retained
Earnings–

Total Surplus

Total
Unitholders’EquityTotal
Net Assets¥4,080,847¥4,080,847¥165,201,252¥165,201,252(4,079,888)(4,079,888)(4,079,888)(4,079,888)––

4,145,780

4,145,780

4,145,780

4,145,780

1,665,260¥161,120,405¥4,146,739¥4,146,739¥165,267,144¥165,267,144

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

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

22

Nomura Real Estate Master Fund

Nomura Real Estate Master Fund23

Statement of Cash Flows

Notes to Financial Statements
Thousands of Yen

For the period
from March 1, 2015
to August 31, 2015

For the period
from September 1, 2014
to February 28, 2015

Cash Flows
Cash Flows from Operating Activities
Income before income taxes
Depreciation
Amortization of investment corporation bond issuance costs
Interest income
Interest expense
Decrease (Increase) in rental receivables
Decrease (Increase) in consumption taxes receivable
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 rent received in advance
Other
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities

1. ORGANIZATION
Nomura Real Estate Master Fund, Inc. (the “Company”) is a real estate investment corporation formed to own and invest
primarily in logistics facilities and retail facilities. The Company 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.
On January 31, 2013, the Company was incorporated under the Act on Investment Trusts and Investment Corporations(the “Investment Trust Act”) of Japan. On June 12, 2013, the Company was listed on the Tokyo Stock Exchange and started
operations on the following day. As of August 31, 2015, the Company owned a portfolio of 57 logistics facilities and retailfacilities containing an aggregate of approximately 954,447.89 square meters of leasable area and leased space to 296 tenants.

¥3,693,766
1,740,121
1,372(1,888)511,254(85,026)
571,566
56,030–(54,636)
48,067
103,578
73,11022,555
6,679,869
1,888(500,174)(5,188)6,176,395¥4,146,526
1,706,848
1,143(1,790)482,775
12,964(571,566)
25,989(50,000)
85,472(4,823)(275,529)
27,520(77,667)
5,507,862
1,790(481,053)(3,845)5,024,754

Cash Flows from Investing Activities
Payments for purchases of property and equipment
Payments for purchases of leasehold rights and intangible assets
Purchases of investment securities
Proceeds from withdrawal of investment securities
Reimbursement of security deposits to tenants
Proceeds from security deposits from tenants
Payments for security deposits(11,359,833)(2,250)(104,838)
456,448(340,023)
462,129–(18,358,111)(4,489)–24,322(75,227)
960,736(29,969)

Net cash provided by (used in) investing activities(10,888,367)(17,482,738)

4,100,000–
7,100,000(42,800)––(4,144,617)

7,000,000(3,000,000)
11,800,000(42,800)
3,000,000(27,670)(4,079,025)

7,012,583

14,650,505

Net Increase (Decrease) in Cash and Cash Equivalents

2,300,611

2,192,521

Investment securities

Cash and Cash Equivalents at Beginning of Period

18,820,188

16,627,667

Cash and Cash Equivalents at End of Period¥21,120,799¥18,820,188

Non-marketable securities are stated at cost determined by the moving average method.
For the silent partnership equity interest, the method of allocating the partnership’s profit/loss is based on the Company’s
proportional interest.

Cash Flows from Financing Activities
Proceeds from short–term debt
Repayment of short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of investment corporation bonds
Payments of investment corporation bonds issuance costs
Distributions to unitholders
Net cash provided by (used in) financing activities

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

2. BASIS OF PRESENTATIONThe Company 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, theCompanies Act of Japan, the Financial Instruments and Exchange Act of Japan and related regulations, which are different incertain respects as to the application and disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which were preparedin accordance with Japanese GAAP and were presented in the Securities Report of the Company filed with the Kanto Local Finance
Bureau. In preparing the accompanying financial statements, certain reclassifications and modifications have been made to thefinancial statements issued domestically in order to present them in a format that is more familiar to readers outside Japan. In
addition, the notes to financial statements include certain information that might not be required under Japanese GAAP but
is presented herein as additional information. Amounts have been rounded to the nearest thousand yen in the accompanying
financial statements and the notes thereto, whereas amounts were truncated in the Japanese financial statements prepared inaccordance with Japanese GAAP.
The Company’s fiscal period is a six-month period which ends at the end of February or August. The Company 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 lesswhen purchased.

Property and equipment
Property and equipment are stated at cost, which includes the purchase price and related costs for acquisition, less accumulated
depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the fixed assets outlined
below:
		 Buildings
3 - 70 years
		 Structures
2 - 20 years
		 Tools, furniture and fixtures
2 - 10 years

Intangible assets
Intangible assets are amortized by the straight-line method.

Long-term prepaid expenses
Long-term prepaid expenses are amortized by the straight-line method.

Impairment of fixed assets
The Company reviews fixed assets for impairment whenever events or changes in circumstances indicate that the carrying valueof its fixed assets may not be recoverable. An impairment loss is recognized if the carrying value of an asset exceeds the aggregate
estimated future cash flows. If a fixed asset is determined to be impaired, it is written down to its recoverable amount and the writedown is recorded as an impairment loss during the period in which it occurs. No impairment losses have been recognized to date.

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.

24

Nomura Real Estate Master Fund

Nomura Real Estate Master Fund

25

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

6. SCHEDULE OF PROPERTY AND EQUIPMENT
Property and equipment as of August 31, 2015 and February 28, 2015 consist of the following:Thousands of Yen

As of August 31, 2015
Acquisition costs
Book value¥10,923,206¥10,923,206

Revenue recognition
Operating revenues consist of rental revenues including base rents and common area charges, and other operating revenues
including utility charge reimbursements, parking space rental revenues and other income. Rental revenues are generally
recognized on an accrual basis over the life of each lease. Utility charge reimbursements are recognized when earned and theiramounts are reasonably estimated.

Property related taxes

Land
Buildings and structures
Accumulated depreciation
Land in trust
Buildings and structures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust
Accumulated depreciation
Construction in progress
Total

3,532,464(229,939)
143,927,748
109,402,415(6,938,158)
55,194(6,205)
19,714¥260,686,439

As of February 28, 2015
Acquisition costs
Book value¥10,923,206¥10,923,206
3,531,906

3,302,525
143,927,748
102,464,257(168,254)
137,141,280
104,822,537(5,264,992)
20,397(3,206)4,318¥251,007,192

3,363,652
137,141,280
99,557,545

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 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
made by the local government. The amount applicable to the buyer of a property is usually settled between each party andcapitalized as part of the acquisition cost of the property. The capitalized property related taxes amounted to ¥12,000 thousand
for the fiscal period ended February 28, 2015 and the capitalized property related taxes amounted to ¥40,919 thousand for the
fiscal period ended August 31, 2015.

7. SHORT-TERM DEBT AND CURRENT PORTION OF LONG-TERM DEBT

Income taxes

Short-term debt and current portion of long-term debt as of August 31, 2015 and February 28, 2015 consist of the following:
As of August 31, 2015
AmountWeighted-average(Thousands of Yen)
interest rate (Note 1)

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

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

Derivative financial instruments
The Company utilizes interest-rate swap contracts as derivative financial instruments only for the purpose of hedging its exposure
to changes in interest rates. The Company defers recognition of gains or losses resulting from changes in the fair value of interestrate swap contracts which meet the criteria for deferral hedge accounting.
Although the deferred hedge treatment is generally applied, the Company applies 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.

4. CHANGES IN ACCOUNTING POLICY
The “Accounting Standard for Business Combinations” (Accounting Standards Board of Japan (ASBJ) Statement No. 21, revised
on September 13, 2013) and “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, revised on September 13,2013) could be applied from the beginning of the accounting period after April 1, 2014. Accordingly, the Company applied theseaccounting standards from the accounting period ended August 31, 2015. In addition, the Company recorded acquisition-related
costs as expenses in the fiscal periods in which the costs are incurred.
Regarding business combinations, from the beginning of the accounting period ended August 31, 2015, the Company changed
the method to reflect changes in the allocation of the acquisition costs arising from confirmation of the provisional accounting
treatment on the financial statements that includes the acquisition date.
The Company has adopted these accounting standards from the beginning of the accounting period ended August 31, 2015,
following transitional treatment based on Article 58-2 (4) of “Accounting Standard for Business Combinations,” and Article 57-4 (4)of “Accounting Standard for Business Divestitures”.
As a result, Operating profit, Ordinary income and Net income decreased 659 million yen each for the Current period.

5. CASH AND CASH EQUIVALENTS
Cash and cash equivalents as of August 31, 2015 and February 28, 2015 consist of the following:Thousands of Yen

Cash and cash equivalents

26

Nomura Real Estate Master Fund

Unsecured loans from banks due on
September 26, 2015
Unsecured loans from banks due on
May 26, 2016
Unsecured loans from a bank due on
May 26, 2025 (Note 2)
Unsecured loans from a bank due on
May 26, 2025 (Note 2)
Total¥4,000,000

0.23000%

4,100,000

0.23000%

42,80042,80017,191
4,318¥251,007,192

As of February 28, 2015
AmountWeighted-average(Thousands of Yen)
interest rate (Note 1)¥4,000,000

0.23000%

2.21812%42,8002.21812%2.17000%

42,8002.17000%¥8,185,600¥4,085,600

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 of interest.
Note 2: Installments of ¥10.7 million will be made on the 26th day of every three month starting on August 26, 2013, with the remaining payment of ¥497.1 million to be repaid on May 26, 2025.

The Company entered into ¥10,000 million credit facilities in the form of commitment lines with three financial institutions for the
fiscal period ended August 31, 2015. The total unused amounts of such credit facilities were ¥10,000 million as of August 31, 2015.

Application of the Accounting Standard for Business Combinations

Cash and bank deposits

48,98919,714¥260,686,439

As of August 31, 2015
¥21,120,799

As of February 28, 2015
¥18,820,188¥21,120,799¥18,820,188

8. LONG-TERM DEBT
Long-term debt as of August 31, 2015 and February 28, 2015 consist of the following:
As of August 31, 2015
AmountWeighted-average(Thousands of Yen)
interest rate (Note 1)
Unsecured loans from banks due on
November 26, 2016
Unsecured loans from banks due on
March 26, 2017
Unsecured loans from banks due on
August 26, 2017
Unsecured loans from banks due on
May 26, 2018
Unsecured loans from banks due on
November 26, 2018
Unsecured loans from banks due on
November 26, 2018
Unsecured loans from banks due on
November 26, 2018
Unsecured loans from banks due on
May 26, 2019
Unsecured loans from a bank due on
May 26, 2019
Unsecured loans from banks due on
November 26, 2019

As of February 28, 2015
AmountWeighted-average(Thousands of Yen)
interest rate (Note 1)¥13,000,000

0.64250%¥13,000,000

0.64250%

1,000,000

0.31000%

1,000,000

0.31000%

5,000,000

0.31000%

5,000,000

0.31000%

12,200,000

0.86250%

12,200,000

0.86250%

4,000,000

0.72500%

4,000,000

0.72500%

1,000,000

0.48250%

1,000,000

0.48250%

1,700,000

0.50250%

1,700,000

0.50250%

9,000,000

1.11750%

9,000,000

1.11750%

1,000,000

1.04875%

1,000,000

1.04875%

4,000,000

0.72650%

4,000,000

0.72650%

Nomura Real Estate Master Fund

27

Notes to Financial Statements
As of August 31, 2015
AmountWeighted-average(Thousands of Yen)
interest rate (Note 1)
Unsecured loans from banks due on
November 26, 2019
Unsecured loans from banks due on
May 26, 2020
Unsecured loans from a bank due on
May 26, 2020
Unsecured loans from banks due on
February 26, 2021
Unsecured loans from banks due on
May 26, 2021
Unsecured loans from a bank due on
May 26, 2021
Unsecured loans from a bank due on
November 26, 2021
Unsecured loans from a bank due on
November 26, 2021
Unsecured loans from a bank due on
May 26, 2022
Unsecured loans from banks due on
November 26, 2022
Unsecured loans from banks due on
November 26, 2022
Unsecured loans from a bank due on
May 26, 2023
Unsecured loans from a bank due on
May 26, 2023
Unsecured loans from a bank due on
May 26, 2023
Unsecured loans from a bank due on
May 26, 2025 (Note 2)
Unsecured loans from a bank due on
May 26, 2025 (Note 2)Total

11. PER UNIT INFORMATIONAs of February 28, 2015
AmountWeighted-average(Thousands of Yen)
interest rate (Note 1)

The net asset values per unit and the net income per unit as of August 31, 2015 and February 28, 2015 were as follows:

5,600,000

0.54065%––

10,000,000

1.33750%

10,000,000

1.33750%

800,000

1.25875%

800,000

2,000,000

0.80832%

8,000,000

For the period
from March 1, 2015
to August 31, 2015
Net assets per unit

¥98,971¥99,2441.25875%

Net income per unit

¥2,217¥2,4902,000,000

0.80832%

The net income per unit is calculated by dividing net income by the weighted-average number of units outstanding.

1.56250%

8,000,000

1.56250%

1,000,000

1.46375%

1,000,000

1.46375%

2,000,000

1.30289%2,000,000

1.30289%2,000,000

1.11662%2,000,000

1.11662%5,500,000

1.25900%

5,500,000

1.25900%

12. RELATED PARTY TRANSACTIONS

2,100,000

0.92280%

2,100,000

0.92280%

For the periods from March 1, 2015 to August 31, 2015 and from September 1, 2014 to February 28, 2015

1,500,000

0.98624%––2,000,000

1.89500%

2,000,000

2,000,000

1.86500%

1,000,000

Note: The basis for calculating net income per unit is as follows:

Net income (Thousands of Yen)
Amount not available to ordinary unitholders (Thousands of Yen)
Net income available to ordinary unitholders (Thousands of Yen)
Average number of units during the period

1.89500%

Subsidiaries and affiliates

Directors and major individual unitholders Not applicable

2,000,000

1.86500%

13. INCOME TAXES

1.83875%

1,000,000

1.83875%

860,900

2.21812%882,300

2.21812%

860,900

2.17000%

882,300

2.17000%¥92,064,600

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:
2-3 years
12,285,600

3-4 years
16,785,600

4-5 years
20,485,600

9. INVESTMENT CORPORATION BONDS

For the period
from March 1, 2015
to August 31, 2015

¥3,000,000

As of February 28, 2015
AmountWeighted-average(Thousands of Yen)
interest rate

0.87000%¥3,000,000¥3,000,000

0.87000%

The scheduled redemption amounts of investment corporation bonds for each of the five years after the balance sheet date are as follows:
Thousands of Yen

Investment corporation bonds–

2-3 years–

3-4 years–

4-5 years–

10. UNITHOLDERS’ EQUITYThe Company 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. The Company is required to maintain net assets of at least ¥50,000
thousand as set forth in the Investment Trust Act.
28

Nomura Real Estate Master Fund34.15%(34.13)0.02
0.04%

34.16%(34.16)0.02
0.02%

Overview¥3,000,000

1-2 years

Statutory tax rate
Deductible cash distributions
Other
Effective tax rate

For the period
from September 1, 2014
to February 28, 2015

14. FINANCIAL INSTRUMENTS

Details of investment corporation bonds outstanding are summarized as follows:
As of August 31, 2015
AmountWeighted-average(Thousands of Yen)
interest rate

Not applicableNot applicable

The Company, as an investment corporation, is subject to corporate income taxes at a statutory tax rate of approximately 34% for
the fiscal period ended August 31, 2015 and February 28, 2015. However, the Company may deduct dividend distributions paid
to its unitholders from its taxable income amounts, provided such distributions meet the requirements under the Act on Special
Measures Concerning Taxation of Japan. Under this act, an investment corporation must meet a number of tax requirements,
including a requirement to distribute in excess of 90% of its distributable income for the fiscal period, in order to deduct suchamounts. If the investment corporation does not satisfy all of the requirements, the entire taxable income of the investment
corporation will be subject to regular corporate income taxes.
Since the Company distributed in excess of 90% of its distributable income in the form of cash distributions totaling ¥3,691,881
thousand and ¥4,146,497 thousand for the fiscal period ended August 31, 2015 and February 28, 2015 respectively, such
distributions were treated as deductible distributions for purposes of corporate income taxes. The following summarizes thesignificant differences between the statutory tax rate and the effective tax rate:

Thousands of Yen

1-2 years
19,085,600

Within a year

For the period
from September 1, 2014
to February 28, 2015
¥4,145,780–
4,145,780¥1,665,260

Fellow subsidiary companies¥99,121,800

First series of unsecured investment
corporation bonds
Due on October 30, 2024
Total

For the period
from March 1, 2015
to August 31, 2015
¥3,692,415–¥3,692,415
1,665,260

Parent Company and major corporate unitholders Not applicable

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 of interest.
Note 2: Installments of ¥10.7 million will be made on the 26th day of every three months starting on August 26, 2013, with the remaining payment of ¥497.1 million to be repaid on May 26, 2025.

Long-term debt

For the period
from September 1, 2014
to February 28, 2015–

(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 interestbearing debt, to secure stable financing capability and reduce future risks of rising interest rates, the Company’s investment
policy is to secure longer-term, fixed-rate borrowings with well-diversified maturities.
The Company enters into derivative transactions only for the purpose of reducing risk of future interest rate fluctuations anddoes not engage in speculative transactions.
(2) Type and Risk of Financial Instruments and Related Risk Management
Debts 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 thefinancial institutions, but also the type of financing to include the effective use of surplus funds and direct financing from thecapital markets such as issuance of investment units. In addition, the Company is exposed to the market risk arising fromfluctuations in interest rates on its floating-rate debts. 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 debts to total debt at high levels.
Nomura Real Estate Master Fund

29

Notes to Financial Statements
Note 5: Redemption schedule for debt as of August 31, 2015

Furthermore, the Company may utilize derivative transactions (interest-rate swap transactions) as a hedging instrument
to reduce the market risk under floating-rate debts by swapping such floating-rate interest payments for fixed-rate interest
payments.
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 whichsurplus funds are deposited.
(3) Supplementary Explanation on Estimated Fair Value of Financial Instruments
The fair value of financial instruments is based on the quoted market price, if applicable. When there is no quoted market
price available, fair value is reasonably estimated. Certain assumptions are used for the estimation of fair value. Accordingly,
the result of such estimation may change if different assumptions are used. Furthermore, the contractual amounts ofderivative transactions stated in “19. Derivatives and Hedge Accounting” below do not represent the market risk involved inthese derivative transactions.

Thousands of Yen

Short-term debt
Investment corporationbonds
Long-term debt
Total

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

–

–

–

–

–

¥3,000,000

85,600¥8,185,600¥19,085,600¥19,085,600¥12,285,600¥12,285,600¥16,785,600¥16,785,600¥20,485,600¥20,485,600

30,479,400¥33,479,400

Short-term debt
Investment corporationbonds
Long-term debt
Total

Due within
After one year,
After two years, After three years, After four years,
one yearwithin two years within three years within four years within five years¥4,000,000––––(i) Cash and bank deposits(ii) Short-term debt(iii) Current portion of long-term debt(iv) Investment corporation bonds(v) Long-term debt(vi) Derivative transactions––¥1,05729,544
2,053,513–

Difference––¥1,04233,7832,070,335–

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 and (ii) Shot-term debt
		 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 fair value.
(iii) 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 “19. Derivatives andHedge 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 tobe 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.
(v) Derivative transactions
		 See “19. Derivatives and Hedge Accounting.”
Note 3: Financial instruments for which fair value is difficult to determine

–

–

–

–

¥3,000,000

85,600¥4,085,600

13,085,600¥13,085,600

6,085,600¥6,085,600

18,985,600¥18,985,600

14,085,600¥14,085,600

39,822,200¥42,822,200

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

As of August 31, 2015
¥99,667

Thousands of Yen

After five years––

Redemption schedule for cash and bank deposits as of February 28, 2015
Thousands of Yen

Cash and bank deposits
Total

30

Nomura Real Estate Master Fund

Due within
After one year,
After two years, After three years, After four years,
one yearwithin two years within three years within four years within five years¥18,820,188––––¥18,820,188––––¥254,835,519
9,668,407
264,503,926¥296,338,000¥238,207,920
16,627,599
254,835,519¥280,180,000

Note 1: The carrying value represents the acquisition cost less accumulated depreciation.
Note 2: The major increase in the carrying value during the period ended August 31, 2015 was mainly due to the acquisition of Kawaguchi Ryoke Logistics Center (10,944,386 thousand yen) anddecrease in the carrying value during the period ended August 31, 2015 was mainly due to depreciation (total 1,738,235 thousand yen). The major increase in the carrying value during
the period ended February 28, 2015 was mainly due to the acquisition of Universal CityWalk Osaka™ (15,961,434 thousand yen) and Kawasaki More’s (2,110,212 thousand yen)anddecrease in the carrying value during the period ended February 28, 2015 was mainly due to depreciation (total 1,705,224 thousand yen).
Note 3: The fair value as of August 31, 2015 and February 28, 2015 represents the sum of the appraisal values estimated by external real estate appraisers.
However, the estimated transfer price is used for the fair value as of August 31, 2015 for the Mitsubishi Motors Ibaraki Maintenance Center.

For the periods from March 1, 2015 to August 31, 2015 and from September 1, 2014 to February 28, 2015

*The fair value of the investment securities is not disclosed because there is no quoted market price available for these securities and it is extremely difficult to determine the fair value.
Note 4: Redemption schedule for cash and bank deposits as of August 31, 2015

Cash and bank deposits
Total

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

For the period
from September 1, 2014
to February 28, 201516. SEGMENT INFORMATIONAs of February 28, 2015
¥463,151

Due within
After one year,
After two years, After three years, After four years,
one yearwithin two years within three years within four years within five years¥21,120,799––––¥21,120,799––––

For the period
from March 1, 2015
to August 31, 2015

The real estate rental revenues and expenses for the fiscal period ended August 31, 2015 and February 28, 2015 are presented in “17.
Breakdown of Real Estate Rental Revenues and Expenses.”Thousands of Yen

Type of asset
Investment securities–

Difference

Thousands of Yen

Fair value (Note 1)¥18,820,188(4,000,000)(86,642)(3,033,783)(94,134,935)–

After five years–

For the period from September 1, 2014 to February 28, 2015
The following table summarizes the carrying value and the estimated fair values of financial instruments as of February 28, 2015.
Carrying value (Note 1)¥18,820,188(4,000,000)(85,600)(3,000,000)(92,064,600)––

Thousands of Yen

For the period from March 1, 2015 to August 31, 2015
The following table summarizes the carrying value and the estimated fair values of financial instruments as of August 31, 2015.
Fair value (Note 1)¥21,120,799(8,100,000)(86,657)(3,029,544)(101,175,313)–

After five years

Redemption schedule for debt as of February 28, 2015

Fair Value of Financial Instruments

Carrying value (Note 1)¥21,120,799(8,100,000)(85,600)(3,000,000)(99,121,800)–

Due within
After one year,
After two years, After three years, After four years,
one yearwithin two years within three years within four years within five years¥8,100,000––––

After five years––

Segment Information
Since the Company has been engaged in the real estate leasing business as a single segment, segment information has been
omitted.

Related Information
1. Information about products and services	Since revenues from external customers of products and services within a single segment are more than 90 percent of total
operating revenues, information about products and services has been omitted.
2. Information about geographical areas(1) Revenues		Since more than 90 percent of the total operating revenues were generated from external customers in Japan,
geographical breakdown of revenues has been omitted.
(2) Property and equipment
		Since more than 90 percent of the total property and equipment on the balance sheet are located in Japan, geographicalbreakdown of property and equipment has been omitted.
3. Information about major clients	Since no single external client represents 10 percent or more of the Company’s total operating revenues, information aboutmajor clients has been omitted.
Nomura Real Estate Master Fund

31

Notes to Financial Statements
17. BREAKDOWN OF REAL ESTATE RENTAL REVENUES AND EXPENSES

20. SIGNIFICANT SUBSEQUENT EVENTSReal estate rental revenues and expenses for the fiscal period ended August 31, 2015 and February 28, 2015 consist of the following:Thousands of Yen

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

For the period
from March 1, 2015
to August 31, 2015
¥10,379,978
9,253,044
8,940,457
312,587
1,126,934
94,517889,790
142,627
4,421,693
404,301
235,392
748,165
723,142
18,840187,662
101,585
1,738,833
263,773¥5,958,285

For the period
from September 1, 2014
to February 28, 2015
¥10,049,350
9,068,948
8,763,844
305,104
980,402
91,017
801,535
87,8504,358,151
391,935
270,561
726,772
672,711
18,405
258,742
96,4801,705,559
216,986¥5,691,199

18. LEASESThe future minimum rental revenues from tenants under non-cancelable operating lease of properties as of August 31, 2015 andFebruary 28, 2015 are summarized as follows:
Thousands of Yen

As of August 31, 2015
¥14,251,817
48,290,073¥62,541,890

Due within one year
Due after one year
Total

As of February 28, 2015
¥14,445,033
44,639,620¥59,084,653

19. DERIVATIVES AND HEDGE ACCOUNTING

Thousands of Yen

Notional amountType of derivative
instruments

Main hedged
item

Special treatment ofinterest-rate swaps

Interest-rate swaps:
Received/floating
and paid/fixedLong-term debt

Due after
one year
78,003,700

77,960,900

Fair
value

Method used for
determining fair
value

(*)

*Since the derivative financial instruments qualifying for the special treatment of interest-rate swaps are accounted for as one transaction together with their hedged item, long-term debt, the fairvalue of these derivatives is included in that of related long-term debt (see “14. Financial Instruments (Note 2) (iii) Current portion of long-term debt and (iv) Long-term debt”).

Derivative transactions as of February 28, 2015
(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
Hedge accounting
methodType of derivative
instruments

Main hedged
item

Special treatment ofinterest-rate swaps

Interest-rate swaps:
Received/floating
and paid/fixedLong-term debt

Due after
one year
72,425,100

The Company has transferred “Mitsubishi Motors Ibaraki Maintenance Center” on September 1, 2015, after the end of 5th fiscal
period (August 31, 2015).
Mitsubishi Motors Ibaraki Maintenance Center
Trust beneficiary interest in mainly real estate
Type of Asset
April 30, 2015
Date of Agreement
Transfer Date
September 1, 2015
Transfer Price¥1,133,000 thousand

Transferee

Japanese General Operating Company
Impact on Earnings	The Company recorded ¥251 million of transfer profit (including miscellaneous expenses) as Operating
Revenues on final fiscal period (from September 1, 2015 to September 30, 2015).

Merger with Nomura Real Estate Office Fund, Inc. and Nomura Real Estate Residential Fund, Inc.
The Company, NOF (Nomura Real Estate Office Fund Inc.), and NRF (Nomura Real Estate Residential Fund Inc.) respectively
have determined at each of the board of directors meetings held on May 27, 2015 to implement a consolidation-type merger(the “Merger”), whereby October 1, 2015 is set as the date of incorporation of the New Investment Corporation, and that thecompanies have entered into a merger agreement (the “Merger Agreement”) dated May 27, 2015. A proposal of the Merger
Agreement was approved at the general meeting of unitholders of the Company and NOF on July 30, 2015, and at the general
meeting of unitholders of NRF on July 31, 2015. Accordingly, each Consolidated Investment Corporation were delisted from
Tokyo Stock Exchange REIT market on September 28, 2015. Moreover, New Investment Corporation was approved by Tokyo
Stock Exchange to be listed on September 1, 2015, and was listed on October 2, 2015.
(1) Purpose of Merger
	The Company believes that the Merger will expand acquisition opportunities, stabilize the portfolio, enhance risk
tolerance, increase competitive strength for asset acquisitions and stabilize the financial base by increasing the asset sizeand diversifying target investment sectors. In addition, the Company believes that it can achieve both growth and stable
management by effectively leveraging the wide-range of know-hows and brands held by Nomura Real Estate Group, one of the
major comprehensive real estate developers in Japan. As such, the Company is confident that the Merger is the best option
for its unitholders and has therefore entered into the Merger Agreement.
(2) Merger Ratio	Upon the merger, 1 New Investment Corporation units was allotted for each Company unit, 3.60 New Investment
Corporation units was for each NOF unit, and 4.45 New Investment Corporation units was allotted for each NRF unit.
(3) Number and Fair Value of Investment Units Issued to the Unitholders of the Consolidated Investment Corporations
Consolidated Investment Corporations
NOF
NRF

Derivative transactions as of August 31, 2015
(1) There were no derivative financial instruments not subject to hedge accounting.
(2) Derivative financial instruments subject to hedge accounting were as follows:

Hedge accounting
methodTransfer of the asset

72,382,300

Fair
value

Method used for
determining fair
value

Number of Investment Units Issued
1,341,190 units
715,560 units

Fair Value of Investment Units
205,604 million yen
109,965 million yen(4) Cash Distribution on Merger
	Instead of cash distributions for the Company’s final fiscal period ending on September 30, 2015 (the period from September
1, 2015 to September 30, 2015), the New Investment Corporation will make a cash distribution on merger to the unitholders
listed or recorded on the final unitholders register of the Company as of the day immediately prior to the date of incorporationof the New Investment Corporation, in an amount equivalent to the cash distributions for the final fiscal period based on the
Company’s distributable profit.
(5)	Overview of Preceding Periods of the Consolidated Investment Corporations (NOF (period ended September 2015) and NRF(period ended September 2015))
NOF (period ended September 2015)
Line of business: Management as investment in specific assets,
mainly assets, based on the Investment Trust Act
Operating revenue
10,853 million yen
Net income
2,876 million yen
Assets438,677 million yen
Liabilities
224,216 million yen
Net assets
214,460 million yen

NRF (period ended September 2015)
Line of business: Management as investment in specific assets,
mainly assets, based on the Investment Trust Act
Operating revenue
3,714 million yen
Net income
1,216 million yen
Assets
164,977 million yen
Liabilities
90,478 million yen
Net assets
74,499 million yen(*)*Since the derivative financial instruments qualifying for the special treatment of interest-rate swaps are accounted for as one transaction together with their hedged item, long-term debt, the fairvalue of these derivatives is included in that of related long-term debt (see “14. Financial Instruments (Note 2) (iii) Current portion of long-term debt and (iv) Long-term debt”).

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Nomura Real Estate Master Fund

Nomura Real Estate Master Fund33

Independent Auditor’s Report

Investor Information
IR Calendar
Announcement of financial results(mid-April)

January

March

February

Fiscal period end(end of February)

April

Announcement of financial results(mid-October)

June

May

July

Commencement of payment of distributions
Dispatch of Asset Management Report(mid-May)

Breakdown of Unitholders

SeptemberAugustFiscal period end(end of August)October

Foreign corporations and individuals

144,735 units
8.7%

Other domestic corporations

865,875 units
52.0%

238,488 units
14.3%
4th
Fiscal Period

Financial institutions(including financial instruments
business operators)

Individuals and others

DecemberCommencement of payment of distributions
Dispatch of Asset Management Report(mid-November)

Top 10 Unitholders
Unitholder

416,162 units
25.0%

November

371,782 units
22.3%
141,018 units
8.5%

953,734 units
57.3%

198,726 units
11.9%
5th
Fiscal Period

Units heldShare

1 Japan Trustee Services Bank, Ltd

393,33923.62%

2 The Master Trust Bank of Japan, Ltd.

169,052

10.15%

3 Trust & Custody Services Bank, Ltd.

141,894

8.52%

4 Nomura Real Estate Development Co., Ltd.

87,820

5.27%

5 NOMURA BANK (LUXEMBOURG) S.A.

85,071

5.11%

6 The Nomura Trust and Banking Co., Ltd

65,621

3.94%

25,0571.50%

20,912

1.26%

17,836

1.07%

13,1690.79%

1,019,771

61.24%

Nomura PB Nominees Limited Omnibus-Margin
7(Cash PB)CREDIT SUISSE SECURITIES (EUROPE) LIMITED PB
8OMNIBUS CLIENT ACCOUNTState Street Bank – West Pension Fund Clients –9Exempt10 The Gibraltar Life Insurance Co., Ltd.
Total
Note: The figures are based on data as of August 31, 2015.

Information provision through the website

NMF intends to disclose information promptly and accurately by utilizing its website.
The website was renewed in the latest form with full use of movies in November 2015.
Disclosure materials of the former NMF before the merger are also available at“Disclosure Materials” under “Investor Relations.”

http://www.nre-mf.co.jp/en/

Portfolio Map
Disclosure Materials

34

Nomura Real Estate Master Fund

Portfolio Summary

Nomura Real Estate Master Fund35